Progress Energy 2008 Annual Report Download - page 85

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Progress Energy Annual Report 2008
an $11 million charge to amortization expense. On June 4,
2008, the NCUC issued an order granting PEC the same
accounting treatment to its GridSouth development costs.
In accordance with the OATT settlement discussed above,
in July 2008, PEC began amortization and recovery of the
wholesale portion of PEC’s GridSouth development costs
over a five-year period. The impact of this wholesale
amortization was $1 million in 2008 and is estimated to
be $2 million annually during the remaining amortization
period. PEC’s recorded investment in GridSouth totaled
$19 million and $22 million at December 31, 2008 and 2007,
respectively.
E. Nuclear License Renewals
The NRC operating license for Robinson expires in 2030
and the licenses for Brunswick expire in 2036 for Unit No.
1 and 2034 for Unit No. 2. On December 17, 2008, the NRC
issued a 20-year extension on the operating license for
Harris, which extends the operating license through 2046.
The NRC operating license held by PEF for CR3 currently
expires in December 2016. On December 18, 2008, PEF
filed an application for a 20-year extension from the NRC
on the operating license for CR3, which would extend
the operating license through 2036, if approved. PEF
anticipates a decision from the NRC in 2011.
8. GOODWILL AND INTANGIBLE ASSETS
We perform annual goodwill impairment tests in
accordance with SFAS No. 142, “Goodwill and Other
Intangible Assets” (SFAS No. 142). Goodwill was tested
for impairment for both the PEC and PEF segments in the
second quarters of 2008 and 2007; each test indicated
no impairment.
Under SFAS No. 142, all goodwill is assigned to our
reporting units that are expected to benefit from the
synergies of the business combination. At December 31,
2008 and 2007, our carrying amount of goodwill was
$3.655 billion, with $1.922 billion assigned to PEC and
$1.733 billion assigned to PEF. The amounts assigned to
PEC and PEF are recorded in our Corporate and Other
business segment. There were no changes to the
assignment of the carrying amounts to PEC and PEF in
2008 or 2007.
Goodwill was previously allocated to our former CCO-
Georgia Operations reporting unit, which was comprised
of four nonregulated generating plants. As a result of
our evaluation of certain business opportunities that
impacted the future cash flows of our Georgia Operations,
we performed an interim goodwill impairment test during
the first quarter of 2006. We estimated the fair value of
that reporting unit using the expected present value of
future cash flows. As a result of that test, we recognized a
pre-tax goodwill impairment charge of $64 million
($39 million after-tax) during the first quarter of 2006,
which has been reclassified to discontinued operations,
net of tax on the Consolidated Statements of Income (See
Note 3C).
We apply SFAS No. 144 for the accounting and reporting
of impairment or disposal of long-lived assets. On
May 22, 2006, we idled our synthetic fuels facilities due
to significant uncertainty surrounding future synthetic
fuels production. With the idling of these facilities, we
performed an evaluation of the intangible assets, which
were comprised primarily of capitalized acquisition costs
(See Note 3A). The impairment test considered numerous
factors including, among other things, continued high oil
prices and the then-current idled 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 has been
reclassified to discontinued operations, net of tax on the
Consolidated Statements of Income.
9. EQUITY
A. Common Stock
At December 31, 2008 and 2007, we had 500 million shares
of common stock authorized under our charter, of which
264 million shares and 260 million shares, respectively,
were outstanding. During 2008, 2007 and 2006, respectively,
we issued approximately 3.7 million, 3.7 million and
4.2 million shares of common stock, resulting in
approximately $132 million, $151 million and $185 million
in proceeds. Included in these amounts for 2008, 2007
and 2006, respectively, were approximately 3.1 million,
1.0 million and 1.6 million shares for proceeds of
approximately $131 million, $46 million and $70 million,
issued for the Progress Energy 401(k) Savings & Stock
Ownership Plan (401(k)) and the Investor Plus Stock
Purchase Plan.
On January 12, 2009, the Parent issued 14.4 million shares
of common stock at a public offering price of $37.50 per
share. Net proceeds from this offering were approximately
$523 million.
There are various provisions limiting the use of retained
earnings for the payment of dividends under certain
circumstances. At December 31, 2008, there were no
significant restrictions on the use of retained earnings
(See Note 11B).