<PAGE>
<TABLE>
<CAPTION>
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
(X) ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the Fiscal Year Ended December 31, 1994
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.
----------- ---------------------------------- ------------------
<S> <C> <C>
1-3526 The Southern Company 58-0690070
(A Delaware Corporation)
64 Perimeter Center East
Atlanta, Georgia 30346
(404) 393-0650
1-3164 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
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Securities registered pursuant to Section 12(b) of the Act:
Each of the following securities registered pursuant to Section 12(b) of the Act
are registered on the New York Stock Exchange.
Title of each class Registrant
<S> <C>
Common Stock, $5 par value The Southern Company
---------------------------
Class A preferred, cumulative, $25 stated capital Alabama Power Company
7.60% (First 1992 Series) 6.80% Series
7.60% (Second 1992 Series) 6.40% Series
Adjustable Rate (1993 Series)
First mortgage bonds
9 1/4% Series due 2021
---------------------------
Preferred stock, cumulative, $100 stated value Georgia Power Company
$7.72 Series $7.80 Series
Class A preferred, cumulative, $25 stated value
$2.125 Series $1.9375 Series
$1.90 Series Adjustable Rate (First 1993 Series)
$1.9875 Series Adjustable Rate (Second 1993 Series)
$1.925 Series
Preferred securities, cumulative, $25 liquidation preference (Note)
9% Monthly Income Preferred Security, Series A
First mortgage bonds
6 1/8% Series due 1999 6 7/8% Series due 2002
---------------------------
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C>
Preferred stock, cumulative, $100 par value Mississippi Power Company
Depositary Preferred Shares, each representing one-fourth of a share of:
7.25% Series 6.32% Series 6.65% Series
---------------------------
</TABLE>
<TABLE>
<CAPTION>
<S> <C>
Preferred stock, cumulative, $25 par value Savannah Electric and Power Company
6.64% Series
(Note) Issued by Georgia Power Capital, L.P., and unconditionally guaranteed by
Georgia Power Company.
</TABLE>
<PAGE>
Securities registered pursuant to Section 12(g) of the Act:
<TABLE>
<CAPTION>
<S> <C> <C> <C>
Title of each class Registrant
Preferred stock, cumulative, $100 par value Alabama Power Company
4.20% Series 4.60% Series 4.72% Series 5.96% Series
4.52% Series 4.64% Series 4.92% Series 6.88% Series
</TABLE>
Class A preferred, cumulative, $100,000 stated capital
Auction (1993 Series)
Class A preferred, cumulative, $100 stated capital
Auction (1988 Series)
---------------------------
<TABLE>
<CAPTION>
<S> <C> <C> <C>
Preferred stock, cumulative, $100 stated value Georgia Power Company
$4.60 Series $4.60 Series (1964) $4.96 Series $6.48 Series
$4.60 Series (1962) $4.72 Series $5.00 Series $6.60 Series
$4.60 Series (1963) 4.92 Series $5.64 Series
---------------------------
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C>
Preferred stock, cumulative, $100 par value Gulf Power Company
4.64% Series 5.44% Series 7.88% Series
5.16% Series 7.52% Series
Class A preferred, cumulative, $10 par, $25 stated capital
7.00% Series 7.30% Series 6.72% Series
Adjustable Rate (1993 Series)
</TABLE>
---------------------------
<TABLE>
<CAPTION>
<S> <C> <C> <C>
Preferred stock, cumulative, $100 par value Mississippi Power Company
4.40% Series 4.60% Series 4.72% Series 7.00% Series
</TABLE>
<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___
Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to the
best of registrants' knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. ( )
Aggregate market value of voting stock held by non-affiliates of The
Southern Company at February 28, 1995: $13.7 billion. Each of such other
registrants are wholly-owned subsidiaries of The Southern Company and have no
voting stock other than their common stock. A description of registrants' common
stock follows:
<TABLE>
<CAPTION>
Description of Shares Outstanding
Registrant Common Stock at February 28, 1995
<S> <C> <C>
The Southern Company Par Value $5 Per Share 661,856,138
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>
Documents incorporated by reference: specified portions of The Southern
Company's Proxy Statement relating to the 1995 Annual Meeting of Stockholders
are incorporated by reference into PART III.
This combined Form 10-K 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 of Contents
<TABLE>
<CAPTION>
<S> <C>
Page
PART I
Item 1 Business-
The SOUTHERN System.................................................................................. I-1
New Business Development............................................................................. I-2
Certain Factors Affecting the Industry............................................................... I-3
Construction Programs................................................................................ I-3
Financing Programs................................................................................... I-4
Fuel Supply.......................................................................................... I-7
Territory Served..................................................................................... I-8
Competition.......................................................................................... I-12
Regulation........................................................................................... I-13
Rate Matters......................................................................................... I-16
Employee Relations................................................................................... I-16
Item 2 Properties............................................................................................. I-18
Item 3 Legal Proceedings...................................................................................... I-23
Item 4 Submission of Matters to a Vote of Security Holders.................................................... I-25
Executive Officers of SOUTHERN......................................................................... I-26
PART II
Item 5 Market for Registrants' Common Equity and Related Stockholder Matters.................................. II-1
Item 6 Selected Financial Data................................................................................ II-2
Item 7 Management's Discussion and Analysis of Results of Operations
and Financial Condition.............................................................................. II-2
Item 8 Financial Statements and Supplementary Data............................................................ II-3
Item 9 Changes in and Disagreements with Accountants on
Accounting and Financial Disclosure.................................................................. II-4
PART III
Item 10 Directors and Executive Officers of the Registrants................................................... III-1
Item 11 Executive Compensation................................................................................ III-13
Item 12 Security Ownership of Certain Beneficial Owners and
Management.......................................................................................... III-30
Item 13 Certain Relationships and Related Transactions........................................................ III-36
PART IV
Item 14 Exhibits, Financial Statement Schedules, and Reports
on Form 8-K......................................................................................... IV-1
</TABLE>
i
<PAGE>
DEFINITIONS
When used in Items 1 through 5 and Items 10 through 14, the
following terms will have the meanings indicated. Other defined
terms specific only to Item 11 are found on page III-13.
<TABLE>
<CAPTION>
<S> <C>
Term Meaning
AEC........................................... Alabama Electric Cooperative, Inc.
AFUDC ........................................ Allowance for Funds Used During Construction
ALABAMA....................................... Alabama Power Company
Alicura....................................... Hidroelectrica Alicura, S.A. (Argentina)
AMEA ......................................... Alabama Municipal Electric Authority
Clean Air Act ................................ Clean Air Act Amendments of 1990
Communications................................ Southern Communications Services, Inc.
Dalton ....................................... City of Dalton, Georgia
DOE .......................................... United States Department of Energy
Edelnor....................................... Empressa, Electrica del Norte Grande, S.A. (Chile)
Energy Act.................................... Energy Policy Act of 1992
EMF........................................... Electromagnetic field
EPA .......................................... United States Environmental Protection Agency
FERC ......................................... Federal Energy Regulatory Commission
FPC .......................................... Florida Power Corporation
FP&L ......................................... Florida Power & Light Company
Freeport...................................... Freeport Power Company (Bahamas)
GEORGIA ...................................... Georgia Power Company
GULF ......................................... Gulf Power Company
Gulf States .................................. Gulf States Utilities Company
Holding Company Act .......................... Public Utility Holding Company Act of 1935, as amended
IBEW ......................................... International Brotherhood of Electrical Workers
IRS........................................... Internal Revenue Service
JEA .......................................... Jacksonville Electric Authority
MEAG ......................................... Municipal Electric Authority of Georgia
MISSISSIPPI .................................. Mississippi Power Company
NRC ......................................... Nuclear Regulatory Commission
OPC .......................................... Oglethorpe Power Corporation
operating affiliates.......................... ALABAMA, GEORGIA, GULF, MISSISSIPPI and SAVANNAH
PSC .......................................... Public Service Commission
REA .......................................... Rural Electrification Administration
RICO.......................................... Racketeer Influenced and Corrupt Organizations Act
SAVANNAH ..................................... Savannah Electric and Power Company
SCS .......................................... Southern Company Services, Inc.
SDIG.......................................... The Southern Development and Investment Group, Inc.
SEC .......................................... Securities and Exchange Commission
SEGCO ........................................ Southern Electric Generating Company
SEI .......................................... Southern Electric International, Inc.
SEPA ......................................... Southeastern Power Administration
SERC ......................................... Southeastern Electric Reliability Council
SMEPA ........................................ South Mississippi Electric Power Association
SOUTHERN...................................... The Southern Company
Southern Nuclear.............................. Southern Nuclear Operating Company, Inc.
SOUTHERN system............................... SOUTHERN, the operating affiliates, SEGCO, SEI
Southern Nuclear, SCS, Communications, SDIG and
............................... other subsidiaries
T & TEC....................................... Trinidad and Tobago Electricity Commission
TVA........................................... Tennessee Valley Authority
</TABLE>
ii
<PAGE>
PART I
Item 1. BUSINESS
SOUTHERN was incorporated under the laws of Delaware on November 9, 1945.
SOUTHERN is domesticated under the laws of Georgia and is qualified to do
business as a foreign corporation under the laws of Alabama. SOUTHERN owns all
the outstanding common stock of ALABAMA, GEORGIA, GULF, MISSISSIPPI and
SAVANNAH, each of which is an operating public utility company. ALABAMA and
GEORGIA each own 50% of the outstanding common stock of SEGCO. The operating
affiliates supply electric service in the states of Alabama, Georgia, Florida,
Mississippi and Georgia, respectively, and SEGCO owns generating units at a
large electric generating station which supplies power to ALABAMA and GEORGIA.
More particular information relating to each of the operating affiliates is as
follows:
ALABAMA is a corporation organized under the laws of the State of Alabama
on November 10, 1927, by the consolidation of a predecessor Alabama Power
Company, Gulf Electric Company and Houston Power Company. The predecessor
Alabama Power Company had had a continuous existence since its
incorporation in 1906.
GEORGIA was incorporated under the laws of the State of Georgia on June
26, 1930, and admitted to do business in Alabama on September 15, 1948.
GULF is a corporation which was organized under the laws of the State of
Maine on November 2, 1925, and admitted to do business in Florida on
January 15, 1926, in Mississippi on October 25, 1976 and in Georgia on
November 20, 1984.
MISSISSIPPI was incorporated under the laws of the State of Mississippi on
July 12, 1972, was admitted to do business in Alabama on November 28,
1972, and effective December 21, 1972, by the merger into it of the
predecessor Mississippi Power Company, succeeded to the business and
properties of the latter company. The predecessor Mississippi Power
Company was incorporated under the laws of the State of Maine on November
24, 1924, and was admitted to do business in Mississippi on December 23,
1924, and in Alabama on December 7, 1962.
SAVANNAH is a corporation existing under the laws of the State of Georgia;
its charter was granted by the Secretary of State on August 5, 1921.
SOUTHERN also owns all the outstanding common stock of SEI, Communications,
Southern Nuclear, SCS (the system service company), SDIG and various other
subsidiaries related to foreign operations and domestic non-utility operations
(see Exhibit 21 herein). At this time, the operations of the other subsidiaries
are not material. SEI designs, builds, owns and operates power production
facilities and provides a broad range of technical services to industrial
companies and utilities in the United States and a number of international
markets. A further description of SEI's business and organization follows later
in this section. Communications, beginning in mid-1995, will provide digital
wireless communications services -- over the 800-megahertz frequency band -- to
SOUTHERN's subsidiaries and also will market these services to the public within
the Southeast. Southern Nuclear provides services to the Southern electric
system's nuclear plants. SDIG develops new business opportunities related to
energy products and services.
SEGCO owns electric generating units with an aggregate capacity of 1,019,680
kilowatts at Plant Gaston on the Coosa River near Wilsonville, Alabama, and
ALABAMA and GEORGIA are each entitled to one-half of SEGCO's capacity and
energy. ALABAMA acts as SEGCO's agent in the operation of SEGCO's units and
furnishes coal to SEGCO as fuel for its units. SEGCO also owns three 230,000
volt transmission lines extending from Plant Gaston to the Georgia state line at
which point connection is made with the GEORGIA transmission line system.
The SOUTHERN System
The transmission facilities of each of the operating affiliates and SEGCO are
connected to the respective company's own generating plants and other sources of
power and are interconnected with the transmission facilities of the other
operating affiliates and SEGCO by means of heavy-duty high voltage lines. (In
the case of GEORGIA's integrated transmission system, see Item 1 - BUSINESS -
"Territory Served" herein.)
Operating contracts covering arrangements in effect with principal
neighboring utility systems provide for capacity exchanges, capacity purchases
I-1
<PAGE>
and sales, transfers of economy energy and other similar transactions.
Additionally, the operating affiliates have entered into voluntary reliability
agreements with the subsidiaries of Entergy Corporation, Florida Electric Power
Coordinating Group and TVA and with Carolina Power & Light Company, Duke Power
Company, South Carolina Electric & Gas Company and Virginia Electric and Power
Company, each of which provides for the establishment and periodic review of
principles and procedures for planning and operation of generation and
transmission facilities, maintenance schedules, load retention programs,
emergency operations, and other matters affecting the reliability of bulk power
supply. The operating affiliates have joined with other utilities in the
Southeast (including those referred to above) to form the SERC to augment
further the reliability and adequacy of bulk power supply. Through the SERC, the
operating affiliates are represented on the National Electric Reliability
Council.
An intra-system interchange agreement provides for coordinating operations
of the power producing facilities of the operating affiliates and SEGCO and the
capacities available to such companies from non-affiliated sources and for the
pooling of surplus energy available for interchange. Coordinated operation of
the entire interconnected system is conducted through a central power supply
coordination office maintained by SCS. The available sources of energy are
allocated to the operating affiliates to provide the most economical sources of
power consistent with good operation. The resulting benefits and savings are
apportioned among the operating affiliates.
SCS has contracted with SOUTHERN, each operating affiliate, SEI, various of
the other subsidiaries, Southern Nuclear and SEGCO to furnish, at cost and upon
request, the following services: general executive and advisory services, power
pool operations, general engineering, design engineering, purchasing,
accounting, finance and treasury, taxes, insurance and pensions, corporate,
rates, budgeting, public relations, employee relations, systems and procedures
and other services with respect to business and operations. SEI, SDIG and
Communications have also secured from the operating affiliates certain services
which are furnished at cost.
Southern Nuclear has contracted with ALABAMA to operate its Farley Nuclear
Plant, as authorized by amendments to the plant operating licenses. Southern
Nuclear also has a contract to provide GEORGIA with technical and other services
to support GEORGIA's operation of plants Hatch and Vogtle. Applications are now
pending before the NRC for amendments to the Hatch and Vogtle operating licenses
which would authorize Southern Nuclear to become the operator. See Item 1 -
BUSINESS - "Regulation - Atomic Energy Act of 1954" herein.
New Business Development
SOUTHERN continues to consider new business opportunities, particularly those
which allow use of the expertise and resources developed through its regulated
utility experience. These endeavors began in 1981 and are conducted through SEI
and other existing subsidiaries.
SEI's primary business focus is international and domestic cogeneration, the
independent power market, and the privatization and development of generation
facilities in the international market. SEI currently operates three domestic
independent power production projects totaling 280 megawatts and is one-third
owner of one of these (which produces 180 megawatts). SEI (through subsidiaries)
has a contract to sell electric energy to Virginia Electric and Power Company
from a facility it is constructing in King George, Virginia. Upon completion,
currently planned for 1996, SEI will operate the 220 megawatt coal-fired plant.
SOUTHERN owns 50% of the project.
In April 1993, SOUTHERN completed the purchase of a 50% interest in
Freeport, an electric utility on the Island of Grand Bahama, for a purchase
price of $35.5 million. Freeport has generating capacity of about 112 megawatts.
In August 1993, SOUTHERN completed the purchase of a 55% interest in Alicura, an
entity that owns the right to use the generation from a 1,000 megawatt
hydroelectric generating facility in Argentina, for a net purchase price of
approximately $188 million. In 1993, SOUTHERN completed the purchase of a 38%
interest in Edelnor for the purchase price of $73 million. In December 1994,
SOUTHERN purchased an additional 27% interest in Edelnor for $80 million.
Edelnor is a utility located in Northern Chile that owns and operates a
transmission grid and 96 megawatts of generating facilities and is building an
additional 150 megawatt facility.
I-2
<PAGE>
Also in December 1994, SOUTHERN completed the acquisition of a 39% interest
in a partnership that acquired the generation operations of the T&TEC,
comprising approximately 1,178 megawatts of generating capacity for a purchase
price of $85.6 million. Additionally, SOUTHERN purchased a 100% interest in an
energy and recovery complex from Scott Paper Company for a purchase price of
$350 million, which included the assumption of $85 million of outstanding
tax-exempt debt. This complex is used to generate substantially all of the steam
and electricity requirements of Scott's integrated pulp and paper mill located
in Mobile, Alabama and has a generating capacity of 105 megawatts. Most of the
facility's fuel needs are met from waste and by-products generated by Scott's
pulping and woodlands operations.
SEI and SDIG render consulting services and market SOUTHERN system expertise
in the United States and throughout the world. They contract with other public
utilities, commercial concerns and government agencies for the rendition of
services and the licensing of intellectual property. In addition, SDIG engages
in energy management-related services and activities.
At year-end, the SEC authorized SOUTHERN to form a new subsidiary,
Communications, and to invest up to $179 million in Communications.
Communications has contracted with a prime vendor for the installation and
construction of a wireless communications system in order to provide services to
the general public, including SOUTHERN subsidiaries. The technology selected is
new and still under development. Communications will be subject to both market
and technology risks. It is anticipated that the operations of Communications,
at least in its early years, will negatively affect earnings and cash flow.
Furthermore, there can be no assurance that Communications will ultimately
recover the cost of constructing its wireless communications system.
These continuing efforts to invest in and develop new business
opportunities offer the potential of earning returns which may exceed those of
rate-regulated operations. However, these activities also involve a higher
degree of risk. SOUTHERN expects to make substantial investments over the period
1995-1997 in these and other new businesses.
Certain Factors Affecting the Industry
Various factors are currently affecting the electric utility industry in
general, including increasing competition, costs required to comply with
environmental regulations, and the potential for new business opportunities
(with their associated risks) outside of traditional rate-regulated operations.
The effects of these and other factors on the SOUTHERN system are described
herein; particular reference is made to Item 1 - BUSINESS - "New Business
Development,"- - "Competition" and -- "Environmental Regulation".
Construction Programs
The subsidiary companies of SOUTHERN are engaged in continuous construction
programs to accommodate existing and estimated future loads on their respective
systems. Construction additions or acquisitions of property during 1995 through
1997 by the operating affiliates, SEGCO, SCS and Southern Nuclear are estimated
as follows: (in millions)
===========================================================
1995 1996 1997
----------------------------
ALABAMA $ 604 $ 500 $ 502
GEORGIA 579 626 724
GULF 62 76 84
MISSISSIPPI 78 73 72
SAVANNAH 34 27 26
SEGCO 10 11 11
SCS 26 19 14
Southern Nuclear 2 2 1
----------------------------------------------------------
SOUTHERN system* $1,395 $1,267 $1,362
==========================================================
*System totals for years 1996 and 1997 are less than the sum of the
subsidiaries due to changes made in GEORGIA's construction budget subsequent to
approval of the SOUTHERN system construction budget. However, 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.
Reference is made to Note 4 to the financial statements of each registrant
in Item 8 herein for the amounts of AFUDC included in the above estimates. The
construction estimates do not include amounts which may be spent by
Communications or SEI (or the subsidiary(s) created to effect such project(s))
on future power production projects or the projects discussed earlier under "New
Business Development." (See also Item 1 - BUSINESS - "Financing Programs"
herein.)
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<PAGE>
Estimated construction costs in 1995 are expected to be apportioned
approximately as follows: (in millions)
<TABLE>
<CAPTION>
============================================================================================================================
SOUTHERN
system* ALABAMA GEORGIA GULF MISSISSIPPI SAVANNAH
-----------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Combustion turbines $ 135 $100 $ 35 $ - $ - $ -
Other generating
facilities including
associated plant substations 246 98 90 20 16 12
New business 323 134 155 14 13 7
Transmission 214 91 105 2 15 1
Joint line and substation 30 - 28 1 1 -
Distribution 155 77 41 11 18 8
Nuclear fuel 99 40 59 - - -
General plant 193 64 66 14 15 6
----------------------------------------------------------------------------------------
$1,395 $604 $579 $62 $78 $34
========================================================================================
</TABLE>
*SCS and Southern Nuclear plan capital additions to general plant in 1995
of $26 million and $2 million, respectively, while SEGCO plans capital additions
of $10 million to generating facilities.
The construction programs are subject to periodic review and revision, and
actual construction costs may vary from the above estimates because of numerous
factors. These factors include changes in business conditions; revised load
growth estimates; changes in environmental regulations; changes in existing
nuclear plants to meet new regulatory requirements; increasing cost of labor,
equipment and materials; and cost of capital. Also, the SOUTHERN system
construction estimates do not reflect expenditures by Communications or the
possibility of SEI securing a contract(s) to buy or build additional generating
facilities.
The operating affiliates do not have any baseload generating plants under
construction. However, within the service area, the construction of combustion
turbine peaking units with an aggregate capacity of approximately 1,100
megawatts 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.
During 1991, the Georgia legislature passed legislation which requires
GEORGIA and SAVANNAH each to file an Integrated Resource Plan for approval by
the Georgia PSC. Under the plan rules, the Georgia PSC must pre-certify the
construction of new power plants. (See Item 1 - BUSINESS - "Rate Matters
-Integrated Resource Planning" herein.)
See Item 1 - BUSINESS - "Regulation - Environmental Regulation" herein for
information with respect to certain existing and proposed environmental
requirements and Item 2 - PROPERTIES - "Jointly-Owned Facilities" herein for
additional information concerning ALABAMA's and GEORGIA's joint ownership of
certain generating units and related facilities with certain non-affiliated
utilities.
Rocky Mountain Hydroelectric Project
For information regarding GEORGIA's Rocky Mountain Project, including a joint
ownership agreement with OPC and the uncertain recovery of GEORGIA's costs in
this project, reference is made to Note 4 to SOUTHERN's and to GEORGIA's
financial statements in Item 8 herein.
Stockholder Suit
For information concerning a suit against certain current and former directors
and officers of SOUTHERN involving allegations related to Plant Vogtle, the
Rocky Mountain project and other matters, see Item 3 - LEGAL PROCEEDINGS herein.
Financing Programs
In early 1995, SOUTHERN sold - through a public offering - common stock for
proceeds totaling approximately $103 million. SOUTHERN may require additional
I-4
<PAGE>
equity capital during the remainder of 1995. The amount and timing of additional
equity capital to be raised in 1995, as well as subsequent years, will be
contingent on SOUTHERN's investment opportunities. Equity capital can be
provided from any combination of public offerings, private placements, or
SOUTHERN's stock plans. The operating affiliates' construction programs are
expected to be financed primarily from internal sources. Short-term debt will be
utilized if necessary. The operating affiliates may issue additional long-term
debt and preferred stock primarily for the purposes of debt maturities and for
redeeming higher-cost securities if market conditions permit.
In order to issue first mortgage bonds and preferred stock, each of the
operating affiliates must comply with earnings coverage requirements contained
in its respective mortgage and charter. These provisions require, for the
issuance of additional first mortgage bonds, a minimum, before income tax,
earnings coverage of twice the pro forma annual interest charges on first
mortgage bonds and indebtedness secured by prior or equal ranking lien and, for
the issuance of additional preferred stock, a minimum, after income tax,
earnings coverage of one and one-half times pro forma annual interest charges
and preferred stock dividends, in each case for a period of twelve consecutive
calendar months within the fifteen calendar months immediately preceding the
proposed new issue. The ability to issue securities in the future will depend on
coverages at that time. Currently each of the operating affiliates expect to
have adequate coverage ratios for anticipated requirements through at least
1997.
The amounts of securities representing short-term unsecured indebtedness
allowable under the respective charters, and the maximum amounts of short-term
indebtedness authorized by the appropriate regulatory authorities, are shown in
the following table:
======================================================
Short-term Unsecured Indebtedness
------------------------------------------------------
Allowable
Under Charter
at December 31, 1994
--------------------
Percent of
Secured
Indebtedness
and Other
Amount Capital (2)
-------- -------------------
(Millions)
ALABAMA $ 1,108 20%
GEORGIA 1,752 20
GULF 89 10
MISSISSIPPI 146 20
SAVANNAH 70 20
SOUTHERN (1) (1)
------------------------------------------------------
======================================================
Short-term Indebtedness
------------------------------------------------------
Maximum Regulatory
Authorization
-------------
Outstanding
at
Amount December 31, 1994
------ -----------------
(Millions)
ALABAMA $530 (3) $180
GEORGIA 900 (3) 425
GULF 150 (3) 54
MISSISSIPPI 140 (3) -
SAVANNAH 70 (3) 3
SOUTHERN 500 (3) 305
------------------------------------------------------
Notes:
(1) No limitation.
(2) Under the provisions of the respective charters, GEORGIA's,
MISSISSIPPI's and SAVANNAH's preferred stockholders have approved increases in
the amounts of securities representing short-term unsecured indebtedness which
the companies may have outstanding until July 1 in 2003, 1999 and 1999,
respectively. Such limitations were raised from 10% of secured indebtedness and
other capital to 20% thereof. These approved increases are reflected in the
above table.
I-5
<PAGE>
(3) ALABAMA, GEORGIA, GULF, MISSISSIPPI, SAVANNAH and SOUTHERN have received
SEC authorization to issue from time to time short-term and/or term loan notes
to banks and commercial paper to dealers in the amounts shown through March 31,
1996, except for GULF, which date is December 31, 1996.
Reference is made to Note 5, 5, 8, 5, 5 and 5 to the financial statements
for SOUTHERN, ALABAMA, GEORGIA, GULF, MISSISSIPPI and SAVANNAH, respectively, in
Item 8 herein for information regarding the registrants' credit arrangements.
I-6
<PAGE>
Fuel Supply
The operating affiliates' and SEGCO's supply of electricity is derived
predominantly from coal. The sources of generation for the years 1992 through
1994 and the estimates for 1995 are shown below:
Oil
and
ALABAMA Coal Nuclear Hydro Gas Total
-----------------------------------------
1992 70% 21% 9% *% 100%
1993 70 22 8 * 100
1994 68 23 9 * 100
1995 74 19 7 * 100
GEORGIA
1992 76 21 3 * 100
1993 77 20 3 * 100
1994 75 22 3 * 100
1995 76 21 2 1 100
GULF
1992 100 ** ** * 100
1993 99 ** ** 1 100
1994 100 ** ** * 100
1995 100 ** ** * 100
MISSISSIPPI
1992 91 ** ** 9 100
1993 90 ** ** 10 100
1994 85 ** ** 15 100
1995 83 ** ** 17 100
SAVANNAH
1992 81 ** ** 19 100
1993 83 ** ** 17 100
1994 91 ** ** 9 100
1995 89 ** ** 11 100
SEGCO
1992 100 ** ** * 100
1993 100 ** ** * 100
1994 100 ** ** * 100
1995 100 ** ** * 100
SOUTHERN
system
1992 77 17 5 1 100
1993 78 17 4 1 100
1994 75 19 5 1 100
1995 78 17 4 1 100
-------------------------------------------------------------
*Less than 0.5%
**Not applicable
The average costs of fuel in cents per net kilowatt-hour generated are shown
below:
Oil
and Weighted
ALABAMA Coal Nuclear Gas Average
-------------------------------------------
1992 1.99 0.44 * 1.64
1993 2.11 0.51 * 1.73
1994 1.92 0.49 * 1.56
GEORGIA
1992 1.75 0.63 * 1.52
1993 1.75 0.58 * 1.52
1994 1.67 0.63 * 1.44
GULF
1992 2.07 ** * 2.07
1993 2.03 ** 4.50 2.05
1994 2.00 ** * 2.01
MISSISSIPPI
1992 1.59 ** 3.05 1.60
1993 1.66 ** 2.97 1.71
1994 1.67 ** 2.60 1.71
SAVANNAH
1992 2.28 ** 3.55 2.53
1993 2.02 ** 4.70 2.49
1994 2.19 ** 4.72 2.42
SEGCO
1992 1.81 ** * 1.81
1993 1.80 ** * 1.81
1994 1.83 ** * 1.83
SOUTHERN
system
1992 1.86 0.54 4.81 1.62
1993 1.90 0.54 4.34 1.67
1994 1.80 0.56 3.99 1.56
----------------------------------------------------------------
*Not meaningful because of minimal generation from
fuel source.
**Not applicable.
***See SELECTED FINANCIAL DATA in Item 6 herein for each registrant's source
of energy supply.
I-7
<PAGE>
At March 3, 1995, the operating affiliates and SEGCO had stockpiles of coal
on hand at their respective coal-fired plants which represented an estimated 38
day recoverable supply, based on projected 1995 nameplate burn requirements. It
is estimated that approximately 56.8 million tons of coal will be consumed in
1995 by the operating affiliates and SEGCO (including those units GEORGIA owns
jointly with OPC, MEAG, Dalton, FP&L and JEA and the units ALABAMA owns jointly
with AEC). The operating affiliates and SEGCO currently have 32 coal contracts.
These contracts cover remaining terms of up to 16 years. Approximately 20% of
1995 estimated coal requirements will be purchased in the spot market.
Management has set a goal whereby the spot market should be utilized, absent the
transition from coal contract expirations, for 20 to 25% of the SOUTHERN
system's coal supply. Additionally, it has been determined that approximately 35
days of recoverable supply of coal is the appropriate level for coal stockpiles.
During 1994, the operating affiliates' and SEGCO's average price of coal
delivered was approximately $42 per ton. The typical sulfur content of coal
purchased under contracts ranges from approximately 0.7% to 3.0% sulfur by
weight. Fuel sulfur restrictions and other environmental limitations have
increased significantly and may increase further the difficulty and cost of
obtaining an adequate coal supply. See Item 1 - BUSINESS - "Regulation -
Environmental Regulation" herein.
Changes in fuel prices are generally reflected in fuel adjustment clauses
contained in rate schedules. See Item 1 - BUSINESS - "Rate Matters -
Rate Structure" herein.
ALABAMA owns coal lands and mineral rights in the Warrior Coal Field,
located northwest of Birmingham in the vicinity of its Gorgas Steam Plant. SEGCO
also owns coal reserves in the Warrior Coal Field and in the Cahaba Coal Field,
which is located southwest of Birmingham. ALABAMA has an agreement with a
non-affiliated industrial and mining firm to mine coal from ALABAMA's reserves,
as well as its own reserves, for supply to ALABAMA's generating units.
The operating affiliates have renegotiated, bought out or otherwise
terminated various coal supply contracts. For more information on certain of
these transactions see Note 5 to the financial statements of SOUTHERN, GULF and
MISSISSIPPI in Item 8 herein.
ALABAMA and GEORGIA have numerous contracts covering a portion of their
nuclear fuel needs for uranium, conversion services, enrichment services and
fuel fabrication. These contracts have varying expiration dates up to the year
2014, but most are short to medium term (less than 10 years). Management
believes that sufficient capacity for nuclear fuel supplies and processing
exists to preclude the impairment of normal operations of the SOUTHERN system's
nuclear generating units.
ALABAMA and GEORGIA have contracts with the DOE that provide for the
permanent disposal of spent nuclear fuel, which was scheduled to begin in 1998.
However, the actual year this service will begin is uncertain. Sufficient
storage capacity currently is available to permit operation into 2003 at Plant
Hatch, into 2009 at Plant Vogtle, and into 2012 and 2014 at Plant Farley units 1
and 2, respectively.
The Energy Act imposed upon utilities with nuclear plants, including ALABAMA
and GEORGIA, obligations for the decontamination and decommissioning of federal
nuclear fuel enrichment facilities. See Note 1 to SOUTHERN's, ALABAMA's and
GEORGIA's financial statements in Item 8 herein.
Territory Served
The territory in which the operating affiliates provide electric service
comprises most of the states of Alabama and Georgia together with the
northwestern portion of Florida and southeastern Mississippi. In this territory
there are non-affiliated electric distribution systems which obtain some or all
of their power requirements either directly or indirectly from the operating
affiliates. The territory has an area of approximately 120,000 square miles and
an estimated population of approximately 11 million.
ALABAMA is engaged, within the State of Alabama, in the generation and
purchase of electricity and the distribution and sale of such electricity at
retail in over 1,000 communities (including Anniston, Birmingham, Gadsden,
Mobile, Montgomery and Tuscaloosa), and at wholesale to 15 municipally-owned
electric distribution systems, 11 of which are served indirectly through sales
to AMEA, and two rural distributing cooperative associations. ALABAMA also
supplies steam service in downtown Birmingham. ALABAMA owns coal reserves near
I-8
<PAGE>
its steam-electric generating plant at Gorgas and uses the output of coal from
these reserves in its generating plants. ALABAMA also sells, and cooperates with
dealers in promoting the sale of, electric appliances.
GEORGIA is engaged in the generation and purchase of electricity and the
distribution and sale of such electricity within the State of Georgia at retail
in over 600 communities (including Athens, Atlanta, Augusta, Columbus, Macon,
Rome and Valdosta), as well as in rural areas, and at wholesale currently to 39
electric cooperative associations through OPC, a corporate cooperative of
electric membership cooperatives in Georgia, and to 50 municipalities, 47 of
which are served through MEAG, a public corporation and an instrumentality of
the State of Georgia.
GULF is engaged, within the northwestern portion of Florida, in the
generation and purchase of electricity and the distribution and sale of such
electricity at retail in 71 communities (including Pensacola, Panama City and
Fort Walton Beach), as well as in rural areas, and at wholesale to a
non-affiliated utility and a municipality. GULF also sells electric appliances.
MISSISSIPPI is engaged in the generation and purchase of electricity and the
distribution and sale of such energy within the 23 counties of southeastern
Mississippi, at retail in 123 communities (including Biloxi, Gulfport,
Hattiesburg, Laurel, Meridian and Pascagoula), as well as in rural areas, and at
wholesale to one municipality and four rural electric cooperative associations.
SAVANNAH is engaged, within a five-county area in eastern Georgia, in the
generation and purchase of electricity and the distribution and sale of such
electricity at retail and, as a member of the SOUTHERN system power pool, the
transmission and sale of wholesale energy.
I-9
<PAGE>
The sources of revenues for the SOUTHERN system and each of SOUTHERN's
operating affiliates are shown in Item 6 herein. For the year ended December 31,
1994, the registrants derived their respective industrial revenues as shown in
the following table.
<TABLE>
<CAPTION>
======================================================================================================================
SOUTHERN
system ALABAMA GEORGIA GULF MISSISSIPPI SAVANNAH
----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Textiles 13% 10% 19% *% 3% *%
Chemical 10 14 6 21 14 36
Paper 10 10 10 11 5 28
Primary metal 7 13 5 1 2 *
Stone, clay, glass
and concrete 6 6 8 2 1 4
Utility services 8 8 8 3 9 6
Food 5 3 6 1 5 9
Government 5 2 5 38 10 *
Transportation equipment 3 1 4 1 7 10
Lumber and wood products 4 5 3 2 8 2
Other** 29 28 26 20 36 5
----------------------------------------------------------------------------------------------------------------------
100% 100% 100% 100% 100% 100%
======================================================================================================================
</TABLE>
* Less than 0.5%
**Other major sources (5% or more) of industrial revenues were: ALABAMA, coal
mining (5%); GULF, oil and gas extraction (8%); and MISSISSIPPI, petroleum
refining (23%) and electric machinery (5%).
A portion of the area served by SOUTHERN's operating affiliates adjoins the
area served by TVA and its municipal and cooperative distributors. An Act of
Congress limits the distribution of TVA power, unless otherwise authorized by
Congress, to specified areas or customers which generally were those served on
July 1, 1957.
The REA has authority to make loans to cooperative associations or
corporations to enable them to provide electric service to customers in rural
sections of the country. There are 70 electric cooperative organizations
operating in the territory in which the operating affiliates provide electric
service at retail or wholesale.
One of these, AEC, is a generating and transmitting cooperative selling
power to several distributing cooperatives, municipal systems and other
customers in south Alabama and northwest Florida. AEC owns generating units with
approximately 840 megawatts of nameplate capacity, including an undivided
ownership interest in ALABAMA's Plant Miller Units 1 and 2. AEC's facilities
were financed with REA loans secured by long-term contracts requiring
distributing cooperatives to take their requirements from AEC to the extent such
energy is available. Two of the 14 distributing cooperatives operating in
ALABAMA's service territory obtain a portion of their power requirements
directly from ALABAMA.
Four electric cooperative associations, financed by the REA, operate within
GULF's service area. These cooperatives purchase their full requirements from
AEC and SEPA. A non-affiliated utility also operates within GULF's service area
and purchases a portion of its requirements from GULF.
ALABAMA and GULF have entered into separate agreements with AEC involving
interconnection between the respective systems and, in the case of ALABAMA, the
delivery of capacity and energy from AEC to certain distributing cooperatives.
The rates for the various services provided by ALABAMA and GULF to AEC are based
on formulary approaches which result in the charges by each company being
updated annually, subject to FERC approval. See Item 2 - PROPERTIES -
"Jointly-Owned Facilities" herein for details of ALABAMA's joint-ownership with
AEC of a portion of Plant Miller.
Another of the 70 electric cooperatives is SMEPA, also a generating and
transmitting cooperative. SMEPA has a generating capacity of 739,000 kilowatts
I-10
<PAGE>
and a transmission system estimated to be 1,357 miles in length. MISSISSIPPI has
an interchange agreement with SMEPA pursuant to which various services are
provided, including the furnishing of protective capacity by MISSISSIPPI to
SMEPA.
There are 43 electric cooperative organizations operating in, or in areas
adjoining, territory in the State of Georgia in which GEORGIA provides electric
service at retail or wholesale. Three of these organizations obtain their power
from TVA and one from other sources. Since July 1, 1975, OPC has supplied the
requirements of the remaining 39 of these cooperative organizations from
self-owned generation acquired from GEORGIA and, until September 1991, through
partial requirements purchases from GEORGIA. GEORGIA entered into an agreement
with OPC pursuant to which, effective in September 1991, OPC ceased to be a
partial requirements wholesale customer of GEORGIA. Instead, OPC began the
purchase of 1,250 megawatts of capacity from GEORGIA through 1999, subject to
reduction or extension by OPC, and may satisfy the balance of its needs through
purchases from others. During 1994, OPC gave GEORGIA notice of its intent to
decrease its purchases of capacity by 250 megawatts beginning in the fall of
1996.
There are 65 municipally-owned electric distribution systems operating in
the territory in which SOUTHERN's operating affiliates provide electric service
at retail or wholesale.
AMEA was organized under an act of the Alabama legislature and is comprised
of 11 municipalities. In 1986, ALABAMA entered into a firm power purchase
contract with AMEA entitling AMEA to scheduled amounts of capacity (to a maximum
of 100 megawatts) for a period of 15 years commencing September 1, 1986. In
October 1991, ALABAMA entered into a second firm power purchase contract with
AMEA entitling AMEA to scheduled amounts of additional capacity (to a maximum 80
megawatts) for a period of 15 years beginning October 1, 1991. In both contracts
the power is being sold to AMEA for its member municipalities that previously
were served directly by ALABAMA as wholesale customers. Under the terms of the
contracts, ALABAMA received payments from AMEA representing the net present
value of the revenues associated with the respective capacity entitlements. See
Note 7 to ALABAMA's financial statements to Item 8 herein for further
information on these contracts.
Forty-six municipally-owned electric distribution systems formerly served on
a full requirements wholesale basis by GEORGIA and one county-owned system now
receive their requirements through MEAG, which was established by a state
statute in 1975. MEAG serves these requirements from self-owned generation
facilities acquired from GEORGIA and through purchases of capacity and energy
from GEORGIA under partial requirements rates. Similarly, since 1977 Dalton has
filled its requirements from generation facilities acquired from GEORGIA and
through partial requirements purchases. The full requirements of two
municipally-owned electric distribution systems are still served at wholesale by
GEORGIA. (See Item 2 - PROPERTIES - "Jointly-Owned Facilities" herein.)
GULF and MISSISSIPPI provide wholesale requirements for one municipal system
each.
GEORGIA has entered into substantially similar agreements with OPC, MEAG and
Dalton providing for the establishment of an integrated transmission system to
carry the power and energy of each. The agreements require an investment by each
party in the integrated transmission system in proportion to its respective
share of the aggregate system load. (See Item 2 - PROPERTIES - "Jointly-Owned
Facilities" herein.)
ALABAMA, GEORGIA, GULF and MISSISSIPPI also have contracts with SEPA (a
federal power marketing agency) providing for the use of those companies'
facilities at government expense to deliver to certain cooperatives and
municipalities, entitled by federal statute to preference in the purchase of
power from SEPA, quantities of power equivalent to the amounts of power
allocated to them by SEPA from certain United States Government hydroelectric
projects.
The retail service rights of all electric suppliers in the State of Georgia
are regulated by the 1973 State Territorial Electric Service Act. Pursuant to
the provisions of this Act, all areas within existing municipal limits were
assigned to the primary electric supplier therein on March 29, 1973 (451
municipalities, including Atlanta, Columbus, Macon, Augusta, Athens, Rome and
Valdosta, to GEORGIA; 115 to electric cooperatives; and 50 to publicly-owned
I-11
<PAGE>
systems). Areas outside of such municipal limits were either to be assigned or
to be declared open for customer choice of supplier by action of the Georgia PSC
pursuant to standards set forth in the Act. Consistent with such standards, the
Georgia PSC has assigned substantially all of the land area in the state to a
supplier. Notwithstanding such assignments, the Act provides that any new
customer locating outside of 1973 municipal limits and having a connected load
of at least 900 kilowatts may receive electric service from the supplier of its
choice.
Under and subject to the provisions of its franchises and concessions and
the 1973 State Territorial Electric Service Act, SAVANNAH has the full but
nonexclusive right to serve the City of Savannah, the Towns of Bloomingdale,
Pooler, Garden City, Guyton, Newington, Oliver, Port Wentworth, Rincon, Tybee
Island, Springfield, Thunderbolt, Vernonburg, and in conjunction with a
secondary supplier, the Town of Richmond Hill. In addition, SAVANNAH has been
assigned certain unincorporated areas in Chatham, Effingham, Bryan, Bulloch and
Screven Counties by the Georgia PSC. No other electric utility operates in
competition with SAVANNAH in its service area.
Pursuant to the 1956 Utility Act, the Mississippi PSC issued "Grandfather
Certificates" of convenience and necessity to MISSISSIPPI and to six
distribution rural cooperatives operating in southeastern Mississippi, then
served in whole or in part by MISSISSIPPI, authorizing them to distribute
electricity in certain specified geographically described areas of the state.
The six cooperatives serve approximately 290,000 retail customers in a
certificated area of approximately 10,300 square miles. In areas included in a
"Grandfather Certificate", the utility holding such certificate may, without
further certification, extend its lines up to five miles; other extensions
within that area by such utility, or by other utilities, may not be made except
upon a showing of, and a grant of a certificate of, public convenience and
necessity. Areas included in such a certificate which are subsequently annexed
to municipalities may continue to be served by the holder of the certificate,
irrespective of whether it has a franchise in the annexing municipality. On the
other hand, the holder of the municipal franchise may not extend service into
such newly annexed area without authorization by the Mississippi PSC.
Long-Term Power Sales Agreements
Reference is made to Note 8, 7, 6, 7, 7 and 6 to the financial statements for
SOUTHERN, ALABAMA, GEORGIA, GULF, MISSISSIPPI and SAVANNAH, respectively, in
Item 8 herein for information regarding contracts for the sales of capacity and
energy to non-territorial customers.
Competition
The electric utility industry in general has become, and is expected to continue
to be, increasingly competitive as the result of factors including regulatory
and technological developments. The Energy Act, enacted in 1992, was intended to
foster competition in the wholesale market by, among other things, facilitating
participation by independent power producers. The Energy Act includes provisions
authorizing the FERC under certain conditions to order utilities owning
transmission facilities to provide wholesale transmission services for other
utilities or entities that generate energy.
As a result of the foregoing factors, SOUTHERN has experienced increasing
competition for available off-system sales of capacity and energy from
neighboring utilities and alternative sources of energy. Additionally, the
future effect of cogeneration and small-power production facilities on the
SOUTHERN system cannot currently be determined but may be adverse. Reference is
made to each registrant's "Management's Discussion and Analysis - Future
Earnings Potential" in Item 7 herein for further discussion of competition.
ALABAMA currently has cogeneration contracts in effect with nine industrial
customers. Under the terms of these contracts, ALABAMA purchases excess
generation of such companies. During 1994, ALABAMA purchased 82.1 million
kilowatt-hours from such companies at a cost of $1.5 million.
GEORGIA currently has cogeneration contracts in effect with seven industrial
customers. Under the terms of these contracts, GEORGIA purchases excess
generation of such companies. During 1994, GEORGIA purchased 4.1 million
kilowatt-hours from such companies at a cost of $56,000. GEORGIA has also
reached an agreement on major terms and conditions of a purchase power
I-12
<PAGE>
arrangement whereby GEORGIA would buy electricity during peak periods from a
proposed 200 megawatt cogeneration facility, starting in June 1998. A final
agreement is expected to be completed and filed with the Georgia PSC for
certification during 1995.
GULF currently has cogeneration agreements for "as available" energy in
effect with two industrial customers. During 1994, GULF purchased 237 million
kilowatt-hours from such companies for $3.8 million.
SAVANNAH currently has cogeneration contracts in effect with four industrial
customers. Under the terms of these contracts, SAVANNAH purchases excess
generation of such companies. During 1994, SAVANNAH purchased 2.0 million
kilowatt-hours from such companies at a cost of $43,000.
The competition for retail energy sales among competing suppliers of energy
is influenced by various factors, including price, availability, technological
advancements and reliability. These factors are, in turn, affected by, among
other influences, political and environmental considerations, taxation and
supply.
The operating affiliates have experienced, and expect to continue to
experience, competition in their respective retail service territories in
varying degrees as the result of self-generation (as described above) and fuel
switching by customers and other factors. (See also Item 1 - BUSINESS -
"Territory Served" herein for information concerning suppliers of electricity
operating within or near the areas served at retail by the operating
affiliates.) In addition, while the Energy Act does not provide for "retail
wheeling" (i.e., the transmission and distribution by an electric utility to
retail customers within its service territory of energy produced by another
entity), applicable legislative and regulatory bodies may consider imposing such
a requirement in the future, the effect of which may be adverse or, conversely,
prove to be beneficial. Some form of retail wheeling has been mandated in the
states of California and Michigan. Any form of retail wheeling which may be
adopted would need to address a variety of complex issues, including stranded
investments and the utility's obligation to serve a particular customer or
customers.
Regulation
State Commissions
The operating affiliates and SEGCO are subject to the jurisdiction of their
respective state regulatory commissions, which have broad powers of supervision
and regulation over public utilities operating in the respective states,
including their rates, service regulations, sales of securities (except for the
Mississippi PSC) and, in the cases of the Georgia PSC and Mississippi PSC, in
part, retail service territories. (See Item 1 - BUSINESS - "Rate Matters" and
"Territory Served" herein.)
Holding Company Act
SOUTHERN is registered as a holding company under the Holding Company Act, and
it and its subsidiary companies are subject to the regulatory provisions of said
Act, including provisions relating to the issuance of securities, sales and
acquisitions of securities and utility assets, services performed by SCS and
Southern Nuclear, and the activities of certain of SOUTHERN's special purpose
subsidiaries. In light of heightened competition in the electric utility
industry and development of the "information superhighway", public debate has
increasingly suggested enacting legislation which would repeal, in whole or in
part, the Holding Company Act.
Federal Power Act
The Federal Power Act subjects the operating affiliates and SEGCO to regulation
by the FERC as companies engaged in the transmission or sale at wholesale of
electric energy in interstate commerce, including regulation of accounting
policies and practices.
ALABAMA and GEORGIA are also subject to the provisions of the Federal Power
Act or the earlier Federal Water Power Act applicable to licensees with respect
to their hydroelectric developments. Among the hydroelectric projects subject to
licensing by the FERC are 14 existing ALABAMA generating stations having an
aggregate installed capacity of 1,582,725 kilowatts and 17 existing GEORGIA
generating stations having an aggregate installed capacity of 859,440 kilowatts.
I-13
<PAGE>
In December 1991, ALABAMA and GEORGIA filed with the FERC their applications
for new licenses on six of their existing hydroelectric projects. The six
projects, ALABAMA's Yates and Thurlow and GEORGIA's Lloyd Shoals, Langdale,
Riverview and North Georgia, totaling 272,340 kilowatts of capacity, had
licenses that expired December 31, 1993. Although the possibility of competition
existed for these licenses, no competing applications were filed prior to the
filing deadline of December 31, 1991.
The Lloyd Shoals, Langdale and Riverview projects were granted new 30-year
licenses that expire 2023. Each of the remaining projects are operating on
annual licenses under the same terms and conditions as their original licenses.
Additionally, the FERC has issued an order granting a combined, 40-year license
for the Yates and Thurlow projects. ALABAMA appealed the FERC order to the U.S.
Court of Appeals for the District of Columbia Circuit with respect to certain
provisions of this license. However, in December 1994 the FERC, in a separate
proceeding, issued an order deleting the contested provisions, but ALABAMA's
appeal remains pending before the Court. As a part of the application for the
combined, 40-year license for the Yates and Thurlow projects, ALABAMA agreed to
expand the capacity of these units by a total of approximately 10 megawatts.
In August 1995, GEORGIA will file with the FERC its application for a new
license for its Sinclair Project which has 45,000 kilowatts of capacity.
GEORGIA's current license for this project expires September 1, 1997. Certain
environmental issues raised during the licensing process may result in the FERC
including license terms and conditions that could have a substantial effect on
the peaking capability of the project.
In July 1994, flooding of the Flint River in and around Albany, Georgia and
the Flint River Project (5,400 kilowatts of capacity) resulted in substantial
damage to the dam and power house. Under the FERC oversight, GEORGIA is
undertaking repairs to the facilities. In the event GEORGIA elects to file for a
new license for the Flint River Project, it is required to file a notice of
intent with the FERC by September 1996. GEORGIA will then be required to file an
application for a new license for such project by September 1999.
GEORGIA and OPC also have a license, expiring in 2027, for the Rocky
Mountain Project, a pure pumped storage facility of 847,800 kilowatt capacity
scheduled to begin commercial operation in 1995. In 1988, the FERC approved an
amendment to GEORGIA's license for the project, adding OPC as co-licensee and
extending the commercial operation date to 1996. (See Item 1 - BUSINESS -
"Construction Programs - Rocky Mountain Hydroelectric Project" and Item 2 -
PROPERTIES - "Jointly-Owned Facilities" herein.)
Licenses for all projects, excluding those discussed above, expire in the
period 2007-2023 in the case of ALABAMA's projects and in the period 2005-2020
in the case of GEORGIA's projects.
Upon or after the expiration of each license, the United States Government,
by act of Congress, may take over the project, or the FERC may relicense the
project either to the original licensee or to a new licensee. In the event of
takeover or relicensing to another, the original licensee is to be compensated
in accordance with the provisions of the Federal Power Act, such compensation to
reflect the net investment of the licensee in the project, not in excess of the
fair value of the property taken, plus reasonable damages to other property of
the licensee resulting from the severance therefrom of the property taken. In
addition, the FERC recently has issued a policy statement addressing
decommissioning of a licensed project. What may be required to decommission a
project has not been determined.
Atomic Energy Act of 1954
ALABAMA, GEORGIA and Southern Nuclear are subject to the provisions of the
Atomic Energy Act of 1954, as amended, which vests jurisdiction in the NRC over
the construction and operation of nuclear reactors, particularly with regard to
certain public health and safety and antitrust matters. The National
Environmental Policy Act has been construed to expand the jurisdiction of the
NRC to consider the environmental impact of a facility licensed under the Atomic
Energy Act of 1954, as amended.
Reference is made to Notes 1 and 13 to SOUTHERN's, Notes 1 and 11 to
ALABAMA's and Notes 1 and 4 to GEORGIA's financial statements in Item 8 herein
for information on nuclear decommissioning costs and nuclear insurance.
I-14
<PAGE>
Additionally, Note 3 to GEORGIA's financial statements contains information
regarding nuclear performance standards imposed by the Georgia PSC that may
impact retail rates.
Environmental Regulation
The operating affiliates and SEGCO are subject to federal, state and local
environmental requirements which, among other things, control emissions of
particulates, sulfur dioxide and nitrogen oxides into the air; the use,
transportation, storage and disposal of hazardous and toxic waste; and
discharges of pollutants, including thermal discharges, into waters of the
United States. The operating affiliates and SEGCO expect to comply with such
requirements, which generally are becoming increasingly stringent, through
technical improvements, the use of appropriate combinations of low-sulfur fuel
and chemicals, addition of environmental control facilities, changes in control
techniques and reduction of the operating levels of generating facilities.
Failure to comply with such requirements could result in the complete shutdown
of individual facilities not in compliance as well as the imposition of civil
and criminal penalties.
Reference is made to each registrant's "Management's Discussion and
Analysis" in Item 7 herein for a discussion of the Clean Air Act and other
environmental legislation and proceedings.
Possible adverse health effects of EMFs from various
sources, including transmission and distribution lines, have been the subject of
a number of studies and increasing public discussion. The scientific research
currently is inconclusive as to whether EMFs may cause adverse health effects.
However, there is the possibility of passage of legislation and promulgation of
rulemaking that would require measures to mitigate EMFs, with resulting
increases in capital and operating costs. In addition, the potential exists for
public liability with respect to lawsuits brought by plaintiffs alleging damages
caused by EMFs.
The operating affiliates' and SEGCO's estimated capital expenditures for
environmental quality control facilities for the years 1995, 1996 and 1997 are
as follows: (in millions)
========================================================
1995 1996 1997
-------------------------------
ALABAMA $28.4 $26.4 $33.4
GEORGIA 21.5 30.7 40.3
GULF 1.4 13.7 17.2
MISSISSIPPI 6.3 0.8 2.1
SAVANNAH 0.5 1.6 0.3
SEGCO 6.5 5.8 3.2
-------------------------------
SOUTHERN
system $64.6 $79.0 $96.5
========================================================
*Such estimates are included in the current construction programs. (See
Item 1 - BUSINESS - "Construction Programs" herein.)
Additionally, each operating affiliate (excluding SAVANNAH) and SEGCO have
incurred costs for environmental remediation of various sites. Reference is made
to each applicable registrant's "Management's Discussion and Analysis" in Item 7
herein for information regarding the registrants' environmental remediation
efforts. Also, see Note 3 to SOUTHERN's and Note 4 to GEORGIA's financial
statements in Item 8 herein for information regarding the identification of
sites that may require environmental remediation by GEORGIA.
The operating affiliates and SEGCO are unable to predict at this time what
additional steps they may be required to take as a result of the implementation
of existing or future quality control requirements for air, water and hazardous
or toxic materials, but such steps could adversely affect system operations and
result in substantial additional costs.
The outcome of the matters mentioned above under "Regulation" cannot now be
determined, except that these developments may result in delays in obtaining
appropriate licenses for generating facilities, increased construction and
operating costs, or reduced generation, the nature and extent of which, while
not determinable at this time, could be substantial.
I-15
<PAGE>
Rate Matters
Rate Structure
The rates and service regulations of the operating affiliates are uniform for
each class of service throughout their respective service areas. Rates for
residential electric service are generally of the block type based upon
kilowatt-hours used and include minimum charges.
Residential and other rates contain separate customer charges. Rates for
commercial service are presently of the block type and, for large customers, the
billing demand is generally used to determine capacity and minimum bill charges.
These large customers' rates are generally based upon usage by the customer
(without differentiation between industrial and commercial classifications)
including those with special features to encourage off-peak usage. Additionally,
the operating affiliates are allowed by their respective PSCs to negotiate the
terms and compensation of service to large customers. With respect to GULF's and
MISSISSIPPI's retail rates, fuel and purchased power costs above base levels
included in the various rate schedules are billed to such customers under the
fuel and energy adjustment clauses. ALABAMA, GEORGIA and SAVANNAH are allowed by
state law to recover fuel and net purchased energy costs through fuel cost
recovery provisions which are adjusted to reflect increases or decreases in such
costs. GULF's recovery of such costs is based upon projections thereof for
six-month periods; any over/under recovery during any such period is reflected
in the subsequent six-month period. The adjustment factors for MISSISSIPPI's
retail and wholesale rates are levelized based on the estimated energy cost for
the year, adjusted for any actual over/under collection from the previous year.
Revenues are adjusted for differences between recoverable fuel costs and amounts
actually recovered in current rates.
Integrated Resource Planning
During 1991, the Georgia legislature passed certain legislation under which both
GEORGIA and SAVANNAH must file Integrated Resource Plans for approval by the
Georgia PSC. The plans must specify how GEORGIA and SAVANNAH each intend to meet
the future electrical needs of their customers through a combination of
demand-side and supply-side resources. The Georgia PSC must pre-certify these
new resources. Once certified, all prudently incurred construction costs will be
recoverable through rates.
In 1992, the Georgia PSC approved Integrated Resource Plans for GEORGIA and
SAVANNAH. See Note 3 to SOUTHERN's and GEORGIA's financial statements in Item 8
herein for information regarding the recovery of GEORGIA's costs incurred from
various demand-side option programs.
Environmental Cost Recovery Plans
GULF and MISSISSIPPI both have retail rate mechanisms that provide for recovery
of environmental compliance costs. For a description of these plans, see Note 3
to GULF's and MISSISSIPPI's notes to the financial statements in Item 8 herein.
Rate Increase Applications
Reference is made to Note 3 to each registrant's notes to the financial
statements in Item 8 herein for a discussion of retail and wholesale rate
proceedings. Also discussed therein are the proceedings initiated by the FERC
concerning the reasonableness of the Southern electric system's wholesale rate
schedules and contracts that have a return on equity of 13.75% or greater.
Employee Relations
The companies of the SOUTHERN system had a total of 27,826 employees on their
payrolls at December 31, 1994.
==========================================================
Employees
at
December 31, 1994
--------------------
ALABAMA 7,996
GEORGIA 11,765
GULF 1,540
MISSISSIPPI 1,535
SAVANNAH 616
SCS 2,612
Southern Nuclear 1,401
Other 361
----------------------------------------------------------
Total 27,826
==========================================================
I-16
<PAGE>
The operating affiliates have separate agreements with local unions of the
IBEW generally covering wages, working conditions and procedures for handling
grievances and arbitration. These agreements apply with certain exceptions to
operating, maintenance and construction employees.
ALABAMA has agreements with the IBEW on a three-year contract extending to
August 15, 1995. Upon notice given at least 60 days prior to that date,
negotiations may be initiated with respect to agreement terms to be effective
after such date.
GEORGIA has an agreement with the IBEW covering wages and working conditions
which is in effect through June 30, 1996. GEORGIA also has a contract with the
United Plant Guard Workers of America with respect to Plant Hatch which extends
through September 30, 1995.
GULF has an agreement with a local union of the IBEW on a three-year
contract extending to August 15, 1995.
MISSISSIPPI has agreements with local unions of the IBEW on a contract
extending to August 16, 1995.
Southern Nuclear has an agreement with the IBEW on a three-year contract
extending to August 15, 1995. Upon notice given at least 60 days prior to that
date, negotiations may be initiated with respect to agreement terms to be
effective after such date.
The agreements also subject the terms of the pension plans for the companies
discussed above to collective bargaining with the unions at five-year intervals.
SAVANNAH has three-year labor agreements with the IBEW and the Office and
Professional Employees International Union that expire April 15, 1996 and
December 1, 1996, respectively.
SEI has agreements with local unions of the IBEW and the United Paperworkers
International Union which covers employees of its energy and recovery complex in
Mobile, Alabama. These agreements extend to May 31, 1997.
I-17
<PAGE>
Item 2. PROPERTIES
Electric Properties
The operating affiliates and SEGCO, at December 31, 1994, operated 33
hydroelectric generating stations, 31 fossil fuel generating stations and three
nuclear generating stations. The amounts of capacity owned by each company are
shown in the table below.
============================================================
Nameplate
Generating Station Location Capacity
------------------------------------------------------------
(Kilowatts)
Fossil Steam
Gadsden Gadsden, AL 120,000
Gorgas Jasper, AL 1,221,250
Barry Mobile, AL 1,525,000
Chickasaw Chickasaw, AL 40,000
Greene County Demopolis, AL 300,000 (1)
Gaston Unit 5 Wilsonville, AL 880,000
Miller Birmingham, AL 2,532,288 (2)
---------
ALABAMA Total 6,618,538
---------
Arkwright Macon, GA 160,000
Atkinson Atlanta, GA 180,000
Bowen Cartersville, GA 3,160,000
Branch Milledgeville, GA 1,539,700
Hammond Rome, GA 800,000
McDonough Atlanta, GA 490,000
McManus Brunswick, GA 115,000
Mitchell Albany, GA 170,000
Scherer Macon, GA 886,303 (3)
Wansley Carrollton, GA 925,550 (4)
Yates Newnan, GA 1,250,000
---------
GEORGIA Total 9,676,553
---------
Crist Pensacola, FL 1,045,000
Lansing Smith Panama City, FL 305,000
Scholz Chattahoochee, FL 80,000
Daniel Pascagoula, MS 500,000 (5)
Scherer Unit 3 Macon, GA 204,500 (3)
---------
GULF Total 2,134,500
---------
Eaton Hattiesburg, MS 67,500
Sweatt Meridian, MS 80,000
Watson Gulfport, MS 1,012,000
Daniel Pascagoula, MS 500,000 (5)
Greene County Demopolis, AL 200,000 (1)
---------
MISSISSIPPI Total 1,859,500
---------
============================================================
============================================================
Nameplate
Generating Station Location Capacity
------------------------------------------------------------
(Kilowatts)
McIntosh Effingham County, GA 163,117
Kraft Port Wentworth, GA 281,136
Riverside Savannah, GA 102,278
-----------
SAVANNAH Total 546,531
----------
Gaston Units 1-4 Wilsonville, AL
(SEGCO) 1,000,000 (6)
----------
Total Fossil Steam 21,835,622
----------
Nuclear Steam
Farley Dothan, AL
(ALABAMA) 1,720,000
----------
Hatch Baxley, GA 816,630 (7)
Vogtle Augusta, GA 1,060,240 (8)
----------
GEORGIA Total 1,876,870
----------
Total Nuclear Steam 3,596,870
----------
Combustion Turbines
Arkwright Macon, GA 30,580
Atkinson Atlanta, GA 78,720
Bowen Cartersville, GA 39,400
McDonough Atlanta, GA 78,800
McIntosh
Units 3, 4, 7, 8 Effingham County, GA 320,000
McManus Brunswick, GA 481,700
Mitchell Albany, GA 118,200
Wilson Augusta, GA 354,100
Wansley Carrollton, GA 26,322 (4)
----------
GEORGIA Total 1,527,822
----------
Lansing Smith
Unit A (GULF) Panama City, FL 39,400
----------
Chevron Cogenerating
Station Pascagoula, MS 147,292 (9)
Sweatt Meridian, MS 39,400
Watson Gulfport, MS 39,360
----------
MISSISSIPPI Total 226,052
----------
Boulevard Savannah, GA 59,100
Kraft Port Wentworth, GA 22,000
McIntosh
Units 5&6 Effingham County, GA 160,000
----------
SAVANNAH Total 241,100
----------
============================================================
I-18
<PAGE>
============================================================
Nameplate
Generating Station Location Capacity
------------------------------------------------------------
(Kilowatts)
Gaston (SEGCO) Wilsonville, AL 19,680 (6)
----------
Total Combustion Turbines 2,054,054
----------
Hydroelectric Facilities
Weiss Leesburg, AL 87,750
Henry Ohatchee, AL 72,900
Logan Martin Vincent, AL 128,250
Lay Clanton, AL 177,000
Mitchell Verbena, AL 170,000
Jordan Wetumpka, AL 100,000
Bouldin Wetumpka, AL 225,000
Harris Wedowee, AL 135,000
Martin Dadeville, AL 154,200
Yates Tallassee, AL 32,000
Thurlow Tallassee, AL 58,000
Lewis Smith Jasper, AL 157,500
Bankhead Holt, AL 45,125
Holt Holt, AL 40,000
----------
ALABAMA Total 1,582,725
----------
Barnett Shoals
(Leased) Athens, GA 2,800
Bartletts Ferry Columbus, GA 173,000
Goat Rock Columbus, GA 26,000
Lloyd Shoals Jackson, GA 14,400
Morgan Falls Atlanta, GA 16,800
North Highlands Columbus, GA 29,600
Oliver Dam Columbus, GA 60,000
Sinclair Dam Milledgeville, GA 45,000
Tallulah Falls Clayton, GA 72,000
Terrora Clayton, GA 16,000
Tugalo Clayton, GA 45,000
Wallace Dam Eatonton, GA 321,300
Yonah Toccoa, GA 22,500
6 Other Plants 18,080 (10)
----------
GEORGIA Total 862,480
----------
Total Hydroelectric Facilities 2,445,205
----------
Total Generating Capacity 29,931,751
==========
============================================================
Notes:
(1) Owned by ALABAMA and MISSISSIPPI as
tenants in common in the proportions of 60% and 40%, respectively.
(2) Excludes the capacity owned by AEC. (See Item 2- PROPERTIES -
"Jointly-Owned Facilities" herein.)
(3) Capacity shown is GEORGIA's or GULF's (Unit 3 only) current portion:
8.4% of Units 1 and 2, 75% (25% for GULF) for Unit 3 and 16.55% for
Unit 4 of total plant capacity. See Item 2 - PROPERTIES - "Proposed
Sale of Property" and "Jointly-Owned Facilities" herein.
(4) Capacity shown is GEORGIA's portion (53.5%) of total plant capacity.
(5) Represents 50% of the plant which is owned as tenants in common by
GULF and MISSISSIPPI.
(6) SEGCO is jointly-owned by ALABAMA and GEORGIA. (See Item 1 -
BUSINESS herein.)
(7) Capacity shown is GEORGIA's portion (50.1%) of total plant capacity.
(8) Capacity shown is GEORGIA's portion (45.7%) of total plant capacity.
(9) Generation is dedicated to a single industrial customer.
(10) Includes 5,400 megawatts of capacity for the Flint River Project
damaged by flooding. See Item 1 - BUSINESS - "Regulation -
Federal Power Act" herein.
Except as discussed below under "Titles to Property", the principal plants
and other important units of the SOUTHERN system are owned in fee by the
operating affiliates and SEGCO. It is the opinion of management of each such
company that its operating properties are adequately maintained and are
substantially in good operating condition.
MISSISSIPPI owns a 79-mile length of 500-kilovolt transmission line which is
leased to Gulf States. The line, completed in 1984, extends from Plant Daniel to
the Louisiana state line. Gulf States is paying a use fee over a forty-year
period covering all expenses and the amortization of the original $57 million
cost of the line.
The all-time maximum demand on the SOUTHERN system was 25,936,900 kilowatts
and occurred in July 1993. This amount excludes demand served by generation
retained by MEAG and Dalton and excludes demand associated with power purchased
from OPC and SEPA by its preference customers. At that time, 27,342,700
kilowatts were supplied by SOUTHERN system generation and 1,405,800 kilowatts
(net) were sold to other parties through net purchased and interchanged power.
I-19
<PAGE>
The reserve margin for the Southern electric system at that time was 13.2%. The
SOUTHERN system's maximum demand for 1994 of 24,545,700 kilowatts occurred in
August. For information on the other registrant's peak demands, reference is
made to Item 6 - SELECTED FINANCIAL DATA herein.
ALABAMA and GEORGIA will incur significant costs in decommissioning their
nuclear units at the end of their useful lives. (See Item 1 - BUSINESS -
"Regulations - Atomic Energy Act of 1954" and Note 1 to SOUTHERN's, ALABAMA's
and GEORGIA's financial statements in Item 8 herein.)
I-20
<PAGE>
Other Electric Generation Facilities
Through special purpose subsidiaries, SOUTHERN owns interests in or operates
independent power production facilities and foreign utility companies. For
further discussion of other SEI projects, see Item 1 - BUSINESS - "New Business
Development" herein. The generating capacity of these utilities (or facilities)
at December 31, 1994, was as follows:
<TABLE>
<CAPTION>
Facilities in Operation
--------------------------------------------------------------------------------------------------------------------
Megawatts of Capacity
<S> <C> <C> <C> <C> <C>
------------------------
Facility Location Units Owned Operated Fuel
-------- -------- ----- ----- ---------- ------
Alicura' Argentina 4 551 (1) 1,000 Hydro
Edelnor Chile 22 41 64 Oil
Edelnor Chile 1 14 22 Diesel
Edelnor Chile 2 7 10 Hydro
Freeport Grand Bahama 5 56 113 Oil & Gas
Goodyear New York 1 - 50 Coal (2)
Kalaeloa Hawaii 1 60 180 Oil (2)
Las Vegas Nevada 1 - 50 Gas (2)
Mobile Alabama 3 105 105 Waste &
by-products (2)
Penal Trinidad and Tobago 5 92 236 Gas
Port of Spain Trinidad and Tobago 6 120 308 Gas
Pt. Lisas Trinidad and Tobago 10 247 634 Gas
--------------------------------------------------------------------------------------------------------------------
Total Capacity 1,293 2,772
====================================================================================================================
</TABLE>
<TABLE>
<CAPTION>
Facilities Under Development
--------------------------------------------------------------------------------------------------------------------
Megawatts of Capacity
--------------------------------
Facility Location Owned Operated Fuel
-------- -------- ------- ---------- ------
<S> <C> <C> <C> <C>
Birchwood Virginia 110 220 Coal (2)
Edelnor Chile 98 150 Coal
--------------------------------------------------------------------------------------------------------------------
Total Capacity 208 370
====================================================================================================================
</TABLE>
Notes: (1) Represents megawatts of capacity under a concession agreement
expiring in the year 2023.
(2) Cogeneration facility.
I-21
<PAGE>
Jointly-Owned Facilities
ALABAMA and GEORGIA have sold and GEORGIA has purchased undivided interests in
certain generating plants and other related facilities to or from non-affiliated
parties. The percentages of ownership resulting from these transactions are as
follows:
<TABLE>
<CAPTION>
Total Percentage Ownership
Capacity ALABAMA AEC GEORGIA OPC MEAG DALTON FP&L JEA FPC
-------- -----------------------------------------------------------------------------
(Megawatts)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Plant Miller
Units 1 and 2 1,320 91.8% 8.2% -% -% -% -% -% -% -%
Plant Hatch 1,630 - - 50.1 30.0 17.7 2.2 - - -
Plant Vogtle 2,320 - - 45.7 30.0 22.7 1.6 - - -
Plant Scherer
Units 1 and 2 1,636 - - 8.4 60.0 30.2 1.4 - - -
Unit 4 818 - - 16.6 - - - 65.7 17.7 -
Plant Wansley 1,779 - - 53.5 30.0 15.1 1.4 - - -
Rocky Mountain 848 - - 25.0* 75.0 - - - - -
Intercession City, FL 150 - - 33.3* - - - - - 66.7
*Estimated ownership at completion.
==========================================================================================================================
</TABLE>
ALABAMA and GEORGIA have contracted to operate and maintain the respective
units in which each has an interest (other than Rocky Mountain and Intercession
City, as described below) as agent for the joint owners. See "Proposed Sale of
Property" below for a description of the proposed sale of GEORGIA's remaining
unsold ownership interest in Plant Scherer Unit 4.
In connection with the joint ownership arrangements for Plant Vogtle,
GEORGIA has remaining commitments to purchase declining fractions of OPC's and
MEAG's capacity and energy until 1996 for Unit 2 and, with regard to a portion
of a 5% interest owned by MEAG, until the latter of the retirement of the plant
or the latest stated maturity date of MEAG's bonds issued to finance such
ownership interest. The payments for capacity are required whether any capacity
is available. The energy cost is a function of each unit's variable operating
costs. Except for the portion of the capacity payments related to the 1987 and
1990 write-offs of Plant Vogtle costs, the cost of such capacity and energy is
included in purchased power in the Statements of Income in Item 8 herein.
In December 1988, GEORGIA and OPC completed a joint ownership agreement for
the Rocky Mountain project under which GEORGIA will retain its present
investment in the project and OPC will finance, complete and operate the
facility. Upon completion (scheduled for 1995), GEORGIA will own an undivided
interest in the project equal to the proportion its investment bears to the
total investment in the project (excluding each party's cost of funds and ad
valorem taxes). For purposes of the ownership formula, GEORGIA's investment will
be expressed in nominal dollars and OPC's investment will be expressed in
constant 1987 dollars. Based on current cost estimates, GEORGIA's final
ownership is estimated at approximately 25% of the project at completion.
In 1994, GEORGIA and FPC entered into a joint ownership agreement regarding
the Intercession City combustion turbine unit. The unit is scheduled to be in
commercial operation in early 1996, and will be constructed, operated, and
maintained by FPC. GEORGIA will have a one-third interest in the 150-megawatt
unit, with retention of 100% of the capacity from June through September. FPC
will have the capacity the remainder of the year. GEORGIA's investment in the
unit at completion is estimated to be $14 million. Also, GEORGIA entered into a
separate four-year purchase power contract with FPC. Beginning in 1996, GEORGIA
will purchase 400 megawatts of capacity. In 1998, this amount will decline to
200 megawatts for the remaining two years.
I-22
<PAGE>
Proposed Sale of Property
GEORGIA has completed three of four separate transactions to sell Unit 4 of
Plant Scherer to FP&L and JEA for a total price of approximately $808 million,
including any gains on these transactions. FP&L would eventually own
approximately 76.4% of this unit, with JEA owning the remainder. GEORGIA will
continue to operate the unit.
The completed and scheduled remaining transactions are as follows:
========================================================
Percentage
Closing of Sales
Date Capacity Ownership Price
--------------------------------------------------------
(Megawatts) (in millions)
July 1991 290 35.46% $291
June 1993 258 31.44 253
June 1994 135 16.55 133
June 1995 135 16.55 131
--------------------------------------------------------
Total 818 100.00% $808
========================================================
Plant Scherer, a jointly owned coal-fired generating plant, has four units
with a total capacity of 3,272 megawatts. Unit 4 was completed in 1989.
Titles to Property
The operating affiliates' and SEGCO's interests in the principal plants (other
than certain pollution control facilities, one small hydroelectric generating
station leased by GEORGIA and the land on which four combustion turbine
generators of MISSISSIPPI are located, which is held by easement) and other
important units of the respective companies are owned in fee by such companies,
subject only to the liens of applicable mortgage indentures (except for SEGCO)
and to excepted encumbrances as defined therein. The operating affiliates own
the fee interests in certain of their principal plants as tenants in common.
(See Item 2 - PROPERTIES - "Jointly-Owned Facilities" herein.) Properties such
as electric transmission and distribution lines and steam heating mains are
constructed principally on rights-of-way which are maintained under franchise or
are held by easement only. A substantial portion of lands submerged by
reservoirs is held under flood right easements. In substantially all of its coal
reserve lands, SEGCO owns or will own the coal only, with adequate rights for
the mining and removal thereof.
Property Additions and Retirements
During the period from January 1, 1990, to December 31, 1994, the operating
affiliates, SEGCO, and others (i.e. SCS, Southern Nuclear and, beginning in
1993, various of the special purpose subsidiaries) recorded gross property
additions and retirements as follows:
============================================================
Gross Property
Additions Retirements
-------------- -----------
(in millions)
ALABAMA (1) $2,182 $ 336
GEORGIA (2) 2,928 2,030
GULF 349 118
MISSISSIPPI 415 69
SAVANNAH 173 15
SEGCO 81 12
Other (3) 262 87
------------------------------------------------------------
SOUTHERN
system $6,390 $2,667
============================================================
(1) Includes approximately $62 million attributable to property sold to AEC
in 1992.
(2) Includes approximately $612 million attributable to property sold to
OPC, FP&L and JEA, but excludes $231 million from the write-off of
certain Plant Vogtle costs in 1990.
(3) Net of intercompany eliminations.
Item 3. LEGAL PROCEEDINGS
(1) Stepak v. certain SOUTHERN officials
(U.S. District Court for the Southern District of Georgia)
In April 1991, two SOUTHERN stockholders filed a derivative action suit
against certain current and former directors and officers of SOUTHERN.
The suit alleges violations of RICO by officers and breaches of
fiduciary duty and gross negligence by all defendants resulting from
alleged fraudulent accounting for spare parts, illegal political
campaign contributions, violations of federal securities laws involving
misrepresentations and omissions in SEC filings, and concealment of the
I-23
<PAGE>
foregoing acts. The complaint seeks damages, including treble damages
pursuant to RICO, in an unspecified amount, which if awarded, would be
payable to SOUTHERN. The plaintiffs' amended complaint was dismissed by
the court in March 1992. The court ruled the plaintiffs had failed to
present adequately their allegation that the SOUTHERN board of
directors' refusal of an earlier demand by the plaintiffs was wrongful.
In April 1994, the U. S. Court of Appeals for the Eleventh Circuit
reversed the dismissal and remanded the case to the trial court, finding
that allegations by the plaintiffs created a reasonable doubt that the
board validly exercised its business judgment in refusing the earlier
demand. This action is still pending.
(2) Johnson v. ALABAMA
(Circuit Court of Shelby County, Alabama)
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, 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
of approximately $10 million 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. ALABAMA has appealed the court's order to the Supreme Court of
Alabama.
The final outcome of this matter cannot be determined; however, in
management's opinion, the final outcome will not have a material adverse
effect on SOUTHERN's or ALABAMA's financial statements.
(3) In January 1995, GEORGIA and four other unrelated entities were notified
by the EPA that they have been designated as potentially responsible
parties under the Comprehensive Environmental Response, Compensation and
Liability Act with respect to a site in Brunswick, Georgia. While
GEORGIA believes that the total amount of costs required for the cleanup
of this site may be substantial, it is unable at this time to estimate
either such total or the portion for which GEORGIA may be ultimately
responsible.
The final outcome of this matter cannot now be determined; however,
in management's opinion, based on the nature and extent of GEORGIA's
activities relating to the site, the final outcome will not have a
material adverse effect on SOUTHERN's or GEORGIA's financial statements.
(4) In June 1994, a tax deficiency notice was received from the IRS for the
years 1984 through 1987 with regard to the tax accounting by GEORGIA for
the sale in 1984 of an interest in Plant Vogtle and related capacity and
energy buyback commitments. The potential tax deficiency and interest
arising from this issue currently amount to approximately $28 million
and $32 million, respectively. The tax deficiency relates to a timing
issue as to when taxes are paid; therefore, only the interest portion
could affect future income. Management believes that the IRS position is
incorrect, and GEORGIA has filed a petition with the U. S. Tax Court
challenging the IRS position. In order to minimize additional interest
charges should the IRS's position prevail, GEORGIA made a payment to the
IRS related to the potential tax deficiency in September 1994.
I-24
<PAGE>
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 financial statements.
See Item 1 - BUSINESS - "Construction Programs," "Fuel Supply," "Regulation
- Federal Power Act" and "Rate Matters" for a description of certain other
administrative and legal proceedings discussed therein.
Additionally, each of the operating affiliates, SEI, SCS, Southern Nuclear,
SDIG and Communications are, in the normal course of business, engaged in
litigation or administrative proceedings that include, but are not limited to,
acquisition of property, injuries and damages claims, and complaints by present
and former employees. In management's opinion these various actions will not
have a material adverse effect on any of the registrants' financial statements.
Item 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
None.
I-25
<PAGE>
EXECUTIVE OFFICERS OF SOUTHERN
(Inserted in Part I in accordance with Regulation S-K, Item 401(b),
Instruction 3)
A. W. Dahlberg
Chairman, President and Chief Executive Officer
Age 54 Elected in 1985; President and Chief Executive
Officer of GEORGIA from 1988 through 1993. He
was elected Executive Vice President of SOUTHERN
in 1991. He was elected President of SOUTHERN
effective January 1994. He was elected Chairman and
Chief Executive Officer effective March 1995.
Paul J. DeNicola
Executive Vice President and Director
Age 46
Elected in 1989; Executive Vice President of
SOUTHERN since 1991. Elected President and Chief
Executive Officer of SCS effective January 1994. He
previously served as Executive Vice President of SCS
from 1991 to 1993 and President and Chief Executive
Officer of MISSISSIPPI from 1989 to 1991.
H. Allen Franklin
Executive Vice President and Director
Age 50
Elected in 1988; President and Chief Executive Officer
of SCS from 1988 through 1993 and, beginning 1991,
Executive Vice President of SOUTHERN. He was
elected President and Chief Executive Officer of
GEORGIA effective January 1994.
Elmer B. Harris
Executive Vice President and Director
Age 55
Elected in 1989; President and Chief Executive Officer
of ALABAMA since 1989 and, beginning 1991,
Executive Vice President of SOUTHERN.
David M. Ratcliffe
Senior Vice President
Age 46
Elected in 1995; President and Chief Executive Officer of
MISSISSIPPI since 1991. He also serves as Executive
Vice President of SCS beginning in 1995 and previously
held that position from 1989 to 1991.
W. L. Westbrook
Financial Vice President and Chief Financial Officer
Age 55
Elected in 1986; responsible primarily for all aspects of
financing for SOUTHERN. He has served as Executive
Vice President of SCS since 1986.
Bill M. Guthrie
Vice President
Age 61
Elected in 1991; serves as Chief Production Officer for
the SOUTHERN system. Senior Executive Vice
President of SCS effective January 1994. He has also
served as Executive Vice President of ALABAMA since
1988.
Each of the above is currently an officer of SOUTHERN, serving a term running
from the last annual meeting of the directors (May 25, 1994) for one year until
the next annual meeting or until his successor is elected and qualified.
I-26
<PAGE>
PART II
Item 5. MARKET FOR REGISTRANTS' COMMON EQUITY AND RELATED STOCKHOLDER MATTERS
(a) The common stock of SOUTHERN is listed and traded on the New York
Stock Exchange. The stock is also traded on regional exchanges across
the United States. High and low stock prices, per the New York Stock
Exchange Composite Tape and as adjusted to reflect a two-for-one
stock split in the form of a stock distribution for each share held
as of February 7, 1994, during each quarter for the past two years
were as follows:
===================================================
High Low
------ -----
1994
First Quarter $22 $18-1/2
Second Quarter 20-1/2 17-3/4
Third Quarter 20 17
Fourth Quarter 21 18-1/4
1993
First Quarter $21-3/8 $18-3/8
Second Quarter 22-1/2 19-3/8
Third Quarter 23 20-1/2
Fourth Quarter 23-5/8 20-3/4
---------------------------------------------------
There is no market for the other registrants' common stock, all of
which is owned by SOUTHERN. On February 28, 1995, the closing price
of SOUTHERN's common stock was $20-5/8.
(b) Number of SOUTHERN's common stockholders at December 31, 1994:
234,927
Each of the other registrants have one common stockholder, SOUTHERN.
(c) Dividends on each registrant's common stock are payable at the
discretion of their respective board of directors. The dividends on
common stock paid and/or declared by SOUTHERN and the operating
affiliates to their stockholder(s) for the past two years were as
follows: (in thousands)
====================================================
Registrant Quarter 1994 1993
----------------------------------------------------
SOUTHERN First $191,262 $180,381
Second 191,262 180,948
Third 191,475 181,892
Fourth 192,758 182,351
ALABAMA First 66,500 62,900
Second 67,000 63,100
Third 66,900 63,400
Fourth 67,600 63,500
GEORGIA First 106,600 100,100
Second 107,200 100,400
Third 107,200 100,800
Fourth 108,300 101,100
GULF First 10,900 10,400
Second 11,000 10,400
Third 11,000 10,500
Fourth 11,100 10,500
MISSISSIPPI First 8,500 7,200
Second 8,500 7,200
Third 8,500 7,300
Fourth 8,600 7,300
SAVANNAH First 4,100 4,500
Second 4,100 5,500
Third 4,100 5,500
Fourth 4,000 5,500
-----------------------------------------------------
In January 1994, SOUTHERN's board of directors authorized a two-for-one
common stock split in the form of a stock distribution for each share held as of
February 7, 1994. For all reported common stock data, the number of common
shares outstanding and per share amounts for earnings, dividends, and market
price have been adjusted to reflect the stock distribution.
II-1
<PAGE>
The dividend paid per share by SOUTHERN was 28.5(cent) for each quarter of
1993 and 29.5(cent) for each quarter of 1994. The dividend paid on SOUTHERN's
common stock for the first quarter of 1995 was raised to 30.5(cent) per share.
The amount of dividends on their common stock that may be paid by the
subsidiary registrants is restricted in accordance with their respective first
mortgage bond indenture and charter. The amounts of earnings retained in the
business and the amounts restricted against the payment of cash dividends on
common stock at December 31, 1994, were as follows:
========================================================
Retained Restricted
Earnings Amount
---------- -----------
(in millions)
ALABAMA $1,085 $ 807
GEORGIA 1,413 742
GULF 169 101
MISSISSIPPI 144 94
SAVANNAH 99 57
Consolidated 3,191 1,805
--------------------------------------------------------
Item 6. SELECTED FINANCIAL DATA
SOUTHERN. Reference is made to information under the heading "Selected
Consolidated Financial and Operating Data," contained herein at pages II-38
through II-49.
ALABAMA. Reference is made to information under the heading "Selected
Financial and Operating Data," contained herein at pages II-79 through II-92.
GEORGIA. Reference is made to information under the heading "Selected
Financial and Operating Data," contained herein at pages II-127 through II-141.
GULF. Reference is made to information under the heading "Selected
Financial and Operating Data," contained herein at pages II-170 through II-183.
MISSISSIPPI. Reference is made to information under the heading "Selected
Financial and Operating Data," contained herein at pages II-210 through II-223.
SAVANNAH. Reference is made to information under the heading "Selected
Financial and Operating Data," contained herein at pages II-247 through II-260.
Item 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND
FINANCIAL CONDITION
SOUTHERN. Reference is made to information under the heading "Management's
Discussion and Analysis of Results of Operations and Financial Condition,"
contained herein at pages II-8 through II-15.
ALABAMA. Reference is made to information under the heading "Management's
Discussion and Analysis of Results of Operations and Financial Condition,"
contained herein at pages II-53 through II-59.
GEORGIA. Reference is made to information under the heading "Management's
Discussion and Analysis of Results of Operations and Financial Condition,"
contained herein at pages II-96 through II-103.
GULF. Reference is made to information under the heading "Management's
Discussion and Analysis of Results of Operations and Financial Condition,"
contained herein at pages II-145 through II-151.
MISSISSIPPI. Reference is made to information under the heading
"Management's Discussion and Analysis of Results of Operations and Financial
Condition," contained herein at pages II-187 through II-193.
SAVANNAH. Reference is made to information under the heading "Management's
Discussion and Analysis of Results of Operations and Financial Condition,"
contained herein at pages II-227 through II-232.
II-2
<PAGE>
Item 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
INDEX TO 1994 FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
<S> <C>
Page
The Southern Company and Subsidiary Companies:
Report of Independent Public Accountants (in which their opinion on the
financial statements includes an explanatory paragraph which states that an
uncertainty exists with respect to the actions of the regulators regarding
recoverability of the investment in the Rocky Mountain pumped storage
hydroelectric project) II-7
Consolidated Statements of Income for the Years Ended December 31, 1994, 1993 and 1992 II-16
Consolidated Statements of Retained Earnings for the Years Ended
December 31, 1994, 1993 and 1992 II-16
Consolidated Statements of Cash Flows for the Years Ended December 31, 1994, 1993 and 1992 II-17
Consolidated Balance Sheets at December 31, 1994 and 1993 II-18
Consolidated Statements of Capitalization at December 31, 1994 and 1993 II-20
Consolidated Statements of Paid-In Capital for the Years Ended December 31, 1994, 1993 and 1992 II-21
Notes to Financial Statements II-22
ALABAMA:
Report of Independent Public Accountants II-52
Statements of Income for the Years Ended December 31, 1994, 1993 and 1992 II-60
Statements of Cash Flows for the Years Ended December 31, 1994, 1993 and 1992 II-61
Balance Sheets at December 31, 1994 and 1993 II-62
Statements of Capitalization at December 31, 1994 and 1993 II-64
Statements of Retained Earnings for the Years Ended December 31, 1994, 1993 and 1992 II-65
Notes to Financial Statements II-66
GEORGIA:
Report of Independent Public Accountants (in which their opinion on the
financial statements includes an explanatory paragraph which states that
an uncertainty exists with respect to the actions of the regulators
regarding the recoverability of Georgia Power's investment in the Rocky
Mountain pumped storage hydroelectric project) II-95
Statements of Income for the Years Ended December 31, 1994, 1993 and 1992 II-104
Statements of Cash Flows for the Years Ended December 31, 1994, 1993 and 1992 II-105
Balance Sheets at December 31, 1994 and 1993 II-106
Statements of Capitalization at December 31, 1994 and 1993 II-108
Statements of Retained Earnings for the Years Ended December 31, 1994, 1993 and 1992 II-109
Statements of Paid-In Capital for the Years Ended December 31, 1994, 1993 and 1992 II-109
Notes to Financial Statements II-110
</TABLE>
II-3
<PAGE>
<TABLE>
<CAPTION>
<S> <C>
Page
GULF:
Report of Independent Public Accountants II-144
Statements of Income for the Years Ended December 31, 1994, 1993 and 1992 II-152
Statements of Cash Flows for the Years Ended December 31, 1994, 1993 and 1992 II-153
Balance Sheets at December 31, 1994 and 1993 II-154
Statements of Capitalization at December 31, 1994 and 1993 II-156
Statements of Retained Earnings for the Years Ended December 31, 1994, 1993 and 1992 II-158
Statements of Paid-In Capital for the Years Ended December 31, 1994, 1993 and 1992 II-158
Notes to Financial Statements II-159
MISSISSIPPI:
Report of Independent Public Accountants II-186
Statements of Income for the Years Ended December 31, 1994, 1993 and 1992 II-194
Statements of Cash Flows for the Years Ended December 31, 1994, 1993 and 1992 II-195
Balance Sheets at December 31, 1994 and 1993 II-196
Statements of Capitalization at December 31, 1994 and 1993 II-198
Statements of Retained Earnings for the Years Ended December 31, 1994, 1993 and 1992 II-199
Statements of Paid-In Capital for the Years Ended December 31, 1994, 1993 and 1992 II-199
Notes to Financial Statements II-200
SAVANNAH:
Report of Independent Public Accountants II-226
Statements of Income for the Years Ended December 31, 1994, 1993 and 1992 II-233
Statements of Cash Flows for the Years Ended December 31, 1994, 1993 and 1992 II-234
Balance Sheets at December 31, 1994 and 1993 II-235
Statements of Capitalization at December 31, 1994 and 1993 II-237
Statements of Retained Earnings for the Years Ended December 31, 1994, 1993 and 1992 II-238
Statements of Paid-In Capital for the Years Ended December 31, 1994, 1993 and 1992 II-238
Notes to Financial Statements II-239
Item 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE
None.
</TABLE>
II-4
<PAGE>
THE SOUTHERN COMPANY
AND SUBSIDIARY COMPANIES
FINANCIAL SECTION
II-5
<PAGE>
MANAGEMENT'S REPORT
The Southern Company and Subsidiary Companies 1994 Annual Report
The management of The Southern Company has prepared -- and is responsible for --
the consolidated financial statements and related information included in this
report. These statements were prepared in accordance with generally accepted
accounting principles appropriate in the circumstances and necessarily include
amounts that are based on the best estimates and judgments of management.
Financial information throughout this annual report is consistent with the
financial statements.
The company maintains a system of internal accounting controls to provide
reasonable assurance that assets are safeguarded and that books and records
reflect only authorized transactions of the company. Limitations exist in any
system of internal controls, however, based on a recognition that the cost of
the system should not exceed its benefits. The company believes its system of
internal accounting controls maintains an appropriate cost/benefit relationship.
The company's system of internal accounting controls is evaluated on an
ongoing basis by the company's internal audit staff. The company's independent
public accountants also consider certain elements of the internal control system
in order to determine their auditing procedures for the purpose of expressing an
opinion on the financial statements.
The audit committee of the board of directors, composed of four directors
who are not employees, provides a broad overview of management's financial
reporting and control functions. Periodically, this committee meets with
management, the internal auditors, and the independent public accountants to
ensure that these groups are fulfilling their obligations and to discuss
auditing, internal controls, and financial reporting matters. The internal
auditors and independent public accountants have access to the members of the
audit committee at any time.
Management believes that its policies and procedures provide reasonable
assurance that the company's operations are conducted according to a high
standard of business ethics.
In management's opinion, the consolidated financial statements present
fairly, in all material respects, the financial position, results of operations,
and cash flows of The Southern Company and its subsidiary companies in
conformity with generally accepted accounting principles. As discussed in Note 4
to the financial statements, an uncertainty exists with respect to the actions
of regulators regarding recoverability of the investment in the Rocky Mountain
pumped storage hydroelectric project. The outcome of this uncertainty cannot be
determined until a regulatory review is completed. Accordingly, no provision for
any write-down of the costs associated with the Rocky Mountain project resulting
from the potential actions of the Georgia Public Service Commission has been
made in the accompanying financial statements.
/s/ A. W. Dahlberg
A. W. Dahlberg
Chairman, President, and Chief Executive Officer
/s/ W. L. Westbrook
W. L. Westbrook
Financial Vice President and Chief Financial Officer
II-6
<PAGE>
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To the Board of Directors and to the Stockholders of The Southern Company:
We have audited the accompanying consolidated balance sheets and consolidated
statements of capitalization of The Southern Company (a Delaware corporation)
and subsidiary companies as of December 31, 1994 and 1993, and the related
consolidated statements of income, retained earnings, paid-in capital, and cash
flows for each of the three years in the period ended December 31, 1994. These
financial statements are the responsibility of the company's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements (pages 11-16 through II-37)
referred to above present fairly, in all material respects, the financial
position of The Southern Company and subsidiary companies as of December 31,
1994 and 1993, and the results of their operations and their cash flows for the
periods stated, in conformity with generally accepted accounting principles.
As explained in Notes 2 and 9 to the financial statements, effective January
1, 1993, The Southern Company changed its methods of accounting for
postretirement benefits other than pensions and for income taxes.
As more fully discussed in Note 4 to the financial statements, an
uncertainty exists with respect to the actions of the regulators regarding
recoverability of the investment in the Rocky Mountain pumped storage
hydroelectric project. The outcome of this uncertainty cannot be determined
until a regulatory review is completed. Accordingly, no provision for any
write-down of the costs associated with the Rocky Mountain project resulting
from the potential actions of the Georgia Public Service Commission has been
made in the accompanying financial statements.
/s/ Arthur Andersen LLP
Atlanta, Georgia
February 15, 1995
II-7
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND FINANCIAL
CONDITION
The Southern Company and Subsidiary Companies 1994 Annual Report
RESULTS OF OPERATIONS
Earnings and Dividends
The Southern Company's 1994 earnings were $989 million or $1.52 per share, a
decrease of $13 million or 5 cents per share from the year 1993. Earnings were
significantly affected in 1994 by efforts related to the company's strategy to
remain a low-cost producer of electricity and a high-quality investment.
These efforts included work force reduction programs in 1994 and additional
investments in companies related to the core business of electricity. These
investments have put downward pressure on earnings and return on equity, and
that trend will continue in the near term. However, the investments should
support growth and strength in the financial condition of the company as it
emerges into a more competitive and global environment.
Costs related to the work force reduction programs decreased earnings by $61
million or 9 cents per share. These costs should be recovered through future
savings in about two years. Additional non-operating or non-recurring items
affected earnings in 1994 and 1993. After excluding these items in both years,
1994 earnings from operations of the ongoing business of selling electricity
were $1.0 billion -- or $1.58 per share -- an increase of $11 million compared
with 1993. The non-operating items that affected earnings were as follows:
Consolidated Earnings
Net Income Per Share
----------------- -----------------
1994 1993 1994 1993
----------------- -----------------
(in millions)
Earnings as reported $ 989 $1,002 $1.52 $1.57
-----------------------------------------------------------------
Work force reduction
programs in 1994 61 - .09 -
Sale of facilities (28) (18) (.04) (.03)
Environmental
cleanup 5 25 .01 .04
Transportation fleet
reduction - 13 - .02
Gulf States related - (6) - (.01)
-----------------------------------------------------------------
Total non-operating 38 14 .06 .02
-----------------------------------------------------------------
Earnings from
operations $1,027 $1,016 $1.58 $1.59
=================================================================
Amount and
percent change $11 1.1% $(0.01) (0.6)%
-----------------------------------------------------------------
In 1994, non-operating items -- both positive and negative -- had an impact
on earnings, which resulted in a net reduction of $38 million. These items were:
(1) Costs associated with work force reduction programs implemented in 1994
decreased earnings. (2) The third in a series of four separate transactions to
sell Plant Scherer Unit 4 to two Florida utilities and the sale of a 50 percent
interest in a cogeneration facility in Virginia increased earnings. (3)
Environmental cleanup costs decreased earnings.
Items not discussed above that affected 1993 earnings were: (1)
Costs associated with a transportation fleet reduction program decreased
earnings. (2) Transactions related to a 1991 settlement agreement with Gulf
States Utilities Company increased earnings.
In January 1994, The Southern Company board of directors approved a
two-for-one common stock split in the form of a stock distribution. All common
stock data reported reflect the stock distribution. Dividends paid on common
stock during 1994 were $1.18 per share or 29 1/2 cents per quarter. During 1993
and 1992, dividends paid per share were $1.14 and $1.10, respectively. In
January 1995, The Southern Company board of directors raised the quarterly
dividend to 30 1/2 cents per share or an annual rate of $1.22 per share.
