-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: keymaster@town.hall.org Originator-Key-Asymmetric: MFkwCgYEVQgBAQICAgADSwAwSAJBALeWW4xDV4i7+b6+UyPn5RtObb1cJ7VkACDq pKb9/DClgTKIm08lCfoilvi9Wl4SODbR1+1waHhiGmeZO8OdgLUCAwEAAQ== MIC-Info: RSA-MD5,RSA, OBN/lxvjjDmJ5AAkurRj3VEmj7AWGt6sj7AZIY8q33YgoB7LCapod545tsbfLsA8 fGR0t0C7RX8PdOp3Y8QOQQ== 0000092122-95-000054.txt : 19950516 0000092122-95-000054.hdr.sgml : 19950516 ACCESSION NUMBER: 0000092122-95-000054 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 8 CONFORMED PERIOD OF REPORT: 19950331 FILED AS OF DATE: 19950515 SROS: NONE FILER: COMPANY DATA: COMPANY CONFORMED NAME: SOUTHERN CO CENTRAL INDEX KEY: 0000092122 STANDARD INDUSTRIAL CLASSIFICATION: ELECTRIC SERVICES [4911] IRS NUMBER: 580690070 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 001-03526 FILM NUMBER: 95539750 BUSINESS ADDRESS: STREET 1: 64 PERIMETER CTR EAST CITY: ATLANTA STATE: GA ZIP: 30346 BUSINESS PHONE: 4043930650 FILER: COMPANY DATA: COMPANY CONFORMED NAME: ALABAMA POWER CO CENTRAL INDEX KEY: 0000003153 STANDARD INDUSTRIAL CLASSIFICATION: ELECTRIC SERVICES [4911] IRS NUMBER: 630004250 STATE OF INCORPORATION: AL FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 001-03164 FILM NUMBER: 95539751 BUSINESS ADDRESS: STREET 1: 600 N 18TH ST STREET 2: P O BOX 2641 CITY: BIRMINGHAM STATE: AL ZIP: 35291 BUSINESS PHONE: 2052501000 FILER: COMPANY DATA: COMPANY CONFORMED NAME: GEORGIA POWER CO CENTRAL INDEX KEY: 0000041091 STANDARD INDUSTRIAL CLASSIFICATION: ELECTRIC SERVICES [4911] IRS NUMBER: 580257110 STATE OF INCORPORATION: GA FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 001-06468 FILM NUMBER: 95539752 BUSINESS ADDRESS: STREET 1: 333 PIEDMONT AVE NE CITY: ATLANTA STATE: GA ZIP: 30308 BUSINESS PHONE: 4045266526 FILER: COMPANY DATA: COMPANY CONFORMED NAME: GULF POWER CO CENTRAL INDEX KEY: 0000044545 STANDARD INDUSTRIAL CLASSIFICATION: ELECTRIC SERVICES [4911] IRS NUMBER: 590276810 STATE OF INCORPORATION: ME FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 000-02429 FILM NUMBER: 95539753 BUSINESS ADDRESS: STREET 1: 500 BAYFRONT PKWY CITY: PENSACOLA STATE: FL ZIP: 32501 BUSINESS PHONE: 9044446111 FILER: COMPANY DATA: COMPANY CONFORMED NAME: MISSISSIPPI POWER CO CENTRAL INDEX KEY: 0000066904 STANDARD INDUSTRIAL CLASSIFICATION: ELECTRIC SERVICES [4911] IRS NUMBER: 640205820 STATE OF INCORPORATION: MS FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 001-11229 FILM NUMBER: 95539754 BUSINESS ADDRESS: STREET 1: 2992 W BEACH CITY: GULFPORT STATE: MS ZIP: 39501 BUSINESS PHONE: 6018641211 FILER: COMPANY DATA: COMPANY CONFORMED NAME: SAVANNAH ELECTRIC & POWER CO CENTRAL INDEX KEY: 0000086940 STANDARD INDUSTRIAL CLASSIFICATION: ELECTRIC SERVICES [4911] IRS NUMBER: 580418070 STATE OF INCORPORATION: GA FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 001-05072 FILM NUMBER: 95539755 BUSINESS ADDRESS: STREET 1: 600 BAY ST EAST CITY: SAVANNAH STATE: GA ZIP: 31401 BUSINESS PHONE: 9122327171 10-Q 1 FORM 10-Q SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 ------------------------- FORM 10-Q (X) QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the Quarter Ended March 31, 1995 OR ( ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the Transition Period from _____to_____
Commission Registrant, State of Incorporation, I.R.S. Employer File Number Address and Telephone Number Identification No. 1-3526 The Southern Company 58-0690070 (A Delaware Corporation) 64 Perimeter Center East Atlanta, Georgia 30346 (404) 393-0650 1-3164 Alabama Power Company 63-0004250 (An Alabama Corporation) 600 North 18th Street Birmingham, Alabama 35291 (205) 250-1000 1-6468 Georgia Power Company 58-0257110 (A Georgia Corporation) 333 Piedmont Avenue, N.E. Atlanta, Georgia 30308 (404) 526-6526 0-2429 Gulf Power Company 59-0276810 (A Maine Corporation) 500 Bayfront Parkway Pensacola, Florida 32501 (904) 444-6111 0-6849 Mississippi Power Company 64-0205820 (A Mississippi Corporation) 2992 West Beach Gulfport, Mississippi 39501 (601) 864-1211 1-5072 Savannah Electric and Power Company 58-0418070 (A Georgia Corporation) 600 Bay Street, East Savannah, Georgia 31401 (912) 232-7171
Indicate by check mark whether the registrants (1) have filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrants were required to file such reports), and (2) have been subject to such filing requirements for the past 90 days. Yes X No____
Description of Shares Outstanding Registrant Common Stock at April 30, 1995 The Southern Company Par Value $5 Per Share 665,468,159 Alabama Power Company Par Value $40 Per Share 5,608,955 Georgia Power Company No Par Value 7,761,500 Gulf Power Company No Par Value 992,717 Mississippi Power Company Without Par Value 1,121,000 Savannah Electric and Power Company Par Value $5 Per Share 10,844,635
This combined Form 10-Q is separately filed by The Southern Company, Alabama Power Company, Georgia Power Company, Gulf Power Company, Mississippi Power Company and Savannah Electric and Power Company. Information contained herein relating to any individual company is filed by such company on its own behalf. Each company makes no representation as to information relating to the other companies. 3 Table of Contents PART I Page Definitions 4 The Southern Company and Subsidiary Companies Management's Opinion as to Fair Statement of Results 6 Condensed Statements of Income 7 Condensed Statements of Cash Flows 8 Condensed Balance Sheets 9 Management's Discussion and Analysis of Results of Operations and Financial Condition 11 Alabama Power Company Management's Opinion as to Fair Statement of Results 17 Review by Independent Public Accountants 17 Condensed Statements of Income 18 Condensed Statements of Cash Flows 19 Condensed Balance Sheets 20 Management's Discussion and Analysis of Results of Operations and Financial Condition 22 Exhibit 1 - Report of Independent Public Accountants 26 Georgia Power Company Management's Opinion as to Fair Statement of Results 28 Review by Independent Public Accountants 28 Condensed Statements of Income 29 Condensed Statements of Cash Flows 30 Condensed Balance Sheets 31 Management's Discussion and Analysis of Results of Operations and Financial Condition 33 Exhibit 1 - Report of Independent Public Accountants 38 Gulf Power Company Management's Opinion as to Fair Statement of Results 40 Condensed Statements of Income 41 Condensed Statements of Cash Flows 42 Condensed Balance Sheets 43 Management's Discussion and Analysis of Results of Operations and Financial Condition 45 Mississippi Power Company Management's Opinion as to Fair Statement of Results 50 Condensed Statements of Income 51 Condensed Statements of Cash Flows 52 Condensed Balance Sheets 53 Management's Discussion and Analysis of Results of Operations and Financial Condition 55 Savannah Electric and Power Company Management's Opinion as to Fair Statement of Results 60 Condensed Statements of Income 61 Condensed Statements of Cash Flows 62 Condensed Balance Sheets 63 Management's Discussion and Analysis of Results of Operations and Financial Condition 65
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Table of Contents (Continued) Page Notes to the Condensed Financial Statements 68 PART II Item 1. Legal Proceedings 71 Item 6. Exhibits and Reports on Form 8-K 71 Signatures 73
DEFINITIONS TERM MEANING AFUDC..................... Allowance for Funds Used During Construction ALABAMA................... Alabama Power Company Clean Air Act ............ Clean Air Act Amendments of 1990 ECO Plan.................. Environmental Compliance Overview Plan Energy Act................ Energy Policy Act of 1992 FASB...................... Financial Accounting Standards Board FERC...................... Federal Energy Regulatory Commission GEORGIA................... Georgia Power Company GULF...................... Gulf Power Company IRS....................... Internal Revenue Service MEAG...................... Municipal Electric Authority of Georgia MISSISSIPPI............... Mississippi Power Company NRC....................... Nuclear Regulatory Commission OPC....................... Oglethorpe Power Corporation PEP....................... Performance Evaluation Plan PSC ...................... Public Service Commission SAVANNAH ................. Savannah Electric and Power Company SCS....................... Southern Company Services, Inc. SEC....................... Securities and Exchange Commission SEGCO..................... Southern Electric Generating Company SOUTHERN ................. The Southern Company 5 THE SOUTHERN COMPANY AND SUBSIDIARY COMPANIES 6 THE SOUTHERN COMPANY AND SUBSIDIARY COMPANIES MANAGEMENT'S OPINION AS TO FAIR STATEMENT OF RESULTS The condensed financial statements of SOUTHERN included herein have been prepared by SOUTHERN, without audit, pursuant to the rules and regulations of the SEC. In the opinion of SOUTHERN's management, subject to the effect of such adjustments, if any, as might have been required had the outcome of the uncertainty with respect to the actions of the regulators regarding the recoverability of GEORGIA's investment in the Rocky Mountain pumped storage hydroelectric project as more fully discussed in Note (F) to the Condensed Financial Statements herein, been known, the information furnished herein reflects all adjustments (which, except for the provision for separation benefits, included only normal recurring adjustments) necessary to present fairly the results for the periods ended March 31, 1995 and 1994. Certain information and footnote disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles have been condensed or omitted pursuant to such rules and regulations, although SOUTHERN believes that the disclosures are adequate to make the information presented not misleading. It is suggested that these condensed financial statements be read in conjunction with the financial statements and the notes thereto included in SOUTHERN's latest annual report on Form 10-K. 7
THE SOUTHERN COMPANY AND SUBSIDIARY COMPANIES CONDENSED STATEMENTS OF INCOME (UNAUDITED) (Stated in Thousands of Dollars) For the Three Months Ended March 31, 1995 1994 OPERATING REVENUES $1,929,043 $1,932,430 ---------- ---------- OPERATING EXPENSES: Operation-- Fuel 449,782 479,991 Purchased power 58,538 80,660 Other 360,013 423,323 Maintenance 159,412 173,787 Depreciation and amortization 212,322 200,210 Amortization of deferred Plant Vogtle expenses, net (Note E) 28,157 12,618 Taxes other than income taxes 123,448 118,936 Federal and state income taxes 151,992 112,593 ---------- ---------- Total operating expenses 1,543,664 1,602,118 ---------- ---------- OPERATING INCOME 385,379 330,312 OTHER INCOME (EXPENSE): Allowance for equity funds used during construction 3,119 3,283 Interest income 7,902 6,098 Other, net (16,697) (15,876) Income taxes applicable to other income 11,680 6,061 ---------- ---------- INCOME BEFORE INTEREST CHARGES 391,383 329,878 ---------- ---------- INTEREST CHARGES AND PREFERRED DIVIDENDS: Interest on long-term debt 136,398 142,571 Allowance for debt funds used during construction (5,848) (4,384) Interest on interim obligations 13,598 9,249 Amortization of debt discount, premium and expense, net 8,119 7,361 Other interest charges 10,324 12,144 Preferred dividends of subsidiary companies 22,450 21,334 ---------- ---------- Net interest charges and preferred dividends 185,041 188,275 ---------- ---------- CONSOLIDATED NET INCOME $ 206,342 $ 141,603 ========== ========== AVERAGE NUMBER OF SHARES OF COMMON STOCK OUTSTANDING (Thousands) 661,393 646,452 EARNINGS PER SHARE OF COMMON STOCK $0.31 $0.22 CASH DIVIDENDS PAID PER SHARE OF COMMON STOCK $0.305 $0.295 The accompanying notes as they relate to SOUTHERN are an integral part of these condensed statements.
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THE SOUTHERN COMPANY AND SUBSIDIARY COMPANIES CONDENSED STATEMENTS OF CASH FLOWS (UNAUDITED) (Stated in Thousands of Dollars) For the Three Months Ended March 31, 1995 1994 OPERATING ACTIVITIES: Consolidated net income $ 206,342 $ 141,603 Adjustments to reconcile consolidated net income to net cash provided by operating activities-- Depreciation and amortization 270,448 259,093 Deferred income taxes, net 22,208 (2,844) Allowance for equity funds used during construction (3,119) (3,283) Deferred Plant Vogtle costs 28,157 12,618 Provision for separation benefits - 91,466 Other, net 21,340 (30,373) Changes in certain current assets and liabilities-- Receivables, net 161,465 177,397 Fossil fuel stock (46,374) (30,907) Materials and supplies 9,418 2,892 Accounts payable (189,441) (94,587) Other 14,691 (62,362) --------- --------- Net cash provided from operating activities 495,135 460,713 --------- --------- INVESTING ACTIVITIES: Gross property additions (312,714) (319,410) Other (70,085) (40,133) --------- --------- Net cash used in investing activities (382,799) (359,543) --------- --------- FINANCING ACTIVITIES: Proceeds-- Common stock 180,273 121,767 First mortgage bonds - 35,000 Pollution control bonds - 52,465 Other long-term debt 28,745 264,653 Retirements-- Preferred stock (1,000) (1,000) First mortgage bonds (1,350) (72,128) Pollution control bonds (70) (52,465) Other long-term debt (52,653) (37,652) Interim obligations, net (95,834) (181,833) Payment of common stock dividends (201,866) (191,262) Miscellaneous 4,666 (3,702) --------- --------- Net cash provided from (used in) financing activities (139,089) (66,157) --------- --------- NET CHANGE IN CASH AND CASH EQUIVALENTS (26,753) 35,013 CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD 139,309 178,346 --------- --------- CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 112,556 $ 213,359 ========= ========= SUPPLEMENTAL CASH FLOW INFORMATION: Cash paid during the period for-- Interest (net of amount capitalized) $161,369 $166,489 Income taxes 8,827 49,356 The accompanying notes as they relate to SOUTHERN are an integral part of these condensed statements.
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THE SOUTHERN COMPANY AND SUBSIDIARY COMPANIES CONDENSED BALANCE SHEETS (Stated in Thousands of Dollars) ASSETS At March 31, 1995 At December 31, (Unaudited) 1994 UTILITY PLANT: Plant in service $29,315,862 $29,208,380 Less accumulated provision for depreciation 9,756,993 9,576,577 ----------- ----------- 19,558,869 19,631,803 Nuclear fuel, at amortized cost 227,156 238,055 Construction work in progress 1,370,530 1,247,427 ----------- ----------- Total 21,156,555 21,117,285 ------------ ----------- OTHER PROPERTY AND INVESTMENTS: Argentine operating concession, being amortized 442,946 445,834 Nuclear decommissioning trusts 142,383 125,311 Miscellaneous 238,405 223,504 ----------- ----------- Total 823,734 794,649 ----------- ----------- CURRENT ASSETS: Cash and cash equivalents 112,556 139,309 Receivables, less accumulated provisions for uncollectible accounts of $9,449 at March 31, 1995 and $9,129 at December 31, 1994 903,081 1,057,928 Fossil fuel stock, at average cost 396,914 350,540 Materials and supplies, at average cost 543,391 552,809 Prepayments 227,635 193,983 Miscellaneous 78,052 73,614 ----------- ----------- Total 2,261,629 2,368,183 ----------- ----------- DEFERRED CHARGES: Deferred charges related to income taxes 1,436,285 1,454,190 Deferred Plant Vogtle costs (Note E) 403,935 432,092 Debt expense and loss, being amortized 341,760 345,897 Miscellaneous 541,054 530,591 ----------- ---------- Total 2,723,034 2,762,770 ----------- ----------- TOTAL ASSETS $26,964,952 $27,042,887 =========== =========== The accompanying notes as they relate to SOUTHERN are an integral part of these condensed statements.
