SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 11-K
(Mark One)
/X/ | ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) |
For the fiscal year ended December 31, 2000
OR
/ / | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE |
For the Transition period from _________ to _________
A. | Full title of the plan and the address of the plan, if different from that of the issuer named below: |
PACIFICORP K PLUS EMPLOYEE SAVINGS PLAN
825 N.E. Multnomah, Portland, Oregon 97232
B. | Name of issuer of the securities held pursuant to the plan and the address of its principal executive office: |
SCOTTISH POWER plc
1 Atlantic Quay, Glasgow, G2 8SP, Scotland
PacifiCorp K Plus Employee
Savings Plan
Financial Statements and Supplemental Schedule
For the Years Ended December 31, 2000 and 1999
PacifiCorp K Plus Employee Savings Plan
Table of Contents
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Report of Independent Accountants
To the Trustees of
PacifiCorp K Plus Employee Savings Plan
In our opinion, the accompanying statement of net assets available for benefits and the related statement of changes in net assets available for benefits present fairly, in all material respects, the net assets available for benefits of the PacifiCorp K Plus Employee Savings Plan (the Plan) at December 31, 2000 and 1999, and the changes in net assets available for benefits for the years then ended in conformity with accounting principles generally accepted in the United States of America. These financial statements are the responsibility of the Plan's management; our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits of these statements in accordance with auditing standards generally accepted in the United States of America, which require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.
Our audits were conducted for the purpose of forming an opinion on the basic financial statements taken as a whole. The supplemental schedule of assets held for investment purposes at end of year is presented for the purpose of additional analysis and is not a required part of the basic financial statements but is supplementary information required by the Department of Labor's Rules and Regulations for Reporting and Disclosure under the Employee Retirement Income Security Act of 1974. This supplemental schedule is the responsibility of the Plan's management. The supplemental schedule has been subjected to the auditing procedures applied in the audit of the basic financial statements and, in our opinion, is fairly stated in all material respects in relation to the basic financial statements taken as a whole.
Portland, Oregon
June 25, 2001
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PacifiCorp K Plus Employee Savings Plan
Statement of Net Assets Available for Benefits
December 31, 2000 and 1999
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The accompanying notes are an integral part of the financial statements.
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PacifiCorp K Plus Employee Savings Plan
Statement of Changes in Net Assets Available for Benefits
For the Years Ended December 31, 2000 and 1999
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The accompanying notes are an integral part of the financial statements.
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PacifiCorp K Plus Employee Savings Plan
Notes to Financial Statements
1. Plan Description
The following brief description of the PacifiCorp K Plus Employee Savings Plan (the Plan) is
provided for general information purposes only. Participants should refer to the Plan
document for more complete information.
General
Effective January 1, 1988, PacifiCorp (the Company) and most of its subsidiaries
(collectively, the Employers) adopted the Plan. The Plan is a tax-qualified Employee
Savings Plan covering employees of the Employers, except employees identified as "casual
employees" within the Employers' payroll systems, employees covered by a collective
bargaining agreement that does not provide for participation in the Plan, leased employees
and temporary employees. Qualified employees of the Employers become eligible to
participate after completing one month of service as defined in the Plan. The Plan is subject
to the provisions of the Employee Retirement Income Security Act of 1974 (ERISA).
Effective January 1, 1999, the Plan adopted the American Institute of Certified Public
Accountants Statement of Position 99-3, Accounting for and Reporting of Certain Defined
Contribution Plan Investments and Disclosure Matters, which, among other things,
eliminates the previous requirement to present fund information for participant directed
investments. The adoption of this statement had no effect on reported net assets or changes
in net assets available for benefits.
Contributions
Participants may elect to contribute a percentage of their pre-tax annual compensation as
defined in the Plan (Pre-Tax Contributions). Different percentages can apply to separate
employee groups, but in no event will the percentage be more than 16% of eligible
compensation.