Revenues
Operating revenues decreased in 1994 and increased in 1993 and 1992 as a result
of the following factors:
Increase (Decrease)
From Prior Year
----------------------------
1994 1993 1992
----------------------------
(in millions)
Retail --
Change in base rates $ 3 $ 3 $ 137
Sales growth 153 104 138
Weather (177) 198 (113)
Fuel recovery and other (107) 199 (55)
---------------------------------------------------------------
Total retail (128) 504 107
---------------------------------------------------------------
Sales for resale --
Within service area (87) 38 (8)
Outside service area (108) (184) (87)
---------------------------------------------------------------
Total sales for resale (195) (146) (95)
Other operating revenues 131 58 11
---------------------------------------------------------------
Total operating revenues $(192) $416 $ 23
==============================================================
Percent change (2.3)% 5.2% 0.3%
--------------------------------------------------------------
Retail revenues of $7.1 billion in 1994 decreased 1.8 percent from last
year, compared with an increase of 7.4 percent in 1993. Under fuel cost recovery
II-8
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS (continued)
The Southern Company and Subsidiary Companies 1994 Annual Report
provisions, fuel revenues generally equal fuel expense -- including the fuel
component of purchased energy -- and do not affect net income.
Revenues from sales for resale within the service area were $360 million in
1994, down 19 percent from the prior year. The decrease resulted from certain
municipalities and cooperatives in the service area retaining more of their own
generation at facilities jointly owned with Georgia Power. Sales for resale
revenues within the service area were $447 million in 1993, up 9.2 percent from
the prior year. This increase resulted primarily from the prolonged hot summer
weather, which increased the demand for electricity.
Revenues from sales to utilities outside the service area under long-term
contracts consist of capacity and energy components. Capacity revenues reflect
the recovery of fixed costs and a return on investment under the contracts.
Energy is generally sold at variable cost. The capacity and energy components
were as follows:
1994 1993 1992
--------------------------------
(in millions)
Capacity $276 $350 $457
Energy 176 230 330
-----------------------------------------------------
Total $452 $580 $787
=====================================================
Capacity revenues decreased in 1994 and 1993 because the amount of capacity
under contract declined by some 400 megawatts and 500 megawatts, respectively.
In 1995, the contracted capacity will decline another 100 megawatts. Additional
declines in capacity are not scheduled until after 1999.
Changes in revenues are influenced heavily by the amount of energy sold each
year. Kilowatt-hour sales for 1994 and the percent change by year were as
follows:
(billions of Amount Percent Change
kilowatt-hours) ------ ------------------------
1994 1994 1993 1992
---- ------------------------
Residential 35.8 (2.6)% 9.5% 0.0%
Commercial 34.1 3.8 5.9 2.1
Industrial 50.3 3.2 1.9 3.8
Other 0.9 3.8 4.6 (4.8)
-----
Total retail 121.1 1.6 5.3 2.1
Sales for resale --
Within service area 8.1 (38.5) 9.5 (1.7)
Outside service area 10.8 (13.5) (25.2) (16.2)
-----
Total 140.0 (3.4) 2.1 (0.7)
=================================================================
The rate of increase in 1994 retail energy sales was suppressed by the
impact of weather. Residential energy sales registered the first annual decrease
in more than a decade as a result of milder-than-normal summer weather in 1994,
compared with the extremely hot summer of 1993. Commercial and industrial sales
continue to show moderate gains in excess of the national average. This reflects
the strength of business and economic conditions in The Southern Company's
service area. Energy sales to retail customers are projected to increase at an
average annual rate of 1.9 percent during the period 1995 through 2005.
Energy sales for resale outside the service area are predominantly unit
power sales under long-term contracts to Florida utilities. Economy sales and
amounts sold under short-term contracts are also sold for resale outside the
service area. Sales to customers outside the service area continue to decrease,
primarily as a result of the scheduled decline in megawatts of capacity under
contract.
Expenses
Total operating expenses of $6.6 billion for 1994 declined 2.1 percent compared
with the prior year. The costs to produce and deliver electricity in 1994
declined by $297 million, primarily as a result of less energy being sold and
continued effective cost controls. However, certain other expenses in 1994
increased compared with expenses in 1993. Depreciation expenses and property
taxes increased by $41 million as a result of additional utility plant being
placed into service. The work force reduction programs in 1994 increased
expenses by $100 million. The amortization of deferred expenses related to Plant
Vogtle increased by $39 million in 1994 when compared with the prior year. For
additional information concerning Plant Vogtle, see Note 1 to the financial
statements under "Plant Vogtle Phase-In Plans."
In 1993, operating expenses of $6.7 billion were up 6.5 percent compared
with 1992. The increase was attributable to higher production expenses of $75
million to meet increased energy demands and an additional $50 million in
depreciation expenses and property taxes. The transportation fleet reduction
program and environmental cleanup costs discussed earlier increased expenses by
some $62 million. Also, a $67 million change in deferred Plant Vogtle expenses
compared with the amount in 1992 contributed to the rise in total operating
expenses.
Fuel costs constitute the single largest expense for The Southern Company.
The mix of fuel sources for generation of electricity is determined primarily by
system load, the unit cost of fuel consumed, and the availability of hydro and
II-9
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS (continued)
The Southern Company and Subsidiary Companies 1994 Annual Report
nuclear generating units. The amount and sources of generation and the average
cost of fuel per net kilowatt-hour generated were as follows:
1994 1993 1992
----------------------
Total generation
(billions of kilowatt-hours) 142 144 140
Sources of generation
(percent) --
Coal 75 78 77
Nuclear 19 17 17
Hydro 5 4 5
Oil and gas 1 1 1
Average cost of fuel per net
kilowatt-hour generated
(cents) --
Coal 1.80 1.90 1.86
Nuclear 0.56 0.54 0.54
Oil and gas 3.99 4.34 4.81
Total 1.56 1.67 1.62
------------------------------------------------------------
Fuel and purchased power costs of $2.3 billion in 1994 decreased $266 million
or 10 percent compared with 1993, primarily because 3.1 billion fewer
kilowatt-hours were needed to meet customer requirements. Also, the decrease in
these costs was attributable to a lower average cost of fuel per net
kilowatt-hour generated. Fuel and purchased power expenses of $2.6 billion in
1993 increased 1.3 percent compared with the prior year because of increased
energy demands and a slightly higher average cost of fuel per net kilowatt-hour
generated.
For 1994, income taxes rose $8 million or 1.3 percent above the amount
reported for 1993. The increase resulted primarily from the sale of interests in
generating plant facilities discussed earlier. For 1993, income taxes increased
$69 million compared with the prior year. The increase was primarily
attributable to a 1 percent increase in the corporate federal income tax rate
effective January 1993, and the increase in taxable income from operations.
Total gross interest charges and preferred stock dividends continued to
decline from amounts reported in the previous year. The declines are
attributable to lower interest rates and significant refinancing activities in
1993 and 1992. In 1994, these costs were $765 million -- down $66 million or 8.0
percent. These costs for 1993 decreased $21 million. As a result of favorable
market conditions, $1.0 billion in 1994, $3.0 billion in 1993, and $2.4 billion
in 1992 of senior securities were issued for the primary purpose of retiring
higher-cost securities.
Effects of Inflation
The Southern Company is subject to rate regulation and income tax laws that are
based on the recovery of historical costs. Therefore, inflation creates an
economic loss because the company is recovering its costs of investments in
dollars that have less purchasing power. While the inflation rate has been
relatively low in recent years, it continues to have an adverse effect on The
Southern Company because of the large investment in long-lived utility plant.
Conventional accounting for historical cost does not recognize this economic
loss nor the partially offsetting gain that arises through financing facilities
with fixed-money obligations such as long-term debt and preferred stock. Any
recognition of inflation by regulatory authorities is reflected in the rate of
return allowed.
Future Earnings Potential
The results of operations for the past three years 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.
Georgia Power has completed three of four separate transactions to sell Unit
4 of Plant Scherer to two Florida utilities. The remaining transaction is
scheduled to take place in 1995 with the after-tax gain currently estimated to
total approximately $12 million. See Note 7 to the financial statements for
additional information.
In 1994, work force reduction programs were implemented, reducing earnings by
$61 million. These actions will assist in efforts to control growth in future
operating expenses.
See Note 4 to the financial statements for information on an uncertainty
regarding full recovery of an investment in the Rocky Mountain pumped storage
hydroelectric project scheduled to be in commercial operation in 1995.
Future earnings in the near term will depend upon growth in energy 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 the company's service area. However, the Energy
Policy Act of 1992 (Energy Act) is beginning to have a dramatic effect on the
future of the electric utility industry. The Energy Act promotes energy
efficiency, alternative fuel use, and increased competition for electric
II-10
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS (continued)
The Southern Company and Subsidiary Companies 1994 Annual Report
utilities. The Southern Company is positioning the business to meet the
challenge of this major change in the traditional practice of selling
electricity. The Energy Act allows independent power producers (IPPs) to access
a utility's transmission network in order to sell electricity to other
utilities. This may enhance the incentive for IPPs to build cogeneration plants
for a utility's large industrial and commercial customers and sell excess energy
generation to other utilities. Although the Energy Act does not require
transmission access to retail customers, retail wheeling initiatives are rapidly
evolving and becoming very prominent issues in several states. In order to
address these initiatives, numerous questions must be resolved with the most
complex ones relating to transmission pricing and recovery of stranded
investments. As the initiatives become a reality, the structure of the utility
industry could radically change. Therefore, unless The Southern Company remains
a low-cost producer and provides quality service, the company's retail energy
sales growth could be limited, and this could significantly erode earnings.
Conversely, being the low-cost producer could provide significant opportunities
to increase market share and profitability.
The Energy Act amended the Public Utility Holding Company Act of 1935
(PUHCA). The amendment allows holding companies to form exempt wholesale
generators and foreign utility companies to sell power largely free of
regulation under PUHCA. These entities are able to sell power to affiliates --
under certain restrictions -- and to own and operate power generating facilities
in other domestic and international markets. To take advantage of these
opportunities, Southern Electric International (Southern Electric) -- founded in
1981 -- is focusing on international and domestic cogeneration, the independent
power market, and the privatization of generating facilities in the
international market. During 1994, additional investments were made in entities
that own and operate generating facilities in domestic and various international
markets. At December 31, 1994, Southern Electric's investment in these
facilities amounted to $436 million. In the near term, Southern Electric is
expected to have minimal effect on earnings, but the potential exists that it
could be a prime contributor to future earnings growth.
Southern Communications Services is constructing a wireless communications
system to provide services beginning in 1995 to Southern Company subsidiaries
and to other parties. It is anticipated that the operations of this new
subsidiary, at least in its early years, will negatively affect earnings and
cash flow.
Demand-side options -- programs that enable customers to lower or alter
their peak energy requirements -- have been implemented by some of the system
operating companies and are a significant part of integrated resource planning.
See Note 3 to the financial statements under "Georgia Power Demand-Side
Conservation Programs" for information concerning the recovery of certain costs.
Customers can receive cash incentives for participating in these programs as
well as reduce their energy requirements. Besides promoting energy efficiency,
another benefit of these programs could be the ability to defer the need to
construct costly baseload generating facilities further into the future.
The ability to defer major construction projects in conjunction with
regulatory precertification approval processes for both new plant additions and
purchase power contracts should minimize the possibility of not being able to
fully recover additional costs.
Rates to retail customers served by the system operating companies are
regulated by the respective state public service commissions in Alabama,
Florida, Georgia, and Mississippi. Rates for Alabama Power and Mississippi Power
are adjusted periodically within certain limitations based on earned retail rate
of return compared with an allowed return. See Note 3 to the financial
statements for information about other retail and wholesale regulatory matters.
The Southern Company is subject to the provisions of Financial Accounting
Standards Board (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, the company would be required to write
off related regulatory assets and liabilities. See Note 1 to the financial
statements under "Regulatory Assets and Liabilities" for additional information.
The staff of the Securities and Exchange Commission has questioned certain of
the current accounting practices of the electric utility industry -- including
the company -- regarding the recognition, measurement, and classification of
decommissioning costs for nuclear generating facilities in the financial
statements. In response to these questions, the FASB has decided to review the
accounting for nuclear decommissioning. If current electric utility industry
accounting practices for decommissioning are changed: (1) Annual provisions for
decommissioning could increase. (2) The estimated cost for decommissioning may
be required to be recorded as a liability in the Consolidated Balance Sheets. In
II-11
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS (continued)
The Southern Company and Subsidiary Companies 1994 Annual Report
management's opinion -- should these changes be required -- the changes would
not have a significant adverse effect on results of operations because of the
company's current and expected future ability to recover decommissioning costs
through rates. See Note 1 to the financial statements under "Depreciation and
Nuclear Decommissioning" for additional information.
The company is involved in various matters being litigated. See Note 3 to
the financial statements for information regarding material issues that could
possibly affect future earnings.
Compliance costs related to the Clean Air Act Amendments of 1990 (Clean Air
Act) could affect earnings if such costs are not fully recovered. The Clean Air
Act and other important environmental items are discussed later under
"Environmental Matters."
FINANCIAL CONDITION
Overview
The Southern Company's financial condition continues to remain at the strongest
level since the mid-1980s. Earnings from operations continued to increase in
1994 and exceeded $1 billion. Based on this performance, in January 1995, The
Southern Company board of directors increased the common stock dividend for the
fourth consecutive year.
Another major change in The Southern Company's financial condition was gross
property additions of $1.5 billion to utility plant. The majority of funds
needed for gross property additions since 1991 have been provided from operating
activities, principally from earnings and non-cash charges to income such as
depreciation and deferred income taxes. The Consolidated Statements of Cash
Flows provide additional details.
The Southern Company has a policy that financial derivatives are to be used
only to mitigate business risks and not for speculative purposes. Derivatives
have been used by the company on a very limited basis. At December 31, 1994, the
credit risk for derivatives outstanding was not material.
Capital Structure
The company achieved a ratio of common equity to total capitalization --
including short-term debt -- of 44.4 percent in 1994, compared with 43.8 percent
in 1993 and 42.8 percent in 1992. The company's goal is to maintain the common
equity ratio generally within a range of 40 percent to 45 percent.
During 1994, the operating companies sold $185 million of first mortgage
bonds and, through public authorities, $749 million of pollution control revenue
bonds. Preferred securities of $100 million were issued in 1994. The operating
companies continued to reduce financing costs by retiring higher-cost bonds.
Retirements, including maturities, of bonds totaled $973 million during 1994,
$2.5 billion during 1993, and $2.8 billion during 1992. Retirements of preferred
stock totaled $1 million during 1994, $516 million during 1993, and $326 million
during 1992. As a result, the composite interest rate on long-term debt
decreased from 8.8 percent at December 31, 1991, to 7.2 percent at December 31,
1994. During this same period, the composite dividend rate on preferred stock
declined from 7.7 percent to 6.7 percent.
In 1994, The Southern Company raised $159 million from the issuance of new
common stock under the company's various stock plans. An additional $120 million
of new common stock was issued through a public offering in early 1994. At the
close of 1994, the company's common stock had a market value of $20.00 per
share, compared with a book value of $12.47 per share. The market-to-book value
ratio was 160 percent at the end of 1994, compared with 184 percent at year-end
1993 and 168 percent at year-end 1992.
Capital Requirements for Construction
The construction program of the operating companies is budgeted at $1.4 billion
for 1995, $1.3 billion for 1996, and $1.3 billion for 1997. The total is $4.0
billion for the three years. Actual construction costs may vary from this
estimate because of factors such as changes in environmental regulations;
changes in existing nuclear plants to meet new regulations; revised load
projections; the cost and efficiency of construction labor, equipment, and
materials; and the cost of capital. In addition, there can be no assurance that
costs related to capital expenditures will be fully recovered.
II-12
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS (continued)
The Southern Company and Subsidiary Companies 1994 Annual Report
The operating companies do not have any baseload generating plants under
construction, and current energy demand forecasts do not require any additional
baseload facilities until well into the future. However, within the service
area, the construction of combustion turbine peaking units of approximately
1,100 megawatts of capacity is planned to be completed by 1997 to meet increased
peak-hour demands. In addition, significant construction of transmission and
distribution facilities and upgrading of generating plants will be continuing.
Other Capital Requirements
In addition to the funds needed for the construction program, approximately $718
million will be required by the end of 1997 for present sinking fund
requirements and maturities of long-term debt. Also, the operating subsidiaries
will continue to retire higher-cost debt and preferred stock and replace these
obligations with lower-cost capital if market conditions permit.
Environmental Matters
In November 1990, the Clean Air Act was signed into law. Title IV of the Clean
Air Act -- the acid rain compliance provision of the law -- will have a
significant impact on The Southern Company. Specific reductions in sulfur
dioxide and nitrogen oxide emissions from fossil-fired generating plants will be
required in two phases. Phase I compliance began in 1995 and affected eight
generating plants -- some 10,000 megawatts of capacity or 35 percent of total
capacity -- in the Southern electric system. Phase II compliance is required in
2000, and all fossil-fired generating plants in the Southern electric system
will be affected.
In 1995, the Environmental Protection Agency (EPA) began issuing annual
sulfur dioxide emission allowances through the allowance trading program. An
emission allowance is the authority to emit one ton of sulfur dioxide during a
calendar year. The method for issuing allowances is based on the fossil fuel
consumed from 1985 through 1987 for each affected generating unit. Emission
allowances are transferable and can be bought, sold, or banked and used in the
future.
The sulfur dioxide emission allowance program is expected to minimize the
cost of compliance. The Southern Company's sulfur dioxide compliance strategy is
designed to use allowances as a compliance option.
The Southern Company expects to achieve Phase I sulfur dioxide compliance at
the eight affected plants by switching to low-sulfur coal, which has required
some equipment upgrades. This compliance strategy is expected to result in
unused emission allowances being banked for later use. Additional construction
expenditures were required to install equipment for the control of nitrogen
oxide emissions at these eight plants. Also, continuous emissions monitoring
equipment will be installed on all fossil-fired units. Construction expenditures
for Phase I compliance are estimated to total approximately $300 million through
1995.
For Phase II sulfur dioxide compliance, The Southern Company could use
emission allowances banked during Phase I, increase fuel switching, install flue
gas desulfurization equipment at selected plants, and/or purchase more
allowances, depending on the price and availability of allowances. Also, in
Phase II, equipment to control nitrogen oxide emissions will be installed on
additional system fossil-fired plants as required to meet anticipated Phase II
limits. Therefore, during the period 1996 to 2000, current compliance strategy
could require total estimated construction expenditures of approximately $150
million. However, the full impact of Phase II compliance cannot now be
determined with certainty, pending the continuing development of a market for
emission allowances, the completion of EPA regulations, and the possibility of
new emission reduction technologies.
An average increase of up to 2 percent in revenue requirements from
customers could be necessary to fully recover the cost of compliance for both
Phase I and Phase II of Title IV of the Clean Air Act. Compliance costs include
construction expenditures, increased costs for switching to low-sulfur coal, and
costs related to emission allowances.
Metropolitan Atlanta is classified as a non-attainment area with regard to
the ozone ambient air quality standards. Title I of the Clean Air Act requires
the state of Georgia to conduct specific studies and establish new control rules
-- affecting sources of nitrogen oxides and volatile organic compounds -- to
achieve attainment by 1999. As the required first step, the state has issued
II-13
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS (continued)
The Southern Company and Subsidiary Companies 1994 Annual Report
rules for the application of reasonably available control technology to reduce
nitrogen oxide emissions by May 31, 1995. The results of these new rules require
nitrogen oxide controls, above Title IV requirements, on some Georgia Power
plants. Final attainment rules, based on modeling studies, could require
installation of additional controls for nitrogen oxide emissions to meet the
1999 deadline. A decision on new requirements is expected in 1996. Compliance
with any new rules could result in significant additional costs. The actual
impact of new rules will depend on the development and implementation of such
rules.
Title III of the Clean Air Act requires a multi-year EPA study of power
plant emissions of hazardous air pollutants. The EPA is scheduled to submit a
report to Congress on the results of this study by November 1995. The report
will include a decision on whether additional regulatory control of these
substances is warranted. Compliance with any new control standards could result
in significant additional costs. The impact of new standards -- if any -- will
depend on the development and implementation of applicable regulations.
A significant portion of costs related to the acid rain provision of the
Clean Air Act is expected to be recovered through existing ratemaking
provisions. However, there can be no assurance that all Clean Air Act costs will
be recovered.
The EPA continues to evaluate the need for a new short-term ambient air
quality standard for sulfur dioxide. Preliminary results from an EPA study on
the impact of a new standard indicate that a number of plants could be required
to install sulfur dioxide controls. These controls would be in addition to the
controls already required to meet the acid rain provision of the Clean Air Act.
The EPA issued proposed rules in November 1994 and is required to take final
action on this issue in 1996. The impact of any new standard will depend on the
level chosen for the standard and cannot be determined at this time.
In addition, the EPA is evaluating the need to revise the ambient air
quality standards for particulate matter, nitrogen oxides, and ozone. The impact
of any new standard will depend on the level chosen for the standard and cannot
be determined at this time.
In 1995, the EPA may issue revised rules on air quality control regulations
related to stack height requirements of the Clean Air Act. The full impact of
the final rules cannot be determined at this time, pending their development and
implementation.
In 1993, the EPA issued a ruling confirming the non-hazardous status of coal
ash. However, the EPA has until 1998 to classify co-managed utility wastes --
coal ash and other utility wastes -- as either non-hazardous or hazardous. If
the EPA classifies the co-managed wastes as hazardous, then substantial
additional costs for the management of such wastes may be required. The full
impact of any change in the regulatory status will depend on the subsequent
development of co-managed waste requirements.
The Southern Company subsidiaries must comply with other environmental laws
and regulations that cover the handling and disposal of hazardous waste. Under
these various laws and regulations, the subsidiaries could incur substantial
costs to clean up properties. The subsidiaries conduct studies to determine the
extent of any required cleanup costs and have recognized in their respective
financial statements costs to clean up known sites. These costs for The Southern
Company amounted to $8 million, $41 million, and $3 million in 1994, 1993, and
1992, respectively. Additional sites may require environmental remediation for
which the subsidiaries may be liable for a portion or all required cleanup
costs. See Note 3 to the financial statements for information regarding Georgia
Power's potentially responsible party status at a site in Brunswick, Georgia.
Several major pieces of environmental legislation are being considered for
reauthorization or amendment by Congress. These include: the Clean Water Act;
the Comprehensive Environmental Response, Compensation, and Liability Act; the
Resource Conservation and Recovery Act; the Toxic Substances Control Act; and
the Endangered Species Act. Changes to these laws could affect many areas of The
Southern Company's operations. The full impact of these requirements cannot be
determined at this time, pending the development and implementation of
applicable regulations.
II-14
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS (continued)
The Southern Company and Subsidiary Companies 1994 Annual Report
Compliance with possible additional legislation related to global climate
change, electromagnetic fields, and other environmental and health concerns
could significantly affect The Southern Company. The impact of new legislation
-- if any -- will depend on the subsequent development and implementation of
applicable regulations. In addition, the potential exists for liability as the
result of lawsuits alleging damages caused by electromagnetic fields.
Sources of Capital
In early 1995, The Southern Company sold -- through a public offering -- common
stock with proceeds totaling $103 million. The company may require additional
equity capital during the remainder of 1995. The amount and timing of additional
equity capital to be raised in 1995 -- as well as in subsequent years -- will be
contingent on The Southern Company's investment opportunities. Equity capital
can be provided from any combination of public offerings, private placements, or
the company's stock plans. Any portion of the common stock required during 1995
for the company's stock plans that is not provided from the issuance of new
stock will be acquired on the open market in accordance with the terms of such
plans.
The operating subsidiaries plan to obtain the funds required for
construction and other purposes from sources similar to those used in the past,
which was primarily from internal sources. However, the type and timing of any
financings -- if needed -- will depend on market conditions and regulatory
approval.
Completing the sale of Unit 4 of Plant Scherer in 1995 will provide some
$130 million of cash.
To meet short-term cash needs and contingencies, the system companies had
approximately $139 million of cash and cash equivalents and $1.4 billion of
unused credit arrangements with banks at the beginning of 1995.
To issue additional first mortgage bonds and preferred stock, the operating
companies must comply with certain earnings coverage requirements designated in
their mortgage indentures and corporate charters. The ability to issue
securities in the future will depend on coverages at that time. Currently, each
of the operating companies expects to have adequate coverage ratios for
anticipated requirements through at least 1997.
II-15
<PAGE>
CONSOLIDATED STATEMENTS OF INCOME
For the Years Ended December 31, 1994, 1993, and 1992
The Southern Company and Subsidiary Companies 1994 Annual Report
<TABLE>
<CAPTION>
==========================================================================================================================
1994 1993 1992
--------------------------------------------------------------------------------------------------------------------------
(in millions)
<S> <C> <C> <C>
Operating Revenues $8,297 $8,489 $8,073
--------------------------------------------------------------------------------------------------------------------------
Operating Expenses:
Operation --
Fuel 2,058 2,265 2,114
Purchased power 277 336 454
Other 1,505 1,445 1,310
Maintenance 660 653 613
Depreciation and amortization 821 793 768
Amortization of deferred Plant Vogtle expenses, net (Note 1) 75 36 (31)
Taxes other than income taxes 475 462 436
Federal and state income taxes 711 734 647
--------------------------------------------------------------------------------------------------------------------------
Total operating expenses 6,582 6,724 6,311
--------------------------------------------------------------------------------------------------------------------------
Operating Income 1,715 1,765 1,762
Other Income (Expense):
Allowance for equity funds used during construction 11 9 10
Interest income 32 30 32
Other, net (48) (41) (50)
Income taxes applicable to other income 26 57 39
--------------------------------------------------------------------------------------------------------------------------
Income Before Interest Charges 1,736 1,820 1,793
--------------------------------------------------------------------------------------------------------------------------
Interest Charges and Preferred Dividends:
Interest on long-term debt 568 595 684
Allowance for debt funds used during construction (18) (13) (12)
Interest on notes payable 33 30 16
Amortization of debt discount, premium, and expense, net 30 26 14
Other interest charges 47 87 34
Preferred dividends of subsidiary companies 87 93 104
--------------------------------------------------------------------------------------------------------------------------
Net interest charges and preferred dividends 747 818 840
--------------------------------------------------------------------------------------------------------------------------
Consolidated Net Income $ 989 $1,002 $ 953
==========================================================================================================================
Common Stock Data: (Note 10)
Average number of shares of common stock outstanding (in millions) 650 637 632
Earnings per share of common stock $ 1.52 $1.57 $1.51
Cash dividends paid per share of common stock $ 1.18 $1.14 $1.10
--------------------------------------------------------------------------------------------------------------------------
CONSOLIDATED STATEMENTS OF RETAINED EARNINGS
For the Years Ended December 31, 1994, 1993, and 1992
==========================================================================================================================
1994 1993 1992
--------------------------------------------------------------------------------------------------------------------------
(in millions)
Balance at Beginning of Year $2,968 $2,721 $2,490
Consolidated net income 989 1,002 953
--------------------------------------------------------------------------------------------------------------------------
3,957 3,723 3,443
Cash dividends on common stock 766 726 695
Capital and preferred stock transactions, net - 29 27
--------------------------------------------------------------------------------------------------------------------------
Balance at End of Year (Note 10) $3,191 $2,968 $2,721
==========================================================================================================================
The accompanying notes are an integral part of these statements.
</TABLE>
II-16
<PAGE>
CONSOLIDATED STATEMENTS OF CASH FLOWS
For the Years Ended December 31, 1994, 1993, and 1992
The Southern Company and Subsidiary Companies 1994 Annual Report
<TABLE>
<CAPTION>
=================================================================================================
1994 1993 1992
-------------------------------------------------------------------------------------------------
(in millions)
<S> <C> <C> <C>
Operating Activities:
Consolidated net income $ 989 $1,002 $ 953
Adjustments to reconcile consolidated net income
to net cash provided by operating activities --
Depreciation and amortization 1,050 1,011 969
Deferred income taxes and investment tax credits (4) 189 215
Allowance for equity funds used during construction (11) (9) (10)
Deferred Plant Vogtle costs (Note 1) 75 36 (31)
Gain on asset sales (52) (36) --
Other, net 45 (9) (32)
Changes in certain current assets and liabilities --
Receivables, net 114 (55) (10)
Fossil fuel stock (110) 138 53
Materials and supplies (18) (2) (76)
Accounts payable 81 43 35
Other (48) (61) (71)
-------------------------------------------------------------------------------------------------
Net cash provided from operating activities 2,111 2,247 1,995
-------------------------------------------------------------------------------------------------
Investing Activities:
Gross property additions (1,536) (1,441) (1,105)
Southern Electric's investments (405) (465) --
Sales of property 171 262 44
Other (87) (37) 61
-------------------------------------------------------------------------------------------------
Net cash used for investing activities (1,857) (1,681) (1,000)
-------------------------------------------------------------------------------------------------
Financing Activities:
Proceeds --
Common stock 279 205 30
Preferred securities 100 -- --
Preferred stock -- 426 410
First mortgage bonds 185 2,185 1,815
Other long-term debt 1,188 592 256
Retirements --
Preferred stock (1) (516) (326)
First mortgage bonds (241) (2,178) (2,575)
Other long-term debt (1,039) (450) (296)
Increase in notes payable, net 37 114 525
Payment of common stock dividends (766) (726) (695)
Miscellaneous (35) (137) (148)
-------------------------------------------------------------------------------------------------
Net cash used for financing activities (293) (485) (1,004)
-------------------------------------------------------------------------------------------------
Net Increase (Decrease) in Cash and Cash Equivalents (39) 81 (9)
Cash and Cash Equivalents at Beginning of Year 178 97 106
-------------------------------------------------------------------------------------------------
Cash and Cash Equivalents at End of Year $ 139 $ 178 $ 97
=================================================================================================
Supplemental Cash Flow Information:
Cash paid during the year for --
Interest (net of amount capitalized) $618 $673 $743
Income taxes 716 530 458
-------------------------------------------------------------------------------------------------
The accompanying notes are an integral part of these statements.
</TABLE>
II-17
<PAGE>
CONSOLIDATED BALANCE SHEETS
At December 31, 1994 and 1993
The Southern Company and Subsidiary Companies 1994 Annual Report
<TABLE>
<CAPTION>
=============================================================================================
Assets 1994 1993
---------------------------------------------------------------------------------------------
(in millions)
<S> <C> <C>
Utility Plant:
Plant in service (Note 1) $29,209 $27,687
Less accumulated provision for depreciation 9,577 8,934
---------------------------------------------------------------------------------------------
19,632 18,753
Nuclear fuel, at amortized cost 238 229
Construction work in progress (Note 4) 1,247 1,031
---------------------------------------------------------------------------------------------
Total 21,117 20,013
---------------------------------------------------------------------------------------------
Other Property and Investments:
Argentine operating concession, being amortized (Note 5) 446 469
Nuclear decommissioning trusts 125 88
Miscellaneous 224 179
---------------------------------------------------------------------------------------------
Total 795 736
---------------------------------------------------------------------------------------------
Current Assets:
Cash and cash equivalents 139 178
Special deposits 36 -
Receivables, less accumulated provisions for uncollectible accounts
of $9 million in 1994 and in 1993 1,022 1,147
Fossil fuel stock, at average cost 354 254
Materials and supplies, at average cost 553 535
Prepayments 194 148
Vacation pay deferred (Note 1) 70 73
---------------------------------------------------------------------------------------------
Total 2,368 2,335
---------------------------------------------------------------------------------------------
Deferred Charges:
Deferred charges related to income taxes (Note 9) 1,454 1,546
Deferred Plant Vogtle costs (Note 1) 432 507
Debt expense, being amortized 48 33
Premium on reacquired debt, being amortized 298 288
Miscellaneous 530 453
---------------------------------------------------------------------------------------------
Total 2,762 2,827
---------------------------------------------------------------------------------------------
Total Assets $27,042 $25,911
=============================================================================================
The accompanying notes are an integral part of these balance sheets.
</TABLE>
II-18
<PAGE>
CONSOLIDATED BALANCE SHEETS (continued)
At December 31, 1994 and 1993
The Southern Company and Subsidiary Companies 1994 Annual Report
<TABLE>
<CAPTION>
=============================================================================================
Capitalization and Liabilities 1994 1993
---------------------------------------------------------------------------------------------
(in millions)
<S> <C> <C>
Capitalization (See accompanying statements):
Common stock equity $ 8,186 $ 7,684
Preferred stock 1,332 1,333
Preferred securities 100 -
Long-term debt 7,593 7,412
---------------------------------------------------------------------------------------------
Total 17,211 16,429
---------------------------------------------------------------------------------------------
Current Liabilities:
Amount of securities due within one year 229 157
Notes payable 978 941
Accounts payable 806 698
Customer deposits 102 103
Taxes accrued-
Federal and state income - 34
Other 153 172
Interest accrued 190 186
Vacation pay accrued 87 90
Miscellaneous 233 190
---------------------------------------------------------------------------------------------
Total 2,778 2,571
---------------------------------------------------------------------------------------------
Deferred Credits and Other Liabilities:
Accumulated deferred income taxes (Note 9) 4,007 3,979
Deferred credits related to income taxes (Note 9) 987 1,051
Accumulated deferred investment tax credits 858 900
Prepaid capacity revenues 138 144
Department of Energy assessments 92 98
Disallowed Plant Vogtle capacity buyback costs 60 63
Storm damage reserves 53 22
Miscellaneous 858 654
---------------------------------------------------------------------------------------------
Total 7,053 6,911
---------------------------------------------------------------------------------------------
Commitments and Contingent Matters (Notes 1, 2, 3, 4, 5, 6, 7, 8, and 13)
Total Capitalization and Liabilities $27,042 $25,911
=============================================================================================
The accompanying notes are an integral part of these balance sheets.
</TABLE>
II-19
<PAGE>
CONSOLIDATED STATEMENTS OF CAPITALIZATION
At December 31, 1994 and 1993
The Southern Company and Subsidiary Companies 1994 Annual Report
<TABLE>
<CAPTION>
================================================================================================
1994 1993 1994 1993
------------------------------------------------------------------------------------------------
(in millions) (percent of total)
<S> <C> <C> <C> <C>
Common Stock Equity:
Common stock, par value $5 per share --
Authorized -- 1 billion shares
Outstanding -- 1994: 657 million shares,
1993: 643 million shares (Note 10) $ 3,283 $ 3,213
Paid-in capital 1,712 1,503
Retained earnings (Note 10) 3,191 2,968
-------------------------------------------------------------------------------------------------
Total common stock equity 8,186 7,684 47.6 % 46.8 %
-------------------------------------------------------------------------------------------------
Cumulative Preferred Stock of Subsidiaries:
$100 par or stated value --
4.20% to 5.96% 199 199
6.32% to 7.88% 205 205
11.36% -- 1
$25 par or stated value --
$1.90 to $2.125 295 295
6.40% to 7.60% 323 323
Auction rates -- at January 1, 1995:
4.59% to 4.64% 70 70
Adjustable rates -- January 1, 1995:
6.07% to 6.86% 240 240
-------------------------------------------------------------------------------------------------
Total (annual dividend requirement -- $90 million) 1,332 1,333 7.7 8.1
-------------------------------------------------------------------------------------------------
Cumulative Preferred Securities of Subsidiaries:
$25 stated value -- 9% 100 --
-------------------------------------------------------------------------------------------------
Total (annual distribution requirement -- $9 million) 100 -- 0.6 --
-------------------------------------------------------------------------------------------------
</TABLE>
II-20
<PAGE>
CONSOLIDATED STATEMENTS OF CAPITALIZATION (continued)
At December 31, 1994 and 1993
The Southern Company and Subsidiary Companies 1994 Annual Report
<TABLE>
<CAPTION>
=========================================================================================================
1994 1993 1994 1993
---------------------------------------------------------------------------------------------------------
(in millions) (percent of total)
<S> <C> <C> <C> <C>
Long-Term Debt of Subsidiaries:
First mortgage bonds --
Maturity Interest Rates
-------- --------------
1994 4 5/8% -- 26
1995 4 3/4 % -- 11
1995 5 1/8 % 130 130
1996 4 1/2 % to 6% 210 235
1997 5 7/8 % 25 25
1998 5% to 9.2% 230 249
1999 6 1/8% to 6 3/8% 365 365
2000 through 2004 6% to 7% 1,250 1,215
2005 through 2009 6 7/8% to 9% 228 230
2015 through 2019 9.23% to 10 5/8% 65 215
2020 through 2024 7.3% to 9 3/8% 1,921 1,779
2032 Variable rates 200 200
---------------------------------------------------------------------------------------------------------
Total first mortgage bonds 4,624 4,680
Other long-term debt (Note 11) 3,261 2,962
Unamortized debt premium (discount), net (63) (74)
---------------------------------------------------------------------------------------------------------
Total long-term debt (annual interest
requirement -- $570 million) 7,822 7,568
Less amount due within one year (Note 12) 229 156
--------------------------------------------------------------------------------------------------------
Long-term debt excluding amount due within one year 7,593 7,412 44.1 45.1
---------------------------------------------------------------------------------------------------------
Total Capitalization $17,211 $16,429 100.0 % 100.0%
=========================================================================================================
</TABLE>
CONSOLIDATED STATEMENTS OF PAID-IN CAPITAL
For the Years Ended December 31, 1994, 1993, and 1992
<TABLE>
<CAPTION>
=========================================================================================================
1994 1993 1992
---------------------------------------------------------------------------------------------------------
(in millions)
<S> <C> <C> <C>
Balance at Beginning of Year $1,503 $2,931 $2,908
Proceeds from sales of common stock over the par value -- 13.9 million,
9.7 million, and 1.6 million shares in 1994, 1993, and 1992, respectively 209 179 23
Two-for-one stock split (Note 10) -- (1,607) --
-----------------------------------------------------------------------------------------------------------
Balance at End of Year $1,712 $1,503 $2,931
===========================================================================================================
The accompanying notes are an integral part of these statements.
</TABLE>
II-21
<PAGE>
NOTES TO FINANCIAL STATEMENTS
The Southern Company and Subsidiary Companies 1994 Annual Report
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
General
The Southern Company is the parent company of five operating companies, a system
service company, Southern Communications Services (Southern Communications),
Southern Electric International (Southern Electric), Southern Nuclear Operating
Company (Southern Nuclear), and The Southern Development and Investment Group
(SDIG). The operating companies provide electric service in four Southeastern
states. Contracts among the companies -- dealing with jointly owned generating
facilities, interconnecting transmission lines, and the exchange of electric
power -- are regulated by the Federal Energy Regulatory Commission (FERC) or the
Securities and Exchange Commission (SEC). The system service company provides,
at cost, specialized services to The Southern Company and subsidiary companies.
Southern Communications, beginning in mid-1995, will provide digital wireless
communications services -- over the 800-megahertz frequency band -- to The
Southern Company's subsidiaries and also will market these services to the
public within the Southeast. Southern Electric designs, builds, owns, and
operates power production facilities and provides a broad range of technical
services to industrial companies and utilities in the United States and a number
of international markets. Southern Nuclear provides services to The Southern
Company's nuclear power plants. SDIG develops new business opportunities related
to energy products and services.
The Southern Company is registered as a holding company under the Public
Utility Holding Company Act of 1935 (PUHCA). Both the company and its
subsidiaries are subject to the regulatory provisions of the PUHCA. The
operating companies also are subject to regulation by the FERC and their
respective state regulatory commissions. The companies follow generally accepted
accounting principles and comply with the accounting policies and practices
prescribed by their respective commissions.
All material intercompany items have been eliminated in consolidation.
Consolidated retained earnings at December 31, 1994, include $2.8 billion of
undistributed retained earnings of subsidiaries.
Certain prior years' data presented in the consolidated financial statements
have been reclassified to conform with current year presentation.
Regulatory Assets and Liabilities
The Southern Company is subject to the provisions of Financial Accounting
Standards Board (FASB) Statement No. 71, Accounting for the Effects of Certain
Types of Regulation. Regulatory assets represent probable future revenues to the
company associated with certain costs that are expected to be recovered from
customers through the ratemaking process. Regulatory liabilities represent
probable future reductions in revenues associated with amounts that are to be
credited to customers through the ratemaking process. Regulatory assets and
(liabilities) reflected in the Consolidated Balance Sheets at December 31 relate
to:
1994 1993
----------------
(in millions)
Deferred income taxes $1,454 $1,546
Deferred Plant Vogtle costs 432 507
Premium on reacquired debt 298 288
Demand-side programs 97 49
Department of Energy assessments 79 87
Vacation pay 70 73
Deferred fuel charges 51 83
Postretirement benefits 41 22
Work force reduction costs 15 5
Deferred income tax credits (987) (1,051)
Storm damage reserve (53) (22)
Other, net 108 91
-------------------------------------------------------------
Total $1,605 $1,678
=============================================================
In the event that a portion of the company's operations is no longer subject
to the provisions of Statement No. 71, the company would be required to write
off related regulatory assets and liabilities. In addition, the company would be
required to determine any impairment to other assets, including plant, and write
down the assets to their fair value.
Revenues and Fuel Costs
The operating companies accrue revenues for service rendered but unbilled at the
end of each fiscal period. Fuel costs are expensed as the fuel is used. The
operating companies' electric rates include provisions to adjust billings for
fluctuations in fuel and the energy component of purchased power costs. Revenues
are adjusted for differences between recoverable fuel costs and amounts actually
recovered in current rates.
The company has a diversified base of customers. No single customer or
industry comprises 10 percent or more of revenues. In 1994, uncollectible
accounts continued to average less than 1 percent of revenues.
II-22
<PAGE>
NOTES (continued)
The Southern Company and Subsidiary Companies 1994 Annual Report
Fuel expense includes the amortization of the cost of nuclear fuel and a
charge, based on nuclear generation, for the permanent disposal of spent nuclear
fuel. Total charges for nuclear fuel included in fuel expense amounted to $152
million in 1994, $137 million in 1993, and $132 million in 1992. Alabama Power
and Georgia Power have contracts with the U.S. Department of Energy (DOE) that
provide for the permanent disposal of spent nuclear fuel, which was scheduled to
begin in 1998. However, the actual year this service will begin is uncertain.
Sufficient storage capacity currently is available to permit operation into 2003
at Plant Hatch, into 2009 at Plant Vogtle, and into 2012 and 2014 at Plant
Farley units 1 and 2, respectively.
Also, the Energy Policy Act of 1992 required the establishment in 1993 of a
Uranium Enrichment Decontamination and Decommissioning Fund, which is to be
funded in part by a special assessment on utilities with nuclear plants. This
assessment will be paid over a 15-year period, which began in 1993. This fund
will be used by the DOE for the decontamination and decommissioning of its
nuclear fuel enrichment facilities. The law provides that utilities will recover
these payments in the same manner as any other fuel expense. Alabama Power and
Georgia Power -- based on its ownership interests -- estimate their remaining
liability at December 31, 1994, under this law to be approximately $43 million
and $33 million, respectively. These obligations are recorded in the
Consolidated Balance Sheets.
Depreciation and Nuclear Decommissioning
Depreciation of the original cost of depreciable utility plant in service is
provided primarily by using composite straight-line rates, which approximated
3.2 percent in 1994 and 3.3 percent in both 1993 and 1992. When property subject
to depreciation is retired or otherwise disposed of in the normal course of
business, its cost -- together with the cost of removal, less salvage -- is
charged to the accumulated provision for depreciation. Minor items of property
included in the original cost of the plant are retired when the related property
unit is retired. Depreciation expense includes an amount for the expected costs
of decommissioning nuclear facilities.
In 1988, the Nuclear Regulatory Commission (NRC) adopted regulations
requiring all licensees operating commercial power reactors to establish a plan
for providing, with reasonable assurance, funds for decommissioning. Alabama
Power and Georgia Power have external trust funds to comply with the NRC's
regulations. Amounts previously recorded in internal reserves are being
transferred into the external trust funds over set periods of time as approved
by the respective state public service commissions. The NRC's minimum external
funding requirements are based on a generic estimate of the cost to decommission
the radioactive portions of a nuclear unit based on the size and type of
reactor. Alabama Power and Georgia Power have filed plans with the NRC to ensure
that -- over time -- the deposits and earnings of the external trust funds will
provide the minimum funding amounts prescribed by the NRC.
Site study cost is the estimate to decommission the facility as of the site
study year, and ultimate cost is the estimate to decommission the facility as of
retirement date. The estimated costs of decommissioning -- both site study costs
and ultimate costs -- at December 31, 1994, for Alabama Power's Plant Farley and
Georgia Power's ownership interests in plants Hatch and Vogtle were as follows:
Plant Plant Plant
Farley Hatch Vogtle
--------------------------
Site study basis (year) 1993 1994 1994
Decommissioning periods:
Beginning year 2017 2014 2027
Completion year 2029 2027 2038
--------------------------------------------------------------
(in millions)
Site study costs:
Radiated structures $409 $241 $193
Non-radiated structures 75 34 43
Other 94 60 49
--------------------------------------------------------------
Total $578 $335 $285
==============================================================
(in millions)
Ultimate costs:
Radiated structures $1,258 $641 $ 843
Non-radiated structures 231 91 190
Other 289 160 215
--------------------------------------------------------------
Total $1,778 $892 $1,248
==============================================================
II-23
<PAGE>
NOTES (continued)
The Southern Company and Subsidiary Companies 1994 Annual Report
Plant Plant Plant
Farley Hatch Vogtle
---------------------------
(in millions)
Amount expensed in 1994 $18 $6 $6
Accumulated provisions:
Balance in external trust
funds $ 71 $33 $22
Balance in internal reserves 51 29 10
----------------------------------------------------------------
Total $122 $62 $32
================================================================
Assumed in ultimate costs:
Inflation rate 4.5% 4.4% 4.4%
Trust earning rate 7.0 6.0 6.0
----------------------------------------------------------------
Annual provisions for nuclear decommissioning are based on an annuity --
sinking fund -- method as approved by the respective state public service
commissions. The decommissioning costs approved for ratemaking are $578 million
for Plant Farley, $184 million for Plant Hatch, and $155 million for Plant
Vogtle. These amounts for Georgia Power are the costs to decommission the
radioactive portions of the plants based on 1990 site studies. Georgia Power's
estimated ultimate costs, based on the 1990 studies, were $872 million and $1.4
billion for plants Hatch and Vogtle, respectively. Georgia Power expects the
GPSC to periodically review and adjust, if necessary, the amounts collected in
rates for the anticipated cost of decommissioning.
The decommissioning cost estimates are based on prompt dismantlement and
removal of the plant from service. The actual decommissioning costs may vary
from the above estimates because of changes in the assumed date of
decommissioning, changes in regulatory requirements, changes in technology, and
changes in costs of labor, materials, and equipment.
Income Taxes
The companies provide deferred income taxes for all significant income tax
temporary differences. Investment tax credits utilized are deferred and
amortized to income over the average lives of the related property.
Effective January 1, 1993, The Southern Company adopted FASB Statement No.
109, Accounting for Income Taxes. Statement No. 109 required, among other
things, conversion to the liability method of accounting for accumulated
deferred income taxes. See Note 9 for additional information about Statement No.
109.
Plant Vogtle Phase-In Plans
In 1987 and 1989, the GPSC ordered that the allowed costs of Plant Vogtle, a
two-unit nuclear facility of which Georgia Power owns 45.7 percent, be phased
into rates under plans that meet the requirements of FASB Statement No. 92,
Accounting for Phase-In Plans. Under these plans, Georgia Power deferred
financing costs and depreciation expense until the allowed investment was fully
reflected in rates as of October 1991. In 1991, the GPSC modified the Plant
Vogtle phase-in plan to begin earlier amortization of the costs deferred under
the plan. Also, the GPSC levelized capacity buyback expense from co-owners of
Plant Vogtle. See Note 3 for additional information regarding Georgia Power's
1991 rate order. Previously, pursuant to two separate interim accounting orders
by the GPSC, Georgia Power deferred substantially all operating expenses and
financing costs related to Plant Vogtle. Under phase-in plans and accounting
orders from the GPSC, Georgia Power deferred and began amortizing the costs --
recovered through rates -- related to Plant Vogtle as follows:
1994 1993 1992
-------------------------------
(in millions)
Deferred capacity buybacks $ 10 $ 38 $100
Amortization of
deferred costs (85) (74) (69)
Income taxes - - (23)
-------------------------------------------------------------------
Net (amortization) deferred (75) (36) 8
Effect of adoption of FASB
Statement No. 109 - 160 -
Deferred costs
at beginning of year 507 383 375
------------------------------------------------------------------
Deferred costs
at end of year $432 $507 $383
==================================================================
Each GPSC order called for recovery of deferred costs within 10 years. Also,
the orders authorized Georgia Power to impute a return similar to allowance for
funds used during construction (AFUDC) on its investment in Plant Vogtle units 1
and 2 after the units began commercial operation.
AFUDC
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 increases the revenue requirement
over the service life of the plant through a higher rate base and higher
II-24
<PAGE>
NOTES (continued)
The Southern Company and Subsidiary Companies 1994 Annual Report
depreciation expense. The composite rates used by the operating companies to
calculate AFUDC during the years 1992 through 1994 ranged from a
before-income-tax rate of 5.0 percent to 11.3 percent. AFUDC, net of income tax,
as a percent of consolidated net income was 2.3 percent in 1994, 1.7 percent in
1993, and 1.8 percent in 1992.
Utility Plant
Utility plant is stated at original cost less regulatory disallowances. Original
cost includes: materials; labor; minor items of property; appropriate
administrative and general costs; payroll-related costs such as taxes, pensions,
and other benefits; and the estimated cost of funds used during construction.
The cost of maintenance, repairs, and replacement of minor items of property is
charged to maintenance expense. The cost of replacements of property (exclusive
of minor items of property) is charged to utility plant.
Cash and Cash Equivalents
For purposes of the Consolidated Statements of Cash Flows, temporary cash
investments are considered cash equivalents. Temporary cash investments are
securities with original maturities of 90 days or less.
Financial Instruments
In accordance with FASB Statement No. 107, Disclosure About Fair Value of
Financial Instruments, The Southern Company's only financial instrument that the
carrying amount did not approximate fair value at December 31 was as follows:
Long-Term Debt
-----------------------
Carrying Fair
Year Amount Value
---- -------- -----
(in millions)
1994 $7,674 $7,373
1993 7,321 7,729
----------------------------------------------------------------
The fair value of long-term debt was based on either closing market price or
closing price of comparable instruments.
Materials and Supplies
Generally, materials and supplies include the cost of transmission,
distribution, and generating plant materials. Materials are charged to inventory
when purchased and then expensed or capitalized to plant, as appropriate, when
installed.
Vacation Pay
The operating companies' employees earn their vacation in one year and take it
in the subsequent year. However, for ratemaking purposes, vacation pay is
recognized as an allowable expense only when paid. Consistent with this
ratemaking treatment, the companies accrue a current liability for earned
vacation pay and record a current regulatory asset representing the future
recoverability of this cost. The amount was $70 million and $73 million at
December 31, 1994 and 1993, respectively. In 1995, an estimated 69 percent of
the 1994 deferred vacation cost will be expensed, and the balance will be
charged to construction and other accounts.
2. RETIREMENT BENEFITS
Pension Plan
The system companies have defined benefit, trusteed, non-contributory pension
plans that cover substantially all regular employees. Benefits are based on the
greater of amounts resulting from two different formulas: years of service and
final average pay or years of service and a flat-dollar benefit. Primarily, the
companies use the "entry age normal method with a frozen initial liability"
actuarial method for funding purposes, subject to limitations under federal
income tax regulations. Amounts funded to the pension trusts are primarily
invested in equity and fixed-income securities. FASB Statement No. 87,
Employers' Accounting for Pensions, requires use of the "projected unit credit"
actuarial method for financial reporting purposes.
Postretirement Benefits
The system companies also provide certain medical care and life insurance
benefits for retired employees. Substantially all employees may become eligible
for these benefits when they retire. Qualified trusts are funded to the extent
deductible under federal income tax regulations or to the extent required by the
operating companies' respective regulatory commissions. Amounts funded are
primarily invested in debt and equity securities.
Effective January 1, 1993, the system companies adopted FASB Statement No.
106, Employers' Accounting for Postretirement Benefits Other Than Pensions, on a
prospective basis. Statement No. 106 requires that medical care and life
insurance benefits for retired employees be accounted for on an accrual basis
II-25
<PAGE>
NOTES (continued)
The Southern Company and Subsidiary Companies 1994 Annual Report
using a specified actuarial method, "benefit/years-of-service." In October 1993,
the GPSC ordered Georgia Power to phase in the adoption of Statement No. 106 to
cost of service over a five-year period, whereby one-fifth of the additional
costs would be expensed in 1993 and the remaining costs would be deferred. An
additional one-fifth of the costs would be expensed each succeeding year until
the costs are fully reflected in cost of service in 1997. The costs deferred
during the five-year period will be amortized to expense over a 15-year period
beginning in 1998. For the other operating companies, the cost of postretirement
benefits is reflected in rates on a current basis.
Prior to 1993, the system companies, except for Georgia Power and Savannah
Electric, recognized these benefit costs on an accrual basis using the
"aggregate cost" actuarial method, which spreads the expected cost of such
benefits over the remaining periods of employees' service as a level percentage
of payroll costs. Consistent with regulatory treatment in those years, Georgia
Power and Savannah Electric recognized these costs on a cash basis as payments
were made. The total costs of such benefits recognized by system companies in
1992 were $42 million.
Funded Status and Cost of Benefits
Shown in the following tables are actuarial results and assumptions for pension
and postretirement medical and life insurance benefits as computed under the
requirements of FASB Statement Nos. 87 and 106, respectively. The funded status
of the plans at December 31 was as follows:
Pension
--------------------
1994 1993
--------------------
(in millions)
Actuarial present value of
benefit obligation:
Vested benefits $1,593 $1,534
Non-vested benefits 68 76
----------------------------------------------------------------------
Accumulated benefit obligation 1,661 1,610
Additional amounts related to
projected salary increases 638 558
----------------------------------------------------------------------
Projected benefit obligation 2,299 2,168
Less:
Fair value of plan assets 3,171 3,337
Unrecognized net gain (789) (1,060)
Unrecognized prior service cost 64 72
Unrecognized transition asset (139) (152)
----------------------------------------------------------------------
Prepaid asset recognized in the
Consolidated Balance Sheets $ 8 $ 29
======================================================================
Postretirement Medical
-----------------------
1994 1993
-----------------------
(in millions)
Actuarial present value of
benefit obligation:
Retirees and dependents $293 $243
Employees eligible to retire 40 48
Other employees 367 389
-------------------------------------------------------------------
Accumulated benefit obligation 700 680
Less:
Fair value of plan assets 128 95
Unrecognized net loss (gain) 22 76
Unrecognized transition
obligation 394 419
-------------------------------------------------------------------
Accrued liability recognized in the
Consolidated Balance Sheets $156 $ 90
===================================================================
Postretirement Life
--------------------
1994 1993
--------------------
(in millions)
Actuarial present value of benefit obligation:
Retirees and dependents $ 82 $ 75
Employees eligible to retire - -
Other employees 92 96
-------------------------------------------------------------------
Accumulated benefit obligation 174 171
Less:
Fair value of plan assets 12 2
Unrecognized net loss (gain) (19) (13)
Unrecognized transition
obligation 106 113
-------------------------------------------------------------------
Accrued liability recognized in the
Consolidated Balance Sheets $ 75 $ 69
===================================================================
The weighted average rates assumed in the actuarial calculations were:
1994 1993 1992
--------------------------------------
Discount 8.0% 7.5% 8.0%
Annual salary increase 5.5 5.0 6.0
Long-term return on
plan assets 8.5 8.5 8.5
--------------------------------------------------------------------
An additional assumption used in measuring the accumulated postretirement
medical benefit obligation was a weighted average medical care cost trend rate
of 10.5 percent for 1994 decreasing gradually to 6.0 percent through the year
2000 and remaining at that level thereafter. An annual increase in the assumed
II-26
<PAGE>
NOTES (continued)
The Southern Company and Subsidiary Companies 1994 Annual Report
medical care cost trend rate of 1 percent would increase the accumulated medical
benefit obligation at December 31, 1994, by $130 million and the aggregate of
the service and interest cost components of the net retiree medical cost by $18
million.
Components of the plans' net costs are shown below:
Pension
-----------------------
1994 1993 1992
------------------------
(in millions)
Benefits earned during the year $ 77 $ 76 $ 75
Interest cost on projected
benefit obligation 160 156 146
Actual (return) loss on plan assets 75 (432) (135)
Net amortization and deferral (351) 186 (85)
----------------------------------------------------------------
Net pension cost (income) $ (39) $ (14) $ 1
================================================================
Of the above net pension amounts, pension income of $29 million in 1994 and
$9 million in 1993, and pension expense of $2 million in 1992, were recorded in
operating expenses, and the remainder was recorded in construction and other
accounts.
Postretirement Medical
----------------------
1994 1993
----------------------
(in millions)
Benefits earned during the year $ 26 $ 21
Interest cost on accumulated
benefit obligation 51 43
Amortization of transition obligation 21 22
Actual (return) loss on plan assets 2 (12)
Net amortization and deferral (10) 5
-----------------------------------------------------------------
Net postretirement cost $ 90 $ 79
=================================================================
Postretirement Life
---------------------
1994 1993
--------------------
(in millions)
Benefits earned during the year $ 5 $ 6
Interest cost on accumulated
benefit obligation 13 13
Amortization of transition obligation 6 6
Actual (return) loss on plan assets - -
Net amortization and deferral - -
-----------------------------------------------------------------
Net postretirement cost $24 $25
=================================================================
Of the above net postretirement medical and life insurance costs recorded
in 1994 and 1993, $77 million and $64 million were charged to operating
expenses, $18 million and $21 million were deferred, and the remainder was
charged to construction and other accounts, respectively.
Work Force Reduction Programs
The system companies have incurred additional costs for work force reduction
programs. The costs related to these programs were $112 million, $35 million,
and $37 million for the years 1994, 1993, and 1992, respectively. A portion of
the cost of these programs was deferred and is being amortized in accordance
with regulatory treatment. The unamortized balance of these costs was $15
million at December 31, 1994.
3. LITIGATION AND REGULATORY MATTERS
Stockholder Suit
In April 1991, two Southern Company stockholders filed a derivative action suit
in the U.S. District Court for the Southern District of Georgia against certain
current and former directors and officers of The Southern Company. The suit
alleges violations of the Federal Racketeer Influenced and Corrupt Organizations
Act (RICO) by officers and breaches of fiduciary duty and gross negligence by
all defendants resulting from alleged fraudulent accounting for spare parts,
illegal political campaign contributions, violations of federal securities laws
involving misrepresentations and omissions in SEC filings, and concealment of
the foregoing acts. The complaint seeks damages -- including treble damages
pursuant to RICO -- in an unspecified amount, which if awarded, would be payable
to The Southern Company. The plaintiffs' amended complaint was dismissed by the
court in March 1992. The court ruled the plaintiffs had failed to present
adequately their allegation that The Southern Company board of directors'
refusal of an earlier demand by the plaintiffs was wrongful. In April 1994, the
U.S. Court of Appeals for the 11th Circuit reversed the dismissal and remanded
the case to the trial court, finding that allegations by the plaintiffs created
a reasonable doubt that the board validly exercised its business judgment in
refusing the earlier demand. This action is still pending.
Alabama Power Heat Pump Financing Suit
In September 1990, two customers of Alabama Power filed a civil complaint in the
Circuit Court of Shelby County, Alabama, against Alabama Power seeking to
represent all persons who, prior to June 23, 1989, entered into agreements with
Alabama Power for the financing of heat pumps and other merchandise purchased
from vendors other than Alabama Power. The plaintiffs contended that Alabama
Power was required to obtain a license under the Alabama Consumer Finance Act to
II-27
<PAGE>
NOTES (continued)
The Southern Company and Subsidiary Companies 1994 Annual Report
engage in the business of making consumer loans. The plaintiffs were seeking an
order declaring these agreements null and void and requiring Alabama Power to
refund all payments -- principal and interest -- 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 Power to refund or forfeit interest
of approximately $10 million because of Alabama Power'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. Alabama
Power has appealed the court's order to the Supreme Court of Alabama.
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 the company's financial statements.
Georgia Power Potentially Responsible Party Status
In January 1995, Georgia Power and four other unrelated entities were notified
by the EPA that they have been designated as potentially responsible parties
under the Comprehensive Environmental Response, Compensation and Liability Act
with respect to a site in Brunswick, Georgia. While Georgia Power believes that
the total amount of costs required for the cleanup of this site may be
substantial, it is unable at this time to estimate either such total or the
portion for which Georgia Power may be ultimately responsible.
The final outcome of this matter cannot now be determined; however, in
management's opinion -- based on the nature and extent of Georgia Power's
activities relating to the site -- the final outcome will not have a material
adverse effect on the company's financial statements.
Georgia Power Tax Litigation
In June 1994, a tax deficiency notice was received from the Internal Revenue
Service (IRS) for the years 1984 through 1987 with regard to the tax accounting
by Georgia Power for the sale in 1984 of an interest in Plant Vogtle and related
capacity and energy buyback commitments. The potential tax deficiency and
interest arising from this issue currently amount to approximately $28 million
and $32 million, respectively. The tax deficiency relates to a timing issue as
to when taxes are paid; therefore only the interest portion could affect future
income. Management believes that the IRS position is incorrect, and Georgia
Power has filed a petition with the U. S. Tax Court challenging the IRS
position. In order to minimize additional interest charges should the IRS's
position prevail, Georgia Power made a payment to the IRS related to the
potential tax deficiency in September 1994.
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 the company's financial statements.
Alabama Power Rate Adjustment Procedures
In November 1982, the Alabama Public Service Commission (APSC) adopted rates
that provide for periodic adjustments based upon Alabama Power's earned return
on end-of-period retail common equity. The rates also provide for adjustments to
recognize the placing of new generating facilities in retail service. Both
increases and decreases have been placed into effect since the adoption of these
rates. The last rate adjustment was effective in January 1992. The rate
adjustment procedures allow a return on common equity range of 13.0 percent to
14.5 percent and limit increases or decreases in rates to 4 percent in any
calendar year.
In 1994, the APSC issued an order -- at Alabama Power's request -- allowing
Alabama Power to establish a natural disaster reserve not to exceed $32 million
and to change the procedure for estimating the accrual of revenues for service
rendered but unbilled at the end of each month. This change increased unbilled
revenues for September 1994 by $28 million, which offset the initial accrual for
the natural disaster reserve for the same amount. Additional monthly accruals of
$250 thousand will be made until the reserve maximum is attained. In addition, a
moratorium on rate increases through the third quarter of 1995 was approved.
The ratemaking procedures will remain in effect until the APSC votes to
modify or discontinue them.
Georgia Power Demand-Side Conservation Programs
In October 1993, a Superior Court of Fulton County, Georgia, judge ruled that
rate riders previously approved by the GPSC for recovery of Georgia Power's
costs incurred in connection with demand-side conservation programs were
unlawful. The judge held that the GPSC lacked statutory authority to approve
II-28
<PAGE>
NOTES (continued)
The Southern Company and Subsidiary Companies 1994 Annual Report
such rate riders except through general rate case proceedings and that those
procedures had not been followed. Georgia Power suspended collection of the
demand-side conservation costs and appealed the court's decision to the Georgia
Court of Appeals. In December 1993, the GPSC approved Georgia Power's request
for an accounting order allowing Georgia Power to defer all current unrecovered
and future costs related to these programs until the superior court's decision
is reversed or until the next general rate case proceedings. An association of
industrial customers filed a petition for review of the accounting order in
superior court.
In July 1994, the Georgia Court of Appeals upheld the legality of the rate
riders. In November 1994, the Supreme Court of Georgia denied petitions for
review of this ruling. As a result, Georgia Power resumed collection under the
rate riders in December 1994. In early 1995, the GPSC initiated a true-up
proceeding to review Georgia Power's demand-side conservation program costs both
incurred and expected to be incurred during 1995 in order to adjust rate riders
accordingly. The proceeding will also address a plan for recovery of costs
deferred under the accounting order. Georgia Power's costs related to these
conservation programs through 1994 were $115 million, of which $18 million has
been collected and the remainder deferred.
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 the company's financial statements.
Georgia Power 1991 Rate Order; Phase-In Plan Modifications
Georgia Power received a rate order in 1991 from the GPSC that modified the
Plant Vogtle phase-in plans to begin earlier amortization of the costs deferred
under the plans. The amortization period began October 1991 -- rather than
October 1994 as originally scheduled -- and extends through September 1999. In
addition, the GPSC ordered the levelization of capacity buyback expense from the
co-owners of Plant Vogtle over a six-year period beginning October 1991. This
results in net cost deferrals during the first three years and subsequent
amortization of the deferred amounts in the last three years.
Mississippi Power Retail Rate Adjustment Plan
Mississippi Power's retail base rates have been set under a Performance
Evaluation Plan (PEP) since 1986 with various modifications. In January 1994,
the Mississippi Public Service Commission (MPSC) approved PEP-2. Under PEP-2,
Mississippi Power's rate of return is measured on retail net investment. Also,
three indicators are used to evaluate Mississippi Power's performance with
emphasis on price and service to the customer. In addition, PEP-2 provides for
the sharing of rate adjustments based on low rates and on the performance
rating. The evaluation periods for PEP-2 are semiannual. Any change in rates is
limited to 2 percent of retail revenues per period. PEP-2 will remain in effect
until the MPSC modifies or terminates the plan.
FERC Reviews Equity Returns
In May 1991, the FERC ordered that hearings be conducted concerning the
reasonableness of the Southern electric system's wholesale rate schedules and
contracts that have a return on common equity of 13.75 percent or greater. The
contracts that could be affected by the hearings include substantially all of
the transmission, unit power, long-term power, and other similar contracts. Any
change in the rate of return on common equity that may require refunds as a
result of this proceeding would be substantially for the period beginning in
July 1991 and ending in October 1992.
In August 1992, a FERC administrative law judge issued an opinion that
changes in rate schedules and contracts were not necessary and that the FERC
staff failed to show how any changes were in the public interest. The FERC staff
has filed exceptions to the administrative law judge's opinion, and the matter
remains pending before the FERC.
In August 1994, the FERC instituted another proceeding based on
substantially the same issues as in the 1991 proceeding. The second period under
review for possible refunds began in October 1994 and is scheduled to continue
until January 1996.
If the rates of return on common equity recommended by the FERC staff were
applied to all of the schedules and contracts involved in both proceedings, and
refunds were ordered, the amount of refunds could range up to approximately $77
million at December 31, 1994. Although the final outcome of this matter cannot
now be determined, in management's opinion, the final outcome will not result in
II-29
<PAGE>
NOTES (continued)
The Southern Company and Subsidiary Companies 1994 Annual Report
changes that would have a material adverse effect on the company's financial
statements.
4. CONSTRUCTION PROGRAM
General
The operating companies are engaged in continuous construction programs,
currently estimated to total some $1.4 billion in 1995, $1.3 billion in 1996,
and $1.3 billion in 1997. These estimates include AFUDC of $40 million in 1995,
$30 million in 1996, and $33 million in 1997. The construction programs are
subject to periodic review and revision, and actual construction costs may vary
from the above estimates because of numerous factors. These factors include
changes in business conditions; revised load growth estimates; changes in
environmental regulations; changes in existing nuclear plants to meet new
regulatory requirements; increasing costs of labor, equipment, and materials;
and cost of capital. At December 31, 1994, significant purchase commitments were
outstanding in connection with the construction program. The operating companies
do not have any new baseload generating plants under construction. However,
within the service area, the construction of combustion turbine peaking units of
approximately 1,100 megawatts 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.
See Management's Discussion and Analysis under "Environmental Matters" for
information on the impact of the Clean Air Act Amendments of 1990 and other
environmental matters.
Rocky Mountain Project Status
In its 1985 financing order, the GPSC concluded that completion of the Rocky
Mountain pumped storage hydroelectric project in 1991 as then planned was not
economically justifiable and reasonable and withheld authorization for Georgia
Power to spend funds from approved securities issuances on that project. In
1988, Georgia Power and Oglethorpe Power Corporation (OPC) entered into a joint
ownership agreement for OPC to assume responsibility for the construction and
operation of the project, as discussed in Note 6. However, full recovery of
Georgia Power's costs depends on the GPSC's treatment of the project's costs and
the disposition of the project's capacity output. In the event the GPSC does not
allow full recovery of the project costs, then the portion not allowed may have
to be written off. AFUDC accrued on the Rocky Mountain project has not been
credited to income or included in the project cost since December 1985. If
accrual of AFUDC is not resumed, Georgia Power's portion of the estimated total
plant additions at completion would be approximately $200 million. The plant is
scheduled to be in commercial operation in 1995.
The ultimate outcome of this matter cannot now be determined.
5. FINANCING, INVESTMENT, AND COMMITMENTS
General
In early 1995, The Southern Company sold -- through a public offering -- 5
million shares of common stock with proceeds totaling $103 million. The company
may require additional equity capital during the remainder of 1995. The amount
and timing of additional equity capital to be raised in 1995 -- as well as in
subsequent years --will be contingent on The Southern Company's investment
opportunities. Equity capital can be provided from any combination of public
offerings, private placements, or the company's stock plans.
The operating companies' construction programs are expected to be financed
primarily from internal sources. Short-term debt will be utilized if necessary;
the amounts available are discussed below. The subsidiary companies may issue
additional long-term debt and preferred stock primarily for the purposes of debt
maturities and for redeeming higher-cost securities if market conditions permit.
Southern Electric Investments
Southern Electric's investments in generating facilities in domestic and various
foreign markets were approximately $436 million at December 31, 1994. The
consolidated financial statements reflect these investments in majority-owned or
controlled subsidiaries on a consolidated basis and other investments on an
equity basis.
II-30
<PAGE>
NOTES (continued)
The Southern Company and Subsidiary Companies 1994 Annual Report
Bank Credit Arrangements
At the beginning of 1995, unused credit arrangements with banks totaled $1.4
billion, of which approximately $875 million expires at various times during
1995 and 1996; $41 million expires at May 1, 1997; $25 million expires at May
31, 1997; $400 million expires at June 30, 1997; and $40 million expires at
December 1, 1997.
Georgia Power's revolving credit agreements of $60 million, of which $41
million remained unused as of December 31, 1994, expire May 1, 1997. During the
term of these agreements, Georgia Power may convert short-term borrowings into
term loans, payable in 12 equal quarterly installments, with the first
installment due at the end of the first calendar quarter after the applicable
termination date or at an earlier date at Georgia Power's option. In connection
with these credit arrangements, Georgia Power agrees to pay commitment fees
based on the unused portions of the commitments or to maintain compensating
balances with the banks.
Gulf Power has $25 million of revolving credit agreements expiring May 31,
1997. These agreements allow short-term and/or term borrowings with various
terms and conditions regarding repayment. In connection with these credit
arrangements, Gulf Power agrees to pay commitment fees based on the unused
portions of the commitments or to maintain compensating balances with the banks.
The $400 million expiring June 30, 1997, is under revolving credit
arrangements with several banks providing The Southern Company, Alabama Power,
and Georgia Power up to the total credit amount of $400 million. To provide
liquidity support to commercial paper programs, $135 million and $165 million of
the $400 million available credit are currently dedicated to the exclusive use
of Alabama Power and Georgia Power, respectively. During the term of these
agreements, short-term borrowings may be converted into term loans, payable in
12 equal quarterly installments, with the first installment due at the end of
the first calendar quarter after the applicable termination date or at an
earlier date at the companies' option. In addition, these agreements require
payment of commitment fees based on the unused portions of the commitments or
the maintenance of compensating balances with the banks.
Mississippi Power has $40 million of revolving credit agreements expiring
December 1, 1997. These agreements allow short-term borrowings to be converted
into term loans, payable in 12 equal quarterly installments, with the first
installment due at the end of the first calendar quarter after the applicable
termination date or at an earlier date at Mississippi Power's option. In
connection with these credit arrangements, Mississippi Power agrees to pay
commitment fees based on the unused portions of the commitments or to maintain
compensating balances with the banks.
Savannah Electric's revolving credit arrangements of $20 million, of which
$11 million remained unused as of December 31, 1994, expire December 31, 1996.
These agreements allow short-term borrowings to be converted into term loans,
payable in 12 equal quarterly installments, with the first installment due at
the end of the first calendar quarter after the applicable termination date or
at an earlier date at Savannah Electric's option. In connection with these
credit arrangements, Savannah Electric agrees to pay commitment fees based on
the unused portions of the commitments.
A portion of the $1.4 billion unused credit arrangements with banks --
discussed earlier -- is dedicated to provide liquidity support to the companies'
variable rate pollution control bonds. The amount of credit lines dedicated at
December 31, 1994, was $293 million.
In connection with all other lines of credit, the companies have the option
of paying fees or maintaining compensating balances, which are substantially all
the cash of the companies except for daily working funds and similar items.
These balances are not legally restricted from withdrawal.
In addition, the companies from time to time borrow under uncommitted lines
of credit with banks, and in the case of Alabama Power and Georgia Power,
through commercial paper programs that have the liquidity support of committed
bank credit arrangements.
II-31
<PAGE>
NOTES (continued)
The Southern Company and Subsidiary Companies 1994 Annual Report
Assets Subject to Lien
The operating companies' mortgages, which secure the first mortgage bonds issued
by the companies, constitute a direct first lien on substantially all of the
companies' respective fixed property and franchises.
Fuel Commitments
To supply a portion of the fuel requirements of the system's generating plants,
the subsidiary companies have entered into various long-term commitments for the
procurement of fossil and nuclear fuel. In most cases, these contracts contain
provisions for price escalations, minimum purchase levels, and other financial
commitments. Total estimated long-term obligations were approximately $16
billion at December 31, 1994. Additional commitments for coal and nuclear fuel
will be required in the future to supply the operating companies' fuel needs.
To take advantage of lower-cost coal supplies, agreements were reached in
1986 for the payment of $121 million to terminate two contracts for the supply
of coal to Plant Daniel, which is jointly owned by Gulf Power and Mississippi
Power. Also, in March 1988, Gulf Power made an advance payment of $60 million to
a coal supplier under an agreement to lower the cost of future coal purchased
under an existing contract. These amounts are being amortized to expense.
Operating Leases
The operating companies have entered into coal rail car rental agreements with
various terms and expiration dates. These expenses totaled $15 million, $11
million, and $9 million for 1994, 1993, and 1992, respectively. At December 31,
1994, estimated minimum rental commitments for noncancelable operating leases
were as follows:
Year Amounts
--- -----------
(in millions)
1995 $ 18
1996 17
1997 17
1998 17
1999 17
2000 and thereafter 242
-------------------------------------------------------
Total minimum payments $328
=======================================================
6. FACILITY SALES AND JOINT OWNERSHIP AGREEMENTS
In 1992, Alabama Power sold an undivided interest in units 1 and 2 of Plant
Miller and related facilities to Alabama Electric Cooperative, Inc.
Since 1975, Georgia Power has sold undivided interests in plants Vogtle,
Hatch, Scherer, and Wansley in varying amounts, together with transmission
facilities, to OPC, the Municipal Electric Authority of Georgia (MEAG), and the
city of Dalton, Georgia. Georgia Power has completed three of four separate
transactions to sell Unit 4 of Plant Scherer to two Florida utilities. See Note
7 for additional information concerning these sales. In addition, Georgia Power
has joint ownership agreements with OPC for the Rocky Mountain project and with
Florida Power Corporation (FPC) for a combustion turbine unit at Intercession
City, Florida, both of which are discussed later.
At December 31, 1994, Alabama Power's and Georgia Power's ownership and
investment (exclusive of nuclear fuel) in jointly owned facilities with the
above entities were as follows:
Jointly Owned Facilities
------------------------
Percent Amount of Accumulated
Ownership Investment Depreciation
---------- ----------- ------------
Plant Vogtle (in millions)
(nuclear) 45.7% $3,289 $628
Plant Hatch
(nuclear) 50.1 842 346
Plant Miller
(coal)
Units 1 and 2 91.8 708 264
Plant Scherer
(coal)
Units 1 and 2 8.4 112 36
Unit 4 16.6 119 18
Plant Wansley
(coal) 53.5 287 129
Rocky Mountain
(pumped storage) 25.0* 199 -
-------------------------------------------------------------
*Estimated ownership at date of completion.
Georgia Power and OPC have a joint ownership agreement regarding the
848-megawatt Rocky Mountain pumped storage hydroelectric project. Under the
agreement, Georgia Power will retain its present investment in the project and
OPC will finance, complete, and operate the facility. Upon completion, Georgia
II-32
<PAGE>
NOTES (continued)
The Southern Company and Subsidiary Companies 1994 Annual Report
Power will own an undivided interest in the project equal to the proportion its
investment bears to the total investment in the project (excluding each party's
cost of funds and ad valorem taxes). Based on current cost estimates, Georgia
Power's final ownership is estimated at approximately 25 percent of the project
at completion. The plant is scheduled to be in commercial operation in 1995.
In 1994, Georgia Power and FPC entered into a joint ownership agreement
regarding the Intercession City combustion turbine unit. The unit is scheduled
to be in commercial operation in early 1996, and will be constructed, operated,
and maintained by FPC. Georgia Power will have a 33 percent interest in the
150-megawatt unit, with retention of 100 percent of the capacity from June
through September. FPC will have the capacity the remainder of the year. Georgia
Power's investment in the unit at completion is estimated to be $14 million.
Also, Georgia Power entered into a separate four-year purchase power contract
with FPC. Beginning in 1996, Georgia Power will purchase 400 megawatts of
capacity. In 1998, this amount will decline to 200 megawatts for the remaining
two years.
Alabama Power and Georgia Power have contracted to operate and maintain the
jointly owned facilities -- except for the Rocky Mountain project and
Intercession City -- as agents for their respective co-owners. The companies'
proportionate share of their plant operating expenses is included in the
corresponding operating expenses in the Consolidated Statements of Income.
In connection with a joint ownership arrangement at Plant Vogtle, Georgia
Power has remaining commitments to purchase declining fractions of OPC's and
MEAG's capacity and energy from this plant for periods of up to 10 years
following commercial operation (and, with regard to a portion of the 5 percent
additional interest in Plant Vogtle owned by MEAG, until the latter of the
retirement of the plant or the latest stated maturity date of MEAG's bonds
issued to finance such ownership interest). The payments for such capacity are
required whether any capacity is available. The energy cost of these purchases
is a function of each unit's variable operating costs. Except as noted below,
the cost of such capacity and energy is included in purchased power in the
Consolidated Statements of Income. Capacity payments totaled $129 million, $183
million, and $289 million for 1994, 1993, and 1992, respectively. Projected
capacity payments for the next five years are as follows: $77 million in 1995;
$70 million in 1996; $59 million in 1997; $59 million in 1998; and $59 million
in 1999. Also, a portion of the above capacity payments relates to Plant Vogtle
costs that were written off after being disallowed for retail ratemaking
purposes.
In 1991, the GPSC ordered that the Plant Vogtle capacity buyback expense be
levelized over a six-year period. The amounts deferred and not expensed in the
year paid totaled $38 million in 1993 and $100 million in 1992. In 1994, the
amount deferred was exceeded by the amortization of amounts previously deferred
by almost $1 million. The projected net amortization of the deferred expense is
$49 million in 1995, $62 million in 1996, and $57 million in 1997.
7. SALES OF INTERESTS IN PLANT SCHERER
Georgia Power has completed three of four separate transactions to sell Unit 4
of Plant Scherer to Florida Power & Light Company (FP&L) and Jacksonville
Electric Authority (JEA) for a total price of approximately $808 million,
including any gains on these transactions. FP&L would eventually own
approximately 76.4 percent of the unit, with JEA owning the remainder. Georgia
Power will continue to operate the unit.
The completed and scheduled remaining transactions are as follows:
Closing Percent
Date Capacity Ownership Amount
------ -------- --------- -------
(megawatts) (in millions)
July 1991 290 35.46% $291
June 1993 258 31.44 253
June 1994 135 16.55 133
June 1995 135 16.55 131
-------------------------------------------------------------
Total 818 100.00% $808
=============================================================
Plant Scherer -- a jointly owned coal-fired generating plant -- has four
units with a total capacity of 3,272 megawatts. Unit 4 was completed in 1989.
See Note 6 for information regarding current plant ownership.
8. LONG-TERM POWER SALES AGREEMENTS
The operating subsidiaries of The Southern Company entered into long-term
contractual agreements for the sale of capacity and energy to certain
non-affiliated utilities located outside the system's service area. The
II-33
<PAGE>
NOTES (continued)
The Southern Company and Subsidiary Companies 1994 Annual Report
agreements for non-firm capacity expired in 1994. Other agreements -- expiring
at various dates discussed below -- are firm and pertain to capacity related to
specific generating units. Because the energy is generally sold at cost under
these agreements, revenues from capacity sales primarily affect profitability.
The capacity revenues have been as follows:
Unit Other
Year Power Long-Term Total
---- ----------------------------------
(in millions)
1994 $257 $19 $276
1993 312 38 350
1992 435 22 457
In 1994, long-term non-firm power of 200 megawatts was sold to FPC under a
contract that expired at year-end. In January 1995, the amount of unit power
sales to FPC increased by 200 megawatts.
Unit power from specific generating plants is currently being sold to FP&L,
FPC, JEA, and the city of Tallahassee, Florida. Under these agreements,
approximately 1,700 megawatts of capacity is scheduled to be sold during 1995.
Thereafter, these sales will decline to some 1,600 megawatts and remain at that
approximate level -- unless reduced by FP&L, FPC, and JEA for the periods after
1999 -- until the expiration of the contracts in 2010.
9. INCOME TAXES
Effective January 1, 1993, The Southern Company adopted FASB Statement No. 109,
Accounting for Income Taxes. The adoption resulted in the recording of
additional deferred income taxes and related regulatory assets and liabilities.
At December 31, 1994, the tax- related regulatory assets and liabilities were
$1.5 billion and $1.0 billion, respectively. These assets are attributable to
tax benefits flowed through to customers in prior years and to taxes applicable
to capitalized AFUDC. These liabilities are attributable to deferred taxes
previously recognized at rates higher than current enacted tax law and to
unamortized investment tax credits.
Details of the federal and state income tax provisions are as follows:
1994 1993 1992
-------------------------
(in millions)
Total provision for income taxes:
Federal --
Currently payable $603 $424 $343
Deferred -- current year 67 224 225
-- reversal of
prior years (75) (51) (41)
Deferred investment tax
credits - (20) (6)
-------------------------------------------------------------------
595 577 521
-------------------------------------------------------------------
State --
Currently payable 86 64 50
Deferred -- current year 15 39 46
-- reversal of
prior years (11) (3) (9)
-------------------------------------------------------------------
90 100 87
-------------------------------------------------------------------
Total 685 677 608
Less income taxes charged
(credited) to other income (26) (57) (39)
-------------------------------------------------------------------
Federal and state income
taxes charged to operations $711 $734 $647
===================================================================
The tax effects of temporary differences between the carrying amounts of
assets and liabilities in the financial statements and their respective tax
bases, which give rise to deferred tax assets and liabilities, are as follows:
1994 1993
-----------------------
(in millions)
Deferred tax liabilities:
Accelerated depreciation $2,637 $2,496
Property basis differences 1,647 1,741
Deferred plant costs 141 161
Other 271 289
------------------------------------------------------------------
Total 4,696 4,687
------------------------------------------------------------------
Deferred tax assets:
Federal effect of state deferred taxes 104 102
Other property basis differences 278 292
Deferred costs 79 69
Pension and other benefits 63 46
Other 225 210
------------------------------------------------------------------
Total 749 719
------------------------------------------------------------------
Net deferred tax liabilities 3,947 3,968
Portion included in current assets, net 60 11
------------------------------------------------------------------
Accumulated deferred income taxes
in the Consolidated Balance Sheet $4,007 $3,979
==================================================================
II-34
<PAGE>
NOTES (continued)
The Southern Company and Subsidiary Companies 1994 Annual Report
Deferred investment tax credits are amortized over the life of the related
property with such amortization normally applied as a credit to reduce
depreciation in the Consolidated Statements of Income. Credits amortized in this
manner amounted to $42 million in 1994, $36 million in 1993, and $41 million in
1992. At December 31, 1994, all investment tax credits available to reduce
federal income taxes payable had been utilized.
A reconciliation of the federal statutory income tax rate to the effective
income tax rate is as follows:
1994 1993 1992
---------------------------
Federal statutory rate 35.0% 35.0% 34.0%
State income tax,
net of federal deduction 3.3 3.7 3.4
Non-deductible book
depreciation 1.8 1.9 2.2
Difference in prior years'
deferred and current tax rate (1.5) (1.3) (1.5)
Other 0.3 (1.1) (1.6)
---------------------------------------------------------------
Effective income tax rate 38.9% 38.2% 36.5%
===============================================================
The Southern Company and its subsidiaries file a consolidated federal income
tax return. Under a joint consolidated income tax agreement, each company's
current and deferred tax expense is computed on a stand-alone basis, and
consolidated tax savings are allocated to each company based on its ratio of
taxable income to total consolidated taxable income.
10. COMMON STOCK
Stock Distribution
In January 1994, The Southern Company board of directors authorized a
two-for-one common stock split in the form of a stock distribution for each
share held as of February 7, 1994. For all reported common stock data, the
number of common shares outstanding and per share amounts for earnings,
dividends, and market price reflect the stock distribution.
Shares Reserved
At December 31, 1994, a total of 15 million shares was reserved for issuance
pursuant to the Dividend Reinvestment and Stock Purchase Plan, the Employee
Savings Plan, Outside Directors Stock Plan, and the Executive Stock Option Plan.
Executive Stock Option Plan
The Southern Company's Executive Stock Option Plan authorizes the granting of
non-qualified stock options to key employees of The Southern Company, including
officers. Currently, 36 employees are eligible to participate in the plan. As of
December 31, 1994, 42 current and former employees participated in the plan. The
maximum number of shares of common stock that may be issued under the Executive
Stock Option Plan may not exceed 6 million. The price of options granted to date
has been at the fair market value of the shares on the date of grant. Options
granted to date become exercisable pro rata over a maximum period of four years
from date of grant. Options outstanding will expire no later than 10 years after
the date of grant, unless terminated earlier by the board of directors in
accordance with the plan. Stock option activity in 1993 and 1994 is summarized
below:
Shares Average
Subject Option Price
To Option Per Share
---------------------------
Balance at December 31, 1992 1,189,122 $15.02
Options granted 359,492 21.22
Options canceled -- --
Options exercised (183,804) 14.14
--------------------------------------------------------------------
Balance at December 31, 1993 1,364,810 16.77
Options granted 446,443 18.88
Options canceled - -
Options exercised (74,649) 14.81
--------------------------------------------------------------------
Balance at December 31, 1994 1,736,604 $17.39
====================================================================
Shares reserved for future grants:
At December 31, 1992 4,073,936
At December 31, 1993 3,714,444
At December 31, 1994 3,268,001
--------------------------------------------------------------------
Options exercisable:
At December 31, 1993 475,795
At December 31, 1994 793,989
--------------------------------------------------------------------
Common Stock Dividend Restrictions
The income of The Southern Company is derived primarily from equity in earnings
of its operating subsidiaries. At December 31, 1994, $1.8 billion of
consolidated retained earnings was restricted against the payment by the
operating companies of cash dividends on common stock under terms of bond
indentures or charters.
II-35
<PAGE>
NOTES (continued)
The Southern Company and Subsidiary Companies 1994 Annual Report
11. OTHER LONG-TERM DEBT
Details of other long-term debt at December 31 are as follows:
1994 1993
-----------------
(in millions)
Obligations incurred in connection
with the sale by public authorities
of tax-exempt pollution control
revenue bonds:
Collateralized --
5.375% to 9.375% due
2004-2024 $1,179 $ 708
Variable rate (5% to 6.25%
at 1/1/95) due 2011-2024 412 63
Non-collateralized --
7.2 % to 12.25% due 2003-2014 1 650
6.75% to 10.6% due 2015-2017 828 890
5.8% due 2022 10 10
Variable rate (2.95% to 3.7% at
1/1/94) due 2011-2022 - 92
-----------------------------------------------------------------
2,430 2,413
-----------------------------------------------------------------
Capitalized lease obligations 148 247
-----------------------------------------------------------------
Notes payable:
4.15% to 9.75% due 1994-1998 153 144
8.375% to 10% due 1997-1999 196 -
Adjustable rates (14.04% at
1/1/95) due 1995 26 -
Adjustable rates (4% to 7.8% at
1/1/95) due 1994-1996 133 115
Adjustable rates (5.5% to 8.14%
at 1/1/95) due 1998-2019 175 43
-----------------------------------------------------------------
683 302
-----------------------------------------------------------------
Total $3,261 $2,962
=================================================================
With respect to the collateralized pollution control revenue bonds, the
operating companies have authenticated and delivered to trustees a like
principal amount of first mortgage bonds as security for obligations under
installment sale or loan agreements. The principal and interest on the first
mortgage bonds will be payable only in the event of default under the
agreements.
Assets acquired under capital leases are recorded as utility plant in
service, and the related obligation is classified as other long-term debt. The
net book value of capitalized leases was $126 million and $217 million at
December 31, 1994 and 1993, respectively. At December 31, 1994, the composite
interest rates for buildings and other were 9.7 percent and 10.7 percent,
respectively. Sinking fund requirements and/or serial maturities through 1999
applicable to other long-term debt are as follows: $97 million in 1995; $166
million in 1996; $46 million in 1997; $29 million in 1998; and $23 million in
1999.
12. LONG-TERM DEBT DUE WITHIN ONE YEAR
A summary of the improvement fund requirements and scheduled maturities and
redemptions of long-term debt due within one year at December 31 is as follows:
1994 1993
-------------
(in millions)
Bond improvement fund requirements $ 48 $ 51
Less:
Portion to be satisfied by certifying
property additions 46 3
Reacquired bonds - 25
----------------------------------------------------------------
Cash sinking fund requirements 2 23
First mortgage bond maturities
and redemptions 130 44
Other long-term debt maturities
(Note 11) 97 89
----------------------------------------------------------------
Total $229 $156
================================================================
The first mortgage bond improvement (sinking) fund requirements amount to 1
percent of each outstanding series of bonds authenticated under the indentures
prior to January 1 of each year, other than those issued to collateralize
pollution control and other obligations. The requirements may be satisfied by
depositing cash or reacquiring bonds, or by pledging additional property equal
to 166 2/3 percent of such requirements.
13. NUCLEAR INSURANCE
Under the Price-Anderson Amendments Act of 1988, Alabama Power and Georgia Power
maintain agreements of indemnity with the NRC that, together with private
insurance, cover third-party liability arising from any nuclear incident
occurring at the companies' nuclear power plants. The act provides funds up to
$8.9 billion for public liability claims that could arise from a single nuclear
incident. Each nuclear plant is insured against this liability to a maximum of
$200 million by private insurance, with the remaining coverage provided by a
mandatory program of deferred premiums that could be assessed, after a nuclear
incident, against all owners of nuclear reactors. A company could be assessed up
to $79 million per incident for each licensed reactor it operates but not more
than an aggregate of $10 million per incident to be paid in a calendar year for
each reactor. Such maximum assessment, excluding any applicable state premium
II-36
<PAGE>
NOTES (continued)
The Southern Company and Subsidiary Companies 1994 Annual Report
taxes, for Alabama Power and Georgia Power -- based on its ownership and buyback
interests -- is $159 million and $163 million, respectively, per incident but
not more than an aggregate of $20 million and $21 million, respectively, to be
paid for each incident in any one year.
Alabama Power and Georgia Power are members of Nuclear Mutual Limited (NML),
a mutual insurer established to provide property damage insurance in an amount
up to $500 million for members' nuclear generating facilities. The members are
subject to a retrospective premium assessment in the event that losses exceed
accumulated reserve funds. Alabama Power's and Georgia Power's maximum annual
assessments are limited to $12 million and $15 million, respectively, under
current policies.
Additionally, both companies have policies that currently provide
decontamination, excess property insurance, and premature decommissioning
coverage up to $2.25 billion for losses in excess of the $500 million NML
coverage. This excess insurance is provided by Nuclear Electric Insurance
Limited (NEIL), a mutual insurance company.
NEIL also covers the additional costs that would be incurred in obtaining
replacement power during a prolonged accidental outage at a member's nuclear
plant. Members can be insured against increased costs of replacement power in an
amount up to $3.5 million per week -- starting 21 weeks after the outage -- for
one year and up to $2.8 million per week for the second and third years.
Under each of the NEIL policies, members are subject to assessments if
losses each year exceed the accumulated funds available to the insurer under
that policy. The maximum annual assessments under current policies for Alabama
Power and Georgia Power for excess property damage would be $27 million and $25
million, respectively. The maximum replacement power assessments are $10 million
for Alabama Power and $13 million for Georgia Power.
For all on-site property damage insurance policies for commercial nuclear
power plants, the NRC requires that the proceeds of such policies issued or
renewed on or after April 2, 1991, shall be dedicated first for the sole purpose
of placing the reactor in a safe and stable condition after an accident. Any
remaining proceeds are to be applied next toward the costs of decontamination
and debris removal operations ordered by the NRC, and any further remaining
proceeds are to be paid either to the company or to its bond trustees as may be
appropriate under the policies and applicable trust indentures.
Alabama Power and Georgia Power participate in an insurance program for
nuclear workers that provides coverage for worker tort claims filed for bodily
injury caused at commercial nuclear power plants. In the event that claims for
this insurance exceed the accumulated reserve funds, Alabama Power and Georgia
Power could be subject to a maximum total assessment of approximately $6 million
each.
All retrospective assessments -- whether generated for liability, property,
or replacement power -- may be subject to applicable state premium taxes.
14. QUARTERLY FINANCIAL INFORMATION (Unaudited)
Summarized quarterly financial data for 1994 and 1993 are as follows:
<TABLE>
<CAPTION>
Per Common Share*
------------------------------------------------
Operating Operating Consolidated Price Range
Quarter Ended Revenues Income Net Income Earnings Dividends High Low
------------- ----------------------------------------- ------------------------------------------------
(in millions)
<S> <C> <C> <C> <C> <C> <C> <C>
March 1994 $1,932 $330 $142 $0.22 $0.295 22 18 1/2
June 1994 2,069 440 256 0.39 0.295 20 1/2 17 3/4
September 1994 2,381 607 416 0.64 0.295 20 17
December 1994 1,915 338 175 0.27 0.295 21 18 1/4
March 1993 $1,840 $377 $177 $0.28 $0.285 21 3/8 18 3/8
June 1993 2,068 426 250 0.39 0.285 22 1/2 19 3/8
September 1993 2,636 637 442 0.70 0.285 23 20 1/2
December 1993 1,945 325 133 0.20 0.285 23 5/8 20 3/4
--------------------------------------------------------------------------------------------------------------------------------
</TABLE>
Earnings for 1994 declined by $61 million or 9 cents per share as a result
of work force reduction programs primarily recorded in the first quarter.
*Common stock data reflect a two-for-one stock split in the form of a stock
distribution for each share held as of February 7, 1994.
The company's business is influenced by seasonal weather conditions.
II-37
<PAGE>
SELECTED CONSOLIDATED FINANCIAL AND OPERATING DATA
The Southern Company and Subsidiary Companies 1994 Annual Report
(See Note Below)
<TABLE>
<CAPTION>
==========================================================================================================
1994 1993 1992
----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Operating Revenues (in millions) $8,297 $8,489 $8,073
Consolidated Net Income (in millions) $989 $1,002 $953
Earnings Per Share of Common Stock $1.52 $1.57 $1.51
Cash Dividends Paid Per Share of Common Stock $1.18 $1.14 $1.10
Return on Average Common Equity (percent) 12.47 13.43 13.42
Total Assets (in millions) $27,042 $25,911 $20,038
Gross Property Additions (in millions) $1,536 $1,441 $1,105
----------------------------------------------------------------------------------------------------------
Capitalization (in millions):
Common stock equity $8,186 $7,684 $7,234
Preferred stock 1,332 1,333 1,351
Preferred and preference stock subject
to mandatory redemption -- -- 8
Preferred securities 100 -- --
Long-term debt 7,593 7,412 7,241
----------------------------------------------------------------------------------------------------------
Total excluding amounts due within one year $17,211 $16,429 $15,834
==========================================================================================================
Capitalization Ratios (percent):
Common stock equity 47.6 46.8 45.7
Preferred stock 8.3 8.1 8.6
Long-term debt 44.1 45.1 45.7
----------------------------------------------------------------------------------------------------------
Total excluding amounts due within one year 100.0 100.0 100.0
==========================================================================================================
Other Common Stock Data:
Book value per share (year-end) $12.47 $11.96 $11.43
Market price per share:
High 22 23 5/8 19 1/2
Low 17 18 3/8 15 1/8
Close 20 22 19 1/4
Market-to-book ratio (year-end) (percent) 160.4 183.9 168.4
Price-earnings ratio (year-end) (times) 13.2 14.0 12.7
Dividends paid (in millions) $766 $726 $695
Dividend yield (year-end) (percent) 5.9 5.2 5.7
Dividend payout ratio (percent) 77.5 72.4 72.9
Cash coverage of dividends (year-end) (times) 2.7 2.9 2.8
Proceeds from sales of stock (in millions) $279 $204 $30
Shares outstanding (in thousands):
Average 649,927 637,319 631,844
Year-end 656,528 642,662 632,917
Stockholders of record (year-end) 234,927 237,105 247,378
----------------------------------------------------------------------------------------------------------
First Mortgage Bonds (in millions):
Issued $185 $2,185 $1,815
Retired 241 2,178 2,575
Preferred Stock (in millions):
Issued $-- $426 $410
Retired 1 516 326
----------------------------------------------------------------------------------------------------------
Customers (year-end) (in thousands):
Residential 3,046 2,996 2,950
Commercial 439 427 414
Industrial 17 18 18
Other 5 4 4
----------------------------------------------------------------------------------------------------------
Total 3,507 3,445 3,386
==========================================================================================================
Employees (year-end) 27,826 28,743 29,085
----------------------------------------------------------------------------------------------------------
Note: Common stock data reflect a two-for-one stock split in the form of a
stock distribution for each share held as of February 7, 1994.
