-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, GvUGxKKFIkGtyANKABDq8LjrxW4I3X9xvAPCbS5vqy306YFq8RmQutfu2174uYNE CFvovt6VDy2mP/tM19NVHg== 0000092122-97-000029.txt : 19970515 0000092122-97-000029.hdr.sgml : 19970515 ACCESSION NUMBER: 0000092122-97-000029 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 7 CONFORMED PERIOD OF REPORT: 19970331 FILED AS OF DATE: 19970514 SROS: NYSE 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: 97603435 BUSINESS ADDRESS: STREET 1: 64 PERIMETER CENTER EAST CITY: ATLANTA STATE: GA ZIP: 30346 BUSINESS PHONE: 770-393-06 MAIL ADDRESS: STREET 1: 64 PERIMETER CENTER EAST CITY: ATLANTA STATE: GA ZIP: 30346 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: 97603436 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: 97603437 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: 97603438 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: 97603439 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: 97603440 BUSINESS ADDRESS: STREET 1: 600 BAY ST EAST CITY: SAVANNAH STATE: GA ZIP: 31401 BUSINESS PHONE: 9122327171 10-Q 1 FIRST QUARTER 1997
=================================================================================================================== 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, 1997 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) 270 Peachtree Street, N.W. Atlanta, Georgia 30303 (770) 393-0650 1-3164 Alabama Power Company 63-0004250 (An Alabama Corporation) 600 North 18th Street Birmingham, Alabama 35291 (205) 257-1000 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 32520 (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 East Bay Street Savannah, Georgia 31401 (912) 644-7171 ===================================================================================================================
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, 1997 The Southern Company Par Value $5 Per Share 681,674,776 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.
INDEX TO QUARTERLY REPORT ON FORM 10-Q March 31, 1997 Page Number DEFINITIONS........................................................................................................ 4 PART I - FINANCIAL INFORMATION Item 1. Financial Statements (Unaudited) and Item 2. Management's Discussion and Analysis of Results of Operations and Financial Condition The Southern Company and Subsidiary Companies Condensed Consolidated Statements of Income........................................................ 6 Condensed Consolidated Statements of Cash Flows.................................................... 7 Condensed Consolidated Balance Sheets.............................................................. 8 Management's Discussion and Analysis of Results of Operations and Financial Condition.............. 10 Alabama Power Company Condensed Statements of Income..................................................................... 15 Condensed Statements of Cash Flows................................................................. 16 Condensed Balance Sheets........................................................................... 17 Management's Discussion and Analysis of Results of Operations and Financial Condition.............. 19 Exhibit 1 - Report of Independent Public Accountants............................................... 22 Georgia Power Company Condensed Statements of Income..................................................................... 24 Condensed Statements of Cash Flows................................................................. 25 Condensed Balance Sheets........................................................................... 26 Management's Discussion and Analysis of Results of Operations and Financial Condition.............. 28 Exhibit 1 - Report of Independent Public Accountants............................................... 32 Gulf Power Company Condensed Statements of Income..................................................................... 34 Condensed Statements of Cash Flows................................................................. 35 Condensed Balance Sheets........................................................................... 36 Management's Discussion and Analysis of Results of Operations and Financial Condition.............. 38 Mississippi Power Company Condensed Statements of Income..................................................................... 42 Condensed Statements of Cash Flows................................................................. 43 Condensed Balance Sheets........................................................................... 44 Management's Discussion and Analysis of Results of Operations and Financial Condition.............. 46 Savannah Electric and Power Company Condensed Statements of Income..................................................................... 50 Condensed Statements of Cash Flows................................................................. 51 Condensed Balance Sheets........................................................................... 52 Management's Discussion and Analysis of Results of Operations and Financial Condition.............. 54 Notes to the Condensed Financial Statements........................................................... 56 PART II - OTHER INFORMATION Item 1. Legal Proceedings......................................................................................... 62 Item 2. Changes in Securities..................................................................................... Inapplicable Item 3. Defaults Upon Senior Securities........................................................................... Inapplicable Item 4. Submission of Matters to a Vote of Security Holders....................................................... Inapplicable Item 5. Other Information......................................................................................... Inapplicable Item 6. Exhibits and Reports on Form 8-K.......................................................................... 62 Signatures ............................................................................................... 64 3
DEFINITIONS TERM MEANING affiliates.............................. ALABAMA, GEORGIA, GULF, MISSISSIPPI and SAVANNAH ALABAMA................................. Alabama Power Company CEPA.................................... Consolidated Electric Power Asia Clean Air Act .......................... Clean Air Act Amendments of 1990 ECO Plan................................ Environmental Compliance Overview Plan Energy Act.............................. Energy Policy Act of 1992 EWG..................................... Exempt wholesale generator FASB.................................... Financial Accounting Standards Board FERC.................................... Federal Energy Regulatory Commission Form 10-K............................... Combined Annual Report on Form 10-K of SOUTHERN, ALABAMA, GEORGIA, GULF, MISSISSIPPI and SAVANNAH for the year ended December 31, 1996 FUCO.................................... Foreign utility company GEORGIA................................. Georgia Power Company GULF.................................... Gulf Power Company MEAG.................................... Municipal Electric Authority of Georgia MISSISSIPPI............................. Mississippi Power Company OPC..................................... Oglethorpe Power Corporation operating affiliates.................... see affiliates operating companies..................... see affiliates PEP..................................... Performance Evaluation Plan PSC..................................... Public Service Commission SAVANNAH................................ Savannah Electric and Power Company SEC..................................... Securities and Exchange Commission SOUTHERN................................ The Southern Company Southern Energy......................... Southern Energy, Inc. (formerly Southern Electric International, Inc.), including SOUTHERN subsidiaries managed or controlled by Southern Energy SWEB.................................... South Western Electricity plc (United Kingdom) TVA..................................... Tennessee Valley Authority
4 THE SOUTHERN COMPANY AND SUBSIDIARY COMPANIES 5
THE SOUTHERN COMPANY AND SUBSIDIARY COMPANIES CONDENSED CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED) (Stated in Thousands of Dollars) For the Three Months Ended March 31, 1997 1996 OPERATING REVENUES $ 2,584,414 $ 2,429,355 -------------- -------------- OPERATING EXPENSES: Operation-- Fuel 485,755 502,710 Purchased power 458,241 271,497 Other (Note H) 425,347 451,061 Maintenance 191,292 186,377 Depreciation and amortization 292,124 246,619 Amortization of deferred Plant Vogtle costs (Note M) 37,627 33,759 Taxes other than income taxes 151,694 168,667 Income taxes 146,182 160,603 -------------- -------------- Total operating expenses 2,188,262 2,021,293 -------------- -------------- OPERATING INCOME 396,152 408,062 OTHER INCOME: Allowance for equity funds used during construction 791 860 Interest income 28,084 15,728 Other, net 14,210 22,346 Income taxes applicable to other income 4,439 (3,160) -------------- -------------- INCOME BEFORE INTEREST CHARGES 443,676 443,836 -------------- -------------- INTEREST CHARGES AND OTHER: Interest on long-term debt 152,200 139,768 Allowance for debt funds used during construction (4,596) (5,311) Interest on notes payable 29,319 22,547 Amortization of debt discount, premium and expense, net 7,520 12,975 Other interest charges 18,123 16,444 Minority interest in subsidiaries 15,519 (556) Distributions on capital and preferred securities of subsidiary companies 21,523 3,601 Preferred dividends of subsidiary companies 17,055 21,493 -------------- -------------- Interest charges and other, net 256,663 210,961 -------------- -------------- CONSOLIDATED NET INCOME $ 187,013 $ 232,875 ============== ============== AVERAGE NUMBER OF SHARES OF COMMON STOCK OUTSTANDING (Thousands) 678,826 670,105 EARNINGS PER SHARE OF COMMON STOCK $0.28 $0.35 CASH DIVIDENDS PAID PER SHARE OF COMMON STOCK $0.325 $0.315 The accompanying notes as they relate to SOUTHERN are an integral part of these condensed statements.
6
THE SOUTHERN COMPANY AND SUBSIDIARY COMPANIES CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED) (Stated in Thousands of Dollars) For the Three Months Ended March 31, 1997 1996 OPERATING ACTIVITIES: Consolidated net income $ 187,013 $ 232,875 Adjustments to reconcile net income to net cash provided by operating activities-- Depreciation and amortization 347,829 306,320 Deferred income taxes and investment tax credits (6,835) 18,918 Allowance for equity funds used during construction (791) (860) Amortization of deferred Plant Vogtle costs (Note M) 37,627 33,759 Gain on asset sales (15,593) (11,072) Other, net (38,019) 20,947 Changes in certain current assets and liabilities-- Receivables, net 229,542 130,802 Fossil fuel stock (30,419) 25,113 Materials and supplies 13,491 11,486 Prepayments (62,908) (45,250) Payables (58,783) (126,490) Customer deposits 551 (85,141) Taxes Accrued 76,706 (17,221) Other (93,766) (87,831) ---------------- ---------------- Net cash provided from operating activities 585,645 406,355 ---------------- ---------------- INVESTING ACTIVITIES: Gross property additions (377,836) (306,470) Southern Energy business acquisitions (1,755,064) - Sales of property 15,350 1,800 Other (45,932) (79,155) ---------------- ---------------- Net cash used for investing activities (2,163,482) (383,825) ---------------- ---------------- FINANCING ACTIVITIES: Proceeds-- Common stock 88,528 18,530 Capital and preferred securities 931,500 97,000 First mortgage bonds - 40,000 Pollution control bonds - 21,200 Other long-term debt 998,133 279,147 Retirements-- Preferred stock (203,528) - First mortgage bonds (83,574) (239,127) Pollution control bonds - (6,800) Other long-term debt (252,728) (1,074,005) Special deposits-redemption funds 44,454 (21,291) Notes payable, net 458,762 618,850 Payment of common stock dividends (220,194) (211,081) Miscellaneous (78,455) (5,479) ---------------- ---------------- Net cash provided from (used for) financing activities 1,682,898 (483,056) ---------------- ---------------- NET CHANGE IN CASH AND CASH EQUIVALENTS 105,061 (460,526) CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD 444,832 772,340 ---------------- ---------------- CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 549,893 $ 311,814 ================ ================ SUPPLEMENTAL CASH FLOW INFORMATION: Cash paid during the period for-- Interest (net of amount capitalized) $213,978 $199,455 Income taxes $3,956 $56,321 Southern Energy business acquisitions-- Fair value of assets acquired $3,551,064 - Less cash paid for common stock 1,755,064 - -------------- -------------- Liabilities assumed $1,796,000 - ============== ============== The accompanying notes as they relate to SOUTHERN are an integral part of these condensed statements.
7
THE SOUTHERN COMPANY AND SUBSIDIARY COMPANIES CONDENSED CONSOLIDATED BALANCE SHEETS (Stated in Thousands of Dollars) ASSETS At March 31, 1997 At December 31, (Unaudited) 1996 ---------------- ----------------- UTILITY PLANT: Plant in service $ 33,343,549 $ 33,260,914 Less accumulated provision for depreciation 11,174,138 10,921,242 ---------------- --------------- 22,169,411 22,339,672 Nuclear fuel, at amortized cost 220,620 245,702 Construction work in progress 748,674 683,924 ---------------- --------------- Total 23,138,705 23,269,298 ---------------- --------------- OTHER PROPERTY AND INVESTMENTS: Goodwill, being amortized 1,807,245 318,142 Leasehold interests 1,441,891 415,600 Equity investments in subsidiaries 1,044,943 227,097 Nuclear decommissioning trusts, at market 307,475 278,938 Miscellaneous 283,371 261,175 ---------------- --------------- Total 4,884,925 1,500,952 ---------------- --------------- CURRENT ASSETS: Cash and cash equivalents 549,893 444,832 Special deposits - 44,454 Receivables, less accumulated provisions for uncollectible accounts of $29,753 at March 31, 1997 and $31,587 at December 31, 1996 1,779,456 1,458,092 Fossil fuel stock, at average cost 301,367 269,940 Materials and supplies, at average cost 499,491 509,409 Prepayments 340,949 252,977 Vacation pay deferred 75,399 77,195 ---------------- --------------- Total 3,546,555 3,056,899 ---------------- --------------- DEFERRED CHARGES: Deferred charges related to income taxes 1,284,674 1,302,342 Deferred Plant Vogtle costs (Note M) 133,361 170,988 Debt expense, being amortized 92,370 78,042 Premium on reacquired debt, being amortized 284,202 289,019 Miscellaneous 635,290 624,262 ---------------- --------------- Total 2,429,897 2,464,653 ---------------- --------------- TOTAL ASSETS $ 34,000,082 $ 30,291,802 ================ =============== The accompanying notes as they relate to SOUTHERN are an integral part of these condensed statements.
8
THE SOUTHERN COMPANY AND SUBSIDIARY COMPANIES CONDENSED CONSOLIDATED BALANCE SHEETS (Stated in Thousands of Dollars) CAPITALIZATION AND LIABILITIES At March 31, 1997 At December 31, (Unaudited) 1996 ---------------- ------------------ CAPITALIZATION: Common stock, par value $5 per share- Authorized -- 1 billion shares Outstanding -- March 31, 1997: 681,118,747 shares -- December 31, 1996: 677,035,961 shares $ 3,405,594 $ 3,385,180 Paid-in capital 2,125,534 2,067,228 Retained earnings 3,730,782 3,763,987 ---------------- ---------------- 9,261,910 9,216,395 Preferred stock of subsidiaries 833,372 979,527 Subsidiary obligated mandatorily redeemable capital and preferred securities (Note I) 1,353,500 422,000 Long-term debt 9,699,757 7,935,269 ---------------- ---------------- Total 21,148,539 18,553,191 ---------------- ---------------- CURRENT LIABILITIES: Preferred stock of subsidiaries due within one year 116,155 173,528 Long-term debt due within one year 466,515 191,411 Notes payable 2,024,235 1,482,822 Accounts payable 772,527 787,809 Customer deposits 132,095 131,544 Taxes accrued-- Income taxes 150,222 11,965 Other 146,967 192,921 Interest accrued 185,734 187,152 Vacation pay accrued 102,843 103,514 Miscellaneous 527,292 535,366 ---------------- ---------------- Total 4,624,585 3,798,032 ---------------- ---------------- DEFERRED CREDITS AND OTHER LIABILITIES: Accumulated deferred income taxes 4,674,025 4,738,085 Deferred credits related to income taxes 866,806 879,090 Accumulated deferred investment tax credits 780,012 787,545 Employee benefits provisions 451,868 439,176 Minority interests in subsidiaries 730,178 374,922 Prepaid capacity revenues 119,417 122,496 Department of Energy assessments 80,523 80,523 Disallowed Plant Vogtle capacity buyback costs 56,947 57,250 Storm damage reserves 36,297 35,112 Miscellaneous 430,885 426,380 ---------------- ---------------- Total 8,226,958 7,940,579 ---------------- ---------------- TOTAL CAPITALIZATION AND LIABILITIES $ 34,000,082 $ 30,291,802 ================ ================ The accompanying notes as they relate to SOUTHERN are an integral part of these condensed statements.
