-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, Ce92MU8qayHjhHv+Np/6zv+q+d21kSBnAgaJxxJoWoNceS6cDhN1BziTh9oQi0pJ cfk1cItSi6Gel/FcRKGVuA== 0000079636-95-000027.txt : 19951102 0000079636-95-000027.hdr.sgml : 19951102 ACCESSION NUMBER: 0000079636-95-000027 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 5 CONFORMED PERIOD OF REPORT: 19950930 FILED AS OF DATE: 19951101 SROS: NYSE FILER: COMPANY DATA: COMPANY CONFORMED NAME: PORTLAND GENERAL ELECTRIC CO /OR/ CENTRAL INDEX KEY: 0000784977 STANDARD INDUSTRIAL CLASSIFICATION: ELECTRIC SERVICES [4911] IRS NUMBER: 930256820 STATE OF INCORPORATION: OR FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 001-05532-99 FILM NUMBER: 95586244 BUSINESS ADDRESS: STREET 1: 121 SW SALMON ST CITY: PORTLAND STATE: OR ZIP: 97204 BUSINESS PHONE: 5034648000 FILER: COMPANY DATA: COMPANY CONFORMED NAME: PORTLAND GENERAL CORP /OR CENTRAL INDEX KEY: 0000079636 STANDARD INDUSTRIAL CLASSIFICATION: ELECTRIC SERVICES [4911] IRS NUMBER: 930909442 STATE OF INCORPORATION: OR FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 001-05532 FILM NUMBER: 95586245 BUSINESS ADDRESS: STREET 1: 121 SW SALMON ST CITY: PORTLAND STATE: OR ZIP: 97204 BUSINESS PHONE: 5034648820 FORMER COMPANY: FORMER CONFORMED NAME: PORTLAND GENERAL ELECTRIC CO DATE OF NAME CHANGE: 19860804 10-Q 1 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 SEPTEMBER 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 __________ Registrant; State of Incorporation; IRS Employer COMMISSION FILE NUMBER ADDRESS; AND TELEPHONE NUMBER IDENTIFICATION NO. 1-5532 PORTLAND GENERAL CORPORATION 93-0909442 (an Oregon Corporation) 121 SW Salmon Street Portland, Oregon 97204 (503) 464-8820 1-5532-99 PORTLAND GENERAL ELECTRIC COMPANY 93-0256820 (an Oregon Corporation) 121 SW Salmon Street Portland, Oregon 97204 (503) 464-8000 Indicate by check mark whether the registrants (1) have filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrants were required to file such reports), and (2) have been subject to such filing requirements for the past 90 days. Yes X . No . The number of shares outstanding of the registrants' common stocks as of September 30, 1995 are: Portland General Corporation 50,824,141 Portland General Electric Company 42,758,877 (owned by Portland General Corporation) 1 INDEX PAGE NUMBER PART I. PORTLAND GENERAL CORPORATION AND SUBSIDIARIES FINANCIAL INFORMATION Management's Discussion and Analysis of Financial Condition and Results of Operations 3 Statements of Income 11 Statements of Retained Earnings 11 Balance Sheets 12 Statements of Capitalization 13 Statements of Cash Flow 14 Notes to Financial Statements 15 Portland General Electric Company and Subsidiaries Financial Information 18 PART II. OTHER INFORMATION Item 1 - Legal Proceedings 22 Item 6 - Exhibits and Reports on Form 8-K 22 Signature Page 23 2 PORTLAND GENERAL CORPORATION AND SUBSIDIARIES MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS RESULTS OF OPERATIONS Portland General Electric Company (PGE or the Company), an electric utility company and the principal operating subsidiary of Portland General Corporation (Portland General), accounts for substantially all of Portland General's assets, revenues and net income. The following discussion focuses on utility operations, unless otherwise noted. 1995 COMPARED TO 1994 FOR THE THREE MONTHS ENDED SEPTEMBER 30 Portland General earned $14 million or $0.28 per share for the third quarter of 1995 compared to earnings of $12 million or $0.24 per share in 1994. Earnings for the period include an after tax provision against earnings of $13 million, related to unrecoverable deferred power costs. Excluding this charge to income, earnings would have been $27 million. The quarters' strong operating earnings reflect continued retail load growth as well as low variable power costs driven by improved hydro conditions throughout the western region and a competitive wholesale market. Operating revenues increased $8 million or 4% for the quarter. Retail revenues increased by $14 million, or 8%, due primarily to the company's April 1995 general rate increase and increased retail energy sales. A strong local economy and continued increase in the number of retail customers contributed to a 3% rise in retail energy sales. PGE is serving 13,600, or 2.2 %, more retail customers than served in the same period last year with 2,580 new retail customers added during this quarter. A $6 million wholesale, or 23%, decline in wholesale revenues partially offset the increase in retail revenues. Wholesale energy sales decreased 11% and average wholesale prices decreased 13%. A competitive wholesale market coupled with the availability of inexpensive power narrowed wholesale margins and decreased sales. PGE took advantage of the competitive wholesale market and the availability of inexpensive power and purchased 54% of its total system load compared to 48% last year. Increased low-cost energy purchases, good hydro generation and low natural gas prices drove variable power costs down despite increased total system load. The average cost of power decreased from 19.7 to 16.0 mills (10 mills = 1 cent) as variable power costs decreased $19 million, or 23% for the quarter (see table below). Abundant supplies of energy drove secondary prices below 1994 levels. Spot market purchases averaged 11.4 mills, ranging from 6 to 20 mills, compared to an average 22.4 mills in 1994. Hydro generation increased 14%, or 53,600 MWh, reflecting good water conditions on the Clackamas River system. While thermal generation decreased 15%, lower gas prices allowed the Beaver Combustion Turbine Plant to generate energy at 39% lower variable cost. 3 PORTLAND GENERAL CORPORATION AND SUBSIDIARIES MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
RESOURCE MIX/VARIABLE POWER COSTS Average Variable Resource Mix Power Cost (Mills/KWh) 1995 1994 1995 1994 Generation 46% 52% 8.4 11.3 Firm Purchases 35% 35% 24.5 26.6 Spot Purchases 19% 13% 11.4 22.4 Total 100% 100% Average 16.0 19.7 Resources
Operating expenses (excluding variable power, depreciation and income taxes) were comparable with 1994. Depreciation increased $2 million, or 7%, largely due to higher depreciation levels effective with the Company's recent general rate increase in April 1995. Income taxes included in Net Operating Income increased $14 million primarily due to an increase in before tax operating income. PGE recorded a $13 million, after tax, provision against earnings as a result of an agreement with the Oregon Public Utility Commission's (PUC) Staff which allows for only partial recovery of the Company's outstanding power cost deferrals. For further information regarding this agreement see the Power Cost Recovery and Coyote Springs Filing discussion in the Financial and Operating Outlook section below. 1995 COMPARED TO 1994 FOR THE NINE MONTHS ENDED SEPTEMBER 30 Portland General earned $45 million or $0.88 per share for the nine months ended September 30, 1995, compared to earnings of $75 million or $1.51 per share in 1994. 1995 results include after tax charges to income of $37 million related to the PUC's rate order disallowing 13% of PGE's remaining investment in Trojan and $13 million related to the Company's agreement with PUC Staff allowing only partial recovery of the Company's deferred power costs. 1994 earnings include $7 million, after tax, in previously recorded real estate reserves. Excluding these items, earnings would have been $94 million in 1995 and $69 million in 1994. Strong operating results reflect improved hydro conditions, favorable secondary power costs and continued retail load growth, partially offset by narrowing margins in a competitive wholesale market. Although operating revenues only increased $7 million, retail MWh sales rose 3% and revenues increased by $23 million. Colder temperatures during the early part of the year and an increase in retail customers contributed to a higher level of energy sales. The increased sales combined with the general rate increase boosted revenues from energy sales nearly 7%. Fewer accrued revenues partially offset increases from energy sales. PGE recorded $12 million in power cost deferrals in 1995 ($11 million in the first quarter), compared with $19 million in 1994 ($18 million in the first quarter). 4 PORTLAND GENERAL CORPORATION AND SUBSIDIARIES MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS A decline in wholesale revenues of $18 million from 1994 levels also partially offset the increase in retail revenues. Wholesale energy sales declined 13% and prices averaged 13% lower. The Northwest region's traditional price advantage over the Southwest eroded due to abundant energy supplies and improved hydro conditions in California and made for a more competitive wholesale marketplace. Variable power costs decreased $50 million, or 20%, resulting from increased hydro production and lower secondary prices. PGE reduced thermal plant generation 30% to take advantage of favorable secondary energy prices, decreasing average variable power costs from 19.1 to 16.0 mills (see table below). PGE hydro generation increased 21%, or 307,704 MWh, reflecting improved water conditions on the Clackamas River system. Spot market purchases averaged 10.7 mills compared to 19.8 mills in 1994 due to the availability of low-cost secondary power.
