Progress Energy's Q3 net income down 19% year-over-year to US$291M on lower revenue, marking down the value of contingent-value obligations; revenue down to US$2.75B from US$2.96B a year ago

RALEIGH, North Carolina , November 3, 2011 () – Progress Energy Inc., which is being bought by Duke Energy Corp., said third-quarter earnings fell 19 percent on lower revenue and marking down the value of contingent-value obligations.

The company blamed the revenue decline on milder weather in the Southeast and its inability to charge rate-payers for all the cost of replacing power in the Carolinas after a nuclear plant had unplanned outages.

The contingent-value obligations were issued when the company bought Florida Progress Corp. Buyers were entitled to payments based on cash flows above certain levels from four synthetic-fuels plants, and Progress Energy is required to account for changes in their fair value every quarter.

The company settled litigation this week with a major holder of the obligations, Davidson Kempner, by agreeing to buy them for 75 cents each and take a pretax loss of $63 million in the third quarter.

Third-quarter net income was $291 million, or 98 cents per share, compared with $361 million, or $1.23 per share, a year earlier. Excluding the obligations markdown and other items, the company would have earned $1.16 per share from ongoing operations. Analysts expected $1.25 per share.

Revenue fell to $2.75 billion from $2.96 billion a year ago. Analysts expected $3.18 billion.

Progress Energy stood by its forecast of adjusted full-year earnings between $3 and $3.20 per share. Analysts expected $3.14 per share, according to FactSet.

In morning trading, shares of the company added 18 cents to $52.49.

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