20120120Report of First Mortgage.pdf

~ROC. KY MOUNTAINPORA DIIO 01 PAFI"P
201 South Main. Suite 2300
Salt Lake City. Utah 84111
Januar 20,2012 7n i ~ì J.. ;J 1 ~'" "'.to: 3l~
nA OVERNIGHT DELIVERY
Idaho Public Utilities Commission
472 West Washington Street
Boise, Idaho 83702
Attn: Ms. Jean Jewell
Commission Secretary
Re: Case No. PAC-E-10-02 Order No. 31018 Report of First Mortgage Bond
Offering in Aggregate Principal Amount of $650,000,000
Pursuant to the referenced Order, PacifiCorp submits to the Commission an original and seven (7)
copies ofthe following documents relating to PacifiCorp's Januar 3,2012 offering of
$650,000,000 aggregate principal amount of First Mortgage Bonds, (the "Bonds"):
1. Prospectus Supplement dated Janua 3, 2012
2. Underwiting Agreement between PacifiCorp and J.P. Morgan Securties LLC, Mitsubishi
UFJ Securities (USA), Inc., RBS Securities Inc. and Wells Fargo Securities, LLC. dated
Januar 3, 2012 (Confidential)
3. Report of Securities Issued
With regard to the use of the proceeds from the issuance of the Bonds, please see "Use of
Proceeds" on page S-9 of the enclosed Prospectus Supplement.
Under penalty of perjur, I declare that I know the contents of the enclosed documents, and they
are tre, correct, and complete.
Please contact me at [phone] if you have any questions about this letter or the enclosed
documents.
Sincerely,
~ tJ W.St~
Bruce N. Wiliams
Vice President and Treasurer
Enclosures
Cc: Terri Carlock (Idaho Commission)
Ted Weston (PacifiCorp)
II
PROSPECTUS SUPPLEMENT
PROSPECTUS SUPPLEMENT TO PROSPECTUS DATED DECEMBER 3, 2010
~ ~~ÇlElf9Bl=
$650,000,000 First Mortgage Bonds
$350,000,000 2.95% Series Due 2022
$300,000,000 4.10% Series Due 2042
The 2022 bonds wil bear interest at 2.95% per year and wil mature on February 1, 2022. The 2042
bonds wil bear interest at 4.10% per year and wil mature on February 1, 2042. We wil pay interest on the
bonds of each series on February 1 and August 1 of each year, beginning on August 1, 2012. We collectively
refer to the 2022 bonds and the 2042 bonds as the "bonds."
We may redeem some or all of the bonds of either series at any time at the redemption prices discussed
under the captlon "Description of the Bonds-Optional Redemption."
We wil not apply for listing of the bonds on any securities exchange or include them in any automated
dealer quotation system. Currently, there is no public market for the bonds.
Investing in the bonds involves risks. See "Risk Factors" on page S-8 for information
on certain matters you should consider before purchasing the bonds.
Per 2022 Bond Total Per 2042 Bond Total
Public Offering Price(l). . . . . .99.912%$349,692,000 99.671%$299,013,000
Underwriting Discount. . . . . . .0.58%$2,030,000 0.80%$2,400,000
Proceeds to PacifiCorp (Before
Expenses). . . . . . . . . . . . . . .99.332%$347,662,000 98.871%$296,613,000
(1) Plus accrued interest, if any, from January 6, 2012.
The underwriters expect to deliver the bonds to purchasers through The Depository 1fust Company on
or about January 6, 2012.
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 accompanying prospectus
is truthful or complete. Any representation to the contrary is a criminal offense.
Joint Book-Running Managers
J.I! Morgan Mitsubishi UFJ Securities RBS Wells Fargo Securities
Co-Managers
BorA Merrill Lynch
Citigroup
Credit Suisse
Scotia Capital
Sun1ìust Robinson Humphrey
US Bancorp
The date of this prospectus supplement is January 3, 2012.
TABLE OF CONTENTS
Page
Prospectus Supplement
About This Prospectus Supplement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-3
Prospectus Supplement Summary .............................................. S-4
About PacifiCorp . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-4
The Offering. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-5
Risk Factors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-8
Summary Consolidated Financial Information ..................................... S-8
Use of Proceeds. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-9
Capitalization. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-9
Consolidated Ratios of Earnings to Fixed Charges . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-9
Description of the Bonds .................................................... S-10
Certain U.S. Federal Income Tax Considerations ................................... S-13
Benefit Plan Investor Considerations. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. S-16
Underwriting (Conflicts of Interest and Afilations) . . . . . . . . . . . . . . . . . . . . . . . . . . . .. . . . .. S-17
Legal Matters ............................................................ S-20
Experts ........ . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. S-20
Prospectus
About This Prospectus . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Forward-Looking Statements. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
The Company ............................................................ 2
Risk Factors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Consolidated Ratios of Earnings to Fixed Charges . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Where You Can Find More Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Use of Proceeds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Description of Additional Bonds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Book-Entry Issuance. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
Plan of Distribution .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
Legal Matters ............................................................ 14
Experts. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
S-2
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 accompanying prospectus, gives more general information about
securities wè 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.
You should read both this prospectus supplement and the accompanying prospectus, together with the
documents incorporated by reference and the additional information described in the accompanying
prospectus under the heading "Where You Can Find More Information." If the description of the
bonds in the prospectus supplement differs from the description in the accompanying prospectus, the
description in the prospectus supplement supersedes the description in the accompanying prospectus.
Any statement made in this prospectus supplement or in a document incorporated or deemed to
be incorporated by reference in this prospectus supplement wil be deemed to be modified or
superseded for purposes of this prospectus supplement to the extent that a statement contained in this
prospectus supplement or in any other subsequently filed document that is also incorporated or deemed
to be incorporated by reference in this prospectus supplement modifies or supersedes that statement.
Any statement so modified or superseded wil not be deemed, except as so modified or superseded, to
constitute a part of this prospectus supplement. The information we have included in this prospectus
supplement and the accompanying prospectus is accurate only as of the date of this prospectus
supplement or the accompanying prospectus, and any information we have incorporated by reference is
accurate only as of the date of the document incorporated by reference.
You should rely only on the information contained in or incorporated by reference in the
prospectus. 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 the bonds. The information in this
prospectus and the documents incorporated by reference herein may only be accurate as of the dates of
those respective documents. Our business, financial condition, results of operations and prospects may
have changed since those dates.
S-3
PROSPECTUS SUPPLEMENT SUMMAY
In this prospectus supplement, unless otherwise indicated or unless the contex otherwise requires, the
words "Company," "we," "our," "us" 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 9,
1989, as amended and supplemented, with The Bank of New York Mellon Trust Company, N.A. as
successor trstee.
The following summary contains basic information about PacifiCorp and this offering. It may not
contain all of 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 electricity company serving 1.7 milion retail customers, including residential,
commercial, industrial and other customers in portions of the states of Utah, Oregon, Wyoming,
Washington, Idaho and California. We own, or have interests in, 75 thermal, hydroelectric,
wind-powered and geothermal generating facilities with a net owned capacity of 10,596 megawatts. We
also own, or have interests in, electric transmission and distribution assets, and transmit electricity
through approximately 16,200 miles of transmission lines. We also buy and sell electricity on the
wholesale market with other utilities, energy marketing companies, financial institutions and other
market participants as a result of excess electricity generation or other system balancing activities. We
are subject to comprehensive state and federal regulation. Our subsidiaries support our electric utilty
operations by providing coal mining and environmental remediation services.
We are an indirect subsidiary of MidAerican Energy Holdings Company ("MEHC"), a holding
company based in Des Moines, Iowa that owns subsidiaries principally engaged in energy businesses.
