DUKE ENERGY PROGRESS, LLC. - FORM 8-K - EX-99.1 - EARNINGS RELEASE EXHIBIT 99

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8-K - Q4 2010 EARNINGS RELEASE 8K - DUKE ENERGY PROGRESS, LLC.	q42010_8k.htm

Progress Energy announces 2010 results and

2011 earnings guidance

Highlights:

Full Year 2010

¨	Reports 2010 GAAP earnings of $2.95 per share, compared to $2.71 per share in 2009, primarily due to prior-year activities related to discontinued non-utility businesses

¨	Reports 2010 ongoing earnings of $889 million, or $3.06 per share, compared to $846 million, or $3.03 per share in 2009

Fourth Quarter 2010

¨	Reports fourth-quarter GAAP earnings of $0.42 per share, compared to $0.55 for the same period last year, primarily due to prior-year activities related to discontinued non-utility businesses

¨	Reports fourth-quarter ongoing earnings of $133 million, or $0.45 per share, compared to $142 million, or $0.50 per share, for the same period last year

2011 Earnings Guidance

¨	Announces 2011 ongoing earnings guidance of $3.00 to $3.20 per share

RALEIGH, N.C. (February 18, 2011) – Progress Energy [NYSE: PGN] announced full-year GAAP earnings of $856 million, or $2.95 per share, compared with GAAP earnings of $757 million, or $2.71 per share, for the same period last year. Full-year ongoing earnings were $889 million, or $3.06 per share, compared to $846 million, or $3.03 per share, last year. The significant drivers in ongoing earnings per share were favorable weather, partially offset by higher O&M. (See the discussion later in this release for a reconciliation of ongoing earnings per share to GAAP earnings per share.)

Fourth-quarter GAAP earnings were $125 million, or $0.42 per share, compared with GAAP earnings of $154 million, or $0.55 per share, for the same period last year. Fourth-quarter ongoing earnings were $133 million, or $0.45 per share, compared to $142 million, or $0.50 per share, for the same period last year. The significant drivers in ongoing earnings per share were higher O&M and income taxes, partially offset by favorable weather. (See the discussion later in this release for a reconciliation of ongoing earnings per share to GAAP earnings per share.)

“Our continued financial discipline, coupled with very favorable weather, allowed us to achieve our financial goals and meet our commitment to customers and shareholders in 2010,” said Bill Johnson, Progress Energy chairman, president and CEO. “We delivered strong financial results, while making the investments necessary to meet customer needs now and in the future.

“For 2011 – even as we move forward with approval activities associated with our merger with Duke Energy – we are focused on cost discipline and managing our business effectively and efficiently while meeting our customers’ energy needs every day,” Johnson said.

Progress Energy announces 2011 ongoing earnings guidance of $3.00 to $3.20 per share. The ongoing earnings guidance excludes the impact, if any, from discontinued operations, the effects of certain identified gains and charges and any merger-related costs from our proposed merger with Duke Energy Corporation. Progress Energy is not able to provide a corresponding GAAP equivalent for the 2011 ongoing earnings guidance due to the uncertain nature and amount of these adjustments.

Progress Energy will host a conference call and webcast at 10 a.m. ET today to review fourth-quarter and full-year 2010 financial performance, as well as discuss 2011 earnings guidance and provide an overall business update. Additional details are provided at the end of this earnings release.

See pages 3-6 for detailed fourth-quarter and full-year 2010 earnings variance analyses for the Progress Energy Carolinas (PEC), Progress Energy Florida (PEF) and Corporate and Other Businesses segments.

RECENT DEVELOPMENTS

Duke Energy – Progress Energy Merger

Announced definitive merger agreement with Duke Energy (the Merger) to combine the two companies in a stock-for-stock transaction and continue as a wholly-owned subsidiary of Duke Energy. Progress Energy shareholders will receive 2.6125 shares of common stock of Duke Energy in exchange for each share of Progress Energy common stock.

·	The Merger is targeted to close by the end of 2011 and is expected to be accretive to adjusted diluted earnings in the first year after closing.

Received notice following the Merger announcement that Standard & Poor’s placed the corporate credit and issue ratings of Progress Energy and its subsidiaries on CreditWatch with positive implications, while Fitch and Moody’s affirmed the ratings of Progress Energy and its subsidiaries with stable outlooks.

Financial and Regulatory

Received approval from the Florida Public Service Commission (FPSC) to recover all proposed costs in PEF’s annual filings for fuel and purchased power, environmental projects, conservation programs and new nuclear generation. The overall result of these recoveries is a 6 percent reduction in customer bills in 2011, due primarily to lower fuel and purchased power costs as well as a reduced charge related to the Levy Nuclear Plant cost recovery. Within the fuel clause, PEF received approval to collect, subject to refund, replacement power costs related to the Crystal River 3 (CR3) Nuclear Plant outage.

·	Filed with the FPSC a revised demand-side management plan for PEF, which would result in 1,540 GWh of energy savings from 2011 to 2019, seven times more than PEF’s historic goals.

·	Received approval from the North Carolina Utilities Commission (NCUC) to recover all proposed costs of fuel, energy-efficiency programs and renewable energy resources, resulting in a slight net reduction in customer bills effective December 1, 2010, due primarily to lower fuel costs.

·	Issued $500 million of Progress Energy, Inc. 4.40% Senior Notes due 2021 in January 2011, with proceeds to be used, along with available cash on hand, to retire at maturity the $700 million aggregate principal balance of our 7.10% Senior Notes due March 1, 2011.

State-of-the-Art Power System

Expect to complete repairs on CR3 in March, and return the unit to service following successful completion of post-repair testing and start-up activities in April 2011. A number of factors affect the return to service date, including regulatory reviews by the NRC and other agencies, emergent work, final engineering designs, testing, weather and other developments.

·	Completed successful refueling and maintenance outage at the Harris Nuclear Plant, executing several major projects including an electric generator replacement, cooling tower fill project, and a fire protection enhancement.

Alternative Energy and Energy Efficiency

·	Launched the SunSense® Residential Solar PV program in North Carolina, which provides incentives to residential customers who install and own solar photovoltaic systems at their homes.