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THE SOUTHERN COMPANY AND SUBSIDIARY COMPANIES CONDENSED BALANCE SHEETS (Stated in Thousands of Dollars) CAPITALIZATION AND LIABILITIES At March 31, 1995 At December 31, (Unaudited) 1994 CAPITALIZATION: Common stock, par value $5 per share - Authorized - 1 billion shares; Outstanding - March 31, 1995: 665,467,477 shares December 31, 1994: 656,528,126 shares $ 3,327,337 $ 3,282,643 Paid-in capital 1,846,061 1,711,366 Premium on preferred stock 1,012 1,012 Retained earnings 3,193,995 3,191,228 ------------ ----------- 8,368,405 8,186,249 Preferred stock of subsidiaries 1,332,203 1,332,203 Guaranteed interest in preferred securities of partnership 100,000 100,000 Long-term debt 7,242,629 7,592,826 ------------ ----------- Total 17,043,237 17,211,278 ------------- ------------ CURRENT LIABILITIES: Amount of securities due within one year 554,924 229,925 Notes payable 371,500 575,200 Commercial paper 510,350 402,484 Accounts payable 576,866 806,459 Customer deposits 103,226 101,575 Taxes accrued-- Federal and state income 107,466 243 Other 107,650 152,979 Interest accrued 175,148 190,094 Vacation pay accrued 89,625 87,431 Miscellaneous 242,562 232,325 ------------ ----------- Total 2,839,317 2,778,715 ------------ ----------- DEFERRED CREDITS AND OTHER LIABILITIES: Accumulated deferred income taxes 4,002,919 4,007,427 Deferred credits related to income taxes 975,021 986,933 Accumulated deferred investment tax credits 849,406 857,387 Disallowed Plant Vogtle capacity buyback costs 59,607 60,490 Prepaid capacity revenues, net 136,679 138,421 Miscellaneous 1,058,766 1,002,236 ----------- ----------- Total 7,082,398 7,052,894 ----------- ------------ TOTAL CAPITALIZATION AND LIABILITIES $26,964,952 $27,042,887 =========== =========== The accompanying notes as they relate to SOUTHERN are an integral part of these condensed statements.
11 THE SOUTHERN COMPANY AND SUBSIDIARY COMPANIES MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND FINANCIAL CONDITION Results of Operations Earnings SOUTHERN's earnings for the first three months of 1995 were higher than earnings recorded in the same period of 1994 primarily because of costs recorded in the prior period associated with workforce reduction programs for GEORGIA and the system service company, SCS. Consolidated net income was $206 million for the first quarter of 1995, compared to $142 million for the first quarter of 1994. Earnings per share were $0.31 in the first quarter of 1995, compared to $0.22 in the corresponding period of 1994. Disregarding the after-tax effect of the workforce reduction programs of $57 million ($0.09 per share), earnings would have risen slightly above 1994's results. Revenues Despite the adverse effects of weather, retail energy sales rose 2.2% primarily because of the improvement in the economy. Energy sales to residential, commercial and industrial customers increased (decreased) (0.4%), 2.3% and 4.1%, respectively. Wholesale energy sales decreased due to reduced demand and scheduled reductions in off-system contracts. Capacity revenues for the first quarter of 1995 were $14 million less than in the first quarter of 1994 primarily because GEORGIA completed the third sale of a portion of Plant Scherer Unit 4 in June 1994. The final sale in a series of four transactions for the sale of this generating unit is scheduled for June 1995. The generation from this unit has been dedicated to unit power sales. Expenses Fuel expense for the first three months of 1995, compared to the corresponding period of 1994, decreased due primarily to the displacement of fossil and nuclear generation with hydro generation and the lower average cost of fuel consumed. Purchased power expense decreased because of the reduction in capacity buyback payments by GEORGIA to the co-owners of Plant Vogtle. See Note (E) to the Condensed Financial Statements herein for information regarding the Georgia PSC's retail rate order that required the levelization of capacity buyback expense for Plant Vogtle. Other operation expense in the first quarter of 1994 included approximately $93 million for costs associated with workforce reduction programs. Maintenance expenses decreased due to the timing of scheduled maintenance on generating units. The increase in depreciation and amortization is attributable to increased investment in plant. Income tax expense in the first quarter of 1994 reflects the effect of the workforce reduction programs. Interest Charges and Dividends on Preferred Stock The decrease in interest on long-term debt reflects the SOUTHERN system's efforts to decrease its capital costs. However, since January 1994, interest rates have risen and SOUTHERN's subsidiaries have outstanding a number of securities with interest or dividend rates that vary according to prevailing market conditions. Interest on interim obligations rose because of higher interest rates on an increased average amount of short-term debt outstanding. 12 THE SOUTHERN COMPANY AND SUBSIDIARY COMPANIES MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND FINANCIAL CONDITION Results of Operations (Continued) Allowance for Funds Used During Construction AFUDC represents the cost of capital charged to utility plant under construction and not included in rate base. The equity portion represents non-cash income. However, when facilities are completed and included in rate base, previously capitalized amounts significantly increase cash flow because revenues are higher as a result of the increased rate base and additional depreciation expense. Future Earnings Potential The results of operations discussed above are not necessarily indicative of future earnings potential. The level of future earnings is contingent upon numerous factors ranging from growth in energy sales to a less regulated, more competitive environment. Reference is made to the Notes to the Condensed Financial Statements herein for further discussion of various uncertainties and legal proceedings related to: the actions of regulators regarding the recovery of GEORGIA's investment in the Rocky Mountain pumped storage hydroelectric project; a civil suit filed against ALABAMA related to financing agreements; a tax issue regarding GEORGIA's tax accounting for the sale in 1984 of an interest in Plant Vogtle and related capacity and energy buyback commitments; proceedings regarding GEORGIA's recovery of demand-side conservation program costs; and the outcome of proceedings initiated by the FERC to determine the appropriate return on equity on wholesale power and transmission contracts. Compliance costs related to the Clean Air Act will reduce earnings if such increased costs cannot be offset. The Clean Air Act is discussed under "Environmental Matters" in Item 7 - Management's Discussion and Analysis in SOUTHERN's 1994 Annual Report on Form 10-K. Future earnings in the near term will also depend upon growth in electric sales which are subject to a number of factors. Traditionally, these factors have included changes in contracts with neighboring utilities, energy conservation practiced by customers, the elasticity of demand, weather, competition, and the rate of economic growth in SOUTHERN's service area. The enactment of the Energy Act is beginning to have a dramatic effect on the electric utility industry. A discussion of the potential impact of the Energy Act and particularly its effect on competition is found under "Future Earnings Potential" in Item 7 - Management's Discussion and Analysis in SOUTHERN's 1994 Annual Report on Form 10-K. The staff of the SEC has questioned certain of the current accounting practices of the electric utility industry regarding the recognition, measurement and classification of decommissioning costs for nuclear generating stations in financial statements. Further discussion of this issue is found in "Future Earnings Potential" in Item 7 -Management's Discussion and Analysis in SOUTHERN's 1994 Annual Report on Form 10-K. Reference is made to Note 3 to the financial statements in Item 8 of SOUTHERN's 1994 Annual Report on Form 10-K for information on certain environmental contingencies. 13 THE SOUTHERN COMPANY AND SUBSIDIARY COMPANIES MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND FINANCIAL CONDITION Results of Operations (Continued) SOUTHERN's operating subsidiaries are subject to the provisions of FASB Statement No. 71, Accounting for the Effects of Certain Types of Regulation. In the event that a portion of the company's operations is no longer subject to these provisions, SOUTHERN would be required to write-off related regulatory assets and liabilities. See Note 1 to the financial statements in Item 8 of SOUTHERN's 1994 Annual Report on Form 10-K. In March 1995, the FASB issued Statement No. 121, Accounting for the Impairment of Long-Lived Assets and Long-Lived Assets to be Disposed Of. This statement imposes stricter criteria for regulatory assets by requiring that such assets be probable of future recovery at each balance sheet date. SOUTHERN anticipates adopting this standard on January 1, 1996 and does not expect that adoption will have a material impact on the financial position or results of operations of SOUTHERN based on the current regulatory structure in which SOUTHERN operates. This conclusion may change in the future as competitive factors influence wholesale and retail pricing in this industry. Financial Condition Overview The major changes in SOUTHERN's financial condition during the first three months of 1995 were the addition of approximately $313 million to utility plant and the sale by SOUTHERN of additional shares of its common stock for $180 million. The funds for gross property additions and other capital requirements were derived primarily from operations and the sale of common stock by SOUTHERN. See SOUTHERN's Condensed Statements of Cash Flows for further details. Capital Structure One of SOUTHERN's goals is to maintain common equity as a percent of total capitalization, including short-term debt and the current portion of capitalization, within a range of 40 to 45%. This ratio was 45.3% at March 31, 1995, compared to 44.4% at December 31, 1994. The market price of SOUTHERN's common stock at March 31, 1995, was $20.375 per share, compared to a book value of $12.58. This represents a market-to-book value ratio of 162%. The dividend for the first quarter of 1995 was 30.5 cents per share. Capital Requirements for Construction The construction program of the Southern electric system is budgeted at $4.0 billion for the three years 1995 through 1997 ($1.4 billion in 1995, $1.3 billion in 1996 and $1.3 billion in 1997). Actual construction costs may vary from this estimate because of such factors as changes in business conditions; changes in nuclear plants to meet new regulations; changes in environmental regulations; revised load growth projections; increasing costs of labor, equipment and materials; and the cost of capital. 14 THE SOUTHERN COMPANY AND SUBSIDIARY COMPANIES MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND FINANCIAL CONDITION Financial Condition (Continued) Current energy demand forecasts do not require any additional baseload generating facilities until well into the future. However, within the service area, the construction of combustion turbine peaking units of approximately 1,100 megawatts is planned to be completed by 1997. In addition, significant construction will continue related to transmission and distribution facilities and the upgrading and extension of the useful lives of generating plants. GEORGIA and OPC have entered into a joint ownership agreement for the latter to assume responsibility for the construction and completion of the Rocky Mountain project. This agreement is described further in Note 4 to the financial statements in Item 8 of SOUTHERN's 1994 Annual Report on Form 10-K. Also, see Note 6 to the financial statements in Item 8 in SOUTHERN's 1994 Annual Report on Form 10-K for information regarding GEORGIA's joint ownership agreement for a combustion turbine unit in Florida. Changes in environmental regulations could substantially increase the Southern electric system's capital requirements and operating costs. The acid rain compliance provision of the Clean Air Act will have a significant impact on the Southern electric system. This legislation, as well as other legislation and regulations, are described under "Environmental Matters" in Item 7 - Management's Discussion and Analysis in SOUTHERN's 1994 Annual Report on Form 10-K. The full impact of these requirements cannot be determined at this time, pending the development and implementation of applicable regulations. Other Capital Requirements In addition to the funds needed for the construction program, approximately $555 million will be required by March 31, 1996, for present sinking fund requirements and maturities of long-term debt. Also, the operating subsidiaries plan to continue, to the extent possible, a program to retire high-cost debt and preferred stock and replace these obligations with lower-cost capital. Sources of Funds In addition to the sale of common stock in the first quarter of 1995, SOUTHERN may require additional equity capital during the remainder of the year. The amounts and timing of additional equity capital to be raised in 1995, as well as in subsequent years, will be contingent on SOUTHERN's investment opportunities. The operating subsidiaries plan to obtain the funds required for construction and other purposes from sources similar to those used in the past. However, the type and timing of financings will depend on market conditions, maintenance of adequate earnings, and regulatory approval. Additionally, GEORGIA expects to receive approximately $131 million in June 1995 from the sale of its remaining ownership interest in Plant Scherer Unit 4. This property sale is discussed further in Note 7 to the financial statements in Item 8 in SOUTHERN's 1994 Annual Report on Form 10-K. To meet short-term cash needs and contingencies, the SOUTHERN system had at March 31, 1995, approximately $113 million of cash and cash equivalents and approximately $1.4 billion of unused credit arrangements with banks. 15 THE SOUTHERN COMPANY AND SUBSIDIARY COMPANIES MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND FINANCIAL CONDITION Financial Condition (Continued) At March 31, 1995, the system companies had outstanding $372 million of notes payable and $510 million of commercial paper. The short-term lines of credit may not be utilized in their entirety without additional regulatory approval. Since the construction program with respect to major generating projects has been completed, management believes that the need for working capital can be adequately met by utilizing lines of credit without maintaining large cash balances. In order to issue additional long-term debt and preferred stock, the operating subsidiaries must comply with certain earnings coverage requirements outlined in their respective mortgage indentures and corporate charters. The coverage ratios of SOUTHERN's operating subsidiaries are sufficiently high to permit, at present interest rate levels, any foreseeable security sales. The amount of securities which they will be permitted to issue in the future will depend upon market conditions and other factors prevailing at that time. 16 ALABAMA POWER COMPANY 17 ALABAMA POWER COMPANY MANAGEMENT'S OPINION AS TO FAIR STATEMENT OF RESULTS The condensed financial statements of ALABAMA included herein have been prepared by ALABAMA, without audit, pursuant to the rules and regulations of the SEC. In the opinion of ALABAMA's management, the information regarding ALABAMA furnished herein reflects all adjustments (which included only normal recurring adjustments) necessary to present fairly the results for the periods ended March 31, 1995 and 1994. Certain information and footnote disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles have been condensed or omitted pursuant to such rules and regulations, although ALABAMA believes that the disclosures regarding ALABAMA are adequate to make the information presented not misleading. It is suggested that these condensed financial statements be read in conjunction with the financial statements and the notes thereto included in ALABAMA's latest annual report on Form 10-K. REVIEW BY INDEPENDENT PUBLIC ACCOUNTANTS The condensed financial statements of ALABAMA included herein have been reviewed by ALABAMA's independent public accountants as set forth in their report included herein as Exhibit 1. 18
ALABAMA POWER COMPANY CONDENSED STATEMENTS OF INCOME (UNAUDITED) (Stated in Thousands of Dollars) For the Three Months Ended March 31, 1995 1994 OPERATING REVENUES: Revenues $618,970 $654,313 Revenues from affiliates 27,801 32,534 ------ ------ Total operating revenues 646,771 686,847 ------- ------- OPERATING EXPENSES: Operation-- Fuel 157,189 185,000 Purchased power from non-affiliates 2,619 5,258 Purchased power from affiliates 22,961 26,582 Other 112,723 110,634 Maintenance 63,885 67,659 Depreciation and amortization 76,457 72,602 Taxes other than income taxes 47,678 46,423 Federal and state income taxes 40,310 44,066 ------ ------ Total operating expenses 523,822 558,224 ------- ------- OPERATING INCOME 122,949 128,623 OTHER INCOME (EXPENSE): Allowance for equity funds used during construction 1,257 667 Interest income 4,895 4,230 Other, net (6,972) (3,748) Income taxes applicable to other income 4,730 667 ----- --- INCOME BEFORE INTEREST CHARGES 126,859 130,439 ------- ------- INTEREST CHARGES: Interest on long-term debt 45,400 44,489 Allowance for debt funds used during construction (2,041) (683) Interest on interim obligations 4,006 810 Amortization of debt discount, premium, and expense, net 2,519 2,472 Other interest charges 4,791 4,961 ----- ----- Net interest charges 54,675 52,049 ------ ------ NET INCOME 72,184 78,390 DIVIDENDS ON PREFERRED STOCK 6,856 6,359 ----- ----- NET INCOME AFTER DIVIDENDS ON PREFERRED STOCK $65,328 $72,031 ======= ======= The accompanying notes as they relate to ALABAMA are an integral part of these condensed statements.