9 THE SOUTHERN COMPANY AND SUBSIDIARY COMPANIES MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND FINANCIAL CONDITION FIRST QUARTER 1997 vs. FIRST QUARTER 1996 RESULTS OF OPERATIONS Earnings SOUTHERN's consolidated net income for the first quarter of 1997 was $187 million ($0.28 per share), compared to $233 million ($0.35 per share) for the corresponding period of 1996, representing a 19.7% decrease. Milder weather in the service territories of the operating affiliates during the current quarter, compared with the corresponding quarter of 1996, was the primary reason for this reduction in earnings. In addition, the acquisition of CEPA also had a slightly negative effect, which was anticipated. (Reference is made to "Future Earnings Potential" below for additional information relating to the acquisition, in January 1997, of CEPA.) SOUTHERN's traditional core business is primarily represented by its five domestic electric utility operating companies, which provide electric service in four Southeastern states. Another significant portion of SOUTHERN's business is its non-traditional business primarily represented by Southern Energy, which owns and manages international and domestic businesses for SOUTHERN. Businesses acquired by Southern Energy have been included in the consolidated statements of income since the date of acquisition. Certain changes in operating revenues and expenses from the prior period are the result of such acquisitions. Significant income statement items appropriate for discussion include the following:
Increase (Decrease) ----------------------------------------- (in thousands) % Operating revenues................................... $155,059 6.4 Purchased power expense.............................. 186,744 68.8 Depreciation and amortization expense................ 45,505 18.5 Taxes other than income taxes........................ (16,973) (10.1) Interest income...................................... 12,356 78.6 Interest on long-term debt........................... 12,432 8.9 Distributions on preferred and capital securities of subsidiaries.............. 17,922 497.7 Minority interest.................................... 16,075 NM -------------- NM - Not meaningful.
Operating revenues. Operating revenues for the first quarter of 1997 when compared to the corresponding quarter of 1996 decreased by $81 million (4.1%) for the traditional core business while operating revenues were up by $236 million (55.1%) for the non-traditional business. The primary factor contributing to this decrease in traditional core revenues was milder weather during the current period which resulted in a lower demand for electricity. The effect of weather on first quarter results is evidenced by the fact that residential energy sales were down by 9.7% when compared to the corresponding quarter of 1996. In addition, although energy sales for commercial and industrial customers were up by 0.3% and 2.9%, respectively, revenues, in both cases, were down primarily due to rate reductions to certain large customers. The increase in operating revenues for the non-traditional business was primarily attributable to increased sales by Southern Energy's power marketing organization and to CEPA, which was acquired in late January 1997. 10 THE SOUTHERN COMPANY AND SUBSIDIARY COMPANIES MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND FINANCIAL CONDITION Purchased power expense. Purchased power expense for the traditional core business declined by $17 million for the first quarter of 1997, compared to the comparable period of 1996, primarily because of milder-than-normal weather. Purchased power expense attributable to Southern Energy-related activities increased by $204 million primarily due to purchases in connection with its power marketing activities. Depreciation and amortization expense. Depreciation and amortization expense for the traditional core business increased by $28 million for the current quarter as compared to the corresponding quarter of 1996 primarily due to additions to utility plant and a charge of $19.8 million pursuant to GEORGIA's retail accounting order as discussed in Note (L) in the "Notes to the Condensed Financial Statements" herein. For the non-traditional business, depreciation and amortization increased by $17 million primarily because of the acquisition of CEPA. Taxes other than income taxes. Taxes other than income taxes for the firs quarter of 1997 when compared to the corresponding quarter of 1996 decreased primarily due to a $15 million reduction attributable to SWEB. This decrease resulted from the lowering, in November 1996, of the taxes on electricity sales from 10% to 3.7%. Interest income. This increase for the current quarter as compared to the corresponding quarter of 1996, is primarily attributable to $8 million in interest income from investment of funds provided to Southern Energy prior to closing of the CEPA acquisition. Interest on long-term debt. Interest on long-term debt for the operating companies decreased by $7 million for the current quarter as compared to the comparable quarter of 1996, reflecting the refinancing efforts of such companies. However, increases attributable to non-traditional business activities, primarily CEPA, resulted in a net increase in such interest for the current quarter. Distributions on preferred and capital securities of subsidiaries. This increase resulted from the sales of securities in 1996 and the first quarter of 1997. See Note (I) in the "Notes to the Condensed Financial Statements" herein for additional information. Minority interest. The increase in minority interest for the current quarter as compared to the corresponding quarter of 1996 is primarily attributable to the sale in July 1996 of a 25% share of SWEB and to the acquisition of an 80% controlling interest in CEPA. 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 energy sales growth to a less regulated, more competitive environment, with non-traditional business becoming more significant. (For additional information relating to non-traditional business activities, including information relating to the acquisition in January 1997 of an 80% interest in CEPA, see Item 1 - BUSINESS - "New Business Development" in the Form 10-K.) In May 1997, SOUTHERN announced that, through Southern Energy, it had agreed to purchase 25% of the outstanding common stock of Berliner Kraft und Licht AG (Bewag), the vertically integrated electric utility that serves Berlin, Germany, for approximately $830 million. The purchase is subject to approval by Berlin's parliament and European regulators. 11 THE SOUTHERN COMPANY AND SUBSIDIARY COMPANIES MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND FINANCIAL CONDITION With the enactment of the Energy Act and new legislation being discussed at federal and state levels to expand customer choice, SOUTHERN is positioning the business to meet the challenge of increasing competition. For additional information, see Item 1 - BUSINESS - "Competition" and Item 7 - MANAGEMENT'S DISCUSSION AND ANALYSIS - "Future Earnings Potential" of SOUTHERN in the Form 10-K. Compliance costs related to the Clean Air Act could affect earnings if such costs cannot be offset. For additional information about the Clean Air Act and other environmental issues, see Item 7 - MANAGEMENT'S DISCUSSION AND ANALYSIS "Environmental Matters" of SOUTHERN in the Form 10-K. In February, 1997, the FASB issued Statement No. 128, Earnings Per Share. The standard simplifies the computation of earnings per share (EPS) required by existing rules. SOUTHERN will adopt this standard on December 31, 1997. If EPS amounts were computed as specified by Statement No. 128, basic EPS and diluted EPS would be equal, and would equal the amounts currently reported in the "Condensed Statements of Income". Reference is made to Notes (B), (C), (D), (G), (J), (K), (L), (M), (N) and (P) in the "Notes to the Condensed Financial Statements" herein for discussion of various contingencies and other matters which may affect future earnings potential. Reference is also made to Part II - Item 1 - "Legal Proceedings" herein. FINANCIAL CONDITION Overview Major changes in SOUTHERN's financial condition during the first three months of 1997 included the addition of approximately $378 million to utility plant and the acquisition of CEPA. The funds for these additions and other capital requirements were derived primarily from operations and sales of securities. See SOUTHERN's Condensed Statements of Cash Flows for further details. Financing Activities During the first three months of 1997, retirements of the operating companies' first mortgage bonds totaled $80 million and redemptions of preferred stock totaled $204 million. Subsidiaries of SOUTHERN, ALABAMA, GEORGIA, GULF and MISSISSIPPI have formed statutory business trusts which sold, during the first quarter of 1997, an aggregate of $932 million of trust preferred or capital securities. See Note (I) in the "Notes to the Condensed Financial Statements" herein for further details. During the first three months of 1997, SOUTHERN raised $89 million from the issuance of new common stock under SOUTHERN's various stock plans. The market price of SOUTHERN's common stock at March 31, 1997 was $21.125 per share and the book value was $13.60 per share, representing a market-to-book ratio of 155%, compared to $22.625, $13.61 and 166%, respectively, at the end of 1996. The dividend for the first quarter of 1997 was $0.325 per share. 12 THE SOUTHERN COMPANY AND SUBSIDIARY COMPANIES MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND FINANCIAL CONDITION Capital Requirements Reference is made to Item 7 - MANAGEMENT'S DISCUSSION AND ANALYSIS of SOUTHERN under "Capital Requirements for Construction," "Environmental Matters" and "Other Capital Requirements" in the Form 10-K for a description of the Southern electric system's capital requirements for its construction program, environmental compliance efforts, sinking fund requirements and maturing debt. Approximately $583 million will be required by March 31, 1998, for present sinking fund requirements, redemption of preferred stock and redemptions and maturities of long-term debt. Also, the operating companies plan to continue, to the extent possible, a program to retire higher-cost debt and preferred stock and replace these securities with lower-cost capital. Sources of Capital In addition to the financing activities previously described, SOUTHERN may require additional equity capital during the remainder of the year. The amounts and timing of additional equity capital to be raised in 1997, as well as in subsequent years, will be contingent on SOUTHERN's investment opportunities. The operating companies plan to obtain the funds required for construction and other purposes from sources similar to those used in the past. The amount, type and timing of any financings--if needed--will depend upon maintenance of adequate earnings, regulatory approval, prevailing market conditions and other factors. Currently, each of the operating companies expects to have adequate earnings coverage ratios for any anticipated security sales through at least 1999. See Item 1 BUSINESS - "Financing Programs" in the Form 10-K for additional information. To meet short-term cash needs and contingencies, the SOUTHERN system had at March 31, 1997, approximately $550 million of cash and cash equivalents and approximately $4,127 million of unused credit arrangements with banks (including $829 million of such arrangements under which borrowings may be made only to fund purchase obligations of the operating companies relating to variable rate pollution control bonds). At March 31, 1997, the system companies had outstanding approximately $286 million of short-term notes payable and $1.7 billion of commercial paper. Since SOUTHERN's construction program with respect to major generating projects in the traditional core business 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. See Note (D) in the "Notes to the Condensed Financial Statements" herein for discussion of financial derivative contracts entered into by SOUTHERN. 13 ALABAMA POWER COMPANY 14
ALABAMA POWER COMPANY CONDENSED STATEMENTS OF INCOME (UNAUDITED) (Stated in Thousands of Dollars) For the Three Months Ended March 31, 1997 1996 OPERATING REVENUES: Revenues $ 658,105 $ 655,401 Revenues from affiliates 46,663 77,408 ------------- ------------ Total operating revenues 704,768 732,809 ------------- ------------ OPERATING EXPENSES: Operation-- Fuel 204,358 211,630 Purchased power from non-affiliates 3,374 8,967 Purchased power from affiliates 20,058 15,846 Other 114,278 116,996 Maintenance 68,950 62,934 Depreciation and amortization 85,652 79,898 Taxes other than income taxes 49,457 50,064 Federal and state income taxes 35,186 44,422 ------------- ------------ Total operating expenses 581,313 590,757 ------------- ------------ OPERATING INCOME 123,455 142,052 OTHER INCOME (EXPENSE): Allowance for equity funds used during construction - 401 Income from subsidiary 980 974 Interest income 11,090 9,670 Other, net (8,372) (7,623) Income taxes applicable to other income (708) (370) ------------- ------------ INCOME BEFORE INTEREST CHARGES 126,445 145,104 ------------- ------------ INTEREST CHARGES AND OTHER: Interest on long-term debt 41,383 42,576 Allowance for debt funds used during construction (946) (1,876) Interest on interim obligations 4,406 5,727 Amortization of debt discount, premium and expense, net 2,396 7,372 Other interest charges 10,704 10,183 Distributions on preferred securities of subsidiary trusts 4,997 1,351 ------------- ------------ Total interest charges and other 62,940 65,333 ------------- ------------ NET INCOME 63,505 79,771 DIVIDENDS ON PREFERRED STOCK 5,698 6,612 ------------- ------------ NET INCOME AFTER DIVIDENDS ON PREFERRED STOCK $ 57,807 $ 73,159 ============= ============ The accompanying notes as they relate to ALABAMA are an integral part of these condensed statements.
15
ALABAMA POWER COMPANY CONDENSED STATEMENTS OF CASH FLOWS (UNAUDITED) (Stated in Thousands of Dollars) For the Three Months Ended March 31,__ 1997 1996 OPERATING ACTIVITIES: Net income $ 63,505 $ 79,771 Adjustments to reconcile net income to net cash provided by operating activities-- Depreciation and amortization 101,987 101,996 Deferred income taxes and investment tax credits, net (2,380) 4,469 Allowance for equity funds used during construction - (401) Other, net (38,460) (6,600) Changes in certain current assets and liabilities-- Receivables, net 48,292 6,009 Inventories (16,130) 14,268 Prepayments (45,067) (42,872) Payables (76,068) (66,557) Taxes accrued 53,076 53,974 Energy cost recovery, retail 14,656 30,855 Other (39,157) (32,087) -------------- -------------- Net cash provided from operating activities 64,254 142,825 -------------- -------------- INVESTING ACTIVITIES: Gross property additions (94,605) (105,663) Other (9,469) (19,058) -------------- -------------- Net cash used for investing activities (104,074) (124,721) -------------- -------------- FINANCING ACTIVITIES: Proceeds-- Company obligated mandatorily redeemable preferred securities 200,000 97,000 Retirements-- Preferred stock (100,000) - First mortgage bonds (19,801) (83,797) Other long-term debt (232) (239) Interim obligations, net 48,933 46,014 Payment of preferred stock dividends (6,730) (6,638) Payment of common stock dividends (80,100) (76,000) Miscellaneous (6,361) (2,869) -------------- -------------- Net cash provided from (used for) financing activities 35,709 (26,529) -------------- -------------- NET CHANGE IN CASH AND CASH EQUIVALENTS (4,111) (8,425) CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD 9,587 12,616 -------------- -------------- CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 5,476 $ 4,191 ============== ============== SUPPLEMENTAL CASH FLOW INFORMATION: Cash paid during the period for-- Interest (net of amount capitalized) $58,030 $ 56,128 Income taxes 3,009 218 The accompanying notes as they relate to ALABAMA are an integral part of these condensed statements.
