<PAGE>
PROSPECTUS SUPPLEMENT TO PROSPECTUS DATED AUGUST 9, 1996.
$200,000,000
[LOGO]
FIRST MORTGAGE BONDS
5.65% SERIES DUE NOVEMBER 1, 2006
-----------
PacifiCorp will pay interest on the Bonds on May 1 and November 1 of each
year. The first such payment will be made on May 1, 1999. PacifiCorp cannot
redeem the Bonds before maturity. The Bonds will be issued in book-entry only
form and only in denominations of $1,000 and integral multiples of $1,000.
--------------
NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY OTHER REGULATORY BODY
HAS APPROVED OR DISAPPROVED OF THESE SECURITIES OR PASSED UPON THE ACCURACY OR
ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL
OFFENSE.
--------------
<TABLE>
<CAPTION>
PER BOND TOTAL
---------- ----------------
<S> <C> <C>
Initial public offering price....................................................... 99.665% $199,330,000
Underwriting discount............................................................... 0.625% $1,250,000
Proceeds, before expenses, to PacifiCorp............................................ 99.040% $198,080,000
</TABLE>
The initial public offering price set forth above does not include accrued
interest, if any. Interest on the Bonds will accrue from November 6, 1998 and
must be paid by the purchaser if the Bonds are delivered after November 6, 1998.
--------------
The underwriters are severally underwriting the Bonds being offered. The
underwriters expect to deliver the Bonds through the facilities of The
Depository Trust Company ("DTC") against payment in New York, New York on
November 6, 1998.
GOLDMAN, SACHS & CO.
J.P. MORGAN & CO.
MORGAN STANLEY DEAN WITTER
PAINEWEBBER INCORPORATED
SALOMON SMITH BARNEY
--------------
Prospectus Supplement dated October 30, 1998.
<PAGE>
ABOUT THIS PROSPECTUS SUPPLEMENT
You should read this Prospectus Supplement along with the Prospectus that
follows carefully before you invest. Both documents contain important
information you should consider when making your investment decision. This
Prospectus Supplement contains information about the Bonds and the Prospectus
contains information about PacifiCorp's Additional Bonds generally. This
Prospectus Supplement may add, update or change information in the Prospectus.
You should rely only on the information provided or incorporated by reference in
this Prospectus Supplement and the Prospectus. The information in this
Prospectus Supplement is accurate as of October 30, 1998. PacifiCorp has not
authorized anyone else to provide you with different information.
DESCRIPTION OF THE BONDS
PRINCIPAL AMOUNT, MATURITY AND INTEREST
PacifiCorp is issuing $200,000,000 of Bonds which will mature on November 1,
2006. PacifiCorp will pay interest on the Bonds on May 1 to holders of record on
the preceding April 15 and on November 1 to holders of record on the preceding
October 15. The first interest payment date is May 1, 1999. Interest accrues
from November 6, 1998.
NO REDEMPTION
PacifiCorp cannot redeem the Bonds before maturity.
ADDITIONAL INFORMATION
See "DESCRIPTION OF ADDITIONAL BONDS" in the accompanying Prospectus for
additional important information about the Additional Bonds. That information
includes:
- additional information about the terms of the Additional Bonds, including
security;
- general information about the Mortgage and the Mortgage Trustee;
- a description of certain restrictions; and
- a description of events of default under the Mortgage.
FORM AND BOOK-ENTRY PROCEDURES
PacifiCorp will issue the Bonds in book-entry only form, which means that
they will be represented by one permanent global certificate registered in the
name of DTC or its nominee.
DTC will keep a computerized record of its participants (for example, your
broker) whose clients purchased the Bonds. The participant will then keep a
record of its clients who purchased the Bonds. The global certificate
representing the Bonds may not be transferred, except that DTC, its nominees and
their successors may transfer the entire global certificate to one another.
By using book-entry only form, PacifiCorp will not issue certificates to
individual holders of the Bonds. Beneficial interests in the global certificate
will be shown on, and transfers of the global certificate will be made only
through, records maintained by DTC and its participants.
DTC has provided PacifiCorp with the following information: DTC is a limited
purpose trust company organized under the New York Banking Law, a "banking
organization" within the meaning of the New York Banking Law, a member of the
United States Federal Reserve System, a "clearing corporation" within the
meaning of the New York Uniform Commercial Code, and a "clearing agency"
registered under Section 17A of the Securities Exchange Act of 1934. DTC holds
securities that its participants ("Direct Participants") deposit with DTC. DTC
also facilitates the settlement among Direct Participants of securities
transactions, such as transfers and pledges, in deposited securities through
computerized records for Direct Participants' accounts. This eliminates the need
to exchange certificates. Direct Participants include securities brokers and
dealers, banks, trust companies, clearing corporations and certain other
organizations.
DTC is owned by a number of its Direct Participants and by the New York
Stock Exchange, Inc., the American Stock Exchange, Inc. and the National
Association of Securities Dealers, Inc.
DTC's book-entry system is also used by other organizations, such as
securities brokers and dealers, banks and trust companies that work through a
Direct Participant. The rules that apply to DTC and its participants are on file
with the Securities and Exchange Commission.
S-2
<PAGE>
PacifiCorp will wire principal and interest payments to DTC's nominee.
PacifiCorp and the Mortgage Trustee will treat DTC's nominee as the owner of the
global certificate for all purposes. Accordingly, PacifiCorp will have no direct
responsibility or liability to pay amounts due on the Bonds to owners of
beneficial interests in the global certificate.
It is DTC's current practice, upon receipt of any payment of principal and
interest, to credit Direct Participants' accounts on the payment date according
to their respective holdings of beneficial interests in the global certificate
as shown on DTC's records. In addition, it is DTC's current practice to assign
any consenting or voting rights to Direct Participants whose accounts are
credited with Bonds on a record date by using an omnibus proxy. Payments by
participants to owners of beneficial interests in the global certificate, and
voting by participants, will be governed by the customary practices between the
participants and owners of beneficial interests, as is the case with securities
held for the account of customers registered in "street name." However, these
payments will be the responsibility of the participants and not of DTC, the
Mortgage Trustee or PacifiCorp.
Bonds represented by the global certificate will be exchangeable for Bond
certificates with the same terms in authorized denominations only if:
- DTC notifies PacifiCorp that it is unwilling or unable to continue as
depository or if DTC ceases to be a clearing agency registered under
applicable law and a successor depository is not appointed by PacifiCorp
within 90 days;
- PacifiCorp instructs the Mortgage Trustee that the global certificate is
now exchangeable; or
- An event of default under the Mortgage has occurred and payment of
principal and interest has been accelerated with respect to the Bonds.
S-3
<PAGE>
UNDERWRITING
The Company and the underwriters for the offering (the "Underwriters") named
below have entered into an underwriting agreement with respect to the Bonds.
Subject to certain conditions, each Underwriter has severally agreed to purchase
the principal amount of Bonds indicated in the following table:
<TABLE>
<CAPTION>
UNDERWRITERS PRINCIPAL AMOUNT OF BONDS
- -------------------------------------------------------------------------------------- --------------------------
<S> <C>
Goldman, Sachs & Co. ................................................................. $ 120,000,000
J.P. Morgan Securities Inc............................................................ 20,000,000
Morgan Stanley & Co. Incorporated..................................................... 20,000,000
PaineWebber Incorporated.............................................................. 20,000,000
Salomon Smith Barney Inc.............................................................. 20,000,000
---------------
Total............................................................................... $ 200,000,000
---------------
---------------
</TABLE>
If all the conditions under the underwriting agreement have been met, the
Underwriters will purchase all of the Bonds if any are purchased.
Bonds sold by the Underwriters to the public will initially be offered at
the initial public offering price set forth on the cover of this Prospectus
Supplement. Any Bonds sold by the Underwriters to securities dealers may be sold
at a discount from the initial public offering price of up to .375% of the
principal amount of the Bonds. Any such securities dealers may resell any Bonds
purchased from the Underwriters to certain other brokers or dealers at a
discount from the initial public offering price of up to .250% of the principal
amount of the Bonds. If all the Bonds are not sold at the initial public
offering price, the Underwriters may change the offering price and the other
selling terms.
The Bonds are a new issue of securities with no established trading market.
PacifiCorp has been advised by the Underwriters that the Underwriters intend to
make a market in the Bonds but are not obligated to do so and may discontinue
market making at any time without notice. No assurance can be given as to the
liquidity of the trading market for the Bonds.
In connection with offering the Bonds, the Underwriters may purchase and
sell Bonds in the open market. These transactions may include short sales,
stabilizing transactions and purchases to cover positions created by short
sales. Short sales involve the sale by the Underwriters of a greater principal
amount of Bonds than they are required to purchase in the offering. Stabilizing
transactions consist of certain bids or purchases made for the purpose of
preventing or retarding a decline in the market price of the Bonds while the
offering is in progress.
The Underwriters also may impose a penalty bid. This occurs when a
particular Underwriter repays to the other Underwriters a portion of the
underwriting discount received by it because they have repurchased Bonds sold by
or for the account of such Underwriter in stabilizing or short covering
transactions.
These activities by the Underwriters may stabilize, maintain or otherwise
affect the market price of the Bonds. As a result, the price of the Bonds may be
higher than the price that otherwise might exist in the open market. If these
activities are commenced, they may be discontinued by the Underwriters at any
time. These transactions may be effected in the over-the-counter market or
otherwise.
PacifiCorp estimates that its share of the total expenses of the offering,
excluding the underwriting discount, will be approximately $300,000.
PacifiCorp has agreed to indemnify the several Underwriters against certain
liabilities, including liabilities under the Securities Act of 1933.
