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