Highlights: -- Reports second-quarter GAAP earnings of $0.79 per share, compared to a loss of $0.75 per share for the same period last year, primarily due to prior-year losses from the final transactions associated with exiting the merchant energy business
RALEIGH, N.C., Aug. 7 /PRNewswire-FirstCall/ -- Progress Energy
(NYSE: PGN) announced second-quarter reported GAAP earnings of $205 million,
or $0.79 per share, compared with reported GAAP losses of $193 million, or
$0.75 per share, for the same period last year. The favorable quarter-over-
quarter variance in reported GAAP earnings is primarily due to prior-year
losses from the final transactions associated with exiting the merchant energy
business. Second-quarter ongoing earnings were $199 million, or $0.77 per
share, compared to $142 million, or $0.56 per share, last year. The favorable
quarter-over-quarter variance in ongoing earnings is primarily due to
increased wholesale revenues and AFUDC equity, and an increase in net retail
rates related to the Hines Energy Complex. (See the discussion later in this
release for a reconciliation of ongoing earnings per share to reported GAAP
earnings per share.)
(Logo: http://www.newscom.com/cgi-bin/prnh/20020923/CHM008LOGO-c )
"Overall, our company performed well operationally and financially during
the second quarter," said Bill Johnson, chairman, president and CEO. "We are
continuing to deliver on our strategy to generate solid earnings growth
through our two utilities. To help mitigate the effects of weakness in the
general economy and lower-than-forecasted customer growth in Florida, we have
successfully taken steps to increase wholesale revenues and effectively manage
our costs. We are reaffirming our 2008 ongoing earnings guidance of $3.05 per
share, with a range of 10 cents above and below that target."
The 2008 ongoing earnings guidance excludes any impact from CVO
mark-to-market adjustment, potential impairments and discontinued operations.
Progress Energy is not able to provide a corresponding GAAP equivalent for the
2008 earnings guidance due to the uncertain nature and amount of these
adjustments.
See pages 3-5 for detailed second-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
-- Received notice that the Florida Public Service Commission (FPSC)
unanimously approved PEF's need certification petition for two
advanced, state-of-the-art nuclear power plant units at a site in Levy
County, Florida.
-- Submitted a combined license application with the Nuclear Regulatory
Commission for two new reactors at the Levy County, Florida site.
-- Received further evidence of strong policy support for new nuclear and
transmission construction in Florida with the legislature's passage of
comprehensive energy legislation.
-- Issued a request for proposals to supply approximately 1,200 MW of
generating capacity to PEF beginning in 2013, which will compete with
the company's self-build option consisting of a combined-cycle natural
gas unit to be built on company property at its existing Suwannee
plant.
-- Received approval from the FPSC to recover half of PEF's $213 million
mid-course fuel cost correction from August to December 2008 and the
remaining half in 2009.
-- Received an order from the Federal Energy Regulatory Commission
approving an annual increase of approximately $17 million to $19
million in transmission rates for PEC pursuant to the company's revised
Open Access Transmission Tariff filing.
-- Filed a petition with the North Carolina Utilities Commission (NCUC) to
terminate Clean Smokestacks Act amortizations in excess of $569.1
million, and instead allow PEC to place into rate base all capital
costs associated with its compliance with the Clean Smokestacks Act in
excess of $569.1 million.
-- Received notice that the U.S. Court of Appeals for the D.C. Circuit
vacated the Environmental Protection Agency's 2005 Clean Air Interstate
Rule.
-- Achieved top-quartile ranking among energy providers in the latest
residential customer satisfaction survey from J.D. Power & Associates.
-- Made a number of announcements relating to energy conservation,
demand-side management (DSM), and renewable energy:
-- Established a new department, the Efficiency and Innovative
Technology Department, to meet growing energy demand and address
global climate change through the use of renewable and alternative
energy, advanced technologies such as plug-in hybrid vehicles and
new energy-efficiency and DSM programs.
-- Filed an application with the NCUC for recovery of PEC's costs
incurred for the adoption and implementation of DSM and
energy-efficiency programs in North Carolina.
-- Filed an application with the NCUC for recovery of PEC's costs
associated with compliance with renewable energy portfolio
standards in North Carolina.
-- Announced PEC's power purchase agreement with SAS Institute, Inc.
to buy Renewable Energy Certificates and electricity generated by
its proposed 1-MW photovoltaic solar electric power farm.
-- Issued second global climate change report, which outlines the
company's initiatives and calls for a national policy to reduce
carbon emissions across all sectors of the economy.
Press releases regarding various announcements are available on the
company's Web site at www.progress-energy.com/aboutus/news .
SECOND-QUARTER 2008 BUSINESS HIGHLIGHTS
Below are the second-quarter and year-to-date 2008 earnings variance
analyses for the company's business units. See the reconciliation table on
pages 5-6 and pages S-1 and S-2 of the supplemental data for a reconciliation
of reported GAAP earnings per share to ongoing 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
information.
