-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, F49BsYGT3ZLv8EHDlZA3DCZAo/VWNvacpN4L4OGQGtohZosrYI+JtgNepzK1Shbo bB6g1nw/A+H7deBBBFcz7A== 0001094093-05-000236.txt : 20050728 0001094093-05-000236.hdr.sgml : 20050728 20050728090457 ACCESSION NUMBER: 0001094093-05-000236 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 20050630 ITEM INFORMATION: Results of Operations and Financial Condition ITEM INFORMATION: Financial Statements and Exhibits FILED AS OF DATE: 20050728 DATE AS OF CHANGE: 20050728 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: 05979179 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 FILER: COMPANY DATA: COMPANY CONFORMED NAME: FLORIDA POWER CORP / CENTRAL INDEX KEY: 0000037637 STANDARD INDUSTRIAL CLASSIFICATION: ELECTRIC SERVICES [4911] IRS NUMBER: 590247770 STATE OF INCORPORATION: FL FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 8-K SEC ACT: 1934 Act SEC FILE NUMBER: 001-03274 FILM NUMBER: 05979180 BUSINESS ADDRESS: STREET 1: 3201 34TH ST SOUTH STREET 2: ONE PROGRESS PLAZA CITY: ST PETERSBURG STATE: FL ZIP: 33701 BUSINESS PHONE: 7278205151 FILER: COMPANY DATA: COMPANY CONFORMED NAME: FLORIDA PROGRESS CORP CENTRAL INDEX KEY: 0000357261 STANDARD INDUSTRIAL CLASSIFICATION: ELECTRIC SERVICES [4911] IRS NUMBER: 592147112 STATE OF INCORPORATION: FL FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 8-K SEC ACT: 1934 Act SEC FILE NUMBER: 001-08349 FILM NUMBER: 05979181 BUSINESS ADDRESS: STREET 1: ONE PROGRESS PLAZA STREET 2: STE 2600 CITY: ST PETERSBURG STATE: FL ZIP: 33701 BUSINESS PHONE: 7278246400 MAIL ADDRESS: STREET 1: ONE PROGRESS PLZ STREET 2: SUITE 2600 CITY: ST PETERSBURG STATE: FL ZIP: 33701 FILER: COMPANY DATA: COMPANY CONFORMED NAME: CAROLINA POWER & LIGHT CO CENTRAL INDEX KEY: 0000017797 STANDARD INDUSTRIAL CLASSIFICATION: ELECTRIC SERVICES [4911] IRS NUMBER: 560165465 STATE OF INCORPORATION: NC FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 8-K SEC ACT: 1934 Act SEC FILE NUMBER: 001-03382 FILM NUMBER: 05979182 BUSINESS ADDRESS: STREET 1: 411 FAYETTEVILLE ST CITY: RALEIGH STATE: NC ZIP: 27601 BUSINESS PHONE: 9195466111 8-K 1 pei_2q058k-.txt 2005 2ND QTR EARNING RELEASE 8K As filed with the Securities and Exchange Commission on July 28, 2005 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): July 28, 2005 Commission Exact name of registrants as specified in their charters, I.R.S. Employer File Number state of incorporation, address of principal executive Identification Number offices, and telephone number 1-15929 Progress Energy, Inc. 56-2155481 410 S. Wilmington Street Raleigh, North Carolina 27601-1748 Telephone: (919) 546-6411 State of Incorporation: North Carolina 1-8349 Florida Progress Corporation 59-2147112 410 S. Wilmington Street Raleigh, North Carolina 27601-1748 Telephone: (919) 546-6111 State of Incorporation: Florida 1-3274 Florida Power Corporation 59-0247770 d/b/a Progress Energy Florida, Inc. 100 Central Avenue St. Petersburg, Florida 33701-3324 Telephone: (727) 820-5151 State of Incorporation: Florida 1-3382 Carolina Power & Light Company 56-0165465 d/b/a Progress Energy Carolinas, Inc. 410 S. Wilmington Street Raleigh, North Carolina 27601-1748 Telephone: (919) 546-6411 State of Incorporation: North Carolina
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: - -- Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) - -- Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) - -- Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) - -- Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) This combined Form 8-K is filed separately by four registrants: Progress Energy, Inc., Florida Progress Corporation, Carolina Power & Light Company d/b/a Progress Energy Carolinas, Inc. and Florida Power Corporation d/b/a Progress Energy Florida, Inc. and information contained herein relating to any individual registrant is filed by such registrant solely on its own behalf, and is not, and shall not, be deemed to be filed or disclosed by any other registrant. Section 2 Financial Information and Section 7 Regulation FD Item 2.02 Results of Operations and Financial Condition and Item 7.01 Regulation FD Disclosure This Current Report on Form 8-K and the earnings press release attached hereto are being furnished by the registrants pursuant to Section 2, Item 2.02 of Form 8-K, in accordance with SEC Release Nos. 33-8216; 34-47583, insofar as they disclose historical information regarding the Registrants' results of operations or financial condition for the quarter ended June 30, 2005. On July 28, 2005, Progress Energy, Inc., issued a press release regarding its earnings for the quarter ended June 30, 2005. A copy of this release is being furnished as Exhibit 99.1 to this Current Report on Form 8-K. The press release contains business segment information for the Progress Energy Carolinas and Progress Energy Florida business units, which are substantially similar to the standalone operations of each of Progress Energy Carolinas, Inc. and Progress Energy Florida, Inc. (which is in turn a significant subsidiary of Florida Progress Corporation). Accordingly, this current report is also being furnished on behalf of each such registrant. In accordance with General Instruction B.2 of Form 8-K, the information in this Current Report on Form 8-K, including Exhibit 99.1, shall not be deemed "filed" for the purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or otherwise subject to the liabilities of that section, nor shall it be deemed incorporated by reference in any filing under the Securities Act of 1933, as amended, or the Securities Exchange Act of 1934, as amended, except as shall be expressly set forth by specific reference in such a filing. Item 9 Financial Statements and Exhibits Item 9.01 Financial Statements and Exhibits (c) Exhibits 99.1 Press Release dated July 28, 2005 with respect to financial results for the quarter ended June 30, 2005. SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, each of the registrants has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized. PROGRESS ENERGY, INC. FLORIDA PROGRESS CORPORATION FLORIDA POWER CORPORATION d/b/a PROGRESS ENERGY FLORIDA, INC. and CAROLINA POWER & LIGHT COMPANY d/b/a PROGRESS ENERGY CAROLINAS, INC. Registrants By: /s/ Jeffrey M. Stone --------------------------------- Jeffrey M. Stone Controller and Chief Accounting Officer Date: July 28, 2005 Index to Exhibits Exhibit No. Description 99.1 Press Release dated July 28, 2005 with respect to financial results for the quarter ended June 30, 2005. EX-99.1 2 pei_8k2qexhibit991-.txt 2005 2ND QTR 8K - EXHIBIT 99.1 Progress Energy Announces 2005 Second-Quarter Results Quarterly Highlights: o Reports quarterly ongoing earnings of $0.63 per share, GAAP net loss of $0.01 per share o Includes quarterly ongoing earnings adjustments of $0.36 per share related to post-retirement and severance charges and $0.25 per share of intraperiod tax allocation o Reports year-to-date ongoing earnings of $1.14 per share, GAAP earnings of $0.37 per share o Reaffirms 2005 ongoing earnings guidance of $2.90 - $3.20 per share RALEIGH, N.C. (July 28, 2005) - Progress Energy [NYSE: PGN] today reported ongoing earnings of $155 million, or $0.63 per share, for the second quarter of 2005 compared with ongoing earnings of $185 million, or $0.76 per share, for the second quarter of 2004. Reported consolidated net loss under generally accepted accounting principles (GAAP) was $1 million, or $0.01 per share, for the quarter compared with reported consolidated net income of $154 million, or $0.63 per share, for the second quarter of 2004. See the table that follows for a reconciliation of ongoing earnings per share to GAAP earnings per share. Core ongoing earnings, which include the results of Progress Energy Carolinas, Progress Energy Florida and Progress Ventures, excluding synthetic fuels, were $0.54 per share