Form U-13-60
Mutual and Subsidiary Service Companies
Revised February 7, 1980
ANNUAL REPORT
For The Period
Beginning January 1, 1998 and Ending December 31, 1998
--------------- -----------------
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:
Senior Vice 241 Ralph McGill Blvd., NE
W. Dean Hudson Pres.,Comptroller Atlanta, Georgia 30308-3374
(Name) and Chief (Address)
Financial 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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2
<S> <C> <C>
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
</TABLE>
<PAGE>
<TABLE>
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<S> <C> <C>
3
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
---------------------
</TABLE>
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4
<TABLE>
<CAPTION>
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.
<S> <C>
ACCOUNT ASSETS AND OTHER DEBITS AS OF DECEMBER 31
- ------- ----------------------- --------------------
CURRENT PRIOR
------- -----
SERVICE COMPANY PROPERTY
------------------------
101 Service company property (Schedule II) 250,657 209,657
107 Construction work in progress (Schedule II) 98 23,106
------- -------
Total Property 250,755 232,763
------- -------
108 Less accumulated provision for depreciation
and amortization of service company
property (Schedule III) 141,287 135,276
------- -------
Net Service Company Property 109,468 97,487
------- -------
INVESTMENTS
-----------
123 Investments in associate companies (Schedule IV) - -
124 Other investments (Schedule IV) 2,354 2,877
------- -------
Total Investments 2,354 2,877
------- -------
CURRENT AND ACCRUED ASSETS
--------------------------
131 Cash - -
134 Special deposits - -
135 Working funds 4 5
136 Temporary cash investments (Schedule IV) 1,100 -
141 Notes receivable - -
143 Accounts receivable 28,762 41,749
146 Accounts receivable from associate
companies (Schedule V) 144,467 155,207
152 Fuel stock expenses undistributed (Schedule VI) - -
154 Materials and supplies 2,414 2,116
163 Stores expense undistributed (Schedule VII) - -
165 Prepayments 8,539 4,228
174 Miscellaneous current and accrued assets
(Schedule VIII) 81 -
------- -------
Total Current and Accrued Assets 185,367 203,305
------- -------
DEFERRED DEBITS
---------------
181 Unamortized debt expense - -
184 Clearing accounts 166 135
186 Miscellaneous deferred debits (Schedule IX) 15,306 5,642
188 Research, development, or demonstration
expenditures (Schedule X) - -
190 Accumulated deferred income taxes - -
------- -------
Total Deferred Debits 15,472 5,777
------- -------
TOTAL ASSETS AND OTHER DEBITS 312,661 309,446
======= =======
</TABLE>
<PAGE>
<TABLE>
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5
ANNUAL REPORT OF SOUTHERN COMPANY SERVICES, INC.
------------------------------
(Thousands of Dollars)
SCHEDULE I - COMPARATIVE BALANCE SHEET
--------------------------------------
<S> <C>
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) 33,295 36,021
225 Unamortized premium on long-term debt - -
226 Unamortized discount on long-term debt-debit - -
------- -------
Total Long-Term Debt 33,295 36,021
------- -------
CURRENT AND ACCRUED LIABILITIES
-------------------------------
231 Notes payable 2,726 2,300
232 Accounts payable 68,808 45,478
233 Notes payable to associated companies
(Schedule XIII) - 6,400
234 Accounts payable to associate companies
(Schedule XIII) 32,754 43,384
236 Taxes accrued 1,103 5,275
237 Interest accrued - 3
238 Dividends declared - -
241 Tax collections payable 1,850 12,903
242 Miscellaneous current and accrued
liabilities (Schedule XIII) 84,716 81,360
------- -------
Total Current and Accrued Liabilities 191,957 197,103
------- -------
DEFERRED CREDITS
----------------
253 Other deferred credits 86,534 75,447
255 Accumulated deferred investment tax credits - -
------- -------
Total Deferred Credits 86,534 75,447
------- -------
282 ACCUMULATED DEFERRED INCOME TAXES - -
--------------------------------- ------- -------
TOTAL LIABILITIES AND PROPRIETARY
CAPITAL 312,661 309,446
======= =======
</TABLE>
<PAGE>
6
<TABLE>
<CAPTION>
ANNUAL REPORT OF SOUTHERN COMPANY SERVICES, INC.
-------------------------------
For the Year Ended December 31, 1998
-----------------
(Thousands of Dollars)
SCHEDULE II
-----------
SERVICE COMPANY PROPERTY
-------------------------
<S> <C> <C> <C> <C> <C>
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 42,165 - - - 42,165
306 LEASEHOLD
IMPROVEMENTS 7,076 1,836 (57) - 8,855
307 EQUIPMENT 2/ 83,541 24,274 (6,691) - 101,124
-
308 OFFICE FURNITURE
AND EQUIPMENT 2/ 28,159 2,091 (2,179) - 28,071
-
309 AUTOMOBILES, OTHER
VEHICLES AND
RELATED GARAGE
EQUIPMENT 2/ 803 45 (67) - 781
-
310 AIRCRAFT AND
AIRPORT EQUIPMENT 2/ 27,855 - (276) - 27,579
-
311 OTHER SERVICE COMPANY
PROPERTY 2/ 3/ 20,058 23,430 (1,406) - 42,082
- - ------- ------- -------- ------- -------
SUB-TOTAL 209,657 51,676 (10,676) - 250,657
------- ------- -------- ------- -------
107 CONSTRUCTION WORK
IN PROGRESS 4/ 23,106 98 - (23,106) 98
- ------- ------- ------- ------- -------
TOTAL 232,763 51,774 (10,676) (23,106) 250,755
======= ======= ======== ======= =======
1/ PROVIDE AN EXPLANATION OF THOSE CHANGES CONSIDERED MATERIAL:
107-1, Adjustment to 1997 CWIP balance which was placed in service December
1998 (included in 1998 additions)
</TABLE>
<PAGE>
<TABLE>
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7
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:
<S> <C> <C> <C>
BALANCE AT
CLOSE OF
SEC/CLASS SUBACCOUNT DESCRIPTION ADDITIONS YEAR
- --------- ---------------------- ---------- -----------
307/02 Research & Laboratory Equip. 634 3,918
307/04 Personal Computer Equip. 20,786 52,352
307/05 Computer Equipment 57 24,337
307/11 Telephone Systems 1,892 10,184
307/12 Telecommunications Equip. 905 10,333
308/01 Furniture & Fixtures 1,522 17,185
308/09 Data Handling Equipment
& Miscellaneous 569 10,886
309/08 Autos, Trucks & Trailers 45 781
310/07 Aircraft - 27,579
311/10 Software 23,430 40,411
311/13 Coal Pilot Scale Combustion
Facility - 1,671
------ -------
TOTAL 49,840 199,637
====== =======
</TABLE>
3/ DESCRIBE OTHER SERVICE COMPANY PROPERTY:
1. Purchased computer software and software licenses.
2. Pulverized coal pilot scale combustion facility.
4/ DESCRIBE CONSTRUCTION WORK IN PROGRESS:
107-1., New Equipment Annex Building used to house mechanical and
electrical equipment to support the SCS data center.
<PAGE>
<TABLE>
<CAPTION>
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ANNUAL REPORT OF SOUTHERN COMPANY SERVICES, INC.
------------------------------
For the Year Ended December 31, 1998
-----------------
(Thousands of Dollars)
SCHEDULE III
------------
ACCUMULATED PROVISION FOR DEPRECIATION AND
AMORTIZATION OF SERVICE COMPANY PROPERTY
------------------------------------------
<S> <C> <C> <C> <C> <C>
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 26,130 1,713 (87) - 27,756
306 LEASEHOLD
IMPROVEMENTS 2,890 742 (57) - 3,575
307 EQUIPMENT 63,598 7,225 (5,944) 2,287 67,166
308 OFFICE FURNITURE
AND FIXTURES 20,659 1,731 (2,915) (2,357) 17,118
309 AUTOMOBILES, OTHER
VEHICLES AND
RELATED GARAGE
EQUIPMENT 698 51 (67) - 682
310 AIRCRAFT AND
AIRPORT EQUIPMENT 10,406 1,091 (276) - 11,221
311 OTHER SERVICE
COMPANY PROPERTY 10,895 3,294 (420) - 13,769
------- ------ ------ ------ -------
TOTAL 135,276 15,847 (9,766) (70) 141,287
======= ====== ====== ====== =======
</TABLE>
1/ PROVIDE AN EXPLANATION OF THOSE CHANGES CONSIDERED MATERIAL:
307/308, Property True-up to correct previous years adjustments and account
balances to reflect actual for implementation of new Oracle Fixed Asset System.
<PAGE>
9
ANNUAL REPORT OF SOUTHERN COMPANY SERVICES, INC.
