<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, 1996
_____________
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, 1996, there were 294,157,368 shares of registrant's common stock
outstanding.
<PAGE>1
PACIFICORP
<TABLE>
<CAPTION>
Page No.
________
<S> <C>
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 4. Submission of Matters to a Vote of Security Holders 24
Item 5. Other Information 24
Item 6. Exhibits and Reports on Form 8-K 25
Signature 26
</TABLE>
<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,
__________________ _________________
1996 1995 1996 1995
______ ______ ______ ______
<S> <C> <C> <C> <C>
REVENUES $ 978.6 $ 813.5 $1,983.3 $1,672.1
_______ _______ _______ _______
EXPENSES
Operations 393.6 300.1 779.2 622.9
Maintenance 82.6 83.5 154.4 150.6
Administrative and general 82.1 64.6 156.2 124.9
Depreciation and amortization 131.6 113.4 260.2 224.0
Taxes, other than income taxes 32.4 32.0 64.7 63.6
_______ _______ _______ _______
TOTAL 722.3 593.6 1,414.7 1,186.0
_______ _______ _______ _______
INCOME FROM OPERATIONS 256.3 219.9 568.6 486.1
_______ _______ _______ _______
INTEREST EXPENSE AND OTHER
Interest expense 109.9 115.7 227.5 199.0
Interest capitalized (3.6) (4.0) (6.8) (7.4)
Other (income) expense .3 (10.9) (6.6) (6.8)
_______ _______ _______ _______
TOTAL 106.6 100.8 214.1 184.8
_______ _______ _______ _______
Income before income taxes 149.7 119.1 354.5 301.3
Income taxes 50.5 25.6 125.4 93.0
_______ _______ _______ _______
NET INCOME 99.2 93.5 229.1 208.3
RETAINED EARNINGS BEGINNING OF PERIOD 674.2 502.2 632.4 474.3
Cash dividends declared
Preferred stock (8.7) (9.9) (17.8) (20.2)
Common stock per share: 1996 and
1995/$.27 and $.54 (79.7) (76.7) (158.7) (153.3)
_______ _______ _______ _______
RETAINED EARNINGS END OF PERIOD $ 685.0 $ 509.1 $ 685.0 $ 509.1
======= ======= ======= =======
EARNINGS ON COMMON STOCK (Net
income less preferred dividend
requirement) $ 90.2 $ 83.3 $ 211.1 $ 188.0
Average number of common shares
outstanding (Thousands) 293,864 284,277 290,177 284,268
EARNINGS PER COMMON SHARE $ .31 $ .29 $ .73 $ .66
<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,
1996 1995
________ ____________
<S> <C> <C>
PROPERTY, PLANT AND EQUIPMENT
Electric utility $11,096.7 $10,948.1
Electricity distributor 1,395.0 1,286.5
Telecommunications 1,603.1 1,592.9
Other 65.0 65.0
Accumulated depreciation and amortization (4,475.9) (4,280.5)
________ ________
Net 9,683.9 9,612.0
Construction work in progress 357.3 340.3
________ ________
TOTAL PROPERTY, PLANT AND EQUIPMENT 10,041.2 9,952.3
________ ________
CURRENT ASSETS
Cash and cash equivalents 118.2 22.2
Accounts receivable less allowance
for doubtful accounts: 1996/$8.0
and 1995/$7.4 549.7 545.0
Materials, supplies and fuel stock at
average cost 216.5 212.1
Inventory 62.9 62.8
Other 59.5 70.1
________ ________
TOTAL CURRENT ASSETS 1,006.8 912.2
________ ________
OTHER ASSETS
Investments in and advances to affiliated
companies 197.2 187.9
Intangible assets - net 755.2 743.2
Regulatory assets - net 1,064.8 1,060.3
Finance note receivable 216.0 217.5
Finance assets 453.3 453.7
Real estate investments 187.4 179.8
Deferred charges and other 298.9 308.3
________ ________
TOTAL OTHER ASSETS 3,172.8 3,150.7
________ ________
TOTAL ASSETS $14,220.8 $14,015.2
======== ========
<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,
1996 1995
________ ____________
<S> <C> <C>
COMMON EQUITY
Common shareholders' capital
shares authorized 750,000,000;
shares outstanding: 1996/294,136,530
and 1995/284,276,709 $ 3,212.9 $ 3,012.9
Retained earnings 685.0 632.4
Guarantees of Employee Stock Ownership
Plan borrowings (5.9) (12.2)
________ ________
TOTAL COMMON EQUITY 3,892.0 3,633.1
________ ________
PREFERRED STOCK 311.5 311.5
________ ________
PREFERRED STOCK SUBJECT TO MANDATORY REDEMPTION 219.0 219.0
________ ________
COMPANY OBLIGATED MANDATORILY REDEEMABLE
PREFERRED SECURITIES OF SUBSIDIARY TRUST
HOLDING SOLELY PARENT JUNIOR SUBORDINATED
DEBENTURES 210.2 -
________ ________
LONG-TERM DEBT AND CAPITAL LEASE OBLIGATIONS 5,127.4 4,968.2
________ ________
CURRENT LIABILITIES
Long-term debt and capital lease obligations
currently maturing 273.1 206.1
Notes payable and commercial paper 429.7 1,021.1
Accounts payable 341.6 345.3
Taxes, interest and dividends payable 285.8 256.4
Customer deposits and other 191.9 176.0
________ ________
TOTAL CURRENT LIABILITIES 1,522.1 2,004.9
________ ________
DEFERRED CREDITS
Income taxes 1,947.9 1,910.1
Investment tax credits 151.8 159.2
Other 806.1 786.2
________ ________
TOTAL DEFERRED CREDITS 2,905.8 2,855.5
________ ________
MINORITY INTEREST 32.8 23.0
________ ________
COMMITMENTS AND CONTINGENCIES (See Note 2)
TOTAL CAPITALIZATION AND LIABILITIES $14,220.8 $14,015.2
======== ========
<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,
______________________
1996 1995
______ ______
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net income $ 229.1 $ 208.3
Adjustments to reconcile net income
to net cash provided by operating
activities
Depreciation and amortization 270.7 237.0
Deferred income taxes and investment tax
credits - net 12.5 5.1
Other 15.6 22.3
Accounts receivable and prepayments 2.3 44.9
Materials, supplies, fuel stock and
inventory (3.7) (33.8)
Accounts payable and accrued liabilities 37.8 (54.8)
______ ______
NET CASH PROVIDED BY OPERATING ACTIVITIES 564.3 429.0
______ ______
CASH FLOWS FROM INVESTING ACTIVITIES
Construction (296.2) (299.1)
Assets acquired (10.9) (197.9)
Proceeds from sale of assets 24.6 36.1
Proceeds from sales of finance assets
and principal payments 42.7 33.5
Other (11.7) 2.7
______ ______
NET CASH USED IN INVESTING ACTIVITIES (251.5) (424.7)
______ ______
<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,
______________________
1996 1995
______ ______
<S> <C> <C>
CASH FLOWS FROM FINANCING ACTIVITIES
Changes in short-term debt (591.4) 102.7
Proceeds from long-term debt 257.1 226.1
Proceeds from issuance of common stock 200.0 1.9
