<PAGE> 1
Filed Pursuant to Rule 424(b)(2)
Registration No. 33-45916
PROSPECTUS SUPPLEMENT
- ---------------------
(TO PROSPECTUS DATED MARCH 2, 1992)
2,000,000 SHARES
PUGET SOUND POWER & LIGHT COMPANY
ADJUSTABLE RATE CUMULATIVE PREFERRED STOCK, SERIES B ($25 PAR VALUE)
------------------------
Dividends on the Adjustable Rate Cumulative Preferred Stock, Series B ($25
Par Value) (the "New Preferred Stock") will be payable at the rate of 5.24% per
annum through May 14, 1994, and at the Applicable Rate (as defined herein), from
time to time in effect, for each quarterly dividend period thereafter. However,
the Applicable Rate for any dividend period shall in no event be less than 4.00%
per annum nor greater than 10.00% per annum. Dividends will be cumulative from
the date of original issue payable on the fifteenth day of February, May, August
and November in each year, commencing February 15, 1994. See "Certain Terms of
the New Preferred Stock -- Dividend Rights" herein.
The New Preferred Stock will be redeemable by Puget Sound Power & Light
Company (the "Company") in whole or in part at any time on not less than 30
days' notice at $27.50 per share on or prior to February 1, 1999, and at $25.00
per share thereafter, plus in each case accrued dividends to the date of
redemption; provided, however, that no share of the New Preferred Stock shall be
redeemed prior to February 1, 1999, if such redemption is for the purpose or in
anticipation of refunding such share at an effective interest or dividend cost
to the Company of less than 5.37% per annum. See "Certain Terms of the New
Preferred Stock -- Redemption Provisions" herein.
------------------------
Application will be made to list the New Preferred Stock on the New York
Stock Exchange. Listing will be made subject to meeting the requirements of such
Exchange, including those relating to distribution.
------------------------
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 SUPPLEMENT OR THE PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
<TABLE>
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PRICE TO UNDERWRITING PROCEEDS TO
PUBLIC(1) DISCOUNT(2)(4) COMPANY(3)(4)
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<S> <C> <C> <C>
Per Share............................. $25.00 $.7875 $24.2125
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Total................................. $50,000,000 $1,575,000 $48,425,000
- -----------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------
</TABLE>
(1) Plus accrued dividends, if any, from the date of original issue.
(2) The Company has agreed to indemnify the Underwriters against certain
liabilities, including liabilities under the Securities Act of 1933, as
amended. See "Underwriting" herein.
(3) Before deducting expenses payable by the Company estimated at $110,000.
(4) The Underwriting Discount will be $.50 per share of New Preferred Stock with
respect to any share of such New Preferred Stock sold to certain
institutions. Therefore, to the extent of any such sales to such
institutions, the actual total Underwriting Discount will be less than, and
the actual total Proceeds to Company will be greater than, the amounts shown
in the table above.
------------------------
The shares of New Preferred Stock offered by this Prospectus Supplement are
offered by the Underwriters, subject to prior sale, withdrawal, cancellation or
modification of the offer without notice, to delivery to and acceptance by the
Underwriters and to certain further conditions. It is expected that delivery of
the shares of New Preferred Stock will be made at the offices of Lehman Brothers
Inc., New York, New York, on or about February 3, 1994.
------------------------
LEHMAN BROTHERS
MERRILL LYNCH & CO.
SMITH BARNEY SHEARSON INC.
JANUARY 26, 1994
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IN CONNECTION WITH THIS OFFERING, THE UNDERWRITERS MAY OVER-ALLOT OR EFFECT
TRANSACTIONS THAT STABILIZE OR MAINTAIN THE MARKET PRICE OF THE NEW PREFERRED
STOCK, OR OF OTHER PREFERRED STOCK OF THE COMPANY, AT LEVELS ABOVE THAT WHICH
MIGHT OTHERWISE PREVAIL IN THE OPEN MARKET. SUCH TRANSACTIONS MAY BE EFFECTED ON
THE NEW YORK STOCK EXCHANGE OR ANY OTHER STOCK EXCHANGE ON WHICH SUCH STOCK HAS
BEEN ADMITTED TO TRADING PRIVILEGES, 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, proxy statements and other information with the
Securities and Exchange Commission (the "Commission"). Such reports, proxy
statements and other information on file can be inspected and copied at the
public reference facilities of the Commission at 450 Fifth Street N.W.,
Washington, D.C. 20549; Northwestern Atrium Center, 500 West Madison Street,
Suite 1400, Chicago, Illinois 60661; and 7 World Trade Center, Suite 1300, New
York, New York 10048. Copies of this material can also be obtained at prescribed
rates from the Public Reference Section of the Commission, Washington, D.C.
20549. The Company's Common Stock is listed on the New York Stock Exchange.
Reports, proxy statements and other information concerning the Company can be
inspected at the offices of the New York Stock Exchange at 20 Broad Street, New
York, New York 10005.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
Reference is made to "Incorporation of Certain Documents by Reference" in
the accompanying Prospectus. At the date of this Prospectus Supplement, the
documents incorporated by reference include:
(1) The Company's Annual Report on Form 10-K for the year ended
December 31, 1992;
(2) The Company's Quarterly Reports on Form 10-Q for the quarters
ended March 31, June 30 and September 30, 1993; and
(3) The Company's Current Reports on Form 8-K dated May 4 and
September 22, 1993.
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SELECTED FINANCIAL INFORMATION
The following financial information is qualified in its entirety by
reference to the detailed information and financial statements appearing in the
documents incorporated herein by reference and, therefore, should be read
together therewith.
