SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K/A
AMENDMENT NO. 1
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 1994
or
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the Transition period from ________________ to _______________
Registrant; State of Incorporation; IRS Employer
Commission File Number Address; and Telephone Number Identification No.
1-5532 PORTLAND GENERAL CORPORATION 93-0909442
(an Oregon Corporation)
121 SW Salmon Street
Portland, Oregon 97204
(503) 464-8820
1-5532-99 PORTLAND GENERAL ELECTRIC COMPANY 93-0256820
(an Oregon Corporation)
121 SW Salmon Street
Portland, Oregon 97204
(503) 464-8000
Securities registered pursuant to Section 12(b) of the Act:
Name of Each Exchange
Title of Each Class on Which Registered
Portland General Corporation
Common Stock, par value $3.75 per share New York Stock Exchange
Pacific Stock Exchange
Portland General Electric Company
None
Securities registered pursuant to Section 12(g) of the Act:
Portland General Corporation
None
Portland General Electric Company,
Cumulative Preferred Stock, par value $100 per share
7.75% Series, Cumulative Preferred Stock, no par value
1
1
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not
contained herein, and will not be contained, to the best of registrant's knowledge, in definitive proxy or
information statements incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. [ ]
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or
15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period
that the registrant was required to file such reports), and (2) has been subject to such filing requirements
for the past 90 days. Yes X No .
The aggregate market value of Portland General Corporation voting stock held by non-affiliates of the
registrant as of February 28, 1995 is $1,031,163,041
The number of shares outstanding of the registrants' common stocks as of February 28, 1995 are:
Portland General Corporation 50,609,229
Portland General Electric Company 42,758,877
(owned by Portland General Corporation) Document Incorporated by Reference
The information required to be included in Part III hereof is incorporated by reference from Portland
General Corporation's definitive proxy statement to be filed on or about March 27, 1995.
2
2
Management's Statement of Responsibility
Portland General Corporation's management is responsible
for the preparation and
presentation of the consolidated financial statements in this
report. Management is also
responsible for the integrity and objectivity of the
statements. Generally accepted
accounting principles have been used to prepare the
statements, and in certain cases
informed estimates have been used that are based on the best
judgment of management.
Management has established, and maintains, a system of internal
accounting controls. The
controls provide reasonable assurance that assets are
safeguarded, transactions receive
appropriate authorization, and financial records are reliable.
Accounting controls are
supported by written policies and procedures, an operations
planning and budget process
designed to achieve corporate objectives, and internal audits of
operating activities.
Portland General's Board of Directors includes an Audit
Committee composed entirely of
outside directors. It reviews with management, internal
auditors and independent
auditors, the adequacy of internal controls, financial reporting,
and other audit matters.Arthur Andersen LLP is Portland
General's independent public
accountant. As a part of its
annual audit, selected internal accounting controls are reviewed
in order to determine
the nature, timing and extent of audit tests to be performed.
All of the corporation's
financial records and related data are made available to Arthur
Andersen LLP. Management
has also endeavored to ensure that all representations to Arthur
Andersen LLP were valid
and appropriate.
Joseph M. Hirko
Vice President Finance,
Chief Financial Officer,
Chief Accounting Officer
and Treasurer
Report of Independent Public Accountants
To the Board of Directors and Shareholders of
Portland General Corporation:
We have audited the accompanying consolidated balance
sheets and statements of
capitalization of Portland General Corporation and subsidiaries
as of December 31, 1994
and 1993, and the related consolidated statements of income,
retained earnings and cash
flows for each of the three years in the period ended December
31, 1994. These financial
statements are the responsibility of the Company's management.
Our responsibility is to
express an opinion on these financial statements based on our
audits.
We conducted our audits in accordance with generally accepted
auditing standards. Those standards require that we plan and perform the
audit to obtain reasonable assurance aboutwhether the financial statements
are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts
and disclosures in the
financial statements. An audit also includes assessing the
accounting principles used and
significant estimates made by management, as well as
evaluating the overall financial
statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, the financial statements referred to above
present fairly, in all material
respects, the financial position of Portland General
Corporation and subsidiaries as of
December 31, 1994 and 1993, and the results of their operations
and their cash flows for
each of the three years in the period ended December 31, 1994 in
conformity with generally
accepted accounting principles.
Arthur Andersen LLP
Portland, Oregon,
February 7, 1995 (except with respect to the matter discussed in
Note 15, as to which the date is March 29, 1995)
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3
Item 8. Financial Statements and Supplementary Data
Portland General Corporation and Subsidiaries
Consolidated Statements of Income
For the Years Ended December 31 1994 1993 1992
(Thousands of Dollars except per share amounts)
Operating Revenues $959,409 $946,829 $883,266
Operating Expenses
Purchased power and fuel 347,125 311,713 222,127
Production and distribution 61,891 73,576 93,677
Maintenance and repairs 47,391 55,320 70,496
Administrative and other 100,596 100,321 112,010
Depreciation, decommissioning and amortization 124,081 122,218 98,706
Taxes other than income taxes 52,151 55,730 55,515
733,235 718,878 652,531
Operating Income Before Income Taxes 226,174 227,951 230,735
Income Taxes 71,878 69,770 67,235
Net Operating Income 154,296 158,181 163,500
Other Income (Deductions)
Interest expense (71,653) (70,802) (73,895)
Allowance for funds used during construction 4,314 785 2,769
Preferred dividend requirement - PGE (10,800) (12,046) (12,636)
Other - net of income taxes 16,901 13,000 9,885
Income From Continuing Operations 93,058 89,118 89,623
Discontinued Operations
Gain on disposal of real estate operations -
net of income taxes of $4,226 6,472 - -
Net Income $ 99,530 $89,118 $ 89,623
Common Stock
Average shares outstanding 49,896,685 47,392,185 46,887,184
Earnings per average share
Continuing operations $1.86 $1.88 $1.93 *
Discontinued operations 0.13 - -
Earnings per average share $1.99 $1.88 $1.93 *
Dividends declared per share $1.20 $1.20 $1.20
* Includes $.02 for tax benefits from ESOP dividends.
Portland General Corporation and Subsidiaries
Consolidated Statements of Retained Earnings
For the Years Ended December 31 1994 1993 1992
(Thousands of Dollars)
Balance at Beginning of Year $ 81,159 $ 50,481 $ 19,635
Net Income 99,530 89,118 89,623
ESOP Tax Benefit & Amortization of
Preferred Stock Premium (1,705) (1,524) (2,505)
178,984 138,075 106,753
Dividends Declared on Common Stock 60,308 56,916 56,272
Balance at End of Year $118,676 $ 81,159 $ 50,481
The accompanying notes are an integral part of these consolidated statements.
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4
Portland General Corporation and Subsidiaries
Consolidated Balance Sheets
At December 31 1994 1993
(Thousands of Dollars)
Assets
Electric Utility Plant - Original Cost
Utility plant (includes Construction Work
in Progress of $148,267 and $46,679) $2,563,476 $2,370,460
Accumulated depreciation (958,465) (894,284)
1,605,011 1,476,176
Capital leases - less amortization of $25,796 and $23,626 11,523 13,693
1,616,534 1,489,869
Other Property and Investments
Leveraged leases 153,332 155,618
Net assets of discontinued real estate operations 11,562 31,378
Trojan decommissioning trust, at market value 58,485 48,861
Corporate Owned Life Insurance, less loan of $21,731 in 1994 65,687 72,612
Other investments 28,626 29,552
317,692 338,021
Current Assets
Cash and cash equivalents 17,542 3,202
Accounts and notes receivable 91,418 91,641
Unbilled and accrued revenues 158,259 133,476
Inventories, at average cost 43,269 46,534
Prepayments and other 38,347 22,128
348,835 296,981
Deferred Charges
Unamortized regulatory assets
Trojan abandonment - plant 342,276 366,712
Trojan abandonment - decommissioning 338,718 355,718
Trojan - other 65,922 66,387
Income taxes recoverable 217,967 228,233
Debt reacquisition costs 32,245 34,941
Energy efficiency programs 58,894 39,480
Other 30,182 33,857
WNP-3 settlement exchange agreement 173,308 178,003
Miscellaneous 16,698 21,126
1,276,210 1,324,457
$3,559,271 $3,449,328
Capitalization and Liabilities
Capitalization
Common stock $ 189,358 $ 178,630
Other paid-in capital 563,915 519,058
Unearned compensation (13,636) (19,151)
Retained earnings 118,676 81,159
858,313 759,696
Cumulative preferred stock of subsidiary
Subject to mandatory redemption 50,000 70,000
Not subject to mandatory redemption 69,704 69,704
Long-term debt 835,814 842,994
1,813,831 1,742,394
Current Liabilities
Long-term debt and preferred stock due within one year 81,506 51,614
Short-term borrowings 148,598 159,414
Accounts payable and other accruals 104,254 109,479
Accrued interest 19,915 18,581
Dividends payable 18,109 17,657
Accrued taxes 27,778 25,601
400,160 382,346
Other
Deferred income taxes 687,670 660,248
Deferred investment tax credits 56,760 60,706
Deferred gain on sale of assets 118,939 120,410
Trojan decommissioning and transition costs 396,873 407,610
Miscellaneous 85,038 75,614
1,345,280 1,324,588
$3,559,271 $3,449,328
The accompanying notes are an integral part of these consolidated balance sheets.
