Progress Energy 401(k) Savings & Stock Ownership Plan Prospectus

Transcription

1 Document title: AUTHORIZED COPY Progress Energy 401(k) Savings & Stock Ownership Plan Prospectus Document number: HRI-SUBS Applies to: Keywords: Eligible employees of: Progress Energy Carolinas, Inc., Progress Energy Florida, Inc. (non-bargaining employees), Progress Fuels Corporation (corporate employees), Progress Energy Service Company, LLC human resources information; benefits booklets; SPD This document constitutes part of a prospectus covering securities that have been registered under the Securities Act of Progress Energy, Inc. 22,215,069 Shares of Common Stock to be issued under the Progress Energy 401(k) Savings & Stock Ownership Plan This document relates to retirement benefits offered to participants under the Progress Energy 401(k) Savings & Stock Ownership Plan (the Plan ), including the shares of common stock noted above and an indeterminate amount of interests to be offered or sold pursuant to the Plan. Our common stock is traded on the New York Stock Exchange under the symbol PGN. This document is part of a prospectus covering securities that have been registered under the Securities Act of 1933, as amended (the Securities Act) and may be used only in connection with our offer and sale of common stock and interests under the Plan. You cannot use this document to offer or sell securities that you acquire under the plan to anyone else. Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved of these securities or determined if this document, or any other materials that serve as portions of the prospectus, is truthful or complete. Any representation to the contrary is a criminal offense. January, 2012 HRI-SUBS Rev. 2 Page 1 of 15

2 IMPORTANT INFORMATION ABOUT THIS DOCUMENT AUTHORIZED COPY We have filed a registration statement with the United States Securities and Exchange Commission, or the SEC, with respect to the securities described in this document. Under the registration statement, we may from time to time issue Progress Energy, Inc. securities under the Plan. This document serves as a part of the prospectus, which is part of the registration statement. As permitted by the SEC, other documents, including the Summary Plan Description for the Plan, as well as any other documents that we designate as such, are also part of the prospectus. We may update this document and any other prospectus documents in the future by furnishing you with current information in the form of a new prospectus document or an appendix to the prospectus. An appendix or a new prospectus document may add, update, or change information that is considered to be a part of the prospectus. When we deliver an appendix or a new prospectus document, we will also give you another copy of all of the materials that are considered to be a part of the prospectus without charge if you request it. If you are a new participant in the Plan, you will be given a copy of this document and any current appendix, along with any other materials that serve as prospectus documents. You should carefully read this document, along with any other materials that serve as portions of the prospectus and any appendices, together with the additional information described under the heading WHERE YOU CAN FIND MORE INFORMATION. You should rely only on the information incorporated by reference or provided in the prospectus documents or any appendix. We have not authorized anyone to provide you with different information. We are not making an offer of these securities in any state or jurisdiction where the offer is not permitted. You should not assume that the information in the prospectus documents or in any appendix is accurate as of any date other than the dates printed on the front of each such document. HOW TO OBTAIN ADDITIONAL INFORMATION This document serves as part of a prospectus and incorporates important business and financial information about us that is not included in or delivered with this document or the other prospectus documents. This information is described on page 17 under WHERE YOU CAN FIND MORE INFORMATION. You can obtain free copies of this information by writing or calling us at the address and telephone number provided on page 18. TABLE OF CONTENTS Progress Energy, Inc. 3 Investment Funds Offered as Investment Options under the Plan 3 More Information About the Progress Energy Stock Fund 12 Resale Restrictions 13 Where You Can Find More Information 14 HRI-SUBS Rev. 2 Page 2 of 15

