ITEM 1. BUSINESS
THE ORGANIZATION
The Company is a domestic electric utility that conducts a retail electric utility business through Pacific Power and Utah Power, and engages in power production and sales on a wholesale basis under the name PacifiCorp. The Company formed Holdings in 1984 to hold the stock of the Company's principal subsidiaries and to facilitate the conduct of businesses not regulated as domestic electric utilities. The Company's strategic business plan is to strengthen the domestic and international scope and competitive position of its electric utility and telecommunications operations and to develop and expand its nonregulated, energy-related activities, including its independent power production, cogeneration, and power marketing and trading businesses. The Company's goal is to become a dominant supplier of energy on a global basis.
Through Holdings, the Company indirectly owns 100% of PTI, a telecommunications company that provides local telephone service and access to the long distance network in Alaska, seven other western states and three midwestern states; provides cellular mobile telephone services in six states; and is engaged in sales of capacity in and operation and maintenance of a submarine fiber optic cable between the United States and Japan. PTI has agreements in place that should lead to acquisitions of 27,100 access lines in Minnesota, 11,300 access lines in Michigan and 32,000 access lines and 6,800 cellular customers in Fairbanks, Alaska. These acquisitions are subject to a number of conditions, including regulatory approval, and are expected to close in 1997.
On December 12, 1995, Holdings purchased 100% of Powercor, an electricity distributor and marketer in Australia. Powercor serves approximately 547,000 customers in suburban Melbourne and the western and central regions of the State of Victoria in southeast Australia. In September 1996, Holdings acquired a 19.9% interest in the 1,600 megawatt ("MW") Hazelwood coal-fired generating station and adjacent mine located in Victoria, Australia. The Company continues to explore growth opportunities in countries with similar competitive environments.
Holdings also has interests in the independent power production and cogeneration businesses through PGC, and continues to liquidate portions of the loan, leasing and real estate investment portfolio of PFS. PFS presently expects to retain only its tax-advantaged investments in leveraged lease assets (primarily aircraft) and affordable housing, and is limiting its pursuit of tax-advantaged investment opportunities to affordable housing and alternative fuels.
On March 11, 1997, Holdings entered into an agreement to acquire TPC Corporation, a natural gas gathering, processing, storage and marketing company. The acquisition is expected to cost approximately $288 million in cash plus assumed debt of approximately $149 million.
For the year ended December 31, 1996, 69% of PacifiCorp's revenues from operations were derived from Domestic Electric Operations, Australian Electric
Operations contributed 15%, and Telecommunications contributed 12%. Note 16 to the Company's Consolidated Financial Statements, incorporated herein by reference under Item 8, contains information with respect to the revenue and income from operations contributed by each of the Company's industry segments for the past three years and the identifiable assets attributable to each segment at the end of each of those years; this information is incorporated herein by this reference.
From time to time, the Company may issue forward-looking statements that involve a number of risks and uncertainties. The following factors are among the factors that could cause actual results to differ materially from the forward-looking statements: utility commission practices; regional economic conditions; weather variations affecting customer usage, competition in bulk power markets and hydroelectric production; wholesale power marketing results; environmental, regulatory and tax legislation, including industry restructuring and deregulation initiatives; technological developments in the electricity and telecommunications industries; and the cost of debt and equity capital. Any forward-looking statements issued by the Company should be considered in light of these factors.
The Company's common stock (symbol PPW) is traded on the New York and Pacific Stock Exchanges. The Company's $1.98 No Par Serial Preferred Stock, Series 1992, 8 3/8% Quarterly Income Debt Securities (Junior Subordinated Deferrable Interest Debentures, Series A) and 8.55% Quarterly Income Debt Securities (Junior Subordinated Deferrable Interest Debentures, Series B) are traded on the New York Stock Exchange. The 8 1/4% Cumulative Quarterly Income Preferred Securities (Series A Preferred Securities) of PacifiCorp Capital I, the Company's wholly owned subsidiary trust, are also traded on the New York Stock Exchange.
DOMESTIC ELECTRIC OPERATIONS
PacifiCorp conducts its retail electric utility operations as Pacific Power and Utah Power, and engages in wholesale electric transactions under the name PacifiCorp. Pacific Power and Utah Power provide electric service within their respective service territories. Power production, wholesale sales, fuel supply and administrative functions are managed on a coordinated basis.
Service Area
The Company serves 1.4 million retail customers in service territories aggregating about 153,000 square miles in portions of seven western states: Utah, Oregon, Wyoming, Washington, Idaho, California and Montana. The service area contains diversified industrial and agricultural economies. Principal industrial customers include oil and gas extraction, lumber and wood products, paper and allied products, chemicals, primary metals, mining companies and agribusiness. Agricultural products include potatoes, hay, grain and livestock.
The geographical distribution of retail electric operating revenues for the year ended December 31, 1996 was Utah, 37%; Oregon, 32%; Wyoming, 13%; Washington, 9%; Idaho, 4%; California, 3%; and Montana, 2%.