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Portland General Corporation and Subsidiaries
Consolidated Statements of Capitalization
At December 31 1994 1993
(Thousands of Dollars)
Common Stock Equity
Common stock, $3.75 par value per
share 100,000,000 shares authorized,
50,495,492 and 47,634,653 shares outstanding $189,358 $ 178,630
Other paid-in capital - net 563,915 519,058
Unearned compensation (13,636) (19,151)
Retained earnings 118,676 81,159
858,313 47.3% 759,696 43.6%
Cumulative Preferred Stock
Subject to mandatory redemption
No par value, 30,000,000 shares authorized
7.75% Series, 300,000 shares outstanding 30,000 30,000
$100 par value per share, 2,500,000 shares authorized
8.10% Series, 300,000 and 500,000 shares outstanding 30,000 50,000
Current sinking fund (10,000) (10,000)
50,000 2.8 70,000 4.0
Not subject to mandatory redemption, $100 par value
7.95% Series, 298,045 shares outstanding 29,804 29,804
7.88% Series, 199,575 shares outstanding 19,958 19,958
8.20% Series, 199,420 shares outstanding 19,942 19,942
69,704 3.8 69,704 4.0
Long Term Debt First mortgage bonds
Maturing 1994 through 1999
4-3/4% Series due April 1, 1994 - 8,119
4.70% Series due March 1, 1995 3,045 3,220
5-7/8% Series due June 1, 1996 5,216 5,366
6.60% Series due October 1, 1997 15,363 15,363
Medium-term notes - 5.65%-9.27% 251,000 242,000
Maturing 2001 through 2005 - 6.47%-9.07% 210,845 166,283
Maturing 2021 through 2023 - 7-3/4%-9.46% 195,000 195,000
Pollution control bonds
Port of Morrow, Oregon, variable rate
(Average 2.7% for 1994), due 2013 23,600 23,600
City of Forsyth, Montana, variable rate
(Average 2.9% for 1994), due 2013 through 2016 118,800 118,800
Amount held by trustee (8,355) (8,537)
Port of St. Helens, Oregon, due 2010 and 2014
(Average variable 2.7%-2.9% for 1994) 51,600 51,600
Medium-term notes maturing 1994 through
1996 - 7.19%-8.09% 30,000 50,000
Capital lease obligations 11,523 13,693
Other (317) 101
907,320 884,608
Long-term debt due within one year (71,506) (41,614)
835,814 46.1 842,994 48.4
Total capitalization $1,813,831 100.0% $1,742,394 100.0%
The accompanying notes are an integral part of these consolidated statements.
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Portland General Corporation and Subsidiaries
Consolidated Statements of Cash Flow
For the Years Ended December 31 1994 1993 1992
(Thousands of Dollars)
Cash Provided (Used) By -
Operations:
Net income $ 99,530 $ 89,118 $ 89,623
Adjustments to reconcile net income
to net cash provided by operations:
Depreciation and amortization 94,217 89,749 113,405
Amortization of WNP-3 exchange agreement 4,695 4,489 5,658
Amortization of deferred charges - Trojan plant 24,417 24,015 -
Amortization of deferred charges - Trojan decomm. 11,220 11,220 -
Amortization of deferred charges - Trojan other 2,321 2,314 1,609
Amortization of deferred charges - other 2,712 6,713 7,080
Deferred income taxes - net 37,396 61,086 26,480
Other noncash income (677) (1,926) (2,659)
Changes in working capital:
(Increase) in receivables (24,440) (72,837) (12,736)
(Increase) Decrease in inventories 3,264 15,017 (4,181)
(Decrease) in payables (1,300) (29,837) (6,231)
Other working capital items - net (18,509) 12,473 7,020
Gain from discontinued operations (6,472) - -
Deferred items 10,258 (7,174) (12,835)
Miscellaneous - net 12,369 17,728 21,260
251,001 222,148 233,493
Investing Activities:
Utility construction - new resources (91,342) (28,666) -
Utility construction - general (131,675) (101,692) (148,348)
Energy efficiency programs (23,745) (18,149) (10,705)
Rentals received from leveraged leases 20,886 15,530 9,007
Trojan decommissioning trust (11,220) (11,220) (11,220)
Other investments (14,058) (10,763) (7,245)
(251,154) (154,960) (168,511)
Financing Activities:
Short-term debt - net (10,816) 18,736 48,273
Borrowings from Corporate Owned Life Insurance 21,731 - -
Long-term debt issued 75,000 252,000 123,000
Long-term debt retired (49,882) (279,986) (143,902)
Repayment of nonrecourse borrowings for
leveraged leases (18,046) (13,095) (9,035)
Preferred stock issued - - 30,000
Preferred stock retired (20,000) (3,600) (31,225)
Common stock issued 50,074 9,520 9,753
Dividends paid (59,856) (56,850) (56,230)
(11,795) (73,275) (29,366)
Net Cash Provided By (Used In)
Continuing Operations (11,948) (6,087) 35,616
Discontinued Operations 26,288 2,600 (30,948)
Increase (Decrease) in Cash and
Cash Equivalents 14,340 (3,487) 4,668
Cash and Cash Equivalents at the Beginning
of Year 3,202 6,689 2,021
Cash and Cash Equivalents at the End
of Year $ 17,542 $ 3,202 $ 6,689
Supplemental disclosures of cash flow information
Cash paid during the year:
Interest $ 64,895 $ 74,261 $ 72,535
Income taxes 31,539 12,259 22,241
The accompanying notes are an integral part of these consolidated statements.
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7
Portland General Corporation and Subsidiaries Notes to Financial
StatementsNote 1
Summary of Significant Accounting
Policies
Consolidation Principles
The consolidated financial statements include
the accounts of Portland General Corporation
(Portland General) and all of its majority-owned
subsidiaries. Significant intercompany balances
and transactions have been eliminated.
Basis of Accounting
Portland General and its subsidiaries' financial statements
conform to generally accepted accounting principles.
In addition, Portland General Electric
Company's (PGE or the Company) accounting policies are
in accordance with the requirements and the
ratemaking practices of regulatory
authorities having jurisdiction.
Revenues
PGE accrues estimated unbilled revenues for
services provided from the meter read date to month-end.
Purchased Power
PGE credits purchased power costs for the net
amount of benefits received through a power
purchase and sale contract with the
Bonneville Power Administration (BPA).
Reductions in purchased power costs that
result from this exchange are passed directly
to PGE's residential and small farm customers
in the form of lower prices.
Depreciation
PGE's depreciation is computed on the
straight-line method based on the estimated
average service lives of the various classes
of plant in service. Excluding the Trojan
Nuclear Plant (Trojan), depreciation expense
as a percent of the related average
depreciable plant in service was
approximately 3.8% in 1994, 3.9% in 1993 and
3.8% in 1992.
The cost of renewal and replacement of
property units is charged to plant, and
repairs and maintenance are charged to
expense as incurred. The cost of utility
property units retired, other than land, is
charged to accumulated depreciation.
Allowance for Funds Used During
Construction (AFDC)
AFDC represents the pretax cost of borrowed
funds used for construction purposes and a
reasonable rate for equity funds. AFDC is
capitalized as part of the cost of plant and
is credited to income but does not represent
current cash earnings. The average rates
used by PGE were 4.65%, 3.52%, and 4.72% for
the years 1994, 1993 and 1992, respectively.
Income Taxes
Portland General files a consolidated federal
income tax return. Portland General's policy
is to collect for tax liabilities from
subsidiaries that generate taxable income and
to reimburse subsidiaries for tax benefits
utilized in its tax return.
Income tax provisions are adjusted, when
appropriate, for potential tax adjustments.
Deferred income taxes are provided for
temporary differences between financial and
income tax reporting. See Notes 4 and 4A,
Income Taxes, for more details.
Amounts recorded for Investment Tax Credits
(ITC) have been deferred and are being
amortized to income over the approximate
lives of the related properties, not to
exceed 25 years.
Nuclear Fuel
Amortization of nuclear fuel (reflected only
in 1992 expenses) was based on the quantity
of heat produced for the generation of
electric energy.
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Investment in Leases
Columbia Willamette Leasing (CWL), a
subsidiary of Portland General Holdings, Inc.
(Holdings), acquires and leases capital
equipment. Leases that qualify as direct
financing leases and are substantially
financed with nonrecourse debt at lease
inception are accounted for as leveraged
leases. Recorded investment in leases is the
sum of the net contracts receivable and the
estimated residual value, less unearned
income and deferred ITC. Unearned income and
deferred ITC are amortized to income over the
life of the leases to provide a level rate of
return on net equity invested.
The components of CWL's net investment in
leases as of December 31, 1994 and 1993, are
as follows (thousands of dollars):
1994 1993
Lease contracts receivable $ 550,620 $ 600,710
Nonrecourse debt service (434,542) (481,988)
Net contracts receivable 116,078 118,722
Estimated residual value 86,202 88,047
Less - Unearned income (39,391) (41,395)
Investment in leveraged leases 162,889 165,374
Less - Deferred ITC (9,557) (9,756)
Investment in leases, net $ 153,332 $ 155,618
Cash and Cash Equivalents
Highly liquid investments with original
maturities of three months or less are
classified as cash equivalents.
WNP-3 Settlement Exchange Agreement
The Washington Public Power Supply System
Unit 3 (WNP-3) Settlement Exchange Agreement,
which has been excluded from PGE's rate base,
is carried at present value and amortized on
a constant return basis.
Regulatory Assets
PGE defers, or accrues revenue for, certain
costs which would otherwise be charged to
expense, if it is probable that future
rates will permit recovery of such
costs. These costs are reflected as deferred
charges or accrued revenues in the financial
statements and are amortized over the period
in which revenues are collected. Trojan
plant and decommissioning costs are currently
covered in customer rates. Of the remaining
regulatory assets of approximately $500 million,
78% have been treated by the Oregon Public Utility
Commission (PUC) as allowable cost of service
items in PGE's most recent rate processes. The
remaining amounts, primarily comprised of power
cost deferrals, are subject to regulatory
confirmation in future ratemaking
proceedings.