QUARTER-OVER-QUARTER ONGOING EPS VARIANCE ANALYSIS
Progress Energy Carolinas
-- Reported ongoing earnings per share of $0.41, compared with $0.34 for
the same period last year; reported GAAP earnings per share of $0.40,
compared with $0.34 for the same period last year
-- Reported primary quarter-over-quarter ongoing earnings per share
favorability of:
-- $0.03 growth and usage
-- $0.03 wholesale revenues primarily due to increased energy rates
and sales with a major customer
-- $0.02 other retail margin related to the expiration of a power
buyback agreement and the impact of the comprehensive energy bill
implementation
-- $0.01 AFUDC equity related to an increase in eligible construction
projects
-- $0.01 other
-- Reported primary quarter-over-quarter ongoing earnings per share
unfavorability of:
-- $(0.03) depreciation and amortization primarily associated with the
accelerated cost recovery program for nuclear generating assets
-- Added 25,000 customers (net) during the last 12 months
Progress Energy Florida
-- Reported ongoing earnings per share of $0.46, compared with $0.27 for
the same period last year; reported GAAP earnings per share of $0.48,
compared with $0.27 for the same period last year
-- Reported primary quarter-over-quarter ongoing earnings per share
favorability of:
-- $0.05 wholesale revenues primarily due to two new contracts with
one major customer
-- $0.05 AFUDC equity related to an increase in eligible construction
projects
-- $0.04 weather
-- $0.04 net retail rate increase related to the Hines Energy Complex
-- $0.04 other operating expenses primarily due to prior-year
disallowed fuel costs and a gain on a land sale in 2008
-- $0.02 operation and maintenance expense (O&M) primarily due to a
favorable sales and use tax audit adjustment
-- Reported primary quarter-over-quarter ongoing earnings per share
unfavorability of:
-- $(0.02) income taxes primarily due to a prior-year benefit related
to the closure of certain federal tax years and positions
-- $(0.01) growth and usage
-- $(0.02) other
-- Added 2,000 customers (net) during the last 12 months
Corporate and Other Businesses (includes primarily Holding Company Debt)
-- Reported ongoing expenses of $0.10 per share, compared with expenses of
$0.05 per share for the same period last year; reported GAAP expenses
of $0.11 per share, compared with expenses of $0.07 per share for the
same period last year
-- Reported primary quarter-over-quarter ongoing expenses per share
favorability of:
-- $0.03 other primarily due to decreased legal expenses and increased
investment gains
-- Reported primary quarter-over-quarter ongoing expenses per share
unfavorability of:
-- $(0.05) income tax expense primarily due to a prior-year benefit
from the closure of certain federal tax years and positions related
to divested subsidiaries
-- $(0.03) interest expense primarily due to a prior-year benefit from
the closure of certain federal tax years and positions primarily
related to divested subsidiaries and a decrease in interest
allocated to discontinued operations
YEAR-OVER-YEAR ONGOING EPS VARIANCE ANALYSIS
Progress Energy Carolinas
-- Reported year-to-date ongoing and reported GAAP earnings per share of
$0.87, compared with $0.82 for the same period last year
-- Reported primary year-over-year ongoing earnings per share favorability
of:
-- $0.08 other retail margin related to the expiration of a power
buyback agreement and the impact of the comprehensive energy bill
implementation
-- $0.06 growth and usage
-- $0.01 AFUDC equity related to an increase in eligible construction
projects
-- $0.01 other
-- Reported primary year-over-year ongoing earnings per share
unfavorability of:
-- $(0.05) depreciation and amortization primarily associated with the
accelerated cost recovery program for nuclear generating assets and
higher depreciable base
-- $(0.02) weather
-- $(0.02) O&M primarily due to an increase in estimated environmental
remediation expenses and increased spending on vegetation
management in compliance with federal regulations
-- $(0.02) changes in income tax estimates
Progress Energy Florida
-- Reported year-to-date ongoing earnings per share of $0.72, compared
with $0.51 for the same period last year; reported GAAP earnings per
share of $0.74, compared with $0.51 for the same period last year
-- Reported primary year-over-year ongoing earnings per share favorability
of:
-- $0.10 AFUDC equity related to an increase in eligible construction
projects
-- $0.07 wholesale revenues primarily due to two new contracts with
one major customer and a contract amendment with another major
customer
-- $0.06 net retail rate increase related to the Hines Energy Complex
$0.04 weather
-- $0.04 other operating expenses primarily due to prior-year
disallowed fuel costs and a gain on a land sale in 2008
-- Reported primary year-over-year ongoing earnings per share
unfavorability of:
-- $(0.03) growth and usage
-- $(0.03) income taxes primarily due to a prior-year benefit related
to the closure of certain federal tax years and positions
-- $(0.02) depreciation due to higher depreciable base
-- $(0.02) other
Corporate and Other Businesses (includes primarily Holding Company Debt)
-- Reported year-to-date ongoing expenses of $0.25 per share, compared
with expenses of $0.17 per share for the same period last year;
reported GAAP expenses of $0.26 per share, compared with expenses of
$0.19 per share for the same period last year
-- Reported primary year-over-year ongoing expenses per share favorability
of:
-- $0.04 other primarily due to decreased legal expenses
-- Reported primary year-over-year ongoing expenses per share
unfavorability of:
-- $(0.07) income tax expense primarily due to a prior-year benefit
from the closure of certain federal tax years and positions related
to divested subsidiaries
-- $(0.05) interest expense primarily due to a prior-year benefit from
the closure of certain federal tax years and positions primarily
related to divested subsidiaries and a decrease in interest
allocated to discontinued operations
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 Six months ended
June 30 June 30
2008 2007* 2008 2007*
Ongoing earnings per share $0.77 $0.56 $1.34 $1.15
Tax levelization 0.01 - 0.02 (0.01)
Discontinued operations 0.02 (1.29) 0.25 (0.81)
CVO mark-to-market (0.01)(0.02)(0.01) (0.01)
Reported GAAP earnings per
share $0.79$(0.75)$1.60 $0.32
Shares outstanding (millions) 260 256 259255
* Previously reported 2007 results have been restated to reflect
discontinued operations. See pages S-1 and S-2 of the supplemental data for
information regarding 2007's core and non-core earnings.