Customers
Electric utility revenues and energy sales, by class of customer, for the three years ended December 31, 1996 were as follows:
- ----------- (1) Includes miscellaneous revenues.
The Company's seven-state service territory has complementary seasonal load patterns. In the western sector, customer demand peaks in the winter months due to space heating requirements. In the eastern sector, customer demand peaks in the summer when irrigation and cooling systems are heavily used. Many factors affect per customer consumption of electricity. For residential customers, within a given year, weather conditions are the dominant cause of usage variations from normal seasonal patterns. However, the price of electricity is also considered a significant factor.
During 1996, no single retail customer accounted for more than 1.3% of the Company's retail utility revenues and the 20 largest retail customers accounted for 10.6% of total retail electric revenues.
Competition
Domestic Electric Operations continues to operate as a regulated monopoly within its seven-state franchise service territories. Competition in these areas varies in form and intensity, but is expected to increase over time, principally as a result of industry restructuring and deregulation, and increased marketing by alternative energy suppliers. In addition, many large industrial customers have the option to build their own generation or cogeneration facilities or to use alternative energy sources, such as natural gas. These competitive pressures enable these customers to negotiate lower prices through special tariffs.
Competition has already transformed the electric utility industry at the wholesale level. The Energy Policy Act, passed in 1992, led to opening wholesale competition to energy brokers, independent power producers and power marketers. In 1996, the FERC ordered all investor-owned utilities to allow others access to their transmission systems for wholesale power sales. This access must be provided at the same price and terms the utilities would charge their own wholesale customers. As a result of increased competition and excess capacity, wholesale prices have dropped significantly over the past two years.
In addition to these changes in the wholesale market, numerous states have initiated studies of retail competition or are considering retail competition as part of industry restructuring. See "Regulation." The Company is advocating federal legislation that would require states to give all consumers choice in their energy provider by January 1, 2001. The Company believes that federal legislation is necessary to address barriers to entry and issues of jurisdiction, to preserve the proper role for the states in implementing customer choice and to bring benefits to consumers as quickly as possible. The Company is also seeking alternate forms of regulation in its state jurisdictions that would include performance indices to provide appropriate incentive for those portions of its operations that remain regulated.
The Company has also formulated strategies to meet these new challenges. The Company is marketing power supply services to other utilities, including dispatch assistance, daily system load monitoring, backup power, power storage and power marketing, and services to retail customers that encourage efficient use of energy. In January 1997, the Company and KN Energy, Inc. announced the formation of a joint venture called "en-able." En-able intends to offer utilities a single package of energy, communications and "infotainment" home-oriented options under the name "Simple Choice". These services will be available in one convenient package on one bill served through one customer service number.
The Company is also expanding its nonregulated businesses that are engaged in wholesale marketing and aggregating of electricity, plant and fuels management, utilities services and retail energy services. A wholly owned subsidiary of Holdings, PacifiCorp Power Marketing, Inc. ("PPM"), has obtained authorization from the FERC to sell power at market prices outside of the western United States. In addition, Holdings and Big Rivers Electric Corporation ("Big Rivers"), a generation and transmission cooperative based in Henderson, Kentucky, signed an agreement during 1996 providing for PacifiCorp Kentucky Energy Company, a wholly owned subsidiary of Holdings, to
operate and manage Big Rivers' power plants under a 25-year operating agreement for annual payments of $30 million. Big Rivers filed for bankruptcy in September 1996. In February 1997, the bankruptcy judge opened the Big Rivers facilities to auction. Holdings asked the U.S. District Court to take jurisdiction over the Big Rivers reorganization away from the U.S. Bankruptcy Court. In addition, Holdings filed a motion in bankruptcy court requesting that the bankruptcy judge remove himself and the bankruptcy examiner from the case and impose sanctions on the examiner. The examiner responded and requested that sanctions be imposed on the Company and its counsel. On March 18, 1997, the district court declined to take jurisdiction of the bankruptcy case, ruling that the bankruptcy judge must first decide the disqualification and removal motion. On March 19, 1997, the bankruptcy court accepted a bid from LG&E Energy Corp. for Big Rivers' facilities. The outcome of these proceedings is uncertain. PPM intends to expand its power marketing activities in the East, working initially from its offices in White Plains, New York, and Henderson, Kentucky.
A consortium of utilities, including the Company, have signed a memorandum of understanding to create an independent grid operator ("IndeGO") for the high-voltage transmission of electricity in Washington, Oregon, Idaho, Montana, Nevada, Utah and Wyoming. The group intends to facilitate the operation of an evolving competitive electric power market. Through IndeGO, the members expect to increase the efficiency of their transmission systems and provide access for all users of the regional transmission grid. IndeGO would be independent and not be controlled by any individual market participant or class of participants involved in marketing electricity. IndeGO participants plan to file a proposal with the FERC in 1997.
