0000092122-95-000091.txt : 19950815 0000092122-95-000091.hdr.sgml : 19950815 ACCESSION NUMBER: 0000092122-95-000091 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 7 CONFORMED PERIOD OF REPORT: 19950630 FILED AS OF DATE: 19950814 SROS: NONE FILER: COMPANY DATA: COMPANY CONFORMED NAME: SOUTHERN CO CENTRAL INDEX KEY: 0000092122 STANDARD INDUSTRIAL CLASSIFICATION: ELECTRIC SERVICES [4911] IRS NUMBER: 580690070 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 001-03526 FILM NUMBER: 95562323 BUSINESS ADDRESS: STREET 1: 64 PERIMETER CTR EAST CITY: ATLANTA STATE: GA ZIP: 30346 BUSINESS PHONE: 4043930650 FILER: COMPANY DATA: COMPANY CONFORMED NAME: ALABAMA POWER CO CENTRAL INDEX KEY: 0000003153 STANDARD INDUSTRIAL CLASSIFICATION: ELECTRIC SERVICES [4911] IRS NUMBER: 630004250 STATE OF INCORPORATION: AL FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 001-03164 FILM NUMBER: 95562324 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: 95562325 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: 95562326 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: 95562327 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: 95562328 BUSINESS ADDRESS: STREET 1: 600 BAY ST EAST CITY: SAVANNAH STATE: GA ZIP: 31401 BUSINESS PHONE: 9122327171 10-Q 1 FORM 10-Q SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 ------------------------- FORM 10-Q (X) QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the Quarter Ended June 30, 1995 OR ( ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the Transition Period from _____to_____ Commission Registrant, State of Incorporation, I.R.S. Employer File Number Address and Telephone Number Identification No. 1-3526 The Southern Company 58-0690070 (A Delaware Corporation) 64 Perimeter Center East Atlanta, Georgia 30346 (770) 393-0650 -3164 Alabama Power Company 63-0004250 (An Alabama Corporation) 600 North 18th Street Birmingham, Alabama 35291 (205) 250-1000 1-6468 Georgia Power Company 58-0257110 (A Georgia Corporation) 333 Piedmont Avenue, N.E. Atlanta, Georgia 30308 (404) 526-6526 0-2429 Gulf Power Company 59-0276810 (A Maine Corporation) 500 Bayfront Parkway Pensacola, Florida 32501 (904) 444-6111 0-6849 Mississippi Power Company 64-0205820 (A Mississippi Corporation) 2992 West Beach Gulfport, Mississippi 39501 (601) 864-1211 1-5072 Savannah Electric and Power Company 58-0418070 (A Georgia Corporation) 600 Bay Street, East Savannah, Georgia 31401 (912) 232-7171 Indicate by check mark whether the registrants (1) have filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrants were required to file such reports), and (2) have been subject to such filing requirements for the past 90 days. Yes X No____
Description of Shares Outstanding Registrant Common Stock at July 31, 1995 The Southern Company Par Value $5 Per Share 665,774,460 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.
Table of Contents PART I Page Definitions 4 The Southern Company and Subsidiary Companies Management's Opinion as to Fair Statement of Results 6 Condensed Statements of Income 7 Condensed Statements of Cash Flows 8 Condensed Balance Sheets 9 Management's Discussion and Analysis of Results of Operations and Financial Condition 11 Alabama Power Company Management's Opinion as to Fair Statement of Results 18 Review by Independent Public Accountants 18 Condensed Statements of Income 19 Condensed Statements of Cash Flows 20 Condensed Balance Sheets 21 Management's Discussion and Analysis of Results of Operations and Financial Condition 23 Exhibit 1 - Report of Independent Public Accountants 27 Georgia Power Company Management's Opinion as to Fair Statement of Results 29 Review by Independent Public Accountants 29 Condensed Statements of Income 30 Condensed Statements of Cash Flows 31 Condensed Balance Sheets 32 Management's Discussion and Analysis of Results of Operations and Financial Condition 34 Exhibit 1 - Report of Independent Public Accountants 40 Gulf Power Company Management's Opinion as to Fair Statement of Results 42 Condensed Statements of Income 43 Condensed Statements of Cash Flows 44 Condensed Balance Sheets 45 Management's Discussion and Analysis of Results of Operations and Financial Condition 47 Mississippi Power Company Management's Opinion as to Fair Statement of Results 52 Condensed Statements of Income 53 Condensed Statements of Cash Flows 54 Condensed Balance Sheets 55 Management's Discussion and Analysis of Results of Operations and Financial Condition 57 Savannah Electric and Power Company Management's Opinion as to Fair Statement of Results 62 Condensed Statements of Income 63 Condensed Statements of Cash Flows 64 Condensed Balance Sheets 65 Management's Discussion and Analysis of Results of Operations and Financial Condition 67
Table of Contents (Continued) Page Notes to the Condensed Financial Statements 70 PART II Item 1. Legal Proceedings 74 Item 4. Submission of Matters to a Vote of Security Holders 74 Item 6. Exhibits and Reports on Form 8-K 77 Signatures 78 DEFINITIONS
TERM MEANING AFUDC....................................... Allowance for Funds Used During Construction ALABAMA..................................... Alabama Power Company Clean Air Act .............................. Clean Air Act Amendments of 1990 ECO Plan.................................... Environmental Compliance Overview Plan Energy Act.................................. Energy Policy Act of 1992 FASB........................................ Financial Accounting Standards Board FERC........................................ Federal Energy Regulatory Commission GEORGIA..................................... Georgia Power Company GULF........................................ Gulf Power Company IRS......................................... Internal Revenue Service MEAG........................................ Municipal Electric Authority of Georgia MISSISSIPPI................................. Misissippi Power Company Mobile...................................... Mobile Energy Services Company, L.L.C. NRC......................................... Nuclear Regulatory Commission OPC......................................... Oglethorpe Power Corporation PEP......................................... Performance Evaluation Plan PSC ........................................ Public Service Commission SAVANNAH ................................... Savannah Electric and Power Company SCS......................................... Southern Company Services, Inc. SEC......................................... Securities and Exchange Commission SEI......................................... Southern Electric International, Inc. SEGCO....................................... Southern Electric Generating Company SOUTHERN ................................... The Southern Company South Western............................... South Western Electricity PLC (United Kingdom)
THE SOUTHERN COMPANY AND SUBSIDIARY COMPANIES THE SOUTHERN COMPANY AND SUBSIDIARY COMPANIES MANAGEMENT'S OPINION AS TO FAIR STATEMENT OF RESULTS The condensed financial statements of SOUTHERN included herein have been prepared by SOUTHERN, without audit, pursuant to the rules and regulations of the SEC. In the opinion of SOUTHERN's management, subject to the effect of such adjustments, if any, as might have been required had the outcome of the uncertainty with respect to the actions of the regulators regarding the recoverability of GEORGIA's investment in the Rocky Mountain pumped storage hydroelectric project as more fully discussed in Note (G) to the Condensed Financial Statements herein, been known, the information furnished herein reflects all adjustments (which, except for the provision for separation benefits as described in Note (C) to the Condensed Financial Statements herein, included only normal recurring adjustments) necessary to present fairly the results for the periods ended June 30, 1995 and 1994. Certain information and footnote disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles have been condensed or omitted pursuant to such rules and regulations, although SOUTHERN believes that the disclosures are adequate to make the information presented not misleading. It is suggested that these condensed financial statements be read in conjunction with the financial statements and the notes thereto included in SOUTHERN's latest annual report on Form 10-K. THE SOUTHERN COMPANY AND SUBSIDIARY COMPANIES CONDENSED STATEMENTS OF INCOME (UNAUDITED) (Stated in Thousands of Dollars)
For the Three Months For the Six Months Ended June 30, Ended June 30, -------------------- -------------------- 1995 1994 1995 1994 ---- ---- ---- ---- OPERATING REVENUES $2,183,570 $2,068,485 $4,112,613 $4,000,915 ---------- ---------- ---------- ---------- OPERATING EXPENSES: Operation-- Fuel 545,766 536,681 995,548 1,016,672 Purchased power 70,551 43,199 129,089 123,859 Other 390,012 364,254 750,025 787,577 Maintenance 162,896 161,089 322,308 334,876 Depreciation and amortization 216,720 202,176 429,041 402,386 Amortization of deferred Plant Vogtle expenses, net (Note F) 29,793 15,789 57,950 28,407 Taxes other than income taxes 121,432 118,015 244,880 236,951 Federal and state income taxes 193,451 187,292 345,444 299,885 ---------- ---------- ---------- ---------- Total operating expenses 1,730,621 1,628,495 3,274,285 3,230,613 ---------- ---------- ---------- ---------- OPERATING INCOME 452,949 439,990 838,328 770,302 OTHER INCOME (EXPENSE): Allowance for equity funds used during construction 1,885 2,492 5,004 5,775 Interest income 477 7,443 8,379 13,541 Other, net 10,534 (138) (6,163) (16,014) Income taxes applicable to other income (6,641) (1,336) 5,039 4,725 ---------- ---------- ---------- ---------- INCOME BEFORE INTEREST CHARGES 459,204 448,451 850,587 778,329 ---------- ---------- ---------- ---------- INTEREST CHARGES AND PREFERRED DIVIDENDS: Interest on long-term debt 137,103 146,087 273,501 288,658 Allowance for debt funds used during construction (5,391) (5,342) (11,239) (9,726) Interest on interim obligations 14,793 8,323 28,391 17,572 Amortization of debt discount, premium and expense, net 7,822 7,482 15,941 14,843 Other interest charges 15,110 13,970 25,434 26,114 Preferred dividends of subsidiary companies 22,253 21,732 44,703 43,066 ---------- ---------- ---------- ---------- Net interest charges and preferred dividends 191,690 192,252 376,731 380,527 ---------- ---------- ---------- ---------- CONSOLIDATED NET INCOME $ 267,514 $ 256,199 $ 473,856 $ 397,802 ========== ========== ========== ========== AVERAGE NUMBER OF SHARES OF COMMON STOCK OUTSTANDING (Thousands) 665,670 648,347 663,532 647,399 EARNINGS PER SHARE OF COMMON STOCK $0.40 $0.39 $0.71 $0.61 CASH DIVIDENDS PAID PER SHARE OF COMMON STOCK $0.305 $0.295 $0.61 $0.59 The accompanying notes as they relate to SOUTHERN are an integral part of these condensed statements.
THE SOUTHERN COMPANY AND SUBSIDIARY COMPANIES CONDENSED STATEMENTS OF CASH FLOWS (UNAUDITED) (Stated in Thousands of Dollars) For the Six Months Ended June 30, 1995 1994 ---- ---- OPERATING ACTIVITIES: Consolidated net income $ 473,856 $ 397,802 Adjustments to reconcile consolidated net income to net cash provided by operating activities-- Depreciation and amortization 536,079 519,402 Deferred income taxes, net 29,591 (10,499) Allowance for equity funds used during construction (5,004) (5,775) Deferred Plant Vogtle costs 57,950 28,407 Provision for separation benefits - 83,962 Gain on asset sales (23,228) (23,582) Other, net 54,000 (23,628) Changes in certain current assets and liabilities-- Receivables, net (17,212) 11,956 Fossil fuel stock (13,024) (74,858) Materials and supplies 14,949 (6,062) Accounts payable (266,880) (24,435) Taxes accrued 100,681 16,411 Other (33,512) (22,374) ---------- --------- Net cash provided from operating activities 908,246 866,727 ---------- ---------- INVESTING ACTIVITIES: Gross property additions (634,641) (696,330) Sales of Property 131,099 141,931 Other 27,621 (70,069) ---------- --------- Net cash used in investing activities (475,921) (624,468) ---------- --------- FINANCING ACTIVITIES: Proceeds-- Common stock 186,535 121,766 First mortgage bonds 90,000 35,000 Pollution control bonds 198,535 106,165 Other long-term debt 107,977 428,178 Retirements-- Preferred stock (1,000) (1,000) First mortgage bonds (171,356) (106,679) Pollution control bonds (198,625) (52,555) Other long-term debt (109,599) (159,744) Special deposits-redemption funds (135,933) (187,259) Interim obligations, net (11,972) (8,655) Payment of common stock dividends (404,926) (382,525) Miscellaneous (5,574) (8,667) ---------- --------- Net cash provided from (used in) financing activities (455,938) (215,975) ---------- --------- NET CHANGE IN CASH AND CASH EQUIVALENTS (23,613) 26,284 CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD 139,309 178,346 ---------- --------- CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 115,696 $ 204,630 ========== ========= SUPPLEMENTAL CASH FLOW INFORMATION: Cash paid during the period for-- Interest (net of amount capitalized) $ 305,783 $ 307,537 Income taxes 245,202 291,612 The accompanying notes as they relate to SOUTHERN are an integral part of these condensed statements.
THE SOUTHERN COMPANY AND SUBSIDIARY COMPANIES CONDENSED BALANCE SHEETS (Stated in Thousands of Dollars) ASSETS
At June 30, 1995 At December 31, (Unaudited) 1994 ---------- --------------- UTILITY PLANT: Plant in service $29,792,212 $29,208,380 Less accumulated provision for depreciation 9,947,958 9,576,577 ----------- ----------- 19,844,254 19,631,803 Nuclear fuel, at amortized cost 222,870 238,055 Construction work in progress 928,533 1,247,427 ----------- ----------- Total 20,995,657 21,117,285 ----------- ----------- OTHER PROPERTY AND INVESTMENTS: Argentine operating concession, being amortized 440,442 445,834 Nuclear decommissioning trusts 159,118 125,311 Miscellaneous 241,441 223,504 ----------- ----------- Total 841,001 794,649 ----------- ----------- CURRENT ASSETS: Cash and cash equivalents 115,696 139,309 Special deposits 135,933 36,338 Receivables, less accumulated provisions for uncollectible accounts of $11,295 at June 30, 1995 and $9,129 at December 31, 1994 1,070,591 1,021,590 Fossil fuel stock, at average cost 363,564 350,540 Materials and supplies, at average cost 537,860 552,809 Prepayments 229,260 193,983 Miscellaneous 73,195 73,614 ----------- ----------- Total 2,526,099 2,368,183 ----------- ----------- DEFERRED CHARGES: Deferred charges related to income taxes 1,403,780 1,454,190 Deferred Plant Vogtle costs (F) 374,142 432,092 Debt expense and loss, being amortized 347,764 345,897 Miscellaneous 533,054 530,591 ----------- ----------- Total 2,658,740 2,762,770 ------------ ----------- TOTAL ASSETS $27,021,497 $27,042,887 =========== =========== The accompanying notes as they relate to SOUTHERN are an integral part of these condensed statements.
THE SOUTHERN COMPANY AND SUBSIDIARY COMPANIES CONDENSED BALANCE SHEETS (Stated in Thousands of Dollars) CAPITALIZATION AND LIABILITIES
At June 30, 1995 At December 31, (Unaudited) 1994 ----------- -------------- CAPITALIZATION: Common stock, par value $5 per share - Authorized - 1 billion shares; Outstanding -June 30, 1995: 665,771,143 shares December 31, 1994: 656,528,126 shares $ 3,328,856 $ 3,282,643 Paid-in capital 1,850,386 1,711,366 Premium on preferred stock 1,012 1,012 Retained earnings 3,258,416 3,191,228 ----------- ----------- 8,438,670 8,186,249 Preferred stock of subsidiaries 1,332,203 1,332,203 Guaranteed interest in preferred securities of partnership 100,000 100,000 Long-term debt 7,035,240 7,592,826 ----------- ----------- Total 16,906,113 17,211,278 ----------- ----------- CURRENT LIABILITIES: Amount of securities due within one year 708,422 229,925 Notes payable 396,000 575,200 Commercial paper 569,712 402,484 Accounts payable 481,934 806,459 Customer deposits 104,673 101,575 Taxes accrued-- Federal and state income 75,877 243 Other 176,766 152,979 Interest accrued 186,850 190,094 Vacation pay accrued 89,720 87,431 Miscellaneous 250,733 232,325 ----------- ------- Total 3,040,687 2,778,715 ----------- ----------- DEFERRED CREDITS AND OTHER LIABILITIES: Accumulated deferred income taxes 3,990,723 4,007,427 Deferred credits related to income taxes 960,112 986,933 Accumulated deferred investment tax credits 835,114 857,387 Disallowed Plant Vogtle capacity buyback costs 58,854 60,490 Prepaid capacity revenues, net 134,893 138,421 Miscellaneous 1,095,001 1,002,236 ----------- ------------ Total 7,074,697 7,052,894 ----------- ----------- TOTAL CAPITALIZATION AND LIABILITIES $27,021,497 $27,042,887 =========== =========== The accompanying notes as they relate to SOUTHERN are an integral part of these condensed statements.