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 $0.01
for the quarter and had no impact on earnings per share for the same period
last year, and has no impact on the company's annual earnings. Because this
adjustment varies by quarter but has no impact on annual earnings, management
believes this adjustment is not representative of the company's ongoing
quarterly earnings.
Discontinued Operations
The company has reduced its business risk by exiting nonregulated
businesses to focus on the core operations of the utilities. The discontinued
operations of these nonregulated businesses increased earnings per share by
$0.02 for the quarter and decreased earnings per share by $1.29 for the same
period last year. 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 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 decreased earnings
per share by $0.01 for the quarter and decreased earnings per share by $0.02
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 the
adjustment to be a component of ongoing earnings.
This earnings announcement, as well as a package of detailed financial
information, is available on the company's Web site at
www.progress-energy.com . Additionally, the slides accompanying the
presentation may be downloaded beginning at 9:30 a.m. ET today at
www.progress-energy.com/webcast .
Progress Energy's conference call with the investment community will be
held August 7, 2008, at 10 a.m. ET (7 a.m. PT). Investors, media and the
public may listen to the conference call by dialing 913-312-0691, confirmation
code 1644230. 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 August 7
through midnight August 21. To listen to the recorded call, dial 719-457-0820
and enter confirmation code 1644230.
A webcast of the live conference call will be available at
www.progress-energy.com/webcast. The webcast will be available in Windows
Media format. The webcast will be archived on the site for at least 30 days
following the call for those unable to listen in real time.
Progress Energy, headquartered in Raleigh, N.C., is a Fortune 250 energy
company with more than 21,000 megawatts of generation capacity and $9 billion
in annual revenues. The company is observing its 100th anniversary in 2008.
Progress Energy includes two major utilities that serve 3.1 million customers
in the Carolinas and Florida. The company is the 2006 recipient of the Edison
Electric Institute's Edison Award, the industry's highest honor, in
recognition of its operational excellence. The company also is the first
utility to receive the prestigious J.D. Power and Associates Founder's Award
for customer service. Progress Energy serves two growing areas of the country,
and the company is pursuing a balanced strategy for a secure energy future.
That balance includes aggressive energy-efficiency programs, investments in
renewable energy technologies and a state-of-the-art electricity system. For
more information about Progress Energy, 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 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 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 ability to successfully access capital markets on
favorable terms; 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 and the assets of our
pension and benefit plans; 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 United
States Securities and Exchange Commission. 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
June 30, 2008
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS of INCOME
Three months ended Six months ended
June 30, June 30,
(in millions except per share
data)20082007 2008 2007
Operating revenues $2,244 $2,129 $4,310$4,201
Operating expenses
Fuel used in electric generation 696 716 1,393 1,452
Purchased power 330 283562 504
Operation and maintenance 488 461931 881
Depreciation and amortization 208 223414 442
Taxes other than on income125 125246 249
Other (9) 20 (7) 21
Total operating expenses 1,838 1,828 3,539 3,549
Operating income406 301771 652
Other income (expense)
Interest income 5 6 1214
Allowance for equity funds
used during construction 27 10 5020
Other, net 3 (2)(2) (1)
Total other income, net 35 14 6033
Interest charges
Interest charges 154 139315 284
Allowance for borrowed funds
used during construction (8) (4) (16) (7)
Total interest charges, net 146 135299 277
Income from continuing operations
before income tax and minority
interest 295 180532 408
Income tax expense 95 41179 113
Income from continuing operations
before minority interest 200 139353 295
Minority interest in subsidiaries'
income, net of tax - (1)(4) (8)
Income from continuing operations 200 138349 287
Discontinued operations, net
of tax 5(331)65 (205)
Net income (loss) $205 $(193) $414 $82
Average common shares outstanding
- basic260 256259 255
Basic earnings per common share