For a discussion of accounting for the effects of regulation, see Note 2 to the Company's Consolidated Financial Statements incorporated herein by reference under Item 8.
Current Power and Fuel Supply
The Company's generating facilities are interconnected through its own transmission lines or by contract through the lines of others. Substantially all generating facilities and reservoirs located within the Pacific Northwest are managed on a coordinated basis to obtain maximum load carrying capability and efficiency.
The Company's transmission system connects with other utilities in the Northwest having low-cost hydroelectric generation and with utilities in California and the Southwest having higher-cost, fossil-fuel generation. In periods of favorable hydro conditions, the Company utilizes lower-cost hydroelectric power to supply a greater portion of its load and attempts to sell its displaced higher-cost thermal generation to other utilities. In periods of less favorable hydro conditions, the Company seeks to sell excess thermal generation to utilities that are more dependent on hydroelectric generation than the Company. During the winter, the Company is able to purchase power from Southwest utilities, either for its own peak requirements or for resale to other Northwest utilities. During the summer, the Company is able to sell excess power to Southwest utilities to assist them in meeting their peak requirements. See "Wholesale Sales and Purchased Power."
In July 1996, the Company purchased a 50% ownership interest in the 474 MW Hermiston Plant, a natural gas-fired, combined-cycle generating plant that began operation in 1996. The Company takes all of the energy produced by the Hermiston Plant under a long-term contract. This commitment is expected
to reduce income from operations in 1997 by approximately $15 million as compared to 1996.
The Company owns or has interests in generating plants with an aggregate nameplate rating of 8,699 MW and plant net capability of 8,282 MW. See "Item 2.
ITEM 2. PROPERTIES
The Company owns 52 hydroelectric generating plants and has an interest in one additional plant, with an aggregate nameplate rating of 1,078.1 MW and plant net capability of 1,138.6 MW. It also owns or has interests in 17
thermal-electric generating plants with an aggregate nameplate rating of 7,620.5 MW and plant capability of 7,143.6 MW. The following table summarizes the Company's existing generating facilities:
- ----------- * Jointly owned plants; amount shown represents the Company's share only.
NOTE: Hydroelectric project locations are stated by locality and river watershed.
The Company's generating facilities are interconnected through its own transmission lines or by contract through the lines of others. Substantially all generating facilities and reservoirs located within the Pacific Northwest region are managed on a coordinated basis to obtain maximum load carrying capability and efficiency. Portions of the Company's transmission and distribution systems are located, by franchise or permit, upon public lands, roads and streets and, by easement or license, upon the lands of others.
Substantially all of the Company's electric utility plants are subject to the lien of the Company's Mortgage and Deed of Trust.
The following table describes the Company's recoverable coal reserves as of December 31, 1996. All coal reserves are dedicated to nearby Company operated generating plants. Recoverability by surface mining methods typically ranges between 90% and 95%. Recoverability by underground mining techniques ranges from 50% to 70%. The Company considers that the respective reserves assigned to the Centralia, Craig, Dave Johnston, Huntington, Hunter and Jim Bridger plants, together with coal available under both long-term and short-term contracts with external suppliers, will be sufficient to provide these plants with fuel that meets the Clean Air Act standards effective in 1996, for their current economically useful lives. The sulfur content of the reserves ranges from 0.43% to 0.84% and the BTU value per pound of the reserves ranges from 7,600 to 11,400. Reserve estimates are subject to adjustment as a result of the development of additional data, new mining technology and changes in regulation and economic factors affecting the utilization of such reserves.
Recoverable Tons Location Plant Served (in Millions) -------- ------------ ----------------
Centralia, Washington........ Centralia 50(1) Craig, Colorado.............. Craig 71(2) Glenrock, Wyoming............ Dave Johnston 50(1) Emery County, Utah........... Huntington and Hunter 103(1)(3) Rock Springs, Wyoming........ Jim Bridger 129(4) - ------------
(1) These reserves are mined by subsidiaries of the Company. (2) These reserves are leased and mined by Trapper Mining Company, a wholly owned subsidiary of Williams Fork Company, in which the Company owns approximately 20% of the outstanding stock. (3) These reserves are in underground mines. (4) These reserves are leased and mined by Bridger Coal Company, a joint venture between Pacific Minerals, Inc., a subsidiary of the Company, and a subsidiary of Idaho Power Company. Pacific Minerals, Inc. has a two-thirds interest in the joint venture.
Most of the Company's coal reserves are held pursuant to leases from the federal government through BLM and from certain states and private parties. The leases generally have multi-year terms that may be renewed or extended and require payment of rentals and royalties. In addition, federal and state regulations require that comprehensive environmental protection and reclamation standards be met during the course of mining operations and upon completion of mining activities. In 1996, the Company expended $4 million of reclamation costs and accrued $6 million of estimated final mining reclamation costs. Final mine reclamation funds have been established with respect to certain of the Company's mining properties. At December 31, 1996, the Company's pro rata portion of these reclamation funds totaled $36 million and the Company had an accrued reclamation liability of $118 million at December 31, 1996.
