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201 South Main, Suite 2300
Salt lake City, Utah 84111
October 8, 2007
Idaho Public Utilities Commission
472 West Washington Street
Boise, Idaho 83702
Attn: Ms. Jean D. Jewell
Commission Secretary
Re:Case No. PAC-07-
Order No. 30258
Report of First Mortgage Bond Offering in
Aggregate Principal Amount of $600,000,000
Dear Commissioners:
Pursuant to the referenced Order, PacifiCorp submits to the Commission an original and nine (9)
copies of the following documents relating to PacifiCorp s October 3 2007 offering of
$600 000 000 aggregate principal amount of First Mortgage Bonds, 6.25% Series due 2037 (the
Bonds
Prospectus Supplement dated September 28 2007
Underwriting Agreement between PacifiCorp and Greenwich Capital Markets, Inc., 1. P.
Morgan Securities Inc. and Lehman Brothers, Inc. dated September 28 2007
Report of Securities Issued
With regard to the use of the proceeds ITom the issuance of the Bonds, please see "Use of
Proceeds" on page S-10 of the enclosed Prospectus Supplement.
Under penalty ofpeIjury, I declare that I know the contents of the enclosed documents, and they
are true, correct, and complete.
Please contact me if you have any questions about this letter or the enclosed documents.
Sincerely,
fJwv-N, / PCJ
Bruce N. Williams
Vice President and Treasurer
Enclosurescc: Terri Carlock (Idaho Commission)
PROSPECTUS SUPPLEMENT TO PROSPECTUS DATED FEBRUARY 13, 2007 .
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$600,000,000 First Mortgage Bonds
25 % Series Due 2037
The bonds will bear interest at 6.25% per year and will mature on October 15, 2037. We will pay
interest on the bonds on April 15 and October 15 of each year, beginning on April 15 , 2008.
We may redeem some or all of the bonds at any time at the redemption prices discussed under
the caption "Description of the Bonds-Optional Redemption.
We will not apply for listing of the bonds on any securities exchange or include them in any
automated quotation system.
Investing in the bonds involves risks. See "Risk Factors" on page S-9 for information on certain
matters you should consider before buying the bonds.
Per Bond........................................
Total. . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Underwriting
Price to Discounts and Proceeds, Before
Public
(')
Commissions Expenses, to Us(l)
99.875%875%99.000%
$599 250,000 $5,250 000 $594 000 000
(1) Plus accrued interest, if any, from October 3, 2007.
The underwriters expect to deliver the bonds to purchasers through The Depository Trust
Company on or about October 3, 2007.
Neither the Securities and Exchange Commission nor any state securities commission has
approved or disapproved of these securities or determined if this prospectus supplement or the related
prospectus is truthful or complete. Any representation to the contrary is a criminal offense.
Joint Book-Running Managers
RBS GREENWICH CAPITAL JPMORGAN LEHMAN BROTHERS
The date of this prospectus supplement is September 28, 2007.
TABLE OF CONTENTS
Prospectus Supplement
Table of Contents....................................... .............................
About This Prospectus Supplement.
... .,...... ..... .... .... ............. ....... .... ....
Where You Can Find More Information
................................................
Documents Incorporated by Reference
.................................................
Forward-Looking Statements ..........................................................
Prospectus Supplement Summary
......................................................
AboutPacifiCorp
.......................................................,............
The Offering ...............................................................,........RiskFactors.........................................................................
Summary Consolidated Financial Information..
.... .... .... ....... ......... ...... ........
Use of Proceeds......................................... .............................Capitalization....................................................,...................
Consolidated Ratios of Earnings to Fixed Charges
.......................................
Description of the Bonds.................................. ............................
Book-Entry Procedures and Settlement.. .....
... ......... .... .... ... .... ........... ...,
Certain United States Federal Income Tax Considerations.
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Underwriting......................................................................,.LegaIMatters........................................................................Experts.................................................................,...........
Prospectus
AboutThisProspectus................................................................RiskFactors.......................................................................,.
Forward-Looking Statements ..........................................................
The Company
..................................................................,....
Consolidated Ratios of Earnings to Fixed Charges
.......................................
Where You Can Find More Information
................................................
Use of Proceeds......................................... .............................
Description of Additional Bonds..
.......,............... ..... ............ ...... .... ...
Description of Unsecured Debt Securities....................
...........................
Book-Entry Issuance
.................................................................
Plan of Distribution
..................................................................
LegaIMatters........................................................................Experts.............................................................................
PaKe
ABOUT THIS PROSPECTUS SUPPLEMENT
This document is in two parts. The first part is the prospectus supplement, which describes the
specific terms of the bonds we are offering and certain other matters relating to us and our financial
condition. The second part, the base prospectus, gives more general information about securities we
may offer from time to time, some of which does not apply to the bonds we are offering. Generally,
when we refer to the prospectus, we are referring to both parts of this document combined. If the
description of the bonds in the prospectus supplement differs from the description in the base
prospectus, the description in the prospectus supplement supersedes the description in the base
prospectus.
You should rely only on the information contained in this document or to which this document
refers you. We have not, and the underwriters have not, authorized anyone to provide you with
different information. If anyone provides you with different or inconsistent information, you should
not rely on it. This document may only be used where it is legal to sell these securities. The
information in this document may only be accurate as of the date of this document. Our business
financial condition, results of operations and prospects may have changed since that date.
WHERE YOU CAN FIND MORE INFORMATION
We file annual, quarterly and special reports and other information with the Securities and
Exchange Commission (the "SEC"). Our SEC filings are available to the public over the internet at
the SEC's web site at http://www.sec.gov. You may also read and copy any document we file at the
SEC's public reference room at 100 F Street, N., Washington, D.C. 20549. Please call the SEC at
800-SEC-0330 for further information regarding the public reference rooms. We make available free
of charge through our internet website at http://www.pacificorp.com our annual reports on Form 10-
as updated by our quarterly reports on Form 10-Q and current reports on Form 8-, and amendments
to those reports filed or furnished in compliance with the requirements of Section 13(a) or 15(d) of
the Securities Exchange Act of 1934 (the "Exchange Act"), as soon as reasonably practicable after we
electronically file with, or furnish to, the SEC. Any information available on or through our website is
not part of this prospectus supplement, except to the extent it is expressly incorporated by reference
herein as set forth under "Documents Incorporated by Reference" below.
You may also request a copy of our filings at no cost, by writing or telephoning us at the
following:
PacifiCorp
825 NE Multnomah, Suite 1900
Portland, Oregon 97232-4116
Telephone: (503) 813-5000
Attention: Treasury
DOCUMENTS INCORPORATED BY REFERENCE
The following documents filed with the SEC (File No. 001-05152) are incorporated by reference
into this prospectus supplement:
Our Transition Report on Form 10-K for the transition period from April 1, 2006 to
December 31, 2006 (the "Form lO-
Our Quarterly Reports on Form 10-Q for the quarterly periods ended March 31 , 2007 and
June 30 2007 (the "Forms 10-
Our Current Reports on Form 8-K filed March 12, 2007 , March 14, 2007, June 4, 2007
July 30, 2007, August 30, 2007 and August 31, 2007 (the "Forms 8-
Incorporation by reference means that we can disclose important information to you by referring
you to those documents. The information incorporated by reference is considered to be part of this
prospectus supplement. We also incorporate by reference any future filings made with the SEC prior
to the consummation of this offering under Sections 13(a), 13(c), 14, or 15(d) of the Exchange Act
(other than those "furnished" pursuant to Item 2.02 or Item 7.01 or disclosures made in accordance
with Regulation FD on Item 8.01 in any Current Report on Form 8-K or other information
furnished" to the SEC). Any statement contained in a document incorporated by reference herein
shall be deemed to be modified or superseded for purposes of this prospectus supplement to the
extent a statement contained herein, or in any other subsequently filed document also incorporated
herein by reference , modifies or supersedes such statement. Any such statement so modified or
superseded shall not be deemed to constitute a part of this prospectus supplement except as so
modified or superseded.
FORWARD-LOOKING STATEMENTS
This prospectus supplement and the additional information described under the heading
Documents Incorporated by Reference" may contain "forward-looking statements" within the
meaning of Section 27 A of the Securities Act and Section 21E of the Exchange Act, which are subject
to the safe harbor created by the Private Securities Litigation Reform Act of 1995. All statements
other than statements of historical fact are "forward-looking statements " for purposes of these
provisions. Examples include discussions as to our expectations, beliefs , plans, goals, objectives and
future financial or other performance or assumptions concerning matters discussed in this prospectus
supplement. This information, by its nature, involves estimates, projections, forecasts and uncertainties
that could cause actual results or outcomes to differ substantially from those expressed in the
forward-looking statements found in this prospectus supplement and the documents incorporated by
reference in this prospectus supplement.
Our business is influenced by many factors that are difficult to predict, involve uncertainties that
may materially affect actual results and are often beyond our ability to control. We have identified a
number of these factors in our filings with the SEC, including the Form 10-, the Forms 10-Q and the
Forms 8-, which are incorporated by reference in this prospectus supplement, and we refer you to
those reports for further information.
Any forward-looking statement speaks only as of the date on which it is made, and we undertake
no obligation to update any forward-looking statement to reflect events or circumstances after the
date on which it is made. The forward-looking statements in this prospectus supplement and the
documents incorporated by reference in this prospectus supplement are qualified in their entirety by
the preceding cautionary statements.
PROSPECTUS SUPPLEMENT SUMMARY
In this prospectus supplement, unless otherwise indicated or unless the context otherwise requires
the words "Company,
" "" "
our,
" "
" and "PacifiCorp " refer to PacifiCorp, an Oregon corporation
and its subsidiaries. References to the "Mortgage " are to the Mortgage and Deed of Trust, dated as of
January 1989, as amended and supplemented, with The Bank of New York, as successor trustee.
The following summary contains basic information about PadfiCorp and this offering. It may not
contain all the information that is important to you. The "Description of the Bonds" section of this
prospectus supplement contains more detailed information regarding the terms and conditions of the
bonds. The following summary is qualified in its entirety by reference to the detailed information
appearing elsewhere in this prospectus supplement and by the documents incorporated by reference into
this prospectus supplement.
ABOUT PACIFICORP
We are a regulated electric utility serving approximately 1.7 million residential, commercial
industrial and other customers in service territories aggregating approximately 136 000 square miles in
portions of the states of Utah, Oregon, Wyoming, Washington, Idaho and California. The regulatory
commission in each state approves rates for retail electric sales within that state. We also buy and sell
electricity on the wholesale market with public and private utilities, energy marketing companies and
incorporated municipalities. The Federal Energy Regulatory Commission (the "FERC") regulates our
wholesale activities. We own, or have interests in , 70 thermal, hydroelectric and wind generating plants
with a net plant capacity of 9 262 megawatts. The FERC and the six state regulatory commissions also
have authority over the construction and operation of our electric generation facilities. We transmit
electricity through approximately 15 600 miles of transmission lines.
We are an indirect subsidiary of Mid American Energy Holdings Company ("MEHC"). MEHC, a
holding company based in Des Moines, Iowa owning subsidiaries that are principally engaged in
energy businesses , is a consolidated subsidiary of Berkshire Hathaway Inc. ("Berkshire Hathaway
On March 1 , 2006, MEHC and Berkshire Hathaway entered into an Equity Commitment
Agreement pursuant to which Berkshire Hathaway has agreed to purchase up to $3.5 billion of
common equity of MEHC upon any requests authorized from time to time by the Board of Directors
of MEHe. The proceeds of any such equity contribution may only be used by MEHC for the purpose
of (i) paying when due MEHC's debt obligations and (ii) funding the general corporate purposes and
capital requirements of MEHC's regulated subsidiaries , which include us. Berkshire Hathaway will
have up to 180 days to fund any such request. We have no right to make or to cause MEHC to make
any equity contribution requests. The Berkshire Hathaway equity commitment will expire on
February 28, 2011.
Our address and telephone number are: PacifiCorp, 825 NE Multnomah, Suite 2000, Portland
Oregon 97232-4116; telephone: (503) 813-5000.
For additional information about our business and affairs, including our capital requirements and
external financing plans, pending legal and regulatory proceedings (including the status of industry
restructuring in our service areas and its effect on us, and descriptions of those laws and regulations to
which it is subject), prospective purchasers should refer to the documents incorporated by reference
into this prospectus supplement, as described under the heading "Documents Incorporated by
Reference. "
Issuer...............................
BondsOffered.......................
Ratings.............................
Maturity Date .......................
Interest Payment Dates.
. . . . . . . . . . . . . .
Optional Redemption.
. . . . . . . . . . . . . . . .
SinkingFund........................
Ranking.............................
Covenants...........................
THE OFFERING
PacifiCorp.
$600 000 000 aggregate principal amount of 6.25% First
Mortgage Bonds due 2037.
The bonds are a series of securities that will be issued
under a twenty-first supplement to the Mortgage.
The bonds are expected to be assigned ratings of A3 by
Moody s Investor Services, Inc., A- by Standard & Poor
Ratings Group and A- by Fitch, Inc. However, the ratings
are subject to change.
October 15, 2037.
April 15 and October 15, commencing April 15, 2008.
We may redeem the bonds, at our option, in whole or in
part, at any time, at a redemption price equal to the
greater of:
(1) 100% of the principal amount of the bonds to be
redeemed; or
(2) the sum of the present values of the remaining
scheduled payments of principal of and interest on the
bonds to be redeemed discounted to the date of
redemption on a semi-annual basis (assuming a 360-day
year consisting of twelve 30-day months) at a discount rate
equal to the yield on equivalent Treasury securities plus 25
basis points
plus, for (1) or (2) above, whichever is applicable, accrued
and unpaid interest, if any, on such bonds to the date of
redemption. See "Description of the Bonds-Optional
Redemption.
The bonds will not be subject to a mandatory sinking fund.
The bonds will be secured by a first mortgage lien on
certain utility property owned by us. The bonds will be
equally and ratably secured with all other bonds issued
under the Mortgage. The lien of the Mortgage is subject
to certain exceptions. See "Description of the
Bonds-Ranking and Security.
The Mortgage contains a number of covenants by us for
the benefit of the holders of the bonds, including
provisions requiring us to maintain the mortgaged property
as an operating system or systems capable of engaging in
all or any of the generating, transmission, distribution or
other utility businesses described in the Mortgage. See
Denominations.......................
Use of Proceeds "
Trustee
......................,......
Description of Additional Bonds-Certain Covenants" in
the base prospectus.
The bonds are available for purchase in minimum
denominations of $2 000 and any integral multiple of
000 in excess thereof.
We intend to use the net proceeds from the sale of the
bonds for the repayment of short-term debt and for
general corporate purposes. See "Use of Proceeds" in this
prospectus supplement.
The Bank of New York will be the trustee for the holders
of the bonds. See "Description of Additional Bonds-The
Mortgage Trustee " in the base prospectus.
RISK FACTORS
Investing in our bonds involves risk. Before purchasing the bonds, you should carefully consider
the risk factors included in the base prospectus, our Form 10-K and our Forms 10-Q. You should also
read and consider the other information contained in this prospectus supplement and the information
incorporated by reference herein in order to evaluate an investment in our bonds. See
Forward-Looking Statements" and "Documents Incorporated by Reference" in this prospectus
supplement. Additional risks and uncertainties that are not yet identified or that we think are
immaterial may also materially harm our business, operating results and financial condition and could
result in a loss on your investment.
SUMMARY CONSOLIDATED FINANCIAL INFORMATION
We have derived the summary consolidated financial information presented below from our
audited consolidated financial statements for the years ended March 31 , 2006 and 2005, our audited
consolidated financial statements for the nine-month transition period ended December 31 , 2006 and
our unaudited consolidated financial statements for the nine-month period ended December 31, 2005
the six-month period ended June 30, 2006, and the six-month period ended June 30,2007. This
summary consolidated financial information should be read together with, and is qualified in its
entirety by reference to, our consolidated financial statements and Management's Discussion and
Analysis of Financial Condition and Results of Operations contained in the Form 10-K and the
Forms 10-Q, incorporated by reference herein.
Six Months Ended Nine Months Ended Year Ended
June 30,December 31,March 31
2007 2006 2006 2005 2006 2005
(Millions of dollars)
Income Statement Information:Revenues..............................053 090 $ 2 924 667 $ 3 897 049
Income from operations. . .
. . . . . . . . . . . . ..
402 393 415 521 792 656
Netincome............................204 190 161 214 361 252
Other Information:
Net cash provided by operating activities..461 383 431 573 895 711
Net cash used in investing activities. . . .
. . .
(705)(631)056)(689)024)(847)
Net cash provided by financing activities. ..241 157 564 276
June 30,
2007
December 31,2006 2005
March 31,2006 2005
Balance Sheet Information:
Total assets
.........................,.........
Totaldebt(1)
...................................
Totalshareholders equity.......................
$14 250
617
797
$13 852
491
426
$12 827
255
805
$12 731
122
052
$12 521
368
377
(1) Includes capital lease obligations, but excludes preferred stock subject to mandatory redemption.
USE OF PROCEEDS
We intend to use the net proceeds from the sale of the bonds for the repayment of a portion of
our short-term debt and for general corporate purposes. At June 30, 2007, we had $30 million of
commercial paper outstanding with a weighted-average maturity date of 10 days and a
weighted-average interest rate of 5.4%. See "Capitalization" below.
CAPITALIZATION
The table below shows our capitalization on a consolidated basis as of June 30, 2007. The "
Adjusted" column will reflect our capitalization as of that date after giving effect to this offering of
bonds and the use of the net proceeds from this offering. You should read this table along with the
consolidated financial statements contained in the Form 10-, as updated by the Forms 10-
Short-termdebt.......................................
Long-term debt, currently maturing(l)
. . . . . . . . . . . . . . . . . . . .
Long-term debt, net of current maturities(l)
...........,..
Preferred stock.......................................
Totalcommonequity..................................
Total. . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(1) Includes capital lease obligations.
As of June 30, 2007
Actual As Adjusted
Amount Amount
(Millions of dollars)
221 221
366 46.4 966 49.
617 49.187 51.9
0.4 0.4
0.4 0.4
756 50.756 47.
414 100.984 100.
CONSOLIDATED RATIOS OF EARNINGS TO FIXED CHARGES
Six Months Ended
June 30, 2007
Nine Months Ended
December 31, 2006
Years Ended March 31,2006 2005 2004 2003
2.4x 1.7x
For purposes of this ratio, fixed charges represent consolidated interest charges, an estimated
amount representing the interest factor in rents and preferred dividends of wholly owned subsidiaries.
Preferred dividends of wholly owned subsidiaries represent preferred dividends multiplied by the ratio
which pre-tax income from continuing operations bears to income from continuing operations.
Earnings represent the aggregate of (a) income from continuing operations, (b) taxes based on income
from continuing operations, (c) minority interest in the income of majority-owned subsidiaries that
have fixed charges, (d) fixed charges and (e) undistributed income of less than 50% owned affiliates
without loan guarantees.
DESCRIPTION OF THE BONDS
The bonds will be issued pursuant to the twenty-first supplemental indenture to the Mortgage, to
be dated October 1 2007 (the "Supplemental Indenture ). The terms of the bonds include those
stated in the Mortgage, the Supplemental Indenture and those made part of the Mortgage by
reference to the Trust Indenture Act of 1939, as amended.
Set forth below is a description of the specific terms of the bonds. The following description is not
complete in every detail and is subject to, and is qualified in its entirety by reference to, the Mortgage
and the Supplemental Indenture. Capitalized terms used in this "Description of the Bonds" section
that are not defined in this prospectus supplement have the meanings given to them in the Mortgage
or the Supplemental Indenture.
General
The bonds will be issued as a series of First Mortgage Bonds under the Mortgage and will
initially be limited in aggregate principal amount to $600 000 000. The entire principal amount of the
bonds will mature and become due and payable, together with any accrued and unpaid interest
thereon, on October 15, 2037. The bonds are not subject to any sinking fund provision. The bonds are
available for purchase in minimum denominations of $2 000 and any integral multiple of $1 000 in
excess thereof.
Interest
Each Bond will bear interest at the rate of 6.25% per annum from the date of original issuance.
Interest on the bonds will be payable semi-annually in arrears on April 15 and October 15 of each
year (each, an "Interest Payment Date ). The initial Interest Payment Date is April 15 2008. The
amount of interest payable will be computed on the basis of a 360-day year consisting of twelve
30-day months. If any date on which interest is payable on the bonds is not a business day, then
payment of the interest payable on that date will be made on the next succeeding day which is a
business day (and without any additional interest or other payment in respect of any delay), with the
same force and effect as if made on such date.
So long as the bonds remain in book-entry only form, the record date for each Interest Payment
Date will be the close of business on the business day before the applicable Interest Payment Date. If
the bonds are not all in book-entry form, the record date for each Interest Payment Date will be the
close of business on the first calendar day of the month in which the applicable Interest Payment Date
occurs (whether or not a business day).
Ranking and Security
The bonds will be issued under the Mortgage and secured by a first mortgage lien on certain
utility property owned from time to time by the Company. The lien of the Mortgage is subject to
Excepted Encumbrances, including tax and construction liens, purchase money liens and certain other
exceptions. The bonds will be equally and ratably secured with all other bonds issued under the
Mortgage.
Further Issuances
The bonds will be limited initially to $600 000 000 in aggregate principal amount. We may, from
time to time, without notice to or the consent of the registered holders of the bonds, create and issue
further bonds equal in rank and having the same maturity, payment terms, redemption features
CUSIP numbers and other terms as the series of bonds offered by this prospectus supplement, except
for the payment of interest accruing prior to the issue date of the further bonds and, under some
circumstances, for the first payment of interest following the issue date of the further bonds. These
further bonds may be consolidated and form a single series with the series of the bonds offered by this
prospectus supplement.
Optional Redemption
The bonds are redeemable , in whole or in part, at any time, and at our option, at a redemption
price equal to the greater of:
100% of the principal amount of bonds then outstanding to be redeemed; or
the sum of the present values of the remaining scheduled payments of principal and interest
thereon (not including any portion of such payments of interest accrued as of the redemption
date) discounted to the redemption date on a semi-annual basis (assuming a 360-day year
consisting of twelve 30-day months) at the Adjusted Treasury Rate, plus 25 basis points, as
calculated by an Independent Investment Banker;
plus, in either of the above cases, accrued and unpaid interest thereon to the redemption date.
We will mail a notice of redemption at least 30 days before the redemption date to each holder
bonds to be redeemed. If we elect to partially redeem the bonds, the Trustee will select in a fair and
appropriate manner the bonds to be redeemed.
Unless we default in payment of the redemption price, on and after the redemption date, interest
will cease to accrue on the bonds or portions thereof called for redemption.
