While the intensity of management activity was very high throughout the merger planning process, it was generally well ordered, in large measure because our Corporate/ Utility Transition Team and 16 sub-teams formed an effective vehicle for managing the planning process.

The Transition Team was given less than one year from the July 27, 1994, merger announcement date to plan the implementation of the merger. The plans for implementation were targeted for completion no later than June 1, 1995.

Building Goals

into the Process

It is important to understand that Russ Christiansen and I viewed the merger process in qualitative as well as quantitative terms. In other words, we viewed the merger as an opportunity to achieve something well beyond just an integration to eliminate duplicate functions and reduce costs. As important as that objective was, we wanted to supplement it with a continuing vision for MidAmerican, a vision defined by a set of goals that would not only encompass all functions, but would also be seen by our employees, shareholders, customers, regulators, and the communities we serve as a striving for excellence. Consequently, these six goals became the guideposts for the Transition Team:

1) Realize merger savings and improve utility earnings as soon as possible. In addition:

s Recognize that the preliminary employment, operation, and maintenance targets would establish only the minimum goals

s Identify performance gaps by benchmarking key functions

s Assign targets for performance to transition sub-teams.

2) Maintain key community commitments and economic development initiatives in terms of:

s The relative employment and income levels in key communities served

s The relative scope of economic development activity and community funding in such communities

s Community roles of key employees

s The need to achieve optimum efficiencies and economies in the merger.

3) Provide high quality and improved customer service by identifying:

s Key customer requirements by customer class

s Opportunities for improved service

s Areas for business growth through the addition of customers, products, and services.

4) Enhance employee productivity in support of improved corporate performance by:

s Defining those employee characteristics we will value at MidAmerican

s Developing employee selection policies

s Assuring that all employees receive effective and timely communication of the information needed for top performance

s Expanding the use of properly designed incentive compensation plans.

5) Seek opportunities to enhance earnings through nonregulated businesses, being careful to:

s Focus always on our core energy businesses

s Require tight management controls

s Emphasize the synergies of the new businesses with existing ones

s Continue to emphasize a stand-alone financing structure.

6) Strategically position MidAmerican for the competitive environment by:

s Establishing clearly defined electric, gas, and nonregulated business units that have the authority and the resources to pursue strategic alternatives

s Identifying gas, electric, and related market trends and opportunities

s Properly assessing competitors' strengths and weaknesses

s Identifying actions and resources required to position the company properly for targeted markets.

Given the complexity and scope of the task, a Transition Team Assistance Group was created to provide staff support in several areas. The Group focused