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
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR
15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from ____________ to ______________.
Exact name of registrants as specified in their
Commission charters, state of incorporation, address of principal I.R.S. Employer
File Number executive offices, and telephone number Identification Number
1-15929 CP&L Energy, Inc. 56-2155481
411 Fayetteville Street
Raleigh, North Carolina 27601-1748
Telephone: (919) 546-6411
State of Incorporation: North Carolina
1-3382 Carolina Power & Light Company 56-0165465
411 Fayetteville Street
Raleigh, North Carolina 27601-1748
Telephone: (919) 546-6411
State of Incorporation: North Carolina
|
Indicate by check mark whether the 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 registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes X No ---. ---.
Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practicable date.
Description of Shares Outstanding
Registrant Common Stock at July 31, 2000
CP&L Energy, Inc: Common Stock (Without Par Value) 159,597,655
Carolina Power & Light Company Common Stock (Without Par Value) 159,608,055
(All held by CP&L Energy, Inc.)
|
Filing Format
This Quarterly Report on Form 10Q is a combined quarterly report being filed separately by two registrants: CP&L Energy, Inc. (CP&L Energy) and Carolina Power & Light Company (CP&L). CP&L Energy became the holding company for CP&L on June 19, 2000. Information contained herein relating exclusively to either 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 registrant.
CP&L ENERGY, INC. AND CAROLINA POWER & LIGHT COMPANY
FORM 10-Q - For the Quarter Ended June 30, 2000
Safe Harbor For Forward-Looking Statements
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
Supplemental Data Schedule
Notes to Consolidated Financial Statements
Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operation
Item 3. Quantitative and Qualitative Disclosures About Market Risk
PART II. OTHER INFORMATION
Item 1. Legal Proceedings
Item 2. Changes in Securities and Use of Proceeds
Item 4. Submission of Matters to a Vote of Security Holders
Item 6. Exhibits and Reports on Form 8-K
Signatures
Exhibit Index
SAFE HARBOR FOR FORWARD-LOOKING STATEMENTS
The matters discussed throughout this 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.
Examples of forward-looking statements discussed in this Form 10-Q, PART 1, ITEM 2, "MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS", include, but are not limited to, statements under the heading "Other Matters" concerning the effects of electric utility industry restructuring.
Any forward-looking statement speaks only as of the date on which such statement is made, and neither CP&L Energy nor CP&L undertakes any obligation to update any forward-looking statement or statements to reflect events or circumstances after the date on which such statement is made.
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: Governmental policies and regulatory actions (including those of the Federal Energy Regulatory Commission, the Environmental Protection Agency, the Nuclear Regulatory Commission, the Department of Energy, the North Carolina Utilities Commission and the Public Service Commission of South Carolina); general industry trends; operation of nuclear power facilities; availability of nuclear waste storage facilities; nuclear decommissioning costs; changes in the economy of areas served by CP&L ; legislative and regulatory initiatives that impact the speed and degree of industry restructuring; ability to obtain adequate and timely rate recovery of costs, including potential stranded costs arising from industry restructuring; competition from other energy suppliers; the success of CP&L Energy's direct and indirect subsidiaries; weather conditions and catastrophic weather-related damage; market demand for energy; inflation; capital market conditions; the proposed share exchange with Florida Progress Corporation; failure of the potential benefits of CP&L's conversion to a holding company structure to materialize; cash flows derived from the synthetic fuel plants; unanticipated changes in operating expenses and capital expenditures and legal and administrative proceedings. All such factors are difficult to predict, contain uncertainties that may materially affect actual results, and may be beyond the control of CP&L Energy and CP&L. New factors emerge from time to time, and it is not possible for management to predict all of such factors, nor can it assess the effect of each such factor on CP&L Energy and CP&L.
PART I. FINANCIAL INFORMATION
CP&L Energy, Inc.
CONSOLIDATED INTERIM FINANCIAL STATEMENTS
(Unaudited)
JUNE 30, 2000
STATEMENTS OF INCOME
Three Months Ended Six Months Ended
June 30 June 30
(In thousands except per share amounts) 2000 1999 2000 1999
------------------------------------------------------------------------------------------------------------------------------
Operating Revenues
Electric $ 778,470 $ 733,999 $ 1,558,378 $ 1,472,558
Natural gas 75,350 - 147,448 -
Diversified businesses 38,484 28,823 63,618 53,166
------------------------------------------------------------------------------------------------------------------------------
Total Operating Revenues 892,304 762,822 1,769,444 1,525,724
------------------------------------------------------------------------------------------------------------------------------
Operating Expenses
Fuel used in electric generation 137,001 142,918 297,388 281,882
Purchased power 85,067 96,961 155,326 182,183
Gas purchased for resale 59,836 - 103,734 -
Other operation and maintenance 164,989 164,819 363,216 307,786
Depreciation and amortization 134,134 121,284 266,624 241,840
Taxes other than on income 35,511 34,669 72,845 70,670
Harris Plant deferred costs, net 2,815 1,964 8,096 3,488
Diversified businesses 58,767 42,836 102,922 81,096
------------------------------------------------------------------------------------------------------------------------------
Total Operating Expenses 678,120 605,451 1,370,151 1,168,945
------------------------------------------------------------------------------------------------------------------------------
Operating Income 214,184 157,371 399,293 356,779
------------------------------------------------------------------------------------------------------------------------------
Other Income (Expense)
Interest income 2,048 2,270 5,311 4,563
Other, net (5,531) (8,992) (1,977) (16,729)
------------------------------------------------------------------------------------------------------------------------------
Total Other Income (Expense) (3,483) (6,722) 3,334 (12,166)
------------------------------------------------------------------------------------------------------------------------------
Interest Charges
Long-term debt 54,851 43,993 104,923 86,394
Other interest charges 4,279 3,042 9,280 5,803
Allowance for borrowed funds used during construction (6,323) (2,964) (10,929) (4,792)
------------------------------------------------------------------------------------------------------------------------------
Net Interest Charges 52,807 44,071 103,274 87,405
------------------------------------------------------------------------------------------------------------------------------
Income before Income Taxes 157,894 106,578 299,353 257,208
Income Taxes 50,434 44,161 106,632 103,320
------------------------------------------------------------------------------------------------------------------------------
Net Income $ 107,460 $ 62,417 $ 192,721 $ 153,888
==============================================================================================================================
Average Common Shares Outstanding 153,311 144,466 153,183 144,380
Basic Earnings per Common Share $ 0.70 $ 0.43 $ 1.26 $ 1.07
Diluted Earnings per Common Share $ 0.70 $ 0.43 $ 1.26 $ 1.06
Dividends Declared per Common Share $ 0.515 $ 0.500 $ 1.030 $ 1.000
==============================================================================================================================
|
See Supplemental Data and Notes to Consolidated Interim Financial Statements.
CP&L Energy, Inc.
BALANCE SHEETS
June 30 December 31
(In thousands) 2000 1999 1999
-------------------------------------------------------------------------------------------------------------------
ASSETS
Utility Plant
Electric utility plant in service $ 10,915,192 $ 10,418,318 $ 10,633,823
Gas utility plant in service 362,445 - 354,773
Accumulated depreciation (5,246,208) (4,685,796) (4,975,405)
-------------------------------------------------------------------------------------------------------------------
Utility plant in service, net 6,031,429 5,732,522 6,013,191
Held for future use 8,028 11,984 11,282
Construction work in progress 637,770 408,959 536,017
Nuclear fuel, net of amortization 193,287 184,095 204,323
-------------------------------------------------------------------------------------------------------------------
Total Utility Plant, Net 6,870,514 6,337,560 6,764,813
-------------------------------------------------------------------------------------------------------------------
Current Assets
Cash and cash equivalents 29,464 81,303 79,871
Accounts receivable 501,516 448,655 446,367
Taxes receivable - - 3,770
Inventory 272,508 233,264 247,913
Deferred fuel cost 95,683 44,411 81,699
Prepayments 31,980 9,462 42,631
Other current assets 114,243 81,393 177,082
-------------------------------------------------------------------------------------------------------------------
Total Current Assets 1,045,394 898,488 1,079,333
-------------------------------------------------------------------------------------------------------------------
Deferred Debits and Other Assets
Income taxes recoverable through future rates 228,880 253,000 229,008
Harris Plant deferred costs 49,562 58,341 56,142
Unamortized debt expense 13,264 16,922 10,924
Nuclear decommissioning trust funds 411,534 345,947 379,949
Diversified business property, net 192,154 170,767 239,982
Miscellaneous other property and investments 428,335 227,320 252,454
Goodwill, net 341,671 61,269 288,970
Other assets and deferred debits 190,338 196,503 192,444
-------------------------------------------------------------------------------------------------------------------
Total Deferred Debits and Other Assets 1,855,738 1,330,069 1,649,873
-------------------------------------------------------------------------------------------------------------------
Total Assets $ 9,771,646 $ 8,566,117 $ 9,494,019
===================================================================================================================
CAPITALIZATION AND LIABILITIES
Capitalization
Common stock equity $ 3,460,084 $ 2,975,565 $ 3,412,647
Preferred stock of subsidiary - redemption not required 59,376 59,376 59,376
Long-term debt, net 3,084,048 2,716,447 3,028,561
-------------------------------------------------------------------------------------------------------------------
Total Capitalization 6,603,508 5,751,388 6,500,584
-------------------------------------------------------------------------------------------------------------------
Current Liabilities
Current portion of long-term debt 388,477 201,610 197,250
Accounts payable 269,278 231,787 269,053
Taxes accrued 60,873 35,280 -
Interest accrued 49,558 47,104 47,607
Dividends declared 81,185 74,385 80,939
Short-term obligations 114,631 - 168,240
Other current liabilities 153,670 114,282 130,036
-------------------------------------------------------------------------------------------------------------------
Total Current Liabilities 1,117,672 704,448 893,125
-------------------------------------------------------------------------------------------------------------------
Deferred Credits and Other Liabilities
Accumulated deferred income taxes 1,581,633 1,636,415 1,632,778
Accumulated deferred investment tax credits 198,506 206,722 203,704
Other liabilities and deferred credits 270,327 267,144 263,828
-------------------------------------------------------------------------------------------------------------------
Total Deferred Credits and Other Liabilities 2,050,466 2,110,281 2,100,310
-------------------------------------------------------------------------------------------------------------------
Total Capitalization and Liabilities $ 9,771,646 $ 8,566,117 $ 9,494,019
===================================================================================================================
SCHEDULES OF COMMON STOCK EQUITY
(In thousands)
Common stock (without par value, authorized 500,000,000; issued and $ 1,747,584 $ 1,382,353 $ 1,745,455
outstanding 159,608,055, 151,337,503 and 159,599,650
shares, respectively)
Unearned ESOP common stock (129,260) (144,254) (140,153)
Retained earnings 1,841,760 1,737,466 1,807,345
-------------------------------------------------------------------------------------------------------------------
Total Common Stock Equity $ 3,460,084 $ 2,975,565 $ 3,412,647
===================================================================================================================
|
See Supplemental Data and Notes to Consolidated Interim Financial Statements.
CP&L Energy, Inc.
STATEMENTS OF CASH FLOWS Three Months Ended Six Months Ended
June 30 June 30
(In thousands) 2000 1999 2000 1999
-------------------------------------------------------------------------------------------------------------------------
Operating Activities
Net income $ 107,460 $ 62,417 $ 192,721 $ 153,888
Adjustments to reconcile net income to net cash provided by
operating activities
Depreciation and amortization 156,549 143,534 310,334 286,905
Harris Plant deferred costs 2,033 1,065 6,580 1,679
Deferred income taxes (20,066) (15,407) (51,106) (32,805)
Investment tax credit (2,599) (2,550) (5,198) (5,100)
Deferred fuel cost (credit) (20,014) (2,172) (12,555) (1,765)
Net (increase) decrease in receivables, inventories,
prepaid expense and other current assets (136,989) (61,429) 3,799 (69,861)
Net increase (decrease) in payables and accrued expenses 4,005 36,203 74,016 87,265
Other 6,451 32,260 61,529 81,080
-------------------------------------------------------------------------------------------------------------------------
Net Cash Provided by Operating Activities 96,830 193,921 580,120 501,286
-------------------------------------------------------------------------------------------------------------------------
Investing Activities
Gross property additions (186,664) (139,938) (418,321) (309,004)
Nuclear fuel additions (22,077) (5,439) (47,329) (32,573)
Contributions to nuclear decommissioning trust (7,704) (7,712) (17,979) (17,995)
Increase in cash restricted for redemption of long-term debt (59,079) - (59,079) -
Net cash flow of company-owned life insurance program (4,976) (6,729) (4,963) (6,850)
Investment in non-utility activities (34,883) (41,611) (61,486) (106,545)
-------------------------------------------------------------------------------------------------------------------------
Net Cash Used in Investing Activities (315,383) (201,429) (609,157) (472,967)
-------------------------------------------------------------------------------------------------------------------------
Financing Activities
Proceeds from issuance of long-term debt 417,383 - 417,383 400,970
Net increase (decrease) in short-term indebtedness (69,500) 117,500 (57,600) (144,750)
Net increase (decrease) in outstanding payments 10,067 473 41,620 (85,833)
Retirement of long-term debt (67,352) (47) (264,717) (1,683)
Dividends paid on common stock (79,125) (72,522) (158,056) (144,736)
Other - (187) - 144
-------------------------------------------------------------------------------------------------------------------------
Net Cash Provided by (Used in) Financing Activities 211,473 45,217 (21,370) 24,112
-------------------------------------------------------------------------------------------------------------------------
Net Increase (Decrease) in Cash and Cash Equivalents (7,080) 37,709 (50,407) 52,431
Cash and Cash Equivalents at Beginning of the Period 36,544 43,594 79,871 28,872
-------------------------------------------------------------------------------------------------------------------------
Cash and Cash Equivalents at End of the Period $ 29,464 $ 81,303 $ 29,464 81,303
-------------------------------------------------------------------------------------------------------------------------
Supplemental Disclosures of Cash Flow Information
Cash paid during the period - interest $ 30,131 $ 26,543 $ 96,864 $ 77,731
income taxes $ 110,477 $ 108,337 $ 111,866 $ 109,493
-------------------------------------------------------------------------------------------------------------------------
|
See Supplemental Data and Notes to Consolidated Interim Financial Statements.
PART I. FINANCIAL INFORMATION (cont.)
Carolina Power & Light Company
CONSOLIDATED INTERIM FINANCIAL STATEMENTS
(Unaudited)
JUNE 30, 2000
STATEMENTS OF INCOME
Three Months Ended Six Months Ended
June 30 June 30
(In thousands) 2000 1999 2000 1999
---------------------------------------------------------------------------------------------------------------------------
Operating Revenues
Electric $ 778,470 $ 733,999 $ 1,558,378 $ 1,472,558
Natural gas 75,350 - 147,448 -
Diversified businesses 38,484 28,823 63,618 53,166
---------------------------------------------------------------------------------------------------------------------------
Total Operating Revenues 892,304 762,822 1,769,444 1,525,724
---------------------------------------------------------------------------------------------------------------------------
Operating Expenses
Fuel used in electric generation 137,001 142,918 297,388 281,882
Purchased power 85,067 96,961 155,326 182,183
Gas purchased for resale 59,836 - 103,734 -
Other operation and maintenance 164,989 164,819 363,216 307,786
Depreciation and amortization 134,134 121,284 266,624 241,840
Taxes other than on income 35,511 34,669 72,845 70,670
Harris Plant deferred costs, net 2,815 1,964 8,096 3,488
Diversified businesses 58,767 42,836 102,922 81,096
---------------------------------------------------------------------------------------------------------------------------
Total Operating Expenses 678,120 605,451 1,370,151 1,168,945
---------------------------------------------------------------------------------------------------------------------------
Operating Income 214,184 157,371 399,293 356,779
---------------------------------------------------------------------------------------------------------------------------
Other Income (Expense)
Interest income 2,048 2,270 5,311 4,563
Other, net (4,789) (8,250) (494) (15,246)
---------------------------------------------------------------------------------------------------------------------------
Total Other Income (Expense) (2,741) (5,980) 4,817 (10,683)
---------------------------------------------------------------------------------------------------------------------------
Interest Charges
Long-term debt 54,851 43,993 104,923 86,394
Other interest charges 4,279 3,042 9,280 5,803
Allowance for borrowed funds used during construction (6,323) (2,964) (10,929) (4,792)
---------------------------------------------------------------------------------------------------------------------------
Net Interest Charges 52,807 44,071 103,274 87,405
---------------------------------------------------------------------------------------------------------------------------
Income before Income Taxes 158,635 107,320 300,836 258,691
Income Taxes 50,434 44,161 106,632 103,320
---------------------------------------------------------------------------------------------------------------------------
Net Income 108,202 63,159 194,204 155,371
Preferred Stock Dividend Requirements (742) (742) (1,483) (1,483)
---------------------------------------------------------------------------------------------------------------------------
Earnings for Common Stock $ 107,460 $ 62,417 $ 192,721 $ 153,888
===========================================================================================================================
===========================================================================================================================
|
See Supplemental Data and Notes to Consolidated Interim Financial Statements.
Carolina Power & Light Company
BALANCE SHEETS
June 30 December 31
(In thousands) 2000 1999 1999
-------------------------------------------------------------------------------------------------------------------
ASSETS
Utility Plant
Electric utility plant in service $ 10,915,192 $ 10,418,318 $ 10,633,823
Gas utility plant in service 362,445 - 354,773
Accumulated depreciation (5,246,208) (4,685,796) (4,975,405)
------------------------------------------------------------------------------------------------------------
Utility plant in service, net 6,031,429 5,732,522 6,013,191
Held for future use 8,028 11,984 11,282
Construction work in progress 637,770 408,959 536,017
Nuclear fuel, net of amortization 193,287 184,095 204,323
------------------------------------------------------------------------------------------------------------
Total Utility Plant, Net 6,870,514 6,337,560 6,764,813
------------------------------------------------------------------------------------------------------------
Current Assets
Cash and cash equivalents 29,464 81,303 79,871
Accounts receivable 501,516 448,655 446,367
Taxes receivable - - 3,770
Inventory 272,508 233,264 247,913
Deferred fuel cost 95,683 44,411 81,699
Prepayments 31,980 9,462 42,631
Other current assets 114,243 81,393 177,082
------------------------------------------------------------------------------------------------------------
Total Current Assets 1,045,394 898,488 1,079,333
------------------------------------------------------------------------------------------------------------
Deferred Debits and Other Assets
Income taxes recoverable through future rates 228,880 253,000 229,008
Abandonment costs - 9,005 1,675
Harris Plant deferred costs 49,562 58,341 56,142
Unamortized debt expense 13,264 16,922 10,924
Nuclear decommissioning trust funds 411,534 345,947 379,949
Diversified business property, net 192,154 170,767 239,982
Miscellaneous other property and investments 428,335 227,320 252,454
Goodwill, net 341,671 61,269 288,970
Other assets and deferred debits 190,338 187,498 190,769
------------------------------------------------------------------------------------------------------------
Total Deferred Debits and Other Assets 1,855,738 1,330,069 1,649,873
------------------------------------------------------------------------------------------------------------
Total Assets $ 9,771,646 $ 8,566,117 $ 9,494,019
------------------------------------------------------------------------------------------------------------
CAPITALIZATION AND LIABILITIES
Capitalization
Common stock equity $ 3,460,084 $ 2,975,565 $ 3,412,647
Preferred stock - redemption not required 59,376 59,376 59,376
Long-term debt, net 3,084,048 2,716,447 3,028,561
-----------------------------------------------------------------------------------------------------------
Total Capitalization 6,603,508 5,751,388 6,500,584
-----------------------------------------------------------------------------------------------------------
Current Liabilities
Current portion of long-term debt 388,477 201,610 197,250
Accounts payable 269,278 231,787 269,053
Taxes accrued 60,873 35,280 -
Interest accrued 49,558 47,104 47,607
Dividends declared 81,185 74,385 80,939
Short-term obligations 114,631 - 168,240
Other current liabilities 153,670 114,282 130,036
-----------------------------------------------------------------------------------------------------------
Total Current Liabilities 1,117,672 704,448 893,125
-----------------------------------------------------------------------------------------------------------
Deferred Credits and Other Liabilities
Accumulated deferred income taxes 1,581,633 1,636,415 1,632,778
Accumulated deferred investment tax credits 198,506 206,722 203,704
Other liabilities and deferred credits 270,327 267,144 263,828
-----------------------------------------------------------------------------------------------------------
Total Deferred Credits and Other Liabilities 2,050,466 2,110,281 2,100,310
-----------------------------------------------------------------------------------------------------------
Total Capitalization and Liabilities $ 9,771,646 $ 8,566,117 $ 9,494,019
===========================================================================================================
SCHEDULES OF COMMON STOCK EQUITY
(In thousands)
Common stock (without par value, authorized 200,000,000, $ 1,748,400 $ 1,383,143 $ 1,746,249
issued and outstanding 159,608,055,
151,337,503 and 159,599,650 shares,
respectively)
Unearned ESOP common stock (129,260) (144,254) (140,153)
Capital stock issuance expense (816) (790) (794)
Retained earnings 1,841,760 1,737,466 1,807,345
-----------------------------------------------------------------------------------------------------------
Total Common Stock Equity $ 3,460,084 $ 2,975,565 $ 3,412,647
===========================================================================================================
|
See Supplemental Data and Notes to Consolidated Interim Financial Statements.
