SECURITIES AND EXCHANGE COMMISSION
Washington D.C. 20549
FORM 8-K
CURRENT REPORT PURSUANT TO SECTION 13 OR 15 (d) OF
THE SECURITIES EXCHANGE ACT OF 1934
Date of report (date of earliest event reported):
December 12, 1995
PACIFICORP
(Exact name of registrant as specified in its charter)
State of Oregon 1-5152 93-0246090
(State of Incorporation) (Commission (I.R.S. Employer
File No.) Identification No.)
700 N.E. Multnomah, Suite 1600, Portland, Oregon 97232-4116
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code:
(503) 731-2000
No Change
(Former Name or Former Address, if changed since last report)
2
Item 2. ACQUISITION OR DISPOSITION OF ASSETS
On December 12, 1995, PacifiCorp Holdings, Inc. ("Holdings"), a
wholly owned subsidiary of PacifiCorp, purchased Powercor Australia, Limited
("Powercor"), an Australian electric distribution utility, from the State of
Victoria for approximately $1.6 billion in cash. The purchase price was
established pursuant to a bidding process. Powercor had assets of
approximately $855 million at June 30, 1995 and revenues of approximately
$561 million for the year ended June 30, 1995. Powercor's service territory
includes a portion of suburban Melbourne and the western and central regions
of the State of Victoria and has approximately 570,000 customers.
The acquisition was financed with borrowings of A$1.2 billion in
Australia under a A$1.325 billion credit facility co-arranged by Citibank
Limited, National Australia Bank Limited, Morgan Guaranty Trust Company of New
York and UBS Australia Limited and with an equity contribution from Holdings
which has been initially financed with short-term debt in the U.S. The
transaction was structured through a series of wholly owned U.S. and
Australian companies.
Item 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS
(a) Financial Statements for Businesses Acquired.
1. Audited Financial Statements of Powercor as of and for the
period from May 11, 1994 to June 30, 1995, together with
the Auditor-General's Report. (Page 1)
2. Unaudited Financial Statements of Powercor as of and for
the three months ended September 30, 1995. (Page 42)
(b) Pro Forma Financial Information.
1. Unaudited Pro Forma Condensed Consolidated Balance Sheet
and Income Statement as of and for the year ended
December 31, 1994. (Page 36)
2. Unaudited Pro forma Condensed Consolidated Balance Sheet
and Income Statement as of and for the nine months ended
September 30, 1995. (Page 38)
(c) Exhibits.
The Exhibits to this Report are listed below.
2.1 Asset Sale Agreement between Powercor Australia Limited
and PacifiCorp Australia Holdings Pty Ltd.
2.2 Share Sale Agreement between the State Electricity
Commission of Victoria and the State of Victoria and
PacifiCorp Australia Holdings Pty Ltd. and PacifiCorp
Holdings, Inc.
3
2.3 Asset Purchase Agreement between PacifiCorp Australia
Holdings Pty Ltd. and Powercor Australia Limited.
23 Consent of the Auditor-General, Melbourne, Australia.
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
PACIFICORP
(Registrant)
By: RICHARD T. O'BRIEN
________________________________
Richard T. O'Brien
Senior Vice President
and Chief Financial Officer
Date: December 22, 1995
All Dollars are Australian with Australian Accounting Standards applied.
Powercor Australia Limited
Financial Statements and Reports
For The Period From
11 May 1994 to 30 June 1995
Contents
Page
____
Profit and Loss Account 1
Balance Sheet 2
Statement of Cash Flows 3
Notes on and Forming Part of the Financial Statements 4
Auditor General's Report 34
1
All Dollars are Australian with Australian Accounting Standards applied.
PROFIT AND LOSS ACCOUNT
for the period ended 30 June 1995 [i]
______________________________________________________________________________
1995
Notes $000
______________________________________________________________________________
Operating profit before income tax (2),(3) 111,079
Income tax attributable to operating profit (4) 43,221
__________
Operating profit after income tax 67,858
Retained profits at the beginning of the period 0
__________
Total available for appropriation 67,858
Less dividends provided for or paid (13) 44,108
__________
Retained profits at the end of the financial period 23,750
==========
<FN>
The above profit and loss account of Powercor Australia Ltd (Powercor) should
be read in conjunction with the Notes On and Forming Part of the Financial
Statements.
[i] Refer note 1 under the heading "Financial Period"
</FN>
2
All Dollars are Australian with Australian Accounting Standards applied.
BALANCE SHEET
as at 30 June 1995
______________________________________________________________________________
1995
Notes $000
______________________________________________________________________________
Current Assets
Cash 132
Receivables (7) 49,383
Inventories (8) 12,367
Other (9) 66,384
__________
Total Current Assets 128,266
__________
Non-current Assets
Receivables (7) 3,525
Inventories (8) 3,412
Property, plant and equipment (10) 1,065,456
Other (9) 3,343
__________
Total Non-current Assets 1,075,736
__________
TOTAL ASSETS 1,204,002
__________
Current liabilities
Creditors and borrowings (11) 749,490
Provisions (12) 51,134
__________
Total Current Liabilities 800,624
__________
Non-current Liabilities
Creditors and borrowings (11) 315,658
Provisions (12) 63,970
__________
Total Non-current Liabilities 379,628
__________
TOTAL LIABILITIES 1,180,252
__________
NET ASSETS 23,750
==========
Shareholders Equity
Share Capital (13) 0
Retained Profits 23,750
__________
SHAREHOLDERS' EQUITY 23,750
==========
The above Balance Sheet should be read in conjunction with the Notes On and
Forming Part of the Financial Statements.
3
All Dollars are Australian with Australian Accounting Standards applied.
STATEMENT OF CASH FLOWS
for the period ended 30 June 1995 [i]
______________________________________________________________________________
1995
Notes $000
______________________________________________________________________________
Inflows
(Outflows)
Cash flows from operating activities
Receipts from customers 747,659
Payments to suppliers and employees for goods and services (219,697)
Interest and other items of a similar nature received 2,874
Interest and other costs of finance paid (57,171)
Purchased electricity (342,449)
__________
Net cash inflow from operating activities (5) 131,216
Cash flows from investing activities
Payments to acquire property, plant and equipment (70,659)
Purchase of investments and licences (106)
Contributions from customers for capital works 24,222
Proceeds from sale of assets 685
__________
Net cash outflow from investing activities (45,858)
Cash flows from financing activities
Proceeds from borrowings 414,297
Repayment of borrowings (principal only) (484,230)
Payment of dividends (13) (18,100)
Net payment of trust moneys (502)
Net transfer of cash from allocation statement 1,221
__________
Net cash outflow from financing activities (87,314)
__________
Net decrease in cash held (1,956)
Cash at the beginning of the period 0
__________
Cash at the end of the period (6) (1,956)
==========
<FN>
The Statement of Cash Flows should be read in conjunction with the Notes On
and Forming Part of the Financial Statements.
[i] Refer note 1 under the heading "Financial Period"
</FN>
4
All Dollars are Australian with Australian Accounting Standards applied.
NOTES ON AND FORMING PART OF THE FINANCIAL STATEMENTS
______________________________________________________________________________
1 SUMMARY OF THE SIGNIFICANT ACCOUNTING POLICIES
______________________________________________
The following significant accounting policies have been adopted in the
presentation of the Financial Statements. The Financial Statements have been
drawn up in accordance with applicable Australian Accounting Standards, the
provisions of Schedule 5 to the Corporations Regulations and other
requirements of law. Although not mandatory, Powercor Australia Ltd
(Powercor) has included additional disclosures where practical which relate to
the Financial Management Act 1994.
The Financial Statements have been drawn up in accordance with the Historical
Cost Convention except where otherwise indicated.