16
ALABAMA POWER COMPANY CONDENSED BALANCE SHEETS (Stated in Thousands of Dollars) ASSETS At March 31, 1997 At December 31, (Unaudited) 1996 ---------------- ----------------- UTILITY PLANT: Plant in service $ 10,861,095 10,806,921 Less accumulated provision for depreciation 4,196,246 4,113,622 ---------------- --------------- 6,664,849 6,693,299 Nuclear fuel, at amortized cost 113,666 123,862 Construction work in progress 282,433 256,802 ---------------- --------------- Total 7,060,948 7,073,963 ---------------- --------------- OTHER PROPERTY AND INVESTMENTS: Southern Electric Generating Company, at equity 27,011 26,032 Nuclear decommissioning trusts 152,253 148,760 Miscellaneous 21,353 20,243 ---------------- --------------- Total 200,617 195,035 ---------------- --------------- CURRENT ASSETS: Cash and cash equivalents 5,476 9,587 Receivables-- Customer accounts receivable 302,374 334,150 Other accounts and notes receivable 19,467 28,524 Affiliated companies 37,753 47,630 Accumulated provision for uncollectible accounts (1,357) (1,171) Refundable income taxes 8,461 5,856 Fossil fuel stock, at average cost 105,255 81,704 Materials and supplies, at average cost 160,371 167,792 Prepayments 176,937 131,870 Vacation pay deferred 27,083 28,369 ---------------- --------------- Total 841,820 834,311 ---------------- --------------- DEFERRED CHARGES: Deferred charges related to income taxes 409,263 410,010 Debt expense, being amortized 7,619 7,398 Premium on reacquired debt, being amortized 82,717 84,149 Uranium enrichment decontamination and decommissioning fund 37,490 37,490 Miscellaneous 109,721 91,490 ---------------- --------------- Total 646,810 630,537 ---------------- --------------- TOTAL ASSETS $ 8,750,195 $ 8,733,846 ================ =============== The accompanying notes as they relate to ALABAMA are an integral part of these condensed statements.
17
ALABAMA POWER COMPANY CONDENSED BALANCE SHEETS (Stated in Thousands of Dollars) CAPITALIZATION AND LIABILITIES At March 31, 1997 At December 31, (Unaudited) 1996 -------------- ---------------- 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 1,162,776 1,185,128 -------------- -------------- 2,691,925 2,714,277 Preferred stock 278,400 340,400 Company obligated mandatorily redeemable preferred securities of subsidiary trusts holding Company Junior Subordinated Notes (Note I) 297,000 97,000 Long-term debt 2,298,601 2,354,006 -------------- -------------- Total 5,565,926 5,505,683 -------------- -------------- CURRENT LIABILITIES: Preferred stock due within one year 62,000 100,000 Long-term debt due within one year 50,955 20,753 Commercial paper 413,786 364,853 Accounts payable-- Affiliated companies 55,406 64,307 Other 112,936 182,563 Customer deposits 32,721 32,003 Taxes accrued-- Federal and state income 53,230 35,638 Other 30,476 15,271 Interest accrued 43,930 51,941 Vacation pay accrued 27,083 28,369 Miscellaneous 78,303 96,485 -------------- -------------- Total 960,826 992,183 -------------- -------------- DEFERRED CREDITS AND OTHER LIABILITIES: Accumulated deferred income taxes 1,198,950 1,177,687 Accumulated deferred investment tax credits 291,269 294,071 Prepaid capacity revenues, net 119,417 122,496 Uranium enrichment decontamination and decommissioning fund 33,741 33,741 Deferred credits related to income taxes 360,680 364,792 Natural disaster reserve 21,379 20,757 Miscellaneous 198,007 222,436 -------------- -------------- Total 2,223,443 2,235,980 -------------- -------------- TOTAL CAPITALIZATION AND LIABILITIES $ 8,750,195 $ 8,733,846 ============== ============== The accompanying notes as they relate to ALABAMA are an integral part of these condensed statements.
18 ALABAMA POWER COMPANY MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND FINANCIAL CONDITION FIRST QUARTER 1997 vs. FIRST QUARTER 1996 RESULTS OF OPERATIONS Earnings ALABAMA's net income after dividends on preferred stock for the first quarter of 1997 was $57.8 million, compared to $73.2 million for the corresponding period of 1996. This 21.0% decrease in earnings was primarily due to milder weather and a decrease in commercial and industrial prices. Significant income statement items appropriate for discussion include the following:
Increase (Decrease) ----------------------------------------- (in thousands) % Revenues............................................. $ 2,704 0.4 Revenues from affiliates............................. (30,745) (39.7) Purchased power from affiliates...................... 4,212 26.6 Maintenance expense.................................. 6,016 9.6 Depreciation and amortization........................ 5,754 7.2 Distributions on preferred securities of subsidiary trusts................................. 3,646 269.9
Revenues. Excluding fuel revenues, which represent the pass-through of fuel expenses and do not affect net income, revenues for the first quarter 1997 decreased $16.1 million, compared to the corresponding period of 1996. The decrease in first quarter 1997 revenues reflects a decrease in the amount of retail, particularly residential, energy sold as well as rate reductions initiated by ALABAMA for certain commercial and industrial customers. Milder weather during the current quarter of 1997 as compared to the corresponding quarter of 1996 primarily impacted residential energy sales, which were down 9.5%. Commercial energy sales and industrial energy sales increased 3.0% and 2.6%, respectively, for the first quarter compared to 1996. Total retail kilowatt-hour sales for the quarter were down 1.3% compared to the same period of 1996. Revenues from affiliates and Purchased power from affiliates. 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 cost of generating resources at each company. These transactions did not have a significant impact on earnings. Maintenance expense. Maintenance expense increased for the first quarter of 1997 compared to the same period of 1996 primarily due to an increase in the accrual of estimated maintenance expenses related to nuclear refueling outages. Depreciation and amortization. The increase in depreciation and amortization for the first quarter of 1997 as compared to the corresponding period of 1996 was primarily due to additions to utility plant and an increase in depreciation rates. Distributions on preferred securities of subsidiary trusts. The change in this item resulted primarily from the issuance of mandatorily redeemable preferred securities. For additional information, see Item 7 - MANAGEMENT'S DISCUSSION AND ANALYSIS - "Capital Structure" of ALABAMA in the Form 10-K. 19 ALABAMA POWER COMPANY MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND FINANCIAL CONDITION 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 energy sales growth to a less regulated, more competitive environment. With the enactment of the Energy Act and new legislation being discussed at federal and state levels to expand customer choice, the Southern electric system is positioning the business to meet the challenge of increasing competition. For additional information, see Item 1 - BUSINESS - "Competition" and Item 7 - MANAGEMENT'S DISCUSSION AND ANALYSIS - "Future Earnings Potential" of ALABAMA in the Form 10-K. Compliance costs related to the Clean Air Act could affect earnings if such costs cannot be offset. For additional information about the Clean Air Act and other environmental issues, see Item 7 - MANAGEMENT'S DISCUSSION AND ANALYSIS "Environmental Matters" of ALABAMA in the Form 10-K. Reference is made to Notes (B), (C), (G), (H), (J) and (K) in the "Notes to the Condensed Financial Statements" herein for discussion of various contingencies and other matters which may affect future earnings potential. Reference is also made to Part II - Item 1 - "Legal Proceedings" herein. FINANCIAL CONDITION Overview Major changes in ALABAMA's financial condition during the first three months of 1997 included the addition of approximately $94.6 million to utility plant. The funds for these additions and other capital requirements were derived primarily from operating activities. See ALABAMA's Condensed Statements of Cash Flows for further details. Financing Activities During the first quarter of 1997, redemptions of first mortgage bonds of ALABAMA totaled $19.8 million. Also, Alabama Power Capital Trust II, a statutory business trust established for the purpose of holding ALABAMA's junior subordinated notes and issuing trust preferred securities and common securities, sold $200.0 million of its 7.60% trust originated preferred securities which are guaranteed by ALABAMA. A portion of these proceeds was used to redeem $100 million of cumulative preferred stock in February 1997. For additional information, see Note (I) in the "Notes to the Condensed Financial Statements" and Item 7 - MANAGEMENT'S DISCUSSION AND ANALYSIS - "Capital Structure" of ALABAMA in the Form 10-K. In addition, ALABAMA has announced its plans to redeem an aggregate of $62 million of preferred stock in June and July of 1997. ALABAMA will continue to retire higher-cost debt and preferred stock and replace these securities with lower-cost capital, if market conditions permit. 20 ALABAMA POWER COMPANY MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND FINANCIAL CONDITION Capital Requirements Reference is made to Item 7 - MANAGEMENT'S DISCUSSION AND ANALYSIS of ALABAMA under "Capital Requirements," "Other Capital Requirements" and "Environmental Matters" in the Form 10-K for a description of ALABAMA's capital requirements for its construction program, maturing debt and environmental compliance efforts. Sources of Capital In addition to the financing activities previously described herein, ALABAMA plans to obtain the funds required for construction and other purposes from sources similar to those used in the past. The amount, type and timing of any financings--if needed--will depend upon maintenance of adequate earnings, regulatory approval, prevailing market conditions and other factors. Currently, ALABAMA expects to have adequate earnings coverage ratios for any anticipated security sales through at least 1999. See Item 1 - BUSINESS - "Financing Programs" in the Form 10-K for additional information. To meet short-term cash needs and contingencies, ALABAMA had at March 31, 1997, approximately $5.5 million of cash and cash equivalents and had unused committed lines of credit of approximately $815 million (including $208 million of such lines under which borrowings may be made only to fund purchase obligations relating to variable rate pollution control bonds) with regulatory authority for up to $750 million of short-term borrowings. At March 31, 1997, ALABAMA had outstanding $413.8 million of commercial paper. Since ALABAMA has no major traditional generating plants under construction, management believes that the need for working capital can be adequately met by utilizing lines of credit without maintaining large cash balances. 21 Exhibit 1 ARTHUR ANDERSEN LLP 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, 1997, and the related condensed statements of income and cash flows for the three-month periods ended March 31, 1997 and 1996. 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, 1996 (not presented herein) and, in our report dated February 12, 1997, 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, 1996 is fairly stated, in all material respects, in relation to the balance sheet from which it has been derived. /s/ Arthur Andersen LLP Birmingham, Alabama May 6, 1997 22 GEORGIA POWER COMPANY 23
GEORGIA POWER COMPANY CONDENSED STATEMENTS OF INCOME (UNAUDITED) (Stated in Thousands of Dollars) For the Three Months Ended March 31, 1997 1996 OPERATING REVENUES: Revenues $ 951,453 $ 1,015,353 Revenues from affiliates 7,259 13,466 ------------ -------------- Total operating revenues 958,712 1,028,819 ------------ -------------- OPERATING EXPENSES: Operation-- Fuel 178,629 188,494 Purchased power from non-affiliates 26,775 36,920 Purchased power from affiliates 41,371 65,476 Provision for separation benefits 604 18,500 Other 151,005 165,544 Maintenance 74,950 75,826 Depreciation and amortization 129,302 107,520 Amortization of deferred Plant Vogtle costs (Note M) 37,627 33,759 Taxes other than income taxes 53,931 55,146 Federal and state income taxes 84,649 89,684 ------------ -------------- Total operating expenses 778,843 836,869 ------------ -------------- OPERATING INCOME 179,869 191,950 OTHER INCOME (EXPENSE): Allowance for equity funds used during construction 542 255 Equity in earnings of unconsolidated subsidiary 980 973 Interest income 595 901 Other, net (5,598) (3,673) Income taxes applicable to other income 2,366 138 ------------ -------------- INCOME BEFORE INTEREST CHARGES 178,754 190,544 ------------ -------------- INTEREST CHARGES AND OTHER: Interest on long-term debt 48,455 53,430 Allowance for debt funds used during construction (3,500) (3,190) Interest on interim obligations 3,693 5,039 Amortization of debt discount, premium and expense, net 3,774 3,847 Other interest charges 2,924 3,115 Distributions on preferred securities of subsidiary companies 9,417 2,250 ------------ -------------- Interest charges and other, net 64,763 64,491 ------------ -------------- NET INCOME 113,991 126,053 DIVIDENDS ON PREFERRED STOCK 7,956 11,652 ------------ -------------- NET INCOME AFTER DIVIDENDS ON PREFERRED STOCK $ 106,035 $ 114,401 ============ ============== The accompanying notes as they relate to GEORGIA are an integral part of these condensed statements.