Carolina Power & Light Company
STATEMENTS OF CASH FLOWS Three Months Ended Six Months Ended
June 30 June 30
(In thousands) 2000 1999 2000 1999
------------------------------------------------------------------------------------------------------------------------
Operating Activities
Net income $ 108,202 $ 63,159 $ 194,204 $ 155,371
Adjustments to reconcile net income to net cash provided by
operating activities
Depreciation and amortization 156,549 143,534 310,334 286,905
Harris Plant deferred costs 2,033 1,065 6,580 1,679
Deferred income taxes (20,066) (15,407) (51,106) (32,805)
Investment tax credit (2,599) (2,550) (5,198) (5,100)
Deferred fuel cost (credit) (20,014) (2,172) (12,555) (1,765)
Net (increase) decrease in receivables, inventories,
prepaid expense and other current assets (136,989) (61,429) 3,799 (69,861)
Net increase (decrease) in payables and accrued expenses 4,005 36,203 74,016 87,265
Other 6,451 32,260 61,529 81,080
------------------------------------------------------------------------------------------------------------------------
Net Cash Provided by Operating Activities 97,572 194,663 581,603 502,769
------------------------------------------------------------------------------------------------------------------------
Investing Activities
Gross property additions (186,664) (139,938) (418,321) (309,004)
Nuclear fuel additions (22,077) (5,439) (47,329) (32,573)
Contributions to nuclear decommissioning trust (7,704) (7,712) (17,979) (17,995)
Increase in cash restricted for redemption of long-term debt (59,079) - (59,079) -
Net cash flow of company-owned life insurance program (4,976) (6,729) (4,963) (6,850)
Investment in non-utility activities (34,883) (41,611) (61,486) (106,545)
------------------------------------------------------------------------------------------------------------------------
Net Cash Used in Investing Activities (315,383) (201,429) (609,157) (472,967)
------------------------------------------------------------------------------------------------------------------------
Financing Activities
Proceeds from issuance of long-term debt 417,383 - 417,383 400,970
Net increase (decrease) in short-term indebtedness (69,500) 117,500 (57,600) (144,750)
Net increase (decrease) in outstanding payments 10,067 473 41,620 (85,833)
Retirement of long-term debt (67,352) (47) (264,717) (1,683)
Dividends paid on common and preferred stock (79,867) (73,264) (159,539) (146,219)
Other - (187) - 144
------------------------------------------------------------------------------------------------------------------------
Net Cash Provided by (Used in) Financing Activities 210,731 44,475 (22,853) 22,629
------------------------------------------------------------------------------------------------------------------------
Net Increase (Decrease) in Cash and Cash Equivalents (7,080) 37,709 (50,407) 52,431
Cash and Cash Equivalents at Beginning of the Period 36,544 43,594 79,871 28,872
------------------------------------------------------------------------------------------------------------------------
Cash and Cash Equivalents at End of the Period $ 29,464 $ 81,303 $ 29,464 81,303
------------------------------------------------------------------------------------------------------------------------
Supplemental Disclosures of Cash Flow Information
Cash paid during the period - interest $ 30,131 $ 26,543 $ 96,864 $ 77,731
income taxes $ 110,477 $ 108,337 $ 111,866 $ 109,493
------------------------------------------------------------------------------------------------------------------------
|
See Supplemental Data and Notes to Consolidated Interim Financial Statements.
CP&L Energy, Inc and Carolina Power & Light Company
SUPPLEMENTAL DATA Three Months Ended Six Months Ended
June 30 June 30
2000 1999 2000 1999
------------------------------------------------------------------------------------------------------------------------
Operating Revenues (in thousands)
Electric
Retail $ 622,227 $ 580,155 $ 1,256,893 $ 1,182,419
Wholesale 138,785 136,832 268,477 258,120
Miscellaneous revenue 17,458 17,012 33,008 32,019
------------------------------------------------------------------------------------------------------------------------
Total Electric 778,470 733,999 1,558,378 1,472,558
Natural gas 75,350 - 147,448 -
Diversified businesses 38,484 28,823 63,618 53,166
------------------------------------------------------------------------------------------------------------------------
Total Operating Revenues $ 892,304 $ 762,822 $ 1,769,444 $ 1,525,724
========================================================================================================================
Energy Sales
Electric (millions of kWh)
Retail
Residential 3,172 2,753 7,061 6,416
Commercial 2,962 2,689 5,474 5,121
Industrial 3,768 3,827 7,191 7,111
Other retail 332 326 678 638
------------------------------------------------------------------------------------------------------------------------
Total retail 10,234 9,595 20,404 19,286
Wholesale 3,303 3,772 7,011 7,042
------------------------------------------------------------------------------------------------------------------------
Total Electric 13,537 13,367 27,415 26,328
------------------------------------------------------------------------------------------------------------------------
========================================================================================================================
Natural Gas Delivered (thousands of dt) 13,497 - 30,841 -
========================================================================================================================
Energy Supply (millions of kWh)
Generated - coal 6,885 6,840 14,345 13,392
nuclear 5,433 5,405 11,097 11,145
hydro 157 145 333 355
combustion turbines 282 47 316 67
Purchased 1,299 1,392 2,331 2,320
------------------------------------------------------------------------------------------------------------------------
Total Energy Supply (Company Share) 14,056 13,829 28,422 27,279
========================================================================================================================
Detail of Income Taxes (in thousands)
Income tax expense (credit) - current $ 73,099 $ 62,118 $ 162,936 $ 141,225
deferred (20,066) (15,407) (51,106) (32,805)
investment tax credit (2,599) (2,550) (5,198) (5,100)
------------------------------------------------------------------------------------------------------------------------
Total Income Tax Expense $ 50,434 $ 44,161 $ 106,632 $ 103,320
========================================================================================================================
|
See Notes to Consolidated Interim Financial Statements.
CP&L Energy, Inc. & Carolina Power & Light Company
NOTES TO CONSOLIDATED INTERIM FINANCIAL STATEMENTS
1. ORGANIZATION AND BASIS OF PRESENTATION
Organization. On June 19, 2000, CP&L was reorganized into a holding company structure and all of the shares of common stock of CP&L were exchanged for an equal number of shares of common stock of CP&L Energy. The outstanding preferred stock and debt securities of CP&L were not affected by the holding company restructuring and remain outstanding as securities of CP&L. The holding company structure will allow greater organizational flexibility, including a clearer separation of regulated businesses from each other and from unregulated business such as energy services, telecommunications and electric generation projects for wholesale markets.
CP&L is a public service corporation primarily engaged in the generation, transmission, distribution and sale of electricity in portions of North and South Carolina and the transmission, distribution and sale of natural gas in portions of North Carolina.
Basis of Presentation. This Quarterly Report on Form 10-Q is a combined report of CP&L Energy and CP&L, a regulated electric and gas utility subsidiary of CP&L Energy. The Notes to the Consolidated Financial Statements apply to both CP&L Energy and CP&L, unless indicated otherwise. CP&L Energy's prior period consolidated financial statements have been prepared from CP&L's prior period consolidated financial statements, except that certain items have been reclassified to reflect CP&L Energy's structure.
In the opinion of management, the accompanying unaudited consolidated financial statements reflect all adjustments necessary to fairly present CP&L Energy's and CP&L's financial position and results of operations for the interim periods. These consolidated interim financial statements do not contain the complete detail or footnote disclosure which would be included in full year financial statements and, therefore, should be read in conjunction with the consolidated financial statements included in CP&L's Annual Report on Form 10-K for the Year Ended December 31, 1999. Due to temperature variations between seasons of the year and the timing of outages of electric generating units, especially nuclear-fueled units, the results of operations for interim periods are not necessarily indicative of amounts expected for the entire year. Certain amounts for 1999 have been reclassified to conform to the 2000 presentation, with no effect on previously reported net income or common stock equity.
In preparing financial statements that conform with generally accepted accounting principles, management must make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the date of the financial statements and amounts of revenues and expenses reflected during the reporting period. Actual results could differ from those estimates.
On July 15, 1999, CP&L completed the acquisition of North Carolina Natural Gas Corporation (NCNG). The acquisition was accounted for as a purchase and, accordingly, the operating results of NCNG have been included in the consolidated financial statements of CP&L since the date of acquisition.
2. FLORIDA PROGRESS CORPORATION
CP&L, Florida Progress Corporation (FPC), a Florida corporation, and CP&L Energy, entered into an Amended and Restated Agreement and Plan of Share Exchange dated as of August 22, 1999, amended and restated as of March 3, 2000 (the "Amended Agreement").
Under the terms of the Amended Agreement, all outstanding shares of common stock, no par value, of FPC common stock would be acquired by CP&L Energy in a statutory share exchange with an approximate value of $5.0 billion, which is subject to change based on CP&L Energy's stock price and on the value of the contingent value obligations (CVO) discussed below. Each share of FPC common stock, at the election of the holder, will be exchanged for (i) $54.00 in cash and one CVO, or (ii) the number of shares of common stock, no par value, of CP&L Energy equal to the ratio determined by dividing $54.00 by the average of the closing sale price per share of CP&L Energy common stock (Final Stock Price), as reported on the New York Stock Exchange composite tape for the twenty consecutive trading days ending with the fifth trading day immediately preceding the closing date for the exchange, and one CVO, or (iii) a combination of cash and CP&L Energy common stock, and one CVO; provided, however, that shareholder elections shall be subject to allocation and proration to achieve a mix of the aggregate exchange consideration that is 65% cash and 35% common stock. The number of shares of CP&L Energy common stock that will be issued as stock consideration will vary if the Final Stock Price is within a range of $37.13 to $45.39, but not outside that range. Thus, the maximum number of shares of CP&L Energy common stock into which one share of FPC common stock could be exchanged would be 1.4543 and the minimum would be 1.1897.
FPC shareholders will receive one CVO for each share of FPC stock owned. Each CVO will represent the right to receive contingent payments that may be made by CP&L Energy based on certain cash flows that may be derived from future operations of four synthetic fuel plants, purchased by FPC in October 1999. In conjunction with this proposed share exchange, CP&L Energy plans to issue debt to fund the cash portion of the exchange.
The transaction has been approved by the Boards of Directors of FPC, CP&L and CP&L Energy. Consummation of the exchange is subject to the satisfaction or waiver of certain closing conditions including, among others, the approval by the shareholders of FPC and the approval of the issuance of CP&L Energy common stock in the exchange by the shareholders of CP&L Energy; the approval or regulatory review by the Federal Energy Regulatory Commission (FERC), the Securities and Exchange Commission (SEC), the Nuclear Regulatory Commission (NRC), the North Carolina Utilities Commission (NCUC), and certain other federal and state regulatory bodies; the expiration or early termination of the waiting period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976 (HSR Act); and other customary closing conditions. In addition, FPC's obligation to consummate the exchange is conditioned upon the Final Stock Price being not less than $30.00. CP&L, CP&L Energy and FPC have agreed to certain undertakings and limitations regarding the conduct of their respective businesses prior to the closing of the transaction. The transaction is expected to be completed in the fall of 2000.
Either FPC or CP&L Energy and CP&L may terminate the Amended Agreement under certain circumstances, including if the exchange has not been consummated on or before December 31, 2000; provided that if certain conditions have not been satisfied on December 31, 2000, but all other conditions have been satisfied or waived then such date shall be June 30, 2001. In the event that FPC or CP&L Energy terminate the Amended Agreement in certain limited circumstances, FPC would be required to pay CP&L Energy a termination fee of $150 million, plus CP&L Energy's reasonable out-of-pocket expenses which are not to exceed $25 million in the aggregate.
On May 23, 2000, the NRC approved the change in control of FPC that will result from the share exchange. On July 12, 2000, the FERC approved the change of control over FPC's jurisdictional facilities resulting from the share exchange. Also, on July 12, 2000, the Department of Justice terminated the waiting period under the HSR Act and completed its antitrust review. On February 3, 2000, CP&L Energy filed an application with the NCUC for authorization of the share exchange with FPC and the issuance of common stock in connection with the transaction. A hearing was held on this matter on July 18, 2000. Prior to the hearing, CP&L Energy had settled all disputed matters with all parties. As part of the settlement with the NCUC Public Staff, CP&L agreed to reduce rates to all of its non-Real Time Pricing customers by $3 million in 2002, $4.5 million in 2003, $6 million in 2004 and $6 million in 2005. CP&L also agreed to write off and forego recovery of $10 million of unrecovered fuel costs in its 2000 fuel cost recovery proceeding. On March 14, 2000, CP&L Energy and FPC filed an application with the SEC requesting approval of the share exchange under the Public Utility Holding Company Act. On July 28, 2000, the parties filed an amended application with the SEC, and the SEC issued its notice of the merger application on August 4, 2000. CP&L Energy and CP&L expect to obtain the final regulatory approvals and close the transaction by the fall of 2000. However, CP&L Energy and CP&L cannot predict the outcome of this matter.
3. FINANCIAL INFORMATION BY BUSINESS SEGMENT
CP&L provides services through the following business segments:
electric, natural gas and other.
The electric segment generates, transmits, distributes and sells electric energy in portions of North and South Carolina. Electric operations are subject to the rules and regulations of the FERC, the NCUC and the Public Service Commission of South Carolina (SCPSC).
The natural gas segment transmits, distributes and sells gas in portions of North Carolina. Gas operations are subject to the rules and regulations of the NCUC.
The other segment primarily includes telecommunication services, energy management services, propane and miscellaneous non-regulated activities.
For reportable segments presented in the accompanying table, segment earnings (losses) before taxes include intersegment sales accounted for at prices representative of unaffiliated party transactions.
(in thousands)
Natural Segment
Electric Gas Other Eliminations Totals
---------------------------------------- -------------- -------------- ------------- -------------- --------------
Three Months Ended 6/30/00
Revenues
Unaffiliated $778,470 $73,779 $37,643 - $889,892
Intersegment - 2,412 5,410 (5,410) 2,412
-------------- -------------- ------------- -------------- --------------
Total Revenues $778,470 $76,191 $43,053 (5,410) $892,304
Depreciation and Amortization $129,204 $4,930 $7,742 - $141,876
Net Interest Charges $53,013 $1,674 $230 (1,880) $53,037
Earnings(Losses) Before Taxes $179,246 $959 $(21,552) (18) $158,635
Total Segment Assets $8,830,386 $561,680 $495,067 (115,487) $9,771,646
Capital and Investment Expenditures $204,980 $6,685 $9,882 - $221,547
======================================== ============== ============== ============= ============== ==============
Electric Natural Other Eliminations Segment
Gas Totals
---------------------------------------- -------------- -------------- ------------- -------------- --------------
Three Months Ended 6/30/99
Revenues
Unaffiliated $733,999 - $28,823 - $762,822
Intersegment - - 6,146 (6,146) -
-------------- -------------- ------------- -------------- --------------
Total Revenues $733,999 - $34,969 $(6,146) $762,822
Depreciation and Amortization $121,284 - $4,045 - $125,329
Net Interest Charges $44,071 - $376 - $44,447
Earnings(Losses) Before Taxes $124,887 - $(17,550) $(17) $107,320
Total Segment Assets $8,280,912 - $285,170 $35 $8,566,117
Capital and Investment Expenditures $158,376 - $23,173 - $181,549
======================================== ============== ============== ============= ============== ==============
Electric Natural Other Eliminations Segment
Gas Totals
---------------------------------------- -------------- -------------- ------------- -------------- --------------
Six Months Ended 6/30/00
Revenues
Unaffiliated $1,588,378 $145,747 $62,777 - $1,766,902
Intersegment - 2,542 13,811 (13,811) 2,542
-------------- -------------- ------------- -------------- --------------
Total Revenues $1,558,378 $148,289 $76,588 $(13,811) $1,769,444
Depreciation and Amortization $257,008 $9,616 $13,504 - $280,128
Net Interest Charges $103,665 $3,388 $567 $(3,779) $103,841
Earnings(Losses) Before Taxes $326,407 $15,344 $(40,879) $(36) $300,836
Total Segment Assets $8,830,386 $561,680 $495,067 $(115,487) $9,771,646
Capital and Investment Expenditures $429,840 $16,497 $33,470 - $479,807
======================================== ============== ============== ============= ============== ==============
Six Months Ended 6/30/99
Revenues
Unaffiliated $1,472,558 - $53,166 - $1,525,724
Intersegment - - 12,707 (12,707) -
-------------- -------------- ------------- -------------- --------------
Total Revenues $1,472,558 - $65,873 $(12,707) $1,525,724
Depreciation and Amortization $241,840 - $8,146 - $249,986
Net Interest Charges $87,405 - $780 - $88,185
Earnings(Losses) Before Taxes $294,009 - $(35,277) $(41) $258,691
Total Segment Assets $8,280,912 - $285,170 $35 $8,566,117
Capital and Investment Expenditures $292,860 - $122,689 - $415,549
======================================== ============== ============== ============= ============== ==============
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Segment totals for depreciation and amortization expense include expenses related to the other segments that are included in diversified business operating expenses on a consolidated basis. Segment totals for interest expense include expenses related to the other segments that are included in other, net on a consolidated basis.
4. FINANCING ACTIVITIES
During 2000, CP&L has issued a total of $300 million principal amount of Senior Notes and $497.64 million principal amount of variable rate First Mortgage Bonds. The issuances were as follows:
a) On April 11, 2000, CP&L issued $300 million principal amount of Senior Notes, 7.50% Series Due April 1, 2005.
b) On June 15, 2000, CP&L issued $67.3 million principal amount of First Mortgage Bonds, Pollution Control Series N, Wake County Pollution Control Revenue Refunding Bonds (Carolina Power & Light Company Project) 2000 Series A Due November 1, 2018.
c) On June 15, 2000, CP&L issued $55.64 million principal amount of First Mortgage Bonds, Pollution Control Series O, Person County Pollution Control Revenue Refunding Bonds (Carolina Power & Light Company Project) 2000 Series A Due November 1, 2018.
d) On July 13, 2000, CP&L issued $329.1 million principal amount of First Mortgage Bonds, Pollution Control Series P, Q, and S through V, Wake County Pollution Control Revenue Refunding Bonds (Carolina Power & Light Company Project) 2000 Series B, C, and D through G Due October 1, 2022.
e) On July 13, 2000, CP&L issued $45.6 million principal amount of First Mortgage Bonds, Pollution Control Series R, Person County Solid Waste Disposal Revenue Refunding Bonds (Carolina Power & Light Company Project) 2000 Series B Due October 1, 2022.