For a description of the properties of PTI, see "Item 1. Business" and "Item 2. Properties" of the Annual Report on Form 10-K of Pacific Telecom, Inc. for the year ended December 31, 1996; such information is incorporated
herein by this reference. For a description of Powercor's properties, see "Item 1. Business--Australian Electric Operations--Properties" above.
ITEM 3.
ITEM 3. LEGAL PROCEEDINGS
The Company and its subsidiaries are parties to various legal claims, actions and complaints, certain of which are described below. Although it is impossible to predict with certainty whether or not the Company and its subsidiaries will ultimately be successful in its legal proceedings or, if not, what the impact might be, management believes that disposition of these matters will not have a material adverse effect on the Company's consolidated financial statements.
In December 1995, the Company received a Notice of Violation and Order ("NOV") from the Wyoming Department of Environmental Quality ("DEQ") alleging that the Company has failed to maintain pollution control equipment at Unit 4 of its Jim Bridger Power Plant in a manner consistent with good air pollution control practices and alleging violations of the 30 percent opacity limitation in the air quality permit issued for that Unit. The Company performed certain stack tests to verify compliance with particulate emission limitations. As a result, DEQ has indicated that the NOV will be withdrawn and no penalties will be assessed against the Company.
On January 28, 1997, the Air Quality Division ("AQD") of the Wyoming DEQ issued a NOV alleging that Jim Bridger Unit 4 violated permit limits for SO2 emissions during 1994. Specifically, the NOV asserts that Unit 4 emitted 153.5 tons more SO2 during 1994 than allowed under the plant's permit. The NOV also indicates the AQD's intention to refer the matter to the Wyoming Attorney General's office for the filing of a complaint in state court to collect appropriate civil penalties, although a complaint has not yet been filed. The Company is working with the AQD toward a resolution which is not expected to involve any significant capital expenditures at the plant.
On March 1, 1996, a purported class action was filed against PacifiCorp alleging negligence, nuisance and trespass by PacifiCorp as a result of the operation of three dams on the Lewis River in the State of Washington during the floods of February 1996 (LARRY AND BARBARA RAINEY, ET AL. V. PACIFICORP, Case No. 96-2-00977-0, Superior Court of Washington for Clark County). Plaintiffs request an unspecified amount of damages on behalf of the alleged class, estimated by plaintiffs to have over 500 members, for injury to their property, diminution of value of the related real estate and improvements, and consequential damages in the form of lost income to businesses operating in the flooded areas. The complaint also seeks injunctive relief compelling PacifiCorp to establish additional warning systems downstream from the dams. PacifiCorp believes that it operated the dams in an appropriate manner.
On March 15, 1996, Utah Associated Municipal Power Systems ("UAMPS") filed an action against PacifiCorp asserting 10 different causes of action, all relating to the ownership interest of UAMPS in the Hunter Steam Electric Generating Unit No. II ("Hunter II") in Emery County, Utah, which is operated by PacifiCorp. (UTAH ASSOCIATED MUNICIPAL POWER SYSTEMS V. PACIFICORP, Civil No. 2:96CV 0240B, U.S. District Court for the District of Utah, Central Division). The complaint alleges, among other things, an illegal tying arrangement in the supply of coal by PacifiCorp to Hunter II, violations of various federal and state antitrust laws, breach of contract and breach of a
duty of good faith and fair dealing. The complaint seeks damages in excess of $1,000,000 with respect to each of several of the causes of action and certain declaratory rulings.
On April 2, 1996, the Utah Municipal Power Agency and Provo City, Utah served an action against PacifiCorp asserting 13 different causes of action, all relating to the plaintiffs' ownership interest in the Hunter Steam Electric Generating Unit I ("Hunter I") in Emery County, Utah, which is operated by PacifiCorp. (UTAH MUNICIPAL POWER AGENCY AND PROVO CITY, UTAH V. PACIFICORP, Civil No. 2:96CV 0290C, US District Court for the District of Utah, Central Division). The complaint alleges, among other things, an illegal tying arrangement in the supply of coal by PacifiCorp to Hunter I, violations of various federal and state antitrust laws, breach of contract, breach of fiduciary duties and breach of a duty of good faith and fair dealing. The complaint seeks damages in amounts to be proven at trial, trebled in the case of the antitrust claims, and certain declaratory rulings.
On October 9, 1996, the Sierra Club filed an action against the Company and the other joint owners of the Craig Electric Generating Station (the "Station") under the citizen's suit provisions of the federal Clean Air Act alleging, based upon reports from emissions monitors at the Station, that over 14,000 violations of state and federal opacity standards have occurred over a five-year period at Units 1 and 2 of the Station. (SIERRA CLUB V. TRI-STATE GENERATION AND TRANSMISSION ASSOCIATION, INC., PUBLIC SERVICE COMPANY OF COLORADO, INC., SALT RIVER PROJECT AGRICULTURAL IMPROVEMENT AND POWER DISTRICT, PACIFICORP AND PLATTE RIVER POWER AUTHORITY, Civil Action No. 96-B2368, US District Court for the District of Colorado). The Company has a 19.28 percent interest in Units 1 and 2 of the Station, which is operated by Tri-State Generation and Transmission Association and located in Craig, Colorado.
