Send us Feedback

Progress Energy (PGN)
Analysis
SUMMARY
BULLS
BEARS
TOPICS
Data
DATA CENTRAL
STOCK CHART
Financials
SEC FILINGS
BALANCE
INCOME
CASH FLOW

 
Annual Reports

 
Quarterly Reports

  • 10-Q (May 9, 2013)
  • 10-Q (Nov 8, 2012)
  • 10-Q (Aug 8, 2012)
  • 10-Q (May 8, 2012)
  • 10-Q (Nov 8, 2011)
  • 10-Q (Aug 8, 2011)

 
8-K

 
Other

Progress Energy 10-Q 2011

Documents found in this filing:

  1. 10-Q
  2. Graphic
  3. Ex-10.A
  4. Ex-10.B
  5. Ex-10.C
  6. Ex-10.D
  7. Ex-10.E
  8. Ex-10.F
  9. Ex-10.G
  10. Ex-10.H
  11. Ex-10.I
  12. Ex-31.A
  13. Ex-31.B
  14. Ex-31.C
  15. Ex-31.D
  16. Ex-31.E
  17. Ex-31.R
  18. Ex-32.A
  19. Ex-32.B
  20. Ex-32.C
  21. Ex-32.D
  22. Ex-32.E
  23. Ex-32.F
  24. Ex-32.F
form10q_32011.htm
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 10-Q

x     QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)>
OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2011

OR

o    TRANSITION REPORT PURSUANT TO SECTION 13 OR>
15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from                      to                    .


Commission File Number
Exact name of registrants as specified in their charters, states of incorporation, addresses of principal executive offices,
and telephone numbers
I.R.S. Employer Identification Number
 
pgn logo
  
     
1-15929
Progress Energy, Inc.
410 South Wilmington Street
Raleigh, North Carolina 27601-1748
Telephone:   (919) 546-6111
State of Incorporation: North Carolina
56-2155481
     
1-3382
Carolina Power & Light Company
d/b/a Progress Energy Carolinas, Inc.
410 South Wilmington Street
Raleigh, North Carolina  27601-1748
Telephone:   (919) 546-6111
State of Incorporation: North Carolina
56-0165465
     
1-3274
Florida Power Corporation
d/b/a Progress Energy Florida, Inc.
299 First Avenue North
St. Petersburg, Florida  33701
Telephone:   (727) 820-5151
State of Incorporation: Florida
59-0247770

NONE
(Former name, former address and former fiscal year, if changed since last report)

Indicate by check mark whether each registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrants were required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

Progress Energy, Inc. (Progress Energy)
Yes
x
No
o
Carolina Power & Light Company (PEC)
Yes
x
No
o
Florida Power Corporation (PEF)
Yes
o
No
x
 
 
 
 
 
Indicate by check mark whether each registrant has submitted electronically and posted to its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrants were required to submit and post such files).

Progress Energy
Yes
x
No
o
PEC
Yes
x
No
o
PEF
Yes
x
No
o

Indicate by check mark whether each registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See definition of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.

Progress Energy
Large accelerated filer
x
Accelerated filer
o
 
Non-accelerated filer
o
Smaller reporting company
o
         
PEC
Large accelerated filer
o
Accelerated filer
o
 
Non-accelerated filer
x
Smaller reporting company
o
         
PEF
Large accelerated filer
o
Accelerated filer
o
 
Non-accelerated filer
x
Smaller reporting company
o

Indicate by check mark whether each registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

Progress Energy
Yes
o
No
x
PEC
Yes
o
No
x
PEF
Yes
o
No
x

At November 4, 2011, each registrant had the following shares of common stock outstanding:

Registrant
Description
Shares
Progress Energy
Common Stock (Without Par Value)
295,005,362
     
PEC
Common Stock (Without Par Value)
159,608,055 (all of which were held directly by Progress Energy, Inc.)
     
PEF
Common Stock (Without Par Value)
100 (all of which were held indirectly by Progress Energy, Inc.)

This combined Form 10-Q is filed separately by three registrants: Progress Energy, PEC and PEF (collectively, the Progress Registrants). Information contained herein relating to any individual registrant is filed by such registrant solely on its own behalf. Each registrant makes no representation as to information relating exclusively to the other registrants.