Allocation Statement
As part of the current Victorian Government's Electricity Industry
privatisation and reform process, Powercor was incorporated on 11 May 1994 as
an independent Distribution company operating entirely within the Australian
electricity retail and distribution industry. Before Powercor could
effectively begin trading as a new entity within this new environment, certain
regulations and processes had to be empowered by legislation in defining the
legal, regulatory, and financial framework in which the business was to
operate. One such process known as the `Allocation Statement' was prepared by
order of the legislation and requirements of the Electricity Industry Act.
The Allocation Statement itself was the formal vehicle established in order to
provide for the transfer of all assets, liabilities, employees, debt balances
and other interest and obligations. Under the predetermined guidelines and
for various commercial reasons, the allocation of these balances were vested
in Powercor's accounts effective from 1 July 1994.
The valuations transferred for both Distribution and Subtransmission assets
were based on an Optimised Depreciated Replacement Cost method which was then
installed in the fixed asset register to reflect these valuations.
Debt was transferred at market value and reflected in Powercor's opening
accounts.
All other assets and liabilities were transferred at book values with any
residual equity after allowing for assets and the forementioned debt being
reflected in shareholders loans.
Certain obligations arising from payments made on Powercor's behalf for wages,
salaries, related provisions, related tax instalments, and other contracted
services were resolved through a separate process or `Settlement' which
concluded 31 December 1994.
5
All Dollars are Australian with Australian Accounting Standards applied.
Income Tax
Tax effect accounting procedures are followed whereby the income tax expense
in the Profit and Loss account is matched with the accounting profit (after
allowing for permanent differences). The future tax benefit relating to tax
losses is not carried forward as an asset unless the benefit can be regarded
as being virtually certain of realisation. Income tax on net cumulative
timing differences is set aside to the deferred income tax and future income
tax benefit accounts at the rates which are expected to apply when those
timing differences reverse. A tax rate of 33% has been used and a restatement
in deferred tax was made as a result of an increase in the company tax rate to
36%.
The $11.896M write back of the FITB during the financial period was
attributable to proposed tax legislation for tax exempt bodies entering the
Federal income tax arena which will apply a `rule the books' approach to
determine whether outgoings connected to the tax exempt period are deductible.
Financial Period
As there were no financial transactions for the period from date of
Incorporation 11 May 1994 to 30 June 1994, Powercor's Board of Directors have
resolved to extend the initial reporting period for the preparation of the
Financial Statements from the date of Incorporation, 11 May 1994 to 30 June
1995.
Comparative Accounting Information
As these accounts are the first accounts prepared by Powercor, comparisons
against prior year results are not available.
Acquisition of Assets
The cost method of accounting is used for all acquisitions of assets
regardless of whether shares or other assets are acquired. Cost is determined
as the fair value of the assets acquired at the date of acquisition plus costs
incidental to the acquisition.
Recoverable Amount of Non-Current Assets
The recoverable amount of an asset is the net amount expected to be recovered
through the net cash inflows arising from its continued use and subsequent
disposal.
Where the carrying amount of a non-current asset is greater than its
recoverable amount the asset is revalued to its recoverable amount. Where net
cash inflows are derived from a group of assets working together, recoverable
6
All Dollars are Australian with Australian Accounting Standards applied.
amount is determined on the basis of the relevant group of assets. To the
extent that any revaluation decrement reverses a revaluation increment
previously credited to, and still included in the balance of, an asset
revaluation reserve, the decrement is debited directly to that reserve.
Otherwise the decrement is recognised as an expense in the Profit and Loss
Account.
Revaluations do not result in the carrying value of assets exceeding their
recoverable amount.
The expected net cash inflows included in determining recoverable amounts of
non-current assets are discounted to their present values using a
market-determined, risk-adjusted discount rate.
Capital Project Costs
Powercor finances part of its distribution works programme by a self help
scheme whereby customers requesting electricity supply are required to
contribute all or part of the estimated capital cost.
Contributions for Capital Works
Customer contributions are treated as reductions to the carrying value of the
assets to which they relate, with the corresponding depreciation calculated on
the net asset value over the assets depreciable life.
Refundable Contributions and Advances for Capital Works
Where customers are required to lodge security deposits for capital works,
Powercor will refund these amounts with interest over the period specified in
each individual contract. All balances held in this category are included in
the Balance Sheet item Loans.
Cogeneration Contract Agreements
Where Powercor installs interconnection facilities between its customers
generation assets and its pre existing load bearing assets, and where the
construction of these assets are funded by a long term interest bearing loan
from Powercor, the loan has been recognised in the accounts at its face value
with the cash flows discounted using the rate of interest implicit in the
original contract.
Where the customer generates electricity from these generation assets in
excess of its own requirements, the surplus electricity will be fed back into
Powercor's supply system. The tariffs for both the supply and purchase of
electricity are governed by specific contracts in determining special rates
for cogeneration customers.
7
All Dollars are Australian with Australian Accounting Standards applied.
Insurance
Powercor assesses the risk associated with all events which are specific to
its operations and which are expected in the normal course of business.
Powercor will in some circumstances take out insurance for catastrophic losses
and other specific risks, and in other situations will elect to self insure.
Powercor included in its accounts at 30 June 1995, a provision for uninsured
losses for both outstanding claims by third parties and claims against
Powercor which were not received at period end.
An additional provision has been raised in the financial statements at 30 June
1995 for an amount which Powercor expects to expend to compensate employees
for work related illnesses associated with both claims which have occurred and
are ongoing, and claims which are expected to arise which have not yet been
reported.
Inventories
Raw Materials and Stores, Work in Progress and Finished Goods
Raw materials, goods manufactured for stock, and spare parts are recorded at
the lower of cost and net realisable value. Cost is represented by weighted
average cost of purchase or manufacture. An estimation of net realisable
value is made after consideration of obsolete, obsolescent and slow moving
stock.
Construction Work in Progress
Construction work in progress is stated at cost plus attributable overheads.
Cost includes all costs directly related to specific projects and an
allocation of capital overhead expenses incurred in connection with Powercor's
operations.
Restructuring and Establishment Costs
Powercor is expected to expend resources as a direct result of the
restructuring process associated with the disaggregation and privatisation of
the State owned Electricity Services Victoria. Where these costs are
identifiable to the `establishment' and/or `restructuring' of the business and
are in addition to costs that would otherwise be incurred, a provision for
these costs has been raised. The amount of the provision has been reassessed
at balance date and allocated between current and non-current for the period
ended 30 June 1995.
8
All Dollars are Australian with Australian Accounting Standards applied.
Restoration
An estimate of the total cost for land, heatbank, asbestos, PCB and
environmental restoration is brought to account in the period that the
requirement to restore a site arises, and where the cost associated in
restoring such sites can be reliably measured.
Depreciation
Depreciation for all fixed assets other than freehold land is calculated on a
straight-line basis to write off the net cost or revalued amount of each item
of property, plant and equipment over its expected useful life. Estimates of
remaining useful lives are made on a regular basis for all assets, with annual
reassessments for major items. Depreciation for all assets commences on the
first day of the month closest to the in-service date.
Major spares purchased specifically for particular plant and equipment are
capitalised and depreciated over the same period as the items of plant and
equipment to which they relate.
Cash
For purposes of the Statement of Cash Flows, cash includes deposits at call
which are readily convertible to cash on hand and which are used in the cash
management function on a day-to-day basis, net of outstanding bank overdrafts.
Interest on Term Debtors
Interest is brought to account as income over the term of each contract in
direct proportion to the estimated amounts owing in the relevant accounting
periods.
Estimated Doubtful Debts
Powercor establishes a provision for doubtful debts based on a review of all
electricity receivables greater than ninety days old, with an additional
provision for doubtful debts being determined by specific review of other
receivables.