S-4
<PAGE>
$1,000,000,000
[LOGO]
COMMON STOCK
NO PAR SERIAL PREFERRED STOCK
FIRST MORTGAGE BONDS
UNSECURED DEBT SECURITIES
PacifiCorp, an Oregon corporation (the "Company"), may from time to time
offer (i) shares of its Common Stock ("Additional Common Stock"), (ii) shares of
its No Par Serial Preferred Stock ("Additional Preferred Stock"), (iii) First
Mortgage Bonds ("Additional Bonds") and (iv) other debt securities, including
unsecured debt securities that are subordinated to other debt of the Company
("Unsecured Debt Securities"), all at prices and on terms to be determined at
the time of sale. Additional Common Stock, Additional Preferred Stock,
Additional Bonds and Unsecured Debt Securities (collectively, the "Securities")
may be issued in one or more issuances or series and the aggregate initial
offering price thereof will not exceed $1,000,000,000, of which no more than an
aggregate of $853,491,250 may consist of Additional Preferred Stock and
Unsecured Debt Securities.
This Prospectus will be supplemented by a prospectus supplement or
supplements (each, a "Prospectus Supplement" that will set forth: (i) in the
case of any Additional Common Stock, the number of shares of such Common Stock,
their purchase price, the initial public offering price or prices and other
specific terms of such Common Stock in respect of which this Prospectus is being
delivered; (ii) in the case of any Additional Preferred Stock, the number of
shares of such Preferred Stock, their purchase price, the initial public
offering price or prices, dividend rights and restrictions, voting rights and
redemption or conversion provisions, if any, and other specific terms of such
Preferred Stock in respect of which this Prospectus is being delivered; (iii) in
the case of any Additional Bonds, the form in which such Bonds are to be issued,
their aggregate principal amount, rate or rates and times of payment of
interest, maturity or maturities, the initial public offering price or prices,
redemption or repurchase provisions, if any, and other specific terms of such
Bonds in respect of which this Prospectus is being delivered; and (iv) in the
case of any Unsecured Debt Securities, their aggregate principal amount, rate of
interest, maturity, the initial public offering price or prices, redemption
provisions, if any, and other specific terms of such Unsecured Debt Securities
in respect of which this Prospectus is being delivered. See "Description of
Capital Stock," "Description of Additional Bonds" and "Description of Unsecured
Debt Securities" herein.
The Common Stock of the Company is listed on the New York Stock Exchange
(the "NYSE") and the Pacific Stock Exchange (the "PSE") (Symbol: PPW). The
Additional Common Stock will be listed, subject to notice of issuance, on those
exchanges. The $1.98 No Par Serial Preferred Stock, Series 1992 (the "Series
1992 Preferred Stock") of the Company is listed on the NYSE (Symbol: PPW E). No
other class or series of Preferred Stock of the Company is listed on any
exchange, although the Preferred Securities, Series A of PacifiCorp Capital I, a
Delaware business trust, all of the common securities of which are owned by the
Company, are listed on the NYSE (Symbol: PPW PrA). The Junior Subordinated
Deferrable Interest Debentures, Series A and Series B of the Company (the
"Series A Debentures" and the "Series B Debentures," respectively) are also
listed on the NYSE (Symbols: PCQ and PCX, respectively).
The Securities may be sold directly by the Company, through agents
designated from time to time or through underwriters or dealers. See "Plan of
Distribution." If any agents of the Company or underwriters are involved in the
sale of any Securities in respect of which this Prospectus is being delivered,
the names of such agents or underwriters and any applicable commissions or
discounts will be set forth in a Prospectus Supplement. The net proceeds to the
Company from such sale also will be set forth in a Prospectus Supplement.
------------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION
PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
------------------------
This Prospectus may not be used to consummate sales of Securities unless
accompanied by a Prospectus Supplement relating to the Securities offered.
THE DATE OF THIS PROSPECTUS IS AUGUST 9, 1996
<PAGE>
IN CONNECTION WITH THIS OFFERING, THE UNDERWRITERS MAY OVER-ALLOT OR EFFECT
TRANSACTIONS WHICH STABILIZE OR MAINTAIN THE MARKET PRICES OF THE CLASSES OR
SERIES OF SECURITIES OFFERED HEREBY AT LEVELS ABOVE THOSE WHICH MIGHT OTHERWISE
PREVAIL IN THE OPEN MARKET. SUCH TRANSACTIONS MAY BE EFFECTED ON THE APPLICABLE
EXCHANGES, IN THE OVER-THE-COUNTER MARKET OR OTHERWISE. SUCH STABILIZING, IF
COMMENCED, MAY BE DISCONTINUED AT ANY TIME.
------------------------
AVAILABLE INFORMATION
The Company is subject to the informational requirements of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), and in accordance
therewith files reports and other information with the Securities and Exchange
Commission (the "Commission"). Such reports and other information (including
proxy and information statements) filed by the Company can be inspected and
copied at the public reference facilities maintained by the Commission at 450
Fifth Street, N.W., Room 1024, Washington, D.C. 10549, and at the following
Regional Offices of the Commission: New York Regional Office, 7 World Trade
Center, 13th Floor, New York, New York 10048 and Chicago Regional Office,
Citicorp Center, 500 West Madison Street, Suite 1400, Chicago, Illinois 60661.
Copies of such material can be obtained from the Public Reference Section of the
Commission at 450 Fifth Street, N.W., Washington, D.C. 20549, at prescribed
rates. The Commission maintains a Website that contains reports, proxy and
information statements and other information regarding reporting companies under
the Exchange Act, including the Company at http://www.sec.gov. The Common Stock
of the Company is listed on the NYSE and the PSE. The Series 1992 Preferred
Stock, the Series A Debentures and the Series B Debentures are also listed on
the NYSE. Reports, proxy statements and other information concerning the Company
can be inspected at their respective offices: New York Stock Exchange, 20 Broad
Street, New York, New York 10005 and Pacific Stock Exchange, 301 Pine Street,
San Francisco, California 94104.
This Prospectus constitutes a part of a registration statement on Form S-3
(together with all amendments and exhibits thereto, the "Registration
Statement") filed by the Company with the Commission under the Securities Act of
1933, as amended (the "Securities Act"). This Prospectus does not contain all of
the information included in the Registration Statement, certain parts of which
are omitted in accordance with the rules and regulations of the Commission.
Statements contained herein concerning the provisions of any document are
qualified by reference to the copy of such document filed as an exhibit to the
Registration Statement or otherwise filed with the Commission. Reference is made
to the Registration Statement, including the exhibits thereto, for further
information with respect to the Company and the Securities offered hereby.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents filed by the Company with the Commission pursuant to
the Exchange Act are incorporated in this Prospectus by reference:
(i) The Company's Annual Report on Form 10-K for the year ended December
31, 1995, as amended by Form 10-K/A dated June 24, 1996;
(ii) The Company's Quarterly Report on Form 10-Q for the quarter ended
March 31, 1996; and
(iii) The Company's Current Reports on Form 8-K dated January 16, 1996,
February 12, 1996 and August 5, 1996.
All documents filed by the Company pursuant to Section 13(a), 13(c), 14 or
15(d) of the Exchange Act after the date of this Prospectus and prior to the
termination of this offering shall be deemed to be incorporated by reference in
this Prospectus and to be a part hereof from the date of filing of such
documents (such documents, and the documents enumerated above, being hereinafter
referred to as "Incorporated Documents"; PROVIDED, HOWEVER, that all documents
subsequently filed by the Company pursuant to Section 13 or 14 of the Exchange
Act in each year during which the offering made by this
2
<PAGE>
Prospectus is in effect prior to the filing with the Commission of the Company's
Annual Report on Form 10-K covering such year shall not be Incorporated
Documents or be incorporated by reference in this Prospectus or be a part hereof
from and after such filing of such Annual Report on Form 10-K).
Any statement contained in an Incorporated Document shall be deemed to be
modified or superseded for purposes of this Prospectus to the extent that a
statement contained herein or in any other subsequently filed Incorporated
Document modifies or supersedes such statement. Any such statement so modified
or superseded shall not be deemed, except as so modified or superseded, to
constitute a part of this Prospectus.
THE COMPANY HEREBY UNDERTAKES TO PROVIDE WITHOUT CHARGE TO EACH PERSON,
INCLUDING ANY BENEFICIAL OWNER, TO WHOM A COPY OF THIS PROSPECTUS IS DELIVERED,
ON THE WRITTEN OR ORAL REQUEST OF ANY SUCH PERSON, A COPY OF ANY OR ALL OF THE
INCORPORATED DOCUMENTS, OTHER THAN EXHIBITS TO SUCH DOCUMENTS, UNLESS SUCH
EXHIBITS ARE SPECIFICALLY INCORPORATED BY REFERENCE THEREIN. REQUESTS SHOULD BE
DIRECTED TO PACIFICORP, 700 NE MULTNOMAH, SUITE 1600, PORTLAND, OREGON 97232,
ATTENTION: RICHARD T. O'BRIEN, SENIOR VICE PRESIDENT AND CHIEF FINANCIAL
OFFICER, TELEPHONE NUMBER (503) 731-2000. THE INFORMATION RELATING TO THE
COMPANY CONTAINED IN THIS PROSPECTUS DOES NOT PURPORT TO BE COMPREHENSIVE AND
SHOULD BE READ TOGETHER WITH THE INFORMATION CONTAINED IN THE INCORPORATED
DOCUMENTS.
NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATION NOT CONTAINED IN THIS PROSPECTUS OR IN ANY PROSPECTUS SUPPLEMENT,
AND, IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATION SHOULD NOT BE RELIED
UPON AS HAVING BEEN AUTHORIZED. THIS PROSPECTUS AND ANY PROSPECTUS SUPPLEMENT DO
NOT CONSTITUTE AN OFFER TO SELL OR A SOLICITATION OF AN OFFER TO BUY ANY OF THE
SECURITIES OFFERED HEREBY OR THEREBY IN ANY JURISDICTION TO ANY PERSON TO WHOM
IT IS UNLAWFUL TO MAKE SUCH OFFER IN SUCH JURISDICTION.
