Filed Pursuant to Rule 424(b)(5)
Registration No. 333-83434
PROSPECTUS SUPPLEMENT
(To Prospectus dated March 6, 2002)
3,500,000 Shares
[IDACORP Logo]
IDACORP, Inc.
COMMON STOCK
_________________
IDACORP, Inc. is offering 3,500,000 shares of its common stock.
Our common stock is listed on the New York Stock Exchange and the Pacific
Exchange under the symbol "IDA." On December 9, 2004, the last reported sale
price of our common stock on the New York Stock Exchange was $30.15 per share.
_________________
Investing in our common stock involves risks. Before buying any shares you
should carefully read the discussion of material risks of investing in our
common stock under the heading "Risk Factors" beginning on page S-8 of this
prospectus supplement.
_________________
PRICE $30.00 A SHARE
_________________
Underwriting
Discounts and Proceeds to
Price to Public Commissions IDACORP, Inc.
--------------- ----------- -------------
Per Share............. $30.00 $1.20 $28.80
Total................. $105,000,000 $4,200,000 $100,800,000
We have granted the underwriters the right to purchase up to an additional
525,000 shares of our common stock at the public offering price, less
underwriting discounts and commissions payable by us, to cover over-allotments.
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.
_________________
The underwriters expect to deliver the shares to purchasers on
or about December 15, 2004.
_________________
MORGAN STANLEY
WACHOVIA SECURITIES KEYBANC CAPITAL MARKETS
A.G. EDWARDS D.A. DAVIDSON & CO.
Prospectus Supplement dated December 9, 2004
Table of Contents
Prospectus Supplement
Page
----
About this Prospectus Supplement...................................ii
Forward-Looking Statements........................................S-1
About IDACORP.....................................................S-3
Recent Developments...............................................S-3
The Offering......................................................S-6
Summary Consolidated Financial Information........................S-7
Risk Factors......................................................S-8
Use of Proceeds..................................................S-13
Capitalization...................................................S-14
Price Range of Common Stock and Dividends........................S-15
Description of Common Stock......................................S-16
Underwriting.....................................................S-20
Where You Can Find More Information..............................S-23
Information Incorporated by Reference............................S-23
Legal Matters....................................................S-24
Experts..........................................................S-24
Prospectus
About IDACORP.......................................................2
Forward-Looking Information.........................................2
Description of Common Stock.........................................3
Description of the Senior Debt Securities...........................7
Description of the Purchase Contracts and the Units................13
Ratios of Earnings to Fixed Charges................................13
Use of Proceeds....................................................14
Plan of Distribution...............................................14
Where You Can Find More Information................................15
Information Incorporated by Reference..............................15
Legal Opinions.....................................................16
Experts............................................................16
i
ABOUT THIS PROSPECTUS SUPPLEMENT
This prospectus supplement is a supplement to the prospectus, which is also
a part of this document. This prospectus supplement and the accompanying
prospectus are part of a registration statement that we filed with the
Securities and Exchange Commission using the shelf registration process. Under
the shelf registration process, we may offer, from time to time, shares of
common stock, unsecured senior debt securities and purchase contracts, up to an
aggregate amount of $500,000,000, of which this offering is a part. In the
accompanying prospectus, we provide you with a general description of the
securities we may offer from time to time under our shelf registration
statement. In this prospectus supplement, we provide you with specific
information about the shares of our common stock that we are selling in this
offering. Both this prospectus supplement and the accompanying prospectus
include important information about us, the common stock that we are offering
and other information you should know before investing. This prospectus
supplement also adds, updates and changes information contained in the
prospectus. You should read the entire prospectus supplement and the
accompanying prospectus, and the documents incorporated by reference, which are
described under "Where You Can Find More Information" and "Information
Incorporated by Reference" in this prospectus supplement. To the extent there is
a conflict between the information contained in this prospectus supplement and
the information contained in or incorporated by reference into the accompanying
prospectus, the information in this prospectus supplement shall control.
This prospectus supplement and the accompanying prospectus contain or
incorporate forward-looking statements. Please read forward-looking statements
with the cautionary statements and important factors included in this prospectus
supplement under "Forward-Looking Statements."
Unless we indicate otherwise, or the context otherwise requires, references
in this prospectus supplement and the accompanying prospectus to "IDACORP,"
"we," "us" and "our" or similar terms are to IDACORP, Inc. and its subsidiaries.
Except as otherwise noted, all information in this prospectus supplement
assumes no exercise of the underwriters' over-allotment option.
______________________
You should rely only on the information contained in or incorporated by
reference in this prospectus supplement and the accompanying prospectus. We have
not, and the underwriters have not, authorized any other person to provide you
with information that is different. If anyone provides you with different or
inconsistent information, you should not rely on it. We are not making an offer
of the shares of our common stock in any state that does not permit their offer
or sale. The information contained in or incorporated by reference in this
document is accurate only as of the date of this prospectus supplement,
regardless of the time of delivery of this prospectus supplement or of any sale
of our common stock.
ii
FORWARD-LOOKING STATEMENTS
In connection with the safe harbor provisions of the Private Securities
Litigation Reform Act of 1995, we are hereby filing cautionary statements
identifying important factors that could cause actual results to differ
materially from those projected in forward-looking statements made or
incorporated by reference in this prospectus supplement or the accompanying
prospectus. Any statements that express, or involve discussions as to
expectations, beliefs, plans, objectives, assumptions or future events or
performance, often, but not always, through the use of words or phrases such as
"anticipates," "believes," "estimates," "expects," "intends," "plans,"
"predicts," "projects," "will likely result," "will continue" or similar
expressions, are not statements of historical fact and may be forward-looking.
Forward-looking statements involve estimates, assumptions and uncertainties and
are qualified in their entirety by reference to, and are accompanied by, the
following important factors, which are difficult to predict, contain
uncertainties, are beyond our control and may cause actual results to differ
materially from those contained in forward-looking statements:
o Changes in governmental policies and regulatory actions, including
those of the Federal Energy Regulatory Commission, the Idaho Public
Utilities Commission and the Oregon Public Utility Commission, with
respect to allowed rates of return, industry and rate structure,
acquisition and disposal of assets and facilities, operation and
construction of plant facilities, relicensing of hydroelectric
projects, recovery of purchased power, recovery of other capital
investments, present or prospective wholesale and retail competition,
including but not limited to retail wheeling and transmission costs,
and other refund proceedings;
o Litigation and regulatory proceedings resulting from the energy
situation in the western United States;
o Economic, geographic and political factors and risks;
o Changes in compliance with environmental, endangered species and
safety laws and policies;
o Weather variations affecting hydroelectric generating conditions and
customer energy usage;
o Construction of power generating facilities including inability to
obtain required governmental permits and approvals, and risks related
to contracting, construction and start-up;
o Operation of power generating facilities including breakdown or
failure of equipment, performance below expected levels, competition,
fuel supply and transmission;
o System conditions and operating costs;
o Population growth rates and demographic patterns;
o Pricing and transportation of commodities;
o Market demand and prices for energy, including structural market
changes;
o Changes in capacity, fuel availability and prices;
o Changes in tax rates or policies, interest rates or rates of
inflation;
o Performance of the stock market and the changing interest rate
environment, which affect the amount of required contributions to our
pension plans, as well as the reported costs of providing pension and
other postretirement benefits;
o Adoption of or changes in critical accounting policies or estimates;
o Exposure to operational, market and credit risk;
o Changes in operating expenses and capital expenditures;
o Capital market conditions;
o Rating actions by Moody's Investors Service, Standard & Poor's Ratings
Services and Fitch, Inc.;
o Competition for new energy development opportunities;
o Results of financing efforts, including the ability to obtain
financing on favorable terms, which can be affected by various
factors, including credit ratings and general economic conditions;
o Homeland security, natural disasters, acts of war or terrorism;
o Fluctuations in sources and uses of cash;
o Impacts from the potential formation of a regional transmission
organization;
o Increasing health care costs and the resulting effect on health
insurance premiums paid for employees;
o Increasing costs of insurance, changes in coverage terms and the
ability to obtain insurance;
o Technological developments that could affect the operations and
prospects of our subsidiaries or their competitors;
S-1
o Over appropriation of surface and groundwater in the Snake River Basin
resulting in reduced generation at hydroelectric facilities;
o Legal and administrative proceedings, whether civil or criminal, and
settlements that influence business and profitability; and
o New accounting or Securities and Exchange Commission requirements, or
new interpretation or application of existing requirements.
