As filed with the Securities and Exchange Commission on July 25, 2002
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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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 24, 2002
Commission File Exact name of registrant as specified in its charter, state I.R.S. Employer
Number of incorporation, address of principal executive offices, and Identification Number
telephone number
1-3382 Carolina Power & Light Company 56-0165465
410 South Wilmington Street
Raleigh, North Carolina 27601-1748
Telephone: (919) 546-6411
State of Incorporation: North Carolina
The address of the registrant has not changed since the last report.
Forward-Looking Statements
We have included in this Form 8-K information containing "forward-looking
statements," as defined by the Private Securities Litigation Reform Act of 1995.
Any statements that express, or involve discussions as to, expectations,
beliefs, plans, objectives, assumptions or future events or performance (often,
but not always, through the use of words or phrases such as "will likely
result," "are expected to," "will continue," "is anticipated," "estimated,"
"projection" or "outlook") are not statements of historical facts and may be
forward-looking. Forward-looking statements, by their nature, involve estimates,
projections, goals, forecasts, assumptions, risks and uncertainties that could
cause actual results or outcomes to differ materially from those expressed in
such forward-looking statements. Forward-looking statements speak only as of the
date on which they are made; and, except to fulfill our obligations under the
U.S. securities laws, we undertake no obligation to update any such statements
to reflect events or circumstances after the date on which they are made.
Examples of factors that can affect our expectations, beliefs, plans,
goals, objectives and future events or performance include, but are not limited
to, the following:
. governmental policies and regulatory actions (including those of the
Federal Energy Regulatory Commission, the Environmental Protection Agency,
the Nuclear Regulatory Commission, the Department of Energy, the North
Carolina Utilities Commission and the Public Service Commission of South
Carolina), particularly legislative and regulatory initiatives regarding
the restructuring of the electricity industry or potential national
deregulation legislation;
. risks associated with operating nuclear power facilities, availability of
nuclear waste storage facilities, and nuclear decommissioning costs;
. terrorist threats and activities, particularly with respect to our
facilities, economic uncertainty caused by recent terrorist attacks on the
United States, and potential adverse reactions to U.S. anti-terrorism
activities;
. changes in the economy of areas we serve;
. the extent to which we are able to obtain adequate and timely rate recovery
of costs, including potential stranded costs arising from the restructuring
of the electricity industry;
. weather conditions and catastrophic weather-related damage;
. general industry trends, increased competition from energy and gas
suppliers, and market demand for energy;
. inflation and capital market conditions; and
. unanticipated changes in operating expenses and capital expenditures.
All such factors are difficult to predict, contain uncertainties that may
materially affect actual results, and may be beyond our control. New factors
emerge from time to time, and it is not possible for us to predict all of such
factors or to assess the effect of each such factor on our business.
ITEM 5. OTHER EVENTS
The purpose of this Form 8-K is to make publicly available certain
information relating to (i) our financial performance as of and for the three
and six months ended June 30, 2002 and (ii) recent developments. Attached hereto
as Exhibit 99 are our Unaudited Interim Consolidated Statements of Income for
the three and six months ended June 30, 2002 and 2001 and the Consolidated
Balance Sheets as of June 30, 2002 and December 31, 2001.
Second Quarter Earnings
On July 24, 2002, we reported earnings of $130.4 million for the second
quarter of 2002 and $214.8 million for the first half of 2002 compared to $84.1
million for the second quarter of 2001 and $204.3 million for the first half of
2001. Our financial highlights for the second quarter of 2002 include:
. Second quarter revenues of $838.1 million, $54.7 million higher than
the comparable period in 2001. Revenue and margin improvements were
primarily related to improvements in retail growth and usage as well
as favorable weather conditions. However, industrial sales slipped
from comparable 2001 levels because of the weak economic
environment.
. Operation and Maintenance costs over the second quarter were up 7%
for the comparable period in 2001 due to increased infrastructure
costs (primarily information systems costs) and higher employee
benefits (driven by increased health insurance costs).
. Interest charges were $9.1 million lower than second quarter 2001
because of lower debt balances and favorable interest rates.
. In June 2002 we received a $28.3 million favorable impact from a tax
reallocation from our corporate parent, Progress Energy, Inc. This
reallocation resulted from an Securities and Exchange Commission
ruling that requires the allocation of non-acquisition interest tax
benefit for 2000 through year-to-date 2002 to be allocated to the
profitable subsidiaries.
Our Unaudited Interim Consolidated Statements of Income for the three
and six months ended June 30, 2002 and 2001 are not necessarily indicative of
the results that may be expected for an entire year.
Telecommunications Assets and Related Valuation Study
The fiber-optic telecommunications operations of our subsidiary,
Caronet, Inc., are included in our consolidated results of operations. For the
quarter ended June 30, 2002, Caronet earned $0.3 million based on revenue of
$4.6 million. In the second quarter of 2001, Caronet earned $1.7 million based
on revenues of $4.8 million.
Caronet's revenue reduction is related to the general slow down in the
telecommunications industry. Due to this industry decline, Progress Energy has
initiated a valuation study to assess the recoverability of Caronet's long-lived
assets, which totaled $111.3 million at June 30, 2002. We expect to conclude
this review during the third quarter of 2002.
North Carolina Clean Air Legislation
On June 20, 2002, North Carolina enacted a law that requires
investor-owned utilities to make significant reductions in sulfur dioxide and
nitrogen oxide emissions beginning in 2007. Under this new law, our coal-fired
generating plants located in North Carolina must reduce yearly system-wide
emissions of sulfur dioxide by 76% and emissions of nitrogen oxides by 62% from
2000 levels by 2013. We are also required to provide for testing, monitoring,
record keeping, and reporting for compliance purposes. The new law freezes our
base electric rates for five years and provides, over a seven-year period
beginning January 1, 2003, for accelerated cost recovery of the $813 million in
capital expenses that we estimate will be necessary to comply with the new
standards. This law allows us to recover actual compliance costs as part of any
rate adjustment that is effective in 2008 or later. Pursuant to the new law,
Progress Energy has entered into an agreement with the state of North Carolina
to sell to the state all emissions allowances we generate from over-complying
with the new emission limits. The new law also requires the state to undertake a
study of mercury and carbon dioxide emissions in North Carolina. We cannot
predict the future regulatory interpretation, implementation or the impact of
this new law.
ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS
(c) EXHIBITS.
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Exhibit 99- Unaudited Interim Consolidated Statements of Income for the
three and six months ended June 30, 2002 and 2001 and the
Consolidated Balance Sheets as of June 30, 2002 and December
31, 2001.
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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.
CAROLINA POWER & LIGHT COMPANY
Registrant
By: /s/ Peter M. Scott III
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Peter M. Scott III
Executive Vice President and
Chief Financial Officer
Date: July 25, 2002
EXHIBIT INDEX
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Exhibit 99- Unaudited Consolidated Interim Statements of Income for the three
and six months ended June 30, 2002 and 2001 and the Consolidated
Balance Sheets as of June 30, 2002 and December 31, 2001.
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