</TABLE>
II-38
<PAGE>
SELECTED CONSOLIDATED FINANCIAL AND OPERATING DATA
The Southern Company and Subsidiary Companies 1994 Annual Report
(See Note Below)
<TABLE>
<CAPTION>
==========================================================================================================
1991 1990 1989
----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Operating Revenues (in millions) $8,050 $8,053 $7,620
Consolidated Net Income (in millions) $876 $604 $846
Earnings Per Share of Common Stock $1.39 $0.96 $1.34
Cash Dividends Paid Per Share of Common Stock $1.07 $1.07 $1.07
Return on Average Common Equity (percent) 12.74 8.85 12.49
Total Assets (in millions) $19,863 $19,955 $20,092
Gross Property Additions (in millions) $1,123 $1,185 $1,346
----------------------------------------------------------------------------------------------------------
Capitalization (in millions):
Common stock equity $6,976 $6,783 $6,861
Preferred stock 1,207 1,207 1,209
Preferred and preference stock subject
to mandatory redemption 126 151 191
Preferred securities -- -- --
Long-term debt 7,992 8,458 8,575
----------------------------------------------------------------------------------------------------------
Total excluding amounts due within one year $16,301 $16,599 $16,836
==========================================================================================================
Capitalization Ratios (percent):
Common stock equity 42.8 40.9 40.8
Preferred stock 8.2 8.2 8.3
Long-term debt 49.0 50.9 50.9
----------------------------------------------------------------------------------------------------------
Total excluding amounts due within one year 100.0 100.0 100.0
==========================================================================================================
Other Common Stock Data:
Book value per share (year-end) $11.05 $10.74 $10.87
Market price per share:
High 17 3/8 14 5/8 14 7/8
Low 12 7/8 11 1/2 11
Close 17 1/8 13 7/8 14 1/2
Market-to-book ratio (year-end) (percent) 155.5 129.7 134.0
Price-earnings ratio (year-end) (times) 12.4 14.6 10.9
Dividends paid (in millions) $676 $676 $675
Dividend yield (year-end) (percent) 6.2 7.7 7.3
Dividend payout ratio (percent) 77.1 111.8 79.8
Cash coverage of dividends (year-end) (times) 2.5 2.8 2.6
Proceeds from sales of stock (in millions) $-- $-- $4
Shares outstanding (in thousands):
Average 631,307 631,307 631,303
Year-end 631,307 631,307 631,307
Stockholders of record (year-end) 254,568 263,046 273,751
----------------------------------------------------------------------------------------------------------
First Mortgage Bonds (in millions):
Issued $380 $300 $280
Retired 881 146 201
Preferred Stock (in millions):
Issued $100 $-- $--
Retired 125 96 21
----------------------------------------------------------------------------------------------------------
Customers (year-end) (in thousands):
Residential 2,903 2,865 2,824
Commercial 403 396 392
Industrial 18 18 18
Other 4 4 4
----------------------------------------------------------------------------------------------------------
Total 3,328 3,283 3,238
==========================================================================================================
Employees (year-end) 30,402 30,263 30,530
----------------------------------------------------------------------------------------------------------
Note: Common stock data reflect a two-for-one stock split in the form of a
stock distribution for each share held as of February 7, 1994.
</TABLE>
II-39A
<PAGE>
SELECTED CONSOLIDATED FINANCIAL AND OPERATING DATA
The Southern Company and Subsidiary Companies 1994 Annual Report
(See Note Below)
<TABLE>
<CAPTION>
==========================================================================================================
1988 1987 1986
----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Operating Revenues (in millions) $7,287 $7,204 $7,033
Consolidated Net Income (in millions) $846 $577 $903
Earnings Per Share of Common Stock $1.36 $0.96 $1.56
Cash Dividends Paid Per Share of Common Stock $1.07 $1.07 $1.0325
Return on Average Common Equity (percent) 13.03 9.27 15.61
Total Assets (in millions) $19,731 $19,518 $18,483
Gross Property Additions (in millions) $1,754 $1,853 $2,367
----------------------------------------------------------------------------------------------------------
Capitalization (in millions):
Common stock equity $6,686 $6,307 $6,133
Preferred stock 1,259 1,139 1,214
Preferred and preference stock subject
to mandatory redemption 206 224 178
Preferred securities -- -- --
Long-term debt 8,433 8,333 7,812
----------------------------------------------------------------------------------------------------------
Total excluding amounts due within one year $16,584 $16,003 $15,337
==========================================================================================================
Capitalization Ratios (percent):
Common stock equity 40.3 39.4 40.0
Preferred stock 8.8 8.5 9.1
Long-term debt 50.9 52.1 50.9
----------------------------------------------------------------------------------------------------------
Total excluding amounts due within one year 100.0 100.0 100.0
==========================================================================================================
Other Common Stock Data:
Book value per share (year-end) $10.60 $10.28 $10.35
Market price per share:
High 12 1/8 14 1/2 13 5/8
Low 10 1/8 8 7/8 10 1/8
Close 11 1/8 11 1/8 12 5/8
Market-to-book ratio (year-end) (percent) 105.5 108.8 122.5
Price-earnings ratio (year-end) (times) 8.2 11.7 8.2
Dividends paid (in millions) $661 $628 $583
Dividend yield (year-end) (percent) 9.6 9.6 8.4
Dividend payout ratio (percent) 78.1 108.9 64.6
Cash coverage of dividends (year-end) (times) 2.3 2.0 2.7
Proceeds from sales of stock (in millions) $194 $247 $379
Shares outstanding (in thousands):
Average 622,292 601,390 580,252
Year-end 630,898 613,565 592,364
Stockholders of record (year-end) 290,725 296,079 297,302
----------------------------------------------------------------------------------------------------------
First Mortgage Bonds (in millions):
Issued $335 $700 $735
Retired 273 369 875
Preferred Stock (in millions):
Issued $120 $125 $100
Retired 10 160 53
----------------------------------------------------------------------------------------------------------
Customers (year-end) (in thousands):
Residential 2,781 2,733 2,675
Commercial 384 374 362
Industrial 18 18 17
Other 4 4 4
Total 3,187 3,129 3,058
==========================================================================================================
Employees (year-end) 32,523 32,612 32,358
----------------------------------------------------------------------------------------------------------
Note: Common stock data reflect a two-for-one stock split in the form of a
stock distribution for each share held as of February 7, 1994.
</TABLE>
II-39B
<PAGE>
SELECTED CONSOLIDATED FINANCIAL AND OPERATING DATA
The Southern Company and Subsidiary Companies 1994 Annual Report
(See Note Below)
<TABLE>
<CAPTION>
==============================================================================================
1985 1984
----------------------------------------------------------------------------------------------
<S> <C> <C>
Operating Revenues (in millions) $6,999 $6,350
Consolidated Net Income (in millions) $845 $735
Earnings Per Share of Common Stock $1.56 $1.47
Cash Dividends Paid Per Share of Common Stock $0.975 $0.915
Return on Average Common Equity (percent) 16.59 16.55
Total Assets (in millions) $16,855 $15,327
Gross Property Additions (in millions) $2,242 $2,130
----------------------------------------------------------------------------------------------
Capitalization (in millions):
Common stock equity $5,443 $4,741
Preferred stock 1,114 1,004
Preferred and preference stock subject
to mandatory redemption 194 206
Preferred securities -- --
Long-term debt 7,220 6,774
----------------------------------------------------------------------------------------------
Total excluding amounts due within one year $13,971 $12,725
Capitalization Ratios (percent):
Common stock equity 38.9 37.3
Preferred stock 9.4 9.5
Long-term debt 51.7 53.2
----------------------------------------------------------------------------------------------
Total excluding amounts due within one year 100.0 100.0
Other Common Stock Data:
Book value per share (year-end) $9.72 $9.08
Market price per share:
High 11 5/8 9 3/8
Low 8 7/8 7 1/8
Close 11 1/8 9 3/8
Market-to-book ratio (year-end) (percent) 114.5 103.9
Price-earnings ratio (year-end) (times) 7.1 6.4
Dividends paid (in millions) $512 $444
Dividend yield (year-end) (percent) 9.2 10.2
Dividend payout ratio (percent) 60.6 60.4
Cash coverage of dividends (year-end) (times) 2.6 3.1
Proceeds from sales of stock (in millions) $373 $318
Shares outstanding (in thousands):
Average 541,244 501,313
Year-end 560,063 522,018
Stockholders of record (year-end) 318,221 336,165
----------------------------------------------------------------------------------------------
First Mortgage Bonds (in millions):
Issued $20 $150
Retired 69 71
Preferred Stock (in millions):
Issued $150 $50
Retired 6 6
----------------------------------------------------------------------------------------------
Customers (year-end) (in thousands):
Residential 2,611 2,541
Commercial 348 336
Industrial 17 17
Other 4 4
----------------------------------------------------------------------------------------------
Total 2,980 2,898
==============================================================================================
Employees (year-end) 32,354 31,753
----------------------------------------------------------------------------------------------
Note: Common stock data reflect a two-for-one stock split in the form of a
stock distribution for each share held as of February 7, 1994.
</TABLE>
II-39C
<PAGE>
SELECTED CONSOLIDATED FINANCIAL AND OPERATING DATA (continued)
The Southern Company and Subsidiary Companies 1994 Annual Report
<TABLE>
<CAPTION>
==========================================================================================================
1994 1993 1992
----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Operating Revenues (in millions):
Residential $2,560 $2,696 $2,402
Commercial 2,357 2,313 2,181
Industrial 2,162 2,200 2,126
Other 70 68 64
----------------------------------------------------------------------------------------------------------
Total retail 7,149 7,277 6,773
Sales for resale within service area 360 447 409
Sales for resale outside service area 505 613 797
----------------------------------------------------------------------------------------------------------
Total revenues from sales of electricity 8,014 8,337 7,979
Other revenues 283 152 94
----------------------------------------------------------------------------------------------------------
Total $8,297 $8,489 $8,073
==========================================================================================================
Kilowatt-Hour Sales (in millions):
Residential 35,836 36,807 33,627
Commercial 34,080 32,847 31,025
Industrial 50,311 48,738 47,816
Other 844 814 777
----------------------------------------------------------------------------------------------------------
Total retail 121,071 119,206 113,245
Sales for resale within service area 8,151 13,258 12,107
Sales for resale outside service area 10,769 12,445 16,632
----------------------------------------------------------------------------------------------------------
Total 139,991 144,909 141,984
==========================================================================================================
Average Revenue Per Kilowatt-Hour (cents):
Residential 7.14 7.32 7.14
Commercial 6.92 7.04 7.03
Industrial 4.30 4.51 4.45
Total retail 5.90 6.10 5.98
Sales for resale 4.57 4.12 4.20
Total sales 5.72 5.75 5.62
Average Annual Kilowatt-Hour Use Per Residential Customer 11,851 12,378 11,490
Average Annual Revenue Per Residential Customer $846.48 $906.60 $820.67
Plant Nameplate Capacity Ratings (year-end) (megawatts) 29,932 29,513 29,830
Maximum Peak-Hour Demand (megawatts):
Winter 22,254 19,432 19,121
Summer 24,546 25,937 24,146
System Reserve Margin (at peak) (percent) 19.3 13.2 14.3
Annual Load Factor (percent) 63.5 59.4 60.3
Plant Availability (percent):
Fossil-steam 85.2 87.9 88.6
Nuclear 89.8 85.9 85.2
----------------------------------------------------------------------------------------------------------
Source of Energy Supply (percent):
Coal 70.8 73.0 71.7
Nuclear 17.9 16.3 16.2
Hydro 4.7 3.9 4.6
Oil and gas 0.9 0.9 0.5
Purchased power 5.7 5.9 7.0
----------------------------------------------------------------------------------------------------------
Total 100.0 100.0 100.0
==========================================================================================================
Total Fuel Economy Data:
BTU per net kilowatt-hour generated 10,010 9,994 9,976
Cost of fuel per million BTU (cents) 155.81 166.85 162.58
Average cost of fuel per net kilowatt-hour generated (cents) 1.56 1.67 1.62
----------------------------------------------------------------------------------------------------------
</TABLE>
II-40
<PAGE>
SELECTED CONSOLIDATED FINANCIAL AND OPERATING DATA (continued)
The Southern Company and Subsidiary Companies 1994 Annual Report
<TABLE>
<CAPTION>
==========================================================================================================
1991 1990 1989
----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Operating Revenues (in millions):
Residential $2,391 $2,342 $2,194
Commercial 2,122 2,062 1,965
Industrial 2,088 2,085 2,011
Other 65 64 60
----------------------------------------------------------------------------------------------------------
Total retail 6,666 6,553 6,230
Sales for resale within service area 417 412 401
Sales for resale outside service area 884 977 928
----------------------------------------------------------------------------------------------------------
Total revenues from sales of electricity 7,967 7,942 7,559
Other revenues 83 111 61
----------------------------------------------------------------------------------------------------------
Total $8,050 $8,053 $7,620
==========================================================================================================
Kilowatt-Hour Sales (in millions):
Residential 33,622 33,118 31,627
Commercial 30,379 29,658 28,454
Industrial 46,050 45,974 45,022
Other 817 806 787
----------------------------------------------------------------------------------------------------------
Total retail 110,868 109,556 105,890
Sales for resale within service area 12,320 11,134 11,419
Sales for resale outside service area 19,839 24,402 24,228
----------------------------------------------------------------------------------------------------------
Total 143,027 145,092 141,537
==========================================================================================================
Average Revenue Per Kilowatt-Hour (cents):
Residential 7.11 7.07 6.94
Commercial 6.99 6.96 6.91
Industrial 4.53 4.53 4.47
Total retail 6.01 5.98 5.88
Sales for resale 4.05 3.91 3.73
Total sales 5.57 5.47 5.34
Average Annual Kilowatt-Hour Use Per Residential Customer 11,659 11,637 11,287
Average Annual Revenue Per Residential Customer $829.18 $822.93 $782.90
Plant Nameplate Capacity Ratings (year-end) (megawatts) 29,915 29,532 29,532
Maximum Peak-Hour Demand (megawatts):
Winter 19,166 17,629 20,772
Summer 25,261 25,981 24,399
System Reserve Margin (at peak) (percent) 16.5 14.0 21.0
Annual Load Factor (percent) 58.3 56.6 58.6
Plant Availability (percent):
Fossil-steam 91.3 91.9 92.2
Nuclear 83.4 83.0 87.0
----------------------------------------------------------------------------------------------------------
Source of Energy Supply (percent):
Coal 72.6 72.1 71.5
Nuclear 16.2 15.6 15.7
Hydro 4.4 4.4 5.2
Oil and gas 0.6 1.3 1.1
Purchased power 6.2 6.6 6.5
----------------------------------------------------------------------------------------------------------
Total 100.0 100.0 100.0
==========================================================================================================
Total Fuel Economy Data:
BTU per net kilowatt-hour generated 10,022 10,065 10,086
Cost of fuel per million BTU (cents) 168.28 172.81 171.00
Average cost of fuel per net kilowatt-hour generated (cents) 1.69 1.74 1.72
----------------------------------------------------------------------------------------------------------
</TABLE>
II-41A
<PAGE>
SELECTED CONSOLIDATED FINANCIAL AND OPERATING DATA (continued)
The Southern Company and Subsidiary Companies 1994 Annual Report
<TABLE>
<CAPTION>
==========================================================================================================
1988 1987 1986
----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Operating Revenues (in millions):
Residential $2,103 $2,042 $1,996
Commercial 1,835 1,692 1,613
Industrial 1,945 1,870 1,845
Other 56 54 52
----------------------------------------------------------------------------------------------------------
Total retail 5,939 5,658 5,506
Sales for resale within service area 480 461 511
Sales for resale outside service area 777 1,028 957
----------------------------------------------------------------------------------------------------------
Total revenues from sales of electricity 7,196 7,147 6,974
Other revenues 91 57 59
----------------------------------------------------------------------------------------------------------
Total $7,287 $7,204 $7,033
==========================================================================================================
Kilowatt-Hour Sales (in millions):
Residential 31,041 30,583 29,501
Commercial 27,005 25,593 24,166
Industrial 43,675 42,113 40,503
Other 763 737 723
----------------------------------------------------------------------------------------------------------
Total retail 102,484 99,026 94,893
Sales for resale within service area 14,806 13,282 14,347
Sales for resale outside service area 15,860 22,905 16,909
----------------------------------------------------------------------------------------------------------
Total 133,150 135,213 126,149
==========================================================================================================
Average Revenue Per Kilowatt-Hour (cents):
Residential 6.77 6.68 6.77
Commercial 6.79 6.61 6.67
Industrial 4.45 4.44 4.56
Total retail 5.80 5.71 5.80
Sales for resale 4.10 4.11 4.69
Total sales 5.40 5.29 5.53
Average Annual Kilowatt-Hour Use Per Residential Customer 11,255 11,307 11,157
Average Annual Revenue Per Residential Customer $762.42 $754.96 $754.93
Plant Nameplate Capacity Ratings (year-end) (megawatts) 27,552 27,610 26,262
Maximum Peak-Hour Demand (megawatts):
Winter 18,685 18,185 19,665
Summer 23,641 23,194 23,255
System Reserve Margin (at peak) (percent) 15.0 16.2 11.4
Annual Load Factor (percent) 59.8 58.7 57.2
Plant Availability (percent):
Fossil-steam 91.3 91.2 90.3
Nuclear 78.4 84.5 74.2
----------------------------------------------------------------------------------------------------------
Source of Energy Supply (percent):
Coal 77.7 77.8 79.4
Nuclear 14.5 13.1 11.5
Hydro 2.3 3.3 2.2
Oil and gas 0.7 0.6 0.9
Purchased power 4.8 5.2 6.0
----------------------------------------------------------------------------------------------------------
Total 100.0 100.0 100.0
==========================================================================================================
Total Fuel Economy Data:
BTU per net kilowatt-hour generated 10,094 10,122 10,171
Cost of fuel per million BTU (cents) 170.36 176.64 185.89
Average cost of fuel per net kilowatt-hour generated (cents) 1.72 1.78 1.89
----------------------------------------------------------------------------------------------------------
</TABLE>
II-41B
<PAGE>
SELECTED CONSOLIDATED FINANCIAL AND OPERATING DATA (continued)
The Southern Company and Subsidiary Companies 1994 Annual Report
<TABLE>
<CAPTION>
==============================================================================================
1985 1984
----------------------------------------------------------------------------------------------
<S> <C> <C>
Operating Revenues (in millions):
Residential $1,825 $1,751
Commercial 1,512 1,410
Industrial 1,830 1,790
Other 50 47
----------------------------------------------------------------------------------------------
Total retail 5,217 4,998
Sales for resale within service area 436 456
Sales for resale outside service area 1,289 854
----------------------------------------------------------------------------------------------
Total revenues from sales of electricity 6,942 6,308
Other revenues 57 42
----------------------------------------------------------------------------------------------
Total $6,999 $6,350
==============================================================================================
Kilowatt-Hour Sales (in millions):
Residential 27,088 26,163
Commercial 22,512 20,816
Industrial 39,804 39,055
Other 713 663
----------------------------------------------------------------------------------------------
Total retail 90,117 86,697
Sales for resale within service area 11,079 11,193
Sales for resale outside service area 27,881 21,374
----------------------------------------------------------------------------------------------
Total 129,077 119,264
==============================================================================================
Average Revenue Per Kilowatt-Hour (cents):
Residential 6.74 6.69
Commercial 6.71 6.77
Industrial 4.60 4.58
Total retail 5.79 5.76
Sales for resale 4.43 4.02
Total sales 5.38 5.29
Average Annual Kilowatt-Hour Use Per Residential Customer 10,515 10,434
Average Annual Revenue Per Residential Customer $708.46 $698.26
Plant Nameplate Capacity Ratings (year-end) (megawatts) 26,262 25,397
Maximum Peak-Hour Demand (megawatts):
Winter 19,347 16,353
Summer 21,778 20,210
System Reserve Margin (at peak) (percent) 17.6 32.8
Annual Load Factor (percent) 57.4 58.9
Plant Availability (percent):
Fossil-steam 90.5 90.5
Nuclear 80.3 66.9
----------------------------------------------------------------------------------------------
Source of Energy Supply (percent):
Coal 78.5 77.3
Nuclear 12.0 11.8
Hydro 3.1 5.6
Oil and gas 0.3 0.2
Purchased power 6.1 5.1
----------------------------------------------------------------------------------------------
Total 100.0 100.0
==============================================================================================
Total Fuel Economy Data:
BTU per net kilowatt-hour generated 10,193 10,208
Cost of fuel per million BTU (cents) 191.24 191.44
Average cost of fuel per net kilowatt-hour generated (cents) 1.95 1.95
----------------------------------------------------------------------------------------------
</TABLE>
II-41C
<PAGE>
CONSOLIDATED STATEMENTS OF INCOME
The Southern Company and Subsidiary Companies
<TABLE>
<CAPTION>
=======================================================================================================
For the Years Ended December 31, 1994 1993 1992
-------------------------------------------------------------------------------------------------------
(Millions of Dollars)
<S> <C> <C> <C>
-------------------------------------------------------------------------------------------------------
Operating Revenues $ 8,297 $ 8,489 $ 8,073
-------------------------------------------------------------------------------------------------------
Operating Expenses:
Operation --
Fuel 2,058 2,265 2,114
Purchased power 277 336 454
Proceeds from settlement of disputed contracts - (3) (7)
Other 1,505 1,448 1,317
Maintenance 660 653 613
Depreciation and amortization 821 793 768
Deferred Plant Vogtle expenses, net 75 36 (31)
Taxes other than income taxes 475 462 436
Federal and state income taxes 711 734 647
-------------------------------------------------------------------------------------------------------
Total operating expenses 6,582 6,724 6,311
-------------------------------------------------------------------------------------------------------
Operating Income 1,715 1,765 1,762
Other Income (Expense):
Allowance for equity funds used during construction 11 9 10
Deferred return on Plant Vogtle - - -
Write-off of Plant Vogtle costs - - -
Income tax reduction for write-off of Plant Vogtle costs - - -
Interest income 32 30 32
Other, net (48) (41) (50)
Income taxes applicable to other income 26 57 39
-------------------------------------------------------------------------------------------------------
Income Before Interest Charges 1,736 1,820 1,793
-------------------------------------------------------------------------------------------------------
Interest Charges and Preferred Dividends:
Interest on long-term debt 568 595 684
Allowance for debt funds used during construction (18) (13) (12)
Interest on interim obligations 33 30 16
Amortization of debt discount, premium, and expense, net 30 26 14
Other interest charges 47 87 34
Preferred and preference dividends of subsidiary companies 87 93 104
-------------------------------------------------------------------------------------------------------
Net interest charges and preferred and preference dividends 747 818 840
-------------------------------------------------------------------------------------------------------
Consolidated Net Income $ 989 $ 1,002 $ 953
=======================================================================================================
Earnings Per Share of Common Stock $1.52 $1.57 $1.51
Average Number of Shares of Common Stock Outstanding (Thousands) 649,927 637,319 631,844
=======================================================================================================
</TABLE>
II-42
<PAGE>
CONSOLIDATED STATEMENTS OF INCOME
The Southern Company and Subsidiary Companies
<TABLE>
<CAPTION>
===============================================================================================================
For the Years Ended December 31, 1991 1990 1989 1988
(Millions of Dollars)
<S> <C> <C> <C> <C>
---------------------------------------------------------------------------------------------------------------
Operating Revenues $ 8,050 $ 8,053 $ 7,620 $ 7,287
---------------------------------------------------------------------------------------------------------------
Operating Expenses:
Operation --
Fuel 2,237 2,327 2,241 2,213
Purchased power 468 642 575 562
Proceeds from settlement of disputed contracts (181) - - -
Other 1,321 1,161 1,103 1,167
Maintenance 637 602 542 547
Depreciation and amortization 763 749 698 632
Deferred Plant Vogtle expenses, net 16 31 (39) (8)
Taxes other than income taxes 432 397 356 362
Federal and state income taxes 618 520 525 412
---------------------------------------------------------------------------------------------------------------
Total operating expenses 6,311 6,429 6,001 5,887
---------------------------------------------------------------------------------------------------------------
Operating Income 1,739 1,624 1,619 1,400
Other Income (Expense):
Allowance for equity funds used during construction 13 33 71 138
Deferred return on Plant Vogtle 35 83 48 107
Write-off of Plant Vogtle costs - (281) - -
Income tax reduction for write-off of Plant Vogtle costs - 63 - -
Interest income 30 28 28 46
Other, net (57) (55) (50) (30)
Income taxes applicable to other income 21 36 30 23
---------------------------------------------------------------------------------------------------------------
Income Before Interest Charges 1,781 1,531 1,746 1,684
---------------------------------------------------------------------------------------------------------------
Interest Charges and Preferred Dividends:
Interest on long-term debt 757 788 791 784
Allowance for debt funds used during construction (18) (34) (63) (130)
Interest on interim obligations 20 22 12 22
Amortization of debt discount, premium, and expense, net 9 10 11 10
Other interest charges 29 26 26 32
Preferred and preference dividends of subsidiary companies 108 115 123 120
---------------------------------------------------------------------------------------------------------------
Net interest charges and preferred and preference dividends 905 927 900 838
---------------------------------------------------------------------------------------------------------------
Consolidated Net Income $ 876 $ 604 $ 846 $ 846
===============================================================================================================
Earnings Per Share of Common Stock $1.39 $0.96 $1.34 $1.36
Average Number of Shares of Common Stock Outstanding (Thousands) 631,307 631,307 631,303 622,292
===============================================================================================================
</TABLE>
II-43A
<PAGE>
CONSOLIDATED STATEMENTS OF INCOME
The Southern Company and Subsidiary Companies
<TABLE>
<CAPTION>
===============================================================================================================
For the Years Ended December 31, 1987 1986 1985 1984
(Millions of Dollars)
<S> <C> <C> <C> <C>
---------------------------------------------------------------------------------------------------------------
Operating Revenues $ 7,204 $ 7,033 $ 6,999 $ 6,350
---------------------------------------------------------------------------------------------------------------
Operating Expenses:
Operation --
Fuel 2,303 2,316 2,431 2,197
Purchased power 552 386 456 435
Proceeds from settlement of disputed contracts - - - -
Other 1,219 1,045 941 840
Maintenance 574 576 562 494
Depreciation and amortization 563 510 471 444
Deferred Plant Vogtle expenses, net (142) - - -
Taxes other than income taxes 349 315 303 283
Federal and state income taxes 517 672 649 576
---------------------------------------------------------------------------------------------------------------
Total operating expenses 5,935 5,820 5,813 5,269
---------------------------------------------------------------------------------------------------------------
Operating Income 1,269 1,213 1,186 1,081
Other Income (Expense):
Allowance for equity funds used during construction 190 312 269 212
Deferred return on Plant Vogtle 115 - - -
Write-off of Plant Vogtle costs (358) - - -
Income tax reduction for write-off of Plant Vogtle costs 129 - - -
Interest income 77 66 70 61
Other, net (59) (20) - 46
Income taxes applicable to other income 19 - (19) (42)
---------------------------------------------------------------------------------------------------------------
Income Before Interest Charges 1,382 1,571 1,506 1,358
---------------------------------------------------------------------------------------------------------------
Interest Charges and Preferred Dividends:
Interest on long-term debt 776 782 755 679
Allowance for debt funds used during construction (157) (260) (254) (199)
Interest on interim obligations 24 4 21 16
Amortization of debt discount, premium, and expense, net 8 6 3 2
Other interest charges 29 15 17 15
Preferred and preference dividends of subsidiary companies 125 121 119 110
---------------------------------------------------------------------------------------------------------------
Net interest charges and preferred and preference dividends 805 668 661 623
---------------------------------------------------------------------------------------------------------------
Consolidated Net Income $ 577 $ 903 $ 845 $ 735
===============================================================================================================
Earnings Per Share of Common Stock $0.96 $1.56 $1.56 $1.47
Average Number of Shares of Common Stock Outstanding (Thousands) 601,390 580,252 541,244 501,313
===============================================================================================================
</TABLE>
II-43B
<PAGE>
CONSOLIDATED STATEMENTS OF CASH FLOWS
The Southern Company and Subsidiary Companies
<TABLE>
<CAPTION>
============================================================================================
For the Years Ended December 31, 1994 1993 1992
--------------------------------------------------------------------------------------------
(Millions of Dollars)
<S> <C> <C> <C>
Operating Activities:
Net income $ 989 $ 1,002 $ 953
Adjustments to reconcile net income to net
cash provided by operating activities --
Depreciation and amortization 1,050 1,011 969
Deferred income taxes, net (3) 209 221
Deferred investment tax credits, net (1) (20) (6)
Allowance for equity funds used during construction (11) (9) (10)
Deferred Plant Vogtle costs 75 36 (31)
Write-off of Plant Vogtle costs - - -
Non-cash proceeds from settlement of disputed contracts - - (7)
Other, net (7) (45) (25)
Changes in certain current assets and liabilities --
Receivables 114 (55) (10)
Inventories (128) 136 (23)
Payables 81 43 35
Taxes accrued - 3 (62)
Other (48) (64) (9)
--------------------------------------------------------------------------------------------
Net cash provided from operating activities 2,111 2,247 1,995
--------------------------------------------------------------------------------------------
Investing Activities:
Gross property additions (1,536) (1,441) (1,105)
Foreign utility operations (405) (465) -
Sales of property 171 262 44
Other (87) (37) 61
--------------------------------------------------------------------------------------------
Net cash used for investing activities (1,857) (1,681) (1,000)
--------------------------------------------------------------------------------------------
Financing Activities:
Proceeds:
Common stock 279 205 30
Preferred securities of subsidiary 100 - -
Preferred stock - 426 410
First mortgage bonds 185 2,185 1,815
Pollution control bonds 749 386 208
Other long-term debt 439 206 48
Prepaid capacity revenues - - -
Retirements:
Preferred and preference stock (1) (516) (326)
First mortgage bonds (241) (2,178) (2,575)
Pollution control bonds (732) (351) (208)
Other long-term debt (307) (99) (88)
Interim obligations, net 37 114 525
Payment of common stock dividends (766) (726) (695)
Miscellaneous (35) (137) (148)
--------------------------------------------------------------------------------------------
Net cash provided from (used for) financing activities (293) (485) (1,004)
--------------------------------------------------------------------------------------------
Net Increase (Decrease) in Cash and Cash Equivalents (39) 81 (9)
Cash and Cash Equivalents at Beginning of Year 178 97 106
--------------------------------------------------------------------------------------------
Cash and Cash Equivalents at End of Year $ 139 $ 178 $ 97
============================================================================================
( ) Denotes use of cash.
</TABLE>
II-44
<PAGE>
CONSOLIDATED STATEMENTS OF CASH FLOWS
The Southern Company and Subsidiary Companies
<TABLE>
<CAPTION>
======================================================================================================
For the Years Ended December 31, 1991 1990 1989 1988
------------------------------------------------------------------------------------------------------
(Millions of Dollars)
<S> <C> <C> <C> <C>
Operating Activities:
Net income $ 876 $ 604 $ 846 $ 846
Adjustments to reconcile net income to net
cash provided by operating activities --
Depreciation and amortization 968 982 951 837
Deferred income taxes, net 26 158 225 206
Deferred investment tax credits, net (11) - (1) 27
Allowance for equity funds used during construction (13) (33) (71) (138)
Deferred Plant Vogtle costs (19) (52) (87) (115)
Write-off of Plant Vogtle costs - 281 - -
Non-cash proceeds from settlement of disputed contracts (141) - - -
Other, net 45 (10) (28) 46
Changes in certain current assets and liabilities --
Receivables 68 8 (123) (21)
Inventories 20 (82) 6 (47)
Payables (13) (41) (23) (6)
Taxes accrued 107 (5) (15) 29
Other (46) (34) 156 (40)
------------------------------------------------------------------------------------------------------
Net cash provided from operating activities 1,867 1,776 1,836 1,624
------------------------------------------------------------------------------------------------------
Investing Activities:
Gross property additions (1,123) (1,185) (1,346) (1,754)
Foreign utility operations - - - -
Sales of property 291 35 - -
Other (45) 14 54 (2)
------------------------------------------------------------------------------------------------------
Net cash used for investing activities (877) (1,136) (1,292) (1,756)
------------------------------------------------------------------------------------------------------
Financing Activities:
Proceeds:
Common stock - - 4 194
Preferred securities of subsidiary - - - -
Preferred stock 100 - - 120
First mortgage bonds 380 300 280 335
Pollution control bonds 126 - 104 73
Other long-term debt 14 74 74 68
Prepaid capacity revenues 53 - - -
Retirements:
Preferred and preference stock (125) (96) (21) (10)
First mortgage bonds (881) (146) (201) (273)
Pollution control bonds (130) (3) (55) (1)
Other long-term debt (70) (207) (83) (108)
Interim obligations, net 180 78 27 (300)
Payment of common stock dividends (676) (676) (675) (661)
Miscellaneous (41) (8) (10) (20)
------------------------------------------------------------------------------------------------------
Net cash provided from (used for) financing activities (1,070) (684) (556) (583)
------------------------------------------------------------------------------------------------------
Net Increase (Decrease) in Cash and Cash Equivalents (80) (44) (12) (715)
Cash and Cash Equivalents at Beginning of Year 186 230 242 957
------------------------------------------------------------------------------------------------------
Cash and Cash Equivalents at End of Year $ 106 $ 186 $ 230 $ 242
======================================================================================================
( ) Denotes use of cash.
</TABLE>
II-45A
<PAGE>
CONSOLIDATED STATEMENTS OF CASH FLOWS
The Southern Company and Subsidiary Companies
<TABLE>
<CAPTION>
======================================================================================================
For the Years Ended December 31, 1987 1986 1985 1984
------------------------------------------------------------------------------------------------------
(Millions of Dollars)
<S> <C> <C> <C> <C>
Operating Activities:
Net income $ 577 $ 903 $ 845 $ 735
Adjustments to reconcile net income to net
cash provided by operating activities --
Depreciation and amortization 742 674 623 581
Deferred income taxes, net 198 465 242 243
Deferred investment tax credits, net 20 132 184 245
Allowance for equity funds used during construction (190) (312) (269) (212)
Deferred Plant Vogtle costs (257) - - -
Write-off of Plant Vogtle costs 358 - - -
Non-cash proceeds from settlement of disputed contracts - - - -
Other, net 87 15 17 (190)
Changes in certain current assets and liabilities --
Receivables (113) 38 (89) (27)
Inventories (62) (37) 127 (69)
Payables 125 48 38 187
Taxes accrued (34) 24 (65) 32
Other 42 (56) 84 70
------------------------------------------------------------------------------------------------------
Net cash provided from operating activities 1,493 1,894 1,737 1,595
------------------------------------------------------------------------------------------------------
Investing Activities:
Gross property additions (1,853) (2,367) (2,242) (2,130)
Foreign utility operations - - - -
Sales of property 12 - 1 321
Other 64 46 126 110
------------------------------------------------------------------------------------------------------
Net cash used for investing activities (1,777) (2,321) (2,115) (1,699)
------------------------------------------------------------------------------------------------------
Financing Activities:
Proceeds:
Common stock 247 379 373 318
Preferred securities of subsidiary - - - -
Preferred stock 125 100 150 50
First mortgage bonds 700 735 20 150
Pollution control bonds 228 386 635 368
Other long-term debt 81 367 68 28
Prepaid capacity revenues - 100 - -
Retirements:
Preferred and preference stock (160) (53) (6) (6)
First mortgage bonds (369) (875) (69) (71)
Pollution control bonds (122) (21) - (4)
Other long-term debt (56) (55) (54) (99)
Interim obligations, net 313 (37) (77) 118
Payment of common stock dividends (628) (583) (512) (444)
Miscellaneous (58) (82) (24) (22)
------------------------------------------------------------------------------------------------------
Net cash provided from (used for) financing activities 301 361 504 386
------------------------------------------------------------------------------------------------------
Net Increase (Decrease) in Cash and Cash Equivalents 17 (66) 126 282
Cash and Cash Equivalents at Beginning of Year 940 1,006 880 598
------------------------------------------------------------------------------------------------------
Cash and Cash Equivalents at End of Year $ 957 $ 940 $ 1,006 $ 880
======================================================================================================
( ) Denotes use of cash.
</TABLE>
II-45B
<PAGE>
CONSOLIDATED BALANCE SHEETS
The Southern Company and Subsidiary Companies
<TABLE>
<CAPTION>
====================================================================================================
At December 31, 1994 1993 1992
----------------------------------------------------------------------------------------------------
(Millions of Dollars)
<S> <C> <C> <C>
ASSETS
Electric Plant:
Production-
Fossil $ 8,778 $ 8,006 $ 8,033
Nuclear 5,942 5,930 5,912
Hydro 1,341 1,263 1,253
----------------------------------------------------------------------------------------------------
Total production 16,061 15,199 15,198
Transmission 3,504 3,224 3,093
Distribution 7,243 6,848 6,430
General 2,380 2,395 2,291
Construction work in progress 1,247 1,031 665
Nuclear fuel, at amortized cost 238 229 257
----------------------------------------------------------------------------------------------------
Total electric plant 30,673 28,926 27,934
----------------------------------------------------------------------------------------------------
Steam Heat Plant 21 21 21
----------------------------------------------------------------------------------------------------
Total utility plant 30,694 28,947 27,955
----------------------------------------------------------------------------------------------------
Accumulated Provision for Depreciation:
Electric 9,567 8,924 8,271
Steam heat 10 10 9
----------------------------------------------------------------------------------------------------
Total accumulated provision for depreciation 9,577 8,934 8,280
----------------------------------------------------------------------------------------------------
Total 21,117 20,013 19,675
----------------------------------------------------------------------------------------------------
Less property-related accumulated deferred income taxes - - 3,186
----------------------------------------------------------------------------------------------------
Total 21,117 20,013 16,489
----------------------------------------------------------------------------------------------------
Other Property and Investments:
Securities received from settlement of disputed contracts - - -
Argentine operating concession, being amortized 446 469 -
Nuclear decommissioning trusts 125 88 52
Miscellaneous 224 179 75
----------------------------------------------------------------------------------------------------
Total 795 736 127
----------------------------------------------------------------------------------------------------
Current Assets:
Cash and cash equivalents 139 178 97
Investment securities - - 199
Receivables, net 840 962 742
Accrued utility revenues 218 185 177
Fossil fuel stock, at average cost 354 254 392
Materials and supplies, at average cost 553 535 533
Prepayments 194 148 220
Vacation pay deferred 70 73 70
----------------------------------------------------------------------------------------------------
Total 2,368 2,335 2,430
----------------------------------------------------------------------------------------------------
Deferred Charges:
Deferred charges related to income taxes 1,454 1,546 -
Deferred Plant Vogtle costs 432 507 383
Deferred fuel charges 47 70 89
Debt expense, being amortized 48 33 28
Premium on reacquired debt, being amortized 298 288 222
Miscellaneous 483 383 270
----------------------------------------------------------------------------------------------------
Total 2,762 2,827 992
----------------------------------------------------------------------------------------------------
Total Assets $ 27,042 $25,911 $20,038
====================================================================================================
</TABLE>
II-46
<PAGE>
CONSOLIDATED BALANCE SHEETS
The Southern Company and Subsidiary Companies
<TABLE>
<CAPTION>
================================================================================================================
At December 31, 1991 1990 1989 1988
----------------------------------------------------------------------------------------------------------------
(Millions of Dollars)
<S> <C> <C> <C> <C>
ASSETS
Electric Plant:
Production-
Fossil $ 7,997 $ 7,661 $ 7,565 $ 6,226
Nuclear 5,902 5,820 5,976 4,995
Hydro 1,247 1,222 1,215 1,197
----------------------------------------------------------------------------------------------------------------
Total production 15,146 14,703 14,756 12,418
Transmission 2,955 2,824 2,683 2,500
Distribution 6,092 5,738 5,365 4,944
General 2,196 2,078 2,026 1,865
Construction work in progress 603 1,092 1,006 3,071
Nuclear fuel, at amortized cost 301 354 402 481
----------------------------------------------------------------------------------------------------------------
Total electric plant 27,293 26,789 26,238 25,279
----------------------------------------------------------------------------------------------------------------
Steam Heat Plant 20 20 20 20
----------------------------------------------------------------------------------------------------------------
Total utility plant 27,313 26,809 26,258 25,299
----------------------------------------------------------------------------------------------------------------
Accumulated Provision for Depreciation:
Electric 7,676 7,079 6,492 5,885
Steam heat 8 8 7 6
----------------------------------------------------------------------------------------------------------------
Total accumulated provision for depreciation 7,684 7,087 6,499 5,891
----------------------------------------------------------------------------------------------------------------
Total 19,629 19,722 19,759 19,408
----------------------------------------------------------------------------------------------------------------
Less property-related accumulated deferred income taxes 3,020 2,911 2,759 2,559
----------------------------------------------------------------------------------------------------------------
Total 16,609 16,811 17,000 16,849
----------------------------------------------------------------------------------------------------------------
Other Property and Investments:
Securities received from settlement of disputed contracts 202 - - -
Argentine operating concession, being amortized - - - -
Nuclear decommissioning trusts 26 2 - -
Miscellaneous 83 83 85 88
----------------------------------------------------------------------------------------------------------------
Total 311 85 85 88
----------------------------------------------------------------------------------------------------------------
Current Assets:
Cash and cash equivalents 106 186 230 242
Investment securities - - - -
Receivables, net 723 793 765 687
Accrued utility revenues 160 151 189 148
Fossil fuel stock, at average cost 445 467 427 490
Materials and supplies, at average cost 457 456 413 348
Prepayments 222 193 192 174
Vacation pay deferred 70 64 65 63
----------------------------------------------------------------------------------------------------------------
Total 2,183 2,310 2,281 2,152
----------------------------------------------------------------------------------------------------------------
Deferred Charges:
Deferred charges related to income taxes - - - -
Deferred Plant Vogtle costs 375 364 322 270
Deferred fuel charges 106 126 143 157
Debt expense, being amortized 23 23 24 24
Premium on reacquired debt, being amortized 126 99 103 102
Miscellaneous 130 137 134 89
----------------------------------------------------------------------------------------------------------------
Total 760 749 726 642
----------------------------------------------------------------------------------------------------------------
Total Assets $ 19,863 $19,955 $20,092 $19,731
================================================================================================================
</TABLE>
II-47A
<PAGE>
CONSOLIDATED BALANCE SHEETS
The Southern Company and Subsidiary Companies
<TABLE>
<CAPTION>
================================================================================================================
At December 31, 1987 1986 1985 1984
----------------------------------------------------------------------------------------------------------------
(Millions of Dollars)
<S> <C> <C> <C> <C>
ASSETS
Electric Plant:
Production-
Fossil $ 6,157 $ 5,415 $ 5,274 $ 4,740
Nuclear 4,987 2,490 2,341 2,312
Hydro 1,192 1,184 1,162 863
---------------------------------------------------------------------------------------------------------------
Total production 12,336 9,089 8,777 7,915
Transmission 2,388 2,254 2,001 1,878
Distribution 4,510 4,131 3,793 3,491
General 1,674 1,504 1,243 1,037
Construction work in progress 2,519 5,162 4,278 3,830
Nuclear fuel, at amortized cost 479 520 497 455
----------------------------------------------------------------------------------------------------------------
Total electric plant 23,906 22,660 20,589 18,606
----------------------------------------------------------------------------------------------------------------
Steam Heat Plant 20 35 32 26
----------------------------------------------------------------------------------------------------------------
Total utility plant 23,926 22,695 20,621 18,632
----------------------------------------------------------------------------------------------------------------
Accumulated Provision for Depreciation:
Electric 5,355 4,879 4,472 4,056
Steam heat 6 13 11 11
----------------------------------------------------------------------------------------------------------------
Total accumulated provision for depreciation 5,361 4,892 4,483 4,067
----------------------------------------------------------------------------------------------------------------
Total 18,565 17,803 16,138 14,565
----------------------------------------------------------------------------------------------------------------
Less property-related accumulated deferred income taxes 2,371 2,212 1,976 1,792
----------------------------------------------------------------------------------------------------------------
Total 16,194 15,591 14,162 12,773
----------------------------------------------------------------------------------------------------------------
Other Property and Investments:
Securities received from settlement of disputed contracts - - - -
Argentine operating concession, being amortized - - - -
Nuclear decommissioning trusts - - - -
Miscellaneous 70 69 36 32
----------------------------------------------------------------------------------------------------------------
Total 70 69 36 32
----------------------------------------------------------------------------------------------------------------
Current Assets:
Cash and cash equivalents 957 940 1,006 880
Investment securities - - - -
Receivables, net 687 657 685 613
Accrued utility revenues 139 83 92 76
Fossil fuel stock, at average cost 513 501 503 649
Materials and supplies, at average cost 278 228 188 169
Prepayments 136 70 22 18
Vacation pay deferred 59 56 53 49
----------------------------------------------------------------------------------------------------------------
Total 2,769 2,535 2,549 2,454
----------------------------------------------------------------------------------------------------------------
Deferred Charges:
Deferred charges related to income taxes - - - -
Deferred Plant Vogtle costs 173 - - -
Deferred fuel charges 112 121 - -
Debt expense, being amortized 25 24 24 22
Premium on reacquired debt, being amortized 95 70 - -
Miscellaneous 80 73 84 46
----------------------------------------------------------------------------------------------------------------
Total 485 288 108 68
----------------------------------------------------------------------------------------------------------------
Total Assets $ 19,518 $18,483 $16,855 $15,327
================================================================================================================
</TABLE>
II-47B
<PAGE>
CONSOLIDATED BALANCE SHEETS
The Southern Company and Subsidiary Companies
<TABLE>
<CAPTION>
====================================================================================================
At December 31, 1994 1993 1992
----------------------------------------------------------------------------------------------------
(Millions of Dollars)
<S> <C> <C> <C>
CAPITALIZATION AND LIABILITIES
Capitalization:
Common stock $ 3,283 $ 3,213 $ 1,582
Paid-in capital 1,711 1,502 2,929
Premium on preferred stock 1 1 2
Retained Earnings 3,191 2,968 2,721
----------------------------------------------------------------------------------------------------
Total common equity 8,186 7,684 7,234
Preferred stock 1,332 1,332 1,351
Preferred stock subject to mandatory redemption - 1 8
Preferred securities of subsidiary 100 - -
Long-term debt 7,593 7,412 7,241
----------------------------------------------------------------------------------------------------
Total (excluding amount due within one year) 17,211 16,429 15,834
----------------------------------------------------------------------------------------------------
Current Liabilities:
Notes payable to banks 575 865 567
Commercial paper 403 76 260
Preferred stock due within one year 1 1 65
Long-term debt due within one year 228 156 188
Accounts payable 806 698 646
Customer deposits 102 103 99
Taxes accrued 153 206 172
Interest accrued 190 186 191
Vacation pay accrued 87 90 86
Miscellaneous 233 190 242
----------------------------------------------------------------------------------------------------
Total 2,778 2,571 2,516
----------------------------------------------------------------------------------------------------
Deferred Credits and Other Liabilities:
Accumulated deferred income taxes 4,007 3,979 -
Deferred credits related to income taxes 987 1,051 -
Accumulated deferred investment tax credits 858 900 957
Prepaid capacity revenues, net 138 144 148
Disallowed Plant Vogtle capacity buyback costs 60 63 72
Miscellaneous 1,003 774 511
----------------------------------------------------------------------------------------------------
Total 7,053 6,911 1,688
----------------------------------------------------------------------------------------------------
Total Capitalization and Liabilities $ 27,042 $25,911 $20,038
====================================================================================================
</TABLE>
II-48
<PAGE>
CONSOLIDATED BALANCE SHEETS
The Southern Company and Subsidiary Companies
<TABLE>
<CAPTION>
================================================================================================================
At December 31, 1991 1990 1989 1988
----------------------------------------------------------------------------------------------------------------
(Millions of Dollars)
<S> <C> <C> <C> <C>
CAPITALIZATION AND LIABILITIES
Capitalization:
Common stock $ 1,578 $ 1,578 $ 1,578 $ 1,577
Paid-in capital 2,906 2,906 2,906 2,903
Premium on preferred stock 2 3 3 3
Retained Earnings 2,490 2,296 2,374 2,203
----------------------------------------------------------------------------------------------------------------
Total common equity 6,976 6,783 6,861 6,686
Preferred stock 1,207 1,207 1,209 1,259
Preferred stock subject to mandatory redemption 126 151 191 206
Preferred securities of subsidiary - - - -
Long-term debt 7,992 8,458 8,575 8,433
----------------------------------------------------------------------------------------------------------------
Total (excluding amount due within one year) 16,301 16,599 16,836 16,584
----------------------------------------------------------------------------------------------------------------
Current Liabilities:
Notes payable to banks 302 122 44 17
Commercial paper - - - -
Preferred stock due within one year 7 7 61 17
Long-term debt due within one year 217 308 169 190
Accounts payable 585 616 676 728
Customer deposits 95 91 89 83
Taxes accrued 215 144 181 203
Interest accrued 221 246 233 240
Vacation pay accrued 84 75 75 74
Miscellaneous 229 233 252 104
----------------------------------------------------------------------------------------------------------------
Total 1,955 1,842 1,780 1,656
----------------------------------------------------------------------------------------------------------------
Deferred Credits and Other Liabilities:
Accumulated deferred income taxes - - - -
Deferred credits related to income taxes - - - -
Accumulated deferred investment tax credits 1,004 1,063 1,111 1,161
Prepaid capacity revenues, net 149 100 102 81
Disallowed Plant Vogtle capacity buyback costs 110 136 73 104
Miscellaneous 344 215 190 145
----------------------------------------------------------------------------------------------------------------
Total 1,607 1,514 1,476 1,491
----------------------------------------------------------------------------------------------------------------
Total Capitalization and Liabilities $ 19,863 $19,955 $20,092 $19,731
================================================================================================================
</TABLE>
II-49A
<PAGE>
CONSOLIDATED BALANCE SHEETS
The Southern Company and Subsidiary Companies
<TABLE>
<CAPTION>
================================================================================================================
At December 31, 1987 1986 1985 1984
----------------------------------------------------------------------------------------------------------------
(Millions of Dollars)
<S> <C> <C> <C> <C>
CAPITALIZATION AND LIABILITIES
Capitalization:
Common stock $ 1,534 $ 1,481 $ 1,400 $ 1,305
Paid-in capital 2,752 2,558 2,259 1,981
Premium on preferred stock 3 5 7 7
Retained Earnings 2,018 2,089 1,777 1,448
----------------------------------------------------------------------------------------------------------------
Total common equity 6,307 6,133 5,443 4,741
Preferred stock 1,139 1,214 1,114 1,004
Preferred stock subject to mandatory redemption 224 177 194 205
Preferred securities of subsidiary - - - -
Long-term debt 8,333 7,813 7,220 6,775
----------------------------------------------------------------------------------------------------------------
Total (excluding amount due within one year) 16,003 15,337 13,971 12,725
----------------------------------------------------------------------------------------------------------------
Current Liabilities:
Notes payable to banks 317 4 41 118
Commercial paper - - - -
Preferred stock due within one year 9 15 51 6
Long-term debt due within one year 192 251 303 162
Accounts payable 747 737 689 651
Customer deposits 86 82 80 83
Taxes accrued 221 259 144 208
Interest accrued 233 221 226 208
Vacation pay accrued 68 66 63 58
Miscellaneous 110 111 117 91
----------------------------------------------------------------------------------------------------------------
Total 1,983 1,746 1,714 1,585
----------------------------------------------------------------------------------------------------------------
Deferred Credits and Other Liabilities:
Accumulated deferred income taxes - - - -
Deferred credits related to income taxes - - - -
Accumulated deferred investment tax credits 1,180 1,208 1,114 968
Prepaid capacity revenues, net 104 101 - -
Disallowed Plant Vogtle capacity buyback costs 79 - - -
Miscellaneous 169 91 56 49
----------------------------------------------------------------------------------------------------------------
Total 1,532 1,400 1,170 1,017
----------------------------------------------------------------------------------------------------------------
Total Capitalization and Liabilities $ 19,518 $18,483 $16,855 $15,327
================================================================================================================
</TABLE>
II-49B
<PAGE>
<PAGE>
ALABAMA POWER COMPANY
FINANCIAL SECTION
II-50
<PAGE>
MANAGEMENT'S REPORT
Alabama Power Company 1994 Annual Report
The management of Alabama Power Company has prepared -- and is responsible for
-- the financial statements and related information included in this report.
These statements were prepared in accordance with generally accepted accounting
principles appropriate in the circumstances and necessarily include amounts that
are based on the best estimates and judgments of management. Financial
information throughout this annual report is consistent with the financial
statements.
The company maintains a system of internal accounting controls to provide
reasonable assurance that assets are safeguarded and that the books and records
reflect only authorized transactions of the company. Limitations exist in any
system of internal controls, however, based on a recognition that the cost of
the system should not exceed its benefits. The company believes its system of
internal accounting controls maintains an appropriate cost/benefit relationship.
The company's system of internal accounting controls is evaluated on an
ongoing basis by the company's internal audit staff. The company's independent
public accountants also consider certain elements of the internal control system
in order to determine their auditing procedures for the purpose of expressing an
opinion on the financial statements.
The audit committee of the board of directors, composed of directors who are
not employees, provides a broad overview of management's financial reporting and
control functions. Periodically, this committee meets with management, the
internal auditors and the independent public accountants to ensure that these
groups are fulfilling their obligations and to discuss auditing, internal
controls, and financial reporting matters. The internal auditors and independent
public accountants have access to the members of the audit committee at any
time.
Management believes that its policies and procedures provide reasonable
assurance that the company's operations are conducted according to a high
standard of business ethics. In management's opinion, the financial statements
present fairly, in all material respects, the financial position, results of
operations and cash flows of Alabama Power Company in conformity with generally
accepted accounting principles.
/s/ Elmer B. Harris
Elmer B. Harris
President
and Chief Executive Officer
/s/ William B. Hutchins, III
William B. Hutchins, III
Executive Vice President
and Chief Financial Officer
II-51
<PAGE>
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To the Board of Directors
of Alabama Power Company:
We have audited the accompanying balance sheets and statements of capitalization
of Alabama Power Company (an Alabama corporation and wholly owned subsidiary of
The Southern Company) as of December 31, 1994 and 1993, and the related
statements of income, retained earnings, and cash flows for each of the three
years in the period ended December 31, 1994. These financial statements are the
responsibility of the company's management. Our responsibility is to express an
opinion on these financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements (pages II-60 through II-78)
referred to above present fairly, in all material respects, the financial
position of Alabama Power Company as of December 31, 1994 and 1993, and the
results of its operations and its cash flows for the periods stated, in
conformity with generally accepted accounting principles.
As explained in Notes 2 and 8 to the financial statements, effective January
1, 1993, the company changed its methods of accounting for postretirement
benefits other than pensions and for income taxes.
/s/ Arthur Andersen LLP
Birmingham, Alabama
February 15, 1995
II-52
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND FINANCIAL
CONDITION
Alabama Power Company 1994 Annual Report
RESULTS OF OPERATIONS
Earnings
Alabama Power Company's 1994 net income after dividends on preferred stock was
$356 million, representing a $10 million (2.8 percent) increase from the prior
year. This improvement can be attributed to lower operating expenses which
decreased 3.0 percent from the previous year as a result of the company's
strategy to remain a low-cost producer of electricity. This improvement was
partially offset by reduced capacity sales to nonterritorial utilities. Net
income was also impacted by the mild weather in 1994.
In 1993, earnings were $346 million, representing a 2.3 percent increase
over the prior year. This increase was due to higher retail energy sales and
lower financing costs. These positive factors were partially offset by higher
operating costs and a scheduled reduction in capacity sales to non-affiliated
utilities.
The return on average common equity for 1994 was 13.86 percent compared to
13.94 percent in 1993, and 14.02 percent in 1992.
Revenues
The following table summarizes the principal factors that affected operating
revenues for the past three years:
===============================================================
Increase (Decrease)
From Prior Year
-------------------------------------
1994 1993 1992
-------------------------------------
(in thousands)
Retail --
Change in
base rates $ -- $ -- $ 36,348
Unbilled
adjustment 28,000 -- --
Sales growth 45,304 24,960 36,237
Weather (39,964) 58,536 (42,709)
Fuel cost recovery
and other (84,344) 96,437 (31,318)
----------------------------------------------------------------
Total retail (51,004) 179,933 (1,442)
----------------------------------------------------------------
Sales for Resale --
Non-affiliates (9,345) (43,686) (121)
Affiliates (17,213) 23,887 (1,287)
----------------------------------------------------------------
Total sales for resale (26,558) (19,799) (1,408)
Other operating
revenues 5,095 635 2,896
----------------------------------------------------------------
Total operating
revenues $(72,467) $160,769 $ 46
================================================================
Percent change (2.4)% 5.6% -- %
================================================================
Retail revenues of $2.4 billion in 1994 decreased $51 million (2.1 percent)
from the prior year, compared with an increase of $180 million (8.0 percent) in
1993. The mild weather during the summer of 1994 and lower fuel cost recovery
were the primary reasons for the decrease in retail revenues from 1993. The
extreme weather during 1993 and sales growth contributed to the increase in
retail revenues over 1992. Fuel revenues, which decreased substantially in 1994,
generally represent the direct recovery of fuel expense, including the fuel
component of purchased energy, and therefore have no effect on net income. In
September 1994, the company recorded an additional $28 million (679 million
kilowatt-hours) in estimated unbilled revenues due to a change in the estimating
procedure for unbilled kilowatt-hours (KWHs) and associated revenues. For
additional information concerning unbilled revenues and an offsetting expense,
see Note 3 under "Retail Rate Adjustment Procedures."
II-53
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS (continued)
Alabama Power Company 1994 Annual Report
Revenues from sales to utilities outside the service area under
long-term contracts consist of capacity and energy components. Capacity revenues
reflect the recovery of fixed costs and a return on investment under the
contracts. Energy is generally sold at variable cost. These capacity and energy
components, as well as the components of the sales to affiliated companies,
were:
============================================================
1994 1993 1992
------------------------------------------
(in thousands)
Capacity $165,063 $187,062 $216,113
Energy 222,579 233,253 239,622
------------------------------------------------------------
Total $387,642 $420,315 $455,735
============================================================
Capacity revenues from non-affiliates remained relatively constant in 1994
but decreased in 1993 due to a scheduled reduction in capacity dedicated to unit
power sales customers for the first five months of the year. Capacity revenues
from sales to affiliates decreased $22 million in 1994. Sales to affiliated
companies within the Southern electric system will vary from year to year
depending on demand, the availability, and the variable production cost of
generating resources at each company.
KWH sales for 1994 and the percent change by year were as follows:
===============================================================
KWH Percent Change
-----------------------------------------
1994 1994 1993 1992
-----------------------------------------
(millions)
Residential 12,955 (1.7)% 9.2% (2.1)%
Commercial 9,495 3.4 6.4 1.2
Industrial 19,181 3.2 1.8 4.3
Unbilled
adjustment 679 - - -
Other 184 1.1 2.8 1.2
---------
Total retail 42,494 3.3 5.1 1.6
Sales for resale -
Non-affiliates 6,775 (5.2) (14.8) (4.9)
Affiliates 8,433 4.3 12.1 (7.4)
---------
Total 57,702 2.4% 3.0% (0.7)%
===============================================================
Expenses
Total operating expenses of $2.3 billion for 1994 were down 3.0 percent compared
with the prior year. The decrease was mainly due to less coal-fired generation
and a lower average cost of fuel consumed. Coal-fired generation decreased
because it was displaced with lower cost nuclear and hydro generation.
Total operating expenses for 1993 were up 7.0 percent over those recorded in
1992. The increase was mainly attributable to higher production expenses of $95
million to meet increased energy demands.
Fuel costs are the single largest expense for the company. The mix of fuel
sources for generation of electricity is determined primarily by system load,
the unit cost of fuel consumed, and the availability of hydro and nuclear
generating units. Fuel expense decreased in 1994 by $75 million (8.6 percent)
from the previous year. This decrease is attributable to the increase in
availability of nuclear and hydro generation and a decrease in the cost of fuel.
Fuel expense increased in 1993 as a result of increased energy demands during
the summer. Fuel cost per KWH generated was 1.56 cents in 1994, 1.73 cents in
1993 and 1.64 cents in 1992.
Purchased power consists primarily of purchases from the affiliates of the
Southern electric system. Purchased power transactions among the company and its
affiliates will vary from period to period depending on demand, the
availability, and the variable production cost of generating resources at each
company. Purchased capacity from affiliates increased $5 million in 1994. KWH
purchases from affiliates decreased 27 percent from the prior year.
Other operation expenses decreased 2.5 percent in 1994 following a 5.6
percent increase in 1993. The increase in 1993 was primarily the result of
environmental cleanup costs, net expenses of a March snowstorm, and the one-time
cost of a transportation fleet reduction program, which together totaled $16.1
million.
Maintenance expenses increased 3.8 percent in 1994 over the previous year
due to the establishment of a Natural Disaster Reserve. For additional
information concerning the Natural Disaster Reserve, see Note 3 under "Retail
Rate Adjustment Procedures."
Depreciation and amortization expense remained virtually unchanged from the
previous year. This is the result of lower average depreciation rates effective
January 1994 offset by growth in depreciable plant in service. Depreciation and
II-54
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS (continued)
Alabama Power Company 1994 Annual Report
amortization expense increased 3.4 percent in 1993 due principally to growth in
depreciable plant in service.
Income taxes increased in 1994 by $17 million (8.2 percent). This is due to
higher taxable income. The increase in income tax expense of 2.6 percent for
1993 was primarily attributable to a one percent increase in the corporate
federal income tax rate effective January 1, 1993.
The company contributed $13.5 million to the Alabama Power Foundation, Inc.
in 1994, which represents an increase of $10.5 million from the previous year.
The Foundation makes distributions to qualified entities which are organized
exclusively for charitable, educational, literary, and scientific purposes.
Total net interest charges and preferred stock dividends continued to
decline from amounts reported in the previous year. The declines reflect the
significant refinancing activities in 1993 and 1992. In 1994, these costs were
$236 million -- down $23 million (9.0 percent). These costs decreased $7.5
million (2.8 percent) in 1993.
Effects of Inflation
The company is subject to rate regulation and income tax laws that are based on
the recovery of historical costs. Therefore, inflation creates an economic loss
because the company is recovering its costs of investments in dollars that have
less purchasing power. While the inflation rate has been relatively low in
recent years, it continues to have an adverse effect on the company because of
the large investment in long-lived utility plant. Conventional accounting for
historical cost does not recognize this economic loss nor the partially
offsetting gain that arises through financing facilities with fixed-money
obligations, such as long-term debt and preferred stock. Any recognition of
inflation by regulatory authorities is reflected in the rate of return allowed.
Future Earnings Potential
The results of operations for the past three years 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.
Future earnings in the near term will 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 the company's service area. However, the Energy
Policy Act of 1992 (Energy Act) is beginning to have a dramatic effect on the
future of the electric utility industry. The Energy Act promotes energy
efficiency, alternative fuel use, and increased competition for electric
utilities. The company is posturing the business to meet the challenge of this
major change in the traditional practice of selling electricity. The Energy Act
allows independent power producers (IPPs) to access a utility's transmission
network in order to sell electricity to other utilities. This may enhance the
incentive for IPPs to build cogeneration plants for a utility's large industrial
and commercial customers and sell excess energy generation to other utilities.
Although the Energy Act does not require transmission access to retail
customers, retail wheeling initiatives are rapidly evolving and becoming very
prominent issues in several states. In order to address these initiatives,
numerous questions must be resolved with the most complex ones relating to
transmission pricing, recovery of stranded investments, and developing rate
structures for different market segments that reflect the economic costs of
serving that market. As the initiatives become a reality, the structure of the
utility industry could radically change. Therefore, unless the company remains a
low-cost producer and provides quality service, the company's retail energy
sales growth could be limited, and this could significantly erode earnings.
Conversely, being the low-cost producer could provide significant opportunities
to increase market share and profitability.
The scheduled addition of five combustion turbine generating units in 1995
and four more in 1996 will increase related operation and maintenance expenses
and depreciation expenses. These additions are to ensure reliable service to its
customers during critical peak times.
Rates to retail customers served by the company are regulated by the Alabama
Public Service Commission (APSC). Rates for the company can be adjusted
II-55
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS (continued)
Alabama Power Company 1994 Annual Report
periodically within certain limitations based on earned retail rate of return
compared with an allowed return. See Note 3 to the financial statements for
information about other regulatory matters.
The company is subject to the provisions of Financial Accounting Standards
Board (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, the company would be required to write off related
regulatory assets and liabilities. See Note 1 to the financial statements under
"Regulatory Assets and Liabilities" for additional information.
The staff of the Securities and Exchange Commission has questioned certain
of the current accounting practices of the electric utility industry --
including the company -- regarding the recognition, measurement, and
classification of decommissioning costs for nuclear generating facilities in the
financial statements. In response to these questions, the FASB is currently
reviewing the accounting for nuclear decommissioning. If current electric
utility industry accounting practices for decommissioning are changed: (1)
Annual provisions for decommissioning could increase. (2) The estimated cost for
decommissioning may be required to be recorded as a liability in the Balance
Sheets. In management's opinion -- should these changes be required -- the
changes would not have a significant adverse effect on results of operations
because of the company's current and expected future ability to recover
decommissioning costs through rates. See Note 1 to the financial statements
under "Depreciation and Nuclear Decommissioning" for additional information.
The Federal Energy Regulatory Commission (FERC) regulates wholesale rate
schedules and power sales contracts that the company 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 under
"FERC Reviews Equity Returns" for additional information.
Compliance costs related to the Clean Air Act Amendments of 1990 (Clean Air
Act) could affect earnings if such costs are not fully recovered. The Clean Air
Act and other important environmental items are discussed later under
"Environmental Matters."
FINANCIAL CONDITION
Overview
The company's financial condition remained stable in 1994. This stability is the
continuation over recent years of growth in energy sales and cost control
measures combined with a significant lowering of the cost of capital, achieved
through the refinancing and/or redemption of higher-cost long-term debt and
preferred stock.
The company had gross property additions of $537 million in 1994. The
majority of funds needed for gross property additions since 1991 have been
provided from operating activities, principally from earnings and non-cash
charges to income such as depreciation and deferred income taxes. The Statements
of Cash Flows provide additional details.
Capital Structure
The company's ratio of common equity to total capitalization was 47.4 percent in
1994 and 1993, compared to 47.6 percent in 1992.
In 1994, the company issued $150 million of first mortgage bonds and through
public authorities, $180 million of pollution control revenue refunding bonds.
Composite financing rates as of year-end for 1992 through 1994 were as follows:
================================================================
1994 1993 1992
------------------------------
Composite interest rate on
long-term debt 7.39% 7.35% 8.00%
Composite dividend rate on
preferred stock 6.23% 5.80% 6.76%
================================================================
The company's current securities ratings are as follows:
==============================================================
Duff & Standard
Phelps Moody's & Poor's
---------------------------------
First Mortgage Bonds A+ A1 A
Preferred Stock A- a2 A-
==============================================================
II-56
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS (continued)
Alabama Power Company 1994 Annual Report
Capital Requirements
Capital expenditures are estimated to be $604 million for 1995, $500 million for
1996, and $502 million for 1997. The total is $1.6 billion for the three years.
Actual capital costs may vary from this estimate because of factors such as
changes in environmental regulations; changes in the existing nuclear plant to
meet new regulations; revised load projections; the cost and efficiency of
construction labor, equipment, and materials; and the cost of capital. In
addition, there can be no assurance that costs related to capital expenditures
will be fully recovered.
The company does not have any baseload generating plants under construction,
and current energy demand forecasts do not require any additional baseload
generating units until well into the future. However, the construction of
combustion turbine peaking units of approximately 720 megawatts of capacity is
planned by 1996 to meet increased peak-hour demands. In addition, significant
construction of transmission and distribution facilities and upgrading of
generating plants will continue.
Other Capital Requirements
In addition to the funds needed for the capital budget, approximately $60
million will be required by the end of 1997 for maturities of first mortgage
bonds. Also, the company will continue to retire higher-cost debt and preferred
stock and replace these obligations with lower-cost capital, as market
conditions permit.
Environmental Matters
In November 1990, the Clean Air Act was signed into law. Title IV of the Clean
Air Act -- the acid rain compliance provision of the law -- will have a
significant impact on the Southern electric system. Specific reductions in
sulfur dioxide and nitrogen oxide emissions from fossil-fired generating plants
will be required in two phases. Phase I compliance began in 1995 and affected
eight generating plants -- some 10,000 megawatts of capacity or 35 percent of
total capacity -- in the Southern electric system. Phase II compliance is
required in 2000, and all fossil-fired generating plants in the Southern
electric system will be affected.
In 1995, the Environmental Protection Agency (EPA) began issuing annual
sulfur dioxide emission allowances through the allowance trading program. An
emission allowance is the authority to emit one ton of sulfur dioxide during a
calendar year. The method for issuing allowances is based on the fossil fuel
consumed from 1985 through 1987 for each affected generating unit. Emission
allowances are transferable and can be bought, sold, or banked and used in the
future.
The sulfur dioxide emission allowance program is expected to minimize the
cost of compliance. The Southern Company's sulfur dioxide compliance strategy is
designed to use allowances as a compliance option.
The Southern Company expects to achieve Phase I sulfur dioxide compliance at
the eight affected plants by switching to low-sulfur coal, which has required
some equipment upgrades. This compliance strategy is expected to result in
unused emission allowances being banked for later use. Additional construction
expenditures were required to install equipment for the control of nitrogen
oxide emissions at these eight plants. Also, continuous emissions monitoring
equipment will be installed on all fossil-fired units. Construction expenditures
for Phase I compliance are estimated to total approximately $300 million through
1995 for The Southern Company, of which the company's portion is approximately
$30 million.
For Phase II sulfur dioxide compliance, The Southern Company could use
emission allowances banked during Phase I, increase fuel switching, install flue
gas desulfurization equipment at selected plants, and/or purchase more
allowances, depending on the price and availability of allowances. Also, in
Phase II, equipment to control nitrogen oxide emissions will be installed on
additional system fossil-fired plants as required to meet anticipated Phase II
limits. Therefore, during the period 1996 to 2000, compliance could require
total estimated construction expenditures of $150 million for The Southern
Company, of which the company's portion is approximately $80 million. However,
the full impact of Phase II compliance cannot now be determined with certainty,
pending the continuing development of a market for emission allowances, the
completion of EPA regulations, and the possibility of new emission reduction
technologies.
II-57
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS (continued)
Alabama Power Company 1994 Annual Report
An average increase of up to 2 percent in annual revenue requirements from
customers could be necessary to fully recover the company's cost of compliance
for both Phase I and Phase II of Title IV of the Clean Air Act. Compliance costs
include construction expenditures, increased costs for switching to low-sulfur
coal, and costs related to emission allowances.
Title III of the Clean Air Act requires a multi-year EPA study of power plant
emissions of hazardous air pollutants. The EPA is scheduled to submit a report
to Congress on the results of this study by November 1995. The report will
include a decision on whether additional regulatory control of these substances
is warranted. Compliance with any new control standards could result in
significant additional costs. The impact of new standards -- if any -- will
depend on the development and implementation of applicable regulations.
A significant portion of costs related to the acid rain provision of the
Clean Air Act is expected to be recovered through existing ratemaking
provisions. However, there can be no assurance that all Clean Air Act costs will
be recovered.
The EPA continues to evaluate the need for a new short-term ambient air
quality standard for sulfur dioxide. Preliminary results from an EPA study on
the impact of a new standard indicate that a number of plants could be required
to install sulfur dioxide controls. These controls would be in addition to the
controls already required to meet the acid rain provision of the Clean Air Act.
The EPA issued proposed rules in November 1994 and is required to take final
action on this issue in 1996. The impact of any new standard will depend on the
level chosen for the standard and cannot be determined at this time.
In addition, the EPA is evaluating the need to revise the ambient air quality
standards for particulate matter, nitrogen oxides, and ozone. The impact of any
new standard will depend on the level chosen for the standard and cannot be
determined at this time.
In 1995, the EPA may issue revised rules on air quality control regulations
related to stack height requirements of the Clean Air Act. The full impact of
the final rules cannot be determined at this time, pending their development and
implementation.
In 1993, the EPA issued a ruling confirming the non-hazardous status of coal
ash. However, the EPA has until 1998 to classify co-managed utility wastes --
coal ash and other utility wastes -- as either non-hazardous or hazardous. If
the EPA classifies the co-managed wastes as hazardous, then substantial
additional costs for the management of such wastes may be required. The full
impact of any change in the regulatory status will depend on the subsequent
development of co-managed waste requirements.
The company must comply with other environmental laws and regulations that
cover the handling and disposal of hazardous waste. Under these various laws and
regulations, the company could incur costs to clean up properties currently or
previously owned. The company conducts studies to determine the extent of any
required cleanup costs and has recognized in the financial statements costs to
clean up known sites.
Several major pieces of environmental legislation are being considered for
reauthorization or amendment by Congress. These include: the Clean Water Act;
the Comprehensive Environmental Response, Compensation, and Liability Act; the
Resource Conservation and Recovery Act; and the Endangered Species Act. Changes
to these laws could affect many areas of The Southern Company's operations. The
full impact of these requirements cannot be determined at this time, pending the
development and implementation of applicable regulations.
Compliance with possible additional legislation related to global climate
change, electromagnetic fields, and other environmental and health concerns
could significantly affect the Southern electric system. The impact of new
legislation -- if any -- will depend on the subsequent development and
implementation of applicable regulations. In addition, the potential exists for
liability as the result of lawsuits alleging damages caused by electromagnetic
fields.
Sources of Capital
It is anticipated that the funds required will be derived from sources in form
and quantity similar to those used in the past. To issue additional first
mortgage bonds and preferred stock, the company must comply with certain
earnings coverage requirements designated in its mortgage indenture and
II-58
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS (continued)
Alabama Power Company 1994 Annual Report
corporate charter. The company's coverages are at a level that would permit any
necessary amount of security sales at current interest and dividend rates.
As required by the Nuclear Regulatory Commission and as ordered by the APSC,
the company has established external trust funds for nuclear decommissioning
costs. In 1994, the company also established an external trust fund for
postretirement benefits as ordered by the APSC. The cumulative effect of funding
these items over a long period will diminish internally funded capital and may
require capital from other sources. For additional information concerning
nuclear decommissioning costs, see Note 1 to the financial statements under
"Depreciation and Nuclear Decommissioning."
II-59
<PAGE>
<TABLE>
<CAPTION>
STATEMENTS OF INCOME
For the Years Ended December 31, 1994, 1993, and 1992
Alabama Power Company 1994 Annual Report
====================================================================================================
1994 1993 1992
----------------------------------------------------------------------------------------------------
(in thousands)
<S> <C> <C> <C>
Operating Revenues (Notes 1, 3 and 7):
Revenues $2,770,380 $2,825,634 $2,688,752
Revenues from affiliates 164,762 181,975 158,088
----------------------------------------------------------------------------------------------------
Total operating revenues 2,935,142 3,007,609 2,846,840
----------------------------------------------------------------------------------------------------
Operating Expenses:
Operation --
Fuel 801,948 877,099 794,438
Purchased power from non-affiliates 15,158 15,230 14,242
Purchased power from affiliates 100,888 120,330 107,230
Other 458,917 470,815 445,836
Maintenance 262,102 252,506 237,071
Depreciation and amortization 292,420 290,310 280,881
Taxes other than income taxes 183,425 178,997 172,095
Federal and state income taxes (Note 8) 224,280 207,210 201,925
----------------------------------------------------------------------------------------------------
Total operating expenses 2,339,138 2,412,497 2,253,718
----------------------------------------------------------------------------------------------------
Operating Income 596,004 595,112 593,122
Other Income (Expense):
Allowance for equity funds used during construction (Note 1) 3,239 3,260 2,071
Income from subsidiary (Note 6) 3,588 4,127 4,635
Charitable foundation (13,500) (3,000) (6,887)
Interest income 16,944 20,775 14,804
Other, net (30,569) (24,420) (11,019)
Income taxes applicable to other income 16,834 10,239 8,947
----------------------------------------------------------------------------------------------------
Income Before Interest Charges 592,540 606,093 605,673
----------------------------------------------------------------------------------------------------
Interest Charges:
Interest on long-term debt 178,045 184,861 206,871
Allowance for debt funds used during construction (Note 1) (3,548) (2,992) (2,416)
Interest on interim obligations 5,939 3,760 3,704
Amortization of debt discount, premium, and expense, net 9,623 8,937 4,392
Other interest charges 19,908 35,474 19,381
----------------------------------------------------------------------------------------------------
Net interest charges 209,967 230,040 231,932
----------------------------------------------------------------------------------------------------
Net Income 382,573 376,053 373,741
Dividends on Preferred Stock 26,235 29,559 35,186
----------------------------------------------------------------------------------------------------
Net Income After Dividends on Preferred Stock $ 356,338 $ 346,494 $ 338,555
====================================================================================================
The accompanying notes are an integral part of these statements.
</TABLE>
II-60
<PAGE>
<TABLE>
<CAPTION>
STATEMENTS OF CASH FLOWS
For the Years Ended December 31, 1994, 1993, and 1992
Alabama Power Company 1994 Annual Report
=============================================================================================
1994 1993 1992
---------------------------------------------------------------------------------------------
(in thousands)
<S> <C> <C> <C>
Operating Activities:
Net income $ 382,573 $ 376,053 $ 373,741
Adjustments to reconcile net income to net
cash provided by operating activities --
Depreciation and amortization 359,791 356,499 338,421
Deferred income taxes and investment tax credits (32,613) 32,994 23,514
Allowance for equity funds used during construction (3,239) (3,260) (2,071)
Other, net 28,656 36,493 (3,298)
Changes in certain current assets and liabilities --
Receivables, net 19,390 19,215 (11,010)
Inventories (38,946) 51,630 12,704
Payables (21,240) 31,544 2,158
Taxes accrued 6,856 (9,959) (21,120)
Energy cost recovery, retail 16,907 (56,128) 45,509
Other (14,235) (21,110) 10,629
---------------------------------------------------------------------------------------------
Net cash provided from operating activities 703,900 813,971 769,177
---------------------------------------------------------------------------------------------
Investing Activities:
Gross property additions (536,785) (435,843) (367,463)
Sale of property - - 43,556
Other (26,632) (741) (13,379)
---------------------------------------------------------------------------------------------
Net cash used for investing activities (563,417) (436,584) (337,286)
---------------------------------------------------------------------------------------------
Financing Activities:
Proceeds:
Preferred stock - 158,000 150,000
First mortgage bonds 150,000 860,000 745,000
Other long-term debt 208,720 180,314 48,382
Retirements:
Preferred stock - (207,000) (145,000)
First mortgage bonds (20,387) (699,788) (931,797)
Other long-term debt (305,380) (181,329) (54,223)
Interim obligations, net 139,882 (156,917) 120,917
Payment of preferred stock dividends (25,431) (32,099) (35,704)
Payment of common stock dividends (268,000) (252,900) (273,300)
Miscellaneous (8,444) (56,064) (53,697)
---------------------------------------------------------------------------------------------
Net cash used for financing activities (129,040) (387,783) (429,422)
---------------------------------------------------------------------------------------------
Net Change in Cash 11,443 (10,396) 2,469
Cash at Beginning of Year 3,233 13,629 11,160
---------------------------------------------------------------------------------------------
Cash at End of Year $ 14,676 $ 3,233 $ 13,629
=============================================================================================
Supplemental Cash Flow Information:
Cash paid during the year for --
Interest (net of amount capitalized) $ 183,445 $ 176,805 $ 219,263
Income taxes 231,831 175,591 197,693
---------------------------------------------------------------------------------------------
( ) Denotes use of cash.
The accompanying notes are an integral part of these statements.
</TABLE>
II-61
<PAGE>
<TABLE>
<CAPTION>
BALANCE SHEETS
At December 31, 1994 and 1993
Alabama Power Company 1994 Annual Report
===============================================================================================
ASSETS 1994 1993
-----------------------------------------------------------------------------------------------
(in thousands)
<S> <C> <C>
Utility Plant:
Plant in service, at original cost (Note 1) $10,052,772 $9,757,141
Less accumulated provision for depreciation 3,598,604 3,384,156
-----------------------------------------------------------------------------------------------
6,454,168 6,372,985
Nuclear fuel, at amortized cost 101,630 93,551
Construction work in progress 317,779 225,786
-----------------------------------------------------------------------------------------------
Total 6,873,577 6,692,322
-----------------------------------------------------------------------------------------------
Other Property and Investments:
Southern Electric Generating Company, at equity (Note 6) 26,985 29,201
Nuclear decommissioning trusts (Note 1) 71,014 49,550
Miscellaneous 16,970 20,434
-----------------------------------------------------------------------------------------------
Total 114,969 99,185
-----------------------------------------------------------------------------------------------
Current Assets:
Cash 14,676 3,233
Receivables-
Customer accounts receivable 308,561 312,090
Other accounts and notes receivable 22,547 48,808
Affiliated companies 29,303 40,216
Accumulated provision for uncollectible accounts (2,297) (2,632)
Refundable income taxes 16,011 11,940
Fossil fuel stock, at average cost 119,555 88,481
Materials and supplies, at average cost 184,600 176,728
Prepayments-
Income taxes 19,196 18,980
Other 84,354 60,227
Vacation pay deferred 20,442 22,680
-----------------------------------------------------------------------------------------------
Total 816,948 780,751
-----------------------------------------------------------------------------------------------
Deferred Charges:
Deferred charges related to income taxes (Note 8) 451,886 469,010
Debt expense, being amortized 7,370 7,064
Premium on reacquired debt, being amortized 101,851 102,634
Uranium enrichment decontamination and decommissioning fund (Note 1) 42,996 45,554
Miscellaneous 49,620 52,163
-----------------------------------------------------------------------------------------------
Total 653,723 676,425
-----------------------------------------------------------------------------------------------
Total Assets $8,459,217 $8,248,683
===============================================================================================
The accompanying notes are an integral part of these statements.
</TABLE>
II-62
<PAGE>
<TABLE>
<CAPTION>
BALANCE SHEETS
At December 31, 1994 and 1993
Alabama Power Company 1994 Annual Report
===============================================================================================
CAPITALIZATION AND LIABILITIES 1994 1993
-----------------------------------------------------------------------------------------------
(in thousands)
<S> <C> <C>
Capitalization (See accompanying statements):
Common stock equity $2,614,405 $2,526,348
Preferred stock 440,400 440,400
Long-term debt 2,455,013 2,362,852
-----------------------------------------------------------------------------------------------
Total 5,509,818 5,329,600
-----------------------------------------------------------------------------------------------
Current Liabilities:
Long-term debt due within one year (Note 10) 796 58,998
Notes payable to banks - 40,000
Commercial paper 179,882 -
Accounts payable-
Affiliated companies 60,334 62,507
Other 258,657 272,491
Customer deposits 30,245 31,198
Taxes accrued-
Federal and state income 6,848 25,730
Other 15,589 14,414
Interest accrued 52,516 52,809
Vacation pay accrued 20,442 22,680
Miscellaneous 57,047 50,426
-----------------------------------------------------------------------------------------------
Total 682,356 631,253
-----------------------------------------------------------------------------------------------
Deferred Credits and Other Liabilities:
Accumulated deferred income taxes (Note 8) 1,181,342 1,165,127
Accumulated deferred investment tax credits 317,018 329,909
Prepaid capacity revenues, net (Note 7) 138,421 143,762
Uranium enrichment decontamination and decommissioning fund (Note 1) 39,413 39,644
Deferred credits related to income taxes (Note 8) 405,256 440,945
Natural disaster reserve 28,750 -
Miscellaneous 156,843 168,443
-----------------------------------------------------------------------------------------------
Total 2,267,043 2,287,830
-----------------------------------------------------------------------------------------------
Commitments and Contingent Matters (Notes 1, 3, 4, 5, 6, 7, and 11)
Total Capitalization and Liabilities $8,459,217 $8,248,683
===============================================================================================
The accompanying notes are an integral part of these statements.
</TABLE>
II-63
<PAGE>
<TABLE>
<CAPTION>
STATEMENTS OF CAPITALIZATION
At December 31, 1994 and 1993
Alabama Power Company 1994 Annual Report
=================================================================================================
1994 1993 1994 1993
-------------------------------------------------------------------------------------------------
(in thousands) (percent of total)
<S> <C> <C> <C> <C>
Common Stock Equity:
Common stock, par value $40 per share --
Authorized -- 6,000,000 shares
Outstanding -- 5,608,955 shares in
1994 and 1993 $ 224,358 $ 224,358
Paid-in capital 1,304,645 1,304,645
Premium on preferred stock 146 146
Retained earnings (Note 12) 1,085,256 997,199
-------------------------------------------------------------------------------------------------
Total common stock equity 2,614,405 2,526,348 47.4 % 47.4 %
-------------------------------------------------------------------------------------------------
Cumulative Preferred Stock:
$1 par value --
Authorized -- 27,500,000 shares
Outstanding -- 12,020,200 shares
$25 stated capital --
6.40% 50,000 50,000
6.80% 38,000 38,000
7.60% 150,000 150,000
Adjustable rate
6.26% - at January 1, 1995 50,000 50,000
$100 stated capital --
Auction rate - at January 1, 1995: 4.59% 50,000 50,000
$100,000 stated capital --
Auction rate - at January 1, 1995: 4.64% 20,000 20,000
$100 par value --
Authorized -- 3,850,000 shares
Outstanding -- 824,000 shares
4.20% to 4.52% 41,400 41,400
4.60% to 4.92% 29,000 29,000
5.96% to 6.88% 12,000 12,000
-------------------------------------------------------------------------------------------------
Total (annual dividend requirement -- $27,421,000) 440,400 440,400 8.0 8.3
-------------------------------------------------------------------------------------------------
Long-Term Debt:
First mortgage bonds --
Maturity Interest Rates
-------- --------------
March 1, 1996 4 1/2% 60,000 60,000
February 1, 1998 5 1/2% 50,000 50,000
August 1, 1999 6 3/8% 170,000 170,000
2000 through 2003 6% to 7% 500,000 500,000
2007 7 1/4% 175,000 175,000
2017 10 5/8% - 15,243
2021 through 2024 7.30% to 9 1/4% 1,044,856 900,000
-------------------------------------------------------------------------------------------------
Total first mortgage bonds 1,999,856 1,870,243
Pollution control obligations 476,140 476,140
Other long-term debt 9,754 106,414
Unamortized debt premium (discount), net (29,941) (30,947)
-------------------------------------------------------------------------------------------------
Total long-term debt (annual interest
requirement -- $183,592,000) 2,455,809 2,421,850
Less amount due within one year (Note 10) 796 58,998
-------------------------------------------------------------------------------------------------
Long-term debt excluding amount due within one year 2,455,013 2,362,852 44.6 44.3
-------------------------------------------------------------------------------------------------
Total Capitalization $5,509,818 $5,329,600 100.0 % 100.0 %
=================================================================================================
The accompanying notes are an integral part of these statements.
</TABLE>
II-64
<PAGE>
<TABLE>
<CAPTION>
STATEMENTS OF RETAINED EARNINGS
For the Years Ended December 31, 1994, 1993, and 1992
Alabama Power Company 1994 Annual Report
=====================================================================================
1994 1993 1992
-------------------------------------------------------------------------------------
(in thousands)
<S> <C> <C> <C>
Balance at Beginning of Year $ 997,199 $ 914,148 $ 857,734
Net income after dividends on preferred stock 356,338 346,494 338,555
Cash dividends on common stock (268,000) (252,900) (273,300)
Preferred stock transactions, net (118) (10,587) (8,732)
Other adjustments to retained earnings (163) 44 (109)
-------------------------------------------------------------------------------------
Balance at End of Year (Note 12) $1,085,256 $ 997,199 $ 914,148
=====================================================================================
The accompanying notes are an integral part of these statements.
</TABLE>
II-65
<PAGE>
NOTES TO FINANCIAL STATEMENTS
Alabama Power Company 1994 Annual Report
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
General
Alabama Power Company (the company) is a wholly owned subsidiary of The Southern
Company, which is the parent company of five operating companies, a system
service company, Southern Communications Services (Southern Communications),
Southern Electric International (Southern Electric), Southern Nuclear Operating
Company (Southern Nuclear), and The Southern Development and Investment Group
(SDIG). The operating companies (Alabama Power Company, Georgia Power Company,
Gulf Power Company, Mississippi Power Company, and Savannah Electric and Power
Company) provide electric service in four Southeastern states. Contracts among
the companies -- dealing with jointly-owned generating facilities,
interconnecting transmission lines, and the exchange of electric power -- are
regulated by the Federal Energy Regulatory Commission (FERC) or the Securities
and Exchange Commission (SEC). The system service company provides, at cost,
specialized services upon request to The Southern Company and to the subsidiary
companies. Southern Communications, beginning in mid-1995, will provide digital
wireless communications services -- over the 800-megahertz frequency band -- to
The Southern Company's subsidiaries and also will market these services to the
public within the Southeast. Southern Electric designs, builds, owns and
operates power production facilities and provides a broad range of technical
services to industrial companies and utilities in the United States and a number
of international markets. Southern Nuclear provides services to The Southern
Company's nuclear power plants. SDIG develops new business opportunities related
to energy products and services.
The Southern Company is registered as a holding company under the Public
Utility Holding Company Act of 1935 (PUHCA). Both The Southern Company and its
subsidiaries are subject to the regulatory provisions of the PUHCA. The company
is also regulated by the FERC and the Alabama Public Service Commission (APSC).
The company follows generally accepted accounting principles and complies with
the accounting policies and practices prescribed by the respective regulatory
commissions.
Certain prior years' data presented in the financial statements have been
reclassified to conform with current year presentation.
Regulatory Assets and Liabilities
The company is subject to the provisions of Financial Accounting Standards Board
(FASB) Statement No. 71, Accounting for the Effects of Certain Types of
Regulation. Regulatory assets represent probable future revenues to the company
associated with certain costs that are expected to be recovered from customers
through the ratemaking process. Regulatory liabilities represent probable future
reductions in revenues associated with amounts that are to be credited to
customers through the ratemaking process. Regulatory assets and (liabilities)
reflected in the Balance Sheets at December 31 relate to:
================================================================
1994 1993
--------------------
(in thousands)
Deferred income taxes $451,886 $469,010
Premium on reacquired debt 101,620 102,216
Department of Energy assessments 42,996 45,554
Vacation pay 20,442 22,680
Work force reduction costs 3,664 5,468
Deferred income tax credits (405,256) (440,945)
Natural disaster reserve (28,750) -
Other, net 45,956 26,824
----------------------------------------------------------------
Total $232,558 $230,807
================================================================
In the event that a portion of the company's operations are no longer
subject to the provisions of Statement No. 71, the company would be required to
write off related regulatory assets and liabilities. In addition, the company
would be required to determine any impairment to other assets, including plant,
and write down the assets to their fair value.
Revenues and Fuel Costs
The company accrues revenues for services rendered but unbilled at the end of
each fiscal period. For additional information concerning unbilled revenues, see
Note 3 under "Retail Rate Adjustment Procedures."
The company has a diversified base of customers. No single customer or
industry comprises 10 percent or more of revenues. In 1994, uncollectible
II-66
<PAGE>
NOTES (continued)
Alabama Power Company 1994 Annual Report
accounts continued to average less than 1 percent of revenues.
Fuel costs are expensed as the fuel is used. The company's electric rates
include provisions to adjust billings for fluctuations in fuel and the energy
component of purchased power costs. Revenues are adjusted for differences
between recoverable fuel costs and amounts actually recovered in current rates.
Fuel expense includes the amortization of the cost of nuclear fuel and a
charge, based on nuclear generation, for the permanent disposal of spent nuclear
fuel. Total charges for nuclear fuel included in fuel expense amounted to $65
million in 1994, $62 million in 1993, and $48 million in 1992. The company has a
contract with the U.S. Department of Energy (DOE) that provides for the
permanent disposal of spent nuclear fuel, which was scheduled to begin in 1998.
However, the actual year this service will begin is uncertain. Sufficient
storage capacity currently is available to permit operation into 2012 and 2014
at Plant Farley units 1 and 2, respectively.
Also, the Energy Policy Act of 1992 required the establishment in 1993 of a
Uranium Enrichment Decontamination and Decommissioning Fund, which is to be
funded in part by a special assessment on utilities with nuclear plants. This
assessment will be paid over a 15- year period, which began in 1993. This fund
will be used by the DOE for the decontamination and decommissioning of its
nuclear fuel enrichment facilities. The law provides that utilities will recover
these payments in the same manner as any other fuel expense. The company
estimates its remaining liability at December 31, 1994, under this law to be
approximately $43 million. This obligation is recognized in the accompanying
Balance Sheets.
Depreciation and Nuclear Decommissioning
Depreciation of the original cost of depreciable utility plant in service is
provided primarily by using composite straight-line rates, which approximated
3.2 percent in 1994 and 3.3 percent in both 1993 and 1992. When property subject
to depreciation is retired or otherwise disposed of in the normal course of
business, its cost -- together with the cost of removal, less salvage -- is
charged to the accumulated provision for depreciation. Minor items of property
included in the original cost of the plant are retired when the related property
unit is retired. Depreciation expense includes an amount for the expected cost
of decommissioning nuclear facilities.
In 1988, the Nuclear Regulatory Commission (NRC) adopted regulations
requiring all licensees operating commercial power reactors to establish a plan
for providing, with reasonable assurance, funds for decommissioning. The company
has established external trust funds to comply with the NRC's regulations.
Amounts previously recorded in internal reserves are being transferred into the
external trust funds over set periods of time as approved by the APSC. Earnings
on the trust fund are considered in determining decommissioning expense. The
NRC's minimum external funding requirements are based on a generic estimate of
the cost to decommission the radioactive portions of a nuclear unit based on the
size and type of reactor. The company has filed plans with the NRC to ensure
that -- over time -- the deposits and earnings of the external trust funds will
provide the minimum funding amounts prescribed by the NRC.
Site study cost is the estimate to decommission the facility as of the
site study year, and ultimate cost is the estimate to decommission the facility
as of retirement date. The estimated cost of decommissioning -- both site study
costs and ultimate costs -- at December 31, 1994, for Plant Farley were as
follows:
==============================================================
Plant
Farley
-------------
Site study basis (year) 1993
Decommissioning periods:
Beginning year 2017
Completion year 2029
--------------------------------------------------------------
(in millions)
Site study costs:
Radiated structures $409
Non-radiated structures 75
Other 94
--------------------------------------------------------------
Total $578
==============================================================
(in millions)
Ultimate costs:
Radiated structures $1,258
Non-radiated structures 231
Other 289
--------------------------------------------------------------
Total $1,778
==============================================================
II-67
<PAGE>
NOTES (continued)
Alabama Power Company 1994 Annual Report
(in millions)
Amount expensed in 1994 $18
--------------------------------------------------------------
Accumulated provisions:
Balance in external trust funds $ 71
Balance in internal reserves 51
--------------------------------------------------------------
Total $122
==============================================================
Assumed in ultimate costs:
Inflation rate 4.5%
Trust earning rate 7.0
--------------------------------------------------------------
Annual provisions for nuclear decommissioning are based on an annuity --
sinking fund -- method as approved by the APSC. The decommissioning costs
approved for ratemaking are $578 million for Plant Farley.
The decommissioning cost estimates are based on prompt dismantlement and
removal of the plant from service. The actual decommissioning costs may vary
from the above estimates because of changes in the assumed date of
decommissioning, changes in regulatory requirements, changes in technology, and
changes in costs of labor, materials, and equipment.
Income Taxes
The company provides deferred income taxes for all significant income tax
temporary differences. Investment tax credits utilized are deferred and
amortized to income over the average lives of the related property.
Effective January 1, 1993, the company adopted FASB Statement No. 109,
Accounting for Income Taxes. Statement No. 109 required, among other things,
conversion to the liability method of accounting for accumulated deferred income
taxes. See Note 8 for additional information about Statement No. 109.
Allowance For Funds Used During Construction (AFUDC)
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 increases the revenue requirement
over the service life of the plant through a higher rate base and higher
depreciation expense. The composite rate used to determine the amount of
allowance was 7.9 percent in 1994, 7.8 percent in 1993, and 7.9 percent in 1992.
AFUDC, net of income tax, as a percent of net income after dividends on
preferred stock was 1.5 percent in both 1994 and 1993 and 1.1 percent in 1992.
Utility Plant
Utility plant is stated at original cost. Original cost includes: materials;
labor; minor items of property; appropriate administrative and general costs;
payroll-related costs such as taxes, pensions, and other benefits; and the
estimated cost of funds used during construction. The cost of maintenance,
repairs and replacement of minor items of property is charged to maintenance
expense. The cost of replacements of property (exclusive of minor items of
property) is charged to utility plant.
