-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: keymaster@town.hall.org Originator-Key-Asymmetric: MFkwCgYEVQgBAQICAgADSwAwSAJBALeWW4xDV4i7+b6+UyPn5RtObb1cJ7VkACDq pKb9/DClgTKIm08lCfoilvi9Wl4SODbR1+1waHhiGmeZO8OdgLUCAwEAAQ== MIC-Info: RSA-MD5,RSA, M+DTkdOdSCB9aA0Gd3MQyUtCzFVXLlenZy0vDbuDVFKwOUor/8f40Yb7Sk3/Ok+/ Z002D8SYCssu5FL3T2m+vw== 0000075594-95-000013.txt : 19950814 0000075594-95-000013.hdr.sgml : 19950814 ACCESSION NUMBER: 0000075594-95-000013 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 5 CONFORMED PERIOD OF REPORT: 19950630 FILED AS OF DATE: 19950811 SROS: NYSE SROS: PSE FILER: COMPANY DATA: COMPANY CONFORMED NAME: PACIFICORP /OR/ CENTRAL INDEX KEY: 0000075594 STANDARD INDUSTRIAL CLASSIFICATION: ELECTRIC & OTHER SERVICES COMBINED [4931] IRS NUMBER: 930246090 STATE OF INCORPORATION: OR FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 001-05152 FILM NUMBER: 95561384 BUSINESS ADDRESS: STREET 1: 700 NE MULTNOMAH STE 1600 CITY: PORTLAND STATE: OR ZIP: 97232 BUSINESS PHONE: 5037312000 FORMER COMPANY: FORMER CONFORMED NAME: PACIFICORP /ME/ DATE OF NAME CHANGE: 19890628 FORMER COMPANY: FORMER CONFORMED NAME: PC/UP&L MERGING CORP DATE OF NAME CHANGE: 19890628 10-Q 1 UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-Q /X/ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended June 30, 1995 _____________ OR / / TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from _______________ to _______________ Commission file number 1-5152 ______ PACIFICORP (Exact name of registrant as specified in its charter) STATE OF OREGON 93-0246090 (State or other jurisdiction (I.R.S. Employer of incorporation or organization) Identification No.) 700 N.E. Multnomah Suite 1600 Portland, Oregon 97232-4116 (Address of principal executive offices) (Zip code) 503-731-2000 (Registrant's telephone number) Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding twelve months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for at least the past 90 days. YES X NO _____ _____ At July 31, 1995, there were 284,276,709 shares of registrant's common stock outstanding. 1 PACIFICORP Page No. ________ PART I. FINANCIAL INFORMATION 2 Item 1. Financial Statements 2 Condensed Consolidated Statements of Income and Retained Earnings 2 Condensed Consolidated Balance Sheets 3 Condensed Consolidated Statements of Cash Flows 5 Notes to Condensed Consolidated Financial Statements 7 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations 9 PART II. OTHER INFORMATION 24 Item 1. Legal Proceedings 24 Item 4. Submission of Matters to a Vote of Security Holders 25 Item 6. Exhibits and Reports on Form 8-K 26 Signature 27 2 PART I. FINANCIAL INFORMATION Item 1. Financial Statements PACIFICORP CONDENSED CONSOLIDATED STATEMENTS OF INCOME AND RETAINED EARNINGS (Millions of Dollars, except per share amounts) (Unaudited)
Three Months Ended Six Months Ended June 30, June 30, __________________ _________________ 1995 1994 1995 1994 ______ ______ ______ ______ REVENUES $ 807.9 $ 836.1 $1,662.1 $1,701.4 _______ _______ _______ _______ EXPENSES Operations 298.6 336.1 620.2 678.6 Maintenance 83.5 83.7 150.6 149.3 Administrative and general 63.2 62.2 122.5 122.5 Depreciation and amortization 113.0 112.0 223.2 217.7 Taxes, other than income taxes 32.0 31.8 63.6 63.6 _______ _______ _______ _______ TOTAL 590.3 625.8 1,180.1 1,231.7 _______ _______ _______ _______ INCOME FROM OPERATIONS 217.6 210.3 482.0 469.7 _______ _______ _______ _______ INTEREST EXPENSE AND OTHER Interest expense 115.7 83.3 199.0 167.7 Interest capitalized (4.0) (3.0) (7.4) (7.6) Minority interest and other (13.2) (7.4) (10.9) (11.6) _______ _______ _______ _______ TOTAL 98.5 72.9 180.7 148.5 _______ _______ _______ _______ Income before income taxes 119.1 137.4 301.3 321.2 Income taxes 25.6 48.1 93.0 111.4 _______ _______ _______ _______ NET INCOME 93.5 89.3 208.3 209.8 RETAINED EARNINGS BEGINNING OF PERIOD 502.2 386.0 474.3 351.3 Cash dividends declared Preferred stock (9.9) (9.9) (20.2) (19.8) Common stock per share: 1995 and 1994/$.27 (76.7) (76.4) (153.3) (152.3) _______ _______ _______ _______ RETAINED EARNINGS END OF PERIOD $ 509.1 $ 389.0 $ 509.1 $ 389.0 _______ _______ _______ _______ _______ _______ _______ _______ EARNINGS ON COMMON STOCK (Net income less preferred dividend requirement) $ 83.3 $ 79.3 $ 188.0 $ 190.1 Average number of common shares outstanding (Thousands) 284,277 282,445 284,268 281,950 EARNINGS PER COMMON SHARE $ .29 $ .28 $ .66 $ .67 See accompanying Notes to Condensed Consolidated Financial Statements
3 PACIFICORP CONDENSED CONSOLIDATED BALANCE SHEETS (Millions of Dollars) (Unaudited) ASSETS
June 30, December 31, 1995 1994 ________ ____________ PROPERTY, PLANT AND EQUIPMENT Electric $10,719.3 $10,577.2 Telecommunications 1,818.0 1,572.7 Other 65.0 64.9 Accumulated depreciation and amortization (4,360.6) (4,136.9) ________ ________ Net 8,241.7 8,077.9 Construction work in progress 390.8 368.3 ________ ________ TOTAL PROPERTY, PLANT AND EQUIPMENT 8,632.5 8,446.2 ________ ________ CURRENT ASSETS Cash and cash equivalents 41.6 23.3 Accounts receivable less allowance for doubtful accounts: 1995/$7.9 and 1994/$9.4 404.8 442.7 Materials, supplies and fuel stock at average cost 229.4 193.2 Inventory 65.0 66.3 Finance assets 28.5 27.9 Other 44.8 62.0 ________ ________ TOTAL CURRENT ASSETS 814.1 815.4 ________ ________ OTHER ASSETS Investments in and advances to affiliated companies 191.3 189.9 Intangible assets - net 311.0 237.2 Regulatory assets - net 1,084.8 1,081.2 Finance note receivable 218.3 220.7 Finance assets 450.2 481.9 Real estate investments 168.7 166.5 Deferred charges and other 205.1 206.6 ________ ________ TOTAL OTHER ASSETS 2,629.4 2,584.0 ________ ________ TOTAL ASSETS $12,076.0 $11,845.6 ________ ________ ________ ________ See accompanying Notes to Condensed Consolidated Financial Statements
4 PACIFICORP CONDENSED CONSOLIDATED BALANCE SHEETS (Millions of Dollars) (Unaudited) CAPITALIZATION AND LIABILITIES
June 30, December 31, 1995 1994 ________ ____________ COMMON EQUITY Common shareholder capital shares authorized 750,000,000; shares outstanding: 1995/284,276,709 and 1994/284,251,024 $ 3,009.9 $ 3,010.6 Retained earnings 509.1 474.3 Guarantees of Employee Stock Ownership Plan borrowings (18.2) (25.1) ________ ________ TOTAL COMMON EQUITY 3,500.8 3,459.8 ________ ________ PREFERRED STOCK 367.4 367.4 ________ ________ PREFERRED STOCK SUBJECT TO MANDATORY REDEMPTION 219.0 219.0 ________ ________ LONG-TERM DEBT AND CAPITAL LEASE OBLIGATIONS 3,855.0 3,768.2 ________ ________ CURRENT LIABILITIES Long-term debt and capital lease obligations currently maturing 142.3 95.8 Notes payable and commercial paper 557.4 454.7 Accounts payable 276.9 338.4 Taxes, interest and dividends payable 236.8 253.3 Customer deposits and other 120.2 126.8 ________ ________ TOTAL CURRENT LIABILITIES 1,333.6 1,269.0 ________ ________ DEFERRED CREDITS Income taxes 1,854.2 1,822.6 Investment tax credits 168.5 190.1 Other 667.5 641.6 ________ ________ TOTAL DEFERRED CREDITS 2,690.2 2,654.3 ________ ________ MINORITY INTEREST 110.0 107.9 ________ ________ COMMITMENTS AND CONTINGENCIES (See Notes 1 and 2) TOTAL CAPITALIZATION AND LIABILITIES $12,076.0 $11,845.6 ________ ________ ________ ________ See accompanying Notes to Condensed Consolidated Financial Statements
5 PACIFICORP CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Millions of Dollars) (Unaudited)