9
All Dollars are Australian with Australian Accounting Standards applied.
Leased Non-Current Assets
A distinction is made between finance leases which effectively transfer, from
the lessor to the lessee, substantially all the risks and benefits incidental
to ownership of leased non-current assets (finance leases), and operating
leases under which the lessor effectively retains substantially all such risks
and benefits.
Where a non-current asset is acquired by means of a finance lease, the asset
is established at its fair value at the inception of the lease. The liability
is established at the same amount. Lease payments are allocated between the
principal component and the interest expense.
Operating lease payments are representative of the pattern of benefits derived
from the leased assets and accordingly are charged to the Profit and Loss
Account in the period in which they are incurred.
Construction of Non-Current Assets
The cost of non-current assets constructed by Powercor includes the cost of
all materials used in construction, direct labour on the project and an
appropriate proportion of variable and fixed overhead.
Investments
Powercor's interests in listed and unlisted securities are brought to account
at cost, with dividend income being recognised in the Profit and Loss Account
when received.
Negotiable Securities
Where interest is paid in advance on negotiable securities, the interest is
recognised as an asset and progressively charged to the Profit and Loss
Account over the applicable interest period. Interest payable in arrears is
accrued as it becomes due, and charged to the Profit and Loss Account.
Discounts and premiums from face value on the issue of negotiable securities
are recognised as variations of the liability to which they relate. The
variations are amortised over the term of the issue, using the effective yield
method. Changes in the capital value of Powercor's outstanding liability on
Index linked securities are recognised as variations in the book value of the
liability. Changes are charged to the Profit and Loss Account.
Securities
Securities are recorded at the lower of cost and net realisable value.
10
All Dollars are Australian with Australian Accounting Standards applied.
Buybacks of Negotiable Securities
Any gains or losses arising from the buyback of negotiable securities are
charged to the Profit and Loss Account as incurred.
Foreign Currency Translations
Transactions in foreign currencies are recorded at the rate of exchange ruling
on the date of each transaction. At balance date, amounts payable and
receivable in foreign currencies are converted at the rates of exchange ruling
at the end of the financial period. Exchange differences arising on foreign
currency amounts payable and receivable are brought to account in the Profit
and Loss Account. In the case of hedges of monetary items, exchange gains or
losses are brought to account in the financial period in which the exchange
rates change. Gains or costs arising at the time of entering into such hedging
transactions are brought to account in the profit and loss account over the
lives of the hedges.
Joint Ventures and Other Interests
The proportion of assets, liabilities and expenses attributable to the
interest of the Company in a joint venture has been incorporated in the
financial statements under the appropriate headings. Details of the joint
ventures and other interests are set out in note 14.
Research and Development
Research and Development costs are expensed to the current year Profit and
Loss Account.
Employee Entitlements
Wages and Salaries, Recreation Leave
Liabilities for wages and salaries, and recreation leave are recognised, and
are measured as the amount unpaid at the reporting date at current pay rates
in respect of employee's services up to that date.
Long Service Leave
A liability for long service leave is recognised and is measured as the
present value of expected future payments to be made in respect of services
provided by employees up to the reporting date. Consideration is given to
expected future wage and salary levels, experience of employee departures and
periods of service. Expected future payments are discounted using interest
rates attaching, as at the reporting date, to national Government guaranteed
11
All Dollars are Australian with Australian Accounting Standards applied.
securities with terms to maturity that match, as closely as possible, the
estimated future cash outflows.
Oncosts
Consequential oncosts relating to Payroll Tax, Workcover, and Superannuation
have been considered and taken to account in respect to Long Service and
Recreation Leave Entitlements.
Superannuation
Contributions paid by Powercor to defined benefit superannuation plans are
expensed in the year they are paid or become payable. No amount is recognised
in Powercor's accounts in respect of the net surplus or deficiency of the
Superannuation Trust, however a liability in respect of defined benefit
Superannuation is included and disclosed in the accounts of the external
Superannuation Trust Fund as governed by the required legislation.
All moneys, investments or other property in the Fund are held in trust in the
name of the Trustee company, VEI Super Pty Ltd for the benefit of the members
and beneficiaries of the Fund.
Maintenance and Repairs
Maintenance, repair costs, and minor renewals are charged as expenses when
incurred.
Rounding of Amounts
Powercor is a company of the kind referred to in the Corporations Law
Regulation 3.6.05(6) and unless otherwise stated, the amounts in the
accompanying accounts have been rounded to the nearest thousand dollars in
accordance with section 311 of the Corporations Law.
12
All Dollars are Australian with Australian Accounting Standards applied.
2 OPERATING REVENUE
1995
$000
______________________________________________________________________________
Operating profit is stated after crediting the following revenues
Sales Revenue 734,093
Other Operating Revenue
Charges for Minor Services 3,160
Proceeds from the sale of assets [i] 685
Customer transfer and reconnection fees 1,834
Bad debts recovered 647
Proceeds from Sales of Materials 1,899
Interest Revenue [ii] 2,874
New Business Ventures 505
Property Rentals 294
Trade Incentive and Rebate 1,290
Revenue from other Distribution Businesses 5,860
Other 2,063
__________
Total Operating Revenue 755,204
==========
[i] Losses arising from disposal of Non-current Assets 1,442
==========
[ii] Interest from
Related bodies corporate 131
Other persons and/or corporations 2,743
__________
Total interest received 2,874
==========
13
All Dollars are Australian with Australian Accounting Standards applied.
3 OPERATING PROFIT
1995
Notes $000
______________________________________________________________________________
Operating Expenses
Operating profit is stated after charging the following expenses:
Interest
Related bodies corporate 48,650
Other persons and/or corporations 2,282
__________
Total Interest Expense 50,932
==========
Operating lease rentals 667
==========
Provisions
Employee entitlements 11,033
Accident Compensation (841)
Uninsured losses 2,112
Stock write-off 201
Restoration 2,768
Provision for deferred tax (4) 32,037
__________
Total provisions 47,310
==========
Depreciation
Buildings 1,268
Distribution system, net of customer contributions amortised 43,460
Plant and equipment 3,422
__________
Total depreciation 48,150
==========
Bad debt expense 2,538
==========
Abnormal items included in operating profit before income tax are:
Abnormal profits
Writeback of establishment and restructuring provision 13,221
Writeback of provision for future Cogeneration losses 9,010
__________
22,231
==========
Tax calculated on abnormal items 2,973
==========
14
All Dollars are Australian with Australian Accounting Standards applied.
4 INCOME TAX
1995
Notes $000
______________________________________________________________________________
(a) The aggregate amount of income tax attributable to the financial period
differs by more than 15% from the amount calculated on the operating profit.
The differences are reconciled as follows:
Operating profit before income tax 111,079
__________
Income tax calculated at 33% 36,656
Add/(deduct) reconciling items expressed on a tax effected basis:
Tax losses not carried forward 1,011
Non-assessable items:
General Investment Allowance (108)
Building & Structural Improvement Allowance (199)
Provision for Establishment Costs (8,601)
Non-deductible items:
Other 24
Future Income Tax Benefit write-back (1) 11,896
Restatement of deferred tax balances on change in
tax rate to 36% 2,542
__________
Total income tax attributable to operating profit 43,221
==========
Total income tax expense comprises movements in:
Provision for income tax 0
Provision for deferred income tax 32,037
Future income tax benefit (9) 11,184
__________
43,221
==========
The allocation between these categories corresponds to the tax effect
accounting entries.
