<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington D.C. 20549
FORM 8-K
CURRENT REPORT PURSUANT TO SECTION 13 OR 15 (d) OF
THE SECURITIES EXCHANGE ACT OF 1934
Date of report (date of earliest event reported):
October 23, 1998
PACIFICORP
(Exact name of registrant as specified in its charter)
State of Oregon 1-5152 93-0246090
(State of Incorporation) (Commission (I.R.S. Employer
File No.) Identification No.)
700 N.E. Multnomah, Suite 1600, Portland, Oregon 97232-4116
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code:
(503) 813-7200
No Change
(Former Name or Former Address, if changed since last report)
<PAGE>2
Item 5. OTHER EVENTS
Information contained in the news releases of PacifiCorp issued on
October 23, 1998 concerning the Company's third quarter earnings and the
Company's strategic plan is incorporated herein by reference.
Item 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS
(c) Exhibits.
99a. PacifiCorp news release issued October 23, 1998.
99b. PacifiCorp news release issued October 23, 1998.
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
PACIFICORP
(Registrant)
By: ROBERT R. DALLEY
__________________________________
Robert R. Dalley
Controller
(Chief Accounting Officer)
Date: October 23, 1998
<PAGE>
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
EXHIBIT DESCRIPTION PAGE
_______ ___________ ____
<S> <C> <C>
99a PacifiCorp news release issued October 23, 1998.
99b PacifiCorp news release issued October 23, 1998.
</TABLE>
<PAGE>1
EXHIBIT 99a
_____________________________________________________________________________
PACIFICORP NEWS RELEASE
_____________________________________________________________________________
FOR FURTHER INFORMATION CONTACT:
Scott Hibbs: (503) 813-7222
October 23, 1998
PACIFICORP REPORTS THIRD QUARTER 1998 FINANCIAL
RESULTS
PORTLAND, Oregon - PacifiCorp (NYSE: PPW) today reported third quarter
1998 losses on common stock of $92 million, or $0.31 per share. These losses
include $151 million, or $0.51 per share, relating to unregulated energy
businesses that the Company has decided to exit.
Excluding losses relating to unregulated energy businesses, third
quarter 1998 earnings on common stock were $59 million, or $0.20 per share,
compared to $68 million, or $0.23 per share, reported in 1997. Third quarter
1997 results included a loss of $65 million, or $0.22 per share, associated
with closing foreign exchange positions relating to the Company's offer for
The Energy Group.
The earnings contribution from the Company's Domestic Electric
Operations totaled $50 million in the third quarter of 1998, compared to
$88 million in 1997. Operating income declined in the quarter primarily due
to lower wholesale margins in the West and less favorable hydroelectric
conditions.
Earnings from the Company's Australian Electric Operations were
$7 million in the third quarter of 1998, compared to $16 million in the same
quarter last year. Earnings declined primarily as a result of lower sales
margins and increased administrative and general expenses. In addition
earnings were reduced by $2 million as the result of unfavorable fluctuations
in the currency exchange rate.
PacifiCorp expects that its fourth quarter 1998 earnings will be
approximately $0.20 per share and that its full year 1999 earnings will be
approximately $1.20 per share. The Company's estimate of its fourth quarter
earnings includes increased accrual levels primarily for system and plant
maintenance and customer service costs.
The Company's estimates do not include the impact of charges expected in
the fourth quarter of 1998 associated with cost reduction efforts or the
impact of share repurchase activity under programs announced today by the
company. The earnings estimates also do not include the financial impact of a
general rate case in Utah.
The Company has decided to exit the unregulated energy trading business
and dispose of TPC Corporation and the eastern U.S. electricity trading
business of PacifiCorp Power
<PAGE>2
Marketing. As a result the unregulated energy trading segment has been
reported as discontinued operations. Discontinued operations reported losses
of $122 million in the quarter as compared to income of $28 million in the
third quarter of 1997. Third quarter 1998 results include $119 million, or
$0.40 per share, related to the loss anticipated to exit the unregulated
energy trading business and $3 million, or $0.01 per share, related to normal
operations. Third quarter 1997 results also included income of $27 million,
or $0.09 per share, from the Company's telecommunications operations that were
sold in December of 1997.
The Company has decided to dispose of the majority of its other
unregulated energy development businesses and its 19.9% investment in the
Hazelwood Power Station. The Company has evaluated the unregulated energy
development businesses and recorded an impairment of $32 million.