Adjusted Treasury Rate means, with respect to any redemption date:
the yield, under the heading which represents the average for the immediately preceding
week, appearing in the most recently published statistical release designated "15(519)" or
any successor publication which is published weekly by the Board of Governors of the
Federal Reserve System and which establishes yields on actively traded United States
Treasury securities adjusted to constant maturity under the caption "Treasury Constant
Maturities " for the maturity corresponding to the Comparable Treasury Issue (if no maturity
is within three months before or after the Remaining Life, yields for the two published
maturities most closely corresponding to the Comparable Treasury Issue will be determined
and the Adjusted Treasury Rate will be interpolated or extrapolated from such yields on a
straight line basis, rounding to the nearest month); or
if such release (or any successor release) is not published during the week preceding the
calculation date or does not contain such yields, the rate per annum equal to the semi-annual
equivalent yield to maturity of the Comparable Treasury Issue, calculated using a price for
the Comparable Treasury Issue (expressed as a percentage of its principal amount) equal to
the Comparable Treasury Price for such redemption date.
The Adjusted Treasury Rate will be calculated on the third business day preceding the
redemption date.
Comparable Treasury Issue means the United States Treasury security selected by an
Independent Investment Banker as having a maturity comparable to the remaining term of the bonds
to be redeemed that would be used, at the time of selection and in accordance with customary
financial practice, in pricing new issues of corporate debt securities of comparable maturity to the
remaining term of such bonds Remaining Life
Comparable Treasury Price means, with respect to any redemption date, (1) the average of
three Reference Treasury Dealer Quotations for such redemption date, after excluding the highest and
lowest Reference Treasury Dealer Quotations, or (2) if the Independent Investment Banker obtains
fewer than four such Reference Treasury Dealer Quotations , the average of all such quotations.
Independent Investment Banker means one of the Reference Treasury Dealers appointed by us
and its successors, or if that firm is unwilling or unable to serve as such, an independent investment
and banking institution of national standing appointed by us.
Reference Treasury Dealer means:
each of Greenwich Capital Markets, Inc., J.P. Morgan Securities Inc., Lehman Brothers Inc.
and their respective successors; provided that, if one of these parties ceases to be a primary
u.S. Government securities dealer in New York City Primary Treasury Dealer
),
we will
substitute another Primary Treasury Dealer; and
any other Primary Treasury Dealers selected by us.
Reference Treasury Dealer Quotations means, with respect to each Reference Treasury Dealer
and any redemption date, the average, as determined by the Independent Investment Banker, of the
bid and asked prices for the Comparable Treasury Issue (expressed in each case as a percentage of its
principal amount) quoted in writing to the Independent Investment Banker at 5:00 p., New York
City time, on the third business day preceding such redemption date.
BOOK-ENTRY PROCEDURES AND SETTLEMENT
Upon issuance, the bonds will be represented by one or more fully registered global certificates.
Each global certificate will be deposited with The Depository Trust Company ("DTC") or its
custodian and will be registered in the name of DTC or a nominee of DTc. DTC or its nominee will
therefore, be the only registered holder of the bonds. See "Book-Entry Issuance" in the accompanying
base prospectus.
CERTAIN UNITED STATES FEDERAL INCOME TAX CONSIDERATIONS
The following discussion is a summary of the material U.S. federal income tax consequences
relevant to the ownership and disposition of the bonds assigned pursuant to this offering, and does not
purport to be a complete analysis of all potential tax effects. This discussion does not address all the
u.S. federal income tax consequences that may be relevant to a holder in light of such holder
particular circumstances or to holders subject to special rules, such as financial institutions, banks
partnerships and other pass-through entities, U.S. expatriates, controlled foreign corporations, passive
foreign investment companies, insurance companies, dealers in securities or currencies , traders in
securities, u.S. Holders (defined below) whose functional currency is not the U.S. dollar, tax-exempt
organizations and persons holding the bonds as part of a "straddle
" "
hedge
" "
conversion
transaction" or other integrated transaction. In addition, this discussion is limited to persons
purchasing the bonds for cash pursuant to this prospectus supplement at the offering price on the
cover page of this prospectus supplement. Moreover, the effect of any applicable state, local or foreign
tax laws is not discussed. The discussion deals only with bonds held as "capital assets" within the
meaning of Section 1221 of the Internal Revenue Code of 1986, as amended (the "Code
The discussion is based on the provisions of the Code, u.S. Treasury regulations issued
thereunder, rulings and pronouncements of the IRS and judicial decisions, all as in effect as of the
date of this prospectus supplement and all of which are subject to change at any time. Any such
change may be applied retroactively in a manner that could adversely affect a holder of the bonds.
We have not sought and will not seek any rulings from the IRS with respect to the matters
discussed below. There can be no assurance that the IRS will not take a different position concerning
the tax consequences of the purchase, ownership or disposition of the bonds or that any such position
would not be sustained.
To ensure compliance with Treasury Department Circular 230 ("Circular 230"), you are hereby
notified that: (A) any discussion of U.S. federal tax issues in this prospectus supplement is not
intended or written to be used, and cannot be used, by you for the purpose of avoiding penalties that
may be imposed on you under the Code, (B) such discussion is included herein by us in connection
with the promotion or marketing (within the meaning of Circular 230) of the transactions or matters
addressed herein, and (C) you should seek advice based on your particular circumstances from an
independent tax advisor.
Prospective investors also should consult their own tax advisors with regard to the application of
any state, local, foreign or other tax laws, including gift and estate tax laws.
For purposes of this discussion, the term "S. Holder" means a beneficial owner of the bonds
that is for u.S. federal income tax purposes:
an individual citizen or resident of the United States;
a corporation (or other entity taxable as a corporation for u.S. federal income tax purposes)
created or organized in or under the laws of the United States or any state, including the
District of Columbia;
an estate, the income of which is subject to u.S. federal income tax regardless of its source;
a trust if (a) a U.S. court can exercise primary supervision over the administration of the trust
and one or more u.S. persons can control all substantial trust decisions or (b) if the trust was
in existence on August 20, 1996, and has elected to continue to be treated as a u.S. person.
A non-S. holder means a holder (other than a partnership or an entity or arrangement
.classified as a partnership for U.S. federal income tax purposes) of the bonds that is not a u.S. holder
for u.S. federal income tax purposes.
For u.S. federal income tax purposes, if a partnership (including any entity or arrangement
classified as a partnership for u.S. federal income tax purposes) is a beneficial owner of the bonds, the
treatment of a partner in the partnership generally will depend upon the status of the partner and the
activities of the partnership. A beneficial owner of the bonds that is a partnership for u.S. federal
income tax purposes, and the partners in such partnership, should consult their tax advisors about the
S. federal income tax consequences relating to the ownership and disposition of the bonds.
u.s. Holders
The following discussion is a summary of the U.S. federal income tax consequences relevant to a
beneficial owner of a bond that is a u.S. Holder.
Interest
A u.S. Holder generally must include stated interest on a bond as ordinary income at the time
such interest is received or accrued, in accordance with such U.S. Holder s method of accounting for
u.S. federal income tax purposes.
If we call the bonds for redemption (see "Description of the Bonds-Optional Redemption ), we
may be obligated to make "make-whole" payments on the bonds in excess of stated interest and
principal. We believe, and the following discussion assumes, that the likelihood that we will be
obligated to make these additional payments is remote. Remote contingencies are not taken into
account unless and until they occur. Our determination that this contingency is remote is binding on
u.S. Holders unless they disclose a contrary position in the manner required by applicable Treasury
regulations. Our determination is not, however, binding on the IRS. Assuming our determination is
upheld, if we are required to make these additional payments, u.S. Holders would likely recognize
additional interest income in accordance with their method of accounting for u.S. federal income tax
purposes.
Sale or Other Taxable Disposition of the Bonds
A U.S. Holder will generally recognize gain or loss on the sale , exchange, redemption, retirement
or other taxable disposition of a bond equal to the difference between (i) the amount of cash and the
fair market value of any property received upon the disposition (less any amount attributable to
accrued but unpaid interest, which will be taxable as ordinary income unless previously taken into
income) and (ii) the U.S. Holder s adjusted tax basis in the bond. A u.S. Holder s adjusted tax basis
in a bond generally will be the U.S. Holder s purchase price of the bond on the date of purchase. Gain
or loss recognized generally will be a capital gain or loss, and generally will be long-term capital gain
or loss if the U.S. Holder held the bond for more than one year. Long-term capital gains of
non-corporate taxpayers are taxed at lower standard rates than those applicable to ordinary income. A
u.S. Holder s ability to deduct capital losses may be limited.
Non-US. Holders
The following discussion is a summary of the U.S. federal income tax consequences relevant to a
beneficial owner of a bond that is a Non-u.S. Holder.
Interest
Interest paid to a Non-u.S. Holder generally will not be subject to u.S. federal income tax or
withholding, provided that:
the Non-u.S. Holder does not actually or constructively own 10% or more of the total
combined voting power of all classes of our stock entitled to vote;
the Non-S. Holder is not a controlled foreign corporation that is related to us directly or
constructively through stock ownership;
the Non-u.S. Holder is not a bank receiving certain types of interest;
the interest is not effectively connected with the conduct by the Non-u.S. Holder of a trade
or business within the United States; and
, or our paying agent, receive appropriate documentation, generally a completed IRS
Form W-8BEN , establishing that the Non-u.S. Holder is not a U.S. person within the
meaning of the Code.
Interest that meets these requirements is referred to as "portfolio interest.
The interest on the bonds will be taxed at regular U.S. federal income tax rates and not be
subject to u.s. withholding tax if: (i) the interest constitutes income that is effectively connected with
the conduct by a Non-S. Holder of a United States trade or business, and (ii) if an income tax
treaty applies, the interest is attributable to a United States permanent establishment of the Non-u.S.
Holder under the terms of such treaty ("United States trade or business income ), provided , in each
case, that a proper certification is provided. In addition, if the Non-S. Holder is a foreign
corporation, such income may also be subject to the "branch profits tax" at a rate of 30% (or lower
applicable treaty rate). Interest that neither qualifies as portfolio interest nor constitutes United States
trade or business income will be subject to United States withholding tax at the rate of 30%, unless
such rate is reduced or eliminated by an applicable tax treaty.
Sale or Other Taxable Disposition of the Bonds
Gain realized by a Non-S. Holder on the sale , redemption or other disposition of a bond
generally will not be subject to U.S. federal income tax, unless (i) such gain is effectively connected
with the conduct by such Non-u.S. Holder of a trade or business within the United States (and, if a
tax treaty applies, to a permanent establishment in the United States) or (ii) the Non-u.S. Holder is
an individual who is present in the United States for 183 days or more in the taxable year of
disposition and certain other conditions are satisfied.
Gain recognized by a Non-u.S. Holder upon a sale, redemption or other disposition of a bond
that is effectively connected with the conduct by the Non-u.S. Holder of a United States trade or
business or, if an income tax treaty applies, is attributable to a United States permanent establishment
of the Non-u.S. Holder, generally will be subject to u.S. federal income tax in the same manner as if
the bond were held by a U.S. Holder. In addition, if the Non-u.S. Holder is a foreign corporation
such gain may also be subject to the branch profits tax at a rate of 30% (or lower applicable treaty
rate ).
Information Reporting and Backup Withholding
Payments of interest made by us on, or the proceeds of the sale or other disposition of, the bonds
may be subject to information reporting and United States federal backup withholding tax, if the
recipient of the payment fails to supply an accurate taxpayer identification number or otherwise fails
to comply with applicable United States information reporting or certification requirements. Any
amount withheld under the backup withholding rules is allowable as a credit against the holder
United States federal income tax, provided that the required information is furnished to the IRS.
PERSONS CONSIDERING THE PURCHASE OF THE BONDS SHOULD CONSULT THEIR
OWN TAX ADVISORS WITH RESPECT TO THE UNITED STATES FEDERAL INCOME TAX
CONSEQUENCES OF THE PURCHASE, OWNERSHIP AND DISPOSITION OF BONDS IN
LIGHT OF THEIR PARTICULAR CIRCUMSTANCES, AS WELL AS THE EFFECT OF ANY
STATE, LOCAL OR FOREIGN TAX LAWS OR ANY APPLICABLE TAX TREATY.
UNDERWRITING
We have entered into an underwriting agreement with the underwriters named below with respect
to the bonds. Subject to certain conditions, each underwriter has severally agreed to purchase the
principal amount of bonds indicated in the following table:
Underwriters
Principal
Amount of Bonds
Greenwich Capital Markets, Inc.
.............................................
P. Morgan Securities Inc.
..................................................
Lehman Brothers Inc.
......................................................
Total....................................................................
$200 000 000
200 000 000
200 000 000
$600 000 000
The underwriting agreement provides that the obligations of the underwriters to purchase the
bonds included in this offering are subject to approval of legal matters by counsel and to other
conditions. The underwriters are obligated to purchase all the bonds if they purchase any of the
bonds.
The underwriters propose to offer some of the bonds directly to the public at the public offering
price set forth on the cover page of this prospectus supplement and some of the bonds to dealers at
the public offering price. After the initial offering of the bonds to the public, the underwriters may
change the public offering price and other selling terms.
The bonds are a new issue of securities with no established trading market. We have been advised
by the underwriters that the underwriters intend to make a market in the bonds but are not obligated
to do so and may discontinue market making at any time without notice. No assurance can be given
as to the liquidity of any trading market for the bonds.
In connection with this offering, the underwriters may purchase and sell the bonds in the open
market. These transactions may include short sales, stabilizing transactions and purchases to cover
positions created by short sales. Short sales involve the sale by the underwriters of a greater number
of bonds than they are required to purchase in the offering. Stabilizing transactions consist of certain
bids or purchases made for the purpose of preventing or retarding a decline in the market price of the
bonds while the offering is in progress.
The underwriters may also impose a penalty bid. This occurs when a particular underwriter
repays to the underwriters a portion of the underwriting discount received by it because another
underwriter has repurchased bonds sold by or for the account of such underwriter in stabilizing or
short covering transactions.
These activities by the underwriters, as well as other purchases by the underwriters for their own
accounts, may stabilize, maintain or otherwise affect the market price of the bonds. As a result, the
price of the bonds may be higher than the price that otherwise would exist in the open market. If
these activities are commenced, they may be discontinued by the underwriters at any time. These
transactions may be effected in the over-the-counter market or otherwise.
We estimate that our total offering expenses, not including the underwriting discount, will be
approximately $750 000. The underwriters have agreed to reimburse us for a portion of our offering
expenses.
The underwriters have performed investment banking and advisory services for us from time to
time for which they have received customary fees and expenses. The underwriters may, from time to
time, engage in transactions with and perform services for us or our affiliates in the ordinary course of
their business.
We have agreed to indemnify each of the underwriters against certain liabilities, including
liabilities under the Securities Act of 1933, or to contribute to payments the underwriters may be
required to make because of those liabilities.
In relation to each Member State of the European Economic Area which has implemented the
Prospectus Directive (each, a "Relevant Member State ), each underwriter has represented and
agreed that with effect from and including the date on which the Prospectus Directive is implemented
in that Relevant Member State (the "Relevant Implementation Date ) it has not made and will not
make an offer of bonds to the public in that Relevant Member State prior to the publication of a
prospectus in relation to the bonds which has been approved by the competent authority in that
Relevant Member State or, where appropriate, approved in another Relevant Member State and
notified to the competent authority in that Relevant Member State, all in accordance with the
Prospectus Directive , except that it may, with effect from and including the Relevant Implementation
Date, make an offer of bonds to the public in that Relevant Member State at any time:
(a) to legal entities which are authorised or regulated to operate in the financial markets or, if
not so authorized or regulated, whose corporate purpose is solely to invest in securities;
(b) to any legal entity which has two or more of (1) an average of at least 250 employees during
the last financial year; (2) a total balance sheet of more than €43 000 000 and (3) an annual
net turnover of more than €50 000 000, as shown in its last annual or consolidated accounts;
(c) in any other circumstances which do not require the publication by us of a prospectus
pursuant to Article 3 of the Prospectus Directive.
For the purposes of this provision, the expression an "offer of bonds to the public" in relation to
any bonds in any Relevant Member State means the communication in any form and by any means of
sufficient information on the terms of the offer and the bonds to be offered so as to enable an
investor to decide to purchase or subscribe the bonds, as the same may be varied in that Member
State by any measure implementing the Prospectus Directive in that Member State, and the
expression "Prospectus Directive" means Directive 2003/71/EC and includes any relevant
implementing measure in each Relevant Member State.
Each underwriter has represented and agreed that:
(a) it has only communicated or caused to be communicated (and will only communicate or
cause to be communicated) an invitation or inducement to engage in investment activity
(within the meaning of Section 21 of the Financial Services & Market Act (the "FSMA"
received by it in connection with the issue or sale of the bonds in circumstances in which
Section 21(1) of the FSMA does not apply to us; and
(b) it has complied and will comply with all applicable provisions of the FSMA with respect to
anything done by it in relation to the bonds in, from or otherwise involving the United
Kingdom.
The bonds may not be offered or sold by means of any document other than (i) in circumstances
which do not constitute an offer to the public within the meaning of the Companies Ordinance
(Cap., Laws of Hong Kong), or (ii) to "professional investors" within the meaning of the Securities
and Futures Ordinance (Cap.571 , Laws of Hong Kong) and any rules made thereunder, or (iii) in
other circumstances which do not result in the document being a "prospectus" within the meaning of
the Companies Ordinance (Cap., Laws of Hong Kong), and no advertisement, invitation or
document relating to the bonds may be issued or may be in the possession of any person for the
purpose of issue (in each case whether in Hong Kong or elsewhere), which is directed at, or the
contents of which are likely to be accessed or read by, the public in Hong Kong (except if permitted
to do so under the laws of Hong Kong) other than with respect to bonds which are or are intended to
be disposed of only to persons outside Hong Kong or only to "professional investors" within the
meaning of the Securities and Futures Ordinance (Cap. 571 , Laws of Hong Kong) and any rules made
thereunder.
The bonds have not been and will not be registered under the Securities and Exchange Law of
Japan (the "Securities and Exchange Law ) and each underwriter has agreed that it will not offer or
sell any bonds, directly or indirectly, in Japan or to, or for the benefit of, any resident of Japan (which
term as used herein means any person resident in Japan, including any corporation or other entity
organized under the laws of Japan), or to others for re-offering or resale, directly or indirectly, in
Japan or to a resident of Japan, except pursuant to an exemption from the registration requirements
, and otherwise in compliance with, the Securities and Exchange Law and any other applicable laws
regulations and ministerial guidelines of Japan.
This prospectus has not been registered as a prospectus with the Monetary Authority of
Singapore. Accordingly, this prospectus and any other document or material in connection with the
offer or sale, or invitation for subscription or purchase, of the bonds may not be circulated or
distributed, nor may the bonds be offered or sold, or be made the subject of an invitation for
subscription or purchase, whether directly or indirectly, to persons in Singapore other than (i) to an
institutional investor under Section 274 of the Securities and Futures Act, Chapter 289 of Singapore
(the "SFA"), (ii) to a relevant person, or any person pursuant to Section 275(IA), and in accordance
with the conditions, specified in Section 275 of the SFA or (iii) otherwise pursuant to, and in
accordance with the conditions of, any other applicable provision of the SFA.
Where the bonds are subscribed or purchased under Section 275 by a relevant person which is:
(a) a corporation (which is not an accredited investor) the sale business of which is to hold
investments and the entire share capital of which is owned by one or more individuals, each of whom
is an accredited investor; or (b) a trust (where the trustee is not an accredited investor) whose sale
purpose is to hold investments and each beneficiary is an accredited investor, shares, debentures and
units of shares and debentures of that corporation or the beneficiaries ' rights and interest in that trust
shall not be transferable for 6 months after that corporation or that trust has acquired the bonds
under Section 275 except: (1) to an institutional investor under Section 274 of the SFA or to a
relevant person, or any person pursuant to Section 275(IA), and in accordance with the conditions
specified in Section 275 of the SFA; (2) where no consideration is given for the transfer; or (3) by
operation of law.
LEGAL MATTERS
Certain legal matters with respect to the bonds we are offering will be passed upon for us by
Mark C. Moench, General Counsel of PacifiCorp, and by Perkins Coie LLP, Portland, Oregon.
Certain legal matters will be passed upon for the underwriters by Latham & Watkins LLP, New York
New York. Latham & Watkins LLP from time to time represents us and certain of our affiliates.
EXPERTS
The consolidated financial statements as of December 31 , 2006 and for the nine-month period
then ended, incorporated in this prospectus supplement by reference from our Transition Report on
Form 10-K for the transition period from April 1, 2006 to December 31, 2006, have been audited by
Deloitte & Touche LLP, an independent registered public accounting firm, as stated in their report
(which report expresses an unqualified opinion and includes an explanatory paragraph relating to the
adoption of SFAS No. 158 Employers ' Accounting for Defined Benefit Pension and Other
Postretirement Plans-an amendment of FASB Statements No. , 88 106 and 132(R)), which is
incorporated herein by reference, and has been so incorporated in reliance upon the report of such
firm given upon their authority as experts in accounting and auditing.
With respect to the unaudited interim financial information for the periods ended March 31, 2007
and June 30, 2007, which is incorporated herein by reference, Deloitte & Touche LLP, an independent
public accounting firm, has applied limited procedures in accordance with the standards of the Public
Company Accounting Oversight Board (United States) for a review of such information. However, as
stated in their reports included in the Forms 10-Q and incorporated by reference herein, they did not
audit and they do not express an opinion on that interim financial information. Accordingly, the
degree of reliance on their reports on such information should be restricted in light of the limited
nature of review procedures applied. Deloitte & Touche LLP is not subject to the liability provisions
of Section 11 of the Securities Act of 1933 for its reports on the unaudited interim financial
information because those reports are not "reports" or a "part" of the registration statement prepared
or certified by an accountant within the meaning of Sections 7 and 11 of the Securities Act of 1933.
The consolidated financial statements as of March 31, 2006 and for each of the two years in the
period ended March 31 , 2006 incorporated in this prospectus by reference to the Transition Report on
Form 10-K for the transition period from April 1, 2006 to December 31, 2006 have been so
incorporated in reliance on the report of PricewaterhouseCoopers LLP, an independent registered
public accounting firm, given on the authority of said firm as experts in auditing and accounting.
(THIS PAGE INTENTIONALLY LEFT BLANK.