(b) The future income tax benefit attributable to tax losses but not
recognised in the financial statements is 1,103
==========
This benefit for tax loss will only be obtained if
(i) Powercor derives future assessable income of a nature and of an amount
sufficient to enable the benefit from the deductions for the losses to
be realised;
(ii) Powercor continues to comply with the conditions for deductibility
imposed by law; and
(iii) no changes in tax legislation adversely affect Powercor in realising
the benefit from the deductions for the losses.
15
All Dollars are Australian with Australian Accounting Standards applied.
5 CASH FLOW DISCLOSURES 1995
$000
______________________________________________________________________________
During the reporting period, Powercor acquired assets and liabilities with an
aggregate fair value of $466,704 million by means of Allocation. With the
exception of cash and bank overdraft transfers, these allocations represent
the non-cash financing and investing activities between the date of
incorporation 11 May 1994, and the time of transfer 1 July 1994, and is not
reflected in the Statement of Cash Flows. Since no prior trading occurred
between these dates, the balances have been considered as opening balances in
calculating the relative movements in operating cash flows.
The amounts of assets and liabilities acquired by major class are
Cash and Bank Overdraft 1,221
Receivables 45,684
Accrued Revenue 67,072
Inventories 15,688
Property, Plant and Equipment, Net 1,065,700
Other 17,047
Accounts Payable (66,203)
Provisions (87,725)
Deposits (9,811)
Borrowings (581,969)
__________
466,704
==========
Reconciliation of operating profit after income tax to net cash flow from
operating activities
Operating Profit After Income Tax 67,858
Depreciation 48,419
Loss on disposal of assets 1,442
Amortised finance charges (8,849)
Increase in deferred debtors (546)
Increase in prepayments (610)
Increase in accounts receivable (3,699)
Increase in material inventories (291)
Decrease in accrued revenue 2,310
Decrease in interest accrued (458)
Increase in deferred revenue 4
Increase in accounts payable and accruals 10,489
Decrease in provisions (28,074)
Increase in tax provisions 43,221
__________
Cash Flow from Operating Activities 131,216
==========
16
All Dollars are Australian with Australian Accounting Standards applied.
6 CASH AT BANK AND SHORT TERM DEPOSITS 1995
$000
______________________________________________________________________________
Cash at the end of the financial year as shown in the Statement of Cash Flows
is reconciled to the related items in the Balance Sheet as follows:
Cash Accounts
- - National Australia Bank Advance Account 132
Bank overdraft
- - National Australia Bank Drawing Account (2,088)
__________
(1,956)
==========
17
All Dollars are Australian with Australian Accounting Standards applied.
7 RECEIVABLES 1995
$000
______________________________________________________________________________
Current
Trade debtors [i] 42,569
Less: Provision for doubtful debts 238
__________
42,331
Non trade debtors 7,173
Less: Provision for doubtful debts 121
__________
7,052
__________
Total Current Receivables 49,383
==========
Non-current
Deferred debtors
Amounts due from cogeneration customers 1,536
Other 1,989
__________
Total Non-current Receivables 3,525
==========
<FN>
[i] Trade debtors comprise electricity accounts receivable.
</FN>
Powercor provides bridging finance in specified instances where employees are
required to relocate their place of residence as part of a permanent
appointment or transfer. Balances of employee loans are included in current
non trade debtors, with outstanding amounts as at 30 June 1995 as follows.
Balance Employee Loans Outstanding 630
==========
18
All Dollars are Australian with Australian Accounting Standards applied.
8 INVENTORIES 1995
$000
______________________________________________________________________________
Construction, General Purpose and Maintenance Stocks
Current 12,568
Less provision for stock obsolescence 201
__________
12,367
Non-current 3,412
__________
Total Construction, General Purpose and Maintenance Stocks 15,779
==========
19
All Dollars are Australian with Australian Accounting Standards applied.
9 OTHER ASSETS 1995
$000
______________________________________________________________________________
Current
Prepayments 1,622
Accrued unread and unbilled meter revenues 64,762
__________
Total Current Other Assets 66,384
__________
Non-current
Future income tax benefit:
Attributable to carry forward tax losses 781
FITB carried forward from Allocation Statement 142
__________
923
Attributable to timing differences
Provision for restoration 180
Provision for uninsured losses 270
Provision for doubtful debts 351
__________
801
Other:
Other non-deductible items 198
Fringe benefits tax (50)
__________
148
__________
Total future income tax benefit 1,872
Investments in other corporations 56
Licences 50
Victorian Power Exchange Trust Fund 1,365
__________
Total Non-current Other Assets 3,343
__________
Total Other Assets 69,727
==========
20
All Dollars are Australian with Australian Accounting Standards applied.
10 PROPERTY, PLANT AND EQUIPMENT 1995
$000
______________________________________________________________________________
Land and Buildings
Freehold land
At cost 9,267
__________
Buildings
At cost 28,260
Less: Accumulated depreciation 1,268
__________
26,992
__________
Total Land and Buildings, Net 36,259
__________
Distribution System
At cost 1,064,206
Less: Customer and Cogeneration Contributions 23,971
Less: Accumulated depreciation 43,650
__________
Total Distribution System, Net 996,585
__________
Other
At cost 35,953
Less: Accumulated depreciation 3,341
__________
Total Other, Net 32,612
__________
Total Property, Plant and Equipment, Net 1,065,456
==========
21
All Dollars are Australian with Australian Accounting Standards applied.
11 CREDITORS AND BORROWINGS 1995
$000
______________________________________________________________________________
Current
Shareholder's Loan [i] 466,704
Other Loans [ii] 190,443
Bank overdraft [iii] 2,088
Trade creditors 59,936
Accrued interest 11,571
Accruals and other creditors 8,073
Customer, contractor and miscellaneous deposits 10,675
__________
Total Current Creditors and Borrowings 749,490
==========
Non-current
Other Loans [ii] 315,654
Deferred revenue 4
__________
Total Non-current Creditors and Borrowings 315,658
==========
<FN>
[i] [ii] Security for Loans
Shareholder's Loan and loans payable to Treasury Corporation Victoria under
Other Loans, are guaranteed by the Victorian State Government. The Treasurer
of Victoria for the Victorian State Government has indicated these loans will
not be fully or partially called upon prior to privatisation, unless Powercor
has the capacity to facilitate redemption as a result of build up of cash
reserves from operational activities, or an alternative loan or other
financial arrangement is put into place. (Facilitation to be assisted by the
Government if necessary). Therefore the SECV shareholder loan represents an
equity position as far as the Government and Powercor are concerned.
[iii] Bank Overdraft Facilities
Powercor has a bank overdraft facility of $5.0M which has no specific expiry
date. At 30 June 1995, $2.1M of this limit was used.
</FN>
22
All Dollars are Australian with Australian Accounting Standards applied.
12 PROVISIONS
1995 Allocation
Current Non-current Total [i] Amounts
$000 $000 $000 $000
______________________________________________________________________________
Employee entitlements
Recreation leave 7,878 0 7,878 6,522
Long service leave 354 15,410 15,764 13,494
______ ______ _______ ______
8,232 15,410 23,642 20,016
______ ______ _______ ______
Restorations
Environmental cleaning 3,449 5,436 8,885 6,502
Other 100 774 874 894
______ ______ _______ ______
3,549 6,210 9,759 7,396
______ ______ _______ ______
Uninsured losses 5,184 680 5,864 4,079
Accident compensation 150 600 750 1,591
Future losses on
Cogeneration agreements 0 0 0 9,009
Establishment and
restructuring costs [ii] 8,011 8,700 16,711 45,300
Deferred Tax 0 32,370 32,370 333
Dividends Payable 26,008 0 26,008 0
______ ______ _______ ______
39,353 42,350 81,703 60,312
______ ______ _______ ______
Total Provisions 51,134 63,970 115,104 87,724
====== ====== ======= ======
<FN>
[i] All amounts represented as "Allocation Amounts" were transferred from
Electricity Services Victoria in the current year via an Allocation
Statement in accordance with the Electricity Supply Industry Act 1993,
and have been disclosed solely for the purpose of providing comparative
data regarding the movement in provision balances.