-------------------------------
For the Year Ended December 31, 1998
-----------------
(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.
BALANCE AT BALANCE AT
BEGINNING CLOSE OF
DESCRIPTION OF YEAR YEAR
----------- ---------- ----------
ACCOUNT 123 - INVESTMENT IN ASSOCIATE COMPANIES - -
ACCOUNT 124 - OTHER INVESTMENTS
Employee Merchandise Loans 7 -
Employee Energy Loans 2,079 1,666
ACE Limited - Reserve 69 69
Employee Computer Loans 722 619
------ ------
Subtotal 2,877 2,354
ACCOUNT 136 - TEMPORARY CASH INVESTMENTS - 1,100
------ ------
TOTAL 2,877 3,454
====== ======
<PAGE>
10
ANNUAL REPORT OF SOUTHERN COMPANY SERVICES, INC.
-------------------------------
For the Year Ended December 31, 1998
-----------------
(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.
BALANCE AT BALANCE AT
BEGINNING CLOSE OF
DESCRIPTION OF YEAR YEAR
----------- ---------- ----------
ACCOUNT 146 - ACCOUNTS RECEIVABLE FROM ASSOCIATE COMPANIES
The Southern Company 2,430 3,003
Alabama Power Company 37,117 38,099
Georgia Power Company 64,480 58,587
Gulf Power Company 10,976 7,486
Mississippi Power Company 11,235 10,050
Savannah Electric and Power Company 6,812 4,992
Southern Communications Services, Inc. 2,998 2,624
Southern Company Energy Solutions, Inc. 2,747 2,766
Southern Electric Generating Company 617 598
Southern Electric Railroad Company 694 254
Southern Energy, Inc. 1,649 2,192
Southern Information Holding Company 2 2
Southern Nuclear Operating Company, Inc. 13,253 13,591
Southern Telecom, Inc. 197 223
------- -------
TOTAL 155,207 144,467
======= =======
ANALYSIS OF CONVENIENCE OR ACCOMMODATION PAYMENTS: TOTAL
PAYMENTS
The Southern Company 1,054
Alabama Power Company 277,662
Georgia Power Company 346,812
Gulf Power Company 42,565
Mississippi Power Company 81,108
Savannah Electric and Power Company 57,491
Southern Communications Services, Inc. 7,471
Southern Company Energy Solutions, Inc. 6,600
Southern Electric Generating Company 200
Southern Electric Railroad Company -
Southern Energy, Inc. 4,551
Southern Nuclear Operating Company, Inc. 119,201
-------
The major portion of the above expenses consists of Integrated System Power Pool
transactions, transactions relating to the System Pension Plan, transactions
relating to the Employee Savings Plan, transactions relating to third party
payroll payments, and transactions relating to the Employee Stock Ownership
Plan.
TOTAL PAYMENTS 944,715
=======
<PAGE>
<TABLE>
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ANNUAL REPORT OF SOUTHERN COMPANY SERVICES, INC.
-------------------------------
For the Year Ended December 31, 1998
-----------------
(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.
<S> <C> <C> <C>
DESCRIPTION LABOR EXPENSES TOTAL
----------- ----- ------- -----
ACCOUNT 152 - FUEL STOCK EXPENSES UNDISTRIBUTED 5,394 3,728 9,122
Total amount billed during current year as follows:
Associated Companies
The Southern Company (1) - (1)
Alabama Power Company (1,595) (1,105) (2,700)
Georgia Power Company (2,252) (1,527) (3,779)
Gulf Power Company (514) (352) (866)
Mississippi Power Company (489) (308) (797)
Savannah Electric and Power Company (197) (129) (326)
Southern Company Energy Solutions Inc. (11) (4) (15)
Southern Electric Generating Company (96) (77) (173)
Southern Electric Railroad Company - - -
Southern Energy, Inc. (239) (226) (465)
Southern Nuclear Operating Company, Inc. - - -
------ ------ ------
Subtotal (5,394) (3,728) (9,122)
------ ------ ------
Nonassociated Companies - - -
TOTAL 0 0 0
====== ====== ======
</TABLE>
SUMMARY: Fuel services performed by the service company consist 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.
<PAGE>
12
ANNUAL REPORT OF SOUTHERN COMPANY SERVICES, INC.
-------------------------------
For the Year Ended December 31, 1998
-----------------
(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
<PAGE>
<TABLE>
<CAPTION>
13
ANNUAL REPORT OF SOUTHERN COMPANY SERVICES, INC.
-------------------------------
For the Year Ended December 31, 1998
-----------------
(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.
<S> <C> <C>
BALANCE AT BALANCE AT
BEGINNING CLOSE OF
DESCRIPTION OF YEAR YEAR
----------- ---------- ----------
ACCOUNT 174 - MISCELLANEOUS CURRENT AND ACCRUED ASSETS
Interest Receivable -Temporary Cash Investments - 6
Accounts Payable Suspense - 75
----- ---
Total - 81
===== ===
</TABLE>
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<TABLE>
<CAPTION>
14
ANNUAL REPORT OF SOUTHERN COMPANY SERVICES, INC.
------------------------------
For the Year Ended December 31, 1998
(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.
<S> <C> <C>
BALANCE AT BALANCE AT
BEGINNING CLOSE OF
DESCRIPTION OF YEAR YEAR
----------- ---------- ----------
ACCOUNT 186 - MISCELLANEOUS DEFERRED DEBITS
Deferred Payroll Charge - 8,181
Deposit for Georgia Sales and Use Tax 26 25
Wilsonville Clean-up 156 1,905
Executive Stock Option Taxes - 5
Retire Capital Items 280 184
Unamortized Leasehold - Bldg. 66 2,449 2,146
Unamortized Leasehold - Bldg. 64 1,599 1,853
Unamortized Leasehold - Inverness 460 416
Sundry Delayed Clearance 672 591
------ ------
Total 5,642 15,306
====== ======
</TABLE>
<PAGE>
15
ANNUAL REPORT OF SOUTHERN COMPANY SERVICES, INC.
------------------------------
For the Year Ended December 31, 1998
-----------------
(Thousands of Dollars)
SCHEDULE X
----------
RESEARCH, DEVELOPMENT OR DEMONSTRATION EXPENDITURES
---------------------------------------------------
INSTRUCTIONS: Provide a description of each material research, development,
or demonstration project that incurred costs by the service
corporation during the year.
DESCRIPTION AMOUNT
----------- ------
ACCOUNT 188 - RESEARCH, DEVELOPMENT, OR DEMONSTRATION
EXPENDITURES 36,129
Total amount billed/incurred during current year as follows:
Government Projects:
Clean Coal Technology Projects:
Yates CT-121 Project (30)
Hammond Wall Fired Project (94)
Other Government Projects:
PSDF/Hot Gas Cleanup Project (23,201)
Westinghouse AP600 Design Certification (21)
Liquefaction (2,546)
EPRI Projects:
GNOCIS Demonstration (112)
RE&A EPRI Contracts (275)
Advanced End-Use Technologies (212)
Engineering EPRI Projects (826)
EPRI Bulk Trans. System Reliability (331)
Associate Companies:
End-Use Research Projects (1,305)
Pwr Delivery Researcy-Overhead Transmission (608)
Pwr Delivery Research-Transmission Substations (283)
Pwr Delivery Research-Distribution (614)
Air Quality Studies (138)
Combustion & Fuel Effects (813)
Research Administration (468)
Flue Gas Treatment (366)
Power Delivery Research (38)
Advanced End-Use Technology Research (1,233)
Particulate Control Studies (518)
Advanced Energy Systems (1,371)
Thermal & Fluid Sciences (662)
R&D Tech Econ Assessments (64)
---------
TOTAL AMOUNT BILLED/INCURRED (36,129)
--------
TOTAL 0
========
<PAGE>
16
<TABLE>
<CAPTION>
ANNUAL REPORT OF SOUTHERN COMPANY SERVICES, INC.
-------------------------------
For the Year Ended December 31, 1998
-----------------
(Thousands of Dollars)
SCHEDULE XI - PROPRIETARY CAPITAL
---------------------------------
<S> <C> <C> <C> <C>
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 that 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 - - - -
</TABLE>
<PAGE>
17
<TABLE>
<CAPTION>
ANNUAL REPORT OF SOUTHERN COMPANY SERVICES, INC.
-------------------------------
For the Year Ended December 31, 1998
-----------------
(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.