PROSPECTUS
$1,500,000,000
PACIFICORP
FIRST MORTGAGE BONDS
UNSECURED DEBT SECURITIES
PacifiCorp, an Oregon corporation, may from time to time offer:
First Mortgage Bonds ("Additional Bonds ); and
unsecured debt securities, including subordinated debt securities ("Unsecured Debt
Securities
all at prices and on terms to be determined at the time of sale. We may issue Additional Bonds and
Unsecured Debt Securities (collectively, the "Securities ) in one or more issuances or series and the
aggregate initial offering price thereof will not exceed $1 500 000 000.
We will provide specific terms of the Securities, including, as applicable, the amount offered
offering prices, interest rates, dividend rates, maturities and redemption or repurchase provisions, in
supplements to this prospectus. The supplements may also add, update or change information
contained in this prospectus. You should read this prospectus and any supplements carefully before
you invest.
The Securities may be sold directly by us, through agents designated from time to time or
through underwriters or dealers. The supplements to this prospectus will describe the terms of any
particular plan of distribution, including any underwriting arrangements. The "Plan of Distribution
section in this prospectus provides more information on this topic.
Investing in our Securities involves risks. See the "Risk Factors" section beginning on page 2 of this
prospectus for information on certain matters you should consider before buying our Securities.
NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE
SECURITIES COMMISSION HAS APPROVED OR DISAPPROVED OF THESE SECURITIES
OR DETERMINED IF THIS PROSPECTUS IS TRUTHFUL OR COMPLETE. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
This prospectus may not be used to consummate sales of Securities unless accompanied by a
prospectus supplement relating to the Securities offered.
The date of this prospectus is February 13, 2007.
We have not authorized anyone to give you any information other than this prospectus and any
supplements to this prospectus. You should not assume that the information contained in this
prospectus, any prospectus supplement or any document incorporated by reference in this prospectus
is accurate as of any date other than the date mentioned on the cover page of those documents. We
are not offering to sell the Securities and we are not soliciting offers to buy the Securities in any
jurisdiction in which offers are not permitted.
ABOUT THIS PROSPECTUS
This prospectus is part of a registration statement that PacifiCorp filed with the Securities and
Exchange Commission (the "SEC") using the "shelf" registration process. Under this shelf registration
process, we may from time to time sell the Securities described in this prospectus in one or more
offerings up to a total dollar amount of $1,500 000 000. This prospectus provides a general description
of the Securities. Each time we sell Securities, we will provide a prospectus supplement that will
contain specific information about the terms of that offering. That prospectus supplement may include
or incorporate by reference a detailed and current discussion of any risk factors and will discuss any
special considerations applicable to those securities. The prospectus supplement may also add, update
or change information contained in this prospectus. You should read both this prospectus and any
prospectus supplement together with additional information described under "Where You Can Find
More Information." If there is any inconsistency between the information in this prospectus and any
prospectus supplement, you should rely on the information contained in that prospectus supplement.
Unless otherwise indicated or unless the context otherwise requires, in this prospectus, the words
PacifiCorp,
" "
Company,
" "" "
our" and "" refer to PacifiCorp, an Oregon corporation, and its
subsidiaries.
For more detailed information about the Securities, you can read the exhibits to the registration
statement. Those exhibits have been either filed with the registration statement or incorporated by
reference to earlier SEC filings listed in the registration statement. See "Where You Can Find More
Information.
RISK FACTORS
Investing in our Securities involves risk. Before purchasing any Securities we offer, you should
carefully consider the following risk factors as well as the other information contained in this
prospectus, any prospectus supplement and the information incorporated by reference herein in order
to evaluate an investment in our Securities. See "Forward-Looking Statements" and "Where You Can
Find More Information" in this prospectus. Additional risks and uncertainties that are not yet
identified or that we believe are immaterial may also materially harm our business, operating results
and financial condition and could result in a loss on your investment.
RISKS RELATED TO OUR BUSINESS
We are subject to extensive regulations that affect our operations and costs. These regulations are
complex, dynamic and subject to legislative developments.
We conduct our business in conformance with a multitude of comprehensive federal, state and
local laws and regulations, all of which significantly influence our operating environment, the prices we
are allowed to charge customers, our capital structure, our costs and our ability to recover costs from
customers. Failure to comply with these laws or regulations can also result in material financial
penalties and limitations on the types of electricity services we can offer to customers. The agencies
regulating us include the Federal Energy Regulations Commission ("FERC"), the Environmental
Protection Agency and the public utility commissions in Utah, Oregon, Wyoming, Washington, Idaho
and California.
Changes in regulations or the imposition of additional regulations by any of these regulatory
entities, as well as new legislation, could have a material adverse impact on our financial results. For
example, such changes could result in increased retail competition in our service territory, changes to
the hydroelectric relicensing process under the Federal Power Act, mandatory investments in
renewable or lower-emission generation, the acquisition by a municipality or other quasi-governmental
body of our distribution facilities (by negotiation, legislation or condemnation or by a vote in favor of
a Public Utility District under Oregon law), or a negative impact on our current cost recovery
arrangements, including income tax recovery.
Further, several of our hydroelectric projects whose operating licenses have expired or will expire
in the next several years are in some stage of the FERC relicensing process. Hydroelectric relicensing
is a political and public regulatory process involving sensitive resource issues and uncertainties. We
cannot predict with certainty the requirements that may be imposed as a result of relicensing, the
economic impact of those requirements, whether new licenses will ultimately be issued or whether we
will be willing to meet the relicensing requirements to continue operating our hydroelectric projects.
Loss of hydroelectric resources or additional commitments arising from relicensing could adversely
affect our financial results.
The Energy Policy Act of 2005 impacts many segments of the energy industry. In implementing
the law, the FERC has issued and will continue to issue new regulations and regulatory decisions
addressing electric system reliability, electric transmission expansion and pricing, utility holding
companies and enforcement authority. The full impact of the FERC's implementation of the Energy
Policy Act of 2005 remains uncertain; however, the FERC has recently exercised its enforcement
authority by imposing significant civil penalties on us and other companies for violations of its rules
and regulations.
In addition, as a result of past events affecting electric reliability, the Energy Policy Act of 2005
requires federal agencies, working together with non-governmental organizations charged with electric
reliability responsibilities, to adopt and implement measures designed to ensure the reliability of
electric transmission and distribution systems. The implementation of such measures could result in
the imposition of more comprehensive or stringent requirements on us or other industry participants
which would result in increased compliance costs and could adversely affect our financial results.
Recovery of our costs is subject to regulatory review and approval, and the inability to recover costs
may adversely affect our financial results.
We are subject to the jurisdiction of federal and state regulatory authorities. The FERC
administers the Federal Power Act and establishes tariffs under which we provide transmission service
to the wholesale market and the retail market (in states allowing retail competition). The FERC also
establishes both cost-based and market-based tariffs under which we sell wholesale electricity and has
licensing authority over most of our hydroelectric generation facilities. In addition , the utility
regulatory commissions in each state served by us independently determine the rates we may charge
our retail customers in those states.
Each state s rate-setting process is based upon the state utility commission s acceptance of an
allocated share of our total utility costs for our entire retail service territory. When different states
adopt different methods to address this cost allocation issue, some costs may not be incorporated into
rates in any state. Rate-making is also generally done on the basis of estimates of normalized costs, so
if in a specific year realized costs are higher than normal, rates will not be sufficient to cover those
costs. Each state utility commission generally sets rates based on a test year established according to
that commission s policies. Certain states use a future test year and allow for escalation of historical
costs, while other states use a historical test year. Use of a historical test year may cause regulatory
lag, which results in us incurring costs, including significant new investments , for which recovery
through rates is delayed. In addition, each state commission decides the percentage return a utility will
be permitted to earn on its equity. Each commission also decides what level of expense and
investment is necessary, reasonable and prudent in providing service and may disallow and deny
recovery in rates for any costs that do not meet this standard. For these reasons, as well as others
including changes in regulations or legislative developments, the rates authorized by the state
regulators may not be sufficient to cover costs incurred to provide electrical services in any given
period.
Also, in Utah, Washington and Idaho , we do not have an ability to pass through energy cost
increases in our rates without seeking a general rate increase, so any significant increase in the cost of
fuel used for generation or the cost of purchased electricity could have a negative impact on our
financial results, despite our efforts to minimize this impact through the use of hedging instruments.
We are engaged in several large construction or expansion projects, the completion and expected cost
of which is subject to significant risk, and we have significant funding needs related to our planned
capital expenditures.
We are engaged in several large construction or expansion projects, including construction of a
new gas-fired generating facility, the Lake Side Power Plant in Utah, construction and development of
multiple wind generating plants and various capital projects related to generation, transmission and
distribution. In addition, in connection with our acquisition by MidAmerican Energy Holdings
Company ("MEHC") in early 2006, MEHC and we have committed to undertake several other capital
expenditure projects, principally relating to environmental controls, transmission and distribution
renewable generation and other facilities. Including these investments, we expect to incur substantial
construction, expansion and other capital-related costs over the next several years.
The completion of any or all of our pending, proposed or future construction or expansion
projects is subject to substantial risk. Fluctuations in the price and availability of commodities
manufactured goods, equipment, labor and other items over a multi-year construction period can
result in higher than expected costs to complete an asset and place it into service. Such costs may not
be recoverable in the rates we are able to charge our customers. The inability to successfully and
timely complete a project, avoid unexpected costs or to recover any excess costs may materially affect
the ability to recover our investment in that project.
Furthermore, we depend upon both internal and external sources of liquidity to provide working
capital and to fund capital requirements. If these funds are not available and MEHC does not elect to
provide any needed funding to us, we may need to postpone or cancel planned capital expenditures.
Failure to construct these projects could materially increase operating costs, limit opportunities for
revenue growth and adversely affect the reliability of electric service to our customers. For example, if
we are not able to expand our existing generating facilities, we may be required to enter into bilateral
long-term electricity procurement contracts or procure electricity at more volatile and potentially
higher prices in the spot markets to support growing retail loads. These contracts would result in
additional counterparty performance risk, which is described further below.
We are subject to environmental, health, safety and other laws and regulations that may adversely
impact us.
We are subject to a number of environmental, health, safety and other laws and regulations
affecting many aspects of our present and future operations, including air emissions, water quality,
endangered species, wastewater discharges, solid wastes, hazardous substances and safety matters. We
may incur substantial costs and liabilities in connection with our operations as a result of these laws
and regulations. In particular, the cost of future compliance with federal, state and local clean air laws
such as those that relate to addressing regional haze issues and those that require certain generators
including some of our electric generating facilities, to limit emissions of nitrogen oxide, sulfur dioxide
carbon dioxide, mercury and other potential pollutants or emissions, may require us to make
significant capital and operating expenditures that may not be recoverable through future rates. In
addition, these costs and liabilities may include those relating to claims for damages to property and
persons resulting from our operations. Regulatory changes, including new interpretations of existing
laws and regulations, imposing increased compliance costs or additional operating restrictions on us
could adversely affect our financial results.
Furthermore, regulatory compliance for existing facilities and the construction of new facilities is
a costly and time-consuming process, and intricate and rapidly changing environmental regulations
may require major expenditures for permitting and create the risk of expensive delays or material
impairment of value if projects cannot function as planned due to changing regulatory requirements or
local opposition.
In addition to operational standards, environmental laws also impose obligations to remediate
contaminated properties or to pay for the cost of such remediation, often upon parties that did not
actually cause the contamination. Accordingly, we may become liable, either contractually or by
operation of law, for remediation costs even if the contaminated property is not presently owned or
operated by us, or if the contamination was caused by third parties during or prior to our ownership
or operation of the property. Given the nature of the past industrial operations conducted by us and
others at our properties, all potential instances of sailor groundwater contamination may not have
been identified, even for those properties where an environmental site assessment or other
investigation has been conducted. Although we have accrued reserves for our known remediation
liabilities, future events , such as changes in existing laws or policies or their enforcement, or the
discovery of currently unknown contamination, may give rise to additional remediation liabilities
which may be material. Any failure to recover increased environmental, health or safety costs incurred
by us could adversely affect our financial results.
We are subject to market risk, counterparty performance risk and other risks associated with
wholesale energy markets.
In general, market risk is the risk of adverse fluctuations in the market price of wholesale
electricity and fuel, including natural gas and coal. These fluctuations may be compounded by energy
volume changes affecting the availability of or demand for electricity and fuel. We purchase electricity
and fuel in the open market or pursuant to short-term or variable-priced contracts as part of our
normal operating business. If market prices rise, especially in a time when we require larger than
expected volumes that must be purchased at market or short-term prices, we may have significantly
greater costs than anticipated. In addition , we may not be able to timely recover all, if any, of those
increased costs through rate-making, due to retroactive rate-making prohibitions, unless deferred
accounting or power cost recovery mechanisms have been previously authorized. Likewise, if
electricity market prices decline in a period when we are a net seller of electricity in the wholesale
market, we will earn less revenue, possibly to the extent of not recovering the cost of generating the
electricity. Wholesale electricity prices are influenced primarily by factors throughout the western
United States relating to supply and demand. Those factors include the adequacy of generating
capacity, scheduled and unscheduled outages of generating facilities, hydroelectric generation levels
prices and availability of fuel sources for generation, disruptions or constraints to transmission
facilities, weather conditions, economic growth, and changes in technology. Energy volume changes
generally are caused by unanticipated changes in generation availability and changes in customer
demand for power due to the weather, the economy and customer behavior. Although we plan for
resources to meet our current and expected power delivery obligations, we are a net buyer of
electricity during peak periods and therefore our energy costs may be adversely impacted by market
risk.
We are also exposed to risks related to performance of contractual obligations by our wholesale
suppliers and customers. We rely on suppliers to deliver commodities, primarily natural gas, coal and
electricity, in accordance with short- and long-term contracts. Failure or delay by suppliers to provide
these commodities pursuant to existing contracts could disrupt our ability to deliver electricity and
require us to incur additional expenses to meet customer needs. In addition, as these contractual
agreements end , we may not be able to continue to purchase the commodities on terms equivalent to
the terms of current contracts.
We rely on wholesale customers to take delivery of the energy they have committed to purchase
and to pay for the energy on a timely basis. Failure of customers to take delivery may require us to
find other customers to take the energy at lower prices than the original customers committed to pay.
At certain times of year, prices paid by us for energy needed to satisfy our customers' demand for
energy may exceed the amounts we receive through rates from these customers. If the strategy we use
to economically hedge the exposure to these risks is ineffective, we could incur significant losses.
Weather conditions can adversely affect our financial results.
Although our service territory has historically experienced complementary seasonal customer
power demand patterns as a result of the geographically diverse area of our operations, weather
conditions can significantly affect operating results. For residential customers , within a given year
weather conditions are the dominant cause of usage variations from normal seasonal patterns. For
example , in periods of unusually hot summer weather, residential customers tend to use significantly
greater amounts of electricity to run air conditioners, which may substantially increase summer peak
energy demand. Changes in weather conditions and other natural events also impact customer
behavior and energy demand. Additionally, a portion of our supply of electricity comes from
hydroelectric projects that are dependent upon rainfall and snowpack. During or following periods of
low rainfall or snowpack, we may obtain substantially less electricity from hydroelectric projects and
must purchase greater amounts of electricity from the wholesale market or from other sources at
market prices. Accordingly, variations in weather conditions can adversely affect our financial results
through lower revenues and increased energy costs.
We are subject to certain operating uncertainties that may adversely affect our financial results.
The operation of complex electric utility systems (including transmission and distribution) and
power generating facilities that are spread over a large geographic area involves many risks associated
with operating uncertainties and events beyond our control. These potential events include the
breakdown or failure of power generation equipment, transmission and distribution lines or other
equipment or processes, unscheduled plant outages, work stoppages, transmission and distribution
system constraints or outages, fuel shortages or interruptions, performance below expected levels of
output, capacity or efficiency, the effects of changing government regulation, operator error and
catastrophic events such as severe storms, fires, earthquakes, explosions or mining accidents. A
casualty occurrence might result in injury or loss of life, extensive property damage or environmental
damage. Further, current and future insurance coverage may not be sufficient to replace lost revenues
or cover repair and replacement costs. Any of these risks could significantly reduce our revenues or
significantly increase our expenses, thereby adversely affecting results of operations. For example, if
we cannot operate generation facilities at full capacity due to damage caused by a catastrophic event
our revenues could decrease due to decreased wholesale sales and our expenses could increase due to
the need to obtain energy from more expensive sources. Any reduction of revenues or increase in
expenses resulting from the risks described above could adversely affect our financial results.
Acts of sabotage and terrorism aimed at our facilities, the facilities of our fuel suppliers or customers,
or at regional transmission facilities could adversely affect our business.
Since the September 11 , 2001 terrorist attacks, the United States government has issued warnings
that energy assets, specifically the nation s pipeline and electric utility infrastructure, may be the future
targets of terrorist organizations. These developments have subjected our operations to increased
risks. Damage to our assets, the assets of our fuel suppliers or customers, or to regional transmission
facilities inflicted by terrorist groups or saboteurs could result in a significant decrease in revenues and
significant repair costs , force us to increase security measures, cause changes in the insurance markets
and cause disruptions of fuel supplies, energy consumption and markets, particularly with respect to
natural gas and electricity. Any of these consequences of acts of terrorism could materially affect our
financial results. Instability in the financial markets as a result of terrorism or war could also
materially adversely affect our ability to raise capital.
Poor performance of plan investments and other factors impacting pension and postretirement
benefits plan costs could unfavorably impact our cash flows and liquidity.
Costs of providing our non-contributory defined benefit pension and postretirement benefits plans
depend upon a number of factors, including the level and nature of benefits provided, the rates of
return on plan assets, discount rates, the interest rates used to measure required minimum funding
levels, changes in laws and government regulation and our required or voluntary contributions made
to the plans. Our pension and postretirement benefits plans are in underfunded positions, and without
sustained growth in the investments over time to increase the value of the plans' assets , we will be
required to make significant cash contributions to fund the plans. Furthermore, the recently enacted
Pension Protection Act of 2006 may require us to accelerate contributions to our pension plan for
periods after 2007 and may result in more volatility in the amount and timing of future contributions.
Such cash funding obligations, which are also impacted by the other factors described above, could
have a material impact on our liquidity by reducing our cash flows.
A downgrade in our credit ratings could negatively affect our ability to access capital, cost of
borrowing and energy transaction credit support requirements.
Changes in our financial performance, capital structure, regulatory environment and other factors
could result in a credit ratings downgrade by the principal ratings agencies that evaluate our
creditworthiness, debt securities and preferred stock. Although we have no ratings-downgrade triggers
that would accelerate the maturity of our outstanding debt, a downgrade in our credit ratings could
directly increase the interest rates and commitment fees on our revolving credit agreement and certain
other financing arrangements. A ratings downgrade also may reduce the accessibility and increase the
cost of our commercial paper program, our principal source of short-term borrowing, and may result
in the requirement that we post collateral under certain of our energy purchase and other agreements.
In addition, a credit ratings downgrade could allow counterparties in the wholesale energy markets to
require us to post a letter of credit or other collateral, make cash prepayments , obtain a guarantee
agreement or provide other mutually agreeable security. The consequences of a credit ratings
downgrade could adversely affect our financial results through increased borrowing and operating
costs.
We have a substantial amount of debt, which could adversely affect our ability to obtain future
financing and limit our expenditures.
As of December 31 , 2006, we had $4.4 billion in total debt securities outstanding. Our principal
financing agreements contain restrictive covenants that limit our ability to borrow funds, and any
issuance of debt securities requires prior authorization from multiple state regulatory commissions. We
expect that we will need to supplement cash generated from operations and availability under
committed credit facilities with new issuances of long-term debt. However, if market conditions are
not favorable for the issuance of long-term debt, or if an issuance of long-term debt would exceed
contractual or regulatory limits, we may postpone planned capital expenditures, or take other actions
to the extent those expenditures are not fully covered by cash from operations, borrowings under
committed credit facilities or equity contributions from MEHe.
MEHC may exercise its significant influence over us in a manner that would benefit MEHC to the
detriment of our creditors and preferred stockholders.
MEHC, through its subsidiary, owns all of our common stock and therefore has significant
influence over our business and any matters submitted for shareholder approval. In circumstances
involving a conflict of interest between MEHC and our creditors and prderred stockholders, MEHC
could exercise its influence in a manner that would benefit MEHC to the detriment of our creditors
and preferred stockholders.
RISKS RELATED TO OUR SECURITIES
We have not appraised the collateral subject to the mortgage securing our Additional Bonds
Mortgage ) and, if there is a default or a foreclosure sale, the value of the collateral may not be
sufficient to repay the holders of any Additional Bonds.
We have not made any formal appraisal of the value of the collateral subject to the Mortgage
which will secure any Additional Bonds. The value of the collateral in the event of liquidation will
depend on market and economic conditions, the availability of buyers, the timing of the sale of the
collateral and other factors. Although we believe the value of the collateral substantially exceeds the
indebtedness under the Additional Bonds and the other first mortgage bonds issued under our
Mortgage, we cannot assure you that the proceeds from a sale of all of the collateral would be
sufficient to satisfy the amounts outstanding under the Additional Bonds and our other first mortgage
bonds secured by the same collateral or that such payments would be made in a timely manner. If the
proceeds were not sufficient to repay amounts outstanding under the Additional Bonds, then holders
of the Additional Bonds, to the extent not repaid from the proceeds of the sale of the collateral
would only have an unsecured claim against our remaining assets.
Holders of our Unsecured Debt Securities would have a claim that is junior with respect to the assets
securing our Additional Bonds and any other secured debt issued by us.
The first mortgage bonds (including Additional Bonds) that we issue under our Mortgage are
secured by a first priority lien on specific utility property owned from time to time by us. See
Description of Additional Bonds-Security and Priority." Unsecured Debt Securities will not have
the benefit of the lien of our Mortgage, and payment to holders of our Unsecured Debt Securities will
therefore be effectively subordinated to the payment of all of our outstanding first mortgage bonds
from our properties that are subject to the lien of the Mortgage.
There is no existing market for the Securities, and we cannot assure you that an active trading market
for the Securities will develop.
We do not intend to apply for listing of the Securities on any securities exchange or automated
quotation system. There can be no assurance as to the liquidity of any market that may develop for
the Securities. Accordingly, the ability of holders to sell the Securities that they hold or the price
which holders will be able to sell the Securities may be limited. Future trading prices of the Securities
will depend on many factors , including, among other things , prevailing interest rates, our operating
results and the market for similar securities.
We do not know whether an active trading market will develop for the Securities. To the extent
that an active trading market does develop, the price at which a holder may be able to sell the
Securities that it holds, if at all, may be less than the price paid for them. Consequently, a holder may
not be able to liquidate its investment readily, and the Securities may not be readily accepted as
collateral for loans.
FORWARD-LOOKING STATEMENTS
This prospectus contains statements that do not directly or exclusively relate to historical facts.
