Text

Pacificorp Annual Rept 1992
	ML20056G900
Person / Time
Site:	Trojan File:Portland General Electric icon.png
Issue date:	12/31/1992
From:	Gleason A; PACIFICORP (FORMERLY PACIFIC POWER & LIGHT)
To:	;
Shared Package
ML20056G894	List: ML20056G893; ML20056G895; ML20056G897; ML20056G900;
References
	NUDOCS 9309070290
	Download: ML20056G900 (62)
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i ~ eu t } q 0, H,,.,L. r, U;g374 y tA M,, y x A s the thits!aigest electric utiliir com-pany urst ofthe Rocky Mountains, RiafCory senes 1.3 million customas through Pacifc Pouer and Utah Pouer. PacifCorp also holds a major telecommunications utility Paafc Tdecom, an 87parentwuwedsubsidiary is one ofthe natiois largest nonBelltelephone companies. I CoterPhoto Tir sxnic Oregon wait isjust one oftie mary desirairle locatiom smed 1 PadSCorps ciertric andidecommunicadons 7 operadens. On the nonhern Oregon coast PadfCory smrs moir than 19,000 elearic customm. With an dearicalsystem that enendsfrom de PaajcNordmen to the daen Soutburst, PacifCorp is able to tair advantay ofseasonaldurrsi.y to more efdem!r andproftaldr use its generation and trarismission resources. 1 l I i P Contents RnandalHight& hts 1 Elearic operadons 8 Oficm &Boant FinandalRevine 2 Tdecommunicadom 14 ofDireaon 55 l To OurSharcholdm 3 DixontinuelOperatiom 18 hnsstorh{annation 57 7 Map ofOperadons 6 FinancialScaion 19 'h h f J

iNANC A:_ iG-ATS t _ M.il.l 1_0M.OF !KEIAkstab IOR THI UAR m, 1*C w m! Genpuul J $'t U"j 1992 1991M OPERATING RESL'LTS Revenues S 3.242 5 3,168 2% 3% Income from Operations 633 941 03) (7) Inmme from Continuing Operations 150 447 (66) (16) i Discontinued Operations (491) 60 Net income (loss) (341) 507 078) 481 i Emnines (loss) Available for Common Stock DATA PER COMMON SHARE Eaminp floss) ContinuingOperations 5 .42 5 1.63 (74) (21) Discontinued 0perations (1.84 ) .23 Total (1.42 ) 156 Dividends PaidW 1.52 1.47 3 4 hk Value 10.75 13.40 (20) (2) 44 _ _ - IS% _. 25 %_-20% _._ (21)(d'. 25 % Stock Price Rance FINANCRLPOSITION ATDECEMER31 r Aucts 5 11,257 5 11,910 (5) 3 Capitalization 7.894 8.537 (8) 3 Capital Structure i long-Term Debt and Capital inse Obligations 55 % 53 % l Prefe red Stock 8 6 4I C#'* " N"N ._ __ [ _ OTHER STATISTICS Retum on Average Common Equit# 7.4% 12.5 % Market to bkValue(Year End) 184 % 188 % Cash flu from ContinuingOperations 5 942 5 1.020 Common Shares (Average.Lusands) 266,527 258,350 W a memps numic w her pn mm uom & Red fud a, unra A sin dharmind q.crmum w tud que== ddx IL=d dDmam a m Waw le nom, ihr uJuwd ar.nd dnand rm d mr Compam i,5 L f* per dau id blon vuod pru W C4adced umg cumrp Imm amtmaug apemwm esduarpm.nl durp m 1*C b,Mrg 9ed dwp. h reture fw 1% 3 4 peram CONSOLIDATED EARNINGS AND ROUUL5 DfGDENDS PAID PERCOMMON SRULE at:uwwnnuar amaw; 3%0 2.00 r 3No

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E Eicctnc Operanum ,g ,g n.w macw rg p em of ess' chcp e N t 3. kg e a; et s P M ' 89 90 91 92 E7 88 89 90. 91 92 -)

?N/ N 'IAL 11/~'i 'l } I i . I i INorxin TOTAL 1NVESWENT f FARNINcs RLTl'RN fnT.YIAR l PER COMMON C(BIPOl'No Rm i SilARE 1987-1992 i was auu . Pax,rpum ne: w., n- =w

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5 Pd4 (W after the decisor, to wll 5 sudada r=1s%* E bM & P=W NEPCO, the minmg and 3 w ayd6:rw et hru-E I., so Utilim+ rewwa dnrLipmem subsdun-u. _.mmy j _. u. m

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PadfxTelecom wnnnus tohd thecompany with mm than 50 fut opportunne to expand the other utiima and is um as a m kuttelephoncexdunge budnes km-as pducepm Pa.iLrp 12 an advamage in ik competinve wMeuk pmer malet. j g g g r u 89 - w m 92 - ru 89 wm 92 l i i

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i:1 OUR SHMEHOWERS f . ? orIadfCory,1992 was an extremely diffcidt year, with end) of die company) operating units aperiencing lower irsuits than in 1991. Hounrr, positive actions taken during theyear and in early 1993 have changed the scope ofthe company, andpositioned itpr a more stablefiture. e---- Problems startedin thefrst quarter, when naturalgas l pricesfdl to a 12-year low. Coupled with debtfom the $500 l million naturalgas properties acquisition made in April l 1991, ihefdling naturalgas prices placed a sigmfcant bur-den on NERCOsjnancialposition and caused NERCO to l q gg i j take afrst quarter after-tax charge of$123 million against i \\ the value ofits natundgas holdings. { m 3 l Edlingpricesfor gold and silver abo forred NERCO to take a hardlook at itsprecious minerals unit, which had been unproftable in recentyean. A stmtegic decision was made in thejnt quarter to evalu-are thepotentialdisposition ofthepwcious minends business, which led to l an attempt to sdlthis unit. Hourver, byyear-end it became apparent that r a sale would not bepossible atprices consistent with its book vahie. l { i t..

i l t I As a resuh, it was also necessary for NERCO to write down the sina early 1989, took after-tax write-downs of 5115 million in 1992 to value ofits precious minerals company. All these measures caused us to eliminate all goodwill from the balance sheet and to prtnide added reserves l repon a kiss for the year for NERCO of 5451 million. against possible future k>sses. Our goal is to continue the reduction of Paci6c Tdecom, our tdecommunications subsidiary, also experi-fmancial senices in an orderly manner. During 1992, assets were reduad enced falling rntnues during the year. Sales of capacity in the North by 5442 million for a wtal reduction of almost 51.1 billion sina 1989. Pacinc cable, a submarine fiber optic cable between the U.S. and Japan, When the results fmm all business units air considered, Paci6 Corp decreased 520 million, or 65 percem in 1992. experienced a loss for 1992 of $376 million. Hownrr, actions taken in Most signi6 cant at Pacific Tdecom was a $40 million a6er-tax write-1992 and to date in 1993 have addressed the causes of those losses and down taken in anticipation of the sale ofits intemational communica-I feel the company is r.aw placed in a stmnger financial position for tions subsidiarv. His transaction, expected to dose in the third quaner of future perfcanance. 1993, is another step in exiting noncore aethities in order to better focus Narrowing the focus ofdiversi6 cation at Paci6 Corp has been a prin-on the more stable, regulated pans of the idecommunications industrv. cipal objective for the past several years. Te have been stating our intent The core tdecommunications acthities of Pacific Tdecom are kical to return to our roots as a utility operation, with the accompanying sta-exchange operations and long distance senices in Alaska. While loal net-ble, more predictable camings and dividends. I work senice revenues incrased 8 percent in 1992, Paci6c Telecom's earn-That goal drove the reduction in the size of our financial services ings contribution m Paci6 Corp fmm continuing operations was 557 mil-subsidiary. h also helps darify the decision we announced in February lion, a 25 percent decrease imm 1991. Aside from lower cable rnenues of 1993 to sdl NERCO, our mining and natural resources subsidiarv. h noted abwe, the increased competition in the Alaska long distance mar-was not our original intention to sell all of NERCO, which had been a ket and lower out-of-period :ntnues wen contributors to this dedine. fine contributor to the growth of Paci6 Corp over the years, and helped Even the mainstay dectric utilitt business had a hard year, also suppon the dhidend to its 1992 level. We estimate, with the sale, the starting in the first quaner. As a w;nter-peaking utility, we were nega-NERCO investment over its life will have pmduced an internal rate of thrly impacted by mild wimer weather early in 1992, and plagued by return of approximardy 18 percent for the company. continuing drought conditions thmugh much of the year. This resuh-All that considered, NERCO's recent expansion ofits natural gas ed in lower hydm pmduction and the accompanying need to use a business added a signincant dement of volatility to our consolidated higher percemage of more expensive powrr from coal-fired plants and earnings, and that was unaaeptable to the company going forward. As purchases from other utilities. time has passed it was dear that this volatility also was inconsistent These weather conditions, coupled with 570 million of one-time with our shareholders' long-term expectations. after-tax writedowns. kmtred the electric group's contribution to 5203 As a resuh, in February of 1993 the decision was made to sell million, compared to the 1991 contribution of 5347 million. A bright NERCO to Kennecott Corporation. The agreed upon price of 512 per spot for electric operations was a 30 percent increase in our wholesale share represents, we bdieve, a fair price to all shareholders. And, the energy sales to other utilities, as several new contracts took effect. assumption by the buyer of nearly $700 million of NERCO's debt ne nnancial senices subsidiam which we have been shrinking in size olniously impmves our capital structure.

l i l s Because a subsidiary of PacifiCorp may be asked, as part of this trans-On the dectric side, as a resuh of the merger and acquisition activity i action, to provide up to $225 million in fmancing, the $154 million pain mrr the past snrral vears, we now operate one of the stmngest and l l fmm the sale will be recognized as pavments are received on the loan. The most flexible electric utility svstems in the West. The system was funher sale of NERCO is expected to dose early in the second quaner. enhanced in April 1992 when 243 megawatts of existing coaMred As a resuh of the pending NERCO sale and the company's nduced capacity fmm two plants in Colorado were purchased fmm the i earnings base, our dividend level needed to be reconsidered. bankrupt Colorado-Ute Electric Association. Paci6 Corps Board of Directors normally reviews the diW.nd Intl No other ekctric utility in the West has the advantages of Paci6 Corp. based on the future earnings capability of the company and other fac-We are one of the nation's lowest-cost producers ofcoal-fired energv, and tors at the annual meeting in May of each year. With the sale of also have low-cost hydro resources. Thmugh one of the most extensive l NERCO, it was dear the dividend issue had to be addressed sooner. transmission systems in the nation, we interconnea with more than 50 l At the February 17,1993 mating, PacifiCorps Board of Directors other utilities, most of which have higher system power costs than our carefully considered the dividend lorl. and finally condaded that a 30 own. Our low costs and system advantages put PacifiCorp in an enviable l percent reduction to S.27 per quaner was the appropriate level to best position in what will be an increasingly competithr future. balance the fmancial needs of the company with the desire to not Paci6 Corps electric operations span from the winter-peaking sys-reduce the dhidend more than was necessarv. h was not an easy deci-tems of the Pacific Northwen to the summer-peaking systems of the sion, but one I bdinr was necesurv. desen Southwest, pmviding additional efiiciencies by allowing us to PacifiCorp has norr before needed to reduce its d;vidend: in fact, it take full advantage of seasonal dhrtsiti-s - bencfiting both our 1.3 has an excellent record of dhidend increases. Howntr, many of those million retail customers and our wholesale power business. increases were possible because of the higher earnings potential orTered With the company's focus narmwing to its electric and telephone by our non-electric subsidiaries, NERCO and Pacific Telecom, over operations, we befine PacifiCorp is very well positioned to panicipate the past decade. in the gmwth of our senice area. Our goal is to maximize those oppor-l Our reset dhidend is in the neighborhood of 80 percent of our tunities and provide the kind of growth in earnings and dividends that near-term earning potential, a level appmpriate for our company and you historically have seen from the company, ) one which, over time, should allow room for gmwth. With the sale of We certainly appreciate the support of our employees, vinually all of NERCO, we have returned to our mots as a stmng utility, and we whom are shareholders in the enterprise, and the continued suppon of expect to stay there. These businesses have more predictable gmwth our non-employee shareholders, as we move the company forward. l rates and ther have historically been more stable. i l We have staned 1993 with impmved earnings contributions fmm i / 9 8, our remaining electric and tdephone utility operatios Pacific Telecom, .44W,&<t4 n ~.s with.ns technolog. lly advanced and cost-competithr svstem, continues ica to look for new ways to meet customers' needs, while seeking expansion A.M. Gleason opponunities in the local tdephone exchange business. hesidentandChiefheanirr Ofcer l i 1

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M m i l L l i a f ) acifCorp' elatic utilig openitions serve - - } i s g r n retailcustomers in seven states. Tin company.,.s transmimon.9stan, alo.-ng m th.. access to : y c .z = . _. :.u.. - _ [ other transmission, also enabla PacifCorp to sellpourr to other krilitics tlunghout the[ ;=E=Q j o,,, l Mst. Thejexibility ofthispouer netuwk allowsfor the most efcient nse of, theugion%. -- ~.. m.

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7 i E2CTC l EY 0,Mr ONS 7,- l P aapCorp isfrst andforanost an eiectric utii. ity, a utility with a unique marketposition in the West. Through Paajc Power and Utah Pourr, PaafCory provides electricity and related enery services to 1.3 million customers in sevm Westeni states. t 7 - -. _.. -..-. During 1992, PaafCory continued eforts to strengthen the l competitiveposition ofits electric operations. With a strongfocus I 1 l on being a louncostproducer, PaafCorps electric utility is ready l i l to take advantage ofopportunities in the enny market, while l assuring that the needs ofa growing customer base am met. Customer growth was steady in PacifiCorps service area, i l l i even though an unusually wann winter resultedin a 1 percent l decline in residential energy sales during 1992. Areas of sigmfcant population growth include Utah, Montana, Idaho, andcentralandsouthern Oregon. l To address growingpower needs and assure a rdiable powerfow a i i into southern Oregon and nonhern Califontia service areas, a new 500 i .m x j lT ~ kilovolt transmission line is under construction. Halfof the 135-milel { line was energizedin thefallof1992. The remaindershould be up and ) ,,,b n. j running by the end of1993, along with othersystem improvements. l 1 t a _ __ s _

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The company remains committed to meeting new This Lind of conservation plays an important role gmwth in its service area. and is a strong player in pro-in Paci6 Corp's integrated resource - or "least cost" i moting heakhy economics n these communities. At - pian, the blueprim used to assute an adequate 1 i i j the same time, PacifiCorp is emphasizing efiicient use power supply for customers at the least possible l l t of the region's power resources, working with cus-cost. In the plan umeiled in June 1992, PacifiCorp i romers thmugh a varierv of programs to reduce ineHi-estimated that substantial energy saving could be f cient uses of energ so that power is avai!able for a achieved by 1996 through demand-side management. l a l growing economy. The least cost plan is updated every two years, and { p_ -l j { i 1 - ~ --- - 7 adjustments are made to accoum for changing market i .Q w c.nd economic conditions. 1-4,

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,I Environr.ienul impact also is considered m part of j j..l f( jh ~ ) / g ' 4 My 9 & ' the resource planning process, and renewable resources l s g f are expened to play an increasingly important role in f l 3 the future power mix. Paci6 Corp announced planned i i i N j I [ j l <j j participation in two maior wind pmicas in 1992, one

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[ in Wyoming and one in central Washington state. j c g f.h ' [f b Construction could begin as early as 1994. l 4 ....,.1- '! PacifiCorp is conamed about the envimnmental ( t l 's t[ 4

a impa of pmducing power, and seeks to minimiu

-i$ ..; e ..g... m - l f ggMA@ Y Q,%7 and mitigate dTects wheiever possible. In the fall of 1992. PuifiCorp launched a pilot pmgram to l l L_ . _ _..2__ _._ a.u._._._ _. _ _ _.n. l h m-PacifiCorp's innovathe Energy Service Charge - demonstrate a low-cost effective way to remove car-l where the cusmmer directly recching the benefus of bon dioxide (CO ) fmm the atmmphere through l 3 2 m er new cHiciency measures pars much of the costs from offsets. CO; is a byproduct of burning fossil fuels, the energy savings - has been successfully applied and trees naturally absorb CO Through the pro-l 3 i thmugh Energv FinAnswer pre;, rams These programs gram, PacifiCorp is planting nees in metropolitan t m j have been enthusiastically accepted bv cusmmers and Salt Lake City and rural parts of Oregon. { j have received national recognition. Appmximately 80 pera:nt of the company's power t comes from its coal-fired plants, which have a to;al j I nameplate rating of more than 7,000 me;,4 watts. i 1 i I .m

j gg g 3 cach year, delaying the need to build new large gener- { { ating stations for the foreseeable future. Seven l PacifiCorp thermal plants set generation records in i l 9) 1992. contributing to the best year in overall plant f sk M performance since operations were combined with w -j.m @Qip[Qg,A J i Utah Ibwer in the 1989 merger. l Company operation of fhe coal mines located '~ i next to power plants further enhances the ability of i I 'i l { PacifiCorps electric operations to control costs. u noe niining companin pnduced 22 mimon tons _.. _ _ _ ~ _.. of coal in 1992 for the exclusive use of plants man- ,,../,,j.- Because of early pollution control investment at many ~ aged by PacifiCorp, of the plants, and becauw of its significant low-sulfur '~ Safen is a amstam priority in all company opera-toal reserves. Pacif, Corp is among the deanest coal-4 l tbns. Two of PacifrCorps underground mines in east-fired utilities in the nation. ern unh were recently ranked the nationi second safest PuifiCorpi p! anis are aho mme of the least expen- < is 4 1p Washington, D.C.-based public interrst law firm. m, ; sne to onerate. In a recent national sunev of almost pm x;- ~m =;===: 800 thermal plants, four facih. ties owned and operated 'Q-y ig7 l by PacifiCorp, plus nso others Pacif, Corp has panial p-------~ ownership in, were liaed among the 20 least expen- .^ k 'l-l site. Dave Johnston plant, with operating costs of } n p ~;, j g. t i 510.72 per net mepwan-hour. was the fourth least j ,~ L expensive in the nation. Aserage cost per net <\\ , q? i l mmawan-hour in the sunev was 520.3t PacifiCorps ~ r average system cost per net megawatt-hour in 1992 1 \\ was just under $13. 6 V ParifiCorp has, thmugh enhanced maintenance ,y 7 l methods and oth r improvements. increased the L M I j i t

l l PacifiCorp continues to k>ok for opportunities to tral Utah. PacifiCorp is already principal owner of the l acquire new or existing sources of puer, focusing on project, with over 1,000 megawatts. And, through smaller, flexible options. There was posithr response the rennt purchase by Paci6 Corp of additional near-l 1 to the utility's first formal Request for Proposals for up by km-sulfur coal reserves, the fuel supply for the to 50 megav,,tts from both supply-side (generating plant has been extended at least 10 years. .____ _m ; 4 ? II ! ?..~ t.Y tt [t a f .i..

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{ "On i - t1 i I.o te . :n: l 'O 7 ) i i i i l l l I h I %p ' f v., f f _._m facilities) and demand-side (conservation) resources. Inter-utility transactions such as the pending Cogeneration plays a part in the future power mix. Hunter purduse and tne larger Arizona Public Service A contract was signed in early 1993 with the kmes and Colorado-Ute Dectric Association arrangements River paper mill in southern Washington to build a of recent years have increased company resources and 50 megawatt cogeneration facility there. The plant, a!knv for improved utilization of existing transmission fueled by natural gas and waste products from the and generating facil.ities. The Colorado-Ute transac-pulp-and paper-making process, is expected to begin tion, which closed in April 1992, transferred 243 operation in late 1995. megawatts of existing coal-fired capacity to Paci6 Corp During the year, PacifiCorp also orTered to pur-from the Craig and Hayden plants in northwestern chase a generation and transmission cooperative's Colorado. 100-megawatt ownership at the Hunter plant in cen- _ u __

i 4 J t i 1; t 1 ,y In 1992, electric operations contributed $203 ~~~""~~7 p]w.pg~~-mmr Pm;,~ .e ,~.w VO. t ,M.