PEF meets the conditions set forth in General Instruction H(1)(a) and (b) of Form 10-Q and is therefore filing this form with the reduced disclosure format.>

 
 
 

TABLE OF CONTENTS
2
 
5
 
PART I.  FINANCIAL INFORMATION
 
ITEM 1.
7
     
 
Unaudited Condensed Interim Financial Statements
  
     
 
Progress Energy, Inc. (Progress Energy)
  
 
7
 
8
 
9
     
 
Carolina Power & Light Company d/b/a Progress Energy Carolinas, Inc. (PEC)
  
 
10
 
11
 
12
     
 
Florida Power Corporation d/b/a Progress Energy Florida, Inc. (PEF)
  
 
13
 
14
 
15
     
 
16
     
ITEM 2.
 
72
     
ITEM 3.
110
     
ITEM 4.
113
     
PART II.  OTHER INFORMATION
 
ITEM 1.
114
     
ITEM 1A.
114
     
ITEM 2.
115
     
ITEM 6.
116
     
118

 
1
 

GLOSSARY OF TERMS

We use the words “Progress Energy,” “we,” “us” or “our” to indicate that certain information relates to Progress Energy, Inc. and its subsidiaries on a consolidated basis. When appropriate, the parent holding company or the subsidiaries of Progress Energy are specifically identified on an unconsolidated basis as we discuss their various business activities.
 
The following abbreviations, acronyms or initialisms are used by the Progress Registrants:
 
TERM
DEFINITION
   
2010 Form 10-K
Progress Registrants’ annual report on Form 10-K for the fiscal year ended December 31, 2010
401(k)
Progress Energy 401(k) Savings & Stock Ownership Plan
AFUDC
Allowance for funds used during construction
ARO
Asset retirement obligation
ASC
FASB Accounting Standards Codification
ASLB
Atomic Safety and Licensing Board
the Asset Purchase Agreement
Agreement by and among Global, Earthco and certain affiliates, and the Progress Affiliates as amended on August 23, 2000
ASU
Accounting Standards Update
Audit Committee
Audit and Corporate Performance Committee of Progress Energy’s board of directors
BART
Best Available Retrofit Technology
Base Revenues
Non-GAAP measure defined as operating revenues excluding clause recoverable regulatory returns, miscellaneous revenues and fuel and other pass-through revenues
Brunswick
PEC’s Brunswick Nuclear Plant
Btu
British thermal unit
CAA
Clean Air Act
CAIR
Clean Air Interstate Rule
CAMR
Clean Air Mercury Rule
CAVR
Clean Air Visibility Rule
CCRC
Capacity Cost-Recovery Clause
CERCLA or Superfund
Comprehensive Environmental Response, Compensation and Liability Act of 1980, as amended
Clean Smokestacks Act
North Carolina Clean Smokestacks Act
the Code
Internal Revenue Code
CO2
Carbon dioxide
COL
Combined license
Corporate and Other
Corporate and Other segment primarily includes the Parent, PESC and miscellaneous other nonregulated businesses
CR1 and CR2
PEF’s Crystal River Units No. 1 and No. 2 coal-fired steam turbines
CR3
PEF’s Crystal River Unit No. 3 Nuclear Plant
CR4 and CR5
PEF’s Crystal River Units No. 4 and No. 5 coal-fired steam turbines
CSAPR
Cross-State Air Pollution Rule
CVO
Contingent value obligation
D.C. Court of Appeals
U.S. Court of Appeals for the District of Columbia Circuit
DOE
U.S. Department of Energy
DOJ
U.S. Department of Justice
DSM
Demand-side management
Duke Energy
Duke Energy Corporation
Earthco
Four coal-based solid synthetic fuels limited liability companies of which three were wholly owned
ECCR
Energy Conservation Cost Recovery Clause
ECRC
Environmental Cost Recovery Clause
EE
Energy efficiency
 