MEHC is a consolidated subsidiary of Berkshire Hathaway Inc. ("Berkshire"), which owned 89.8% of
MEHC's voting common stock as of September 30, 2011.
Our principal executive offices are located at 825 N.E. Multnomah, Portland, Oregon 97232 and
our telephone number is [phone]. We were initially incorporated in 1910 under the laws of the
state of Maine under the name Pacific Power & Light Company. In 1984, Pacific Power & Light
Company changed its name to PacifiCorp. In 1989, we merged with Utah Power and Light Company, a
Utah corporation, in a transaction wherein both corporations merged into a newly formed Oregon
corporation. The resulting Oregon corporation was re-named PacifiCorp, which is the operating entity
today.
For additional information concerning our business and affairs, including our capital requirements,
external financing arrangements and pending legal and regulatory proceedings, including descriptions of
those laws and regulations to which we are subject, prospective purchasers should refer to the
documents in the section entitled "Where You Can Find More Information" in the accompanying
prospectus.
S-4
THE OFFERING
Issuer . . . . . . . . . . . . . . . . . . . . . .. PacifiCorp.
Bonds Offered . . . . . . . . . . . . . . . .. $350,000,000 aggregate principal amount of 2.95% First
Mortgage Bonds due 2022 (the "2022 bonds").
$300,000,000 aggregate principal amount of 4.10% First
Mortgage Bonds due 2042 (the "2042 bonds" and, together
with the 2022 bonds, the "bonds").
The bonds constitute two series of securities that wil be
issued under a twenty-fifth supplement to the Mortgage.
February 1, 2022 for the 2022 bonds.
February 1, 2042 for the 2042 bonds.
February 1 and August 1, beginning on August 1, 2012, for the
bonds of each series.
Maturity Date .................
Interest Payment Dates. . . . . . . . . . .
Optional Redemption of the 2022
Bonds. . . . . . . . . . . . . . . . . . . . . .
Optional Redemption of the 2042
Bonds. . . . . . . . . . . . . . . . . . . . . .
At any time prior to November 1, 2021, we may redeem the
2022 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 2022 bonds to be
redeemed; or
(2) the sum of the present values of the remaining scheduled
payments of principal and interest on the 2022 bonds to
be redeemed (not including any portion of such
payments of interest accrued as of the redemption date)
discounted to the date of redemption on a semi-annual
basis (assuming a 360-day year consisting of twelve
30-day months) at the Adjusted Treasury Rate plus 15
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."
At any time on or after November 1, 2021 (which is the date
that is three months prior to the maturity of the 2022 bonds),
we may redeem the 2022 bonds, in whole or in part, at a
redemption price equal to 100% of the principal amount of
the 2022 bonds to be redeemed, plus accrued and unpaid
interest thereon, if any, to the date of redemption.
At any time prior to August 1, 2041, we may redeem the 2042
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 2042 bonds to be
redeemed; or
S-5
Sinking Fund . . . . . . . . . . . . . . . . . .
Ranking. . . . . . . . . . . . . . . . . . . . . .
Covenants
Denominations . . . . . . . . . . . . . . . . .
Use of Proceeds . . . . . . . . . . . . . . . .
Trustee ......................
(2) the sum of the present values of the remaining scheduled
payments of principal and interest on the 2042 bonds to
be redeemed (not including any portion of such
payments of interest accrued as of the redemption date)
discounted to the date of redemption on a semi-annual
basis (assuming a 360-day year consisting of twelve
30-day months) at the Adjusted Treasury Rate plus 20
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. "
At any time on or after August 1, 2041 (which is the date that
is six months prior to the maturity of the 2042 bonds), we may
redeem the 2042 bonds, in whole or in part, at a redemption
price equal to 100% of the principal amount of the 2042
bonds to be redeemed, plus accrued and unpaid interest
thereon, if any, to the date of redemption.
The bonds wil not be subject to a mandatory sinking fund.
The bonds wil be secured by a first mortgage lien on certain
utility property owned by us. The bonds wil 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 utilty
businesses described in the Mortgage. See "Description of
Additional Bonds-Certain Covenants" in the accompanying
prospectus.
The bonds are available for purchase in minimum
denominations of $2,000 and any integral multiple of $1,000 in
excess thereof.
We intend to use the net proceeds from the sale of the bonds
for the repayment of short-term debt, to fund capital
expenditures and for general corporate purposes, including the
potential redemption of tax-exempt bonds. See "Use of
Proceeds" in this prospectus supplement.
The Bank of New York Mellon Trust Company, N.A. wil be
the trustee for the holders of the bonds. See "Description of
Additional Bonds-The Mortgage Trustee" in the
accompanying prospectus.
S-6
Conflcts of Interest . . . . . . . . . . . .. Berkshire, through its investment in Bank of America
Corporation, has an ownership interest in Merril Lynch,
Pierce, Fenner & Smith Incorporated ("Merril Lynch") and,
as such, Merril Lynch has a potential "conflct of interest" in
this offering within the meaning of Rule 5121 of the Financial
Industry Regulatory Authority, Inc. ("FINRA"). Consequently,
this offering is being conducted in compliance with the
provisions of FINRA Rule 5121. See "Underwiting-Conflicts
of Interest and Affiliations."
S-7
RISK FACTORS
Investing in the bonds involves risk. Before purchasing the bonds, you should carefully consider the
risk factors included in the accompanying prospectus, our Annual Report on Form lO-K for the year
ended December 31, 2010 (the "Form 10-K") and our Quarterly Reports on Form lO-Q for the
quarterly periods ended March 31, 2011, June 30, 2011 and September 30, 2011 (the "Forms 10-Q").
You should also read and consider the other information contained in this prospectus supplement, the
accompanying prospectus and the documents incorporated by reference herein and therein in order to
evaluate an investment in the bonds. See "Where You Can Find More Information" in the
accompanying prospectus. Additional risks and uncertainties that are not presently known or that are
currently deemed immaterial may also materially harm our business, operating results and financial
condition and could result in a loss on your investment.
SUMMARY CONSOLIDATED FINANCIA INFORMATION
We have derived the summary consolidated financial information presented below from our
audited historical Consolidated Financial Statements as of and for the years ended December 31, 2010
and December 31, 2009 and our unaudited historical Consolidated Financial Statements as of and for
the nine-month periods ended September 30, 2011 and 2010. 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 Forms lO-K and the Forms 10-Q, incorporated by reference
herein.
Nine.Month PeriodsEnded Years Ended
September 30, December 31,
2011 2010 2010 2009
(in milions)
Consolidated Statements of Operations Information:
Operating revenue .................................
Operating income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Net income attributable to PacifiCorp ...................
Other Consolidated Financial Information:
Net cash from operating activities ......................
Net cash from investing activities. . . . . . . . . . . . . . . . . . . . . . .
Net cash from financing activities. . . . . . . . . . . . . . . . . . . . . . .
$ 3,408
846
425
$ 3,323
800
442
$ 4,432
1,036
566
$ 4,457
1,060
542
$ 1,452
(1,067)
(265)
$ 1,044
(1,259)
130
$ 1,410
(1,613)
117
$ 1,500
(2,308)
866
As of September 30, As of December 31,
2011 2010 2010 2009
(in milions)
Consolidated Balance Sheet Information:
Total assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total long-term debt(l) . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total PacifiCorp shareholders' equity .... . . . . . . . . . . . . . . .
$20,570
6,206
7,184
$19,779
6,326
7,194
$20,146
5,813
7,311
$18,966
6,400
6,648
(1) Includes capital lease obligations, but excludes current maturities and short-term debt.