NEITHER THE DELIVERY OF THIS PROSPECTUS AND THE PROSPECTUS SUPPLEMENT NOR
ANY SALE MADE HEREUNDER OR THEREUNDER SHALL, UNDER ANY CIRCUMSTANCES, CREATE ANY
IMPLICATION THAT THERE HAS BEEN NO CHANGE IN THE AFFAIRS OF THE COMPANY OR ITS
SUBSIDIARIES SINCE THE DATE OF THIS PROSPECTUS OR THE DATE OF THE LATEST
PROSPECTUS SUPPLEMENT, AS THE CASE MAY BE.
3
<PAGE>
THE COMPANY
The Company is an electric utility headquartered in Portland, Oregon that
conducts a retail electric utility business through Pacific Power & Light
Company and Utah Power & Light Company, and engages in power production and
sales on a wholesale basis under the name PacifiCorp. The Company is the
indirect owner, through PacifiCorp Holdings, Inc. (a wholly-owned subsidiary),
of 100% of each of Powercor Australia Limited ("Powercor"), an Australian
electric distribution company, and Pacific Telecom, Inc. ("Pacific Telecom"), a
leading provider of local telephone exchange service to rural and suburban
markets.
The Company furnishes electric service to approximately 1,300,000 customers
in portions of seven western states: California, Idaho, Montana, Oregon, Utah,
Washington and Wyoming. Powercor serves approximately 540,000 customers in
suburban Melbourne and the western and central regions of the State of Victoria
in southeast Australia. Pacific Telecom, through its subsidiaries, provides
local telephone service and access to the long-distance network in Alaska, seven
other western states and three Midwestern states, provides cellular mobile
telephone services in six states and is engaged in sales of capacity in and
operation of a submarine fiber optic cable between the United States and Japan.
PacifiCorp Holdings, Inc. also has interests in the independent power and
cogeneration business through its wholly-owned subsidiary, Pacific Generation
Company, and continues to liquidate portions of the loan, leasing and real
estate investment portfolio of its wholly-owned subsidiary, PacifiCorp Financial
Services, Inc. ("PFS"). PFS expects to retain only its tax advantaged
investments in leveraged lease assets (primarily aircraft) and affordable
housing, and is limiting its pursuit of tax-advantaged investment opportunities
to affordable housing.
The principal executive offices of the Company are located at 700 NE
Multnomah, Suite 1600, Portland, Oregon 97232; the telephone number is (503)
731-2000.
USE OF PROCEEDS
Unless otherwise indicated in a Prospectus Supplement, the net proceeds to
be received by the Company from the issuance and sale of the Securities will
initially become part of the general funds of the Company and will be used to
repay all or a portion of the Company's short-term borrowings outstanding at the
time of issuance of the Securities or may be applied to utility asset purchases,
new construction or other corporate purposes, including the refunding of
long-term debt. Reference is made to the Incorporated Documents with respect to
the Company's capital requirements and its general financing plans.
DESCRIPTION OF CAPITAL STOCK
The authorized capital stock of the Company consists of three classes of
preferred stock ("Preferred Stock"): 126,533 shares of 5% Preferred Stock of the
stated value of $100 per share ("5% Preferred Stock"), 3,500,000 shares of
Serial Preferred Stock of the stated value of $100 per share ("Serial Preferred
Stock") and 16,000,000 shares of No Par Serial Preferred Stock ("No Par Serial
Preferred Stock"); and 750,000,000 shares of Common Stock ("Common Stock").
Following is a brief summary of the relative rights and preferences of the
various classes of the Company's capital stock, which does not purport to be
complete. For a complete description of the relative rights and preferences of
the various classes of the Company's capital stock, reference is made to Article
III of the Company's Second Restated Articles of Incorporation, as amended (the
"Articles"), a copy of which is an exhibit to the Registration Statement.
GENERAL. The Company's Articles provide that Serial Preferred Stock and No
Par Serial Preferred Stock each may be issued in one or more series and that all
such series of each such class, respectively, shall constitute one and the same
class of stock, shall be of equal rank and shall be identical in all respects
except as to the designation thereof and except that each series may vary, as
fixed and determined by the Company's Board of Directors at the time of its
creation and expressed in a resolution, as to (i) the dividend rate or rates,
which may be subject to adjustment, (ii) the date or dates from which dividends
shall be cumulative, (iii) the dividend payment dates, (iv) the amount to be
paid upon redemption, if redeemable, or in the event of voluntary liquidation,
dissolution or winding up of the Company, (v) the rights of conversion, if any,
into
4
<PAGE>
shares of Common Stock and the terms and conditions of any such conversion, (vi)
provisions, if any, for the redemption or purchase of shares, which may be at
the option of the Company or upon the happening of a specified event or events,
including the times, prices or rates, which may be subject to adjustment, and
(vii) with respect to the No Par Serial Preferred Stock, voting rights.
The specific terms of the series of Additional Preferred Stock to which this
Prospectus relates, including the dividend rate (or, if the rate is not fixed,
the method of determining the dividend rate) and restrictions, the liquidation
preference per share, the voting rights for shares of such series, redemption or
conversion provisions, if any, and other specific terms of such series, will be
set forth in a Prospectus Supplement.
DIVIDENDS. Each class of Preferred Stock is entitled, pari passu with each
other class and in preference to the Common Stock, to accumulate dividends at
the rate or rates, which may be subject to adjustment, determined in accordance
with the Articles at the time of creation of each series. Subject to the prior
rights of each class of Preferred Stock (and to the rights of any other classes
of preferred stock hereafter authorized), the Common Stock alone is entitled to
all dividends other than those payable in respect of each class of Preferred
Stock.
For certain restrictions on the payment of dividends, reference is made to
the notes to the audited consolidated financial statements included in the
Company's Annual Report on Form 10-K incorporated by reference herein and to
"Description of Additional Bonds -- Dividend Restrictions" herein.
LIQUIDATION RIGHTS. Upon involuntary liquidation of the Company, each class
of Preferred Stock is entitled, pari passu with each other class and in
preference to the Common Stock, to the stated value thereof or, in the case of
the No Par Serial Preferred Stock, the amount fixed as the consideration
therefor in the resolution creating the series of No Par Serial Preferred Stock,
in each case plus accrued dividends to the date of distribution.
Upon voluntary liquidation of the Company, each outstanding series of No Par
Serial Preferred Stock (other than the $7.70 Series and the $7.48 Series, which
are entitled to $100 per share, and the Series 1992 Preferred Stock, which is
entitled to $25 per share) and Serial Preferred Stock (other than the 7.00%,
6.00%, 5.00% and 5.40% Series, which are entitled to $100 per share) is entitled
to an amount equal to the then current redemption price for such series and the
5% Preferred Stock is entitled to $110 per share, in each case plus accrued
dividends to the date of distribution, pari passu with each other class and in
preference to the Common Stock.
Subject to the rights of each class of Preferred Stock (and to the rights of
any other class of preferred stock hereafter authorized), the Common Stock alone
is entitled to all amounts available for distribution upon liquidation of the
Company other than those to be paid on each class of Preferred Stock.
VOTING RIGHTS. The holders of the 5% Preferred Stock, Serial Preferred
Stock and Common Stock are entitled to one vote for each share held on matters
presented to shareholders generally. The holders of the No Par Serial Preferred
Stock are entitled to such voting rights as are set forth in the Articles upon
creation of each series. Certain series of No Par Serial Preferred Stock may not
be entitled to vote on matters presented to shareholders generally, including
the election of directors. During any periods when dividends on any class of
Preferred Stock are in default in an amount equal to four full quarterly
payments or more per share, the holders of all classes of Preferred Stock,
voting as one class separately from the holders of the Common Stock, have the
right to elect a majority of the full Board of Directors. No Preferred Stock
dividends are in arrears at the date of this Prospectus.
Holders of the outstanding shares of any class of Preferred Stock are
entitled to vote as a class on certain matters, such as changes in the aggregate
number of authorized shares of the class and certain changes in the
designations, preferences, limitations or relative rights of the class. The vote
of holders of at least two-thirds of each class of Preferred Stock is required
prior to creating any new stock ranking prior thereto or altering its express
terms to its prejudice. The vote of holders of a majority of all classes of
Preferred Stock, voting as one class separately from the holders of the Common
Stock, is required prior to merger or consolidation and prior to making certain
unsecured borrowings and certain issuances of Preferred Stock.
5
<PAGE>
None of the Company's outstanding shares of capital stock has cumulative
voting rights, which means that the holders of more than 50% of all outstanding
shares entitled to vote for the election of directors can elect 100% of the
directors if they choose to do so, and, in such event, the holders of the
remaining less than 50% of the shares will not be able to elect any person or
persons to the Board of Directors.
None of the Company's outstanding shares of capital stock has any preemptive
rights.
VOTING ON CERTAIN TRANSACTIONS. Under the Articles, certain business
transactions with a Related Person (as defined below), including a merger,
consolidation or plan of exchange of the Company or its subsidiaries, or certain
recapitalizations, or the sale or exchange of a substantial part of the assets
of the Company or its subsidiaries, or any issuance of voting securities of the
Company, will require in addition to existing voting requirements, approval by
at least 80% of the outstanding Voting Stock (for purposes of this provision,
Voting Stock is defined as all of the outstanding shares of capital stock of the
Company entitled to vote generally in the election of directors, considered as
one class). A Related Person includes any shareholder that is, directly or
indirectly, the beneficial owner of 20% or more of the Voting Stock. The 80%
voting requirement will not apply in the following instances:
(i) The Related Person has no direct or indirect interest in the
proposed transaction except as a shareholder;
(ii) The shareholders, other than the Related Person, will receive
consideration for their Voting Stock having a fair market value per share at
least equal to, or in the opinion of a majority of the Continuing Directors
(as defined in the Articles) at least equivalent to, the highest per-share
price paid by the Related Person for any Voting Stock acquired by it;
(iii) At least two-thirds of the Continuing Directors expressly approved
in advance the acquisition of the Voting Stock that caused such Related
Person to become a Related Person; or
(iv) The transaction is approved by at least two-thirds of the
Continuing Directors.
