<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 September 30, 1998
__________________
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)
503-813-7200
(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 October 31, 1998, there were 297,334,589 shares of registrant's common
stock outstanding.
<PAGE>1
PACIFICORP
<TABLE>
<CAPTION>
Page No.
________
<S> <C>
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
Condensed Consolidated Statements of Income
and Retained Earnings 2
Condensed Consolidated Statements of Cash Flows 3
Condensed Consolidated Balance Sheets 4
Notes to Condensed Consolidated Financial Statements 6
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations 13
PART II. OTHER INFORMATION
Item 1. Legal Proceedings 35
Item 6. Exhibits and Reports on Form 8-K 35
Signature 36
</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 Nine Months Ended
September 30, September 30,
___________________ _________________
1998 1997 1998 1997
______ ______ ______ ______
<S> <C> <C> <C> <C>
REVENUES $1,918.2 $1,207.7 $4,380.6 $3,208.6
_______ _______ _______ _______
EXPENSES
Purchased power 1,220.6 429.2 2,237.2 971.6
Other operations and maintenance 291.6 292.5 848.1 848.7
Depreciation and amortization 110.1 111.2 340.8 331.2
Administrative and general 81.6 70.0 239.8 212.8
Taxes, other than income taxes 23.9 25.7 76.7 79.2
Special charges - - 113.1 -
_______ _______ _______ _______
TOTAL 1,727.8 928.6 3,855.7 2,443.5
_______ _______ _______ _______
INCOME FROM OPERATIONS 190.4 279.1 524.9 765.1
_______ _______ _______ _______
INTEREST EXPENSE AND OTHER
Interest expense 92.5 112.8 280.8 330.0
Interest capitalized (4.4) (3.3) (11.4) (9.5)
Other expense - net 48.2 108.8 114.3 104.4
_______ _______ _______ _______
TOTAL 136.3 218.3 383.7 424.9
_______ _______ _______ _______
Income from continuing operations
before income taxes 54.1 60.8 141.2 340.2
Income tax expense 19.5 14.5 42.3 112.6
_______ _______ _______ _______
Income from continuing operations 34.6 46.3 98.9 227.6
Discontinued Operations (less applicable
income tax expense: 1998/$60.2 and
$83.4, 1997/$17.8 and $41.7) (122.2) 27.7 (160.8) 62.2
_______ _______ _______ _______
NET INCOME (LOSS) (87.6) 74.0 (61.9) 289.8
RETAINED EARNINGS BEGINNING OF PERIOD 962.8 827.7 1,106.3 782.8
Cash dividends declared
Preferred stock (4.2) (5.5) (12.8) (16.6)
Common stock per share of $0.27
and $0.81 (80.1) (80.1) (240.7) (239.9)
_______ _______ _______ _______
RETAINED EARNINGS END OF PERIOD $ 790.9 $ 816.1 $ 790.9 $ 816.1
======= ======= ======= =======
EARNINGS (LOSS) ON COMMON STOCK $ (92.4) $ 68.2 $ (76.3) $ 271.8
Average number of common shares
outstanding - Basic (Thousands) 297,272 296,347 297,197 295,884
Dilutive (Thousands) 297,322 296,350 297,224 295,899
EARNINGS (LOSS) PER COMMON SHARE -
Basic and dilutive
Continuing operations $ 0.10 $ 0.14 $ 0.28 $ 0.71
Discontinued operations (0.41) 0.09 (0.54) 0.21
_______ _______ _______ _______
TOTAL $ (0.31) $ 0.23 $ (0.26) $ 0.92
======= ======= ======= =======
<FN>
See accompanying Notes to Condensed Consolidated Financial Statements
</FN>
</TABLE>
<PAGE>3
<TABLE>
PACIFICORP
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Millions of Dollars)
(Unaudited)
<CAPTION>
Nine Months Ended
September 30,
______________________
1998 1997
______ ______
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net income $ (61.9) $ 289.8
Adjustments to reconcile net income to
net cash provided by operating activities
Loss (income) from discontinued operations 160.8 (62.2)
Write off of exited operations 52.0 -
Depreciation and amortization 347.4 343.8
Deferred income taxes and investment tax
credits - net (61.0) 21.1
Special charges 113.1 -
Other 82.3 19.8
Accounts receivable and prepayments (296.4) (46.3)
Materials, supplies and fuel stock (5.6) -
Accounts payable and accrued liabilities 327.9 24.7
________ ______
Net cash provided by continuing operations 658.6 590.7
Net cash used in discontinued operations (390.2) (386.2)
________ ______
NET CASH PROVIDED BY OPERATING ACTIVITIES 268.4 204.5
________ ______
CASH FLOWS FROM INVESTING ACTIVITIES
Construction (429.5) (440.6)
Investments in and advances to
affiliated companies - net (25.1) (45.6)
Operating companies and assets acquired (40.3) (30.5)
Proceeds from sales of finance assets, real
estate investments and principal payments 316.8 52.6
Other 3.9 (34.7)
________ ______
NET CASH USED IN INVESTING ACTIVITIES (174.2) (498.8)
________ ______
CASH FLOWS FROM FINANCING ACTIVITIES
Changes in short-term debt 144.4 23.8
Proceeds from long-term debt 1,066.2 742.4
Proceeds from issuance of common stock 8.9 29.1
Proceeds from issuance of Trusts holding solely
PacifiCorp debentures preferred securities - 130.7
Dividends paid (259.6) (256.0)
Repayments of long-term debt (1,155.0) (233.2)
Redemptions of preferred stock - (72.2)
Other 39.4 (62.5)
________ ______
NET CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES (155.7) 302.1
________ ______
INCREASE IN CASH AND CASH EQUIVALENTS 61.5 7.8
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD 740.8 8.4
________ ______
CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 679.3 $ 16.2
======== ======
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION
Cash paid during the period for
Interest (net of amount capitalized) $ 330.9 $ 381.2
Income taxes 485.0 115.2
<FN>
See accompanying Notes to Condensed Consolidated Financial Statements
</FN>
</TABLE>
<PAGE>4
<TABLE>
PACIFICORP
CONDENSED CONSOLIDATED BALANCE SHEETS
(Millions of Dollars)
(Unaudited)
ASSETS
<CAPTION>
September 30, December 31,
1998 1997
____________ ____________
<S> <C> <C>
CURRENT ASSETS
Cash and cash equivalents $ 679.3 $ 740.8
Accounts receivable less allowance
for doubtful accounts: 1998/$12.4
and 1997/$17.7 947.9 723.9
Materials, supplies and fuel stock at
average cost 193.3 181.9
Real estate investments held for sale - 272.2
Net assets of discontinued operations 120.0 223.4
Other 38.3 55.0
________ ________
TOTAL CURRENT ASSETS 1,978.8 2,197.2
PROPERTY, PLANT AND EQUIPMENT
Domestic Electric Operations 12,402.2 12,094.6
Australian Electric Operations 1,090.4 1,161.2
Other Operations 30.4 31.1
Accumulated depreciation and amortization (4,508.2) (4,240.0)
________ ________
TOTAL PROPERTY, PLANT AND EQUIPMENT - NET 9,014.8 9,046.9
OTHER ASSETS
Investments in and advances to affiliated
companies 131.9 166.1
Intangible assets - net 366.1 399.0
Regulatory assets - net 849.6 871.1
Finance note receivable 207.3 211.2
Finance and real estate assets - net 377.5 349.8
Deferred charges and other 272.6 385.7
________ ________
TOTAL OTHER ASSETS 2,205.0 2,382.9
________ ________
TOTAL ASSETS $13,198.6 $13,627.0
======== ========
<FN>
See accompanying Notes to Condensed Consolidated Financial Statements
</FN>
</TABLE>
<PAGE>5
<TABLE>
PACIFICORP
CONDENSED CONSOLIDATED BALANCE SHEETS
(Millions of Dollars)
(Unaudited)
LIABILITIES AND SHAREHOLDERS' EQUITY
<CAPTION>
September 30, December 31,
1998 1997
____________ ____________
<S> <C> <C>
CURRENT LIABILITIES
Long-term debt currently maturing $ 299.0 $ 365.4
Notes payable and commercial paper 333.6 189.2
Accounts payable 842.6 546.7
Taxes, interest and dividends payable 348.7 677.5
Customer deposits and other 125.6 84.9
________ ________
TOTAL CURRENT LIABILITIES 1,949.5 1,863.7
DEFERRED CREDITS
Income taxes 1,494.4 1,666.2
Investment tax credits 129.2 135.2
Other 685.7 646.2
________ ________
TOTAL DEFERRED CREDITS 2,309.3 2,447.6
LONG-TERM DEBT 4,354.3 4,413.0
COMMITMENTS AND CONTINGENCIES (See Notes 4 and 5) -
GUARANTEED PREFERRED BENEFICIAL INTERESTS
IN COMPANY'S JUNIOR SUBORDINATED DEBENTURES 340.5 340.4
PREFERRED STOCK SUBJECT TO MANDATORY REDEMPTION 175.0 175.0
PREFERRED STOCK 66.4 66.4
COMMON EQUITY
Common shareholders' capital
shares authorized 750,000,000;
shares outstanding: 1998/297,279,589
and 1997/296,908,110 3,283.6 3,274.2
Retained earnings 790.9 1,106.3
Accumulated other comprehensive loss (70.9) (59.6)
________ ________
TOTAL COMMON EQUITY 4,003.6 4,320.9
________ ________
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $13,198.6 $13,627.0
======== ========
<FN>
See accompanying Notes to Condensed Consolidated Financial Statements
</FN>
</TABLE>
<PAGE>6
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
September 30, 1998
1. FINANCIAL STATEMENTS
The accompanying unaudited condensed consolidated financial statements as
of September 30, 1998 and December 31, 1997 and for the periods ended
September 30, 1998 and 1997, 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 September 30, 1998 and 1997 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 1997 Annual Report on
Form 10-K.
The condensed consolidated financial statements of the Company include
the integrated domestic electric utility operations of Pacific Power and Utah
Power and its wholly owned and majority owned subsidiaries. Major
subsidiaries, all of which are wholly owned, are: PacifiCorp Group Holdings
Company ("Holdings"), which holds directly or through its wholly owned
subsidiary, PacifiCorp International Group Holdings Company, Powercor
Australia Limited ("Powercor"), an Australian electricity distributor, and
PacifiCorp Financial Services, Inc. ("PFS"), a financial services business.
Together these businesses are referred to herein as the Companies.
Significant intercompany transactions and balances have been eliminated.
The Company has decided to exit the unregulated energy trading business
and dispose of TPC Corporation ("TPC"), a natural gas marketing and storage
company and the eastern U.S. electricity trading business of PacifiCorp Power
Marketing, Inc. ("PPM"). See Note 3. The Company sold its wholly owned
telecommunications subsidiary, Pacific Telecom, Inc. ("PTI"), on December 1,
1997. See Note 3. The Company sold Pacific Generation Company ("PGC") on
November 5, 1997, and the natural gas gathering and processing assets of TPC
on December 1, 1997. During May 1998, a majority of the real estate assets
held by PFS were sold.
The Company has also decided to exit the majority of its other
unregulated energy development businesses and has recorded them at estimated
net realizable value less selling costs.
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 have been reclassified to conform with the 1998 method of
presentation. These reclassifications had no effect on previously reported
consolidated net income.
<PAGE>7
2. BID FOR THE ENERGY GROUP
During 1997 and 1998, the Company sought to acquire The Energy Group PLC
("TEG"), a diversified international energy group with operations in the
United Kingdom, the United States and Australia. The Company made three
tender offers for TEG. The last offer was valued at $11.1 billion, including
the assumption of $4.1 billion of TEG's debt. In March 1998, Texas Utilities
Company made a tender offer at a higher price. On April 30, 1998, the Company
announced that it would not increase its revised offer for TEG.
The Company recorded an $86 million pretax charge to first quarter 1998
earnings, included in "Other expense-net," for bank commitment and facility
fees, legal expenses and other related costs incurred since the Company's
original bid for TEG in June of 1997. These costs had been deferred pending
the outcome of the transaction. The Company incurred a pretax loss of
$3 million in April 1998 in connection with closing its foreign currency
option contract associated with the bid for TEG. Total pretax costs incurred
in 1997 and 1998 were $199 million.
Additionally, in connection with the attempt to acquire TEG, a subsidiary
of the Company purchased approximately 46 million shares of TEG at a price of
820 pence per share, or $625 million. The Company recorded a pretax gain on
the TEG shares of $16 million when they were sold on June 2, 1998.
3. DISCONTINUED OPERATIONS
The Company has decided to exit the unregulated energy trading business
and offer for sale TPC and the eastern U.S. electricity trading business of
PPM. The Company will continue its wholesale power marketing activities in
the West, where it can provide physical delivery of energy. The Company
anticipates completing these transactions within the next twelve months.
On December 1, 1997, Holdings completed the sale of PTI for $1.5 billion
in cash plus the assumption of PTI's debt of $713 million. A portion of the
proceeds from the sale of PTI were used to repay short-term debt of Holdings.
The remaining proceeds were invested in short-term money market instruments
and Holdings temporarily advanced excess funds to Domestic Electric Operations
for retirement of short-term debt.
The net assets, operating results and cash flows of the unregulated
energy trading segment and PTI have been classified as discontinued operations
for all periods presented in the condensed financial statements and notes.
