Progress Energy 2004 Annual Report Download - page 110

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24. SUBSEQUENT EVENTS
Sale of Progress Rail
On February 18, 2005, the Company announced it has
entered into a definitive agreement to sell Progress Rail to
One Equity Partners LLC, a private equity firm unit of J.P.
Morgan Chase & Co. Gross cash proceeds from the
transaction will be $405 million, subject to working capital
adjustments. The sale is expected to close by mid-2005, and
is subject to various closing conditions customary to such
transactions. Proceeds from the sale are expected to be
used to reduce debt. The Company expects to report
Progress Rail as a discontinued operation in the first
quarter of 2005. The carrying amounts for the assets and
liabilities of the discontinued operations disposal group
included in the Consolidated Balance Sheets as of
December 31, are as follows:
Cost-Management Initiative
On February 28, 2005, as part of a previously announced
cost-management initiative, the executive officers of the
Company approved a workforce restructuring. The
restructuring will result in a reduction of approximately
450 positions and is expected to be completed in
September 2005. The cost-management initiative is
designed to permanently reduce by $75 million to
$100 million the projected growth in the Company’s annual
operation and maintenance expenses by the end of 2007. In
addition to the workforce restructuring, the cost-
management initiative includes a voluntary enhanced
retirement program.
In connection with the 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,
and 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.
Approximately 3,500 of the Company’s 15,700 employees
are eligible to participate in the voluntary enhanced
retirement program. The total cost-management initiative
charges could change significantly depending upon how
many eligible employees elect early retirement under the
voluntary enhanced retirement program and the salary,
service years and age of such employees.
108
Notes to Consolidated Financial Statements
(in millions)
2004 2003
Total current assets $378 $373
Total property, plant & equipment (net) 173 151
Total other assets 40 77
Total current liabilities 156 114
Total long-term liabilities 33
Total capitalization 432 484