 
2
 
 
EGU MACT
MACT standards for coal-fired and oil-fired electric steam generating units
EIP
Equity Incentive Plan
EPA
U.S. Environmental Protection Agency
EPC
Engineering, procurement and construction
ESOP
Employee Stock Ownership Plan
FASB
Financial Accounting Standards Board
FDEP
Florida Department of Environmental Protection
FERC
Federal Energy Regulatory Commission
FGT
Florida Gas Transmission Company, LLC
Fitch
Fitch Ratings
the Florida Global Case
U.S. Global, LLC v. Progress Energy, Inc. et al.
Florida Progress
Florida Progress Corporation
FPSC
Florida Public Service Commission
Funding Corp.
Florida Progress Funding Corporation, a wholly owned subsidiary of Florida Progress
GAAP
Accounting principles generally accepted in the United States of America
GHG
Greenhouse gas
Global
U.S. Global, LLC
GWh
Gigawatt-hours
Harris
PEC’s Shearon Harris Nuclear Plant
IPP
Progress Energy Investor Plus Plan
kV
Kilovolt
kVA
Kilovolt-ampere
kWh
Kilowatt-hours
Levy
PEF’s proposed Levy Units No. 1 and No. 2 Nuclear Plants
LIBOR
London Inter Bank Offered Rate
MACT
Maximum achievable control technology
MD&A
Management’s Discussion and Analysis of Financial Condition and Results of Operations contained in PART I, Item 2 of this Form 10-Q
Medicare Act
Medicare Prescription Drug, Improvement and Modernization Act of 2003
the Merger
Proposed merger between Progress Energy and Duke Energy
the Merger Agreement
Agreement and Plan of Merger, dated as of January 8, 2011, by and among Progress Energy and Duke Energy
MGP
Manufactured gas plant
MW
Megawatts
MWh
Megawatt-hours
Moody’s
Moody’s Investors Service, Inc.
NAAQS
National Ambient Air Quality Standards
NC REPS
North Carolina Renewable Energy and Energy Efficiency Portfolio Standard
NCUC
North Carolina Utilities Commission
NDT
Nuclear decommissioning trust
NEIL
Nuclear Electric Insurance Limited
NERC
North American Electric Reliability Corporation
NO2
Nitrogen dioxide
North Carolina Global Case
Progress Synfuel Holdings, Inc. et al. v. U.S. Global, LLC
NOx
Nitrogen oxides
NRC
Nuclear Regulatory Commission
O&M
Operation and maintenance expense
OATT
Open Access Transmission Tariff
OCI
Other comprehensive income
Ongoing Earnings
Non-GAAP financial measure defined as GAAP net income attributable to controlling interests less discontinued operations and the effects of certain identified gains and charges
OPEB
Postretirement benefits other than pensions
 
 
3
 
 
the Parent
Progress Energy, Inc. holding company on an unconsolidated basis
PEC
Carolina Power & Light Company d/b/a Progress Energy Carolinas, Inc.
PEF
Florida Power Corporation d/b/a Progress Energy Florida, Inc.
PESC
Progress Energy Service Company, LLC
Power Agency
North Carolina Eastern Municipal Power Agency
PPACA
Patient Protection and Affordable Care Act and the related Health Care and Education Reconciliation Act
Preferred Securities
7.10% Cumulative Quarterly Income Preferred Securities due 2039, Series A issued by the Trust
Preferred Securities Guarantee
Florida Progress’ guarantee of all distributions related to the Preferred Securities
Progress Affiliates
Five affiliated coal-based solid synthetic fuels facilities
Progress Energy
Progress Energy, Inc. and subsidiaries on a consolidated basis
Progress Registrants
The reporting registrants within the Progress Energy consolidated group. Collectively, Progress Energy, Inc., PEC and PEF
PRP
Potentially responsible party, as defined in CERCLA
PSSP
Performance Share Sub-Plan
QF
Qualifying facility
RCA
Revolving credit agreement
Reagents
Commodities such as ammonia and limestone used in emissions control technologies
REPS
Renewable energy portfolio standard
the Registration Statement
The registration statement filed on Form S-4 by Duke Energy related to the Merger
Robinson
PEC’s Robinson Nuclear Plant
ROE
Return on equity
RSU
Restricted stock unit
SCPSC
Public Service Commission of South Carolina
Section 29
Section 29 of the Code
Section 29/45K
General business tax credits earned after December 31, 2005 for synthetic fuels production in accordance with Section 29
Section 45K
Section 45K of the Code
Section 316(b)
Section 316(b) of the Clean Water Act
(See Note/s “#”)
For all sections, this is a cross-reference to the Combined Notes to the Financial Statements contained in PART I, Item 1 of this Form 10-Q
SERC
SERC Reliability Corporation
S&P
Standard & Poor’s Rating Services
SO2
Sulfur dioxide
SOx
Sulfur oxides
Subordinated Notes
7.10% Junior Subordinated Deferrable Interest Notes due 2039 issued by Funding Corp.
Tax Agreement
Intercompany Income Tax Allocation Agreement
the Trust
FPC Capital I
the Utilities
Collectively, PEC and PEF
VSP
Voluntary severance plan
VIE
Variable interest entity
Ward
Ward Transformer site located in Raleigh, N.C.
Ward OU1
Operable unit for stream segments downstream from the Ward site
Ward OU2
Operable unit for further investigation at the Ward facility and certain adjacent areas


 
4
 

SAFE HARBOR FOR FORWARD-LOOKING STATEMENTS
 
In this combined report, each of the Progress Registrants makes forward-looking statements within the meaning of the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. The matters discussed throughout this combined Form 10-Q that are not historical facts are forward looking and, accordingly, involve estimates, projections, goals, forecasts, assumptions, risks and uncertainties that could cause actual results or outcomes to differ materially from those expressed in the forward-looking statements. Any forward-looking statement is based on information current as of the date of this report and speaks only as of the date on which such statement is made, and the Progress Registrants 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.
 