Hedge Accounting
PGE may use derivative products to hedge
against exposures to interest rate and
commodity price risks. The objective is to
mitigate risks due to market fluctuations
associated with external financings or the
purchase of natural gas, electricity and
related products. PGE's hedging programs are
intended to reduce such risks.
Gains and losses from derivatives that reduce
commodity price risks are recognized as fuel
or purchased power expense. Gains and losses
from derivatives that reduce interest rate
risk of future debt issuances are deferred
and amortized over the life of the related
debt.
Reclassifications
Certain amounts in prior years have been
reclassified for comparative purposes.
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Note 2
Real Estate - Discontinued Operations
Portland General has substantially completed
divestiture of its real estate operations in
Columbia Willamette Development Company
(CWDC). In June 1994, CWDC sold the largest
remaining property in its real estate
holdings for $16 million. As a result, the
real estate reserve was liquidated.
Note 3
Employee Benefits
Pension Plan
Portland General has a non-contributory
pension plan (the Plan) covering
substantially all of its employees. Benefits
under the Plan are based on years of service,
final average pay and covered compensation.
Portland General's policy is to contribute
annually to the Plan at least the minimum
required under the Employee Retirement Income
Security Act of 1974 but not more than the
maximum amount deductible for income tax
purposes. The Plan's assets are held in a
trust and consist primarily of investments in
common stocks, corporate bonds
and US government issues.
Portland General determines net periodic
pension expense according to the principles
of SFAS No. 87, Employers' Accounting for
Pensions. Differences between the actual and
expected return on plan assets is included in
net amortization and deferral and is considered
in the determination of future pension expense.
The following table sets forth the Plan's
funded status and amounts recognized in
Portland General's financial statements
(thousands of dollars):
1994 1993
Actuarial present value of benefit
obligations:
Accumulated benefit obligation, including
vested benefits of $142,082 and $151,334 $154,320 $166,301
Effect of projected future compensation levels 35,134 32,608
Projected benefit obligation (PBO) 189,454 198,909
Plan assets at fair value 245,225 262,412
Plan assets in excess of PBO 55,771 63,503
Unrecognized net experience gain (54,391) (60,445)
Unrecognized prior service costs 12,935 14,147
Unrecognized net transition asset being (19,575) (21,533)
recognized over 18 years
Pension - prepaid cost (liability) $ (5,260) $ (4,328)
1994 1993 1992
Assumptions:
Discount rate used to calculate PBO 8.50% 7.25% 8.00%
Rate of increase in future compensation levels 6.50 5.25 6.00
Long-term rate of return on assets 8.50 8.50 8.50
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Net pension expense for 1994, 1993 and 1992 included the
following components (thousands of dollars):
1994 1993 1992
Service cost $ 6,199 $ 6,151 $ 6,082
Interest cost on PBO 14,693 14,241 13,792
Actual return on plan assets 6,011 (48,231) (18,272)
Net amortization and deferral (25,971) 29,839 1,496
Net periodic pension expense $ 932 $ 2,000 $ 3,098
Other Post-Retirement Benefit Plans
Portland General accrues for health, medical
and life insurance costs during the
employees' service years, per SFAS No. 106.
PGE receives recovery for the annual
provision in customer rates. Employees are
covered under a Defined Dollar Medical
Benefit Plan which limits Portland General's
obligation by establishing a maximum
contribution per employee. The accumulated
benefit obligation for postretirement health
and life insurance benefits at December 31,
1994 was $27 million, for which there were
$25 million of assets held in trust. The
benefit obligation for postretirement health
and life insurance benefits at December 31,
1993 was $31 million.
Portland General also provides senior
officers with additional benefits under an
unfunded Supplemental Executive Retirement
Plan (SERP). Projected benefit obligations
for the SERP are $15 million and $16 million
at December 31, 1994 and 1993, respectively.
Deferred Compensation
Portland General provides certain employees
with benefits under an unfunded Management
Deferred Compensation Plan (MDCP).
Obligations for the MDCP are $21 million and
$18 million at December 31, 1994 and 1993,
respectively.
Employee Stock Ownership Plan
Portland General has an Employee Stock
Ownership Plan (ESOP) which is a part of its
401(k) retirement savings plan. Employee
contributions up to 6% of base pay are
matched by employer contributions in the form
of ESOP common stock. Shares of common stock
to be used to match contributions of PGE
employees were purchased from a $36 million
loan from PGE to the ESOP trust in late 1990.
This loan is presented in the common equity
section as unearned compensation. Cash
contributions from PGE and dividends on
shares held in the trust are used to pay the
debt service on PGE's loan. As the loan is
retired, an equivalent amount of stock is
allocated to employee accounts. In 1994,
total contributions to the ESOP of $5 million
combined with dividends on unallocated shares
of $1 million were used to pay debt service
and interest on PGE's loan. Shares of common
stock used to match contributions by
employees of Portland General and its
subsidiaries are purchased on the open
market.
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Note 4
Income Taxes
The following table shows the detail of taxes on income and the items used in
computing the differences between the statutory federal income tax rate and
Portland General's effective tax rate. Note: The table does not include
income taxes related to 1994 gains on discontinued real estate operations
(thousands of dollars):
1994 1993 1992
Income Tax Expense:
Currently payable $ 48,905 $ 2,989 $ 44,057
Deferred income taxes 26,741 72,889 27,648
Investment tax credit adjustments (4,145) (4,356) (6,981)
$ 71,501 $ 71,522 $ 64,724
Provision Allocated to:
Operations $ 71,878 $ 69,770 $ 67,235
Other income and deductions (377) 1,752 (2,511)
$ 71,501 $ 71,522 $ 64,724
Effective Tax Rate Computation:
Computed tax based on
statutory federal income
tax rates applied to
income before income taxes $ 57,596 $ 56,224 $ 52,478
Increases (Decreases) resulting from:
Accelerated depreciation 8,283 10,748 9,462
State and local taxes - net 8,953 3,288 10,117
Investment tax credits (4,145) (4,356) (6,981)
Excess deferred taxes (767) (3,419) (1,816)
USDOE nuclear fuel assessment - 5,075 -
Preferred dividend requirement 3,526 3,935 4,296
Other (1,945) 27 (2,832)
$ 71,501 $ 71,522 $ 64,724
Effective tax rate 43.5% 44.5% 41.9%
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As of December 31, 1994 and 1993, the significant components of the Company's
deferred income tax assets and liabilities were as follows (thousands of dollars):
1994 1993
Deferred Tax Assets
Plant-in-service $ 72,012 $ 73,625
Deferred gain on sale of assets 47,134 47,718
Other 51,924 74,334
171,070 195,677
Deferred Tax Liabilities
Plant-in-service (444,546) (448,559)
Energy Efficiency programs (23,024) (15,395)
Trojan abandonment (80,944) (75,948)
WNP-3 exchange contract (68,698) (70,542)
Replacement power costs (38,136) (29,574)
Leasing (146,468) (147,101)
Other (40,829) (41,451)
(842,645) (828,570)
Less current deferred taxes 4,040 842
Less valuation allowance (20,135) (28,197)
Total $(687,670) $(660,248)
Portland General has recorded deferred tax assets and liabilities for all
temporary differences between the financial statement bases and tax bases of
assets and liabilities.
Portland General has benefits of capital loss carryforwards that presently cannot
be offset with capital gains and accordingly has recorded a valuation allowance
totalling $20.1 million at December 31, 1994 to fully reserve against these
assets.
The IRS completed its examination of Portland General's tax returns for the years
1985 to 1987 and has issued a statutory notice of tax deficiency which Portland
General is contesting. As part of this audit, the IRS has proposed to disallow
PGE's 1985 WNP-3 abandonment loss deduction on the premise that it is a taxable
exchange. PGE disagrees with this position and will take appropriate action to
defend its deduction. Management believes that it has appropriately provided for
probable tax adjustments and is of the opinion that the ultimate disposition of
this matter will not have a material adverse impact on the financial condition of
Portland General.
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Note 5
Trojan Nuclear Plant
Plant Shutdown and Transition Costs - PGE is
the 67.5% owner of Trojan. In early 1993 PGE
ceased commercial operation of Trojan. Since
plant closure PGE has committed itself to a
safe and economical transition toward a
decommissioned plant.
Transition costs associated with operating
and maintaining the spent fuel pool and
securing the plant until dismantlement begins
are estimated at $51 million for the period
1995 through 1998 inclusive. These costs are
recorded as part of the Trojan
decommissioning reserve and transition costs
on the Company's balance sheet. Unlike
decommissioning costs which will utilize
funds from PGE's Nuclear Decommissioning
Trust (NDT), transition costs are paid from
current operating funds.
Decommissioning - In January 1995 PGE
submitted a decommissioning plan to the
Nuclear Regulatory Commission (NRC) and
Energy Facility Siting Council of Oregon
(EFSC). The plan estimates PGE's cost to
decommission Trojan at $351 million
reflected in nominal dollars (actual
dollars expected to be spent in each year).
The decommissioning estimate represents a
site specific decommissioning cost estimate
performed for Trojan by an experienced
decommissioning engineering firm. This cost
estimate assumes that the majority of
decommissioning activities will occur between
1997 and 2001, beginning with the removal of
certain large plant components while
construction of a temporary dry spent fuel
storage facility is taking place. The plan
anticipates final site restoration activities
will begin in 2018 after PGE completes
shipment of spent fuel to a United States
Department of Energy (USDOE) facility (see
the Nuclear Fuel Disposal discussion below).
