Progress Energy 2004 Annual Report Download - page 43

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associated with this legislation, which is included in the
table above (See Note 22).
All projected capital and investment expenditures are
subject to periodic review and revision and may vary
significantly depending on a number of factors including,
but not limited to, industry restructuring, regulatory
constraints, market volatility and economic trends.
Other Cash Needs
As of December 31, 2004, on a consolidated basis, the
Company had $349 million of long-term debt maturing in
2005. Progress Energy expects to pay these maturities
using funds from operations, issuance of new long-term
debt, commercial paper borrowings and/or issuance of
new equity securities.
In 2006, $800 million of Progress Energy senior
unsecured notes will mature. The Company expects to
fund the maturity using proceeds from the sale of the
Progress Rail subsidiary, issuance of new long-term
debt, commercial paper borrowings and/or issuance of
new equity securities.
During the fourth quarter of 2004, Progress Energy
announced the launch of a new cost-management
initiative aimed at achieving nonfuel O&M expense
reductions of $75 million to $100 million annually by the
end of 2007. In connection with this cost-management
initiative, the Company expects to incur one-time pre-tax
charges of approximately $130 million. Approximately
$30 million of that amount relates to payments for
severance benefits, which will be recognized in the first
quarter of 2005 and paid over time. The remaining
approximately $100 million will be recognized in the
second quarter of 2005 and relates primarily to
postretirement benefits that will be paid over time to
those eligible employees who elect to participate in the
voluntary enhanced retirement program (See Note 24).
Credit Facilities
At December 31, 2004, the Company and its subsidiaries
had committed lines of credit and outstanding balances
as shown in the table in Note 13. All of the credit facilities
supporting the credit were arranged through a
syndication of financial institutions. There are no
bilateral contracts associated with these facilities.
The Company’s financial policy precludes issuing
commercial paper in excess of its supporting lines of
credit. At December 31, 2004, the Company had
$424 million of commercial paper outstanding, $150 million
reserved for backing of letters of credit and an additional
$475 million drawn directly from the credit facilities,
leaving $931 million available for issuance or drawdown.
In addition, the Company has requirements to pay
minimal annual commitment fees to maintain its credit
facilities. At December 31, 2003, the Company had
$4 million of commercial paper outstanding. The
Company expects to continue to use commercial paper
issuances as a source of liquidity as long as it maintains
its current short-term ratings.
All of the credit facilities include a defined maximum
total debt-to-total capital ratio (leverage) and coverage
ratios. The Company is in compliance with these
covenants at December 31, 2004. See Note 13 for a
discussion of the credit facilities’ financial covenants,
material adverse change clause provisions and cross-
default provisions. At December 31, 2004, the calculated
ratios for the companies, pursuant to the terms of the
agreements, are as disclosed in Note 13.
Both PEC and PEF plan to enter into new five-year lines
of credit in 2005 to replace their existing credit facilities.
The Company has on file with the SEC a shelf registration
statement under which senior notes, junior debentures,
common and preferred stock and other trust preferred
securities are available for issuance by the Company.
At December 31, 2004, the Company had approximately
$1.1 billion available under this shelf registration.
Progress Energy and PEF each have an uncommitted
bank bid facility authorizing each of them to borrow and
reborrow, and have loans outstanding at any time, up to
$300 million and $100 million, respectively. At
December 31, 2004, there were no outstanding loans
against these facilities.
PEC currently has on file with the SEC a shelf registration
statement under which it can issue up to $900 million of
various long-term securities. PEF currently has on
file registration statements under which it can issue
an aggregate of $750 million of various long-term
debt securities.
Both PEC and PEF can issue First Mortgage Bonds under
their respective First Mortgage Bond indentures. At
December 31, 2004, PEC and PEF could issue up to
$2.9 billion and $3.7 billion, respectively, based on
property additions and $2.2 billion and $176 million,
respectively, based upon retirements.
41
Progress Energy Annual Report 2004