The Utah Division of Public Utilities (DPU) has filed testimony
proposing adjustments as part of the Company's general rate case that, if
ultimately accepted by the Utah Public Service Commission (PSC), could result
in a $57.5 million annual reduction in customer prices. Other intervening
parties have proposed similar types of adjustments that could result in an
even larger reduction of customer prices. Hearings for the case are currently
in process and a final order is expected from the PSC by the end of the year.
Any required adjustments to customer prices would most likely be
retroactive to February 1997, which is the date that the DPU and the Committee
of Consumer Services in Utah filed a joint petition with the PSC requesting a
general rate case.
<PAGE>3
THIRD QUARTER 1998 EARNINGS ANALYSIS
DOMESTIC ELECTRIC OPERATIONS
EARNINGS CONTRIBUTION
Domestic Electric Operations earnings contribution was $50 million, or $0.17
per share, as compared to $88 million, or $0.30 per share, in the third
quarter of 1997. Income from operations declined $57 million, or 25 percent,
to $172 million. Lower wholesale margins in the West and less favorable
hydroelectric conditions contributed to the decrease in operating income.
REVENUES
Total Domestic Electric Operations revenues increased $766 million, or
77 percent, from the third quarter of 1997 to $1.76 billion. This increase
was primarily attributable to a $754 million increase in wholesale revenues.
Residential revenues were up $8 million to $192 million. Energy sales volumes
increased 3 percent. Growth in the average number of residential customers of
2 percent added $4 million to revenues. Warmer weather and other customer
usage changes added $3 million to residential revenues. Third quarter 1998
temperatures averaged 4 degrees warmer in July and 2 degrees warmer in
September.
Commercial revenues were up $5 million, or 3 percent, to $174 million. Energy
sales volumes increased 2 percent over the prior year. Growth in the average
number of customers of 2 percent added $5 million to revenues.
Industrial revenues increased $2 million, or 1 percent, to $204 million.
Warmer, drier weather resulted in increased irrigation, which added $3 million
to industrial revenues.
Wholesale volumes continued to expand with the active markets. The
$754 million increase in revenues was driven by total energy volumes that more
than doubled in 1998 to 34.2 million MWh. Higher short-term and spot market
wholesale energy volumes increased revenues by $639 million. Related energy
prices averaged $34 per MWh in the quarter, a 44 percent increase over the
prior year. The higher prices for these sales added $120 million to revenues
in the quarter.
OPERATING EXPENSES
Total operating expenses increased $823 million, or 108 percent, to
$1.59 billion in the quarter. This increase was primarily attributable to
increased purchased power expense to serve the expanding wholesale market.
Purchased power expense increased $809 million, to $1.18 billion. The higher
expense was primarily due to a 19.6 million MWh increase in short-term firm
and spot market energy purchases, more than double the amount of purchases in
the same period of 1997, which increased purchased power expense $665 million.
Short-term firm and spot market purchase prices averaged $34 per MWh in the
quarter versus $22 per MWh in 1997, a 56 percent increase. The increase in
purchase prices added $145 million to costs. Lower volumes partially offset
by
<PAGE>4
higher prices relating to long-term firm purchased power contracts resulted in
a $3 million decrease in purchased power costs.
<TABLE>
SHORT-TERM AND SPOT MARKET SALES AND PURCHASES
______________________________________________
<CAPTION>
1998 1997
________ ________
<S> <C> <C>
Total sales volume (thousands of MWh) 30,512 11,485
Average sales price ($/MWh) $ 33.71 $ 23.46
________ ________
Revenues ($, millions) $ 1,029 $ 269
Total purchase volume (thousands of MWh) 31,410 11,830
Average purchase price ($/MWh) $ 33.99 $ 21.77
________ ________
Expenses ($,millions) $ 1,068 $ 258
________ ________
Net ($, millions) $ (39) $ 11
======== ========
</TABLE>
Fuel expense was up $9 million, or 7 percent, to $135 million. Thermal
generation increased 4 percent to 13.6 million MWh. The average cost per MWh
increased to $9.93 from $9.58 due to increased generation at plants with
higher fuel costs. This shift in generation resulted from unscheduled plant
outages and higher market prices for generation. Hydroelectric generation
decreased 3 percent compared to the third quarter of last year due to lower
stream flows.