3 PROGRESS ENERGY, INC. AUTHORIZED COPY Progress Energy, Inc. (the Company or Progress Energy ), the issuer of the common stock and interests offered under the Plan, is a North Carolina corporation. Our principal executive offices are located at 410 S. Wilmington Street, Raleigh, NC 27601, and our telephone number is (919) INVESTMENT FUNDS OFFERED AS INVESTMENT OPTIONS UNDER THE PLAN Following are brief descriptions of the Plan s investment options based on information provided by Fidelity. Past performance does not guarantee future results. Such descriptions do not purport to be complete and are subject to, and qualified in their entirety by reference to, the descriptions contained in the prospectuses relating to the respective funds. You should obtain and read a copy of each fund s prospectus carefully before deciding to invest. Prospectuses for these funds are available by contacting the Progress Energy 401(k) Service Center at Fidelity, at K- NOW ( ) or the Fidelity NetBenefits web site at 401k.com or from the managers of each Plan fund. Progress Energy Stock Fund (PGN) This fund invests in Progress Energy common stock to provide the possibility of long-term growth through increases in the value of the stock and the reinvestment of its dividends. A small portion of the fund may also be invested in short-term reserves such as money market instruments to help accommodate daily transactions. The overall risk/reward level of the fund is considered aggressive because it concentrates on a single stock. Investors who should consider investing in this fund are those who are interested in sharing in the long-term growth potential of this company s stock; are aware of the risk of investing in a fund that depends solely on the performance of one company; and who have a long-term investment horizon (more than five years). There are no redemption fees for transactions into or out of this fund for Plan participants. Domestic Equity - Mid-Cap Growth Fund (ACRNX) Contributions to this fund are invested in the Columbia Acorn Fund Class Z. The Columbia Acorn Fund is a mutual fund managed by Columbia Wanger Asset Management. The investment seeks long-term capital appreciation. The fund normally invests a majority of net assets in small- and mid-sized companies with market capitalizations under $5 billion at the time of investment. It invests the majority of assets in U.S. companies, but also may invest up to 33 percent of total assets in foreign companies in developed markets and in emerging markets. Someone who is seeking the potential for long-term share-price appreciation Someone who is willing to accept the generally greater price volatility associated both with growth-oriented stocks and with smaller companies. Domestic Equity - Large Cap Growth Fund (HACAX) Contributions to this fund are invested in the Harbor Cap Appreciation Institutional CL. A mutual fund registered under Harbor Funds, and managed by Harbor Capital Advisors Inc. This fund is a growth mutual fund. The investment seeks long-term growth of capital. The fund invests primarily in equity securities, principally common and preferred stocks, of U.S. companies with market capitalizations of at least $1 billion and considered to have above average prospects for growth. It may invest up to 20% of assets in the securities of foreign issuers, including issuers located or doing business in emerging markets. Someone who is seeking the potential for long-term share-price appreciation. Someone who is willing to accept the generally greater price volatility associated with growth-oriented stocks. HRI-SUBS Rev. 2 Page 3 of 15

4 International/Global Fund (RERFX) Contributions to this fund are invested in the EuroPacific Growth Fund Class R5 mutual fund. This fund is managed by Capital Research and Management Company or American Funds. The investment seeks to provide long-term growth of capital. The fund invests primarily in common stocks of issuers in Europe and the Pacific Basin that the investment adviser believes have the potential for growth. It normally invests at least 80 percent of net assets in securities of issuers in Europe and the Pacific Basin. The fund may invest a portion of its assets in common stocks and other securities of companies in countries with developing economies and/or markets and may also hold cash, money market instruments and fixed-income securities Someone who is seeking to complement a portfolio of domestic investments with international investments, which can behave differently Someone who is willing to accept the higher degree of risk associated with investing overseas Domestic Equity- Mid Cap Growth Fund (WCGIX) Contributions to this fund are invested in the William Blair Mid-Cap Growth CL I mutual fund. The fund is managed by William Blair & Company L.L.C. The investment seeks long-term capital appreciation. The fund normally invests at least 80% of net assets in stocks of medium-sized companies. It primarily invests in a diversified portfolio of common stocks of medium-sized domestic growth companies that are expected to experience solid growth in earnings. It may also purchase stocks of companies with business characteristics and growth prospects similar to mid cap companies, but that may have a market capitalization above the market capitalization of the largest member or below the market capitalization of the smallest member of the Russell Midcap Index. Someone who is seeking the potential for long-term share-price appreciation.. Someone who is willing to accept the generally greater price volatility associated both with growth-oriented stocks and with smaller companies. Domestic Equity Large Cap Blend Fund (VINIX) Contributions to this fund are invested in the Vanguard 500 Index Fund Institutional Class mutual fund. This fund is managed by The Vanguard Group. This is a large-cap blend fund. The investment seeks to track the performance of a benchmark index that measures the investment return of largecapitalization stocks. The fund attempts to replicate the target index by investing all, or substantially all, of its assets in the stocks that make up Standard & Poor's 500 Index, which is a widely recognized benchmark of U.S. stock market performance that is dominated by the stocks of large U.S. companies. Someone who is seeking the potential for long-term share-price appreciation and, secondarily, dividend income. Someone who is seeking both growth- and value-style investments and who is willing to accept the volatility associated with investing in the stock market. Domestic Equity - Large Cap Value Fund (FEQIX) Contributions to this fund are invested in the Fidelity Equity-Income mutual fund. This fund, managed by the Fidelity Management Research Company, seeks reasonable income. The fund will also consider the potential for capital appreciation. The fund seeks a yield for its shareholders that exceed the yield on the securities comprising the S&P 500 Index. HRI-SUBS Rev. 2 Page 4 of 15