S-8
USE OF PROCEEDS
We intend to use the net proceeds from the sale of the bonds for the repayment of short-term
debt, to fund capital expenditures and for general corporate purposes, including the potential
redemption of tax-exempt bonds. As of December 31, 2011, we had approximately $688 milion of
commercial paper outstanding maturing through January 25, 2012, with a weighted-average interest rate
of 0.51 %. See "Capitalization" below.
CAPITALIZATION
The table below shows our capitalization on a consolidated basis as of September 30, 2011. The
'~ Adjusted" column wil 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 lO-K and the Forms 10-Q (in milions).
Short-term debt. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Long-term debt, currently maturing(l) .....................
Long-term debt, net of current maturities(l) . . . . . . . . . . . . . . . . .
Total short- and long-term debt. . . . . . . . . . . . . . . . . . . . . . . . .
Preferred stock ......................................
Total common equity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total capitalization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
As of September 30, 2011
Actual As Adjusted
Amounts %Amounts %
$0 0.0 $0 0.0%
521 3.8 521 3.6
6,206 44.6 6,856 47.1--
6,727 48.4 7,377 50.7
41 0.3 41 0.3
7,143 51.3 7,143 49.0--
$13,911 100.0 $14,561 100.0%
(1) Includes capital lease obligations.
As of December 31, 2011, short-term debt consisted of approximately $688 milion of commercial
paper, long-term debt currently maturing was approxiately $19 milion and long-term debt, net of
current maturities, was approximately $6,194 milion.
CONSOLIDATED RATIOS OF EARNINGS TO FIXED CHAGES
Nine-Month
Period Ended
September 30, 2011
3.Ox
2010
3.0x
Years Ended December 31,
2009 2008 2007
Nine-Month
Period Ended
December 31, 2006
2.9x 3.Ox 3.Ox 2.1x
S-9
DESCRIPTION OF THE BONDS
The bonds wil be issued pursuant to the twenty-fifth supplemental indenture to the Mortgage, to
be dated as of January 1, 2012 (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 wil be issued as two separate series of First Mortgage Bonds under the Mortgage. The
2022 bonds wil initially be limited in aggregate principal amount to $350,000,000. The 2042 bonds wil
initially be limited in aggregate principal amount to $300,000,000. The entire principal amount of the
2022 bonds wil mature and become due and payable, together with any accrued and unpaid interest
thereon, on February 1, 2022. The entire principal amount of the 2042 bonds wil mature and become
due and payable, together with any accrued and unpaid interest thereon, on February 1, 2042. 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 2022 bond wil bear interest at the rate of 2.95% per annum from the date of original
issuance. Each 2042 bond wil bear interest at the rate of 4.10% per annum from the date of original
issuance. Interest on the bonds of each series wil be payable semi-annually in arrears on February 1
and August 1 of each year (each, an "Interest Payment Date"). The initial Interest Payment Date is
August 1, 2012. The amount of interest payable wil 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 wil 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 wil 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 wil be the
close of business on the 15th calendar day of the month immediately preceding the month in which the
applicable Interest Payment Date occurs (whether or not a business day).
Ranking and Security
The bonds wil be issued under the Mortgage and secured by a first mortgage lien on certain utilty
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 wil be equally and ratably secured with all other bonds issued under the Mortgage.
Further Issuances
The 2022 bonds wil initially be limited in aggregate principal amount to $350,000,000. The 2042
bonds wil initially be limited in aggregate principal amount to $300,000,000. We may, from time to
time, without notice to or the consent of the holders of the bonds, create and issue further bonds equal
S-10
in rank and having the same maturity, payment terms, redemption features, CUSIP numbers and other
terms as the bonds of a series offered by this prospectus supplement, except for the issue price,
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 bonds of such series offered by
this prospectus supplement.
Optional Redemption
At any time prior to November 1, 2021, we may redeem the 2022 bonds, at our option, in whole or
in part, at any time, at a redemption price equal to the greater of:
· 100% of the principal amount of 2022 bonds then outstanding to be redeemed; or
· the sum of the present values of the remaining scheduled payments of principal and interest on
the 2022 bonds to be redeemed (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 15 basis
points, as calculated by an Independent Investment Banker;
plus, in either of the above cases, whichever is applicable, accrued and unpaid interest, if any, on such
2022 bonds to the date of redemption.
At any time on or after November 1, 2021 (which is the date that is three months prior to the
maturity of the 2022 bonds), we may redeem the 2022 bonds, at our option, in whole or in part, at any
time, at a redemption price equal to 100% of the principal amount of the 2022 bonds to be redeemed,
plus accrued and unpaid interest thereon to the date of redemption.
At any time prior to August 1, 2041, we may redeem the 2042 bonds, at our option, in whole or in
part, at any time, at a redemption price equal to the greater of:
· 100% of the principal amount of 2042 bonds then outstanding to be redeemed; or
· the sum of the present values of the remaining scheduled payments of principal and interest on
the 2042 bonds to be redeemed (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 20 basis
points, as calculated by an Independent Investment Banker;
plus, in either of the above cases, whichever is applicable, accrued and unpaid interest, if any, on such
2042 bonds to the date of redemption.
At any time on or after August 1, 2041 (which is the date that is six months prior to the maturity
of the 2042 bonds), we may redeem the 2042 bonds, at our option, in whole or in part, at any time, at
a redemption price equal to 100% of the principal amount of the 2042 bonds to be redeemed, plus
accrued and unpaid interest thereon to the date of redemption.
We wil mail a notice of redemption at least 30 days before the redemption date to each holder of
bonds to be redeemed. If we elect to partially redeem the bonds of either series, the Trustee wil 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
wil 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 "H.15(519)" or any
S-ll
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 applicable 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 such Comparable Treasury Issue wil be determined and the Adjusted Treasury
Rate wil 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 applicable Comparable Treasury Issue, calculated using a
price for such Comparable Treasury Issue (expressed as a percentage of its principal amount)
equal to the applicable Comparable Treasury Price for such redemption date.
The Adjusted Treasury Rate wil 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 Prce" means, with respect to any redemption date, (1) the average of four
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, or
if that firm is unwiling or unable to serve as such, an independent investment and banking institution
of national standing appointed by us.
"Reference Treasury Dealer" means:
· each of J.P. Morgan Securities LLC, RBS Securities Inc., a Primary Treasury Dealer (as defined
herein) selected by Mitsubishi UFJ Securities (USA), Inc. and a Primary Treasury Dealer
selected by Wells Fargo Securities, LLC, 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 wil 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 applicable 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.m., New
York City time, on the third business day preceding such redemption date.
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CERTAIN U.S. FEDERA INCOME TAX CONSIDERATIONS
The following discussion is a summary of the material U.S. federal income tax considerations that
may be relevant to the ownership and disposition of the bonds issued pursuant to this offering, and
does not purport to be a complete analysis of all potential tax effects.
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 and who hold the
bonds as capital assets for tax purposes. This discussion does not address all the u.s. federal income
tax consequences that may be relevant to you in light of your particular circumstances or to investors
subject to special rules, such as financial institutions, banks, U.S. expatriates, controlled foreign
corporations, passive foreign investment companies, insurance companies, dealers in securities or
currencies, traders in securities, persons 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. This discussion does not address any U.S. gift or estate tax
considerations or tax considerations arising under the laws of any state, local or non-U.S. jurisdiction.
If a partnership (including any entity or arrangement classified as a partnership for U.S. federal
income tax purposes) is an owner of the bonds, the treatment of a partner in the partnership generally
wil depend upon the status of the partner and the activities of the partnership. If you are a partner of
a partnership holding the bonds, you should consult your tax advisor regarding the U.S. federal income
tax consequences relating to the ownership and disposition of the bonds.