<S> <C> <C> <C> <C> <C> <C> <C> <C>
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:
CAPITAL LEASE OBLIGATION
Equity Office Properties 02/01/2011 9.25 7,225 5,260 - 245 5,015
Equity Office Properties 02/01/2006 13.00 41,451 30,761 - 2,481 28,280
------ ------ --------- ------ ------
Subtotal 48,676 36,021 - 2,726 33,295
------ ------ --------- ------ ------
TOTAL 48,676 36,021 - 2,726 33,295
====== ====== ========= ====== ======
1/ GIVE AN EXPLANATION OF DEDUCTIONS: Equity Office Properties - Deductions of $2,726,233.52 transferred to current
maturities.
</TABLE>
<PAGE>
18
ANNUAL REPORT OF SOUTHERN COMPANY SERVICES, INC.
-------------------------------
For the Year Ended December 31, 1998
-----------------
(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.
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) 5
Alabama Power Company 30,060 22,458
Georgia Power Company 8,142 6,185
Gulf Power Company 2,676 2,958
Mississippi Power Company 367 151
Savannah Electric and Power Company 420 326
Southern Electric Generating Company - -
Southern Energy, Inc. - -
Southern Communications Services, Inc. 724 142
Southern Nuclear Operating Company, Inc. 1,007 467
Southern Company Energy Solutions, Inc. 62 62
------ ------
TOTAL 43,384 32,754
====== ======
ACCOUNT 242 - MISCELLANEOUS CURRENT AND ACCRUED LIABILITIES
Incentive Pay (PPP) 22,941 26,516
Vacation Clearing Account 18,197 17,605
Accrued Labor & Related Overheads 5,661 7,220
Employee Group Insurance Premiums 504 -
Early Retirement Benefits 1,376 1,490
Productivity Improvement Program 15,597 20,924
Accumulated Provision for Major Overhaul
of Aircraft 865 1,090
Supplemental Pensions and Benefits 1,680 1,982
Department of Energy 24 -
Flex and Save Benefits 2,969 4,262
Post Employment Benefits 66 66
Severance Pay 4,975 2,589
Metro Life Advance-Current 176 256
Performance Dividend Plan - 574
Employee Merchandise Withholding 9 19
(Continued on Page 18A)
<PAGE>
18A
ANNUAL REPORT OF SOUTHERN COMPANY SERVICES, INC.
-------------------------------
For the Year Ended December 31, 1998
-----------------
(Thousands of Dollars)
SCHEDULE XIII - CURRENT AND ACCRUED LIABILITIES
-----------------------------------------------
(Continued)
BALANCE AT BALANCE AT
BEGINNING CLOSE OF
DESCRIPTION OF YEAR YEAR
----------- ----------- -----------
Associate Companies - ESP 4,323 -
Commitment Fees - Credit Lines 85 -
Accrued Bank Fees 60 -
SCS - Employee Savings Plan 1,475 -
SCS - U.S. Savings Bonds Withholdings 265 108
Funds Dist-Holders SE P&L Corp. 13 13
Employee Energy/PC Loan W/H 14 -
SCS-FLEX Benefits Premiums 82 -
Miscellaneous (21 Beginning)(24 Ending) 3 2
------ ------
TOTAL 81,360 84,716
====== ======
<PAGE>
19
ANNUAL REPORT OF SOUTHERN COMPANY SERVICES, INC.
-------------------------------
For the Year Ended December 31, 1998
-----------------
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.
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.
<PAGE>
19A
ANNUAL REPORT OF SOUTHERN COMPANY SERVICES, INC.
------------------------------
For the Year Ended December 31, 1998
-----------------
(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.
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), 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 develops and manages electricity and other energy
related projects worldwide, including domestic energy trading and
marketing), Southern Company Energy Solutions, Inc. (a subsidiary of The
Southern Company which develops new business opportunities related to
energy products and services), Southern Nuclear Operating Company, Inc.
(a subsidiary of The Southern Company which provides services to
Southern Company's 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. (Southern LINC; a subsidiary of The Southern Company,
which provides digital wireless communications services to the operating
subsidiaries and the public in the southeast) 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, information resources,
marketing, auditing, 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.
3. RETIREMENT BENEFITS
-------------------
The Company has a defined benefit, trusteed, pension plan that covers
substantially all employees. 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. In 1998, the Company adopted Financial Accounting Standards
Board (FASB) Statement No. 132, Employers' Disclosure about Pensions and
Other Post-Retirement Benefits. The measurement date is September 30 for
each year.
<PAGE>
19B
ANNUAL REPORT OF SOUTHERN COMPANY SERVICES, INC.
------------------------------
For the Year Ended December 31, 1998
-----------------
(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.
Pension Plans
- -------------
Changes during the year in the projected benefit obligations and in the fair
value of plan assets were as follows:
Projected Benefit Obligations
-----------------------------
1998 1997
------------ ------------
Balance at beginning of year 350,319 329,775
Service cost 12,939 11,961
Interest cost 25,800 24,728
Benefits paid (13,192) (9,802)
Actuarial (gain) loss 46,535 (6,343)
------- -------
Balance at end of year 422,401 350,319
======= =======
Plan Assets
-----------------------------
1998 1997
----------- -------------
Balance at beginning of year 557,333 479,484
Actual return on plan assets 3,052 75,118
Employer contributions - -
Benefits paid (13,192) (9,802)
Receivables/Payables due to
transfers 44,832 12,533
-------- --------
Balance at end of year 592,025 557,333
======== ========
The accrued pension costs recognized in the Balance Sheets are as follows:
1998 1997
---------- -------------
Funded status 169,624 207,014
Unrecognized transition obligation 10,093) (11,379)
Unrecognized prior service cost 11,454 12,324
Unrecognized net gain (167,269) (210,194)
Fourth quarter contributions - -
-------- --------
Prepaid asset recognized in the
Balance Sheet 3,716 (2,235)
======== =========
<PAGE>
19C
ANNUAL REPORT OF SOUTHERN COMPANY SERVICES, INC.
------------------------------
For the Year Ended December 31, 1998
----------------
(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.
Components of the plan's net periodic cost were as follows:
1998 1997
---------- ----------
Service cost 12,939 11,961
Interest cost 25,800 24,728
Expected return on plan assets (38,676) (36,024)
Recognized net gain (5,599) (5,266)
Net amortization (415) (415)
------- -------
Net pension income (5,951) (5,016)
======= =======
Post-retirement Benefits
- ------------------------
Changes during the year in the projected benefit obligations and in the fair
value of plan assets were as follows:
Projected Benefit
-----------------------------
1998 1997
---------- ----------
Balance at beginning of year 85,163 74,456
Service cost 2,085 1,954
Interest cost 6,252 6,049
Benefits paid (2,428) (1,980)
Actuarial loss 10,682 4,684
------- -------
Balance at end of year 101,754 85,163
======= =======
Plan Assets
-----------------------------
1998 1997
--------- ----------
Balance at beginning of year 22,154 18,674
Actual return on plan assets 132 3,480
Employer contributions 2,428 1,980
Benefits paid (2,428) (1,980)
------- -------
Balance at end of year 22,286 22,154
======= =======
The accrued post-retirement costs recognized in the Balance Sheets are as
follows:
1998 1997
---------- ------------
Funded status (79,468) (63,009)
Unrecognized transition obligation 5,765 6,170
Unrecognized prior service cost (17) (18)
Unrecognized net gain 17,424 5,335
Fourth quarter contributions 363 640
------- -------
Accrued liability recognized in the
Balance Sheet (55,933) (50,882)
======= =======
<PAGE>
19D
ANNUAL REPORT OF SOUTHERN COMPANY SERVICES, INC.
-------------------------------
For the Year Ended December 31, 1998
-----------------
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 plan's net periodic cost were as follows:
1998 1997
---------- ----------
Service cost 2,085 1,954
Interest cost 6,252 6,049
Expected return on plan assets (1,654) (1,487)
Recognized net gain 115 225
Net amortization 404 403
------- -------
Net post-retirement cost 7,202 7,144
======= =======
The weighted average rates assumed in the actuarial calculations for both the
pension plans and post-retirement benefits were:
1998 1997
---- ----
Discount 6.75% 7.50%
Annual salary increase 4.25% 5.00%
Long-term return on plan assets 8.50% 8.50%
An additional assumption used in measuring the accumulated
post-retirement benefit obligation was a weighted average medical care
cost trend rate of 8.30 percent for 1998 decreasing gradually to 4.75
percent through the year 2005 and remaining at that level thereafter. An
annual increase or decrease in the assumed medical care cost trend rate
of 1 percent would affect the accumulated benefit obligation and the
service and interest cost components at December 31, 1998 as follows:
1 Percent 1 Percent
Increase Decrease
--------- ----------
Benefit obligation 5,862 (5,205)
Service and interest costs 505 (441)
Work Force Reduction Programs
- -----------------------------
The Company has incurred additional costs for work force reduction
programs. The costs related to these programs were $2 million, $7
million, and $20 million for 1998, 1997, and 1996, respectively. These
costs were charged to expense.