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k. ~ earnings by approximately 524 million. Electric i k 1 results were further reduced by 570 millL. due to a ') _ l l c j nonrecurnng after-tax charges, covering a mie of l 'i t ~ // 1 items, including surplus and obsolete in entory, and numerous miscellaneous charges. j Materials pmcurement and management processes I [ I. i were evaluated in 1992 as part of an extensive ongoing j j Pag. l E business pmcess improvement effort Eunched in the t l J clectric operations. As part of this erTort, significant L.____.____.,- . _ ~ _. - - - ? PacifiCorp's extensive transmission svstem allows it cross-company processes are studied and rec,mmend-m do business with more than 50 other utilities, most ed changes are implemented, to impnwe future efii-of which have higher average system costs than ciency and reduce overall costs. Conuact applications Paci6 Corp. This increases system flexibilitt and allows and cuswmer service activities are among the issues power exchanges that take ad1antage of seasonal and scheduled for resiew in 1993. svstem diversities. Whether it's helping a large industrial customer i i l As long as Paci6 Corp can remain a low-cost pm-with a sophisticated electrical solution to a business ducer, it will continue to have opportunities in the problem, or helping a residenti.J customer solve a bill wholesale market. Wholesale energv sales increased 30 question. customer service remains a high priority. percent in 1992, as several new comracts took etTect. This focus on customer service and being a low-cost l However, record dmught conditions reduced the avail-provider should allow Pacific Power and Utah Power ability oflow<ost hydroelectric generation. So, while to prosper in the more competitive future. 1992 sales increased, earnhgs were dampened by a 13 percem increase in fuel expenses due to increased ther-mal generation, and a 19 percent increase in cost of I purchased pourt. i l ) -u-4

r L:ECONNUN;;CK'O.NS l l I roviding high <juality communication ser-vices - in both locd exchange and Alaska long distance markets - is \\ i what Pacipe Telecom has emphasized throughout its 38-year history. t j"y"tirir*T-~- Today these businesses remain Pacife 1 l Telecoms chieffocus, in addition to a j growing celhdarphone opemtion. Pacific i Telecom is an 87 percent-owned sub-l l sidiaryofPacifCorp. 1 i M-In the local telephone exchange l \\ business, Pacife Telecom operates under l the business name PTl Communications, and serves 379,400 customer access lines in rund and suburban parts of 11 states-a 6 percent increase in access lines over 1991. This growth rate is well above the indimry avemge and is due primarily to the recent population boom in many ofthe ceas PTl Communications serves. i l Population growth has been especiallygoodin western Washington and Montana. The resulting gnneth in access linesfor PTl Communications in l 1992 was 7 parent in westem %shington, and 8 percent in the Kalispell, Mamma area. i i i __. n._

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j_..._ _ _. _ _ _ _ _ ,a l l t Acquisitions hae abo played a central role in the ment is being depkwed to upgrade transmission net-l growth of Pacific Telecom's local exchange business, works and allow the company to provide enhanced l ) and the company continues to hiok for new opportu-senices to a larger geographic area. nities to expand the area it serves. Two relatively small A new generation of enhancai servico was ofkred 1 t purchases were made in 1992 - Shell 1.ake Telephone in 1992 as a pilot program to customers in Gig j and Wayside Telecom - both in Wisconsin. Rese Harbor. hhington, and surrounding communities. acquisitions added appmximately 3.200 access lines to His pmduct offering-Custom Local Area Signaling the Pacific Telemm system, as well as additional cellu-Service (CLASS) - includes caller identification, iar telephone market share. automatic rrdial and selective forwarding of calk from l In addition to expanding the area it serves, Pacific preselected calling numbers. Approximately 2.000 cus-Telecom has cominued modemizing its network and tomers have signed up to date for CLASS, which will broadening the array of services it offers local tele-be offered in other market areas in coming years. phone customers. The company's switching facilities Offering advanced products such as CLASS is part of are virtually 100 percent digitized. allowing Pacific Pacific Telecom's commitment to pmvide the best in Telecom to offer the latest communications services to customer service by making available a range of l its customers. Approximately 92 new miles of fiber options to meet individual nenis. optic cable were added in 1992, bringing the total to Alaska long distance service - provided by more than 1,026 miles. Aho, digital microwave equip-Alascom - is another primary business for Pacific g I g' b 7 I l l l l k. l t i*. -, - -,. _., - -..,. - _. -. - - -., -. - -,. -. -. --=

Cellular phone senices are another growing pan . ~. _ _ _ _, _ _ _ _. _ -, of the iclecommunications industrv. as mobile phones become a more common pan of everyday life. Paci6c Tdecom has focused most ofits cdluh:r efLns in the Midwest, ahhough it has market ownership in many .... 9 ~ vices. The number of cdfular customers served by of the 11 states where it provides local exchange ser- ? V' N % <... t { Pacific Tdecom increased more than 70 percent in i .i 1992, compared to 1991. In 1992, PacifiCorp's carnings from continuing q

4 operations induded 557 million from Pacinc Tdecom.

J' a ~ PY ____.._.d,. s w Tiu.. $19 million lower dan 1991 due priman.ly to __.m.-- s is Telecom. Alascom has fared well in spite of the com-lower sales of capacity on the Sonh Pacific cable, 1 7 petitive nature of the Alaska long distance market. lower outmf-period revenues, and the effects cf com-While the imersure market has lun competitive since petition on the Alaska long lines operation. 1982. in-state services were opened to wmpetition in Pacific Telecom is a well<stablished and growing 1991. Competition contributed to a 7 percent reduc-business in the dvnamic telecommunicatiom indus-tion in the company's intrasute minute volumes in try. Actions taken in 1992 to get out of noncore 1992 which, coupled with rate reductions of recent activities such as international operations permit years, resuhed in lower long distance revenues. Pacific Telecom to focus more closely on providing An agreement to transfer Pacinc Tdecom's Alaska high-quality local tdephone exchange and Alaska imerstate long distance business to AT&T terminated long distance services to its customers, and growth in mid-Januarv 1993. Various entities opposed the for its shareholders. plan, and regulatory approvals were not received by the Januart deadline. Paci6c ldecom continues to actively wek a satisfactorv resolution to Alaska market restTUCluring inueL l l l l i. l l ~ y,g m g \\.1 [ g y' llisq l M A_11 N .1 1V 1. 'd i t i uring 1992, PacifCorps NERCO subsidiary which has extensive oil, natum! gas, coal andprecious minerals hold-l ings, recorded a $451 million lossfor PacifCorp, primarily due to lower l gas and oilproduction andprices, andfallingprecious minerals vahtes. As a result, a decision was made to i pa m c n:. m. m: w am;y c. 3.!n d 1'.,+A* n p x w w!..:.'. ch ' ' f~ g.h-J. ?b s j kp w w.a m y ~g;7 ~. ?vg gy 9 l eh..minate the risks and volatih.. ties asso-e. w w; i i f:. p> ', '~. e. ciated with NERCO by selling it to A $r l VV ,/ \\ Kennecott Corporation. i / 1 J. l .] This transaction is expected to dose early in the second k \\ f ' [ } quaner of 1993. The resulting pretax gain of approximatdy ..-) 5154 million will be recognized over the life of a fmancing f ,[ - / { agreement induded in the transaction, which could extend 1 L_ ... M[ I d through 2009. f l _a_i.1 1_i Also, Pacific Tdecom announad in January of1993 the i f sale ofits international communications subsidiary to IDB Communications Group in exchange for common I , u ;w u c stcd ofIDB. That sale is subject to regulatory and IDB shareholder approval, and should dose in the third .,y quarter of 1991 The resulting 540 million loss reduced Pacinc Tdecom's 1992 earnings contribution to , it -/- PaciSCorp to 517 million. g, Lh the elimination of these subsidiaries, lhcifiCorp's remaining strength is in its first-dass utility operations. By w l getting out of more volatile businesses, the company is able to lower its ainsolidated debt while boosting financial strength and flexibility. Upon completion of the pending transaction, PacifiCorp will be a more stable company bet-ter equipped to exploit opportunities in its core dectric and tdecommunications utility operations. 1 i l 3 s $ ti

4 k j l 4 1 i FINANCIAL SECTON CONRIN"S I i i 1i l j s 3 1 l l i i i M AN AGEMENT'S DISCUSSION 4 l AND AN ALYSIS OF. FIN ANCI AL CONDITION ~ i { AND RESULTS OF OPER ATIONS 20 4 i i a REPORT OF M AN AGEMENT 36 j 1 1 IN D E PEN D E NT AU DITO'R S' R EPORT 36 F 4 i i i STATEMENTS OF CONSOllDATED INCOME l AND RETAINED EARNINGS 37 CONSOLID ATED BALANCE SHEETS 38 l e STATEMENTS OF CON 5OLIDATED C ASH FLOWS 40 i NOTES TO CONSOLID ATED FIN ANCI AL STATEMENTS 41 i I j i l j - _ _ = 4 s i-i i 4 t a { \\ i .. ~.

9 l SU \\lM TRY } NIO RM ATiO N" wupum noLLriaIton nir vtAst j m l'r2 m !"91 Gupomed Peremgr Annual 1992 1991 1990 1989 1988 1987 n,my m c,,.ih RE\\INL'f.S 5 3.242.0 53,1683 5 3.093.9 5 3,007.0 5 2,944.6 5 2,736.0 2% 3% INCOMEiROM OPERATIONS 65.0 9413 923.0 . 900.1 E951 959A ' (33) - p) ~ ~ Income fmm continuing opadans 1502 446.8 413A 403.0 387.0 356.7 (66) (16) l Dicontinued opatione*' (490.6) 60 4 60.5 62.6 59.7 %4 NETINCOMEaOSS) 040A) 507.2 473.9 465.6 446.7 411.1 BRNINGS CONTRIBlm0N(LOSS) l ONCOMMONSTOCK l Elcaric opadons 202.9 346.6 334.2 329.6 309 0 291.0 (41) F) l Telecommunicadons 573 76.6 76.6 M2 503 35 6 (25) 10 FinancialSavias and Corporate (14i31 (31) (193) (12.0) 7.0 75 l l Discontinued opadonsW !490 6) 60A 60 5 62.6 59.7 R4 i TOTAL $ O'7.7) 5 4805 5 452.0 5 4444 5 426.0 5 388.5 F.ARNINGS CDSS)PER SHARE I Con:inuingopaadons 5 A2 5 1.63 5 1 60 5 156 5 1A9 5 137 U4) (21) { Dientinued operadonsW (1.64) 23 .25 .25 24 .22 l TOTAE 5 (IA2) 5 1.86 i 1.85 5 1.81 5 1.73 5 159 CASH DWIDENDS PER COMMON SHAREM Paid 5 152 5 1A7 5 1A1 5 135 5 1305 5 1245 3 4 { Dedared 5 1.53 5 1A85 5 1A25 5 1365 5 1.635 _ 5 1.245 3__ 4 i Total assee, 511257 5 11.910 $ 11201 ! 10.SR6 510A48 5 9,500 (5) 3 Toul emplo,msM 12,7 0 13239 13All 12,560 13318 13487 , 0) (1) Common shareholdes of l record (Tiwud) 165.7 1623 164 6 171.0 188.0 196.7 2 0) Ikxlvalue p share -5 10.75 . 13A0 $ 12.69. 5 12.29 5 11.91 5 11.77 (20) (2) Mder priap share 5 19 % , 25 '/a 5 22 % 5 22'la $ 17:/: 5 16'!S (21) 4 ld Pricceanmpmulti;4e ' 21 5 15A 14 0 14.7 11.7 11.7 40 13 Pre:n iranest coveraged 2.0 25 2A 2.3 23 2.7 (20) (6) Retum on average comnxm equitvd 7A 12 5 12.9 12.8 125 11.9 (41) (9) ' Nm a manmpful numbn. W Nonunued omanom repmens ihr Compm's iniemi in NIRCO Inc and an mrenunon) mmmuniusmnuhudum Puor yem hm !=rn almfied to umform ic the me:hml of pmemme. N ILud u;*m a tm 4the Iked of Diream m itJcinua v l',179 neng the mda:ed annual dividend raic of tbcCompny is SUE pa dure. W Eidades emp4=cen ddiumunued omaim i 4 Caku'wed udng cammp imm conunmng opnanum, cadudq graal diarps in 1M 5ee Nme 4 to Corm & dated Fmancul Swemens indadmg da e6ea af speaal days. pnce cammp muhq le = 1: pmaa mierrsuwcope w 1.6. and mum on amap wmmon equay n 3 L e t 4 L I i s 4 3 l 9 i ? 1992 was a year of considerable turbulence and change for Wl i OUNTD TO 1* I the Company. Significant steps were taken in 1992 and cady 1 Dmric Ogndons' carninp mntribudon rme 512 mil-l 1993 to narrow the facus of the Company to its mre utility lion or 4% primarily due to inc ased enegv sales, higher prias operations: dectric and telecommunications. Acmrdingly, the for enngy sold to other utilities and reduced km from equiry Company remrded charges in 1992 to reflect the proposed sale investments in cogeneration projects. Offserung these gains - ) of its commercia! mining and resource development subsidiary were increased imere.t expense, income tax expense and pre-and international communications operation. Disposition of fened dividend cequirements and decreased mterest capaalized. these investments is expcaed to be mmpleted in 1993, and they 4 Telecommum. canons earnmp cunmbution remained con. have been dassihed as discontmued operations. The Company stant primarily due to a dedine in sales of cable capacirv, offset by aho signifwantly donsized its finana. l services acthities and no a the etTects of the August 1990 acquisidon of a medium-s.ned longer repons these activities as a separate.cgment. Midwest kulidephone mmpany, By eliminating and reducing these business activities, the 4 Financial Services and Corporate's nepdve contribution C,ompan"is sedung to reduce caming volatih.rv and reduce l ~ impmved by 516 million primarily due to decreased operating pressure on the Company.s capaal and management resources. losses resulting from sales of noncore businessn and inaeased - Concunent wah these changes, the Board of Directors reduced mnsolidated tax benefits at Corporate, partially offset by the t the. dicated annual o...dend rate on the C,ompany's common m m t effects oflower average finance assets, increased assets on t stock to 51.08 from 51.54 per share e6ccu.ve with the May i nonaccru.J status and depressed results in the mmputer leasidg i t i 1993 dividend pavment. business. t 170 CUMPARH> l0 to91 l

The average number of common shares outstanding rose
Dectne Operations' caminp cretribution dedined 5144 6% due to issuances to the public in March and December l

million or 41% primarily due to mild weather conditions, higher 1991, issuances for the dividend reinvestment and employee I power costs, write-offs, increased pension contributions and M ownership plans and the effect in the prior year of shares l higher preferred dividend regmrements, ottier m part by held for use in acquisitions. ~ increased energe sales to other udlities.

Tdecommunicadons' caminp contsbudon from contin-

) uing operations dedined $19 million or 25% primarily due to ] l kmer out-of-period revenues, competidon in the state of Alaska l and lower cable capacity sales.

Financial Services and Corporate's neptive contribution l

increased by 5144 million primarily due to after-tax special charges of 5132 million. l

Discontinued operations' losses in 1992 were 5491 mil-I lion compared to caminp of $60 milhon in 1991. Adverse com-1 modities markets, lower than expected oil and ps pmducuan volumes and the decision to sell cenain operations led to the numerous asset write 4xns and losses at NERCO in 1992. In addakm. 540 million kas reladng to the disposal of an intcma-tional communications subsidiary was recognized in 1992.

+' The average number of common shares outstanding increased 3% due to issuances for the dividend reinvestment and anployee stock ownenhip plans and issuances of shares to i the public. { j ',( e

1 n!Uinn y un C Aprrn Raounci.s e9Mi!uumn3mmnu3 _ _-. 4'"I. _ _ _...._ _ Forecasted IWO 1991 1992-1993 _ 994 _ 1 1995 !!ETCASH F1OTI ROM CONTINUINGOPERAllONS Dectric Operations 5 526 5 740 5 642 Trinommunicanom 204 110 177 Other 185 170 _. _123 TOTAL 915 1,020, 942 C%H DIVIDENDS PAID 364 409 -440 ' NET 5 551 5 611 5 502 5 57 % 25 570a750 5 750-800

M104, IROM CONTINCING CONSTRUCTION OPERATIONS Derric Operations 5 410 5 504 5 585 5

793 5 717. 5 715 BY SEGMLyr Teleconununimions 168 195 109 94 110 106 mwunvscn;aun Other 17 _4 12 2 595 703 694 887 827 821 ACQUISUlONS ANDINVESTMBTS EleaiOperations 49 292 279W Tdecornmunications 307 41 3r 15 Other (18) 23 (3) BN. TOTAL CAPITAL 5PENDING 5 933 5 1,059 51,001 5 902-5 827 5 821 MATURITIES OF LONGlil.RM DEBT AND ue'- CVITAllIASE OBUGATIONS Ucaric Operations S ' 32 5 88 5 111 5 70 S 81 5 58 Tdecommunicasans 29 16 19 32 192 54 Financia! Services 293 314 231 168 76 57 Other 45 23 90 42 37 2 2* ~ ~' 5 399 5 441 5 451 5 312 5 386 5 171 ~ Other rennancin? 5 232 5 379 5 751 D g q) g

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t ol!.11 m The Compan/s construction expenditurn for 1993 through The 11ectric Operations uses 6everal took to plan for future 1995 are estimated to be as followst growth. The process starts with the Company's 20-year gg 1993 1994

'1995 remurce plan, which is reviwd every two years. The Compan/s ~ ~ tinancial plan extends this planning pmens. These plans define Production $153 5 181 $ 211 how the Company imend, to acquire efiicient, cost-effective d(" f energy resources for its customers and achieve its financial and Odier 218 190 172 opaating goals. Total $793 5717 $715 Ior the period 1993 to 1997, megawatt-hour sales are expected to increase at an average rate of 2A% per year, exclud-Indaded in the table above are the Compan/s estimates of ing the impact of the limpanis demand-side efficiency pro-the wsts of acquiring demand-side remurces. He Company is CVITALSPENDING MIX 14 SEGMEKr gramt After denund-side resourcn are considered, sales would implementing demand-side programs to impmve the energy cili-(ft kJNT) be expected m increase 1.8% per year. The Companfs strategy ciency of residences, commercial buildings and industrial facili-relies on no single energy murce to meet customer needs, and tin-hath new and existing. no large central station generating plants are planned in the Whenever the Company has power available and the mar-fareseeable future. The Company has identified a variety of iet price is favorable, it makes off-system sales generally to i 80 remurce ahernathes to manage supply and demand, such as other utilities. Off-system sales permit the Company to use purchases of existing power plants, impronments in equipment existing and newly acquired power supplies in a manner that g 1 and operations at its own generating faelities, power purchase keeps down long-run costs for retail customen and pmvides - E f~ agreements with other utilities and demand. side resources. added flexibility in meeting chanj,es in customer demand. i# On April 15,1992, the Company purchased 243 megawans The Company expcas to support its amicipated gmwth of generating assets and fael remurco from Colorad>Ute Electric through internally genaated cash fkiw and issuances of additional i Association. Inc. for Sr9 milhon. The Company aho put in debt and common snick in amounts that should resuh in a modest " 20 phce a 176 megawatt,30-year contract pmviding for a system impmvement in the etjuity cumponent ofits capita! struaure. i power sale by Paaf> Corp to Public Service Company of Colorado .o 90 91 92 and a 50 megawatt seasonal exhange betwen the Company and Tn4 tate Generation and Transmis6 ion Assoation, Inc. During 5 O&ci 1992 the Company also invested in construction consisting of .'"'[f" [" pmduction,596 mibt transmhsion,5131 million; distribution, $203 million: and other,5155 rnillion. I I - 23 l

