1
EXHIBIT 99
_____________________________________________________________________________
PACIFICORP NEWS RELEASE
_____________________________________________________________________________
FOR FURTHER INFORMATION CONTACT:
Scott Hibbs (503) 731-2123
July 23, 1997
PACIFICORP REPORTS SECOND QUARTER 1997
FINANCIAL RESULTS
PacifiCorp (NYSE:PPW) today reported second quarter 1997 earnings on common
stock of $89 million, or $0.30 per share, compared to $90 million, or $0.31
per share, reported in 1996. Second quarter 1996 results included $0.02 per
share associated with asset sales at the company's financial services and
telecommunications subsidiaries.
The earnings contribution from the company's domestic electric utility
operations totaled $62 million in the quarter, approximating the 1996 level.
Increases in retail and wholesale revenues were offset by higher operating,
overhead and interest costs.
Earnings from Powercor, the company's Australian electricity and marketing
company, increased in the quarter due to 35 percent load growth.
Commenting on second quarter results, Fred Buckman, President and Chief
Executive Officer, said, "We are pleased with the continued earnings growth
from our Australian electric business. Higher non-operational costs, however,
are putting pressure on earnings from our domestic electric operations. We
continue to search for additional ways to reduce costs in the domestic
electric business in order to meet our earnings growth expectations for 1997."
Earnings from Pacific Telecom, Inc., the company's telecommunications
subsidiary, increased in the quarter due to a 6% increase in customer access
lines. As a result of the company's pending sales agreement, PTI is reported
as a discontinued operation.
2
SECOND QUARTER 1997 EARNINGS ANALYSIS
DOMESTIC ELECTRIC OPERATIONS
EARNINGS CONTRIBUTION
Domestic electric operations earnings contribution in the quarter was $62
million, or $0.21 per share, approximating the contribution in the second
quarter of 1996. Income from operations rose $7 million, or 4 percent, to
$184 million. Increased interest costs offset the increase in operating
income.
REVENUES
Second quarter domestic electric revenues increased $126 million, or 19
percent, to $791 million. Wholesale revenues increased $98 million, or 62
percent, while retail revenues rose $21 million, or 4 percent.
Retail revenues improved to $517 million mainly on the strength of increased
energy sales volumes of 2 percent.
Residential revenues were up $4 million, or 2 percent, to $171 million.
Average realized prices increased revenues $7 million primarily due to
increased rates in Oregon and Wyoming. Increased volumes associated with
customer growth were more than offset by declining customer usage, which is
largely attributable to weather.
Commercial revenues grew by $8 million, or 5 percent, to $156 million on a 4
percent increase in energy sales. Growth in the average number of customers
of 3 percent added $5 million to revenues, while increased usage per customer
added $2 million.
Industrial revenues increased $9 million, or 5 percent, to $181 million on a 3
percent increase in energy sales. Price increases in the company's Oregon and
Wyoming jurisdictions added $2 million to revenue. Increased usage, primarily
for small to medium-sized industrial customers in Oregon and Wyoming, added $5
million to revenue. Increased irrigation usage also added $1 million to
revenue.
Wholesale revenues increased $98 million, or 62 percent, to $254 million.
Energy sales volumes increased 85 percent. Increased short-term firm and spot
market sales added $80 million. Short-term firm and spot market sales prices
averaged $15 per mWh compared to $11 per mWh for the same period in 1996. The
increased prices added $13 million in revenues.
OPERATING EXPENSES
Total operating expenses increased $119 million, or 24 percent, to $608
million in the quarter.
Purchased power expense for the second quarter of 1997 increased $90 million,
or 71 percent, to $217 million. Short-term firm and spot market energy
purchases were up $64 million, or 5.5 million mWh, more than doubling the
amount of purchases in the same period of 1996. Short-term firm and spot
market purchase prices averaged $13 per mWh in the quarter versus $9 per mWh
in the first quarter of 1996. The increase in purchase prices added $22
million to costs.
3
Fuel expense for the quarter was up $4 million, or 4 percent, to $97 million.