19
ALABAMA POWER COMPANY CONDENSED STATEMENTS OF CASH FLOWS (UNAUDITED) (Stated in Thousands of Dollars) For the Three Months Ended March 31, 1995 1994 OPERATING ACTIVITIES: Net income $ 72,184 $ 78,390 Adjustments to reconcile net income to net cash provided by operating activities-- Depreciation and amortization 91,746 88,655 Deferred income taxes, net 3,547 (18,561) Allowance for equity funds used during construction (1,257) (667) Other, net 52,996 9,289 Change in certain current assets and liabilities-- Receivables, net 32,703 68,069 Inventories (27,442) (6,787) Payables (137,642) (52,536) Taxes accrued 45,081 50,245 Energy cost recovery, retail 27,803 1,719 Other (65,887) (51,743) ------- ------- Net cash provided from operating activities 93,832 166,073 ------ ------- INVESTING ACTIVITIES: Gross property additions (126,840) (99,622) Other (13,643) (10,076) ------- ------- Net cash used for investing activities (140,483) (109,698) -------- -------- FINANCING ACTIVITIES: Proceeds: Other long-term debt - 27,987 Retirements: First mortgage bonds - (20,387) Other long-term debt (185) (32,388) Interim obligations, net 120,169 50,398 Payment of preferred stock dividends (6,589) (5,759) Payment of common stock dividends (71,900) (66,500) Miscellaneous (186) (636) ---- ---- Net cash provided from (used for) financing activities 41,309 (47,285) ------ ------- NET CHANGE IN CASH AND CASH EQUIVALENTS (5,342) 9,090 CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD 14,676 3,233 ------ ----- CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 9,334 $ 12,323 ======== ======== Supplemental cash flow information: Cash paid during the period for-- Interest (net of amount capitalized) $49,600 $48,347 Income taxes 2,500 14,896 The accompanying notes as they relate to ALABAMA are an integral part of these condensed statements.
20
ALABAMA POWER COMPANY CONDENSED BALANCE SHEETS (Stated in Thousands of Dollars) ASSETS At March 31, 1995 At December 31, (Unaudited) 1994 UTILITY PLANT: Plant in service, at original cost $10,108,050 $10,052,772 Less accumulated provision for depreciation 3,668,195 3,598,604 --------- --------- 6,439,855 6,454,168 Nuclear fuel, at amortized cost 94,193 101,630 Construction work in progress 374,882 317,779 ------- ------- Total 6,908,930 6,873,577 --------- --------- OTHER PROPERTY AND INVESTMENTS: Nuclear decommissioning trusts 71,535 71,014 Other 46,153 43,955 ------ ------ Total 117,688 114,969 ------- ------- CURRENT ASSETS: Cash and cash equivalents 9,334 14,676 Receivables -- Customer accounts receivable 275,152 308,561 Other accounts and notes receivable 17,089 22,547 Affiliated companies 25,443 29,303 Accumulated provision for uncollectible accounts (2,653) (2,297) Refundable income taxes 17,003 16,011 Fossil fuel stock, at average cost 153,382 119,555 Materials and supplies, at average cost 178,215 184,600 Prepayments-- Income taxes 10,999 19,196 Other 129,142 84,354 Vacation pay deferred 20,442 20,442 ------ ------ Total 833,548 816,948 ------- ------- DEFERRED CHARGES: Deferred charges related to income taxes 448,173 451,886 Debt expense and loss, being amortized 107,415 109,221 Uranium enrichment decontamination and decommissioning fund 42,996 42,996 Miscellaneous 49,770 49,620 ------ ------ Total 648,354 653,723 ------- ------- TOTAL ASSETS $ 8,508,520 $ 8,459,217 =========== =========== The accompanying notes as they relate to ALABAMA are an integral part of these condensed statements.
21
ALABAMA POWER COMPANY CONDENSED BALANCE SHEETS (Stated in Thousands of Dollars) CAPITALIZATION AND LIABILITIES At March 31, 1995 At December 31, (Unaudited) 1994 CAPITALIZATION: Common stock equity -- Common stock, par value $40 per share--authorized 6,000,000 shares, outstanding 5,608,955 shares $ 224,358 $ 224,358 Paid-in capital 1,304,645 1,304,645 Premium on preferred stock 146 146 Retained earnings 1,078,613 1,085,256 --------- --------- 2,607,762 2,614,405 Preferred stock 440,400 440,400 Long-term debt 2,395,363 2,455,013 --------- --------- Total 5,443,525 5,509,818 --------- --------- CURRENT LIABILITIES: Long-term debt due within one year 60,823 796 Notes payable 12,000 - Commercial paper 288,051 179,882 Accounts payable-- Affiliated companies 47,455 60,334 Other 124,778 258,657 Customer deposits 30,612 30,245 Taxes accrued -- Federal and state income 36,507 6,848 Other 31,488 15,589 Interest accrued 49,711 52,516 Miscellaneous 76,238 77,489 ------ ------ Total 757,663 682,356 ------- ------- DEFERRED CREDITS AND OTHER LIABILITIES: Accumulated deferred income taxes 1,177,911 1,181,342 Accumulated deferred investment tax credits 314,143 317,018 Prepaid capacity revenues, net 136,679 138,421 Uranium enrichment decontamination and decommissioning fund 39,413 39,413 Deferred credits related to income taxes 401,190 405,256 Miscellaneous 237,996 185,593 ------- ------- Total 2,307,332 2,267,043 --------- --------- TOTAL CAPITALIZATION AND LIABILITIES $8,508,520 $8,459,217 ========== ========== The accompanying notes as they relate to ALABAMA are an integral part of these condensed statements.
22 ALABAMA POWER COMPANY MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND FINANCIAL CONDITION Results of Operations ALABAMA's financial performance during the first quarter of 1995 decreased, compared to the same period of 1994, due primarily to lower capacity revenues and higher financing costs. Net income after dividends on preferred stock was $65.3 million during the first three months of 1995, compared to $72.0 million in the corresponding period of 1994. Revenues Operating revenues in the first three months of 1995 decreased from the corresponding period of 1994 due primarily to lower fuel clause revenues and fewer energy sales to non-affiliated customers. Retail energy sales rose 2.8% due primarily to an increase in customers served and the improving economy in Alabama. Weather had a very small negative impact on energy sales in 1995 and a modestly positive effect in 1994. Also, some reduction in non-affiliated revenues occurred due to a small decrease in capacity payments received from these customers. Total energy sales decreased 2.4%. Revenues from sales to affiliated companies within the Southern electric system, as well as purchases of energy, will vary from period to period depending on demand, the availability, and the variable production cost of generating resources at each company. Expenses Fuel expense decreased because of the lower average cost of fuel consumed and the displacement of fossil and nuclear generation with hydro generation. Total generation increased marginally. Purchased power from both affiliates and non-affiliates decreased because of lower demand. Maintenance expenses for the first quarter of 1995 were lower than the same period of 1994 due primarily to decreased maintenance on transmission and distribution plant. The increase in depreciation and amortization reflects additions to utility plant. The decrease in income tax expense is attributable to the change in earnings. Allowance for Funds Used During Construction AFUDC represents the estimated debt and equity costs of capital funds that are necessary to finance the construction of new facilities. While cash is not realized currently from such allowance, it is realized over the service life of the plant through increased revenues resulting from a higher rate base and higher depreciation expense. The amount of AFUDC recorded will rise as ALABAMA's investment in the construction of combustion turbine peaking units approach commercial operation. Interest Charges and Dividends on Preferred Stock The increase in interest on long-term debt reflects the sale of additional first mortgage bonds. Preferred stock dividends increased due to higher dividend rates on three series of variable rate preferred stock. Interest on interim obligations rose due to higher interest rates on an increased average amount of short-term debt outstanding. 23 ALABAMA POWER COMPANY MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND FINANCIAL CONDITION Results of Operations (Continued) Future Earnings Potential The results of operations discussed above are not necessarily indicative of future earnings potential. The level of future earnings depends on numerous factors ranging from growth in energy sales to a less regulated, more competitive environment. Discussed in the Notes to the Condensed Financial Statements herein are certain regulatory and legal proceedings that may impact ALABAMA's future earnings. The issues include a civil suit related to financing agreements and proceedings concerning the reasonableness of the Southern electric system's wholesale rate schedules and contracts. Compliance costs related to the Clean Air Act will reduce earnings if such cost increases cannot be offset. The Clean Air Act and other environmental issues are discussed under "Environmental Matters" in Item 7 - Management's Discussion and Analysis in ALABAMA's 1994 Annual Report on Form 10-K. Future earnings will also depend upon growth in electric sales which are subject to a number of factors. Traditionally, these factors have included changes in contracts with neighboring utilities, energy conservation practiced by customers, the elasticity of demand, weather, competition, and the rate of economic growth in ALABAMA's service area. However, the enactment of the Energy Act is beginning to have a dramatic effect on the future of the electric utility industry. A discussion of the potential impact of the Energy Act and particularly its effect on competition is found under "Future Earnings Potential" in Item 7 - Management's Discussion and Analysis in ALABAMA's 1994 Annual Report on Form 10-K. The staff of the SEC has questioned certain current accounting practices of the electric utility industry regarding the recognition, measurement and classification of decommissioning costs for nuclear generating stations in financial statements. Further discussion of this issue is found under "Future Earnings Potential" in Item 7 - Management's Discussion and Analysis in ALABAMA's 1994 Annual Report on Form 10-K. ALABAMA is subject to the provisions of FASB Statement No. 71, Accounting for the Effects of Certain Types of Regulation. In the event that a portion of the company's operations is no longer subject to these provisions, ALABAMA would be required to write off related regulatory assets and liabilities. See Note 1 to the financial statements in Item 8 in ALABAMA's 1994 Annual Report on Form 10-K for additional information. In March 1995, the FASB issued Statement No. 121, Accounting for the Impairment of Long-Lived Assets and Long-Lived Assets to be Disposed Of. This statement imposes stricter criteria for regulatory assets by requiring that such assets be probable of future recovery at each balance sheet 24 ALABAMA POWER COMPANY MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND FINANCIAL CONDITION Financial Condition (Continued) date. ALABAMA anticipates adopting this standard on January 1, 1996 and does not expect that adoption will have a material impact on the financial position or results of operations of ALABAMA based on the current regulatory structure in which ALABAMA operates. This conclusion may change in the future as competitive factors influence wholesale and retail pricing in this industry. Financial Condition Overview The principal change in ALABAMA's financial condition in the first three months of 1995 was gross property additions of $126.8 million to utility plant. The funds for gross property additions were derived from operating activities and an increase in short-term debt. See ALABAMA's Condensed Statements of Cash Flows herein for further details. ALABAMA's common equity as a percent of total capitalization was 47.9% at March 31, 1995, compared to 47.4% at year-end 1994. Liquidity and Capital Resources ALABAMA has committed lines of credit and regulatory approval for short-term borrowings of up to $530 million. At March 31, 1995, ALABAMA had outstanding $288 million of commercial paper and $12 million of notes payable. Capital expenditures are estimated to total $1.6 billion for the three years 1995 through 1997 ($604 million in 1995, $500 million in 1996 and $502 million in 1997). Current energy demand forecasts do not require any additional baseload generating facilities until well into the future. However, the construction of combustion turbine peaking units of approximately 720 megawatts of capacity is planned by 1996 to meet increased peak-hour demands. Five of the nine units (80 megawatts of capacity each) are scheduled to begin commercial operation in May 1995. In addition, significant construction of transmission and distribution facilities and upgrading of generating plants will continue. The capital budget is subject to periodic review and revision and capital costs incurred may vary from estimates because of several factors, including changes in business conditions; revised load growth projections; changes in environmental regulations; changes in existing nuclear plant to meet new regulatory requirements; increasing costs of labor, equipment and materials; and the cost of capital. In addition to the funds needed for the capital budget, approximately $60.8 million will be required by March 31, 1996, for debt maturities. Also, ALABAMA will continue to retire higher-cost debt and preferred stock and replace these obligations with lower-cost capital, as market conditions permit. 25 ALABAMA POWER COMPANY MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND FINANCIAL CONDITION Financial Condition (Continued) It is anticipated that the funds required will be derived from sources similar to those used in the past. In order to issue additional first mortgage bonds and preferred stock, ALABAMA must comply with certain earnings coverage requirements contained in its mortgage indenture and corporate charter. ALABAMA's coverages are at a level that would permit any necessary amount of security sales at current interest and dividend rates. 26 Exhibit 1 REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS TO ALABAMA POWER COMPANY: We have reviewed the accompanying condensed balance sheet of ALABAMA POWER COMPANY as of March 31, 1995, and the related condensed statements of income for the three-month periods ended March 31, 1995 and 1994, and condensed statements of cash flows for the three-month periods ended March 31, 1995 and 1994. These financial statements are the responsibility of the Company's management. We conducted our review in accordance with standards established by the American Institute of Certified Public Accountants. A review of interim financial information consists principally of applying analytical procedures to financial data and making inquiries of persons responsible for financial and accounting matters. It is substantially less in scope than an audit conducted in accordance with generally accepted auditing standards, the objective of which is the expression of an opinion regarding the financial statements taken as a whole. Accordingly, we do not express such an opinion. Based on our review, we are not aware of any material modifications that should be made to the financial statements referred to above for them to be in conformity with generally accepted accounting principles. We have previously audited, in accordance with generally accepted auditing standards, the balance sheet of ALABAMA POWER COMPANY as of December 31, 1994 (not presented herein) and, in our report dated February 15, 1995, we expressed an unqualified opinion on that statement. In our opinion, the information set forth in the accompanying condensed balance sheet as of December 31, 1994 is fairly stated, in all material respects, in relation to the balance sheet from which it has been derived. Birmingham, Alabama May 5, 1995 27 GEORGIA POWER COMPANY 28 GEORGIA POWER COMPANY MANAGEMENT'S OPINION AS TO FAIR STATEMENT OF RESULTS The condensed financial statements of GEORGIA included herein have been prepared by GEORGIA, without audit, pursuant to the rules and regulations of the SEC. As more fully discussed in Note (F) to the Condensed Financial Statements herein, an uncertainty exists with respect to the actions of the regulators regarding the recoverability of GEORGIA's investment in the Rocky Mountain pumped storage hydroelectric project. In the opinion of GEORGIA's management, subject to the effect of such adjustments, if any, as might have been required had the outcome of the uncertainty been known, the information regarding GEORGIA furnished herein reflects all adjustments (which, except for the provision for separation benefits recorded in 1995 and 1994, included only normal recurring adjustments) necessary to present fairly the results for the periods ended March 31, 1995 and 1994. Certain information and footnote disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles have been condensed or omitted pursuant to SEC rules and regulations, although GEORGIA believes that the disclosures regarding GEORGIA are adequate to make the information presented not misleading. It is suggested that these condensed financial statements be read in conjunction with the financial statements and the notes thereto included in GEORGIA's latest annual report on Form 10-K. REVIEW BY INDEPENDENT PUBLIC ACCOUNTANTS The condensed financial statements of GEORGIA included herein have been reviewed by GEORGIA's independent public accountants as set forth in their report included herein as Exhibit 1. 29
GEORGIA POWER COMPANY CONDENSED STATEMENTS OF INCOME (UNAUDITED) (Stated in Thousands of Dollars) For the Three Months Ended March 31, 1995 1994 OPERATING REVENUES: Revenues $961,047 $968,059 Revenues from affiliates 13,446 24,273 ------ ------ Total operating revenues 974,493 992,332 ------- ------- OPERATING EXPENSES: Operation-- Fuel 200,943 211,995 Purchased power from non-affiliates 41,572 71,757 Purchased power from affiliates 29,730 28,450 Provision for separation benefits 1,060 84,689 Other 161,673 152,626 Maintenance 65,969 75,089 Depreciation and amortization 96,160 94,049 Amortization of deferred Plant Vogtle expenses, net (Note E) 28,157 12,618 Taxes other than income taxes 50,789 49,536 Federal and state income taxes 91,437 54,383 ------ ------ Total operating expenses 767,490 835,192 ------- ------- OPERATING INCOME 207,003 157,140 OTHER INCOME (EXPENSE): Allowance for equity funds used during construction 1,671 1,637 Other, net (4,615) (739) Income taxes applicable to other income 3,561 2,611 ----- ----- INCOME BEFORE INTEREST CHARGES 207,620 160,649 ------- ------- INTEREST CHARGES: Interest on long-term debt 68,565 80,099 Allowance for debt funds used during construction (3,614) (2,676) Interest on interim obligations 5,417 3,527 Amortization of debt discount, premium and expense, net 3,920 3,874 Preferred distribution of subsidiary 2,250 - Other interest charges 2,632 6,503 ----- ----- Net interest charges 79,170 91,327 ------ ------ NET INCOME 128,450 69,322 DIVIDENDS ON PREFERRED STOCK 12,313 11,713 ------ ------ NET INCOME AFTER DIVIDENDS ON PREFERRED STOCK $116,137 $ 57,609 ======== ======== ( ) Denotes red figure. The accompanying notes as they relate to GEORGIA are an integral part of these condensed statements.