Any forward-looking statement speaks only as of the date on which such
statement is made. New factors emerge from time to time and it is not possible
for management to predict all such factors, nor can it assess the impact of any
such factor on our business or the extent to which any factor, or combination of
factors, including those discussed under "Risk Factors" in this prospectus
supplement, may cause results to differ materially from those contained in any
forward-looking statement.
S-2
ABOUT IDACORP
We are a successor registrant to, and a holding company owning all of the
outstanding common stock of, Idaho Power Company. In 1998, we exchanged one
share of our common stock for each share of Idaho Power Company's common stock,
and Idaho Power Company became our wholly-owned subsidiary.
Idaho Power Company is an electric public utility incorporated under the
laws of the state of Idaho in 1989 as successor to a Maine corporation organized
in 1915. Idaho Power Company is involved in the generation, purchase,
transmission, distribution and sale of electric energy in a 20,000 square mile
area, primarily in southern Idaho and eastern Oregon, with an estimated
population of 883,000. Idaho Power Company holds franchises in 71 cities in
Idaho and nine cities in Oregon and holds certificates from the respective
public utility regulatory authorities to serve all or a portion of 25 counties
in Idaho and three counties in Oregon.
Idaho Power Company owns and operates 17 hydroelectric power plants and one
gas-fired generating plant and shares ownership in three coal-fired generating
plants. Idaho Power Company relies heavily on hydroelectric power for its
generating needs and is one of the nation's few investor-owned utilities with a
predominantly hydro base.
Our other operating subsidiaries include:
o IdaTech - developer of integrated fuel cell systems;
o IDACORP Financial Services - affordable housing and other real estate
investments;
o IDACOMM - provider of telecommunications services and owner of
Velocitus, a commercial and residential Internet service provider;
o Ida-West Energy - operator of independent power projects, which
discontinued its project development operations in 2003 and is
managing its independent power projects with a reduced workforce; and
o IDACORP Energy - marketer of electricity and natural gas that wound
down its operations during 2003.
Our principal executive offices are located at 1221 West Idaho Street,
Boise, Idaho 83702-5627, and our telephone number is (208) 388-2200.
RECENT DEVELOPMENTS
Shareholder Lawsuits
On May 26, 2004 and June 22, 2004, respectively, two shareholder lawsuits
were filed against us and certain of our directors and officers. The lawsuits,
captioned Powell, et al. v. IDACORP, Inc., et al. and Shorthouse, et al. v.
IDACORP, Inc., et al., raise largely similar allegations. The lawsuits are
putative class actions brought on behalf of purchasers of our common stock
between February 1, 2002 and June 4, 2002, which we refer to as the class
period, and were filed in the United States District Court for the District of
Idaho. The named defendants in each suit, in addition to us, are Jon H. Miller,
Jan B. Packwood, J. LaMont Keen and Darrel T. Anderson.
The complaints alleged that, during the class period, we and/or certain of
our officers and/or directors made materially false and misleading statements or
omissions about our financial outlook in violation of Sections 10(b) and 20(a)
of the Securities Exchange Act of 1934, as amended, and Rule 10b-5, thereby
causing investors to purchase our common stock at artificially inflated prices.
More specifically, the complaints alleged that we failed to disclose and
misrepresented the following material adverse facts which were known to us or
recklessly disregarded by us: (1) we failed to appreciate the negative impact
that lower volatility and reduced pricing spreads in the western wholesale
energy market would have on our marketing subsidiary, IDACORP Energy; (2) we
would be forced to limit our origination activities to shorter-term transactions
due to increasing regulatory uncertainty and continued deterioration of
creditworthy counterparties; (3) we failed to discount for the fact that Idaho
Power Company might not recover from the lingering effects of the prior year's
regional drought; and (4) as a result of the foregoing, we lacked a reasonable
basis for positive statements about our earnings projections. The Powell
complaint also alleged
S-3
that our conduct artificially inflated the price of our common stock. The
actions seek an unspecified amount of damages, as well as other forms of relief.
By order dated August 31, 2004, the court consolidated the Powell and Shorthouse
cases for pretrial purposes and ordered the plaintiffs to file a consolidated
complaint within 60 days.
On November 1, 2004, we and the directors and officers named in the Powell
and Shorthouse complaints were served with a purported consolidated complaint
captioned Powell et al. v. IDACORP, Inc. et al., which was filed in the United
States District Court for the District of Idaho.
The new complaint alleges that during the class period we and/or certain of
our officers and/or directors made materially false and misleading statements or
omissions about our business operations, and specifically IDACORP Energy
financial outlook, in violation of Rule 10b-5, thereby causing investors to
purchase our common stock at artificially inflated prices. The new complaint
alleges that we failed to disclose and misrepresented the following material
adverse facts which were known to us or recklessly disregarded by us: (1) we
falsely inflated the value of energy contracts held by IDACORP Energy in order
to report higher revenues and profits; (2) we permitted Idaho Power Company to
inappropriately grant native load priority for certain energy transactions to
IDACORP Energy; (3) we failed to file 13 ancillary service agreements involving
the sale of power for resale in interstate commerce that we were required to
file under Section 205 of the Federal Power Act; (4) we failed to file 1,182
contracts that Idaho Power Company assigned to IDACORP Energy for the sale of
power for resale in interstate commerce that Idaho Power Company was required to
file under Section 203 of the Federal Power Act; (5) we failed to ensure that
IDACORP Energy provided appropriate compensation from IDACORP Energy to Idaho
Power Company for certain affiliated energy transactions; and (6) we permitted
inappropriate sharing of certain energy pricing and transmission information
between Idaho Power Company and IDACORP Energy. These activities allegedly
allowed IDACORP Energy to maintain a false perception of continued growth that
inflated our earnings. In addition, the new complaint alleges that those
earnings press releases, earnings release conference calls, analyst reports and
revised earnings guidance releases issued during the class period were false and
misleading. The action seeks an unspecified amount of damages, as well as other
forms of relief.
Although no assurance can be given as to the ultimate outcome of these
cases, we and the other named defendants intend to defend ourselves vigorously
against these allegations.
Ratings
On December 3, 2004, Moody's Investors Service announced that it had
lowered our corporate credit ratings from Baa1, with negative outlook, to Baa2,
with stable outlook and Idaho Power Company's corporate credit ratings from A3,
with negative outlook, to Baa1, with stable outlook. Moody's Investors Service
also lowered Idaho Power Company's and our long-term ratings and Idaho Power
Company's commercial paper ratings, but affirmed our commercial paper ratings at
P-2. At the same time, Moody's Investors Service assigned a Baa2 rating to our
three-year $150 million senior unsecured bank credit facility and assigned a
Baa1 rating to Idaho Power Company's three-year $200 million senior unsecured
bank credit facility.
Moody's Investors Service stated that the downgrade of Idaho Power
Company's ratings reflects (1) expected weaker cash flow coverage of interest
and debt; (2) the likelihood for continued negative free cash flow over the next
few years, with internally generated funds falling short of meeting our dividend
requirements and significant utility-related capital spending; (3) persistent
drought conditions that are likely to result in higher supply costs, not all of
which are recoverable under Idaho Power Company's power cost adjustment
mechanism; (4) the final resolution this fall of Idaho Power Company's rate
case, which resulted in a revenue increase of a little more than half of its
updated request; and (5) the likely need for additional support from the Idaho
Public Utilities Commission in future rate proceedings as Idaho Power Company
adds new generation and transmission infrastructure to help meet customer and
load growth and ensure reliability of service.
On November 29, 2004, Standard & Poor's Ratings Services announced that it
had lowered Idaho Power Company's and our corporate credit ratings from A-, with
negative outlook, to BBB+, with stable outlook. At the same time, Standard &
Poor's Ratings Services also lowered Idaho Power Company's and our long-term
ratings, but affirmed Idaho Power Company's and our commercial paper ratings at
A-2.