Income from continuing
operations $0.77 $0.54 $1.35 $1.13
Discontinued operations, net
of tax 0.02 (1.29) 0.25 (0.81)
Net income (loss) $0.79 $(0.75) $1.60 $0.32
Diluted earnings per common share
Income from continuing
operations $0.77 $0.54 $1.34 $1.12
Discontinued operations,
net of tax 0.02 (1.29) 0.25 (0.80)
Net income (loss) $0.79 $(0.75) $1.59 $0.32
Dividends declared per common
share $0.615 $0.610 $1.230$1.220
This financial information 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) June 30, December 31,
20082007
ASSETS
Utility plant
Utility plant in service $25,880$25,327
Accumulated depreciation (11,102) (10,895)
Utility plant in service, net 14,778 14,432
Held for future use 37 37
Construction work in progress2,297 1,765
Nuclear fuel, net of amortization 389371
Total utility plant, net 17,501 16,605
Current assets
Cash and cash equivalents1,423255
Receivables, net 934 1,167
Inventory1,123994
Deferred fuel cost 295154
Derivative assets 520 85
Assets to be divested- 52
Prepayments and other current assets 187122
Total current assets 4,482 2,829
Deferred debits and other assets
Regulatory assets 854946
Nuclear decommissioning trust funds 1,302 1,384
Miscellaneous other property and investments 464448
Goodwill 3,655 3,655
Derivative assets 617119
Other assets and deferred debits 417379
Total deferred debits and other assets 7,309 6,931
Total assets $29,292$26,365
CAPITALIZATION AND LIABILITIES
Common stock equity
Common stock without par value, 500 million
shares authorized, 261 million and 260 million
shares issued and outstanding, respectively$6,102 $6,028
Unearned ESOP shares (1 million and 2 million
shares, respectively) (25) (37)
Accumulated other comprehensive loss (28) (34)
Retained earnings2,558 2,465
Total common stock equity 8,607 8,422
Preferred stock of subsidiaries - not subject to
mandatory redemption 93 93
Minority interest 6 84
Long-term debt, affiliate271271
Long-term debt, net9,886 8,466
Total capitalization 18,863 17,336
Current liabilities
Current portion of long-term debt 850877
Short-term debt343201
Accounts payable 1,078819
Interest accrued 162173
Dividends declared 161160
Customer deposits 268255
Regulatory liabilities 17173
Derivative collateral liabilities 420108
Liabilities to be divested - 8
Other current liabilities 568528
Total current liabilities 3,867 3,302
Deferred credits and other liabilities
Noncurrent income tax liabilities 252361
Accumulated deferred investment tax credits133139
Regulatory liabilities 3,500 2,554
Asset retirement obligations 1,417 1,378
Accrued pension and other benefits 759763
Capital lease obligations 236239
Other liabilities and deferred credits 265293
Total deferred credits and other liabilities 6,562 5,727
Commitments and contingencies
Total capitalization and liabilities $29,292$26,365
PROGRESS ENERGY, INC.
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS of CASH FLOWS
(in millions)
Six months ended June 302008 2007
Operating activities
Net income $414$82
Adjustments to reconcile net income to net cash
provided by operating activities
Depreciation and amortization 467504
Deferred income taxes and investment tax
credits, net 98132
Deferred fuel (credit) cost (166)83
Deferred income -(64)
Allowance for equity funds used during
construction (50) (20)
Other adjustments to net income (9)85
Cash provided (used) by changes in operating
assets and liabilities
Receivables 224 13
Inventory (116) (56)
Prepayments and other current assets (28) (58)
Income taxes, net(60) (508)
Accounts payable 293 24
Derivative collateral liabilities312(89)
Other current liabilities 10202
Other assets and deferred debits (33) (127)
Other liabilities and deferred credits 1(26)
Net cash provided by operating activities 1,357177
Investing activities
Gross property additions (1,260) (899)
Nuclear fuel additions (43) (97)
Proceeds from sales of discontinued operations
and other assets, net of cash divested 64646
Purchases of available-for-sale securities and
other investments (836) (382)
Proceeds from sales of available-for-sale
securities and other investments816433
Other investing activities (15)(8)
Net cash used by investing activities (1,274) (307)
Financing activities
Issuance of common stock 42122
Dividends paid on common stock (320) (311)
Payments of short-term debt with original
maturities greater than 90 days(176) -
Net increase in short-term debt 318169
Proceeds from issuance of long-term debt, net 1,798 -
Retirement of long-term debt(427)(2)
Cash distributions to minority interests of
consolidated subsidiaries (85) (10)
Other financing activities (65) (17)
Net cash provided (used) by financing
activities1,085(49)
Net increase (decrease) in cash and cash
equivalents 1,168 (179)
Cash and cash equivalents at beginning of period 255265
Cash and cash equivalents at end of period$1,423$86
Progress Energy, Inc.