Financial Instruments
In accordance with FASB Statement No. 107, Disclosure About Fair Value of
Financial Instruments, the company's only financial instrument that the carrying
amount did not approximate fair value at December 31 was as follows:
==============================================================
Long-Term Debt
-------------------------
Carrying Fair
Year Amount Value
------------- ----------
(in millions)
1994 $2,446 $2,323
1993 2,315 2,439
==============================================================
The fair value for long-term debt was based on either closing market price
or closing price of comparable instruments.
Materials and Supplies
Generally, materials and supplies include the cost of transmission,
distribution, and generating plant materials. Materials are charged to inventory
when purchased and then expensed or capitalized to plant, as appropriate, when
installed.
Vacation Pay
The company's employees earn their vacation in one year and take it in the
subsequent year. However, for ratemaking purposes, vacation pay is recognized as
II-68
<PAGE>
NOTES (continued)
Alabama Power Company 1994 Annual Report
an allowable expense only when paid. Consistent with this ratemaking treatment,
the company accrues a current liability for earned vacation pay and records a
current regulatory asset representing future recoverability of this cost. The
amount was $20 million and $23 million at December 31, 1994 and 1993,
respectively. In 1995, an estimated 64 percent of the 1994 deferred vacation
cost will be expensed and the balance will be charged to construction and other
accounts.
Natural Disaster Reserve
In September 1994, in response to a request by the company, the APSC issued
an order allowing the company to establish a Natural Disaster Reserve. As of
December 31, 1994, the accumulated provision amounted to $28.8 million.
Regulatory treatment by the APSC allows the company to accrue $250 thousand per
month until the maximum accumulated provision of $32 million is attained. For
additional information concerning the Natural Disaster Reserve, see Note 3 under
"Retail Rate Adjustment Procedures."
2. RETIREMENT BENEFITS
Pension Plan
The company has a defined benefit, trusteed, non-contributory pension plan that
covers substantially all regular employees. Benefits are based on the greater of
amounts resulting from two different formulas: years of service and final
average pay or years of service and a flat-dollar benefit. The company uses the
"entry age normal method with a frozen initial liability" actuarial method for
funding purposes, subject to limitations under federal income tax regulations.
Amounts funded to the pension trusts are primarily invested in equity and
fixed-income securities. FASB Statement No. 87, Employers' Accounting for
Pensions, requires use of the "projected unit credit" actuarial method for
financial reporting purposes.
Postretirement Benefits
The company also provides certain medical care and life insurance benefits for
retired employees. Substantially all employees may become eligible for these
benefits when they retire. Qualified trusts are funded to the extent deductible
under federal income tax regulations. Amounts funded are primarily invested in
debt and equity securities. In December 1993, the APSC issued an accounting
policy statement which requires the company to externally fund net annual
postretirement benefits.
Effective January 1, 1993, the company adopted FASB Statement No. 106,
Employers' Accounting for Postretirement Benefits Other Than Pensions, on a
prospective basis. Statement No. 106 requires that medical care and life
insurance benefits for retired employees be accounted for on an accrual basis
using a specified actuarial method, "benefit/years-of-service." Because the
adoption of Statement No. 106 was reflected in rates, it did not have a material
impact on net income.
Prior to 1993, the company recognized these benefit costs on an accrual
basis using the "aggregate cost" actuarial method, which spreads the expected
cost of such benefits over the remaining periods of employees' service as a
level percentage of payroll costs. The total costs of such benefits recognized
by the company in 1992 were $15.2 million.
Funded Status and Cost of Benefits
Shown in the following tables are actuarial results and assumptions for pension
and postretirement medical and life insurance benefits as computed under the
requirements of Statement Nos. 87 and 106, respectively. The funded status of
the plans at December 31 was as follows:
============================================================
Pension
------------------
1994 1993
------------------
(in millions)
Actuarial present value of
benefit obligations:
Vested benefits $ 522 $ 523
Non-vested benefits 18 20
------------------------------------------------------------
Accumulated benefit obligation 540 543
Additional amounts related to
projected salary increases 174 153
------------------------------------------------------------
Projected benefit obligation 714 696
Less:
Fair value of plan assets 1,059 1,121
Unrecognized net gain (251) (349)
Unrecognized prior service cost 23 25
Unrecognized transition asset (51) (56)
============================================================
Prepaid asset recognized in the
Balance Sheets $ 66 $ 45
============================================================
II-69
<PAGE>
NOTES (continued)
Alabama Power Company 1994 Annual Report
===========================================================
Postretirement
Medical
-------------------
1994 1993
-------------------
(in millions)
Actuarial present value of
benefit obligation:
Retirees and dependents $ 69 $ 67
Employees eligible to retire 22 21
Other employees 90 95
-----------------------------------------------------------
Accumulated benefit obligation 181 183
Less:
Fair value of plan assets 56 39
Unrecognized net loss 6 18
Unrecognized transition
obligation 96 102
-----------------------------------------------------------
Accrued liability recognized
in the Balance Sheets $ 23 $ 24
===========================================================
===========================================================
Postretirement
Life
------------------
1994 1993
------------------
(in millions)
Actuarial present value of
benefit obligation:
Retirees and dependents $ 27 $ 27
Other employees 29 29
-----------------------------------------------------------
Accumulated benefit obligation 56 56
Less:
Fair value of plan assets 5 1
Unrecognized net gain (6) (4)
Unrecognized transition
obligation 24 26
-----------------------------------------------------------
Accrued liability recognized
in the Balance Sheets $ 33 $ 33
===========================================================
The weighted average rates assumed in the actuarial calculations were:
===========================================================
1994 1993 1992
----------------------------
Discount 8.0% 7.5% 8.0%
Annual salary increase 5.5 5.0 6.0
Long-term return on
plan assets 8.5 8.5 8.5
===========================================================
An additional assumption used in measuring the accumulated postretirement
medical benefit obligation was a weighted average medical care cost trend rate
of 10.5 percent for 1994, decreasing gradually to 6.0 percent through the year
2000 and remaining at that level thereafter. An annual increase in the assumed
medical care cost trend rate of 1.0 percent would increase the accumulated
medical benefit obligation as of December 31, 1994, by $33 million and the
aggregate of the service and interest cost components of the net retiree medical
cost by $4 million.
Components of the plans' net income are shown below:
==================================================================
Pension
------------------------------------------------------------------
1994 1993 1992
-----------------------------
(in millions)
Benefits earned during
the year $ 20.8 $ 20.6 $ 20.6
Interest cost on projected
benefit obligation 51.2 50.4 48.2
Actual (return) loss on plan
assets 23.5 (146.3) (45.8)
Net amortization and deferral (116.2) 63.3 (29.3)
------------------------------------------------------------------
Net pension cost (income) $ (20.7)$ (12.0) $ (6.3)
==================================================================
Of the above net pension amounts, $(15.7) million in 1994, $(8.9)
million in 1993, and $(5.1) million in 1992 were recorded in operating expenses,
and the remainder was recorded in construction and other accounts.
============================================================
Postretirement
Medical
------------------
1994 1993
------------------
(in millions)
Benefits earned during the year $ 6 $ 5
Interest cost on accumulated
benefit obligation 14 12
Amortization of transition
obligation 5 5
Actual (return) loss on plan
assets 1 (5)
Net amortization and deferral (4) 2
------------------------------------------------------------
Net postretirement cost $22 $19
============================================================
II-70
<PAGE>
NOTES (continued)
Alabama Power Company 1994 Annual Report
=============================================================
Postretirement
Life
------------------
1994 1993
------------------
(in millions)
Benefits earned during the year $2 $2
Interest cost on accumulated
benefit obligation 4 4
Amortization of transition
obligation 1 1
-------------------------------------------------------------
Net postretirement cost $7 $7
=============================================================
Of the above net postretirement medical and life insurance costs recorded in
1994 and 1993, $23 million and $22 million, respectively, were charged to
operating expenses and the remainder was charged to construction and other
accounts.
Work Force Reduction Programs
The company has incurred additional costs for work force reduction programs. The
costs related to these programs were $8.2 million, $16.1 million and $13.4
million for the years 1994, 1993 and 1992, respectively. A portion of the cost
of these programs was deferred and is being amortized in accordance with
regulatory treatment. The unamortized balance of these costs was $3.7 million at
December 31, 1994.
3. LITIGATION AND REGULATORY MATTERS
Retail Rate Adjustment Procedures
In November 1982, the APSC adopted rates that provide for periodic adjustments
based upon the company's earned return on end-of-period retail common equity.
The rates also provide for adjustments to recognize the placing of new
generating facilities in retail service. Both increases and decreases have been
placed into effect since the adoption of these rates. The last rate adjustment
was effective in January 1992. The rate adjustment procedures allow a return on
common equity range of 13.0 percent to 14.5 percent and limit increases or
decreases in rates to 4 percent in any calendar year.
In February 1993, the APSC ordered - at the company's request - a moratorium
on rate increases for the first two quarters of 1993, which facilitated the
transition of an accounting change. This accounting change permitted the accrual
of estimated operation and maintenance expenses related to nuclear refueling
outages during the period between outages rather than at the time the expenses
are incurred.
Also, in 1994, the APSC issued an order - at the company's request -
allowing the company to establish a natural disaster reserve not to exceed $32
million and to change the estimating procedure for unbilled kilowatt-hours and
associated revenues for service rendered but unbilled at the end of each month.
This change in estimate resulted in an increase in unbilled revenues for
September 1994 of $28 million, which offset the initial accrual for the natural
disaster reserve for the same amount. Additional monthly accruals of $250
thousand will be made until the reserve maximum is attained. In addition, a
moratorium on rate increases through the third quarter of 1995 was approved.
The ratemaking procedures will remain in effect until the APSC votes to
modify or discontinue them.
Heat Pump Financing Suit
In September 1990, two customers of the company filed a civil complaint in the
Circuit Court of Shelby County, Alabama, against the company seeking to
represent all persons who, prior to June 23, 1989, entered into agreements with
the company for the financing of heat pumps and other merchandise purchased from
vendors other than the company. The plaintiffs contended that the company 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 the company to refund all
payments -- principal and interest -- 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 the company to refund or forfeit interest of
approximately $10 million because of the company'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. The
company has appealed the court's order to the Supreme Court of Alabama.
The final outcome of this matter cannot now be determined; however, in
management's opinion, the final outcome will not have a material effect on the
II-71
<PAGE>
NOTES (continued)
Alabama Power Company 1994 Annual Report
company's financial statements.
FERC Reviews Equity Returns
In May 1991, the FERC ordered that hearings be conducted concerning the
reasonableness of the Southern electric system's wholesale rate schedules and
contracts that have a return on common equity of 13.75 percent or greater. The
contracts that could be affected by the hearings include substantially all of
the transmission, unit power, long-term power and other similar contracts. Any
changes in the rate of return on common equity that may require refunds as a
result of this proceeding would be substantially for the period beginning in
July 1991 and ending in October 1992.
In August 1992, a FERC administrative law judge issued an opinion that
changes in rate schedules and contracts were not necessary and that the FERC
staff failed to show how any changes were in the public interest. The FERC staff
has filed exceptions to the administrative law judge's opinion, and the matter
remains pending before the FERC.
In August 1994, the FERC instituted another proceeding based on
substantially the same issues as in the 1991 proceeding. The second period under
review for possible refunds began in October 1994 and is scheduled to continue
until January 1996.
If the rates of return on common equity recommended by the FERC staff were
applied to all of the schedules and contracts involved in both proceedings, and
refunds were ordered, the amount of refunds could range up to approximately $34
million at December 31, 1994. Although the final outcome of this matter cannot
now be determined; in management's opinion, the final outcome will not have a
material effect on the company's financial statements.
4. CAPITAL BUDGET
The company's capital expenditures are currently estimated to total $604 million
in 1995, $500 million in 1996, and $502 million in 1997. The estimates include
AFUDC of $10 million in 1995 and $9 million in both 1996 and 1997. The
estimates for property additions for the three-year period includes $42.5
million committed to meeting the requirements of the Clean Air Act. The capital
budget is subject to periodic review and revision, and actual capital cost
incurred may vary from the above estimates because of numerous factors. These
factors include changes in business conditions; revised load growth projections;
changes in environmental regulations; changes in the existing nuclear plant to
meet new regulatory requirements; increasing costs of labor, equipment, and
materials; and cost of capital. At December 31, 1994, significant purchase
commitments were outstanding in connection with the construction program. The
company does not have any new baseload generating plants under construction.
However, the construction of combustion turbine peaking units of approximately
720 megawatts is planned to be completed by 1996. In addition, significant
construction will continue related to transmission and distribution facilities
and the upgrading and extension of the useful lives of generating plants.
5. FINANCING, INVESTMENT, AND
COMMITMENTS
General
To the extent possible, the company's construction program is expected to be
financed primarily from internal sources. Short-term debt will be utilized at
appropriate levels. The amounts available are discussed below. The company may
issue additional long-term debt and preferred stock for the purposes of debt
maturities, redeeming higher-cost securities, and meeting additional capital
requirements.
Financing
The ability of the company to finance its capital budget depends on the amount
of funds generated internally and the funds it can raise by external financing.
The company's primary sources of external financing are sales of first mortgage
bonds and preferred stock to the public and receipt of additional paid-in
capital from The Southern Company. In order to issue additional first mortgage
bonds and preferred stock, the company must comply with certain earnings
coverage requirements contained in its mortgage indenture and corporate charter.
The most restrictive of these provisions requires, for the issuance of
additional first mortgage bonds, that before-income-tax earnings, as defined,
cover pro forma annual interest charges on outstanding first mortgage bonds at
II-72
<PAGE>
NOTES (continued)
Alabama Power Company 1994 Annual Report
least twice; and for the issuance of additional preferred stock, that gross
income available for interest cover pro forma annual interest charges and
preferred stock dividends at least one and one-half times. The company's
coverages are at a level that would permit any necessary amount of security
sales at current interest and dividend rates.
Bank Credit Arrangements
The company, along with The Southern Company and Georgia Power Company, has
entered into agreements with several banks outside the service area to provide
$400 million of revolving credit to the companies through June 30, 1997. To
provide liquidity support for commercial paper programs, the company and Georgia
Power Company have exclusive right to $135 million and $165 million,
respectively, of the available credit. The companies have the option of
converting the short-term borrowings into term loans, payable in 12 equal
quarterly installments, with the first installment due at the end of the first
calendar quarter after the applicable termination date or at an earlier date at
the companies' option. In addition, these agreements provide for payment of
commitment fees based on the unused portions of the commitments or the
maintenance of compensating balances with the banks.
Additionally, the company maintains committed lines of credit in the amount
of $349 million which expire at various times during 1995 and, in certain cases,
provide for average annual compensating balances. Because the arrangements are
based on an average balance, the company does not consider any of its cash
balances to be restricted as of any specific date. Moreover, the company borrows
from time to time pursuant to arrangements with banks for uncommitted lines of
credit.
At December 31, 1994, the company had regulatory approval to have
outstanding up to $530 million of short-term borrowings.
Assets Subject to Lien
The company's mortgage, as amended and supplemented, securing the first mortgage
bonds issued by the company, constitutes a direct
lien on substantially all of the company's fixed property and franchises.
Fuel Commitments
To supply a portion of the fuel requirements of its generating plants, the
company has entered into various long-term commitments for the procurement of
fossil and nuclear fuel. In most cases, these contracts contain provisions for
price escalations, minimum purchase levels and other financial commitments.
Total estimated long-term obligations through year 2013 were approximately $9.4
billion at December 31, 1994. Additional commitments for coal and for nuclear
fuel will be required in the future to supply the company's fuel needs.
Operating Leases
The company has entered into coal rail car rental agreements with various terms
and expiration dates. At December 31, 1994, estimated minimum rental commitments
for noncancellable operating leases were as follows:
============================================================
Year Amounts
---- ---------------
(in millions)
1995 $ 0.5
1996 2.8
1997 2.8
1998 2.8
1999 2.8
2000 and thereafter 59.5
------------------------------------------------------------
Total minimum payments $71.2
============================================================
6. FACILITY SALES AND JOINT OWNERSHIP
AGREEMENTS
The company and Georgia Power Company own equally all of the outstanding capital
stock of Southern Electric Generating Company (SEGCO), which owns electric
generating units with a total rated capacity of 1,019,680 kilowatts, together
with associated transmission facilities. The capacity of these units is sold
equally to the company and Georgia Power Company under a contract which, in
substance, requires payments sufficient to provide for the operating expenses,
taxes, interest expense and a return on equity, whether or not SEGCO has any
capacity and energy available. The company's share of expenses totaled $74
million in 1994, $86 million in 1993 and $73 million in 1992, and is included in
"Purchased power from affiliates" in the Statements of Income.
II-73
<PAGE>
NOTES (continued)
Alabama Power Company 1994 Annual Report
In addition, the company has guaranteed unconditionally the obligation of
SEGCO under an installment sale agreement for the purchase of certain pollution
control facilities at SEGCO's generating units, pursuant to which $24.5 million
principal amount of pollution control revenue bonds are outstanding. Georgia
Power Company has agreed to reimburse the company for the pro rata portion of
such obligation corresponding to its then proportionate ownership of stock of
SEGCO if the company is called upon to make such payment under its guaranty.
At December 31, 1994, the capitalization of SEGCO consisted of $54 million
of equity and $78 million of long-term debt on which the annual interest
requirement is $5.1 million. SEGCO paid dividends totaling $11.6 million in
1994, $11.3 million in 1993, and $12.0 million in 1992, of which one-half of
each was paid to the company. SEGCO's net income was $7.2 million, $8.3 million,
and $9.3 million for 1994, 1993 and 1992, respectively.
The company's percentage ownership and investment in jointly-owned
generating plants at December 31, 1994, follows:
================================================================
Total
Megawatt Company
Facility (Type) Capacity Ownership
--------------------- -------- ---------
Greene County 500 60.00% (1)
(coal)
Plant Miller
Units 1 and 2 1,320 91.84% (2)
(coal)
================================================================
(1) Jointly owned with an affiliate, Mississippi Power Company.
(2) Jointly owned with Alabama Electric Cooperative, Inc.
================================================================
Company Accumulated
Facility Investment Depreciation
---------------------- ---------- -------------
(in millions)
Greene County $ 89 $ 39
Plant Miller
Units 1 and 2 $708 $264
----------------------------------------------------------------
7. LONG-TERM POWER SALES AGREEMENTS
General
The company and the operating affiliates of The Southern Company have entered
into long-term contractual agreements for the sale of capacity and energy to
certain non-affiliated utilities located outside the system's service area. The
agreements for non-firm capacity expired in 1994. Other agreements -- expiring
at various dates discussed below -- are firm and pertain to capacity related to
specific generating units. Because the energy is generally sold at cost under
these agreements, revenues from capacity sales primarily affect profitability.
The company's capacity revenues have been as follows:
================================================================
Unit Other
Year Power Long-Term Total
----------------------------------------------------------------
(in millions)
1994 $152 $ 7 $159
1993 144 15 159
1992 177 9 186
================================================================
Unit power from Plant Miller is being sold to Florida Power Corporation
(FPC), Florida Power & Light Company (FP&L), Jacksonville Electric Authority
(JEA) and the City of Tallahassee, Florida. Under these agreements,
approximately 1,200 megawatts of capacity, a slight increase over 1994, is
scheduled to be sold during 1995 and will remain at that approximate level --
unless reduced by FP&L, FPC, and JEA for the periods after 1999 -- until the
expiration of the contracts in 2010.
Alabama Municipal Electric Authority (AMEA) Capacity Contracts
In August 1986, the company entered into a firm power purchase contract with
AMEA entitling AMEA to scheduled amounts of capacity (to a maximum 100
megawatts) for a period of 15 years commencing September 1, 1986 (1986
Contract). In October 1991, the company entered into a second firm power
purchase contract with AMEA entitling AMEA to scheduled amounts of additional
capacity (to a maximum 80 megawatts) for a period of 15 years commencing October
1, 1991 (1991 Contract). In both contracts the power will be sold to AMEA for
its member municipalities that previously were served directly by the company as
II-74
<PAGE>
NOTES (continued)
Alabama Power Company 1994 Annual Report
wholesale customers. Under the terms of the contracts, the company received
payments from AMEA representing the net present value of the revenues associated
with the respective capacity entitlements, discounted at effective annual rates
of 9.96 percent and 11.19 percent for the 1986 and 1991 Contracts, respectively.
These payments are being recognized as operating revenues and the discounts are
being amortized to other interest expense as scheduled capacity is made
available over the terms of the contracts.
In order to secure AMEA's advance payments and the company's performance
obligation under the contracts, the company issued and delivered to an escrow
agent first mortgage bonds representing the maximum amount of liquidated damages
payable by the company in the event of a default under the contracts. No
principal or interest is payable on such bonds unless and until a default by the
company occurs. As the liquidated damages decline under the contracts, a portion
of the bonds equal to the decreases are returned to the company. At December 31,
1994, $146 million of such bonds was held by the escrow agent under the
contracts.
8. INCOME TAXES
Effective January 1, 1993, the company adopted FASB Statement No. 109,
Accounting for Income Taxes. The adoption resulted in the recording of
additional deferred income taxes and related regulatory assets and liabilities.
At December 31, 1994, the tax-related regulatory assets and liabilities were
$452 million and $405 million, respectively. These assets are attributable to
tax benefits flowed through to customers in prior years and to taxes applicable
to capitalized AFUDC. These liabilities are attributable to deferred taxes
previously recognized at rates higher than current enacted tax law and to
unamortized investment tax credits.
Details of the federal and state income tax provisions are as follows:
=================================================================
1994 1993 1992
-------------------------------
(in thousands)
Total provision for income taxes:
Federal --
Currently payable $219,494 $149,680 $152,481
Deferred --
current year (48,153) 9,636 27,760
reversal of prior years 15,932 19,653 (7,827)
Deferred investment tax
credits (1) (2,106) -
-----------------------------------------------------------------
187,272 176,863 172,414
-----------------------------------------------------------------
State --
Currently payable 20,565 14,297 16,983
Deferred --
current year (4,067) 1,898 6,387
reversal of prior years 3,676 3,913 (2,806)
-----------------------------------------------------------------
20,174 20,108 20,564
-----------------------------------------------------------------
Total 207,446 196,971 192,978
Less income taxes credited
to other income (16,834) (10,239) (8,947)
-----------------------------------------------------------------
Federal and state income
taxes charged to operations $224,280 $207,210 $201,925
=================================================================
II-75
<PAGE>
NOTES (continued)
Alabama Power Company 1994 Annual Report
The tax effects of temporary differences between the carrying amounts of
assets and liabilities in the financial statements and their respective tax
bases, which give rise to deferred tax assets and liabilities, are as follows:
===============================================================
1994 1993
--------------------
(in millions)
Deferred tax liabilities:
Accelerated depreciation $ 734 $ 697
Property basis differences 513 536
Premium on reacquired debt 38 38
Fuel clause underrecovered 4 11
Other 26 17
---------------------------------------------------------------
Total 1,315 1,299
---------------------------------------------------------------
Deferred tax assets:
Capacity prepayments 36 44
Other deferred costs 27 8
Postretirement benefits 24 15
Accrued nuclear outage costs 7 7
Unbilled revenue 13 7
Other 44 39
---------------------------------------------------------------
Total 151 120
---------------------------------------------------------------
Net deferred tax liabilities 1,164 1,179
Portion included in current assets
(liabilities), net 17 (14)
---------------------------------------------------------------
Accumulated deferred income taxes
in the Balance Sheets $1,181 $1,165
===============================================================
Deferred investment tax credits are amortized over the life of the related
property with such amortization normally applied as a credit to reduce
depreciation in the Statements of Income. Credits amortized in this manner
amounted to $13 million in 1994 and 1993 and $18 million in 1992. At December
31, 1994, all investment tax credits available to reduce federal income taxes
payable had been utilized.
A reconciliation of the federal statutory income tax rate to the effective
income tax rate is as follows:
==============================================================
1994 1993 1992
--------------------------
Federal statutory rate 35.0% 35.0% 34.0%
State income tax,
net of federal deduction 2.2 2.3 2.4
Non-deductible book
depreciation 1.6 1.6 1.6
Differences in prior years'
deferred and current tax rates (2.9) (1.6) (1.9)
Other (0.7) (2.9) (2.0)
--------------------------------------------------------------
Effective income tax rate 35.2% 34.4% 34.1%
==============================================================
The Southern Company and its subsidiaries file a consolidated federal income tax
return. Under a joint consolidated income tax agreement, each company's current
and deferred tax expense is computed on a stand-alone basis, and consolidated
tax savings are allocated to each company based on its ratio of taxable income
to total consolidated taxable income.
9. OTHER LONG-TERM DEBT
Details of other long-term debt at December 31 are as follows:
==============================================================
1994 1993
--------------------------
(in thousands)
Obligations incurred in
connection with the
sale of tax-exempt
pollution control
revenue bonds by
public authorities-
2003-2013--6% to
9.375% $ 1,000 $ 27,050
2014-2024--3.05%
to 10.875% 475,140 449,090
--------------------------------------------------------------
476,140 476,140
--------------------------------------------------------------
Capitalized lease obligations:
Nuclear fuel - 95,943
Office buildings 7,312 7,710
Street light 2,442 2,761
--------------------------------------------------------------
9,754 106,414
--------------------------------------------------------------
Total $485,894 $582,554
==============================================================
Pollution control obligations represent installment purchases of pollution
control facilities financed by funds derived from sales by public authorities of
revenue bonds. The company is required to make payments sufficient for the
authorities to meet principal and interest requirements of such bonds. With
respect to $312.8 million of such pollution control obligations, the company has
authenticated and delivered to the trustees a like principal amount of first
mortgage bonds as security for its obligations under the installment purchase
agreements. No principal or interest on these first mortgage bonds is payable
unless and until a default occurs on the installment purchase agreements.
II-76
<PAGE>
NOTES (continued)
Alabama Power Company 1994 Annual Report
The company has capitalized certain office building leases and a street light
lease. Monthly principal payments plus interest are required, and at December
31, 1994, the interest rate was 9.5 percent for office buildings and 13.0
percent for street lights. In December 1994, the company discontinued capital
leases pertaining to nuclear fuel.
The net book value of capitalized leases included in utility plant in service
was $6.2 million and $94.7 million at December 31, 1994 and 1993, respectively.
The estimated aggregate annual maturities of other long-term debt through 1999
are as follows: $0.8 million in 1995, $0.9 million in 1996, $1.0 million in
1997, $1.0 million in 1998 and $1.2 million in 1999.
10. LONG-TERM DEBT DUE WITHIN ONE YEAR
A summary of the improvement fund requirements and scheduled maturities and
redemptions of long-term debt due within one year at December 31 is as follows:
=================================================================
1994 1993
------------------------
(in thousands)
Bond improvement fund
requirements $20,047 $20,135
Less:
Portion to be satisfied by
certifying property additions 20,047 -
-----------------------------------------------------------------
Cash sinking fund requirements - $20,135
Other long-term debt maturities
(Note 9) 796 38,863
-----------------------------------------------------------------
Total $ 796 $58,998
=================================================================
The annual first mortgage bond improvement fund requirement is one
percent of the aggregate principal amount of bonds of each series authenticated,
so long as a portion of that series is outstanding, and may be satisfied by the
deposit of cash and/or reacquired bonds, the certification of unfunded property
additions or a combination thereof. The 1995 requirement of $20.0 million was
satisfied by certification of property additions. In addition, maturing in 1995
are other long-term debt of $796 thousand consisting primarily of capitalized
office building leases and a street light lease.
11. NUCLEAR INSURANCE
Under the Price-Anderson Amendments Act of 1988 (Act), the company maintains
agreements of indemnity with the NRC that, together with private insurance,
cover third-party liability arising from any nuclear incident occurring at Plant
Farley. The Act provides funds up to $8.9 billion for public liability claims
that could arise from a single nuclear incident. Plant Farley is insured against
this liability to a maximum of $200 million by private insurance, with the
remaining coverage provided by a mandatory program of deferred premiums which
could be assessed, after a nuclear incident, against all owners of nuclear
reactors. A company could be assessed up to $79 million per incident for each
licensed reactor it operates but not more than an aggregate of $10 million per
incident to be paid in a calendar year for each reactor. Such maximum
assessment, excluding any applicable state premium taxes, for the company is
$159 million per incident but not more than an aggregate of $20 million to be
paid for each incident in any one year.
The company is a member of Nuclear Mutual Limited (NML), a mutual insurer
established to provide property damage insurance in an amount up to $500 million
for members' nuclear generating facilities. The members are subject to a
retrospective premium assessment in the event that losses exceed accumulated
reserve funds. The company's maximum annual assessment per incident is limited
to $12 million under the current policy.
Additionally, the company has policies that currently provide
decontamination, excess property insurance, and premature decommissioning
coverage up to $2.25 billion for losses in excess of the $500 million NML
coverage. This excess insurance is provided by Nuclear Electric Insurance
Limited (NEIL), a mutual insurance company.
NEIL also covers the additional cost that would be incurred in obtaining
replacement power during a prolonged accidental outage at a member's nuclear
plant. Members can be insured against increased cost of replacement power in an
amount up to $3.5 million per week (starting 21 weeks after the outage) for one
year and up to $2.8 million per week for the second and third years.
Under each of the NEIL policies, members are subject to assessments if
losses each year exceed the accumulated funds available to the insurer under
II-77
<PAGE>
NOTES (continued)
Alabama Power Company 1994 Annual Report
that policy. The maximum annual assessments per incident under current policies
for the company would be $27 million for excess property damage and $10 million
for replacement power.
For all on-site property damage insurance policies for commercial nuclear
power plants, the NRC requires that the proceeds of such policies issued or
renewed on or after April 2, 1991, shall be dedicated first for the sole purpose
of placing the reactor in a safe and stable condition after an accident. Any
remaining proceeds are to be applied next toward the costs of decontamination
and debris removal operations ordered by the NRC, and then, any further
remaining proceeds are to be paid either to the company or to its bond trustees
as may be appropriate under applicable trust indentures.
The company participates in an insurance program for nuclear workers that
provides coverage for worker tort claims filed for bodily injury caused at
commercial nuclear power plants. In the event that claims for this insurance
exceed the accumulated reserve funds, the company could be subject to a maximum
total assessment of $6.4 million.
All retrospective assessments, whether generated for liability, property
or replacement power may be subject to applicable state premium taxes.
12. COMMON STOCK DIVIDEND
RESTRICTIONS
The company's first mortgage bond indenture contains various common stock
dividend restrictions that remain in effect as long as the bonds are
outstanding. At December 31, 1994, $807 million of retained earnings was
restricted against the payment of cash dividends on common stock under terms of
the mortgage indenture. Supplemental indentures in connection with future first
mortgage bond issues may contain more stringent common stock dividend
restrictions than those currently in effect.
13. QUARTERLY FINANCIAL INFORMATION
(Unaudited)
Summarized quarterly financial data for 1994 and 1993 are as follows:
==================================================================
Net Income
After
Dividends
Quarter Operating Operating on Preferred
Ended Revenues Income Stock
------------------- --------- --------- --------------
(in thousands)
March 1994 $686,847 $128,623 $ 72,031
June 1994 759,399 162,696 98,668
September 1994 838,927 199,736 141,214
December 1994 649,969 104,949 44,425
March 1993 $635,559 $124,356 $ 57,856
June 1993 733,589 159,023 91,448
September 1993 919,934 205,151 150,818
December 1993 718,527 106,582 46,372
==================================================================
The company's business is influenced by seasonal weather conditions.
II-78
<PAGE>
<TABLE>
<CAPTION>
SELECTED FINANCIAL AND OPERATING DATA
Alabama Power Company 1994 Annual Report
=====================================================================================================
1994 1993 1992
-----------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Operating Revenues (in thousands) $2,935,142 $3,007,609 $2,846,840
Net Income after Dividends
on Preferred Stock (in thousands) $356,338 $346,494 $338,555
Cash Dividends on Common Stock (in thousands) $268,000 $252,900 $273,300
Return on Average Common Equity (percent) 13.86 13.94 14.02
Total Assets (in thousands) $8,459,217 $8,248,683 $6,593,618
Gross Property Additions (in thousands) $536,785 $435,843 $367,463
-----------------------------------------------------------------------------------------------------
Capitalization (in thousands):
Common stock equity $2,614,405 $2,526,348 $2,443,493
Preferred stock 440,400 440,400 489,400
Preferred stock subject to mandatory redemption - - -
Long-term debt 2,455,013 2,362,852 2,202,473
-----------------------------------------------------------------------------------------------------
Total (excluding amounts due within one year) $5,509,818 $5,329,600 $5,135,366
=====================================================================================================
Capitalization Ratios (percent):
Common stock equity 47.4 47.4 47.6
Preferred stock 8.0 8.3 9.5
Long-term debt 44.6 44.3 42.9
-----------------------------------------------------------------------------------------------------
Total (excluding amounts due within one year) 100.0 100.0 100.0
=====================================================================================================
First Mortgage Bonds (in thousands):
Issued 150,000 860,000 745,000
Retired 20,387 699,788 931,797
Preferred Stock (in thousands):
Issued - 158,000 150,000
Retired - 207,000 145,000
-----------------------------------------------------------------------------------------------------
Security Ratings:
First Mortgage Bonds -
Moody's A1 A1 A1
Standard and Poor's A A A
Duff & Phelps A+ A+ A
Preferred Stock -
Moody's a2 a2 a2
Standard and Poor's A- A- A-
Duff & Phelps A- A- A-
-----------------------------------------------------------------------------------------------------
Customers (year-end):
Residential 1,042,974 1,027,130 1,012,294
Commercial 162,239 157,337 152,530
Industrial 5,341 5,391 5,434
Other 716 713 704
-----------------------------------------------------------------------------------------------------
Total 1,211,270 1,190,571 1,170,962
=====================================================================================================
Employees (year-end) 7,996 8,009 8,116
</TABLE>
II-79
<PAGE>
<TABLE>
<CAPTION>
SELECTED FINANCIAL AND OPERATING DATA
Alabama Power Company 1994 Annual Report
=====================================================================================================
1991 1990 1989
-----------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Operating Revenues (in thousands) $2,846,794 $2,722,424 $2,629,354
Net Income after Dividends
on Preferred Stock (in thousands) $339,666 $312,803 $311,146
Cash Dividends on Common Stock (in thousands) $232,900 $220,800 $217,300
Return on Average Common Equity (percent) 14.55 14.00 14.53
Total Assets (in thousands) $6,549,462 $6,362,293 $6,279,431
Gross Property Additions (in thousands) $397,011 $444,680 $459,199
-----------------------------------------------------------------------------------------------------
Capitalization (in thousands):
Common stock equity $2,387,198 $2,280,590 $2,188,811
Preferred stock 484,400 484,400 484,400
Preferred stock subject to mandatory redemption - 12,500 17,500
Long-term debt 2,382,635 2,397,931 2,435,129
-----------------------------------------------------------------------------------------------------
Total (excluding amounts due within one year) $5,254,233 $5,175,421 $5,125,840
=====================================================================================================
Capitalization Ratios (percent):
Common stock equity 45.4 44.1 42.7
Preferred stock 9.2 9.6 9.8
Long-term debt 45.4 46.3 47.5
-----------------------------------------------------------------------------------------------------
Total (excluding amounts due within one year) 100.0 100.0 100.0
=====================================================================================================
First Mortgage Bonds (in thousands):
Issued 250,000 - -
Retired 227,695 33,122 75,650
Preferred Stock (in thousands):
Issued - - -
Retired 17,500 5,000 5,000
-----------------------------------------------------------------------------------------------------
Security Ratings:
First Mortgage Bonds -
Moody's A1 A1 A1
Standard and Poor's A A A
Duff & Phelps A A A
Preferred Stock -
Moody's a2 a2 a2
Standard and Poor's A- A- A-
Duff & Phelps A- A- A-
-----------------------------------------------------------------------------------------------------
Customers (year-end):
Residential 997,585 985,566 974,622
Commercial 148,228 144,340 141,265
Industrial 5,496 5,322 5,200
Other 697 690 684
-----------------------------------------------------------------------------------------------------
Total 1,152,006 1,135,918 1,121,771
=====================================================================================================
Employees (year-end) 8,513 9,473 9,698
</TABLE>
II-80A
<PAGE>
<TABLE>
<CAPTION>
SELECTED FINANCIAL AND OPERATING DATA
Alabama Power Company 1994 Annual Report
=====================================================================================================
1988 1987 1986
-----------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Operating Revenues (in thousands) $2,476,626 $2,574,634 $2,549,574
Net Income after Dividends
on Preferred Stock (in thousands) $283,475 $257,239 $273,456
Cash Dividends on Common Stock (in thousands) $212,700 $201,100 $191,300
Return on Average Common Equity (percent) 14.03 13.56 15.12
Total Assets (in thousands) $6,180,945 $5,912,000 $5,570,653
Gross Property Additions (in thousands) $643,892 $600,589 $553,767
-----------------------------------------------------------------------------------------------------
Capitalization (in thousands):
Common stock equity $2,094,815 $1,946,747 $1,847,608
Preferred stock 484,400 384,400 384,400
Preferred stock subject to mandatory redemption 22,500 27,500 30,000
Long-term debt 2,496,492 2,386,258 2,210,108
-----------------------------------------------------------------------------------------------------
Total (excluding amounts due within one year) $5,098,207 $4,744,905 $4,472,116
=====================================================================================================
Capitalization Ratios (percent):
Common stock equity 41.1 41.0 41.3
Preferred stock 9.9 8.7 9.3
Long-term debt 49.0 50.3 49.4
-----------------------------------------------------------------------------------------------------
Total (excluding amounts due within one year) 100.0 100.0 100.0
=====================================================================================================
First Mortgage Bonds (in thousands):
Issued 150,000 200,000 125,000
Retired 42,445 108,082 405,765
Preferred Stock (in thousands):
Issued 100,000 - -
Retired 2,500 5,000 42,224
-----------------------------------------------------------------------------------------------------
Security Ratings:
First Mortgage Bonds -
Moody's A1 A1 A1
Standard and Poor's A A A
Duff & Phelps 6 6 6
Preferred Stock -
Moody's a2 a2 a2
Standard and Poor's A- A- A-
Duff & Phelps 7 7 7
-----------------------------------------------------------------------------------------------------
Customers (year-end):
Residential 964,581 950,101 934,798
Commercial 137,955 134,533 130,540
Industrial 5,120 4,955 4,725
Other 678 713 697
-----------------------------------------------------------------------------------------------------
Total 1,108,334 1,090,302 1,070,760
=====================================================================================================
Employees (year-end) 10,302 10,457 10,367
</TABLE>
II-80B
<PAGE>
<TABLE>
<CAPTION>
SELECTED FINANCIAL AND OPERATING DATA
Alabama Power Company 1994 Annual Report
=========================================================================================
1985 1984
-----------------------------------------------------------------------------------------
<S> <C> <C>
Operating Revenues (in thousands) $2,518,699 $2,236,560
Net Income after Dividends
on Preferred Stock (in thousands) $264,562 $233,252
Cash Dividends on Common Stock (in thousands) $185,700 $161,900
Return on Average Common Equity (percent) 15.41 14.74
Total Assets (in thousands) $5,722,263 $5,496,197
Gross Property Additions (in thousands) $568,073 $575,173
-----------------------------------------------------------------------------------------
Capitalization (in thousands):
Common stock equity $1,770,156 $1,664,295
Preferred stock 384,400 424,400
Preferred stock subject to mandatory redemption 35,000 37,224
Long-term debt 2,349,373 2,402,713
-----------------------------------------------------------------------------------------
Total (excluding amounts due within one year) $4,538,929 $4,528,632
=========================================================================================
Capitalization Ratios (percent):
Common stock equity 39.0 36.7
Preferred stock 9.3 10.2
Long-term debt 51.7 53.1
-----------------------------------------------------------------------------------------
Total (excluding amounts due within one year) 100.0 100.0
=========================================================================================
First Mortgage Bonds (in thousands):
Issued - -
Retired 39,460 21,250
Preferred Stock (in thousands):
Issued - -
Retired - 810
-----------------------------------------------------------------------------------------
Security Ratings:
First Mortgage Bonds -
Moody's A1 A2
Standard and Poor's A A-
Duff & Phelps 6 7
Preferred Stock -
Moody's a2 a3
Standard and Poor's A- BBB+
Duff & Phelps 7 8
-----------------------------------------------------------------------------------------
Customers (year-end):
Residential 918,777 905,239
Commercial 126,644 123,561
Industrial 4,619 4,467
Other 755 759
-----------------------------------------------------------------------------------------
Total 1,050,795 1,034,026
=========================================================================================
Employees (year-end) 10,212 10,144
</TABLE>
II-80C
<PAGE>
<TABLE>
<CAPTION>
SELECTED FINANCIAL AND OPERATING DATA (continued)
Alabama Power Company 1994 Annual Report
=====================================================================================================
1994 1993 1992
-----------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Operating Revenues (in thousands):
Residential $913,146 $947,277 $845,660
Commercial 647,202 634,895 589,816
Industrial 803,587 832,938 800,311
Other 13,515 13,344 12,734
-----------------------------------------------------------------------------------------------------
Total retail 2,377,450 2,428,454 2,248,521
Sales for resale - non-affiliates 354,760 364,105 407,791
Sales for resale - affiliates 164,762 181,975 158,088
-----------------------------------------------------------------------------------------------------
Total revenues from sales of electricity 2,896,972 2,974,534 2,814,400
Other revenues 38,170 33,075 32,440
-----------------------------------------------------------------------------------------------------
Total $2,935,142 $3,007,609 $2,846,840
=====================================================================================================
Kilowatt-Hour Sales (in thousands):
Residential 13,183,147 13,185,062 12,069,268
Commercial 9,645,798 9,185,462 8,629,869
Industrial 19,479,364 18,595,237 18,260,274
Other 185,876 181,673 176,798
-----------------------------------------------------------------------------------------------------
Total retail 42,494,185 41,147,434 39,136,209
Sales for resale - non-affiliates 6,775,176 7,143,672 8,382,571
Sales for resale - affiliates 8,432,533 8,081,324 7,210,697
-----------------------------------------------------------------------------------------------------
Total 57,701,894 56,372,430 54,729,477
=====================================================================================================
Average Revenue Per Kilowatt-Hour (cents):
Residential 6.93 7.18 7.01
Commercial 6.71 6.91 6.83
Industrial 4.13 4.48 4.38
Total retail 5.59 5.90 5.75
Sales for resale 3.42 3.59 3.63
Total sales 5.02 5.28 5.14
Residential Average Annual Kilowatt-Hour
Use Per Customer 12,746 12,936 12,017
Residential Average Annual Revenue
Per Customer $882.88 $929.36 $842.00
Plant Nameplate Capacity Ratings (Note 1)
(year-end) (megawatts) 10,431 10,431 10,431
Territorial Peak-Hour Demand (megawatts) (Note 2):
Winter 8,217 7,152 7,077
Summer 9,028 9,457 8,801
Annual Load Factor (percent) (Note 2) 62.2 58.6 59.6
Plant Availability (percent):
Fossil-steam 86.9 89.7 88.9
Nuclear 92.5 86.6 80.2
-----------------------------------------------------------------------------------------------------
Source of Energy Supply (percent):
Coal 62.9 63.9 64.3
Nuclear 21.7 20.1 19.0
Hydro 8.4 6.9 8.5
Oil and gas * * *
Purchased power -
From non-affiliates 1.3 1.1 1.2
From affiliates 5.7 8.0 7.0
-----------------------------------------------------------------------------------------------------
Total 100.0 100.0 100.0
=====================================================================================================
Total Fuel Economy Data (Note 1):
BTU per net kilowatt-hour generated 9,961 10,003 10,000
Cost of fuel per million BTU (cents) 157.62 173.66 164.57
Average cost of fuel per net kilowatt-hour generated (cents) 1.57 1.74 1.65
=====================================================================================================
Notes:
(1) Generating capacity and fuel data includes Alabama Power Company's 50% portion of SEGCO.
(2) Includes Southeastern Power Administration allotment.
* Less than one-tenth of one percent.
</TABLE>
II-81
<PAGE>
<TABLE>
<CAPTION>
SELECTED FINANCIAL AND OPERATING DATA (continued)
Alabama Power Company 1994 Annual Report
=====================================================================================================
1991 1990 1989
-----------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Operating Revenues (in thousands):
Residential $864,347 $825,645 $781,982
Commercial 582,730 551,634 533,487
Industrial 790,224 777,580 762,274
Other 12,662 12,103 11,743
-----------------------------------------------------------------------------------------------------
Total retail 2,249,963 2,166,962 2,089,486
Sales for resale - non-affiliates 407,912 434,996 409,202
Sales for resale - affiliates 159,375 93,473 104,488
-----------------------------------------------------------------------------------------------------
Total revenues from sales of electricity 2,817,250 2,695,431 2,603,176
Other revenues 29,544 26,993 26,178
-----------------------------------------------------------------------------------------------------
Total $2,846,794 $2,722,424 $2,629,354
=====================================================================================================
Kilowatt-Hour Sales (in thousands):
Residential 12,324,898 11,996,794 11,346,736
Commercial 8,526,131 8,201,534 7,915,685
Industrial 17,511,579 17,713,153 17,360,791
Other 174,760 170,420 166,485
-----------------------------------------------------------------------------------------------------
Total retail 38,537,368 38,081,901 36,789,697
Sales for resale - non-affiliates 8,810,442 10,277,060 10,292,329
Sales for resale - affiliates 7,784,285 4,519,275 5,048,743
-----------------------------------------------------------------------------------------------------
Total 55,132,095 52,878,236 52,130,769
=====================================================================================================
Average Revenue Per Kilowatt-Hour (cents):
Residential 7.01 6.88 6.89
Commercial 6.83 6.73 6.74
Industrial 4.51 4.39 4.39
Total retail 5.84 5.69 5.68
Sales for resale 3.42 3.57 3.35
Total sales 5.11 5.10 4.99
Residential Average Annual Kilowatt-Hour
Use Per Customer 12,435 12,256 11,717
Residential Average Annual Revenue
Per Customer $872.04 $843.50 $807.50
Plant Nameplate Capacity Ratings (Note 1)
(year-end) (megawatts) 10,539 9,879 9,879
Territorial Peak-Hour Demand (megawatts) (Note 2):
Winter 6,586 6,293 7,264
Summer 8,627 8,878 8,256
Annual Load Factor (percent) (Note 2) 59.9 57.4 59.5
Plant Availability (percent):
Fossil-steam 93.1 92.2 90.7
Nuclear 87.0 86.5 83.1
-----------------------------------------------------------------------------------------------------
Source of Energy Supply (percent):
Coal 61.5 57.0 54.1
Nuclear 20.8 21.6 21.0
Hydro 8.2 8.7 11.0
Oil and gas * 0.1 0.1
Purchased power -
From non-affiliates 1.6 0.9 1.8
From affiliates 7.9 11.7 12.0
-----------------------------------------------------------------------------------------------------
Total 100.0 100.0 100.0
=====================================================================================================
Total Fuel Economy Data (Note 1):
BTU per net kilowatt-hour generated 9,985 10,072 10,061
Cost of fuel per million BTU (cents) 170.49 171.55 172.20
Average cost of fuel per net kilowatt-hour generated (cents) 1.70 1.73 1.73
=====================================================================================================
Notes:
(1) Generating capacity and fuel data includes Alabama Power Company's 50% portion of SEGCO.
(2) Includes Southeastern Power Administration allotment.
* Less than one-tenth of one percent.
</TABLE>
II-82A
<PAGE>
<TABLE>
<CAPTION>
SELECTED FINANCIAL AND OPERATING DATA (continued)
Alabama Power Company 1994 Annual Report
=====================================================================================================
1988 1987 1986
-----------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Operating Revenues (in thousands):
Residential $761,805 $759,957 $738,864
Commercial 510,910 501,088 481,676
Industrial 738,755 721,298 705,395
Other 11,255 10,968 10,811
-----------------------------------------------------------------------------------------------------
Total retail 2,022,725 1,993,311 1,936,746
Sales for resale - non-affiliates 355,362 443,880 472,938
Sales for resale - affiliates 76,691 118,746 120,911
-----------------------------------------------------------------------------------------------------
Total revenues from sales of electricity 2,454,778 2,555,937 2,530,595
Other revenues 21,848 18,697 18,979
-----------------------------------------------------------------------------------------------------
Total $2,476,626 $2,574,634 $2,549,574
=====================================================================================================
Kilowatt-Hour Sales (in thousands):
Residential 11,332,285 11,149,225 10,606,698
Commercial 7,711,092 7,476,924 7,015,589
Industrial 16,881,342 15,969,075 15,025,806
Other 165,122 159,422 153,282
-----------------------------------------------------------------------------------------------------
Total retail 36,089,841 34,754,646 32,801,375
Sales for resale - non-affiliates 7,905,750 10,523,554 9,064,049
Sales for resale - affiliates 3,551,142 4,963,997 4,456,360
-----------------------------------------------------------------------------------------------------
Total 47,546,733 50,242,197 46,321,784
=====================================================================================================
Average Revenue Per Kilowatt-Hour (cents):
Residential 6.72 6.82 6.97
Commercial 6.63 6.70 6.87
Industrial 4.38 4.52 4.69
Total retail 5.60 5.74 5.90
Sales for resale 3.77 3.63 4.39
Total sales 5.16 5.09 5.46
Residential Average Annual Kilowatt-Hour
Use Per Customer 11,839 11,848 11,457
Residential Average Annual Revenue
Per Customer $795.84 $807.61 $798.09
Plant Nameplate Capacity Ratings (Note 1)
(year-end) (megawatts) 9,279 9,337 9,337
Territorial Peak-Hour Demand (megawatts) (Note 2):
Winter 6,377 6,138 6,257
Summer 7,991 7,886 7,892
Annual Load Factor (percent) (Note 2) 59.6 58.3 56.2
Plant Availability (percent):
Fossil-steam 91.3 90.2 88.5
Nuclear 91.9 83.3 83.8
-----------------------------------------------------------------------------------------------------
Source of Energy Supply (percent):
Coal 53.9 52.5 58.8
Nuclear 26.1 21.7 23.8
Hydro 4.8 6.3 4.2
Oil and gas 0.1 0.2 0.1
Purchased power -
From non-affiliates 0.5 0.2 2.0
From affiliates 14.6 19.1 11.1
-----------------------------------------------------------------------------------------------------
Total 100.0 100.0 100.0
=====================================================================================================
Total Fuel Economy Data (Note 1):
BTU per net kilowatt-hour generated 10,137 10,214 10,209
Cost of fuel per million BTU (cents) 168.21 176.72 179.65
Average cost of fuel per net kilowatt-hour generated (cents) 1.71 1.80 1.83
=====================================================================================================
Notes:
(1) Generating capacity and fuel data includes Alabama Power Company's 50% portion of SEGCO.
(2) Includes Southeastern Power Administration allotment.
* Less than one-tenth of one percent.
</TABLE>
II-82B
<PAGE>
<TABLE>
<CAPTION>
SELECTED FINANCIAL AND OPERATING DATA (continued)
Alabama Power Company 1994 Annual Report
=========================================================================================
1985 1984
-----------------------------------------------------------------------------------------
<S> <C> <C>
Operating Revenues (in thousands):
Residential $684,970 $664,286
Commercial 453,651 430,400
Industrial 717,078 692,177
Other 10,129 9,615
-----------------------------------------------------------------------------------------
Total retail 1,865,828 1,796,478
Sales for resale - non-affiliates 539,343 317,890
Sales for resale - affiliates 95,733 108,812
-----------------------------------------------------------------------------------------
Total revenues from sales of electricity 2,500,904 2,223,180
Other revenues 17,795 13,380
-----------------------------------------------------------------------------------------
Total $2,518,699 $2,236,560
=========================================================================================
Kilowatt-Hour Sales (in thousands):
Residential 9,814,814 9,634,285
Commercial 6,593,645 6,270,899
Industrial 15,215,276 15,134,188
Other 146,119 143,785
-----------------------------------------------------------------------------------------
Total retail 31,769,854 31,183,157
Sales for resale - non-affiliates 12,158,464 8,587,936
Sales for resale - affiliates 3,588,338 4,270,493
-----------------------------------------------------------------------------------------
Total 47,516,656 44,041,586
=========================================================================================
Average Revenue Per Kilowatt-Hour (cents):
Residential 6.98 6.90
Commercial 6.88 6.86
Industrial 4.71 4.57
Total retail 5.87 5.76
Sales for resale 4.03 3.32
Total sales 5.26 5.05
Residential Average Annual Kilowatt-Hour
Use Per Customer 10,781 10,755
Residential Average Annual Revenue
Per Customer $752.43 $741.58
Plant Nameplate Capacity Ratings (Note 1)
(year-end) (megawatts) 9,337 8,580
Territorial Peak-Hour Demand (megawatts) (Note 2):
Winter 6,191 5,696
Summer 7,570 6,946
Annual Load Factor (percent) (Note 2) 57.2 59.8
Plant Availability (percent):
Fossil-steam 90.5 91.2
Nuclear 81.0 86.5
-----------------------------------------------------------------------------------------
Source of Energy Supply (percent):
Coal 55.7 51.5
Nuclear 22.4 26.1
Hydro 6.2 11.0
Oil and gas 0.1 *
Purchased power -
From non-affiliates 1.7 0.2
From affiliates 13.9 11.2
-----------------------------------------------------------------------------------------
Total 100.0 100.0
=========================================================================================
Total Fuel Economy Data (Note 1):
BTU per net kilowatt-hour generated 10,229 10,367
Cost of fuel per million BTU (cents) 185.74 179.40
Average cost of fuel per net kilowatt-hour generated (cents) 1.90 1.86
=========================================================================================
Notes:
(1) Generating capacity and fuel data includes Alabama Power Company's 50% portion of SEGCO.
(2) Includes Southeastern Power Administration allotment.
* Less than one-tenth of one percent.
</TABLE>
II-82C
<PAGE>
<TABLE>
<CAPTION>
STATEMENTS OF INCOME
Alabama Power Company
=======================================================================================================
For the Years Ended December 31, 1994* 1993* 1992*
-------------------------------------------------------------------------------------------------------
(Thousands of Dollars)
<S> <C> <C> <C>
Operating Revenues:
Revenues $ 2,770,380 $ 2,825,634 $ 2,688,752
Revenues from affiliates 164,762 181,975 158,088
-------------------------------------------------------------------------------------------------------
Total operating revenues 2,935,142 3,007,609 2,846,840
-------------------------------------------------------------------------------------------------------
Operating Expenses:
Operation --
Fuel 801,948 877,099 794,438
Purchased power from non-affiliates 15,158 15,230 14,242
Purchased power from affiliates 100,888 120,330 107,230
Proceeds from settlement of disputed contracts - (2,568) (641)
Other 458,917 473,383 446,477
Maintenance 262,102 252,506 237,071
Depreciation and amortization 292,420 290,310 280,881
Taxes other than income taxes 183,425 178,997 172,095
Federal and state income taxes 224,280 207,210 201,925
-------------------------------------------------------------------------------------------------------
Total operating expenses 2,339,138 2,412,497 2,253,718
-------------------------------------------------------------------------------------------------------
Operating Income 596,004 595,112 593,122
Other Income (Expense):
Allowance for equity funds used during construction 3,239 3,260 2,071
Income from subsidiary 3,588 4,127 4,635
Charitable foundation (13,500) (3,000) (6,887)
Interest income 16,944 20,775 14,804
Other, net (30,569) (24,420) (11,019)
Income taxes applicable to other income 16,834 10,239 8,947
-------------------------------------------------------------------------------------------------------
Income Before Interest Charges 592,540 606,093 605,673
-------------------------------------------------------------------------------------------------------
Interest Charges:
Interest on long-term debt 178,045 184,861 206,871
Allowance for debt funds used during construction (3,548) (2,992) (2,416)
Interest on interim obligations 5,939 3,760 3,704
Amortization of debt discount, premium, and expense, net 9,623 8,937 4,392
Other interest charges 19,908 35,474 19,381
-------------------------------------------------------------------------------------------------------
Net interest charges 209,967 230,040 231,932
-------------------------------------------------------------------------------------------------------
Net Income 382,573 376,053 373,741
Dividends on Preferred Stock 26,235 29,559 35,186
-------------------------------------------------------------------------------------------------------
Net Income After Dividends on Preferred Stock $ 356,338 $ 346,494 $ 338,555
=======================================================================================================
* Includes the effect of recognizing, beginning in 1987, retail service
rendered but not yet billed to customers.
</TABLE>
II-83
<PAGE>
<TABLE>
<CAPTION>
STATEMENTS OF INCOME
Alabama Power Company
======================================================================================================================
For the Years Ended December 31, 1991* 1990* 1989* 1988*
----------------------------------------------------------------------------------------------------------------------
(Thousands of Dollars)
<S> <C> <C> <C> <C>
Operating Revenues:
Revenues $ 2,687,419 $ 2,628,951 $ 2,524,866 $ 2,399,935
Revenues from affiliates 159,375 93,473 104,488 76,691
----------------------------------------------------------------------------------------------------------------------
Total operating revenues 2,846,794 2,722,424 2,629,354 2,476,626
----------------------------------------------------------------------------------------------------------------------
Operating Expenses:
Operation --
Fuel 812,667 756,501 712,453 676,423
Purchased power from non-affiliates 21,080 11,185 28,272 8,407
Purchased power from affiliates 119,602 165,982 163,267 185,390
Proceeds from settlement of disputed contracts (14,819) - - -
Other 435,908 411,559 380,536 400,879
Maintenance 229,114 215,304 202,633 197,225
Depreciation and amortization 271,433 262,817 247,973 225,123
Taxes other than income taxes 169,639 163,567 154,398 148,681
Federal and state income taxes 200,612 185,954 188,507 143,614
----------------------------------------------------------------------------------------------------------------------
Total operating expenses 2,245,236 2,172,869 2,078,039 1,985,742
----------------------------------------------------------------------------------------------------------------------
Operating Income 601,558 549,555 551,315 490,884
Other Income (Expense):
Allowance for equity funds used during construction 2,368 25,487 29,515 39,047
Income from subsidiary 4,576 4,182 3,750 3,302
Charitable foundation (6,500) (17,500) (25,000) -
Interest income 14,356 12,006 10,871 9,914
Other, net (9,926) (8,235) (4,313) (13,694)
Income taxes applicable to other income 7,523 11,081 13,629 8,034
----------------------------------------------------------------------------------------------------------------------
Income Before Interest Charges 613,955 576,576 579,767 537,487
----------------------------------------------------------------------------------------------------------------------
Interest Charges:
Interest on long-term debt 214,107 221,527 230,046 225,522
Allowance for debt funds used during construction (6,903) (23,339) (27,627) (31,830)
Interest on interim obligations 13,385 10,252 9,098 5,714
Amortization of debt discount, premium, and expense, net 2,634 3,706 4,469 4,411
Other interest charges 14,927 13,115 13,112 13,715
----------------------------------------------------------------------------------------------------------------------
Net interest charges 238,150 225,261 229,098 217,532
----------------------------------------------------------------------------------------------------------------------
Net Income 375,805 351,315 350,669 319,955
Dividends on Preferred Stock 36,139 38,512 39,523 36,480
----------------------------------------------------------------------------------------------------------------------
Net Income After Dividends on Preferred Stock $ 339,666 $ 312,803 $ 311,146 $ 283,475
======================================================================================================================
* Includes the effect of recognizing, beginning in 1987, retail service
rendered but not yet billed to customers.
</TABLE>
II-84A
<PAGE>
<TABLE>
<CAPTION>
STATEMENTS OF INCOME
Alabama Power Company
======================================================================================================================
For the Years Ended December 31, 1987* 1986 1985 1984
----------------------------------------------------------------------------------------------------------------------
(Thousands of Dollars)
<S> <C> <C> <C> <C>
Operating Revenues:
Revenues $ 2,455,888 $ 2,428,663 $ 2,422,966 $ 2,127,748
Revenues from affiliates 118,746 120,911 95,733 108,812
----------------------------------------------------------------------------------------------------------------------
Total operating revenues 2,574,634 2,549,574 2,518,699 2,236,560
----------------------------------------------------------------------------------------------------------------------
Operating Expenses:
Operation --
Fuel 696,763 738,367 743,463 657,183
Purchased power from non-affiliates 6,703 23,889 25,990 4,592
Purchased power from affiliates 257,052 156,091 187,041 156,180
Proceeds from settlement of disputed contracts - - - -
Other 410,575 350,671 308,437 287,647
Maintenance 199,617 203,972 210,143 182,957
Depreciation and amortization 212,072 201,803 183,779 174,514
Taxes other than income taxes 141,422 135,248 128,648 122,928
Federal and state income taxes 190,575 255,400 248,774 224,726
----------------------------------------------------------------------------------------------------------------------
Total operating expenses 2,114,779 2,065,441 2,036,275 1,810,727
----------------------------------------------------------------------------------------------------------------------
Operating Income 459,855 484,133 482,424 425,833
Other Income (Expense):
Allowance for equity funds used during construction 27,663 27,455 32,985 45,704
Income from subsidiary 3,440 2,967 3,417 3,181
Charitable foundation - - - -
Interest income 7,044 11,422 20,874 12,432
Other, net (816) (3,738) (4,447) (666)
Income taxes applicable to other income 849 185 (4,941) (3,088)
----------------------------------------------------------------------------------------------------------------------
Income Before Interest Charges 498,035 522,424 530,312 483,396
----------------------------------------------------------------------------------------------------------------------
Interest Charges:
Interest on long-term debt 205,824 226,110 248,073 245,684
Allowance for debt funds used during construction (24,235) (24,334) (29,048) (42,868)
Interest on interim obligations 7,221 1,159 - -
Amortization of debt discount, premium, and expense, net 4,405 3,313 1,145 996
Other interest charges 14,662 8,695 4,234 4,291
----------------------------------------------------------------------------------------------------------------------
Net interest charges 207,877 214,943 224,404 208,103
----------------------------------------------------------------------------------------------------------------------
Net Income 290,158 307,481 305,908 275,293
Dividends on Preferred Stock 32,919 34,025 41,346 42,041
----------------------------------------------------------------------------------------------------------------------
Net Income After Dividends on Preferred Stock $ 257,239 $ 273,456 $ 264,562 $ 233,252
======================================================================================================================
* Includes the effect of recognizing, beginning in 1987, retail service
rendered but not yet billed to customers.
</TABLE>
II-84B
<PAGE>
<TABLE>
<CAPTION>
STATEMENTS OF CASH FLOWS
Alabama Power Company
============================================================================================================
For the Years Ended December 31, 1994 1993 1992
------------------------------------------------------------------------------------------------------------
(Thousands of Dollars)
<S> <C> <C> <C>
Operating Activities:
Net income $ 382,573 $ 376,053 $ 373,741
Adjustments to reconcile net income to net
cash provided by operating activities --
Depreciation and amortization 359,791 356,499 338,421
Deferred income taxes, net (32,612) 35,100 23,514
Deferred investment tax credits, net (1) (2,106) -
Allowance for equity funds used during construction (3,239) (3,260) (2,071)
Non-cash proceeds from settlement of disputed contracts - - (641)
Other, net 28,656 36,493 (2,657)
Changes in certain current assets and liabilities --
Receivables, net 19,390 19,215 (11,010)
Inventories (38,946) 51,630 12,704
Payables (21,240) 31,544 2,158
Taxes accrued 6,856 (9,959) (21,120)
Energy cost recovery, retail 16,907 (56,128) 45,509
Other (14,235) (21,110) 10,629
-------------------------------------------------------------------------------------------------------------
Net cash provided from operating activities 703,900 813,971 769,177
-------------------------------------------------------------------------------------------------------------
Investing Activities:
Gross property additions (536,785) (435,843) (367,463)
Sales of property - - 43,556
Other (26,632) (741) (13,379)
-------------------------------------------------------------------------------------------------------------
Net cash used for investing activities (563,417) (436,584) (337,286)
-------------------------------------------------------------------------------------------------------------
Financing Activities and Capital Contributions:
Proceeds:
Preferred stock - 158,000 150,000
First mortgage bonds 150,000 860,000 745,000
Pollution control bonds - - -
Other long-term debt 208,720 180,314 48,382
Capital contributions from parent company - - -
Prepaid capacity revenues - - -
Retirements:
Preferred stock - (207,000) (145,000)
First mortgage bonds (20,387) (699,788) (931,797)
Pollution control bonds (179,750) (135,315) (335)
Other long-term debt (125,630) (46,014) (53,888)
Interim obligations, net 139,882 (156,917) 120,917
Payment of preferred stock dividends (25,431) (32,099) (35,704)
Payment of common stock dividends (268,000) (252,900) (273,300)
Miscellaneous (8,444) (56,064) (53,697)
-------------------------------------------------------------------------------------------------------------
Net cash provided from (used for) financing activities (129,040) (387,783) (429,422)
-------------------------------------------------------------------------------------------------------------
Net Change in Cash 11,443 (10,396) 2,469
Cash at Beginning of Year 3,233 13,629 11,160
-------------------------------------------------------------------------------------------------------------
Cash at End of Year $ 14,676 $ 3,233 $ 13,629
=============================================================================================================
( ) Denotes use of cash.
</TABLE>
II-85
<PAGE>
<TABLE>
<CAPTION>
STATEMENTS OF CASH FLOWS
Alabama Power Company
========================================================================================================================
For the Years Ended December 31, 1991 1990 1989 1988
------------------------------------------------------------------------------------------------------------------------
(Thousands of Dollars)
<S> <C> <C> <C> <C>
Operating Activities:
Net income $ 375,805 $ 351,315 $ 350,669 $ 319,955
Adjustments to reconcile net income to net
cash provided by operating activities --
Depreciation and amortization 337,978 331,858 322,042 296,234
Deferred income taxes, net (5,779) 64,480 31,715 37,952
Deferred investment tax credits, net (1,089) 132 6,917 15,019
Allowance for equity funds used during construction (2,368) (25,487) (29,515) (39,047)
Non-cash proceeds from settlement of disputed contracts (13,750) - - -
Other, net 26,614 19,899 (5,297) 16,106
Changes in certain current assets and liabilities --
Receivables, net 9,178 12,005 (10,436) 8,822
Inventories (17,374) (40,901) 20,408 (23,182)
Payables 28,889 6,597 16,259 (12,957)
Taxes accrued 24,828 (6,167) 1,547 (7,754)
Energy cost recovery, retail (12,304) (42,535) 39,164 -
Other (37,906) 14,144 28,701 (18,658)
------------------------------------------------------------------------------------------------------------------------
Net cash provided from operating activities 712,722 685,340 772,174 592,490
------------------------------------------------------------------------------------------------------------------------
Investing Activities:
Gross property additions (397,011) (444,680) (459,199) (643,892)
Sales of property - - - -
Other (36,083) 6,935 3,768 23,161
------------------------------------------------------------------------------------------------------------------------
Net cash used for investing activities (433,094) (437,745) (455,431) (620,731)
------------------------------------------------------------------------------------------------------------------------
Financing Activities and Capital Contributions:
Proceeds:
Preferred stock - - - 100,000
First mortgage bonds 250,000 - - 150,000
Pollution control bonds - - 53,700 -
Other long-term debt 12,906 54,831 55,176 62,515
Capital contributions from parent company - - - 79,500
Prepaid capacity revenues 52,900 - - -
Retirements:
Preferred stock (17,500) (5,000) (5,000) (2,500)
First mortgage bonds (227,695) (33,122) (75,650) (42,445)
Pollution control bonds (250) (250) (53,950) -
Other long-term debt (48,428) (56,895) (57,316) (56,748)
Interim obligations, net (13,500) 59,500 30,000 (15,000)
Payment of preferred stock dividends (36,829) (38,245) (40,105) (35,362)
Payment of common stock dividends (232,900) (220,800) (217,300) (212,700)
Miscellaneous (17,732) (293) (4,576) (5,581)
------------------------------------------------------------------------------------------------------------------------
Net cash provided from (used for) financing activities (279,028) (240,274) (315,021) 21,679
------------------------------------------------------------------------------------------------------------------------
Net Change in Cash 600 7,321 1,722 (6,562)
Cash at Beginning of Year 10,560 3,239 1,517 8,079
------------------------------------------------------------------------------------------------------------------------
Cash at End of Year $ 11,160 $ 10,560 $ 3,239 $ 1,517
========================================================================================================================
( ) Denotes use of cash.
</TABLE>
II-86A
<PAGE>
<TABLE>
<CAPTION>
STATEMENTS OF CASH FLOWS
Alabama Power Company
========================================================================================================================
For the Years Ended December 31, 1987 1986 1985 1984
------------------------------------------------------------------------------------------------------------------------
(Thousands of Dollars)
<S> <C> <C> <C> <C>
Operating Activities:
Net income $ 290,158 $ 307,481 $ 305,908 $ 275,293
Adjustments to reconcile net income to net
cash provided by operating activities --
Depreciation and amortization 270,492 292,569 266,657 266,479
Deferred income taxes, net 107,824 135,364 104,259 85,426
Deferred investment tax credits, net 23,477 19,736 57,096 165,020
Allowance for equity funds used during construction (27,663) (27,455) (32,985) (45,704)
Non-cash proceeds from settlement of disputed contracts - - - -
Other, net 67,445 4,251 (18,971) (4,573)
Changes in certain current assets and liabilities --
Receivables, net (133,468) 15,238 (13,531) (16,403)
Inventories (26,255) (2,040) 29,823 25,159
Payables 39,645 (56,720) 26,360 39,964
Taxes accrued 516 (1,487) (6,325) (8,198)
Energy cost recovery, retail - - - -
Other 4,464 (35,293) 4,358 29,836
------------------------------------------------------------------------------------------------------------------------
Net cash provided from operating activities 616,635 651,644 722,649 812,299
------------------------------------------------------------------------------------------------------------------------
Investing Activities:
Gross property additions (600,589) (553,767) (568,073) (575,173)
Sales of property - - - -
Other 17,010 10,115 22,028 26,175
------------------------------------------------------------------------------------------------------------------------
Net cash used for investing activities (583,579) (543,652) (546,045) (548,998)
------------------------------------------------------------------------------------------------------------------------
Financing Activities and Capital Contributions:
Proceeds:
Preferred stock - - - -
First mortgage bonds 200,000 125,000 - -
Pollution control bonds 432 26,232 115,577 161,134
Other long-term debt 69,786 95,017 12,998 25,654
Capital contributions from parent company 43,000 - 27,000 93,000
Prepaid capacity revenues - 100,000 - -
Retirements:
Preferred stock (5,000) (42,224) - (810)
First mortgage bonds (108,082) (405,765) (39,460) (21,250)
Pollution control bonds - (21,000) - (3,500)
Other long-term debt (32,500) (43,561) (35,023) (128,060)
Interim obligations, net 15,000 - - -
Payment of preferred stock dividends (32,837) (36,014) (41,566) (42,061)
Payment of common stock dividends (201,100) (191,300) (185,700) (161,900)
Miscellaneous (2,581) (38,052) (4,438) (2,727)
------------------------------------------------------------------------------------------------------------------------
Net cash provided from (used for) financing activities (53,882) (431,667) (150,612) (80,520)
------------------------------------------------------------------------------------------------------------------------
Net Change in Cash (20,826) (323,675) 25,992 182,781
Cash at Beginning of Year 28,905 352,580 326,588 143,807
------------------------------------------------------------------------------------------------------------------------
Cash at End of Year $ 8,079 $ 28,905 $ 352,580 $ 326,588
========================================================================================================================
( ) Denotes use of cash.
</TABLE>
II-86B
<PAGE>
<TABLE>
<CAPTION>
BALANCE SHEETS
Alabama Power Company
===========================================================================================================
At December 31, 1994* 1993* 1992*
-----------------------------------------------------------------------------------------------------------
(Thousands of Dollars)
<S> <C> <C> <C>
ASSETS
Electric Plant:
Production-
Fossil $ 3,027,956 $ 2,987,010 $ 2,953,683
Nuclear 1,866,750 1,860,842 1,860,832
Hydro 836,256 819,848 818,363
-----------------------------------------------------------------------------------------------------------
Total production 5,730,962 5,667,700 5,632,878
Transmission 1,087,452 1,051,130 1,013,464
Distribution 2,366,477 2,206,834 2,072,165
General 847,111 810,551 751,652
Construction work in progress 317,745 225,743 164,555
Nuclear fuel, at amortized cost 101,630 93,551 101,128
-----------------------------------------------------------------------------------------------------------
Total electric plant 10,451,377 10,055,509 9,735,842
-----------------------------------------------------------------------------------------------------------
Steam Heat Plant:
Plant in service 20,770 20,926 20,924
Construction work in progress 34 43 33
-----------------------------------------------------------------------------------------------------------
Total steam heat plant 20,804 20,969 20,957
-----------------------------------------------------------------------------------------------------------
Total utility plant 10,472,181 10,076,478 9,756,799
-----------------------------------------------------------------------------------------------------------
Accumulated provision for depreciation:
Electric 3,588,363 3,374,310 3,122,332
Steam heat 10,241 9,846 9,211
-----------------------------------------------------------------------------------------------------------
Total accumulated provision for depreciation 3,598,604 3,384,156 3,131,543
-----------------------------------------------------------------------------------------------------------
Total 6,873,577 6,692,322 6,625,256
Less property-related accumulated deferred income taxes - - 1,170,982
-----------------------------------------------------------------------------------------------------------
Total 6,873,577 6,692,322 5,454,274
-----------------------------------------------------------------------------------------------------------
Other Property and Investments:
Securities received from settlement of disputed contracts - - -
Nuclear decommissioning trusts 71,014 49,550 32,390
Miscellaneous 43,955 49,635 49,892
-----------------------------------------------------------------------------------------------------------
Total 114,969 99,185 82,282
-----------------------------------------------------------------------------------------------------------
Current Assets:
Cash and cash equivalents 14,676 3,233 13,629
Investment securities - - 64,832
Receivables, net 374,125 410,422 344,934
Fossil fuel stock, at average cost 119,555 88,481 134,328
Materials and supplies, at average cost 184,600 176,728 182,511
Prepayments 103,550 79,207 108,254
Vacation pay deferred 20,442 22,680 21,879
-----------------------------------------------------------------------------------------------------------
Total 816,948 780,751 870,367
-----------------------------------------------------------------------------------------------------------
Deferred Charges:
Deferred charges related to income taxes 451,886 469,010 -
Debt expense, being amortized 7,370 7,064 6,118
Premium on reacquired debt, being amortized 101,851 102,634 74,835
Uranium enrichment decontamination and decommissioning fund 42,996 45,554 47,730
Miscellaneous 49,620 52,163 58,012
-----------------------------------------------------------------------------------------------------------
Total 653,723 676,425 186,695
-----------------------------------------------------------------------------------------------------------
Total Assets $ 8,459,217 $ 8,248,683 $ 6,593,618
===========================================================================================================
*Includes the effect of recognizing, beginning in 1987, retail service rendered
but not yet billed to customers.
</TABLE>
II-87
<PAGE>
<TABLE>
<CAPTION>
BALANCE SHEETS
Alabama Power Company
==========================================================================================================================
At December 31, 1991* 1990* 1989* 1988*
--------------------------------------------------------------------------------------------------------------------------
(Thousands of Dollars)
<S> <C> <C> <C> <C>
ASSETS
Electric Plant:
Production-
Fossil $ 2,991,876 $ 2,462,100 $ 2,428,146 $ 1,820,966
Nuclear 1,851,317 1,794,540 1,786,877 1,769,093
Hydro 814,301 809,578 803,901 789,617
--------------------------------------------------------------------------------------------------------------------------
Total production 5,657,494 5,066,218 5,018,924 4,379,676
Transmission 977,239 925,368 882,933 844,003
Distribution 1,947,972 1,815,265 1,692,426 1,587,690
General 713,948 660,217 646,523 613,498
Construction work in progress 148,564 654,055 557,150 1,023,019
Nuclear fuel, at amortized cost 109,259 143,711 147,997 174,130
---------------------------------------------------------------------------------------------------------------------------
Total electric plant 9,554,476 9,264,834 8,945,953 8,622,016
---------------------------------------------------------------------------------------------------------------------------
Steam Heat Plant:
Plant in service 20,214 20,091 20,083 20,076
Construction work in progress 181 74 71 58
--------------------------------------------------------------------------------------------------------------------------
Total steam heat plant 20,395 20,165 20,154 20,134
--------------------------------------------------------------------------------------------------------------------------
Total utility plant 9,574,871 9,284,999 8,966,107 8,642,150
--------------------------------------------------------------------------------------------------------------------------
Accumulated provision for depreciation:
Electric 2,913,385 2,676,957 2,458,747 2,257,696
Steam heat 8,492 7,861 7,154 6,456
--------------------------------------------------------------------------------------------------------------------------
Total accumulated provision for depreciation 2,921,877 2,684,818 2,465,901 2,264,152
--------------------------------------------------------------------------------------------------------------------------
Total 6,652,994 6,600,181 6,500,206 6,377,998
Less property-related accumulated deferred income taxes 1,140,303 1,106,664 1,051,877 1,001,173
--------------------------------------------------------------------------------------------------------------------------
Total 5,512,691 5,493,517 5,448,329 5,376,825
--------------------------------------------------------------------------------------------------------------------------
Other Property and Investments:
Securities received from settlement of disputed contracts 69,550 - - -
Nuclear decommissioning trusts 15,864 - - -
Miscellaneous 48,254 40,604 34,710 29,677
--------------------------------------------------------------------------------------------------------------------------
Total 133,668 40,604 34,710 29,677
--------------------------------------------------------------------------------------------------------------------------
Current Assets:
Cash and cash equivalents 11,160 10,560 3,239 1,517
Investment securities - - - -
Receivables, net 349,599 346,473 355,107 344,671
Fossil fuel stock, at average cost 154,798 144,960 131,942 173,858
Materials and supplies, at average cost 174,745 167,209 139,326 117,818
Prepayments 95,832 50,364 54,613 28,412
Vacation pay deferred 21,691 22,845 22,021 21,871
--------------------------------------------------------------------------------------------------------------------------
Total 807,825 742,411 706,248 688,147
--------------------------------------------------------------------------------------------------------------------------
Deferred Charges:
Deferred charges related to income taxes - - - -
Debt expense, being amortized 5,957 6,083 6,491 6,831
Premium on reacquired debt, being amortized 40,174 26,504 28,778 27,329
Uranium enrichment decontamination and decommissioning fund - - - -
Miscellaneous 49,147 53,174 54,875 52,136
--------------------------------------------------------------------------------------------------------------------------
Total 95,278 85,761 90,144 86,296
--------------------------------------------------------------------------------------------------------------------------
Total Assets $ 6,549,462 $ 6,362,293 $ 6,279,431 $ 6,180,945
==========================================================================================================================
*Includes the effect of recognizing, beginning in 1987, retail service rendered
but not yet billed to customers.
</TABLE>
II-88A
<PAGE>
<TABLE>
<CAPTION>
BALANCE SHEETS
Alabama Power Company
==========================================================================================================================
At December 31, 1987* 1986 1985 1984
--------------------------------------------------------------------------------------------------------------------------
(Thousands of Dollars)
<S> <C> <C> <C> <C>
ASSETS
Electric Plant:
Production-
Fossil $ 1,787,979 $ 1,748,226 $ 1,678,117 $ 1,203,447
Nuclear 1,765,854 1,749,981 1,687,766 1,664,849
Hydro 788,046 784,445 773,682 559,696
--------------------------------------------------------------------------------------------------------------------------
Total production 4,341,879 4,282,652 4,139,565 3,427,992
Transmission 817,065 773,142 699,980 642,968
Distribution 1,481,845 1,384,576 1,295,930 1,221,003
General 535,148 506,228 349,249 300,043
Construction work in progress 750,907 497,491 502,455 972,832
Nuclear fuel, at amortized cost 191,493 205,768 243,468 223,818
--------------------------------------------------------------------------------------------------------------------------
Total electric plant 8,118,337 7,649,857 7,230,647 6,788,656
--------------------------------------------------------------------------------------------------------------------------
Steam Heat Plant:
Plant in service 20,217 19,508 17,056 9,780
Construction work in progress 89 123 64 901
--------------------------------------------------------------------------------------------------------------------------
Total steam heat plant 20,306 19,631 17,120 10,681
--------------------------------------------------------------------------------------------------------------------------
Total utility plant 8,138,643 7,669,488 7,247,767 6,799,337
--------------------------------------------------------------------------------------------------------------------------
Accumulated provision for depreciation:
Electric 2,068,176 1,877,124 1,697,547 1,525,893
Steam heat 5,938 5,261 3,874 3,619
--------------------------------------------------------------------------------------------------------------------------
Total accumulated provision for depreciation 2,074,114 1,882,385 1,701,421 1,529,512
--------------------------------------------------------------------------------------------------------------------------
Total 6,064,529 5,787,103 5,546,346 5,269,825
Less property-related accumulated deferred income taxes 933,932 857,081 758,150 664,591
--------------------------------------------------------------------------------------------------------------------------
Total 5,130,597 4,930,022 4,788,196 4,605,234
--------------------------------------------------------------------------------------------------------------------------
Other Property and Investments:
Securities received from settlement of disputed contracts - - - -
Nuclear decommissioning trusts - - - -
Miscellaneous 31,402 30,735 24,849 22,288
--------------------------------------------------------------------------------------------------------------------------
Total 31,402 30,735 24,849 22,288
--------------------------------------------------------------------------------------------------------------------------
Current Assets:
Cash and cash equivalents 8,079 28,905 352,580 326,588
Investment securities - - - -
Receivables, net 353,493 220,025 235,263 221,732
Fossil fuel stock, at average cost 164,671 152,640 163,899 206,232
Materials and supplies, at average cost 103,823 89,599 76,300 63,790
Prepayments 10,595 12,320 9,741 8,801
Vacation pay deferred 21,317 20,002 18,859 17,599
--------------------------------------------------------------------------------------------------------------------------
Total 661,978 523,491 856,642 844,742
--------------------------------------------------------------------------------------------------------------------------
Deferred Charges:
Deferred charges related to income taxes - - - -
Debt expense, being amortized 6,695 6,308 6,607 6,774
Premium on reacquired debt, being amortized 30,767 34,170 524 109
Uranium enrichment decontamination and decommissioning fund - - - -
Miscellaneous 50,561 45,927 45,445 17,050
--------------------------------------------------------------------------------------------------------------------------
Total 88,023 86,405 52,576 23,933
--------------------------------------------------------------------------------------------------------------------------
Total Assets $ 5,912,000 $ 5,570,653 $ 5,722,263 $ 5,496,197
==========================================================================================================================
*Includes the effect of recognizing, beginning in 1987, retail service rendered
but not yet billed to customers.
</TABLE>
II-88B
<PAGE>
<TABLE>
<CAPTION>
BALANCE SHEETS
Alabama Power Company
===========================================================================================================
At December 31, 1994* 1993* 1992*
-----------------------------------------------------------------------------------------------------------
(Thousands of Dollars)
<S> <C> <C> <C>
CAPITALIZATION AND LIABILITIES
Capitalization:
Common stock $ 224,358 $ 224,358 $ 224,358
Paid-in capital 1,304,645 1,304,645 1,304,645
Premium on preferred stock 146 146 342
Earnings retained in the business 1,085,256 997,199 914,148
-----------------------------------------------------------------------------------------------------------
Total common equity 2,614,405 2,526,348 2,443,493
Preferred stock 440,400 440,400 489,400
Preferred stock subject to mandatory redemption - - -
Long-term debt 2,455,013 2,362,852 2,202,473
-----------------------------------------------------------------------------------------------------------
Total 5,509,818 5,329,600 5,135,366
(excluding amount due within one year)
-----------------------------------------------------------------------------------------------------------
Current Liabilities:
Notes payable to banks - 40,000 71,000
Commercial paper 179,882 - 125,917
Preferred stock due within one year - - -
Long-term debt due within one year 796 58,998 67,379
Accounts payable 318,991 334,998 296,731
Customer deposits 30,245 31,198 31,286
Taxes accrued 22,437 40,144 24,373
Interest accrued 52,516 52,809 41,675
Vacation pay accrued 20,442 22,680 21,879
Miscellaneous 57,047 50,426 93,836
-----------------------------------------------------------------------------------------------------------
Total 682,356 631,253 774,076
-----------------------------------------------------------------------------------------------------------
Deferred Credits and Other Liabilities:
Accumulated deferred income taxes 1,181,342 1,165,127 -
Accumulated deferred investment tax credits 317,018 329,909 344,707
Prepaid capacity revenues, net 138,421 143,762 147,658
Deferred revenues from settlement of disputed contracts - 19,871 46,721
Uranium enrichment decontamination and decommissioning fund 39,413 39,644 44,548
Deferred credits related to income taxes 405,256 440,945 -
Natural disaster reserve 28,750 - -
Miscellaneous 156,843 148,572 100,542
-----------------------------------------------------------------------------------------------------------
Total 2,267,043 2,287,830 684,176
-----------------------------------------------------------------------------------------------------------
Total Capitalization and Liabilities $ 8,459,217 $ 8,248,683 $ 6,593,618
===========================================================================================================
*Includes the effect of recognizing, beginning in 1987, retail service rendered
but not yet billed to customers.
</TABLE>
II-89
<PAGE>
<TABLE>
<CAPTION>
BALANCE SHEETS
Alabama Power Company
==========================================================================================================================
At December 31, 1991* 1990* 1989* 1988*
--------------------------------------------------------------------------------------------------------------------------
(Thousands of Dollars)
<S> <C> <C> <C> <C>
CAPITALIZATION AND LIABILITIES
Capitalization:
Common stock $ 224,358 $ 224,358 $ 224,358 $ 224,358
Paid-in capital 1,304,645 1,304,645 1,304,645 1,304,645
Premium on preferred stock 461 461 461 461
Earnings retained in the business 857,734 751,126 659,347 565,351
--------------------------------------------------------------------------------------------------------------------------
Total common equity 2,387,198 2,280,590 2,188,811 2,094,815
Preferred stock 484,400 484,400 484,400 484,400
Preferred stock subject to mandatory redemption - 12,500 17,500 22,500
Long-term debt 2,382,635 2,397,931 2,435,129 2,496,492
--------------------------------------------------------------------------------------------------------------------------
Total 5,254,233 5,175,421 5,125,840 5,098,207
(excluding amount due within one year)
--------------------------------------------------------------------------------------------------------------------------
Current Liabilities:
Notes payable to banks 76,000 89,500 30,000 -
Commercial paper - - - -
Preferred stock due within one year - 5,000 5,000 5,000
Long-term debt due within one year 85,077 83,989 81,031 96,242
Accounts payable 295,333 271,776 267,645 259,443
Customer deposits 30,165 29,571 28,450 25,964
Taxes accrued 45,493 20,665 26,832 25,285
Interest accrued 49,288 49,820 49,926 50,174
Vacation pay accrued 21,691 22,845 22,021 21,871
Miscellaneous 37,699 64,547 91,022 28,944
--------------------------------------------------------------------------------------------------------------------------
Total 640,746 637,713 601,927 512,923
--------------------------------------------------------------------------------------------------------------------------
Deferred Credits and Other Liabilities:
Accumulated deferred income taxes - - - -
Accumulated deferred investment tax credits 362,672 379,990 399,097 412,771
Prepaid capacity revenues, net 149,534 99,835 102,346 104,211
Deferred revenues from settlement of disputed contracts 59,937 - - -
Uranium enrichment decontamination and decommissioning fund - - - -
Deferred credits related to income taxes - - - -
Natural disaster reserve - - - -
Miscellaneous 82,340 69,334 50,221 52,833
--------------------------------------------------------------------------------------------------------------------------
Total 654,483 549,159 551,664 569,815
--------------------------------------------------------------------------------------------------------------------------
Total Capitalization and Liabilities $ 6,549,462 $ 6,362,293 $ 6,279,431 $ 6,180,945
==========================================================================================================================
*Includes the effect of recognizing, beginning in 1987, retail service rendered
but not yet billed to customers.
</TABLE>
II-90A
<PAGE>
<TABLE>
<CAPTION>
BALANCE SHEETS
Alabama Power Company
==========================================================================================================================
At December 31, 1987* 1986 1985 1984
--------------------------------------------------------------------------------------------------------------------------
(Thousands of Dollars)
<S> <C> <C> <C> <C>
CAPITALIZATION AND LIABILITIES
Capitalization:
Common stock $ 224,358 $ 224,358 $ 224,358 $ 224,358
Paid-in capital 1,225,145 1,182,145 1,182,145 1,155,145
Premium on preferred stock 461 461 1,937 1,938
Earnings retained in the business 496,783 440,644 361,716 282,854
--------------------------------------------------------------------------------------------------------------------------
Total common equity 1,946,747 1,847,608 1,770,156 1,664,295
Preferred stock 384,400 384,400 384,400 424,400
Preferred stock subject to mandatory redemption 27,500 30,000 35,000 37,224
Long-term debt 2,386,258 2,210,108 2,349,373 2,402,713
--------------------------------------------------------------------------------------------------------------------------
Total 4,744,905 4,472,116 4,538,929 4,528,632
(excluding amount due within one year)
--------------------------------------------------------------------------------------------------------------------------
Current Liabilities:
Notes payable to banks 15,000 - - -
Commercial paper - - - -
Preferred stock due within one year 2,500 5,000 42,224 -
Long-term debt due within one year 95,140 142,394 224,918 120,077
Accounts payable 273,613 238,606 295,326 268,966
Customer deposits 32,220 30,333 29,436 28,498
Taxes accrued 72,118 50,757 27,368 36,788
Interest accrued 49,489 47,648 66,193 66,201
Vacation pay accrued 21,317 20,002 18,859 17,599
Miscellaneous 24,660 25,567 42,622 38,474
--------------------------------------------------------------------------------------------------------------------------
Total 586,057 560,307 746,946 576,603
--------------------------------------------------------------------------------------------------------------------------
Deferred Credits and Other Liabilities:
Accumulated deferred income taxes - - - -
Accumulated deferred investment tax credits 418,370 418,275 418,222 379,433
Prepaid capacity revenues, net 103,947 101,143 - -
Deferred revenues from settlement of disputed contracts - - - -
Uranium enrichment decontamination and decommissioning fund - - - -
Deferred credits related to income taxes - - - -
Natural disaster reserve - - - -
Miscellaneous 58,721 18,812 18,166 11,529
--------------------------------------------------------------------------------------------------------------------------
Total 581,038 538,230 436,388 390,962
--------------------------------------------------------------------------------------------------------------------------
Total Capitalization and Liabilities $ 5,912,000 $ 5,570,653 $ 5,722,263 $ 5,496,197
==========================================================================================================================
*Includes the effect of recognizing, beginning in 1987, retail service rendered
but not yet billed to customers.
</TABLE>
II-90B
<PAGE>
ALABAMA POWER COMPANY
OUTSTANDING SECURITIES AT DECEMBER 31, 1994
First Mortgage Bonds
Amount Interest Amount
Series Issued Rate Outstanding Maturity
--------------------------------------------------------------------------
(Thousands) (Thousands)
1993 $ 60,000 4-1/2% $ 60,000 3/1/96
1993 50,000 5-1/2% 50,000 2/1/98
1992 170,000 6-3/8% 170,000 8/1/99
1993 100,000 6% 100,000 3/1/00
1992 100,000 6.85% 100,000 8/1/02
1993 125,000 7% 125,000 1/1/03
1993 175,000 6-3/4% 175,000 2/1/03
1992 175,000 7-1/4% 175,000 8/1/07
1991 100,000 9-1/4% 98,748 5/1/21
1991 150,000 8-3/4% 148,500 12/1/21
1992 200,000 8-1/2% 198,000 5/1/22
1992 100,000 8.30% 99,608 7/1/22
1993 100,000 7-3/4% 100,000 2/1/23
1993 150,000 7.45% 150,000 7/1/23
1993 100,000 7.30% 100,000 11/1/23
1994 150,000 9% 150,000 12/1/24
---------- ----------
$2,005,000 $1,999,856
========== ==========
Pollution Control Bonds
Amount Interest Amount
Series Issued Rate Outstanding Maturity
--------------------------------------------------------------------------
(Thousands) (Thousands)
1978 $ 5,600 7-1/4% $ 1,000 5/1/03
1985 50,000 9-3/8% 50,000 6/1/15
1985 81,500 9-1/4% 81,500 12/1/15
1986 21,000 7.40% 21,000 11/1/16
1993 12,100 Variable 12,100 8/1/17
1993 12,000 Variable 12,000 8/1/17
1993 12,000 Variable 12,000 8/1/17
1993 96,990 6.05% 96,990 5/1/23
1993 9,800 5.80% 9,800 6/1/22
1994 24,400 5-1/2% 24,400 1/1/24
1994 53,700 Variable 53,700 6/1/15
1994 101,650 6-1/2% 101,650 9/1/23
---------- ----------
$ 480,740 $ 476,140
========== ==========
Preferred Stock
Shares Dividend Amount
Series Outstanding Rate Outstanding
--------------------------------------------------------------------------
(Thousands)
1946-1952 364,000 4.20% $ 36,400
1950 100,000 4.60% 10,000
1961 80,000 4.92% 8,000
1963 50,000 4.52% 5,000
1964 60,000 4.64% 6,000
1965 50,000 4.72% 5,000
1966 70,000 5.96% 7,000
1968 50,000 6.88% 5,000
1988 500,000 Auction 50,000
1992 4,000,000 7.60% 100,000
1992 2,000,000 7.60% 50,000
1993 1,520,000 6.80% 38,000
1993 2,000,000 6.40% 50,000
1993 200 Auction 20,000
1993 2,000,000 Adjustable 50,000
---------- ----------
12,844,200 $ 440,400
========== ==========
II-91
<PAGE>
ALABAMA POWER COMPANY
SECURITIES RETIRED DURING 1994
First Mortgage Bonds
Principal Interest
Series Amount Rate
----------------------------------------------------
(Thousands)
1987 $ 15,243 10-5/8%
1991 1,252 9-1/4%
1991 1,500 8-3/4%
1992 2,000 8-1/2%
1992 392 8.30%
--------
$ 20,387
========
Pollution Control Bonds
Principal Interest
Series Amount Rate
---------------------------------------------------
(Thousands)
1974 $ 18,550 6%
1976 2,900 7.20%
1978 4,600 7-1/4%
1984 100,000 10-7/8%
1989 35,000 7.20%
1989 18,700 7.20%
--------
$179,750
========
II-92
<PAGE>
GEORGIA POWER COMPANY
FINANCIAL SECTION
II-93
<PAGE>
MANAGEMENT'S REPORT
Georgia Power Company 1994 Annual Report
The management of Georgia Power Company has prepared this annual report and is
responsible for the financial statements and related information. These
statements were prepared in accordance with generally accepted accounting
principles appropriate in the circumstances, and necessarily include amounts
that are based on the best estimates and judgments of management. Financial
information throughout this annual report is consistent with the financial
statements.
The Company maintains a system of internal accounting controls to provide
reasonable assurance that assets are safeguarded and that the books and records
reflect only authorized transactions of the Company. Limitations exist in any
system of internal controls based upon the recognition that the cost of the
system should not exceed its benefits. The Company believes that its system of
internal accounting controls maintains an appropriate cost/benefit relationship.
The Company's system of internal accounting controls is evaluated on an
ongoing basis by the Company's internal audit staff. The Company's independent
public accountants also consider certain elements of the internal control system
in order to determine their auditing procedures for the purpose of expressing an
opinion on the financial statements.
The audit committee of the board of directors, which is composed of five
directors who are not employees, provides a broad overview of management's
financial reporting and control functions. At least three times a
year this committee meets with management, the internal auditors, and the
independent public accountants to ensure that these groups are fulfilling their
obligations and to discuss auditing, internal control and financial reporting
matters. The internal auditors and the independent public accountants have
access to the members of the audit committee at any time.
Management believes that its policies and procedures provide reasonable
assurance that the Company's operations are conducted with a high standard of
business ethics.
In management's opinion, the financial statements present fairly, in all
material respects, the financial position, results of operations and cash flows
of Georgia Power Company in conformity with generally accepted accounting
principles. As discussed in Note 4 to the financial statements, an uncertainty
exists with respect to the actions of regulators regarding recoverability of the
Company's investment in the Rocky Mountain pumped storage hydroelectric project.
The outcome of this uncertainty cannot be determined until a regulatory review
is completed. Accordingly, no provision for any write-down of the costs
associated with the Rocky Mountain project resulting from the potential actions
of the Georgia Public Service Commission has been made in the accompanying
financial statements.
/s/ H. Allen Franklin
H. Allen Franklin
President and Chief
Executive Officer
/s/ Warren Y. Jobe
Warren Y. Jobe
Executive Vice President,
Treasurer and Chief
Financial Officer
II-94
<PAGE>
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To the Board of Directors
of Georgia Power Company:
We have audited the accompanying balance sheets and statements of capitalization
of Georgia Power Company (a Georgia corporation and wholly owned subsidiary of
The Southern Company) as of December 31, 1994 and 1993, and the related
statements of income, retained earnings, paid-in capital, and cash flows for
each of the three years in the period ended December 31, 1994. These financial
statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements (pages II-104 through II-126)
referred to above present fairly, in all material respects, the financial
position of Georgia Power Company as of December 31, 1994 and 1993, and
the results of its operations and its cash flows for the periods stated, in
conformity with generally accepted accounting principles.
As explained in Notes 2 and 7 to the financial statements, effective January
1, 1993, the Company changed its methods of accounting for postretirement
benefits other than pensions and for income taxes.
