<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):
May 9, 1999
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.)
825 N.E. Multnomah, Suite 2000, Portland, Oregon 97232-4116
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code:
(503) 813-5000
No Change
(Former Name or Former Address, if changed since last report)
<PAGE>2
Item 5. OTHER EVENTS
Information contained in the news release of PacifiCorp issued on
May 9, 1999 is incorporated herein by reference.
Item 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS
(c) Exhibit.
99. PacifiCorp news release issued May 9, 1999.
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: May 10, 1999
<PAGE>
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
EXHIBIT DESCRIPTION PAGE
_______ ___________ ____
<S> <C> <C>
99 PacifiCorp news release issued May 9, 1999.
</TABLE>
<PAGE>1
EXHIBIT 99
_____________________________________________________________________________
PACIFICORP NEWS RELEASE
_____________________________________________________________________________
Scott Hibbs: (503) 813-7222
May 9, 1999
PACIFICORP REPORTS FIRST QUARTER 1999 FINANCIAL RESULTS
PORTLAND, Ore. - PacifiCorp (NYSE: PPW) today reported first quarter
1999 earnings on common stock of $87 million, or $0.29 per share.
That compared to a first quarter 1998 loss on common stock of $20
million, or $0.07 per share. The first quarter 1998 loss included a charge of
$70 million, or $0.24 per share, associated with a work force reduction in the
company's domestic electric operations, and a charge of $54 million, or $0.18
per share, associated with the company's terminated bid for The Energy Group
PLC.
"Our first quarter financial results are in line with expectations and
we are off to a good start in 1999," said Keith McKennon, Chairman and Chief
Executive Officer of PacifiCorp. "We remain squarely focused on our twin
objectives of improving the performance of our core electric business and
obtaining the necessary approvals for our proposed merger with ScottishPower.
We are pleased with our progress to date on both accounts," McKennon said.
On May 6, 1999 the Securities and Exchange Commission cleared the proxy
solicitation materials for PacifiCorp's proposed merger with ScottishPower.
These documents have been mailed to PacifiCorp shareholders, who can vote by
mail or in person at a shareholder meeting to be held on June 17, 1999.
"We are happy to begin the process of seeking our shareholders' approval
for our merger with ScottishPower," McKennon said. "As part of ScottishPower,
we have an exciting future with the opportunity to pursue more effectively our
strategy of concentrating on our core electricity business and providing good
value for our shareholders."
DOMESTIC ELECTRIC OPERATIONS
The first quarter 1999 earnings contribution from the company's domestic
electric operations totaled $75 million, or $0.25 per share.
In the first quarter of 1998, the earnings contribution from domestic
electric operations was $76 million, or $0.26 per share, excluding the work
force reduction charge.
A recently ordered rated reduction in the state of Utah reduced domestic
electric operations earnings in the first quarter of 1999 by $6 million, or
$0.02 per share.
<PAGE>2
Non-fuel operations and maintenance and administrative and general costs
declined $3 million, or 2 percent, in the quarter, consistent with the
company's recent actions to reduce these costs.
AUSTRALIAN ELECTRIC OPERATIONS
The first quarter 1999 earnings contribution from the company's
Australian electric operations totaled $10 million, or $0.04 per share.
The first quarter 1998 earnings contribution from Australian electric
operations was $14 million, or $0.05 per share.
The decreased earnings contribution from Australian operations was
primarily attributable to increased purchased power costs.
SCOTTISHPOWER MERGER
In December 1998, PacifiCorp announced a proposed merger with
ScottishPower PLC, a leading United Kingdom multi-utility. Under the terms of
the agreement, each PacifiCorp share will be converted tax-free into a right
to receive 0.58 American Depositary Shares (each ADS represents four ordinary
shares) or 2.32 ordinary shares of ScottishPower.
The proposed merger is subject to approval by the shareholders of both
companies and federal and state regulators.
Both companies have already received clearance under the Hart-Scott-
Rodino Antitrust Improvements Act and from U.K. and Australian regulatory
authorities for the proposed merger. Proceedings are currently underway before
state regulators in PacifiCorp's western U.S. service territory. Both
companies expect completion of the regulatory approval process to occur later
this year.