Net power costs in the quarter were $5.54 per mWh, compared to $6.19 per mWh
in the second quarter of 1996, an 11 percent decrease. Net power cost
represents the net cost to serve the company's domestic retail customers on a
mWh basis. This is measured by the sum of fuel, purchased power and wheeling
expense, less wholesale power and wheeling revenues. The decrease in net
power cost is attributable to increased wholesale revenue contribution,
primarily from higher short-term firm and spot market sales.
Other operations and maintenance expense increased $11 million, or 10 percent,
to $127 million. The increase was driven by higher generation plant operating
costs, increased tree trimming expense and increased customer service
expenses.
Administrative and general expenses increased $7 million, or 10 percent, to
$76 million. The increase resulted from higher employee-related expenses and
outside service costs.
Depreciation and amortization expense increased $7 million, or 8 percent, to
$91 million. The addition of the Hermiston plant in July, 1996, and the
company's new customer service system added $4 million to depreciation in the
quarter.
OTHER INCOME/EXPENSE
Electric interest expense increased $9 million, or 12 percent, to $81 million.
The increase was attributable to higher debt balances as the result of the
acquisition of the Hermiston plant in July, 1996, and increased capital
contributions to PacifiCorp Holdings, Inc. relating to the acquisition of TPC
Corporation in the second quarter of 1997.
Other income included $5 million in emission allowance sales in the second
quarter of 1997. There were no emission allowance sales in the second quarter
of 1996.
Income tax expense approximated 1996 levels at $41 million.
AUSTRALIAN ELECTRIC OPERATIONS
EARNINGS CONTRIBUTION
The company's Australian electric operations contributed $8 million, or $0.03
per share, in the second quarter of 1997, compared to $5 million, or $0.02 per
share, in the second quarter of 1996.
In the second quarter of 1997, Powercor, the company's Australian electric
distribution and marketing business, contributed earnings of $8 million,
compared to $5 million in the comparable period of 1996. Income from
operations increased $4 million, or 18 percent, to $27 million.
4
REVENUES
Powercor's revenues increased $22 million, or 14 percent, to $178 million.
The increase was attributable to increased energy sales volumes of 679
million kWh, or 35 percent.
Energy volumes to contestable customers outside Powercor's franchise area were
up 770 million kWh and added $32 million to revenue due to customer gains in
Victoria and New South Wales. This includes increased energy volumes for
customers in Victoria of 513 million kWh that added $24 million to revenue,
and increased energy volumes for customers in New South Wales of 257 million
kWh which added $8 million to revenue.
Energy volumes to customers inside Powercor's franchise area decreased 91
million kWh, which reduced revenue by $10 million. Residential revenues for
franchise customers were down $1 million, or 2%, to $61 million. This
includes decreased energy volumes for residential customers of 10 million kWh,
primarily due to the effect of mild weather, partially offset by growth in the
number of customers of 1%. Energy volumes to commercial and industrial
customers that include franchise and contestable customers, decreased 81
million kWh, which reduced revenue by $9 million. Customers lost from the
effect of continued deregulation in the market reduced revenue by $7 million
and lower prices, in part due to moving Tariff H customers to market related
prices, reduced revenue by $2 million.
OPERATING EXPENSES
Purchased power expense increased $8 million, or 10 percent, to $85 million.
A 35 percent increase in purchased power volumes added $27 million to costs,
which was offset in part by lower power pool prices. Purchased power prices
averaged $33 per mWh, compared to $40 per mWh in 1996.
Other operating expenses increased $11 million, or 30 percent, to $48 million.
Increased sales to contestable customers outside Powercor's franchise area
resulted in higher network and grid fees of $16 million. This was offset in
part by higher network revenues of $4 million from customers inside Powercor's
franchise area serviced by other electricity companies.
Interest expense and other decreased $5 million, or 25 percent, to $15
million. Included in this decrease is lower interest expense of $3 million
primarily due to reduced interest rates.
Income tax expense was $4 million in 1997, compared to a tax benefit of $2
million in 1996. The tax benefit resulted from purchase price adjustments
relating to the Powercor acquisition.
In the second quarter of 1997, the company recorded break-even results on its
equity investment in the Hazelwood power station.