for the quarter compared to $0.61 per share for the same period last year. The primary drivers of the decrease in core ongoing earnings were milder weather and the write-off of unrecoverable storm costs associated with the 2004 hurricanes. Partially offsetting these factors were the positive impacts of one less planned nuclear refueling outage compared with 2004 and the gain on the sale of the city of Winter Park, Florida's distribution system. "I'm very pleased with the execution of our strategy so far this year," said Bob McGehee, chairman and CEO of Progress Energy. "We have achieved several of our key milestones - including an outstanding start to our cost-management initiative and the regulatory ruling on recovering the 2004 hurricane costs. Obviously, milder weather has impacted our earnings this quarter, but the third quarter is off to a good start temperature-wise. I am confident in reaffirming our 2005 ongoing earnings guidance of $2.90 to $3.20 per share." Non-core earnings from the synthetic fuel operations were $0.09 per share for the quarter compared with ongoing earnings of $0.15 per share for the same period last year. The primary drivers of the decrease in non-core earnings were due to lower synthetic fuel sales of 0.4 million tons compared to last year as a result of a change in the planned production schedule and higher production costs. Ongoing earnings for the six months ended June 30, 2005, were $279 million, or $1.14 per share, compared with ongoing earnings of $330 million, or $1.36 per share, for the first half of 2004. Reported GAAP consolidated net income for the first half of 2005 was $92 million, or $0.37 per share, compared with consolidated net income of $262 million, or $1.08 per share, for the first half of 2004. The following table provides a reconciliation of ongoing earnings per share to reported GAAP earnings per share. A detailed discussion of these items is provided later in this release under the caption "Ongoing Earnings Adjustments." Progress Energy, Inc. Reconciliation of Ongoing Earnings per Share to Reported GAAP Earnings per Share Three months ended June 30 2005 2004* ----------------------------------- -------------------------------------- Core Non-core Total Core Non-core Total Ongoing earnings per share $ 0.54 $ 0.09 $ 0.63 $ 0.61 $ 0.15 $ 0.76 Intraperiod tax allocation (0.25) - (0.25) (0.02) - (0.02) CVO mark-to-market - - - (0.02) - (0.02) Progress Rail discontinued operations (0.03) - (0.03) 0.03 - 0.03 Postretirement and severance charges (0.36) - (0.36) - - - SRS litigation settlement - - - (0.12) - (0.12) ----------- ------------ ---------- ----------- ------------ ------------- Reported GAAP earnings per share $ (0.10) $ 0.09 $ (0.01) $ 0.48 $ 0.15 $ 0.63 =========== ============ ========== =========== ============ ============= Shares outstanding (millions) 246 242
Progress Energy, Inc. Reconciliation of Ongoing Earnings per Share to Reported GAAP Earnings per Share Six months ended June 30 2005 2004* ----------------------------------- -------------------------------------- Core Non-core Total Core Non-core Total Ongoing earnings per share $ 1.05 $ 0.09 $ 1.14 $ 1.06 $ 0.30 $ 1.36 Intraperiod tax allocation (0.26) - (0.26) (0.18) - (0.18) CVO mark-to-market - - - (0.05) - (0.05) Progress Rail discontinued operations (0.08) - (0.08) 0.07 - 0.07 Postretirement and severance charges (0.43) - (0.43) - - - SRS litigation settlement - - - (0.12) - (0.12) ----------- ------------ ---------- ----------- ------------ ------------- Reported GAAP earnings per share $ 0.28 $ 0.09 $ 0.37 $ 0.78 $ 0.30 $ 1.08 =========== ============ ========== =========== ============ ============= Shares outstanding (millions) 245 242
* The prior year ongoing earnings have been restated to reflect the operations of Progress Rail as discontinued operations. 2 The 2005 ongoing earnings guidance of $2.90 to $3.20 per share excludes any impacts from the CVO mark-to-market adjustment, discontinued operations of Progress Rail, and the postretirement and severance charges associated with the cost-management initiative and voluntary enhanced retirement program. The nature of these adjustments is discussed under the heading "Ongoing Earnings Adjustments." Progress Energy is not able to provide a corresponding GAAP equivalent for the 2005 earnings guidance figures due to the uncertain nature and amount of these adjustments. SIGNIFICANT DEVELOPMENTS Financial Accounting Standards Board Issues Exposure Draft On July 14, 2005, the Financial Accounting Standards Board (FASB) issued an exposure draft of a proposed interpretation of SFAS No. 109, "Accounting for Income Taxes," that would address the accounting for uncertain tax positions. The proposed interpretation, as currently drafted, could have a material impact on the company's evaluation and recognition of Section 29 tax credits generated by its Earthco facilities. The exposure draft has a 60-day public comment period ending September 12, 2005, and the company intends to provide comments during this period. Florida Public Service Commission Rules on Storm Cost Recovery On June 21, 2005, the Florida Public Service Commission (FPSC) ruled that Progress Energy Florida can begin recovering approximately $232 million of costs incurred to respond to the four hurricanes in 2004. This amount was based on the initial request of $252 million, and Progress Energy Florida may begin recovering the costs in August 2005. The complete press release regarding this announcement is available on the company's Web site at: http://www.progress-energy.com/aboutus/news/article.asp?id=11942. Progress Energy Carolinas Files for Fuel Recovery in North Carolina On June 3, 2005, Progress Energy Carolinas filed for an increase in the fuel rate charged to its North Carolina customers. Progress Energy Carolinas is asking the North Carolina Utilities Commission to approve a $276 million increase in the fuel components of its rates. Progress Energy Carolinas requested the change to recoup unrecovered fuel costs for the previous 12 months and to meet expected fuel costs in the near future. If approved, the increase would take effect October 1, 2005. The complete press release regarding this announcement is available on the company's Web site at: http://www.progress-energy.com/aboutus/news/article.asp?id=11862. South Carolina Public Service Commission Approves Fuel Factor Increase On May 25, 2005, the South Carolina Public Service Commission approved an increase in the fuel component of rates for Progress Energy Carolinas' South Carolina customers. The agreement spreads a portion of the cost recovery over three years with the new rates effective on July 1, 2005. The complete press release regarding this announcement is available on the company's Web site at: http://www.progress-energy.com/aboutus/news/article.asp?id=11842. 