<TABLE>
<CAPTION>
12 MOS.
YEAR ENDED DECEMBER 31, ENDED
----------------------------------- 9/30/93
1990 1991 1992 UNAUDITED
-------- -------- --------- ---------
(THOUSANDS EXCEPT PER SHARE AMOUNTS AND RATIOS)
<S> <C> <C> <C> <C>
Operating Revenues............................. $935,273 $956,769 $1,024,970 $1,076,673
Operating Income............................... $215,376 $213,731 $ 214,670 $ 211,045
Net Income..................................... $132,343 $132,777 $ 135,720 $ 139,130
Earnings per Weighted Average Common Share..... $ 2.16 $ 2.21 $ 2.16 $ 2.05
Ratio of Earnings to Combined Fixed Charges and
Preferred Stock Dividends(a)................. 2.58 2.57 2.47 2.62
</TABLE>
<TABLE>
<CAPTION>
CAPITALIZATION AS OF SEPTEMBER 30, 1993
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ACTUAL AS ADJUSTED(B)
-------------------- --------------------
(THOUSANDS EXCEPT PERCENTAGES)
<S> <C> <C> <C> <C>
Long-Term Debt................................. $1,030,044 42.80% $1,030,044 42.62%
Preferred Stock Subject to Mandatory
Redemption................................... 93,202 3.87 93,202 3.86
Preferred Stock Not Subject to Mandatory
Redemption................................... 115,000 4.78 125,000 5.17
Common Equity.................................. 1,168,301 48.55 1,168,301 48.35
---------- ------ ---------- ------
Total................................ $2,406,547 100.00% $2,416,547 100.00%
---------- ------ ---------- ------
---------- ------ ---------- ------
</TABLE>
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(a) For the purpose of computing the Company's ratios of earnings to combined
fixed charges and preferred stock dividend requirements, "earnings" are
defined as the sum of Net Income, federal income taxes and fixed charges of
the Company and its majority-owned subsidiaries. "Fixed charges" consist of
interest on debt, amortization of debt premium, discount and expense, and
such portion of rentals as are estimated to be representative of the
interest factor in the particular case. "Preferred stock dividend
requirements" consist of the requirements for dividends on the Company's
Preferred Stock, multiplied by the ratio that pre-tax income bears to Net
Income.
(b) Reflects (i) the sale of the New Preferred Stock before deducting the
underwriting discount and other expenses for such sale and (ii) the
retirement of 400,000 shares of Adjustable Rate Cumulative Preferred Stock,
Series A ($100 par value).
USE OF PROCEEDS
The net proceeds to be received by the Company from the issuance and sale
of the New Preferred Stock will be used for the redemption of 400,000 shares of
the Adjustable Rate Cumulative Preferred Stock, Series A ($100 par value) and
for the repayment of short-term debt incurred for the Company's construction
program.
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RECENT DEVELOPMENTS
COMPETITION
Competition is evolving in the electric utility industry. In October 1992,
the National Energy Policy Act was passed. Among its provisions, the National
Energy Policy Act eases restrictions on independent power production, thereby
encouraging the development of wholesale power generation.
Another provision opens access to utility transmission systems and the
possibility of retail wheeling subject to state approval. Retail wheeling has
been the subject of legislative hearings by the Washington State Senate Energy
and Utilities Committee. Although the State of Washington has not made a
decision to allow retail wheeling, other states are allowing retail wheeling on
a limited basis. The Company believes that competition at the retail level in
the electric utility industry will continue to be the subject of legislative and
administrative interest and is closely monitoring developments in this area.
The Company cannot at this time predict the outcome or impact on results of
operations of increased competition and retail wheeling.
RATES AND REGULATION
On September 21, 1993, the Washington Utilities and Transportation
Commission ( the "WUTC") issued two rate orders, one regarding the Company's
request for an increase in general rates, the other related to an annual rate
adjustment under the Company's Periodic Rate Adjustment Mechanism ("PRAM"). In
its revised general rate request, the Company had requested a $97 million
increase and in its PRAM request it had requested a first year recovery of
between $27.6 and $38.1 million.
The WUTC authorized a general rate increase of $21.9 million, reflecting
increased costs of service, and an increase of $35.7 million in the first year
to recover previously deferred costs under the PRAM. The total increase in rates
of $57.6 million was effective October 1, 1993. The WUTC also authorized the
Company to increase rates by an additional $3.9 million effective October 1,
1993 to recognize, prospectively, the effect of the increase in the Federal
corporate income tax rate from 34 to 35 percent.
While the WUTC's order allowed only $57.6 million of the total requested
rate relief, an additional amount of approximately $33.1 million remains
eligible for deferral and future recovery through the continued operation of the
PRAM. This amount includes such items as the Tenaska purchase power contract (a
245 megawatt cogeneration facility scheduled for operation in April of 1994);
costs associated with the impact of hydro conditions; costs associated with fuel
costs at the Colstrip plant in Montana; and costs associated with additional
peaking capacity.
The WUTC authorized a 10.5 percent return on common equity and a common
equity component of 45 percent, compared to the Company's request for a 12.25
percent return on common equity and a 45 percent common equity component. This
lower return on equity reduced the amount the WUTC granted by approximately $30
million.
The general rate order also required the Company to file a case by November
1, 1993, demonstrating the prudency of its eight new power purchase contracts
acquired since its last general rate case. Pending the resolution of the
prudency review case, the WUTC ordered that the Company's new rates, effective
October 1, 1993, would be collected subject to refund to the extent this
proceeding demonstrates any of those contracts to be imprudent. The WUTC
calculated the annual revenue requirement at risk to be up to $86.1 million.