<PAGE>8
Summarized operating results for unregulated energy trading were as
follows:
<TABLE>
<CAPTION>
Three-Month Nine-Month
Periods Ended Periods Ended
September 30, September 30,
_________________ _________________
1998 1997 1998 1997
______ ______ ______ ______
(Dollars in Millions)
<S> <C> <C> <C> <C>
Revenues $1,424.7 $ 802.1 $2,961.4 $1,062.5
_______ _______ _______ _______
Income (loss) from discontinued
operations (less applicable
income tax expense/(benefit):
1998/$(1.1) and $(24.3),
1997/$1.2 and ($0.1)) $ (3.1) $ 0.6 $ (41.7) $ (2.3)
Loss on disposal, including
provision of $20.0 for
operating losses during
phase-out period (less
applicable income tax
benefit $59.1) (119.1) - (119.1) -
_______ _______ _______ _______
Net income (loss) $ (122.2) $ 0.6 $ (160.8) $ (2.3)
</TABLE>
Summarized operating results for PTI were as follows:
<TABLE>
<CAPTION>
Three-Month Nine-Month
Period Ended Period Ended
September 30, September 30,
_________________ _________________
1998 1997 1998 1997
______ ______ ______ ______
(Dollars in Millions)
<S> <C> <C> <C> <C>
Revenues $ - $154.0 $ - $416.2
______ _____ ______ _____
Income before income taxes $ - $ 43.7 $ - $106.3
Income taxes - 16.6 41.8
______ _____ ______ _____
Net income $ - $ 27.1 $ - $ 64.5
______ _____ ______ _____
Total income (loss) from
discontinued operations $(122.2) $ 27.7 $(160.8) $ 62.2
====== ===== ====== =====
</TABLE>
<PAGE>9
Net assets of the discontinued operations of Unregulated Energy Trading
consisted of the following:
<TABLE>
<CAPTION>
September 30, December 31,
1998 1997
_____________ ____________
(Dollars in Millions)
<S> <C> <C>
Current assets $ 220.0 $ 208.5
Noncurrent assets 262.6 269.5
Current liabilities (186.3) (241.9)
Long-term debt (1.4) (1.5)
Noncurrent liabilities (24.8) (11.2)
Write down of assets (150.1) -
_______ _______
Net Assets of Discontinued Operations $ 120.0 $ 223.4
======= =======
</TABLE>
4. ACCOUNTING FOR THE EFFECTS OF REGULATION
Domestic Electric Operations prepares its financial statements in
accordance with Statement of Financial Accounting Standards ("SFAS") 71,
"Accounting for the Effects of Certain Types of Regulations." Under this
statement, the Company may defer certain costs as regulatory assets and
certain obligations as regulatory liabilities. Regulatory assets and
liabilities represent probable future revenues that will be recovered from, or
refunded to, customers through the ratemaking process.
The Emerging Issues Task Force of the Financial Accounting Standards
Board (the "EITF") concluded in 1997 that SFAS 71 should be discontinued when
detailed legislation or regulatory orders regarding competition are issued.
Additionally, the EITF concluded that regulatory assets and liabilities
applicable to businesses being deregulated should be written off unless their
recovery is provided for through future regulated cash flows. Recoverability
of regulatory assets is assessed at each reporting period.
During 1997, the Utah Public Service Commission (the "PSC") held hearings
on the proper method to be used in allocating costs among the Company's seven
jurisdictions that resulted in an order issued on April 16, 1998. Under the
order, differences in allocations associated with the merger of Pacific Power
and Utah Power will be eliminated over five years on a straight-line basis.
The phase-out of the differences is to be completed by January 1, 2001 and
could reduce Utah prices by approximately $50 million to $60 million per year
once fully implemented. The order itself will not decrease revenues, but is
being included in a general rate case for the overall determination of revenue
requirement by the PSC and will be combined with other cost increases and
decreases to determine the overall impact to customer rates.
In the pending Utah rate case, the Utah Division of Public Utilities
(the "DPU") proposed adjustments that could result in a $57 million
annualized reduction in customer prices. This includes approximately $21
million of the allocation phase-in. The Committee of Consumer Services
proposed adjustments in the rate case that could reduce customer prices
annually by $79 million, including $21 million relating to the allocation
phase-in. The Company originally requested no change in customer prices and
proposed a new authorized rate of return on equity of 11.25%. The Company
subsequently settled certain issues with the other parties and is now
requesting an $18 million decrease. Any
<PAGE>10
required adjustment to customer prices could be retroactive to February 1997,
the date a petition was filed by the DPU with the PSC requesting a general
rate case. If the PSC approved the DPU proposal in December 1998 and
ordered the adjustment to be retroactive to February 1997, the Company would
have collected approximately $110 million of revenues subject to refund. An
adjustment to 1998 earnings of approximately $70 million, excluding any
interest imposed, would be required when the order was issued and the amount
was determinable. Hearings for the case are currently in process, with a
final order expected by year end. The Company has announced it will not
appeal the Utah allocation order.
On July 9, 1998, the Company announced its intent to seek buyers for its
California and Montana electric distribution assets. This action was in
response to the continued decline in earnings on the assets and changes in the
legislative and regulatory environments, including fixing prices, in these
states where the Company has few distribution properties. The Company issued
requests for proposals to interested parties on July 20, 1998. The Company
has received bids for the California assets. These bids remain open and the
Company has taken no action related to the bids.
On September 16, 1998, the Company entered into a Letter of Agreement
with Flathead Electric Cooperative for the Montana distribution assets. On
November 5, 1998, the Company completed the sale and received after-tax
proceeds of $92 million. The Company will return $4 million of the $8 million
gain to Montana customers as negotiated with the Montana Public Service
Commission (the "MPSC") and the Montana Consumer Counsel.
In addition, the Company is participating in a docket concerning the
transition plan the Company filed in compliance with direct access legislation
in Montana. The Company has asserted in that docket that it has significant
stranded costs related to its Montana service territory. However, the Company
has stated its willingness to forego recovery of those stranded costs as a
result of the sale of the Montana service territory. Other parties in the
proceeding believe the Company has stranded benefits, rather than stranded
costs, and that those benefits should be returned to customers. The Company
believes that the concept of stranded benefits is not addressed by Montana
legislation and there is no obligation to return stranded benefits to
customers even if the MPSC finds that such benefits exist. The outcome of
this proceeding is uncertain.
In December 1997, the California Public Utilities Commission issued an
order with respect to the Company's filing concerning transition to direct
access requirements enacted in that state. The order mandated a 10% rate
reduction effective January 1, 1998, which would result in a $3.5 million
annual reduction in revenues. The Company has requested a rehearing of this
issue.
The Oregon Public Utility Commission and the Company have agreed to an
Alternate Form of Regulation ("AFOR") for the Company's Oregon distribution
business. The AFOR allows for index-related price increases in 1998, 1999 and
2000, with an annual cap of 2% of distribution revenues in any one year and an
overall cap of 5% over the three-year period. The estimated revenue increase
in 1998 is approximately $6.9 million. The AFOR also includes incentives to
invest in renewable resources and penalties for failure to maintain the
service quality levels.
<PAGE>11
The Company continues to evaluate the impact of all changes in regulation
and legislation. Changes in regulatory environment may significantly affect
the Company's future financial condition, results of operations and cash
flows.
5. 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.
6. COMPREHENSIVE INCOME
Effective January 1, 1998, the Company adopted SFAS No. 130, "Reporting
Comprehensive Income." This statement requires items previously reported as a
component of common equity be more prominently reported in a separate
financial statement as a component of comprehensive income.
The components of comprehensive income are as follows:
<TABLE>
<CAPTION>
Three-Month Nine-Month
Periods Ended Periods Ended
September 30, September 30,
_________________ ________________
1998 1997 1998 1997
______ ______ ______ ______
(Dollars in Millions)
<S> <C> <C> <C> <C>
Net income $(87.6) $ 74.0 $(61.9) $289.8
Other comprehensive income
Foreign currency translation
adjustment, net of taxes:
1998/$0.7 and $(11.1),
1997/$(3.3) and $(22.0) 1.1 (5.4) (18.4) (34.6)
Unrealized gain on available-
for-sale securities, net of
taxes: 1998/$4.3 - - 7.1 -
_____ _____ _____ _____
Total comprehensive income $(86.5) $ 68.6 $(73.2) $255.2
===== ===== ===== =====
</TABLE>
7. NEW ACCOUNTING STANDARDS
In June 1997, the Financial Accounting Standards Board (the "FASB")
issued SFAS No. 131, "Disclosures about Segments of an Enterprise and Related
Information." SFAS No. 131 requires that companies disclose segment data
based on how management makes decisions about allocating resources to segments
and measuring performance. This standard is effective for fiscal years
beginning after December 15, 1997. Adoption of this standard may result in
additional financial disclosure but will not have an effect on the Company's
financial position or results of operations.
In February 1998, the FASB issued SFAS No. 132, "Employers' Disclosures
About Pensions and Other Postretirement Benefits." This statement, which is
<PAGE>12
effective for fiscal years beginning after December 15, 1997, revises
employers' disclosures about pension and other postretirement benefit plans.
Adoption of this standard will not change the measurement of the liability nor
recognition of expense of these plans.
In June 1998, the FASB issued SFAS No. 133, "Accounting for Derivative
Instruments and Hedging Activities." This statement, which is effective for
fiscal years beginning after June 15, 1999, requires an entity to recognize
all derivatives as either assets or liabilities in the statement of financial
position and measure those instruments at fair value. Adoption of this
standard will have an effect on the Company's financial position and results
of operations. The magnitude of the effect will be determined by the hedges
and derivatives that the Company has in place at the adoption of the standard.
The effects in future periods will be dependent upon the derivatives and
hedges in place at the end of each period.
<PAGE>13
Item 2.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
SUMMARY RESULTS OF OPERATIONS
This report includes forward-looking statements that involve a number of risks
and uncertainties that may influence the financial performance and earnings of
the Company and its subsidiaries, including the factors identified in the
Company's 1997 Annual Report on Form 10-K. Such forward-looking statements
should be considered in light of those factors.
Comparison of the three-month periods ended September 30, 1998 and 1997
_______________________________________________________________________
<TABLE>
<CAPTION>
%
1998 1997 Change Change
____ ____ ______ ______
(Dollars in Millions)
<S> <C> <C> <C> <C>
Earnings contribution (loss) on
common stock (1)
Domestic Electric Operations $ 49.9 $ 87.5 $ (37.6) (43)
Australian Electric Operations 6.5 15.8 (9.3) (59)
Other Operations (26.6) (62.8) 36.2 58
______ _____ ______
Continuing Operations 29.8 40.5 (10.7) (26)
Discontinued Operations (2) (122.2) 27.7 (149.9) *
______ _____ ______
Total $ (92.4) $ 68.2 $(160.6) *
====== ===== ======
Earnings (loss) per common
share - Basic and dilutive
Continuing Operations $ 0.10 $ 0.14 $ (0.04) (29)
Discontinued Operations (2) (0.41) 0.09 (0.50) *
_____ _____ ______
Total $(0.31) $ 0.23 $ (0.54) *
===== ===== ======
<FN>
*Not a meaningful number.
(1) Earnings contribution (loss) 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 Operations; (c) amounts
are net of preferred dividend requirements and minority interest.
(2) Represents the discontinued operations of PTI and the unregulated energy
trading business.
</FN>
</TABLE>
The Company recorded losses on common stock of $92 million, or $0.31 per
share, in the third quarter of 1998 compared to income of $68 million, or
$0.23 per share, reported in 1997. Third quarter 1998 results included losses
of $151 million, or $0.51 per share, relating to unregulated energy businesses
that the Company has decided to exit. Third quarter 1997 results included a
loss of $65 million, or $0.22 per share, associated with closing foreign
exchange positions relating to the Company's offer for TEG and income of
$27 million, or $0.09 per share, from the Company's telecommunications
operations that were sold in December of 1997.
<PAGE>14
Domestic Electric Operations earnings contribution was $50 million, or $0.17
per share, as compared to $88 million, or $0.30 per share, in the third
quarter of 1997. Income from operations declined $57 million, or 25%, to $172
million. Operating income declined in the quarter primarily due to lower
wholesale margins in the West and less favorable hydroelectric conditions.
Earnings from the Company's Australian Electric Operations were $7 million, or
$0.02 per share, in the third quarter of 1998, compared to $16 million, or
$0.05 per share, in the same quarter last year. Earnings declined primarily
as a result of lower sales margins and increased administrative and general
expenses. In addition, earnings were reduced by $2 million as the result of
unfavorable fluctuations in the currency exchange rate.
Other operations reported losses of $27 million, or $0.09 per share, in the
quarter compared to losses of $63 million, or $0.21 per share, in the third
quarter 1997. The Company evaluated the unregulated energy development
businesses and recorded an impairment of $32 million in the third quarter of
1998. Third quarter 1997 included a loss of $65 million, or $0.22 per share,
associated with closing foreign currency options and initial option premium
costs relating to the Company's offer for TEG.