RESOURCE MIX/VARIABLE POWER COSTS Average Variable Resource Mix Power Cost (Mills/KWh) 1995 1994 1995 1994 Generation 37% 45% 7.5 10.6 Firm Purchases 36% 33% 24.8 25.5 Spot Purchases 27% 22% 10.7 19.8 Total Resources 100% 100% Average 16.0 19.1
The Company held operating expenses (excluding variable power, depreciation and income taxes) at levels comparable to 1994. Depreciation increased $7 million, or 8%, largely due to increased depreciation rates effective with the Company's general rate increase in April 1995. Income taxes increased $19 million, or 37%, due to an increase in before tax operating income. CASH FLOW PORTLAND GENERAL CORPORATION Portland General requires cash to pay dividends to its common stockholders, to provide funds to its subsidiaries, to meet debt service obligations and for day to day operations. Sources of cash are dividends from PGE, leasing rentals, short- and intermediate-term borrowings and the sale of its common stock. 5 PORTLAND GENERAL CORPORATION AND SUBSIDIARIES MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS Portland General received $11.5 million in dividends from PGE during the third quarter of 1995 and $2.3 million in proceeds from the issuance of shares of common stock under its Dividend Reinvestment and Optional Cash Payment Plan. PORTLAND GENERAL ELECTRIC COMPANY CASH PROVIDED BY OPERATIONS Operations are the primary source of cash used for day to day operating needs of PGE and funding of construction activities. PGE also obtains cash from external borrowings, as needed. A significant portion of cash from operations comes from depreciation and amortization of utility plant, charges which are recovered in customer revenues but require no current cash outlay. Changes in accounts receivable and accounts payable can also be significant contributors or users of cash. Improved cash flow for the current year reflects the Company's general price increase and lower variable power costs. 1994 third quarter cash flows were also affected by a $20 million prepayment to the IRS related to the 1985 tax deduction discussed below. Portland General has reached a tentative settlement with the IRS regarding the Washington Public Power Supply System Unit 3 (WNP-3) abandonment loss deduction on its 1985 tax return. Portland General does not expect future cash requirements to be materially affected by the resolution of this matter (see Note 3, Income Taxes, for further information). INVESTING ACTIVITIES PGE invests in facilities for generation, transmission and distribution of electric energy and products and services for energy efficiency. Estimated capital expenditures for 1995 are expected to be $225 million. Approximately $160 million has been expended for capital projects, including energy efficiency, through September 30, 1995. PGE funds an external trust for the Trojan decommissioning costs. The April 1995 general rate order authorized PGE to increase its collections from customers and its corresponding contribution to the trust from $11 million to $14 million annually. The trust invests in investment-grade tax-exempt bonds. Total-to-date cash withdrawn from the trust to pay for decommissioning costs is approximately $8 million. FINANCING ACTIVITIES During the third quarter the Company used strong operating cash flows to reduce short-term debt $26 million. 6 PORTLAND GENERAL CORPORATION AND SUBSIDIARIES MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS In early October 1995, PGE issued $75 million in 8.25% Quarterly Income Debt Securities (QUIDS) Junior Subordinated Deferrable Interest Debentures maturing on December 31, 2035. The proceeds will be used to redeem the balance of outstanding shares of the 8.20%, 7.88% and 7.95% Preferred stock series. PGE will redeem each of the preferred stock series at $101.00 per share which including partial period dividends will require funding of approximately $71 million. The redemption is scheduled for early November 1995. The issuance of additional preferred stock and First Mortgage Bonds requires PGE to meet earnings coverage and security provisions set forth in the Articles of Incorporation and Indenture securing its First Mortgage Bonds. As of September 30, 1995, PGE could issue approximately $300 million of preferred stock and $350 million of additional First Mortgage Bonds. FINANCIAL AND OPERATING OUTLOOK UTILITY RETAIL CUSTOMER GROWTH AND ENERGY SALES During the third quarter of 1995, 2,580 retail customers were added to PGE's service territory. For the nine-months ended September 30, 1995, approximately 8,500 retail customers were added. Weather adjusted retail energy sales growth for the nine months ended September 30, 1995 was approximately 2.7%. The Company expects annual 1995 weather-adjusted retail energy sales growth to be approximately 2.9%. Quarterly Increase in Retail Customers Quarter/Year Residential Customers Commercial/Industrial Customers 2Q 93 1697 429 3Q 93 2802 446 4Q 93 2775 563 1Q 94 2986 390 2Q 94 2476 550 3Q 94 2219 454 4Q 94 4247 379 1Q 95 3010 270 2Q 95 2194 509 3Q 95 2145 435 SEASONALITY Due to seasonal fluctuations in electricity sales, as well as the price of wholesale energy and fuel costs, quarterly operating earnings are not necessarily indicative of results to be expected for calendar year 1995. COMPETITION The Energy Policy Act of 1992 (Energy Act) set the stage for federal and state regulations directed toward the stimulation of both wholesale and retail competition in the electric industry. The Energy Act eased restrictions on independent power production, and bestowed authority on the Federal Energy Regulatory Commission (FERC) to mandate open access for the wholesale transmission of electricity. 7 PORTLAND GENERAL CORPORATION AND SUBSIDIARIES MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS FERC has since taken steps to provide a framework for increased competition in the electric industry. In March 1995 it issued a Notice of Proposed Rulemaking (NOPR) regarding non-discriminatory open access transmission requirements for all public utilities. The proposed rules address several issues including stranded asset recovery and the open access transmission of electricity. If adopted, the proposed open access transmission requirements would give wholesale competitors access to PGE's transmission facilities and, in turn, give PGE access to other's transmission facilities. PGE is in the process of preparing an open access transmission tariff for its transmission facilities. Since the passage of the Energy Act, various state utility commissions are considering proposals which would gradually allow customers direct access to generation suppliers, marketers, brokers and other service providers in a competitive marketplace for energy services. Although presently operating in a cost-based regulated environment, PGE expects increasing competition from other forms of energy and other suppliers of electricity. While the Company is unable to determine precisely the future impact of increased competition, it believes that ultimately it will result in reduced wholesale and retail prices in the industry. POWER COST RECOVERY AND COYOTE SPRINGS FILING PGE operates without a power cost adjustment tariff, therefore adjustments for power costs above or below those set in existing general tariffs are not automatically reflected in customers' rates. As a result, PGE obtained PUC approval to defer incremental replacement power costs related to the closure of Trojan. The following table sets out the amounts deferred and the collection status of the various deferrals. In accordance with Oregon law, collection of the deferrals is subject to PUC review of PGE's reported earnings, adjusted for the regulatory treatment of unusual and/or non- recurring items, as well as the determination of an appropriate rate of return on equity for a given review period. The table below indicates the balance of outstanding power cost deferrals as of September 30, 1995. SYNOPSIS OF POWER COST DEFERRALS
Deferral Earnings Amounts Period Covered Rate Review Deferred Collected December 4, 1992 - 80% Approved (1) $57 million $27 million March 31, 1993 (4)(a) July 1, 1993 - 50% Late 1995 (2) $59 million N/A March 31, 1994 (4)(b) January 1, 1995 - 40% Late 1995 (3) $11 million N/A March 31, 1995 (4)(c) (1) Approved for collection which began on 4/1/94. (2) See discussion below on settlement with PUC staff. (3) See discussion below on settlement with PUC staff. (4) Includes accrued interest of (a) $12 million, (b) $10 million, and (c) $.7 million.
8 PORTLAND GENERAL CORPORATION AND SUBSIDIARIES MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS On October 17, 1995 PGE and the Oregon Public Utility Commission's (PUC) Staff agreed to jointly recommend to the PUC a settlement on PGE's August 1995 consolidated filing which supports increasing Company annual revenues by $20 million or approximately 2.0%. The increase includes an additional $40 million for the Coyote Springs Generation Project (Coyote Springs) and Bonneville Power Administration (BPA) price increases offset by the cancellation of the current collection of deferred power costs. See Portland General's and PGE's reports on form 10-Q dated June 30, 1995 and form 8-K dated October 5, 1995 for further information on PGE's consolidated filing. While the agreement supports full recovery of the $11 million of power costs deferred from January through March 1995, it supports recovery of only $9 million of the $50 million of power costs deferred from July 1993 through March 1994. The agreement also includes a provision for immediate recovery of approximately $27 million in incentive revenues associated with prior years' achievements of the Company's energy efficiency programs. Lastly, the stipulation supports the Company's proposal to offset the uncollected balance of all power cost deferrals, incentive revenues, certain other regulatory assets, and a portion of the remaining Trojan investment, against PGE's unamortized gain on the prior sale of a portion of the Boardman Coal Plant. If approved, the offsets will allow for recovery of the deferred power costs and incentive revenues discussed above, without increasing customer rates as well as eliminate approximately $117 million of regulatory assets and liabilities from the Company's Balance Sheets. A PUC order on the regulatory proceeding is expected during the fourth quarter 1995. TROJAN DECOMMISSIONING UPDATE As of October 31, 1995 PGE has substantially completed the early removal of some of Trojan's large components. The large component removal project (LCRP) commenced in November 1994 following public hearings in a lengthy state approval process. On two separate occasions LCRP work was interrupted pending review of legal challenges in both state and federal courts. Despite the work stoppages the LCRP was completed in time to take advantage of lower near- term burial costs and provide cost savings. The LCRP was the subject of an NRC review initiated in early September 1995. The NRC solicited comments from interested parties on whether to halt the LCRP and any further decommissioning activities at Trojan until public hearings could be held regarding the Trojan Decommissioning Plan. For further information see Portland General's and PGE's reports on form 8-K dated August 30, 1995. The NRC completed its review on October 12, 1995 with an order that allowed the completion of the LCRP. However, the NRC Order stated that no further major dismantling at Trojan would be allowed until final NRC approval of the Trojan Decommissioning Plan is obtained. This does not preclude further planning or minor dismantling activities. The Trojan Decommissioning Plan is presently under review by the NRC. The order notes that the NRC intends to give notice of an opportunity for a public hearing on the plan. A hearing may require additional time beyond that originally anticipated by the Company in obtaining final approval of the Trojan Decommissioning Plan. 9 PORTLAND GENERAL CORPORATION AND SUBSIDIARIES MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS NONUTILITY In April 1992 legal action was filed by Bonneville Pacific against Portland General, Holdings, and certain individuals affiliated with Portland General and Holdings alleging breach of fiduciary duty, tortious interference, breach of contract, and other actionable wrongs related to Holdings' investment in Bonneville Pacific. Following his appointment, the Bonneville Pacific bankruptcy trustee, on behalf of Bonneville Pacific, filed numerous amendments to the complaint. The complaint now includes allegations of RICO violations and RICO conspiracy, collusive tort, civil conspiracy, common law fraud, negligent misrepresentation, breach of fiduciary duty, liability as a partner for the debts of a partnership, and other actionable wrongs. Although the amount of damages sought is not specified in the Complaint, the Trustee has filed a damage disclosure calculation which purports to compute damages in amounts ranging from $340 million to $1 billion - subject to possible increase based on various factors. Holdings has filed a complaint seeking approximately $228 million in damages against Deloitte & Touche and certain parties associated with Bonneville Pacific alleging that it relied on fraudulent and negligent statements and omissions when it acquired an interest in and made loans to Bonneville Pacific. A detailed report released in June 1992, by a U.S. Bankruptcy examiner outlined a number of questionable transactions that resulted in gross exaggeration of Bonneville Pacific's assets prior to Holdings' investment. This report includes the examiner's opinion that there was significant mismanagement and very likely fraud at Bonneville Pacific. For background information and further details, see Note 2, Legal Matters in the Notes to Financial Statements. 10
Portland General Corporations and Subsidaries Consolidated Statements of Income for the Three Months and Nine Months Ended September 30, 1995 and 1994 (Unaudited) Three Months Ended Nine Months Ended September 30 September 30 1995 1994 1995 1994 (Thousands of Dollars) Operating Revenues $ 222,612 $ 214,180 $ 701,681 $ 694,304 Operating Expenses Purchased power and fuel 64,428 83,732 198,740 248,549 Production and distribution 15,963 15,282 47,404 46,295 Maintenance and repairs 10,563 12,267 31,880 35,495 Administrative and other 25,346 24,836 76,895 72,562 Depreciation and amortization 33,340 31,331 99,583 92,579 Taxes other than income taxes 11,889 12,057 38,672 39,144 161,529 179,505 493,174 534,624 Operating Income Before Income Taxes 61,083 34,675 208,507 159,680 Income Taxes 20,817 7,150 71,509 46,216 Net Operating Income 40,266 27,525 136,998 113,464 Other Income (Deductions) Regulatory disallowances - net of income taxes of $8,441 and $25,542 (12,859) 0 (49,567) 0 Interest expense (19,592) (18,951) (58,921) (53,870) Allowance for funds used during construction 3,608 1,243 8,682 2,507 Preferred dividend requirement - PGE (2,380) (2,583) (7,380) (8,217) Other - net of income taxes 5,138 4,653 14,818 14,661 Income From Continuing Operations 14,181 11,887 44,630 68,545 Discontinued Operations Gain on disposal of real estate operations - net of income taxes of $4,226 0 0 0 6,472 Net Income $ 14,181 $ 11,887 $ 44,630 $ 75,017 Common Stock Average shares outstanding 50,798,082 50,285,669 50,696,185 49,706,398 Earnings per average share Continuing operations $0.28 $0.24 $0.88 $1.38 Discontinued operations 0 0 0 0.13 Earnings per average share $0.28 $0.24 $0.88 $1.51 Dividends declared per share $0.30 $0.30 $0.90 $0.90 Consolidated Statements of Retained Earnings for the Three Months and Nine Months Ended September 30, 1995 and 1994 (Unaudited) Three Months Ended Nine Months Ended September 30 September 30 1995 1994 1995 1994 (Thousands of Dollars) Balance at Beginning of Period $ 117,777 $ 113,427 $ 118,676 $ 81,159 Net Income 14,181 11,887 44,630 75,017 ESOP Tax Benefit and Amortization of Preferred Stock Premium (470) (484) (1,418) (1,280) 131,488 124,830 161,888 154,896 Dividends Declared on Common Stock 15,247 15,094 45,647 45,160 Balance at End of Period $ 116,241 $ 109,736 $ 116,241 $ 109,736 The accompanying notes are an integral part of these consolidated statements.