Six Months Ended June 30, _______________________ 1995 1994 ______ ______ CASH FLOWS FROM OPERATING ACTIVITIES Net income $ 208.3 $ 209.8 Adjustments to reconcile net income to net cash provided by operating activities Depreciation and amortization 237.0 236.8 Deferred income taxes and investment tax credits - net 5.1 32.1 Interest capitalized on equity funds .2 (1.5) Minority interest and other 22.1 10.1 Accounts receivable and prepayments 44.9 43.5 Materials, supplies, fuel stock and inventory (33.8) (.6) Accounts payable and accrued liabilities (54.8) (14.6) ______ ______ NET CASH PROVIDED BY OPERATING ACTIVITIES 429.0 515.6 ______ ______ CASH FLOWS FROM INVESTING ACTIVITIES Construction (299.1) (362.9) Assets acquired (197.9) - Proceeds from sales of assets 36.1 4.0 Proceeds from sales of finance assets and principal payments 33.5 137.2 Other 2.7 (29.2) ______ ______ NET CASH USED IN INVESTING ACTIVITIES (424.7) (250.9) ______ ______ See accompanying Notes to Condensed Consolidated Financial Statements
6 PACIFICORP CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Millions of Dollars) (Unaudited)
Six Months Ended June 30, _______________________ 1995 1994 ______ ______ CASH FLOWS FROM FINANCING ACTIVITIES Changes in short-term debt 102.7 (26.0) Proceeds from long-term debt 226.1 8.6 Proceeds from issuance of common stock 1.9 34.8 Dividends paid (172.6) (171.9) Repayments of long-term debt and capital lease obligations (97.8) (99.2) Redemptions of capital stock (1.4) - Other (44.9) (24.1) ______ ______ NET CASH PROVIDED (USED) BY FINANCING ACTIVITIES 14.0 (277.8) ______ ______ INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS 18.3 (13.1) CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD 23.3 31.2 ______ ______ CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 41.6 $ 18.1 ______ ______ ______ ______ SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION Cash paid during the period for Interest $ 215.5 $ 191.9 Income taxes net of refunds 130.8 83.6 See accompanying Notes to Condensed Consolidated Financial Statements
7 NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) June 30, 1995 1. FINANCIAL STATEMENTS The accompanying unaudited condensed consolidated financial statements as of June 30, 1995 and December 31, 1994 and for the periods ended June 30, 1995 and 1994, in the opinion of management, include all adjustments, constituting only normal recording of accruals, necessary for a fair presentation of financial position, results of operations and cash flows for such periods. A significant part of the business of PacifiCorp (the "Company") is of a seasonal nature; therefore, results of operations for the periods ended June 30, 1995 and 1994 are not necessarily indicative of the results for a full year. These condensed consolidated financial statements should be read in conjunction with the financial statements and related notes incorporated by reference in the Company's 1994 Annual Report on Form 10-K. The condensed consolidated financial statements of the Company encompass two businesses primarily of a utility nature -- Electric Operations (Pacific Power and Utah Power) and an 87%-owned Telecommunications operation (Pacific Telecom, Inc.); and a wholly owned Financial Services business (PacifiCorp Financial Services, Inc.). The Company's wholly owned subsidiary, PacifiCorp Holdings, Inc. ("Holdings"), holds all of the Company's nonelectric utility investments. Together these businesses are referred to herein as the Companies. Significant intercompany transactions and balances have been eliminated. On March 9, 1995, Holdings entered into an agreement and plan of merger with Pacific Telecom, Inc. ("Pacific Telecom") under which Holdings would acquire the 13% publicly held minority interest in Pacific Telecom for $30 per share. The merger requires approval by the holders of a majority of the outstanding shares of Pacific Telecom not owned by Holdings (5.3 million shares), and is subject to regulatory approvals and other conditions customary to such transactions. In July 1995, Pacific Telecom reported that a Special Committee of its Board of Directors was conducting a review of certain aspects regarding one of the proposed acquisitions of additional local exchange assets being considered by Pacific Telecom. The Special Committee has completed this review and reaffirmed its previous unanimous recommendation to the Board of Directors of Pacific Telecom in favor of the proposed merger transaction as being fair to, and in the best interests of, Pacific Telecom's public minority shareholders. Pacific Telecom has filed with the Securities and Exchange Commission (the "SEC") revised preliminary proxy materials relating to its annual meeting of shareholders, at which time the proposed merger transaction will be presented for approval. Pacific Telecom is awaiting further comments or confirmation of no additional comments from the SEC. Investments in and advances to affiliated companies represent investments in unconsolidated affiliated companies carried on the equity basis, which approximates the Company's equity in their underlying net book value. Certain amounts from the prior period have been reclassified to conform with the 1995 method of presentation. Finance interest of $7.7 million in the second quarter of 1994 and $17 million in the six months ended June 30, 1994 were 8 reclassified from operating expense to interest expense. Reclassifications had no effect on previously reported consolidated net income. 2. CONTINGENT LIABILITIES The Company and its subsidiaries are parties to various legal claims, actions and complaints, certain of which involve material amounts. Although the Company is unable to predict with certainty whether or not it will ultimately be successful in these legal proceedings or, if not, what the impact might be, management presently believes that disposition of these matters will not have a materially adverse effect on the Company's consoli- dated financial position or results of operations. During the second quarter of 1995, the Company and the Internal Revenue Service (the "IRS") agreed on a settlement of substantially all issues related to the IRS examination of the Company's federal income tax returns for the years 1983 through 1988, including matters relating to the Company's abandonment of its 10% interest in Washington Public Power Supply System Unit No. 3 ("WPPS 3"). The settlement had no effect on consolidated net income. The Company's 1989 and 1990 federal income tax returns are currently under examination by the IRS. As previously reported, several Superfund sites have been identified where the Company has been or may be designated as a potentially responsible party. Future costs associated with the disposition of these matters are not expected to be material to the Company's consolidated financial position or results of operations. 3. SUBSEQUENT EVENT On August 7, 1995, Pacific Telecom closed the sale of the stock of Alascom, Inc. ("Alascom") to AT&T Corp. ("AT&T"), in a transaction providing $366 million in proceeds. Under terms of the agreement, AT&T paid $291 million in cash for the Alascom stock and for settlement of all past cost study issues. AT&T has also agreed to allow Pacific Telecom to retain the $75 million transition payment made by AT&T to Alascom in July 1994 pursuant to a Federal Communications Commission ("FCC") order. AT&T made a down payment of $30 million to Pacific Telecom upon signing the stock purchase agreement in October 1994. The remaining $261 million was paid when the transaction closed. Summarized income statement data for Alascom is as follows:
Six Months Second Quarter Ended June 30, ______________ ________________ 1995 1994 1995 1994 ____ ____ ____ ____ (In Millions) Revenues $82.4 $81.7 $164.3 $159.7 Income from operations 15.1 15.7 30.4 30.8
Cash increased approximately $25 million in the six-month period ended June 30, 1995 due to the sale agreement which does not allow transfers of cash from Alascom to Pacific Telecom. 9 Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS SUMMARY RESULTS OF OPERATIONS