[ii] The decrease in the establishment and restructuring provision was as a
result of voluntary departure packages of $10.3M, and other costs
associated with restructuring of $5.1M being charged to the provision in
the current period. A total amount of $13.2M representing planned
Information Technology and other incremental establishment and
restructuring expenditure was written back to the current periods Profit
and Loss Account at 30 June 1995.
</FN>
23
All Dollars are Australian with Australian Accounting Standards applied.
13 SHARE CAPITAL AND DIVIDENDS 1995
Notes $
______________________________________________________________________________
(a) Ordinary shares of $1 each
Authorised 500,000,000
===========
Issued and paid up 5
===========
(b) On Incorporation of the Company, 5 $1.00 ordinary
shares were issued on 11 May 1994.
(c) Dividends Provided for or Paid $000
Total dividends provided for or paid 44,108
Less: Interim dividend paid during the year [i] 18,100
___________
Balance at end of year [ii] (12) 26,008
===========
<FN>
Total dividends provided for or paid comprised:
[i] In accordance with a recommendation from the Treasurer of Victoria, an
interim dividend of $18.1M was approved by the Board of Directors and
paid as per section 38 of the Electricity Industry Act 1993 to the
State Electricity Commission of Victoria.
[ii] A final dividend of $26.0M was provided on the basis of total
dividends for the period being equal to 65% of after tax profits.
Payment of the final dividend is subject to further recommendation
from the Treasurer of Victoria and final approval from the Board of
Directors in accordance with the Electricity Industry Act 1993.
</FN>
24
All Dollars are Australian with Australian Accounting Standards applied.
14 JOINT VENTURES AND OTHER INTERESTS
__________________________________________________________________________________________
Ventures/ Place of Principal Nature of Interest Method Net Value of Contribution Share in
Interest Business Activity Interest % $000 of Products to Profit Assets &
Accounting Received $000 Liabilities
_____________________________________________________________________________________________________________________________
Energy Victoria Provision Ownership 8% 56 Shares Nil (299) Nil
Business of Energy of 56,000 are valued
Centre Pty Ltd Management ($1) "A" class at cost
Services shares
Agreement for Victoria Ongoing Cost Sharing 20% - Expenses Nil (140) Nil
Distribution Development Arrangement recorded on
Businesses of Industry only Accrual Basis
Joint Venture Standards
and Systems
25
All Dollars are Australian with Australian Accounting Standards applied.
15 RELATED PARTIES
______________________________________________________________________________
(a) Directors
The names of persons who were Directors of Powercor at any time during the
financial period are as follows:
L Wilson (appointed 02/10/94)
L Gason (appointed 02/10/94)
P Griffin (appointed 02/10/94)
R Guy OAM (appointed 02/10/94)
R King (appointed 02/10/94)
Y von Hartel (appointed 02/10/94)
C Mitchell (appointed 15/12/94, resigned 15/08/95)
J O'Rourke (resigned 16/05/94)
S McCarthy (resigned 16/05/94)
D Moulis (resigned 16/05/94)
R Nicholson (resigned 02/10/94)
S Mitchell (resigned 02/10/94)
P Hay (resigned 02/10/94)
(b) Remuneration
Remuneration of Directors is disclosed in note 16. During the financial
period there were no loans due to Powercor from any of the above-named
Directors.
(c) Other Transactions of Directors and Director-Related Entities
No Director or their related entities has declared an interest in a contract,
or proposed contract, during the period ended 30 June 1995 with Powercor other
than:
During the financial period ended 30 June 1995, payments were made to the
Victorian Power Exchange of $2.65M in connection with pricing adjustments on
electricity purchases. These payments were determined by VicPool rules taking
into account the quantity and price of electricity purchased. Subsequent to
30 June 1995, the VicPool rules were amended due to an error affecting the
payment calculations which resulted in a total of $1.325M being paid during
the period ended 30 June 1995 in excess of amounts that would have been
payable had the amended rules applied. Retrospective application of the
amended rules was sought so as to recover the excess payments. As at the date
of these financial statements, no agreement has been reached with the relevant
power generators to recover the excess payments, and no amount receivable has
been recognised in the Financial Statements. The Directors have resolved to
continue to pursue recovery of the overpayment.
26
All Dollars are Australian with Australian Accounting Standards applied.
Mr. Olaf B. O'Duill was appointed a Director of Powercor on 21 September 1995.
He is also a Director of the Victorian Power Exchange and Chairman of Yallourn
Energy Ltd. Due to the Victorian Government's common shareholding with
Powercor and the Victorian Power Exchange, the aforementioned transaction has
been disclosed.
Powercor may directly or indirectly supply energy from time to time to its
Directors or their director related parties. Transactions of this nature
occur within a normal employee, customer or supplier relationship on terms and
conditions no more favourable than those with which it is reasonable to expect
Powercor to adopt if dealing with the Director or director related party at
arm's length in similar circumstances.
(d) Financing of Debt
In accordance with the Borrowing and Investment Act 1987, Powercor is
empowered to continue to negotiate its debt position directly with the
Treasury Corporation of Victoria through the application of various borrowing,
investment and hedging instruments.
(e) Other Related Parties
Powercor trades regularly with government bodies and departments. The
Victorian Government still has control over Powercor and as such all
transactions with the Government must be disclosed as related party
transactions.
A revised ruling has been made by the Australian Securities Commission under
Accounting Standard AASB 1017: "The Commission has made an Order which
provides limited relief under sub-section 313(2) of the Law which exempts the
company from the requirement to disclose details relating to the classes of
the related parties involved and the aggregate amount recognised, where the
underlying transactions relate to either the supply of electricity or the
purchase of operating supplies and other services which would impose an
unreasonable burden on the company".
The relief has only been provided for the financial year ended 30 June 1995.
(f) Controlling Entities
Powercor is an entity which is 100% controlled by the Victorian Government.
The issued ordinary shares in Powercor are held by the State Electricity
Commission of Victoria of which votes cannot be cast without the expressed
written consent of the State of Victoria given by the Victorian Treasurer and
the Minister for Energy and Minerals, or their joint nominee.
27
All Dollars are Australian with Australian Accounting Standards applied.
16 REMUNERATION OF DIRECTORS 1995
______________________________________________________________________________
Remuneration received, or due and receivable,
by Directors of the company $441,250
============
The number of Directors whose income was within the specified bands are as
follows (period covered is 3 October 1994 to 30 June 1995):
1995
$000 Number
30-40 5
60-70 1
210-220[i] 1
_____
Total 7
=====
Amounts are shown in summary form as the directors believe the provision of
full particulars would be unreasonable.
Remuneration of Directors covers the period from 3 October 1994 to 30 June
1995 and has not been annualised.
<FN>
[i] A Director is included in both note 16 - Directors' Remuneration (based
on a period basis), and note 17 - Executives' Remuneration (based on an
annualised basis).
</FN>
______________________________________________________________________________
28
All Dollars are Australian with Australian Accounting Standards applied.
17 REMUNERATION OF EXECUTIVES
______________________________________________________________________________
The number of Executive Officers domiciled in Australia who received, or were
due to receive, directly or indirectly from the company, or from any related
body corporate, a total annualised remuneration in connection with the
management of affairs of the company, or any related body corporate, whether
as Executive Officers or otherwise, is shown in the following bands:
1995
$000 Number
100-110 6
110-120 6
120-130 4
130-140 1
160-170 1
170-180 2
200-210 2
260-270[i] 1
_____
Total 23
=====
The aggregate (annualised) remuneration of the executives referred to in the
above bands, including bonuses paid or payable under contract at 30 June 1995,
was $3,177,120. Remuneration of executives at the directive of the Victorian
Treasurer requires the reporting entity to report the information on an annual
equivalent basis, Powercor therefore, has annualised the executive
remuneration for the 1994/95 income year.
