Exhibit 99.1
Progress Energy Announces Strong Quarterly Results,
Reaffirms Year-end Guidance
Highlights:
. Reports $1.78 EPS, $1.34 before non-operating adjustments due to
synthetic fuels
. Progress Ventures contributes $0.39 per share for the quarter
. Unregulated business offsets mild weather, industrial slowdown impact
on utilities
. Reaffirms 2001 guidance of $3.35-$3.45, provides 2002 guidance of
$3.90-$4.10
RALEIGH, N.C. (October 24, 2001) - Progress Energy [NYSE: PGN] today reported
consolidated net income of $366.4 million, or $1.78 per share of common stock,
for the third quarter of 2001. Year-to-date, the company has reported net income
of $3.13 per share. The company's synthetic fuel investments create certain
adjustments that increased EPS by $0.44 for the quarter and $0.17 year-to-date.
When these items are considered, operating earnings were $1.34 per share for the
quarter and $2.96 per share for the first nine months of 2001.
"Despite a more challenging economic climate, Progress Energy delivered very
strong financial results for the quarter, and we are confident we will meet our
2001 earnings target of $3.35 to $3.45 per share," said William Cavanaugh,
chairman, president and CEO, Progress Energy. "It has been less than one year
since the combination of CP&L and Florida Progress, and we are very pleased with
the results we have seen in integrating the companies," added Cavanaugh. "Today,
Progress Energy is more diversified. This diversity and balance have
strengthened our ability to consistently deliver solid financial performance."
The Progress Ventures business unit - which participates in the wholesale energy
business through fuel extraction, manufacturing and delivery; merchant
generation; and energy marketing and trading - contributed $0.39 per share. Of
this total, marketing and trading activities on behalf of the utility operating
companies contributed $0.09 per share. Year-to-date, Progress Ventures has
contributed $1.08 per share on a similar basis.
Progress Energy committed to grow earnings at 7 percent to 8 percent annually
from 2001's original earnings target of $3.25 to $3.35 per share. Achieving
earnings per share in the $3.90 to $4.10 range for 2002 is consistent with that
commitment. In 2002, Progress Energy will benefit from the elimination of
goodwill amortization as well as solid growth in its primary businesses.
However, the company will face ongoing challenges due to the economic slowdown
and other impacts of the aftermath of the events of September 11. "We remain
committed to our operating earnings growth target, and we are confident that we
can achieve excellent results in 2002," said Cavanaugh.
SIGNIFICANT RECENT DEVELOPMENTS
Florida Rate Case
In May 2001, the Florida Public Service Commission (FPSC) issued an
order initiating a rate case for Florida Power. The calculation of the
company's revenue requirements, along with supporting testimony, was
filed on September 14, 2001. Additional filings are due October 31,
2001, and November 15, 2001. Hearings are scheduled to begin March 20,
2002, with a final decision expected in July 2002, although the
commissioners have encouraged the FPSC staff and the company to
negotiate a settlement before then if possible.
Successful Equity Offering
In August, the company marketed and issued 12.65 million shares. The
issuance raised $488 million in net proceeds that were used to retire
commercial paper and other short-term debt issued to finance the
Florida Progress Corporation (FPC) acquisition and for general
corporate purposes. This transaction completed the permanent financing
of the FPC acquisition that closed on November 30, 2000.
Progress Ventures Generation
On February 26, 2001, the company requested approval from the North
Carolina Utilities Commission (NCUC) to transfer the Certificates of
Public Convenience and Necessity granted to construct electric
generating facilities in both Richmond and Rowan counties from CP&L to
Progress Ventures. In September, the NCUC approved the transfer of
certificates for the 480 MW Rowan County facility from CP&L to Progress
Ventures, while the Richmond County assets will remain in CP&L's
ownership.
Progress Ventures announced in July that it is building a plant to
include two 150 MW combustion turbine peaking generators at a site in
DeSoto County, Fla., about 50 miles east of Sarasota. Plant capacity
has been pre-sold to another utility. Environmental permits and zoning
have been approved for the plant site, and construction is under way.
The plant is expected to be complete in June 2002, to coincide with the
start of the contract.
At the year-end, Progress Ventures will have approximately 1,900 MW of
unregulated generation in operation or under construction in the
Carolinas, Georgia and Florida.