As more fully discussed in Note 4 to the financial statements, an
uncertainty exists with respect to the actions of the regulators regarding
recoverability of the Company's investment in the Rocky Mountain pumped storage
hydroelectric project. The outcome of this uncertainty cannot be determined
until a regulatory review is completed. Accordingly, no provision for any
write-down of the costs associated with the Rocky Mountain project resulting
from the potential actions of the Georgia Public Service Commission has been
made in the accompanying financial statements.
/s/ Arthur Andersen LLP
Atlanta, Georgia
February 15, 1995
II-95
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND FINANCIAL
CONDITION
Georgia Power Company 1994 Annual Report
RESULTS OF OPERATIONS
Earnings
Georgia Power Company's 1994 earnings totaled $526 million, representing a $44
million (7.8 percent) decrease from the prior year. This decline is primarily
the result of a $55 million after-tax charge associated with the 1994 work force
reduction programs. The Company had lower operating expenses and financing costs
in 1994, partially offset by lower retail revenues due to the mild weather.
Also, during the period, the Company had an $11 million after-tax gain on the
sale of a portion of Plant Scherer Unit 4 compared to an $18 million after-tax
gain on the sale of a portion of the plant in the prior year.
Earnings for 1993 increased over the prior year primarily as a result of
higher retail revenues due to the exceptionally hot summer weather during 1993
and lower financing costs. Also, as previously discussed, 1993 earnings included
an $18 million after-tax gain on the sale of a portion of Plant Scherer. These
positive events were partially offset by higher operating expenses.
Revenues
The following table summarizes the factors impacting operating revenues for the
1992-1994 period:
==========================================================
Increase (Decrease)
From Prior Year
----------------------------------------------------------
1994 1993 1992
--------------------------
Retail - (in millions)
Change in base rates $ - $ - $ 95
Sales growth 67 45 76
Weather (128) 126 (58)
Fuel cost recovery (35) 76 (26)
Demand-side programs (12) 15 -
----------------------------------------------------------
Total retail (108) 262 87
----------------------------------------------------------
Sales for resale -
Non-affiliates (183) (106) (96)
Affiliates (1) (6) 2
----------------------------------------------------------
Total sales for resale (184) (112) (94)
----------------------------------------------------------
Other operating revenues 3 4 3
----------------------------------------------------------
Total operating revenues $(289) $ 154 $ (4)
==========================================================
Percent change (6.5)% 3.6% (0.1)%
----------------------------------------------------------
Retail revenues of $3.7 billion in 1994 decreased $108 million (2.8 percent)
from the prior year, compared with an increase of $262 million (7.4 percent) in
1993. The milder-than-normal weather during the summer of 1994, compared to the
hot summer of 1993, was the primary reason for the decrease in retail revenues.
The hot weather during the summer of 1993 was the primary factor affecting the
increase in retail revenues over 1992. Fuel revenues generally represent the
direct recovery of fuel expense, including the fuel component of purchased
energy, and do not affect net income. Revenues from demand-side option programs
generally represent the direct recovery of program costs. See Note 3 to the
financial statements under "Demand-Side Conservation Programs" for further
information on these programs.
Revenues from sales to non-affiliated utilities decreased in both 1994 and
1993. Sales to municipalities and cooperatives in Georgia decreased in 1994 as
these customers retained more of their own generation at jointly owned
facilities, and as a result of a new agreement with territorial wholesale
customers.
Revenues from sales to non-affiliated utilities outside the service area
under long-term contracts consist of capacity and energy components. Capacity
revenues reflect the recovery of fixed costs and a return on investment under
the contracts. Energy is generally sold at variable cost. The capacity and
energy components were as follows:
==============================================================
1994 1993 1992
--------------------------
(in millions)
Capacity $84 $152 $233
Energy 82 113 168
--------------------------------------------------------------
Total $166 $265 $401
==============================================================
Contractual unit power sales to Florida utilities for 1994 and 1993 are down
compared with prior years, primarily due to scheduled reductions that
corresponded with the sales to these utilities of portions of Plant Scherer Unit
4 in June 1994 and June 1993. The amount of capacity under these contracts
declined by 427 megawatts and 533 megawatts in 1994 and 1993, respectively.
In 1995, the contracted capacity will decline another 155 megawatts.
II-96
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS (continued)
Georgia Power Company 1994 Annual Report
Revenues from sales to affiliated companies within the Southern electric
system will vary from year to year depending on demand and the availability and
cost of generating resources at each company. Sales to affiliated companies do
not have a significant impact on earnings.
Kilowatt-hour (KWH) sales for 1994 and the percent change by year were as
follows:
=======================================================================
Percent Change
----------------------------------
1994
KWH 1994 1993 1992
------ ----------------------------------
(in billions)
Residential 15.7 (5.8)% 11.5% 0.8%
Commercial 18.7 2.5 5.9 2.2
Industrial 24.3 3.0 2.9 3.1
Other 0.5 5.0 5.7 1.7
------
Total retail 59.2 0.4 6.1 2.2
------
Sales for resale -
Non-affiliates 8.0 (44.3) (9.8) (15.2)
Affiliates 3.1 0.9 (8.8) (14.6)
------
Total sales for resale 11.1 (36.4) (9.7) (15.1)
------
Total sales 70.3 (8.0) 2.1 (2.9)
======
-----------------------------------------------------------------------
The sales decline in the residential class was primarily the result of
milder-than-normal summer weather in 1994, compared to the extremely hot summer
of 1993. Industrial and commercial sales were positively impacted by continued
improvement in economic conditions. Residential and commercial energy sales
growth in 1993 reflected hot summer weather. Industrial sales growth in 1993 is
attributable to improved economic conditions which also positively influenced
commercial sales. Assuming normal weather, sales to retail customers are
projected to grow approximately 2 percent annually on average during 1995
through 1997.
Energy sales to non-affiliated utilities reflect reductions in contractual
unit power sales and energy sales to municipalities and cooperatives, as
discussed earlier.
Expenses
Fuel costs constitute the single largest expense for the Company. The mix of
fuel sources for generation of electricity is determined primarily by system
load, the unit cost of fuel consumed, and the availability of hydro and nuclear
generating units. The amount and sources of generation and the average cost of
fuel per net kilowatt-hour generated were as follows:
===============================================================================
1994 1993 1992
----------------------------------
Total generation
(billions of kilowatt-hours) 62 64 63
Sources of generation
(percent) --
Coal 74.8 76.9 75.9
Nuclear 21.9 20.0 20.9
Hydro 3.1 2.8 3.1
Oil and gas 0.2 0.3 0.1
Average cost of fuel per net
kilowatt-hour generated
(cents) --
Coal 1.67 1.75 1.75
Nuclear 0.63 0.58 0.63
Oil and gas * * *
Total 1.44 1.52 1.52
-------------------------------------------------------------------------------
* Not meaningful because of minimal generation from
fuel source.
Fuel expense decreased 8.5 percent in 1994 due to lower fuel costs, lower
generation, and the displacement of coal-fired generation with lower cost
nuclear generation. In 1993, fuel expense increased 2.3 percent due to higher
generation, which was partially offset by lower nuclear fuel costs.
Purchased power expense has decreased significantly since 1992, reflecting
declining contractual capacity purchases from the co-owners of plants Vogtle and
Scherer. Purchased power expense decreased $156 million in 1994 and $88 million
in 1993. The decline in 1994 also results from decreased purchases from
affiliated companies and energy purchases from territorial wholesale customers.
The declines in Plant Vogtle contractual capacity purchases did not have a
significant impact on earnings in 1994 or 1993 since these costs are being
levelized over six years under the terms of the 1991 Georgia Public Service
Commission (GPSC) retail rate order. The levelization is reflected in the
amortization of deferred Plant Vogtle expenses in the income statements. See
Note 3 to the financial statements under "Plant Vogtle Phase-In Plans" for
additional information.
II-97
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS (continued)
Georgia Power Company 1994 Annual Report
Other Operation and Maintenance (O & M) expenses, excluding the provision
for separation benefits, decreased 4.5 percent in 1994. The decrease is
primarily due to environmental remediation costs at various sites of $32 million
in 1993, compared to $8 million in 1994, recognition in 1993 of the one-time
cost of an automotive fleet reduction program, and lower maintenance expenses
and pension costs during 1994. Other O & M expenses increased 9.0 percent in
1993 primarily as a result of environmental remediation costs and the automotive
fleet reduction program, and the recognition of higher employee benefit costs
under new accounting rules adopted in 1993. See Note 2 to the financial
statements under "Postretirement Benefits" for additional information concerning
the new accounting rules. Also, during 1993, O & M expenses reflected costs
associated with new demand-side option programs. These program costs were offset
by increases in retail revenues. See Note 3 to the financial statements under
"Demand-Side Conservation Programs" for additional information on the recovery
of these program costs.
Taxes other than income taxes increased 1.0 percent in 1994 and 7.4 percent
in 1993, reflecting primarily higher ad valorem taxes. The 1993 increase also
includes higher franchise taxes paid to municipalities as a result of increased
sales.
Income tax expense decreased $24 million in 1994 primarily due to lower
earnings and the recognition of $17 million in tax expense associated with the
sale of a portion of Plant Scherer Unit 4 in 1994, compared to $27 million in
tax expense associated with the sale of a portion of the plant in the prior
year. The sales resulted in after-tax gains of $11 million in 1994 and $18
million in 1993. Income tax expense increased $62 million in 1993 due primarily
to higher earnings, the effect of a one percent increase in the federal tax rate
effective January, 1993, and as previously discussed, the sale of a portion of
Plant Scherer Unit 4.
Interest expense and dividends on preferred stock decreased $63 million
(13.7 percent) and $19 million (4.0 percent) in 1994 and 1993, respectively.
These reductions are primarily due to refinancing of long-term debt and
preferred stock. The Company refinanced $510 million and $1.5 billion of
securities in 1994 and 1993, respectively. The Company also retired $386 million
of long-term debt with the proceeds from the 1994 and 1993 Plant Scherer Unit 4
sales. Other interest charges in 1993 include interest related to the settlement
of an Internal Revenue Service (IRS) audit. The settlement had no effect on 1993
net income.
The Company has deferred certain expenses and recorded a deferred return
related to Plant Vogtle under phase-in plans. See Note 3 to the financial
statements under "Plant Vogtle Phase-In Plans" for information regarding the
deferral and subsequent amortization of costs related to Plant Vogtle.
Effects of Inflation
The Company is subject to rate regulation and income tax laws that are based on
the recovery of historical costs. Therefore, inflation creates an economic loss
because the Company is recovering its costs of investments in dollars that have
less purchasing power. While the inflation rate has been relatively low in
recent years, it continues to have an adverse effect on the Company because of
the large investment in long-lived utility plant. Conventional accounting for
historical cost does not recognize either this economic loss or the partially
offsetting gain that arises through financing facilities with fixed-money
obligations such as long-term debt and preferred stock. Any recognition of
inflation by regulatory authorities is reflected in the rate of return allowed.
Future Earnings Potential
The results of operations for the past three years 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 the Company's service area.
Assuming normal weather, retail sales growth is projected to be approximately 2
percent annually on average during 1995 through 1997.
The scheduled addition of four combustion turbine generating units and the
Rocky Mountain pumped storage hydroelectric project in 1995 and one jointly
owned combustion turbine unit in 1996, will increase related O & M and
II-98
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS (continued)
Georgia Power Company 1994 Annual Report
depreciation expenses. In addition, the Company has entered into a four-year
purchase power agreement to meet peaking needs. Beginning in 1996, the Company
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. These costs will be
recorded in purchased power expenses in the Statements of Income. The Company
has also reached an agreement on major terms and conditions of a purchase power
arrangement whereby the Company would buy electricity during peak periods from a
proposed 200 megawatt cogeneration facility, starting in June 1998. A final
agreement is expected to be completed and filed with the GPSC for certification
during 1995.
In 1994, work force reduction programs were implemented, reducing earnings
by $55 million. These reductions will assist in efforts to control growth in
future operating expenses.
As discussed in Note 4 to the financial statements, regulatory uncertainties
exist related to the Rocky Mountain pumped storage hydroelectric project. In the
event the GPSC does not allow full recovery of the project's costs, then the
portion not allowed may have to be written off. The Company's total investment
in the project at completion is estimated to be approximately $200 million.
See Note 3 to the financial statements for information regarding
proceedings with respect to the Company's recovery of demand-side conservation
program costs and litigation currently pending in the U. S. Tax Court.
The Company has completed three in a series of four separate transactions to
sell Unit 4 of Plant Scherer to two Florida utilities. The remaining transaction
is scheduled to take place in 1995. If the sale takes place as planned, the
Company would realize an additional after-tax gain estimated to total
approximately $12 million. This transaction coincides with scheduled reductions
in capacity revenues from Florida utilities under contractual unit power sales
contracts of approximately $18 million in 1995 and an additional $10 million in
1996. Additionally, the expiration in 1994 of the contract for the sale of
long-term non-firm power to Florida Power Corporation will result in a $9
million decrease in capacity revenues in 1995. See Notes 5 and 6 to the
financial statements for additional information.
During 1994, Oglethorpe Power Corporation (OPC) gave the Company notice of
its intent to decrease its purchases of capacity under a power supply agreement.
As a result, the Company's capacity revenues from OPC will decline approximately
$8 million in 1996 and an additional $16 million in 1997.
OPC and the Municipal Electric Authority of Georgia (MEAG) have filed joint
complaints in two separate venues seeking to recover from the Company
approximately $16.5 million in alleged overcharges, plus approximately $6.3
million in interest. See Note 3 to the financial statements under "Wholesale
Litigation" for further discussion of this matter.
The Clean Air Act and other environmental issues are discussed later under
"Environmental Issues."
The Energy Policy Act of 1992 (Energy Act) is beginning to have a dramatic
effect on the future of the electric utility industry. The Energy Act promotes
energy efficiency, alternative fuel use, and increased competition for electric
utilities. The Company is posturing the business to meet the challenge of this
major change in the traditional practice of selling electricity. The Energy Act
allows independent power producers (IPPs) to access a utility's transmission
network in order to sell electricity to other utilities. This may enhance the
incentive for IPPs to build cogeneration plants for a utility's large industrial
and commercial customers and sell excess energy generation to other utilities.
Although the Energy Act does not require transmission access to retail
customers, retail wheeling initiatives are rapidly evolving and becoming very
prominent issues in several states. In order to address these initiatives,
numerous questions must be resolved with the most complex ones relating to
transmission pricing and recovery of stranded investments. As the initiatives
become a reality, the structure of the utility industry could radically change.
Therefore, unless the Company remains a low-cost producer and provides quality
service, the Company's retail energy sales growth could be limited, and this
could significantly erode earnings. Conversely, being the low-cost producer
could provide significant opportunities to increase market share and
profitability.
The Company continues to compete with other electric suppliers within the
state. In Georgia, most new retail customers with at least 900 kilowatts of
II-99
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS (continued)
Georgia Power Company 1994 Annual Report
connected load may choose their electricity supplier. In addition, the bulk
power market has become very competitive as utilities, IPPs and cogenerators
seek to supply future capacity needs. Competition can create new business
opportunities, but it increases risk and has the potential to adversely affect
earnings.
The Federal Energy Regulatory Commission (FERC) regulates wholesale rate
schedules and power sales contracts that the Company 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 under
"FERC Review of Equity Returns" for additional information.
The Company is subject to the provisions of Financial Accounting Standards
Board (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, the Company would be required to write off related
regulatory assets and liabilities. See Note 1 to the financial statements under
"Regulatory Assets and Liabilities" for additional information.
The staff of the Securities and Exchange Commission has questioned certain
of the current accounting practices of the electric utility industry --
including the Company -- regarding the recognition, measurement, and
classification of decommissioning costs for nuclear generating facilities in the
financial statements. In response to these questions, the FASB has decided to
review the accounting for nuclear decommissioning. If current electric utility
industry accounting practices for decommissioning are changed: (1) annual
provisions for decommissioning could increase, and (2) the estimated cost for
decommissioning may be required to be recorded as a liability in the Balance
Sheets. In management's opinion -- should these changes be required -- the
changes would not have a significant adverse effect on results of operations
because of the Company's current and expected future ability to recover
decommissioning costs through rates. See Note 1 to the financial statements
under "Depreciation and Nuclear Decommissioning" for additional information.
FINANCIAL CONDITION
Overview
The principal changes in the Company's financial condition in 1994 were gross
utility plant additions of $638 million and the lowering of the cost of capital
achieved through the refinancing or retirement of $654 million of long-term
debt.
The funds needed for gross property additions are currently provided from
operations. The Statements of Cash Flows provide additional details.
Financing Activities
In 1994, the Company continued to lower its financing costs by refinancing
higher-cost issues. New issues during 1992 through 1994 totaled $3.5 billion and
retirement or repayment of securities totaled $4.1 billion. The retirements
included the redemption of $133 million and $253 million in 1994 and 1993,
respectively, of first mortgage bonds with the proceeds from the Plant Scherer
Unit 4 sales. Composite financing rates for the years 1992 through 1994, as of
year-end, were as follows:
==============================================================
1994 1993 1992
----------------------------------
Composite interest rate
on long-term debt 7.14% 7.86% 8.49%
Composite preferred
stock dividend rate 7.11% 6.76% 7.52%
==============================================================
The Company's current securities ratings are as follows:
==============================================================
Duff & Standard &
Phelps Moody's Poor's
First Mortgage Bonds A+ A2 A
Preferred Stock A- a3 A-
Unsecured Bonds A A3 A-
Commercial Paper D1 P1 A1
==============================================================
Liquidity and Capital Requirements
Cash provided from operations decreased by $128 million in 1994, primarily due
to lower retail sales, higher tax payments, and the receipt in 1993 of cash
payments from Gulf States as partial settlement of litigation.
II-100
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS (continued)
Georgia Power Company 1994 Annual Report
The Company estimates that construction expenditures for the years 1995
through 1997 will total $579 million, $626 million and $724 million,
respectively. The Company will continue to invest in transmission and
distribution facilities and enhance existing generating plants. These
expenditures also include amounts for five combustion turbine generating units
and equipment that will be required to comply with the provisions of the Clean
Air Act.
The Company's annual contractual capacity purchases will decline by $70
million over the next three years. Cash requirements for sinking fund
requirements, redemptions announced, and maturities of long-term debt are
expected to total $360 million during 1995 through 1997.
As a result of requirements by the Nuclear Regulatory Commission, the
Company has established external trust funds for the purpose of funding nuclear
decommissioning costs. For 1995 through 1997, the amount to be funded totals $16
million annually. For additional information concerning nuclear decommissioning
costs, see Note 1 to the financial statements under "Depreciation and Nuclear
Decommissioning."
As a result of the Energy Policy Act of 1992, the Company is required to pay
a special assessment over a 15-year period beginning in 1993 into a fund which
will be used by the U. S. Department of Energy for the decontamination and
decommissioning of its nuclear enrichment facilities. The Company estimates its
remaining liability to be approximately $33 million as of December 31, 1994. See
Note 1 to the financial statements under "Revenues and Fuel Costs" for
additional information.
Sources of Capital
The Company expects to meet future capital requirements primarily using funds
generated from operations and, if needed, by the issuance of new debt and equity
securities, term loans, and short-term borrowings. To meet short-term cash needs
and contingencies, the Company had approximately $709 million of unused credit
arrangements with banks at the beginning of 1995. See Note 8 to the financial
statements for additional information.
Completing the remaining transaction for the sale of Plant Scherer Unit 4
will generate approximately $131 million in 1995.
Georgia Power Capital, a limited partnership, was formed on November 10,
1994, for the purpose of issuing preferred securities and subsequently lending
the proceeds to the Company. In December 1994, Georgia Power Capital issued four
million shares of preferred securities at 9 percent and subsequently loaned the
proceeds of $100 million to the Company. This subordinated debt of the Company
is due December 19, 2024.
The Company is required to meet certain coverage requirements specified in
its mortgage indenture and corporate charter to issue new first mortgage bonds
and preferred stock. The Company'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.
Environmental Issues
In November 1990, the Clean Air Act was signed into law. Title IV of the Clean
Air Act -- the acid rain compliance provision of the law -- will have a
significant impact on The Southern Company. Specific reductions in sulfur
dioxide and nitrogen oxide emissions from fossil-fired generating plants will be
required in two phases. Phase I compliance began in 1995 and affected eight
generating plants -- some 10,000 megawatts of capacity or 35 percent of total
capacity -- in the Southern electric system. Phase II compliance is required in
2000, and all fossil-fired generating plants in the Southern electric system
will be affected.
In 1995, the Environmental Protection Agency (EPA) began issuing annual
sulfur dioxide emission allowances through the newly established allowance
trading program. An emission allowance is the authority to emit one ton of
sulfur dioxide during a calendar year. The method for issuing allowances is
based on the fossil fuel consumed from 1985 through 1987 for each affected
generating unit. Emission allowances are transferable and can be bought, sold,
or banked and used in the future.
The sulfur dioxide emission allowance program is expected to minimize the
cost of compliance. The Southern Company's sulfur dioxide compliance strategy is
II-101
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS (continued)
Georgia Power Company 1994 Annual Report
designed to use allowances as a compliance option.
The Southern Company expects to achieve Phase I sulfur dioxide compliance at
the eight affected plants by switching to low-sulfur coal, which has required
some equipment upgrades. This compliance strategy is expected to result in
unused emission allowances being banked for later use. Additional construction
expenditures were required to install equipment for the control of nitrogen
oxide emissions at these eight plants. Also, continuous emissions monitoring
equipment will be installed on all fossil-fired units. Under this Phase I
compliance approach, Georgia Power's construction expenditures are estimated to
total approximately $175 million through 1995.
For Phase II sulfur dioxide compliance, The Southern Company could use
emission allowances banked during Phase I, increase fuel switching, install flue
gas desulfurization equipment at selected plants, and/or purchase more
allowances depending on the price and availability of allowances. Also, in Phase
II, equipment to control nitrogen oxide emissions will be installed on
additional system fossil-fired plants as required to meet anticipated Phase II
limits. During the period 1996 to 2000, current compliance strategy could
require total estimated Georgia Power construction expenditures of approximately
$20 million. However, the full impact of Phase II compliance cannot now be
determined with certainty, pending the continuing development of a market for
emission allowances, the completion of EPA regulations, and the possibility of
new emission reduction technologies.
An increase of up to 2 percent in Georgia Power's annual revenue
requirements from customers could be necessary to fully recover the cost of
compliance for both Phase I and Phase II of Title IV of the Clean Air Act.
Compliance costs include construction expenditures, increased costs for
switching to low-sulfur coal, and costs related to emission allowances.
Metropolitan Atlanta is classified as a non-attainment area with regard to
the ozone ambient air quality standards. Title I of the Clean Air Act requires
the state of Georgia to conduct specific studies and establish new control rules
-- affecting sources of nitrogen oxides and volatile organic compounds -- to
achieve attainment by 1999. As the required first step, the state has issued
rules for the application of reasonably available control technology to reduce
nitrogen oxide emissions by May 31, 1995. The results of these new rules require
nitrogen oxide controls, above Title IV requirements, on some of the Company's
plants. Final attainment rules, based on modeling studies, could require
installation of additional controls for nitrogen oxide emissions to meet the
1999 deadline. A decision on new requirements is expected in 1996. Compliance
with any new rules could result in significant additional costs. The actual
impact of new rules will depend on the development and implementation of such
rules.
Title III of the Clean Air Act requires a multi-year EPA study of power
plant emissions of hazardous air pollutants. The EPA is scheduled to submit a
report to Congress on the results of this study by November 1995. The report
will include a decision on whether additional regulatory control of these
substances is warranted. Compliance with any new control standards could result
in significant additional costs. The impact of new standards -- if any -- will
depend on the development and implementation of applicable regulations.
The EPA continues to evaluate the need for a new short-term ambient air
quality standard for sulfur dioxide. Preliminary results from an EPA study on
the impact of a new standard indicate that a number of plants could be required
to install sulfur dioxide controls. These controls would be in addition to the
controls already required to meet the acid rain provision of the Clean Air Act.
The EPA issued proposed rules in November 1994 and is required to take final
action on this issue in 1996. The impact of any new standard will depend on the
level chosen for the standard and cannot be determined at this time.
In addition, the EPA is evaluating the need to revise the ambient air
quality standards for particulate matter, nitrogen oxides, and ozone. The impact
of any new standard will depend on the level chosen for the standard and cannot
be determined at this time.
In 1995, the EPA may issue revised rules on air quality control regulations
related to stack height requirements of the Clean Air Act. The full impact of
the final rules cannot be determined at this time, pending their development and
implementation.
II-102
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS (continued)
Georgia Power Company 1994 Annual Report
In 1993, the EPA issued a ruling confirming the non-hazardous status of coal
ash. However, the EPA has until 1998 to classify co-managed utility wastes --
coal ash and other utility wastes -- as either non-hazardous or hazardous. If
the EPA classifies the co-managed wastes as hazardous, then substantial
additional costs for the management of such wastes may be required. The full
impact of any change in the regulatory status will depend on the subsequent
development of co-managed waste requirements.
The Company must comply with other environmental laws and regulations that
cover the handling and disposal of hazardous waste. Under these various laws and
regulations, the Company could incur costs to clean-up properties currently or
previously owned. The Company conducts studies to determine the extent of any
required clean-up costs and has recognized in the financial statements, costs to
clean up known sites. These costs for the Company amounted to $8 million, $32
million, and $3 million in 1994, 1993, and 1992, respectively. Additional sites
may require environmental remediation for which the Company may be liable for a
portion or all required cleanup costs. See Note 4 to the financial statements
under "Certain Environmental Contingencies" for information regarding the
Company's potentially responsible party status at a site in Brunswick, Georgia
and another environmental matter.
Several major pieces of environmental legislation are being considered for
reauthorization or amendment by Congress. These include: the Clean Water Act;
the Comprehensive Environmental Response, Compensation, and Liability Act; the
Resource Conservation and Recovery Act; and the Endangered Species Act. Changes
to these laws could affect many areas of the Company's operations. The full
impact of these requirements cannot be determined at this time, pending the
development and implementation of applicable regulations.
Compliance with possible new legislation related to global climate change,
electromagnetic fields and other environmental and health concerns could
significantly affect the Company. The impact of new legislation -- if any --
will depend on the subsequent development and implementation of applicable
regulations. In addition, the potential exists for liability as the result of
lawsuits alleging damages caused by electromagnetic fields.
II-103
<PAGE>
<TABLE>
<CAPTION>
STATEMENTS OF INCOME
For the Years Ended December 31, 1994, 1993, and 1992
Georgia Power Company 1994 Annual Report
==================================================================================================
1994 1993 1992
--------------------------------------------------------------------------------------------------
(in thousands)
<S> <C> <C> <C>
Operating Revenues:
Revenues (Note 1) $4,101,504 $4,389,513 $4,229,601
Revenues from affiliates 60,899 61,668 67,835
--------------------------------------------------------------------------------------------------
Total operating revenues 4,162,403 4,451,181 4,297,436
--------------------------------------------------------------------------------------------------
Operating Expenses:
Operation --
Fuel 870,653 951,507 929,780
Purchased power from non-affiliates 193,130 313,170 436,761
Purchased power from affiliates 158,063 194,024 158,306
Provision for separation benefits 82,238 - 9,778
Other 643,375 675,284 611,134
Maintenance 272,818 284,521 264,757
Depreciation and amortization 379,158 379,425 375,460
Amortization of deferred Plant Vogtle expenses, net (Note 3) 74,888 36,284 (30,804)
Taxes other than income taxes 194,566 192,671 179,460
Federal and state income taxes 399,413 452,122 377,542
--------------------------------------------------------------------------------------------------
Total operating expenses 3,268,302 3,479,008 3,312,174
--------------------------------------------------------------------------------------------------
Operating Income 894,101 972,173 985,262
Other Income (Expense):
Allowance for equity funds used during construction 5,663 3,168 5,855
Equity in earnings of unconsolidated subsidiary (Note 5) 3,588 4,127 4,635
Interest income 3,254 3,806 12,475
Other, net 10,626 11,902 (30,527)
Income taxes applicable to other income 7,975 37,661 25,163
--------------------------------------------------------------------------------------------------
Income Before Interest Charges 925,207 1,032,837 1,002,863
--------------------------------------------------------------------------------------------------
Interest Charges:
Interest on long-term debt 306,473 343,634 402,541
Allowance for debt funds used during construction (11,571) (8,271) (8,310)
Interest on interim obligations 17,529 15,530 9,694
Amortization of debt discount, premium, and expense, net 15,743 14,024 8,033
Other interest charges 23,483 47,393 12,425
--------------------------------------------------------------------------------------------------
Net interest charges 351,657 412,310 424,383
--------------------------------------------------------------------------------------------------
Net Income 573,550 620,527 578,480
Dividends on Preferred Stock 48,006 50,674 57,942
--------------------------------------------------------------------------------------------------
Net Income After Dividends on Preferred Stock $ 525,544 $ 569,853 $ 520,538
==================================================================================================
The accompanying notes are an integral part of these statements.
</TABLE>
II-104
<PAGE>
<TABLE>
<CAPTION>
STATEMENTS OF CASH FLOWS
For the Years Ended December 31, 1994, 1993, and 1992
Georgia Power Company 1994 Annual Report
==================================================================================================
1994 1993 1992
--------------------------------------------------------------------------------------------------
(in thousands)
<S> <C> <C> <C>
Operating Activities:
Net income $ 573,550 $ 620,527 $ 578,480
Adjustments to reconcile net income to net
cash provided by operating activities --
Depreciation and amortization 484,032 475,152 471,014
Deferred income taxes and investment tax credits, net 33,567 150,735 189,251
Allowance for equity funds used during construction (5,663) (3,168) (5,855)
Deferred Plant Vogtle costs 74,888 36,284 (30,804)
Provision for separation benefits 68,599 - -
Gain on asset sales (22,717) (35,514) (12)
Other, net (72,597) (10,713) (14,738)
Changes in certain current assets and liabilities --
Receivables, net 67,218 27,088 (31,348)
Inventories (63,545) 82,433 (65,621)
Payables 5,409 17,364 25,303
Taxes accrued (60,474) 15,377 (22,828)
Energy cost recovery, retail 55,505 (74,260) (46,615)
Other (706) (35,691) (16,518)
------------------------------------------------------------------------------------------------
Net cash provided from operating activities 1,137,066 1,265,614 1,029,709
------------------------------------------------------------------------------------------------
Investing Activities:
Gross property additions (638,426) (674,432) (508,444)
Sales of property 132,644 261,687 46
Other (41,273) (43,154) 42,892
------------------------------------------------------------------------------------------------
Net cash used for investing activities (547,055) (455,899) (465,506)
------------------------------------------------------------------------------------------------
Financing Activities and Capital Contributions:
Proceeds:
Preferred securities of subsidiary 100,000 - -
Preferred stock - 175,000 195,000
First mortgage bonds - 1,135,000 975,000
Pollution control bonds 527,210 145,425 161,955
Long-term notes - 37,000 -
Retirements:
Preferred stock - (245,005) (165,004)
First mortgage bonds (133,559) (1,337,822) (1,381,300)
Pollution control bonds (510,320) (145,465) (160,205)
Other long-term debt (10,187) (19,451) (567)
Interim obligations, net (57,425) (51,444) 334,671
Payment of preferred stock dividends (47,147) (53,123) (60,475)
Payment of common stock dividends (429,300) (402,400) (384,000)
Miscellaneous (22,640) (63,648) (70,986)
------------------------------------------------------------------------------------------------
Net cash used for financing activities (583,368) (825,933) (555,911)
------------------------------------------------------------------------------------------------
Net Change in Cash and Cash Equivalents 6,643 (16,218) 8,292
Cash and Cash Equivalents at Beginning of Year 5,896 22,114 13,822
------------------------------------------------------------------------------------------------
Cash and Cash Equivalents at End of Year $ 12,539 $ 5,896 $ 22,114
================================================================================================
Supplemental Cash Flow Information:
Cash paid during the year for --
Interest (net of amount capitalized) $ 336,155 $ 420,107 $ 435,203
Income taxes 386,653 275,867 190,674
------------------------------------------------------------------------------------------------
The accompanying notes are an integral part of these statements.
</TABLE>
II-105
<PAGE>
<TABLE>
<CAPTION>
BALANCE SHEETS
At December 31, 1994 and 1993
Georgia Power Company 1994 Annual Report
===========================================================================================
ASSETS 1994 1993
-------------------------------------------------------------------------------------------
(in thousands)
<S> <C> <C>
Utility Plant:
Plant in service (Note 1) $ 14,054,917 $ 13,743,521
Less accumulated provision for depreciation 4,054,986 3,822,344
-------------------------------------------------------------------------------------------
9,999,931 9,921,177
Nuclear fuel, at amortized cost (Note 1) 136,425 135,742
Construction work in progress (Note 4) 541,889 584,013
-------------------------------------------------------------------------------------------
Total 10,678,245 10,640,932
-------------------------------------------------------------------------------------------
Other Property and Investments:
Southern Electric Generating Company, at equity (Note 5) 26,985 29,201
Nuclear decommissioning trusts (Note 1) 54,297 37,937
Miscellaneous 89,542 31,941
-------------------------------------------------------------------------------------------
Total 170,824 99,079
-------------------------------------------------------------------------------------------
Current Assets:
Cash and cash equivalents 12,539 5,896
Receivables-
Customer accounts receivable 377,570 486,947
Other accounts and notes receivable 104,989 117,249
Affiliated companies 14,443 14,832
Accumulated provision for uncollectible accounts (4,500) (4,300)
Fossil fuel stock, at average cost 169,252 111,620
Materials and supplies, at average cost 293,464 287,551
Prepayments 55,383 65,269
Vacation pay deferred (Note 1) 40,823 41,575
-------------------------------------------------------------------------------------------
Total 1,063,963 1,126,639
-------------------------------------------------------------------------------------------
Deferred Charges:
Deferred charges related to income taxes (Note 7) 919,750 992,510
Deferred Plant Vogtle costs (Note 3) 432,092 506,980
Premium on reacquired debt, being amortized 164,676 153,146
Debt expense, being amortized 26,223 20,730
Miscellaneous 256,885 196,094
-------------------------------------------------------------------------------------------
Total 1,799,626 1,869,460
-------------------------------------------------------------------------------------------
Total Assets $ 13,712,658 $ 13,736,110
===========================================================================================
The accompanying notes are an integral part of these statements.
</TABLE>
II-106
<PAGE>
<TABLE>
<CAPTION>
BALANCE SHEETS
At December 31, 1994 and 1993
Georgia Power Company 1994 Annual Report
===========================================================================================
CAPITALIZATION AND LIABILITIES 1994 1993
-------------------------------------------------------------------------------------------
(in thousands)
<S> <C> <C>
Capitalization (See accompanying statements):
Common stock equity $ 4,141,554 $ 4,045,458
Preferred stock 692,787 692,787
Preferred securities of subsidiary 100,000 -
Long-term debt 3,757,823 4,031,387
-------------------------------------------------------------------------------------------
Total 8,692,164 8,769,632
-------------------------------------------------------------------------------------------
Current Liabilities:
Long-term debt due within one year (Note 8) 167,420 10,543
Notes payable to banks (Note 8) 202,200 406,700
Commercial paper (Note 8) 222,602 75,527
Accounts payable-
Affiliated companies 41,760 38,115
Other 313,307 285,929
Customer deposits 47,017 45,922
Taxes accrued-
Federal and state income 2,856 31,639
Other 90,163 121,854
Interest accrued 110,256 110,497
Vacation pay accrued 39,720 40,060
Miscellaneous 70,006 64,527
-------------------------------------------------------------------------------------------
Total 1,307,307 1,231,313
-------------------------------------------------------------------------------------------
Deferred Credits and Other Liabilities:
Accumulated deferred income taxes (Note 7) 2,477,661 2,479,720
Accumulated deferred investment tax credits 453,121 478,334
Deferred credits related to income taxes (Note 7) 433,334 452,819
Disallowed Plant Vogtle capacity buyback costs (Note 5) 60,490 63,067
Miscellaneous 288,581 261,225
-------------------------------------------------------------------------------------------
Total 3,713,187 3,735,165
-------------------------------------------------------------------------------------------
Commitments and Contingent Matters (Notes 1, 2, 3, 4, 5, and 6)
Total Capitalization and Liabilities $ 13,712,658 $ 13,736,110
===========================================================================================
The accompanying notes are an integral part of these statements.
</TABLE>
II-107
<PAGE>
<TABLE>
<CAPTION>
STATEMENTS OF CAPITALIZATION
At December 31, 1994 and 1993
Georgia Power Company 1994 Annual Report
====================================================================================================
1994 1993 1994 1993
----------------------------------------------------------------------------------------------------
(in thousands) (percent of total)
<S> <C> <C> <C> <C>
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 (Note 8) 1,412,543 1,316,447
----------------------------------------------------------------------------------------------------
Total common stock equity 4,141,554 4,045,458 47.6 % 46.1 %
----------------------------------------------------------------------------------------------------
Cumulative Preferred Stock, without par value:
Authorized -- 55,000,000 shares in 1994 and 1993;
Outstanding -- 21,027,865 shares in 1994;
$100 stated value --
4.60% to 6.60% 117,787 117,787
7.72% to 7.80% 105,000 105,000
$25 stated value --
$1.90 to $2.125 295,000 295,000
Adjustable rate -- at January 1, 1995:
6.30% 100,000 100,000
6.86% 75,000 75,000
----------------------------------------------------------------------------------------------------
Total (annual dividend requirement -- $49,251,000) 692,787 692,787 8.0 7.9
----------------------------------------------------------------------------------------------------
Cumulative Preferred Securities of Subsidiary (Note 8):
$25 stated value -- 9% 100,000 -
----------------------------------------------------------------------------------------------------
Total (annual distribution requirement -- $9,000,000) 100,000 - 1.2 -
----------------------------------------------------------------------------------------------------
Long-Term Debt:
First mortgage bonds --
Maturity Interest Rates
-------- --------------
September 1, 1995 5 1/8% 130,000 130,000
March 1, 1996 4 3/4% 150,000 150,000
April 1, 1998 5 1/2% 100,000 100,000
September 1, 1999 6 1/8% 195,000 195,000
2000 through 2003 6% to 7% 625,000 625,000
2008 6 7/8% 50,000 50,000
2016 through 2019 9.23% to 10% 36,157 169,716
2022 through 2023 7.55% to 8 3/4% 660,000 660,000
2032 variable rates 200,000 200,000
----------------------------------------------------------------------------------------------------
Total first mortgage bonds 2,146,157 2,279,716
Pollution control obligations (Note 8) 1,678,140 1,661,250
Other long-term debt (Note 8) 124,686 135,058
Unamortized debt premium (discount), net (23,740) (34,094)
----------------------------------------------------------------------------------------------------
Total long-term debt (annual interest
requirement -- $282,112,000) 3,925,243 4,041,930
Less amount due within one year (Note 8) 167,420 10,543
----------------------------------------------------------------------------------------------------
Long-term debt excluding amount due within one year 3,757,823 4,031,387 43.2 46.0
----------------------------------------------------------------------------------------------------
Total Capitalization $ 8,692,164 $ 8,769,632 100.0 % 100.0 %
====================================================================================================
The accompanying notes are an integral part of these statements.
</TABLE>
II-108
<PAGE>
<TABLE>
<CAPTION>
STATEMENTS OF RETAINED EARNINGS
For the Years Ended December 31, 1994, 1993, and 1992
Georgia Power Company 1994 Annual Report
===============================================================================================
1994 1993 1992
-----------------------------------------------------------------------------------------------
(in thousands)
<S> <C> <C> <C>
Balance at Beginning of Period $ 1,316,447 $ 1,159,380 $ 1,038,012
Net income after dividends on preferred stock 525,544 569,853 520,538
Cash dividends on common stock (429,300) (402,400) (384,000)
Preferred stock transactions, net (148) (10,386) (15,170)
-----------------------------------------------------------------------------------------------
Balance at End of Period (Note 8) $ 1,412,543 $ 1,316,447 $ 1,159,380
===============================================================================================
STATEMENTS OF PAID-IN CAPITAL
For the Years Ended December 31, 1994, 1993, and 1992
Georgia Power Company 1994 Annual Report
===============================================================================================
1994 1993 1992
-----------------------------------------------------------------------------------------------
(in thousands)
Balance at Beginning of Period $ 2,384,348 $ 2,384,140 $ 2,383,800
Contributions to capital by parent company - 208 340
-----------------------------------------------------------------------------------------------
Balance at End of Period $ 2,384,348 $ 2,384,348 $ 2,384,140
===============================================================================================
The accompanying notes are an integral part of these financial statements.
</TABLE>
II-109
<PAGE>
NOTES TO FINANCIAL STATEMENTS
Georgia Power Company 1994 Annual Report
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
General
The Company is a wholly owned subsidiary of The Southern Company, which is the
parent company of five operating companies, Southern Company Services (SCS), a
system service company, Southern Communications Services (Southern
Communications), Southern Electric International (Southern Electric), and
Southern Nuclear Operating Company (Southern Nuclear), and The Southern
Development and Investment Group (SDIG). The operating companies (Alabama Power
Company, Georgia Power Company, Gulf Power Company, Mississippi Power Company,
and Savannah Electric and Power Company) provide electric service in four
southeastern states. Intracompany contracts dealing with jointly owned
generating facilities, transmission lines and exchange of electric power are
regulated by the Federal Energy Regulatory Commission (FERC) or the Securities
and Exchange Commission. SCS provides, at cost, specialized services to The
Southern Company and each of the subsidiary companies. Southern Communications,
beginning in mid-1995, will provide digital wireless communications services to
The Southern Company's subsidiaries and also will market these services to the
public within the Southeast. Southern Electric designs, builds, owns, and
operates power production facilities and provides a broad range of technical
services to industrial companies and utilities in the United States and a number
of international markets. Southern Nuclear provides services to The Southern
Company's nuclear power plants. SDIG develops new business opportunities related
to energy products and services.
The Southern Company is registered as a holding company under the Public
Utility Holding Company Act of 1935. Both The Southern Company and its
subsidiaries are subject to the regulatory provisions of this act. The Company
is also subject to regulation by the FERC and the Georgia Public Service
Commission (GPSC). The Company follows generally accepted accounting principles
and complies with the accounting policies and practices prescribed by the
respective regulatory commissions.
Certain prior years' data presented in the financial statements have been
reclassified to conform with current year presentation.
Regulatory Assets and Liabilities
The Company is subject to the provisions of Financial Accounting Standards Board
(FASB) Statement No. 71, Accounting for the Effects of Certain Types of
Regulation. Regulatory assets represent probable future revenues to the Company
associated with certain costs that are expected to be recovered from customers
through the ratemaking process. Regulatory liabilities represent probable future
reductions in revenues associated with amounts that are to be credited to
customers through the ratemaking process. Regulatory assets and (liabilities)
reflected in the Company's Balance Sheets at December 31 relate to the
following:
===============================================================
1994 1993
--------------------
(in millions)
Deferred income taxes $ 920 $ 993
Deferred income tax credits (433) (453)
Deferred Plant Vogtle costs 432 507
Premium on reacquired debt 165 153
Demand-side program costs 97 49
Corporate building lease 48 47
Postretirement benefits 41 22
Vacation pay 41 42
Inventory conversions (39) (47)
Department of Energy assessments 36 41
Other, net 52 61
---------------------------------------------------------------
Total $1,360 $1,415
===============================================================
In the event that a portion of the Company's operations is no longer subject
to the provisions of Statement No. 71, the Company would be required to write
off related regulatory assets and liabilities. In addition, the Company would be
required to determine any impairment to other assets, including plant, and write
down the assets to their fair value.
II-110
<PAGE>
NOTES (continued)
Georgia Power Company 1994 Annual Report
Revenues and Fuel Costs
The Company accrues revenues for service rendered but unbilled at the end of
each fiscal period. Fuel costs are expensed as the fuel is used. The Company's
electric rates include provisions to adjust billings for fluctuations in fuel
and the energy component of purchased power costs. Revenues are adjusted for
differences between recoverable fuel costs and amounts actually recovered in
current rates. Fuel costs were under recovered by $23 million and $79 million at
December 31, 1994, and 1993, respectively. These amounts are included in
customer accounts receivable on the Balance Sheets. The fuel cost recovery rate
was increased effective December 6, 1993.
The Company has a diversified base of customers. No single customer or
industry comprises 10 percent or more of revenues. In 1994, uncollectible
accounts continued to average less than 1 percent of revenues.
Fuel expense includes the amortization of the cost of nuclear fuel and a
charge, based on nuclear generation, for the permanent disposal of spent nuclear
fuel. Total charges for nuclear fuel included in fuel expense amounted to $87
million in 1994, $75 million in 1993, and $84 million in 1992. The Company has a
contract with the U.S. Department of Energy (DOE) that provides for the
permanent disposal of spent nuclear fuel, which was scheduled to begin in 1998.
However, the actual year this service will begin is uncertain. Sufficient
storage capacity currently is available to permit operation into 2003 at Plant
Hatch and into 2009 at Plant Vogtle.
Also, the Energy Policy Act of 1992 required the establishment in 1993 of a
Uranium Enrichment Decontamination and Decommissioning Fund, which is to be
funded in part by a special assessment on utilities with nuclear plants. This
fund will be used by the DOE for the decontamination and decommissioning of its
nuclear fuel enrichment facilities. The assessment will be paid over a 15-year
period, which began in 1993. The law provides that utilities will recover these
payments in the same manner as any other fuel expense. The Company -- based on
its ownership interests -- estimates its remaining liability under this law to
be approximately $33 million. This obligation is recognized in the accompanying
Balance Sheets and is being recovered through the fuel cost recovery provisions.
Depreciation and Nuclear Decommissioning
Depreciation of the original cost of depreciable utility plant in service is
provided primarily by using composite straight-line rates, which approximated
3.1 percent in 1994, 1993, and 1992. When property subject to depreciation is
retired or otherwise disposed of in the normal course of business, its cost --
together with the cost of removal, less salvage -- is charged to the accumulated
provision for depreciation. Minor items of property included in the original
cost of the plant are retired when the related property unit is retired.
Depreciation expense includes an amount for the expected costs of
decommissioning nuclear facilities.
In 1988, the Nuclear Regulatory Commission (NRC) adopted regulations
requiring all licensees operating commercial nuclear power reactors to establish
a plan for providing, with reasonable assurance, funds for decommissioning. The
Company has established external trust funds to comply with the NRC's
regulations. Amounts previously recorded in internal reserves are being
transferred into the external trust funds over a set period of time as approved
by the GPSC. Earnings on the trust funds are considered in determining
decommissioning expense. The NRC's minimum external funding requirements are
based on a generic estimate of the cost to decommission the radioactive portions
of a nuclear unit based on the size and type of reactor. The Company has filed
plans with the NRC to ensure that -- over time -- the deposits and earnings of
the external trust funds will provide the minimum funding amounts prescribed by
the NRC.
II-111
<PAGE>
NOTES (continued)
Georgia Power Company 1994 Annual Report
Site study cost is the estimate to decommission the facility as of the site
study year, and ultimate cost is the estimate to decommission the facility as of
retirement date. The estimated costs of decommissioning -- both site study costs
and ultimate costs at December 31, 1994, -- based on the Company's ownership
interests -- were as follows:
===========================================================
Plant Plant
Hatch Vogtle
--------------------
Site study basis (year) 1994 1994
Decommissioning periods:
Beginning year 2014 2027
Completion year 2027 2038
-----------------------------------------------------------
Site study costs: (in millions)
Radiated structures $241 $193
Non-radiated structures 34 43
Other 60 49
-----------------------------------------------------------
Total $335 $285
===========================================================
Ultimate costs: (in millions)
Radiated structures $641 $ 843
Non-radiated structures 91 190
Other 160 215
-----------------------------------------------------------
Total $892 $1,248
===========================================================
(in millions)
Amount expensed in 1994 $6 $6
Accumulated provisions:
Balance in external trust funds $33 $22
Balance in internal reserves 29 10
-----------------------------------------------------------
Total $62 $32
===========================================================
Assumed in ultimate costs:
Inflation rate 4.4% 4.4%
Trust earning rate 6.0 6.0
-----------------------------------------------------------
Annual provisions for nuclear decommissioning are based on an annuity --
sinking fund -- method as approved by the GPSC. The decommissioning costs
approved for ratemaking are $184 million for Plant Hatch and $155 million for
Plant Vogtle. These amounts are based on costs to decommission the radioactive
portions of the plants based on 1990 site studies. The estimated ultimate costs
based on the 1990 studies were $872 million and $1.4 billion for plants Hatch
and Vogtle, respectively. The Company expects the GPSC to periodically review
and adjust, if necessary, the amounts collected in rates for the anticipated
cost of decommissioning.
The decommissioning cost estimates are based on prompt dismantlement and
removal of the plant from service. The actual decommissioning costs may vary
from the above estimates because of changes in assumed date of decommissioning,
changes in regulatory requirements, changes in technology, and changes in costs
of labor, materials, and equipment.
Plant Vogtle Phase-In Plans
In 1987 and 1989, the GPSC ordered that the allowed costs of Plant Vogtle Units
1 and 2 be phased into rates under plans that meet the requirements of FASB
Statement No. 92, Accounting for Phase-In Plans. In 1991, the GPSC modified the
phase-in plans. In addition, the Company deferred certain Plant Vogtle operating
expenses and financing costs under accounting orders issued by the GPSC. See
Note 3 for further information.
Income Taxes
The Company provides deferred income taxes for all significant income tax
temporary differences. Investment tax credits utilized are deferred and
amortized to income over the average lives of the related property.
Effective January 1, 1993, the Company adopted FASB Statement No. 109,
Accounting for Income Taxes. Statement No. 109 required, among other things,
conversion to the liability method of accounting for accumulated deferred income
taxes. See Note 7 for additional information about Statement No. 109.
II-112
<PAGE>
NOTES (continued)
Georgia Power Company 1994 Annual Report
Allowance for Funds Used During Construction (AFUDC)
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 increases the revenue requirement
over the service life of the plant through a higher rate base and higher
depreciation expense. For the years 1994, 1993 and 1992, the average AFUDC rates
were 6.18 percent, 4.96 percent and 7.16 percent, respectively. The reduction in
the average AFUDC rate in 1993 reflects the Company's greater use of lower cost
short-term debt. The increase in 1994 is primarily the result of the higher
short-term borrowing rates.
AFUDC, net of taxes, as a percentage of net income after dividends on
preferred stock, was less than 2.5 percent for 1994, 1993 and 1992,
respectively.
Utility Plant
Utility plant is stated at original cost with the exception of Plant Vogtle,
which is stated at cost less regulatory disallowances. Original cost includes
materials; labor; appropriate administrative and general costs; payroll-related
costs such as taxes, pensions, and other benefits; and the cost of funds used
during construction. The cost of maintenance, repairs, and replacement of minor
items of property is charged to maintenance expense. The cost of replacement of
property (exclusive of minor items of property) is charged to utility plant.
The Company's investment in generating plant, based on its ownership
interests and net of the accumulated provision for depreciation, by type of
generation as of December 31 was as follows:
==================================================================
Nameplate
Type of Generation Net Investment Capacity
-------------------- ----------------- ----------------
1994 1993 1994 1993
----------------- ----------------
(in millions) (megawatts)
Steam $1,674 $1,718 9,676 9,812
Nuclear 3,113 3,215 1,877 1,877
Hydro 335 338 862 862
Other 123 18 1,528 1,208
-----------------------------------------------------------------
Total $5,245 $5,289 13,943 13,759
=================================================================
Cash and Cash Equivalents
For purposes of the Statements of Cash Flows, temporary cash investments are
considered cash equivalents. Temporary cash investments are securities with
original maturities of 90 days or less.
Financial Instruments
In accordance with FASB Statement No. 107, Disclosure About Fair Value of
Financial Instruments, the Company's financial instruments for which the
carrying amounts did not approximate fair value at December 31 are as follows:
=============================================================
Long-Term Debt
-------------------------
Carrying Fair
Amount Value
------------------------
Year (in millions)
1994 $3,838 $3,697
1993 3,954 4,197
The fair values for long-term debt were based on either closing market
prices or closing prices of comparable instruments.
Materials and Supplies
Generally, materials and supplies include the cost of transmission, distribution
and generating plant materials. Materials are charged to inventory when
purchased and then expensed or capitalized to plant, as appropriate, when
installed.
Vacation Pay
Company employees earn vacation in one year and take it in the subsequent year.
However, for ratemaking purposes, vacation pay is recognized as an allowable
expense only when paid. Consistent with this ratemaking treatment, the Company
accrues a current liability for earned vacation pay and records a current
regulatory asset representing the future recoverability of this cost. This
amount was $41 million at December 31, 1994, and $42 million at December 31,
1993. In 1995, approximately 70 percent of the 1994 deferred vacation costs will
be expensed, and the balance will be charged to construction and other accounts.
II-113
<PAGE>
NOTES (continued)
Georgia Power Company 1994 Annual Report
2. RETIREMENT BENEFITS
Pension Plan
The Company has a defined benefit, trusteed,
non-contributory pension plan covering substantially all regular employees.
Benefits are based on the greater of amounts resulting from two different
formulas: years of service and final average pay or years of service and a flat
dollar benefit. The Company uses the "entry age normal method with a frozen
initial liability" actuarial method for funding purposes, subject to limitations
under federal income tax regulations. Amounts funded to the pension trusts are
primarily invested in equity and fixed-income securities. FASB Statement No. 87,
Employers' Accounting for Pensions, requires use of the projected unit credit
actuarial method for financial reporting purposes.
Postretirement Benefits
The Company also provides certain medical care and life insurance benefits for
retired employees. Substantially all employees may become eligible for these
benefits when they retire. Qualified trusts are funded to the extent deductible
under federal income tax regulations and to the extent required by the GPSC and
FERC. During 1994, the Company funded $22 million to the qualified trusts.
Amounts funded are primarily invested in debt and equity securities.
Effective January 1, 1993, the Company adopted FASB Statement No. 106,
Employers' Accounting for Postretirement Benefits Other Than Pensions, on a
prospective basis. Statement No. 106 requires that medical care and life
insurance benefits for retired employees be accounted for on an accrual basis
using a specified actuarial method, "benefit/years-of-service."
In October 1993, the GPSC ordered the Company to phase in the adoption of
Statement No. 106 to cost of service over a five-year period, whereby one-fifth
of the additional expense was recognized in 1993 and the remaining additional
expense was deferred. An additional one-fifth of the costs will be expensed each
succeeding year until the costs are fully reflected in cost of service in 1997.
The cost deferred during the five-year period will be amortized to expense over
a 15-year period beginning in 1998. As a result of the regulatory treatment
allowed by the GPSC, the adoption of Statement No. 106 did not have a material
impact on net income.
Prior to 1993, the Company recognized these costs on a cash basis as
payments were made. The total costs of such benefits recognized by the Company
in 1992 were $13 million.
Funded Status and Cost of Benefits
Shown in the following tables are actuarial results and assumptions for pension
and postretirement medical and life insurance benefits as computed under the
requirements of Statement Nos. 87 and 106, respectively. The funded status of
the plans at December 31 was as follows:
Pension
===============================================================
1994 1993
---------------------
Actuarial present value of (in millions)
benefit obligations:
Vested benefits $ 689 $ 655
Non-vested benefits 32 35
---------------------------------------------------------------
Accumulated benefit obligation 721 690
Additional amounts related
to projected salary increases 294 257
---------------------------------------------------------------
Projected benefit obligation 1,015 947
Less:
Fair value of plan assets 1,419 1,495
Unrecognized net gain (371) (490)
Unrecognized prior service cost 28 31
Unrecognized transition asset (58) (62)
---------------------------------------------------------------
Prepaid asset recognized in
the Balance Sheets $ 3 $ 27
===============================================================
II-114
<PAGE>
NOTES (continued)
Georgia Power Company 1994 Annual Report
Postretirement Medical
===============================================================
1994 1993
--------------------
(in millions)
Actuarial present value of
benefit obligation:
Retirees and dependents $168 $136
Employees eligible to retire 7 12
Other employees 191 206
---------------------------------------------------------------
Accumulated benefit obligation 366 354
Less:
Fair value of plan assets 46 30
Unrecognized net loss 7 40
Unrecognized transition
obligation 236 251
---------------------------------------------------------------
Accrued liability recognized in the
Balance Sheets $ 77 $ 33
===============================================================
Postretirement Life
===============================================================
1994 1993
---------------
(in millions)
Actuarial present value of benefit obligation:
Retirees and dependents $35 $32
Employees eligible to retire - -
Other employees 38 40
---------------------------------------------------------------
Accumulated benefit obligation 73 72
Less:
Fair value of plan assets 6 1
Unrecognized net gain (8) (6)
Unrecognized transition
obligation 65 69
---------------------------------------------------------------
Accrued liability recognized in the
Balance Sheets $10 $ 8
===============================================================
Weighted average rates used in actuarial calculations:
=============================================================
1994 1993 1992
------------------------------
Discount 8.0% 7.5% 8.0%
Annual salary increase 5.5 5.0 6.0
Long-term return on plan
assets 8.5 8.5 8.5
-------------------------------------------------------------
An additional assumption used in measuring the accumulated postretirement
medical benefit obligation was a weighted average medical care cost trend rate
of 10.5 percent for 1994, decreasing gradually to 6 percent through the year
2000 and remaining at that level thereafter. An annual increase in the assumed
medical care cost trend rate of 1.0 percent would increase the accumulated
medical benefit obligation as of December 31, 1994, by $68 million and the
aggregate of the service and interest cost components of the net retiree medical
cost by $10 million.
The components of the plans' net costs are shown below:
Pension
==============================================================================
1994 1993 1992
----------------------------
(in millions)
Benefits earned during the year $ 34 $ 33 $ 34
Interest cost on projected
benefit obligation 71 69 65
Actual (return) loss on plan assets 35 (194) (61)
Net amortization and deferral (160) 84 (38)
------------------------------------------------------------------------------
Net pension cost $ (20) $ (8) $ -
==============================================================================
Net pension costs were negative in 1994 and 1993. Of net pension costs
recorded, $15 million in 1994 and $6 million in 1993, were recorded as a
reduction to operating expense, with the balance being recorded as a reduction
to construction and other accounts.
Postretirement Medical
===============================================================================
1994 1993
--------------
(in millions)
Benefits earned during the year $ 13 $ 11
Interest cost on accumulated
benefit obligation 27 23
Amortization of transition
obligation over 20 years 12 12
Actual (return) loss on plan assets 1 (4)
Net amortization and deferral (3) 2
-------------------------------------------------------------------------------
Net postretirement cost $ 50 $ 44
===============================================================================
Postretirement Life
===============================================================================
1994 1993
-----------
(in millions)
Benefits earned during the year $ 2 $ 3
Interest cost on accumulated
benefit obligation 6 6
Amortization of transition
obligation over 20 years 3 3
Actual return on plan assets - -
Net amortization and deferral - -
-------------------------------------------------------------------------------
Net postretirement cost $11 $12
===============================================================================
II-115
<PAGE>
NOTES (continued)
Georgia Power Company 1994 Annual Report
Of the above net postretirement medical and life insurance costs recorded in
1994, $28 million was charged to operating expenses, $18 million was deferred,
and the remainder was charged to construction and other accounts. In 1993, $21
million was charged to operating expenses, $21 million was deferred, and the
remainder was charged to construction and other accounts.
Work Force Reduction Programs
The Company has incurred additional costs for work force reduction programs. The
costs related to the Company's programs were $82 million and $10 million for the
years 1994 and 1992, respectively. Additionally, in 1994, the Company recognized
$8 million for its share of costs associated with SCS's work force reduction
program.
3. LITIGATION AND REGULATORY MATTERS
Demand-Side Conservation Programs
In October 1993, a Superior Court of Fulton County, Georgia, judge ruled that
rate riders previously approved by the GPSC for recovery of the Company's costs
incurred in connection with demand-side conservation programs were unlawful. The
judge held that the GPSC lacked statutory authority to approve such rate riders
except through general rate case proceedings and that those procedures had not
been followed. The Company suspended collection of the demand-side conservation
costs and appealed the court's decision to the Georgia Court of Appeals. In
December 1993, the GPSC approved the Company's request for an accounting order
allowing the Company to defer all current unrecovered and future costs related
to these programs until the superior court's decision is reversed or until the
next general rate case proceedings. An association of industrial customers filed
a petition for review of the accounting order in superior court.
In July 1994, the Georgia Court of Appeals upheld the legality of the rate
riders. In November 1994, the Supreme Court of Georgia denied petitions for
review of this ruling. As a result, the Company resumed collection under the
rate riders in December 1994. In February 1995, the GPSC initiated a true-up
proceeding to review program costs which have been incurred by the Company and
costs expected to be incurred during 1995 in order to adjust the rate riders
accordingly. The proceeding will also address a plan for recovery of costs
deferred under the accounting order. The Company's costs related to these
conservation programs through 1994 were $115 million, of which $18 million has
been collected and the remainder deferred.
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 the Company's financial statements.
Tax Litigation
In June 1994, a tax deficiency notice was received from the Internal Revenue
Service (IRS) for the years 1984 through 1987 with regard to the tax accounting
by the Company for the sale in 1984 of an interest in Plant Vogtle and related
capacity and energy buyback commitments. The potential tax deficiency and
interest arising from this issue currently amount to $28 million and $32
million, respectively. The tax deficiency relates to a timing issue as to when
taxes are paid; therefore, only the interest portion could affect future income.
Management believes that the IRS position is incorrect, and the Company has
filed a petition with the U. S. Tax Court challenging the IRS position. In order
to minimize additional interest charges should the IRS's position prevail, the
Company made a payment to the IRS related to the potential tax deficiency for
the years 1984 through 1987 in September 1994.
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 the Company's financial statements.
FERC Review of Equity Returns
In May 1991, the FERC ordered that hearings be conducted concerning the
reasonableness of the Southern electric system's wholesale rate schedules and
contracts that have a return on common equity of 13.75 percent or greater. The
contracts that could be affected by the hearings include substantially all of
the transmission, unit power, long-term power, and other similar contracts. Any
change in the rate of return on common equity that could potentially require
refunds as a result of this proceeding would be substantially for the period
beginning in July 1991 and ending in October 1992.
II-116
<PAGE>
NOTES (continued)
Georgia Power Company 1994 Annual Report
In August 1992, a FERC administrative law judge issued an opinion that
changes in rate schedules and contracts were not necessary and that the FERC
staff failed to show how any changes were in the public interest. The FERC staff
has filed exceptions to the administrative law judge's opinion, and the matter
remains pending before the FERC.
In August 1994, the FERC instituted another proceeding based on
substantially the same issues as in the 1991 proceeding. The second period under
review for possible refunds began in October 1994 and is scheduled to continue
until January 1996.
If the rates of return on common equity recommended by the FERC staff were
applied to all the schedules and contracts involved in both proceedings and
refunds were ordered, the amount of refunds could range up to approximately $35
million at December 31, 1994. Although the final outcome of this matter cannot
now be determined, in management's opinion, the final outcome will not result in
changes that would have a material adverse effect on the Company's financial
statements.
Wholesale Litigation
In July 1994, Oglethorpe Power Corporation (OPC) and the Municipal Electric
Authority of Georgia (MEAG) filed a joint complaint with the FERC seeking to
recover from the Company an aggregate of approximately $16.5 million in alleged
partial requirements rates overcharges, plus approximately $6.3 million in
interest. OPC and MEAG claimed that the Company improperly reflected in such
rates costs associated with capacity that had previously been sold to Gulf
States pursuant to a unit power sales contract or, alternatively, that they
should be allocated a portion of the proceeds received by the Company as a
result of a settlement with Gulf States of litigation arising out of such
contract. The Company's response sought dismissal of the complaint by the FERC.
Dismissal was ordered in November 1994. OPC and MEAG filed a request for
rehearing in December 1994, and such request is pending before the FERC. In
August 1994, OPC and MEAG also filed a complaint in the Superior Court of Fulton
County, Georgia, urging substantially the same claims and asking the court to
hear the matter in the event the FERC declines jurisdiction. Such court
proceeding was subsequently stayed pending resolution of the FERC filing.
While the outcome of this matter cannot be determined, in management's
opinion, it will not have a material adverse effect on the Company's financial
statements.
Plant Vogtle Phase-In Plans
Pursuant to orders from the GPSC, the Company recorded a deferred return under
phase-in plans for Plant Vogtle Units 1 and 2 until October 1991 when the
allowed investment was fully reflected in rates. In addition, the GPSC issued
two separate accounting orders that required the Company to defer substantially
all operating and financing costs related to both units until rate orders
addressed these costs. These GPSC orders provide for the recovery of deferred
costs within 10 years. The GPSC modified the phase-in plans in 1991 to
accelerate the recognition of costs previously deferred under the Plant Vogtle
Unit 2 phase-in plan and to levelize the remaining Plant Vogtle declining
capacity buyback expenses.
Under these orders, the Company has deferred and amortized these costs (as
recovered through rates) as follows:
=============================================================
1994 1993 1992
---------------------------
(in millions)
Deferred costs at beginning
of year $507 $383 $375
--------------------------------------------------------------
Deferred capacity buyback
expenses 10 38 100
Amortization of previously
deferred costs (85) (74) (69)
Less income taxes - - (23)
--------------------------------------------------------------
Net (amortization) deferral (75) (36) 8
--------------------------------------------------------------
Effect of adoption of FASB
Statement No. 109 - 160 -
--------------------------------------------------------------
Deferred costs at end of year $432 $507 $383
==============================================================
II-117
<PAGE>
NOTES (continued)
Georgia Power Company 1994 Annual Report
Nuclear Performance Standards
In October 1989, the GPSC adopted a nuclear performance standard for the
Company's nuclear generating units under which the performance of plants Hatch
and Vogtle will be evaluated every three years. The performance standard is
based on each unit's capacity factor as compared to the average of all U.S.
nuclear units operating at a capacity factor of 50 percent or higher during the
three-year period of evaluation. Depending on the performance of the units, the
Company could receive a monetary reward or penalty under the performance
standards criteria. The first evaluation was conducted in 1993 for performance
during the 1990-92 period. During this three-year period, the Company's units
performed at an average capacity factor of 81 percent compared to an industry
average of approximately 73 percent. Based on these results, the GPSC approved a
performance reward of approximately $8.5 million for the Company. This reward is
being collected through the retail fuel cost recovery provision and recognized
in income over a 36-month period beginning November, 1993. At December 31, 1994,
the remaining amount to be collected was $5 million.
4. COMMITMENTS AND CONTINGENCIES
Rocky Mountain Project Status
In its 1985 financing order, the GPSC concluded that completion of the Rocky
Mountain pumped storage hydroelectric project in 1991 as then planned was not
economically justifiable and reasonable and withheld authorization for the
Company to spend funds from approved securities issuances on that project. In
1988, the Company and OPC entered into a joint ownership agreement for OPC to
assume responsibility for the construction and operation of the project, as
discussed in Note 5. However, full recovery of the Company's costs depends on
the GPSC's treatment of the project's costs and disposition of the project's
capacity output. In the event the GPSC does not allow full recovery of the
project's costs, then the portion not allowed may have to be written off. AFUDC
accrued on the Rocky Mountain project has not been credited to income or
included in the project cost since December 1985. If accrual of AFUDC is not
resumed, the Company's estimated total investment in the project at completion
would be approximately $200 million. The plant is scheduled to begin commercial
operation in 1995.
The ultimate outcome of this matter cannot now be determined.
Construction Program
While the Company has no new baseload generating plants under construction,
the construction of five combustion turbine peaking units is planned to be
completed by 1996. In addition, significant construction of transmission and
distribution facilities, and projects to upgrade and extend the useful life of
generating plants will continue. The Company currently estimates property
additions to be approximately $579 million in 1995, $626 million in 1996 and
$724 million in 1997. These estimated additions include AFUDC of $27 million in
1995, $17 million in 1996, and $22 million in 1997. The estimates for property
additions for the three-year period include $92 million committed to meeting the
requirements of the Clean Air Act.
The construction program is subject to periodic review and revision, and
actual construction costs may vary from estimates because of numerous factors,
including, but not limited to, changes in business conditions, load growth
estimates, environmental regulations, and regulatory requirements.
Fuel Commitments
To supply a portion of the fuel requirements of its generating plants, the
Company has entered into various long-term commitments for the procurement of
fossil and nuclear fuel. In most cases, these contracts contain provisions for
price escalations, minimum purchase levels and other financial commitments.
Total estimated long-term commitments were approximately $4.6 billion at
December 31, 1994. Additional commitments for coal and for nuclear fuel will be
required in the future to supply the Company's fuel needs.
II-118
<PAGE>
NOTES (continued)
Georgia Power Company 1994 Annual Report
Operating Leases
The Company has entered into coal rail car rental agreements with various terms
and expiration dates. These expenses totaled $13 million, $8 million, and $7
million for 1994, 1993, and 1992, respectively. At December 31, 1994, estimated
minimum rental commitments for noncancelable operating leases were as follows:
======================================================
Amounts
--------------
Year (in millions)
----
1995 $ 12
1996 11
1997 10
1998 10
1999 10
2000 and thereafter 136
------------------------------------------------------
Total minimum payments $189
======================================================
Certain Environmental Contingencies
In January 1995, the Company and four other unrelated entities were notified by
the EPA that they have been designated as potentially responsible parties under
the Comprehensive Environmental Response, Compensation and Liability Act with
respect to a site in Brunswick, Georgia. While the Company believes that the
total amount of costs required for the clean up of this site may be substantial,
it is unable at this time to estimate either such total or the portion for which
the Company may ultimately be responsible.
The final outcome of this matter cannot now be determined. In management's
opinion, however, based upon the nature and extent of the Company's activities
relating to the site, the final outcome will not have a material adverse effect
on the Company's financial statements.
In compliance with the recently enacted Georgia Hazardous Site Response Act,
the State of Georgia was required to compile an inventory of all known or
suspected sites where hazardous wastes, constituents or substances have been
disposed of or released in quantities deemed reportable by the State. In
developing this list, the State identified several hundred properties throughout
the State, including 24 sites which may require environmental remediation by the
Company. The majority of these 24 sites are electrical power substations and
power generation facilities. The Company has recognized $4 million in expenses
for the anticipated clean-up cost for two sites that the Company plans to
remediate. The Company will conduct studies at each of the remaining sites to
determine the extent of remediation and associated clean-up costs, if any, that
may be required. The Company has recognized $3 million in expenses for the
anticipated cost of completing such studies. Any cost of remediating the
remaining sites cannot presently be determined until such studies are completed
for each site, and the State of Georgia determines whether remediation is
required. If all sites were required to be remediated, the Company could incur
expenses of up to approximately $25 million in additional clean-up costs, and
construction expenditures of up to $100 million to develop new waste management
facilities or install additional pollution control devices.
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 the Company's financial statements.
Nuclear Insurance
Under the Price-Anderson Amendments Act of 1988, the Company maintains
agreements of indemnity with the NRC that, together with private insurance,
cover third-party liability arising from any nuclear incident occurring at the
Company's nuclear power plants. The act provides funds up to $8.9 billion for
public liability claims that could arise from a single nuclear incident. Each
nuclear plant is insured against this liability to a maximum of $200 million by
private insurance, with the remaining coverage provided by a mandatory program
of deferred premiums that could be assessed, after a nuclear incident, against
all owners of nuclear reactors. A company could be assessed up to $79 million
per incident for each licensed reactor it operates but not more than an
aggregate of $10 million per incident to be paid in a calendar year for each
reactor. Such maximum assessment for the Company -- based on its ownership and
buyback interests -- is $163 million per incident but not more than an aggregate
of $21 million to be paid for each incident in any one year.
II-119
<PAGE>
NOTES (continued)
Georgia Power Company 1994 Annual Report
The Company is a member of Nuclear Mutual Limited (NML), a mutual insurer
established to provide property damage insurance in an amount up to $500 million
for members' nuclear generating facilities. The members are subject to a
retrospective premium assessment in the event that losses exceed accumulated
reserve funds. The Company's maximum annual assessment is limited to $15 million
under current policies.
Additionally, the Company has policies that currently provide
decontamination, excess property insurance, and premature decommissioning
coverage up to $2.25 billion for losses in excess of the $500 million NML
coverage. This excess insurance is provided by Nuclear Electric Insurance
Limited (NEIL), a mutual insurance company.
NEIL also covers the additional costs that would be incurred in obtaining
replacement power during a prolonged accidental outage at a member's nuclear
plant. Members can be insured against increased costs of replacement power in an
amount up to $3.5 million per week -- starting 21 weeks after the outage -- for
one year and up to $2.8 million per week for the second and third years.
Under each of the NEIL policies, members are subject to assessments if
losses each year exceed the accumulated funds available to the insurer under
that policy. The maximum annual assessments under the current policies for the
Company would be $25 million for excess property damage and $13 million for
replacement power.
For all on-site property damage insurance policies for commercial nuclear
power plants, the NRC requires that the proceeds of such policies issued or
renewed on or after April 2, 1991, shall be dedicated first for the sole purpose
of placing the reactor in a safe and stable condition after an accident. Any
remaining proceeds are to be applied next toward the costs of decontamination
and debris removal operations ordered by the NRC, and any further remaining
proceeds are to be paid either to the Company or to its bond trustees as may be
appropriate under the policies and applicable trust indentures.
The Company participates in an insurance program for nuclear workers that
provides coverage for worker tort claims filed for bodily injury caused at
commercial nuclear power plants. In the event that claims for this insurance
exceed the accumulated reserve funds, the Company could be subject to a maximum
total assessment of $6 million.
All retrospective assessments, whether generated for liability, property or
replacement power may be subject to applicable state premium taxes.
5. FACILITY SALES AND JOINT OWNERSHIP AGREEMENTS
Since 1975, the Company has sold undivided interests in plants Hatch, Wansley,
Vogtle, and Scherer Units 1 and 2, together with transmission facilities, to
OPC, an electric membership generation and transmission corporation; MEAG, a
public corporation and an instrumentality of the state of Georgia; and the City
of Dalton, Georgia. The Company has sold an interest in Plant Scherer Unit 3 to
Gulf Power, an affiliate.
Additionally, the Company has completed three of four separate transactions
to sell Unit 4 of Plant Scherer to Florida Power & Light Company (FPL) and
Jacksonville Electric Authority (JEA) for a total price of approximately $808
million, including any gains on these transactions. FPL will eventually own
approximately 76.4 percent of the unit, with JEA owning the remainder. Georgia
Power will continue to operate the unit.
The completed and scheduled remaining transactions are as follows:
=============================================================
Closing Percent After-Tax
Date Capacity Ownership Amount Gain
-------------------------------------------------------------
(in megawatts) (in millions)
July 1991 290 35.46% $291 $14
June 1993 258 31.44 253 18
June 1994 135 16.55 133 11
June 1995 135 16.55 131 12
-------------------------------------------------------------
Total 818 100.00% $808 $55
=============================================================
Except as otherwise noted, the Company has contracted to operate and
maintain all jointly owned facilities. The Company includes its proportionate
share of plant operating expenses in the corresponding operating expenses in the
Statements of Income.
As discussed in Note 4, the Company and OPC have a joint ownership
arrangement for the Rocky Mountain pumped storage hydroelectric project under
which the Company will retain its present investment in the project and OPC will
II-120
<PAGE>
NOTES (continued)
Georgia Power Company 1994 Annual Report
finance and complete the remainder of the project and operate the completed
facility. Based on current cost estimates the Company's ownership will be
approximately 25 percent of the project (194 megawatts of capacity) at
completion.
The Company will own six of eight 80 megawatt combustion turbine generating
units and 75 percent of the related common facilities being jointly constructed
at Plant McIntosh with Savannah Electric, an affiliate. The Company's investment
in the project at December 31, 1994, was $149 million and is expected to total
approximately $182 million when the project is completed. Four of the Company's
six units began commercial operation during 1994, and the remaining two units
are expected to be completed by June, 1995. Savannah Electric will operate these
units.
In 1994, the Company and FPC entered into a joint ownership agreement
regarding a 150 megawatt combustion turbine unit to be constructed near Orlando,
Florida. The unit is scheduled to be in commercial operation in early 1996, and
will be constructed, operated, and maintained by FPC. The Company will have a
one-third interest in the unit, with use of 100 percent of the unit's capacity
from June through September. FPC will have the capacity the remainder of the
year. The Company's investment in the project is expected to be approximately
$14 million at completion.
In connection with the joint ownership arrangements for plants Vogtle and
Scherer, the Company has made commitments to purchase declining fractions of
OPC's and MEAG's capacity and energy from these units. These commitments are in
effect during periods of up to 10 years following commercial operation (and with
regard to a portion of a 5 percent interest in Plant Vogtle owned by MEAG, until
the latter of the retirement of the plant or the latest stated maturity date of
MEAG's bonds issued to finance such ownership interest). The payments for
capacity are required whether or not any capacity is available. The energy cost
is a function of each unit's variable operating costs. Except as noted below,
the cost of such capacity and energy is included in purchased power from
non-affiliates in the Company's Statements of Income. Capacity payments totaled
$129 million, $183 million and $289 million in 1994, 1993 and 1992,
respectively. The Plant Scherer buyback agreements ended in 1993. The current
projected Plant Vogtle capacity payments for the next five years are as follows:
$77 million in 1995, $70 million in 1996, $59 million in 1997, $59 million in
1998, and $59 million in 1999. Portions of the payments noted above relate to
costs in excess of Plant Vogtle's allowed investment for ratemaking purposes.
The present value of these portions was written off in 1987 and 1990.
Additionally, the Plant Vogtle declining capacity buyback expense is being
levelized over a six-year period. See Note 3 for further information.
At December 31, 1994, the Company's percentage ownership and investment
(exclusive of nuclear fuel) in jointly owned facilities in commercial operation,
were as follows:
================================================================
Total
Nameplate Company
Facility (Type) Capacity Ownership
----------------------------------------------------------------
(megawatts)
Plant Vogtle (nuclear) 2,320 45.7%
Plant Hatch (nuclear) 1,630 50.1
Plant Wansley (coal) 1,779 53.5
Plant Scherer (coal)
Units 1 and 2 1,636 8.4
Unit 3 818 75.0
Unit 4 818 16.6
Plant McIntosh
Common Facilities N/A 75.0
(combustion-turbine)
=================================================================
Accumulated
Facility (Type) Investment Depreciation
-----------------------------------------------------------------
(in millions)
Plant Vogtle (nuclear) $3,289* $628
Plant Hatch (nuclear) 842 346
Plant Wansley (coal) 287 129
Plant Scherer (coal)
Units 1 and 2 112 36
Unit 3 540 121
Unit 4 119 18
Plant McIntosh
Common Facilities
(combustion-turbine) 17 **
-----------------------------------------------------------------
* Investment net of write-offs.
** Less than $1 million.
II-121
<PAGE>
NOTES (continued)
Georgia Power Company 1994 Annual Report
The Company and an affiliate, Alabama Power, own equally all of the
outstanding capital stock of Southern Electric Generating Company (SEGCO), which
owns electric generating units with a total rated capacity of 1,020 megawatts,
as well as associated transmission facilities. The capacity of the units has
been sold equally to the Company and Alabama Power under a contract which, in
substance, requires payments sufficient to provide for the operating expenses,
taxes, debt service and return on investment, whether or not SEGCO has any
capacity and energy available. The term of the contract extends automatically
for two year periods, subject to either party's right to cancel upon two year's
notice. The Company's share of expenses included in purchased power from
affiliates in the Statements of Income, is as follows:
============================================================
1994 1993 1992
------------------------------------------------------------
(in millions)
Energy $43 $60 $47
Capacity 33 30 28
------------------------------------------------------------
Total $76 $90 $75
============================================================
Kilowatt-hours 2,429 3,352 2,664
------------------------------------------------------------
At December 31, 1994, the capitalization of SEGCO consisted of $54 million
of equity and $78 million of long-term debt on which the annual interest
requirement is $5 million.
6. LONG-TERM POWER SALES AGREEMENTS
The Company and the operating affiliates of The Southern Company have entered
into long-term contractual agreements for the sale of capacity and energy to
non-affiliated utilities located outside the system's service territory. These
agreements consist of firm unit power sales pertaining to capacity from specific
generating units and non-firm sales based on the capacity of the Southern
system. Because energy is generally sold at cost under these agreements, it is
primarily the capacity revenues that affect the Company's profitability.
The Company's capacity revenues have been as follows:
==============================================================
Year Unit Power Sales Non-firm Sales
--------------------------------------------------------------
(in millions) (megawatts) (in millions) (megawatts)
1994 $ 75 403 $ 9 101
1993 135 830 17 200
1992 223 1,363 10 124
Long-term non-firm power of 200 megawatts was sold by the Southern electric
system in 1994 to FPC, of which the Company's share was 101 megawatts, under a
contract that expired at year-end. Sales under these long-term non-firm power
sales agreements are made from available power pool energy, and the revenues
from the sales are shared by the operating affiliates.
Unit power from specific generating plants is being sold to FPL, JEA, and
the City of Tallahassee, Florida and beginning in 1994 to FPC. Under these
agreements, the Company sold approximately 403 megawatts of capacity in 1994 and
is scheduled to sell approximately 248 megawatts of capacity in 1995.
Thereafter, these sales will decline to an estimated 172 megawatts in 1996 then
will remain at an approximate level of 158 megawatts through 1999. After 2000,
capacity sales will decline to approximately 102 megawatts -- unless reduced by
FPL, FPC, and JEA -- until the expiration of the contracts in 2010.
II-122
<PAGE>
NOTES (continued)
Georgia Power Company 1994 Annual Report
7. INCOME TAXES
Effective January 1, 1993, the Company adopted FASB Statement No. 109,
Accounting for Income Taxes. The adoption resulted in the recording of
additional deferred income taxes and related regulatory assets and liabilities.
At December 31, 1994, the tax-related regulatory assets were $920 million and
the tax-related regulatory liabilities were $433 million. The assets are
attributable to tax benefits flowed through to customers in prior years and to
taxes applicable to capitalized AFUDC. The liabilities are attributable to
deferred taxes previously recognized at rates higher than current enacted tax
law and to unamortized investment tax credits.
Details of the federal and state income tax provisions are as follows:
==============================================================
1994 1993 1992
---------------------------
Total provision for income taxes: (in millions)
Federal:
Currently payable $306 $223 $139
Deferred -
Current year 86 181 170
Reversal of prior years (57) (40) (6)
Deferred investment tax
credits (1) (18) (6)
--------------------------------------------------------------
334 346 297
--------------------------------------------------------------
State:
Currently payable 52 41 24
Deferred -
Current year 15 31 35
Reversal of prior years (10) (3) (3)
--------------------------------------------------------------
57 69 56
--------------------------------------------------------------
Total 391 415 353
--------------------------------------------------------------
Less:
Income taxes charged
(credited) to other income (8) (37) (25)
--------------------------------------------------------------
Federal and state income
taxes charged to operations $399 $452 $378
==============================================================
The tax effects of temporary differences between the carrying amounts of
assets and liabilities in the financial statements and their respective tax
basis, which give rise to deferred tax assets and liabilities are as follows:
===============================================================
1994 1993
-----------------
(in millions)
Deferred tax liabilities:
Accelerated depreciation $1,541 $1,458
Property basis differences 1,085 1,163
Deferred Plant Vogtle costs 141 161
Premium on reacquired debt 68 63
Deferred regulatory costs 48 24
Fuel clause underrecovered 9 32
Other 23 38
---------------------------------------------------------------
Total 2,915 2,939
---------------------------------------------------------------
Deferred tax assets:
Other property basis differences 250 263
Federal effect of state deferred taxes 94 92
Other deferred costs 79 61
Disallowed Plant Vogtle buybacks 26 29
Accrued interest 10 24
Other 13 12
---------------------------------------------------------------
Total 472 481
---------------------------------------------------------------
Net deferred tax liabilities 2,443 2,458
Portion included in current assets 35 22
---------------------------------------------------------------
Accumulated deferred income taxes
in the Balance Sheets $2,478 $2,480
===============================================================
Deferred investment tax credits are amortized over the life of the related
property with such amortization normally applied as a credit to reduce
depreciation in the Statements of Income. Credits amortized in this manner
amounted to $25 million in 1994, $19 million in 1993, and $19 million in 1992.
At December 31, 1994, all investment tax credits available to reduce federal
income taxes payable had been utilized.
II-123
<PAGE>
NOTES (continued)
Georgia Power Company 1994 Annual Report
A reconciliation of the federal statutory tax rate to the effective income
tax rate is as follows:
=============================================================
1994 1993 1992
------------------------
Federal statutory rate 35% 35% 34%
State income tax, net of
federal deduction 4 4 4
Non-deductible book
depreciation 3 3 3
Difference in prior years'
deferred and current tax rate (1) (1) (1)
Other - (1) (2)
-------------------------------------------------------------
Effective income tax rate 41% 40% 38%
=============================================================
The Southern Company and its subsidiaries file a consolidated federal income
tax return. Under a joint consolidated income tax agreement, each company's
current and deferred tax expense is computed on a stand-alone basis, and
consolidated tax savings are allocated to each company based on its ratio of
taxable income to total consolidated taxable income.
8. CAPITALIZATION
Common Stock Dividend Restrictions
The Company's first mortgage bond indenture contains various common stock
dividend restrictions that remain in effect as long as the bonds are
outstanding. At December 31, 1994, $742 million of retained earnings were
restricted against the payment of cash dividends on common stock under terms of
the mortgage indenture. Supplemental indentures in connection with future first
mortgage bond issues may contain more stringent common stock dividend
restrictions than those currently in effect.
The Company's charter limits cash dividends on common stock to the lesser of
the retained earnings balance or 75 percent of net income available for such
stock during a prior period of 12 months if the ratio of common stock equity to
total capitalization, including retained earnings, adjusted to reflect the
payment of the proposed dividend, is below 25 percent, and to 50 percent of such
net income if such ratio is less than 20 percent. At December 31, 1994, the
ratio as defined was 47.3 percent.
Preferred Securities
Georgia Power Capital, a limited partnership, was formed November 10, 1994, for
the purpose of issuing preferred securities and subsequently lending the
proceeds to the Company. In December 1994, Georgia Power Capital issued four
million shares of preferred securities at 9 percent and subsequently loaned the
proceeds of $100 million to the Company. This subordinated debt of the Company
is due December 19, 2024.
Pollution Control Bonds
The Company has incurred obligations in connection with the sale by public
authorities of tax-exempt pollution control and industrial development revenue
bonds. The Company has authenticated and delivered to trustees an aggregate of
$1 billion of its first mortgage bonds, which are pledged as security for its
obligations under pollution control and industrial development contracts. No
interest on these first mortgage bonds is payable unless and until a default
occurs on the installment purchase or loan agreements. An aggregate of
approximately $651 million of the pollution control and industrial development
bonds is secured by a subordinated interest in specific property of the Company.
Details of pollution control bonds are as follows:
============================================================
Maturity Interest Rates 1994 1993
------------------------------------------------------------
(in millions)
2004 5.70% $ 39 $ 39
2005-2008 5.375% to 6.75% 59 59
2011-2014 11.75% & Variable 10 477
2015-2019 6.00% to 10.60%
& Variable 786 830
2021-2024 5.40% to 7.25% &
Variable 784 256
------------------------------------------------------------
Total pollution control bonds $1,678 $1,661
============================================================
Bank Credit Arrangements
At the beginning of 1995, the Company had unused credit arrangements with banks
totaling $709 million, of which $268 million expires at various times during
1995, $41 million expires at May 1, 1997, and $400 million expires at June 30,
1997.
II-124
<PAGE>
NOTES (continued)
Georgia Power Company 1994 Annual Report
The $400 million expiring June 30, 1997, is under revolving credit
arrangements with several banks providing the Company, Alabama Power, and The
Southern Company up to a total credit amount of $400 million. To provide
liquidity support for commercial paper programs and for other short-term cash
needs, $165 million and $135 million of the $400 million available credit are
currently dedicated for the Company and Alabama Power, respectively. However,
the allocations can be changed among the borrowers by notifying the respective
banks.
During the term of the agreements expiring in 1997, short-term borrowings
may be converted into term loans, payable in 12 equal quarterly installments,
with the first installment due at the end of the first calendar quarter after
the applicable termination date or at an earlier date at the companies' option.
In addition, these agreements require payment of commitment fees based on the
unused portions of the commitments or the maintenance of compensating balances
with the banks.
Of the Company's total $709 million in unused credit arrangements, a portion
of the lines are dedicated to provide liquidity support to variable rate
pollution control bonds. The credit lines dedicated as of December 31, 1994, is
$219 million. In connection with all other lines of credit, the Company has the
option of paying fees or maintaining compensating balances. These balances are
not legally restricted from withdrawal.
In addition, the Company borrows under uncommitted lines of credit with
banks and through a $225 million commercial paper program that has the liquidity
support of committed bank credit arrangements. Average compensating balances
held under these committed facilities were not material in 1994.
Other Long-Term Debt
Assets acquired under capital leases are recorded in the Balance Sheets as
utility plant in service, and the related obligations are classified as
long-term debt. At December 31, 1994 and 1993, the Company had a capitalized
lease obligation for its corporate headquarters building of $88 million with an
interest rate of 8.1 percent. The maturity of this capital lease obligation
through 1999 is approximately as follows: $310 thousand in 1995, $336 thousand
in 1996, $365 thousand in 1997, $395 thousand in 1998, and $429 thousand in
1999.
The lease agreement for the corporate headquarters building provides for
payments that are minimal in early years and escalate through the first 21 years
of the lease. For ratemaking purposes, the GPSC has treated the lease as an
operating lease and has allowed only the lease payments in cost of service. The
difference between the accrued expense and the lease payments allowed for
ratemaking purposes is being deferred as a cost to be recovered in the future as
ordered by the GPSC. At December 31, 1994, and 1993, the interest and lease
amortization deferred on the Balance Sheets are $48 million and $47 million,
respectively.
In December 1993, the Company borrowed $37 million through a long-term note
due in 1995.
Assets Subject to Lien
The Company's mortgage dated as of March 1, 1941, as amended and supplemented,
securing the first mortgage bonds issued by the Company, constitutes a direct
lien on substantially all of the Company's fixed property and franchises.
Long-Term Debt Due Within One Year
The current portion of the Company's long-term debt is as follows:
================================================================
1994 1993
--------------
(in millions)
First mortgage bond maturity $130 $ -
Other long-term debt 37 11
----------------------------------------------------------------
Total $167 $11
================================================================
The Company's first mortgage bond indenture includes an improvement fund
requirement that amounts to 1 percent of each outstanding series of bonds
authenticated under the indenture prior to January 1 of each year, other than
those issued to collateralize pollution control obligations. The requirement may
be satisfied by June 1 of each year by depositing cash or reacquired bonds, or
by pledging additional property equal to 1 2/3 times the requirement. The 1994
requirement was funded in December 1993. The 1995 requirement of $23 million
II-125
<PAGE>
NOTES (continued)
Georgia Power Company 1994 Annual Report
will be satisfied by pledging additional property.
Redemption of Securities
The Company plans to continue a program of redeeming or replacing debt and
preferred stock in cases where opportunities exist to reduce financing costs.
Issues may be repurchased in the open market or called at premiums as specified
under terms of the issue. They may also be redeemed at face value to meet
improvement fund and sinking fund requirements, to meet replacement provisions
of the mortgage, or through use of proceeds from the sale of property pledged
under the mortgage. In general, for the first five years a series is outstanding
the Company is prohibited from redeeming for improvement fund purposes more than
1 percent annually of the original issue amount.
9. QUARTERLY FINANCIAL DATA (UNAUDITED)
Summarized quarterly financial information for 1994 and 1993 is as follows:
==================================================================
Net Income
After
Dividends on
Operating Operating Preferred
Quarter Ended Revenues Income Stock
------------------------------------------------------------------
(in millions)
March 1994 $ 992 $157 $ 58
June 1994 1,030 227 140
September 1994 1,213 331 233
December 1994 927 179 95
March 1993 $1,004 $221 $108
June 1993 1,096 219 141
September 1993 1,376 356 245
December 1993 975 176 76
------------------------------------------------------------------
Earnings in 1994 declined by $55 million as a result of work force
reduction programs. Of this amount, $52 million was recorded in the first
quarter of 1994.
The Company's business is influenced by seasonal weather
conditions.