The action seeks injunctive relief requiring the defendants to operate the Station in compliance with applicable statutes and regulations, the imposition of civil penalties, litigation costs, attorneys' fees and mitigation. The federal Clean Air Act provides for penalties of up to $25,000 per day for each violation, but the level of penalties imposed in any particular instance is discretionary. The complaint alleges that the Company and Public Service Company of Colorado are responsible for the alleged violations beginning with the second quarter of 1992, when they acquired their interests in the Station, and that the other owners are responsible for the alleged violations during the entire period. The complaint alleges that there were approximately 10,000 violations since the second quarter of 1992. The Company is unable to predict the level of penalties or other remedies that may be imposed upon the joint owners of the Station or what portion of such liability may ultimately be borne by the Company.
ITEM 4.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
No information is required to be reported pursuant to this item.
ITEM 4A. EXECUTIVE OFFICERS OF THE REGISTRANT
The following is a list of all executive officers of the Company. There are no family relationships among the executive officers. Officers are normally elected annually.
Frederick W. Buckman, born March 9, 1946, President and Chief Executive Officer of the Company
Mr. Buckman was elected President and Chief Executive Officer of the Company effective February 1, 1994 and became a director of the Company and PacifiCorp Holdings, Inc. in February 1994. He formerly served as President and Chief Executive Officer of Consumers Power Company, Jackson, Michigan, from 1992 to 1994.
Charles E. Robinson, born December 3, 1933, Chairman, President and Chief Executive Officer of Pacific Telecom, Inc.
Mr. Robinson was elected Chairman of Pacific Telecom, Inc. in February 1989. He has been serving as Chief Executive Officer since April 1985 and served as President from April 1985 to October 1990. He resumed the role of President on December 31, 1992.
William C. Brauer, born January 11, 1939, Senior Vice President of the Company
Mr. Brauer was elected Senior Vice President of the Company in May 1996. He served as Vice President from 1992 to 1996 and as Senior Vice President of Electric Operations from 1991 to 1992.
John A. Bohling, born June 23, 1943, Senior Vice President of the Company
Mr. Bohling was elected Senior Vice President of the Company in February 1993. He served as Executive Vice President of Pacific Power from September 1991 to February 1993 and as Senior Vice President of Utah Power from February 1990 to September 1991.
Shelley R. Faigle, born June 8, 1951, Senior Vice President of the Company
Ms. Faigle was elected Senior Vice President of the Company in November 1993. She served as Vice President from February 1992 to November 1993 and as Vice President of Pacific Power from 1989 to February 1992.
Paul G. Lorenzini, born April 16, 1942, Senior Vice President of the Company
Mr. Lorenzini was elected Senior Vice President of the Company in May 1994. He served as President of Pacific Power from January 1992 to May 1994 and as Executive Vice President from January 1989 to January 1992.
John E. Mooney, born March 9, 1937, Senior Vice President of the Company
Mr. Mooney was elected Senior Vice President of the Company in November 1994. He served as Executive Vice President of Utah Power from September 1991 to November 1994 and as Vice President of Pacific Power from August 1990 to September 1991.
Richard T. O'Brien, born March 20, 1954, Senior Vice President and Chief Financial Officer of the Company and Senior Vice President and Chief Financial Officer of PacifiCorp Holdings, Inc.
Mr. O'Brien was elected Senior Vice President and Chief Financial Officer of the Company in August 1995, and of PacifiCorp Holdings in February 1996. He served as Vice President of the Company from August 1993 to August 1995. He served as Senior Vice President, Treasurer and Chief Financial Officer of NERCO, Inc., a former subsidiary of the Company, during 1992 and 1993 and Vice President and Treasurer of NERCO from 1989 to 1992.
Daniel L. Spalding, born December 23, 1953, Chairman and Chief Executive Officer of Powercor, Senior Vice President of the Company
Mr. Spalding was elected Chairman and Chief Executive Officer of Powercor in December 1995 and was elected Senior Vice President of the Company in February 1992. He served as Vice President from October 1987 to February 1992.
Dennis P. Steinberg, born December 5, 1946, Senior Vice President of the Company
Mr. Steinberg was elected Senior Vice President of the Company in August 1994. He served as Vice President of the Company from February 1992 to August 1994 and as Vice President of Electric Operations from August 1990 to February 1992.
Verl R. Topham, born August 25, 1934, Senior Vice President and General Counsel of the Company
Mr. Topham was elected Senior Vice President and General Counsel and a director of the Company in May 1994. He had served as President of Utah Power from February 1990 to May 1994.