S-4
Standard & Poor's stated that its decision reflects weakened financial
ratios that have resulted from a combination of (1) sustained drought conditions
on the Snake River that have depressed Idaho Power Company's hydro production
and increased deferred power costs; (2) a disappointing general rate case ruling
by the Idaho Public Utilities Commission, partly mitigated by the approval of a
settlement agreement on September 29, 2004, which granted Idaho Power Company's
position on income tax issues; and (3) more than $600 million of expected
capital requirements by Idaho Power Company. Standard & Poor's stated that these
pressures resulted in a financial profile that is weak even for the current
'BBB+' corporate credit rating. Further, Standard & Poor's stated that two key
issues that would determine future ratings movement were water flows in the
Snake River and future rate case rulings by the Idaho Public Utilities
Commission.
These security ratings reflect the views of the rating agencies. An
explanation of the significance of these ratings may be obtained from each
rating agency. Such ratings are not a recommendation to buy, sell or hold
securities. Any rating can be revised upward or downward or withdrawn at any
time by a rating agency if it decides that the circumstances warrant the change.
Each rating should be evaluated independently of any other rating.
These downgrades are expected to increase the cost of new debt and other
issued securities going forward.
S-5
THE OFFERING
Company IDACORP, Inc.
Common stock offered 3,500,000 shares
Common stock outstanding after this offering 41,692,022 shares (1) (2)
Over-allotment option 525,000 shares (2)
New York Stock Exchange symbol IDA
Use of proceeds We will use the net proceeds
that we receive from this
offering to repay a portion of
our short-term debt and to
make a capital contribution to
Idaho Power Company. Idaho
Power Company will use the
capital contribution to
repay a portion of its
short-term debt and to fund a
portion of its capital
requirements. If we do not use
the proceeds immediately, we
may temporarily invest them
in short-term debt instruments.
As of November 30, our
consolidated short-term debt
was $119 million.
Risk Factors See "Risk Factors," beginning
on page S-8 of this
prospectus supplement for a
discussion of factors you
should carefully consider
before deciding to invest in
shares of our common stock.
Current indicated annual dividend rate $1.20 per share (3)
______________________
(1) The number of shares outstanding after this offering is based on
38,192,022 shares outstanding as of December 9, 2004 and excludes:
o 3,725,198 shares of common stock reserved for issuance under our
dividend reinvestment plan, which is currently using open market
purchases, but may use original issue stock commencing in 2005;
o 2,337,116 shares of common stock reserved for issuance under our
employee stock plan, which is currently using open market
purchases;
o 314,114 shares of common stock reserved for issuance under our
restricted stock plan, which is currently using open market
purchases; and
o 2,042,600 shares of common stock reserved for issuance under our
long-term incentive and compensation plan, of which 1,216,600
shares were subject to outstanding options at a weighted average
exercise price of $32.67 per share as of September 30, 2004. We
are currently using original issue stock for this plan.
(2) Except as otherwise noted, all information in this prospectus
supplement assumes no exercise of the underwriters' over-allotment
option.
(3) Based upon the current quarterly dividend rate of $0.30. The amount
and timing of dividends payable on our common stock are within the
sole discretion of our board of directors. Our ability to pay
dividends on our common stock depends upon dividends paid to us by our
subsidiaries.
S-6
SUMMARY CONSOLIDATED FINANCIAL INFORMATION
The consolidated financial information below is taken from our audited
financial statements for the years ended December 31, 2001 through December 31,
2003 and our unaudited financial statements for the nine months ended September
30, 2003 and September 30, 2004. This information is only a summary. You should
read it in connection with our historical financial statements and related notes
and "Management's Discussion and Analysis of Financial Condition and Results of
Operations," which we incorporate by reference in this prospectus supplement and
the accompanying prospectus. See "Where You Can Find More Information" and
"Information Incorporated by Reference" in this prospectus supplement.
Nine Months Ended Year Ended
September 30, December 31,
------------- ------------
2004 2003 2003 2002 2001
---- ---- ---- ---- ----
(unaudited)
(in thousands, except per share data)
Consolidated Statement of Income Data:
Total electric utility revenues $ 631,701 $ 615,911 $ 782,720 $ 869,040 $ 914,201
Total operating revenues $ 646,738 $ 651,432 $ 823,002 $ 928,800 $ 1,275,312
Total electric utility expenses $ 551,945 $ 518,222 $ 661,026 $ 736,379 $ 824,099
Total operating expenses $ 576,204 $ 578,023 $ 738,940 $ 853,160 $ 1,033,023
Total operating income $ 70,534 $ 73,409 $ 84,062 $ 75,640 $ 242,289
Net Income $ 58,717 $ 42,824 $ 46,578 $ 61,672 $ 125,214
Average common shares outstanding
(000's) 38,193 38,227 38,186 37,729 37,387
Earnings per share of common stock
(basic and diluted) $ 1.54 $ 1.12 $ 1.22 $ 1.63 $ 3.35
As of As of
September 30, December 31,
------------- ------------
2004 2003
---- ----
(unaudited)
(in thousands)
Consolidated Balance Sheet Data:
Cash and cash equivalents $ 20,949 $ 75,159
Property, plant and equipment - net 2,177,564 2,088,319
Total assets 3,125,919 3,101,726
Long-term debt 985,487 945,834
Total shareholders' equity 887,142 864,281
S-7
RISK FACTORS
Before you participate in this offering, you should be aware there are
risks in making an investment in our common stock, including the ones listed
below. You should carefully consider these risk factors and other information
contained in or incorporated by reference into this prospectus supplement and
the accompanying prospectus in evaluating this offering.
The risks and uncertainties that we describe below are not the only ones we
face. Additional risks and uncertainties not presently known to us or that we
currently deem immaterial may also impair our business operations. If any of the
following risks actually occur, our business, financial condition and results of
operations could be materially and adversely affected. In that case, the value
of our common stock and your investment could decline.
Risks Relating to our Company
Pending shareholder litigation could be costly, time consuming and, if
adversely decided, result in substantial liabilities.
As we describe more fully in "Recent Developments - Shareholder Lawsuits,"
two securities shareholder lawsuits consolidated by order dated August 31, 2004
and a purported consolidated complaint have been filed against us and certain of
our officers and directors. Securities litigation can be costly, time-consuming
and disruptive to normal business operations. Certain costs below a self-insured
retention are not covered by insurance policies. While we cannot predict the
outcome of these matters and these matters will take time to resolve, damages
arising from these lawsuits if resolved against us or in connection with any
settlement, absent insurance coverage or damages in excess of insurance
coverage, could have a material adverse effect on our financial position,
results of operations or cash flows.
Reduced hydroelectric generation can reduce revenues and increase costs.
Idaho Power Company has a predominately hydroelectric generating base.
Because of Idaho Power Company's heavy reliance on hydroelectric generation, the
weather can significantly affect Idaho Power Company's operations. Idaho Power
Company is experiencing its fifth consecutive year of below normal water
conditions. When hydroelectric generation is reduced, Idaho Power Company must
increase its use of more expensive thermal generating resources and purchased
power. Through its power cost adjustment in Idaho, Idaho Power Company can
expect to recover approximately 90 percent of the increase in its Idaho
jurisdictional net power supply costs, which are fuel and purchased power less
off-system sales, above the level included in its base rates. The power cost
adjustment recovery includes both a forecast and deferrals that are subject to
the regulatory process. The non-Idaho power supply costs, which are fuel and
purchased power less off-system sales, are subject to periodic recovery from its
Oregon and Federal Energy Regulatory Commission jurisdictional customers.
Changes in temperature can reduce power sales and revenues.
Warmer than normal winters or cooler than normal summers will reduce retail
revenues from power sales.
The Idaho Public Utilities Commission's grant of less rate relief than
requested will reduce Idaho Power Company's projected earnings and cash flows.
Because the Idaho Public Utilities Commission did not grant the full amount
of rate relief requested, Idaho Power Company's projected earnings and cash
flows will be reduced and the rating agencies have downgraded or may downgrade
Idaho Power Company's and our credit ratings. If the Idaho Public Utilities
Commission were to rule against Idaho Power Company in any future requests for
relief, it could have a negative effect on earnings and cash flow.