LINE OF BUSINESS/SEGMENT FINANCIAL INFORMATION
UTILITIES
CP&L
CP&L retail energy operations contributed earnings of $153.4 million
for the quarter compared to $154.4 million for the same period last
year. Factors contributing to this quarter's results were a significant
slowdown in industrial sales, mild weather and higher O&M expenses over
the third quarter of 2000 due primarily to the timing of planned
nuclear plant outages.
Total retail kWh sales for the quarter decreased 2.0 percent compared
to the same period last year. Commercial sales increased 2.4 percent,
while residential sales increased 2.3 percent. Industrial sales
declined 9.1 percent for the quarter due primarily to continuing
weakness in the textile, chemical and paper industries.
Florida Power
The operations of Florida Power were included in Progress Energy's
earnings subsequent to the acquisition date of November 30, 2000, and,
therefore, are not reflected in the period ended September 30, 2000.
Florida Power retail energy operations had earnings of $107.4 million
for the quarter compared to $114.7 million for the same period last
year. Factors contributing to this quarter's results were a significant
slowdown in industrial sales and cooler than normal weather.
Total retail kWh sales for the quarter decreased 2.4 percent compared
to the same period last year. Commercial sales decreased 0.6 percent,
while residential sales decreased 1.8 percent. Industrial sales
declined 13.4 percent, mainly due to continued weakness in the
phosphate industry.
NCNG
North Carolina Natural Gas (NCNG) reported a loss of $3.2 million in
the third quarter compared to net loss of $0.5 million in the same
period last year. The decrease was due to reduced industrial sales,
primarily in the textile industry.
DIVERSIFIED BUSINESSES
Progress Ventures
The Progress Ventures business unit recorded net income of $80.1
million in the third quarter compared to $35.1 million for the same
period last year. The increase in earnings is primarily due to the
inclusion of Florida Progress subsidiaries in the current quarter.
Total synthetic fuel sales were 4.1 million tons for the quarter and
10.3 million tons year-to-date. The company anticipates total synthetic
fuel production of 12 to 13 million tons for the year.
Progress Telecom
Progress Telecom, including CaroNet's operations, recorded revenues of
$14.6 million for the quarter. Year-to-date revenues are $45 million
compared to $31 million for the same period in 2000.
Progress Rail
The operations of Progress Rail were included in Progress Energy's
earnings subsequent to the acquisition date of November 30, 2000, and,
therefore, are not reflected in the period ended September 30, 2000.
Progress Rail reported revenues of $220.0 million and a net loss of
$2.2 million for the quarter compared to revenues and net income of
$250.2 million and $0.1 million in third quarter 2000. The decrease in
net income was mainly due to the continued slowdown in rail service
procurement by major railroads.
Other Diversified
Due to the historical losses at SRS, which include a loss of $0.02 per
share for the quarter, and the decline of the market value for
technology companies, the company is assessing the recoverability of
SRS's long-lived assets, which totaled approximately $43 million at
September 30, 2001. The company expects to conclude the assessment in
the fourth quarter.
As of September 30, 2001, the company's cost basis investment in
Interpath was approximately $150 million. Due to the overall conditions
in the technology industry, and in the Application Service Provider
segment in particular, the company has initiated a valuation study to
help assess the recoverability of its investment in Interpath. The
company expects to receive the results in the fourth quarter.
The results of these assessments may require a writedown of a major
portion of these assets.
CORPORATE
Corporate results include interest expense on holding company debt and
goodwill amortization. The corporate operating loss was $0.28 for the
quarter.
NON-OPERATING ADJUSTMENTS ASSOCIATED WITH SYNTHETIC FUELS
Intra-period Tax Allocation
With respect to the intra-period tax allocation effects, 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' earnings lower Progress Energy's overall effective tax
rate. The company's synthetic fuel operations' earnings are not subject
to seasonal fluctuation to the extent the electric utility operations'
earnings are. The company projects the effective tax rate for the year
and then, based upon projected operating income for each
quarter, raises or lowers the credits recorded in that quarter to
reflect that projected tax rate. On the other hand, operating losses
incurred to produce the tax credit are included in the current quarter.
The resulting tax adjustment has increased earnings per share by $0.36
for the quarter and $0.13 for the year. These adjustments will reverse
over the balance of the year, resulting in no impact to the company's
annual earnings.