Each of the Employers makes a matching contribution each year for each participant
(Matching Contribution). The Matching Contribution is a percentage of the participant's
Pre-Tax Contribution for the year, up to 6% of the participant's compensation for the year.
The Matching Contribution percentage is 50% or a percentage fixed in the Employer's
adoption statement, by resolution of the Board of Directors of the Employers and announced
to participants, or pursuant to a collective bargaining agreement. Other than for participants
covered by certain collective bargaining agreements, the Matching Contribution is made to
the PacifiCorp K Plus Employee Stock Ownership Plan, another employee benefit plan
sponsored by the Company.
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PacifiCorp K Plus Employee Savings Plan
Notes to Financial Statements, Continued
1. Plan Description (Continued)
Vesting
Pre-Tax Contributions are fully vested at all times. Matching Contributions are vested based
on years of service as follows:
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Participant accounts
Each participant's account is credited with Pre-Tax Contributions, Matching Contributions,
where applicable, and an allocation of the Plan's net earnings or losses. Pre-Tax
Contributions are credited based on the participant's election, Matching Contributions are
credited according to the formula defined in the Plan document, and Plan earnings are
allocated based on participant account balances.
Participant withdrawals
Vested benefits are payable in a lump sum upon retirement, termination, death or disability.
If the participant's account balance exceeds $5,000, the participant may defer payment, or
upon retirement, elect installment payments over a specified period of time not exceeding 15
years from the date of commencement of benefits. The Plan also provides for withdrawals
due to financial hardship.
Participant loans
Participants may borrow from their account balance a minimum of $1,000 up to a maximum
equal to the lesser of $50,000 or 50% of their account balance under the Plan. Loan terms
range from 1 to 5 years, or up to 15 years for the purchase of a primary residence, except for
some loans, which are transferred in from other plans, which maintain their existing terms.
The loans bear interest at a rate commensurate with local prevailing rates and are secured by
the balance in the participant's account and an assignment of current pay of the participant
sufficient to service the loan.
Plan termination
Although it has not expressed any intention to do so, the Company may wholly or partially
terminate the Plan or direct the discontinuance of contributions at any time, subject to the
provisions of ERISA. Upon terminating the Plan, the Company may either liquidate the
assets or continue to pay benefits as they become payable under Plan provisions. If the assets
are liquidated, the net assets (after payment of expenses) will be allocated among participants
in proportion to their account balances.
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PacifiCorp K Plus Employee Savings Plan
Notes to Financial Statements, Continued
2. Summary of Significant Accounting Policies
Basis of accounting
The financial statements of the Plan are prepared under the accrual method of accounting.
Investment valuation
On November 29, 1999, the Company and Scottish Power plc (ScottishPower) completed
their merger under which the Company became an indirect subsidiary of ScottishPower.
Each share of the Company's stock in the Plan was converted to 0.58 ScottishPower
American Depository Shares (ScottishPower ADS). Each ScottishPower ADS represents
four ordinary shares of ScottishPower common stock.
The investments in ScottishPower ADS are stated at fair value based on published market
quotations at year-end. The per share market values of the ScottishPower ADS at
December 31, 2000 and 1999 were $30.31 and $28.00, respectively.
Investments in mutual funds and the common and commingled trust fund are stated at fair
value based on quoted market prices. Temporary cash investments and participant loans are
stated at cost, which approximates fair value.
The Plan's investments in guaranteed investment contracts are stated at contract value, which
represents contributions made under the contract, plus earnings, less withdrawals. Plan
management believes that the contract value approximates fair value for the guaranteed
investment contracts. At December 31, 2000, the fair value of all investment contracts was
$75,765,895. The average yield to maturity of the guaranteed investment contracts was
6.24% at December 31, 2000 and 1999. There were no valuation reserves at December 31,
2000 and 1999.