The discussion is based on the provisions of the Internal Revenue Code of 1986, as amended (the
"Code"), U.S. Treasury regulations issued thereunder ("Treasury Regulations"), court decisions and
administrative interpretations, all as in effect as of the date of this prospectus supplement and all of
which are subject to change at any time, possibly with retroactive effect. Changes in these authorities
may cause the tax consequences to vary substantially from the consequences described below.
We have not sought and wil not seek any rulings from the Internal Revenue Service ("IRS") with
respect to the matters discussed below. There can be no assurance that the IRS wil not take a
different position concerning the tax consequences of the purchase, ownership or disposition of the
bonds or that any such position taken by the IRS would not be sustained by a court.
You are urged to consult your own tax advisor regarding the U.S. federal, state, local, foreign or
other tax consequences of the ownership and disposition of the bonds.
U.S. Holders
This section applies to you if you are a "U.S. Holder." A "U.S. Holder" means a beneficial owner
of the bonds that is a U.S. citizen or U.S. resident alien, 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, any state thereof or the District of Columbia, an estate whose income is subject to U.S.
federal income tax regardless of its source or a trust that either is subject to the supervision of a court
within the United States and has one or more U.S. persons with authority to control all of its
substantial decisions or has a valid election in effect under applicable Treasury Regulations to be
treated as a U.S. person.
Interest
You generally must include the stated interest on a bond as ordinary income at the time such
interest is received or accrued, in accordance with your method of accounting for U.S. federal income
tax purposes. It is expected, and the following discussion assumes, that the bonds wil not be treated as
issued with original issue discount for U.S. federal income tax purposes.
S-13
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 wil 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
you unless you 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, you likely would recognize additional interest income
in accordance with your method of accounting for U.S. federal income tax purposes.
Certain U.S. Holders who are individuals, estates or trusts wil be subject to a 3.8% tax on, among
other things, interest for taxable years beginning after December 31, 2012. You should consult your tax
advisor regarding the effect, if any, of this tax on your ownership of our bonds.
Sale or Other Taxable Disposition of the Bonds
You generally wil 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 wil be taxable as ordinary interest income unless previously taken into
income) and (ii) your adjusted tax basis in the bond. Your adjusted tax basis in a bond generally wil be
your purchase price of the bond on the date of purchase. Gain or loss recognized generally wil be a
capital gain or loss, and wil be long-term capital gain or loss if you held the bond for more than one
year. Long-term capital gains of some non-corporate taxpayers (including individuals) are taxed at
preferential capital gains tax rates. Your abilty to deduct capital losses may be limited.
Certain U.S. Holders who are individuals, estates or trusts wil be subject to a 3.8% tax on, among
other things, capital gains from the sale or other disposition of the bonds for taxable years beginning
after December 31, 2012. You should consult your tax advisors regarding the effect, if any, of this tax
on your disposition of the bonds.
Non-U.S. Holders
This section applies to you if you are a "Non-U.S. Holder." A Non-U.S. Holder means a beneficial
owner of the bonds that is neither a U.S. Holder nor a partnership for U.S. federal income tax
purposes.
Interest
Payments to you of interest generally wil not be subject to U.S. federal withholding tax, provided
that:
· you do not actually or constructively own 10% or more of the total combined voting power of all
classes of our stock entitled to vote;
· you are not a controlled foreign corporation that is related to us actually or constructively
through stock ownership;
· you are not a bank receiving certain tyes of interest; and
· we, or our paying agent, receive appropriate documentation, generally a completed IRS
Form W-8BEN, establishing that you are not a U.S. person within the meaning of the Code.
Interest that meets these requirements is referred to as "portfolio interest" and, in addition to
generally not being subject to U.S. federal withholding tax, is also generally not subject to regular U.S.
federal income tax unless the conditions of the following paragraph apply to you.
S-14
The interest on the bonds wil be taxed at regular u.s. federal net 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 you of a U.S. trade or business, and (n) if an income tax treaty applies, the interest is
attributable to a U.S. permanent establishment or fixed base under the terms of such treaty ("U.S.
trade or bus.iness income"), provided, in each case, that a proper certification is provided. In addition,
if you are 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 U.S. trade or business income wil be subject to U.S. withholding tax at the rate of 30%,
unless such rate is reduced or eliminated by an applicable tax treaty and you provide the appropriate
certification.
Sale or Other Taxable Disposition of the Bonds
Gain realized by a you on the sale, redemption or other taxable disposition of a bond generally
wil not be subject to U.S. federal income or withholding tax, unless (i) such gain is effectively
connected with the conduct by you of a trade' or business within the United States (and, if an income
tax treaty applies, is attributable to a permanent establishment or fixed base in the United States) or
(ii) you are 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 you upon a sale, redemption or other taxable disposition of a bond that is
effectively connected with the conduct by you of a U.S. trade or business and, if an income tax treaty
applies, is attributable to a U.S. permanent establishment or fixed base, generally wil 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 you
are a 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 U.S. federal backup withholding tax, unless, in certain
cases, the recipient of the payment supplies an accurate taxayer identification number or otherwise
complies with applicable U.S. information reporting or certification requirements. Backup withholding
is not an additional tax, and any amount withheld under the backup withholding rules is allowable as a
credit against your U.S. federal income tax liability, and you may qualify for a refund of any excess
withheld amounts, provided that the required information is timely furnished to the IRS.
PERSONS CONSIDERING THE PURCHASE OF THE BONDS SHOULD CONSULT THEIR OWN
TAX ADVISORS WITH RESPECT TO THE U.S. FEDERA 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 AN APPLICABLE TAX TRATY
S-15
BENEFIT PLA INVSTOR CONSIDERATIONS
The bonds may be purchased and held by or with the assets of an employee benefit plan subject to
Title I of the Employee Retirement Income Security Act of 1974, as amended ("ERISA"), an individual
retirement account or other plan subject to Section 4975 of the Code or an employee benefit plan
sponsored by a state or local government or otherwise subject to laws that include restrictions
substantially similar to ERISA and Section 4975 of the Code (any such law, a "Similar Law"). A
fiduciary of an employee benefit plan subject to ERISA, Section 4975 of the Code or any Similar Law
must determine that the purchase and holding of the bonds are consistent with its fiduciary duties
under ERISA, Section 4975 of the Code or any Similar Law. Such fiduciary, as well as any other
prospective investor subject to ERISA, Section 4975 of the Code or any Similar Law, must also
determine that its purchase and holding of the bonds does not result in a non-exempt prohibited
transaction as defined in Section 406 of ERISA, Section 4975 of the Code or any Similar Law. Among
other things, these sections prohibit the lending of money and other extensions of credit between an
employee benefit plan or individual retirement account or annuity ("IRA") and a party in interest (as
defined in ERISA) or disqualified person (as defined in the Code) with respect to such plan or IRA,
unless such transaction is covered by an exemption. The bonds constitute an extension of credit by the
purchaser to us. Accordingly, each purchaser and transferee of the bonds who is subject to ERISA,
Section 4975 of the Code or a Similar Law wil be deemed to have represented by its acquisition and
holding of the bonds that its acquisition and holding of the bonds does not constitute or give rise to a
non-exempt 'prohibited transaction under ERISA, Section 4975 of the Code or any Similar Law. Such
purchaser or transferee should consult legal counsel before purchasing the bonds. Nothing herein shall
be construed as a representation that an investment in the bonds would meet any or all of the relevant
legal requirements with respect to investments by, or is appropriate for, an employee benefit plan or
IRA subject to ERISA, Section 4975 of the Code or a Similar Law.
S-16
UNDERWRING
J.P. Morgan Securities LLC, Mitsubishi UFJ Securities (USA), Inc., RBS Securities Inc. and Wells
Fargo Securities, LLC are acting as our joint book-running managers for this offering and as
representatives for the underwriters named below. Subject to certain conditions, under the terms of an
underwriting agreement, each underwiter has severally agreed to purchase, and we have agreed to sell
to each underwriter, the principal amount of bonds indicated in the following table:
Underwiters
J.P. Morgan Securities LLC . . . . . . . . . . . . . . . . . . . .