THE SOUTHERN COMPANY AND SUBSIDIARY COMPANIES MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND FINANCIAL CONDITION Results of Operations Earnings SOUTHERN's earnings for the second quarter and year-to-date 1995 were higher than earnings recorded in the corresponding periods of 1994 primarily because of higher retail revenues and, for year-to-date, costs recorded in the prior period associated with workforce reduction programs for GEORGIA and the system service company, SCS. Consolidated net income was $268 million ($0.40 per share) for the second quarter of 1995, compared to $256 million ($0.39 per share) for the second quarter of 1994. Earnings were $474 million ($0.71 per share) for year-to-date 1995, compared to $398 million ($0.61 per share) in the corresponding period of 1994. Disregarding the after-tax effect of the workforce reduction programs of $57 million ($0.09 per share), year-to-date earnings would have risen 4.2% over 1994's results. Revenues Retail energy sales increased 4.6% and 3.4% for the second quarter and year-to-date 1995, respectively, due to the improvement in the economy and an increase in customers served. An increase in wholesale energy sales was recorded in the second quarter of 1995; however, such energy sales in 1994 reflected a one-time reduction to GEORGIA's territorial wholesale customers as a result of a new agreement with these customers. Wholesale energy sales for year-to-date 1995 decreased due to reduced demand and scheduled reductions in off-system contracts. Capacity revenues for the second quarter and year-to-date 1995 were $13 million and $27 million less than in the corresponding periods of 1994 and coincided with GEORGIA completing the final sale in a series of four transactions for the sale of Plant Scherer Unit 4 in June 1995. The capacity from this unit had been dedicated to unit power sales. Expenses Although total generation for both periods of 1995 was approximately the same as in 1994, fuel expense for the second quarter of 1995 increased due to the displacement of nuclear and hydro generation with fossil generation. Fuel expense for both periods of 1995 benefitted from the lower average cost of fuel consumed. Purchased power expense in recent years has steadily declined because of the reduction in capacity buyback payments by GEORGIA to the co-owners of Plant Vogtle; however, an increase was recorded for the second quarter and year-to-date 1995 because of the one-time reduction recorded in 1994 as a result of a new agreement with GEORGIA's territorial wholesale customers. See Note (F) to the Condensed Financial Statements herein for information regarding the Georgia PSC's retail rate order that required the levelization of capacity buyback expense for Plant Vogtle. Other operation expenses for the second quarter of 1995 increased for a variety of factors including higher costs for demand side option programs (recoverable through rates), higher employee benefit and training costs and the recognition of emission allowance expense (also recoverable through rates). THE SOUTHERN COMPANY AND SUBSIDIARY COMPANIES MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND FINANCIAL CONDITION Results of Operations (Continued) ALABAMA accrues estimated operation and maintenance expenses related to nuclear refueling outages during the period between outages. During the second quarter of 1994, ALABAMA recorded a credit to the accrual to reflect actual incurred costs. Other operation expense in the first quarter of 1994 included approximately $93 million for costs associated with workforce reduction programs. See Note (C) to the Condensed Financial Statements herein.) Maintenance expenses for year-to-date 1995 decreased due to the timing of scheduled maintenance on generating units. The increase in depreciation and amortization is attributable to increased investment in plant. Other Income In May 1995, as a result of litigation, ALABAMA recorded a charge of $9 million to reflect the refund of interest on financing of merchandise sales. See Note (D) to the Condensed Financial Statements herein for further details. On June 1 of 1994 and 1995, GEORGIA completed the third and fourth sales in a series of four separate transactions to sell Plant Scherer Unit 4. Each of these sales were for 16.55% of the unit. These sales generated cash of $133 million and $131 million, respectively, and resulted in after-tax gains of approximately $11 million and $12 million, respectively. Interest Charges and Dividends on Preferred Stock The decrease in interest on long-term debt reflects the SOUTHERN system's efforts to decrease its capital costs. However, since January 1994, interest rates have risen and SOUTHERN's subsidiaries have outstanding a number of securities with dividend rates that vary according to prevailing market conditions. Interest on interim obligations rose because of higher interest rates on an increased average amount of short-term debt outstanding. Allowance for Funds Used During Construction AFUDC represents the cost of capital charged to utility plant under construction and not included in rate base. The equity portion represents non-cash income. When facilities are completed and included in rate base, previously capitalized amounts significantly increase cash flow because revenues are higher as a result of the increased rate base and additional depreciation expense. Future Earnings Potential The results of operations discussed above are not necessarily indicative of future earnings potential. The level of future earnings is contingent upon numerous factors ranging from growth in energy sales to a less regulated, more competitive environment. On July 13, 1995, SEI, a wholly-owned subsidiary of SOUTHERN, made a tender offer to acquire South Western in its entirety for approximately $1.6 billion. Such offer is not being made in the United States. South Western is one of twelve regional electricity companies in the United Kingdom. South Western's principal business is the distribution of electricity to 1.3 million THE SOUTHERN COMPANY AND SUBSIDIARY COMPANIES MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND FINANCIAL CONDITION Results of Operations (Continued) customers in the southwest portion of England. As of August 2, 1995, SEI had acquired approximately 16 million shares of South Western (14.4% of the issued capital). For further information reference is made to SOUTHERN's Current Report on Form 8-K dated July 13, 1995. SEI expects to learn within 60 days from the date of the tender offer whether its bid will be successful. To date, the management of South Western has recommended rejection of the offer. Reference is made to the Notes to the Condensed Financial Statements herein for further discussion of various uncertainties and legal proceedings related to: the actions of regulators regarding the recovery of GEORGIA's investment in the Rocky Mountain pumped storage hydroelectric project; a tax issue regarding GEORGIA's tax accounting for the sale in 1984 of an interest in Plant Vogtle and related capacity and energy buyback commitments; and the outcome of proceedings initiated by the FERC to determine the appropriate return on equity on wholesale power and transmission contracts. Reference is made to Note 3 to the financial statements of SOUTHERN in Item 8 of the SOUTHERN system's combined 1994 Annual Report on Form 10-K for information regarding proceedings with respect to GEORGIA's recovery of demand-side conservation program costs. On August 7, 1995, the Georgia PSC ordered GEORGIA to discontinue the current demand-side conservation programs by the end of 1995. The rate riders will continue in effect until costs deferred are collected, not to exceed an $80 million cap as of December 31, 1995. In July 1995, GEORGIA recognized expenses of approximately $22 million for previously deferred costs which will not be recovered under the riders and costs expected to be incurred in excess of the capped amount. As discussed in Note (E) to the Condensed Financial Statements herein, ALABAMA has a retail rate moratorium on increases (but not decreases) in effect until July 2001. Compliance costs related to the Clean Air Act will reduce earnings if such increased costs cannot be offset. The Clean Air Act is discussed under "Environmental Matters" in Item 7 - Management's Discussion and Analysis in SOUTHERN's 1994 Annual Report on Form 10-K. Future earnings in the near term will also depend upon growth in electric sales which are subject to a number of factors. Traditionally, these factors have included changes in contracts with neighboring utilities, energy conservation practiced by customers, the elasticity of demand, weather, competition, and the rate of economic growth in SOUTHERN's service area. The enactment of the Energy Act is beginning to have a dramatic effect on the electric utility industry. A discussion of the potential impact of the Energy Act and particularly its effect on competition is found under "Future Earnings Potential" in Item 7 - Management's Discussion and Analysis in SOUTHERN's 1994 Annual Report on Form 10-K. THE SOUTHERN COMPANY AND SUBSIDIARY COMPANIES MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND FINANCIAL CONDITION Results of Operations (Continued) The staff of the SEC has questioned certain of the current accounting practices of the electric utility industry regarding the recognition, measurement and classification of decommissioning costs for nuclear generating stations in financial statements. Further discussion of this issue is found in "Future Earnings Potential" in Item 7 - Management's Discussion and Analysis in SOUTHERN's 1994 Annual Report on Form 10-K. Reference is made to Note 3 to the financial statements in Item 8 of SOUTHERN's 1994 Annual Report on Form 10-K for information on certain environmental contingencies. SOUTHERN's operating subsidiaries are subject to the provisions of FASB Statement No. 71, Accounting for the Effects of Certain Types of Regulation. In the event that a portion of the company's operations is no longer subject to these provisions, SOUTHERN would be required to write-off related regulatory assets and liabilities. See Note 1 to the financial statements in Item 8 of SOUTHERN's 1994 Annual Report on Form 10-K. In March 1995, the FASB issued Statement No. 121, Accounting for the Impairment of Long-Lived Assets and Long-Lived Assets to be Disposed Of. This statement requires that long-lived assets be reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount for an asset may not be recoverable. This statement also imposes stricter criteria for regulatory assets by requiring that such assets be probable of future recovery at each balance sheet date. SOUTHERN anticipates adopting this standard by January 1, 1996 and does not expect that adoption will have a material impact on the financial position or results of operations of SOUTHERN based on the current regulatory structure in which SOUTHERN operates. This conclusion may change in the future as competitive factors influence wholesale and retail pricing in this industry. Financial Condition Overview The major changes in SOUTHERN's financial condition during the first half of 1995 were the addition of approximately $658 million to utility plant, the commercial operation of eleven generating units designed for peak demand (approximately 860 megawatts of capacity, including two units of the Rocky Mountain project), and the consummation of the final transaction in the sale of Plant Scherer Unit 4. The funds for gross property additions and other capital requirements were derived primarily from operations and the sale of common stock by SOUTHERN. See SOUTHERN's Condensed Statements of Cash Flows for further details. Capital Structure One of SOUTHERN's goals is to maintain common equity as a percent of total capitalization, including short-term debt and the current portion of capitalization, within a range of 40 to 45%. This THE SOUTHERN COMPANY AND SUBSIDIARY COMPANIES MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND FINANCIAL CONDITION Financial Condition (Continued) ratio was 45.4% at June 30, 1995, compared to 44.4% at December 31, 1994. The market price of SOUTHERN's common stock at June 30, 1995, was $22.375 per share, compared to a book value of $12.68. This represents a market-to-book value ratio of 176%. The dividend for the second quarter of 1995 was 30.5 cents per share. Capital Requirements for Construction The construction program of SOUTHERN's operating subsidiaries is budgeted at $4.0 billion for the three years 1995 through 1997 ($1.4 billion in 1995, $1.3 billion in 1996 and $1.3 billion in 1997). Actual construction costs may vary from this estimate because of such factors as changes in business conditions; changes in nuclear plants to meet new regulations; changes in environmental regulations; revised load growth projections; increasing costs of labor, equipment and materials; and the cost of capital. Current energy demand forecasts do not require any additional baseload generating facilities until well into the future. However, within the service area, the construction of combustion turbine peaking units of approximately 380 megawatts (in addition to those units that began commercial operation in 1995) is planned to be completed by 1997. In addition, significant construction will continue related to transmission and distribution facilities and the upgrading and extension of the useful lives of generating plants. Also, see Note 6 to the financial statements in Item 8 in SOUTHERN's 1994 Annual Report on Form 10-K for information regarding GEORGIA's joint ownership agreement for a combustion turbine unit in Florida. Changes in environmental regulations could substantially increase the Southern electric system's capital requirements and operating costs. The acid rain compliance provision of the Clean Air Act will impact the Southern electric system. This legislation, as well as other legislation and regulations, are described under "Environmental Matters" in Item 7 - Management's Discussion and Analysis in SOUTHERN's 1994 Annual Report on Form 10-K. The full impact of these requirements cannot be determined at this time, pending the development and implementation of applicable regulations. Other Capital Requirements In addition to the funds needed for the construction program, approximately $708 million will be required by June 30, 1996, for present sinking fund requirements and maturities of long-term debt. Included in this amount is $136 million on deposit with the trustee that may be used only for the redemption of first mortgage bonds. Also, the operating subsidiaries plan to continue, to the extent possible, a program to retire high-cost debt and preferred stock and replace these obligations with lower-cost capital. Sources of Funds In addition to the sale of common stock in the first half of 1995, SOUTHERN may require additional equity capital during the remainder of the year. The amounts and timing of additional equity capital THE SOUTHERN COMPANY AND SUBSIDIARY COMPANIES MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND FINANCIAL CONDITION Financial Condition (Continued) to be raised in 1995, as well as in subsequent years, will be contingent on SOUTHERN's investment opportunities. The operating subsidiaries plan to obtain the funds required for construction and other purposes from sources similar to those used in the past. However, the type and timing of financings will depend on market conditions, maintenance of adequate earnings, and regulatory approval. Mobile filed a Registration Statement on Form S-1 to register $280 million of first mortgage bonds. In anticipation of the first mortgage bond offering and the concurrent offering of tax exempt bonds, Mobile entered into interest rate hedging agreements in order to achieve a targeted aggregate annual debt service. Interest rates have decreased since these hedging agreements were executed; accordingly Mobile expects to pay $46 million to terminate these agreements. Such amounts will be funded from the proceeds from the first mortgage bond issue and will be recorded as a cost of the new securities. Mobile expects to achieve its targeted annual debt service as a result of these transactions. To meet short-term cash needs and contingencies, the SOUTHERN system had at June 30, 1995, approximately $116 million of cash and cash equivalents and approximately $1.5 billion of unused credit arrangements with banks. In connection with SEI's tender offer for South Western, SOUTHERN established credit commitments with four banks for $700 million. As of August 3, 1995, none of these credit commitments had been utilized. At June 30, 1995, the system companies had outstanding $396 million of notes payable and $570 million of commercial paper. The short-term lines of credit may not be utilized in their entirety without additional regulatory approval. Since the construction program with respect to major generating projects has been completed, management believes that the need for working capital can be adequately met by utilizing lines of credit without maintaining large cash balances. In order to issue additional first mortgage bonds and preferred stock, the operating subsidiaries must comply with certain earnings coverage requirements outlined in their respective mortgage indentures and corporate charters. The coverage ratios of SOUTHERN's operating subsidiaries are sufficiently high to permit, at present interest and dividend rate levels, any foreseeable security sales. The amount of securities which they will be permitted to issue in the future will depend upon market conditions and other factors prevailing at that time. ALABAMA POWER COMPANY ALABAMA POWER COMPANY MANAGEMENT'S OPINION AS TO FAIR STATEMENT OF RESULTS The condensed financial statements of ALABAMA included herein have been prepared by ALABAMA, without audit, pursuant to the rules and regulations of the SEC. In the opinion of ALABAMA's management, the information regarding ALABAMA furnished herein reflects all adjustments (which included only normal recurring adjustments) necessary to present fairly the results for the periods ended June 30, 1995 and 1994. Certain information and footnote disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles have been condensed or omitted pursuant to such rules and regulations, although ALABAMA believes that the disclosures regarding ALABAMA are adequate to make the information presented not misleading. It is suggested that these condensed financial statements be read in conjunction with the financial statements and the notes thereto included in ALABAMA's latest annual report on Form 10-K. REVIEW BY INDEPENDENT PUBLIC ACCOUNTANTS The condensed financial statements of ALABAMA included herein have been reviewed by ALABAMA's independent public accountants as set forth in their report included herein as Exhibit 1. ALABAMA POWER COMPANY CONDENSED STATEMENTS OF INCOME (UNAUDITED) (Stated in Thousands of Dollars)
For the Three Months For the Six Months Ended June 30, Ended June 30, 1995 1994 1995 1994 ---- ---- ---- ---- OPERATING REVENUES: Revenues $735,190 $711,174 $1,354,160 $1,365,487 Revenues from affiliates 17,863 48,225 45,664 80,759 -------- -------- ---------- ---------- Total operating revenues 753,053 759,399 1,399,824 1,446,246 -------- -------- ---------- ---------- OPERATING EXPENSES: Operation-- Fuel 196,419 219,869 353,608 404,869 Purchased power from non-affiliates 6,592 4,377 9,211 9,635 Purchased power from affiliates 29,723 25,113 52,684 51,695 Other 124,672 113,536 237,395 224,170 Maintenance 59,345 52,045 123,230 119,704 Depreciation and amortization 76,374 72,757 152,831 145,359 Taxes other than income taxes 44,031 45,021 91,709 91,444 Federal and state income taxes 58,212 63,985 98,522 108,051 -------- -------- ---------- ---------- Total operating expenses 595,368 596,703 1,119,190 1,154,927 -------- -------- ---------- ---------- OPERATING INCOME 157,685 162,696 280,634 291,319 OTHER INCOME (EXPENSE): Allowance for equity funds used during construction 1,002 503 2,259 1,170 Interest income (3,975) 4,028 920 8,258 Other, net (2,527) (15,735) (9,499) (19,483) Income taxes applicable to other income 3,269 6,268 7,999 6,935 -------- -------- ---------- ---------- INCOME BEFORE INTEREST CHARGES 155,454 157,760 282,313 288,199 -------- -------- ---------- ---------- INTEREST CHARGES: Interest on long-term debt 45,547 44,648 90,947 89,137 Allowance for debt funds used during construction (1,629) (766) (3,670) (1,449) Interest on interim obligations 4,864 1,499 8,870 2,309 Amortization of debt discount, premium, and expense, net 2,525 2,423 5,044 4,895 Other interest charges 8,402 4,784 13,193 9,745 -------- -------- ---------- ---------- Net interest charges 59,709 52,588 114,384 104,637 -------- -------- ---------- ---------- NET INCOME 95,745 105,172 167,929 183,562 DIVIDENDS ON PREFERRED STOCK 6,819 6,504 13,675 12,863 -------- -------- ---------- ---------- NET INCOME AFTER DIVIDENDS ON PREFERRED STOCK $ 88,926 $ 98,668 $ 154,254 $ 170,699 ======== ======== ========== ========== The accompanying notes as they relate to ALABAMA are an integral part of these condensed statements.
ALABAMA POWER COMPANY CONDENSED STATEMENTS OF CASH FLOWS (UNAUDITED) (Stated in Thousands of Dollars)
For the Six Months Ended June 30, 1995 1994 ---- ---- OPERATING ACTIVITIES: Net income $ 167,929 $ 183,562 Adjustments to reconcile net income to net cash provided by operating activities-- Depreciation and amortization 180,282 177,518 Deferred income taxes, net 10,745 (8,453) Allowance for equity funds used during construction (2,259) (1,170) Other, net 53,649 (8,763) Change in certain current assets and liabilities-- Receivables, net (25,487) 7,528 Inventories (5,434) (16,738) Payables (125,287) (49,046) Taxes accrued 28,522 29,139 Energy cost recovery, retail 9,633 (9,745) Other (47,908) (43,592) --------- --------- Net cash provided from operating activities 244,385 260,240 --------- --------- INVESTING ACTIVITIES: Gross property additions (246,744) (217,500) Other (34,490) (20,101) --------- --------- Net cash used for investing activities (281,234) (237,601) --------- --------- FINANCING ACTIVITIES: Proceeds: Other long-term debt 50,000 107,433 Retirements: First mortgage bonds - (20,387) Other long-term debt (50,395) (43,641) Special deposits-redemption funds - (53,700) Interim obligations, net 192,172 142,845 Payment of preferred stock dividends (13,830) (12,107) Payment of common stock dividends (141,400) (133,500) Miscellaneous (1,506) (1,063) --------- --------- Net cash provided from (used for) financing activities 35,041 (14,120) --------- --------- NET CHANGE IN CASH AND CASH EQUIVALENTS (1,808) 8,519 CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD 14,676 3,233 --------- --------- CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 12,868 $ 11,752 ========= ========= Supplemental cash flow information: Cash paid during the period for-- Interest (net of amount capitalized) $ 93,677 $ 89,088 Income taxes 74,013 103,811 The accompanying notes as they relate to ALABAMA are an integral part of these condensed statements.