Proceeds from issuance of Company
obligated mandatorily redeemable
preferred securities 210.1 -
Dividends paid (173.7) (172.6)
Repayments of long-term debt and capital
lease obligations (79.6) (97.8)
Redemptions of capital stock (1.3) (1.4)
Other (38.0) (44.9)
______ ______
NET CASH PROVIDED BY (USED IN) FINANCING
ACTIVITIES (216.8) 14.0
______ ______
INCREASE IN CASH AND CASH EQUIVALENTS 96.0 18.3
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD 22.2 23.3
______ ______
CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 118.2 $ 41.6
====== ======
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION
Cash paid during the period for
Interest $ 244.7 $ 215.5
Income taxes net of refunds 114.1 130.8
<FN>
See accompanying Notes to Condensed Consolidated Financial Statements
</FN>
</TABLE>
<PAGE>7
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
June 30, 1996
1. FINANCIAL STATEMENTS
The accompanying unaudited condensed consolidated financial
statements as of June 30, 1996 and December 31, 1995 and for the periods ended
June 30, 1996 and 1995, 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, 1996 and 1995 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 1995 Annual Report on Form 10-K.
The condensed consolidated financial statements of the Company
include its integrated electric utility operating divisions of Pacific Power
and Utah Power and its wholly owned and majority owned subsidiaries. Major
subsidiaries, all of which are wholly owned, are: PacifiCorp Holdings, Inc.
("Holdings"), which holds all of the Company's nonintegrated electric utility
investments, including Powercor Australia Limited ("Powercor"), an Australian
electricity distributor purchased on December 12, 1995; and other investments,
including Pacific Telecom, Inc. ("Pacific Telecom"), a telecommunications
operation, 87% owned until September 25, 1995, and PacifiCorp Financial
Services, Inc., a financial services business. Together these businesses are
referred to herein as the Companies. Significant intercompany transactions
and balances have been eliminated.
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 1996 method of presentation. These 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 currently believes that disposition of these
matters will not have a materially adverse effect on the Company's
consolidated financial statements.
The Company's 1989 and 1990 federal income tax returns are currently
under examination by the Internal Revenue Service (the "IRS"). The Company
has received an examination report for these years proposing adjustments that
would increase income tax by $11 million. The Company filed a protest of
certain of the proposed adjustments on July 30, 1996.
<PAGE>8
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 statements.
3. COMPANY OBLIGATED MANDATORILY REDEEMABLE PREFERRED
SECURITIES OF PACIFICORP CAPITAL I
On June 11, 1996, PacifiCorp Capital I, a wholly owned subsidiary
trust of the Company (the "Trust"), issued, in a public offering, 8,680,000 of
its 8 1/4% Company Obligated Mandatorily Redeemable Preferred Securities (the
"Preferred Securities"), representing preferred undivided beneficial interests
in the assets of the Trust, with a liquidation preference of $25 per Preferred
Security. The sole assets of the Trust are $224 million, in aggregate
principal amount, of the Company's 8 1/4% Junior Subordinated Deferrable
Interest Debentures, Series C, due June 30, 2036 ("Series C Debentures") and
certain rights under a related guarantee by the Company. The Company's
guarantee of the Preferred Securities, considered together with the other
obligations of the Company with respect to Preferred Securities, constitutes a
full and unconditional guarantee by the Company of the Trust's obligations
with respect to the Preferred Securities.
4. NEW ACCOUNTING STANDARD
Effective January 1, 1996, the Company adopted Statement of
Financial Accounting Standards ("SFAS") No. 121 "Accounting for the Impairment
of Long Lived Assets and for Long-Lived Assets to Be Disposed Of." SFAS No.
121 requires that long-lived assets and certain identifiable intangibles to be
held and used by an entity be reviewed for impairment whenever events or
changes in circumstances indicate that the carrying amount of an asset may not
be recoverable. The Company has evaluated its assets based upon SFAS No. 121
and within the context of SFAS 71 "Accounting for the Effects of Certain Types
of Regulation" for its regulated operations and has concluded that no assets
qualified for impairment and consequently no adjustments were required.
<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/
________________ _______________
1996 1995 (Decrease) 1996 1995 (Decrease)
____ ____ __________ ____ ____ __________
<S> <C> <C> <C> <C> <C> <C>
(Dollars in Millions, except per share)
Revenues $ 978.6 $ 813.5 20% $1,983.3 $1,672.1 19%
_______ ______ _______ _______
Income from operations 256.3 219.9 17 568.6 486.1 17
_______ ______ _______ _______
Net income 99.2 93.5 6 229.1 208.3 10
_______ ______ _______ _______
Earnings contribution
on common stock (1)
Electric Operations 62.1 22.5 * 148.4 103.2 *
Powercor 5.1 - * 15.9 - *
Pacific Telecom 17.9 17.7 1 33.8 32.1 5
Other 5.1 43.1 * 13.0 52.7 *
_______ ______ _______ _______
Total $ 90.2 $ 83.3 8 $ 211.1 $ 188.0 12
======= ====== ======= =======
Earnings per common share $ .31 $ .29 7 $ .73 $ .66 11
Average number of common shares
outstanding (thousands) 293,864 284,277 3 290,177 284,268 2
<FN>
*Not a meaningful number.
(1) 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 1996 and 1995
__________________________________________________
. Earnings contribution on common stock increased $7 million or 8%.
.. In 1995, the Company reached a tax settlement with the IRS for the
years 1983 through 1988. The settlement had no effect on consolidated
net income, although it had the effect of reducing Electric Operations'
earnings $32 million and increasing Other earnings $32 million.