<PAGE>
19E
ANNUAL REPORT OF SOUTHERN COMPANY SERVICES, INC.
-------------------------------
For the Year Ended December 31, 1998
-----------------
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. OPERATING LEASES
----------------
The Company has operating lease agreements with various terms and
expiration dates. Rental expense under all operating leases was
approximately $65,769,000 and $49,931,000 in 1998 and 1997,
respectively. Future minimum lease payments under noncancelable
operating leases at December 31, 1998 were as follows:
(In Thousands)
--------------
1999 48,430
2000 33,614
2001 18,508
2002 11,528
2003 11,464
Thereafter 31,809
-------
Total 155,353
========
5. LONG-TERM DEBT AND NOTES PAYABLE - OTHER
----------------------------------------
Details of long-term debt and notes payable - other at December 31 are
as follows:
1998 1997
---- ----
(In Thousands)
Long-term debt
--------------
Capitalized lease obligations:
9 1/4% building lease 5,260 5,484
13% building lease 30,761 32,837
------- -------
36,021 38,321
------- -------
Less Current Maturities (2,726) (2,300)
------- -------
33,295 36,021
------- -------
Total long-term debt 33,295 36,021
======= =======
<PAGE>
19F
ANNUAL REPORT OF SOUTHERN COMPANY SERVICES, INC.
-------------------------------
For the Year Ended December 31, 1998
-----------------
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, 1998 are as follows:
(In Thousands)
1999 2,726
2000 3,211
2001 3,761
2002 4,386
2003 5,097
Thereafter 16,840
------
Total 36,021
======
Assets acquired under capital leases are recorded in the Company's
balance sheets as structures and improvements. The net book value of
assets acquired under capitalized leases was approximately $13,114,000
and $14,866,000 at December 31, 1998 and 1997, respectively.
Financial Instruments
---------------------
The Company did not have financial instruments, in either 1997 or 1998,
which require disclosure in accordance with Statement of Financial
Accounting Standards No. 107, "Disclosure About Fair Value of Financial
Instruments."
6. PURCHASE COMMITMENTS
--------------------
The Company has various purchase commitments. At December 31, 1998,
total capital expenditures are budgeted to be approximately $65,644,000
in 1999.
<PAGE>
<TABLE>
<CAPTION>
20
ANNUAL REPORT OF SOUTHERN COMPANY SERVICES, INC.
-------------------------------
For the Year Ended December 31, 1998
-----------------
(Thousands of Dollars)
SCHEDULE XV
-----------
STATEMENT OF INCOME
-------------------
<S> <C> <C> <C>
ACCOUNT DESCRIPTION CURRENT YEAR PRIOR YEAR
- ------- ----------- ------------- ----------
INCOME
------
457 Services rendered to associate companies 709,127 581,403
458 Services rendered to nonassociate
companies 35,515 32,098
421 Miscellaneous income or loss 8,339 (7,359)
------- -------
Total Income 752,981 606,142
------- -------
EXPENSE
-------
920 Salaries and wages 262,950 225,502
921 Office supplies and expenses 104,037 82,958
922 Administrative expense transferred-
credit - -
923 Outside services employed 192,241 135,379
924 Property insurance 725 774
925 Injuries and damages 81 119
926 Employee pensions and benefits 22,830 23,161
928 Regulatory commission expense 143 588
930.1 General advertising expenses - -
930.2 Miscellaneous general expenses 33,212 19,540
931 Rents 65,769 49,931
932 Maintenance of structures and
equipment 31,897 27,766
403 Depreciation and amortization expense 15,847 16,471
408 Taxes other than income taxes 17,006 16,076
409 Income taxes 46 108
410 Provision for deferred income taxes - -
411 Provision for deferred income taxes -
credit - -
411.5 Investment tax credit - -
426.1 Donations 1,344 1,314
426.5 Other deductions - -
427 Interest on long-term debt 3,737 5,462
430 Interest on debt to associate companies 683 788
431 Other interest expense 433 205
------- -------
Total Expense 752,981 606,142
------- -------
Net Income - -
======= =======
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
21
ANNUAL REPORT OF SOUTHERN COMPANY SERVICES, INC.
-------------------------------
For the Year Ended December 31, 1998
-----------------
(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 22,083 3,683 305 26,071
Alabama Power Company 161,597 31,786 1,179 194,562
Georgia Power Company 209,011 40,007 2,201 251,219
Gulf Power Company 32,194 6,617 239 39,050
Mississippi Power Company 34,861 7,647 243 42,751
Savannah Electric & Power Co. 11,806 2,775 106 14,687
Southern Communication
Services, Inc. 23,984 990 99 25,073
Southern Company Energy
Solutions, Inc. 12,817 3,677 74 16,568
Southern Electric Generating Co. 1,110 398 4 1,512
Southern Electric Railroad Company 612 280 (1) 891
Southern Energy, Inc. 11,323 3,722 184 15,229
Southern Nuclear Operating Co. 65,112 15,045 207 80,364
Southern Telecom, Inc. 999 149 2 1,150
------- ------- ----- -------
TOTAL 587,509 116,776 4,842 709,127
======= ======= ===== =======
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
22
ANNUAL REPORT OF SOUTHERN COMPANY SERVICES, INC.
-------------------------------
For the Year Ended December 31, 1998
-----------------
(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) $23,643 $2,228 $(1) $25,870 $ 0 $25,870
Electric Power Research Institute 1,466 285 5 1,756 0 1,756
Westinghouse Electric Corp. 16 5 0 21 0 21
APC Credit Union 31 0 0 31 0 31
Assoc. of Edison Illuminating Co. 6 0 0 6 0 6
Motorola 7 0 0 7 0 7
Gulf Power Credit Union 14 0 0 14 0 14
Asplundh 5 0 0 5 0 5
AT & T 12 0 0 12 0 12
ALLTEL 6 0 0 6 0 6
DeltaCom 20 0 0 20 0 20
MCI 18 0 0 18 0 18
North American Electric Reliability Council 20 11 1 32 0 32
Oak Ridge Laboratory 30 2 0 32 0 32
Geothermal Heat Pump Consortium 114 12 1 127 0 127
Bankers Trust Company (Southern
System Master Retirement Trust) 642 0 0 642 0 642
Metro Atlanta Host Committee 354 40 3 397 0 397
GEAC Computer System 415 0 0 415 0 415
Phillips Electronics 41 0 0 41 0 41
Crawford & Co. 82 0 0 82 0 82
GE Capital 144 0 0 144 0 144
Onyx Technologies 7 0 0 7 0 7
FP&L; JEA; Tallahassee, FPC 1,955 51 1 2,007 0 2,007
Alabama Electric Cooperative, Inc. 5 3 0 8 0 8
Municipal Electric Authority of GA 8 3 0 11 0 11
Oglethorpe Power Corporation 3,693 7 0 3,700 0 3,700
Southeastern Electric Reliability
Council 57 0 0 57 0 57
Morgan Stanley 2 5 0 7 0 7
Other (13 items less than $5,000) 29 10 1 40 0 40
------- ------ --- ------- -- -------
TOTAL $32,842 $2,662 $11 $35,515 $0 $35,515
======= ====== === ======= == =======
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
22A
ANNUAL REPORT OF SOUTHERN COMPANY SERVICES, INC.
-------------------------------
For the Year Ended December 31, 1998
-----------------
(Thousands of Dollars)
ANALYSIS OF BILLING
----------------------
NONASSOCIATE COMPANIES
ACCOUNT 458
<S> <C>
INSTRUCTION: Provide a brief description of the services rendered to each nonassociate company:
Department of Energy (DOE) - Contract services concerning clean coal technology, Power System Development
Facility/hot gas System Development Facility/hot gas cleanup project. Cleanup of Liquefaction project main site.
Electric Power Research Institute - GNOCIS demonstrations, ash in agriculture and land reclamation; catalyst test
facility; NOX reduction and performance; evaluation of fly ash; CFD modeling;
USABC; flywheel evaluation; MGP ROAM modeling; multimedia diesel cleanup; electrokinetic remediation;
phytoremediation of arsenic contaminated soil; and bulk transmission system reliability evaluation.
Westinghouse - Subcontracts for the research and design of components of nuclear reactors.
APC Credit Union, Edison Illuminating Co., Motorola, Gulf Credit Union, Asplundh - Telecommunication services.
AT&T, ALLTEL, DeltaCom, MCI - Telecommunication services related to fiber optics.
North American Electric Reliability Council - Development of Software.
Oak Ridge Laboratory, Geothermal Heat Pump Consortium - Marketing Services and Marketing Research.
Bankers Trust Co. (Southern System Master Retirement Trust) - Management and administration of Pension Fund for Southern Company.