ALABAMA POWER COMPANY CONDENSED BALANCE SHEETS (Stated in Thousands of Dollars) ASSETS
At June 30, 1995 At December 31, (Unaudited) 1994 ----------- --------------- UTILITY PLANT: Plant in service, at original cost $10,272,844 $10,052,772 Less accumulated provision for depreciation 3,735,152 3,598,604 ------------ ----------- 6,537,692 6,454,168 Nuclear fuel, at amortized cost 98,603 101,630 Construction work in progress 299,023 317,779 ----------- ----------- Total 6,935,318 6,873,577 ----------- ----------- OTHER PROPERTY AND INVESTMENTS: Nuclear decommissioning trusts 87,091 71,014 Other 50,052 43,955 ----------- ----------- Total 137,143 114,969 ----------- ----------- CURRENT ASSETS: Cash and cash equivalents 12,868 14,676 Receivables -- Customer accounts receivable 337,170 308,561 Other accounts and notes receivable 25,146 22,547 Affiliated companies 25,494 29,303 Accumulated provision for uncollectible accounts (3,289) (2,297) Refundable income taxes 5,704 16,011 Fossil fuel stock, at average cost 134,267 119,555 Materials and supplies, at average cost 175,322 184,600 Prepayments-- Income taxes 8,097 19,196 Other 122,970 84,354 Vacation pay deferred 20,442 20,442 ----------- ----------- Total 864,191 816,948 ----------- ----------- DEFERRED CHARGES: Deferred charges related to income taxes 444,457 451,886 Debt expense and loss, being amortized 107,649 109,221 Uranium enrichment decontamination and decommissioning fund 42,996 42,996 Miscellaneous 55,071 49,620 ----------- ----------- Total 650,173 653,723 ----------- ----------- TOTAL ASSETS $ 8,586,825 $ 8,459,217 =========== =========== The accompanying notes as they relate to ALABAMA are an integral part of these condensed statements.
ALABAMA POWER COMPANY CONDENSED BALANCE SHEETS (Stated in Thousands of Dollars) CAPITALIZATION AND LIABILITIES
At June 30, 1995 At December 31, (Unaudited) 1994 ----------- -------------- CAPITALIZATION: Common stock equity -- Common stock, par value $40 per share--authorized 6,000,000 shares, outstanding 5,608,955 shares $ 224,358 $ 224,358 Paid-in capital 1,304,645 1,304,645 Premium on preferred stock 146 146 Retained earnings 1,097,983 1,085,256 ---------- ---------- 2,627,132 2,614,405 Preferred stock 440,400 440,400 Long-term debt 2,396,604 2,455,013 ---------- ---------- Total 5,464,136 5,509,818 ---------- ---------- CURRENT LIABILITIES: Long-term debt due within one year 60,848 796 Commercial paper 372,054 179,882 Accounts payable-- Affiliated companies 60,267 60,334 Other 123,768 258,657 Customer deposits 31,099 30,245 Taxes accrued -- Federal and state income 7,382 6,848 Other 44,624 15,589 Interest accrued 54,780 52,516 Miscellaneous 68,682 77,489 ---------- ---------- Total 823,504 682,356 ---------- ---------- DEFERRED CREDITS AND OTHER LIABILITIES: Accumulated deferred income taxes 1,178,487 1,181,342 Accumulated deferred investment tax credits 311,269 317,018 Prepaid capacity revenues, net 134,893 138,421 Uranium enrichment decontamination and decommissioning fund 39,413 39,413 Deferred credits related to income taxes 395,894 405,256 Miscellaneous 239,229 185,593 ---------- ---------- Total 2,299,185 2,267,043 ---------- ---------- TOTAL CAPITALIZATION AND LIABILITIES $8,586,825 $8,459,217 ========== ========== The accompanying notes as they relate to ALABAMA are an integral part of these condensed statements.
ALABAMA POWER COMPANY MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND FINANCIAL CONDITION Results of Operations ALABAMA's earnings during the second quarter and year-to-date 1995 were lower, compared to the same periods of 1994, due primarily to increases in non-fuel operating expenses. Compared to the corresponding periods of 1994, net income after dividends on preferred stock was $9.7 million lower in the second quarter of 1995 and $16.4 million lower year-to-date. Revenues Operating revenues for the second quarter and year-to-date 1995 decreased from the corresponding periods of 1994 due primarily to fewer energy sales to affiliated companies and, for year-to-date revenues, lower fuel clause revenues. Retail energy sales rose 4.3% in the second quarter and 3.6% year-to-date due primarily to an increase in customers served and the improving economy in Alabama. Also, some reductions in non-affiliated revenues occurred due to a decrease in capacity payments received from these customers of $2.9 million for the second quarter and $5.9 million year-to-date. Total energy sales decreased 5.5% for the quarter and 4.0% year-to-date 1995 as a result of the decreases in wholesale energy sales to both affiliates and non-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 the variable production cost of generating resources at each company. Expenses Fuel expense for both the second quarter and year-to-date 1995 decreased because of lower generation and average cost of fuel consumed, despite the partial displacement of nuclear and hydro generation with coal-fired generation. ALABAMA accrues estimated operation and maintenance expenses related to nuclear refueling outages during the period between outages. The increase in other operation and maintenance expenses for both second quarter and year-to-date 1995 is primarily due to credits to expense for this accrual in 1994 and the expiration, in 1994, of the amortization of credits associated with the Gulf States Utilities settlement. The increase in depreciation and amortization reflects additions to utility plant. The decrease in income tax expense is attributable to the change in earnings. Other Income In May 1995, pursuant to litigation, ALABAMA recorded a charge of $9 million to reflect the refund of interest on the sales of merchandise by vendors other than ALABAMA. See Note (D) to the Condensed Financial Statements herein for further details. The change in "Other, net" is primarily attributable to decreases in contributions to non-profit organizations. Allowance for Funds Used During Construction AFUDC represents the estimated debt and equity costs of capital funds that are necessary to finance the construction of new facilities. While cash is not realized currently from such allowance, it is ALABAMA POWER COMPANY MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND FINANCIAL CONDITION Results of Operations (Continued) realized over the service life of the plant through increased revenues resulting from a higher rate base and higher depreciation expense Interest Charges Interest on interim obligations rose due to higher interest rates on an increased average amount of short-term debt outstanding. Other interest charges for the second quarter and year-to-date 1995 reflect interest on federal income tax assessments arising from the audit for the tax years 1988-1990. Future Earnings Potential The results of operations discussed above are not necessarily indicative of future earnings potential. The level of future earnings depends on numerous factors ranging from growth in energy sales to a less regulated, more competitive environment. Discussed in Note (B) to the Condensed Financial Statements herein are the proceedings concerning the reasonableness of the Southern electric system's wholesale rate schedules and contracts. Also, see Note (E) to the Condensed Financial Statements herein for information regarding a retail rate moratorium and the application of adjustments to achieve parity among the various rate classes. Compliance costs related to the Clean Air Act will reduce earnings if such cost increases cannot be offset. The Clean Air Act and other environmental issues are discussed under "Environmental Matters" in Item 7 - Management's Discussion and Analysis in ALABAMA's 1994 Annual Report on Form 10-K. Future earnings will also depend upon growth in electric sales which are subject to a number of factors. Traditionally, these factors have included changes in contracts with neighboring utilities, energy conservation practiced by customers, the elasticity of demand, weather, competition, and the rate of economic growth in ALABAMA's service area. However, the enactment of the Energy Act is beginning to have a dramatic effect on the electric utility industry. A discussion of the potential impact of the Energy Act and particularly its effect on competition is found under "Future Earnings Potential" in Item 7 - Management's Discussion and Analysis in ALABAMA's 1994 Annual Report on Form 10-K. The staff of the SEC has questioned certain current accounting practices of the electric utility industry regarding the recognition, measurement and classification of decommissioning costs for nuclear generating stations in financial statements. Further discussion of this issue is found under "Future Earnings Potential" in Item 7 - Management's Discussion and Analysis in ALABAMA's 1994 Annual Report on Form 10-K. ALABAMA POWER COMPANY MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND FINANCIAL CONDITION Results of Operations (Continued) ALABAMA is subject to the provisions of FASB Statement No. 71, Accounting for the Effects of Certain Types of Regulation. In the event that a portion of the company's operations is no longer subject to these provisions, ALABAMA would be required to write off related regulatory assets and liabilities. See Note 1 to the financial statements in Item 8 in ALABAMA's 1994 Annual Report on Form 10-K for additional information. In March 1995, the FASB issued Statement No. 121, Accounting for the Impairment of Long-Lived Assets and Long-Lived Assets to be Disposed Of. This statement requires that long-lived assets be reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount for an asset may not be recoverable. This statement also imposes stricter criteria for regulatory assets by requiring that such assets be probable of future recovery at each balance sheet date. ALABAMA anticipates adopting this standard by January 1, 1996 and does not expect that adoption will have a material impact on the financial position or results of operations of ALABAMA based on the current regulatory structure in which ALABAMA operates. This conclusion may change in the future as competitive factors influence wholesale and retail pricing in this industry. Financial Condition Overview The principal change in ALABAMA's financial condition in the first half of 1995 was gross property additions of $247 million to utility plant. The funds for gross property additions were derived from operating activities and an increase in short-term debt. See ALABAMA's Condensed Statements of Cash Flows herein for further details. ALABAMA's common equity as a percent of total capitalization was 48.1% at June 30, 1995, compared to 47.4% at year-end 1994. Liquidity and Capital Resources ALABAMA has committed lines of credit and regulatory approval for short-term borrowings of up to $530 million. At June 30, 1995, ALABAMA had outstanding $372 million of commercial paper. Capital expenditures are estimated to total $1.6 billion for the three years 1995 through 1997 ($604 million in 1995, $500 million in 1996 and $502 million in 1997). Current energy demand forecasts do not require any additional baseload generating facilities until well into the future. However, five combustion turbine peaking units (400 megawatts of capacity) began commercial operation in May 1995 to meet increased peak-hour demand and an additional four units (320 megawatts of capacity) are scheduled to be placed in service in 1996. In addition, significant construction of transmission and distribution facilities and upgrading of generating plants will continue. ALABAMA POWER COMPANY MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND FINANCIAL CONDITION Financial Condition (Continued) The capital budget is subject to periodic review and revision and capital costs incurred may vary from estimates because of several factors, including changes in business conditions; revised load growth projections; changes in environmental regulations; changes in existing nuclear plant to meet new regulatory requirements; increasing costs of labor, equipment and materials; and the cost of capital. In addition to the funds needed for the capital budget, approximately $60.8 million will be required by June 30, 1996, for debt maturities. Also, ALABAMA will continue to retire higher-cost debt and preferred stock and replace these obligations with lower-cost capital, as market conditions permit. It is anticipated that the funds required will be derived from sources similar to those used in the past. In order to issue additional first mortgage bonds and preferred stock, ALABAMA must comply with certain earnings coverage requirements contained in its mortgage indenture and corporate charter. ALABAMA's coverages are at a level that would permit any necessary amount of security sales at current interest and dividend rates. The amount of securities which ALABAMA will be permitted to issue in the future will depend upon market conditions and other factors prevailing at that time. ARTHUR ANDERSEN LLP Exhibit 1 REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS TO ALABAMA POWER COMPANY: We have reviewed the accompanying condensed balance sheet of ALABAMA POWER COMPANY as of June 30, 1995, and the related condensed statements of income for the three-month and six-month periods ended June 30, 1995 and 1994, and condensed statements of cash flows for the six-month periods ended June 30, 1995 and 1994. These financial statements are the responsibility of the Company's management. We conducted our review in accordance with standards established by the American Institute of Certified Public Accountants. A review of interim financial information consists principally of applying analytical procedures to financial data and making inquiries of persons responsible for financial and accounting matters. It is substantially less in scope than an audit conducted in accordance with generally accepted auditing standards, the objective of which is the expression of an opinion regarding the financial statements taken as a whole. Accordingly, we do not express such an opinion. Based on our review, we are not aware of any material modifications that should be made to the financial statements referred to above for them to be in conformity with generally accepted accounting principles. We have previously audited, in accordance with generally accepted auditing standards, the balance sheet of ALABAMA POWER COMPANY as of December 31, 1994 (not presented herein) and, in our report dated February 15, 1995, we expressed an unqualified opinion on that statement. In our opinion, the information set forth in the accompanying condensed balance sheet as of December 31, 1994 is fairly stated, in all material respects, in relation to the balance sheet from which it has been derived. /S/ ARTHUR ANDERSEN LLP Birmingham, Alabama August 9, 1995 GEORGIA POWER COMPANY GEORGIA POWER COMPANY MANAGEMENT'S OPINION AS TO FAIR STATEMENT OF RESULTS The condensed financial statements of GEORGIA included herein have been prepared by GEORGIA, without audit, pursuant to the rules and regulations of the SEC. As more fully discussed in Note (G) to the Condensed Financial Statements herein, an uncertainty exists with respect to the actions of the regulators regarding the recoverability of GEORGIA's investment in the Rocky Mountain pumped storage hydroelectric project. In the opinion of GEORGIA's management, subject to the effect of such adjustments, if any, as might have been required had the outcome of the uncertainty been known, the information regarding GEORGIA furnished herein reflects all adjustments (which, except for the provisions for separation benefits recorded in 1994 as described in Note (C) to the Condensed Financial Statements herein, included only normal recurring adjustments) necessary to present fairly the results for the periods ended June 30, 1995 and 1994. Certain information and footnote disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles have been condensed or omitted pursuant to SEC rules and regulations, although GEORGIA believes that the disclosures regarding GEORGIA are adequate to make the information presented not misleading. It is suggested that these condensed financial statements be read in conjunction with the financial statements and the notes thereto included in GEORGIA's latest annual report on Form 10-K. REVIEW BY INDEPENDENT PUBLIC ACCOUNTANTS The condensed financial statements of GEORGIA included herein have been reviewed by GEORGIA's independent public accountants as set forth in their report included herein as Exhibit 1. GEORGIA POWER COMPANY CONDENSED STATEMENTS OF INCOME (UNAUDITED) (Stated in Thousands of Dollars)
For the Three Months For the Six Months Ended June 30, Ended June 30, 1995 1994 1995 1994 ---- ---- ---- ---- OPERATING REVENUES: Revenues $1,053,369 $1,017,589 $2,014,416 $1,985,648 Revenues from affiliates 21,534 12,876 34,980 37,149 ---------- ---------- ---------- ---------- Total operating revenues 1,074,903 1,030,465 2,049,396 2,022,797 ---------- ---------- ---------- ---------- OPERATING EXPENSES: Operation-- Fuel 231,312 217,259 432,255 429,254 Purchased power from non-affiliates 47,142 32,374 88,714 104,131 Purchased power from affiliates 28,155 48,068 57,885 76,518 Provision for separation benefits 2,919 3,208 3,979 87,897 Other 176,313 169,043 337,986 321,669 Maintenance 71,218 70,328 137,187 145,417 Depreciation and amortization 99,333 95,395 195,493 189,444 Amortization of deferred Plant Vogtle expenses, net (Note F) 29,793 15,789 57,950 28,407 Taxes other than income taxes 51,512 48,913 102,301 98,449 Federal and state income taxes 107,212 103,551 198,649 157,934 ---------- ---------- ---------- ---------- Total operating expenses 844,909 803,928 1,612,399 1,639,120 ---------- ---------- ---------- ---------- OPERATING INCOME 229,994 226,537 436,997 383,677 OTHER INCOME (EXPENSE): Allowance for equity funds used during construction 739 1,275 2,410 2,912 Other, net 26,524 25,168 21,909 24,429 Income taxes applicable to other income (14,869) (10,187) (11,308) (7,576) ---------- ---------- ---------- ---------- INCOME BEFORE INTEREST CHARGES 242,388 242,793 450,008 403,442 ---------- ---------- ---------- ---------- INTEREST CHARGES: Interest on long-term debt 68,893 79,770 137,458 159,869 Allowance for debt funds used during construction (3,437) (3,658) (7,051) (6,334) Interest on interim obligations 6,703 4,891 12,120 8,418 Amortization of debt discount, premium and expense, net 4,096 3,892 8,016 7,766 Preferred distribution of subsidiary 2,250 - 4,500 - Other interest charges 3,194 6,576 5,826 13,079 ---------- ---------- ---------- ---------- Net interest charges 81,699 91,471 160,869 182,798 ---------- ---------- ---------- ---------- NET INCOME 160,689 151,322 289,139 220,644 DIVIDENDS ON PREFERRED STOCK 12,165 11,948 24,478 23,661 ---------- ---------- ---------- ---------- NET INCOME AFTER DIVIDENDS ON PREFERRED STOCK $ 148,524 $ 139,374 $ 264,661 $ 196,983 ========== ========== ========== ========== The accompanying notes as they relate to GEORGIA are an integral part of these condensed statements.
