SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of report (date of earliest event reported): October 31, 2000
<TABLE>
<CAPTION>
<S> <C> <C>
Commission Exact name of registrant as specified in its charter, I.R.S. Employer
File Number state of incorporation, address of principal executive Identification Number
offices, and telephone 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
</TABLE>
NONE
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(Former name, former address and former fiscal year, if changed since last
report)
<PAGE>
This combined Form 8-K represents separate filings by CP&L Energy, Inc. and
Carolina Power & Light Company. Information contained herein relating to an
individual registrant is filed by that registrant on its own behalf.
ITEM 9: REGULATION FD DISCLOSURE
This document contains forward-looking statements within the meaning of the safe
harbor provisions of the Private Securities Litigation Reform Act of 1995. The
forward-looking statements 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. 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 or North Carolina Natural Gas Company; 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 and gas 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; factors
affecting the synthetic fuel plants including cash flows derived from the
synthetic fuel plants, market acceptance of synthetic fuel, competition from
competing products, impacts of environmental regulations on potential buyers of
synthetic fuel, and income tax issues related to synthetic fuel tax credits;
ability to access and utilize the gas expansion fund established by the North
Carolina Utilities Commission; 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 or CP&L.
The following information will be presented at the Edison Electric Institute
Fall Finance Conference to be held on October 31, 2000 in San Francisco, CA.
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EEI Fall Finance Conference
San Francisco Hilton
October 31, 2000
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Slide 1: CP&L Energy, Inc.: Focusing on the future
Thank you very much for joining us today. This is a great opportunity to
describe our soon-to-be combined company.
It's a great story, but if we run out of time today our investor relations team
will be available this afternoon in the _____________ Room and tomorrow morning
in the ____________ Room.
Of course, no presentation is complete without acknowledging the Safe Harbor
language in the handout and on our website. If you're unfamiliar with it, please
refer to our website or our SEC filings.
Slide 2: Agenda
Today I want to spend a few moments in each of these areas. I will hit them at a
high level to allow for questions later.
<PAGE>
Slide 3: Merger status
The question on everyone's mind is, "When are you going to close on the Florida
Progress deal?" Well, the short answer is, "Soon." We're waiting to hear from
the Securities and Exchange Commission, but everything else is completed.
Earlier this month we mailed forms to FPC shareholders so they could choose how
they'd be compensated for their FPC shares, either with stock in the new
company, or cash.
Our attorneys are working closely with the SEC staff, and all indications point
to a closing this year.
After we close on the FPC deal, we will have a much larger company with a lot of
options. We are even more optimistic today -- about the prospects of our new
company -- than when the deal was announced in August of last year.
I have spent a lot of time on organizational structure and integration
activities and can tell you that our companies have been working very well
together. We expect to realize significant revenue and cost synergies and expect
that they will more than equal our projected synergies.
Many of you were skeptical about our ability to retain synergies, but we are on
track to do just that.
Overall, the integration effort has gone very smoothly, and following the close
we'll quickly integrate both companies based on the plans we have in place.
Slide 4: Deregulation (highlighted on Agenda slide)
Now, turning to the deregulation front, we still expect legislation to be
introduced in North Carolina in 2001, and it will likely track the guidelines
approved by the legislative Study Commission earlier this year.
We're comfortable with that and will be working closely with Duke Energy to
guide the plan through next year's legislature.
Although the events in California have raised awareness -- and concern -- within
our region about deregulation, we are optimistic that the proposed deregulation
plan can succeed.
In South Carolina and Florida, we expect continued review of the issue by the
legislative bodies with some form of deregulation legislation possibly being
introduced in South Carolina next year.
Slide 5: Strategic Focus (highlighted on Agenda slide)
Now I know many of you want to know what you can expect of our new company after
the Florida Progress closing.
<PAGE>
Slide 6: Four lines of business
Under the strategic umbrella, we will concentrate on four lines-of-business that
offer very significant value growth potential.
The four are:
1) energy supply -- or our generation and fuel business,
2) transmission,
3) energy delivery and services, and
4) telecom.
We have strategic teams looking into how to best extract optimum value from
these business lines.
I'll provide more details shortly, but there are two issues that directly
influence how that potential value is realized.
One involves our maintaining and building on our sound regulatory platforms. In
our franchise states we believe we benefit from a responsible regulatory regime.