3 Florida's Governor Bush Signs Storm Securitization Bill into Law On June 1, 2005, Florida's Governor Jeb Bush signed legislation authorizing electric utilities to petition the FPSC to use securitized bonds to recover catastrophic storm costs. Progress Energy Florida intends to ask the FPSC for approval to issue securitized debt and expects the regulatory approval and financing process to take six to nine months. This arrangement would benefit the company by providing immediate cash recovery of the hurricane costs and would benefit the customer by providing a longer recovery period, which would reduce the price impact. Progress Energy Florida Files Base Rate Plan On April 29, 2005, Progress Energy Florida filed a request with the FPSC for a new base rate plan beginning January 1, 2006. Progress Energy Florida is seeking to increase base rates by approximately $206 million annually to support new power plants, increase the storm reserve fund and better reflect the costs of providing reliable power to customers in one of the fastest-growing regions in the country. The complete press release regarding this announcement is available on the company's Web site at: http://www.progress-energy.com/aboutus/news/article.asp?id=11662. LINE OF BUSINESS FINANCIAL INFORMATION Progress Energy Carolinas Progress Energy Carolinas electric energy operations contributed GAAP net income of $68 million for the current quarter compared with $97 million for the same period last year. This quarter's earnings were negatively impacted by postretirement and severance charges and milder weather. Partially offsetting these factors were the positive impacts of one less planned nuclear refueling outage compared with 2004 and increased growth and usage. The results for the current quarter include an increase in income tax expense to apply an effective tax rate to interim periods that is consistent with the annual rate. For the six months ended June 30, 2005, Progress Energy Carolinas electric energy operations contributed GAAP net income of $184 million compared with $213 million for the same period last year. See the attached Supplemental Data schedules for additional information on Progress Energy Carolinas electric revenues, energy sales, energy supply, weather impacts and the postretirement and severance charges. Progress Energy Florida Progress Energy Florida electric energy operations contributed GAAP net income of $10 million for the quarter compared with $84 million for the same period last year. This quarter's earnings were negatively impacted by higher O&M expenses, milder weather and lower average usage per retail customer. These factors were partially offset by the gain on the sale of the city of Winter Park's distribution system and increased retail customer growth. Higher O&M 4 expenses were primarily attributable to postretirement and severance charges, the write-off of unrecoverable storm costs associated with the 2004 hurricanes and the change in accounting estimates for certain Energy Delivery capital costs. The results for the current quarter include an increase in income tax expense to apply an effective tax rate to interim periods that is consistent with the annual rate. For the six months ended June 30, 2005, Progress Energy Florida electric energy operations contributed GAAP net income of $53 million compared with $133 million for the same period last year. See the attached Supplemental Data schedules for additional information on Progress Energy Florida electric revenues, energy sales, energy supply, weather impacts and the postretirement and severance charges. Progress Ventures, excluding synthetic fuels The Progress Ventures operations, excluding synthetic fuels, consist of Progress Fuels, which includes natural gas production and coal mining, and Competitive Commercial Operations, which includes nonregulated generation and energy marketing activities. The Progress Ventures business unit, excluding synthetic fuels, had GAAP net income of $9 million for the quarter compared with $22 million for the same period last year. This quarter's earnings were negatively impacted by postretirement and severance charges. Progress Fuels, excluding synthetic fuels, generated GAAP net income of $12 million for the current quarter compared with $17 million for the same period last year. This quarter's earnings were negatively impacted by increased mining and production costs, lower gas production as a result of the sale of certain gas assets in 2004, and lower coal sales volume. These factors were partially offset by higher margins on the remaining gas assets. Competitive Commercial Operations recorded a GAAP net loss of $3 million for the quarter compared with GAAP net income of $5 million for the same period last year. This quarter's results were negatively impacted by lower contract margins primarily as a result of the expiration of certain tolling agreements and lower at-market sales. These factors were partially offset by increased earnings from the new full-requirements contracts and increased load on an existing contract. For the six months ended June 30, 2005, Progress Ventures, excluding synthetic fuels, contributed GAAP net income of $14 million compared with $24 million for the same period last year. Other Businesses Other businesses include Progress Telecom and other small subsidiaries. Other businesses had a GAAP net loss of $2 million for the quarter compared with a GAAP net loss of $31 million for the same period last year. Results from the quarter ended June 30, 2004, included a $29 million after-tax charge recorded by SRS related to a civil litigation settlement. For the six months ended June 30, 2005, other businesses reported a GAAP net loss of $2 million compared with a GAAP net loss $35 million for the same period last year. 5 Corporate Corporate results, which primarily include interest expense on holding company debt, incurred ongoing operating losses of $53 million for the quarter compared with ongoing operating losses of $51 million for the same period last year. For the six months ended June 30, 2005, corporate results had ongoing operating losses of $108 million compared with $106 million for the same period last year. Synthetic Fuels Synthetic fuels operations generated GAAP net income of $23 million for the quarter compared with GAAP net income of $36 million for the same period last year. Earnings were negatively impacted by lower sales and higher production costs. Total synthetic fuel sales were 2.3 million tons for the quarter compared with 2.7 million tons for the same period last year. The decrease in sales is primarily attributable to a change in the quarterly planned production schedule in 2005 compared to 2004. For the six months ended June 30, 2005, synthetic fuel operations reported GAAP net income of $22 million compared with $72 million for the same period last year. 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 compare more accurately 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. Reconciling adjustments from GAAP earnings to ongoing earnings as they relate to the current quarter and information included in the Supplemental Data schedules are as follows: Intraperiod Tax Allocation 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 tax credits generated from synthetic fuel operations reduce Progress Energy's overall effective tax rate. The company's synthetic fuel sales are not subject to seasonal fluctuations to the same extent as the electric utility earnings. 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. On the other hand, operating losses incurred to produce the tax credits are included in the current quarter. The resulting tax adjustment decreased earnings per share by $0.25 for the quarter and by $0.02 for the same period last year, but has no impact on the company's annual earnings. An effective tax rate adjustment was also recorded for Progress Energy Carolinas and Progress Energy Florida this quarter. Since 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. 