SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended SEPTEMBER 30, 1995
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
Indicate by check mark whether the registrants (1) have 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
registrants were required to file such reports), and (2) have been subject to
such filing requirements for the past 90 days. Yes X . No .
The number of shares outstanding of the registrants' common stocks as of
September 30, 1995 are:
Portland General Corporation 50,824,141
Portland General Electric Company 42,758,877
(owned by Portland General Corporation)
1
INDEX
PAGE
NUMBER
PART I. PORTLAND GENERAL CORPORATION AND SUBSIDIARIES
FINANCIAL INFORMATION
Management's Discussion and Analysis of
Financial Condition and Results of Operations 3
Statements of Income 11
Statements of Retained Earnings 11
Balance Sheets 12
Statements of Capitalization 13
Statements of Cash Flow 14
Notes to Financial Statements 15
Portland General Electric Company and
Subsidiaries Financial Information 18
PART II. OTHER INFORMATION
Item 1 - Legal Proceedings 22
Item 6 - Exhibits and Reports on Form 8-K 22
Signature Page 23
2
PORTLAND GENERAL CORPORATION AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
RESULTS OF OPERATIONS
Portland General Electric Company (PGE or the Company), an electric utility
company and the principal operating subsidiary of Portland General
Corporation (Portland General), accounts for substantially all of Portland
General's assets, revenues and net income. The following discussion focuses
on utility operations, unless otherwise noted.
1995 COMPARED TO 1994 FOR THE THREE MONTHS ENDED SEPTEMBER 30
Portland General earned $14 million or $0.28 per share for the third quarter
of 1995 compared to earnings of $12 million or $0.24 per share in 1994.
Earnings for the period include an after tax provision against earnings of
$13 million, related to unrecoverable deferred power costs. Excluding this
charge to income, earnings would have been $27 million. The quarters' strong
operating earnings reflect continued retail load growth as well as low
variable power costs driven by improved hydro conditions throughout the
western region and a competitive wholesale market.
Operating revenues increased $8 million or 4% for the quarter. Retail
revenues increased by $14 million, or 8%, due primarily to the company's
April 1995 general rate increase and increased retail energy sales. A
strong local
economy and continued increase in the number of retail customers contributed
to a 3% rise in retail energy sales. PGE is serving 13,600, or 2.2 %, more
retail customers than served in the same period last year with 2,580 new
retail customers added during this quarter. A $6 million wholesale, or 23%,
decline in wholesale revenues partially offset the increase in retail
revenues. Wholesale energy sales decreased 11% and average wholesale prices
decreased 13%. A competitive wholesale market coupled with the availability
of inexpensive power narrowed wholesale margins and decreased sales.
PGE took advantage of the competitive wholesale market and the availability
of inexpensive power and purchased 54% of its total system load compared to
48% last year. Increased low-cost energy purchases, good hydro generation
and low natural gas prices drove variable power costs down despite increased
total system load. The average cost of power decreased from 19.7 to 16.0
mills (10 mills = 1 cent) as variable power costs decreased $19 million, or
23% for the quarter (see table below).
Abundant supplies of energy drove secondary prices below 1994
levels. Spot market purchases averaged 11.4 mills, ranging from 6 to 20
mills, compared to an average 22.4 mills in 1994.
Hydro generation increased 14%, or 53,600 MWh, reflecting good water
conditions on the Clackamas River system. While thermal generation decreased
15%, lower gas prices allowed the Beaver Combustion Turbine Plant to generate
energy at 39% lower variable cost.
3
PORTLAND GENERAL CORPORATION AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
RESOURCE MIX/VARIABLE POWER COSTS
Average Variable
Resource Mix Power Cost (Mills/KWh)
1995 1994 1995 1994
Generation 46% 52% 8.4 11.3
Firm Purchases 35% 35% 24.5 26.6
Spot Purchases 19% 13% 11.4 22.4
Total 100% 100% Average 16.0 19.7
Resources
Operating expenses (excluding variable power, depreciation and income
taxes) were comparable with 1994. Depreciation increased $2 million, or
7%, largely due to higher depreciation levels effective with the Company's
recent general rate increase in April 1995.
Income taxes included in Net Operating Income increased $14 million
primarily due to an increase in before
tax operating income.
PGE recorded a $13 million, after tax, provision against earnings as a
result of an
agreement with the Oregon Public Utility Commission's (PUC) Staff which
allows for only partial recovery of the Company's outstanding power cost
deferrals. For further information regarding this agreement see the Power
Cost Recovery and Coyote Springs Filing discussion in the Financial and
Operating Outlook section below.
1995 COMPARED TO 1994 FOR THE NINE MONTHS ENDED SEPTEMBER 30
Portland General earned $45 million or $0.88 per share for the nine months
ended September 30, 1995, compared to earnings of $75 million or $1.51 per
share in 1994. 1995 results include after tax charges to income of $37
million related to the PUC's rate order disallowing 13% of PGE's remaining
investment in Trojan and $13 million related to the Company's agreement
with PUC Staff allowing only partial recovery of the Company's deferred
power costs. 1994 earnings include $7 million, after tax, in previously
recorded
real estate reserves. Excluding these items, earnings would have been $94
million in 1995 and $69 million in 1994. Strong operating results reflect
improved hydro conditions, favorable secondary power costs and continued
retail load growth, partially offset by narrowing margins in a competitive
wholesale market.
Although operating revenues only increased $7 million, retail MWh sales
rose 3% and revenues increased by $23 million. Colder temperatures during
the early part of the year and an increase in retail customers contributed
to a higher level of energy sales. The increased sales combined with the
general rate increase boosted revenues from energy sales nearly 7%. Fewer
accrued revenues partially offset increases from energy sales. PGE
recorded $12 million in power cost deferrals in 1995 ($11 million in the
first quarter), compared with $19 million in 1994 ($18 million in the
first quarter).
4
PORTLAND GENERAL CORPORATION AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
A decline in wholesale revenues of $18 million from 1994 levels also
partially offset the increase in retail revenues. Wholesale energy sales
declined 13% and prices averaged 13% lower. The Northwest region's
traditional price advantage over the Southwest eroded due to abundant
energy supplies and improved hydro conditions in California and made for a
more competitive wholesale marketplace.
Variable power costs decreased $50 million, or 20%, resulting from
increased hydro production and lower secondary prices.
PGE reduced thermal plant generation 30% to take advantage of favorable
secondary energy prices, decreasing average variable power costs from 19.1
to 16.0 mills (see table below).
PGE hydro generation increased 21%, or 307,704 MWh, reflecting improved
water conditions on the Clackamas River system. Spot market purchases
averaged 10.7 mills compared to 19.8 mills in 1994 due to the availability
of low-cost secondary power.
RESOURCE MIX/VARIABLE POWER COSTS
Average Variable
Resource Mix Power Cost (Mills/KWh)
1995 1994 1995 1994
Generation 37% 45% 7.5 10.6
Firm Purchases 36% 33% 24.8 25.5
Spot Purchases 27% 22% 10.7 19.8
Total Resources 100% 100% Average 16.0 19.1
The Company held operating expenses (excluding variable power,
depreciation and income taxes) at levels comparable to 1994. Depreciation
increased $7 million, or 8%, largely due to increased depreciation rates
effective with the Company's general rate increase in April 1995.
Income taxes increased $19 million, or 37%, due to an increase in before
tax operating income.
CASH FLOW
PORTLAND GENERAL CORPORATION
Portland General requires cash to pay dividends to its common
stockholders, to provide funds to its subsidiaries, to meet debt service
obligations and for day to day operations. Sources of cash are dividends
from PGE, leasing rentals, short- and intermediate-term borrowings and the
sale of its common stock.
5
PORTLAND GENERAL CORPORATION AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
Portland General received $11.5 million in dividends from PGE during the
third quarter of 1995 and $2.3 million in proceeds from the issuance of
shares of common stock under its Dividend Reinvestment and Optional Cash
Payment Plan.
PORTLAND GENERAL ELECTRIC COMPANY
CASH PROVIDED BY OPERATIONS
Operations are the primary source of cash used for day to day operating
needs of PGE and funding of construction activities. PGE also obtains
cash from external borrowings, as needed.
A significant portion of cash from operations comes from depreciation and
amortization of utility plant, charges which are recovered in customer
revenues but require no current cash outlay. Changes in accounts
receivable and accounts payable can also be significant contributors or
users of cash. Improved cash flow for the current year reflects the
Company's general price increase and lower variable power costs. 1994
third quarter cash flows were also affected by a $20 million prepayment to
the IRS related to the 1985 tax deduction discussed below.
Portland General has reached a tentative settlement with the IRS regarding
the Washington Public Power Supply System Unit 3 (WNP-3) abandonment loss
deduction on its 1985 tax return. Portland General does not expect future
cash requirements to be materially affected by the resolution of this
matter (see Note 3, Income Taxes, for further information).
INVESTING ACTIVITIES
PGE invests in facilities for generation, transmission and distribution of
electric energy and products and services for energy efficiency.
Estimated capital expenditures for 1995 are expected to be $225 million.
Approximately $160 million has been expended for capital projects,
including energy efficiency, through September 30, 1995.
PGE funds an external trust for the Trojan decommissioning costs. The
April 1995 general rate order authorized PGE to increase its collections
from customers and its corresponding contribution to the trust from $11
million to $14 million annually. The trust invests in
investment-grade tax-exempt bonds. Total-to-date cash withdrawn from the
trust to pay for decommissioning costs is approximately $8 million.
FINANCING ACTIVITIES
During the third quarter the Company used strong operating cash flows to
reduce short-term debt $26 million.
6
PORTLAND GENERAL CORPORATION AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
In early October 1995, PGE issued $75 million in 8.25% Quarterly Income
Debt Securities (QUIDS) Junior Subordinated Deferrable Interest Debentures
maturing on December 31, 2035. The proceeds will be used to redeem the
balance of outstanding shares of the 8.20%, 7.88% and 7.95% Preferred
stock series. PGE will redeem each of the preferred stock series at
$101.00 per share which including partial period dividends will require
funding of approximately $71 million. The redemption is scheduled for
early November 1995.
The issuance of additional preferred stock and First Mortgage Bonds
requires PGE to meet earnings coverage and security provisions set forth
in the Articles of Incorporation and Indenture securing its First Mortgage
Bonds. As of September 30, 1995, PGE could issue approximately $300
million of preferred stock and $350 million of additional First Mortgage
Bonds.
FINANCIAL AND OPERATING OUTLOOK
UTILITY
RETAIL CUSTOMER GROWTH AND ENERGY SALES
During the third quarter of 1995, 2,580 retail customers were added to PGE's
service territory. For the nine-months ended September 30, 1995,
approximately 8,500 retail customers were added.
Weather adjusted retail energy sales growth for the nine months ended
September 30, 1995 was approximately 2.7%. The Company expects annual 1995
weather-adjusted retail energy sales growth to be approximately 2.9%.