In addition, CP&L retired or redeemed $47.25 million principal amount of Promissory Notes, $150 million principal amount of First Mortgage Bonds and $497.64 million principal amount of variable rate Pollution Control Obligations. The following contains details of each retirement or redemption:
a) The retirement on January 15, 2000 of $47.25 million principal amount of non-interest bearing Promissory Notes, Series 1993A, which matured on that date.
b) The retirement on February 1, 2000 of $150 million principal amount of First Mortgage Bonds, 6-1/8% Series, which matured on that date.
c) The redemption of CP&L's Pollution Control Obligations
relating to:
i) The redemption on June 30, 2000, of $67.3 million principal
amount of The Wake County Industrial Facility and Pollution
Control Financing Authority Pollution Control Revenue Bonds
(Carolina Power & Light Company Project) Series 1985A due
May 1, 2015, at 100% of the principal amount of such bonds.
ii) The redemption on July 28, 2000, of $50 million principal
amount of The Wake County Industrial Facility and Pollution
Control Financing Authority Pollution Control Revenue Bonds
(Carolina Power & Light Company Project) Series 1985B due
September 1, 2015, at 100% of the principal amount of such
bonds.
iii) The redemption on July 28, 2000, of $97.4 million
principal amount of The Wake County Industrial Facility and
Pollution Control Financing Authority Pollution Control
Revenue Bonds (Carolina Power & Light Company Project)
Series 1985C due October 1, 2015, at 100% of the principal
amount of such bonds.
iv) The redemption on August 1, 2000, of $45.6 million
principal amount of The Person County Industrial Facility
and Pollution Control Financing Authority Solid Waste
Disposal Revenue Bonds (Carolina Power & Light Company
Project) Series 1986 due November 1, 2016, at 100% of the
principal amount of such bonds.
v) The redemption on August 1, 2000, of $41.7 million
principal amount of The Wake County Industrial Facility and
Pollution Control Financing Authority Pollution Control
Revenue Bonds (Carolina Power & Light Company Project)
Series 1987 due March 1, 2017, at 100% of the principal
amount of such bonds.
vi) The redemption on August 1, 2000, of $70 million principal
amount of The Wake County Industrial Facility and Pollution
Control Financing Authority Pollution Control Revenue
Refunding Bonds (Carolina Power & Light Company Project)
Series 1990A due June 15, 2014, at 100% of the principal
amount of such bonds.
vii) The redemption on August 1, 2000, of $70 million principal
amount of The Wake County Industrial Facility and Pollution
Control Financing Authority Pollution Control Revenue
Refunding Bonds (Carolina Power & Light Company Project)
Series 1990B due June 15, 2014, at 100% of the principal
amount of such bonds.
viii) The redemption on August 2, 2000, of $55.64 million principal amount of The Person County Industrial Facility and Pollution Control Financing Authority Pollution Control Revenue Refunding Bonds (Carolina Power & Light Company Project) Series 1992A due November 1, 2019, at 100% of the principal amount of such bonds.
5. NUCLEAR DECOMMISSIONING
In CP&L's retail jurisdictions, provisions for nuclear decommissioning costs are approved by the NCUC and the SCPSC and are based on site-specific estimates that include the costs for removal of all radioactive and other structures at the site. In the wholesale jurisdiction, the provisions for nuclear decommissioning costs are based on amounts agreed upon in applicable rate agreements. Based on the site-specific estimates discussed below, and using an assumed after-tax earnings rate of 7.75% and an assumed cost escalation rate of 4%, current levels of rate recovery for nuclear decommissioning costs are adequate to provide for decommissioning of CP&L's nuclear facilities.
CP&L's most recent site-specific estimates of decommissioning costs were developed in 1998, using 1998 cost factors, and are based on prompt dismantlement decommissioning, which reflects the cost of removal of all radioactive and other structures currently at the site, with such removal occurring shortly after operating license expiration. These estimates, in 1998 dollars, are $281.5 million for Robinson Unit No. 2, $299.6 million for Brunswick Unit No. 1, $298.7 million for Brunswick Unit No. 2 and $328.1 million for the Harris Plant. The estimates are subject to change based on a variety of factors including, but not limited to, cost escalation, changes in technology applicable to nuclear decommissioning and changes in federal, state or local regulations. The cost estimates exclude the portion attributable to North Carolina Eastern Municipal Power Agency (Power Agency), which holds an undivided ownership interest in the Brunswick and Harris nuclear generating facilities. Operating licenses for CP&L's nuclear units expire in the year 2010 for Robinson Unit No. 2, 2016 for Brunswick Unit No. 1, 2014 for Brunswick Unit No. 2 and 2026 for the Harris Plant.
The Financial Accounting Standards Board is proceeding with its project regarding accounting practices related to obligations associated with the retirement of long-lived assets, and a revised exposure draft of a proposed accounting standard was issued during the first quarter of 2000. It is uncertain what effects this draft may ultimately have on CP&L's accounting for nuclear decommissioning and other retirement costs.
6. COMMITMENTS AND CONTINGENCIES
Contingencies existing as of the date of these statements are described below. No significant changes have occurred since December 31, 1999, with respect to the commitments discussed in Note 16 of the financial statements included in CP&L's 1999 Annual Report on Form 10-K.
Contingencies
1) Applicability of SFAS-71. As a regulated entity, CP&L is subject to the provisions of Statement of Financial Accounting Standards No. 71, "Accounting for the Effects of Certain Types of Regulation" (SFAS-71). Accordingly, CP&L records certain assets and liabilities resulting from the effects of the ratemaking process, which would not be recorded under generally accepted accounting principles for unregulated entities. CP&L's ability to continue to meet the criteria for application of SFAS-71 may be affected in the future by competitive forces, deregulation and restructuring in the electric utility industry. In the event that SFAS-71 no longer applies to a separable portion of CP&L's operations, related regulatory assets and liabilities would be eliminated unless an appropriate regulatory recovery mechanism is provided. Additionally, these factors could result in an impairment of electric utility plant assets as determined pursuant to Statement of Financial Accounting Standards No. 121, "Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to Be Disposed Of." CP&L's net regulatory assets totaled $417 million, $426 million and $414 million as of June 30, 2000, June 30, 1999 and December 31, 1999, respectively.
2) Claims and Uncertainties.
a) CP&L is subject to federal, state and local regulations addressing air and water quality, hazardous and solid waste management and other environmental matters.
Various organic materials associated with the production of manufactured gas, generally referred to as coal tar, are regulated under various federal and state laws. There are several manufactured gas plant (MGP) sites to which the electric utility and gas utility have some connection. In this regard, both the electric utility and gas utility, along with others, are participating in a cooperative effort with the North Carolina Department of Environment and Natural Resources, Division of Waste Management (DWM). The DWM has established a uniform framework to address MGP sites. The investigation and remediation of specific MGP sites will be addressed pursuant to an Administrative Order on Consent (AOC) between the DWM and the potentially responsible party or parties. Both the electric utility and gas utility have signed an AOC to investigate and remediate certain sites. Both the electric utility and the gas utility continue to identify parties connected to individual MGP sites, and to determine their relative relationship to other parties at those sites and the degree to which they will undertake efforts with others at individual sites. CP&L
Energy and CP&L do not expect the costs associated with these sites to be material to the consolidated results of operations or financial position of CP&L Energy and CP&L.
The electric utility and gas utility are periodically notified by regulators such as the North Carolina Department of Environment and Natural Resources, the South Carolina Department of Health and Environmental Control, and the U.S. Environmental Protection Agency (EPA) of its involvement or potential involvement in sites, other than MGP sites, that may require investigation and/or remediation. Although CP&L may incur costs at the sites about which it has been notified, based upon the current status of the sites, CP&L Energy and CP&L do not expect those costs to be material to the consolidated results of operations or financial position of CP&L Energy and CP&L.
The EPA has been conducting an enforcement initiative related to a number of coal-fired electric utility power plants in an effort to determine whether modifications at those facilities were subject to New Source Review requirements or New Source Performance Standards under the Clean Air Act. CP&L has been asked to provide information to the EPA as part of this initiative and has cooperated in providing the requested information. The EPA has initiated enforcement actions, which may have potentially significant penalties, against other companies that have been subject to this initiative. CP&L cannot predict the outcome of this matter.
The EPA published a final rule approving petitions under section 126 of the Clean Air Act, which requires certain sources to make reductions in nitrogen oxide emissions by 2003. The final rule also includes a set of regulations that affect nitrogen oxide emissions from sources included in the petitions. CP&L's fossil-fueled electric generating plants are included in these petitions. CP&L and certain states are participating in litigation challenging the EPA's action. CP&L cannot predict the outcome of this matter.
In 1998, the EPA published a final rule addressing the issue of regional transport of ozone. This rule is commonly known as the NOx SIP Call. The EPA's rule requires 22 states, including North and South Carolina, to further reduce nitrogen oxide emissions in order to attain a pre-set state NOx emission level by May 2003. The EPA's rule also suggests to the states that these additional nitrogen oxide emission reductions be obtained from the utility sector. CP&L is evaluating necessary measures to comply with the rule and estimates its related capital expenditures through 2003 could be approximately $327 million. Increased operation and maintenance costs relating to the NOx SIP Call are not expected to be material to CP&L's results of operations. CP&L and the states of North and South Carolina have been participating in litigation challenging the NOx SIP Call. The District of Columbia Circuit Court of Appeals upheld the EPA's NOx SIP Call. Further appeals are being considered. Prior to resolution of a potential appeal, the EPA is requiring regulations in the states involved in the NOx SIP call including North and South Carolina to comport with the NOx SIP call. Acceptable state plans can be approved in lieu of the final rules the EPA approved as part of the 126 petitions. CP&L cannot predict the outcome of this matter.
In July 1997, the EPA issued final regulations establishing a new eight-hour ozone standard. In October 1999, the District of Columbia Circuit Court of Appeals ruled against the EPA with regard to the federal eight-hour ozone standard. North Carolina and certain states are participating in a further appeal to the U.S. Supreme Court. North Carolina adopted the federal eight-hour ozone standard and is proceeding with the implementation process.
b) As required under the Nuclear Waste Policy Act of 1982, CP&L entered into a contract with the U.S. Department of Energy (DOE) under which the DOE agreed to begin taking spent nuclear fuel by no later than January 31, 1998. All similarly situated utilities were required to sign the same standard contract.
In April 1995, the DOE issued a final interpretation that it did not have an unconditional obligation to take spent nuclear fuel by January 31, 1998. In Indiana & Michigan Power v. DOE, the Court of Appeals vacated the DOE's final interpretation and ruled that the DOE had an unconditional obligation to begin taking spent nuclear fuel. The Court did not specify a remedy because the DOE was not yet in default.
After the DOE failed to comply with the decision in Indiana &
Michigan Power v. DOE, a group of utilities (including CP&L)
petitioned the Court of Appeals in Northern States Power (NSP)
v. DOE, seeking an order requiring the DOE to begin taking
spent nuclear fuel by January 31, 1998. The DOE took the
position that their delay was unavoidable, and the DOE was
excused from performance under the terms and conditions of the
contract. The Court of Appeals did not order the DOE to begin
taking spent nuclear fuel, stating that the utilities had a
potentially adequate remedy by filing a claim for damages
under the contract.
After the DOE failed to begin taking spent nuclear fuel by January 31, 1998, a group of utilities (including CP&L) filed a motion with the Court of Appeals to enforce the mandate in NSP v. DOE. Specifically, the utilities asked the Court to permit the utilities to escrow their waste fee payments, to order the DOE not to use the waste fund to pay damages to the utilities, and to order the DOE to establish a schedule for disposal of spent nuclear fuel. The Court denied this motion based primarily on the grounds that a review of the matter was premature, and that some of the requested remedies fell outside of the mandate in NSP v. DOE.
Subsequently, a number of utilities each filed an action for damages in the Court of Claims and before the Court of Appeals. CP&L is in the process of evaluating whether it should file a similar action for damages. In NSP v. U.S., the Court of Claims decided that NSP must pursue its administrative remedies instead of filing an action in the Court of Claims. NSP has filed an interlocutory appeal to the Court of Appeals based on NSP's position that the Court of Claims has jurisdiction to decide that matter. A group of utilities (including CP&L) has submitted an amicus brief in support of NSP's position.
CP&L also continues to monitor legislation that has been introduced in Congress which might provide some limited relief. CP&L cannot predict the outcome of this matter.
With certain modifications and additional approval by the NRC, CP&L's spent fuel storage facilities will be sufficient to provide storage space for spent fuel generated on CP&L's system through the expiration of the current operating licenses for all of CP&L's nuclear generating units. Subsequent to the expiration of these licenses, dry storage may be necessary. CP&L has initiated the process of obtaining the additional NRC approval.
c) In the opinion of management, liabilities, if any, arising under other pending claims would not have a material effect on the financial position and results of operations of CP&L Energy and CP&L.
7. EARNINGS PER COMMON SHARE
Restricted stock awards and contingently issuable shares had a dilutive effect on earnings per share for the six months ended June 30, 1999 and increased the weighted-average number of common shares outstanding for dilutive purposes by 400,256 and 370,149 for the three and six months ended June 30, 2000, respectively, and by 289,087 and 282,988 for the three and six months ended June 30, 1999, respectively. The weighted-average number of common shares outstanding for dilutive purposes was 153.7 million and 153.5 million for the three and six months ended June 30, 2000, respectively, and 144.8 million and 144.7 million for the three and six months ended June 30, 1999.
Employee Stock Ownership Plan shares that have not been committed to be released to participants' accounts are not considered outstanding for the determination of earnings per common share. Those shares totaled 5,875,527 and 6,557,051 at June 30, 2000 and June 30, 1999, respectively.
8. NEW ACCOUNTING STANDARD
In June 2000, the Financial Accounting Standards Board published Statement of Financial Accounting Standards (SFAS) No. 138, which amended SFAS No. 133, "Accounting for Derivative Instruments and Hedging Activities." The amendment to SFAS No. 133 includes expansion of the normal purchases and sales exception to most contracts for which physical delivery of the asset being sold or purchased is probable. This amendment is expected to substantially reduce the scope of SFAS No. 133 implementation efforts by CP&L. In addition, CP&L believes that its contracts that will fall within the scope of SFAS No. 133, as amended, are currently being recorded at fair value, with appropriate hedge or non-hedge accounting treatment. Consequently, based on CP&L's historical use of such contracts, CP&L currently does not expect SFAS No. 133 to have a material effect on its financial position or results of operations. CP&L will continue its SFAS No. 133 implementation efforts during the last half of 2000 in preparation for implementation in 2001.
9. RISK MANAGEMENT AND DERIVATIVE INFORMATION
During the second quarter, CP&L entered into interest rate swap agreements to hedge its exposure on variable rate debt positions. The agreements, with a total notional amount of $500 million, are effective in July 2000 and mature in July 2002. Under these agreements, CP&L receives a floating rate based on the three month LIBOR and pays a weighted-average fixed rate of approximately 7.17%. The notional amount of the contracts is not exchanged and does not represent exposure to credit loss. In the event of default by a counterparty, the risk in these transactions is
the cost of replacing the agreements at current market rates. CP&L only enters into swap agreements with strong creditworthy counterparties.
10 INTERPATH AGREEMENT
Effective June 28, 2000, CP&L, Caronet, Inc. (Caronet), the wholly-owned subsidiary of CP&L formerly known as Interpath Communications, Inc., a North Carolina and Virginia corporation, and Bain Capital, Inc. a private equity fund, and its affiliates (Bain) formed a new company, Interpath Communications, Inc. (Interpath), a Delaware corporation. As part of the transaction, Caronet contributed the net assets used in the application service provider business to Interpath. Under the terms of the related agreement, Caronet owns 35% of Interpath's stock (10% of the voting stock) and Bain owns 65% of Interpath's stock. Prior to this agreement, Caronet was consolidated in CP&L's financial statements as a wholly-owned subsidiary. As of the effective date, the net book value of CP&L's investment in Interpath was recorded in miscellaneous other property and investments using the cost method of accounting.
11 SUBSEQUENT EVENT
On July 1, 2000, CP&L distributed its ownership interest in the stock of NCNG, Strategic Resource Solutions Corp. (SRS), Monroe Power Company (Monroe Power) and CPL Energy Ventures, Inc (Energy Ventures) to CP&L Energy. As a result, those companies are direct subsidiaries of CP&L Energy and will not be included in CP&L's results of operations and financial position on a prospective basis.
This is a combined Quarterly Report on Form 10-Q of CP&L Energy, Inc. (CP&L Energy) and Carolina Power & Light (CP&L). Therefore, the Management Discussion and Analysis of Financial Condition and Results of Operations (MD&A) applies to both CP&L Energy and CP&L, unless indicated otherwise. The MD&A should be read in conjunction with the consolidated financial statements included in this report.
Business segment earnings and the factors affecting them are discussed below.
The fluctuations in electric operating revenues for the three and six months ended June 30, 2000 as compared to last year were affected by the following factors (in millions):
Three Six
Months Months
Customer growth/changes in usage patterns* $ 30 $ 60
Industrial sales (3) 4
Weather 27 32
Price (7) (13)
Sales to Power Agency 3 8
Sales to other utilities (7) (6)
Miscellaneous 1 1
----- -----
Total $ 44 $ 86
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*Customer growth/changes in usage patterns excludes industrial customers.
The increase in the customer growth/changes in usage patterns component of revenues reflects continued growth in the number of customers served by CP&L. During the three-month period, industrial sales experienced a decline reflecting the downturn in the chemical industry. During the six-month period, industrial sales experienced an overall increase primarily related to the textile industry, while continuing to be negatively affected by the downturn in the chemical industry. The increase in the weather component of revenues is the result of favorable temperatures in the current periods compared to corresponding prior periods. During the three-month period, the price-related decrease reflects capacity pricing changes between CP&L and the North Carolina Electric Membership Corporation that took effect January 1, 2000. During the six-month period, the price-related decrease reflects capacity pricing changes between CP&L and the North Carolina Electric Membership Corporation that took effect January 1, 2000, and the effects of real-time pricing rate participation by industrial customers. The increase in revenue related to sales to North Carolina Eastern Municipal Power Agency (Power Agency) is due to more favorable temperatures and to increased demand. For both periods, the decrease in sales to other utilities is attributable to unit outages, and the effects of gas prices on generation sales.
The increase in fuel used in electric generation for the six-month period is primarily due to an increase in generation and to deferred fuel adjustments.
Purchased power decreased in both periods primarily due to the expiration in mid-1999 of CP&L's long-term purchase power agreement with Duke Energy Corporation (Duke Energy).
Other operation and maintenance expense remained relatively stable for the three month period but increased significantly during the six months ended June 30, 2000 due to restoration costs associated with the severe winter storm and record breaking snowfall in January, the timing of plant outages, increased general and administrative expenses and the effects of emission allowances which CP&L began to expense in January 2000. These allowances were acquired to meet the Clear Air Act emission requirements.
On July 15, 1999, CP&L completed the acquisition of North Carolina Natural Gas (NCNG), now operating as a wholly-owned subsidiary. The acquisition was accounted for as a purchase and, accordingly, the operating results
of NCNG have been included in CP&L's financial results since the date of acquisition. Natural gas revenues totaled $75.4 million and $147.4 million, while gas purchased for resale totaled $59.8 million and $103.7 million and other operation and maintenance expenses totaled $7.6 million and $15.1 million for the three months and six months, respectively. NCNG's natural gas operations contributed $1.9 million and $17.5 million of operating income for the three months and six months, respectively.
The increase in operating revenues of diversified business operations was due to several factors. Strategic Resource Solution Corp.'s (SRS) operating revenues continued to increase for the three and six months ended June 30, 2000, while revenues in the current periods also included the results of NCNG's and Monroe Power's diversified operations. Operating expenses increased primarily due to the business expansion program at Interpath Communications, Inc. (Interpath) and the addition of NCNG's and Monroe Power's diversified operations. This increase was partially offset by a decline in SRS's expenses due to the sale of the lighting division and improved operational performance.
MATERIAL CHANGES IN LIQUIDITY AND CAPITAL RESOURCES
In July 2000, CP&L established a $300 million medium term notes, Series D program. As of August 14, 2000, there were no medium term notes, Series D, issued and outstanding.
On April 11, 2000, CP&L issued $300 million principal amount of Senior Notes, 7.50% Series Due April 1, 2005. The net proceeds from the issuance were used to reduce the outstanding balance of commercial paper and other short-term indebtedness, and for general corporate purposes.