These statements are "forward-looking statements " within the meaning of the Private Securities
Litigation Reform Act of 1995. You can typically identify forward-looking statements by the use of
forward-looking words, such as "may,
" "
will
" "
could
" "
project
" "
believe
" "
anticipate
" "
expect
estimate,
" "
continue
" "
potential
" "
plan
" "
forecast
" "
intend" and similar terms. These statements
are based upon our current intentions, assumptions, expectations and beliefs and are subject to risks
uncertainties and other important factors. Many of these factors are outside our control and could
cause actual results to differ materially from those expressed or implied by our forward-looking
statements.
We have identified a number of these factors in our filings with the SEC, including our Annual
Report on Form 10-K that is incorporated by reference in this prospectus, and we refer you to those
reports for further information.
The following are among the factors, in addition to those set forth above under "Risk Factors
that could cause actual results to differ materially from the forward-looking statements:
The outcome of general rate cases and other proceedings conducted by regulatory
commissions or other governmental and legal bodies, including any of our related
commitments or restrictions on our future activities;
Changes in prices and availability for both purchases and sales of wholesale electricity and
purchases of coal, natural gas and other fuel sources that could have a significant impact on
generation capacity and energy costs;
Changes in legislation or regulatory requirements, including limits on the ability of public
utilities to recover income tax expense in rates such as Oregon Senate Bill 408 and related
rules;
Changes in economic, industry or weather conditions, as well as demographic trends, that
could affect customer growth and electricity usage or supply;
A high degree of variance between actual and forecasted load and prices that could impact
the hedging strategy and costs to balance electricity load and supply;
Hydroelectric conditions, as well as the cost, feasibility and eventual outcome of hydroelectric
facility relicensing proceedings, that could have a significant impact on electric capacity and
cost and on our ability to generate electricity from this renewable resource;
Performance of our generation facilities, including unscheduled outages or repairs;
Changes in, and compliance with, environmental and endangered species laws, regulations
decisions and policies that could increase operating and capital improvement costs, reduce
plant output and/or delay plant construction;
Changes resulting from MEHC ownership;
The impact of new accounting pronouncements or changes in current accounting estimates
and assumptions on financial position and results of operations;
The impact of increases in healthcare costs, changes in interest rates, morbidity and
investment performance on pension and other postretirement benefits expense, as well as the
impact of changes in legislation on funding requirements;
Availability, terms and deployment of capital;
Financial condition and creditworthiness of significant customers and suppliers;
The impact of derivative instruments used to mitigate or manage interest rate risk and
volume and price risk and changes in the commodity prices, interest rates and other
conditions that affect that value of the derivatives;
Changes in our credit ratings;
Timely and appropriate completion of our resource procurement process; unanticipated
construction delays, changes in costs , receipt of required permits and authorizations, ability to
fund capital projects and other factors that could affect future generation plants and
infrastructure additions;
Other risks or unforeseen events, including wars, the effects of terrorism, embargoes and
other catastrophic events; and
Other business or investment considerations that may be disclosed from time to time in filings
with the SEC or in other publicly disseminated written documents.
Further details of the potential risks and uncertainties affecting us are described in the "Risk
Factors" section of this prospectus and in the "Risk Factors" section of our Form 10-K incorporated
by reference herein. We undertake no obligation to publicly update or revise any forward-looking
statements, whether as a result of new information, future events or otherwise. The foregoing review
of factors should not be construed as exclusive.
THE COMPANY
We are a regulated electricity company serving approximately 1.7 million retail customers in
service territories aggregating approximately 136 000 square miles in portions of the states of Utah
Oregon, Wyoming, Washington, Idaho and California. The regulatory commission in each state
approves rates for retail electric sales within that state. We also sell electricity on the wholesale
market to public and private utilities, energy marketing companies and incorporated municipalities.
The FERC regulates our wholesale activities. We own, or have interests in, 69 thermal, hydroelectric
and wind generating plants with a net plant capacity of 8 588.1 MW. The FERC and the six state
regulatory commissions also have authority over the construction and operation of our electric
generation facilities. We transmit electricity through approximately 15 600 miles of transmission lines.
We are an indirect subsidiary of MidAmerican Energy Holdings Company ("MEHC"). MEHC, a
global energy company based in Des Moines, Iowa, is a majority-owned subsidiary of Berkshire
Hathaway Inc.
Our address and telephone number are: PacifiCorp, 825 NE Multnomah, Suite 2000, Portland
Oregon 97232-4116; (503) 813-5000.
For additional information concerning our business and affairs, including our capital requirements
and external financing plans, pending legal and regulatory proceedings, including the status of industry
restructuring in our service areas and its effect on us, and descriptions of those laws and regulations to
which we are subject, prospective purchasers should refer to the documents incorporated by reference
into this prospectus, as described in the section entitled
, "
Where You Can Find More Information
and the documents incorporated by reference therein.
CONSOLIDATED RATIOS OF EARNINGS TO FIXED CHARGES
2006
Years Ended March 31,2005 2004 20035x 2Ax 1.7x
2002
Six Months Ended September 30,2006 2005
For purposes of this ratio, fixed charges represent consolidated interest charges, an estimated
amount representing the interest factor in rents and preferred dividends of wholly-owned subsidiaries.
Preferred dividends of wholly-owned subsidiaries represents preferred dividends multiplied by the
ratio which pre-tax income from continuing operations bears to income from continuing operations.
Earnings represent the aggregate of (a) income from continuing operations, (b) taxes based on income
from continuing operations, (c) minority interest in the income of majority-owned subsidiaries that
have fixed charges, (d) fixed charges and (e) undistributed income of less than 50% owned affiliates
without loan guarantees.
WHERE YOU CAN FIND MORE INFORMATION
This prospectus is part of a registration statement filed with the SEe. The registration statement
contains additional information and exhibits not included in this prospectus and refers to documents
that are filed as exhibits to other SEC filings. We file annual, quarterly and special reports and other
information with the SEe. Our SEC filings are available to the public over the Internet at the SEC's
web site at http://www.sec.gov. You may also read and copy any document we file at the SEC's Public
Reference Room at 100 F Street, N., Room 1580, Washington, D.e. 20549. Please call the SEC at
800-SEC-0330 for further information regarding the public reference rooms. Our SEC filings are also
available through the Investor Information section of our website at www.pacificorp.com. The
information found on our web site, other than any of our SEC filings that are incorporated by
reference herein, is not part of this prospectus.
The SEC allows us to "incorporate by reference " the information we file with them, which means
that we can disclose important information to you by referring you to those documents. The
information incorporated by reference is considered to be part of this prospectus and later information
that we file with the SEC will automatically update or supersede this information. We incorporate by
reference the documents listed below and any future filings made with the SEC under Sections 13(a),
13(c), 14, or 15(d) of the Exchange Act until all of the securities covered by this prospectus have been
sold:
Annual Report on Form 10-K for the year ended March 31 , 2006.
Quarterly Reports on Form 10-Q for the quarters ended June 30, 2006 and September 30
2006.
Current Reports on Form 8-K filed May 11 2006, June 5, 2006, August 14, 2006
August 21, 2006, August 25, 2006, November 22, 2006 and December 22, 2006.
You may request a copy of these filings (other than exhibits to such documents unless such
exhibits are specifically incorporated by reference herein), at no cost, by writing or telephoning us at
the following address:
PacifiCorp
825 NE Multnomah, Suite 1900
Portland, Oregon 97232-4116
Telephone: (503) 813-5000
Attention: Treasury
You should rely only on the information contained in, or incorporated by reference in, this
prospectus and the prospectus supplement. We have not, and any underwriters, agents or dealers have
not, authorized anyone else to provide you with different information. We are not, and any
underwriters, agents or dealers are not, making an offer of these Securities in any state where the
offer or sale is not permitted. You should not assume that the information contained in this prospectus
and the prospectus supplement is accurate as of any date other than the date on the front of the
prospectus supplement or that the information incorporated by reference in this prospectus is accurate
as of any date other than the date on the front of those documents.
USE OF PROCEEDS
Unless otherwise indicated in a prospectus supplement, the net proceeds to be received by us
from the issuance and sale of the Securities will initially become part of our general funds and will be
used to repay all or a portion of our short-term borrowings outstanding at the time of issuance of the
Securities or may be applied to utility asset purchases, capital expenditures or other corporate
purposes, including the refunding of long-term debt.
DESCRIPTION OF ADDITIONAL BONDS
General
Additional Bonds may be issued from time to time under our Mortgage and Deed of Trust, dated
as of January 9, 1989, as amended and supplemented (the "Mortgage ), with The Bank of New York
(as successor trustee to JPMorgan Chase Bank, N.A.) (the "Mortgage Trustee ). The following
summary is subject to the provisions of and is qualified by reference to the Mortgage, a copy of which
is an exhibit to the Registration Statement. Whenever particular provisions or defined terms in the
Mortgage are referred to herein, those provisions or defined terms are incorporated by reference
herein. Section and Article references used below are references to provisions of the Mortgage unless
otherwise noted. When we refer to "bonds " we refer to all first mortgage bonds issued under the
Mortgage, including the Additional Bonds.
We expect to issue Additional Bonds in the form of fully registered bonds and, except as may be
set forth in any prospectus supplement relating to those Additional Bonds, in denominations of $1 000
and any multiple thereof. They may be transferred without charge, other than for applicable taxes or
other governmental charges, at the offices of the Mortgage Trustee, New York, New York. Any
Additional Bonds issued will be equally and ratably secured with all other bonds issued under the
Mortgage. See "Book-Entry Issuance.
Maturity and Interest Payments
Reference is made to the prospectus supplement relating to any Additional Bonds for the date or
dates on which those Additional Bonds will mature, the rate or rates per annum at which those
Additional Bonds will bear interest and the times at which any interest will be payable. These terms
and conditions , as well as the terms and conditions relating to redemption and purchase referred to
under "Redemption or Purchase of Additional Bonds" below, will be as established in or pursuant
to resolutions of our Board of Directors at the time of issuance of the Additional Bonds.
Redemption or Purchase of Additional Bonds
The Additional Bonds may be redeemable, in whole or in part, on not less than 30 days' notice
either at our option or as required by the Mortgage or may be subject to repurchase at the option of
the holder.
Reference is made to the prospectus supplement relating to any Additional Bonds for the
redemption or repurchase terms and other specific terms of those Additional Bonds.
, at the time notice of redemption is given, the redemption moneys are not held by the
Mortgage Trustee, the redemption may be made subject to their receipt on or before the date fixed
for redemption and that notice shall be of no effect unless those moneys are so received.
While the Mortgage , as described below, contains provisions for the maintenance of the
Mortgaged and Pledged Property, the Mortgage does not permit redemption of bonds pursuant to
these provisions. There is no sinking or analogous fund in the Mortgage.
Cash deposited under any provisions of the Mortgage may be applied (with specific exceptions) to
the redemption or repurchase of bonds of any series. (Section 7., Article XII and Section 13.06)
Security and Priority
If bonds will be issued under the Mortgage and secured by a first mortgage lien on certain utility
property owned from time to time by us and/or Class "!\:' Bonds , if any, held by the Mortgage
Trustee.
There are excepted from the lien of the Mortgage all cash and securities (except those specifically
deposited); equipment, materials or supplies held for sale or other disposition; any fuel and similar
consumable materials and supplies; automobiles, other vehicles, aircraft and vessels; timber, minerals
mineral rights and royalties; receivables, contracts , leases and operating agreements; electric energy,
gas, water, steam and other products for sale , distribution or other use; natural gas wells; gas
transportation lines or other property used in the sale of natural gas to customers or to a natural gas
distribution or pipeline company, up to the point of connection with any distribution system; our
interest in the Wyodak Facility; and all properties that have been released from the discharged
Mortgages and Deeds of Trust, as supplemented, of Pacific Power & Light Company and Utah
Power & Light Company and that PacifiCorp, a Maine corporation, or Utah Power & Light Company,
a Utah corporation, contracted to dispose of, but title to which had not passed at the date of the
Mortgage. The lien of the Mortgage is also subject to Excepted Encumbrances, including tax and
construction liens, purchase money liens and other specific exceptions. We have reserved the right
without any consent or other action by holders of bonds of the Eighth Series or any subsequently
created series of bonds, to amend the Mortgage in order to except from the lien of the Mortgage
allowances allocated to steam-electric generating plants owned by us, or in which we have interests
pursuant to Title IV of the Clean Air Act Amendments of 1990, as now in effect or as hereafter
supplemented or amended.
The Mortgage contains provisions subjecting after-acquired property to the lien thereof. These
provisions may be limited, at our option, in the case of consolidation or merger (whether or not we
are the surviving corporation), conveyance or transfer of all or substantially all of the utility property
of another electric utility company to us or sale of substantially all of our assets. (Section 18.03) In
addition, after-acquired property may be subject to a Class A!' Mortgage, purchase money mortgages
and other liens or defects in title.
The Mortgage provides that the Mortgage Trustee shall have a lien upon the mortgaged property,
prior to the holders of bonds, for the payment of its reasonable compensation and expenses and for
indemnity against certain liabilities. (Section 19.09)
Issuance of Additional Bonds
The maximum principal amount of bonds that may be issued under the Mortgage is not limited.
Bonds of any series may be issued from time to time on the basis of:
(1) 70% of qualified Property Additions after adjustments to offset retirements;
(2) Class A!' Bonds (which need not bear interest) delivered to the Mortgage Trustee;
(3) retirement of bonds or certain prior lien bonds; and/or
(4) deposits of cash.
With certain exceptions in the case of clauses (2) and (3) above, the issuance of bonds is subject
to our Adjusted Net Earnings for 12 consecutive months out of the preceding 15 months, before
income taxes, being at least twice the Annual Interest Requirements on all bonds at the time
outstanding, all outstanding Class A!.' Bonds held other than by the Mortgage Trustee or by us, and
all other indebtedness secured by a lien prior to the lien of the Mortgage. In general, interest on
variable interest bonds, if any, is calculated using the rate then in effect. (Section 1.07 and Articles IV
through VII)
Property Additions generally include electric, gas, steam and/or hot water utility property but not
fuel, securities , automobiles, other vehicles or aircraft, or property used principally for the production
or gathering of natural gas. (Section 1.04)
The issuance of bonds on the basis of Property Additions subject to prior liens is restricted.
Bonds may, however, be issued against the deposit of Class A!' Bonds. (Sections 1.04 through 1.06
and Articles IV and V)
Release and Substitution of Property
Property subject to the lien of the Mortgage may be released upon the basis of:
(1) the release of that property from the lien of a Class A!' Mortgage;
(2)
(3)
the deposit of cash or, to a limited extent, purchase money mortgages;
Property Additions, after making adjustments for certain prior lien bonds outstanding against
Property Additions; and/or
(4) waiver of the right to issue bonds.
Cash may be withdrawn upon the bases stated in (1), (3) and (4) above. Property that does not
constitute Funded Property, as defined in Section 1.05 of the Mortgage, may be released without
substituting other Funded Property. Similar provisions are in effect as to cash proceeds from such
property. The Mortgage contains special provisions with respect to certain prior lien bonds deposited
and disposition of moneys received on deposited prior lien bonds. (Sections 1.05 , 7., 9., 10.
through 10.04 and 13.03 through 13.09)
Merger or Consolidation
The Mortgage provides that in the event of the merger or consolidation of another electric utility
company with or into us or the conveyance or transfer to us by another electric utility company of all
or substantially all of that company s property that is of the same character as Property Additions, as
defined in the Mortgage, an existing mortgage constituting a first lien on operating properties of that
other company may be designated by us as a Class I\:' Mortgage. (Section 11.06) Bonds thereafter
issued pursuant to the additional mortgage would be Class I\:' Bonds and could provide the basis for
the issuance of bonds under the Mortgage.
Certain Covenants
The Mortgage contains a number of covenants by us for the benefit of the holders of the bonds
including provisions requiring us to maintain the mortgaged property as an operating system or
systems capable of engaging in all or any of the generating, transmission, distribution or other utility
businesses described in the Mortgage. (Article IX)
Dividend Restrictions
The Mortgage provides that we may not declare or pay dividends (other than dividends payable
solely in shares of our common stock) on any shares of our common stock if, after giving effect to the
declaration or payment, we would not be able to pay our debts as they become due in the usual
course of business. (Section 9.07) Reference is made to the notes to the audited consolidated financial
statements included in our Annual Report on Form 10-K incorporated by reference herein for
information relating to other restrictions.
Foreign Currency Denominated Bonds
The Mortgage authorizes the issuance of bonds denominated in foreign currencies, provided that
we deposit with the Mortgage Trustee a currency exchange agreement with an entity having, at the
time of the deposit, a financial rating at least as high as our financial rating that, in the opinion of an
independent expert, gives us at least as much protection against currency exchange fluctuation as is
usually obtained by similarly situated borrowers. (Section 2.03) We believe that this type of currency
exchange agreement will provide effective protection against currency exchange fluctuations. However
if the other party to the exchange agreement defaults and the foreign currency is valued higher at the
date of maturity than at the date of issuance of the relevant bonds, holders of those bonds would have
a claim on our assets that is greater than the claim to which holders of dollar-denominated bonds
issued at the same time would be entitled.
The Mortgage Trustee
The Bank of New York may act as a lender, trustee or agent under other agreements and
indentures involving us and our affiliates.
Modification
The rights of bondholders may be modified with the consent of holders of 60% of the bonds, or, if
less than all series of bonds are adversely affected, the consent of the holders of 60% of the series of
bonds adversely affected. In general, no modification of the terms of payment of principal , premium, if
any, or interest and no modification affecting the lien or reducing the percentage required for
modification is effective against any bondholder without the consent of the holder. (Section 21.07)
Unless there is a Default under the Mortgage, the Mortgage Trustee generally is required to vote
Class " /\:" bonds held by it with respect to any amendment of the applicable Class /\:,' Mortgage
proportionately with the vote of the holders of all Class "/\:" Bonds then actually voting.
(Section 11.03)
Defaults and Notice Thereof
Defaults" are defined in the Mortgage as:
(1) default in payment of principal;
(2) default for 60 days in payment of interest or an installment of any fund required to be
applied to the purchase or redemption of any bonds;
default in other covenants for 90 days after notice; or
the existence of any default under a Class /\:,' Mortgage that permits the declaration of the
principal of all the bonds secured by the Class /\:,' Mortgage and the interest accrued
thereupon due and payable. (Section 15.01)
An effective default under any Class /\:,' Mortgage or under the Mortgage will result in an
effective default under all those mortgages. The Mortgage Trustee may withhold notice of default
(except in payment of principal, interest or funds for retirement of bonds) if it determines that it is
not detrimental to the interests of the bondholders. (Section 15.02)
The Mortgage Trustee or the holders of 25% of the bonds may declare the principal and interest
due and payable on Default, but a majority may annul the declaration if the Default has been cured.
(Section 15.03) No holder of bonds may enforce the lien of the Mortgage without giving the Mortgage
Trustee written notice of a Default and unless the holders of 25% of the bonds have requested the
Mortgage Trustee to act and offered it reasonable opportunity to act and indemnity satisfactory to it
against the costs, expenses and liabilities to be incurred thereby and the Mortgage Trustee shall have
failed to act. (Section 15.16) The holders of a majority of the bonds may direct the time, method and
place of conducting any proceedings for any remedy available to the Mortgage Trustee or exercising
any trust or power conferred on the Mortgage Trustee. (Section 15.07) The Mortgage Trustee is not
required to risk its funds or incur personal liability if there is reasonable ground for believing that
repayment is not reasonably assured. (Section 19.08)
(3) default in payment of principal or interest with respect to certain prior lien bonds;
(4) certain events in bankruptcy, insolvency or reorganization;
(5)
(6)
Defeasance
Under the terms of the Mortgage, we will be discharged from any and all obligations under the
Mortgage in respect of the bonds of any series if we deposit with the Mortgage Trustee, in trust
moneys or government obligations, in an amount sufficient to pay all the principal of, premium (if
any) and interest on, the bonds of those series or portions thereof, on the redemption date or maturity
date thereof, as the case may be. The Mortgage Trustee need not accept the deposit unless it is
accompanied by an opinion of counsel to the effect that (a) we have received from , or there has been
published by, the Internal Revenue Service a ruling or, (b) since the date of the Mortgage, there has
been a change in applicable federal income tax law, in either case to the effect that, and based thereon
the opinion of counsel shall confirm that, the holders of the bonds or the right of payment of interest
thereon (as the case may be) will not recognize income, gain or loss for federal income tax purposes
as a result of the deposit, and/or ensuing discharge and will be subject to federal income tax on the
same amount and in the same manner and at the same times, as would have been the case if the
deposit, and/or discharge had not occurred. (Section 20.02)
Upon the deposit, our obligation to pay the principal of (and premium, if any) and interest on
those bonds shall cease, terminate and be completely discharged and the holders of such bonds shall
thereafter be entitled to receive payment solely from the funds deposited. (Section 20.02)
DESCRIPTION OF UNSECURED DEBT SECURITIES
General
The Unsecured Debt Securities may be issued from time to time in one or more series under an
indenture or indentures (each, an "Indenture ), between us and the trustees named below, or other
bank or trust company to be named as trustee (each, an "Indenture Trustee ). The Unsecured Debt
Securities will be our unsecured obligations. If so provided in the prospectus supplement, the
Unsecured Debt Securities will be our subordinated obligations ("Subordinated Debt Securities
Except as may otherwise be described in the prospectus supplement, Subordinated Debt Securities
will be issued under the Indenture, dated as of May 1, 1995, as supplemented (the "Subordinated
Indenture ), between us and The Bank of New York, as Trustee. Except as may otherwise be
described in the prospectus supplement, Unsecured Debt Securities other than Subordinated Debt
Securities will be issued under an Indenture, dated as of September 1, 1996 (the "Unsecured
Indenture ), between us and The Bank of New York (as successor trustee to The Chase Manhattan
Bank), as Trustee. Except as otherwise specified herein, the term "Indenture" includes the
Subordinated Indenture and the Unsecured Indenture.
The following summary is subject to the provisions of and is qualified by reference to the
Indenture, which is filed as an exhibit to or incorporated by reference in the registration statement.
Whenever particular provisions or defined terms in the Indenture are referred to herein, those
provisions or defined terms are incorporated by reference herein. Section and Article references used
herein are references to provisions of the Indenture unless otherwise noted.
The Indenture provides that Unsecured Debt Securities may be issued from time to time in one
or more series pursuant to an indenture supplemental to the Indenture or a resolution of our Board.