But, we also recognize that it takes the right amount of discourse among all
parties -- and attention to detail -- to maintain the desired environment. We
plan to do that.
The other point involves the issue of divestiture. We're inheriting a number of
properties and companies with the acquisition.
Consequently, our priority will be analyzing and addressing what to retain and
what to shed. We will then use the divestiture proceeds to improve our financial
position.
Now let me talk a little about our four lines-of-business.
Slide 7: Upstream Energy: Energy Supply/Energy Ventures
Upstream Energy: two business units will concentrate on this. One called Energy
Supply will manage all of our regulated generation assets. The other, called
Energy Ventures, will focus on deregulated enterprises.
Energy Ventures will include our trading operations, term marketing, and our
generation development activities. As an example of the latter, over the next
few years we will place anywhere from 2,000 to 4,000 megawatts of new merchant
capacity in the ground.
Energy Ventures will purchase all of our fuels and oversee our mines and synfuel
operations.
Slide 8: Upstream Energy: four bullets
In our view, success in this upstream energy business depends on four
accomplishments:
1. total preparation for deregulation
<PAGE>
2. the timely transition of our regulated assets into unregulated assets
3. putting together a team with world-class commercial skills when it comes to
power trading and term marketing
4. and putting together a portfolio of assets that matches this expanding
market.
Slide 9: Balanced generation portfolio
Consider our generation mix...it's going to be formidable. Balanced and
well-maintained, these assets have long lives ahead of them and embedded costs
that are going to be approximately $220 a kW.
We compete favorably -- either at the margin or at the bus -- with every forward
price curve I've seen. We are aware of the tremendous value we have tied up in
this portfolio, and we will do whatever it takes to unlock that value.
Slide 10: Electricity Transmission
Let's talk about our second line-of-business: electricity transmission. We've
filed for FERC approval of GridSouth, the RTO we've established with Duke and
SCANA. Also, we are working with the Florida utilities to establish an RTO to
meet the needs of that region. Obviously, after we establish these independent
businesses, we must determine the best way to release the value out of our
transmission assets. At close, we will have transmission assets of roughly $1.2
billion.
Slide 11: Downstream Energy
Now, let me spend a few moments on the downstream energy delivery plus services
business. I believe this can be one of the hidden jewels in our enterprise
operation, although it will take time to perfect the business model.
We expect to have a customer on both sides of the pipes and wires. We will take
care of the energy supply companies selling energy into our area, and we will
continue to provide the customer care components of the value chain -- something
we excel in already.
We must intensely focus on providing value-added services to our customers.
These will include reliability and power quality -- and by the way we already
have a premier power tariff in North Carolina that has allowed us to install
over 11 MW of distributed generation.
We know that achieving this arrangement requires the right codes of conduct, and
we are working -- and making good progress -- toward establishing those codes.
We also know that it is critical to get the tariff right in this business. The
delivery business will require capital. We will work with regulators to provide
for prompt and efficient investment recovery.
Slide 12: Fiber network business
<PAGE>
Now, the fourth line of business, our fiber network. Some of you may recall we
recently sold our wireless assets to BellSouth for $200 million. And a few
months ago, we sold 65% of the ASP business of Interpath to Bain Capital. But we
retained Interpath's fiber and telecom assets.
Now, we're going to focus on the fiber network. Frankly, I think acquiring
Florida Progress provided us with a real opportunity in Progress Telecom. It is
a two-year-old company -- with a positive EBITDA -- and it has a good group of
telecom-savvy managers and staff.
They have a sound business model that will gain strength when we combine the
CP&L fiber network with Progress Telecom's.
Slide 13: Strong regional fiber system
Here is our system. After this year's completion of our loop between Florida and
Atlanta -- and our extension into the southern tip of Florida -- our network
will reach from Miami to Washington, D.C.
At closing and by the end of this year, we will have about $175 million in
assets and about $50 million in revenues.
We're bigger -- in terms of revenues -- than NEON. And Progress Telecom is
already establishing a strong reputation for quick and reliable service -- which
matters as much in this business as in the energy distribution business.
Slide 14: Earnings Outlook
Now, let me discuss our earnings expectations for 2000 and beyond. After our
strong third quarter, we are very comfortable with the street consensus for 2000
of around $3.00 per share for CP&L on a stand-alone basis and excluding the sale
to BellSouth.