Six Months Percentage Ended Percentage Second Quarter Increase/ June 30, Increase/ ________________ _______________ 1995 1994 (Decrease) 1995 1994 (Decrease) ____ ____ __________ ____ ____ __________ (Dollars in Millions, except per share) Revenues $ 807.9 $ 836.1 (3)% $1,662.1 $1,701.4 (2)% _______ ______ _______ _______ Income from operations (1) 217.6 210.3 3 482.0 469.7 3 _______ ______ _______ _______ Net income 93.5 89.3 5 208.3 209.8 (1) _______ ______ _______ _______ Earnings contribution on common stock (2) Electric Operations 22.5 56.0 (60) 103.2 145.8 (29) Telecommunications 17.7 15.2 16 32.1 28.9 11 Other 43.1 8.1 * 52.7 15.4 * _______ ______ _______ _______ Total $ 83.3 $ 79.3 5 $ 188.0 $ 190.1 (1) _______ ______ _______ _______ _______ ______ _______ _______ Earnings per common share $ .29 $ .28 4 $ .66 $ .67 (1) Average number of common shares outstanding (thousands) 284,277 282,445 1 284,268 281,950 1 *Not a meaningful number. (1) Finance interest of $7.7 million in the second quarter of 1994 and $17 million in the six months ended June 30, 1994 was reclassified from operating expense to interest expense. Reclassifications had no effect on previously reported consolidated net income. (2) Earnings contribution on common stock by segment: (a) does not reflect elimination for interest on intercompany borrowing arrangements; (b) includes income taxes on a separate company basis, with any benefit or detriment of consolidation reflected in Other; (c) amounts are net of preferred dividend requirements and minority interest.
Comparison of the second quarters of 1995 and 1994 __________________________________________________ . Earnings contribution on common stock increased $4 million or 5%. .. Electric Operations' earnings contribution decreased $34 million or 60% primarily due to the $32 million settlement with the IRS, relating to the abandonment of WPPS 3 and the resolution of substantially all other tax issues for the years 1983 through 1988. Lower revenues, resulting from depressed conditions in the wholesale market and the impact of cool, wet weather on sales to irrigation customers, and increased depreciation and interest expenses were largely offset by significant reductions in fuel and purchased power expenses and increased other income. .. Telecommunications' earnings contribution increased $3 million or 16% due to the February 1995 acquisition of local exchange assets in Colorado, revised local exchange revenue estimates for prior years and growth in existing local exchange and cellular operations. The operating income 10 improvements were partially offset by increased interest expense due to the issuance of short-term debt for the acquisition in Colorado. .. The earnings contribution of other businesses increased $35 million primarily due to the release of $32 million of tax accruals relating to issues contained in the settlement with the IRS. The remaining $3 million increase was primarily due to reduced interest expense resulting from lower debt levels. . The average number of common shares outstanding rose 1% due to the issuances under dividend reinvestment and employee stock ownership plans. In November 1994, the Company ceased issuing new shares to meet the requirements under the plans. The Company periodically evaluates the advantages of common share issuances in the context of its current capital structure, financing needs and market price and may consider future issuances. Comparison of the six-month periods ended June 30, 1995 and 1994 ________________________________________________________________ . Earnings contribution on common stock decreased $2 million or 1%. .. Electric Operations' earnings contribution decreased $43 million or 29% primarily due to the $32 million relating to the IRS settlement described above. Excluding this settlement, the earnings contribution decreased $10 million or 7%. Lower prices and volumes sold in the wholesale market resulting from increased competition and mild temperatures in the region and lower sales to industrial customers were offset by significant reductions in fuel and purchased power expenses. Increased depreciation, administrative and general and interest expenses were partially offset by decreased maintenance expense and increased nonoperating income. .. Telecommunications' earnings contribution increased $3 million or 11% due to the acquisition of local exchange assets in Colorado, revised local exchange revenue estimates for prior years and growth in existing local exchange and cellular operations, partially offset by increased interest expense resulting from higher levels of short-term debt outstanding. .. The earnings contribution of other businesses increased $37 million primarily due to the release of tax accruals of $32 million relating to the settlement with the IRS described above and reduced interest expense resulting from lower debt levels. . The average number of common shares outstanding rose 1% due to the same factors described above. 11 RESULTS OF OPERATIONS Electric Operations ___________________
Six Months Percentage Ended Percentage Second Quarter Increase/ June 30, Increase/ ________________ _______________ 1995 1994 (Decrease) 1995 1994 (Decrease) ____ ____ __________ ____ ____ __________ (Dollars in Millions) Revenues Residential $151.0 $145.6 4% $ 358.0 $ 353.7 1% Commercial 134.7 134.9 - 276.9 274.3 1 Industrial 171.9 186.2 (8) 337.2 354.7 (5) Other 7.4 7.7 (4) 14.7 15.1 (3) _____ _____ _______ _______ Retail sales 465.0 474.4 (2) 986.8 997.8 (1) Wholesale sales 113.4 123.0 (8) 225.5 241.7 (7) Other 14.5 15.5 (6) 29.1 27.2 7 _____ _____ _______ _______ Total 592.9 612.9 (3) 1,241.4 1,266.7 (2) Operating expenses 432.9 448.5 (3) 872.9 891.9 (2) _____ _____ _______ _______ Income from operations 160.0 164.4 (3) 368.5 374.8 (2) Interest expense 99.1 66.8 48 167.8 132.7 26 Other income - net (15.0) (6.6) (127) (20.8) (16.9) (23) Income taxes 43.2 38.2 13 98.0 93.5 5 _____ _____ _______ _______ Net income 32.7 66.0 (50) 123.5 165.5 (25) Preferred dividend requirement 10.2 10.0 2 20.3 19.7 3 _____ _____ _______ _______ Earnings contribution $ 22.5 $ 56.0 (60) $ 103.2 $ 145.8 (29) _____ _____ _______ _______ _____ _____ _______ _______ Energy sales (millions of kWh) Residential 2,602 2,494 4 6,068 5,976 2 Commercial 2,508 2,498 - 5,148 5,065 2 Industrial 4,859 5,258 (8) 9,556 9,942 (4) Other 142 152 (7) 291 305 (5) _____ _____ _______ _______ Retail sales 10,111 10,402 (3) 21,063 21,288 (1) Wholesale sales 3,240 3,414 (5) 6,524 6,951 (6) _____ _____ _______ _______ Total 13,351 13,816 (3) 27,587 28,239 (2) _____ _____ _______ _______ _____ _____ _______ _______ Residential average usage (kWh) 2,243 2,183 3 5,229 5,238 - Total customers (end of period) 1,356,784 1,340,174 1 1,356,784 1,340,174 1
Comparison of the second quarters of 1995 and 1994 __________________________________________________ . Revenues decreased $20 million or 3%. .. Residential revenues increased $5 million or 4% primarily due to a 4% increase in kWh volume sold. Cooler temperatures and a 2% increase in the average number of residential customers increased revenues $4 million and $3 million, respectively. The cooler weather favorably affected heating demand in April and May, while adversely affecting air conditioning demand in June. .. Industrial revenues decreased $14 million or 8% due to an 8% decrease in kWh volume sold. The decreases were primarily due to a $9 million decrease in sales to irrigation customers resulting from increased rainfall and mild temperatures in 1995 and a $6 million revenue reduction resulting from lower volumes sold to Wyoming oil and gas customers, including $4 million from permanent well closures. Higher special contract revenues of $2 million partially offset these decreases. .. Wholesale revenues decreased $10 million or 8% and kWh volume decreased 5%. Spot and short-term market revenues declined $8 million due to lower prices resulting from increased competition, surplus hydro generation 