On June 15, 2000, CP&L issued $67.3 million principal amount of First Mortgage Bonds, Pollution Control Series N, Wake County Pollution Control Revenue Refunding Bonds (Carolina Power & Light Company Project) 2000 Series A Due November 1, 2018. The proceeds were used to redeem The Wake County Industrial Facilities and Pollution Control Financing Authority's Pollution Control Revenue Bonds (Carolina Power & Light Company Project) Series 1985A Due May 1, 2015, at 100% of the principal amount of such bonds.
On June 15, 2000, CP&L issued $55.64 million principal amount of First Mortgage Bonds, Pollution Control Series O, Person County Pollution Control Revenue Refunding Bonds (Carolina Power & Light Company Project) 2000 Series A Due November 1, 2018. The proceeds were used for the redemption on August 2, 2000 of $55.64 million The Person County Industrial Facilities and Pollution Control Financing Authority's Pollution Control Revenue Refunding Bonds (Carolina Power & Light Company Project) Series 1992A Due November 1, 2019, at 100% of the principal amount of such bonds.
On July 13, 2000, CP&L issued $329.1 million principal amount of First Mortgage Bonds, Pollution Control Series P, Q, and S through V, Wake County Pollution Control Revenue Refunding Bonds (Carolina Power & Light Company Project) 2000 Series B, C, and D through G Due October 1, 2022. The proceeds were used for the redemption on July 28 and August 1, 2000 of $329.1 million The Wake County Industrial Facilities and Pollution Control Financing Authority's Pollution Control Revenue Bonds (Carolina Power & Light Company Project) Series 1985B due September 1, 2015, Series 1985C due October 1, 2015, Series 1987 due March 1, 2017, Series 1990A due June 15, 2014, and Series 1990B due June 15, 2014, at 100% of the principal amount of such bonds.
On July 13, 2000, CP&L issued $45.6 million principal amount of First Mortgage Bonds, Pollution Control Series R, Person County Solid Waste Disposal Revenue Refunding Bonds (Carolina Power & Light Company Project) 2000 Series B Due October 1, 2022. The proceeds were used for the redemption on August 1, 2000 of $45.6 million The Person County Industrial Facilities and Pollution Control Financing Authority's Solid Waste Disposal Revenue Bonds (Carolina Power & Light Company Project) Series 1986 due November 1, 2016, at 100% of the principal amount of such bonds.
Redemptions/Retirements of Bonds, Preferred Stock and Debentures
i. The retirement on January 15, 2000 of $47.25 million principal amount of non-interest bearing Promissory Notes, Series 1993A, which matured on that date.
ii. The retirement on February 1, 2000 of $150 million principal amount of First Mortgage Bonds, 6-1/8% Series, which matured on that date.
iii. The redemption of CP&L's Pollution Control Obligations related to:
a. The redemption on June 30, 2000, of $67.3 million principal amount of The Wake County Industrial Facility and Pollution Control Financing Authority Pollution Control Revenue Bonds (Carolina Power & Light Company Project) Series 1985A due May 1, 2015, at 100% of the principal amount of such bonds.
b. The redemption on July 28, 2000, of $50 million principal amount of The Wake County Industrial Facility and Pollution Control Financing Authority Pollution Control Revenue Bonds (Carolina Power & Light Company Project) Series 1985B due September 1, 2015, at 100% of the principal amount of such bonds.
c. The redemption on July 28, 2000, of $97.4 million principal amount of The Wake County Industrial Facility and Pollution Control Financing Authority Pollution Control Revenue Bonds (Carolina Power & Light Company Project) Series 1985C due October 1, 2015, at 100% of the principal amount of such bonds.
d. The redemption on August 1, 2000, of $45.6 million principal amount of The Person County Industrial Facility and Pollution Control Financing Authority Solid Waste Disposal Revenue Bonds (Carolina Power & Light Company Project) Series 1986 due November 1, 2016, at 100% of the principal amount of such bonds.
e. The redemption on August 1, 2000, of $41.7 million principal amount of The Wake County Industrial Facility and Pollution Control Financing Authority Pollution Control Revenue Bonds (Carolina Power & Light Company Project) Series 1987 due March 1, 2017, at 100% of the principal amount of such bonds.
f. The redemption on August 1, 2000, of $70 million principal amount of The Wake County Industrial Facility and Pollution Control Financing Authority Pollution Control Revenue Refunding Bonds (Carolina Power & Light Company Project) Series 1990A due June 15, 2014, at 100% of the principal amount of such bonds.
g. The redemption on August 1, 2000, of $70 million principal amount of The Wake County Industrial Facility and Pollution Control Financing Authority Pollution Control Revenue Refunding Bonds (Carolina Power & Light Company Project) Series 1990B due June 15, 2014, at 100% of the principal amount of such bonds.
h. The redemption on August 2, 2000, of $55.64 million principal amount of The Person County Industrial Facility and Pollution Control Financing Authority Pollution Control Revenue Refunding Bonds (Carolina Power & Light Company Project) Series 1992A due November 1, 2019, at 100% of the principal amount of such bonds.
As of June 30, 2000, CP&L's revolving credit facilities totaled $750 million, all of which are long-term agreements supporting its commercial paper borrowings and other short-term indebtedness. CP&L is required to pay minimal annual commitment fees to maintain its credit facilities. Consistent with management's intent to maintain its commercial paper, pollution control revenue refunding bonds (pollution control bonds) and other short-term indebtedness on a long-term basis, and as supported by its long-term revolving credit facilities, CP&L included in long-term debt commercial paper, pollution control bonds and other short-term indebtedness of $750 million at June 30, 2000 and December 31, 1999.
CP&L's First Mortgage Bonds are currently rated "A2" by Moody's Investors Service, "A" CreditWatch with negative implications by Standard and Poor's and "A+" Rating Watch-Down by Duff and Phelps. Moody's Investors Service, Standard and Poor's and Duff and Phelps have rated CP&L's commercial paper and extendible
notes "P-1", "A-1" and "D-1", respectively. Moody's Investors Service and Standard and Poor's have rated CP&L's extendible commercial notes "P-1" and "A-1", respectively.
On July 21, 2000, NCNG filed a shelf registration statement with the Securities and Exchange Commission (SEC) that will allow NCNG to issue up to $300 million in debt securities. The proceeds may be used to finance ongoing construction and maintenance, redeem or retire outstanding indebtedness, finance future acquisitions of other entities or for other general corporate purposes.
CP&L, Florida Progress Corporation (FPC), a Florida corporation, and CP&L Energy, entered into an Amended and Restated Agreement and Plan of Share Exchange dated as of August 22, 1999, amended and restated as of March 3, 2000 (the "Amended Agreement").
Under the terms of the Amended Agreement, all outstanding shares of common stock, no par value, of FPC common stock would be acquired by CP&L Energy in a statutory share exchange with an approximate value of $5.0 billion, which is subject to change based on CP&L Energy's stock price and on the value of the contingent value obligations (CVO) discussed below. Each share of FPC common stock, at the election of the holder, will be exchanged for (i) $54.00 in cash and one CVO, or (ii) the number of shares of common stock, no par value, of CP&L Energy equal to the ratio determined by dividing $54.00 by the average of the closing sale price per share of CP&L Energy common stock (Final Stock Price), as reported on the New York Stock Exchange composite tape for the twenty consecutive trading days ending with the fifth trading day immediately preceding the closing date for the exchange, and one CVO, or (iii) a combination of cash and CP&L Energy common stock, and one CVO; provided, however, that shareholder elections shall be subject to allocation and proration to achieve a mix of the aggregate exchange consideration that is 65% cash and 35% common stock. The number of shares of CP&L Energy common stock that will be issued as stock consideration will vary if the Final Stock Price is within a range of $37.13 to $45.39, but not outside that range. Thus, the maximum number of shares of CP&L Energy common stock into which one share of FPC common stock could be exchanged would be 1.4543 and the minimum would be 1.1897. FPC shareholders will receive one CVO for each share of FPC stock owned. Each CVO will represent the right to receive contingent payments that may be made by CP&L Energy based on certain cash flows that may be derived from future operations of four synthetic fuel plants, purchased by FPC in October 1999. In conjunction with this proposed share exchange, CP&L Energy plans to issue debt to fund the cash portion of the exchange.
The transaction has been approved by the Boards of Directors of FPC, CP&L and CP&L Energy. Consummation of the exchange is subject to the satisfaction or waiver of certain closing conditions including, among others, the approval by the shareholders of FPC and the approval of the issuance of CP&L Energy common stock in the exchange by the shareholders of CP&L Energy; the approval or regulatory review by the Federal Energy Regulatory Commission (FERC), the Securities and Exchange Commission (SEC), the Nuclear Regulatory Commission (NRC), the North Carolina Utilities Commission (NCUC), and certain other federal and state regulatory bodies; the expiration or early termination of the waiting period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976 (HSR Act); and other customary closing conditions. In addition, FPC's obligation to consummate the exchange is conditioned upon the Final Stock Price being not less than $30.00. CP&L, CP&L Energy and FPC have agreed to certain undertakings and limitations regarding the conduct of their respective businesses prior to the closing of the transaction. The transaction is expected to be completed in the fall of 2000.
Either FPC or CP&L Energy and CP&L may terminate the Amended Agreement under certain circumstances, including if the exchange has not been consummated on or before December 31, 2000; provided that if certain conditions have not been satisfied on December 31, 2000, but all other conditions have been satisfied or waived then such date shall be June 30, 2001. In the event that FPC or CP&L Energy terminate the Amended Agreement in certain limited circumstances, FPC would be required to pay CP&L Energy a termination fee of $150 million, plus CP&L Energy's reasonable out-of-pocket expenses which are not to exceed $25 million in the aggregate.
On May 23, 2000, the NRC approved the change in control of FPC that will result from the share exchange. On July 12, 2000, the FERC approved the change of control over FPC's jurisdictional facilities resulting from the share exchange. Also on July 12, 2000, the Department of Justice terminated the waiting period under the HSR Act and completed its antitrust review. On February 3, 2000, CP&L Energy filed an application with the NCUC for authorization of the share exchange with FPC and the issuance of common stock in connection with the transaction, a hearing was held on this matter on July 18, 2000. Prior to the hearing CP&L Energy had settled all disputed matters with all parties. As part of the settlement with the NCUC Public Staff, CP&L agreed to reduce rates to all of
its non-Real Time Pricing customers by $3 million in 2002, $4.5 million in 2003, $6 million in 2004 and $6 million in 2005. CP&L also agreed to write off and forego recovery of $10 million of unrecovered fuel costs in its 2000 fuel cost recovery proceeding. On March 14, 2000, CP&L Energy and FPC filed an application with the SEC requesting approval of the share exchange under the Public Utility Holding Company Act. On July 28, 2000, the parties filed an amended application with the SEC, and the SEC issued its notice of the merger application on August 4, 2000. CP&L Energy and CP&L expect to obtain final regulatory approvals and close the transaction by the fall of 2000. However, CP&L Energy and CP&L cannot predict the outcome of this matter.
To assist in the development of wholesale competition, the FERC, in 1996, issued standards for wholesale wheeling of electric power through its rules on open access transmission and stranded costs and on information systems and standards of conduct (Orders 888 and 889). The rules require all transmitting utilities to have on file an open access transmission tariff, which contains provisions for the recovery of stranded costs and numerous other provisions that could affect the sale of electric energy at the wholesale level. CP&L filed its open access transmission tariff with the FERC in mid-1996. Shortly thereafter, Power Agency and other entities filed protests challenging numerous aspects of CP&L's tariff and requesting that an evidentiary proceeding be held. The FERC set the matter for hearing and set a discovery and procedural schedule. In July 1997, CP&L filed an offer of settlement in this matter. The administrative law judge certified the offer to the full FERC in September 1997. The offer is pending before the FERC. In February 2000, the FERC issued a basket order for several utilities including CP&L to file a compliance filing stating whether there were any remaining undisputed issues surrounding CP&L's open access transmission tariff. On May 1, 2000, CP&L made the compliance filing setting forth the remaining undisputed issues and a plan for settling those issues. CP&L made additional compliance filings on June 8, 2000 and July 12, 2000 to report the status of negotiations with the remaining intervenors. CP&L cannot predict the outcome of this matter.
On December 20, 1999, the FERC issued Order No. 2000 on Regional Transmission Organizations (RTO), which sets forth four minimum characteristics and eight functions for transmission entities, including independent system operators and transmission companies, to become FERC-approved RTOs. The rule states that public utilities that own, operate or control interstate transmission facilities must file by October 2000, either a proposal to participate in an RTO or an alternative filing describing efforts and plans to participate in an RTO. CP&L is participating in an effort with Duke Power and South Carolina Electric & Gas (SCE&G) to develop a for-profit transmission company to comply with Order No. 2000. The RTO is currently known as GridSouth and is expected to operate the transmission systems of CP&L, Duke Power, SCE&G and perhaps others. The current plans for GridSouth include public meetings on the proposed transmission company beginning August 2, 2000 and a filing for approval of GridSouth by October 16, 2000. CP&L cannot predict the outcome of these matters.
On May 16, 2000, the Study Commission on the Future of Electric Service in North Carolina issued its report to the General Assembly. The report includes the recommendations adopted by the study commission on April 3, 2000, as well as discussion regarding the recommendations, a summary of past study commission meetings, summaries of studies prepared for the study commission by its consultants, and other background information.
As proposed by the study commission's April 3, 2000 recommendations, the General Assembly acted during its 2000 short session, which concluded on July 13, 2000, to extend the authorization and funding of the study commission until June 30, 2006. According to its report, the study commission will recommend to the 2001 General Assembly, and where necessary, the 2003 General Assembly, specific legislation to accomplish its recommendations. CP&L cannot predict the outcome of this matter.
A draft bill regarding electric industry restructuring passed the House Commerce Subcommittee on October 27, 1999, and remains pending before the full Commerce Committee, which has yet to reach a consensus on the issue of jurisdiction over bundled retail transmission sales. The Senate Energy Committee passed a stand-alone reliability bill on June 20, 2000, after failing to reach a consensus on a comprehensive restructuring bill introduced by the chairman of the Committee in February. The reliability bill passed the full Senate on June 30 and was then sent to
the House, where it awaits review and approval. On July 18, 2000, a new comprehensive restructuring bill was introduced in the Senate, which would require all states to implement retail competition by January 1, 2002. No date has been set for consideration of the bill. CP&L cannot predict the outcome of this matter.
In October 1999, CP&L and the Albemarle-Pamlico Economic Development Corporation (APEC) announced their intention to build an 850-mile, $197.5 million, natural gas transmission and distribution system to 14 currently unserved counties in eastern North Carolina. CP&L will operate both the transmission and distribution systems, and APEC will help ensure that the new facilities are built in the most advantageous locations to promote development of the economic base in the region. In conjunction with this proposal, CP&L and APEC filed a joint request with the NCUC for $186 million of a $200 million state bond package established for natural gas infrastructure to pay for the portion of the project that likely could not be recovered from future gas customers through rates. On April 10, 2000, CP&L and APEC executed an operating agreement creating Eastern North Carolina Natural Gas, LLC (ENCNG), a limited liability company, which will be the local distribution natural gas company serving the 14 counties in question. CP&L and APEC will be the joint owners. The operations of ENCNG will be subject to the rules and regulations of the NCUC. On June 15, 2000, the NCUC issued an order awarding ENCNG an exclusive franchise to all 14 counties and granted $38.7 million in bond funding for phase one of the project. Phase one, which will cost a total of $50.5 million, will bring gas service to 6 of the 14 counties. The NCUC will consider approval of bond funding for phases two through five of the project at a later date. CP&L cannot predict the outcome of this matter.
On April 7, 2000, CP&L announced the execution of an agreement to purchase 75 million cubic feet per day of firm gas transportation service to be provided through the Williams Energy's Sundance Expansion Project on the Transcontinental Interstate Pipeline (Transco). This service will be used, beginning in mid-2002, to supply the 30-inch natural gas pipeline, Sandhills Pipeline that CP&L announced in December 1999 it would build. The pipeline will extend from Iredell County to Richmond County in North Carolina. The agreement is contingent upon FERC approval and both parties can terminate if Transco fails to commence service by April 3, 2003. CP&L cannot predict the outcome of this matter.
In April 2000, CP&L signed a 5-1/2 year agreement with Duke Energy, whereby CP&L will provide peaking generation capacity. CP&L will provide 300 MW of capacity for the first 11 months of the contract, beginning July 1, 2000, and will provide 150 MW for the remainder of the contract.
The CP&L board of directors decided to reorganize with a holding company structure before agreeing to the share exchange with FPC. This reorganization will offer certain advantages as CP&L continues to confront the rapidly changing environment facing electric utilities. The holding company structure will allow greater organizational flexibility, including a clearer separation of regulated businesses from each other and from unregulated business such as energy services, telecommunications and electric generation projects for wholesale markets. The ability to conduct financing activities at the holding company level without the need for state regulatory approvals will enable CP&L to satisfy financing needs more quickly and efficiently. Consequently, CP&L Energy was incorporated in August 1999 under the laws of the State of North Carolina as a subsidiary of CP&L. On October 20, 1999, shareholders of CP&L approved the formation of the holding company structure. Upon completion of the holding company restructuring, the holders of CP&L common stock became the holders of the outstanding stock of CP&L Energy, through a one-for-one share exchange. CP&L and CP&L Energy completed the restructuring on June 19, 2000, following receipt of required regulatory approvals.
On July 1, 2000, CP&L distributed its ownership interest in the stock of NCNG, SRS, Monroe Power and CPL Energy Ventures, Inc. (Energy Ventures) to CP&L Energy. As a result, those companies are direct subsidiaries of CP&L Energy and will not be included in CP&L's results of operations and financial position on a prospective basis.
Synthetic Fuel Plants
On April 25, 2000, Energy Ventures, a wholly owned subsidiary of CP&L, through CPL Synfuels, LLC (CPL Synfuels), a wholly-owned subsidiary of Energy Ventures, purchased a 90 percent membership interest in Solid Fuel, LLC which operates the Powell Mountain synthetic fuel plant in Virginia.
On May 22, 2000, Energy Ventures, through CPL Synfuels, purchased a 90 percent membership interest in Sandy River Synfuel, LLC which operates the Cyrus Dock synthetic fuel plant in West Virginia.
Pursuant to a Contribution Agreement effective June 28, 2000 between CP&L, Caronet, Inc. (Caronet), the wholly owned subsidiary of CP&L formerly known as Interpath Communications, Inc., a North Carolina and Virginia Corporation, and Interpath Communications, Inc. (Interpath), a Delaware corporation formed in conjunction with the transaction, Caronet contributed the assets used in the application service provider business to Interpath. Under the terms of the agreement, Caronet owns 35% of Interpath's stock and Bain Capital, Inc. a private equity fund, and its affiliates (Bain) own 65% of Interpath's stock. On July 6, 2000, Caronet and Bain each invested $25 million of additional equity in Interpath.
On May 3, 2000, CP&L also entered into a capacity sharing and marketing agreement with Progress Telecom, a wholly-owned fiber optic based subsidiary of FPC, utilizing the fiber optic network assets of Caronet. Upon completion of the share exchange between CP&L Energy and FPC, the two fiber optic subsidiaries will be combined and will operate as Progress Telecom.
Certain market risks are inherent in CP&L's financial instruments, which arise from transactions entered into in the normal course of business. CP&L's primary exposures are changes in interest rates with respect to long-term debt and commercial paper, and fluctuations in the return on marketable securities with respect to its nuclear decommissioning trust funds. CP&L's exposure to return on marketable securities for the decommissioning trust funds has not changed materially since December 31, 1999. The total fixed rate debt at June 30, 2000 was $2.026 billion, with an average interest rate of 7.17%. The total commercial paper and extendible notes outstanding at June 30, 2000 was $305 million, with an average interest rate of 6.19%, and $500 million, with an average interest rate of 6.40%, respectively.