SUPPLEMENTAL DATA - Page S-1
Unaudited
Earnings Variances
Second Quarter 2008 vs. 2007
Regulated Utilities Corporate
and Other
($ per share) Carolinas Florida Businesses
2007 GAAP earnings0.34 0.27 (0.07)
Tax levelization
Discontinued operations
CVO mark-to-market 0.02
2007 ongoing earnings 0.34 0.27 (0.05)
Weather - retail 0.04
Other retail - growth and usage 0.03 (0.01)
Net retail rates 0.04
Other retail margin 0.02 0.01
Wholesale 0.03 0.05
O&M (0.01) 0.02
Other operating 0.01 0.04
Other 0.01 (0.02) 0.03
AFUDC equity 0.01 0.05
Depreciation & amortization (0.03) (0.01)
Interest charges 0.01 (0.03)
Income taxes 0.01 (0.02)(0.05)
Share dilution (0.01) (0.01)
2008 ongoing earnings 0.41 0.46 (0.10)
Tax levelization (0.01) 0.02
Discontinued operations
CVO mark-to-market(0.01)
2008 GAAP earnings0.40 0.48 (0.11)
CoreNon-Core
($ per share) Business Businesses Consolidated
2007 GAAP earnings 0.54 (1.29)(0.75)
Tax levelization - A-
Discontinued operations - 1.29 B1.29
CVO mark-to-market 0.02 C 0.02
2007 ongoing earnings 0.56 - 0.56
Weather - retail 0.040.04
Other retail - growth and usage0.020.02
Net retail rates 0.04 D 0.04
Other retail margin0.03 E 0.03
Wholesale 0.08 F 0.08
O&M0.01 G 0.01
Other operating0.05 H 0.05
Other 0.02 I 0.02
AFUDC equity 0.06 J 0.06
Depreciation & amortization (0.04) K(0.04)
Interest charges (0.02) L(0.02)
Income taxes (0.06) M(0.06)
Share dilution(0.02) 0.02)
2008 ongoing earnings 0.77 - 0.77
Tax levelization 0.01 A 0.01
Discontinued operations - 0.02 B0.02
CVO mark-to-market(0.01) C(0.01)
2008 GAAP earnings 0.77 0.02 0.79
Corporate and Other Businesses includes small subsidiaries, Holding
Company interest expense, CVO mark-to-market, tax levelization, purchase
accounting transactions and corporate eliminations. Ongoing losses of
Non-Core Businesses are included in the Corporate and Other segment for
GAAP reporting purposes.
A - Tax levelization impact, related to cyclical nature of energy
demand/earnings and various permanent items of income or deduction.
Intraperiod tax allocation of $0.13 related to synthetic fuels tax
credits for 2007 has been reclassified to discontinued operations.
B - Discontinued operations primarily consists of 1) Terminals operations
and Synthetic Fuels businesses 2) CCO operations and 3) Coal Mining
businesses.
C - Corporate and Other - Impact of change in fair value of outstanding
CVOs.
D - Florida - Favorable primarily due to the net retail rate increase
related to the Hines Energy Complex.
E - Carolinas - Favorable primarily due to the expiration of a power
buyback agreement with North Carolina Eastern Municipal Power Agency
and the impact of the comprehensive energy bill implementation.
F - Carolinas - Favorable primarily due to increased energy rates and
sales with a major customer.
Florida - Favorable primarily due to two new contracts with one major
customer.
G - Florida - Favorable primarily due to a sales and use tax audit
adjustment.
H - Florida - Favorable primarily due to the disallowance of fuel costs in
2007 and a gain on a land sale in 2008.
I - Corporate and Other - Favorable primarily due to decreased legal
expenses and increased investment gains.
J - Florida - Favorable primarily due to AFUDC equity related to costs
associated with eligible construction projects.
K - Carolinas - Unfavorable primarily due to additional depreciation
expense associated with PEC's accelerated cost recovery program for
nuclear generating assets, partially offset by lower Clean Smokestacks
amortization.
L - Corporate and Other - Unfavorable primarily due to a prior-year
benefit from the closure of certain federal tax years and positions
primarily related to divested subsidiaries and a decrease in interest
allocated to discontinued operations.
M - Florida - Unfavorable primarily due to a prior-year benefit from the
closure of certain federal tax years and positions.
Corporate and Other - Unfavorable primarily due to a prior-year
benefit related to the closure of certain federal tax years and
positions related to divested subsidiaries.
Progress Energy, Inc.