Discontinued operations reported losses of $122 million, or $0.41 per share,
in the quarter as compared to income of $28 million, or $0.09 per share, in
the third quarter of 1997. Third quarter 1998 results included $119 million,
or $0.40 per share, relating to the loss anticipated to exit the unregulated
energy trading business and a loss of $3 million, or $0.01 per share, relating
to normal operations. Third quarter 1997 results included income of $27
million, or $0.09 per share, from the Company's telecommunications operations
that were sold in December of 1997.
Comparison of the nine-month periods ended September 30, 1998 and 1997
______________________________________________________________________
<TABLE>
<CAPTION>
%
1998 1997 Change Change
____ ____ ______ ______
(Dollars in Millions)
<S> <C> <C> <C> <C>
Earnings contribution (loss) on
common stock
Domestic Electric Operations $ 108.4 $224.3 $(115.9) (52)
Australian Electric Operations 27.2 44.9 (17.7) (39)
Other Operations (51.1) (59.6) 8.5 14
______ _____ ______
Continuing Operations 84.5 209.6 (125.1) (60)
Discontinued Operations (160.8) 62.2 (223.0) *
______ _____ ______
Total $ (76.3) $271.8 $(348.1) (128)
====== ===== ======
Earnings (loss) per common share - Basic
and dilutive
Continuing Operations $ 0.28 $ 0.71 $ (0.43) (61)
Discontinued Operations (0.54) 0.21 (0.75) *
_____ _____ ______
Total $(0.26) $ 0.92 $ (1.18) (128)
===== ===== ======
<FN>
*Not a meaningful number.
</FN>
</TABLE>
<PAGE>15
The Company recorded losses on common stock of $76 million, or $0.26 per
share, in 1998 compared to income of $272 million, or $0.92 per share,
reported in 1997. The 1998 results included losses of $151 million, or $0.51
per share, relating to unregulated energy businesses that the Company has
decided to exit, a charge of $70 million, or $0.24 per share, associated with
the Company's work force reduction in the United States and a charge of $54
million, or $0.18 per share, associated with the Company's terminated bid for
TEG. The 1997 results included a loss of $65 million, or $0.22 per share,
associated with closing foreign exchange positions relating to the Company's
offer for TEG and income of $65 million, or $0.22 per share, from the
Company's telecommunications operations that were sold in December of 1997.
Domestic Electric Operations earnings contribution was $108 million, or $0.37
per share. Excluding the $70 million charge relating to the work force
reduction, the earnings contribution would have been $178 compared to $224
million in 1997. Lower wholesale margins in the West, less favorable
hydroelectric conditions, higher depreciation and costs relating to the Year
2000 issues and implementation of a new SAP software operating environment
contributed to the decrease in operating income.
Earnings from the Company's Australian Electric Operations were $27 million,
or $0.09 per share, in 1998, compared to $45 million, or $0.15 per share, in
1997. Earnings declined primarily as a result of lower sales margins,
increased administrative and general expenses and a reduction in Tariff H
revenue. In addition, earnings were reduced by $6 million as the result of
unfavorable fluctuations in the currency exchange rate.
Other operations reported losses of $51 million, or $0.18 per share, compared
to losses of $60 million, or $0.20 per share, in 1997. The Company evaluated
the unregulated energy development businesses and recorded an impairment of
$32 million in 1998. In addition, 1998 earnings included a charge of $54
million for costs associated with the Company's terminated bid for TEG,
partially offset by a gain of $10 million on the sale of TEG shares acquired
in March 1998. The 1997 earnings included a loss of $65 million, or $0.22 per
share, associated with closing foreign currency options and initial option
premium costs relating to the Company's offer for TEG.
Discontinued operations reported losses of $161 million, or $0.54 per share,
compared to income of $62 million, or $0.21 per share, in 1997. The 1998
results included $119 million, or $0.40 per share, for the loss anticipated to
exit the unregulated energy trading business and a loss of $42 million, or
$0.14 per share, relating to normal operations. The 1997 results included
income of $65 million, or $0.22 per share, from the Company's
telecommunications operations that were sold in December of 1997.
<PAGE>16
RESULTS OF OPERATIONS
Domestic Electric Operations
____________________________
Comparison of the three-month periods ended September 30, 1998 and 1997
_______________________________________________________________________
<TABLE>
<CAPTION>
%
1998 1997 Change Change
____ ____ ______ ______
(Dollars in Millions)
<S> <C> <C> <C> <C>
Revenues
Residential $ 191.8 $ 184.1 $ 7.7 4
Commercial 173.6 168.7 4.9 3
Industrial 203.5 201.6 1.9 1
Other 8.4 8.1 0.3 4
_______ _______ ______
Retail sales 577.3 562.5 14.8 3
Wholesale sales and
market trading 1,164.0 409.7 754.3 *
Other 17.6 20.7 (3.1) (15)
_______ _______ ______
Total 1,758.9 992.9 766.0 77
Operating expenses 1,587.4 764.9 822.5 108
_______ _______ ______
Income from operations 171.5 228.0 (56.5) (25)
Interest expense 82.9 81.5 1.4 2
Minority interest and other 0.4 (0.3) 0.7 *
Income taxes 33.5 53.5 (20.0) (37)
_______ _______ ______
Net income 54.7 93.3 (38.6) (41)
Preferred dividend requirement 4.8 5.8 (1.0) (17)
_______ _______ ______
Earnings contribution $ 49.9 $ 87.5 $ (37.6) (43)
======= ======= ======
Energy sales (millions of kWh)
Residential 2,929 2,832 97 3
Commercial 3,250 3,189 61 2
Industrial 5,831 5,572 259 5
Other 181 184 (3) (2)
______ ______ ______
Retail sales 12,191 11,777 414 4
Wholesale sales and
market trading 34,227 15,354 18,873 123
______ ______ ______
Total 46,418 27,131 19,287 71
====== ====== ======
Residential average usage (kWh) 2,356 2,331 25 1
Total retail customers (end
of period) 1,459,029 1,427,289 31,740 2
</TABLE>
Revenues
Domestic Electric Operations revenues increased $766 million, or 77%. This
increase was primarily attributable to a $754 million increase in wholesale
revenues.
Wholesale volumes continued to expand with the active markets. The $754
million increase in revenues was driven by energy volumes that more than
doubled in 1998 to 34.2 million MWh. Higher short-term and spot market
wholesale energy volumes increased revenues by $639 million. Related energy
prices averaged $34 per MWh
<PAGE>17
in the quarter, a 44% increase over the prior year. The higher prices for
these sales added $120 million to revenues in the quarter.
Residential revenues and energy volumes were up $8 million and 3%,
respectively. Growth in the average number of residential customers of 2%
added $4 million to revenues. Warmer weather and other customer usage
changes added $3 million to residential revenues. Third quarter 1998
temperatures averaged 4 degrees warmer in July and 2 degrees warmer in
September.
Commercial revenues were up $5 million, or 3%. Energy sales volumes increased
2% over the prior year. Growth in the average number of customers of 2% added
$5 million to revenues.
Industrial revenues increased $2 million, or 1%. Warmer, drier weather
resulted in increased irrigation, which added $3 million to industrial
revenues.
Hearings in the Company's general rate case in Utah are currently in process,
with a final order expected by year end. Parties in the case have proposed
adjustments that would result in significant reductions in prices and could
require a material reduction to 1998 earnings for revenues collected subject
to refund. Regulatory changes have also occurred in other states in which the
Company operates. See Note 4 to the Condensed Consolidated Financial
Statements for additional information concerning pending regulatory
proceedings and developments.
The Company continues to evaluate the accounting impact of all changes in
regulation. Changes in regulatory structure may significantly affect the
Company's future financial condition and results of operations.
Operating Expenses
Total operating expenses increased $823 million, or 108%. This increase was
primarily attributable to increased purchased power expense to serve the
expanding wholesale market.
Purchased power expense increased $809 million, to $1.18 billion. The higher
expense was primarily due to a 19.6 million MWh increase in short-term firm
and spot market energy purchases, more than double the amount of purchases in
the same period of 1997, which increased purchased power expense $665 million.
Short-term firm and spot market purchase prices averaged $34 per MWh in the
quarter versus $22 per MWh in 1997, a 56% increase. The increase in purchase
prices added $145 million to costs. Lower volumes partially offset by higher
prices relating to long-term firm purchased power contracts resulted in a
$3 million decrease in purchased power costs.
<PAGE>18
<TABLE>
SHORT-TERM AND SPOT MARKET SALES AND PURCHASES
______________________________________________
<CAPTION>
1998 1997
________ ________
<S> <C> <C>
Total sales volume (thousands of MWh) 30,512 11,485
Average sales price ($/MWh) $ 33.71 $ 23.46
______ ______
Revenues ($, millions) $ 1,029 $ 269
Total purchase volume (thousands of MWh) 31,410 11,830
Average purchase price ($/MWh) $ 33.99 $ 21.77
______ ______
Expenses ($, millions) $ 1,068 $ 258
______ ______
Net ($, millions) $ (39) $ 11
====== ======
</TABLE>
Fuel expense was up $9 million, or 7%, to $135 million. Thermal generation
increased 4% to 13.6 million MWh. The average cost per MWh increased to $9.93
from $9.58 due to increased generation at plants with higher fuel costs. This
shift in generation resulted from unscheduled plant outages and higher market
prices for generation. Hydroelectric generation decreased 3% compared to the
third quarter of last year due to lower stream flows.
Depreciation and amortization expense increased $3 million, or 3%, to
$95 million. Increased plant in service added $2 million.
In July 1998, the Company withdrew its filings with regulatory bodies of a
depreciation study filed in 1997 because in its view regulatory approvals to
increase depreciation rates were unlikely. As a result of the decision to
withdraw the filing, the Company ceased recording the increased depreciation
expense in the third quarter. During the first six months of 1998, the
Company had recorded $9 million in additional depreciation as a result of the
study. The Company is preparing a revised depreciation study that will be
submitted to the regulatory commission in the fourth quarter of 1998.
Administrative and general expenses increased $2 million, or 2%, to $78
million. This increase includes $1 million of expenses relating to Year 2000
issues and $1 million relating to the ongoing implementation of the Company's
new SAP software operating environment.
Other Income and Expense
Income tax expense decreased $20 million, to $34 million, due to the decline
in pretax income.
<PAGE>19
Comparison of the nine-month periods ended September 30, 1998 and 1997
______________________________________________________________________
<TABLE>
<CAPTION>
%
1998 1997 Change Change
____ ____ ______ ______
(Dollars in Millions)
<S> <C> <C> <C> <C>
Revenues
Residential $ 598.3 $ 588.6 $ 9.7 2
Commercial 495.4 474.9 20.5 4
Industrial 542.2 537.5 4.7 1
Other 23.7 24.1 (0.4) (2)
_______ _______ _______
Retail sales 1,659.6 1,625.1 34.5 2
Wholesale sales and
market trading 2,158.8 893.8 1,265.0 142
Other 49.1 58.6 (9.5) (16)
_______ _______ _______
Total 3,867.5 2,577.5 1,290.0 50
Operating expenses 3,432.2 1,968.9 1,463.3 74
_______ _______ _______
Income from operations 435.3 608.6 (173.3) (28)
Interest expense 244.7 235.7 9.0 4
Minority interest and other (6.5) (13.4) 6.9 (51)
Income taxes 74.3 144.0 (69.7) (48)
_______ _______ _______
Net income 122.8 242.3 (119.5) (49)
Preferred dividend requirement 14.4 18.0 (3.6) (20)
_______ _______ _______
Earnings contribution $ 108.4 $ 224.3 $ (115.9) (52)
======= ======= =======
Energy sales (millions of kWh)
Residential 9,385 9,294 91 1
Commercial 9,166 8,811 355 4
Industrial 15,808 15,472 336 2
Other 500 546 (46) (8)
_______ ______ ______
Retail sales 34,859 34,123 736 2
Wholesale sales and
market trading 79,019 37,456 41,563 111
_______ ______ ______
Total 113,878 71,579 42,299 59
======= ====== ======
Residential average usage (kWh) 7,579 7,694 (115) (2)
Total retail customers (end
of period) 1,459,029 1,427,289 31,740 2
</TABLE>
Revenues
Total Domestic Electric Operations revenues increased $1.29 billion, or 50%.
This increase was primarily attributable to a $1.27 billion increase in
wholesale revenues.
The $1.27 billion increase in wholesale revenues was driven by energy volumes
that more than doubled in 1998 to a total of 79.0 million MWh. Higher
short-term and spot market wholesale energy volumes increased revenues by
$1.07 billion. Related energy prices averaged $26 per MWh, a 37% increase
over the prior year. The higher prices for these sales added $186 million to
revenues. Higher long-term prices partially offset by lower long-term volumes
added $5 million to revenues.
<PAGE>20
Residential revenues were up $10 million. Growth in the average number of
residential customers of 3% added $14 million to revenues. This increase was
partially offset by volume decreases due to decreased customer usage, which
lowered revenues by $4 million.
Commercial revenues were up $21 million, or 4%. Energy sales volumes
increased 4% over the prior year. Growth in the average number of customers
of 2% added $12 million to revenues, and increased customer usage added $7
million to revenues.
Industrial revenues increased $5 million, or 1%. A 2% increase in energy
sales increased revenues $3 million. Mild weather and planting conditions
reduced irrigation revenues by $1 million. Revenues in 1997 were reduced by
billing adjustments of $3 million for certain industrial customers.