Metro Atlanta Host Committee - Planning committee for Super Bowl 2000.
GEAC Computer Systems, Philips Electronics, Crawford & Co., GE Capital, Onyx Technologies - O&M sublease expense at Perimeter
Center East buildings.
FP&L, FPC, JEA, and City of Tallahassee - Unit Power Sales (UPS) true-up and scheduling agreements.
Ala. Electric Coop, MEAG - Southeastern Electric Reliability Council (SERC) security coordinator.
Oglethorpe Power - Transmission Planning Operations (TPO) scheduling fees and SERC security coordinator.
Southeastern Electric Reliability Council - Occupancy, telecommunications and other related services.
Morgan Stanley - Transmission impact studies.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
23
ANNUAL REPORT OF SOUTHERN COMPANY SERVICES, INC.
------------------------------
For the Year Ended December 31, 1998
-----------------
(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.
<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
- -------------------- ------- -------- ----- ------- -------- ----- ------ -------- ------
TOTAL
920 SALARIES AND WAGES $214,469 $41,755 $256,224 $ 6,507 $ 219 $ 6,726 $220,976 $ 41,974 $262,950
921 OFFICE SUPPLIES & EXPENSES 81,017 16,642 97,659 6,371 7 6,378 87,388 16,649 104,037
922 ADMINISTRATIVE EXP.
TRANSFERRED-CREDIT - - - - - - - - -
923 OUTSIDE SERVICES EMPLOYED 161,992 15,822 177,814 14,426 1 14,427 176,418 15,823 192,241
924 PROPERTY INSURANCE 224 345 569 156 - 156 380 345 725
925 INJURIES AND DAMAGES - 81 81 - - - - 81 81
926 EMPLOYEE PENSIONS
& BENEFITS 3,093 19,425 22,518 1 311 312 3,094 19,736 22,830
928 REGULATORY COMMISSION
EXPENSE 143 - 143 - - - 143 - 143
930.1 GENERAL ADVERTISING
EXPENSES - - - - - - - - -
930.2 MISCELLANEOUS GENERAL
EXPENSES 44,599 (17,704) 26,895 4,744 1,573 6,317 49,343 (16,131) 33,212
931 RENTS 49,898 15,766 65,664 51 54 105 49,949 15,820 65,769
932 MAINTENANCE OF STRUCTURES
AND EQUIPMENT 27,005 4,272 31,277 582 38 620 27,587 4,310 31,897
403 DEPRECIATION & AMORTIZATION
EXPENSE 10,157 5,638 15,795 4 48 52 10,161 5,686 15,847
408 TAXES OTHER THAN INCOME
TAXES 3,089 13,506 16,595 - 411 411 3,089 13,917 17,006
409 INCOME TAXES 3 43 46 - - - 3 43 46
410 PROVISION FOR DEFERRED
INCOME TAXES - - - - - - - - -
411 PROVISION FOR DEFERRED
INCOME TAXES CREDIT - - - - - - - - -
411.5 INVESTMENT TAX CREDIT - - - - - - - - -
426.1 DONATIONS 159 1,185 1,344 - - - 159 1,185 1,344
------ ------ ------ ------ ----- ------ ------- ------- -------
SUBTOTAL EXPENSES = 595,848 116,776 712,624 32,842 2,662 35,504 628,690 119,438 748,128
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
23A
ANNUAL REPORT OF SOUTHERN COMPANY SERVICES, INC.
------------------------------
For the Year Ended December 31, 1998
-----------------
(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 - - 3,726 - - 11 - - 3,737
430 INTEREST ON DEBT TO
ASSOCIATE COMPANIES - - 683 - - - - - 683
431 OTHER INTEREST EXPENSE - - 433 - - - - - 433
------- ------- ------- ------- ------ ------ ------- ------- ------
TOTAL EXPENSES = 595,848 116,776 717,466 32,842 2,662 35,515 628,690 119,438 752,981
421 MISCELLANEOUS GAIN (8,339) - (8,339) - - - (8,339) - (8,339)
-------- -------- -------- ------- ------ ------- -------- -------- -------
TOTAL COST OF SERVICE = $587,509 $116,776 $709,127 $32,842 $2,662 $35,515 $620,351 $119,438 $744,642
======== ======== ======== ======= ====== ======= ======== ======== ========
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
24
ANNUAL REPORT OF SOUTHERN COMPANY SERVICES, INC.
-------------------------------
For the Year Ended December 31, 1998
-----------------
(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) --------------------------
--------------
<S> <C> <C> <C> <C> <C> <C> <C>
DEPARTMENT OR SERVICE FUNCTION
Finance Human
Total and Governmental Resources and Information
Amount Engineering Executive Accounting Affairs Administration Resources
DESCRIPTION OF ITEMS ------ ---------- -------- --------- ----------- ------------- ---------
- --------------------
920 SALARIES AND WAGES $262,950 $59,894 $ 5,392 $18,621 $ 1,537 $20,126 $ 75,129
921 OFFICE SUPPLIES AND EXPENSES 104,037 10,978 2,502 4,965 465 5,498 52,736
923 OUTSIDE SERVICES EMPLOYED 192,241 31,290 32,334 11,081 1,761 8,961 42,608
924 PROPERTY INSURANCE 725 77 4 22 1 27 111
925 INJURIES AND DAMAGES 81 19 1 5 - 6 27
926 EMPLOYEE PENSIONS & BENEFITS 22,830 4,861 532 1,574 111 1,795 6,180
928 REGULATORY COMMISSION EXPENSE 143 - - - - - -
930.2 MISCELLANEOUS GENERAL EXPENSES 33,212 2,991 3,400 (501) 511 4,123 7,795
931 RENTS 65,769 2,646 785 894 26 1,027 50,345
932 MAINTENANCE OF STRUCTURES & EQUIP 31,897 1,720 2,481 349 17 818 18,752
403 DEPRECIATION & AMORTIZATION,
EXPENSE 15,847 1,776 696 561 167 497 7,020
408 TAXES OTHER THAN INCOME TAXES 17,006 4,019 137 1,060 53 1,286 5,299
409 INCOME TAXES 46 - - 3 - - -
426.1 DONATIONS 1,344 - 58 1 114 12 -
427 INTEREST ON LONG-TERM DEBT 3,737 113 283 507 (2) 410 1,176
430 INTEREST ON DEBT TO ASSOCIATE CO. 683 63 38 17 2 28 307
431 OTHER INTEREST EXPENSE 433 7 7 2 - 2 49
-------- -------- ------ ------- ------ ------- --------
TOTAL EXPENSES 752,981 120,454 48,650 39,158 4,763 44,616 267,534
421 MISCELLANEOUS LOSS (8,339) (889) (776) (625) (76) (712) (2,852)
-------- --------- ------ ------- ------ ------- --------
TOTAL COSTS $744,642 $119,565 $47,874 $38,533 $4,687 $43,904 $264,682
======== ======== ======= ======= ====== ======= ========
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
25
ANNUAL REPORT OF SOUTHERN COMPANY SERVICES, INC.
------------------------------
For the Year Ended December 31, 1998
-----------------
(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> <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 $6,043 $10,368 $45,148 $ 2,325 $ 8,227 $3,052 $ 1,812 $ 5,276
921 1,221 3,360 6,624 2,391 7,622 870 1,949 2,856
923 983 30,153 7,411 1,227 29,644 146 (8,546) 3,188
924 8 14 49 3 166 4 234 5
925 2 4 12 1 2 1 - 1
926 564 1,063 3,732 201 642 289 892 394
928 - - - - - - 143 -
930.2 849 3,567 2,064 910 859 120 5,420 1,104
931 420 404 2,157 206 190 620 5,690 359
932 83 240 1,012 63 54 4,422 1,751 135
403 103 576 2,257 171 100 1,239 528 156
408 390 679 2,628 144 524 217 376 194
409 - - - - - - 46 -
426.1 - - 20 621 - - 127 391
427 91 79 182 119 (12) (176) 762 205
430 5 30 65 4 8 112 - 4
431 1 5 12 - 1 12 334 1
------- ------- ------- ------ ------- ------- ------- -------
Expenses 10,763 50,542 73,373 8,386 48,027 10,928 11,518 14,269
421 (172) (806) (524) (134) (355) (6) (184) (228)
------- ------- ------- ------ -------- ------- ------- -------
TOTAL COSTS $10,591 $49,736 $72,849 $8,252 $47,672 $10,922 $11,334 $14,041
======= ======= ======= ====== ======= ======= ======= =======
</TABLE>
<PAGE>
26
ANNUAL REPORT OF SOUTHERN COMPANY SERVICES, INC.