24
GEORGIA POWER COMPANY CONDENSED STATEMENTS OF CASH FLOWS (UNAUDITED) (Stated in Thousands of Dollars) For the Three Months Ended March 31, 1997 1996 OPERATING ACTIVITIES: Net income $ 113,991 $ 126,053 Adjustments to reconcile net income to net cash provided by operating activities-- Depreciation and amortization 155,377 133,095 Deferred income taxes and investment tax credits, net (13,553) 9,399 Allowance for equity funds used during construction (542) (255) Amortization of deferred Plant Vogtle costs (Note M) 37,627 33,759 Other, net 26,260 10,576 Changes in certain current assets and liabilities-- Receivables, net 83,646 42,945 Inventories (3,784) 14,250 Payables (61,585) (25,785) Taxes accrued 46,910 28,253 Energy cost recovery, retail 16,764 15,980 Other (29,131) (32,232) -------------- -------------- Net cash provided from operating activities 371,980 356,038 -------------- -------------- INVESTING ACTIVITIES: Gross property additions (103,455) (111,998) Other (26,972) (51,702) -------------- -------------- Net cash used for investing activities (130,427) (163,700) -------------- -------------- FINANCING ACTIVITIES: Proceeds-- Preferred securities 175,000 - First mortgage bonds - 10,000 Retirements-- Preferred stock (79,028) - First mortgage bonds (60,258) (150,000) Pollution control bonds - (6,800) Special deposits - redemption funds 44,454 - Interim obligations, net (168,658) 72,810 Payment of preferred stock dividends (7,679) (11,518) Payment of common stock dividends (122,700) (121,500) Miscellaneous (6,492) (86) -------------- -------------- Net cash used for financing activities (225,361) (207,094) -------------- -------------- NET CHANGE IN CASH AND CASH EQUIVALENTS 16,192 (14,756) CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD 15,356 28,930 -------------- -------------- CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 31,548 $ 14,174 ============== ============== SUPPLEMENTAL CASH FLOW INFORMATION: Cash paid during the period for-- Interest (net of amount capitalized) $ 72,031 $ 75,312 Income taxes (net of refunds) (7) 10,460 The accompanying notes as they relate to GEORGIA are an integral part of these condensed statements.
25
GEORGIA POWER COMPANY CONDENSED BALANCE SHEETS (Stated in Thousands of Dollars) ASSETS At March 31, 1997 At December 31, (Unaudited) 1996 ---------------- ------------------ UTILITY PLANT: Plant in service $ 14,850,880 $ 14,769,573 Less accumulated provision for depreciation 4,908,485 4,793,638 ---------------- ---------------- 9,942,395 9,975,935 Nuclear fuel, at amortized cost 106,954 121,840 Construction work in progress 242,666 256,141 ---------------- ---------------- Total 10,292,015 10,353,916 ---------------- ---------------- OTHER PROPERTY AND INVESTMENTS: Southern Electric Generating Company, at equity 25,891 26,032 Nuclear decommissioning trusts, at market 155,222 130,178 Miscellaneous 103,132 103,787 ---------------- ---------------- Total 284,245 259,997 ---------------- ---------------- CURRENT ASSETS: Cash and cash equivalents 31,548 15,356 Receivables-- Customer accounts receivable 334,018 392,328 Other accounts and notes receivable 85,360 159,499 Affiliated companies 15,900 20,095 Accumulated provision for uncollectible accounts (4,000) (4,000) Fossil fuel stock, at average cost 125,092 117,382 Materials and supplies, at average cost 254,894 258,820 Prepayments 113,289 109,771 Vacation pay deferred 39,455 39,965 ---------------- ---------------- Total 995,556 1,109,216 ---------------- ---------------- DEFERRED CHARGES: Deferred charges related to income taxes 801,921 818,418 Deferred Plant Vogtle costs (Note M) 133,361 170,988 Premium on reacquired debt, being amortized 164,151 166,670 Debt expense, being amortized 37,131 32,693 Miscellaneous 167,313 159,153 ---------------- ---------------- Total 1,303,877 1,347,922 ---------------- ---------------- TOTAL ASSETS $ 12,875,693 $ 13,071,051 ================ ================ The accompanying notes as they relate to GEORGIA are an integral part of these condensed statements.
26
GEORGIA POWER COMPANY CONDENSED BALANCE SHEETS (Stated in Thousands of Dollars) CAPITALIZATION AND LIABILITIES At March 31, 1997 At December 31, (Unaudited) 1996 ---------------- ------------------ 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 2,134,886 2,134,886 Premium on preferred stock 371 371 Retained earnings 1,658,105 1,674,774 ---------------- ---------------- 4,137,612 4,154,281 Preferred stock 380,456 464,611 Company obligated mandatorily redeemable preferred securities of subsidiaries substantially all of whose assets are junior subordinated debentures or notes (Note I) 500,000 325,000 Long-term debt 3,200,526 3,200,419 ---------------- ---------------- Total 8,218,594 8,144,311 ---------------- ---------------- CURRENT LIABILITIES: Preferred stock due within one year 54,155 49,028 Long-term debt due within one year 372 60,622 Notes payable to banks 58,400 207,300 Commercial paper 203,438 223,196 Accounts payable-- Affiliated companies 46,210 66,821 Other 201,774 263,093 Customer deposits 66,873 64,901 Taxes accrued-- Federal and state income 111,339 15,497 Other 51,729 100,661 Interest accrued 68,893 79,936 Vacation pay accrued 31,666 38,597 Miscellaneous 123,341 114,530 ---------------- ---------------- Total 1,018,190 1,284,182 ---------------- ---------------- DEFERRED CREDITS AND OTHER LIABILITIES: Accumulated deferred income taxes 2,502,966 2,522,945 Accumulated deferred investment tax credits 411,797 415,477 Deferred credits related to income taxes 375,506 382,381 Employee benefits provisions 175,153 186,319 Disallowed Plant Vogtle capacity buyback costs 56,947 57,250 Miscellaneous 116,540 78,186 ---------------- ---------------- Total 3,638,909 3,642,558 ---------------- ---------------- TOTAL CAPITALIZATION AND LIABILITIES $ 12,875,693 $ 13,071,051 ================ ================ The accompanying notes as they relate to GEORGIA are an integral part of these condensed statements.
27 GEORGIA POWER COMPANY MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND FINANCIAL CONDITION FIRST QUARTER 1997 vs. FIRST QUARTER 1996 RESULTS OF OPERATIONS Earnings GEORGIA's net income after dividends on preferred stock for the first quarter of 1997 was $106.0 million compared to $114.4 million for the corresponding period of 1996. Earnings decreased by 7.3% primarily as a result of decreased revenues due to milder weather experienced during the current quarter. Significant income statement items appropriate for discussion include the following:
Increase (Decrease) -------------------------------------- (in thousands) % Revenues............................................. $(63,900) (6.3) Revenue from affiliates.............................. (6,207) (46.1) Purchased power from non-affiliates.................. (10,145) (27.5) Purchased power from affiliates...................... (24,105) (36.8) Provision for separation benefits.................... (17,896) (96.7) Other operation expense.............................. (14,539) (8.8) Depreciation and amortization expense................ 21,782 20.3 Interest on long-term debt........................... (4,975) (9.3) Distributions on preferred securities of subsidiary companies............................... 7,167 318.5 Dividends on preferred stock......................... (3,696) (31.7)
Revenues. Excluding fuel revenues, which represent the pass-through of fuel expenses and do not affect income, revenues for the first quarter decreased $31.0 million compared to the corresponding period of 1996. The decrease in revenues is primarily due to a 9.7% decrease in residential kilowatt-hour sales resulting from milder-than-normal weather. Retail revenues, excluding fuel revenues, decreased 4.7% or $33.0 million for the current quarter as compared to the corresponding quarter of 1996. Revenues from affiliates and Purchased power from affiliates. 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. Purchased power from non-affiliates. The decrease in purchased power from non-affiliates compared to the corresponding period of 1996 is primarily due to a decrease in energy purchases resulting from milder-than-normal weather. 28 GEORGIA POWER COMPANY MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND FINANCIAL CONDITION Provision for separation benefits. The decrease in provision for separation benefits is attributable to work force reduction programs charged to this provision in the first quarter of 1996, which have been implemented to control growth in future operating expenses. Other operation expense. The decrease in other operation expense for the current quarter is primarily due to lower administrative and general expenses compared to the same period of 1996. Depreciation and amortization expense. The increase in depreciation and amortization for the current quarter compared to the same period of 1996 is primarily due to a charge of $19.8 million pursuant to the retail accounting order. See Note (L) in the "Notes to the Condensed Financial Statements" herein for further details. Interest on long-term debt and Dividends on preferred stock. These declines reflect the redemption and refinancing of long-term debt and preferred stock. Distributions on preferred securities of subsidiary companies. The change in this item resulted primarily from the issuance of additional mandatorily redeemable preferred securities in August 1996 and January 1997. For additional information, see Item 7 - MANAGEMENT'S DISCUSSION AND ANALYSIS - "Financing Activities" of GEORGIA in the Form 10-K. 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 including regulatory matters and energy sales. With the enactment of the Energy Act and new legislation being discussed at federal and state levels to expand customer choice, the Southern electric system is positioning the business to meet the challenge of increasing competition. For additional information, see Item 1 - BUSINESS - "Competition" and Item 7 - MANAGEMENT'S DISCUSSION AND ANALYSIS - "Future Earnings Potential" of GEORGIA in the Form 10-K. Effective January 1, 1996, GEORGIA began operating under a three-year retail accounting order. Under the order, GEORGIA's earnings are evaluated against a retail return on common equity range of 10% to 12.5%. GEORGIA is required to absorb cost increases of approximately $29.0 million annually during the order's three-year operation, including $14.0 million annually of accelerated depreciation of electric plant. Reference is made to Note (L) in the "Notes to the Condensed Financial Statements" herein for additional information. Compliance costs related to the Clean Air Act could affect earnings if such costs cannot be offset. For additional information about the Clean Air Act and other environmental issues, see Item 7 - MANAGEMENT'S DISCUSSION AND ANALYSIS "Environmental Issues" of GEORGIA in the Form 10-K. 29 GEORGIA POWER COMPANY MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND FINANCIAL CONDITION Reference is made to Notes (B), (C), (G) and (L) through (P) in the "Notes to the Condensed Financial Statements" herein for discussion of various contingencies and other matters which may affect future earnings potential. Reference is also made to Part II - Item 1 - "Legal Proceedings" herein. FINANCIAL CONDITION Overview Major changes in GEORGIA's financial condition during the first three months of 1997 included the addition of approximately $103 million to utility plant. The funds for these additions and other capital requirements were derived primarily from operations. See GEORGIA's Condensed Statements of Cash Flows for further details. Financing Activities During the first quarter of 1997, maturities and redemptions of first mortgage bonds and preferred stock by GEORGIA totaled $139 million. In January 1997, Georgia Power Capital Trust II, a statutory business trust established for the purpose of holding GEORGIA's junior subordinated notes and issuing trust preferred securities and common securities, sold $175.0 million of its 7.60% trust preferred securities, which are guaranteed by GEORGIA. (See Note (I) in the " Notes to the Condensed Financial Statements" and Item 7 - MANAGEMENT'S DISCUSSION AND ANALYSIS - "Financing Activities" of GEORGIA in the Form 10-K for further details.) In April 1997, GEORGIA sold, through public authorities, $90.0 million of variable rate pollution control revenue bonds due 2032. The proceeds will be applied to the redemption on July 1, 1997 of $90.0 million outstanding principal amount of 8.375% pollution control revenue bonds. GEORGIA plans to continue, to the extent possible, a program to retire higher-cost debt and preferred stock and replace these securities with lower-cost capital. Capital Requirements Reference is made to Item 7 - MANAGEMENT'S DISCUSSION AND ANALYSIS of GEORGIA under "Liquidity and Capital Requirements" and "Environmental Issues" in the Form 10-K for a description of GEORGIA's capital requirements for its construction program and environmental compliance efforts. Sources of Capital In addition to the financing activities previously described herein, GEORGIA plans to obtain the funds required for construction and other purposes from sources similar to those used in the past. The amount, type and timing of any financings--if needed--will depend upon maintenance of adequate earnings, regulatory approval, prevailing market conditions and other factors. Currently, GEORGIA expects to have adequate earnings coverage ratios for any anticipated security sales through at least 1999. See Item 1 - BUSINESS - "Financing Programs" in the Form 10-K for additional information. 30 GEORGIA POWER COMPANY MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND FINANCIAL CONDITION To meet short-term cash needs and contingencies, GEORGIA had at March 31, 1997, approximately $31.5 million of cash and cash equivalents and approximately $854.7 million of unused credit arrangements with banks (including $589.7 million of such arrangements under which borrowings may be made only to fund purchase obligations relating to variable rate pollution control bonds). At March 31, 1997, GEORGIA had outstanding $58.4 million of short-term notes payable to banks and $203.4 million of commercial paper. Since GEORGIA has no major generating plants under construction, management believes that the need for working capital can be adequately met by utilizing lines of credit without maintaining large cash balances. 31 Exhibit 1 ARTHUR ANDERSEN LLP 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, 1997, and the related condensed statements of income and cash flows for the three-month periods ended March 31, 1997 and 1996. 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 GEORGIA POWER COMPANY as of December 31, 1996 (not presented herein), and, in our report dated February 12, 1997, 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, 1996, is fairly stated, in all material respects, in relation to the balance sheet from which it has been derived. /s/ Arthur Andersen LLP Atlanta, Georgia May 9, 1997 32 GULF POWER COMPANY 33
GULF POWER COMPANY CONDENSED STATEMENTS OF INCOME (UNAUDITED) (Stated in Thousands of Dollars) For the Three Months Ended March 31, 1997 1996 OPERATING REVENUES: Revenues $ 140,204 $ 153,670 Revenues from affiliates 1,170 1,251 ------------ ------------ Total operating revenues 141,374 154,921 ------------ ------------ OPERATING EXPENSES: Operation-- Fuel 36,992 38,213 Purchased power from non-affiliates 1,096 1,676 Purchased power from affiliates 8,863 19,319 Other 30,620 25,636 Maintenance 9,510 15,047 Depreciation and amortization 14,446 14,085 Taxes other than income taxes 12,775 13,466 Federal and state income taxes 6,860 7,278 ------------ ------------ Total operating expenses 121,162 134,720 ------------ ------------ OPERATING INCOME 20,212 20,201 OTHER INCOME (EXPENSE): Allowance for equity funds used during construction 1 9 Interest income 329 349 Other, net (254) (471) Income taxes applicable to other income (77) 4 ------------ ------------ INCOME BEFORE INTEREST CHARGES 20,211 20,092 ------------ ------------ INTEREST CHARGES AND OTHER: Interest on long-term debt 5,797 6,148 Other interest charges 716 282 Interest on notes payable 283 504 Amortization of debt discount, premium, and expense, net 566 525 Allowance for debt funds used during construction (3) (48) Distributions on preferred securities of subsidiary trust 517 - ------------ ------------ Interest charges and other, net 7,876 7,411 ------------ ------------ NET INCOME 12,335 12,681 DIVIDENDS ON PREFERRED STOCK 1,595 1,423 ------------ ------------ NET INCOME AFTER DIVIDENDS ON PREFERRED STOCK $ 10,740 $ 11,258 ============ ============ The accompanying notes as they relate to GULF are an integral part of these condensed statements.