Operating Expenses
Total operating expenses increased $1.46 billion, or 74%. This increase was
primarily attributable to increased purchased power expense to serve the
expanding wholesale market and the $113 million pretax cost of the work force
reduction.
Purchased power expense increased $1.31 billion, to $2.1 billion. The higher
expense was primarily due to a 40.8 million MWh increase in short term firm
and spot market energy purchases, more than double the amount of purchases in
the same period of 1997, which increased purchased power expense $1.11
billion. Short-term firm and spot market purchase prices averaged $26 per MWh
in 1998 versus $17 per MWh in 1997, a 52% increase. The increase in purchase
prices added $193 million to costs. Higher volumes and prices relating to
long-term firm purchased power contracts added $6 million to purchased power
costs.
<TABLE>
SHORT-TERM AND SPOT MARKET SALES AND PURCHASES
______________________________________________
<CAPTION>
1998 1997
________ ________
<S> <C> <C>
Total sales volume (thousands of MWh) 68,690 27,334
Average sales price ($/MWh) $ 25.83 $ 18.83
______ ______
Revenues ($, millions) $ 1,774 $ 515
Total purchase volume (thousands of MWh) 68,966 28,196
Average purchase price ($/MWh) $ 25.85 $ 16.99
______ ______
Expenses ($, millions) $ 1,783 $ 479
______ ______
Net ($, millions) $ (9) $ 36
====== ======
</TABLE>
Fuel expense was up $17 million, or 5%, to $356 million. Thermal generation
increased 6% to 38.0 million MWh, resulting in a decrease of 1% in the average
cost per MWh to $9.37. Hydroelectric generation decreased 7% due to less
favorable water conditions.
Other operations and maintenance expense decreased $15 million, or 4%, to
$330 million. Pension expense decreased $13 million due to amortization cost
decreases relating to deferred regulatory pension assets that were written off
in December 1997 and the implementation of the early retirement plan initiated
<PAGE>21
in the first quarter of 1998. Steam plant maintenance expense decreased
$4 million due to overhaul timing differences.
Depreciation and amortization expense increased $20 million, or 7%, to
$292 million. Higher depreciation rates that were implemented in the fourth
quarter of 1997 added $9 million to expense and increased plant in service
added $11 million.
Administrative and general expenses increased $15 million, or 7%, to
$241 million. This increase included $5 million of expenses relating to Year
2000 issues, $3 million relating to the Company's new SAP software operating
environment and $8 million of employee related costs.
Other Income and Expense
Interest expense increased $9 million to $245 million as a result of higher
debt balances. Income tax expense decreased $70 million due to the decline in
pretax income.
<PAGE>22
Australian Electric Operations
______________________________
Comparison of the three-month periods ended September 30, 1998 and 1997
_______________________________________________________________________
<TABLE>
<CAPTION>
Change Due Change % Change
to Currency Due to Due to
1998 1997 Translation Operations Operations
____ ____ ___________ __________ __________
(Dollars in Millions)
<S> <C> <C> <C> <C> <C>
Powercor Earnings Contribution
Revenues
Powercor area $108.3 $139.0 $(24.6) $ (6.1) (4)
Outside Powercor area
Victoria 19.3 26.4 (4.4) (2.7) (10)
New South Wales 15.8 14.4 (3.6) 5.0 35
Australia Capital Territory 0.3 - - 0.3 *
_____ _____ _____ _____
143.7 179.8 (32.6) (3.5) (2)
Other 5.8 5.6 (1.3) 1.5 27
_____ _____ _____ _____
Total 149.5 185.4 (33.9) (2.0) (1)
Operating expenses 126.0 147.3 (28.6) 7.3 5
_____ _____ _____ _____
Income from operations 23.5 38.1 (5.3) (9.3) (24)
Interest expense 13.6 15.5 (3.1) 1.2 8
Equity in (income)/losses
of Hazelwood (0.4) (0.5) 0.1 - -
Other (income)/expense 0.1 (1.3) - 1.4 108
Income taxes 3.7 8.6 (0.8) (4.1) (48)
_____ _____ _____ _____
Earnings contribution $ 6.5 $ 15.8 $ (1.5) $ (7.8) (49)
===== ===== ===== =====
Powercor energy sales (millions of kWh)
Powercor area 1,885 1,906 (21) (1)
Outside Powercor area
Victoria 596 591 5 1
New South Wales 560 449 111 25
Australia Capital Territory 6 - 6 *
_____ _____ _____
Total 3,047 2,946 101 3
===== ===== =====
<FN>
*Not a meaningful number.
</FN>
</TABLE>
Currency Exchange Rates
The currency exchange rate for converting Australian dollars to U. S. dollars
was 0.60 in the third quarter of 1998 as compared to 0.74 in 1997, a 19%
decrease. The effect of this change in exchange rates lowered revenues by $34
million and costs by $32 million in the third quarter of 1998.
The following discussion does not include the effects of the lower currency
exchange rates in 1998.
Revenue
Australia's revenues decreased $2 million, or 1%. The decrease was primarily
attributable to declining prices that reduced revenues by $10 million,
partially offset by increased energy sales volumes of 100 million kWh, or 3%,
which added $6 million to revenues.
<PAGE>23
Energy volumes sold to contestable customers outside Powercor's franchise area
were up 121 million kWh and added $6 million to revenues due to customer gains
in New South Wales and $1 million due to customer gains in Victoria. Lower
prices for contestable sales reduced revenues by $4 million in 1998. Inside
Powercor's franchise area, revenues declined $5 million primarily due to price
decreases for contestable customers and $1 million due to decreased volumes of
21 million kWh.
Operating Expenses
Purchased power expense decreased $5 million, or 6%, to $63 million. Lower
average prices reduced power costs by $8 million. Prices for purchased power
averaged $23 per MWh in the third quarter of 1998 compared to $25 per MWh in
the third quarter of 1997. The reduction resulted from competition. The
decrease was offset in part by a 4% increase in purchased power volumes that
added $3 million to costs.
Other operating expenses increased $12 million, or 25%, to $49 million.
Increased sales to contestable customers outside the Powercor service area
resulted in higher network fees of $9 million. This increase was offset in
part by higher network revenues of $3 million from customers inside Powercor's
franchise area serviced by other energy suppliers. Maintenance decreased
$2 million due to the outsourcing of various functions. Administrative and
general expenses increased $8 million primarily due to a $4 million adjustment
to capitalize new customer connection costs and $2 million of costs
capitalized for SAP system development in the third quarter of 1997.
Other Income and Expense
Income tax expense decreased due to a reduction in taxable income.
<PAGE>24
Comparison of the nine-month periods ended September 30, 1998 and 1997
______________________________________________________________________
<TABLE>
<CAPTION>
Change Due Change % Change
to Currency Due to Due to
1998 1997 Translation Operations Operations
____ ____ ___________ __________ __________
(Dollars in Millions)
<S> <C> <C> <C> <C> <C>
Powercor Earnings Contribution
Revenues
Powercor area $337.1 $417.7 $(70.0) $(10.6) (3)
Outside Powercor area
Victoria 60.2 75.7 (12.5) (3.0) (4)
New South Wales 52.9 24.1 (11.0) 39.8 *
Australia Capital Territory 0.3 - - 0.3 *
_____ _____ _____ _____
450.5 517.5 (93.5) 26.5 5
Other 18.6 29.4 (3.9) (6.9) (23)
_____ _____ _____ _____
Total 469.1 546.9 (97.4) 19.6 4
Operating expenses 375.3 426.6 (78.0) 26.7 6
_____ _____ _____ _____
Income from operations 93.8 120.3 (19.4) (7.1) (6)
Interest expense 43.8 49.9 (9.1) 3.0 6
Equity in losses of Hazelwood 3.9 2.0 (0.8) 2.7 135
Other (income)/expense 3.0 (1.6) (0.6) 5.2 *
Income taxes 15.9 25.1 (3.3) (5.9) (24)
_____ _____ _____ _____
Earnings contribution $ 27.2 $ 44.9 $ (5.6) $(12.1) (27)
===== ===== ===== =====
Powercor energy sales (millions of kWh)
Powercor area 5,549 5,576 (27) -
Outside Powercor area
Victoria 1,786 1,632 154 9
New South Wales 1,643 765 878 115
Australia Capital Territory 6 - 6 *
_____ _____ _____
Total 8,984 7,973 1,011 13
===== ===== =====
<FN>
*Not a meaningful number.
</FN>
</TABLE>
Currency Exchange Rates
The currency exchange rate for converting Australian dollars to U.S. dollars
was 0.63 in 1998 as compared to 0.76 in 1997, a 17% decrease. The effect of
this change in exchange rates lowered revenues by $98 million and costs by
$92 million.
The following discussion does not include the effects of the lower currency
exchange rate in 1998.
Revenue
Australia's revenues increased $20 million, or 4%. The increase was
attributable to increased energy sales volumes of 1,011 million kWh, or 13%,
which added $48 million to revenues. Declining prices reduced revenues by $21
million.
Energy volumes sold to contestable customers outside Powercor's franchise area
were up 1,038 million kWh and added $40 million to revenues due to customer
gains in New South Wales and $7 million due to customer gains in Victoria.
Lower
<PAGE>25
prices for these sales reduced revenues by $10 million in 1998. Inside
Powercor's franchise area, revenues decreased $11 million primarily due to a
decline in prices.
Other revenues decreased $7 million primarily as a result of less Tariff H
contract renegotiations revenue in 1998 than in 1997.
Operating Expenses
Purchased power expense decreased $8 million, or 3%, to $189 million. Lower
average prices reduced power costs by $38 million. Prices for purchased power
averaged $23 per MWh compared to $27 per MWh in 1997. The decrease, which was
due to competition, was offset in part by an 13% increase in purchased power
volumes that added $30 million to costs. In addition, purchased power expense
increased as the result of a contractual dispute with a third party, who did
not supply power as agreed, causing Powercor to pay a higher price for power.
Other operating expenses increased $35 million, or 25%, to $144 million.
Increased sales to contestable customers outside the Powercor service area
resulted in higher network fees of $36 million. This increase was offset in
part by higher network revenues of $8 million from customers inside Powercor's
franchise area serviced by other energy suppliers. Maintenance decreased
$2 million due to the outsourcing of various functions. Administrative and
general expenses increased $8 million primarily due to a $4 million adjustment
to capitalize new customer connection costs and $2 million of costs
capitalized for SAP system development in the third quarter of 1997.
Other Income and Expense
Interest expense increased $3 million as a result of higher debt balances,
partially offset by declining interest rates.
Other expense increased $5 million primarily due to a reserve relating to a
product recall. Powercor is in the process of negotiating recovery from the
manufacturer.
Equity losses in Hazelwood increased $3 million over 1997 primarily due to a
planned outage and increased maintenance costs for one of the power station
units during April and May of 1998.
Income taxes decreased $6 million primarily due to a decrease in taxable
income.
<PAGE>26
Discontinued Operations
_______________________
Comparison of the three-month periods ended September 30, 1998 and 1997
_______________________________________________________________________
<TABLE>
<CAPTION>
%
1998 1997 Change Change
____ ____ ______ ______
<S> <C> <C> <C> <C>
Unregulated Energy Trading
__________________________
Revenues $1,424.7 $802.1 $ 622.6 78
Cost of sales 1,421.6 792.1 629.5 79
_______ _____ ______
Gross margin 3.1 10.0 (6.9) (69)
Depreciation and amortization 1.5 3.9 (2.4) (62)
Administrative and other 5.4 5.0 0.4 8
_______ _____ ______
Loss from operations (3.8) 1.1 (4.9) *
Interest expense 1.3 0.6 0.7 117
Other expense/(income) - net 177.3 (1.3) 178.6 *
Income tax expense/(benefit) (60.2) 1.2 (61.4) *
_______ _____ ______
Earnings contribution (loss) $ (122.2) $ 0.6 $(122.8) *
_______ _____ ______
Telecommunications
__________________
Revenues $ - $154.0 $(154.0) (100)
Operating expenses - 102.9 (102.9) (100)
_______ _____ ______
Income from operations - 51.1 (51.1) (100)
Interest expense - 10.2 (10.2) (100)
Other income - net - (2.8) 2.8 100
Income taxes - 16.6 (16.6) (100)
_______ _____ ______
Earnings contribution $ - $ 27.1 $ (27.1) (100)
_______ _____ ______
Total discontinued operations
Earnings contribution (loss) $ (122.2) $ 27.7 $(149.9) *
======= ===== ======
<FN>
*Not a meaningful number.
</FN>
</TABLE>
Unregulated Energy Trading
__________________________
Unregulated energy trading gross margin declined $7 million primarily as a
result of the sale of TPC's gas gathering and processing assets in December
1997.
Other Income and Expense
Other expense increased $179 million primarily due to a $178 million loss
taken to exit the unregulated energy trading business.
Income tax expense decreased $61 million due to the reduction in taxable
income.
Telecommunications
__________________
Earnings contribution from telecommunications declined due to the sale of PTI
in December 1997.