DISCONTINUED OPERATIONS
In September 1998, the company decided to dispose of TPC Corporation and
exit the eastern U.S. electricity trading business of PacifiCorp Power
Marketing. As a result, the energy trading segment has been reported as
discontinued operations in 1998. The eastern electricity trading business was
shut down in the fourth quarter of 1998 and the company sold TPC to NIPSCO
Industries, Inc. in the first quarter of 1999 for $150 million.
UTAH RATE ORDER
On March 4, 1999, the Utah Public Service Commission ordered PacifiCorp
to reduce customer prices by 12 percent, or $85 million annually. The ordered
rate reduction is the culmination of a general rate case in Utah that began in
1997. The company has decided not to appeal the ordered rate reduction to the
Utah Supreme Court.
<PAGE>3
FIRST QUARTER 1999 EARNINGS ANALYSIS
DOMESTIC ELECTRIC OPERATIONS
EARNINGS CONTRIBUTION
Domestic electric operations earnings contribution was $75 million, or $0.25
per share, in the first quarter of 1999 compared to $6 million, or $0.02 per
share, in 1998. The first quarter of 1998 included a charge of $70 million,
or $0.24 per share, associated the work force reduction. Excluding this
charge, earnings contribution in 1998 would have been $76 million, or $0.26
per share.
The Utah Rate Order reduced 1999 earnings $6 million, or $0.02 per share.
This decrease was partially offset by lower interest expense and increased
interest income totaling $11 million, or $0.04 per share, due to funds
received by domestic electric operations as intercompany dividends from
PacifiCorp Group Holdings Company (Holdings) of $500 million and $660 million
in October 1998 and January 1999, respectively.
REVENUES
Total Domestic electric operations revenues decreased $270 million, or 25
percent, from the first quarter of 1998 to $807 million. This decrease was
primarily attributable to a $259 million decrease in wholesale revenues. The
sale of the company's Montana service area in November 1998 decreased revenues
$12 million while the Utah rate order reduced revenues by $10 million.
Residential revenues were down $1 million to $231 million. Excluding the
impact of the sale of Montana, residential revenues were up $5 million, energy
volumes were up 4 percent and customer growth was 2 percent. Growth in the
average number of residential customers added $5 million to revenues. Volume
increases added $3 million to revenues primarily due to colder weather. The
Utah rate order reduced residential revenues by $4 million.
Commercial revenues were down $2 million, or 1 percent, to $159 million.
Excluding the impact of the sale of Montana, commercial revenues were up $1
million. Increased commercial customers added $5 million to revenues. The
Utah rate order reduced commercial revenues by $4 million.
Industrial revenues decreased $11 million, or 7 percent, to $152 million.
Excluding the impact of the sale of Montana, industrial revenues were down $8
million, energy volumes were down 4 percent and average customers were down 4
percent. Decreased energy volumes due to the cyclical nature of industrial
customer usage drove a $6 million decrease in revenues. The company does not
expect this trend to be long-term. The Utah rate order reduced industrial
revenues by $2 million.
Wholesale sales decreased $259 million. The decrease in revenues was driven
by a 57 percent decline in energy volumes. Lower short-term and spot market
wholesale energy volumes decreased revenues by $264 million. Related energy
prices averaged $20 per mWh in the quarter, a 3 percent increase over the
prior year. The higher prices for these sales added $7
<PAGE>4
million to revenues in the quarter. This decline in energy volumes is
consistent with the company's decision to scale back short-term wholesale
sales.
OPERATING EXPENSES
Total operating expenses decreased $370 million, or 38 percent, to $612
million in the quarter. This decrease was primarily attributable to decreased
purchased power expense due to the decline in wholesale sales and the special
charge for the work force reduction that occurred in 1998.
Purchased power expense decreased $249 million, to $210 million. The lower
expense was primarily due to a 12.5 million mWh decrease in short-term firm
and spot market energy purchases which decreased purchased power expense $243
million. Short-term firm and spot market purchase prices averaged $19 per mWh
in the quarter versus $20 per mWh in 1998, a 5 percent decrease. The decrease
in purchase prices reduced costs $9 million.