Hazelwood sells its generation output through a statewide generation pool and
under bilateral contracts directly to Victorian distribution companies. Pool
and contract prices vary depending on certain conditions, including weather,
economic growth and other factors influencing supply and demand for electric
power. Power prices are highest in the Australian winter months because
demand is highest, which generally is expected to result in higher profit
margins for Hazelwood during the second and third calendar quarters.
5
The refurbishment of units 7 and 8 at Hazelwood continues on schedule. The
refurbishment of unit 8 is scheduled for completion later this year, while
unit 7 is expected to be completed early in 1998.
AUSTRALIAN ELECTRIC OPERATIONS SECOND QUARTER RESULTS (In millions):
_____________________________________________________
1997 1996
____ ____
Powercor:
________
Revenues $178 $156
Purchased power (85) (77)
Depreciation and amortization (18) (19)
Other operating expenses (48) (37)
___ ___
Income from operations 27 23
Interest expense and other (15) (20)
___ ___
Income before income taxes 12 3
Income taxes (4) 2
POWERCOR NET INCOME $ 8 $ 5
HAZELWOOD NET INCOME - -
___ ___
Earnings contribution $ 8 $ 5
=== ===
TELECOMMUNICATIONS
On June 13, 1997, the Company announced it had entered into an agreement to
sell Pacific Telecom, Inc. to Century Telephone Enterprises, Inc. for $1.5
billion in cash, plus assumption of Pacific Telecom debt. As a result of the
agreement to sell, PacifiCorp is reporting PTI as a discontinued operation
pending final disposition. The sale of PTI is subject to regulatory approvals
in certain states in which it does business, and with the Federal
Communications Commission.
PTI SECOND QUARTER RESULTS (In millions): 1997 1996
__________________________ ____ ____
Revenues $134 $127
Operating expenses (92) (89)
___ ___
Income from operations 42 38
Interest expense (10) (11)
Other income/(expense) (1) 3
___ ___
Income before income taxes 31 30
Income taxes (12) (12)
___ ___
Net income $19 $18
__ __
6
EARNINGS CONTRIBUTION
The earnings contribution from PTI for the second quarter of 1997 totaled $19
million, or $0.06 per share, compared to $18 million, or $0.06 per share, in
the second quarter of 1996. Second quarter 1996 results included a gain of
$0.01 per share associated with the sale of a cellular property.
REVENUES
PTI's revenues increased $7 million, or 5 percent, to $134 million. Growth of
6 percent in local exchange access lines added $2 million to revenue and
customer growth increased cellular revenue $2 million. Increased minutes of
use also added $2 million in network access service revenue.
OPERATING EXPENSES
Operating expenses increased $3 million, or 3 percent, to $92 million. The
increase includes $1 million in costs for increased local exchange access
lines, $1 million in depreciation for additional plant in service and $1
million for cellular customer growth.
OTHER INCOME/EXPENSE
Interest expense for the quarter is $10 million, a slight decrease from the
second quarter of 1996. Income taxes are $12 million in the quarter, the same
as for the same period in 1996.
PTI has pending acquisitions of local exchange properties in Minnesota,
Michigan and Alaska serving approximately 70,000 access lines. Approvals for
the Minnesota and Michigan acquisitions have been received from the public
utility commissions in those states. PTI is awaiting approval of these
acquisitions from the Federal Communications Commission. Hearings before the
Alaska Public Utilities Commission for the Alaska acquisition concluded in
June, and PTI is awaiting an order. PTI anticipates that all three
acquisitions will receive all final regulatory approvals and close prior to
the end of 1997. PTI also has signed letters of intent to acquire additional
local exchange operations totaling 3,800 access lines.
OTHER BUSINESSES
EARNINGS CONTRIBUTION
Earnings from other operations declined $6 million in the quarter. Second
quarter 1996 results included gains on sales of financial assets totaling $4
million, or $0.01 per share. Earnings for the quarter include a $1 million
loss from TPC Corporation, the company's natural gas marketing and storage
company. PacifiCorp Holdings, Inc. acquired TPC in April of this year and
last week announced that it is soliciting offers for the natural gas gathering
and processing assets of TPC.
OTHER INCOME/EXPENSE
Interest expense from other operations increased $9 million, to $17 million in
1997. The increase was attributable to higher debt balances as a result of
the acquisitions of Hazelwood and TPC Corporation. Additionally, second
quarter 1996 included a favorable interest expense adjustment from a state tax
settlement.