S-8
A downgrade in Idaho Power Company's and our credit ratings could
negatively affect the companies' ability to access capital.
During the second quarter of 2004, Moody's Investors Service, Standard &
Poor's Ratings Services and Fitch, Inc. placed certain of Idaho Power Company's
and our ratings under review for possible downgrade. On November 29, 2004,
Standard & Poor's Ratings Services downgraded Idaho Power Company's and our
credit ratings and on December 3, 2004 Moody's Investors Service downgraded
Idaho Power Company's and our credit ratings. These downgrades, and any future
downgrade of Idaho Power Company's or our credit ratings, could limit Idaho
Power Company's and our ability to access the capital markets, including the
commercial paper markets. In addition, we and Idaho Power Company would likely
be required to pay a higher interest rate on existing variable rate debt and in
future financings.
Conditions that may be imposed in connection with hydroelectric license
renewals may require large capital expenditures and reduce earnings and cash
flows.
Idaho Power Company is currently involved in renewing federal licenses for
several of its hydroelectric projects. Conditions with respect to environmental,
operating and other matters that the Federal Energy Regulatory Commission may
impose in connection with the renewal of Idaho Power Company's licenses could
have a negative effect on Idaho Power Company's operations, require large
capital expenditures and reduce earnings and cash flows.
The cost of complying with environmental regulations can harm cash flows
and earnings.
Idaho Power Company is subject to extensive federal, state and local
environmental statutes, rules and regulations relating to air quality, water
quality, natural resources and health and safety. Compliance with these
environmental statutes, rules and regulations involves significant capital,
operating and other costs, and those costs could be even more significant in the
future as a result of changes in legislation and enforcement policies and
additional requirements imposed in connection with the relicensing of Idaho
Power Company's hydroelectric projects.
Terrorist threats and activities could result in lost revenues and
increased costs.
Idaho Power Company is subject to direct and indirect effects of terrorist
threats and activities. Potential targets include generation and transmission
facilities. The effects of terrorist threats and activities could prevent Idaho
Power Company from purchasing, generating or transmitting power and result in
lost revenues and increased costs.
We, IDACORP Energy and Idaho Power Company are subject to costs and other
effects of legal and regulatory proceedings, settlements, investigations and
claims, including those that have arisen out of the western energy situation.
We, IDACORP Energy and Idaho Power Company are involved in a number of
proceedings including a complaint filed against sellers of power in California,
based on California's unfair competition law, a cross-action wholesale electric
antitrust case against various sellers and generators of power in California and
the California refund proceeding at the Federal Energy Regulatory Commission.
Other cases that are the direct or indirect result of the western energy
situation include a refund proceeding affecting sellers of wholesale power in
the spot market in the Pacific Northwest, in which the Federal Energy Regulatory
Commission directed that no refunds be paid, but which is now pending on appeal
before the United States Court of Appeals for the Ninth Circuit; efforts by
certain public parties to reform or terminate contracts for the purchase of
power from IDACORP Energy or claiming violations of state and federal antitrust
acts and dysfunctional energy markets as the result of market manipulation; show
cause proceedings at the Federal Energy Regulatory Commission, which have been
settled but are the subject of motions for rehearing or have been appealed and
efforts by the California Attorney General to secure a reversal from the United
States Court of Appeals for the Ninth Circuit of Federal Energy Regulatory
Commission rulings that market-based sellers' transactional reports satisfy the
Federal Energy Regulatory Commission's filed-rate doctrine requirements as a
means of expanding refunds from all sellers of wholesale power. To the extent
the companies are required to make payments, earnings will be negatively
affected. It is possible that additional
S-9
proceedings related to the western energy situation may be filed in the future
against IDACORP Energy, Idaho Power Company or us.
Litigation relating to stray voltage, if adversely decided, could result in
liabilities, reducing earnings, and encourage the commencement of additional
lawsuits.
In three instances, dairy farmers have brought actions against Idaho Power
Company claiming loss of milk production and other damages to livestock due to
stray voltage from Idaho Power Company's electrical system. In the first
proceeding, the jury ruled in Idaho Power Company's favor. In the second
proceeding, a jury verdict was entered in favor of the plaintiffs. A third is in
the early stages of discovery. Adverse court rulings in such proceedings could
increase the number of future claims. The costs of defending these lawsuits
could be significant, and certain costs, such as those below a deductible
amount, are not covered by insurance policies.
Increased capital expenditures can significantly affect liquidity.
Increases in both the number of customers and the demand for energy require
expansion and reinforcement of transmission, distribution and generating
systems. Because the Idaho Public Utilities Commission did not grant the full
amount of rate relief Idaho Power Company requested, Idaho Power Company will
have to rely more on external financing for its planned utility construction
expenditures in the 2004 through 2006 period; these large planned expenditures
may weaken Idaho Power Company's and our consolidated financial profile.
Additionally, a significant portion of Idaho Power Company's facilities was
constructed many years ago. Aging equipment, even if maintained in accordance
with good engineering practices, may require significant capital expenditures.
Failure of equipment or facilities used in Idaho Power Company's systems could
potentially increase repair and maintenance expenses, purchased power expenses
and capital expenditures.
If we are unable to complete our assessment as to the adequacy of our
internal control over financial reporting as required by Section 404 of the
Sarbanes-Oxley Act of 2002, or if we complete the assessment and identify and
report material weaknesses, investors could lose confidence in the reliability
of our financial statements, which could decrease the value of our common stock.
As directed by Section 404 of the Sarbanes-Oxley Act of 2002, the
Securities and Exchange Commission has adopted rules requiring public companies
to include a report of management on the company's internal control over
financial reporting in their annual reports on Form 10-K. This report is
required to contain management's assessment of the effectiveness of the
company's internal control over financial reporting as of the end of the most
recent fiscal year. In addition, the independent registered public accounting
firm auditing a public company's financial statements must also attest to and
report on management's assessment of the effectiveness of the company's internal
control over financial reporting. We have expended significant resources in
developing and implementing the testing procedures and documentation required by
Section 404. Effective internal controls are necessary for us to provide
reliable financial reports and to prevent and detect fraud. If we fail to have
an effectively designed and operating system of internal control over financial
reporting, we will be unable to comply with the requirements of Section 404 in a
timely manner. Our failure to complete our assessment or design internal
controls effectively could preclude the independent registered public accounting
firm from issuing an unqualified opinion on the effectiveness of our internal
controls. This could result in decreased confidence in the reliability of our
financial statements, which could cause the market price of our common stock to
decline.
Risks Relating to this Offering of Common Stock
We are a holding company and have no operating income of our own.
We are a holding company, exempt from registration as a public utility
holding company pursuant to Section 3(a)(1) of the Public Utility Holding
Company Act of 1935, and we do not have any operating income of our own.
Consequently, our ability to pay our indebtedness and to pay dividends on our
common stock is dependent on dividends and other payments received from our
subsidiaries. Our subsidiaries are separate and distinct legal entities and have
no obligation to pay any amounts to us, whether through dividends, loans or
other payments. Our subsidiaries' ability to pay dividends or make distributions
to us will depend on, among other things:
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o their actual and projected earnings and cash flow, capital
requirements and general financial condition; and
o the prior rights of holders of their existing and future
preferred stock, first mortgage bonds and other debt securities.
Future sales of our common stock in the public market could lower our
stock price.
We may sell additional shares of common stock in subsequent public
offerings, through our dividend reinvestment plan or to finance future
transactions. We cannot predict the size of future issuances of our common
stock, or the effect, if any, that future issuances and sales of shares of our
common stock will have on the market price of our common stock. Sales of
substantial amounts of our common stock, or the perception that such sales could
occur, may adversely affect the prevailing market price of our common stock.
The market price for our common stock is uncertain and may fluctuate
significantly, and you could lose all or part of your investment.
Volatility in the market price of our common stock may prevent you from
being able to sell your shares at or above the price you paid for them. We
cannot predict whether the market price of our common stock will rise or fall.
Numerous factors influence the trading price of our common stock. These factors
may include changes in our financial condition, results of operations and
prospects, legal and administrative proceedings and political, economic,
financial and other factors that can affect the capital markets generally, the
stock exchanges on which our common stock is traded and our business segments.
