Current REport

0001094093-06-000400.txt : 20061218 0001094093-06-000400.hdr.sgml : 20061218 20061218153155 ACCESSION NUMBER: 0001094093-06-000400 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 20061213 ITEM INFORMATION: Cost Associated with Exit or Disposal Activities ITEM INFORMATION: Material Impairments ITEM INFORMATION: Financial Statements and Exhibits FILED AS OF DATE: 20061218 DATE AS OF CHANGE: 20061218 FILER: COMPANY DATA: COMPANY CONFORMED NAME: PROGRESS ENERGY INC CENTRAL INDEX KEY: 0001094093 STANDARD INDUSTRIAL CLASSIFICATION: ELECTRIC SERVICES [4911] IRS NUMBER: 562155481 STATE OF INCORPORATION: NC FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 8-K SEC ACT: 1934 Act SEC FILE NUMBER: 001-15929 FILM NUMBER: 061283295 BUSINESS ADDRESS: STREET 1: 410 S WILMINGTON ST CITY: RALEIGH STATE: NC ZIP: 27601 BUSINESS PHONE: 9195466463 MAIL ADDRESS: STREET 1: 410 S WILMINGTON ST CITY: RALEIGH STATE: NC ZIP: 27601 FORMER COMPANY: FORMER CONFORMED NAME: CP&L ENERGY INC DATE OF NAME CHANGE: 20000314 FORMER COMPANY: FORMER CONFORMED NAME: CP&L HOLDINGS INC DATE OF NAME CHANGE: 19990830 8-K 1 eightkdec18.htm CURRENT REPORT Current REport

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 8-K

CURRENT REPORT

Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

Date of Report (Date of earliest event reported): December 13, 2006

PROGRESS ENERGY, INC.

(Exact Name of Registrant as Specified in Its Charter)

North Carolina

(State or Other Jurisdiction of Incorporation)

1-15929	56-2155481
(Commission File Number)	(IRS Employer Identification No.)

410 S. Wilmington St., Raleigh, North Carolina	27601-1748
(Address of Principal Executive Offices)	(Zip Code)

919-546-6111

(Registrant’s Telephone Number, Including Area Code)

None

(Former Name or Former Address, if Changed Since Last Report)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

o Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

o Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

o Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

o Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

SECTION 2. FINANCIAL INFORMATION

Item 2.05 Costs Associated With Exit Or Disposal Activities.

On December 13, 2006, the board of directors of Progress Energy, Inc. (the “Company”) approved a plan to pursue the disposition of substantially all of Progress Ventures, Inc.’s Competitive Commercial Operations physical and commercial assets (the “CCO Assets”), which include approximately 1,800 megawatts of power generation facilities in Georgia, as well as forward gas and power contracts, gas transportation, storage and structured power and other contracts, including the full requirements contracts with sixteen Georgia Electric Membership Cooperatives (the “Georgia Contracts”). The Company has evaluated various options for the CCO Assets and believes that disposition is the best option for those assets. The disposition plan is expected to be completed during 2007 and the Company expects the net effect on cash to be positive.

As a result of the approval of this disposition plan, year-to-date losses generated by the CCO Assets will be reclassified to discontinued operations. In addition, the disposition plan will result in a net initial after-tax charge of approximately $165 million, which will be reported in the 4th quarter 2006 earnings. This net non-cash charge is expected to be comprised of:

An after-tax impairment charge of approximately $225 million related to the generation assets and intangible assets to reduce the carrying value of the assets that are expected to be sold to their estimated fair value less cost to sell. The impairment will be classified as a component of Discontinued operations - net loss on dispositions in the Company’s 2006 Consolidated Financial Statements.

The reclassification to earnings of approximately $75 million of after-tax deferred gains in accumulated other comprehensive income (AOCI) for cash flow hedges of forecasted gas purchases that will no longer occur as a result of the disposition plan. The reclassification will be presented as a component of Discontinued operations - net operating (loss) income in the Company’s 2006 Consolidated Financial Statements.