Mitsubishi UFJ Securities (USA), Inc. ............
RBS Securities Inc. . . . . . . . . . . . . . . . . . . . . . . . . . .
Wells Fargo Securities, LLC . . . . . . . . . . . . . . . . . . . .
Citigroup Global Markets Inc. . . . . . . . . . . . . . . . . . .
Credit Suisse Securities (USA) LLC . . . . . . . . . . . . . .
Merril Lynch, Pierce, Fenner & Smith
Incorporated. . . . . . . . . . . . . . . . . . . . . .
Scotia Capital (USA) Inc. .....................
SunThst Robinson Humphrey, Inc. ..............
U.S. Bancorp Investments, Inc. .................
Total. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Principal
Amount
0£2022
Bonds
$ 70,000,000
70,000,000
70,000,000
70,000,000
11,667,000
11,667,000
11,667,000
11,667,000
11,666,000
11,666,000
$350,000,000
Principal
Amount
0£2042
Bonds
$ 60,000,000
60,000,000
60,000,000
60,000,000
10,000,000
10,000,000
10,000,000
10,000,000
10,000,000
10,000,000
$300,000,000
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 the bonds directly to the public at the public offering price set
forth on the cover page of this prospectus supplement. Mter the initial offering of the bonds to the
public, the public offering price and concessions may be changed.
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 contiection 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 underwiter in stabilizing or short covering
transactions.
These activities by the underwiters, 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 underwiters at any time. These transactions
may be effected in the over-the-counter market or otherwise.
S-17
We estimate that our total offering expenses, not including the underwriting discount, wil be
approximately $575,000.
Conflcts of Interest and Afliations
The underwriters and their respective affilates are full service financial institutions engaged in
various activities, which may include securities trading, commercial and investment banking, financial
advisory investment management, investment research, principal investment, hedging, financing and
brokerage activities.
In the ordinar course of their various business activities, the underwriters and their respective
affiliates may make or hold a broad array of investments and actively trade debt and equity securities
(or related derivative securities) and financial instruments (including ban loans) for their own account
and for the accounts of their customers, and such investment and securities activities may involve
securities and instruments of us or our affilates. Certain of the underwiters or their affiliates that have
a lending relationship with us routinely hedge their credit exposure to us consistent with their
customary risk management policies. Typically, such underwriters and their affiiates would hedge such
exposure by entering into transactions which consist of either the purchase of credit default swaps or
the creation of short positions in our securities, including potentially the bonds offered hereby. Any
such short positions could adversely affect future trading prices of the bonds offered hereby. The
underwriters and their respective affiliates may also make investment recommendations or publish or
express independent research views in respect of such securities or instruments and may at any time
hold, or recommend to clients that they acquire, long or short positions in such securities and
instruments.
Certain of the underwiters and their affilates have performed commercial banking, investment
banking and advisory services for us from time to time for which they have received customary fees and
expenses. For example, affiliates of several of the underwriters act as agents and as lenders under our
credit facilitles, which we may repay from time to time with proceeds of the offering and for which they
receive 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. Affilates of
certain of the underwriters act as agents and as lenders under our credit facilities for which they
receive customary fees and expenses.
Berkshire, through its investment in Bank of America Corporation, has an ownership interest in
Merril Lynch and, as such, Merril Lynch has a potential "conflct of interest" in this offering within
the meaning of FINRA Rule 5121. Consequently, this offering is being conducted in compliance with
the provisions of FINRA Rule 5121.
We have agreed to indemnify each of the underwriters against certain liabilities, including liabilities
under the Securities Act of 1933, as amended, or to contribute to payments the underwiters may be
required to make because of those liabilities.
Sellng Restrictions
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 wil not make an
offer of the bonds to the public in that Relevant Member State other than:
(a) to any legal entity which is a qualified investor as defined in the Prospectus Directive;
(b). to fewer than 100 or, if the Relevant Member State has implemented the relevant
provision of the 2010 PD Amending Directive, 150, natural or legal persons (other than qualified
S-18
investors as defined in the Prospectus Directive), as permitted under the Prospectus Directive,
subject to obtaining the prior consent of the relevant Dealer or Dealers nominated by us for any
such offer; or;
(c) in any other circumstances falling within Article 3(2) of the Prospectus Directive,
provided that no such offer of bonds shall require us or any underwriter to publish 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 the bonds, as the same may be varied in that Member State by any measure
implementing the Prospectus Directive in that Member State, the expression "Prospectus Directive"
means Directive 2003/71ÆC (and amendments thereto, including the 2010 PD Amending Directive, to
the extent implemented in the Relevant Member State), and includes any relevant implementing
measure in the Relevant Member State and the expression "2010 PD Amending Directive" means
Directive 201O/73ÆU.
This prospectus has been prepared on the basis that any offer of the bonds in any Member State
of the European Economic Area which has implemented the Prospectus Directive (each, a "Relevant
Member State") wil be made pursuant to an exemption under the Prospectus Directive from the
requirement to publish a prospectus for offers of bonds. Accordingly any person making or intending to
make an offer in that Relevant Member State of the bonds may only do so in circumstances in which
no obligation arises for us or any of the underwriters to publish a prospectus pursuant to Article 3 of
the Prospectus Directive, in each case, in relation to such offer. Neither we nor the underwiters have
authorized, nor do we authorize, the makng of any offer of bonds in circumstances in which an
obligation arises for us or the underwriters to publish a prospectus for such offer.
Each underwriter has represented and agreed that:
(a) it has only communicated or caused to be communicated (and wil 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 "FS~')) 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 wil 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.
S-19
LEGAL MATTERS
Certain legal matters with respect to the bonds we are offering wil be passed upon for us by
Mark C. Moench, General Counsel of PacifiCorp, and by Perkins Coie LLp' Portland, Oregon. Certain
legal matters wil be passed upon for the underwriters by Latham & Watkins LLp' New York, New
York. Latham & Watkins LLP from time to time represents us or certain of our affiliates.
EXPERTS
The consolidated financial statements incorporated in this prospectus supplement by reference
from PacifiCorp's Annual Report on Form 10-K for the year ended December 31, 2010, have been
audited by Deloitte & Touche LLp' an independent registered public accounting firm, as stated in their
report, which is incorporated herein by reference. Such financial statements have 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 consolidated financial information of PacifiCorp for the
periods ended March 31, 2011, June 30, 2011 and September 30, 2011, which is incorporated herein by
reference, Deloitte & Touche LLp' an independent registered public accounting firm, have 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
PacifiCorp's Quarterly Reports on Form 10-Q for the quarterly periods ended March 31, 2011, June 30,
2011 and September 30, 2011 and incorporated by reference herein, they did not audit and they do not
express an opinion on that interim consolidated 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 are not subject to the liability provisions of
Section 11 of the Securities Act of 1933, as amended, for their reports on the unaudited interim
financial information because those reports are not a "report" 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, as amended.
S-20
PROSPECTUS
PACIFICORP
FIRST MORTGAGE BONDS
PacifiCorp, an Oregon corporation, may from time to time offer First Mortgage Bonds
("Additional Bonds" or "Securities") in one or more issuances or series at prices and on terms to be
determined at the time of sale.
We wil provide specific terms of the Securities, including, as applicable, the amount offered,
offering prices, interest 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.
We may sell the Securities directly through agents designated from time to time or through
underwriters or dealers. The supplements to this prospectus wil 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.
This prospectus may not be used to consummate sales of Securities unless accompanied by a
prospectus supplement relating to the Securities offered.