Sally A. Nofziger, born July 5, 1936, Vice President and Corporate Secretary of the Company, Secretary of PacifiCorp Holdings, Inc. and PacifiCorp Financial Services, Inc.
Mrs. Nofziger was elected Vice President of the Company in 1989 and has been Corporate Secretary since 1983.
William E. Peressini, born May 23, 1956, Vice President and Treasurer of the Company and Treasurer of PacifiCorp Holdings, Inc. and Pacific Telecom, Inc.
Mr. Peressini was elected Vice President and Treasurer of the Company in May 1996. He had served as Treasurer since January 1994. He has been Treasurer of PacifiCorp Holdings, Inc. since February 1994 and of Pacific Telecom, Inc. since August 1996. He served as Executive Vice President of PacifiCorp Financial Services, Inc. from January 1992 to January 1994 and as Senior Vice President and Chief Financial Officer of that company from 1989 to January 1992.
Michael C. Henderson, born October 24, 1946, Vice President of the Company
Mr. Henderson was elected Vice President of the Company in November 1995. He has served as Director, President and Chief Executive Officer of PacifiCorp Holdings, Inc. and as Chairman, President and Chief Executive Officer of PacifiCorp Financial Services, Inc. since March 1995. He joined PacifiCorp in 1991 as Senior Vice President of PacifiCorp Financial Services, Inc. and served as its President from April 1993 to March 1995.
Thomas J. Imeson, born March 20, 1950, Vice President of the Company
Mr. Imeson was elected Vice President of the Company in February 1992. He had served as Vice President of Electric Operations from 1990 to February 1992.
Michael J. Pittman, born March 25, 1953, Vice President of the Company
Mr. Pittman was elected Vice President of the Company in May 1993. He served as Assistant Vice President from 1990 to 1993.
Donald A. Bloodworth, born May 9, 1956, Controller of the Company
Mr. Bloodworth was elected Controller of the Company in August 1996. He formerly served as Vice President of Revenue Requirements and Controller for Pacific Telecom, Inc. from May 1993 until August 1996. He was Vice President and Treasurer for PacifiCorp Holdings, Inc. and PacifiCorp Financial Services during 1992 and 1993.
PART II
ITEM 5.
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS
The information required by this item is included under "Quarterly Financial Data" on page 59 of the Company's Annual Report to Shareholders and is incorporated herein by this reference.
ITEM 6.
ITEM 6. SELECTED FINANCIAL DATA
The information required by this item is included under Note 16 "Selected Financial and Segment Information" on page 54 of the Company's Annual Report to Shareholders and is incorporated herein by this reference.
ITEM 7.
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The information required by this item is included under "Earnings Overview," "Domestic Electric Operations," "Australian Electric Operations," "Telecommunications," "Other Operations" and "Liquidity and Capital Resources" on pages 24 through 36 of the Company's Annual Report to Shareholders and is incorporated herein by this reference.
ITEM 8.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
The information required by this item is incorporated by this reference from the Company's Annual Report to Shareholders or filed with this Report as listed in Item 14 hereof.
ITEM 9.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE
No information is required to be reported pursuant to this item.
PART III
ITEM 10.
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
The information required by this item with respect to the Company's directors is incorporated herein by this reference to "Election of Directors" in the Proxy Statement for the 1997 Annual Meeting of Shareholders. The information required by this item with respect to the Company's executive officers is set forth in Part I of this report under Item 4A. The information required by this item with respect to compliance with Section 16(a) of the Securities Exchange Act of 1934 is incorporated herein by this reference to "Compliance within Section 16(a) of the Securities Exchange Act of 1934" in the Proxy Statement for the 1997 Annual Meeting of Shareholders.
ITEM 11.
ITEM 11. EXECUTIVE COMPENSATION
The information required by this item is incorporated herein by this reference to "Executive Compensation" in the Proxy Statement for the 1997 Annual Meeting of Shareholders.
ITEM 12.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The information required by this item is incorporated herein by this reference to "Security Ownership of Certain Beneficial Owners and Management" in the Proxy Statement for the 1997 Annual Meeting of Shareholders.
ITEM 13.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The information required by this item is incorporated herein by this reference to "Director Compensation and Certain Transactions" in the Proxy Statement for the 1997 Annual Meeting of Shareholders.
PART IV
ITEM 14.
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K
Page References ---------- (a) 1. Index to Consolidated Financial Statements:* Independent Auditors' Report............................... 37 Statements of consolidated income and retained earnings for each of the three years ended December 31, 1996........................................ 38 Statements of consolidated cash flows for each of the three years ended December 31, 1996............... 39 Consolidated balance sheets at December 31, 1996 and 1995................................................. 40 Notes to consolidated financial statements................. 42
2. Schedules:**
- ---------- * Page references are to the incorporated portion of the Annual Report to Shareholders of the Registrant for the year ended December 31, 1996. ** All schedules have been omitted because of the absence of the conditions under which they are required or because the required information is included elsewhere in the financial statements incorporated by reference herein.