6 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 to receive contingent payments based on after-tax cash flows above certain levels of four synthetic fuel facilities purchased by subsidiaries of Florida Progress Corporation in October 1999. The CVOs are debt instruments and, under GAAP, are valued at market value. Unrealized gains and losses from changes in market value are recognized in earnings each quarter. The CVO mark-to-market had no impact during the quarter and decreased earnings per share by $0.02 for the same period last year. Since changes in the market value of the CVOs do not affect the company's underlying obligation, management does not consider the adjustment a component of ongoing earnings. Progress Rail Discontinued Operations The sale of Progress Rail Services Corp. (Progress Rail) to One Equity Partners, LLC closed on March 24, 2005, and the net proceeds were used to pay down debt. Progress Rail had a discontinued loss of $7 million for the quarter compared with discontinued earnings of $8 million in the prior year. The current quarter's results include an additional after-tax loss on the sale due to working capital adjustments and adjustments to the estimated loss on the sale. The company anticipates adjustments to the loss on the divestiture during the third quarter of 2005 related to employee benefit settlements and the finalization of the working capital adjustment and other operating expenses. For the six months ended June 30, 2005, Progress Rail had a discontinued loss of $19 million compared with discontinued earnings of $16 million in the prior year. Due to its sale, the operations of Progress Rail are reported as discontinued operations in the accompanying financial statements and therefore management does not believe this activity is representative of the ongoing operations of the company. Cost-Management Restructuring Charge On February 28, 2005, as part of a previously announced cost-management initiative, Progress Energy approved a workforce restructuring, which will result in a reduction of approximately 450 positions and is expected to be completed in September 2005. In connection with the cost-management initiative, the company incurred approximately $176 million of estimated pre-tax charges. Approximately $18 million of this amount relates to estimated future payments for severance benefits that will be paid out over time. The remaining $158 million relates to postretirement and termination benefits that will be paid out over time to the 1,450 eligible employees who elected to participate in the voluntary enhanced retirement program. The cost-management initiative charges are subject to revision in future quarters based on the completion of the workforce restructuring and the potential additional impacts that the early retirements and outplacements may have on the company's postretirement plans. Such revisions may be significant. In addition, the company expects to incur certain incremental costs other than severance and postretirement benefits for recruiting and staff augmentation activities that cannot be quantified at this time. Due to the nonrecurring nature of the adjustment, management believes it is not representative of the company's ongoing operations. 7 SRS Litigation Settlement In June 2004, SRS, a subsidiary of the company, reached a settlement agreement in a civil suit with the San Francisco Unified School District. As a result, the company recorded a charge of approximately $29 million after-tax in the second quarter 2004. Management does not believe this settlement charge is indicative of ongoing operations of the company. * * * * 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. Progress Energy's conference call with the investment community will be held July 28, 2005, at 10 a.m. ET (7 a.m. PT) and will be hosted by Bob McGehee, chairman and chief executive officer, and Geoff Chatas, executive vice president and chief financial officer. Investors, media and the public may listen to the conference call by dialing 913-981-4913, confirmation code 9587784. Should you encounter problems, please contact Tammy Blankenship at 919-546-2233. A playback of the call will be available from 1 p.m. ET July 28 through midnight August 11, 2005. To listen to the recorded call, dial 719-457-0820 and enter confirmation code 9587784. A webcast of the live conference call will be available at www.progress-energy.com. The webcast will be available in Windows Media format. The webcast will be archived on the site for those unable to listen in real time. Members of the media are invited to listen to the conference call and then participate in a media-only question and answer session with Geoff Chatas starting at 11 a.m. ET. To participate in this session, please dial 719-457-2602, confirmation code 4170487. Progress Energy (NYSE: PGN), headquartered in Raleigh, N.C., is a Fortune 250 diversified energy company with more than 24,000 megawatts of generation capacity and $9 billion in annual revenues. The company's holdings include two electric utilities serving more than 2.9 million customers in North Carolina, South Carolina and Florida. Progress Energy also includes nonregulated operations covering generation, energy marketing, natural gas production, fuel extraction and broadband capacity. For more information about Progress Energy, visit the company's Web site at www.progress-energy.com. This document 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. Any forward-looking statement speaks only as of the date 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. Examples of factors that you should consider with respect to any forward-looking statements made in this document include, but are not limited to, the following: the impact of fluid and complex government laws and regulations, including those relating to the environment; deregulation or restructuring in the electric industry that may result in increased competition and unrecovered (stranded) costs; the uncertainty regarding the timing, creation and structure of regional transmission organizations; weather conditions that 8 directly influence the demand for electricity; our ability to recover through the regulatory process, and the timing of such recovery of, the costs associated with the four hurricanes that impacted our service territory in 2004 or other future significant weather events; recurring seasonal fluctuations in demand for electricity; fluctuations in the price of energy commodities and purchased power; economic fluctuations and the corresponding impact on our commercial and industrial customers; the ability of our subsidiaries to pay upstream dividends or distributions to us; the impact on our facilities and the businesses from a terrorist attack; the inherent risks associated with the operation of nuclear facilities, including environmental, health, regulatory and financial risks; the ability to successfully access capital markets on favorable terms; our ability to maintain our current credit ratings and the impact on our financial condition and ability to meet cash and other financial obligations in the event our credit ratings are downgraded below investment grade; the impact that increases in leverage may have on us; the impact of derivative contracts used in the normal course of business by us; investment performance of pension and benefit plans; our ability to control costs, including pension and benefit expense, and achieve its cost management targets for 2007; the availability and use of Internal Revenue Code Section 29 (Section 29) tax credits by synthetic fuel producers and our continued ability to use Section 29 tax credits related to our coal and synthetic fuel businesses; the impact to our financial condition and performance in the event it is determined we are not entitled to previously taken Section 29 tax credits; the impact of proposed accounting pronouncements regarding uncertain tax positions; the outcome of Progress Energy Florida's rate proceeding in 2005 regarding its future base rates; our ability to manage the risks involved with the operation of our nonregulated plants, including dependence on third parties and related counter-party risks, and a lack of operating history; our ability to manage the risks associated with our energy marketing operations; 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 subsidiaries. These and other risk factors are detailed from time to time in our SEC reports. All such factors are difficult to predict, contain uncertainties that may materially affect actual results, and may be beyond our ability to control or estimate precisely. New factors emerge from time to time, and it is not possible for management to predict all such factors