This provision of the Articles may be amended or replaced only upon the
approval of the holders of at least 80% of the Voting Stock.
CLASSIFICATION OF BOARD; REMOVAL. The Board of Directors of the Company is
divided into three classes, designated Class I, Class II and Class III, each
class as nearly equal in number as possible. The directors in each class serve
staggered three-year terms such that one-third (or as close thereto as possible)
of the Board of Directors is elected each year. A vote of at least 80% of the
votes entitled to be cast at an election of directors is required to remove a
director without cause, and at least two-thirds of the votes entitled to be cast
at an election of directors are required to remove a director for cause. Any
amendment or revision of this provision requires the approval of at least 80% of
the votes entitled to be cast at an election of directors.
DESCRIPTION OF ADDITIONAL BONDS
GENERAL. Additional Bonds may be issued from time to time under the
Company's Mortgage and Deed of Trust, dated as of January 9, 1989, as amended
and supplemented (the "Mortgage"), with The Chase Manhattan Bank (formerly known
as Chemical Bank), as successor trustee (the "Mortgage Trustee"). The following
summary is subject to the provisions of and is qualified by reference to the
Mortgage, a copy of which is an exhibit to the Registration Statement. Whenever
particular provisions or defined terms in the Mortgage are referred to herein,
such provisions or defined terms are incorporated by reference herein. Section
and Article references used herein are references to provisions of the Mortgage
unless otherwise noted.
The Company assumed the Mortgages and Deeds of Trust, as supplemented, of
Pacific Power & Light Company (the "Pacific Mortgage") and Utah Power & Light
Company (the "Utah Mortgage") (each, a "Class "A" Mortgage") as the surviving
corporation in its 1989 merger with PacifiCorp, a Maine corporation, and Utah
Power & Light Company, a Utah corporation. The first mortgage bonds issued under
these
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Class "A" Mortgages were secured by a first mortgage lien on certain properties
owned by the particular company prior to the merger and on improvements,
extensions and additions to, and renewals and replacements of, such properties.
The Mortgage was a second mortgage lien on these properties. The Company is
currently in the process of discharging the Pacific and Utah Mortgages, which
discharge will be completed prior to the issuance of any Additional Bonds.
The Mortgage provides that in the event of the merger or consolidation of
another electric utility company with or into the Company or the conveyance or
transfer to the Company by another such company of all or substantially all of
such company's property that is of the same character as Property Additions
under the Mortgage, an existing mortgage constituting a first lien on operating
properties of such other company may be designated by the Company as an
additional Class "A" Mortgage. (Section 11.06) Bonds thereafter issued pursuant
to such additional mortgage would be Class "A" Bonds and could provide the basis
for the issuance of Bonds under the Mortgage.
The Company expects to issue Additional Bonds in the form of fully
registered bonds and, except as may be set forth in any Prospectus Supplement
relating to such Additional Bonds, in denominations of $1,000 and any multiple
thereof. They may be transferred without charge, other than for applicable taxes
or other governmental charges, at the offices of the Mortgage Trustee, New York,
New York. Any Additional Bonds issued will be equally and ratably secured with
all other bonds issued under the Mortgage.
MATURITY AND INTEREST PAYMENTS. Reference is made to the Prospectus
Supplement relating to any Additional Bonds for the date or dates on which such
Bonds will mature; the rate or rates per annum at which such Bonds will bear
interest; and the times at which such interest will be payable. These terms and
conditions, as well as the terms and conditions relating to redemption and
purchase referred to under "Redemption or Purchase of Additional Bonds" below,
will be as established in or pursuant to resolutions of the Board of Directors
of the Company at the time of issuance of the Additional Bonds.
REDEMPTION OR PURCHASE OF ADDITIONAL BONDS. The Additional Bonds may be
redeemable, in whole or in part, on not less than 30 days' notice either at the
option of the Company or as required by the Mortgage. The Additional Bonds may
be subject to repurchase at the option of the holder.
Reference is made to the Prospectus Supplement relating to any Additional
Bonds for the redemption or repurchase terms and other specific terms of such
Bonds.
If, at the time notice of redemption is given, the redemption moneys are not
held by the Mortgage Trustee, the redemption may be made subject to their
receipt on or before the date fixed for redemption and such notice shall be of
no effect unless such moneys are so received.
While the Mortgage, as described below, contains provisions for the
maintenance of the Mortgaged and Pledged Property, the Mortgage does not permit
redemption of Bonds pursuant to these provisions. There is no sinking or
analogous fund in the Mortgage.
Cash deposited under any provisions of the Mortgage may be applied (with
certain exceptions) to the redemption or repurchase of Bonds of any series.
(Articles XII and XIII)
SECURITY AND PRIORITY. The Bonds issued under the Mortgage will be secured
by a first mortgage lien on certain utility property owned from time to time by
the Company and/or Class "A" Bonds held by the Mortgage Trustee. The Lien of the
Mortgage is subject to Excepted Encumbrances, including tax and construction
liens, purchase money liens and certain other exceptions.
There are excepted from the Lien of the Mortgage all cash and securities
(except those specifically deposited); equipment, materials or supplies held for
sale or other disposition; any fuel and similar consumable materials and
supplies; automobiles, other vehicles, aircraft and vessels; timber, minerals,
mineral rights and royalties; receivables, contracts, leases and operating
agreements; electric energy, gas, water, steam, ice and other products for sale,
distribution or other use; natural gas wells; gas transportation lines or other
property used in the sale of natural gas to customers or to a natural gas
distribution or pipeline company, up to the point of connection with any
distribution system; the Company's interest in the Wyodak Facility; and all
properties that have been released from the Pacific Mortgage or the Utah
Mortgage and that PacifiCorp,
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a Maine corporation, or Utah Power & Light Company, a Utah corporation,
contracted to dispose of, but title to which had not passed at the date of the
Mortgage. The Company has reserved the right, without any consent or other
action by holders of Bonds of the Eighth Series or any subsequently created
series of Bonds (including the Additional Bonds), to amend the Mortgage in order
to except from the Lien of the Mortgage allowances allocated to steam-electric
generating plants owned by the Company, or in which the Company has interests,
pursuant to Title IV of the Clean Air Act Amendments of 1990, as now in effect
or as hereafter supplemented or amended.
The Mortgage contains provisions subjecting after-acquired property to the
Lien thereof. These provisions may be limited, at the option of the Company, in
the case of consolidation or merger (whether or not the Company is the surviving
corporation), conveyance or transfer of all or substantially all of the utility
property of another electric utility company to the Company or sale of
substantially all of the Company's assets. In addition, after-acquired property
may be subject to a Class "A" Mortgage, purchase money mortgages and other liens
or defects in title. (Section 18.03)
The Mortgage provides that the Mortgage Trustee shall have a lien upon the
mortgaged property, prior to the holders of Bonds, for the payment of its
reasonable compensation and expenses and for indemnity against certain
liabilities. (Section 19.09)
ISSUANCE OF ADDITIONAL BONDS. The maximum principal amount of Bonds which
may be issued under the Mortgage is not limited. Bonds of any series may be
issued from time to time on the basis of: (i) Class "A" Bonds (which need not
bear interest) delivered to the Mortgage Trustee; (ii) 70% of qualified Property
Additions after adjustments to offset retirements; (iii) retirement of Bonds or
certain prior lien bonds; and/ or (iv) deposits of cash. With certain exceptions
in the case of (i) and (iii) above, the issuance of Bonds is subject to Adjusted
Net Earnings of the Company for 12 consecutive months out of the preceding 15
months, before income taxes, being at least twice the Annual Interest
Requirements on all Bonds at the time outstanding, including the issue of
Additional Bonds, all outstanding Class "A" Bonds held other than by the
Mortgage Trustee or by the Company, and all other indebtedness secured by a lien
prior to the Lien of the Mortgage. In general, interest on variable interest
bonds, if any, is calculated using the rate then in effect. (Articles IV through
VII)
Property Additions generally include electric, gas, steam and/or hot water
utility property but not fuel, securities, automobiles, other vehicles or
aircraft, or property used principally for the production or gathering of
natural gas. (Section 1.04)
The issuance of Bonds on the basis of Property Additions subject to prior
liens is restricted. Bonds may, however, be issued against the deposit of Class
"A" Bonds. (Sections 1.04 to 1.07 and 4.01 to 7.01)
RELEASE AND SUBSTITUTION OF PROPERTY. Property subject to the Lien of the
Mortgage may be released upon the basis of: (i) the release of such property
from the Lien of a Class "A" Mortgage; (ii) the deposit of cash or, to a limited
extent, purchase money mortgages; (iii) Property Additions, after making
adjustments for certain prior lien bonds outstanding against Property Additions;
and/or (iv) waiver of the right to issue Bonds. Cash may be withdrawn upon the
bases stated in (i), (iii) and (iv) above. Property that does not constitute
Funded Property may be released without funding other property. Similar
provisions are in effect as to cash proceeds of such property. The Mortgage
contains special provisions with respect to certain prior lien bonds deposited
and disposition of moneys received on deposited prior lien bonds. (Sections
1.05, 7.02, 7.03, 9.05, 10.01 to 10.04 and 13.03 to 13.09)
CERTAIN COVENANTS. The Mortgage contains a number of covenants by the
Company for the benefit of bondholders, including provisions requiring the
Company to maintain the Mortgaged and Pledged Property as an operating system or
systems capable of engaging in all or any of the generating, transmission,
distribution or other utility businesses described in the Mortgage. (Article IX;
Section 9.06)
DIVIDEND RESTRICTIONS. The Mortgage provides that the Company may not
declare or pay dividends (other than dividends payable solely in shares of
Common Stock) on any shares of Common Stock if, after giving effect to such
declaration or payment, the Company would not be able to pay its debts as they
become
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due in the usual course of business. (Section 9.07) Reference is made to the
notes to the audited consolidated financial statements included in the Company's
Annual Report on Form 10-K incorporated by reference herein for information
relating to other restrictions.