3. Exhibits:
(3)a -- Third Restated Articles of Incorporation of the Company.
*(3)b -- Bylaws of the Company (as restated and amended May 10, 1995) (Exhibit (3)b, Form 10-K for the fiscal year ended December 31, 1995, File No. 1-5152).
*(4)a -- Mortgage and Deed of Trust dated as of January 9, 1989, between the Company and Morgan Guaranty Trust Company of New York (The Chase Manhattan Bank, successor), Trustee, as supplemented and modified by twelve Supplemental Indentures (Exhibit 4-E, Form 8-B, File No. 1-5152; Exhibit (4)(b), File No. 33-31861; Exhibit (4)(a), Form 8-K dated January 9, 1990, File No. 1-5152; Exhibit 4(a), Form 8-K dated September 11, 1991, File No. 1-5152; Exhibit 4(a), Form 8-K dated January 7, 1992, File No. 1-5152; Exhibit 4(a), Form 10-Q for the quarter ended March 31, 1992, File No. 1-5152; and Exhibit 4(a), Form 10-Q for the quarter ended September 30, 1992, File No. 1-5152; Exhibit 4(a), Form 8-K dated April 1, 1993, File No. 1-5152; Exhibit 4(a), Form
10-Q for the quarter ended September 30, 1993, File No. 1-5152); Exhibit 4(a), Form 10-Q for the quarter ended June 30, 1994, File No. 1-5152; Exhibit (4)b, Form 10-K for the fiscal year ended December 31, 1994, File No. 1-5152; and Exhibit (4)b, Form 10-K for the fiscal year ended December 31, 1995, File No. 1-5152).
(4)b -- Twelfth Supplemental Indenture dated as of September 1, 1996 to the Mortgage and Deed of Trust dated as of January 9, 1989 between the Company and Morgan Guaranty Trust Company of New York (The Chase Manhattan Bank, successor), Trustee.
*(4)c -- Third Restated Articles of Incorporation and Bylaws. See (3)a and (3)b above.
In reliance upon item 601(4)(iii) of Regulation S-K, various instruments defining the rights of holders of long-term debt of the Registrant and its subsidiaries are not being filed because the total amount authorized under each such instrument does not exceed 10% of the total assets of the Registrant and its subsidiaries on a consolidated basis. The Registrant hereby agrees to furnish a copy of any such instrument to the Commission upon request.
*+(10)a -- PacifiCorp Deferred Compensation Payment Plan (Exhibit 10-F, Form 10-K for fiscal year ended December 31, 1992, File No. 1-8749) (Exhibit (10)b, Form 10-K for fiscal year ended December 31, 1994, File No. 1-5152).
*+(10)b -- PacifiCorp Compensation Reduction Plan dated December 1, 1994, as amended (Exhibit (10)b, Form 10-K for fiscal year ended December 31, 1994, File No. 1-5152).
*+(10)c -- Pacific Telecom, Inc. Executive Bonus Plan, dated October 26, 1990 (Exhibit 10B, Form 10-K for the fiscal year ended December 31, 1990, File No. 0-873).
+(10)d -- PacifiCorp Executive Incentive Program.
*+(10)e -- PacifiCorp Non-Employee Directors' Stock Compensation Plan dated August 1, 1985, as amended. (Exhibit (10)f, Form 10-K for fiscal year ended December 31, 1994, File No. 1-5152).
*+(10)f -- PacifiCorp Long Term Incentive Plan, 1993 Restatement (Exhibit 10G, Form 10-K for the year ended December 31, 1993, File No. 0-873).
*+(10)g -- Form of Restricted Stock Agreement under PacifiCorp Long Term Incentive Plan, 1993 Restatement (Exhibit 10H, Form 10-K for the year ended December 31, 1993, File No. 0-873).
+(10)h -- PacifiCorp Supplemental Executive Retirement Plan, as amended.
*+(10)i -- Pacific Telecom, Inc. Executive Deferred Compensation Plan dated as of January 1, 1994, as amended (Exhibit 10L, Form 10-K for the year ended December 31, 1994, File No. 0-873).
*+(10)j -- Pacific Telecom, Inc. Executive Officer Severance Plan (Exhibit 10N, Form 10-K for the year ended December 31, 1994, File No. 0-873).
*+(10)k -- Incentive Compensation Agreement dated as of February 1, 1994 between PacifiCorp and Frederick W. Buckman (Exhibit (10)k, Form 10-K for the fiscal year ended December 31, 1993, File No. 1-5152).
*+(10)l -- Compensation Agreement dated as of February 9, 1994 between PacifiCorp and Keith R. McKennon (Exhibit (10)m, Form 10-K for the fiscal year ended December 31, 1993, File No. 1-5152).