SUPPLEMENTAL DATA - Page S-2
Unaudited
Earnings Variances
Year-to-Date June 30, 2008 vs. 2007
Regulated Utilities Corporate
and Other
($ per share) CarolinasFlorida Businesses
2007 GAAP earnings 0.820.51(0.19)
Tax levelization 0.01
Discontinued operations
CVO mark-to-market0.01
2007 ongoing earnings0.820.51(0.17)
Weather - retail(0.02) 0.04
Other retail - growth and usage 0.06 (0.03)
Net retail rates 0.06
Other retail margin 0.08
Wholesale0.07
O&M (0.02) 0.01
Other operating 0.010.04
Other (0.01)0.04
AFUDC equity 0.010.10
Depreciation & amortization (0.05) (0.02)
Interest charges 0.01 (0.01) (0.05)
Income taxes(0.02) (0.03) (0.07)
Share dilution (0.01) (0.01)
2008 ongoing earnings0.870.72(0.25)
Tax levelization 0.02
Discontinued operations
CVO mark-to-market (0.01)
2008 GAAP earnings 0.870.74(0.26)
CoreNon-Core
($ per share) Business Businesses Consolidated
2007 GAAP earnings 1.14(0.82) 0.32
Tax levelization 0.01 A 0.01
Discontinued operations - 0.81 B 0.81
CVO mark-to-market 0.01 C 0.01
2007 ongoing earnings 1.16(0.01) 1.15
Weather - retail 0.020.02
Other retail - growth and usage0.030.03
Net retail rates 0.06 D 0.06
Other retail margin0.08 E 0.08
Wholesale 0.07 F 0.07
O&M (0.01) G(0.01)
Other operating0.05 H 0.05
Other 0.03 I 0.01 I 0.04
AFUDC equity 0.11 J 0.11
Depreciation & amortization (0.07) K(0.07)
Interest charges (0.05) L(0.05)
Income taxes (0.12) M(0.12)
Share dilution(0.02) (0.02)
2008 ongoing earnings 1.34- 1.34
Tax levelization 0.02 A 0.02
Discontinued operations - 0.25 B 0.25
CVO mark-to-market(0.01) C(0.01)
2008 GAAP earnings 1.35 0.25 1.60
Corporate and Other Businesses includes small subsidiaries, Holding
Company interest expense, CVO mark-to-market, tax levelization, purchase
accounting transactions and corporate eliminations. Ongoing losses of
Non-Core Businesses are included in the Corporate and Other segment for
GAAP reporting purposes.
A - Tax levelization impact, related to cyclical nature of energy
demand/earnings and various permanent items of income or deduction.
Intraperiod tax allocation of $0.09 related to synthetic fuels tax
credits for 2007 has been reclassified to discontinued operations.
B - Discontinued operations consists primarily of 1) Terminals operations
and Synthetic Fuels businesses 2) CCO operations and 3) Coal Mining
businesses.
C - Corporate and Other - Impact of change in fair value of outstanding
CVOs.
D - Florida - Favorable primarily due to the net retail rate increase
related to the Hines Energy Complex.
E - Carolinas - Favorable primarily due to the expiration of a power
buyback agreement with North Carolina Eastern Municipal Power Agency
and the impact of the comprehensive energy bill implementation.
F - Florida - Favorable primarily due to two new contracts with one major
customer and a contract amendment with another major customer.
G - Carolinas - Unfavorable primarily due to an increase in estimated
environmental remediation expenses and increased spending on
vegetation management in compliance with federal regulations.
H - Florida - Favorable primarily due to the disallowance of fuel costs in
2007 and a gain on a land sale in 2008.
I - Corporate and Other - Favorable primarily due to decreased legal
expenses.
Non-Core Businesses - Favorable primarily due to decreased indirect
corporate overhead due to divestitures completed in 2007.
J - Florida - Favorable primarily due to AFUDC equity related to costs
associated with eligible construction projects.
K - Carolinas - Unfavorable primarily due to additional depreciation
expense associated with PEC's accelerated cost recovery program for
nuclear generating assets and the impact of depreciable asset base
increases, partially offset by lower Clean Smokestacks amortization.
Florida - Unfavorable primarily due to the impact of depreciable asset
base increases.
L - Corporate and Other - Unfavorable primarily due to a prior-year
benefit from the closure of certain federal tax years and positions
primarily related to divested subsidiaries and a decrease in interest
allocated to discontinued operations.
M - Carolinas - Unfavorable primarily due to changes in tax estimates.
Florida - Unfavorable primarily due to a prior-year benefit related to
the closure of certain federal tax years and positions.
Corporate and Other - Unfavorable primarily due to a prior-year
benefit from the closure of certain federal tax years and positions
related to divested subsidiaries.
Progress Energy, Inc.