------------------------------
For the Year Ended December 31, 1998
-----------------
(Thousands of Dollars)
DEPARTMENTAL ANALYSIS OF SALARIES
---------------------------------
ACCOUNT 920
DEPARTMENTAL SALARY EXPENSE
---------------------------------------
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 59,894 1 58,630 1,263 766
Executive 5,392 862 4,356 174 13
Finance & Accounting 18,621 2,068 16,069 484 184
Governmental Affairs 1,537 515 1,022 - 8
Human Resources & Admin. 20,126 53 20,023 50 262
Information Resources 75,129 208 74,668 253 1,132
Internal Auditing 6,043 303 5,740 - 67
Planning Marketing
Research & Support 10,368 200 10,168 - 71
Production 45,148 36 44,728 384 476
Public Relations 2,325 1,110 1,215 - 37
Research & Environmental
Affairs 8,227 1 4,206 4,020 99
System Aircraft 3,052 366 2,686 - 47
External Affairs 5,276 1,427 3,849 - 66
Administrative & General 1,812 1,353 361 98 -
------- ----- ------- ----- -----
TOTAL 262,950 8,503 247,721 6,726 3,228
======= ===== ======= ===== =====
<PAGE>
27
ANNUAL REPORT OF SOUTHERN COMPANY SERVICES, INC.
------------------------------
For the Year Ended December 31, 1998
-----------------
(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.
ELATIONSHIP
A"=ASSOCIATE
DESCRIPTION OF NA"= NON
FROM WHOM PURCHASED LARGEST INVOICE ASSOCIATE AMOUNT
- ------------------- --------------- ------------ ------
Legal Services
Akin, Gump, Strauss,
Hauer & Feld Legal Services NA 360
Balch & Bingham Legal Services NA 2,088
Hunton & Williams Legal Services NA 249
King & Spalding Legal Services NA 356
McDermott, Will & Emery Legal Services NA 387
Troutman, Sanders Legal Services NA 2,025
Twenty-One Other Items Less
than $100,000 NA 403
------
5,868
------
Auditing Service
- ----------------
Arthur Andersen LLP Audit Services NA 1,181
Two Other Items Less
than $100,000 NA 57
------
1,238
------
(Continued on Page 27A)
<PAGE>
<TABLE>
<CAPTION>
27A
ANNUAL REPORT OF SOUTHERN COMPANY SERVICES, INC.
-------------------------------
For the Year Ended December 31, 1998
-----------------
(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.
<S> <C> <C> <C>
RELATIONSHIP
"A"=ASSOCIATE
DESCRIPTION OF "NA"= NON
FROM WHOM PURCHASED LARGEST INVOICE ASSOCIATE AMOUNT
- ------------------- -------------- ------------- -------
Engineering Services
ABB C-E Services, Inc. ontract Engineering Serv. NA 225
Atlanta Technical Support ontract Engineering Serv. NA 142
BE&K Engineering Co. ontract Engineering Serv. NA 10,483
Bechtel Power Corp. ontract Engineers-Constructors NA 5,461
Foster Wheeler USA Corp. ower Systems Development-DOE NA 438
Hamon Corporation ontract Engineering Serv. NA 249
Industrial Services
of Mobile ontract Engineering Serv. NA 3,934
The M.W. Kellogg Co. ontract Engineering Serv. NA 410
Southern Co. Energy
Solutions ower Systems Development-DOE A 264
Southern Research Institute ower Systems Development-DOE NA 968
United Dynamics Corp. ontract Engineering Serv. NA 138
Westinghouse Electric Corp. ontract Engineering Serv. NA 386
One Hundred-Seven Other Items
Less than $100,000 1,524
------
24,622
------
(Continued on Page 27B)
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
27B
ANNUAL REPORT OF SOUTHERN COMPANY SERVICES, INC.
-------------------------------
For the Year Ended December 31, 1998
-----------------
(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.
<S> <C> <C> <C>
RELATIONSHIP
"A"=ASSOCIATE
DESCRIPTION OF "NA"= NON
FROM WHOM PURCHASED LARGEST INVOICE ASSOCIATE AMOUNT
- ------------------- --------------- ------------- ------
Other Services
- --------------
Acxiom Corp. Market Research Services NA 175
ADECCO Services Temporary Services NA 6,917
Airflow Sciences Corp. Consulting Services NA 139
Alabama Power Company Consulting Services A 10,451
Alpha-Omega Power
Technologies Consulting Services NA 190
America's Registry, Inc. Systems Development NA 586
Andersen Consulting LLP Consulting Services NA 16,476
Ann Randazzo Consulting Services NA 115
Aon Consulting Consulting Services NA 343
Application Tech. Serv. Consulting Services NA 240
Argenbright Security, Inc. Security Services NA 179
Arthur Andersen LLP Consulting Services NA 1,427
Barbour, Griffith & Rogers Consulting Services NA 252
Bellcore Consulting Services NA 280
Blankenship & Seay
Consulting Consulting Services NA 104
Browning-Ferris Industries Soil Remediation Services NA 384
Caddell Construction Co. Erection Services NA 3,399
Cambridge Tech. Partners Software Consulting NA 498
Charles Rose Consultants Coal Assessment Services NA 249
Chicago Interface Group Consulting Services NA 336
Citicorp Securities, Inc. Financial Services NA 134
Compass America, Inc. Consulting Services NA 120
Comprehensive Computer
Consulting Consulting Services NA 14,084
Computer Associates
International Software Consulting NA 133
Comsys, Inc. Programming Services NA 680
Consumermetrics, Inc. Consulting Services NA 791
Credit Suisse First
Boston Corp Banking Services NA 705
Custom Contract Programming Contract Programming NA 148
Dataplex Corporation Microfiche Production NA 130
Deloitte & Touche LLP Consulting Services NA 1,011
(Continued on page 27C)
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
27C
ANNUAL REPORT OF SOUTHERN COMPANY SERVICES, INC.
------------------------------
For the Year Ended December 31, 1998
-----------------
(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.
<S> <C> <C> <C>
RELATIONSHIP
"A"=ASSOCIATE
DESCRIPTION OF "NA"= NON
FROM WHOM PURCHASED LARGEST INVOICE ASSOCIATE AMOUNT
- ------------------- --------------- ------------- -------
Dependable PC Consulting Consulting Services NA 104
DMR Consulting Group Contract Programming NA 248
DNA Communications LLC Consulting Services NA 648
Docucorp International Programming Services NA 2,043
Dove Associates Inc. Consulting Services NA 104
Dun & Bradstreet Marketing Services NA 458
Electric Power Research
Institute Research and Development NA 940
Electrokinetics, Inc. Consulting Services NA 218
Elrick & Lavidge, Inc. Survey Services NA 107
Energy Research Group, Inc Consulting Services NA 138
EQE, Inc. Consulting Services NA 165
Equifax Credit Info. Serv. Credit Information Services NA 199
Ernst & Young Consulting Services NA 125
Ferguson Harbour Inc. Soil Remediation Services NA 1,119
Form Maker Software, Inc. Software Services NA 120
Gartner Group, Inc. Research Services NA 130
GE Capital Software Services NA 122
GE Harris Energy Systems Energy Management Services NA 326
Georgia Power Company Project Support A 9,568
Gulf Electric Company
Inc. of Mobile Consulting Services NA 119
Gulf Power Company Project Support A 1,286
H. E. Cauthen Consulting Services NA 100
Hewitt Associates Personnel Services NA 4,445
Hogan & Hartson Consulting Services NA 237
Houston Advanced Research
Center Research Services NA 613
Inacom Information Systems Systems Support NA 213
Installshield Software Corp. Software Services NA 105
Intelligent Mgt. Solutions Consulting Services NA 108
International Bus. Machine Consulting Services NA 27,035
J. P. Morgan Securities,Inc. Financial Services NA 454
James W. Rock Consulting Services NA 107
Keith Bissell Consulting Services NA 150
KPS Group, Inc. Architectural Services NA 121
Lai Worldwide Staffing Services NA 192
Lehman Brothers Financial Services NA 145
(Continued on page 27D)
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
27D
ANNUAL REPORT OF SOUTHERN COMPANY SERVICES, INC.
-------------------------------
For the Year Ended December 31, 1998
-----------------
(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.