·	Announced an expanded solar energy program in Florida, which includes new incentives for solar photovoltaic systems.

·	Assisted customers in saving more than 243 million kWh through energy-efficiency programs and measures in 2010 throughout the Carolinas and Florida.

Press releases regarding various announcements are available on the company’s website at www.progress-energy.com/aboutus/news.

2010 BUSINESS HIGHLIGHTS

Below are the fourth-quarter and full-year 2010 earnings variance analyses for the company’s segments. See the reconciliation tables on pages 7-8 and on pages S-1 and S-2 of the supplemental data for a reconciliation of ongoing earnings per share to GAAP earnings per share. Also see the attached supplemental data schedules for additional information on PEC and PEF electric revenues, energy sales, energy supply, weather impacts and other topics.

QUARTER-OVER-QUARTER ONGOING EPS VARIANCE ANALYSIS

Progress Energy Carolinas

·	Reported fourth-quarter ongoing earnings per share of $0.42, compared with $0.38 for the same period last year; GAAP earnings per share of $0.40, compared with $0.30 for the same period last year.

·	Reported primary quarter-over-quarter ongoing earnings per share favorability of:

§	$0.05 weather primarily due to 16 percent higher heating-degree days than 2009; additionally, heating-degree days were 18 percent higher than normal

§	$0.04 clauses, wholesale and other margin due primarily to higher miscellaneous revenues, favorable non-clause-recoverable purchased power and higher clause-recoverable regulatory returns

§	$0.03 retail growth and usage

§	$0.03 AFUDC equity primarily due to increased construction project costs

·	Reported primary quarter-over-quarter ongoing earnings per share unfavorability of:

§	$(0.06) O&M primarily due to higher nuclear plant outage and maintenance costs driven by expanded scope and more emergent work in 2010 compared to 2009, partially offset by lower storm costs. There were no nuclear outages in the fourth quarter 2009.

§	$(0.01) other

§	$(0.01) depreciation and amortization

§	$(0.01) income taxes

§	$(0.02) share dilution

·	9,000 net increase in the average number of customers for the three months ended December 31, 2010, compared to the same period in 2009

Progress Energy Florida

·	Reported fourth-quarter ongoing earnings per share of $0.17, compared with $0.28 for the same period last year; GAAP earnings per share of $0.17, compared with $0.27 for the same period last year.

·	Reported primary quarter-over-quarter ongoing earnings per share favorability of:

§	$0.05 weather primarily due to heating-degree days 125 percent higher than 2009 and 118 percent higher than normal

§	$0.02 clauses, wholesale and other margin primarily due to higher clause-recoverable regulatory revenues and returns

§	$0.02 depreciation and amortization primarily due to a change in depreciation rates resulting from a depreciation study in conjunction with the 2009 base rate case

·	Reported primary quarter-over-quarter ongoing earnings per share unfavorability of:

§	$(0.06) O&M primarily due to higher employee benefits expense and the prior-year pension deferral in accordance with an FPSC order

§	$(0.05) AFUDC equity primarily due to placing CAIR assets in service

§	$(0.02) retail growth and usage

§	$(0.02) interest expense primarily due to higher average debt outstanding and unfavorable AFUDC debt resulting from placing CAIR assets in service

§	$(0.02) income taxes primarily due to lower deductions for domestic production activities

§	$(0.01) retail rates

§	$(0.01) other

§	$(0.01) share dilution

·	9,000 net increase in the average number of customers for the three months ended December 31, 2010, compared to the same period in 2009

Corporate and Other Businesses (includes primarily Holding Company debt)

·	Reported fourth-quarter ongoing after-tax expenses of $0.14 per share compared with after-tax expenses of $0.16 per share for the same period last year; GAAP after-tax expenses of $0.15 per share, compared with after-tax expenses of $0.02 per share for the same period last year.

·	Reported primary quarter-over-quarter ongoing after-tax expenses per share favorability of:

§	$0.02 O&M primarily due to the allocation to the Utilities of the corporate tax impact of withdrawals from an employee benefit trust

§	$0.01 other

§	$0.01 share dilution

·	Reported primary quarter-over-quarter ongoing after-tax expense per share unfavorability of:

§	$(0.02) income taxes primarily due to the impact of withdrawals from an employee benefit trust

YEAR-OVER-YEAR ONGOING EPS VARIANCE ANALYSIS

Progress Energy Carolinas

·	Reported full-year ongoing earnings per share of $2.13, compared with $1.93 for the same period last year; GAAP earnings per share of $2.06, compared with $1.83 for the same period last year.

·	Reported primary year-over-year ongoing earnings per share favorability of:

§	$0.25 weather primarily due to 15 percent higher heating-degree days and 24 percent higher cooling-degree days than 2009; additionally, cooling-degree days were 30 percent higher and heating-degree days were 14 percent higher than normal

§	$0.11 AFUDC equity primarily due to increased construction project costs

§	$0.09 clauses, wholesale and other margin primarily due to higher miscellaneous revenues, favorable non-clause-recoverable purchased power and higher clause-recoverable regulatory returns

§	$0.08 retail growth and usage

§	$0.02 interest expense primarily due to AFUDC debt resulting from increased construction project costs

·	Reported primary year-over-year ongoing earnings per share unfavorability of:

§	$(0.19) O&M primarily due to higher nuclear plant outage and maintenance costs driven by three nuclear refueling and maintenance outages in 2010 compared to two in 2009, as well as extended outages and more emergent work in 2010 compared to 2009

§	$(0.04) income taxes primarily due to the prior-year deduction related to nuclear decommissioning trust funds and changes in tax estimates

§	$(0.03) depreciation and amortization primarily due to the impact of depreciable asset base increases

§	$(0.09) share dilution

·	10,000 net increase in the average number of customers for 2010, compared to 2009

Progress Energy Florida

·	Reported full-year ongoing earnings per share of $1.59, compared with $1.65 for the same period last year; GAAP earnings per share of $1.56, compared with $1.65 for the same period last year.