Depreciation and amortization expense increased $3 million, or 3 percent, to
$95 million. Increased plant in service added $2 million.
In July of 1998, the Company withdrew its filings with regulatory bodies of a
depreciation study filed in 1997 because in its view regulatory approvals to
increase depreciation rates were unlikely. As a result of the decision to
withdraw the filing, the Company has ceased recording the increased
depreciation expense in the third quarter. During the first six months of
1998, the Company had recorded $8 million in additional depreciation as a
result of the study.
Administrative and general expenses increased $2 million, or 2 percent, to
$78 million. This increase includes $1 million of expenses relating to Year
2000 issues and $1 million relating to the ongoing implementation of the
Company's new SAP software operating environment.
OTHER INCOME/EXPENSE
Income tax expense decreased $20 million, to $34 million, due to the decline
in pretax income.
<PAGE>5
AUSTRALIAN ELECTRIC OPERATIONS
<TABLE>
AUSTRALIAN ELECTRIC OPERATIONS THIRD QUARTER RESULTS (In millions):
____________________________________________________
<CAPTION>
Change Change
Due to Due to
1998 1997 Currency Operations
____ ____ _______ __________
<S> <C> <C> <C> <C>
Australian Electric Operations:
______________________________
Revenues $149 $185 $(34) $(2)
Purchased power (63) (82) 14 5
Depreciation and amortization (14) (17) 3 -
Other operating expenses (49) (48) 11 (12)
___ ___ __ ___
Income from operations 23 38 (6) (9)
Equity in income (losses) of
Hazelwood 1 1 - -
Interest expense (14) (16) 3 (1)
Other income/(expense) - 1 - (1)
___ ___ __ ___
Income before income taxes 10 24 (3) (11)
Income taxes (3) (8) (1) 4
__ __ __ _
Earnings contribution $7 $16 $(2) $(7)
== === === ===
</TABLE>
EARNINGS CONTRIBUTION
The Company's Australian Electric Operations contributed earnings of
$7 million, or $0.02 per share, in the third quarter of 1998, compared to
$16 million, or $0.05 per share in 1997.
Excluding the impact of currency exchange rate fluctuations, the Company's
Australian Electric Operations earnings declined $7 million when compared to
1997.
The currency exchange rate for converting Australian dollars to U. S. dollars
was 0.60 in the third quarter of 1998 as compared to 0.74 in 1997, a 19
percent decrease. The effect of this change in exchange rates lowered
revenues by $34 million and costs by $32 million in the third quarter of 1998.
The following discussion excludes the effects of the lower currency exchange
rate in 1998.
<PAGE>6
REVENUE
Australia's revenues decreased $2 million, or 1 percent.
The decrease was primarily attributable to declining prices that reduced
revenues by $10 million, partially offset by increased energy sales volumes of
100 million kWh, or 3 percent, which added $6 million to revenues and a sales
tax reimbursement contract that added $2 million.
Energy volumes sold to contestable customers outside Powercor's franchise area
were up 121 million kWh and added $6 million to revenues due to customer gains
in New South Wales and $1 million due to customer gains in Victoria. Lower
prices for contestable sales reduced revenues by $4 million in 1998. Inside
Powercor's franchise area, revenues declined $5 million primarily due to price
decreases for contestable customers and $1 million due to decreased volumes of
21 million kWh.
Other revenues increased $2 million, largely due to a sales tax contract
reimbursement from the Australian government.
OPERATING EXPENSES
Purchased power expense decreased $5 million, or 6 percent. Lower average
prices reduced power costs by $8 million. Prices for purchased power averaged
$23 per MWh in the third quarter of 1998 compared to $25 per MWh in the third
quarter of 1997. The reduction resulted from competition. The decrease was
offset in part by a 4 percent increase in purchased power volumes that added
$3 million to costs.
Other operating expenses increased $12 million, or 25 percent. Increased
sales to contestable customers outside the Powercor service area resulted in
higher network fees of $9 million. This increase was offset in part by higher
network revenues of $3 million from customers inside Powercor's franchise area
serviced by other energy suppliers. Maintenance decreased $2 million due to
the outsourcing of various functions. Administrative and general expenses
increased $8 million primarily due to a $4 million adjustment to capitalize
new customer connection costs and $2 million of costs capitalized for SAP
system development in the third quarter of 1997.