In addition, examples of forward-looking statements discussed in this Form 10-Q include, but are not limited to, statements made in “Management’s Discussion and Analysis of Financial Condition and Results of Operations” (MD&A) including, but not limited to, statements under the following headings: “Pending Merger” about the proposed merger between Progress Energy and Duke Energy Corporation (Duke Energy) (the Merger) and the impact of the Merger on our strategy and liquidity; “Results of Operations” about trends and uncertainties; “Liquidity and Capital Resources” about operating cash flows, future liquidity requirements and estimated capital expenditures; and “Other Matters” about the effects of new environmental regulations, changes in the regulatory environment, meeting anticipated demand in our regulated service territories, potential nuclear construction and our synthetic fuels tax credits.
 
Examples of factors that you should consider with respect to any forward-looking statements made throughout this document include, but are not limited to, the following:
 
·  
our ability to obtain the approvals required to complete the Merger and the impact of compliance with material restrictions or conditions potentially imposed by our regulators;
·  
the risk that the Merger is terminated prior to completion and results in significant transaction costs to us;
·  
our ability to achieve the anticipated results and benefits of the Merger;
·  
the impact of business uncertainties and contractual restrictions while the Merger is pending;
·  
the scope of necessary repairs of the delamination of PEF’s Crystal River Unit No. 3 Nuclear Plant (CR3) could prove more extensive than is currently identified, such repairs could prove not to be feasible, the costs of repair and/or replacement power could exceed our estimates and insurance coverage or may not be recoverable through the regulatory process;
·  
the impact of fluid and complex laws and regulations, including those relating to the environment and energy policy;
·  
our ability to recover eligible costs and earn an adequate return on investment through the regulatory process;
·  
the ability to successfully operate electric generating facilities and deliver electricity to customers;
·  
the impact on our facilities and businesses from a terrorist attack, cyber security threats and other catastrophic events;
·  
the ability to meet the anticipated future need for additional baseload generation and associated transmission facilities in our regulated service territories and the accompanying regulatory and financial risks;
·  
our ability to meet current and future renewable energy requirements;
·  
the inherent risks associated with the operation and potential construction of nuclear facilities, including environmental, health, safety, regulatory and financial risks;
·  
the financial resources and capital needed to comply with environmental laws and regulations;
·  
risks associated with climate change;
·  
weather and drought conditions that directly influence the production, delivery and demand for electricity;
·  
recurring seasonal fluctuations in demand for electricity;
·  
the ability to recover in a timely manner, if at all, costs associated with future significant weather events through the regulatory process;
·  
fluctuations in the price of energy commodities and purchased power and our ability to recover such costs through the regulatory process;
 
 
5
 
 
·  
the Progress Registrants’ ability to control costs, including operations and maintenance expense (O&M) and large construction projects;
·  
the ability of our subsidiaries to pay upstream dividends or distributions to Progress Energy, Inc. holding company (the Parent);
·  
current economic conditions;
·  
the ability to successfully access capital markets on favorable terms;
·  
the stability of commercial credit markets and our access to short- and long-term credit;
·  
the impact that increases in leverage or reductions in cash flow may have on each of the Progress Registrants;
·  
the Progress Registrants’ ability to maintain their current credit ratings and the impacts in the event their credit ratings are downgraded;
·  
the investment performance of our nuclear decommissioning trust (NDT) funds;
·  
the investment performance of the assets of our pension and benefit plans and resulting impact on future funding requirements;
·  
the impact of potential goodwill impairments;
·  
our ability to fully utilize tax credits generated from the previous production and sale of qualifying synthetic fuels under Internal Revenue Code (the Code) Section 29/45K (Section 29/45K); and
·  
the outcome of any ongoing or future litigation or similar disputes and the impact of any such outcome or related settlements.
 
Many of these risks similarly impact our nonreporting subsidiaries.
 