34
GULF POWER COMPANY CONDENSED STATEMENTS OF CASH FLOWS (UNAUDITED) (Stated in Thousands of Dollars) For the Three Months Ended March 31, 1997 1996 OPERATING ACTIVITIES: Net income $ 12,335 $ 12,681 Adjustments to reconcile net income to net cash provided by operating activities-- Depreciation and amortization 17,857 18,255 Deferred income taxes (983) 2,268 Allowance for equity funds used during construction (1) (9) Deferred costs of 1995 coal contract renegotiation 1,246 2,070 Other, net 722 934 Changes in certain current assets and liabilities-- Receivables, net 11,985 6,351 Inventories (3,522) 3,377 Payables (3,413) (10,690) Taxes accrued 6,333 2,562 Current costs of 1995 coal contract renegotiation 4,121 (2,271) Other (7,611) (7,627) ------------ ------------ Net cash provided from operating activities 39,069 27,901 ------------ ------------ INVESTING ACTIVITIES: Gross property additions (11,072) (16,692) Other (1,146) (1,640) ------------ ------------ Net cash used for investing activities (12,218) (18,332) ------------ ------------ FINANCING ACTIVITIES: Proceeds-- Preferred securities 40,000 - First mortgage bonds - 30,000 Pollution control bonds - 21,200 Other long-term debt - 22,147 Retirements-- Preferred stock (24,500) - First mortgage bonds - (1,750) Other long-term debt (5,456) - Notes payable, net (7,500) (45,000) Special deposits - redemption funds (21,291) Payment of preferred stock dividends (2,058) (1,423) Payment of common stock dividends (22,900) (12,300) Miscellaneous (1,519) (939) ------------ ------------ Net cash used for financing activities (23,933) (9,356) ------------ ------------ NET CHANGE IN CASH AND CASH EQUIVALENTS 2,918 213 CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD 807 680 ------------ ------------ CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 3,725 $ 893 ============ ============ SUPPLEMENTAL CASH FLOW INFORMATION: Cash paid during the period for-- Interest (net of amount capitalized) $ 6,132 $ 4,743 Income taxes 3 49 The accompanying notes as they relate to GULF are an integral part of these condensed statements.
35
GULF POWER COMPANY CONDENSED BALANCE SHEETS (Stated in Thousands of Dollars) ASSETS At March 31, 1997 At December 31, (Unaudited) 1996 -------------- --------------- UTILITY PLANT: Plant in service $1,740,191 $1,734,510 Less accumulated provision for depreciation 706,404 694,245 -------------- -------------- 1,033,787 1,040,265 Construction work in progress 26,075 23,465 -------------- -------------- Total 1,059,862 1,063,730 -------------- -------------- OTHER PROPERTY AND INVESTMENTS: 628 652 -------------- -------------- CURRENT ASSETS: Cash and cash equivalents 3,725 807 Receivables-- Customer accounts receivable 56,321 67,727 Other accounts and notes receivable 2,380 3,098 Affiliated companies 1,999 1,821 Accumulated provision for uncollectible accounts (828) (789) Fossil fuel stock, at average cost 31,972 28,352 Materials and supplies, at average cost 30,154 30,252 Current portion of deferred coal contract costs 12,204 16,389 Regulatory clauses under recovery 3,881 4,144 Prepaid income taxes - 353 Other prepayments 10,064 8,833 Vacation pay deferred 4,055 4,055 -------------- -------------- Total 155,927 165,042 -------------- -------------- DEFERRED CHARGES: Deferred charges related to income taxes 27,974 28,313 Debt expense and loss, being amortized 23,157 23,308 Deferred coal contract costs 9,511 13,126 Deferred storm charges 2,400 3,275 Miscellaneous 11,709 10,920 -------------- -------------- Total 74,751 78,942 -------------- -------------- TOTAL ASSETS $1,291,168 $1,308,366 ============== ============== The accompanying notes as they relate to GULF are an integral part of these condensed statements.
36
GULF POWER COMPANY CONDENSED BALANCE SHEETS (Stated in Thousands of Dollars) CAPITALIZATION AND LIABILITIES At March 31, 1997 At December 31, (Unaudited) 1996 -------------- --------------- CAPITALIZATION: Common stock equity-- Common stock (without par value)-- authorized and outstanding--992,717 shares $ 38,060 $ 38,060 Paid-in capital 218,438 218,438 Premium on preferred stock 44 81 Retained earnings 177,056 179,179 -------------- -------------- 433,598 435,758 Preferred stock 65,102 65,102 Company obligated mandatorily redeemable preferred securities of subsidiary trust holding Company Junior Subordinated Notes (Note I) 40,000 - Long-term debt 325,022 331,880 -------------- -------------- Total 863,722 832,740 -------------- -------------- CURRENT LIABILITIES: Preferred stock due within one year - 24,500 Long-term debt due within one year 41,271 40,972 Notes payable 17,500 25,000 Accounts payable-- Affiliated companies 7,999 10,274 Other 20,778 22,496 Customer deposits 13,669 13,464 Taxes accrued-- Federal and state income 8,333 - Other 6,757 8,342 Interest accrued 7,764 7,629 Regulatory clauses over recovery 3,004 5,884 Vacation pay accrued 4,055 4,055 Dividends declared 989 11,453 Miscellaneous 1,502 5,668 -------------- -------------- Total 133,621 179,737 -------------- -------------- DEFERRED CREDITS AND OTHER LIABILITIES: Accumulated deferred income taxes 163,306 163,857 Deferred credits related to income taxes 62,814 64,354 Accumulated deferred investment tax credits 33,208 33,760 Accumulated provision for postretirement benefits 18,832 18,339 Miscellaneous 15,665 15,579 -------------- -------------- Total 293,825 295,889 -------------- -------------- TOTAL CAPITALIZATION AND LIABILITIES $ 1,291,168 $1,308,366 ============== ============== The accompanying notes as they relate to GULF are an integral part of these condensed statements.
37 GULF POWER COMPANY MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND FINANCIAL CONDITION FIRST QUARTER 1997 vs. FIRST QUARTER 1996 RESULTS OF OPERATIONS Earnings GULF's net income after dividends on preferred stock for the first quarter of 1997 was $10.7 million, compared to $11.3 million for the corresponding period of 1996. Earnings decreased by 4.6% primarily due to lower revenues as a result of milder temperatures. Significant income statement items appropriate for discussion include the following:
Increase (Decrease) (in thousands) % Revenues......................................... $(13,466) (8.8) Purchased power from affiliates.................. (10,456) (54.1) Other operation expense.......................... 4,984 19.4 Maintenance expense.............................. (5,537) (36.8)
Revenues. Excluding fuel and other revenues which represent the pass-through of fuel expense and certain other expenses and do not affect net income, revenues for the first quarter decreased $6.1 million, compared to the corresponding period of 1996. The decrease in revenues for the current period was influenced most heavily by a 5.4% decrease in retail kilowatt-hour sales compared to the same period of 1996. This change in retail energy sales is primarily due to lower residential sales as a result of milder weather during the current quarter as compared to the previous year offset somewhat by an increase in the number of customers served. Industrial revenues were down for the current quarter compared to a year ago, primarily due to increased participation in the Real-Time-Pricing program. See Item 7 - MANAGEMENT'S DISCUSSION AND ANALYSIS - "Future Earnings Potential" of GULF in the Form 10-K for information on initiatives to remain competitive and to meet conservation goals set by the Florida PSC. Purchased power from affiliates. Purchased power from affiliates for the first quarter compared to the corresponding period of 1996 was lower due to maintenance outages at Plant Crist and Plant Daniel during the first half of 1996. 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 expense. Other operation expense increased primarily due to an increase in amortization costs related to the buyout and renegotiation of a coal supply contract and costs associated with work force reduction programs. For additional information regarding work force reduction programs, see Note (H) in the "Notes to the Condensed Financial Statements" herein. 38 GULF POWER COMPANY MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND FINANCIAL CONDITION Maintenance expense. The decrease in maintenance expense for the current quarter is primarily due to the scheduled maintenance on production facilities which occurred in the first quarter of 1996 at Plant Crist and Plant Daniel. 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 energy sales growth to a potentially less regulated, more competitive environment. With the enactment of the Energy Act and new legislation being discussed at federal and state levels to expand customer choice, the Southern electric system is positioning the business to meet the challenge of increasing competition. For additional information, see Item 7 - MANAGEMENT'S DISCUSSION AND ANALYSIS - "Future Earnings Potential" of GULF and Item 1 - BUSINESS - "Competition" in the Form 10-K. Compliance costs related to the Clean Air Act could affect earnings if such costs are not fully recovered through GULF's Environmental Cost Recovery Clause. For additional information about the Clean Air Act and other environmental issues, see Item 7 - MANAGEMENT'S DISCUSSION AND ANALYSIS - "Environmental Matters" of GULF in the Form 10-K. Reference is made to Notes (B) and (G) in the "Notes to the Condensed Financial Statements" herein for discussion of various contingencies and other matters which may affect future earnings potential. FINANCIAL CONDITION Overview Major changes in GULF's financial condition during the first three months of 1997 included the addition of approximately $11.1 million to utility plant. The funds for these additions and other capital requirements were derived primarily from operations. See GULF's Condensed Statements of Cash Flows for further details. Financing Activities On January 31, 1997, Gulf Power Capital Trust I, a statutory business trust established for the purpose of holding GULF's junior subordinated notes and issuing trust preferred securities and common securities, sold $40 million of its 7.625% trust preferred securities which are guaranteed by GULF. For additional information, see Note (I) in the "Notes to the Condensed Financial Statements" and Item 7 - MANAGEMENT'S DISCUSSION AND ANALYSIS - "Sources of Capital" of GULF in the Form 10-K. A portion of these proceeds was used to redeem $5 million of 7.88% cumulative preferred stock, $5 million of 7.52% cumulative preferred stock and $14.5 million of 7.00% cumulative preferred stock. GULF plans to continue, to the extent possible, a program to retire higher-cost debt and preferred stock and replace these securities with lower-cost capital. 39 GULF POWER COMPANY MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND FINANCIAL CONDITION Capital Requirements Reference is made to Item 7 - MANAGEMENT'S DISCUSSION AND ANALYSIS of GULF under "Capital Requirements for Construction," "Environmental Matters" and "Other Capital Requirements" in the Form 10-K for a description of GULF's capital requirements for its construction program, environmental compliance efforts and maturing debt. Sources of Capital In addition to the financing activities previously described herein, GULF plans to obtain the funds required for construction and other purposes from sources similar to those used in the past. The amount, type and timing of any financings--if needed--will depend upon maintenance of adequate earnings, regulatory approval, prevailing market conditions and other factors. Currently, GULF expects to have adequate earnings coverage ratios for any anticipated security sales through at least 1999. See Item 1 - BUSINESS - "Financing Programs" in the Form 10-K for additional information. To meet short-term cash needs and contingencies, GULF had at March 31, 1997, approximately $3.7 million of cash and cash equivalents and $66.8 million of unused committed lines of credit with banks (including $20.3 million liquidity support for variable rate pollution control bonds). At March 31, 1997, GULF had outstanding $17.5 million of short-term notes payable to banks. Since GULF has no major generating plants under construction, management believes that the need for working capital can be adequately met by utilizing lines of credit without maintaining large cash balances. 40 MISSISSIPPI POWER COMPANY 41
MISSISSIPPI POWER COMPANY CONDENSED STATEMENTS OF INCOME (UNAUDITED) (Stated in Thousands of Dollars) For the Three Months Ended March 31, 1997 1996 OPERATING REVENUES: Revenues $ 117,789 $ 124,960 Revenues from affiliates (886) 1,994 ------------- ------------ Total operating revenues 116,903 126,954 ------------- ------------ OPERATING EXPENSES: Operation-- Fuel 29,541 29,900 Purchased power from non-affiliates 484 1,693 Purchased power from affiliates 10,515 12,998 Other 20,824 24,758 Maintenance 9,612 10,296 Depreciation and amortization 11,194 11,373 Taxes other than income taxes 10,897 10,723 Federal and state income taxes 6,704 7,139 ------------- ------------ Total operating expenses 99,771 108,880 ------------- ------------ OPERATING INCOME 17,132 18,074 OTHER INCOME (EXPENSE): Allowance for equity funds used during construction 4 95 Interest income 141 56 Other, net 654 1,430 Income taxes applicable to other income (329) (552) ------------- ------------ INCOME BEFORE INTEREST CHARGES 17,602 19,103 ------------- ------------ INTEREST CHARGES AND OTHER: Interest on long-term debt 4,895 5,493 Allowance for debt funds used during construction (8) (104) Interest on notes payable 47 230 Amortization of debt discount, premium, and expense, net 387 373 Other interest charges 139 191 Distributions on preferred securities of subsidiary trust 272 - ------------- ------------ Interest charges and other, net 5,732 6,183 ------------- ------------ NET INCOME 11,870 12,920 DIVIDENDS ON PREFERRED STOCK 1,225 1,225 ------------- ------------ NET INCOME AFTER DIVIDENDS ON PREFERRED STOCK $ 10,645 $ 11,695 ============= ============ The accompanying notes as they relate to MISSISSIPPI are an integral part of these condensed statements.