(Section 2.01) The Indenture does not limit the aggregate principal amount of Unsecured Debt
Securities which may be issued thereunder. Our Third Restated Articles of Incorporation (the
Restated Articles ) limit the amount of unsecured debt that we may issue to the equivalent of 30%
of the total of all secured indebtedness and total equity. On June 17, 1999 , a majority of the holders of
the three classes of PacifiCorp preferred stock (the "Preferred Stock"), voting together as a single
class, consented to an increase of $5 billion in the amount of unsecured indebtedness permitted under
the Restated Articles. The Indenture does not contain any provisions that would limit our ability to
incur indebtedness or that would afford holders of Unsecured Debt Securities protection in the event
of a highly leveraged or similar transaction involving us or in the event of a change of control.
Reference is made to the prospectus supplement which will accompany this prospectus for the
following terms of the series of Unsecured Debt Securities being offered thereby:
the specific title of those Unsecured Debt Securities;
any limit on the aggregate principal amount of those Unsecured Debt Securities;
the date or dates on which the principal of those Unsecured Debt Securities is payable;
the rate or rates at which those Unsecured Debt Securities will bear interest or the manner
of calculation of the rate or rates;
the date or dates from which any interest shall accrue, the interest payment dates on which
any interest will be payable or the manner of determination of interest payment dates and
the record dates for the determination of holders to whom interest is payable on any interest
payment dates;
the period or periods within which, the price or prices at which and the terms and conditions
upon which those Unsecured Debt Securities may be redeemed, in whole or in part, at our
option;
our obligation, if any, to redeem or purchase those Unsecured Debt Securities pursuant to
any sinking fund or analogous provisions or at the option of the holder thereof and the
period or periods, the price or prices at which and the terms and conditions upon which
those Unsecured Debt Securities shall be redeemed or purchased, in whole or part, pursuant
to that obligation;
the form of those Unsecured Debt Securities;
if other than denominations of $1 000 (except with respect to Subordinated Debt Securities
issued pursuant to the Subordinated Indenture, in which case other than denominations of
$25) or, in either case, any integral multiple thereof, the denominations in which those
Unsecured Debt Securities shall be issuable; and
any and all other terms with respect to those series. (Section 2.01)
For Subordinated Debt Securities issued pursuant to the Subordinated Indenture, the applicable
prospectus supplement will also describe (a) the right, if any, to extend the interest payment periods
and the duration of that extension and (b) the subordination terms of the Subordinated Debt
Securities to the extent the subordination terms vary from those described under "Subordination
below.
Subordination
The Subordinated Indenture provides that Subordinated Debt Securities are subordinate and
junior in right of payment to the prior payment in full of all of our Senior Indebtedness (as defined
below) as provided in the Subordinated Indenture. No payment of principal of (including redemption
and sinking fund payments), or premium, if any, or interest on, the Subordinated Debt Securities may
be made if any Senior Indebtedness is not paid when due, any applicable grace period with respect to
that default has ended and that default has not been cured or waived, or if the maturity of any Senior
Indebtedness has been accelerated because of a default. Upon payment by us or any distribution of
our assets to creditors upon any dissolution, winding-up, liquidation or reorganization, whether
voluntary or involuntary or in bankruptcy, insolvency, receivership or other proceedings, all amounts
due or to become due on all Senior Indebtedness must be paid in full before the holders of the
Subordinated Debt Securities are entitled to receive or retain any payment. The rights of the holders
of the Subordinated Debt Securities will be subrogated to the rights of the holders of Senior
Indebtedness to receive payments or distributions applicable to Senior Indebtedness until all amounts
owing on the Subordinated Debt Securities (including the Subordinated Debt Securities to be offered
hereby) are paid in full. (Sections 14.01 to 14.04 of the Subordinated Indenture)
The term "Senior Indebtedness" shall mean the principal of and premium, if any, and interest on
and any other payment due pursuant to any of the following, whether outstanding at the date of
execution of the Subordinated Indenture or thereafter incurred, created or assumed:
(1) all of our indebtedness evidenced by notes (including indebtedness owed to banks),
debentures, bonds or other securities sold by us for money;
(2) all indebtedness of others of the kinds described in the preceding Clause (1) assumed by or
guaranteed in any manner by us or in effect guaranteed by us through an agreement to
purchase, contingent or otherwise; and
(3) all renewals, extensions or refundings of indebtedness of the kinds described in either of the
preceding clauses (1) and (2);
unless, in the case of any particular indebtedness, renewal, extension or refunding, the instrument
creating or evidencing the same or the assumption or guarantee of the same expressly provides that
indebtedness, renewal, extension or refunding is not superior in right of payment to or is pari passu
with the Subordinated Debt Securities. The Senior Indebtedness shall continue to be Senior
Indebtedness and entitled to the benefits of the subordination provisions contained in the
Subordinated Indenture irrespective of any amendment, modification or waiver of any term of the
Senior Indebtedness. (Section 1.01 of the Subordinated Indenture)
The Subordinated Indenture does not limit the aggregate amount of Senior Indebtedness which
may be issued.
As the Subordinated Debt Securities will be issued by us, the Subordinated Debt Securities
effectively will be subordinate to all obligations of our subsidiaries, and the rights of our creditors
including holders of bonds issued under the Mortgage, Subordinated Debt Securities and any other
Unsecured Debt Securities issued by us, to participate in the assets of the subsidiaries upon
liquidation or reorganization, and will be junior to the rights of the holders of all preferred stock
indebtedness and other liabilities of the subsidiaries, which may include trade payables, obligations to
banks under credit facilities, guarantees, pledges , support arrangements, bonds, capital leases, notes
and other obligations.
Certain Covenants of the Company
, with respect to Subordinated Debt Securities issued pursuant to the Subordinated Indenture
there shall have occurred any event that would, with the giving of notice or the passage of time, or
both, constitute an Event of Default under the Indenture, as described under "Events of Default"
below, or we exercise our option to extend the interest payment period described in clause (a) in the
last sentence under "General" above, we will not, until all defaulted interest on the Subordinated
Debt Securities and all interest accrued on the Subordinated Debt Securities during any extended
interest payment period described above and all principal and premium, if any, then due and payable
on the Subordinated Debt Securities shall have been paid in full:
(i) declare, set aside or pay any dividend or distribution on any of our capital stock, including
the Common Stock, except for dividends or distributions in shares of our capital stock or in rights
to acquire shares of our capital stock; or
(ii) repurchase, redeem or otherwise acquire, or make any sinking fund payment for the
purchase or redemption of, any shares of our capital stock (except by conversion into or exchange
for shares of our capital stock and except for a redemption , purchase or other acquisition of
shares of our capital stock made for the purpose of an employee incentive plan or benefit plan of
ours or any of our subsidiaries and except for mandatory redemption or sinking fund payments
with respect to any series of Preferred Stock that are subject to mandatory redemption or sinking
fund requirements, provided that the aggregate stated value of all series of Preferred Stock
outstanding at the time of any payment does not exceed five percent of the aggregate of (a) the
total principal amount of all bonds or other securities representing secured indebtedness issued or
assumed by us and then outstanding and (b) our capital and surplus to be stated on our books of
account after giving effect to the payment); provided, however, that any moneys deposited in any
sinking fund and not in violation of this provision may thereafter be applied to the purchase or
redemption of the Preferred Stock in accordance with the terms of the sinking fund without
regard to the restrictions contained in this provision. (Section 4.06 of the Subordinated Indenture)
Form, Exchange, Registration and Transfer
Each series of Unsecured Debt Securities will be issued in registered form and, unless otherwise
specified in the applicable prospectus supplement, will be represented by one or more global
certificates. If not represented by one or more global certificates, Unsecured Debt Securities may be
presented for registration of transfer (with the form of transfer endorsed thereon duly executed) or
exchange, at the office of the Registrar or at the office of any transfer agent designated by us for that
purpose with respect to any series of Unsecured Debt Securities and referred to in an applicable
prospectus supplement, without service charge and upon payment of any taxes and other
governmental charges as described in the Indenture. The transfer or exchange will be effected upon
the registrar or the transfer agent, as the case may be, being satisfied with the documents of title and
identity of the person making the request. (Section 2.05) If a prospectus supplement refers to any
transfer agent (in addition to the registrar) initially designated by us with respect to any series of
Unsecured Debt Securities, we may at any time rescind the designation of any transfer agent or
approve a change in the location through which any transfer agent acts, except that we will be
required to maintain a transfer agent in each place of payment for that series. (Section 4.02) We may
at any time designate additional transfer agents with respect to any series of Unsecured Debt
Securities. The Unsecured Debt Securities may be transferred or exchanged without service charge
other than any tax or governmental charge imposed in connection therewith. (Section 2.05)
In the event of any redemption in part, we shall not be required to (i) issue, register the transfer
of or exchange any Unsecured Debt Security during a period beginning at the opening of business
15 days before any selection for redemption of Unsecured Debt Securities of like tenor and of the
series of which that Unsecured Debt
Security is a part, and ending at the close of business on the earliest date in which the relevant
notice of redemption is deemed to have been given to all holders of Unsecured Debt Securities of like
tenor and of that series to be redeemed, or (ii) register the transfer of or exchange any Unsecured
Debt Securities so selected for redemption, in whole or in part, except the unredeemed portion of any
Unsecured Debt Security being redeemed in part. (Section 2.05)
Payment and Paying Agents
Unless otherwise indicated in the prospectus supplement or the Unsecured Debt Securities are
represented by one or more global certificates (see "Book-Entry Issuance ), payment of principal of
and premium (if any) on any Unsecured Debt Security will be made only against surrender to the
Paying Agent of that Unsecured Debt Security. Unless otherwise indicated in the prospectus
supplement or unless the Unsecured Debt Securities are represented by one or more global
certificates, principal of and any premium and interest, if any, on Unsecured Debt Securities will be
payable , subject to any applicable laws and regulations, at the office of the Paying Agent or Paying
Agents as we may designate from time to time, except that at our option payments on the Unsecured
Debt Securities may be made:
by checks mailed by the Indenture Trustee to the holders entitled thereto at their registered
addresses as specified in the Register for those Unsecured Debt Securities; or
to a holder of $1 000 000 or more in aggregate principal amount of those Unsecured Debt
Securities who has delivered a written request to the Indenture Trustee at least 14 days prior
to the relevant payment date electing to have payments made by wire transfer to a
designated account in the United States, by wire transfer of immediately available funds to
the designated account;
provided that, in either case, the payment of principal with respect to any Unsecured Debt Security
will be made only upon surrender of that Unsecured Debt Security to the Indenture Trustee. Unless
otherwise indicated in the prospectus supplement, payment of interest on an Unsecured Debt Security
on any Interest Payment Date will be made to the person in whose name that Unsecured Debt
Security (or Predecessor Security) is registered at the close of business on the Regular Record Date
for that interest payment. (Sections 2.03 and 4.03)
We will act as Paying Agent with respect to the Unsecured Debt Securities. We may at any time
designate additional Paying Agents or rescind the designation of any Paying Agents or approve a
change in the office through which any Paying Agent acts, except that we will be required to maintain
a Paying Agent in each Place of Payment for each series of the respective Unsecured Debt Securities.
(Sections 4.02 and 4.03)
All moneys paid by us to a Paying Agent for the payment of the principal of or premium, if any,
or interest on any Unsecured Debt Security of any series that remain unclaimed at the end of two
years after that principal, premium , if any, or interest shall have become due and payable will be
repaid to us and the holder of that Unsecured Debt Security will thereafter look only to us for
payment thereof. (Section 11.06)
Agreed Tax Treatment
The Subordinated Indenture provides that each holder of a Subordinated Debt Security, each
person that acquires a beneficial ownership interest in a Subordinated Debt Security and we agree
that for United States federal, state and local tax purposes it is intended that the Subordinated Debt
Security constitutes indebtedness. (Section 13.12 of the Subordinated Indenture)
Modification of the Indenture
The Indenture contains provisions permitting us and the Indenture Trustee, with the consent of
the holders of not less than a majority in principal amount of the Unsecured Debt Securities of each
series which are affected by the modification, to modify the Indenture or any supplemental indenture
affecting that series or the rights of the holders of that series of Unsecured Debt Securities; provided
that no modification may, without the consent of the holder of each outstanding Unsecured Debt
Security affected thereby:
extend the fixed maturity of any Unsecured Debt Securities of any series, or reduce the
principal amount thereof, or reduce the rate or extend the time of payment of interest
thereon, or reduce any premium payable upon the redemption thereof;
reduce the percentage of Unsecured Debt Securities, the holders of which are required to
consent to a supplemental indenture; or
in the case of the Unsecured Indenture, reduce the percentage of Unsecured Debt Securities
the holders of which are required to waive any default and its consequences or modify any
provision of the Indenture relating to the percentage of Unsecured Debt Securities (except to
increase the percentage) required to rescind and annul any declaration of principal due and
payable upon an Event of Default. (Section 9.02)
In addition, we and the Indenture Trustee may execute, without the consent of any holder of
Unsecured Debt Securities (including the Unsecured Debt Securities being offered hereby), any
supplemental indenture for some other usual purposes, including the creation of any new series of
Unsecured Debt Securities. (Sections 2., 9.01 and 10.01)
Events of Default
The Indenture provides that anyone or more of the following described events , which has
occurred and is continuing, constitutes an "Event of Default" with respect to each series of Unsecured
Debt Securities:
default for 30 days (except with respect to Subordinated Debt Securities issued under the
Subordinated Indenture, in which case default for 10 days) in payment of interest;
default in payment of principal or premium, if any;
default in other covenants (other than those specifically relating to one or more other series)
for 90 days after notice; or
specified events in bankruptcy, insolvency or reorganization. (Section 6.01)
The holders of a majority in aggregate outstanding principal amount of any series of the
Unsecured Debt Securities have the right to direct the time, method and place of conducting any
proceeding for any remedy available to the Indenture Trustee for that series. (Section 6.06) The
applicable Indenture Trustee or the holders of not less than 25% in aggregate outstanding principal
amount of any particular series of the Unsecured Debt Securities may declare the principal due and
payable immediately upon an Event of Default with respect to that series, but the holders of a
majority in aggregate outstanding principal amount of that series may annul the declaration and waive
the Event of Default if it has been cured and a sum sufficient to pay all matured installments of
interest and principal and any premium has been deposited with the Indenture Trustee. (Sections 6.
and 6.06)
The holders of a majority in aggregate outstanding principal amount of all series of the
Unsecured Debt Securities issued under the Indenture and affected thereby may, on behalf of the
holders of all the Unsecured Debt Securities of those series, waive any past default, except a default
in the payment of principal, premium, if any, or interest. (Section 6.06) We are required to file
annually with the applicable Indenture Trustee a certificate as to whether or not we are in compliance
with all the conditions and covenants under the Indenture. (Section 5.03( d))
No holder of an Unsecured Debt Security has any right by virtue or by availing of any provision
of the Indenture to institute any suit, action or proceeding upon or under or with respect to the
Indenture unless such holder previously has given written notice to the Indenture Trustee of an Event
of Default with respect to Unsecured Debt Securities of that series and unless the holders of not less
than 25% in aggregate principal amount of the Unsecured Debt Securities of such series then
outstanding have made written request upon the Indenture Trustee to institute such action, suit or
proceeding in its own name as trustee and have offered to the Indenture Trustee such reasonable
indemnity as it may require against the costs, expenses and liabilities to be incurred, and the
Indenture Trustee has failed to institute any such action, suit or proceeding for 60 days after its
receipt of such notice, request and offer of indemnity. (Section 6.04)
No holder of an Unsecured Debt Security of a specific series has any right in any manner
whatsoever by virtue or by availing of any provision of the Indenture to affect, disturb or prejudice
the rights of the holders of any other Unsecured Debt Securities of that series, or to obtain or seek to
obtain priority over or preference to any other holder of Unsecured Debt Securities of that series, or
to enforce any right under the Indenture , except in the manner provided and for the equal, ratable
and common benefit of all holders of Unsecured Debt Securities of that series. (Section 6.04)
Consolidation, Merger and Sale
The Indenture does not contain any covenant which restricts our ability to merge or consolidate
with or into any other corporation, sell or convey all or substantially all of our assets to any person
firm or corporation or otherwise engage in restructuring transactions. (Section 10.01)
Defeasance and Discharge
Under the terms of the Indenture, we will be discharged from any and all obligations under the
Indenture in respect of the Unsecured Debt Securities of any series (except in each case for specific
obligations to register the transfer or exchange of Unsecured Debt Securities, replace stolen, lost or
mutilated Unsecured Debt Securities, maintain paying agencies and hold moneys for payment in trust)
if we deposit with the Indenture Trustee, in trust, moneys or government obligations, in an amount
sufficient to pay all the principal of, and interest on, the Unsecured Debt Securities of that series on
the dates those payments are due in accordance with the terms of those Unsecured Debt Securities
and, if, among other things, those Unsecured Debt Securities are not due and payable, or are not to
be called for redemption, within one year, we deliver to the Indenture Trustee an Opinion of Counsel
to the effect that the holders of Unsecured Debt Securities of that series will not recognize income
gain or loss for federal income tax purposes as a result of the deposit and discharge and will be
subject to federal income tax on the same amount and in the same manner and at the same times as
would have been the case if the deposit and discharge had not occurred.
In addition to discharging those obligations under the Indenture as stated above, if:
(1) We deliver to the Indenture Trustee an opinion of counsel (in lieu of the opinion of counsel
referred to above) to the effect that (a) we have received from , or there has been published
by, the Internal Revenue Service a ruling or, since the date of the Indenture, there has been
a change in applicable federal income tax law, in either case to the effect that, and based
thereon the opinion of counsel shall confirm that, the holders of Unsecured Debt Securities
of that series will not recognize income, gain or loss for federal income tax purposes as a
result of the deposit, defeasance and discharge and will be subject to federal income tax on
the same amount and in the same manner and at the same times, as would have been the
case if the deposit, defeasance and discharge had not occurred, and (b) the deposit shall not
result in us, the Indenture Trustee or the trust resulting from the defeasance being deemed
an investment company under the Investment Company Act of 1940, as amended; and
(2) in the case of the Unsecured Indenture, no event or condition shall exist that would prevent
us from making payments of the principal of (and premium, if any) or interest on the
Unsecured Debt Securities on the date of the deposit or at any time during the period
ending on the ninety-first day after the date of the deposit (it being understood that this
condition shall not be deemed satisfied until the expiration of that period),
then, in that event, we will be deemed to have paid and discharged the entire indebtedness on the
Unsecured Debt Securities of that series.
In the event of any defeasance and discharge of Unsecured Debt Securities of a series, holders of
Unsecured Debt Securities of that series would be able to look only to the trust fund for payment of
principal of (and premium, if any) and interest, if any, on the Unsecured Debt Securities of that series.
(Sections 11.01 , 11.02 and 11.03 of the Indenture)
Governing Law
The Indenture and the Unsecured Debt Securities will be governed by, and construed in
accordance with, the laws of the State of New York. (Section 13.04)
Information Concerning the Indenture Trustee
The Indenture Trustee, prior to default, undertakes to perform only those duties as are
specifically set forth in the Indenture and, after default, shall exercise the same degree of care as a
prudent person would exercise in the conduct of his or her own affairs. (Section 7.01) Subject to that
provision, the Indenture Trustee is under no obligation to exercise any of the powers vested in it by
the Indenture at the request of any holder of Unsecured Debt Securities, unless offered reasonable
indemnity by the holder against the costs, expenses and liabilities which might be incurred thereby.
(Section 7.02) The Indenture Trustee is entitled , in the absence of bad faith on the part of the
Indenture Trustee, to rely on the truthfulness of statements and the correctness of opinions expressed
in certificates or opinions furnished to it, is not subject to liability for errors of judgment made by its
officers in good faith, and is not required to expend or risk its own funds or otherwise incur personal
financial liability in the performance of its duties if the Indenture Trustee reasonably believes that
repayment or adequate indemnity is not reasonably assured to it. (Section 7.01)
Miscellaneous
We will have the right at all times to assign any of our rights or obligations under the Indenture
to any of our direct or indirect wholly-owned subsidiaries; provided that, in the event of any
assignment, we will remain liable for all obligations. Subject to the foregoing, the Indenture will be
binding upon and inure to the benefit of the parties thereto and their respective successors and
assigns. The Indenture provides that it may not otherwise be assigned by the parties thereto.
(Section 13.11 of the Subordinated Indenture and Section 13.10 of the Unsecured Indenture).
BOOK-ENTRY ISSUANCE
Unless otherwise specified in the applicable prospectus supplement, The Depository Trust
Company ("DTC") will act as securities depositary for each series of the Additional Bonds and the
Unsecured Debt Securities. The Additional Bonds and the Unsecured Debt Securities will be issued
only as fully-registered securities registered in the name of Cede & Co. (DTC's nominee) or such
other name as may be requested by an authorized representative of DTc. One or more
fully-registered global certificates will be issued for the Additional Bonds and the Unsecured Debt
Securities, representing the aggregate principal amount of each series of Additional Bonds or the
aggregate principal amount of each series of Unsecured Debt Securities, respectively, and will be
deposited with DTC or its custodian. If, however, the aggregate principal amount of any issue exceeds
$500 000 000, one certificate will be issued with respect to each $500 000 000 of principal amount and
an additional certificate will be issued with respect to any remaining principal amount of such issue.
DTC is a limited purpose trust company organized under the New York Banking Law, a "banking
organization" within the meaning of the New York Banking Law, a member of the Federal Reserve
System, a "clearing corporation" within the meaning of the New York Uniform Commercial Code
and a "clearing agency" registered pursuant to the provisions of Section 17 A of the Exchange Act.
DTC holds securities that its participants ("Direct Participants ) deposit with DTc. DTC also
facilitates the post-trade settlement among Direct Participants of sales and other securities
transactions, such as transfers and pledges, in deposited securities through electronic computerized
book-entry changes between Direct Participants' accounts , thereby eliminating the need for physical
movement of securities certificates. Direct Participants include both U.S. and non-US. securities
brokers and dealers, banks, trust companies, clearing corporations and some other organizations. DTC
is a wholly-owned subsidiary of The Depository Trust & Clearing Corporation ("DTCC"), which, in
turn, is owned by a number of Direct Participants of DTC and Members of the National Securities
Clearing Corporation, Government Securities Clearing Corporation, MBS Clearing Corporation, and
Emerging Markets Clearing Corporation (NSCC, GSCC, MBSCC, and EMCC, also subsidiaries of
DTCC), as well as by the New York Stock Exchange, Inc., the American Stock Exchange LLC, and
the National Association of Securities Dealers, Inc. Access to the DTC system is also available to
others such as both U.S. and non-S. securities brokers and dealers, banks, trust companies, and
clearing corporations that clear through or maintain a custodial relationship with a Direct Participant
either directly or indirectly ("Indirect Participants , and together with Direct Participants
Participants ). DTC has Standard & Poor s highest rating: AAA. The DTC Rules applicable to its
Participants are on file with the SEC. More information about DTC can be found at www.dtcc.com.