For 2001, we estimate earnings for the combined company within the $3.25 to
$3.35 range. Going forward you can expect earnings to grow in the 7% to 8% range
as we consolidate our operations with Florida Progress.
In addition, we expect to continue our policy of providing a solid dividend. The
Board of Directors reviews our policy annually. However, we all understand the
dividend's value as a component of the total shareholder return equation.
Slide 15: Fundamental strengths
In closing, I want to leave you with a picture of the fundamental strengths that
underscore the opportunities for this new company. By 2002, we will have:
o About 22,000 mWs of capacity in the high-growth Southeast, with market
reach into other areas
<PAGE>
o A competitive average embedded cost for the entire generation fleet of
approximately $220 per kW
o Over 2.8 million customers -- adding 50,000 more annually, and
o We expect to have responsible restructuring plans enacted into law in
North Carolina and quite possibly in South Carolina and Florida.
Finally, I want to emphasize this final comment: we are committed to 7% to 8%
EPS growth for the foreseeable future -- and a bankable dividend to boot.
<PAGE>
Slide 1
CP&L Energy Inc.
Focusing on the Future
Remarks by:
William Cavanaugh III
Chairman, President & CEO October/November 2000
Slide 2
Agenda
o Merger status
o Deregulation
o Strategic focus
o Earnings outlook
o Q&A
Slide 3
Merger Status
Approval Required (arrow pointing downward)
Securities Exchange Commission
CLOSING EXPECTED IN 4TH QUARTER
Slide 4
Agenda
o Merger status
o Deregulation [Highlighted]
o Strategic focus
o Earnings outlook
o Q&A
<PAGE>
Slide 5
Agenda
o Merger status
o Deregulation
o Strategic focus [Highlighted]
o Earnings outlook
o Q&A
Slide 6
Four lines-of-business
Upstream Energy
Electricity Transmission
Downstream Energy Delivery Plus Services
Fiber Network
Slide 7
Upstream energy
Energy Supply Energy Ventures
o Regulated generation assets o Deregulated generation
o Trading and marketing
o Synfuel plants
Slide 8
Upstream energy
o Prepare for deregulation
o Build merchant capability
o Create right portfolio in right locations
o Manage risks
<PAGE>
Slide 9
Balanced generation portfolio
Installed capacity
[Pie graphs appear here containing the following information]
CP&L Florida Progress New Company
Hydro 2% Hydro 1%
Gas/oil 15% Gas/Oil 63% Gas/Oil 37%
Coal 52% Coal 28% Coal 41%
Nuclear 31% Nuclear 9% Nuclear 21%
[Graphics of shaded boxes for graph legend appear here]
[]Nuclear []Coal []Gas/Oil []Hydro
Slide 10
Electricity Transmission
o Meet FERC commitment for RTO
o Select optimum value
Slide 11
Downstream energy delivery plus services
o Establish reasonable codes of conduct
o Provide value-added services
o Get delivery tariff right
o Maintain DG/technology options
Slide 12
Develop fiber network business
o Target locations
o Customer responsiveness
o Pricing
o Reliability
<PAGE>
Slide 13
Strong regional fiber system
o 3,000 route miles; 110,000 fiber miles
o $175 million assets
o $50 million revenues
[Graphic of map from
Washington, D.C. to Florida
indicating fiber network route]
[Map legend]
--Progress teleCom Fiber Network
= =Leased/Partnership Network
Slide 14
Earnings outlook
Earnings growth--and a bankable dividend
[Bar graph depicting EPS at $3.00 in 2000 and $3.30 in 2001] [Graphic of arrow
indicating 7% to 8% increase in the years beyond 2001]
Slide 15
Fundamental strengths
o 22,000 MW in the Southeast
o $220/KW average embedded cost of generation
o 2.8 million customers plus 50,000/year
o Responsible and reasonable deregulation
Slide 16
CP&L
Focusing on the Future
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrants have duly caused this report to be signed on their behalf by the
undersigned hereunto duly authorized.
CP&L ENERGY, INC.
CAROLINA POWER & LIGHT COMPANY
Registrants
By: /s/ Peter M. Scott III
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Peter M. Scott III
Executive Vice President and
Chief Financial Officer of each Registrant
Date: October 31, 2000