·	Reported primary year-over-year ongoing earnings per share favorability of:

§	$0.19 weather primarily due to 89 percent higher heating-degree days than 2009 and 124 percent higher than normal

§	$0.14 depreciation and amortization primarily due to the reduction in the cost of removal component of amortization expense in accordance with the base rate settlement agreement

§	$0.11 retail rates primarily due to the increase in base rates for the repowered Bartow Plant

§	$0.10 clauses, wholesale and other margin primarily due to higher clause-recoverable regulatory revenues and returns, partially offset by lower wholesale revenues related to amended contracts and estimated CR3 joint owner replacement power costs

·	Reported primary year-over-year ongoing earnings per share unfavorability of:

§	$(0.22) AFUDC equity primarily due to placing CAIR assets and the repowered Bartow Plant in service

§	$(0.17) O&M primarily due to the prior-year pension deferral in accordance with an FPSC order, higher employee benefits expense and the prior-year impact of a change in the vacation benefits policy

§	$(0.06) interest expense primarily due to higher average debt outstanding and unfavorable AFUDC debt resulting from placing CAIR assets and the repowered Bartow Plant in service

§	$(0.04) income taxes primarily due to the prior-year deduction related to nuclear decommissioning trust funds

§	$(0.03) other primarily due to higher property taxes resulting from placing the repowered Bartow Plant in service

§	$(0.01) retail growth and usage

§	$(0.07) share dilution

·	4,000 net increase in the average number of customers for 2010, compared to 2009

Corporate and Other Businesses (includes primarily Holding Company debt)

·	Reported full-year ongoing after-tax expenses of $0.66 per share compared with after-tax expenses of $0.55 per share for the same period last year; GAAP after-tax expenses of $0.67 per share, compared with after-tax expenses of $0.77 per share for the same period last year.

·	Reported primary year-over-year ongoing after-tax expenses per share favorability of:

§	$0.04 O&M primarily due to the allocation to the Utilities of the corporate tax impact of withdrawals from an employee benefit trust

§	$0.02 share dilution

·	Reported primary year-over-year ongoing after-tax expenses per share unfavorability of:

§	$(0.11) interest expense primarily due to higher average debt outstanding at the Parent

§	$(0.05) income taxes primarily due to the impact of withdrawals from an employee benefit trust

§	$(0.01) other

ONGOING EARNINGS ADJUSTMENTS

Progress Energy’s management uses ongoing earnings per share to evaluate the operations of the company and to establish goals for management and employees. Management believes this non-GAAP measure is appropriate for understanding the business and assessing our potential future performance, because excluded items are limited to those that we believe are not representative of our fundamental core earnings. Ongoing earnings as presented here may not be comparable to similarly titled measures used by other companies. The following table provides a reconciliation of ongoing earnings per share to reported GAAP earnings per share.

Progress Energy, Inc.

Reconciliation of Ongoing Earnings per Share to Reported GAAP Earnings per Share

	Three months ended December 31						Years ended December 31
	2010			2009			2010			2009
Ongoing earnings per share	$	0.45		$	0.50		$	3.06		$	3.03
Tax levelization		(0.01	)		0.02			-			-
CVO mark-to-market		-			0.03			-			0.07
Change in the tax treatment of the Medicare Part D subsidy		-			-			(0.08	)		-
Impairment		(0.01	)		-			(0.02	)		(0.01	)
Plant retirement charges		-			(0.05	)		-			(0.06	)
Cumulative prior period adjustment		-			(0.04	)		-			(0.04	)
Discontinued operations		(0.01	)		0.09			(0.01	)		(0.28	)
Reported GAAP earnings per share	$	0.42		$	0.55		$	2.95		$	2.71
Shares outstanding (millions)		294			281			291			279

Reconciling adjustments from ongoing earnings to GAAP earnings are as follows:

Tax Levelization

Generally accepted accounting principles require companies to apply an effective tax rate to interim periods that is consistent with a company’s estimated annual tax rate. The company projects the effective tax rate for the year and then, based upon projected operating income for each quarter, increases or decreases the tax expense recorded in that quarter to reflect the projected tax rate. The resulting tax adjustment decreased earnings per share by $0.01 for the quarter and increased earnings per share by $0.02 for the same period last year, but has no impact on the company’s annual earnings. Because this adjustment varies by quarter but has no impact on annual earnings, management does not consider this adjustment to be representative of the company’s fundamental core earnings.

Contingent Value Obligation (CVO) Mark-to-Market

In connection with the acquisition of Florida Progress Corporation, Progress Energy issued 98.6 million CVOs. Each CVO represents the right of the holder to receive contingent payments based on net after-tax cash flows above certain levels of four synthetic fuels facilities purchased by subsidiaries of Florida Progress Corporation in October 1999. The CVO liability is valued at fair value, and unrealized gains and losses from changes in fair value are recognized in earnings each quarter. The CVO mark-to-market had no impact for the quarter and increased earnings per share by $0.03 for the same period last year. Progress Energy is unable to predict the changes in the fair value of the CVOs, and management does not consider this adjustment to be representative of the company’s fundamental core earnings.

Change in the Tax Treatment of the Medicare Part D Subsidy

The federal Patient Protection and Affordable Care Act (PPACA) and the related Health Care and Education Reconciliation Act, which made various amendments to the PPACA, were enacted in March 2010. Under prior law, employers could claim a deduction for the entire cost of providing retiree prescription drug coverage even though a portion of the cost was offset by the retiree drug subsidy received. As a result of the PPACA, as amended, retiree drug subsidy payments will effectively become taxable in tax years beginning after December 31, 2012, by requiring the amount of the subsidy received to be offset against the employer’s deduction. Under GAAP, changes in tax law are accounted for in the period of enactment. The change in the tax treatment of the Medicare Part D subsidy decreased earnings by $0.08 for the year and had no impact for the same period last year. Management does not consider this change in tax treatment to be representative of the company’s fundamental core earnings.

Impairment

The company recorded an impairment of certain miscellaneous investments and other assets which decreased earnings per share by $0.01 for the quarter and had no impact for the same period last year. Management does not consider this adjustment to be representative of the company’s fundamental core earnings.

Plant Retirement Charges

The company recognized charges for the impact of PEC’s decision to retire certain coal-fired generating units, with resulting reduced emissions for compliance with the Clean Smokestacks Act’s emission targets. The charges had no impact for the quarter and decreased earnings per share by $0.05 for the same period last year. Since the coal-fired generating units will be retired prior to their estimated useful lives, management does not consider this charge to be representative of the company’s fundamental core earnings.