Quarterly Increase in Retail Customers
Quarter/Year Residential Customers Commercial/Industrial Customers
2Q 93 1697 429
3Q 93 2802 446
4Q 93 2775 563
1Q 94 2986 390
2Q 94 2476 550
3Q 94 2219 454
4Q 94 4247 379
1Q 95 3010 270
2Q 95 2194 509
3Q 95 2145 435
SEASONALITY
Due to seasonal fluctuations in electricity sales, as well as the price of
wholesale energy and fuel costs, quarterly operating earnings are not
necessarily indicative of results to be expected for calendar year 1995.
COMPETITION
The Energy Policy Act of 1992 (Energy Act) set the stage for federal and state
regulations directed toward the stimulation of both wholesale and retail
competition in the electric industry. The Energy Act eased restrictions on
independent power production, and bestowed authority on the Federal Energy
Regulatory Commission (FERC) to mandate open access for the wholesale
transmission of electricity.
7
PORTLAND GENERAL CORPORATION AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
FERC has since taken steps to provide a framework for increased competition in
the electric industry. In March 1995 it issued a Notice of Proposed
Rulemaking (NOPR) regarding non-discriminatory open access transmission
requirements for all public utilities. The proposed rules address several
issues including stranded asset recovery and the open access transmission of
electricity. If adopted, the proposed open access transmission requirements
would give wholesale competitors access to PGE's transmission facilities and,
in turn, give PGE access to other's transmission facilities. PGE is in the
process of preparing an open access transmission tariff for its transmission
facilities.
Since the passage of the Energy Act, various state utility commissions are
considering proposals which would gradually allow customers direct access to
generation suppliers, marketers, brokers and other service providers in a
competitive marketplace for energy services.
Although presently operating in a cost-based regulated environment, PGE
expects increasing competition from other forms of energy and other suppliers
of electricity. While the Company is unable to determine
precisely the future impact of increased competition, it believes that
ultimately it will result in reduced wholesale and retail prices in the
industry.
POWER COST RECOVERY AND COYOTE SPRINGS FILING
PGE operates without a power cost adjustment tariff, therefore adjustments for
power costs above or below those set in existing general tariffs are not
automatically reflected in customers' rates. As a result, PGE obtained PUC
approval to defer incremental replacement power costs related to the closure
of Trojan. The following table sets out the amounts deferred and the
collection status of the various deferrals. In accordance with Oregon law,
collection of the deferrals is subject to PUC review of PGE's reported
earnings, adjusted for the regulatory treatment of unusual and/or non-
recurring items, as well as the determination of an appropriate rate of return
on equity for a given review period.
The table below indicates the balance of outstanding power cost deferrals as
of September 30, 1995.
SYNOPSIS OF POWER COST DEFERRALS
Deferral Earnings Amounts
Period Covered Rate Review Deferred Collected
December 4, 1992 - 80% Approved (1) $57 million $27 million
March 31, 1993 (4)(a)
July 1, 1993 - 50% Late 1995 (2) $59 million N/A
March 31, 1994 (4)(b)
January 1, 1995 - 40% Late 1995 (3) $11 million N/A
March 31, 1995 (4)(c)
(1) Approved for collection which began on 4/1/94.
(2) See discussion below on settlement with PUC staff.
(3) See discussion below on settlement with PUC staff.
(4) Includes accrued interest of (a) $12 million, (b) $10 million, and (c) $.7 million.
8
PORTLAND GENERAL CORPORATION AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
On October 17, 1995 PGE and the Oregon Public Utility
Commission's (PUC) Staff agreed to jointly recommend to the
PUC a settlement on PGE's August 1995 consolidated filing which
supports increasing Company annual revenues by $20 million or
approximately 2.0%. The increase includes an additional $40
million for the Coyote Springs Generation Project (Coyote
Springs) and Bonneville Power Administration (BPA) price
increases offset by the cancellation of the current collection
of deferred power costs. See Portland General's and PGE's
reports on form 10-Q dated June 30, 1995 and form 8-K dated
October 5, 1995 for further information on PGE's consolidated
filing.
While the agreement supports full recovery of the $11 million
of power costs deferred from January through March 1995, it
supports recovery of only $9 million of the $50 million of
power costs deferred from July 1993 through March 1994. The
agreement also includes a provision for immediate recovery of
approximately $27 million in incentive revenues associated with
prior years' achievements of the Company's energy efficiency
programs.
Lastly, the stipulation supports the Company's proposal to
offset the uncollected balance of all power cost deferrals,
incentive revenues, certain other regulatory assets, and a
portion of the remaining Trojan investment, against PGE's
unamortized gain on the prior sale of a portion of the Boardman
Coal Plant. If approved, the offsets will allow for recovery
of the deferred power costs and incentive revenues discussed
above, without increasing customer rates as well as eliminate
approximately $117 million of regulatory assets and
liabilities from the Company's Balance Sheets. A PUC order on
the regulatory proceeding is expected during the fourth quarter 1995.
TROJAN DECOMMISSIONING UPDATE
As of October 31, 1995 PGE has substantially completed the
early removal of some of Trojan's large components. The large
component removal project (LCRP) commenced in November 1994
following public hearings in a lengthy state approval process.
On two separate occasions LCRP work was interrupted
pending review of legal challenges in both state
and federal courts. Despite the work stoppages the LCRP was
completed in time to take advantage of lower near-
term burial costs and provide cost savings.
The LCRP was the subject of an NRC
review initiated in early September 1995. The NRC solicited
comments from interested parties on whether to halt the LCRP
and any further decommissioning activities at Trojan until
public hearings could be held regarding the Trojan
Decommissioning Plan. For further information see Portland
General's and PGE's reports on form 8-K dated August 30, 1995.
The NRC completed its review on October 12, 1995 with an order
that allowed the completion of the LCRP. However, the NRC
Order stated that no further major dismantling
at Trojan would be allowed until final NRC approval of the
Trojan Decommissioning Plan is obtained. This does not preclude
further planning or minor dismantling activities.
The Trojan Decommissioning Plan is presently under review by the NRC. The
order notes that the NRC intends to give notice of an
opportunity for a public hearing on the plan. A hearing may
require additional time beyond that originally anticipated by
the Company in obtaining final approval of the Trojan
Decommissioning Plan.
9
PORTLAND GENERAL CORPORATION AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
NONUTILITY
In April 1992 legal action was filed by Bonneville Pacific against Portland
General, Holdings, and certain individuals affiliated with
Portland General and Holdings alleging breach of fiduciary
duty, tortious interference, breach of contract, and other
actionable wrongs related to Holdings' investment in Bonneville
Pacific. Following his appointment, the Bonneville Pacific
bankruptcy trustee, on behalf of Bonneville Pacific, filed
numerous amendments to the complaint. The complaint now
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.
Holdings has filed a complaint seeking approximately $228
million in damages against Deloitte & Touche and certain
parties associated with Bonneville Pacific alleging that it
relied on fraudulent and negligent statements and omissions
when it acquired an interest in and made loans to Bonneville
Pacific.
A detailed report released in June 1992, by a U.S. Bankruptcy
examiner outlined a number of questionable transactions that
resulted in gross exaggeration of Bonneville Pacific's assets
prior to Holdings' investment. This report includes the
examiner's opinion that there was significant mismanagement and
very likely fraud at Bonneville Pacific.
For background information and further details, see Note 2,
Legal Matters in the Notes to Financial Statements.
10
Portland General Corporations and Subsidaries
Consolidated Statements of Income for the
Three Months and Nine Months Ended September 30, 1995 and 1994
(Unaudited)
Three Months Ended Nine Months Ended
September 30 September 30
1995 1994 1995 1994
(Thousands of Dollars)
Operating Revenues $ 222,612 $ 214,180 $ 701,681 $ 694,304
Operating Expenses
Purchased power and fuel 64,428 83,732 198,740 248,549
Production and distribution 15,963 15,282 47,404 46,295
Maintenance and repairs 10,563 12,267 31,880 35,495
Administrative and other 25,346 24,836 76,895 72,562
Depreciation and amortization 33,340 31,331 99,583 92,579
Taxes other than income taxes 11,889 12,057 38,672 39,144
161,529 179,505 493,174 534,624
Operating Income Before Income Taxes 61,083 34,675 208,507 159,680
Income Taxes 20,817 7,150 71,509 46,216
Net Operating Income 40,266 27,525 136,998 113,464
Other Income (Deductions)
Regulatory disallowances - net of income
taxes of $8,441 and $25,542 (12,859) 0 (49,567) 0
Interest expense (19,592) (18,951) (58,921) (53,870)
Allowance for funds used
during construction 3,608 1,243 8,682 2,507
Preferred dividend requirement - PGE (2,380) (2,583) (7,380) (8,217)
Other - net of income taxes 5,138 4,653 14,818 14,661
Income From Continuing Operations 14,181 11,887 44,630 68,545
Discontinued Operations
Gain on disposal of real estate
operations - net of income taxes
of $4,226 0 0 0 6,472
Net Income $ 14,181 $ 11,887 $ 44,630 $ 75,017
Common Stock
Average shares outstanding 50,798,082 50,285,669 50,696,185 49,706,398
Earnings per average share
Continuing operations $0.28 $0.24 $0.88 $1.38
Discontinued operations 0 0 0 0.13
Earnings per average share $0.28 $0.24 $0.88 $1.51
Dividends declared per share $0.30 $0.30 $0.90 $0.90
Consolidated Statements of Retained Earnings for the
Three Months and Nine Months Ended September 30, 1995 and 1994
(Unaudited)
Three Months Ended Nine Months Ended
September 30 September 30
1995 1994 1995 1994
(Thousands of Dollars)
Balance at Beginning of Period $ 117,777 $ 113,427 $ 118,676 $ 81,159
Net Income 14,181 11,887 44,630 75,017
ESOP Tax Benefit and Amortization of
Preferred Stock Premium (470) (484) (1,418) (1,280)
131,488 124,830 161,888 154,896
Dividends Declared on
Common Stock 15,247 15,094 45,647 45,160
Balance at End of Period $ 116,241 $ 109,736 $ 116,241 $ 109,736
The accompanying notes are an integral part of these consolidated statements.