5 The fund normally invests at least 80 percent of assets in equity securities, primarily in income-producing equity securities, which tend to lead to investments in large cap "value" stocks. Someone who is seeking the potential for long-term share-price appreciation and, secondarily, dividend income Someone who is comfortable with the volatility of large-cap stocks and value-style investments Someone who is looking for income from a fund invested in stocks and bonds. Bond Fund (PTTRX) Contributions to this fund are invested in the PIMCO Total Return Institutional Class mutual fund. Pacific Investment Management Company ( PIMCO ) manages this fund. This is a bond mutual fund. The investment seeks maximum total return. The fund normally invests at least 65 percent of assets in a diversified portfolio of Fixed-Income Instruments of varying maturities, which may be represented by forwards or derivatives such as options, futures contracts, or swap agreements. It invests primarily in investment-grade debt securities, but may invest up to 10 percent of total assets in high-yield securities ("junk bonds"). The fund may invest in derivative instruments, such as options, futures contracts or swap agreements, or in mortgage- or asset-backed securities Someone who is seeking potential returns primarily in the form of interest dividends rather than through an increase in share price. Someone who is seeking to diversify an equity portfolio with a more conservative investment option. Fixed Income Fund Contributions to this fund are invested in the Vanguard Retirement Savings Trust. This fund is managed by The Vanguard Group. This fund is a money market fund (not a mutual fund). The fund seeks stable returns comparable to those of short-term fixed income securities. This fund invests in a combination of synthetic contracts (backed primarily by Vanguard bond funds), traditional insurance, and bank contracts. The average maturity range of the trust is two to three years. Because it invests in contracts designed to preserve a stable net asset value, the trust generates income without the price volatility associated with traditional short-term credit instruments. A stable value fund investment does not constitute a balanced investment program. The fund will seek to invest with a diversified selection of investment contract issuers, however the number of qualifying institutions may fluctuate over time. Although Vanguard selects only highly rated investments for the fund, the contracts held by the fund are not guaranteed by the U.S. government, Vanguard, the trustee, or your retirement plan. A stable value fund is designed as a low-risk investment, but you could still lose money by investing in it. Unit price, return and yield will vary. Investors seeking interest income and a stable share price. Investors with a short-term investment horizon (less than five years). Long-term investors seeking a fixed income investment to balance the risks of a portfolio containing stocks. Fidelity Freedom K Fund The Fidelity Freedom K Funds offered under the Plan are the following: Fidelity Freedom K Income Fund Fidelity Freedom K 2000 Fund Fidelity Freedom K 2005 Fund Fidelity Freedom K 2010 Fund Fidelity Freedom K 2015 Fund Fidelity Freedom K 2020 Fund Fidelity Freedom K 2025 Fund HRI-SUBS Rev. 2 Page 5 of 15