30
GEORGIA POWER COMPANY CONDENSED STATEMENTS OF CASH FLOWS (UNAUDITED) (Stated in Thousands of Dollars) For the Three Months Ended March 31, 1995 1994 OPERATING ACTIVITIES Net income $ 128,450 $ 69,322 Adjustments to reconcile net income to net cash provided by operating activities-- Depreciation and amortization 124,104 121,351 Deferred income taxes, net 16,077 18,748 Allowance for equity funds used during construction (1,671) (1,637) Deferred Plant Vogtle costs 28,157 12,618 Provision for separation benefits - 84,275 Other, net 1,462 (18,706) Changes in current assets and liabilities-- Receivables, net 48,837 86,901 Inventories (8,834) (14,541) Payables (57,941) (25,863) Taxes accrued 29,377 (68,762) Energy cost recovery, retail 20,916 23,219 Other 4,918 (1,346) ----- ------ NET CASH PROVIDED FROM OPERATING ACTIVITIES 333,852 285,579 ------- ------- INVESTING ACTIVITIES Property additions (103,245) (143,034) Other (49,232) (12,052) ------- ------- NET CASH USED FOR INVESTING ACTIVITIES (152,477) (155,086) -------- -------- FINANCING ACTIVITIES Proceeds-- Pollution control bonds - 28,065 Retirements-- Pollution control bonds (70) (28,065) Other long-term debt - (128) Interim obligations, net (51,903) (3,226) Payment of preferred stock dividends (12,208) (11,435) Payment of common stock dividends (113,900) (106,600) Miscellaneous (329) (1,569) ---- ------ NET CASH USED FOR FINANCING ACTIVITIES (178,410) (122,958) -------- -------- NET CHANGE IN CASH AND CASH EQUIVALENTS 2,965 7,535 CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD 12,539 5,896 ------ ----- CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 15,504 $ 13,431 ======== ========= Supplemental Cash Flow Information-- Interest (net of amount capitalized) $81,525 $93,342 Income taxes 3,515 33,967 The accompanying notes as they relate to GEORGIA are an integral part of these condensed statements.
31
GEORGIA POWER COMPANY CONDENSED BALANCE SHEETS (Stated in Thousands of Dollars) ASSETS At March 31, 1995 At December 31, (Unaudited) 1994 UTILITY PLANT: Plant in service $14,088,876 $14,054,917 Less accumulated provision for depreciation 4,128,921 4,054,986 --------- --------- 9,959,955 9,999,931 Nuclear fuel, at amortized cost 132,963 136,425 Construction work in progress 558,193 541,889 ------- ------- Total 10,651,111 10,678,245 ---------- ---------- OTHER PROPERTY AND INVESTMENTS: Nuclear decommissioning trusts 70,848 54,297 Miscellaneous 126,878 116,527 ------- ------- Total 197,726 170,824 ------- ------- CURRENT ASSETS: Cash and cash equivalents 15,504 12,539 Receivables-- Customer accounts receivable 329,690 377,570 Other accounts and notes receivable 84,545 104,989 Affiliated companies 17,557 14,443 Accumulated provision for uncollectible accounts (4,500) (4,500) Fossil fuel stock, at average cost 180,017 169,252 Materials and supplies, at average cost 291,533 293,464 Prepayments 61,220 55,383 Vacation pay deferred 40,823 40,823 ------ ------ Total 1,016,389 1,063,963 --------- --------- DEFERRED CHARGES: Deferred charges related to income taxes 906,009 919,750 Deferred Plant Vogtle costs (Note E) 403,935 432,092 Debt expense and loss, being amortized 187,761 190,899 Miscellaneous 262,745 256,885 ------- ------- Total 1,760,450 1,799,626 --------- --------- TOTAL ASSETS $13,625,676 $13,712,658 =========== =========== The accompanying notes as they relate to GEORGIA are an integral part of these condensed statements.
32
GEORGIA POWER COMPANY CONDENSED BALANCE SHEETS (Stated in Thousands of Dollars) CAPITALIZATION AND LIABILITIES At March 31, 1995 At December 31, (Unaudited) 1994 CAPITALIZATION: Common stock equity-- Common stock (without par value)-- authorized 15,000,000 shares, outstanding 7,761,500 shares $ 344,250 $ 344,250 Paid-in capital 2,384,348 2,384,348 Premium on preferred stock 413 413 Retained earnings 1,414,779 1,412,543 --------- --------- 4,143,790 4,141,554 Preferred stock 692,787 692,787 Guaranteed interest in preferred securities of partnership 100,000 100,000 Long-term debt 3,508,148 3,757,823 --------- --------- Total 8,444,725 8,692,164 --------- --------- CURRENT LIABILITIES: Long-term debt due within one year 417,427 167,420 Notes payable to banks 150,600 202,200 Commercial paper 222,299 222,602 Accounts payable-- Affiliated companies 39,264 41,760 Other 232,199 313,307 Customer deposits 48,162 47,017 Taxes accrued-- Federal and state income 71,140 2,856 Other 51,256 90,163 Interest accrued 103,981 110,256 Miscellaneous 130,074 109,726 ------- ------- Total 1,466,402 1,307,307 --------- --------- DEFERRED CREDITS AND OTHER LIABILITIES: Accumulated deferred income taxes 2,481,712 2,477,661 Accumulated deferred investment tax credits 449,185 453,121 Deferred credits related to income taxes 427,274 433,334 Disallowed Plant Vogtle capacity buyback costs 59,607 60,490 Miscellaneous 296,771 288,581 ------- ------- Total 3,714,549 3,713,187 --------- --------- TOTAL CAPITALIZATION AND LIABILITIES $13,625,676 $13,712,658 =========== =========== The accompanying notes as they relate to GEORGIA are an integral part of these condensed statements.
33 GEORGIA POWER COMPANY MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND FINANCIAL CONDITION Results of Operations Earnings GEORGIA's earnings for the first quarter of 1995 increased compared to the corresponding quarter of 1994, primarily as a result of charges in 1994 related to workforce reduction programs at GEORGIA and the system service company, SCS. Net income after dividends on preferred stock was $116.1 million in the first quarter of 1995 and $57.6 million in the first quarter of 1994. Disregarding the after-tax effect of the provision for separation benefits, GEORGIA's earnings still would have been slightly above earnings in the first quarter of 1994, primarily due to lower interest charges and higher retail energy sales. Revenues Total operating revenues decreased compared to the first quarter of 1994 primarily because of the decrease in energy sales to non-affiliated wholesale customers. Excluding fuel clause revenues, which represent the pass-through of fuel expenses and do not affect income, operating revenues for the first quarter of 1995 increased $7.9 million, compared to the corresponding period of 1994. Retail - Retail energy sales increased 2.6% primarily because of an increase in customers served and continued improvement in Georgia's economy. Residential, commercial and industrial energy sales increased 0.4%, 2.6% and 4.1%, respectively. Mild temperatures in the first quarter of 1995 had a dampening effect on energy sales increases. Total non-fuel retail revenues increased $15.9 million. Of this amount, $7.6 million is attributable to increased revenues from demand-side option programs collected through rate riders reinstated in December 1994. Revenues from demand-side programs generally represent the direct recovery of program costs. See Note (G) to the Condensed Financial Statements herein for additional information on these programs. Wholesale - Energy sales to non-affiliated wholesale customers for the first quarter of 1995 decreased 33.2%, compared to the corresponding period of 1994. Capacity revenues from non-affiliated utilities outside the service area were down $9.3 million. These capacity revenues decreased as scheduled, coinciding with GEORGIA completing the third in a series of four transactions for the sale of Plant Scherer Unit 4 in June 1994. The final sale of this unit is scheduled for June 1995. Energy revenues from non-affiliated utilities outside the service area decreased $25.1 million. The energy component of contract sales is priced at approximately the variable production cost and does not materially affect earnings. Revenues from sales to affiliated companies within the Southern electric system, as well as purchases of energy, will vary from period to period depending on demand and the availability and cost of generating resources at each company. These transactions do not have a significant impact on earnings. 34 GEORGIA POWER COMPANY MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND FINANCIAL CONDITION Results of Operations (Continued) Operating Expenses Fuel and Purchased Power - Fuel expense decreased because of less generation and the displacement of coal-fired generation with hydro generation. Purchased power expense for the first quarter of 1995 decreased primarily due to lower energy purchases from non-affiliated companies and scheduled reductions in capacity buyback payments to the co-owners of Plant Vogtle. See Note (E) to the Condensed Financial Statements herein for information regarding the levelization of capacity buyback expense for Plant Vogtle. Other - As part of the SOUTHERN system's effort to curtail growth in operating expenses, both GEORGIA and SCS initiated workforce reduction programs in the first quarter of 1994. GEORGIA's portion of SCS's costs for such programs amounted to approximately $12.1 million, while GEORGIA's programs amounted to approximately $72.6 million in the first quarter of 1994. Other operation expense for the first quarter of 1995 increased primarily due to costs associated with demand-side option programs, and environmental remediation costs at various sites of $3.7 million in 1995, compared to $0.5 million in 1994. The demand-side option program costs were offset by increases in retail revenues. The decrease in maintenance expense is attributable to the timing of maintenance, primarily on coal-fired generating units. Income taxes in the first quarter of 1994 reflect the effect of the workforce reduction programs. Allowance for Funds Used During Construction AFUDC represents the cost of capital charged to utility plant under construction and is included in rate base. The equity portion of AFUDC represents non-cash income. The increase in AFUDC during the first quarter of 1995 is primarily the result of higher short-term borrowing rates. Based upon GEORGIA's construction budget, AFUDC is estimated to total $27 million in 1995 and $17 million in 1996. Interest Charges and Dividends on Preferred Stock Interest charges have declined due to refinancing efforts over the past twelve months. Also, GEORGIA used the proceeds from the Plant Scherer sale to redeem high cost securities. Dividends on preferred stock have increased because GEORGIA has a number of securities outstanding that have variable dividend rates, which have risen since year-end 1993. Interest on interim obligations rose due to higher interest rates. Future Earnings Potential The results of operations discussed above are not necessarily indicative of future earnings. The level of future earnings depends on numerous factors including energy sales and regulatory matters. 35 GEORGIA POWER COMPANY MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND FINANCIAL CONDITION Results of Operations (Continued) Growth in energy sales is subject to a number of factors which traditionally have included changes in contracts with neighboring utilities, energy conservation practiced by customers, the elasticity of demand, weather, competition, and the rate of economic growth in GEORGIA's service area. The enactment of the Energy Act is having a dramatic effect on the future of the electric utility industry. A discussion of the potential impact of the Energy Act and particularly its effect on competition is found under "Future Earnings Potential" in Item 7 - Management's Discussion and Analysis in GEORGIA's 1994 Annual Report on Form 10-K. The scheduled addition of four combustion turbine generating units and the Rocky Mountain hydroelectric project in 1995 and one jointly-owned combustion turbine unit in 1996, will increase related operation, maintenance and depreciation expense. GEORGIA has entered into a four-year purchase power agreement to meet peaking needs. Beginning in 1996, GEORGIA will purchase 400 megawatts of capacity. In 1998, this amount will decline to 200 megawatts for the remaining two years. Capacity payments are projected to be $6 million in 1996 and 1997 and $3 million in 1998 and 1999. GEORGIA has also reached an agreement on major terms and conditions of a purchase power arrangement whereby GEORGIA would buy electricity during peak periods from a proposed 200 megawatt cogeneration facility, starting in June 1998. A final agreement is expected to be completed and filed with the Georgia PSC for certification during 1995. GEORGIA is scheduled to sell in June 1995 its remaining ownership interest (16.55%) in Plant Scherer Unit 4 to two Florida utilities. This transaction will generate approximately $131 million in cash, including an estimated after-tax gain of approximately $12 million. This transaction coincides with scheduled reductions in capacity revenues from Florida utilities under unit power sales contracts of approximately $18 million in 1995 and an additional $10 million in 1996. As discussed in Note 4 to the financial statements of GEORGIA in Item 8 of the SOUTHERN system's combined 1994 Annual Report in Form 10-K, regulatory uncertainties exist related to the Rocky Mountain pumped storage hydroelectric project. In the event the Georgia PSC does not allow full recovery of the project's costs, then the portion not allowed may have to be written off. GEORGIA's total investment in the project at completion is estimated to be approximately $200 million. Reference is made to Note 3 to the financial statements of GEORGIA in Item 8 of the SOUTHERN system's combined 1994 Annual Report on Form 10-K for information regarding proceedings with respect to GEORGIA's recovery of demand-side conservation program costs and litigation currently pending in the U. S. Tax Court. Also discussed therein are the joint complaints filed by OPC 36 GEORGIA POWER COMPANY MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND FINANCIAL CONDITION Results of Operations (Continued) and MEAG in two separate venues seeking to recover from GEORGIA approximately $16.5 million in alleged partial requirements rates overcharges, plus approximately $6.3 million in interest. The FERC regulates wholesale rate schedules and power sales contacts that GEORGIA has with its sales for resale customers. The FERC currently is reviewing the