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 EXCHAGE COMMISSION NOR AN STATE
SECURITIES COMMISSION HAS APPROVED OR DISAPPROVED OF THESE SECURITIES
OR DETERMINED IF THIS PROSPECTUS IS TRUTHFUL OR COMPLETE. AN
REPRESENTATION TO THE CONTRAY IS A CRIMINAL OFFENSE.
The date of this prospectus is December 3, 2010.
TABLE OF CONTENTS
ABOUT THIS PROSPECTUS ................................................. 1
FORWARD-LOOKING STATEMENTS .......................................... 1
THE COMPANY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
RISK FACTORS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
CONSOLIDATED RATIOS OF EARNINGS TO FIXED CHARGES .................... 3
WHERE YOU CAN FIND MORE INFORMATION. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
USE OF PROCEEDS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
DESCRIPTION OF ADDITIONAL BONDS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
BOOK-ENTRY ISSUANCE. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. 10
PLA OF DISTRIBUTION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. 13
LEGAL MATTERS ......................................................... 14
EXPERTS................................................................ 14
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, any document incorporated by reference in this prospectus or
any free writing prospectuses is accurate as of any date other than the date mentioned on the cover
page of those documents. Our business, financial condition and results of operations may have changed
since that date. 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 on Form S-3 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. This prospectus provides a general description of the Securities. Each time we
sell Securities, we wil provide a prospectus supplement that wil 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 wil 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," "we," "our" and "us" 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 fied with the registration statement or incorporated by
reference to earlier SEC fiings listed in the registration statement. See "Where You Can Find More
Information."
FORWAR.LOOKING STATEMENTS
This prospectus, any accompanying prospectus supplement and the additional information
described under the heading "Where You Can Find More Information" 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,
including through incorporation by reference, in this prospectus. This information, by its nature,
involves estimates, projections, forecasts, risks and uncertainties that could cause actual results or
outcomes to differ substantially from those expressed in the forward-looking statements found in this
prospectus ~nd the documents incorporated by reference in this prospectus.
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 lO-K, the Forms 10-Q and the
Forms 8-K incorporated by reference in this prospectus, 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 and the documents incorporated
by reference in this prospectus are qualified in their entirety by the preceding cautionary statements.
1
THE COMPAN
We are a regulated electricity company serving retail customers, including residential, commercial,
industrial and other customers in portions of the states of Utah, Oregon, Wyoming, Washington, Idaho
and California. We own, or have interests in, a number of thermal, hydroelectric, wind-powered and
geothermal generating facilties, as well as electric transmission and distribution assets. We also buy and
sell electricity on the wholesale market with public and private utilities, energy marketing companies
and incorporated municipalities. We are subject to comprehensive state and federal regulation and the
regulatory commission in each state approves rates for retail electric sales within that state.
We are an indirect subsidiary of MidAmerican Energy Holdings Company ("MEHC"), a holding
company based in Des Moines, Iowa that owns subsidiaries principally engaged in energy businesses.
MEHC is a consolidated subsidiary of Berkshire Hathaway Inc.
Our principal executive offices are located at 825 N.E. Multnomah, Suite 2000, Portland, Oregon
97232 and our telephone number is [phone]. We were initially incorporated in 1910 under the
laws of the state of Maine under the name Pacific Power & Light Company. In 1984, Pacific Power &
Light Company changed its name to PacifiCorp. In 1989, we merged with Utah Power and Light
Company, a Utah corporation, in a transaction wherein both corporations merged into a newly formed
Oregon corporation. The resulting Oregon corporation was re-named PacifiCorp, which is the operating
entity today.
For additional information concerning our business and affairs, including our capital requirements
and external financing arrangements, and pending legal and regulatory proceedings, including
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".
RISK FACTORS
Investing in our Securities involves risk. Before purchasing any Securities we offer, you should
carefully consider the risk factors described in our periodic reports filed with the SEC and the
following risk factors related to the Securities, 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 currently believe are immaterial may also materially harm our business, operating
results and financial condition and could result in a loss on your investment.
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
suffcient 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 wil secure any Additional Bonds. The value of the collateral in the event of liquidation wil
depend on market and economic conditions, the availability of buyers, the timing of the sale of the
collateral and other factors. We cannot assure you that the proceeds from a sale of all of the collateral
would be sufficient tà 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.
2
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 at which
holders wil be able to sell the Securities may be limited. Future trading prices of the Securities wil
depend on many factors, including, among other things, prevailng interest rates, our operating results
and the market for similar securities.
We do not know whether an active trading market wil 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.
CONSOLIDATED RATIOS OF EARNINGS TO FIXED CHAGES
Nine-Month Period Ended
September 30, 2010
3.1~
Years Ended December 31,
2009 2008 2007 Nine-Month Period Ended
December 31, 2006
Year Ended
March 31, 2006
2.9x 3.Ox 3.0x 2.1x 2.9x
3
WHERE YOU CAN FIND MORE INFORMTION
This prospectus is part of a registration statement fied with the SEC. 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 SEC. Our SEC fiings are available to the public over the Internet at the SEC's
web site at http://ww.sec.gov. You may also read and copy any document we file at the SEC's Public
Reference Room at 100 F Street, N.E., Washington, D.C. 20549. Please call the SEC at
1-800-SEC-0330 for further information regarding the public reference rooms. Our SEC filngs are also
available through the Financial Information section of our website at ww.pacificorp.com. The
information found on our website, 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 wil automatically update or supersede this information. We incorporate by
reference the documents listed below and any future filngs made with the SEC under Sections 13(a),
13(c), 14 or 15(d) of the Securities Exchange Act of 1934 (the "Exchange Act") (but only to the extent
the information therein is filed and not furnished) until all of the securities covered by this prospectus
have been sold:
· Annual Report on Form lO-K for the year ended December 31, 2009.
· Quarterly Reports on Form lO-Q for the quarters ended March 31, 2010, June 30, 2010 and
September 30, 2010.
· Current Report on Form 8-K filed January 20, 2010.
You may request a copy of these filngs (other than exhibits to such documents unless such exhibits
are specifically incorporated by reference therein), at no cost, by writing or telephoning us at the
following address:
PacifiCorp
825 N.E. Multnomah, Suite 1900
Portland, Oregon 97232-4116
Telephone: [phone]
Attention: 1feasury
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.
4
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 wil initially become part of our general funds and wil be used
for capital expenditures or utility asset purchases, to repay all or a portion of our short-term
borrowings ånd for general corporate purposes, including repayment 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
Mellon Trust Company, N.A. (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 wil be equally and ratably secured with all other bonds issued under the
Mortgage. See "Book-Entry Issuance."
Maturity and Interest Payments
The prospectus supplement relating to any Additional Bonds wil set forth the date or dates on
which those Additional Bonds wil mature, the rate or rates per annum at which those Additional
Bonds wil bear interest and the times at which any interest wil be payable. Those terms, as well as
other terms and conditions of the Additional Bonds, including those related to redemption and
purchase referred to under "Redemption or Purchase of Additional Bonds" below, wil be established
by resolution of our Board of Directors at the time we issue 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.
The prospectus supplement relating to any Additional Bonds wil set forth the redemption or
repurchase terms and other specific terms of those Additional Bonds.
If, at the time notice of redemption is given, the redemption amount is not held by the Mortgage
Trustee, the redemption may be made subject to the receipt of the redemption amount by the
Mortgage Trustee on or before the date fixed for redemption. A redemption notice wil be of no effect
unless the redemption amount is received.
The Mortgage, as described below, contains provisions for the maintenance of the Mortgaged and
Pledged Property. 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 7.03, Article XII and Section 13.06)
5
Security and Priority
The Additional Bonds wil 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 by Class "/\' Bonds, if any, held by the
Mortgage Trustee.