Cumulative Prior Period Adjustment

The company recorded a cumulative prior period adjustment charge related to certain employee life insurance benefits. The charge had no impact for the quarter and decreased earnings per share by $0.04 for the same period last year. Management does not consider this adjustment to be representative of the company’s fundamental core earnings.

Discontinued Operations

The company has reduced its business risk by exiting nonregulated businesses to focus on the core operations of the utilities. The discontinued operations of these nonregulated businesses decreased earnings per share by $0.01 for the quarter and increased earnings per share by $0.09 for the same period last year. The prior-year impact was due primarily to adjustments related to a litigation judgment against our former Synthetic Fuels businesses. Due to the disposition of these assets, management does not consider this activity to be representative of the company’s fundamental core earnings.

* * * *

Progress Energy’s conference call with the investment community will be held February 18, 2011 at 10 a.m. ET (7 a.m. PT). Investors, media and the public may listen to the conference call by dialing (913) 312-0836, confirmation code 3289071. If you encounter problems, please contact Investor Relations at (919) 546-6057.

A webcast of the live conference call will be available at www.progress-energy.com/webcast. The webcast will be archived on the site for at least 30 days following the call for those unable to listen in real time. The webcast will include audio of the conference call and a slide presentation referred to by management during the call. The slide presentation will be available for download beginning at 9:30 a.m. ET today at www.progress-energy.com/webcast.

Progress Energy (NYSE: PGN), headquartered in Raleigh, N.C., is a Fortune 500 energy company with more than 22,000 megawatts of generation capacity and approximately $10 billion in annual revenues. Progress Energy includes two major electric utilities that serve approximately 3.1 million customers in the Carolinas and Florida. The company has earned the Edison Electric Institute's Edison Award, the industry's highest honor, in recognition of its operational excellence, and was the first utility to receive the prestigious J.D. Power and Associates Founder's Award for customer service. The company is pursuing a balanced strategy for a secure energy future, which includes aggressive energy-efficiency programs, investments in renewable energy technologies and a state-of-the-art power system. Progress Energy celebrated a century of service in 2008. Visit the company’s website at www.progress-energy.com.

Caution Regarding Forward-Looking Information:

This release contains forward-looking statements within the meaning of the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. The matters discussed throughout this document 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 factors that you should consider with respect to any forward-looking statements made throughout this document include, but are not limited to, the following:

·	our ability to obtain the approvals required to complete the Merger and the impact of compliance with material restrictions or conditions potentially imposed by our regulators;

·	the risk that the Merger is terminated prior to completion and results in significant transaction costs to us;

·	our ability to achieve the anticipated results and benefits of the Merger;

·	the impact of business uncertainties and contractual restrictions while the Merger is pending;

·	the impact of fluid and complex laws and regulations, including those relating to the environment and energy policy;

·	our ability to recover eligible costs and earn an adequate return on investment through the regulatory process;

·	the ability to successfully operate electric generating facilities and deliver electricity to customers;

·	the impact on our facilities and businesses from a terrorist attack;

·	the ability to meet the anticipated future need for additional baseload generation and associated transmission facilities in our regulated service territories and the accompanying regulatory and financial risks;

·	our ability to meet current and future renewable energy requirements;

·	the inherent risks associated with the operation and potential construction of nuclear facilities, including environmental, health, safety, regulatory and financial risks;

·	the financial resources and capital needed to comply with environmental laws and regulations;

·	risks associated with climate change;

·	weather and drought conditions that directly influence the production, delivery and demand for electricity;

·	recurring seasonal fluctuations in demand for electricity;

·	the ability to recover in a timely manner, if at all, costs associated with future significant weather events through the regulatory process;

·	fluctuations in the price of energy commodities and purchased power and our ability to recover such costs through the regulatory process;

·	our ability to control costs, including operations and maintenance expense (O&M) and large construction projects;

·	the ability of our subsidiaries to pay upstream dividends or distributions to Progress Energy, Inc. holding company;

·	current economic conditions;

·	the ability to successfully access capital markets on favorable terms;

·	the stability of commercial credit markets and our access to short- and long-term credit;

·	the impact that increases in leverage or reductions in cash flow may have on us;

·	our ability to maintain our current credit ratings and the impacts in the event our credit ratings are downgraded;

·	the investment performance of our nuclear decommissioning trust (NDT) funds;

·	the investment performance of the assets of our pension and benefit plans and resulting impact on future funding requirements;

·	the impact of potential goodwill impairments;

·	our ability to fully utilize tax credits generated from the previous production and sale of qualifying synthetic fuels under Internal Revenue Code Section 29/45K; and

·	the outcome of any ongoing or future litigation or similar disputes and the impact of any such outcome or related settlements.

Many of these risks similarly impact our nonreporting subsidiaries.

These and other risk factors are detailed from time to time in our filings with the SEC. All such factors are difficult to predict, contain uncertainties that may materially affect actual results and may be beyond our control.

Any forward-looking statement is based on information current as of the date of this document and speaks only as of the date on which such statement is made, and we undertake no obligation to update any forward-looking statement or statements to reflect events or circumstances after that date on which such statement is made.

# # #

Contacts: Corporate Communications – (919) 546-6189 or toll-free (877) 641-NEWS (6397)

PROGRESS ENERGY, INC.

UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

December 31, 2010

UNAUDITED CONSOLIDATED STATEMENTS of INCOME
	Three months ended December 31						Years ended December 31
(in millions except per share data)	2010			2009			2010			2009
Operating revenues	$	2,321		$	2,307		$	10,190		$	9,885
Operating expenses
Fuel used in electric generation		726			897			3,300			3,752
Purchased power		283			312			1,279			911
Operation and maintenance		568			534			2,027			1,894
Depreciation, amortization and accretion		240			109			920			986
Taxes other than on income		132			132			580			557
Other		5			(1	)		30			13
Total operating expenses		1,954			1,983			8,136			8,113
Operating income		367			324			2,054			1,772
Other income (expense)
Interest income		1			6			7			14
Allowance for equity funds used during construction		24			29			92			124
Other, net		5			(7	)		-			6
Total other income, net		30			28			99			144
Interest charges
Interest charges		192			184			779			718
Allowance for borrowed funds used during construction		(8	)		(9	)		(32	)		(39	)
Total interest charges, net		184			175			747			679
Income from continuing operations before income tax		213			177			1,406			1,237
Income tax expense		83			45			539			397
Income from continuing operations		130			132			867			840
Discontinued operations, net of tax		(2	)		24			(4	)		(79	)
Net income		128			156			863			761
Net income attributable to noncontrolling interests, net of tax		(3	)		(2	)		(7	)		(4	)
Net income attributable to controlling interests	$	125		$	154		$	856		$	757
Average common shares outstanding – basic		294			281			291			279
Basic and diluted earnings per common share
Income from continuing operations attributable to controlling interests, net of tax	$	0.43		$	0.46		$	2.96		$	2.99
Discontinued operations attributable to controlling interests, net of tax		(0.01	)		0.09			(0.01	)		(0.28	)
Net income attributable to controlling interests	$	0.42		$	0.55		$	2.95		$	2.71
Dividends declared per common share	$	0.620		$	0.620		$	2.480		$	2.480
Amounts attributable to controlling interests
Income from continuing operations, net of tax	$	127		$	130		$	860		$	836
Discontinued operations, net of tax		(2	)		24			(4	)		(79	)
Net income attributable to controlling interests	$	125		$	154		$	856		$	757

The Unaudited Consolidated Financial Statements should be read in conjunction with the Company’s Annual Report to shareholders. These statements have been prepared for the purpose of providing information concerning the Company and not in connection with any sale, offer for sale, or solicitation of an offer to buy any securities.

PROGRESS ENERGY, INC.
UNAUDITED CONSOLIDATED BALANCE SHEETS
(in millions)	December 31, 2010			December 31, 2009
ASSETS
Utility plant
Utility plant in service	$	29,708		$	28,353
Accumulated depreciation		(11,567	)		(11,176	)
Utility plant in service, net		18,141			17,177
Other utility plant, net		220			212
Construction work in progress		2,205			1,790
Nuclear fuel, net of amortization		674			554
Total utility plant, net		21,240			19,733
Current assets
Cash and cash equivalents		611			725
Receivables, net		1,033			800
Inventory		1,226			1,325
Regulatory assets		176			142
Derivative collateral posted		164			146
Income taxes receivable		52			145
Prepayments and other current assets		214			248
Total current assets		3,476			3,531
Deferred debits and other assets
Regulatory assets		2,374			2,179
Nuclear decommissioning trust funds		1,571			1,367
Miscellaneous other property and investments		413			438
Goodwill		3,655			3,655
Other assets and deferred debits		325			333
Total deferred debits and other assets		8,338			7,972
Total assets	$	33,054		$	31,236
CAPITALIZATION AND LIABILITIES
Common stock equity
Common stock without par value, 500 million shares authorized, 293 million and 281 million shares issued and outstanding, respectively	$	7,343		$	6,873
Unearned ESOP shares (0 and 1 million shares, respectively)		–			(12	)
Accumulated other comprehensive loss		(125	)		(87	)
Retained earnings		2,805			2,675
Total common stock equity		10,023			9,449
Noncontrolling interests		4			6
Total equity		10,027			9,455
Preferred stock of subsidiaries		93			93
Long-term debt, affiliate		273			272
Long-term debt, net		11,864			11,779
Total capitalization		22,257			21,599
Current liabilities
Current portion of long-term debt		505			406
Short-term debt		–			140
Accounts payable		994			835
Interest accrued		216			206
Dividends declared		184			175
Customer deposits		324			300
Derivative liabilities		259			190
Accrued compensation and other benefits		175			167
Other current liabilities		298			239
Total current liabilities		2,955			2,658
Deferred credits and other liabilities
Noncurrent income tax liabilities		1,696			1,196
Accumulated deferred investment tax credits		110			117
Regulatory liabilities		2,635			2,510
Asset retirement obligations		1,200			1,170
Accrued pension and other benefits		1,514			1,339
Derivative liabilities		278			240
Other liabilities and deferred credits		409			407
Total deferred credits and other liabilities		7,842			6,979
Commitments and contingencies
Total capitalization and liabilities	$	33,054		$	31,236

PROGRESS ENERGY, INC.
UNAUDITED CONSOLIDATED STATEMENTS of CASH FLOWS
(in millions)
Years ended December 31	2010			2009
Operating activities
Net income	$	863		$	761
Adjustments to reconcile net income to net cash provided by operating activities
Depreciation, amortization and accretion		1,083			1,135
Deferred income taxes and investment tax credits, net		478			220
Deferred fuel (credit) cost		(2	)		290
Allowance for equity funds used during construction		(92	)		(124	)
Loss on sales of assets		9			2
Pension, postretirement and other employee benefits		198			135
Other adjustments to net income		40			134
Cash (used) provided by changes in operating assets and liabilities
Receivables		(200	)		26
Inventory		98			(99	)
Derivative collateral posted		(23	)		200
Other assets		(1	)		14
Income taxes, net		90			(14	)
Accounts payable		125			(26	)
Accrued pension and other benefits		(164	)		(285	)
Other liabilities		35			(98	)
Net cash provided by operating activities		2,537			2,271
Investing activities
Gross property additions		(2,221	)		(2,295	)
Nuclear fuel additions		(221	)		(200	)
Purchases of available-for-sale securities and other investments		(7,009	)		(2,350	)
Proceeds from available-for-sale securities and other investments		6,990			2,314
Other investing activities		61			(1	)
Net cash used by investing activities		(2,400	)		(2,532	)
Financing activities
Issuance of common stock, net		434			623
Dividends paid on common stock		(717	)		(693	)
Payments of short-term debt with original maturities greater than 90 days		–			(629	)
Net decrease in short-term debt		(140	)		(381	)
Proceeds from issuance of long-term debt, net		591			2,278
Retirement of long-term debt		(400	)		(400	)
Cash distributions to noncontrolling interests		(6	)		(6	)
Other financing activities		(13	)		14
Net cash (used) provided by financing activities		(251	)		806
Net (decrease) increase in cash and cash equivalents		(114	)		545
Cash and cash equivalents at beginning of year		725			180
Cash and cash equivalents at end of year	$	611		$	725

Progress Energy, Inc.