rate of return on common equity included in these schedules and contracts and may require such returns to be lowered, possibly retroactively. See Note 3 to the financial statements in Item 8 in GEORGIA's 1994 Annual Report on Form 10-K for additional information. The staff of the SEC has questioned certain of the current accounting practices of the electric utility industry regarding the recognition, measurement and classification of decommissioning costs for nuclear generating stations in financial statements. Further discussion of this issue is found in "Future Earnings Potential" in Item 7 -Management's Discussion and Analysis in GEORGIA's 1994 Annual Report on Form 10-K. Reference is made to Note 4 to the financial statements in Item 8 of GEORGIA's 1994 Annual Report on Form 10-K for information on certain environmental contingencies. GEORGIA is subject to the provisions of FASB Statement No. 71, Accounting for the Effects of Certain Types of Regulation. In the event that a portion of the company's operations is no longer subject to these provisions, GEORGIA would be required to write off related regulatory assets and liabilities. See Note 1 to the financial statements in Item 8 of GEORGIA's 1994 Annual Report on Form 10-K for additional information. In March 1995, the FASB issued Statement No. 121, Accounting for the Impairment of Long-Lived Assets and Long-Lived Assets to be Disposed Of. This statement imposes stricter criteria for regulatory assets by requiring that such assets be probable of future recovery at each balance sheet date. GEORGIA anticipates adopting this standard on January 1, 1996 and does not expect that adoption will have a material impact on the financial position or results of operations of GEORGIA based on the current regulatory structure in which GEORGIA operates. This conclusion may change in the future as competitive factors influence wholesale and retail pricing in this industry. Financial Condition Overview The principal changes in GEORGIA's financial condition during the first three months of 1995 were additions of $103 million to utility plant. The funds needed 37 GEORGIA POWER COMPANY MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND FINANCIAL CONDITION Financial Condition (Continued) for gross property additions are currently provided from operations. See GEORGIA's Condensed Statements of Cash Flows for further details. Construction and Other Capital Requirements Estimated construction expenditures for the years 1995 through 1997 are $579 million, $626 million and $724 million, respectively. GEORGIA's management has adopted an initiative to reduce its 1996 and 1997 construction expenditures by approximately 10% from currently estimated amounts. There can be no assurance that such reductions will be achieved. The Clean Air Act will have a significant impact on the capital requirements of the Southern electric system. This legislation, as well as other legislation and regulations, is described under "Environmental Issues" in Item 7 - - Management's Discussion and Analysis in GEORGIA's 1994 Annual Report on Form 10-K. Cash requirements for long-term debt maturities and redemptions total approximately $417.4 million for the twelve months ending March 31, 1996. Included in this amount is the redemption of $100 million of first mortgage bonds funded by an increase in commercial paper. Sources of Funds GEORGIA expects to meet future capital requirements primarily using funds from operations and, if needed, by the issuance of new debt and equity securities, term loans and short-term borrowings. Cash from operations for the first three months of 1995 increased, as compared to the corresponding period in 1994, primarily because of a decrease in income tax and interest payments. GEORGIA must comply with coverage requirements of its mortgage indenture and corporate charter to issue new first mortgage bonds and preferred stock. GEORGIA's ability to satisfy all coverage requirements is such that it could issue new first mortgage bonds and preferred stock to provide sufficient funds for all anticipated requirements. To meet short-term cash needs and contingencies, GEORGIA had approximately $541 million of unused credit arrangements with banks at March 31, 1995. Additionally, the completion of the remaining transaction for the sale of Plant Scherer Unit 4 in June 1995 will generate approximately $131 million. 38 Exhibit 1 REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS TO GEORGIA POWER COMPANY: We have reviewed the accompanying condensed balance sheet of GEORGIA POWER COMPANY (a Georgia corporation) as of March 31, 1995, and the related condensed statements of income for the three-month periods ended March 31, 1995 and 1994, and the condensed statements of cash flows for the three-month periods ended March 31, 1995 and 1994. These financial statements are the responsibility of the Company's management. We conducted our review in accordance with standards established by the American Institute of Certified Public Accountants. A review of interim financial information consists principally of applying analytical procedures to financial data and making inquiries of persons responsible for financial and accounting matters. It is substantially less in scope than an audit conducted in accordance with generally accepted auditing standards, the objective of which is the expression of an opinion regarding the financial statements taken as a whole. Accordingly, we do not express such an opinion. Based on our review, we are not aware of any material modifications that should be made to the financial statements referred to above for them to be in conformity with generally accepted accounting principles. As more fully discussed in Note (F) to the Condensed Financial Statements, an uncertainty exists with respect to the actions of the regulators regarding the recoverability of the Company's investment in the Rocky Mountain pumped storage hydroelectric project. The outcome of this uncertainty cannot presently be determined. Accordingly, no provision for any writedown of the costs associated with the Rocky Mountain facility resulting from the potential actions of the Georgia Public Service Commission has been made in the accompanying Condensed Financial Statements. We have previously audited, in accordance with generally accepted auditing standards, the balance sheet of GEORGIA POWER COMPANY as of December 31, 1994 (not presented herein), and, in our report dated February 15, 1995, we included an explanatory paragraph which describes an uncertainty with respect to the actions of the regulators regarding the recoverability of the Company's investment in the Rocky Mountain pumped storage hydroelectric project. In our opinion, the information set forth in the accompanying condensed balance sheet as of December 31, 1994, is fairly stated, in all material respects, in relation to the balance sheet from which it has been derived. Atlanta, Georgia May 5, 1995 39 GULF POWER COMPANY 40 GULF POWER COMPANY MANAGEMENT'S OPINION AS TO FAIR STATEMENT OF RESULTS The condensed financial statements of GULF included herein have been prepared by GULF, without audit, pursuant to the rules and regulations of the SEC. In the opinion of GULF's management, the information regarding GULF furnished herein reflects all adjustments (which included only normal recurring adjustments) necessary to present fairly the results for the periods ended March 31, 1995 and 1994. Certain information and footnote disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles have been condensed or omitted pursuant to such rules and regulations, although GULF believes that the disclosures regarding GULF are adequate to make the information presented not misleading. It is suggested that these condensed financial statements be read in conjunction with the financial statements and the notes thereto included in GULF's latest annual report on Form 10-K. 41
GULF POWER COMPANY CONDENSED STATEMENTS OF INCOME (UNAUDITED) (Stated in Thousands of Dollars) For the Three Months Ended March 31, 1995 1994 OPERATING REVENUES: Revenues $135,776 $134,229 Revenues from affiliates 5,142 3,859 ----- ----- Total operating revenues 140,918 138,088 ------- ------- OPERATING EXPENSES: Operation-- Fuel 43,954 35,941 Purchased power from non-affiliates 1,299 2,068 Purchased power from affiliates 6,042 8,791 Other 28,282 30,454 Maintenance 9,632 10,982 Depreciation and amortization 13,655 14,037 Taxes other than income taxes 11,882 10,279 Federal and state income taxes 6,669 6,382 ----- ----- Total operating expenses 121,415 118,934 ------- ------- OPERATING INCOME 19,503 19,154 OTHER INCOME (EXPENSE): Allowance for equity funds used during construction 26 160 Interest income 654 259 Other, net (158) (152) Income taxes applicable to other income (250) (64) ---- --- INCOME BEFORE INTEREST CHARGES 19,775 19,357 ------ ------ INTEREST CHARGES: Interest on long-term debt 5,920 6,871 Allowance for debt funds used during construction (35) (142) Interest on notes payable 820 242 Amortization of debt discount, premium and expense, net 499 458 Other interest charges 216 355 --- --- Net interest charges 7,420 7,784 ----- ----- NET INCOME 12,355 11,573 DIVIDENDS ON PREFERRED STOCK 1,475 1,456 ----- ----- NET INCOME AFTER DIVIDENDS ON PREFERRED STOCK $ 10,880 $ 10,117 ======== ======== The accompanying notes as they relate to GULF are an integral part of these condensed statements.
42
GULF POWER COMPANY CONDENSED STATEMENTS OF CASH FLOWS (UNAUDITED) (Stated in Thousands of Dollars) For the Three Months Ended March 31, 1995 1994 OPERATING ACTIVITIES: Net income $ 12,355 $ 11,573 Adjustments to reconcile net income to net cash provided by operating activities-- Depreciation and amortization 18,834 21,571 Deferred income taxes, net (125) 899 Allowance for equity funds used during construction (26) (160) Other, net 1,458 (341) Changes in certain current assets and liabilities-- Receivables, net 3,400 9,204 Inventories (634) (933) Payables 1,061 (4,919) Other 2,203 3,315 ----- ----- Net Cash Provided From Operating Activities 38,526 40,209 ------ ------ INVESTING ACTIVITIES: Gross property additions (14,816) (20,723) Other (1,407) (4,522) ------ ------ Net Cash Used For Investing Activities (16,223) (25,245) ------- ------- FINANCING ACTIVITIES: Retirements: Preferred stock subject to mandatory redemption (1,000) (1,000) First mortgage bonds - (29,370) Other long-term debt (2,430) (2,224) Notes payable, net (6,000) 27,447 Payment of preferred stock dividends (1,475) (1,456) Payment of common stock dividends (11,700) (10,900) Miscellaneous (13) (317) --- ---- Net Cash Used For Financing Activities (22,618) (17,820) ------- ------- NET CHANGE IN CASH AND CASH EQUIVALENTS (315) (2,856) CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD 902 5,576 --- ----- CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 587 $ 2,720 ======= ======= SUPPLEMENTAL CASH FLOW INFORMATION: Cash paid during the period for: Interest (net of amounts capitalized) $4,733 $3,223 Income taxes 2,705 2,036 The accompanying notes as they relate to GULF are an integral part of these condensed statements.
43
GULF POWER COMPANY CONDENSED BALANCE SHEETS (Stated in Thousands of Dollars) ASSETS At March 31, 1995 At December 31, (Unaudited) 1994 UTILITY PLANT: Plant in service, at original cost $1,662,127 $1,656,367 Less accumulated provision for depreciation 633,011 622,911 ------- ------- 1,029,116 1,033,456 Construction work in progress 29,589 24,288 ------ ------ Total 1,058,705 1,057,744 --------- --------- OTHER PROPERTY AND INVESTMENTS 8,003 7,997 ----- ----- CURRENT ASSETS: Cash and cash equivalents 587 902 Receivables-- Customer accounts receivable 54,051 57,637 Other accounts and notes receivable 2,122 2,268 Affiliated companies 1,369 1,079 Accumulated provision for uncollectible accounts (558) (600) Fuel stock, at average cost 36,713 35,686 Materials and supplies, at average cost 34,864 35,257 Current portion of deferred coal contract costs 3,427 2,521 Regulatory clauses under recovery 6,816 5,002 Prepayments 4,444 4,354 Vacation pay deferred 4,172 4,172 ----- ----- Total 148,007 148,278 ------- ------- DEFERRED CHARGES: Deferred charges related to income taxes 30,339 30,433 Debt expense and loss, being amortized 21,701 22,119 Deferred coal contract costs 33,178 38,169 Miscellaneous 11,673 10,802 ------ ------ Total 96,891 101,523 ------ ------- TOTAL ASSETS $1,311,606 $1,315,542 ========== ========== The accompanying notes as they relate to GULF are an integral part of these condensed statements.
44
GULF POWER COMPANY CONDENSED BALANCE SHEETS (Stated in Thousands of Dollars) CAPITALIZATION AND LIABILITIES At March 31, 1995 At December 31, (Unaudited) 1994 CAPITALIZATION: Common stock equity-- Common stock (without par value)-- authorized and outstanding 992,717 shares $ 38,060 $ 38,060 Paid-in capital 218,380 218,380 Premium on preferred stock 81 81 Retained earnings 168,130 168,951 ------- ------- 424,651 425,472 Preferred stock 89,602 89,602 Long-term debt 354,713 356,393 ------- ------- Total 868,966 871,467 ------- ------- CURRENT LIABILITIES: Preferred stock due within one year - 1,000 Long-term debt due within one year 12,759 13,439 Notes payable 47,500 53,500 Accounts payable-- Affiliated companies 7,327 9,132 Other 16,909 14,524 Customer deposits 13,573 13,609 Taxes accrued-- Federal and state income 9,901 5,990 Other 6,723 7,475 Interest accrued 8,035 6,106 Regulatory clauses over recovery 2,653 3,960 Vacation pay accrued 4,172 4,172 Miscellaneous 8,667 7,828 ----- ----- Total 138,219 140,735 ------- ------- DEFERRED CREDITS AND OTHER LIABILITIES: Accumulated deferred income taxes 152,874 151,681 Deferred credits related to income taxes 70,980 71,964 Accumulated deferred investment tax credits 37,797 38,391 Accumulated provision for property damage 11,822 11,522 Accumulated provision for postretirement benefits 14,446 13,680 Miscellaneous 16,502 16,102 ------ ------ Total 304,421 303,340 ------- ------- TOTAL CAPITALIZATION AND LIABILITIES $1,311,606 $1,315,542 ========== ========== The accompanying notes as they relate to GULF are an integral part of these condensed statements.
