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PACIFICORP ANNOUNCES AGREEMENT TO SELL ITS INTEREST IN NERCO

 PORTLAND, Ore., Feb. 18 /PRNewswire/ -- PacifiCorp (NYSE: PPW) today announced an agreement to sell its interest in NERCO, Inc. (NYSE: NER), declared preferred and lower common stock dividends and reported unaudited losses for the fourth quarter of 1992 and for the full year. The full-year loss of $378 million, or $1.42 per share, compared with 1991 earnings of $481 million, or $1.86 per share. The loss for the fourth quarter was $310 million or $1.15 per share compared to 1991 earnings of $157 million or $.60 per share.
 PacifiCorp recorded 1992 earnings from continuing operations of $113 million, or $.42 per share, and $10 million, or $.03 per share, for the fourth quarter. Results from continuing operations included after-tax nonrecurring charges of $213 million, or $.80 per share, for the full year and $58 million, or $.21 per share, in the fourth quarter.
 A. M. Gleason, president and chief executive officer, characterized 1992 as "The most difficult year we have experienced with each of our businesses reporting lower operating results than a year ago. Adverse commodities markets, the decision to exit Eastern U.S. Coal operations, and lower than expected oil and gas production volumes led to the numerous asset write-downs and losses at NERCO. Our electric utility operations were negatively affected by an abnormally warm winter and the poor hydroelectric conditions brought on by another year of drought. Pacific Telecom recorded a loss for the disposal of its international operations and our financial services unit wrote off all its goodwill and significantly increased its loss reserves. These losses have been painful, but the actions taken in 1992 have been consistent with the direction of the company since 1989. Our direction is still two-fold in purpose: strengthen the competitive position of our mainstay electric utility operation and narrow the scope of our diversified activities. I see our job in 1993 as one of demonstrating that we can meet the expectations of our shareholders and regain their confidence."
 PacifiCorp also announced that it had reached agreement to sell its 82 percent ownership in NERCO, Inc. to Kennecott Corporation as part of a merger agreement between a subsidiary of Kennecott and NERCO Inc. The merger proposal calls for cash consideration of $12.00 per NERCO share. The merger is subject to a vote of the NERCO, Inc. shareholders, completion of a Hart-Scott-Rodino and Exon-Florio filings, expiration of the applicable waiting periods and other conditions of closing. In connection with the transaction, a wholly owned subsidiary of PacifiCorp will, if requested by Kennecott, fund a $225 million loan to a subsidiary of Kennecott, which loan will be repaid by the borrower as it receives certain future contract revenues. A subsidiary of PacifiCorp has agreed to provide certain financial and other accommodations in order to facilitate the transaction.
 The sale is expected to be completed in the second quarter of 1993 and would result in a total pretax gain to PacifiCorp of approximately $154 million, which will be recognized over the life of the financing agreement which could extend through 2009.
 According to Gleason, "The opportunity to sell NERCO is a major step in our desire to narrow our diversified activities and focus our resources in the core utility operations of the electric and telecommunications units. We estimate that with the sale, the NERCO investment over its life will have produced an internal rate of return of approximately 18 percent to the company. PacifiCorp shareholders benefited greatly from the development of NERCO since 1977. However, we believe that now is a good time to redeploy our capital into PacifiCorp's core utility activities."
 "In the wake of the NERCO sale," Gleason continued, "PacifiCorp will have shrunk its asset and earnings base. Accordingly, we considered it appropriate to request the board of directors to consider a reduction in the dividend level of the company."
 PacifiCorp's board of directors declared a quarterly common stock dividend of $.27 per share payable May 15, 1993 to shareholders of record on April 23, 1993. Preferred dividends were declared at prescribed rates.
 Consolidated 1992 revenues from continuing operations rose 2 percent, or $74 million, to $3.2 billion; as a $111 million, or 5 percent revenue increase at electric operations was offset in part by declines at the telecommunications and financial services segments.
 Electric revenues increased on the strength of an 8 percent gain in total kilowatt-hour sales. Although retail energy sales rose 2 percent, most of the growth came in wholesale sales. Energy sales to other utilities gained 30 percent over 1991 as several new contracts took effect. Retail energy sales in the first half of 1992 were adversely affected by an abnormally warm winter in the Pacific Northwest. In that period, residential energy sales declined some 6 percent, which was the principal reason total 1992 energy sales to residential customers were 1 percent less than those of 1991.
 Pacific Telecom's revenue declined 3 percent, or $20 million, to $705 million. Although a better than 6 percent rate of internal access line growth at the company's local telephone business continues to drive increases in local network service revenues, this growth was offset by reductions in long distance network service revenues and sales of cable capacity on the North Pacific fiber optic cable. Cable sales in 1992 totaled $11 million, as compared to $31 million in 1991. Long distance network service revenues were lower in 1992 as a result of reductions in out-of-period revenue adjustments, the full-year effect of an intrastate rate decrease and a 8 percent reduction in intrastate minute volumes as a result of competition.
 Consolidated net loss for the year was $340 million, comprised of income from continuing operations of $150 million and $490 million loss associated with discontinued operations. The loss from discontinued operations is comprised primarily of charges to reduce the value of various precious minerals, oil and gas and eastern coal assets of NERCO and the loss related to the disposal of Pacific Telecom's international operations.