.. Excluding the effects of the $32 million tax settlement in 1995
referred to above, Electric Operations' earnings contribution increased
$7 million or 14%. Residential and commercial revenues rose $8 million
and $13 million, respectively. Of these increases, $9 million was from
increased customer usage and $8 million was due to growth in the
average number of customers (2% for residential and 3% for commercial).
Wholesale revenues increased $43 million due to a 98% increase in
energy sales volumes, despite lower prices. Purchased power and fuel
expenses increased $37 million and $5 million, respectively, due to
higher purchased and generated volumes, resulting from increased demand
for power, and higher short-term and spot market purchase prices.
.. The earnings contribution of Powercor, an Australian electricity
distributor, acquired in December 1995, was $5 million.
<PAGE>10
.. Pacific Telecom's earnings contribution was virtually unchanged. The
earnings contribution increased $3 million due to the effect of
PacifiCorp's 100% ownership of Pacific Telecom in 1996 versus 87% in
1995 and $3 million resulting from local exchange company ("LEC")
assets acquired in late 1995. In addition, earnings increased due to
internal access line growth of 5%, revised LEC revenue estimates for
prior years and cellular customer growth. These increases were offset
by a $10 million decrease resulting from the sale of Alascom, Inc.
("Alascom") in August 1995.
.. Excluding the $32 million tax settlement in 1995 referred to above, the
earnings contribution of other businesses decreased $6 million or 53%.
After-tax expenditures of $6 million relating to the development of
unregulated energy projects and businesses and increased after-tax
interest expense of $1 million, $3 million resulting from higher debt
levels offset by allocations and adjustments of $2 million, were
partially offset by an after-tax gain of $4 million from a settlement
of indemnification issues relating to the sale of a computer leasing
business in 1994.
. The average number of common shares outstanding rose 3% due to a public
sale of 8,500,000 shares in March and 290,000 shares in April 1996 and
issuances under the dividend reinvestment and stock purchase plan (the
"Plan"). The Company periodically evaluates the advantages of common share
issuances in the context of its current capital structure, financing needs
and market price and began to issue common stock under the Plan in February
1996, following a period during which open market purchases had been used
for the Plan.
Comparison of the six-month periods ended June 30,1996 and 1995
_______________________________________________________________
. Earnings contribution on common stock increased $23 million or 12%.
.. Excluding the tax settlement in 1995 referred to above, Electric
Operations' earnings contribution increased $13 million or 10%.
Residential and commercial revenues rose $28 million and $22 million,
respectively. Of these increases, $16 million was from increased
customer usage, $14 million was due to increases in the average number
of residential customers (2%) and commercial customers (3%) and
$13 million was due to the effect of cooler winter temperatures in
1996. Wholesale revenues increased $72 million due to an 85% increase
in energy sales volumes, despite lower prices. An increase of
$74 million in purchased power expense, increased interest expense of
$8 million (excluding the effect of the tax settlement), increased
depreciation of $9 million and increases in other operating expenses of
$7 million partially offset these improvements.
.. The earnings contribution of Powercor, acquired in December 1995, was
$16 million.
.. Pacific Telecom's earnings contribution increased $2 million or 5% due
to the $5 million effect of PacifiCorp's 100% ownership of Pacific
Telecom in 1996 versus 87% in 1995. Increased earnings of $7 million
resulting from LEC assets acquired in 1995 and the $9 million effect of
5% growth in existing local exchange operations and growth in cellular
operations
<PAGE>11
were offset by a $19 million decrease resulting from the sale of
Alascom in August 1995.
.. Excluding the tax settlement referred to above, the earnings
contribution of other businesses decreased $8 million or 37%. The
decreases were due to after-tax expenditures of $8 million relating to
the development of unregulated energy projects and businesses and
increased after-tax interest expense of $7 million resulting from
higher debt levels. The reductions were partially offset by after-tax
gains of $10 million on sales of finance assets and the settlement of
indemnification issues relating to a computer leasing business sold in
1994.
. The average number of common shares outstanding rose 2% due to the same
factors described above.
<PAGE>12
RESULTS OF OPERATIONS
<TABLE>
Electric Operations
___________________
<CAPTION>
Six Months
Percentage Ended Percentage
Second Quarter Increase/ June 30, Increase/
________________ _______________
1996 1995 (Decrease) 1996 1995 (Decrease)
____ ____ __________ ____ ____ __________
<S> <C> <C> <C> <C> <C> <C>
(Dollars in Millions)
Revenues
Residential $158.5 $151.0 5% $ 386.0 $ 358.0 8%
Commercial 147.8 134.7 10 298.8 276.9 8
Industrial 170.3 171.9 (1) 335.9 337.2 -
Other 8.0 7.4 8 15.6 14.7 6
_____ _____ _______ _______
Retail sales 484.6 465.0 4 1,036.3 986.8 5
Wholesale sales 156.6 113.4 38 297.0 225.5 32
Other 13.1 14.5 (10) 26.1 29.1 (10)
_____ _____ _______ _______
Total 654.3 592.9 10 1,359.4 1,241.4 10
Operating expenses 477.4 432.9 10 962.8 872.9 10
_____ _____ _______ _______
Income from operations 176.9 160.0 11 396.6 368.5 8
Interest expense 73.0 99.1 * 147.1 167.8 *
Other income - net (7.7) (15.0) (49) (15.4) (20.8) (26)
Income taxes 40.5 43.2 (6) 98.5 98.0 1
_____ _____ _______ _______
Net income 71.1 32.7 117 166.4 123.5 35
Preferred dividend requirement 9.0 10.2 (12) 18.0 20.3 (11)
_____ _____ _______ _______
Earnings contribution $ 62.1 $ 22.5 * $ 148.4 $ 103.2 *
===== ===== ======= =======
Energy sales (millions of kWh)
Residential 2,683 2,602 3 6,454 6,068 6
Commercial 2,736 2,508 9 5,520 5,148 7
Industrial 4,981 4,859 3 9,755 9,556 2
Other 164 142 15 315 291 8
______ ______ ______ ______
Retail sales 10,564 10,111 4 22,044 21,063 5
Wholesale sales 6,399 3,240 98 12,072 6,524 85
______ ______ ______ ______
Total 16,963 13,351 27 34,116 27,587 24
====== ====== ====== ======
Residential average usage (kWh) 2,269 2,243 1 5,465 5,229 5
Total customers (end of period) 1,398,226 1,356,784 3 1,398,226 1,356,784 3
</TABLE>
Comparison of the second quarters of 1996 and 1995
__________________________________________________
. Revenues increased $61 million or 10%.