Contingent Value Obligation 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 the performance of four
synthetic fuel facilities purchased by subsidiaries of Florida Progress
Corporation in October 1999. The payments, if any, are based on the net
after-tax cash flows the facilities generate. The CVOs are debt
instruments and thus are valued at market value. Unrealized gains and
losses from changes in market value are recognized in earnings each
quarter. The gain from the CVO mark-to-market was $0.08 per share for
the third quarter and $0.04 for the year-to-date. Since the company
does not have any control over the market price of the CVOs, it does
not consider the mark-to-market adjustment a component of operating
earnings.
* * * *
Progress Energy (NYSE: PGN) is a Fortune 250 diversified holding company
headquartered in Raleigh, N.C., with more than 20,000 megawatts of generation
capacity and $7 billion in annual revenues. The company's diverse portfolio
includes two major electric utility companies, CP&L and Florida Power, as well
as NCNG, SRS, Progress Rail, Progress Telecom and an important new organization,
Progress Ventures, which was created to manage fuel extraction,
manufacturing and delivery; merchant generation; and energy marketing and
trading. These companies serve 2.8 million customers across the Southeast,
providing electricity, natural gas, energy services and broadband capacity. For
more information about Progress Energy, visit the company's Web site at
http://www.progress-energy.com/.
-------------------------------
This press 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 to differ
materially from those expressed in the forward-looking statements. Factors that
you should consider with respect to any forward-looking statement in this press
release include, but are not limited to, actions in the financial markets,
actions of regulatory agencies, weather conditions, economic conditions in the
companies' service territories, fluctuations in energy-related commodity prices,
conversion activity, other marketing efforts and other uncertainties. Key
factors affecting the synthetic fuel plant investment that could have a direct
bearing on the company's ability to meet these projections include cash flows
derived from the synthetic fuel plants, market acceptance of synthetic fuel,
competition from competing products, impacts of environmental regulations on
potential buyers, income tax issues related to synthetic fuel tax credits and
other factors. Other risk factors are detailed from time to time in the
companies' SEC reports. All such factors are difficult to predict, contain
uncertainties that may materially affect actual results, and may be beyond the
ability of the company to control or estimate precisely.
# # #
Contacts:
Investor Relations, Bob Drennan, 919.546.7474
Corporate Communications, Keith Poston, 919.546.6189 or toll-free 877.641.NEWS
(6397)
PROGRESS ENERGY, INC.
UNAUDITED CONSOLIDATED INTERIM FINANCIAL INFORMATION
STATEMENTS OF INCOME
Three Months Ended Nine Months Ended
September 30 September 30
(In thousands except per share amounts) 2001 2000 2001 2000
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Operating Revenues
Electric $ 1,879,934 $ 919,547 $ 5,077,928 $ 2,474,847
Natural gas 51,671 75,645 258,820 223,093
Diversified businesses 398,942 69,716 1,217,532 133,334
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Total Operating Revenues 2,330,547 1,064,908 6,554,280 2,831,274
Operating Expenses
Fuel used in electric generation 446,309 175,090 1,194,453 472,479
Purchased power 268,794 98,172 698,218 253,498
Gas purchased for resale 36,282 62,736 203,060 166,471
Other operation and maintenance 290,651 169,912 890,148 533,128
Depreciation and amortization 268,475 137,183 849,395 411,903
Taxes other than on income 105,125 39,884 298,716 112,729
Diversified businesses 461,393 104,630 1,372,840 207,551
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Total Operating Expenses 1,877,029 787,607 5,506,830 2,157,759
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Operating Income 453,518 277,301 1,047,450 673,515
---------------------------------------------------------------------------------------------------------------------------
Other Income (Expense)
Interest income 3,018 2,686 20,132 7,997
Other, net 16,724 216,654 6,544 217,754
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Total Other Income (Expense) 19,742 219,340 26,676 225,751
---------------------------------------------------------------------------------------------------------------------------
Income before Interest Charges and Income Taxes 473,260 496,641 1,074,126 899,266
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Interest Charges
Long-term debt 152,505 50,703 435,011 155,625
Other interest charges 15,061 5,092 89,713 14,373
Allowance for borrowed funds used during construction (4,206) (4,728) (9,559) (15,657)
---------------------------------------------------------------------------------------------------------------------------
Net Interest Charges 163,360 51,067 515,165 154,341
---------------------------------------------------------------------------------------------------------------------------
Income before Income Taxes 309,900 445,574 558,961 744,925
Income Taxes (56,543) 148,493 (73,187) 255,124
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Net Income $ 366,443 $ 297,081 $ 632,148 $ 489,801
===========================================================================================================================
Average Common Shares Outstanding 205,866 153,324 201,925 153,230
Basic Earnings per Common Share $ 1.78 $ 1.94 $ 3.13 $ 3.20
Diluted Earnings per Common Share $ 1.77 $ 1.93 $ 3.12 $ 3.19
Dividends Declared per Common Share $ 0.530 $ 0.515 $ 1.590 $ 1.545
===========================================================================================================================
This financial information should be read in conjunction with the Company's
2000 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.