11
Portland General Corporation and Subsidaries
Consolidated Balance Sheets
as of September 30, 1995 and December 31, 1994
(Unaudited)
September 30 December 31
1995 1994
(Thousands of Dollars)
Assets
Electric Utility Plant - Original Cost
Utility plant (includes Construction Work
in Progress of $201,963 and $148,267) $ 2,699,334 $ 2,563,476
Accumulated depreciation (1,019,142) (958,465)
1,680,192 1,605,011
Capital leases - less amortization of $27,423 9,895 11,523
1,690,087 1,616,534
Other Property and Investments
Leveraged leases 153,106 153,332
Net assets of discontinued real estate operations 2,770 11,562
Trojan decommissioning trust, at market value 69,261 58,485
Corporate Owned Life Insurance less loans of $24,320 in 1995
and $21,731 in 1994 69,964 65,687
Other investments 27,999 28,626
323,100 317,692
Current Assets
Cash and cash equivalents 10,323 17,542
Accounts and notes receivable 84,845 91,418
Unbilled and accrued revenues 127,938 162,151
Inventories, at average cost 33,512 31,149
Prepayments and other 45,864 34,455
302,482 336,715
Deferred Charges
Unamortized regulatory assets
Trojan investment 330,521 402,713
Trojan decommissioning 316,434 338,718
Income taxes recoverable 200,595 217,967
Debt reacquisition costs 30,222 32,245
Energy efficiency programs 68,502 58,894
Other 45,265 47,787
WNP-3 settlement exchange agreement 169,626 173,308
Miscellaneous 22,109 16,698
1,183,274 1,288,330
$ 3,498,943 $ 3,559,271
Capitalization and Liabilities
Capitalization
Common stock $ 190,591 $ 189,358
Other paid-in capital 571,137 563,915
Unearned compensation (8,906) (13,636)
Retained earnings 116,241 118,676
869,063 858,313
Cumulative preferred stock of subsidiary
Subject to mandatory redemption 40,000 50,000
Not subject to mandatory redemption 69,704 69,704
Long-term debt 874,051 835,814
1,852,818 1,813,831
Current Liabilities
Long-term debt and preferred stock due within 113,483 81,506
Short-term borrowings 74,216 148,598
Accounts payable and other accruals 82,420 104,254
Accrued interest 23,050 19,915
Dividends payable 17,999 18,109
Accrued taxes 48,389 27,778
359,557 400,160
Other
Deferred income taxes 645,217 687,670
Deferred investment tax credits 53,558 56,760
Deferred gain on sale of assets 117,840 118,939
Trojan decommissioning and transition costs 383,836 396,873
Miscellaneous 86,117 85,038
1,286,568 1,345,280
$ 3,498,943 $ 3,559,271
The accompanying notes are an integral part of of these consolidated balance sheets.
12
Portland General Corporation and Subsidiaries
Consolidated Statements of Capitalization
as of September 30, 1995 and December 31, 1994
(Unaudited)
September 30 December 31
1995 1994
(Thousands of Dollars)
Common Stock Equity
Common stock, $3.75 par value per
share 100,000,000 shares authorized,
50,824,141 and 50,495,492 shares outstanding $ 190,591 $ 189,358
Other paid-in capital - net 571,137 563,915
Unearned compensation (8,906) (13,636)
Retained earnings 116,241 118,676
869,063 46.9% 858,313 47.3%
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, 200,000 shares and 300,000 shares outstanding 20,000 30,000
Current sinking fund (10,000) (10,000)
40,000 2.1 50,000 2.8
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 3.8
Long-Term Debt
First mortgage bonds
Maturing 1995 through 2000
4.70% Series due March 1, 1995 0 3,045
5-7/8% Series due June 1, 1996 5,066 5,216
6.60% Series due October 1, 1997 15,363 15,363
Medium-term notes - 5.65%-9.27% 276,000 251,000
Maturing 2001 through 2007 - 6.47%-9.07% 260,845 210,845
Maturing 2021 through 2023 - 7.75%-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 (8,117) (8,355)
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 1996 - 8.09% 30,000 30,000
Capital lease obligations 9,895 11,523
Other (518) (317)
977,534 907,320
Long-term debt due within one year (103,483) (71,506)
874,051 47.2 835,814 46.1
Total Capitalization $1,852,818 100.0% $1,813,831 100.0%
The accompanying notes are an integral part of these consolidated statements.
13
Portland General Corporation and Subsidaries
Consolidated Statements of Cash Flow for the
Three Months and Nine Months Ended September 30, 1995 and 1994
(Unaudited)
Three Months Ended Nine Months Ended
September 30 September 30
1995 1994 1995 1994
(Thousands of Dollars)
Cash Provided (Used) By -
Operations:
Net income $ 14,181 $ 11,887 $ 44,630 $ 75,017
Adjustment to reconcile net income to net cash
provided by operations:
Depreciation and amortization 24,695 25,442 75,540 70,596
Amortization of WNP-3 exchange agreement 1,227 1,174 3,682 3,521
Amortization of Trojan investment 6,456 6,425 18,865 19,641
Amortization of Trojan decommissioning 3,511 2,805 9,826 8,415
Amortization of deferred charges - other (30) (339) (208) 2,547
Deferred income taxes - net 2,221 7,075 (1,651) 19,607
Other noncash revenues (1,597) (296) (3,969) (954)
Changes in working capital:
(Increase) Decrease in receivables 8,175 5,147 18,976 4,268
(Increase) Decrease in inventories 5,228 2,661 (2,363) 1,303
Increase (Decrease) in payables 16,931 27,071 (176) 5,830
Other working capital items - net (12,132) (32,379) (11,347) (28,980)
Gain from discontinued operations 0 0 0 (6,472)
Deferred charges - other (3,465) 5,622 (13,205) 5,378
Miscellaneous - net 5,985 6,258 11,713 13,573
Regulatory Disallowances 12,859 0 49,567 0
84,246 68,553 199,881 193,290
Investing Activities:
Utility construction - new resources (8,386) (19,667) (37,797) (69,520)
Utility construction - other (43,056) (33,179) (108,219) (94,587)
Energy efficiency programs (4,439) (5,757) (13,391) (15,789)
Rentals received from leveraged leases 8,050 6,469 19,735 19,351
Nuclear decommissioning trust contributions (3,046) (2,805) (13,553) (8,415)
Nuclear decommissioning expenditures 1,805 0 8,413 0
Discontinued operations 1,853 (181) 8,792 26,884
Other (215) (2,310) (4,907) (4,637)
(47,434) (57,430) (140,927) (146,713)
Financing Activities:
Short-term borrowings - net (25,856) (48,458) (74,381) (47,324)
Borrowings from Corporate Owned Life Insurance 0 0 2,589 19,619
Long-term debt issued 0 75,000 75,000 75,000
Long-term debt retired 0 (34,112) (3,045) (45,577)
Repayment of nonrecourse borrowings for
leveraged leases (6,815) (4,804) (17,443) (16,865)
Preferred stock retired 0 0 (10,000) (20,000)
Common stock issued 2,303 2,479 6,865 47,685
Dividends paid (15,218) (15,044) (45,757) (44,754)
(45,587) (24,939) (66,173) (32,216)
Increase (Decrease) in Cash and
Cash Equivalents (8,775) (13,816) (7,219) 14,361
Cash and Cash Equivalents at the Beginning
of Period 19,098 31,379 17,542 3,202
Cash and Cash Equivalents at the End
of Period $ 10,323 $ 17,563 $ 10,323 $ 17,563
Supplemental disclosures of cash flow information
Cash paid during the period:
Interest $ 14,923 $ 12,488 $ 50,934 $ 45,426
Income taxes 26,220 2,100 67,610 20,339
The accompanying notes are an integral part of these consolidated statements.
14
PORTLAND GENERAL CORPORATION AND SUBSIDIARIES
NOTES TO FINANCIAL STATEMENTS
(Unaudited)
NOTE 1
PRINCIPLES OF INTERIM STATEMENTS
The interim financial statements have been prepared by Portland General and,
in the opinion of management, reflect all material adjustments which are
necessary to a fair statement of results for the interim periods presented.
Certain information and footnote disclosures made in the last annual report
on Form 10-K have been condensed or omitted for the interim statements.
Certain costs are estimated for the full year and allocated to interim
periods based on the estimates of operating time expired, benefit received or
activity associated with the interim period. Accordingly, such costs are
subject to year-end adjustment. It is Portland General's opinion that, when
the interim statements are read in conjunction with the 1994 Annual Report on
Form 10-K, the disclosures are adequate to make the information presented not
misleading.
RECLASSIFICATIONS
Certain amounts in prior years have been reclassified for comparative
purposes.
NOTE 2
LEGAL MATTERS
BONNEVILLE PACIFIC CLASS ACTION AND LAWSUIT
In April 1992 legal action was filed by Bonneville Pacific against Portland
General,
Holdings, and certain individuals affiliated with Portland General and
Holdings alleging breach of fiduciary duty, tortious interference, breach of
contract, and other actionable wrongs related to Holdings' investment in
Bonneville Pacific. Following his appointment, the Bonneville Pacific
bankruptcy trustee, on behalf of Bonneville Pacific, filed numerous amendments
to the complaint. The complaint now 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.
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.
15
PORTLAND GENERAL CORPORATION AND SUBSIDIARIES
NOTES TO FINANCIAL STATEMENTS
(Unaudited)
OTHER BONNEVILLE PACIFIC RELATED LITIGATION
Holdings has filed complaints seeking approximately $228 million in damages
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 an
interest in and made loans to Bonneville Pacific.
NOTE 3
INCOME TAXES
As a result of its examination of PGE's 1985 tax return the IRS proposed to
disallow PGE's 1985 WNP-3 abandonment loss deduction on the premise that it is
a taxable exchange. Portland General and the IRS have reached a tentative
settlement regarding this issue. Management has previously 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 results of
operations or cash flows of Portland General.
NOTE 4
DEFERRED POWER COST RECOVERY
In accordance with Oregon law, collection of PGE's power costs deferrals is
subject to PUC review of PGE's reported earnings, adjusted for regulatory
treatment of unusual and/or non-recurring items, as well as the determination
of an appropriate rate of return on equity for a given review period. On
August 8, 1995 as part of a consolidated request to recover deferred power
costs and fixed costs associated with Coyote Springs, PGE filed earnings
reviews for both of its outstanding power cost deferrals. On October 17, 1995
PGE and the PUC Staff reached an agreement on the Company's August 1995
filing that, if approved, would allow full recovery of the power costs
deferred from January to March 1995 and partial recovery of the power costs
deferred from July 1993 to March 1994.
As a result of the agreement management believes that it is unlikely that the
PUC will authorize collection of all of the deferred power costs and has
recorded a third quarter $13 million, after tax, loss provision. A PUC
order on the regulatory proceeding is expected during the fourth quarter
1995.
16
PORTLAND GENERAL ELECTRIC COMPANY AND SUBSIDIARIES
FINANCIAL STATEMENTS AND RELATED INFORMATION
TABLE OF CONTENTS
Page
Number
Management Discussion and Analysis of
Financial Condition and Results of Operations * 3-10
Financial Statements 18-21
Notes to Financial Statements ** 15-16
* The discussion is substantially the same as that disclosed by
Portland General and, therefore, is incorporated by reference
to the information on the page numbers listed above.
** The notes are substantially the same as those disclosed by
Portland General and are incorporated by reference to the
information on the page numbers shown above, excluding the
Bonneville Pacific litigation discussion contained in Note 2
which relates solely to Portland General.