These and other risk factors are detailed from time to time in the Progress Registrants’ filings with the SEC. Many, but not all, of the factors that may impact actual results are discussed in Item 1A, “Risk Factors,” in the Progress Registrants’ annual report on Form 10-K for the fiscal year ended December 31, 2010 (2010 Form 10-K), which was filed with the SEC on February 28, 2011, and is updated for material changes, if any, in this Form 10-Q and in our other SEC filings. All such factors are difficult to predict, contain uncertainties that may materially affect actual results and may be beyond our control. New factors emerge from time to time, and it is not possible for management to predict all such factors, nor can management assess the effect of each such factor on the Progress Registrants.
 

 
6
 

PART I.  FINANCIAL INFORMATION

 
ITEM 1.   FINANCIAL STATEMENTS
 
               
PROGRESS ENERGY, INC.
  
UNAUDITED CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS
  
September 30, 2011
  
 
  
 
    
 
    
 
    
 
  
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS of INCOME
  
 
  
Three months ended September 30
    
Nine months ended September 30
  
(in millions except per share data)
  
2011
    
2010
    
2011
    
2010
  
Operating revenues
   $ 2,747     $ 2,962     $ 7,170     $ 7,869  
Operating expenses
                                
Fuel used in electric generation
     844       935       2,236       2,574  
Purchased power
     349       418       898       996  
Operation and maintenance
     487       474       1,491       1,459  
Depreciation, amortization and accretion
     175       201       508       680  
Taxes other than on income
     163       161       437       448  
Other
     39       20       31       25  
Total operating expenses
     2,057       2,209       5,601       6,182  
Operating income
     690       753       1,569       1,687  
Other income (expense)
                                
Interest income
     1       3       2       6  
Allowance for equity funds used during construction
     22       22       77       68  
Other, net
     (70 )     (5 )     (60 )     (5 )
Total other (expense) income, net
     (47 )     20       19       69  
Interest charges
                                
Interest charges
     180       197       568       587  
Allowance for borrowed funds used during construction
     (8 )     (8 )     (26 )     (24 )
Total interest charges, net
     172       189       542       563  
Income from continuing operations before income tax
     471       584       1,046       1,193  
Income tax expense
     178       219       386       456  
Income from continuing operations before cumulative effect
  of change in accounting principle
     293       365       660       737  
Discontinued operations, net of tax
     -       (2 )     (4 )     (2 )
Cumulative effect of change in accounting principle, net of tax
     -       2       -       -  
Net income
     293       365       656       735  
Net income attributable to noncontrolling interests, net of tax
     (2 )     (4 )     (5 )     (4 )
Net income attributable to controlling interests
   $ 291     $ 361     $ 651     $ 731  
Average common shares outstanding – basic
     296       294       296       289  
Basic and diluted earnings per common share
                                
Income from continuing operations attributable to controlling
  interests, net of tax
   $ 0.98     $ 1.23     $ 2.22     $ 2.53  
Discontinued operations attributable to controlling interests,
  net of tax
     -       -       (0.02 )     -  
Net income attributable to controlling interests
   $ 0.98     $ 1.23     $ 2.20     $ 2.53  
Dividends declared per common share
   $ 0.620     $ 0.620     $ 1.860     $ 1.860  
Amounts attributable to controlling interests
                                
Income from continuing operations, net of tax
   $ 291     $ 363     $ 655     $ 733  
Discontinued operations, net of tax
     -       (2 )     (4 )     (2 )
Net income attributable to controlling interests
   $ 291     $ 361     $ 651     $ 731  
 
  
See Notes to Progress Energy, Inc. Unaudited Condensed Consolidated Interim Financial Statements.
  

 
7
 

PROGRESS ENERGY, INC.
  
UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS
  
(in millions)
  
September 30, 2011
    
December 31, 2010
  
ASSETS
  
 
    
 
  
Utility plant
  
 
    
 
  
Utility plant in service
   $ 30,729     $ 29,708  
Accumulated depreciation
     (11,905 )     (11,567 )
Utility plant in service, net
     18,824       18,141  
Other utility plant, net
     222       220  
Construction work in progress
     2,233       2,205  
Nuclear fuel, net of amortization
     736       674  
Total utility plant, net
     22,015       21,240  
Current assets
                
Cash and cash equivalents
     103       611  
Receivables, net
     1,207       1,033  
Inventory
     1,376       1,226  
Regulatory assets
     180       176  
Derivative collateral posted
     112       164  
Deferred tax assets
     285       156  
Prepayments and other current assets
     162       110  
Total current assets
     3,425       3,476  
Deferred debits and other assets
                