.. Residential revenues increased $8 million or 5% and kWh volume
increased 3% primarily due to the $3 million effect of a 2% increase in
the average number of residential customers, a $2 million increase from
higher customer usage and the $2 million effect of a decrease in
Bonneville Power Administration ("BPA") exchange benefits.
.. Commercial revenues increased $13 million or 10% primarily due to a
$7 million increase from higher customer usage and the $5 million
effect of a 3% increase in the average number of commercial customers.
Energy sales growth to commercial customers in the state of Utah was
almost 14%, reflecting favorable economic expansion.
.. Industrial revenues decreased $2 million or 1% due to reductions in
sales to general industrial customers of $7 million resulting from
lower contract prices and $4 million from lower volumes sold to oil and
gas customers, partially offset by $5 million from increased volumes
sold to new and existing customers. Sales to irrigation customers
increased $5 million primarily due to warmer and drier weather in June
1996.
<PAGE>13
On July 10, 1996, Electric Operations received an order from the Public
Utility Commission of Oregon (the "PUC") to raise prices in Oregon by
an average of 4%. The price increase, which was effective July 15,
1996, is expected to result in additional annual revenues of
$27 million.
Electric Operations also received a price increase order from the
Wyoming Public Service Commission (the "PSC") to raise prices by an
average of 3.9%. This price increase was effective July 1, 1996 and is
expected to result in additional annual revenues of $10 million.
.. Wholesale revenues increased $43 million or 38% while kWh volume
increased 98%. Higher short-term and spot market sales volumes added
$32 million to revenues. Additionally, new long-term contract volumes
and higher long-term prices increased revenues $15 million and
$3 million, respectively. The increases were partially offset by a
revenue decrease of $8 million due to an 8% decline in prices for
short-term and spot market sales resulting from increased competition
and the availability of hydroelectric generation in the region.
. Operating expenses increased $45 million or 10%.
.. Fuel expense increased $5 million or 6% due to a 569,000 mWh or 6%
increase in thermal generation. The higher demand for electricity in
1996 was also satisfied by a 235,000 mWh or 20% increase in lower cost
hydroelectric generation at Company-owned plants.
.. Purchased power and wheeling expense increased $37 million or 48% while
kWh volume purchased increased 97%. Short-term and spot market
purchases increased $19 million due to a 2,403,000 mWh, or two-fold,
increase in kWh volume purchased and $4 million due to higher prices.
An increase of $11 million was due to higher volumes and prices for
long-term firm contract purchases and a $2 million increase was due to
the effect of decreased BPA exchange benefits.
BPA, a wholesale power and wheeling supplier, increased its rates
effective October 1, 1995. The rates increased Electric Operations'
capacity and wheeling expenses by approximately $4 million annually and
reduced the exchange benefits directly received by Electric Operations'
residential and small farm customers by approximately $10 million
annually. Electric Operations has received approval for price
increases that allow it to recover the loss of exchange benefits.
BPA completed its 1996 rate case hearing process and will implement new
five-year rates effective October 1, 1996. The new rates will reduce
Electric Operations' annual capacity and wheeling expenses by
$3 million. In addition, while the new rates would have reduced the
annual exchange benefits directly received by Electric Operations'
residential and small farm customers by approximately $17 million,
President Clinton signed into law the "Energy and Water Development
Appropriation Act of 1995" which, among other things, provided for a
set amount of exchange benefits for 1997, largely mitigating the loss
of exchange benefits. Electric Operations will likely seek approval
for price increases that will allow it to recover any loss of exchange
benefits.
<PAGE>14
.. Depreciation and amortization expense increased $4 million or 6%
primarily due to additional plant in service.
. Earnings contribution increased $40 million.
.. Income from operations increased $17 million or 11%.
.. Interest expense decreased $25 million primarily due to the $28 million
interest portion of the settlement with the IRS in 1995, referred to
above. Interest expense, excluding the IRS settlement, increased
$2 million or 3% primarily due to the effects of higher levels of debt
outstanding in 1996.
.. Other income decreased $6 million primarily due to the effect of gains
in 1995 of $3 million from sales of sulphur dioxide emission allowances
and $3 million from the sale of water rights.
.. Income tax expense decreased $3 million or 6% primarily due to the
$4 million net effect of the IRS settlement in 1995 ($15 million of
additional taxes due, partially offset by an $11 million tax benefit
from related interest expense).
Comparison of the six-month periods ended June 30,1996 and 1995
_______________________________________________________________
. Revenues increased $118 million or 10%.
.. Residential revenues increased $28 million or 8% and kWh volume
increased 6% primarily due to the $10 million effect of temperatures
that were 3 degrees cooler during the winter months in 1996, the
$7 million effect of a 2% increase in the average number of residential
customers, a $5 million increase from higher customer usage and a
$3 million increase from the effect of a decrease in BPA exchange
benefits.
.. Commercial revenues increased $22 million or 8% and KWh volume
increased 7% primarily due to a $11 million increase resulting from
higher customer usage, the $7 million effect of a 3% increase in the
average number of commercial customers and the $2 million effect of
cooler winter temperatures in 1996.
.. Wholesale revenues increased $72 million or 32% while kWh volume
increased 85%. Higher short-term and spot market sales volumes added
$49 million to revenues. Additionally, new firm contract volumes and
higher long-term prices increased revenues $33 million and $6 million,
respectively. The increases were partially offset by a revenue
decrease of $18 million due to a 17% decline in prices for short-term
and spot market sales resulting from increased competition, surplus
hydroelectric generation in the region and low natural gas prices.
. Operating expenses increased $90 million or 10%.
.. Fuel expense was virtually unchanged. Thermal generation declined
558,000 mWh or 3% due to a 457,000 mWh or 17% increase in hydroelectric
generation and the availability of lower-cost purchased power in the
spot market.
<PAGE>15
.. Purchased power and wheeling expense increased $74 million or 45% while
kWh volumes purchased increased 140%. A $51 million increase in short-
term and spot market purchases resulted from a 5,453,000 mWh, or nearly
three-fold, increase in volumes purchased. An increase of $17 million
was due to higher volumes and prices for purchases under long-term firm
contracts.