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Portland General Corporation and Subsidaries Consolidated Balance Sheets as of September 30, 1995 and December 31, 1994 (Unaudited) September 30 December 31 1995 1994 (Thousands of Dollars) Assets Electric Utility Plant - Original Cost Utility plant (includes Construction Work in Progress of $201,963 and $148,267) $ 2,699,334 $ 2,563,476 Accumulated depreciation (1,019,142) (958,465) 1,680,192 1,605,011 Capital leases - less amortization of $27,423 9,895 11,523 1,690,087 1,616,534 Other Property and Investments Leveraged leases 153,106 153,332 Net assets of discontinued real estate operations 2,770 11,562 Trojan decommissioning trust, at market value 69,261 58,485 Corporate Owned Life Insurance less loans of $24,320 in 1995 and $21,731 in 1994 69,964 65,687 Other investments 27,999 28,626 323,100 317,692 Current Assets Cash and cash equivalents 10,323 17,542 Accounts and notes receivable 84,845 91,418 Unbilled and accrued revenues 127,938 162,151 Inventories, at average cost 33,512 31,149 Prepayments and other 45,864 34,455 302,482 336,715 Deferred Charges Unamortized regulatory assets Trojan investment 330,521 402,713 Trojan decommissioning 316,434 338,718 Income taxes recoverable 200,595 217,967 Debt reacquisition costs 30,222 32,245 Energy efficiency programs 68,502 58,894 Other 45,265 47,787 WNP-3 settlement exchange agreement 169,626 173,308 Miscellaneous 22,109 16,698 1,183,274 1,288,330 $ 3,498,943 $ 3,559,271 Capitalization and Liabilities Capitalization Common stock $ 190,591 $ 189,358 Other paid-in capital 571,137 563,915 Unearned compensation (8,906) (13,636) Retained earnings 116,241 118,676 869,063 858,313 Cumulative preferred stock of subsidiary Subject to mandatory redemption 40,000 50,000 Not subject to mandatory redemption 69,704 69,704 Long-term debt 874,051 835,814 1,852,818 1,813,831 Current Liabilities Long-term debt and preferred stock due within 113,483 81,506 Short-term borrowings 74,216 148,598 Accounts payable and other accruals 82,420 104,254 Accrued interest 23,050 19,915 Dividends payable 17,999 18,109 Accrued taxes 48,389 27,778 359,557 400,160 Other Deferred income taxes 645,217 687,670 Deferred investment tax credits 53,558 56,760 Deferred gain on sale of assets 117,840 118,939 Trojan decommissioning and transition costs 383,836 396,873 Miscellaneous 86,117 85,038 1,286,568 1,345,280 $ 3,498,943 $ 3,559,271 The accompanying notes are an integral part of of these consolidated balance sheets.
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Portland General Corporation and Subsidiaries Consolidated Statements of Capitalization as of September 30, 1995 and December 31, 1994 (Unaudited) September 30 December 31 1995 1994 (Thousands of Dollars) Common Stock Equity Common stock, $3.75 par value per share 100,000,000 shares authorized, 50,824,141 and 50,495,492 shares outstanding $ 190,591 $ 189,358 Other paid-in capital - net 571,137 563,915 Unearned compensation (8,906) (13,636) Retained earnings 116,241 118,676 869,063 46.9% 858,313 47.3% Cumulative Preferred Stock Subject to mandatory redemption No par value, 30,000,000 shares authorized 7.75% Series, 300,000 shares outstanding 30,000 30,000 $100 par value, 2,500,000 shares authorized 8.10% Series, 200,000 shares and 300,000 shares outstanding 20,000 30,000 Current sinking fund (10,000) (10,000) 40,000 2.1 50,000 2.8 Not subject to mandatory redemption, $100 par value 7.95% Series, 298,045 shares outstanding 29,804 29,804 7.88% Series, 199,575 shares outstanding 19,958 19,958 8.20% Series, 199,420 shares outstanding 19,942 19,942 69,704 3.8 69,704 3.8 Long-Term Debt First mortgage bonds Maturing 1995 through 2000 4.70% Series due March 1, 1995 0 3,045 5-7/8% Series due June 1, 1996 5,066 5,216 6.60% Series due October 1, 1997 15,363 15,363 Medium-term notes - 5.65%-9.27% 276,000 251,000 Maturing 2001 through 2007 - 6.47%-9.07% 260,845 210,845 Maturing 2021 through 2023 - 7.75%-9.46% 195,000 195,000 Pollution control bonds Port of Morrow, Oregon, variable rate (Average 2.7% for 1994), due 2013 23,600 23,600 City of Forsyth, Montana, variable rate (Average 2.9% for 1994), due 2013 through 2016 118,800 118,800 Amount held by trustee (8,117) (8,355) Port of St. Helens, Oregon, due 2010 and 2014 (Average variable 2.7%-2.9% for 1994) 51,600 51,600 Medium-term notes maturing 1996 - 8.09% 30,000 30,000 Capital lease obligations 9,895 11,523 Other (518) (317) 977,534 907,320 Long-term debt due within one year (103,483) (71,506) 874,051 47.2 835,814 46.1 Total Capitalization $1,852,818 100.0% $1,813,831 100.0% The accompanying notes are an integral part of these consolidated statements.
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Portland General Corporation and Subsidaries Consolidated Statements of Cash Flow for the Three Months and Nine Months Ended September 30, 1995 and 1994 (Unaudited) Three Months Ended Nine Months Ended September 30 September 30 1995 1994 1995 1994 (Thousands of Dollars) Cash Provided (Used) By - Operations: Net income $ 14,181 $ 11,887 $ 44,630 $ 75,017 Adjustment to reconcile net income to net cash provided by operations: Depreciation and amortization 24,695 25,442 75,540 70,596 Amortization of WNP-3 exchange agreement 1,227 1,174 3,682 3,521 Amortization of Trojan investment 6,456 6,425 18,865 19,641 Amortization of Trojan decommissioning 3,511 2,805 9,826 8,415 Amortization of deferred charges - other (30) (339) (208) 2,547 Deferred income taxes - net 2,221 7,075 (1,651) 19,607 Other noncash revenues (1,597) (296) (3,969) (954) Changes in working capital: (Increase) Decrease in receivables 8,175 5,147 18,976 4,268 (Increase) Decrease in inventories 5,228 2,661 (2,363) 1,303 Increase (Decrease) in payables 16,931 27,071 (176) 5,830 Other working capital items - net (12,132) (32,379) (11,347) (28,980) Gain from discontinued operations 0 0 0 (6,472) Deferred charges - other (3,465) 5,622 (13,205) 5,378 Miscellaneous - net 5,985 6,258 11,713 13,573 Regulatory Disallowances 12,859 0 49,567 0 84,246 68,553 199,881 193,290 Investing Activities: Utility construction - new resources (8,386) (19,667) (37,797) (69,520) Utility construction - other (43,056) (33,179) (108,219) (94,587) Energy efficiency programs (4,439) (5,757) (13,391) (15,789) Rentals received from leveraged leases 8,050 6,469 19,735 19,351 Nuclear decommissioning trust contributions (3,046) (2,805) (13,553) (8,415) Nuclear decommissioning expenditures 1,805 0 8,413 0 Discontinued operations 1,853 (181) 8,792 26,884 Other (215) (2,310) (4,907) (4,637) (47,434) (57,430) (140,927) (146,713) Financing Activities: Short-term borrowings - net (25,856) (48,458) (74,381) (47,324) Borrowings from Corporate Owned Life Insurance 0 0 2,589 19,619 Long-term debt issued 0 75,000 75,000 75,000 Long-term debt retired 0 (34,112) (3,045) (45,577) Repayment of nonrecourse borrowings for leveraged leases (6,815) (4,804) (17,443) (16,865) Preferred stock retired 0 0 (10,000) (20,000) Common stock issued 2,303 2,479 6,865 47,685 Dividends paid (15,218) (15,044) (45,757) (44,754) (45,587) (24,939) (66,173) (32,216) Increase (Decrease) in Cash and Cash Equivalents (8,775) (13,816) (7,219) 14,361 Cash and Cash Equivalents at the Beginning of Period 19,098 31,379 17,542 3,202 Cash and Cash Equivalents at the End of Period $ 10,323 $ 17,563 $ 10,323 $ 17,563 Supplemental disclosures of cash flow information Cash paid during the period: Interest $ 14,923 $ 12,488 $ 50,934 $ 45,426 Income taxes 26,220 2,100 67,610 20,339 The accompanying notes are an integral part of these consolidated statements.