<S> <C> <C> <C>
RELATIONSHIP
"A"=ASSOCIATE
DESCRIPTION OF "NA"= NON
FROM WHOM PURCHASED LARGEST INVOICE ASSOCIATE AMOUNT
- ------------------- --------------- ------------- -------
M/A/R/C Inc. Market Research Service NA 201
Magi-Ware, Inc. Programming Services NA 125
Marketing & Planning Sys System Development NA 1,418
Marketpower, Inc. Marketing Services NA 334
Marketpro Marketing Services NA 150
Marketry Market Research Services NA 212
Matrix Resources, Inc. Consulting Services NA 313
Maxim Group Programming Services NA 171
Merrill Lynch Asset
Management Financial Services NA 1,031
Merrill Lynch Pierce,
Fenner & Smith Financial Services NA 224
Merrill Lynch Trust Co. Financial Services NA 850
Metamor Information Tech. Information Technology Services NA 213
Microsoft Enterprise Serv Consulting Resources NA 448
Mintel Communications, Inc. Contract Programming NA 280
Mississippi Power Co. Project Support A 252
Mobile Data Solutions Consulting Services NA 168
New Harbor, Inc. Financial Services NA 937
Nordeman Grimm, Inc. Consulting Services NA 393
Oracle Corporation Software Technical Support NA 134
Paine Webber Consulting Services NA 433
Pine Rock Productions Training Services NA 864
Platinum Technology Software Consulting Services NA 327
Professional Diversified
Service Consulting Services NA 154
Quantum Consulting, Inc. Consulting Services NA 124
Red Mountain Construction Construction Services NA 1,461
Regional Economic
Research Consulting Services NA 879
Robert Cobb Consulting Services NA 100
Root Learning, Inc. Consulting Services NA 324
Sapient Corp. Energy Management Services NA 516
Savannah Electric & Power Project Support A 299
Sawyer & Associates, Inc. Contract Programming NA 215
Scott, Madden & Assoc., Inc. Consulting Services NA 2,833
Shoreline Utility Advisors Consulting Services NA 460
(Continued on page 27E)
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
27E
ANNUAL REPORT OF SOUTHERN COMPANY SERVICES, INC.
-------------------------------
For the Year Ended December 31, 1998
-----------------
(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.
<S> <C> <C> <C>
RELATIONSHIP
"A"=ASSOCIATE
DESCRIPTION OF "NA"= NON
FROM WHOM PURCHASED LARGEST INVOICE ASSOCIATE AMOUNT
- ------------------- ---------------- ------------- ------
Soft Switching Technologies Environmental Studies NA 476
Software Spectrum Software Upgrade Services NA 185
Southern Company
Energy Solutions, Inc. Project Support A 417
Southern Energy
Constructors Inc. Erection Services NA 2,936
Southern Energy, Inc. Project Support A 466
Southern Nuclear Project Support A 107
Southern Research Institute Consulting Services NA 261
SPEC Group Holdings, Inc. Personnel Services NA 438
Sprint Paranet, Inc. Contract Programming NA 2,069
Standard & Poor's Corp. Financial Services NA 127
Stern Stewart Management Financial Services NA 1,203
Sunbelt Builders, Inc. Erection Services NA 130
Sunbelt Resources, Inc. Soil Remediation Services NA 160
Suntrust Bank Banking Services NA 127
Synet Services Corp. Contract Programming NA 311
Systems Applications Intl Consulting Services NA 638
TATA Consultancy Services Systems Support NA 4,015
The Economics Resource
Group, Inc. Consulting Services NA 565
The Hawthorn Group Survey Services NA 1,708
The Smith-Free Group Consulting Services NA 181
The University of Alabama Environmental Studies NA 134
Towers Perrin Survey Services NA 215
TQS Research, Inc. Market Research Studies NA 102
UGA Research Foundation Environmental Studies NA 127
Utilities International,Inc. Consulting Services NA 331
W.G. Yates & Sons
Construction Erection Services NA 446
1,219 Other Items Less Than $100,000 NA 12,807
-------
160,513
-------
192,241
=======
<PAGE>
28
ANNUAL REPORT OF SOUTHERN COMPANY SERVICES, INC.
-------------------------------
For the Year Ended December 31, 1998
-----------------
(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 $ (3,080)
Early Retirement Benefits 623
Flexible Credit Benefits - Company Contributions 9,830
Post Retirement Medical Benefits 5,014
Post Retirement Life Benefits 2,188
Educational Assistance Plan 157
Minority Scholarship Program 22
Employee Savings Plan/ESOP - Company Contribution 7,539
Employee Health and Physical Examinations 69
Other (Employees' Professional Fees and
Other Employee Fringe Benefits) 468
-------
TOTAL $22,830
=======
<PAGE>
29
ANNUAL REPORT OF SOUTHERN COMPANY SERVICES, INC.
------------------------------
For the Year Ended December 31, 1998
-----------------
(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, 1998
-----------------
(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 7,686
Expenses of SCS Employees Located at Operating Co. 16,645
Meals, Lodging, & Incidentals Related to
Meetings & Conferences 6,074
Dues and Memberships 1,455
Recruiting, Interviewing, & Placement
of Employees 522
Corporate Moving Expenses (348)
Other General Expenses 1,178
------
TOTAL 33,212
======
<PAGE>
31
ANNUAL REPORT OF SOUTHERN COMPANY SERVICES, INC.
------------------------------
For the Year Ended December 31, 1998
-----------------
(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 $20,067
Computer and Other Data Processing Equipment Rental 39,690
Software Rental 3,881
All Other (Automobile, Office Furniture & Equipment,
Miscellaneous Storage, Equipment Rental & Aircraft) 2,131
-------
TOTAL $65,769
=======
<PAGE>
32
ANNUAL REPORT OF SOUTHERN COMPANY SERVICES, INC.
-------------------------------
For the Year Ended December 31, 1998
-----------------
(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 197
City/Business License Tax 4
Property and Other City and State 892
-------
Subtotal - Other 1,093
-------
U.S. Government Taxes
Federal Insurance Contributions Act 15,694
Federal Unemployment 219
-------
Subtotal - U.S. Government 15,913
-------
TOTAL 17,006
=======
<PAGE>
33
ANNUAL REPORT OF SOUTHERN COMPANY SERVICES, INC.
------------------------------
For the Year Ended December 31, 1998
-----------------
(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
- ----------------- ------------------- ------
Alley Theater Civic & Charitable 3
American Academy in Berlin Civic & Charitable 60
American Jewish Committee Civic & Charitable 5
American Legislative Exchange Council Support of Program 5
Americans for Fair Taxation Civic & Charitable 50
Andrade/Faxon Charities for Children Civic & Charitable 6
Atlanta Ballet Civic & Charitable 5
Atlanta Chamber of Commerce Civic & Charitable 13
Auburn University Foundation Educational Matching 8
Birmingham Area Chamber of Commerce
Foundation Civic & Charitable 12
Birmingham Festival of Arts Civic & Charitable 5
Boy Scouts of America Civic & Charitable 9
Business Institute for Political Analysis Support of Program 5
Cahaba Girl Scouts Civic & Charitable 18
Callanwolde Fine Arts Center Civic & Charitable 5
Childkind, Inc. Civic & Charitable 4
Children's Hospital of Alabama Civic & Charitable 4
Christina's Smile Civic & Charitable 5
Compass Civic & Charitable 100
Egleston Children's Hospital Civic & Charitable 15
Engineering Council of Birmingham, Inc. Civic & Charitable 3
Environmental Literacy Council Civic & Charitable 6
Foundation for Student Communication Civic & Charitable 5
Georgia Business Forum, Inc. Civic & Charitable 4
Georgia Institute of Technology Educational Matching 14
Georgia State University Educational Matching 4
Georgia State University Educational
Foundation, Inc. Civic & Charitable 3
Georgia Tech Foundation, Inc. Civic & Charitable 3
Georgia Youth Science & Technology
Center Civic & Charitable 15
Global Climate Coalition Support of Program 50
Gresham Middle School Civic & Charitable 4
Helene Erickson Scholarship Fund Civic & Charitable 10
Houston Grand Opera Civic & Charitable 15
International Services of Atlanta Civic & Charitable 5
Junior Achievement of Greater Birmingham Civic & Charitable 9
Kennedy Center Civic & Charitable 8
March of Dimes Civic & Charitable 11
National Engineers Week Civic & Charitable 5
National Guard Association of Georgia Civic & Charitable 5
National Republican Comm. Building Fund Support of Program 100
National Society of Professional Engineers Civic & Charitable 5
No on Proposition 9 Support of Program 50
Opportunity XXI Civic & Charitable 10
Options, Inc. Civic & Charitable 5
Prevent Blindness Georgia Civic & Charitable 9
<PAGE>
33A
ANNUAL REPORT OF SOUTHERN COMPANY SERVICES, INC.