.. Administrative and general expense increased $6 million or 8% primarily
due to higher outside services and employee expenses and increased
amortization of deferred postretirement benefits.
.. Depreciation and amortization expense increased $9 million or 6%
primarily due to additional plant in service.
. Earnings contribution increased $45 million.
.. Income from operations increased $28 million or 8%.
.. Interest expense decreased $20 million primarily due to the effect of
the $28 million interest portion of the settlement with the IRS in
1995, referred to above. Interest expense, excluding the IRS
settlement, increased $9 million or 6% primarily due to the effects of
higher levels of debt outstanding in 1996.
.. Other income decreased $4 million primarily due to the effects of a
gain of $3 million on the sale of water rights in 1995 and a $2 million
increase in charitable contributions in 1996.
.. Income tax expense was virtually unchanged. The $4 million net effect
of the IRS settlement in 1995, referred to above, was offset by
increased tax expense due to higher taxable income.
<PAGE>16
<TABLE>
Powercor
________
<CAPTION>
Second Quarter Six Months
______________ Ended
1996 June 30, 1996
____ _____________
<S> <C> <C>
(Dollars in Millions)
Revenues
Domestic $ 62.6 $112.8
Commercial 35.1 67.9
Industrial 42.8 84.9
Other 19.2 33.9
_____ _____
Total 159.7 299.5
Operating expenses 136.6 240.2
_____ _____
Income from operations 23.1 59.3
Interest expense 19.3 37.8
Other expense .9 .9
Income taxes (2.2) 4.7
_____ _____
Earnings contribution $ 5.1 $ 15.9
===== =====
Energy sales (millions of kWh)
Domestic 685 1,257
Commercial 350 745
Industrial 773 1,527
Other 108 259
_____ _____
Total 1,916 3,788
===== =====
</TABLE>
Powercor was acquired by Holdings on December 12, 1995 for
approximately $1.6 billion of debt. Approximately $900 million was financed
in Australia and $700 million was borrowed in the U.S. At June 30, 1996, the
Australian debt totaled $925 million. Interest expense associated with the
U.S. borrowings are not allocated to subsidiaries of Holdings.
Second quarter of 1996
______________________
Powercor contributed $5 million of earnings on revenues of
$160 million and operating income of $23 million. Operating expenses included
purchased power expense of $77 million, other operations expense of
$14 million, maintenance expense of $12 million, administrative and general
expense of $15 million and depreciation and amortization expense of
$19 million. Interest expense totaled $19 million and a net $2 million income
tax benefit was recorded. The income tax benefit resulted from revised
estimates of deferred income taxes associated with purchase price allocations.
Six-month period ended June 30, 1996
____________________________________
Powercor contributed $16 million of earnings on revenues of
$300 million and operating income of $59 million. Operating expenses included
purchased power costs of $136 million, other operations expense of
$22 million, maintenance expense of $22 million, administrative and general
expense of $24 million and depreciation and amortization expense of
$35 million. Powercor incurred interest expense of $38 million and income
taxes of $5 million in the period.
<PAGE>17
Powercor has a license to sell electricity to franchise customers
whose facilities are in its distribution area and a nonexclusive state-wide
license to sell to contestable customers. Contestable customers are able to
choose their electricity retailer. As of July 1, 1996, approximately 2,000
customers in the state of Victoria using 750 or more megawatt hours become
contestable, including 500 of Powercor's customers. By the end of the year
2000, all customers across the state will be able to choose their electricity
supplier. Contestable sales currently represent about 34% of Powercor's total
energy sales.
<PAGE>18
<TABLE>
Pacific Telecom
_______________
<CAPTION>
Six Months
Percentage Ended Percentage
Second Quarter Increase/ June 30, Increase/
________________ _______________
1996 1995 (Decrease) 1996 1995 (Decrease)
____ ____ __________ ____ ____ __________
<S> <C> <C> <C> <C> <C> <C>
(Dollars in Millions)
Revenues
Local network service $ 34.6 $ 29.9 16% $ 67.8 $ 57.2 19%
Network access service 62.6 52.9 18 126.1 100.7 25
Long distance network service .4 64.2 (99) .8 126.3 (99)
Private line service - 14.4 * - 29.6 *
Sales of cable capacity 2.2 1.1 100 2.2 2.7 (19)
Cellular and other 29.7 29.8 - 57.0 57.5 (1)
_____ _____ _____ _____
Total 129.5 192.3 (33) 253.9 374.0 (32)
Operating expenses 91.7 146.9 (38) 180.7 288.4 (37)
_____ _____ _____ _____
Income from operations 37.8 45.4 (17) 73.2 85.6 (14)
Interest expense 10.5 11.5 (9) 20.6 21.5 (4)
Other (income) expense - net (2.3) .6 * (3.2) 3.7 *
Income taxes 11.5 12.9 (11) 21.7 23.3 (7)
_____ _____ _____ _____
Net Income 18.1 20.4 (11) 34.1 37.1 (8)
Minority interest and other .2 2.7 (93) .3 5.0 (94)
_____ _____ _____ _____
Earnings contribution $ 17.9 $ 17.7 1 $ 33.8 $ 32.1 5
===== ===== ===== =====
Telephone access lines (end
of period) 545,028 482,311 13 545,028 482,311 13
<FN>
*Not a meaningful number.
</FN>
</TABLE>
On September 25, 1995, Holdings acquired the 13% publicly held
minority interest of Pacific Telecom.
On August 7, 1995, Pacific Telecom closed the sale of the stock of
Alascom to AT&T Corp., in a transaction providing $366 million in proceeds.
The table below contains summarized income statement data for Alascom. The
table below does not include interest allocations made by Pacific Telecom in
these periods.
<TABLE>
<CAPTION>
Second Quarter Six Months
______________ Ended
1995 June 30, 1995
____ _____________
<S> <C> <C>
(Dollars in Millions)
Revenues
Long distance network service $ 63.9 $125.7
Private line service 14.4 29.6
Other 4.1 9.0
_____ _____
Total 82.4 164.3
Operating expenses 67.3 133.9
_____ _____
Income from operations 15.1 30.4
Other (income) expense - net (.2) .3
Income taxes 5.5 11.5
_____ _____
Net income 9.8 18.6
Minority interest and other 1.5 2.9
_____ _____
Earnings contribution $ 8.3 $ 15.7
===== =====
</TABLE>
<PAGE>19
The discussion below is presented excluding the effect of Alascom's earnings
contribution in the 1995 periods.