There are excepted from 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 propert 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 Ninth 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 mortgage 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 "/\' Mortgage, purchase
money mortgages and other liens or defects in title.
The Mortgage provides that the Mortgage Trustee shall have a lien on 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 maxmum principal amount of bonds that may be issued under the Mortgage is unlimited.
Bonds of any series may be issued from time to time on the basis of:
(1) 70% of qualified Property Additions after adjustments to ùffset retirements;
(2) Class ''I' 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 interest
expense and income taxes, being at least twice the Annual Interest Requirements on all outstanding
bonds issued under the Mortgage, all outstanding Class ''I' Bonds held other than by the Mortgage
Trustee or by us, all other indebtedness secured by a lien prior to the lien of the Mortgage and all
bonds then applied for in pending bond issuance applications under 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)
6
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 ''/' Bonds. (Sections 1.04 through 1.06 and
Articles IV and V)
Release and Substitution of Propert
Property subject to the Mortgage may be released on the basis of:
(1) the release of that property from a Class ''/' Mortgage;
(2) the deposit of cash or, to a limited extent, purchase money mortgages;
(3) Property Additions, after makng adjustments for certain prior lien bonds outstanding against
Property Additions; and/or
(4) a waiver of the right to issue bonds on the basis of the released property.
Funded Cash, as defined in Section 1.05 of the Mortgage, may be withdrawn upon the bases stated
in (1), (3) and (4) above. Property that does not constitute Funded Propert, 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, 7.02, 9.05, 10.01 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 company with
or into us or the conveyance or transfer to us by another 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 ''1' Mortgage. (Section 11.06) Bonds thereafter issued pursuant to the
additional mortgage would be Class ''1' 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 utilty 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) The notes to our audited consolidated financial statements included in our
Report on Form lO-K incorporated by reference herein contain information relating to other
restrictions.
7
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 tye of currency
exchange agreement wil 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 1ìustee
The Bank of New York Mellon Trust Company, N.A. or its affiliates 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 at least 60% of the
bonds, or, if not all series of bonds are adversely affected, the consent of the holders of at least 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 we are in default in the payment of the interest on any bonds then Outstanding under the
Mortgage or 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;
(3) default in payment of principal or interest with respect to certain prior lien bonds;
(4) certain events in bankrptcy, insolvency or reorganization;
(5) default in other covenants for 90 days after notice; or
(6) 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 wil 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.
8
(Section 15.03) No holder of bonds may enforce the lien of the Mortgage unless the Mortgage Trustee
is given written notice of a Default and the Mortgage Trustee fails to act after the holders of 25% of
the bonds have requested in writing the Mortgage Trustee to act, offered it reasonable opportunity to
act and offered an indemnity satisfactory to it against the costs, expenses and liabilties that may be
incurred when enforcing the lien. (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 liabilty if there is reasonable
ground for believing that repayment is not reasonably assured. (Section 19.08)
Defeasance
Under the terms of the Mortgage, we wil 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) wil not recognize income, gain or loss for federal income tax purposes as
a result of the deposit, and/or ensuing discharge and wil 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)
9
BOOK.ENTRY ISSUANCE
Except as set forth below, the Additional Bonds wil be issued in registered global form without
interest coupons. Unless otherwise specified in the applicable prospectus supplement, The Depository
Trust Company ("DTC") in New York, New York, wil act as securities depositary for each series of the
Additional Bonds. The Additional Bonds wil be issued as fully registered securities registered in the
name of Cede & Co. (DTC's partnership nominee) or such other name as may be requested by an
authorized representative of DTC, in each case for the credit to an account of a direct or indirect
participant in DTC, as described below.
Transfers of beneficial interests in the Additional Bonds wil be subject to the applicable rules and
procedures of DTC and its direct or indirect participants (including, if applicable, those of the
Euroclear System ("Euroclear") and Clearstream Banking, S.A. ("Clearstream")), which may change
from time tõ time.
The following description of the operations and procedures of DTC is provided solely as a matter
of convenience. These operations and procedures are solely within the control of DTC and are subject
to changes by it. We take no responsibility for these operations and procedures and urge investors to
contact DTC or its participants directly to discuss these matters.
DTC has advised us that DTC is a limited-purpose trust company created to hold securities for its
participating organizations (collectively, the "Participants") and to facilitate the clearance and
settlement of transactions in those securities between Participants through electronic book-entry
changes in accounts of its Participants. The Participants include securities brokers and dealers
(including the underwriters), banks, trust companies, clearing corporations and certain other
organizations. Access to DTC's system is also available to other entities, such as banks, brokers, dealers
and trust companies that clear through or maintain a custodial relationship with a Participant, either
directly or indirectly (collectively, the "Indirect Participants"). Persons who are not Participants may
beneficially own securities held by or on behalf of DTC only through the Participants or the Indirect
Participants. The ownership interests in, and transfers of ownership interests in, each security held by
or on behalf of DTC are recorded on the records of the Participants and Indirect Participants.
DTC has also advised us that, pursuant to procedures established by it:
(1) upon deposit of the Additional Bonds, DTC wil credit the accounts of the Participants
designated by the underwriters with portions of the principal amount of the Additional Bonds;
and
(2) ownership of these interests in the Additional Bonds wil be shown on, and the transfer of
ownership of these interests wil be effected only through, records maintained by DTC (with
respect to the Participants) or by the Participants and the Indirect Participants (with respect to
other owners of beneficial interests in the Additional Bonds).
Investors in the Additional Bonds who are Participants may hold their interests therein directly through
DTC. Investors in the Additional Bonds who are not Participants may hold their interests therein
indirectly through organizations (including Euroclear and Clearstream) which are Participants. All
interests in the Additional Bonds, including those held through Euroclear or Clearstream, may be
subject to the procedures and requirements of DTC. Those interests held through Euroclear or
Clearstream may also be subject to the procedures and requirements of such systems. The laws of some
states require that certain persons take physical delivery in definitive form of securities that they own.
Consequently, the ability to transfer beneficial interests in Additional Bonds to such persons wil be
limited to that extent. Because DTC can act only on behalf of the Participants, which in turn act on
behalf of the Indirect Participants, the ability of a person having beneficial interests in an Additional
Bond to pledge such interests to persons that do not participate in the DTC system, or otherwise take
10
actions in respect of such interests, may be affected by the lack of a physical certificate evidencing such
interests.
Except as described below, owners of an interest in the Additional Bonds wil not have bonds
registered in their names, wil not receive physical delivery of certificated Additional Bonds and wil not
be considered the registered owners or "Holders" thereof under any supplemental indenture to the
Mortgage for any purpose.
We may decide to discontinue use of the system of book-entry only transfers through DTC or any
successor depositary. In that event, Additional Bond certificates wil be printed and delivered to DTC.
Payments in respect of the principal of, and interest and premium, if any, on an Additional Bond
registered in the name of DTC or its nominee wil be payable to DTC in its capacity as the registered
holder. Under the terms of any supplemental indenture to the Mortgage, the Company and the
Mortgage Trustee wil treat the persons in whose names the Additional Bonds are registered as the
owners of the Additional Bonds for the purpose of receiving payments and for all other purposes.
Consequently, neither the Company, the Mortgage Trustee nor any agent of ours or of the Mortgage
Trustee has or wil have any responsibility or liability for:
(1) any aspect of DTC's records or any Participant's or Indirect Participant's records relating to,
or payments made on account of, beneficial ownership interests in the Additional Bonds or
for maintaining, supervising or reviewing any of DTC's records or any Participant's or Indirect
Participant's records relating to the beneficial ownership interests in the Additional Bonds; or
(2) any other matter relating to the actions and practices of DTC or any of its Participants or
Indirect Participants.