17
Portland General Electric Company and Subsidiaries
Consoliated Statements of Income for the
Three Months and Nine Months Ended September 30, 1995 and 1994
(Unaudited)
Three Months Ended Nine Months Ended
September 30 September 30
1995 1994 1995 1994
(Thousands of Dollars)
Operating Revenues $ 222,240 $ 213,897 $ 699,607 $ 693,342
Operating Expenses
Purchased power and fuel 64,428 83,732 198,740 248,549
Production and distribution 15,963 15,282 47,404 46,295
Maintenance and repairs 10,563 12,267 31,880 35,494
Administrative and other 24,943 25,013 75,904 71,425
Depreciation and amortization 33,318 31,257 99,520 92,345
Taxes other than income taxes 11,915 12,073 38,650 39,092
Income taxes 21,208 7,931 71,720 52,511
182,338 187,555 563,818 585,711
Net Operating Income 39,902 26,342 135,789 107,631
Other Income (Deductions)
Regulatory disallowances - net of income
taxes of $8,441 and $25,542 (12,859) 0 (49,567) 0
Allowance for equity funds used
during construction 1,274 0 1,960 0
Other 5,348 5,286 14,852 15,565
Income taxes (258) (689) (518) (1,639)
(6,495) 4,597 (33,273) 13,926
Interest Charges
Interest on long-term debt and other 17,735 15,706 51,546 45,551
Interest on short-term borrowings 1,217 1,669 5,463 3,979
Allowance for borrowed funds used
during construction (2,334) (1,243) (6,722) (2,507)
16,618 16,132 50,287 47,023
Net Income 16,789 14,807 52,229 74,534
Preferred Dividend Requirement 2,380 2,583 7,380 8,217
Income Available for Common Stock $ 14,409 $ 12,224 $ 44,849 $ 66,317
Consolidated Statements of Retained Earnings for the
Three Months and Nine Months Ended September 30, 1995 and 1994
(Unaudited)
Three Months Ended Nine Months Ended
September 30 September 30
1995 1994 1995 1994
(Thousands of Dollars)
Balance at Beginning of Period $ 222,870 $ 201,808 $ 216,468 $ 179,297
Net Income 16,789 14,807 52,229 74,534
ESOP Tax Benefit & Amortization of
Preferred Stock Premium (470) (484) (1,418) (1,280)
239,189 216,131 267,279 252,551
Dividends Declared
Common stock 13,682 12,828 36,772 43,614
Preferred stock 2,380 2,583 7,380 8,217
16,062 15,411 44,152 51,831
Balance at End of Period $ 223,127 $ 200,720 $ 223,127 $ 200,720
The accompanying notes are an integral part of these consolidated statements.
18
Portland General Electric Company and Subsidiaries
Consolidated Balance Sheets
as of September 30, 1995 and December 31, 1994
(Unaudited)
September 30 December 31
1995 1994
(Thousands of Dollars)
Assets
Electric Utility Plant - Original Cost
Utility plant (includes Construction Work in Progress of
$201,963 and $148,267) $ 2,699,334 $ 2,563,476
Accumulated depreciation (1,019,142) (958,465)
1,680,192 1,605,011
Capital leases - less amortization of $27,423 and $25,796 9,895 11,523
1,690,087 1,616,534
Other Property and Investments
Trojan decommissioning trust, at market value 69,261 58,485
Corporate Owned Life Insurance, less loans of $ 24,320 in 1995 41,785 40,034
and $ 21,731 in 1994
Other investments 25,101 26,074
136,147 124,593
Current Assets
Cash and cash equivalents 4,438 9,590
Accounts and notes receivable 82,420 91,672
Unbilled and accrued revenues 127,938 162,151
Inventories, at average cost 33,512 31,149
Prepayments and other 44,082 33,148
292,390 327,710
Deferred Charges
Unamortized regulatory assets
Trojan investment 330,521 402,713
Trojan decommissioning 316,434 338,718
Income taxes recoverable 200,595 217,967
Debt reacquisition costs 30,222 32,245
Energy efficiency programs 68,502 58,894
Other 45,265 47,787
WNP-3 settlement exchange agreement 169,626 173,308
Miscellaneous 19,143 13,682
1,180,308 1,285,314
$ 3,298,932 $ 3,354,151
Capitalization and Liabilities
Capitalization
Common stock equity $ 847,211 $ 834,226
Cumulative preferred stock
Subject to mandatory redemption 40,000 50,000
Not subject to mandatory redemption 69,704 69,704
Long-term debt 874,051 805,814
1,830,966 1,759,744
Current Liabilities
Long-term debt and preferred stock due within one year 83,483 81,506
Short-term borrowings 74,216 148,598
Accounts payable and other accruals 82,723 104,612
Accrued interest 22,835 19,084
Dividends payable 16,350 15,702
Accrued taxes 53,999 32,820
333,606 402,322
Other
Deferred income taxes 509,491 549,160
Deferred investment tax credits 53,558 56,760
Deferred gain on sale of assets 117,840 118,939
Trojan decommissioning and transition costs 383,836 396,873
Miscellaneous 69,635 70,353
1,134,360 1,192,085
$ 3,298,932 $ 3,354,151
The accompanying notes are an integral part of these consolidated balance sheets.
19
Portland General Electric Company and Subsidiaries
Consolidated Statements of Capitalization
as of September 30, 1995 and December 31, 1994
(Unaudited)
September 30 December 31
1995 1994
(Thousands of Dollars)
Common Stock Equity
Common stock, $3.75 par value per share,
100,000,000 shares authorized, 42,758,877
shares outstanding $ 160,346 $ 160,346
Other paid-in capital - net 471,766 470,008
Unearned compensation (8,028) (12,596)
Retained earnings 223,127 216,468
847,211 46.3% 834,226 47.4%
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, 200,000 and 300,000 shares outstanding 20,000 30,000
Current sinking fund (10,000) (10,000)
40,000 2.2 50,000 2.8
Not subject to mandatory redemption, $100 par
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 1995 through 2000
4.70% Series due March 1, 1995 0 3,045
5-7/8% Series due June 1, 1996 5,066 5,216
6.60% Series due October 1, 1997 15,363 15,363
Medium-term notes - 5.65%-9.27% 276,000 251,000
Maturing 2001 through 2007 - 6.47%-9.07% 260,845 210,845
Maturing 2021 through 2023 - 7.75%-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 (8,117) (8,355)
Port of St. Helens, Oregon, due 2010 and 2014
(Average variable 2.7% - 2.9% for 1994) 51,600 51,600
Capital lease obligations 9,895 11,523
Other (518) (317)
947,534 877,320
Long-term debt due within one year (73,483) (71,506)
874,051 47.7 805,814 45.8
Total Capitalization $ 1,830,966 100.0% $ 1,759,744 100.0%
The accompanying notes are an integral part of these consolidated statements.
20
Portland General Electric Company and Subsidaries
Consolidated Statements of Cash Flow for the
Three Months and Nine Months Ended September 30, 1995 and 1994
(Unaudited)
Three Months Ended Nine Months Ended
September 30 September 30
1995 1994 1995 1994
(Thousands of Dollars)
Cash Provided (Used In)
Operations:
Net Income $ 16,789 $ 14,807 $ 52,229 $ 74,534
Non-cash items included in net income:
Depreciation and amortization 24,729 25,221 75,533 70,363
Amortization of WNP-3 exchange agreement 1,227 1,174 3,682 3,521
Amortization of Trojan investment 6,456 6,425 18,865 19,641
Amortization of Trojan decommissioning 3,511 2,805 9,826 8,415
Amortization of deferred charges - other (30) (339) (208) 2,547
Deferred income taxes - net 2,113 6,592 1,423 11,182
Other noncash revenues (1,275) 0 (1,960) 0
Changes in working capital:
(Increase) Decrease in receivables 7,997 5,270 21,655 2,838
(Increase) Decrease in inventories 5,228 2,662 (2,363) 1,303
Increase (Decrease) in payables 19,678 26,452 781 10,399
Other working capital items - net (10,946) (31,616) (11,156) (28,623)
Deferred charges - other (3,465) 5,622 (13,205) 5,378
Miscellaneous - net 6,139 6,388 11,116 9,089
Regulatory disallowances 12,859 0 49,567 0
91,010 71,463 215,785 190,587
Investing Activities:
Utility construction - new resources (8,386) (19,667) (37,797) (69,520)
Utility construction - other (43,056) (33,179) (108,219) (94,587)
Energy efficiency programs (4,439) (5,757) (13,391) (15,789)
Nuclear decommissioning trust contributions (3,046) (2,805) (13,553) (8,415)
Nuclear decommissioning expenditures 1,805 0 8,413 0
Other investments (70) (451) (3,048) (2,997)
(57,192) (61,859) (167,595) (191,308)
Financing Activities:
Short-term debt - net (25,869) (39,897) (74,381) (19,473)
Borrowings from Corporate Owned Life Insurance 0 0 2,589 19,619
Long-term debt issued 0 75,000 75,000 75,000
Long-term debt retired 0 (24,195) (3,045) (33,077)
Preferred stock retired 0 0 (10,000) (20,000)
Common stock issued 0 0 0 41,055
Dividends paid (13,926) (17,976) (43,505) (57,615)
(39,795) (7,068) (53,342) 5,509
Increase (Decrease) in Cash and
Cash Equivalents (5,977) 2,536 (5,152) 4,788
Cash and Cash Equivalents at the Beginning
of Period 10,415 4,351 9,590 2,099
Cash and Cash Equivalents at the End
of Period $ 4,438 $ 6,887 $ 4,438 $ 6,887
Supplemental disclosures of cash flow information
Cash paid during the period:
Interest $ 13,709 $ 11,265 $ 48,490 $ 41,030
Income taxes 27,721 5,358 72,842 30,818
The accompanying notes are an integral part of these consolidated statements.
21
PORTLAND GENERAL CORPORATION AND SUBSIDIARIES
PORTLAND GENERAL ELECTRIC COMPANY AND SUBSIDIARIES
PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
For further information, see Portland General's and PGE's reports on Form 10-K
for the year ended December 31, 1994.
UTILITY
SOUTHERN CALIFORNIA EDISON COMPANY V. PGE, OREGON COURT OF APPEALS, OCTOBER 9,
1995
Southern California Edison (SCE) has appealed a Multnomah County Circuit Court
order which granted PGE summary judgment in a long-term power sales contract
dispute.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
a. Exhibits
NUMBER EXHIBIT PGC PGE
1 Underwriting agreement X X
24 Power of Attorney X X
27 Financial Data Schedule - UT X X
(Electronic Filing Only)
b. Reports on Form 8-K
August 16, 1995 - Item 5. Other Events: Update on Trojan Decommissioning,
legal proceedings and regulatory
matters.
October 3, 1995 - Item 5. Other Events: Financing update.
Item 7. Exhibits: (4)b Indentures.
(4)c Indenture supplement.
October 5, 1995 - Item 5. Other Events: Regulatory update.
October 17, 1995 - Item 5. Other Events: Regulatory update.
22
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
(Registrants)
October 31, 1995 By /s/ Joseph E. Feltz
Joseph E. Feltz
Assistant Controller
Assistant Treasurer
*Joseph M. Hirko
Sr. Vice President and
Chief Financial Officer
* Signed on behalf of this person.