This calculation was made to represent the difference between the Company's
power costs under the new power purchase contracts and costs of purchasing
equivalent power on the secondary market. The Company filed its prudency case on
October 18, 1993, and expects the WUTC to enter a final order before October 1,
1994.
On October 1, 1993, the Company filed a petition with the WUTC for
clarification and reconsideration of its general rate case order. The Company
sought clarification or reconsideration of about $3 million in expenses, as well
as an increase in the allowed rate of return on equity.
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On December 15, 1993, the WUTC issued its order in response to these
petitions. The WUTC did not grant the Company's request for a higher rate of
return on equity. In addition, the WUTC made certain corrections to its original
order, amounting to an increase in revenues of less than $500,000.
The decrease in allowed return on equity from 12.8 percent in the last
general rate case to 10.5 percent approved in the present rate case has put
downward pressure on earnings since the order became effective on October 1,
1993. In addition, it will be difficult for the Company to earn its full allowed
rate of return because of changes made by the rate orders in the recovery
methods of certain costs. Therefore, the Company continues to place strong
emphasis on its ongoing improvement efforts designed to increase operating
efficiencies.
HYDRO CONDITIONS
The Pacific Northwest depends on the accumulation of snow in the Rocky and
Cascade mountain ranges to supply the region's Columbia River hydroelectric
resources. The Company derives much of its power supply from the Columbia River
projects. For three previous winters, snowpack was substantially below normal
due to dry weather.
Recently completed forecasts indicate that the projected streamflow
affecting the principal hydroelectric facilities from which the Company receives
power is expected to be only 75 percent of normal for the period January through
July, 1994. This reduction should not have a significant impact on the Company
because it has recently purchased the output of several new cogeneration
projects and because it owns 700 MW of installed combustion turbine capacity,
which can be used as an alternative energy supply under certain market
conditions. Substantially all cost increases due to operation of combustion
turbines or purchases of alternative power supplies are expected to be recovered
in rates through the PRAM mechanism.
CERTAIN TERMS OF THE NEW PREFERRED STOCK
The following description of certain terms of the New Preferred Stock
supplements, and should be read together with, the statements under "Description
of the Company's Preferred Stock" in the accompanying Prospectus.
GENERAL
The Articles at present authorize four classes of capital stock: $100 par
value Preferred Stock, $25 par value Preferred Stock, $50 par value Preference
Stock and Common Stock, without par value. At September 30, 1993, there were
1,332,018 shares of $100 par value Preferred Stock outstanding, 3,000,000 shares
of $25 par value Preferred Stock outstanding, no shares of $50 par value
Preference Stock outstanding and 63,140,603 shares of Common Stock outstanding.
The New Preferred Stock will constitute an additional series of $25 par value
Preferred Stock.
In addition to the New Preferred Stock, additional shares of $100 par value
Preferred Stock and of $25 par value Preferred Stock, including such terms as
the Board of Directors may fix according to law, may be issued in the future as
additional series of Preferred Stock without further approval by the
shareholders.
DIVIDEND RIGHTS
The annual dividend per share on the New Preferred Stock will be computed
at the rate of 5.24% per annum based on par value for the dividend periods
ending February 14 and May 14, 1994, and at the Applicable Rate (as defined
below) from time to time in effect for each subsequent dividend period. However,
the dividend rate for any dividend period shall in no event be less than 4.00%
per annum nor greater than 10.00% per annum. Dividends on the New Preferred
Stock will be cumulative from the date of original issue and are payable on the
fifteenth day of February, May, August and November in each year. The first
dividend on the New Preferred Stock, which will accrue from the date of issue,
will be $.0437 per share, payable on February 15, 1994.
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ADJUSTABLE DIVIDENDS
Except as provided below in this paragraph, the "Applicable Rate" for any
dividend period will be (a) the highest of the Treasury Bill Rate, the Ten-Year
Constant Maturity Rate and the Thirty-Year Constant Maturity Rate (each as
hereinafter defined) for such dividend period, multiplied by (b) 83%. In the
event that the Company determines in good faith that for any reason one or more
of such rates cannot be determined for any dividend period, then the Applicable
Rate for such dividend period shall be (a) the higher of whichever of such rates
can be determined, multiplied by (b) 83%. In the event that the Company
determines in good faith that for any reason none of such rates can be
determined for any dividend period, then the Applicable Rate for such dividend
period shall be the Applicable Rate in effect for the preceding dividend period.
However, the Applicable Rate for any dividend period shall in no event be
less than 4.00% per annum nor greater than 10.00% per annum.
Except as provided below in this paragraph, the "Treasury Bill Rate" for
each dividend period will be the arithmetic average of the two most recent
weekly per annum market discount rates (or the one weekly per annum market
discount rate, if only one such rate shall be published during the relevant
Calendar Period (as defined below)) for three-month U.S. Treasury bills, as
published weekly by the Federal Reserve Board during the Calendar Period
immediately prior to the ten calendar days immediately preceding February 14,
May 14, August 14 or November 14, as the case may be, prior to the dividend
period for which the dividend rate on the New Preferred Stock is being
determined. In the event that the Federal Reserve Board does not publish a
weekly per annum market discount rate during any such Calendar Period, then the
Treasury Bill Rate for the related dividend period shall be the arithmetic
average of the two most recent weekly per annum market discount rates (or the
one weekly per annum market discount rate, if only one such rate shall be
published during the relevant Calendar Period) for three-month U.S. Treasury
bills, as published weekly during such Calendar Period by any Federal Reserve
Bank or by any U.S. Government department or agency selected by the Company. In
the event that a per annum market discount rate for three-month U.S. Treasury
bills shall not be published by the Federal Reserve Board or by any Federal
Reserve Bank or by any U.S. Government department or agency during such Calendar
Period, then the Treasury Bill Rate for such dividend period shall be the
arithmetic average of the two most recent weekly per annum market discount rates
(or the one weekly per annum market discount rate, if only one such rate shall
be published during the relevant Calendar Period) for all of the U.S. Treasury
bills then having maturities of not less than 80 nor more than 100 days, as
published during such Calendar Period by the Federal Reserve Board or, if the
Federal Reserve Board shall not publish such rates, by any Federal Reserve Bank
or by any U.S. Government department or agency selected by the Company. In the
event that the Company determines in good faith that for any reason no such U.S.