As noted above, the decommissioning plan
reflects PGE's current efforts to remove some
of Trojan's large components which is
expected to result in overall decommissioning
cost savings. Since the Trojan large
component removal project (LCRP) will be
completed prior to NRC and EFSC approval of
PGE's formal decommissioning plan, specific
approval of the LCRP was obtained from EFSC
in November 1994.
Decommissioning activities reflected in the
cost estimate include the cost of
decommissioning planning, removal and
disposal of radioactively contaminated
equipment and facilities as required by the
NRC; building demolition; nonradiological site
remediation; and extended fuel management costs
including licensing and surveillance through the
year 2018.
The Trojan decommissioning plan filed with
the NRC was the culmination of a two-year
process undertaken by PGE to evaluate the
most economical way to safely decommission
Trojan in a regulated environment. Both the
1994 update and the 1993 site specific cost
estimates are reflected in the financial
statements in nominal dollars (actual dollars
expected to be spent in each year). The $17
million difference between the 1993 $334
million estimate and the 1994 $351 million
estimate, stated in nominal dollars, is due
to refinement of the timing and scope of
certain dismantlement activities. Stated in
1994 dollars the current estimate of $234
million is not significantly changed from the
previous estimate of $230 million.
Following is a reconciliation of the
decommissioning cost estimate from December
31, 1992 to December 31, 1994 (thousands of dollars):
Decommissioning estimate -
12/31/92 $281,779
Adjustments:
Site specific cost estimate -
12/31/93 52,431
Rate case testimony filed with
PUC - 9/30/94 16,556
NRC decommissioning plan filed -
12/31/94 528
351,294
Decommissioning expenditures
through 12/31/94 (4,986)
Decommissioning liability -
12/31/94 $346,308
Decommissioning liability $346,308
Transition costs 50,565
Trojan decommissioning liability
and transition costs $396,873
PGE expects any future changes in estimated
decommissioning costs to be incorporated in
future revenues to be collected from
customers. PGE collects revenues from customers
for decommissioning costs and deposits them into an
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external trust fund.
Earnings on the trust fund will be used to adjust
the amount of decommissioning costs to
be collected from customers.
Trojan decommissioning trust assets are
invested primarily in investment grade tax-
exempt bonds which are available for sale.
Year-end balances are valued at market which
approximates cost. For the year ended December
31, 1994 and 1993 the trust reflected the following
activity (thousands of dollars):
1994 1993
Beginning Balance $48,861 $32,945
Activity
Contributions 11,220 11,220
Gain (loss) (1,596) 4,696
Disbursements - -
Ending Balance $58,485 $48,861
Investment Recovery - PGE filed a general
rate case on November 8, 1993 which addresses
recovery of Trojan plant costs, including
decommissioning. In late February 1993 the
PUC granted PGE accounting authorization to
continue using previously approved
depreciation and decommissioning rates and
lives for its Trojan investment.
PGE made the decision to permanently cease
commercial operation of Trojan as part of its
least cost planning process. Management
determined that continued operation of Trojan
was not cost effective. Least cost analysis
assumed that recovery of the Trojan plant
investment, including future decommissioning
costs, would be granted by the PUC.
Regarding the authority of the PUC to grant
recovery, the Oregon Department of Justice
(Attorney General) issued an opinion that the
PUC may allow rate recovery of total plant
costs, including operating expenses, taxes,
decommissioning costs, return of capital
invested in the plant and return on the
undepreciated investment. While the Attorney
General's opinion does not guarantee recovery
of costs associated with the shutdown, it
does clarify that under current law the PUC
has authority to allow recovery of such costs
in rates.
PGE asked the PUC to resolve certain legal
and policy questions regarding the statutory
framework for future ratemaking proceedings
related to the recovery of the Trojan
investment and decommissioning costs. On
August 9, 1993, the PUC issued a declaratory
ruling agreeing with the Attorney General's
opinion discussed above. The ruling also
stated that the PUC will favorably consider
allowing PGE to recover in rates some or all
of its return on and return of its
undepreciated investment in Trojan, including
decommissioning costs, if PGE meets certain
conditions. PGE believes that its general
rate filing provides evidence that satisfies
the conditions established by the PUC.
Management believes that the PUC will grant
future revenues to cover all, or
substantially all, of Trojan plant costs with
an appropriate return. However, recovery of
the Trojan plant investment and
decommissioning costs requires PUC approval
in a public regulatory process. Although the
PUC has allowed PGE to continue, on an
interim basis, collection of these costs in
the same manner as prescribed in its last
general rate proceeding, the PUC has not
previously addressed recovery of costs
related to a prematurely retired plant when
the decision to close the plant was based
upon a least cost planning process. While
the PUC Staff has recommended recovery of
85.9% of the Trojan investment and full
recovery of decommissioning costs, the
ultimate decision will be made by the PUC.
If the PUC staff's recommendation on Trojan
were the ultimate outcome of the regulatory process,
PGE estimates that it could record a loss of
up to approximately $39 million. Due to uncertainties
inherent in a public process, management cannot predict, with
certainty, whether the PUC will allow
recovery of all, or substantially all, of the
$342 million Trojan plant investment and $339
million of decommissioning costs.
Management believes the ultimate
outcome of this public regulatory process
will not have a material adverse effect on
the financial condition, liquidity or capital
resources of Portland General. However, it
may have a material impact on the results of
operations for a future reporting period.
Portland General's independent accountants
are satisfied that management's assessment
regarding the ultimate outcome of the
regulatory process is reasonable. Due to the
inherent uncertainties in the regulatory
process discussed above, the magnitude of the
amounts involved and the possible impact on
the results of operations for a future
reporting period, the independent accountants
have added a paragraph to their audit report
to give emphasis to this matter.
Nuclear Fuel Disposal and Clean up of Federal
Plants - PGE contracted with the USDOE for
permanent disposal of its spent nuclear fuel
in USDOE facilities at a cost of .1 cent per net
kilowatt-hour sold at Trojan which PGE pre-
paid during the period of Trojan's
operations. Significant
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delays are expected
in the USDOE acceptance schedule of spent
nuclear fuel from domestic utilities. The
federal repository which was originally
scheduled to begin operations in 1998 is now
estimated to commence no earlier than 2010.
Based on this projection, PGE anticipates the
possibility of difficulties in disposing of
its high-level radioactive waste by 2018.
However, on-site storage capacity is able to
accommodate fuel until the federal facilities
are available.
The Energy Policy Act of 1992 provided for
the creation of a Decontamination and
Decommissioning Fund (DDF) to provide for the
clean up of the USDOE gas diffusion plants.
The DDF is to be funded by domestic nuclear
utilities and the Federal Government. The
legislation provided that each utility pays
based on the ratio of the amount of
enrichment services the utility purchased to
the total amount of enrichment services
purchased by all domestic utilities prior to
the enactment of the legislation. Based on
Trojan's 1.1% usage of total industry
enrichment services, PGE's portion of the
funding requirement is approximately $17.3
million. Amounts are funded over 15 years
beginning with the USDOE's fiscal year 1993.
Since enactment PGE has made the first three
of the 15 annual payments with the first
annual payment made in September 1993.
Nuclear Insurance - The Price-Anderson
Amendment of 1988 limits public liability
claims that could arise from a nuclear
incident to a maximum of $9.0 billion per
incident. PGE has purchased the maximum
primary insurance coverage currently
available of $200 million. The remaining
$8.8 billion is covered by secondary
financial protection required by the NRC.
This secondary coverage provides for loss
sharing among all owners of nuclear reactor licenses.
In the event of an incident at any nuclear
plant in which the amount of the loss exceeds
$200 million, PGE could be assessed
retrospective premiums of up to $53.5 million
per incident, limited to a maximum of $6.75
million per incident in any one year under
the secondary financial protection coverage.
Based upon Trojan's permanently defueled
condition and following the NRC and other
regulators' approval, PGE and co-owners carry
property insurance coverage on the Trojan
plant in the amount of $155 million and self-
insure for on-site decontamination.
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Note 6
Common and Preferred Stock
Cumulative Preferred
Common Stock of Subsidiary Other
Number $3.75 Par Number $100 Par $25 Par No-Par Paid-in Unearned
of Shares Value of Shares Value Value Value Capital Compensation*
(Thousands of Dollars
except share amount)
December 31, 1991 46,525,163 $174,469 2,269,040 $ 126,904 $ 25,000 - $502,559 $(30,070)
Sales of stock 574,538 2,155 300,000 - - $30,000 7,293 -
Redemption of stock - - (1,036,000) (3,600) (25,000) - 871 -
Repayment of ESOP loan
and other - - - - - - (921) 6,592
December 31, 1992 47,099,701 176,624 1,533,040 123,304 - 30,000 509,802 (23,478)
Sales of stock 534,952 2,006 - - - - 8,802 -
Redemption of stock - - (36,000) (3,600) - - 2,130 -
Repayment of ESOP loan
and other - - - - - - (1,676) 4,327
December 31, 1993 47,634,653 178,630 1,497,040 119,704 - 30,000 519,058 (19,151)
Sales of stock 2,864,839 10,743 - - - - 40,390 -
Redemption of stock (4,000) (15) (200,000) (20,000) - 2,055 -
Repayment of ESOP loan
and other - - - - - - 2,412 5,515
December 31, 1994 50,495,492 $189,358 1,297,040 $ 99,704 $ - $30,000 $563,915 $(13,636)
* See the discussion of stock compensation plans below and Note 3, Employee Benefits for a discussion of the ESOP.
Common Stock
As of December 31, 1994, Portland General had
reserved 2,872,476 authorized but unissued
common shares for issuance under its dividend
reinvestment plan. In addition, new shares
of common stock are issued under an employee
stock purchase plan.