-j -l f l l 111! CGvMM!wip% k1 TL% CH1NGlS i in 1992 Pacific Telecoln had no maior construction pro-In March 1992. Standard & Poor's Corporation ("S&P*) j jects that required more than one year to complete. During downpaded the senior debt rating of PacifiCorp Iloidinp { 1991 Paci6c Telecom's construction expenditures consistal of ('lioldinp"), NERCO and PacifiCorp Financial Services j 569 million fot kwal exchange opentions,522 million for long ("PPS") fmm BBB io BBB-for long. term debt and from A2 to hnes. 510 mdhon for cellular operatiom and $8 million for A3 for short-term debt. S&P also downpaded Pacific l othe communicatiom subsidiaries. Tdecom's rating for long-term debt from A-to BBB+. Aho in l Construaion expenditurn for 1993 through 1995 are esti-March 1992, Moody's Invesmrs Service, Inc. (" Moody's") - mated to be as follows downpaded NERCO's long-tenn debt from Baa3 to Ba2 and j - - -- - gggg its shon-term debt from P3 to Not Prime. In November 1992, _,l M _.1994 -1995 S&P placed the credit rating of the Company, IIoldinp. localexdiange $ 66 5 81 $ 77 long lines 13 18 19 - NERCO and PFS on CreditTatch with neptive implications. Celfular 8 5 4. In Febr ary 1993 S&P downpaded PacifiCorp's rating 6 6 from A to A-for senior secured debt, from A-to BBB+ for pre. Total -- $ 94 $ 110 5106 ferred stock and from Al to A2 for shon-term debt. S&P' abo - l During 1992, Pacific Telecom sought regulatory approval downpaded the othy of liolding from BBB-to BB+ for .of its' December 1991 apeement with American Tdephone - long-term debt and frorn A3 to B for shon-term debt, and the l .t and Tdepaph Company FAT &T") to restruaure the Alaska. ratinp of PFS from BBB' to BB for long-term dcbt and from ~ market. This eHort was unsuccessful and the agreement termi-A3 to B for shon. term debt. Also in February 1993, Moody's [ nated in January 1993. The existing settlements agreement placed the credit rating of the Company, lioldinp, PFS and [ between AT&Tand Pacific Telecoin remains in effect, pending NERCO under review for possible uppades pending comple-i further action by a Federal! State Joim Board and the federa! . tion of the proposed NERCO merger. Communications Commission with respea to restruauring the %e ntinp aaions by S&P have increased rle Company's cost Alaska telecommunications market. Paci6c Telecom continues ofdebt and pnferred smck and have dicctivdy nstriaed 11oldmp j to pursue resolution of Alaska ma:Let issues and is unable to and PI 5 to debt bormwing under their mmmitted bank facilities. predict the ultimate outcome'of this maner. OP) R A 15GACTillllD + Pacific Tdecom is seeking to expand.us local exchange i operatiom and :dlular interests thmugh acquisitiom. A combi. Net cash provided by operating activities lus been a prim-nation ofinternally generated cash and external debt would be ary source ofliquidity for the Company. The 578 million or 8% ) ' used to fund these acquisitiens. Equity issuances by Pacific decrease in cash provided by continuing operating aaivities was Tdecom may be considered if a large acquisition occuned, prim tily antibuuble m the e6cas of 1991 transanions, indud-l ing the receipt of $114 million from the sale of power entitle-ments. During 1992,1991 and 1990, cash generated from con-tinuing operations less dividends paid provided for 72%, 87% i and 93% of construaion expenditures, respectiydy. The dedin-i I I i k i Wapung M m. l

ing canstruction coverage reflecu the increase in dividends paid, Ilolding has e ecuted variom apermenn diat suppon the j j both wmmon and preferred and the increase in construction uedit ratinp :md credit facilities of PI S, under which Holdinp npenditurn in 1992 and 1991 compared to 1990 has agrmi to maintain ownership of not less dian 80% of the l Net cash pmvided or used by diswntinued operations voting shares of PFS; provide equiry contributions to PFS to reflects dividends received fmm and investmenu made in dis. cause in tanpble net wonh m come into compliance with continued operatiom. applicable covenants in the event such covenants are violated; and pmvide liquidity suppon to enable PFS to fimd debt matu-I \\ a rities. Pi S' tangible net wonh, as de6ned by in most restrictive i Net cash used in investing acthities of 5425 million in apeement, was $177 mil! ion at December 31,1992 or $10 1992 penained principally to 5694 million of construction million peater than in most restrictive requirement. expenditures, pnmarily in the Electric Operations. OffseninF Holdinp has pledged its shares of Pacific Tdecom and l these apenditures were net pruends of $156 milhon from NEkoO stca as security for repayment ofin obliptions under ~ l linancial Servicn' investments and proceeds from Pacific cenain debt apeements. These agreements contain restrictive Telecom's sale of a satdlite, subsequendy leased under an oper-covenants, induding defmed debt to capitalization and dividend ating lease, and its sale of a noncore investrnent.. m interest npense ratios. The apeements also prov'.de for defined collateral coverage of outstanding debt and for defaults l ,j. in the event the material debt obliptions ofits signi6 cant sub-L,onsolidated long-term debt, exduding f.inancial Sem. i

ces, sidiaries, induding Pacific Telecom NERCO and PFS, are in decreased $112 ~ mil,uon _m 1992, primarily due to redass ca-m default. Accordingly, defaults under the debt aperments of i

tions of shon-term debt and increases in current maturities. off-I these subsidiaries could resuh in defaults under Holdinp* debt set in pan by Pacific T. lecom. 543 milh. e s on net mcrease in aperments. Defaults under the debt apermenu of Holding debt. During the year, Paa. Corp re6nanced long-term debt b and its subsidi;iries are not defaults under PacifiCorp's debt with interest rates from 8% to 10.1% :hrough the issuance of i apeements. Holdings npects to obtain amendments of long-term debt with imerest rates of 53% to 8.3% Financial cmenants in in debt apeements that would otherwise preclude Sem.ces loneterm debt dedined $71 milh. on. the proposed NERCO merpr. At December 31,1992. the Company had 593 million of ? Dian:inwd Operariam secured medium-term noin in the form of brst Moncage and NERCO would have been in default of cenain loan Collateral Tmst Ibads ( FMB ) registered with the Securitin covenants as a resuh of hmes incurred in 1992 if it had not and Exchany Comm.. won, which were.usued in January 1993 l obtained waivers for the period ended December 31, 1992. wnh interest tatn fmm.A. to 8.2% and maturities fmm 2000 NERCO has aho obtained waivers of these covenants until June t to 2023. The proceeds fmm these issuances were used to reduce 30,1993. See Note 2 to Consolidated Financial Statements. shon-term debt which temporarily hnanced the.C,ompany,5 l capital requirements. In 1993, the Company is considering establishing another 5%0 million series of secured medium- ] term notes, as well.6 implementing a $150 milhon underwrit-ten offering of fMB to th advantage of the current low imer-est rate envimnment. 1 f - \\ , <~.,..

7_ ___ _ _ ___ _ _.m_ t f l s MilllON5Of DOllARsIDKIMBfM1 l 1992 1991 1990 1989 1988 1987 i CAPITAllZATION i Common cquity 5 2.n08 3'% $3,512 41 % 5 3,208 41% $ 3.007 40 % 5 2,936 41% $2.901 42% Prefened sad 417 5 342 4 342 4 242 3 246 3 249 4 l Prefened stwk subjea to mandatory redemption 219 3 150 2 50 1* 50 1 56 1 56 1 long-term debt and capital l ( lease obliptions 3,847 49 3,959 - 46 3,536 45 3.278 44 3,095 43 3,146 - 45 I Financial Senies' i longterm debt 503 6 574 7 ,695 9 858 12 906 12 551 8 I TOTAL 5 7,894 100% 58,537 100% $7,831 100% 5 7,435 100 % 5 7,239 100% $6,903 100 % m ",F % / u A Issuance of the Companis FMB is limited by camings cov-COMMON EQUITY During 1992, the Company issued an additiona! 8.158,957 erage and fundable propeny pmvisions of the Companv's mon-j m m ossorocu m shares, consisting of 4,851,157 shares issued through the page indentures. Under these provkions and at current interest 4M0-Dividend Reinvestment and K Plus Employee Savings and rates, appmximately $2.3 billion of ad&tional FMB could have Stock Ownership Plans and 3,307,800 shares hsued to the Iub. been issued at December 31,1992. However, cenain of the m' lic for ner proceeds of $179 million. The Company registered Companfs credit facilities would have limited additional long-3mo: 5,000.000 shares in August 1r91, of which 1,050,000 shares term borrowings to approximately 5745 million. were issued to the public during 1991 and 3.307,800 shares Under the Companis principal credit agreement, it is an N were issued during 1992. The Board of Directors of the event of default if any penon or group acquires 35% or more of Company has aho authorized the issuance and sale of 5.000.000 the Compan/s common shares or if, during any period of 14 m additional 6 hares ofcommon stock, consecutive'rnonths, individuah who were directors of the Company on the first day of such period (and any new direaors N

, ecc la, 9 m ^

whose cleaion or nomination was appmved by such individuals N The Company issued 5125 million of 51.98 No Par Serial and direaors) cease to constitute a majority of the Board of Prefened Stock 525 stated value. in May 1992 and $75 million Dircaers. For additional information regarding bank credit g of 57.48 No Par Serial Preferred Stock,5100 stated value, in agreements, lines of credit and other shon-term borrowing facil-o June 1992. In December 1992, the Company redeemed 500 ities and related limitations on borrowings, see Note 6 to shares ofits Series D auaion rate preferred stock at stated value Consolidated Financial Statements. or 550 million and purchased 60,000 shares ofits 57.12 No Par Serial Preferred Stock,5100 stated value, for 56 million. In O 'W addition, on January 25, 1993, the Company redeemed 500 Due to the capiulimensive nature of PacifiCorp's business-shares ofits Series B auction rate preferred stock at stated value es, inflation may have a significant impact on replacement of or $50 million. property, acquisition and development activities and final mine The Compan/s Anides ofIncorporation place earnings lim-reclamation. The effects ofinflation on the Compan/s utility itations upon the issuance of additional prefened stock. On the businesses are not significant to ongoing operations. While the basis of results of operations for the year ended December 31, rate-making pnass gives no recognition to the currem cost of 1992, the Company believes it will be unable to issue prefened replacing plant, based upon past praaices, the Companfs utility stock prior tojanuary 1,1994. businesses expea to be allowed to recover and earn on the increased cost of their net investment when replacement of facil-c i ;n ll :s mp mes aanally occurs. The Companis Anicles ofIncorporation limit the amount of unsecured debt outstanding to the equivalent of 30% of total W" N W!!/VW< % defmed equiry and secwed debt. Under this pmvision, appmxi-The Company adopted Statement of Financial Accounting mately 51.1 billion principal amount of additional unsecured Standards (*FAS') 109, " Accounting for Income Taxes," effec-debt could have been outstanding at December 31,1992. tive January 1,1993. This statement requires that defened N' JAIEU UID

i l l r i l l income taxes be recorded for all temporary differences and cury-The Company's generating phnts burn low-sulphur coal. forwnds, and that deferred tax balances be based on enacted tax Major construction expenditures have already been made at f 'I laws at rates that are expened to be in effea when the temporary many plana to reduce sulphur dioxide emissions, but mme addi-differences reverse. As a result ofthe adoption of FAS 109,1993 tional expenditures may be necesary. He plant most affeaed by consolidated ner inmme will be reduced by approximately 52 the Act is the Centralia Plant in Washington. The Company is million, assets will be increased by approximatdy 5800 million studying how to bring this plant into compliance in a cost-eifec- ..ad liabilities will be increued by appmaimardy 5800 million. tive manner i.y the required January 1,2000 a>mpliance dead-His adjustment indades defened income tax liabilities and hne. Sine the Aa does not mandate thc' use of a particular emis-related regulatory assets recorded for cumulative income tax sion reduction technokg, the Company will have the flexibility - temponry differences which will be recovered through rates to sdea fmm several possible cumpliance stntegies. l when the remporary differences teverse. The greenhouse effect is bdieved to occur when certain tuce gaes n the atnaphere trap radiant heat. There is uncer- ! w xim:D!!S! !M!in w "!R!H n N m ;,s tainty regarding the amount of wuming, its timing and the The Company adopted FAS 106,

Employers' Accounting impact f any pmendal warming. As a mal-based utility, the

{ for Postretirement Benefits Other Than Pensions," effettive paa ge f a carbon tax or a stringent acmss-the-board emission .j January 1,1993. This stuement requires acaual of postretire-reduaion could make it difficuh for the Company to achieve ment benef ts, such as heahh care benefus, during the years an in goal f pr viding competitively priced energy. The employee provides services. Based upon the most recent actuar-Company is searching for cost-effective ways of offsetting i ial studies, it is estimated the Companies have a transition obli-f#"'c carbon dioxide emissions and is undertaking demonstra-i l gadon liability of $310 million. He 1993 expense will increase ti n pr jects inv Iving tree planting as a means of offsetting carbon dioxide emissions. by approximately $27 million, induding interest cost, service cost and amortization of the transition obligation. Electric He Company continues to monitor the results of research f Operations' incremental expense of $20 million is not currendy c ncerning the possible relationship between heakh effects l induded in its rates. During 1992, action was undertaken in a fmm exp sure t electromagnetic fields (" EMF") and the dehv. majority of the Electric Oprations' ngulatory jurisdiaions ao cry and use of dectricity. The Company has supported EMF i determine treatment of FAS 106 costs for ute recovery. All but research in 6e past, and continues to encourage such research. one jurisdiction allowed total FAS 106 costs in principle. Of Actions under the Endangered Species Aa with respea to these jurisdiaions, one allowed deferral of the incremental costs certain salmon and other endangered or threatened species until the next general r te case in that jurisdiction and pmvided c uld result in restrictions on the Federal hydmpower system assurance of future recovery of defened amounts. Only one and affra regional power supplies and costs. These actions jurisdiaion, Utah which regulates approximately 30 percent of muld alm resuh in further restriaions on timber harvesting and the Company's retail sales, adopted a lod of allowed costs less advasely affea kilowan-hour sales to the Company's customers j than total FAS 106 costs. A rehening of that commission's in the wed pmduas industry. order has been held and the uhimate outcome of the proceed-Several Superfund sites have been identified where the ing is still pen' ding. Final decisions as to recovery of these costs Companies have been or may be designated as potentially v ill be made during a general rate case. The Company does not resp nsible panies. In such cases, the Companies review the cir-plan to file a general rate case in 1993. cumstances and, whae pouMe, negodate with mher paendab ly responsible parties to provide funds for dean-up and, if nec-Ja W l/ S Tal & ij essary, monitoring activities. In addit on, insurance resources i During 1991, the Environmental Protection Agency (" EPA") are reviewed and investigated. Future costs associated with the and the states begm the pmcess ofimplementing the newly amend-disposition of these matters are not expected to be material to ' ed Clean Air Aa (the *Aa"). Brough the ongoing ndemaking PacifiCorp's consolidated results ofoperations. prc:es, t9 EPA will issue regulations to implement the Aa's acid ts:. F.ovisions; approve and oversee a program of state adminis-l terd oprating permits; establish a national emissions allowance a trading system; and tequire monitoring ofplant emissions. j i ;

I ] I ~ Et tcrnic OPEnnioNs j .. ~ _ n .,~ i en. ima cra 1987. -.c D..d 1992 1991 1990 1989 1988 REVENUES Resi&mial 5 649.8 5 663.8 5 6464 5 646A 5 651.1 5637A (2)% ~! Commercial 526.9 - 517A 509.0 $173 5265 523 4 - 2 f Indusma! 695.6 674.9 673.8-6'0.6 670.2 646.0 3 1 j . -._. - _45_3_ ___ _._.(8) t 424 (13) Oaa 29.9 34.2 _ 34 3_ R_2_._ 1,890A 1,852.1 1 1 Generalsals 1,902.2 1,890 3 1,863.7 1,8725-' 5.' ~ ~105.6 35 28 Saleifor rsale-Erm 3%5 ' 2d 7 209.U' 1903 8 -.. 4 ) -p (-- Sain..for re. ale-nonfir,m

59. 9.,... a ~.78A.- -. 79.0 87A B5.9

.-..;ra .19 n. 71 3 _~ ElIcTRic Odwr 32A %9 32.5 33.9 31.0 35.2 ~ ' (12)~ (2)~ l Sals to other utilitis 427.8 324 6 2883 _ 2693 238.2 1915 32 _ 17 Olumoss f0TAE 23621 2251.8-~ ~ ~ 2,159 5 2,098.8 ' - ~5 3 i1N.5 5175.7 ~ autuam onxuw ~ ~ ,g75 2M* ' Depreaation and arnonindon 2s64 256.0 235A 227.8 231A

2M4, 12 4

.f Operadons.maintenana and odo 1,398.1 1212.8 1,204.1 1.192.9 1,183A 1,096.6 15 5 I TOTAL. 1.684.7 1A68.8 1A395 1 A20.7 1A14.8 1327.0 15 5 7 55.0' 44.8 [ 75[ 13).. (2) f 7 INCOME FROM OPERATIONS 677.7 783.0 745.0 gg; NETINCOME 240.2 3733 356.1 350.8' 329.7 313.6 06) (5) } L PREFERRED DIVIDEND '0.7 22 4, _ _ 40 _ 11 [ 3'3 26.7 21.9 _ _ _ ' REQl'IREMENT 21 f W m' EARNINGS CONTRIBLTfl0N $ 202.9 5 346.6 5 334.2 53294 5 309.0 5 291.0 (41) (7) ( I&ntinable awn 5 8,192 5 7.665 5 7,027 5 6,728 5 6A59 5 6A80 7 5 j Capital spending 5 864* $ 796 5 459 5 344 5 265 5 286 9 25 W' Number of emplovces 9245 9A19 8.974 8.913 9,163 9,442 (2) [ OPERAllNG EXPENSES -{ Fue! 5 479.0 5 424.1 5 4035 5 39 A 5 412.1 5 398.8 13 4 i 0' Power purdmed 5 210.2 5176A 51494 5 1333 5 81.1 5 57.5 19 30 Other operations 5 25S.0 5 249.7 52595 5 271.1 5 295.7 5 242.5 15 3 I D Rmnun Maintenana 5 167.8 51464 5 151.2 5 158.7 5 165.0 5 135.8 14 4 j D Iname from Omanum ' Adminarative and general 5 144.5 5 119.1 5 139.5 5 135.7 '51E7 5 159.8 21 (2) D f aming Contra,unan pepn. cia. ion and amortistion 5 286.6 52%0 5235A 5 227.8 5 231A 5230A 12 4 Taxa other than mcome tam 5 108.6 5 96.9 5 100.8 5 96.7 5 92.8 5 102.2 12 1 i Income taxes-utility 5 1703 5 180.8 5 169.7 5189.1 5154A 5 223.9 (6) (5) l . ome taxo-other 5 (12.8) 5 (6.5) 5 (7.9) 5 (.9) 5 (9.9) 5 (8.7) (97) (8) j INTt.Kd r CAPITAtl71D AFUDC-ydty 5 73 5 7.9 5 8A 5 Ift5 5 7.2 5 9.2 (8) (5) AFUDC-debt 5 8.9 5 7.9 5 14.0 5 12.2 5 7.7 5 7.9 13 2 1 ENERGYSALES sfihgfh4) Residential 11,230 11354 10.990 10.765 10A91 10,100 (1) 2 f Commercial 9,733 - 9A16 9.101 8,803 8,666 8330 3 3 i Indastrial 19,942 19322 19,507 18.88 18,085 16,729 3 4 I Other 606 692 699 750 711 725 (12) ~ (4) ^ 39,196 [ 37,953 [ 35.884 _ f2 3 I General sales 41,511 _ 40,754 40.2S8 Sales for rnale-firm 10A55 7349 6.147 5A41 4331 3A50 42 25 Sales for rnale-nordinn 2,965-2.946 3323 3,118 4,066 4.683