45 GULF POWER COMPANY MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND FINANCIAL CONDITION Results of Operations Earnings GULF's net income after dividends on preferred stock for the first three months of 1995 was $10.9 million, compared to $10.1 million for the same period of 1994. The rise in earnings was primarily due to decreased non-fuel operation expenses as discussed below. Revenues Retail energy sales for the first quarter of 1995 decreased 0.5% from the corresponding period of 1994 due primarily to the mild temperatures experienced in the winter of 1995. However, retail revenues increased because of higher regulatory cost recovery clause revenues. The regulatory clause recovery provisions equal the related expenses and have no material effect on net income. Wholesale energy sales to non-affiliates also decreased with capacity revenues $1.3 million lower than in the first quarter of 1994. Also, included in operating revenues for the first quarter of 1995 is $1.4 million collected to recover county franchise fees. These collections are also included in taxes other than income taxes and have no impact on earnings (see discussion under "Expenses"). Including energy sales to affiliated companies, total energy sales increased 1.8%. Expenses Fuel expenses for the first quarter of 1995 increased over the same period of 1994 due to an increase in generation. Purchased power transactions (both sales and purchases) among the affiliated companies within the Southern electric system will vary from period to period depending on demand and the availability and cost of generating resources at each company. Other operation expenses for the first quarter of 1995, compared to the first quarter of last year, were lower due primarily to a reduction in costs associated with a coal supply suspension agreement, which was essentially fully amortized by year-end 1994. See Note 5 to the financial statements in Item 8 in GULF's 1994 Annual Report on Form 10-K for additional information. Maintenance expenses decreased due primarily to the scheduling of maintenance on production facilities. The decrease in depreciation and amortization is attributable to the amortization of limited-term property, which was fully amortized by December 1994. The increase in taxes other than income taxes is attributable to $1.4 million of county franchise fees in the first three months of 1995 as discussed above. Interest Charges and Dividends on Preferred Stock The decrease in interest on long-term debt reflects GULF's efforts to decrease its capital costs through refinancings of higher-cost issues. The increase in dividends on preferred stock is due to an increase in the dividend rate on GULF's adjustable rate preferred stock, reflecting higher interest rates prevailing since year-end 1993. Interest on notes payable rose because of higher interest rates on an increased average outstanding amount of notes payable. To the extent it is economically feasible, GULF will continue its efforts to lower its capital costs. 46 GULF POWER COMPANY MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND FINANCIAL CONDITION Results of Operations (Continued) Future Earnings Potential The results of operations discussed above are not necessarily indicative of future earnings potential. The level of future earnings depends on a number of factors ranging from growth in energy sales to the effects of a less regulated, more competitive environment. Future earnings in the near term will depend upon growth in energy sales, which is subject to a number of factors. Traditionally, these factors have included changes in contracts with neighboring utilities, energy conservation practiced by customers, the elasticity of demand, weather, competition, and the rate of economic growth in GULF's service area. The enactment of the Energy Act is beginning to have a dramatic effect on the future of the electric utility industry. A discussion of the potential impact of the Energy Act and particularly its effect on competition is found under "Future Earnings Potential" in Item 7 - Management's Discussion and Analysis in GULF's 1994 Annual Report on Form 10-K. See Note 3 to the financial statements in Item 8 in GULF's 1994 Annual Report on Form 10-K for a discussion of the hearings ordered by the FERC regarding the reasonableness of the return on common equity on certain of the Southern electric system's wholesale rate schedules and contracts. Compliance costs related to the Clean Air Act could reduce earnings if such increased costs are not fully recovered. The Clean Air Act is discussed further under "Environmental Matters" in Item 7 - Management's Discussion and Analysis in GULF's 1994 Annual Report on Form 10-K. See also Note 3 to the financial statements in Item 8 in GULF's 1994 Annual Report on Form 10-K for a discussion of the Environmental Cost Recovery clause which provides for the recovery of such costs. GULF is subject to the provisions of FASB Statement No. 71, Accounting for the Effects of Certain Types of Regulation. In the event that a portion of the company's operations is no longer subject to these provisions, GULF would be required to write off related regulatory assets and liabilities. See Note 1 to the financial statements in Item 8 in GULF's 1994 Annual Report on Form 10-K for additional information. In March 1995, the FASB issued Statement No. 121, Accounting for the Impairment of Long-Lived Assets to be Disposed Of. This statement imposes stricter criteria for regulatory assets by requiring that such assets be probable of future recovery at each balance sheet date. GULF anticipates adopting this standard by January 1, 1996 and does not expect that adoption will have a material impact on the financial position or results of operations of GULF based on the current regulatory structure in which GULF operates. This conclusion may change in the future as competitive factors influence wholesale and retail pricing in this industry. 47 GULF POWER COMPANY MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND FINANCIAL CONDITION Financial Condition Overview The major change in GULF's financial condition during the first three months of 1995 was gross property additions of $14.8 million. The principal sources of funds for these additions and other capital requirements were provided from operations. See the Condensed Statements of Cash Flows for further details. Capital Requirements for Construction GULF's gross property additions, including those amounts related to environmental compliance, are estimated to total approximately $225 million for the three years 1995 through 1997 ($62 million in 1995, $79 million in 1996 and $84 million in 1997). The estimates of property additions for the three-year period include $13 million committed to meeting the requirements of the Clean Air Act, the cost of which is expected to be recovered through the Environmental Cost Recovery clause. Actual construction costs may vary from these estimates because of factors such as the granting of timely and adequate rate increases, changes in environmental regulations, revised load projections, the cost and efficiency of construction labor, equipment, and materials, and the cost of capital. GULF does not have any baseload generating plants under construction, however, construction related to maintenance and upgrading transmission and distribution facilities and generating plants will continue. Various environmental legislation and other related regulations are described in "Environmental Matters" in Item 7 - Management's Discussion and Analysis in GULF's 1994 Annual Report on Form 10-K. The full impact of these requirements cannot be determined at this time, pending the development and implementation of applicable regulations. In addition to the funds required for the construction program, $12.8 million will be required by March 31, 1996, in connection with improvement fund requirements, maturities and redemptions of long-term debt. GULF plans to continue a program to retire higher-cost debt and preferred stock and replace these obligations with lower-cost capital as market conditions and terms of the instruments permit. At March 31, 1995, GULF had $37 million of unused credit arrangements with banks to meet its short-term cash needs. GULF had $47.5 million of short-term bank borrowings outstanding at March 31, 1995. It is anticipated that the funds required for construction and other purposes, including compliance with environmental regulations, will be derived from operations, the sale of additional first mortgage bonds and preferred stock, and capital contributions from SOUTHERN. GULF is required to meet certain coverage requirements specified in its mortgage indenture and corporate charter to issue new first mortgage bonds and preferred stock. GULF's coverage ratios are sufficient to permit, at present interest rate levels, any foreseeable security sales. The amount of securities which GULF will be permitted to issue 48 GULF POWER COMPANY MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND FINANCIAL CONDITION Financial Condition (Continued) in the future will depend upon market conditions and other factors prevailing at that time. 49 MISSISSIPPI POWER COMPANY 50 MISSISSIPPI POWER COMPANY MANAGEMENT'S OPINION AS TO FAIR STATEMENT OF RESULTS The condensed financial statements of MISSISSIPPI included herein have been prepared by MISSISSIPPI, without audit, pursuant to the rules and regulations of the SEC. In the opinion of MISSISSIPPI's management, the information regarding MISSISSIPPI furnished herein reflects all adjustments (which, except for the provision for separation benefits recorded in the first quarter of 1995, included only normal recurring adjustments) necessary to present fairly the results for the periods ended March 31, 1995 and 1994. Certain information and footnote disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles have been condensed or omitted pursuant to such rules and regulations, although MISSISSIPPI believes that the disclosures regarding MISSISSIPPI are adequate to make the information presented not misleading. It is suggested that these condensed financial statements be read in conjunction with the financial statements and the notes thereto included in MISSISSIPPI's latest annual report on Form 10-K. 51
MISSISSIPPI POWER COMPANY CONDENSED STATEMENTS OF INCOME (UNAUDITED) (Stated in Thousands of Dollars) For the Three Months Ended March 31, 1995 1994 OPERATING REVENUES: Revenues $107,199 $111,700 Revenues from affiliates 2,373 2,434 ----- ----- Total operating revenues 109,572 114,134 ------- ------- OPERATING EXPENSES: Operation-- Fuel 24,790 17,601 Purchased power from non-affiliates 916 966 Purchased power from affiliates 9,547 24,156 Other 25,334 21,381 Maintenance 8,527 13,146 Depreciation and amortization 9,918 9,299 Taxes other than income taxes 9,378 9,805 Federal and state income taxes 5,433 4,870 ----- ----- Total operating expenses 93,843 101,224 ------ ------- OPERATING INCOME 15,729 12,910 OTHER INCOME (EXPENSE): Allowance for equity funds used during construction 123 405 Other, net 1,387 1,528 Income taxes applicable to other income (379) (445) ----- ---- INCOME BEFORE INTEREST CHARGES 16,860 14,398 ------ ------ INTEREST CHARGES: Interest on long-term debt 5,657 4,512 Allowance for debt funds used during construction (71) (370) Interest on notes payable 200 326 Amortization of debt discount, premium and expense, net 373 357 Other interest charges 207 82 --- -- Net interest charges 6,366 4,907 ----- ----- NET INCOME 10,494 9,491 DIVIDENDS ON PREFERRED STOCK 1,225 1,225 ----- ----- NET INCOME AFTER DIVIDENDS ON PREFERRED STOCK $ 9,269 $ 8,266 ======= ======= ( ) Denotes negative figure. The accompanying notes as they relate to MISSISSIPPI are an integral part of these condensed statements.
52
MISSISSIPPI POWER COMPANY CONDENSED STATEMENTS OF CASH FLOWS (UNAUDITED) (Stated in Thousands of Dollars) For the Three Months Ended March 31, 1995 1994 OPERATING ACTIVITIES: Net income $10,494 $ 9,491 Adjustments to reconcile net income to net cash provided by operating activities-- Depreciation and amortization 13,100 11,609 Deferred income taxes, net (626) (3,260) Allowance for equity funds used during construction (123) (405) Other, net 941 (3,868) Change in certain current assets and liabilities-- Receivables, net 5,366 7,762 Inventories 943 (5,661) Payables 581 (5,146) Taxes accrued (20,130) (11,140) Other 2,224 3,115 ----- ----- Net cash provided from operating activities 12,770 2,497 ------ ----- INVESTING ACTIVITIES: Gross property additions (16,337) (27,022) Other (3,325) (13,925) ------ ------- Net cash used for investing activities (19,662) (40,947) ------- ------- FINANCING ACTIVITIES: Proceeds-- First mortgage bonds - 35,000 Other long-term debt - 50,309 Retirements-- First mortgage bonds - (22,371) Other long-term debt (4,119) (2,647) Notes payable, net 22,000 (11,000) Payment of preferred stock dividends (1,225) (1,225) Payment of common stock dividends (9,900) (8,500) Miscellaneous - (989) - ---- Net cash provided (used) from financings 6,756 38,577 ----- ------ NET CHANGE IN CASH AND CASH EQUIVALENTS (136) 127 CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD 1,317 878 ----- --- CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 1,181 $ 1,005 ======= ======= SUPPLEMENTAL CASH FLOW INFORMATION: Cash paid during the period for-- Interest (net of amount capitalized) $5,021 $3,224 Income taxes (refunded) (384) (1,743) The accompanying notes as they relate to MISSISSIPPI are an integral part of these condensed statements.
53
MISSISSIPPI POWER COMPANY CONDENSED BALANCE SHEETS (Stated in Thousands of Dollars) ASSETS At March 31, 1995 At December 31, (Unaudited) 1994 UTILITY PLANT: Plant in service, at original cost $1,397,942 $1,385,032 Less accumulated provision for depreciation 487,216 477,098 ------- ------- Total 910,726 907,934 Construction work in progress 47,206 44,838 ------ ------ Total 957,932 952,772 ------- ------- OTHER PROPERTY AND INVESTMENTS 3,334 3,353 ----- ----- CURRENT ASSETS: Cash and cash equivalents 1,181 1,317 Receivables-- Customer accounts receivable 24,833 27,865 Other accounts and notes receivable 6,340 6,599 Affiliated companies 3,761 6,058 Accumulated provision for uncollectible accounts (447) (670) Fuel stock, at average cost 16,492 16,885 Materials and supplies, at average cost 24,751 25,301 Current portion of deferred fuel charges 1,325 1,068 Current portion of accumulated deferred income taxes 5,273 5,410 Prepaid federal income taxes 673 5,019 Prepayments 2,638 760 Vacation pay deferred 4,588 4,588 ----- ----- Total 91,408 100,200 ------ ------- DEFERRED CHARGES: Deferred charges related to income taxes 24,902 25,036 Deferred fuel charges 6,570 9,000 Debt expense and loss, being amortized 10,636 10,929 Deferred early retirement program costs 10,536 11,286 Miscellaneous 11,786 11,135 ------ ------ Total 64,430 67,386 ------ ------ TOTAL ASSETS $1,117,104 $1,123,711 ========== ========== The accompanying notes as they relate to MISSISSIPPI are an integral part of these condensed statements.
54
MISSISSIPPI POWER COMPANY CONDENSED BALANCE SHEETS (Stated in Thousands of Dollars) CAPITALIZATION AND LIABILITIES At March 31, 1995 At December 31, (Unaudited) 1994 CAPITALIZATION: Common stock equity-- Common stock (without par value), authorized 1,130,000 shares, outstanding 1,121,000 shares $ 37,691 $ 37,691 Paid-in capital 179,362 179,362 Premium on preferred stock 372 372 Retained earnings 143,696 144,328 ------- ------- 361,121 361,753 Cumulative preferred stock 74,414 74,414 Long-term debt 285,602 306,522 ------- ------- Total 721,137 742,689 ------- ------- CURRENT LIABILITIES: Long-term debt due within one year 58,080 41,199 Notes payable 22,000 - Accounts payable-- Affiliated companies 7,328 3,337 Other 24,112 31,144 Customer deposits 2,678 2,712 Taxes accrued-- Federal and state income 2,910 433 Other 8,617 31,224 Interest accrued 5,062 4,427 Miscellaneous 13,948 14,613 ------ ------ Total 144,735 129,089 ------- ------- DEFERRED CREDITS AND OTHER LIABILITIES: Accumulated deferred income taxes 129,214 129,505 Accumulated deferred investment tax credits 30,863 31,228 Deferred credits related to income taxes 45,227 45,832 Accumulated provision for property damage 11,280 10,905 Miscellaneous 34,648 34,463 ------ ------ Total 251,232 251,933 ------- ------- TOTAL CAPITALIZATION AND LIABILITIES $1,117,104 $1,123,711 ========== ========== The accompanying notes as they relate to MISSISSIPPI are an integral part of these condensed statements.