<PAGE>27
Comparison of the nine-month periods ended September 30, 1998 and 1997
______________________________________________________________________
<TABLE>
<CAPTION>
%
1998 1997 Change Change
____ ____ ______ ______
<S> <C> <C> <C> <C>
Unregulated Energy Trading
__________________________
Revenues $2,961.4 $1,062.5 $1,898.9 *
Cost of sales 3,008.2 1,044.3 1,963.9 *
_______ _______ _______
Gross margin (46.8) 18.2 (65.0) *
Depreciation and amortization 4.5 7.8 (3.3) (42)
Administrative and other 14.8 12.6 2.2 17
_______ _______ _______
Loss from operations (66.1) (2.2) (63.9) *
Interest expense 2.1 2.4 (0.3) (13)
Other expense/(income) - net 176.0 (2.2) 178.2 *
Income tax expense/(benefit) (83.4) (0.1) (83.3) *
_______ _______ _______
Earnings contribution (loss) $ (160.8) $ (2.3) $ (158.5) *
_______ _______ _______
Telecommunications
__________________
Revenues $ - $ 416.2 $ (416.2) (100)
Operating expenses - 283.0 (283.0) (100)
_______ _______ _______
Income from operations - 133.2 (133.2) (100)
Interest expense - 30.4 (30.4) (100)
Other income - net - (3.5) 3.5 100
Income taxes - 41.8 (41.8) (100)
_______ _______ _______
Earnings contribution $ - $ 64.5 $ (64.5) (100)
_______ _______ _______
Total discontinued operations
Earnings contribution (loss) $ (160.8) $ 62.2 $ (223.0) *
======= ======= =======
<FN>
*Not a meaningful number.
</FN>
</TABLE>
Unregulated Energy Trading
__________________________
Unregulated energy trading gross margin declined $65 million. In the second
quarter of 1998, a credit reserve of $32 million pretax was recorded as a
result of a default by a supplier of power on a commitment to deliver power
and an additional $10 million pretax charge was recorded for known and
probable future trading losses. In addition, gross margin decreased
$19 million as a result of the sale of the Company's gas gathering and
processing assets in December 1997.
Other Income and Expense
Other expense increased $178 million primarily due to a $178 million loss
taken to exit the unregulated energy trading business.
Income tax expense decreased $83 million due to the reduction in taxable
income.
Telecommunications
__________________
Earnings contribution from telecommunications declined due to the sale of PTI
in December 1997.
<PAGE>28
Other Operations
________________
Comparison of the three-month periods ended September 30, 1998 and 1997
_______________________________________________________________________
<TABLE>
<CAPTION>
%
1998 1997 Change Change
____ ____ ______ ______
(Dollars in Millions)
<S> <C> <C> <C> <C>
Earnings contribution (loss)
PFS $ (1.0) $ 5.3 $ (6.3) (119)
PGC - 3.0 (3.0) (100)
Holdings and other (25.6) (71.1) 45.5 64
_____ _____ _____
Total $(26.6) $(62.8) $ 36.2 58
===== ===== =====
</TABLE>
Other operations reported losses of $27 million in the quarter compared to a
loss of $63 million in the same period a year ago. Losses relating to the
decision to exit the unregulated energy development businesses totaled
$32 million, or $0.11 per share. Third quarter 1997 included a loss of
$65 million, or $0.22 per share, associated with closing foreign currency
options and initial option premium costs relating to the Company's offer for
TEG.
Results from other operations were benefited by a $14 million after tax
increase in interest income and reduced interest expense as the result of cash
received from asset sales in 1997.
Earnings from PFS were down $6 million primarily due to the sale of affordable
housing properties.
In addition, the other unregulated energy development businesses incurred
$7 million of after tax losses, or $0.02 per share, compared to a loss of
$2 million, or $0.01 per share, in the third quarter of 1997.
<PAGE>29
Comparison of the nine-month periods ended September 30, 1998 and 1997
______________________________________________________________________
<TABLE>
<CAPTION>
%
1998 1997 Change Change
____ ____ ______ ______
(Dollars in Millions)
<S> <C> <C> <C> <C>
Earnings contribution (loss)
PFS $ 6.5 $ 14.8 $ (8.3) (56)
PGC - 7.0 (7.0) (100)
Holdings and other (57.6) (81.4) 23.8 29
_____ _____ _____
Total $(51.1) $(59.6) $ 8.5 14
===== ===== =====
</TABLE>
Other operations reported losses of $51 million in 1998 compared to a loss of
$60 million in the same period a year ago. Losses relating to the decision to
exit the unregulated energy development businesses totaled $32 million, or
$0.11 per share, and losses relating to the costs associated with the
Company's terminated bid for TEG totaled $54 million, or $0.18 per share.
Third quarter 1997 included a loss of $65 million, or $0.22 per share,
associated with closing foreign currency options and initial option premium
costs relating to the Company's offer for TEG.
On March 2, 1998, a subsidiary of Holdings purchased approximately 46 million
TEG shares at a price of 820 pence per share, or $625 million, utilizing a
portion of the cash proceeds from asset sales. On June 2, 1998, the
subsidiary sold the shares and recorded an after-tax gain of $10 million.
Results from other operations were benefited by a $37 million after tax
increase in interest income and reduced interest expense as the result of cash
received from asset sales in 1997.
During May 1998, PFS received approximately $80 million in cash proceeds for
the sale of a majority of its real estate assets. Earnings from PFS were down
$8 million primarily due to the sale of affordable housing properties.
In addition, the other unregulated energy development businesses incurred
$18 million of after tax losses, or $0.06 per share, compared to a loss of
$4 million, or $0.01 per share, in 1997.
<PAGE>30
FINANCIAL CONDITION -
For the nine months ended September 30, 1998:
OPERATING ACTIVITIES
Net cash flows provided by continuing operations were $659 million during
the period compared to $591 million in the first nine months of 1997. The
$68 million increase in operating cash flows was primarily attributable to
decreased working capital requirements.
Net cash used in discontinued operations represents payment of income
taxes of $304 million associated with a $671 million pretax gain recorded in
December 1997 on the sale of PTI and cash flows of $86 million related to
unregulated energy trading.
INVESTING ACTIVITIES
Capital spending totaled $429 million in 1998 compared with $441 million
in 1997.
Disposition of Assets
On October 23, 1998, the Company announced its intent to exit its
unregulated energy trading business and its other unregulated energy
development businesses. As a result, the Company recorded a $151 million loss
for these businesses.
Management of the eight investor and publicly-owned utility partners who
own the 1,340 megawatt coal-fired Centralia Power Project in Washington have
hired an investment advisor to pursue the possible sale of the plant and the
adjacent Centralia Mine. The sale of the plant is being considered by the
owners, in part, because of emerging deregulation and competition in the
electricity industry. The Company operates the plant and owns a 47.5 percent
share. The Company owns and operates the adjacent Centralia Mine. The
Company is investigating the effect of a potential sale on the reclamation
costs for the Centralia Mine. The amount and timing of any charge for
additional reclamation at the mine are dependent upon a number of factors,
including the results of the sale process, completion of certain reclamation
studies at the mine and the regulatory treatment of these costs.
On July 9, 1998, the Company announced its intent to seek buyers for its
California and Montana electric distribution assets. This action was in
response to the continued decline in earnings on the assets and changes in the
legislative and regulatory environments, including fixing prices, in these
states where the Company has few distribution properties. The Company issued
requests for proposals to interested parties on July 20, 1998. The Company
has received bids for the California assets. These bids remain open and the
Company has taken no action related to the bids.
On September 16, 1998, the Company entered into a Letter of Agreement
with Flathead Electric Cooperative for the Montana distribution assets. On
November 5, 1998, the Company closed the sale and received after-tax proceeds
of $92 million. The Company will return $4 million of the $8 million gain to
Montana customers as negotiated with the MPSC and the Montana Consumer
Counsel.
<PAGE>31
In addition, the Company is participating in a docket concerning the
transition plan the Company filed in compliance with direct access legislation
in Montana. The Company has asserted in that docket that it has significant
stranded costs related to its Montana service territory. However, the Company
has stated its willingness to forego recovery of those stranded costs as a
result of the sale of the Montana service territory. Other parties in the
proceeding believe the Company has stranded benefits, rather than stranded
costs, and that those benefits should be returned to customers. The Company
believes that the concept of stranded benefits is not addressed by Montana
legislation and there is no obligation to return stranded benefits to
customers even if the MPSC finds that such benefits exist. The outcome of
this proceeding is uncertain.
Bid for The Energy Group
During 1997 and 1998, the Company sought to acquire TEG, a diversified
international energy group with operations in the United Kingdom, the United
States and Australia. The Company made three tender offers for TEG. The last
offer was valued at $11.1 billion, including the assumption of $4.1 billion of
TEG's debt. In February 1998, Texas Utilities Company also made a tender
offer at a higher price. On April 30, 1998, the Company announced that it
would not increase its revised offer for TEG.
The Company recorded an $86 million pretax charge to first quarter 1998
earnings, included in "Other expense-net," for bank commitment and facility
fees, legal expenses and other related costs incurred since the Company's
original bid for TEG in June of 1997. These costs had been deferred pending
the outcome of the transaction. The Company incurred a pretax loss of
$3 million in April 1998 in connection with closing its foreign currency
option contract associated with the bid for TEG. Total pretax costs incurred
in 1997 and 1998 were $199 million.
Additionally, in connection with the attempt to acquire TEG, a subsidiary
of the Company purchased approximately 46 million shares of TEG at a price of
820 pence per share, or $625 million. The Company recorded a pretax gain on
the TEG shares of $16 million when they were sold on June 2, 1998.
CAPITALIZATION
At September 30, 1998, the Company had approximately $445 million of
commercial paper outstanding at a weighted average rate of 5.6%. These
borrowings are supported by $700 million of revolving credit agreements. At
September 30, 1998, the consolidated subsidiaries had access to $825 million
of short-term funds through committed bank revolving credit agreements.
Subsidiaries had $413 million outstanding under bank revolving credit
facilities. At September 30, 1998, the Companies had $531 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 temporary loans of funds between parties
at short-term market rates. At September 30, 1998, Holdings had loaned
$651 million to PacifiCorp.
In January 1998, Australian Electric Operations issued $400 million of
6.15% Notes due 2008. At the same time, in order to mitigate foreign currency
exchange risk, Australian Electric Operations entered into a series of
currency exchange agreements in the same amount and for the same duration as
the underlying United
<PAGE>32
States denominated notes. The proceeds of the Notes were used to repay
Australian bank bill borrowings.
On May 12, 1998, the Company issued $200 million of 6.375% secured
medium-term notes due May 15, 2008 in the form of First Mortgage Bonds.
Proceeds were used to repay short-term debt.
On November 6, 1998, the Company issued $200 million of its 5.65% Series
of First Mortgage Bonds due November 1, 2006. Proceeds were used to repay
short-term debt.
YEAR 2000
The Company's Year 2000 project has been underway since mid-1996. A
standard methodology of inventory, assessment, remediation and testing of
hardware, software and equipment has been implemented. The main areas of risk
are in: power supply (generating plant and system controls); information
technology (computer software and hardware); business disruption; and supply
chain disruption. The first two areas of risk are within the Company's own
business operations. The others are areas of risk the Company might face from
interaction with other companies, such as critical suppliers. The Company's
plan is to have successfully identified, corrected and tested its existing
critical systems by July 1, 1999. All new hardware or software must be
certified Year 2000 ready before it is installed.
A summary of the Company's progress to date in areas affected by Year
2000 issues is set forth in the following table:
<TABLE>
<CAPTION>
Remediation
Inventory Assessment and Testing
_________ __________ ___________
(% Completed)
<S> <C> <C> <C>
Electric Systems 98 65 23
Computer Systems
Central Applications
to Correct 100 100 42
Central Applications
to Replace 100 100 65
Desktop 100 100 20
</TABLE>
The Company's ability to maintain normal operations into the year 2000
will be affected by Year 2000 readiness of third parties from whom the Company
purchases products and services or with whom the Company exchanges
information. At October 30, 1998, the Company had identified 100% of its
critical third-party relationships and assessed the Year 2000 readiness of 75%
of these parties. Assessment of the readiness of the remaining critical third
parties is estimated to be completed by the end of November 1998.
The Company, the North American Electric Reliability Council ("NERC") and
the Western Systems Coordinating Council ("WSCC") are working closely together
to ensure the integrity of the interconnected electrical distribution and
transmission system in the Company's service area and the Western United
States. NERC coordinates the efforts of the ten regional electric reliability
councils throughout the United States while WSCC is focused on reliable
electric service
<PAGE>33
in the western United States. These agencies require Year 2000 readiness for
all interconnected electric utilities by July 1, 1999. In compliance with
NERC guidelines, the Company is in the process of developing Year 2000
contingency plans. The first draft of these plans is due by the end of 1998.
The Company has incurred $8.9 million in costs relating to the Year 2000
project through September 30, 1998. Estimates of the total cost of the Year
2000 project are approximately $30 million. This estimate does not include
the cost of system replacements that will be Year 2000 compliant, but are not
being installed primarily to resolve Year 2000 problems.
The dates on which the Company believes the Year 2000 project will be
completed and the expected costs and other impacts of the Year 2000 issues are
based on management's best estimates, which were derived utilizing numerous
assumptions concerning future events, including the availability of certain
resources, the completion of third-party modification plans and other factors.
There can be no assurance that these estimates will be achieved, or that there
will not be a delay in, or increased costs associated with, the Company's
implementation of its Year 2000 project.