14 PORTLAND GENERAL CORPORATION AND SUBSIDIARIES NOTES TO FINANCIAL STATEMENTS (Unaudited) NOTE 1 PRINCIPLES OF INTERIM STATEMENTS The interim financial statements have been prepared by Portland General and, in the opinion of management, reflect all material adjustments which are necessary to a fair statement of results for the interim periods presented. Certain information and footnote disclosures made in the last annual report on Form 10-K have been condensed or omitted for the interim statements. Certain costs are estimated for the full year and allocated to interim periods based on the estimates of operating time expired, benefit received or activity associated with the interim period. Accordingly, such costs are subject to year-end adjustment. It is Portland General's opinion that, when the interim statements are read in conjunction with the 1994 Annual Report on Form 10-K, the disclosures are adequate to make the information presented not misleading. RECLASSIFICATIONS Certain amounts in prior years have been reclassified for comparative purposes. NOTE 2 LEGAL MATTERS BONNEVILLE PACIFIC CLASS ACTION AND LAWSUIT In April 1992 legal action was filed by Bonneville Pacific against Portland General, Holdings, and certain individuals affiliated with Portland General and Holdings alleging breach of fiduciary duty, tortious interference, breach of contract, and other actionable wrongs related to Holdings' investment in Bonneville Pacific. Following his appointment, the Bonneville Pacific bankruptcy trustee, on behalf of Bonneville Pacific, filed numerous amendments to the complaint. The complaint now includes allegations of RICO violations and RICO conspiracy, collusive tort, civil conspiracy, common law fraud, negligent misrepresentation, breach of fiduciary duty, liability as a partner for the debts of a partnership, and other actionable wrongs. Although the amount of damages sought is not specified in the Complaint, the Trustee has filed a damage disclosure calculation which purports to compute damages in amounts ranging from $340 million to $1 billion - subject to possible increase based on various factors. OTHER LEGAL MATTERS Portland General and certain of its subsidiaries are party to various other claims, legal actions and complaints arising in the ordinary course of business. These claims are not considered material. SUMMARY While the ultimate disposition of these matters may have an impact on the results of operations for a future reporting period, management believes, based on discussion of the underlying facts and circumstances with legal counsel, that these matters will not have a material adverse effect on the financial condition of Portland General. 15 PORTLAND GENERAL CORPORATION AND SUBSIDIARIES NOTES TO FINANCIAL STATEMENTS (Unaudited) OTHER BONNEVILLE PACIFIC RELATED LITIGATION Holdings has filed complaints seeking approximately $228 million in damages against Deloitte & Touche and certain other parties associated with Bonneville Pacific alleging that it relied on fraudulent and negligent statements and omissions by Deloitte & Touche and the other defendants when it acquired an interest in and made loans to Bonneville Pacific. NOTE 3 INCOME TAXES As a result of its examination of PGE's 1985 tax return the IRS proposed to disallow PGE's 1985 WNP-3 abandonment loss deduction on the premise that it is a taxable exchange. Portland General and the IRS have reached a tentative settlement regarding this issue. Management has previously provided for probable tax adjustments and is of the opinion that the ultimate disposition of this matter will not have a material adverse impact on the results of operations or cash flows of Portland General. NOTE 4 DEFERRED POWER COST RECOVERY In accordance with Oregon law, collection of PGE's power costs deferrals is subject to PUC review of PGE's reported earnings, adjusted for regulatory treatment of unusual and/or non-recurring items, as well as the determination of an appropriate rate of return on equity for a given review period. On August 8, 1995 as part of a consolidated request to recover deferred power costs and fixed costs associated with Coyote Springs, PGE filed earnings reviews for both of its outstanding power cost deferrals. On October 17, 1995 PGE and the PUC Staff reached an agreement on the Company's August 1995 filing that, if approved, would allow full recovery of the power costs deferred from January to March 1995 and partial recovery of the power costs deferred from July 1993 to March 1994. As a result of the agreement management believes that it is unlikely that the PUC will authorize collection of all of the deferred power costs and has recorded a third quarter $13 million, after tax, loss provision. A PUC order on the regulatory proceeding is expected during the fourth quarter 1995. 16 PORTLAND GENERAL ELECTRIC COMPANY AND SUBSIDIARIES FINANCIAL STATEMENTS AND RELATED INFORMATION TABLE OF CONTENTS Page Number Management Discussion and Analysis of Financial Condition and Results of Operations * 3-10 Financial Statements 18-21 Notes to Financial Statements ** 15-16 * The discussion is substantially the same as that disclosed by Portland General and, therefore, is incorporated by reference to the information on the page numbers listed above. ** The notes are substantially the same as those disclosed by Portland General and are incorporated by reference to the information on the page numbers shown above, excluding the Bonneville Pacific litigation discussion contained in Note 2 which relates solely to Portland General. 17
Portland General Electric Company and Subsidiaries Consoliated Statements of Income for the Three Months and Nine Months Ended September 30, 1995 and 1994 (Unaudited) Three Months Ended Nine Months Ended September 30 September 30 1995 1994 1995 1994 (Thousands of Dollars) Operating Revenues $ 222,240 $ 213,897 $ 699,607 $ 693,342 Operating Expenses Purchased power and fuel 64,428 83,732 198,740 248,549 Production and distribution 15,963 15,282 47,404 46,295 Maintenance and repairs 10,563 12,267 31,880 35,494 Administrative and other 24,943 25,013 75,904 71,425 Depreciation and amortization 33,318 31,257 99,520 92,345 Taxes other than income taxes 11,915 12,073 38,650 39,092 Income taxes 21,208 7,931 71,720 52,511 182,338 187,555 563,818 585,711 Net Operating Income 39,902 26,342 135,789 107,631 Other Income (Deductions) Regulatory disallowances - net of income taxes of $8,441 and $25,542 (12,859) 0 (49,567) 0 Allowance for equity funds used during construction 1,274 0 1,960 0 Other 5,348 5,286 14,852 15,565 Income taxes (258) (689) (518) (1,639) (6,495) 4,597 (33,273) 13,926 Interest Charges Interest on long-term debt and other 17,735 15,706 51,546 45,551 Interest on short-term borrowings 1,217 1,669 5,463 3,979 Allowance for borrowed funds used during construction (2,334) (1,243) (6,722) (2,507) 16,618 16,132 50,287 47,023 Net Income 16,789 14,807 52,229 74,534 Preferred Dividend Requirement 2,380 2,583 7,380 8,217 Income Available for Common Stock $ 14,409 $ 12,224 $ 44,849 $ 66,317 Consolidated Statements of Retained Earnings for the Three Months and Nine Months Ended September 30, 1995 and 1994 (Unaudited) Three Months Ended Nine Months Ended September 30 September 30 1995 1994 1995 1994 (Thousands of Dollars) Balance at Beginning of Period $ 222,870 $ 201,808 $ 216,468 $ 179,297 Net Income 16,789 14,807 52,229 74,534 ESOP Tax Benefit & Amortization of Preferred Stock Premium (470) (484) (1,418) (1,280) 239,189 216,131 267,279 252,551 Dividends Declared Common stock 13,682 12,828 36,772 43,614 Preferred stock 2,380 2,583 7,380 8,217 16,062 15,411 44,152 51,831 Balance at End of Period $ 223,127 $ 200,720 $ 223,127 $ 200,720 The accompanying notes are an integral part of these consolidated statements.
18
Portland General Electric Company and Subsidiaries Consolidated Balance Sheets as of September 30, 1995 and December 31, 1994 (Unaudited) September 30 December 31 1995 1994 (Thousands of Dollars) Assets Electric Utility Plant - Original Cost Utility plant (includes Construction Work in Progress of $201,963 and $148,267) $ 2,699,334 $ 2,563,476 Accumulated depreciation (1,019,142) (958,465) 1,680,192 1,605,011 Capital leases - less amortization of $27,423 and $25,796 9,895 11,523 1,690,087 1,616,534 Other Property and Investments Trojan decommissioning trust, at market value 69,261 58,485 Corporate Owned Life Insurance, less loans of $ 24,320 in 1995 41,785 40,034 and $ 21,731 in 1994 Other investments 25,101 26,074 136,147 124,593 Current Assets Cash and cash equivalents 4,438 9,590 Accounts and notes receivable 82,420 91,672 Unbilled and accrued revenues 127,938 162,151 Inventories, at average cost 33,512 31,149 Prepayments and other 44,082 33,148 292,390 327,710 Deferred Charges Unamortized regulatory assets Trojan investment 330,521 402,713 Trojan decommissioning 316,434 338,718 Income taxes recoverable 200,595 217,967 Debt reacquisition costs 30,222 32,245 Energy efficiency programs 68,502 58,894 Other 45,265 47,787 WNP-3 settlement exchange agreement 169,626 173,308 Miscellaneous 19,143 13,682 1,180,308 1,285,314 $ 3,298,932 $ 3,354,151 Capitalization and Liabilities Capitalization Common stock equity $ 847,211 $ 834,226 Cumulative preferred stock Subject to mandatory redemption 40,000 50,000 Not subject to mandatory redemption 69,704 69,704 Long-term debt 874,051 805,814 1,830,966 1,759,744 Current Liabilities Long-term debt and preferred stock due within one year 83,483 81,506 Short-term borrowings 74,216 148,598 Accounts payable and other accruals 82,723 104,612 Accrued interest 22,835 19,084 Dividends payable 16,350 15,702 Accrued taxes 53,999 32,820 333,606 402,322 Other Deferred income taxes 509,491 549,160 Deferred investment tax credits 53,558 56,760 Deferred gain on sale of assets 117,840 118,939 Trojan decommissioning and transition costs 383,836 396,873 Miscellaneous 69,635 70,353 1,134,360 1,192,085 $ 3,298,932 $ 3,354,151 The accompanying notes are an integral part of these consolidated balance sheets.
19
Portland General Electric Company and Subsidiaries Consolidated Statements of Capitalization as of September 30, 1995 and December 31, 1994 (Unaudited) September 30 December 31 1995 1994 (Thousands of Dollars) Common Stock Equity Common stock, $3.75 par value per share, 100,000,000 shares authorized, 42,758,877 shares outstanding $ 160,346 $ 160,346 Other paid-in capital - net 471,766 470,008 Unearned compensation (8,028) (12,596) Retained earnings 223,127 216,468 847,211 46.3% 834,226 47.4% Cumulative Preferred Stock Subject to mandatory redemption No par value, 30,000,000 shares authorized 7.75% Series, 300,000 shares outstanding 30,000 30,000 $100 par value, 2,500,000 shares authorized 8.10% Series, 200,000 and 300,000 shares outstanding 20,000 30,000 Current sinking fund (10,000) (10,000) 40,000 2.2 50,000 2.8 Not subject to mandatory redemption, $100 par 7.95% Series, 298,045 shares outstanding 29,804 29,804 7.88% Series, 199,575 shares outstanding 19,958 19,958 8.20% Series, 199,420 shares outstanding 19,942 19,942 69,704 3.8 69,704 4.0 Long-Term Debt First mortgage bonds Maturing 1995 through 2000 4.70% Series due March 1, 1995 0 3,045 5-7/8% Series due June 1, 1996 5,066 5,216 6.60% Series due October 1, 1997 15,363 15,363 Medium-term notes - 5.65%-9.27% 276,000 251,000 Maturing 2001 through 2007 - 6.47%-9.07% 260,845 210,845 Maturing 2021 through 2023 - 7.75%-9.46% 195,000 195,000 Pollution control bonds Port of Morrow, Oregon, variable rate (Average 2.7% for 1994), due 2013 23,600 23,600 City of Forsyth, Montana, variable rate (Average 2.9% for 1994), due 2013 through 2016 118,800 118,800 Amount held by trustee (8,117) (8,355) Port of St. Helens, Oregon, due 2010 and 2014 (Average variable 2.7% - 2.9% for 1994) 51,600 51,600 Capital lease obligations 9,895 11,523 Other (518) (317) 947,534 877,320 Long-term debt due within one year (73,483) (71,506) 874,051 47.7 805,814 45.8 Total Capitalization $ 1,830,966 100.0% $ 1,759,744 100.0% The accompanying notes are an integral part of these consolidated statements.
20
Portland General Electric Company and Subsidaries Consolidated Statements of Cash Flow for the Three Months and Nine Months Ended September 30, 1995 and 1994 (Unaudited) Three Months Ended Nine Months Ended September 30 September 30 1995 1994 1995 1994 (Thousands of Dollars) Cash Provided (Used In) Operations: Net Income $ 16,789 $ 14,807 $ 52,229 $ 74,534 Non-cash items included in net income: Depreciation and amortization 24,729 25,221 75,533 70,363 Amortization of WNP-3 exchange agreement 1,227 1,174 3,682 3,521 Amortization of Trojan investment 6,456 6,425 18,865 19,641 Amortization of Trojan decommissioning 3,511 2,805 9,826 8,415 Amortization of deferred charges - other (30) (339) (208) 2,547 Deferred income taxes - net 2,113 6,592 1,423 11,182 Other noncash revenues (1,275) 0 (1,960) 0 Changes in working capital: (Increase) Decrease in receivables 7,997 5,270 21,655 2,838 (Increase) Decrease in inventories 5,228 2,662 (2,363) 1,303 Increase (Decrease) in payables 19,678 26,452 781 10,399 Other working capital items - net (10,946) (31,616) (11,156) (28,623) Deferred charges - other (3,465) 5,622 (13,205) 5,378 Miscellaneous - net 6,139 6,388 11,116 9,089 Regulatory disallowances 12,859 0 49,567 0 91,010 71,463 215,785 190,587 Investing Activities: Utility construction - new resources (8,386) (19,667) (37,797) (69,520) Utility construction - other (43,056) (33,179) (108,219) (94,587) Energy efficiency programs (4,439) (5,757) (13,391) (15,789) Nuclear decommissioning trust contributions (3,046) (2,805) (13,553) (8,415) Nuclear decommissioning expenditures 1,805 0 8,413 0 Other investments (70) (451) (3,048) (2,997) (57,192) (61,859) (167,595) (191,308) Financing Activities: Short-term debt - net (25,869) (39,897) (74,381) (19,473) Borrowings from Corporate Owned Life Insurance 0 0 2,589 19,619 Long-term debt issued 0 75,000 75,000 75,000 Long-term debt retired 0 (24,195) (3,045) (33,077) Preferred stock retired 0 0 (10,000) (20,000) Common stock issued 0 0 0 41,055 Dividends paid (13,926) (17,976) (43,505) (57,615) (39,795) (7,068) (53,342) 5,509 Increase (Decrease) in Cash and Cash Equivalents (5,977) 2,536 (5,152) 4,788 Cash and Cash Equivalents at the Beginning of Period 10,415 4,351 9,590 2,099 Cash and Cash Equivalents at the End of Period $ 4,438 $ 6,887 $ 4,438 $ 6,887 Supplemental disclosures of cash flow information Cash paid during the period: Interest $ 13,709 $ 11,265 $ 48,490 $ 41,030 Income taxes 27,721 5,358 72,842 30,818 The accompanying notes are an integral part of these consolidated statements.