Comparison of the second quarters of 1996 and 1995.
__________________________________________________
. Revenues increased $20 million or 18%.
.. Local network service revenues increased $5 million or 16% primarily
due to increased revenues of $2 million from LEC assets acquired in
late 1995 and increases of $1 million in enhanced service revenues and
$1 million from the effects of internal access line growth. Pacific
Telecom acquired properties with 53,000 access lines in Colorado in
February 1995 and additional properties with 37,000 access lines in
Oregon and Washington later in 1995.
.. Network access service revenues increased $10 million or 18% primarily
due to increased revenues of $9 million from LEC assets acquired,
increases of $1 million from access line growth of 5%, exclusive of
acquisitions, and $1 million due to revised LEC revenue estimates for
prior years. The increases were partially offset by a $1 million
decrease in Universal Service Fund ("USF") support. The national
average cost per access line to provide service to rural telephone
customers (the USF benchmark) increased while Pacific Telecom's cost
per access line increased at a rate below the national average. This
caused a slight decrease in USF support received per access line.
.. Cellular and other revenue increased $4 million or 16% primarily due to
an increase of $3 million in cellular revenues resulting from customer
growth and higher roaming revenues.
. Operating expenses increased $12 million or 15%.
.. Administrative and general expense increased $3 million or 20%
primarily due to an increase of $1 million from LEC assets acquired and
a $2 million increase due to higher corporate support costs for
information systems and benefits.
.. Depreciation expense increased $4 million or 19% primarily due to a
$3 million increase from LEC assets acquired and $1 million due to
increased LEC plant in service.
. Earnings contribution increased $9 million or 90%.
.. Income from operations increased $8 million or 25%. Excluding the
$5 million effect of the acquisition of LEC assets, income from
operations increased $3 million or 9%.
.. Other income increased $3 million due to a gain on the sale of cellular
properties.
.. Income tax expense increased $4 million or 55% due to higher taxable
income.
<PAGE>20
Comparison of the six-month periods ended June 30,1996 and 1995.
_______________________________________________________________
. Revenues increased $44 million or 21%.
.. Local network service revenues increased $11 million or 19% primarily
due to increased revenues of $6 million from LEC assets acquired in
1995 and increases of $3 million from the effects of customer and
internal access line growth and $2 million in enhanced service
revenues.
.. Network access service revenues increased $25 million or 25% primarily
due to increased revenues of $22 million from LEC assets acquired and
increases of $4 million from access line growth of 5%, exclusive of
acquisitions, and $2 million from revised LEC revenue estimates for
prior years. The increases were partially offset by a $2 million
decrease in USF support.
.. Cellular and other revenue increased $9 million or 18% primarily due to
an increase of $5 million in cellular revenues resulting from customer
growth and higher roaming revenues and other revenues of $2 million
from LEC assets acquired.
. Operating expenses increased $26 million or 17%.
.. Maintenance expense increased $4 million or 11% due to the LEC assets
acquired.
.. Operations expense increased $3 million or 7% due to an increase of
$2 million from growth in LEC and cellular operations and $1 million
from LEC assets acquired.
.. Administrative and general expense increased $6 million or 23%
primarily due to an increase of $3 million from LEC assets acquired and
$3 million due to higher administrative support costs for information
systems and employee benefits.
.. Depreciation expense increased $11 million or 25% primarily due to an
$8 million increase from LEC assets acquired and $2 million due to
increased LEC plant in service.
. Earnings contribution increased $17 million or 106%.
.. Income from operations increased $18 million or 33%. Excluding the
$11 million effect of the acquisition of LEC assets, income from
operations increased $7 million or 13%.
.. Other income increased $7 million primarily due to gains of $4 million
from sales of cellular properties and a $2 million increase in income
from cellular and other investments.
.. Income tax expense increased $10 million or 83% due to higher taxable
income.
<PAGE>21
FINANCIAL CONDITION -
For the six months ended June 30, 1996:
Net cash flows of $564 million were provided by operating activities
during the period. Uses for cash included $296 million for construction
program expenditures and $174 million for dividends.
The Company issued 8,500,000 shares of common stock to the public
for proceeds of $172 million in March 1996 and 290,000 shares in April 1996
for proceeds of $6 million. Proceeds were used to repay short-term debt.
During the period, the Company issued 1,072,941 shares of its common
stock under the dividend reinvestment and stock purchase plan.
On June 11, 1996, the Trust issued, in a public offering, 8,680,000
of its 8 1/4% Preferred Securities for proceeds of $217 million. Concurrent
with the issuance of the Preferred Securities, the Trust issued to the Company
Series A Common Securities in the amount of $7 million. The sole asset of the
Trust is $224 million of Series C Debentures issued by the Company. See
Note 3 to Condensed Consolidated Financial Statements.
On July 12, 1996, the Company redeemed all outstanding shares of its
7.96%, 8.92% and 9.08% Serial Preferred Stock, all outstanding shares of its
$1.76, $1.98 and $2.13 No Par Serial Preferred Stock and 410,000 shares of the
440,000 outstanding shares of its $7.12 No Par Serial Preferred Stock. The
aggregate stated value of the shares redeemed of $117 million and the
redemption premium of $5 million were funded with short-term debt.
On July 29, 1996, the Company redeemed all of its outstanding shares
of Dutch Auction Rate Transferable Securities Series A-1 at a redemption price
of $100,000 per share, plus accrued and unpaid dividends at that date. The
aggregate redemption price for the DARTS of $50 million was funded with short-
term debt.
On August 19, 1996, the Company will redeem all of its outstanding
shares of Market Auction Preferred Securities Series C at a redemption price
of $100,000 per share, plus accrued and unpaid dividends at that date. The
aggregate redemption price for the MAPS of $50 million will be funded with
short-term debt.
During January 1996, the Company issued $200 million of secured
medium-term notes in the form of First Mortgage and Collateral Trust Bonds
with interest rates ranging from 6.1% to 6.7% and maturities from 2006 to
2026. Proceeds were used to repay short-term debt that had been classified as
long-term debt at December 31, 1995.
In April 1996, Holdings issued $150 million of 6.75% senior notes
due 2001 and $100 million of 7.2% senior notes due 2006 for proceeds of
$247 million. Proceeds were used to repay short-term debt.