or to assess the effect each such factor will have on us. # # # Contacts: Investor Relations, Bob Drennan, 919-546-7474 Corporate Communications, Garrick Francis, 919-546-6189, or toll-free 877-641-NEWS (6397) 9 PROGRESS ENERGY, INC. CONSOLIDATED INTERIM FINANCIAL STATEMENTS June 30, 2005 UNAUDITED CONSOLIDATED STATEMENTS of INCOME Three months ended Six months ended June 30 June 30 - ----------------------------------------------------------------------------------------------------------- (in millions except per share data) 2005 2004 2005 2004 - ----------------------------------------------------------------------------------------------------------- Operating revenues Utility $ 1,768 $ 1,721 $ 3,551 $ 3,406 Diversified business 565 402 980 723 - ----------------------------------------------------------------------------------------------------------- Total operating revenues 2,333 2,123 4,531 4,129 - ----------------------------------------------------------------------------------------------------------- Operating expenses Utility Fuel used in electric generation 529 468 1,079 961 Purchased power 217 219 415 402 Operation and maintenance 543 372 949 735 Depreciation and amortization 207 207 415 409 Taxes other than income 108 109 225 214 Diversified business Cost of sales 539 388 934 699 Depreciation and amortization 43 42 82 83 Other 31 31 63 61 - ----------------------------------------------------------------------------------------------------------- Total operating expenses 2,217 1,836 4,162 3,564 - ----------------------------------------------------------------------------------------------------------- Operating income 116 287 369 565 - ----------------------------------------------------------------------------------------------------------- Other income (expense) Interest income 4 4 8 6 Other, net 19 (3) 21 (25) - ----------------------------------------------------------------------------------------------------------- Total other income (expense) 23 1 29 (19) - ----------------------------------------------------------------------------------------------------------- Interest charges Net interest charges 168 157 334 318 Allowance for borrowed funds used during construction (4) (2) (7) (3) - ----------------------------------------------------------------------------------------------------------- Total interest charges, net 164 155 327 315 - ----------------------------------------------------------------------------------------------------------- (Loss) income from continuing operations before income tax and minority interest (25) 133 71 231 Income tax benefit 22 12 23 14 - ----------------------------------------------------------------------------------------------------------- (Loss) income from continuing operations before minority (3) 145 94 245 interest Minority interest in subsidiaries' loss, net of tax 9 1 17 - - ----------------------------------------------------------------------------------------------------------- Income from continuing operations 6 146 111 245 Discontinued operations, net of tax (7) 8 (19) 17 - ----------------------------------------------------------------------------------------------------------- Net (loss) income $ (1) $ 154 $ 92 $ 262 - ----------------------------------------------------------------------------------------------------------- Average common shares outstanding 246 242 245 242 - ----------------------------------------------------------------------------------------------------------- Basic earnings per common share Income from continuing operations $ 0.02 $ 0.60 $ 0.45 $ 1.01 Discontinued operations, net of tax (0.03) 0.03 (0.08) 0.07 Net (loss) income $ (0.01) $ 0.63 $ 0.37 $ 1.08 - ----------------------------------------------------------------------------------------------------------- Diluted earnings per common share Income from continuing operations $ 0.02 $ 0.60 $ 0.45 $ 1.01 Discontinued operations, net of tax (0.03) 0.03 (0.08) 0.07 Net (loss) income $ (0.01) $ 0.63 $ 0.37 $ 1.08 - ----------------------------------------------------------------------------------------------------------- Dividends declared per common share $ 0.590 $ 0.575 $ 1.180 $ 1.120 - -----------------------------------------------------------------------------------------------------------
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 CONSOLIDATED BALANCE SHEETS (in millions) June 30 December 31 ASSETS 2005 2004 - -------------------------------------------------------------------------------------------------------- Utility plant Utility plant in service $ 22,320 $ 22,103 Accumulated depreciation (9,341) (8,783) - -------------------------------------------------------------------------------------------------------- Utility plant in service, net 12,979 13,320 Held for future use 6 13 Construction work in process 1,001 799 Nuclear fuel, net of amortization 230 231 - -------------------------------------------------------------------------------------------------------- Total utility plant, net 14,216 14,363 - -------------------------------------------------------------------------------------------------------- Current Assets Cash and cash equivalents 141 56 Short-term investments 40 82 Receivables, net 995 911 Inventory 801 805 Deferred fuel cost 231 229 Deferred income taxes 100 114 Assets of discontinued operations - 577 Prepayments and other current assets 235 174 - -------------------------------------------------------------------------------------------------------- Total current assets 2,543 2,948 - -------------------------------------------------------------------------------------------------------- Deferred debits and other assets Regulatory assets 1,001 1,064 Nuclear decommissioning trust funds 1,081 1,044 Diversified business property, net 1,917 1,838 Miscellaneous other property and investments 502 444 Goodwill 3,719 3,719 Intangibles, net 321 337 Other assets and deferred debits 346 262 - -------------------------------------------------------------------------------------------------------- Total deferred debits and other assets 8,887 8,708 - -------------------------------------------------------------------------------------------------------- Total assets $ 25,646 $ 26,019 - -------------------------------------------------------------------------------------------------------- CAPITALIZATION AND LIABILITIES - -------------------------------------------------------------------------------------------------------- Common stock equity Common stock without par value, 500 million shares authorized, 251 and 247 million shares issued and outstanding, respectively $ 5,540 $ 5,360 Unearned restricted shares (16) (13) Unearned ESOP shares (63) (76) Accumulated other comprehensive loss (113) (164) Retained earnings 2,327 2,526 - -------------------------------------------------------------------------------------------------------- Total common stock equity 7,675 7,633 - -------------------------------------------------------------------------------------------------------- Preferred stock of subsidiaries - not subject to mandatory redemption 93 93 Minority interest 41 36 Long-term debt, affiliate 270 270 Long-term debt, net 9,041 9,251 - -------------------------------------------------------------------------------------------------------- Total capitalization 17,120 17,283 - -------------------------------------------------------------------------------------------------------- Current Liabilities Current portion of long-term debt 848 349 Accounts payable and accrued liabilities 576 630 Interest accrued 221 219 Dividends declared 147 145 Short-term obligations 403 684 Customer deposits 189 180 Liabilities of discontinued operations - 152 Other current liabilities 666 703 - -------------------------------------------------------------------------------------------------------- Total current liabilities 3,050 3,062 - -------------------------------------------------------------------------------------------------------- Deferred credits and other liabilities Noncurrent income tax liabilities 532 625 Accumulated deferred investment tax credits 170 176 Regulatory liabilities 2,451 2,654 Asset retirement obligations 1,229 1,282 Other liabilities and deferred credits 1,094 937 - -------------------------------------------------------------------------------------------------------- Total deferred credits and other liabilities 5,476 5,674 - -------------------------------------------------------------------------------------------------------- Commitments and contingencies - -------------------------------------------------------------------------------------------------------- Total capitalization and liabilities $ 25,646 $ 26,019 - --------------------------------------------------------------------------------------------------------