During the second quarter, CP&L entered into interest rate swap agreements to hedge its exposure on variable rate debt positions. The agreements, with a total notional amount of $500 million, are effective in July 2000 and mature in July 2002. Under these agreements, CP&L receives a floating rate based on the three month LIBOR and pays a weighted-average fixed rate of approximately 7.17%. The notional amount of the contracts is not exchanged and does not represent exposure to credit loss. In the event of default by a counterparty, the risk in these transactions is the cost of replacing the agreements at current market rates. CP&L only enters into swap agreements with strong creditworthy counterparties.
PART II. OTHER INFORMATION
Legal aspects of certain matters are set forth in Part I, Item 1 Notes to the Consolidated Interim Financial Statements, Note 6: Commitments and Contingencies.
RESTRICTED STOCK AWARDS:
(a) Securities Delivered. On May 15, June 5, June 22 and July 12, 2000,
27,000, 6,800, 18,300 and 56,900 restricted shares, respectively of
CP&L's and CP&L Energy's Common Shares were delivered to certain key
employees pursuant to the terms of the 1997 Equity Incentive Plan
(Plan), which was approved by CP&L's shareholders on May 7, 1997.
Section 9 of the Plan provides for the granting of Restricted Stock by
the Personnel, Executive Development and Compensation Committee
(currently the Committee on Organization and Compensation), (the
Committee) to key employees of CP&L and CP&L Energy. The Common Shares
delivered pursuant to the Plan were acquired in market transactions
directly for the accounts of the recipients and do not represent newly
issued shares of CP&L Energy.
(b) Underwriters and Other Purchasers. No underwriters were used in connection with the delivery of Common Shares described above. The Common Shares were delivered to certain key employees of CP&L Energy and CP&L. The Plan defines "key employees" as an officer or other employee of CP&L Energy or CP&L who, in the opinion of the Committee, can contribute significantly to the growth and profitability of, or perform services of major importance to, CP&L Energy or CP&L.
(c) Consideration. The Common Shares were delivered to provide an incentive to the employee recipients to exert their utmost efforts on CP&L Energy's or CP&L's behalf and thus enhance the respective company's performance while aligning the employee's interest with those of CP&L Energy's shareholders.
(d) Exemption from Registration Claimed. The Common Shares described in this Item were delivered on the basis of an exemption from registration under Section 4(2) of the Securities Act of 1933. Receipt of the Common Shares required no investment decision on the part of the recipients. All award decisions were made by the Committee, which consists entirely of non-employee directors.
(a) The Annual Meeting of the Shareholders of CP&L was held on May 10, 2000.
(b) The meeting involved the election of three Class II directors to serve for three-year terms and one Class I director to serve for a two-year term. Proxies for the meeting were solicited pursuant to Regulation 14, there was no solicitation in opposition to management's nominees as listed below, and all nominees were elected.
(c) The total votes for the election of directors were as follows:
Class II Votes For Votes Withheld
-------- --------- --------------
(Term Expiring in 2003)
Edwin B. Borden 131,965,625 2,528,003
David L. Burner 129,387,791 5,105,826
Richard L. Daugherty 131,873,716 2,619,901
Class I Votes For Votes Withheld
------- --------- --------------
(Term Expiring in 2002)
E. Marie McKee 131,914,751 2,578,878
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The shareholder proposal regarding the CP&L's cash balance pension plan was not approved by the shareholders. The number of shares voted for the proposal was 18,930,496 and the number of shares voted against the proposal was 91,251,526.
(a) See EXHIBIT INDEX
(b) Reports on Form 8-K filed during or with respect to the quarter:
CP&L filed a Current Report on Form 8-K on April 20, 2000, detailing the April 11, 2000 issuance of $300 million principal amount of Senior Notes, 7.50% Series Due April 1, 2005 under Item 5 of the Report. Exhibits related to the issuance were listed under Item 7 of the Report.
CP&L filed a Current Report on Form 8-K on June 21, 2000, detailing the June 19, 2000 restructuring in which CP&L Energy, Inc. became the holding company for CP&L under Item 5 of the Report. Exhibits related to the restructuring were listed under Item 7 of the Report.
CP&L filed a Current Report on Form 8-K on July 18, 2000, detailing the June 30, 2000 establishment of a $300 million principal amount of unsecured Medium Term Notes, Series D program under Item 5 of the Report. Exhibits related to the program were listed under Item 7 of the Report.
CP&L Energy filed a Current Report on Form 8-K on June 21, 2000, detailing the June 19, 2000 restructuring in which CP&L Energy became the holding company for CP&L under Item 5 of the Report. Exhibits related to the restructuring were listed under Item 7 of the Report.
SIGNATURES
Pursuant to requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
By /s/ Peter M. Scott III ----------------------------------- |
Peter M. Scott III Executive Vice President and Chief Financial Officer
By /s/ Robert H. Bazemore, Jr. ------------------------------------ |
Robert H. Bazemore, Jr.
Vice President and Controller
(Chief Accounting Officer)
Date: August 14, 2000
EXHIBIT INDEX
Exhibit Number Description
3(a)(1) Amended and Restated Articles of
Incorporation of CP&L Energy, Inc., as
amended and restated on June 15, 2000.
3(b)(1) Bylaws of CP&L Energy, Inc., as amended and
restated June 15, 2000.
3(b)(2) Bylaws of Carolina Power & Light Company, as
amended on July 12, 2000.
27(a) Financial Data Schedule - CP&L Energy, Inc.
27(b) Financial Data Schedule - Carolina Power &
Light Company
|
AMENDED AND RESTATED
ARTICLES OF INCORPORATION
of
CP&L ENERGY, INC.
AMENDED AND RESTATED
ARTICLES OF INCORPORATION
of
CP&L ENERGY, INC.
ARTICLE I
NAME
The name of the corporation is CP&L Energy, Inc. (the "Corporation")
ARTICLE II
REGISTERED OFFICE AND AGENT
The street and mailing address of the registered office and the name and mailing address of the registered agent of the Corporation in the State of North Carolina is:
William D. Johnson
c/o Carolina Power & Light Company
411 Fayetteville Street
Raleigh, Wake County, North Carolina 27601
ARTICLE III
PURPOSES
The purposes for which the Corporation is formed are to conduct the business of a holding company as well as to transact any or all other lawful business, not required to be specifically stated in these Articles of Incorporation, for which corporations may be incorporated under the North Carolina Business Corporation Act, as amended from time to time, and any legislation succeeding thereto (the "NCBCA").
All references herein to "Articles of Incorporation" shall mean these Amended and Restated Articles of Incorporation, as subsequently amended or restated in accordance herewith and with the NCBCA.
ARTICLE IV
CAPITAL STOCK
The aggregate number of shares that the Corporation shall have authority to issue shall be 20,000,000 shares of Preferred Stock, no par value per share (hereinafter called "Preferred Stock"), and 500,000,000 shares of Common Stock, no par value per share (hereinafter called "Common Stock").
The following is a description of each of such classes of stock, and a statement of the preferences, limitations, voting rights and relative rights in respect of the shares of each such class:
1. Authority to Fix Rights of Preferred Stock. The Board of Directors shall have authority, by resolution or resolutions, at any time and from time to time to divide and establish any or all of the unissued shares of Preferred Stock not then allocated to any series of Preferred Stock into one or more series, and, without limiting the generality of the foregoing, to fix and determine the designation of each such series, the number of shares that shall constitute such series and the following relative rights and preferences of the shares of each series so established:
(a) The annual or other periodic dividend rate payable on shares of such series, the time of payment thereof, whether such dividends shall be cumulative or non-cumulative, and the date or dates from which any cumulative dividends shall commence to accrue;
(b) the price or prices at which and the terms and conditions, if any, on which shares of such series may be redeemed;
(c) the amounts payable upon shares of such series in the event of the voluntary or involuntary dissolution, liquidation or winding-up of the affairs of the Corporation;
(d) the sinking fund provisions, if any, for the redemption or purchase of shares of such series;
(e) the extent of the voting powers, if any, of the shares of such series; provided, however, that no share of Preferred Stock shall entitle its holder to more than one vote on any matter;
(f) the terms and conditions, if any, on which shares of such series may be converted into shares of stock of the Corporation of any other class or classes or into shares of any other series of the same or any other class or classes;
(g) whether, and if so the extent to which, shares of such series may participate with the Common Stock in any dividends in excess of the preferential dividend fixed for shares of such series or in any distribution of the assets of the Corporation, upon a liquidation, dissolution or winding-up thereof, in excess of the preferential amount fixed for shares of such series; and
(h) any other preferences and relative, optional or other special rights, and qualifications, limitations or restrictions of such preferences or rights, of shares of such series not fixed and determined by law or in this Article III.
2. Distinctive Designations of Series. Each series of Preferred Stock shall be so designated as to distinguish the shares thereof from the shares of all other series. Different series of Preferred Stock shall not be considered to constitute different voting groups of shares for the purpose of voting by voting groups except as required by the NCBCA or as otherwise specified by the Board of Directors with respect to any series at the time of the creation thereof.
3. Restrictions on Certain Distributions. So long as any shares of Preferred Stock are outstanding, the Corporation shall not declare and pay or set apart for payment any dividends (other than dividends payable in Common Stock or other stock of the Corporation ranking junior to the Preferred Stock as to dividends) or make any other distribution on such junior stock if, at the time of making such declaration, payment or distribution, the Corporation shall be in default with respect to any dividend payable on, or any obligation to redeem, any shares of Preferred Stock.
4. Redeemed or Reacquired Shares. Shares of any series of Preferred Stock that have been redeemed or otherwise reacquired by the Corporation (whether through the operation of a sinking fund, upon conversion or otherwise) shall have the status of authorized and unissued shares of Preferred Stock and may be redesignated and reissued as a part of such series (unless prohibited by the articles of amendment creating such series) or of any other series of Preferred Stock. Shares of Common Stock that have been reacquired by the Corporation shall have the status of authorized and unissued shares of Common Stock and may be reissued.
5. Voting Rights. Subject to the provisions of the NCBCA or of the By-Laws of the Corporation as from time to time in effect with respect to the closing of the transfer books or the fixing of a record date for the determination of shareholders entitled to vote, and except as otherwise provided by the NCBCA or in resolutions of the Board of Directors establishing any series of Preferred Stock pursuant to the provisions of paragraph 1 of this Article IV, the holders of outstanding shares of Common Stock of the Corporation shall exclusively possess voting power for the election of directors and for all other purposes, with each holder of record of shares of Common Stock of the Corporation being entitled to one vote for each share of such stock standing in his name
on the books of the Corporation. Shares shall not be voted cumulatively for the election of directors.
6. No Preemptive Rights. No holder of shares of stock of any class of the Corporation shall, as such holder, have any right to subscribe for or purchase (a) any shares of stock of any class of the Corporation, or any warrants, options or other instruments that shall confer upon the holder thereof the right to subscribe for or purchase or receive from the Corporation any shares of stock of any class, whether or not such shares of stock, warrants, options or other instruments are issued for cash or services or property or by way of dividend or otherwise, or (b) any other security of the Corporation that shall be convertible into, or exchangeable for, any shares of stock of the Corporation of any class or classes, or to which shall be attached or appurtenant any warrant, option or other instrument that shall confer upon the holder of such security the right to subscribe for or purchase or receive from the Corporation any shares of its stock of any class or classes, whether or not such securities are issued for cash or services or property or by way of dividend or otherwise, other than such right, if any, as the Board of Directors, in its sole discretion, may from time to time determine. If the Board of Directors shall offer to the holders of shares of stock of any class of the Corporation, or any of them, any such shares of stock, options, warrants, instruments or other securities of the Corporation, such offer shall not, in any way, constitute a waiver or release of the right of the Board of Directors subsequently to dispose of other securities of the Corporation without offering the same to said holders.
7. Shareholder Protection Act and Control Share Acquisition Act. The provisions of Articles 9 and 9A of the NCBCA shall not apply to acquisitions of shares of any class of capital stock of the Corporation.
ARTICLE V
DIRECTORS
1. Number. The number of directors shall be as specified in the By-Laws of the Corporation, but such number may be increased or decreased from time to time in such manner as may be prescribed in the By-Laws, provided that in no event shall the number of directors be less than nine or more than fifteen.
2. Removal. Subject to the rights of the holders of any Preferred Stock then outstanding, directors may be removed with or without cause by the affirmative vote of a majority of the voting power of the then outstanding shares of capital stock of the Corporation entitled to vote generally in the election of directors ("Voting Stock"), voting together as a single voting group.
3. Vacancies. Subject to the rights of the holders of any Preferred Stock then outstanding and to any limitations set forth in the NCBCA, newly-created directorships
resulting from any increase in the number of directors and any vacancies in the Board of Directors resulting from death, resignation, disqualification, removal or other cause shall be filled solely (i) by the Board of Directors or (ii) at an annual meeting of shareholders by the shareholders entitled to vote on the election of directors. If the directors remaining in office constitute fewer than a quorum of the Board, they may fill the vacancy by the affirmative vote of a majority of the directors remaining in office.
ARTICLE VI
AMENDMENT OF ARTICLES
An amendment or restatement of the Articles of Incorporation requiring shareholder approval shall be approved by a majority of the votes entitled to be cast by each voting group that is entitled to vote on the matter, unless in submitting any such amendment or restatement to the shareholders the Board of Directors shall require a greater vote.
ARTICLE VII
IMMUNITY
To the fullest extent permitted by the NCBCA, a director of the Corporation shall not be liable to the Corporation or any of its shareholders for monetary damages for breach of duty as a director. Any amendment to or repeal of the provisions of this Article shall not impair any right or protection of a director pertaining to service as a director up to the effective time of such amendment or repeal.
ARTICLE VIII
AMENDMENT OF BY-LAWS
In furtherance of, and not in limitation of, the powers conferred by the NCBCA, the Board of Directors is expressly authorized and empowered to adopt, amend or repeal the By-Laws of the Corporation. By-laws adopted by the Board of Directors under the powers hereby conferred may be altered, amended or repealed by the Board of Directors or by the shareholders having voting power with respect thereto as provided herein. In the case of any such action by shareholders, the affirmative vote of the holders of a majority of the voting power of the then outstanding Voting Stock, voting together as a single voting group, shall be required in order for the shareholders to alter, amend or repeal any provision of the By-Laws or to adopt any additional by-law. Any by-law adopted, amended or repealed by the shareholders may not be readopted, amended or repealed by the Board of Directors unless the Articles of Incorporation or a by-law adopted by the shareholders authorizes the Board of Directors to adopt, amend or repeal that particular by-law or the By-laws generally.
B Y - L A W S
of
CP&L ENERGY, INC.
Raleigh, North Carolina
(As Amended And Restated June 15, 2000)
TABLE OF CONTENTS
ARTICLE I
Meetings of Shareholders
Section 1. Place of Meetings...............................................................................1 Section 2. Annual Meetings.................................................................................1 Section 3. Special Meetings................................................................................1 Section 4. Notice of Meetings..............................................................................1 Section 5. List of Shareholders............................................................................2 Section 6. Quorum; Proxies.................................................................................2 Section 7. Voting of Shares................................................................................2 Section 8. Inspectors......................................................................................2 Section 9. Conduct of Meetings.............................................................................3 Section 10. Business Proposed by a Shareholder..............................................................3 Section 11. Nominations by Shareholders.....................................................................4 |
ARTICLE II
Directors and Meetings of Directors
Section 12. Number and Election of Directors................................................................5 Section 13. Vacancies.......................................................................................6 Section 14. Meetings........................................................................................6 Section 15. Telephone Meetings..............................................................................6 Section 16. Actions Without Meetings........................................................................6 Section 17. General Powers..................................................................................7 Section 18. Committees......................................................................................7 |
ARTICLE III
Notices
Section 19. Notice Requirements.............................................................................8 Section 20. Waiver of Notice................................................................................9 |
ARTICLE IV
Officers, Their Authority, and Their Terms of Office
Section 21. Officers of the Corporation.....................................................................9 Section 22. Chief Executive Officer.........................................................................9 Section 23. Removal and Resignation of Officers............................................................10 Section 24. Bond...........................................................................................10 |
ARTICLE V
Capital Stock
Section 25. Certificated and Uncertificated Shares.........................................................10 Section 26. Stock Transfer Books and Transfer of Shares....................................................11 Section 27. Holder of Record...............................................................................11 Section 28. Record Date....................................................................................12 Section 29. Lost, Destroyed or Mutilated Certificates......................................................12 Section 30. Transfer Agent and Registrar; Regulations......................................................12 |
ARTICLE VI
General
Section 31. Distributions..................................................................................13 Section 32. Deeds, Bonds, and Contracts....................................................................13 Section 33. Deposits.......................................................................................13 Section 34. Interpretation.................................................................................13 |
ARTICLE VII
Indemnity of Officers and Directors
Section 35. Indemnification and Advancement of Expenses....................................................13 |
ARTICLE VIII
Emergency By-Laws
Section 36. Definitions....................................................................................15 Section 37. Applicability..................................................................................15 Section 38. Board of Directors.............................................................................16 Section 39. Appointment of Officers........................................................................16 Section 40. Amendments.....................................................................................16 |
B Y - L A W S
of
CP&L ENERGY, INC.
Raleigh, North Carolina
(As Amended And Restated June 15, 2000)
ARTICLE I
All meetings of the shareholders of CP&L Energy, Inc. (the "Corporation"), shall be held at such place, either within or without the State of North Carolina, as may from time to time be fixed by the Board of Directors of the Corporation (the "Board").
Beginning in the year 2000, the annual meeting of the shareholders of the Corporation shall be held on the second Wednesday of May in each year, if not a legal holiday, and if a legal holiday, then on the next day not a legal holiday, at ten o'clock A.M., or at such other date, or hour, and at such place as stated in the notice of the meeting as the Board of Directors may determine. The annual meeting of shareholders for 1999 shall be held on the date and time specified by the Board of Directors.
Special meetings of the shareholders of the Corporation may be held upon call by a majority of the Board of Directors or of the Executive Committee, or by the Chairman of the Board, or by the President of the Corporation, at such time as may be stated in the call and notice.
Written notice of the time and place of every meeting of shareholders may be given, and shall be deemed to have been duly given, by mailing the same at least ten, but not more than
sixty, days prior to the meeting, to each shareholder of record entitled to vote at such meeting, and addressed to him at his address as it appears on the records of the Corporation, with postage thereon prepaid. Notice may also be given by any other lawful means.
In accordance with Section 55-7-20 of the General Statutes of North Carolina, the Corporation, or an officer having charge of the record of shareholders of the Corporation, shall prepare a list of shareholders which shall be available for inspection by shareholders, or their agents or attorneys.
Shares entitled to vote as a separate voting group may take action on a matter at a meeting only if a quorum of that voting group exists. A majority of the votes entitled to be cast on the matter by the voting group constitutes a quorum of the voting group on that matter. Once a share is represented for any purpose at a meeting, it is deemed present for quorum purposes for the remainder of the meeting and for any adjournment of that meeting unless a new record date is or must be set for that adjourned meeting. In the absence of a quorum at the opening of any meeting of shareholders, the meeting may be adjourned by a majority of shares voting on a motion to adjourn. Notice of adjournment other than announcement at the meeting need not be given unless a new record date is or must be set for that adjourned meeting. At any adjourned meeting at which a quorum shall be present or represented, any business may be transacted which might have been transacted at the original meeting.
(a) When a quorum is present at any meeting, the vote of the holders of a majority of the outstanding stock having voting power present in person or represented by proxy shall decide any question brought before such meeting, unless the question is one upon which by express provision of any applicable statute or of the Articles of Incorporation a different vote is required, in which case such express provision shall govern and control the decision of such question.
(b) Unless otherwise provided by law or the Articles of Incorporation, at every meeting of the shareholders each shareholder shall be entitled to one vote in person or by proxy for each share of such stock held of record by such shareholder. Except where the transfer books of the Corporation have been closed or a date has been fixed as a record date for the determination of its shareholders entitled to vote, no share of stock shall be voted at any election for directors which has been transferred on the books of the Corporation within twenty days next preceding such election of directors.