FOREIGN CURRENCY DENOMINATED BONDS. The Mortgage authorizes the issuance of
Bonds denominated in foreign currencies, PROVIDED that the Company deposits with
the Mortgage Trustee a currency exchange agreement with an entity having, at the
time of such deposit, a financial rating at least as high as that of the Company
that, in the opinion of an independent expert, gives the Company at least as
much protection against currency exchange fluctuation as is usually obtained by
similarly situated borrowers. The Company believes that such a currency exchange
agreement will provide effective protection against currency exchange
fluctuations. However, if the other party to the exchange agreement defaults and
the foreign currency is valued higher at the date of maturity than at the date
of issuance of the relevant Bonds, holders of such Bonds would have a claim on
the assets of the Company which is greater than that to which holders of
dollar-denominated Bonds issued at the same time would be entitled.
THE MORTGAGE TRUSTEE. The Chase Manhattan Bank acts as lender and agent
under loan agreements with the Company and affiliates of the Company, and serves
as trustee under indentures and other agreements involving the Company and its
affiliates.
MODIFICATION. The rights of bondholders may be modified with the consent of
holders of 60% of the Bonds, or, if less than all series of Bonds are adversely
affected, the consent of the holders of 60% of the series of Bonds adversely
affected. In general, no modification of the terms of payment of principal,
premium, if any, or interest and no modification affecting the Lien or reducing
the percentage required for modification is effective against any bondholder
without the consent of such holder. (Article XXI)
Unless there is a Default under the Mortgage, the Mortgage Trustee generally
is required to vote Class "A" Bonds held by it with respect to any amendment of
the applicable Class "A" Mortgage proportionately with the vote of the holders
of all Class "A" Bonds then actually voting. (Section 11.03)
DEFAULTS AND NOTICE THEREOF. Defaults are defined in the Mortgage as:
default in payment of principal; default for 60 days in payment of interest or
an installment of any fund required to be applied to the purchase or redemption
of any Bonds; default in payment of principal or interest with respect to
certain prior lien bonds; certain events in bankruptcy, insolvency or
reorganization; default in other covenants for 90 days after notice; and the
existence of any default under a Class "A" Mortgage which permits the
declaration of the principal of all of the bonds secured by such Class "A"
Mortgage and the interest accrued thereupon due and payable. (Section 15.01) An
effective default under any Class "A" Mortgage or under the Mortgage will result
in an effective default under all such mortgages. The Mortgage Trustee may
withhold notice of default (except in payment of principal, interest or funds
for retirement of Bonds) if it determines that it is not detrimental to the
interests of the bondholders. (Section 15.02)
The Mortgage Trustee or the holders of 25% of the Bonds may declare the
principal and interest due and payable on Default, but a majority may annul such
declaration if such Default has been cured. (Section 15.03) No holder of Bonds
may enforce the Lien of the Mortgage without giving the Mortgage Trustee written
notice of a Default and unless the holders of 25% of the Bonds have requested
the Mortgage Trustee to act and offered it reasonable opportunity to act and
indemnity satisfactory to it against the costs, expenses and liabilities to be
incurred thereby and the Mortgage Trustee shall have failed to act. (Section
15.16) The holders of a majority of the Bonds may direct the time, method and
place of conducting any proceedings for any remedy available to the Mortgage
Trustee or exercising any trust or power conferred on the Mortgage Trustee.
(Section 15.07) The Mortgage Trustee is not required to risk its funds or incur
personal liability if there is reasonable ground for believing that repayment is
not reasonably assured. (Section 19.08)
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DESCRIPTION OF UNSECURED DEBT SECURITIES
GENERAL
The Unsecured Debt Securities may be issued from time to time in one or more
series under an indenture or indentures (each, an "Indenture"), between the
Company and the trustees named below, or other bank or trust company to be named
as trustee (each, an "Indenture Trustee"). The Unsecured Debt Securities will be
unsecured obligations of the Company. If so provided in the Prospectus
Supplement, the Unsecured Debt Securities will be subordinated obligations of
the Company ("Subordinated Debt Securities"). Except as may otherwise be
described in the Prospectus Supplement, Subordinated Debt Securities will be
issued under the Indenture, dated as of May 1, 1995, as supplemented (the
"Subordinated Indenture"), between the Company and The Bank of New York, as
trustee. Except as may otherwise be described in the Prospectus Supplement,
Unsecured Debt Securities other than Subordinated Debt Securities will be issued
under an Indenture, dated as of September 1, 1996 (the "Unsecured Indenture"),
between the Company and The Chase Manhattan Bank, as Trustee. Except as
otherwise specified herein, the term "Indenture" includes the Subordinated
Indenture and the Unsecured Indenture.
The following summary is subject to the provisions of and is qualified by
reference to the Indenture, which is filed as an exhibit to or incorporated by
reference in the Registration Statement. Whenever particular provisions or
defined terms in the Indenture are referred to herein, such provisions or
defined terms are incorporated by reference herein. Section and Article
references used herein are references to provisions of the Indenture unless
otherwise noted.
The Indenture provides that Unsecured Debt Securities may be issued from
time to time in one or more series pursuant to an indenture supplemental to the
Indenture or a resolution of the Company's Board of Directors. (Section 2.01)
The Indenture does not limit the aggregate principal amount of Unsecured Debt
Securities which may be issued thereunder. The Company's Articles limit the
amount of unsecured debt that the Company may issue to the equivalent of 30% of
the total of all secured indebtedness and total equity. At June 30, 1996,
approximately $1 billion of unsecured debt was outstanding and approximately
$1.2 billion of additional unsecured debt could have been issued under this
provision. The Indenture does not contain any provisions that would limit the
ability of the Company to incur indebtedness or that would afford holders of
Unsecured Debt Securities protection in the event of a highly leveraged or
similar transaction involving the Company or in the event of a change of
control.
Reference is made to the Prospectus Supplement which will accompany this
Prospectus for the following terms of the series of Unsecured Debt Securities
being offered thereby: (i) the specific title of such Unsecured Debt Securities;
(ii) any limit on the aggregate principal amount of such Unsecured Debt
Securities; (iii) the date or dates on which the principal of such Unsecured
Debt Securities is payable; (iv) the rate or rates at which such Unsecured Debt
Securities will bear interest or the manner of calculation of such rate or
rates; (v) the date or dates from which such interest shall accrue, the interest
payment dates on which such interest will be payable or the manner of
determination of such interest payment dates and the record dates for the
determination of holders to whom interest is payable on any such interest
payment dates; (vi) the period or periods within which, the price or prices at
which and the terms and conditions upon which such Unsecured Debt Securities may
be redeemed, in whole or in part, at the option of the Company; (vii) the
obligation, if any, of the Company to redeem or purchase such Unsecured Debt
Securities pursuant to any sinking fund or analogous provisions or at the option
of the holder thereof and the period or periods, the price or prices at which
and the terms and conditions upon which such Unsecured Debt Securities shall be
redeemed or purchased, in whole or part, pursuant to such obligation; (viii) the
form of such Unsecured Debt Securities; (ix) if other than denominations of
$1,000 (except with respect to Subordinated Debt Securities issued pursuant to
the Subordinated Indenture, in which case other than denominations of $25) or,
in either case, any integral multiple thereof, the denominations in which such
Unsecured Debt Securities shall be issuable; (x) whether such Unsecured Debt
Securities are issuable as a global security, and in such case, the identity of
the depository; and (xi) any and all other terms with respect to such series.
(Section 2.01) For Subordinated Debt Securities issued pursuant to the
Subordinated Indenture, the applicable Prospectus
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Supplement will also describe (a) the right, if any, to extend the interest
payment periods and the duration of such extension and (b) the subordination
terms of the Subordinated Debt Securities to the extent such subordination terms
vary from those described under "-- Subordination" below.
SUBORDINATION
The Subordinated Indenture provides that Subordinated Debt Securities are
subordinate and junior in right of payment to the prior payment in full of all
Senior Indebtedness (as defined below) of the Company as provided in the
Subordinated Indenture. No payment of principal of (including redemption and
sinking fund payments), or premium, if any, or interest on, the Subordinated
Debt Securities may be made if any Senior Indebtedness is not paid when due, any
applicable grace period with respect to such default has ended and such default
has not been cured or waived, or if the maturity of any Senior Indebtedness has
been accelerated because of a default. Upon payment by the Company or any
distribution of assets of the Company to creditors upon any dissolution,
winding-up, liquidation or reorganization, whether voluntary or involuntary or
in bankruptcy, insolvency, receivership or other proceedings, all amounts due or
to become due on all Senior Indebtedness must be paid in full before the holders
of the Subordinated Debt Securities are entitled to receive or retain any
payment. The rights of the holders of the Subordinated Debt Securities will be
subrogated to the rights of the holders of Senior Indebtedness to receive
payments or distributions applicable to Senior Indebtedness until all amounts
owing on the Subordinated Debt Securities (including the Subordinated Debt
Securities to be offered hereby) are paid in full. (Sections 14.01 to 14.04 of
the Subordinated Indenture)
The term "Senior Indebtedness" shall mean the principal of and premium, if
any, and interest on and any other payment due pursuant to any of the following,
whether outstanding at the date of execution of the Subordinated Indenture or
thereafter incurred, created or assumed:
(i) all indebtedness of the Company evidenced by notes (including
indebtedness owed to banks), debentures, bonds or other securities sold by
the Company for money;
(ii) all indebtedness of others of the kinds described in the preceding
clause (i) assumed by or guaranteed in any manner by the Company or in
effect guaranteed by the Company through an agreement to purchase,
contingent or otherwise; and
(iii) all renewals, extensions or refundings of indebtedness of the
kinds described in either of the preceding clauses (i) and (ii);
unless, in the case of any particular indebtedness, renewal, extension or
refunding, the instrument creating or evidencing the same or the assumption
or guarantee of the same expressly provides that such indebtedness, renewal,
extension or refunding is not superior in right of payment to or is PARI
PASSU with the Subordinated Debt Securities. Such Senior Indebtedness shall
continue to be Senior Indebtedness and entitled to the benefits of the
subordination provisions contained in the Subordinated Indenture
irrespective of any amendment, modification or waiver of any term of such
Senior Indebtedness. (Section 1.01 of the Subordinated Indenture)
The Subordinated Indenture does not limit the aggregate amount of Senior
Indebtedness which may be issued. As of June 30, 1996, Senior Indebtedness of
the Company aggregated approximately $3.6 billion.