GEORGIA POWER COMPANY CONDENSED STATEMENTS OF CASH FLOWS (UNAUDITED) (Stated in Thousands of Dollars) For the Six Months Ended June 30, 1995 1994 ---- ---- OPERATING ACTIVITIES Net income $ 289,139 $ 220,644 Adjustments to reconcile net income to net cash provided by operating activities-- Depreciation and amortization 246,322 238,231 Deferred income taxes, net 12,377 7,468 Allowance for equity funds used during construction (2,410) (2,912) Deferred Plant Vogtle costs 57,950 28,407 Provision for separation benefits - 76,312 Gain on asset sales (23,353) (22,230) Other, net 20,900 (22,312) Changes in current assets and liabilities-- Receivables, net (12,248) 61,464 Inventories 6,637 (50,097) Payables (50,636) 8,059 Taxes accrued 69,324 (26,663) Other 20,795 21,408 --------- --------- NET CASH PROVIDED FROM OPERATING ACTIVITIES 634,797 537,779 --------- --------- INVESTING ACTIVITIES Property additions (217,288) (283,718) Sales of property 131,099 132,644 Other (49,451) (26,013) --------- --------- NET CASH USED FOR INVESTING ACTIVITIES (135,640) (177,087) --------- --------- FINANCING ACTIVITIES Proceeds-- First mortgage bonds 75,000 - Pollution control bonds 148,535 28,065 Retirements-- First mortgage bonds (140,356) - Pollution control bonds (148,625) (28,155) Other long-term debt - (132) Special deposits-redemption funds (135,433) (133,559) Interim obligations, net (39,944) 18,103 Payment of preferred stock dividends (24,524) (23,076) Payment of common stock dividends (224,100) (213,800) Miscellaneous (6,824) (1,803) --------- --------- NET CASH USED FOR FINANCING ACTIVITIES (496,271) (354,357) --------- --------- NET CHANGE IN CASH AND CASH EQUIVALENTS 2,886 6,335 CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD 12,539 5,896 --------- --------- CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 15,425 $ 12,231 ========= ========= Supplemental Cash Flow Information-- Interest (net of amount capitalized) $ 154,187 $ 167,995 Income taxes 133,939 158,583 The accompanying notes as they relate to GEORGIA are an integral part of these condensed statements.
GEORGIA POWER COMPANY CONDENSED BALANCE SHEETS (Stated in Thousands of Dollars) ASSETS
At June 30, 1995 At December 31, (Unaudited) 1994 ------------- --------------- UTILITY PLANT: Plant in service $14,346,790 $14,054,917 Less accumulated provision for depreciation 4,206,380 4,054,986 ----------- ----------- 10,140,410 9,999,931 Nuclear fuel, at amortized cost 124,267 136,425 Construction work in progress 261,131 541,889 ----------- ----------- Total 10,525,808 10,678,245 ----------- ----------- OTHER PROPERTY AND INVESTMENTS: Nuclear decommissioning trusts 72,027 54,297 Miscellaneous 127,588 116,527 ----------- ----------- Total 199,615 170,824 ----------- ----------- CURRENT ASSETS: Cash and cash equivalents 15,425 12,539 Special deposits - redemption funds 135,433 - Receivables-- Customer accounts receivable 392,130 377,570 Other accounts and notes receivable 93,713 104,989 Affiliated companies 18,046 14,443 Accumulated provision for uncollectible accounts (5,600) (4,500) Fossil fuel stock, at average cost 166,697 169,252 Materials and supplies, at average cost 289,382 293,464 Prepayments 62,006 55,383 Vacation pay deferred 40,343 40,823 ----------- ----------- Total 1,207,575 1,063,963 ----------- ----------- DEFERRED CHARGES: Deferred charges related to income taxes 877,673 919,750 Deferred Plant Vogtle costs (Note F) 374,142 432,092 Debt expense and loss, being amortized 192,020 190,899 Miscellaneous 256,348 256,885 ----------- ----------- Total 1,700,183 1,799,626 ----------- ----------- TOTAL ASSETS $13,633,181 $13,712,658 =========== =========== The accompanying notes as they relate to GEORGIA are an integral part of these condensed statements.
GEORGIA POWER COMPANY CONDENSED BALANCE SHEETS (Stated in Thousands of Dollars) CAPITALIZATION AND LIABILITIES At June 30, 1995 At December 31, (Unaudited) 1994 ------------- --------------- CAPITALIZATION: Common stock equity-- Common stock (without par value)-- authorized 15,000,000 shares, outstanding 7,761,500 shares $ 344,250 $ 344,250 Paid-in capital 2,384,348 2,384,348 Premium on preferred stock 413 413 Retained earnings 1,453,104 1,412,543 ----------- ----------- 4,182,115 4,141,554 Preferred stock 692,787 692,787 Guaranteed interest in preferred securities of partnership 100,000 100,000 Long-term debt 3,309,140 3,757,823 ----------- ----------- Total 8,284,042 8,692,164 ----------- ----------- CURRENT LIABILITIES: Long-term debt due within one year 552,866 167,420 Notes payable to banks 187,200 202,200 Commercial paper 197,658 222,602 Accounts payable-- Affiliated companies 40,314 41,760 Other 220,601 313,307 Customer deposits 48,944 47,017 Taxes accrued-- Federal and state income 66,497 2,856 Other 95,846 90,163 Interest accrued 108,922 110,256 Miscellaneous 142,215 109,726 ----------- ----------- Total 1,661,063 1,307,307 ----------- ----------- DEFERRED CREDITS AND OTHER LIABILITIES: Accumulated deferred income taxes 2,460,830 2,477,661 Accumulated deferred investment tax credits 438,969 453,121 Deferred credits related to income taxes 419,446 433,334 Disallowed Plant Vogtle capacity buyback costs 58,854 60,490 Miscellaneous 309,977 288,581 ----------- ----------- Total 3,688,076 3,713,187 ----------- ----------- TOTAL CAPITALIZATION AND LIABILITIES $13,633,181 $13,712,658 =========== =========== The accompanying notes as they relate to GEORGIA are an integral part of these condensed statements.
GEORGIA POWER COMPANY MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND FINANCIAL CONDITION Results of Operations Earnings GEORGIA recorded higher earnings for both the second quarter and year-to-date 1995 compared to the corresponding periods of 1994, primarily as a result of higher retail energy sales and lower interest charges. Earnings for the first quarter of 1994 also reflected expenses related to workforce reduction programs at GEORGIA and the system service company, SCS. (See Note (C) to the Condensed Financial Statements herein.) Net income after dividends on preferred stock rose $9.2 million in the second quarter of 1995 and $67.7 million in the first six months of 1995, compared to the corresponding periods of 1994. Disregarding the after-tax effect of the provision for separation benefits in 1994, GEORGIA's earnings for the first half of 1995 still would have been $13.8 million above earnings in the first half of 1994. Revenues Total operating revenues for both periods of 1995 increased compared to the corresponding periods of 1994 primarily because of higher retail energy sales. Excluding fuel clause revenues, which represent the pass-through of fuel expenses and do not affect income, operating revenues for the second quarter and year-to-date 1995 increased $18.2 million and $26.1 million, respectively, compared to the corresponding periods of 1994. Retail - Retail energy sales in 1995 increased 4.5% in the second quarter and 3.6% year-to-date over the corresponding periods of 1994 primarily because of an increase in customers served and continued expansion of Georgia's economy. Residential, commercial and industrial energy sales for the second quarter and year-to-date 1995 increased 5.5% and 2.9%; 4.7% and 3.7%; and 3.7% and 3.9%, respectively. Total non-fuel retail revenues increased $29.0 million in the second quarter of 1995 and $44.8 million in the first six months of 1995. Of these amounts, $7.3 million and $14.9 million, respectively, are attributable to increased revenues from demand-side option programs collected through rate riders reinstated in December 1994. Revenues from demand-side programs generally represent the direct recovery of program costs. See Note (H) to the Condensed Financial Statements herein for additional information on these programs. Wholesale - Energy sales to non-affiliated wholesale customers increased 33.8% in the second quarter of 1995 and decreased 10.6% year-to-date compared to the corresponding periods of 1994. The increase in the second quarter is primarily due to a one-time reduction in energy sales to territorial wholesale customers in 1994 that reflected the impact of a new agreement with these customers. Capacity revenues from non-affiliated utilities outside the service area were down $6.5 million for the second quarter of 1995 and $15.8 million year-to-date. These capacity revenues decreased as scheduled, coinciding with GEORGIA completing the final in a series of four transactions for the sale of Plant Scherer Unit 4 in June 1995. Energy revenues from non-affiliated utilities outside the service area decreased $19.7 million and $ 44.8 million, GEORGIA POWER COMPANY MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND FINANCIAL CONDITION Results of Operations (Continued) respectively. The energy component of contract sales is priced at approximately the variable production cost and does not materially affect earnings. Revenues from sales to affiliated companies within the Southern electric system, as well as purchases of energy, will vary from period to period depending on demand and the availability and cost of generating resources at each company. These transactions do not have a significant impact on earnings. Operating Expenses Fuel and Purchased Power - Fuel expense increased because of higher generation and, for the second quarter of 1995, the displacement of hydro generation with coal-fired generation. Purchased power expense for year-to-date 1995 decreased primarily due to lower energy purchases from non-affiliated companies and scheduled reductions in capacity buyback payments to the co-owners of Plant Vogtle. See Note (F) to the Condensed Financial Statements herein for information regarding the levelization of capacity buyback expense for Plant Vogtle. However, purchased power from non-affiliates increased in the second quarter of 1995 primarily due to a one-time reduction in energy purchases from territorial wholesale customers in 1994 that reflected the impact of a new agreement with these customers. Other - As part of the SOUTHERN system's effort to curtail growth in operating expenses, both GEORGIA and SCS initiated workforce reduction programs in the first quarter of 1994. See Note (C) to the Condensed Financial Statements herein for further details. Other operation expense for 1995 increased, compared to 1994, primarily as a result of costs associated with demand-side option programs. The demand-side option program costs were offset by increases in retail revenues. Environmental remediation costs at various sites were $3.9 million through June 1995, compared to $5.3 million in the first half of 1994. Income taxes for year-to-date 1994 reflect the effect of the workforce reduction programs. Allowance for Funds Used During Construction AFUDC represents the cost of capital charged to utility plant under construction and is included in rate base. The equity portion of AFUDC represents non-cash income. The amount of AFUDC recorded is dependent upon the level of construction work in progress, capital costs and capitalization ratios. Based upon GEORGIA's construction budget, AFUDC is estimated to total $21 million in 1995 and $17 million in 1996. Other Income On June 1 of 1994 and 1995, GEORGIA completed the third and fourth sales in a series of four separate transactions to sell Plant Scherer Unit 4. Each sale was for 16.55% of the unit. These GEORGIA POWER COMPANY MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND FINANCIAL CONDITION Results of Operations (Continued) sales generated cash of $133 million and $131 million, respectively, and resulted in after-tax gains of approximately $11 million and $12 million, respectively. Interest Charges and Dividends on Preferred Stock Interest charges on long-term debt have declined due to refinancing efforts over the past twelve months. Also, GEORGIA used the proceeds from the Plant Scherer sales to redeem higher cost securities. Other interest charges have declined during 1995, as compared to 1994, due to interest accrued during 1994 on tax assessments. Dividends on preferred stock have increased because GEORGIA has outstanding $175 million aggregate stated value of preferred stock that have variable dividend rates, which have risen since year-end 1993. Interest on interim obligations rose due to higher interest rates. Future Earnings Potential The results of operations discussed above are not necessarily indicative of future earnings. The level of future earnings depends on numerous factors including energy sales and regulatory matters. Growth in energy sales is subject to a number of factors which traditionally have included changes in contracts with neighboring utilities, energy conservation practiced by customers, the elasticity of demand, weather, competition, and the rate of economic growth in GEORGIA's service area. The enactment of the Energy Act is having a dramatic effect on the electric utility industry. A discussion of the potential impact of the Energy Act and particularly its effect on competition is found under "Future Earnings Potential" in Item 7 - Management's Discussion and Analysis in GEORGIA's 1994 Annual Report on Form 10-K. Four combustion turbine units and two pumped storage hydroelectric units began commercial operation in the second quarter of 1995 and a third pumped storage hydroelectric unit began commercial operation in July. GEORGIA has entered into a four-year purchase power agreement to meet peaking needs. Beginning in 1996, GEORGIA will purchase 400 megawatts of capacity. In 1998, this amount will decline to 200 megawatts for the remaining two years. Capacity payments are projected to be $6 million in 1996 and 1997 and $3 million in 1998 and 1999. GEORGIA has also entered into a purchase power agreement whereby GEORGIA will buy electricity during peak periods from a proposed 300 megawatt cogeneration facility, starting in June 1998. The agreement is expected to be filed with the Georgia PSC for certification during 1995. GEORGIA sold in June 1995 its remaining ownership interest (16.55%) in Plant Scherer Unit 4 to two Florida utilities. This transaction coincided with scheduled reductions in capacity revenues from Florida utilities under unit power sales contracts of approximately $18 million in 1995 and an additional $10 million in 1996. GEORGIA POWER COMPANY MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND FINANCIAL CONDITION Results of Operations (Continued) As discussed in Note 4 to the financial statements of GEORGIA in Item 8 of the SOUTHERN system's combined 1994 Annual Report on Form 10-K, regulatory uncertainties exist related to the Rocky Mountain pumped storage hydroelectric project. In the event the Georgia PSC does not allow full recovery of the project's costs, then the portion not allowed may have to be written off. GEORGIA's total investment in the project at completion is estimated to be approximately $200 million. Reference is made to Note 3 to the financial statements of GEORGIA in Item 8 of the SOUTHERN system's combined 1994 Annual Report on Form 10-K for information regarding proceedings with respect to GEORGIA's recovery of demand-side conservation program costs. On August 7, 1995, the Georgia PSC ordered GEORGIA to discontinue the current demand-side conservation programs by the end of 1995. The rate riders will continue in effect until costs deferred are collected, not to exceed an $80 million cap as of December 31, 1995. In July 1995, GEORGIA recognized expenses of approximately $22 million for previously deferred costs which will not be recovered under the riders and costs expected to be incurred in excess of the capped amount. Reference is made to Note 3 to the financial statements of GEORGIA in Item 8 of the SOUTHERN system's combined 1994 Annual Report on Form 10-K for information regarding proceedings with respect to litigation currently pending in the U. S. Tax Court. Also see Note (J) to the Condensed Financial Statements herein for developments concerning the joint complaints filed by OPC and MEAG in two separate venues seeking to recover from GEORGIA approximately $16.5 million in alleged partial requirements rates overcharges, plus approximately $6.3 million in interest. The FERC regulates wholesale rate schedules and power sales contracts that GEORGIA has with its sales for resale customers. The FERC currently is reviewing the rate of return on common equity included in these schedules and contracts and may require such returns to be lowered, possibly retroactively. See Note 3 to the financial statements in Item 8 in GEORGIA's 1994 Annual Report on Form 10-K for additional information. The staff of the SEC has questioned certain of the current accounting practices of the electric utility industry regarding the recognition, measurement and classification of decommissioning costs for nuclear generating stations in financial statements. Further discussion of this issue is found in "Future Earnings Potential" in Item 7 -Management's Discussion and Analysis in GEORGIA's 1994 Annual Report on Form 10-K. Reference is made to Note 4 to the financial statements in Item 8 of GEORGIA's 1994 Annual Report on Form 10-K for information on certain environmental contingencies. GEORGIA POWER COMPANY MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND FINANCIAL CONDITION Results of Operations (Continued) GEORGIA is subject to the provisions of FASB Statement No. 71, Accounting for the Effects of Certain Types of Regulation. In the event that a portion of the company's operations is no longer subject to these provisions, GEORGIA would be required to write off related regulatory assets and liabilities. See Note 1 to the financial statements in Item 8 of GEORGIA's 1994 Annual Report on Form 10-K for additional information. In March 1995, the FASB issued Statement No. 121, Accounting for the Impairment of Long-Lived Assets and Long-Lived Assets to be Disposed Of. This statement requires that long-lived assets be reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. This statement also imposes stricter criteria for regulatory assets by requiring that such assets be probable of future recovery at each balance sheet date. GEORGIA anticipates adopting this standard by January 1, 1996 and does not expect that adoption will have a material impact on the financial position or results of operations of GEORGIA based on the current regulatory structure in which GEORGIA operates. This conclusion may change in the future as competitive factors influence wholesale and retail pricing in this industry. Financial Condition Overview The principal changes in GEORGIA's financial condition during the first six months of 1995 were additions of $217 million to utility plant and the commercial operation of four combustion turbine units (cumulatively, 320 megawatts of capacity) and two of the three units of the Rocky Mountain pumped storage hydroelectric project (GEORGIA's ownership interest is approximately 70 megawatts of capacity per unit). Additionally, GEORGIA completed the final in a series of four transactions for the sale of Plant Scherer Unit 4. The funds needed for gross property additions are currently provided from operations. See GEORGIA's Condensed Statements of Cash Flows for further details. Construction and Other Capital Requirements Estimated construction expenditures for the years 1995 through 1997 are $579 million, $626 million and $724 million, respectively. GEORGIA's management has adopted an initiative to reduce its 1996 and 1997 construction expenditures by approximately 10% from currently estimated amounts. There can be no assurance that such reductions will be achieved. The Clean Air Act will impact the capital requirements of the Southern electric system. This legislation, as well as other legislation and regulations, is described under "Environmental Issues" in Item 7 - Management's Discussion and Analysis in GEORGIA's 1994 Annual Report on Form 10-K. GEORGIA POWER COMPANY MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND FINANCIAL CONDITION Financial Condition (Continued) Cash requirements for long-term debt maturities and redemptions total approximately $553 million for the twelve months ending June 30, 1996. Included in this amount is the redemption of $135 million of first mortgage bonds for which funds are on deposit with the trustee and may be used only for that purpose. Sources of Funds GEORGIA expects to meet future capital requirements primarily using funds from operations and, if needed, by the issuance of new debt and equity securities, term loans and short-term borrowings. Cash from operations for the first six months of 1995 increased, as compared to the corresponding period in 1994, primarily because of an increase in revenues and a decrease in income tax and interest payments. GEORGIA must comply with coverage requirements of its mortgage indenture and corporate charter to issue new first mortgage bonds and preferred stock. GEORGIA's ability to satisfy all coverage requirements is such that it could issue new first mortgage bonds and preferred stock to provide sufficient funds for all anticipated requirements. The amount of securities which GEORGIA will be permitted to issue in the future will depend upon market conditions and other factors prevailing at that time. To meet short-term cash needs and contingencies, GEORGIA had approximately $540 million of unused credit arrangements with banks at June 30, 1995. ARTHUR ANDERSEN LLP Exhibit 1 REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS TO GEORGIA POWER COMPANY: We have reviewed the accompanying condensed balance sheet of GEORGIA POWER COMPANY (a Georgia corporation) as of June 30, 1995, and the related condensed statements of income for the three-month and six-month periods ended June 30, 1995 and 1994, and the condensed statements of cash flows for the six-month periods ended June 30, 1995 and 1994. These financial statements are the responsibility of the Company's management. We conducted our review in accordance with standards established by the American Institute of Certified Public Accountants. A review of interim financial information consists principally of applying analytical procedures to financial data and making inquiries of persons responsible for financial and accounting matters. It is substantially less in scope than an audit conducted in accordance with generally accepted auditing standards, the objective of which is the expression of an opinion regarding the financial statements taken as a whole. Accordingly, we do not express such an opinion. Based on our review, we are not aware of any material modifications that should be made to the financial statements referred to above for them to be in conformity with generally accepted accounting principles. As more fully discussed in Note (G) to the Condensed Financial Statements, an uncertainty exists with respect to the actions of the regulators regarding the recoverability of the Company's investment in the Rocky Mountain pumped storage hydroelectric project. The outcome of this uncertainty cannot presently be determined. Accordingly, no provision for any writedown of the costs associated with the Rocky Mountain facility resulting from the potential actions of the Georgia Public Service Commission has been made in the accompanying Condensed Financial Statements. We have previously audited, in accordance with generally accepted auditing standards, the balance sheet of GEORGIA POWER COMPANY as of December 31, 1994 (not presented herein), and, in our report dated February 15, 1995, we included an explanatory paragraph which describes an uncertainty with respect to the actions of the regulators regarding the recoverability of the Company's investment in the Rocky Mountain pumped storage hydroelectric project. In our opinion, the information set forth in the accompanying condensed balance sheet as of December 31, 1994, is fairly stated, in all material respects, in relation to the balance sheet from which it has been derived. /s/ ARTHUR ANDERSEN LLP Atlanta, Georgia August 9, 1995 GULF POWER COMPANY GULF POWER COMPANY MANAGEMENT'S OPINION AS TO FAIR STATEMENT OF RESULTS The condensed financial statements of GULF included herein have been prepared by GULF, without audit, pursuant to the rules and regulations of the SEC. In the opinion of GULF's management, the information regarding GULF furnished herein reflects all adjustments (which included only normal recurring adjustments) necessary to present fairly the results for the periods ended June 30, 1995 and 1994. Certain information and footnote disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles have been condensed or omitted pursuant to such rules and regulations, although GULF believes that the disclosures regarding GULF are adequate to make the information presented not misleading. It is suggested that these condensed financial statements be read in conjunction with the financial statements and the notes thereto included in GULF's latest annual report on Form 10-K.