<FN>
[i] A Director is included in both note 16 - Directors Remuneration (based on
a period basis), and note 17 - Executives Remuneration (based on an annualised
basis).
</FN>
29
All Dollars are Australian with Australian Accounting Standards applied.
18 CONTINGENCIES AND OTHER COMMITMENTS
______________________________________________________________________________
Contingent liabilities at balance date, not otherwise provided for in these
financial statements, are categorised as, and supported by, the following
notes:
[i] Victorian Power Exchange Rules impose "collective responsibility" on Pool
customers for the default of a fellow Pool customer. Although not anticipated
to occur, there is a potential liability if a fellow Pool customer defaults on
payment.
[ii] Environmental provisions have been assessed as adequately provided for in
the current periods Financial Statements however, further reviews currently
being undertaken regarding additional costs associated with the restoration of
the Brooklyn quarry, may reveal an increase in future liabilities.
[iii] Powercor recently completed an external review and evaluation of all
zone substations and capacitor banks for existing contamination levels which
directly results from the current use of Polychlorinatedbiphenyls (PCBs). It
is anticipated that proposed changes in environmental legislation will require
the removal of all capacitor canisters containing PCBs. At 30 June the
preliminary findings indicated a contingency may eventuate, estimated costs
$2.7M for the replacement of capacitor bank canisters.
[iv] Powercor has a contingent liability for termination benefits under
various service agreements with General Managers and under the terms of
individual employment contracts with other management executives. The maximum
amount of such contingent liability at 30 June was $6.8M.
[v] Powercor will be expected to refinance its debt portfolio at a future
date. Depending upon the yield curve prevailing on the date of refinancing, a
gain or loss will be realised. At 3 July 1995 a loss of $11.8M would have
been realised had Powercor proceeded with refinancing.
[vi] The Victorian Electricity Supply Industry Tariff Order established by
Victorian Government legislation requires Powercor to supply electricity to a
number of franchised customers at uncommercial prices under "Tariff H". These
customers have the option of remaining on this tariff until the year 2000 or
joining the contestable market when Tariff H aligns with cost reflective
tariffs. At 30 June these contracts which represent 20% of Powercor's
business were individually costed on an estimated total cost basis which
revealed potential future losses to the business of $13.2M.
[vii] Commercial cogeneration agreements currently exist with a number of
Cogenerators. Under these contracts, Powercor undertakes to buy-back all
excess electricity generated by the cogenerators at a specific price; this
value represents a price higher than the cogenerators are required to pay for
their usage. At 30 June 1995 a total estimated future loss of $11.2M measured
at net present value was anticipated in honouring these contracts.
Amounts disclosed in respect to any of the above contingent liabilities or
other commitments are based on estimates only and may give rise to actual
losses in future periods.
30
All Dollars are Australian with Australian Accounting Standards applied.
19 COMMITMENTS FOR EXPENDITURE 1995
$000
______________________________________________________________________________
(a) Capital Commitments
Total capital expenditure contracted for at balance date
but not provided for in the accounts, payable:
Not later than one year 715
===========
(b) Lease Commitments
Total lease expenditure contracted for at balance date but
not provided for in the accounts, payable:
Not later than one year 1,306
Later than one year but not later than two years 392
Later than two years but not later than five years 1,680
Later than five years 53
___________
3,431
===========
Representing:
Cancellable operating leases 34
Non-cancellable operating leases 3,397
___________
3,431
===========
Commitments in relation to non-cancellable operating leases are
payable as follows:
Not later than one year 1,282
Later than one year but not later than two years 382
Later than two years but not later than five years 1,680
Later than five years 53
___________
3,397
===========
31
All Dollars are Australian with Australian Accounting Standards applied.
20 EMPLOYEE ENTITLEMENTS
1995
$000
______________________________________________________________________________
(a) Aggregate employee entitlement liability
The aggregate employee entitlement liability includes amounts
for wages and salaries, annual leave, long service leave and
superannuation contributions 23,642
===========
In accordance with the application of Accounting Standard AASB 1028,
adjustments to employee liabilities were taken to account inclusive of
relevant oncosts as follows:
Provision for Long Service Leave 2,457
Provision for Annual Leave 1,228
___________
3,685
===========
All amounts resulting from the application and compliance of AASB 1028 have
been taken to the current periods Profit and Loss account.
(b) Victorian Electricity Industry Superannuation Fund
All permanent employees of the company and casual employees hired directly are
entitled to benefits on termination from the V.E.I. Super Pty Ltd, casual
employees, some executives and all permanent employees engaged after 3 October
1994 are members of an accumulation fund, Division D or other external
accumulation funds. All other permanent employees are members of Divisions B
or C of the Fund which provide defined benefits in the form of pensions
(Division B) or lump sums (Division C). Both defined schemes are closed to new
members. Division B members contribute at 6% of superannuation salary, and
Division C members can contribute at 0, 3 or 6%. During 1994/95 the company
contributed to the Fund at the rate of 10% for the defined benefit.
The effective date of the most recent detailed valuation of the Fund was
30 June 1994. A summary valuation for annual accounts purposes was last made
at 30 June 1995 by Mr G I Burgess, FIA, FIAA of William M Mercer Pty Ltd. At
30 June 1995 the Fund had a surplus of assets over liabilities of $5.0M. At
30 June 1995, Mr Burgess prepared a further assessment of the defined benefit
schemes on an individual employer basis.
32
All Dollars are Australian with Australian Accounting Standards applied.
Based on that assessment, the unaudited situation for the company as at
30 June 1995 was:
1995
$000
Present value of employees' accrued benefits 82,100
Net market value of assets held by the Fund to meet future
benefit payments 87,100
___________
Excess/(deficit) of assets over present value of employees'
accrued benefits held to meet future benefit payments 5,000
===========
Employer contributions to the Fund for the year
ended 30 June 1995 7,008
===========
Vested benefits 83,900
===========
The present value of employees' accrued benefits is equal to the past
membership liability calculated in accordance with Australian Accounting
Standard AAS25 "Financial Reporting by Superannuation Plans".
Vested benefits are those benefits which would have been paid on voluntary
termination from the Fund.
33
All Dollars are Australian with Australian Accounting Standards applied.
21 AUDIT AND ACCOUNTING FEES
______________________________________________________________________________
1995
AUDITORS REMUNERATION $000
Amounts paid or payable to:
Victorian Auditor-General
Audits of the Financial Statements - current year 88
Other Auditors
Arthur Andersen internal audit services - current year 262
___________
Total Audit Fees 350
___________
OTHER ACCOUNTING FEES
Charged to Other Accounts
- - Arthur Andersen 97
- - Price Waterhouse 56
___________
153
___________
Total Audit and Accounting Fees 503
===========
______________________________________________________________________________
22 CONSULTANCY FEES 1995
$000
______________________________________________________________________________
Amounts paid or payable
TOTAL CONSULTANCY FEES 1,752
=====
______________________________________________________________________________
23 SUBSEQUENT EVENTS
______________________________________________________________________________
On 15 August 1995, Mr Chris Mitchell resigned from the position of Chief
Executive Officer and Managing Director with Powercor.
As a result of the current Victorian Government's privatisation process,
Powercor is expected to be sold within the 1995/96 financial year. The sale
is expected to be transacted through a trade sale.
On 21 September 1995 Mr Olaf B. O'Duill was appointed as a Director of
Powercor.