21 PORTLAND GENERAL CORPORATION AND SUBSIDIARIES PORTLAND GENERAL ELECTRIC COMPANY AND SUBSIDIARIES PART II. OTHER INFORMATION ITEM 1. LEGAL PROCEEDINGS For further information, see Portland General's and PGE's reports on Form 10-K for the year ended December 31, 1994. UTILITY SOUTHERN CALIFORNIA EDISON COMPANY V. PGE, OREGON COURT OF APPEALS, OCTOBER 9, 1995 Southern California Edison (SCE) has appealed a Multnomah County Circuit Court order which granted PGE summary judgment in a long-term power sales contract dispute. ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K a. Exhibits NUMBER EXHIBIT PGC PGE 1 Underwriting agreement X X 24 Power of Attorney X X 27 Financial Data Schedule - UT X X (Electronic Filing Only) b. Reports on Form 8-K August 16, 1995 - Item 5. Other Events: Update on Trojan Decommissioning, legal proceedings and regulatory matters. October 3, 1995 - Item 5. Other Events: Financing update. Item 7. Exhibits: (4)b Indentures. (4)c Indenture supplement. October 5, 1995 - Item 5. Other Events: Regulatory update. October 17, 1995 - Item 5. Other Events: Regulatory update. 22 SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the registrants have duly caused this report to be signed on their behalf by the undersigned hereunto duly authorized. PORTLAND GENERAL CORPORATION PORTLAND GENERAL ELECTRIC COMPANY (Registrants) October 31, 1995 By /s/ Joseph E. Feltz Joseph E. Feltz Assistant Controller Assistant Treasurer *Joseph M. Hirko Sr. Vice President and Chief Financial Officer * Signed on behalf of this person. October 31, 1995 By /s/ Joseph E. Feltz Joseph E. Feltz (Attorney-in-Fact) 23 EX-27 2 WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
UT THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE CONSOLIDATED FINANCIAL STATEMENTS FILED ON FORM 10-Q FOR THE PERIOD ENDED SEPTEMBER 30, 1995 FOR PORTLAND GENERAL CORPORATION AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS. 1000 3-MOS DEC-31-1995 SEP-30-1995 PER-BOOK 1,690,087 323,100 302,482 1,183,274 0 3,498,943 190,591 571,137 107,335 869,063 40,000 69,704 866,573 0 0 74,216 101,066 10,000 7,478 2,417 1,458,426 3,498,943 222,612 20,817 161,529 182,346 40,266 (6,447) 33,819 17,258 16,561 2,380 14,181 15,247 62,888 84,246 0.28 0.28 INCLUDING CAPITAL LEASE OBLIGATIONS, NET OF AMORTIZATION. INCLUDES UNEARNED COMPENSATION OF $8,906. NET OF MANDATORY SINKING FUND OF $10,000. NET OF CURRENT PORTION. NET OF CURRENT PORTION OF CAPITAL LEASE OBLIGATIONS. EXCLUSIVE OF INTEREST EXPENSE AND PREFERRED DIVIDEND REQUIREMENT FOR PGE. INCLUDING AFUDC. PRIOR TO PREFERRED DIVIDEND REQUIREMENTS. REPRESENTS THE 12 MONTH-TO-DATE FIGURE ENDING SEPTEMBER 30, 1995.
EX-27 3 WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
UT THE SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE CONSOLIDATED FINANCIAL STATEMENTS FILED ON FORM 10-Q FOR THE PERIOD ENDED SEPTEMBER 30, 1995 FOR PORTLAND GENERAL ELECTRIC COMPANY AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS. 1000 3-MOS DEC-31-1995 SEP-30-1995 PER-BOOK 1,690,087 136,147 292,390 1,180,308 0 3,298,932 160,346 471,766 215,099 847,211 40,000 69,704 866,573 0 0 74,216 71,066 10,000 7,478 2,417 1,310,267 3,298,932 222,240 21,208 161,130 182,338 39,902 (6,495) 33,407 16,618 16,789 2,380 14,409 13,682 60,445 91,010 0 0 INCLUDING CAPITAL LEASE OBLIGATIONS, NET OF AMORTIZATION. INCLUDES UNEARNED COMPENSATION OF $8,028. NET OF MANDATORY SINKING FUND OF $10,000. NET OF CURRENT PORTION. NET OF CURRENT PORTION OF CAPITAL LEASE OBLIGATIONS. EXCLUSIVE OF INTEREST EXPENSE AND PREFERRED DIVIDEND REQUIREMENT FOR PGE. INCLUDING AFUDC. PRIOR TO PREFERRED DIVIDEND REQUIREMENTS. REPRESENTS THE 12 MONTH-TO-DATE FIGURE ENDING SEPTEMBER 30, 1995. PORTLAND GENERAL ELECTRIC COMPANY, AS A WHOLLY OWNED SUBSIDIARY OF PORTLAND GENERAL CORPORATION, DOES NOT REPORT EARNINGS PER SHARE INFORMATION.
EX-1 4 PORTLAND GENERAL ELECTRIC COMPANY JUNIOR SUBORDINATED DEBENTURES UNDERWRITING AGREEMENT October 3, 1995 Goldman Sachs & Co. Merrill Lynch, Pierce, Fenner & Smith Incorporated Smith Barney Inc. c/o Goldman, Sachs & Co. 85 Broad Street New York, New York 10004 Dear Sirs: PORTLAND GENERAL ELECTRIC COMPANY, an Oregon corporation (the "Company") confirms its agreement with you and each of the Underwriters named in Schedule A attached hereto (which term shall also include any underwriter substituted as hereinafter in Section 8 provided), with respect to the sale by the Company as set forth in Section 2 and the purchase by the Underwriters, acting severally and not jointly, of the aggregate principal amount of 8 1/4 % Quarterly Income Debt Securities (QUIDS) (Junior Subordinated Deferrable Interest Debentures, Series A) of the Company (the "Debentures") set forth opposite their names in Schedule A. The Debentures will be issued under and secured by the Company's Indenture dated as of September 1, 1995 to The Bank of New York, as Trustee (the "Original Indenture"), as amended and supplemented by the supplemental indenture thereto (the "Supplemental Indenture") dated as of October 1, 1995, executed and delivered by the Company to the Trustee (the Original Indenture, as supplemented by the Supplemental Indenture, being sometimes hereinafter referred to collectively as the "Indenture"). The Debentures are to mature December 31, 2035 and are to bear interest at the rate set forth in the title thereof from October 10, 1995. The Debentures are otherwise to conform to the description thereof to be contained in the Supplemental Prospectus relating to the Debentures referred to in Section 1(a) hereof and to the provisions of the Indenture and the Supplemental Indenture, a form of which Supplemental Indenture has been filed as an exhibit to the Registration Statement referred to below. No amendment to said form of Supplemental Indenture is to be made prior to the Closing Date hereinafter referred to unless said amendment is first approved by you. 1. REPRESENTATIONS AND WARRANTIES OF THE COMPANY. The Company represents and warrants to each Underwriter that: (a) A registration statement (File No. 33-62549) on Form S-3 with respect to the Debentures, including a preliminary prospectus, copies of which have heretofore been delivered to you, has been prepared by the Company in conformity with the requirements of the Securities Act of 1933, as amended (the "Act"), the Trust Indenture Act of 1939, as amended (the "Trust Indenture Act"), and the Rules and Regulations of the Securities and Exchange Commission (the "Commission") under such Act, and has been filed with and declared effective by the Commission. The Company will file with or mail for filing to the Commission a supplemental prospectus relating to the Debentures pursuant to Rule 424 under the Act. The registration statement when it became effective and as it may be amended as of the date of this Agreement is hereafter referred to as the "Registration Statement" and such supplemented prospectus including all documents incorporated therein by reference is hereafter referred to as the "Prospectus." If the Company files any documents pursuant to Section 13 or 14 of the Securities Exchange Act of 1934, as amended (the "Exchange Act") after the time the Registration Statement became effective and prior to the termination of the offering of the Debentures by the Underwriters, which documents are deemed to be incorporated by reference in the Prospectus, the term "Prospectus", unless the context otherwise indicates or requires, shall refer to said Prospectus as supplemented by the documents so filed from and after the time said documents are filed with the Commission. (b) The Commission has not issued an order preventing or suspending the use of any prospectus relating to the Debentures, and when the Registration Statement became effective and the Prospectus is filed with the Commission and at all times subsequent thereto up to and at the Closing Date (as hereinafter defined), (i) the Registration Statement and the Prospectus and any amendment or supplement thereto will contain all statements which are required to be stated therein by the Act, the Trust Indenture Act and the Rules and Regulations of the Commission thereunder and will in all respects conform to the requirements of such Act and such Rules and Regulations and (ii) neither the Registration Statement nor the Prospectus nor any amendment or supplement thereto will include any untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary to make the statements therein not misleading; PROVIDED, HOWEVER, that the Company makes no representations or warranties as to information contained in or omitted from the Registration Statement or the Prospectus or any such amendment or supplement in reliance upon, and in conformity with, written information furnished to the Company by either of you expressly for use in the preparation thereof. (c) The documents incorporated by reference in the Prospectus, when they became effective or were filed with the Commission, as the case may be, conformed in all material respects to the requirements of the Act or Exchange Act, as applicable, and the Rules and Regulations of the Commission thereunder, and any further documents so filed and incorporated by reference will, when they become effective or are filed with the Commission, as the case may be, conform in all material respects to the requirements of the Act or the Exchange Act, as applicable, and the Rules and Regulations of the Commission thereunder; and none of such documents contained or will contain an untrue statement of a material fact or omitted or will omit to state a material fact required to be stated therein or necessary to make the statements therein not misleading, PROVIDED, HOWEVER, that this representation and warranty shall not apply to any statements or omissions made in reliance upon, and in conformity with, written information furnished to the Company by either of you expressly for use therein. (d) The Company and each of its active subsidiaries have been duly incorporated and are validly existing as corporations in good standing under the laws of the respective jurisdictions of their incorporation, with power and authority (corporate and other) to own their respective properties and conduct their respective businesses as described in the Prospectus; and each of the Company and such subsidiaries is duly qualified to do business as a foreign corporation in each jurisdiction in which the character of the properties owned or leased by it or, to the Company's knowledge, the nature of the business it transacts makes such qualification necessary. (e) The Company and each of its active subsidiaries have valid and sufficient grants, franchises, miscellaneous permits and easements, free from unduly burdensome restrictions, adequate for the conduct of their respective businesses in the territories in which they are now conducting such businesses and the ownership of the respective properties now owned by them -2- and, except as otherwise set forth in the Prospectus, there are no legal or governmental proceedings pending or, to the Company's knowledge, threatened which might result in a material modification, suspension or revocation thereof. (f) Subsequent to the respective dates as of which information is given in the Registration Statement and Prospectus and prior to the Closing Date, and except as contemplated in the Prospectus, (i) the Company has not incurred or will not have incurred any material liabilities or obligations, direct or contingent, or entered into any material transaction, not in the ordinary course of business, (ii) there has not been and will not have been any material change in the capital stock or funded debt of the Company or any material adverse change in the financial position or results of operations of the Company and its subsidiaries taken as a whole, and (iii) no material adverse legal or governmental proceedings affecting the Company or the transactions contemplated hereby have been or will have been instituted or, to the Company's knowledge, threatened. (g) On the Closing Date, the Debentures will have been duly authorized, executed and authenticated and, when issued and delivered hereunder, will constitute valid and legally binding obligations of the Company entitled to the benefits provided by the Indenture and will conform to the description thereof contained in the Prospectus; and the execution and delivery of, and compliance with this Agreement, the Debentures and the Indenture will not conflict with or constitute a breach of or default under the Articles of Incorporation or Bylaws of the Company, any indenture, mortgage, deed of trust or other agreement or instrument by which the Company is or at the Closing Date will be bound, or any law, administrative regulation or court decree. (h) In the opinion of counsel for the Company, the Company is a "subsidiary company" of a "holding company" within the meaning of the Public Utility Holding Company Act of 1935, as amended (the "PUHCA"), which holding company is exempt from application of all provisions of the PUHCA except Section 9(a)(2) thereof. 2. PURCHASE AND SALE OF DEBENTURES. Upon the basis of the representations and warranties and upon the terms and conditions herein set forth, the Company agrees to sell to each of you, severally and not jointly, and each of you, upon the basis of the representations and warranties herein contained and subject to the conditions hereinafter stated, agrees to purchase from the Company, severally and not jointly, the principal amount of Debentures set forth opposite your name in Schedule A hereto at a purchase price of 96.85% of the principal amount thereof. 