42
MISSISSIPPI POWER COMPANY CONDENSED STATEMENTS OF CASH FLOWS (UNAUDITED) (Stated in Thousands of Dollars) For the Three Months Ended March 31,___ 1997 1996 OPERATING ACTIVITIES: Net income $ 11,870 $ 12,920 Adjustments to reconcile net income to net cash provided by operating activities-- Depreciation and amortization 12,263 13,422 Deferred income taxes 884 (2,012) Allowance for equity funds used during construction (4) (95) Other, net (1,821) (1,454) Changes in certain current assets and liabilities-- Receivables, net 10,073 1,945 Inventories (2,300) 2,922 Payables (12,277) (10,679) Taxes accrued (16,094) (12,238) Other (1,662) (781) ------------ ------------ Net cash provided from operating activities 932 3,950 ------------ ------------ INVESTING ACTIVITIES: Gross property additions (11,437) (12,165) Other (2,286) (1,476) ------------ ------------ Net cash used for investing activities (13,723) (13,641) ------------ ------------ FINANCING ACTIVITIES: Proceeds-- Capital contribution - 27 Preferred securities 35,000 - Retirements-- Other long-term debt - (20,000) Notes payable, net - 31,000 Payment of preferred stock dividends (1,225) (1,225) Payment of common stock dividends (11,300) (10,600) ------------ ------------ Net cash provided from (used for) financing activities 22,475 (798) ------------ ------------ NET CHANGE IN CASH AND CASH EQUIVALENTS 9,684 (10,489) CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD 7,058 12,641 ------------ ------------ CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 16,742 $ 2,152 ============ ============ SUPPLEMENTAL CASH FLOW INFORMATION: Cash paid during the period for-- Interest (net of amount capitalized) $ 4,833 $ 4,568 Income taxes 390 1 The accompanying notes as they relate to MISSISSIPPI are an integral part of these condensed statements.
43
MISSISSIPPI POWER COMPANY CONDENSED BALANCE SHEETS (Stated in Thousands of Dollars) ASSETS At March 31, 1997 At December 31, (Unaudited) 1996 -------------- ---------------- UTILITY PLANT: Plant in service, at original cost $ 1,489,018 $ 1,483,875 Less accumulated provision for depreciation 537,589 526,776 -------------- -------------- 951,429 957,099 Construction work in progress 40,819 35,100 -------------- -------------- Total 992,248 992,199 -------------- -------------- OTHER PROPERTY AND INVESTMENTS: 3,035 3,054 -------------- -------------- CURRENT ASSETS: Cash and cash equivalents 16,742 7,058 Receivables-- Customer accounts receivable 21,607 26,364 Regulatory clauses under recovery 8,028 7,300 Other accounts and notes receivable 5,775 7,468 Affiliated companies 1,843 6,329 Accumulated provision for uncollectible accounts (704) (839) Fossil fuel stock, at average cost 14,367 12,168 Materials and supplies, at average cost 21,184 21,083 Current portion of accumulated deferred income taxes 3,863 7,227 Prepayments 6,746 4,744 Vacation pay deferred 4,806 4,806 -------------- -------------- Total 104,257 103,708 -------------- -------------- DEFERRED CHARGES: Debt expense and loss, being amortized 11,910 12,220 Deferred charges related to income taxes 22,540 22,274 Long-term notes receivable 3,404 3,737 Miscellaneous 7,837 5,135 -------------- -------------- Total 45,691 43,366 -------------- -------------- TOTAL ASSETS $ 1,145,231 $ 1,142,327 ============== ============== The accompanying notes as they relate to MISSISSIPPI are an integral part of these condensed statements.
44
MISSISSIPPI POWER COMPANY CONDENSED BALANCE SHEETS (Stated in Thousands of Dollars) CAPITALIZATION AND LIABILITIES At March 31, 1997 At December 31, (Unaudited) 1996 -------------- ---------------- 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 179,389 179,389 Premium on preferred stock 372 372 Retained earnings 165,527 166,282 -------------- -------------- 382,979 383,734 Preferred stock 74,414 74,414 Company obligated mandatorily redeemable preferred securities of subsidiary trust holding Company Junior Subordinated Notes (Note I) 35,000 - Long-term debt 291,455 326,379 -------------- -------------- Total 783,848 784,527 -------------- -------------- CURRENT LIABILITIES: Long-term debt due within one year 35,010 10 Accounts payable-- Affiliated companies 5,285 4,136 Regulatory clauses over recovery 11,279 8,788 Other 21,262 38,720 Customer deposits 3,288 3,154 Taxes accrued-- Federal and state income 5,726 - Other 10,625 32,445 Interest accrued 4,588 4,384 Miscellaneous 13,918 13,942 -------------- -------------- Total 110,981 105,579 -------------- -------------- DEFERRED CREDITS AND OTHER LIABILITIES: Accumulated deferred income taxes 131,491 133,437 Accumulated deferred investment tax credits 28,032 28,333 Deferred credits related to income taxes 40,300 40,568 Postretirement benefits 22,141 21,850 Accumulated provision for property damage 13,330 12,955 Miscellaneous 15,108 15,078 -------------- -------------- Total 250,402 252,221 -------------- -------------- TOTAL CAPITALIZATION AND LIABILITIES $ 1,145,231 $ 1,142,327 ============== ============== The accompanying notes as they relate to MISSISSIPPI are an integral part of these condensed statements.
45 MISSISSIPPI POWER COMPANY MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND FINANCIAL CONDITION FIRST QUARTER 1997 vs. FIRST QUARTER 1996 RESULTS OF OPERATIONS Earnings MISSISSIPPI's net income after dividends on preferred stock for the first quarter of 1997 was $10.6 million compared to $11.7 million for the corresponding period of 1996. The 9.0% decrease in earnings was primarily due to a decrease in revenues. Significant income statement items appropriate for discussion include the following:
Increase (Decrease) (in thousands) % Revenues........................................... $(7,171) (5.7) Revenues from affiliates........................... (2,880) (144.4) Purchased power from affiliates.................... (2,483) (19.1) Other operation expense............................ (3,934) (15.9) Maintenance expense................................ (684) (6.6) Interest on long-term debt......................... (598) (10.9)
Revenues. The decrease in revenues for the current quarter as compared to the corresponding period of 1996 was influenced by a 1.3% decrease in the amount of retail energy sold. For the current quarter, residential energy sales decreased 7.1% while commercial and industrial energy sales increased by 1.2% and 0.5%, respectively, as compared to the same period of 1996. Retail revenues, excluding those revenues which represent the recovery of fuel expense and certain other expenses and do not affect income, decreased $3.6 million primarily due to milder weather experienced during the current quarter as compared to 1996, offset somewhat by a slight increase in the number of customers. For the current quarter, sales to territorial wholesale customers were lower than in 1996. First quarter revenues from territorial wholesale customers, excluding fuel revenues which do not affect income, decreased $1.6 million compared to the same period of 1996, with a decrease in energy sales of 3.5%. Revenues from affiliates and Purchased power from affiliates. 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. In addition, the first quarter of 1997 reflects an adjustment in affiliated billings. These transactions do not have a significant impact on earnings. Other operation expense. The decrease in other operation expense for the current quarter as compared to the corresponding quarter of 1996 is primarily due to lower administrative and general expenses. Maintenance expense. The decrease in maintenance expense for the current quarter is primarily attributable to scheduled maintenance performed at Plant Daniel during the first quarter of 1996. Interest on long-term debt. The decline in interest on long-term debt reflects the redemption and refinancing of long-term debt. 46 MISSISSIPPI POWER COMPANY MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND FINANCIAL CONDITION 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 energy sales growth 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. MISSISSIPPI's 1997 annual filing under the ECO Plan with the Mississippi PSC resulted in an approved annual revenue requirement increase of $0.9 million, effective April 1997. With the enactment of the Energy Act and new legislation being discussed at federal and state levels to expand customer choice, the Southern electric system is positioning the business to meet the challenge of increasing competition. For additional information, see Item 1 - BUSINESS - "Competition" and Item 7 - MANAGEMENT'S DISCUSSION AND ANALYSIS - "Future Earnings Potential" of MISSISSIPPI in the Form 10-K. Compliance costs related to the Clean Air Act could affect earnings if such costs cannot be recovered. For additional information about the Clean Air Act and other environmental issues, see Item 7 - MANAGEMENT'S DISCUSSION AND ANALYSIS - "Environmental Matters" of MISSISSIPPI in the Form 10-K. Reference is made to Notes (B), (G) and (H) in the "Notes to the Condensed Financial Statements" herein for discussion of various contingencies and other matters which may affect future earnings potential. Reference is also made to Part II - Item 1 - "Legal Proceedings" herein. FINANCIAL CONDITION Overview Major changes in MISSISSIPPI's financial condition during the first three months of 1997 included the addition of approximately $11.4 million to utility plant. The funds for these additions and other capital requirements were derived primarily from operations and an increase in short-term debt. See MISSISSIPPI's Condensed Statements of Cash Flows for further details. Financing Activities On February 26, 1997, Mississippi Power Capital Trust I, a statutory business trust established for the purpose of holding MISSISSIPPI's junior subordinated notes and issuing trust preferred securities and common securities, sold $35 million of its 7.75% trust originated preferred securities which are guaranteed by MISSISSIPPI. For additional information, see Note (I) in the "Notes to the Condensed Financial Statements" and Item 7 - MANAGEMENT'S DISCUSSION AND ANALYSIS - "Sources of Capital" of MISSISSIPPI in the Form 10-K. MISSISSIPPI plans to continue, to the extent possible, a program to retire higher-cost debt and preferred stock and replace these securities with lower-cost capital. 47 MISSISSIPPI POWER COMPANY MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND FINANCIAL CONDITION Capital Requirements Reference is made to Item 7 - MANAGEMENT'S DISCUSSION AND ANALYSIS of MISSISSIPPI under "Capital Requirements for Construction," "Environmental Matters" and "Other Capital Requirements" in the Form 10-K for a description of MISSISSIPPI's capital requirements for its construction program, environmental compliance efforts, sinking fund requirements and maturities of long-term debt. Sources of Capital In addition to the financing activities previously described herein, MISSISSIPPI plans to obtain the funds required for construction and other purposes from sources similar to those used in the past. The amount, type and timing of any financings--if needed--will depend upon maintenance of adequate earnings, regulatory approval, prevailing market conditions and other factors. Currently, MISSISSIPPI expects to have adequate earnings coverage ratios for any anticipated security sales through at least 1999. See Item 1 - BUSINESS - "Financing Programs" in the Form 10-K for additional information. To meet short-term cash needs and contingencies, MISSISSIPPI had at March 31, 1997, approximately $16.7 million of cash and cash equivalents and approximately $76.3 million of unused committed credit arrangements with banks (including $10.8 million of such arrangements under which borrowings may be made only to fund purchase obligations relating to variable rate pollution control bonds). At March 31, 1997, MISSISSIPPI had no short-term borrowings outstanding. Since MISSISSIPPI has no major generating plants under construction, management believes that the need for working capital can be adequately met by utilizing lines of credit without maintaining large cash balances. 48 SAVANNAH ELECTRIC AND POWER COMPANY 49
SAVANNAH ELECTRIC AND POWER COMPANY CONDENSED STATEMENTS OF INCOME (UNAUDITED) (Stated in Thousands of Dollars) For the Three Months Ended March 31, 1997 1996 OPERATING REVENUES: Revenues $ 42,887 $ 49,367 Revenues from affiliates 58 1,208 ---------- ---------- Total operating revenues 42,945 50,575 ---------- ---------- OPERATING EXPENSES: Operation-- Fuel 3,517 3,949 Purchased power from non-affiliates 405 550 Purchased power from affiliates 9,282 15,850 Other 10,674 10,283 Maintenance 3,042 3,130 Depreciation and amortization 4,992 4,902 Taxes other than income taxes 2,841 3,020 Federal and state income taxes 2,075 2,329 ---------- ---------- Total operating expenses 36,828 44,013 ---------- ---------- OPERATING INCOME 6,117 6,562 OTHER INCOME (EXPENSE): Allowance for equity funds used during construction 145 83 Interest income 2 2 Other, net (184) (316) Income taxes applicable to other income 70 117 ---------- ---------- INCOME BEFORE INTEREST CHARGES 6,150 6,448 ---------- ---------- INTEREST CHARGES: Interest on long-term debt 2,771 2,914 Allowance for debt funds used during construction (80) (82) Interest on notes payable 60 102 Amortization of debt discount, premium, and expense, net 181 104 Other interest charges 92 89 ---------- ---------- Net interest charges 3,024 3,127 ---------- ---------- NET INCOME 3,126 3,321 DIVIDENDS ON PREFERRED STOCK 581 581 ---------- ---------- NET INCOME AFTER DIVIDENDS ON PREFERRED STOCK $ 2,545 $ 2,740 ========== ========== The accompanying notes as they relate to SAVANNAH are an integral part of these condensed statements.
50
SAVANNAH ELECTRIC AND POWER COMPANY CONDENSED STATEMENTS OF CASH FLOWS (UNAUDITED) (Stated in Thousands of Dollars) For the Three Months Ended March 31, 1997 1996 OPERATING ACTIVITIES: Net income $ 3,126 $ 3,321 Adjustments to reconcile net income to net cash provided by operating activities-- Depreciation and amortization 5,398 5,116 Deferred income taxes and investment tax credits, net (783) 1,038 Allowance for equity funds used during construction (145) (83) Other, net 872 691 Changes in certain current assets and liabilities-- Receivables, net 7,382 3,623 Inventories 14 1,535 Payables (5,111) (297) Taxes accrued 1,293 2,457 Other (1,548) (5,200) ------------- ------------ Net cash provided from operating activities 10,498 12,201 ------------- ------------ INVESTING ACTIVITIES: Gross property additions (4,628) (6,655) Other (2,318) (5,563) ------------- ------------ Net cash used for investing activities (6,946) (12,218) ------------- ------------ FINANCING ACTIVITIES: Proceeds-- Other long-term debt - 7,000 Retirements-- First mortgage bonds - (1,200) Other long-term debt (185) (70) Notes payable, net (800) (500) Payment of preferred stock dividends (581) (581) Payment of common stock dividends (5,100) (4,800) Miscellaneous 24 - ------------- ------------ Net cash used for financing activities (6,642) (151) ------------- ------------ NET CHANGE IN CASH AND CASH EQUIVALENTS (3,090) (168) CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD 5,214 877 ------------- ------------ CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 2,124 $ 709 ============= ============ SUPPLEMENTAL CASH FLOW INFORMATION: Cash paid during the period for-- Interest (net of amount capitalized) $ 3,657 $ 4,982 Income taxes - 104 The accompanying notes as they relate to SAVANNAH are an integral part of these condensed statements.