1 _

_ 9) ( Sals to other utilitis 13A20 10.295 9A70 8559

8397, 8.133 30 11 TOTAL

$4.931 51.079 49,758 47.755 46350 44.017 8 5 W N na rek clamnanon of mieren on imemnnnny temwng arran;iemenn and maudn muorius on a. gor.tr.compny i==. ao ladudmg anncash aajuisinn aan I of $25 rnaum rdag a> the ColarAUtt pnyn t i

I I EtLcTn!<: OrtRuloxs i t l /W /Dia M!l!!# IM /_ ! D /W $ Sals for re ale to other utilities inaeased $103 million or i . PadfCorp generates power at ud-fired and hydmelectric 32% primarily due to a 30% incease in sulame sold long-term plants and relies on a nammission and distribudon network to finn power sales inacased 569 million fmm contracts imple-serve retail and wholesale cusmmers throughout the Pacific mented afia July 1991 and 514 million fmm sales under pred-f Northwest, Rocky Mountain and dont Southwest regionit. ously exisang agreements. Shon-term firm sales increased 59 mil-PacifiCorp also offers retail customers a variny of services hon and secondaty sales were up 511 million. ] enmuraging ediciem use of energe. Operating nyenns increaud S216 million or 15% Earnings depend on ef5cient y and economically balancing l power 4upply resources with customer demand; utility commis. 4 Fuel expeme inceased $55 million or 13% due to inacased sion practices; regional economic wnditions; retemion of mab6 red genention as a remit of the acquisition of addidonal municipal franchises; weather variatiom aTecting cunomer plant capadtv, inamd ofi4yste:n sales and poor hydm condi-KIl0TATT.ll0l'R b^IN bNM usage and hydradeeta produaion; fud costs; sholesale Erm tions As a resuh of dmught conditions, the Company's bydro pm-SEGh1ENT power marketing success; environmental and tax legislation; jeas set an alLtime low generation record. The 1992 hydro output og and the mst of debt and equity capital, was 21% bdow the pruim kiwen year, which was 1977. g E PRN / YG 5 7W 4 7/ G F

i higher prices, panially offset by a 5% decease in volumes pur-9 PadfCorp seeks to mmunne pnce mcreases From January chased Firm purchases inacased $20 million and seamdary pur-e 1,1988 through December 31,1992, the Company reduccd i

chases.mcreased 516 m.lh.i on pnmarily due to higher pn. ces. prices paid by retail cunomers by 5232 million. or 12% on an i BPA. a wholesale power and wheeling supph.er, has annuali7ed basis. These decreases were made possible by pown announced its intent to increase rates commencing Oaober 1. imna M i supp!y coordination, insurance savings. lower interest rates and 1993. The... l proposal would increase the Company.s capaa-wurk fora reduaions. Future wst redaaions are expeacd to i tv and wheding npenses by 516 million annually and would i t be teamed throuen. pmcess improvement cifidencies, but are 20 ~ redue the Company's net residential exchange benefm by $27 not expeaed to be on the scale of those experienced over tras mi!! ion annually. The Company amicipates that BPA will file period Future cost increases rda:ine m the poposed f njeral m revhed rates in April 1993 dut modifr and substantially increase i energy tax and anticipated rate inaeases trom the Bonnen!!c the pmposed rate leveh. He Company imends to request pria Power Administration (,BPA,) are expected to place significant 0 v i increases that will allow it to recover the loss ofexchange bencfits, upward pessure on the Company's msts and pn,a,ng struaure 87 88 89 90 91 92 and may request reawery of the wholesale pawn and wheding m the next several years. g s,in to Otha Utihan + cost mcreases. E halunnal !W COMP 4R1Dio!n! ^' + Otha opcations expeme increased 538 million or.15% Revenan increaud $111 million or 5% primarily due m a $10 million innease in wheeling expeme as a result fincnud v lumes w e!cd a contraa sett ement and a e General sales revenues increased 512 million or 1%. MA pme inacase; a M mEon incese for pemion funding; a Commercial revenues increased $ 10 million due to increased cm-tomers and customer usage, panially otTset by sdective prite 59 million charge in 1992 relating to cancellation of a cual pur-reductions and the effects of mild weather. Industrial revenues chase option; and increzed expense of 58 million due to acquisi-j j increased 521 million due to higher contract tevenue and tim fimnem in thamal pneadng plams, increased sales to irrigation customers. Residential revenues

Maintenance expense inacased 521 milhon or 14% pri-decreased 514 milhon pnmari!y due m price reductions and the marily due to a 517 million write-off of obsolete materiah and i

effea of mild weather that contributed m a 3% decrease in aver-supplies inventory and the acquisition ofinterens in thermal gen-age usage, otTset in pan by a 2% increase in customers. erating plants. 1 i f, I j I 1

. ~... - - -.... -. - ~ - - ~ .-..-.x. ~= ~ Et EcTaic Ort n ATioNs .~ KIR dif. HAR. ~ Wem i M2 to I!N1 Canga.und litmnapr Anmini 1992 -1991 1990 1989 1988 ENERGY SOURCE (%) _ _ - - -. - 1987 cmim .. _ _. _ -. ~ Coat 81 78 .78 78 81 77 4% 1%_ _ Hydm 4 6 7-8- .7 8 ~ (33) (13) ] Othe 2 1 1 1 1 100 15 NUMBER OF CUSTOMERS (Emnd).- (13)-. (1) Pahase and eschance contracn 13 15 14 14 11 14 _.x.. ( Residential 1,112 - 1,093 1.076. 1,060 1,047 1,037 2 1 Commercial 149 146 142 _142 140 138 2 2 Industrial 17 16 15 13

12 11 6

9 l Other 3 3 3 3_ 3 -_.3 . _.. ~ -. ~ _ -. - ~ i r ENUGYSOURCE TOTAL 1281 1258 1.236 1218 . 1202 ' 1,189-t 2 2 l

W#

--.. ~ ~. Residemial average annual } 100 usage (M) 10.183 10A64 10.283 10,209 10,070 - 9J80 (3) 1 l ~ Residentialaverage annual I revenue per customer (Ik!!an) 589 612 605 613- '625 617 (4) (1) 80 bdemialrevenue per kwh (Crnn) 5.8 5.8 5.9 6.0 62 6.3 (2) j MILES OFIJNE - i Transmission 15.000-14,%0 14,900 - 14.700 14.600. 144,00 1 1 l Distribution 44A00 44A00 44200 44200 41100 44,100 SYSTEM PEAK DEMAND (Mgawaral l Net system loadtai 4 - summer - 6.734 6.405 6A07 5,978 5,939 5,626 5 4 l -winter 6 968 7.019. 7,623 - 6.875 6,267 6246 (1) 2 l Totalfinn loadh. - summer 8A7 7,639 - 7,109 6J41 6,503 ,6,088 11 7 j j 3 -winta 8.335 7J10 SA17 7,559 6,833 6,725 8 4 l l SYSTEM CAPANIIIT(MgaumN 1 3 I - summer 9J53 9.629 8.551 8,570 8,923 8A65 l 0 -winta 9.982 9,316 9,141 8 S48 8,831 sal 9 7 3 i B' 88 89 90 91 92 l i uhiA ofintem a hv rce th!A Amtem Erm a hw resaleJd Ownal mi mmractua!generamp qubdhy a the tw d>ynem 6rm pl D PurchLe & Ixhange j i Comracu 6 D Hyh + Administrative and general expenses increased $25 mi!! ion farnings contribution decreased $144 million or 41%. 1 0 coal i or 21% primarily due to increased pension funding and the effect 9 Income from operationsdecreased 5105 million or 13%. of 1991 adjustments that reduced insurance resems and benefit j ,g 4 Other expenses increased $44 million primarily due to 520 million of valuation adjustments rela:ing to investments in i + Depreciation and amortization expense inacased $3] mil-cogcneration projects, a coal lease and other propenier, a $14 lion or 12% primarily due to acquisitions ofinte:csts in thermal 4 de m' W b d h bdM d i E#"#

a tenninated sale ofwata rights.
Taxes otha than income taxes increased $12 million or

, p,;,. gjg; ,g l 12% due to aujuisitions ofinterests in thermal generating plants due to decreased taxable income, panially offset by reversal of I and propeny tax adjustments in 1991 relating to valuation air-pnor flow-through tax depreciation. l rections and wrtlement refunds.

Preferred dividend requirements incr:ased 511 million or i

Any tax on energy could significandy increase the Company's 40% due to issuances ofpreferred mick in August 1991 and May I costs. If legislation is passed imposing this tax on the Company g or the Company's fuel supp!!crs, the Company may fde regtiests for prict increases in order to recover diese costs. i -.30 - m -w m + v s-

,,<.s F.L t c i n ic ()P E nnlo N s Wim%vi Drnings contribution increased $12 million or 4% Revenun inem: sed $67 million or3%

Income fwm operations inacased $38 million or 5%
General sales revenues increased $27 million or 1% pri-
Interest expense increased 514 million or 6% primarily j

marily due to inacases in residential and commercial customers due to increased debt outstanding due in pan to the acquisitions l and custome uwge, panially ofhet by redaced industrial Lik>- ofinterests in the Cholla Unit 4 and Tplak plants. panially wandiour sales volume to Northwest wood poduas csmomen. ok by the eHect of retirement of higher interest rate debt. i l

Sales for resale to otha utilities inacased $36 milhon or e inten st capitahzed decreased 57 million or 2% due m 13% (kilowart-hour sales inaeased 9%) due to a 551 million reduced mnstmetion in progress and a lower ms, of capital.

inacae in long-term fan contract sales. The increase was oliset

Other expense decreased 51,2 million primarily due tc in part by deucased secondary sales due to competition from decreased losses imm cogeneration projects as a result of KIIDWA1T-H01 R t

SA115 BY CUSTOMfR incrcased energy asailable from BPA in earh 1991 and from impmvements in operating totdts and a 1940 valuation adjust-SEcMFAT a gas-fired generatir:g resources as a resuh oflow natural gas ment hiss. panially offset by the effeas of a 55 million settle-y.g prices in 1991. ment in 1991 of a long-standing dispute over treatment of. l 5"*"'"* 5" *I"0 "*0' ' P'*5'*** Operating expenses increased $29 million or 2%.

Pmvision for inmme taxes inacased 513 million or 8%
Puel expense increased 521 md. lion or 5% due to due to increased taxable inmme and the net etTea of favorable mereased aut cosa and increased thermal genecan.

on. deferral tax adjustrnents of 512 million in 1991 compared to

Purchased power expense macased $27 million or 18%

518 milhon in 1990, partially ok by a 55 million favorable tax due to inaex.ed purchases of available lower cost hydmpow" sadement in 1991. from BPA. higher rates for cenam firm purchase contracts and

Preferred dividead requirements increased 55 million or increased BPA rates eficcive September 1991, 22% due to issuances of $100 million of preferred stock in leth
Other operations expense deacased 510 rnillion or 4%

Oaaber 1990 and August 1991, partially offset by lower rates le2 primarily due to reductinns of $18 million in rent expense for for maion rate pfared M the previously le&ed Wyodak Plant and 53 million in allowance j ERc3 M 1 for doubtful accounts, pctially ofiiet by 512 million for dacon-E Commeraal l i l tinuance in 1990 of aeds allowed unda the Utah energv lui-g ine.wial j W SalesiWer Utihties i l andng account.

Maintenana npeme decreased 55 million or 3% due to the timing of::ansmission, distribution and substatim mainterrace.
Administrative and general expeme deceased $20 million l

or 15% due to lowa reserve requirements for insurance and decreased payroll and employee benefit costs resuhing fmm work forcr redactions (

Depreciation and amortization expense inacased 521 million or 9% primarily due to the acquisitions of interests in the Wyodak and Cholla Unit 4 generaing plants.

l l 1 t ! l t.

TmcommmemoNs _ __ 9BTM"MMM M i N 8 W u. M1 G,mpund r'ergmay kmusi 1992 1991- -.., 1990 1989 1988 1987 conom cmh hul networbenice 5 741 5 68.4 5 57,7 5 554 550.1 5 48.0 8% 9%' Nenvorl access senice 224.5 209.5 186.8 170.0 160.5 155.8 7 6' long disuna netwmL senia 225.8 244.8 214A '231.8 229.8 201.9 (S) 2 Private hne senix 70.4 66.0 60.1 583 61 3 68 7 1 Sain ofcable capadtv 10.8 30.9 83.2 (65) l Other 96.9 104.8 80.7 62.2 583 533 (6).- 13 TOTAL 704.5 724.4 682.9 _ _5 7.7 _ 560.0_ 52".2___ Q) 6 [ EXPENSES j Depreciadon and amortization 114.1 1173 101.9 985 93.6 90.6 (3) 5 [ Operations. maintenance 305.6 1 8 e [ 2nd other 451.8 447.5 426.8 3454 349.9 TEi.itouMcNicATloss TOTAL 565.9 564.3 _ 52p _ _ 3.9,,_443.5 _ 3%2 _ _ _- _ 7_ [ 44 anurm m;me m, INCOME FROM OPERATIONS 138.6 159.6 154.2 133.S 1163 _ (31.0 _ 13)._l._ [ ( INCOME FROM CONTINUING I 7m ) OPERATIONS

67.2 89 5 95.4 75.1 58.6

'44.4 (25) 9 f i l Minoritvintaest and other 9.9 12.9 18.8 10.9 83 ^ ~ (23) 2 r 8.8 f EUiNINGSCONTRIBUTION ^ TROM CONTINUING

~

OPERATIONSW 5 573 5 76.6 5 76.6 - 5 642 5 503 5 35.6 (25) 10 i [ Identifuble assets 51313 5 1,674 51,703 $1,192 51206 51,128 (10) 6 Capita! spending 5 140 5 236 5 475 5 180 . 5 170 $ 90 (41) 9 b Number ofemployees 2,891 3,050 3A12 2,73 3AS5 3,626 (5) (4) Telephone axesilinn f7ba.mdd 379. 357 340 253 240 230 .6 11 3 longImes originatingbilled i minuts 8&m) 679 654 632 597 512 ' 469 4 8 3 W Co:am amouno maar.p diommed operata,ri+ km 6 red.,dudAc redadams had no eb on Pa4Girp i permudy rq=md nn nwnr. Ser Lu ; e Gamed 0; Faun.ul kemen Dw ru retieu chrmanum d r.r. na on marmen) bonwy ananpmenn and mduda mwmr tam on ngurawmpn hun L, M M % 9I L, fm hdvdeem%ddwmthmedoperam O Revenues I~ " ' M ii .6NW

Network access senice revenues (fees charged to long-dis-D income from Operanes O [2minp Gm:nkhm tiam Pad 6c Telecon presides voice, data. video and other ser, tance interexchange ca riers using the kxal exchange network to Omtmumg Opemum'

3. g, g

( gg ] g. 7g gg, pg access their customers) increased 515 milhon o. 7% primarily Telecom aiso operates, maintains and sells capacity on the due to higher tra!!ic m!umes and higher expenses, '511 million; North Pacifk Cable. Pricing for senices is both rate regu!ated increased universal service fund suppon,57 mi!!i n; and acquisi-l tions, 51 million. Panully offsetting these increasentere h>wer l-and market driven. Long-term profnabih... frandu. d senice ty m se out-of-pen. d revenue adjustments of 52 million and rate o l territories is influenced by technology, cfsciency of operations' d-of 51 million. cost of capital and competition. Padfic Teleconh revenues for 1992 were derised 49% from long lines,44% from ' local 9 long distana network service revenues (charges for long-l exchange companies,3% from cable and backhaul capacity distance calling senices) decreased 519 million or 8% primarily due to a $13 milh.on reduction in out-of-per. d revenue adjust-m sales and related cable senices and 1% tmm cellular operations. ments, a 59 million reducn.on resulting from the.introdua.mn of !M ( 0 > !. l> m M, competition in Alaska in'May 1991 and the effects of a 56 mil-Rerennes demased $20 million or3%. I lion annual rate decrease in Alaska that became effeaive in Julv 199i. As a result of competition, intrastate minute volumes

local network senice revenues (local telephone servias to dedined 7%. These reductions were criset in pan by the revenue.

residential and business customers) increased 56 million or 8% pri, efica of higher expenses totaling 53 mi!! ion. marily due to an intemal access line growth rate of 6% that added

Sales of cable capacity revenues (sales of capadry in a sub-54 million and kxa! senia rate increases totaling 51 rnillion.

marine fiber optic cable baween the U.S. and Japan) decreased ],

.~ N1 F COM V i'S J C ATIO N S 'f 520 mibn or 65% Approximately 45% of the Nonh Pacific nynses panially ofkn by the effecu of wnipetition and Cable's apcirv has been sold; 4% vas mid in 1992 compared intrastate rate decremes in Alaska of 56 r..illon and 511 million to 10% in 1991. The cable system is now operating under a annually in July 1991 and March 1990, respectively. warranty of three to ten years depending on the component of

%de p d Nd Pdfdthsed the system. Here have been five outages since turn-up of the Wd Appmximatehy 31% of cabk capacity was sold in i

cable in May 1991. The outages may have aarrsely affected the 1990 and 10% was sold in 1991. market's perception of the reliability of the cable and contribut-

Other revenues increased 524 million or 30% due to the

[ ed to a slowing in sales of capdty, and these percepdons may continue to have an adverse eficct on future saks An agrecmet amuisiten of North-Test, revenues from transponable canh sta-t in principle has been negadated with the consortium that buih tions and other services provided in Saudi Arabia and maintc- { and hid the cable that pmvida for enhaned repair arrange. nance savica on the Nonh Pacific Cabk. menn and assistance in marketing erTorn to demonstrate that a Ornating npenm innra6 mWin oM the svstem is rehable. Tekmmmunications continues to maket the renuining cable capacit, and believe that most ofit can be + ne North-Test acquisition added 526 million ofexpem. AmIMim l IM mld over the next five years. es: operations and maimenance,510 million; administrative and general 56 million; depreciation and amonization 58 million; f Opnaring expenses armainedflat rn 1992. and taxes other than inwme taxes,52 million. - en r f

Operahans expenses deacased $11 millkm or 5% primari'

+ Operariam expense dxtrased 537 million as more cable m ly due to an 58 million redaaion stemming frmn lower cable capadty was sold in 1990. He decrene was offset in pan by ( y capacity sales and $7 million of expense in 1991 for leasir g g g transpondas on an interim satellite. putially orTsn by increard .{ expense rehting to powth in cellahr operations, local exchange

Opanions and maimenance expemes inaeased an addi-29 company acquisidons and access line growth.

donal 537 million primarily due m access line powth; leasing of transponden on an interim satelhte, services and equipment pm-200

Administraths and general expenses inarased $12 million nded in Saudi Arabia; n.aintenance of the North Pacific Cable; e

or 15% primarily due m $7 mi,llion relating to development of no macased cellular maintenance; and cusmmer operancms expeme I l cusmmer suppon and billing mirwm and $6 mi!! ion relating to t l rauhing fmm.mcreased allula operaiom and.macaxd airn.e r an early retirement program. No ing expense. The increases were otTset in pan by decreaes rehting i Earnings nnrriburienfrom antir:uing operatiora to compktion of the service lile of the prior satellite and lower p decreaud519 millin or25% telemetry, tracking and contml service for the new satellite. l 8