6 Fidelity Freedom K 2030 Fund Fidelity Freedom K 2035 Fund Fidelity Freedom K 2040 Fund Fidelity Freedom K 2045 Fund Fidelity Freedom K 2050 Fund Fidelity Freedom K 2055 Fund AUTHORIZED COPY Fidelity Freedom K Income Fund This is an asset allocation mutual fund. This fund seeks high current income and, as a secondary objective, some capital appreciation. Investing in a combination of underlying Fidelity equity, fixed-income, and short-term funds using a moderate asset allocation strategy designed for investors already in retirement. Allocating assets among underlying Fidelity funds according to a stable asset allocation strategy of approximately 20 percent in domestic equity funds, 35 percent in investment-grade fixed-income funds, 5 percent in high yield fixed-income funds and 40 percent in short-term funds. The fund is subject to the volatility of the financial markets, including equity and fixed income investments. Fixed income investments entail issuer default and credit risk, inflation risk and interest rate risk (as interest rates rise bond prices usually fall and vice versa). This effect is usually pronounced for longer-term securities. Principal invested is not guaranteed at any time, including at or after retirement. Someone seeking an investment option intended for people in retirement and willing to accept the volatility of diversified investments in the market. Someone seeking a diversified mix of stocks, bonds, and short-term investments in one investment option and looking primarily for the potential for income and, secondarily, for share-price appreciation. Fidelity Freedom K Fund 2000 (FFKBX) The fund invests in a combination of underlying Fidelity domestic equity, international equity funds, bond fund, and short-term funds using a moderate asset allocation strategy design for investors already expected to have retired around the year Assets are allocated among underlying Fidelity funds according to an asset allocation strategy that becomes increasingly conservative until it reaches approximately 20 percent in domestic equity funds, 35 percent investment- grade fixed income funds, 5 percent in high yield fixed-income funds and 40 percent in shortterm mutual funds (approximately 10 to 15 years after the year 2000). Fidelity Freedom K Fund 2005 (FFKVX) The fund invests in a combination of underlying Fidelity equity, fixed-income, and short-term funds using a moderate asset allocation strategy designed for investors expected to have retired around the year Assets are allocated among underlying Fidelity funds according to an asset allocation strategy that becomes increasingly conservative until it reaches 20 percent in domestic equity funds, 35 percent in investment-grade fixed-income funds, 5 percent in high yield fixed-income funds, and 40 percent in short-term funds (approximately 10 to 15 years after the year 2005). Ultimately, the fund will merge with Freedom Income Fund. HRI-SUBS Rev. 2 Page 6 of 15

7 Fidelity Freedom K Fund 2010 (FFKCX) This fund invests in a combination of underlying Fidelity equity, fixed-income, and short-term funds using a moderate asset allocation strategy designed for investors expecting to retire around the year Assets are 5 percent in high yield fixed-income funds, and 40% in short-term funds (approximately 10 to 15 years after the year 2010). Ultimately, the fund will merge with Freedom Income Fund. Fidelity Freedom K Fund 2015 (FKVFX) This fund invests in a combination of underlying Fidelity equity, fixed-income, and short-term funds using a moderate asset allocation strategy designed for investors expecting to retire around the year Assets are 5 percent in high yield fixed-income funds, and 40 percent in short-term funds (approximately 10 to 15 years after the year 2015). Ultimately, the fund will merge with Fidelity Freedom Income Fund. abroad and may be subject to risks associated with investing in high yield, small cap, commodity-linked, and foreign Fidelity Freedom K Fund 2020 (FFKDX) HRI-SUBS Rev. 2 Page 7 of 15

8 This fund invests in a combination of underlying Fidelity equity, fixed-income, and short-term funds using a moderate asset allocation strategy designed for investors expecting to retire around the year Assets are 5 percent in high yield fixed-income funds, and 40 percent in short-term funds (approximately 10 to 15 years after the year 2020). Ultimately, the fund will merge with Fidelity Freedom Income Fund Fidelity Freedom K Fund 2025 (FKTWX) This fund invests in a combination of underlying Fidelity equity, fixed-income, and short-term funds using a moderate asset allocation strategy designed for investors expecting to retire around the year Assets are 5 percent in high yield fixed-income funds, and 40 percent in short-term funds (approximately 10 to 15 years after the year 2025). Ultimately, the fund will merge with Fidelity Freedom Income Fund. Fidelity Freedom K Fund 2030 (FFKEX) This fund invests in a combination of underlying Fidelity equity, fixed-income, and short-term funds using a moderate asset allocation strategy designed for investors expecting to retire around the year Assets are 5 percent in high yield fixed-income funds, and 40 percent in short-term funds (approximately 10 to 15 years after the year 2030). Ultimately, the fund will merge with Fidelity Freedom Income Fund. HRI-SUBS Rev. 2 Page 8 of 15