Regulatory assets
     2,333       2,374  
Nuclear decommissioning trust funds
     1,512       1,571  
Miscellaneous other property and investments
     410       413  
Goodwill
     3,655       3,655  
Other assets and deferred debits
     327       325  
Total deferred debits and other assets
     8,237       8,338  
Total assets
   $ 33,677     $ 33,054  
CAPITALIZATION AND LIABILITIES
                
Common stock equity
                
Common stock without par value, 500 million shares authorized, 295
  million and 293 million shares issued and outstanding, respectively
   $ 7,414     $ 7,343  
Accumulated other comprehensive loss
     (207 )     (125 )
Retained earnings
     2,905       2,805  
Total common stock equity
     10,112       10,023  
Noncontrolling interests
     3       4  
Total equity
     10,115       10,027  
Preferred stock of subsidiaries
     93       93  
Long-term debt, affiliate
     273       273  
Long-term debt, net
     11,717       11,864  
Total capitalization
     22,198       22,257  
Current liabilities
                
Current portion of long-term debt
     950       505  
Short-term debt
     45       -  
Accounts payable
     895       994  
Interest accrued
     184       216  
Dividends declared
     185       184  
Customer deposits
     339       324  
Derivative liabilities
     303       259  
Accrued compensation and other benefits
     140       175  
Other current liabilities
     507       298  
Total current liabilities
     3,548       2,955  
Deferred credits and other liabilities
                
Noncurrent income tax liabilities
     2,310       1,696  
Accumulated deferred investment tax credits
     104       110  
Regulatory liabilities
     2,326       2,635  
Asset retirement obligations
     1,253       1,200  
Accrued pension and other benefits
     1,226       1,514  
Derivative liabilities
     255       278  
Other liabilities and deferred credits
     457       409  
Total deferred credits and other liabilities
     7,931       7,842  
Commitments and contingencies (Notes 14 and 15)
                
Total capitalization and liabilities
   $ 33,677     $ 33,054  
 
 
  
See Notes to Progress Energy, Inc. Unaudited Condensed Consolidated Interim Financial Statements.
  

 
8
 

PROGRESS ENERGY, INC.
  
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS of CASH FLOWS
  
(in millions)
  
 
    
 
  
Nine months ended September 30
  
2011
    
2010
  
Operating activities
  
 
    
 
  
Net income
   $ 656     $ 735  
Adjustments to reconcile net income to net cash provided by operating activities
                
Depreciation, amortization and accretion
     632       804  
Deferred income taxes and investment tax credits, net
     430       263  
Deferred fuel credit
     (11 )     (37 )
Allowance for equity funds used during construction
     (77 )     (68 )
Other adjustments to net income
     202       197  
Cash (used) provided by changes in operating assets and liabilities
                
Receivables
     (93 )     (252 )
Inventory
     (152 )     111  
Derivative collateral posted
     52       (83 )
Other assets
     (19 )     (25 )
Income taxes, net
     20       213  
Accounts payable
     (40 )     45  
Accrued pension and other benefits
     (359 )     (162 )
Other liabilities
     63       163  
Net cash provided by operating activities
     1,304       1,904  
Investing activities
                
Gross property additions
     (1,535 )     (1,643 )
Nuclear fuel additions
     (134 )     (164 )
Purchases of available-for-sale securities and other investments
     (4,536 )     (5,927 )
Proceeds from available-for-sale securities and other investments
     4,509       5,915  
Insurance proceeds
     78       18  
Other investing activities
     43       (3 )
Net cash used by investing activities
     (1,575 )     (1,804 )
Financing activities
                
Issuance of common stock, net
     42       419  
Dividends paid on common stock
     (550 )     (535 )
Net increase (decrease) in short-term debt
     45       (140 )
Proceeds from issuance of long-term debt, net
     1,286       591  
Retirement of long-term debt
     (1,000 )     (400 )
Other financing activities
     (60 )     (69 )
Net cash used by financing activities
     (237 )     (134 )
Net decrease in cash and cash equivalents
     (508 )     (34 )
Cash and cash equivalents at beginning of period
     611       725  
Cash and cash equivalents at end of period
   $ 103     $ 691  
Supplemental disclosures
                
Significant noncash transactions
                
Accrued property additions
   $ 253     $ 255  
 
  
See Notes to Progress Energy, Inc. Unaudited Condensed Consolidated Interim Financial Statements.
  