3. OFFERING BY UNDERWRITERS. The Company is advised by you that each of you, severally, propose to offer the Debentures to the public as soon as in your judgment is advisable. 4. DELIVERY AND PAYMENT. The Debentures to be purchased by each Underwriter hereunder will be represented by one or more definitive global Debentures in book-entry form which will be deposited by or on behalf of the Company with The Depositary Trust Company ("DTC") or its designated custodian. The Company will deliver the Debentures to the Representatives, for the account of each Underwriter, against payment by or on behalf of such Underwriter of the purchase price therefor by certified or official bank check or checks (or as otherwise agreed by the Company and the Representatives), payable to the order of the Company in New York Clearing House (next day) funds, by causing DTC to credit the Debentures to the account of the Representatives at DTC. The Company will cause the certificates representing the Debentures to be made available to Goldman, Sachs & Co. for checking at least twenty-four hours prior to the Time of Delivery (as defined below) at the office of DTC or its designated custodian (the "Designated Office"). The time and date of such delivery and payment shall be 9:30 a.m., New York -3- City time, on October 10, 1995 or such other time and date as Goldman, Sachs & Co. and the Company may agree upon in writing. Such time and Date are herein called the Time of Delivery." Unless otherwise agreed to by the Company and the Representatives, the documents to be delivered at the time of Delivery by or on behalf of the parties hereto pursuant to Section 5 hereof, including the cross receipt for the Debentures and any additional documents requested by the Underwriters pursuant to Section 5(h) hereof, will be delivered at the offices of Morgan, Lewis & Bockius LLP, 101 Park Avenue, New York, New York 10178 (the "Closing Location"), and the Debentures will be delivered at the Designated Office, all at the Time of Delivery. Unless otherwise agreed to by the Company and the Representatives, a meeting will be held at the Closing Location at 3:00 p.m., New York City time, on the New York Business Day next preceding the Time of Delivery, at which meeting the final drafts of the documents to be delivered pursuant to the preceding sentence will be available for review by the parties hereto. For the purposes of this Section 4, "New York Business Day" shall mean each Monday, Tuesday, Wednesday, Thursday and Friday which is not a day on which banking institutions in New York City are generally authorized or obligated by law or executive order to close. 5. CONDITIONS TO UNDERWRITERS' OBLIGATIONS. Your several obligations hereunder are subject to the accuracy of the representations and warranties on the part of the Company herein at and as of the date hereof and at and as of the Closing Date, to the accuracy of the statements of Company officers made pursuant to the provisions hereof, to the performance by the Company of its obligations hereunder and to the following additional conditions: (a) No stop order suspending the effectiveness of the Registration Statement shall be in effect at the Closing Date; no proceedings for that purpose shall be pending before or threatened by the Commission at the Closing Date; any request for additional information on the part of the Commission (to be included in the Registration Statement or the Prospectus or otherwise) shall have been complied with to the satisfaction of Morgan, Lewis & Bockius LLP, counsel for the Underwriters; subsequent to the execution of this Agreement, the rating assigned by any nationally recognized securities rating agency to any debt securities or preferred stock of the Company as of the date of this Agreement shall not have been lowered at or before the Closing Date; and no amendment or supplement to the Registration Statement or Prospectus shall have been filed hereafter to which you shall have objected, in writing, after having received reasonable notice. (b) The legality and sufficiency of all proceedings relative to the authorization and issuance of the stock shall have been approved by Steven F. McCarrel, Deputy General Counsel of the Company and you shall have received his opinion or opinions, dated the Closing Date, and in form satisfactory to counsel for the Underwriters, to the effect that: (i) The Company is a corporation duly organized and validly existing and in good standing under the laws of the State of Oregon and is duly qualified to do business as a foreign corporation in the States of Arizona, California, Washington and Montana and the District of Columbia, with power and authority (corporate and other) to own its properties and operate its business, and neither the character of the properties owned by it nor the nature of the business it transacts makes necessary its licensing or qualification as a foreign corporation in any other state or jurisdiction; (ii) The Company's subsidiaries have each been duly organized and are validly existing and in good standing under the laws of the states or jurisdictions in which they have been organized, with power and authority (corporate and other) to own their -4- respective properties and to operate their respective businesses, and each of such corporations is duly qualified to do business as a foreign corporation in each jurisdiction in which the character of the properties owned or leased by it or the nature of the business it transacts makes such qualification necessary; (iii) The Company and each of such active subsidiaries have valid and sufficient grants, franchises, miscellaneous permits and easements free from unduly burdensome restrictions, adequate for the conduct of their respective businesses in the territories in which they are now conducting such businesses and the ownership of the respective properties now owned by them; (iv) All material contracts to which the Company is a party and which are described or referred to in the Prospectus are valid and legally binding contracts of the Company, and, except as the validity thereof may be the subject of litigation referred to in the Prospectus, to the best of such counsel's knowledge, of the other parties thereto; (v) All authorizations, approvals, consents or other orders of any governmental authority or agency required in connection with the authorization, issuance and sale of the Debentures by the Company pursuant to this Agreement have been obtained and continue in full force and effect; (vi) The Indenture has been duly authorized, executed and delivered, has been duly qualified under the Trust Indenture Act, and constitutes a valid and legally binding instrument in accordance with its terms, except as limited by bankruptcy, insolvency, fraudulent conveyance, reorganization or other similar laws relating to or affecting the enforcement of creditors' rights generally and general equitable principles (whether considered in a proceeding in equity or at law); (vii) The Debentures are in due and proper form, have been duly and validly authorized and executed by the Company and, when authenticated and delivered in accordance with the Indenture and paid for by the purchasers thereof in accordance with this Agreement, will constitute valid and legally binding agreements of the Company enforceable in accordance with their respective terms, except as limited by bankruptcy, insolvency, fraudulent conveyance, reorganization or other similar laws relating to or affecting the enforcement of creditors' rights generally and general equitable principles (whether considered in a proceeding in equity or at law); the Debentures have been listed (subject to official notice of issuance) on the New York Stock Exchange; (viii) The Debentures and the Indenture conform to the descriptions thereof contained in the Registration Statement and Prospectus and the statements in the Registration Statement and Prospectus, recited therein as having been prepared or reviewed by such counsel, are true and correct; (ix) This Agreement has been duly authorized, executed and delivered by the Company; (x) The Registration Statement has become effective under the Act, and, to the best of the knowledge of such counsel, no stop order suspending the effectiveness of the Registration Statement is in effect and no proceedings for that purpose are pending before or threatened by the Commission, and the Registration Statement and Prospectus, and any amendment or supplement thereto (except as to financial statements and other -5- financial data contained therein, as to which such counsel need express no opinion) comply as to form in all material respects with the applicable requirements of the Act, the Trust Indenture Act and the Rules and Regulations of the Commission under such Acts; and such counsel does not believe that at the date hereof or at the Closing Date either the Registration Statement or the Prospectus, or any such amendment or supplement, contains any untrue statement of a material fact or omits to state any material fact required to be stated therein or necessary in order to make the statements therein not misleading; (xi) The descriptions in the Registration Statement and Prospectus of statutes, legal and governmental proceedings, and contracts and other documents are, to the best of the knowledge of such counsel, accurate and fairly present the information required to be shown therein; and such counsel does not know of any legal or governmental proceedings required to be described in the Prospectus which are not described as required or any contracts or documents of a character required to be described in the Registration Statement or Prospectus or to be filed as exhibits to the Registration Statement which are not described or filed as required; (xii) The execution and delivery of, and compliance with, this Agreement, the Debentures and the Indenture will not conflict with or constitute a breach of or default under the Articles of Incorporation or Bylaws of the Company, any indenture, mortgage, deed of trust or other agreement or instrument known to such counsel by which the Company is bound, or any applicable law, or to the best of his knowledge, any administrative regulation or court decree; and (xiii) The Company is a "subsidiary company" of a "holding company" within the meaning of the PUHCA, which holding company is exempt from application of all provisions of the PUHCA except Section 9(a)(2) thereof. In rendering such opinion counsel may rely as to matters involving the laws of any jurisdiction other than the State of Oregon, upon the opinion or opinions of such local counsel as shall be acceptable to you and counsel for the Underwriters; and with respect to the opinions contemplated by clauses (i) and (ii) of paragraph (b) of this Section 5, upon advices from public officials as to the good standing of the Company and its subsidiaries. (c) You shall have received from Morgan, Lewis & Bockius LLP, counsel for the Underwriters, such opinion or opinions, dated the Closing Date, with respect to the validity of the Debentures, the Indenture, including the Supplemental Indenture, the Registration Statement, the Prospectus and other related matters as you may require, and the Company shall have furnished to such counsel such documents as they reasonably request for the purpose of enabling them to pass upon such matters. In giving the opinions contemplated by paragraph (c) of this Section 5, counsel may rely on certificates of responsible officers of the Company as to matters of fact and upon advice from state authorities as to the good standing of the Company and its subsidiaries. (d) You shall have received a certificate, dated the Closing Date, signed by the Chairman, President or any Vice President and the Treasurer or any Assistant Treasurer or the Controller of the Company, to the effect that, to the best of their knowledge: -6- (i) No stop order suspending the effectiveness of the Registration Statement is in effect and no proceedings for such purpose are pending before or threatened by the Commission; (ii) Since the respective dates as of which information is given in the Registration Statement and the Prospectus as supplemented on the date of this Agreement, there has not been any material adverse change in the condition of the Company and its subsidiaries, financial or otherwise, or in the results of operations of the Company and its subsidiaries, except as reflected in or contemplated by the Registration Statement and the Prospectus as supplemented on the date of this Agreement, and that except as so reflected or contemplated since such dates there has not been any material transaction entered into by the Company or any of its subsidiaries, other than transactions in the ordinary course of business; (iii) The Company does not have any material contingent obligations which are not disclosed in the Registration Statement and the Prospectus; (iv) The representations and warranties of the Company herein are true and correct in all material respects at and as of the Closing Date; and (v) The Company has performed all agreements herein contained to be performed on its part at or prior to the Closing Date. (e) You shall have received on the date hereof