SUPPLEMENTAL DATA - Page S-3
Unaudited - Data is not weather-adjusted
Utility Statistics
Three Months Ended
June 30, 2008
Total
Progress
Operating Revenues (in millions)Carolinas Florida Energy
Retail
Residential $334 $553$887
Commercial 269 281 550
Industrial 18780 267
Governmental2370 93
Total Retail 813 984 1,797
Wholesale 189 141 330
Unbilled2427 51
Miscellaneous revenue 2242 64
Total Electric$1,048$1,194 $2,242
Energy Sales (millions of kWh)
Retail
Residential 3,586 4,755 8,341
Commercial 3,384 3,069 6,453
Industrial 3,122 1,009 4,131
Governmental 335 800 1,135
Total Retail 10,427 9,633 20,060
Wholesale 3,441 1,930 5,371
Unbilled 245 715 960
Total Electric14,11312,278 26,391
Energy Supply (millions of kWh)
Generated - steam7,036 5,146 12,182
nuclear 6,093 1,703 7,796
combustion
turbines/combined cycle 503 3,276 3,779
hydro 114 - 114
Purchased 917 2,750 3,667
Total Energy Supply
(Company Share) 14,66312,875 27,538
Impact of Weather to Normal on Retail
Sales
Heating Degree Days - Actual 21122
- Normal 22726
Cooling Degree Days - Actual 573 977
- Normal 538 928
Impact of retail weather to normal on
EPS $0.01 $0.01 $0.02
Three Months Ended
June 30, 2007
Total
Progress
Operating Revenues (in millions)Carolinas Florida Energy
Retail
Residential $327 $533$860
Commercial 261 281 542
Industrial 17478 252
Governmental2274 96
Total Retail 784 966 1,750
Wholesale 158 102 260
Unbilled2819 47
Miscellaneous revenue 2642 68
Total Electric $996$1,129 $2,125
Energy Sales (millions of kWh)
Retail
Residential 3,575 4,502 8,077
Commercial 3,347 2,947 6,294
Industrial 2,986 938 3,924
Governmental 332 811 1,143
Total Retail 10,240 9,198 19,438
Wholesale 3,166 1,447 4,613
Unbilled 403 751 1,154
Total Electric13,80911,396 25,205
Energy Supply (millions of kWh)
Generated - steam7,127 4,887 12,014
nuclear 5,457 1,715 7,172
combustion
turbines/combined cycle 769 2,729 3,498
hydro 107 - 107
Purchased 822 2,718 3,540
Total Energy Supply
(Company Share) 14,28212,049 26,331
Impact of Weather to Normal on Retail
Sales
Heating Degree Days - Actual 26929
- Normal 24025
Cooling Degree Days - Actual 525 854
- Normal 521 930
Impact of retail weather to normal on
EPS $0.01($0.02) ($0.01)
Percentage Change
From June 30, 2007
Operating Revenues (in millions) Carolinas Florida
Retail
Residential2.1 % 3.8 %
Commercial 3.1 -
Industrial 7.5 2.6
Governmental 4.5 (5.4)
Total Retail 3.7 1.9
Wholesale 19.6 38.2
Unbilled - -
Miscellaneous revenue(15.4)-
Total Electric 5.2 % 5.8 %
Energy Sales (millions of kWh)
Retail
Residential0.3 % 5.6 %
Commercial 1.1 4.1
Industrial 4.6 7.6
Governmental 0.9 (1.4)
Total Retail 1.8 4.7
Wholesale 8.7 33.4
Unbilled- -
Total Electric 2.2 % 7.7 %
Energy Supply (millions of kWh)
Generated - steam
nuclear
combustion
turbines/combined
cycle
hydro
Purchased
Total Energy Supply
(Company Share)
Impact of Weather to Normal on Retail
Sales
Heating Degree Days - Actual (21.6)% (24.1)%
- Normal
Cooling Degree Days - Actual 9.1 %14.4 %
- Normal
Impact of retail weather to normal on
EPS
Six Months Ended
June 30, 2008
Total
Progress
Operating Revenues (in millions)CarolinasFlorida Energy
Retail
Residential $760 $1,016 $1,776
Commercial 531 524 1,055
Industrial 355 148 503
Governmental46 137 183
Total Retail 1,692 1,825 3,517
Wholesale 370 245 615
Unbilled 7 33 40
Miscellaneous revenue 46 87 133
Total Electric$2,115 $2,190 $4,305
Energy Sales (millions of kWh)
Retail
Residential 8,264 8,760 17,024
Commercial 6,662 5,729 12,391
Industrial 5,894 1,874 7,768
Governmental 668 1,567 2,235
Total Retail 21,488 17,930 39,418
Wholesale 7,213 3,320 10,533
Unbilled 4 935 939
Total Electric28,705 22,185 50,890
Energy Supply (millions of kWh)
Generated - steam 14,581 9,869 24,450
nuclear 12,418 3,031 15,449
combustion
turbines/combined cycle 951 5,569 6,520
hydro 287 - 287
Purchased1,633 4,901 6,534
Total Energy Supply
(Company Share) 29,870 23,370 53,240
Impact of Weather to Normal on Retail
Sales
Heating Degree Days - Actual 1,775 286
- Normal 1,880 386
Cooling Degree Days - Actual 582 1,185
- Normal 550 1,137
Impact of retail weather to normal on
EPS ($0.02) ($0.02) ($0.04)
Six Months Ended
June 30, 2007
Total
Progress
Operating Revenues (in millions)CarolinasFlorida Energy