*+(10)m -- Amendment No. 1 to Compensation Agreement between PacifiCorp and Keith R. McKennon dated as of February 9, 1995. (Exhibit (10)r, Form 10-K for the fiscal year ended December 31, 1994, File No. 1-5152).
+(10)n -- PacifiCorp Stock Incentive Plan dated August 14, 1996, as amended.
+(10)o -- Form of Restricted Stock Agreement under PacifiCorp Stock Incentive Plan.
+(10)p -- PacifiCorp Executive Severance Plan.
*(10)q -- Short-Term Surplus Firm Capacity Sale Agreement executed July 9, 1992 by the United States of America Department of Energy acting by and through the Bonneville Power Administration and Pacific Power & Light Company (Exhibit (10)n, Form 10-K for the fiscal year ended December 31, 1992, File No. 1-5152).
*(10)r -- Restated Surplus Firm Capacity Sale Agreement executed September 27, 1994 by the United States of America Department of Energy acting by and through the Bonneville Power Administration and Pacific Power & Light Company. (Exhibit (10)t, Form 10-K for the fiscal year ended December 31, 1994, File No. 1-5152).
(12)a -- Statements of Computation of Ratio of Earnings to Fixed Charges. (See page S-1.)
(12)b -- Statements of Computation of Ratio of Earnings to Combined Fixed Charges and Preferred Stock Dividends. (See page S-2.)
(13) -- Portions of Annual Report to Shareholders of the Registrant for the year ended December 31, 1996 incorporated by reference herein.
(21) -- Subsidiaries. (See pages S-3 and S-4.)
(23) -- Consent of Deloitte & Touche LLP with respect to Annual Report on Form 10-K.
(24) -- Powers of Attorney.
(27) -- Financial Data Schedule (filed electronically only).
(99) -- "Item 1. Business" and "Item 2. Properties" from the Annual Report on Form 10-K of Pacific Telecom, Inc. for the year ended December 31, 1996. - ----------- *Incorporated herein by reference. +This exhibit constitutes a management contract or compensatory plan or arrangement.
(b) Reports on Form 8-K.
On Form 8-K dated February 12, 1997, under "Item 5. Other Events," the Company filed a press release reporting the Utah Division of Public Utilities and Committee of Consumer Services filed a joint petition with the Utah Public Services Commission ("PSC") requesting the PSC to commence proceedings to establish new rates for the Company's Utah customers. The Company also filed a press release reporting financial results for the three and twelve months ended December 31, 1996.
On Form 8-K dated March 12, 1997, under "Item 5. Other Events," the Company filed a press release reporting the proposed acquisition of a natural gas gathering, processing, storage and marketing company based in Houston, Texas.
(c) See (a) 3. above.
(d) See (a) 2. above.
SIGNATURES
PURSUANT TO THE REQUIREMENTS OF SECTION 13 OR 15(D) 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
/s/FREDERICK W. BUCKMAN By_________________________________ Frederick W. Buckman (PRESIDENT)
Date: March 20, 1997
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES EXCHANGE ACT OF 1934, THIS REPORT HAS BEEN SIGNED BELOW BY THE FOLLOWING PERSONS ON BEHALF OF THE REGISTRANT AND IN THE CAPACITIES AND ON THE DATES INDICATED.
SIGNATURE TITLE DATE --------- ----- ----
/s/FREDERICK W. BUCKMAN President, Chief March 20, 1997 - ----------------------------------- Executive Officer Frederick W. Buckman and Director (President)
/s/RICHARD T. O'BRIEN Senior Vice President March 20, 1997 - ----------------------------------- (Chief Financial Richard T. O'Brien Officer and Principal (Senior Vice President) Accounting Officer)
*W. CHARLES ARMSTRONG ) - ----------------------------------- ) W. Charles Armstrong ) ) ) *KATHRYN A. BRAUN ) - ----------------------------------- ) Kathryn A. Braun ) ) ) Director March 20, 1997 *C. TODD CONOVER ) - ----------------------------------- ) C. Todd Conover ) ) ) *NOLAN E. KARRAS ) - ----------------------------------- ) Nolan E. Karras )
TITLE DATE ----- ----
*KEITH R. MCKENNON ) - ----------------------------------- ) Keith R. McKennon ) (Chairman) ) ) ) *ROBERT G. MILLER ) - ----------------------------------- ) Robert G. Miller ) ) ) *ALAN K. SIMPSON ) - ----------------------------------- ) Alan K. Simpson ) ) ) *VERL R. TOPHAM ) - ----------------------------------- ) Director March 20, 1997 Verl R. Topham ) ) ) *DON M. WHEELER ) - ----------------------------------- ) Don M. Wheeler ) ) ) *NANCY WILGENBUSCH ) - ----------------------------------- ) Nancy Wilgenbusch ) ) ) *PETER I. WOLD ) - ----------------------------------- ) Peter I. Wold )
*By/s/NANCY WILGENBUSCH - ----------------------------------- Nancy Wilgenbusch (Attorney-in-Fact)