INCOME TAX
Income tax expense decreased due to a reduction in taxable income.
<PAGE>7
OTHER BUSINESSES
EARNINGS CONTRIBUTION
Other operations reported losses of $27 million in the quarter compared to a
loss of $63 million in the same period a year ago. Losses relating to the
decision to exit the unregulated energy development businesses totaled
$32 million, or $0.11 per share. Third quarter 1997 included a loss of
$65 million, or $0.22 per share, associated with closing foreign currency
options and initial option premium costs relating to the Company's offer for
TEG.
Results from other operations were benefited by a $14 million after tax
increase in interest income and reduced interest expense as the result of cash
received from asset sales in 1997.
Earnings form PacifiCorp Financial Services were down $6 million primarily due
to the sale of affordable housing properties.
In addition, the other unregulated energy development businesses incurred
$7 million of after tax losses, or $0.02 per share, compared to a loss of
$2 million, or $0.01 per share, in the third quarter of 1997.
The information included in this press release includes certain
forward-looking statements that involve a number of risks and uncertainties
that may influence the financial performance and earnings of the Company.
There can be no assurance the results predicted will be realized.
The following factors are among those that could cause actual results to
differ materially from the forward-looking statements: utility commission
practices; economic conditions; weather variations affecting customer usage;
energy market competition; environmental, regulatory and tax legislation,
including industry restructure and deregulation initiatives; technological
developments in the electricity industry; and cost of debt and equity capital.
Any forward-looking statements issued by the Company should be considered in
light of these factors.
<PAGE>
<TABLE>
PacifiCorp
and its Consolidated Subsidiaries
Summary Financial Information
(In Thousands, Except Per Share Amounts)
(Unaudited)
<CAPTION>
3 Months Ended September 30 $ %
1998 1997 Change Change
- ------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
REVENUES
Domestic Electric Operations
(See next page) $ 1,758,900 $ 992,900 $ 766,000 77
Australian Electric Operations
(See next page) 149,500 185,400 (35,900) (19)
Other Operations (1) 9,800 29,400 (19,600) (67)
-----------------------------------------------------
TOTAL 1,918,200 1,207,700 710,500 59
-----------------------------------------------------
EXPENSES
Domestic Electric Operations
(See next page) 1,587,400 764,900 822,500 108
Australian Electric Operations 126,000 147,300 (21,300) (14)
Other Operations (1) 14,400 16,400 (2,000) (12)
-----------------------------------------------------
TOTAL 1,727,800 928,600 799,200 86
-----------------------------------------------------
INCOME FROM OPERATIONS
Domestic Electric Operations 171,500 228,000 (56,500) (25)
Australian Electric Operations 23,500 38,100 (14,600) (38)
Other Operations (1) (4,600) 13,000 (17,600) (135)
-----------------------------------------------------
TOTAL 190,400 279,100 (88,700) (32)
Interest expense 92,500 112,900 (20,400) (18)
Other (income) expense 43,800 105,400 (61,600) (58)
-----------------------------------------------------
Income from continuing operations
before income taxes 54,100 60,800 (6,700) (11)
Income taxes 19,500 14,500 5,000 34
-----------------------------------------------------
Income from continuing operations 34,600 46,300 (11,700) (25)
Discontinued operations (2) (122,200) 27,700 (149,900) *
-----------------------------------------------------
NET INCOME (87,600) 74,000 (161,600) *
Preferred dividend requirement 4,800 5,800 (1,000) (17)
-----------------------------------------------------
EARNINGS CONTRIBUTION (LOSS) ON COMMON STOCK (3)
Domestic Electric Operations 49,900 87,500 (37,600) (43)
Australian Electric Operations 6,500 15,800 (9,300) (59)
Other Operations (1) (26,600) (62,800) 36,200 58
-----------------------------------------------------
Continuing operations 29,800 40,500 (10,700) (26)
Discontinued operations (2) (122,200) 27,700 (149,900) *
-----------------------------------------------------
TOTAL $ (92,400) $ 68,200 $ (160,600) *
=====================================================
Average common shares outstanding 297,272 296,347 925 -
EARNINGS (LOSS) PER COMMON SHARE -
BASIC AND DILUTIVE
Domestic Electric Operations $ 0.17 $ 0.30 $ (0.13) (43)
Australian Electric Operations 0.02 0.05 (0.03) (60)
Other Operations (1) (0.09) (0.21) 0.12 57
-----------------------------------------------------
Continuing operations 0.10 0.14 (0.04) (29)
Discontinued operations (2) (0.41) 0.09 (0.50) *
-----------------------------------------------------
TOTAL $ (0.31) $ 0.23 $ (0.54) *
=====================================================
Dividends paid per common share $ 0.27 $ 0.27 $ - -
=====================================================
<FN>
* Not a meaningful number.