Cumulative Preferred Stock of Subsidiary
No dividends may be paid on common stock or
any class of stock over which the preferred
stock has priority unless all amounts
required to be paid for dividends and sinking
fund payments have been paid or set aside,
respectively.
The 7.75% Series preferred stock has an
annual sinking fund requirement which
requires the
redemption of 15,000 shares at $100 per share
beginning in 2002. At its option, PGE may
redeem, through the sinking fund, an
additional 15,000 shares each year. All
remaining shares shall be mandatorily
redeemed by sinking fund in 2007. This Series
is only redeemable by operation of the
sinking fund.
The 8.10% Series preferred stock has an
annual sinking fund requirement which
requires the redemption of 100,000 shares at
$100 per share which began in 1994. At its
option, PGE may redeem, through the sinking
fund, an additional 100,000 shares each year.
This Series is redeemable at the option of
PGE at $102 per share to April 14, 1995 and
at reduced amounts thereafter.
Common Dividend Restriction of Subsidiary
PGE is restricted from paying dividends or
making other distributions to Portland
General, without prior PUC approval, to the
extent such payment or distribution would
reduce PGE's common stock equity capital
below 36% of its total capitalization. At
December 31, 1994, PGE's common stock equity
capital was 47% of its total capitalization.
Stock Compensation Plans
Portland General has a plan under which 2.3
million shares of Portland General common
stock are available for stock-based
incentives. Upon termination, expiration or
lapse of certain types of awards, any shares
remaining subject to the award are again
available for grant under the plan. As of
December 31, 1994, stock options for 835,300
shares of common stock were outstanding.
Options for 15,000 shares are currently
exercisable: 2,500 at $17.375 per share;
7,500 at $14.75 per share and 5,000 shares at
$17.125 per share. The options for the
remaining 820,300 shares are exercisable
beginning in 1995 through 1999 at prices
ranging from $13 to $22.25 per share. During
1994, Portland General issued 60,882
restricted common shares for officers and
selected employees of both Portland General
and PGE. As of December 31, 1994, 120,882
restricted common shares under the plan were
outstanding for officers and employees.
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Note 7
Short-Term Borrowings
At December 31, 1994, Portland General had
total committed lines of credit of
$215 million. Portland General has a
$15 million committed facility expiring in
July 1995. PGE has committed facilities of
$120 million expiring in July 1997 and $80
million expiring in July 1995. These lines of
credit have annual fees ranging from 0.125%
to 0.15% and do not require compensating cash
balances. The facilities are used primarily
as backup for both commercial paper and
borrowings from commercial banks under
uncommitted lines of credit. At December 31,
1994, there were no outstanding borrowings
under the committed facilities.
PGE has a $200 million commercial paper
facility. Unused committed lines of credit
must be at least equal to the amount of PGE's
commercial paper outstanding.
Commercial paper and lines of credit
borrowings are at rates reflecting current
market conditions and, generally, are
substantially below the prime commercial
rate.
Short-term borrowings and related interest
rates were as follows (thousands of dollars):
1994 1993 1992
As of year end:
Aggregate short-term debt outstanding
Bank loans - - $ 10,002
Commercial paper $148,598 $159,414 130,676
Weighted average interest rate
Bank loans - - 4.4%
Commercial paper 6.2% 3.5% 4.1
Unused committed lines of credit $215,000 $240,000 $180,000
For the year ended:
Average daily amounts of short-term
debt outstanding
Bank loans $ 1,273 $ 10,949 $ 7,671
Commercial paper 138,718 123,032 89,077
Weighted daily average interest rate
Bank loans 4.3% 3.6% 5.0%
Commercial paper 4.5 3.5 4.2
Maximum amount outstanding
during the year $174,082 $171,208 $144,056
Interest rates exclude the effect of commitment fees, facility fees and other financing fees.
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Note 8
Long-Term Debt
The Indenture securing PGE's First Mortgage Bonds constitutes a direct first
mortgage lien on substantially all utility property and franchises, other than
expressly excepted property.
The following principal amounts of long-term debt become due for redemption through
sinking funds and maturities (thousands of dollars):
1995 1996 1997 1998 1999
Sinking Funds $ 1,138 $ 988 $ 688 $ 688 $ 688
Maturities:
PGC (Parent only) - $30,000 - - -
PGE $71,356 17,528 $86,385 $64,745 $44,000
$71,356 $47,528 $86,385 $64,745 $44,000
The sinking funds include $988,000 a year for 1995 and 1996 and $688,000 for 1997
through 1999, which, in accordance with the terms of the Indenture, PGE may satisfy
by pledging available property additions equal to 166-2/3% of the sinking fund
requirements.
Interest Rate Swap Agreements
In November 1994, PGE entered into two 10
year forward interest rate swap agreements,
each with a notional amount
of $25 million. The agreements are used to
hedge against interest rate movements on long-term
debt which PGE anticipates issuing in mid-
1995. PGE is committed to terminate the agreements
on or before May 15, 1995.
PGE is exposed to credit risks in the event
of nonperformance by the counterparties to
these interest rate swap agreements. PGE
anticipates that the counterparties will be
able to fully satisfy their obligations.
Note 9
Commitments
Natural Gas Agreements
PGE has two long-term agreements for
transmission of natural gas
from domestic and Canadian sources to PGE's
existing and proposed natural gas-fired
generating facilities. One agreement
provides PGE firm pipeline capacity beginning
June, 1993 and increased pipeline capacity in
November 1995. The second agreement
will give PGE capacity on a
second interstate gas pipeline. Under the
terms of these two agreements, PGE is
committed to paying capacity charges of
approximately $5 million during 1995,
$14 million annually in 1996 through 1999,
and $140 million over the remaining years of
the contract which expires in 2015. Under
these agreements PGE has the right to assign
unused capacity to other parties. In
addition, PGE will make a capital
contribution for pipeline construction of
approximately $3 million in 1995.
For the period of October 1994 through
February 1995, PGE hedged an average of
38,000 MMBtus per day of physical gas
purchases which represented approximately 40% of
gas usage for the period. The effect of these agreements
was to fix the prices of gas.
Railroad Service Agreement
In October 1993, PGE entered into a railroad
service agreement to deliver coal from
Wyoming to the Boardman Coal Plant (Boardman)
and is required to contribute $7 million over
the 5 years remaining in the contract.
Purchase Commitments
Other purchase commitments outstanding
(principally construction at PGE) totaled
approximately $69 million at December 31,
1994.
Cancellation of these purchase
agreements could result in cancellation
charges.
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Purchased Power
PGE has long-term power purchase contracts
with certain public utility districts in the
state of Washington and with the City of
Portland, Oregon. PGE is required to pay its
proportionate share of the operating and debt
service costs of the hydro projects whether
or not they are operable.
Selected information is summarized as follows (thousands of dollars):
Rocky Priest Portland
Reach Rapids Wanapum Wells Hydro
Revenue bonds outstanding at
December 31, 1994 $218,246 $131,163 $186,425 $195,320 $ 39,190
PGE's current share of output,
capacity, and cost
Percentage of output 12.0% 13.9% 18.7% 22.7% 100%
Net capability in megawatts 155 127 194 191 36
Annual cost, including debt
service
1994 $4,500 $3,400 $4,800 $6,600 $4,600
1993 4,000 3,800 5,400 5,500 4,800
1992 3,900 3,100 4,400 4,800 4,400
Contract expiration date 2011 2005 2009 2018 2017
PGE's share of debt service costs, excluding
interest, will be approximately $6 million
for 1995 and 1996, $7 million for 1997, and
$6 million for 1998 and 1999. The minimum
payments through the remainder of the
contracts are estimated to total $97 million.
PGE has entered into long-term contracts to
purchase power from other utilities in the
west. These contracts will require fixed
payments of up to $67 million in 1995, $32
million in 1996, and $22 million in 1997.
After that date, capacity contract charges
will be up to $25 million annually until
2001. From 2001 until 2016 capacity charges
total $19 million annually.
Leases
PGE has operating and capital leasing
arrangements for its headquarters complex,
combustion turbines and the coal-handling
facilities and certain railroad cars for
Boardman. PGE's aggregate rental payments
charged to expense amounted to $22 million in
1994 and 1993, and $20 million in 1992. PGE
has capitalized its combustion turbine
leases. However, these leases are considered
operating leases for ratemaking purposes.
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As of December 31, 1994, the future minimum lease payments under non-cancelable
leases are as follows (thousands of dollars):
Year Ending Operating Leases
December 31 Capital Leases (Net of Sublease Rentals) Total
1995 $ 3,016 $ 18,224 $21,240
1996 3,016 18,331 21,347
1997 3,016 18,821 21,837
1998 3,016 18,618 21,634
1999 1,388 19,604 20,992
Remainder - 167,015 167,015
Total 13,452 $260,613 $274,065
Imputed Interest (1,929)
Present Value of
Minimum Future
Net Lease Payments $11,523
Included in the future minimum operating lease payments schedule above is
approximately $135 million for PGE's headquarters complex.
Note 10
WNP-3 Settlement Exchange Agreement
PGE is selling energy received under a WNP-3
Settlement Exchange Agreement (WSA) to the
Western Area Power Administration (WAPA) for
25 years, which began October 1990. Revenues
from the WAPA sales contract are expected to
be sufficient to support the carrying value
of PGE's investment.
The energy received by PGE under WSA is the
result of a settlement related to litigation
surrounding the abandonment of WNP-3. PGE
receives about 65 average annual megawatts
for approximately 30 years from BPA under the
WSA. In exchange PGE will make available to
BPA energy from its combustion turbines or
from other available resources at an agreed-
to price.