II-126
<PAGE>
<TABLE>
<CAPTION>
SELECTED FINANCIAL AND OPERATING DATA
Georgia Power Company 1994 Annual Report
===================================================================================================
1994 1993 1992
---------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Operating Revenues (in thousands) $4,162,403 $4,451,181 $4,297,436
Net Income after Dividends
on Preferred Stock (in thousands) $525,544 $569,853 $520,538
Cash Dividends on Common Stock (in thousands) $429,300 $402,400 $384,000
Return on Average Common Equity (percent) 12.84 14.37 13.60
Total Assets (in thousands) $13,712,658 $13,736,110 $10,964,442
Gross Property Additions (in thousands) $638,426 $674,432 $508,444
---------------------------------------------------------------------------------------------------
Capitalization (in thousands):
Common stock equity $4,141,554 $4,045,458 $3,888,237
Preferred stock 692,787 692,787 692,792
Preferred stock subject to mandatory redemption - - 6,250
Preferred securities of subsidiary 100,000 - -
Long-term debt 3,757,823 4,031,387 4,131,016
---------------------------------------------------------------------------------------------------
Total (excluding amounts due within one year) $8,692,164 $8,769,632 $8,718,295
===================================================================================================
Capitalization Ratios (percent):
Common stock equity 47.6 46.1 44.6
Preferred stock 8.0 7.9 8.0
Preferred securities of subsidiary 1.2 - -
Long-term debt 43.2 46.0 47.4
---------------------------------------------------------------------------------------------------
Total (excluding amounts due within one year) 100.0 100.0 100.0
===================================================================================================
First Mortgage Bonds (in thousands):
Issued - 1,135,000 975,000
Retired 133,559 1,337,822 1,381,300
Preferred Stock (in thousands):
Issued - 175,000 195,000
Retired - 245,005 165,004
Preferred Securities of subsidiary (in thousands):
Issued 100,000 - -
Retired - - -
---------------------------------------------------------------------------------------------------
Security Ratings:
First Mortgage Bonds -
Moody's A2 A3 A3
Standard and Poor's A A- A-
Duff & Phelps A+ A+ A-
Preferred Stock -
Moody's a3 baa1 baa1
Standard and Poor's A- BBB+ BBB+
Duff & Phelps A- A- BBB
---------------------------------------------------------------------------------------------------
Customers (year-end):
Residential 1,466,382 1,441,972 1,421,175
Commercial 193,648 188,820 183,784
Industrial 10,976 11,217 11,479
Other 2,426 2,322 2,269
---------------------------------------------------------------------------------------------------
Total 1,673,432 1,644,331 1,618,707
===================================================================================================
Employees (year-end) 11,765 12,528 12,600
</TABLE>
II-127
<PAGE>
<TABLE>
<CAPTION>
SELECTED FINANCIAL AND OPERATING DATA
Georgia Power Company 1994 Annual Report
===================================================================================================
1991 1990 1989
---------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Operating Revenues (in thousands) $4,301,428 $4,445,809 $4,145,240
Net Income after Dividends
on Preferred Stock (in thousands) $474,855 $208,066 $449,099
Cash Dividends on Common Stock (in thousands) $375,200 $389,600 $394,500
Return on Average Common Equity (percent) 12.76 5.52 11.72
Total Assets (in thousands) $10,842,538 $11,176,619 $11,372,346
Gross Property Additions (in thousands) $548,051 $558,727 $727,631
---------------------------------------------------------------------------------------------------
Capitalization (in thousands):
Common stock equity $3,766,551 $3,673,913 $3,860,657
Preferred stock 607,796 607,796 607,844
Preferred stock subject to mandatory redemption 118,750 125,000 155,000
Preferred securities of subsidiary - - -
Long-term debt 4,553,189 5,000,225 5,054,001
---------------------------------------------------------------------------------------------------
Total (excluding amounts due within one year) $9,046,286 $9,406,934 $9,677,502
===================================================================================================
Capitalization Ratios (percent):
Common stock equity 41.7 39.1 39.9
Preferred stock 8.0 7.8 7.9
Preferred securities of subsidiary - - -
Long-term debt 50.3 53.1 52.2
---------------------------------------------------------------------------------------------------
Total (excluding amounts due within one year) 100.0 100.0 100.0
===================================================================================================
First Mortgage Bonds (in thousands):
Issued - 300,000 250,000
Retired 598,384 91,117 91,516
Preferred Stock (in thousands):
Issued 100,000 - -
Retired 100,000 83,750 7,500
Preferred Securities of subsidiary (in thousands):
Issued - - -
Retired - - -
---------------------------------------------------------------------------------------------------
Security Ratings:
First Mortgage Bonds -
Moody's Baa1 Baa1 Baa2
Standard and Poor's BBB+ BBB+ BBB+
Duff & Phelps BBB+ BBB BBB
Preferred Stock -
Moody's baa1 baa1 baa2
Standard and Poor's BBB BBB BBB
Duff & Phelps BBB- BBB- BBB-
---------------------------------------------------------------------------------------------------
Customers (year-end):
Residential 1,397,682 1,378,888 1,355,211
Commercial 179,933 178,391 177,814
Industrial 11,946 12,115 12,311
Other 2,190 2,114 2,050
---------------------------------------------------------------------------------------------------
Total 1,591,751 1,571,508 1,547,386
===================================================================================================
Employees (year-end) 13,700 13,746 13,900
</TABLE>
II-128A
<PAGE>
<TABLE>
<CAPTION>
SELECTED FINANCIAL AND OPERATING DATA
Georgia Power Company 1994 Annual Report
===================================================================================================
1988 1987 1986
---------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Operating Revenues (in thousands) $3,897,479 $3,786,485 $3,561,603
Net Income after Dividends
on Preferred Stock (in thousands) $479,532 $240,057 $535,003
Cash Dividends on Common Stock (in thousands) $386,600 $377,800 $325,500
Return on Average Common Equity (percent) 13.06 6.85 16.51
Total Assets (in thousands) $11,130,539 $11,197,494 $10,465,063
Gross Property Additions (in thousands) $929,019 $1,034,059 $1,598,309
---------------------------------------------------------------------------------------------------
Capitalization (in thousands):
Common stock equity $3,806,070 $3,538,182 $3,469,201
Preferred stock 657,844 657,844 732,844
Preferred stock subject to mandatory redemption 162,500 166,250 112,500
Preferred securities of subsidiary - - -
Long-term debt 4,861,378 4,825,760 4,464,857
---------------------------------------------------------------------------------------------------
Total (excluding amounts due within one year) $9,487,792 $9,188,036 $8,779,402
===================================================================================================
Capitalization Ratios (percent):
Common stock equity 40.1 38.5 39.5
Preferred stock 8.6 9.0 9.6
Preferred securities of subsidiary - - -
Long-term debt 51.3 52.5 50.9
---------------------------------------------------------------------------------------------------
Total (excluding amounts due within one year) 100.0 100.0 100.0
===================================================================================================
First Mortgage Bonds (in thousands):
Issued 150,000 500,000 500,000
Retired 206,677 217,949 377,538
Preferred Stock (in thousands):
Issued - 125,000 100,000
Retired 3,750 150,000 7,500
Preferred Securities of subsidiary (in thousands):
Issued - - -
Retired - - -
---------------------------------------------------------------------------------------------------
Security Ratings:
First Mortgage Bonds -
Moody's Baa2 Baa2 Baa1
Standard and Poor's BBB BBB BBB+
Duff & Phelps 9 9 9
Preferred Stock -
Moody's baa2 baa2 baa1
Standard and Poor's BBB- BBB- BBB
Duff & Phelps 10 10 10
---------------------------------------------------------------------------------------------------
Customers (year-end):
Residential 1,329,173 1,303,721 1,268,983
Commercial 174,147 169,014 162,258
Industrial 12,353 12,307 12,315
Other 1,993 1,858 1,816
---------------------------------------------------------------------------------------------------
Total 1,517,666 1,486,900 1,445,372
===================================================================================================
Employees (year-end) 15,110 14,924 14,773
</TABLE>
II-128B
<PAGE>
<TABLE>
<CAPTION>
SELECTED FINANCIAL AND OPERATING DATA
Georgia Power Company 1994 Annual Report
======================================================================================
1985 1984
--------------------------------------------------------------------------------------
<S> <C> <C>
Operating Revenues (in thousands) $3,609,140 $3,319,699
Net Income after Dividends
on Preferred Stock (in thousands) $493,717 $421,719
Cash Dividends on Common Stock (in thousands) $277,500 $225,500
Return on Average Common Equity (percent) 17.95 18.43
Total Assets (in thousands) $9,030,618 $7,880,072
Gross Property Additions (in thousands) $1,384,182 $1,396,846
--------------------------------------------------------------------------------------
Capitalization (in thousands):
Common stock equity $3,013,707 $2,486,172
Preferred stock 632,844 482,844
Preferred stock subject to mandatory redemption 120,000 127,500
Preferred securities of subsidiary - -
Long-term debt 3,878,066 3,432,606
--------------------------------------------------------------------------------------
Total (excluding amounts due within one year) $7,644,617 $6,529,122
======================================================================================
Capitalization Ratios (percent):
Common stock equity 39.4 38.1
Preferred stock 9.9 9.3
Preferred securities of subsidiary - -
Long-term debt 50.7 52.6
--------------------------------------------------------------------------------------
Total (excluding amounts due within one year) 100.0 100.0
======================================================================================
First Mortgage Bonds (in thousands):
Issued - 150,000
Retired 17,738 26,084
Preferred Stock (in thousands):
Issued 150,000 50,000
Retired 3,750
Preferred Securities of subsidiary (in thousands):
Issued - -
Retired - -
--------------------------------------------------------------------------------------
Security Ratings:
First Mortgage Bonds -
Moody's Baa1 Baa1
Standard and Poor's BBB+ BBB+
Duff & Phelps 9 8
Preferred Stock -
Moody's baa1 baa1
Standard and Poor's BBB BBB
Duff & Phelps 10 9
--------------------------------------------------------------------------------------
Customers (year-end):
Residential 1,231,140 1,189,670
Commercial 155,399 148,536
Industrial 12,309 12,276
Other 1,789 1,753
--------------------------------------------------------------------------------------
Total 1,400,637 1,352,235
======================================================================================
Employees (year-end) 14,947 14,562
</TABLE>
II-128C
<PAGE>
<TABLE>
<CAPTION>
SELECTED FINANCIAL AND OPERATING DATA (continued)
Georgia Power Company 1994 Annual Report
===================================================================================================
1994 1993 1992
---------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Operating Revenues (in thousands):
Residential $1,180,358 $1,291,035 $1,128,396
Commercial 1,367,315 1,354,130 1,285,681
Industrial 1,100,995 1,113,067 1,083,856
Other 42,983 41,399 39,504
---------------------------------------------------------------------------------------------------
Total retail 3,691,651 3,799,631 3,537,437
Sales for resale - non-affiliates 351,591 534,370 640,308
Sales for resale - affiliates 60,899 61,668 67,835
---------------------------------------------------------------------------------------------------
Total revenues from sales of electricity 4,104,141 4,395,669 4,245,580
Other revenues 58,262 55,512 51,856
---------------------------------------------------------------------------------------------------
Total $4,162,403 $4,451,181 $4,297,436
===================================================================================================
Kilowatt-Hour Sales (in thousands):
Residential 15,680,709 16,649,859 14,939,172
Commercial 18,738,461 18,278,508 17,260,614
Industrial 24,337,632 23,635,363 22,978,312
Other 484,009 460,801 436,144
---------------------------------------------------------------------------------------------------
Total retail 59,240,811 59,024,531 55,614,242
Sales for resale - non-affiliates 7,968,475 14,307,030 15,870,222
Sales for resale - affiliates 3,056,050 3,027,733 3,320,060
---------------------------------------------------------------------------------------------------
Total 70,265,336 76,359,294 74,804,524
===================================================================================================
Average Revenue Per Kilowatt-Hour (cents):
Residential 7.53 7.75 7.55
Commercial 7.30 7.41 7.45
Industrial 4.52 4.71 4.72
Total retail 6.23 6.44 6.36
Sales for resale 3.74 3.44 3.69
Total sales 5.84 5.76 5.68
Residential Average Annual Kilowatt-Hour Use Per Customer 10,766 11,630 10,603
Residential Average Annual Revenue Per Customer $810.39 $901.79 $800.88
Plant Nameplate Capacity Ratings (year-end) (megawatts) 13,943 13,759 14,076
Maximum Peak-Hour Demand (megawatts) (Note):
Winter 10,509 9,067 8,938
Summer 11,758 12,573 11,448
Annual Load Factor (percent) 63.0 58.5 60.5
Plant Availability (percent):
Fossil-steam 83.1 85.9 86.6
Nuclear 88.4 85.5 87.7
---------------------------------------------------------------------------------------------------
Source of Energy Supply (percent):
Coal 61.3 62.1 61.4
Nuclear 18.0 16.2 17.0
Hydro 2.6 2.3 2.5
Oil and gas 0.1 0.2 *
Purchased power -
From non-affiliates 9.7 10.2 12.2
From affiliates 8.3 9.0 6.9
---------------------------------------------------------------------------------------------------
Total 100.0 100.0 100.0
===================================================================================================
Total Fuel Economy Data:
BTU per net kilowatt-hour generated 9,915 9,912 9,900
Cost of fuel per million BTU (cents) 145.33 153.62 153.08
Average cost of fuel per net kilowatt-hour generated (cents) 1.44 1.52 1.52
===================================================================================================
Note: As of 9/1/91, Georgia Power Company's sales to Oglethorpe Power Company are not included in Peak-Hour Demand.
* Less than one-tenth of one percent.
</TABLE>
II-129
<PAGE>
<TABLE>
<CAPTION>
SELECTED FINANCIAL AND OPERATING DATA (continued)
Georgia Power Company 1994 Annual Report
===================================================================================================
1991 1990 1989
---------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Operating Revenues (in thousands):
Residential $1,111,358 $1,109,165 $1,022,781
Commercial 1,243,067 1,218,441 1,143,727
Industrial 1,057,702 1,061,830 1,006,416
Other 37,861 36,773 34,775
---------------------------------------------------------------------------------------------------
Total retail 3,449,988 3,426,209 3,207,699
Sales for resale - non-affiliates 736,643 784,086 760,809
Sales for resale - affiliates 65,586 168,251 150,394
---------------------------------------------------------------------------------------------------
Total revenues from sales of electricity 4,252,217 4,378,546 4,118,902
Other revenues 49,211 67,263 26,338
---------------------------------------------------------------------------------------------------
Total $4,301,428 $4,445,809 $4,145,240
===================================================================================================
Kilowatt-Hour Sales (in thousands):
Residential 14,815,089 14,771,648 14,134,195
Commercial 16,885,833 16,627,128 15,843,181
Industrial 22,298,062 22,126,604 21,801,404
Other 429,016 428,459 414,107
---------------------------------------------------------------------------------------------------
Total retail 54,428,000 53,953,839 52,192,887
Sales for resale - non-affiliates 18,719,924 20,158,681 20,479,412
Sales for resale - affiliates 3,885,892 8,272,528 7,489,948
---------------------------------------------------------------------------------------------------
Total 77,033,816 82,385,048 80,162,247
===================================================================================================
Average Revenue Per Kilowatt-Hour (cents):
Residential 7.50 7.51 7.24
Commercial 7.36 7.33 7.22
Industrial 4.74 4.80 4.62
Total retail 6.34 6.35 6.15
Sales for resale 3.55 3.35 3.26
Total sales 5.52 5.31 5.14
Residential Average Annual Kilowatt-Hour Use Per Customer 10,675 10,795 10,530
Residential Average Annual Revenue Per Customer $800.78 $810.56 $761.96
Plant Nameplate Capacity Ratings (year-end) (megawatts) 14,076 14,366 14,366
Maximum Peak-Hour Demand (megawatts) (Note):
Winter 10,001 8,977 10,101
Summer 13,090 13,196 12,735
Annual Load Factor (percent) 55.2 55.5 56.3
Plant Availability (percent):
Fossil-steam 93.3 92.5 93.0
Nuclear 81.6 81.3 89.2
---------------------------------------------------------------------------------------------------
Source of Energy Supply (percent):
Coal 63.6 65.1 64.0
Nuclear 15.3 13.7 14.1
Hydro 2.3 2.2 2.1
Oil and gas * 0.1 0.1
Purchased power -
From non-affiliates 10.3 11.0 10.2
From affiliates 8.5 7.9 9.5
---------------------------------------------------------------------------------------------------
Total 100.0 100.0 100.0
===================================================================================================
Total Fuel Economy Data:
BTU per net kilowatt-hour generated 9,960 9,939 10,020
Cost of fuel per million BTU (cents) 157.97 166.22 164.27
Average cost of fuel per net kilowatt-hour generated (cents) 1.57 1.65 1.65
===================================================================================================
Note: As of 9/1/91, Georgia Power Company's sales to Oglethorpe Power Company are not included in Peak-Hour Demand.
*Less than one-tenth of one percent.
</TABLE>
II-130A
<PAGE>
<TABLE>
<CAPTION>
SELECTED FINANCIAL AND OPERATING DATA (continued)
Georgia Power Company 1994 Annual Report
===================================================================================================
1988 1987 1986
---------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Operating Revenues (in thousands):
Residential $979,047 $904,218 $874,231
Commercial 1,054,995 915,540 854,755
Industrial 983,822 911,933 897,646
Other 31,743 29,350 27,948
---------------------------------------------------------------------------------------------------
Total retail 3,049,607 2,761,041 2,654,580
Sales for resale - non-affiliates 707,076 822,696 780,049
Sales for resale - affiliates 86,751 159,998 91,753
---------------------------------------------------------------------------------------------------
Total revenues from sales of electricity 3,843,434 3,743,735 3,526,382
Other revenues 54,045 42,750 35,221
---------------------------------------------------------------------------------------------------
Total $3,897,479 $3,786,485 $3,561,603
===================================================================================================
Kilowatt-Hour Sales (in thousands):
Residential 13,800,038 13,675,730 13,234,248
Commercial 14,790,561 13,799,379 12,945,926
Industrial 21,412,845 20,884,454 20,339,235
Other 397,669 385,514 381,917
---------------------------------------------------------------------------------------------------
Total retail 50,401,113 48,745,077 46,901,326
Sales for resale - non-affiliates 18,544,705 20,910,185 18,198,186
Sales for resale - affiliates 3,327,814 6,032,889 3,160,242
---------------------------------------------------------------------------------------------------
Total 72,273,632 75,688,151 68,259,754
===================================================================================================
Average Revenue Per Kilowatt-Hour (cents):
Residential 7.09 6.61 6.61
Commercial 7.13 6.63 6.60
Industrial 4.59 4.37 4.41
Total retail 6.05 5.66 5.66
Sales for resale 3.63 3.65 4.08
Total sales 5.32 4.95 5.17
Residential Average Annual Kilowatt-Hour Use Per Customer 10,484 10,623 10,577
Residential Average Annual Revenue Per Customer $743.82 $702.36 $698.72
Plant Nameplate Capacity Ratings (year-end) (megawatts) 13,018 13,018 11,875
Maximum Peak-Hour Demand (megawatts) (Note):
Winter 9,866 9,446 10,551
Summer 12,295 12,390 11,910
Annual Load Factor (percent) 59.1 56.1 57.5
Plant Availability (percent):
Fossil-steam 94.5 92.7 91.2
Nuclear 69.4 85.4 64.7
---------------------------------------------------------------------------------------------------
Source of Energy Supply (percent):
Coal 72.0 70.9 74.6
Nuclear 9.6 9.1 5.0
Hydro 1.2 1.7 1.2
Oil and gas 0.1 0.1 0.6
Purchased power -
From non-affiliates 8.2 8.5 8.9
From affiliates 8.9 9.7 9.7
---------------------------------------------------------------------------------------------------
Total 100.0 100.0 100.0
===================================================================================================
Total Fuel Economy Data:
BTU per net kilowatt-hour generated 9,969 9,932 10,016
Cost of fuel per million BTU (cents) 166.28 168.81 175.81
Average cost of fuel per net kilowatt-hour generated (cents) 1.66 1.68 1.76
===================================================================================================
Note: As of 9/1/91, Georgia Power Company's sales to Oglethorpe Power Company are not included in Peak-Hour Demand.
* Less than one-tenth of one percent.
</TABLE>
II-130B
<PAGE>
<TABLE>
<CAPTION>
SELECTED FINANCIAL AND OPERATING DATA (continued)
Georgia Power Company 1994 Annual Report
======================================================================================
1985 1984
--------------------------------------------------------------------------------------
<S> <C> <C>
Operating Revenues (in thousands):
Residential $786,500 $754,163
Commercial 797,540 739,035
Industrial 873,554 858,536
Other 26,766 24,388
--------------------------------------------------------------------------------------
Total retail 2,484,360 2,376,122
Sales for resale - non-affiliates 941,743 779,028
Sales for resale - affiliates 149,463 136,047
--------------------------------------------------------------------------------------
Total revenues from sales of electricity 3,575,566 3,291,197
Other revenues 33,574 28,502
--------------------------------------------------------------------------------------
Total $3,609,140 $3,319,699
======================================================================================
Kilowatt-Hour Sales (in thousands):
Residential 12,006,462 11,548,787
Commercial 11,945,938 10,902,163
Industrial 19,517,543 18,862,531
Other 382,238 342,047
--------------------------------------------------------------------------------------
Total retail 43,852,181 41,655,528
Sales for resale - non-affiliates 21,526,865 19,138,575
Sales for resale - affiliates 5,999,834 4,970,928
--------------------------------------------------------------------------------------
Total 71,378,880 65,765,031
======================================================================================
Average Revenue Per Kilowatt-Hour (cents):
Residential 6.55 6.53
Commercial 6.68 6.78
Industrial 4.48 4.55
Total retail 5.67 5.70
Sales for resale 3.96 3.80
Total sales 5.01 5.00
Residential Average Annual Kilowatt-Hour Use Per Customer 9,923 9,855
Residential Average Annual Revenue Per Customer $650.01 $643.53
Plant Nameplate Capacity Ratings (year-end) (megawatts) 11,875 11,767
Maximum Peak-Hour Demand (megawatts) (Note):
Winter 10,049 8,462
Summer 11,079 10,443
Annual Load Factor (percent) 56.3 56.9
Plant Availability (percent):
Fossil-steam 91.2 91.0
Nuclear 79.5 47.3
--------------------------------------------------------------------------------------
Source of Energy Supply (percent):
Coal 72.7 74.4
Nuclear 6.7 4.0
Hydro 1.5 2.7
Oil and gas * *
Purchased power -
From non-affiliates 9.4 9.2
From affiliates 9.7 9.7
--------------------------------------------------------------------------------------
Total 100.0 100.0
======================================================================================
Total Fuel Economy Data:
BTU per net kilowatt-hour generated 10,089 10,002
Cost of fuel per million BTU (cents) 178.11 184.63
Average cost of fuel per net kilowatt-hour generated (cents) 1.80 1.85
Note: As of 9/1/91, Georgia Power Company's sales to Oglethorpe Power Company are not included in Peak-Hour Demand.
* Less than one-tenth of one percent.
</TABLE>
II-130C
<PAGE>
<TABLE>
<CAPTION>
STATEMENTS OF INCOME
Georgia Power Company
====================================================================================================
For the Years Ended December 31, 1994 1993 1992
----------------------------------------------------------------------------------------------------
(Thousands of Dollars)
<S> <C> <C> <C>
Operating Revenues:
Revenues $4,101,504 $4,389,513 $4,229,601
Revenues from affiliates 60,899 61,668 67,835
----------------------------------------------------------------------------------------------------
Total operating revenues 4,162,403 4,451,181 4,297,436
----------------------------------------------------------------------------------------------------
Operating Expenses:
Operation --
Fuel 870,653 951,507 929,780
Purchased power from non-affiliates 193,130 313,170 436,761
Purchased power from affiliates 158,063 194,024 158,306
Provision for separation benefits 82,238 - 9,778
Proceeds from settlement of disputed contracts - - (4,982)
Other 643,375 675,284 616,116
Maintenance 272,818 284,521 264,757
Depreciation and amortization 379,158 379,425 375,460
Deferred Plant Vogtle expenses, net 74,888 36,284 (30,804)
Taxes other than income taxes 194,566 192,671 179,460
Federal and state income taxes 399,413 452,122 377,542
----------------------------------------------------------------------------------------------------
Total operating expenses 3,268,302 3,479,008 3,312,174
----------------------------------------------------------------------------------------------------
Operating Income 894,101 972,173 985,262
Other Income (Expense):
Allowance for equity funds used during construction 5,663 3,168 5,855
Income from subsidiary 3,588 4,127 4,635
Deferred return on Plant Vogtle - - -
Write-off of Plant Vogtle costs - - -
Income tax reduction for write-off of Plant Vogtle costs - - -
Interest income 3,254 3,806 12,475
Other, net (See note) 10,626 11,902 (30,527)
Income taxes applicable to other income 7,975 37,661 25,163
----------------------------------------------------------------------------------------------------
Income Before Interest Charges 925,207 1,032,837 1,002,863
----------------------------------------------------------------------------------------------------
Interest Charges:
Interest on long-term debt 306,473 343,634 402,541
Allowance for debt funds used during construction (11,571) (8,271) (8,310)
Interest on interim obligations 17,529 15,530 9,694
Amortization of debt discount, premium, and expense, net 15,743 14,024 8,033
Other interest charges 23,483 47,393 12,425
----------------------------------------------------------------------------------------------------
Net interest charges 351,657 412,310 424,383
----------------------------------------------------------------------------------------------------
Net Income 573,550 620,527 578,480
Dividends on Preferred Stock 48,006 50,674 57,942
----------------------------------------------------------------------------------------------------
Net Income After Dividends on Preferred Stock $ 525,544 $ 569,853 $ 520,538
====================================================================================================
Note: Reflects major sales of facilities to JEA, FP&L, OPC, MEAG, and Dalton.
Increases in net income, after total taxes, from these sales were $11,275,000 in 1994, $23,191,000 in 1993, $14,542,000 in 1991,
$6,336,000 in 1990, $3,851,000 in 1987, and $21,250,000 in 1984.
</TABLE>
II-131
<PAGE>
<TABLE>
<CAPTION>
STATEMENTS OF INCOME
Georgia Power Company
===============================================================================================================
For the Years Ended December 31, 1991 1990 1989 1988
---------------------------------------------------------------------------------------------------------------
(Thousands of Dollars)
<S> <C> <C> <C> <C>
Operating Revenues:
Revenues $4,235,842 $4,277,558 $3,994,846 $3,810,728
Revenues from affiliates 65,586 168,251 150,394 86,751
---------------------------------------------------------------------------------------------------------------
Total operating revenues 4,301,428 4,445,809 4,145,240 3,897,479
---------------------------------------------------------------------------------------------------------------
Operating Expenses:
Operation --
Fuel 998,701 1,120,933 1,078,586 1,023,173
Purchased power from non-affiliates 444,920 626,989 543,448 546,511
Purchased power from affiliates 193,114 173,716 195,355 164,873
Provision for separation benefits 52,952 - - -
Proceeds from settlement of disputed contracts (142,183) - - -
Other 596,565 524,665 504,743 541,975
Maintenance 295,012 280,304 233,680 246,877
Depreciation and amortization 382,549 380,394 346,091 306,492
Deferred Plant Vogtle expenses, net 16,008 31,146 (39,211) (8,333)
Taxes other than income taxes 172,893 151,124 128,518 146,759
Federal and state income taxes 349,284 270,561 273,287 204,222
---------------------------------------------------------------------------------------------------------------
Total operating expenses 3,359,815 3,559,832 3,264,497 3,172,549
---------------------------------------------------------------------------------------------------------------
Operating Income 941,613 885,977 880,743 724,930
Other Income (Expense):
Allowance for equity funds used during construction 9,083 6,985 40,525 96,530
Income from subsidiary 4,576 4,182 3,750 3,302
Deferred return on Plant Vogtle 34,549 82,721 48,096 107,310
Write-off of Plant Vogtle costs - (281,254) - -
Income tax reduction for write-off of Plant Vogtle costs - 63,231 - -
Interest income 10,563 7,552 10,333 28,445
Other, net (See note) 13,551 (21,199) (20,603) (3,746)
Income taxes applicable to other income (7,522) 20,859 15,573 6,583
---------------------------------------------------------------------------------------------------------------
Income Before Interest Charges 1,006,413 769,054 978,417 963,354
---------------------------------------------------------------------------------------------------------------
Interest Charges:
Interest on long-term debt 459,184 480,174 475,991 471,897
Allowance for debt funds used during construction (10,385) (9,325) (34,244) (95,818)
Interest on interim obligations 4,906 8,512 1,059 15,084
Amortization of debt discount, premium, and expense, net 6,214 6,100 5,865 5,466
Other interest charges 9,938 9,404 8,868 14,556
---------------------------------------------------------------------------------------------------------------
Net interest charges 469,857 494,865 457,539 411,185
---------------------------------------------------------------------------------------------------------------
Net Income 536,556 274,189 520,878 552,169
Dividends on Preferred Stock 61,701 66,123 71,779 72,637
---------------------------------------------------------------------------------------------------------------
Net Income After Dividends on Preferred Stock $ 474,855 $ 208,066 $ 449,099 $ 479,532
===============================================================================================================
Note: Reflects major sales of facilities to JEA, FP&L, OPC, MEAG, and Dalton.
Increases in net income, after total taxes, from these sales were $11,275,000 in 1994, $23,191,000 in 1993, $14,542,000 in 1991,
$6,336,000 in 1990, $3,851,000 in 1987, and $21,250,000 in 1984.
</TABLE>
II-132A
<PAGE>
<TABLE>
<CAPTION>
STATEMENTS OF INCOME
Georgia Power Company
===============================================================================================================
For the Years Ended December 31, 1987 1986 1985 1984
---------------------------------------------------------------------------------------------------------------
(Thousands of Dollars)
<S> <C> <C> <C> <C>
Operating Revenues:
Revenues $3,626,487 $3,469,850 $3,459,677 $3,183,652
Revenues from affiliates 159,998 91,753 149,463 136,047
---------------------------------------------------------------------------------------------------------------
Total operating revenues 3,786,485 3,561,603 3,609,140 3,319,699
---------------------------------------------------------------------------------------------------------------
Operating Expenses:
Operation --
Fuel 1,064,552 1,012,949 1,077,092 1,000,434
Purchased power from non-affiliates 530,051 344,708 415,406 427,403
Purchased power from affiliates 199,831 192,297 204,848 188,938
Provision for separation benefits - - - -
Proceeds from settlement of disputed contracts - - - -
Other 575,182 513,974 482,468 412,803
Maintenance 274,672 275,533 254,510 228,377
Depreciation and amortization 254,929 215,763 201,524 191,205
Deferred Plant Vogtle expenses, net (141,977) - - -
Taxes other than income taxes 143,289 119,768 120,320 106,908
Federal and state income taxes 250,093 319,374 311,151 268,654
---------------------------------------------------------------------------------------------------------------
Total operating expenses 3,150,622 2,994,366 3,067,319 2,824,722
---------------------------------------------------------------------------------------------------------------
Operating Income 635,863 567,237 541,821 494,977
Other Income (Expense):
Allowance for equity funds used during construction 159,414 275,183 227,950 162,057
Income from subsidiary 3,440 2,967 3,417 3,181
Deferred return on Plant Vogtle 115,028 - - -
Write-off of Plant Vogtle costs (357,821) - - -
Income tax reduction for write-off of Plant Vogtle costs 128,923 - - -
Interest income 55,388 44,615 41,546 34,074
Other, net (See note) (55,081) (28,464) (6,815) 45,132
Income taxes applicable to other income 17,344 5,154 (9,114) (37,678)
---------------------------------------------------------------------------------------------------------------
Income Before Interest Charges 702,498 866,692 798,805 701,743
---------------------------------------------------------------------------------------------------------------
Interest Charges:
Interest on long-term debt 480,519 472,744 421,764 351,855
Allowance for debt funds used during construction (130,756) (225,897) (216,233) (150,931)
Interest on interim obligations 16,362 1,954 20,516 13,387
Amortization of debt discount, premium, and expense, net 3,573 2,681 2,335 1,680
Other interest charges 12,239 4,610 10,593 8,416
---------------------------------------------------------------------------------------------------------------
Net interest charges 381,937 256,092 238,975 224,407
---------------------------------------------------------------------------------------------------------------
Net Income 320,561 610,600 559,830 477,336
Dividends on Preferred Stock 80,504 75,597 66,113 55,617
---------------------------------------------------------------------------------------------------------------
Net Income After Dividends on Preferred Stock $ 240,057 $ 535,003 $ 493,717 $ 421,719
===============================================================================================================
Note: Reflects major sales of facilities to JEA, FP&L, OPC, MEAG, and Dalton.
Increases in net income, after total taxes, from these sales were $11,275,000 in 1994, $23,191,000 in 1993, $14,542,000 in 1991,
$6,336,000 in 1990, $3,851,000 in 1987, and $21,250,000 in 1984.
</TABLE>
II-132B
<PAGE>
<TABLE>
<CAPTION>
STATEMENTS OF CASH FLOWS
Georgia Power Company
==========================================================================================================
For the Years Ended December 31, 1994 1993 1992
----------------------------------------------------------------------------------------------------------
(Thousands of Dollars)
<S> <C> <C> <C>
Operating Activities:
Net income $ 573,550 $ 620,527 $ 578,480
Adjustments to reconcile net income to net
cash provided by operating activities --
Depreciation and amortization 484,032 475,152 471,014
Deferred income taxes, net 33,567 169,009 194,955
Deferred investment tax credits, net - (18,274) (5,704)
Allowance for equity funds used during construction (5,663) (3,168) (5,855)
Deferred Plant Vogtle costs 74,888 36,284 (30,804)
Write-off of Plant Vogtle costs - - -
Provision for separation benefits 68,599 - -
Non-cash proceeds from settlement of disputed contracts - - (4,982)
Other, net (95,314) (46,227) (9,768)
Changes in certain current assets and liabilities:
Receivables, net 67,218 27,088 (31,348)
Inventories (63,545) 82,433 (65,621)
Payables 5,409 17,364 25,303
Other (5,675) (94,574) (85,961)
----------------------------------------------------------------------------------------------------------
Net cash provided from operating activities 1,137,066 1,265,614 1,029,709
----------------------------------------------------------------------------------------------------------
Investing Activities:
Gross property additions (638,426) (674,432) (508,444)
Sales of property 132,644 261,687 46
Other (41,273) (43,154) 42,892
----------------------------------------------------------------------------------------------------------
Net cash used for investing activities (547,055) (455,899) (465,506)
----------------------------------------------------------------------------------------------------------
Financing Activities and Capital Contributions:
Proceeds:
Preferred securities of subsidiary 100,000 - -
Preferred stock - 175,000 195,000
First mortgage bonds - 1,135,000 975,000
Pollution control bonds 527,210 145,425 161,955
Other long-term debt - 37,000 -
Capital contributions from parent company - - -
Retirements:
Preferred stock - (245,005) (165,004)
First mortgage bonds (133,559) (1,337,822) (1,381,300)
Pollution control bonds (510,320) (145,465) (160,205)
Other long-term debt (10,187) (19,451) (567)
Interim obligations, net (57,425) (51,444) 334,671
Payment of preferred stock dividends (47,147) (53,123) (60,475)
Payment of common stock dividends (429,300) (402,400) (384,000)
Miscellaneous (22,640) (63,648) (70,986)
----------------------------------------------------------------------------------------------------------
Net cash provided from (used for) financing activities (583,368) (825,933) (555,911)
----------------------------------------------------------------------------------------------------------
Net Change in Cash and Cash Equivalents 6,643 (16,218) 8,292
Cash and Cash Equivalents at Beginning of Year 5,896 22,114 13,822
Cash and Cash Equivalents at End of Year $ 12,539 $ 5,896 $ 22,114
==========================================================================================================
( ) Denotes use of cash.
</TABLE>
II-133
<PAGE>
<TABLE>
<CAPTION>
STATEMENTS OF CASH FLOWS
Georgia Power Company
========================================================================================================================
For the Years Ended December 31, 1991 1990 1989 1988
------------------------------------------------------------------------------------------------------------------------
(Thousands of Dollars)
<S> <C> <C> <C> <C>
Operating Activities:
Net income $ 536,556 $ 274,189 $ 520,878 $ 552,169
Adjustments to reconcile net income to net
cash provided by operating activities --
Depreciation and amortization 480,318 502,098 484,870 400,665
Deferred income taxes, net 53,219 88,667 184,490 160,774
Deferred investment tax credits, net (9,524) (52) (8,017) 11,605
Allowance for equity funds used during construction (9,083) (6,985) (40,525) (96,530)
Deferred Plant Vogtle costs (18,541) (51,575) (87,307) (115,643)
Write-off of Plant Vogtle costs - 281,254 - -
Provision for separation benefits - - - -
Non-cash proceeds from settlement of disputed contracts (103,846) - - -
Other, net (26,024) (50,804) (38,046) 6,983
Changes in certain current assets and liabilities:
Receivables, net 23,920 1,444 (59,035) 11,225
Inventories 24,130 (23,498) (33,123) (10,044)
Payables (23,075) (43,470) (38,976) (2,065)
Other 54,777 (9,991) 36,015 1,161
------------------------------------------------------------------------------------------------------------------------
Net cash provided from operating activities 982,827 961,277 921,224 920,300
------------------------------------------------------------------------------------------------------------------------
Investing Activities:
Gross property additions (548,051) (558,727) (727,631) (929,019)
Sales of property 291,075 34,573 - -
Other 931 1,937 47,260 35,328
------------------------------------------------------------------------------------------------------------------------
Net cash used for investing activities (256,045) (522,217) (680,371) (893,691)
------------------------------------------------------------------------------------------------------------------------
Financing Activities and Capital Contributions:
Proceeds:
Preferred securities of subsidiary - - - -
Preferred stock 100,000 - - -
First mortgage bonds - 300,000 250,000 150,000
Pollution control bonds 80,420 - 50,000 69,526
Other long-term debt - - - -
Capital contributions from parent company - - - 175,000
Retirements:
Preferred stock (100,000) (83,750) (7,500) (3,750)
First mortgage bonds (598,384) (91,117) (91,516) (206,677)
Pollution control bonds (83,265) (535) (505) (475)
Other long-term debt (1,130) (114,452) (3,806) (2,878)
Interim obligations, net 199,000 - - (302,261)
Payment of preferred stock dividends (60,766) (67,757) (72,259) (72,931)
Payment of common stock dividends (375,200) (389,600) (394,500) (386,600)
Miscellaneous (17,613) (7,663) (4,742) (13,440)
------------------------------------------------------------------------------------------------------------------------
Net cash provided from (used for) financing activities (856,938) (454,874) (274,828) (594,486)
------------------------------------------------------------------------------------------------------------------------
Net Change in Cash and Cash Equivalents (130,156) (15,814) (33,975) (567,877)
Cash and Cash Equivalents at Beginning of Year 143,978 159,792 193,767 761,644
Cash and Cash Equivalents at End of Year $ 13,822 $ 143,978 $ 159,792 $ 193,767
========================================================================================================================
( ) Denotes use of cash.
</TABLE>
II-134A
<PAGE>
<TABLE>
<CAPTION>
STATEMENTS OF CASH FLOWS
Georgia Power Company
========================================================================================================================
For the Years Ended December 31, 1987 1986 1985 1984
------------------------------------------------------------------------------------------------------------------------
(Thousands of Dollars)
<S> <C> <C> <C> <C>
Operating Activities:
Net income $ 320,561 $ 610,600 $ 559,830 $ 477,336
Adjustments to reconcile net income to net
cash provided by operating activities --
Depreciation and amortization 336,647 260,945 248,256 219,301
Deferred income taxes, net 76,445 236,822 104,102 145,266
Deferred investment tax credits, net (5,075) 106,407 115,144 61,252
Allowance for equity funds used during construction (159,414) (275,183) (227,950) (162,057)
Deferred Plant Vogtle costs (257,005) - - -
Write-off of Plant Vogtle costs 357,821 - - -
Provision for separation benefits - - - -
Non-cash proceeds from settlement of disputed contracts - - - -
Other, net (759) 5,554 34,311 (81,166)
Changes in certain current assets and liabilities:
Receivables, net (6,880) (7,474) (27,928) (68,325)
Inventories (72,540) (26,863) 77,667 (65,772)
Payables 74,341 133,044 (9,182) 161,479
Other 2,751 19,682 21,289 99,191
------------------------------------------------------------------------------------------------------------------------
Net cash provided from operating activities 666,893 1,063,534 895,539 786,505
------------------------------------------------------------------------------------------------------------------------
Investing Activities:
Gross property additions (1,034,059) (1,598,309) (1,384,182) (1,396,846)
Sales of property 12,276 - - 320,708
Other 45,801 168,518 92,826 82,741
------------------------------------------------------------------------------------------------------------------------
Net cash used for investing activities (975,982) (1,429,791) (1,291,356) (993,397)
------------------------------------------------------------------------------------------------------------------------
Financing Activities and Capital Contributions:
Proceeds:
Preferred securities of subsidiary - - - -
Preferred stock 125,000 100,000 150,000 50,000
First mortgage bonds 500,000 500,000 - 150,000
Pollution control bonds 191,736 350,001 500,962 190,577
Other long-term debt - 113,000 - -
Capital contributions from parent company 228,000 250,000 315,000 202,000
Retirements:
Preferred stock (150,000) (7,500) (3,750) (2,380)
First mortgage bonds (217,949) (377,538) (17,738) (26,084)
Pollution control bonds (90,000) - - -
Other long-term debt (2,824) (108) (843) (276)
Interim obligations, net 302,261 (36,715) (72,956) 109,356
Payment of preferred stock dividends (80,420) (73,665) (62,337) (55,433)
Payment of common stock dividends (377,800) (325,500) (277,500) (225,500)
Miscellaneous (51,745) (33,773) (17,503) (17,975)
------------------------------------------------------------------------------------------------------------------------
Net cash provided from (used for) financing activities 376,259 458,202 513,335 374,285
------------------------------------------------------------------------------------------------------------------------
Net Change in Cash and Cash Equivalents 67,170 91,945 117,518 167,393
Cash and Cash Equivalents at Beginning of Year 694,474 602,529 485,011 317,618
Cash and Cash Equivalents at End of Year $ 761,644 $ 694,474 $ 602,529 $ 485,011
========================================================================================================================
( ) Denotes use of cash.
</TABLE>
II-134B
<PAGE>
<TABLE>
<CAPTION>
BALANCE SHEETS
Georgia Power Company
===================================================================================================
At December 31, 1994 1993 1992
---------------------------------------------------------------------------------------------------
(Thousands of Dollars)
<S> <C> <C> <C>
ASSETS
Electric Plant:
Production-
Fossil $ 3,077,470 $ 2,976,806 $ 3,144,405
Nuclear 4,075,339 4,069,299 4,051,020
Hydro 443,466 442,888 434,341
---------------------------------------------------------------------------------------------------
Total production 7,596,275 7,488,993 7,629,766
Transmission 1,754,945 1,713,122 1,646,904
Distribution 3,777,279 3,600,115 3,413,681
General 926,418 941,291 923,010
Construction work in progress 541,889 584,013 405,606
Nuclear fuel, at amortized cost 136,425 135,742 155,194
---------------------------------------------------------------------------------------------------
Total electric plant 14,733,231 14,463,276 14,174,161
---------------------------------------------------------------------------------------------------
Steam Heat Plant - - -
---------------------------------------------------------------------------------------------------
Total utility plant 14,733,231 14,463,276 14,174,161
---------------------------------------------------------------------------------------------------
Accumulated Provision for Depreciation:
Electric 4,054,986 3,822,344 3,569,717
Steam heat - - -
---------------------------------------------------------------------------------------------------
Total accumulated provision for depreciation 4,054,986 3,822,344 3,569,717
---------------------------------------------------------------------------------------------------
Total 10,678,245 10,640,932 10,604,444
---------------------------------------------------------------------------------------------------
Less property-related accumulated deferred income taxes - - 1,589,743
---------------------------------------------------------------------------------------------------
Total 10,678,245 10,640,932 9,014,701
---------------------------------------------------------------------------------------------------
Other Property and Investments:
Securities received from settlement of disputed contracts - - -
Nuclear decommissioning trusts 54,297 37,937 20,311
Miscellaneous 116,527 61,142 55,463
---------------------------------------------------------------------------------------------------
Total 170,824 99,079 75,774
---------------------------------------------------------------------------------------------------
Current Assets:
Cash and cash equivalents 12,539 5,896 22,114
Investment securities - - 108,206
Receivables, net 389,279 515,178 385,227
Accrued utility revenues 103,223 99,550 88,164
Fossil fuel stock, at average cost 169,252 111,620 197,332
Materials and supplies, at average cost 293,464 287,551 284,272
Prepayments 55,383 65,269 91,447
Vacation pay deferred 40,823 41,575 40,169
---------------------------------------------------------------------------------------------------
Total 1,063,963 1,126,639 1,216,931
---------------------------------------------------------------------------------------------------
Deferred Charges:
Deferred charges related to income taxes 919,750 992,510 -
Deferred Plant Vogtle costs 432,092 506,980 383,025
Debt expense, being amortized 26,223 20,730 17,719
Premium on reacquired debt, being amortized 164,676 153,146 116,940
Miscellaneous 256,885 196,094 139,352
---------------------------------------------------------------------------------------------------
Total 1,799,626 1,869,460 657,036
---------------------------------------------------------------------------------------------------
Total Assets $13,712,658 $13,736,110 $10,964,442
===================================================================================================
</TABLE>
II-135
<PAGE>
<TABLE>
<CAPTION>
BALANCE SHEETS
Georgia Power Company
==============================================================================================================
At December 31, 1991 1990 1989 1988
--------------------------------------------------------------------------------------------------------------
(Thousands of Dollars)
<S> <C> <C> <C> <C>
ASSETS
Electric Plant:
Production-
Fossil $ 3,128,594 $ 3,350,018 $ 3,319,876 $ 2,638,725
Nuclear 4,051,043 4,025,862 4,189,723 3,225,945
Hydro 432,674 412,157 411,235 407,771
--------------------------------------------------------------------------------------------------------------
Total production 7,612,311 7,788,037 7,920,834 6,272,441
Transmission 1,566,173 1,522,157 1,431,485 1,322,034
Distribution 3,252,111 3,056,825 2,863,011 2,598,714
General 896,477 876,989 859,013 737,621
Construction work in progress 390,437 370,243 403,365 1,963,283
Nuclear fuel, at amortized cost 191,726 210,320 254,101 307,109
--------------------------------------------------------------------------------------------------------------
Total electric plant 13,909,235 13,824,571 13,731,809 13,201,202
--------------------------------------------------------------------------------------------------------------
Steam Heat Plant - - - -
--------------------------------------------------------------------------------------------------------------
Total utility plant 13,909,235 13,824,571 13,731,809 13,201,202
--------------------------------------------------------------------------------------------------------------
Accumulated Provision for Depreciation:
Electric 3,315,247 3,040,298 2,762,937 2,445,404
Steam heat - - - -
--------------------------------------------------------------------------------------------------------------
Total accumulated provision for depreciation 3,315,247 3,040,298 2,762,937 2,445,404
--------------------------------------------------------------------------------------------------------------
Total 10,593,988 10,784,273 10,968,872 10,755,798
--------------------------------------------------------------------------------------------------------------
Less property-related accumulated deferred income taxes 1,465,408 1,397,647 1,313,626 1,178,291
--------------------------------------------------------------------------------------------------------------
Total 9,128,580 9,386,626 9,655,246 9,577,507
--------------------------------------------------------------------------------------------------------------
Other Property and Investments:
Securities received from settlement of disputed contracts 107,993 - - -
Nuclear decommissioning trusts 10,007 - - -
Miscellaneous 71,880 78,895 69,839 66,677
--------------------------------------------------------------------------------------------------------------
Total 189,880 78,895 69,839 66,677
--------------------------------------------------------------------------------------------------------------
Current Assets:
Cash and cash equivalents 13,822 143,978 159,792 193,767
Investment securities - - - -
Receivables, net 330,411 356,236 347,899 320,018
Accrued utility revenues 79,099 78,067 93,786 66,265
Fossil fuel stock, at average cost 200,248 225,966 214,487 225,274
Materials and supplies, at average cost 215,735 220,103 208,084 164,174
Prepayments 96,750 121,646 116,342 121,840
Vacation pay deferred 39,769 33,677 35,238 34,418
--------------------------------------------------------------------------------------------------------------
Total 975,834 1,179,673 1,175,628 1,125,756
--------------------------------------------------------------------------------------------------------------
Deferred Charges:
Deferred charges related to income taxes - - - -
Deferred Plant Vogtle costs 375,028 364,446 322,116 269,958
Debt expense, being amortized 12,368 12,708 13,032 12,476
Premium on reacquired debt, being amortized 70,855 60,653 61,889 62,352
Miscellaneous 89,993 93,618 74,596 15,813
--------------------------------------------------------------------------------------------------------------
Total 548,244 531,425 471,633 360,599
--------------------------------------------------------------------------------------------------------------
Total Assets $10,842,538 $11,176,619 $11,372,346 $11,130,539
==============================================================================================================
</TABLE>
II-136A
<PAGE>
<TABLE>
<CAPTION>
BALANCE SHEETS
Georgia Power Company
==============================================================================================================
At December 31, 1987 1986 1985 1984
--------------------------------------------------------------------------------------------------------------
(Thousands of Dollars)
<S> <C> <C> <C> <C>
ASSETS
Electric Plant:
Production-
Fossil $ 2,616,741 $ 2,138,511 $ 2,118,863 $ 2,105,551
Nuclear 3,220,632 739,835 652,756 647,020
Hydro 404,291 399,120 388,832 303,334
--------------------------------------------------------------------------------------------------------------
Total production 6,241,664 3,277,466 3,160,451 3,055,905
Transmission 1,248,976 1,176,479 1,004,329 949,802
Distribution 2,318,185 2,096,498 1,892,127 1,722,546
General 657,258 578,236 501,477 452,119
Construction work in progress 1,710,769 4,430,152 3,581,065 2,694,628
Nuclear fuel, at amortized cost 287,492 314,225 253,418 231,456
--------------------------------------------------------------------------------------------------------------
Total electric plant 12,464,344 11,873,056 10,392,867 9,106,456
--------------------------------------------------------------------------------------------------------------
Steam Heat Plant 7 15,266 14,709 15,419
--------------------------------------------------------------------------------------------------------------
Total utility plant 12,464,351 11,888,322 10,407,576 9,121,875
--------------------------------------------------------------------------------------------------------------
Accumulated Provision for Depreciation:
Electric 2,193,395 2,001,605 1,851,649 1,693,788
Steam heat (5) 7,841 7,517 7,696
--------------------------------------------------------------------------------------------------------------
Total accumulated provision for depreciation 2,193,390 2,009,446 1,859,166 1,701,484
--------------------------------------------------------------------------------------------------------------
Total 10,270,961 9,878,876 8,548,410 7,420,391
--------------------------------------------------------------------------------------------------------------
Less property-related accumulated deferred income taxes 1,077,747 1,020,271 920,047 873,024
--------------------------------------------------------------------------------------------------------------
Total 9,193,214 8,858,605 7,628,363 6,547,367
--------------------------------------------------------------------------------------------------------------
Other Property and Investments:
Securities received from settlement of disputed contracts - - - -
Nuclear decommissioning trusts - - - -
Miscellaneous 54,148 50,749 39,357 38,143
--------------------------------------------------------------------------------------------------------------
Total 54,148 50,749 39,357 38,143
--------------------------------------------------------------------------------------------------------------
Current Assets:
Cash and cash equivalents 761,644 694,474 602,529 485,011
Investment securities - - - -
Receivables, net 342,315 374,590 367,226 350,197
Accrued utility revenues 68,370 55,513 55,403 44,504
Fossil fuel stock, at average cost 262,752 220,206 210,604 289,807
Materials and supplies, at average cost 116,652 86,658 69,397 67,861
Prepayments 113,381 44,800 8,506 6,697
Vacation pay deferred 30,100 29,800 28,700 26,600
--------------------------------------------------------------------------------------------------------------
Total 1,695,214 1,506,041 1,342,365 1,270,677
--------------------------------------------------------------------------------------------------------------
Deferred Charges:
Deferred charges related to income taxes - - - -
Deferred Plant Vogtle costs 172,990 - - -
Debt expense, being amortized 12,985 12,860 12,450 11,218
Premium on reacquired debt, being amortized 51,509 26,914 - -
Miscellaneous 17,434 9,894 8,083 12,667
--------------------------------------------------------------------------------------------------------------
Total 254,918 49,668 20,533 23,885
--------------------------------------------------------------------------------------------------------------
Total Assets $11,197,494 $10,465,063 $ 9,030,618 $ 7,880,072
==============================================================================================================
</TABLE>
II-136B
<PAGE>
<TABLE>
<CAPTION>
BALANCE SHEETS
Georgia Power Company
==================================================================================================
At December 31, 1994 1993 1992
--------------------------------------------------------------------------------------------------
(Thousands of Dollars)
<S> <C> <C> <C>
CAPITALIZATION AND LIABILITIES
Capitalization:
Common stock $ 344,250 $ 344,250 $ 344,250
Paid-in capital 2,384,348 2,384,348 2,384,140
Premium on preferred stock 413 413 467
Earnings retained in the business 1,412,543 1,316,447 1,159,380
--------------------------------------------------------------------------------------------------
Total common equity 4,141,554 4,045,458 3,888,237
Preferred stock 692,787 692,787 692,792
Preferred stock subject to mandatory redemption - - 6,250
Preferred securities of subsidiary 100,000 - -
Long-term debt 3,757,823 4,031,387 4,131,016
--------------------------------------------------------------------------------------------------
Total (excluding amount due within one year) 8,692,164 8,769,632 8,718,295
--------------------------------------------------------------------------------------------------
Current Liabilities:
Notes payable to banks 202,200 406,700 400,200
Commercial paper 222,602 75,527 133,471
Preferred stock due within one year - - 63,750
Long-term debt due within one year 167,420 10,543 95,823
Accounts payable 355,067 324,044 317,351
Customer deposits 47,017 45,922 45,145
Taxes accrued 93,019 153,493 138,289
Interest accrued 110,256 110,497 132,319
Vacation pay accrued 39,720 40,060 38,694
Miscellaneous 70,006 64,527 89,355
--------------------------------------------------------------------------------------------------
Total 1,307,307 1,231,313 1,454,397
--------------------------------------------------------------------------------------------------
Deferred Credits and Other Liabilities:
Accumulated deferred income taxes 2,477,661 2,479,720 -
Accumulated deferred investment tax credits 453,121 478,334 515,539
Disallowed Plant Vogtle capacity buyback costs 60,490 63,067 72,201
Deferred credits related to income taxes 433,334 452,819 -
Miscellaneous 288,581 261,225 204,010
--------------------------------------------------------------------------------------------------
Total 3,713,187 3,735,165 791,750
--------------------------------------------------------------------------------------------------
Total Capitalization and Liabilities $13,712,658 $13,736,110 $10,964,442
==================================================================================================
</TABLE>
II-137
<PAGE>
<TABLE>
<CAPTION>
BALANCE SHEETS
Georgia Power Company
==============================================================================================================
At December 31, 1991 1990 1989 1988
--------------------------------------------------------------------------------------------------------------
(Thousands of Dollars)
<S> <C> <C> <C> <C>
CAPITALIZATION AND LIABILITIES
Capitalization:
Common stock $ 344,250 $ 344,250 $ 344,250 $ 344,250
Paid-in capital 2,383,800 2,383,800 2,383,800 2,383,800
Premium on preferred stock 489 1,089 1,089 1,089
Earnings retained in the business 1,038,012 944,774 1,131,518 1,076,931
--------------------------------------------------------------------------------------------------------------
Total common equity 3,766,551 3,673,913 3,860,657 3,806,070
Preferred stock 607,796 607,796 607,844 657,844
Preferred stock subject to mandatory redemption 118,750 125,000 155,000 162,500
Preferred securities of subsidiary - - - -
Long-term debt 4,553,189 5,000,225 5,054,001 4,861,378
--------------------------------------------------------------------------------------------------------------
Total (excluding amount due within one year) 9,046,286 9,406,934 9,677,502 9,487,792
--------------------------------------------------------------------------------------------------------------
Current Liabilities:
Notes payable to banks 199,000 - - -
Commercial paper - - - -
Preferred stock due within one year 6,250 - 53,750 3,750
Long-term debt due within one year 54,976 204,906 54,712 42,001
Accounts payable 275,932 310,676 372,968 429,807
Customer deposits 41,623 38,144 36,255 34,221
Taxes accrued 161,117 84,185 91,424 130,686
Interest accrued 151,171 175,959 162,513 170,090
Vacation pay accrued 38,531 33,677 35,238 34,418
Miscellaneous 106,810 135,392 130,546 51,289
--------------------------------------------------------------------------------------------------------------
Total 1,035,410 982,939 937,406 896,262
--------------------------------------------------------------------------------------------------------------
Deferred Credits and Other Liabilities:
Accumulated deferred income taxes - - - -
Accumulated deferred investment tax credits 540,134 576,837 601,248 632,111
Disallowed Plant Vogtle capacity buyback costs 109,537 135,926 73,111 80,585
Deferred credits related to income taxes - - - -
Miscellaneous 111,171 73,983 83,079 33,789
--------------------------------------------------------------------------------------------------------------
Total 760,842 786,746 757,438 746,485
--------------------------------------------------------------------------------------------------------------
Total Capitalization and Liabilities $10,842,538 $11,176,619 $11,372,346 $11,130,539
==============================================================================================================
</TABLE>
II-138A
<PAGE>
<TABLE>
<CAPTION>
BALANCE SHEETS
Georgia Power Company
==============================================================================================================
At December 31, 1987 1986 1985 1984
--------------------------------------------------------------------------------------------------------------
(Thousands of Dollars)
<S> <C> <C> <C> <C>
CAPITALIZATION AND LIABILITIES
Capitalization:
Common stock $ 344,250 $ 344,250 $ 344,250 $ 344,250
Paid-in capital 2,208,800 1,980,800 1,730,800 1,415,800
Premium on preferred stock 1,089 3,074 3,074 3,058
Earnings retained in the business 984,043 1,141,077 935,583 723,064
--------------------------------------------------------------------------------------------------------------
Total common equity 3,538,182 3,469,201 3,013,707 2,486,172
Preferred stock 657,844 732,844 632,844 482,844
Preferred stock subject to mandatory redemption 166,250 112,500 120,000 127,500
Preferred securities of subsidiary - - - -
Long-term debt 4,825,760 4,464,857 3,878,066 3,432,606
--------------------------------------------------------------------------------------------------------------
Total (excluding amount due within one year) 9,188,036 8,779,402 7,644,617 6,529,122
--------------------------------------------------------------------------------------------------------------
Current Liabilities:
Notes payable to banks 302,261 - 36,400 109,356
Commercial paper - - - -
Preferred stock due within one year 3,750 7,500 7,500 3,750
Long-term debt due within one year 65,774 47,683 48,229 21,324
Accounts payable 446,004 488,910 355,866 365,048
Customer deposits 31,106 29,520 29,752 34,838
Taxes accrued 114,947 140,968 92,028 151,438
Interest accrued 162,439 150,145 136,279 117,759
Vacation pay accrued 30,100 29,800 28,700 26,600
Miscellaneous 62,364 70,595 60,965 37,874
--------------------------------------------------------------------------------------------------------------
Total 1,218,745 965,121 795,719 867,987
--------------------------------------------------------------------------------------------------------------
Deferred Credits and Other Liabilities:
Accumulated deferred income taxes - - - -
Accumulated deferred investment tax credits 640,694 665,447 572,509 471,640
Disallowed Plant Vogtle capacity buyback costs 79,376 - - -
Deferred credits related to income taxes - - - -
Miscellaneous 70,643 55,093 17,773 11,323
--------------------------------------------------------------------------------------------------------------
Total 790,713 720,540 590,282 482,963
--------------------------------------------------------------------------------------------------------------
Total Capitalization and Liabilities $11,197,494 $10,465,063 $ 9,030,618 $ 7,880,072
==============================================================================================================
</TABLE>
II-138B
<PAGE>
GEORGIA POWER COMPANY
OUTSTANDING SECURITIES AT DECEMBER 31, 1994
First Mortgage Bonds
Amount Interest Amount
Series Issued Rate Outstanding Maturity
-------------------------------------------------------------------
(Thousands) (Thousands)
1992 $ 130,000 5-1/8% $ 130,000 9/1/95
1993 150,000 4-3/4% 150,000 3/1/96
1993 100,000 5-1/2% 100,000 4/1/98
1992 195,000 6-1/8% 195,000 9/1/99
1993 100,000 6% 100,000 3/1/00
1992 100,000 7% 100,000 10/1/00
1992 150,000 6-7/8% 150,000 9/1/02
1993 200,000 6-5/8% 200,000 4/1/03
1993 75,000 6.35% 75,000 8/1/03
1993 50,000 6-7/8% 50,000 4/1/08
1989 250,000 9.23% 36,157 12/1/19
1992 100,000 8-3/4% 100,000 4/1/22
1992 100,000 8-5/8% 100,000 6/1/22
1993 160,000 7.95% 160,000 2/1/23
1993 100,000 7-5/8% 100,000 3/1/23
1993 75,000 7-3/4% 75,000 4/1/23
1993 125,000 7.55% 125,000 8/1/23
1992 100,000 Variable 100,000 4/1/32
1992 100,000 Variable 100,000 7/1/32
---------- ----------
$2,360,000 $2,146,157
========== ==========
Pollution Control Bonds
Amount Interest Amount
Series Issued Rate Outstanding Maturity
-------------------------------------------------------------------
(Thousands) (Thousands)
1992 $ 38,800 5.70% $ 38,800 9/1/04
1993 46,790 5-3/8% 46,790 3/1/05
1976 40,800 6-3/4% 1,940 11/1/06
1977 24,100 6.40% 1,960 6/1/07
1978 21,600 6-3/8% 8,130 4/1/08
1991 10,450 Variable 10,450 7/1/11
1985 150,000 10-1/8% 148,535 6/1/15
1985 200,000 10-1/2% 156,580 9/1/15
1985 100,000 10.60% 100,000 10/1/15
1985 100,000 10-1/2% 99,585 11/1/15
1986 56,400 8% 56,400 10/1/16
1987 90,000 8-3/8% 90,000 7/1/17
1987 50,000 9-3/8% 50,000 12/1/17
1993 26,700 6% 26,700 3/1/18
1989 50,000 6.35% 50,000 5/1/19
1991 8,500 Variable 8,500 7/1/19
1991 51,345 7.25% 51,345 7/1/21
1991 10,125 Variable 10,125 7/1/21
1992 13,155 Variable 13,155 5/1/22
1992 75,000 6.20% 75,000 8/1/22
1992 35,000 6.20% 35,000 9/1/22
1993 11,935 5-3/4% 11,935 9/1/23
1993 60,000 5-3/4% 60,000 9/1/23
1994 28,065 5.40% 28,065 1/1/24
1994 175,000 Variable 175,000 7/1/24
1994 125,000 6.60% 125,000 7/1/24
1994 60,000 6-3/8% 60,000 8/1/24
1994 43,420 6-3/4% 43,420 10/1/24
1994 20,000 Variable 20,000 10/1/24
1994 20,000 Variable 20,000 10/1/24
1994 38,725 6-5/8% 38,725 10/1/24
1994 10,000 Variable 10,000 12/1/24
1994 7,000 Variable 7,000 12/1/24
---------- ----------
$1,797,910 $1,678,140
========== ==========
II-139
<PAGE>
GEORGIA POWER COMPANY
OUTSTANDING SECURITIES AT DECEMBER 31, 1994 (Continued)
Preferred Securities (1)
Preferred Securities Interest Amount
Series Outstanding Rate Outstanding
---------------------------------------------------------------
(Thousands)
1994 4,000,000 9% $100,000
Preferred Stock
Shares Dividend Amount
Series Outstanding Rate Outstanding
---------------------------------------------------------------
(Thousands)
(2) 14,090 $5.00 $ 1,409
1953 100,000 $4.92 10,000
1954 433,775 $4.60 43,378
1961 70,000 $4.96 7,000
1962 70,000 $4.60 7,000
1963 70,000 $4.60 7,000
1964 50,000 $4.60 5,000
1965 60,000 $4.72 6,000
1966 90,000 $5.64 9,000
1967 120,000 $6.48 12,000
1968 100,000 $6.60 10,000
1971 300,000 $7.72 30,000
1972 750,000 $7.80 75,000
1991 4,000,000 $2.125 100,000
1992 2,000,000 $1.90 50,000
1992 2,200,000 $1.9875 55,000
1992 2,400,000 $1.9375 60,000
1992 1,200,000 $1.925 30,000
1993 3,000,000 Adjustable 75,000
1993 4,000,000 Adjustable 100,000
---------- --------
21,027,865 $692,787
========== ========
(1)Issued by Georgia Power Capital, L.P., and unconditionally guaranteed
by GEORGIA.
(2)Issued in exchange for $5.00 preferred outstanding at the time of
company formation.
II-140
<PAGE>
GEORGIA POWER COMPANY
SECURITIES RETIRED DURING 1994
First Mortgage Bonds
Principal Interest
Series Amount Rate
-----------------------------------------------------
(Thousands)
1986 $ 69,716 10.00%
1989 63,843 9.23%
--------
$133,559
========
Pollution Control Bonds
Principal Interest
Series Amount Rate
-----------------------------------------------------
(Thousands)
1976 $ 20 6-3/4%
1977 20 6.40%
1978 70 6-3/8%
1984 28,065 11-5/8%
1984 113,745 12-1/4%
1984 123,175 11-5/8%
1984 126,735 12%
1984 75,070 11-3/4%
1985 43,420 10-1/2%
--------
$510,320
========
II-141
<PAGE>
GULF POWER COMPANY
FINANCIAL SECTION
II-142
<PAGE>
MANAGEMENT'S REPORT
Gulf Power Company 1994 Annual Report
The management of Gulf Power Company has prepared and is responsible for the
financial statements and related information included in this report. These
statements were prepared in accordance with generally accepted accounting
principles appropriate in the circumstances and necessarily include amounts that
are based on the best estimates and judgments of management. Financial
information throughout this annual report is consistent with the financial
statements.
The Company maintains a system of internal accounting controls to provide
reasonable assurance that assets are safeguarded and that books and records
reflect only authorized transactions of the Company. Limitations exist in any
system of internal controls, however, based on a recognition that the cost of
the system should not exceed its benefits. The Company believes its system of
internal accounting controls maintains an appropriate cost/benefit relationship.
The Company's system of internal accounting controls is evaluated on an
ongoing basis by the Company's internal audit staff. The Company's independent
public accountants also consider certain elements of the internal control system
in order to determine their auditing procedures for the purpose of expressing an
opinion on the financial statements.
The audit committee of the board of directors, composed of five directors who
are not employees, provides a broad overview of management's financial reporting
and control functions. Periodically, this committee meets with management, the
internal auditors, and the independent public accountants to ensure that these
groups are fulfilling their obligations and to discuss auditing, internal
controls, and financial reporting matters. The internal auditors and independent
public accountants have access to the members of the audit committee at any
time.
Management believes that its policies and procedures provide reasonable
assurance that the Company's operations are conducted according to a high
standard of business ethics.
In management's opinion, the financial statements present fairly, in all
material respects, the financial position, results of operations, and cash flows
of Gulf Power Company in conformity with generally accepted accounting
principles.
/s/ Travis J. Bowden
Travis J. Bowden
President
and Chief Executive Officer
/s/ Arlan E. Scarbrough
Arlan E. Scarbrough
Chief Financial Officer
II-143
<PAGE>
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To the Board of Directors
of Gulf Power Company:
We have audited the accompanying balance sheets and statements of capitalization
of Gulf Power Company (a Maine corporation and a wholly owned subsidiary of The
Southern Company) as of December 31, 1994 and 1993, and the related statements
of income, retained earnings, paid-in capital, and cash flows for each of the
three years in the period ended December 31, 1994. These financial statements
are the responsibility of the Company's management. Our responsibility is to
express an opinion on these financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements (pages II-152 through II-169)
referred to above present fairly, in all material respects, the financial
position of Gulf Power Company as of December 31, 1994 and 1993, and the
results of its operations and its cash flows for the periods stated, in
conformity with generally accepted accounting principles.
As explained in Notes 2 and 8 to the financial statements, effective January
1, 1993, Gulf Power Company changed its methods of accounting for postretirement
benefits other than pensions and for income taxes.
/s/ Arthur Andersen LLP
Atlanta, Georgia
February 15, 1995
II-144
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND FINANCIAL
CONDITION
Gulf Power Company 1994 Annual Report
RESULTS OF OPERATIONS
Earnings
Gulf Power Company's net income after dividends on preferred stock for 1994
totaled $55.2 million, representing a $0.9 million increase from the prior year.
Major factors affecting earnings were a decrease in interest charges on
long-term debt as a result of security refinancings and an increase in
customers. These positive factors were offset by lower revenues primarily due to
mild summer weather, and an increase in other operation expenses and taxes.
Also, earnings decreased approximately $3.0 million, reflecting the first full
year of decreased industrial sales due to the Company's largest industrial
customer, Monsanto, installing its own cogeneration facility in August, 1993.
Earnings for 1994 increased from the 1993 level, even though 1993 earnings
included $4.0 million of unusual items pertaining to the gain on sale of Gulf
States Utilities Company (Gulf States) stock and the reversal of a wholesale
rate refund discussed below.
In 1993, earnings were $54.3 million, representing a $0.2 million increase
compared to the prior year. This increase resulted primarily from a $2.3 million
gain on the sale of Gulf States' stock and the reversal of a $1.7 million
wholesale rate refund as the result of a court order. The Company also
experienced growth in residential and commercial sales and a decrease in
interest expense on long-term debt as a result of security refinancings. These
positive events were offset by higher operation and maintenance expense and
decreased industrial sales, reflecting the loss of Monsanto, which is discussed
above.
The Company's return on average common equity was 13.15 percent for 1994, a
slight decrease from the 13.29 percent return earned in 1993.
Revenues
Changes in operating revenues over the last three years are the result of the
following factors:
===========================================================
Increase (Decrease)
From Prior Year
-------------------------------
1994 1993 1992
-------------------------------
(in thousands)
Retail --
Change in base rates $ 0 $ 1,571 $ 722
Sales growth 7,126 7,671 12,965
Weather (4,631) 4,049 (6,448)
Regulatory cost
recovery and other 8,938 (3,079) (1,839)
-----------------------------------------------------------
Total retail 11,433 10,212 5,400
-----------------------------------------------------------
Sales for resale--
Non-affiliates (6,098) 2,131* 442
Affiliates (5,813) (909) (5,268)
-----------------------------------------------------------
Total sales for resale (11,911) 1,222 (4,826)
-----------------------------------------------------------
Other operating
revenues (3,851) 806 5,121
-----------------------------------------------------------
Total operating
revenues $(4,329) $12,240 $ 5,695
===========================================================
Percent change (0.7)% 2.1% 1.0%
-----------------------------------------------------------
* Includes the non-interest portion of the wholesale rate refund
reversal discussed in "Earnings."
Retail revenues of $483.1 million in 1994 increased $11.4 million or 2.4
percent from last year, compared with an increase of 2.2 percent in 1993 and 1.2
percent in 1992. Revenues increased in the residential and commercial classes
primarily due to customer growth and favorable economic conditions, partially
offset by the effect of milder weather. Revenues in the industrial class
declined in 1994 and 1993 primarily due to the loss of Monsanto as discussed in
"Earnings." Also, in 1994, industrial sales decreased due to an unexpected six
month plant shutdown -- which ended in October 1994 -- by another major
industrial customer. The change in base rates for 1993 and 1992 reflects the
expiration of a retail rate penalty in September 1992.
The increase in regulatory cost recovery and other retail revenue is
primarily attributable to the first year of recovery under the Environmental
Cost Recovery (ECR) clause. Regulatory cost recovery and other primarily
includes recovery provisions for fuel expense and the energy component of
purchased power costs; energy conservation costs; purchased power capacity
II-145
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS (continued)
Gulf Power Company 1994 Annual Report
costs; and environmental compliance costs. The recovery provisions equal the
related expenses and have no material effect on net income. See Notes 1 and 3 to
the financial statements under "Revenues and Regulatory Cost Recovery Clauses"
and "Environmental Cost Recovery," respectively, for further information.
Sales for resale were $83.5 million in 1994, decreasing $11.9 million or 12.5
percent from 1993. The majority of non-affiliated energy sales arise from
long-term contractual agreements. Non-affiliated long-term contracts include
capacity and energy components. Capacity revenues reflect the recovery of fixed
costs and return on investment. Energy is sold at its variable cost. The
capacity and energy components under these long-term contracts were as follows:
===========================================================
1994 1993 1992
------------------------------------
(in thousands)
Capacity $30,926 $33,805 $34,180
Energy 18,456 21,202 22,933
-----------------------------------------------------------
$49,382 $55,007 $57,113
===========================================================
Capacity revenues decreased in 1994, reflecting the decline in capacity under
long-term contracts.
Sales to affiliated companies vary from year to year depending on demand and
the availability and cost of generating resources at each company. These sales
have little impact on earnings.
The changes in other operating revenues for 1994 and 1993 are primarily due
to adjustments of regulatory cost recovery clauses for differences between
recoverable costs and the amounts actually reflected in revenues. See Notes 1
and 3 to the financial statements under "Revenues and Regulatory Cost Recovery
Clauses" and "Environmental Cost Recovery," respectively, for further
discussion.
Kilowatt-hour sales for 1994 and percent changes in sales since 1992 are
reported below.
=============================================================
(millions of Amount Percent Change
kilowatt-hours) ------ ----------------------
1994 1994 1993 1992
------ ----------------------
Residential 3,752 1.1% 3.2% 4.1%
Commercial 2,549 4.8 2.7 4.2
Industrial 1,847 (9.0) (6.9) 2.9
Other 17 - - (2.7)
------
Total retail 8,165 (0.3) 0.4 3.8
Sales for resale
Non-affiliates 1,419 (2.8) 2.0 (7.7)
Affiliates 874 (15.2) (14.8) (2.2)
------
Total 10,458 (2.1) (1.1) 1.4
=============================================================
Retail sales decreased in 1994 primarily due to mild summer weather and a
decline in sales in the industrial class, which reflects the loss of Monsanto
and a lengthy shutdown of another major customer. The decline in sales was
partially offset by a 2.4 percent increase in residential customers, a 2.9
percent increase in commercial customers, and an improving economy. Retail sales
were relatively flat in 1993.
In 1994, energy sales for resale to non-affiliates decreased 2.8 percent and
are predominantly related to unit power sales under long-term contracts to
Florida utilities, which are discussed above. Energy sales to affiliated
companies vary from year to year as mentioned previously.
Expenses
Total operating expenses for 1994 decreased $4.0 million or 0.8 percent from
1993. The decrease is primarily due to decreased fuel and purchased power
expenses, offset by an increase in other operation expenses and taxes. In 1993,
total operating expenses increased $16.6 million or 3.5 percent from 1992
primarily due to increased operation and maintenance expenses and higher taxes.
Fuel and purchased power expenses for 1994 declined $13.4 million or 6.5
percent from 1993. The decline reflects the decrease in generation due to the
mild weather experienced in 1994 and the lower cost of fuel. In 1993, fuel and
purchased power expenses decreased $3.8 million or 1.8 percent from 1992,
reflecting the lower cost of fuel.
II-146
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS (continued)
Gulf Power Company 1994 Annual Report
In 1994, other operation expenses increased $4.7 million or 4.3 percent from
the 1993 level. The increase is primarily attributable to additional costs of
$6.4 million related to the buyouts and renegotiation of coal supply contracts
and $1.3 million for the Company's pro rata share of affiliated companies'
workforce reduction costs. These costs are further discussed in Notes 2 and 5 to
the financial statements under "Work Force Reduction Programs" and "Fuel
Commitments," respectively. The increase in coal buyouts and workforce
reductions costs were partially offset by a decrease in various administrative
and general expenses. In 1993, other operation expenses increased $11.9 million
or 12.2 percent from the previous year, reflecting $7.4 million of additional
costs related to the buyouts and renegotiation of coal supply contracts. In
addition, in 1993, other operation expenses increased $3.5 million due to higher
employee benefit costs, the Company's pro rata share of the Southern electric
system's environmental cleanup costs of a research facility site, and costs
related to an automotive fleet reduction program.
Maintenance expense remained relatively flat in 1994 reflecting no major
changes in the scheduling of maintenance of production facilities. In 1993,
maintenance expense increased $4.1 million or 9.7 percent over 1992 due to
scheduled maintenance of production facilities.
Federal and state income taxes increased $1.2 million or 3.8 percent in 1994
primarily due to an increase in taxable income. Other taxes increased $1.5
million or 3.7 percent due to higher property taxes, gross receipt taxes, and
franchise fee collections. In 1993, federal income taxes increased $0.7 million
primarily due to a corporate federal income tax rate increase from 34 percent to
35 percent. Taxes other than income taxes increased $2.3 million in 1993, an
increase of 6.1 percent over the 1992 expense primarily due to increases in
property and gross receipt taxes. Changes in gross receipt taxes and franchise
fee collections, which are collected from customers, have no impact on earnings.
In 1994, interest expense decreased $3.8 million or 10.5 percent under the
prior year. Interest expense in 1993 decreased $3.2 million or 8.1 percent from
the 1992 level. The decrease in both years is primarily attributable to the
refinancing of some of the Company's higher-cost securities.
Effects of Inflation
The Company is subject to rate regulation and income tax laws that are based on
the recovery of historical costs. Therefore, inflation creates an economic loss
because the Company is recovering its cost of investments in dollars that have
less purchasing power. While the inflation rate has been relatively low in
recent years, it continues to have an adverse effect on the Company because of
the large investment in long-lived utility plant. Conventional accounting for
historical cost does not recognize this economic loss nor the partially
offsetting gain that arises through financing facilities with fixed-money
obligations, such as long-term debt and preferred stock. Any recognition of
inflation by regulatory authorities is reflected in the rate of return allowed.
Future Earnings Potential
The results of operations for the past three years 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 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 the Company's service area. However, the Energy Policy Act of
1992 (Energy Act) is beginning to have a dramatic effect on the future of the
electric utility industry. The Energy Act promotes energy efficiency,
alternative fuel use, and increased competition for electric utilities. The
Company is posturing the business to meet the challenge of this major change in
the traditional practice of selling electricity. The Energy Act allows
independent power producers (IPPs) to access the Company's transmission network
in order to sell electricity to other utilities. This may enhance the incentive
for IPPs to build cogeneration plants for industrial and commercial customers
and sell excess energy generation to utilities. Presently, Florida law does not
permit retail wheeling. Although the Energy Act does not require transmission
access to retail customers, retail wheeling initiatives are rapidly evolving and
becoming very prominent issues in several states. In order to address these
initiatives, numerous questions must be resolved, with the most complex ones
II-147
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS (continued)
Gulf Power Company 1994 Annual Report
relating to transmission pricing and recovery of stranded investments. As the
initiatives become a reality, the structure of the utility industry could
radically change. Therefore, unless the Company remains a low-cost producer and
provides quality service, the Company's retail energy sales growth could be
limited and this could significantly erode earnings. Conversely, being the
low-cost producer could provide significant opportunities to increase market
share and profitability.
The future effect of cogeneration and small-power production facilities
cannot be fully determined at this time. One effect of cogeneration which the
Company has experienced is the loss of its largest industrial customer,
Monsanto, which is discussed in "Earnings." The Company's strategy is to
identify and pursue profitable cogeneration projects in Northwest Florida.
The Florida Public Service Commission (FPSC) has set conservation goals for
the Company to reduce 148 megawatts of peak demand by the year 2003. The Company
will file conservation programs in 1995 to accomplish these goals. In response
to these goals and seeking to remain competitive with other electric utilities,
the Company has developed initiatives which emphasize price flexibility and
competitive offering of energy efficiency products and services. These
initiatives will enable customers to lower or alter their peak energy
requirements. Besides promoting energy efficiency, another benefit of these
initiatives could be the ability to defer the need to construct some generating
facilities further into the future.
The Company is subject to the provisions of Financial Accounting Standards
Board (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, the Company would be required to write off related
regulatory assets and liabilities. See Note 1 to the financial statements under
"Regulatory Assets and Liabilities" for additional information.
The Federal Energy Regulatory Commission (FERC) regulates wholesale rate
schedules and power sales contracts that the Company has with its sales for
resale customers. The FERC is currently reviewing the rate of return on common
equity included in these schedules and contracts that have a return on common
equity of 13.75 percent or greater, and may require such returns to be lowered,
possibly retroactively. See Note 3 to the financial statements under "FERC
Reviews Equity Returns" for additional information.
Compliance costs related to the Clean Air Act Amendments of 1990 (Clean Air
Act) could reduce earnings if such costs are not fully recovered. The Clean Air
Act is discussed later under "Environmental Matters." Also, state of Florida
legislation adopted in 1993 that provides for recovery of prudent environmental
compliance costs is discussed in Note 3 to the financial statements under
"Environmental Cost Recovery."
FINANCIAL CONDITION
Overview
The principal changes in the Company's financial condition during 1994 were
gross property additions of $78.9 million and an increase of $47.4 million in
notes payable. Funds for the property additions were provided by internal
sources. The Company continued to refinance higher-cost securities to lower the
Company's cost of capital. See "Financing Activities" below and the Statements
of Cash Flows for further details.
Financing Activities
The Company continued to lower its financing costs by issuing new securities and
other debt, and retiring higher-cost issues in 1994. The Company sold through
public authorities, $42 million of pollution control revenue bonds and obtained
$32.1 million of long-term bank notes. Retirements, including maturities during
1994, totaled $48.9 million of first mortgage bonds, $42.1 million of pollution
control bonds, $24.2 million of bank notes and other long-term debt, and $1
million of preferred stock. (See the Statements of Cash Flows for further
details.)
II-148
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS (continued)
Gulf Power Company 1994 Annual Report
Composite financing rates for the years 1992 through 1994 as of year end were
as follows:
===========================================================
1994 1993 1992
-------------------------
Composite interest rate on
long-term debt 6.5% 7.1% 8.0%
Composite preferred stock
dividend rate 6.6% 6.5% 7.3%
===========================================================
The continued decrease in the composite interest rate on long-term debt
reflects the Company's continued efforts to refinance higher-cost debt, which is
discussed above. The slight increase in the composite preferred dividend rate is
primarily due to an increase in dividends on the Company's adjustable rate
preferred stock, reflecting the recent rise in interest rates.
Capital Requirements for Construction
The Company's gross property additions, including those amounts related to
environmental compliance, are budgeted at $222 million for the three years
beginning 1995 ($62 million in 1995, $76 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 ECR clause, which is discussed in
Note 3 to the financial statements under "Environmental Cost Recovery." Actual
construction costs may vary from this estimate because of factors such as the
granting of timely and adequate rate increases; changes in environmental
regulations; revised load projections; the cost and efficiency of construction
labor, equipment, and materials; and the cost of capital. The Company does not
have any baseload generating plants under construction. However, significant
construction related to maintaining and upgrading transmission and distribution
facilities and generating plants will continue.
Other Capital Requirements
In addition to the funds needed for the construction program, approximately
$74.3 million will be required by the end of 1997 in connection with maturities
of long-term debt and preferred stock subject to mandatory redemption. Also, the
Company 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.
Environmental Matters
In November 1990, the Clean Air Act was signed into law. Title IV of the Clean
Air Act -- the acid rain compliance provision of the law -- will have a
significant impact on the Company. Specific reductions in sulfur dioxide and
nitrogen oxide emissions from fossil-fired generating plants will be required in
two phases. Phase I compliance began in 1995 and affects eight generating plants
-- some 10,000 megawatts of capacity or 35 percent of total capacity -- in the
Southern electric system. Phase II compliance is required by 2000, and all
fossil-fired generating plants in the Southern electric system will be affected.
In 1993, the Florida Legislature adopted legislation that allows a utility to
petition the FPSC for recovery of prudent environmental compliance costs that
are not being recovered through base rates or any other rate-adjustment clause.
The legislation is discussed in Note 3 to the financial statements under
"Environmental Cost Recovery." Substantially all of the costs for the Clean Air
Act and other new legislation discussed below is expected to be recovered
through the Environmental Cost Recovery clause.
In 1995, the Environmental Protection Agency (EPA) will begin issuing annual
sulfur dioxide emission allowances through the allowance trading program. An
emission allowance is the authority to emit one ton of sulfur dioxide during a
calendar year. The method for issuing allowances is based on the fossil fuel
consumed from 1985 through 1987 for each affected generating unit. Emission
allowances are transferable and can be bought, sold, or banked and used in the
future.
The sulfur dioxide emission allowance program is expected to minimize the
cost of compliance. The Southern Company's sulfur dioxide compliance strategy is
designed to use allowances as a compliance option.
The Southern Company expects to achieve Phase I sulfur dioxide compliance at
the eight affected plants by switching to low-sulfur coal, which has required
some equipment upgrades. This compliance strategy is expected to result in
unused emission allowances being banked for later use. Additional construction
II-149
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MANAGEMENT'S DISCUSSION AND ANALYSIS (continued)
Gulf Power Company 1994 Annual Report
expenditures are required to install equipment for the control of nitrogen oxide
emissions at these eight plants. Also, continuous emissions monitoring equipment
has been installed on all fossil-fired units. Construction expenditures for
Phase I are estimated to total approximately $300 million for The Southern
Company through 1995. Through 1994, the Company's construction expenditures for
Phase I were approximately $51 million.
For Phase II sulfur dioxide compliance, The Southern Company could use
emission allowances banked during Phase I, increase fuel switching, install flue
gas desulfurization equipment at selected plants, and/or purchase more
allowances depending on the price and availability of allowances. Also, in Phase
II, equipment to control nitrogen oxide emissions will be installed on
additional system fossil-fired plants as required to meet anticipated Phase II
limits. Therefore, during the period 1996 to 2000, the current compliance
strategy could require total construction expenditures of approximately $150
million for The Southern Company, including approximately $19 million for the
Company. However, the full impact of Phase II compliance cannot be determined
with certainty, pending the continuing development of a market for emission
allowances, the completion of EPA regulations, and the possibility of new
emission reduction technologies.
Following adoption of legislation in April of 1992 allowing electric
utilities in Florida to seek FPSC approval of their Clean Air Act Compliance
Plans, the Company filed its petition for approval. The FPSC approved the
Company's plan for Phase I compliance, deferring until a later date approval of
its Phase II Plan.
An average increase of up to 4 percent in annual revenue requirements from
the Company's customers could be necessary to fully recover the cost of
compliance for both Phase I and Phase II of Title IV of the Clean Air Act.
Compliance costs include construction expenditures, increased costs for
switching to low-sulfur coal, and costs related to emission allowances.
Title III of the Clean Air Act requires a multi-year EPA study of power plant
emissions of hazardous air pollutants. The EPA is scheduled to submit a report
to Congress on the results of this study by November 1995. The report will
include a decision on whether additional regulatory control of these substances
is warranted. Compliance with any new control standards could result in
significant additional costs. The impact of new standards -- if any -- will
depend on the development and implementation of applicable regulations.
The EPA continues to evaluate the need for a new short-term ambient air
quality standard for sulfur dioxide. Preliminary results from an EPA study on
the impact of a new standard indicate that a number of plants could be required
to install sulfur dioxide controls. These controls would be in addition to the
controls already required to meet the acid rain provision of the Clean Air Act.
The EPA issued proposed rules in November 1994 and is required to take final
action on this issue in 1996. The impact of any new standard will depend on the
level chosen for the standard and cannot be determined at this time.
In addition, the EPA is evaluating the need to revise the ambient air quality
standards for particulate matter, nitrogen oxides, and ozone. The impact of any
new standard will depend on the level chosen for the standard and cannot be
determined at this time.
In 1995, the EPA may issue revised rules on air quality control regulations
related to stack height requirements of the Clean Air Act. The full impact of
the final rules cannot be determined at this time, pending their development and
implementation.
In 1993, the EPA issued a ruling confirming the non-hazardous status of coal
ash. However, the EPA has until 1998 to classify co-managed utility wastes --
coal ash and other utility wastes -- as either non-hazardous or hazardous. If
the EPA classifies the co-managed wastes as hazardous, then substantial
additional costs for the management of such wastes may be required. The full
impact of any change in the regulatory status will depend on the subsequent
development of co-managed waste requirements.
The Company must comply with other environmental laws and regulations that
cover the handling and disposal of hazardous waste. Under these various laws and
regulations, the Company could incur costs to clean up properties currently or
previously owned. The Company conducts studies to determine the extent of any
required cleanup costs and has recognized in the financial statements costs to
clean up known sites. For additional information, see Note 3 to the financial
statements under "Environmental Cost Recovery."
II-150
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS (continued)
Gulf Power Company 1994 Annual Report
Several major pieces of environmental legislation are being considered for
reauthorization or amendment by Congress. These include: the Clean Water Act;
the Comprehensive Environmental Response, Compensation, and Liability Act; the
Resource Conservation and Recovery Act; and the Endangered Species Act. Changes
to these laws could affect many areas of the Company's operations. The full
impact of these requirements cannot be determined at this time, pending the
development and implementation of applicable regulations.
Compliance with possible new legislation related to global climate change,
electromagnetic fields, and other environmental and health concerns could
significantly affect the Company. The impact of new legislation -- if any --
will depend on the subsequent development and implementation of applicable
regulations. In addition, the potential for lawsuits alleging damages caused by
electromagnetic fields exists.
Sources of Capital
At December 31, 1994, the Company had $0.9 million of cash and cash equivalents
to meet its short-term cash needs.
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; bank notes; and capital contributions from The
Southern Company. The Company is required to meet certain coverage requirements
specified in its mortgage indenture and corporate charter to issue new first
mortgage bonds and preferred stock. The Company's coverage ratios are sufficient
to permit, at present interest and preferred dividend levels, any foreseeable
security sales. The amount of securities which the Company will be permitted to
issue in the future will depend upon market conditions and other factors
prevailing at that time.
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<PAGE>
<TABLE>
<CAPTION>
STATEMENTS OF INCOME
For the Years Ended December 31, 1994, 1993, and 1992
Gulf Power Company 1994 Annual Report
=========================================================================================
1994 1993 1992
-----------------------------------------------------------------------------------------
(in thousands)
<S> <C> <C> <C>
Operating Revenues:
Revenues $ 561,460 $ 559,976 $ 546,827
Revenues from affiliates 17,353 23,166 24,075
-----------------------------------------------------------------------------------------
Total operating revenues 578,813 583,142 570,902
-----------------------------------------------------------------------------------------
Operating Expenses:
Operation-
Fuel 161,168 170,485 182,754
Purchased power from non-affiliates 6,761 4,386 1,394
Purchased power from affiliates 25,819 32,273 26,788
Other 113,879 109,164 97,310
Maintenance 46,700 46,004 41,947
Depreciation and amortization 56,615 55,309 53,758
Taxes other than income taxes 41,701 40,204 37,898
Federal and state income taxes (Note 8) 33,957 32,730 32,078
-----------------------------------------------------------------------------------------
Total operating expenses 486,600 490,555 473,927
-----------------------------------------------------------------------------------------
Operating Income 92,213 92,587 96,975
Other Income (Expense):
Allowance for equity funds used during
construction (Note 1) 450 512 14
Interest income 1,429 1,328 2,733
Other, net (780) (1,238) (1,487)
Gain on sale of investment securities - 3,820 -
Income taxes applicable to other income 95 (921) 187
-----------------------------------------------------------------------------------------
Income Before Interest Charges 93,407 96,088 98,422
-----------------------------------------------------------------------------------------
Interest Charges:
Interest on long-term debt 27,124 31,344 35,792
Other interest charges 2,442 2,877 1,410
Interest on notes payable 1,509 870 1,041
Amortization of debt discount, premium, and expense, net 1,834 1,412 1,032
Allowance for debt funds used during
construction (Note 1) (656) (454) (46)
-----------------------------------------------------------------------------------------
Net interest charges 32,253 36,049 39,229
-----------------------------------------------------------------------------------------
Net Income 61,154 60,039 59,193
Dividends on Preferred Stock 5,925 5,728 5,103
-----------------------------------------------------------------------------------------
Net Income After Dividends on Preferred Stock $ 55,229 $ 54,311 $ 54,090
=========================================================================================
The accompanying notes are an integral part of these statements.
</TABLE>
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<PAGE>
<TABLE>
<CAPTION>
STATEMENTS OF CASH FLOWS
For the Years Ended December 31, 1994, 1993, and 1992
Gulf Power Company 1994 Annual Report
=================================================================================================
1994 1993 1992
-------------------------------------------------------------------------------------------------
(in thousands)
<S> <C> <C> <C>
Operating Activities:
Net income $ 61,154 $ 60,039 $ 59,193
Adjustments to reconcile net income to net
cash provided by operating activities --
Depreciation and amortization 86,098 72,111 68,021
Deferred income taxes and investment tax credits (6,986) 5,347 3,322
Allowance for equity funds used during construction (450) (512) (14)
Other, net 4,898 (864) (735)
Changes in certain current assets and liabilities --
Receivables, net 3,540 12,867 (11,041)
Inventories (13,901) 5,574 23,560
Payables (10,159) 5,386 1,580
Other 610 (9,504) (13,637)
-------------------------------------------------------------------------------------------------
Net cash provided from operating activities 124,804 150,444 130,249
-------------------------------------------------------------------------------------------------
Investing Activities:
Gross property additions (78,869) (78,562) (64,671)
Other (3,493) (5,328) 3,970
-------------------------------------------------------------------------------------------------
Net cash used for investing activities (82,362) (83,890) (60,701)
-------------------------------------------------------------------------------------------------
Financing Activities and Capital Contributions:
Proceeds:
Preferred stock - 35,000 29,500
First mortgage bonds - 75,000 25,000
Pollution control bonds 42,000 53,425 8,930
Capital contributions from parent 98 11 121
Other long-term debt 32,108 25,000 -
Retirements:
Preferred stock (1,000) (21,060) (15,500)
First mortgage bonds (48,856) (88,809) (117,693)
Pollution control bonds (42,100) (40,650) (9,205)
Other long-term debt (24,240) (7,736) (5,783)
Notes payable, net 47,447 (37,947) 44,000
Payment of preferred stock dividends (5,925) (5,728) (5,103)
Payment of common stock dividends (44,000) (41,800) (39,900)
Miscellaneous (2,648) (6,888) (8,760)
-------------------------------------------------------------------------------------------------
Net cash used for financing activities (47,116) (62,182) (94,393)
-------------------------------------------------------------------------------------------------
Net Increase (Decrease) in Cash and Cash Equivalents (4,674) 4,372 (24,845)
Cash and Cash Equivalents at Beginning of Year 5,576 1,204 26,049
-------------------------------------------------------------------------------------------------
Cash and Cash Equivalents at End of Year $ 902 $ 5,576 $ 1,204
=================================================================================================
Supplemental Cash Flow Information:
Cash paid during the year for --
Interest (net of amount capitalized) $30,139 $28,470 $38,164
Income taxes $43,089 $27,865 $37,569
-------------------------------------------------------------------------------------------------
( ) Denotes use of cash.
The accompanying notes are an integral part of these statements.
</TABLE>
II-153
<PAGE>
<TABLE>
<CAPTION>
BALANCE SHEETS
At December 31, 1994 and 1993
Gulf Power Company 1994 Annual Report
========================================================================================
ASSETS 1994 1993
----------------------------------------------------------------------------------------
(in thousands)
<S> <C> <C>
Utility Plant:
Plant in service (Notes 1 and 6) $ 1,656,367 $ 1,611,704
Less accumulated provision for depreciation 622,911 610,542
----------------------------------------------------------------------------------------
1,033,456 1,001,162
Construction work in progress 24,288 34,591
----------------------------------------------------------------------------------------
Total 1,057,744 1,035,753
----------------------------------------------------------------------------------------
Other Property and Investments 7,997 13,242
----------------------------------------------------------------------------------------
Current Assets:
Cash and cash equivalents 902 5,576
Receivables-
Customer accounts receivable 57,637 57,226
Other accounts and notes receivable 2,268 5,904
Affiliated companies 1,079 1,241
Accumulated provision for uncollectible accounts (600) (447)
Fossil fuel stock, at average cost 35,686 20,652
Materials and supplies, at average cost 35,257 36,390
Current portion of deferred coal contract costs (Note 5) 2,521 12,535
Regulatory clauses under recovery (Note 1) 5,002 3,244
Prepayments 4,354 2,160
Vacation pay deferred (Note 1) 4,172 4,022
----------------------------------------------------------------------------------------
Total 148,278 148,503
----------------------------------------------------------------------------------------
Deferred Charges:
Deferred charges related to income taxes (Note 8) 30,433 31,334
Debt expense and loss, being amortized 22,119 21,247
Deferred coal contract costs (Note 5) 38,169 52,884
Miscellaneous 10,802 4,846
----------------------------------------------------------------------------------------
Total 101,523 110,311
----------------------------------------------------------------------------------------
Total Assets $ 1,315,542 $ 1,307,809
========================================================================================
The accompanying notes are an integral part of these statements.
</TABLE>
II-154
<PAGE>
<TABLE>
<CAPTION>
BALANCE SHEETS (continued)
At December 31, 1994 and 1993
Gulf Power Company 1994 Annual Report
========================================================================================
CAPITALIZATION AND LIABILITIES 1994 1993
----------------------------------------------------------------------------------------
(in thousands)
<S> <C> <C>
Capitalization (See accompanying statements):
Common stock equity (Note 11) $ 425,472 $ 414,196
Preferred stock 89,602 89,602
Preferred stock subject to mandatory redemption - 1,000
Long-term debt 356,393 369,259
----------------------------------------------------------------------------------------
Total 871,467 874,057
----------------------------------------------------------------------------------------
Current Liabilities:
Preferred stock due within one year 1,000 1,000
Long-term debt due within one year (Note 10) 13,439 41,552
Notes payable 53,500 6,053
Accounts payable-
Affiliated companies 9,132 18,560
Other 14,524 20,139
Customer deposits 13,609 15,082
Taxes accrued-
Federal and state income 5,990 10,330
Other 7,475 2,685
Interest accrued 6,106 5,420
Regulatory clauses over recovery (Note 1) 3,960 840
Vacation pay accrued (Note 1) 4,172 4,022
Miscellaneous 7,828 8,527
----------------------------------------------------------------------------------------
Total 140,735 134,210
----------------------------------------------------------------------------------------
Deferred Credits and Other Liabilities:
Accumulated deferred income taxes (Note 8) 151,681 151,743
Deferred credits related to income taxes (Note 8) 71,964 76,876
Accumulated deferred investment tax credits 38,391 40,770
Accumulated provision for property damage (Note 1) 11,522 10,509
Accumulated provision for postretirement benefits (Note 2) 13,680 10,749
Miscellaneous 16,102 8,895
----------------------------------------------------------------------------------------
Total 303,340 299,542
----------------------------------------------------------------------------------------
Commitments and Contingent Matters (Notes 1, 2, 3, 4, 5, and 7)
Total Capitalization and Liabilities $ 1,315,542 $ 1,307,809
========================================================================================
The accompanying notes are an integral part of these statements.
</TABLE>
II-155
<PAGE>
<TABLE>
<CAPTION>
STATEMENTS OF CAPITALIZATION
At December 31, 1994 and 1993
Gulf Power Company 1994 Annual Report
=================================================================================================
1994 1993 1994 1993
-------------------------------------------------------------------------------------------------
(in thousands) (percent of total)
<S> <C> <C> <C> <C>
Common Stock Equity:
Common stock, without par value --
Authorized and outstanding --
992,717 shares in 1994 and 1993 $ 38,060 $ 38,060
Paid-in capital 218,380 218,282
Premium on preferred stock 81 81
Retained earnings (Note 11) 168,951 157,773
-------------------------------------------------------------------------------------------------
Total common stock equity 425,472 414,196 48.8 % 47.4 %
-------------------------------------------------------------------------------------------------
Cumulative Preferred Stock:
$10 par value, authorized 10,000,000 shares,
Outstanding 2,580,000 shares at December 31, 1994
$25 stated capital --
6.72% 20,000 20,000
7.00% 14,500 14,500
7.30% 15,000 15,000
Adjustable Rate -- at January 1, 1995: 6.07% 15,000 15,000
$100 par value --
Authorized -- 791,626 shares
Outstanding -- 251,026 shares at December 31, 1994
4.64% 5,102 5,102
5.16% 5,000 5,000
5.44% 5,000 5,000
7.52% 5,000 5,000
7.88% 5,000 5,000
-------------------------------------------------------------------------------------------------
Total (annual dividend requirement -- $5,901,300) 89,602 89,602 10.3 10.3
-------------------------------------------------------------------------------------------------
Cumulative Preferred Stock Subject to Mandatory Redemption:
$100 par value --
Authorized -- 10,000 shares
Outstanding -- 10,000 shares at December 31, 1994
11.36% Series 1,000 2,000
-------------------------------------------------------------------------------------------------
Total (annual dividend requirement -- $113,600) 1,000 2,000
-------------------------------------------------------------------------------------------------
Less amount due within one year 1,000 1,000
-------------------------------------------------------------------------------------------------
Total excluding amount due within one year - 1,000 - 0.1
-------------------------------------------------------------------------------------------------
</TABLE>
II-156
<PAGE>
<TABLE>
<CAPTION>
STATEMENTS OF CAPITALIZATION (continued)
At December 31, 1994 and 1993
Gulf Power Company 1994 Annual Report
=================================================================================================
1994 1993 1994 1993
-------------------------------------------------------------------------------------------------
(in thousands) (percent of total)
<S> <C> <C> <C> <C>
First mortgage bonds --
Maturity Interest Rates
-------- --------------
October 1, 1994 4.625% - 12,000
June 1, 1996 6% - 15,000
August 1, 1997 5.875% 25,000 25,000
April 1, 1998 9.20% - 19,486
April 1, 1998 5.55% 15,000 15,000
July 1, 1998 5.00% 30,000 30,000
July 1, 2003 6.125% 30,000 30,000
September 1, 2008 9% 2,680 5,050
December 1, 2021 8.75% 50,000 50,000
-------------------------------------------------------------------------------------------------
Total first mortgage bonds 152,680 201,536
Pollution control obligations (Note 9) 169,755 169,855
Other long-term debt (Note 9) 50,388 42,520
Unamortized debt premium (discount), net (2,991) (3,100)
-------------------------------------------------------------------------------------------------
Total long-term debt (annual interest
requirement -- $23,777,000) 369,832 410,811
Less amount due within one year (Note 10) 13,439 41,552
-------------------------------------------------------------------------------------------------
Long-term debt excluding amount due within one year 356,393 369,259 40.9 42.2
-------------------------------------------------------------------------------------------------
Total Capitalization $871,467 $874,057 100.0 % 100.0 %
=================================================================================================
The accompanying notes are an integral part of these statements.