<TABLE>
Short-Term and Spot Market Sales and Purchases
<CAPTION>
1999 1998
______ ______
<S> <C> <C>
Total sales volume (thousands of mWh) 5,719 18,900
Average sales price ($/mWh) $20.32 $19.77
______ ______
Revenues ($, millions) $ 116 $ 374
Total purchase volume (thousands of mWh) 5,111 17,635
Average purchase price ($/mWh) $18.61 $19.70
______ ______
Expenses ($,millions) $ 95 $ 347
______ ______
Net ($, millions) $ 21 $ 27
====== ======
</TABLE>
Fuel expense was down $3 million, or 3 percent, to $120 million in 1999.
Thermal generation was down 4 percent to 12.8 million mWh. The average cost
per mWh increased to $9.31 from $9.17 in the prior year due to increased
generation at plants with higher fuel costs. The shift in generation resulted
from unscheduled plant outages. Hydroelectric generation increased 13 percent
compared to the first quarter of 1998 due to favorable water conditions.
Other operations and maintenance expense increased $2 million, or 2 percent,
to $113 million. Increased tree trimming added $3 million to expenses, which
was partially offset by a reduction in labor costs of $1 million.
Administrative and general expenses decreased $5 million, or 7 percent, to $73
million primarily due to a reduction in labor and employee related costs of
$12 million. This decrease was partially offset by a $6 million increase in
costs relating to the ongoing implementation of the company's new SAP software
operating environment and increased outside services of $2 million.
OTHER INCOME/EXPENSE
<PAGE>5
Domestic electric operations interest expense was down $12 million to $68
million as a result of lower debt balances. The lower debt balances were due
to dividends received from Holdings in October and January that were used to
pay down intercompany debt owed to Holdings and some external debt. Interest
income increased $5 million as a result of the dividends received from
Holdings, some of which was invested in interest bearing accounts.
AUSTRALIAN ELECTRIC OPERATIONS
Australian Electric Operations First Quarter Results (In millions):
____________________________________________________
<TABLE>
<CAPTION>
Change Change
Due to Due to
1999 1998 Currency Operations
____ ____ ________ __________
<S> <C> <C> <C> <C>
Australian Electric Operations:
______________________________
Revenues $147 $163 $(8) $(8)
Purchased power 59 58 (3) 4
Depreciation and amortization 15 15 (1) 1
Other operating expenses 38 49 (2) (9)
___ ___ __ __
Income from operations 35 41 (2) (4)
Equity in losses of Hazelwood 4 3 - 1
Interest expense 14 16 (1) (1)
___ ___ __ __
Income before income taxes 17 22 (1) (4)
Income taxes 7 8 - 1
___ ___ __ __
Earnings contribution $ 10 $ 14 $(1) $(3)
=== === == ==
</TABLE>
EARNINGS CONTRIBUTION
The company's Australian electric operations contributed earnings of $10
million, or $0.04 per share, in the first quarter of 1999, compared to $14
million, or $0.05 per share in 1998.
The currency exchange rate for converting Australian dollars to U. S. dollars
was 0.63 in the first quarter of 1999 as compared to 0.67 in 1998, a 6 percent
decrease. The effect of this change in exchange rates lowered revenues by $8
million and costs by $7 million in the first quarter of 1999.
The following discussion excludes the effects of the lower currency exchange
rate in 1999.
REVENUE
Australia's revenues decreased $8 million, or 5 percent, to $147 million.
This decrease is attributable to a decline in energy volumes sold of 120
million kWh, or 4 percent.
Energy volumes sold to contestable customers outside Powercor's franchise area
were up 11 million kWh and added $1 million to revenues due to customer gains
in Queensland and Australian Capital Territory. Inside Powercor's franchise
area, revenues decreased $8 million due to a 131 million kWh decrease in
energy sold. Volumes are down due to the loss of a few large contestable
customers.