Treasury bill rates are published as provided above during such Calendar Period,
then the Treasury Bill Rate for such dividend period shall be the arithmetic
average of the per annum market discount rates based upon the closing bids
during such Calendar Period for each of the issues of marketable non-interest
bearing U.S. Treasury securities with a maturity of not less than 80 nor more
than 100 days from the date of each such quotation, as quoted daily for each
business day in New York City (or less frequently if daily quotations shall not
be generally available) to the Company by at least three recognized U.S.
Government securities dealers selected by the Company. In the event that the
Company determines in good faith that for any reason the Company cannot
determine the Treasury Bill Rate for any dividend period as provided above in
this paragraph, the Treasury Bill Rate for such dividend period shall be the
arithmetic average of the per annum market discount rates based upon the closing
bids during the related Calendar Period for each of the issues of marketable
interest-bearing U.S. Treasury securities with a maturity of not less than 80
nor more than 100 days from the date of each such quotation, as quoted daily for
each business day in New York City (or less frequently if daily quotations shall
not be generally available) to the Company by at least three recognized U.S.
Government securities dealers selected by the Company.
Except as provided below in this paragraph, the "Ten-Year Constant Maturity
Rate" for each dividend period shall be the arithmetic average of the two most
recent weekly per annum Ten-Year Average Yields (or the one weekly per annum
Ten-Year Average Yield, if only one such Yield shall be published during the
relevant Calendar Period), as published weekly by the Federal Reserve Board
during the Calendar Period
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<PAGE> 7
immediately prior to the ten calendar days immediately preceding February 14,
May 14, August 14 or November 14, as the case may be, prior to the dividend
period for which the dividend rate on the New Preferred Stock is being
determined. In the event that the Federal Reserve Board does not publish such a
weekly per annum Ten-Year Average Yield during such Calendar Period, then the
Ten-Year Constant Maturity Rate for such dividend period shall be the arithmetic
average of the two most recent weekly per annum Ten-Year Average Yields (or the
one weekly per annum Ten-Year Average Yield, if only one such Yield shall be
published during such Calendar Period), as published weekly during such Calendar
Period by any Federal Reserve Bank or by any U.S. Government department or
agency selected by the Company. In the event that a per annum Ten-Year Average
Yield shall not be published by the Federal Reserve Board or by any Federal
Reserve Bank or by any U.S. Government department or agency during such Calendar
Period, then the Ten-Year Constant Maturity Rate for such dividend period shall
be the arithmetic average of the two most recent weekly per annum average yields
to maturity (or the one weekly average yield to maturity, if only one such yield
shall be published during such Calendar Period) for all of the actively traded
marketable U.S. Treasury fixed interest rate securities (other than Special
Securities (as defined below)) then having maturities of not less than eight nor
more than twelve years, as published during such Calendar Period by the Federal
Reserve Board or, if the Federal Reserve Board shall not publish such yields, by
any Federal Reserve Bank or by any U.S. Government department or agency selected
by the Company. In the event that the Company determines in good faith that for
any reason the Company cannot determine the Ten-Year Constant Maturity Rate for
any dividend period as provided above in this paragraph, then the Ten-Year
Constant Maturity Rate for such dividend period shall be the arithmetic average
of the per annum average yields to maturity based upon the closing bids during
such Calendar Period for each of the issues of actively traded marketable U.S.
Treasury fixed interest rate securities (other than Special Securities) with a
final maturity date not less than eight nor more than twelve years from the date
of each such quotation, as quoted daily for each business day in New York City
(or less frequently if daily quotations shall not be generally available) to the
Company by at least three recognized U.S. Government securities dealers selected
by the Company.
Except as provided below in this paragraph, the "Thirty-Year Constant
Maturity Rate" for each dividend period shall be the arithmetic average of the
two most recent weekly per annum Thirty-Year Average Yields (or the one weekly
per annum Thirty-Year Average Yield, if only one such Yield shall be published
during the relevant Calendar Period), as published weekly by the Federal Reserve
Board during the Calendar Period immediately prior to the ten calendar days
immediately preceding February 14, May 14, August 14 or November 14, as the case
may be, prior to the dividend period for which the dividend rate on the New
Preferred Stock is being determined. In the event that the Federal Reserve Board
does not publish such a weekly per annum Thirty-Year Average Yield during such
Calendar Period, then the Thirty-Year Constant Maturity Rate for such dividend
period shall be the arithmetic average of the two most recent weekly per annum
Thirty-Year Average Yields (or the one weekly per annum Thirty-Year Average
Yield, if only one such Yield shall be published during such Calendar Period),
as published weekly during such Calendar Period by any Federal Reserve Bank or
by any U.S. Government department or agency selected by the Company. In the
event that a per annum Thirty-Year Average Yield shall not be published by the
Federal Reserve Board or by any Federal Reserve Bank or by any U.S. Government
department or agency during such Calendar Period, then the Thirty-Year Constant
Maturity Rate for such dividend period shall be the arithmetic average of the
two most recent weekly per annum average yields to maturity (or the one weekly
per annum average yield to maturity, if only one such yield shall be published
during such Calendar Period) for all of the actively traded marketable U.S.