Income fmm operadom decremed 521 mihn or 13%.
Depredation and amonization expeme inacased an addi-p ss 89 90 9 92 tional 57 million as a rauh ofincrened depreciable pmperty
Interest capitahzed deacased 56 million due m the absence s Mawar resuhing from the Abska Spur of the Nonh Paa. Cable and til hb nc i

oflong-term construction projects in 1992 venus the effect of E #'"'"' I

"P"* "

wngraction of the rephcement satellite and cable in 1991. Drming wnrriburionfrom wnrinuing

e reo m k1O m o A

\\ operations rrmainedwrutant. Rerrnues increaud$42 million or 6%

Income imm operations inceased 55 million or 4%
local network service revenues inceased 511 million or
Interest opeme increased $15 million or 39% primarily 19% due to the acquisition of Nonh-Test Telecommunications.

due to debt incurred to fund the acquisidon of Nonh Test and Inc. CNorth-West') in August 1990, which added 64.500 acceu expen mra fm wnstm on and cable invenmry, offset in pan I lines and 58 million in revenuet and the effect of a 5% increase by lower average interest rates in 1991. in aacss lines in areas already served

Odier income inacased 510 million due to pretax gains
Network aaess service revenue increased $23 million or fmm sales d wmmunications subsidiarin and cellular intercsn 12% The Nonh-West acquisidon added 511 million.The remain-

$28 mhnin M wmpued m M mEonin N der was rehted to incases in operating expemes used in setting

Other expenses inacased 55 million due to valuation aarss rares
long distana nawork servia revenuo inacased 530 mil-adjustmems relating to noncore investmena tion or 14% primarily due to higher out-of-period revenue,
Income taxes deacased 511 million or 27% due to the adjustmems, rate base grow:h and the revenue effats ofincreased favorable resolution of tax audit issue and lower taxable mcome.

j j . l F

l Fin > o Nl M U His t w a! rivn;i i During 1992. as a resuh of credit sating downgrades, PFS to reduce PFS' auers to no more than 10% of PacifiCorp's con-and Holdmp experienced restricted access to the commercial solidated assen. PF,5 and Holdinp anticipated generating cash paper and medium-term note markns. Rese marLns have his. by sdling assets, limiting PFS' computer leasing por'tfolio and torically been their primary source of funding. In order to expanding nonrecourse fmancing sources. Given that the dispo-improve this situation, PFS and Holding conducted an exten-sition process was being accderated imo an umenled marka for sive review of their fmancial plam during 1992. In addnion, cenain of these investments, estimated kuses on disposition of Paci6 Corp announced, as part ofits strategic direction, in intent auets were recorded. i He following is a summan of PFS' assets and revenues by businas ime: l l l utmoss or tVUAM I i 1992 ... 1991.. 1990 PERCENT 0F RnTNUIS PERCENTOF RDT.NUES PERCENT OF RDT.NL15 ASSITS AT FORTHE ASSETS AT FOR Tile ASSETS AT FORTHE i YlAR END . HAR. HAR END ITAR. YEAR END. _ \\ TAR l Aviation fmancing 40% $ 33.5 33 % $ 35.4 24 % 5 42.0 Computet icasing 11 28.6 23 51.1 33 78.8 Other 27 43.1 28 453 33 60.8 Total fmana 78 105.2 64 131.6 90 151.6 - Real estate 20 29.7 15 251 9 12 3 Manufacturing 2 40.2 1 35.2 1 .28.6 Other 4.0 'I ~ ' 00% $ 192.1 100% 5 226.5 Total 1DD% 5 175.1 1 l l PFS and Holdinp' nep6ve contribution increased 5144 mil. He aviation industry has suffered and continues to experi-l lion in 1992 primarily due to after-tax yecial charges of $132 ence a severe economic downturn. Ris has impacted PFS' avia-l million rdating to asser reduction plans, as well as the write <>ff of tion fmance portfolio in a variery of ways, induding having two i cenain intangible assen primarily aunciatal with PI S' computer lessees /borrowen (invohing six planes) currently involved as i leasing unit. In addition, revenues and expemes were lower in debton-in-possession in bankruptcy proceedinp. Although fur-i 1992 primarih due to the dedine in average finance assets. He ther deterioration may ocrur in the industry, PFS has made loss i decrease in finance assns was primarily due to special charges, provisions based upon its best estimate of the present situation. asset sabnd net run-off of existing portfahos in the ordinary PFS expeca to fund its scheduled debt maturities and i course of businest financing commitments through cash flow from operations, At December 31,1992, the aviation portfaho (with net assers funher asset sales, nonrecourse fmancinp and access to com-of 5506 million) consisted of 52 aircraft,50 of which were placed mined banklines. with 15 separate carriers and two (with a book value of 550 mil-lion) were being held for lease or sale. A maiority of the aire aft were Stage 111 noise compliant. Garn the limited number and rdativdy large size ofindivid. ual kun and leas: assen, PFS analyus each discrete account in its process of establishing the inr1 of allowance for credir losses. PFS' allowance and earning are subjea to a higher depee of volatility than larger more diversified finance companies, a situa-tion which is magnified by the current weak industry conditions in aviation and real estate. PTS attempts to control this volatility by subjecting the entire ponfi>!io to ongoing rn-iews. k .i l, l 6

l />!4 = WilU ID M i l! 'm in early 1993, NERCO, the Company's 824ewned Mining amount of pourds expeaed m be received by NERCO fmm and Resoura Deve!apment subsidiarv, announced that in board the sde or dispsition ofits minaab operation. Baed on the of direc ors had appmved an apeement that would soult in accent depressed industry mndithm and 6e fact that potential NERCO merging with a subsdiary of Kennemt: Corporation punhasers would discount future ntimated cah flows and [ (*Kamecott"). Kennecott is a subsidiary of R12 Corporation reserve potential, NERCO recorded an after-tax loss of 5132 Plf. The proposed merger will be submitted to NERCO's million in the founh quaner on the expend sale or dupwition i shardiolders at a special meeting on a date to be announted. ofits minerah operation. Clodng h expecid immediardy after dawholds appmval. He Voladle natural p prices aho signifeanth affected NERWi merger proposal calls for cash consideratbn of 512 per NERCO 1992 maiadon. During the first quana <I1992, natural p aare, subjea to adiustment in cenain nrnts. In connection with dmpped m their lownt lork dace 19'9 pdmarily due to [ the transaaion, a subsidiary of PadiCorp will, if requested lend bWdW& grim sd edly winnda i 5225 million to a subsidiary of Kennecott. He loan is to be in the castern United States, as wdl as excess natural ps supplin in i repaid as, and only to the extent dut, the hwwwa receivts ar-6e United States. As a resuh of this sharp dedine in natural p h tain future contraa intnues He merger would resuk in a praax prices, NERCO wrote down the canying value of its prmed and - pin to the Company of appnnimately 5154 million. He pain unprmrd oil and ps pmperties by $123 million after-tax, in the will be recognized owr the hic of the hun, which could extend M d 1991 NERCO m&d a ditbd indr-r thmugh 2009.11olding has apeed to me its NERCO shares in ment d he unpmvcd propenis of $20 million afia-tax due to [ favor of the merger. lioklinp expects to recerve cash comidera-the umenainty of their future exploitaticm as a resuh of capital tion of appmrimatdy 53S4 million for its darn of NERCO expenditure reduaions, expliation dates of 6e associated leases common stock and m use a signincant ponion of the proceeds, and the ftuctuation in natural ps prices. net of the $225 million loan, to pay down debt. i He Company incurred after-tu losses from discontinued The financial constraints imposed l!y the debt incurred i im d NERCO d Sei don in 1992 and earninp l make a 5500 million namral gas acquisition in April 1991, com-mikio48 miHion in 1991 and $65 million in 1990. f l bined with lower than espeaed producnon volumes and cum-A su & y ofPacific Tdeann,Intemational Gnnmunications modity prices, resuhed in cash kws not mening NLRCOi lloidinp, Inc. ("lCW). has lxrn shown as a dientimttd opera-expectatiom during 1992. The mmbination of high debt and tbn pending c mplai n fan agreement to sdlits wholly owned deaeasing cash faws led to an efton m domsize NERCO by subsidiary, TRT Communications, Inc. ("TRT"), to IDB Aedding cen2in nonstrategic aucts to par down debt. Communication., Group, Inc. ("lDB"). TRT pmvides interna-In February 1993, NERCO formalizedits plan to sd! or oth-dod Md M hone services. Under the aperment, whia is j erwise dispose ofits minerah opeadons. That decision was baed d m dose in the third quaner of 1993. &c stock of TPsT on several factors,indudinglow pid and d!ve prices, the ri k of and 6e sd dana stdh r mbsidiary will be exchanpd for funher price dedines. high capital expeniture requirements ne'- O mhn shara, or 2&fIDBi outstanding common stock, - essary to continue development of the reserves and 6e need io and !! million in cash, Upon signing the aperment. Pacific l redxe debt. Tdemm received L3 million Aares ofIDB stock. If the tramac-I NERCO determined that bsed upcm the continuing low tion is not consummated. Pacific Tdecom witbetain thne shares } prias ofgold and siher. it would not fulh recmes its imrstment and IDB wi!hetain the stock of the smaller subsidiary <The tram-l in cenain ofits precious metak mining pmpenics through undis-aaion is subject m IDB shareholder approval and FCC and otha counted ntirrated future cash flows and recorded an after-tax regulamry appmvak. he Gunpany incurred after-tax losses rdat-impairment charge of 5110 rnillion in the founh quaner of ing to discontinued operations of ICH totaling 56 million in the 1992. In addition, the km gold and diva prices also had a nep-third quarter of 1992,534 million in the founh quaner of 1992, tive economic impact on the gold minkg industry and on the 57 million in 1991 and 55 million in 1990. l 4 r i ~ l t

l L 1 REPORT OF M AN AGEMENT l The management of PacifiCorp is responsible for preparing struaure and recommends pssible imp ovements. Ddoitte & l the accompanving consohated fmancial statements and for Touche aho considered the internal ccmuol stmaure in connee-their integrin and objeaivity. He statements were prepared in tion with its audit. Management wnsiden the interna! audiron' acwrdance with genent!y accepted accounting principles giving and Ddoitte & Touche's'recommendatiom wncerning the consideration to materiality, ne fmancial statements indude Company's intemal control struaure and takes mst-dr i,ve a amouna that are based on management's best estimato and actions to respond appropriately to these recommen&tions. [ j. iudgments. Management aho prepared the other infonnadan ne Company's principles of business condua, publicized in the annual repon and is responsible br its accuracy and con-throughout the Company, address among other things, poten-sistencv with the Enancial staterhents. tial conflicts ofimeresa, compliance with laws, indudmg those The Company's fmancial statements have been audited by rdating to fmancial disdosure and the confdentiahty of propri-j Ddoitte & Touche, independent public accountants. etary information. [ Management has made available to Ddoine & Touche all the The Audit Committee of the Board 5f Direaors is wm-l Company's financial records and rdated dar2, as wdl as the prised soldy of outside direcon. It meas periodically with the l minutes of shareholders' and direaon' meaings. Chairpersom of dnisions and subsidiary audit committees, f Management of the Company has established and maintaim management, Ddoine & Touche, internal audiron and counsd l an intemal control st uaure that prmides reasonable assurance ' to review the work of each and ensure 6e Committee's repon-l as to the mtegrity and rdiability of the fmancial statements, the sibilities are being properly dncharged. Ddoitte & Touche and proteaion of assen from unauthorired use or disposition and imernal auditors have free access to the Committee, without { 6e prevention and daeaion of frauddent Enancia! reponing. management present, to discuss their audit work and their eval-i The Company mainuins an internal auditing program that nations of the adequacy of the imemal contml structure and independently assesses the eficeriveness of the internal contml the quality of financial reprting. ii A l i I To the BoardefDirecton andSharrholdm ofPaafCory: Te hue audited the aacmpanving mnsolidated balance and significant estinutes made by management, as wrIl as evalu-l l sheets of Paci6 Corp and subsidiarin as of December 31,1992 ating the mrrali iinancial statement presentation. Tc bdint that and 1991, and the rdated statements of comolidated income and our audits provide a reasonable basis for our opinion. retained earnings and of consoli&ted cash flows for each of the in our opinion such financial statements present fairly, in all three years in the period ended December 31,1992. Rese mn-material respects, the consolidated financial position of solidated financial statements are the responsibility of the Pad 6 Corp and subsidaries at December 31,1992 and 1991, l Companyi management. Our respnsibility is to express an and the resdn of their orations and their wh fkms for each of opinion on these fmancial statements based on our audin. three yean in the period ended December 31,1992 in conformi-Te conducted our audits in accordance with generally ty with generally accepted accounting prindples. accepted auditing standards, nose standards require that wr e, plan and perform the audit to obtain reasonable assurance alcut !f / o whether the financial statemena are free of material mistate-b5. M ment. An audit indudes examining. on a test basis, nidence sup-DELOITfE & TOUCHE pning the amounts and disdosures in the financial statements., Ponland, Oregon An audn aho indudes assessing the accounting prindples used March 8,1993 L 36 - I .. _.., ~ ... + - m.-

i, i ^ % as. S i ATEM E N !T O! C O N < 01. i D A I E D I N C O M E.A N D R E T A I N E D E A R N I N G S wuAN or aiuAR.'u 11 A.h iNDID DIGAttj R M { 1W2 1991 190 RE\\TSUES 53242.0 53.1683 5 3.093.9 i EXILNSIS t Operations 1376.6 1,129.8 1,096 % Maintenan e 287.9 264.2 249.2 ? Administrative and genaal 298.2 239.9 2583 l Depreciation and amoniution 452.5 3813 342.9 Taes.otha than income tnes 1233 110.6 112.2 70.5 91.2 111.5 Financial Senices'imeest expense t___. t 2.6&1.0 2227.0 2.170.9 j 1OTAL , 9413 - - -923.0 INCOME TROM OPERATIONS 633.0 i DISPOSm0N Of. INTERESTEXPLNSE AND OTHER INCOME FROM l Interest experte ' 341.4 3E0 317.5 OPERGONS Imerest capitalized (16.2) - (21.5) 00A) g a gy,gg g 33 43A Minonty interest and other . __ _ _ _ _. @ S.__. _ jogo TOTAL -. 392.0 317.8. - - - - 330.5 Income imm continuing operations before income taes 241.0 623.5 592.5 g income taes 90.8 176.7 179.1 l INCOME FROM CONTINCINC OPElMTIONS 150.2 446 8 4134 DISCONTINUED OPERATIONS h ypluid iiuome ex W 5 i490.6) 60 4 60.5 fimEd egnue 1992n51'S 5L 199115Ti5.1WVS30.6 NETINCOME(LOSS) B40A) 50~.2 473.9 493 l RETAINED LARNINGS.] ant 3RY l 999.6 907.9 8050 Cash dividends dedared M l Preferred stock 09.0) (28.0) (21.1) Conuntm stock piec 1992lSI.53.1991/SI.45.1990iS1425 (410.6) 0 84.4) (3502) Common and prefctred stock retired o and ESOP dividend ta saing ._ O 1), l .8 RETAINED EARNINGS.DECrimER 31 5 2104 5 999.6 5 907.9 200 EARNINGS (1055) ON COMMON STOCK 8' 88 89 90 91 92 Net inwmr (imd h prdeweddwined repiremnu y 3, p, Continuing operations 5.112.9 5 420.1 5 391,5 m lacome Tam (490.6) 60A 60.5 Diwantinued operations E Intercit hpenic & & TOTAL 5 ( 3~7.7) $ 4RO.5 5 452.0 B Raained f=P Average number of common shares outstanding (7hamh1 266.527 258350 244A67 ZUE EARNINGS (1055) PER COMMON SHARE . A2 5 L63 5 110 Continuing operations 5' U.84) .23 .25 Discimtinued operations TOTAL $ (I A2) 5 IE 5 1 85 & ungnnn; % n, n. nard runa2 si.uemmes, \\ 4 h = -

{ j CONsouonEn BRANCE SHEET $ MMP

M 2"W i

j ASSETS l992 1991 PROPERLY.PLBT AND EQl'IPMENT Dxtric $ 9,3'4.0 $ 8.6% 4 i Telecommunications 1.610.5 1,651.5 [ Other 19.7 23.1 13,2565) [ Accumulated depreciation and amortizadan ,,_ _ _ _ (3A51.7) l Net 7,552.5 7,114.5 . _Qastructmyghin propess 305.!,__ ., _3235-t ~ PROITRTY,PIANT TOTALPROPERTY,PLBTAND EQCIPMENT 7,857 4 7A38.0 ANQwm/ RNANCLE SERYlCES' INVESTMENTS l CONSTRlCHON f WORKIN PROGRf35 t lavestment in fmana rectiva% 3.- 3., les akeupr orda huet IM215.48.2snd1991/S150 3%$ 555.9 } Net investment in leveraged leues l les allowanapr creht lauer 1992!$183 3393 350.8 Net investment in equipment under operating leases 180A 288.8 [ m Realestate assets 240.1 266.0 TOTALUN.. bks ~.SARd5 baUfMENTS- - - _ - _ -.. _ - - - - - - - -l$1143._._. -~ 13 ~~ f CL'RRENTASSETS Cash and cash equwalents 50.2 75.8 j Aca>unts receivable j len alicuanapr&nk.plamwnw 1992:$95and1991/517.8 482.8 478.2 Materials, supplies and fad stock at amapon 215.9 233.2 ' 2000 Inventory 104.1 108.9 [ Cther _ _,_ _ _ _ _,, __ _ _, 5 3 6 _, . _ _ 5{.2_ p l. N CLMASSETS _ __ _ _906.6_ _ 9513, l OmER ASsd5 c tr n 89 % 91 92 Ime:ments in and advanas to attliated cunpanies 192.5 219.0 Cost in acess 4 net asms ofbusinese acquired 169.1 211.5 l D Tehammunca:kim Deferred charges and other 7019 787.7 O Dmric Net assets offacontinued op. rations 312.5_ _ _ _ M3_ l TOTAL OTHER ASSETS _., _ _ _. _ _._ 2,059.5 TOTALASSETS _ 1J8.0_ i $11,2565 $11,9103 1 %,ne w,0.mmar-asumena 9 e 9

i MillRN%of D0llAP6!DiflhSf10 ' ~- 1992 1991 CAPITAUZATION AND LlGIUTIL5 COMMON EQtm Common sha:thouer capital dum adwixd'50.0tWW dum oa:andmg l