12 in the region and low natural gas prices. Long-term firm contract revenues decreased $1 million primarily due to price adjustments. . Operating expenses decreased $16 million or 3%. .. Fuel expense decreased $15 million or 14%. Thermal generation declined 1,250,000 mWh or 11% resulting from reduced demand, the availability of lower-cost purchased power in the spot market and a 269,000 mWh or 30% increase in hydro generation. .. Purchased power expense decreased $4 million or 5% while kWh volume purchased increased 15%. Significantly lower spot market prices resulted in a $13 million expense reduction, which was partially offset by the $9 million effect of higher spot market volumes purchased. Firm purchases decreased $2 million primarily due to lower kWh volumes purchased. Bonneville Power Administration ("BPA"), a wholesale power and wheeling supplier, will increase its rates effective October 1, 1995. The new rates will increase Electric Operations' capacity and wheeling expenses by approximately $4 million annually and will reduce the exchange benefits directly received by Electric Operations' residential and small farm customers by approximately $10 million annually. Electric Operations intends to request price increases that will allow it to recover the loss of exchange benefits. On July 10, 1995, BPA issued its 1996 rate case initial proposal. This proposal will be subject to a rate hearing which will conclude April 30, 1996, with final wholesale power and wheeling rates to be effective October 1, 1996. .. Maintenance expense decreased $4 million or 8% primarily due to lengthening the intervals between thermal plant overhauls and extending the duration of maintenance overhaul periods at some plants, thereby reducing the use of contract employees and overtime pay. .. Depreciation and amortization expense increased $5 million or 7% primarily due to additional plant in service. . Earnings contribution decreased $34 million or 60%. .. Income from operations decreased $4 million or 3%. .. Interest expense increased $32 million or 48% primarily due to the $28 million interest portion of the settlement with the IRS referred to above. The remaining $4 million increase was primarily due to the effects of higher short-term interest rates and higher levels of debt outstanding in 1995. .. Other income increased $8 million primarily due to gains in 1995 of $3 million from sales of surplus sulfur dioxide emission allowances and $3 million from the sale of water rights. .. Income tax expense increased $5 million or 13% primarily due to the $4 million net effect of the IRS settlement ($15 million of additional taxes due, partially offset by an $11 million tax benefit from the 13 related interest expense). Additionally, income taxes rose due to a higher effective tax rate resulting from the reversal of deductions flowed through to ratepayers in prior years. Comparison of the six-month periods ended June 30, 1995 and 1994 ________________________________________________________________ . Revenues decreased $25 million or 2%. .. Residential revenues increased $4 million or 1% and kWh volume increased 2% primarily due to the $7 million effect of a 2% increase in the average number of residential customers, partially offset by a $4 million decrease resulting from the sale of the Sandpoint, Idaho distribution facilities. .. Commercial revenues increased $3 million or 1% primarily due to the $5 million effect of a 2% increase in the average number of commercial customers, partially offset by a $2 million decrease resulting from the sale of Sandpoint, Idaho distribution facilities. .. Industrial revenues decreased $18 million or 5% due to a 4% decrease in kWh volume. Sales to irrigation customers decreased $9 million due to increased rainfall and mild temperatures in 1995. Additionally, revenues decreased $12 million due to lower volumes sold to Wyoming oil and gas customers, including $7 million resulting from permanent well closures. These reductions were partially offset by the $3 million effect of higher interruptible sales volumes. .. Wholesale revenues decreased $16 million or 7% and kWh volumes decreased 6%. Spot and short-term market revenues decreased $16 million primarily due to lower prices resulting from increased competition, the effect of lower natural gas prices, moderate winter heating temperatures and an abundance of hydro generation in the region. . Operating expenses decreased $19 million or 2%. .. Fuel expense decreased $30 million or 13%. Thermal generation declined 2,061,000 mWh or 9% resulting from an 803,000 mWh or 43% increase in hydro generation, reduced demand and the availability of lower-cost purchased power in the spot market. .. Purchased power expense decreased $3 million or 2% while kWh volume purchased increased 11%. A $16 million decrease resulting from lower spot market prices was partially offset by the $14 million effect of higher volumes purchased in the spot market. Firm purchases decreased $3 million primarily due to lower volumes purchased. .. Other operations expense increased $5 million or 3% primarily due to the effect of a $3 million increase in distribution system expense. .. Maintenance expense decreased $6 million or 6% primarily due to lengthening the intervals between thermal plant overhauls and extending the duration of maintenance overhaul periods at some plants, thereby reducing the use of contract employees and overtime pay. 14 .. Administrative and general expense increased $5 million or 7% primarily due to increased computer service, property, labor and benefits expenses. .. Depreciation and amortization expense increased $10 million or 7% primarily due to additional plant in service. . Earnings contribution decreased $43 million or 29%. .. Income from operations decreased $6 million or 2%. .. Interest expense increased $35 million or 26% primarily due to the $28 million interest portion of the tax settlement with the IRS referred to above. The remaining $7 million increase was primarily due to the effects of higher short-term interest rates and higher levels of debt outstanding in 1995. .. Other income increased $4 million primarily due to gains in 1995 of $3 million from sales of surplus sulfur dioxide emission allowances and $3 million from the sale of water rights. .. Income tax expense increased $5 million or 5% primarily due to the net effects of the tax settlement and a higher effective tax rate associated with the reversal of deductions flowed through to ratepayers in prior years. 15 Telecommunications __________________
Six Months Percentage Ended Percentage Second Quarter Increase/ June 30, Increase/ ________________ _______________ 1995 1994 (Decrease) 1995 1994 (Decrease) ____ ____ __________ ____ ____ __________ (Dollars in Millions) Revenues Local network service $ 29.9 $ 23.2 29% $ 57.2 $ 46.2 24% Network access service 52.9 41.7 27 100.7 83.4 21 Long distance network service 64.2 64.9 (1) 126.3 125.5 1 Private line service 14.4 14.3 1 29.6 29.2 1 Sales of cable capacity 1.1 .4 * 2.7 2.6 4 Cellular and other 29.8 26.0 15 57.5 49.4 16 _____ _____ _____ _____ Total 192.3 170.5 13 374.0 336.3 11 Operating expenses 146.9 135.8 8 288.4 266.9 8 _____ _____ _____ _____ Income from operations 45.4 34.7 31 85.6 69.4 23 _____ _____ _____ _____ Interest expense 11.5 8.6 34 21.5 17.9 20 Other expense - net .6 (.7) * 3.7 .9 * Income taxes 12.9 9.2 40 23.3 17.2 35 _____ _____ _____ _____ Net Income 20.4 17.6 16 37.1 33.4 11 Minority interest and other 2.7 2.4 13 5.0 4.5 11 _____ _____ _____ _____ Earnings contribution $ 17.7 $ 15.2 16 $ 32.1 $ 28.9 11 _____ _____ _____ _____ _____ _____ _____ _____ Telephone access lines (end of period) 482,311 407,946 18 482,311 407,946 18 Long lines originating billed minutes (thousands) 187,737 185,995 1 366,215 360,051 2 *Not a meaningful number.