Our charter and bylaws, rights plan and Idaho law could delay or prevent a
change in control that you may favor.
The terms of some of the provisions in our articles of incorporation and
bylaws and provisions of the Idaho Business Corporation Act could delay or
prevent a change in control that you may favor or may impede the ability of the
holders of our common stock to change our management.
In particular, the provisions of our amended articles of incorporation and
amended bylaws:
o authorize our board of directors to issue up to 20,000,000 shares of
preferred stock in one or more series without further action by
shareholders;
o divide the members of our board of directors into three classes having
staggered terms, with directors in each class elected to three-year
terms;
o limit the shareholders' right to remove directors, fill vacancies and
increase or reduce the number of directors;
o regulate how shareholders may present proposals or nominate directors
for election at shareholders' meetings; and
o require a supermajority vote of shareholders to amend certain
provisions.
In addition, each share of our outstanding common stock includes one
preferred share purchase right. The rights become exercisable after a third
party acquires or announces an offer to acquire 20% or more of our stock. The
rights, when exercisable, entitle the holder to purchase our A series preferred
stock, our common stock or, under some circumstances, common stock of the
acquiring company. The rights cause substantial dilution to a person or group
that attempts to acquire us on terms our board of directors does not approve and
make it significantly more expensive for that person or group to acquire control
of us.
We are subject to the provisions of the Idaho Control Share Acquisition Law
and the Idaho Business Combination Law. The Idaho Control Share Acquisition Law
is designed to protect minority shareholders if someone acquires 20% or more of
our voting stock. An acquiring person must disclose to us its identity,
acquisition plans and financing. The acquiring person cannot vote a number of
shares exceeding the applicable percentages, unless two-thirds of the
outstanding voting stock, excluding shares owned by the acquiring person,
approves of such voting power. The Idaho Business Combination Law prohibits us
from engaging in certain business combinations
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with a person who owns 10% or more of our outstanding voting stock for three
years after that person acquired the shares, unless our board of directors
approved of the business combination or the acquisition in advance. The Idaho
Business Corporation Act provides that certain notice and informational
requirements and special shareholder meeting and voting procedures must be
followed prior to consummation of a proposed "merger or share exchange," as
defined in the Idaho Business Corporation Act.
Statutory and regulatory factors will limit another party's ability to
acquire us and could deprive you of the opportunity to gain a takeover premium
for your shares of common stock.
Even if our board of directors favors a sale of the company, the sale
requires approval of a number of federal and state regulatory agencies,
including the Federal Energy Regulatory Commission, the Idaho Public Utilities
Commission, the Oregon Public Utility Commission and the Wyoming Public Service
Commission. The approval process could be lengthy and the outcome uncertain,
which may deter otherwise interested parties from proposing or attempting a
business combination. In addition, provisions of the Public Utility Holding
Company Act of 1935, as amended, could require a buyer of our shares or Idaho
Power Company shares to register as a "public utility holding company" or merge
Idaho Power Company or us directly into its parent company. These regulatory
constraints may result in a limited number of potential buyers.
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USE OF PROCEEDS
We estimate the net proceeds from this offering of common stock, after
deducting the underwriting discounts and estimated offering expenses payable by
us, will be approximately $100.5 million, or $115.6 million if the underwriters'
over-allotment option is exercised in full.
We will use the net proceeds that we receive from this offering to repay a
portion of our short-term debt and to make a capital contribution to Idaho Power
Company. Idaho Power Company will use the capital contribution to repay a
portion of its short-term debt and to fund a portion of its capital
requirements.
If we do not use the proceeds immediately, we may temporarily invest them
in short-term debt instruments. As of November 30, 2004, our consolidated
short-term debt was $119 million.
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CAPITALIZATION
The following table presents as of September 30, 2004 on a consolidated
basis:
o our actual capitalization and
o our capitalization as adjusted to give effect to the sale of the
common stock in this offering, without giving effect to the
underwriters' over-allotment option, at a public offering price of
$30.00 per share, less the underwriting discounts and estimated
offering expenses payable by us, and our repayment of $52 million in
our consolidated short-term debt.
This information is only a summary. You should read it in connection with
our historical financial statements and related notes and "Management's
Discussion and Analysis of Financial Condition and Results of Operations" in our
Form 10-K for the year ended December 31, 2003 and our Form 10-Q for the quarter
ended September 30, 2004, which we incorporate by reference in this prospectus
supplement. See "Information Incorporated by Reference" in this prospectus
supplement.
As of September 30, 2004
------------------------
(unaudited)
As Adjusted to Reflect
Actual this Offering
------ -------------
(in thousands)
Cash and cash equivalents $ 20,949 $ 69,449
--------------------------- -----------------------
Debt:
Current maturities of long-term debt $ 77,510 $ 77,510
Notes payable 82,135 30,135
Long-term debt 985,487 985,487
--------------------------- -----------------------
Total Debt 1,145,132 1,093,132
Shareholders' equity:
Common stock, no par value (shares authorized
120,000,000; 38,348,758 issued, as adjusted
41,848,758) 474,666 575,166
Retained earnings 421,504 421,504
Accumulated other comprehensive loss (3,525) (3,525)
Treasury stock (156,736 shares at cost) (4,578) (4,578)
Unearned compensation (925) (925)
--------------------------- -----------------------
Total shareholders' equity 887,142 987,642
--------------------------- -----------------------
Total capitalization $ 2,032,274 $ 2,080,774
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PRICE RANGE OF COMMON STOCK AND DIVIDENDS
Our common stock is listed and traded on the New York Stock Exchange and
Pacific Exchange under the symbol "IDA." The following table provides, for the
calendar quarters indicated, the high and low prices per share as reported on
the New York Stock Exchange as composite transactions and the amount of
dividends paid.
Period High Low Dividends Paid
------ ---- --- --------------
2002:
First Quarter $ 40.86 $ 37.26 $ 0.465
Second Quarter 40.99 25.71 0.465
Third Quarter 28.60 21.58 0.465
Fourth Quarter 26.60 20.87 0.465
2003:
First Quarter $ 26.35 $ 20.60 $ 0.465
Second Quarter 27.92 22.65 0.465
Third Quarter 27.25 23.15 0.465
Fourth Quarter 30.19 25.42 0.300
2004:
First Quarter $ 32.05 $ 29.32 $ 0.300
Second Quarter 30.66 25.30 0.300
Third Quarter 29.95 26.05 0.300
Fourth Quarter (through December 9, 2004) 32.95 29.05 0.300
On December 9, 2004, the last reported sale price on the New York Stock
Exchange for our common stock was $30.15 per share. At December 9, 2004, there
were 38,192,022 shares of common stock outstanding. At December 9, 2004, our
common stock outstanding was held by approximately 18,100 shareholder accounts
of record.
The amount and timing of dividends payable on our common stock are within
the sole discretion of our board of directors. Our board of directors reviews
the dividend rate quarterly to determine its appropriateness in light of our
current and long-term financial position and results of operations, capital
requirements, rating agency requirements, legislative and regulatory
developments affecting the electric utility industry in general and Idaho Power
Company in particular, competitive conditions and any other factors our board of
directors deems relevant. In September 2003, we announced a decrease in the
annual dividend from $1.86 to $1.20 per share in order to strengthen our
financial position and our ability to fund Idaho Power Company's growing capital
expenditure needs, improve cash flows and help maintain credit ratings. This
decreased rate is equivalent to a quarterly dividend of $0.30 per share. Our
ability to pay dividends on our common stock is dependent upon dividends paid to
us by our subsidiaries, primarily Idaho Power Company.
Idaho Power Company's articles of incorporation contain restrictions on the
payment of dividends on its common stock if preferred stock dividends are in
arrears. Idaho Power Company paid dividends to us of $65 million in 2003 and $70
million in 2002 and 2001.
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DESCRIPTION OF COMMON STOCK
The following description of our common stock is not complete, and we refer
you to our articles of incorporation, as amended, our amended bylaws and our
rights agreement, each of which is on file with the Securities and Exchange
Commission and is incorporated by reference in this prospectus supplement. We
also refer you to the laws of the state of Idaho.