9 Fidelity Freedom K Fund 2035 (FKTHX) This funds invests in a combination of underlying Fidelity equity, fixed-income, and short-term funds using a moderate asset allocation strategy designed for investors expecting to retire around the year Assets are 5 percent in high yield fixed-income funds, and 40 percent in short-term funds (approximately 10 to 15 years after the year 2035). Ultimately, the fund will merge with Fidelity Freedom Income Fund. securities. Principal invested is not guaranteed at any time, including at or after their target dates Fidelity Freedom K Fund 2040 (FFKFX) This fund invests in a combination of underlying Fidelity equity, fixed-income, and short-term funds using a moderate asset allocation strategy designed for investors expecting to retire around the year Assets are 5 percent in high yield fixed-income funds, and 40 percent in short-term funds (approximately 10 to 15 years after the year 2040). Ultimately, the fund will merge with Fidelity Freedom Income Fund. HRI-SUBS Rev. 2 Page 9 of 15

10 Fidelity Freedom K Fund 2045 (FFKGX) This funds invests in a combination of underlying Fidelity equity, fixed-income, and short-term funds using a moderate asset allocation strategy designed for investors expecting to retire around the year Assets are 5% in high yield fixed-income funds, and 40 percent in short-term funds (approximately 10 to 15 years after the year 2045). Ultimately, the fund will merge with Fidelity Freedom Income Fund Fidelity Freedom K Fund 2050 (FFKHX) This fund invests in a combination of underlying Fidelity equity, fixed-income, and short-term funds using a moderate asset allocation strategy designed for investors expecting to retire around the year Assets are 5 percent in high yield fixed-income funds, and 40 percent in short-term funds (approximately 10 to 15 years after the year 2050). Ultimately, the fund will merge with Fidelity Freedom Income Fund. the volatility of diversified in the market. HRI-SUBS Rev. 2 Page 10 of 15

11 The following chart provides the one-year rates of return for each of the past three fiscal years for each of investment funds offered as investment options under the Plan. INVESTMENT FUNDS RATE OF RETURN AS OF 12/31/09 RATE OF RETURN AS OF 12/31/10 RATE OF RETURN AS OF 12/31/11 Fidelity Freedom K Income Fund# N/A 7.68% 2.12% Fidelity Freedom K 2000 Fund# N/A 7.91% 2.07% Fidelity Freedom K 2005 Fund# N/A 10.64% 0.36% Fidelity Freedom K 2010 Fund# N/A 11.77% -0.19% Fidelity Freedom K 2015 Fund# N/A 11.93% -0.34% Fidelity Freedom K 2020 Fund# N/A 13.07% -1.24% Fidelity Freedom K 2025 Fund# N/A 13.89% -2.50% Fidelity Freedom K 2030 Fund# N/A 14.18% -3.09% Fidelity Freedom K 2035 Fund# N/A 14.72% -4.53% Fidelity Freedom K 2040 Fund# N/A 14.79% -4.64% Fidelity Freedom K 2045 Fund# N/A 14.97% -4.95% Fidelity Freedom K 2050 Fund# N/A 15.06% -5.50% Vanguard Retirement Savings Trust 3.19% 3.19% 3.15% PIMCO Total Return 13.8% 8.83% 4.16% Fidelity Equity Income 29.54% 15.13% -4.68% Vanguard Institutional Index Fund - Institutional Class 26.63% 15.05% 2.09% Harbor Capital Appreciation Instl CL * N/A N/A 0.61% Columbia Acorn Fund - Class Z 39.65% 26.00% -4.61% William Blair Mid-Cap Growth CL I * N/A N/A 1.78% American Funds Group EuroPacific Growth Fund - Class R % 9.72% % Progress Energy Stock Fund 12.14% 8.68% 22.55% # - Added to Plan 02/09/2011 * - Added to Plan 12/28/2011 HRI-SUBS Rev. 2 Page 11 of 15