BALANCE SHEETS September 30 December 31
(In thousands) 2001 2000
--------------------------------------------------------------------------------------------------------------------------
ASSETS
Utility Plant
Electric utility plant in service $ 18,955,425 $ 18,124,036
Gas utility plant in service 487,700 378,464
Accumulated depreciation (9,948,848) (9,350,172)
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Utility plant in service, net 9,494,277 9,152,328
Held for future use 15,380 16,302
Construction work in progress 917,158 1,043,376
Nuclear fuel, net of amortization 247,244 224,692
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Total Utility Plant, Net 10,674,059 10,436,698
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Current Assets
Cash and cash equivalents 103,863 101,296
Accounts receivable 1,139,800 925,911
Taxes receivable 14,444 -
Inventory 842,052 420,985
Deferred fuel cost 189,871 217,806
Prepayments 32,878 50,040
Assets Held for Sale, net 5,485 747,745
Other current assets 177,371 192,347
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Total Current Assets 2,505,764 2,656,130
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Deferred Debits and Other Assets
Income taxes recoverable through future rates 241,379 228,686
Harris Plant deferred costs 35,661 44,813
Unamortized debt expense 42,276 38,771
Nuclear decommissioning trust funds 811,055 811,998
Diversified business property, net 1,127,828 720,231
Miscellaneous other property and investments 589,560 636,677
Deferred purchased power contract termination costs 138,601 226,656
Goodwill, net 3,751,088 3,652,429
Other assets and deferred debits 755,718 657,612
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Total Deferred Debits and Other Assets 7,493,166 7,017,873
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Total Assets $ 20,672,989 $ 20,110,701
==========================================================================================================================
CAPITALIZATION AND LIABILITIES
Capitalization
Common stock equity $ 6,203,097 $ 5,424,201
Preferred stock of subsidiary - redemption not required 92,831 92,831
Long-term debt, net 8,627,029 5,890,099
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Total Capitalization 14,922,957 11,407,131
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Current Liabilities
Current portion of long-term debt 719,483 184,037
Accounts payable 715,925 828,568
Taxes accrued - 932
Interest accrued 124,895 121,433
Dividends declared 114,650 107,645
Short-term Obligations 664,045 3,972,674
Other current liabilities 613,308 447,370
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Total Current Liabilities 2,952,306 5,662,659
--------------------------------------------------------------------------------------------------------------------------
Deferred Credits and Other Liabilities
Accumulated deferred income taxes 1,615,144 1,807,192
Accumulated deferred investment tax credits 230,782 261,255
Other liabilities and deferred credits 951,800 972,464
--------------------------------------------------------------------------------------------------------------------------
Total Deferred Credits and Other Liabilities 2,797,726 3,040,911
--------------------------------------------------------------------------------------------------------------------------
Total Capitalization and Liabilities $ 20,672,989 $ 20,110,701
==========================================================================================================================
SCHEDULES OF COMMON STOCK EQUITY
(In thousands)
Common stock (without par value, authorized 500,000,000, issued
and outstanding 218,739,274 and 206,089,047 shares,
respectively) $ 4,106,101 $ 3,608,902
Unearned ESOP common stock (114,914) (127,211)
Accumulated other comprehensive loss (37,609) -
Retained earnings 2,249,519 1,942,510
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Total Common Stock Equity $ 6,203,097 $ 5,424,201
==========================================================================================================================