GULF POWER COMPANY CONDENSED STATEMENTS OF INCOME (UNAUDITED) (Stated in Thousands of Dollars) For the Three Months For the Six Months Ended June 30, Ended June 30, -------------------- -------------------- 1995 1994 1995 1994 ---- ---- ---- ---- OPERATING REVENUES: Revenues $147,330 $140,664 $283,106 $274,893 Revenues from affiliates 5,727 6,105 10,869 9,964 -------- -------- ------ ----- Total operating revenues 153,057 146,769 293,975 284,857 -------- -------- ------- ------- OPERATING EXPENSES: Operation-- Fuel 49,278 41,163 93,232 77,104 Purchased power from non-affiliates 1,768 1,631 3,067 3,699 Purchased power from affiliates 4,146 3,983 10,188 12,774 Other 26,575 33,148 54,857 63,602 Maintenance 13,345 17,177 22,977 28,159 Depreciation and amortization 13,694 13,937 27,349 27,974 Taxes other than income taxes 12,006 10,366 23,888 20,645 Federal and state income taxes 8,855 5,407 15,524 11,789 -------- -------- ------ ------ Total operating expenses 129,667 126,812 251,082 245,746 -------- -------- ------- ------- OPERATING INCOME 23,390 19,957 42,893 39,111 OTHER INCOME (EXPENSE): Allowance for equity funds used during construction 21 112 47 272 Interest income 259 504 913 763 Other, net (137) (16) (295) (168) Income taxes applicable to other income (101) (193) (351) (257) -------- -------- ---- ---- INCOME BEFORE INTEREST CHARGES 23,432 20,364 43,207 39,721 -------- -------- ------ ------ INTEREST CHARGES: Interest on long-term debt 5,951 6,877 11,871 13,748 Allowance for debt funds used during construction (31) (191) (66) (333) Interest on notes payable 945 416 1,765 658 Amortization of debt discount, premium and expense, net 518 446 1,017 904 Other interest charges 489 2,455 705 2,810 -------- -------- --- ----- Net interest charges 7,872 10,003 15,292 17,787 -------- -------- ------ ------ NET INCOME 15,560 10,361 27,915 21,934 DIVIDENDS ON PREFERRED STOCK 1,464 1,475 2,939 2,931 -------- -------- ----- ----- NET INCOME AFTER DIVIDENDS ON PREFERRED STOCK $ 14,096 $ 8,886 $ 24,976 $ 19,003 ======== ======== = ====== = ====== The accompanying notes as they relate to GULF are an integral part of these condensed statements.
GULF POWER COMPANY CONDENSED STATEMENTS OF CASH FLOWS (UNAUDITED) (Stated in Thousands of Dollars) For the Six Months Ended June 31, 1995 1994 ---- ---- OPERATING ACTIVITIES: Net income $ 27,915 $ 21,934 Adjustments to reconcile net income to net cash provided by operating activities-- Depreciation and amortization 38,021 45,434 Deferred income taxes, net (2,079) (2,861) Allowance for equity funds used during construction (47) (272) Other, net 2,754 6,970 Changes in certain current assets and liabilities-- Receivables, net (14,036) (7,120) Inventories 445 (3,017) Payables 10,079 2,396 Other 1,884 20 -------- --------- Net Cash Provided From Operating Activities 64,936 63,484 -------- --------- INVESTING ACTIVITIES: Gross property additions (29,909) (47,331) Other (2,281) (3,386) -------- --------- Net Cash Used For Investing Activities (32,190) (50,717) -------- --------- FINANCING ACTIVITIES: Proceeds-- Other long-term debt - 32,108 Retirements: Preferred stock subject to mandatory redemption (1,000) (1,000) First mortgage bonds (1,750) (48,856) Other long-term debt (6,623) (17,520) Notes payable, net 2,500 43,447 Payment of preferred stock dividends (2,939) (2,931) Payment of common stock dividends (23,000) (21,900) Miscellaneous (19) (912) -------- --------- Net Cash Used For Financing Activities (32,831) (17,564) -------- --------- NET CHANGE IN CASH AND CASH EQUIVALENTS (85) (4,797) CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD 902 5,576 -------- --------- CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 817 $ 779 ======== ========= SUPPLEMENTAL CASH FLOW INFORMATION: Cash paid during the period for: Interest (net of amounts capitalized) $ 12,570 $ 15,553 Income taxes 17,009 13,467 The accompanying notes as they relate to GULF are an integral part of these condensed statements.
GULF POWER COMPANY CONDENSED BALANCE SHEETS (Stated in Thousands of Dollars) ASSETS At June 30, 1995 At December 31, (Unaudited) 1994 UTILITY PLANT: Plant in service, at original cost $1,674,543 $1,656,367 Less accumulated provision for depreciation 643,723 622,911 ---------- ---------- 1,030,820 1,033,456 Construction work in progress 28,171 24,288 ---------- ---------- Total 1,058,991 1,057,744 --------- ---------- OTHER PROPERTY AND INVESTMENTS 8,002 7,997 ---------- ---------- CURRENT ASSETS: Cash and cash equivalents 817 902 Receivables-- Customer accounts receivable 71,187 57,637 Other accounts and notes receivable 2,982 2,268 Affiliated companies 782 1,079 Accumulated provision for uncollectible accounts (531) (600) Fuel stock, at average cost 36,153 35,686 Materials and supplies, at average cost 34,345 35,257 Current portion of deferred coal contract costs 2,532 2,521 Regulatory clauses under recovery 3,954 5,002 Prepayments 4,181 4,354 Vacation pay deferred 4,172 4,172 ---------- ---------- Total 160,574 148,278 ------- ---------- DEFERRED CHARGES: Deferred charges related to income taxes 30,245 30,433 Debt expense and loss, being amortized 21,263 22,119 Deferred coal contract costs 29,455 38,169 Miscellaneous 11,700 10,802 ---------- ---------- Total 92,663 101,523 ---------- ---------- TOTAL ASSETS $1,320,230 $1,315,542 ========== ========== The accompanying notes as they relate to GULF are an integral part of these condensed statements.
GULF POWER COMPANY CONDENSED BALANCE SHEETS (Stated in Thousands of Dollars) CAPITALIZATION AND LIABILITIES At June 30, 1995 At December 31, (Unaudited) 1994 ----------- -------------- CAPITALIZATION: Common stock equity-- Common stock (without par value)-- authorized and outstanding 992,717 shares $ 38,060 $ 38,060 Paid-in capital 218,380 218,380 Premium on preferred stock 81 81 Retained earnings 170,927 168,951 ---------- ---------- 427,448 425,472 Preferred stock 89,602 89,602 Long-term debt 327,521 356,393 ---------- ---------- Total 844,571 871,467 ---------- ---------- CURRENT LIABILITIES: Preferred stock due within one year - 1,000 Long-term debt due within one year 34,080 13,439 Notes payable 56,000 53,500 Accounts payable-- Affiliated companies 6,651 9,132 Other 25,806 14,524 Customer deposits 13,552 13,609 Taxes accrued-- Federal and state income 4,194 5,990 Other 12,333 7,475 Interest accrued 6,540 6,106 Regulatory clauses over recovery 3,089 3,960 Vacation pay accrued 4,172 4,172 Miscellaneous 3,193 7,828 ---------- ---------- Total 169,610 140,735 ---------- ---------- DEFERRED CREDITS AND OTHER LIABILITIES: Accumulated deferred income taxes 154,121 151,681 Deferred credits related to income taxes 69,996 71,964 Accumulated deferred investment tax credits 37,202 38,391 Accumulated provision for property damage 12,009 11,522 Accumulated provision for postretirement benefits 15,306 13,680 Miscellaneous 17,415 16,102 ---------- ---------- Total 306,049 303,340 ---------- ---------- TOTAL CAPITALIZATION AND LIABILITIES $1,320,230 $1,315,542 ========== ========== The accompanying notes as they relate to GULF are an integral part of these condensed statements.
GULF POWER COMPANY MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND FINANCIAL CONDITION Results of Operations Earnings GULF's net income after dividends on preferred stock for both the second quarter and year-to-date 1995 increased over the same periods of 1994 by $5.2 million and $6.0 million, respectively. The rise in earnings was primarily due to higher retail revenues, lower net interest charges and decreased non-fuel operation expenses as discussed below. Revenues Retail energy sales for the second quarter and year-to-date 1995 increased 6.3% and 3.1%, respectively, over the corresponding periods of 1994 due primarily to an increase in customers served, favorable economic conditions, and hotter weather in 1995. Retail revenues also increased because of higher regulatory cost recovery clause revenues. The regulatory clause recovery provisions equal the related expenses and have no material effect on net income. Wholesale energy sales to non-affiliates for the second quarter and year-to-date 1995 decreased with capacity revenues lower by $2.8 million and $4.0 million, respectively. Also, included in operating revenues for 1995 are amounts collected to recover county franchise fees. These collections are also included in taxes other than income taxes and have no impact on earnings (see discussion under "Expenses"). Including energy sales to affiliated companies, total energy sales increased 3.0% for the second quarter and 2.4% year-to-date 1995. Expenses Fuel expenses for the second quarter and year-to-date 1995 increased over the same periods of 1994 due to an increase in generation. Purchased power transactions (both sales and purchases) among the affiliated companies within the Southern electric system will vary from period to period depending on demand and the availability and variable cost of generating resources at each company. Other operation expenses for the second quarter and year-to-date 1995, compared to the corresponding periods of last year, were lower due primarily to a reduction in costs associated with a coal supply suspension agreement, which was essentially fully amortized by year-end 1994. See Note 5 to the financial statements in Item 8 in GULF's 1994 Annual Report on Form 10-K for additional information. Additionally, during the first quarter of 1994, GULF recorded its share of costs associated with a workforce reduction program at the system service company. Maintenance expenses will fluctuate due primarily to the scheduling of maintenance on production facilities. The decrease in depreciation and amortization is attributable to the amortization of limited-term property, which was fully amortized by December 1994. The increase in taxes other than income taxes is attributable to county franchise fees being collected in 1995 as discussed above. Interest Charges and Dividends on Preferred Stock The decrease in interest on long-term debt reflects GULF's efforts to decrease its capital costs through refinancings of higher-cost issues. Interest on notes payable rose because of higher interest rates on an increased average outstanding amount of notes payable. Other interest charges in the second quarter of 1994 included a $2.1 million contingent liability related to potential assessments arising from a federal GULF POWER COMPANY MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND FINANCIAL CONDITION Results of Operations (Continued) income tax audit for the tax years 1988-1990. To the extent it is economically feasible, GULF will continue its efforts to lower its capital costs. Future Earnings Potential The results of operations discussed above are not necessarily indicative of future earnings potential. The level of future earnings depends on a number of factors ranging from growth in energy sales to the effects of a less regulated, more competitive environment. Future earnings in the near term will depend upon growth in energy sales, which is subject to a number of factors. Traditionally, these factors have included changes in contracts with neighboring utilities, energy conservation practiced by customers, the elasticity of demand, weather, competition, and the rate of economic growth in GULF's service area. The enactment of the Energy Act is beginning to have a dramatic effect on the electric utility industry. A discussion of the potential impact of the Energy Act and particularly its effect on competition is found under "Future Earnings Potential" in Item 7 - Management's Discussion and Analysis in GULF's 1994 Annual Report on Form 10-K. Hurricane Erin struck GULF's service territory on August 3, 1995. The expense of repairing damages will be charged to the Property Damage Reserve. Management believes that the cost of repairing damages and the loss of revenue will not have a material effect on future results of operations. See Note 3 to the financial statements in Item 8 in GULF's 1994 Annual Report on Form 10-K for a discussion of the hearings ordered by the FERC regarding the reasonableness of the return on common equity on certain of the Southern electric system's wholesale rate schedules and contracts. Compliance costs related to the Clean Air Act could reduce earnings if such increased costs are not fully recovered. The Clean Air Act is discussed further under "Environmental Matters" in Item 7 - Management's Discussion and Analysis in GULF's 1994 Annual Report on Form 10-K. See also Note 3 to the financial statements in Item 8 in GULF's 1994 Annual Report on Form 10-K for a discussion of the Environmental Cost Recovery clause which provides for the recovery of such costs. GULF is subject to the provisions of FASB Statement No. 71, Accounting for the Effects of Certain Types of Regulation. In the event that a portion of the company's operations is no longer subject to these provisions, GULF would be required to write off related regulatory assets and liabilities. See Note 1 to the financial statements in Item 8 in GULF's 1994 Annual Report on Form 10-K for additional information. In March 1995, the FASB issued Statement No. 121, Accounting for the Impairment of Long-Lived Assets and Long-Lived Assets to be Disposed Of. This statement requires that long-lived assets GULF POWER COMPANY MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND FINANCIAL CONDITION Results of Operations (Continued) be reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. This statement also imposes stricter criteria for regulatory assets by requiring that such assets be probable of future recovery at each balance sheet date. GULF anticipates adopting this standard by January 1, 1996 and does not expect that adoption will have a material impact on the financial position or results of operations of GULF based on the current regulatory structure in which GULF operates. This conclusion may change in the future as competitive factors influence wholesale and retail pricing in this industry. Financial Condition Overview The major change in GULF's financial condition during the first half of 1995 was gross property additions of $29.9 million. The principal sources of funds for these additions and other capital requirements were provided from operations. See the Condensed Statements of Cash Flows for further details. Capital Requirements for Construction GULF's gross property additions, including those amounts related to environmental compliance, are estimated to total approximately $225 million for the three years 1995 through 1997 ($62 million in 1995, $79 million in 1996 and $84 million in 1997). The estimates of property additions for the three-year period include $13 million committed to meeting the requirements of the Clean Air Act, the cost of which is expected to be recovered through the Environmental Cost Recovery clause. Actual construction costs may vary from these estimates because of factors such as changes in environmental regulations, revised load projections, the cost and efficiency of construction labor, equipment, and materials, and the cost of capital. GULF does not have any baseload generating plants under construction, however, construction related to maintenance and upgrading transmission and distribution facilities and generating plants will continue. Various environmental legislation and other related regulations are described in "Environmental Matters" in Item 7 - Management's Discussion and Analysis in GULF's 1994 Annual Report on Form 10-K. The full impact of these requirements cannot be determined at this time, pending the development and implementation of applicable regulations. In addition to the funds required for the construction program, $34.1 million will be required by June 30, 1996, in connection with maturities and redemptions of long-term debt. GULF plans to continue a program to retire higher-cost debt and preferred stock and replace these obligations with lower-cost capital as market conditions and terms of the instruments permit. GULF POWER COMPANY MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND FINANCIAL CONDITION Financial Condition (Continued) At June 30, 1995, GULF had $65.8 million of unused credit arrangements with banks to meet its short-term cash needs. GULF had $56 million of short-term bank borrowings outstanding at June 30, 1995. It is anticipated that the funds required for construction and other purposes, including compliance with environmental regulations, will be derived from operations, the sale of additional first mortgage bonds and preferred stock, and capital contributions from SOUTHERN. GULF is required to meet certain coverage requirements specified in its mortgage indenture and corporate charter to issue new first mortgage bonds and preferred stock. GULF's coverage ratios are sufficient to permit, at present interest and dividend rate levels, any foreseeable security sales. The amount of securities which GULF will be permitted to issue in the future will depend upon market conditions and other factors prevailing at that time. MISSISSIPPI POWER COMPANY MISSISSIPPI POWER COMPANY MANAGEMENT'S OPINION AS TO FAIR STATEMENT OF RESULTS The condensed financial statements of MISSISSIPPI included herein have been prepared by MISSISSIPPI, without audit, pursuant to the rules and regulations of the SEC. In the opinion of MISSISSIPPI's management, the information regarding MISSISSIPPI furnished herein reflects all adjustments (which, except for the provision for separation benefits recorded in 1995 as described in Note (C) to the Condensed Financial Statements herein, included only normal recurring adjustments) necessary to present fairly the results for the periods ended June 30, 1995 and 1994. Certain information and footnote disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles have been condensed or omitted pursuant to such rules and regulations, although MISSISSIPPI believes that the disclosures regarding MISSISSIPPI are adequate to make the information presented not misleading. It is suggested that these condensed financial statements be read in conjunction with the financial statements and the notes thereto included in MISSISSIPPI's latest annual report on Form 10-K.