 
9
 

CAROLINA POWER & LIGHT COMPANY
  
d/b/a PROGRESS ENERGY CAROLINAS, INC.
  
UNAUDITED CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS
  
September 30, 2011
  
 
  
 
    
 
    
 
    
 
  
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS of INCOME
  
 
  
Three months ended September 30
    
Nine months ended September 30
  
(in millions)
  
2011
    
2010
    
2011
    
2010
  
Operating revenues
   $ 1,332     $ 1,414     $ 3,525     $ 3,794  
Operating expenses
                                
Fuel used in electric generation
     388       464       1,077       1,322  
Purchased power
     117       109       257       235  
Operation and maintenance
     271       256       859       841  
Depreciation, amortization and accretion
     132       120       382       358  
Taxes other than on income
     57       58       163       169  
Other
     38       5       38       5  
Total operating expenses
     1,003       1,012       2,776       2,930  
Operating income
     329       402       749       864  
Other income (expense)
                                
Interest income
     -       1       1       3  
Allowance for equity funds used during construction
     15       17       53       45  
Other, net
     (4 )     (2 )     (5 )     (5 )
Total other income, net
     11       16       49       43  
Interest charges
                                
Interest charges
     45       51       149       154  
Allowance for borrowed funds used during construction
     (4 )     (5 )     (15 )     (14 )
Total interest charges, net
     41       46       134       140  
Income before income tax
     299       372       664       767  
Income tax expense
     100       138       227       284  
Income before cumulative effect of change in accounting principle
     199       234       437       483  
Cumulative effect of change in accounting principle, net of tax
     -       2       -       -  
Net income
     199       236       437       483  
Net (income) loss attributable to noncontrolling interests, net of tax
     -       (2 )     -       1  
Net income attributable to controlling interests
     199       234       437       484  
Preferred stock dividend requirement
     (1 )     (1 )     (2 )     (2 )
Net income available to parent
   $ 198     $ 233     $ 435     $ 482  
 
  
See Notes to Progress Energy Carolinas, Inc. Unaudited Condensed Consolidated Interim Financial Statements.
  

 
10
 

CAROLINA POWER & LIGHT COMPANY d/b/a PROGRESS ENERGY CAROLINAS, INC.
  
UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS
  
(in millions)
  
September 30, 2011
    
December 31, 2010
  
ASSETS
  
 
    
 
  
Utility plant
  
 
    
 
  
Utility plant in service
   $ 17,234     $ 16,388  
Accumulated depreciation
     (7,505 )     (7,324 )
Utility plant in service, net
     9,729       9,064  
Other utility plant, net
     186       184  
Construction work in progress
     1,141       1,233  
Nuclear fuel, net of amortization
     522       480  
Total utility plant, net
     11,578       10,961  
Current assets
                
Cash and cash equivalents
     67       230  
Receivables, net
     547       519  
Receivables from affiliated companies
     27       44  
Inventory
     734       590  
Deferred fuel cost
     52       71  
Income taxes receivable
     17       90  
Deferred tax assets
     112       65  
Prepayments and other current assets
     99       47  
Total current assets
     1,655       1,656  
Deferred debits and other assets
                
Regulatory assets
     1,029       987  
Nuclear decommissioning trust funds
     992       1,017  
Miscellaneous other property and investments
     185       183  
Other assets and deferred debits
     104       95  
Total deferred debits and other assets
     2,310       2,282  
Total assets
   $ 15,543     $ 14,899  
CAPITALIZATION AND LIABILITIES
                
Common stock equity
                
Common stock without par value, 200 million shares authorized, 160
  million shares issued and outstanding
   $ 2,144     $ 2,130  
Accumulated other comprehensive loss
     (70 )     (33 )
Retained earnings
     3,068       3,083  
Total common stock equity
     5,142       5,180  
Preferred stock
     59       59  
Long-term debt, net
     3,693       3,693  
Total capitalization
     8,894       8,932  
Current liabilities
                
Current portion of long-term debt
     500       -  
Accounts payable
     496       534  
Payables to affiliated companies
     88       109  
Interest accrued
     65       74  
Customer deposits
     114       106  
Derivative liabilities
     93       53  
Accrued compensation and other benefits
     81       99  
Other current liabilities
     147       81  
Total current liabilities
     1,584       1,056  
Deferred credits and other liabilities
                
Noncurrent income tax liabilities
     1,902       1,608  
Accumulated deferred investment tax credits
     100       104  
Regulatory liabilities
     1,443       1,461  
Asset retirement obligations
     889       849  
Accrued pension and other benefits
     519       723  
Other liabilities and deferred credits
     212       166  
Total deferred credits and other liabilities
     5,065       4,911  
Commitments and contingencies (Notes 14 and 15)
                
Total capitalization and liabilities
   $ 15,543     $ 14,899  
 
 
  
See Notes to Progress Energy Carolinas, Inc. Unaudited Condensed Consolidated Interim Financial Statements.
  