Retail
Residential $751 $1,025 $1,776
Commercial 515 528 1,043
Industrial 339 152 491
Governmental44 141 185
Total Retail 1,649 1,846 3,495
Wholesale 352 181 533
Unbilled 3 27 30
Miscellaneous revenue 49 86 135
Total Electric$2,053 $2,140 $4,193
Energy Sales (millions of kWh)
Retail
Residential 8,316 8,657 16,973
Commercial 6,591 5,570 12,161
Industrial 5,807 1,833 7,640
Governmental 659 1,560 2,219
Total Retail 21,373 17,620 38,993
Wholesale 7,122 2,617 9,739
Unbilled 60 941 1,001
Total Electric28,555 21,178 49,733
Energy Supply (millions of kWh)
Generated - steam 14,699 9,451 24,150
nuclear 11,582 3,347 14,929
combustion
turbines/combined cycle 1,245 4,516 5,761
hydro 320 - 320
Purchased1,734 5,033 6,767
Total Energy Supply
(Company Share) 29,580 22,347 51,927
Impact of Weather to Normal on Retail
Sales
Heating Degree Days - Actual 1,848 322
- Normal 1,876 385
Cooling Degree Days - Actual 554 1,066
- Normal 533 1,137
Impact of retail weather to normal on
EPS $0.00 ($0.06) ($0.06)
Percentage Change
From June 30, 2007
Operating Revenues (in millions) Carolinas Florida
Retail
Residential1.2 % (0.9)%
Commercial 3.1 (0.8)
Industrial 4.7 (2.6)
Governmental 4.5 (2.8)
Total Retail 2.6 (1.1)
Wholesale 5.1 35.4
Unbilled- -
Miscellaneous revenue (6.1) 1.2
Total Electric 3.0 % 2.3 %
Energy Sales (millions of kWh)
Retail
Residential (0.6)% 1.2 %
Commercial 1.12.9
Industrial 1.52.2
Governmental 1.40.4
Total Retail 0.51.8
Wholesale1.3 26.9
Unbilled - -
Total Electric 0.5 % 4.8 %
Energy Supply (millions of kWh)
Generated - steam
nuclear
combustion
turbines/combined cycle
hydro
Purchased
Total Energy Supply
(Company Share)
Impact of Weather to Normal on Retail
Sales
Heating Degree Days - Actual (4.0)%(11.2)%
- Normal
Cooling Degree Days - Actual 5.1 % 11.2 %
- Normal
Impact of retail weather to normal on
EPS
Progress Energy, Inc.
SUPPLEMENTAL DATA - Page S-4
Unaudited
Adjusted O&M Reconciliation (A)
Six months ended
(in millions) June 30, 2008 June 30, 2007 Growth
Reported GAAP O&M $931$8815.7%
Adjustments
Carolinas 523 516
O&M recoverable through clauses (12) (1)
Timing of nuclear outages (B) - (28)
Estimated environmental remediation
expenses (4) 1
Florida420 373
Storm damage reserve (55) -
Energy conservation cost recovery
clause (ECCR) (32)(31)
Environmental cost recovery clause
(ECRC) (14)(22)
Sales and use tax audit adjustments5 (4)
Adjusted O&M$819$7962.9%
A - Adjusted O&M excludes certain expenses that are recovered through
cost-recovery clauses which have no material impact on earnings, as
well as certain non-recurring items. As discussed in note B, it also
reflects adjustments related to nuclear plant outages, which can fall
disproportionately in one particular calendar year. Management
believes this presentation is appropriate and enables investors to
more accurately compare the company's O&M expense over the periods
presented. Adjusted O&M as presented here may not be comparable to
similarly titled measures used by other companies. The preceding
table provides a reconciliation of reported GAAP O&M to Adjusted O&M.
B - Nuclear units are periodically removed from service to accommodate
normal refueling and maintenance outages, repairs and certain other
modifications. PEC experienced one nuclear outage during the six
months ended June 30, 2008, compared to two nuclear outages during
the six months ended June 30, 2007. Therefore, the average expense
for one outage has been excluded from the six months ended June 30,
2007 in order to more accurately compare the company's O&M expense
over the periods presented.
Impact of Discontinued Operations
Six months ended
(Basic earnings per share) June 30, 2008 June 30, 2007
CCO Operations($0.01) ($1.02)
Coal Mining Operations 0.01 (0.03)
Rail0.01 -
Terminals and Synthetic Fuels 0.24 0.24
Total Discontinued Operations $0.25($0.81)
Financial Statistics
June 30, 2008 June 30, 2007
Return on average common stock equity
(12 months ended) 9.9 % 7.9 %
Book value per common share $33.10$32.11
Capitalization
Common stock equity 42.9 %46.5 %
Preferred stock of subsidiary and
minority interest 0.5 % 0.7 %
Total debt56.6 %52.8 %
Total Capitalization 100.0 % 100.0 %
SOURCE Progress Energy