Note 11
Jointly-Owned Plant
At December 31, 1994, PGE had the following investments in
jointly-owned
generating plants (thousands of dollars):
MW PGE % Plant Accumulated
Facility Location Fuel Capacity Interest In Service Depreciation
Boardman Boardman, OR Coal 508 65.0 $364,947 $164,199
Colstrip 3&4 Colstrip, MT Coal 1,440 20.0 447,053 174,075
Centralia Centralia, WA Coal 1,310 2.5 9,588 5,435
The dollar amounts in the table above represent PGE's share of each jointly-owned
plant. Each participant in the above generating plants has provided its own
financing. PGE's share of the direct expenses of these plants is included in the
corresponding operating expenses on Portland General's and PGE's consolidated income
statements.
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Note 12
Regulatory Matters
Public Utility Commission of Oregon
PGE had sought judicial review of three rate matters
related to a 1987 general rate case. In July
1990 PGE reached an out-of-court settlement
with the PUC on two of the three rate matter issues
being litigated. The settlement resolved the
dispute with the PUC regarding treatment of
accelerated amortization of certain
investment tax credits and 1986-1987
interim relief.
The settlement, however, did not resolve the
issue related to the gain on PGE's sale of a
portion of Boardman and the Intertie. PGE's
position is that 28% of the gain should be
allocated to customers. The 1987 rate order
allocated 77% of the gain to customers over a
27-year period. In accordance with the
1987 rate order, the unamortized gain, $119
million at December 31, 1994, is being
distributed as a reduction of customer
revenue requirements .
On January 23, 1995 the Marion County Circuit
Court affirmed the PUC's decision in the 1987
rate order discussed above. PGE has sixty
days from the date of the decision to appeal.
Note 13
Legal Matters
WNP Cost Sharing
PGE and three other investor-owned utilities
(IOUs) are involved in litigation surrounding
the proper allocation of shared costs between
Washington Public Power Supply System (Supply
System) Units 1 and 3 and Units 4 and 5. A
court ruling, issued in May 1989, stated that
Bond Resolution No. 890, adopted by the
Supply System, controlled disbursement of
proceeds from bonds issued for the
construction of Unit 5, including the method
for allocation of shared costs. It is the
IOUs' contention that at the time the project
commenced there was agreement among the
parties as to the allocation of shared costs
and that this agreement and the Bond
Resolution are consistent, such that the
allocation under the agreement is not
prohibited by the Bond Resolution.
In February 1992, the Court of Appeals ruled
that shared costs between Units 3 and 5
should be allocated in proportion to benefits
under the equitable method supported by PGE
and the IOUs. A trial remains necessary to
assure that the allocations are properly
performed.
PGE has agreed to a tentative settlement in
the case which would result in a $1 million
payment by the Company. Any final settlement will require
court approval.
Bonneville Pacific Class Action and Lawsuit
A complaint was originally filed on August 31, 1992 as
the consolidation of various class actions filed on
behalf of certain purchasers of Bonneville Pacific
Corporation common shares and subordinated debentures.
In April 1994 the Court dismissed certain of the plaintiffs'
claims and thereafter plaintiffs filed a second amended
consolidated class action complaint. The defendants in
the action are certain Bonneville Pacific Corporation insiders
and other individuals associated with Bonneville Pacific,
Portland
General Corporation (Portland General), Portland General
Holdings,
Inc. (Holdings), certain Portland General individuals, Deloitte &
Touche (Bonneville's independent auditors) and one of its
partners,
Mayer, Brown & Platt, a law firm used by Bonneville, and two
partners of that firm, three underwriters of a Bonnevilleoffering
of convertible subordinated debentures (Kidder, Peabody & Co.,
Piper Jaffray & Hopwood Incorporated, and Hanifen, Imhoff Inc.),
and Norwest Bank, Minnesota, N.A., indenture trustee on a
Bonneville Pacific's offering of convertible subordinated
debentures. The amount of damages sought is not specified.
The claims asserted against Portland General, Holdings, and the
Portland General individuals allege violations of federal and
Utah
state securities laws and of Racketeer Influenced and Corrupt
Organizations Act (RICO).
Further motions to dismiss have been filed in response to the
amended
complaint, however hearing on the motions of Portland General,
Holdings,
and the Portland General individuals has been deferred pending
ongoing
settlement discussions between those parties and the plaintiffs.
A separate legal action was filed on April 24, 1992 by Bonneville
Pacific
Corporation against Portland General, Holdings, and certain
individuals affiliated with Portland General or Holdings alleging
breach of fiduciary duty, tortious
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interference, breach of contract, and other
actionable wrongs
related to Holdings' investment in Bonneville Pacific. On August
2, 1993
an amended complaint was filed by the Bonneville Pacific
bankruptcy trustee
against Portland General or Holdings and over 50 other defendants
unrelated to Portland General or Holdings. This complaint and
another
subsequent amended version were dismissed by the Court in whole
or inpart. The Trustee has currently on file his Fifth Amended
Complaint.
The complaint includes allegations of RICO violations and RICO
conspiracy,
collusive tort, civil conspiracy, common law fraud, negligent
misrepresentation, breach of fiduciary duty, liability as a
partner
for the debts of a partnership, and other actionable wrongs.
Although the amount of damages sought is not specified in the
Complaint, the Trustee has filed a damage disclosure
calculation which purports to compute damages in amounts ranging
from
$340 million to $1 billion - subject to possible increase based
on various
factors. The Portland General parties have again filed motions
to dismiss.
Arguments were heard in December, 1994, and the motions are
awaiting
decision by the Court.
Other Legal Matters
Portland General and certain of its
subsidiaries are party to various other
claims, legal actions and complaints arising
in the ordinary course of business. These
claims are not considered material.
Summary
While the ultimate disposition of these
matters may have an impact on the results of
operations for a future reporting period,
management believes, based on discussion of
the underlying facts and circumstances with
legal counsel, that these matters will not
have a material adverse effect on the
financial condition of Portland General.
Other Bonneville Pacific Related Litigation
Holdings filed complaints seeking
approximately $228 million in damages in the
Third Judicial District Court for Salt Lake
County (Utah) against Deloitte & Touche and
certain other parties associated with
Bonneville Pacific alleging that it relied on
fraudulent and negligent statements and
omissions by Deloitte & Touche and the other
defendants when it acquired a 46% interest in
and made loans to Bonneville Pacific starting
in September 1990.
Note 14
Fair Value of Financial Instruments
The following methods and assumptions were
used to estimate the fair value of each class
of financial instruments for which it is
practicable to estimate that value:
Cash and cash equivalents
The carrying amount of cash and cash
equivalents approximates fair value because
of the short maturity of those instruments.
Other investments
Other investments approximate market value.
Redeemable preferred stock
The fair value of redeemable preferred stock
is based on quoted market prices.
Long-term debt
The fair value of long-term debt is estimated
based on the quoted market prices for the
same or similar issues or on the current
rates offered to Portland General for debt of
similar remaining maturities.
Interest Rate/Natural Gas Hedging
The fair value of interest rate and natural
gas derivatives is the estimated amount that
the Company would receive or
pay to terminate the agreements at the
reporting date, taking into account current
market rates. At year-end 1994 this amount
was not material.
23
23
The estimated fair values of financial
instruments are as follows (thousands of
dollars):
1994 1993
Carrying Fair Carrying Fair
Amount Value Amount Value
Preferred stock subject to
mandatory redemption $ 60,000 $ 60,000 $ 80,000 $ 84,815
Long-term debt
PGC (Parent only) $ 30,000 $ 29,887 $ 50,000 $ 53,363
PGE 866,114 824,211 820,814 848,696
$896,114 $854,098 $870,814 $902,059
Note 15
Subsequent Event
On March 29, 1995 the PUC issued an order on PGE's November 8,
1993 general rate request. The order authorized PGE to recover
all of the estimated Trojan decommissioning costs and 87% of its
remaining investment in Trojan. Amounts will be collected over
Trojan's original license period ending in 2011. The disallowed
portion of the Trojan investment is comprised of $17.1 million of
post-1991 capital expenditures, primarily related to steam
generator repair activities and $20.4 million of general Trojan
investment. As a result of this disallowance, PGE has recorded
an after tax charge to income of $36.7 million in the first
quarter of 1995.
The PUC's rate order, as well as their authority to grant
recovery of the Trojan investment under Oregon law, are being
challenged in state courts. Management believes that the
authorized recovery of the Trojan investment and decommissioning
costs will be upheld and that these legal challenges will not
have a material adverse impact on the results of operations
or financial condition of the Company for any future reporting
period.
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QUARTERLY COMPARISON FOR 1994 AND 1993 (Unaudited)
Portland General Corporation
March 31 June 30 September 30 December 31
(Thousands of Dollars except per share amounts)
1994
Operating revenues $278,014 $202,110 $214,180 $265,105
Net operating income 57,116 31,012 28,667 37,501
Net income 39,165 23,965 11,887 24,513
Common stock
Average shares outstanding 48,670,211 50,145,565 50,285,669 50,461,348
Earnings per average share 1 $.80 $.48 $.24 $.49
1993
Operating revenues $276,832 $192,146 $209,250 $268,601
Net operating income 55,187 31,174 23,816 48,004
Net income 36,556 13,328 6,349 32,885
Common stock
Average shares outstanding 47,243,743 47,354,072 47,458,575 47,564,862
Earnings per average share 1 $.77 $.28 $.13 $.69
1 As a result of dilutive effects of shares issued during the period, quarterly
earnings per share cannot be added to arrive at annual earnings per share.