See Note 1 to Condensed Consolidated Financial Statements regarding a proposal by Holdings to acquire the 13% publicly held minority interest in Pacific Telecom. See Note 3 to Condensed Consolidated Financial Statements for information regarding the sale of Alascom to AT&T. Summarized income statement data for Alascom is as follows:
Six Months Second Quarter Ended June 30, ______________ ________________ 1995 1994 1995 1994 ____ ____ ____ ____ (In Millions) Revenues $82.4 $81.7 $164.3 $159.7 Income from operations 15.1 15.7 30.4 30.8
The Company will recognize an after-tax gain of approximately $37 million from the sale of Alascom, based on its 87% ownership interest of Pacific Telecom, but the lost earnings from Alascom will be substantial. Comparison of the second quarters of 1995 and 1994. __________________________________________________ . Revenues increased $22 million or 13%. .. Local network service revenues increased $7 million or 29% primarily due to $4 million from local exchange assets acquired in Colorado and increases of $1 million each from the effects of customer and internal access line growth. 16 .. Network access service revenues increased $11 million or 27% primarily due to $10 million from the Colorado acquisition and a $2 million increase from revised local exchange company revenue estimates for prior years. .. Cellular and other revenues increased $4 million or 15% due to increases of $2 million in cellular revenue resulting from customer growth and $2 million in long lines equipment resale and installation activities revenue. . Operating expenses increased $11 million or 8%. .. Operations expense increased $3 million or 5% primarily due to increases of $1 million from the Colorado acquisition and $1 million relating to cellular customer growth. .. Maintenance expense increased $4 million or 15% primarily due to increases of $2 million from the Colorado acquisition and $1 million in other local exchange company project work. .. Depreciation expense increased $3 million or 10% primarily due to increased local exchange plant balances, $4 million from the Colorado acquisition and $1 million from internal growth. These increases were partially offset by reductions of $2 million resulting from an Alaska local exchange rate decrease ordered in December 1994 and $1 million resulting from decreased long lines depreciable plant balances. . Earnings contribution increased $3 million or 16%. .. Income from operations increased $11 million or 31%, including a $5 million increase resulting from the Colorado acquisition. .. Interest expense increased $3 million or 34% due to increased short- term borrowings used to fund the acquisition of the Colorado assets. .. Income tax expense increased $4 million or 40% due to higher taxable income and reductions in tax benefits relating to amortization of investment tax credits and excess deferred taxes. Comparison of the six-month periods ended June 30, 1995 and 1994. ________________________________________________________________ . Revenues increased $38 million or 11%. .. Local network service revenues increased $11 million or 24% primarily due to $6 million of revenue from the Colorado acquisition and the $3 million effect of internal access line and customer growth. .. Network access service revenues increased $17 million or 21% due to increases of $14 million from the Colorado acquisition and $3 million from revised local exchange company revenue estimates for prior years. .. Cellular and other revenues increased $8 million or 16% primarily due to a $4 million increase in cellular revenue from customer growth, an increase of $3 million from installation activities and long lines 17 equipment resale and an increase of $2 million resulting from restoration services provided subsequent to two cable outages in 1995. . Operating expenses increased $22 million or 8%. .. Operations expense increased $7 million or 6% primarily due to an increase of $3 million in leased circuit expense and increases of $1 million each resulting from the Colorado acquisition, growth in local exchange operations and cellular customer growth. .. Maintenance expense increased $7 million or 13% primarily due to increases of $3 million from the Colorado acquisition and $2 million in other local exchange company project work. .. Depreciation expense increased $4 million or 7% primarily due to increased local exchange plant balances, $6 million from the Colorado acquisition and $2 million from internal growth. These increases were partially offset by reductions of $3 million resulting from an Alaska local exchange rate decrease ordered in December 1994 and $2 million from decreased long lines depreciable plant balances. . Earnings contribution increased $3 million or 11%. .. Income from operations increased $16 million or 23%, including an $8 million increase due to the Colorado acquisition. .. Interest expense increased $4 million or 20% due to increased short- term borrowings used to fund the acquisition of the Colorado assets. .. Income tax expense increased $6 million or 35% due to higher taxable income and reductions in tax benefits relating to amortization of investment tax credits and excess deferred taxes. 18 FINANCIAL CONDITION - For the six months ended June 30, 1995: Net cash flows of $429 million were provided by operating activities during the period. Uses for cash were: $299 million for construction program expenditures, $98 million for repayments of long-term debt and $173 million for dividends. On February 15, 1995, Pacific Telecom acquired certain rural telephone exchange assets in Colorado from U.S. West Communications, Inc. ("USWC"). Pacific Telecom paid $200 million in cash for these assets. To fund the acquisition, Pacific Telecom used external short-term debt. Pacific Telecom plans to repay amounts borrowed with proceeds from the sale of Alascom. During 1995, the Company sold certain of its demand-side receivables, realizing net proceeds of $23 million. In May 1995, the Company issued $120 million of 8 3/8% Junior Subordinated Deferrable Interest Debentures, Series A due June 30, 2035, for net proceeds of $116 million. The proceeds were used to repay short-term debt. In June 1995, the Company issued $100 million of 6 5/8% First Mortgage and Collateral Trust Bonds ("FMB") due June 1, 2007. A portion of the proceeds, initially used to repay short-term debt, will be used to retire $56 million of previously issued FMB, with interest rates ranging from 7% to 7 3/4% and maturities from 1998 to 2002. The previously issued FMB were called for redemption on July 10, 1995. At June 30, 1995, the Company had $281 million of commercial paper and bank borrowings outstanding at an average weighted rate of 6.1%. These borrowings are supported by revolving credit agreements totaling $500 million. A $150 million revolving credit agreement will terminate on August 17, 1995. Management intends to replace this agreement with an equivalent increase in an existing revolving credit agreement upon the termination date. At June 30, 1995, the consolidated subsidiaries had access to $650 million of short-term funds through committed bank revolving credit agreements. Subsidiaries had $88 million of commercial paper outstanding at June 30, 1995, as well as borrowings of $209 million under bank revolving credit facilities. At June 30, 1995, the Companies