</TABLE>
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<PAGE>
<TABLE>
<CAPTION>
STATEMENTS OF RETAINED EARNINGS
For the Years Ended December 31, 1994, 1993, and 1992
Gulf Power Company 1994 Annual Report
========================================================================================
1994 1993 1992
----------------------------------------------------------------------------------------
(in thousands)
<S> <C> <C> <C>
Balance at Beginning of Year $ 157,773 $ 146,771 $ 134,372
Net income after dividends on preferred stock 55,229 54,311 54,090
Cash dividends on common stock (44,000) (41,800) (39,900)
Preferred stock transactions, net (51) (1,509) (1,791)
----------------------------------------------------------------------------------------
Balance at End of Year (Note 11) $ 168,951 $ 157,773 $ 146,771
========================================================================================
STATEMENTS OF PAID-IN CAPITAL
For the Years Ended December 31, 1994, 1993, and 1992
Gulf Power Company 1994 Annual Report
========================================================================================
1994 1993 1992
----------------------------------------------------------------------------------------
(in thousands)
Balance at Beginning of Year $ 218,282 $ 218,271 $ 218,150
Contributions to capital by parent company 98 11 121
----------------------------------------------------------------------------------------
Balance at End of Year $ 218,380 $ 218,282 $ 218,271
========================================================================================
The accompanying notes are an integral part of these financial statements.
</TABLE>
II-158
<PAGE>
NOTES TO FINANCIAL STATEMENTS
At December 31, 1994, 1993, and 1992
Gulf Power Company 1994 Annual Report
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
General
Gulf Power Company is a wholly owned subsidiary of The Southern Company, which
is the parent company of five operating companies, a system service company,
Southern Communications Services (Southern Communications), Southern Electric
International (Southern Electric), Southern Nuclear Operating Company (Southern
Nuclear) and The Southern Development and Investment Group (SDIG). The operating
companies (Alabama Power Company, Georgia Power Company, Gulf Power Company,
Mississippi Power Company, and Savannah Electric and Power Company) provide
electric service in four Southeastern states. Contracts among the companies --
dealing with jointly owned generating facilities, interconnecting transmission
lines, and the exchange of electric power -- are regulated by the Federal Energy
Regulatory Commission (FERC) or the Securities and Exchange Commission (SEC).
The system service company provides, at cost, specialized services to The
Southern Company and subsidiary companies. Southern Communications, beginning in
mid-1995, will provide digital wireless communications services -- over the
800-megahertz frequency band--to The Southern Company's subsidiaries and also
will market these services to the public within the Southeast. Southern Electric
designs, builds, owns and operates power production facilities and provides a
broad range of technical services to industrial companies and utilities in the
United States and a number of international markets. Southern Nuclear provides
services to The Southern Company's nuclear power plants. SDIG develops new
business opportunities related to energy products and services.
The Southern Company is registered as a holding company under the Public
Utility Holding Company Act of 1935 (PUHCA). Both The Southern Company and its
subsidiaries are subject to the regulatory provisions of the PUHCA. The Company
is also subject to regulation by the FERC and the Florida Public Service
Commission (FPSC). The Company follows generally accepted accounting principles
and complies with the accounting policies and practices prescribed by the FPSC.
Certain prior years' data presented in the financial statements have been
reclassified to conform with current year presentation.
Regulatory Assets and Liabilities
The Company is subject to the provisions of Financial Accounting Standards Board
(FASB) Statement No. 71, Accounting for the Effects of Certain Types of
Regulation. Regulatory assets represent probable future revenues to the Company
associated with certain costs that are expected to be recovered from customers
through the ratemaking process. Regulatory liabilities represent probable future
reductions in revenues associated with amounts that are to be credited to
customers through the ratemaking process. Regulatory assets and (liabilities)
reflected in the Balance Sheets at December 31 relate to:
===========================================================
1994 1993
-----------------------
(in thousands)
Current & deferred fuel charges $ 40,690 $ 65,419
Deferred income taxes 30,433 31,334
Premium on reacquired debt 18,494 17,554
Environmental remediation 7,800 -
Vacation pay 4,172 4,022
Regulatory clauses under (over)
recovery, net 1,042 2,404
Deferred income tax credits (71,964) (76,876)
Accumulated provision for
property damage (11,522) (10,509)
Other, net (2,691) (1,697)
-----------------------------------------------------------
Total $ 16,454 $ 31,651
===========================================================
In the event that a portion of the Company's operations are no longer subject
to the provisions of Statement No. 71, the Company would be required to write
off related regulatory assets and liabilities. In addition, the Company would be
required to determine any impairment to other assets, including plant, and write
down the assets to their fair value.
II-159
<PAGE>
NOTES (continued)
Gulf Power Company 1994 Annual Report
Revenues and Regulatory Cost Recovery Clauses
The Company accrues revenues for service rendered but unbilled at the end of
each fiscal period. The Company's electric rates include provisions to
periodically adjust billings for fluctuations in fuel and the energy component
of purchased power costs; purchased power capacity costs; energy conservation
costs; and environmental compliance costs. Revenues are adjusted monthly for
differences between recoverable costs and amounts actually reflected in current
rates.
Depreciation and Amortization
Depreciation of the original cost of depreciable utility plant in service is
provided primarily by using composite straight-line rates which approximated 3.8
percent in 1994, 1993, and 1992. When property subject to depreciation is
retired or otherwise disposed of in the normal course of business, its cost --
together with the cost of removal, less salvage -- is charged to the accumulated
provision for depreciation. Minor items of property included in the original
cost of the plant are retired when the related property unit is retired.
Income Taxes
The Company provides deferred income taxes for all significant income tax
temporary differences. Investment tax credits utilized are deferred and
amortized to income over the average lives of the related property.
Effective January 1, 1993, the Company adopted FASB Statement No. 109,
Accounting for Income Taxes. Statement No. 109 required, among other things,
conversion to the liability method of accounting for accumulated deferred income
taxes. See Note 8 for additional information about Statement No. 109. The
Company is included in the consolidated federal income tax return of The
Southern Company.
Allowance for Funds Used During Construction
(AFUDC)
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 increases the revenue requirement
over the service life of the plant through a higher rate base and higher
depreciation expense. The FPSC-approved composite rate used to calculate AFUDC
was 7.27 percent for 1994 and the second half of 1993, and 8.03 percent for the
first half of 1993 and all of 1992. AFUDC amounts for 1994, 1993, and 1992 were
$1.1 million, $966 thousand, and $60 thousand, respectively. The increase in
1994 and 1993 is primarily due to an increase in construction projects at Plant
Daniel.
Utility Plant
Utility plant is stated at original cost. Original cost includes: materials;
labor; minor items of property; appropriate administrative and general costs;
payroll-related costs such as taxes, pensions, and other benefits; and the
estimated cost of funds used during construction. The cost of maintenance,
repairs, and replacement of minor items of property is charged to maintenance
expense. The cost of replacements of property (exclusive of minor items of
property) is charged to utility plant.
Cash and Cash Equivalents
For purposes of the Statements of Cash Flows, temporary cash investments are
considered cash equivalents. Temporary cash investments are securities with
original maturities of 90 days or less.
II-160
<PAGE>
NOTES (continued)
Gulf Power Company 1994 Annual Report
Financial Instruments
In accordance with FASB Statement No. 107, Disclosure About Fair Values of
Financial Instruments, all financial instruments of the Company -- for which the
carrying amount does not approximate fair value -- are shown in the table below
as of December 31:
============================================================
1994
-----------------------
Carrying Fair
Amount Value
-----------------------
(in thousands)
Long-term debt $369,832 $355,019
Preferred stock subject to
mandatory redemption 1,000 1,030
============================================================
============================================================
1993
-----------------------
Carrying Fair
Amount Value
-----------------------
(in thousands)
Long-term debt $410,811 $431,251
Preferred stock subject to
mandatory redemption 2,000 2,040
============================================================
The fair values for long-term debt and preferred stock subject to mandatory
redemption were based on either closing market prices or closing prices of
comparable instruments.
Materials and Supplies
Generally, materials and supplies include the cost of transmission,
distribution, and generating plant materials. Materials are charged to inventory
when purchased and then expensed or capitalized to plant, as appropriate, when
installed.
Vacation Pay
The Company's employees earn their vacation in one year and take it in the
subsequent year. However, for ratemaking purposes, vacation pay is recognized as
an allowable expense only when paid. Consistent with this ratemaking treatment,
the Company accrues a current liability for earned vacation pay and records a
current asset representing the future recoverability of this cost. The amount
was $4.2 million and $4.0 million at December 31, 1994, and 1993, respectively.
In 1995, an estimated 81.3 percent of the 1994 deferred vacation cost will be
expensed and the balance will be charged to construction and other accounts.
Provision for Injuries and Damages
The Company is subject to claims and suits arising in the ordinary course of
business. As permitted by regulatory authorities, the Company provides for the
uninsured costs of injuries and damages by charges to income amounting to $1.2
million annually. The expense of settling claims is charged to the provision to
the extent available. The accumulated provision of $2.5 million and $2.2 million
at December 31, 1994, and 1993, respectively, is included in miscellaneous
current liabilities in the accompanying Balance Sheets.
Provision for Property Damage
Due to a significant increase in the cost of traditional insurance, effective in
1993, the Company became self-insured for the full cost of storm and other
damage to its transmission and distribution property. As permitted by regulatory
authorities, the Company provides for the estimated cost of uninsured property
damage by charges to income amounting to $1.2 million annually. At December 31,
1994, and 1993, the accumulated provision for property damage amounted to $11.5
million and $10.5 million, respectively. The expense of repairing such damage as
occurs from time to time is charged to the provision to the extent it is
available.
2. RETIREMENT BENEFITS
Pension Plan
The Company has a defined benefit, trusteed, non-contributory pension plan that
covers substantially all regular employees. Benefits are based on the greater of
amounts resulting from two different formulas: years of service and final
average pay or years of service and a flat-dollar benefit. The Company uses the
"entry age normal method with a frozen initial liability" actuarial method for
funding purposes, subject to limitations under federal income tax regulations.
Amounts funded to the pension trust fund are primarily invested in equity and
fixed-income securities. FASB Statement No. 87, Employers' Accounting for
Pensions, requires use of the "projected unit credit" actuarial method for
financial reporting purposes.
II-161
<PAGE>
NOTES (continued)
Gulf Power Company 1994 Annual Report
Postretirement Benefits
The Company also provides certain medical care and life insurance benefits for
retired employees. Substantially all employees may become eligible for these
benefits when they retire. A qualified trust for medical benefits is funded to
the extent deductible under federal income tax regulations. Amounts funded are
primarily invested in debt and equity securities.
Effective January 1, 1993, the Company adopted FASB Statement No. 106,
Employers' Accounting for Postretirement Benefits Other Than Pensions, on a
prospective basis. Statement No. 106 requires that medical care and life
insurance benefits for retired employees be accounted for on an accrual basis
using a specified actuarial method, "benefit/years-of-service." The costs of
such benefits recognized by the Company in 1994 and 1993 were $4.3 million and
$3.9 million, respectively.
Prior to 1993, the Company recognized these benefit costs on an accrual basis
using the "aggregate cost" actuarial method, which spreads the expected cost of
such benefits over the remaining periods of employees' service as a level
percentage of payroll costs. The cost of such benefits recognized by the Company
in 1992 was $3.1 million.
Status and Cost of Benefits
Shown in the following tables are actuarial results and assumptions for pension
and postretirement medical and life insurance benefits as computed under the
requirements of FASB Statement Nos. 87 and 106, respectively. The funded status
of the plans at December 31 was as follows:
=================================================================
Pension
-------------------------
1994 1993
-------------------------
(in thousands)
Actuarial present value of
benefit obligation:
Vested benefits $ 73,552 $ 73,925
Non-vested benefits 3,016 3,217
-----------------------------------------------------------------
Accumulated benefit obligation 76,568 77,142
Additional amounts related to
projected salary increases 29,451 25,648
-----------------------------------------------------------------
Projected benefit obligation 106,019 102,790
Less:
Fair value of plan assets 151,337 159,192
Unrecognized net gain (36,599) (49,376)
Unrecognized prior service cost 2,802 3,152
Unrecognized transition asset (8,034) (8,765)
-----------------------------------------------------------------
Prepaid asset recognized in
the Balance Sheets $ 3,487 $ 1,413
=================================================================
=================================================================
Postretirement Medical
-------------------------
1994 1993
-------------------------
(in thousands)
Actuarial present value of benefit obligation:
Retirees and dependents $ 7,768 $ 7,857
Employees eligible to retire 4,043 4,054
Other employees 14,598 14,927
-----------------------------------------------------------------
Accumulated benefit obligation 26,409 26,838
Less:
Fair value of plan assets 5,655 5,638
Unrecognized net loss (gain) 615 2,653
Unrecognized transition
obligation 12,714 13,420
-----------------------------------------------------------------
Accrued liability recognized in
the Balance Sheets $ 7,425 $ 5,127
=================================================================
II-162
<PAGE>
NOTES (continued)
Gulf Power Company 1994 Annual Report
=================================================================
Postretirement Life
--------------------
1994 1993
--------------------
(in thousands)
Actuarial present value of benefit obligation:
Retirees and dependents $3,032 $2,929
Employees eligible to retire - -
Other employees 5,041 5,058
-----------------------------------------------------------------
Accumulated benefit obligation 8,073 7,987
Less:
Fair value of plan assets 85 52
Unrecognized net loss (gain) (1,073) (641)
Unrecognized transition
obligation 2,806 2,954
-----------------------------------------------------------------
Accrued liability recognized in
the Balance Sheets $6,255 $5,622
=================================================================
The weighted average rates assumed in the actuarial calculations were:
=================================================================
1994 1993 1992
---------------------------
Discount 8.0% 7.5% 8.0%
Annual salary increase 5.5% 5.0% 6.0%
Long-term return on plan
assets 8.5% 8.5% 8.5%
=================================================================
An additional assumption used in measuring the accumulated postretirement
medical benefit obligation was a weighted average medical care cost trend rate
of 10.5 percent for 1994, decreasing to 6.0 percent through the year 2000 and
remaining at that level thereafter. An annual increase in the assumed medical
care cost trend rate of 1 percent would increase the accumulated medical benefit
obligation at December 31,1994, by $4.8 million and the aggregate of the service
and interest cost components of the net retiree medical cost by $660 thousand.
Components of the plans' net costs are shown below:
=================================================================
Pension
-----------------------------------
1994 1993 1992
-----------------------------------
(in thousands)
Benefits earned during
the year $ 3,775 $ 3,710 $ 3,550
Interest cost on projected
benefit obligation 7,484 7,319 6,939
Actual (return) loss on
plan assets 3,721 (20,672) (6,431)
Net amortization
and deferral (17,054) 8,853 (4,054)
-----------------------------------------------------------------
Net pension cost
(income) $ (2,074) $ (790) $ 4
=================================================================
Of the above net pension amounts, pension expense/(income) of $(1.5) million
in 1994, $(601) thousand in 1993, and $3 thousand in 1992, were recorded in
operating expenses, and the remainder was recorded in construction and other
accounts.
=================================================================
Postretirement Medical
-----------------------
1994 1993
-----------------------
(in thousands)
Benefits earned during the year $1,092 $ 874
Interest cost on accumulated
benefit obligation 1,952 1,714
Amortization of transition
obligation 706 706
Actual (return) loss on plan assets 117 (726)
Net amortization and deferral (575) 309
-----------------------------------------------------------------
Net postretirement cost $3,292 $2,877
=================================================================
=================================================================
Postretirement Life
-----------------------
1994 1993
-----------------------
(in thousands)
Benefits earned during the year $270 $ 292
Interest cost on accumulated
benefit obligation 583 625
Amortization of transition
obligation 148 148
Actual (return) loss on plan assets 12 (5)
Net amortization and deferral (16) 1
-----------------------------------------------------------------
Net postretirement cost $997 $1,061
=================================================================
II-163
<PAGE>
NOTES (continued)
Gulf Power Company 1994 Annual Report
Of the above net postretirement medical and life insurance amounts, $3.1
million in 1994 and $3.0 million in 1993, were charged to operating expenses,
and the remainder was recorded in construction and other accounts.
Work Force Reduction Programs
The Company has not had a work force reduction program but has incurred its pro
rata share of affiliated companies' costs. The costs related to these programs
were $1.3 million, $109 thousand, and $138 thousand for the years 1994, 1993,
and 1992, respectively.
3. LITIGATION AND REGULATORY MATTERS
FERC Reviews Equity Returns
In May 1991, the FERC ordered that hearings be conducted concerning the
reasonableness of the Southern electric system's wholesale rate schedules and
contracts that have a return on common equity of 13.75 percent or greater. The
contracts that could be affected by the hearings include substantially all of
the transmission, unit power, long-term power and other similar contracts. Any
change in the rate of return on common equity that may require refunds as a
result of this proceeding would be substantially for the period beginning in
July 1991 and ending in October 1992.
In August 1992, a FERC administrative law judge issued an opinion that
changes in rate schedules and contracts were not necessary and that the FERC
staff failed to show how any changes were in the public interest. The FERC staff
has filed exceptions to the administrative law judge's opinion, and the matter
remains pending before the FERC.
In August 1994, the FERC instituted another proceeding based on substantially
the same issues as in the 1991 proceeding. The second period under review for
possible refunds began in October 1994 and is scheduled to continue until
January 1996.
If the rates of return on common equity recommended by the FERC staff were
applied to all of the schedules and contracts involved in both proceedings and
refunds were ordered, the amount of refunds could range up to approximately $5.4
million at December 31, 1994. Although the final outcome of this matter cannot
now be determined, in management's opinion, the final outcome will not result in
changes that would have a material adverse effect on the Company's financial
statements.
Environmental Cost Recovery
In April 1993, the Florida Legislature adopted legislation for an Environmental
Cost Recovery (ECR) clause, which allows a utility to petition the FPSC for
recovery of all prudent environmental compliance costs that are not being
recovered through base rates or any other rate-adjustment clause. Such
environmental costs include operation and maintenance expense, depreciation, and
a return on invested capital.
On January 12, 1994, the FPSC approved the Company's initial petition under
the ECR clause for recovery of environmental costs that were projected to be
incurred from July 1993 through September 1994. After this initial period,
recovery under the ECR clause is determined semi-annually and includes a true-up
of the prior period and a projection of the ensuing six month period. During
1994 and 1993, the Company recorded $7.2 million and $2.6 million, respectively,
of ECR revenues net of over/under recovery true-up amounts.
In 1994, the Company accrued a liability of $7.8 million for the estimated
costs of environmental remediation projects for known sites. These estimated
costs are expected to be expended during the period 1995 to 1999. These projects
have been approved by the FPSC for recovery through the ECR clause discussed
above. Therefore, the Company recorded $2.1 million in current assets and $5.7
million in deferred charges representing the future recoverability of these
costs.
4. CONSTRUCTION PROGRAM
The Company is engaged in a continuous construction program, the cost of which
is currently estimated to total $62 million in 1995, $76 million in 1996, and
$84 million in 1997. The construction program is subject to periodic review and
revision, and actual construction costs may vary from the above estimates
because of numerous factors. These factors include changes in business
conditions; revised load growth estimates; changes in environmental regulations;
increasing costs of labor, equipment and materials; and cost of capital. At
December 31, 1994, significant purchase commitments were outstanding in
connection with the construction program. The Company does not have any new
II-164
<PAGE>
NOTES (continued)
Gulf Power Company 1994 Annual Report
baseload generating plants under construction. However, significant construction
will continue related to transmission and distribution facilities and the
upgrading and extension of the useful lives of generating plants.
See Management's Discussion and Analysis under "Environmental Matters" for
information on the impact of the Clean Air Act Amendments of 1990 and other
environmental matters.
5. FINANCING AND COMMITMENTS
General
Current projections indicate that funds required for construction and other
purposes, including compliance with environmental regulations, will be derived
primarily from internal sources. Requirements not met from internal sources will
be financed from the sale of additional first mortgage bonds and preferred
stock; bank notes; and capital contributions from The Southern Company. In
addition, the Company may issue additional long-term debt and preferred stock
primarily for the purposes of debt maturities and redemptions of higher-cost
securities. If the attractiveness of current short-term interest rates
continues, the Company may maintain a higher level of short-term indebtedness
than has historically been true.
Bank Credit Arrangements
At December 31, 1994, the Company had $25 million in revolving credit lines
subject to renewal June 1, 1997, and $22 million of lines of credit with banks
subject to renewal June 1 of each year. In connection with these credit lines,
the Company has agreed to pay certain fees and/or maintain compensating balances
with the banks. The compensating balances, which represent substantially all the
cash of the Company except for daily working funds and like items, are not
legally restricted from withdrawal. The Company had $19 million of these lines
of credit committed at December 31, 1994. In addition, the Company has bid-loan
facilities with fourteen major money center banks that total $275 million, of
which $34.5 million was committed at December 31, 1994.
Assets Subject to Lien
The Company's mortgage, which secures the first mortgage bonds issued by the
Company, constitutes a direct first lien on substantially all of the Company's
fixed property and franchises.
Fuel Commitments
To supply a portion of the fuel requirements of its generating plants, the
Company has entered into long-term commitments for the procurement of fuel. In
most cases, these contracts contain provisions for price escalations, minimum
purchase levels, and other financial commitments. Total estimated long-term
obligations were approximately $1.1 billion at December 31, 1994. Additional
commitments will be required in the future to supply the Company's fuel needs.
To take advantage of lower-cost coal supplies, agreements were reached in
1986 to terminate two long-term contracts for the supply of coal to Plant
Daniel, which is jointly owned by the Company and Mississippi Power, an
operating affiliate. The Company's portion of this payment was $60 million. This
amount is being amortized to expense on a per ton basis over a nine-year period
ending in 1995. The remaining unamortized amount was $10.1 million at December
31, 1994.
In 1988, the Company made an advance payment of $60 million to another coal
supplier under an arrangement to lower the cost of future coal purchased under
an existing contract. This amount is being amortized to expense on a per ton
basis over a ten-year period. The remaining unamortized amount was $30.5 million
at December 31, 1994.
Also, in 1993, the Company made a payment of $16.4 million to a coal supplier
under an arrangement to suspend the purchase of coal under an existing contract
for one year. This amount was amortized to expense on a per ton basis during
1993 and 1994, with a remainder of $118 thousand to be amortized to expense in
the first quarter of 1995.
The amortization expense of these contract buyouts and renegotiations is
being recovered through the fuel cost recovery clause discussed under "Revenues
and Regulatory Cost Recovery Clauses" in Note 1.
II-165
<PAGE>
NOTES (continued)
Gulf Power Company 1994 Annual Report
Lease Agreements
In 1989, the Company and Mississippi Power Company jointly entered into a
twenty-two year operating lease agreement for the use of 495 aluminum railcars.
In 1995, a second lease agreement for the use of 250 additional aluminum
railcars will begin and continue for twenty-two years. Both of these leases are
for the transportation of coal to Plant Daniel. The Company, as a joint owner of
Plant Daniel, is responsible for one half of the lease costs. The lease costs
are charged to fuel inventory and are allocated to fuel expense as the fuel is
used. The Company's share of the lease costs charged to fuel inventory were $1.2
million in 1994, 1993, and 1992. For the year 1995, the Company's annual lease
payments associated with both leases will be approximately $2.6 million. The
Company's annual lease payments for 1996 through 1999 will be approximately $1.7
million and after 1999, lease payments total approximately $26.0 million. The
Company has the option after three years from the date of the original contract
on each lease to purchase the respective number of railcars at the greater of
the termination value or the fair market value. Additionally, at the end of each
lease term, the Company has the option to renew the lease.
6. JOINT OWNERSHIP AGREEMENTS
The Company and Mississippi Power jointly own Plant Daniel, a steam-electric
generating plant, located in Jackson County, Mississippi. In accordance with an
operating agreement, Mississippi Power acts as the Company's agent with respect
to the construction, operation, and maintenance of the plant.
The Company and Georgia Power jointly own Plant Scherer Unit No. 3, a
steam-electric generating plant, located near Forsyth, Georgia. In accordance
with an operating agreement, Georgia Power acts as the Company's agent with
respect to the construction, operation, and maintenance of the unit.
The Company's pro rata share of expenses related to both plants is included
in the corresponding operating expense accounts in the Statements of Income.
At December 31, 1994, the Company's percentage ownership and its amount of
investment in these jointly owned facilities were as follows:
================================================================
Plant Scherer Plant
Unit No. 3 Daniel
(coal-fired) (coal-fired)
----------------------------
(in thousands)
Plant-In Service $185,339(1) $220,125
Accumulated Depreciation $45,814 $93,110
Construction Work in Progress $941 $1,163
Nameplate Capacity (2)
(In megawatts) 205 500
Ownership 25% 50%
================================================================
(1) Includes net plant acquisition adjustment.
(2) Total megawatt nameplate capacity:
Plant Scherer Unit No. 3: 818
Plant Daniel: 1,000
7. LONG-TERM POWER SALES AGREEMENTS
General
The Company and the other operating affiliates of The Southern Company entered
into long-term contractual agreements for the sale of capacity and energy to
certain non-affiliated utilities located outside the system's service area. The
agreements for non-firm capacity expired in 1994. Other agreements, expiring at
various dates discussed below, are firm and pertain to capacity related to
specific generating units. Because the energy is generally sold at cost under
these agreements, revenues from capacity sales primarily affect profitability.
The Company's capacity revenues have been as follows:
================================================================
Other
Unit Long-
Year Power Term Total
---- -----------------------------------------
(in thousands)
1994 $29,653 $1,273 $30,926
1993 31,162 2,643 33,805
1992 32,679 1,501 34,180
================================================================
II-166
<PAGE>
NOTES (continued)
Gulf Power Company 1994 Annual Report
In 1994, long-term non-firm power of 200 megawatts was sold to Florida Power
Corporation (FPC) under a contract that expired at year-end. Capacity and energy
sales under these long-term non-firm power sales agreements were made from
available power pool capacity, and the revenues from the sales were shared by
the operating affiliates.
Unit power from specific generating plants is currently being sold to FPC,
Florida Power & Light Company (FP&L), Jacksonville Electric Authority (JEA), and
the City of Tallahassee, Florida. Under these agreements, 210 megawatts of net
dependable capacity were sold by the Company during 1994, and sales will remain
at that level until the expiration of the contracts in 2010, unless reduced by
FPC, FP&L and JEA after 1999.
Capacity and energy sales to FP&L, the Company's largest single customer,
provided revenues of $29.3 million in 1994, $39.5 million in 1993, and $46.2
million in 1992, or 5.1 percent, 6.8 percent, and 8.1 percent of operating
revenues, respectively.
8. INCOME TAXES
Effective January 1, 1993, the Company adopted FASB Statement No. 109,
Accounting for Income Taxes. The adoption resulted in the recording of
additional deferred income taxes and related regulatory assets and liabilities.
At December 31, 1994, the tax-related regulatory assets to be recovered from
customers were $30.4 million. These assets are attributable to tax benefits
flowed through to customers in prior years and to taxes applicable to
capitalized AFUDC. At December 31, 1994, the tax-related regulatory liabilities
to be refunded to customers were $72.0 million. These liabilities are
attributable to deferred taxes previously recognized at rates higher than
current enacted tax law and to unamortized investment tax credits.
Details of the federal and state income tax provisions are as follows:
=================================================================
1994 1993 1992
-----------------------------
(in thousands)
Total provision for income taxes:
Federal--
Currently payable $34,941 $24,354 $24,287
Deferred--current year 18,556 26,396 18,173
--reversal of
prior years (24,787) (22,102) (15,506)
-----------------------------------------------------------------
28,710 28,648 26,954
-----------------------------------------------------------------
State--
Currently payable 5,907 3,950 4,282
Deferred--current year 2,549 3,838 2,662
--reversal of
prior years (3,304) (2,785) (2,007)
-----------------------------------------------------------------
5,152 5,003 4,937
-----------------------------------------------------------------
Total 33,862 33,651 31,891
Less income taxes charged
(credited) to other income (95) 921 (187)
-----------------------------------------------------------------
Federal and state income
taxes charged
to operations $33,957 $32,730 $32,078
=================================================================
The tax effects of temporary differences between the carrying amounts of
assets and liabilities in the financial statements and their respective tax
bases, which give rise to deferred tax assets and liabilities, are as follows:
=====================================================================
1994 1993
-----------------------
(in thousands)
Deferred tax liabilities:
Accelerated depreciation $146,686 $146,657
Property basis differences 18,468 15,140
Coal contract buyout 6,896 15,427
Other 11,846 6,724
---------------------------------------------------------------------
Total 183,896 183,948
---------------------------------------------------------------------
Federal effect of state deferred taxes 9,732 10,136
Postretirement benefits 4,383 3,406
Property insurance 5,200 4,730
Other 7,566 6,500
---------------------------------------------------------------------
Total 26,881 24,772
---------------------------------------------------------------------
Net deferred tax liabilities 157,015 159,176
Portion included in current liabilities, net 5,334 7,433
---------------------------------------------------------------------
Accumulated deferred income
taxes in the Balance Sheets $151,681 $151,743
=====================================================================
II-167
<PAGE>
NOTES (continued)
Gulf Power Company 1994 Annual Report
Deferred investment tax credits are amortized over the life of the related
property with such amortization normally applied as a credit to reduce
depreciation in the Statements of Income. Credits amortized in this manner
amounted to $2.3 million in 1994, 1993 and 1992. At December 31, 1994, all
investment tax credits available to reduce federal income taxes payable had been
utilized.
A reconciliation of the federal statutory income tax rate to the effective
income tax rate is as follows:
=============================================================
1994 1993 1992
--------------------------
Federal statutory rate 35% 35% 34%
State income tax,
net of federal deduction 4 3 4
Non-deductible book
depreciation 1 1 1
Difference in prior years'
deferred and current tax rate (2) (2) (2)
Other (2) (1) (2)
-------------------------------------------------------------
Effective income tax rate 36% 36% 35%
=============================================================
The Company and the other subsidiaries of The Southern Company file a
consolidated federal tax return. Under a joint consolidated income tax
agreement, each company's current and deferred tax expense is computed on a
stand-alone basis, and consolidated tax savings are allocated to each company
based on its ratio of taxable income to total consolidated taxable income.
9. POLLUTION CONTROL OBLIGATIONS AND OTHER LONG-TERM DEBT
Details of long-term debt are as follows:
==============================================================
December 31,
1994 1993
----------------------
(in thousands)
Obligations incurred in
connection with the sale by
public authorities of
tax-exempt pollution control
revenue bonds:
Collateralized
6% due 2006* $ 12,200 $ 12,300
8.25% due 2017 32,000 32,000
7.125% due 2021 21,200 21,200
6.75% due 2022 8,930 8,930
5.70% due 2023 7,875 7,875
5.80% due 2023 32,550 32,550
6.20% due 2023 13,000 13,000
6.30% due 2024 22,000 -
Variable Rate
Remarketed daily 20,000 -
Non-collateralized
10.50% due 2014 - 42,000
--------------------------------------------------------------
$169,755 $169,855
--------------------------------------------------------------
Notes payable:
5.39% due 1995 4,500 -
5.72% due 1995 4,500 -
4.69% due 1996 25,000 25,000
6.44% due 1994-1998 16,388 -
8.25% due 1995 - 17,520
--------------------------------------------------------------
50,388 42,520
--------------------------------------------------------------
Total $220,143 $212,375
==============================================================
* Sinking fund requirement applicable to the 6 percent pollution control
bonds is $125 thousand for 1995 with increasing increments thereafter through
2005, with the remaining balance due in 2006.
Pollution control obligations represent installment purchases of pollution
control facilities financed by funds derived from sales by public authorities of
revenue bonds. With respect to the collateralized pollution control revenue
bonds, the Company has authenticated and delivered to trustees a like principal
amount of first mortgage bonds as security for obligations under collateralized
installment agreements. The principal and interest on the first mortgage bonds
will be payable only in the event of default under the agreements.
II-168
<PAGE>
NOTES (continued)
Gulf Power Company 1994 Annual Report
The 5.39 percent and 5.72 percent notes payable are the Company's portion of
notes payable issued in connection with the termination of Plant Daniel coal
contracts (see Note 5 under "Fuel Commitments" for further information). These
notes refinanced the remaining balance of the 8.25 percent note payable. The
proceeds from the 6.44 percent note were used to refinance the remaining balance
of the 9.2 percent first mortgage bond, which was redeemed in June, 1994. The
estimated annual maturities of the notes payable through 1998 are as follows:
$13.3 million in 1995, $29.6 million in 1996, $4.9 million in 1997, and $2.6
million in 1998.
10. LONG-TERM DEBT DUE WITHIN ONE YEAR
A summary of the improvement fund requirement and scheduled maturities and
redemptions of long-term debt due within one year is as follows:
==============================================================
December 31
1994 1993
--------------------
(in thousands)
Bond improvement fund requirement $ 1,750 $ 2,370
Less: Portion to be satisfied by cash
or certifying property
additions 1,750 -
--------------------------------------------------------------
Cash sinking fund requirement - 2,370
Maturities of first mortgage bonds - 3,676
Redemptions of first mortgage bonds - 27,000
Current portion of notes payable 13,314 8,406
(Note 9)
Pollution control bond maturity 125 100
(Note 9)
--------------------------------------------------------------
Total $13,439 $41,552
==============================================================
The first mortgage bond improvement (sinking) fund requirement amounts to 1
percent of each outstanding series of bonds authenticated under the indenture
prior to January 1 of each year, other than those issued to collateralize
pollution control obligations. The requirement may be satisfied by depositing
cash, reacquiring bonds, or by pledging additional property equal to 1 and 2/3
times the requirement.
11. COMMON STOCK DIVIDEND
RESTRICTIONS
The Company's first mortgage bond indenture contains various common stock
dividend restrictions which remain in effect as long as the bonds are
outstanding. At December 31, 1994, $101 million of retained earnings was
restricted against the payment of cash dividends on common stock under the terms
of the mortgage indenture.
The Company's charter limits cash dividends on common stock to 50 percent of
net income available for such stock during a prior period of 12 months if the
capitalization ratio is below 20 percent, and to 75 percent of such net income
if such ratio is 20 percent or more but less than 25 percent. The capitalization
ratio is defined as the ratio of common stock equity to total capitalization,
including retained earnings, adjusted to reflect the payment of the proposed
dividend. At December 31, 1994, the ratio was 47.2 percent.
12. QUARTERLY FINANCIAL DATA (Unaudited)
Summarized quarterly financial data for 1994 and 1993 are as follows:
=================================================================
Net Income
After Dividends
Operating Operating on Preferred
Quarter Ended Revenues Income Stock
-----------------------------------------------------------------
(in thousands)
March 31, 1994 $138,088 $19,154 $10,117
June 30, 1994 146,769 19,957 8,886
Sept. 30, 1994 162,143 31,123 21,831
Dec. 31, 1994 131,813 21,979 14,395
March 31, 1993 $127,036 $17,646 $10,426
June 30, 1993 138,863 19,562 7,312
Sept. 30, 1993 175,964 32,783 22,366
Dec. 31, 1993 141,279 22,596 14,207
=================================================================
The Company's business is influenced by seasonal weather conditions and the
timing of rate changes, among other factors.
II-169
<PAGE>
<TABLE>
<CAPTION>
SELECTED FINANCIAL AND OPERATING DATA
Gulf Power Company 1994 Annual Report
====================================================================================================
1994 1993 1992
----------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Operating Revenues (in thousands) $578,813 $583,142 $570,902
Net Income after Dividends
on Preferred Stock (in thousands) $55,229 $54,311 $54,090
Cash Dividends on Common Stock (in thousands) $44,000 $41,800 $39,900
Return on Average Common Equity (percent) 13.15 13.29 13.62
Total Assets (in thousands) $1,315,542 $1,307,809 $1,062,699
Gross Property Additions (in thousands) $78,869 $78,562 $64,671
----------------------------------------------------------------------------------------------------
Capitalization (in thousands):
Common stock equity $425,472 $414,196 $403,190
Preferred stock 89,602 89,602 74,662
Preferred stock subject to mandatory redemption - 1,000 2,000
Long-term debt 356,393 369,259 382,047
----------------------------------------------------------------------------------------------------
Total (excluding amounts due within one year) $871,467 $874,057 $861,899
----------------------------------------------------------------------------------------------------
Capitalization Ratios (percent):
Common stock equity 48.8 47.4 46.8
Preferred stock 10.3 10.4 8.9
Long-term debt 40.9 42.2 44.3
----------------------------------------------------------------------------------------------------
Total (excluding amounts due within one year) 100.0 100.0 100.0
====================================================================================================
First Mortgage Bonds (in thousands):
Issued - 75,000 25,000
Retired 48,856 88,809 117,693
Preferred Stock (in thousands):
Issued - 35,000 29,500
Retired 1,000 21,060 15,500
----------------------------------------------------------------------------------------------------
Security Ratings:
First Mortgage Bonds -
Moody's A2 A2 A2
Standard and Poor's A A A
Duff & Phelps A+ A+ A
Preferred Stock -
Moody's a2 a2 a2
Standard and Poor's A- A- A-
Duff & Phelps A A A-
----------------------------------------------------------------------------------------------------
Customers (year-end):
Residential 280,859 274,194 267,591
Commercial 40,398 39,253 37,105
Industrial 283 274 270
Other 106 86 74
----------------------------------------------------------------------------------------------------
Total 321,646 313,807 305,040
====================================================================================================
Employees (year-end) 1,540 1,565 1,613
</TABLE>
II-170
<PAGE>
<TABLE>
<CAPTION>
SELECTED FINANCIAL AND OPERATING DATA
Gulf Power Company 1994 Annual Report
====================================================================================================
1991 1990 1989
----------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Operating Revenues (in thousands) $565,207 $567,825 $527,821
Net Income after Dividends
on Preferred Stock (in thousands) $57,796 $38,714 $37,361
Cash Dividends on Common Stock (in thousands) $38,000 $37,000 $37,200
Return on Average Common Equity (percent) 15.17 10.51 10.32
Total Assets (in thousands) $1,095,736 $1,084,579 $1,093,430
Gross Property Additions (in thousands) $64,323 $62,462 $70,726
----------------------------------------------------------------------------------------------------
Capitalization (in thousands):
Common stock equity $390,981 $371,185 $365,471
Preferred stock 55,162 55,162 55,162
Preferred stock subject to mandatory redemption 7,500 9,250 11,000
Long-term debt 434,648 475,284 484,608
----------------------------------------------------------------------------------------------------
Total (excluding amounts due within one year) $888,291 $910,881 $916,241
----------------------------------------------------------------------------------------------------
Capitalization Ratios (percent):
Common stock equity 44.0 40.8 39.9
Preferred stock 7.1 7.1 7.2
Long-term debt 48.9 52.1 52.9
----------------------------------------------------------------------------------------------------
Total (excluding amounts due within one year) 100.0 100.0 100.0
====================================================================================================
First Mortgage Bonds (in thousands):
Issued 50,000 - -
Retired 32,807 6,455 9,344
Preferred Stock (in thousands):
Issued - - -
Retired 2,500 1,750 1,250
----------------------------------------------------------------------------------------------------
Security Ratings:
First Mortgage Bonds -
Moody's A2 A2 A1
Standard and Poor's A A A
Duff & Phelps A A AA-
Preferred Stock -
Moody's a2 a2 a1
Standard and Poor's A- A- A-
Duff & Phelps A- A- A+
----------------------------------------------------------------------------------------------------
Customers (year-end):
Residential 261,210 256,111 251,341
Commercial 34,685 34,019 33,678
Industrial 264 252 240
Other 72 67 67
----------------------------------------------------------------------------------------------------
Total 296,231 290,449 285,326
====================================================================================================
Employees (year-end) 1,598 1,615 1,614
</TABLE>
II-171A
<PAGE>
<TABLE>
<CAPTION>
SELECTED FINANCIAL AND OPERATING DATA
Gulf Power Company 1994 Annual Report
====================================================================================================
1988 1987 1986
----------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Operating Revenues (in thousands) $550,827 $587,860 $542,919
Net Income after Dividends
on Preferred Stock (in thousands) $45,698 $42,217 $46,421
Cash Dividends on Common Stock (in thousands) $35,400 $34,200 $33,100
Return on Average Common Equity (percent) 13.41 13.23 15.06
Total Assets (in thousands) $1,097,225 $1,051,182 $1,028,864
Gross Property Additions (in thousands) $67,042 $97,511 $90,160
----------------------------------------------------------------------------------------------------
Capitalization (in thousands):
Common stock equity $358,310 $323,012 $314,995
Preferred stock 55,162 55,162 55,162
Preferred stock subject to mandatory redemption 12,750 14,000 16,500
Long-term debt 497,069 474,640 482,869
----------------------------------------------------------------------------------------------------
Total (excluding amounts due within one year) $923,291 $866,814 $869,526
----------------------------------------------------------------------------------------------------
Capitalization Ratios (percent):
Common stock equity 38.8 37.2 36.2
Preferred stock 7.4 8.0 8.3
Long-term debt 53.8 54.8 55.5
----------------------------------------------------------------------------------------------------
Total (excluding amounts due within one year) 100.0 100.0 100.0
====================================================================================================
First Mortgage Bonds (in thousands):
Issued 35,000 - 50,000
Retired 9,369 - 46,640
Preferred Stock (in thousands):
Issued - - -
Retired 1,750 2,500 750
----------------------------------------------------------------------------------------------------
Security Ratings:
First Mortgage Bonds -
Moody's A1 A1 A1
Standard and Poor's A A A+
Duff & Phelps 4 4 4
Preferred Stock -
Moody's a1 a1 a1
Standard and Poor's A- A- A
Duff & Phelps 5 5 5
----------------------------------------------------------------------------------------------------
Customers (year-end):
Residential 246,450 241,138 235,329
Commercial 33,030 32,139 31,142
Industrial 206 206 197
Other 61 61 62
----------------------------------------------------------------------------------------------------
Total 279,747 273,544 266,730
====================================================================================================
Employees (year-end) 1,601 1,603 1,544
</TABLE>
II-171B
<PAGE>
<TABLE>
<CAPTION>
SELECTED FINANCIAL AND OPERATING DATA
Gulf Power Company 1994 Annual Report
======================================================================================
1985 1984
--------------------------------------------------------------------------------------
<S> <C> <C>
Operating Revenues (in thousands) $562,068 $505,812
Net Income after Dividends
on Preferred Stock (in thousands) $45,484 $40,336
Cash Dividends on Common Stock (in thousands) $30,800 $27,200
Return on Average Common Equity (percent) 15.61 15.11
Total Assets (in thousands) $921,635 $892,924
Gross Property Additions (in thousands) $92,541 $156,443
--------------------------------------------------------------------------------------
Capitalization (in thousands):
Common stock equity $301,674 $280,990
Preferred stock 55,162 55,162
Preferred stock subject to mandatory redemption 18,250 19,000
Long-term debt 410,917 394,859
--------------------------------------------------------------------------------------
Total (excluding amounts due within one year) $786,003 $750,011
--------------------------------------------------------------------------------------
Capitalization Ratios (percent):
Common stock equity 38.4 37.5
Preferred stock 9.3 9.9
Long-term debt 52.3 52.6
--------------------------------------------------------------------------------------
Total (excluding amounts due within one year) 100.0 100.0
======================================================================================
First Mortgage Bonds (in thousands):
Issued - -
Retired 2,860 10,415
Preferred Stock (in thousands):
Issued - -
Retired 750 1,500
--------------------------------------------------------------------------------------
Security Ratings:
First Mortgage Bonds -
Moody's A1 A1
Standard and Poor's A+ A+
Duff & Phelps 4 4
Preferred Stock -
Moody's a1 a1
Standard and Poor's A A
Duff & Phelps 5 5
--------------------------------------------------------------------------------------
Customers (year-end):
Residential 227,845 217,138
Commercial 29,603 27,939
Industrial 183 177
Other 62 63
--------------------------------------------------------------------------------------
Total 257,693 245,317
======================================================================================
Employees (year-end) 1,509 1,460
</TABLE>
II-171C
<PAGE>
<TABLE>
<CAPTION>
SELECTED FINANCIAL AND OPERATING DATA (continued)
Gulf Power Company 1994 Annual Report
====================================================================================================
1994 1993 1992
----------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Operating Revenues (in thousands):
Residential $252,598 $244,967 $235,296
Commercial 146,394 137,308 133,071
Industrial 82,169 87,526 91,320
Other 1,955 1,882 1,784
----------------------------------------------------------------------------------------------------
Total retail 483,116 471,683 461,471
Sales for resale - non-affiliates 66,111 72,209 70,078
Sales for resale - affiliates 17,353 23,166 24,075
----------------------------------------------------------------------------------------------------
Total revenues from sales of electricity 566,580 567,058 555,624
Other revenues 12,233 16,084 15,278
----------------------------------------------------------------------------------------------------
Total $578,813 $583,142 $570,902
====================================================================================================
Kilowatt-Hour Sales (in thousands):
Residential 3,751,932 3,712,980 3,596,515
Commercial 2,548,846 2,433,382 2,369,236
Industrial 1,847,114 2,029,936 2,179,435
Other 17,354 16,944 16,649
----------------------------------------------------------------------------------------------------
Total retail 8,165,246 8,193,242 8,161,835
Sales for resale - non-affiliates 1,418,977 1,460,105 1,430,908
Sales for resale - affiliates 874,050 1,029,787 1,208,771
----------------------------------------------------------------------------------------------------
Total 10,458,273 10,683,134 10,801,514
====================================================================================================
Average Revenue Per Kilowatt-Hour (cents):
Residential 6.73 6.60 6.54
Commercial 5.74 5.64 5.62
Industrial 4.45 4.31 4.19
Total retail 5.92 5.76 5.65
Sales for resale 3.64 3.83 3.57
Total sales 5.42 5.31 5.14
Average Annual Kilowatt-Hour Use Per Residential Customer 13,486 13,671 13,553
Average Annual Revenue Per Residential Customer $907.92 $901.96 $886.66
Plant Nameplate Capacity Ratings (year-end) (megawatts) 2,174 2,174 2,174
Maximum Peak-Hour Demand (megawatts):
Winter 1,801 1,571 1,533
Summer 1,795 1,898 1,828
Annual Load Factor (percent) 56.7 54.5 55.0
Plant Availability - Fossil-Steam (percent) 92.2 88.9 91.2
----------------------------------------------------------------------------------------------------
Source of Energy Supply (percent):
Coal 87.2 84.5 87.7
Oil and gas 0.2 0.5 0.1
Purchased power -
From non-affiliates 2.8 1.5 0.8
From affiliates 9.8 13.5 11.4
----------------------------------------------------------------------------------------------------
Total 100.0 100.0 100.0
====================================================================================================
Total Fuel Economy Data:
BTU per net kilowatt-hour generated 10,614 10,390 10,347
Cost of fuel per million BTU (cents) 189.55 197.37 200.30
Average cost of fuel per net kilowatt-hour generated (cents) 2.01 2.05 2.07
====================================================================================================
</TABLE>
II-172
<PAGE>
<TABLE>
<CAPTION>
SELECTED FINANCIAL AND OPERATING DATA (continued)
Gulf Power Company 1994 Annual Report
====================================================================================================
1991 1990 1989
----------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Operating Revenues (in thousands):
Residential $231,220 $217,843 $203,781
Commercial 130,691 124,066 118,897
Industrial 92,300 91,041 84,671
Other 1,860 1,805 1,586
----------------------------------------------------------------------------------------------------
Total retail 456,071 434,755 408,935
Sales for resale - non-affiliates 69,636 73,855 67,554
Sales for resale - affiliates 29,343 38,563 39,244
----------------------------------------------------------------------------------------------------
Total revenues from sales of electricity 555,050 547,173 515,733
Other revenues 10,157 20,652 12,088
----------------------------------------------------------------------------------------------------
Total $565,207 $567,825 $527,821
====================================================================================================
Kilowatt-Hour Sales (in thousands):
Residential 3,455,100 3,360,838 3,293,750
Commercial 2,272,690 2,217,568 2,169,497
Industrial 2,117,408 2,177,872 2,094,670
Other 17,118 18,866 17,209
----------------------------------------------------------------------------------------------------
Total retail 7,862,316 7,775,144 7,575,126
Sales for resale - non-affiliates 1,550,018 1,775,703 1,640,355
Sales for resale - affiliates 1,236,223 1,435,558 1,461,036
----------------------------------------------------------------------------------------------------
Total 10,648,557 10,986,405 10,676,517
====================================================================================================
Average Revenue Per Kilowatt-Hour (cents):
Residential 6.69 6.48 6.19
Commercial 5.75 5.59 5.48
Industrial 4.36 4.18 4.04
Total retail 5.80 5.59 5.40
Sales for resale 3.55 3.50 3.44
Total sales 5.21 4.98 4.83
Average Annual Kilowatt-Hour Use Per Residential Customer 13,320 13,173 13,173
Average Annual Revenue Per Residential Customer $891.38 $853.86 $815.00
Plant Nameplate Capacity Ratings (year-end) (megawatts) 2,174 2,174 2,174
Maximum Peak-Hour Demand (megawatts):
Winter 1,418 1,310 1,814
Summer 1,740 1,778 1,691
Annual Load Factor (percent) 57.0 55.2 52.6
Plant Availability - Fossil-Steam (percent) 92.2 89.2 89.1
----------------------------------------------------------------------------------------------------
Source of Energy Supply (percent):
Coal 82.0 69.8 78.3
Oil and gas 0.1 0.5 0.2
Purchased power -
From non-affiliates 0.5 0.6 0.4
From affiliates 17.4 29.1 21.1
----------------------------------------------------------------------------------------------------
Total 100.0 100.0 100.0
====================================================================================================
Total Fuel Economy Data:
BTU per net kilowatt-hour generated 10,636 10,765 10,621
Cost of fuel per million BTU (cents) 203.60 206.06 193.70
Average cost of fuel per net kilowatt-hour generated (cents) 2.17 2.22 2.06
====================================================================================================
</TABLE>
II-173A
<PAGE>
<TABLE>
<CAPTION>
SELECTED FINANCIAL AND OPERATING DATA (continued)
Gulf Power Company 1994 Annual Report
====================================================================================================
1988 1987 1986
----------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Operating Revenues (in thousands):
Residential $184,036 $199,701 $200,725
Commercial 107,615 116,057 116,253
Industrial 72,634 80,295 79,873
Other 1,402 1,357 1,343
----------------------------------------------------------------------------------------------------
Total retail 365,687 397,410 398,194
Sales for resale - non-affiliates 117,466 134,456 106,892
Sales for resale - affiliates 48,277 55,955 27,113
----------------------------------------------------------------------------------------------------
Total revenues from sales of electricity 531,430 587,821 532,199
Other revenues 19,397 39 10,720
----------------------------------------------------------------------------------------------------
Total $550,827 $587,860 $542,919
====================================================================================================
Kilowatt-Hour Sales (in thousands):
Residential 3,154,541 3,055,041 2,963,502
Commercial 2,088,598 1,986,332 1,913,139
Industrial 1,968,091 1,839,931 1,745,074
Other 16,257 15,241 14,903
----------------------------------------------------------------------------------------------------
Total retail 7,227,487 6,896,545 6,636,618
Sales for resale - non-affiliates 1,911,759 2,138,390 1,609,146
Sales for resale - affiliates 2,326,238 2,689,487 1,078,500
----------------------------------------------------------------------------------------------------
Total 11,465,484 11,724,422 9,324,264
====================================================================================================
Average Revenue Per Kilowatt-Hour (cents):
Residential 5.83 6.54 6.77
Commercial 5.15 5.84 6.08
Industrial 3.69 4.36 4.58
Total retail 5.06 5.76 6.00
Sales for resale 3.91 3.94 4.99
Total sales 4.64 5.01 5.71
Average Annual Kilowatt-Hour Use Per Residential Customer 12,883 12,763 12,729
Average Annual Revenue Per Residential Customer $751.60 $834.31 $862.16
Plant Nameplate Capacity Ratings (year-end) (megawatts) 2,174 2,174 1,969
Maximum Peak-Hour Demand (megawatts):
Winter 1,395 1,354 1,406
Summer 1,613 1,617 1,678
Annual Load Factor (percent) 56.5 54.4 50.5
Plant Availability - Fossil-Steam (percent) 88.2 92.8 90.5
----------------------------------------------------------------------------------------------------
Source of Energy Supply (percent):
Coal 93.2 93.5 85.8
Oil and gas 0.4 0.4 0.5
Purchased power -
From non-affiliates 0.4 0.4 1.9
From affiliates 6.0 5.7 11.8
----------------------------------------------------------------------------------------------------
Total 100.0 100.0 100.0
====================================================================================================
Total Fuel Economy Data:
BTU per net kilowatt-hour generated 10,461 10,512 10,639
Cost of fuel per million BTU (cents) 178.00 197.53 239.26
Average cost of fuel per net kilowatt-hour generated (cents) 1.86 2.08 2.55
====================================================================================================
</TABLE>
II-173B
<PAGE>
<TABLE>
<CAPTION>
SELECTED FINANCIAL AND OPERATING DATA (continued)
Gulf Power Company 1994 Annual Report
======================================================================================
1985 1984
--------------------------------------------------------------------------------------
<S> <C> <C>
Operating Revenues (in thousands):
Residential $186,415 $174,302
Commercial 109,631 98,408
Industrial 81,621 83,538
Other 1,346 1,334
--------------------------------------------------------------------------------------
Total retail 379,013 357,582
Sales for resale - non-affiliates 126,789 106,802
Sales for resale - affiliates 43,844 35,712
--------------------------------------------------------------------------------------
Total revenues from sales of electricity 549,646 500,096
Other revenues 12,422 5,716
--------------------------------------------------------------------------------------
Total $562,068 $505,812
======================================================================================
Kilowatt-Hour Sales (in thousands):
Residential 2,736,432 2,560,648
Commercial 1,777,418 1,559,344
Industrial 1,770,587 1,771,100
Other 14,702 14,555
--------------------------------------------------------------------------------------
Total retail 6,299,139 5,905,647
Sales for resale - non-affiliates 2,388,591 2,183,631
Sales for resale - affiliates 1,562,452 1,308,410
--------------------------------------------------------------------------------------
Total 10,250,182 9,397,688
======================================================================================
Average Revenue Per Kilowatt-Hour (cents):
Residential 6.81 6.81
Commercial 6.17 6.31
Industrial 4.61 4.72
Total retail 6.02 6.05
Sales for resale 4.32 4.08
Total sales 5.36 5.32
Average Annual Kilowatt-Hour Use Per Residential Customer 12,221 12,057
Average Annual Revenue Per Residential Customer $832.55 $820.71
Plant Nameplate Capacity Ratings (year-end) (megawatts) 1,969 1,969
Maximum Peak-Hour Demand (megawatts):
Winter 1,517 1,209
Summer 1,448 1,381
Annual Load Factor (percent) 53.4 54.9
Plant Availability - Fossil-Steam (percent) 84.8 87.7
--------------------------------------------------------------------------------------
Source of Energy Supply (percent):
Coal 79.7 83.9
Oil and gas 0.2 0.2
Purchased power -
From non-affiliates 0.4 (1.4)
From affiliates 19.7 17.3
--------------------------------------------------------------------------------------
Total 100.0 100.0
======================================================================================
Total Fuel Economy Data:
BTU per net kilowatt-hour generated 10,609 10,639
Cost of fuel per million BTU (cents) 254.53 240.40
Average cost of fuel per net kilowatt-hour generated (cents) 2.70 2.60
=======================================================================================
</TABLE>
II-173C
<PAGE>
<TABLE>
<CAPTION>
STATEMENTS OF INCOME
Gulf Power Company
==============================================================================================
For the Years Ended December 31, 1994 1993 1992
----------------------------------------------------------------------------------------------
(Thousands of Dollars)
<S> <C> <C> <C>
Operating Revenues:
Revenues $ 561,460 $559,976 $546,827
Revenues from affiliates 17,353 23,166 24,075
----------------------------------------------------------------------------------------------
Total operating revenues 578,813 583,142 570,902
----------------------------------------------------------------------------------------------
Operating Expenses:
Operation --
Fuel 161,168 170,485 182,754
Purchased power from non-affiliates 6,761 4,386 1,394
Purchased power from affiliates 25,819 32,273 26,788
Proceeds from settlement of disputed contracts - - (920)
Other 113,879 109,164 98,230
Maintenance 46,700 46,004 41,947
Depreciation and amortization 56,615 55,309 53,758
Taxes other than income taxes 41,701 40,204 37,898
Federal and state income taxes 33,957 32,730 32,078
----------------------------------------------------------------------------------------------
Total operating expenses 486,600 490,555 473,927
----------------------------------------------------------------------------------------------
Operating Income 92,213 92,587 96,975
Other Income (Expense):
Allowance for equity funds used during construction 450 512 14
Interest income 1,429 1,328 2,733
Other, net (780) (1,238) (1,487)
Gain on sale of investment securities - 3,820 -
Income taxes applicable to other income 95 (921) 187
----------------------------------------------------------------------------------------------
Income Before Interest Charges 93,407 96,088 98,422
----------------------------------------------------------------------------------------------
Interest Charges:
Interest on long-term debt 27,124 31,344 35,792
Allowance for debt funds used during construction (656) (454) (46)
Interest on notes payable 1,509 870 1,041
Amortization of debt discount, premium, and expense, net 1,834 1,412 1,032
Other interest charges 2,442 2,877 1,410
----------------------------------------------------------------------------------------------
Net interest charges 32,253 36,049 39,229
----------------------------------------------------------------------------------------------
Net Income 61,154 60,039 59,193
Dividends on Preferred Stock 5,925 5,728 5,103
----------------------------------------------------------------------------------------------
Net Income After Dividends on Preferred Stock $ 55,229 $ 54,311 $ 54,090
==============================================================================================
</TABLE>
II-174
<PAGE>
<TABLE>
<CAPTION>
STATEMENTS OF INCOME
Gulf Power Company
======================================================================================================
For the Years Ended December 31, 1991 1990 1989 1988
------------------------------------------------------------------------------------------------------
(Thousands of Dollars)
<S> <C> <C> <C> <C>
Operating Revenues:
Revenues $ 535,864 $529,262 $488,577 $502,550
Revenues from affiliates 29,343 38,563 39,244 48,277
------------------------------------------------------------------------------------------------------
Total operating revenues 565,207 567,825 527,821 550,827
------------------------------------------------------------------------------------------------------
Operating Expenses:
Operation --
Fuel 176,038 156,712 158,858 191,687
Purchased power from non-affiliates 896 1,427 1,251 1,468
Purchased power from affiliates 32,579 67,729 48,972 27,267
Proceeds from settlement of disputed contracts (20,385) - - -
Other 94,411 90,045 82,231 93,028
Maintenance 45,468 45,491 44,295 41,919
Depreciation and amortization 52,195 50,899 48,760 47,530
Taxes other than income taxes 42,359 39,110 30,718 27,087
Federal and state income taxes 33,893 24,780 23,621 26,239
------------------------------------------------------------------------------------------------------
Total operating expenses 457,454 476,193 438,706 456,225
------------------------------------------------------------------------------------------------------
Operating Income 107,753 91,632 89,115 94,602
Other Income (Expense):
Allowance for equity funds used during construction 54 - (446) 457
Interest income 2,427 4,508 3,271 2,858
Other, net (3,484) (6,360) (3,800) (3,491)
Gain on sale of investment securities - - - -
Income taxes applicable to other income 1,104 1,303 779 1,001
------------------------------------------------------------------------------------------------------
Income Before Interest Charges 107,854 91,083 88,919 95,427
------------------------------------------------------------------------------------------------------
Interest Charges:
Interest on long-term debt 41,665 43,215 43,265 42,538
Allowance for debt funds used during construction (95) 1 242 (808)
Interest on notes payable 280 693 180 182
Amortization of debt discount, premium, and expense, net 699 603 613 600
Other interest charges 2,272 2,422 1,636 1,456
------------------------------------------------------------------------------------------------------
Net interest charges 44,821 46,934 45,936 43,968
------------------------------------------------------------------------------------------------------
Net Income 63,033 44,149 42,983 51,459
Dividends on Preferred Stock 5,237 5,435 5,622 5,761
------------------------------------------------------------------------------------------------------
Net Income After Dividends on Preferred Stock $ 57,796 $ 38,714 $ 37,361 $ 45,698
======================================================================================================
</TABLE>
II-175A
<PAGE>
<TABLE>
<CAPTION>
STATEMENTS OF INCOME
Gulf Power Company
======================================================================================================
For the Years Ended December 31, 1987 1986 1985 1984
------------------------------------------------------------------------------------------------------
(Thousands of Dollars)
<S> <C> <C> <C> <C>
Operating Revenues:
Revenues $ 531,905 $515,806 $518,224 $470,100
Revenues from affiliates 55,955 27,113 43,844 35,712
------------------------------------------------------------------------------------------------------
Total operating revenues 587,860 542,919 562,068 505,812
------------------------------------------------------------------------------------------------------
Operating Expenses:
Operation --
Fuel 227,233 215,262 230,944 214,885
Purchased power from non-affiliates 1,792 4,533 1,638 (3,698)
Purchased power from affiliates 28,326 37,172 55,119 42,967
Proceeds from settlement of disputed contracts - - - -
Other 100,032 70,117 59,851 56,352
Maintenance 38,748 35,251 35,654 28,773
Depreciation and amortization 44,619 39,386 37,775 33,061
Taxes other than income taxes 26,246 24,854 22,886 21,696
Federal and state income taxes 31,703 39,948 40,061 35,831
------------------------------------------------------------------------------------------------------
Total operating expenses 498,699 466,523 483,928 429,867
------------------------------------------------------------------------------------------------------
Operating Income 89,161 76,396 78,140 75,945
Other Income (Expense):
Allowance for equity funds used during construction 1,013 7,809 6,893 2,877
Interest income 4,507 2,445 3,235 8,777
Other, net (1,207) (1,077) (1,131) (704)
Gain on sale of investment securities - - - -
Income taxes applicable to other income (642) (648) (862) (3,524)
------------------------------------------------------------------------------------------------------
Income Before Interest Charges 92,832 84,925 86,275 83,371
------------------------------------------------------------------------------------------------------
Interest Charges:
Interest on long-term debt 43,689 39,479 40,769 36,952
Allowance for debt funds used during construction (1,004) (8,651) (7,676) (3,261)
Interest on notes payable - 106 - 1,628
Amortization of debt discount, premium, and expense, net 555 488 287 265
Other interest charges 1,350 869 1,120 1,111
------------------------------------------------------------------------------------------------------
Net interest charges 44,590 32,291 34,500 36,695
------------------------------------------------------------------------------------------------------
Net Income 48,242 52,634 51,775 46,676
Dividends on Preferred Stock 6,025 6,213 6,291 6,340
------------------------------------------------------------------------------------------------------
Net Income After Dividends on Preferred Stock $ 42,217 $ 46,421 $ 45,484 $ 40,336
======================================================================================================
</TABLE>
II-175B
<PAGE>
<TABLE>
<CAPTION>
STATEMENTS OF CASH FLOWS
Gulf Power Company
============================================================================================================
For the Years Ended December 31, 1994 1993 1992
------------------------------------------------------------------------------------------------------------
(Thousands of Dollars)
<S> <C> <C> <C>
Operating Activities:
Net income $ 61,154 $ 60,039 $ 59,193
Adjustments to reconcile net income to net
cash provided by operating activities --
Depreciation and amortization 86,098 72,111 68,021
Deferred income taxes, net (6,986) 5,347 3,322
Deferred investment tax credits, net - - -
Allowance for equity funds used during construction (450) (512) (14)
Non-cash proceeds from settlement of disputed contracts - - (920)
Other, net 4,898 (864) 185
Changes in certain current assets and liabilities --
Receivables, net 3,540 12,867 (11,041)
Inventories (13,901) 5,574 23,560
Payables (10,159) 5,386 1,580
Other 610 (9,504) (13,637)
------------------------------------------------------------------------------------------------------------
Net cash provided from operating activities 124,804 150,444 130,249
------------------------------------------------------------------------------------------------------------
Investing Activities:
Gross property additions (78,869) (78,562) (64,671)
Other (3,493) (5,328) 3,970
------------------------------------------------------------------------------------------------------------
Net cash used for investing activities (82,362) (83,890) (60,701)
------------------------------------------------------------------------------------------------------------
Financing Activities and Capital Contributions:
Proceeds:
Preferred stock - 35,000 29,500
First mortgage bonds - 75,000 25,000
Pollution control bonds 42,000 53,425 8,930
Capital contributions from parent company 98 11 121
Other long-term debt 32,108 25,000 -
Retirements:
Preferred stock (1,000) (21,060) (15,500)
First mortgage bonds (48,856) (88,809) (117,693)
Pollution control bonds (42,100) (40,650) (9,205)
Other long-term debt (24,240) (7,736) (5,783)
Notes payable, net 47,447 (37,947) 44,000
Payment of preferred stock dividends (5,925) (5,728) (5,103)
Payment of common stock dividends (44,000) (41,800) (39,900)
Miscellaneous (2,648) (6,888) (8,760)
------------------------------------------------------------------------------------------------------------
Net cash provided from (used for) financing activities (47,116) (62,182) (94,393)
------------------------------------------------------------------------------------------------------------
Net Increase (Decrease) in Cash and Cash Equivalents (4,674) 4,372 (24,845)
Cash and Cash Equivalents at Beginning of Year 5,576 1,204 26,049
------------------------------------------------------------------------------------------------------------
Cash and Cash Equivalents at End of Year $ 902 $ 5,576 $ 1,204
============================================================================================================
( ) Denotes use of cash.
</TABLE>
II-176
<PAGE>
<TABLE>
<CAPTION>
STATEMENTS OF CASH FLOWS
Gulf Power Company
==========================================================================================================================
For the Years Ended December 31, 1991 1990 1989 1988
--------------------------------------------------------------------------------------------------------------------------
(Thousands of Dollars)
<S> <C> <C> <C> <C>
Operating Activities:
Net income $ 63,033 $ 44,149 $ 42,983 $ 51,459
Adjustments to reconcile net income to net
cash provided by operating activities --
Depreciation and amortization 65,584 63,650 59,955 56,260
Deferred income taxes, net (3,392) 1,837 5,319 10,138
Deferred investment tax credits, net - - - -
Allowance for equity funds used during construction (54) - 446 (457)
Non-cash proceeds from settlement of disputed contracts (19,734) - - -
Other, net 3,079 1,544 3,827 11,449
Changes in certain current assets and liabilities --
Receivables, net 12,421 (2,468) 492 8,984
Inventories (2,397) (11,807) 16,306 (16,160)
Payables (2,003) (3,440) 6,142 (5,340)
Other 8,012 5,781 4,466 (18,432)
--------------------------------------------------------------------------------------------------------------------------
Net cash provided from operating activities 124,549 99,246 139,936 97,901
--------------------------------------------------------------------------------------------------------------------------
Investing Activities:
Gross property additions (64,323) (62,462) (70,726) (67,042)
Other (8,097) (1,597) 419 (62,782)
--------------------------------------------------------------------------------------------------------------------------
Net cash used for investing activities (72,420) (64,059) (70,307) (129,824)
--------------------------------------------------------------------------------------------------------------------------
Financing Activities and Capital Contributions:
Proceeds:
Preferred stock - - - -
First mortgage bonds 50,000 - - 35,000
Pollution control bonds 21,200 - - 3,677
Capital contributions from parent company - 4,000 7,000 25,000
Other long-term debt - - - -
Retirements:
Preferred stock (2,500) (1,750) (1,250) (1,750)
First mortgage bonds (32,807) (6,455) (9,344) (9,369)
Pollution control bonds (21,250) (50) (50) (50)
Other long-term debt (7,981) (6,083) (5,611) (5,175)
Notes payable, net - - - -
Payment of preferred stock dividends (5,237) (5,435) (5,622) (5,761)
Payment of common stock dividends (38,000) (37,000) (37,200) (35,400)
Miscellaneous (3,715) 5 (3) (233)
--------------------------------------------------------------------------------------------------------------------------
Net cash provided from (used for) financing activities (40,290) (52,768) (52,080) 5,939
--------------------------------------------------------------------------------------------------------------------------
Net Increase (Decrease) in Cash and Cash Equivalents 11,839 (17,581) 17,549 (25,984)
Cash and Cash Equivalents at Beginning of Year 14,210 31,791 14,242 40,226
--------------------------------------------------------------------------------------------------------------------------
Cash and Cash Equivalents at End of Year $ 26,049 $ 14,210 $ 31,791 $ 14,242
==========================================================================================================================
( ) Denotes use of cash.
</TABLE>
II-177A
<PAGE>
<TABLE>
<CAPTION>
STATEMENTS OF CASH FLOWS
Gulf Power Company
===========================================================================================================================
For the Years Ended December 31, 1987 1986 1985 1984
--------------------------------------------------------------------------------------------------------------------------
(Thousands of Dollars)
<S> <C> <C> <C> <C>
Operating Activities:
Net income $ 48,242 $ 52,634 $ 51,775 $ 46,676
Adjustments to reconcile net income to net
cash provided by operating activities --
Depreciation and amortization 51,672 41,619 39,595 34,784
Deferred income taxes, net 2,377 45,213 18,467 3,877
Deferred investment tax credits, net 868 1,634 5,716 10,667
Allowance for equity funds used during construction (1,013) (7,809) (6,893) (2,877)
Non-cash proceeds from settlement of disputed contracts - - - -
Other, net 12,913 5,860 (2,535) 243
Changes in certain current assets and liabilities --
Receivables, net (8,849) (6,012) (5,401) 19,173
Inventories 23,691 (1,342) 1,870 2,053
Payables 10,173 449 1,756 601
Other 6,208 (113) (13,331) 11,169
--------------------------------------------------------------------------------------------------------------------------
Net cash provided from operating activities 146,282 132,133 91,019 126,366
--------------------------------------------------------------------------------------------------------------------------
Investing Activities:
Gross property additions (97,511) (90,160) (92,541) (156,443)
Other (692) (55,652) 7,693 2,086
--------------------------------------------------------------------------------------------------------------------------
Net cash used for investing activities (98,203) (145,812) (84,848) (154,357)
--------------------------------------------------------------------------------------------------------------------------
Financing Activities and Capital Contributions:
Proceeds:
Preferred stock - - - -
First mortgage bonds - 50,000 - -
Pollution control bonds 35,996 9,900 18,776 16,424
Capital contributions from parent company - - 6,000 15,000
Other long-term debt - 60,663 - -
Retirements:
Preferred stock (2,500) (750) (750) (1,500)
First mortgage bonds - (46,640) (2,860) (10,415)
Pollution control bonds (32,050) (50) (50) (50)
Other long-term debt (4,774) - - -
Notes payable, net - - - -
Payment of preferred stock dividends (6,025) (6,213) (6,291) (6,340)
Payment of common stock dividends (34,200) (33,100) (30,800) (27,200)
Miscellaneous (1,632) (6,064) (227) (680)
--------------------------------------------------------------------------------------------------------------------------
Net cash provided from (used for) financing activities (45,185) 27,746 (16,202) (14,761)
--------------------------------------------------------------------------------------------------------------------------
Net Increase (Decrease) in Cash and Cash Equivalents 2,894 14,067 (10,031) (42,752)
Cash and Cash Equivalents at Beginning of Year 37,332 23,265 33,296 76,048
--------------------------------------------------------------------------------------------------------------------------
Cash and Cash Equivalents at End of Year $ 40,226 $ 37,332 $ 23,265 $ 33,296
==========================================================================================================================
( ) Denotes use of cash.
</TABLE>
II-177B
<PAGE>
<TABLE>
<CAPTION>
BALANCE SHEETS
Gulf Power Company
============================================================================================================
At December 31, 1994 1993 1992
------------------------------------------------------------------------------------------------------------
(Thousands of Dollars)
<S> <C> <C> <C>
ASSETS
Utility Plant:
Production-fossil $ 896,236 $ 863,223 $ 841,489
Transmission 155,967 154,304 148,824
Distribution 487,986 464,182 443,352
General 116,178 129,995 127,826
Construction work in progress 24,288 34,591 29,564
------------------------------------------------------------------------------------------------------------
Total utility plant 1,680,655 1,646,295 1,591,055
Accumulated provision for depreciation 622,911 610,542 578,851
------------------------------------------------------------------------------------------------------------
Total 1,057,744 1,035,753 1,012,204
Less property-related accumulated deferred income taxes - - 200,904
------------------------------------------------------------------------------------------------------------
Total 1,057,744 1,035,753 811,300
------------------------------------------------------------------------------------------------------------
Other Property and Investments:
Securities received from settlement of disputed contracts - - -
Miscellaneous 7,997 13,242 7,074
------------------------------------------------------------------------------------------------------------
Total 7,997 13,242 7,074
------------------------------------------------------------------------------------------------------------
Current Assets:
Cash and cash equivalents 902 5,576 1,204
Investment securities - - 22,322
Receivables, net 60,384 63,924 60,047
Fossil fuel stock, at average cost 35,686 20,652 29,492
Materials and supplies, at average cost 35,257 36,390 33,124
Current portion of deferred coal contract costs 2,521 12,535 3,071
Regulatory clauses under recovery 5,002 3,244 1,680
Prepayments 4,354 2,160 1,395
Vacation pay deferred 4,172 4,022 3,779
------------------------------------------------------------------------------------------------------------
Total 148,278 148,503 156,114
------------------------------------------------------------------------------------------------------------
Deferred Charges:
Deferred charges related to income taxes 30,433 31,334 -
Debt expense, being amortized 3,625 3,693 3,253
Premium on reacquired debt, being amortized 18,494 17,554 15,319
Deferred coal contract costs 38,169 52,884 63,723
Miscellaneous 10,802 4,846 5,916
------------------------------------------------------------------------------------------------------------
Total 101,523 110,311 88,211
------------------------------------------------------------------------------------------------------------
Total Assets $ 1,315,542 $1,307,809 $1,062,699
============================================================================================================
</TABLE>
II-178
<PAGE>
<TABLE>
<CAPTION>
BALANCE SHEETS
Gulf Power Company
=======================================================================================================================
At December 31, 1991 1990 1989 1988
-----------------------------------------------------------------------------------------------------------------------
(Thousands of Dollars)
<S> <C> <C> <C> <C>
ASSETS
Utility Plant:
Production-fossil $ 837,712 $ 817,490 $ 807,546 $ 796,052
Transmission 143,275 136,813 133,926 113,177
Distribution 419,228 400,016 375,521 343,421
General 125,330 123,059 119,779 115,273
Construction work in progress 13,684 16,868 10,166 29,572
-----------------------------------------------------------------------------------------------------------------------
Total utility plant 1,539,229 1,494,246 1,446,938 1,397,495
Accumulated provision for depreciation 535,408 501,739 464,944 425,520
-----------------------------------------------------------------------------------------------------------------------
Total 1,003,821 992,507 981,994 971,975
Less property-related accumulated deferred income taxes 197,138 192,749 186,084 178,657
-----------------------------------------------------------------------------------------------------------------------
Total 806,683 799,758 795,910 793,318
-----------------------------------------------------------------------------------------------------------------------
Other Property and Investments:
Securities received from settlement of disputed contracts 19,938 - - -
Miscellaneous 6,410 5,439 6,933 6,756
-----------------------------------------------------------------------------------------------------------------------
Total 26,348 5,439 6,933 6,756
-----------------------------------------------------------------------------------------------------------------------
Current Assets:
Cash and cash equivalents 26,049 14,210 31,791 14,242
Investment securities - - - -
Receivables, net 49,006 61,427 58,959 59,451
Fossil fuel stock, at average cost 52,106 50,469 37,526 55,286
Materials and supplies, at average cost 34,070 33,310 34,446 32,992
Current portion of deferred coal contract costs 4,626 6,212 5,534 6,194
Regulatory clauses under recovery - 7,008 4,503 1,218
Prepayments 1,410 2,168 2,490 3,577
Vacation pay deferred 3,776 3,631 3,425 3,340
-----------------------------------------------------------------------------------------------------------------------
Total 171,043 178,435 178,674 176,300
-----------------------------------------------------------------------------------------------------------------------
Deferred Charges:
Deferred charges related to income taxes - - - -
Debt expense, being amortized 3,232 2,954 3,117 3,281
Premium on reacquired debt, being amortized 8,855 6,256 6,574 6,892
Deferred coal contract costs 74,502 87,102 97,833 106,263
Miscellaneous 5,073 4,635 4,389 4,415
-----------------------------------------------------------------------------------------------------------------------
Total 91,662 100,947 111,913 120,851
-----------------------------------------------------------------------------------------------------------------------
Total Assets $ 1,095,736 $1,084,579 $1,093,430 $1,097,225
=======================================================================================================================
</TABLE>
II-179A
<PAGE>
<TABLE>
<CAPTION>
BALANCE SHEETS
Gulf Power Company
=======================================================================================================================
At December 31, 1987 1986 1985 1984
-----------------------------------------------------------------------------------------------------------------------
(Thousands of Dollars)
<S> <C> <C> <C> <C>
ASSETS
Utility Plant:
Production-fossil $ 801,600 $ 608,340 $ 599,613 $ 582,139
Transmission 106,352 99,507 98,683 96,686
Distribution 325,037 295,052 274,656 241,557
General 102,664 66,092 56,427 43,539
Construction work in progress 10,113 188,966 148,969 130,027
-----------------------------------------------------------------------------------------------------------------------
Total utility plant 1,345,766 1,257,957 1,178,348 1,093,948
Accumulated provision for depreciation 388,248 350,117 318,308 287,349
-----------------------------------------------------------------------------------------------------------------------
Total 957,518 907,840 860,040 806,599
Less property-related accumulated deferred income taxes 166,707 152,589 135,388 112,684
-----------------------------------------------------------------------------------------------------------------------
Total 790,811 755,251 724,652 693,915
-----------------------------------------------------------------------------------------------------------------------
Other Property and Investments:
Securities received from settlement of disputed contracts - - - -
Miscellaneous 2,932 2,619 601 2,216
-----------------------------------------------------------------------------------------------------------------------
Total 2,932 2,619 601 2,216
-----------------------------------------------------------------------------------------------------------------------
Current Assets:
Cash and cash equivalents 40,226 37,332 23,265 33,296
Investment securities - - - -
Receivables, net 68,435 59,586 53,574 48,173
Fossil fuel stock, at average cost 43,290 69,785 73,890 76,039
Materials and supplies, at average cost 28,828 26,024 20,577 20,298
Current portion of deferred coal contract costs 2,642 - - -
Regulatory clauses under recovery - - - -
Prepayments 677 788 633 474
Vacation pay deferred 3,200 3,000 2,775 2,517
-----------------------------------------------------------------------------------------------------------------------
Total 187,298 196,515 174,714 180,797
-----------------------------------------------------------------------------------------------------------------------
Deferred Charges:
Deferred charges related to income taxes - - - -
Debt expense, being amortized 3,203 2,736 2,768 2,636
Premium on reacquired debt, being amortized 7,210 - - -
Deferred coal contract costs 55,889 60,663 - -
Miscellaneous 3,839 11,080 18,900 13,360
-----------------------------------------------------------------------------------------------------------------------
Total 70,141 74,479 21,668 15,996
-----------------------------------------------------------------------------------------------------------------------
Total Assets $ 1,051,182 $1,028,864 $ 921,635 $ 892,924
=======================================================================================================================
</TABLE>
II-179B
<PAGE>
<TABLE>
<CAPTION>
BALANCE SHEETS
Gulf Power Company
============================================================================================================
At December 31, 1994 1993 1992
------------------------------------------------------------------------------------------------------------
(Thousands of Dollars)
<S> <C> <C> <C>
CAPITALIZATION AND LIABILITIES
Capitalization:
Common stock $ 38,060 $ 38,060 $ 38,060
Paid-in capital 218,380 218,282 218,271
Premium on preferred stock 81 81 88
Earnings retained in the business 168,951 157,773 146,771
------------------------------------------------------------------------------------------------------------
Total common equity 425,472 414,196 403,190
Preferred stock 89,602 89,602 74,662
Preferred stock subject to mandatory redemption - 1,000 2,000
Long-term debt 356,393 369,259 382,047
------------------------------------------------------------------------------------------------------------
Total (excluding amount due within one year) 871,467 874,057 861,899
------------------------------------------------------------------------------------------------------------
Current Liabilities:
Notes payable to banks 53,500 6,053 44,000
Preferred stock due within one year 1,000 1,000 1,000
Long-term debt due within one year 13,439 41,552 13,820
Accounts payable 23,656 38,699 33,461
Customer deposits 13,609 15,082 15,532
Taxes accrued 13,465 13,015 11,419
Interest accrued 6,106 5,420 6,370
Regulatory clauses over recovery 3,960 840 -
Vacation pay accrued 4,172 4,022 3,779
Miscellaneous 7,828 8,527 3,950
------------------------------------------------------------------------------------------------------------
Total 140,735 134,210 133,331
------------------------------------------------------------------------------------------------------------
Deferred Credits and Other Liabilities:
Accumulated deferred income taxes 151,681 151,743 -
Deferred credits related to income taxes 71,964 76,876 -
Accumulated deferred investment tax credits 38,391 40,770 43,117
Miscellaneous 41,304 30,153 24,352
------------------------------------------------------------------------------------------------------------
Total 303,340 299,542 67,469
------------------------------------------------------------------------------------------------------------
Total Capitalization and Liabilities $ 1,315,542 $1,307,809 $1,062,699
============================================================================================================
</TABLE>
II-180
<PAGE>
<TABLE>
<CAPTION>
BALANCE SHEETS
Gulf Power Company
========================================================================================================================
At December 31, 1991 1990 1989 1988
------------------------------------------------------------------------------------------------------------------------
(Thousands of Dollars)
<S> <C> <C> <C> <C>
CAPITALIZATION AND LIABILITIES
Capitalization:
Common stock $ 38,060 $ 38,060 $ 38,060 $ 38,060
Paid-in capital 218,150 218,150 214,150 207,150
Premium on preferred stock 399 399 399 399
Earnings retained in the business 134,372 114,576 112,862 112,701
------------------------------------------------------------------------------------------------------------------------
Total common equity 390,981 371,185 365,471 358,310
Preferred stock 55,162 55,162 55,162 55,162
Preferred stock subject to mandatory redemption 7,500 9,250 11,000 12,750
Long-term debt 434,648 475,284 484,608 497,069
------------------------------------------------------------------------------------------------------------------------
Total (excluding amount due within one year) 888,291 910,881 916,241 923,291
------------------------------------------------------------------------------------------------------------------------
Current Liabilities:
Notes payable to banks - - - -
Preferred stock due within one year 1,000 1,750 1,750 1,250
Long-term debt due within one year 59,111 9,452 12,588 15,005
Accounts payable 25,315 27,447 34,764 29,595
Customer deposits 15,513 15,551 15,752 15,316
Taxes accrued 19,274 19,610 12,388 10,683
Interest accrued 9,720 10,820 10,105 10,247
Regulatory clauses over recovery 1,114 - - -
Vacation pay accrued 3,776 3,631 3,425 3,340
Miscellaneous 3,545 12,177 7,759 2,748
------------------------------------------------------------------------------------------------------------------------
Total 138,368 100,438 98,531 88,184
------------------------------------------------------------------------------------------------------------------------
Deferred Credits and Other Liabilities:
Accumulated deferred income taxes 1,775 6,736 13,381 17,678
Deferred credits related to income taxes - - - -
Accumulated deferred investment tax credits 45,446 47,776 50,109 52,451
Miscellaneous 21,856 18,748 15,168 15,621
------------------------------------------------------------------------------------------------------------------------
Total 69,077 73,260 78,658 85,750
------------------------------------------------------------------------------------------------------------------------
Total Capitalization and Liabilities $ 1,095,736 $1,084,579 $1,093,430 $1,097,225
========================================================================================================================
</TABLE>
II-181A
<PAGE>
<TABLE>
<CAPTION>
BALANCE SHEETS
Gulf Power Company
========================================================================================================================
At December 31, 1987 1986 1985 1984
------------------------------------------------------------------------------------------------------------------------
(Thousands of Dollars)
<S> <C> <C> <C> <C>
CAPITALIZATION AND LIABILITIES
Capitalization:
Common stock $ 38,060 $ 38,060 $ 38,060 $ 38,060
Paid-in capital 182,150 182,150 182,150 176,150
Premium on preferred stock 399 399 399 399
Earnings retained in the business 102,403 94,386 81,065 66,381
------------------------------------------------------------------------------------------------------------------------
Total common equity 323,012 314,995 301,674 280,990
Preferred stock 55,162 55,162 55,162 55,162
Preferred stock subject to mandatory redemption 14,000 16,500 18,250 19,000
Long-term debt 474,640 482,869 410,917 394,859
------------------------------------------------------------------------------------------------------------------------
Total (excluding amount due within one year) 866,814 869,526 786,003 750,011
------------------------------------------------------------------------------------------------------------------------
Current Liabilities:
Notes payable to banks - - - -
Preferred stock due within one year 1,750 1,750 750 750
Long-term debt due within one year 13,225 4,823 2,910 2,910
Accounts payable 34,500 24,014 23,565 21,809
Customer deposits 15,565 14,715 13,753 12,624
Taxes accrued 7,850 10,986 13,240 22,038
Interest accrued 9,584 11,024 11,783 11,707
Regulatory clauses over recovery 9,330 - - -
Vacation pay accrued 3,200 3,000 2,775 2,517
Miscellaneous 2,144 3,869 4,966 4,474
------------------------------------------------------------------------------------------------------------------------
Total 97,148 74,181 73,742 78,829
------------------------------------------------------------------------------------------------------------------------
Deferred Credits and Other Liabilities:
Accumulated deferred income taxes 22,992 23,550 - -
Deferred credits related to income taxes - - - -
Accumulated deferred investment tax credits 54,597 55,843 55,846 53,242
Miscellaneous 9,631 5,764 6,044 10,842
------------------------------------------------------------------------------------------------------------------------
Total 87,220 85,157 61,890 64,084
------------------------------------------------------------------------------------------------------------------------
Total Capitalization and Liabilities $ 1,051,182 $1,028,864 $ 921,635 $ 892,924
========================================================================================================================
</TABLE>
II-181B
<PAGE>
GULF POWER COMPANY
OUTSTANDING SECURITIES AT DECEMBER 31, 1994
First Mortgage Bonds
Amount Interest Amount
Series Issued Rate Outstanding Maturity
----------------------------------------------------------------
(Thousands) (Thousands)
1992 $ 25,000 5-7/8% $ 25,000 8/1/97
1993 15,000 5.55% 15,000 4/1/98
1993 30,000 5% 30,000 7/1/98
1993 30,000 6-1/8% 30,000 7/1/03
1978 25,000 9% 2,680 9/1/08
1991 50,000 8-3/4% 50,000 12/1/21
--------- --------
$ 175,000 $152,680
========= ========
Pollution Control Bonds
Amount Interest Amount
Series Issued Rate Outstanding Maturity
----------------------------------------------------------------
(Thousands) (Thousands)
1976 $ 12,500 6% $ 12,200 10/1/06
1987 32,000 8-1/4% 32,000 6/1/17
1991 21,200 7-1/8% 21,200 4/1/21
1992 8,930 6-3/4% 8,930 3/1/22
1993 13,000 6.20% 13,000 4/1/23
1993 32,550 5.80% 32,550 6/1/23
1993 7,875 5.70% 7,875 11/1/23
1994 22,000 6.30% 22,000 9/1/24
1994 20,000 Variable 20,000 9/1/24
--------- --------
$ 170,055 $169,755
========= ========
Preferred Stock
Shares Dividend Amount
Series Outstanding Rate Outstanding
----------------------------------------------------------------
(Thousands)
1950 51,026 4.64% $ 5,102
1960 50,000 5.16% 5,000
1966 50,000 5.44% 5,000
1969 50,000 7.52% 5,000
1972 50,000 7.88% 5,000
1980 (1) 10,000 11.36% 1,000
1992 580,000 7% 14,500
1992 600,000 7.30% 15,000
1993 800,000 6.72% 20,000
1993 600,000 Adjustable 15,000
--------- --------
2,841,026 $ 90,602
========= ========
(1) The outstanding balance of $1 million was redeemed on February 1, 1995.
II-182
<PAGE>
GULF POWER COMPANY
SECURITIES RETIRED DURING 1994
First Mortgage Bonds
Principal Interest
Series Amount Rate
-----------------------------------------------------
(Thousands)
1964 $12,000 4-5/8%
1966 15,000 6%
1978 2,370 9%
1988 19,486 9.20%
-------
$48,856
=======
Pollution Control Bonds
Principal Interest
Series Amount Rate
-----------------------------------------------------
(Thousands)
1976 $ 100 6%
1984 42,000 10-1/2%
-------
$42,100
=======
Preferred Stock
Principal Dividend
Series Amount Rate
-----------------------------------------------------
(Thousands)
1980 $ 1,000 11.36%
II-183
<PAGE>
MISSISSIPPI POWER COMPANY
FINANCIAL SECTION
II-184
<PAGE>
MANAGEMENT'S REPORT
Mississippi Power Company 1994 Annual Report
The management of Mississippi Power Company has prepared--and is responsible
for--the financial statements and related information included in this report.
These statements were prepared in accordance with generally accepted accounting
principles appropriate in the circumstances and necessarily include amounts that
are based on best estimates and judgments of management. Financial information
throughout this annual report is consistent with the financial statements.
The Company maintains a system of internal accounting controls to provide
reasonable assurance that assets are safeguarded and that books and records
reflect only authorized transactions of the Company. Limitations exist in any
system of internal controls, however, based upon a recognition that the cost of
the system should not exceed its benefits. The Company believes its system of
internal accounting control maintains an appropriate cost/benefit relationship.
The Company's system of internal accounting controls is evaluated on an
ongoing basis by the internal audit staff. The Company's independent public
accountants also consider certain elements of the internal control system in
order to determine their auditing procedures for the purpose of expressing an
opinion on the financial statements.
The audit committee of the board of directors, composed of four directors
who are not employees, provides a broad overview of management's financial
reporting and control functions. Periodically, this committee meets with
management, the internal auditors, and the independent public accountants to
ensure that these groups are fulfilling their obligations and to discuss
auditing, internal controls, and financial reporting matters. The internal
auditors and independent public accountants have access to the members of the
audit committee at any time.
Management believes that its policies and procedures provide reasonable
assurance that the Company's operations are conducted according to a high
standard of business ethics.
In management's opinion, the financial statements present fairly, in all
material respects, the financial position, results of operations, and cash flows
of Mississippi Power Company in conformity with generally accepted accounting
principles.
/s/ David M. Ratcliffe
David M. Ratcliffe
President and Chief Executive Officer
/s/ Michael W. Southern
Michael W. Southern
Vice President, Secretary, Treasurer and
Chief Financial Officer
II-185
<PAGE>
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To the Board of Directors of Mississippi Power Company:
We have audited the accompanying balance sheets and statements of capitalization
of Mississippi Power Company (a Mississippi corporation and a wholly owned
subsidiary of The Southern Company) as of December 31, 1994 and 1993, and the
related statements of income, retained earnings, paid-in capital, and cash flows
for each of the three years in the period ended December 31, 1994. These
financial statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements (pages II-194 through II-209)
referred to above present fairly, in all material respects, the financial
position of Mississippi Power Company as of December 31, 1994 and 1993, and the
results of its operations and its cash flows for the periods stated, in
conformity with generally accepted accounting principles.
As explained in Notes 2 and 8 to the financial statements, effective January
1, 1993, Mississippi Power changed its methods of accounting for postretirement
benefits other than pensions and for income taxes.
/S/ ARTHUR ANDERSEN LLP
Atlanta, Georgia
February 15, 1995
II-186
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND FINANCIAL
CONDITION
Mississippi Power Company 1994 Annual Report
RESULTS OF OPERATIONS
Earnings
Mississippi Power Company's net income after dividends on preferred stock for
1994 totaled $49.2 million, an increase of $6.7 million over the prior year.
This improvement is attributable primarily to increased energy sales and rate
increases. A retail rate increase under the Company's Performance Evaluation
Plan (PEP) of $6.4 million annually became effective in July 1993. Under the
Environmental Compliance Overview Plan (ECO Plan), retail rates increased by
$7.6 million annually effective April 1994. Also, effective in April 1994 was a
$3.6 million wholesale rate increase.
A comparison of 1993 to 1992 reflects an increase in 1993 earnings of $5.6
million. As was the case in 1994, earnings in 1993 increased because of higher
energy sales and retail rate increases.
Revenues
The following table summarizes the factors impacting operating revenues for the
past three years:
================================================================
Increase (Decrease)
from Prior Year
-----------------------------------
1994 1993 1992
-----------------------------------
(in thousands)
Retail --
Change in
base rates $ 9,314* $ 5,079* $ 6,605
Sales growth 9,560 5,606 7,181
Weather 1,752 4,735 (3,915)
Fuel cost
recovery
and other 6,594 15,028 (2,743)
----------------------------------------------------------------
Total retail 27,220 30,448 7,128
----------------------------------------------------------------
Sales for resale --
Non-affiliates 4,611 3,298 1,387
Affiliates (5,981) 5,464 (7,989)
----------------------------------------------------------------
Total sales for
resale (1,370) 8,762 (6,602)
Other operating
revenues (1,571) 1,226 1,535
----------------------------------------------------------------
Total operating
revenues $ 24,279 $ 40,436 $ 2,061
================================================================
Percent change 5.1% 9.3% 0.5%
----------------------------------------------------------------
*Includes the effect of the retail rate increases approved under the ECO Plan.
Retail revenues of $395 million in 1994 increased 7.4 percent over the prior
year, compared with increases of 9.0 percent and 2.2 percent in 1993 and 1992,
respectively. The increase in retail revenues for 1994 was a result of growth in
energy sales and customers and retail rate increases. Changes in base rates
reflect rate changes made under PEP and the ECO Plan as approved by the
Mississippi Public Service Commission (MPSC).
Under the fuel cost recovery provision, recorded fuel revenues are equal to
recorded fuel expenses, including the fuel component and the operation and
maintenance component of purchased energy. Therefore, changes in recoverable
fuel expenses are offset with corresponding changes in fuel revenues and have no
effect on net income.
II-187
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS (continued)
Mississippi Power Company 1994 Annual Report
Included in sales for resale to non-affiliates are revenues from rural
electric cooperative associations and municipalities located in southeastern
Mississippi. Energy sales to these customers increased 7.8 percent in 1994 and
9.0 percent in 1993 with the related revenues rising 14.0 percent and 14.1
percent, respectively. The customer demand experienced by these utilities is
determined by factors very similar to Mississippi Power's.
Sales for resale to non-affiliated non-territorial utilities are primarily
under long-term contracts consisting of capacity and energy components. Capacity
revenues reflect the recovery of fixed costs and a return on investment under
the contracts. Energy is generally sold at variable cost. Under these long-term
contracts, the capacity and energy components were:
=============================================================
1994 1993 1992
----------------------------------------
(in thousands)
Capacity $ 1,965 $ 4,191 $ 3,573
Energy 8,473 12,120 19,538
-------------------------------------------------------------
Total $10,438 $16,311 $23,111
=============================================================
Capacity revenues for Mississippi Power varied due to changes in the
contracts and in the allocation of transmission capacity revenues throughout the
Southern electric system. Most of the Company's capacity revenues are derived
from transmission charges.
Sales to affiliated companies within the Southern electric system will vary
from year to year depending on demand and the availability and cost of
generating resources at each company. These sales have no material impact on
earnings.
Below is a breakdown of kilowatt-hour sales for 1994 and the percent change
for the last three years:
==================================================================
Amount Percent Change
(millions of -------- -----------------------------
kilowatt-hours 1994 1994 1993 1992
-------- -----------------------------
Residential 1,922 (0.4)% 6.9 % (1.5)%
Commercial 2,101 8.6 6.8 2.4
Industrial 3,847 6.2 2.5 7.3
Other 38 (0.5) 0.3 (57.2)
-----
Total retail 7,908 5.1 4.7 2.9
Sales for
resale --
Non-affiliates 2,556 0.4 (5.3) (0.7)
Affiliates 174 (59.2) 52.2 (54.6)
------
Total 10,638 1.3% 3.3% (1.5)%
==================================================================
Total retail energy sales in 1994 increased, compared to the previous year,
due primarily to the improvement in the economy. The most notable factor that
increased commercial energy sales was the recent establishment of casinos within
the Company's service area. It is expected that the establishment of new casinos
should slow appreciably. However, growth in ancillary services (lodging, food,
transportation, etc.) should continue. Also, energy demand is expected to grow
as a result of a larger and more fully employed population. The improvement in
the economy also carried over to the industrial sector. Retail energy sales in
1993 increased due to an improving economy and weather influences. Industrial
sales increased in 1992 as a result of new contracts with two large industrial
customers.
In addition to the previously discussed long-term contracts, energy sales to
non-affiliates include economy sales and amounts sold under short-term
contracts. Sales for resale to non-affiliates are influenced by those utilities'
own customer demand, plant availability, and the cost of their predominant fuels
-- oil and natural gas.
Expenses
Total operating expenses for 1994 were higher than the previous year because of
higher taxes and an increase in maintenance expenses and depreciation and
amortization. Additionally, included in other operation expenses are increased
costs associated with work force reduction programs. (See Note 2 to the
financial statements for information on these programs.) Expenses in 1993 were
higher than 1992 primarily because of higher production expenses stemming from
II-188
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS (continued)
Mississippi Power Company 1994 Annual Report
increased demand, an increase in the federal income tax rate, and higher
employee related costs.
Fuel costs constitute the single largest expense for Mississippi Power.