Treasury fixed interest rate securities (other than Special Securities) then
having maturities of not less than twenty-eight nor more than thirty years, as
published during such Calendar Period by the Federal Reserve Board or, if the
Federal Reserve Board shall not publish such yields, by any Federal Reserve Bank
or by any U.S. Government department or agency selected by the Company. In the
event that per annum average yields to maturity for all of the actively traded
marketable U.S. Treasury fixed interest rate securities (other than Special
Securities) then having maturities of not less than twenty-eight nor more than
thirty years shall not be published by the Federal Reserve Board or by any
Federal Reserve Bank or by any U.S. Government department or agency during such
Calendar Period, then the Thirty-Year Constant Maturity Rate for such dividend
period shall be determined in the manner specified in the preceding sentence
based upon all of the actively traded marketable U.S. Treasury fixed interest
rate securities (other than
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<PAGE> 8
Special Securities) then having maturities of not less than twenty-five years
or, in the absence of which, twenty years. In the event that the Company
determines in good faith that for any reason the Company cannot determine the
Thirty-Year Constant Maturity Rate for any dividend period as provided above in
this paragraph, then the Thirty-Year Constant Maturity Rate for such dividend
period shall be the arithmetic average of the per annum average yields to
maturity based upon the closing bids during such Calendar Period for each of the
issues of actively traded marketable U.S. Treasury fixed interest rate
securities (other than Special Securities) with a final maturity date not less
than twenty-eight nor more than thirty years (or, in the absence of which,
having maturities of not less than twenty-five years or, in the further absence
of which, twenty years) from the date of each such quotation, as quoted daily
for each business day in New York City (or less frequently if daily quotations
shall not be generally available) to the Company by at least three recognized
U.S. Government securities dealers selected by the Company.
The Treasury Bill Rate, the Ten-Year Constant Maturity Rate and the
Thirty-Year Constant Maturity Rate shall each be rounded to the nearest
one-hundredth of a percentage point.
The amount of dividends per share payable for each dividend period shall be
computed by dividing the dividend rate for such dividend period by four and
applying such rate against the par value per share of the New Preferred Stock.
The amount of dividends payable for the initial dividend period or any period
shorter than a full quarterly dividend period shall be computed on the basis of
30-day months and a 360-day year.
The dividend rate with respect to each dividend period will be calculated
as promptly as practicable by the Company according to the appropriate method
described herein. The mathematical accuracy of each such calculation will be
confirmed in writing by independent accountants of recognized standing. Except
for the dividend rate for both the initial dividend period and the dividend
period commencing February 15, 1994, the Company will cause each dividend rate
to be published in a newspaper of general circulation in New York City prior to
the commencement of the new dividend period to which it applies and will cause
notice of such dividend rate to be enclosed with the dividend payment checks
next mailed to the holders of the New Preferred Stock.
As used herein, the term "Calendar Period" means a period of fourteen
consecutive calendar days; the term "Special Securities" means securities (i)
which can, at the option of the holder, be surrendered at face value in payment
of any Federal estate tax or (ii) which provide tax benefits to the holder and
are priced to reflect such tax benefits or which were originally issued at a
deep or substantial discount; the term "Ten-Year Average Yield" means the
average yield to maturity for actively traded marketable U.S. Treasury fixed
interest rate securities (adjusted to constant maturities of ten years); and the
term "Thirty-Year Average Yield" means the average yield to maturity for
actively traded marketable U.S. Treasury fixed interest rate securities
(adjusted to constant maturities of thirty years). In December 1993, the weekly
per annum market discount rate for three month U.S. Treasury bills, the Ten-Year
Average Yield and the Thirty-Year Average Yield were published weekly by the
Federal Reserve Board in "Federal Reserve Statistical Release H.15(519)-Selected
Interest Rates."
LIQUIDATION RIGHTS
In the event of any involuntary liquidation, dissolution or winding up of
the Company, holders of the New Preferred Stock, together and on a parity with
holders of the presently outstanding $25 par value Preferred Stock and $100 par
value Preferred Stock, will be entitled to receive, before any distribution is
made on the Common Stock, the par value of such shares plus accrued dividends,
or, if such liquidation, dissolution or winding up is voluntary, such holders
will be entitled to receive the then applicable optional redemption price, which
in the case of the New Preferred Stock shall be $27.50 per share through
February 1, 1999, and $25 per share thereafter, plus accrued dividends.
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REDEMPTION PROVISIONS
The New Preferred Stock may be redeemed by the Company in whole or in part
at any time on not less than 30 days' notice at $27.50 per share if the date of
redemption is on or prior to February 1, 1999, and at $25.00 per share if the
date of redemption is after February 1, 1999, plus an amount in each case equal
to the accrued dividends to the date of redemption; provided, however, that the
Company will not redeem any shares of the New Preferred Stock prior to February
1, 1999, if such redemption is a part, or in anticipation, of any refunding
operation involving the application, directly or indirectly, of borrowed funds
or the proceeds of an issue of any stock ranking superior to or on a parity with
the New Preferred Stock if such borrowed funds have an interest rate or cost to
the Company, or such stock has an effective dividend rate or cost to the Company
(calculated in each case in accordance with generally accepted financial
practice), of less than 5.37% per annum.
SINKING FUND
The holders of the New Preferred Stock will not be entitled to the benefit
of any sinking or purchase fund.
TRANSFER AGENTS AND REGISTRARS
The Bank of New York, New York and Puget Sound Power & Light Company,
Bellevue, Washington will both be Transfer Agents and Registrars for the New
Preferred Stock.