had $25 million of short-term debt classified as long-term debt as they have the intent and ability to support short-term borrowings through the various revolving credit facilities on a long-term basis. The Company and its subsidiaries have intercompany borrowing arrangements providing for loans of funds between parties at short-term market rates. In May 1994, Pacific Telecom signed definitive purchase agreements to acquire certain rural exchange assets located in Oregon and Washington from USWC. Pacific Telecom will pay $180 million in cash, subject to certain adjustments at closing, for the assets. Pacific Telecom expects to fund this acquisition through proceeds received on the sale of Alascom, the issuance of external debt and internally generated funds. On August 7, 1995, Pacific Telecom closed the sale of the stock of Alascom to AT&T for proceeds of $366 million. Pacific Telecom received $105 million in advance of the sale, and the remaining $261 million was paid when 19 the transaction closed. See Note 3 to Condensed Consolidated Financial Statements for information regarding the sale of Alascom. Holdings has entered into an agreement with Pacific Telecom under which Holdings would acquire the 13% publicly held minority interest in Pacific Telecom for approximately $160 million. See Note 1 to Condensed Consolidated Financial Statements. The Company believes that its existing and available capital resources are sufficient to meet working capital, dividend and the majority of construction needs in 1995. Pro Forma Financial Information (Unaudited) ___________________________________________ The accompanying unaudited pro forma condensed consolidated balance sheet as of June 30, 1995 and income statement for the six months then ended reflect the operations of the Company, excluding Alascom. On August 7, 1995, Pacific Telecom closed the sale of the stock of Alascom to AT&T for $366 million (including the $75 million transition payment received in July 1994). The pro forma condensed consolidated balance sheet assumes the sale occurred on June 30, 1995. The pro forma condensed consolidated income statement assumes the sale occurred on January 1, 1995. The pro forma results of operations are not necessarily indicative of the results of operations that would actually have resulted if the sale had occurred on the dates assumed, or of expected results of operations in the future. The unaudited pro forma condensed consolidated balance sheet and income statement, and related notes should be read in conjunction with the consolidated financial statements and related notes incorporated by reference in the Company's Annual Report on Form 10-K for the year ended December 31, 1994. PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET June 30, 1995 (Unaudited) In Millions of Dollars
Historical Elimination of Sale of Pro Forma Consolidated Historical Affiliated Alascom and Consolidated PacifiCorp Alascom Balances (a) Adjustments (b)(c) PacifiCorp ____________ __________ ______________ __________________ ____________ Assets Property, plant and equipment-net $ 8,632.5 $(174.4) $ - $ - $ 8,458.1 Current assets 814.1 (100.9) 11.2 - 724.4 Investments 191.3 (.1) 221.9 (221.9) 191.2 Intangible and other assets 2,438.1 (7.1) - (20.3) 2,410.7 ________ ______ _____ ______ ________ Total Assets $12,076.0 $(282.5) $233.1 $(242.2) $11,784.4 ________ ______ _____ ______ ________ ________ ______ _____ ______ ________ Capitalization and Liabilities Common equity $ 3,500.8 $(186.4) $186.4 $ 39.2 $ 3,540.0 Preferred stock 367.4 - - 367.4 Preferred stock subject to mandatory redemption 219.0 - - 219.0 Long-term debt and capital lease obligations 3,855.0 - - 3,855.0 Current liabilities 1,333.6 (60.0) 18.0 (260.5) 1,031.1 Deferred credits 2,690.2 (7.4) (30.0) 2,652.8 Minority interest 110.0 (28.7)* 28.7 9.1 119.1 ________ ______ _____ ______ ________ Total Capitalization and Liabilities $12,076.0 $(282.5) $233.1 $(242.2) $11,784.4 ________ ______ _____ ______ ________ ________ ______ _____ ______ ________ *Represents the recognition of a reduction due to the Company's 87% interest in Pacific Telecom.
20 Notes to Pro Forma Condensed Consolidated Balance Sheet (Unaudited) ___________________________________________________________________ The accompanying pro forma condensed consolidated balance sheet as of June 30, 1995 consists of the historical balance sheet of the Company (after the elimination of affiliated transactions and interest), less the historical balance sheet of Alascom, plus certain pro forma adjustments described below: a. Affiliated balances between Pacific Telecom and its subsidiaries and Alascom eliminated in the consolidation process were restored on the pro forma balance sheet. The affiliated balances between Pacific Telecom and Alascom were added to Pacific Telecom's investment in Alascom. The affiliated balances between the other subsidiaries and Alascom were reclassified to the proper nonaffiliated line item. b. Cash proceeds of $261 million received at closing in August 1995 and the $30 million deposit in "Other Deferred Credits" received in October 1994, were offset by Pacific Telecom's investment in Alascom. The actual gain to be realized on the sale will be approximately $37 million, which is lower than indicated on the pro forma balance sheet because the sales price is fixed and the carrying value in Alascom increased as Alascom's earnings were recognized and affiliated account balances changed between June 30, 1995 and the August 1995 closing. c. Cash proceeds received from the sale of Alascom have been applied to short-term debt. Pacific Telecom plans to redeploy the proceeds of the sale of Alascom to purchase certain USWC assets in Oregon, Washington and Colorado. In February 1995, Pacific Telecom funded the $200 million Colorado acquisition with short-term borrowings and anticipates repaying these borrowings with proceeds from the sale of Alascom. 21 PRO FORMA CONDENSED CONSOLIDATED INCOME STATEMENT For the Six Months Ended June 30, 1995 (Unaudited) In Millions of Dollars
Historical Elimination of Sale of Pro Forma Consolidated Historical Affiliated Alascom and Consolidated PacifiCorp Alascom Balances (a) Adjustments PacifiCorp ____________ __________ ______________ ___________ ____________ Revenues $1,662.1 $(164.3) $ 1.5 $ .9(c) $1,500.2 Expenses Depreciation and amortization 223.2 (16.9) - - 206.3 Operations, maintenance and other 956.9 (117.0) 1.5 2.2(c) 843.6 _______ ______ ____ ____ _______ Total 1,180.1 (133.9) 1.5 2.2 1,049.9 _______ ______ ____ ____ _______ Income from Operations 482.0 (30.4) - (1.3) 450.3 _______ ______ ____ ____ _______ Other Income (Expense) Interest expense (199.0) .9 (.3) 13.8(b)(e) (184.6) Other 24.4 (.6) .3 .4(d)(e) 24.5 Minority interest (6.1) 2.5* - (1.0)(b)(c) (4.6) _______ ______ ____ ____ _______ Total (180.7) 2.8 - 13.2 (164.7) _______ ______ ____ ____ _______ Income before Income Taxes 301.3 (27.6) - 11.9 285.6 Income Taxes 93.0 (11.5) - 5.6(b)(c)(e) 87.1 _______ ______ ____ ____ _______ Net Income $ 208.3 $ (16.1) $ - $ 6.3 $ 198.5 _______ ______ ____ ____ _______ _______ ______ ____ ____ _______ Earnings on Common Stock $ 188.0 $ 178.2 Earnings per Share $ .66 $ .63 Average Number of Common Shares Outstanding 284,268 284,268 *Represents the recognition of a reduction due to the Company's 87% interest in Pacific Telecom.