October 31, 1995 By /s/ Joseph E. Feltz
Joseph E. Feltz
(Attorney-in-Fact)
23
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
UT
1000
3-MOS
DEC-31-1995
SEP-30-1995
PER-BOOK
1,690,087
323,100
302,482
1,183,274
0
3,498,943
190,591
571,137
107,335
869,063
40,000
69,704
866,573
0
0
74,216
101,066
10,000
7,478
2,417
1,458,426
3,498,943
222,612
20,817
161,529
182,346
40,266
(6,447)
33,819
17,258
16,561
2,380
14,181
15,247
62,888
84,246
0.28
0.28
INCLUDING CAPITAL LEASE OBLIGATIONS, NET OF AMORTIZATION.
INCLUDES UNEARNED COMPENSATION OF $8,906.
NET OF MANDATORY SINKING FUND OF $10,000.
NET OF CURRENT PORTION.
NET OF CURRENT PORTION OF CAPITAL LEASE OBLIGATIONS.
EXCLUSIVE OF INTEREST EXPENSE AND PREFERRED DIVIDEND REQUIREMENT FOR PGE.
INCLUDING AFUDC.
PRIOR TO PREFERRED DIVIDEND REQUIREMENTS.
REPRESENTS THE 12 MONTH-TO-DATE FIGURE ENDING SEPTEMBER 30, 1995.
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
UT
1000
3-MOS
DEC-31-1995
SEP-30-1995
PER-BOOK
1,690,087
136,147
292,390
1,180,308
0
3,298,932
160,346
471,766
215,099
847,211
40,000
69,704
866,573
0
0
74,216
71,066
10,000
7,478
2,417
1,310,267
3,298,932
222,240
21,208
161,130
182,338
39,902
(6,495)
33,407
16,618
16,789
2,380
14,409
13,682
60,445
91,010
0
0
INCLUDING CAPITAL LEASE OBLIGATIONS, NET OF AMORTIZATION.
INCLUDES UNEARNED COMPENSATION OF $8,028.
NET OF MANDATORY SINKING FUND OF $10,000.
NET OF CURRENT PORTION.
NET OF CURRENT PORTION OF CAPITAL LEASE OBLIGATIONS.
EXCLUSIVE OF INTEREST EXPENSE AND PREFERRED DIVIDEND REQUIREMENT FOR PGE.
INCLUDING AFUDC.
PRIOR TO PREFERRED DIVIDEND REQUIREMENTS.
REPRESENTS THE 12 MONTH-TO-DATE FIGURE ENDING SEPTEMBER 30, 1995.
PORTLAND GENERAL ELECTRIC COMPANY, AS A WHOLLY OWNED SUBSIDIARY OF PORTLAND
GENERAL CORPORATION, DOES NOT REPORT EARNINGS PER SHARE INFORMATION.
PORTLAND GENERAL ELECTRIC COMPANY
JUNIOR SUBORDINATED DEBENTURES
UNDERWRITING AGREEMENT
October 3, 1995
Goldman Sachs & Co.
Merrill Lynch, Pierce, Fenner & Smith Incorporated
Smith Barney Inc.
c/o Goldman, Sachs & Co.
85 Broad Street
New York, New York 10004
Dear Sirs:
PORTLAND GENERAL ELECTRIC COMPANY, an Oregon corporation (the
"Company") confirms its agreement with you and each of the Underwriters named
in Schedule A attached hereto (which term shall also include any underwriter
substituted as hereinafter in Section 8 provided), with respect to the sale by
the Company as set forth in Section 2 and the purchase by the Underwriters,
acting severally and not jointly, of the aggregate principal amount of 8 1/4 %
Quarterly Income Debt Securities (QUIDS) (Junior Subordinated Deferrable
Interest Debentures, Series A) of the Company (the "Debentures") set forth
opposite their names in Schedule A. The Debentures will be issued under and
secured by the Company's Indenture dated as of September 1, 1995 to The Bank
of New York, as Trustee (the "Original Indenture"), as amended and
supplemented by the supplemental indenture thereto (the "Supplemental
Indenture") dated as of October 1, 1995, executed and delivered by the Company
to the Trustee (the Original Indenture, as supplemented by the Supplemental
Indenture, being sometimes hereinafter referred to collectively as the
"Indenture"). The Debentures are to mature December 31, 2035 and are to bear
interest at the rate set forth in the title thereof from October 10, 1995.
The Debentures are otherwise to conform to the description thereof to be
contained in the Supplemental Prospectus relating
to the Debentures referred
to in Section 1(a) hereof and to the provisions of the Indenture and the
Supplemental Indenture, a form of which Supplemental Indenture has been filed
as an exhibit to the Registration Statement referred to below. No amendment
to said form of Supplemental Indenture is to be made prior to the Closing Date
hereinafter referred to unless said amendment is first approved by you.
1. REPRESENTATIONS AND WARRANTIES OF THE COMPANY. The Company
represents and warrants to each Underwriter that:
(a) A registration statement (File No. 33-62549) on Form S-3 with
respect to the Debentures, including a preliminary prospectus, copies of
which have heretofore been delivered to you, has been prepared by the
Company in conformity with the requirements of the Securities Act of
1933, as amended (the "Act"), the Trust Indenture Act of 1939, as
amended (the "Trust Indenture Act"), and the Rules and Regulations of the
Securities and Exchange Commission (the "Commission") under such Act, and
has been filed with and declared effective by the Commission. The
Company will file with or mail for filing to the Commission a
supplemental prospectus relating to the Debentures pursuant to Rule 424
under the Act. The registration statement when it became effective and
as it may be amended as of the date of this Agreement is hereafter
referred to as the "Registration Statement" and such supplemented
prospectus including all documents incorporated therein by reference is
hereafter referred to as the "Prospectus." If the Company files any
documents pursuant to Section 13 or 14 of the Securities Exchange Act of
1934, as amended (the "Exchange Act") after the time the Registration
Statement became effective and prior to the termination of the offering
of the Debentures by the Underwriters, which documents are deemed to be
incorporated by reference in the Prospectus, the term "Prospectus",
unless the context otherwise indicates or requires, shall refer to said
Prospectus as supplemented by the documents so filed from and after the
time said documents are filed with the Commission.
(b) The Commission has not issued an order preventing or
suspending the use of any prospectus relating to the Debentures, and when
the Registration Statement became effective and the Prospectus is filed
with the Commission and at all times subsequent thereto up to and at the
Closing Date (as hereinafter defined), (i) the Registration Statement and
the Prospectus and any amendment or supplement thereto will contain all
statements which are required to be stated therein by the Act, the Trust
Indenture Act and the Rules and Regulations of the Commission thereunder
and will in all respects conform to the requirements of such Act and such
Rules and Regulations and (ii) neither the Registration Statement nor the
Prospectus nor any amendment or supplement thereto will include any
untrue statement of a material fact or omit to state any material fact
required to be stated therein or necessary to make the statements therein
not misleading; PROVIDED, HOWEVER, that the Company makes no
representations or warranties as to information contained in or omitted
from the Registration Statement or the Prospectus or any such amendment
or supplement in reliance upon, and in conformity with, written
information furnished to the Company by either of you expressly for use
in the preparation thereof.
(c) The documents incorporated by reference in the Prospectus,
when they became effective or were filed with the Commission, as the case
may be, conformed in all material respects to the requirements of the Act
or Exchange Act, as applicable, and the Rules and Regulations of the
Commission thereunder, and any further documents so filed and
incorporated by reference will, when they become effective or are filed
with the Commission, as the case may be, conform in all material respects
to the requirements of the Act or the Exchange Act, as applicable, and
the Rules and Regulations of the Commission thereunder; and none of such
documents contained or will contain an untrue statement of a material
fact or omitted or will omit to state a material fact required to be
stated therein or necessary to make the statements therein not
misleading, PROVIDED, HOWEVER, that this representation and warranty
shall not apply to any statements or omissions made in reliance upon, and
in conformity with, written information furnished to the Company by
either of you expressly for use therein.
(d) The Company and each of its active subsidiaries have been
duly incorporated and are validly existing as corporations in good
standing under the laws of the respective jurisdictions of their
incorporation, with power and authority (corporate and other) to own
their respective properties and conduct their respective businesses as
described in the Prospectus; and each of the Company and such
subsidiaries is duly qualified to do business as a foreign corporation in
each jurisdiction in which the character of the properties owned or
leased by it or, to the Company's knowledge, the nature of the business
it transacts makes such qualification necessary.
(e) The Company and each of its active subsidiaries have valid
and sufficient grants, franchises, miscellaneous permits and easements,
free from unduly burdensome restrictions, adequate for the conduct of
their respective businesses in the territories in which they are now
conducting such businesses and the ownership of the respective properties
now owned by them
-2-
and, except as otherwise set forth in the Prospectus,
there are no legal or governmental proceedings pending or, to the
Company's knowledge, threatened which might result in a material
modification, suspension or revocation thereof.
(f) Subsequent to the respective dates as of which information is
given in the Registration Statement and Prospectus and prior to the
Closing Date, and except as contemplated in the Prospectus, (i) the
Company has not incurred or will not have incurred any material
liabilities or obligations, direct or contingent, or entered into any
material transaction, not in the ordinary course of business, (ii) there
has not been and will not have been any material change in the capital
stock or funded debt of the Company or any material adverse change in the
financial position or results of operations of the Company and its
subsidiaries taken as a whole, and (iii) no material adverse legal or
governmental proceedings affecting the Company or the transactions
contemplated hereby have been or will have been instituted or, to the
Company's knowledge, threatened.
(g) On the Closing Date, the Debentures will have been duly
authorized, executed and authenticated and, when issued and delivered
hereunder, will constitute valid and legally binding obligations of the
Company entitled to the benefits provided by the Indenture and will
conform to the description thereof contained in the Prospectus; and the
execution and delivery of, and compliance with this Agreement, the
Debentures and the Indenture will not conflict with or constitute a
breach of or default under the Articles of Incorporation or Bylaws of the
Company, any indenture, mortgage, deed of trust or other agreement or
instrument by which the Company is or at the Closing Date will be bound,
or any law, administrative regulation or court decree.
(h) In the opinion of counsel for the Company, the Company is a
"subsidiary company" of a "holding company" within the meaning of the
Public Utility Holding Company Act of 1935, as amended (the "PUHCA"),
which holding company is exempt from application of all provisions of the
PUHCA except Section 9(a)(2) thereof.
2. PURCHASE AND SALE OF DEBENTURES. Upon the basis of the
representations and warranties and upon the terms and conditions herein set
forth, the Company agrees to sell to each of you, severally and not jointly,
and each of you, upon the basis of the representations and warranties herein
contained and subject to the conditions hereinafter stated, agrees to purchase
from the Company, severally and not jointly, the principal amount of
Debentures set forth opposite your name in Schedule A hereto at a purchase
price of 96.85% of the principal amount thereof.