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<PAGE> 10
UNDERWRITING
Subject to the terms and conditions set forth in the Underwriting
Agreement, the Company has agreed to sell to each of the Underwriters named
below, and each of the Underwriters has severally agreed to purchase from the
Company, the number of shares of New Preferred Stock set forth opposite its
name:
<TABLE>
<CAPTION>
NUMBER OF
UNDERWRITER SHARES
----------- ---------
<S> <C>
Lehman Brothers Inc. ............................................. 666,680
Merrill Lynch, Pierce, Fenner & Smith
Incorporated......................................... 666,660
Smith Barney Shearson Inc. ....................................... 666,660
---------
Total........................................................ 2,000,000
---------
---------
</TABLE>
The Underwriting Agreement provides that the Underwriters will be obligated
to purchase all the shares of the New Preferred Stock if any are purchased.
The Underwriters have advised the Company that they propose initially to
offer the New Preferred Stock to the public at the public offering price set
forth on the cover page of this Prospectus Supplement, and to certain dealers at
such price less a concession not in excess of $.50 per share, provided, however,
that such concession shall not be in excess of $.30 per share for sales to
certain institutions. The Underwriters may allow, and such dealers may reallow,
a discount not in excess of $.25 per share on sales to certain other dealers.
After the initial public offering, the public offering price, concession and
reallowance may be changed.
The Underwriters have advised the Company that they intend to make a market
in the New Preferred Stock but are not obligated to do so and may discontinue
any market making at any time without notice. No assurance can be given as to
the liquidity of the New Preferred Stock.
The Company has agreed to indemnify the Underwriters against certain civil
liabilities, including liabilities under the Securities Act of 1933, as amended.
S-10
<PAGE> 11
PROSPECTUS
- ----------
PUGET SOUND POWER & LIGHT COMPANY
PREFERRED STOCK
Puget Sound Power & Light Company (the "Company") may offer from time to
time up to an aggregate of 8,000,000 shares of $25 par value Preferred Stock or
up to an aggregate of 2,000,000 shares of $100 par value Preferred Stock, as an
alternative to the sale of some or all of its $25 par value Preferred Stock. The
Preferred Stock to be offered is hereinafter referred to as the "New Preferred
Stock." The total par value of the New Preferred Stock will not exceed
$200,000,000. The New Preferred Stock may be issued in one or more transactions,
in one or more series and at prices and on terms to be determined at the time or
times of sale. The specific designation, number of shares, initial public
offering price, proceeds to the Company, liquidation preference, dividend rate
(or method of calculation thereof), redemption provisions, sinking fund
provisions, if any, and other specific terms of the offering of each series of
New Preferred Stock will be set forth in a prospectus supplement relating to
such series (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.
------------------------
The New Preferred Stock may be offered from time to time to or through
underwriters, through agents or directly to other purchasers. See "Plan of
Distribution" herein.
The date of this Prospectus is March 2, 1992.
<PAGE> 12
AVAILABLE INFORMATION
The Company is subject to the informational requirements of the Securities
Exchange Act of 1934 (the "Exchange Act") and in accordance therewith files
reports, proxy statements and other information with the Securities and Exchange
Commission (the "Commission"). Such reports, proxy statements and other
information on file can be inspected and copied at the public reference
facilities of the Commission at 450 Fifth Street, N.W., Washington, D.C. 20549;
Northwestern Atrium Center, 500 West Madison Street, Suite 1400, Chicago,
Illinois 60661-2511; and 75 Park Place, New York, New York 10007. Copies of this
material can also be obtained at prescribed rates from the Public Reference
Section of the Commission, Washington, D.C. 20549. The Company's Common Stock is
listed on the New York Stock Exchange. Reports, proxy statements and other
information concerning the Company can be inspected at the offices of the
exchange at 20 Broad Street, New York, New York 10005.
The Company has filed with the Commission a Registration Statement
(together with all amendments and exhibits thereto, the "Registration
Statement") under the Securities Act of 1933, as amended, with respect to the
New Preferred Stock. This Prospectus does not contain all information set forth
in the Registration Statement and reference is hereby made to the Registration
Statement for further information with respect to the Company and the New
Preferred Stock.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents heretofore filed with the Commission are hereby
incorporated by reference in this Prospectus:
1. The Company's Annual Report on Form 10-K for the year ended December
31, 1990.
2. The Company's Quarterly Reports on Form 10-Q for the quarters ended
March 31, June 30 and September 30, 1991.
3. The Company's Current Reports on Form 8-K dated January 16, April 8,
April 17 and October 2, 1991 and January 15, 1992.
All documents filed by the Company pursuant to Sections 13(a), 13(c), 14 or
15(d) of the Exchange Act after the date of this Prospectus and prior to the
termination of the offering or offerings of the New Preferred Stock 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. Any statement contained in a
document incorporated or deemed to be incorporated by reference herein 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
document which is or is deemed to be incorporated by reference herein 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 to
whom a copy of this Prospectus has been delivered, on the written or oral
request of any such person, a copy of any or all of the documents referred to
above which have been or may be incorporated by reference in this Prospectus,
other than exhibits to such documents. Requests for such copies should be
directed to R. E. Olson, Vice President Finance and Treasurer, Puget Sound Power
& Light Company, 411--108th Avenue N.E., Bellevue, Washington 98004-5515, (206)
454-6363.
2
<PAGE> 13
THE COMPANY
Puget Sound Power & Light Company, a Washington corporation (the
"Company"), is an investor-owned electric utility providing electric service to
approximately 760,000 customers within a 4,500-square mile territory in the
State of Washington, principally in the Puget Sound region of western
Washington. During the year ended December 31, 1991, the Company's electric
generation was 54% hydroelectric and 46% thermal. The Company's executive office
is located at 411--108th Avenue N.E., Bellevue, Washington 98004-5515. The
telephone number is (206) 454-6363.