SUPPLEMENTAL DATA - Page S-1

Unaudited

Earnings Variances

Fourth Quarter 2010 vs. 2009

	Regulated Utilities
($ per share)	Carolinas			Florida			Corporate and Other Businesses			Consolidated

2009 GAAP earnings		0.30			0.27			(0.02	)		0.55
Tax levelization		(0.01	)		0.01			(0.02	)		(0.02	)	A
CVO mark-to-market								(0.03	)		(0.03	)	B
Plant retirement charges		0.05									0.05		C
Cumulative prior period adjustment		0.04									0.04		D
Discontinued operations								(0.09	)		(0.09	)	E
2009 ongoing earnings		0.38			0.28			(0.16	)		0.50

Weather - retail		0.05			0.05						0.10		F

Growth and usage - retail		0.03			(0.02	)					0.01

Retail rates					(0.01	)					(0.01	)

Clauses, wholesale and other margin		0.04			0.02						0.06		G

O&M		(0.06	)		(0.06	)		0.02			(0.10	)	H

Other		(0.01	)		(0.01	)		0.01			(0.01	)

AFUDC equity		0.03			(0.05	)					(0.02	)	I

Depreciation and amortization		(0.01	)		0.02						0.01		J

Interest expense					(0.02	)					(0.02	)	K

Income taxes		(0.01	)		(0.02	)		(0.02	)		(0.05	)	L

Share dilution		(0.02	)		(0.01	)		0.01			(0.02	)

2010 ongoing earnings		0.42			0.17			(0.14	)		0.45
Tax levelization		(0.01	)								(0.01	)	A
Discontinued operations								(0.01	)		(0.01	)	E
Impairment		(0.01	)								(0.01	)	M
2010 GAAP earnings		0.40			0.17			(0.15	)		0.42

Corporate and Other Businesses includes small subsidiaries, Holding Company interest expense, discontinued operations, CVO mark-to-market, purchase accounting transactions and corporate eliminations.

Certain line items presented gross on the Consolidated Statements of Income are netted in this analysis to highlight earnings drivers.

A -	Tax levelization impact, related to cyclical nature of energy demand/earnings and various permanent items of income or deduction.
B -	Impact of change in fair value of outstanding CVOs.
C -	Impact of decision to retire in-service generating units prior to the end of their estimated useful lives.
D -	Related to certain employee life insurance benefits.
E -	Discontinued operations in 2009 consists primarily of adjustments related to a litigation judgment against our former Synthetic Fuels businesses.
F -	Carolinas - Favorable primarily due to 16 percent higher heating-degree days than 2009; additionally, heating-degree days were 18 percent higher than normal.
	Florida - Favorable primarily due to heating-degree days 125 percent higher than 2009 and 118 percent higher than normal.
G -	Carolinas - Favorable primarily due to higher miscellaneous revenues, favorable non-clause-recoverable purchased power and higher clause-recoverable regulatory returns.
	Florida - Favorable primarily due to higher clause-recoverable regulatory revenues and returns.
H -	Carolinas - Unfavorable primarily due to higher nuclear plant outage and maintenance costs driven by expanded scope and more emergent work in 2010 compared to 2009, partially offset by lower storm costs. There were no nuclear outages in the fourth quarter 2009.
	Florida - Unfavorable primarily due to higher employee benefits expense and the prior-year pension deferral in accordance with an FPSC order.
	Corporate and Other - Favorable primarily due to the allocation to the Utilities of the corporate tax impact of withdrawals from an employee benefit trust.
I -	AFUDC equity is presented gross of tax as it is excluded from the calculation of income tax expense.
	Carolinas - Favorable primarily due to increased construction project costs.
	Florida - Unfavorable primarily due to placing CAIR assets in service.
J -	Florida - Favorable primarily due to a change in depreciation rates resulting from a depreciation study in conjunction with the 2009 base rate case.
K -	Florida - Unfavorable primarily due to higher average debt outstanding and unfavorable AFUDC debt resulting from placing CAIR assets in service.
L -	Florida - Unfavorable primarily due to lower deductions for domestic production activities.
	Corporate and Other - Unfavorable primarily due to the impact of withdrawals from an employee benefit trust.
M -	Impairment of certain miscellaneous investments and other assets.

S-1

Progress Energy, Inc.

SUPPLEMENTAL DATA - Page S-2

Unaudited

Earnings Variances

Full-Year 2010 vs. 2009

	Regulated Utilities
($ per share)	Carolinas			Florida			Corporate and Other Businesses			Consolidated

2009 GAAP earnings		1.83			1.65			(0.77	)		2.71
CVO mark-to-market								(0.07	)		(0.07	)	A
Impairment								0.01			0.01		B
Plant retirement charges		0.06									0.06		C
Cumulative prior period adjustment		0.04									0.04		D
Discontinued operations								0.28			0.28		E
2009 ongoing earnings		1.93			1.65			(0.55	)		3.03

Weather - retail		0.25			0.19						0.44		F

Growth and usage - retail		0.08			(0.01	)					0.07

Retail rates					0.11						0.11		G

Clauses, wholesale and other margin		0.09			0.10						0.19		H

O&M		(0.19	)		(0.17	)		0.04			(0.32	)	I

Other					(0.03	)		(0.01	)		(0.04	)	J

AFUDC equity		0.11			(0.22	)					(0.11	)	K

Depreciation and amortization		(0.03	)		0.14						0.11		L

Interest expense		0.02			(0.06	)		(0.11	)		(0.15	)	M

Income taxes		(0.04	)		(0.04	)		(0.05	)		(0.13	)	N

Share dilution		(0.09	)		(0.07	)		0.02			(0.14	)

2010 ongoing earnings		2.13			1.59			(0.66	)		3.06
Impairment		(0.02	)								(0.02	)	B
Discontinued operations								(0.01	)		(0.01	)	E
Change in the tax treatment of the Medicare Part D subsidy		(0.05	)		(0.03	)					(0.08	)	O
2010 GAAP earnings		2.06			1.56			(0.67	)		2.95

Corporate and Other Businesses includes small subsidiaries, Holding Company interest expense, discontinued operations, CVO mark-to-market, purchase accounting transactions and corporate eliminations.
Certain line items presented gross on the Consolidated Statements of Income are netted in this analysis to highlight earnings drivers.