<PAGE>6
OPERATING EXPENSES
Purchased power expense increased $4 million, or 7 percent, to $59 million.
Higher average prices increased power costs by $6 million. Prices for
purchased power averaged $22 per mWh in the first quarter of 1999 compared to
$19 per mWh in the first quarter of 1998. This price increase was the result
of a contract dispute Powercor is having with a power supplier in Australia.
The power supplier did not deliver power to Powercor at the agreed upon rate
which forced Powercor to purchase power on the open market at a higher rate
than last year.
Other operating expenses decreased $9 million, or 18 percent, to $38 million.
Decreased network rates resulted in lower network fees of $2 million and an
increase in customers inside Powercor's franchise area serviced by other
energy suppliers resulted in higher network revenues of $6 million.
OTHER BUSINESSES
EARNINGS CONTRIBUTION
Other operations reported income of $1 million in the quarter compared to
losses of $39 million in the same period a year ago. The increase was
primarily due to an $86 million pretax ($54 million after-tax) charge in the
first quarter of 1998 for costs associated with the company's terminated bid
for TEG.
Results from other operations for the quarter were reduced by approximately
$11 million, or $0.04 per share, in decreased interest income as the result of
cash dividends of $500 million paid in November and $660 million paid in
January by Holdings to domestic electric operations. This cash had been
invested by Holdings in interest bearing accounts prior to the dividends.
<PAGE>
<TABLE>
PacifiCorp
and its Consolidated Subsidiaries
Summary Financial Information
(In Thousands, Except Per Share Amounts)
(Unaudited)
<CAPTION>
3 Months Ended March 31 $ %
1999 1998 Change Change
- -----------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
REVENUES
Domestic Electric Operations
(See next page) $ 807,200 $1,077,000 $(269,800) (25)
Australian Electric Operations
(See next page) 147,000 162,500 (15,500) (10)
Other Operations (1) 5,600 20,700 (15,100) (73)
- -----------------------------------------------------------------------------------
TOTAL 959,800 1,260,200 (300,400) (24)
- -----------------------------------------------------------------------------------
EXPENSES
Domestic Electric Operations
(See next page) 611,600 981,200 (369,600) (38)
Australian Electric Operations 112,200 121,700 (9,500) (8)
Other Operations (1) 8,500 17,100 (8,600) (50)
- -----------------------------------------------------------------------------------
TOTAL 732,300 1,120,000 (387,700) (35)
- -----------------------------------------------------------------------------------
INCOME (LOSS) FROM OPERATIONS
Domestic Electric Operations 195,600 95,800 99,800 104
Australian Electric Operations 34,800 40,800 (6,000) (15)
Other Operations (1) (2,900) 3,600 (6,500) *
- -----------------------------------------------------------------------------------
TOTAL 227,500 140,200 87,300 62
Interest expense 88,000 94,300 (6,300) (7)
Other (income) expense (9,700) 76,000 (85,700) (113)
- -----------------------------------------------------------------------------------
Income from continuing operations
before income taxes 149,200 (30,100) 179,300 *
Income taxes 57,900 (15,500) 73,400 *
- -----------------------------------------------------------------------------------
Income from continuing operations 91,300 (14,600) 105,900 *
Discontinued operations (2) - (500) 500 100
- -----------------------------------------------------------------------------------
NET INCOME 91,300 (15,100) 106,400 *
Preferred dividend requirement 4,800 4,800 - -
- -----------------------------------------------------------------------------------
EARNINGS CONTRIBUTION (LOSS) ON
COMMON STOCK (3)
Domestic Electric Operations 75,400 5,600 69,800 *
Australian Electric Operations 10,400 14,100 (3,700) (26)
Other Operations (1) 700 (39,100) 39,800 102
- -----------------------------------------------------------------------------------
Continuing operations 86,500 (19,400) 105,900 *
Discontinued operations (2) - (500) 500 100