USE OF PROCEEDS
Except as otherwise set forth in any Prospectus Supplement, the net
proceeds to be received by the Company from the issuance and sale of the New
Preferred Stock 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 outstanding
short-term borrowings incurred for the Company's construction program, for
payment of securities upon their maturity or redemption, and for other corporate
purposes.
DESCRIPTION OF THE COMPANY'S PREFERRED STOCK
GENERAL
The following statements include summaries of certain general provisions
relating to the New Preferred Stock contained in the Company's Restated Articles
of Incorporation (the "Articles") and in the Company's First Mortgage Indenture,
which are Exhibits to the Registration Statement of which this Prospectus forms
a part. Reference is made to the pertinent Exhibits for a full and complete
statement of such provisions, and the following statements are qualified in
their entirety by such reference.
A Prospectus Supplement will set forth any variation in the terms and
provisions of the New Preferred Stock from those described in this Prospectus.
The specific designation, number of shares, initial public offering price,
proceeds to the Company, liquidation preference, dividend rate (or method of
calculation thereof), redemption provisions, sinking fund provisions, if any,
and other specific terms of the offering of each series of New Preferred Stock
will be set forth in a Prospectus Supplement.
The Articles authorize four classes of capital stock: $100 par value
Preferred Stock (3,000,000 shares authorized), $25 par value Preferred Stock
(13,000,000 shares authorized), $50 par value Preference Stock and Common Stock,
without par value. At December 31, 1991, there were 1,601,887 shares of $100 par
value Preferred Stock outstanding and there were no shares of $25 par value
Preferred Stock outstanding. The shares of the New Preferred Stock being offered
hereby will constitute one or more additional series of either $25 par value
Preferred Stock or $100 par value Preferred Stock.
DIVIDENDS
The holders of the $100 par value Preferred Stock, together and on a parity
with the holders of the $25 par value Preferred Stock, are entitled to receive,
when and as declared by the Board of Directors, cumulative dividends at the
rate(s) fixed or pursuant to methods and procedures established by the Board of
Directors for each particular series, before the Company may pay dividends on,
make any other distributions on, or make any expenditures for the acquisition of
shares of, the Company's $50 par value Preference Stock or Common Stock.
If the Company is in default in respect of dividends on any Preferred
Stock, the Company may not redeem or purchase any Preferred Stock unless all
Preferred Stock is redeemed or an offer to purchase is made to all holders
thereof on substantially equal terms.
Subject to the provisions of the Articles, dividends in arrears may be
declared and paid at any time, without reference to any regular dividend payment
date, to the holders as their names appear on the stock
3
<PAGE> 14
books of the Company on such date, not exceeding fifteen days preceding the
payment date thereof, as may be fixed by the Board of Directors.
In case the stated dividends on the New Preferred Stock are not paid in
full, the holders of the New Preferred Stock and any other class or series of
stock of the Company ranking on a parity with the New Preferred Stock as to
dividends, which includes any outstanding $100 par value Preferred Stock and $25
par value Preferred Stock, shall share ratably (i) in the payment of dividends,
including accumulations, if any, in accordance with the sums which would be
payable on such shares if all dividends were declared and paid in full, and (ii)
in any distribution of assets other than by way of dividends, in accordance with
the sums which would be payable in such distributions if all sums payable were
discharged in full.
LIQUIDATION RIGHTS
In the event of any involuntary liquidation, dissolution or winding up of
the Company, holders of the New Preferred Stock, together and on a parity with
holders of any other outstanding $100 par value Preferred Stock and $25 par
value Preferred Stock, will be entitled to receive, before any distribution is
made on the Company's $50 par value Preference Stock or Common Stock, the par
value of such shares ($100 or $25, as the case may be) plus accrued dividends.
If such liquidation, dissolution or winding up is voluntary, such holders will
be entitled to receive the then applicable optional redemption price in effect
on the liquidation date for the respective series before any distribution of the
assets of the Company.
VOTING RIGHTS
Whenever dividends payable on any $100 par value Preferred Stock or $25 par
value Preferred Stock are in arrears in an amount equivalent to or exceeding
four quarterly dividends, holders of $100 par value Preferred Stock have the
right to elect the smallest number of directors necessary to constitute a
majority of the Board of Directors and holders of $25 par value Preferred Stock
have the right to elect two directors. Such rights shall continue until no
dividends are in arrears and the current dividend has been set apart.
RESTRICTIONS ON CORPORATE ACTION
The Company may not, without the consent of two-thirds of each outstanding
class of Preferred Stock: (i) authorize any prior ranking stock; (ii) change the
terms of the Preferred Stock in any prejudicial manner; provided, however, if
such change would be prejudicial to the holders of one class, or any series
thereof, alone, only the like consent of holders of such class or series of
stock is required; (iii) dispose of substantially all of its property (but no
consent is required to mortgage assets of the Company); or (iv) issue or sell
any shares of either class of Preferred Stock unless certain earnings and other
tests are satisfied.
The Company may not, without the consent of a majority of each outstanding
class of Preferred Stock (or such greater proportion as may be required by the
laws of the State of Washington), in certain instances (i) merge with any
corporation or (ii) incur unsecured indebtedness in excess of specified amounts.
Under the Articles, the voting rights of each class of Preferred Stock
described above in this section are not effective if, in connection with any of
the matters specified, provision is made for the redemption or other retirement
of such class of Preferred Stock at the time outstanding.
PREEMPTIVE RIGHTS
No holder of shares of stock of any class has preemptive rights to
subscribe for or purchase any stock of the Company of any class or securities
convertible into stock.