______________________________________________________________________________
The condensed consolidated financial statements as of September 30, 1998
and December 31, 1997 and for the three-and nine-month periods ended
September 30, 1998 and 1997 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>34
Deloitte & Touche LLP
_____________________ _____________________________________________________
Suite 3900 Telephone:(503)222-1341
111 S.W. 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 September 30, 1998, and the related
condensed consolidated statements of income and retained earnings for the
three- and nine-month periods ended September 30, 1998 and 1997 and of cash
flows for the nine-month periods ended September 30, 1998 and 1997. 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, 1997, 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 3, 1998 (March 2, 1998 as to Note
2), 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, 1997 is fairly stated,
in all material respects, in relation to the consolidated balance sheet from
which it has been derived.
DELOITTE & TOUCHE LLP
October 22, 1998
<PAGE>35
PART II. OTHER INFORMATION
Item 1. Legal Proceedings
______ _________________
The Company has settled the Utah Associated Municipal Power Systems
_______________________________________
v. PacifiCorp case (see "Item 3. Legal Proceedings" at page 25 of
_____________
the Company's Annual Report on Form 10-K for the year ended December
31, 1997).
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
September 30, 1998, restated Financial Data Schedules for June 30,
1998, March 31, 1998, all quarters ended in 1997 and 1996 and for
the quarter ended December 31, 1995 (filed electronically only).
(b) Reports on Form 8-K.
On Form 8-K, dated August 26, 1998, under Item 5. "Other Events,"
the Company filed a news release reporting the appointment of Keith
McKennon as Chief Executive Officer.
On Form 8-K, dated September 16, 1998, under Item 5. "Other Events,"
the Company filed a news release concerning the expected earnings
shortfall for the third quarter of 1998.
On Form 8-K, dated October 23, 1998, under Item 5. "Other Events,"
the Company filed news releases concerning the Company's third
quarter earnings and the Company's strategic plan.
<PAGE>36
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 November 12, 1998 By ROBERT R. DALLEY
___________________________ ___________________________________
Robert R. Dalley
Controller
(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 September 30, 1998, restated Financial Data
Schedules for June 30, 1998, March 31, 1998, all
quarters ended in 1997 and 1996 and for the quarter
ended December 31, 1995 (filed electronically only).
</TABLE>
<PAGE>
<TABLE>
EXHIBIT (12)(a)
PACIFICORP
STATEMENTS OF COMPUTATION OF RATIO
OF EARNINGS TO FIXED CHARGES
<CAPTION>
Nine Months
______________________________________________ Ended
1993 1994 1995 1996 1997 Sept. 30, 1998
____ ____ ____ ____ ____ ______________
(In Millions of Dollars)
<S> <C> <C> <C> <C> <C> <C>
Fixed Charges, as defined:*
Interest expense..................... $ 333.5 $ 302.0 $ 336.4 $ 415.0 $ 438.1 $280.9
Estimated interest portion of
rentals charged to expense......... 4.8 5.6 4.5 4.1 6.6 7.0
Preferred dividends of
wholly owned subsidiary............ - - - 15.3 32.9 30.1
_______ _______ _______ _______ _______ _____
Total fixed charges.............. $ 338.3 $ 307.6 $ 340.9 $ 434.4 $ 477.6 $318.0
======= ======= ======= ======= ======= =====
Earnings, as defined:*
Income from continuing operations.... $ 371.8 $ 397.5 $ 402.4 $ 430.3 $ 232.8 $141.3
Add (deduct):
Provision for income taxes......... 163.6 209.0 192.1 236.5 111.8 42.3
Minority interest.................. 2.7 1.3 1.4 1.8 1.9 (0.8)
Undistributed income of less
than 50% owned affiliates........ (16.2) (14.7) (15.0) (18.2) (11.1) 8.7
Fixed charges as above............. 338.3 307.6 340.9 434.4 477.6 318.0
_______ _______ _______ _______ _______ _____
Total earnings................... $ 860.2 $ 900.7 $ 921.8 $1,084.8 $ 813.0 $509.5
======= ======= ======= ======= ======= =====
Ratio of Earnings to Fixed Charges..... 2.5x 2.9x 2.7x 2.5x 1.7x 1.6x
==== ==== ==== ==== ==== ====
<FN>
*"Fixed charges" represent consolidated interest charges, an estimated amount representing the interest
factor in rents and preferred 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>
EXHIBIT (12)(b)
PACIFICORP
STATEMENTS OF COMPUTATION OF RATIO
OF EARNINGS TO COMBINED FIXED CHARGES AND PREFERRED STOCK DIVIDENDS
<CAPTION>
Nine Months
______________________________________________ Ended
1993 1994 1995 1996 1997 Sept. 30, 1998
____ ____ ____ ____ ____ ______________
(In Millions of Dollars)
<S> <C> <C> <C> <C> <C> <C>
Fixed Charges, as defined:*
Interest expense..................... $ 333.5 $ 302.0 $ 336.4 $ 415.0 $ 438.1 $280.9
Estimated interest portion of
rentals charged to expense...... 4.8 5.6 4.5 4.1 6.6 7.0
Preferred dividends of
wholly owned subsidiary............ - - - 15.3 32.9 30.1
_______ _______ _______ _______ _______ _____
Total fixed charges.............. $ 338.3 $ 307.6 $ 340.9 $ 434.4 $ 477.6 $318.0
Preferred Stock Dividends,
as defined:*....................... 56.8 60.8 57.2 46.2 33.8 20.6
_______ _______ _______ _______ _______ _____
Total fixed charges and
preferred dividends............ $ 395.1 $ 368.4 $ 398.1 $ 480.6 $ 511.4 $338.6
======= ======= ======= ======= ======= =====
Earnings, as defined:*
Income from continuing operations.... $ 371.8 $ 397.5 $ 402.4 $ 430.3 $ 232.8 $141.3
Add (deduct):
Provision for income taxes......... 163.6 209.0 192.1 236.5 111.8 42.3
Minority interest.................. 2.7 1.3 1.4 1.8 1.9 (0.8)
Undistributed income of less than
50% owned affiliates............. (16.2) (14.7) (15.0) (18.2) (11.1) 8.7
Fixed charges as above............. 338.3 307.6 340.9 434.4 477.6 318.0
_______ _______ _______ _______ _______ _____
Total earnings................... $ 860.2 $ 900.7 $ 921.8 $1,084.8 $ 813.0 $509.5
======= ======= ======= ======= ======= =====
Ratio of Earnings to Combined Fixed
Charges and Preferred Stock Dividends.. 2.2x 2.4x 2.3x 2.3x 1.6x 1.5x
==== ==== ==== ==== ==== ====
<FN>
*"Fixed charges" represent consolidated interest charges, an estimated amount representing the interest
factor in rents and preferred 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
___________ _____________________________________________________
Suite 3900 Telephone:(503)222-1341
111 S.W. Fifth Avenue Facsimile:(503)224-2172
Portland, Oregon 97204-3642
EXHIBIT 15
November 12, 1998
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
September 30, 1998 and 1997, as indicated in our report dated October 22,
1998; 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 September 30, 1998, is
incorporated by reference in Registration Statement Nos. 33-51277, 33-54169,
33-57043, 33-58461, 333-10885, and 333-45851, all on Form S-8; Registration
Statement No. 33-36239 on Form S-4; and Registration Statement Nos. 33-62095
and 333-09115 on Form S-3.
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>
<PAGE>
<ARTICLE> UT
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM PACIFICORP'S
FORM 10-Q DATED SEPTEMBER 30, 1998 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE
TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<CIK> 0000075594
<NAME> PACIFICORP
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-START> JAN-01-1998
<PERIOD-END> SEP-30-1998
<BOOK-VALUE> PER-BOOK
<TOTAL-NET-UTILITY-PLANT> 7886100
<OTHER-PROPERTY-AND-INVEST> 1626700
<TOTAL-CURRENT-ASSETS> 1978800<F1>
<TOTAL-DEFERRED-CHARGES> 272600
<OTHER-ASSETS> 1434400
<TOTAL-ASSETS> 13198600
<COMMON> 3212800
<CAPITAL-SURPLUS-PAID-IN> 0
<RETAINED-EARNINGS> 790900
<TOTAL-COMMON-STOCKHOLDERS-EQ> 4003700
175000
66400
<LONG-TERM-DEBT-NET> 4331400
<SHORT-TERM-NOTES> 7600
<LONG-TERM-NOTES-PAYABLE> 0
<COMMERCIAL-PAPER-OBLIGATIONS> 326000
<LONG-TERM-DEBT-CURRENT-PORT> 298000
0
<CAPITAL-LEASE-OBLIGATIONS> 22900
<LEASES-CURRENT> 1000
<OTHER-ITEMS-CAPITAL-AND-LIAB> 3966600
<TOT-CAPITALIZATION-AND-LIAB> 13198600
<GROSS-OPERATING-REVENUE> 4380600
<INCOME-TAX-EXPENSE> 42300
<OTHER-OPERATING-EXPENSES> 3855700
<TOTAL-OPERATING-EXPENSES> 3898000
<OPERATING-INCOME-LOSS> 482600
<OTHER-INCOME-NET> (102900)
<INCOME-BEFORE-INTEREST-EXPEN> 379700
<TOTAL-INTEREST-EXPENSE> 280800
<NET-INCOME> (61900)<F1>
14400
<EARNINGS-AVAILABLE-FOR-COMM> (76300)<F1>
<COMMON-STOCK-DIVIDENDS> 247200
<TOTAL-INTEREST-ON-BONDS> 222700
<CASH-FLOW-OPERATIONS> 268400
<EPS-PRIMARY> (0.26)<F1>
<EPS-DILUTED> (0.26)<F1>
<FN>
<F1>CURRENT ASSETS INCLUDE NET ASSETS OF DISCONTINUED
OPERATIONS OF $120,000. NET INCOME AND EARNINGS AVAILABLE
FOR COMMON INCLUDE LOSS FROM DISCONTINUED OPERATIONS
OF $160,800. EPS INCLUDES LOSS PER COMMON SHARE FROM
DISCONTINUED OPERATIONS OF $0.54.
</FN>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> UT
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM PACIFICORP'S
FORM 10-Q DATED JUNE 30, 1998 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE
TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<RESTATED>
<CIK> 0000075594
<NAME> PACIFICORP
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-START> JAN-01-1998
<PERIOD-END> JUN-30-1998
<BOOK-VALUE> PER-BOOK
<TOTAL-NET-UTILITY-PLANT> 7855000
<OTHER-PROPERTY-AND-INVEST> 1672900
<TOTAL-CURRENT-ASSETS> 1761400<F1>
<TOTAL-DEFERRED-CHARGES> 301900
<OTHER-ASSETS> 1441700
<TOTAL-ASSETS> 13032900
<COMMON> 3211100
<CAPITAL-SURPLUS-PAID-IN> 0
<RETAINED-EARNINGS> 962800
<TOTAL-COMMON-STOCKHOLDERS-EQ> 4173900
175000
66400
<LONG-TERM-DEBT-NET> 4412600
<SHORT-TERM-NOTES> 16900
<LONG-TERM-NOTES-PAYABLE> 0
<COMMERCIAL-PAPER-OBLIGATIONS> 206900
<LONG-TERM-DEBT-CURRENT-PORT> 312800
0
<CAPITAL-LEASE-OBLIGATIONS> 23300
<LEASES-CURRENT> 1000
<OTHER-ITEMS-CAPITAL-AND-LIAB> 3644100
<TOT-CAPITALIZATION-AND-LIAB> 13032900
<GROSS-OPERATING-REVENUE> 2462400
<INCOME-TAX-EXPENSE> 22800
<OTHER-OPERATING-EXPENSES> 2127900
<TOTAL-OPERATING-EXPENSES> 2150700
<OPERATING-INCOME-LOSS> 311700
<OTHER-INCOME-NET> (59100)
<INCOME-BEFORE-INTEREST-EXPEN> 252600
<TOTAL-INTEREST-EXPENSE> 188300
<NET-INCOME> 25700<F1>
9600
<EARNINGS-AVAILABLE-FOR-COMM> 16100<F1>
<COMMON-STOCK-DIVIDENDS> 160200
<TOTAL-INTEREST-ON-BONDS> 222200
<CASH-FLOW-OPERATIONS> 34700
<EPS-PRIMARY> 0.05<F1>
<EPS-DILUTED> 0.05<F1>
<FN>
<F1>CURRENT ASSETS INCLUDE NET ASSETS OF DISCONTINUED
OPERATIONS OF $205,100. NET INCOME AND EARNINGS AVAILABLE
FOR COMMON INCLUDE LOSS FROM DISCONTINUED OPERATIONS
OF $38,600. EPS INCLUDES LOSS PER COMMON SHARE FROM
DISCONTINUED OPERATIONS OF $0.13.