MISSISSIPPI POWER COMPANY CONDENSED STATEMENTS OF INCOME (UNAUDITED) (Stated in Thousands of Dollars) For the Three Months For the Six Months Ended June 30, Ended June 30, --------------------- ------------------ 1995 1994 1995 1994 ---- ---- ---- ---- OPERATING REVENUES: Revenues $126,903 $128,886 $234,102 $240,586 Revenues from affiliates 1,601 2,906 3,974 5,340 -------- -------- -------- -------- Total operating revenues 128,504 131,792 238,076 245,926 -------- -------- -------- -------- OPERATING EXPENSES: Operation-- Fuel 28,536 26,727 53,326 44,328 Purchased power from non-affiliates 996 819 1,912 1,785 Purchased power from affiliates 12,992 18,853 22,539 43,009 Other 25,361 25,091 50,695 46,472 Maintenance 8,912 12,624 17,439 25,770 Depreciation and amortization 10,155 8,945 20,072 18,244 Taxes other than income taxes 9,826 10,410 19,204 20,215 Federal and state income taxes 9,533 8,432 14,967 13,302 -------- -------- -------- -------- Total operating expenses 106,311 111,901 200,154 213,125 -------- -------- -------- -------- OPERATING INCOME 22,193 19,891 37,922 32,801 OTHER INCOME (EXPENSE): Allowance for equity funds used during construction 54 271 177 676 Other, net 756 1,302 2,143 2,830 Income taxes applicable to other income (157) (325) (536) (770) -------- -------- -------- -------- INCOME BEFORE INTEREST CHARGES 22,846 21,139 39,706 35,537 ------- -------- -------- -------- INTEREST CHARGES: Interest on long-term debt 5,636 5,614 11,293 10,126 Allowance for debt funds used during construction (151) (332) (222) (702) Interest on notes payable 371 425 571 751 Amortization of debt discount, premium and expense, net 372 372 745 729 Other interest charges 657 92 864 174 -------- -------- -------- -------- Net interest charges 6,885 6,171 13,251 11,078 -------- -------- -------- -------- NET INCOME 15,961 14,968 26,455 24,459 DIVIDENDS ON PREFERRED STOCK 1,224 1,224 2,449 2,449 -------- -------- -------- -------- NET INCOME AFTER DIVIDENDS ON PREFERRED STOCK $ 14,737 $ 13,744 $ 24,006 $ 22,010 ======== ======== ======== ======== ( ) Denotes negative figure. The accompanying notes as they relate to MISSISSIPPI are an integral part of these condensed statements.
MISSISSIPPI POWER COMPANY CONDENSED STATEMENTS OF CASH FLOWS (UNAUDITED) (Stated in Thousands of Dollars) For the Six Months Ended June 30, 1995 1994 ---- ---- OPERATING ACTIVITIES: Net income $ 26,455 $ 24,459 Adjustments to reconcile net income to net cash provided by operating activities-- Depreciation and amortization 26,517 24,211 Deferred income taxes, net (949) (7,657) Allowance for equity funds used during construction (177) (676) Other, net 4,336 (2,409) Change in certain current assets and liabilities-- Receivables, net (12,078) (8,637) Inventories (115) (11,581) Payables 7,325 340 Taxes accrued (11,046) (729) Other 1,494 4,794 -------- --------- Net cash provided from operating activities 41,762 22,115 -------- --------- INVESTING ACTIVITIES: Gross property additions (36,828) (58,624) Other (3,209) (17,012) -------- --------- Net cash used for investing activities (40,037) (75,636) -------- --------- FINANCING ACTIVITIES: Proceeds-- Capital contributions from parent company - 25,000 First mortgage bonds - 35,000 Other long-term debt - 50,310 Retirements-- First mortgage bonds - (32,371) Other long-term debt (6,189) (4,560) Notes payable, net 27,000 3,000 Payment of preferred stock dividends (2,449) (2,449) Payment of common stock dividends (19,500) (17,000) Miscellaneous (500) (1,182) ------- --------- Net cash provided (used) from financings (1,638) 55,748 ------- --------- NET CHANGE IN CASH AND CASH EQUIVALENTS 87 2,227 CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD 1,317 878 ------- --------- CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 1,404 $ 3,105 ======= ========= SUPPLEMENTAL CASH FLOW INFORMATION: Cash paid during the period for-- Interest (net of amount capitalized) $11,820 $ 9,157 Income taxes (refunded) 11,222 8,308 The accompanying notes as they relate to MISSISSIPPI are an integral part of these condensed statements.
MISSISSIPPI POWER COMPANY CONDENSED BALANCE SHEETS (Stated in Thousands of Dollars) ASSETS At June 30, 1995 At December 31, (Unaudited) 1994 UTILITY PLANT: Plant in service, at original cost $1,405,339 $1,385,032 Less accumulated provision for depreciation 492,592 477,098 ---------- ---------- Total 912,747 907,934 Construction work in progress 55,129 44,838 ---------- ---------- Total 967,876 952,772 ---------- ---------- OTHER PROPERTY AND INVESTMENTS 3,280 3,353 ---------- ---------- CURRENT ASSETS: Cash and cash equivalents 1,404 1,317 Receivables-- Customer accounts receivable 33,824 27,865 Other accounts and notes receivable 9,703 6,599 Affiliated companies 9,471 6,058 Accumulated provision for uncollectible accounts (568) (670) Fuel stock, at average cost 17,852 16,885 Materials and supplies, at average cost 24,449 25,301 Current portion of deferred fuel charges 1,118 1,068 Current portion of accumulated deferred income taxes 5,207 5,410 Prepaid federal income taxes - 5,019 Prepayments 2,697 760 Vacation pay deferred 4,588 4,588 ---------- ---------- Total 109,745 100,200 ---------- ---------- DEFERRED CHARGES: Deferred charges related to income taxes 24,768 25,036 Deferred fuel charges 4,500 9,000 Debt expense and loss, being amortized 10,343 10,929 Deferred early retirement program costs 9,786 11,286 Miscellaneous 10,216 11,135 ---------- ---------- Total 59,613 67,386 ---------- ---------- TOTAL ASSETS $1,140,514 $1,123,711 ========== ========== The accompanying notes as they relate to MISSISSIPPI are an integral part of these condensed statements.
MISSISSIPPI POWER COMPANY CONDENSED BALANCE SHEETS (Stated in Thousands of Dollars) CAPITALIZATION AND LIABILITIES At June 30, 1995 At December 31, (Unaudited) 1994 ------------ -------------- CAPITALIZATION: Common stock equity-- Common stock (without par value), authorized 1,130,000 shares, outstanding 1,121,000 shares $ 37,691 $ 37,691 Paid-in capital 179,362 179,362 Premium on preferred stock 372 372 Retained earnings 148,834 144,328 ---------- ---------- 366,259 361,753 Cumulative preferred stock 74,414 74,414 Long-term debt 285,556 306,522 ---------- ---------- Total 726,229 742,689 ---------- ---------- CURRENT LIABILITIES: Long-term debt due within one year 56,135 41,199 Notes payable 27,000 - Accounts payable-- Affiliated companies 7,764 3,337 Other 30,903 31,144 Customer deposits 2,677 2,712 Taxes accrued-- Federal and state income 3,549 433 Other 17,062 31,224 Interest accrued 4,572 4,427 Miscellaneous 12,839 14,613 ---------- ---------- Total 162,501 129,089 ---------- ---------- DEFERRED CREDITS AND OTHER LIABILITIES: Accumulated deferred income taxes 129,295 129,505 Accumulated deferred investment tax credits 30,506 31,228 Deferred credits related to income taxes 44,622 45,832 Accumulated provision for property damage 11,655 10,905 Miscellaneous 35,706 34,463 --------- ---------- Total 251,784 251,933 ---------- ---------- TOTAL CAPITALIZATION AND LIABILITIES $1,140,514 $1,123,711 ========== ========== The accompanying notes as they relate to MISSISSIPPI are an integral part of these condensed statements.
MISSISSIPPI POWER COMPANY MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND FINANCIAL CONDITION Results of Operations Net Income MISSISSIPPI's net income after dividends on preferred stock for the second quarter and year-to-date 1995 rose $1.0 million and $2.0 million, respectively, compared to the corresponding periods of 1994. Net income rose primarily because of lower maintenance expenses and a retail rate increase under the ECO plan. Revenues Revenues for the second quarter and year-to-date 1995 decreased, compared to the same periods of 1994, because of lower fuel clause revenues. Additionally, non-affiliated wholesale capacity revenues decreased approximately $0.5 million each quarter of 1995, compared to prior year. Partially offsetting these factors were a retail rate increase of $3.7 million annually under the ECO plan that became effective May 1995 and higher retail and territorial wholesale energy sales. MISSISSIPPI registered respective increases of 2.7% and 1.0% in retail energy sales and respective increases of 12.1% and 6.8% in territorial wholesale sales. Retail energy sales increased because of the expanding economy in coastal Mississippi (particularly the commercial sector), an increase in the number of customers served and, with respect to the second quarter, weather influences. The customer demand experienced by territorial wholesale customers is determined by factors very similar to MISSISSIPPI's, however, their growth in energy sales exceeds MISSISSIPPI's. Additionally, MISSISSIPPI began serving a new cooperative in the second quarter of 1995. Total energy sales, compared to prior year, increased 1.5% for the second quarter and decreased 0.3% year-to-date 1995. Expenses Fuel expense for the second quarter and year-to-date 1995 increased over the corresponding periods of 1994 due to an increase in generation of 18.3% and 33.6%, respectively. Generation in 1994 was impacted by the timing of scheduled maintenance on production facilities. Purchased power transactions (both sales and purchases) among the affiliated companies within the Southern electric system will vary from period to period depending on demand and the availability and variable cost of generating resources at each company. Other operation expenses for year-to-date 1995, compared to the corresponding period in 1994, increased primarily due to the amortization of workforce reduction programs and, pursuant to the Clean Air Act, the recognition of emission allowance expense. Such emission allowances are a recoverable expense under the ECO plan. Depreciation in 1995 increased due to additions to utility plant, particularly, the commercial operation of a combustion turbine unit in May 1994. Taxes other than income taxes decreased because of lower revenues. The increase in income tax expense reflects the assessment of approximately $1.0 million in additional federal income taxes pursuant an audit for the tax years 1988-1990. Additionally, MISSISSIPPI incurred interest on this tax assessment of approximately $0.55 million which is reflected in other interest charges. The additional tax and interest was paid in June 1995. MISSISSIPPI POWER COMPANY MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND FINANCIAL CONDITION Results of Operations (Continued) Allowance for Funds Used During Construction AFUDC represents the cost of capital charged to utility plant under construction. The equity portion of AFUDC represents non-cash income. However, when facilities are completed and included in rate base, previously capitalized amounts increase cash flow because revenues are higher as a result of the increased rate base and additional depreciation expense. The amount of AFUDC recorded in 1994 was higher because of MISSISSIPPI's investment in the construction of a combustion turbine generating unit. This unit began commercial operation in May 1994. Future Earnings Potential The results of operations discussed above are not necessarily indicative of future earnings potential. The level of future earnings depends on numerous factors ranging from regulatory matters to growth in energy sales to a less regulated, more competitive environment. Operating revenues will be affected by any changes in rates under the PEP and ECO plans. The PEP has proven to be a stabilizing force on electric rates, with only moderate changes in rates taking place. Also see Notes (B) and (C) to the Condensed Financial Statements herein for information regarding FERC's review of equity returns and workforce reduction programs, respectively. MISSISSIPPI's 1995 annual filing under the ECO plan with the Mississippi PSC resulted in an approved annual revenue requirement, effective in May 1995, of $3.7 million, including $1.6 million of 1994 carryover. Future earnings in the near term will also depend upon growth in electric sales which are subject to a number of factors. Traditionally, these factors have included the rate of economic growth in MISSISSIPPI's service area, customer growth, competition, weather, changes in contracts with neighboring utilities, energy conservation practiced by customers, and the elasticity of demand. The enactment of the Energy Act is beginning to have a dramatic effect on the electric utility industry. A discussion of the potential impact of the Energy Act and particularly its effect on competition is found under "Future Earnings Potential" in Item 7 - Management's Discussion and Analysis in MISSISSIPPI's 1994 Annual Report on Form 10-K. MISSISSIPPI is subject to the provisions of FASB Statement No. 71, Accounting for the Effects of Certain Types of Regulation. In the event that a portion of the company's operations is no longer subject to these provisions, MISSISSIPPI would be required to write off related regulatory assets and liabilities. See Note 1 to the financial statements in Item 8 in MISSISSIPPI's 1994 Annual Report on Form 10-K for additional information. In March 1995, the FASB issued Statement No. 121, Accounting for the Impairment of Long-Lived Assets and Long-Lived Assets to be Disposed Of. This statement requires that long-lived assets be reviewed for impairment whenever events or circumstances indicate that the carrying amount of an asset may not be recoverable. This statement also imposes stricter criteria for MISSISSIPPI POWER COMPANY MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND FINANCIAL CONDITION Results of Operations (Continued) regulatory assets by requiring that such assets be probable of future recovery at each balance sheet date. MISSISSIPPI anticipates adopting this standard by January 1, 1996, and does not expect that adoption will have a material impact on the financial position or results of operations of MISSISSIPPI based on the current regulatory structure in which MISSISSIPPI operates. This conclusion may change in the future as competitive factors influence wholesale and retail pricing in this industry. Financial Condition Overview During the first half of 1995, gross property additions were $36.8 million. The funds for these additions and other capital requirements were derived primarily from internal sources and an increase in short-term debt. See the Condensed Statements of Cash Flows for further details. At June 30, 1995, cash totaled approximately $1.4 million and MISSISSIPPI had $97 million of unused credit arrangements with banks to meet short-term cash needs. MISSISSIPPI had $27 million of notes payable outstanding at quarter-end. It is MISSISSIPPI's strategy to maintain a permanent layer of short-term debt, approximately $40 million through the end of 1995, consistent with its overall risk capital strategy. Capital Requirements MISSISSIPPI's gross property additions for the next three years are estimated to be $223 million ($78 million in 1995, $73 million in 1996 and $72 million in 1997). The major emphasis within the construction program will be on upgrading existing facilities. Included in these construction estimates is $2.9 million committed to meeting the requirements of the Clean Air Act regulations. Revisions may be necessary because of factors such as revised load projections, the availability and cost of capital and changes in environmental regulations. In addition to the funds required for the construction program, approximately $56.1 million will be required by June 30, 1996, for maturities of long-term debt. It is anticipated that the funds required for construction and other purposes, including compliance with environmental regulations, will be derived from operations, the sale of additional first mortgage bonds, pollution control bonds and preferred stock and the receipt of additional capital contributions from SOUTHERN. MISSISSIPPI is required to meet certain coverage requirements specified in its mortgage indenture and corporate charter to issue new first mortgage bonds and preferred stock. MISSISSIPPI's coverage ratios are sufficiently high to permit, at present interest and dividend rate levels, any foreseeable security sales. The amount of securities which MISSISSIPPI will be able to issue in the future will depend upon market conditions and other factors prevailing at that time. MISSISSIPPI POWER COMPANY MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND FINANCIAL CONDITION Financial Condition (Continued) Environmental Matters Changes in environmental regulations could substantially increase the Southern electric system's capital requirements and operating costs. The acid rain compliance provision of the Clean Air Act will impact the Southern electric system. This legislation, as well as other legislation and regulations, are described under "Environmental Matters" in Item 7 - Management's Discussion and Analysis in MISSISSIPPI's 1994 Annual Report on Form 10-K. The full impact of these requirements cannot be determined at this time pending the development and implementation of applicable regulations. MISSISSIPPI's management believes that the ECO plan will provide for retail recovery of the Clean Air Act costs. MISSISSIPPI must comply with other environmental laws and regulations that cover the handling and disposal of hazardous waste. Under these various laws and regulations, MISSISSIPPI could incur costs to clean up properties currently or previously owned. Upon identifying potential sites, the company conducts studies, when possible, to determine the extent of any required remediation. Should remediation be determined to be probable, reasonable estimates of costs to clean up such sites are developed and recognized in the financial statements. A currently owned site where manufactured gas plant operations were located prior to MISSISSIPPI's ownership is under investigation for potential remediation, but no prediction can presently be made regarding the extent, if any, of contamination or possible cleanup. Accordingly, no accrual has been made for remediation in the accompanying Condensed Financial Statements. Results of this investigation are expected to be available in 1995. If this site were required to be remediated, industry studies show MISSISSIPPI could incur cleanup costs ranging from $1.5 million to $10 million before giving consideration to possible recovery of clean-up costs from other parties. SAVANNAH ELECTRIC AND POWER COMPANY SAVANNAH ELECTRIC AND POWER COMPANY MANAGEMENT'S OPINION AS TO FAIR STATEMENT OF RESULTS The condensed financial statements of SAVANNAH included herein have been prepared by SAVANNAH, without audit, pursuant to the rules and regulations of the SEC. In the opinion of SAVANNAH's management, the information regarding SAVANNAH furnished herein reflects all adjustments (which, except for the provision for separation benefits recorded in the first quarter of 1994 as described in Note (C) to the Condensed Financial Statements herein, included only normal recurring adjustments) necessary to present fairly the results for the periods ended June 30, 1995 and 1994. Certain information and footnote disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles have been condensed or omitted pursuant to such rules and regulations, although SAVANNAH believes that the disclosures regarding SAVANNAH are adequate to make the information presented not misleading. It is suggested that these condensed financial statements be read in conjunction with the financial statements and the notes thereto included in SAVANNAH's latest annual report on Form 10-K.