LIABILITY FOR FURTHER CALLS OR ASSESSMENTS
The New Preferred Stock will be fully paid and nonassessable.
4
<PAGE> 15
LEGAL OPINIONS
The validity of the New Preferred Stock offered hereby will be passed upon
for the Company by Perkins Coie, Seattle, Washington, and for the Underwriters
by Mudge Rose Guthrie Alexander & Ferdon, New York, New York. All matters
pertaining to the laws of the State of Washington will be passed upon by Perkins
Coie.
EXPERTS
The financial statements and financial statement schedules included in the
Company's Annual Report on Form 10-K for the year ended December 31, 1990,
incorporated by reference in this Prospectus, have been incorporated herein in
reliance on the report of Coopers & Lybrand, independent certified public
accountants, given on the authority of that firm as experts in accounting and
auditing.
PLAN OF DISTRIBUTION
The Company may sell the New Preferred Stock in any of three ways: (i)
through underwriters or dealers; (ii) directly to a limited number of purchasers
or to a single purchaser; or (iii) through agents. The Prospectus Supplement
relating to a series of the New Preferred Stock will set forth the terms of the
offering, including the name or names of any underwriters, dealers or agents,
the purchase price of such New Preferred Stock and the proceeds to the Company
from such sale, any items constituting underwriters' or agents' compensation,
any initial public offering price and any discounts or concessions allowed or
reallowed or paid to dealers. Any initial public offering price and any
discounts or concessions allowed or reallowed or paid to dealers may be changed
from time to time after the initial public offering.
If underwriters are used in the sale, the New Preferred Stock 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 the
sale. The underwriters with respect to a particular underwritten offering of New
Preferred Stock will be named in the Prospectus Supplement relating to such
offering and, if an underwriting syndicate is used, the managing underwriters
will be set forth on the cover page of such Prospectus Supplement. Unless
otherwise set forth in the Prospectus Supplement, the obligations of the
underwriters to purchase the New Preferred Stock will be subject to certain
conditions precedent, and the underwriters will be obligated to purchase all
such New Preferred Stock if any are purchased.
New Preferred Stock may be sold directly by the Company or through agents
designated by the Company from time to time. A Prospectus Supplement will set
forth the name of any agent involved in the offer or sale of the New Preferred
Stock in respect of which such Prospectus Supplement will be delivered as well
as any commissions payable by the Company to such agent. Unless otherwise
indicated in the Prospectus Supplement, any such agent will be acting on a best
efforts basis for the period of its appointment.
If so indicated in a Prospectus Supplement, the Company will authorize
agents, underwriters or dealers to solicit offers by certain specified
institutions to purchase New Preferred Stock from the Company at the public
offering price set forth in the Prospectus Supplement pursuant to delayed
delivery contracts providing for payment and delivery on a specified date in the
future. Such contracts will be subject to those conditions set forth in the
Prospectus Supplement, and the Prospectus Supplement will set forth the
commissions payable for solicitation of such contracts.
Subject to certain conditions, the Company may agree to indemnify any
underwriter, dealer, agent or purchaser and their controlling persons against
certain civil liabilities, including certain liabilities under the Securities
Act of 1933, as amended.
5
<PAGE> 16
- ------------------------------------------------------
- ------------------------------------------------------
NO DEALER, SALESMAN OR OTHER PERSON HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATION NOT CONTAINED IN THIS PROSPECTUS
SUPPLEMENT OR THE ACCOMPANYING PROSPECTUS AND, IF GIVEN OR MADE, SUCH
INFORMATION OR REPRESENTATION MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED
BY THE COMPANY OR BY ANY UNDERWRITER. THIS PROSPECTUS SUPPLEMENT AND THE
ACCOMPANYING PROSPECTUS DO NOT CONSTITUTE AN OFFER TO SELL OR A SOLICITATION OF
AN OFFER TO BUY ANY OF THE SECURITIES OFFERED HEREBY IN ANY JURISDICTION TO ANY
PERSON TO WHOM IT IS UNLAWFUL TO MAKE SUCH OFFER IN SUCH JURISDICTION. NEITHER
THE DELIVERY OF THIS PROSPECTUS SUPPLEMENT OR THE PROSPECTUS 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 SINCE THE DATE
HEREOF.
------------------------
TABLE OF CONTENTS
PROSPECTUS SUPPLEMENT
<TABLE>
<CAPTION>
PAGE
<S> <C>
Available Information................. S-2
Incorporation of Certain Documents by
Reference........................... S-2
Selected Financial Information........ S-3
Use of Proceeds....................... S-3
Recent Developments................... S-4
Certain Terms of the New Preferred
Stock............................... S-5
Underwriting.......................... S-10
PROSPECTUS
Available Information................. 2
Incorporation of Certain Documents by
Reference........................... 2
The Company........................... 3
Use of Proceeds....................... 3
Description of the Company's Preferred
Stock............................... 3
Legal Opinions........................ 5
Experts............................... 5
Plan of Distribution.................. 5
- --------------------------------------
- --------------------------------------
</TABLE>
- ------------------------------------------------------
- ------------------------------------------------------
2,000,000 SHARES
PUGET SOUND POWER &
LIGHT COMPANY
ADJUSTABLE RATE CUMULATIVE
PREFERRED STOCK, SERIES B
($25 PAR VALUE)
---------------------
PROSPECTUS SUPPLEMENT
January 26, 1994
---------------------
LEHMAN BROTHERS
MERRILL LYNCH & CO.
SMITH BARNEY SHEARSON INC.
- ------------------------------------------------------
- ------------------------------------------------------