(See accompanying notes)
</FN>
</TABLE>
<PAGE>
<TABLE>
PacifiCorp
and its Consolidated Subsidiaries
Summary Financial Information
(In Thousands, Except Per Share Amounts)
(Unaudited)
<CAPTION>
3 Months Ended September 30 $ %
1998 1997 Change Change
- ------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
DOMESTIC ELECTRIC REVENUES (In thousands)
Residential $ 191,800 $ 184,100 $ 7,700 4
Commercial 173,600 168,700 4,900 3
Industrial 203,500 201,600 1,900 1
Other 8,400 8,100 300 4
-----------------------------------------------------
Retail sales 577,300 562,500 14,800 3
Wholesale sales and market trading 1,164,000 409,700 754,300 *
Other 17,600 20,700 (3,100) (15)
-----------------------------------------------------
TOTAL $ 1,758,900 $ 992,900 $ 766,000 77
=====================================================
DOMESTIC ELECTRIC ENERGY SALES (Millions of kWh)
Residential 2,929 2,832 97 3
Commercial 3,250 3,189 61 2
Industrial 5,831 5,572 259 5
Other 181 184 (3) (2)
-----------------------------------------------------
Retail sales 12,191 11,777 414 4
Wholesale sales and market trading 34,227 15,354 18,873 123
-----------------------------------------------------
TOTAL 46,418 27,131 19,287 71
=====================================================
DOMESTIC ELECTRIC EXPENSES (In thousands)
Fuel $ 134,800 $ 125,400 $ 9,400 7
Purchased power 1,174,800 365,900 808,900 *
Other operations and maintenance 104,500 105,000 (500) -
Depreciation and amortization 94,900 91,800 3,100 3
Administrative and general 78,400 76,800 1,600 2
-----------------------------------------------------
TOTAL $ 1,587,400 $ 764,900 $ 822,500 108
=====================================================
AUSTRALIAN ELECTRIC REVENUES (In thousands)
Residential $ 54,700 $ 66,400 $ (11,700) (18)
Commercial 46,600 50,600 (4,000) (8)
Industrial 42,400 62,800 (20,400) (32)
-----------------------------------------------------
Retail sales 143,700 179,800 (36,100) (20)
Other 5,800 5,600 200 4
-----------------------------------------------------
TOTAL $ 149,500 $ 185,400 $ (35,900) (19)
=====================================================
AUSTRALIAN ELECTRIC ENERGY SALES (Millions of kWh)
Residential 798 777 21 3
Commercial 962 724 238 33
Industrial 1,287 1,445 (158) (11)
-----------------------------------------------------
TOTAL 3,047 2,946 101 3
=====================================================
<FN>
* Not a meaningful number.