As the Subordinated Debt Securities will be issued by the Company, the
Subordinated Debt Securities effectively will be subordinate to all obligations
of the Company's subsidiaries, and the rights of the Company's creditors,
including holders of Bonds issued under the Mortgage, Subordinated Debt
Securities and any other Unsecured Debt Securities issued by the Company, to
participate in the assets of such subsidiaries upon liquidation or
reorganization will be junior to the rights of the holders of all preferred
stock, indebtedness and other liabilities of such subsidiaries, which may
include trade payables, obligations to banks under credit facilities,
guarantees, pledges, support arrangements, bonds, capital leases, notes and
other obligations.
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CERTAIN COVENANTS OF THE COMPANY
If, with respect to Subordinated Debt Securities issued pursuant to the
Subordinated Indenture, there shall have occurred any event that would, with the
giving of notice or the passage of time, or both, constitute an Event of Default
under the Indenture, as described under "-- Events of Default" below, or the
Company exercises its option to extend the interest payment period described in
clause (i) in the last sentence under "-- General" above, the Company will not,
until all defaulted interest on the Subordinated Debt Securities and all
interest accrued on the Subordinated Debt Securities during any such extended
interest payment period and all principal and premium, if any, then due and
payable on the Subordinated Debt Securities shall have been paid in full, (i)
declare, set aside or pay any dividend or distribution on any capital stock of
the Company, including the Common Stock, except for dividends or distributions
in shares of its capital stock or in rights to acquire shares of its capital
stock, or (ii) repurchase, redeem or otherwise acquire, or make any sinking fund
payment for the purchase or redemption of, any shares of its capital stock
(except by conversion into or exchange for shares of its capital stock and
except for a redemption, purchase or other acquisition of shares of its capital
stock made for the purpose of an employee incentive plan or benefit plan of the
Company or any of its subsidiaries and except for mandatory redemption or
sinking fund payments with respect to any series of Preferred Stock that are
subject to mandatory redemption or sinking fund requirements, PROVIDED that the
aggregate stated value of all such series of Preferred Stock outstanding at the
time of any such payment does not exceed five percent of the aggregate of (a)
the total principal amount of all bonds or other securities representing secured
indebtedness issued or assumed by the Company and then outstanding and (b) the
capital and surplus of the Company to be stated on the books of account of the
Company after giving effect to such payment); PROVIDED, HOWEVER, that any moneys
deposited in any sinking fund and not in violation of this provision may
thereafter be applied to the purchase or redemption of such Preferred Stock in
accordance with the terms of such sinking fund without regard to the
restrictions contained in this provision. (Section 4.06 of the Subordinated
Indenture) As of June 30, 1996, the aggregate stated value of such series of
Preferred Stock outstanding was approximately $219 million, which represented
approximately three percent of the aggregate of clauses (a) and (b) above at
such date.
FORM, EXCHANGE, REGISTRATION AND TRANSFER
Each series of Unsecured Debt Securities will be issued in registered form
and in certificated form or will be represented by one or more global
securities. If not represented by one or more global securities, Unsecured Debt
Securities may be presented for registration of transfer (with the form of
transfer endorsed thereon duly executed) or exchange, at the office of the
Registrar or at the office of any transfer agent designated by the Company for
such purpose with respect to any series of Unsecured Debt Securities and
referred to in an applicable Prospectus Supplement, without service charge and
upon payment of any taxes and other governmental charges as described in the
Indenture. Such transfer or exchange will be effected upon the registrar or such
transfer agent, as the case may be, being satisfied with the documents of title
and identity of the person making the request. (Section 2.05) If a Prospectus
Supplement refers to any transfer agent (in addition to the registrar) initially
designated by the Company with respect to any series of Unsecured Debt
Securities, the Company may at any time rescind the designation of any such
transfer agent or approve a change in the location through which any such
transfer agent acts, except that the Company will be required to maintain a
transfer agent in each place of payment for such series. (Section 4.02) The
Company may at any time designate additional transfer agents with respect to any
series of Unsecured Debt Securities. The Unsecured Debt Securities may be
transferred or exchanged without service charge, other than any tax or
governmental charge imposed in connection therewith. (Section 2.05)
In the event of any redemption in part, the Company shall not be required to
(i) issue, register the transfer of or exchange any Unsecured Debt Security
during a period beginning at the opening of business 15 days before any
selection for redemption of Unsecured Debt Securities of like tenor and of the
series of which such Unsecured Debt Security is a part, and ending at the close
of business on the earliest date in which the relevant notice of redemption is
deemed to have been given to all holders of Unsecured Debt Securities of like
tenor and of such series to be redeemed and (ii) register the transfer of or
exchange any Unsecured Debt Securities so selected for redemption, in whole or
in part, except the unredeemed portion of any Unsecured Debt Security being
redeemed in part. (Section 2.05)
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PAYMENT AND PAYING AGENTS
Unless otherwise indicated in the Prospectus Supplement, payment of
principal of and premium (if any) on any Unsecured Debt Security will be made
only against surrender to the Paying Agent of such Unsecured Debt Security.
Unless otherwise indicated in the Prospectus Supplement, principal of and any
premium and interest, if any, on Unsecured Debt Securities will be payable,
subject to any applicable laws and regulations, at the office of such Paying
Agent or Paying Agents as the Company may designate from time to time, except
that at the option of the Company payments on the Unsecured Debt Securities may
be made (i) by checks mailed by the Indenture Trustee to the holders entitled
thereto at their registered addresses as specified in the Register for such
Unsecured Debt Securities or (ii) to a holder of $1,000,000 or more in aggregate
principal amount of such Unsecured Debt Securities who has delivered a written
request to the Indenture Trustee at least 14 days prior to the relevant payment
date electing to have payments made by wire transfer to a designated account in
the United States, by wire transfer of immediately available funds to such
designated account; PROVIDED that, in either case, the payment of principal with
respect to any Unsecured Debt Security will be made only upon surrender of such
Unsecured Debt Security to the Indenture Trustee. Unless otherwise indicated in
the Prospectus Supplement, payment of interest on an Unsecured Debt Security on
any Interest Payment Date will be made to the person in whose name such
Unsecured Debt Security (or Predecessor Security) is registered at the close of
business on the Regular Record Date for such interest payment. (Sections 2.03
and 4.03)
The Company will act as Paying Agent with respect to the Unsecured Debt
Securities. The Company may at any time designate additional Paying Agents or
rescind the designation of any Paying Agents or approve a change in the office
through which any Paying Agent acts, except that the Company will be required to
maintain a Paying Agent in each Place of Payment for each series of the
respective Unsecured Debt Securities. (Sections 4.02 and 4.03)
All moneys paid by the Company to a Paying Agent for the payment of the
principal of or premium, if any, or interest on any Unsecured Debt Security of
any series that remain unclaimed at the end of two years after such principal,
premium, if any, or interest shall have become due and payable will be repaid to
the Company and the holder of such Unsecured Debt Security will thereafter look
only to the Company for payment thereof. (Section 11.06)
GLOBAL DEBENTURES
If any Unsecured Debt Securities of a series are represented by one or more
global securities, the Prospectus Supplement will describe the circumstances, if
any, under which beneficial owners of interests in any such global Unsecured
Debt Security may exchange such interests for Unsecured Debt Securities of such
series and of like tenor and principal amount in any authorized form and
denomination. Principal of and premium, if any, and interest on a global
Unsecured Debt Security will be payable in the manner described in the
Prospectus Supplement. (Section 2.11)
The specific terms of the depository arrangement with respect to any portion
of a series of Unsecured Debt Securities to be represented by a global Unsecured
Debt Security will be described in the Prospectus Supplement.
