Form U-13-60
Mutual and Subsidiary Service Companies
Revised February 7, 1980
ANNUAL REPORT
For The Period
Beginning January 1, 1997 and Ending December 31, 1997
TO THE
U. S. SECURITIES AND EXCHANGE COMMISSION
OF
SOUTHERN COMPANY SERVICES, INC.
(Exact Name of Reporting Company)
SUBSIDIARY SERVICE COMPANY
("Mutual" or "Subsidiary")
Date of Incorporation April 21, 1949 If not Incorporated, Date of Organization
State or Sovereign Power Under Which Incorporated or Organized State of Alabama
Location of Principal Executive Offices of Reporting Company
241 Ralph McGill Blvd., NE
Atlanta, Georgia 30308-3374
Name, title, and address of officer to whom correspondence concerning
this report should be addressed:
Vice President, 241 Ralph McGill Blvd., NE
W. Dean Hudson Comptroller and Atlanta, Georgia 30308-3374
(Name) Chief Financial (Address)
Officer
(Title)
Name of Principal Holding Company Whose Subsidiaries are served by
Reporting Company:
THE SOUTHERN COMPANY
<PAGE>
INSTRUCTIONS FOR USE OF FORM U-13-60
1. Time of Filing.--Rule 94 provides that on or before the first day of
May in each calendar year, each mutual service company and each
subsidiary service company as to which the Commission shall have made a
favorable finding pursuant to Rule 88, and every service company whose
application for approval or declaration pursuant to Rule 88 is pending
shall file with the Commission an annual report on form U-13-60 and in
accordance with the Instructions for that form.
2. Number of Copies.--Each annual report shall be filed in duplicate. The
company should prepare and retain at least one extra copy for itself in
case correspondence with reference to the report become necessary.
3. Period Covered by Report.--The first report filed by any company shall
cover the period from the date the Uniform System of Accounts was
required to be made effective as to that company under Rules 82 and 93
to the end of that calendar year. Subsequent reports should cover a
calendar year.
4. Report Format.--Reports shall be submitted on the forms prepared by the
Commission. If the space provided on any sheet of such form is
inadequate, additional sheets may be inserted of the same size as a
sheet of the form or folded to such size.
5. Money Amounts Displayed.--All money amounts required to be shown in
financial statements may be expressed in whole dollars, in thousands of
dollars or in hundred thousands of dollars, as appropriate and subject
to provisions of Regulation S-X ( 210.3-01(b)).
6. Deficits Displayed.--Deficits and other like entries shall be
indicated by the use of either brackets or a parenthesis with
corresponding reference in footnotes. (Regulation S-X, 210.3-01(c))
7. Major Amendments or Corrections.--Any company desiring to amend or
correct a major omission or error in a report after it has been filed
with the Commission shall submit an amended report including only those
pages, schedules, and entries that are to be amended or corrected. A
cover letter shall be submitted requesting the Commission to
incorporate the amended report changes and shall be signed by a duly
authorized officer of the company.
<PAGE>
INSTRUCTIONS FOR USE OF FORM U-13-60
(Continued)
8. Definitions.--Definitions contained in Instruction 01-8 to the Uniform
System of Accounts for Mutual Service companies and Subsidiary Service
companies, Public Utility Holding Company Act of 1935, as amended
February 2, 1979 shall be applicable to words or terms used
specifically within this Form U-13-60.
9. Organization Chart.--The service company shall submit with each annual
report a copy of its current organization chart.
10. Methods of Allocation.--The service company shall submit with each
annual report a listing of the currently effective methods of
allocation being used by the service company and on file with the
Securities and Exchange Commission pursuant to the Public Utility
Holding Company Act of 1935.
11. Annual Statement of Compensation for Use of Capital Billed.--The
service company shall submit with each annual report a copy of the
annual statement supplied to each associate company in support of the
amount of compensation for use of capital billed during the calendar
year.
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LISTING OF SCHEDULES AND ANALYSIS OF ACCOUNTS
Schedule or Page
Description of Schedules and Accounts Account Number Number
COMPARATIVE BALANCE SHEET Schedule I 4-5
SERVICE COMPANY PROPERTY Schedule II 6-7
ACCUMULATED PROVISION FOR DEPRECIATION
AND AMORTIZATION OF SERVICE COMPANY
PROPERTY Schedule III 8
INVESTMENTS Schedule IV 9
ACCOUNTS RECEIVABLE FROM ASSOCIATE
COMPANIES Schedule V 10
FUEL STOCK EXPENSES UNDISTRIBUTED Schedule VI 11
STORES EXPENSE UNDISTRIBUTED Schedule VII 12
MISCELLANEOUS CURRENT AND ACCRUED
ASSETS Schedule VIII 13
MISCELLANEOUS DEFERRED DEBITS Schedule IX 14
RESEARCH, DEVELOPMENT, OR DEMONSTRATION
EXPENDITURES Schedule X 15
PROPRIETARY CAPITAL Schedule XI 16
LONG-TERM DEBT Schedule XII 17
CURRENT AND ACCRUED LIABILITIES Schedule XIII 18
NOTES TO FINANCIAL STATEMENTS Schedule XIV 19
COMPARATIVE INCOME STATEMENT Schedule XV 20
ANALYSIS OF BILLING - ASSOCIATE
COMPANIES Account 457 21
ANALYSIS OF BILLING - NONASSOCIATE
COMPANIES Account 458 22
ANALYSIS OF CHARGES FOR SERVICE - ASSOCIATE
AND NONASSOCIATE COMPANIES Schedule XVI 23
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LISTING OF SCHEDULES AND ANALYSIS OF ACCOUNTS (Continued)
Schedule or Page
Description of Schedules and Accounts Account Number Number
SCHEDULE OF EXPENSE BY DEPARTMENT OR
SERVICE FUNCTION Schedule XVII 24-25
DEPARTMENTAL ANALYSIS OF SALARIES Account 920 26
OUTSIDE SERVICES EMPLOYED Account 923 27
EMPLOYEE PENSIONS AND BENEFITS Account 926 28
GENERAL ADVERTISING EXPENSES Account 930.1 29
MISCELLANEOUS GENERAL EXPENSES Account 930.2 30
RENTS Account 931 31
TAXES OTHER THAN INCOME TAXES Account 408 32
DONATIONS Account 426.1 33
OTHER DEDUCTIONS Account 426.5 34
NOTES TO STATEMENT OF INCOME Schedule XVIII 35
FINANCIAL DATA SCHEDULE Schedule XIX 36
ORGANIZATION CHART 37
METHODS OF ALLOCATION 38
ANNUAL STATEMENT OF COMPENSATION FOR USE
OF CAPITAL BILLED 39
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4
ANNUAL REPORT OF SOUTHERN COMPANY SERVICES, INC.
(Thousands of Dollars)
SCHEDULE I - COMPARATIVE BALANCE SHEET
Give balance sheet of the Company as of December 31 of the current and prior
year.
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ACCOUNT ASSETS AND OTHER DEBITS AS OF DECEMBER 31
CURRENT PRIOR
SERVICE COMPANY PROPERTY
101 Service company property (Schedule II) 209,657 234,904
107 Construction work in progress (Schedule II) 23,106 22,118
------- -------
Total Property 232,763 257,022
------- -------
108 Less accumulated provision for depreciation
and amortization of service company
property (Schedule III) 135,276 132,535
------- -------
Net Service Company Property 97,487 124,487
------- -------
INVESTMENTS
123 Investments in associate companies (Schedule IV) - -
124 Other investments (Schedule IV) 2,877 3,925
------- -------
Total Investments 2,877 3,925
------- -------
CURRENT AND ACCRUED ASSETS
131 Cash - -
134 Special deposits - -
135 Working funds 5 5
136 Temporary cash investments (Schedule IV) - 4,602
141 Notes receivable - -
143 Accounts receivable 41,749 38,918
146 Accounts receivable from associate
companies (Schedule V) 155,207 91,208
152 Fuel stock expenses undistributed (Schedule VI) - -
154 Materials and supplies 2,116 2,951
163 Stores expense undistributed (Schedule VII) - -
165 Prepayments 4,228 1,937
174 Miscellaneous current and accrued assets
(Schedule VIII) - 65
------- -------
Total Current and Accrued Assets 203,305 139,686
------- -------
DEFERRED DEBITS
181 Unamortized debt expense - -
184 Clearing accounts 135 108
186 Miscellaneous deferred debits (Schedule IX) 5,642 6,743
188 Research, development, or demonstration
expenditures (Schedule X) - -
190 Accumulated deferred income taxes - -
------- -------
Total Deferred Debits 5,777 6,851
------- -------
TOTAL ASSETS AND OTHER DEBITS 309,446 274,949
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ANNUAL REPORT OF SOUTHERN COMPANY SERVICES, INC.
(Thousands of Dollars)
SCHEDULE I - COMPARATIVE BALANCE SHEET
ACCOUNT LIABILITIES AND PROPRIETARY CAPITAL AS OF DECEMBER 31
CURRENT PRIOR
PROPRIETARY CAPITAL
201 Common stock issued (Schedule XI) 725 725
211 Miscellaneous paid-in-capital (Schedule XI) 150 150
215 Appropriated retained earnings (Schedule XI) - -
216 Unappropriated retained earnings
(Schedule XI) - -
------- -------
Total Proprietary Capital 875 875
------- -------
LONG-TERM DEBT
223 Advances from associate companies (Schedule XII) - -
224 Other long-term debt (Schedule XII) 36,021 47,658
225 Unamortized premium on long-term debt - -
226 Unamortized discount on long-term debt-debit - -
------- -------
Total Long-Term Debt 36,021 47,658
------- -------
CURRENT AND ACCRUED LIABILITIES
231 Notes payable 2,300 15,792
232 Accounts payable 45,478 29,262
233 Notes payable to associated companies
(Schedule XIII) 6,400 -
234 Accounts payable to associate companies
(Schedule XIII) 43,384 33,592
236 Taxes accrued 5,275 799
237 Interest accrued 3 62
238 Dividends declared - -
241 Tax collections payable 12,903 605
242 Miscellaneous current and accrued
liabilities (Schedule XIII) 81,360 67,731
------- -------
Total Current and Accrued Liabilities 197,103 147,843
------- -------
DEFERRED CREDITS
253 Other deferred credits 75,447 78,573
255 Accumulated deferred investment tax credits - -
------- -------
Total Deferred Credits 75,447 78,573
------- -------
282 ACCUMULATED DEFERRED INCOME TAXES - -
------- -------
TOTAL LIABILITIES AND PROPRIETARY
CAPITAL 309,446 274,949
======= =======
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6
ANNUAL REPORT OF SOUTHERN COMPANY SERVICES, INC.
For the Year Ended December 31, 1997
(Thousands of Dollars)
SCHEDULE II
SERVICE COMPANY PROPERTY
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BALANCE AT BALANCE AT
BEGINNING RETIREMENTS OTHER 1/ CLOSE OF
DESCRIPTION OF YEAR ADDITIONS OR SALES CHANGES YEAR
SERVICE COMPANY PROPERTY
Account
301 ORGANIZATION - - - - -
303 MISCELLANEOUS
INTANGIBLE PLANT - - - - -
304 LAND & LAND RIGHTS - - - - -
305 STRUCTURES AND
IMPROVEMENTS 50,781 - - (8,616) 42,165
306 LEASEHOLD
IMPROVEMENTS 23,239 2,614 (161) (18,616) 7,076
307 EQUIPMENT 2/ 80,918 6,380 (2,975) (782) 83,541
-
308 OFFICE FURNITURE
AND EQUIPMENT 2/ 35,841 1,640 (10,859) 1,537 28,159
-
309 AUTOMOBILES, OTHER
VEHICLES AND
RELATED GARAGE
EQUIPMENT 2/ 783 31 (11) - 803
-
310 AIRCRAFT AND
AIRPORT EQUIPMENT 2/ 28,823 - (968) - 27,855
-
311 OTHER SERVICE COMPANY
PROPERTY 2/ 3/ 14,519 5,775 (133) (103) 20,058
- - ------- ------- -------- -------- -------
SUB-TOTAL 234,904 16,440 (15,107) (26,580) 209,657
------- ------- -------- -------- -------
107 CONSTRUCTION WORK
IN PROGRESS 4/ 22,118 988 - - 23,106
- ------- ------- -------- ------- -------
TOTAL 257,022 17,428 (15,107) (26,580) 232,763
======= ======= ======== ======= =======
1/ PROVIDE AN EXPLANATION OF THOSE CHANGES CONSIDERED MATERIAL:
305-1, In December 1997, Southern Company Services, Inc. recognized an asset impairment loss on office building
resulting in a capital lease basis adjustment.