55 MISSISSIPPI POWER COMPANY MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND FINANCIAL CONDITION Results of Operations Net Income MISSISSIPPI's net income after dividends on preferred stock for the first quarter of 1995 was $9.3 million, compared to $8.3 million for the corresponding period of 1994. Net income rose primarily because of lower maintenance expenses and a retail rate increase under the ECO plan. Revenues Revenues for the first three months of 1995 decreased, compared to the same period of 1994, because of decreases of 0.9% in retail energy sales and approximately 44% in non-affiliated non-territorial wholesale energy sales. However, revenues were positively impacted by a retail rate increase of $7.6 million annually under the ECO plan effective April 1994. Energy sales to wholesale customers in MISSISSIPPI's service territory were up a small amount. Energy sales to commercial customers increased 2.6% reflecting sales to casinos and service industries supporting casinos in coastal Mississippi. Total energy sales decreased 2.4%. Non-affiliated wholesale capacity revenues decreased approximately $0.5 million. Expenses Fuel and purchased power expenses combined decreased in the first quarter of 1995, compared to the corresponding period of 1994, due to lower energy sales. Purchased power transactions (both sales and purchases) among the affiliated companies within the Southern electric system will vary from period to period depending on demand and the availability and cost of generating resources at each company. Other operation expenses in the first quarter of 1995, compared to the corresponding period in 1994, increased primarily due to the amortization of workforce reduction programs and, pursuant to the Clean Air Act, the recognition of emission allowance expense. Such emission allowances are a recoverable expense under the ECO plan. The decrease in maintenance expense is attributable to the timing of scheduled maintenance on production facilities. Taxes other than income taxes decreased because of lower revenues. The increase in income tax expense reflects higher earnings. The increase in interest was because of the sale or issuance of additional debt instruments and higher interest rates on $23.3 million of pollution control bonds that have variable interest rates. Allowance for Funds Used During Construction AFUDC represents the cost of capital charged to utility plant under construction. The equity portion of AFUDC represents non-cash income. However, when facilities are completed and included in rate base, previously capitalized amounts increase cash flow because revenues are higher as a result of the increased rate base and additional depreciation expense. The amount of AFUDC recorded in 1994 was higher because of MISSISSIPPI's investment in the construction of a combustion turbine generating unit. This unit began commercial operation in May 1994. 56 MISSISSIPPI POWER COMPANY MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND FINANCIAL CONDITION Results of Operations (Continued) Future Earnings Potential The results of operations discussed above are not necessarily indicative of future earnings potential. The level of future earnings depends on numerous factors ranging from regulatory matters to growth in energy sales to a less regulated, more competitive environment. Operating revenues will be affected by any changes in rates under the PEP and ECO plans. The PEP has proven to be a stabilizing force on electric rates, with only moderate changes in rates taking place. Also see Notes (B) and (C) to the Condensed Financial Statements herein for information regarding FERC's review of equity returns and workforce reduction programs, respectively. MISSISSIPPI's 1995 annual filing under the ECO plan with the Mississippi PSC resulted in an approved annual revenue requirement, effective in May 1995, of $3.7 million, including $1.6 million of 1994 carryover. Future earnings in the near term will also depend upon growth in electric sales which are subject to a number of factors. Traditionally, these factors have included the rate of economic growth in MISSISSIPPI's service area, customer growth, competition, weather, changes in contracts with neighboring utilities, energy conservation practiced by customers, and the elasticity of demand. The enactment of the Energy Act is beginning to have a dramatic effect on the future of the electric utility industry. A discussion of the potential impact of the Energy Act and particularly its effect on competition is found under "Future Earnings Potential" in Item 7 - Management's Discussion and Analysis in MISSISSIPPI's 1994 Annual Report on Form 10-K. MISSISSIPPI is subject to the provisions of FASB Statement No. 71, Accounting for the Effects of Certain Types of Regulation. In the event that a portion of the company's operations is no longer subject to these provisions, MISSISSIPPI would be required to write off related regulatory assets and liabilities. See Note 1 to the financial statements in Item 8 in MISSISSIPPI's 1994 Annual Report on Form 10-K for additional information. In March 1995, the FASB issued Statement No. 121, Accounting for the Impairment of Long-Lived Assets and Long-Lived Assets to be Disposed Of. This statement imposes stricter criteria for regulatory assets by requiring that such assets be probable of future recovery at each balance sheet date. MISSISSIPPI anticipates adopting this standard on January 1, 1996 and does not expect that adoption will have a material impact on the financial position or results of operations of MISSISSIPPI based on the current regulatory structure in which MISSISSIPPI operates. This conclusion may change in the future as competitive factors influence wholesale and retail pricing in this industry. 57 MISSISSIPPI POWER COMPANY MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND FINANCIAL CONDITION Financial Condition Overview During the first three months of 1995, gross property additions were $16.3 million. The funds for these additions and other capital requirements were derived primarily from internal sources and an increase in short-term debt. See the Condensed Statements of Cash Flows for further details. At March 31, 1995, cash totaled approximately $1.2 million and MISSISSIPPI had $97 million of unused credit arrangements with banks to meet short-term cash needs. MISSISSIPPI had $22 million of notes payable outstanding at quarter-end. It is MISSISSIPPI's strategy to maintain a permanent layer of short-term debt, approximately $40 million through the end of 1995, consistent with its overall risk capital strategy. Capital Requirements MISSISSIPPI's gross property additions for the next three years are estimated to be $223 million ($78 million in 1995, $73 million in 1996 and $72 million in 1997). The major emphasis within the construction program will be on upgrading existing facilities. Included in these construction estimates is $2.9 million committed to meeting the requirements of the Clean Air Act regulations. Revisions may be necessary because of factors such as revised load projections, the availability and cost of capital and changes in environmental regulations. In addition to the funds required for the construction program, approximately $58.1 million will be required by March 31, 1996, for maturities of long-term debt. It is anticipated that the funds required for construction and other purposes, including compliance with environmental regulations, will be derived from operations, the sale of additional first mortgage bonds, pollution control bonds and preferred stock and the receipt of additional capital contributions from SOUTHERN. MISSISSIPPI is required to meet certain coverage requirements specified in its mortgage indenture and corporate charter to issue new first mortgage bonds and preferred stock. MISSISSIPPI's coverage ratios are sufficiently high to permit, at present interest rate levels, any foreseeable security sales. The amount of securities which MISSISSIPPI will be able to issue in the future will depend upon market conditions and other factors prevailing at that time. Environmental Matters Changes in environmental regulations could substantially increase the Southern electric system's capital requirements and operating costs. The acid rain compliance provision of the Clean Air Act will have a significant impact on the Southern electric system. This legislation, as well as other legislation and regulations, are described under "Environmental Matters" in Item 7 - Management's Discussion and Analysis in MISSISSIPPI's 1994 Annual Report on Form 10-K. The full impact of these requirements cannot be determined at this time pending the development and implementation of applicable regulations. MISSISSIPPI's management believes that the ECO plan will provide for retail recovery of the Clean Air Act costs. 58 MISSISSIPPI POWER COMPANY MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND FINANCIAL CONDITION Financial Condition (Continued) MISSISSIPPI must comply with other environmental laws and regulations that cover the handling and disposal of hazardous waste. Under these various laws and regulations, MISSISSIPPI could incur costs to clean up properties currently or previously owned. Upon identifying potential sites, the company conducts studies, when possible, to determine the extent of any required cleanup costs. Should remediation be determined to be probable, reasonable estimates of costs to clean up such sites are developed and recognized in the financial statements. A currently owned site where manufactured gas plant operations were located prior to MISSISSIPPI's ownership is under investigation for potential remediation, but no prediction can presently be made regarding the extent, if any, of contamination or possible cleanup. Results of this investigation are expected to be available in early 1995. If this site were required to be remediated, industry studies show MISSISSIPPI could incur cleanup costs ranging from $1.5 million to $10 million before giving consideration to possible recovery of clean-up costs from other parties. Accordingly, no accrual has been made for remediation in the accompanying Condensed Financial Statements. 59 SAVANNAH ELECTRIC AND POWER COMPANY 60 SAVANNAH ELECTRIC AND POWER COMPANY MANAGEMENT'S OPINION AS TO FAIR STATEMENT OF RESULTS The condensed financial statements of SAVANNAH included herein have been prepared by SAVANNAH, without audit, pursuant to the rules and regulations of the SEC. In the opinion of SAVANNAH's management, the information regarding SAVANNAH furnished herein reflects all adjustments (which, except for the provision for separation benefits recorded in the first quarter of 1994, included only normal recurring adjustments) necessary to present fairly the results for the periods ended March 31, 1995 and 1994. Certain information and footnote disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles have been condensed or omitted pursuant to such rules and regulations, although SAVANNAH believes that the disclosures regarding SAVANNAH are adequate to make the information presented not misleading. It is suggested that these condensed financial statements be read in conjunction with the financial statements and the notes thereto included in SAVANNAH's latest annual report on Form 10-K. 61
SAVANNAH ELECTRIC AND POWER COMPANY CONDENSED STATEMENTS OF INCOME (UNAUDITED) (Stated in Thousands of Dollars) For the Three Months Ended March 31, 1995 1994 OPERATING REVENUES: Revenues $45,016 $46,400 Revenues from affiliates 1,727 317 ----- --- Total operating revenues 46,743 46,717 ------ ------ OPERATING EXPENSES: Operation-- Fuel 1,350 2,139 Purchased power from non-affiliates 349 359 Purchased power from affiliates 15,236 15,229 Other 10,203 9,428 Maintenance 3,236 2,647 Depreciation and amortization 4,747 4,250 Taxes other than income taxes 2,961 2,562 Federal and state income taxes 2,193 2,973 ----- ----- Total operating expenses 40,275 39,587 ------ ------ OPERATING INCOME 6,468 7,130 OTHER INCOME (EXPENSE): Allowance for equity funds used during construction 22 387 Other, net (124) (231) Income taxes applicable to other income 48 88 -- -- INCOME BEFORE INTEREST CHARGES 6,414 7,374 ----- ----- INTEREST CHARGES: Interest on long-term debt 3,129 3,152 Allowance for debt funds used during construction (73) (500) Amortization of debt discount, premium and expense, net 138 137 Other interest charges 219 106 --- --- Net interest charges 3,413 2,895 ----- ----- NET INCOME 3,001 4,479 DIVIDENDS ON PREFERRED STOCK 581 581 --- --- NET INCOME AFTER DIVIDENDS ON PREFERRED STOCK $ 2,420 $ 3,898 ======= ======= ( ) Denotes red figure. The accompanying notes as they relate to SAVANNAH are an integral part of these condensed statements.
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SAVANNAH ELECTRIC AND POWER COMPANY CONDENSED STATEMENTS OF CASH FLOWS (UNAUDITED) (Stated in Thousands of Dollars) For the Three Months Ended March 31, 1995 1994 OPERATING ACTIVITIES: Net income $3,001 $ 4,479 Adjustments to reconcile net income to net cash provided by operating activities-- Depreciation and amortization 5,116 4,617 Deferred taxes, net 163 704 Allowance for equity funds used during construction (22) (387) Other, net (84) (85) Changes in certain current assets and liabilities-- Receivables, net 2,860 15,175 Inventories (836) 69 Payables 1,736 (16,994) Taxes accrued 2,253 3,454 Other (2,501) (2,376) ------ ------ Net Cash Provided From Operating Activities 11,686 8,656 ------ ----- INVESTING ACTIVITIES: Gross property additions (7,627) (7,766) Other (1,563) (916) ------ ---- Net Cash Used For Investing Activities (9,190) (8,682) ------ ------ FINANCING ACTIVITIES: Proceeds: Other long-term debt 3,500 6,000 Retirements: First mortgage bonds (1,350) - Other long-term debt (1,697) (198) Notes payable, net 500 (1,000) Payment of preferred stock dividends (581) (387) Payment of common stock dividends (4,400) (4,100) Miscellaneous - (48) - --- Cash Provided From (Used For) Financing Activities (4,028) 267 ------ --- NET CHANGE IN CASH AND CASH EQUIVALENTS (1,532) 241 CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD 1,563 3,915 ----- ----- CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 31 $ 4,156 ======= ======= Supplemental cash flow information: Cash paid (received) during the period for-- Interest (net of amount capitalized) $4,871 $4,236 Income taxes (refunded) 444 (155) The accompanying notes as they relate to SAVANNAH are an integral part of these condensed statements.
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SAVANNAH ELECTRIC AND POWER COMPANY CONDENSED BALANCE SHEETS (Stated in Thousands of Dollars) ASSETS At March 31, 1995 At December 31, (Unaudited) 1994 UTILITY PLANT: Plant in service, at original cost $694,935 $693,432 Less accumulated provision for depreciation 271,912 267,590 ------- ------- 423,023 425,842 Construction work in progress 11,364 5,930 ------ ----- Total 434,387 431,772 ------- ------- OTHER PROPERTY AND INVESTMENTS 1,790 1,790 ----- ----- CURRENT ASSETS: Cash and cash equivalents 31 1,563 Receivables-- Customer accounts receivable 16,808 17,581 Other accounts and notes receivable 223 216 Affiliated companies 537 177 Accumulated provision for uncollectible accounts (893) (866) Fuel cost under recovery 680 3,113 Fuel stock, at average cost 8,474 7,557 Materials and supplies, at average cost 8,995 9,076 Prepayments 9,282 7,446 ----- ----- Total 44,137 45,863 ------ ------ DEFERRED CHARGES: Deferred charges related to income taxes 23,289 23,521 Debt expense and loss, being amortized 6,249 6,387 Cash surrender value of life insurance for deferred compensation plan 7,028 7,028 Miscellaneous 2,450 1,944 ----- ----- Total 39,016 38,880 ------ ------ TOTAL ASSETS $519,330 $518,305 ======== ======== The accompanying notes as they relate to SAVANNAH are an integral part of these condensed statements.
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SAVANNAH ELECTRIC AND POWER COMPANY CONDENSED BALANCE SHEETS (Stated in Thousands of Dollars) CAPITALIZATION AND LIABILITIES At March 31, 1995 At December 31, (Unaudited) 1994 CAPITALIZATION: Common stock equity-- Common stock ($5 par value)--authorized 16,000,000 shares; outstanding 10,844,635 shares $ 54,223 $ 54,223 Paid-in capital 8,688 8,688 Additional minimum liability for under-funded pension obligations (2,181) (546) Retained earnings 97,236 99,216 ------ ------ 157,966 161,581 Preferred stock 35,000 35,000 Long-term debt 157,856 155,922 ------- ------- Total 350,822 352,503 ------- ------- CURRENT LIABILITIES: Amount of securities due within one year 1,111 2,579 Notes payable 3,000 2,500 Accounts payable-- Affiliated companies 4,782 5,162 Other 4,428 3,829 Customer deposits 4,768 4,698 Taxes accrued-- Federal and state income 1,055 272 Other 2,331 861 Interest accrued 5,170 6,830 Vacation pay accrued 1,841 1,823 Pensions accrued 4,680 4,783 Miscellaneous 2,445 3,499 ----- ----- Total 35,611 36,836 ------ ------ DEFERRED CREDITS: Accumulated deferred income taxes 71,878 70,786 Accumulated deferred investment tax credits 14,471 14,637 Deferred credits related to income taxes 25,359 25,487 Deferred compensation plans 7,030 6,807 Deferred under-funded accrued benefit obligation 5,688 3,022 Postretirement benefits 4,232 3,808 Miscellaneous 4,239 4,419 ----- ----- Total 132,897 128,966 ------- ------- TOTAL CAPITALIZATION AND LIABILITIES $519,330 $518,305 ======== ======== The accompanying notes as they relate to SAVANNAH are an integral part of these condensed statements.
65 SAVANNAH ELECTRIC AND POWER COMPANY MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND FINANCIAL CONDITION Results of Operations Earnings SAVANNAH's net income after dividends on preferred stock for the first three months of 1995 was $2.4 million, compared to $3.9 million in the corresponding period of 1994. The decrease in net income was primarily due to higher operation and maintenance expenses and lower construction related credits. Revenues Although revenues for the first quarter of 1995 were comparable to the corresponding period in 1994, earnings suffered because of the change in the composition of energy sales. Retail energy sales increased 1.1%, with the industrial sector offsetting decreases from residential and commercial customers. Industrial energy sales were higher primarily because a major customer performed maintenance on its cogeneration facility in the first quarter of 1995 and purchased replacement energy under a rate schedule that has a smaller profit margin than for typical residential and commercial customers. Wholesale energy sales to non-affiliated companies decreased; however, only the capacity revenues of such sales have any measurable effect on earnings. Capacity revenues fell $113,000. Expenses Fuel expenses during the first quarter of 1995 decreased, compared to those recorded in the first quarter of 1994, because generation was lower by one-third. The change in generation was due to demand in SAVANNAH's service area and elsewhere in the Southeast. Purchased power transactions among the affiliated companies within the Southern electric system will vary from period to period depending on demand and the availability and cost of generating resources at each company. These transactions do not have a significant impact on earnings. Other operation expenses for the first three months of 1995 increased over the corresponding period in 1994 for a variety of reasons including employee compensation and consulting costs for training and increased expenses related to demand side option programs. The change in maintenance expense reflects the unscheduled maintenance at Plant McIntosh. Depreciation and amortization rose because of the commercial operation of two combustion turbine peaking units in April and May 1994. Income taxes were lower because of the change in taxable income. Allowance for Funds Used During Construction AFUDC represents the cost of capital charged to utility plant under construction and is included in rate base. The equity portion of AFUDC represents non-cash income. In addition, when facilities are completed and included in rate base, previously capitalized amounts increase cash flow because revenues are higher as a result of the increased rate base and additional depreciation expense. The amount of AFUDC recorded in 1994 was higher because of SAVANNAH's investment in the construction of two 80 megawatt combustion turbine peaking units. These units were placed in service in April and May 1994. 