(See accompanying notes)
</FN>
</TABLE>
<PAGE>
<TABLE>
PacifiCorp
and its Consolidated Subsidiaries
Summary Financial Information
(In Thousands, Except Per Share Amounts)
(Unaudited)
<CAPTION>
9 Months Ended September 30 $ %
1998 1997 Change Change
- ------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
REVENUES
Domestic Electric Operations
(See next page) $ 3,867,500 $ 2,577,500 $ 1,290,000 50
Australian Electric Operations
(See next page) 469,100 546,900 (77,800) (14)
Other Operations (1) 44,000 84,200 (40,200) (48)
-----------------------------------------------------
TOTAL 4,380,600 3,208,600 1,172,000 37
-----------------------------------------------------
EXPENSES
Domestic Electric Operations
(See next page) 3,432,200 1,968,900 1,463,300 74
Australian Electric Operations 375,300 426,600 (51,300) (12)
Other Operations (1) 48,200 48,000 200 -
-----------------------------------------------------
TOTAL 3,855,700 2,443,500 1,412,200 58
-----------------------------------------------------
INCOME (LOSS) FROM OPERATIONS
Domestic Electric Operations 435,300 608,600 (173,300) (28)
Australian Electric Operations 93,800 120,300 (26,500) (22)
Other Operations (1) (4,200) 36,200 (40,400) (112)
-----------------------------------------------------
TOTAL 524,900 765,100 (240,200) (31)
Interest expense 280,800 330,000 (49,200) (15)
Other (income) expense 102,900 94,900 8,000 8
-----------------------------------------------------
Income from continuing operations
before income taxes 141,200 340,200 (199,000) (58)
Income taxes 42,300 112,600 (70,300) (62)
-----------------------------------------------------
Income from continuing operations 98,900 227,600 (128,700) (57)
Discontinued operations (2) (160,800) 62,200 (223,000) *
-----------------------------------------------------
NET INCOME (61,900) 289,800 (351,700) (121)
Preferred dividend requirement 14,400 18,000 (3,600) (20)
-----------------------------------------------------
EARNINGS CONTRIBUTION (LOSS) ON COMMON STOCK (3)
Domestic Electric Operations 108,400 224,300 (115,900) (52)
Australian Electric Operations 27,200 44,900 (17,700) (39)
Other Operations (1) (51,100) (59,600) 8,500 14
-----------------------------------------------------
Continuing operations 84,500 209,600 (125,100) (60)
Discontinued operations (2) (160,800) 62,200 (223,000) *
-----------------------------------------------------
TOTAL $ (76,300) $ 271,800 $ (348,100) (128)
=====================================================
Average common shares outstanding 297,197 295,884 1,313 -
EARNINGS (LOSS) PER COMMON SHARE - BASIC AND DILUTIVE
Domestic Electric Operations $ 0.37 $ 0.76 $ (0.39) (51)
Australian Electric Operations 0.09 0.15 (0.06) (40)
Other Operations (1) (0.18) (0.20) 0.02 10
-----------------------------------------------------
Continuing operations 0.28 0.71 (0.43) (61)
Discontinued operations (2) (0.54) 0.21 (0.75) *
-----------------------------------------------------
TOTAL $ (0.26) $ 0.92 $ (1.18) (128)
=====================================================
Dividends paid per common share $ 0.81 $ 0.81 $ - -
=====================================================
<FN>
* Not a meaningful number.
(See accompanying notes)
</FN>
</TABLE>
<PAGE>
<TABLE>
PacifiCorp
and its Consolidated Subsidiaries
Summary Financial Information
(In Thousands, Except Per Share Amounts)
(Unaudited)
<CAPTION>
9 Months Ended September 30 $ %
1998 1997 Change Change
- ------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
DOMESTIC ELECTRIC REVENUES (In thousands)
Residential $ 598,300 $ 588,600 $ 9,700 2
Commercial 495,400 474,900 20,500 4
Industrial 542,200 537,500 4,700 1
Other 23,700 24,100 (400) (2)
-----------------------------------------------------
Retail sales 1,659,600 1,625,100 34,500 2
Wholesale sales and market trading 2,158,800 893,800 1,265,000 142
Other 49,100 58,600 (9,500) (16)
-----------------------------------------------------
TOTAL $ 3,867,500 $ 2,577,500 $ 1,290,000 50
=====================================================
DOMESTIC ELECTRIC ENERGY SALES (Millions of kWh)
Residential 9,385 9,294 91 1
Commercial 9,166 8,811 355 4
Industrial 15,808 15,472 336 2
Other 500 546 (46) (8)
-----------------------------------------------------
Retail sales 34,859 34,123 736 2
Wholesale sales and market trading 79,019 37,456 41,563 111
-----------------------------------------------------
TOTAL 113,878 71,579 42,299 59
=====================================================
DOMESTIC ELECTRIC EXPENSES (In thousands)
Fuel $ 356,100 $ 339,300 $ 16,800 5
Purchased power 2,100,700 786,500 1,314,200 *
Other operations and maintenance 329,700 345,200 (15,500) (4)