306-1, In December 1997, Southern Company Services, Inc. recognized an asset impairment loss on office building
resulting in a capital lease basis adjustment.
( ) Denotes red figure.
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SCHEDULE II-CONTINUED
(Thousands of Dollars)
2/ SUBACCOUNTS ARE REQUIRED FOR EACH CLASS OF EQUIPMENT OWNED. THE SERVICE COMPANY SHALL PROVIDE A LISTING
BY SUBACCOUNT OF EQUIPMENT ADDITIONS DURING THE YEAR AND THE BALANCE AT THE CLOSE OF THE YEAR:
BALANCE AT
CLOSE OF
SEC/CLASS SUBACCOUNT DESCRIPTION ADDITIONS YEAR
307/02 Research & Laboratory Equip. 1,147 3,080
307/03 Word Processing/Office
Automation Equip. 91 4,974
307/04 Personal Computer Equip. 2,868 33,083
307/05 Computer Equipment 1,305 24,496
307/11 Telephone Systems 878 8,290
307/12 Telecommunications Equip. 91 9,618
308/01 Furniture & Fixtures 1,307 16,780
308/09 Data Handling Equipment
& Miscellaneous 333 11,379
309/08 Autos, Trucks & Trailers 31 803
310/07 Aircraft - 27,855
311/10 Software 5,775 18,362
311/13 Coal Pilot Scale Combustion
Facility - 1,671
311/14 Boats 25
------ -------
TOTAL 13,826 160,416
====== =======
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3/ DESCRIBE OTHER SERVICE COMPANY PROPERTY:
1. Purchased computer software and software licenses.
2. Pulverized coal pilot scale combustion facility.
3. Boats, motors, & trailers
4/ DESCRIBE CONSTRUCTION WORK IN PROGRESS:
A. An energy management system for the Southern Electric System to be
located at Birmingham, Alabama.
<PAGE>
8
ANNUAL REPORT OF SOUTHERN COMPANY SERVICES, INC.
For the Year Ended December 31, 1997
(Thousands of Dollars)
SCHEDULE III
ACCUMULATED PROVISION FOR DEPRECIATION AND
AMORTIZATION OF SERVICE COMPANY PROPERTY
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ADDITIONS OTHER
BALANCE AT CHARGED CHARGES BALANCE AT
BEGINNING TO ADD CLOSE OF
DESCRIPTION OF YEAR ACCT #403 RETIREMENTS (DEDUCT)1/ YEAR
Account
301 ORGANIZATION - - - - -
303 MISCELLANEOUS
INTANGIBLE PLANT - - - - -
304 LAND & LAND RIGHTS - - - - -
305 STRUCTURES AND
IMPROVEMENTS 22,818 1,967 - 1,345 26,130
306 LEASEHOLD
IMPROVEMENTS 8,582 1,509 (130) (7,071) 2,890
307 EQUIPMENT 61,541 7,211 (5,132) (22) 63,598
308 OFFICE FURNITURE
AND FIXTURES 19,875 2,621 (1,701) (136) 20,659
309 AUTOMOBILES, OTHER
VEHICLES AND
RELATED GARAGE
EQUIPMENT 624 77 (11) 8 698
310 AIRCRAFT AND
AIRPORT EQUIPMENT 10,050 1,062 (706) - 10,406
311 OTHER SERVICE
COMPANY PROPERTY 9,045 2,007 (122) (35) 10,895
------- ------ ------ ------ --------
TOTAL 132,535 16,454 (7,802) (5,911) 135,276
======= ====== ====== ======= =======
1/ PROVIDE AN EXPLANATION OF THOSE CHANGES CONSIDERED MATERIAL:
305-1, In December 1997, Southern Company Services, Inc. recognized an asset
impairment loss on office building resulting in a capital lease basis adjustment.
306-1, In December 1997, Southern Company Services, Inc. recognized an asset impairment loss on office building
resulting in a capital lease basis adjustment.
( ) Denotes red figure.
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9
ANNUAL REPORT OF SOUTHERN COMPANY SERVICES, INC.
For the Year Ended December 31, 1997
(Thousands of Dollars)
SCHEDULE IV
INVESTMENTS
INSTRUCTIONS: Complete the following schedule concerning investments.
Under Account 124, "Other Investments", state each
investment separately, with description, including the
name of issuing company, number of shares or principal
amount, etc.
Under Account 136, "Temporary Cash Investments", list
each investment separately.
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BALANCE AT BALANCE AT
BEGINNING CLOSE OF
DESCRIPTION OF YEAR YEAR
ACCOUNT 123 - INVESTMENT IN ASSOCIATE
COMPANIES - -
ACCOUNT 124 - OTHER INVESTMENTS
Employee Merchandise Loans 9 7
Employee Energy Loans 2,520 2,079
Energy Insurance Mutual LTD - Reserve 11 -
ACE Limited - Reserve 69 69
Employee Computer Loans 1,038 722
Notes Receivable 86 -
Miscellaneous 192 -
ACCOUNT 136 - TEMPORARY CASH INVESTMENTS 4,602 -
------ ------
TOTAL 8,527 2,877
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10
ANNUAL REPORT OF SOUTHERN COMPANY SERVICES, INC.
For the Year Ended December 31, 1997
(Thousands of Dollars)
SCHEDULE V
ACCOUNTS RECEIVABLE FROM ASSOCIATE COMPANIES
INSTRUCTIONS: Complete the following schedule listing accounts
receivable from each associate company. Where the
service company has provided accommodation or
convenience payments for associate companies, a
separate listing of total payments for each associate
company by subaccount should be provided.
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BALANCE AT BALANCE AT
BEGINNING CLOSE OF
DESCRIPTION OF YEAR YEAR
ACCOUNT 146 - ACCOUNTS RECEIVABLE FROM ASSOCIATE COMPANIES
The Southern Company 1,039 2,430
Alabama Power Company 23,947 37,117
Georgia Power Company 36,390 64,480
Gulf Power Company 5,547 10,976
Mississippi Power Company 5,594 11,235
Savannah Electric and Power Company 5,992 6,812
Southern Communications Services, Inc. 1,500 2,998
Southern Development & Investment Group, Inc. 662 2,747
Southern Electric Generating Company 401 617
Southern Electric Railroad 99 694
Southern Energy, Inc. 1,356 1,649
Southern Information Holding Company 1 2
Southern Nuclear Operating Company 8,656 13,253
Southern Telecom Holding Company 23 197
Trustee for SCS Pension 1 -
------ -------
TOTAL 91,208 155,207
====== =======
ANALYSIS OF CONVENIENCE OR ACCOMMODATION PAYMENTS: TOTAL
PAYMENTS
The Southern Company 838
Alabama Power Company 231,662
Georgia Power Company 364,487
Gulf Power Company 60,172
Mississippi Power Company 77,852
Savannah Electric and Power Company 60,980
Southern Communications Services, Inc. 4,839
Southern Development & Investment Group, Inc. 3,778
Southern Electric Generating Company 204
Southern Electric Railroad -
Southern Energy, Inc. 6,012
Southern Nuclear Operating Company 97,706
------
The major portion of the above expenses consists of the Integrated System Power
Pool transactions, transactions relating to the System Pension Plan,
transactions relating to the Employee Savings Plan, transactions relating to 3rd
party payroll payments, and transactions relating to the Employee Stock
Ownership Plan.
TOTAL PAYMENTS 908,530
=======
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ANNUAL REPORT OF SOUTHERN COMPANY SERVICES, INC.
For the Year Ended December 31, 1997
(Thousands of Dollars)
SCHEDULE VI
FUEL STOCK EXPENSES UNDISTRIBUTED
INSTRUCTIONS: Report the amount of labor and expenses incurred with
respect to fuel stock expenses during the year and
indicate amount attributable to each associate company.
Under the section headed "Summary" listed below give an
overall report of the fuel functions performed by the
service company.
DESCRIPTION LABOR EXPENSES TOTAL
ACCOUNT 152 - FUEL STOCK EXPENSES
UNDISTRIBUTED 4,252 3,067 7,319
Total amount billed during current year as follows:
Associated Companies
The Southern Company (1) (1) (2)
Alabama Power Company (1,279) (883) (2,162)
Georgia Power Company (1,750) (1,195) (2,945)
Gulf Power Company (357) (239) (596)
Mississippi Power Company (428) (274) (702)
Savannah Electric and Power Company (120) (83) (203)
Southern Development & Investment Group (4) (2) (6)
Southern Electric Generating Company (65) (57) (122)
Southern Electric Railroad - (10) (10)
Southern Energy, Inc. (247) (323) (570)
Southern Nuclear Operating Company (1) - (1)
------ ------ ------
Subtotal (4,252) (3,067) (7,319)
------ ------ ------
Nonassociated Companies - - -
TOTAL 0 0 0
====== ======= ======
( ) Denotes red figure.
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SUMMARY: Fuel services performed by the service company consists of
acting as agent on behalf of all the system operating
companies on fossil related matters as defined in an operating
agreement with each company.
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12
ANNUAL REPORT OF SOUTHERN COMPANY SERVICES, INC.
For the Year Ended December 31, 1997
(Thousands of Dollars)
SCHEDULE VII - STORES EXPENSE UNDISTRIBUTED
INSTRUCTIONS: Report the amount of labor and expenses incurred with respect
to stores expense during the year and indicate amount
attributable to each associate company.
DESCRIPTION LABOR EXPENSES TOTAL
ACCOUNT 163 - STORES EXPENSE UNDISTRIBUTED
NOT APPLICABLE
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13
ANNUAL REPORT OF SOUTHERN COMPANY SERVICES, INC.
For the Year Ended December 31, 1997
(Thousands of Dollars)
SCHEDULE VIII
MISCELLANEOUS CURRENT AND ACCRUED ASSETS
INSTRUCTIONS: Provide detail of items in this account. Items less than
$10,000 may be grouped, showing the number of items in each
group.
BALANCE AT BALANCE AT
BEGINNING CLOSE OF
DESCRIPTION OF YEAR YEAR
ACCOUNT 174 - MISCELLANEOUS CURRENT AND
ACCRUED ASSETS - INTEREST RECEIVABLE -
TEMPORARY CASH INVESTMENTS 65 -
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14
ANNUAL REPORT OF SOUTHERN COMPANY SERVICES, INC.
For the Year Ended December 31, 1997
(Thousands of Dollars)
SCHEDULE IX
MISCELLANEOUS DEFERRED DEBITS
INSTRUCTIONS: Provide detail of items in this account. Items less than
$10,000 may be grouped, showing the number of items in each
class.
BALANCE AT BALANCE AT
BEGINNING CLOSE OF
DESCRIPTION OF YEAR YEAR
ACCOUNT 186 - MISCELLANEOUS DEFERRED DEBITS
Deposit for Georgia Sales and Use Tax 26 26
Wilsonville Clean-up 141 156
Executive Stock Option Taxes 5 -
Retire Capital Items 20 280
Unamortized Leasehold - Bldg. 66 2,752 2,449
Unamortized Leasehold - Bldg. 64 - 1,599
Unamortized Leasehold - Inverness - 460
Sundry Delayed Clearance 2,774 672
Power Marketing Trading Floor 1,025 -
------ ------
Total 6,743 5,642
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15
ANNUAL REPORT OF SOUTHERN COMPANY SERVICES, INC.
For the Year Ended December 31, 1997
(Thousands of Dollars)
SCHEDULE X
RESEARCH, DEVELOPMENT OR DEMONSTRATION EXPENDITURES
INSTRUCTIONS: Provide a description of each material research, development,
or demonstration project which incurred costs by the service
corporation during the year.