·	A $15 million valuation allowance against certain deferred tax assets for state net operating loss carry forwards which are no longer expected to be utilized. This charge will primarily be recorded in Income from continuing operations in the Company’s 2006 Consolidated Financial Statements.

The actual amount of the final impairment charge will vary depending upon changes in market conditions and other factors. The final charge could differ materially from this estimate.

In 2007, the Company anticipates recording additional material charges in discontinued operations related to the disposition plan. These additional charges relate primarily to costs to be incurred to exit the Georgia Contracts. These costs could exceed $200 million after-tax.

Further information about the plan of disposition is set forth in the press release attached hereto as Exhibit 99.1, which is incorporated herein by reference.

Item 2.06 Material Impairments.

The information set forth under “ITEM 2.05 Costs Associated with Exit or Disposal Activities” is incorporated herein by reference.

SECTION 9 - FINANCIAL STATEMENTS AND EXHIBITS

Item 9.01 Financial Statements And Exhibits.

99.1

Press Release dated December 18, 2006.

SIGNATURES

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

PROGRESS ENERGY, INC.

Registrant

By: /s/ Jeffrey M. Stone

Jeffrey M. Stone

Chief Accounting Officer

Date: December 18, 2006

EX-99.1 2 ex991.htm EXHIBIT 99.1 Exhibit 99.1 Exhibit 99.1

Progress Energy board approves plan to sell Progress Ventures

RALEIGH, N.C. (Dec. 18, 2006) - Progress Energy’s [NYSE: PGN] board of directors approved a plan to pursue the disposition of substantially all of Progress Ventures Inc.’s Competitive Commercial Operations physical and commercial assets (CCO). The disposition plan is expected to be completed in 2007, and the company expects the net effect on cash to be positive.

In connection with the plan, Progress Energy will take a net non-cash, after-tax charge of approximately $165 million, or approximately $0.66 per share. The company previously announced the sale of its natural gas businesses which resulted in an after-tax gain of approximately $300 million. Results of both of these actions will be reported in fourth quarter 2006 earnings. Furthermore, as a result of the board’s approval of the disposition plan, accounting standards require the reclassification of CCO’s financial results from continuing to discontinued operations in the fourth quarter.

“We are nearing the completion of our restructuring efforts and I am pleased with our continued success in the execution of the plan,” said Peter Scott, chief financial officer of Progress Energy. “Over the past year, we have reduced our holding company debt, lowered our risk profile and strengthened our balance sheet and credit metrics. We are now better positioned to accommodate the significant future growth we expect to see in our electric utilities.”

The CCO assets to be divested include approximately 1,800 megawatts of power generation located in Georgia, as well as forward gas and power contracts, gas transportation, storage and structured power and other contracts, including the full requirements contracts with sixteen Georgia Electric Membership Cooperatives.

Progress Energy, headquartered in Raleigh, N.C., is a Fortune 250 diversified energy company with more than 23,000 megawatts of generation capacity and $10 billion in annual revenues. The company's holdings include two electric utilities serving approximately 3 million customers in North Carolina, South Carolina and Florida. Progress Energy’s nonregulated operations include energy marketing. Progress Energy is the 2006 recipient of the Edison Electric Institute's Edison Award, the industry's highest honor, in recognition of its operational excellence. In 2005, the company also received the prestigious J.D. Power and Associates Founder's Award for dedication, commitment and sustained improvement in customer service. For more information about Progress Energy, visit the company's Web site at 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 forward-looking statements involve estimates, projections, goals, forecasts, assumptions, risk and uncertainties that could cause actual results or outcomes to differ materially from those expressed in the forward-looking statements. Examples of forward-looking statements in the above release include, but are not limited to, (i) the actual amounts of various charges resulting from approval of the CCO asset disposition plan, (ii) any assumptions concerning the timing of the disposition of the CCO assets or the company’s ability to ultimately dispose of those assets and (iii) expectations of future growth of the company, the company’s earnings or the utility industry in genera. Any forward-looking statement is based on information current as of the date of this report 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.

Contact: Corporate Communications, 919-546-6189 or toll-free (877) 641-NEWS (6397)

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