7
Income taxes from other operations is a benefit of $5 million in 1997,
compared to an expense of $2 million in 1996. Second quarter 1996 included
income tax expense relating to gains on financial asset sales and an
unfavorable state tax settlement.
8
PacifiCorp
and its Consolidated Subsidiaries
Summary Financial Information
(In Thousands, Except Per Share Amounts)
(Unaudited)
3 Months Ended June 30 $ %
1997 1996 Change Change
- ------------------------------------------------------------------------------------------
REVENUES
Domestic Electric Operations (1) $ 791,400 $ 665,400 $ 126,000 19
Australian Electric Operations (1) 178,100 156,100 22,000 14
Other Operations (2) 250,600 35,100 215,500 *
-----------------------------------------------
TOTAL 1,220,100 856,600 363,500 42
-----------------------------------------------
EXPENSES
Domestic Electric Operations
Fuel 97,300 93,600 3,700 4
Purchased power (1) 216,700 126,500 90,200 71
Other operations and maintenance (1) 126,500 115,200 11,300 10
Depreciation and amortization 91,000 84,400 6,600 8
Administrative and general 76,000 68,800 7,200 10
-----------------------------------------------
TOTAL 607,500 488,500 119,000 24
Australian Electric Operations (1) 150,800 133,000 17,800 13
Other Operations (2) 239,900 16,600 223,300 *
-----------------------------------------------
TOTAL 998,200 638,100 360,100 56
-----------------------------------------------
INCOME FROM OPERATIONS
Domestic Electric Operations 183,900 176,900 7,000 4
Australian Electric Operations 27,300 23,100 4,200 18
Other Operations (2) 10,700 18,500 (7,800) (42)
-----------------------------------------------
TOTAL 221,900 218,500 3,400 2
Interest expense 113,200 98,400 14,800 15
Other (income) expense (7,600) (200) (7,400) *
-----------------------------------------------
Income from continuing operations
before income taxes 116,300 120,300 (4,000) (3)
Income taxes 40,600 39,000 1,600 4
-----------------------------------------------
Income from continuing operations 75,700 81,300 (5,600) (7)
Discontinued operations (3) 19,100 17,900 1,200 7
-----------------------------------------------
NET INCOME 94,800 99,200 (4,400) (4)
Preferred dividend requirement 6,100 9,000 (2,900) (32)
-----------------------------------------------
EARNINGS CONTRIBUTION
ON COMMON STOCK (4)
Domestic Electric Operations 62,200 62,100 100 -
Australian Electric Operations 8,100 5,100 3,000 59
Other Operations (2) (700) 5,100 (5,800) (114)
-----------------------------------------------
Continuing operations 69,600 72,300 (2,700) (4)
Discontinued operations (3) 19,100 17,900 1,200 7
-----------------------------------------------
TOTAL $ 88,700 $ 90,200 $ (1,500) (2)
===============================================
Average common shares outstanding 295,901 293,864 2,037 1
EARNINGS PER COMMON SHARE
Domestic Electric Operations $ 0.21 $ 0.21 $ - -
Australian Electric Operations 0.03 0.02 0.01 50
Other Operations (2) - 0.02 (0.02) (100)
-----------------------------------------------
Continuing operations 0.24 0.25 (0.01) (4)
Discontinued operations (3) 0.06 0.06 - -
-----------------------------------------------
TOTAL $ 0.30 $ 0.31 $ (0.01) (3)
===============================================
Dividends paid per common share $ 0.27 $ 0.27 $ - -
===============================================
<FN>
* Not a meaningful number.