PROGRESS ENERGY, INC. UNAUDITED CONSOLIDATED STATEMENTS OF CASH FLOWS - ------------------------------------------------------------------------------------------------------ (in millions) Six months ended June 30, 2005 2004 - ------------------------------------------------------------------------------------------------------ Operating activities Net income $ 92 $ 262 Adjustments to reconcile net income to net cash provided by operating activities: Discontinued operations, net of tax 19 (17) Charges for voluntary enhanced retirement program 158 - Depreciation and amortization 556 549 Deferred income taxes (132) (203) Investment tax credit (6) (6) Tax levelization 63 43 Deferred fuel cost - 13 Other adjustments to net income 61 27 Cash provided (used) by changes in operating assets and liabilities: Receivables (60) (138) Inventory (90) (2) Prepayments and other current assets (27) (18) Accounts payable 76 72 Other current liabilities (68) 230 Regulatory assets and liabilities (59) 10 Other (3) 80 - ------------------------------------------------------------------------------------------------------ Net cash provided by operating activities 580 902 - ------------------------------------------------------------------------------------------------------ Investing activities Gross utility property additions (539) (473) Diversified business property additions (130) (93) Nuclear fuel additions (67) (47) Proceeds from sales of subsidiaries and other investments, net of cash 436 94 divested Purchases of short-term investments (2,804) (651) Proceeds from sales of short-term investments 2,846 853 Other (41) (37) - ------------------------------------------------------------------------------------------------------ Net cash used in investing activities (299) (354) - ------------------------------------------------------------------------------------------------------ Financing activities Issuance of common stock 171 59 Issuance of long-term debt 792 1 Net (decrease) increase in short-term indebtedness (281) 624 Retirement of long-term debt (517) (865) Dividends paid on common stock (289) (278) Other (42) (61) - ------------------------------------------------------------------------------------------------------ Net cash used in financing activities (166) (520) - ------------------------------------------------------------------------------------------------------ Cash used by discontinued operations: Operating activities (26) (4) Investing activities (4) (8) Financing activities - - Net increase in cash and cash equivalents 85 16 Cash and cash equivalents at beginning of period 56 35 - ------------------------------------------------------------------------------------------------------ Cash and cash equivalents at end of the period $ 141 $ 51 - ------------------------------------------------------------------------------------------------------
Progress Energy, Inc. SUPPLEMENTAL DATA Page S-1 Unaudited Progress Energy, Inc. Earnings Variances Second Quarter 2005 vs. 2004 Regulated Utilities ------------------- Fuels, excluding Corporate and synthetic Other Core ($ per share) Carolinas Florida fuels CCO Businesses Business Synthetic fuels Consolidated - ------------------------------------------------------------------------------------------------------------------------------- 2004 GAAP earnings 0.40 0.34 0.07 0.02 (0.35) 0.48 0.15 0.63 Intraperiod tax allocation 0.02 0.02 A 0.02 CVO mark-to-market 0.02 0.02 B 0.02 Rail discontinued operations (0.03) (0.03) C (0.03) SRS Litigation Settlement 0.12 0.12 D 0.12 - ------------------------------------------------------------------------------------------------------------------------------- 2004 ongoing earnings 0.40 0.34 0.07 0.02 (0.22) 0.61 0.15 0.76 - ------------------------------------------------------------------------------------------------------------------------------- Weather - retail (0.07) (0.01) (0.08) (0.08) Other retail - growth and usage 0.02 (0.02) 0.00 0.00 Wholesale 0.01 0.01 0.02 F 0.02 Retail revenue sharing - 0.01 0.01 0.01 Other margin 0.01 0.01 0.02 G 0.02 O&M 0.03 (0.09) (0.06) H (0.06) Utility depreciation and amortization(0.01) - (0.01) I (0.01) Other 0.03 0.06 0.09 J 0.09 Interest charges (0.01) (0.01) (0.02) K (0.02) Net diversified business (0.01) (0.03) 0.01 (0.03) L (0.06) M (0.09) Share dilution (0.01) (0.01) (0.01) - ------------------------------------------------------------------------------------------------------------------------------- 2005 ongoing earnings 0.40 0.30 0.06 (0.01) (0.21) 0.54 0.09 0.63 - ------------------------------------------------------------------------------------------------------------------------------- Intraperiod tax allocation (0.01) (0.03) (0.21) (0.25) A (0.25) CVO mark-to-market - - - Rail discontinued operations (0.03) (0.03) C (0.03) Postretirement and severance charges (0.11) (0.23) (0.01) - (0.01) (0.36) E (0.36) - ------------------------------------------------------------------------------------------------------------------------------- 2005 GAAP earnings 0.28 0.04 0.05 (0.01) (0.46) (0.10) 0.09 (0.01) - -------------------------------------------------------------------------------------------------------------------------------
Corporate and Other Businesses includes Progress Telecom, Progress Rail, other small subsidiaries, Holding Company interest expense, CVO mark-to-market, intraperiod tax allocations, purchase accounting transactions and corporate eliminations. A - Intraperiod income tax allocation impact, related to cyclical nature of energy demand/earnings and timing of synthetic fuel tax credits. B - Impact of change in market value of outstanding CVOs. C - Sale of Progress Rail to One Equity Partnership LLC which was finalized on March 24, 2005. D - Impact of SRS litigation settlement reached in civil proceedings announced June 30, 2004. E - Postretirement and severance costs recorded in the second quarter 2005 associated with the previously announced cost management initiative and voluntary enhanced retirement program. F - Carolinas - primarily due to increased capacity under contract in current year. Florida - increased primarily due to new contracts effective June 2004 and January 2005. G - Carolinas - Other margin increased due to higher fuel costs increasing the recoverable portion of the fixed price cogeneration contract costs as well as reduced generation at cogeneration facilities in the current year. Florida - Other margin increased primarily due to higher lighting revenues and higher transmission and wheeling revenues. H - Carolinas - O&M decreased primarily due to lower business unit spending due to one additional planned nuclear outage in 2004 offset by the impact of the change in accounting estimates for certain Energy Delivery capital costs, planned fossil plant outages and the employee lump-sum out-of-base salary increase. Florida - O&M increased primarily due to the $17M (pre-tax) write-off of major storm restoration costs as a result of the FPSC's storm cost recovery ruling, the impact of the change in accounting estimates for certain Energy Delivery capital costs and the employee lump-sum out-of-base salary increase. I - Carolinas - Depreciation & amortization increased due to higher Clean Air amortization, partially offset by decreased depreciation on plant & equipment primarily related to the license extensions of the nuclear plants. J - Carolinas - Other income increased due to the write-off of a regulatory liability related to income taxes refundable through future rates and the favorable impact of lower taxes due to lower pre-tax earnings. Florida - Other income increased due to the $25M (pre-tax) gain on the sale of the City of Winter Park, FL distribution system and AFUDC equity associated with construction of Hines 3 and Hines 4. K - Carolinas - Increased interest charges on variable rate pollution control bonds in 2005. Florida - Higher interest rates on commercial paper and higher balances. L - CCO - decreased primarily due to lower margins as a result of the expiration of certain tolling agreements and lower at-market sales, partially offset by increased earnings from the new full-requirements contracts and increased load on an existing contract. M - Synthetic Fuels - Decreased primarily due to lower sales and higher production costs. S-1 Progress Energy, Inc. SUPPLEMENTAL DATA Page S-2 Unaudited Progress Energy, Inc. Earnings Variances Year-to-Date 2005 vs. 2004 Regulated Utilities ------------------- Fuels, excluding Corporate and synthetic Other Core ($ per share) Carolinas Florida fuels CCO Businesss Business Synthetic fuels Consolidated - ------------------------------------------------------------------------------------------------------------------------------ 2004 GAAP earnings 0.88 0.55 0.11 (0.01) (0.75) 0.78 0.30 1.08 Intraperiod tax allocation 0.18 0.18 A 0.18 CVO mark-to-market 0.05 0.05 B 0.05 Rail discontinued operations (0.07) (0.07) C (0.07) SRS Litigation Settlement 0.12 0.12 D 0.12 - ------------------------------------------------------------------------------------------------------------------------------ 2004 ongoing earnings 0.88 0.55 0.11 (0.01) (0.47) 1.06 0.30 1.36 - ------------------------------------------------------------------------------------------------------------------------------ Weather - retail (0.12) (0.02) (0.14) (0.14) Other retail - growth and usage 0.06 - 0.06 0.06 Wholesale 0.01 0.03 0.04 F 0.04 Retail revenue sharing - 0.02 0.02 0.02 Other margin 0.03 - 0.03 G 0.03 O&M 0.03 (0.11) (0.08) H (0.08) Utility depreciation and amortization(0.01) - (0.01) I (0.01) Other 0.05 0.07 0.12 J 0.12 Interest charges (0.01) (0.02) (0.01) 0.01 (0.03) K (0.03) Net diversified business 0.01 (0.03) 0.02 - L (0.21) M (0.21) Share dilution (0.01) (0.01) (0.02) (0.02) - ------------------------------------------------------------------------------------------------------------------------------ 2005 ongoing earnings 0.91 0.51 0.11 (0.03) (0.45) 1.05 0.09 1.14 - ------------------------------------------------------------------------------------------------------------------------------ Intraperiod tax allocation (0.01) (0.03) (0.22) (0.26) A (0.26) CVO mark-to-market - - - Rail discontinued operations (0.08) (0.08) C (0.08) Postretirement and severance charges (0.15) (0.26) (0.01) - (0.01) (0.43) E (0.43) - ------------------------------------------------------------------------------------------------------------------------------ 2005 GAAP earnings 0.75 0.22 0.10 (0.03) (0.76) 0.28 0.09 0.37 - ------------------------------------------------------------------------------------------------------------------------------
Corporate and Other Businesses includes Progress Telecom, Progress Rail, other small subsidiaries, Holding Company interest expense, CVO mark-to-market, intraperiod tax allocations, purchase accounting transactions and corporate eliminations. A - Intraperiod income tax allocation impact, related to cyclical nature of energy demand/earnings and timing of synthetic fuel tax credits. B - Impact of change in market value of outstanding CVOs. C - Sale of Progress Rail to One Equity Partnership LLC which was finalized on March 24, 2005. D - Impact of SRS litigation settlement reached in civil proceedings announced June 30, 2004. E - Postretirement and severance costs recorded in the first half of 2005 associated with the previously announced cost management initiative and voluntary enhanced retirement program. F - Carolinas - primarily due to increased capacity under contract in current year. Florida - increased primarily due to new contracts effective June 2004 and January 2005. G - Carolinas - Other margin increased due to higher fuel costs increasing the recoverable portion of the fixed price cogeneration contract costs as well as reduced generation at cogeneration facilities in the current year H - Carolinas - O&M decreased primarily due to lower business unit spending due to an additional planned nuclear outage in 2004 and the impact of storm costs in 2004 offset by the impact of the change in accounting estimates for certain Energy Delivery capital costs and additional business unit spending due to planned fossil plant outages in 2005. Florida - O&M increased primarily due to the change in accounting estimates for certain Energy Delivery capital costs, the $17M (pre-tax) write-off of major storm restoration costs as a result of the FPSC's storm cost recovery ruling and an increase in the workers' compensation accrual. I - Carolinas - Depreciation & amortization increased due to higher Clean Air amortization, offset by decreased depreciation on plant & equipment primarily related to the license extensions of the nuclear plants. J - Carolinas - Other income increased due to write-off of a regulatory liability related to income taxes refundable through future rates and favorable income tax adjustments related to SC audit assessment and affordable housing credits. Additionally, 2004 included costs associated with the write-off of non-trade receivables. Florida - Other income increased due to the $25M (pre-tax) gain on the sale of the City of Winter Park, FL distribution system and AFUDC equity associated with construction of Hines 3 and Hines 4. K - Carolinas - Increased interest charges on variable rate pollution control bonds and commercial paper in 2005. Florida - Higher interest rates on commercial paper and higher balances. Fuels - Interest expense associated with gas operations is no longer being capitalized. CCO - Decreased interest expense due to termination of the variable rate project financing in December 2004. L - Fuels - Increased due to increased coal and gas prices, partially offset by the sale of the North Texas Gas operations, the waterborne coal transportation rate settlement in 2004 and increased mining costs. CCO - decreased primarily due to lower margins as a result of the expiration of certain tolling agreements and lower market sales, partially offset by increased earnings from the new full-requirements contracts and increased load on an existing contract. Corporate and Other Businesses - increased primarily due to increased earnings at Progress Telecom. M - Synthetic Fuels - Decreased due to lower sales, forfeited tax credits from the sale of Progress Rail and higher production costs. S-2 Progress Energy, Inc. SUPPLEMENTAL DATA Page S-3 Unaudited - -------------------------------------------------------------------------------------------------------------------------- Three Months Ended Three Months Ended Percentage Change June 30, 2005 June 30, 2004 From June 30, 2004 - -------------------------------------------------------------------------------------------------------------------------- Total Total Utility Statistics Carolinas Florida Progress