DTC has advised us that its current practice, at the due date of any payment in respect of securities
such as the Additional Bonds, is to credit the accounts of the relevant Participants with the payment on
the payment date unless DTC has reason to believe that it wil not receive payment on such payment
date. Each relevant Participant is credited with an amount proportionate to its beneficial ownership of
an interest in the principal amount of the bonds as shown on the records of DTC. Payments by the
Participants and the Indirect Participants to the beneficial owners of bonds wil be governed by standing
instructions and customary practices and wil be the responsibility of the Participants or the Indirect
Participants and wil not be the responsibility of DTC, the Mortgage Trustee or us. Neither we nor the
Mortgage Trustee wil be liable for any delay by DTC or any of its Participants in identifying the
beneficial owners of the Additional Bonds, and the Company and the Mortgage Trustee may
conclusively rely on and wil be protected in relying on instructions from DTC or its nominee for all
purposes.
Transfers between Participants in DTC wil be effected in accordance with DTC's procedures, and
wil be settled in same-day funds, and transfers between participants in Euroclear and Clearstream wil
be effected in accordance with their respective rules and operating procedures.
Subject to compliance with any transfer restrictions specified herein and in the applicable
prospectus supplement, cross-market transfers between the Participants in DTC, on the one hand, and
Euroclear or Clearstream participants, on the other hand, wil be effected through DTC in accordance
with DTC's rules on behalf of Euroclear or Clearstream, as the case may be, by its depositary;
however, such cross-market transactions wil require delivery of instructions to Euroclear or
Clearstream, as the case may be, by the counterparty in such system in accordance with the rules and
procedures and within the established deadlines (Brussels time) of such system. Euroclear or
Clearstream, as the case may be, wil, if the transaction meets its settlement requirements, deliver
instructions to its respective depositary to take action to effect final settlement on its behalf by
delivering or receiving interests in the relevant Additional Bond in DTC, and makng or receiving
payment in accordance with normal procedures for same-day funds settement applicable to DTC.
11
Euroclear participants and Clearstream participants may not deliver instructions directly to the
depositories for Euroclear or Clearstream.
DTC has advised us that it wil take any action permitted to be taken by a holder of any
Additional Bond only at the direction of one or more Participants to whose account DTC has credited
the interests in the Additional Bond and only in respect of such portion of the aggregate principal
amount of the Additional Bond as to which such Participant or Participants has or have given such
direction.
Although DTC, Euroclear and Clearstream have agreed to the foregoing procedures to facilitate
transfers of interests in the Additional Bonds among participants in DTC, Euroclear and Clearstream,
they are under no obligation to perform or to continue to perform such procedures, and may
discontinue such procedures at any time. Neither the Company nor the Mortgage Trustee nor any of
their respective agents wil have any responsibility for the performance by DTC, Euroclear or
Clearstream or their respective Participants or Indirect Participants of their respective obligations under
the rules and procedures governing their operations.
Any redemption notices wil be sent to Cede & Co. as the registered holder of the Additional
Bonds. If less than all of the Additional Bonds are being redeemed, DTC's practice is to determine by
lot the amount of the interest of each Direct Participant in such issue.
Neither.DTC nor Cede & Co. (nor any other DTC nominee) wil consent or vote with respect to
Additional Bonds 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 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 are credited on the record date
(identified in a listing attached to the Omnibus Proxy).
12
PLAN OF DISTRIBUTION
We may sell the Securities through underwiters, dealers or agents, or directly to one or more
purchasers. The prospectus supplement with respect to the Securities being offered wil 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 wil enter into an underwriting agreement with the
underwriters. Those Securities wil 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 underwiters with respect to a particular underwritten offering of Securities wil be
named in the prospectus supplement relating to that offering and, if an underwiting syndicate is used,
the managing underwriter or underwiters wil be set forth on the cover page of the prospectus
supplement. Any underwiting 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, wil 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 wil be subject to specific conditions, and the underwriters wil
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 wil 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 wil 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 wil 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 of 1933, as amended (the
"Securities Act"), involved in the offer or sale of any of the Securities wil be named, and any
commissions payable by us to the agent wil be set forth, in the prospectus supplement relating to that
offer or sale. Unless otherwise indicated in the prospectus supplement, any agent wil be acting on a
reasonable ~est efforts basis for the period of its appointment.
In connection with a particular underwritten offering of Securities, and in compliance with
applicable law, 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. These activities may stabilize, maintain or otherwise affect the market price of
the Securities, which may be higher than the price that might otherwise prevail in the open market, and
if commenced, may be discontinued at any time. A description of these activities, if any, wil 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 wil indicate in a prospectus supplement the extent to which we anticipate that a secondary
market for the Securities wil 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
13
would be obligated, however, to make a market in the Securities, and any market-making could be
discontinued at any time at the sole 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 "undeiwriters" 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 wil 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 consolidated financial statements incorporated in this Prospectus by reference from
PacifiCorp's' Annual Report on Form 10-K for the year ended December 31, 2009, have been audited
by Deloitte & Touche LLp' an independent registered public accounting firm, as stated in their report,
which is incorporated herein by reference. Such financial statements have 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 consolidated financial information of PacifiCorp for the
periods ended March 31, 2010 and 2009, June 30, 2010 and 2009 and September 30, 2010 and 2009,
which is incorporated herein by reference, Deloitte & Touche LLp' an independent registered public
accounting firm, have 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 PacifiCorp's Quarterly Reports on Form 10-Q for the quarterly
periods ended March 31, 2010, June 30, 2010 and September 30, 2010 and incorporated by reference
herein, they did not audit and they do not express an opinion on that interim consolidated 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 are
not subject to the liability provisions of Section 11 of the Securities Act of 1933 for their 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 Act.
14
$650,000,000 First Mortgage Bonds
$350,000,000 2.95% Series Due 2022
$300,000,000 4.10% Series Due 2042
~ ~~Çl~I~9Bl=
PROSPECTUS SUPPLEMENT
January 3, 2012
Joint Book-Running Managers
J.I! Morgan Mitsubishi UFJ Securities RBS Wells Fargo Securities
Co-Managers
BorA Merrill Lynch
Citigroup
Credit Suisse
Scotia Capital
Sun1ìust Robinson Humphrey
US Bancorp
CONFIDENTIAL
UNDERWRITING AGREEMENT BETWEEN
PACIFICORP AND J.P. MORGAN SECURITIES LLC,
MITSUBISHI UFJ SECURITIES (USA), INC., RBS
SECURITIES INC. AND WELLS FARGO
SECURITIES, LLC.
REPORT OF SECURITIES ISSUED
II
REPORT OF SECURITIES ISSUED
January 19,2012
PACIFICORP
Description of securities:$650,000,000 ofPacifiCorp's First Mortgage Bonds
$350,000,0002.95% Series due Februar, 2022
$300,000,0004.10% Series due Februar, 2042
Description Amount
1.Face value or principal amount $650,000,000
2.Plus premium or less discount (1,295,000)
3.Gross proceeds (648,705,000)
4.Underwiter's spread or commission (4,430,000)
5.Securities and Exchange Commission registration fee (74,490)
6.State mortgage registration tax N/A
7.State commission fee*N/A
8.Fee for recording indenture*(42,000)
9.United States document tax N/A
10.Printing and engraving expenses *(20,000)
11.Trustee's charges*(16,000)
12.Counsel fees*(80,000)
13.Accountats' fees*(80,000)
14.Cost of listing N/A
15.Miscellaneous expenses of issue* *(262,510)
(Describe large items)
16.Total deductions (575,000)
17.Net amount realized $643,700,000
*Denotes estimate only.
** Includes estimated rating agency fees of $250,000 for the Bonds.
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