Our articles of incorporation authorize us to issue 120,000,000 shares of
common stock, without par value, and 20,000,000 shares of preferred stock,
without par value. Each outstanding share of our common stock currently has
attached to it one right issued pursuant to our rights agreement, which we
describe below under "Certain Matters That Could Delay or Prevent a Change in
Control - Preferred Share Purchase Rights".
Dividend Rights. Subject to the prior rights of the preferred stock,
holders of our common stock are entitled to receive any dividends our board of
directors may declare on the common stock. The board of directors may declare
dividends from any property legally available for this purpose.
Voting Rights. The common stock has one vote per share. The holders of our
common stock are entitled to vote on all matters to be voted on by shareholders.
The holders of our common stock are not entitled to cumulative voting in the
election of directors.
Holders of our preferred stock will not have any right to vote except as
established by our board of directors or as provided in our articles of
incorporation or bylaws or by state law. The A series preferred stock, if
issued, will have voting rights.
A majority of the outstanding shares entitled to vote on a particular
matter at a meeting constitutes a quorum. Action on a matter is approved if the
votes cast favoring the action exceed the votes cast opposing the action, unless
our articles of incorporation, the Idaho Business Corporation Act or our bylaws
require a greater number of affirmative votes. A plurality of the votes cast
determines the election of directors.
Liquidation Rights. Subject to the prior rights of the preferred stock, if
we liquidate, dissolve or wind up, whether this is voluntary or not, the holders
of the common stock will be entitled to receive any net assets available for
distribution to shareholders.
Other Rights. The common stock is not liable to further calls or
assessment. The holders of our common stock are not entitled to subscribe for or
purchase additional shares of our capital stock. Our common stock is not subject
to redemption and does not have any conversion or sinking fund provisions.
Transfer Agent and Registrar. Wells Fargo Bank is the transfer agent and
registrar for the common stock.
Certain Matters That Could Delay or Prevent a Change in Control
Although it is not the intention of the board of directors to discourage
legitimate offers to enhance shareholder value, the existence of unissued common
stock, the ability of the board to issue preferred stock without further
shareholder action and other provisions of our articles of incorporation and
bylaws may discourage transactions aimed at obtaining control of us.
Preferred Stock. Our board of directors has the authority, without further
action by shareholders, to issue up to 20,000,000 shares of preferred stock in
one or more series. The board of directors has the authority to determine the
terms of each series of preferred stock, within the limits of the articles of
incorporation and the laws of the state of Idaho. These terms include the number
of shares in a series, dividend rights, liquidation preferences, terms of
redemption, conversion rights and voting rights.
If we issue preferred stock, it may negatively affect the holders of our
common stock. These possible negative effects include diluting the voting power
of shares of our common stock and affecting the market price of
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our common stock. In addition, the ability of our board of directors to issue
preferred stock without shareholder approval may delay or prevent a change in
control.
Although there are no shares of preferred stock currently outstanding, we
have reserved 1,200,000 shares of A series preferred stock for issuance in
connection with our shareholder rights plan.
Classified Board. We have divided the members of our board of directors
into three classes having staggered terms. The number of directors in each class
is as nearly equal as possible. Directors in each class are elected for a
three-year term.
This classification of the board of directors may prevent shareholders from
changing the membership of the entire board of directors in a relatively short
period of time. At least two annual meetings, instead of one, generally will be
required to change the majority of directors. The classified board provisions
could have the effect of prolonging the time required for a shareholder with
significant voting power to gain majority representation on the board of
directors. Where majority or supermajority board of directors approval is
necessary for a transaction, such as an interested shareholder business
combination, the inability to immediately gain majority representation on the
board of directors could discourage takeovers and tender offers.
Number of Directors, Vacancies, Removal of Directors. Our bylaws provide
that the board of directors will have at least 9 and at most 15 directors. The
size of the board may be changed by a two-thirds vote of shareholders entitled
to vote, or by a majority vote of the board of directors. A majority of the
board decides the exact number of directors at a given time. The board fills any
new directorships it creates and any vacancies.
Directors may be removed by the shareholders only for cause and only if at
least two-thirds of the shares of our outstanding voting stock approve the
removal.
These provisions may delay or prevent a shareholder from gaining control of
the board.
Calling of a Special Meeting. The president, a majority of the board of
directors or the chairman of the board may call a special meeting of the
shareholders at any time. Holders of at least 20% of the outstanding shares
entitled to vote may call a special meeting if such holders sign, date and
deliver to our secretary one or more written demands describing the purpose(s)
of the proposed meeting. Upon receipt of one or more written demands from such
holders, our secretary is responsible for determining whether such demand or
demands conform to the requirements of the Idaho Business Corporation Act, our
articles of incorporation and bylaws. After making an affirmative determination,
our secretary will prepare, sign and deliver the notices for such meeting. The
shareholders may suggest a time and place in their demand(s), but the board of
directors will determine the time and place of any such meeting by resolution.
These provisions for calling a special meeting may delay or prevent a person
from bringing matters before a shareholder meeting.
No Cumulative Voting. Our articles of incorporation do not provide for
cumulative voting. This could prevent directors from being elected by a
relatively small group of shareholders.
Advance Notice Provisions. Our bylaws require that for a shareholder to
nominate a director or bring other business before an annual meeting, the
shareholder must give notice to our secretary not later than the close of
business on the 120th day prior to the first anniversary of the date on which we
first mailed proxy materials for the preceding year's annual meeting. If the
date of the annual meeting is more than 30 days before or after the anniversary
date of the preceding year's annual meeting, the shareholder must deliver notice
no later than the close of business on the 10th day following the day on which
we first publicly announce the date of such meeting.
Our bylaws also limit business at a special meeting to the purposes stated
in the notice of the special meeting.
These advance notice provisions may delay a shareholder from bringing
matters before a shareholder meeting. The provisions may provide enough time for
our board of directors to begin litigation or take other steps to
S-17
respond to these matters, or to prevent them from being acted upon, if our board
of directors finds it necessary or desirable for any reason.
Amendment of Articles of Incorporation. Our articles of incorporation
require an 80% vote of shareholders entitled to vote in order to amend the
provisions relating to the board of directors and the amendment of our articles
of incorporation, unless such amendment is recommended by two-thirds of the
continuing directors, as defined.
Amendment of Bylaws. Amendment of the bylaws relating to the board of
directors or advance notice provisions for shareholder meetings requires a
two-thirds vote of shareholders entitled to vote or a majority vote of the board
of directors.
Preferred Share Purchase Rights. On September 10, 1998, our board of
directors declared a dividend distribution of one preferred share purchase right
for each share of our common stock outstanding as of October 1, 1998. Since that
time, we have issued and will continue to issue one right with each additional
share of common stock we issue until the rights expire, are redeemed or
exchanged or become exercisable. We have authorized and reserved 1,200,000
shares of our A series preferred stock for issuance if the rights become
exercisable.
The rights become exercisable on the earlier of ten business days after a
third party announces its acquisition of 20% or more of our outstanding voting
stock and ten business days after a third party makes a tender offer or exchange
offer to acquire 20% or more of our outstanding voting stock. Each right, when
it becomes exercisable, entitles its holder, other than the third party that has
acquired 20% or more of our voting stock, to purchase from us one one-hundredth
of a share of our A series preferred stock at a price of $95. The value of this
one one-hundredth of a share is intended to approximate the value of one share
of common stock. However, when a third party has acquired, or obtained the right
to acquire, 20% or more of our voting stock, a holder who exercises this right
for $95 will have the right to receive the number of shares of our common stock,
and/or, at our option, A series preferred stock, that have a market value of
$190. Rights owned by the third party will be null and void. Also, under the
following circumstances, a holder who exercises this right for $95 will have the
right to receive the number of shares of common stock of an acquiring company
that have a market value of $190, instead of one one-hundredth of a share of our
A series preferred stock or shares of our common stock:
o we merge with another person and we are not the surviving entity;
o we merge with another person and we are the surviving entity in the
transaction, and our common stock is exchanged for shares of another
company or cash or other property;
o we sell or transfer 50% or more of our assets or earning power;
o a person who has acquired, or obtained the right to acquire, 20% or
more of our outstanding voting stock engages in some types of
transactions with us which benefit the person due to its ownership of
our stock; or
o the proportionate share of a person who has acquired, or obtained the
right to acquire, 20% or more of our outstanding voting stock is
increased by more than 1% as a result of reclassification of
securities or recapitalization or other transaction.