3. OFFERING BY UNDERWRITERS. The Company is advised by you that each
of you, severally, propose to offer the Debentures to the public as soon as in
your judgment is advisable.
4. DELIVERY AND PAYMENT. The Debentures to be purchased by each
Underwriter hereunder will be represented by one or more definitive global
Debentures in book-entry form which will be deposited by or on behalf of the
Company with The Depositary Trust Company ("DTC") or its designated custodian.
The Company will deliver the Debentures to the Representatives, for the
account of each Underwriter, against payment by or on behalf of such
Underwriter of the purchase price therefor by certified or official bank check
or checks (or as otherwise agreed by the Company and the Representatives),
payable to the order of the Company in New York Clearing House (next day)
funds, by causing DTC to credit the Debentures to the account of the
Representatives at DTC. The Company will cause the certificates representing
the Debentures to be made available to Goldman, Sachs & Co. for checking at
least twenty-four hours prior to the Time of Delivery (as defined below) at
the office of DTC or its designated custodian (the "Designated Office"). The
time and date of such delivery and payment shall be 9:30 a.m., New York
-3-
City
time, on October 10, 1995 or such other time and date as Goldman, Sachs & Co.
and the Company may agree upon in writing. Such time and Date are herein
called the Time of Delivery."
Unless otherwise agreed to by the Company and the Representatives, the
documents to be delivered at the time of Delivery by or on behalf of the
parties hereto pursuant to Section 5 hereof, including the cross receipt for
the Debentures and any additional documents requested by the Underwriters
pursuant to Section 5(h) hereof, will be delivered at the offices of Morgan,
Lewis & Bockius LLP, 101 Park Avenue, New York, New York 10178 (the "Closing
Location"), and the Debentures will be delivered at the Designated Office, all
at the Time of Delivery. Unless otherwise agreed to by the Company and the
Representatives, a meeting will be held at the Closing Location at 3:00 p.m.,
New York City time, on the New York Business Day next preceding the Time of
Delivery, at which meeting the final drafts of the documents to be delivered
pursuant to the preceding sentence will be available for review by the parties
hereto. For the purposes of this Section 4, "New York Business Day" shall
mean each Monday, Tuesday, Wednesday, Thursday and Friday which is not a day
on which banking institutions in New York City are generally authorized or
obligated by law or executive order to close.
5. CONDITIONS TO UNDERWRITERS' OBLIGATIONS. Your several obligations
hereunder are subject to the accuracy of the representations and warranties on
the part of the Company herein at and as of the date hereof and at and as of
the Closing Date, to the accuracy of the statements of Company officers made
pursuant to the provisions hereof, to the performance by the Company of its
obligations hereunder and to the following additional conditions:
(a) No stop order suspending the effectiveness of the
Registration Statement shall be in effect at the Closing Date; no
proceedings for that purpose shall be pending before or threatened by the
Commission at the Closing Date; any request for additional information on
the part of the Commission (to be included in the Registration Statement
or the Prospectus or otherwise) shall have been complied with to the
satisfaction of Morgan, Lewis & Bockius LLP, counsel for the
Underwriters; subsequent to the execution of this Agreement, the rating
assigned by any nationally recognized securities rating agency to any
debt securities or preferred stock of the Company as of the date of this
Agreement shall not have been lowered at or before the Closing Date; and
no amendment or supplement to the Registration Statement or Prospectus
shall have been filed hereafter to which you shall have objected, in
writing, after having received reasonable notice.
(b) The legality and sufficiency of all proceedings relative to
the authorization and issuance of the stock shall have been approved by
Steven F. McCarrel, Deputy General Counsel of the Company and you shall
have received his opinion or opinions, dated the Closing Date, and in
form satisfactory to counsel for the Underwriters, to the effect that:
(i) The Company is a corporation duly organized and validly
existing and in good standing under the laws of the State of Oregon
and is duly qualified to do business as a foreign corporation in
the States of Arizona, California, Washington and Montana and the
District of Columbia, with power and authority (corporate and
other) to own its properties and operate its business, and neither
the character of the properties owned by it nor the nature of the
business it transacts makes necessary its licensing or
qualification as a foreign corporation in any other state or
jurisdiction;
(ii) The Company's subsidiaries have each been duly
organized and are validly existing and in good standing under the
laws of the states or jurisdictions in which they have been
organized, with power and authority (corporate and other) to own
their
-4-
respective properties and to operate their respective
businesses, and each of such corporations is duly qualified to do
business as a foreign corporation in each jurisdiction in which the
character of the properties owned or leased by it or the nature of
the business it transacts makes such qualification necessary;
(iii) The Company and each of such active subsidiaries have
valid and sufficient grants, franchises, miscellaneous permits and
easements free from unduly burdensome restrictions, adequate for
the conduct of their respective businesses in the territories in
which they are now conducting such businesses and the ownership of
the respective properties now owned by them;
(iv) All material contracts to which the Company is a party
and which are described or referred to in the Prospectus are valid
and legally binding contracts of the Company, and, except as the
validity thereof may be the subject of litigation referred to in
the Prospectus, to the best of such counsel's knowledge, of the
other parties thereto;
(v) All authorizations, approvals, consents or other orders
of any governmental authority or agency required in connection with
the authorization, issuance and sale of the Debentures by the
Company pursuant to this Agreement have been obtained and continue
in full force and effect;
(vi) The Indenture has been duly authorized, executed and
delivered, has been duly qualified under the Trust Indenture Act,
and constitutes a valid and legally binding instrument in
accordance with its terms, except as limited by bankruptcy,
insolvency, fraudulent conveyance, reorganization or other similar
laws relating to or affecting the enforcement of creditors' rights
generally and general equitable principles (whether considered in a
proceeding in equity or at law);
(vii) The Debentures are in due and proper form, have been
duly and validly authorized and executed by the Company and, when
authenticated and delivered in accordance with the Indenture and
paid for by the purchasers thereof in accordance with this
Agreement, will constitute valid and legally binding agreements of
the Company enforceable in accordance with their respective terms,
except as limited by bankruptcy, insolvency, fraudulent conveyance,
reorganization or other similar laws relating to or affecting the
enforcement of creditors' rights generally and general equitable
principles (whether considered in a proceeding in equity or at
law); the Debentures have been listed (subject to official notice
of issuance) on the New York Stock Exchange;
(viii) The Debentures and the Indenture conform to the
descriptions thereof contained in the Registration Statement and
Prospectus and the statements in the Registration Statement and
Prospectus, recited therein as having been prepared or reviewed by
such counsel, are true and correct;
(ix) This Agreement has been duly authorized, executed and
delivered by the Company;
(x) The Registration Statement has become effective under
the Act, and, to the best of the knowledge of such counsel, no stop
order suspending the effectiveness of the Registration Statement is
in effect and no proceedings for that purpose are pending before or
threatened by the Commission, and the Registration Statement and
Prospectus, and any amendment or supplement thereto (except as to
financial statements and other
-5-
financial data contained therein, as
to which such counsel need express no opinion) comply as to form in
all material respects with the applicable requirements of the Act,
the Trust Indenture Act and the Rules and Regulations of the
Commission under such Acts; and such counsel does not believe that
at the date hereof or at the Closing Date either the Registration
Statement or the Prospectus, or any such amendment or supplement,
contains any untrue statement of a material fact or omits to state
any material fact required to be stated therein or necessary in
order to make the statements therein not misleading;
(xi) The descriptions in the Registration Statement and
Prospectus of statutes, legal and governmental proceedings, and
contracts and other documents are, to the best of the knowledge of
such counsel, accurate and fairly present the information required
to be shown therein; and such counsel does not know of any legal or
governmental proceedings required to be described in the Prospectus
which are not described as required or any contracts or documents
of a character required to be described in the Registration
Statement or Prospectus or to be filed as exhibits to the
Registration Statement which are not described or filed as
required;
(xii) The execution and delivery of, and compliance with,
this Agreement, the Debentures and the Indenture will not conflict
with or constitute a breach of or default under the Articles of
Incorporation or Bylaws of the Company, any indenture, mortgage,
deed of trust or other agreement or instrument known to such
counsel by which the Company is bound, or any applicable law, or to
the best of his knowledge, any administrative regulation or court
decree; and
(xiii) The Company is a "subsidiary company" of a "holding
company" within the meaning of the PUHCA, which holding company is
exempt from application of all provisions of the PUHCA except
Section 9(a)(2) thereof.
In rendering such opinion counsel may rely as to matters involving the
laws of any jurisdiction other than the State of Oregon, upon the opinion or
opinions of such local counsel as shall be acceptable to you and counsel for
the Underwriters; and with respect to the opinions contemplated by clauses (i)
and (ii) of paragraph (b) of this Section 5, upon advices from public
officials as to the good standing of the Company and its subsidiaries.
(c) You shall have received from Morgan, Lewis & Bockius LLP,
counsel for the Underwriters, such opinion or opinions, dated the Closing
Date, with respect to the validity of the Debentures, the Indenture, including
the Supplemental Indenture, the Registration Statement, the Prospectus and
other related matters as you may require, and the Company shall have furnished
to such counsel such documents as they reasonably request for the purpose of
enabling them to pass upon such matters.
In giving the opinions contemplated by paragraph (c) of this Section 5,
counsel may rely on certificates of responsible officers of the Company as to
matters of fact and upon advice from state authorities as to the good standing
of the Company and its subsidiaries.
(d) You shall have received a certificate, dated the Closing
Date, signed by the Chairman, President or any Vice President and the
Treasurer or any Assistant Treasurer or the Controller of the Company, to the
effect that, to the best of their knowledge:
-6-
(i) No stop order suspending the effectiveness of the
Registration Statement is in effect and no proceedings for such purpose
are pending before or threatened by the Commission;
(ii) Since the respective dates as of which information is
given in the Registration Statement and the Prospectus as supplemented on
the date of this Agreement, there has not been any material adverse
change in the condition of the Company and its subsidiaries, financial or
otherwise, or in the results of operations of the Company and its
subsidiaries, except as reflected in or contemplated by the Registration
Statement and the Prospectus as supplemented on the date of this
Agreement, and that except as so reflected or contemplated since such
dates there has not been any material transaction entered into by the
Company or any of its subsidiaries, other than transactions in the
ordinary course of business;
(iii) The Company does not have any material contingent
obligations which are not disclosed in the Registration Statement and the
Prospectus;
(iv) The representations and warranties of the Company
herein are true and correct in all material respects at and as of the
Closing Date; and
(v) The Company has performed all agreements herein
contained to be performed on its part at or prior to the Closing Date.
(e) You shall have received on the date hereof and on the Closing
Date, from Arthur Andersen LLP, letters in form and substance satisfactory to
you.
(f) All approvals and consents of the Public Utility Commission
of Oregon required for the valid issuance and sale of the Debentures by the
Company in accordance with the provisions of this Agreement shall have been
obtained.