Purchases of Additional Bonds or Unsecured Debt Securities within the DTC system must be
made by or through Direct Participants, which will receive a credit for the Additional Bonds or
Unsecured Debt Securities on DTC's records. The ownership interest of each actual purchaser of each
Additional Bond and each Unsecured Debt Security ("Beneficial Owner ) is in turn to be recorded
on the Direct and Indirect Participants' records. Beneficial Owners will not receive written
confirmation from DTC of their purchases, but Beneficial Owners are expected to receive written
confirmations providing details of the transactions, as well as periodic statements of their holdings
from the Direct or Indirect Participants through which the Beneficial Owners purchased Additional
Bonds or Unsecured Debt Securities. Transfers of ownership interests in the Additional Bonds or
Unsecured Debt Securities are to be accomplished by entries made on the books of Participants acting
on behalf of Beneficial Owners. Beneficial Owners will not receive certificates representing their
ownership interests in Additional Bonds or Unsecured Debt Securities, except in the event that use of
the book-entry system for the Additional Bonds or Unsecured Debt Securities is discontinued.
To facilitate subsequent transfers, all Additional Bonds or Unsecured Debt Securities deposited
by Direct Participants with DTC are registered in the name of DTC's partnership nominee , Cede &
Co. or such other name as may be requested by an authorized representative of DTc. The deposit of
Additional Bonds or Unsecured Debt Securities with DTC and their registration in the name of Cede
& Co. or such other nominee does not effect any change in beneficial ownership. DTC has no
knowledge of the actual Beneficial Owners of the Additional Bonds or Unsecured Debt Securities;
DTC's records reflect only the identity of the Direct Participants to whose accounts those Additional
Bonds or Unsecured Debt Securities are credited, which mayor may not be the Beneficial Owners.
The Participants will remain responsible for keeping account of their holdings on behalf of their
customers.
Conveyance of notices and other communications by DTC to Direct Participants, by Direct
Participants to Indirect Participants, and by Direct Participants and Indirect Participants to Beneficial
Owners will be governed by arrangements among them, subject to any statutory or regulatory
requirements as may be in effect from time to time. Beneficial Owners of Additional Bonds or
Unsecured Debt Securities may wish to take certain steps to augment transmission to them of notices
of significant events with respect to the Securities, such as redemptions, tenders , defaults, and
proposed amendments to the security documents. For example, Beneficial Owners of Additional
Bonds or Unsecured Debt Securities may wish to ascertain that the nominee holding the Additional
Bonds or Unsecured Debt Securities for their benefit has agreed to obtain and transmit notices to
Beneficial Owners. In the alternative, Beneficial Owners may wish to provide their names and
addresses to the registrar and request that copies of the notices be provided directly to them.
Redemption notices shall be sent to Cede & Co. as the registered holder of the Additional Bonds
or Unsecured Debt Securities. If less than all of the Additional Bonds or Unsecured Debt Securities
are being redeemed, DTC will determine the amount of the interest of each Direct Participant to be
redeemed in accordance with its procedures, which, for the Additional Bonds and Unsecured Debt
Securities that are not Subordinated Debt Securities , will be by lot.
Neither DTC nor Cede & Co. (nor any other DTC nominee) will itself consent or vote with
respect to Additional Bonds or Unsecured Debt Securities unless authorized by a Direct Participant in
accordance with DTC's procedures. Under its usual procedures , DTC mails an omnibus proxy (the
Omnibus Proxy ) to the Mortgage Trustee or the Indenture Trustee, as applicable, as soon as
possible after the record date. The Omnibus Proxy assigns Cede & Co.'s consenting or voting rights to
those Direct Participants to whose accounts those Additional Bonds or Unsecured Debt Securities are
credited on the record date (identified in a listing attached to the Omnibus Proxy).
Payments on the Additional Bonds or Unsecured Debt Securities will be made by the Mortgage
Trustee and the Indenture Trustee, respectively, to Cede & Co. or such other nominee on behalf of us
in immediately available funds. DTC's practice is to credit Direct Participants' accounts upon DTC's
receipt of funds and corresponding detail information on payable date in accordance with their
respective holdings shown on DTC's records. Payments by Participants to Beneficial Owners will be
governed by standing instructions and customary practices and will be the responsibility of the
Participant and not of DTC (or its nominee), the Mortgage Trustee, the Indenture Trustee, or us
subject to any statutory or regulatory requirements as may be in effect from time to time. Payments
on the Additional Bonds or Unsecured Debt Securities are the responsibility of the Mortgage Trustee
or the Indenture Trustee, respectively, disbursement of the payments to Direct Participants is the
responsibility of DTC, and disbursements of the payments to the Beneficial Owners is the
responsibility of Direct and Indirect Participants.
Definitive certificates for the Additional Bonds or the Unsecured Debt Securities will be printed
and delivered only if:
DTC (or any successor depositary) notifies us that DTC is unwilling or unable to continue as
a depositary for the Additional Bonds or the Unsecured Debt Securities and we shall not
have appointed a successor; or
, in our sale discretion and subject to DTC's procedures , determine to discontinue use of
the book-entry system through DTC or any successor depositary.
The information in this section concerning DTC and DTC's book-entry system has been obtained
from sources that we believe to be accurate, but we assume no responsibility for the accuracy thereof.
We have no responsibility for the performance by DTC or its Participants of their respective
obligations as described herein or under the rules and procedures governing their respective
operations.
PLAN OF DISTRIBUTION
We may sell the Securities through underwriters, dealers or agents, or directly to one or more
purchasers. The prospectus supplement with respect to the Securities being offered will set forth the
specific terms of the offering of those Securities, including the name or names of any underwriters
dealers or agents, the purchase price of those Securities and the proceeds to us from the sale, any
underwriting discounts, agency fees and other items constituting underwriters' or agents
compensation , any initial public offering price and any discounts or concessions allowed or reallowed
or paid to dealers.
If we use underwriters to sell Securities, we will enter into an underwriting agreement with the
underwriters. Those Securities will be acquired by the underwriters for their own account and may be
resold from time to time in one or more transactions, at a fixed public offering price, at market prices
prevailing at the time of sale, at prices related to such prevailing market prices or at negotiated prices.
The underwriter or underwriters with respect to a particular underwritten offering of Securities will be
named in the prospectus supplement relating to that offering and, if an underwriting syndicate is used
the managing underwriter or underwriters will be set forth on the cover page of the prospectus
supplement. Any underwriting compensation paid by us to the underwriters or agents in connection
with an offering of Securities , and any discounts, concessions or commissions allowed by underwriters
to dealers, will be set forth in the applicable prospectus supplement to the extent required by
applicable law. Unless otherwise set forth in the prospectus supplement, the obligations of the
underwriters to purchase the Securities will be subject to specific conditions, and the underwriters will
be obligated to purchase all of the offered Securities if any are purchased.
If a dealer is used in the sale of any Securities, we will sell those Securities to the dealer, as
principal. The dealer may then resell the Securities to the public at varying prices to be determined by
the dealer at the time of resale. The name of any dealer involved in a particular offering of Securities
and any discounts or concessions allowed or reallowed or paid to the dealer will be set forth in the
prospectus supplement relating to that offering.
The Securities may be sold directly by us or through agents designated by us from time to time.
We will describe the terms of any direct sales in a prospectus supplement. Any agent, who may be
deemed to be an underwriter as that term is defined in the Securities Act, involved in the offer or sale
of any of the Securities will be named, and any commissions payable by us to the agent will be set
forth, in the prospectus supplement relating to that offer or sale. Unless otherwise indicated in the
prospectus supplement, any agent will be acting on a reasonable best efforts basis for the period of its
appointment.
If so indicated in an applicable prospectus supplement, we will authorize dealers acting as our
agents to solicit offers by certain specified institutions to purchase Securities from us at the public
offering price set forth in the prospectus supplement pursuant to delayed delivery contracts
Contracts ) providing for payment and delivery on a specified date or dates in the future. Each
Contract will be for an amount not less than, and the aggregate principal amount of Securities sold
pursuant to Contracts shall be not less nor more than, the respective amounts stated in the prospectus
supplement. Institutions with whom Contracts, when authorized , may be made include commercial
and savings banks, insurance companies, pension funds, investment companies, educational and
charitable institutions and other institutions, but will in all cases be subject to our approval. Contracts
will not be subject to any conditions except (i) the purchase by an institution of the Securities covered
by its Contracts shall not at the time of delivery be prohibited under the laws of any jurisdiction in the
United States to which the institution is subject, and (ii) if the Securities are being sold to
underwriters, we shall have sold to those underwriters the total principal amount of the Securities less
the principal amount thereof covered by Contracts. Agents and underwriters will have no
responsibility in respect of the delivery or performance of Contracts.
In connection with a particular underwritten offering of Securities, the underwriters may engage
in transactions that stabilize, maintain or otherwise affect the prices of the classes or series of
Securities offered, including stabilizing transactions and syndicate covering transactions. A description
of these activities, if any, will be set forth in the prospectus supplement relating to that offering.
Underwriters, dealers or agents and their associates may be customers of, engage in transactions
with or perform services for us and our affiliates in the ordinary course of business.
We will indicate in a prospectus supplement the extent to which we anticipate that a secondary
market for the Securities will be available. Unless we inform you otherwise in a prospectus
supplement, we do not intend to apply for the listing of any series of the Securities on a national
securities exchange. If the Securities of any series are sold to or through underwriters, the
underwriters may make a market in such Securities, as permitted by applicable laws and regulations.
No underwriter would be obligated, however, to make a market in the Securities, and any
market-making could be discontinued at any time at the sale discretion of the underwriters.
Accordingly, we cannot assure you as to the liquidity of, or trading markets for, the Securities of any
series.
Underwriters, dealers and agents participating in the distribution of the Securities may be deemed
to be "underwriters" within the meaning of, and any discounts and commissions received by them and
any profit realized by them on resale of those Securities may be deemed to be underwriting discounts
and commissions under, the Securities Act. Subject to some conditions, we may agree to indemnify the
several underwriters, dealers or agents and their controlling persons against specific civil liabilities
including liabilities under the Securities Act, or to contribute to payments that person may be
required to make in respect thereof.
During such time as we may be engaged in a distribution of the securities covered by this
prospectus we are required to comply with Regulation M promulgated under the Exchange Act. With
certain exceptions, Regulation M precludes us, any affiliated purchasers and any broker-dealer or
other person who participates in such distributing from bidding for or purchasing, or attempting to
induce any person to bid for or purchase, any security which is the subject of the distribution until the
entire distribution is complete. Regulation M also restricts bids or purchases made in order to stabilize
the price of a security in connection with the distribution of that security. All of the foregoing may
affect the marketability of our securities.
LEGAL MATTERS
The validity of the Securities will be passed upon for us by Perkins Coie LLP, counsel to the
Company, 1120 N.W Couch Street, Tenth Floor, Portland, Oregon 97209.
EXPERTS
The financial statements incorporated in this prospectus by reference to our Annual Report on
Form 10-K for the year ended March 31, 2006 have been so incorporated in reliance on the report
PricewaterhouseCoopers LLP, an independent registered public accounting firm, given on the
authority of said firm as experts in auditing and accounting.
With respect to the unaudited interim financial information for the periods ended June 30, 2006
and September 30, 2006, which are incorporated herein by reference, Deloitte & Touche LLP, an
independent registered public accounting firm , has applied limited procedures in accordance with the
standards of the Public Company Accounting Oversight Board (United States) for a review of such
information. However, as stated in their reports included in our Quarterly Reports on Form 10-Q for
the quarters ended June 30 2006 and September 30, 2006, and incorporated by reference herein, they
did not audit and they do not express an opinion on that interim financial information. Accordingly,
the degree of reliance on their reports on such information should be restricted in light of the limited
nature of the review procedures applied. Deloitte & Touche LLP is not subject to the liability
provision of Section 11 of the Securities Act of 1933 for their reports on unaudited interim financial
information. Those reports are not "reports" or a "part" of the registration statement prepared or
certified by an accountant within the meaning of Sections 7 and 11 of the Securities Act.
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EXECUTION VERSION
$600,000,000
ACIFICORP
First Mortgage Bonds
25% Series Due 2037
UNDERWRITING AGREEMENT
September 28, 2007
GREENWICH CAPITAL MARKETS, INe.
600 Steamboat Road
Greenwich, CT 06830
P. MORGAN SECURITIES INe.
270 Park Avenue
New York, NY 10017
LEHMAN BROTHERS INC.
745 Seventh Avenue
New York, NY 10019
Dear Sirs:
1. Introductory. PacifiCorp, an Oregon corporation (the "Company ), proposes, subject to
the terms and conditions stated herein, to issue and sell to Greenwich Capital Markets, Inc., J.P. Morgan
Securities Inc. and Lehman Brothers Inc. (the "Underwriters ) U.S. $600 000 000 principal amount of
its First Mortgage Bonds, 6.25% Series due 2037 (the "Offered Securities ) to be issued under that
certain Mortgage Deed and Trust, dated as of January 9, 1989, with The Bank of New York, as successor
trustee (the "Trustee ), as heretofore amended and supplemented by the supplemental indentures thereto
and as further amended and supplemented by a supplemental indenture to be dated October 3, 2007
(collectively, the "Mortgage ) pursuant to registration statements on Form S-3 (File No. 333-128134 and
333-140661) filed on February 13, 2007, as amended to date (collectively the "Initial Registration
Statement"). The Mortgage has been qualified under 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 the Trust Indenture Act. The United States Securities Act of 1933, as amended, is
herein referred to as the "Securities Act " and the rules and regulations of the Commission thereunder are
herein referred to as the "Rules and Regulations.
The Company hereby agrees with the several Underwriters as follows:
2. Representations and Warranties of the Company. The Company represents and warrants
, and agrees with, the several Underwriters that:
(a) The Initial Registration Statement in respect of the Offered Securities has been
filed with the Commission; the Initial Registration Statement and any post-effective amendments
thereto prior to the date hereof, each in the form heretofore delivered or to be delivered to the
NY\1313867.
Underwriters and, excluding exhibits to the Initial Registration Statement but including all
documents incorporated by reference in the prospectus contained in such Initial Registration
Statement, including any prospectus supplement relating to the Offered Securities that is filed
with the Commission and deemed by virtue of Rule 430B under the Securities Act to be part of
the Initial Registration Statement, has been declared effective by the Commission in such form;
other than a registration statement, if any, increasing the size of the offering (a "Rule 462(b)
Registration Statement", together with the Initial Registration Statement, the "Registration
Statement"), filed pursuant to Rule 462(b) under the Securities Act, which, if so filed, became
effective upon filing, and no other document with respect to the Initial Registration Statement or
any document incorporated by reference therein has heretofore been filed or transmitted for filing
with the Commission with respect to the offering contemplated by the Initial Registration
Statement (other than documents filed after the filing date of the Initial Registration Statement
under the Securities Exchange Act of 1934, as amended (the "Exchange Act"), and prospectuses
filed pursuant to Rule 424(b) of the Rules and Regulations, each in the form heretofore delivered
to the Underwriters); and no stop order suspending the effectiveness of the Initial Registration
Statement, any post-effective amendment thereto or the Rule 462(b) Registration Statement, if
any, has been issued and no proceeding for that purpose has been initiated or threatened by the
Commission.
(b) A preliminary prospectus and a final prospectus relating to the Offered Securities
to be offered by the Underwriters have been prepared by the Company. Such preliminary
prospectus (including the documents incorporated by reference therein) is hereinafter referred to
, the "Preliminary Prospectus ; such form of final prospectus relating to the Offered
Securities filed with the Commission pursuant to Rule 424(b) under the Securities Act (including
the documents incorporated by reference therein) is hereinafter referred to as the "Prospectus
The Preliminary Prospectus, as amended or supplemented as of the Applicable Time (as defined
below), when considered together with the final term sheet filed pursuant to Section 5(a) hereof
(the "Disclosure Package ) as of the Applicable Time did not include any untrue statement of a
material fact or omit to state any material fact necessary in order to make the statements therein
in the light of the circumstances under which they were made, not misleading. The Prospectus, as
of its date and as of the Closing Date (as defined below), did not and will not include any untrue
statement of a material fact or omit to state any material fact necessary in order to make the
statements therein, in the light of the circumstances under which they were made, not misleading;
and each Issuer Free Writing Prospectus (as defined in Rule 433 under the Securities Act) listed
on Schedule B(ii) hereto does not conflict with the information contained in the Registration
Statement, the Preliminary Prospectus or the Prospectus and each such Issuer Free Writing
Prospectus, as supplemented by and taken together with the Disclosure Package as of the
Applicable Time, did not include any untrue statement of a material fact or omit to state any
material fact necessary in order to make the statements therein, in the light of the circumstances
under which they were made, not misleading; provided the preceding two sentences do not apply
to statements in or omissions from the Preliminary Prospectus, the Disclosure Package, the
Prospectus or any Issuer Free Writing Prospectus based upon written information furnished to the
Company by the Underwriters specifically for use therein, it being understood and agreed that the
only such information is that described as such in Section 7(b) hereof. For purposes of this
Agreement, the "Applicable Time" is 2:15 p., New York City Time, on the date of this
Agreement.
At the earliest time after the filing of the Initial Registration Statement that the Company or another
offering participant made a bona fide offer (within the meaning of Rule 164(h)(2) under the Act) of the
Offered Securities, the Company was not an "ineligible issuer" as defined in Rule 405 under the
Securities Act.
NY\13 I 3867.4
(c) The Registration Statement and the Prospectus conform, and any further
amendments or supplements to the Registration Statement or the Prospectus when made will
conform, in all material respects to the requirements of the Securities Act and the Rules and
Regulations and the Registration Statement conforms, and any further amendments or
supplements to the Registration Statement when made will conform, in all material respects to the
requirements of the Trust Indenture Act, and the rules and regulations of the Commission
thereunder. The Registration Statement as of the applicable Effective Date and any amendments
thereto as of the Closing Date does not and will not contain an untrue statement of a material fact
or omit to state a material fact required to be stated therein or necessary to make the statements
therein not misleading, and the Prospectus as of its date as amended or supplemented as of the
Closing Date does not and will not contain an untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary to make the statements therein, in the light
of the circumstances under which they were made, not misleading.
(d) The Company has been duly incorporated and is validly existing as a corporation
under the laws of the State of Oregon with corporate power and corporate authority (i) to own its
properties and conduct its business as described in the Disclosure Package and the Prospectus and
(ii) to execute and deliver, and perform its obligations under, this Agreement, the Mortgage and
the Offered Securities; and the Company is duly qualified as a foreign corporation to transact
business and is in good standing in each jurisdiction in which it owns or leases substantial
properties or in which the conduct of its business requires such qualification, except where the
failure to so qualify would not have a material adverse effect on the financial condition, business
or results of operations of the Company and its subsidiaries taken as a whole (a Material
Adverse Effect"
(e) The Mortgage has been duly authorized, executed and delivered by the
Company, and constitutes a valid and legally binding instrument of the Company enforceable
against the Company in accordance with its terms, except as limited by bankruptcy, insolvency,
fraudulent conveyance, reorganization and other similar laws relating to or affecting creditors
rights generally and general equitable principles (whether considered in a proceeding in equity or
at law); and the Mortgage conforms to the description thereof in the Disclosure Package and the
Prospectus.
(f) The Offered Securities have been duly authorized by the Company and, when
authenticated and delivered in accordance with the Mortgage and paid for by the purchasers
thereof, will constitute valid and legally binding obligations of the Company enforceable against
the Company in accordance with their terms, except as limited by bankruptcy, insolvency,
fraudulent conveyance, reorganization and other similar laws relating to or affecting creditors
rights generally and general equitable principles (whether considered in a proceeding in equity or
at law), and will be entitled to the benefit of the security afforded by the Mortgage; and the
Offered Securities conform to the description thereof in the Disclosure Package and the
Prospectus.
(g)
No consent, approval, authorization or order of, or filing or registration by the
Company with, any court, governmental agency or third party is required for the consummation
of the transactions contemplated by this Agreement and the Mortgage in connection with the
issuance and sale of the Offered Securities by the Company and the use of the proceeds of the
offering of the Offered Securities as described in the Disclosure Package and the Prospectus
except such as have been obtained or made.
NY\1313867.4
(h) This Agreement has been duly authorized, executed and delivered by the
Company and is a valid and legally binding agreement of the Company enforceable against the
Company in accordance with its terms, except as limited by bankruptcy, insolvency, fraudulent
conveyance, reorganization and other similar laws relating to or affecting creditors' rights
generally and general equitable principles (whether considered in a proceeding in equity or
law) and subject to any principles of public policy limiting the right to enforce the
indemnification and contribution provisions contained herein.
(i) Except as disclosed in the Disclosure Package and the Prospectus, the Company
has good and sufficient title to all the properties described as owned or leased by it (the
Properties
),
subject to minor defects and irregularities customarily found in properties of like
size and character that do not materially impair the use of the property affected thereby in the
operation of the business of the Company.
G) The Company is not in violation of (i) the Articles of Incorporation (the
Articles ) or its Bylaws, as amended, or in default in the performance or observance of any
material obligation, covenant or condition contained in any contract, agreement or other
instrument to which it is a party or by which it may be bound or (ii) any order, rule or regulation
applicable to the Company of any court or any federal or state regulatory body or administrative
agency or other governmental body, the effect of which, in the case of (ii), would result in a
Material Adverse Effect, and neither the execution and delivery of this Agreement, the Mortgage
or the Offered Securities, the consummation of the transactions herein or therein contemplated
the fulfillment of the terms hereof or thereof nor compliance with the terms and provisions hereof
or thereof will conflict with, or result in a breach of, or constitute a default under (x) the Articles
or such Bylaws, or any material contract, agreement or other instrument to which it is now a party
or by which it may be bound or (y) any order, rule or regulation applicable to the Company of any
court or any federal or state regulatory body or administrative agency or other governmental body
having jurisdiction over the Company or over its properties, the effect of which, singly or in the
aggregate, would have a Material Adverse Effect.
(k) Except as disclosed in the Disclosure Package and the Prospectus, there are no
legal or governmental proceedings pending or to the Company s knowledge threatened against
the Company or its subsidiaries which are not adequately disclosed in the Disclosure Package and
the Prospectus that, if determined adversely to the Company or any subsidiary would be
reasonably likely to have, individually or in the aggregate, a Material Adverse Effect or a material
adverse effect on the ability of the Company to perform its obligations under this Agreement or
the Mortgage.