As a result, the rights have the effect of causing substantial dilution to
a person or group that attempts to acquire us on terms our board of directors
does not approve and making it significantly more expensive for that person or
group to acquire control of us.
For example, assuming the price of our common stock is $38 per share at the
time of determination, each holder of our common stock will have the right to
purchase for $95 the number of shares equal to $190, divided by $38, or five
shares. Consequently, a shareholder would effectively obtain $190 in value for
$95. Assuming there are approximately 38 million shares of our common stock
outstanding, each with a right attached, holders of our common stock
collectively have an aggregate value in their rights of approximately $3.6
billion. That is, regardless of the market price for our common stock, whenever
the rights become exercisable, our shareholders collectively have the ability to
spend $3.6 billion to acquire $7.2 billion in stock. That dilution could make it
significantly more expensive for a hostile takeover to occur. The rights should
not interfere with any merger or other business combination our board of
directors approves since our board of directors may elect to redeem the rights
at $0.01 per
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right until ten business days after a third party announces its acquisition of
20% or more of our outstanding voting stock. The rights expire on September 10,
2008, unless we redeem or exchange them earlier.
We may adjust the $95 purchase price and the number of shares that may be
purchased.
The description of our preferred share purchase rights is contained in the
registration statement on Form 8-A filed on September 15, 1998, as amended by
amendment no. 1 on Form 8-A/A filed on October 20, 1999 and amendment no. 2 on
Form 8-A/A filed on September 28, 2004, and in the Rights Agreement, dated as of
September 10, 1998, between Wells Fargo Bank, N.A., as successor to The Bank of
New York, as rights agent, and us.
Idaho Control Share Acquisition Law. We are subject to the provisions of
the Idaho Control Share Acquisition Law. This law is designed to protect
minority shareholders in the event that a person acquires or proposes to acquire
shares of voting stock giving it at least 20%, at least 33 1/3%, or more than
50% of the voting power in the election of our directors. Under this law, an
acquiring person must deliver to us an information statement that includes the
acquiring person's identity, its acquisition plans and its financing. The
acquiring person cannot vote the shares it holds that are greater than the
applicable percentages unless two-thirds of the outstanding voting stock,
excluding shares owned by the acquiring person, approves of such voting power.
If the acquiring person so requests and complies with other requirements, we
must hold a special meeting within 55 days of receiving the information
statement from the acquiring person for the shareholders to vote. If the
acquiring person does not deliver the information statement, or our shareholders
do not approve such voting power, we may redeem all of the acquiring person's
shares that exceed the applicable percentage at their fair market value.
Idaho Business Combination Law. We are also subject to the Idaho Business
Combination Law. This law prohibits us from engaging in certain business
combinations with a person who owns 10% or more of our outstanding voting stock
for a three-year period after the person acquires the shares. This prohibition
does not apply if our board of directors approved of the business combination or
the acquisition of our shares before the person acquired 10% of the shares.
After the three-year period, we could engage in a business combination with the
person only if two-thirds of our outstanding voting stock, excluding shares
owned by the person, approve, or the business combination meets minimum price
requirements.
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UNDERWRITING
We and the underwriters named below have entered into an underwriting
agreement with respect to the shares being offered. Subject to certain
conditions, each underwriter has severally agreed to purchase the number of
shares indicated in the following table. Morgan Stanley & Co. Incorporated is
acting as representative of the underwriters.
Underwriters Number of Shares
------------------------------------------------ ----------------------
Morgan Stanley & Co. Incorporated 1,400,000
Wachovia Capital Markets, LLC 875,000
KeyBanc Capital Markets, a division of McDonald Investments Inc. 700,000
A.G. Edwards & Sons, Inc. 350,000
D.A. Davidson & Co. 175,000
---------------------
Total 3,500,000
The underwriters are committed to take and pay for all of the shares being
offered, if any are taken. However, the underwriters are not required to take or
pay for the shares of common stock covered by the underwriters' over-allotment
option described below.
Shares sold by the underwriters to the public will initially be offered at
the initial price to public set forth on the cover of this prospectus
supplement. Any of these securities dealers may resell any shares purchased from
the underwriters to other brokers or dealers at a discount of up to $0.67 per
share from the initial public offering price. If all the shares are not sold at
the offering price, the representative may change the offering price and other
selling terms.
We have granted to the underwriters an option to purchase from us within 30
days from the date of this prospectus supplement up to an aggregate of 525,000
additional shares of common stock at the initial price to public set forth on
the cover of this prospectus supplement less underwriting discounts and
commissions. The underwriters may exercise this option solely to cover
over-allotments, if any, made in connection with this offering. If the option is
exercised, each underwriter will become obligated, subject to certain
conditions, to purchase approximately the same percentage of additional shares
of common stock as the number listed next to the underwriter's name in the
preceding table bears to the total number of shares of common stock offered by
all the underwriters. The following table presents the per share and total
underwriting discounts and commissions we will pay to the underwriters assuming
both no exercise and full exercise of the underwriters' option to purchase up to
525,000 additional shares:
No Exercise Full Exercise
----------------- -----------------
Per share............... $ 1.20 $ 1.20
Total................... $ 4,200,000 $ 4,830,000
We estimate that the total expenses of this offering payable by us,
excluding underwriting discounts and commissions, will be approximately
$300,000.
We and our Section 16 officers and directors have agreed that, without the
prior written consent of Morgan Stanley & Co. Incorporated on behalf of the
underwriters, we and they will not, during the period ending 90 days after the
date of this prospectus supplement:
o offer, pledge, sell, contract to sell, sell any option or contract to
purchase, purchase any option or contract to sell, grant any option,
right or warrant to purchase, lend or otherwise transfer or dispose
of, directly or indirectly, any shares of our common stock or any
securities convertible into or exercisable or exchangeable for our
common stock; or
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o enter into any swap or other arrangement that transfers to another, in
whole or in part, any of the economic consequences of ownership of
common stock,
whether any transaction described above is to be settled by delivery of common
stock or such other securities, in cash or otherwise.
The restrictions described in the immediately preceding paragraph do not
apply to:
o the sale of shares to the underwriters;
o transactions relating to shares of common stock or other securities
acquired in open market transactions after the completion of this
offering;
o the issuance by us of shares of common stock upon the exercise of an
option or warrant or the conversion of a security outstanding on the
date of this prospectus supplement;
o grants of employee or director stock options or issuances of shares of
our common stock to employees or directors, in each case pursuant to
the terms of a plan in effect on the date of this prospectus
supplement;
o the sale of shares of common stock pursuant to our dividend
reinvestment plan;
o transfers by our Section 16 officers or directors of shares of common
stock or any security convertible into common stock as a bona fide
gift or for no consideration; provided each transferee signs and
delivers a lock-up letter to the underwriters agreeing to the
restrictions described in the immediately preceding paragraph; or
o transfers by our Section 16 officers or directors of shares of common
stock to any trust for the direct or indirect benefit of our Section
16 officers or directors or the immediate family of our Section 16
officers or directors or from any trust to a beneficiary of such
trust; provided that the transfer does not involve a disposition for
value and each transferee signs and delivers a lock-up letter to
the underwriters agreeing to the restrictions described in the
immediately preceding paragraph.