On July 30, 1996, the Company paid $152 million for its 50%
ownership interest in the Hermiston Generating Project located near Hermiston,
Oregon. This 474 megawatt natural gas cogeneration project was developed by
U.S.
<PAGE>22
Generating Company and went into commercial operation on July 1, 1996. The
payment was initially funded with short-term debt.
Pacific Telecom has signed definitive agreements with U.S. West
Communications, Inc. to purchase local exchange telephone properties in
Minnesota with 26,600 access lines and with GTE North Incorporated to purchase
properties in Michigan with 11,100 access lines. Both acquisitions are
subject to regulatory approval and are expected to close in late 1996 or early
1997. Pacific Telecom also has a definitive agreement with the City of
Ketchikan to purchase telephone assets and operations in Ketchikan, Alaska
with 9,600 access lines and is currently negotiating a definitive agreement
with the Fairbanks Municipal Utility System to acquire its telephone and
cellular operations that have 32,000 access lines. The Alaska acquisitions
are expected to close during the first half of 1997. Along with regulatory
approvals, voter approval is required for the Ketchikan and Fairbanks
acquisitions. Pacific Telecom anticipates that the four acquisitions will
require $280 million in cash. Pacific Telecom expects to fund these
acquisitions through the issuance of external debt and internally generated
funds.
A consortium, known as The Hazelwood Power Partnership, was the
successful bidder for a 1,600 megawatt, coal-fired generating station and
associated coal mine in Victoria, Australia. The bid was approximately
$1.9 million, which is expected to be paid with a combination of project debt
financing in Australia and equity contributions from members of the
consortium. PacifiCorp Holdings, Inc., which has a 19.9% interest in the
partnership, expects to finance its portion (approximately $155 million) of
the required equity with borrowings in the United States. Closing is
scheduled for September 1996.
At June 30, 1996, the Company had $174 million of commercial paper
and bank borrowings outstanding at an average weighted rate of 5.4%. These
borrowings are supported by a $500 million revolving credit agreement. At
June 30, 1996, the consolidated subsidiaries had access to $1.9 billion of
short-term funds through committed bank revolving credit agreements.
Subsidiaries had $202 million of commercial paper outstanding at June 30,
1996, as well as borrowings of $1.1 billion under bank revolving credit
facilities. At June 30, 1996, the Companies had $1.0 billion 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 temporary loans of funds between parties
at short-term market rates.
The Company believes that its existing and available capital
resources are sufficient to meet working capital, dividend and the majority of
construction needs in 1996.
______________________________________________________________________________
The condensed consolidated financial statements as of June 30, 1996
and December 31, 1995 and for the three-month and six-month periods ended
June 30, 1996 and 1995 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, 1996, and the related condensed
consolidated statements of income and retained earnings and of cash flows for
the three- and six-month periods ended June 30, 1996 and 1995. 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, 1995, 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 13, 1996 we expressed an unqualified
opinion on those consolidated financial statements and included an explanatory
paragraph relating to the change in the Company's method of accounting for
income taxes and other postretirement benefits. In our opinion, the
information set forth in the accompanying condensed consolidated balance sheet
as of December 31, 1995 is fairly stated, in all material respects, in
relation to the consolidated balance sheet from which it has been derived.
DELOITTE & TOUCHE LLP
July 19, 1996
<PAGE>24
PART II. OTHER INFORMATION
Item 4. Submission of Matters to a Vote of Security Holders
______ ___________________________________________________
At the Company's annual meeting of shareholders on May 8, 1996, the
shareholders ratified the appointment of Deloitte & Touche LLP to
serve as independent auditors of the Company for the year 1996.
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>
243,686,339 1,727,343 1,886,132
</TABLE>
The shareholders also elected four Class III Directors, each for
terms expiring at the 1999 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>
Frederick W. Buckman 240,697,836 6,601,978 -
Don M. Wheeler 241,423,996 5,875,818 -
Nancy Wilgenbusch 241,708,852 5,590,962 -
Peter I. Wold 241,980,952 5,318,863 -
</TABLE>
The Directors whose terms continued and the years their terms expire
are as follows:
Kathryn A. Braun (Class II, 1998); C. Todd Conover (Class I, 1997);
Richard C. Edgley (Class II, 1998); Nolan E. Karras (Class I, 1997);
Keith R. McKennon (Class I, 1997); Roger G. Miller (Class II, 1998);
Verl R. Topham (Class II, 1998).
Item 5. Other Information
______ _________________
On July 10, 1996, the Company received an order from the Oregon PUC
authorizing the Company to raise prices in Oregon by an average of
4%. The price increase, which was effective July 15, 1996, is
expected to result in additional annual revenues of $27 million.
This is PacifiCorp's first general price increase in Oregon since
1987.
The Company's price increase filing also included a proposed
alternate form of regulation. The Company's proposal is designed to
encourage increased efficiencies and innovation. The Oregon PUC's
order did not address issues relating to the alternate form of
regulation. It is expected that hearings on these issues will be
held in October 1996. A PUC decision on the Company's proposal is
expected by year end 1996.
The Company also received an order from the Wyoming PSC authorizing
the Company to raise Wyoming prices by an average of 3.9%. This
price increase was effective July 1, 1996 and is expected to result
in additional annual revenues of $10 million. This was PacifiCorp's
first price increase in Wyoming since 1987. The Company has agreed
not to seek another price increase in Wyoming prior to July 1, 1998
<PAGE>25
and to conduct workshops with interested parties on possible
alternate forms of regulation beginning in the fourth quarter of
1996.
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,
1996 (filed electronically only).
(b) Reports on Form 8-K.
On Form 8-K dated August 5, 1996, under Item 5. "Other Events," the
Company filed its news release relating to a successful bid for the
Hazelwood Power Station and associated coal mine in Victoria,
Australia by a consortium that includes PacifiCorp, National Power
PLC, Destec Energy, Inc. and the Commonwealth Bank Group of
Australia.