(1) The consolidated financial statements included or incorporated by reference in
the Disclosure Package and the Prospectus present fairly the financial condition and operations of
the Company and its consolidated subsidiaries at the respective dates or for the respective periods
to which they apply; such financial statements have been prepared in each case in accordance
with generally accepted accounting principles consistently applied throughout the periods
involved except as otherwise indicated in the Disclosure Package and the Prospectus; and
PricewaterhouseCoopers LLP, who examined certain audited financial statements of the
Company, was, as of May 26, 2006 and during the period covered by the financial statements on
which they reported, an independent registered public accounting firm as required by the
Securities Act and the Rules and Regulations thereunder; and Deloitte & Touche LLP, who has
examined certain audited financial statements of the Company, is an independent registered
public accounting firm as required by the Act and the Regulations thereunder.
NY\1313867.4
(m) Except as reflected in, or contemplated by, the Disclosure Package and the
Prospectus, since the respective most recent dates as of which information is given in the
Disclosure Package and the Prospectus, there has not been any change in the capital stock or
long-term debt of the Company (other than changes arising from transactions in the ordinary
course of business), or any material adverse change in the business, affairs, business prospects
property or financial condition of the Company and its subsidiaries taken as a whole, whether or
not arising in the ordinary course of business, and since such dates there has not been any
material transaction entered into by the Company other than transactions contemplated by the
Disclosure Package and the Prospectus, and transactions in the ordinary course of business; and
the Company has no material contingent obligation that is not disclosed in the Disclosure Package
and the Prospectus.
(n) The Company (i) makes and keeps books, records, and accounts, which, in
reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the
Company and its consolidated subsidiaries and (ii) maintains a system of internal accounting
controls sufficient to provide reasonable assurances that (I) transactions are executed in
accordance with management's general or specific authorization; (2) transactions are recorded as
necessary to permit preparation of financial statements in conformity with generally accepted
accounting principles or any other criteria applicable to such statements and to maintain
accountability for assets; (3) access to assets is permitted only in accordance with management's
general or specific authorization; and (4) the recorded accountability for assets is compared with
the existing assets at reasonable intervals and appropriate action is taken with respect to any
differences.
(0) There is and has been no failure on the part of the Company or, to the knowledge
of the Company, any of the Company s directors or executive officers in their respective
capacities as such, to comply in all material respects with the provisions of the Sarbanes-Oxley
Act of 2002 and the rules and regulations promulgated in connection therewith.
3. Purchase, Sale and Delivery of Offered Securities. On the basis of the representations
warranties and agreements herein contained, but subject to the terms and conditions herein set forth, the
Company agrees to sell to the Underwriters, and the Underwriters agree, severally and not jointly, to
purchase from the Company, at a purchase price of 99.875% of the principal amount thereof plus accrued
interest, if any, from October 3 2007 to the Closing Date (as hereinafter defined), the respective principal
amounts of the Offered Securities set forth opposite the names of the several Underwriters in Schedule A
hereto.
The Company will deliver against payment of the purchase price the Offered Securities to be
purchased by each Underwriter hereunder and to be offered and sold by each Underwriter in the form of
one or more global securities in registered form without interest coupons (the Global Securities
deposited with the Trustee as custodian for The Depository Trust Company ("DTC") and registered in the
name of Cede & Co., as nominee for DTc. Interests in the Global Securities will be held only in book-
entry form through DTC, except in the limited circumstances described in the Disclosure Package and
the Prospectus.
Payment for the Offered Securities shall be made by the Underwriters in Federal (same day)
funds by wire transfer to an account at a bank acceptable to the Underwriters drawn to the order of the
Company, at the office of Latham & Watkins LLP, 885 Third Avenue, New York, New York, 10022, at
10:00 A.M., (New York time), on October 3 2007, or at such other time not later than seven full business
days thereafter as the Underwriters and the Company determine, such time being herein referred to as the
Closing Date against delivery to the Trustee as custodian for DTC of the Global Securities. The
NY\1313867.4
Global Securities will be made available for checking at the above office of Latham & Watkins LLP at
least 24 hours prior to the Closing Date.
Representations by Underwriters; Resale by Underwriters.
(a) Each of the Underwriters severally represents and agrees that (i) it has only
communicated or caused to be communicated and will only communicate or cause to be
communicated any invitation or inducement to engage in investment activity (within the meaning
of section 21 of the Financial Services and Markets Act 2000 (the "FSMA")) received by it in
connection with the issue or sale of any Offered Securities in circumstances in which section
21(1) of the FSMA does not apply to the Company; and (ii) it has complied and will comply with
all applicable provisions of the FSMA with respect to anything done by it in relation to the
Offered Securities in, from or otherwise involving the United Kingdom.
(b) In relation to each Member State of the European Economic Area which has
implemented the Prospectus Directive (each, a "Relevant Member State ), each Underwriter
represents and agrees that with effect from and including the date on which the Prospectus
Directive is implemented in that Relevant Member State (the "Relevant Implementation Date
it has not made and will not make an offer of the Offered Securities to the public in that Relevant
Member State prior to the publication of a prospectus in relation to the bonds which has been
approved by the competent authority in that Relevant Member State or, where appropriate
approved in another Relevant Member State and notified to the competent authority in that
Relevant Member State, all in accordance with the Prospectus Directive, except that it may, with
effect from and including the Relevant Implementation Date, make an offer of the bonds to the
public in that Relevant Member State at any time: (i) to legal entities which are authorized or
regulated to operate in the financial markets or, ifnot so authorized or regulated, whose corporate
purpose is solely to invest in securities; (ii) to any legal entity which has two or more of (1) an
average of at least 250 employees during the last financial year, (2) a total balance sheet of more
than €43 000 000, and (3) an annual net turnover of more than €50 000 000, as shown in its last
annual or consolidated accounts; or (iii) in any other circumstances which do not require the
publication by the Company of a prospectus pursuant to Article 3 of the Prospectus Directive.
For the purposes of this provision, the expression an "offer of bonds to the public" in relation to
any bonds in any Relevant Member State means the communication in any form and by any
means of sufficient information on the terms of the offer and the bonds to be offered so as
enable an investor to decide to purchase or subscribe the bonds, as the same may be varied in that
Member State by any measure implementing the Prospectus Directive in that Member State and
the expression Prospectus Directive means Directive 2003/71/EC and includes any relevant
implementing measure in each Relevant Member State.
(c) (i) In Hong Kong, it has not offered or sold the Offered Securities by means of any
document other than (i) in circumstances which do not constitute an offer to the public within the
meaning of the Companies Ordinance (Cap. 32, Laws of Hong Kong), or (ii) to "professional
investors" within the meaning of the Securities and Futures Ordinance (Cap. 571 , Laws of Hong
Kong) and any rules made thereunder, or (iii) in other circumstances which do not result in the
document being a "prospectus" within the meaning of the Companies Ordinance (Cap. 32, Laws
of Hong Kong), and no advertisement, invitation or document relating to the Offered Securities
may be issued or may be in the possession of any person for the purpose of issue (in each case
whether in Hong Kong or elsewhere), which is directed at, or the contents of which are likely to
be accessed or read by, the public in Hong Kong (except if permitted to do so under the laws of
Hong Kong) other than with respect to Offered Securities which are or are intended to be
disposed of only to persons outside Hong Kong or only to "professional investors" within the
NY\1313867.4
meaning of the Securities and Futures Ordinance (Cap. 571 , Laws of Hong Kong) and any rules
made thereunder.
(ii) It will not circulate or distribute the Prospectus or any other document or material
in connection with the offer or sale, or invitation for subscription or purchase, of the Offered
Securities, nor will it offer or sell, or be made the subject of an invitation for subscription or
purchase, the Offered Securities, whether directly or indirectly, to persons in Singapore other than
(i) to an institutional investor under Section 274 of the Securities and Futures Act, Chapter 289 of
Singapore (the "FSA"), (ii) to a relevant person, or any person pursuant to Section 275(IA), and
in accordance with the conditions, specified in Section 275 of the SF A or (iii) otherwise pursuant
, and in accordance with the conditions of, any other applicable provision of the SF
(d) It will not offer or sell any Offered Securities, directly or indirectly, in Japan or
, or for the benfit of, any resident of Japan (which tenn as used herein means any person
resident in Japan, including any corporation or other entity organized under the laws of Japan), or
to others for re-offering or resale, directly or indirectly, in Japan or to a resident of Japan except
pursuant to an exemption from the registration requirements of, and otherwise in compliance
with, the Securities and Exchange Law and any other applicable laws, regulations and ministerial
guidelines of Japan.
(e) Each Underwriter represents and agrees that, without the prior consent of the
Company and the Underwriters, other than one or more tenn sheets relating to the Offered
Securities containing customary infonnation, it has not made and will not make any offer relating
to the Offered Securities that would constitute a free writing prospectus; and any such free
writing prospectus the use of which has been consented to by the Company and the Underwriters
(including the final tenn sheet prepared and filed pursuant to Section 5(a) hereof) is listed on
Schedule B hereto.
Certain Agreements of the Company. The Company agrees with the several Underwriters
that:
(a) It will prepare the Prospectus in a fonn approved by you and to file such
Prospectus pursuant to Rule 424(b) under the Securities Act not later than the Commission s close
of business on the second business day following the date of this Agreement; to make no further
amendment or any supplement to the Registration Statement, or the Prospectus prior to the
Closing Date that shall be reasonably disapproved by you promptly after reasonable notice
thereof; to advise you, promptly after it receives notice thereof, of the time when any amendment
to the Registration Statement has been filed or becomes effective or any amendment or
supplement to the Prospectus has been filed and to furnish you with copies thereof; to prepare a
final tenn sheet, containing solely a description of the Offered Securities, in a fonn approved by
you and to file such tenn sheet pursuant to Rule 433(d) under the Securities Act within the time
required by such Rule; to file promptly all other material required to be filed by the Company
with the Commission pursuant to Rule 433(d) under the Securities Act; to file promptly all
reports and any definitive proxy or infonnation statements required to be filed by the Company
with the Commission pursuant to Section 13 (a), 13 (c), 14 or 15(d) of the Exchange Act
subsequent to the date of the Prospectus and for so long as the delivery of a prospectus (or in lieu
thereof, the notice referred to in Rule l73(a) under the Act) is required in connection with the
offering or sale of the Offered Securities; to advise you, promptly after it receives notice thereof
of the issuance by the Commission of any stop order or of any order preventing or suspending the
use of any Preliminary Prospectus or other prospectus in respect of the Offered Securities , of the
suspension of the qualification of the Offered Securities for offering or sale in any jurisdiction, of
NY\1313867.4
the initiation or threatening of any proceeding for any such purpose, or of any request by the
Commission for the amending or supplementing of the Registration Statement or the Prospectus
or for additional information; and, in the event of the issuance of any stop order or of any order
preventing or suspending the use of any Preliminary Prospectus or other prospectus or suspending
any such qualification, to promptly use its best efforts to obtain the withdrawal of such order; and
in the event of any such issuance of a notice of objection, promptly to take such steps including,
without limitation, amending the Registration Statement or filing a new registration statement, at
its own expense, as may be necessary to permit offers and sales of the Offered Securities by the
Underwriters (references herein to the Registration Statement shall include any such amendment
or new registration statement).
(b) Prior to 10:00 a., New York City time, on the New York Business Day next
succeeding the date of this Agreement and from time to time, to furnish the Underwriters with
written and electronic copies of the Prospectus in New York City in such quantities as you may
reasonably request, and, if the delivery of a prospectus (or in lieu thereof, the notice referred to in
Rule 173(a) under the Securities Act) is required at any time prior to the expiration of nine
months after the time of issue of the Prospectus in connection with the offering or sale of the
Offered Securities and if at such time any event shall have occurred as a result of which the
Prospectus as then amended or supplemented would include an untrue statement of a material fact
or omit to state any material fact necessary in order to make the statements therein, in the light of
the circumstances under which they were made when such Prospectus (or in lieu thereof, the
notice referred to in Rule 173(a) under the Securities Act) is delivered, not misleading, or, if for
any other reason it shall be necessary during such same period to amend or supplement the
Prospectus or to file under the Exchange Act any document incorporated by reference in the
Prospectus in order to comply with the Securities Act, the Exchange Act or the Trust Indenture
Act, to notify you and upon your request to file such document and to prepare and furnish without
charge to each Underwriter and to any dealer in securities as many written and electronic copies
as you may from time to time reasonably request of an amended Prospectus or a supplement to
the Prospectus that will correct such statement or omission or effect such compliance; and in case
any Underwriter is required to deliver a prospectus (or in lieu thereof, the notice referred to in
Rule 173(a) under the Securities Act) in connection with sales of any of the Offered Securities at
any time nine months or more after the time of issue of the Prospectus, upon your request but at
the expense of such Underwriter, to prepare and deliver to such Underwriter as many written and
electronic copies as you may request of an amended or supplemented Prospectus complying with
Section 1 O( a )(3) of the Securities Act.
(c) To make generally available to its securityholders as soon as practicable, but in
any event not later than 16 months after the effective date of the Registration Statement (as
defined in Rule 158(c) under the Act), an earnings statement of the Company and its subsidiaries
(which need not be audited) complying with Section 1 1 (a) of the Securities Act and the Rules and
Regulations thereunder (including, at the option of the Company, Rule 158);
(d) The Company will arrange for the qualification of the Offered Securities for sale
and the determination of their eligibility for investment under the laws of such jurisdictions in the
United States and Canada as the Underwriters designate and will continue such qualifications in
effect so long as required for the resale of the Offered Securities by the Underwriters, provided
that the Company will not be required to qualify as a foreign corporation, to file a general consent
to service of process in any such jurisdiction or to take any other action that would subject the
Company to service of process in any suits (other than those arising out of the offering of the
Offered Securities) or to taxation in respect of doing business in any jurisdiction in which it is not
otherwise subject.
NY\1313867.4
(e) The Company will pay all expenses incident to the performance of its obligations
under this Agreement and the Mortgage, for any filing fees and other expenses (including fees
and disbursements of counsel) incurred in connection with qualification of the Offered Securities
for sale and determination of their eligibility for investment under the laws of such jurisdictions
as the Underwriters designate and the printing of memoranda relating thereto, for the fees and
expenses of the Trustee and its professional advisors, for all expenses in connection with the
execution, issue, authentication, packaging and initial delivery of the Offered Securities, the
preparation and printing of this Agreement, the Offered Securities, the Disclosure Package and
the Prospectus, any Issuer Free Writing Prospectus, and amendments and supplements thereto
and any other document relating to the issuance, offer, sale and delivery of the Offered Securities
for the cost of any advertising approved by the Company in connection with the issue of the
Offered Securities, for any fees charged by investment rating agencies for the rating of the
Offered Securities, for any travel expenses of the Company s officers and employees, and any
other expenses of the Company in connection with attending or hosting meetings with
prospective purchasers of the Offered Securities and for expenses incurred in distributing the
Disclosure Package, the Prospectus or any Issuer Free Writing Prospectus (including any
amendments and supplements thereto) to the Underwriters. Except as otherwise provided in this
Section 5( e) or in Section 9 of this Agreement, the Underwriters will pay all of their costs and
expenses, including fees and expenses of their counsel, transfer taxes on the resale of the Offered
Securities and any advertising and travel expenses incurred by them.
(f) In connection with the offering, until the earlier of (i) 180 days following the
Closing Date and (ii) the date the Underwriters shall have notified the Company of the
completion of the resale of the Offered Securities, neither the Company nor any of its affiliates
has or will, either alone or with one or more other persons, bid for or purchase for any account in
which it or any of its affiliates has a beneficial interest any Offered Securities or attempt to induce
any person to purchase any Offered Securities; and neither it nor any of its affiliates will make
bids or purchases for the purpose of creating actual, or apparent, active trading in, or of raising
the price of, the Offered Securities.
(g)
From the date hereof through and including the Closing Date, the Company will
not, without the prior written consent of the Underwriters, offer, sell, contract to sell, pledge or
otherwise dispose of, directly or indirectly, or file with the Commission a registration statement
under the Securities Act relating to, any United States dollar-denominated debt securities issued
or guaranteed by the Company and having a maturity of more than one year from the date of
Issue.
(h) If the Company elects to rely upon Rule 462(b), the Company shall file a
Rule 462(b) Registration Statement with the Commission in compliance with Rule 462(b) by
10:00 P., Washington, D.c. time, on the date of this Agreement, and the Company shall at the
time of filing either pay to the Commission the filing fee for the Rule 462(b) Registration
Statement or give irrevocable instructions for the payment of such fee pursuant to Rule lll(b)
under the Act.
(i) The Company (i) represents and agrees that, other than the final term sheet
prepared and filed pursuant to Section 5(a) hereof, without the prior consent of the Underwriters
it has not made and will not make any offer relating to the Offered Securities that would
constitute a "free writing prospectus" as defined in Rule 405 under the Act and (ii) has complied
and will comply with the requirements of Rule 433 under the Act applicable to any Issuer Free
Writing Prospectus, including timely filing with the Commission or retention where required and
legending.
NY\1313867.4
6. Conditions of the Obligations of the Underwriters. The obligations of the several
Underwriters to purchase and pay for the Offered Securities will be subject to the accuracy of the
representations and warranties on the part of the Company herein, to the accuracy of the statements of
officers of the Company made pursuant to the provisions hereof, to the perfonnance by the Company of
its obligations hereunder and to the following additional conditions precedent:
(a) The Prospectus as amended or supplemented in relation to the applicable Offered
Securities shall have been filed with the Commission pursuant to Rule 424(b) within the
applicable time period prescribed for such filing (without reliance on Rule 424(b)(8) by the Rules
and Regulations and in accordance with Section 5(a) hereof; if the Company has elected to rely
upon Rule 462(b), the Rule 462(b) Registration Statement shall have become effective by
10:00 P., Washington, D.C. time, on the date hereof; no stop order suspending the
effectiveness of the Registration Statement or any part thereof shall have been issued and no
proceeding for that purpose shall have been initiated or to the knowledge of the Company
threatened by the Commission; and all requests for additional infonnation on the part of the
Commission shall have been complied with.
(b) (i) On the date hereof, PricewaterhouseCoopers LLP shall have furnished to the
Underwriters a letter, dated as of the date hereof, in fonn and substance satisfactory to the
Underwriters, confinning that as of May 26, 2006 and during the period covered by the financial
statements on which it reported, it was an independent registered public accounting finn with
respect to the Company and its subsidiaries within the meaning of the Securities Act, the
Exchange Act and the applicable published Rules and Regulations and stating that as of the
Applicable Time (or, with respect to matters involving changes or developments since the
respective dates as of which specified financial infonnation is given in the Preliminary Prospectus
as of a particular time not more than five business days prior to the Applicable Time) conclusions
and findings of such finn, to the effect that:
(A) in their opinion the financial statements examined by them and
incorporated by reference in the Preliminary Prospectus comply as to fonn in all
material respects with the applicable accounting requirements of the Securities
Act, the Exchange Act and the related published Rules and Regulations; and
(B) they have compared specified dollar amounts (or percentages
derived from such dollar amounts) and other financial infonnation contained in
the Preliminary Prospectus (in each case to the extent that such dollar amounts
percentages and other financial infonnation are derived from the general
accounting records of the Company and its subsidiaries subject to the internal
controls of the Company s accounting system or are derived directly from such
records by analysis or computation) with the results obtained from inquiries, a
reading of such general accounting records and other procedures specified in
such letter and have found such dollar amounts, percentages and other financial
infonnation to be in agreement with such results, except as otherwise specified in
such letter.
(ii) The Underwriters shall have received a letter, dated the Closing Date, of
PricewaterhouseCoopers LLP which meets the requirements of subsection (b )(i) of this Section
except that (A) the specified date referred to in such subsection will be a date not more than three
days prior to the Closing Date for the purposes of this subsection, and (B) references to the
Preliminary Prospectus will be replaced with references to the Prospectus.
NY\1313867.4
(c) (i) On the date hereof, Deloitte & Touche LLP shall have furnished to the
Underwriters a letter, dated as of the date hereof, in form and substance satisfactory to the
Underwriters, confirming that they are an independent registered public accounting firm with
respect to the Company and its subsidiaries within the meaning of the Securities Act, the
Exchange Act and the applicable published Rules and Regulations and stating that as of the
Applicable Time (or, with respect to matters involving changes or developments since the
respective dates as of which specified financial information is given in the Preliminary Prospectus
as of a particular time not more than five business days prior to the Applicable Time) conclusions
and findings of such firm, to the effect that:
(A) in their opinion the financial statements examined by them and
incorporated by reference in the Preliminary Prospectus comply as to form in all
material respects with the applicable accounting requirements of the Securities
Act, the Exchange Act and the related published Rules and Regulations;
(B) on the basis of a reading of the latest available interim financial
statements of the Company, inquiries of officials of the Company who have
responsibility for financial and accounting matters and other specified
procedures, nothing came to their attention that caused them to believe that:
(1) at the date of the latest available balance sheet read by such
accountants, or at a subsequent specified date not more than one business
day prior to the date of this Agreement, there was any change in the
capital stock or any increase in short-term indebtedness or long-term debt
of the Company and its consolidated subsidiaries or, at the date of the
latest available balance sheet read by such accountants, there was any
decrease in total shareholders ' equity or total consolidated net current
assets, as compared with amounts shown on the latest balance sheet
incorporated by reference in the Preliminary Prospectus; or
(2) for the period from the closing date of the latest statement of
income incorporated by reference in the Preliminary Prospectus to the
closing date of the latest statement of income read by such accountants
there were any decreases, as compared with the corresponding period of
the previous year, in consolidated revenue or net income (excluding
decreases due to derivatives accounted for under Statement of Financial
Accounting Standards No. 133); and
(C) they have compared specified dollar amounts (or percentages
derived from such dollar amounts) and other financial information contained in
the Preliminary Prospectus (in each case to the extent that such dollar amounts
percentages and other financial information are derived from the general
accounting records of the Company and its subsidiaries subject to the internal
controls of the Company s accounting system or are derived directly from such
records by analysis or computation) with the results obtained from inquiries, a
reading of such general accounting records and other procedures specified in
such letter and have found such dollar amounts, percentages and other financial
information to be in agreement with such results, except as otherwise specified in
such letter.
(ii) The Underwriters shall have received a letter, dated the Closing Date, of
Deloitte & Touche LLP which meets the requirements of subsection (c )(i) of this Section, except
NY\I313867.4
that (A) the specified date referred to in such subsection will be a date not more than one day
prior to the Closing Date for the purposes of this subsection, and (B) references to the Preliminary
Prospectus will be replaced with references to the Prospectus.