Carolinas Florida Progress Carolinas Florida - -------------------------------------------------------------------------------------------------------------------------- Operating Revenues (in millions) Retail Residential $272 $431 $703 $284 $422 $706 (4.2)% 2.1 % Commercial 214 227 441 213 214 427 0.5 6.1 Industrial 164 71 235 161 66 227 1.9 7.6 Other retail 18 57 75 19 52 71 (5.3) 9.6 Provision for retail revenue sharing - 2 2 - (3) (3) - - - -------------------------------------------------------------------------------------------------------------------------- Total Retail $668 $788 $1,456 $677 $751 $1,428 (1.3) 4.9 Unbilled 15 18 33 24 24 48 - - Wholesale 154 68 222 139 53 192 10.8 28.3 Miscellaneous revenue 23 34 57 21 32 53 9.5 6.3 - -------------------------------------------------------------------------------------------------------------------------- Total Electric $860 $908 $1,768 $861 $860 $1,721 (0.1)% 5.6 % - -------------------------------------------------------------------------------------------------------------------------- Energy Sales (millions of kWh) Retail Residential 3,285 4,341 7,626 3,525 4,505 8,030 (6.8)% (3.6) % Commercial 3,087 2,888 5,975 3,172 2,941 6,113 (2.7) (1.8) Industrial 3,230 1,040 4,270 3,280 1,051 4,331 (1.5) (1.0) Other retail 314 762 1,076 337 751 1,088 (6.8) 1.5 - -------------------------------------------------------------------------------------------------------------------------- Total Retail 9,916 9,031 18,947 10,314 9,248 19,562 (3.9) (2.3) Unbilled 235 428 663 404 790 1,194 - - Wholesale 3,341 1,318 4,659 3,114 1,093 4,207 7.3 20.6 - -------------------------------------------------------------------------------------------------------------------------- Total Electric 13,492 10,777 24,269 13,832 11,131 24,963 (2.5)% (3.2) % - -------------------------------------------------------------------------------------------------------------------------- Energy Supply (millions of kWh) Generated - steam 6,388 5,328 11,716 7,178 5,656 12,834 nuclear 6,084 1,614 7,698 5,411 1,708 7,119 hydro 213 - 213 156 - 156 combustion turbines/ combined cycle 359 2,134 2,493 576 2,139 2,715 Purchased 1,045 2,381 3,426 1,042 2,322 3,364 - -------------------------------------------------------------------------------------------------------------------------- Total Energy Supply 14,089 11,457 25,546 14,363 11,825 26,188 (Company Share) - -------------------------------------------------------------------------------------------------------------------------- Impact of Weather to Normal on Retail Sales Heating Degree Days - Actual 277 12 211 21 31.3 % (42.9) % - Normal 237 13 236 13 Cooling Degree Days - Actual 411 1,019 647 1,090 (36.5) % (6.5) % - Normal 543 1,144 531 1,144 Impact of retail weather to normal on EPS ($0.04) ($0.02) ($0.06) $0.03 ($0.01) $0.02 - -------------------------------------------------------------------------------------------------------------------------- - -------------------------------------------------------------------------------------------------------------------------- Six Months Ended Six Months Ended Percentage Change June 30, 2005 June 30, 2004 From June 30, 2004 - -------------------------------------------------------------------------------------------------------------------------- Total Total Utility Statistics Carolinas Florida Progress Carolinas Florida Progress Carolinas Florida - -------------------------------------------------------------------------------------------------------------------------- Operating Revenues (in millions) Retail Residential $646 $861 $1,507 $655 $824 $1,479 (1.4) % 4.5 % Commercial 428 428 856 420 395 815 1.9 8.4 Industrial 313 134 447 308 128 436 1.6 4.7 Other retail 38 110 148 38 99 137 - 11.1 Provision for retail revenue sharing - - - - (7) (7) - - - -------------------------------------------------------------------------------------------------------------------------- Total Retail $1,425 $1,533 $2,958 $1,421 $1,439 $2,860 0.3 6.5 Unbilled (3) 13 10 1 18 19 - - Wholesale 328 142 470 295 120 415 11.2 18.3 Miscellaneous revenue 45 68 113 45 67 112 - 1.5 - -------------------------------------------------------------------------------------------------------------------------- Total Electric $1,795 $1,756 $3,551 $1,762 $1,644 $3,406 1.9 % 6.8 % - -------------------------------------------------------------------------------------------------------------------------- Energy Sales (millions of kWh) Retail Residential 7,957 8,688 16,645 8,266 8,797 17,063 (3.7) % (1.2) % Commercial 6,167 5,459 11,626 6,230 5,431 11,661 (1.0) 0.5 Industrial 6,161 1,981 8,142 6,273 2,074 8,347 (1.8) (4.5) Other retail 642 1,471 2,113 682 1,423 2,105 (5.9) 3.4 - -------------------------------------------------------------------------------------------------------------------------- Total Retail 20,927 17,599 38,526 21,451 17,725 39,176 (2.4) (0.7) Unbilled (67) 160 93 20 655 675 - - Wholesale 7,278 2,655 9,933 6,904 2,415 9,319 5.4 9.9 - -------------------------------------------------------------------------------------------------------------------------- Total Electric 28,138 20,414 48,552 28,375 20,795 49,170 (0.8) % (1.8) % - -------------------------------------------------------------------------------------------------------------------------- Energy Supply (millions of kWh) Generated - steam 13,813 10,096 23,909 15,127 10,688 25,815 nuclear 12,076 3,322 15,398 11,345 3,366 14,711 hydro 439 - 439 364 - 364 combustion turbines/ combined cycle 890 3,866 4,756 899 3,534 4,433 Purchased 2,105 4,587 6,692 1,804 4,493 6,297 - -------------------------------------------------------------------------------------------------------------------------- Total Energy Supply 29,323 21,871 51,194 29,539 22,081 51,620 (Company Share) - -------------------------------------------------------------------------------------------------------------------------- Impact of Weather to Normal on Retail Sales Heating Degree Days - Actual 1,969 316 2,056 385 (4.2) % (17.9) % - Normal 1,903 385 1,892 385 Cooling Degree Days - Actual 416 1,059 657 1,090 (36.7) % (2.8) % - Normal 554 1,172 544 1,172 Impact of retail weather to normal on EPS ($0.03) ($0.03) ($0.06) $0.08 ($0.01) $0.07 - 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S-3 Progress Energy, Inc. SUPPLEMENTAL DATA Page S-4 Unaudited - -------------------------------------------------------------------------------- Financial Statistics June 30 2005 2004 - -------------------------------------------------------------------------------- Return on average common stock equity (12 months ended) 7.7 % 9.1 % Book value per common share $30.99 $30.92 Capitalization Common stock equity 41.8 % 41.2 % Preferred stock of subsidiary- redemption not required 0.7 0.7 Total debt 57.5 58.1 - -------------------------------------------------------------------------------- Total Capitalization 100.0 % 100.0 % - -------------------------------------------------------------------------------- Progress Energy, Inc. 2005 Impact of Postretirement and Severance Charges - ----------------------------------------------------------------------------------- ($ in millions) Three months ended Six months ended June 30, 2005 Impact June 30, 2005 Impact Line of Business Pre-tax After-tax Pre-tax After-tax - ----------------------------------------------------------------------------------- Progress Energy Carolinas 46.2 27.7 60.3 36.2 Progress Energy Florida 93.6 56.2 107 64.2 Fuels 4.4 2.6 5.8 3.5 Competitive Commercial Operations 1 0.6 1.9 1.1 Corporate and Other 0 -0.04 0.8 0.5 - ----------------------------------------------------------------------------------- Total* 145.2 87.1 175.8 105.5 - -----------------------------------------------------------------------------------
*Totals may not foot due to rounding S-4 -----END PRIVACY-ENHANCED MESSAGE-----