12 MORE INFORMATION ABOUT THE PROGRESS ENERGY STOCK FUND AUTHORIZED COPY The Progress Energy Stock Fund holds Company common stock almost exclusively. To facilitate daily transactions, it uses unitized accounting. Under unitized accounting, 97 percent to 99 percent of fund assets are held in Company common stock and the balance is a cash reserve. The cash reserve provides the liquidity necessary to process daily fund transactions by the close of market each business day. The value of an account in this fund is based on the same proportions of Progress Energy common stock and cash reserve as the total amounts held by the fund. For example, 99 percent of your account may be invested in Progress Energy common stock and the remaining one percent represents your share of the cash reserve. Dividends in the fund are paid on the amount attributable to Progress Energy common stock. You earn interest on your share of the cash reserve. Your account value is expressed as "equivalent shares." Equivalent shares represent the total value (shares and cash reserve combined) of your account, divided by the current market price of Progress Energy common stock. For example, if your total account value is $40,000 ($39,600 in stock value and $400 in cash reserve) and the current Progress Energy stock price is $40, you would have 1,000 equivalent shares. $40,000 $40 = 1,000 equivalent shares When you receive a distribution, equivalent shares are converted into an equal number of shares of Progress Energy common stock. That means if you take a full distribution and you have 1,000 equivalent shares, you will receive 1,000 shares of Progress Energy common stock. When you access your account through the Fidelity NetBenefits website or the Progress Energy 401(k) Service Center at Fidelity, the information you receive will include both the market value of your account and the current number of equivalent shares you hold. Voting and Tendering Participants have the right, and will be given the opportunity, to instruct the trustee of the Plan, which we refer to as the Trustee, how to vote Participant Directed Shares as of the record date for any meeting of our shareholders. Participant Directed Shares represent that portion of the Progress Energy Stock Fund attributable to each participant based on the equivalent shares held in each participant s account. Voting instructions will be made according to the procedure prescribed by the Plan Administrative Committee in consultation with the Trustee, and will remain in the strict confidence of the Trustee. The Trustee will not vote any Participant Directed Shares for which no voting instructions were received. Company stock remaining in the ESOP Stock Suspense Account will be voted in the same proportion as Participant Directed Shares, except as otherwise required under ERISA. Every participant also has the right to instruct the Trustee in writing regarding a response to a tender or exchange offer for any or all Participant Directed Shares. We will, with the Trustee, notify each participant about any tender or exchange offers, and will use our best effort to ensure that each participant also receives the information other shareholders receive about the tender or exchange offer. Once the Trustee receives instructions with respect to tender or exchange offers, the Trustee will tender or exchange shares accordingly. Proceeds of tenders will be transferred to an investment account according to the written instructions of the participant. In the absence of instructions, the Trustee will not tender any shares. Company stock remaining in the ESOP Stock Suspense Account will be tendered or exchanged as determined by the Trustee. Participants will be considered Named Fiduciaries under ERISA with respect to instructions and directions for the tender or exchange of Participant Directed Shares. Fund Management The Progress Energy Stock Fund will use available cash from contributions and dividends to purchase Progress Energy common stock on the open market or authorized but unissued shares of Progress Energy common stock from the Company. The purchase price of the shares of Company common stock acquired on the open market for employee accounts will be the weighted average price of all shares of Company common stock purchased under the Plan during the applicable Investment Period. HRI-SUBS Rev. 2 Page 12 of 15

13 An Investment Period with respect to shares purchased with employee payroll deductions together with matching allocations of the Company is one pay period, running from the payroll date deductions are taken to the day before the following payroll date. An Investment Period with respect to shares purchased either with special cash contributions of the Company or with the reinvestment of cash dividends is the 30-day period beginning on the third business day prior to (i) the dividend payment date, or (ii) the date on which the Company makes a special cash contribution. Shares of common stock purchased on the open market will be credited to participating employees accounts as of the last day of the Investment Period or as of any earlier date on which all purchases for the Investment Period are completed. If funds to be invested in Company common stock are used to purchase authorized but unissued common stock directly from the Company, the purchase price on the date of purchase will be the prior night s volume weighted average price of common shares of Progress Energy, Inc. traded on the New York Stock Exchange, without any commission expense. 13,381,409 shares of Progress Energy common stock are registered and available for purchase under the Progress Energy Stock Fund. The number of shares of authorized but unissued Company common stock reserved for issuance and sale by the Company to the Plan will be determined by the Company s Board of Directors from time to time. PROGRESS ENERGY STOCK FUND RESALE RESTRICTIONS We have filed a registration statement with the SEC to register the shares of Company common stock offered under the Progress Energy Stock Fund in the Plan. If you are not an affiliate of Progress Energy, you may resell shares of Company common stock acquired under the Plan, subject to the terms of any applicable lock-up agreement or other specific resale restrictions. If you are an affiliate of Progress Energy, you may resell the Company common stock acquired under the Plan only in compliance with all of the provisions of Securities Act of 1933 Rule 144, other than the holding period requirement, or pursuant to a separate registration for the sale of such shares. We have not filed a reoffer prospectus as a part of the registration statement covering the Plan. Resales by affiliates are also subject to any applicable lock-up agreement or other specific resale restrictions. An affiliate of Progress Energy is a person that directly or indirectly through one or more intermediaries, controls, or is controlled by, or is under common control with, Progress Energy. Executive officers and directors of Progress Energy may be deemed to be affiliates for this purpose. In general, under Rule 144, an affiliate is entitled to sell within any three-month period a number of shares of stock, including shares of stock received outside of the Plan, that do not exceed the greater of the following: One percent of the then-outstanding shares of stock of the issuer; The average weekly reported trading volume of the stock on all national securities exchanges and/or reported through the automated quotation system of a registered securities association during the four calendar weeks preceding the sale; or The average weekly trading volume of the stock reported through the consolidated transaction reporting system contemplated by Rule 11Aa3-1 under the Exchange Act during the four calendar weeks preceding the sale. HRI-SUBS Rev. 2 Page 13 of 15