Portland General Electric Company
March 31 June 30 September 30 December 31
(Thousands of Dollars except per share amounts)
1994
Operating revenues $277,672 $201,773 $213,897 $265,613
Net operating income 54,751 28,727 27,484 42,246
Net income 41,187 18,540 14,807 31,584
Income available for
common stock 38,199 15,894 12,224 29,001
1993
Operating revenues $276,304 $191,632 $208,534 $268,061
Net operating income 51,369 30,385 27,656 44,790
Net income 37,382 16,704 14,302 31,356
Income available for
common stock 34,314 13,703 11,314 28,367
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25
Signatures
Pursuant to the requirements of the Securities Exchange Act of
1934, the registrants have duly caused this report to be signed
on their behalf by the undersigned hereunto duly authorized.
Portland General Corporation
Portland General Electric Company
May 12, 1995 By /s/ Joseph M. Hirko
Joseph M. Hirko
Vice President Finance,
Chief Financial Officer,
Chief Accounting Officer
and Treasurer
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26
APPENDIX
PORTLAND GENERAL ELECTRIC COMPANY
TABLE OF CONTENTS
PART II
Page
Item 8. Financial Statements and Notes . . . . .. 29
27
27
Management's Statement of Responsibility
PGE's management is responsible for the preparation and presentation of the
consolidated financial statements in this report. Management is also responsible
for the integrity and objectivity of the statements. Generally accepted
accounting principles have been used to prepare the statements, and in certain
cases informed estimates have been used that are based on the best judgment of
management.
Management has established, and maintains, a system of internal accounting
controls. The controls provide reasonable assurance that assets are safeguarded,
transactions receive appropriate authorization, and financial records are
reliable. Accounting controls are supported by written policies and procedures,
an operations planning and budget process designed to achieve corporate
objectives, and internal audits of operating activities.
PGE's Board of Directors includes an Audit Committee composed entirely of outside
directors. It reviews with management, internal auditors and independent
auditors, the adequacy of internal controls, financial reporting, and other audit
matters.
Arthur Andersen LLP is PGE's independent public accountant. As a part of its
annual audit, selected internal accounting controls are reviewed in order to
determine the nature, timing and extent of audit tests to be performed. All of
the corporation's financial records and related data are made available to Arthur
Andersen LLP Management has also endeavored to ensure that all representations
to Arthur Andersen LLP were valid and appropriate.
Joseph M. Hirko
Vice President Finance,
Chief Financial Officer,
Chief Accounting Officer
and Treasurer
Report of Independent Public Accountants
To the Board of Directors and Shareholder of
Portland General Electric Company:
We have audited the accompanying consolidated balance sheets and statements of
capitalization of Portland General Electric Company and subsidiaries as of
December 31, 1994 and 1993, and the related consolidated statements of income,
retained earnings and cash flows for each of the three years in the period ended
December 31, 1994. These financial statements are the responsibility of the
Company's management. Our responsibility is to express an opinion on these
financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing standards.
Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in all
material respects, the financial position of Portland General Electric Company
and subsidiaries as of December 31, 1994 and 1993, and the results of their
operations and their cash flows for each of the three years in the period ended
December 31, 1994 in conformity with generally accepted accounting principles.
Arthur Andersen LLP
Portland, Oregon,
February 7, 1995 (except with respect to the matter discussed inNote 15A, as to which the date is March 29, 1995)
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28
Item 8. Financial Statements and Supplementary Data
Portland General Electric Company and Subsidiaries
Consolidated Statements of Income
For the Years Ended December 31 1994 1993 1992
(Thousands of Dollars)
Operating Revenues $958,955 $944,531 $880,098
Operating Expenses
Purchased power and fuel 347,125 311,713 222,127
Production and distribution 61,891 73,576 93,677
Maintenance and repairs 47,389 55,320 70,476
Administrative and other 97,987 98,408 107,657
Depreciation, decommissioning and amortization 124,003 121,898 98,039
Taxes other than income taxes 52,038 55,676 54,945
Income taxes 75,314 73,740 73,140
805,747 790,331 720,061
Net Operating Income 153,208 154,200 160,037
Other Income (Deductions)
Allowance for equity funds used
during construction 271 - 311
Other 15,500 11,771 7,717
Income taxes 377 (1,752) 2,511
16,148 10,019 10,539
Interest Charges
Interest on long-term debt and other 61,493 61,817 64,718
Interest on short-term borrowings 5,788 3,443 2,754
Allowance for borrowed funds used
during construction (4,043) (785) (2,458)
63,238 64,475 65,014
Net Income 106,118 99,744 105,562
Preferred Dividend Requirement 10,800 12,046 12,636
Net Income Available for Common Stock $ 95,318 $ 87,698 $ 92,926
Portland General Electric Company and Subsidiaries
Consolidated Statements of Retained Earnings
For the Years Ended December 31 1994 1993 1992
(Thousands of Dollars)
Balance at Beginning of Year $179,297 $165,949 $146,198
Net Income 106,118 99,744 105,562
ESOP Tax Benefit & Amortization of
Preferred Stock Premium (1,705) (1,524) (2,505)
283,710 264,169 249,255
Dividends Declared
Common stock 56,442 72,826 70,670
Preferred stock 10,800 12,046 12,636
67,242 84,872 83,306
Balance at End of Year $216,468 $179,297 $165,949
The accompanying notes are an integral part of these consolidated statements.
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29
Portland General Electric Company and Subsidiaries
Consolidated Balance Sheets
At December 31 1994 1993
(Thousands of Dollars)
Assets
Electric Utility Plant - Original Cost
Utility plant (includes Construction Work
in Progress of $148,267 and $46,679) $2,563,476 $2,370,460
Accumulated depreciation (958,465) (894,284)
1,605,011 1,476,176
Capital leases - less amortization of $25,796 and $23,626 11,523 13,693
1,616,534 1,489,869
Other Property and Investments
Trojan decommissioning trust, at market value 58,485 48,861
Corporate Owned Life Insurance, less loan of $21,731 in 1994 40,034 52,008
Other investments 26,074 25,706
124,593 126,575
Current Assets
Cash and cash equivalents 9,590 2,099
Accounts and notes receivable 91,672 85,169
Unbilled and accrued revenues 158,259 133,476
Inventories, at average cost 43,269 46,534
Prepayments and other 37,040 20,646
339,830 287,924
Deferred Charges
Unamortized regulatory assets
Trojan abandonment - plant 342,276 366,712
Trojan abandonment - decommissioning 338,718 355,718
Trojan - other 65,922 66,387
Income taxes recoverable 217,967 228,233
Debt reacquisition costs 32,245 34,941
Energy efficiency programs 58,894 39,480
Other 30,182 33,857
WNP-3 settlement exchange agreement 173,308 178,003
Miscellaneous 13,682 18,975
1,273,194 1,322,306
$3,354,151 $3,226,674
Capitalization and LiabilitiesCapitalization
Common stock equity $ 834,226 $ 747,197
Cumulative preferred stock
Subject to mandatory redemption 50,000 70,000
Not subject to mandatory redemption 69,704 69,704
Long-term debt 805,814 802,994
1,759,744 1,689,895
Current Liabilities
Long-term debt and preferred stock due within one year 81,506 41,614
Short-term borrowings 148,598 129,920
Accounts payable and other accruals 104,612 111,647
Accrued interest 19,084 17,139
Dividends payable 15,702 21,486
Accrued taxes 32,820 27,395
402,322 349,201
Other
Deferred income taxes 549,160 534,194
Deferred investment tax credits 56,760 60,706
Deferred gain on sale of assets 118,939 120,410
Trojan decommissioning and transition costs 396,873 407,610
Miscellaneous 70,353 64,658
1,192,085 1,187,578
$3,354,151 $3,226,674
The accompanying notes are an integral part of these consolidated balance sheets.
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30
Portland General Electric Company and Subsidiaries
Consolidated Statements of Capitalization
At December 31 1994 1993
(Thousands of Dollars)
Common Stock Equity
Common stock, $3.75 par value per
share, 100,000,000 shares authorized, 42,758,877
and 40,458,877 shares outstanding $ 160,346 $ 151,721
Other paid-in capital - net 470,008 433,978
Unearned compensation (12,596) (17,799)
Retained earnings 216,468 179,297
834,226 47.4% 747,197 44.2%
Cumulative Preferred Stock
Subject to mandatory redemption
No par value, 30,000,000 shares authorized
7.75% Series, 300,000 shares outstanding 30,000 30,000
$100 par value, 2,500,000 shares authorized
8.10% Series, 300,000 and 500,000 shares outstanding 30,000 50,000
Current sinking fund (10,000) (10,000)
50,000 2.8 70,000 4.2
Not subject to mandatory redemption, $100 par value
7.95% Series, 298,045 shares outstanding 29,804 29,804
7.88% Series, 199,575 shares outstanding 19,958 19,958
8.20% Series, 199,420 shares outstanding 19,942 19,942
69,704 4.0 69,704 4.1
Long-Term Debt
First mortgage bonds
Maturing 1994 through 1999
4-3/4% Series due April 1, 1994 - 8,119
4.70% Series due March 1, 1995 3,045 3,220
5-7/8% Series due June 1, 1996 5,216 5,366
6.60% Series due October 1, 1997 15,363 15,363
Medium-term notes - 5.65%-9.27% 251,000 242,000
Maturing 2001 through 2005 - 6.47%-9.07% 210,845 166,283
Maturing 2021 through 2023 - 7-3/4%-9.46% 195,000 195,000
Pollution control bonds
Port of Morrow, Oregon, variable rate
(Average 2.7% for 1994), due 2013 23,600 23,600
City of Forsyth, Montana, variable rate
(Average 2.9% for 1994), due 2013
through 2016 118,800 118,800
Amount held by trustee (8,355) (8,537)
Port of St. Helens, Oregon, due 2010 and 2014
(Average variable 2.7%-2.9% for 1994) 51,600 51,600
Capital lease obligations 11,523 13,693
Other (317) 101
877,320 834,608
Long-term debt due within one year (71,506) (31,614)
805,814 45.8 802,994 47.5
Total capitalization $1,759,744 100.0% $1,689,895 100.0%
The accompanying notes are an integral part of these consolidated statements.