- -----------------------------------------------------------------------------------
TOTAL $ 86,500 $ (19,900) $ 106,400 *
==========================================
Average common shares outstanding 297,334 297,059 275 -
EARNINGS PER COMMON SHARE - BASIC AND DILUTIVE
Domestic Electric Operations $ 0.25 $ 0.02 $ 0.23 *
Australian Electric Operations 0.04 0.05 (0.01) (20)
Other Operations (1) - (0.14) 0.14 100
- -----------------------------------------------------------------------------------
Continuing operations 0.29 (0.07) 0.36 *
Discontinued operations (2) - - - -
- -----------------------------------------------------------------------------------
TOTAL $ 0.29 $ (0.07) $ 0.36 *
===========================================
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 March 31 $ %
1999 1998 Change Change
- -----------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
DOMESTIC ELECTRIC REVENUES (In thousands)
Residential $ 231,200 $ 231,800 $ (600) -
Commercial 159,000 161,400 (2,400) (1)
Industrial 151,800 162,700 (10,900) (7)
Other 7,200 7,600 (400) (5)
- -----------------------------------------------------------------------------------
Retail sales 549,200 563,500 (14,300) (3)
Wholesale sales 240,000 499,100 (259,100) (52)
Other 18,000 14,400 3,600 25
- -----------------------------------------------------------------------------------
TOTAL $ 807,200 $1,077,000 $ (269,800) (25)
===========================================
DOMESTIC ELECTRIC ENERGY SALES (Millions of kWh)
Residential 3,773 3,751 22 1
Commercial 2,993 2,992 1 -
Industrial 4,628 4,891 (263) (5)
Other 153 159 (6) (4)
- -----------------------------------------------------------------------------------
Retail sales 11,547 11,793 (246) (2)
Wholesale sales 9,636 22,443 (12,807) (57)
- -----------------------------------------------------------------------------------
TOTAL 21,183 34,236 (13,053) (38)
===========================================
DOMESTIC ELECTRIC EXPENSES (In thousands)
Fuel $ 119,500 $ 122,700 $ (3,200) (3)
Purchased power 209,700 458,700 (249,000) (54)
Other operations and maintenance 112,600 110,600 2,000 2
Depreciation and amortization 97,000 98,100 (1,100) (1)
Administrative and general 72,800 78,000 (5,200) (7)
Special charges - 113,100 (113,100) (100)
- -----------------------------------------------------------------------------------
TOTAL $ 611,600 $ 981,200 $ (369,600) (38)
===========================================
AUSTRALIAN ELECTRIC REVENUES (In thousands)
Residential $ 48,900 $ 48,600 $ 300 1
Commercial 50,200 53,300 (3,100) (6)
Industrial 42,500 55,700 (13,200) (24)
- -----------------------------------------------------------------------------------
Energy sales 141,600 157,600 (16,000) (10)
Other 5,400 4,900 500 10
- -----------------------------------------------------------------------------------
TOTAL $ 147,000 $ 162,500 $ (15,500) (10)
===========================================
AUSTRALIAN ELECTRIC ENERGY SALES (Millions of kWh)
Residential 622 576 46 8
Commercial 1,080 1,040 40 4
Industrial 1,150 1,356 (206) (15)
- -----------------------------------------------------------------------------------
TOTAL 2,852 2,972 (120) (4)
===========================================
<CAPTION>
March December $ %
1999 1998 Change Change
<S> <C> <C> <C> <C>
CONSOLIDATED CAPITALIZATION (In thousands)
Common equity $3,968,000 $3,957,000 $ 11,000 -
Preferred stock 241,000 241,000 - -
Preferred securities of trusts
holding solely PacifiCorp debentures 341,000 341,000 - -
Long-term debt 4,519,000 4,559,000 (40,000) (1)
Short-term debt 317,000 560,000 (243,000) (43)
- -----------------------------------------------------------------------------------
TOTAL $9,386,000 $9,658,000 $ (272,000) (3)
===========================================
<FN>
* Not a meaningful number.
(1) Other Operations includes the operations of PacifiCorp Financial
Services, Inc. and several start-up phase ventures, as well as
activities of PacifiCorp Group Holdings Company.
(2) Represents the discontinued operations of 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.
</FN>
</TABLE>