66 SAVANNAH ELECTRIC AND POWER COMPANY MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND FINANCIAL CONDITION Results of Operations (Continued) Future Earnings Potential The results of operations discussed above are not necessarily indicative of future earnings potential. The level of future earnings depends on numerous factors ranging from growth in energy sales to a less regulated, more competitive environment. Compliance costs related to the Clean Air Act will reduce earnings if such increased costs cannot be offset. The Clean Air Act is discussed under "Environmental Matters" in Item 7 - Management's Discussion and Analysis in SAVANNAH's 1994 Annual Report on Form 10-K. Future earnings in the near term will also depend upon growth in electric sales which are subject to a number of factors. Traditionally, these factors have included changes in contracts with neighboring utilities, energy conservation practiced by customers, the elasticity of demand, weather, competition, and the rate of economic growth in SAVANNAH's service area. The enactment of the Energy Act is beginning to have a dramatic effect on the future of the electric utility industry. A discussion of the potential impact of the Energy Act and particularly its effect on competition is found under "Future Earnings Potential" in Item 7 - Management's Discussion and Analysis in SAVANNAH's 1994 Annual Report on Form 10-K. SAVANNAH is subject to the provisions of FASB Statement No. 71, Accounting for the Effects of Certain Types of Regulation. In the event that a portion of the company's operations is no longer subject to these provisions, SAVANNAH would be required to write off related regulatory assets and liabilities. See Note 1 to the financial statements in Item 8 of SAVANNAH's 1994 Annual Report on Form 10-K for additional information. In March 1995, the FASB issued Statement No. 121, Accounting for the Impairment of Long-Lived Assets and Long-Lived Assets to be Disposed Of. This statement imposes stricter criteria for regulatory assets by requiring that such assets be probable of future recovery at each balance sheet date. SAVANNAH anticipates adopting this standard on January 1, 1996 and does not expect that adoption will have a material impact on the financial position or results of operations of SAVANNAH based on the current regulatory structure in which SAVANNAH operates. This conclusion may change in the future as competitive factors influence wholesale and retail pricing in this industry. Financial Condition Overview During the first three months of 1995, SAVANNAH made gross property additions to utility plant of $7.6 million. The funds for these additions and other capital requirements came from operating activities, principally from earnings and noncash charges to income such as depreciation. See the Condensed Statements of Cash Flows for further details. 67 SAVANNAH ELECTRIC AND POWER COMPANY MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND FINANCIAL CONDITION Financial Condition (Continued) Capital Requirements for Construction SAVANNAH's construction program is budgeted at $87 million for the three years 1995 through 1997 ($34 million in 1995, $27 million in 1996 and $26 million in 1997). Actual construction costs may vary from this estimate because of such factors as changes in business conditions; changes in environmental regulations; the cost and efficiency of construction labor, equipment and materials; revised load growth estimates and changes in cost of capital. Such construction expenditures will be incurred for transmission and distribution facilities and the upgrading and extension of the useful lives of generating plants. Changes in environmental regulations could substantially increase the Southern electric system's capital requirements and operating costs. The acid rain compliance provision of the Clean Air Act will have a significant impact on the Southern electric system. This legislation, as well as other legislation and regulations, are described under "Environmental Matters" in Item 7 - Management's Discussion and Analysis in SAVANNAH's 1994 Annual Report on Form 10-K. The full impact of these requirements cannot be determined at this time, pending the development and implementation of applicable regulations. There can be no assurance that compliance costs will be recovered through corresponding increases in rates. Sources of Capital At March 31, 1995, SAVANNAH had $27.0 million of unused credit arrangements with banks to meet its short-term cash needs. SAVANNAH had $3.0 million of short-term debt outstanding at quarter-end. Additionally, SAVANNAH has $1.1 million of leases maturing by March 31, 1996. SAVANNAH has received the authority from the SEC to have outstanding at any one time an amount of up to $70 million in short-term borrowings. It is anticipated that the funds required for construction and other purposes, including compliance with environmental regulations, will be derived from operations and the sale of additional first mortgage bonds and preferred stock and capital contributions from SOUTHERN. SAVANNAH is required to meet certain coverage requirements specified in its mortgage indenture and corporate charter to issue new first mortgage bonds and preferred stock. SAVANNAH's coverage ratios are sufficiently high to permit, at present interest rate levels, any foreseeable security sales. The amount of securities which SAVANNAH will be permitted to issue in the future will depend upon market conditions and other factors prevailing at that time. 68 NOTES TO THE CONDENSED FINANCIAL STATEMENTS FOR THE SOUTHERN COMPANY AND SUBSIDIARY COMPANIES ALABAMA POWER COMPANY GEORGIA POWER COMPANY GULF POWER COMPANY MISSISSIPPI POWER COMPANY SAVANNAH ELECTRIC AND POWER COMPANY INDEX TO APPLICABLE NOTES TO FINANCIAL STATEMENTS BY REGISTRANT Registrant Applicable Notes SOUTHERN A, B, C, D, E, F, G, H, J ALABAMA B, C, D GEORGIA B, C, E, F, G, H, I, J GULF B, C MISSISSIPPI B, C SAVANNAH C 69 THE SOUTHERN COMPANY AND SUBSIDIARY COMPANIES ALABAMA POWER COMPANY GEORGIA POWER COMPANY GULF POWER COMPANY MISSISSIPPI POWER COMPANY SAVANNAH ELECTRIC AND POWER COMPANY NOTES TO CONDENSED FINANCIAL STATEMENTS: (A) Reference is made to Item 3 - LEGAL PROCEEDINGS in the SOUTHERN system's combined Annual Report on Form 10-K for the year ended December 31, 1994 for a description of the proceedings related to a derivative action filed against certain current and former directors and officers of SOUTHERN. (B) Reference is made to Note 3 to each of the registrant's, except SAVANNAH's, notes to the financial statements in Item 8 in the SOUTHERN system's combined 1994 Annual Report on Form 10-K for a discussion of the proceedings initiated by the FERC regarding the reasonableness of the return on common equity on certain of the Southern electric system's wholesale rate schedules and contracts. (C) Certain of the registrants and SCS, the system service company, instituted workforce reduction programs. The expenses recognized and the unamortized balance of deferred expenses under these programs were as follows: (in thousands)
Three Months Ended Unamortized Balance March 31, at March 31, 1995 ------------------- ------------------- 1995 1994 ---- ---- ALABAMA $1,445 $ 9,700 $ 3,105 GEORGIA 1,060 84,689 - GULF - 657 - MISSISSIPPI 750 - 10,536 SAVANNAH - 551 - - --- - SOUTHERN system $3,255 $95,597 $13,641 ====== ======= =======
(D) Reference is made to Note 3 to the financial statements of SOUTHERN and ALABAMA in Item 8 of the SOUTHERN system's combined 1994 Annual Report on Form 10-K for information with respect to a civil complaint filed regarding ALABAMA's financing of heat pumps and other merchandise. (E) Pursuant to orders from the Georgia PSC, GEORGIA deferred financing and depreciation costs under phase-in plans for Plant Vogtle units 1 and 2 until the allowed investment was fully reflected in rates as of October 1991. In addition, the Georgia PSC issued two separate accounting orders that required GEORGIA to defer substantially all operating and financing costs related to both units until rate orders addressed these costs. The Georgia PSC orders provide for recovery of deferred costs within 10 years. 70 NOTES TO CONDENSED FINANCIAL STATEMENTS: (Continued) The Georgia PSC also ordered GEORGIA to levelize declining capacity buyback expense from the co-owners of the plant over a six-year period beginning October 1991. The unamortized balance of these deferred costs at March 31, 1995, was $404 million. (F) Reference is made to Note 4 to the financial statements of SOUTHERN and GEORGIA in Item 8 of the SOUTHERN system's combined 1994 Annual Report on Form 10-K for information concerning the uncertainty related to the actions of regulatory authorities with respect to the recovery of costs of the Rocky Mountain pumped storage hydroelectric project. The ultimate outcome of this matter cannot now be determined. (G) Reference is made to Note 3 to the financial statements of SOUTHERN and GEORGIA in Item 8 of the SOUTHERN system's combined 1994 Annual Report on Form 10-K for information regarding recovery of GEORGIA's costs from demand-side conservation programs. The final outcome of this matter cannot now be determined; however, in management's opinion, the final outcome will not have a material adverse effect on SOUTHERN's or GEORGIA's Condensed Financial Statements. (H) Reference is made to Note 3 to the financial statements of SOUTHERN and GEORGIA in Item 8 of the SOUTHERN system's combined 1994 Annual Report on Form 10-K for information regarding a tax deficiency notice received from the Internal Revenue Service relating to GEORGIA's tax accounting for the sale in 1984 of an interest in Plant Vogtle and related capacity and energy buyback commitments. The final outcome of this matter cannot now be determined; however, in management's opinion, the final outcome will not have a material adverse effect on SOUTHERN's or GEORGIA's Condensed Financial Statements. (I) Reference is made to Note 3 to the financial statements of GEORGIA in Item 8 of the SOUTHERN system's combined 1994 Annual Report on Form 10-K for information regarding joint complaints filed by OPC and MEAG seeking recovery from GEORGIA for alleged partial requirements rates overcharges plus interest. While the outcome of this matter cannot now be determined, in management's opinion, it will not have a material adverse effect on GEORGIA's Condensed Financial Statements. (J) Reference is made to Note 3 and Note 4 to the financial statements of SOUTHERN and GEORGIA, respectively, in Item 8 of the SOUTHERN system's combined 1994 Annual Report on Form 10-K for information on certain environmental contingencies. 71 PART II - OTHER INFORMATION Item 1. Legal Proceedings. (1) Reference is made to the Notes to Condensed Financial Statements herein for information regarding certain legal and administrative proceedings in which SOUTHERN and its reporting subsidiaries are involved. (2) In May 1994, GEORGIA received a notice of violation from the NRC proposing a civil penalty in the amount of $200,000 based upon allegedly inaccurate and incomplete information relating to Plant Vogtle reported to the NRC in 1990. The NRC also issued demands for information regarding alleged performance failures by six individual employees to enable the NRC to determine whether additional enforcement actions are necessary. GEORGIA submitted responses to such notice of violation and demands in August 1994 and February 1995. In February 1995, the NRC issued a modified notice of violation in which it withdrew one of the five violations initially alleged and again proposed a $200,000 civil penalty. The NRC also determined that, subject to certain commitments with respect to one individual employee, no additional enforcement sanctions were warranted. GEORGIA has paid the civil penalty proposed by the NRC, and this matter is now concluded. (3) Reference is made to Item 3 - LEGAL PROCEEDINGS in the SOUTHERN system's combined 1994 Annual Report on Form 10-K for information regarding GEORGIA's designation as a potentially responsible party under the Comprehensive Environmental Response, Compensation and Liability Act. Item 6. Exhibits and Reports on Form 8-K. (a) Exhibits. Exhibit 24(a) - Powers of Attorney and resolutions. (Designated in the SOUTHERN system's combined Form 10-K for the year ended December 31, 1994, File Nos. 1-3526, 1-3164, 1-6468, 0-2429, 0-6849 and 1-5072 as Exhibits 24(a), 24(b), 24(c), 24(d), 24(e) and 24(f), respectively, and incorporated herein by reference.) Exhibit 24(b) - Power of Attorney relating to Chief Executive Officer of MISSISSIPPI. 72 Item 6. Exhibits and Reports on Form 8-K. (Continued) Exhibit 27 - Financial Data Schedules (a) SOUTHERN (b) ALABAMA (c) GEORGIA (d) GULF (e) MISSISSIPPI (f) SAVANNAH (b) Reports on Form 8-K. During the first quarter of 1995, each of the registrants filed a Form 8-K dated February 15, 1995, whereby their respective audited financial statements as of December 31, 1994, were made a part of the public record. Additionally, SOUTHERN filed a Form 8-K dated January 25, 1995, to facilitate a security sale. 73 SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. The signature of the undersigned company shall be deemed to relate only to matters having reference to such company and any subsidiaries thereof. THE SOUTHERN COMPANY By A. W. Dahlberg Chairman, President and Chief Executive Officer (Principal Executive Officer) By W. L. Westbrook Financial Vice President (Principal Financial and Accounting Officer) By /s/ Wayne Boston (Wayne Boston, Attorney-in-fact) Date: May 11, 1995 - ------------------------------------------------------------------------------- Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. The signature of the undersigned company shall be deemed to relate only to matters having reference to such company and any subsidiaries thereof. ALABAMA POWER COMPANY By Elmer B. Harris, President and Chief Executive Officer By William B. Hutchins, III, Executive Vice President (Principal Financial Officer) By /s/ Wayne Boston (Wayne Boston, Attorney-in-fact) Date: May 11, 1995 74 SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. The signature of the undersigned company shall be deemed to relate only to matters having reference to such company and any subsidiaries thereof. GEORGIA POWER COMPANY By H. Allen Franklin President and Chief Executive Officer (Principal Executive Officer) By Warren Y. Jobe Executive Vice President, Treasurer and Chief Financial Officer (Principal Financial Officer) By /s/ Wayne Boston (Wayne Boston, Attorney-in-fact) Date: May 11, 1995 - ----------------------------------------------------------------------------- Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. The signature of the undersigned company shall be deemed to relate only to matters having reference to such company and any subsidiaries thereof. GULF POWER COMPANY By Travis J. Bowden, President and Chief Executive Officer By A. E. Scarbrough, Vice President - Finance (Principal Financial and Accounting Officer) By /s/ Wayne Boston (Wayne Boston, Attorney-in-fact) Date: May 11, 1995 75 SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. The signature of the undersigned company shall be deemed to relate only to matters having reference to such company and any subsidiaries thereof. MISSISSIPPI POWER COMPANY By Dwight H. Evans, President and Chief Executive Officer By Michael W. Southern, Vice President, Secretary, Treasurer and Chief Financial Officer (Principal Financial and Accounting Officer) By /s/ Wayne Boston (Wayne Boston, Attorney-in-fact) Date: May 11, 1995 - ----------------------------------------------------------------------------- Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. The signature of the undersigned company shall be deemed to relate only to matters having reference to such company and any subsidiaries thereof. SAVANNAH ELECTRIC AND POWER COMPANY By Arthur M. Gignilliat, Jr., President By Kirby R. Willis, Vice President, Treasurer and Chief Financial Officer (Principal Financial and Accounting Officer) By /s/ Wayne Boston (Wayne Boston, Attorney-in-fact) Date: May 11, 1995 EX-24 2 EXHIBIT 24(B) Exhibit 24(b) 76 May 3, 1995 W. L. Westbrook and Wayne Boston Dear Sirs: Mississippi Power Company proposes to file or join in the filing of statements under the Securities Exchange Act of 1934 with the Securities and Exchange Commission with respect to its quarterly reports on Form 10-Q during 1995. Mississippi Power Company and the undersigned officer of said Company, individually as an officer of the Company, hereby make, constitute and appoint each of you our true and lawful Attorney in each of our names, places and steads to sign and cause to be filed with the Securities and Exchange Commission in connection with the foregoing said quarterly reports on Form 10-Q and any appropriate amendment or amendments thereto and any necessary exhibits. Yours very truly, MISSISSIPPI POWER COMPANY By /s/Dwight H. Evans Dwight H. Evans President and Chief Executive Officer EX-27 3 FINANCIAL DATA SCHEDULE
UT This schedule contains summary financial information extracted from the Form 10-Q for March 31, 1995, and is qualified in its entirety by reference to such financial statements. 0000092122 THE SOUTHERN COMPANY 1,000 3-MOS DEC-31-1994 MAR-31-1995 PER-BOOK 21,156,555 823,734 2,261,629 2,723,034 0 26,964,952 3,327,337 1,847,073 3,193,995 8,368,405 100,000 1,332,203 7,332,271 371,500 317,419 510,350 (552,204) 0 147,863 (2,720) 9,039,865 26,964,952 1,929,043 151,992 1,391,672 1,543,664 385,379 6,004 391,383 162,591 228,792 22,450 206,342 201,866 0 495,135 0.31 0
EX-27 4
UT This schedule contains summary financial information extracted from the Form 10-Q for March 31, 1995, and is qualified in its entirety by reference to such financial statements. 0000003153 ALABAMA POWER COMPANY 1,000 3-MOS DEC-31-1994 MAR-31-1995 PER-BOOK 6,908,930 117,688 833,548 648,354 0 8,508,520 224,358 1,304,791 1,078,613 2,607,762 0 440,400 2,446,617 12,000 0 288,051 (60,000) 0 9,569 (823) 2,764,944 8,508,520 646,771 40,310 483,512 523,822 122,949 3,910 126,859 54,675 72,184 6,856 65,328 71,900 0 93,832 0 0
EX-27 5 GA FINANCIAL DATA SCHEDULE
UT This schedule contains summary financial information extracted from the Form 10-Q for March 31, 1995, and is qualified in its entirety by reference to such financial statements. 0000041091 GEORGIA POWER COMPANY 1,000 3-MOS DEC-31-1994 MAR-31-1995 PER-BOOK 10,651,111 197,726 1,016,389 1,760,450 0 13,625,676 344,250 2,384,761 1,414,779 4,143,790 100,000 692,787 3,800,960 150,600 37,000 222,299 (417,110) 0 87,615 (317) 4,808,052 13,625,676 974,493 91,437 676,053 767,490 207,003 617 207,620 79,170 128,450 12,313 116,137 113,900 0 333,852 0 0
EX-27 6 GULF FINANCIAL DATA SCH
UT This schedule contains summary financial information extracted from the Form 10-Q for March 31, 1995, and is qualified in its entirety by reference to such financial statements. 0000044545 GULF POWER COMPANY 1,000 3-MOS DEC-31-1994 MAR-31-1995 PER-BOOK 1,058,705 8,003 148,007 96,891 0 1,311,606 38,060 218,461 168,130 424,651 0 89,602 319,514 47,500 47,958 0 (12,759) 0 0 0 395,140 1,311,606 140,918 6,669 114,746 121,415 19,503 272 19,775 7,420 12,355 1,475 10,880 11,700 0 38,526 0 0
EX-27 7 MS FINANCIAL DATA SCH
UT This schedule contains summary financial information extracted from the Form 10-Q for March 31, 1995, and is qualified in its entirety by reference to such financial statements. 0000066904 MISSISSIPPI POWER COMPANY 1,000 3-MOS DEC-31-1994 MAR-31-1995 PER-BOOK 957,932 3,334 91,408 64,430 0 1,117,104 37,691 179,734 143,696 361,121 0 74,414 252,112 22,000 91,570 0 (58,080) 0 0 0 373,967 1,117,104 109,572 5,433 88,410 93,843 15,729 1,131 16,860 6,366 10,494 1,225 9,269 9,900 0 12,770 0 0
EX-27 8 SAV FINANCIAL DATA SCH
UT This schedule contains summary financial information extracted from the Form 10-Q for March 31, 1995, and is qualified in its entirety by reference to such financial statements. 0000086940 SAVANNAH ELECTRIC AND POWER COMPANY 1,000 3-MOS DEC-31-1994 MAR-31-1995 PER-BOOK 434,387 1,790 44,137 39,016 0 519,330 54,223 8,688 95,055 157,966 0 35,000 147,176 3,000 10,500 0 0 0 1,291 (1,111) 165,508 519,330 46,743 2,193 38,082 40,275 6,468 (54) 6,414 3,413 3,001 581 2,420 4,400 0 11,686 0 0
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