92/r03'9 Rcd 129l/2ti2m6369 5 2.755.2 5 2,574.1 i

Retaired carninp 210.4 999.6 Gu.nntees ofEmp'xwcr StxlOwnenhip t Planlxyrrominp (57.4) (62.1) l TOTAL COMMONEQlm 2.My.2__ l 3 511.6 PRU' ERRED STOCK 417.4 342.4- _. -I 2195 150I PREFERRED STOCU SUBII CT iO MANDATORE REDUMli!ON CAPITAUZGOh, IONG-TERM DEBT AND CAPITAL LEASE OBUGATIONS 3,846.5 3,959.0 -j mg FINANCIAL SERVICES' DEBT ing j Short-term notes pavabk 212.7 439.7 long-term debt _ 5,0}.9 _ _ _ 57 { 3_ TOTAL FINANCIALSERVICES DEBT 715.6 1.014.0 80 CURRENT LIABIUTIES ? I long-term debt and capital lease obiiptkms currently matunng 142.3 89.1 Notes pavahk and mmmercial paper 450.7 241.4 l Accounts paahic ' 312.4 264.7' l Taxes,imerest and dnidends payable 48.2 417.0 - 130.4 129.7 l Customer deposits and other _, _ _ l,141,9[ TOTAL CURRENT LLG!UTIE5 _ __ _ 145,3 [, 3 DEFERRED CREDITS Inmme taes 9'2.1 1,014A l Investment tax credits 209.2 236.3 + o U 88 89 * " _. - _ -. --. 5 ~.465.6 429. Other -. ~ - _ TOTAL DEFERRED CREDITS _ _ _ _ _ _ __. _1.610.8___ _ _ 7163 E Common Equiry 1, E Prefermisiak MINORITYINTEREST _ _.. _ _751. ' E loyTerm Debi & Capial 86.0 t E financialSerm.a Debt i COMMITMENTS AND CONTINGENCIES (5u Nora) I ncObliptions TOTALCAPITAU7.ATION AND UABIUTIES $11,256.5 - $11.9103 wampnm %m in Con-l&ed Faml Stucmems)

i STATEbi:NTS OF CONSOLIDATED CASil FLors sum 0Nsor toumptnauxnmniuwu u IW2 1991 1990 CASH FlOTS TROM OPERmsG ACTI\\TRES ~ ' ~ Incomeimm continuing operaims $ 150.2 5 446.8 5 4134 Adjustmenn to rctuncile income from amtinuing operatium to net cash provided by operating aahiries Depreciaron and amonization 507.7 485.7 - 477.0 Defened inmme taxa and investment tax credits - cer E2) 01.4) (6.2) Interest capitalimf on equin funds (7.3) U13) (12.1) One-ame reftmd to Electric customers (6(to) Payment fmm sale of power entidemenu 114.1 Minority interest and other 72.9 (20.2) 31.2 Specialcharges 185.7 Accatnts receivable and prepaymenn (6.6) 49.9 44.0 Materials. supplies, fuel sud and invenwry %7 47.0 (903) Amnapayable and accnied habilitin 483 Net cash provided h continuing operations _ _ _ _ _ _ (60.2), _ 1l8.2 441.6 1,020.4 915.0-Net cash pnwided fused) tw discominued operations. 14.2 - (1M5) 19.7 NET CASH PROVIDED BY OPE. RATING AC.TIVITIES - - .. - 955.8. -. - 864 3. -. -.934..7 CMH FLOTS FROMINVESTING ACTi\\TflES. - Consuuction (694.0) F02.6) ~ (595.2) O}mting companies and aucts acquired (40.8) 0095) (235.0) Invesunents and advants to affdiated companin - net 00.9) (46.8) (52.9) Prxeeds fmm sales ofassen 143.8 78.8 542.0 FinancialSenbs Pamt from sales of assets and pnncipal pavmenu 2813 476.8 506.9 Purchx ofassen (125.6) (%0.1) (790.8) Other 20.6 10.1 11.6 NFT C6H USED IN liGT.ST. IN[ACTI\\TflES (425.0) ~ CASH FLOTSIROM FINANCING ACINTIIS- ~. - - - 11.0433 [.-.--UU) ~ Changes in shon-term debt 113.1 (6(LO) 28.8 Prmreds from long-term debt 712.0 E57.7 4465 Proceeds fmm inuance and enhange of common stxl 1 84.8 '1993 3S3.0 Prmreds fmm imance ofprefenalstock 195.2 - 98.4 100.0 c Dividendspaid, (4395) (408.6) (364.2) ' Repaynents of k ng-term debt and capitallease obligations (945.8) (4983) ' (264.7) Redemptions and repurchas of capital stock (56.1) (5) (225.7) FinancialSenhs Changes in shon-term debt (187.6) 30'.0 (4363) Pmceeds fmm long-term debt 137.1 1633 2303 Repayments oflong-term debt (244.4) Cf>45) 0423) Proceeds fmm leveraged lease nomrcourse debt 69.4 235.1 Repayments oflorragtd lease nonrecourse debt and defened equiry (12.2) 06.8) C3.9) Other _ jl3.0)_ _. (473) _ (8;4) ._g NET C_ ASH PROVIDE.D (USED) BY F.INANC.ING ACHVI_ TIES...'. - - - _. _6_%_4 ) 81.9. _ C42.0) ~ INCREASE (DFCREASE) IN CASH AND CASH EQUIVALEhrfS (25.6) - (965) 293 CASH AND CASH EQUIVALENTS AT BEGINNING OF YLAR, _. 75.8 1723 143.0 CASH AND CASH LQUIVALENTS AT END OF YEAR S 50.2 5 75.8 $ 1723 %= paring h mGmar rmw benena) +

notes To CONSOLIDATED FIN ANCin STmM ENTS YEARS ENDED DECEMBER 31,1992.1991 and 1990 .j i \\ NO f f I.$1M~ O f SIGNIYlC ANT AccovNTIN G Policits i fm/$ W TilM Y T4 I!DA ital leases) in the utility businesses were 3.8% of avenge deprecia-l ble assets in 1992,3.9% in 1991 and 3.8% in 1990. The comolidated tinancial sta:ements of PadfiCorp (the ' Company') encompass two businesses primarily of a utility The cost in excesr. of net assets of comolidated businoses nature.--Decnic Operations (Padfic Power and Utah Power) and au;uired is amortized over periods ranging fmm 10 to 40 years, j an 8%wned Telemmmunictions opendon (Padfic Telemm. Inca and a wholly owtied finandal $cnices buimess (PacifiGup Finandal Senies. Inc). The Company's wholly owned sub-Interest revenue on lending tunsactions is remgnhed on an. sidiary, PacifiCorp Ho!&ngs. Inc (' Holdings", formerly named amual basis commencing in the momh of origination using { Inner PadfiCorp, lach holds all of its nonelectric utihty invest- ' meth.ds that generally approximate the stated interest rate for the l men:s. Togeact 6ese busmesss are referred to herein as the innsaaion. Dirca fmancing lease revenue is remgnind as a con-Companks. Significant imermmpany transaaions and balances stant sield on asset carning values. Openting lease revenus mn-j have been eiiminated. sist of periodic rentah, primarily monthlv. He cost of equipment l under operating lease is depreciated on a straight-line basis over The Company also owns a Mining and Resource E'**"' "E'd ""' N " "'* P*' l . Devdopment business (NERCO,Inc) and an intemational mm-duce a constant yield on the outstanding investmenn in periods l munications business (lmernational Communications Holdings, when Financial Senices' net imrstment in be lease is positive. inc.). The Company has agreed io the dispsal of tbe opera-ti nt See Note 2. AliODNCE D)R CRIDITIOSM3 Investments in and advances to aftiliated wmpanies represent Allowance for credit losses is mainuined at a level considered imtstments in uncunwfdated afiiliated companics carried on the adequate to provide for potential cedit losses based on manage-equiry basis, whidi appruximates the Company's equiry in their menis assessment of various risk facors underlying netlook value. INYEXl()RY val U4 ?lON l R!MIA mkl U ?iini:liiLN Inventories are generally valued at the lower of average cost Accounting for the utility businesses confonns with generally or maket. aarpred accouming prindples as applied to reguhted public util-ities and as prescribed by federal agencies and the commissions of IVIM5J C4I'll4!]2TD the various.mtes in whidi the utility businesses operate. Costs of debt and equiry Ends applicable to clearic and telecommun cati n utility properties are capitalked during con-j w!! AXD CW/ i-Qiil AIIN15 struction. Generally, the composite capitalization rates were For the purposes of these financial statements, the Company b for 199198 En 1991 ad 9M br 19M i considas all liquid investments with original maturities of three months or less to be cash equivalents. INCOME T4XES caric Operations pmvides defmed taxes fx &fferenes due PIM!R!L11 WIAXD/GU!TNIV7 to certain book versus tax depreciation lives and methods and cer. Property, plant and equipment are stated at original cost of tain other timing differences. Telecommunicatans' regulated i comraaed services, direa labor and material, interest capitalized anions b>e phided defared taxes for all timing differenas ' l during construction and indirea charges for engineering, sup w-sina 198I Pmm m reguhmry orden, deferred inanne taxes vision and simihr overhead itenu. The cost of depreciable utility are not provided for cenain other differences in the utility busi- - pmperties retired, induding the cost of removal, less salvage, i' nesse. It is e eaed aghmn pactices affeaing the utility p charged to accumulated depreciation. Tdecommunicatiom plant businesses will permit recovery thmugh revenues ofincome taxes, at Decemba 31,1992, induded 564 million relating to cellula' not punided for currently,when such taxes became parable. fianchises that are being amortized over 40 vears. Deferred mcome taxes are provided for all timing diffe'ences r DLl'Rl CIA llO YHD ANo#11/A Tim in the Telecommunications' nonrate regulated and Financial Depreciation and amortization is computed generally by the S'"iC" "P"#i""'- straight-line method over the estimated useful lives of the related Investment tax aedits are deferred and amortized to income assets. Pmvisions for depreciation (exduding amortintion of cap-over the average estimated lives of the pmperties. - l

E h i ? l 1l Wi kl t' %\\!) h r. U1 c 1 n!DiinY he Company accrues estimated unbilled revenues for elec-Certain a;nounts from prior yean have been mhssiful to con- [ tric senices pmvided after cvde billing to month-end. form with 6e 1992 medal of presenution. Rese redassifwations j h d rm etTm on pmioudy ttyted cornofilated net inmme. l t Noll 2,, D i LO N 1 I N L I n O ri.n 4 Tl o s s On February 18,1993, the Company announced an agree-contract revenues. He merger, which is subjm to NERCO f ment to ecll. by meam of a merger, its 82bwned Mining and shareholder approval, is capected to le completed in the semnd [ Resoura Deirkipment business. NERCO, Inc. ("NERCO"), to quaner of 1993 and would resuh in a pretax pin to the Company [ Kennemtt Corporath>n ("Kenneant") for cash comideration of of approximately 5154 million. The gain will be recogniwd over j l 512 per NERCO share, or 5384 million, subject to adiustment in the life of the hian, which muld extend through 2009. ifoldings [ certain events. In connection with 6e proposed merger transac-has agreed to vote its NERCO shares in favor of the merger. j tkm. a subsi&ary of the Company will, if requested. lend 5225 The Compny's net assets attributable to NERCO have been f million to a subsidiary of Kennemtt. He loan is to be sepaid as, separatdy classifted apo6er assets in the comolidated balance l and only to the extent that, the borrower reches certain future sheets. Such amounts consisted of the following' . Mll.1XN OT. Ik UAM I D..R, DfhlJt.si. 1992 1991 Nonatnent anets 1,075.0 1,822.0 Notes payable .(381.7) (13.9) l Cunent portion or kmg term debt and capital lease obligations (309.9) (52.8) l Other cunent liabilities ~ (161.5) (182.3) l long-term d6 (660.1) r Noncunent liabilitia (96.3) (248.7) i j Mmority interest _ 154.5) _ _ 50 4)._ ( ( Net aucts of discontinued operations 5 226.3 5 708.2 i i E he dismntinued operations of NERCO are summariwd as follows: i Mid. lON. iOf DOUARS/ EORTHI Y1A_R_ I 7 1992 1991 1990 i Revenues 5 672.0 $ 919.6 5 827.7 j Costs and expenses 668.0 803.7 714.6 j lasses on awet dispositiom and write-dowm 710.8 _7 .7 j Inwmc (lon) fmm operations before inmme uses (706 8) 115.9 113.1 l Inwme tax (benefit) expense (155.6) 32.8 33.0 l l Mmority imerest and od er _. 100.3 15.4) _ . _ _ 15.1) ( f ( Income (hs) fmm discontinued operations $ (450.9) $ 67.7 5 65.0 At Deumber 31,1992, NLRCO had $692 million of debt reaived waiven of these covenants until June 30,1993. Without and capital lease obliptions outstanding. consisting primarily of such waiven the lenders, among other remedies, would theri Imve 5383 milhon of notes payable and $292 millica of medium-term the right m require immediate repayneit of a!! outstanding loans, j notes. NERCUs ddn agreements mmain a number of restrictive to refuse innowings, or to waive the defaults. If NrRCO's dda - covenants. Taivers of a minimum tangible net wonh requirement and capital leases are accelerated, it would not have sufficient funds { and a maximum debt to mtal capitalimion ratio miuirement were to repay ac rdated'5692 million of total debt. A defauh by j obtained by NLRCO as of fhember 31,1992. Ilad these users NERCO would cause a cmss-defauh under cenain debt oblip not been obtained NrRCO would hm been in violaron of these tions of Holdiags. but would not cause a cross-defauh to obliga-i mven.um as a resuh of hses incuned in 1992. NERCO has aho tions af PacifGrp. In addition, the sale of NERCO would violate i t I I L .-- c - 1

other covenams in the Holdinp' debt apeements. Holding common stod. and 51 milhon in cash. Upon signing the aper-expeas to obtain amendments of these mvenants to permit the ment, Pacific Tdecom mrived 1.3 million shares ofIDB smck. If proposed merge. NERCO sharchuldas are expeaed to approve the tramaction is not mnsummated. Pacific Tdecum will raain the proposal merger whid. if consummated, will tesuh in the sale 6ese shares and IDB will retain the stock of the smaller sub-of NERCO and the sepayment of amounts outsund ng under sidiary. He transaction is subjea to IDB shareholder approval - NERCO's primary credit apeements. and FCC and other regulatory approvals. A subsid an ofPadfc Tdecom. International Communications ne Company incurred after-tax losses from discontinued Hoklinp. Inc. CICH'). has been shown as a discontinued opera-operatiom ofICH totaling 540 mi!! ion,59 millior 4 operating rion pending completion of an apeement to sdl its wholly owned losses and 531 mi!! ion ofvaluation wijustments in 1992,57 mil-subsidiarv, TRT Communications, Inc. CTRT"), to IDB lion in 1991 and 55 million in 1990. The net assets ofdiscontin - Communications Group, Inc. FIDB'). Under the agrument, ued o;mtions ofICH dassified as other assets in the mnsolidat-which is expeacd to dar in the third quana of 1993, the stock ed balance sheets, the mmponents of which were immaterial, of TRT and the stock of anotha smaller subsisary wal be were 586 million and 5133 million at December 31,1992 and exchanged for 4.5 million shares, or 24% of IDB's outstanding 1991,respectivdy. N o l l. 3. A C Q UI S I TIO N S On April 15,1992, the Company purchased 243 mepwarts On April 8,1991. Electric Operations purdased equiry imer-of generating assets and fud resources from Colorado-Ure ests in the Tyudak Plant. On June 8,1991, the Company retired Elcaric Association. Inc. for 5279 million. He purdase was its share of the Wyodak debt, which had been recorded as a capita! - fmanced with 5250 million of First Mongage and Collateral lease obliption, with issuanas ofmedium-term notes and cash. Trust Bonds CFMB"), induding 548 million of FMB issued as Noncash investing and financing activities associated with coUateral for obligations assumed relating to pollution control g,c. i itions werc ar.follows: revenue IWnds. wuxmor nouns Na assets acquired . _ _ _ _ _ 19._92. _ _ _ _1991_ 5 (279.3) 5 (169.9) Disposition of na pro;erry unda capital lease 132.5 long-term debt assumed 250.3 105.6 Accmed liabilities and deferred credits assumed 4.9 8.0 f EC!i'#5#"' ?._bliptions unda capital lease _ _ _ _ _ _, (132.5) On July 15, 1991, Elcaric Operations pid 5234 million to fued geneating plant and rdated common facilities and commenad Anmna Public Senh Company CAP 5") for Unit 4 of the Cholla coal-piding gwu to APS under a iebted power supply aprenent. Nol f 4. S er clai C u slic ts As a result of credit rating downgrades, Financial Services The following table is a summary of the special charges by and Holding have been experiencing restrined access to debt. income statement category: markets. In order to improve this situation, these subsidiaries ~~~ ~~- - - - ~ ~ ^ j9p . have attempted to mluce debt with cash generated by accdnat pyg ^ ~~ ~ --~ 5 50 t ing disinvestment of underperforming and nonstrategic assets. Operations expense 73 Rdated to this action, Financial Senices and Holding recorded Administrative and general expense 21 a vpous pretax adjustments of 5142 million and 544 million, Depreciation and amonization 38 respectivdy, to the carrying value of attain of their assets in the - Othe expeme 44 -M first quaner of1992. Net after-tax charge 5 132

NOT! 3. FINANtt A55L15 ' \\ d %ii 181 n ;!a :A Parment tenm of 6nana reaivables are generally fmm two to respective receivables so as to produce a mmtant eate of return. 6ve years. Net fmana receivables indude amounts for uncamed Contraaual maturitics of fmana receivables outstanding at - income which are deferred and amortized over the term of the December 31,1992, were as follows: """*"5'*"*" 1993 1994 1995 1996 1997 Thereaner Direct fmanceIcases 5 58 5 34 5 21 5 14 5 10 $135-0:ha 6 nance receitables 68 22 3o 4 5 63 TOTALFINANCE RECEIVABLES 5146 5 56 5 57 5 18 - 5 15 5198 The estimated unguaranteed residual value ofleased equip-ment. Uncarned income rdating to leases wa $145 million and ment indaded in fmance leases wa $48 million and 558 million - $179 million at December 31,1992 and 1491, respenively, at December 31,1992 and 1991. respectively. At the end of the Nonacaual fmane zuets were 588 million and $~'9 million - lease period. the lessee usually has the option to buy the equip-at December 31,1992 and 1991, regatively. lD ! \\ 1 Ui VT i V

11 l ll-iG1!> ! L U13 Financial Services' investment in leveraced leases was as follows:

wwaxs.o_r r.,oan.s.:rumtmn. _i 1992 1991 Minimum lex payments receivable ner if9 apa!andinterar on thirdparn nonmvune debt 5 288.1 $ 298.4 6 Fianated unguaranteed residual value oflead assets 203.5 203.9 less defened income and imrstment tax aedits (134.0) (151.5) ins alh>wana for cedir lasses . _ 3)_. (18. NETINVESTMENTIN IDTRAGED LEASES 5 339.3 5 350.8 Deferred inmme tu liability related to l$eraged leases wasof 570 million and 5149 mi!! ion for accumulated depreciation at $292 million and $266 million at December 31,1992 and 1991, December 31,1992 and 1991, respectivdy. Scheduled payments respectively. to be received as rents from operating leises are 541 million,528 milli n. 521 million, 518 million and 59 million in 1993 i f u 1111!'i! l \\D! k O!'i1:f!/MiiM/ q through 1997, respectivelv. h..aancal Servias' net investment in eqtspment under oper-ating leases was $180 million and $289 million after dedaaions N ol t 6. S u o ni-Tr n M Dint o n llo n nowiN c A n a A Nc t MI N Ts The Companies'shon-term debt and honowing arrangements are as follows: _ _ ~ mygu ro Ansitec1Misrui.iw: Revohing aedit agreemenn_ . _ _.. _lacifiCorp _ Subsidiaries; 1 5 500 $ 1.208 Commercialpapet outstanding - (233) (136) Burrowinp under banklines (130) (527) IVAll.MECdCIN ~ ~~ '~ ^^' ~~ T T3f ~ ~Ui>45 5 4