Notes to Pro Forma Condensed Consolidated Income Statement (Unaudited) ______________________________________________________________________ The accompanying pro forma condensed consolidated income statement consists of the historical income statement of the Company (after the elimination of affiliated transactions and interest), less the historical income statement of Alascom, plus certain pro forma adjustments described below: a. Affiliated balances between Pacific Telecom and its subsidiaries and Alascom eliminated in the consolidation process were restored on the pro forma income statement. b. Interest expense was allocated to Alascom by imposing a debt structure equivalent to that of Pacific Telecom at December 31, 1994. c. Pacific Telecom costs previously allocated to Alascom operations were restored as ongoing expenses. d. Amortization of goodwill related to Alascom was restored to income. e. Cash proceeds received from the sale of Alascom have been applied to short-term debt with an average rate of 6.2% and to the purchase of USWC properties in Colorado on February 15, 1995. 22 ______________________________________________________________________________ The condensed consolidated financial statements as of June 30, 1995 and December 31, 1994 and for the three-month and six-month periods ended June 30, 1995 and 1994 have been reviewed by Deloitte & Touche LLP, independent accountants, in accordance with standards established by the American Institute of Certified Public Accountants. A copy of their report is included herein. 23 Deloitte & Touche LLP _____________________ _____________________________________________________ 3900 US Bancorp Tower Telephone:(503)222-1341 111 SW Fifth Avenue Facsimile:(503)224-2172 Portland, Oregon 97204-3698 INDEPENDENT ACCOUNTANTS' REPORT PacifiCorp: We have reviewed the accompanying condensed consolidated balance sheet of PacifiCorp and subsidiaries as of June 30, 1995, and the related condensed consolidated statements of income and retained earnings and of cash flows for the three-month and six-month periods ended June 30, 1995 and 1994. These financial statements are the responsibility of the Company's management. We conducted our review in accordance with standards established by the American Institute of Certified Public Accountants. A review of interim financial information consists principally of applying analytical procedures to financial data and of making inquiries of persons responsible for financial and accounting matters. It is substantially less in scope than an audit conducted in accordance with generally accepted auditing standards, the objective of which is the expression of an opinion regarding the financial statements taken as a whole. Accordingly, we do not express such an opinion. Based on our review, we are not aware of any material modifications that should be made to such condensed consolidated financial statements for them to be in conformity with generally accepted accounting principles. We have previously audited, in accordance with generally accepted auditing standards, the consolidated balance sheet of PacifiCorp and subsidiaries as of December 31, 1994, and the related consolidated statements of income and retained earnings and of cash flows for the year then ended (not presented herein); and in our report dated February 17, 1995 (March 9, 1995 as to the agreement to acquire the minority interest in Pacific Telecom, Inc. described in Note 1), we expressed an unqualified opinion on those consolidated financial statements. In our opinion, the information set forth in the accompanying condensed consolidated balance sheet as of December 31, 1994 is fairly stated, in all material respects, in relation to the consolidated balance sheet from which it has been derived. DELOITTE & TOUCHE LLP August 11, 1995 24 PART II. OTHER INFORMATION Item 1. Legal Proceedings ______ _________________ In April 1992, the Company acquired interests in two units at the Hayden Generating Station (the "Station") located near Hayden, Colorado, which in total average approximately 17.5%. The Public Service Company of Colorado is the operator of the Station. On August 18, 1993, the Sierra Club filed an action against PacifiCorp and other joint owners of the Station under the citizen's suit provisions of the federal Clean Air Act (Sierra Club v. Public _____________________ Service Company of Colorado, Inc., Salt River Project Agricultural __________________________________________________________________ Improvement and Power District, and PacifiCorp, Case No. 93-B-1749, ______________________________________________ U.S. District Court for the District of Colorado). The plaintiff alleges that in excess of 19,000 violations of state and federal air quality regulations have occurred at the Station since 1988, including violations of opacity emission standards. The action seeks declaratory and injunctive relief requiring the defendants to operate the Station in strict compliance with applicable statutes and regulations, the imposition of civil penalties, litigation costs, attorneys' fees and mitigation. In 1994, the parties filed cross-motions for summary judgment. On July 21, 1995, the court granted the Sierra Club's motion for partial summary judgment, holding that violations of the opacity emission standards occurred. The court denied the defendants' motion for summary judgment. The defendants have petitioned the Tenth Circuit Court of Appeals for interlocutory review of the court's decision and further court proceedings have been stayed pending resolution of the appeal. If the joint owners are not successful in their appeal, the District Court will determine the appropriate penalties and/or remedies. The plaintiff has requested, among other things, that the joint owners "pay to the EPA to finance air compliance and enforcement activities, as provided for by 42 U.S.C. section 7604(g)(1), a penalty of $25,000 per day for each of their violations of the Clean Air Act." The statute provides for penalties of up to $25,000 per day for each violation, but the level of penalties imposed in any partic- ular instance is discretionary. In setting penalties in its own enforcement actions, the EPA relies, in part, on such factors as the economic benefit of noncompliance, the actual or possible harm of noncompliance, the size of the violator, the willfulness or negligence of the violator and its degree of cooperation in resolving the matter. At this time, the Company is not able to predict the outcome of the appeal, the level of penalties, if any, the remedies that the court may impose upon the joint owners of the Station if the joint owners are unsuccessful in their appeal, or what portion of that liability would ultimately be borne by the Company. 25 In Duval, et al. v. Gleason, et al., Spencer, et al. v. Gleason, et ________________________________________________________________ al. and Duval, et al. v. Gleason, et al. (see "Item 3. Legal ___ ________________________________ ___ Proceedings," at pages 12 and 13 of the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 1994), the Court approved a final settlement with respect to the federal and state court actions on June 21, 1995. Item 4. Submission of Matters to a Vote of Security Holders ______ ___________________________________________________ At the Company's annual meeting of shareholders on May 10, 1995, the shareholders ratified the appointment of Deloitte & Touche LLP to serve as independent auditors of the Company for the year 1995. Votes cast in relation to this matter are summarized as follows:
Against Or Abstentions And For Withheld Broker Non-votes ___ __________ ________________ 234,511,638 1,788,140 2,605,935
The shareholders also elected four Class II Directors, each for terms expiring at the 1998 Annual Meeting and one Class III Director for a term expiring at the 1996 Annual Meeting. Votes cast in relation to this matter are summarized as follows:
Against Or Abstentions And For Withheld Broker Non-votes ___ __________ ________________ Class II Kathryn A. Braun 234,887,822 4,017,891 - Richard C. Edgley 234,239,470 4,666,243 - Robert G. Miller 234,693,651 4,212,062 - Verl R. Topham 234,085,123 4,820,590 - Class III Peter I. Wold 234,372,636 4,532,989 88
The Directors whose terms continued and the years their terms expire are as follows: Frederick W. Buckman (Class III, 1996); C. Todd Conover (Class I, 1997); John C. Hampton (Class I, 1997); Nolan E. Karras (Class I, 1997); Keith R. McKennon (Class I, 1997); Don M. Wheeler (Class III, 1996); Nancy Wilgenbusch (Class III, 1996). 26 Item 6. Exhibits and Reports on Form 8-K ______ ________________________________ (a) Exhibits. Exhibit 12(a): Statements of Computation of Ratio of Earnings to Fixed Charges. Exhibit 12(b): Statements of Computation of Ratio of Earnings to Combined Fixed Charges and Preferred Stock Dividends. Exhibit 15: Letter re unaudited interim financial information of awareness of incorporation by reference. Exhibit 27: Financial Data Schedule for the quarter ended June 30, 1995 (filed electronically only). (b) Reports on Form 8-K. On Form 8-K dated July 14, 1995, under Item 5. "Other Events," the Company filed its news release reporting certain developments in connection with PacifiCorp Holdings, Inc.'s proposed acquisition of the minority interest of Pacific Telecom, Inc. 27 SIGNATURE Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. PACIFICORP Date August 11, 1995 By DANIEL L. SPALDING _________________________ __________________________________ Daniel L. Spalding Senior Vice President (Chief Accounting Officer) INDEX TO EXHIBITS
EXHIBIT DESCRIPTION PAGE _______ ___________ ____ Exhibit 12(a): Statements of Computation of Ratio of Earnings to Fixed Charges. Exhibit 12(b): Statements of Computation of Ratio of Earnings to Combined Fixed Charges and Preferred Stock Dividends. Exhibit 15: Letter re unaudited interim financial information of awareness of incorporation by reference. Exhibit 27: Financial Data Schedule for the quarter ended June 30, 1995 (filed electronically only).
