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SECURITIES AND EXCHANGE COMMISSION
Washington D.C. 20549
FORM 8-K
CURRENT REPORT PURSUANT TO SECTION 13 OR 15 (d) OF
THE SECURITIES EXCHANGE ACT OF 1934
Date of report (date of earliest event reported):
January 12, 1998
PACIFICORP
(Exact name of registrant as specified in its charter)
State of Oregon 1-5152 93-0246090
(State of Incorporation) (Commission (I.R.S. Employer
File No.) Identification No.)
700 N.E. Multnomah, Suite 1600, Portland, Oregon 97232-4116
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code:
(503) 731-2000
No Change
(Former Name or Former Address, if changed since last report)
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Item 5. OTHER EVENTS
Information contained in the news release of PacifiCorp issued on
January 12, 1998 is incorporated herein by reference.
Item 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS
(c) Exhibit.
99. PacifiCorp news release issued January 12, 1998.
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
(Registrant)
By: RICHARD T. O'BRIEN
________________________________
Richard T. O'Brien
Senior Vice President and
Chief Financial Officer
Date: January 14, 1998
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INDEX TO EXHIBITS
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EXHIBIT DESCRIPTION PAGE
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99 PacifiCorp news release issued January 12, 1998.
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EXHIBIT 99
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PACIFICORP NEWS RELEASE
_____________________________________________________________________________
For investors, Scott Hibbs or Angela Hult, (503) 731-2123
For media, Anita Marks, (503) 464-6268
January 12, 1998
PACIFICORP ANNOUNCES WORK FORCE REDUCTION; GLENROCK MINE
CLOSURE; OTHER CHARGES
PORTLAND, Oregon - PacifiCorp (NYSE: PPW) announced today that it will
reduce its U.S. work force by approximately 7% in 1998.
Approximately 600 jobs will be eliminated in 1998 through a combination
of voluntary early retirement and special severance in the Company's domestic
electric operations and general administrative groups. In addition, the
Company said it will be ceasing mining operations at its Glenrock coal mine in
Wyoming, effective mid to late 1999.
The mine closure will result in a charge to earnings in the fourth
quarter of 1997 of $64 million (pre-tax). The work force reduction is
estimated to result in a charge to earnings of approximately $97 million
(pre-tax), which will be recorded in the first quarter of 1998 when the early
retirement and severance offers are completed.
The Company also announced a series of other non-cash charges totaling
$150 million (pre-tax), driven by changes in the market and regulatory
environments in which it operates. These charges will be recorded in the
fourth quarter of 1997.
"The decisions we are announcing today are part of an ongoing process to
reshape PacifiCorp for the increasingly competitive U.S. electricity market,"
said Fred Buckman, President and Chief Executive Officer. "Our customers,
employees and shareholders will be best served by a company that can maintain
its low-cost advantage going into this market."
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Page 2 - PacifiCorp Announces Work Force Reduction, Glenrock Mine Closure,
Other Charges
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PacifiCorp also reported that it expects continuing cost pressures to
adversely affect the 1997 earnings contribution of its domestic electric
operations. The Company expects to report 1997 earnings in late January.
WORK FORCE REDUCTIONS
The company expects to complete the work force reduction by mid-year.
Non-voluntary reductions will be required if the acceptance rate of those
offered early retirement or severance is not high enough. For non-voluntary
reductions, the Company expects to offer enhanced severance benefits.
The costs associated with the work force reductions will be recorded in
the first quarter of 1998 consistent with current accounting requirements that
do not allow for recognition of the costs associated with these plans until
final acceptance by the affected employees. Employees are not required to
finalize their acceptance of the offers until March 1998.
These reductions are expected to result in annual savings to the Company
of approximately $45 million (pre-tax).
GLENROCK MINE CLOSURE
The Company will replace Glenrock coal with coal purchased from the
Powder River Basin in Wyoming. The inability of the mine to remain
competitive with Powder River Basin coal has caused Glenrock to be uneconomic
under current and expected market conditions due to increased mining stripping
ratios, coal quality and other related costs.
The costs associated with closing the mine include primarily final mine
reclamation and asset write-offs. The mine currently employs 177 people.
Final reclamation is expected to take three to five years and employ
approximately 55 people.
The closure of the Glenrock mine is expected to result in annual pre-tax
cost savings of approximately $15 million (pre-tax) after final mine closure.
OTHER CHARGES
In conjunction with the work force reductions, PacifiCorp will write off
all deferred pension costs. The write-off of $86 million (pre-tax) will be
charged to income in the fourth quarter of 1997.
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Page 3 - PacifiCorp Announces Work Force Reduction, Glenrock Mine Closure,
Other Charges
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The Company has completed a depreciation study of its fixed assets and
has filed with the appropriate regulatory bodies to increase its annual
depreciation rates by $16 million (pre-tax) effective January 1, 1997. As
part of the study, the Company will also record charges totaling $21 million
(pre-tax) to reduce the carrying value of certain of its information
technology assets. The adjusted carrying values better reflect current market
values as the Company implements a new SAP software operating environment.
Management believes that this system enhancement is a critical component to
its emergence as a global energy company.
Both the depreciation adjustment and the valuation charge will be
recorded in the fourth quarter of 1997.
The Company's fourth quarter 1997 results will also include a $26
million (pre-tax) charge related to its decision to record a valuation
allowance for its regulatory assets pertaining to generation resources
allocable to its operations in California and Montana. The decision to impair
these assets is based primarily on recent regulatory and legislative actions
in those states that have mandated customer choice of electric supplier and
eliminated cost-based regulation for the generation portion of the electricity
business. Regulatory assets represent costs incurred in the past that have
been deferred under regulatory accounting practices for future recovery.
Because of potential regulatory and legislative actions in its other
state jurisdictions, the Company may have additional regulatory asset
write-offs and charges for impairment of long-lived assets in future periods.
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