<PAGE>26
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 14, 1996 By RICHARD T. O'BRIEN
_________________________ _________________________________
Richard T. O'Brien
Senior Vice President
(Chief Financial 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, 1996 (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>
YEAR ENDED DECEMBER 31, Six Months
______________________________________________ Ended
1991 1992 1993 1994 1995 June 30, 1996
____ ____ ____ ____ ____ _____________
<S> <C> <C> <C> <C> <C> <C>
Fixed Charges, as defined:*
Interest expense..................... $ 428.0 $ 409.7 $ 377.8 $ 336.8 $ 378.7 $227.5
Estimated interest portion
of rentals charged to expense...... 20.4 17.1 20.1 19.5 16.7 4.6
_______ _______ _______ _______ _______ _____
Total fixed charges.......... $ 448.4 $ 426.8 $ 397.9 $ 356.3 $ 395.4 $232.1
======= ======= ======= ======= ======= =====
Earnings, as defined:*
Income from continuing
operations......................... $ 446.8 $ 150.2 $ 422.7 $ 468.0 $ 505.0 $229.1
Add (deduct):
Provision for income taxes......... 176.7 90.8 187.4 249.8 238.8 125.4
Minority interest.................. 14.1 8.4 11.3 13.3 18.9 1.7
Undistributed income of less
than 50% owned affiliates........ (1.8) (5.7) (16.2) (14.7) (15.0) (5.6)
Fixed charges as above............. 448.4 426.8 397.9 356.3 395.4 232.1
_______ _______ _______ _______ _______ _____
Total earnings............... $1,084.2 $ 670.5 $1,003.1 $1,072.7 $1,143.1 $582.7
======= ======= ======= ======= ======= =====
Ratio of Earnings to Fixed Charges..... 2.4x 1.6x 2.5x 3.0x 2.9x 2.5x
==== ==== ==== ==== ==== ====
<FN>
_______________
*"Fixed charges" represent consolidated interest charges and an estimated amount representing the interest
factor in rents. "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>
YEAR ENDED DECEMBER 31, Six Months
______________________________________________ Ended
1991 1992 1993 1994 1995 June 30, 1996
____ ____ ____ ____ ____ _____________
<S> <C> <C> <C> <C> <C> <C>
Fixed Charges, as defined:*
Interest expense..................... $ 428.0 $ 409.7 $ 377.8 $ 336.8 $ 378.7 $227.5
Estimated interest portion
of rentals charged to expense...... 20.4 17.1 20.1 19.5 16.7 4.6
_______ _______ _______ _______ _______ _____
Total fixed charges.......... 448.4 426.8 397.9 356.3 395.4 232.1
Preferred Stock Dividends,
as defined:*....................... 37.4 59.9 56.8 60.8 57.0 27.9
_______ _______ _______ _______ _______ _____
Total fixed charges and
preferred dividends........ $ 485.8 $ 486.7 $ 454.7 $ 417.1 $ 452.4 $260.0
======= ======= ======= ======= ======= =====
Earnings, as defined:*
Income from continuing operations.... $ 446.8 $ 150.2 $ 422.7 $ 468.0 $ 505.0 $229.1
Add (deduct):
Provision for income taxes......... 176.7 90.8 187.4 249.8 238.8 125.4
Minority interest.................. 14.1 8.4 11.3 13.3 18.9 1.7
Undistributed income of less than
50% owned affiliates............. (1.8) (5.7) (16.2) (14.7) (15.0) (5.6)
Fixed charges as above............. 448.4 426.8 397.9 356.3 395.4 232.1
_______ _______ _______ _______ _______ _____
Total earnings............... $1,084.2 $ 670.5 $1,003.1 $1,072.7 $1,143.1 $582.7
======= ======= ======= ======= ======= =====
Ratio of Earnings to Combined
Fixed Charges and Preferred
Stock Dividends...................... 2.2x 1.4x 2.2x 2.6x 2.5x 2.2x
==== ==== ==== ==== ==== ====
<FN>
_______________
*"Fixed charges" represent consolidated interest charges and an estimated amount representing the interest
factor in rents. "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 13, 1996
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, 1996 and 1995, as indicated in our report dated July 19, 1996;
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, 1996, is
incorporated by reference in Registration Statement Nos. 33-62095, 33-51163,
33-55309, and 333-03357, all on Form S-3; in Registration Statement Nos.
33-58461, 33-51277, 33-54169, 33-56625, 33-57043, and 333-01545 and Post-
Effective Amendment No. 1 to Registration Statement No. 33-17970, all on Form
S-8; and in Registration Statement No. 33-36239 on Form S-4.
We also are aware that the aforementioned report, pursuant to Rule 436(c)
under the Securities Act of 1933, 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, 1996 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-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> JUN-30-1996
<BOOK-VALUE> PER-BOOK
<TOTAL-NET-UTILITY-PLANT> 8513800
<OTHER-PROPERTY-AND-INVEST> 2479800
<TOTAL-CURRENT-ASSETS> 1006800
<TOTAL-DEFERRED-CHARGES> 298900
<OTHER-ASSETS> 1921500
<TOTAL-ASSETS> 14220800
<COMMON> 3207000
<CAPITAL-SURPLUS-PAID-IN> 0
<RETAINED-EARNINGS> 685000
<TOTAL-COMMON-STOCKHOLDERS-EQ> 3892000
311500
219000
<LONG-TERM-DEBT-NET> 5052000
<SHORT-TERM-NOTES> 103900
<LONG-TERM-NOTES-PAYABLE> 0
<COMMERCIAL-PAPER-OBLIGATIONS> 375800
<LONG-TERM-DEBT-CURRENT-PORT> 272400
0
<CAPITAL-LEASE-OBLIGATIONS> 25300
<LEASES-CURRENT> 700
<OTHER-ITEMS-CAPITAL-AND-LIAB> 3968200
<TOT-CAPITALIZATION-AND-LIAB> 14220800
<GROSS-OPERATING-REVENUE> 1983300
<INCOME-TAX-EXPENSE> 125400
<OTHER-OPERATING-EXPENSES> 1414700
<TOTAL-OPERATING-EXPENSES> 1540100
<OPERATING-INCOME-LOSS> 443200
<OTHER-INCOME-NET> 13400
<INCOME-BEFORE-INTEREST-EXPEN> 456600
<TOTAL-INTEREST-EXPENSE> 227500
<NET-INCOME> 229100
18000
<EARNINGS-AVAILABLE-FOR-COMM> 211100
<COMMON-STOCK-DIVIDENDS> 156000
<TOTAL-INTEREST-ON-BONDS> 216700
<CASH-FLOW-OPERATIONS> 564300
<EPS-PRIMARY> .73
<EPS-DILUTED> .73
</TABLE>