EX-12.(A) 2 EXHIBIT (12)(a) PACIFICORP STATEMENTS OF COMPUTATION OF RATIO OF EARNINGS TO FIXED CHARGES (IN MILLIONS OF DOLLARS)
Six Months YEAR ENDED DECEMBER 31, Ended ______________________________________________ 1990 1991 1992 1993 1994 June 30, 1995 ____ ____ ____ ____ ____ _____________ Fixed Charges, as defined:* Interest expense..................... $ 431.2 $ 428.0 $ 409.7 $ 377.8 $ 336.8 $199.0 Estimated interest portion of rentals charged to expense...... 23.3 20.4 17.1 20.1 19.5 10.6 Preferred dividend requirement of majority-owned subsidiary.......... 4.2 - - - - - _______ _______ _______ _______ _______ _____ Total fixed charges.......... $ 458.7 $ 448.4 $ 426.8 $ 397.9 $ 356.3 $209.6 _______ _______ _______ _______ _______ _____ _______ _______ _______ _______ _______ _____ Earnings, as defined:* Income from continuing operations......................... $ 413.4 $ 446.8 $ 150.2 $ 422.7 $ 468.0 $208.3 Add (deduct): Provision for income taxes......... 179.1 176.7 90.8 187.4 249.8 93.0 Minority interest.................. 18.1 14.1 8.4 11.3 13.3 6.1 Undistributed income of less than 50% owned affiliates... - (1.8) (5.7) (16.2) (14.7) (6.9) Fixed charges as above............. 458.7 448.4 426.8 397.9 356.3 209.6 _______ _______ _______ _______ _______ _____ Total earnings............... $1,069.3 $1,084.2 $ 670.5 $1,003.1 $1,072.7 $510.1 _______ _______ _______ _______ _______ _____ _______ _______ _______ _______ _______ _____ Ratio of Earnings to Fixed Charges..... 2.3x 2.4x 1.6x 2.5x 3.0x 2.4x ____ ____ ____ ____ ____ ____ ____ ____ ____ ____ ____ ____ _______________ *"Fixed charges" represent consolidated interest charges, an estimated amount representing the interest factor in rents and preferred stock dividend requirements of majority-owned subsidiaries. "Earnings" represent the aggregate of (a) income from continuing operations, (b) taxes based on income from continuing operations, (c) minority interest in the income of majority-owned subsidiaries that have fixed charges, (d) fixed charges and (e) undistributed income of less than 50% owned affiliates without loan guarantees.
EX-12.(B) 3 PACIFICORP EXHIBIT (12)(b) STATEMENTS OF COMPUTATION OF RATIO OF EARNINGS TO COMBINED FIXED CHARGES AND PREFERRED STOCK DIVIDENDS (IN MILLIONS OF DOLLARS)
Six Months YEAR ENDED DECEMBER 31, Ended _______________________________________________ 1990 1991 1992 1993 1994 June 30, 1995 ____ ____ ____ ____ ____ _____________ Fixed Charges, as defined:* Interest expense..................... $ 431.2 $ 428.0 $ 409.7 $ 377.8 $ 336.8 $199.0 Estimated interest portion of rentals charged to expense...... 23.3 20.4 17.1 20.1 19.5 10.6 Preferred dividend requirement of majority-owned subsidiary....... 4.2 - - - - - _______ _______ _______ _______ _______ _____ Total fixed charges.......... 458.7 448.4 426.8 397.9 356.3 209.6 Preferred Stock Dividends, as defined:*....................... 31.7 37.4 59.9 56.8 60.8 29.4 _______ _______ _______ _______ _______ _____ Total fixed charges and preferred dividends........ $ 490.4 $ 485.8 $ 486.7 $ 454.7 $ 417.1 $239.0 _______ _______ _______ _______ _______ _____ _______ _______ _______ _______ _______ _____ Earnings, as defined:* Net income from continuing operations......................... $ 413.4 $ 446.8 $ 150.2 $ 422.7 $ 468.0 $208.3 Add (deduct): Provision for income taxes......... 179.1 176.7 90.8 187.4 249.8 93.0 Minority interest.................. 18.1 14.1 8.4 11.3 13.3 6.1 Undistributed income of less than 50% owned affiliates............. - (1.8) (5.7) (16.2) (14.7) (6.9) Fixed charges as above............. 458.7 448.4 426.8 397.9 356.3 209.6 _______ _______ _______ _______ _______ _____ Total earnings............... $1,069.3 $1,084.2 $ 670.5 $1,003.1 $1,072.7 $510.1 _______ _______ _______ _______ _______ _____ _______ _______ _______ _______ _______ _____ Ratio of Earnings to Combined Fixed Charges and Preferred Stock Dividends...................... 2.2x 2.2x 1.4x 2.2x 2.6x 2.1x ____ ____ ____ ____ ____ ____ ____ ____ ____ ____ ____ ____ _______________ *"Fixed charges" represent consolidated interest charges, an estimated amount representing the interest factor in rents and preferred stock dividend requirements of majority-owned subsidiaries. "Preferred Stock Dividends" represent preferred dividend requirements multiplied by the ratio which pre-tax income from continuing operations bears to income from continuing operations. "Earnings" represent the aggregate of (a) income from continuing operations, (b) taxes based on income from continuing operations, (c) minority interest in the income of majority-owned subsidiaries that have fixed charges, (d) fixed charges and (e) undistributed income of less than 50% owned affiliates without loan guarantees.
EX-15 4 Deloitte & Touche LLP _____________________ _____________________________________________________ 3900 US Bancorp Tower Telephone:(503)222-1341 111 SW Fifth Avenue Facsimile:(503)224-2172 Portland, Oregon 97204-3698 EXHIBIT 15 August 11, 1995 PacifiCorp 700 N.E. Multnomah Portland, Oregon We have made a review, in accordance with standards established by the American Institute of Certified Public Accountants, of the unaudited interim financial information of PacifiCorp and subsidiaries for the periods ended June 30, 1995 and 1994, as indicated in our report dated August 11, 1995; because we did not perform an audit, we expressed no opinion on that information. We are aware that our report referred to above, which is included in your Quarterly Report on Form 10-Q for the quarter ended June 30, 1995, is incorporated by reference in Registration Statement Nos. 33-36452, 33-51163, and 33-55309, all on Form S-3; in Registration Statement No. 33-58461, and Post-Effective Amendment No. 1 to Registration Statement No. 33-17970, all on Form S-8; and in Registration Statement Nos. 33-36239 and 33-58569 on Form S-4. We are also aware that the aforementioned report, pursuant to Rule 436(c) under the Securities Act, is not considered a part of the Registration Statement prepared or certified by an accountant or a report prepared or certified by an accountant within the meaning of Sections 7 and 11 of that Act. DELOITTE & TOUCHE LLP EX-27 5
UT This schedule contains summary financial information extracted from PacifiCorp's Form 10-Q dated June 30, 1995 and is qualified in its entirety by reference to such financial statements. 0000075594 PACIFICORP 1,000 6-MOS DEC-31-1994 JUN-30-1995 PER-BOOK 8464300 670500 814100 205100 1922000 12076000 2991700 0 509100 3500800 367400 219000 3827700 214300 0 343100 140600 0 27300 1700 3434100 12076000 1662100 93000 1180100 1273100 389000 18300 407300 199000 208300 20300 188000 152300 213500 429000 .66 .66
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