AGREED TAX TREATMENT
The Subordinated Indenture provides that each holder of a Subordinated Debt
Security, each person that acquires a beneficial ownership interest in a
Subordinated Debt Security and the Company agree that for United States federal,
state and local tax purposes it is intended that such Subordinated Debt Security
constitutes indebtedness. (Section 13.12 of the Subordinated Indenture)
MODIFICATION OF THE INDENTURE
The Indenture contains provisions permitting the Company and the Indenture
Trustee, with the consent of the holders of not less than a majority in
principal amount of the Unsecured Debt Securities of each series which are
affected by the modification, to modify the Indenture or any supplemental
indenture affecting that series or the rights of the holders of that series of
Unsecured Debt Securities; PROVIDED that no such modification may, without the
consent of the holder of each outstanding Unsecured Debt Security affected
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thereby, (i) extend the fixed maturity of any Unsecured Debt Securities of any
series, or reduce the principal amount thereof, or reduce the rate or extend the
time of payment of interest thereon, or reduce any premium payable upon the
redemption thereof, (ii) reduce the percentage of Unsecured Debt Securities, the
holders of which are required to consent to any such supplemental indenture or,
in the case of the Unsecured Indenture, (iii) reduce the percentage of Unsecured
Debt Securities, the holders of which are required to waive any default and its
consequences or modify any provision of the Indenture relating to the percentage
of Unsecured Debt Securities (except to increase such percentage) required to
rescind and annul any declaration of principal due and payable upon an Event of
Default. (Section 9.02)
In addition, the Company and the Indenture Trustee may execute, without the
consent of any holder of Unsecured Debt Securities (including the Unsecured Debt
Securities being offered hereby), any supplemental indenture for certain other
usual purposes, including the creation of any new series of Unsecured Debt
Securities. (Sections 2.01, 9.01 and 10.01)
EVENTS OF DEFAULT
The Indenture provides that any one or more of the following described
events, which has occurred and is continuing, constitutes an "Event of Default"
with respect to each series of Unsecured Debt Securities:
(i) failure for 30 days (except with respect to Subordinated Debt
Securities issued under the Subordinated Indenture, in which case failure
for 10 days) to pay interest on the Unsecured Debt Securities of that series
when due; or
(ii) failure to pay principal of or premium, if any, on the Unsecured
Debt Securities of that series when due whether at maturity, upon
redemption, by declaration or otherwise, or to make any sinking or analogous
fund payment established with respect to that series; or
(iii) failure to observe or perform any other covenant (other than those
specifically relating to one or more other series) contained in the
Indenture under which Unsecured Debt Securities of that series were issued
for 90 days after notice; or
(iv) a decree or order by a court having jurisdiction in the premises
shall have been entered adjudging the Company a bankrupt or insolvent, or
approving as properly filed a petition seeking liquidation or reorganization
of the Company under the Federal Bankruptcy Code or any other similar
applicable federal or state law, and such decree or order shall have
continued unvacated and unstayed for a period of 90 days; an involuntary
case shall be commenced under such Code in respect of the Company and shall
continue undismissed for a period of 90 days or an order for relief in such
case shall have been entered and, in the case of the Unsecured Indenture,
such order shall have continued unvacated and unstayed for a period of 90
days; or a decree or order of a court having jurisdiction in the premises
shall have been entered for the appointment on the ground of insolvency or
bankruptcy of a receiver, custodian, liquidator, trustee or assignee in
bankruptcy or insolvency of the Company or of its property, or for the
winding up or liquidation of its affairs, and such decree or order shall
have remained in force unvacated and unstayed for a period of 90 days; or
(v) the Company shall institute proceedings to be adjudicated a
voluntary bankrupt, shall consent to the filing of a bankruptcy proceeding
against it, shall file a petition or answer or consent seeking liquidation
or reorganization under the Federal Bankruptcy Code or other similar
applicable federal or state law, shall consent to the filing of any such
petition or shall consent to the appointment on the ground of insolvency or
bankruptcy of a receiver or custodian or liquidator or trustee or assignee
in bankruptcy or insolvency of it or of its property, or shall make an
assignment for the benefit of creditors. (Section 6.01)
The holders of a majority in aggregate outstanding principal amount of any
series of the Unsecured Debt Securities have the right to direct the time,
method and place of conducting any proceeding for any remedy available to the
Indenture Trustee for that series. (Section 6.06) The applicable Indenture
Trustee or the holders of not less than 25% in aggregate outstanding principal
amount of any particular series of the Unsecured Debt Securities may declare the
principal due and payable immediately upon an Event of Default with respect to
such series, but the holders of a majority in aggregate outstanding principal
amount
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<PAGE>
of such series may annul such declaration and waive such Event of Default if it
has been cured and a sum sufficient to pay all matured installments of interest
and principal and any premium has been deposited with such Indenture Trustee.
(Sections 6.01 and 6.06)
The holders of a majority in aggregate outstanding principal amount of all
series of the Unsecured Debt Securities issued under the Indenture and affected
thereby may, on behalf of the holders of all the Unsecured Debt Securities of
such series, waive any past default, except a default in the payment of
principal, premium, if any, or interest. (Section 6.06.) The Company is required
to file annually with the applicable Indenture Trustee a certificate as to
whether or not the Company is in compliance with all the conditions and
covenants under the Indenture. (Section 5.03(d))
CONSOLIDATION, MERGER AND SALE
The Indenture does not contain any covenant which restricts the Company's
ability to merge or consolidate with or into any other corporation, sell or
convey all or substantially all of its assets to any person, firm or corporation
or otherwise engage in restructuring transactions. (Section 10.01)
DEFEASANCE AND DISCHARGE
Under the terms of the Indenture, the Company will be discharged from any
and all obligations under the Indenture in respect of the Unsecured Debt
Securities of any series (except in each case for certain obligations to
register the transfer or exchange of Unsecured Debt Securities, replace stolen,
lost or mutilated Unsecured Debt Securities, maintain paying agencies and hold
moneys for payment in trust) if the Company deposits with the Indenture Trustee,
in trust, moneys or Government Obligations, in an amount sufficient to pay all
the principal of, and interest on, the Unsecured Debt Securities of such series
on the dates such payments are due in accordance with the terms of such
Unsecured Debt Securities and, if, among other things, such Unsecured Debt
Securities are not due and payable, or are not to be called for redemption,
within one year, the Company delivers to the Indenture Trustee an Opinion of
Counsel to the effect that the holders of Unsecured Debt Securities of such
series will not recognize income, gain or loss for federal income tax purposes
as a result of such deposit and discharge and will be subject to federal income
tax on the same amount and in the same manner and at the same times as would
have been the case if such deposit and discharge had not occurred. In addition
to discharging certain obligations under the Indenture as stated above, if (i)
the Company delivers to the Indenture Trustee an Opinion of Counsel (in lieu of
the Opinion of Counsel referred to above) to the effect that (a) the Company has
received from, or there has been published by, the Internal Revenue Service a
ruling or (b) since the date of the Indenture there has been a change in
applicable federal income tax law, in either case to the effect that, and based
thereon such Opinion of Counsel shall confirm that, the holders of Subordinated
Debt Securities of such series will not recognize income, gain or loss for
federal income tax purposes as a result of such deposit, defeasance and
discharge and will be subject to federal income tax on the same amount and in
the same manner and at the same times, as would have been the case if such
deposit, defeasance and discharge had not occurred, and (c) such deposit shall
not result in the Company, the Indenture Trustee or the trust resulting from the
defeasance being deemed an investment company under the Investment Company Act
of 1940, as amended and (ii), in the case of the Unsecured Indenture, no event
or condition shall exist that would prevent the Company from making payments of
the principal of (and premium, if any) or interest on the Securities on the date
of such deposit or at any time during the period ending on the ninety-first day
after the date of such deposit (it being understood that this condition shall
not be deemed satisfied until the expiration of such period), then, in such
event, the Company will be deemed to have paid and discharged the entire
indebtedness on the Unsecured Debt Securities of such series. In the event of
any such defeasance and discharge of Unsecured Debt Securities of such series,
holders of Unsecured Debt Securities of such series would be able to look only
to such trust fund for payment of principal of (and premium, if any) and
interest, if any, on the Unsecured Debt Securities of such series. (Sections
11.01, 11.02 and 11.03 of the Indenture)
GOVERNING LAW
The Indenture and the Unsecured Debt Securities will be governed by, and
construed in accordance with, the laws of the State of New York. (Section 13.04)
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INFORMATION CONCERNING THE INDENTURE TRUSTEE
The Indenture Trustee, prior to default, undertakes to perform only such
duties as are specifically set forth in the Indenture and, after default, shall
exercise the same degree of care as a prudent person would exercise in the
conduct of his or her own affairs. (Section 7.01) Subject to such provision, the
Indenture Trustee is under no obligation to exercise any of the powers vested in
it by the Indenture at the request of any holder of Unsecured Debt Securities,
unless offered reasonable indemnity by such holder against the costs, expenses
and liabilities which might be incurred thereby. (Section 7.02) The Indenture
Trustee is not required to expend or risk its own funds or otherwise incur
personal financial liability in the performance of its duties if the Indenture
Trustee reasonably believes that repayment or adequate indemnity is not
reasonably assured to it. (Section 7.01)
The Bank of New York and The Chase Manhattan Bank serve as trustees and
agents under agreements involving the Company and its affiliates.
MISCELLANEOUS
The Company will have the right at all times to assign any of its rights or
obligations under the Indenture to a direct or indirect wholly-owned subsidiary
of the Company; PROVIDED that, in the event of any such assignment, the Company
will remain liable for all such obligations. Subject to the foregoing, the
Indenture will be binding upon and inure to the benefit of the parties thereto
and their respective successors and assigns. The Indenture provides that it may
not otherwise be assigned by the parties thereto. (Section 13.11 of the
Subordinated Indenture and Section 13.10 of the Unsecured Indenture)
CONSOLIDATED RATIOS OF EARNINGS TO FIXED CHARGES
The ratios of earnings to fixed charges of the Company for the years ended
December 31, 1991 through 1995 and for the six months ended June 30, 1996,
calculated as required by the Commission, are 2.4x, 1.6x, 2.5x, 3.0x, 2.9x and
2.5x, respectively. Excluding the effect of special charges, the ratio was 1.9x
for the year 1992. For the purpose of computing such ratios, "earnings"
represents the aggregate of (i) income from continuing operations, (ii) taxes
based on income from continuing operations, (iii) minority interest in the
income of majority-owned subsidiaries that have fixed charges, (iv) fixed
charges and (v) undistributed losses (income) of less than 50% owned affiliates
without loan guarantees. "Fixed charges" represents consolidated interest
charges, an estimated amount representing the interest factor in rents and
preferred stock dividend requirements of majority-owned subsidiaries, and
excludes discontinued operations.