DESCRIPTION AMOUNT
ACCOUNT 188 - RESEARCH, DEVELOPMENT, OR DEMONSTRATION
EXPENDITURES 35,039
Total amount billed/incurred during current year as follows:
Government Projects:
Clean Coal Technology Projects:
Yates CT-121 Project 262
Hammond Wall Fired Project (272)
Crist SCR Project (1)
Other Government Projects:
Hot Gas Cleanup Project (23,185)
Westinghouse AP600 Design Certification (29)
Generic NOx Control Intelligent System (12)
Westinghouse 1st of Kind Engineering (FOAKE) (1,861)
Liquefaction (1,462)
EPRI Projects:
GNOCIS Demonstration (263)
RE&A EPRI Contracts (421)
Advanced End-Use Technologies (70)
Engineering EPRI Projects (332)
EPRI Bulk Trans. System Reliability (88)
Associate Companies:
End-Use Research Projects (1,669)
Pwr Delivery Research-Transmission Substations (237)
Pwr Delivery Research-Distribution (111)
Air Quality Studies (118)
Combustion & Fuel Effects (880)
Research Administration (472)
Flue Gas Treatment (412)
Power Delivery Research (51)
Advanced End-Use Technology Research (1,136)
Particulate Control Studies (463)
Advanced Energy Systems (1,279)
Thermal & Fluid Sciences (403)
R&D Tech Econ Assessments (74)
--------
TOTAL AMOUNT BILLED/INCURRED (35,039)
--------
TOTAL 0
========
( ) Denotes red figure.
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16
ANNUAL REPORT OF SOUTHERN COMPANY SERVICES, INC.
For the Year Ended December 31, 1997
(Thousands of Dollars)
SCHEDULE XI - PROPRIETARY CAPITAL
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NUMBER OF PAR OR STATED OUTSTANDING
ACCOUNT SHARES VALUE CLOSE
NUMBER CLASS OF STOCK AUTHORIZED PER SHARE OF PERIOD
201 COMMON STOCK NO. OF SHARES
ISSUED 17,000 50.00 14,500
TOTAL AMOUNT
725
INSTRUCTIONS: Classify amounts in each account with brief explanation, disclosing the general nature of
transactions which gave rise to the reported amounts.
DESCRIPTION AMOUNT
ACCOUNT 211
MISCELLANEOUS PAID-IN CAPITAL 150
ACCOUNT 215
APPROPRIATED RETAINED EARNINGS -
TOTAL 150
INSTRUCTIONS: Give particulars concerning net income or (loss) during the
year, distinguishing between compensation for the use of
capital owed or net loss remaining from servicing
nonassociates per the General Instructions of the Uniform
System of Accounts. For dividends paid during the year in
cash or otherwise, provide rate percentage, amount of
dividend, date declared and date paid.
BALANCE AT NET INCOME BALANCE AT
BEGINNING OR DIVIDENDS CLOSE
DESCRIPTION OF YEAR (LOSS) PAID OF YEAR
ACCOUNT 216
UNAPPROPRIATED RETAINED
EARNINGS - - - -
TOTAL - - - -
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17
ANNUAL REPORT OF SOUTHERN COMPANY SERVICES, INC.
For the Year Ended December 31, 1997
(Thousands of Dollars)
SCHEDULE XII - LONG-TERM DEBT
INSTRUCTIONS: Advances from associate companies should be reported separately for advances on notes, and advances on open
account. Names of associate companies from which advances were received shall be shown under the class and series
of obligation column. For Account 224 - Other Long-Term Debt provide the name of creditor company or organization,
terms of the obligation, date of maturity, interest rate, and the amount authorized and outstanding.
TERMS OF OBLIG DATE BALANCE AT BALANCE AT
CLASS & SERIES OF INTEREST AMOUNT BEGINNING 1/ CLOSE
NAME OF CREDITOR OF OBLIGATION MATURITY RATE AUTHORIZED OF YEAR ADDITIONS DEDUCTIONS OF YEAR
ACCOUNT 223 - ADVANCES FROM ASSOCIATE
COMPANIES:
NOT APPLICABLE
ACCOUNT 224 - OTHER LONG-TERM DEBT:
NOT APPLICABLE
OTHER LONG-TERM DEBT:
CAPITAL LEASE OBLIGATION
Beacon Properties 02/01/2011 9.25 7,225 5,484 - 224 5,260
Beacon Properties 02/01/2006 13.00 41,551 42,174 - 11,413 30,761
------ ------ --------- ------ ------
Subtotal 48,776 47,658 - 11,637 36,021
------ ------ --------- ------ ------
TOTAL 48,776 47,658 - 11,637 36,021
====== ====== ========= ====== ======
1/ GIVE AN EXPLANATION OF DEDUCTIONS: Beacon Properties - Deductions of $1,010,848.46 tnsferred to current maturities. Also
includes an asset impairment write down of $10,626,167.97.
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18
ANNUAL REPORT OF SOUTHERN COMPANY SERVICES, INC.
For the Year Ended December 31, 1997
(Thousands of Dollars)
SCHEDULE XIII - CURRENT AND ACCRUED LIABILITIES
INSTRUCTIONS: Provide balance of notes and accounts payable to each associate
company. Give description and amount of miscellaneous current
and accrued liabilities. Items less than $10,000 may be grouped,
showing the number of items in each group.
<S> <C> <C>
BALANCE AT BALANCE AT
BEGINNING CLOSE OF
DESCRIPTION OF YEAR YEAR
ACCOUNT 233 - NOTES PAYABLE TO ASSOCIATE COMPANIES
The Southern Company - 6,400
------ -------
TOTAL - 6,400
====== =======
ACCOUNT 234 - ACCOUNTS PAYABLE TO ASSOCIATE COMPANIES
The Southern Company - (74)
Alabama Power Company 22,818 30,060
Georgia Power Company 1,761 8,142
Gulf Power Company 1,221 2,676
Mississippi Power Company 270 367
Savannah Electric and Power Company 22 420
Southern Electric Generating Company - -
Southern Energy, Inc. 967 -
Southern Communications Services, Inc. 373 724
Southern Nuclear Operating Company 5,712 1,007
Southern Development & Investment Group 448 62
------ ------
TOTAL 33,592 43,384
====== ======
ACCOUNT 242 - MISCELLANEOUS CURRENT AND ACCRUED LIABILITIES
Incentive Pay 20,621 22,941
Vacation Clearing Account 16,175 18,197
Accrued Labor & Related Overheads 4,174 5,661
Employee Group Insurance Premiums 704 504
Early Retirement Benefits 1,374 1,376
Productivity Improvement Program 11,926 15,597
Accumulated Provision for Major Overhaul
of Aircraft 1,214 865
Supplemental Pensions and Benefits 731 1,680
Department of Energy (75) 24
Flex and Save Benefits 1,658 2,969
Post Employment Benefits 66 66
Severance Pay 8,107 4,975
Metro Life Advance-Current 176 176
(Continued on Page 18A)
</TABLE>
<PAGE>
18A
ANNUAL REPORT OF SOUTHERN COMPANY SERVICES, INC.
For the Year Ended December 31, 1997
(Thousands of Dollars)
SCHEDULE XIII - CURRENT AND ACCRUED LIABILITIES
(Continued)
BALANCE AT BALANCE AT
BEGINNING CLOSE OF
DESCRIPTION OF YEAR YEAR
Associate Companies - ESP (761) 4,323
APCO - U.S. Savings Bond Withholdings - -
Commitment Fees - Credit Lines 71 85
Accrued Bank Fees 136 60
APCO - Supplemental Life Ins. - Pension (66) -
SCS - Employee Savings Plan 567 1,475
MPCO - Contributory Life Ins. Withholdings
- Pension 12 -
MPCO - Medical Withholdings (565) -
APCO - Contributory Life Withholdings 13 -
APCO - Personal Auto Maintenance 23 -
SCS - U.S. Savings Bonds Withholdings 294 265
GPCO - Contributory Life Withholdings
- Pension 17 -
SCS - GPCO-Efficiency Store Withholdings 12 -
GUPCO - Medical Withholdings 667 -
MPCO - Contributory Life Withholdings 422 -
MPCO - Medical Withholdings-Pension (12) -
Funds Dist-Holders SE P&L Corp. 13 13
Employee Energy/PC Loan W/H - 14
SCS-FLEX Benefits Premiums - 82
Miscellaneous (76 Beginning)(22 Ending) 37 12
------ ------
TOTAL 67,731 81,360
====== ======
<PAGE>
19
ANNUAL REPORT OF SOUTHERN COMPANY SERVICES, INC.
For the Year Ended December 31, 1997
SCHEDULE XIV
NOTES TO FINANCIAL STATEMENTS
INSTRUCTIONS: The space below is provided for important notes
regarding the financial statements or any account
thereof. Furnish particulars as to any significant
contingent assets or liabilities existing at the end of
the year. Notes relating to financial statements shown
elsewhere in this report may be indicated here by
reference.
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
General
Southern Company Services, Inc. (the "Company") follows the Uniform
System of Accounts prescribed by the Securities and Exchange Commission
("SEC") for service companies, as amended, effective January 1, 1980.
The Company has no earnings or retained earnings since it primarily
renders services at cost to its parent company, The Southern Company,
and to that company's subsidiaries, as further discussed in Note 2.
The financial statements are prepared in conformity with generally
accepted accounting principles which requires the use of estimates. The
actual results may differ from those estimates.
Cash and Cash Equivalents
The Company considers all highly liquid investments with original
maturities of 90 days or less to be cash equivalents. The carrying
value of cash and cash equivalents approximates fair value.
Income Taxes
The Company is included in the consolidated federal income tax return
with The Southern Company and its subsidiaries. Federal income tax
deferrals primarily resulting from the use of accelerated depreciation
are fully utilized and accounted for by the operating subsidiaries of
The Southern Company.
Property, Equipment, and Depreciation and Amortization
Property and equipment, including any interest capitalized during
construction, are recorded at cost. Depreciation and amortization are
provided on the straight-line method over the estimated economic life of
the related asset (ranging from 5 to 12 years). Leasehold improvements
are amortized over the lives of the respective leases.
<PAGE>
19A
ANNUAL REPORT OF SOUTHERN COMPANY SERVICES, INC.
For the Year Ended December 31, 1997
(Thousands of Dollars)
SCHEDULE XIV
NOTES TO FINANCIAL STATEMENTS
INSTRUCTIONS: The space below is provided for important notes
regarding the financial statements or any account
thereof. Furnish particulars as to any significant
contingent assets or liabilities existing at the end of
the year. Notes relating to financial statements shown
elsewhere in this report may be indicated here by
reference.
On retirement or sale of assets, the cost of such assets and the related
accumulated depreciation are removed from the accounts, and the gain or
loss, if any, is credited or charged to income.
2. SERVICE AGREEMENTS
The Southern Company and each of its operating subsidiaries (Alabama
Power Company, Georgia Power Company, Gulf Power Company, Mississippi
Power Company, and Savannah Electric and Power Company), Southern
Electric Generating Company (an operating subsidiary owned equally by
Alabama Power Company and Georgia Power Company), Southern Energy, Inc.
(a subsidiary of The Southern Company which designs, builds, owns, and
operates power production facilities and provides a broad range of
technical services to industrial companies and utilities in the United
States and a number of international markets), Southern Development and
Investment Group, Inc. (a subsidiary of The Southern Company which
researches and develops new business opportunities), Southern Nuclear
Operating Company (a subsidiary of The Southern Company which provides
services to the Southern electric system nuclear power plants), Southern
Electric Railroad Company (a subsidiary of The Southern Company, which
provides railroad services to the operating subsidiaries) and Southern
Communications Services, Inc. (a subsidiary of The Southern Company,
which provides wireless communications services to the operating
subsidiaries and their customers) have entered into agreements with the
Company under which the Company renders the following services at cost:
general executive and advisory services, general engineering, design
engineering, purchasing, accounting and statistical, finance and
treasury, tax, insurance and pension, rate, budgeting, business
promotion and public relations, employee relations, systems and
procedures, and other services with respect to business and operations
and, in the case of operating subsidiaries, power pool operations. The
agreements shall be canceled to the extent and from the time that
performance thereunder conflicts with any rule, regulation, or order of
the SEC adopted before or after the execution of the agreements.
<PAGE>
19B
ANNUAL REPORT OF SOUTHERN COMPANY SERVICES, INC.