The Board of Directors in advance of any meeting of shareholders may appoint two voting inspectors to act at any such meeting or adjournment thereof. If they fail to make such
appointment, or if their appointees or any of them fail to appear at the meeting of shareholders, the chairman of the meeting may appoint such inspectors or any inspector to act at that meeting.
Meetings of the shareholders shall be presided over by the Chairman of the Board of Directors, or, if he is not present, the President, or, if the President is not present, a Vice President, or if neither of said officers is present, by a chairman pro tem to be elected at the meeting. The Secretary of the Corporation shall act as secretary of such meetings, if present, but if not present, some person shall be appointed by the presiding officer to act during the meeting. The officer of the Corporation presiding over the meeting of shareholders shall have all the powers and authority vested in presiding officers by law or practice, without restriction, as well as the authority to conduct an orderly meeting and to impose reasonable limits on the amount of time taken up in remarks by any one shareholder.
To be properly brought before a meeting of shareholders, business must
be (i) specified in the notice of meeting (or any supplement thereto) given by
or at the direction of the Board of Directors, (ii) otherwise properly brought
before the meeting by or at the direction of the Board of Directors or (iii)
otherwise properly brought before an annual meeting by a shareholder of the
Corporation who was a shareholder of record at the time of the giving of notice
provided for in Section 4 of these By-Laws and who is entitled to vote at the
meeting. In addition to any other applicable requirements, for business to be
properly brought before an annual meeting by a shareholder, the shareholder must
give timely notice of the proposal in writing to the Secretary of the
Corporation. To be timely, a shareholder's notice must be received by the
Secretary of the Corporation at the principal executive offices of the
Corporation not later than the close of business on the 60th day prior to the
first anniversary of the immediately preceding year's annual meeting; provided,
however, that with respect to the annual meeting to be held in 2000, a
shareholder's notice must be received by the Secretary of the Corporation at the
principal executive offices of the Corporation no later than December 3, 1999.
In no event shall the public announcement of an adjournment or postponement of
an annual meeting or the fact that an annual meeting is held after the
anniversary of the preceding annual meeting commence a new time period for the
giving of a shareholder notice as described above. A shareholder's notice shall
set forth as to each matter the shareholder proposes to bring before the meeting
(i) a brief description of the business desired to be brought before the annual
meeting, including the complete text of any resolutions to be presented at the
annual meeting with respect to such business, (ii) the reasons for conducting
such business at the annual meeting, (iii) the name and address of record of the
shareholder and the beneficial owner, if any, on whose behalf the proposal is
made, (iv) the class and number of shares of the Corporation which are owned by
the shareholder and such beneficial owner, (v) a representation that the
shareholder is a holder of record of shares of the Corporation entitled to vote
at such meeting and intends to appear in person or by proxy at the meeting to
propose such business, and (vi) any material interest of the shareholder and
such beneficial owner in such business.
In the event that a shareholder attempts to bring business before a
meeting without complying with the procedures set forth in this Section 10, such
business shall not be transacted at such meeting. The Chairman of the Board of
Directors, or any other individual presiding over the meeting pursuant to
Section 9 of these By-Laws, shall have the power and duty to determine whether
any proposal to bring business before the meeting was made in accordance with
the procedures set forth in this Section 10, and, if any business is not
proposed in compliance with this Section, to declare that such defective
proposal shall be disregarded and that such proposed business shall not be
transacted at such meeting.
Subject to the rights of holders of any securities or obligations of
the Corporation conferring special rights regarding election of directors,
nominations for the election of directors shall be made by the Board of
Directors or by any shareholder entitled to vote in elections of directors;
provided however, that any shareholder entitled to vote in the election of
directors may nominate one or more persons for election as directors only at an
annual meeting and if written notice of such shareholder's intent to make such
nomination or nominations has been received, either by personal delivery or by
United States registered or certified mail, postage prepaid, by the Secretary of
the Corporation at the principal executive offices of the Corporation not later
than the close of business on the 60th day prior to the first anniversary of the
immediately preceding year's annual meeting; provided, however, that with
respect to the annual meeting to be held in 2000, a shareholder's notice must be
received by the Secretary of the Corporation at the principal executive offices
of the Corporation no later than December 3, 1999. In no event shall the public
announcement of an adjournment or postponement of an annual meeting or the fact
that an annual meeting is held after the anniversary of the preceding annual
meeting commence a new time period for the giving of a shareholder's notice as
described above. Each notice shall set forth (i) the name and address of record
of the shareholder who intends to make the nomination, the beneficial owner, if
any, on whose behalf the nomination is made and of the person or persons to be
nominated, (ii) the class and number of shares of the Corporation that are owned
by the shareholder and such beneficial owner, (iii) a representation that the
shareholder is a holder of record of shares of the Corporation entitled to vote
at such meeting and intends to appear in person or by proxy at the meeting to
nominate the person or persons specified in the notice, (iv) a description of
all arrangements, understandings or relationships between the shareholder and
each nominee and any other person or persons (naming such person or persons)
pursuant to which the nomination or nominations are to be made by the
shareholder, and (v) such other information regarding each nominee proposed by
such shareholder as would be required to be disclosed in solicitations of
proxies for election of directors in an election contest, or is otherwise
required to be disclosed, pursuant to the proxy rules of the Securities and
Exchange Commission, had the nominee been nominated, or intended to be
nominated, by the Board of Directors, and shall include a consent signed by each
such nominee to serve as a director of the Corporation if so elected. In the
event that a shareholder attempts to nominate any person without complying with
the procedures set forth in this Section 11, such person shall not be nominated
and shall not stand for election at such meeting. The Chairman of the Board of
Directors, or any other individual presiding over the meeting pursuant to
Section 9 of these By-Laws, shall have the power and duty to determine whether a
nomination proposed to be brought before the meeting was made in accordance with
the procedures set forth in this
Section 11 and, if any proposed nomination is not in compliance with this
Section 11, to declare that such defective proposal shall be disregarded.
(a) The number of directors of the Corporation shall not be less than eleven (11) nor more than fifteen (15). The authorized number of directors, within the limits above specified, shall be determined by the affirmative vote of a majority of the whole board given at any regular or special meeting of the Board of Directors, provided that, the number of directors shall not be reduced to a number less than the number of directors then in office unless such reduction shall become effective only at and after the next ensuing meeting of the shareholders for the election of directors.
(b) The directors shall appoint from among their number a Chairman, who shall serve at the pleasure of the Board. Members of the Board of Directors of the Corporation who are full-time employees of the Corporation shall retire from the Board upon their retirement from employment or upon attaining the age of 65 years, whichever occurs first; provided, however, that the Chairman of the Board, if then a full-time employee of the Corporation, shall be eligible to continue as a member of the Board until the first Annual Meeting of Shareholders occurring at least one year after retirement from employment or after attaining the age of 65 years, whichever occurs first, if so requested to remain by the Board. Those persons who are not employed full-time by the Corporation shall not be eligible for election as a Director in any calendar year (or subsequent year) in which he or she has reached or will reach the age of 71 years, unless requested by the Chairman of the Board and approved on an annual basis by the full Board. Otherwise, any Director who reaches the age of 71 during a term of office shall resign as of the first day of the month so following unless otherwise determined by the Board.
(c) Except for the election of the initial directors whose terms are classified pursuant to this By-Law, the election of directors shall be held at the annual meeting of shareholders. The directors, other than those who may be elected under circumstances specified in the Articles of Incorporation by the holders of any class of stock having a preference over the Common Stock as to dividends or in liquidation, shall be classified into three classes, Class I, Class II and Class III, as nearly equal in number as possible. The directors of Class I shall originally be elected for a term expiring at the annual meeting of shareholders of the Corporation to be held in 2002; the directors of Class II shall originally be elected for a term expiring at the annual meeting of shareholders of the Corporation to be held in 2000; and the directors of Class III shall originally be elected for a term expiring at the annual meeting of shareholders of the Corporation to be held in 2001. The directors of each class shall hold office until their respective successors are elected and qualified, or until their earlier resignation or removal. At each annual meeting of shareholders of the Corporation beginning in 2000, the successors to the class of directors whose term expires at such meeting shall be identified as being of the same class of directors they succeed and shall be elected to hold office for a term expiring at the third succeeding annual meeting of shareholders. When the number of directors is changed, any newly-created
directorships or any decrease in directorships shall be so apportioned among the classes by the Board of Directors as to make all classes as nearly equal in number as possible; provided, however, that no decrease in the number of directors shall shorten or terminate the term of any incumbent director.
Subject to contrary provisions in the Articles of Incorporation or elsewhere in these By-Laws, in case of any vacancy in the number of directors through death, resignation, disqualification, increase in the number of directors or other cause, the remaining directors present at the meeting, by affirmative vote of a majority thereof, though less than a quorum, may elect a successor to hold office until the next shareholders' meeting at which directors are elected and until the election of his successor.
Regular meetings of the Board of Directors shall be held at times fixed by resolution of the Board, and special meetings may be held upon the written call of the Executive Committee, or by the Chairman of the Board, or by the President or by any two directors; and the Secretary or officer performing his duties shall give reasonable notice of all meetings of directors; provided, that a meeting may be held without notice immediately after the annual election, and notice need not be given of regular meetings held at times fixed by resolution of the Board. Meetings may be held at any time without notice if all the directors are present, or if those not present waive notice either before or after the meeting. All regular and special meetings shall be held at the principal offices of the Corporation, provided that the Board, from time to time, may order that any meeting be held elsewhere within or without the State of North Carolina. A majority of the whole Board of Directors shall constitute a quorum, and the act of a majority of the directors present at a meeting at which a quorum is present shall be the act of the Board of Directors, unless a greater proportion is required by the Articles of Incorporation.
Members of the Board or any committee may participate in a meeting of the Board or such committee by means of a conference telephone or other means of communications whereby all directors participating may simultaneously hear each other during the meeting, and participation by such means shall constitute presence in person at such meeting.
Any action that may be taken at a meeting of the Board or of a committee may be taken without a meeting if a consent in writing, setting forth the action, shall be signed, either before or after such action, by all of the directors or all of the members of the committee, as the case may be. Such consent shall have the same force and effect as a unanimous vote.
The business and affairs of the Corporation shall be managed by its Board of Directors, which may exercise all such powers of the Corporation and do all such lawful acts and things which are not by law or by the Articles of Incorporation directed or required to be exercised or done by the shareholders; provided, however, that the officers of the Corporation shall, without prior action of the Board of Directors, perform all acts and things incidental to the usual and ordinary course of the business in which the Corporation is engaged as hereinafter provided by the By-Laws or as may hereafter be delegated by the Board of Directors.
(a) A majority of the Board of Directors may create one or more committees and appoint other members of the Board of Directors to serve on such Committees. Each such committee shall have two or more members, who serve at the pleasure of the Board of Directors. Any such committee may exercise authority over any matters except those matters described in Section 55-8-25(e) of the General Statutes of North Carolina. Each committee may make rules for the conduct of its business. A majority of the members of such committee shall constitute a quorum.
(b) A majority of the whole Board of Directors, present at any meeting held after their election in each year, may appoint an Executive Committee, to consist of three or more directors, which Committee shall have and may exercise, during the intervals between meetings of the Board, by a majority vote of those present at a meeting, all the powers vested in the Board, except the following matters as more fully described in Section 55-8-25(e) of the General Statutes of North Carolina:
- Authorize distributions;
- Approve or propose to shareholders action that is by law required to be approved by the shareholders;
- Fill vacancies on the Board of Directors or on any of its Committees;
- Amend the Corporation's Articles of Incorporation pursuant to N.C.G.S. ss.55-10-02;
- Adopt, amend or repeal the Corporation's By-Laws;
- Approve a plan of merger not requiring shareholder approval;
- Authorize or approve reacquisition of shares, except according to a formula or method prescribed by the Board of Directors; or
- Authorize or approve the issuance or sale or contract for sale of shares, or determine the designation and relative rights, preferences, and limitations of a class or series of shares, except that the Board of Directors may authorize a committee (or a senior executive officer of the Corporation) to do so within limits specifically prescribed by the Board of Directors.
(c) A majority of the whole Board of Directors present at any meeting shall have the power at any time to change the membership of such committee and to fill vacancies in it. The Chairman of the Executive Committee shall be appointed by the Board of Directors from the membership of the Executive Committee.
(a) Notice may be communicated: in person; by telephone, telegraph, teletype, or other form of wire or wireless communication, by facsimile transmission; or by mail or private carrier. If these forms of personal notice are impracticable as to one or more persons, notice may be communicated to such persons by publishing notice in a newspaper in the county wherein the Corporation has its principal place of business in North Carolina, or if it has no principal place of business in North Carolina, the county wherein it has its registered office in North Carolina; or by radio, television, or other form of public broadcast communication.
(b) Written notice is effective at the earliest of the following:
(i) When received;
(ii) Five days after its deposit in the United States mail, as evidenced by the postmark or based on the affidavit of the person depositing the notice, if mailed with postage thereon prepaid and correctly addressed;
(iii) On the date shown on the return receipt, if sent by registered or certified mail, return receipt requested, signed by or on behalf of the addressee. Anyone accepting the mail at the stated address and signing the receipt shall be conclusively presumed to have acted on behalf of the addressee.
(c) Oral notice is effective when actually communicated to the person to whom given.
(d) If these By-Laws prescribe notice requirements for particular circumstances, those requirements govern.
(e) No notice need be given any shareholder or director whose address is outside of the United States and each shareholder located outside of the United States must provide to the Corporation a mailing address in the United States to which notices from the Corporation may be addressed. The Corporation shall not be obligated to recognize any such address (or change of address) received less than thirty days before the date on which the Corporation's notice is sent. Any notice given by telegram or cable shall be deemed to be given when delivered to and accepted for transmittal by an office of the transmitting corporation.
Whenever any notice is required to be given under the provisions of applicable statutes or of the Articles of Incorporation or of these By-Laws, a waiver thereof in writing, signed by the person or persons entitled to said notice, whether before or after the time stated therein, shall be deemed equivalent to the giving of such notice in apt time.
ARTICLE IV
The Board of Directors shall annually at its first meeting held after the annual meeting of shareholders, or as soon thereafter as may be practical, elect the officers of the Corporation, who shall consist of a President, one or more Senior Executive Vice Presidents and Executive Vice Presidents, two or more Senior Vice Presidents, three or more Vice Presidents, a Secretary, a Treasurer, a Controller and such other officers or assistant officers and agents as may be appointed by the Board of Directors. At other times, the Board of Directors or any Committee to which it delegates the authority to do so may elect officers to fill any new office or a vacancy in any office occurring by virtue of the incumbent's death, resignation, removal or otherwise at any duly convened meeting of the Board or of the Committee. The officer shall serve for the period specified or until a successor is chosen. From time to time the Board of Directors may also elect a Vice Chairman who shall have such duties as described herein and as may from time to time be directed. Any two offices may be held by the same person, but no officer may act in more than one capacity where action of two or more officers is required. The Vice Chairman, if any, of the Board of Directors shall be chosen from among the Directors, but the other officers need not be directors of the Corporation.
(a) The Board of Directors shall appoint the Chief Executive Officer, who shall be either the Chairman, the Vice Chairman or the President of the Corporation. In the event the Chief Executive Officer is unavailable at the time for needed action, or in other circumstances as directed by the Chief Executive Officer, then the Chairman, the Vice Chairman, if any, or the President if there is no Vice Chairman, who is not then serving as Chief Executive Officer, shall be the next officer in line of authority to perform the duties of Chief Executive Officer. If the Chairman, the Vice Chairman and the President should be unavailable at the time for needed action, or in other circumstances as directed by the Chief Executive Officer, then the next officer in line of authority to perform the duties of the Chief Executive Officer shall be a Senior Executive Vice President or Executive Vice President as designated by the Chief Executive Officer.
(b) Unless otherwise provided by the Board of Directors, the Corporation's Chief Executive Officer is vested with full power, authority, and the duty, to perform in person, and by delegation of authority to subordinate officers and employees of the Corporation, all acts and things deemed by him to be reasonably necessary or desirable to direct, handle, and manage, and
in general carry on the Corporation's business transactions authorized by its Articles of Incorporation, in respect to all matters except those which by law must be performed by the directors.
Any officer may be reassigned duties by appropriate members of senior management at any time. Any officer may be removed from office at any time by the Board of Directors, or by any Committee to which it delegates the authority to remove officers from office, without prejudice to the rights of the officer removed under an employment agreement in writing previously duly authorized by the Board of Directors or the Executive Committee of the Board of Directors. Any officer may resign at any time by giving written notice to the Board of Directors, the President or any other officer of the Corporation. Such resignation shall take effect at the time specified therein, and, unless otherwise specified therein, the acceptance of such resignation shall not be necessary to make it effective.
The Board of Directors or the Chief Executive Officer of the Corporation may require the Treasurer and any other officer, employee or agent of the Corporation to give bond, in such sum and with such surety or sureties as either shall determine, for the faithful discharge of their duties.
(a) The Board of Directors may authorize the issuance of some or all of the shares of the Corporation's classes or series of capital stock without issuing certificates to represent such shares. If shares are represented by certificates, the certificates shall be in such form as required by law and as determined by the Board of Directors. Certificates shall be signed by the Chairman of the Board or the President and by the Secretary or Treasurer. The signatures of any such officers upon a certificate may be facsimiles or may be engraved or printed or omitted if the certificate is countersigned by a transfer agent, or registered by a registrar, other than the Corporation itself or an employee of the Corporation. If an officer who has signed or whose facsimile or other signature has been placed upon a certificate ceases to hold the office before the certificate is issued, the certificate may be issued by the Corporation with the same effect as if he held the office on the date of issuance.
(b) All certificates for shares shall be consecutively numbered (within class or series designations, if desired) or otherwise identified and entered into the stock transfer records of the Corporation. When shares are represented by certificates, the Corporation shall issue and deliver to each shareholder to whom such shares have been issued or transferred certificates representing the shares owned of record by him. Upon a transfer of certificated shares, a new certificate shall
be issued only upon surrender of a certificate representing such shares for cancellation, subject to the provisions for issuance of a new certificate set forth in Section 26 of these By-Laws. When shares are not represented by certificates, then within a reasonable time after the issuance or transfer of such shares, the Corporation shall send the shareholder to whom such shares have been issued or transferred a written statement of the information required by law to be on certificates.
(c) If uncertificated shares are issued, the Corporation shall send each holder of such shares a written statement containing the information required by law.
(d) Transfer agents or registrars, or both, for one or more classes of the stock of the Corporation may be appointed by the Board of Directors and may be required to countersign certificates representing shares of such class or classes.
The Corporation or its designated transfer agent or other agent, shall keep a book or set of books to be known as the stock transfer books of the Corporation, containing the name of each shareholder of record, together with such shareholder's address and the number and class or series of shares held by such shareholder. Shares of stock of the Corporation shall be transferable on the stock books of the Corporation by the holder in person or by his attorney thereunto authorized by power of attorney duly executed and filed with the Secretary or the transfer agent, but, except as hereinafter provided in the case of loss, destruction or mutilation of certificates, no transfer of stock shall be entered until the previous certificate, if any, given for the same shall have been surrendered and canceled. Transfer of shares of the Corporation represented by certificates shall be made on the stock transfer books of the Corporation only upon surrender of the certificates for the shares sought to be transferred by the holder of record thereof or by such holder's duly authorized agent, transferee or legal representative, who shall furnish proper evidence of authority to transfer with the Secretary of the Corporation or its designated transfer agent or other agent. All certificates surrendered for transfer shall be canceled before new certificates for the transferred shares shall be issued. Except as otherwise provided by law, no transfer of shares shall be valid as against the Corporation, its shareholders or creditors, for any purpose, until it shall have been entered in the stock records of the Corporation by an entry showing from and to whom transferred.
Except as otherwise required by the NCBCA, the Corporation may treat the person in whose name shares of stock of the Corporation (whether or not represented by a certificate) stand of record on its books or the books of any transfer agent or other agent designated by the Board of Directors as the absolute owner of the shares and the person exclusively entitled to receive notification and distributions, to vote, and otherwise to exercise the rights, powers and privileges of ownership of such shares. The Corporation may assume that the holder of record had full competency, capacity and authority to exercise all rights of ownership, irrespective of any knowledge or notice to the contrary or any description indicating a representative, pledge or other
fiduciary relation or any reference to any other instrument or to the rights of any other person appearing upon the records of the Corporation or upon the share certificate.