 
11
 

CAROLINA POWER & LIGHT COMPANY d/b/a PROGRESS ENERGY CAROLINAS, INC.
  
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS of CASH FLOWS
  
(in millions)
  
 
    
 
  
Nine months ended September 30
  
2011
    
2010
  
Operating activities
  
 
    
 
  
Net income
   $ 437     $ 483  
Adjustments to reconcile net income to net cash provided by operating activities
                
Depreciation, amortization and accretion
     491       450  
Deferred income taxes and investment tax credits, net
     222       123  
Deferred fuel cost
     19       63  
Allowance for equity funds used during construction
     (53 )     (45 )
Other adjustments to net income
     20       68  
Cash provided (used) by changes in operating assets and liabilities
                
Receivables
     56       (89 )
Receivables from affiliated companies
     17       15  
Inventory
     (144 )     120  
Other assets
     (5 )     (41 )
Income taxes, net
     79       59  
Accounts payable
     (41 )     (18 )
Payables to affiliated companies
     (21 )     (1 )
Accrued pension and other benefits
     (228 )     (103 )
Other liabilities
     39       65  
Net cash provided by operating activities
     888       1,149  
Investing activities
                
Gross property additions
     (901 )     (867 )
Nuclear fuel additions
     (121 )     (132 )
Purchases of available-for-sale securities and other investments
     (430 )     (352 )
Proceeds from available-for-sale securities and other investments
     401       323  
Changes in advances to affiliated companies
     (59 )     199  
Other investing activities
     16       -  
Net cash used by investing activities
     (1,094 )     (829 )
Financing activities
                
Dividends paid on preferred stock
     (2 )     (2 )
Dividends paid to parent
     (450 )     (75 )
Proceeds from issuance of long-term debt, net
     496       -  
Contributions from parent
     -       14  
Other financing activities
     (1 )     -  
Net cash provided (used) by financing activities
     43       (63 )
Net (decrease) increase in cash and cash equivalents
     (163 )     257  
Cash and cash equivalents at beginning of period
     230       35  
Cash and cash equivalents at end of period
   $ 67     $ 292  
Supplemental disclosures
                
Significant noncash transactions
                
Accrued property additions
   $ 179     $ 160  
 
  
See Notes to Progress Energy Carolinas, Inc. Unaudited Condensed Consolidated Interim Financial Statements.
  

 
12
 

FLORIDA POWER CORPORATION
  
d/b/a PROGRESS ENERGY FLORIDA, INC.
  
UNAUDITED CONDENSED INTERIM FINANCIAL STATEMENTS
  
September 30, 2011
  
 
  
 
    
 
    
 
    
 
  
UNAUDITED CONDENSED STATEMENTS of INCOME
  
 
  
Three months ended September 30
    
Nine months ended September 30
  
(in millions)
  
2011
    
2010
    
2011
    
2010
  
Operating revenues
   $ 1,414     $ 1,543     $ 3,639     $ 4,065  
Operating expenses
                                
Fuel used in electric generation
     456       471       1,159       1,252  
Purchased power
     232       309       641       761  
Operation and maintenance
     221       234       655       647  
Depreciation, amortization and accretion
     39       77       112       311  
Taxes other than on income
     106       102       274       278  
Other
     (1 )     6       (13 )     6  
Total operating expenses
     1,053       1,199       2,828       3,255  
Operating income
     361       344       811       810  
Other income (expense)
                                
Interest income
     1       -       1       1  
Allowance for equity funds used during construction
     7       5       24       23  
Other, net
     (1 )     (3 )     3       -  
Total other income, net
     7       2       28       24  
Interest charges
                                
Interest charges
     50       68       187       202  
Allowance for borrowed funds used during construction
     (4 )     (3 )     (11 )     (10 )
Total interest charges, net
     46       65       176       192  
Income before income tax
     322       281       663       642  
Income tax expense
     119       101       245       241  
Net income
     203       180       418       401  
Preferred stock dividend requirement
     -       -       (1 )     (1 )
Net income avail