14 WHERE YOU CAN FIND MORE INFORMATION AUTHORIZED COPY Annual, quarterly and current reports, proxy statements, and other information are filed annually with the SEC. This information is available on the SEC s website at You may also read and copy this information at the following address: Securities and Exchange Commission 100 F. St., NE Room 1580 Washington, D.C You can call the SEC at the for more information about the public reference room and their copy charges. We filed a registration statement with the SEC under the Securities Act relating to the Company common stock and interests offered pursuant to the Plan. The registration statement contains additional information about us and our securities. The SEC allows us to omit certain information included in the registration statement from the prospectus materials. You may inspect and copy the registration statement at the SEC s public reference facilities described above. The SEC allows us to incorporate by reference into the prospectus certain information that we file with them, which means that we can disclose important information by referring you to those documents. The information incorporated by reference is considered to be part of the prospectus, and information that we file later with the SEC will automatically update and supersede the information contained in the prospectus documents. We incorporate the following documents by reference into the prospectus, as of the date of their filing: Our annual report on Form 10-K for the fiscal year ended December 31, 2011; All other reports filed by us pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended (the Exchange Act), since December 31, 2007; All reports filed by the Plan pursuant to Section 13(a) or 15(d) of the Exchange Act since December 31, 2007; The description of our common stock contained in the registration statement filed with the SEC on Form S-4 (File No ), dated August 31, 1999, and incorporated by reference in our Form 8-A filed June 6, 2000 (File No ), including any amendment or report filed for the purpose of updating such description; and All other documents subsequently filed by the Company pursuant to Section 13(a), 13(c), 14 and 15(d) of the Exchange Act prior to the filing of a post-effective amendment to the registration statement relating to this prospectus that indicates that all securities offered have been sold or that deregisters all securities that remain unsold. Any statement contained in a document incorporated or deemed incorporated herein by reference shall be deemed to be modified or superseded for the purpose of this prospectus to the extent that a statement contained herein or in any subsequently filed document which also is, or is deemed to be, incorporated herein by reference modifies or supersedes such statement. Any such statement so modified or super-seded shall not be deemed, except as so modified or superseded, to constitute a part of this prospectus. HRI-SUBS Rev. 2 Page 14 of 15

15 You should rely only on the information contained in or incorporated by reference in this prospectus. We have not authorized anyone to provide you with different information. We are not making an offer of common stock in any jurisdiction where the offer is not permitted. You should not assume that the information contained in or incorporated by reference in this prospectus is accurate as of any later date. You may request a copy of our latest annual report to shareholders, the Plan s annual report and any of the documents incorporated by reference in this prospectus, at no cost, by writing or calling us at the following address and telephone number: Progress Energy Employee Service Center 410 S. Wilmington Street Raleigh, NC In addition, we will deliver to all participants in the Plan who do not otherwise receive such material copies of all reports, proxy statements, and other communications that we distribute to our stockholders generally. HRI-SUBS Rev. 2 Page 15 of 15