</FN>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> UT
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM PACIFICORP'S
FORM 10-K DATED DECEMBER 31, 1997 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE
TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<RESTATED>
<CIK> 0000075594
<NAME> PACIFICORP
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-START> JAN-01-1998
<PERIOD-END> MAR-31-1998
<BOOK-VALUE> PER-BOOK
<TOTAL-NET-UTILITY-PLANT> 7814100
<OTHER-PROPERTY-AND-INVEST> 1803600
<TOTAL-CURRENT-ASSETS> 2180200<F1>
<TOTAL-DEFERRED-CHARGES> 291600
<OTHER-ASSETS> 1407600
<TOTAL-ASSETS> 13497100
<COMMON> 3242900
<CAPITAL-SURPLUS-PAID-IN> 0
<RETAINED-EARNINGS> 1006600
<TOTAL-COMMON-STOCKHOLDERS-EQ> 4249500
175000
66400
<LONG-TERM-DEBT-NET> 4400200
<SHORT-TERM-NOTES> 7100
<LONG-TERM-NOTES-PAYABLE> 0
<COMMERCIAL-PAPER-OBLIGATIONS> 290800
<LONG-TERM-DEBT-CURRENT-PORT> 426300
0
<CAPITAL-LEASE-OBLIGATIONS> 23400
<LEASES-CURRENT> 900
<OTHER-ITEMS-CAPITAL-AND-LIAB> 3857500
<TOT-CAPITALIZATION-AND-LIAB> 13497100
<GROSS-OPERATING-REVENUE> 1260100
<INCOME-TAX-EXPENSE> (15400)
<OTHER-OPERATING-EXPENSES> 1119900
<TOTAL-OPERATING-EXPENSES> 1104500
<OPERATING-INCOME-LOSS> 155600
<OTHER-INCOME-NET> (75900)
<INCOME-BEFORE-INTEREST-EXPEN> 79700
<TOTAL-INTEREST-EXPENSE> 94300
<NET-INCOME> (15100)<F1>
4800
<EARNINGS-AVAILABLE-FOR-COMM> (19900)<F1>
<COMMON-STOCK-DIVIDENDS> 80300
<TOTAL-INTEREST-ON-BONDS> 219400
<CASH-FLOW-OPERATIONS> (79600)
<EPS-PRIMARY> (0.07)
<EPS-DILUTED> (0.07)
<FN>
<F1>CURRENT ASSETS INCLUDE NET ASSETS OF DISCONTINUED
OPERATIONS OF $214,600. NET INCOME AND EARNINGS AVAILABLE
FOR COMMON INCLUDE LOSS FROM DISCONTINUED OPERATIONS
OF $500.
</FN>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> UT
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM PACIFICORP'S
FORM 10-K DATED DECEMBER 31, 1997 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE
TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<RESTATED>
<CIK> 0000075594
<NAME> PACIFICORP
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> DEC-31-1997
<BOOK-VALUE> PER-BOOK
<TOTAL-NET-UTILITY-PLANT> 7825500
<OTHER-PROPERTY-AND-INVEST> 1786400
<TOTAL-CURRENT-ASSETS> 2197300<F1>
<TOTAL-DEFERRED-CHARGES> 385700
<OTHER-ASSETS> 1432100
<TOTAL-ASSETS> 13627000
<COMMON> 3214600
<CAPITAL-SURPLUS-PAID-IN> 0
<RETAINED-EARNINGS> 1106300
<TOTAL-COMMON-STOCKHOLDERS-EQ> 4320900
175000
66400
<LONG-TERM-DEBT-NET> 4389200
<SHORT-TERM-NOTES> 6300
<LONG-TERM-NOTES-PAYABLE> 0
<COMMERCIAL-PAPER-OBLIGATIONS> 182900
<LONG-TERM-DEBT-CURRENT-PORT> 364500
0
<CAPITAL-LEASE-OBLIGATIONS> 23800
<LEASES-CURRENT> 900
<OTHER-ITEMS-CAPITAL-AND-LIAB> 4097100
<TOT-CAPITALIZATION-AND-LIAB> 13627000
<GROSS-OPERATING-REVENUE> 4548900
<INCOME-TAX-EXPENSE> 111800
<OTHER-OPERATING-EXPENSES> 3738300
<TOTAL-OPERATING-EXPENSES> 3850100
<OPERATING-INCOME-LOSS> 698800
<OTHER-INCOME-NET> (28200)
<INCOME-BEFORE-INTEREST-EXPEN> 670600
<TOTAL-INTEREST-EXPENSE> 437800
<NET-INCOME> 663700<F1>
22800
<EARNINGS-AVAILABLE-FOR-COMM> 640900<F1>
<COMMON-STOCK-DIVIDENDS> 320000
<TOTAL-INTEREST-ON-BONDS> 217500
<CASH-FLOW-OPERATIONS> 618600
<EPS-PRIMARY> 2.16<F1>
<EPS-DILUTED> 2.16<F1>
<FN>
<F1>CURRENT ASSETS INCLUDE NET ASSETS OF DISCONTINUED
OPERATIONS OF $223,400. NET INCOME AND EARNINGS
AVAILABLE FOR COMMON INCLUDE INCOME FROM DISCONTINUED
OPERATIONS OF $81,800, GAIN ON SALE OF DISCONTINUED
OPERATIONS OF $365,100 AND EXTRAORDINARY LOSS FROM
REGULATORY ASSET IMPAIRMENT OF $16,000. EPS INCLUDES
EARNINGS PER COMMON SHARE FROM DISCONTINUED OPERATIONS
OF $0.28, GAIN ON SALE OF DISCONTINUED OPERATIONS OF
$1.23 AND EXTRAORDINARY LOSS FROM REGULATORY ASSET
IMPAIRMENT OF $0.05.
</FN>
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> UT
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM PACIFICORP'S
FORM 10-Q DATED SEPTEMBER 30, 1997 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE
TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<RESTATED>
<CIK> 0000075594
<NAME> PACIFICORP
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> SEP-30-1997
<BOOK-VALUE> PER-BOOK
<TOTAL-NET-UTILITY-PLANT> 7894600
<OTHER-PROPERTY-AND-INVEST> 2064600
<TOTAL-CURRENT-ASSETS> 2086800<F1>
<TOTAL-DEFERRED-CHARGES> 320500
<OTHER-ASSETS> 1914800
<TOTAL-ASSETS> 14281300
<COMMON> 3244200
<CAPITAL-SURPLUS-PAID-IN> 0
<RETAINED-EARNINGS> 816100
<TOTAL-COMMON-STOCKHOLDERS-EQ> 4060300
175000
66400
<LONG-TERM-DEBT-NET> 4834200
<SHORT-TERM-NOTES> 148300
<LONG-TERM-NOTES-PAYABLE> 0
<COMMERCIAL-PAPER-OBLIGATIONS> 559100
<LONG-TERM-DEBT-CURRENT-PORT> 626800
0
<CAPITAL-LEASE-OBLIGATIONS> 23900
<LEASES-CURRENT> 900
<OTHER-ITEMS-CAPITAL-AND-LIAB> 3786400
<TOT-CAPITALIZATION-AND-LIAB> 14281300
<GROSS-OPERATING-REVENUE> 3208600
<INCOME-TAX-EXPENSE> 112600
<OTHER-OPERATING-EXPENSES> 2443500
<TOTAL-OPERATING-EXPENSES> 2556100
<OPERATING-INCOME-LOSS> 652500
<OTHER-INCOME-NET> (94900)
<INCOME-BEFORE-INTEREST-EXPEN> 557600
<TOTAL-INTEREST-EXPENSE> 330000
<NET-INCOME> 289800<F1>
18000
<EARNINGS-AVAILABLE-FOR-COMM> 271800<F1>
<COMMON-STOCK-DIVIDENDS> 239300
<TOTAL-INTEREST-ON-BONDS> 213800
<CASH-FLOW-OPERATIONS> 204500
<EPS-PRIMARY> .92<F1>
<EPS-DILUTED> .92<F1>
<FN>
<F1>CURRENT ASSETS INCLUDE NET ASSETS OF DISCONTINUED
OPERATIONS OF $1,184,600. NET INCOME AND EARNINGS AVAILABLE
FOR COMMON INCLUDE INCOME FROM DISCONTINUED OPERATIONS
OF $62,200. EPS INCLUDES EARNINGS PER COMMON SHARE FROM
DISCONTINUED OPERATIONS OF $0.21.
</FN>
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> UT
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM PACIFICORP'S
FORM 10-Q DATED JUNE 30, 1997 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE
TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<RESTATED>
<CIK> 0000075594
<NAME> PACIFICORP
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> JUN-30-1997
<BOOK-VALUE> PER-BOOK
<TOTAL-NET-UTILITY-PLANT> 7865600
<OTHER-PROPERTY-AND-INVEST> 2108000
<TOTAL-CURRENT-ASSETS> 2047400<F1>
<TOTAL-DEFERRED-CHARGES> 288000
<OTHER-ASSETS> 1922300
<TOTAL-ASSETS> 14231300
<COMMON> 3241200
<CAPITAL-SURPLUS-PAID-IN> 0
<RETAINED-EARNINGS> 827700
<TOTAL-COMMON-STOCKHOLDERS-EQ> 4068900
175000
135500
<LONG-TERM-DEBT-NET> 5335200
<SHORT-TERM-NOTES> 166900
<LONG-TERM-NOTES-PAYABLE> 0
<COMMERCIAL-PAPER-OBLIGATIONS> 432200
<LONG-TERM-DEBT-CURRENT-PORT> 271700
0
<CAPITAL-LEASE-OBLIGATIONS> 24300
<LEASES-CURRENT> 900
<OTHER-ITEMS-CAPITAL-AND-LIAB> 3620700
<TOT-CAPITALIZATION-AND-LIAB> 14231300
<GROSS-OPERATING-REVENUE> 2000900
<INCOME-TAX-EXPENSE> 98100
<OTHER-OPERATING-EXPENSES> 1514900
<TOTAL-OPERATING-EXPENSES> 1613000
<OPERATING-INCOME-LOSS> 387900
<OTHER-INCOME-NET> 10600
<INCOME-BEFORE-INTEREST-EXPEN> 398500
<TOTAL-INTEREST-EXPENSE> 217100
<NET-INCOME> 215800<F1>
12200
<EARNINGS-AVAILABLE-FOR-COMM> 203600<F1>
<COMMON-STOCK-DIVIDENDS> 159400
<TOTAL-INTEREST-ON-BONDS> 213100
<CASH-FLOW-OPERATIONS> 200
<EPS-PRIMARY> .69<F1>
<EPS-DILUTED> .69<F1>
<FN>
<F1>CURRENT ASSETS INCLUDE NET ASSETS OF DISCONTINUED
OPERATIONS OF $1,208,700. NET INCOME AND EARNINGS AVAILABLE
FOR COMMON INCLUDE INCOME FROM DISCONTINUED OPERATIONS
OF $34,400. EPS INCLUDES EARNINGS PER COMMON SHARE FROM
DISCONTINUED OPERATIONS OF $0.12.
</FN>
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> UT
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM PACIFICORP'S
FORM 10-Q DATED MARCH 31, 1997 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE
TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<RESTATED>
<CIK> 0000075594
<NAME> PACIFICORP
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> MAR-31-1997
<BOOK-VALUE> PER-BOOK
<TOTAL-NET-UTILITY-PLANT> 7832500
<OTHER-PROPERTY-AND-INVEST> 2165300
<TOTAL-CURRENT-ASSETS> 1554900<F1>
<TOTAL-DEFERRED-CHARGES> 231900
<OTHER-ASSETS> 1910700
<TOTAL-ASSETS> 13695300
<COMMON> 3257000
<CAPITAL-SURPLUS-PAID-IN> 0
<RETAINED-EARNINGS> 818400
<TOTAL-COMMON-STOCKHOLDERS-EQ> 4075400
175000
135500
<LONG-TERM-DEBT-NET> 4713600
<SHORT-TERM-NOTES> 32800
<LONG-TERM-NOTES-PAYABLE> 0
<COMMERCIAL-PAPER-OBLIGATIONS> 675500
<LONG-TERM-DEBT-CURRENT-PORT> 246800
0
<CAPITAL-LEASE-OBLIGATIONS> 24300
<LEASES-CURRENT> 900
<OTHER-ITEMS-CAPITAL-AND-LIAB> 3615500
<TOT-CAPITALIZATION-AND-LIAB> 13695300
<GROSS-OPERATING-REVENUE> 1002800
<INCOME-TAX-EXPENSE> 56700
<OTHER-OPERATING-EXPENSES> 740000
<TOTAL-OPERATING-EXPENSES> 796700
<OPERATING-INCOME-LOSS> 206100
<OTHER-INCOME-NET> 3600
<INCOME-BEFORE-INTEREST-EXPEN> 209700
<TOTAL-INTEREST-EXPENSE> 106000
<NET-INCOME> 121000<F1>
6100
<EARNINGS-AVAILABLE-FOR-COMM> 114900
<COMMON-STOCK-DIVIDENDS> 79600
<TOTAL-INTEREST-ON-BONDS> 215700
<CASH-FLOW-OPERATIONS> 260800
<EPS-PRIMARY> .39<F1>
<EPS-DILUTED> .39<F1>
<FN>
<F1>CURRENT ASSETS INCLUDE NET ASSETS OF DISCONTINUED
OPERATIONS OF $788,200. NET INCOME AND EARNINGS AVAILABLE
FOR COMMON INCLUDE INCOME FROM DISCONTINUED OPERATIONS
OF $17,300. EPS INCLUDES EARNINGS PER COMMON SHARE
FROM DISCONTINUED OPERATIONS OF $0.06.