(d) Subsequent to the Applicable Time, there shall not have been (i) any change, or
any development or event involving a prospective change, in the financial condition, business
properties or results of operations of the Company and its subsidiaries taken as a whole, which, in
the judgment of the Underwriters, is material and adverse and makes it impractical or inadvisable
to proceed with completion of the offering or the sale of and payment for the Offered Securities;
(ii) any downgrading in the rating of any debt securities or preferred stock of the Company by
any "nationally recognized statistical rating organization" (as defined for purposes of Rule 436(g)
under the Securities Act), or any public announcement that any such organization has under
surveillance or review its rating of any debt securities or preferred stock of the Company (other
than an announcement with positive implications of a possible upgrading, and no implication of a
possible downgrading, of such rating); (iii) any material suspension or material limitation of
trading in securities generally on the New York Stock Exchange, or any setting of minimum
prices for trading on such exchange; (iv) any suspension of trading of any securities of the
Company on any exchange or in the over-the-counter market; (v) any banking moratorium
declared by u.S. Federal or New York authorities; (vi) any major disruption of settlements of
securities or clearance services in the Uruted States; or (vii) any attack on, or outbreak or
escalation of hostilities or act of terrorism involving, the United States, any declaration of war by
Congress or any other substantial national or international calamity or emergency if, in the
judgment of the Underwriters, the effect of any such attack, outbreak, escalation, act, declaration
calamity or emergency makes it impractical or inadvisable to proceed with completion of the
offering or sale of and payment for the Offered Securities.
(e) . The Underwriters shall have received an opinion, dated the Closing Date, of
Mark C. Moench, General Counsel of the Company, substantially in the form of Exhibit A hereto.
(f) The Underwriters shall have received an opinion, dated the Closing Date, of
Perkins Coie LLP, special counsel to the Company, in substantially the form of Exhibit B hereto.
(g)
The Underwriters shall have received from Latham & Watkins LLP, counsel for
the Underwriters, such opinion or opinions, dated the Closing Date, in form and substance
satisfactory to the Underwriters, and the Company shall have furnished to such counsel such
documents as they request for the purpose of enabling them to pass upon such matters.
rendering such opinion, Latham & Watkins LLP may rely as to the incorporation of the Company
and all other matters governed by Oregon law upon the opinion of Mark C. Moench referred to
above.
(h) The Underwriters shall have received a certificate, dated the Closing Date, of the
President or any Vice President and a principal financial or accounting officer of the Company in
which such officers, to the best of their knowledge after reasonable investigation, shall state that:
(i) the representations and warranties of the Company in this Agreement are true and correct, or
true and correct in all material respects where such representations and warranties are not
qualified by materiality or Material Adverse Effect; (ii) that the Company has complied with all
agreements and satisfied all conditions on its part to be performed or satisfied hereunder at or
prior to the Closing Date; and (iii) that, subsequent to the date of the most recent financial
statements in, or incorporated by reference in, the Preliminary Prospectus, there has been no
material adverse change, nor any development or event involving a prospective material adverse
change, in the financial condition, business or results of operations of the Company and its
NY\1313867.4
subsidiaries taken as a whole except as set forth in the Disclosure Package and the Prospectus or
as described in such certificate.
The Company will (i) furnish the Underwriters with such conformed copies of such opinions
certificates, letters and documents as the Underwriters reasonably request. The Underwriters may waive
compliance with any conditions to their obligations hereunder.
7. Indemnification and Contribution. (a) The Company will indemnify and hold harmless
each Underwriter, its partners, members, directors and officers and each person, if any, who controls such
Underwriter within the meaning of Section 15 of the Securities Act, against any losses, claims, damages
or liabilities, joint or several, to which such Underwriter may become subject, under the Securities Act or
the Exchange Act or otherwise, insofar as such losses, claims, damages or liabilities (or actions in respect
thereof) arise out of or are based upon any untrue statement or alleged untrue statement of any material
fact contained in the Registration Statement, the Preliminary Prospectus, the Disclosure Package, the
Prospectus or any Issuer Free Writing Prospectus, or any amendment or supplement to the Registration
Statement, the Prospectus or any Issuer Free Writing Prospectus, or any "issuer information" filed or
required to be filed pursuant to Rule 433(d) under the Act, arise out of or are based upon the omission or
alleged omission to state therein a material fact necessary in order to make the statements therein made, in
light of the circumstances under which they were made (in the case of the Registration Statement
necessary in order to make the statements therein not misleading), not misleading, including any losses
claims, damages or liabilities arising out of or based upon the Company s failure to perform its
obligations under Section 5(a) of this Agreement, and will reimburse each Underwriter for any legal or
other expenses reasonably incurred by such Underwriter in connection with investigating or defending
any such loss, claim, damage, liability or action as such expenses are incurred; provided, however that
the Company will not be liable in any such case to the extent that any such loss, claim, damage or liability
arises out of or is based upon an untrue statement or alleged untrue statement in or omission or alleged
omission from any of such documents in reliance upon and in conformity with written information
furnished to the Company by any Underwriters specifically for use therein, it being understood and
agreed that the only such information consists of the information described as such in subsection (b)
below; provided, further that the foregoing indemnity with respect to any Preliminary Prospectus shall
not inure to the benefit of any Underwriter from whom the person asserting any such losses, claims
damages or liabilities (or actions in respect thereof), in connection with clauses (i) through (iii) below
purchased Offered Securities, or any person controlling such Underwriter, where it shall have been
determined by a court of competent jurisdiction by final and non-appealable judgment that (i) prior to the
Applicable Time the Company has notified such Underwriter that the Preliminary Prospectus, dated
September 28, 2007, contains an untrue statement of material fact or omits to state therein a material fact
necessary in order to make the statements therein, in the light of the circumstances under which they were
made, not misleading, (ii) such untrue statement or omission of a material fact was corrected in an
amended or supplemented Preliminary Prospectus and such corrected Preliminary Prospectus was
provided to such Underwriter sufficiently in advance of the Applicable Time so that such corrected
Preliminary Prospectus could have been conveyed to such person prior to the Applicable Time and (iii)
such corrected Preliminary Prospectus was not conveyed to such person at or prior to the Applicable Time
to such person.
(b) Each Underwriter will severally and not jointly indemnify and hold harmless the
Company, its directors and officers and each person, if any, who controls the Company within the
meaning of Section 15 of the Securities Act, against any losses, claims, damages or liabilities to which the
Company may become subject, under the Securities Act or the Exchange Act or otherwise, insofar as such
losses, claims, damages or liabilities (or actions in respect thereof) arise out of or are based upon any
NY\1313867.4
untrue statement or alleged untrue statement of any material fact contained in the Registration Statement
the Preliminary Prospectus, the Disclosure Package, the Prospectus or any Issuer Free Writing
Prospectus, or any amendment or supplement to the Registration Statement, the Prospectus or any Issuer
Free Writing Prospectus or arise out of or are based upon the omission or the alleged omission to state
therein a material fact necessary in order to make the statements therein, in the light of the circumstances
under which they were made (in the case of the Registration Statement, necessary in order to make the
statements therein not misleading), not misleading, in each case to the extent, but only to the extent, that
such untrue statement or alleged untrue statement or omission or alleged omission was made in reliance
upon and in conformity with written information furnished to the Company by such Underwriter
specifically for use therein, and will reimburse any legal or other expenses reasonably incurred by the
Company in connection with investigating or defending any such loss, claim, damage, liability or action
as such expenses are incurred, it being understood and agreed that the only such information furnished by
any Underwriter consists of the following information in the Preliminary Prospectus and Prospectus
furnished on behalf of each Underwriter: under the caption "Underwriting , paragraphs 3 , 4 (second
sentence only) 5 and 6; provided, however that the Underwriters shall not be liable for any losses, claims
damages or liabilities arising out of or based upon the Company s failure to perform its obligations under
Section 5(a) of this Agreement.
(c) Promptly after receipt by an indemnified party under this Section of notice of the
commencement of any action, such indemnified party will, if a claim in respect thereof is to be made
against the indemnifying party under subsection (a) or (b) above, notify the indemnifying party of the
commencement thereof; but the omission so to notify the indemnifying party will not relieve it from any
liability which it may have to any indemnified party under subsection (a) or (b) above except to the extent
that it has been materially prejudiced (through forfeiture or impairment of procedural or substantive rights
or defenses) by such failure; and provided further that the failure to notify the indemnifying party shall
not relieve it from any liability that it may have to an indemnified party otherwise than under subsection
(a) or (b) above. In case any such action is brought against any indemnified party and it notifies the
indemnifying party of the commencement thereof, the indemnifying party will be entitled to participate
therein and, to the extent that it may wish, jointly with any other indemnifying party similarly notified, to
assume the defense thereof, with counsel reasonably satisfactory to such indemnified party (who shall not
except with the consent of the indemnified party, be counsel to the indemnifying party), and after notice
from the indemnifying party to such indemnified party of its election so to assume the defense thereof, the
indemnifying party will not be liable to such indemnified party under this Section for any legal or other
expenses subsequently incurred by such indemnified party in connection with the defense thereof other
than reasonable costs of investigation; provided, however that the indemnified party shall have the right
to employ counsel to represent the indemnified party and their respective controlling persons who may be
subject to liability arising out of any claim in respect of which indemnity may be sought by the
indemnified party against the indemnifying party under this Section 7 if the employment of such counsel
shall have been authorized in writing by the indemnifying party in connection with the defense of such
action, if in the written opinion of counsel to either the indemnifying party or the indemnified party,
representation of both parties by the same counsel would be inappropriate due to actual or likely conflicts
of interest between them or the indemnifying party shall have failed to employ counsel within a
reasonable period of time, and in that event the fees and expenses of one firm of separate counsel (in
addition to the fees and expenses of one local counsel in each applicable jurisdiction) shall be paid by the
indemnifying party. No indemnifying party shall, without the prior written consent of the indemnified
party (which consent shall not be unreasonably withheld), effect any settlement of any pending or
threatened action in respect of which any indemnified party is or could have been a party and indemnity
could have been sought hereunder by such indemnified party unless such settlement (i) includes an
unconditional release of such indemnified party from all liability on any claims that are the subject matter
of such action and (ii) does not include a statement as to or an admission of fault, culpability or failure to act
by or on behalf of any indemnified party.
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(d) If the indemnification provided for in this Section is unavailable or insufficient to
hold harmless an indemnified party under subsection (a) or (b) above, then each indemnifying party shall
contribute to the amount paid or payable by such indemnified party as a result of the losses, claims
damages or liabilities referred to in subsection (a) or (b) above (i) 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 Offered Securities or (ii) if the allocation provided by clause (i) above is not
permitted by applicable law, in such proportion as is appropriate to reflect not only the relative benefits
referred to in clause (i) above 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 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 the offering (before deducting expenses) received by the
Company bear to the total discounts and commissions received by the Underwriters from the Company
under this Agreement. 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 or the Underwriters and the parties' relative
intent, knowledge, access to information and opportunity to correct or prevent such untrue statement or
omission. The amount paid by an indemnified party as a result of the losses, claims, damages or liabilities
referred to in the first sentence of 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 action or claim which is the subject of this subsection (d). Notwithstanding the provisions of this
subsection (d), no Underwriter shall be required to contribute any amount in excess of the amount by
which the total price at which the Offered Securities purchased by it were resold exceeds the amount of
any damages which such Underwriter has otherwise been required to pay by reason of such untrue or
alleged untrue statement or omission or alleged omission. 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. The Underwriters ' obligations in
this subsection (d) to contribute are several in proportion to their respective purchase obligations and not
joint.
( e) The obligations of the Company under this Section shall be in addition to any
liability which the Company may otherwise have and shall extend, upon the same terms and conditions
to each person, if any, who controls any Underwriter within the meaning of the Securities Act or the
Exchange Act; and the obligations of the Underwriters under this Section shall be in addition to any
liability which the respective Underwriters may otherwise have and shall extend, upon the same terms and
conditions, to each person, if any, who controls the Company within the meaning of the Securities Act or
the Exchange Act.
8. Default of Underwriters. If any Underwriter or Underwriters defaults in its or their
obligations to purchase Offered Securities hereunder and the aggregate principal amount of Offered
Securities that such defaulting Underwriter or Underwriters agreed but failed to purchase does not exceed
10% of the total principal amount of Offered Securities, the non-defaulting Underwriters may make
arrangements satisfactory to the Company for the purchase of such Offered Securities by other persons
including themselves, but if no such arrangements are made by the Closing Date, the non-defaulting
Underwriters shall be obligated severally, in proportion to their respective commitments hereunder, to
purchase the Offered Securities that such defaulting Underwriter or Underwriters agreed but failed to
purchase. If any Underwriter or Underwriters so defaults and the aggregate principal amount of Offered
Securities with respect to which such default or defaults occur exceeds 10% of the total principal amount
of Offered Securities and arrangements satisfactory to the non-defaulting Underwriters and the Company
for the purchase of such Offered Securities by other persons are not made within 36 hours after such
default, this Agreement will terminate without liability on the part of the non-defaulting Underwriters or
NY\1313867.4
the Company, except as provided in Section 9. As used in this Agreement, the term "Underwriter
includes any person substituted for a Underwriter under this Section. Nothing herein, including the
Company s obligations pursuant to Section 9 hereof, will relieve a defaulting Underwriter from liability
for its default.
9. Survival of Certain Representations and Obligations. The respective indemnities
agreements, representations, warranties and other statements of the Company or its officers and of the
several Underwriters set forth in or made pursuant to this Agreement will remain in full force and effect
regardless of any investigation, or statement as to the results thereof, made by or on behalf of any
Underwriter, the Company or any of their respective representatives, officers or directors or any
controlling person, and will survive delivery of and payment for the Offered Securities. If this Agreement
is terminated pursuant to Section 8 or if for any reason the purchase of the Offered Securities by the
Underwriters is not consummated other than such default by an Underwriter, the Company shall remain
responsible for the expenses to be paid or reimbursed by it pursuant to Section 5 and the respective
obligations of the Company and the Underwriters pursuant to Section 7 shall remain in effect. If the
purchase of the Offered Securities 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 (iii), (v), (vi) or (vii) of Section 6( c), 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 Offered Securities, provided that the Company shall not be obligated
under this Section 9 to reimburse the Underwriters for any expenses (including any reasonable fees and
disbursements of counsel) in excess of $200 000.
10. No Fiduciary Duty. The Company acknowledges and agrees that in connection with
this offering or any other services the Underwriters may be deemed to be providing hereunder
notwithstanding any preexisting relationship, advisory or otherwise, between the parties or any oral
representations or assurances previously or subsequently made by the Underwriters: (i) no fiduciary or
agency relationship between the Company and any other person, on the one hand, and the Underwriters
on the other, exists in connection with the offering of the Bonds; (ii) the Underwriters are not acting as
advisors, expert or otherwise, to the Company in connection with the offering of the Bonds and such
relationship between the Company, on the one hand, and the Underwriters, on the other, is entirely and
solely commercial, based on arms-length negotiations; (iii) any duties and obligations that the
Underwriters may have to the Company in connection with the offering of the Bonds shall be limited to
those duties and obligations specifically stated herein; and (iv) the Underwriters and their respective
affiliates may have interests that differ from those of the Company. Any review by the Underwriters of
the Company, the transactions contemplated hereby or other matters related to such transactions will be
performed solely for the benefit of the Underwriters and not on behalf of the Company. The Company
hereby waives any claims that the Company may have against the Underwriters with respect to any
breach of fiduciary duty in connection with this offering.
11. Notices. All communications hereunder will be in writing and, if sent to the
Underwriters, will be mailed, delivered or faxed and confirmed to each of (i) Greenwich Capital Markets
Inc., 600 Steamboat Road, Greenwich, Connecticut 06830, Facsimile number 203-422-4534, Attention:
Debt Capital Markets Syndicate, (ii) J.P. Morgan Securities Inc., 270 Park Avenue, New York, New York
10017, Facsimile number 212-834-6081 , Attention: High Grade Syndicate Desk - 8th Floor, and (iii)
Lehman Brothers Inc., 745 Seventh Avenue, New York, New York 10019, Attention: Debt Capital
Markets, Power Group (with a topy to the General Counsel at the same address), or, if sent to the
Company, will be mailed, delivered or telegraphed and confirmed to it at PacifiCorp, 825 NE Multnomah
18th Floor, Portland, OR 97232, Attention: Legal Department; provided, however that any notice to a
Underwriter pursuant to Section 7 will be mailed, delivered or faxed and confirmed to such Underwriter.
NY\1313867.4
12. Successors. This Agreement will inure to the benefit of and be binding upon the parties
hereto and their respective successors and the controlling persons referred to in Section 7, and no other
person will have any right or obligation hereunder.
13. Counterparts. This Agreement may be executed in any number of counterparts, each of
which shall be deemed to be an original, but all such counterparts shall together constitute one and the
same Agreement.
14. Applicable Law. This Agreement shall be governed by, and construed in accordance
with, the laws of the State of New York without regard to principles of conflicts of laws.
The Company hereby submits to the exclusive jurisdiction of the Federal and state courts in the
Borough of Manhattan in The City of New York in any suit or proceeding arising out of or relating to this
Agreement or the transactions contemplated hereby.
NY\1313867.4
If the foregoing is in accordance with the Underwriters' understanding of our agreement , kindly sign and
return to us one of the counterparts hereof: whereupon it will become a binding agreement between the
Company and the several Underwriters in accordance with its terms.
Very truly yours,
P ACIFICORP
BY:Name:
Title:
PacifiCorp Underwriting Agreement Signature Page
The foregoing Underwriting Agreement
is hereby confirmed and accepted
as of the date first above written.
G R APITAL MARKETS. INC
By:
Name: Okwudiri Onyedum
Title: Vice President
J.P. MORGAN SECURITIES INC.
" ",... ...... "'.. .., "
By:
Name:
Title:
LEHMAN BROTHERS INC.
By:
Name:
Title:
PaciftCorp Underwriting Agreement Signature Page
The foregoing Underwriting Agreement
is h~reby confirmed and accepted
as of the date first above written.
GREENWICH CAPITAL MARKETS; INe.
By:
Name:
Title:
P. MORGANSECURI'I'IES INC.
BY:
Name: RbbertBotmmedi
Title: Vice President
LEHMAN BROTHERS me.
By:
Name:
Title:
PacifiCorp Llnder.1TIting Agreement Signahlre Page
The foregoing Underwriting Agreement
is hereby confinned and accepted
as ohhe date first above. written.
GREENWICH. CAPITAL MARKETS, INt.
By:
Name:
Title:
MORGAN SECURITlESINC.
By:
Name:
Tide:
LEHMAN BRO'rBBRS INC.
By: .
Name:Chri inchenbaugh
Title: Managing Director
Pa.:ifiCOTp Underwriting Agrt'mtlellt Signl1fll.r(' Pagl'
SCHEDULE A
Underwriter
GREENWICH CAPITAL MARKETS, INC.........................................................
J.P. MORGAN SECURITIES INC..... .........................".......................................
LEHMAN BROTHERS INC. ...............................................................................
Total...............................................................................
(Underwriting Agreement)
NY\1313867.
Principal Amount
of Offered
Securities
$200 000 000
$200 000 000
$200 000 000
$600.000.000
SCHEDULE R(i)
Issuer Free Writing Prospectuses
See Schedule B(ii)
(Underwriting Agreement)
NY\1313867.
Issuer:
Expected Ratings:
Issue:
Offering Size:
Coupon:
Trade Date:
Settlement Date:
Maturity:
Treasury Benchmark:
US Treasury Spot:
US Treasury Yield:
Spread to Treasury:
Re-offer Yield:
Price to Public (Issue Price):
Gross Proceeds:
Optional Redemption:
Minimum Denomination:
Bookrunners:
CUSIP:
SCHEDULE B(ii)
FINAL TERM SHEET
PacifiCorp
A3/ A-/ A- (Stable/Stable/Stable)
First Mortgage Bonds due 2037
$600 000 000
250% per annum, payable semi-annually on each April 15 and October
, commencing April 15 , 2008
September 28 2007
October 3 , 2007
October 15 2037
75% due February 15 2037
98-09+
859%
+ 140 basis points
6.259%
99.875%
$599 250 000
Make Whole call, at any time at a discount rate of Treasury plus 25 bps
000 x $1 000
Greenwich Capital Markets, Inc.
P. Morgan Securities Inc.
Lehman Brothers Inc.
695114CG1
The issuer has filed a registration statement (including a prospectus) with the SEC for the offering to
which this communication relates. Before you invest, you should read the prospectus in that registration
statement and other documents the issuer has filed with the SEC for more complete information about the
issuer and this offering. You may get these documents for free by visiting EDGAR on the SEC Web site
at www.sec.gov.
Alternatively, the issuer, any underwriter or any dealer participating in the offering will arrange to send
you the prospectus if you request it by calling Greenwich Capital Markets, Inc. toll-free at 1 (866) 884-
2071 , J.P. Morgan Securities Inc. at (212) 834-4533 or Lehman Brothers Inc. toll-free at 1 (888) 603-
5847.
NY\1313867.4
(Underwriting Agreement)
NY\1313867.
EXHIBIT A
Form of Opinion of Mark C. Moench, General Counsel of the Company
(Underwriting Agreement)
NY\1313867.
EXHIBIT B
Form of Opinion of Perkins Coie LLP, special counsel to the Company
(Underwriting Agreement)
REPORT OF SECURITIES ISSUED
October 8, 2007
ACIFICORP
Description of securities:$600 000 000 ofPacifiCorp s First Mortgage Bonds
6.25% Series due October 15 , 2037
Description Amount
Face value or principal amount $600 000 000
Plus premium or less discount (750 000)
Gross proceeds 599 250 000
Underwriter s spread or commission 650 000)
Securities and Exchange Commission registration fee (66 110)
State mortgage registration tax N/A
State commission fee
* *
000)
Fee for recording indenture (40 000)
United States document tax N/A
10.Printing and engraving expenses * (70 000)
11.Trustee s charges (40 000)
12.Counsel fees (190 000)
13.Accountants' fees * *(110 000)
14.Cost of listing N/A
15,Miscellaneous expenses of issue
* * *
(231 890)
(Describe large items)
16.Total deductions (750 000)
17.Net amount realized 593 850 000
Underwriting commission net of $600 000 reimbursement for offering expenses.
* *
Denotes estimate only.
* * *
Includes estimated rating agency fees of $180 000 for the Bonds.
All amounts rounded to nearest 1 000.
S:\SHARED\FILINGS\ID\ID PAC-07-02\1D PAC-O7-02 Report on First Mortgage Bond (IO-07)\Report of Securities Issued IOO307.DOC