and on the Closing Date, from Arthur Andersen LLP, letters in form and substance satisfactory to you. (f) All approvals and consents of the Public Utility Commission of Oregon required for the valid issuance and sale of the Debentures by the Company in accordance with the provisions of this Agreement shall have been obtained. (g) Prior to the Closing Date and subsequent to the date of this Agreement, the Company shall not have sustained a substantial loss by fire, flood, accident or other calamity which, whether or not such loss shall have been insured, nor shall any regulatory authority having jurisdiction over the Company have made any materially adverse determination not described in the Prospectus which, in any of the above events, in your judgment renders it inadvisable to proceed with the delivery of the Debentures. (h) The Company shall have furnished to you, in form and substance satisfactory to you and to counsel for the Underwriters, such other certificates and opinions as you may reasonably request with respect to the matters contemplated herein. (i) Subsequent to the date of this Agreement, (i) trading on the New York Stock Exchange shall not have been suspended or limited by the New York Stock Exchange, Inc. or by order of the Commission or any other governmental authority having jurisdiction nor shall a general banking moratorium have been declared by Federal or New York authorities; (ii) there shall not have been any suspension of trading of any securities of the Company on any exchange or in the over-the-counter market; (iii) there shall not have been an outbreak or escalation of hostilities between the United States and any foreign power, or of any other insurrection or armed conflict involving or affecting the United States, or any substantial national or international calamity or emergency, if in your judgment, the effect of any such outbreak, escalation, insurrection, conflict, calamity or emergency makes it impractical or inadvisable to proceed with completion of the delivery of the Debentures; (iv) the rating assigned by any nationally recognized securities rating agency to any debt securities or preferred stock of the Company -7- shall not have been lowered; or (v) except as set forth in the Prospectus first filed pursuant to Rule 424 under the Act after the date hereof, there shall not have been any material adverse change in the condition or prospects of the Company and its subsidiaries as a whole, financial or otherwise which, in any case, in your judgment, renders it inadvisable to proceed with delivery of the Debentures. All such opinions, certificates, letters and documents shall be deemed to be in compliance with the provisions hereof only if they are in all material respects satisfactory to you and your counsel. In case any of the conditions specified above in this Section 5 shall not have been fulfilled at the Closing Date, you may waive the compliance by the Company with any such condition, by mailing or delivering written notice thereof to the Company. If any condition of the Underwriters' obligations hereunder to be satisfied on or prior to the Closing Date is not so satisfied, you may terminate this Agreement without liability on the part of any Underwriter or of the Company, except for the expenses to be paid or reimbursed by the Company pursuant to Section 6(h) hereof and except for any liability under Section 8 hereof. 6. COVENANTS BY THE COMPANY. In further consideration of the agreements by the Underwriters herein contained, the Company covenants as follows: (a) To file no amendment to the Registration Statement and, prior to the completion of the offering of the Debentures to make no supplement to the Prospectus, including the initial supplement to the Prospectus which is filed pursuant to Rule 424 under the Act referred to in Section 1(a) hereof, of which you have not been advised and furnished with a copy or to which you have promptly and reasonably objected, and to advise you as soon as the Company is advised thereof, and to confirm the advice in writing, (i) of any request of the Commission for amendment or supplementation of the Registration Statement or Prospectus or for additional information relating thereto and (ii) of the issuance by the Commission of any stop order suspending the effectiveness of the Registration Statement or any amendment to the Registration Statement, or of the initiation or threat of initiation of any proceedings for such purpose. The Company will use its best efforts to prevent the issuance of any such stop order or to obtain as soon as possible the lifting thereof, if issued. The Company will advise you promptly of any order or communication of any public authority addressed to the Company suspending or threatening to suspend qualification of the Debentures for sale in any state. The Company will file promptly all reports and any definitive proxy or information statements required to be filed by the Company with the Commission pursuant to the Exchange Act subsequent to the date of the Prospectus and for so long as the delivery of a prospectus is required in connection with the offering and sale of the Debentures. (b) To deliver without charge to each of you a signed copy of the Registration Statement as filed and all amendments thereto with exhibits, and to deliver without charge to each of you and any other Underwriter such reasonable number of copies as you may request of the Registration Statement and all amendments thereto excluding exhibits. (c) Prior to 10:00 a.m., New York City time, on the New York Business day next succeeding the date of this Agreement and from time to time, to deliver without charge to you, during such period as in the opinion of counsel for the Underwriters a prospectus is required by law to be delivered in connection with sales, so many copies of the Prospectus in New York City (as supplemented or amended if the Company shall have prepared any supplement or amendment thereto) as you may reasonably request. -8- (d) To prepare forthwith and deliver without charge to each of you and to the dealers (whose names and addresses you will furnish to the Company for such purpose) to whom Debentures may have been sold by or on behalf of any of the Underwriters, and upon your request to any other dealers, for such period as in the opinion of counsel for the Underwriters a prospectus is required by law to be delivered in connection with sales, such amendments or supplements to the Prospectus that the statements in the Prospectus as so amended or supplemented will not be misleading in the light of the circumstances under which they are made if any event shall occur as a result of which it is necessary so to amend or supplement the Prospectus in order to make the statements therein, in the light of the circumstances under which they are made, not misleading; and to prepare and furnish to you upon your request, in such quantities as you may reasonably request, copies of any prospectus or prospectuses as may be necessary to permit compliance with Section 10(a)(3) of the Act. (e) To use its best efforts upon your request to qualify the Debentures for offer and sale under the securities or Blue Sky laws of such jurisdictions as you may designate, and to pay the costs and fees incident thereto and to the preparation by counsel for the Underwriters of memoranda as to the status of the Debentures under the securities or Blue Sky laws of certain jurisdictions and as to the eligibility of the Debentures for investment under certain state laws; provided that the Company shall not be required for this purpose to qualify as a foreign corporation in any state or to consent to service of process in any jurisdiction otherwise than in connection with the offer and sale of the Debentures. (f) To furnish to you with reasonable promptness during a period of five years from the date hereof (i) audited annual balance sheets and audited annual statements of income and retained earnings of the Company and its subsidiaries consolidated, (ii) quarterly statements of income for each of the first three fiscal quarters of the Company and its subsidiaries consolidated (which need not be audited), (iii) a copy of each report of the Company mailed to stockholders or filed with the Commission, and (iv) such other information concerning the Company as you may reasonably request. (g) To prepare earnings statements, which need not be audited, that will satisfy the requirements of Section 11(a) of the Act, covering (i) a twelve-month period beginning not later than fourteen months after the beginning of the fiscal quarter next commencing after the effective date of the Registration Statement or if such fiscal quarter is the first fiscal quarter in a fiscal year, fifteen months after the beginning of such fiscal quarter and (ii) a twelve-month period beginning not later than the first day of the Company's fiscal quarter next following the date of this Agreement and make such earnings statements generally available to the Company's security holders as soon as practicable. (h) To pay all costs and expenses incident to the performance of its obligations under this Agreement, including all expenses incident to the preparation of certificates representing the Debentures and their issuance and delivery, the fees and expenses of the Company's counsel and accountants, the costs and expenses incident to the preparation, printing and filing of the Registration Statement (including all exhibits thereto), this Agreement and the cost of furnishing to the Underwriters copies of the Registration Statement and the Prospectus. The Company shall also pay any fee charged by a rating agency in connection with its rating of the Debentures and any fees payable in connection with the listing of the Debentures on an exchange. The Company shall not, however, be required to pay for any of your expenses or those of any of the other Underwriters other than as hereinabove set forth except as provided in Section 8 hereof. -9- (i) To use all reasonable efforts to comply with, or cause to be complied with, the conditions precedent to the several obligations of the Underwriters specified in Section 5 hereof. (j) To refrain from and after the date hereof to the Closing Date, without your prior consent, from offering or selling, or entering into any agreement to sell, any debt securities of the Company with a maturity of more than one year, including additional Debentures of the Company. 7. INDEMNIFICATION. (a) The Company agrees to indemnify and hold harmless each of the Underwriters and each person, if any, who controls any Underwriter within the meaning of Section 15 of the Act, from and against any and all losses, claims, damages, liabilities or expenses (including the reasonable costs of investigation) to which, jointly or severally, such Underwriter or such controlling person may become subject under the Act, or otherwise, insofar as any such loss, claim, damage, lability or expense (or actions with respect thereto) arises out of or is based on any untrue statement or alleged untrue statement of a material fact contained in the Registration Statement or the Prospectus, or any amendment or supplement thereto, or arises out of or is based on the omission or the alleged omission to state therein a material fact required to be stated therein or necessary to make the statements therein not misleading, except insofar as such losses, claims, damages, liabilities or expenses arise out of or are based upon any such untrue statement or omission or alleged untrue statement or omission made in reliance upon information furnished herein or in writing to the Company by any of you or by any other Underwriter through you, expressly for use therein. (b) Each Underwriter agrees to indemnify and hold harmless the Company, its directors, its officers who signed the Registration Statement and each person, if any, who controls the Company within the meaning of Section 15 of the Act from and against any and all losses, claims, damages, liabilities or expenses (including the reasonable costs of investigation) to which, jointly or severally, the Company or such controlling person may become subject under the Act, or otherwise, insofar as any such loss, claim, damage, liability or expense (or actions with respect thereto) arises out of or is based on any untrue statement or alleged untrue statement of a material fact contained in the Registration Statement or the Prospectus, or any amendment or supplement thereto, or arises out of or is based on the omission or the alleged omission to state therein a material fact required to be stated therein or necessary to make the statements therein not misleading, which untrue statement or omission or alleged untrue statement or omission was made in reliance upon information furnished herein or in writing to the Company by any of you or by any other Underwriter through you, expressly for use therein. (c) The Company agrees that upon the commencement of any action against it, any of its directors or officers who signed the Registration Statement, or any person controlling it as aforesaid, and each Underwriter agrees that upon the commencement of any action against it or any person controlling it as aforesaid, in respect of which indemnity may be sought on account of any indemnity agreement contained herein, it will promptly give written notice of the commencement thereof to the party or parties against whom indemnity shall be sought, but the omission so to notify such indemnifying party or parties of any such action shall not relieve such indemnifying party or parties from any liability which it or they may have to the indemnified party or parties otherwise than on account of such indemnity agreement. In case such notice of any such action shall be so given, such indemnifying party or parties shall be entitled to participate at its or their own expense in the defense or, if it or they so elect, to assume the defense of such action with counsel chosen by such indemnifying party or parties and satisfactory to the indemnified party or parties who shall be defendant or defendants in such action, unless such indemnified party or parties reasonably object to such assumption on the ground that there may be legal defenses available to it or them which are different from or in addition to those available to such indemnifying party or parties. If the indemnifying party or parties shall not assume the defense of such action, such indemnifying party or parties will reimburse such indemnified party or parties for the -10- reasonable fees and expenses of any counsel retained by them. If the indemnifying party or parties shall elect to assume the defense and the indemnified party or parties shall not have so objected thereto, such indemnified party or parties shall bear the fees and expenses of any additional counsel retained by them. In no event shall the indemnifying party or parties be liable for the fees and expenses of more than one counsel for all indemnified parties in connection with any one action or separate but similar or related actions in the same jurisdiction arising out of the same general allegations or circumstances. (d) If the indemnification provided for in this Section 7 is unavailable to or insufficient to hold harmless an indemnified party under subsection (a) or (b) above in respect of any losses, claims, damages or liabilities (or actions in respect thereof) referred to therein, then each indemnifying party shall contribute to the amount paid or payable by such indemnified party as a result of such losses, claims, damages or liabilities (or actions in respect thereof) in such proportion as is appropriate to reflect the relative benefits received by the Company on the one hand and the Underwriters on the other from the offering of the Debentures to which such loss, claim, damage or liability (or action in respect thereof) relates. If, however, the allocation provided by the immediately preceding sentence is not permitted by applicable law or if the indemnified party failed to give the notice required under subsection (c) above, then each indemnifying party shall contribute to such amount paid or payable by such indemnified party in such proportion as is appropriate to reflect not only such relative benefits but also the relative fault of the Company on the one hand and the Underwriters on the other in connection with the statements or omissions which resulted in such losses, claims, damages or liabilities (or actions in respect thereof), as well as any other relevant equitable considerations. The relative benefits received by the Company on the one hand and the Underwriters on the other shall be deemed to be in the same proportion as the total net proceeds from such offering (before deducting expenses) received by the Company bear to the total underwriting discounts and commissions received by the Underwriters. The relative fault shall be determined by reference to, among other things, whether the untrue or alleged untrue statement of a material fact or the omission or alleged omission to state a material fact relates to information supplied by the Company on the one hand or the Underwriters on the other and the parties' relative intent, knowledge, access to information and opportunity to correct or prevent such statement or omission. The Company and the Underwriters agree that it would not be just and equitable if contribution pursuant to this subsection (d) where determined by pro rata allocation or by any other method of allocation which does not take account of the equitable considerations referred to above in this subsection (d). The amount paid and payable by an indemnified party as the result of the losses, claims, damages or liabilities (or actions in respect thereof) referred to above in this subsection (d) shall be deemed to include any legal or other expenses reasonably incurred by such indemnified party in connection with investigating or defending any such action or claim. No person guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of the Act) shall be entitled to contribution from any person who was not guilty of such fraudulent misrepresentation. (e) The agreements of the Company and of the Underwriters contained in this Section 7 and the representations and warranties of the Company set forth in this Agreement shall remain operative and in full force and effect regardless of (i) any termination of this Agreement pursuant to any provision hereof or otherwise, (ii) any investigation made by or on behalf of any Underwriter or controlling person or by or on behalf of the Company, its directors or any officer who signed the Registration Statement, or any controlling person, and (iii) acceptance and payment hereunder for any Debentures. 8. TERMINATION. If an Underwriter shall fail (other than for a reason sufficient to justify the termination of this Agreement) to purchase on the Closing Date the principal amount of Debentures agreed to be purchased by such Underwriter, you may find one or more substitute underwriters to purchase such Debentures, make such other arrangements as you or they may deem advisable or the remaining Underwriters may agree to purchase such Debentures, in such proportions as may be approved by you -11- (or those of you who shall not have so failed) in each case upon the terms herein set forth. If no such arrangements have been made within 24 hours after the Closing Date and (a) the aggregate principal amount of Debentures to be purchased by the defaulting Underwriter shall not exceed 10% of the aggregate principal amount of Debentures, each of the non-defaulting Underwriters shall be obligated to purchase such Debentures on the terms herein set forth in proportion to their respective obligations hereunder, or (b) the aggregate principal amount of Debentures to be purchased by the defaulting Underwriter shall exceed 10% of the aggregate principal amount of the Debentures, the Company shall be entitled to an additional period of 24 hours within which to find one or more substitute underwriters satisfactory to you (or to those of you who shall not have so failed) to purchase such Debentures upon the terms set forth herein. A substitute underwriter hereunder shall become an Underwriter for all purposes of this Agreement. In any such case, either you (or those of you who shall not have so failed) or the Company shall have the right to postpone the Closing Date for a period of not more than five business days in order that necessary changes and arrangements may be effected by you and the Company. If neither the non- defaulting Underwriter nor the Company shall make arrangements pursuant to this Section 8 within the period stated for the purchase of the Debentures which such defaulting Underwriter agreed to purchase, this Agreement shall terminate without liability on the part of the non-defaulting Underwriter to the Company and without liability on the part of the Company, except, in both cases, as provided in Section 7 and, in the event you (or to those of you who shall not have so failed) could have otherwise terminated this Agreement because of any failure on the part of the Company to comply with the terms or fulfill any conditions of this Agreement, as provided in Section 6(h) hereof and hereafter in this Section 8. The provisions of this Section 8 shall not in any way affect the liability of any defaulting Underwriter to the Company or the non-defaulting Underwriter arising out of such default. If the purchase of the Debentures by the Underwriters is not consummated for any reason other than solely because of the termination of this Agreement pursuant to Section 8 or the occurrence of any event specified in clause (i), (ii) or (iii) of Section 5(i), the Company will reimburse the Underwriters for all out-of-pocket expenses (including fees and disbursements of counsel) reasonably incurred by them in connection with the offering of the Debentures. The Company shall be entitled to act and rely upon any request, consent, notice or agreement made or given by you. 9. NOTICES. Except as otherwise provided herein, all communications hereunder shall be in writing, and, if sent to any of the Underwriters, shall be mailed, delivered or telecopied and confirmed to you, at c/o Goldman, Sachs & Co., 85 Broad Street, New York, New York 10004, attention of Registration Department, or, if sent to the Company, shall be mailed, delivered or telegraphed and confirmed to it at 121 S.W. Salmon Street, Portland, Oregon 97204, attention of Chief Financial Officer or at such other address as the Company shall furnish to you in writing. NY02/212938.2 -12- 10. SUCCESSORS. This Agreement shall inure to the benefit of and be binding upon the successors of the several Underwriters and shall inure to the benefit of and be binding upon the successors of the Company. Nothing expressed or mentioned in this Agreement is intended or shall be construed to give any person or corporation other than the parties hereto and their respective successors and the officers and directors and controlling persons referred to in Section 7 hereof any legal or equitable right, remedy or claim under or in respect of this Agreement or any provision herein contained; this Agreement and all conditions and provisions hereof being intended to be and being for the sole and exclusive benefit of the parties hereto and their respective successors and said officers and directors and controlling persons and for the benefit of no other person or corporation. The term "successors" shall not include any purchaser of Debentures merely because of such purchase. 11. NEW YORK LAW TO GOVERN. This Agreement shall be construed in accordance with the laws of the State of New York. 12. EFFECTIVENESS. If the foregoing is in accordance with your understanding of our agreement, kindly sign and return to us the enclosed duplicates hereof, whereupon it will become a binding agreement between the Company and the several Underwriters in accordance with its terms. 13. COUNTERPARTS. This Agreement may be executed in several counterparts, each of which shall be an original and all of which shall constitute one in the same instrument Very truly yours, PORTLAND GENERAL ELECTRIC COMPANY By ___/s/ Joseph M. Hirko____________ Name: Joseph M. Hirko Title: Vice President and Chief Financial Officer The foregoing Agreement is hereby confirmed and accepted as of the date first above written. GOLDMAN, SACHS & CO. MERRILL LYNCH, PIERCE, FENNER & SMITH INCORPORATED SMITH BARNEY INC. By: ____/s/ GOLDMAN, SACHS & CO.___________ GOLDMAN, SACHS & CO. On behalf of the Underwriters NY02/212938.2 -13- SCHEDULE A UNDERWRITER PRINCIPAL AMOUNT Goldman, Sachs & Co. $17,167,500 Merrill Lynch, Pierce, Fenner & Smith Incorporated 17,166,250 Smith Barney Inc. 17,166,250 Robert W. Baird & Co. Incorporated 500,000 J.C. Bradford & Co. 500,000 Alex. Brown & Sons Incorporated 1,125,000 Crowell, Weedon & Co. 500,000 Dain Bosworth Incorporated 500,000 Dillon, Read & Co. Inc. 1,125,000 Doft & Co., Inc. 500,000 A.G. Edwards & Sons, Inc. 1,125,000 Everen Securities, Inc. 1,125,000 Fahnestock & Co. Inc. 500,000 Interstate/Johnson Lane Corporation 500,000 Janney Montgomery Scott Inc. 500,000 Kennedy, Cabot & Co. 500,000 Legg Mason Wood Walker, Incorporated 500,000 McDonald & Company Securities, Inc. 500,000 McGinn, Smith & Co., Inc. 500,000 Morgan Keegan & Company, Inc. 500,000 The Ohio Company 500,000 Olde Discount Corporation 500,000 Oppenheimer & Co., Inc. 1,125,000 Pacific Crest Securities 500,000 PaineWebber Incorporated 1,125,000 Piper Jaffray Inc. 500,000 Prudential Securities Incorporated 1,125,000 Ragen MacKenzie Incorporated 500,000 Rauscher Pierce Refsnes, Inc. 500,000 Redwood Securities Group, Inc. 500,000 The Robinson-Humphrey Company, Inc. 500,000 Roney & Co. 500,000 SBC Capital Markets Inc. 1,125,000 Sutro & Co. Incorporated 500,000 Trilon International Inc. 500,000 Tucker Anthony Incorporated 500,000 U.S. Clearing Corp. 500,000 Van Kasper & Company 500,000 Wedbush Morgan Securities 500,000 Wheat, First Securities, Inc. 500,000 Total ................................................. $75,000,000 NY02/212938.2 -14- EX-24 5 POWER OF ATTORNEY The undersigned Joseph M. Hirko, in his capacity as Senior Vice President and Chief Financial Officer of Portland General Corporation (the "Corporation"), hereby appoints Joseph E. Feltz, Assistant Controller of the Corporation, as the attorney-in-fact, in any and all capacities stated herein, to execute on behalf of the undersigned and to file with the Securities and Exchange Commission under the Securities Exchange Act of 1934, the Portland General Corporation Quarterly Report on Form 10-Q for the quarter ended September 30, 1995. Dated: October 27, 1995 Portland, Oregon /s/ Joseph M. Hirko Joseph M. Hirko POWER OF ATTORNEY -- 10-Q J:\L\FINANCE\BOARD\10QAUTH.FRM -----END PRIVACY-ENHANCED MESSAGE-----