(These events have no material impact on the state of affairs or results of
Powercor for the period ended 30 June 1995.)
34
Auditor-General's Report
________________________
AUDITOR-GENERAL'S REPORT
Audit Scope
The accompanying financial statements of Powercor Australia Limited for the
period 11 May 1994 to 30 June 1995, comprising profit and loss account,
balance sheet, statement of cash flows and notes to the financial statements,
have been audited. The company's directors are responsible for the
preparation and presentation of the financial statements and the information
they contain. An independent audit of these financial statements has been
carried out in order to express an opinion on them to the members of the
company as required by the Corporations Law and the Audit Act 1994.
________________ _________
The audit has been conducted in accordance with Australian Auditing Standards
to provide reasonable assurance as to whether the financial statements are
free of material misstatement. The audit procedures included an examination,
on a test basis, of evidence supporting the amounts and other disclosures in
the financial statements, and the evaluation of accounting policies and
significant accounting estimates. These procedures have been undertaken to
form an opinion as to whether, in all material respects, the financial
statements are presented fairly in accordance with applicable Accounting
Standards and other mandatory professional reporting requirements and comply
with the Corporations Law, so as to present a view which is consistent with my
________________
understanding of the company's financial position and the results of its
operations and its cash flows.
The audit opinion expressed on the financial statements has been formed on the
above basis.
Audit Opinion
In my opinion, the financial statements of Powercor Australia Limited are
properly drawn up:
(a) so as to give a true and fair view of:
(i) the company's state of affairs as at 30 June 1995 and of its
profit and cash flows for the period ended on that date; and
(ii) the other matters required by Divisions 4, 4A and 4B of
Part 3.6 of the Corporations Laws to be dealt with in the
_________________
financial statements;
(b) in accordance with the Corporations Law, and
________________
(c) in accordance with applicable Accounting Standards and other mandatory
professional reporting requirements.
MELBOURNE C.A. BARAGWANATH
3/10/1995 Auditor-General
_________ _______________
Level 14.222 Exhibition St, Melbourne, Victoria 3000
____________________________________________________
Tel (03) 9651 6012 Fax (03) 9651 6050
______________________________________
35
All Dollars are Australian with Australian Accounting Standards applied.
Appendix I
RECONCILIATION TO U.S. GENERALLY ACCEPTED ACCOUNTING PRINCIPLES (GAAP)
(UNAUDITED)
______________________________________________________________________________
No significant adjustments to the income statement would be required if U.S.
GAAP had been applied instead of Australian accounting principles.
36
PACIFICORP
PRO FORMA CONDENSED CONSOLIDATED INCOME STATEMENT
For the Year Ended December 31, 1994
In Millions of U.S. Dollars
(Unaudited)
Historical Historical Purchase of Proforma
Consolidated Powercor Powercor and Consolidated
PacifiCorp Australia Adjustments PacifiCorp
____________ __________ ____________ ____________
Revenues $3,506.5 $560.9 - $4,067.4
Expenses
Depreciation and amortization 424.3 35.8 27.8 487.9
Operations, maintenance
and other 2,059.9 419.7 - 2,479.6
_____________________________________________________
Total 2,484.2 455.5 27.8 2,967.5
_____________________________________________________
Income from Operations 1,022.3 105.4 (27.8) 1,099.9
Other Expense (Income)
Interest expense 334.5 37.8 73.4 445.7
Other (30.0) (14.9) - (44.9)
_____________________________________________________
Total 304.5 22.9 73.4 400.8
_____________________________________________________
Income before Income Taxes 717.8 82.5 (101.2) 699.1
Income taxes 249.8 32.1 (36.4) 245.5
_____________________________________________________
Net Income $468.0 $50.4 $(64.8) $453.6
===================================================
Earnings on Common Stock $428.3 $50.4 $(64.8) $413.9
Earnings per Share $1.51 $1.46
Average Number of Common
Shares Outstanding 282,912 282,912
<FN>
See accompanying notes to pro forma condensed consolidated financial information.
</FN>
37
PACIFICORP
PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET
As of December 31, 1994
In Millions of U.S. Dollars
(Unaudited)
Historical Purchase of Pro Forma
Consolidated Historical Powercor and Consolidated
PacifiCorp Powercor Adjustments PacifiCorp
____________ __________ ____________ ____________
Assets
Property, plant and
equipment - net $8,446.2 $756.8 $538.1 $9,741.1
Current assets 815.4 91.1 0.0 906.5
Other assets 2,584.0 7.3 265.0 2,856.3
______________________________________________________
Total Assets $11,845.6 $855.2 $803.1 $13,503.9
======================================================
Capitalization and Liabilities
Common equity $3,459.8 $16.9 $(16.9) $3,459.8
Preferred stock 367.4 - - 367.4
Preferred stock subject to
mandatory redemption 219.0 - - 219.0
Long-term debt and capital
lease obligations 3,768.2 224.2 628.2 4,620.6
Short-term debt and long-term
currently maturing 550.5 466.7 214.8 1,232.0
Other current liabilities 718.5 101.9 - 820.4
Deferred income taxes and
investment tax credits 2,012.7 23.0 (23.0) 2,012.7
Other deferred credits 641.6 22.5 664.1
Minority interest 107.9 - 107.9
______________________________________________________
Total Capitalization and
Liabilities $11,845.6 $855.2 $803.1 $13,503.9
=====================================================
<FN>
See accompanying notes to pro forma condensed consolidated financial information.
</FN>
38
PACIFICORP
PRO FORMA CONDENSED CONSOLIDATED INCOME STATEMENT
For the Nine Months Ended September 30, 1995
In Millions of U.S. Dollars
(Unaudited)
Historical Historical Purchase of Proforma
Consolidated Powercor Powercor and Consolidated
PacifiCorp Australia Adjustments PacifiCorp
____________ ___________ ____________ ____________
Revenues $2,511.8 $424.1 $ - $2,935.9
Expenses
Depreciation and amortization 331.1 24.6 20.8 376.5
Operations, maintenance
and other 1,414.3 294.0 - 1,708.3
______________________________________________________
Total 1,745.4 318.6 20.8 2,084.8
______________________________________________________
Income from Operations 766.4 105.5 (20.8) 851.1
Other Expense (Income)
Interest expense 282.2 31.9 51.2 365.3
Other (68.2) (2.1) - (70.3)
______________________________________________________
Total 214.0 29.8 51.2 295.0
______________________________________________________
Income before Income Taxes 552.4 75.7 (72.0) 556.1
Income taxes 175.1 27.6 (25.9) 176.8
______________________________________________________
Net Income $377.3 $48.1 $(46.1) $379.3
======================================================
Earnings on Common Stock $346.9 $48.1 $(46.1) $348.9
Earnings per Share $1.22 $1.23
Average Number of Common
Shares Outstanding 284,271 284,271
<FN>
See accompanying notes to pro forma condensed consolidated financial information.
</FN>
39
PACIFICORP
PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET
As of September 30, 1995
In Millions of U.S. Dollars
(Unaudited)
Historical Purchase of Pro Forma
Consolidated Historical Powercor and Consolidated
PacifiCorp Powercor Adjustments PacifiCorp
____________ __________ ____________ ____________
Assets
Property, plant and
equipment - net $8,543.3 $806.7 $573.9 $9,923.9
Current assets 734.0 102.9 - 836.9
Other assets 2,677.7 7.2 219.4 2,904.3
______________________________________________________
Total Assets $11,955.0 $916.8 $793.3 $13,665.1
======================================================
Capitalization and Liabilities
Common equity $3,586.8 $12.2 $(12.2) $3,586.8
Preferred stock 367.4 - - 367.4
Preferred stock subject to
mandatory redemption 219.0 - - 219.0
Long-term debt and capital
lease obligations 3,707.2 212.7 694.0 4,613.9
Short-term debt and long-term
currently maturing 682.4 521.0 141.5 1,344.9
Other current liabilities 671.2 116.9 - 788.1
Deferred income taxes and
investment tax credits 2,053.2 30.0 (30.0) 2,053.2
Other deferred credits 646.3 24.0 670.3
Minority interest 21.5 - - 21.5
______________________________________________________
Total Capitalization and
Liabilities $11,955.0 $916.8 $793.3 $13,665.1
======================================================
<FN>
See accompanying notes to pro forma condensed consolidated financial information.