Depreciation and amortization 291,700 272,100 19,600 7
Administrative and general 240,900 225,800 15,100 7
Special charges 113,100 - 113,100 -
-----------------------------------------------------
TOTAL $ 3,432,200 $ 1,968,900 $ 1,463,300 74
=====================================================
AUSTRALIAN ELECTRIC REVENUES (In thousands)
Residential $ 156,200 $ 186,300 $ (30,100) (16)
Commercial 148,200 149,800 (1,600) (1)
Industrial 146,100 181,400 (35,300) (19)
-----------------------------------------------------
Energy sales 450,500 517,500 (67,000) (13)
Other 18,600 29,400 (10,800) (37)
-----------------------------------------------------
TOTAL $ 469,100 $ 546,900 $ (77,800) (14)
=====================================================
AUSTRALIAN ELECTRIC ENERGY SALES (Millions of kWh)
Residential 2,086 2,060 26 1
Commercial 2,926 2,014 912 45
Industrial 3,972 3,899 73 2
-----------------------------------------------------
TOTAL 8,984 7,973 1,011 13
=====================================================
September December $ %
1998 1997 Change Change
- ------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
CONSOLIDATED CAPITALIZATION (In thousands)
Common equity $ 4,004,000 $ 4,321,000 $ (317,000) (7)
Preferred stock 241,000 241,000 - -
Preferred securities of trusts
holding solely PacifiCorp debentures 340,000 340,000 - -
Long-term debt 4,381,000 4,414,000 (33,000) (1)
Short-term debt 606,000 555,000 51,000 9
-----------------------------------------------------
TOTAL $ 9,572,000 $ 9,871,000 $ (299,000) (3)
=====================================================
<FN>
* Not a meaningful number.
</FN>
</TABLE>
(1) Other Operations includes the operations of PacifiCorp Financial
Services, Inc., Pacific Generation Company (sold Nov. 1997), and several
start-up phase ventures, as well as activities of PacifiCorp Group
Holdings Company.
(2) Represents the discontinued operations of Pacific Telecom, Inc., a
telecommunications subsidiary sold on December 1, 1997, and the natural
gas and wholesale electricity trading activities of TPC Corporation and
PacifiCorp Power Marketing, respectively.
(3) Earnings contribution on common stock by segment: (a) Does not reflect
elimination for interest on intercompany borrowing arrangements, (b)
Includes income taxes on a separate company basis, with any benefit or
detriment of consolidation reflected in Other Operations, (c) Amounts
are net of preferred dividend requirements and minority interest.
<PAGE>
EXHIBIT 99b
______________________________________________________________________________
PACIFICORP NEWS RELEASE
______________________________________________________________________________
FOR FURTHER INFORMATION CONTACT:
Scott Hibbs, for investors, (503) 813-7222
Angela Hult, for investors, (503) 813-7234
Leslie Carlson, for media, (503) 813-7282
Dave Kvamme, for media, (503) 813-7279
October 23, 1998
PACIFICORP ANNOUNCES REFOCUS ON ELECTRICITY
BUSINESS IN THE WEST; $750 MILLION SHARE REPURCHASE
PLAN; SALE OF OTHER BUSINESSES
PORTLAND, Oregon - PacifiCorp (NYSE: PPW) today announced it will focus
on its electricity business in the western United States and sell its other
U.S. businesses.
PacifiCorp also announced a $750 million program to repurchase
approximately 13 percent of its shares over the next 12 months. In addition to
the share repurchase program, PacifiCorp Group Holdings, the company's
unregulated holding company, will make a capital contribution of $500 million
to PacifiCorp, the regulated parent company, to repay debt.
The company will also undertake a cost reduction program aimed at
achieving annual pre-tax savings of $30 million from its continuing business.
"PacifiCorp is returning to its roots," said Keith McKennon,
PacifiCorp's Chairman and Chief Executive Officer. "We've spent a lot of time
and money trying to 'transform' ourselves into a global energy company without
success. I don't think we need to be transformed."
"We are in a fast growing part of the U.S. with low-cost generation, an
extensive transmission grid and a proud history of commitment and service to
our customers and communities. We have the opportunity to grow both regulated
and unregulated energy businesses in the West. Success in the West will be
the platform for building shareholder value," he said.
"By refocusing on the business we know best, I believe we can achieve
our five year target of five percent average annual growth in earnings per
share, starting in the year 2000," McKennon said.
As part of its strategic redirection, PacifiCorp will also terminate all
of its business development activities outside the United States and
Australia.