- - "' b N l

_~ l q 4 I .l i Covenants in certain PacifCorp reimbunetnent aperments throupb v.amus revohing creda apcnnenn on a long-tenn haus. -l rehting to letters of crdit limit shon-term bancminp to 12% of At Decemba 31,1992, PacifiCorp had $93 million and its sub- ,j defmed capitaluatbn Gimidng such bormwing by PacifiCorp to s!Jiana, other than NERCO, had 5266 million of shon-term debt approximatdy 5300 milhon at Daember31 M21The Companies dassified as long-term. Consolidated commitment fen were have the intent and ability to suppmt shon-term Wrmwings appmrimatdy $4 million in 1992 and 52 million in 1991 and 1990. NOTI ~ COMMnN i. N D P K t i J R 1t L D S I O C K Chango in shares ofcapital sud and cummon shareldier capital are listed bdow- [ ._ pion 3stworpprismmossorpouas i COMMON SRGES SHARES SRGE-i CDMMON PREFLRRLD HOLDER - - * * - - - ~ - , _., STOCK - _ _ _., CAPITAL i 5TOCK I BhNCEJANUARY 1,1990 244,593 3,842 ' $ 2,220.6 1990 Sales thmugh Dividend Reinvestment and Sud Purchase b 3.465 73 3 Sales through Empknd Stock hs 3,373 73.8 l Salo to public 1 l Shares hdd by Holding i Ikhaed (10,245) (225.7) i H 64{ _ ., _ 7 -. __ 235J ..Exp.angd_ _ _ _, y BMANCE DECEMBER 31,1990 252.832 - 3.80 2,377,0 I 1991 Sales through Dhidend Reinvestment and Stock Purdu & 2,933 65.2 Sales thmugh Emphnra' Sud Plans 224 5.2 Sales to public 6,050 1,000 125.6 Dsposition ofshares hdd bv1hJdap... 57 1.1 BAIANCE DECEMBER 31,1991 262,096 4,S43 2,574 1 1992 Sales thmugh Dhidend Reinvestmem and Sad Purchase b 3,781 81.4 f Sales through Employees'Snxk hs 1,0'0 23.4 Sain topublic 3,308 5.750 70.0 Redemptions (60) (.8) l . _. Disposition ofshares held by H'olding .._3.. 324 7.1 i BALANCE, DECEMBER 31,1992 270 5'9 10,533 $ 2,755.2 i i At December 31,1992, there were l4 A78.255 autbrized but which are also invested in the Company's common stock. l uniwued shares ofcommon stock reserved for issuar.te under the Employee contributions eligible for matching contributions are - I Dividend Reinvestment and Sud Purchase Phn, the K & limited to 6% of compensation. Employee Savinp and Sad Ownenhip Plan (*K Plus Plan") and Generally, preferred sud is redeemable at stipulated prics for sales no the public. Eligible empknres under the K Plus Plan plus accmed dividends, subica to certain restrictions. Upon invob may dirca their praax elective contributions into the purchase of unay liquidson, all pderrd sud is en6dd to md due or the Company's common sud. The Company makes matching spedfd pdcrenmount pa share pl-d 6idad. contributions equal to a percentage of employee contrihudons, l f I l,

o

2 i 1 H llalDnwh0;c+ou!u . _ motwsm mgms wumoi ryuasmKutMR31 1992 1992 1991 1991 SERIES Sharcs _ _ Amount Sham Amount SUBJECTTO MANDATORYREDEMPTION No Par 5erial Prefemd,16.000 Sham Authorized 57.12 (5100 stated salue) 440 $ 44.0 500 5 $0.0 j 7.70 1.000 100.0 1,000 100.0 y 7.4s 750 75.0 gm NOTSUBJICTTOMANDATORYREDEMPTION D"N $1.16 (525 stated ralue) 193- $ 4.8 193 $ 48 1~18 420 10.5 -420 10.5 l DMN 1.28 381 9.5 381 9.5 l watano m u m 1.76 394 9.8 394 9.8 138 502 ' 12.6 502 12.6 ,o, 2.13 666 16.7 6M 16.7 l -i l 138.$eries 1992 5.000 125.0 l Auction Rate (5 KO.000 stated value) tai 2 150.0 2 200.0 t 35 Serial Preferred $100 Stated Value Per Share,3,500 Share Authorized r 452% 2 .2 2e .2 456 85 8.5 85 S.5 1 4.72 70 7.0 70 7.0 i l 30 l 5.00 42 4.2 - 42 4.2 5.40 M 6.6 66 6.6 6.(0 6 .6 6 .6 l 7.00 18 1.8 18 1.8 - 25 i 736 135 13.5 135 13.5 832 69 6.9 69 6.9 9.08 165 IM 165 16.5 20 i 5% Preferred,5100 Stated Value, t 8' 88 89 'O 91 92 127 Shares Authorized and Outstanding. _. _ __ 127 _ _ 12.7_ _ _ 127_. , 12.7 TOTAL 5 417.4 $ 342.4 f !al Dwand rats at Deumkr 31. l*1 on 90 shmirad of Saks A. 5cnn B and Snio C we 4.1% 4.3% and 4 5% rnpecurely. l i The estimated fair 2alue, based upon bid prices from an redeemable on each June 15 from 2002 through 2006, with. j investment bank, of the redeemable prefened stock would be shares outstanding on June 15,2(07 redeemable on that date. [ approximately 1% len than its carrying value of $219 million at . Mandatory redemption requirements for 1993 through 1996 on December 31,1992. the $7.12 series were satisfied by the purchase of 60.000 slares at - Mandatory redemption requirements at stated value plus a discount in Deamber 1992. If the Company is in defauh in its f accrued dividends on No Par' Serial Preferred Stock are as follon: cMig tion i make any fumre redemptiom on the 57.12 series or { beginning in 1997, 15.000 shares of the $7.12 series are the $7.48 series,it may not pay cash dividends on common stock. ~ redeemable annually; the $7.70 series is redeemable in its entirety On January 25,1993, the Company redeemed its 550 mil- [ on August 15,2001: and 37,500 shares of the S7.48 series are lion ofSeries B Auction Rate Preferred Stock. ~ { i i r I [

N o i r F. Lo s <,-Tt R M D !.11 1 ANI! CArtTAl 1.1.s s i O nl ic r t los s The Company's long-term debt and capital leaw obliptions were as follows ..WWONsor poum!nta.wun _ _._ _ 199) 1992 PACIFICORP First mortpge and collateralinm honi hhturing 1993 through 1997/4.549.4% 5 303 5 490.4 Maturing l998 through 2002 /6.5410% 879.4 599 3 hhturing 2003 through 2007/No-9% $20.8 441.5 Maturing 2003 through 2012 /8%.9.2% 152.8 76.0 Maturing 2013 through 2017 /8348.8% 218.5 357.0 EMBEDDED Mamring 2018 through 2022 /8.1%-li.5% 175.0 20.0 COSTOFMORTGAGE Redeemedin February 1992 2013 BOND DEBT Guaranty of pollution mntrol revenue bon 6 unawn 6% due2003 213 E9 , mg 30.00 3 2 5.9410.7% due 1993 through 2017 - 272.9 249.6 [~ ~ Wnable rate due 2005 through 2019td 407.4 3693 v Fun 6 hdd by trustees (.9) (.9) Commerdal paper and uncommitted bank lines"a 93.0 190.0 m ? i 93o t Ineraged ESOPloan guaranty 273 26.2 Unamonized prenuum and discount 11.0 11.0 ' p 20p y .Capirqcane obhppmufqu9) ,j8 2_ __3.087.6 TOTAL 3,167.0 } 9.00 Ins current mamrities 52 3 68.0 SUllSIDIARIES i830-2%-15% First mortpp notes and boni maturing thmugh 2027 171.7 170.9 I o> 5.8%12% Notes dae through 2007 176.0 lli9 } Umecured domestic credit apermentsudi 34.5 54.5 m 4 - g.00 r ' 88 e 90 91 92 Commercial paper and uncommitted bank linesud) 80.0 221.0 Variable rate notes due through 1997Me 19.5 21.5 5.4410.2% Medium-term notes doe through 2006 300.4 318.2 loeraged ESOPloan guaranty 30.1 35.9 Capitalleaseob!iptkms (%rr 9) 9.6 .10.6 TOTAL 821.8 960.5 less current matunties 90.0 21.1. - TO_TAL . _.. _ 9_39_.4_ - _. 731.8_. TOTAL 5 3,846.5 5 3.959.0 FINANCIAL SERVICE 5 5.4%11.5% Nonrecourse debt due through 2031 5 193.7 5 184.7 4.2410.6% Senior debt due through 19% 96.1 188.6 9.2410.5% Senior subordinated debt due through 1998 40.0 65.0 10410.7% junior subordinated debt due through 1998 36.6 38.9 . Shon-tenn debt expected to be refinancedWd) 1%5 TOTAL ...... 97.1. $ 502.9 $ 5743 la) Induds $50 million of 9 3M boniissued to seaur obligatim under an equivalent 14 year ven loan. A currency swap amvened the ined ute yen Lbilig to a Roaing ute U$ dollar habihry based on sia. month IJBOR phs.02Minternt rate 3 A at Drumber 31.1992)c - lbdetured by pledged 6m mongage and colhieral mut lxma generally at the same interest rarn, maturity data and redempiion pmvisions a the secured po!Iution control revenue Wndt k) Imerrst nra flucnate beed on vama nea, pnmarily or cemlicare nf de;uir rato. interiwA imrmwmg rats or pnn ratet f, M The Compania have the abili:y ro support short term bomwmp and currem debi being rc6runced on a king-teon ham ihmugh revolving lino of creat and ierm loan apermenn and. therefore, bued upon man.pmem's ir. rent. have clasfied $3% millmn of mex hntmw' p as long-term debt in 1991 m s

? l l-In accordance with Statemem of Tbmd21 Accounting and % respxthrly, at thember 31,1902. The debt was used i Standards FFAS') 107, "Distlosures about fait Value of to acquire the Compn /s mmmon stock. Common ajuiry has Finandal Instruments,' the fair value of the Compny's long-tam bem reduced and long-term debt has been inacased by the [ d6t at Decemba 31,1992 has been estimated by discounting amoum of the debt guaranteed. Remaining unallocated common ' the projeaed future cash flows, using the current rate at which shues held in trust total 2,614,252. similar loans would be made to bonowns with similar creda ra'- Financial Senices' nonrecour>e long-term notes are semred j inp and for the same maturities. The fair value of the Companis

g. msipe of Mad finana ncddh met scarin iran-i total long-term debt at Decemba 31,1992, unuld be approxi-ests and cash flow from opaating leases. The noteholdas have mately 3% more than its canying value of 54.3 bilkn.

no additimJ recurse m the Companies; ne Compnies have entered imo ;nterest rate swap and Subdinnd bng4am dat is dedinud m senior sbn- + exchange apeements to reduce the impa of changes in interest tenn debt and senior long-term debt. Junior subordinated debt is rates on their v.:riable rate long-term debt. A December 31, further subordinated to senior subord nated debt. 1992, the Companies had outstanding 13 imerest rate contraas with mmmerdal banks and Fanune 500 compnics, having a Maturity and sinking fund requirements on all long-term f iotal notional principal amount of $380 million. Rese agree-debt and capital lease obliptions and redeemable prefened stock mrnts change the Companies' interest rate exposure on the utstanding are 5312 million,5386 million, $171 million,5193 - + underlying variabic rate debt to effecthe rats of 5.7% to 9.6%. m@m and $258 million in 1993 through 1997, respecively. nese contracts mature at various times up to the year 2007. He The Company's Monpges and Deeds of Trust, as supple-Companies are exposed to credit loss in the event of nonperfor-mented, relating to its long-term debt, restria the pyment of mance by the other panies to the interest rate swap agreements. cash dividends and other distributions on common stock. At However, the Compnics do not anucipate nonperformance by Decemba 31,1992, the Company's retained earninp rnailable l the coumapanies. for these purposes was $125 million. ( He fair value ofinterest rate swaps is the estimated amouni Holding has pledged its shares of Pacific Telecom and that the Company would pay te tenninate the swap apeements, NERCO stock as security for repayment ofits obliptions under taking into acmunt current interest rates ind the current credii-cenain debt apeements. These apeements contain restriaive wonhiness of the swap counterpanies. He estimated termina-covenants,induding defined debt to capitalization and dividend tion cost would have been 565 million at Decemba 31,1992. to imerest expense ratios. The agreements also provide for Approximately 56 billion of the assets of the Companis defmed mllueral mverage of outstanding debt and for defauhs in secure long4enn debt and capital lease obligations. First mon _ the evem the material debt obliptions of its significant sub-( l pge and milateral trust bonds of the Compny may be issued in sidiaries, induding Pacific Telecom, NERCO and Financial l l amounts limited by property, earning and other provisions of Senices, are in ciefault. Accordingly, defauhs under the debt' the mortpge indentures. apeemems of these subsidiatics could result in defauhs unda The Company and Holdinp guarantee cenain debt of the Holdmp' debt apeements. Defaults under the debt apeements l Leveraged ESOP Trust established under the K Plus Plan (the of Holdings and its subsidiaries are not defauhs under " Trust'). In addition, the Company and Holding guarantee the PacifiCorp's debt apeements. Hddings expects to obtain [ Trust's performance under cenain intnest rate swaps having a amendments of covenants in its debt apeements that would oth-I total notional principal amount of 548 million that were entered awise predade the proposed NERCO merger. into by the Trust and a commercial bank. These arrangements The Company made imerest papnents, net of capitalized change the interea rate exposure on the variable rate debt guar-interest, of 5482 million, 5475 million and 5479 million in - anteed by the Company and Holding to etTective rates of 6.9% 1992,1991 and 1990, respecthely. Nm r 9. Li ssts The Companies lease certain propenics under leases expiring taxes, expenses of operation (other than depreciation) and main-s during the next 29 years. Rentals on lease rencvals are subjea to tenance applicable to the leased propeny. Capital leases current-i negotiation. Certain leam provide for options to purchase at fair ly in effect are not significant. market value. The Companies are also committed to pay ail On April R 1991, Electric Operations purchased equity _ i - t I t y w m m a -

s \\ interesa in the Tyodak coal-6ted generating plant. At December futurr minimum lease payments texler noncancdlable oper-31,1N0, Dectric Operazions had recognized $17 million of ating leases are 537 million. 532 million,529 million,525 million i 1990 rent expense relating to the Wyndak lease. and $21 millica for 1993 thmugh 1997, respectively. In October Net rent expense for the yean ending December 31, IW2,191 1992, the transponders on Tekammunications'sardlite were and 1WO was $51 million. 560 milhon and 568 mDlion, respeaivdy. sold and lean! back unda an operating lease agreement. NoII 10. Co M ull u t N I s A N D CON 11Nc ENcli s ( 0w!ia i om n!> oDEl' Financial Senices sold artain direa finana lease reaivables with recourse. The pmceeds from these sds amounted to $64 Construction pnpams a estimated at 5887 mi!! ion for million m. 1992 and 557 milh.on m 1991, The maximum 1993. As a pan of these pmgrams. substantial commitments luve 7 33 been made. In wnneaion with the formation of a jointly owned 3L, million in 1992 and 54 million in 1991. corporation. Financial Senices has mmmina'.a provide fund-ing eiier direcdy or thmugh credit enhancements of $85 million The Company and its subsidiaries are parties to various leSal in 1993 and $110 million in lub 1994 and 1995. d*i* "I "' ""d # *P *i" '#*i" f *hi'h i"" !"' **i*! t amounts. Although the Company is unable to pred a wnh cer. Semal Superfund sites have been identified where the tainty whether or not it will ultimately be sucassful in these Companies have ben or may be ' designated as potentially legal proceedings or, if not, what the impact might be manage-responsible parties. Future costs associated with the disposition of ment presently believes ihat disposition of these matters will not these matten are not expeard to be material to Paci6 Corp's con-have a materially adverse effect on the Company's consolidated solidated resuhs ofoperations. resuhs ofoperations. lniV1I Y O n N!is l'!. 4 VI \\ At December 31,1992, Dectric Operations' panicipation in joindy owned plants was as follows- _ _ _ _. _ _ _ _ Jmitm.sortmm ELECTRIC PLANT CONSITKflON* OPERATIONS' IN ACCL%fUlATED TORKIN SHARE SERVICE .EPRFGAT10N- -- - - - -.GRESS D PRO Centralia 47.5 % 5173.5 5 94.9 $3 hm Bridger Units 1,23 and 4 66.i n 3.5 261,9 6.5 fa Tr6an) 2.5 Colstrip Units 3 and 4 10.0 198.9 423 ' .6 Humer Unit 1 93.8 252.2 Fl.2 .1. Hunter Unit 2 603 1793 53.4 .2 Tyodak 80.0 287.8 80.4 - 5.9 Crai Station, Units 1 and 2 193 144.0N 43.8. 15 t Havden Station Unit 1 243 15.1N 10.8 '3 'Hlyden Station, Unit 2_ __.2_ 12.6 16.4M 7.6 (a) Pbm in nerne. accumuLied depreaation, and nmstruaum wmk in pmgren luLnces of $21 milhon. 59 million, and $2 million. segetindy, rehting in the. Troian Phm.along with eninmed plam dmwe and demmmiuic.mng com of SM millkm and fuel invemory msu of 52 milikm were indaded m defened chargs ai December 31,1992. Recovery of these canis pending appnwal of cenain regulatory cmumaskmt M fuludo unakated aapission adjunmenn of $142 millinn. f Under the joint agreements.' each participating utility is jea annual costs (operating expenses and debt senicel These costs responsible for financing its sha of construaion, operating and tre induded in operations expense. Dearic Operations is required to leasing costs. Dearic Operations

ponion is rewrded in its appli-pay its portion of the debt senia, whether or not any power is pro,

cable operations, maintenance and tax accounts. duced. The anangements provide for nonwithdranble power and Salmantial amounts of power a purchased from several hydm-most ofthem also pmvide for additional power,withdramblely the dectric pmjeas under long-tenn anangements with public utility distrias upon one to five years' notia. For 1992, such punhes distrias. Ecse purduss a made on a "am+f-senix' lusis for a appmximated 33% ofenergy requi$ments; an additional 9.9% ns stated perentage of p ujea output and for a like perantage ofpm-obtained thmugh other purdwe and ner interdunge r.rrangementsc - 49 :

At December 31,1992. Electric Opersasihare oflong-temurrangements with public utihty disuias wa as folkm GENERA 11NG IIARCONTRACT CVId5 ~ ~ ~ ~ 5 ' A5Nt'A[. 1 ERCLNTAGE [A @ Q OFOUI'LT COST 5W NE Tanapum 2009 155,444 18.7 % $ 4.4 Priest RapiA 2005 109.602 13.9 3.2 Rock) Reach 2011 64,297 53 1.7 Tells _2_018._ _ _. 54.198 _ __ _ _, __. _ 7.0. _.. _. __1. _.7 1OTAL 383.541 5 11.0 W Annut am,in mJim uf &&runJude &br nnu of 56 mba The Company has a 4% interest in the Intermountain Power capacity and energy from Company plants equalio the Projea fProject"), located in central Utah. He Fompany and Compan/s 4% entitlement of the Projea at a price equivalent to ErrECTIVE the City of los Angeles have ac, reed that the Gty will purchase 4% of the expenses and debt service of the Project. INCOMETu Rm TEK1VD so : N o11 11.INcoMI tax 1s The Company's effective combined federal and state income as if the statutory federal tax rate of 34% wa applied to income tax rate fmm continuing operations was 38Sh in 1992,2A in from continuing operations before income taxes and the remrded 1991 and 30% in 1990. He difference between taxes calculated tax expense is ruonciled as follows: .,o __i ON 1992 1991 1990 35 COMPUTII)fEDERALINCOMETA5S ~ ~ ~ ~ ~ ~~~ $ 'III.9~- ' ~ ~ ~ 312'O '"~ ~ ~ 5552 PdDUCTIONIN TAX RESULTING F' ROM ~~~ ' ~ ~ ~ 3o : Excess (deficiencv) of ta over book depreciation (flow-through basis) (203) 1.8 9.2 Imestment tax credits 15.1 16 3 16.4 Depletion 4.9 5.2 5.8 25 : Affordable housing cedits 10.0 7.2 4.7 Purduse ac ounting adpustments (12.0) (.6) (.9) i l.0 I Other items capitalia:d and miscellaneous differences _ _ _12.0 _ _ _ _ 5.4_ ~ 87 88 89 90 91 92 Federal tax (increases) reductions . _ __ __13.) _ _ _ _ 41.9 40.6_ ( FEDF.RALINCOMETAX 83.2 170.1 160.8 UO-- STATE INCOME TAX, NET OF TEDERAL INCOME TAX BENEFIT. _ 7.6 _ _ _ 63 __ _,183 TOTAL INCOME TAX EXPEN5E 5 90.8 $ 176.7 5 179.1 INCOME TAX EXPENSE CONSISTS OF Tile FOLLOTING TAXESCURRENTLYPROYlDED Federal 5 139.8 51893 5164.0 5 tate 15.1 18.5 26.6 DEJERREDINCDMETAXES Depreciation differences 57 3 303 10.2 Ahernative minimum tax carryforward (42.1) 3.4 Sale ofcontract entidements (42.8) (.6) loss on post merger reacquired debr 12.2 5.5 Valuation adjustments and sales ofstock (8.5) Inventory valuation adjustment (63) Weatherization 43 leasing inwme remgnition differences (93) 21.0 69.2 Pnnision for aedit lose (27.1) (t.7) (2.4) Affordable housing aedits carryforward (9.5) l Excess of tu gain on disposition of assets (14.0) (6.2) (45.7) Accrued pension and retirement benefits (4.8) ^ (11.4) (63) Other (1.1) (9.5) (222) IN tENTTAX CREDrfS-NET (15.2)_ (163) (16.5) TOTAL $ 90.8 5 176.7 5 179.1 l