</FN>
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> UT
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM PACIFICORPS
FORM 10-K ANNUAL REPORT AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH
FINANCIAL STATEMENTS
</LEGEND>
<RESTATED>
<CIK> 0000075594
<NAME> PACIFICORP
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> DEC-31-1996
<BOOK-VALUE> PER-BOOK
<TOTAL-NET-UTILITY-PLANT> 7825100
<OTHER-PROPERTY-AND-INVEST> 2176300
<TOTAL-CURRENT-ASSETS> 1660900<F1>
<TOTAL-DEFERRED-CHARGES> 233100
<OTHER-ASSETS> 1913500
<TOTAL-ASSETS> 13808900
<COMMON> 3249500
<CAPITAL-SURPLUS-PAID-IN> 0
<RETAINED-EARNINGS> 782800
<TOTAL-COMMON-STOCKHOLDERS-EQ> 4032300
178000
135500
<LONG-TERM-DEBT-NET> 4804700
<SHORT-TERM-NOTES> 89200
<LONG-TERM-NOTES-PAYABLE> 0
<COMMERCIAL-PAPER-OBLIGATIONS> 594300
<LONG-TERM-DEBT-CURRENT-PORT> 218900
0
<CAPITAL-LEASE-OBLIGATIONS> 24700
<LEASES-CURRENT> 900
<OTHER-ITEMS-CAPITAL-AND-LIAB> 3730400
<TOT-CAPITALIZATION-AND-LIAB> 13808900
<GROSS-OPERATING-REVENUE> 3792000
<INCOME-TAX-EXPENSE> 236500
<OTHER-OPERATING-EXPENSES> 2705800
<TOTAL-OPERATING-EXPENSES> 2942300
<OPERATING-INCOME-LOSS> 849700
<OTHER-INCOME-NET> (4400)
<INCOME-BEFORE-INTEREST-EXPEN> 845300
<TOTAL-INTEREST-EXPENSE> 415000
<NET-INCOME> 504900<F1>
29800
<EARNINGS-AVAILABLE-FOR-COMM> 475100<F1>
<COMMON-STOCK-DIVIDENDS> 315000
<TOTAL-INTEREST-ON-BONDS> 218000
<CASH-FLOW-OPERATIONS> 925400
<EPS-PRIMARY> 1.62<F1>
<EPS-DILUTED> 1.62<F1>
<FN>
<F1>CURRENT ASSETS INCLUDE NET ASSETS OF DISCONTINUED
OPERATIONS OF $782,900. NET INCOME AND EARNINGS AVAILABLE
FOR COMMON INCLUDE INCOME FROM DISCONTINUED OPERATIONS
OF $74,600. EPS INCLUDES EARNINGS PER COMMON SHARE
FROM DISCONTINUED OPERATIONS OF $0.26.
</FN>
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> UT
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM PACIFICORP'S
FORM 10-Q DATED SEPTEMBER 30, 1996 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE
TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<RESTATED>
<CIK> 0000075594
<NAME> PACIFICORP
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> SEP-30-1996
<BOOK-VALUE> PER-BOOK
<TOTAL-NET-UTILITY-PLANT> 7785500
<OTHER-PROPERTY-AND-INVEST> 2155700
<TOTAL-CURRENT-ASSETS> 1579500<F1>
<TOTAL-DEFERRED-CHARGES> 268500
<OTHER-ASSETS> 1976500
<TOTAL-ASSETS> 13765700
<COMMON> 3223400
<CAPITAL-SURPLUS-PAID-IN> 0
<RETAINED-EARNINGS> 735200
<TOTAL-COMMON-STOCKHOLDERS-EQ> 3958600
178000
135500
<LONG-TERM-DEBT-NET> 4715600
<SHORT-TERM-NOTES> 142800
<LONG-TERM-NOTES-PAYABLE> 0
<COMMERCIAL-PAPER-OBLIGATIONS> 587700
<LONG-TERM-DEBT-CURRENT-PORT> 206300
0
<CAPITAL-LEASE-OBLIGATIONS> 24900
<LEASES-CURRENT> 1300
<OTHER-ITEMS-CAPITAL-AND-LIAB> 3815000
<TOT-CAPITALIZATION-AND-LIAB> 13765700
<GROSS-OPERATING-REVENUE> 2748200
<INCOME-TAX-EXPENSE> 174200
<OTHER-OPERATING-EXPENSES> 1955400
<TOTAL-OPERATING-EXPENSES> 2129600
<OPERATING-INCOME-LOSS> 618600
<OTHER-INCOME-NET> 8300
<INCOME-BEFORE-INTEREST-EXPEN> 626900
<TOTAL-INTEREST-EXPENSE> 308800
<NET-INCOME> 372000<F1>
24300
<EARNINGS-AVAILABLE-FOR-COMM> 347700<F1>
<COMMON-STOCK-DIVIDENDS> 235500
<TOTAL-INTEREST-ON-BONDS> 218100
<CASH-FLOW-OPERATIONS> 745700
<EPS-PRIMARY> 1.19<F1>
<EPS-DILUTED> 1.19<F1>
<FN>
<F1>CURRENT ASSETS INCLUDE NET ASSETS OF DISCONTINUED
OPERATIONS OF $774,800. NET INCOME AND EARNINGS AVAILABLE
FOR COMMON INCLUDE INCOME FROM DISCONTINUED OPERATIONS
OF $53,900. EPS INCLUDES EARNINGS PER COMMON SHARE
FROM DISCONTINUED OPERATIONS OF $0.19.
</FN>
</TABLE>
<TABLE> <S> <C>
<PAGE>
<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>
<RESTATED>
<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> 7606000
<OTHER-PROPERTY-AND-INVEST> 1964700
<TOTAL-CURRENT-ASSETS> 1574600<F1>
<TOTAL-DEFERRED-CHARGES> 257300
<OTHER-ASSETS> 1949900
<TOTAL-ASSETS> 13352500
<COMMON> 3207000
<CAPITAL-SURPLUS-PAID-IN> 0
<RETAINED-EARNINGS> 685000
<TOTAL-COMMON-STOCKHOLDERS-EQ> 3892000
311500
219000
<LONG-TERM-DEBT-NET> 4644300
<SHORT-TERM-NOTES> 30900
<LONG-TERM-NOTES-PAYABLE> 0
<COMMERCIAL-PAPER-OBLIGATIONS> 325800
<LONG-TERM-DEBT-CURRENT-PORT> 266700
0
<CAPITAL-LEASE-OBLIGATIONS> 25300
<LEASES-CURRENT> 700
<OTHER-ITEMS-CAPITAL-AND-LIAB> 3636300
<TOT-CAPITALIZATION-AND-LIAB> 13352500
<GROSS-OPERATING-REVENUE> 1739600
<INCOME-TAX-EXPENSE> 104900
<OTHER-OPERATING-EXPENSES> 1241400
<TOTAL-OPERATING-EXPENSES> 1346300
<OPERATING-INCOME-LOSS> 393300
<OTHER-INCOME-NET> 9700
<INCOME-BEFORE-INTEREST-EXPEN> 403000
<TOTAL-INTEREST-EXPENSE> 205900
<NET-INCOME> 229100<F1>
18000
<EARNINGS-AVAILABLE-FOR-COMM> 211100<F1>
<COMMON-STOCK-DIVIDENDS> 156000
<TOTAL-INTEREST-ON-BONDS> 216700
<CASH-FLOW-OPERATIONS> 488200
<EPS-PRIMARY> .73<F1>
<EPS-DILUTED> .73<F1>
<FN>
<F1>CURRENT ASSETS INCLUDE NET ASSETS OF DISCONTINUED
OPERATIONS OF $766,200. NET INCOME AND EARNINGS AVAILABLE
FOR COMMON INCLUDE INCOME FROM DISCONTINUED OPERATIONS
OF $32,000. EPS INCLUDES EARNINGS PER COMMON SHARE
FROM DISCONTINUED OPERATIONS OF $0.11.
</FN>
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> UT
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED
FROM PACIFICORP'S MARCH 31, 1996 FORM 10-Q AND IS QUALIFIED IN
ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS
</LEGEND>
<RESTATED>
<CIK> 0000075594
<NAME> PACIFICORP
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> MAR-31-1996
<BOOK-VALUE> PER-BOOK
<TOTAL-NET-UTILITY-PLANT> 7582300
<OTHER-PROPERTY-AND-INVEST> 1964200
<TOTAL-CURRENT-ASSETS> 1496000<F1>
<TOTAL-DEFERRED-CHARGES> 274400
<OTHER-ASSETS> 1928300
<TOTAL-ASSETS> 13245200
<COMMON> 3186600
<CAPITAL-SURPLUS-PAID-IN> 0
<RETAINED-EARNINGS> 674200
<TOTAL-COMMON-STOCKHOLDERS-EQ> 3860800
311500
219000
<LONG-TERM-DEBT-NET> 4436500
<SHORT-TERM-NOTES> 109800
<LONG-TERM-NOTES-PAYABLE> 0
<COMMERCIAL-PAPER-OBLIGATIONS> 582300
<LONG-TERM-DEBT-CURRENT-PORT> 228900
0
<CAPITAL-LEASE-OBLIGATIONS> 25400
<LEASES-CURRENT> 1400
<OTHER-ITEMS-CAPITAL-AND-LIAB> 3469600
<TOT-CAPITALIZATION-AND-LIAB> 13245200
<GROSS-OPERATING-REVENUE> 883500
<INCOME-TAX-EXPENSE> 65400
<OTHER-OPERATING-EXPENSES> 604700
<TOTAL-OPERATING-EXPENSES> 670100
<OPERATING-INCOME-LOSS> 213400
<OTHER-INCOME-NET> 9300
<INCOME-BEFORE-INTEREST-EXPEN> 222700
<TOTAL-INTEREST-EXPENSE> 107500
<NET-INCOME> 129900<F1>
9000
<EARNINGS-AVAILABLE-FOR-COMM> 120900<F1>
<COMMON-STOCK-DIVIDENDS> 76700
<TOTAL-INTEREST-ON-BONDS> 214800
<CASH-FLOW-OPERATIONS> 327100
<EPS-PRIMARY> .42<F1>
<EPS-DILUTED> .42<F1>
<FN>
<F1>CURRENT ASSETS INCLUDE NET ASSETS OF DISCONTINUED
OPERATIONS OF $761,000. NET INCOME AND EARNINGS AVAILABLE
FOR COMMON INCLUDE INCOME FROM DISCONTINUED OPERATIONS
OF $14,700. EPS INCLUDES EARNINGS PER COMMON SHARE
FROM DISCONTINUED OPERATIONS OF $0.05.
</FN>
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> UT
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED
FROM PACIFICORP'S DECEMBER 31, 1995 ANNUAL REPORT FORM 10-K AND
IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL
STATEMENTS
</LEGEND>
<RESTATED>
<CIK> 0000075594
<NAME> PACIFICORP
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-START> JAN-01-1995
<PERIOD-END> DEC-31-1995
<BOOK-VALUE> PER-BOOK
<TOTAL-NET-UTILITY-PLANT> 7580200
<OTHER-PROPERTY-AND-INVEST> 1874000
<TOTAL-CURRENT-ASSETS> 1505200<F1>
<TOTAL-DEFERRED-CHARGES> 282900
<OTHER-ASSETS> 1924600
<TOTAL-ASSETS> 13166900
<COMMON> 3000700
<CAPITAL-SURPLUS-PAID-IN> 0
<RETAINED-EARNINGS> 632400
<TOTAL-COMMON-STOCKHOLDERS-EQ> 3633100
311500
219000
<LONG-TERM-DEBT-NET> 4482900
<SHORT-TERM-NOTES> 277000
<LONG-TERM-NOTES-PAYABLE> 0
<COMMERCIAL-PAPER-OBLIGATIONS> 654100
<LONG-TERM-DEBT-CURRENT-PORT> 199100
0
<CAPITAL-LEASE-OBLIGATIONS> 25800
<LEASES-CURRENT> 1500
<OTHER-ITEMS-CAPITAL-AND-LIAB> 3362900
<TOT-CAPITALIZATION-AND-LIAB> 13166900
<GROSS-OPERATING-REVENUE> 2814900
<INCOME-TAX-EXPENSE> 192100
<OTHER-OPERATING-EXPENSES> 1923700
<TOTAL-OPERATING-EXPENSES> 2115800
<OPERATING-INCOME-LOSS> 699100
<OTHER-INCOME-NET> 39700
<INCOME-BEFORE-INTEREST-EXPEN> 738800
<TOTAL-INTEREST-EXPENSE> 336400
<NET-INCOME> 505000<F1>
38700
<EARNINGS-AVAILABLE-FOR-COMM> 466300<F1>
<COMMON-STOCK-DIVIDENDS> 307100
<TOTAL-INTEREST-ON-BONDS> 212800
<CASH-FLOW-OPERATIONS> 675200
<EPS-PRIMARY> 1.64<F1>
<EPS-DILUTED> 1.64<F1>
<FN>
<F1>CURRENT ASSETS INCLUDE NET ASSETS OF DISCONTINUED
OPERATIONS OF $758,000. NET INCOME AND EARNINGS AVAILABLE
FOR COMMON INCLUDE INCOME FROM DISCONTINUED OPERATIONS
OF $102,600. EPS INCLUDES EARNINGS PER COMMON SHARE
FROM DISCONTINUED OPERATIONS OF $0.36.
</FN>
</TABLE>