Fixed rate guaranteed investment contract crediting rates are applied as determined at the
time of purchase and are constant until maturity. Variable or floating rate contracts'
crediting rates are reset from time to time to minimize the spread between market and book
value for security backed investments or to allow the general account investment to be
interest rate responsive. The reset values for security backed investment rates are a function
of contract value, market value, yield and duration. The average crediting interest rate was
6.36% and 6.14% at December 31, 2000 and 1999. Minimum crediting interest rates vary
per contract.
Some investment contracts contain contingencies that could lead to penalties being assessed
on withdrawals from the contract that are the result of events initiated by the Company such
as plan terminations, spin-offs or early retirement programs.
Investment transactions and investment income
Investment transactions are accounted for on the date the investments are purchased or sold
(trade date). Interest income is recorded as earned. Dividend income is recorded on the ex
dividend date.
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PacifiCorp K Plus Employee Savings Plan
Notes to Financial Statements, Continued
2. Summary of Significant Accounting Policies (Continued)
Investment transactions and investment income (continued)
The Plan presents in the statement of changes in net assets available for benefits the net
(depreciation) appreciation in the fair value of its investments which consists of the realized
gains or losses and the unrealized (depreciation) appreciation on these investments.
Tax status
The Internal Revenue Service has determined and informed the Company by letter dated
June 25, 1996, that the Plan and related trust are designed in accordance with applicable
sections of the Internal Revenue Code (IRC). The Plan has been amended since receiving the
determination letter. However, the Plan administrator and the Plan's tax counsel believe that
the Plan is designed and is currently being operated in compliance with the applicable
provisions of the IRC.
Payment of Benefits
Benefits are recorded when paid. As of December 31, 2000 and 1999, net assets available
for benefits included benefits of $1,082,540 and $1,410,781, respectively, due to participants
who have withdrawn from participation in the Plan.
As a result of the May 4, 2000 sale of the Centralia power plant and adjacent mine to
TransAlta, the related active employees ceased participation in the Plan. These participants'
balances totaling $30,348,238 were transferred to a similar plan sponsored by TransAlta.
Administrative expenses
The Plan provides that each participating Employer may pay administrative costs and
expenses of the Plan; those costs not paid by each Employer are paid from Plan assets.
Participant loans
Loan transactions are treated as a transfer between the investment funds and the Participant
Loan Fund.
Use of estimates
The preparation of financial statements in conformity with accounting principles generally
accepted in the United States of America requires management to make estimates and
assumptions that affect reported amounts of assets, liabilities and changes therein, and the
disclosure of contingent assets and liabilities. Actual results could differ from those
estimates.
Reclassifications
Reclassifications have been made to certain prior year amounts to make them comparable to
the 2000 presentation. These changes had no effect on previously reported net assets
available for benefits.
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PacifiCorp K Plus Employee Savings Plan
Notes to Financial Statements, Continued
2. Summary of Significant Accounting Policies (Continued)
New Accounting Pronouncements
In June 1998, the Financial Accounting Standards Board issued Statement of Financial
Accounting Standards ("SFAS") No. 133, "Accounting for Derivative Instruments and
Hedging Activities. SFAS No. 133 requires that an entity recognize all derivatives and
measure those instruments at fair value.
SFAS No. 133 is effective for fiscal years beginning after June 15, 2000. Pursuant to SFAS
No. 137, the Plan is required to adopt SFAS No. 133 effective January 1, 2001. Management
has not yet been able to determine the impact of SFAS No. 133 on the Plan financial
statements as a result of the inconsistency in accounting literature between SFAS No. 133,
requiring derivatives to be measured at fair value, and the AICPA Audit and Accounting
Guide on "Audits of Employee Benefit Plans" and Statement of Position 94-4, "Reporting of
Investment Contracts Held by Health and Welfare Benefit Plans and Defined-Contribution
Pension Plans," requiring benefit responsive investment contracts (including synthetic GICs)
to be measured at contract value. Until this discrepancy is resolved, management is unable to
determine the impact that SFAS 133 will have on the Plan financial statements. The carrying
value of those instruments is $75,134,479 at December 31, 2000.