51
SAVANNAH ELECTRIC AND POWER COMPANY CONDENSED BALANCE SHEETS (Stated in Thousands of Dollars) ASSETS At March 31, 1997 At December 31, (Unaudited) 1996 ------------- -------------- UTILITY PLANT: Plant in service, at original cost $ 741,051 $ 739,461 Less accumulated provision for depreciation 309,652 304,760 ------------- ------------ 431,399 434,701 Construction work in progress 16,409 13,463 ------------- ------------ Total 447,808 448,164 ------------- ------------ OTHER PROPERTY AND INVESTMENTS: 1,785 1,785 ------------- ------------ CURRENT ASSETS: Cash and cash equivalents 2,124 5,214 Special deposits 1,014 1,395 Receivables-- Customer accounts receivable 17,470 18,827 Other accounts and notes receivable 348 769 Affiliated companies - 844 Accumulated provision for uncollectible accounts (538) (632) Fuel cost under recovery 2,816 7,289 Fossil fuel stock, at average cost 5,915 5,892 Materials and supplies, at average cost 7,976 8,013 Prepayments 6,217 6,135 ------------- ------------ Total 43,342 53,746 ------------- ------------ DEFERRED CHARGES: Deferred charges related to income taxes 19,025 19,167 Premium on reacquired debt, being amortized 6,979 7,142 Cash surrender value of life insurance for deferred compensation plans 10,288 10,288 Miscellaneous 1,846 2,003 ------------- ------------ Total 38,138 38,600 ------------- ------------ TOTAL ASSETS $ 531,073 $ 542,295 ============= ============ The accompanying notes as they relate to SAVANNAH are an integral part of these condensed statements.
52
SAVANNAH ELECTRIC AND POWER COMPANY CONDENSED BALANCE SHEETS (Stated in Thousands of Dollars) CAPITALIZATION AND LIABILITIES At March 31, 1997 At December 31, (Unaudited) 1996 ------------- -------------- Common stock equity-- Common stock (par value $5 per share)-- authorized 16,000,000 shares; outstanding 10,844,635 shares $ 54,223 $ 54,223 Paid-in capital 8,688 8,688 Retained earnings 106,818 109,373 ------------- ------------ 169,729 172,284 Preferred stock 35,000 35,000 Long-term debt 161,315 161,801 ------------- ------------ Total 366,044 369,085 ------------- ------------ CURRENT LIABILITIES: Long-term debt due within one year 980 637 Notes payable 4,200 5,000 Accounts payable-- Affiliated companies 5,447 6,374 Other 3,893 10,201 Customer deposits 5,349 5,232 Taxes accrued-- Federal and state income 113 - Other 2,195 1,015 Interest accrued 4,459 5,275 Vacation pay accrued 2,075 2,038 Miscellaneous 4,862 7,470 ------------- ------------ Total 33,573 43,242 ------------- ------------ DEFERRED CREDITS AND OTHER LIABILITIES: Accumulated deferred income taxes 77,562 76,654 Accumulated deferred investment tax credits 13,105 13,271 Deferred credits related to income taxes 22,764 22,792 Deferred compensation plans 8,875 8,602 Postretirement benefits 5,762 5,472 Miscellaneous 3,388 3,177 ------------- ------------ Total 131,456 129,968 ------------- ------------ TOTAL CAPITALIZATION AND LIABILITIES $ 531,073 $ 542,295 ============= ============ The accompanying notes as they relate to SAVANNAH are an integral part of these condensed statements.
53 SAVANNAH ELECTRIC AND POWER COMPANY MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND FINANCIAL CONDITION FIRST QUARTER 1997 vs. FIRST QUARTER 1996 RESULTS OF OPERATIONS Earnings SAVANNAH's net income after dividends on preferred stock for the first quarter of 1997 was $2.5 million compared to $2.7 million for the corresponding period of 1996. The 7.1% decrease in earnings was primarily due to a decrease in revenues. Significant income statement items appropriate for discussion include the following:
Increase (Decrease) (in thousands) % Revenues....................................... $ (6,480) (13.1) Revenues from affiliates....................... (1,150) (95.2) Purchased power from affiliates................ (6,568) (41.4)
Revenues. Excluding fuel revenues, which represent the pass-through of fuel expenses and do not affect income, revenues for the quarter decreased approximately $647 thousand, compared to the corresponding period of 1996. The decrease in revenues was due primarily to an 8.2% decrease in the amount of residential energy sold. Retail revenues, excluding fuel revenues, decreased approximately $650 thousand. This decrease in revenues was primarily a result of milder-than-normal weather during the current quarter offset somewhat by an increase in the number of customers served and an increase in energy requirements to the industrial sector. Revenues from affiliates and Purchased power from affiliates. 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. In addition, the first quarter of 1997 reflects an adjustment in affiliated billings. These transactions do not have a significant impact on earnings. 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 energy sales growth to a less regulated, more competitive environment. With the enactment of the Energy Act and new legislation being discussed at federal and state levels to expand customer choice, the Southern electric system is positioning the business to meet the challenge of increasing competition. For additional information, see Item 1 - BUSINESS - "Competition" and Item 7 - MANAGEMENT'S DISCUSSION AND ANALYSIS - "Future Earnings Potential" of SAVANNAH in the Form 10-K. Compliance costs related to the Clean Air Act could affect earnings if such costs cannot be offset. For additional information about the Clean Air Act and other environmental issues, see Item 7 - MANAGEMENT'S DISCUSSION AND ANALYSIS "Environmental Matters" of SAVANNAH in the Form 10-K. 54 SAVANNAH ELECTRIC AND POWER COMPANY MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND FINANCIAL CONDITION Reference is made to Notes (B) and (Q) in the "Notes to the Condensed Financial Statements" herein for discussion of various contingencies and other matters which may affect future earnings potential. FINANCIAL CONDITION Overview Major changes in SAVANNAH's financial condition during the first three months of 1997 included the addition of approximately $4.6 million to utility plant. The funds for these additions and other capital requirements were derived primarily from operations. See SAVANNAH's Condensed Statements of Cash Flows for further details. Financing Activities In April 1997, SAVANNAH sold, through a public authority, $13.87 million of variable rate pollution control revenue bonds due 2037. The proceeds will be applied to the redemption on May 5, 1997 of $13.87 million of 6 3/4% pollution control revenue bonds. SAVANNAH plans to continue, to the extent possible, a program to retire higher-cost debt and replace these obligations with lower-cost capital. Sources of Capital SAVANNAH plans to obtain the funds required for construction and other purposes from sources similar to those used in the past. The amount, type and timing of any financings--if needed--will depend upon maintenance of adequate earnings, regulatory approval, prevailing market conditions and other factors. Currently, SAVANNAH expects to have adequate earnings coverage ratios for any anticipated security sales through at least 1999. See Item 1 - BUSINESS - "Financing Programs" in the Form 10-K for additional information. To meet short-term cash needs and contingencies, SAVANNAH had at March 31, 1997, approximately $2.1 million of cash and cash equivalents and approximately $36.3 million of unused credit arrangements with banks. At March 31, 1997, SAVANNAH had $4.2 million of short-term notes payable to banks. Since SAVANNAH has no major generating plants under construction, management believes that the need for working capital can be adequately met by utilizing lines of credit. 55 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, I, J, K, L, M, N, O, P ALABAMA A, B, C, G, H, I, J, K GEORGIA A, B, C, G, H, I, L, M, N, O, P GULF A, B, G, H, I MISSISSIPPI A, B, G, H, I SAVANNAH A, B, H, Q
56 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 THE CONDENSED FINANCIAL STATEMENTS: (A) The condensed financial statements of the registrants included herein have been prepared by each registrant, without audit, pursuant to the rules and regulations of the SEC. In the opinion of each registrant's management, the information regarding such registrant furnished herein reflects all adjustments (which included only normal recurring adjustments) necessary to present fairly the results for the periods ended March 31, 1997 and 1996. 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 each registrant believes that the disclosures regarding such registrant 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 each registrant's latest annual report on Form 10-K. Certain prior-period amounts have been reclassified to conform with current- period presentation. The condensed financial statements of ALABAMA and GEORGIA included herein have been reviewed by ALABAMA's and GEORGIA's independent public accountants as set forth in their reports included herein as Exhibit 1 to ALABAMA's and GEORGIA's condensed financial statements. (B) SOUTHERN's operating affiliates 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 a company's operations is no longer subject to these provisions, the company would be required to write off related regulatory assets and liabilities, and determine if any other assets have been impaired. For additional information, see Note 1 to the financial statements of each registrant in Item 8 of the Form 10-K. (C) The staff of the SEC has questioned certain of the current accounting practices of the electric utility industry--including SOUTHERN's--regarding the recognition, measurement and classification of decommissioning costs for nuclear generating facilities in the financial statements. In response to these questions, the FASB has decided to review the accounting for liabilities related to closure and removal of long-lived assets, including nuclear decommissioning. Reference is made to MANAGEMENT'S DISCUSSION AND ANALYSIS - "Future Earnings Potential" of SOUTHERN, ALABAMA and GEORGIA in Item 7 and Note 1 to the financial statements of SOUTHERN, ALABAMA and GEORGIA under "Depreciation and Nuclear Decommissioning" in Item 8 of the Form 10-K. (D) SOUTHERN engages in price risk management activities for trading and non-trading purposes. Reference is made to Note 1 to the financial statements of SOUTHERN in Item 8 of the Form 10-K for a discussion of these activities. Activities for non-trading purposes consist of transactions that are employed to mitigate SOUTHERN's risk related to interest rate and foreign currency fluctuations. At March 31, 1997, the status of outstanding non-trading related derivative contracts was as follows: 57 NOTES TO THE CONDENSED FINANCIAL STATEMENTS: (Continued)
Maturity or Notional Unrealized Type Termination Amount Gain (Loss) (in thousands) Interest rate swaps: 2002-2012 $778,401 $ 8,647 2001-2012 (pound)500,000 $ (2,809) Cross-currency swaps 2001-2007 (pound)455,399 $(27,201) (pound) - Denotes British pounds sterling. Outstanding positions on trading activities were not material at March 31, 1997.
(E) On January 29, 1997, Southern Energy, a wholly-owned subsidiary of SOUTHERN, completed the acquisition of an 80% interest in CEPA for a total net investment of approximately $2.0 billion. (Reference is made to the Current Report on Form 8-K of SOUTHERN dated October 9, 1996 for a more detailed description of the acquisition.) The acquisition of CEPA was accounted for as a purchase with the $1.5 billion excess of the acquisition cost over the preliminary estimate of the fair value of CEPA's net assets being assigned to goodwill. The allocation of the purchase price is preliminary and may be revised at a later date. Goodwill will be amortized on a straight-line basis over 40 years. Results of operations of CEPA are included in the condensed consolidated financial statements subsequent to January 29, 1997. The following unaudited pro forma combined results of operations for the three months ended March 31, 1997 and 1996 have been prepared assuming the acquisition of CEPA had occurred at the beginning of each period. The pro forma results assume acquisition financing of $764 million of short-term borrowings, $792 million of long-term notes and $400 million of capital securities and SOUTHERN's assumed effective composite interest rate on these obligations for each period presented was 6.70%. Eventually, the existing borrowing may be replaced by some other combination of long-term debt and equity. The pro forma results are provided for information only. The results are not necessarily indicative of the actual results that would have been realized had the acquisition occurred on the indicated dates, nor are they necessarily indicative of future results of operations of the combined companies. The pro forma results for the three months ended March 31, 1996, include no revenues from CEPA's ownership interest in 2,715 megawatts of capacity that began commercial operation in mid-1996.