A -	Impact of change in fair value of outstanding CVOs.
B -	Impairment of certain miscellaneous investments and other assets.
C -	Impact of decision to retire in-service generating units prior to the end of their estimated useful lives.
D -	Related to certain employee life insurance benefits.
E -	Discontinued operations in 2009 consists primarily of adjustments related to a litigation judgment against our former Synthetic Fuels businesses.
F -	Carolinas - Favorable primarily due to 15 percent higher heating-degree days and 24 percent higher cooling-degree days than 2009; additionally, cooling-degree days were 30 percent higher and heating-degree days were 14 percent higher than normal.
	Florida - Favorable primarily due to 89 percent higher heating-degree days than 2009 and 124 percent higher than normal.
G -	Florida - Favorable primarily due to the increase in base rates for the repowered Bartow Plant.
H -	Carolinas - Favorable primarily due to higher miscellaneous revenues, favorable non-clause-recoverable purchased power and higher clause-recoverable regulatory returns.
	Florida - Favorable primarily due to higher clause-recoverable regulatory revenues and returns, partially offset by lower wholesale revenues related to amended contracts and estimated CR3 joint owner replacement power costs.
I -	Carolinas - Unfavorable primarily due to higher nuclear plant outage and maintenance costs driven by three nuclear refueling and maintenance outages in 2010 compared to two in 2009, as well as extended outages and more emergent work in 2010 compared to 2009.
	Florida - Unfavorable primarily due to the prior-year pension deferral in accordance with an FPSC order, higher employee benefits expense and the prior-year impact of a change in the vacation benefits policy.
	Corporate and Other - Favorable primarily due to the allocation to the Utilities of the corporate tax impact of withdrawals from an employee benefit trust.
J -	Florida - Unfavorable primarily due to higher property taxes resulting from placing the repowered Bartow Plant in service.
K -	AFUDC equity is presented gross of tax as it is excluded from the calculation of income tax expense.
	Carolinas - Favorable primarily due to increased construction project costs.
	Florida - Unfavorable primarily due to placing CAIR assets and the repowered Bartow Plant in service.
L -	Carolinas - Unfavorable primarily due to the impact of depreciable asset base increases.
	Florida - Favorable primarily due to the reduction in the cost of removal component of amortization expense in accordance with the base rate settlement agreement.
M -	Carolinas - Favorable primarily due to AFUDC debt resulting from increased construction project costs.
	Florida - Unfavorable primarily due to higher average debt outstanding and unfavorable AFUDC debt resulting from placing CAIR assets and the repowered Bartow Plant in service.
	Corporate and Other - Unfavorable primarily due to higher average debt outstanding at the Parent.
N -	Carolinas - Unfavorable primarily due to the prior-year deduction related to nuclear decommissioning trust funds and changes in tax estimates.
	Florida - Unfavorable primarily due to the prior-year deduction related to nuclear decommissioning trust funds.
	Corporate and Other - Unfavorable primarily due to the impact of withdrawals from an employee benefit trust.
O -	Change in the tax treatment of the Medicare Part D subsidy related to the Patient Protection and Affordable Care Act and the related Health Care and Education Reconciliation Act enacted in March 2010.

S-2

Progress Energy, Inc.

SUPPLEMENTAL DATA - Page S-3

Unaudited - Data is not weather-adjusted

Utility Statistics

	Three Months Ended							Three Months Ended								Percentage Change
	December 31, 2010							December 31, 2009(a)								From December 31, 2009
Operating Revenues (in millions)	Carolinas		Florida			Total Utilities		Carolinas		Florida			Total Utilities			Carolinas			Florida
Residential	$	264	$	237		$	501	$	237	$	240		$	477			11.4	%	(1.3	) %
Commercial		170		89			259		162		88			250			4.9		1.1
Industrial		87		17			104		86		19			105			1.2		(10.5	)
Governmental		15		23			38		14		23			37			7.1		-
Unbilled		24		(7	)		17		22		(19	)		3			-		-
Total retail base revenues		560		359			919		521		351			872			7.5		2.3
Wholesale base revenues		77		39			116		72		39			111			6.9		-
Total base revenues		637		398			1,035		593		390			983			7.4		2.1
Clause-recoverable regulatory returns		5		47			52		2		27			29			150.0		74.1
Miscellaneous revenue		36		49			85		26		49			75			38.5		-
Fuel and other pass-through revenues		450		695			1,145		445		772			1,217			-		-
Total operating revenues	$	1,128	$	1,189		$	2,317	$	1,066	$	1,238		$	2,304			5.8	%	(4.0	) %

Energy Sales (millions of kWh)
Residential		4,013		4,618			8,631		3,564		4,699			8,263			12.6	%	(1.7	) %
Commercial		3,263		2,905			6,168		3,111		2,977			6,088			4.9		(2.4	)
Industrial		2,606		748			3,354		2,597		799			3,396			0.3		(6.4	)
Governmental		370		836			1,206		360		847			1,207			2.8		(1.3	)
Unbilled		600		(150	)		450		587		(609	)		(22	)		-		-
Total retail		10,852		8,957			19,809		10,219		8,713			18,392			6.2		2.8
Wholesale		3,233		640			3,873		3,424		727			4,151			(5.6	)	(12.0	)
Total energy sales		14,085		9,597			23,682		13,643		9,440			23,083			3.2	%	1.7	%

Energy Supply (millions of kWh)
Generated
Steam		7,023		3,325			10,348		6,471		3,370			9,841
Nuclear		5,169		-			5,169		6,609		-			6,609
Combustion turbines/combined cycle		1,256		4,977			6,233		649		4,708			5,357
Hydro		102		-			102		169		-			169
Purchased		1,065		1,916			2,981		299		1,923			2,222
Total energy supply (company share)		14,615		10,218			24,833		14,197		10,001			24,198

Impact of Weather to Normal on Retail Sales
Heating-degree days
Actual		1,399		366					1,209		163						15.7	%	124.5	%
Normal		1,189		168					1,175		192
Cooling-degree days
Actual		70		396					52		526						34.6	%	(24.7	) %
Normal		75		442					74		455
Impact of retail weather to normal on EPS	$	0.05	$	0.07		$	0.12	$	0.00	$	0.02		$	0.02

(a) Certain amounts for 2009 have been reclassified to conform to the 2010 presentation.