For the Year Ended December 31, 1997
(Thousands of Dollars)
SCHEDULE XIV
NOTES TO FINANCIAL STATEMENTS
INSTRUCTIONS: The space below is provided for important notes
regarding the financial statements or any account
thereof. Furnish particulars as to any significant
contingent assets or liabilities existing at the end of
the year. Notes relating to financial statements shown
elsewhere in this report may be indicated here by
reference.
3. RETIREMENT BENEFITS
Pension Costs
The Company has a defined benefit, trusteed, pension plan that covers
substantially all regular employees. Benefits are based on one of the
following formulas: years of service and final average pay or years of
service and a flat-dollar benefit. The Company uses the "entry age
normal method with frozen initial liability" actuarial method for
funding purposes, subject to limitations under federal income tax
regulations. Amounts funded to the pension trusts are primarily invested
in equity and fixed-income securities. Statement of Financial Accounting
Standards No. 87, "Employers' Accounting for Pensions," requires use of
the "projected unit credit" actuarial method for financial reporting
purposes.
Other Postretirement Benefits
The Company provides certain medical care and life insurance benefits
for retired employees. Substantially all employees may become eligible
for these benefits when they retire. Trusts are funded to the extent
deductible under federal income tax regulations. Amounts funded are
primarily invested in debt and equity securities.
Statement of Financial Accounting Standards No. 106, "Employers'
Accounting for Postretirement Benefits Other Than Pensions" requires
that medical care and life insurance benefits for retired employees be
accounted for on an accrual basis, using a specified actuarial method,
"benefit/years-of-service."
Funded Status and Cost of Benefits
The following tables show actuarial results and assumptions for pension
and post retirement insurance benefits as computed under the
requirements of FASB Statement Nos. 87 and 106, respectively. The funded
status of the plans at December 31 was as follows:
<PAGE>
<TABLE>
<CAPTION>
19C
ANNUAL REPORT OF SOUTHERN COMPANY SERVICES, INC.
For the Year Ended December 31, 1997
(Thousands of Dollars)
SCHEDULE XIV
NOTES TO FINANCIAL STATEMENTS
INSTRUCTIONS: The space below is provided for important notes
regarding the financial statements or any account
thereof. Furnish particulars as to any significant
contingent assets or liabilities existing at the end of
the year. Notes relating to financial statements shown
elsewhere in this report may be indicated here by
reference.
<S> <C> <C>
Pension
1997 1996
Actuarial present value of benefit obligations:
Vested benefits 242,812 208,808
Non-vested benefits 11,064 16,361
------- -------
Accumulated benefit obligation 253,876 225,169
Additional amounts related to
projected salary increases 96,443 104,606
------- -------
Projected benefit obligation 350,319 329,775
Less:
Fair value of plan assets 557,333 479,484
Unrecognized net gain (210,194) (151,659)
Unrecognized prior service cost 12,324 13,194
Unrecognized net transition asset (11,379) (12,664)
-------- --------
Accrued liability recognized
in the balance sheets 2,235 1,420
======= =======
Postretirement Benefits
1997 1996
Actuarial present value of
benefit obligation:
Retirees and Dependents 40,487 29,321
Employees eligible to retire 6,127 5,480
Other employees 38,549 39,655
------ ------
Accumulated benefit obligations 85,163 74,456
Less:
Fair value of plan assets 22,794 18,674
Unrecognized net loss (gain) 5,335 2,869
Unrecognized prior service cost (18) (19)
Unrecognized transition obligation 6,170 6,574
------ ------
Accrued liability recognized in the
balance sheets 50,882 46,358
====== ======
</TABLE>
<PAGE>
19D
ANNUAL REPORT OF SOUTHERN COMPANY SERVICES, INC.
For the Year Ended December 31, 1997
(Thousands of Dollars)
SCHEDULE XIV
NOTES TO FINANCIAL STATEMENTS
INSTRUCTIONS: The space below is provided for important notes
regarding the financial statements or any account
thereof. Furnish particulars as to any significant
contingent assets or liabilities existing at the end of
the year. Notes relating to financial statements shown
elsewhere in this report may be indicated here by
reference.
The weighted average rates assumed in the actuarial calculations were:
1997 1996
---- ----
Discount 7.50% 7.75%
Annual salary increase 5.00% 5.25%
Long-term return on plan assets 8.50% 8.50%
An additional assumption used in measuring the accumulated
postretirement benefit obligation was a weighted average medical care
cost trend rate of 8.81 percent for 1997 decreasing gradually to 5.50
percent through the year 2005 and remaining at that level thereafter. An
annual increase in the assumed medical care cost trend rate of 1 percent
would increase the accumulated medical benefit obligation at December
31, 1997, by $6.5 million and the aggregate of the service and interest
cost components of the net retiree medical cost by $0.6 million.
<PAGE>
19E
ANNUAL REPORT OF SOUTHERN COMPANY SERVICES, INC.
For the Year Ended December 31, 1997
SCHEDULE XIV
NOTES TO FINANCIAL STATEMENTS
INSTRUCTIONS: The space below is provided for important notes
regarding the financial statements or any account
thereof. Furnish particulars as to any significant
contingent assets or liabilities existing at the end of
the year. Notes relating to financial statements shown
elsewhere in this report may be indicated here by
reference.
Components of the plans net costs are shown below:
Pension
1997 1996
Benefits earned during the year 11,961 12,538
Interest cost on projected
benefit obligation 24,728 18,031
Actual return on plan assets (76,291) (44,746)
Net amortization and deferral 34,586 12,613
------- -------
Net pension income (5,016) (1,564)
======= =======
Postretirement Benefits
1997 1996
Benefits earned during the year 1,954 2,216
Interest cost on accumulated
benefit obligation 6,049 5,134
Amortization of transition obligation 405 405
Actual return on plan assets (2,886) (2,015)
Net amortization and deferral 1,622 849
------ ------
Net postretirement costs 7,144 6,589
====== ======
Work Force Reduction Programs
The Company has incurred additional costs for work force reduction programs.
The costs related to these programs were $7 million and $20 million for 1997
and 1996, respectively. These costs were charged to income.
<PAGE>
19F
ANNUAL REPORT OF SOUTHERN COMPANY SERVICES, INC.
For the Year Ended December 31, 1997
SCHEDULE XIV
NOTES TO FINANCIAL STATEMENTS
INSTRUCTIONS: The space below is provided for important notes
regarding the financial statements or any account
thereof. Furnish particulars as to any significant
contingent assets or liabilities existing at the end of
the year. Notes relating to financial statements shown
elsewhere in this report may be indicated here by
reference.
4. LONG-TERM OPERATING LEASES
The Company leases various facilities and equipment under noncancelable
operating lease arrangements. Rental expense under all operating leases
was approximately $49,931,000 and $23,254,000 in 1997 and 1996,
respectively. Future minimum lease payments under these noncancelable
operating leases as of December 31, 1997 are as follows:
1998 42,733
1999 35,006
2000 20,609
2001 10,123
2002 9,690
Thereafter 38,967
-------
Total 157,128
=======
5. LONG-TERM DEBT AND NOTES PAYABLE - OTHER
Details of long-term debt and notes payable - other at December 31 are as
follows:
1997 1996
------ -----
(In Thousands)
Long-term debt
Notes payable:
4.94% due 1997 - 15,000
Less Current Maturities - (15,000)
------- -------
- -
------- -------
Capitalized lease obligations:
9 1/4% building lease 5,484 5,689
13% building lease 32,837 42,761
------- -------
38,321 48,450
------- -------
Less Current Maturities (2,300) (792)
-------- -------
36,021 47,658
------- -------
Total long-term debt 36,021 47,658
======= =======
<PAGE>
19G
ANNUAL REPORT OF SOUTHERN COMPANY SERVICES, INC.
For the Year Ended December 31, 1997
SCHEDULE XIV
NOTES TO FINANCIAL STATEMENTS
INSTRUCTIONS: The space below is provided for important notes
regarding the financial statements or any account
thereof. Furnish particulars as to any significant
contingent assets or liabilities existing at the end of
the year. Notes relating to financial statements shown
elsewhere in this report may be indicated here by
reference.
The Southern Company has guaranteed the payment of the above notes and
the rental payments relating to the 13% building lease.
Maturities over the next five years of the Company's long-term debt
outstanding at December 31, 1997 are as follows:
(In Thousands)
1998 2,300
1999 2,726
2000 3,211
2001 3,761
2002 4,387
Thereafter 21,936
------
Total 38,321
======
Assets acquired under capital leases are recorded in the Company's
balance sheets as office building. In December 1997, Southern Company
Services, Inc. recognized an asset impairment loss on office building in
the amount of $11,891,014, resulting in a capital lease basis
adjustment. The net book value of assets acquired under capitalized
leases was approximately $14,866,098 and $26,688,179 at December 31,
1997 and 1996, respectively.
Financial Instruments
In accordance with Statement of Financial Accounting Standards No. 107,
"Disclosure About Fair Value of Financial Instruments," all financial
instruments of the Company - for which the carrying amount does not
approximate fair value - are shown in the table below as of December 31:
Long-Term Debt
Carrying Fair
Amount Value
(In Millions)
1997 00.0 00.0
1996 15.0 14.9
The fair values for long-term debt were based on closing prices of
comparable instruments.
6. PURCHASE COMMITMENTS
The Company has purchase commitments for computer hardware and software.
At December 31, 1997, total capital expenditures are budgeted to be
approximately $15,830,000 in 1998.
<PAGE>
<TABLE>
<CAPTION>
20
ANNUAL REPORT OF SOUTHERN COMPANY SERVICES, INC.
For the Year Ended December 31, 1997
(Thousands of Dollars)
SCHEDULE XV
STATEMENT OF INCOME
<S> <C> <C>
ACCOUNT DESCRIPTION CURRENT YEAR PRIOR YEAR
INCOME
457 Services rendered to associate companies 581,403 506,928
458 Services rendered to nonassociate
companies 32,098 31,893
421 Miscellaneous income or loss (7,359) 3,179
------- -------
Total Income 606,142 542,000
------- -------
EXPENSE
920 Salaries and wages 225,502 230,023
921 Office supplies and expenses 82,958 66,950
922 Administrative expense transferred-
credit - -
923 Outside services employed 135,379 115,690
924 Property insurance 774 748
925 Injuries and damages 119 101
926 Employee pensions and benefits 23,161 22,029
928 Regulatory commission expense 588 606
930.1 General advertising expenses - -
930.2 Miscellaneous general expenses 19,540 20,696
931 Rents 49,931 23,254
932 Maintenance of structures and
equipment 27,766 22,118
403 Depreciation and amortization expense 16,471 16,922
408 Taxes other than income taxes 16,076 15,176
409 Income taxes 108 80
410 Provision for deferred income taxes - -
411 Provision for deferred income taxes -
credit - -
411.5 Investment tax credit - -
426.1 Donations 1,314 1,014
426.5 Other deductions - -
427 Interest on long-term debt 5,462 6,296
430 Interest on debt to associate companies 788 231
431 Other interest expense 205 66
------- -------
Total Expense 606,142 542,000
------- -------
Net Income or (Loss) - -
======= =======
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
21
ANNUAL REPORT OF SOUTHERN COMPANY SERVICES, INC.
For the Year Ended December 31, 1997
(Thousands of Dollars)
ANALYSIS OF BILLING
ASSOCIATE COMPANIES
ACCOUNT 457
<S> <C> <C> <C> <C>
DIRECT INDIRECT COMPENSAT'N TOTAL
COSTS COSTS FOR USE AMOUNT
NAME OF ASSOCIATE COMPANY CHARGED CHARGED OF CAPITAL BILLED
457-1 457-2 457-3
The Southern Company 11,647 2,123 221 13,991
Alabama Power Company 122,257 25,542 1,525 149,324
Georgia Power Company 180,905 34,954 2,890 218,749
Gulf Power Company 29,585 5,757 374 35,716
Mississippi Power Company 27,621 5,991 325 33,937
Savannah Electric & Power
Company 10,767 2,174 158 13,099
Southern Communication Services 19,461 1,410 177 21,048
Southern Development and
Investment Group, Inc. 14,487 3,932 133 18,552
Southern Electric Generating
Company 843 297 7 1,147
Southern Electric Railroad 417 262 2 681
Southern Energy, Inc. 7,955 2,722 205 10,882
Southern Information Holding Co. 8 5 - 13
Southern Nuclear Operating
Company 49,954 13,459 423 63,836
Southern Telecommunications
Holding Co. 334 88 6 428
------- ------ ----- -------
TOTAL 476,241 98,716 6,446 581,403
======= ====== ===== =======
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
22
ANNUAL REPORT OF SOUTHERN COMPANY SERVICES, INC.