</FN>
40
PacifiCorp
NOTES TO PRO FORMA CONDENSED CONSOLIDATED
FINANCIAL INFORMATION
(UNAUDITED)
NOTE 1. BASIS OF PRESENTATION
The accompanying unaudited pro forma condensed consolidated balance
sheets reflect the financial position of PacifiCorp (the "Company") after
giving effect to the acquisition of Powercor Australia, Limited ("Powercor")
on December 12, 1995 and the related financings as if it were consummated at
the end of the periods presented. The unaudited pro forma condensed
consolidated income statements reflect the acquisition of Powercor as if it
had occurred as of the beginning of the periods presented. As no financial
information is available for Powercor for periods earlier than July 1, 1994,
the pro forma condensed consolidated income statement for the Company for the
year ended December 31, 1994 has been prepared using the results of Powercor
for the period from May 11, 1994 to June 30, 1995 as if such results were for
the year ended December 31, 1994.
The unaudited pro forma condensed consolidated financial information has
been prepared by the Company based upon assumptions deemed proper by it and a
preliminary allocation of the purchase price paid. The unaudited pro forma
condensed consolidated financial information presented herein are shown for
illustrative purposes only and are not necessarily indicative of the future
financial position or future results of operations of the Company, or of the
financial position or results of operations of the Company that would have
actually occurred had the transaction been in effect as of the date or for the
periods presented. In addition, it should be noted that the Company's
financial statements will reflect the acquisition only from December 12, 1995,
the closing date for the acquisition.
The unaudited pro forma condensed consolidated financial information
should be read in conjunction with the historical financial statements and
related notes of the Company.
PacifiCorp -- Represents the condensed consolidated balance sheets of the
Company as of September 30, 1995 and December 31, 1994 and condensed
consolidated income statements of the Company for (a) the nine months ended
September 30, 1995 and (b) the year ended December 31, 1994 as they appear in
the Company's Quarterly Report on Form 10-Q for the quarter ended
September 30, 1995 and the Company's 1994 Annual Report on Form 10-K.
Powercor -- Represents the condensed balance sheets as of September 30,
1995 and June 30, 1995 and condensed income statements of Powercor for (a) the
nine months ended September 30, 1995 and (b) the period from May 11, 1994 to
June 30, 1995 as reflected on Powercor's statements of profit and loss
adjusted to U.S. generally accepted accounting principles.
41
NOTE 2 PRO FORMA ADJUSTMENTS
Balance Sheet
(a) Property, plant and equipment was increased to reflect balances at
fair market value.
(b) Other assets were increased to reflect the value of licenses
acquired.
(c) Additional short-term and long-term debt issued to fund the
acquisition of Powercor was included and the retirement of
Powercor's short-term and long-term debt was reflected.
(d) The payment of deferred taxes related to the sale of fixed assets
was reflected.
Income Statement
(a) Intangible assets related to the purchase of Powercor were amortized
on a straight-line basis over a 40 year life.
(b) Interest expense related to Powercor's pre-acquisition activities
was removed and interest expense related to the acquisition debt was
included.
(c) Additional depreciation expense related to an increase in property,
plant and equipment to reflect balances at fair value was included.
(d) No material adjustments to conform to U.S. Generally Accepted
Accounting Principles were required.
(e) For the six months ended June 30, 1995, Powercor's revenues were
$277 million and net income was $36 million.
42
All Dollars are Australian with Australian Accounting Standards applied.
See Footnote 2 for Reconciliation to U.S. GAAP
Powercor Australia, Limited
Condensed Income Statement
For the Three Months Ended September 30, 1995
(Unaudited)
In Millions of Australian Dollars
Revenues $198.7
Cost of Sales 115.2
Operating expenses 34.5
Depreciation 12.0
Interest expense 12.9
______
Income before taxes 24.1
Income taxes 7.9
______
Net Income $16.2
======
<FN>
See accompanying notes to condensed consolidated financial information.
</FN>
43
All Dollars are Australian with Australian Accounting Standards applied.
See Footnote 2 for Reconciliation to U.S. GAAP
Powercor Australia, Limited
Condensed Balance Sheet
As of September 30, 1995
(Unaudited)
In Millions of Australian Dollars
Assets
Property, plant and equipment - net $1,067.7
Current assets 136.2
Other assets 9.4
________
Total Assets $1,213.3
========
Capitalization and Liabilities
Common equity $16.2
Long-term debt and capital
lease obligations 281.5
Current liabilities 844.2
Deferred credits 71.4
________
Total Capitalization and
Liabilities $1,213.3
========
<FN>
See accompanying notes to condensed consolidated financial information.
</FN>
44
All Dollars are Australian with Australian Accounting Standards applied.
See Footnote 2 for Reconciliation to U.S. GAAP
Powercor Australia, Limited
Condensed Statement of Cash Flows
For the Three Months Ended September 30, 1995
(Unaudited)
In Millions of Australian Dollars
Cash flows from operating activities
Receipts from customers $196.8
Payments to suppliers and employees for goods (55.2)
Interest and other (14.2)
Purchased electricity (98.6)
______
Net cash inflow from operating activities $28.8
======
Cash flows from investing activities
Payments to acquire property, plant and equipment (17.0)
Other (4.8)
______
Net cash outflow from investing activities $(21.8)
======
Cash flows from financing activities
Proceeds from borrowings 171.4
Repayment of borrowings (principal only) (171.7)
Other 1.8
______
Net cash inflow from investing activities $1.5
======
Net increase in cash held 8.5
Cash at the beginning of the period (2.0)
______
Cash at the end of the period $6.5
======
<FN>
See accompanying notes to condensed consolidated financial information.
</FN>
45
Powercor Australia, Limited
NOTES TO CONDENSED FINANCIAL STATEMENTS
SEPTEMBER 30, 1995
UNAUDITED
Note 1
The financial statements of Powercor Australia, Limited ("Powercor") for
the three months ended and as of September 30, 1995 are unaudited. The
financial statements, in the opinion of Powercor's management, include all
adjustments, constituting only normal recording of accruals, necessary for a
fair presentation of financial position and results of operations. In
addition, such statements are denominated in Australian dollars. The
acquisition, related adjustments, including acquisition financing, have not
been reflected in the attached statements. No adjustments have been made to
reflect the statements in accordance with U.S. Generally Accepted Accounting
Principles (GAAP).
Note 2
No significant adjustments to the condensed income statement for the
three months ended September 30, 1995 would be required if U.S. GAAP had been
applied instead of Australian accounting principles.
INDEX TO EXHIBITS
EXHIBIT DESCRIPTION PAGE
_______ ___________ ____
2.1 Asset Sale Agreement between Powercor Australia
Limited and PacifiCorp Australia Holdings Pty
Ltd.
2.2 Share Sale Agreement between the State
Electricity Commission of Victoria and the State
of Victoria and PacifiCorp Australia Holdings
Pty Ltd. and PacifiCorp Holdings, Inc.
2.3 Asset Purchase Agreement between PacifiCorp
Australia Holdings Pty Ltd. and Powercor
Australia Limited.
23 Consent of the Auditor-General, Melbourne,
Australia.