(g) Prior to the Closing Date and subsequent to the date of this
Agreement, the Company shall not have sustained a substantial loss by fire,
flood, accident or other calamity which, whether or not such loss shall have
been insured, nor shall any regulatory authority having jurisdiction over the
Company have made any materially adverse determination not described in the
Prospectus which, in any of the above events, in your judgment renders it
inadvisable to proceed with the delivery of the Debentures.
(h) The Company shall have furnished to you, in form and
substance satisfactory to you and to counsel for the Underwriters, such other
certificates and opinions as you may reasonably request with respect to the
matters contemplated herein.
(i) Subsequent to the date of this Agreement, (i) trading on the
New York Stock Exchange shall not have been suspended or limited by the New
York Stock Exchange, Inc. or by order of the Commission or any other
governmental authority having jurisdiction nor shall a general banking
moratorium have been declared by Federal or New York authorities; (ii) there
shall not have been any suspension of trading of any securities of the Company
on any exchange or in the over-the-counter market; (iii) there shall not have
been an outbreak or escalation of hostilities between the United States and
any foreign power, or of any other insurrection or armed conflict involving or
affecting the United States, or any substantial national or international
calamity or emergency, if in your judgment, the effect of any such outbreak,
escalation, insurrection, conflict, calamity or emergency makes it impractical
or inadvisable to proceed with completion of the delivery of the Debentures;
(iv) the rating assigned by any nationally recognized securities rating agency
to any debt securities or preferred stock of the Company
-7-
shall not have been
lowered; or (v) except as set forth in the Prospectus first filed pursuant to
Rule 424 under the Act after the date hereof, there shall not have been any
material adverse change in the condition or prospects of the Company and its
subsidiaries as a whole, financial or otherwise which, in any case, in your
judgment, renders it inadvisable to proceed with delivery of the Debentures.
All such opinions, certificates, letters and documents shall be deemed
to be in compliance with the provisions hereof only if they are in all
material respects satisfactory to you and your counsel.
In case any of the conditions specified above in this Section 5 shall not
have been fulfilled at the Closing Date, you may waive the compliance by the
Company with any such condition, by mailing or delivering written notice
thereof to the Company.
If any condition of the Underwriters' obligations hereunder to be
satisfied on or prior to the Closing Date is not so satisfied, you may
terminate this Agreement without liability on the part of any Underwriter or
of the Company, except for the expenses to be paid or reimbursed by the
Company pursuant to Section 6(h) hereof and except for any liability under
Section 8 hereof.
6. COVENANTS BY THE COMPANY. In further consideration of the
agreements by the Underwriters herein contained, the Company covenants as
follows:
(a) To file no amendment to the Registration Statement and, prior
to the completion of the offering of the Debentures to make no supplement
to the Prospectus, including the initial supplement to the Prospectus
which is filed pursuant to Rule 424 under the Act referred to in Section
1(a) hereof, of which you have not been advised and furnished with a copy
or to which you have promptly and reasonably objected, and to advise you
as soon as the Company is advised thereof, and to confirm the advice in
writing, (i) of any request of the Commission for amendment or
supplementation of the Registration Statement or Prospectus or for
additional information relating thereto and (ii) of the issuance by the
Commission of any stop order suspending the effectiveness of the
Registration Statement or any amendment to the Registration Statement, or
of the initiation or threat of initiation of any proceedings for such
purpose. The Company will use its best efforts to prevent the issuance
of any such stop order or to obtain as soon as possible the lifting
thereof, if issued. The Company will advise you promptly of any order or
communication of any public authority addressed to the Company suspending
or threatening to suspend qualification of the Debentures for sale in any
state. The Company will file promptly all reports and any definitive
proxy or information statements required to be filed by the Company with
the Commission pursuant to the Exchange Act subsequent to the date of the
Prospectus and for so long as the delivery of a prospectus is required in
connection with the offering and sale of the Debentures.
(b) To deliver without charge to each of you a signed copy of the
Registration Statement as filed and all amendments thereto with exhibits,
and to deliver without charge to each of you and any other Underwriter
such reasonable number of copies as you may request of the Registration
Statement and all amendments thereto excluding exhibits.
(c) Prior to 10:00 a.m., New York City time, on the New York
Business day next succeeding the date of this Agreement and from time to
time, to deliver without charge to you, during such period as in the
opinion of counsel for the Underwriters a prospectus is required by law
to be delivered in connection with sales, so many copies of the
Prospectus in New York City (as supplemented or amended if the Company
shall have prepared any supplement or amendment thereto) as you may
reasonably request.
-8-
(d) To prepare forthwith and deliver without charge to each of
you and to the dealers (whose names and addresses you will furnish to the
Company for such purpose) to whom Debentures may have been sold by or on
behalf of any of the Underwriters, and upon your request to any other
dealers, for such period as in the opinion of counsel for the
Underwriters a prospectus is required by law to be delivered in
connection with sales, such amendments or supplements to the Prospectus
that the statements in the Prospectus as so amended or supplemented will
not be misleading in the light of the circumstances under which they are
made if any event shall occur as a result of which it is necessary so to
amend or supplement the Prospectus in order to make the statements
therein, in the light of the circumstances under which they are made, not
misleading; and to prepare and furnish to you upon your request, in such
quantities as you may reasonably request, copies of any prospectus or
prospectuses as may be necessary to permit compliance with Section
10(a)(3) of the Act.
(e) To use its best efforts upon your request to qualify the
Debentures for offer and sale under the securities or Blue Sky laws of
such jurisdictions as you may designate, and to pay the costs and fees
incident thereto and to the preparation by counsel for the Underwriters
of memoranda as to the status of the Debentures under the securities or
Blue Sky laws of certain jurisdictions and as to the eligibility of the
Debentures for investment under certain state laws; provided that the
Company shall not be required for this purpose to qualify as a foreign
corporation in any state or to consent to service of process in any
jurisdiction otherwise than in connection with the offer and sale of the
Debentures.
(f) To furnish to you with reasonable promptness during a period
of five years from the date hereof (i) audited annual balance sheets and
audited annual statements of income and retained earnings of the Company
and its subsidiaries consolidated, (ii) quarterly statements of income
for each of the first three fiscal quarters of the Company and its
subsidiaries consolidated (which need not be audited), (iii) a copy of
each report of the Company mailed to stockholders or filed with the
Commission, and (iv) such other information concerning the Company as you
may reasonably request.
(g) To prepare earnings statements, which need not be audited,
that will satisfy the requirements of Section 11(a) of the Act, covering
(i) a twelve-month period beginning not later than fourteen months after
the beginning of the fiscal quarter next commencing after the effective
date of the Registration Statement or if such fiscal quarter is the first
fiscal quarter in a fiscal year, fifteen months after the beginning of
such fiscal quarter and (ii) a twelve-month period beginning not later
than the first day of the Company's fiscal quarter next following the
date of this Agreement and make such earnings statements generally
available to the Company's security holders as soon as practicable.
(h) To pay all costs and expenses incident to the performance of
its obligations under this Agreement, including all expenses incident to
the preparation of certificates representing the Debentures and their
issuance and delivery, the fees and expenses of the Company's counsel and
accountants, the costs and expenses incident to the preparation, printing
and filing of the Registration Statement (including all exhibits
thereto), this Agreement and the cost of furnishing to the Underwriters
copies of the Registration Statement and the Prospectus. The Company
shall also pay any fee charged by a rating agency in connection with its
rating of the Debentures and any fees payable in connection with the
listing of the Debentures on an exchange. The Company shall not, however,
be required to pay for any of your expenses or those of any of the other
Underwriters other than as hereinabove set forth except as provided in
Section 8 hereof.
-9-
(i) To use all reasonable efforts to comply with, or cause to be
complied with, the conditions precedent to the several obligations of the
Underwriters specified in Section 5 hereof.
(j) To refrain from and after the date hereof to the Closing
Date, without your prior consent, from offering or selling, or entering
into any agreement to sell, any debt securities of the Company with a
maturity of more than one year, including additional Debentures of the
Company.
7. INDEMNIFICATION. (a) The Company agrees to indemnify and hold
harmless each of the Underwriters and each person, if any, who controls any
Underwriter within the meaning of Section 15 of the Act, from and against any
and all losses, claims, damages, liabilities or expenses (including the
reasonable costs of investigation) to which, jointly or severally, such
Underwriter or such controlling person may become subject under the Act, or
otherwise, insofar as any such loss, claim, damage, lability or expense (or
actions with respect thereto) arises out of or is based on any untrue
statement or alleged untrue statement of a material fact contained in the
Registration Statement or the Prospectus, or any amendment or supplement
thereto, or arises out of or is based on the omission or the alleged omission
to state therein a material fact required to be stated therein or necessary to
make the statements therein not misleading, except insofar as such losses,
claims, damages, liabilities or expenses arise out of or are based upon any
such untrue statement or omission or alleged untrue statement or omission made
in reliance upon information furnished herein or in writing to the Company by
any of you or by any other Underwriter through you, expressly for use therein.
(b) Each Underwriter agrees to indemnify and hold harmless the
Company, its directors, its officers who signed the Registration Statement and
each person, if any, who controls the Company within the meaning of Section 15
of the Act from and against any and all losses, claims, damages, liabilities
or expenses (including the reasonable costs of investigation) to which,
jointly or severally, the Company or such controlling person may become
subject under the Act, or otherwise, insofar as any such loss, claim, damage,
liability or expense (or actions with respect thereto) arises out of or is
based on any untrue statement or alleged untrue statement of a material fact
contained in the Registration Statement or the Prospectus, or any amendment or
supplement thereto, or arises out of or is based on the omission or the
alleged omission to state therein a material fact required to be stated
therein or necessary to make the statements therein not misleading, which
untrue statement or omission or alleged untrue statement or omission was made
in reliance upon information furnished herein or in writing to the Company by
any of you or by any other Underwriter through you, expressly for use therein.
(c) The Company agrees that upon the commencement of any action
against it, any of its directors or officers who signed the Registration
Statement, or any person controlling it as aforesaid, and each Underwriter
agrees that upon the commencement of any action against it or any person
controlling it as aforesaid, in respect of which indemnity may be sought on
account of any indemnity agreement contained herein, it will promptly give
written notice of the commencement thereof to the party or parties against
whom indemnity shall be sought, but the omission so to notify such
indemnifying party or parties of any such action shall not relieve such
indemnifying party or parties from any liability which it or they may have to
the indemnified party or parties otherwise than on account of such indemnity
agreement. In case such notice of any such action shall be so given, such
indemnifying party or parties shall be entitled to participate at its or their
own expense in the defense or, if it or they so elect, to assume the defense
of such action with counsel chosen by such indemnifying party or parties and
satisfactory to the indemnified party or parties who shall be defendant or
defendants in such action, unless such indemnified party or parties reasonably
object to such assumption on the ground that there may be legal defenses
available to it or them which are different from or in addition to those
available to such indemnifying party or parties. If the indemnifying party or
parties shall not assume the defense of such action, such indemnifying party
or parties will reimburse such indemnified party or parties for the
-10-
reasonable
fees and expenses of any counsel retained by them. If the indemnifying party
or parties shall elect to assume the defense and the indemnified party or
parties shall not have so objected thereto, such indemnified party or parties
shall bear the fees and expenses of any additional counsel retained by them.