In order to facilitate the offering of the common stock, the underwriters
may engage in transactions that stabilize, maintain or otherwise affect the
price of the common stock. Specifically, the underwriters may sell more shares
than they are obligated to purchase under the underwriting agreement, creating a
short position. A short sale is covered if the short position is no greater than
the number of shares available for purchase by the underwriters under the
over-allotment option. The underwriters can close out a covered short sale by
exercising the over-allotment option or purchasing shares in the open market. In
determining the source of shares to close out a covered short sale, the
underwriters will consider, among other things, the open market price of shares
compared to the price available under the over-allotment option. The
underwriters may also sell shares in excess of the over-allotment option,
creating a naked short position. The underwriters must close out any naked short
position by purchasing shares in the open market. A naked short position is more
likely to be created if the underwriters are concerned that there may be
downward pressure on the price of the common stock in the open market after
pricing that could adversely affect investors who purchase in the offering. The
underwriters may also initiate a syndicate covering transaction by placing a bid
on behalf of the underwriting syndicate or by effecting a purchase to reduce a
short position created in connection with the offering. In addition, to
stabilize the price of the common stock, the underwriters may bid for, and
purchase, shares of our common stock in the open market. Finally, the
underwriting syndicate may reclaim selling concessions allowed to an underwriter
or a dealer for distributing the common stock in this offering, if the syndicate
repurchases previously distributed common stock to cover syndicate short
positions or to stabilize the price of the common stock. Any of these activities
may stabilize or maintain the market price of the common stock above independent
market levels. The underwriters are not required to engage in these activities,
and may end any of these activities at any time.
A prospectus supplement and accompanying prospectus in electronic format
may be made available on the websites maintained by one or more of the
underwriters. The underwriters may agree to allocate a number of shares to
underwriters for sale to their online brokerage account holders. Internet
distributions will be allocated by the representative to underwriters that may
make Internet distributions on the same basis as other allocations. Other than
the prospectus supplement and the accompanying prospectus in electronic format,
the information on any of these websites and any other information contained on
a website maintained by an underwriter or syndicate member
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is not part of this prospectus supplement and the accompanying prospectus. In
addition, shares may be sold by the underwriters to securities dealers who
resell shares to online brokerage account holders.
We have agreed to indemnify the underwriters against certain liabilities,
including liabilities under the Securities Act of 1933, as amended, or to
contribute to payments the underwriters may be required to make because of any
of those liabilities.
In the ordinary course of their business, certain of the underwriters and
their affiliates have provided, or may in the future provide, investment banking
and other financial services to us or our subsidiaries, including underwriting,
the provision of financial advice and the extension of credit. These
underwriters and their affiliates have received, and may in the future receive,
customary fees and commissions for their services.
Affiliates of certain of the underwriters are currently agents and lenders
under our credit facility. Specifically, Wachovia Bank, National Association, an
affiliate of Wachovia Securities, Inc.; Wachovia Capital Markets, LLC, an
affiliate of Wachovia Securities, Inc.; and KeyBanc National Association, an
affiliate of KeyBanc Capital Markets, a division of McDonald Investments Inc.
are lenders, agents or arrangers under our credit facility. The underwriters and
their affiliates perform various other financial advisory, investment banking
and commercial banking services for us and our affiliates from time to time, for
which they have received customary fees.
From time to time an affiliate of Morgan Stanley & Co. Incorporated engages
in energy trading transactions in which it sells energy to, or purchases energy
from, Idaho Power Company.
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WHERE YOU CAN FIND MORE INFORMATION
We file annual, quarterly and special reports, proxy statements and other
information with the Securities and Exchange Commission. Our Securities and
Exchange Commission filings are available to the public from the Securities and
Exchange Commission's website at http://www.sec.gov. You may also read and copy
any document we file at the Securities and Exchange Commission's public
reference room in Washington, D.C. located at 450 Fifth Street, N.W., Washington
D.C. 20549. Please call the Securities and Exchange Commission at 1-800-SEC-0330
for further information on the public reference room. Our common stock is listed
and traded on the New York Stock Exchange and the Pacific Exchange. You may also
inspect the information we file with the Securities and Exchange Commission at
the New York Stock Exchange's offices at 20 Broad Street, New York, New York
10005. Information about us is also available at our website at
http://www.idacorpinc.com. However, the information on our website is not a
part of this prospectus supplement or the accompanying prospectus.
INFORMATION INCORPORATED BY REFERENCE
The Securities and Exchange Commission allows us to incorporate by
reference the information we file with it, which means that we can disclose
important information to you by referring to those documents. The information
incorporated by reference is an important part of this prospectus supplement and
the accompanying prospectus, and information that we file later with the
Securities and Exchange Commission will automatically update and supersede this
information. We incorporate by reference the following documents that we filed
with the Securities and Exchange Commission (SEC file number 1-14465):
o Annual Report on Form 10-K for the year ended December 31, 2003, filed
on March 4, 2004.
o Quarterly Reports on Form 10-Q for the quarters ended March 31, 2004,
June 30, 2004 and September 30, 2004, filed on May 6, 2004, August 5,
2004 and November 4, 2004, respectively.
o Current Reports on Form 8-K filed on March 22, 2004, April 1, 2004,
April 13, 2004, May 19, 2004, May 26, 2004, May 27, 2004, June 9,
2004, June 16, 2004, June 23, 2004, July 14, 2004, July 16, 2004, July
30, 2004, August 12, 2004, August 18, 2004, September 3, 2004,
September 30, 2004, November 30, 2004, December 6, 2004 and
December 7, 2004.
o Description of our common stock contained in the registration
statement on Form 8-A, dated and filed on October 20, 1999, as amended
by amendment no. 1 on Form 8-A/A, dated and filed on September 28,
2004.
o Description of our preferred share purchase rights contained in the
registration statement on Form 8-A, dated and filed on September 15,
1998, as amended by amendment no. 1 on Form 8-A/A, dated and filed on
October 20, 1999 and amendment no. 2 on Form 8-A/A, dated and filed on
September 28, 2004.
o All documents we file under Section 13(a), 13(c), 14 or 15(d) of the
Securities Exchange Act of 1934, as amended, after the date of this
prospectus supplement and before we terminate the offering.
We will provide to each person, including any beneficial owner, to whom
this prospectus supplement and the accompanying prospectus is delivered, a copy
of any or all of the information that has been incorporated by reference in this
prospectus supplement and the accompanying prospectus but not delivered with
this prospectus supplement and the accompanying prospectus. You may obtain a
copy of any of these documents at no cost, by written or oral request to us at
the following address:
Shareowner Services
IDACORP, Inc.
1221 W. Idaho Street
Boise, ID 83702
Telephone (208) 388-2200
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LEGAL MATTERS
Thomas R. Saldin, our Senior Vice President, General Counsel and Secretary,
and LeBoeuf, Lamb, Greene & MacRae, L.L.P., New York, New York, a limited
liability partnership including professional corporations, will pass upon the
validity of the common stock and other legal matters for us. Sullivan & Cromwell
LLP, New York, New York, will pass upon the validity of the common stock and
other legal matters for the underwriters. LeBoeuf, Lamb, Greene & MacRae, L.L.P.
and Sullivan & Cromwell LLP may, for matters governed by the laws of Idaho, rely
upon the opinion of Mr. Saldin.
EXPERTS
The consolidated financial statements as of December 31, 2003 and 2002, and
for each of the three years in the period ended December 31, 2003 and the
related consolidated financial statement schedule incorporated in this
prospectus supplement by reference from our Annual Report on Form 10-K for the
year ended December 31, 2003 have been audited by Deloitte & Touche LLP, an
independent registered public accounting firm, as stated in their report, which
is incorporated herein by reference, which report expresses an unqualified
opinion and includes an explanatory paragraph referring to the 2002 change in
the method of accounting for goodwill and the 2003 change in the method of
accounting and presentation of asset retirement obligations, and 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 financial information for the periods
ended March 31, 2004 and 2003, June 30, 2004 and 2003 and September 30, 2004 and
2003 which is incorporated herein by reference, Deloitte & Touche LLP have
applied limited procedures in accordance with standards of the Public Company
Accounting Oversight Board (United States) for a review of such information.
However, as stated in their reports, included in our quarterly reports on Form
10-Q for the quarters ended March 31, 2004, June 30, 2004 and September 30, 2004
and incorporated by reference herein, they did not audit and they do not express
an opinion on that interim financial information. Accordingly, the degree of
reliance on their reports on such information should be restricted in light of
the limited nature of the review procedures applied. Deloitte & Touche LLP is
not subject to the liability 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 "reports" or a "part" of the
registration statement prepared or certified by an accountant within the meaning
of Sections 7 and 11 of the Securities Act of 1933, as amended.
_______________________
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