SAVANNAH ELECTRIC AND POWER COMPANY CONDENSED STATEMENTS OF INCOME (UNAUDITED) (Stated in Thousands of Dollars) For the Three Months For the Six Months Ended June 30, Ended June 30, 1995 1994 1995 1994 ---- ---- ---- ---- OPERATING REVENUES: Revenues $56,198 $55,097 $101,214 $101,497 Revenues from affiliates 1,475 1,280 3,202 1,597 ------- ------- -------- -------- Total operating revenues 57,673 56,377 104,416 103,094 ------- ------- -------- -------- OPERATING EXPENSES: Operation-- Fuel 8,141 7,186 9,491 9,325 Purchased power from non-affiliates 369 1,084 718 1,443 Purchased power from affiliates 12,208 13,652 27,444 28,881 Other 10,724 10,385 20,927 19,813 Maintenance 4,256 2,984 7,492 5,631 Depreciation and amortization 4,708 4,372 9,455 8,622 Taxes other than income taxes 2,959 2,705 5,920 5,267 Federal and state income taxes 4,388 4,454 6,581 7,427 ------- ------- -------- -------- Total operating expenses 47,753 46,822 88,028 86,409 ------- ------- -------- -------- OPERATING INCOME 9,920 9,555 16,388 16,685 OTHER INCOME (EXPENSE): Allowance for equity funds used during construction 37 290 59 677 Other, net 111 (266) (13) (497) Income taxes applicable to other income (43) 104 5 192 ------- ------- - --- INCOME BEFORE INTEREST CHARGES 10,025 9,683 16,439 17,057 ------- ------- -------- -------- INTEREST CHARGES: Interest on long-term debt 3,300 3,134 6,429 6,286 Allowance for debt funds used during construction (122) (375) (195) (875) Amortization of debt discount, premium and expense, net 103 138 241 275 Other interest charges 122 154 341 260 ------- ------- -------- -------- Net interest charges 3,403 3,051 6,816 5,946 ------- ------- -------- -------- NET INCOME 6,622 6,632 9,623 11,111 DIVIDENDS ON PREFERRED STOCK 581 581 1,162 1,162 ------- ------- -------- -------- NET INCOME AFTER DIVIDENDS ON PREFERRED STOCK $ 6,041 $6,051 $ 8,461 $ 9,949 ====== ====== ======== ======== ( ) Denotes red figure. The accompanying notes as they relate to SAVANNAH are an integral part of these condensed statements.
SAVANNAH ELECTRIC AND POWER COMPANY CONDENSED STATEMENTS OF CASH FLOWS (UNAUDITED) (Stated in Thousands of Dollars) For the Six Months Ended June 30, 1995 1994 ---- ---- OPERATING ACTIVITIES: Net income $ 9,623 $11,111 Adjustments to reconcile net income to net cash provided by operating activities-- Depreciation and amortization 10,140 9,351 Deferred taxes, net 1,526 2,290 Allowance for equity funds used during construction (59) (677) Other, net 461 575 Changes in certain current assets and liabilities-- Receivables, net (5,123) 7,434 Inventories 475 561 Payables 4,222 (13,918) Taxes accrued 1,977 336 Other (1,289) 555 -------- -------- Net Cash Provided From Operating Activities 21,953 17,618 ------ -------- INVESTING ACTIVITIES: Gross property additions (14,032) (17,341) Other (220) (1,074) -------- -------- Net Cash Used For Investing Activities (14,252) (18,415) -------- -------- FINANCING ACTIVITIES: Proceeds: First mortgage bonds 15,000 - Other long-term debt 33,500 8,500 Retirements: First mortgage bonds (29,250) (5,065) Other long-term debt (12,376) (392) Notes payable, net (1,500) 9,000 Payment of preferred stock dividends (1,162) (967) Payment of common stock dividends (8,700) (8,200) Miscellaneous (2,019) (74) -------- -------- Cash Provided From (Used For) Financing Activities (6,507) 2,802 -------- -------- NET CHANGE IN CASH AND CASH EQUIVALENTS 1,194 2,005 CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD 1,563 3,915 -------- -------- CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 2,757 $ 5,920 ======== ======== Supplemental cash flow information: Cash paid (received) during the period for-- Interest (net of amount capitalized) $6,987 $5,542 Income taxes (refunded) 3,891 5,506 The accompanying notes as they relate to SAVANNAH are an integral part of these condensed statements.
SAVANNAH ELECTRIC AND POWER COMPANY CONDENSED BALANCE SHEETS (Stated in Thousands of Dollars) ASSETS At June 30, 1995 At December 31, (Unaudited) 1994 UTILITY PLANT: Plant in service, at original cost $ 99,118 $693,432 Less accumulated provision for depreciation 276,318 267,590 -------- ------- 422,800 425,842 Construction work in progress 12,912 5,930 -------- ----- Total 435,712 431,772 -------- ------- OTHER PROPERTY AND INVESTMENTS 1,789 1,790 -------- ----- CURRENT ASSETS: Cash and cash equivalents 2,757 1,563 Receivables-- Customer accounts receivable 23,356 17,581 Other accounts and notes receivable 341 216 Affiliated companies 1,494 177 Accumulated provision for uncollectible accounts (910) (866) Fuel cost under recovery 1,057 3,113 Fuel stock, at average cost 7,079 7,557 Materials and supplies, at average cost 9,079 9,076 Prepayments 8,804 7,446 -------- ----- Total 53,057 45,863 -------- ------ DEFERRED CHARGES: Deferred charges related to income taxes 23,056 23,521 Debt expense and loss, being amortized 8,164 6,387 Cash surrender value of life insurance for deferred compensation plan 7,028 7,028 Miscellaneous 2,979 1,944 -------- ----- Total 41,227 38,880 -------- ------ TOTAL ASSETS $531,785 $518,305 ======== ======== The accompanying notes as they relate to SAVANNAH are an integral part of these condensed statements.
SAVANNAH ELECTRIC AND POWER COMPANY CONDENSED BALANCE SHEETS (Stated in Thousands of Dollars) CAPITALIZATION AND LIABILITIES At June 30, 1995 At December 31, (Unaudited) 1994 CAPITALIZATION: Common stock equity-- Common stock ($5 par value)--authorized 16,000,000 shares; outstanding 10,844,635 shares $ 54,223 $ 54,223 Paid-in capital 8,688 8,688 Additional minimum liability for under-funded pension obligations (2,181) (546) Retained earnings 98,999 99,216 ------ ------ 159,729 161,581 Preferred stock 35,000 35,000 Long-term debt 164,807 155,922 ------- ------- Total 359,536 352,503 ------- ------- CURRENT LIABILITIES: Amount of securities due within one year 992 2,579 Notes payable 1,000 2,500 Accounts payable-- Affiliated companies 4,395 5,162 Other 8,593 3,829 Customer deposits 4,888 4,698 Taxes accrued-- Federal and state income 676 272 Other 2,434 861 Interest accrued 6,337 6,830 Vacation pay accrued 1,860 1,823 Pensions accrued 4,196 4,783 Miscellaneous 3,171 3,499 ----- ----- Total 38,542 36,836 ------ ------ DEFERRED CREDITS: Accumulated deferred income taxes 72,729 70,786 Accumulated deferred investment tax credits 14,266 14,637 Deferred credits related to income taxes 25,232 25,487 Deferred compensation plans 7,217 6,807 Deferred under-funded accrued benefit obligation 5,688 3,022 Postretirement benefits 4,658 3,808 Miscellaneous 3,917 4,419 ----- ----- Total 133,707 128,966 ------- ------- TOTAL CAPITALIZATION AND LIABILITIES $ 531,785 $518,305 = ======= ======== The accompanying notes as they relate to SAVANNAH are an integral part of these condensed statements.
SAVANNAH ELECTRIC AND POWER COMPANY MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND FINANCIAL CONDITION Results of Operations Earnings SAVANNAH's net income after dividends on preferred stock for the second quarter of 1995 showed little change from prior year's second quarter, while year-to-date 1995 dropped $1.5 million. The decrease in net income was primarily due to higher operation, maintenance and depreciation expenses and lower construction related credits, reflecting the commercial operation of two combustion turbine units in the 1994 periods. Revenues Revenues for the second quarter of 1995 rose slightly over the corresponding period in 1994, due to higher retail energy sales. When compared to prior year, retail energy sales increased 11.3% in the second quarter and 6.4% year-to-date because of weather influences, an increase in the number of customers served and higher demand from industrial customers. Industrial energy sales were higher primarily because a major customer performed maintenance on its cogeneration facility in the first and second quarters of 1995. The replacement energy was purchased under a rate schedule that has a small profit margin and, thus, had little impact on earnings. Wholesale energy sales to non-affiliated companies decreased; however, only the capacity revenues of such sales have any measurable effect on earnings. Capacity revenues fell approximately $110,000 for each quarter of 1995, compared to the corresponding quarters in the prior year. Expenses Despite a decrease in the average cost of fuel consumed, fuel expenses increased during the second quarter and year-to-date 1995, compared to those recorded in 1994, because of higher generation. Fuel costs in 1994 spiked because of increases in the cost of fuel in the spot market due to the coal miners' strike and higher freight charges. The increase in generation was due to demand in SAVANNAH's service area and elsewhere in the Southeast. Purchased power transactions among the affiliated companies within the Southern electric system will vary from period to period depending on demand and the availability and variable cost of generating resources at each company. These transactions do not have a significant impact on earnings. Other operation expenses for the second quarter and year-to-date 1995 increased over the corresponding periods in 1994 for a variety of reasons including employee compensation and consulting costs for training and increased expenses related to demand side option programs. The change in maintenance expense reflects unscheduled precipitator maintenance performed at Plant McIntosh. Depreciation and amortization reflected the commercial operation of two combustion turbine peaking units in April and May 1994. Income taxes were lower because of the change in taxable income. Allowance for Funds Used During Construction AFUDC represents the cost of capital charged to utility plant under construction and is included in rate base. The equity portion of AFUDC represents non-cash income. When facilities are completed and included in rate base, previously capitalized amounts increase cash flow because revenues are higher as SAVANNAH ELECTRIC AND POWER COMPANY MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND FINANCIAL CONDITION Results of Operations (Continued) a result of the increased rate base and additional depreciation expense. The amount of AFUDC recorded in 1994 was higher because of SAVANNAH's investment in the construction of two 80 megawatt combustion turbine peaking units. Future Earnings Potential The results of operations discussed above are not necessarily indicative of future earnings potential. The level of future earnings depends on numerous factors ranging from growth in energy sales to a less regulated, more competitive environment. Compliance costs related to the Clean Air Act will reduce earnings if such increased costs cannot be offset. The Clean Air Act is discussed under "Environmental Matters" in Item 7 - Management's Discussion and Analysis in SAVANNAH's 1994 Annual Report on Form 10-K. Future earnings in the near term will also depend upon growth in electric sales which are subject to a number of factors. Traditionally, these factors have included changes in contracts with neighboring utilities, energy conservation practiced by customers, the elasticity of demand, weather, competition, and the rate of economic growth in SAVANNAH's service area. The enactment of the Energy Act is beginning to have a dramatic effect on the electric utility industry. A discussion of the potential impact of the Energy Act and particularly its effect on competition is found under "Future Earnings Potential" in Item 7 - Management's Discussion and Analysis in SAVANNAH's 1994 Annual Report on Form 10-K. SAVANNAH is subject to the provisions of FASB Statement No. 71, Accounting for the Effects of Certain Types of Regulation. In the event that a portion of the company's operations is no longer subject to these provisions, SAVANNAH would be required to write off related regulatory assets and liabilities. See Note 1 to the financial statements in Item 8 of SAVANNAH's 1994 Annual Report on Form 10-K for additional information. In March 1995, the FASB issued Statement No. 121, Accounting for the Impairment of Long-Lived Assets and Long-Lived Assets to be Disposed Of. This statement requires that long-lived assets be reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. This statement also imposes stricter criteria for regulatory assets by requiring that such assets be probable of future recovery at each balance sheet date. SAVANNAH anticipates adopting this standard by January 1, 1996 and does not expect that adoption will have a material impact on the financial position or results of operations of SAVANNAH based on the current regulatory structure in which SAVANNAH operates. This conclusion may change in the future as competitive factors influence wholesale and retail pricing in this industry. SAVANNAH ELECTRIC AND POWER COMPANY MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND FINANCIAL CONDITION Financial Condition Overview During the first half of 1995, SAVANNAH made gross property additions to utility plant of $14.0 million. The funds for these additions and other capital requirements came from operating activities, principally from earnings and noncash charges to income such as depreciation. See the Condensed Statements of Cash Flows for further details. Capital Requirements for Construction SAVANNAH's construction program is budgeted at $87 million for the three years 1995 through 1997 ($34 million in 1995, $27 million in 1996 and $26 million in 1997). Actual construction costs may vary from this estimate because of such factors as changes in business conditions; changes in environmental regulations; the cost and efficiency of construction labor, equipment and materials; revised load growth estimates and changes in cost of capital. Such construction expenditures will be incurred for transmission and distribution facilities and the upgrading and extension of the useful lives of generating plants. Changes in environmental regulations could substantially increase the Southern electric system's capital requirements and operating costs. The acid rain compliance provision of the Clean Air Act will impact the Southern electric system. This legislation, as well as other legislation and regulations, are described under "Environmental Matters" in Item 7 - Management's Discussion and Analysis in SAVANNAH's 1994 Annual Report on Form 10-K. The full impact of these requirements cannot be determined at this time, pending the development and implementation of applicable regulations. There can be no assurance that compliance costs will be recovered through corresponding increases in rates. Sources of Capital At June 30, 1995, SAVANNAH had $29.5 million of unused credit arrangements with banks to meet its short-term cash needs. SAVANNAH had $1.0 million of short-term debt outstanding at quarter-end. Additionally, SAVANNAH has $1.0 million of capitalized leases maturing by June 30, 1996. SAVANNAH has received the authority from the SEC to have outstanding at any one time an amount of up to $70 million in short-term borrowings. It is anticipated that the funds required for construction and other purposes, including compliance with environmental regulations, will be derived from operations and the sale of additional first mortgage bonds and preferred stock and capital contributions from SOUTHERN. SAVANNAH is required to meet certain coverage requirements specified in its mortgage indenture and corporate charter to issue new first mortgage bonds and preferred stock. SAVANNAH's coverage ratios are sufficiently high to permit, at present interest and dividend rate levels, any foreseeable security sales. The amount of securities which SAVANNAH will be permitted to issue in the future will depend upon market conditions and other factors prevailing at that time. 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, K ALABAMA B, C, D, E GEORGIA B, C, F, G, H, I, J, K GULF B, C MISSISSIPPI B, C SAVANNAH C THE SOUTHERN COMPANY AND SUBSIDIARY COMPANIES ALABAMA POWER COMPANY GEORGIA POWER COMPANY GULF POWER COMPANY MISSISSIPPI POWER COMPANY SAVANNAH ELECTRIC AND POWER COMPANY NOTES TO CONDENSED FINANCIAL STATEMENTS: (A) Reference is made to Item 3 - LEGAL PROCEEDINGS in the SOUTHERN system's combined Annual Report on Form 10-K for the year ended December 31, 1994 for a description of the proceedings related to a derivative action filed against certain current and former directors and officers of SOUTHERN. In June 1995, the U.S. District Court for the Southern District of Georgia, on remand from the U.S. Court of Appeals for the Eleventh Circuit, granted the motion for summary judgment filed on behalf of the defendant directors and officers. The plaintiffs have again appealed to the Eleventh Circuit Court. (B) Reference is made to Note 3 to each of the registrant's, except SAVANNAH's, notes to the financial statements in Item 8 in the SOUTHERN system's combined 1994 Annual Report on Form 10-K for a discussion of the proceedings initiated by the FERC regarding the reasonableness of the return on common equity on certain of the Southern electric system's wholesale rate schedules and contracts. (C) Certain of the registrants and SCS, the system service company, instituted workforce reduction programs. The expenses recognized and the unamortized balance of deferred expenses under these programs were as follows: (in thousands)