CONSOLIDATED RATIOS OF EARNINGS TO COMBINED FIXED
CHARGES AND PREFERRED STOCK DIVIDENDS
The ratios of earnings to combined fixed charges and preferred stock
dividends of the Company for the years ended December 31, 1991 through 1995 and
for the six months ended June 30, 1996, calculated as required by the
Commission, are 2.2x, 1.4x, 2.2x, 2.6x, 2.5x and 2.2x, respectively. Excluding
the effect of special charges, the ratio was 1.8x for the year 1992. For the
purpose of computing such ratios, "earnings" represents the aggregate of (i)
income from continuing operations, (ii) taxes based on income from continuing
operations, (iii) minority interest in the income of majority-owned subsidiaries
that have fixed charges, (iv) fixed charges and (v) undistributed losses
(income) of less than 50% owned affiliates without loan guarantees. "Fixed
charges" represents consolidated interest charges, an estimated amount
representing the interest factor in rents and preferred stock dividend
requirements of majority-owned subsidiaries, and excludes discontinued
operations. "Preferred stock dividends" represents preferred dividend
requirements multiplied by the ratio which pre-tax income from continuing
operations bears to income from continuing operations.
PLAN OF DISTRIBUTION
The Company may sell the Securities through underwriters, dealers or agents,
or directly to one or more purchasers. The Prospectus Supplement with respect to
the Securities offered thereby will set forth the terms of the offering of such
Securities, including the name or names of any underwriters, dealers or agents,
the
16
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purchase price of such Securities and the proceeds to the Company from such
sale, any underwriting discounts and other items constituting underwriters' or
agents' compensation, any initial public offering price and any discounts or
concessions allowed or reallowed or paid to dealers.
If underwriters are involved in the sale of any Securities, such Securities
will be acquired by the underwriters for their own account and may be resold
from time to time in one or more transactions, including negotiated
transactions, at a fixed public offering price or at varying prices determined
at the time of sale. The underwriter or underwriters with respect to a
particular underwritten offering of Securities will be named in the Prospectus
Supplement relating to such offering and, if an underwriting syndicate is used,
the managing underwriter or underwriters will be set forth on the cover page of
such Prospectus Supplement. Unless otherwise set forth in such Prospectus
Supplement, the obligations of the underwriters to purchase the Securities will
be subject to certain conditions precedent, and the underwriters will be
obligated to purchase all such Securities if any are purchased.
If a dealer is used in the sale of any Securities, the Company will sell
such Securities to the dealer, as principal. The dealer may then resell such
Securities to the public at varying prices to be determined by such dealer at
the time of resale. The name of any dealer involved in a particular offering of
Securities and any discounts or concessions allowed or reallowed or paid to the
dealer will be set forth in the Prospectus Supplement relating to such offering.
The Securities may be sold directly by the Company or through agents
designated by the Company from time to time. Any such agent, who may be deemed
to be an underwriter as that term is defined in the Securities Act, involved in
the offer or sale of any of the Securities will be named, and any commissions
payable by the Company to such agent will be set forth, in the Prospectus
Supplement relating to such offer or sale. Unless otherwise indicated in such
Prospectus Supplement, any such agent will be acting on a reasonable best
efforts basis for the period of its appointment.
If sold through agents, the Additional Common Stock may be sold from time to
time through such agents, by means of (i) ordinary brokers' transactions, (ii)
block transactions (which may involve crosses) in accordance with the rules of
the NYSE, the PSE or other stock exchanges on which the Common Stock is admitted
to trading privileges (the "Exchanges"), in which such agent may attempt to sell
the Additional Common Stock as agent but may position and resell all or a
portion of the blocks as principal, (iii) "fixed price offerings" off the floor
of the Exchanges or "exchange distributions" and "special offerings" in
accordance with the rules of the Exchanges or (iv) a combination of any such
methods of sale, in each case at market prices prevailing at the time of sale in
the case of transactions on the Exchanges and at negotiated prices related to
prevailing market prices in the case of transactions off the floor of the
Exchanges. In connection therewith, distributors' or sellers' commissions may be
paid or allowed that will not exceed those customary in the types of
transactions involved. If an agent purchases Additional Common Stock as
principal, such stock may be resold by any of the methods of sale described
above.
From time to time an agent may conduct a "fixed price offering" of
Additional Common Stock covered by this Prospectus off the floor of the
Exchanges. In such case, such agent would purchase a block of shares from the
Company and would form a group of selected dealers to participate in the resale
of the shares. Any such offering would be described in the Prospectus Supplement
setting forth the terms of the offering and the number of shares being offered.
It is also possible that an agent may conduct from time to time "special
offerings" or "exchange distributions" in accordance with the rules of the
Exchanges. Any such offering or distribution would be described in the
Prospectus Supplement at the time thereof.
If so indicated in an applicable Prospectus Supplement, the Company will
authorize dealers acting as the Company's agents to solicit offers by certain
institutions to purchase Securities from the Company at the public offering
price set forth in such Prospectus Supplement pursuant to delayed delivery
contracts ("Contracts") providing for payment and delivery on the date or dates
stated in such Prospectus Supplement. Each Contract will be for an amount not
less than, and the aggregate principal amount of Securities sold pursuant to
Contracts shall be not less nor more than, the respective amounts stated in such
Prospectus Supplement. Institutions with whom Contracts, when authorized, may be
made include commercial and savings banks, insurance companies, pension funds,
investment companies, educational and charitable
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<PAGE>
institutions and other institutions, but will in all cases be subject to the
approval of the Company. Contracts will not be subject to any conditions except
(i) the purchase by an institution of the Securities covered by its Contracts
shall not at the time of delivery be prohibited under the laws of any
jurisdiction in the United States to which such institution is subject, and (ii)
if the Securities are being sold to underwriters, the Company shall have sold to
such underwriters the total principal amount of the Securities less the
principal amount thereof covered by Contracts. Agents and underwriters will have
no responsibility in respect of the delivery or performance of Contracts.
Certain of the underwriters, dealers or agents and their associates may be
customers of, engage in the transactions with or perform services for the
Company and its affiliates in the ordinary course of business.
The Company will indicate in a Prospectus Supplement the extent to which it
anticipates that a secondary market for the Securities will be available.
Underwriters, dealers and agents participating in the distribution of the
Securities may be deemed to be "underwriters" within the meaning of, and any
discounts and commissions received by them and any profit realized by them on
resale of such Securities may be deemed to be underwriting discounts and
commissions under, the Securities Act. Subject to certain conditions, the
Company may agree to indemnify the several underwriters, dealers or agents and
their controlling persons against certain civil liabilities, including certain
liabilities under the Securities Act, or to contribute to payments any such
person may be required to make in respect thereof.
LEGAL OPINIONS
The validity of the Securities will be passed upon for the Company by Stoel
Rives LLP, counsel to the Company, 700 NE Multnomah, Suite 950, Portland, Oregon
97232, and for any underwriters, dealers or agents by Winthrop, Stimson, Putnam
& Roberts, One Battery Park Plaza, New York, New York 10004. John M. Schweitzer
and John Detjens III, who are assistant secretaries of the Company, are partners
in the firm of Stoel Rives LLP.
EXPERTS
The financial statements incorporated in this Prospectus by reference from
the Company's Annual Report on Form 10-K have been audited by Deloitte & Touche
LLP, independent auditors, as stated in their reports incorporated by reference
herein (which report with respect to the Form 10-K for the year ended December
31, 1995 expresses an unqualified opinion and includes an explanatory paragraph
relating to changes adopted in accounting for income taxes and other
postretirement benefits), and have been so incorporated in reliance upon the
report of such firm given upon its authority as experts in accounting and
auditing.
With respect to any unaudited interim financial information which is
incorporated herein by reference, Deloitte & Touche LLP have applied limited
procedures in accordance with professional standards for a review of such
information. However, as stated in their reports included in the Company's
Quarterly Reports on Form 10-Q incorporated by reference herein, they did not
audit and they do not express an opinion on that interim financial information.
Accordingly, the degree of reliance on their reports on such information should
be restricted in light of the limited nature of the review procedures applied.
Deloitte & Touche LLP are not subject to the liability provisions of Section 11
of the Securities Act for their reports on the unaudited interim financial
information because those reports are not "reports" or a "part" of the
Registration Statement of which this Prospectus is a part prepared or certified
by an accountant within the meaning of Sections 7 and 11 of the Securities Act.
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NO DEALER, SALESPERSON OR OTHER PERSON IS AUTHORIZED TO GIVE ANY INFORMATION
OR TO REPRESENT ANYTHING NOT CONTAINED IN THIS PROSPECTUS. YOU MUST NOT RELY ON
ANY UNAUTHORIZED INFORMATION OR REPRESENTATIONS. THIS PROSPECTUS IS AN OFFER TO
SELL ONLY THE BONDS OFFERED HEREBY, BUT ONLY UNDER CIRCUMSTANCES AND IN
JURISDICTIONS WHERE IT IS LAWFUL TO DO SO. THE INFORMATION CONTAINED IN THIS
PROSPECTUS IS CURRENT ONLY AS OF ITS DATE.
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TABLE OF CONTENTS
PROSPECTUS SUPPLEMENT
<TABLE>
<CAPTION>
PAGE
-----
<S> <C>
About this Prospectus Supplement............... S-2
Description of the Bonds....................... S-2
Underwriting................................... S-4
</TABLE>
PROSPECTUS
<TABLE>
<S> <C>
Available Information................ 2
Incorporation of Certain Documents by
Reference........................... 2
The Company.......................... 4
Use of Proceeds...................... 4
Description of Capital Stock......... 4
Description of Additional Bonds...... 6
Description of Unsecured Debt
Securities.......................... 10
Consolidated Ratios of Earnings to
Fixed Charges....................... 16
Consolidated Ratios of Earnings to
Combined Fixed Charges and Preferred
Stock Dividends..................... 16
Plan of Distribution................. 16
Legal Opinions....................... 18
Experts.............................. 18
</TABLE>
$200,000,000
[LOGO]
FIRST MORTGAGE BONDS
5.65% SERIES
DUE NOVEMBER 1, 2006
-----------
PROSPECTUS SUPPLEMENT
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GOLDMAN, SACHS & CO.
J.P. MORGAN & CO.
MORGAN STANLEY DEAN WITTER
PAINEWEBBER INCORPORATED
SALOMON SMITH BARNEY
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