Progress Energy 2008 Annual Report Download - page 71

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Progress Energy Annual Report 2008
net loss from discontinued operations in the table below).
We used the net proceeds from the divestiture of CCO and
the Georgia Contracts for general corporate purposes.
The accompanying consolidated financial statements
reflect the operations of CCO as discontinued operations.
Interest expense has been allocated to discontinued
operations based on their respective net assets, assuming
a uniform debt-to-equity ratio across our operations.
Pre-tax interest expense allocated for the years ended
December 31, 2007 and 2006 was $11 million and $36 million,
respectively. We ceased recording depreciation upon
classification of the assets as discontinued operations
in December 2006. After-tax depreciation expense was
$14 million for the year ended December 31, 2006. Results
of discontinued operations for CCO for the years ended
December 31 were as follows:
(in millions) 2008 2007 2006
Revenues $– $407 $754
Loss before income taxes $(5) $(449) $(92)
Income tax benefit 2166 35
Net loss from discontinued operations (3) (283) (57)
(Loss) gain on disposal of discontinued
operations, including income tax
(expense) benefit of $(2), $7 and $123,
respectively (2) 18 (226)
Loss from discontinued operations $(5) $(265) $(283)
D. Natural Gas Drilling and Production
On October 2, 2006, we sold our natural gas drilling and
production business (Gas) for approximately $1.1 billion
in net proceeds. Gas included Winchester Production
Company, Ltd., Westchester Gas Company, Texas Gas
Gathering and Talco Midstream Assets Ltd.; all were
subsidiaries of Progress Fuels Corporation, formerly
Electric Fuels Corporation (Progress Fuels). Proceeds
from the sale were used primarily to reduce holding
company debt and for other corporate purposes.
Based on the net proceeds associated with the sale, we
recorded an after-tax net gain on disposal of $300 million
during the year ended December 31, 2006. We recorded
an after-tax loss of $2 million during the year ended
December 31, 2007, primarily related to working capital
adjustments.
The accompanying consolidated financial statements
reflect the operations of Gas as discontinued operations.
Interest expense has been allocated to discontinued
operations based on their respective net assets,
assuming a uniform debt-to-equity ratio across our
operations. Pre-tax interest expense allocated was
$13 million for the year ended December 31, 2006. We
ceased recording depreciation upon classification of the
assets as discontinued operations in July 2006. After-tax
depreciation expense was $16 million for the year ended
December 31, 2006. Results of discontinued operations for
Gas for the years ended December 31 were as follows:
(in millions) 2007 2006
Revenues $– $192
Earnings before income taxes $– $135
Income tax benefit (expense) 4(53)
Net earnings from discontinued operations 482
(Loss) gain on disposal of discontinued
operations, including income tax benefit
(expense) of $1 and $(188), respectively (2) 300
Earnings from discontinued operations $2 $382
E. CCO – DeSoto and Rowan Generation
Facilities
On May 8, 2006, we entered into definitive agreements
to divest of two subsidiaries of PVI, DeSoto County
Generating Co., LLC (DeSoto) and Rowan County Power,
LLC (Rowan), including certain existing power supply
contracts to Southern Power Company, a subsidiary
of Southern Company, for gross purchase prices of
approximately $80 million and $325 million, respectively.
DeSoto owned a 320-MW dual-fuel combustion turbine
electric generation facility in DeSoto County, Fla., and
Rowan owned a 925-MW dual-fuel combined cycle and
combustion turbine electric generation facility in Rowan
County, N.C. We used the proceeds from the sales to
reduce debt and for other corporate purposes.
The sale of DeSoto closed in the second quarter of 2006
and the sale of Rowan closed during the third quarter
of 2006. Based on the gross proceeds associated with
the sales, we recorded an after-tax loss on disposal of
$67 million during the year ended December 31, 2006.
The accompanying consolidated financial statements
reflect the operations of DeSoto and Rowan as discontinued
operations. Interest expense has been allocated to
discontinued operations based on their respective net
assets, assuming a uniform debt-to-equity ratio across
our operations. Pre-tax interest expense allocated
was $6 million for the year ended December 31, 2006.
We ceased recording depreciation upon classification
of the assets as discontinued operations in May
2006. After-tax depreciation expense during the year
ended December 31, 2006, was $3 million. Results of
discontinued operations for DeSoto and Rowan for the
year ended December 31 were as follows: