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