------------------------------
For the Year Ended December 31, 1998
-----------------
(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
- ------------------ ------------------- ------
Public Affairs Council Civic & Charitable 3
Sheryl W. Czepluch Memorial Fund Civic & Charitable 13
Small Steps Nuturing Center Civic & Charitable 5
Smithsonian Institute Civic & Charitable 25
Southeastern Legal Foundation, Inc. Civic & Charitable 25
Southern Center for International Studies Civic & Charitable 5
Southern Christian Leadership Conference Civic & Charitable 15
Southern Governors' Association Support of Program 5
Southern Legislative Conference Support of Program 10
Southern Republican Leadership Conference Conference Meeting Expenses* 25
Southern States Energy Board Support of Program 3
Taste of the South Support of Program 15
Tennessee Technological University Civic & Charitable 3
The 1998 Africare Bishop Walker Committee Civic & Charitable 10
The Aspen Institute Civic & Charitable 5
The Bill Emerson Group Charities Civic & Charitable 3
The Jefferson Islands Club Support of Program 5
The Progress & Freedom Foundation Civic & Charitable 25
The University of Texas Civic & Charitable 8
Trustees of the University Pennsylvania Civic & Charitable 10
TVA Watch Group Support of Program 36
United Negro College Fund Civic & Charitable 7
United Way of Central Birmingham Civic & Charitable 109
University of Alabama Educational Matching 11
University of Alabama at Birmingham Civic & Charitable 6
University of Georgia Civic & Charitable 4
World Trade Center of Atlanta Civic & Charitable 25
Zoo Atlanta Civic & Charitable 125
Zoo Friends of Houston, Inc. Civic & Charitable 3
64 Other Items (Less than $3,000) Civic & Charitable 72
76 Other Items (Less than $3,000) Employee Matching Gift 30
2 Other Items (Less than $3,000) Support of Program 3
-----
TOTAL 1,344
=====
*Conference organizer indicates that funds in excess of meeting expenses were
transferred to Mississippi Republican Party Building Fund.
<PAGE>
34
ANNUAL REPORT OF SOUTHERN COMPANY SERVICES, INC.
-------------------------------
For the Year Ended December 31, 1998
-----------------
(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, 1998
-----------------
(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 Page 19
<PAGE>
36
ANNUAL REPORT OF SOUTHERN COMPANY SERVICES, INC.
-------------------------------
For the Year Ended December 31, 1998
-----------------
(Thousands of Dollars)
SCHEDULE XIX
------------
FINANCIAL DATA SCHEDULE
Net Service Company Property 109,468
Total Investments 2,354
Total Current and Accrued Assets 185,367
Total Deferred Debits 15,472
Balancing Amount for Total Assets and Other Debits -
Total Assets and Other Debits 312,661
Total Proprietary Capital 875
Total Long-Term Debt 33,295
Notes Payable 2,726
Notes Payable to Associate Companies -
Balancing Amount for Total Current and Accrued
Liabilities 189,231
Total Deferred Credits 86,534
Accumulated Deferred Income Tax Credits -
Total Liabilities and Proprietary Capital 312,661
Services Rendered to Associate Companies 709,127
Services Rendered to Nonassociate Companies 35,515
Miscellaneous Income or Loss 8,339
Total Income 752,981
Salaries and Wages 262,950
Employee Pensions and Benefits 22,830
Balancing Amount for Total Expenses 467,201
Total Expenses 752,981
Net Income (Loss) -
Total Cost of Service (Direct Costs) 620,351
Total Cost of Service (Indirect Costs) 119,438
Total Cost of Service (Total) 744,642
Number of Personnel End of Year 3,228
<PAGE>
37
ANNUAL REPORT OF SOUTHERN COMPANY SERVICES, INC.
ORGANIZATION CHART
Chairman, President & CEO
Southern Company
<S> <C> <C> <C> <C> <C> <C> <C> <C>
President President Sr. VP-Human Exec. VP- Sr. VP- Sr. VP- Director Exec. VP- Sr. VP &
& CEO Southern Co. Resources(1) Chief External Civic/ Internal Finance,(2) General
SCS Generation(2) Marketing Affairs(2) Community Auditing Treasurer Counsel(2)
Officer(2) Affairs(2) (1)
Sr. VP- Exec. VP VP Market- VP Corp.
Transmission Engineering ing & New Communica- VP-Financial VP-Corp.
Planning & Business tion(1) Planning & Secretary
Operations Development Analysis & General
Counsel
Sr. VP- VP Research & VP Govern- Treasurer
Chief Environmental mental
Information Affairs Affairs
Officer
Sr. VP- VP Procurement VP Environ- Director
Comptroller & Materials(1) mental Trust
& CFO Affairs Finance
VPs Senior VP Southern Director
Production Wholesale Risk
Officers Energy Management
(5 Positions)
VP Generation
Planning & Dev.
VP Fuel
Services
(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, 1998
-----------------
METHODS OF ALLOCATION
---------------------
As of January 1, 1998, SCS began using statistics based on a single year (rather
than a three-year rolling average) with a one-year lag; therefore, 1998
allocations were based on 1996 statistics.
1. Annual Operating Area Territorial Load Basis
--------------------------------------------
Each Client Operating Company, other than Southern Electric
Generating Company (SEGCO), was 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 Southern Company, defined as
total energy generated plus energy received minus energy delivered.
2. Customer Basis
--------------
Each Client Operating Company, other than SEGCO, was 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 Southern Company, other than SEGCO.
3. Employee Basis
--------------
Each Client Company, other than SEGCO, was 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 was 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.
5. Financial Basis
---------------
Each Client Company was 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 Southern
Company.
6. Fossil Fuel Generation Basis
----------------------------
Each Client Operating Company was 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 Southern Company.
<PAGE>
38A
ANNUAL REPORT OF SOUTHERN COMPANY SERVICES, INC.
-------------------------------
For the Year Ended December 31, 1998
-----------------
METHODS OF ALLOCATION
---------------------
7. Fossil and Hydro Capacity Basis
-------------------------------
Each Client Company was 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 Southern Company.
8. Fossil Capacity Basis
---------------------
Each Client Company was charged the factor determined by dividing
the total fossil generating capacity for each company, including
capacity attributed to joint owners of system plants, by the total
fossil generating capacity for Southern Company.
9. Insurance Premium Basis
-----------------------
Each Client Company was 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 Southern Company.
10. Number of Vehicles Basis
------------------------
Each Client Company was 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 Southern Company.
11. Salary Basis
------------
Each client company was charged that percentage of the total Service
Company charges to be distributed by this method which its amount of
historical SCS billed labor is to the total SCS billed 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.
12. Southern System Basis (Capitalization)
---------------------
Each Client Company was 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.
<PAGE>
38B
ANNUAL REPORT OF SOUTHERN COMPANY SERVICES, INC.
------------------------------
For the Year Ended December 31, 1998
-----------------
METHODS OF ALLOCATION
---------------------
13. Personal Computers Basis
------------------------
Each Client Company was charged that percentage of the total Service
Company charges to be distributed by this method which its number of
PCs is to the total PCs for Southern Company.
14. Number of Officers and Directors
--------------------------------
Each Client Company was charged that percentage of the total Service
Company charges to be distributed by this method which its number of
defined officers and directors is to the total for Southern Company.
15. Investment in Subsidiaries
---------------------------
Each Client Company was charged that percentage of the total Service
Company charges to be distributed by this method which the amount of
investment made by Southern Company in the subsidiary is to the
total investment for the Southern electric system. The amount of
investment is defined as the total of common stock, paid-in common
in excess of par, and other paid-in capital.
16. System Aircraft
----------------
Passengers on system aircraft were 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 were 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, 1998
-----------------
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 1998:
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 1998, 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 5.191% to 5.924%. Interest in the
amount of $683,123.56 was accrued on The Southern Company borrowings 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, 1998, Southern Company Services had long-term
debt outstanding from various institutions in the amounts of $36,020,891.01. The
interest rates on these borrowings ranged from 9.25% to 13.0%. Interest of
$4,169,686.01 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 $ 305,222.65
Alabama Power Company 1,179,085.58
Georgia Power Company 2,201,171.05
Gulf Power Company 238,787.85
Mississippi Power Company 243,228.18
Savannah Electric & Power Company 106,159.73
Southern Electric Generating Company 3,751.37
Southern Energy, Inc. 183,503.35
Southern Nuclear Operating Company, Inc. 206,700.19
Southern Company Energy Solutions, Inc. 74,386.67
Southern Communications Services, Inc. 99,110.57
Southern Electric Railroad Company (971.70)
Southern Telecom Inc. 1,959.04
Nonassociate 10,715.04
-------------
$4,852,809.57
=============
<PAGE>
40
ANNUAL REPORT OF SOUTHERN COMPANY SERVICES, INC.
For the Year Ended December 31, 1998
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: /s/ W. Dean Hudson
----------------------------
(Signature of Signing Officer)
W. Dean Hudson, Senior Vice President, Comptroller
and Chief Financial Officer
-------------------------------------------------
(Printed Name and Title of Signing Officer)
Date: April 28, 1999