As Reported and Pro Forma Information (Unaudited) (Stated in Thousands of Dollars, except per share) For the Three Months Ended March 31, 1997 1996 As Reported Pro Forma As Reported Pro Forma Operating revenues $2,584,414 $2,605,071 $2,429,355 $2,438,696 Consolidated Net Income 187,013 184,338 232,875 215,848 Earnings Per Share of Common Stock $0.28 $0.27 $0.35 $0.32
58 NOTES TO THE CONDENSED FINANCIAL STATEMENTS: (Continued) (F) SOUTHERN's principal business segment -- or its traditional core business -- is the five electric utility operating companies, which provide electric service in four southeastern states. The other reportable business segment is Southern Energy, which owns and operates power production and delivery facilities in the United States and various international markets. Financial data for business segments and geographic areas are as follows:
Business Segments Operating Operating Total Revenues Income Assets (in thousands) For the Three Months Ended At March 31, 1997 March 31, 1997 ------------------------ -------------- Traditional core business $1,919,282 $334,429 $24,521,029 Southern Energy 665,132 61,723 9,479,053 ---------- -------- ----------- Consolidated $2,584,414 $396,152 $34,000,082 ========== ======== =========== For the Three Months Ended At March 31, 1996 December 31, 1996 ------------------------ ----------------- Traditional core business $2,000,552 $374,052 $25,367,558 Southern Energy 428,803 34,010 4,924,244 ---------- -------- ----------- Consolidated $2,429,355 $408,062 $30,291,802 ========== ======== =========== Geographic Areas Operating Operating Total Revenues Income Assets (in thousands) For the Three Months Ended At March 31, 1997 March 31, 1997 ------------------------ -------------- Domestic $2,098,475 $337,534 $25,088,069 International: Europe 387,357 38,479 2,833,613 Asia 43,129 18,330 4,066,223 Other 55,453 1,809 2,012,177 ---------- -------- ----------- Total $2,584,414 $396,152 $34,000,082 ========== ======== =========== For the Three Months Ended At March 31, 1996 December 31, 1996 ------------------------ ----------------- Domestic $2,021,734 $381,590 $25,868,253 International: Europe 354,908 24,849 2,965,578 Asia - - - Other 52,713 1,623 1,457,971 ---------- -------- ----------- Total $2,429,355 $408,062 $30,291,802 ========== ======== ===========
(G) Reference is made to Note 3 to each of the registrant's, except SAVANNAH's, financial statements in Item 8 of the 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. 59 NOTES TO THE CONDENSED FINANCIAL STATEMENTS: (Continued) (H) Certain of the registrants and other SOUTHERN subsidiaries have instituted work force reduction programs. The expenses recognized under these programs and the unamortized balance of expenses deferred under regulatory orders were as follows: (in thousands) Three Months Ended Unamortized Balance March 31, at March 31, 1997 ----------------------- ----------------- 1997 1996 ---- ---- ALABAMA $ 8,598 $ 4,365 $39,786 GEORGIA 604 18,500 - GULF 1,151 959 - MISSISSIPPI 53 250 1,991 SAVANNAH 15 5 - Other (76) 183 - ---------- ------- ------------ SOUTHERN system $10,345 $24,262 $41,777 ======= ======= ======= (I) During the first quarter of 1997, statutory business trusts formed by ALABAMA, GEORGIA, GULF, MISSISSIPPI, Southern Investments UK plc ("SIUK") and Southern Company Capital Funding, Inc. ("Southern Capital"), of which the respective companies own all the common securities, issued mandatorily redeemable preferred or capital securities as follows (in thousands):
Maturity Date Date of Issue Amount Rate Notes of Notes ALABAMA 1/16/97 $200,000 7.60% $206,000 12/31/2036 GEORGIA 1/16/97 175,000 7.60 180,000 12/31/2036 GULF 1/31/97 40,000 7.625 41,000 12/31/2036 MISSISSIPPI 2/26/97 35,000 7.75 36,000 2/15/2037 SIUK 1/29/97 82,000 8.23 85,000 2/1/2027 Southern Capital 2/4/97 325,000 8.19 335,000 2/1/2037 Southern Capital 2/4/97 75,000 8.14 77,000 2/15/2027
Substantially all the assets of each trust are junior subordinated notes issued by the related company in the respective approximate principal amounts set forth above. The notes of Southern Capital are guaranteed by SOUTHERN. ALABAMA, GEORGIA, GULF, MISSISSIPPI, SIUK and SOUTHERN each considers that the mechanisms and obligations relating to the preferred or capital securities issued for its benefit, taken together, constitute a full and unconditional guarantee by it of the respective trusts' payment obligations with respect to the preferred or capital securities. Reference is also made to Note 9 to the financial statements of ALABAMA and GEORGIA in the Form 10-K. (J) In June 1995, the Alabama PSC issued a rate order granting ALABAMA's request for gradual adjustments to move toward parity among customer classes. This order also calls for a moratorium on any periodic retail rate increases (but not decreases) until July 2001. In December 1995, the Alabama PSC issued an order authorizing ALABAMA to reduce balance sheet items--such as plant and deferred charges--at any time ALABAMA's actual base rate revenues exceed the budgeted revenues. Reference is made to Note 3 to the financial statements of SOUTHERN and ALABAMA in Item 8 of the Form 10-K for additional 60 NOTES TO THE CONDENSED FINANCIAL STATEMENTS: (Continued) information. In April 1997, the Alabama PSC issued an additional order authorizing ALABAMA to reduce balance sheet asset items. This order authorizes the reduction of such items up to an amount equal to 5 times the total estimated annual revenue reduction resulting from future rate reductions. (K) In 1996, legal actions against ALABAMA were filed in several counties in Alabama charging ALABAMA with fraud and non-compliance with regulatory statutes relating to the offer, sale and financing of "extended service contracts" in connection with the sale of electric appliances. See Note 3 to the financial statements of SOUTHERN and ALABAMA in Item 8 of the Form 10-K for additional information. (L) In February 1996, the Georgia PSC approved a three-year accounting order, effective January 1, 1996, which is currently under appeal. GEORGIA is continuing to recognize expenses in accordance with the accounting order while it is under appeal. Under the order, earnings in excess of a 12.5% retail return on common equity will be used to accelerate the amortization of regulatory assets or depreciation of electric plant. Accordingly, for earnings in excess of the 12.5% return, GEORGIA recorded a charge of $19.8 million for the three months ended March 31, 1997 (presented in the accompanying financial statements as depreciation expense and as an addition to the reserve for depreciation). For additional information, reference is made to Note 3 to the financial statements of SOUTHERN and GEORGIA in Item 8 of the Form 10-K. (M) In 1987 and 1989, the Georgia PSC ordered that the allowed costs of Plant Vogtle, a two-unit nuclear facility of which GEORGIA owns 45.7%, be phased into rates. Pursuant to the orders, GEORGIA recorded a deferred return under phase-in plans until October 1991 when the allowed investment was fully reflected in rates. In 1991, the Georgia PSC levelized the remaining Plant Vogtle declining capacity buyback expenses over a six-year period. In addition, GEORGIA deferred certain Plant Vogtle operating expenses and financing costs under accounting orders issued by the Georgia PSC. These Georgia PSC orders provide for the recovery of deferred costs within 10 years. The unamortized balance of these deferred costs at March 31, 1997, was $133 million. (N) Reference is made to Note 3 to the financial statements of SOUTHERN and GEORGIA in Item 8 of the Form 10-K for information concerning the recovery by GEORGIA of its costs associated with the Rocky Mountain pumped storage hydroelectric plant. (O) Reference is made to Note 3 to the financial statements of GEORGIA in Item 8 of the Form 10-K for information relating to an agreement reached January 10, 1997, between GEORGIA and MEAG relating to a new power supply relationship. A power supply contract entered into between GEORGIA and MEAG has been filed with FERC and is presently awaiting its approval. (P) Reference is made to Note 3 to the financial statements of SOUTHERN and GEORGIA in Item 8 of the Form 10-K for information regarding GEORGIA's designation as a potentially responsible party under the Comprehensive Environmental Response, Compensation and Liability Act and other environmental contingencies. (Q) SAVANNAH is currently undergoing an earnings review by the Georgia PSC, and to date, the Georgia PSC has made no determination. 61 PART II - OTHER INFORMATION Item 1. Legal Proceedings. (1) Reference is made to the Notes to the Condensed Financial Statements herein for information regarding certain legal and administrative proceedings in which SOUTHERN and its reporting subsidiaries are involved. (2) Reference is made to Item 3 - LEGAL PROCEEDINGS in the 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. (3) ALABAMA, GEORGIA and MISSISSIPPI, et al. v. TVA (U.S. District Court for the Northern District of Alabama) On April 10, 1997, ALABAMA, GEORGIA and MISSISSIPPI joined in the filing of an action seeking to enjoin TVA from violating a 1959 act which prohibits TVA from selling power outside the area that was being served by it in 1957. TVA is alleged to have entered into arrangements with entities to which it may lawfully sell power under the 1959 act which enable TVA to deliver power to organizations for use outside TVA's statutorily defined service territory. The plaintiffs contend such arrangements are in violation of the 1959 act. Item 6. Exhibits and Reports on Form 8-K. (a) Exhibits.
Exhibit 24 - Powers of Attorney and resolutions. (Designated in the Form 10-K for the year ended December 31, 1996, 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.) Exhibits 27 - Financial Data Schedules (a) SOUTHERN (b) ALABAMA (c) GEORGIA (d) GULF (e) MISSISSIPPI (f) SAVANNAH
(b) Reports on Form 8-K. ALABAMA and GEORGIA each filed a Current Report on Form 8-K dated January 9, 1997: Items reported: Item 5 Item 7 Financial statements filed: None 62
Item 6. Exhibits and Reports on Form 8-K. (b) Reports on Form 8-K. (Continued) GULF filed a Current Report on Form 8-K dated January 27, 1997: Items reported: Item 5 Item 7 Financial statements filed: None SOUTHERN, ALABAMA, GEORGIA, GULF, MISSISSIPPI and SAVANNAH each filed a Current Report on Form 8-K dated February 12, 1997: Item reported: Item 7 Financial statements filed: Each registrant's audited financial statements for the year ended December 31, 1996. MISSISSIPPI filed a Current Report on Form 8-K dated February 20, 1997: Items reported: Item 5 Item 7 Financial statements filed: None
63 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, Chief Financial Officer and Treasurer (Principal Financial and Accounting Officer) By /s/ Wayne Boston (Wayne Boston, Attorney-in-fact) Date: May 13, 1997 - --------------------------------------------------------------------------------------------------------------------------------- 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 (Principal Executive Officer) By William B. Hutchins, III Executive Vice President and Chief Financial Officer (Principal Financial Officer) By /s/ Wayne Boston (Wayne Boston, Attorney-in-fact) Date: May 13, 1997 64 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 13, 1997 - --------------------------------------------------------------------------------------------------------------------------------- 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 (Principal 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 13, 1997 65 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 (Principal 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 13, 1997 - --------------------------------------------------------------------------------------------------------------------------------- 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 and Chief Executive Officer (Principal Executive Officer) 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 13, 1997
66 EX-27 2 FINANCIAL DATA SCHEDULE - SOUTHERN COMPANY
UT This schedule contains summary financial information extracted from the Form 10-Q for March 31, 1997, and is qualified in its entirety by reference to such financial statements. 0000092122 THE SOUTHERN COMPANY 1,000 3-MOS DEC-31-1996 MAR-31-1997 PER-BOOK 23,138,705 4,884,925 3,546,555 2,429,897 0 34,000,082 3,405,594 2,125,534 3,730,782 9,261,910 1,353,500 833,372 6,809,602 286,340 2,743,356 1,737,895 463,148 116,155 146,799 3,367 10,244,638 34,000,082 2,584,414 146,182 2,042,080 2,188,262 396,152 47,524 443,676 239,608 204,068 17,055 187,013 220,194 0 585,645 0.28 0
EX-27 3 FINANCIAL DATA SCHEDULE - ALABAMA POWER COMPANY
UT This schedule contains summary financial information extracted from the Form 10-Q for March 31, 1997, and is qualified in its entirety by reference to such financial statements. 0000003153 ALABAMA POWER COMPANY 1,000 3-MOS DEC-31-1996 MAR-31-1997 PER-BOOK 7,060,948 200,617 841,820 646,810 0 8,750,195 224,358 1,304,791 1,162,776 2,691,925 297,000 278,400 2,291,732 0 0 413,786 50,000 62,000 6,869 955 2,657,528 8,750,195 704,768 35,186 546,127 581,313 123,455 2,990 126,445 62,940 63,505 5,698 57,807 80,100 0 64,254 0 0
EX-27 4 FINANCIAL DATA SCHEDULE - GEORGIA POWER COMPANY
UT This schedule contains summary financial information extracted from the Form 10-Q for March 31, 1997, and is qualified in its entirety by reference to such financial statements. 0000041091 GEORGIA POWER COMPANY 1,000 3-MOS DEC-31-1996 MAR-31-1997 PER-BOOK 10,292,015 284,245 995,556 1,303,877 0 12,875,693 344,250 2,135,257 1,658,105 4,137,612 500,000 380,456 3,113,949 58,400 0 203,438 0 54,155 86,577 372 4,340,734 12,875,693 958,712 84,649 694,194 778,843 179,869 (1,115) 178,754 64,763 113,991 7,956 106,035 122,700 0 371,980 0 0
EX-27 5 FINANCIAL DATA SCHEDULE - GULF POWER COMPANY
UT This schedule contains summary financial information extracted from the Form 10-Q for March 31, 1997, and is qualified in its entirety by reference to such financial statements. 0000044545 GULF POWER COMPANY 1,000 3-MOS DEC-31-1996 MAR-31-1997 PER-BOOK 1,059,862 628 155,927 74,751 0 1,291,168 38,060 218,482 177,056 433,598 40,000 65,102 295,450 17,500 29,572 0 41,271 0 0 0 368,675 1,291,168 141,374 6,860 114,302 121,162 20,212 (1) 20,211 7,876 12,335 1,595 10,740 22,900 0 39,069 0 0
EX-27 6 FINANCIAL DATA SCHEDULE - MISSISSIPPI POWER COMPAN
UT This schedule contains summary financial information extracted from the Form 10-Q for March 31, 1997, and is qualified in its entirety by reference to such financial statements. 0000066904 MISSISSIPPI POWER COMPANY 1,000 3-MOS DEC-31-1996 MAR-31-1997 PER-BOOK 992,248 3,035 104,257 45,691 0 1,145,231 37,691 179,761 165,527 382,979 35,000 74,414 211,455 0 80,000 0 35,010 0 0 0 326,373 1,145,231 116,903 6,704 93,067 99,771 17,132 470 17,602 5,732 11,870 1,225 10,645 11,300 0 932 0 0
EX-27 7 FINANCIAL DATA SCHEDULE - SAVANNAH ELECTRIC AND
UT This schedule contains summary financial information extracted from the Form 10-Q for March 31, 1997, and is qualified in its entirety by reference to such financial statements. 0000086940 SAVANNAH ELECTRIC AND POWER COMPANY 1,000 3-MOS DEC-31-1996 MAR-31-1997 PER-BOOK 447,808 1,785 43,342 38,138 0 531,073 54,223 8,688 106,818 169,729 0 35,000 125,392 4,200 30,000 0 0 0 5,923 980 159,849 531,073 42,945 2,075 34,753 36,828 6,117 33 6,150 3,024 3,126 581 2,545 5,100 0 10,498 0 0
-----END PRIVACY-ENHANCED MESSAGE-----