For the purpose of determining shareholders entitled to notice of or to vote at any meeting of shareholders or any adjournment thereof, or entitled to receive payment of any dividend, or in order to make a determination of shareholders for any other proper purpose, the Board may fix in advance a date as the record date for any such determination of shareholders, such date in any case to be not more than seventy days prior to the date on which the particular action, requiring such determination of shareholders, is to be taken. When a determination of shareholders entitled to vote at any meeting of shareholders has been made as provided in this section, such determination shall apply to any adjournment thereof unless the Board fixes a new record date, which it shall do if the meeting is adjourned to a date more than 120 days after the date fixed for the original meeting.
In case of loss, destruction or mutilation of any certificate of stock, another may be issued in its place upon proof of such loss, destruction or mutilation and upon the giving of a bond of indemnity to the Corporation in such form and in such sum as the Board may direct, provided that a new certificate may be issued without requiring any bond when, in the judgment of the Board, it is proper so to do. The Board of Directors may delegate to the Corporation's Transfer Agent and Registrar authority to issue and register, respectively, from time to time without further action or approval of the Board of Directors, new certificates of stock to replace certificates reported lost, stolen or destroyed upon receipt of an affidavit of loss and bond of indemnity in form and amount and with corporate surety satisfactory to them in each instance protecting the Corporation and them against loss. Such legal evidence of such loss or theft or destruction shall be furnished to the Board of Directors as may be required by them.
The Corporation may, if and whenever the Board of Directors so determines, maintain in the State of North Carolina or any other state of the United States, one or more transfer offices or agencies and also one or more registry offices which offices and agencies may establish rules and regulations for the issue, transfer and registration of certificates. No certificates for shares of stock of the Corporation in respect of which a transfer agent and registrar shall have been designated shall be valid unless countersigned by such transfer agent and registered by such registrar. The Board of Directors may also make such additional rules and regulations as it may deem expedient concerning the issue, transfer and registration of shares represented by certificates and shares without certificates.
ARTICLE VI
Subject to the provisions of the applicable statutes and the Articles of Incorporation of the Corporation, dividends, either cash or stock, upon the capital stock of the Corporation may be declared by the Board of Directors at any meeting thereof.
Deeds, bonds, notes, mortgages and contracts of the Corporation may be executed on behalf of the Corporation by the President, a Senior Executive Vice President, an Executive Vice President, or a Vice President, or any one of such other persons as shall from time to time be authorized by the Board of Directors, and when necessary or appropriate may be attested or countersigned by the Secretary or an Assistant Secretary, or the Treasurer or an Assistant Treasurer. The corporate seal of the Corporation may be affixed to deeds, bonds, notes, mortgages, contracts or stock certificates by an appropriate officer of the Corporation by impression thereon, or, by order of an appropriate officer of the Corporation, a facsimile of said seal may be affixed thereto by engraving, printing, lithograph or other method.
The monies of the Corporation shall be deposited in the name of the Corporation in such bank or banks or trust Corporation or trust companies as the Treasurer, with approval of the Chief Executive Officer, shall from time to time select, and shall be drawn out only by checks or other orders signed by persons designated by resolution by the Board of Directors.
As and when used in any of the foregoing By-Laws the words "stockholder" and "stockholders" shall be deemed and held to be synonymous with the words "shareholder" and "shareholders," and the word "stock" shall be deemed and held to be synonymous with the words "share" or "shares," respectively, as used in Chapter 55 of the General Statutes of North Carolina.
ARTICLE VII
(a) The Corporation shall reimburse or indemnify any past, present or future officer or director of the Corporation for and against such liabilities and expenses as are authorized by Sections 55-8-54, 55-8-55, 55-8-56 and 55-8-57 of the General Statutes of North Carolina.
Persons serving as officers or directors of the Corporation or serving in any such capacity at the request of the Corporation in any other Corporation, partnership, joint venture, trust or other enterprise shall be provided reimbursement and indemnification by the Corporation to the maximum extent allowed hereunder or under applicable law, including without limitation Sections 55-8-54, 55-8-55, 55-8-56 and 55-8-57 of the General Statutes of North Carolina.
(b) In addition to the reimbursement and indemnification provisions set forth above, any person who at any time serves or has served (1) as an officer or director of the Corporation, or (2) at the request of the Corporation as an officer or director (or in any position of similar authority, by whatever title known) of any other Corporation, partnership, joint venture, trust or other enterprise or (3) as an individual trustee or administrator under any employee benefit plan, shall have a right to be indemnified by the Corporation to the fullest extent permitted by law against (i) all reasonable expenses, including attorney's fees, actually and necessarily incurred by him in connection with any pending, threatened or completed action, suit or proceeding, whether civil, criminal, administrative or investigative, and whether or not brought by the Corporation or on behalf of the Corporation in a derivative action, seeking to hold him liable by reason of or arising out of his status as such or his activities in any of the foregoing capacities, and (ii) payments made by him in satisfaction of any judgment, money decree, fine, penalty or settlement for which he may have become liable in any such action, suit or proceeding; provided, however, that the Corporation shall not indemnify any person against liability or litigation expense he may incur on account of his activities which were at the time taken known or believed by him to be clearly in conflict with the best interests of the Corporation.
(c) No past, present or future director or officer of the Corporation (or his heirs, executors, and administrators) shall be liable for any act, omission, step or conduct taken or had in good faith that (whether by condition or otherwise) is required, authorized or approved by any order or orders issued pursuant to: the Public Utility Holding Company Act of 1935; the Federal Power Act; or any state statute regulating the Corporation or its subsidiaries by reason of their being public utility companies or subsidiaries of public utility holding companies; or any amendments to the foregoing laws. If this provision is found by a court not to constitute a valid defense to any claim against such director or officer, each director and officer (and his heirs, executors and administrators) shall be reimbursed for, or indemnified against, all expenses and liabilities received by him in connection with, or arising from, any such action, suit or proceeding based on any act, omission, step or conduct described above. Such expenses and liabilities include, but are not limited to, judgments, court costs and attorneys' fees. The foregoing rights shall not be exclusive of other rights to which any director or officer may otherwise be entitled and shall be available whether or not the director or officer continues to be a director or officer at the time of incurring such expenses and liabilities.
(d) The Board of Directors shall take all actions as may be necessary or appropriate to authorize the Corporation to pay all amounts required under this Section 35 of the By-Laws including, without limitation and to the extent deemed to be appropriate, necessary, or required by law (1) making a good faith evaluation of the manner in which the claimant for indemnity acted and of the reasonable amount of indemnity due such individual, or (2) making advances of costs and expenses, or (3) giving notice to, or obtaining approval by, the shareholders of the Corporation.
(e) Any person who serves or has served in any of the aforesaid capacities for or on behalf of the Corporation shall be deemed to be doing or have done so in reliance upon, and as consideration for, the rights of reimbursement and indemnification provided for herein. Such rights of reimbursement and indemnification shall inure to the benefit of the legal representatives of such individuals, shall include amounts paid in settlement and shall not be exclusive of any other rights to which such individuals shall be entitled apart from the provisions of this Section. No amendment to or repeal of any provision of this Section 35 shall impair any right of a director or officer based on service in such capacity up to the effective time of such amendment or repeal.
(f) The Corporation may, in its sole discretion, wholly or partially indemnify and advance expenses to any employee or agent of the Corporation to the same extent as provided herein for officers and directors.
(g) The provisions of this Section shall not limit the power of the Corporation to agree to indemnify its directors, officers, employees or agents, by contract or resolution to the fullest extent allowed by applicable law.
ARTICLE VIII
As used in these Emergency By-Laws.
(a) the term "period of emergency" shall mean any period during which a quorum of the Board cannot readily be assembled because of some catastrophic event.
(b) the term "incapacitated" shall mean that the individual to whom such term is applied shall not have been determined to be dead but shall be missing or unable to discharge the responsibilities of his office; and
(c) the term "senior officer" shall mean the Chairman of the Board, the Chief Executive Officer, the President, any Senior Executive Vice President, Executive Vice President, Senior Vice President or Vice President, the Treasurer, the Controller and the Secretary, and any other person who may have been so designated by the Board before the emergency.
These Emergency By-Laws, as from time to time amended, shall be operative only during any period of emergency. To the extent not inconsistent with these Emergency By-Laws, all provisions of the regular By-Laws of the Corporation shall remain in effect during any period of emergency.
No officer, director or employee shall be liable for actions taken in good faith in accordance with these Emergency By-Laws.
(a) A meeting of the Board may be called by any director or senior officer of the Corporation. Notice of any meeting of the Board need be given only to such of the directors as it may be feasible to reach at the time and by such means as may be feasible at the time, including publication or radio, and at a time less than twenty-four hours before the meeting if deemed necessary by the person giving notice.
(b) At any meeting of the Board, three directors in attendance shall constitute a quorum. Any act of a majority of the directors present at a meeting at which a quorum shall be present shall be the act of the Board. If less than three directors should be present at a meeting of the Board, any senior officer of the Corporation in attendance at such meeting shall serve as a director for such meeting, selected in order of rank and within the same rank in order of seniority.
(c) In addition to the Board's powers under the regular By-Laws of the Corporation to fill vacancies on the Board, the Board may elect any individual as a director to replace any director who may be incapacitated and to serve until the latter ceases to be incapacitated or until the termination of the period of emergency, whichever first occurs. In considering officers of the Corporation for election to the Board, the rank and seniority of individual officers shall not be pertinent.
(d) The Board, during as well as before any such emergency, may change the principal office or designate several alternative offices or authorize the officers to do so.
In addition to the Board's powers under the regular By-Laws of the Corporation with respect to the election of officers, the Board may elect any individual as an officer to replace any officer who may be incapacitated and to serve until the latter ceases to be incapacitated.
These Emergency By-Laws shall be subject to repeal or change by further
action of the Board of Directors or by action of the shareholders, except that
no such repeal or change shall modify the provisions of the second paragraph of
Section 37 with regard to action or inaction prior to the time of such repeal or
change. Any such amendment of these Emergency By-Laws may make any further or
different provision that may be practical and necessary for the circumstances of
the emergency.
B Y - L A W S
of
CAROLINA POWER & LIGHT COMPANY
Raleigh, North Carolina
(As Amended July 12, 2000)
Section 1. The annual meeting of the stockholders of the Company shall be held at the principal office of the Company, on the second Wednesday of May in each year, if not a legal holiday, and if a legal holiday, then on the next day not a legal holiday, at ten o'clock A.M., or at such other date, or hour, or at such other place within or without the State of North Carolina as stated in the notice of the meeting as the Board of Directors may determine.
Section 2. Special meetings of the stockholders of the Company may be held upon call by a majority of the Board of Directors or of the Executive Committee, or by the Chairman of the Board, or by the President of the Company, at the principal office of the Company or at such other place within or without the State of North Carolina, and at such time, as may be stated in the call and notice.
Section 3. Written notice of the time and place of every meeting of stockholders may be given, and shall be deemed to have been duly given, by mailing the same at least ten, but not more than sixty, days prior to the meeting, to each stockholder of record, entitled to vote at such meeting, and addressed to him at his address as it appears on the records of the Company, with postage thereon prepaid. Notice may also be given by any other lawful means.
Section 4. In accordance with Section 55-7-20 of the General Statutes of North Carolina, the Company, or an officer having charge of the record of stockholders of the Company, shall prepare a list of stockholders which shall be available for inspection by stockholders, or their agents or attorneys.
Section 5. The holders of a majority of the stock of the Company having voting powers must be present in person or represented by proxy at each meeting of the stockholders to constitute a quorum; absent such quorum, the meeting may be adjourned by a majority of shares voting on a motion to adjourn. If such adjournment is for less than thirty days, notice other than announcement at the meeting need not be given. At any adjourned meeting at which a quorum shall be present or represented, any business may be transacted which might have been transacted at the original meeting.
Section 6. (a) When a quorum is present at any meeting, the vote of the holders of a majority of the outstanding stock having voting power present in person or represented by proxy shall decide any question brought before such meeting, unless the question is one upon which by express provision of any applicable statute or of the Charter a different vote is required, in which case such express provision shall govern and control the decision of such question.
Section 6. (b) To be properly brought before a meeting of shareholders, business must be (i) specified in the notice of meeting (or any supplement thereto) given by or at the direction of the Board of Directors, (ii) otherwise properly brought before the meeting by or at the direction of the Board of Directors or (iii) otherwise properly brought before an annual meeting by a shareholder of the Company who was a shareholder of record at the time of the giving of notice provided for in Section 3 of these By-Laws and who is entitled to vote at the meeting. In addition to any other applicable requirements, for business to be properly brought before an annual meeting by a shareholder, the shareholder must give timely notice of the proposal in writing to the Secretary of the Company. To be timely, a shareholder's notice must be received by the Secretary of the Company at the principal executive offices of the Company not later than the close of business on the 60th day prior to the first anniversary of the immediately preceding year's annual meeting. In no event shall the public announcement of an adjournment or postponement of an annual meeting or the fact that an annual meeting is held after the anniversary of the preceding annual meeting commence a new time period for the giving of a shareholder notice as described above. A shareholder's notice shall set forth as to each matter the shareholder proposes to bring before the meeting (i) a brief description of the business desired to be brought before the annual meeting, including the complete text of any resolutions to be presented at the annual meeting with respect to such business, (ii) the reasons for conducting such business at the annual meeting, (iii) the name and address of record of the shareholder and the beneficial owner, if any, on whose behalf the proposal is made, (iv) the class and number of shares of the Company which are owned by the shareholder and such beneficial owner, (v) a representation that the shareholder is a holder of record of shares of the Company entitled to vote at such meeting and intends to appear in person or by proxy at the meeting to propose such business, and (vi) any material interest of the shareholder and such beneficial owner in such business.
In the event that a shareholder attempts to bring business before a
meeting without complying with the procedures set forth in this Section 6(b),
such business shall not be transacted at such meeting. The Chairman of the Board
of Directors, or any other individual presiding over the meeting pursuant to
Section 8 of these By-Laws, shall have the power and duty to determine whether
any proposal to bring business before the meeting was made in accordance with
the procedures set forth in this Section 6(b), and, if any business is not
proposed in compliance with this Section, to declare that such defective
proposal shall be disregarded and that such proposed business shall not be
transacted at such meeting.
Section 7. The Board of Directors in advance of any meeting of stockholders may appoint two voting inspectors to act at any such meeting or adjournment thereof. If they fail to make such appointment, or if their appointees or any of them fail to appear at the meeting of stockholders, the chairman of the meeting may appoint such inspectors or any inspector to act at that meeting.
Section 8. Meetings of the stockholders shall be presided over by the Chairman of the Board of Directors, or, if he is not present, the President, or, if the President is not present, a Vice President, or if neither of said officers is present, by a chairman pro tem to be elected at the meeting. The Secretary of the Company shall act as secretary of such meetings, if present, but if not present, some person shall be appointed by the presiding officer to act during the meeting.
Section 9. Each holder of Preferred Stock and/or Common Stock shall at every meeting of the stockholders be entitled to one vote in person or by proxy for each share of such stock held by such stockholder. Except where the transfer books of the Company have been closed or a date has been fixed as a record date for the determination of its stockholders entitled to vote, no share of stock shall be voted at any election for directors which has been transferred on the books of the Company within twenty days next preceding such election of directors.
Section 10. (a) The number of directors of the Company shall not be less than eleven (11) nor more than fifteen (15). The authorized number of directors, within the limits above specified, shall be determined by the affirmative vote of a majority of the whole board given at any regular or special meeting of the Board of Directors, provided that, the number of directors shall not be reduced to a number less than the number of directors then in office unless such reduction shall become effective only at and after the next ensuing meeting of the shareholders for the election of directors. This subsection (a) was adopted by the stockholders of the Company.
(b) The directors shall appoint from among their number a Chairman, who shall serve at the pleasure of the Board. Members of the Board of Directors of the Company who are full-time employees of the Company shall retire from the Board upon their retirement from employment or upon attaining the age of 65 years, whichever occurs first; provided, however, that the Chairman of the Board, if then a full-time employee of the Company, shall be eligible to continue as a member of the Board until the first Annual Meeting of Shareholders occurring at least one year after retirement from employment or after attaining the age of 65 years, whichever occurs first, if so requested to remain by the Board. Those persons who are not employed full-time by the Company shall not be eligible for election as a Director in any calendar year (or subsequent year) in which he or she has reached or will reach the age of 71 years, unless requested by the Chairman of the Board and approved on an annual basis by the full Board. Otherwise, any Director who reaches the age of 71 during a term of office shall resign as of the first day of the month so following unless otherwise determined by the Board.
(c) The election of directors shall be held at the annual meeting of stockholders. The directors, other than those who may be elected under circumstances specified in the Company's Restated Charter, as it may be amended, by the holders of any class of stock having a preference over the Common Stock as to dividends or in liquidation, shall be classified into three classes, as nearly equal in number as possible. The initial terms of directors first elected or re-elected by the stockholders on the date this amendment to the By-Laws is adopted shall be for the following terms of office:
Class I: One year Class II: Two years Class III: Three years |
and until their successors shall be elected and shall qualify. Upon the expiration of the initial term specified for each class of directors their successors shall be elected for three-year terms or until such time as their successors shall be elected and qualified. In the event of any increase or decrease in the number of directors, the additional or eliminated directorships, shall be classified or chosen so that all classes of directors shall remain or become equal in number, as nearly as possible. This subsection (c) was adopted by the stockholders of the Company.
(d) Subject to the rights of holders of any securities or obligations
of the Company conferring special rights regarding election of directors,
nominations for the election of directors shall be made by the Board of
Directors or by any shareholder entitled to vote in elections of directors;
provided however, that any shareholder entitled to vote in the election of
directors may nominate one or more persons for election as directors only at an
annual meeting and if written notice of such shareholder's intent to make such
nomination or nominations has been received, either by personal delivery or by
United States registered or certified mail, postage prepaid, by the Secretary of
the Company at the principal executive offices of the Company not later than the
close of business on the 60th day prior to the first anniversary of the
immediately preceding year's annual meeting. In no event shall the public
announcement of an adjournment or postponement of an annual meeting or the fact
that an annual meeting is held after the anniversary of the preceding annual
meeting commence a new time period for the giving of a shareholder's notice as
described above. Each notice shall set forth (i) the name and address of record
of the shareholder who intends to make the nomination, the beneficial owner, if
any, on whose behalf the nomination is made and of the person or persons to be
nominated, (ii) the class and number of shares of the Company that are owned by
the shareholder and such beneficial owner, (iii) a representation that the
shareholder is a holder of record of shares of the Company entitled to vote at
such meeting and intends to appear in person or by proxy at the meeting to
nominate the person or persons specified in the notice, (iv) a description of
all arrangements, understandings or relationships between the shareholder and
each nominee and any other person or persons (naming such person or persons)
pursuant to which the nomination or nominations are to be made by the
shareholder, and (v) such other information regarding each nominee proposed by
such shareholder as would be required to be disclosed in solicitations of
proxies for election of directors in an election contest, or is otherwise
required to be disclosed, pursuant to the proxy rules of the Securities and
Exchange Commission, had the nominee been nominated, or intended to be
nominated, by the Board of Directors, and shall include a consent signed by each
such nominee to serve as a director of the Company if so elected. In the event
that a shareholder attempts to nominate any person without complying with the
procedures set forth in this Section 10.(d), such person shall not be nominated
and shall not stand for election at such meeting. The Chairman of the Board of
Directors, or any other individual presiding over the meeting pursuant to
Section 8 of these By-Laws, shall have the power and duty to determine whether a
nomination proposed to be brought before the meeting was made in accordance with
the procedures set forth in this Section 10.(d) and, if any proposed nomination
is not in compliance with this Section 10.(d), to declare that such defective
proposal shall be disregarded.