 Electric Operations and Telecommunications segments produced earnings contributions of $203 million and $18 million, respectively. Losses of $451 million, $119 million and $28 million were reported by NERCO, financial services and corporate, respectively.
 In 1992, the company's electric operations estimate that warmer winter weather and increased fuel and purchased power costs, associated with poor hydro conditions, adversely affected earnings by approximately $24 million.
 Electric Operations' 1992 results were further reduced by $70 million of unusual, one-time after-tax charges. These charges were for a variety of items, including surplus and obsolete inventory, reductions of deferred costs and property held for sale, wholesale and wheeling contract adjustments and numerous miscellaneous charges. Preferred dividend requirements rose $11 million in 1992 over 1991, with the issuance of two new series of preferred stock.
 Pacific Telecom's earnings contribution of $18 million for the year compares to $69 million for 1991. The 1992 results include a $40 million after-tax loss from the disposal of the company's international business, offset in part by the $12 million after-tax gain from the sale of a non-core subsidiary. Operating expenses were flat but lower cable capacity sales contributne operation.
 Non-cash after-tax charges of $144 million were taken during the year at PacifiCorp Financial Services and Corporate. During 1992 financial services assets were reduced by over $400 million. Additional reduction of financial assets is anticipated to occur during 1993.
 The average number of common shares outstanding for the year was 267 million, an increase of 8 million, or 3 percent, from 1991s level. The increase stems from the sale of newly issued shares to institutional investors and from using original issue shares in conjunction with the dividend reinvestment and employee plans.
 The outlook for 1993 in the company's operations has improved. January consolidated PacifiCorp earnings were $48.8 million up 22 percent from a year ago. As a winter-peaking electric utility operation, January is typically one of the company's better earnings months, and is not necessarily indicative of expected results for other months of the year.
 PACIFICORP AND ITS CONSOLIDATED SUBSIDIARIES
 Three Months Ended Dec. 31 1992 1991
 Earnings (loss) per common share (based
 on average number of shares outstanding)(A):
 Continuing operations $.03 $.46
 Discontinued operations (1.18) .14
 Total $(1.15) $.60
 Revenues (A):
 Electric operations $622,900,000 $605,000,000
 Telecommunications 186,300,000 188,600,000
 Financial services 58,500,000 59,100,000
 Total $867,700,000 $852,700,000
 Income from operations (A)(B):
 Electric operations $125,300,000 $203,600,000
 Telecommunications 38,600,000 40,500,000
 Financial services (27,400,000) 9,300,000
 Total $136,500,000 $253,400,000
 Income from continuing operations $ 20,700,000 $127,400,000
 Income (Loss) from discontinued
 operations (net) (319,500,000) 37,200,000
 Net income (loss) $(298,800,000) $164,600,000
 Earnings contribution (loss) on common
 stock (after preferred dividend
 requirement)(C):
 Electric operations $ 9,200,000 $ 92,100,000
 Mining and resource development (285,400,000) 44,500,000
 Telecommunications (17,300,000) 13,900,000
 Financial services (14,500,000) 9,000,000
 Corporate (1,600,000) (2,600,000)
 Total $(309,600,000) $156,900,000
 Average number of common shares 269,926,000 260,783,000
 PACIFICORP AND ITS CONSOLIDATED SUBSIDIARIES
 Twelve Months Ended Dec. 31 1992 1991
 Earnings (Loss) per common share
 (based on average number of shares
 outstanding)(A):
 Continuing operations $.42 $1.63
 Discontinued operations (1.84) .23
 Total $(1.42) $1.86
 Revenues (A):
 Electric operations $2,362,400,000 $2,251,800,000
 Telecommunications 704,500,000 724,400,000
 Financial services 175,100,000 192,100,000
 Total $3,242,000,000 $3,168,300,000
 Income from operations (A)(B):
 Electric operations $ 677,700,000 $ 783,000,000
 Telecommunications 138,600,000 159,600,000
 Financial services (183,300,000) (1,300,000)
 Total $ 633,000,000 $ 941,300,000
 Income from continuing operations $ 150,200,000 $ 446,800,000
 Income (loss) from discontinued
 operations (net) (490,600,000) 60,400,000
 Net income (loss) $ (340,400,000) $ 507,200,000
 Earnings contribution (loss) on common
 stock (after preferred dividend
 requirement)(C):
 Electric operations $ 202,900,000 $ 346,600,000
 Mining and resource development (450,900,000) 67,700,000
 Telecommunications 17,600,000 69,300,000
 Financial services (119,100,000) 6,900,000
 Corporate (28,200,000) (10,000,000)
 Total $ (377,700,000) $ 480,500,000
 Average number of common shares 266,527,000 258,350,000
 PACIFICORP AND ITS CONSOLIDATED SUBSIDIARIES
 (A) Discontinued operations reflects the after-tax results of operations and valuation adjustments related to the company's interest in NERCO, Inc. and an international telecommunications subsidiary. Amounts from the prior year have been reclassified to conform with the 1992 method of presentation. These reclassifications had no effect on previously reported consolidated net income.
 (B) Income (loss) before income taxes, interest, other non-operating items, discontinued operations and reclassification of intercompany profits on coal transactions.
 (C) Earnings contribution (loss) on common stock by segment:
 -- Does not reflect elimination for interest on intercompany borrowing arrangements. Reflects allocation of corporate interest charges.
 -- Includes income taxes on a separate company basis, except financial services, with any benefit or detriment of consolidation reflected in corporate.
 -- Amounts are net of preferred dividend requirements and minority interest.
 -0- 2/18/93
 /CONTACT: Mike Nelson, 503-731-2125, or Chris Hunter, 503-731-2090, both for PacifiCorp/
 (PPW)


CO: PacifiCorp ST: Oregon IN: UTI SU: TNM ERN

PS -- NY013 -- 7707 02/18/93 09:01 EST
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Date:Feb 18, 1993
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