The actual impact on the Plan's net assets available for plan benefits of adopting SFAS No.
133 will be made based on the derivative positions and hedging relationships at the date of
adoption.
3. Investment Programs
Upon enrollment in the Plan, a participant may direct contributions to any of the following
funds:
The Equity Fund - invests primarily in equity investments.
The Balanced Fund - invests primarily in equity investments and bonds.
The Bond Fund - invests primarily in mortgage-backed securities, U.S. Treasury Bonds, and
corporate bonds.
The Stable Asset Fund - invests primarily in guaranteed investment contracts.
The ScottishPower ADS Fund - invests in ScottishPower ADS.
The Money Market Fund - invests solely in U.S. treasury securities.
The Aggressive Equity Fund - invests in equity instruments of small and medium size
companies.
The International Equity Fund - invests in equity investments of non-U.S. companies.
The Life Path Funds - invests in various proportions of equity instruments and fixed income
and debt instruments. There are five Life Path Funds from which the participant may choose.
The S&P 500 Index Fund - invests in a portfolio of common stocks designed to match the
overall return of the S&P 500 Index.
Participant Loan Fund - loans to participants.
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PacifiCorp K Plus Employee Savings Plan
Notes to Financial Statements, Continued
3. Investment Programs (Continued)
The following presents current value of investments that represent 5% or more of the Plan's
net assets:
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4. Net Change in Fair Value of Investments
For the years ended December 31, 2000 and 1999, the Plan's investments (depreciated)
appreciated in fair value as follows:
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5. Party-in-Interest Transactions
Certain Plan investments are shares of ScottishPower ADS, the Bankers Trust Pyramid
Directed Account Cash Fund and Pyramid Equity Index Fund. Indirectly, ScottishPower is
the Plan Sponsor and Bankers Trust is the Trustee, as defined by the Plan. Therefore, these
transactions qualify as party-in-interest.
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PacifiCorp K Plus Employee Savings Plan
Notes to Financial Statements, Continued
5. Party-in-Interest Transactions (Continued)
Purchases of sponsor-related stock during the years ended December 31, 2000 and 1999 were
as follows:
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6. Concentration of Risk
At December 31, 2000, the Plan's assets consist primarily of investments in financial
instruments, including temporary cash investments, guaranteed investment contracts,
ScottishPower ADS, mutual funds, common and commingled trust fund and participant
loans. The Plan does not require collateral or other security to support the investments in
these financial instruments. These investments may subject the Plan to concentrations of
risk, as from time-to-time, cash balances exceed amounts insured by the Federal Deposit
Insurance Corporation, market value of securities are dependent on the ability of the issuers
to honor contractual commitments, and the value of ScottishPower ADS, mutual funds and
the common and commingled trust fund are subject to changes in market values.
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Supplemental Schedule
PacifiCorp K Plus Employee Savings Plan
Schedule H Part IV Line i
Schedule of Assets Held for Investment Purposes at End of Year
December 31, 2000
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PacifiCorp K Plus Employee Savings Plan
Schedule H Part IV Line i, Continued
Schedule of Assets Held for Investment Purposes at End of Year
December 31, 2000
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SIGNATURES
THE PLAN. PURSUANT TO THE REQUIREMENTS OF THE SECURITIES EXCHANGE ACT OF 1934, THE K PLUS EMPLOYEE SAVINGS ADMINISTRATIVE COMMITTEE, WHICH ADMINISTERS THE PLAN, HAS DULY CAUSED THIS ANNUAL REPORT TO BE SIGNED ON ITS BEHALF BY THE UNDERSIGNED HEREUNTO DULY AUTHORIZED.
PacifiCorp |
Date: June 25, 2001
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