S-3

Progress Energy, Inc.

SUPPLEMENTAL DATA - Page S-4

Unaudited - Data is not weather-adjusted

Utility Statistics


	Year Ended						Year Ended						Percentage Change
	December 31, 2010						December 31, 2009(a)						From December 31, 2009
Operating Revenues (in millions)	Carolinas		Florida		Total Utilities		Carolinas		Florida		Total Utilities		Carolinas			Florida
Residential	$	1,242	$	1,045	$	2,287	$	1,128	$	946	$	2,074		10.1	%	10.5	%
Commercial		726		359		1,085		707		340		1,047		2.7		5.6
Industrial		365		75		440		356		72		428		2.5		4.2
Governmental		65		92		157		59		87		146		10.2		5.7
Unbilled		10		17		27		5		9		14		-		-
Total retail base revenues		2,408		1,588		3,996		2,255		1,454		3,709		6.8		9.2
Wholesale base revenues		305		160		465		308		207		515		(1.0	)	(22.7	)
Total base revenues		2,713		1,748		4,461		2,563		1,661		4,224		5.9		5.2
Clause-recoverable regulatory returns		13		173		186		9		87		96		44.4		98.9
Miscellaneous revenue		138		216		354		114		189		303		21.1		14.3
Fuel and other pass-through revenues		2,058		3,117		5,175		1,941		3,314		5,255		-		-
Total operating revenues	$	4,922	$	5,254	$	10,176	$	4,627	$	5,251	$	9,878		6.4	%	0.1	%

Energy Sales (millions of kWh)
Residential		19,108		20,524		39,632		17,117		19,399		36,516		11.6	%	5.8	%
Commercial		14,184		11,896		26,080		13,639		11,884		25,523		4.0		0.1
Industrial		10,665		3,219		13,884		10,368		3,285		13,653		2.9		(2.0	)
Governmental		1,574		3,286		4,860		1,497		3,256		4,753		5.1		0.9
Unbilled		172		458		630		360		131		491		-		-
Total retail		45,703		39,383		85,086		42,981		37,955		80,936		6.3		3.8
Wholesale		13,999		3,857		17,856		13,966		3,835		17,801		0.2		0.6
Total energy sales		59,702		43,240		102,942		56,947		41,790		98,737		4.8	%	3.5	%

Energy Supply (millions of kWh)
Generated
Steam		30,528		14,443		44,971		27,261		13,159		40,420
Nuclear		21,624		-		21,624		24,467		4,945		29,412
Combustion turbines/combined cycle		5,429		22,427		27,856		3,634		17,620		21,254
Hydro		608		-		608		651		-		651
Purchased		3,985		9,488		13,473		3,251		8,745		11,996
Total energy supply (company share)		62,174		46,358		108,532		59,264		44,469		103,733

Impact of Weather to Normal on Retail Sales
Heating-degree days
Actual		3,512		1,046				3,058		554				14.8	%	88.8	%
Normal		3,092		467				3,074		577
Cooling-degree days
Actual		2,239		3,045				1,810		3,114				23.7	%	(2.2	) %
Normal		1,717		3,000				1,704		2,981
Impact of retail weather to normal on EPS	$	0.28	$	0.26	$	0.54	$	0.03	$	0.07	$	0.10

(a) Certain amounts for 2009 have been reclassified to conform to the 2010 presentation.

S-4

Progress Energy, Inc.

SUPPLEMENTAL DATA - Page S-5

Unaudited

O&M Expenses Primarily Recoverable through Base Rates (a)
	Three months ended December 31,						Years ended December 31,
(in millions)	2010			2009			2010			2009
Reported GAAP O&M	$	568		$	534		$	2,027		$	1,894
Adjustments
Carolinas
Fuel clauses		(5	)		(5	)		(24	)		(21	)
Environmental clause		(1	)		-			(3	)		(2	)
DSM/EE and REPS cost recovery clauses (b)		(6	)		(4	)		(26	)		(13	)
Florida
Energy conservation cost recovery clause (ECCR)		(22	)		(19	)		(93	)		(75	)
Environmental cost recovery clause (ECRC)		(15	)		(14	)		(66	)		(87	)
Nuclear cost recovery		(1	)		(1	)		(5	)		(4	)
O&M Expenses Primarily Recoverable through Base Rates	$	518		$	491		$	1,810		$	1,692

(a)

The preceding table provides a reconciliation of reported GAAP O&M to O&M Primarily Recoverable through Base Rates. O&M Primarily Recoverable through Base Rates excludes certain expenses that are recovered through cost-recovery clauses which have no material impact on earnings. Management believes this presentation is appropriate and enables investors to more accurately compare the company's O&M expense over the periods presented. O&M Primarily Recoverable through Base Rates as presented here may not be comparable to similarly titled measures used by other companies.

(b)

DSM = Demand-side Management

EE = Energy efficiency

REPS = Renewable energy portfolio standard

Financial Statistics
	December 31, 2010		December 31, 2009 (a)
Return on average common stock equity (rolling 12 months)	8.7	%	8.1	%
Book value per common share	$34.05		$33.53
Capitalization
Total equity	43.6	%	42.3	%
Preferred stock of subsidiaries	0.4	%	0.4	%
Total debt	56.0	%	57.3	%
Total Capitalization	100.0	%	100.0	%

(a)	Restated to include prior period adjustment that is not material to previously issued or current period financial statements.

S-5

DUKE ENERGY PROGRESS, LLC. - FORM 8-K - EX-99.1 - EARNINGS RELEASE EXHIBIT 99 - February 18, 2011

Attached files