For the Year Ended December 31, 1997
(Thousands of Dollars)
ANALYSIS OF BILLING
NONASSOCIATE COMPANIES
ACCOUNT 458
<S> <C> <C> <C> <C> <C> <C>
DIRECT INDIRECT COMPENSATION EXCESS TOTAL
COSTS COSTS FOR USE TOTAL OR AMOUNT
NAME OF NONASSOCIATE COMPANY CHARGED CHARGED OF CAPITAL COST DEFICIENCY BILLED
- ---------------------------- ------- ------- -------------- ----- ---------- ------
458-1 458-2 458-3 458-4
Department of Energy (DOE) $18,901 $2,184 $ 0 $21,085 $ 0 $21,085
Electric Power Research Institute 4,278 179 3 4,460 0 4,460
Westinghouse 1,248 643 (1) 1,890 0 1,890
MindSpring 20 0 0 20 0 20
Delta Com 24 0 0 24 0 24
Alcoa 14 0 0 14 0 14
Bankers Trust Company (Southern
System Master Retirement Trust) 510 0 0 510 0 510
VEBA-Alabama Power 8 0 0 8 0 8
Geothermal Heat Pump Consortium 260 13 1 274 0 274
Powerco Federal Credit Union 9 0 0 9 0 9
Electric Authority/
City of Tallahassee/FPC 1,903 33 2 1,938 0 1,938
Oglethorpe Power Corporation 1,245 0 0 1,245 0 1,245
Southeastern Electric Reliability
Council 47 0 0 47 0 47
Peabody Holdg Co. (Cost Share) 300 0 0 300 0 300
APC Credit Union 21 0 0 21 0 21
Economic Development Partnership 5 0 0 5 0 5
Motorola 6 0 0 6 0 6
Gulf Power Credit Union 10 0 0 10 0 10
Energy Insurance Bermuda 35 31 3 69 0 69
Comsys 40 3 1 44 0 44
MCI 37 7 0 44 0 44
North American Electric Reliability Council 19 0 0 19 0 19
Oak Ridge Laboratory 17 1 0 18 0 18
Reynolds & Reynolds 24 0 0 24 0 24
GEAC Computer System 214 0 0 214 0 214
Phillips Electronics 59 0 0 59 0 59
Crawford & Co. 8 0 0 8 0 8
GE Capital 26 0 0 26 0 26
Morgan Stanley 7 3 0 10 0 10
Nonassociated Labor Accrual (196) (136) 0 (332) 0 (332)
Other (13 items less than $5,000) 24 5 0 29 0 29
------- ------ --- ------- -- -------
TOTAL $29,123 $2,966 $ 9 $32,098 $0 $32,098
======= ====== === ======= == =======
</TABLE>
<PAGE>
22A
ANNUAL REPORT OF SOUTHERN COMPANY SERVICES, INC.
For the Year Ended December 31, 1997
(Thousands of Dollars)
ANALYSIS OF BILLING
NONASSOCIATE COMPANIES
ACCOUNT 458
INSTRUCTION: Provide a brief description of the services rendered to each
nonassociate company:
Department of Energy (DOE) - Contract services concerning clean coal
technology; hot gas cleanup project, including construction of pilot test
facility.
Electric Power Research Institute - GNOCIS demonstrations, ash in
agriculture and land reclamation; burner balancing; catalyst test facility;
NOx reduction & performance; electrokinetic remediation; multimedia diesel
cleanup at CT; fine particulates and air toxic control; pinch study; fly ash
evaluation; advanced end-use technologies; electroremediation; and bulk
transmission system reliability evaluation.
Westinghouse - Subcontracts for the research and design of components of
nuclear reactors.
MindSpring, and Delta Com - Telecommunication services related to fiber
optics.
Alcoa - Purchase of fiber optic cable.
Bankers Trust Co. (Southern System Master Retirement Trust)-Trustee services
provided by Bankers for Southern Company Master Retirement Trust.
VEBA - Alabama Power - Short-term and Financial Services provided to
Voluntary Employee Benefits Association.
Geothermal Heat Pump Consortium - Marketing services and marketing research.
Oglethorpe Power - Operating and Planning Services (OPS) scheduling fees &
Telecommunication services.
FP&L, FPC, JEA, and City of Tallahassee - Unit Power Sales (UPS) true-up and
scheduling agreements.
Southeastern Electric Reliability Council - Occupancy and other related
services.
Peabody Holdg Co. (Cost Share) - Cost share R&D at the Power Systems
Development Facility (PSDF Project.)
APC Credit Union, Economic Development Partnership, Motorola, Gulf Power
Credit Union - Telecommunication services related to fiber optics.
Energy Insurance Bermuda - Risk Management Information System consulting and
services charges.
Comsys - Computer systems training.
MCI - Maintenance and provisioning of fiber equipment.
North American Electric Reliability Council - Development of Software.
Oak Ridge Laboratory - Marketing Services and Marketing Research.
Reynolds & Reynolds - O&M sublease expense at Inverness building.
GEAC Computer Systems, Philips Electronics, Crawford & Co., GE Capital - O&M
sublease expense at Perimeter Center East building. Morgan Stanley -
Transmission Impact Study.
Nonassociated Labor Accrual - Accounting estimated labor accrual for
non-associate companies.
<PAGE>
<TABLE>
<CAPTION>
23
ANNUAL REPORT OF SOUTHERN COMPANY SERVICES, INC.
For the Year Ended December 31, 1997
(Thousands of Dollars)
SCHEDULE XVI
ANALYSIS OF CHARGES FOR SERVICE
ASSOCIATE AND NONASSOCIATE COMPANIES
INSTRUCTION: Total cost of service will equal for associate and nonassociate
companies the total amount billed under their separate analysis
of billing schedules.
( ) Denotes red figure.
<S> <C> <C> <C>
ASSOCIATE COMPANY CHARGES NONASSOCIATE COMPANY CHARGES TOTAL CHARGES FOR SERVICE
DIRECT INDIRECT DIRECT INDIRECT DIRECT INDIRECT
DESCRIPTION OF ITEMS COST COST TOTAL COST COST TOTAL COST COST TOTAL
- -------------------- -------- ------- ----- -------- -------- ----- ------ -------- -----
920 SALARIES AND WAGES $184,123 $34,641 $218,764 $ 6,477 $ 261 $ 6,738 $190,600 $ 34,902 $225,502
921 OFFICE SUPPLIES & EXPENSES 66,101 9,929 76,030 6,914 14 6,928 73,015 9,943 82,958
922 ADMINISTRATIVE EXP.
TRANSFERRED-CREDIT - - - - - - - - -
923 OUTSIDE SERVICES EMPLOYED 114,430 8,125 122,555 12,819 5 12,824 127,249 8,130 135,379
924 PROPERTY INSURANCE 285 246 531 243 - 243 528 246 774
925 INJURIES AND DAMAGES 15 104 119 - - - 15 104 119
926 EMPLOYEE PENSIONS
& BENEFITS 3,543 19,183 22,726 - 435 435 3,543 19,618 23,161
928 REGULATORY COMMISSION
EXPENSE 588 - 588 - - - 588 - 588
930.1 GENERAL ADVERTISING
EXPENSES - - - - - - - - -
930.2 MISCELLANEOUS GENERAL
EXPENSES 28,641 (12,948) 15,693 2,309 1,538 3,847 30,950 (11,410) 19,540
931 RENTS 37,002 12,769 49,771 95 65 160 37,097 12,834 49,931
932 MAINTENANCE OF STRUCTURES
AND EQUIPMENT 21,953 5,503 27,456 257 53 310 22,210 5,556 27,766
403 DEPRECIATION & AMORTIZATION
EXPENSE 8,405 7,960 16,365 8 98 106 8,413 8,058 16,471
408 TAXES OTHER THAN INCOME
TAXES 3,077 12,501 15,578 1 497 498 3,078 12,998 16,076
409 INCOME TAXES 3 105 108 - - - 3 105 108
410 PROVISION FOR DEFERRED
INCOME TAXES - - - - - - - - -
411 PROVISION FOR DEFERRED
INCOME TAXES CREDIT - - - - - - - - -
411.5 INVESTMENT TAX CREDIT - - - - - - - - -
426.1 DONATIONS 716 598 1,314 - - - 716 598 1,314
------- ------ ------- ------ -------- ------- ------- ------- -------
SUBTOTAL EXPENSES = 468,882 98,716 567,598 29,123 2,966 32,089 498,005 101,682 599,687
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
23A
ANNUAL REPORT OF SOUTHERN COMPANY SERVICES, INC.
For the Year Ended December 31, 1997
(Thousands of Dollars)
SCHEDULE XVI
ANALYSIS OF CHARGES FOR SERVICE
ASSOCIATE AND NONASSOCIATE COMPANIES
<S> <C> <C> <C>
ASSOCIATE COMPANY CHARGES NONASSOCIATE COMPANY CHARGES TOTAL CHARGES FOR SERVICE
DIRECT INDIRECT DIRECT INDIRECT DIRECT INDIRECT
DESCRIPTION OF ITEMS COST COST TOTAL COST COST TOTAL COST COST TOTAL
- -------------------- -------- ----------- ----- -------- ---------- ----- ------ -------- ------
427 INTEREST ON LONG-TERM DEBT - - 5,453 - - 9 - - 5,462
430 INTEREST ON DEBT TO
ASSOCIATE COMPANIES - - 788 - - - - - 788
431 OTHER INTEREST EXPENSE - - 205 - - - - - 205
TOTAL EXPENSES = 468,882 98,716 574,044 29,123 2,966 32,098 498,005 101,682 606,142
421 MISCELLANEOUS GAIN 7,359 - 7,359 - - - 7,359 - 7,359
-------- ------- -------- ------- ------ ------- ------- ------- -------
TOTAL COST OF SERVICE = $476,241 $98,716 $581,403 $29,123 $2,966 $32,098 $505,364 $101,682 $613,501
======== ======= ======== ======= ====== ======= ======== ======== ========
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C>
24
ANNUAL REPORT OF SOUTHERN COMPANY SERVICES, INC.
For the Year Ended December 31, 1997
(Thousands of Dollars)
SCHEDULE XVII
SCHEDULE OF EXPENSE DISTRIBUTION BY
DEPARTMENT OR SERVICE FUNCTION
INSTRUCTION: Indicate each department or service function. (See Instruction 01-3 General Structure of Accounting System: Uniform
System Account)
( ) Denotes red figure.
DEPARTMENT OR SERVICE FUNCTION
Finance Human
Total and Governmental Resources and Information
DESCRIPTION OF ITEMS Amount Engineering Executive Accounting Affairs Administration Resources
920 SALARIES AND WAGES $225,502 $49,130 $ 3,118 $17,504 $ 1,489 $18,631 $ 67,697
921 OFFICE SUPPLIES AND EXPENSES 82,958 6,672 600 3,339 420 6,245 45,805
923 OUTSIDE SERVICES EMPLOYED 135,379 16,720 5,169 7,873 1,193 6,704 63,567
924 PROPERTY INSURANCE 774 67 - 16 1 20 80
925 INJURIES AND DAMAGES 119 27 - 7 - 12 34
926 EMPLOYEE PENSIONS & BENEFITS 23,161 4,672 206 1,645 143 2,113 6,814
928 REGULATORY COMMISSION EXPENSE 588 - - - - - -
930.2 MISCELLANEOUS GENERAL EXPENSES 19,540 586 721 466 490 4,684 8,371
931 RENTS 49,931 2,460 220 912 30 1,518 36,757
932 MAINTENANCE OF STRUCTURES & EQUIP 27,766 1,336 1,851 629 44 881 15,291
403 DEPRECIATION & AMORTIZATION,
EXPENSE 16,471 2,394 163 1,052 207 815 7,146
408 TAXES OTHER THAN INCOME TAXES 16,076 3,658 65 1,137 59 1,339 5,414
409 INCOME TAXES 108 - - 3 - - -
426.1 DONATIONS 1,314 2 116 1 210 14 -
427 INTEREST ON LONG-TERM DEBT 5,462 190 132 830 - 569 2,185
430 INTEREST ON DEBT TO ASSOCIATE CO. 788 85 27 26 3 46 337
431 OTHER INTEREST EXPENSE 205 (9) (12) (1) (2) 4 (12)
-------- ------- ------- ------- ----- ------- -------
TOTAL EXPENSES 606,142 87,990 12,376 35,439 4,287 43,595 259,486
421 MISCELLANEOUS GAIN 7,359 (505) 743 2,127 257 2,617 (1,119)
TOTAL COSTS $613,501 $87,485 $13,119 $37,566 $4,544 $46,212 $258,367
======== ======= ======= ======= ====== ======= ========
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
25
ANNUAL REPORT OF SOUTHERN COMPANY SERVICES, INC.
