Progress Energy 2007 Annual Report Download - page 136

Download and view the complete annual report

Please find page 136 of the 2007 Progress Energy annual report below. You can navigate through the pages in the report by either clicking on the pages listed below, or by using the keyword search tool below to find specific information within the annual report.

Page out of 140

  • 1
  • 2
  • 3
  • 4
  • 5
  • 6
  • 7
  • 8
  • 9
  • 10
  • 11
  • 12
  • 13
  • 14
  • 15
  • 16
  • 17
  • 18
  • 19
  • 20
  • 21
  • 22
  • 23
  • 24
  • 25
  • 26
  • 27
  • 28
  • 29
  • 30
  • 31
  • 32
  • 33
  • 34
  • 35
  • 36
  • 37
  • 38
  • 39
  • 40
  • 41
  • 42
  • 43
  • 44
  • 45
  • 46
  • 47
  • 48
  • 49
  • 50
  • 51
  • 52
  • 53
  • 54
  • 55
  • 56
  • 57
  • 58
  • 59
  • 60
  • 61
  • 62
  • 63
  • 64
  • 65
  • 66
  • 67
  • 68
  • 69
  • 70
  • 71
  • 72
  • 73
  • 74
  • 75
  • 76
  • 77
  • 78
  • 79
  • 80
  • 81
  • 82
  • 83
  • 84
  • 85
  • 86
  • 87
  • 88
  • 89
  • 90
  • 91
  • 92
  • 93
  • 94
  • 95
  • 96
  • 97
  • 98
  • 99
  • 100
  • 101
  • 102
  • 103
  • 104
  • 105
  • 106
  • 107
  • 108
  • 109
  • 110
  • 111
  • 112
  • 113
  • 114
  • 115
  • 116
  • 117
  • 118
  • 119
  • 120
  • 121
  • 122
  • 123
  • 124
  • 125
  • 126
  • 127
  • 128
  • 129
  • 130
  • 131
  • 132
  • 133
  • 134
  • 135
  • 136
  • 137
  • 138
  • 139
  • 140

134
R E C O N C I L I A T I O N O F O N G O I N G E A R N I N G S P E R S H A R E
TO REPORTED GAAP EARNINGS PER SHARE (UNAUDITED)
We use ongoing earnings per share to evaluate the
operations and to establish goals for management and
employees. We believe this presentation is appropriate and
enables investors to more accurately compare our 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 ongoing earnings per share
to GAAP are as follows:
Contingent Value Obligation (CVO)
Mark-to-Market
In connection with the acquisition of Florida Progress
Corporation, we issued 98.6 million CVOs. Each CVO
represents the right of the holder 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 fair value. Unrealized gains and losses from
changes in market value are recognized in earnings. Since
changes in the fair value of the CVOs do not affect our
underlying obligation, we do not consider the adjustment
a component of ongoing earnings.
Discontinued Operations
The operations of businesses that have been sold or are
in the process of being sold are reported as discontinued
operations, and therefore we do not view these activities as
representative of our ongoing operations. Our discontinued
operations include CCO; Rowan and DeSoto; Winchester
Energy; Progress Telecom, LLC; Dixie Fuels; Progress
Materials, Inc.; Coal Mining; Progress Rail; MEMCO;
Synthetic Fuels business; and Coal Terminal services.
Loss on Redemptions of Debt
In November 2006, the Parent redeemed the entire
outstanding $350 million principal amount of its 6.05%
Senior Notes due April 15, 2007, and the entire outstanding
$400 million principal amount of its 5.85% Senior Notes
due October 30, 2008. In December 2006, the Parent
repurchased, pursuant to a tender offer, $550 million, or
approximately 44.0 percent, of the aggregate principal
amount of its 7.10% Senior Notes due March 1, 2011. Due
to the nonrecurring nature of this loss, we do not believe
it is representative of our ongoing operations.
Postretirement and Severance Charges
As part of our cost-management initiative, we approved a
workforce restructuring in February 2005, which resulted in
a reduction of approximately 450 positions. In addition to the
workforce restructuring, the cost-management initiative
included a voluntary enhanced retirement program, in
which 1,450 eligible employees elected to participate. In
connection with this initiative, we incurred charges related
to estimated future payments for severance benefits that
will be paid out over time. Due to the nonrecurring nature
of the charge, we do not believe it is representative of our
ongoing operations.
December 31 2007 2006 2005
Core ongoing earnings per share(a) $2.81 $2.63 $2.70
Noncore ongoing earnings per share(b) (0.09) (0.19) (0.19)
Total ongoing earnings per share 2.72 2.44 2.51
Contingent value obligations
mark-to-market (0.01) (0.10) 0.03
Discontinued operations (0.74) 0.08 0.70
Loss on debt redemptions −(0.14) –
Postretirement and severance charges –−(0.42)
Reported GAAP earnings per share $1.97 $2.28 $2.82
(a) Core ongoing earnings primarily includes the utility operations, corporate
eliminations and the holding company.
(b) Noncore ongoing earnings primarily includes the allocation of corporate
overhead costs associated with divested business.