Section 11. In case of any vacancy in the number of directors through death, resignation, disqualification, increase in the number of directors or other cause, the remaining directors present at the meeting, by affirmative vote of a majority thereof, though less than a quorum, may elect a successor to hold office until the next shareholders' meeting at which directors are elected and until the election of his successor.
Section 12. Regular meetings of the Board of Directors shall be held at times fixed by resolution of the Board, and special meetings may be held upon the written call of the Executive Committee, or by the Chairman of the Board, or by the President or by any two directors; and the Secretary or officer performing his duties shall give reasonable notice of all meetings of directors; provided, that a meeting may be held without notice immediately after the annual election, and notice need not be given of regular meetings held at times fixed by resolution of the Board. Meetings may be held at any time without notice if all the directors are present, or if those not present waive notice either before or after the meeting. All regular and special meetings shall be held at the principal offices of the Company, provided that the Board, from time to time, may order that any meeting be held elsewhere within or without the State of North Carolina. A majority of the whole Board of Directors shall constitute a quorum, and the act of a majority of the directors present at a meeting at which a quorum is present shall be the act of the Board of Directors, unless a greater proportion is required by the Charter.
Section 13. The business and affairs of the Company shall be managed by its Board of Directors, which may exercise all such powers of the Company and do all such lawful acts and things which are not by law or by the Charter directed or required to be exercised or done by the stockholders; provided, however, that the officers of the Company shall, without prior action of the Board of Directors, perform all acts and things incidental to the usual and ordinary course of the business in which the Company is engaged as hereinafter provided by the By-Laws or as may hereafter be delegated by the Board of Directors. A majority of the Board of Directors may create one or more Committees and appoint other members of the Board of Directors to serve on such Committees. Each such Committee shall have two or more members, who serve at the pleasure of the Board of Directors. Any such Committee may exercise authority over any matters except those matters described in Section 55-8-25(e) of the General Statutes of North Carolina.
Section 14. A majority of the whole Board of Directors, present at any meeting held after their election in each year, may appoint an Executive Committee, to consist of three or more directors, which Committee shall have and may exercise, during the intervals between meetings of the Board, by a majority vote of those present at a meeting, all the powers vested in the Board, except the following matters as more fully described in Section 55-8-25(e) of the General Statutes of North Carolina:
- Authorize distributions;
- Approve or propose to shareholders action that is by law required to
be approved by the shareholders;
- Fill vacancies on the Board of Directors or on any of its Committees;
- Amend the Company's Articles of Incorporation pursuant to N.C.G.S.
s.55-10-102;
- Adopt, amend or repeal the Company's By-Laws;
- Approve a plan of merger not requiring shareholder approval;
- Authorize or approve reacquisition of shares, except according to a
formula or method prescribed by the Board of Directors; or
- Authorize or approve the issuance or sale or contract for sale of
shares, or determine the designation and relative rights,
preferences, and limitations of a class or series of shares.
A majority of the whole Board of Directors present at any meeting shall have the power at any time to change the membership of such Committee and to fill vacancies in it. The Executive Committee may make rules for the conduct of its business. A majority of the members of said Committee shall constitute a quorum. The Chairman of the Executive Committee shall be appointed by the Board of Directors from the membership of the Executive Committee.
Section 15. Notices to directors or stockholders shall be in writing and given personally or by mail to the directors and by mail to the stockholders at their addresses appearing on the books of the Company; provided, however, that no notice need be given any stockholder or director whose address is outside of the United States. Notice by mail shall be deemed to be given at the time when the same shall be mailed. Notice to directors may also be given verbally, or by telegram, or cable, and any such notice shall be deemed to be given when delivered to and accepted for transmittal by an office of the transmitting company.
Section 16. Whenever any notice is required to be given under the provisions of applicable statutes or of the Charter or of these By-Laws, a waiver thereof in writing, signed by the person or persons entitled to said notice, whether before or after the time stated therein, shall be deemed equivalent to the giving of such notice in apt time.
Section 17. The Board of Directors shall annually at its first meeting held after the Annual Meeting of Stockholders, or as soon thereafter as may be practical, elect the officers of the Company, who shall consist of a President, one or more Senior Executive Vice Presidents and Executive Vice Presidents, two or more Senior Vice Presidents, three or more Vice Presidents, a Secretary, a Treasurer, a Controller and such other officers or assistant officers and agents as may be appointed by the Board of Directors. At other times, the Board of Directors or any Committee to which it delegates the authority to do so may elect officers to fill any new office or a vacancy in any office occurring by virtue of the incumbent's death, resignation, removal or otherwise at any duly convened meeting of the Board or of the Committee. The officer shall serve for the period specified or until a successor is chosen. From time to time the Board of Directors may also elect a Vice Chairman who shall have such duties as described herein and as may from time to time be directed. Any two offices may be held by the same person, but no officer may act in more than one capacity where
action of two or more officers is required. The Vice Chairman, if any, of the Board of Directors shall be chosen from among the Directors, but the other officers need not be Directors of the Company
Section 18. The Board of Directors shall appoint the Chief Executive Officer who shall be either the Chairman, the Vice Chairman or the President of the Company. In the event the Chief Executive Officer is unavailable at the time for needed action, or in other circumstances as directed by the Chief Executive Officer, then the Chairman, the Vice Chairman, if any, or the President if there is no Vice Chairman, who is not then serving as Chief Executive Officer, shall be the next officer in line of authority to perform the duties of Chief Executive Officer. If the Chairman, the Vice Chairman and the President should be unavailable at the time for needed action, or in other circumstances as directed by the Chief Executive Officer, then the next officer in line of authority to perform the duties of the Chief Executive Officer shall be a Senior Executive Vice President or Executive Vice President as designated by the Chief Executive Officer.
Section 19. Any officer may be reassigned duties by appropriate members of Senior Management at any time. Any officer may be removed from office at any time by the Board of Directors, or by any Committee to which it delegates the authority to remove officers from office, without prejudice to the rights of the officer removed under an employment agreement in writing previously duly authorized by the Board of Directors or an Executive Committee of the Board of Directors. Any officer may resign at any time by giving written notice to the Board of Directors, the President or any other officer of the Company. Such resignation shall take effect at the time specified therein, and, unless otherwise specified therein, the acceptance of such resignation shall not be necessary to make it effective.
Section 20. The Board of Directors or the Chief Executive Officer of the Company may require the Treasurer and any other officer, employee or agent of the Company to give bond, in such sum and with such surety or sureties as either shall determine, for the faithful discharge of their duties.
Section 21. Unless otherwise provided by the Board of Directors, the Company's Chief Executive Officer is vested with full power, authority, and the duty, to perform in person, and by delegation of authority to subordinate officers and employees of the Company, all acts and things deemed by him to be reasonably necessary or desirable to direct, handle, and manage, and in general carry on the Company's business transactions authorized by its Charter, in respect to all matters except those which by law must be performed by the Directors, including but not limited to the following: (a) constructing and contracting for the construction of generating plants authorized by the Directors; (b) operating and maintaining generating plants and appurtenant works; (c) constructing, maintaining, and operating substations, lines and all other facilities, appurtenant to the transmission, distribution and delivery of electricity; (d) acquiring by direct purchase, gift, exchange, or by condemnation, all rights of way, easements, lands, and estates in lands, flowage and water rights; (e) acquiring, maintaining and disposing of tools, machinery, appliances, materials, vehicles, and other appurtenant facilities; (f) employing, and fixing compensation of, Company personnel (except that the compensation of the Chief Executive Officer and the other Company employees who are members of the Board shall be fixed by the Board of Directors) in compliance with any procedures established by the Board; (g) borrowing money from time to time for terms not exceeding
three years, and in connection therewith pledging the credit of the Company and executing unsecured loan agreements, promissory notes, and other desirable instruments evidencing obligations to the lender; (h) fixing the rates and conditions of service and dealing with regulatory bodies in respect thereto, and promoting the use of electricity by means of sales representatives, advertising and otherwise; (i) collecting and keeping accounts of all monies due the Company and making and preserving records of the Company's properties and accounts and fiscal affairs; and (j) possessing, preserving, and protecting all property, assets, and interests of the Company and instituting, prosecuting, intervening in, and defending actions and proceedings in any court or before any administrative agency or tribunal affecting the Company's interests and welfare.
Section 22. Every holder of stock in the Company shall be entitled to have a certificate or certificates certifying the number of fully paid shares owned by him in the Company which shall be in form consistent with law and with the Charter of the Company and as shall be approved by the Board of Directors. The stock certificates shall be signed by: 1) either the Chairman of the Board of Directors or the President, and 2) either the Secretary or Treasurer. Such signatures may be facsimile or other similar method.
Section 23. All transfers of stock of the Company shall be made upon its books by authority of the holder of the shares or of his legal representative, and before a new certificate is issued the old certificate shall be surrendered for cancellation, provided that in case any certificate is lost, stolen or destroyed, a new certificate therefor may be issued pursuant to the provisions of Section 24 hereof.
Section 24. No certificate of shares of stock of the Company shall be issued in place of any certificate alleged to have been lost or stolen or destroyed, except upon the approval of the Board of Directors who may require delivery to the Company of a bond in such sum as it may direct and subject to its approval as indemnity against any claim in respect to such lost or stolen or destroyed certificate; provided that the Board of Directors may delegate to the Company's Transfer Agent and Registrar authority to issue and register, respectively, from time to time without further action or approval of the Board of Directors, new certificates of stock to replace certificates reported lost, stolen or destroyed upon receipt of an affidavit of loss and bond of indemnity in form and amount and with corporate surety satisfactory to them in each instance protecting the Company and them against loss. Such legal evidence of such loss or theft or destruction shall be furnished to the Board of Directors as may be required by them.
Section 25. The Board of Directors shall have power and authority to make all such rules and regulations as it may deem expedient concerning the issue, transfer, conversion and registration of certificates for shares of the capital stock of the Company, not inconsistent with the laws of North Carolina, the Charter of the Company and these By-Laws. The Board of Directors is authorized to appoint one or more transfer agents and registrars for the capital stock of the Company.
Section 26. The Board of Directors shall have power to close the stock transfer books or in lieu thereof to fix record dates as authorized by law.
Section 27. Subject to the provisions of the applicable statutes and the Charter of the Company, dividends, either cash or stock, upon the capital stock of the Company may be declared by the Board of Directors at any meeting thereof.
Section 28. Deeds, bonds, notes, mortgages and contracts of the Company may be executed on behalf of the Company by the President, or a Vice President, or any one of such other persons as shall from time to time be authorized by the Board of Directors, and when necessary or appropriate may be attested or countersigned by the Secretary or an Assistant Secretary, or the Treasurer or an Assistant Treasurer. The corporate seal of the Company may be affixed to deeds, bonds, notes, mortgages, contracts or stock certificates by an appropriate officer of the Company by impression thereon, or, by order of an appropriate officer of the Company, a facsimile of said seal may be affixed thereto by engraving, printing, lithograph or other method.
Section 29. The monies of the Company shall be deposited in the name of the Company in such bank or banks or trust company or trust companies as the Treasurer, with approval of the Chief Executive Officer, shall from time to time select, and shall be drawn out only by checks or other orders signed by persons designated by resolution by the Board of Directors.
Section 30. As and when used in any of the foregoing By-Laws the words "stockholder" and "stockholders" shall be deemed and held to be synonymous with the words "shareholder" and "shareholders", and the word "stock" shall be deemed and held to be synonymous with the words "share" or "shares", respectively, as used in Chapter 55 of the General Statutes of North Carolina.
Section 31. The Board of Directors shall have power from time to time to adopt, amend, alter, add to, and repeal By-Laws for the Company by affirmative vote of a majority of the directors then holding office, provided, however, that the By-Laws may not be amended by the Board of Directors to require more than a majority of the voting shares for a quorum at a stockholder's meeting, or more than a majority vote at such meeting, except where higher percentages are required by law. Any By-Laws so made or any provisions thereof may be altered or repealed by vote of the holders of a majority of the total number of shares of the Company then issued and outstanding and entitled to vote thereon at any annual stockholders' meeting. Additionally, any By-Law adopted, amended or repealed by the stockholders may not be readopted, amended or repealed by the Board of Directors unless the Charter or a By-Law adopted by the stockholders authorizes the Board of Directors to adopt, amend or repeal that particular By-Law or the By-Laws generally.
Section 32. (a) The Company shall reimburse or indemnify any past, present or future officer or director of the Company for and against such liabilities and expenses as are authorized by (1) a resolution adopted by the Company's stockholders at a special meeting held on December 31, 1943, which is made a part hereof as though incorporated herein, or (2) by Sections 55-8-54, 55-8-55, 55-
8-56 and 55-8-57 of the General Statutes of North Carolina. Persons serving as officers or directors of the Company or serving in any such capacity at the request of the Company in any other corporation, partnership, joint venture, trust or other enterprise shall be provided reimbursement and indemnification by the Company to the maximum extent allowed hereunder or under applicable law, including without limitation Sections 55-8-54, 55-8-55, 55-8-56 and 55-8-57 of the General Statutes of North Carolina.
(b) In addition to the reimbursement and indemnification provisions set forth above, any person who at any time serves or has served (1) as an officer or director of the Company, or (2) at the request of the Company as an officer of director (or in any position of similar authority, by whatever title known) of any other corporation, partnership, joint venture, trust or other enterprise, or (3) as an individual trustee or administrator under any employee benefit plan, shall have a right to be indemnified by the Company to the fullest extent permitted by law against (i) all reasonable expenses, including attorney's fees, actually and necessarily incurred by him in connection with any pending, threatened or completed action, suit or proceeding, whether civil, criminal, administrative or investigative, and whether or not brought by the Company or on behalf of the Company in a derivative action, seeking to hold him liable by reason of or arising out of his status as such or his activities in any of the foregoing capacities, and (ii) payments made by him in satisfaction of any judgement, money decree, fine, penalty or settlement for which he may have become liable in any such action, suit or proceeding; provided, however, that the Company shall not indemnify any person against liability or litigation expense he may incur on account of his activities which were at the time taken known or believed by him to be clearly in conflict with the best interests of the Company.
(c) The Board of Directors shall take all action as may be necessary or appropriate to authorize the Company to pay all amounts required under these Sections 32(a),(b) and (c) of the By-Laws including, without limitation and to the extent deemed to be appropriate, necessary, or required by law (1) making a good faith evaluation of the manner in which the claimant for indemnity acted and of the reasonable amount of indemnity due such individual, or (2) making advances of costs and expenses, or (3) giving notice to, or obtaining approval by, the shareholders of the Company.
(d) Any person who serves or has served in any of the aforesaid capacities for or on behalf of the Company shall be deemed to be doing or to have done so in reliance upon, and as consideration for, the rights of reimbursement and indemnification provided for herein. Such rights of reimbursement and indemnification shall inure to the benefit of the legal representatives of such individuals, shall include amounts paid in settlement and shall not be exclusive of any other rights to which such individuals shall be entitled apart from the provisions of this Section.
(e) The Company may, in its sole discretion, wholly or partially indemnify and advance expenses to any employee or agent of the Company to the same extent as provided herein for officers and directors.
| ARTICLE UT |
| THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM (UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS AS OF JUNE 30, 2000) AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS. |
| CIK: 0001094093 |
| NAME: CP&L ENERGY, INC. |
| MULTIPLIER: 1,000 |
| PERIOD TYPE | 6 MOS |
| FISCAL YEAR END | DEC 31 2000 |
| PERIOD END | JUN 30 2000 |
| BOOK VALUE | PER BOOK |
| TOTAL NET UTILITY PLANT | 6,870,514 |
| OTHER PROPERTY AND INVEST | 620,489 |
| TOTAL CURRENT ASSETS | 1,045,394 |
| TOTAL DEFERRED CHARGES | 291,706 |
| OTHER ASSETS | 943,543 |
| TOTAL ASSETS | 9,771,646 |
| COMMON | 1,618,324 |
| CAPITAL SURPLUS PAID IN | 0 |
| RETAINED EARNINGS | 1,841,760 |
| TOTAL COMMON STOCKHOLDERS EQ | 3,460,084 |
| PREFERRED MANDATORY | 0 |
| PREFERRED | 59,376 |
| LONG TERM DEBT NET | 3,084,048 |
| SHORT TERM NOTES | 114,631 |
| LONG TERM NOTES PAYABLE | 0 |
| COMMERCIAL PAPER OBLIGATIONS | 0 |
| LONG TERM DEBT CURRENT PORT | 0 |
| PREFERRED STOCK CURRENT | 0 |
| CAPITAL LEASE OBLIGATIONS | 0 |
| LEASES CURRENT | 0 |
| OTHER ITEMS CAPITAL AND LIAB | 3,053,507 |
| TOT CAPITALIZATION AND LIAB | 9,771,646 |
| GROSS OPERATING REVENUE | 1,769,444 |
| INCOME TAX EXPENSE | 106,632 |
| OTHER OPERATING EXPENSES | 1,370,151 |
| TOTAL OPERATING EXPENSES | 1,476,783 |
| OPERATING INCOME LOSS | 292,661 |
| OTHER INCOME NET | 3,334 |
| INCOME BEFORE INTEREST EXPEN | 295,995 |
| TOTAL INTEREST EXPENSE | 103,274 |
| NET INCOME | 192,721 |
| PREFERRED STOCK DIVIDENDS | 0 |
| EARNINGS AVAILABLE FOR COMM | 192,721 |
| COMMON STOCK DIVIDENDS | 158,306 |
| TOTAL INTEREST ON BONDS | 73,499 |
| CASH FLOW OPERATIONS | 580,120 |
| EPS BASIC | 1.26 |
| EPS DILUTED | 1.26 |
| ARTICLE UT |
| THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM (UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS AS OF JUNE 30, 2000) AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS. |
| CIK: 0000017797 |
| NAME: CAROLINA POWER & LIGHT COMPANY |
| MULTIPLIER: 1,000 |
| PERIOD TYPE | 6 MOS |
| FISCAL YEAR END | DEC 31 2000 |
| PERIOD END | JUN 30 2000 |
| BOOK VALUE | PER BOOK |
| TOTAL NET UTILITY PLANT | 6,870,514 |
| OTHER PROPERTY AND INVEST | 620,489 |
| TOTAL CURRENT ASSETS | 1,045,394 |
| TOTAL DEFERRED CHARGES | 291,706 |
| OTHER ASSETS | 943,543 |
| TOTAL ASSETS | 9,771,646 |
| COMMON | 1,619,140 |
| CAPITAL SURPLUS PAID IN | (816) |
| RETAINED EARNINGS | 1,841,760 |
| TOTAL COMMON STOCKHOLDERS EQ | 3,460,084 |
| PREFERRED MANDATORY | 0 |
| PREFERRED | 59,376 |
| LONG TERM DEBT NET | 3,084,048 |
| SHORT TERM NOTES | 114,631 |
| LONG TERM NOTES PAYABLE | 0 |
| COMMERCIAL PAPER OBLIGATIONS | 0 |
| LONG TERM DEBT CURRENT PORT | 0 |
| PREFERRED STOCK CURRENT | 0 |
| CAPITAL LEASE OBLIGATIONS | 0 |
| LEASES CURRENT | 0 |
| OTHER ITEMS CAPITAL AND LIAB | 3,053,507 |
| TOT CAPITALIZATION AND LIAB | 9,771,646 |
| GROSS OPERATING REVENUE | 1,769,444 |
| INCOME TAX EXPENSE | 106,632 |
| OTHER OPERATING EXPENSES | 1,370,151 |
| TOTAL OPERATING EXPENSES | 1,476,783 |
| OPERATING INCOME LOSS | 292,661 |
| OTHER INCOME NET | 4,817 |
| INCOME BEFORE INTEREST EXPEN | 297,478 |
| TOTAL INTEREST EXPENSE | 103,274 |
| NET INCOME | 194,204 |
| PREFERRED STOCK DIVIDENDS | (1,483) |
| EARNINGS AVAILABLE FOR COMM | 192,721 |
| COMMON STOCK DIVIDENDS | 158,306 |
| TOTAL INTEREST ON BONDS | 73,499 |
| CASH FLOW OPERATIONS | 581,603 |
| EPS BASIC | 0 |
| EPS DILUTED | 0 |