For the Year Ended December 31, 1997
(Thousands of Dollars)
SCHEDULE XVII
SCHEDULE OF EXPENSE DISTRIBUTION BY
DEPARTMENT OR SERVICE FUNCTION
DEPARTMENT OR SERVICE FUNCTION
<S> <C> <C> <C> <C> <C> <C> <C>
Planning Research and
ACCOUNT Internal Market Research Public Environmental System Administrative External
NUMBER Audit and Support Production Relations Affairs Aircraft and General Affairs
- ------- -------- ---------------- ---------- --------- ------------- -------- ------------ -------
920 $5,312 $ 6,587 $32,787 $ 2,013 $ 7,197 $2,740 $ 8,956 $ 2,341
921 1,027 1,084 4,308 1,741 7,580 818 2,515 804
923 681 5,383 5,864 1,095 15,686 108 3,442 1,894
924 5 7 29 2 249 4 292 2
925 2 3 14 1 4 5 9 1
926 546 653 3,042 205 652 305 1,947 218
928 - 588 - - - - - -
930.2 407 (479) 523 279 194 (282) 3,410 170
931 294 411 1,572 112 261 332 4,918 134
932 90 139 1,101 47 69 4,052 2,109 127
403 113 344 1,904 244 107 1,270 585 127
408 377 472 2,205 137 491 213 380 129
409 - - - - - - 105 -
426.1 - - 6 465 - - 76 424
427 83 182 127 61 (8) (146) 1,123 134
430 6 9 69 8 9 159 - 4
431 4 - (7) (1) 25 (18) 234 -
------ ------- -------- ------ ------- ------ ------- -------
Expenses 8,947 15,383 53,544 6,409 32,516 9,560 30,101 6,509
421 537 924 (207) 385 (186) (412) 1,807 391
TOTAL COSTS $9,484 $16,307 $53,337 $6,794 $32,330 $9,148 $31,908 $6,900
====== ======= ======= ====== ======= ====== ======= ======
( ) Denotes red figure.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
26
ANNUAL REPORT OF SOUTHERN COMPANY SERVICES, INC.
For the Year Ended December 31, 1997
(Thousands of Dollars)
DEPARTMENTAL ANALYSIS OF SALARIES
ACCOUNT 920
DEPARTMENTAL SALARY EXPENSE
<S> <C> <C> <C> <C> <C>
NAME OF DEPARTMENT INCLUDED IN AMOUNTS BILLED TO PERSONNEL
Indicate each department TOTAL PARENT OTHER NON END OF
or service function AMOUNT COMPANY ASSOCIATES ASSOCIATES YEAR
------ ------- ---------- --------- ------
Engineering 49,130 15 46,590 2,525 697
Executive 3,118 505 2,613 - 8
Finance & Accounting 17,504 1,263 15,898 343 176
Governmental Affairs 1,489 18 1,471 - 11
Human Resources & Admin. 18,631 24 18,527 80 241
Information Resources 67,697 70 67,403 224 1,038
Internal Auditing 5,312 243 5,069 - 65
Planning Marketing
Research & Support 6,587 5 6,578 4 52
Production 32,787 40 32,429 318 441
Public Relations 2,013 826 1,187 - 36
Research & Environmental
Affairs 7,197 - 3,882 3,315 90
System Aircraft 2,740 304 2,436 - 43
External Affairs 8,956 544 8,412 - 48
Administrative & General 2,341 470 1,942 (71) -
------- ----- ------- ----- -----
TOTAL 225,502 4,327 214,437 6,738 2,946
======= ===== ======= ===== =====
</TABLE>
( ) Denotes red figure.
<PAGE>
27
ANNUAL REPORT OF SOUTHERN COMPANY SERVICES, INC.
For the Year Ended December 31, 1997
(Thousands of Dollars)
OUTSIDE SERVICES EMPLOYED
ACCOUNT 923
INSTRUCTIONS: Provide a breakdown by subaccount of outside services
employed. If the aggregate amounts paid to any one
payee and included within one subaccount is less than
$100,000, only the aggregate number and amount of all
such payments included within the subaccount need be
shown. Provide a subtotal for each type of service.
RELATIONSHIP
"A"=ASSOCIATE
DESCRIPTION OF "NA"= NON
FROM WHOM PURCHASED LARGEST INVOICE ASSOCIATE AMOUNT
Legal Services
Balch & Bingham Legal Services NA 1,006
Edison Electric Institute Industry Initiative NA 293
Hunton & Williams Legal Services NA 175
King & Spalding Legal Services NA 117
McDermott, Will & Emery Legal Services NA 332
Troutman, Sanders Legal Services NA 1,930
Twenty-Two Other Items Less
than $100,000 NA 296
------
4,149
------
Auditing Service
Arthur Andersen LLP Audit Services NA 1,214
Two Other Items Less
than $100,000 NA 6
-----
1,220
-----
(Continued on Page 27A)
<PAGE>
27A
ANNUAL REPORT OF SOUTHERN COMPANY SERVICES, INC.
For the Year Ended December 31, 1997
(Thousands of Dollars)
OUTSIDE SERVICES EMPLOYED
ACCOUNT 923
INSTRUCTIONS: Provide a breakdown by subaccount of outside services
employed. If the aggregate amounts paid to any one
payee and included within one subaccount is less than
$100,000, only the aggregate number and amount of all
such payments included within the subaccount need be
shown. Provide a subtotal for each type of service.
RELATIONSHIP
"A"=ASSOCIATE
DESCRIPTION OF "NA"= NON
FROM WHOM PURCHASED LARGEST INVOICE ASSOCIATE AMOUNT
Engineering Services
ABB C-E Services, Inc. Engineering Services NA 183
ADECCO Services Engineering, Personnel Serv. NA 267
The Babcock & Wilcox Co. Contract Engineering Serv. NA 125
BE&K Engineering Co. Contract Engineering Serv. NA 6,562
Bechtel Power Corp. Contract Engineers-Constructors NA 5,879
Comprehensive Computer
Consulting, Inc. Contract Programming NA 239
Fossil Energy Research Corp. Contract Engineering Serv. NA 159
Foster Wheeler USA Corp. Power Systems Development-DOE NA 1,453
The M.W. Kellogg Co. Contract Engineering Serv. NA 440
Shook & Fletcher
Insulation Co. Power Systems Development-DOE NA 435
Southern Nuclear Oper. Co. Contract Engineering Serv. A 117
Southern Research Institute Power Systems Development-DOE NA 653
Utilities International,Inc. Contract Engineering Serv. NA 141
Westinghouse Electric Corp. Contract Engineering Serv. NA 131
Eighty-Four Other Items
Less than $100,000 (266)
------
16,518
------
(Continued on Page 27B)
<PAGE>
27B
ANNUAL REPORT OF SOUTHERN COMPANY SERVICES, INC.
For the Year Ended December 31, 1997
(Thousands of Dollars)
OUTSIDE SERVICES EMPLOYED
ACCOUNT 923
INSTRUCTIONS: Provide a breakdown by subaccount of outside services
employed. If the aggregate amounts paid to any one
payee and included within one subaccount is less than
$100,000, only the aggregate number and amount of all
such payments included within the subaccount need be
shown. Provide a subtotal for each type of service.
RELATIONSHIP
"A"=ASSOCIATE
DESCRIPTION OF "NA"= NON
FROM WHOM PURCHASED LARGEST INVOICE ASSOCIATE AMOUNT
Other Services
Acorn Communications, Inc. Audio Visual Production Svcs NA 998
Acxiom Corp. Market Research Services NA 151
Accountants on Call Contract Personnel Serv. NA 112
Adecco Services On-Site Clerical Serv. NA 2,648
ADP Proxy Services Mailing Services NA 212
Advanced Strategies, Inc. Consulting & Facilitation Svcs NA 187
Aerotek, Inc. Radio Services NA 141
Alabama CAD/CAM Software Programming NA 125
Alabama Power Company Contract Services A 10,169
Alabama Staff Contract Personnel Serv. NA 147
Alliance Systems, Inc. System Design Services NA 378
America's Registry, Inc. Systems Development NA 1,009
American Process, Inc. Industry Studies NA 150
Andersen Consulting LLP Consulting Services NA 31,297
Ann Randazzo Consulting Services NA 105
Aon Consulting Consulting Services NA 214
Application Tech. Serv. Consulting Services NA 725
Arko Executive Serv., Inc. Security Services NA 356
Arthur Andersen LLP Consulting Services NA 620
Barbour, Griffith & Rogers Consulting Services NA 294
Bowne of Atlanta, Inc. Mail Services NA 215
Brannon & Tully, Inc. Consulting Services NA 144
CC Pace Resources Consulting Services NA 528
Caddell Construction Co. Erection Services NA 3,171
Cauthen & Associates Consulting Services NA 150
Cheyenne Software, Inc. Software Upgrade Services NA 251
Christensen Associates Consulting Services NA 143
Citicorp Securities, Inc. Remarketing Services NA 213
Comms People, Inc. Contract Services NA 260
Comprehensive Computer
Consulting Contract Consulting NA 7,354
Comsys, Inc. Programming Services NA 805
Corporate Reports, Inc. Publication Services NA 101
Custom Contract Programming Contract Programming NA 108
(Continued on page 27C)
<PAGE>
27C
ANNUAL REPORT OF SOUTHERN COMPANY SERVICES, INC.
For the Year Ended December 31, 1997
(Thousands of Dollars)
OUTSIDE SERVICES EMPLOYED
ACCOUNT 923
INSTRUCTIONS: Provide a breakdown by subaccount of outside services
employed. If the aggregate amounts paid to any one
payee and included within one subaccount is less than
$100,000, only the aggregate number and amount of all
such payments included within the subaccount need be
shown. Provide a subtotal for each type of service.
RELATIONSHIP
"A"=ASSOCIATE
DESCRIPTION OF "NA"= NON
FROM WHOM PURCHASED LARGEST INVOICE ASSOCIATE AMOUNT
Dataplex Corporation Microfiche Production NA 469
Docucorp International Programming Services NA 314
Drake Beam Morin, Inc. Personnel Services NA 170
Dunn & Bradstreet Info. Marketing Services NA 285
Dun's Marketing Services Marketing Services NA 267
Elrick & Lavidge, Inc. Survey Services NA 395
Electric Pwr Research Inst Industry Studies NA 1,628
Ernst & Young Consulting Services NA 177
Ferguson Harbour Inc. Soil Remediation Services NA 348
First Union National Bank Banking Services NA 480
Form Maker Software, Inc. Software Services NA 1,278
Georgia Power Company Project Support A 5,855
Godwins Booke & Dickenson Personnel Services NA 124
Gulf Power Company Project Support A 1,190
HBL Computer Resources, Inc. Contract Programming NA 159
Henwood Energy Serv, Inc. Marketing Services NA 165
Herman Smith Inspect. Serv. Tower Maintenance Services NA 141
Hewitt Associates Personnel Services NA 2,543
Hogan & Hartson Consulting Services NA 124
Installshield Software Corp. Software Upgrade Services NA 208
Integrated Systems Solutions Consulting Services NA 1,006
Intelligent Mgt. Solutions Consulting Services NA 100
International Bus. Machine Consulting Services NA 1,824
J. P. Morgan Securities,Inc. Financial Services NA 208
James W. Rock Consulting Services NA 101
Kingry Trucking Co. Trucking Services NA 102
Lamalie Amrop International Consulting Services NA 180
Lee Hecht Harrison, Inc. Personnel Services NA 131
Lexis-Nexis Outside Computer Services NA 176
Magi-Ware, Inc. Programming Services NA 127
Mark R. Gearhart Consulting Services NA 181
Marketing & Planning Sys System Development NA 1,582
Marketing Workshop Survey Services NA 164
Maxim Group Programming Services NA 323
(Continued on page 27D)
<PAGE>
27D
ANNUAL REPORT OF SOUTHERN COMPANY SERVICES, INC.