Three Months Ended Six Months Ended Unamortized Balance June 30, June 30, at June 30, 1995 ------------------ ----------------- ------------------- 1995 1994 1995 1994 ---- ---- ---- ---- ALABAMA $2,859 $2,570 $4,304 $12,270 $ 3,546 GEORGIA 2,919 3,208 3,979 87,897 - GULF - - - 657 - MISSISSIPPI 750 - 1,500 - 9,786 SAVANNAH 29 - 29 551 - -- - -- --- - SOUTHERN system $6,557 $5,778 $9,812 $101,375 $13,332 ====== ====== ====== ======== =======
(D) In September 1990, two customers of ALABAMA filed a civil complaint in the Circuit Court of Shelby County, Alabama, against ALABAMA seeking to represent all persons who, prior to June 23, 1989, entered into agreements with ALABAMA for the financing of heat pumps and other merchandise purchased from vendors other than ALABAMA. The plaintiffs contended that ALABAMA was required to obtain a license under the Alabama Consumer Finance Act to engage in the business of making consumer loans. The plaintiffs were seeking an order declaring these agreements null and void and requiring ALABAMA to refund all payments, principal and interest, NOTES TO CONDENSED FINANCIAL STATEMENTS: (Continued) made under these agreements. The aggregate amount under these agreements, together with interest paid, currently is estimated to be $40 million. In June 1993, the court ordered ALABAMA to refund or forfeit interest because of ALABAMA's failure to obtain such license. However, the court's order did not require any refund or forfeiture with respect to any principal payments under the agreements at issue. In May 1995, the Supreme Court of Alabama affirmed the order of the Circuit Court. The case has now been remanded to the trial court for implementation of the order. ALABAMA recorded a charge of $9 million in "Other Income (Expense)" to cover the refund subject to final resolution of this matter. (E) On June 12, 1995, the Alabama PSC issued an order granting ALABAMA's request for gradual adjustments to move toward parity among rate classes. This order also calls for a moratorium on retail rate increases (but not decreases) until July 2001, under the retail ratemaking procedure that provides for periodic adjustments based upon ALABAMA's earned return on end-of-period retail common equity. (F) Pursuant to orders from the Georgia PSC, GEORGIA deferred financing and depreciation costs under phase-in plans for Plant Vogtle units 1 and 2 until the allowed investment was fully reflected in rates as of October 1991. In addition, the Georgia PSC issued two separate accounting orders that required GEORGIA to defer substantially all operating and financing costs related to both units until rate orders addressed these costs. The Georgia PSC orders provide for recovery of deferred costs within 10 years. The Georgia PSC also ordered GEORGIA to levelize declining capacity buyback expense from the co-owners of the plant over a six-year period beginning October 1991. The unamortized balance of these deferred costs at June 30, 1995, was $374 million. (G) Reference is made to Note 4 to the financial statements of SOUTHERN and GEORGIA in Item 8 of the SOUTHERN system's combined 1994 Annual Report on Form 10-K for information concerning the uncertainty related to the actions of regulatory authorities with respect to the recovery of costs of the Rocky Mountain pumped storage hydroelectric project. The ultimate outcome of this matter cannot now be determined. (H) Reference is made to Note 3 to the financial statements of SOUTHERN and GEORGIA in Item 8 of the SOUTHERN system's combined 1994 Annual Report on Form 10-K for information regarding recovery of GEORGIA's costs from demand-side conservation programs. On August 7, 1995, the Georgia PSC ordered GEORGIA to discontinue the current demand-side conservation programs by the end of 1995. The rate riders will continue in effect until costs deferred are collected, not to exceed an $80 million cap as of December 31, 1995. In July 1995, GEORGIA recognized expenses of approximately $22 million for previously deferred costs which will not be recovered under the riders and costs expected to be incurred in excess of the capped amount. (I) Reference is made to Note 3 to the financial statements of SOUTHERN and GEORGIA in Item 8 of the SOUTHERN system's combined 1994 Annual Report on Form 10-K for information NOTES TO CONDENSED FINANCIAL STATEMENTS: (Continued) regarding a tax deficiency notice received from the Internal Revenue Service relating to GEORGIA's tax accounting for the sale in 1984 of an interest in Plant Vogtle and related capacity and energy buyback commitments. The final outcome of this matter cannot now be determined; however, in management's opinion, the final outcome will not have a material adverse effect on SOUTHERN's or GEORGIA's Condensed Financial Statements. (J) Reference is made to Note 3 to the financial statements of GEORGIA in Item 8 of the SOUTHERN system's combined 1994 Annual Report on Form 10-K for information regarding joint complaints filed by OPC and MEAG seeking recovery from GEORGIA for alleged partial requirements rates overcharges plus interest. In July 1995, the FERC denied OPC's and MEAG's request for a rehearing with respect to this matter. While the outcome of this matter cannot now be determined, in management's opinion, it will not have a material adverse effect on GEORGIA's Condensed Financial Statements. (K) Reference is made to Note 3 and Note 4 to the financial statements of SOUTHERN and GEORGIA, respectively, in Item 8 of the SOUTHERN system's combined 1994 Annual Report on Form 10-K for information on certain environmental contingencies. PART II - OTHER INFORMATION Item 1. Legal Proceedings. (1) Reference is made to the Notes to Condensed Financial Statements herein for information regarding certain legal and administrative proceedings in which SOUTHERN and its reporting subsidiaries are involved. (2) Reference is made to Item 3 - LEGAL PROCEEDINGS in the SOUTHERN system's combined 1994 Annual Report on Form 10-K for information regarding GEORGIA's designation as a potentially responsible party under the Comprehensive Environmental Response, Compensation and Liability Act. Item 4. Submission of Matters to a Vote of Security Holders. SOUTHERN SOUTHERN held its annual meeting of stockholders on May 24, 1995. The following resolutions were voted upon at this meeting. (1) A proposal to approve the Outside Directors Stock Plan for subsidiaries of SOUTHERN was adopted by a vote of 474,303,810 shares for; 54,716,718 shares against; and 15,762,341 shares abstaining. (2) A proposal to amend SOUTHERN's Productivity Improvement Plan for Executive Officers was adopted by a vote of 473,766,918 shares for; 56,702,692 shares against; and 14,313,259 shares abstaining. (3) A proposal to amend SOUTHERN's executive stock plan was approved by a vote of 464,174,585 shares for; 64,337,330 against; and 16,270,954 shares abstaining. (4) A proposal requiring disclosure of certain consulting firms was defeated by a vote of 392,786,193 shares against; 71,289,089 shares for; and 21,456,561 shares abstaining. (5) The appointment of Arthur Andersen LLP as independent auditors for the year 1995 was approved by a vote of 531,588,510 shares for; 8,563,448 shares against; and 4,630,911 shares abstaining. Item 4. Submission of Matters to a Vote of Security Holders. (Continued) (6) Each nominee for director of SOUTHERN received the requisite plurality of votes. The vote tabulation was as follows: Nominees Shares For Shares Withhold Vote John C. Adams 535,784,719 8,998,150 A. D. Correll 535,417,815 9,365,054 A. W. Dahlberg 535,744,638 9,038,231 Paul J. DeNicola 535,804,999 8,977,870 Jack Edwards 531,714,601 13,068,268 H. Allen Franklin 535,693,969 9,088,900 Bruce S. Gordon 532,950,617 11,832,252 L. G. Hardman III 536,028,721 8,754,148 Elmer B. Harris 535,478,217 9,304,652 William A. Parker, Jr. 535,183,086 9,599,783 William J. Rushton, III 535,548,055 9,234,814 Gloria M. Shatto 535,552,272 9,230,597 Gerald J. St. Pe 536,147,575 8,635,294 Herbert Stockham 535,657,377 9,125,492 ALABAMA ALABAMA held its annual common stockholders meeting on April 28, 1995, and the following persons were elected to serve as directors of ALABAMA: Whit Armstrong William V. Muse Philip E. Austin John T. Porter Margaret A. Carpenter Gerald H. Powell A. W. Dahlberg Robert D. Powers Peter V. Gregerson, Sr. John W. Rouse Bill M. Guthrie William J. Rushton, III Elmer B. Harris James H. Sanford Carl E. Jones, Jr. John Cox Webb, IV Wallace D. Malone, Jr. John W. Woods All of the 5,608,955 outstanding shares of ALABAMA's common stock are owned by SOUTHERN and were voted for the election of such directors. GEORGIA GEORGIA held its annual meeting of stockholders on May 17, 1995, and the following persons were elected to serve as directors of GEORGIA: Bennett A. Brown William A. Parker, Jr. A. W. Dahlberg G. Joseph Prendergast William A. Fickling, Jr. Herman J. Russell H. Allen Franklin Gloria M. Shatto L. G. Hardman III William Jerry Vereen Warren Y. Jobe Carl Ware James R. Lientz, Jr. Thomas R. Williams All of the 7,761,500 outstanding shares of GEORGIA's common stock are owned by SOUTHERN and were voted for the election of such directors. GULF GULF held its annual stockholders meeting on June 27, 1995, and the following persons were elected to serve as directors of GULF: Reed Bell, Sr., M.D. W. Deck Hull, Jr. Travis J. Bowden C. Walter Ruckel Paul J. DeNicola Joseph K. Tannehill Fred C. Donovan All of the 992,717 outstanding shares of GULF's common stock are owned by SOUTHERN and were voted for the election of such directors. MISSISSIPPI MISSISSIPPI held its annual stockholders meeting on April 4, 1995, and the following persons were elected to serve as directors of MISSISSIPPI: Paul J. DeNicola Aubrey K. Lucas Edwin E. Downer Gerald J. St. Pe Dwight H. Evans Philip J. Terrell Robert S. Gaddis N. Eugene Warr Walter H. Hurt, III All of the 1,121,000 outstanding shares of MISSISSIPPI's common stock are owned by SOUTHERN and were voted for the election of such directors. SAVANNAH SAVANNAH held its annual stockholders meeting on May 16, 1995, and the following persons were elected to serve as directors of SAVANNAH: Helen Quattlebaum Artley Walter D. Gnann Paul J. DeNicola Robert B. Miller, III Brian R. Foster Arnold M. Tenenbaum Arthur M. Gignilliat, Jr. Frederick F. Williams, Jr. All of the 10,844,635 outstanding shares of SAVANNAH's common stock are owned by SOUTHERN and were voted for the election of such directors. Item 6. Exhibits and Reports on Form 8-K. (a) Exhibits. Exhibit 24(a) - Powers of Attorney and resolutions. (Designated in the SOUTHERN system's combined Form 10-K for the year ended December 31, 1994, File Nos. 1-3526, 1-3164, 1-6468, 0-2429, 0-6849 and 1-5072 as Exhibits 24(a), 24(b), 24(c), 24(d), 24(e) and 24(f), respectively, and incorporated herein by reference.) Exhibit 24(b) - Power of Attorney relating to Chief Executive Officer of MISSISSIPPI. (Designated in the SOUTHERN system's combined Form 10-Q for the quarter ended March 31, 1995, File No. 0-6849 as Exhibit 24(b) 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. During the second quarter of 1995, the following registrants filed a Form 8-K which, in each case, was filed to facilitate a security sale: Registrant Date of Report GEORGIA May 17, 1995 SAVANNAH May 18, 1995 SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. The signature of the undersigned company shall be deemed to relate only to matters having reference to such company and any subsidiaries thereof. THE SOUTHERN COMPANY By A. W. Dahlberg Chairman, President and Chief Executive Officer (Principal Executive Officer) By W. L. Westbrook Financial Vice President (Principal Financial and Accounting Officer) By /s/ Wayne Boston (Wayne Boston, Attorney-in-fact) Date: August 10, 1995 ------------------------------------------------------------------------------ Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. The signature of the undersigned company shall be deemed to relate only to matters having reference to such company and any subsidiaries thereof. ALABAMA POWER COMPANY By Elmer B. Harris, President and Chief Executive Officer By William B. Hutchins, III, Executive Vice President and Chief Financial Officer (Principal Financial Officer) By /s/ Wayne Boston (Wayne Boston, Attorney-in-fact) Date: August 10, 1995 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: August 10, 1995 ----------------------------------------------------------------------------- Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. The signature of the undersigned company shall be deemed to relate only to matters having reference to such company and any subsidiaries thereof. GULF POWER COMPANY By Travis J. Bowden, President and Chief Executive Officer By A. E. Scarbrough, Vice President - Finance (Principal Financial and Accounting Officer) By /s/ Wayne Boston (Wayne Boston, Attorney-in-fact) Date: August 10, 1995 SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. The signature of the undersigned company shall be deemed to relate only to matters having reference to such company and any subsidiaries thereof. MISSISSIPPI POWER COMPANY By Dwight H. Evans, President and Chief Executive Officer By Michael W. Southern, Vice President, Secretary, Treasurer and Chief Financial Officer (Principal Financial and Accounting Officer) By /s/ Wayne Boston (Wayne Boston, Attorney-in-fact) Date: August 10, 1995 ----------------------------------------------------------------------------- Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. The signature of the undersigned company shall be deemed to relate only to matters having reference to such company and any subsidiaries thereof. SAVANNAH ELECTRIC AND POWER COMPANY By Arthur M. Gignilliat, Jr., President By Kirby R. Willis, Vice President, Treasurer and Chief Financial Officer (Principal Financial and Accounting Officer) By /s/ Wayne Boston (Wayne Boston, Attorney-in-fact) Date: August 10, 1995 EX-27 2 SOUTHERN FIN DATA SCH
UT This schedule contains summary financial information extracted from the Form 10-Q for June 30, 1995, and is qualified in its entirety by reference to such financial statements. 0000092122 THE SOUTHERN COMPANY 1,000 6-MOS DEC-31-1994 JUN-30-1995 PER-BOOK 20,995,657 841,001 2,526,099 2,658,740 0 27,021,497 3,328,856 1,851,398 3,258,416 8,438,670 100,000 1,332,203 7,264,346 396,000 332,006 569,712 (705,748) 0 147,310 (2,674) 9,149,672 27,021,497 4,112,613 345,444 2,928,841 3,274,285 838,328 12,259 850,587 332,028 518,559 44,703 473,856 404,926 0 908,246 0.71 0
EX-27 3 ALA FIN DATA SCHEDULE
UT This schedule contains summary financial information extracted from the Form 10-Q for June 30, 1995, and is qualified in its entirety by reference to such financial statements. 0000003153 ALABAMA POWER COMPANY 1,000 6-MOS DEC-31-1994 JUN-30-1995 PER-BOOK 6,935,318 137,143 864,191 650,173 0 8,586,825 224,358 1,304,791 1,097,983 2,627,132 0 440,400 2,448,093 0 0 372,054 (60,000) 0 9,359 (848) 2,750,635 8,586,825 1,399,824 98,522 1,020,668 1,119,190 280,634 1,679 282,313 114,384 167,929 13,675 154,254 141,400 0 244,385 0 0
EX-27 4 GA FINANCIAL DATA SCHEDULE
UT This schedule contains summary financial information extracted from the Form 10-Q for June 30, 1995, and is qualified in its entirety by reference to such financial statements. 0000041091 GEORGIA POWER COMPANY 1,000 6-MOS DEC-31-1994 JUN-30-1995 PER-BOOK 10,525,808 199,615 1,207,575 1,700,183 0 13,633,181 344,250 2,384,761 1,453,104 4,182,115 100,000 692,787 3,737,463 187,200 37,000 197,658 (552,543) 0 87,543 (323) 4,964,281 13,633,181 2,049,396 198,649 1,413,750 1,612,399 436,997 13,011 450,008 160,869 289,139 24,478 264,661 224,100 0 634,797 0 0
EX-27 5 GULF FINANCIAL DATA SCH
UT This schedule contains summary financial information extracted from the Form 10-Q for June 30, 1995, and is qualified in its entirety by reference to such financial statements. 0000044545 GULF POWER COMPANY 1,000 6-MOS DEC-31-1994 JUN-30-1995 PER-BOOK 1,058,991 8,002 160,574 92,663 0 1,320,230 38,060 218,461 170,927 427,448 0 89,602 317,836 56,000 43,765 0 (34,080) 0 0 0 419,659 1,320,230 293,975 15,524 235,558 251,082 42,893 314 43,207 15,292 27,915 2,939 24,976 23,000 0 64,936 0 0
EX-27 6 MS FINANCIAL DATA SCH
UT This schedule contains summary financial information extracted from the Form 10-Q for June 30, 1995, and is qualified in its entirety by reference to such financial statements. 0000066904 MISSISSIPPI POWER COMPANY 1,000 6-MOS DEC-31-1994 JUN-30-1995 PER-BOOK 967,876 3,280 109,745 59,613 0 1,140,514 37,691 179,734 148,834 366,259 0 74,414 252,191 27,000 89,500 0 (56,135) 0 0 0 387,285 1,140,514 238,076 14,967 185,187 200,154 37,922 1,784 39,706 13,251 26,455 2,449 24,006 19,500 0 41,762 0 0
EX-27 7 SAV FINANCIAL DATA SCH
UT This schedule contains summary financial information extracted from the Form 10-Q for June 30, 1995, and is qualified in its entirety by reference to such financial statements. 0000086940 SAVANNAH ELECTRIC AND POWER COMPANY 1,000 6-MOS DEC-31-1994 JUN-30-1995 PER-BOOK 435,712 1,789 53,057 41,227 0 531,785 54,223 8,688 96,818 159,729 0 35,000 134,687 1,000 30,000 0 0 0 1,112 (992) 171,249 531,785 104,416 6,581 81,447 88,028 16,388 51 16,439 6,816 9,623 1,162 8,461 8,700 0 21,953 0 0