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31
Portland General Electric Company and Subsidiaries
Consolidated Statements of Cash Flow
For the Years Ended December 31 1994 1993 1992
(Thousands of Dollars)
Cash Provided (Used) By -
Operations:
Net income $ 106,118 $ 99,744 $ 105,562
Adjustments to reconcile net income to net
cash provided by operations:
Depreciation and amortization 94,140 89,718 113,270
Amortization of WNP-3 exchange agreement 4,695 4,489 5,658
Amortization of deferred charges - Trojan plant 24,417 24,015 -
Amortization of deferred charges - Trojan decomm. 11,220 11,220 -
Amortization of deferred charges - Trojan other 2,321 2,314 1,609
Amortization of deferred charges - Other 2,712 6,713 7,080
Deferred income taxes - net 25,720 60,721 4,252
Other non-cash revenues (271) - (311)
Changes in working capital:
(Increase) in receivables (31,166) (67,431) (9,588)
(Increase) Decrease in inventories 3,264 15,017 (4,181)
Increase (Decrease) in payables 335 (26,588) (2,084)
Other working capital items - net (19,266) 10,600 7,328
Deferred items 10,258 (7,174) (12,858)
Miscellaneous - net 7,374 15,869 18,982
241,871 239,227 234,719
Investing Activities:
Utility construction - new resources (91,342) (28,666) -
Utility construction - general (131,675) (101,692) (148,348)
Energy efficiency programs (23,745) (18,149) (10,705)
Trojan decommissioning trust (11,220) (11,220) (11,220)
Other investments (9,954) (7,133) (5,883)
(267,936) (166,860) (176,156)
Financing Activities:
Short-term debt - net 18,678 29,855 27,939
Borrowings from Corporate Owned Life Insurance 21,731 - -
Long-term debt issued 75,000 252,000 123,000
Long-term debt retired (29,882) (266,986) (123,902)
Preferred stock issued - - 30,000
Preferred stock retired (20,000) (3,600) (31,225)
Common stock issued 41,055 - -
Dividends paid (73,026) (84,951) (82,293)
33,556 (73,682) (56,481)
Increase (Decrease) in Cash and
Cash Equivalents 7,491 (1,315) 2,082
Cash and Cash Equivalents at the Beginning
of Year 2,099 3,414 1,332
Cash and Cash Equivalents at the End
of Year $ 9,590 $ 2,099 $ 3,414
Supplemental disclosures of cash flow information
Cash paid during the year:
Interest $ 60,038 $ 68,232 $ 64,452
Income taxes 44,918 17,242 61,915
The accompanying notes are an integral part of these consolidated statements.
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32
Portland General Electric Company and Subsidiaries
Notes to Financial Statements
Certain information, necessary for a sufficient understanding of PGE's
financial condition and results of operations, is substantially the same as
that disclosed by Portland General in this report. Therefore, the following
PGE information is incorporated by reference to Item 8. of Portland General's
Form 10-K/A on the following page numbers.
Page
Notes to Financial Statements
Note 1A. Summary of Significant Accounting Policies 8
Note 3A. Employee Benefits 10
Note 5A. Trojan Nuclear Plant 14
Note 6A. Preferred Stock 17
Note 8A. Long-Term Debt 19
Note 9A. Commitments 19
Note 10A. WNP-3 Settlement Exchange Agreement 21
Note 11A. Jointly-Owned Plant 21
Note 12A. Regulatory Matters 22
Note 13A. Legal Matters 22
Note 14A. Fair Value of Financial Instruments 23
Note 15A. Subsequent Event 24
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33
Note 4A
Income Taxes
The following table shows the detail of taxes on income and the items used in
computing the differences between the statutory federal income tax rate and
Portland General Electric Company's (PGE) effective tax rate (thousands of
dollars):
1994 1993 1992
Income Tax Expense
Currently payable $ 49,216 $ 14,086 $ 59,804
Deferred income taxes 29,667 65,481 17,584
Investment tax credit adjustments (3,946) (4,075) (6,759)
$ 74,937 $ 75,492 $ 70,629
Provision Allocated to:
Operations $ 75,314 $ 73,740 $ 73,140
Other income and deductions (377) 1,752 (2,511)
$ 74,937 $ 75,492 $ 70,629
Effective Tax Rate Computation
Computed tax based on statutory
federal income tax rates applied
to income before income taxes $63,369 $ 61,333 $ 59,905
Increases (Decreases) resulting from:
Accelerated depreciation 8,080 9,207 9,462
State and local taxes - net 9,839 9,783 10,568
Investment tax credits (3,946) (4,075) (6,759)
USDOE nuclear fuel assessment - 5,050 -
Excess deferred tax (767) (3,419) (1,816)
Other (1,638) (2,387) (731)
$ 74,937 $ 75,492 $ 70,629
Effective tax rate 41.4% 43.1% 40.1%
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34
As of December 31, 1994 and 1993, the significant components of PGE's deferred
income tax assets and liabilities were as follows (thousands of dollars):
1994 1993
Deferred Tax Assets
Plant-in-service $ 72,012 $ 73,625
Deferred gain on sale of assets 47,134 47,718
Other 22,246 22,968
141,392 144,311
Deferred Tax Liabilities
Plant-in-service (444,546) (448,559)
Energy Efficiency programs (23,024) (15,395)
Trojan abandonment (80,944) (75,948)
Replacement power costs (38,136) (29,574)
WNP-3 exchange contract (68,698) (70,542)
Other (39,826) (40,238)
(695,174) (680,256)
Less Current deferred taxes 4,622 1,751
Total $(549,160) $(534,194)
As a result of implementing SFAS No.
109, PGE has recorded deferred tax
assets and liabilities for all
temporary differences between the
financial statement bases and tax bases
of assets and liabilities.
The IRS completed its examination of
Portland General Corporation's
(Portland General) tax returns for the
years 1985 to 1987 and has issued a
statutory notice of tax deficiency
which Portland General is contesting.
As part of this audit, the
IRS has proposed to disallow PGE's 1985
WNP-3 abandonment loss deduction on the
premise that it is a taxable exchange.
PGE disagrees with this position and
will take appropriate action to defend
its deduction. Management believes
that it has appropriately provided for
probable tax adjustments and is of the
opinion that the ultimate disposition
of this matter will not have a material
adverse impact on the financial
condition of PGE.
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35
Note 6A
Common Stock
Common Stock Other
Number $3.75 Par Paid-in Unearned
of Shares Value Capital Compensation
(thousands of dollars)
December 31, 1991 40,458,877 $151,721 $431,517 $(29,759)
Sales of stock - - - -
Redemption of preferred - - 565 -
stock
Repayment of ESOP loan
and other - - (409) 6,492
December 31, 1992 40,458,877 151,721 431,673 (23,267)
Sales of stock - - - -
Sale and redemption of
preferred stock - - 2,130 -
Repayment of ESOP loan
and other - - 175 5,468
December 31, 1993 40,458,877 151,721 433,978 (17,799)
Sales of stock 2,300,000 8,625 32,430 -
Redemption of stock - - - -
Sale and redemption of
preferred stock - - 2,119 -
Repayment of ESOP loan
and other - - 1,481 5,203
December 31, 1994 42,758,877 $160,346 $470,008 $ (12,596)
Common Stock
Portland General is the sole shareholder of PGE common stock. PGE is
restricted, without prior Oregon Public Utility Commission (PUC) approval,
from paying dividends or making other distributions to Portland General to the
extent such payment or distribution would reduce PGE's common stock equity
capital below 36% of total capitalization. At December 31, 1994, PGE's common
stock equity capital was 47% of its total capitalization.
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36
Note 7A
Short-Term Borrowings
At December 31, 1994, PGE had a committed facility of $120 million expiring in
July 1997 and an $80 million facility expiring in July 1995. These lines of
credit have commitment fees and/or facility fees ranging from 0.125 to 0.15 of
one percent and do not require compensating cash balances. The facilities are
used primarily as back-up for both commercial paper and borrowings from
commercial banks under uncommitted lines of credit. At December 31, 1994, there
were no outstanding borrowings under the committed facilities.
PGE has a $200 million commercial paper facility. Unused committed lines of
credit must be at least equal to the amount of commercial paper outstanding.
Most of PGE's short-term borrowings are through commercial paper.
Commercial paper and lines of credit borrowings are at rates reflecting current
market conditions and generally are substantially below the prime commercial
rate.
Short-term borrowings and related interest rates were as follows (thousands of
dollars):
1994 1993 1992
As of year end:
Aggregate short-term debt outstanding
Bank loans - - $ 4,001
Commercial paper $148,598 $129,920 96,064
Weighted average interest rate
Bank loans - - 4.1%
Commercial paper 6.2% 3.5% 3.9
Unused committed lines of credit $200,000 $200,000 $125,000
For the year ended:
Average daily amounts of short-term
debt outstanding
Bank loans $ 1,273 $ 5,025 $ 2,803
Commercial paper 126,564 94,983 62,036
Weighted daily average interest rate
Bank loans 4.3% 3.6% 5.5%
Commercial paper 4.6 3.5 4.2
Maximum amount outstanding
during year $159,482 $144,774 $101,028
Interest rates exclude the effect of commitment fees, facility fees,
and other financing fees.
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37