For the Year Ended December 31, 1997
(Thousands of Dollars)
OUTSIDE SERVICES EMPLOYED
ACCOUNT 923
INSTRUCTIONS: Provide a breakdown by subaccount of outside services
employed. If the aggregate amounts paid to any one
payee and included within one subaccount is less than
$100,000, only the aggregate number and amount of all
such payments included within the subaccount need be
shown. Provide a subtotal for each type of service.
RELATIONSHIP
"A"=ASSOCIATE
DESCRIPTION OF "NA"= NON
FROM WHOM PURCHASED LARGEST INVOICE ASSOCIATE AMOUNT
Merrill Lynch Asset
Management Financial Services NA 1,042
Merrill Lynch Pierce,
Fenner & Smith Financial Services NA 353
Merrill Lynch Trust Co. Financial Services NA 485
Microsoft Corp. Technology Planning Services NA 215
Microsoft Enterprise Serv Consulting Resources NA 397
Mississippi Power Co. Project Support A 467
Mississippi State University Consulting Services NA 123
New York Stock Exchange Financial Services NA 418
NFO Research, Inc. Research Studies NA 164
Novell, Inc. Consulting Services NA 134
OSI Software, Inc. Consulting Services NA 113
Paul Griffin & Assoc. Building Maintenance NA 267
Platinum Technology Software Consulting Services NA 121
Power Energy Services, Inc. Contract Engineering NA 175
Regional Economic
Research Consulting Services NA 151
Savannah Electric & Power Project Support A 406
Sawyer & Associates, Inc. Contract Programming NA 351
Scott, Madden & Assoc., Inc. Personnel Services NA 367
Seek Consulting Group, Inc. Consulting Services NA 132
Smith James Group, Inc. Executive Search Services NA 113
Software Spectrum Software Upgrade Services NA 110
Solutions by Design Software Design Services NA 305
Southern Development &
Investment Group Project Support A 259
Southern Nuclear Project Support A 214
Southern Research Institute Consulting Services NA 217
Springhill Regional Landfill Soil Remediation Services NA 159
Sprint Paranet, Inc. Contract Programming NA 941
Stern Stewart Management Financial Strategy Services NA 751
Sunbelt Builders, Inc. Erection Services NA 692
Sunbelt Resources, Inc. Soil Remediation Services NA 501
Synet Services Corp. Contract Programming NA 934
System Architechs, Inc. Consulting Services NA 188
Systems Applications Intl Consulting Services NA 511
(Continued on page 27E)
<PAGE>
27E
ANNUAL REPORT OF SOUTHERN COMPANY SERVICES, INC.
For the Year Ended December 31, 1997
(Thousands of Dollars)
OUTSIDE SERVICES EMPLOYED
ACCOUNT 923
INSTRUCTIONS: Provide a breakdown by subaccount of outside services
employed. If the aggregate amounts paid to any one
payee and included within one subaccount is less than
$100,000, only the aggregate number and amount of all
such payments included within the subaccount need be
shown. Provide a subtotal for each type of service.
RELATIONSHIP
"A"=ASSOCIATE
DESCRIPTION OF "NA"= NON
FROM WHOM PURCHASED LARGEST INVOICE ASSOCIATE AMOUNT
TATA Consultancy Services Systems Support NA 1,224
TCE, Inc. Soil Remediation Services NA 118
The Hawthorn Group Survey Services NA 709
The Indus Group, Inc. Software Evaluation NA 395
The Richmark Group, Inc. Power Quality Study NA 181
The Smith-Free Group Consulting Services NA 144
Toolbox Design, Inc. Web Site Development NA 627
Towers Perrin Survey Services NA 520
UBICS, Inc. Consulting Services NA 186
UGA Research Foundation Environmental Studies NA 174
Wells Fargo Guard Services Security Services NA 534
Xerox Corporation Facilities Management NA 721
1,004 Other Items Less Than $100,000 NA 10,177
-------
113,492
-------
135,379
=======
<PAGE>
28
ANNUAL REPORT OF SOUTHERN COMPANY SERVICES, INC.
For the Year Ended December 31, 1997
(Thousands of Dollars)
EMPLOYEE PENSIONS AND BENEFITS
ACCOUNT 926
INSTRUCTIONS: Provide a listing of each pension plan and benefit program
provided by the service company. Such listing should be
limited to $25,000.
DESCRIPTION AMOUNT
Pensions $ (2,653)
Early Retirement Benefits 697
Flexible Credit Benefits - Company Contributions 10,776
Post Retirement Medical Benefits 5,051
Post Retirement Life Benefits 2,093
Educational Assistance Plan 149
Minority Scholarship Program 36
Employee Savings Plan/ESOP - Company Contribution 6,467
Employee Health and Physical Examinations 68
Post Employment Benefits (27)
Other (Employees' Professional Fees and
Other Employee Fringe Benefits) 504
-------
TOTAL $23,161
=======
<PAGE>
29
ANNUAL REPORT OF SOUTHERN COMPANY SERVICES, INC.
For the Year Ended December 31, 1997
(Thousands of Dollars)
GENERAL ADVERTISING EXPENSES
ACCOUNT 930.1
INSTRUCTIONS: Provide a listing of the amount included in Account
930.1, "General Advertising Expenses", classifying
the items according to the nature of the advertising
and as defined in the account definition. If a
particular class includes an amount in excess of
$3,000 applicable to a single payee, show separately
the name of the payee and the aggregate amount
applicable thereto.
DESCRIPTION NAME OF PAYEE AMOUNT
NOT APPLICABLE
<PAGE>
30
ANNUAL REPORT OF SOUTHERN COMPANY SERVICES, INC.
For the Year Ended December 31, 1997
(Thousands of Dollars)
MISCELLANEOUS GENERAL EXPENSES
ACCOUNT 930.2
INSTRUCTIONS: Provide a list of the amount included in Account 930.2,
" Miscellaneous General Expenses", classifying the items according
to their nature. Payments and expenses permitted by Section 321
(b)(2) of the Federal Election Campaign Act, as amended by
Public Law 94-284 in 1976 (2 U.S.C.S. 441 (b) (2) shall be
separately classified.
DESCRIPTION AMOUNT
Employee Training 4,642
Expenses of SCS Employees Located at Operating Co. 9,928
Meals, Lodging, & Incidentals Related to
Meetings & Conferences 3,108
Dues and Memberships 1,487
Recruiting, Interviewing, & Placement
of Employees 334
Corporate Moving Expenses 599
Other General Expenses (558)
------
TOTAL 19,540
======
<PAGE>
31
ANNUAL REPORT OF SOUTHERN COMPANY SERVICES, INC.
For the Year Ended December 31, 1997
(Thousands of Dollars)
RENTS
ACCOUNT 931
INSTRUCTIONS: Provide a listing of the amount included in Account 931, "Rents",
classifying such expenses by major groupings of property, as
defined in the account definition of the Uniform System of
Accounts.
DESCRIPTION AMOUNT
Office Rents $16,910
Computer and Other Data Processing Equipment Rental 27,582
Software Rental 2,873
All Other (Automobile, Office Furniture & Equipment,
Miscellaneous Storage, Equipment Rental & Aircraft) 2,566
-------
TOTAL $49,931
=======
<PAGE>
32
ANNUAL REPORT OF SOUTHERN COMPANY SERVICES, INC.
For the Year Ended December 31, 1997
(Thousands of Dollars)
TAXES OTHER THAN INCOME TAXES
ACCOUNT 408
INSTRUCTIONS: Provide an analysis of Account 408, "Taxes Other Than Income
Taxes". Separate the analysis into two groups: (1) other than
U.S. Government taxes, and (2) U.S. Government taxes. Specify
each of the various kinds of taxes and show the amounts
thereof. Provide a subtotal for each class of tax.
KIND OF TAX AMOUNT
Other Than U.S. Government Taxes
State Unemployment 100
City/Business License Tax 4
Property and Other City and State 1,102
-------
Subtotal - Other 1,206
-------
U.S. Government Taxes
Federal Insurance Contributions Act 14,674
Federal Unemployment 196
-------
Subtotal - U.S. Government 14,870
-------
TOTAL 16,076
======
<PAGE>
33
<TABLE>
<CAPTION>
ANNUAL REPORT OF SOUTHERN COMPANY SERVICES, INC.
For the Year Ended December 31, 1997
(Thousands of Dollars)
DONATIONS
ACCOUNT 426.1
INSTRUCTIONS: Provide a listing of the amount included in Account 426.1,
"Donations", classifying such expenses by its purpose. The
aggregate number and amount of all items of less than $3,000
may be shown in lieu of details.
<S> <C> <C>
NAME OF RECIPIENT PURPOSE OF DONATION AMOUNT
100 Black Men of Atlanta, Inc. Civic & Charitable 3
American Heart Association Civic & Charitable 9
American Jewish Committee Civic & Charitable 5
Arts Festival of Atlanta Civic & Charitable 25
Atlanta 150 Committee, Inc. Civic & Charitable 5
Atlanta Chamber of Commerce Civic & Charitable 5
Auburn University Foundation Educational Matching 6
BBA Campaign Fund Civic & Charitable 25
BCDCA - WF `97 Civic & Charitable 5
Birmingham Area Chamber of Commerce Civic & Charitable 11
Boy Scouts of America Civic & Charitable 8
Cahaba Girl Scouts Civic & Charitable 17
Callanwolde Fine Arts Center Civic & Charitable 5
Carter/Mondale Alumni Association Civic & Charitable 35
Congressional Black Caucus Foundation Civic & Charitable 3
Egleston Children's Hospital Civic & Charitable 15
Eisenhower Center Building Fund Support of Program 40
Fort Bend CASA Civic & Charitable 3
Foundation for Student Communications Civic & Charitable 5
Georgia Institute of Technology Educational Matching 17
Georgia Tech Foundation, Inc. Civic & Charitable 3
Georgia Youth Science & Technology
Center, Zoo Atlanta Civic & Charitable 15
Global Climate Coalition Support of Program 50
Global Climate Information Project Civic & Charitable 200
Houston Grand Opera Civic & Charitable 15
Junior Achievement of Greater Birmingham Civic & Charitable 7
Keep America Beautiful, Inc. Civic & Charitable 6
Kennedy Center Civic & Charitable 5
Mara Reid Rogers Civic & Charitable 3
March of Dimes Civic & Charitable 8
National Nutrition Service Civic & Charitable 4
National Race for the Cure Civic & Charitable 5
National Republican Comm. Building Fund Support of Program 15
Opportunity XXI Civic & Charitable 10
PUHCA Now Coalition Support of Program 45
Republican Senate/House Dinner
Building Fund Support of Program 20
Resources for the Future Civic & Charitable 10
</TABLE>
<PAGE>
33A
ANNUAL REPORT OF SOUTHERN COMPANY SERVICES, INC.
For the Year Ended December 31, 1997
(Thousands of Dollars)
DONATIONS
ACCOUNT 426.1
INSTRUCTIONS: Provide a listing of the amount included in Account 426.1,
"Donations", classifying such expenses by its purpose. The
aggregate number and amount of all items of less than $3,000
may be shown in lieu of details.