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In Australia, the company will retain its electricity distribution
business, Powercor, and will seek to sell its 19.9 percent equity interest in
the Hazelwood power station.
McKennon said cost reduction is essential. "The company is embarking on
an aggressive program to cut overhead costs, with the realization that
PacifiCorp must have a smaller management and overhead base."
These cuts will be in addition to a previous early retirement program,
which resulted in a net reduction of about 700 jobs earlier this year.
Several officers also will be leaving the company and will not be replaced.
"We expect additional reductions to come from our staff and support
workforce," McKennon said. "We will do that while improving customer service
and maintaining reliable electric operations."
The company will record charges in the fourth quarter associated with
its cost reduction efforts.
In 1999, the company estimates earnings per share will be approximately
$1.20, before consideration of any share repurchases. The company's estimate
of 1999 earnings per share also does not include the financial impact of the
outcome of its general rate case in Utah. Hearings for the rate case are
currently in process and a final order is expected from the Utah Public
Service Commission by the end of 1998.
The shortfall in anticipated earnings level for 1999 relative to past
performance and market expectations is primarily attributable to higher cost
of operations, increased depreciation of capital expenditures and anticipated
lower margins on wholesale energy contracts.
"We are not pleased with this projected 1999 performance," McKennon
said. "But we have disappointed investors in the past, and I believe in
promising less and delivering more. We intend to deliver."
The company also announced that its Board of Directors has decided to
continue the quarterly dividend on common stock at its current level of $0.27
per share.
In commenting on the decision to continue the dividend at its current
level, McKennon said, "We believe the dividend payout ratio to earnings should
be in the 70 percent to 80 percent range, but recognize that it will be higher
than that for 1999. We intend to achieve the high end of our dividend payout
ratio goal in the year 2000 through improved earnings performance. We have
concluded to continue to return shareholder value through the dividend and
intend to achieve our payout ratio goal with improved earnings performance."
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ASSET SALES
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PacifiCorp expects, over the next 12 months, to divest all of its
businesses other than its western U.S. electric business and Powercor, its
Australian electricity distribution business, assuming reasonable values can
be achieved. The most significant of these businesses include:
. TPC Corporation, the company's U.S. natural gas storage and
marketing business;
. The eastern U.S. electricity trading business of PacifiCorp Power
Marketing;
. EnergyWorks, the company's joint venture with Bechtel Enterprises;
. The company's energy development activities in Turkey and the
Philippines; and
. The company's investment in the Hazelwood power station in
Australia.
The company has recorded charges totaling $230 million pre-tax in its
third quarter financial results for expected losses associated with its
planned business divestitures.
SHARE REPURCHASE PROGRAM
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The repurchase of up to $750 million of outstanding shares of common
stock, authorized today by the Board of Directors, represents approximately 13
percent of outstanding shares at today's market price. PacifiCorp currently
has 297 million shares outstanding.
The company expects to repurchase the shares over the next 12 months in
open market, privately negotiated, and/or other types of transactions in
conformity with the rules of the Securities and Exchange Commission and the
New York Stock Exchange.
"We are committed to improving the performance of our shareholders'
investment and this share repurchase program will be an important step toward
that goal," said McKennon. "We view PacifiCorp stock as a good investment and
a wise use of part of the cash we have raised through non-core asset sales
over the last year."
The company's decision on the size of its share repurchase program and
the $500 million capital contribution from PacifiCorp Group Holdings to
PacifiCorp also reflects its continued commitment to the financial strength
and credit quality of the consolidated company and its U.S. electric utility.
It is the company's goal to maintain its "A" credit ratings.
PacifiCorp is one of the lowest-cost electricity producers in the United
States, with more than 10,000 megawatts of generation capacity. The company
has 1.4 million electric customers in the western United States and 550,000
customers in the Australian states of Victoria and New South Wales.
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The information included in this press release includes certain
forward-looking statements that involve a number of risks and uncertainties
that may influence the financial performance and earnings of the company.
There can be no assurance the results predicted will be realized.
The following factors are among those that could cause actual results to
differ materially from the forward-looking statements: utility commission
practices; economic conditions; weather variations affecting customer usage;
energy market competition; environmental, regulatory and tax legislation,
including industry restructure and deregulation initiatives; technological
developments in the electricity industry; and cost of debt and equity capital.
Any forward-looking statements issued by the company should be considered in
light of these factors.
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