(See accompanying notes on page 11)
</FN>
9
PacifiCorp
and its Consolidated Subsidiaries
Summary Financial Information
(Unaudited)
3 Months Ended June 30 $ %
1997 1996 Change Change
- ------------------------------------------------------------------------------------------
DOMESTIC ELECTRIC REVENUES (In thousands)
Residential $ 171,400 $ 167,500 $ 3,900 2
Commercial 156,000 148,200 7,800 5
Industrial 180,900 171,900 9,000 5
Other 8,200 8,000 200 3
-----------------------------------------------
Retail Sales 516,500 495,600 20,900 4
Wholesale sales 254,400 156,700 97,700 62
Other 20,500 13,100 7,400 56
-----------------------------------------------
TOTAL $ 791,400 $ 665,400 $ 126,000 19
===============================================
DOMESTIC ELECTRIC ENERGY SALES (Millions of kWh)
Residential 2,635 2,683 (48) (2)
Commercial 2,838 2,736 102 4
Industrial 5,155 4,981 174 3
Other 193 164 29 18
-----------------------------------------------
Retail Sales 10,821 10,564 257 2
Wholesale sales 11,862 6,399 5,463 85
-----------------------------------------------
TOTAL 22,683 16,963 5,720 34
===============================================
AUSTRALIAN ELECTRIC REVENUES (In thousands)
Residential $ 61,400 $ 62,600 $ (1,200) (2)
Commercial 49,900 35,100 14,800 42
Industrial 60,700 52,000 8,700 17
-----------------------------------------------
Retail Sales 172,000 149,700 22,300 15
Other 6,100 6,400 (300) (5)
-----------------------------------------------
TOTAL $ 178,100 $ 156,100 $ 22,000 14
===============================================
AUSTRALIAN ELECTRIC ENERGY SALES (Millions of kWh)
Residential 675 685 (10) (1)
Commercial 628 362 266 73
Industrial 1,304 881 423 48
-----------------------------------------------
TOTAL 2,607 1,928 679 35
===============================================
<FN>
* Not a meaningful number.
(See accompanying notes on page 11)
</FN>
10
PacifiCorp
and its Consolidated Subsidiaries
Summary Financial Information
(In Thousands, Except Per Share Amounts)
(Unaudited)
6 Months Ended June 30 $ %
1997 1996 Change Change
- ------------------------------------------------------------------------------------------
REVENUES
Domestic Electric Operations (1) $ 1,584,600 $ 1,370,000 $ 214,600 16
Australian Electric Operations (1) 361,500 299,500 62,000 21
Other Operations (2) 315,800 70,500 245,300 *
-----------------------------------------------
TOTAL 2,261,900 1,740,000 521,900 30
-----------------------------------------------
EXPENSES
Domestic Electric Operations
Fuel 213,900 195,700 18,200 9
Purchased power (1) 420,600 249,700 170,900 68
Other operations and maintenance (1) 240,200 223,000 17,200 8
Depreciation and amortization 180,300 168,300 12,000 7
Administrative and general 149,000 136,700 12,300 9
-----------------------------------------------
TOTAL 1,204,000 973,400 230,600 24
Australian Electric Operations (1) 279,300 240,200 39,100 16
Other Operations (2) 295,300 31,000 264,300 *
-----------------------------------------------
TOTAL 1,778,600 1,244,600 534,000 43
-----------------------------------------------
INCOME FROM OPERATIONS
Domestic Electric Operations 380,600 396,600 (16,000) (4)
Australian Electric Operations 82,200 59,300 22,900 39
Other Operations (2) 20,500 39,500 (19,000) (48)
-----------------------------------------------
TOTAL 483,300 495,400 (12,100) (2)
Interest expense 219,700 205,900 13,800 7
Other (income) expense (11,500) (9,500) (2,000) (21)
-----------------------------------------------
Income from continuing operations
before income taxes 275,100 299,000 (23,900) (8)
Income taxes 96,700 103,700 (7,000) (7)
-----------------------------------------------
Income from continuing operations 178,400 195,300 (16,900) (9)
Discontinued operations (3) 37,400 33,800 3,600 11
-----------------------------------------------
NET INCOME 215,800 229,100 (13,300) (6)
Preferred dividend requirement 12,200 18,000 (5,800) (32)
-----------------------------------------------
EARNINGS CONTRIBUTION
ON COMMON STOCK (4)
Domestic Electric Operations 136,800 148,400 (11,600) (8)
Australian Electric Operations 29,100 15,900 13,200 83
Other Operations (2) 300 13,000 (12,700) (98)
-----------------------------------------------
Continuing operations 166,200 177,300 (11,100) (6)
Discontinued operations (3) 37,400 33,800 3,600 11
-----------------------------------------------
TOTAL $ 203,600 $ 211,100 $ (7,500) (4)
===============================================
Average common shares outstanding 295,648 290,177 5,471 2
EARNINGS PER COMMON SHARE
Domestic Electric Operations $ 0.46 $ 0.51 $ (0.05) (10)
Australian Electric Operations 0.10 0.05 0.05 100
Other Operations (2) - 0.05 (0.05) (100)
-----------------------------------------------
Continuing operations 0.56 0.61 (0.05) (8)
Discontinued operations (3) 0.13 0.12 0.01 8
-----------------------------------------------
TOTAL $ 0.69 $ 0.73 $ (0.04) (5)
===============================================
Dividends paid per common share $ 0.54 $ 0.54 $ - -
===============================================
<FN>
* Not a meaningful number.