Daring 1990. the Imemal Revenue Senice (the ' IRS') com-Defared income taxes have not been provided on cenain pleted its examinadon of the Company's federal income tax raums book and ux timing differences, as the method of rate-making for the yem 1983 thmugh 1956 and has proposed certain adjust-is based on taxes currently payable, and it is expened that ments increasing raes by $153 million. He Gimpany and the there will be recovery of future taes tiuough revenues. At IRS have agreed to a panial settlement on many of the issues. December 31,1992, accumulated timing diffnencn for which Among the remainag unapeed issues, the IRS h chaDenging the deferred taes have nor bten provided amounted to appmxi-Company's abandonment of its 10% imnest in' Washington mardy $1.3 bi!! ion. Public Power Supply Svstem Unit 3. The tenuinint; unapeed ne Company made income tax payments, net of refunds, issues repraent the IRS's initial audit position on specific hsues of $146 million,5172 million and $166 million in 1992,1991 and 6e IRS has not iuued a formal notice of tax deficiency. He and 1990, respectivdy. Comp 1ny and the IRS continue to discuss the remaining unagreed The Company adopted FAS 109, 'Accotmting for Income issues, which await two technical advice memoranda from the Tm effective januay 1,1993. This statement requires that nadonal ofBcc of the IRS In the opinion of management, based in deferred income taxes be recorded for all temporary ditTerences pan on discussions with counsel, the outcome will not have a and carrvforwards, and that deferred tax balances be based on material eficci on the Company's como!idated fmancial position or M bi e sa a d m bein drea when 6e resula f peadoru. temporary differences reverse. As a result of the adoption of FAS Financial Services acquires housing pmjects that qualify for 109,1993 consolidated net income will be reduced by appmxi-the low income housing credir established as pan of the Tax maely $2 million, assets will be increased by approximately 5800 Reform Act of 1986 to provide an incentive for the develop-million and liabilities will be increased by approximatdy 5800 ment and preservation of privardy owned affordabje rental million. His adjustmem includes deferred income tax liabilities housing. Annual ux henefits scheduled to be receisrd fmm these and rdated regulatory assets recorded for cumulative income tax projects are expected to approximate 59 million each gar from temporary ditTerences which will be recovered through rates 1993 through 1997. when the temporary ditTerences reverse. Noli 12. R i T ' utNT plans The Companies have pension plans covering substantially all more than the maimum amount of pension expense which can oftheir employees Benefits under these plans are pencra!!y based be deducted for federal income tax purposes. Unfunded prior on the employee's years of senice and average monthly pay in the service costs are amonized over the remaining service period of 60 consecutive months of highest pay out of the last 120 months, employees expected to receive benefits. At December 31,1992, with adjustments, to reflect benefits estimated to be received plan assets were primarily invested in common stocks, bonds and fmm Social Security. Pension costs are funded annually by no U.S. govemment obligations. Net pension cost is summarized as follows: smuoNsoi naum nos mi ng 1992 1991 1990-Service cost-benefits earned 5 17.2 5 16.9 5 18.1 Interest cost on pmjected benefh obligation 66.8' 63.6 55.0 Actualpain on plan auers (18.0) ()04.5) (24.0) _ Net amortizadon and deferral (23.5) 69.8 19.2 IM""'f_dCI'" b. _ _ _ _ N _ _ f33S_ ; ._$bO NET PENSION COST $ 36.0 $ 12.7 , $. 2.5 w Ileernc Oprathm hanomved amamung mhn fmm iurnmar and cenain enhn trplatmv nothonto to defer the ddntmc betwm pnsion cou aulnamined in - membacc sh i AW and 118 and thai danmined fut falmg purym. 4.,

Re funded status net pension liability and significtnt assumptions are as folknvs- .._L._. .M M MI% N W1 PLANS VITH PLAN 511TH -AM C 6 DH% ACCl?MULATED BENUIT5 OfACCLNIU!T0 . IN EXCL% OF ASSETS !!ENDIT5 1992 1991 199) Aauarial present value ofbenefit obliptions Vested benet oblication S 64. 5 5 105.6 , _Aaumulatedpenefn oypdyn

.'8

- - -. ~. 538.9- _.. -. _ -._. _. a. - - - - _ JH.0, - -_ 378 _982 1 Projected benefit obliption 816.2 ' 633.9 139.6-Plan awers at fair value . 533.8 446.9 156.5 Assen in excea of(or less than) projected benefit obliption (232A) (187.0) - -16.9 Unrec9gnized prior senice cost ' - 11.2 10.8 - 1.2 Unrempnized na pin (82.1) (106.8) (11.8). Unrecognized net (aswt) obliption at January 1, being amortized over 7 to 22 years 105.2 122A (12.0) Minimumliabilin adjustment (26.8) (57.5) NET PEN 5! bel.lASUTY S k2219) 5 (2185) 575.7) Dienunt rate 8-9% 8-9% 8-9% Expeaed long-term rate ofretum on assets 8-9% 8-9% 8-9% Rate ofincrease in compemaaon levels. _. - 6-6.5% 6-6.5% 5-6.5% During 1990, as part ofits overall cost reduaion program. 5310 million. The 1993 expense will increase by approximately Dectric Operations offered an early retirement incentive program. 527 million, induding interest cost, servia cost and amortization Indaded in the table above is the present alue of all future termi-of the transition obliption. Dectric Operations

incrementa!

nation benefits provided of $47 million. Dearic Operations ha$ expense of $20 million is not curremly included in its rates. received regulatory accounting orders to defa these costs as a reg- ' During 1992, aaion was undatalen in a majority of the Dectric ulatory asset to be amortized over 30 years. Operations' regulatory jurisdiaions to daermine treatment of The Companies provide heakh care and life insurance bene-FAS 106 costs for rate recovay. All but one jurisdidion allowed fits fi>r their redrees on a basis substantially similar to those who total FAS 106 costs in principle. Of these jurisdiaions, one are active employees. The cost of these benefits, which is charged allowed deferral ofthe inaemental costs until the next general rate to expense is incurred, was $12 million m 1992, $10 million in case in that jurisdiction and provided assurance of future recovay 1991 and 59 millionin 1990. 'ofdeferred amounts. Only one jurisdiction, Utah which regulares The Company adopad FAS 106,'Empkiyers' Accounting for approximately 30 percent of the Companyi retail sales, adopted a Postretirement Benefits Other Han Pensions." effeaive January level ofallowed costs less than total FAS 106 costs. A rehearing of L 1993. This statement requires aarual ofpostretirement bene-dut commission's order has been held a~nd the uhimate outcome firs, such as health care benefits. during the years an employee of the proceeding is still pending. Final decisions as to recovery of provides senices. Based upon the most recent actuarial studies, it these costs will be made during a general rate case. The Company is estimated the Companies have a transidon obliption liability of does not plan to fde a general rate case in 1993. 9 4 52 - ) --______-__________._-_._-_---___--_______-.__D

i 5 i = S Ol i 13. 8 t' l N E s $ S I G hil N 15 . NAMPl!VN Telecom-Daontinued f.iectric Operanons munications Otheri Operations CMdared I Year ended December 31,1992 j Revenues 5 3.242' 5 2.362 5 705 5175 5 - i income from operations 633 6'S 138 /t83) l Dqreciation and amortimion 45f 287 114 52 Capital spending 1.001 864% 140 (3) 6 identifiable assets 11.257 8,192 1,513 ' i326 226M i Year ended December 31,.1991 Rennues 5 3.168 5 2.252 5 724 5 192 5 - i t income from oper~ations 941 783 159 (1) -l Depreciation and anwtization 381 256 117 8 Capital spending 1.059 796 236 27 identifiabk awts 11,910 7,665 1.674 !.863 70SM I i Year ended December 31,19% l 1 Revenues 5 3.094 5 2,185 $683 5 226 5 - ? 5 income from operations 923 745 154 24 ? Depreciation and amortimion 343 235 102 6 Capital spending 933 459 475 (1) Identifiable assets 11.201 7,027 1.703 2.008 463M tai Indudes 6e operatu.m d finana, real nwe and manufaauring aanus oflinandal hem,cs as well e Corpnaie acnvan N Indado non ash uqaniuon uno of $2% mina n relating to the Cohirad*Uic propernes acquned in Api! 194' k) Th nn aurts of the dnconnnued operariam of ICH are mduded in Tchommumanont t I 9* %...x

\\ N oi r 14. QU A n 11 Riv 1 lN A N CI A1. D u r ( U N.w o n i o ) -. - - - - - -. -.. = -.. MW?M%M IML March June September Decemfer - 31 30 30 31 1 1992 Revenues ~ 5 780.0 $ 7733 5 821.0 5 867.7 income fmm operations 81.7 iS6.2 228.6 136.5 l Income doss) from continuing operations ' (33.7) 65.9 97 3 20.7 Discontinued operations 0 45.8) 1.5 (26.8) (319.5) i j COMMON STOCK ct inaw 0=) fl793) 67.4 70 3 (298.8) l l MARKET PluCE Earninp 00ss) on common stock . (186.7) 58.8 59.8 (309.6) mwra>mou.m Eaminp Goss) per common share from continuing operations - (.15) .22 32 .03 30 30 g,q~munq Eaming Goss) per common share L71) .22 .22 0.15) lt i Common dividends paid per share 375 375 385 385

s[g?;9'pgp;2s Commaridividends dedared per share 375 3 85 3 85 385

[ m Common stock price per share (NYSE) 20 ' 20. High 25 % 233/s 235/8 23 % { low 21 % 21 % 22% 18% - 1991 i Revenues 5 789.5 5 735.9 5 790.2 5 852.7 10 10 Income from operations 246.8 204.7 236.4 253.4 Income from continuing operations 118.4 80.7 1203 127.4 l 5 5 Discontinued operations 17.6 5.4 .2 37.2 Net income 136.0 86.1 120.5 164.6 0: a ..c.,.g.,..p.p."i Earninp on common stock 129.5 80.2 113.9 156.9 Q1 Q2 Q3 Q4 Qi Q203 Q4 4 91 92 Eaminp per common share from continuing operations .44 .29 .44 .46 ,l l Earning per common share .51 31 .44 .60 Common dividends paid per share 36 36 375 375 Common dividends dedared per share 36 375 375 375 Common stock pria per share (NYSE) l High 23 23 ' -23% 25% - low 203/8 20 % -20 /8 22 % 7 A significant portion of the operations are of a seasonal nature. He Erst quaner of 1992 indades special charges to reduce. Previoudy reported quanerly information has been rnised to the canying value ofcenain assets. See Note 4. ] reflect the redassification of cenain revenue and expense The founh quaner of 1992 indudes various unusual charges amounts. These redassifications had no effect on prniously totaling 550 million after-tax. The items prirnarily rdate to ' reponed consolidated net income-obsolete inventory, valuation adjustments, contract senlements j See DamTistm Omtmoss on page 35 and Note 2 for and a number of other items. See Eucauc Omtmoss on information regarding discontinued operations. pages 29 and 30. t F h4 a e mweep.

I OfI1CERS PAOFICORP PActriCORP PAC!rlC P(MIR PAOfic Trucou PouCy GRotr Charin C. Adams 49 PaulG lomuini,50 James H. Haespen.43 A M Glcson 62 %r Va kulent kibni hearin 11r1%uktad kdens andCirief

19'4

+ 1987 ChefFswntia!Ofurr brann Opter

190 John A.Bohling.49 Diana E Snowden,45 br li,r Ndent ikr Ndeni Vern E Dunham,59

+ IMc 4 + 1986 Senior liakulent Gerard K Drummond. 55

IV'J Hwy A. Hayal57 UTAH POWER Leamr lia Nderer

"' u' A$C,7 PACIflCORP

N Verl R Topham,58 FINANCIAL SUMCES

, fy,, "[ Pau! G. lorenuni. 50 P 19 Michael C. Henderwn.46 7 kant heazier l'ia kant

1981 p,,9, y,,

John E Mooney,56 ,,y, heatiw Gr kidnii , jyp g

1960 William E hressmi, M I'

Veri R Topham,58 hecurin lice /%ident Tu u,e 1%iens ,,,s, Uuh ker

19'2 Sally A.Nohiger,56 GENERAL COrNSEL Charles E Robinson,59 Stoel Rim Boley

,, " N"""? 0 Owrman.1%denzand yong.g, Onefbrame 09i,rr faafc Tdram Jacqudine5.Bdl 51 INDEMNDENT 'N Controlle' Aron 0RS TilliamJ.Glucow 46 g,g,7 4, Deloine & Touche MfCoy Owvman. kiknt and Gwfheatur Ofar ta;&G hn.inaal 7 Smim,1nr. + 19M + Yearradoficerjoinedcomparry e O . ~'

i !$ (II D () }' I)] R f C 1()R S-C. M. Bishop.)r. 65 C lodd Cmxwcr.53 Gerard K. Drummond,55 Richard C Edplev,57 Pwuirnt hmdent ad Cinf Lmu:::e 1kr Prerdent Afanaging Diminr Prmi,r:vn %lrn als hea.nw 0%rr Pac 5 Cry Finamr ard Re:rd8 Ekyt \\ Petiini thyn & Vantay Cmpan Penknd. Orqu M CiwsofJAw Gm + 19'O lbnwn Color.uio 4 ihl oflatinity Saina l 4 lw] kit lie Git. Uuh t 198' = f p lb C. Friace, M A. M Gawn. 62 John C Hampmn.67 Sardey K.Hathaway.68 Gwimar 1% dens edCW Gutirmar,andChd Partner l P.s: scc; hem::ir (f er Emunw Ofcrr Hathateas. Spright, Kun:, j PmL:nd. U.yn Pa:lCrr flampton Twwces. Inc. Tr.tuturin c liarrrit + J W,6 Pedad Oryn Ponland. Orryn Charnnt % ming t 1988 4 NB) + 19'5 l I' I i I j L!an E Karnt 48 Kenh R. McKennon.59 Don M..hler,64 Lu Wilgenbuh,45 Imrament Adtim Ciwmnan, Cintfheatisr 1%dret a*d Generalh!.tnager Prcade ' lbna: 6 %atri. }nt 05er andD:rravr \\GmerA!abincrg hln9Ihrst Gllege } !%. Usak ihru CornmgCwporatwn Gnnpar) }!ayihurst. Orepri l + 199.s b!atlad A!.aipn k!rik Ciy Utah 6 1966 l 4 1990 $ 1989 t har wh d:m tor l rit.vdso bad 1 ) e j

INVESTOR INFORM ATION s D c !; i u i.!1IU151s Dn *1DFND ElIAYi sl3?DT .6D.\\ lot Kl'l keiL4M itAN PacifiCorpi common stod is listed on the New York Stock PacifGrps dividend reinvestmem plan is a mnvenient way for bchange and the Pacinc Stock behange under the symbol shareholders to increase their investment in the company. pp7 " * # I "' 9"*"" Daily quotes on the common stock can be obtained by checking shares (all or a portion) may be automatically applied toward the N,ew i.ork Stock bchange composite transactions hsted.m purchase of additional shares of wmmon stock. In addnion, cash "P'P'* contributions of up to 525.000 per quaner can be made. All, or The company's preferred stock and first mortgage bonds are any ponion, of the reinvestment shares can be sold through the infrequently traded in the over-the-counter market, with the plan upon termination of participation. A small commission fee esception of one 1992 prefer:cd stock series, listed on the New is charged when app!icable. York Stock bchange. histing shareholden, can open a dMdend reinvestment aamunt with either dnidends from existing shares or with an initial cash I l'?lX l\\1DV U UION contribur.on. For a prospectus, enrollment card or other. fornu-in Financial analysts, stockbrukers, imcrested investors and 6nancial tion, call or write the Shareholder Senices department. media desiring information about PacifiCorp should contact the BONDHOLDIB1hTOR U4 TION following. dividualsin investor relations-in ?' ' ' ~ " ' " " ~ MikeNebon (503)731-2125 address and other matters relatme to ownersmp should be Chm Hunter (5W) 731-260 g;g, \\l!Milul DI1: si1:1R TMND 1\\TORMA TION Corporate Trust Operations Dept. Te#m aiuWaMmt Shareholder Senices may be reached from all long distance call 55 Evdun#e Plax-Baxmoit A locations at (MKO 23M453. Ponland-area callers should use 731-h,ew York, N1102%003 2002. The toll-free telephone number.is answered between &OO ggg a.m. and 400 p m. Pacific time everv business dav. Shareholder Senices will assist you with: kndholders needing further assistance should contace \\ + Stad tranfer and r,ame dunge requirements Paaf,Cory Shan holder Smias ) (5g3 73,.3gg3 ToH-fraNumber. (800)233-5153 + Addachanger ANNE'A! MEETING + Replacemnitofditidendched, The 1993 Annual Meetingof + Duplicate 1099fornsandT-9taxmtifcationprms paci;;(o,p hareyo;3ersw;;;9e g + Notice <flost ordestroydad art:) cases Wednedq. Mar 19,1993 1:30p.m. Mountain Dar!rg r 7ime. h t DividaidReinmtment Plan statement histors and information regarding t!< plan SrmphoyHall l 123 WestSouth Temple + OderquestiorisamarningPaafCorynodownmh:p Salt L&c Cig, Utah Shareholders' written correspondence: f ORy io g .j faa5Cep Sharrholder Seqius A copy of the companyi 199210.K. filed with the Securities and i 700 N.E Multnomah St., Suite 700 bchange Commission, may be obtained by contacting investor relations at the corporate headquarters address. j Porrland, Orrgon 9-'232-4107 iRWiiR AGIN1 Dn1DEND PA13iENT PacifsCorp maintains shareholder records and acts as Transfer Dividends on the compan/s common and preferrcd stock in Agent and Registrar for the companis common and preferred 1993 are expected to be paid on or about: stock issues. EdAnary 15 May15 August 16 Nowmher15 /. 57 --- j 4 d**=* 1 j

- O l' E R AT I O N S I PACiflC POVIR 920 S.W. SixT H AvrNL t POR11 Asn. OR 97204-1236 - (503) 464-5000 l UTAll POWER .201 SocTH M AIN S'TutrT, Scrn 2300 Sur Lw: 01v. UT 84140-0023 (801) 220-2000 PAClflC TttrCOM, INC. 805 BROADWAY P.O. Box 9901 YANCol'VI R. WA 98668-9901 (206) 696-0983 PACIIICORP FINANCIAL SERVICES, INC. 825 N.E. MetTNoMAH STutrT, Sent 775 PORll.AND, OR 97232 2152 (503) 797-7200 i b8 % e

I I 1 1 i,l/ /~ T} d (#,. f., k ' (t. ) j)s n{_> s r [ l .[ it O .., 1 CORPORATE HIADQUARTERS 700 N.E. Marsonui STRIIT, SUni 1600 PourtAND, ORIGON 97232-4}}6 (503) 731-2000 !)hlGN LAkEl'M i ARAA%!YMTH LAkLwN Nr.11.AAD, OR MAJORPHONoskAPHY L bRUCI FDP5Tik {TKER PHO10 C kA k'dil;[\\().\\ 1 A%!1tKLYLAXI).%CAPTS t.RIMTh7 RI ALH ATI(DLA 5 Tall 1%kK. OR E ENHRT klIDR1 PR!NTED 04 kHTGJI) PAPIR O 10'U PAC /DCORP

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