NAME OF RECIPIENT PURPOSE OF DONATION AMOUNT
Smithsonian Institute Civic & Charitable 17
Southern Governors' Association Support of Program 5
Southern Growth Civic & Charitable 5
Southern States Energy Board Support of Program 3
State Legislative Leaders Foundation Civic & Charitable 25
Taste of the South 1995 Support of Program 10
The Atlanta Ballet Civic & Charitable 5
The Carter Center Civic & Charitable 25
The Jefferson Islands Club Support of Program 5
The Progress & Freedom Foundation Civic & Charitable 50
Trustees of the University Pennsylvania Civic & Charitable 10
TVA Watch Group Civic & Charitable 117
U.S. Department of Education Civic & Charitable 3
United States Energy Association Support of Program 3
United Way of Central Alabama, Inc. Civic & Charitable 103
United Way of Metropolitan Atlanta Civic & Charitable 90
University of Alabama Educational Matching 11
University of Alabama at Birmingham Civic & Charitable 6
Utility Business Education Coalition Civic & Charitable 5
Virginia Dwyer Memorial Scholarship Civic & Charitable 5
Washington Legal Foundation Civic & Charitable 5
Woodruff Arts Center Civic & Charitable 10
83 Other Items (Less than $3,000) Civic & Charitable 96
79 Other Items (Less than $3,000) Employee Matching Gift 32
-----
TOTAL 1,314
=====
<PAGE>
34
ANNUAL REPORT OF SOUTHERN COMPANY SERVICES, INC.
For the Year Ended December 31, 1997
(Thousands of Dollars)
OTHER DEDUCTIONS
ACCOUNT 426.5
INSTRUCTIONS: Provide a listing of the amount included in Account 426.5,"Other
Deductions", classifying such expenses according to their nature.
DESCRIPTION NAME OF PAYEE AMOUNT
NOT APPLICABLE
<PAGE>
35
ANNUAL REPORT OF SOUTHERN COMPANY SERVICES, INC.
For the Year Ended December 31, 1997
(Thousands of Dollars)
SCHEDULE XVIII
NOTES TO STATEMENT OF INCOME
INSTRUCTIONS: The space below is provided for important notes
regarding the statement of income or any account
thereof. Furnish particulars as to any significant
increase in services rendered or expenses incurred
during the year. Notes relating to financial
statements shown elsewhere in this report may be
indicated here by reference.
See Notes to Financial Statements on Pages 19 - 19G.
<PAGE>
36
ANNUAL REPORT OF SOUTHERN COMPANY SERVICES, INC.
For the Year Ended December 31, 1997
(Thousands of Dollars)
SCHEDULE XIX
FINANCIAL DATA SCHEDULE
Net Service Company Property 97,487
Total Investments 2,877
Total Current and Accrued Assets 203,305
Total Deferred Debits 5,777
Balancing Amount for Total Assets and Other Debits -
Total Assets and Other Debits 309,446
Total Proprietary Capital 875
Total Long-Term Debt 36,021
Notes Payable 2,300
Notes Payable to Associate Companies 6,400
Balancing Amount for Total Current and Accrued
Liabilities 188,403
Total Deferred Credits 75,447
Accumulated Deferred Income Tax Credits -
Total Liabilities and Proprietary Capital 309,446
Services Rendered to Associate Companies 581,403
Services Rendered to Nonassociate Companies 32,098
Miscellaneous Income or Loss (7,359)
Total Income 606,142
Salaries and Wages 225,502
Employee Pensions and Benefits 23,161
Balancing Amount for Total Expenses 357,479
Total Expenses 606,142
Net Income (Loss) -
Total Cost of Service (Direct Costs) 505,364
Total Cost of Service (Indirect Costs) 101,682
Total Cost of Service (Total) 613,501
Number of Personnel End of Year 2,946
( ) Denotes red figure.
<PAGE>
37
<TABLE>
<CAPTION>
ANNUAL REPORT OF SOUTHERN COMPANY SERVICES, INC.
ORGANIZATION CHART
Chairman, President & CEO
Southern Company
<S> <C> <C> <C> <C> <C> <C>
President & CEO
Southern Co. Services
VP -Human Sr. VP- Director Exec. VP- Sr. VP &
President Sr. VP- Resources(1) External Internal Finance,(2) General
Fossil/Hydro Group Transmission Affairs(2) Auditing(1) Treasurer, Counsel(2)
Planning & Operations & CFO
Exec. VP Sr. VP- VP Corporate VP-Financial
Engineering Chief Information Communications(1) Planning
Officer
VP Research & VP-Governmental Treasurer
Environmental VP Marketing Affairs
Affairs & New Business Director
Development VP-Environmental Trust
VP Procurement Policy Finance
& Materials VP-Comptroller
& CFO VP-Secretary Director
VP Fuel & House Risk
Services Counsel Management
VP Southern
Wholesale Energy
VPs Senior
Production Officers
(5 positions)
(1) Report to the President & CEO of Southern Company Services for SCS related matters only.
(2) Direct reports to Chairman, President & CEO of Southern Company.
</TABLE>
<PAGE>
38
ANNUAL REPORT OF SOUTHERN COMPANY SERVICES, INC.
For the Year Ended December 31, 1997
METHODS OF ALLOCATION
The allocation statistics for each of the methods described below were
calculated using a three-year rolling average with a one-year lag in
implementation; i.e., the 1997 ratios used the average annual statistics
for the years 1993, 1994, and 1995. As of January 1, 1998, SCS began using
statistics based on a single year rather than a three-year rolling
average. The one-year lag feature is being retained; therefore, 1998
allocations are based on 1996 statistics.
1. Annual Operating Area Territorial Load Basis
Each Client Operating Company, other than Southern Electric
Generating Company (SEGCO), will be charged that percentage of the
total Service Company charges to be distributed by this method which
its annual operating area territorial load is of the total annual
operating area territorial load of the Southern electric system,
defined as total energy generated plus energy received minus energy
deliveried.
2. Customer Basis
Each Client Operating Company, other than SEGCO, will be charged
that percentage of the total Service Company charges to be
distributed by this method which its average number of customers is
to the total average number of customers of the Southern electric
system, other than SEGCO.
3. Employee Basis
Each Client Company, other than SEGCO, will be charged that
percentage of the total Service Company charges to be distributed by
this method which its average number of employees is of the total
average number of employees of all Client Companies, other than
SEGCO. Employee groups not benefiting from the services are not
included in the allocation.
4. Direct Billing Basis
Each Client Company will be charged that percentage of the total
Service Company charges to be distributed by this method which its
applicable Service Company direct billings is to the total Service
Company direct billings.
<PAGE>
38A
ANNUAL REPORT OF SOUTHERN COMPANY SERVICES, INC.
For the Year Ended December 31, 1997
METHODS OF ALLOCATION
5. Financial Basis
Each Client Company will be charged that percentage of the total
Service Company charges to be distributed by this method which its
average of the percentages of net fixed assets, operating expenses
and operating revenue sources is to the total Client Company net
fixed assets, operating expenses and operating revenue of the
Southern electric system.
6. Fossil Fuel Generation Basis
Each Client Operating Company will be charged that percentage of the
total Service Company charges to be distributed by this method which
its generation from fossil fuel sources is to the total generation
from fossil fuel sources of the Southern electric system.
7. Fossil and Hydro Capacity Basis
Each Client Company will be charged the factor determined by
dividing the total fossil and hydro generating capacity for each
company, including capacity attributed to joint owners of system
plants, by the total fossil and hydro generating capacity for the
Southern electric system.
8. Insurance Premium Basis
Each Client Company will be charged that percentage of the total
Service Company charges to be distributed by this method which its
applicable insurance premiums is to the total applicable insurance
premiums of the Southern electric system.
9. Net Fixed Assets Basis
Each Client Company will be charged that percentage of the total
Service Company charges to be distributed by this method which its
net fixed assets is to the total net fixed assets of the Southern
electric system. This method was not used in 1997.
10. Number of Nuclear Plants
Each Client Company will be charged that percentage of the total
Service Company charges to be distributed by this method which its
number of nuclear plants is to the total nuclear plants. This method
was not used in 1997.
11. Number of Vehicles Basis
Each Client Company will be charged that percentage of the total
Service Company charges to be distributed by this method which its
number of vehicles is to the total vehicles for the Southern
electric system.
<PAGE>
38B
ANNUAL REPORT OF SOUTHERN COMPANY SERVICES, INC.
For the Year Ended December 31, 1997
METHODS OF ALLOCATION
12. Nuclear Plant Capacity Basis
Each Client Company will be charged that percentage of the total
Service Company charges to be distributed by this method which its
name plate kilowatt capacity of nuclear plants is to the total
kilowatt capacity of all nuclear plants. This method was not used in
1997.
13. Nuclear Plant Generation Basis
Each Client Company will be charged that percentage of the total
Service Company charges to be distributed by this method which its
net generation of nuclear plants is to the total net generation of
all nuclear plants. This method was not used in 1997.
14. Preferred Stockholder Basis
Each Client Company will be charged that percentage of the total
Service Company charges to be distributed by this method which its
number of preferred stockholders is to the total preferred
stockholders for the Southern electric system. This method was not
used in 1997.
15. Salary Basis
Each client company will be charged that percentage of the total
service company charges to be distributed by this method which its
amount of historical labor is to the total historical labor of all
applicable companies. In addition, overhead charges are allocated to
the applicable companies based on actual labor charges in the
current period.
16. Southern System Basis (Capitalization)
Each Client Company will be charged for the charges to be
distributed by this method in the ratio of such Client Company's
total capitalization to the sum of the total capitalization of all
Client Operating Companies.
17. System Aircraft
Passengers on system aircraft are charged a rate based on
comparable, non-discounted commercial fares for the itinerary
flown. Residual expenses not billed to client companies through the
commercial fares are allocated to all associate companies as an
availability fee based on the number of executives at each company.
<PAGE>
39
ANNUAL REPORT OF SOUTHERN COMPANY SERVICES, INC.
For the Year Ended December 31, 1997
ANNUAL STATEMENT OF COMPENSATION FOR USE OF CAPITAL BILLED
The following annual statement was supplied to each associate client company
regarding interest billed for compensation of equity capital and borrowed
capital in 1997:
Pursuant to the amended Uniform System of Accounts for Mutual and Subsidiary
Service Companies implemented in January 1980, Southern Company Services is
required to submit an annual statement to its associate client companies stating
the amount and calculation of interest billed for compensation of equity capital
and borrowed capital. Southern Company Services does not bill its associate
client companies for compensation of equity capital.
In 1997, Southern Company Services initiated short-term borrowings exclusively
from The Southern Company; other outside banking institutions were not used. The
interest rates on these borrowings ranged from 5.505% to 5.924%. Interest in the
amount of $788,379.35 was accrued on The Southern Company and was billed to the
client companies. The interest was distributed to each company either on the
appropriate fixed percentage allocation basis or on the salary allocation basis
in accordance with the SEC orders and our service contracts.
In addition, as of December 31, 1997, Southern Company Services had long-term
debt outstanding from various institutions in the amounts of $38,320,592.29. The
interest rates on these borrowings ranged from 4.94% to 13.0%. Interest of
$5,666,758.03 was accrued and billed to the client companies. The interest was
distributed to each company either on the appropriate fixed percentage
allocation basis or on the salary allocation basis in accordance with the SEC
orders and service contracts.
The interest on total service company indebtedness was billed to the associate
and nonassociate companies as follows:
The Southern Company $ 220,878.53
Alabama Power Company 1,525,031.10
Georgia Power Company 2,889,917.61
Gulf Power Company 373,569.03
Mississippi Power Company 325,012.03
Savannah Electric & Power Company 157,650.77
Southern Electric Generating Company 7,006.00
Southern Energy, Inc. 205,626.03
Southern Nuclear Operating Company 422,945.64
Southern Development & Investment
Group, Inc.132,940.28
Southern Communications Services, Inc. 177,511.40
Southern Electric Railroad Company 1,960.21
Southern Telecommunications Holding Co. 6,106.61
Southern Information Holding Co. 108.23
Nonassociate 8,873.91
-------------
$6,455,137.38
=============
<PAGE>
40
ANNUAL REPORT OF SOUTHERN COMPANY SERVICES, INC.
For the Year Ended December 31, 1997
SIGNATURE CLAUSE
Pursuant to the requirements of the Public
Utility Holding Company Act of 1935 and the rules and
regulations of the Securities and Exchange Commission
issued thereunder, the undersigned company has duly
caused this report to be signed on its behalf by the
undersigned officer thereunto duly authorized.
Southern Company Services, Inc.
(Name of Reporting Company)
By:
(Signature of Signing Officer)
/s/ W. Dean Hudson
W. Dean Hudson, Vice President, Comptroller
and Chief Financial Officer
(Printed Name and Title of Signing Officer)
Date: April 29, 1998
<PAGE>
