Progress Energy 2006 Annual Report Download - page 92

N O T E S T O C O N S O L I D A T E D F I N A N C I A L S T A T E M E N T S
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including, among other things, continued high oil prices
and the then-current “idle” state of our synthetic fuels
facilities. We estimated the fair value using the expected
present value of future cash flows. Based on the results
of the impairment test, we recorded a pre-tax impairment
charge of $27 million ($17 million after-tax) during the
quarter ended June 30, 2006, which is reported within
impairment of assets on the Consolidated Statements
of Income. This charge represents the entirety of the
synthetic fuels intangible assets; these assets had been
reported within the Coal and Synthetic Fuels segment.
Following a significant decrease in oil prices, our synthetic
fuels facilities resumed limited production of synthetic
fuels in September and October 2006, which continued
through the end of 2006.
9. IMPAIRMENTS OF LONG-LIVED ASSETS
AND INVESTMENTS
We apply SFAS No. 144 for the accounting and reporting
of impairment or disposal of long-lived assets. In
2006 and 2005, we recorded pre-tax long-lived asset
and investment impairments and other charges of
$65 million and $1 million, respectively. No impairments
were recorded in 2004.
A. Long-Lived Assets
Due to rising current and future oil prices, in the third
and fourth quarters of 2005 we tested our synthetic fuels
plant assets for impairment. These tests indicated that the
assets were recoverable and no impairment charge was
recorded. See Note 22D for additional information.
Concurrent with the synthetic fuels intangibles
impairment evaluation discussed in Note 8, we also
performed an impairment evaluation of related long-lived
assets during the second quarter of 2006. Based on the
results of the impairment test, we recorded a pre-tax
impairment charge of $64 million ($38 million after-tax)
during the quarter ended June 30, 2006, which is reported
within impairment of assets on the Consolidated Statements
of Income. This charge represents the entirety of the
asset carrying value of our synthetic fuels manufacturing
facilities, as well as a portion of the asset carrying value
associated with the river terminals at which the synthetic
fuels manufacturing facilities are located. These assets
had been reported within the Coal and Synthetic Fuels
segment. As discussed in Note 8, our synthetic fuels
facilities resumed limited production of synthetic fuels in
September and October 2006, which continued through
the end of 2006.
B. Investments
We evaluate declines in value of investments under
the criteria of SFAS No. 115, “Accounting for Certain
Investments in Debt and Equity Securities” (SFAS No. 115),
and FASB Staff Position FAS 115-1/124-1, “The Meaning
of Other-Than-Temporary Impairments and Its Application
to Certain Investments” (See Note 1D). Declines in fair
value to below the cost basis judged to be other than
temporary on available-for-sale securities are included in
regulatory liabilities on the Consolidated Balance Sheets
for securities held in our nuclear decommissioning trust
funds and in operation and maintenance expense and
other, net on the Consolidated Statements of Income
for securities in our benefit investment trusts and
other available-for-sale securities. See Note 13 for
additional information.
We continually review PEC’s affordable housing
investment (AHI) portfolio for impairment. As a result of
various factors, including continued operating losses
of the AHI portfolio and management issues arising at
certain properties within the AHI portfolio, we recorded
impairment charges of $1 million on a pre-tax basis
in both 2006 and 2005. No impairments were recorded
in 2004.
10. EQUITY
A. Common Stock
At December 31, 2006 and 2005, we had 500 million shares
of common stock authorized under our charter, of which
256 million shares and 252 million shares, respectively,
were outstanding. During 2006, 2005 and 2004,
respectively, we issued approximately 4.2 million,
4.8 million and 1.7 million shares of common stock,
resulting in approximately $185 million, $208 million and
$73 million in proceeds. Included in these amounts for
2006, 2005 and 2004, respectively, were approximately
1.6 million, 4.6 million and 1.4 million shares for proceeds
of approximately $70 million, $199 million and $62 million,
to meet the requirements of the Progress Energy 401(k)
Savings and Stock Ownership Plan (401(k)) and the
Investor Plus Stock Purchase Plan.
At December 31, 2006 and 2005, we had approximately
54 million shares and 58 million shares, respectively, of
common stock authorized by the board of directors that
remained unissued and reserved, primarily to satisfy
the requirements of our stock plans. In 2002, the board
of directors authorized meeting the requirements of
the 401(k) and the Investor Plus Stock Purchase Plan