(See accompanying notes on page 11)
</FN>
11
PacifiCorp
and its Consolidated Subsidiaries
Summary Financial Information
(Unaudited)
6 Months Ended June 30 $ %
1997 1996 Change Change
- ------------------------------------------------------------------------------------------
DOMESTIC ELECTRIC REVENUES (In thousands)
Residential $ 404,500 $ 394,500 $ 10,000 3
Commercial 306,200 299,200 7,000 2
Industrial 335,900 337,600 (1,700) (1)
Other 16,000 15,600 400 3
-----------------------------------------------
Retail Sales 1,062,600 1,046,900 15,700 1
Wholesale sales 484,100 297,000 187,100 63
Other 37,900 26,100 11,800 45
-----------------------------------------------
TOTAL $ 1,584,600 $ 1,370,000 $ 214,600 16
===============================================
DOMESTIC ELECTRIC ENERGY SALES (Millions of kWh)
Residential 6,462 6,454 8 -
Commercial 5,622 5,520 102 2
Industrial 9,900 9,755 145 1
Other 362 315 47 15
-----------------------------------------------
Retail Sales 22,346 22,044 302 1
Wholesale sales 22,102 12,072 10,030 83
-----------------------------------------------
TOTAL 44,448 34,116 10,332 30
===============================================
AUSTRALIAN ELECTRIC REVENUES (In thousands)
Residential $ 119,900 $ 112,800 $ 7,100 6
Commercial 99,200 67,900 31,300 46
Industrial 118,600 106,200 12,400 12
-----------------------------------------------
Retail Sales 337,700 286,900 50,800 18
Other 23,800 12,600 11,200 89
-----------------------------------------------
TOTAL $ 361,500 $ 299,500 $ 62,000 21
===============================================
AUSTRALIAN ELECTRIC ENERGY
SALES (Millions of kWh)
Residential 1,283 1,257 26 2
Commercial 1,290 745 545 73
Industrial 2,454 1,786 668 37
-----------------------------------------------
TOTAL 5,027 3,788 1,239 33
===============================================
June December $ %
1997 1996 Change Change
-----------------------------------------------
CONSOLIDATED CAPITALIZATION
Common equity $ 4,068,000 $ 4,032,000 $ 36,000 1
Preferred stock 311,000 314,000 (3,000) (1)
Preferred securities of trust holding
solely PacifiCorp debentures 210,000 210,000 - -
Long-term debt 5,361,000 4,829,000 532,000 11
Short-term debt 872,000 903,000 (31,000) (3)
-----------------------------------------------
TOTAL $ 10,822,000 $ 10,288,000 $ 534,000 5
===============================================
<FN>
* Not a meaningful number.
</FN>
(1) Certain amounts from the prior year have been reclassified to conform
with the 1997 method of presentation. Reclassifications had no effect on
previously reported consolidated net income.
(2) Other includes the operations of PacifiCorp Financial Services, Inc.,
Pacific Generation Company, TPC Corporation and PacifiCorp Power
Marketing, as well as activities of PacifiCorp Holdings, Inc.
(3) Represents the discontinued operations of Pacific Telecom, Inc., a
telecommunications subsidiary.
(4) Earnings contribution on common stock by segment:
(a) Does not reflect elimination for interest on intercompany
borrowing arrangements.
(b) Includes income taxes on a separate company basis, with any
benefit or detriment of consolidation reflected in Other
Operations.
(c) Amounts are net of preferred dividend requirements and minority
interest.
###