In no event shall the indemnifying party or parties be liable for the fees and
expenses of more than one counsel for all indemnified parties in connection
with any one action or separate but similar or related actions in the same
jurisdiction arising out of the same general allegations or circumstances.
(d) If the indemnification provided for in this Section 7 is
unavailable to or insufficient to hold harmless an indemnified party under
subsection (a) or (b) above in respect of any losses, claims, damages or
liabilities (or actions in respect thereof) referred to therein, then each
indemnifying party shall contribute to the amount paid or payable by such
indemnified party as a result of such losses, claims, damages or liabilities
(or actions in respect thereof) in such proportion as is appropriate to
reflect the relative benefits received by the Company on the one hand and the
Underwriters on the other from the offering of the Debentures to which such
loss, claim, damage or liability (or action in respect thereof) relates. If,
however, the allocation provided by the immediately preceding sentence is not
permitted by applicable law or if the indemnified party failed to give the
notice required under subsection (c) above, then each indemnifying party shall
contribute to such amount paid or payable by such indemnified party in such
proportion as is appropriate to reflect not only such relative benefits but
also the relative fault of the Company on the one hand and the Underwriters on
the other in connection with the statements or omissions which resulted in
such losses, claims, damages or liabilities (or actions in respect thereof),
as well as any other relevant equitable considerations. The relative benefits
received by the Company on the one hand and the Underwriters on the other
shall be deemed to be in the same proportion as the total net proceeds from
such offering (before deducting expenses) received by the Company bear to the
total underwriting discounts and commissions received by the Underwriters.
The relative fault shall be determined by reference to, among other things,
whether the untrue or alleged untrue statement of a material fact or the
omission or alleged omission to state a material fact relates to information
supplied by the Company on the one hand or the Underwriters on the other and
the parties' relative intent, knowledge, access to information and opportunity
to correct or prevent such statement or omission. The Company and the
Underwriters agree that it would not be just and equitable if contribution
pursuant to this subsection (d) where determined by pro rata allocation or by
any other method of allocation which does not take account of the equitable
considerations referred to above in this subsection (d). The amount paid and
payable by an indemnified party as the result of the losses, claims, damages
or liabilities (or actions in respect thereof) referred to above in this
subsection (d) shall be deemed to include any legal or other expenses
reasonably incurred by such indemnified party in connection with investigating
or defending any such action or claim. No person guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the Act) shall be
entitled to contribution from any person who was not guilty of such fraudulent
misrepresentation.
(e) The agreements of the Company and of the Underwriters
contained in this Section 7 and the representations and warranties of the
Company set forth in this Agreement shall remain operative and in full force
and effect regardless of (i) any termination of this Agreement pursuant to any
provision hereof or otherwise, (ii) any investigation made by or on behalf of
any Underwriter or controlling person or by or on behalf of the Company, its
directors or any officer who signed the Registration Statement, or any
controlling person, and (iii) acceptance and payment hereunder for any
Debentures.
8. TERMINATION. If an Underwriter shall fail (other than for a reason
sufficient to justify the termination of this Agreement) to purchase on the
Closing Date the principal amount of Debentures agreed to be purchased by such
Underwriter, you may find one or more substitute underwriters to purchase such
Debentures, make such other arrangements as you or they may deem advisable or
the remaining Underwriters may agree to purchase such Debentures, in such
proportions as may be approved by you
-11-
(or those of you who shall not have so
failed) in each case upon the terms herein set forth. If no such arrangements
have been made within 24 hours after the Closing Date and
(a) the aggregate principal amount of Debentures to be purchased
by the defaulting Underwriter shall not exceed 10% of the aggregate
principal amount of Debentures, each of the non-defaulting Underwriters
shall be obligated to purchase such Debentures on the terms herein set
forth in proportion to their respective obligations hereunder, or
(b) the aggregate principal amount of Debentures to be purchased
by the defaulting Underwriter shall exceed 10% of the aggregate principal
amount of the Debentures, the Company shall be entitled to an additional
period of 24 hours within which to find one or more substitute
underwriters satisfactory to you (or to those of you who shall not have
so failed) to purchase such Debentures upon the terms set forth herein.
A substitute underwriter hereunder shall become an Underwriter for all
purposes of this Agreement.
In any such case, either you (or those of you who shall not have so
failed) or the Company shall have the right to postpone the Closing Date for a
period of not more than five business days in order that necessary changes and
arrangements may be effected by you and the Company. If neither the non-
defaulting Underwriter nor the Company shall make arrangements pursuant to
this Section 8 within the period stated for the purchase of the Debentures
which such defaulting Underwriter agreed to purchase, this Agreement shall
terminate without liability on the part of the non-defaulting Underwriter to
the Company and without liability on the part of the Company, except, in both
cases, as provided in Section 7 and, in the event you (or to those of you who
shall not have so failed) could have otherwise terminated this Agreement
because of any failure on the part of the Company to comply with the terms or
fulfill any conditions of this Agreement, as provided in Section 6(h) hereof
and hereafter in this Section 8. The provisions of this Section 8 shall not in
any way affect the liability of any defaulting Underwriter to the Company or
the non-defaulting Underwriter arising out of such default.
If the purchase of the Debentures by the Underwriters is not consummated
for any reason other than solely because of the termination of this Agreement
pursuant to Section 8 or the occurrence of any event specified in clause (i),
(ii) or (iii) of Section 5(i), the Company will reimburse the Underwriters for
all out-of-pocket expenses (including fees and disbursements of counsel)
reasonably incurred by them in connection with the offering of the Debentures.
The Company shall be entitled to act and rely upon any request, consent,
notice or agreement made or given by you.
9. NOTICES. Except as otherwise provided herein, all communications
hereunder shall be in writing, and, if sent to any of the Underwriters, shall
be mailed, delivered or telecopied and confirmed
to you, at c/o Goldman, Sachs & Co., 85 Broad Street, New York, New York
10004, attention of Registration Department, or, if sent to the Company, shall
be mailed, delivered or telegraphed and confirmed to it at 121 S.W. Salmon
Street, Portland, Oregon 97204, attention of Chief Financial Officer or at
such other address as the Company shall furnish to you in writing.
NY02/212938.2
-12-
10. SUCCESSORS. This Agreement shall inure to the benefit of and be
binding upon the successors of the several Underwriters and shall inure to the
benefit of and be binding upon the successors of the Company. Nothing
expressed or mentioned in this Agreement is intended or shall be construed to
give any person or corporation other than the parties hereto and their
respective successors and the officers and directors and controlling persons
referred to in Section 7 hereof any legal or equitable right, remedy or claim
under or in respect of this Agreement or any provision herein contained; this
Agreement and all conditions and provisions hereof being intended to be and
being for the sole and exclusive benefit of the parties hereto and their
respective successors and said officers and directors and controlling persons
and for the benefit of no other person or corporation. The term "successors"
shall not include any purchaser of Debentures merely because of such purchase.
11. NEW YORK LAW TO GOVERN. This Agreement shall be construed in
accordance with the laws of the State of New York.
12. EFFECTIVENESS. If the foregoing is in accordance with your
understanding of our agreement, kindly sign and return to us the enclosed
duplicates hereof, whereupon it will become a binding agreement between the
Company and the several Underwriters in accordance with its terms.
13. COUNTERPARTS. This Agreement may be executed in several
counterparts, each of which shall be an original and all of which shall
constitute one in the same instrument
Very truly yours,
PORTLAND GENERAL ELECTRIC COMPANY
By ___/s/ Joseph M. Hirko____________
Name: Joseph M. Hirko
Title: Vice President and
Chief Financial Officer
The foregoing Agreement is hereby confirmed
and accepted as of the date first above written.
GOLDMAN, SACHS & CO.
MERRILL LYNCH, PIERCE, FENNER & SMITH INCORPORATED
SMITH BARNEY INC.
By: ____/s/ GOLDMAN, SACHS & CO.___________
GOLDMAN, SACHS & CO.
On behalf of the Underwriters
NY02/212938.2
-13-
SCHEDULE A
UNDERWRITER PRINCIPAL AMOUNT
Goldman, Sachs & Co. $17,167,500
Merrill Lynch, Pierce, Fenner & Smith Incorporated 17,166,250
Smith Barney Inc. 17,166,250
Robert W. Baird & Co. Incorporated 500,000
J.C. Bradford & Co. 500,000
Alex. Brown & Sons Incorporated 1,125,000
Crowell, Weedon & Co. 500,000
Dain Bosworth Incorporated 500,000
Dillon, Read & Co. Inc. 1,125,000
Doft & Co., Inc. 500,000
A.G. Edwards & Sons, Inc. 1,125,000
Everen Securities, Inc. 1,125,000
Fahnestock & Co. Inc. 500,000
Interstate/Johnson Lane Corporation 500,000
Janney Montgomery Scott Inc. 500,000
Kennedy, Cabot & Co. 500,000
Legg Mason Wood Walker, Incorporated 500,000
McDonald & Company Securities, Inc. 500,000
McGinn, Smith & Co., Inc. 500,000
Morgan Keegan & Company, Inc. 500,000
The Ohio Company 500,000
Olde Discount Corporation 500,000
Oppenheimer & Co., Inc. 1,125,000
Pacific Crest Securities 500,000
PaineWebber Incorporated 1,125,000
Piper Jaffray Inc. 500,000
Prudential Securities Incorporated 1,125,000
Ragen MacKenzie Incorporated 500,000
Rauscher Pierce Refsnes, Inc. 500,000
Redwood Securities Group, Inc. 500,000
The Robinson-Humphrey Company, Inc. 500,000
Roney & Co. 500,000
SBC Capital Markets Inc. 1,125,000
Sutro & Co. Incorporated 500,000
Trilon International Inc. 500,000
Tucker Anthony Incorporated 500,000
U.S. Clearing Corp. 500,000
Van Kasper & Company 500,000
Wedbush Morgan Securities 500,000
Wheat, First Securities, Inc. 500,000
Total ................................................. $75,000,000
NY02/212938.2
-14-
POWER OF ATTORNEY
The undersigned Joseph M. Hirko, in his capacity as Senior Vice
President and Chief Financial Officer of Portland General Corporation (the
"Corporation"), hereby appoints Joseph E. Feltz, Assistant Controller of
the Corporation, as the attorney-in-fact, in any and all capacities stated
herein, to execute on behalf of the undersigned and to file with the
Securities and Exchange Commission under the Securities Exchange Act of
1934, the Portland General Corporation Quarterly Report on Form 10-Q for
the quarter ended September 30, 1995.
Dated: October 27, 1995
Portland, Oregon
/s/ Joseph M. Hirko
Joseph M. Hirko
POWER OF ATTORNEY -- 10-Q J:\L\FINANCE\BOARD\10QAUTH.FRM