These costs decreased in 1994 due to a 5.5 percent decrease in generation, which
reflects lower demand on the rest of the Southern electric system and, hence,
the availability of lower cost generation from affiliates. Fuel expenses in
1993, compared to 1992, were higher because of increased generation reflecting
higher demand.
Purchased power consists primarily of energy purchases from the affiliates
of the Southern electric system. Purchased power transactions (both sales and
purchases) among Mississippi Power and its affiliates will vary from period to
period depending on demand and the availability and variable production cost at
each generating unit in the Southern electric system.
The increase in depreciation and amortization is primarily the result of the
commercial operation of a 75 megawatt combustion turbine unit in May 1994.
Taxes other than income taxes increased in 1994 because of higher ad valorem
taxes, which are property based, and municipal franchise taxes, which are
revenue based.
The change in income taxes for 1994 reflected the change in operating
income. Income tax expense in 1993 increased because of the enactment of a
higher corporate income tax rate retroactive to January 1, 1993, coupled with
higher earnings.
Effects of Inflation
Mississippi Power is subject to rate regulation and income tax laws that are
based on the recovery of historical costs. Therefore, inflation creates an
economic loss because the Company is recovering its costs of investments in
dollars that have less purchasing power. While the inflation rate has been
relatively low in recent years, it continues to have an adverse effect on the
Company because of the large investment in long-lived utility plant.
Conventional accounting for historical costs does not recognize this economic
loss nor the partially offsetting gain that arises through financing facilities
with fixed-money obligations, such as long-term debt and preferred stock. Any
recognition of inflation by regulatory authorities is reflected in the rate of
return allowed.
Future Earnings Potential
The results of operations for the past three years 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. Expenses are subject to constant
review and cost control programs. Among the efforts to control costs are
utilizing employees more effectively through a functionalization program for the
Southern electric system, redesigning compensation and benefit packages, and
re-engineering work processes. Mississippi Power is also maximizing the utility
of invested capital and minimizing the need for capital by refinancing,
decreasing the average fuel stockpile, raising generating plant availability and
efficiency, and managing the construction budget. Operating revenues will be
affected by any changes in rates under the PEP, the Company's performance based
ratemaking plan. PEP has proven to be a stabilizing force on electric rates,
with only moderate changes in rates taking place.
The ECO Plan, approved by the MPSC in 1992, provides for recovery of costs
associated with environmental projects approved by the MPSC, most of which are
required to comply with Clean Air Act Amendments of 1990 (Clean Air Act)
regulations. The ECO Plan is operated independently of PEP. The Clean Air Act
and other important environmental items are discussed later under "Environmental
Matters."
The Federal Energy Regulatory Commission (FERC) regulates wholesale rate
schedules and power sales contracts that Mississippi Power has with its sales
for resale customers. The FERC is currently reviewing the rate of return on
common equity included in these schedules and contracts and may require such
returns to be lowered, possibly retroactively.
Further discussion of PEP, the ECO Plan, and proceedings before the FERC is
made in Note 3 to the financial statements herein.
II-189
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS (continued)
Mississippi Power Company 1994 Annual Report
Future earnings in the near term will depend upon growth in energy 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 Mississippi Power's service area. However, the Energy
Policy Act of 1992 (Energy Act) is beginning to have a dramatic effect on the
future of the electric utility industry. The Energy Act promotes energy
efficiency, alternative fuel use, and increased competition for electric
utilities. The Southern Company is positioning the business to meet the
challenge of this major change in the traditional practice of selling
electricity. The Energy Act allows Independent Power Producers (IPPs) to access
a utility's transmission network in order to sell electricity to other
utilities. This may enhance the incentive of IPPs to build cogeneration plants
for a utility's large industrial and commercial customers and sell excess
generation to other utilities. Although the Energy Act does not require
transmission access to retail customers, retail wheeling initiatives are rapidly
evolving and becoming very prominent issues in several states. In order to
address these initiatives, numerous questions must be resolved with the most
complex ones relating to transmission pricing and recovery of stranded
investments. As the initiatives become a reality, the structure of the utility
industry could radically change. Therefore, unless Mississippi Power remains a
low-cost producer and provides quality service, the Company's retail energy
sales growth could be limited, and this could significantly erode earnings.
Conversely, being the low-cost producer could provide significant opportunities
to increase market share and profitability.
Mississippi Power is subject to the provisions of Financial Accounting
Standards Board 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, the Company would be required to write off related
regulatory assets and liabilities. See Note 1 to the financial statements under
"Regulatory Assets and Liabilities," for additional information.
FINANCIAL CONDITION
Overview
The principal changes in Mississippi Power's financial condition during 1994
were gross property additions to utility plant of $104 million, including the
commercial operation of a 75 megawatt capacity combustion turbine unit. Funding
for gross property additions and other capital requirements came primarily from
capital contributions from The Southern Company, the sale of first mortgage
bonds, the issuance of long-term notes payable, earnings and other operating
cash flows. The Statements of Cash Flows provide additional details.
Financing Activity
Mississippi Power continued to lower its financing costs in 1994 by issuing new
debt securities and retiring high-cost issues. The Company sold $35 million of
first mortgage bonds and issued $85 million in term notes. Retirements,
including maturities during 1994, totaled some $42 million of such securities.
(See the Statements of Cash Flows for further details.) Composite financing
rates for the years 1992 through 1994 as of year-end were as follows:
===========================================================
1994 1993 1992
---------------------------
Composite interest rate on
long-term debt 6.44% 6.57% 6.91%
Composite preferred stock
dividend rate 6.58% 6.58% 7.29%
===========================================================
Capital Structure
At year-end 1994, the Company's ratio of common equity to total capitalization
was 48.7 percent, compared to 49.8 percent in 1993 and 47.3 percent in 1992. The
lower equity ratio in 1994 can be attributed primarily to additional long-term
debt.
Capital Requirements for Construction
The Company's projected construction expenditures for the next three years total
$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. Also included in the estimates for property additions for
II-190
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS (continued)
Mississippi Power Company 1994 Annual Report
the three-year period is $2.9 million committed to meeting the requirements of
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.
Other Capital Requirements
In addition to the funds required for the Company's construction program,
approximately $96 million will be required by the end of 1997 for present
sinking fund requirements and maturities of long-term debt. Mississippi Power
plans to continue, when economically feasible, to retire higher cost debt and
preferred stock and replace these obligations with lower-cost capital.
Environmental Matters
In November 1990, the Clean Air Act was signed into law. Title IV of the Clean
Air Act -- the acid rain compliance provision of the law -- will have a
significant impact on Mississippi Power and the other operating companies of The
Southern Company. Specific reductions in sulfur dioxide and nitrogen oxide
emissions from fossil-fired generating plants will be required in two phases.
Phase I compliance began in 1995 and affects eight generating plants -- some 10
thousand megawatts of capacity or 35 percent of total capacity -- in the
Southern electric system. Phase II compliance is required in 2000, and all
fossil-fired generating plants in the Southern electric system will be affected.
In 1995, the Environmental Protection Agency (EPA) began issuing annual
sulfur dioxide emission allowances through the allowance trading program. An
emission allowance is the authority to emit one ton of sulfur dioxide during a
calendar year. The method for issuing allowances is based on the fossil fuel
consumed from 1985 through 1987 for each affected generating unit. Emission
allowances are transferable and can be bought, sold, or banked and used in the
future.
The sulfur dioxide emission allowance program is expected to minimize the
cost of compliance. The Southern Company's sulfur dioxide compliance strategy is
designed to take advantage of allowances as a compliance option.
The Southern Company expects to achieve Phase I sulfur dioxide compliance at
the eight affected plants by switching to low-sulfur coal, which has required
some equipment upgrades. This compliance strategy is expected to result in
unused emission allowances being banked for later use. Additional construction
expenditures were required to install equipment for the control of nitrogen
oxide emissions at these eight plants. Also, continuous emissions monitoring
equipment will be installed on all fossil-fired units. Under this Phase I
compliance approach, additional construction expenditures are estimated to total
approximately $300 million through 1995 for The Southern Company, of which
Mississippi Power's portion is approximately $65 million.
For Phase II sulfur dioxide compliance, The Southern Company could use
emission allowances banked during Phase I, increase fuel switching, install flue
gas desulfurization equipment at selected plants, and/or purchase more
allowances depending on the price and availability of allowances. Also, in Phase
II, equipment to control nitrogen oxide emissions will be installed on
additional system fossil-fired plants as required to meet anticipated Phase II
limits. Therefore, during the period 1996 to 2000, current compliance strategy
for The Southern Company could require total construction expenditures of
approximately $150 million, of which Mississippi Power's portion is
approximately $5 million. However, the full impact of Phase II compliance cannot
now be determined with certainty, pending the continuing development of a market
for emission allowances, the completion of EPA regulations, and the possibility
of new emission reduction technologies.
An average increase of up to 2 percent in revenue requirements from
customers could be necessary to fully recover the Company's cost of compliance
for both Phase I and II of Title IV of the Clean Air Act. Compliance costs
include construction expenditures, increased costs for switching to low-sulfur
coal, and costs related to emission allowances.
Mississippi Power's ECO Plan is designed to allow recovery of costs of
compliance with the Clean Air Act, as well as other environmental statutes and
regulations. The MPSC reviews environmental projects and the Company's
environmental policy through the ECO Plan. Under the ECO Plan, any increase in
II-191
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS (continued)
Mississippi Power Company 1994 Annual Report
the annual revenue requirement is limited to 2 percent of retail revenues.
However, the plan also provides for carryover of any amount over the 2 percent
limit into the next year's revenue requirement. Mississippi Power's management
believes that the ECO Plan provides for recovery of the Clean Air Act costs.
Title III of the Clean Air Act requires a multi-year EPA study of power
plant emissions of hazardous air pollutants. The EPA is scheduled to submit a
report to Congress on the results of this study by November 1995. The report
will include a decision on whether additional regulatory control of these
substances is warranted. Compliance with any new control standard could result
in significant additional costs. The impact of new standards -- if any -- will
depend on the development and implementation of applicable regulations.
The EPA continues to evaluate the need for a new short-term ambient air
quality standard for sulfur dioxide. Preliminary results from an EPA study on
the impact of a new standard indicate that a number of plants could be required
to install sulfur dioxide controls. These controls would be in addition to the
controls already required to meet the acid rain provisions of the Clean Air Act.
The EPA issued proposed rules in November 1994 and is required to take final
action on this issue in 1996. The impact of any new standard will depend on the
level chosen for the standard and cannot be determined at this time.
In addition, the EPA is evaluating the need to revise the ambient air
quality standards for particulate matter, nitrogen oxides, and ozone. The impact
of any new standard will depend on the level chosen for the standard and cannot
be determined at this time.
In 1995, the EPA may issue revised rules on air quality control regulations
related to stack height requirements of the Clean Air Act. The full impact of
the final rules cannot be determined at this time, pending their development and
implementation.
In 1993, the EPA issued a ruling confirming the non-hazardous status of coal
ash. However, the EPA has until 1998 to classify co-managed utility wastes --
coal ash and other utility wastes -- as either non-hazardous or hazardous. If
the EPA classifies the co-managed wastes as hazardous, then substantial
additional costs for the management of such wastes may be required. The full
impact of any change in the regulatory status will depend on the subsequent
development of co-managed waste requirements.
The Company must comply with other environmental laws and regulations that
cover the handling and disposal of hazardous waste. Under these various laws and
regulations, the Company 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 cleanup costs.
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 the Company'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. Results of this investigation are
expected to be available in early 1995. If this site were required to be
remediated, industry studies show the Company 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. Accordingly, no accrual has been
made for remediation in the accompanying financial statements.
Several major pieces of environmental legislation are in the process of
being reauthorized or amended by Congress. These include: the Clean Water Act;
the Resource Conservation and Recovery Act; the Comprehensive Environmental
Response, Compensation, and Liability Act; and the Endangered Species Act.
Changes to these laws could affect many areas of the Company's operations. The
full impact of these requirements cannot be determined at this time, pending the
development and implementation of applicable regulations.
Compliance with possible new legislation related to global climate change,
electromagnetic fields, and other environmental and health concerns could
significantly affect the Company. The impact of new legislation -- if any --
will depend on the subsequent development and implementation of applicable
regulations. In addition, the potential for lawsuits alleging damages caused by
electromagnetic fields exists.
II-192
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS (continued)
Mississippi Power Company 1994 Annual Report
Sources of Capital
At December 31, 1994, the Company had $70 million of committed credit in
revolving credit agreements and also had $27 million of committed short-term
credit lines. The Company had no short-term notes payable outstanding at year
end 1994.
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
obligations, and preferred stock, and the receipt of additional capital
contributions from The Southern Company. Mississippi Power is required to meet
certain coverage requirements specified in its mortgage indenture and corporate
charter to issue new first mortgage bonds and preferred stock. The Company's
coverage ratios are sufficiently high enough to permit, at present interest rate
levels, any foreseeable security sales. The amount of securities which the
Company will be permitted to issue in the future will depend upon market
conditions and other factors prevailing at that time.
II-193
<PAGE>
STATEMENTS OF INCOME
For the Years Ended December 31, 1994, 1993, and 1992
Mississippi Power Company 1994 Annual Report
<TABLE>
<CAPTION>
==========================================================================================
1994 1993 1992
------------------------------------------------------------------------------------------
<S> <C> <C> <C>
(in thousands)
Operating Revenues (Notes 1 and 3):
Revenues $ 489,624 $ 459,364 $ 424,392
Revenues from affiliates 9,538 15,519 10,055
------------------------------------------------------------------------------------------
Total operating revenues 499,162 474,883 434,447
------------------------------------------------------------------------------------------
Operating Expenses:
Operation --
Fuel 102,216 113,986 96,743
Purchased power from non-affiliates 2,711 2,198 1,337
Purchased power from affiliates 68,543 58,019 60,689
Other 97,988 100,381 90,392
Maintenance 45,785 44,001 43,165
Depreciation and amortization 35,716 33,099 32,789
Taxes other than income taxes 41,742 37,145 34,664
Federal and state income taxes (Note 8) 31,386 22,668 16,378
------------------------------------------------------------------------------------------
Total operating expenses 426,087 411,497 376,157
------------------------------------------------------------------------------------------
Operating Income 73,075 63,386 58,290
Other Income (Expense):
Allowance for equity funds used during construction 1,099 1,010 642
Interest income 87 517 766
Other, net 2,033 3,971 5,501
Income taxes applicable to other income (227) (1,158) (1,427)
------------------------------------------------------------------------------------------
Income Before Interest Charges 76,067 67,726 63,772
------------------------------------------------------------------------------------------
Interest Charges:
Interest on long-term debt 19,725 17,688 22,357
Allowance for debt funds used during construction (1,039) (788) (563)
Interest on notes payable 1,442 1,000 362
Amortization of debt discount, premium, and expense 1,479 1,262 630
Other interest charges 404 728 339
------------------------------------------------------------------------------------------
Net interest charges 22,011 19,890 23,125
------------------------------------------------------------------------------------------
Net Income 54,056 47,836 40,647
Dividends on Preferred Stock 4,899 5,400 3,857
------------------------------------------------------------------------------------------
Net Income After Dividends on Preferred Stock $ 49,157 $ 42,436 $ 36,790
==========================================================================================
The accompanying notes are an integral part of these statements.
</TABLE>
II-194
<PAGE>
STATEMENTS OF CASH FLOWS
For the Years ended December 31, 1994, 1993, and 1992
Mississippi Power Company 1994 Annual Report
<TABLE>
<CAPTION>
==========================================================================================
1994 1993 1992
------------------------------------------------------------------------------------------
(in thousands)
<S> <C> <C> <C>
Operating Activities:
Net income $ 54,056 $ 47,836 $ 40,647
Adjustments to reconcile net income to net
cash provided by operating activities --
Depreciation and amortization 47,827 45,660 41,472
Deferred income taxes 1,563 5,039 (5,473)
Allowance for equity funds used during construction (1,099) (1,010) (642)
Other, net 5,230 3,005 7,904
Changes in certain current assets and liabilities --
Receivables, net 3,066 (4,347) 1,002
Inventories (9,856) 11,119 975
Payables (8,754) 4,133 460
Other 3,334 (8,033) 6,095
------------------------------------------------------------------------------------------
Net cash provided from operating activities 95,367 103,402 92,440
------------------------------------------------------------------------------------------
Investing Activities:
Gross property additions (104,014) (139,976) (68,189)
Other (14,087) 7,562 4,235
------------------------------------------------------------------------------------------
Net cash used for investing activities (118,101) (132,414) (63,954)
------------------------------------------------------------------------------------------
Financing Activities:
Proceeds:
Capital contributions 25,000 30,036 26
Preferred stock - 23,404 35,000
First mortgage bonds 35,000 70,000 40,000
Pollution control bonds - 38,875 23,300
Other long-term debt 85,310 - -
Retirements:
Preferred stock - (23,404) -
First mortgage bonds (32,628) (51,300) (104,703)
Pollution control bonds (10) (25,885) (23,650)
Other long-term debt (9,299) (8,170) (6,212)
Notes payable, net (40,000) 9,000 26,500
Payment of preferred stock dividends (4,899) (5,400) (3,857)
Payment of common stock dividends (34,100) (29,000) (28,000)
Miscellaneous (1,201) (5,683) (7,821)
------------------------------------------------------------------------------------------
Net cash provided from (used for) financing activities 23,173 22,473 (49,417)
------------------------------------------------------------------------------------------
Net Change in Cash and Cash Equivalents 439 (6,539) (20,931)
Cash and Cash Equivalents at Beginning of Year 878 7,417 28,348
------------------------------------------------------------------------------------------
Cash and Cash Equivalents at End of Year $ 1,317 $ 878 $ 7,417
==========================================================================================
Supplemental Cash Flow Information:
Cash paid during the year for --
Interest (net of amount capitalized) $19,196 $15,697 $22,941
Income taxes 31,115 29,009 19,514
------------------------------------------------------------------------------------------
( ) Denotes use of cash.
The accompanying notes are an integral part of these statements.
</TABLE>
II-195
<PAGE>
BALANCE SHEETS
At December 31, 1994 and 1993
Mississippi Power Company 1994 Annual Report
<TABLE>
<CAPTION>
============================================================================================
ASSETS 1994 1993
--------------------------------------------------------------------------------------------
(in thousands)
<S> <C> <C>
Utility Plant:
Plant in service, at original cost (Notes 1 and 6) $ 1,385,032 $ 1,238,847
Less accumulated provision for depreciation 477,098 462,725
--------------------------------------------------------------------------------------------
907,934 776,122
Construction work in progress 44,838 108,063
--------------------------------------------------------------------------------------------
Total 952,772 884,185
--------------------------------------------------------------------------------------------
Other Property and Investments 3,353 11,289
--------------------------------------------------------------------------------------------
Current Assets:
Cash and cash equivalents 1,317 878
Receivables-
Customer accounts receivable 27,865 31,376
Other accounts and notes receivable 6,599 5,581
Affiliated companies 6,058 6,698
Accumulated provision for uncollectible accounts (670) (737)
Fossil fuel stock, at average cost 16,885 11,185
Materials and supplies, at average cost 25,301 21,145
Current portion of deferred fuel charges (Note 5) 1,068 440
Current portion of accumulated deferred income taxes (Note 8) 5,410 4,316
Prepaid federal income taxes 5,019 3,648
Prepayments 760 1,007
Vacation pay deferred (Note 1) 4,588 4,797
--------------------------------------------------------------------------------------------
Total 100,200 90,334
--------------------------------------------------------------------------------------------
Deferred Charges:
Debt expense and loss, being amortized 10,929 11,666
Deferred fuel charges (Note 5) 9,000 17,520
Deferred charges related to income taxes (Note 8) 25,036 25,267
Deferred early retirement program costs (Note 2) 11,286 -
Miscellaneous 11,135 10,073
--------------------------------------------------------------------------------------------
Total 67,386 64,526
--------------------------------------------------------------------------------------------
Total Assets $ 1,123,711 $ 1,050,334
============================================================================================
The accompanying notes are an integral part of these statements.
</TABLE>
II-196
<PAGE>
BALANCE SHEETS
At December 31, 1994 and 1993
Mississippi Power Company 1994 Annual Report
<TABLE>
<CAPTION>
============================================================================================
CAPITALIZATION AND LIABILITIES 1994 1993
--------------------------------------------------------------------------------------------
(in thousands)
<S> <C> <C>
Capitalization (See accompanying statements):
Common stock equity $ 361,753 $ 321,768
Preferred stock 74,414 74,414
Long-term debt 306,522 250,391
--------------------------------------------------------------------------------------------
Total 742,689 646,573
--------------------------------------------------------------------------------------------
Current Liabilities:
Long-term debt due within one year (Note 10) 41,199 19,345
Notes payable (Note 5) - 40,000
Accounts payable-
Affiliated companies 3,337 10,197
Other 31,144 50,731
Customer deposits 2,712 2,786
Taxes accrued-
Federal and state income (Note 8) 433 186
Other 31,224 26,952
Interest accrued 4,427 4,237
Miscellaneous 14,613 14,120
--------------------------------------------------------------------------------------------
Total 129,089 168,554
--------------------------------------------------------------------------------------------
Deferred Credits and Other Liabilities:
Accumulated deferred income taxes (Note 8) 129,505 124,334
Accumulated deferred investment tax credits 31,228 32,710
Deferred credits related to income taxes (Note 8) 45,832 48,228
Accumulated provision for property damage (Note 1) 10,905 10,538
Miscellaneous 34,463 19,397
--------------------------------------------------------------------------------------------
Total 251,933 235,207
--------------------------------------------------------------------------------------------
Commitments and Contingent Matters (Notes 2, 3, 4, and 5)
Total Capitalization and Liabilities $ 1,123,711 $ 1,050,334
============================================================================================
The accompanying notes are an integral part of these statements.
</TABLE>
II-197
<PAGE>
STATEMENTS OF CAPITALIZATION
At December 31, 1994 and 1993
Mississippi Power Company 1994 Annual Report
<TABLE>
<CAPTION>
=========================================================================================================
1994 1993 1994 1993
---------------------------------------------------------------------------------------------------------
(in thousands) (percent of total)
<S> <C> <C> <C> <C>
Common Stock Equity:
Common stock, without par value --
Authorized -- 1,130,000 shares
Outstanding -- 1,121,000 shares in
1994 and 1993 $ 37,691 $ 37,691
Paid-in capital 179,362 154,362
Premium on preferred stock 372 372
Retained earnings (Note 11) 144,328 129,343
---------------------------------------------------------------------------------------------------------
Total common stock equity 361,753 321,768 48.7 % 49.8 %
---------------------------------------------------------------------------------------------------------
Cumulative Preferred Stock:
$100 par value --
Authorized -- 1,244,139 shares
Outstanding -- 744,139 shares in 1994
and 1993
4.40% 4,000 4,000
4.60% 2,010 2,010
4.72% 5,000 5,000
6.32% 15,000 15,000
6.65% 8,404 8,404
7.00% 5,000 5,000
7.25% 35,000 35,000
--------------------------------------------------------------------------------------------------------
Total (annual dividend requirement -- $4,899,000) 74,414 74,414 10.0 11.5
--------------------------------------------------------------------------------------------------------
Long-Term Debt:
First mortgage bonds --
Maturity Interest Rates
-------- --------------
June 1, 1994 4 5/8% - 10,000
July 1, 1995 4 3/4% - 11,000
August 1, 1996 6% - 10,000
March 1, 1998 5 3/8% 35,000 35,000
2000 to 2003 6 5/8% to 7 5/8% 40,000 40,000
March 1, 2004 6.60% 35,000 -
May 1, 2021 9 1/4% 47,072 48,700
June 1, 2023 7.45% 35,000 35,000
--------------------------------------------------------------------------------------------------------
Total first mortgage bonds 192,072 189,700
Pollution control obligations (Note 9) 63,155 63,165
Other long-term debt (Note 9) 95,689 19,678
Unamortized debt premium (discount), net (3,195) (2,807)
--------------------------------------------------------------------------------------------------------
Total long-term debt (annual interest
requirement--$22,606,000) 347,721 269,736
Less amount due within one year (Note 10) 41,199 19,345
--------------------------------------------------------------------------------------------------------
Long-term debt excluding amount due within one year 306,522 250,391 41.3 38.7
--------------------------------------------------------------------------------------------------------
Total Capitalization $ 742,689 $ 646,573 100.0% 100.0%
========================================================================================================
The accompanying notes are an integral part of these statements.
</TABLE>
II-198
<PAGE>
STATEMENTS OF RETAINED EARNINGS
For the Years Ended December 31, 1994, 1993, and 1992
Mississippi Power Company 1994 Annual Report
<TABLE>
<CAPTION>
===========================================================================================
1994 1993 1992
------------------------------------------------------------------------------------------
(in thousands)
<S> <C> <C> <C>
Balance at Beginning of Period $ 129,343 $ 118,429 $ 111,670
Net income after dividends on preferred stock 49,157 42,436 36,790
Cash dividends on common stock (34,100) (29,000) (28,000)
Preferred stock transactions and other, net (72) (2,522) (2,031)
-------------------------------------------------------------------------------------------
Balance at End of Period (Note 11) $ 144,328 $ 129,343 $ 118,429
===========================================================================================
STATEMENTS OF PAID-IN CAPITAL
For the Years Ended December 31, 1994, 1993, and 1992
===========================================================================================
1994 1993 1992
-------------------------------------------------------------------------------------------
(in thousands)
Balance at Beginning of Period $ 154,362 $ 124,326 $ 124,300
Contributions to capital by parent company 25,000 30,036 26
-------------------------------------------------------------------------------------------
Balance at End of Period $ 179,362 $ 154,362 $ 124,326
===========================================================================================
The accompanying notes are an integral part of these statements.
</TABLE>
II-199
<PAGE>
NOTES TO FINANCIAL STATEMENTS
Mississippi Power Company 1994 Annual Report
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:
General
Mississippi Power Company is a wholly owned subsidiary of The Southern Company,
which is the parent company of five operating companies, Southern Company
Services (SCS), Southern Communications Services (Southern Communications),
Southern Electric International (Southern Electric), Southern Nuclear Operating
Company (Southern Nuclear), and The Southern Development and Investment Group
(SDIG). The operating companies (Alabama Power Company, Georgia Power Company,
Gulf Power Company, Mississippi Power Company, and Savannah Electric and Power
Company) provide electric service in four southeastern states. Contracts among
the companies--dealing with jointly owned generating facilities, interconnecting
transmission lines, and the exchange of electric power--are regulated by the
Federal Energy Regulatory Commission (FERC) or the Securities and Exchange
Commission. SCS provides, at cost, specialized services to The Southern Company
and to the subsidiary companies. Southern Communications, beginning in mid-1995,
will provide digital wireless communications services--over the 800-megahertz
frequency band--to The Southern Company's subsidiaries and also will market
these services to the public within the Southeast. Southern Electric designs,
builds, owns, and operates power production facilities and provides a broad
range of technical services to industrial companies and utilities in the United
States and a number of international markets. Southern Nuclear provides services
to The Southern Company's nuclear power plants. SDIG develops new business
opportunities related to energy products and services.
The Southern Company is registered as a holding company under the Public
Utility Holding Company Act of 1935 (PUHCA). Both The Southern Company and its
subsidiaries are subject to the regulatory provisions of the PUHCA. Mississippi
Power is also subject to regulation by the FERC and the Mississippi Public
Service Commission (MPSC). The Company follows generally accepted accounting
principles and complies with the accounting policies and practices prescribed by
the respective commissions.
Certain prior years' data presented in the financial statements have been
reclassified to conform with current year presentation.
Regulatory Assets and Liabilities
Mississippi Power is subject to the provisions of Financial Accounting Standards
Board (FASB) Statement No. 71, Accounting for the Effects of Certain Types of
Regulation. Regulatory assets represent probable future revenues to the Company
associated with certain costs that are expected to be recovered from customers
through the ratemaking process. Regulatory liabilities represent probable future
reductions in revenues associated with amounts that are to be credited to
customers through the ratemaking process. Regulatory assets and (liabilities)
reflected in the Balance Sheets as of December 31 relate to: (in thousands)
===============================================================
1994 1993
------------------------
Deferred income taxes $25,036 $25,267
Vacation pay 4,588 4,797
Work force reduction costs 11,286 -
Deferred fuel charges 10,068 17,960
Premium on reacquired debt 9,571 10,563
Property damage reserve (10,905) (10,538)
Deferred income tax credits (45,832) (48,228)
Other, net (3,383) (3,653)
---------------------------------------------------------------
Total $ 429 $(3,832)
===============================================================
In the event that a portion of the Company's operations is no longer subject
to the provisions of Statement No. 71, the Company would be required to write
off the related regulatory assets and liabilities. In addition, the Company
would be required to determine any impairment to other assets, including plant,
and write down the assets to their fair value.
Revenues
Mississippi Power accrues revenues for service rendered but unbilled at the end
of each fiscal period. The Company's retail and wholesale rates include
provisions to adjust billings for fluctuations in fuel and the energy component
of purchased power. Retail rates also include provisions to adjust billings for
fluctuations in costs for ad valorem taxes and certain qualifying environmental
II-200
<PAGE>
NOTES (continued)
Mississippi Power Company 1994 Annual Report
costs. Revenues are adjusted for differences between actual allowable amounts
and the amounts included in rates.
The Company has a diversified base of customers. No single customer or
industry comprised 10 percent or more of revenues. In 1994, uncollectible
accounts continued to average less than 1 percent of revenues.
Depreciation
Depreciation of the original cost of depreciable utility plant in service is
provided by using composite straight-line rates which approximated 3.2 percent
in 1994, 3.1 percent in 1993, and 3.3 percent in 1992. When property subject to
depreciation is retired or otherwise disposed of in the normal course of
business, its cost -- together with the cost of removal, less salvage -- is
charged to the accumulated provision for depreciation. Minor items of property
included in the original cost of the plant are retired when the related property
unit is retired.
Income Taxes
Mississippi Power provides deferred income taxes for all significant income tax
temporary differences. Investment tax credits utilized are deferred and
amortized to income over the average lives of the related property.
Effective January 1, 1993, Mississippi Power adopted FASB Statement No.
109, Accounting for Income Taxes. Statement No. 109 required, among other
things, conversion to the liability method of accounting for accumulated
deferred income taxes. See Note 8 to the financial statements for additional
information about Statement No. 109.
Allowance for Funds Used During Construction (AFUDC)
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 increases the revenue requirement
over the service life of the plant through a higher rate base and higher
depreciation expense. The composite rates used to capitalize the cost of funds
devoted to construction were 6.9 percent in 1994, 6.8 percent in 1993, and 8.2
percent in 1992. AFUDC (net of income taxes), as a percent of net income after
dividends on preferred stock, was 3.5 percent in 1994 and 1993 and 2.7 percent
in 1992.
Utility Plant
Utility plant is stated at original cost. This cost includes: materials; labor;
minor items of property; appropriate administrative and general costs;
payroll-related costs such as taxes, pensions, and other benefits; and the
estimated cost of funds used during construction. The cost of maintenance,
repairs, and replacement of minor items of property is charged to maintenance
expense except for the maintenance of coal cars and a portion of the railway
track maintenance, which are charged to fuel stock. The cost of replacements of
property (exclusive of minor items of property) is charged to utility plant.
Cash and Cash Equivalents
For purposes of the Statements of Cash Flows, temporary cash investments are
considered cash equivalents. Temporary cash investments are securities with
original maturities of 90 days or less.
Financial Instruments
In accordance with FASB Statement No. 107, Disclosure About Fair Value of
Financial Instruments, all financial instruments of the Company for which the
carrying amount does not approximate fair value, must be disclosed. At December
31, 1994, the fair value of long-term debt was $331 million and the carrying
amount was $348 million. At December 31, 1993, the fair value of long-term debt
was $278 million and the carrying amount was $270 million. The fair value for
long-term debt was based on either closing market price or closing price of
comparable instruments.
Materials and Supplies
Generally, materials and supplies include the cost of transmission, distribution
and generating plant materials. Materials are charged to inventory when
purchased and then expensed or capitalized to plant, as appropriate, when used
or installed.
II-201
<PAGE>
NOTES (continued)
Mississippi Power Company 1994 Annual Report
Vacation Pay
Mississippi Power's employees earn their vacation in one year and take it in the
subsequent year. However, for ratemaking purposes, vacation pay is recognized as
an allowable expense only when paid. Consistent with this ratemaking treatment,
the Company accrues a current liability for earned vacation pay and records a
current asset representing the future recoverability of this cost. Such amounts
were $4.6 million and $4.8 million at December 31, 1994 and 1993, respectively.
In 1995, an estimated 78 percent of the 1994 deferred vacation cost will be
expensed, and the balance will be charged to construction and other accounts.
Provision for Property Damage
Mississippi Power is self-insured for the cost of storm, fire and other
uninsured casualty damage to its property, including transmission and
distribution facilities. As permitted by regulatory authorities, the Company
provided for such costs by charges to income of $1.1 million in 1994 and $1.5
million in 1993 and 1992. The cost of repairing damage resulting from such
events that individually exceed $50 thousand is charged to the accumulated
provision to the extent it is available. As of December 31, 1994, the
accumulated provision amounted to $10.9 million, the maximum allowed for 1994.
Effective January 1995, regulatory treatment by the MPSC allows a maximum
accumulated provision of $18 million.
2. RETIREMENT BENEFITS:
Pension Plan
Mississippi Power has a defined benefit, trusteed, non-contributory pension plan
that covers substantially all regular employees. Benefits are based on the
greater of amounts resulting from two different formulas: years of service and
final average pay or years of service and a flat-dollar benefit. The Company
uses the "entry age normal method with a frozen initial liability" actuarial
method for funding purposes, subject to limitations under federal income tax
regulations. Amounts funded to the pension trust are primarily invested in
equity and fixed-income securities. FASB Statement No. 87, Employers' Accounting
for Pensions, requires use of the "projected unit credit" actuarial method for
financial reporting purposes.
Postretirement Benefits
Mississippi Power also provides certain medical care and life insurance benefits
for retired employees. Substantially all employees may become eligible for these
benefits when they retire. Qualified trusts are funded to the extent required by
the Company's regulatory commissions. Amounts funded are primarily invested in
debt and equity securities.
Effective January 1, 1993, Mississippi Power adopted FASB Statement No.
106, Employers' Accounting for Postretirement Benefits Other Than Pensions, on a
prospective basis. Statement No. 106 requires that medical care and life
insurance benefits for retired employees be accounted for on an accrual basis
using a specified actuarial method, "benefit/years-of-service." The cost of
postretirement benefits is reflected in rates on a current basis.
Prior to 1993, Mississippi Power recognized these benefit costs on an
accrual basis using the "aggregate cost" actuarial method, which spreads the
expected cost of such benefits over the remaining periods of employees' service
as a level percentage of payroll costs. The total cost of such benefits
recognized by the Company was $3.6 million in 1992.
Funded Status and Cost of Benefits
Shown in the following tables are actuarial results and assumptions for
pension and postretirement medical and life insurance benefits as computed under
the requirements of FASB Statement Nos. 87 and 106, respectively. The funded
status of the plans at December 31 was as follows:
II-202
<PAGE>
NOTES (continued)
Mississippi Power Company 1994 Annual Report
===============================================================
Pension
-------------------
1994 1993
-------------------
(in thousands)
Actuarial present value of
benefit obligation:
Vested benefits $80,603 $73,735
Non-vested benefits 2,966 3,245
--------------------------------------------------------------
Accumulated benefit obligation 83,569 76,980
Additional amounts related to
projected salary increases 27,292 24,434
---------------------------------------------------------------
Projected benefit obligation 110,861 101,414
Less:
Fair value of plan assets 145,598 154,224
Unrecognized net gain (37,485) (49,239)
Unrecognized prior service cost 3,109 3,590
Unrecognized transition asset (6,635) (7,188)
---------------------------------------------------------------
Prepaid asset (accrued liability)
recognized in the
Balance Sheets $(6,274) $ (27)
===============================================================
Postretirement Medical
------------------------
1994 1993
------------------------
(in thousands)
Actuarial present value of
benefit obligation:
Retirees and dependents $18,106 $10,408
Employees eligible to retire 774 3,752
Other employees 19,124 19,389
---------------------------------------------------------------
Accumulated benefit obligation 38,004 33,549
Less:
Fair value of plan assets 6,460 6,271
Unrecognized net loss (gain) 2,301 3,500
Unrecognized transition
obligation 15,319 16,540
---------------------------------------------------------------
Accrued liability recognized in
the Balance Sheets $13,924 $ 7,238
===============================================================
Postretirement Life
----------------------
1994 1993
----------------------
(in thousands)
Actuarial present value of
benefit obligation:
Retirees $4,727 $3,315
Other employees 3,727 4,596
-----------------------------------------------------------
Accumulated benefit obligation 8,454 7,911
Less:
Fair value of plan assets 148 84
Unrecognized net loss (gain) (550) (632)
Unrecognized transition
obligation 3,349 3,606
-----------------------------------------------------------
Accrued liability recognized in
the Balance Sheets $5,507 $4,853
===========================================================
The weighted average rates assumed in the above actuarial calculations were:
==========================================================
1994 1993 1992
----------------------------
Discount 8.0% 7.5% 8.0%
Annual salary increase 5.5 5.0 6.0
Long-term return on
plan assets 8.5 8.5 8.5
----------------------------------------------------------
An additional assumption used in measuring the accumulated postretirement
medical benefit obligation was a weighted average medical care cost trend rate
of 10.5 percent for 1994 decreasing gradually to 6.0 percent through the year
2000 and remaining at that level thereafter. An annual increase in the assumed
medical care cost trend rate of 1 percent would increase the accumulated medical
benefit obligation as of December 31, 1994, by $6.7 million and the aggregate of
the service and interest cost components of the net retiree medical cost by $1.1
million.
II-203
<PAGE>
NOTES (continued)
Mississippi Power Company 1994 Annual Report
Components of the plans' net cost are shown below:
================================================================
Pension
------------------------------
1994 1993 1992
------------------------------
(in thousands)
Benefits earned during
the year $ 3,780 $ 3,792 $ 3,595
Interest cost on
projected benefit
obligation 7,503 7,296 6,886
Actual (return) loss on
plan assets 3,244 (20,017) (5,812)
Net amortization and
deferral (16,048) 8,741 (4,265)
----------------------------------------------------------------
Net pension cost (income) $(1,521) $ (188) $ 404
================================================================
Of the above net pension amounts recorded, $(1.1) million in 1994, $(170)
thousand in 1993, and $269 thousand in 1992, and were recorded in operating
expenses, and the remainder was recorded in construction and other accounts.
Postretirement Medical
---------------------------
1994 1993
---------------------------
(in thousands)
Benefits earned during the year $1,486 $1,149
Interest cost on accumulated
benefit obligation 2,666 2,187
Amortization of transition
obligation over 20 years 864 871
Actual (return) loss on
plan assets 127 (808)
Net amortization and deferral (562) 343
----------------------------------------------------------------
Net postretirement cost $4,581 $3,742
================================================================
Postretirement Life
---------------------
1994 1993
---------------------
(in thousands)
Benefits earned during the year $ 274 $ 299
Interest cost on accumulated
benefit obligation 585 624
Amortization of transition
obligation over 20 years 179 180
Actual (return) loss on
plan assets 5 (6)
Net amortization and deferral (13) -
---------------------------------------------------------------
Net postretirement cost $1,030 $1,097
===============================================================
Of the above net postretirement medical and life insurance costs recorded,
$4.4 million in 1994 and $3.9 million in 1993 was charged to operating expense
and the remainder was charged to construction and other accounts.
Work Force Reduction Programs
During 1994, Mississippi Power and SCS instituted work force reduction
programs. The costs of the SCS work force reduction program were apportioned
among the various entities that form the Southern electric system, with the
Company's portion amounting to $1.4 million. The Company instituted an early
retirement incentive program in April 1994 and deferred the related costs of
approximately $12.9 million. The Company received authority from the MPSC to
defer these costs, as well as its portion of the costs of the SCS program, and
to amortize over a period not to exceed 60 months, beginning no later than
January 1995. During 1994, the Company expensed $3.0 million of the cost of
these programs.
3. LITIGATION AND REGULATORY MATTERS:
Retail Rate Adjustment Plans
Mississippi Power's retail base rates are set under a Performance Evaluation
Plan (PEP). The current version, PEP-2 was approved by the MPSC in January 1994.
PEP-2 was designed with the MPSC objectives that the plan would reduce the
impact of rate changes on the customer and provide incentives for Mississippi
Power to keep customer prices low. PEP-2 includes a mechanism for sharing rate
adjustments based on the Company's ability to maintain low rates for customers
and on the Company's performance as measured by three indicators that emphasize
price and service to the customer. PEP-2 provides for semiannual evaluations of
Mississippi's performance-based return on investment. Any change in rates is
limited to 2 percent of retail revenues per evaluation period. PEP-2 will remain
in effect until the MPSC modifies or terminates the plan. During 1994, there was
no increase under PEP-2.
Environmental Compliance Overview Plan
The MPSC approved Mississippi Power's ECO Plan in 1992. The plan establishes
procedures to facilitate the MPSC's overview of the Company's environmental
strategy and provides for recovery of costs associated with environmental
projects approved by the MPSC. Under the ECO Plan any increase in the annual
revenue requirement is limited to 2 percent of retail revenues. However, the
plan also provides for carryover of any amount over the 2 percent limit into the
next year's revenue requirement. The ECO Plan has resulted in annual retail rate
increases, the latest being a $7.6 million increase effective April 1994. On
II-204
<PAGE>
NOTES (continued)
Mississippi Power Company 1994 Annual Report
January 31, 1995, the Company filed the ECO Plan with the MPSC requesting an
annual retail rate increase of $3.7 million, which included $1.6 million of 1994
carryover.
Mississippi Power conducts studies, when possible, to determine the extent
of any required clean-up costs. Should remediation be determined to be probable,
reasonable estimates of costs to clean up such sites are developed and
recognized in the financial statements. See "Environmental Matters" in the
Management's Discussion and Analysis for information on a manufactured gas plant
site.
FERC Reviews Equity Returns
In May 1991, the FERC ordered that hearings be conducted concerning the
reasonableness of the Southern electric system's wholesale rate schedules and
contracts that have a return on equity of 13.75 percent or greater. The
contracts that could be affected by the hearings include substantially all of
the transmission, unit power, long-term power and other similar contracts,
including the Company's Transmission Facilities Agreement (TFA) discussed in
Note 5 under "Lease Agreements." Any changes in the rate of return on common
equity that may require refunds as a result of this proceeding would be
substantially for the period beginning in July 1991 and ending in October 1992.
In August 1992, a FERC administrative law judge issued an opinion that
changes in rate schedules and contracts were not necessary and that the FERC
staff failed to show how any changes were in the public interest. The FERC staff
has filed exceptions to the administrative law judge's opinion, and the matter
remains pending before the FERC.
In August 1994, the FERC instituted another proceeding based on
substantially the same issues as in the 1991 proceeding. The second period under
review for possible refunds began in October 1994 and is scheduled to continue
until January 1996.
If the rates of return on common equity recommended by the FERC staff were
applied to all of the schedules and contracts involved in both proceedings and
refunds were ordered, the amount of refunds could range up to approximately $0.6
million at December 31, 1994. Although the final outcome of this matter cannot
now be determined, in management's opinion, the final outcome will not result in
changes that would have a material adverse effect on the Company's financial
statements.
4. CONSTRUCTION PROGRAM:
Mississippi Power is engaged in continuous construction programs, the costs of
which are currently estimated to total some $78 million in 1995, $73 million in
1996, and $72 million in 1997. These estimates include AFUDC of $1.7 million in
1995, $2.2 million in 1996, and $1.5 million in 1997.
The construction program is subject to periodic review and revision, and
actual construction costs may vary from the above estimates because of numerous
factors. These factors include changes in business conditions; revised load
growth estimates; changes in environmental regulations; increasing costs of
labor, equipment and materials; and cost of capital. The Company does not have
any new generating plants under construction. However, significant construction
will continue related to transmission and distribution facilities and the
upgrading and extension of the useful lives of generating plants.
See "Environmental Matters" in Management's Discussion and Analysis for
information on the impact of the Clean Air Act Amendments of 1990 and other
environmental matters.
5. FINANCING AND COMMITMENTS:
Financing
Mississippi Power's construction program is expected to be financed from
internal and other sources, such as the issuance of additional long-term debt
and preferred stock and the receipt of capital contributions from The Southern
Company.
The amounts of first mortgage bonds and preferred stock which can be issued
in the future will be contingent upon market conditions, adequate earnings
levels, regulatory authorizations and other factors. See "Sources of Capital" in
Management's Discussion and Analysis for information regarding the Company's
coverage requirements.
At December 31, 1994, Mississippi Power had unused committed credit
agreements with banks for $27 million. Additionally, Mississippi Power had $70
million of unused committed credit agreements in the form of revolving credit
II-205
<PAGE>
NOTES (continued)
Mississippi Power Company 1994 Annual Report
agreements expiring at various dates during 1995 and in 1997. The agreements
expiring December 31, 1997, for $40 million allow short-term borrowings to be
converted into term loans, payable in 12 equal quarterly installments, with the
first installment due at the end of the first calendar quarter after the
applicable termination date or at an earlier date at the Company's option. In
connection with these credit arrangements, the Company agrees to pay commitment
fees based on the unused portions of the commitments or to maintain compensating
balances with the banks. The Company had no short-term borrowings outstanding at
year-end 1994.
Assets Subject to Lien
Mississippi Power's mortgage indenture dated as of September 1, 1941, as amended
and supplemented, which secures the first mortgage bonds issued by the Company,
constitutes a direct first lien on substantially all the Company's fixed
property and franchises.
Lease Agreements
In 1984, Mississippi Power and Gulf States Utilities Company (Gulf States)
entered into a forty-year transmission facilities agreement whereby Gulf States
began paying a use fee to the Company covering all expenses relative to
ownership and operation and maintenance of a 500 kV line, including amortization
of its original $57 million cost. For the three years ended 1994 use fees
collected under this agreement, net of related expenses, amounted to $3.9
million each year, and are included with other income, net, in the Statements of
Income. For other information see Note 3 under "FERC Reviews Equity Returns."
In 1989, Mississippi Power entered into a twenty-two
year lease agreement for the use of 495 aluminum railcars. In 1994, a second
lease agreement for the use of 250 additional aluminum railcars was also entered
into for twenty-two years. Both of these leases, totaling 745 railcars, were for
the transport of coal at Plant Daniel. Gulf Power, as joint owner of Plant
Daniel, is responsible for one half of the lease cost. The Company's share (50%)
of the leases is charged to fuel inventory and allocated to fuel expense as the
fuel is consumed. The lease cost charged to inventory was $1.2 million in each
of the past three years. For the year 1995, the Company's annual lease payment
will be $2.6 million, of which $1.2 million was charged to inventory in 1994.
Lease payments will be approximately $1.7 million per year for the years 1996
through 1999. Lease payments after 1999 total approximately $26.1 million. The
Company has the option to purchase the 745 railcars at the greater of the
termination value or the fair market value, or to renew the leases at the end of
the lease term.
Fuel Commitments
To supply a portion of the fuel requirements of its generating plants,
Mississippi Power has entered into various long-term commitments for the
procurement of fuel. In most cases, these contracts contain provisions for price
escalations, minimum production levels, and other financial commitments. Total
estimated obligations were approximately $393 million at December 31, 1994.
Additional commitments for fuel will be required in the future to supply the
Company's fuel needs.
In order to take advantage of lower cost coal supplies, agreements were
reached in 1986 to terminate two contracts for the supply of coal to Plant
Daniel, which is jointly owned by Mississippi Power and Gulf Power, an operating
affiliate. The Company's portion of this payment was about $60 million. In
accordance with the ratemaking treatment, the cost to terminate the contracts is
being amortized through 1995 to match costs with savings achieved. The remaining
unamortized amount of Mississippi Power's share of principal payments to the
suppliers totaled $10.1 million at December 31, 1994.
6. JOINT OWNERSHIP AGREEMENTS:
Mississippi Power and Alabama Power own as tenants in common Greene County
Electric Generating Plant (coal) located in Alabama; and Mississippi Power and
Gulf Power own as tenants in common Daniel Electric Generating Plant (coal)
located in Mississippi. At December 31, 1994, Mississippi Power's percentage
ownership and investment in these jointly owned facilities were as follows:
==========================================================================
Company's
Generating Total Percent Gross Accumulated
Plant Capacity Ownership Investment Depreciation
---------- --------- --------- ----------- -------------
(Megawatts) (in thousands)
Greene
County 500 40% $ 57,567 $29,742
Daniel 1,000 50% 219,870 90,908
--------------------------------------------------------------------------
II-206
<PAGE>
NOTES (continued)
Mississippi Power Company 1994 Annual Report
Mississippi Power's share of plant operating expenses is included in the
corresponding operating expenses in the Statements of Income.
7. LONG-TERM POWER SALES AGREEMENTS:
General
Mississippi Power and the other operating affiliates of The Southern Company
have entered into long-term contractual agreements for the sale of capacity and
energy to certain non-affiliated utilities located outside of the system's
service area. The agreements for non-firm capacity expired in 1994. Some of
these agreements (unit power sales) are firm commitments and pertain to capacity
related to specific generating units. Mississippi Power's participation in firm
production capacity unit power sales ended in 1989. However, the Company
continues to participate in transmission and energy sales under the unit power
sales agreements. Because the energy is generally sold at variable costs under
these agreements, only revenues from capacity sales affect profitability.
Off-system capacity revenues for the Company have been as follows:
============================================================
Other
Year Unit Power Long-Term Total
------------------------------------------------------------
(in thousands)
1994 $ 660 $1,305 $1,965
1993 1,571 2,620 4,191
1992 2,168 1,405 3,573
------------------------------------------------------------
In 1994, long-term non-firm power of 200 megawatts was sold by the Southern
electric system to Florida Power Corporation until the contract expired at
year-end.
8. INCOME TAXES:
Effective January 1, 1993, Mississippi Power adopted FASB Statement No. 109,
Accounting for Income Taxes. The adoption resulted in the recording of
additional deferred income taxes and related regulatory assets and liabilities.
At December 31, 1994, the tax-related regulatory assets to be recovered from
customers were $25 million. These assets are attributable to tax benefits flowed
through to customers in prior years and to taxes applicable to capitalized
AFUDC. At December 31, 1994, the tax-related regulatory liabilities to be
refunded to customers were $46 million. These liabilities are attributable to
deferred taxes previously recognized at rates higher than current enacted tax
law and unamortized investment tax credits.
Details of the federal and state income tax provisions are shown below:
==================================================================
1994 1993 1992
------------------------------
(in thousands)
Total provision for
income taxes
Federal --
Currently payable $26,072 $15,842 $20,286
Deferred --current year 6,313 5,158 (1,578)
--reversal of
prior years (5,161) (820) (3,931)
------------------------------------------------------------------
27,224 20,180 14,777
------------------------------------------------------------------
State --
Currently payable 3,978 2,945 2,992
Deferred --current 1,669 1,339 218
--reversal of
prior years (1,258) (638) (182)
------------------------------------------------------------------
4,389 3,646 3,028
------------------------------------------------------------------
Total 31,613 23,826 17,805
Less income taxes charged
to other income 227 1,158 1,427
------------------------------------------------------------------
Federal and state
income taxes charged
to operations $31,386 $22,668 $16,378
==================================================================
The tax effects of temporary differences between the carrying amounts of
assets and liabilities in the financial statements and their respective tax
II-207
<PAGE>
NOTES (continued)
Mississippi Power Company 1994 Annual Report
bases, which give rise to deferred tax assets and liabilities are as follows:
===============================================================
1994 1993
-------------------------
(in thousands)
Deferred tax liabilities:
Accelerated depreciation $138,281 $130,299
Basis differences 11,645 11,332
Coal contract buyouts 3,851 6,870
Other 17,908 18,719
---------------------------------------------------------------
Total 171,685 167,220
---------------------------------------------------------------
Deferred tax assets:
Other property
basis differences 27,375 28,779
Pension and
other benefits 5,386 4,625
Property insurance 4,171 4,031
Unbilled fuel 3,649 4,205
Other 7,009 5,562
--------------------------------------------------------------
Total 47,590 47,202
--------------------------------------------------------------
Net deferred tax
liabilities 124,095 120,018
Portion included in
current assets, net 5,410 4,316
--------------------------------------------------------------
Accumulated deferred
income taxes in the
Balance Sheets $129,505 $124,334
==============================================================
In 1989, under order of the MPSC, Mississippi Power began amortizing
deferred income taxes not covered by the Internal Revenue Service normalization
requirements, that had been recorded at rates higher than those specified by the
current statutory income tax rules. This amortization occurred over a 60-month
period, the effect of which was a reduction of income tax expense of
approximately $2.7 million per year. This tax rate differential has been fully
amortized.
Deferred investment tax credits are amortized over the life of the related
property with such amortization normally applied as a credit to reduce
depreciation in the Statements of Income. Credits amortized in this manner
amounted to $1.5 million in both 1994 and 1993 and $1.4 million in 1992. At
December 31, 1994, all investment tax credits available to reduce federal income
taxes payable had been utilized.
A reconciliation of the federal statutory income tax rate to the effective
income tax rate is as follows:
=============================================================
1994 1993 1992
----------------------------
Total effective tax rate 37% 33% 30%
State income tax, net of
federal income tax benefit (3)% (3) (3)
Tax rate differential 1 4 6
Other - 1 1
-------------------------------------------------------------
Statutory federal tax rate 35% 35% 34%
=============================================================
Mississippi Power and its affiliates file a consolidated federal income tax
return. Under a joint consolidated income tax agreement, each company's current
and deferred tax expense is computed on a stand-alone basis, and consolidated
tax savings are allocated to each company based on its ratio of taxable income
to total consolidated taxable income.
9. OTHER LONG-TERM DEBT:
Details of other long-term debt are as follows:
==============================================================
December 31,
1994 1993
-------------------
(in thousands)
Obligations incurred in
connection with the sale by
public authorities of
tax-exempt pollution control
revenue bonds:
5.80% due 2007 $ 980 $ 990
Variable rate due 2020 6,550 6,550
Variable rate due 2022 16,750 16,750
6.20% due 2023 13,000 13,000
5.65% due 2023 25,875 25,875
--------------------------------------------------------------
63,155 63,165
--------------------------------------------------------------
Notes payable:
8.25% due 1994-1995 - 17,520
7.50% due 1994-1995 1,689 2,158
5.39% to 5.72% due 1995 9,000 -
4.15% to 5.89% due 1995-1996 50,000 -
6.0375% due 1996 35,000 -
--------------------------------------------------------------
95,689 19,678
--------------------------------------------------------------
Total $158,844 $82,843
==============================================================
Pollution control obligations represent installment or lease purchases of
pollution control facilities financed by application of funds derived from sales
by public authorities of tax-exempt revenue bonds. Mississippi Power has
authenticated and delivered to the Trustee a like principal amount of first
II-208
<PAGE>
NOTES (continued)
Mississippi Power Company 1994 Annual Report
mortgage bonds as security for obligations under collateralized installment
agreements. The principal and interest on the first mortgage bonds will be
payable only in the event of default under these agreements. The 5.8% Series of
pollution control obligations has a cash sinking fund requirement of $10
thousand annually through 1997 and $20 thousand annually in 1998 and 1999.
10. LONG-TERM DEBT DUE WITHIN ONE YEAR:
A summary of the improvement fund requirements and scheduled maturities and
redemptions of long-term debt due within one year is as follows:
===============================================================
1994 1993
-------------------
(in thousands)
Bond improvement
fund requirements $ 1,931 $ 1,902
Less:
Portion to be satisfied by
certifying property additions 1,431 1,402
---------------------------------------------------------------
Cash improvement fund
requirements 500 500
First mortgage bond maturities
and redemptions - 10,000
Pollution control bond cash
sinking fund requirements (Note 9) 10 10
Current portion of notes
payable (Note 9) 40,689 8,835
---------------------------------------------------------------
Total $41,199 $19,345
===============================================================
The first mortgage bond improvement fund requirement is one percent of each
outstanding series authenticated under the indenture of Mississippi Power prior
to January 1 of each year, other than first mortgage bonds issued as collateral
security for certain pollution control obligations. The requirement must be
satisfied by June 1 of each year by depositing cash or reacquiring bonds, or by
pledging additional property equal to 166-2/3 percent of such requirement.
11. COMMON STOCK DIVIDEND RESTRICTIONS:
Mississippi Power's first mortgage bond indenture and the corporate charter
contain various common stock dividend restrictions. At December 31, 1994, $94
million of retained earnings was restricted against the payment of cash
dividends on common stock under the most restrictive terms of the mortgage
indenture or corporate charter.
12. QUARTERLY FINANCIAL DATA (UNAUDITED):
Summarized quarterly financial data for 1994 and 1993 are as follows:
===================================================================
Net Income
After Dividends
Quarter Operating Operating On
Ended Revenues Income Preferred Stock
------- ------------------------------------------------
March 1994 $114,134 $12,910 $ 8,266
June 1994 131,792 19,891 13,744
September 1994 142,340 26,212 21,357
December 1994 110,896 14,062 5,790
March 1993 $101,552 $ 9,529 $ 4,424
June 1993 117,764 18,147 11,852
September 1993 148,102 22,377 16,560
December 1993 107,465 13,333 9,600
Mississippi Power's business is influenced by seasonal weather conditions
and the timing of rate changes.
II-209
<PAGE>
SELECTED FINANCIAL AND OPERATING DATA
Mississippi Power Company 1994 Annual Report
<TABLE>
<CAPTION>
================================================================================================
1994 1993 1992
------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Operating Revenues (in thousands) $499,162 $474,883 $434,447
Net Income after Dividends
on Preferred Stock (in thousands) $49,157 $42,436 $36,790
Cash Dividends on Common Stock (in thousands) $34,100 $29,000 $28,000
Return on Average Common Equity (percent) 14.38 14.09 13.27
Total Assets (in thousands) $1,123,711 $1,050,334 $791,283
Gross Property Additions (in thousands) $104,014 $139,976 $68,189
------------------------------------------------------------------------------------------------
Capitalization (in thousands):
Common stock equity $361,753 $321,768 $280,640
Preferred stock 74,414 74,414 74,414
Preferred stock subject to mandatory redemption - - -
Long-term debt 306,522 250,391 238,650
------------------------------------------------------------------------------------------------
Total (excluding amounts due within one year) $742,689 $646,573 $593,704
================================================================================================
Capitalization Ratios (percent):
Common stock equity 48.7 49.8 47.3
Preferred stock 10.0 11.5 12.5
Long-term debt 41.3 38.7 40.2
------------------------------------------------------------------------------------------------
Total (excluding amounts due within one year) 100.0 100.0 100.0
================================================================================================
First Mortgage Bonds (in thousands):
Issued 35,000 70,000 40,000
Retired 32,628 51,300 104,703
Preferred Stock (in thousands):
Issued - 23,404 35,000
Retired - 23,404 -
------------------------------------------------------------------------------------------------
Security Ratings:
First Mortgage Bonds -
Moody's Aa3 A1 A1
Standard and Poor's A+ A+ A+
Duff & Phelps A+ A+ A+
Preferred Stock -
Moody's a1 a1 a1
Standard and Poor's A A A
Duff & Phelps A A A
------------------------------------------------------------------------------------------------
Customers (year-end):
Residential 152,891 151,692 150,248
Commercial 29,276 28,648 28,056
Industrial 650 570 573
Other 189 190 189
------------------------------------------------------------------------------------------------
Total 183,006 181,100 179,066
================================================================================================
Employees (year-end) 1,535 1,586 1,619
------------------------------------------------------------------------------------------------
</TABLE>
II-210
<PAGE>
SELECTED FINANCIAL AND OPERATING DATA (continued)
Mississippi Power Company 1994 Annual Report
<TABLE>
<CAPTION>
================================================================================================
1991 1990 1989
------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Operating Revenues (in thousands) $432,386 $446,871 $442,650
Net Income after Dividends
on Preferred Stock (in thousands) $22,627 $34,176 $38,576
Cash Dividends on Common Stock (in thousands) $28,500 $27,500 $27,000
Return on Average Common Equity (percent) 8.17 12.36 14.43
Total Assets (in thousands) $790,641 $800,026 $786,570
Gross Property Additions (in thousands) $53,675 $49,009 $43,916
------------------------------------------------------------------------------------------------
Capitalization (in thousands):
Common stock equity $273,855 $279,833 $273,157
Preferred stock 39,414 39,414 39,414
Preferred stock subject to mandatory redemption - 3,750 4,500
Long-term debt 304,150 270,724 277,693
------------------------------------------------------------------------------------------------
Total (excluding amounts due within one year) $617,419 $593,721 $594,764
================================================================================================
Capitalization Ratios (percent):
Common stock equity 44.4 47.1 45.9
Preferred stock 6.4 7.3 7.4
Long-term debt 49.2 45.6 46.7
------------------------------------------------------------------------------------------------
Total (excluding amounts due within one year) 100.0 100.0 100.0
================================================================================================
First Mortgage Bonds (in thousands):
Issued 50,000 - -
Retired - 4,000 3,823
Preferred Stock (in thousands):
Issued - - -
Retired 4,118 750 750
------------------------------------------------------------------------------------------------
Security Ratings:
First Mortgage Bonds -
Moody's A1 A1 A1
Standard and Poor's A+ A+ A+
Duff & Phelps A+ A+ A+
Preferred Stock -
Moody's a1 a1 a1
Standard and Poor's A A A
Duff & Phelps A A A
------------------------------------------------------------------------------------------------
Customers (year-end):
Residential 148,978 147,738 147,308
Commercial 27,441 27,134 26,867
Industrial 562 574 525
Other 400 411 404
------------------------------------------------------------------------------------------------
Total 177,381 175,857 175,104
================================================================================================
Employees (year-end) 1,630 1,842 1,750
------------------------------------------------------------------------------------------------
</TABLE>
II-211A
<PAGE>
SELECTED FINANCIAL AND OPERATING DATA (continued)
Mississippi Power Company 1994 Annual Report
<TABLE>
<CAPTION>
================================================================================================
1988 1987 1986
------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Operating Revenues (in thousands) $437,939 $455,843 $476,265
Net Income after Dividends
on Preferred Stock (in thousands) $36,081 $35,200 $33,814
Cash Dividends on Common Stock (in thousands) $27,600 $24,700 $23,700
Return on Average Common Equity (percent) 14.03 14.68 15.28
Total Assets (in thousands) $779,319 $764,068 $767,110
Gross Property Additions (in thousands) $54,550 $53,288 $62,488
------------------------------------------------------------------------------------------------
Capitalization (in thousands):
Common stock equity $261,473 $252,992 $226,601
Preferred stock 39,414 39,414 39,414
Preferred stock subject to mandatory redemption 5,250 6,750 8,250
Long-term debt 287,525 294,811 299,684
------------------------------------------------------------------------------------------------
Total (excluding amounts due within one year) $593,662 $593,967 $573,949
================================================================================================
Capitalization Ratios (percent):
Common stock equity 44.1 42.6 39.5
Preferred stock 7.5 7.8 8.3
Long-term debt 48.4 49.6 52.2
------------------------------------------------------------------------------------------------
Total (excluding amounts due within one year) 100.0 100.0 100.0
================================================================================================
First Mortgage Bonds (in thousands):
Issued - - 35,000
Retired - 29,701 29,250
Preferred Stock (in thousands):
Issued - - -
Retired 1,500 1,500 1,500
------------------------------------------------------------------------------------------------
Security Ratings:
First Mortgage Bonds -
Moody's A1 A1 A1
Standard and Poor's A+ A+ A+
Duff & Phelps 5 5 5
------------------------------------------------------------------------------------------------
Preferred Stock -
Moody's a1 a1 a1
Standard and Poor's A A A
Duff & Phelps 6 6 6
------------------------------------------------------------------------------------------------
Customers (year-end):
Residential 146,750 146,273 145,809
Commercial 26,751 26,342 26,217
Industrial 478 438 393
Other 399 389 363
------------------------------------------------------------------------------------------------
Total 174,378 173,442 172,782
================================================================================================
Employees (year-end) 1,831 1,898 1,882
------------------------------------------------------------------------------------------------
</TABLE>
II-211B
<PAGE>
SELECTED FINANCIAL AND OPERATING DATA (continued)
Mississippi Power Company 1994 Annual Report
<TABLE>
<CAPTION>
====================================================================================
1985 1984
------------------------------------------------------------------------------------
<S> <C> <C>
Operating Revenues (in thousands) $475,610 $442,507
Net Income after Dividends
on Preferred Stock (in thousands) $33,330 $31,380
Cash Dividends on Common Stock (in thousands) $22,600 $21,000
Return on Average Common Equity (percent) 15.83 15.74
Total Assets (in thousands) $679,577 $660,530
Gross Property Additions (in thousands) $57,791 $37,290
------------------------------------------------------------------------------------
Capitalization (in thousands):
Common stock equity $216,087 $205,018
Preferred stock 39,414 39,414
Preferred stock subject to mandatory redemption 9,750 10,500
Long-term debt 261,594 267,051
------------------------------------------------------------------------------------
Total (excluding amounts due within one year) $526,845 $521,983
====================================================================================
Capitalization Ratios (percent):
Common stock equity 41.0 39.3
Preferred stock 9.3 9.5
Long-term debt 49.7 51.2
------------------------------------------------------------------------------------
Total (excluding amounts due within one year) 100.0 100.0
====================================================================================
First Mortgage Bonds (in thousands):
Issued - -
Retired 250 250
Preferred Stock (in thousands):
Issued - -
Retired 1,111 639
------------------------------------------------------------------------------------
Security Ratings:
First Mortgage Bonds -
Moody's A1 A1
Standard and Poor's A A
Duff & Phelps 5 5
Preferred Stock -
Moody's a1 a1
Standard and Poor's A A
Duff & Phelps 6 6
------------------------------------------------------------------------------------
Customers (year-end):
Residential 145,071 142,846
Commercial 25,629 25,404
Industrial 371 348
Other 356 356
------------------------------------------------------------------------------------
Total 171,427 168,954
====================================================================================
Employees (year-end) 1,801 1,669
------------------------------------------------------------------------------------
</TABLE>
II-211C
<PAGE>
SELECTED FINANCIAL AND OPERATING DATA (continued)
Mississippi Power Company 1994 Annual Report
<TABLE>
<CAPTION>
================================================================================================
1994 1993 1992
------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Operating Revenues (in thousands):
Residential $124,257 $118,793 $109,781
Commercial 124,716 115,152 107,131
Industrial 142,268 130,198 117,010
Other 3,882 3,760 3,533
------------------------------------------------------------------------------------------------
Total retail 395,123 367,903 337,455
Sales for resale - non-affiliates 88,122 83,511 80,213
Sales for resale - affiliates 9,538 15,519 10,055
------------------------------------------------------------------------------------------------
Total revenues from sales of electricity 492,783 466,933 427,723
Other revenues 6,379 7,950 6,724
------------------------------------------------------------------------------------------------
Total $499,162 $474,883 $434,447
================================================================================================
Kilowatt-Hour Sales (in thousands):
Residential 1,922,217 1,929,835 1,804,858
Commercial 2,100,625 1,933,685 1,811,042
Industrial 3,847,011 3,623,543 3,536,634
Other 38,147 38,357 38,261
------------------------------------------------------------------------------------------------
Total retail 7,908,000 7,525,420 7,190,795
Sales for resale - non-affiliates 2,555,914 2,544,982 2,687,917
Sales for resale - affiliates 174,342 426,919 280,443
------------------------------------------------------------------------------------------------
Total 10,638,256 10,497,321 10,159,155
================================================================================================
Average Revenue Per Kilowatt-Hour (cents):
Residential 6.46 6.16 6.08
Commercial 5.94 5.96 5.92
Industrial 3.70 3.59 3.31
Total retail 5.00 4.89 4.69
Total sales 4.63 4.45 4.21
Residential Average Annual Kilowatt-Hour Use Per Customer 12,611 12,780 12,066
Residential Average Annual Revenue Per Customer $815.21 $786.71 $733.90
Plant Nameplate Capacity Ratings (year-end) (megawatts) 2,086 2,011 2,011
Maximum Peak-Hour Demand (megawatts):
Winter 1,636 1,401 1,386
Summer 1,874 1,872 1,755
Annual Load Factor (percent) 63.4 60.0 60.8
Plant Availability - Fossil-Steam (percent) 85.4 88.0 92.0
------------------------------------------------------------------------------------------------
Source of Energy Supply (percent):
Coal 56.0 63.5 60.4
Oil and gas 10.2 7.6 5.8
Purchased power -
From non-affiliates 1.2 1.3 1.2
From affiliates 32.6 27.6 32.6
------------------------------------------------------------------------------------------------
Total 100.0 100.0 100.0
================================================================================================
Total Fuel Economy Data:
BTU per net kilowatt-hour generated 10,295 10,075 9,888
Cost of fuel per million BTU (cents) 165.96 170.13 162.27
Average cost of fuel per net kilowatt-hour generated (cents) 1.71 1.71 1.60
------------------------------------------------------------------------------------------------
</TABLE>
II-212
<PAGE>
SELECTED FINANCIAL AND OPERATING DATA (continued)
Mississippi Power Company 1994 Annual Report
<TABLE>
<CAPTION>
================================================================================================
1991 1990 1989
------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Operating Revenues (in thousands):
Residential $103,820 $102,243 $100,068
Commercial 103,666 103,352 103,403
Industrial 116,972 123,754 128,983
Other 5,869 6,078 5,992
------------------------------------------------------------------------------------------------
Total retail 330,327 335,427 338,446
Sales for resale - non-affiliates 78,826 86,194 82,111
Sales for resale - affiliates 18,044 20,157 16,938
------------------------------------------------------------------------------------------------
Total revenues from sales of electricity 427,197 441,778 437,495
Other revenues 5,189 5,093 5,155
------------------------------------------------------------------------------------------------
Total $432,386 $446,871 $442,650
================================================================================================
Kilowatt-Hour Sales (in thousands):
Residential 1,832,266 1,804,838 1,741,855
Commercial 1,768,441 1,718,074 1,686,302
Industrial 3,297,247 3,311,460 3,204,208
Other 89,375 85,938 87,611
------------------------------------------------------------------------------------------------
Total retail 6,987,329 6,920,310 6,719,976
Sales for resale - non-affiliates 2,706,320 2,883,581 2,798,086
Sales for resale - affiliates 617,696 714,365 527,970
------------------------------------------------------------------------------------------------
Total 10,311,345 10,518,256 10,046,032
================================================================================================
Average Revenue Per Kilowatt-Hour (cents):
Residential 5.67 5.66 5.74
Commercial 5.86 6.02 6.13
Industrial 3.55 3.74 4.03
Total retail 4.73 4.85 5.04
Total sales 4.14 4.20 4.35
Residential Average Annual Kilowatt-Hour Use Per Customer 12,338 12,228 11,842
Residential Average Annual Revenue Per Customer $699.11 $692.70 $680.32
Plant Nameplate Capacity Ratings (year-end) (megawatts) 2,011 1,998 1,998
Maximum Peak-Hour Demand (megawatts):
Winter 1,267 1,201 1,556
Summer 1,682 1,724 1,682
Annual Load Factor (percent) 61.5 59.0 58.8
Plant Availability - Fossil-Steam (percent) 89.8 93.3 94.0
------------------------------------------------------------------------------------------------
Source of Energy Supply (percent):
Coal 64.1 62.6 63.4
Oil and gas 8.1 14.0 13.5
Purchased power -
From non-affiliates 0.7 0.8 0.5
From affiliates 27.1 22.6 22.6
------------------------------------------------------------------------------------------------
Total 100.0 100.0 100.0
================================================================================================
Total Fuel Economy Data:
BTU per net kilowatt-hour generated 10,142 10,319 10,159
Cost of fuel per million BTU (cents) 177.52 183.27 178.38
Average cost of fuel per net kilowatt-hour generated (cents) 1.80 1.89 1.81
------------------------------------------------------------------------------------------------
</TABLE>
II-213A
<PAGE>
SELECTED FINANCIAL AND OPERATING DATA (continued)
Mississippi Power Company 1994 Annual Report
<TABLE>
<CAPTION>
================================================================================================
1988 1987 1986
------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Operating Revenues (in thousands):
Residential $96,711 $98,338 $101,984
Commercial 98,772 98,669 100,521
Industrial 123,038 129,004 134,501
Other 5,874 5,723 5,882
------------------------------------------------------------------------------------------------
Total retail 324,395 331,734 342,888
Sales for resale - non-affiliates 75,525 88,060 107,270
Sales for resale - affiliates 33,747 31,278 21,669
------------------------------------------------------------------------------------------------
Total revenues from sales of electricity 433,667 451,072 471,827
Other revenues 4,272 4,771 4,438
------------------------------------------------------------------------------------------------
Total $437,939 $455,843 $476,265
================================================================================================
Kilowatt-Hour Sales (in thousands):
Residential 1,686,722 1,658,327 1,674,407
Commercial 1,607,988 1,555,044 1,544,899
Industrial 2,879,457 2,862,632 2,877,026
Other 86,049 81,153 81,352
------------------------------------------------------------------------------------------------
Total retail 6,260,216 6,157,156 6,177,684
Sales for resale - non-affiliates 2,280,341 2,615,058 2,382,443
Sales for resale - affiliates 1,100,808 955,303 704,461
------------------------------------------------------------------------------------------------
Total 9,641,365 9,727,517 9,264,588
================================================================================================
Average Revenue Per Kilowatt-Hour (cents):
Residential 5.73 5.93 6.09
Commercial 6.14 6.35 6.51
Industrial 4.27 4.51 4.68
Total retail 5.18 5.39 5.55
Total sales 4.50 4.64 5.09
Residential Average Annual Kilowatt-Hour Use Per Customer 11,499 11,356 11,498
Residential Average Annual Revenue Per Customer $659.30 $673.41 $700.32
Plant Nameplate Capacity Ratings (year-end) (megawatts) 1,966 1,966 1,966
Maximum Peak-Hour Demand (megawatts):
Winter 1,284 1,224 1,208
Summer 1,621 1,548 1,612
Annual Load Factor (percent) 57.6 59.0 56.8
Plant Availability - Fossil-Steam (percent) 93.0 93.5 93.2
------------------------------------------------------------------------------------------------
Source of Energy Supply (percent):
Coal 86.3 79.4 74.1
Oil and gas 4.8 5.3 5.1
Purchased power -
From non-affiliates 0.4 0.3 2.0
From affiliates 8.5 15.0 18.8
------------------------------------------------------------------------------------------------
Total 100.0 100.0 100.0
================================================================================================
Total Fuel Economy Data:
BTU per net kilowatt-hour generated 10,220 10,525 10,569
Cost of fuel per million BTU (cents) 185.13 194.46 224.63
Average cost of fuel per net kilowatt-hour generated (cents) 1.89 2.05 2.37
------------------------------------------------------------------------------------------------
</TABLE>
II-213B
<PAGE>
SELECTED FINANCIAL AND OPERATING DATA (continued)
Mississippi Power Company 1994 Annual Report
<TABLE>
<CAPTION>
====================================================================================
1985 1984
------------------------------------------------------------------------------------
<S> <C> <C>
Operating Revenues (in thousands):
Residential $96,878 $92,955
Commercial 96,883 91,500
Industrial 129,495 128,951
Other 5,884 5,704
------------------------------------------------------------------------------------
Total retail 329,140 319,110
Sales for resale - non-affiliates 115,757 106,691
Sales for resale - affiliates 27,277 13,226
------------------------------------------------------------------------------------
Total revenues from sales of electricity 472,174 439,027
Other revenues 3,436 3,480
------------------------------------------------------------------------------------
Total $475,610 $442,507
====================================================================================
Kilowatt-Hour Sales (in thousands):
Residential 1,603,539 1,535,329
Commercial 1,500,972 1,415,153
Industrial 2,786,883 2,768,877
Other 83,142 78,198
------------------------------------------------------------------------------------
Total retail 5,974,536 5,797,557
Sales for resale - non-affiliates 2,819,439 2,656,738
Sales for resale - affiliates 733,142 285,562
------------------------------------------------------------------------------------
Total 9,527,117 8,739,857
====================================================================================
Average Revenue Per Kilowatt-Hour (cents):
Residential 6.04 6.05
Commercial 6.45 6.47
Industrial 4.65 4.66
Total retail 5.51 5.50
Total sales 4.96 5.02
Residential Average Annual Kilowatt-Hour Use Per Customer 11,135 10,814
Residential Average Annual Revenue Per Customer $672.71 $654.74
Plant Nameplate Capacity Ratings (year-end) (megawatts) 1,966 1,966
Maximum Peak-Hour Demand (megawatts):
Winter 1,310 1,210
Summer 1,444 1,421
Annual Load Factor (percent) 61.0 59.8
Plant Availability - Fossil-Steam (percent) 92.4 93.1
------------------------------------------------------------------------------------
Source of Energy Supply (percent):
Coal 74.1 67.5
Oil and gas 2.8 2.5
Purchased power -
From non-affiliates 0.4 0.2
From affiliates 22.7 29.8
------------------------------------------------------------------------------------
Total 100.0 100.0
====================================================================================
Total Fuel Economy Data:
BTU per net kilowatt-hour generated 10,396 10,385
Cost of fuel per million BTU (cents) 235.24 236.45
Average cost of fuel per net kilowatt-hour generated (cents) 2.45 2.46
------------------------------------------------------------------------------------
</TABLE>
II-213C
<PAGE>
STATEMENTS OF INCOME
Mississippi Power Company
<TABLE>
<CAPTION>
========================================================================================================
For the Years Ended December 31, 1994 1993 1992
--------------------------------------------------------------------------------------------------------
(Thousands of Dollars)
<S> <C> <C> <C>
Operating Revenues:
Revenues $ 489,624 $459,364 $424,392
Revenues from affiliates 9,538 15,519 10,055
--------------------------------------------------------------------------------------------------------
Total operating revenues 499,162 474,883 434,447
--------------------------------------------------------------------------------------------------------
Operating Expenses:
Operation --
Fuel 102,216 113,986 96,743
Purchased power from non-affiliates 2,711 2,198 1,337
Purchased power from affiliates 68,543 58,019 60,689
Proceeds from settlement of disputed contracts - - (189)
Other 97,988 100,381 90,581
Maintenance 45,785 44,001 43,165
Depreciation and amortization 35,716 33,099 32,789
Taxes other than income taxes 41,742 37,145 34,664
Federal and state income taxes 31,386 22,668 16,378
--------------------------------------------------------------------------------------------------------
Total operating expenses 426,087 411,497 376,157
--------------------------------------------------------------------------------------------------------
Operating Income 73,075 63,386 58,290
Other Income (Expense):
Allowance for equity funds used during construction 1,099 1,010 642
Interest income 87 517 766
Other, net 2,033 3,971 5,501
Income taxes applicable to other income (227) (1,158) (1,427)
--------------------------------------------------------------------------------------------------------
Income Before Interest Charges 76,067 67,726 63,772
--------------------------------------------------------------------------------------------------------
Interest Charges:
Interest on long-term debt 19,725 17,688 22,357
Allowance for debt funds used during construction (1,039) (788) (563)
Interest on notes payable 1,442 1,000 362
Amortization of debt discount, premium, and expense, net 1,479 1,262 630
Other interest charges 404 728 339
--------------------------------------------------------------------------------------------------------
Net interest charges 22,011 19,890 23,125
--------------------------------------------------------------------------------------------------------
Net Income From Continuing Operations 54,056 47,836 40,647
--------------------------------------------------------------------------------------------------------
Discontinued Operations:
Loss from operations of discontinued subsidiary, net of taxes - - -
Loss on disposal of discontinued subsidiary, net of taxes - - -
Net Loss From Discontinued Operations - - -
--------------------------------------------------------------------------------------------------------
Net Income 54,056 47,836 40,647
Dividends on Preferred Stock 4,899 5,400 3,857
--------------------------------------------------------------------------------------------------------
Net Income After Dividends on Preferred Stock $ 49,157 $ 42,436 $ 36,790
========================================================================================================
</TABLE>
II-214
<PAGE>
STATEMENTS OF INCOME
Mississippi Power Company
<TABLE>
<CAPTION>
=====================================================================================================================
For the Years Ended December 31, 1991 1990 1989 1988
---------------------------------------------------------------------------------------------------------------------
(Thousands of Dollars)
<S> <C> <C> <C> <C>
Operating Revenues:
Revenues $ 414,342 $426,714 $425,712 $404,192
Revenues from affiliates 18,044 20,157 16,938 33,747
---------------------------------------------------------------------------------------------------------------------
Total operating revenues 432,386 446,871 442,650 437,939
---------------------------------------------------------------------------------------------------------------------
Operating Expenses:
Operation --
Fuel 120,485 138,303 133,671 165,912
Purchased power from non-affiliates 851 1,406 1,266 1,257
Purchased power from affiliates 45,506 49,547 47,066 19,270
Proceeds from settlement of disputed contracts (4,205) - - -
Other 86,932 83,730 84,820 83,542
Maintenance 44,166 33,368 35,658 33,412
Depreciation and amortization 32,147 30,770 28,001 26,610
Taxes other than income taxes 35,414 32,709 32,435 29,638
Federal and state income taxes 13,976 17,144 18,387 20,313
---------------------------------------------------------------------------------------------------------------------
Total operating expenses 375,272 386,977 381,304 379,954
---------------------------------------------------------------------------------------------------------------------
Operating Income 57,114 59,894 61,346 57,985
Other Income (Expense):
Allowance for equity funds used during construction 728 307 903 850
Interest income 1,093 829 1,096 1,030
Other, net 3,845 6,297 6,013 6,399
Income taxes applicable to other income (863) (1,666) (1,392) (1,148)
---------------------------------------------------------------------------------------------------------------------
Income Before Interest Charges 61,917 65,661 67,966 65,116
---------------------------------------------------------------------------------------------------------------------
Interest Charges:
Interest on long-term debt 23,656 22,221 21,685 22,271
Allowance for debt funds used during construction (584) (600) (821) (595)
Interest on notes payable 603 1,142 689 341
Amortization of debt discount, premium, and expense, net 377 359 362 363
Other interest charges 285 333 566 522
---------------------------------------------------------------------------------------------------------------------
Net interest charges 24,337 23,455 22,481 22,902
---------------------------------------------------------------------------------------------------------------------
Net Income From Continuing Operations 37,580 42,206 45,485 42,214
---------------------------------------------------------------------------------------------------------------------
Discontinued Operations:
Loss from operations of discontinued subsidiary, net of taxes (6,404) (4,669) (3,459) (2,549)
Loss on disposal of discontinued subsidiary, net of taxes (5,455) - - -
Net Loss From Discontinued Operations (11,859) (4,669) (3,459) (2,549)
---------------------------------------------------------------------------------------------------------------------
Net Income 25,721 37,537 42,026 39,665
Dividends on Preferred Stock 3,094 3,361 3,450 3,584
---------------------------------------------------------------------------------------------------------------------
Net Income After Dividends on Preferred Stock $ 22,627 $ 34,176 $ 38,576 $ 36,081
=====================================================================================================================
</TABLE>
II-215A
<PAGE>
STATEMENTS OF INCOME
Mississippi Power Company
<TABLE>
<CAPTION>
======================================================================================================================
For the Years Ended December 31, 1987 1986 1985 1984
----------------------------------------------------------------------------------------------------------------------
(Thousands of Dollars)
<S> <C> <C> <C> <C>
Operating Revenues:
Revenues $ 424,565 $454,596 $448,333 $429,281
Revenues from affiliates 31,278 21,669 27,277 13,226
----------------------------------------------------------------------------------------------------------------------
Total operating revenues 455,843 476,265 475,610 442,507
----------------------------------------------------------------------------------------------------------------------
Operating Expenses:
Operation --
Fuel 167,165 183,515 188,477 158,793
Purchased power from non-affiliates 1,108 4,671 1,807 836
Purchased power from affiliates 36,114 46,322 56,522 70,202
Proceeds from settlement of disputed contracts - - - -
Other 81,331 70,009 58,528 53,447
Maintenance 33,974 31,368 39,509 31,826
Depreciation and amortization 26,210 30,293 25,412 24,170
Taxes other than income taxes 27,882 26,145 23,930 24,495
Federal and state income taxes 23,888 30,881 29,142 26,525
----------------------------------------------------------------------------------------------------------------------
Total operating expenses 397,672 423,204 423,327 390,294
----------------------------------------------------------------------------------------------------------------------
Operating Income 58,171 53,061 52,283 52,213
Other Income (Expense):
Allowance for equity funds used during construction 608 1,030 693 820
Interest income 1,121 864 1,326 1,325
Other, net 7,065 8,983 9,867 6,482
Income taxes applicable to other income (2,507) (3,517) (3,880) (2,555)
----------------------------------------------------------------------------------------------------------------------
Income Before Interest Charges 64,458 60,421 60,289 58,285
----------------------------------------------------------------------------------------------------------------------
Interest Charges:
Interest on long-term debt 24,139 22,707 22,684 22,678
Allowance for debt funds used during construction (652) (770) (434) (1,800)
Interest on notes payable 558 252 - 1,082
Amortization of debt discount, premium, and expense, net 388 245 146 148
Other interest charges 601 283 562 754
----------------------------------------------------------------------------------------------------------------------
Net interest charges 25,034 22,717 22,958 22,862
----------------------------------------------------------------------------------------------------------------------
Net Income From Continuing Operations 39,424 37,704 37,331 35,423
----------------------------------------------------------------------------------------------------------------------
Discontinued Operations:
Loss from operations of discontinued subsidiary, net of taxes (487) - - -
Loss on disposal of discontinued subsidiary, net of taxes - - - -
Net Loss From Discontinued Operations (487) - - -
----------------------------------------------------------------------------------------------------------------------
Net Income 38,937 37,704 37,331 35,423
Dividends on Preferred Stock 3,737 3,890 4,001 4,043
----------------------------------------------------------------------------------------------------------------------
Net Income After Dividends on Preferred Stock $ 35,200 $ 33,814 $ 33,330 $ 31,380
======================================================================================================================
</TABLE>
II-215B
<PAGE>
STATEMENTS OF CASH FLOWS
Mississippi Power Company
<TABLE>
<CAPTION>
=======================================================================================================
For the Years Ended December 31, 1994 1993 1992
-------------------------------------------------------------------------------------------------------
(Thousands of Dollars)
<S> <C> <C> <C>
Operating Activities:
Net income $ 54,056 $ 47,836 $ 40,647
Adjustments to reconcile net income to net
cash provided by operating activities --
Depreciation and amortization 47,827 45,660 41,472
Deferred income taxes, net 1,563 5,039 (5,473)
Deferred investment tax credits, net - - -
Allowance for equity funds used during construction (1,099) (1,010) (642)
Non-cash proceeds from settlement of disputed contracts - - (189)
Other, net 5,230 3,005 8,093
Changes in certain current assets and liabilities --
Receivables, net 3,066 (4,347) 1,002
Inventories (9,856) 11,119 975
Payables (8,754) 4,133 460
Other 3,334 (8,033) 6,095
-------------------------------------------------------------------------------------------------------
Net cash provided from operating activities 95,367 103,402 92,440
-------------------------------------------------------------------------------------------------------
Investing Activities:
Gross property additions (104,014) (139,976) (68,189)
Other (14,087) 7,562 4,235
-------------------------------------------------------------------------------------------------------
Net cash used for investing activities (118,101) (132,414) (63,954)
-------------------------------------------------------------------------------------------------------
Financing Activities and Capital Contributions:
Proceeds:
Preferred stock - 23,404 35,000
First mortgage bonds 35,000 70,000 40,000
Pollution control bonds - 38,875 23,300
Other long-term debt 85,310 - -
Capital contributions 25,000 30,036 26
Redemptions:
Preferred stock - (23,404) -
First mortgage bonds (32,628) (51,300) (104,703)
Pollution control bonds (10) (25,885) (23,650)
Other long-term debt (9,299) (8,170) (6,212)
Notes payable, net (40,000) 9,000 26,500
Payment of preferred stock dividends (4,899) (5,400) (3,857)
Payment of common stock dividends (34,100) (29,000) (28,000)
Miscellaneous (1,201) (5,683) (7,821)
-------------------------------------------------------------------------------------------------------
Net cash provided from (used for) financing activities 23,173 22,473 (49,417)
-------------------------------------------------------------------------------------------------------
Net Change in Cash and Cash Equivalents 439 (6,539) (20,931)
Cash and Cash Equivalents at Beginning of Year 878 7,417 28,348
-------------------------------------------------------------------------------------------------------
Cash and Cash Equivalents at End of Year $ 1,317 $ 878 $ 7,417
=======================================================================================================
( ) Denotes use of cash.
</TABLE>
II-216
<PAGE>
STATEMENTS OF CASH FLOWS
Mississippi Power Company
<TABLE>
<CAPTION>
==================================================================================================================
For the Years Ended December 31, 1991 1990 1989 1988
------------------------------------------------------------------------------------------------------------------
(Thousands of Dollars)
<S> <C> <C> <C> <C>
Operating Activities:
Net income $ 25,721 $ 37,537 $ 42,026 $ 39,665
Adjustments to reconcile net income to net
cash provided by operating activities --
Depreciation and amortization 41,773 41,079 35,878 34,440
Deferred income taxes, net (11,869) 2,756 (294) (3,053)
Deferred investment tax credits, net (2) (26) (38) 571
Allowance for equity funds used during construction (728) (307) (903) (850)
Non-cash proceeds from settlement of disputed contracts (4,071) - - -
Other, net (4,982) 7,257 4,306 3,503
Changes in certain current assets and liabilities --
Receivables, net 35,343 (6,252) (18,506) 816
Inventories 10,518 (8,922) 3,687 283
Payables (4,949) (5,552) 1,307 (5,241)
Other 11,433 (1,461) 2,172 (2,294)
------------------------------------------------------------------------------------------------------------------
Net cash provided from operating activities 98,187 66,109 69,635 67,840
------------------------------------------------------------------------------------------------------------------
Investing Activities:
Gross property additions (53,675) (49,009) (43,916) (54,550)
Other 2,148 4,481 1,860 8,368
------------------------------------------------------------------------------------------------------------------
Net cash used for investing activities (51,527) (44,528) (42,056) (46,182)
------------------------------------------------------------------------------------------------------------------
Financing Activities and Capital Contributions:
Proceeds:
Preferred stock - - - -
First mortgage bonds 50,000 - - -
Pollution control bonds - - - -
Other long-term debt 844 - 844 -
Capital contributions - - - -
Redemptions:
Preferred stock (4,118) (750) (750) (1,500)
First mortgage bonds - (4,000) (3,823) -
Pollution control bonds (300) (288) (62) (50)
Other long-term debt (8,958) (6,416) (5,919) (5,401)
Notes payable, net (25,603) 17,146 6,457 6,500
Payment of preferred stock dividends (3,094) (3,361) (3,450) (3,584)
Payment of common stock dividends (28,500) (27,500) (27,000) (27,600)
Miscellaneous (839) 2 - -
------------------------------------------------------------------------------------------------------------------
Net cash provided from (used for) financing activities (20,568) (25,167) (33,703) (31,635)
------------------------------------------------------------------------------------------------------------------
Net Change in Cash and Cash Equivalents 26,092 (3,586) (6,124) (9,977)
Cash and Cash Equivalents at Beginning of Year 2,256 5,842 11,966 21,943
------------------------------------------------------------------------------------------------------------------
Cash and Cash Equivalents at End of Year $ 28,348 $ 2,256 $ 5,842 $ 11,966
==================================================================================================================
( ) Denotes use of cash.
</TABLE>
II-217A
<PAGE>
STATEMENTS OF CASH FLOWS
Mississippi Power Company
<TABLE>
<CAPTION>
==================================================================================================================
For the Years Ended December 31, 1987 1986 1985 1984
------------------------------------------------------------------------------------------------------------------
(Thousands of Dollars)
<S> <C> <C> <C> <C>
Operating Activities:
Net income $ 38,937 $ 37,704 $ 37,331 $ 35,423
Adjustments to reconcile net income to net
cash provided by operating activities --
Depreciation and amortization 33,971 33,432 28,229 26,487
Deferred income taxes, net 10,035 41,059 11,246 10,156
Deferred investment tax credits, net 896 2,442 1,749 6,336
Allowance for equity funds used during construction (608) (1,030) (693) (820)
Non-cash proceeds from settlement of disputed contracts - - - -
Other, net 1,965 (14,162) (2,709) 3,802
Changes in certain current assets and liabilities --
Receivables, net 12,000 (1,708) (5,050) 8,734
Inventories 13,708 (8,499) 12,281 (23,307)
Payables 7,487 (14,502) 4,656 (5,506)
Other (9,342) 11,546 (3,725) (3,651)
------------------------------------------------------------------------------------------------------------------
Net cash provided from operating activities 109,049 86,282 83,315 57,654
------------------------------------------------------------------------------------------------------------------
Investing Activities:
Gross property additions (53,288) (62,488) (57,791) (37,290)
Other (1,461) (61,162) 3,825 388
------------------------------------------------------------------------------------------------------------------
Net cash used for investing activities (54,749) (123,650) (53,966) (36,902)
------------------------------------------------------------------------------------------------------------------
Financing Activities and Capital Contributions:
Proceeds:
Preferred stock - - - -
First mortgage bonds - 35,000 - -
Pollution control bonds - - - -
Other long-term debt 130 60,663 1,000 -
Capital contributions 16,000 400 400 1,000
Redemptions:
Preferred stock (1,500) (1,500) (1,111) (639)
First mortgage bonds (29,701) (29,250) (250) (250)
Pollution control bonds (50) (50) (50) (50)
Other long-term debt (4,974) (200) - -
Notes payable, net - - - -
Payment of preferred stock dividends (3,737) (3,890) (4,001) (4,043)
Payment of common stock dividends (24,700) (23,700) (22,600) (21,000)
Miscellaneous (2,696) (2,929) (18) -
------------------------------------------------------------------------------------------------------------------
Net cash provided from (used for) financing activities (51,228) 34,544 (26,630) (24,982)
------------------------------------------------------------------------------------------------------------------
Net Change in Cash and Cash Equivalents 3,072 (2,824) 2,719 (4,230)
Cash and Cash Equivalents at Beginning of Year 18,871 21,695 18,976 23,206
------------------------------------------------------------------------------------------------------------------
Cash and Cash Equivalents at End of Year $ 21,943 $ 18,871 $ 21,695 $ 18,976
==================================================================================================================
( ) Denotes use of cash.
</TABLE>
II-217B
<PAGE>
BALANCE SHEETS
Mississippi Power Company
<TABLE>
<CAPTION>
=========================================================================================================
At December 31, 1994 1993 1992
---------------------------------------------------------------------------------------------------------
(Thousands of Dollars)
<S> <C> <C> <C>
ASSETS
Utility Plant:
Production-fossil $ 705,043 $ 597,425 $ 576,848
Transmission 202,503 188,375 173,278
Distribution 313,345 295,799 279,335
General 164,141 157,248 151,044
Construction work in progress 44,838 108,063 41,692
---------------------------------------------------------------------------------------------------------
Total utility plant 1,429,870 1,346,910 1,222,197
Accumulated provision for depreciation 477,098 462,725 440,777
---------------------------------------------------------------------------------------------------------
Total 952,772 884,185 781,420
---------------------------------------------------------------------------------------------------------
Less property-related accumulated deferred income taxes - - 142,338
---------------------------------------------------------------------------------------------------------
Total 952,772 884,185 639,082
---------------------------------------------------------------------------------------------------------
Other Property and Investments:
Securities received from settlement of disputed contracts - - -
Miscellaneous 3,353 11,289 4,539
---------------------------------------------------------------------------------------------------------
Total 3,353 11,289 4,539
---------------------------------------------------------------------------------------------------------
Current Assets:
Cash and cash equivalents 1,317 878 7,417
Investment securities - - 3,622
Receivables, net 25,424 28,021 20,219
Accrued utility revenues 14,428 14,897 14,898
Fossil fuel stock, at average cost 16,885 11,185 21,341
Materials and supplies, at average cost 25,301 21,145 22,108
Current portion of deferred fuel commitments 1,068 440 1,861
Prepayments 11,189 8,971 5,869
Vacation pay deferred 4,588 4,797 4,651
---------------------------------------------------------------------------------------------------------
Total 100,200 90,334 101,986
---------------------------------------------------------------------------------------------------------
Deferred Charges:
Debt expense, being amortized 1,358 1,103 804
Premium on reacquired debt, being amortized 9,571 10,563 10,102
Deferred fuel commitments 9,000 17,520 25,255
Deferred charges related to income taxes 25,036 25,267 -
Miscellaneous 22,421 10,073 9,515
---------------------------------------------------------------------------------------------------------
Total 67,386 64,526 45,676
---------------------------------------------------------------------------------------------------------
Total Assets $1,123,711 $1,050,334 $ 791,283
=========================================================================================================
</TABLE>
II-218
<PAGE>
BALANCE SHEETS
Mississippi Power Company
<TABLE>
<CAPTION>
======================================================================================================================
At December 31, 1991 1990 1989 1988
----------------------------------------------------------------------------------------------------------------------
(Thousands of Dollars)
<S> <C> <C> <C> <C>
ASSETS
Utility Plant:
Production-fossil $ 567,588 $ 560,537 $ 547,946 $ 529,742
Transmission 162,379 151,949 147,288 134,674
Distribution 259,929 247,705 229,238 221,327
General 141,564 136,815 133,361 137,333
Construction work in progress 33,078 26,816 27,057 35,204
----------------------------------------------------------------------------------------------------------------------
Total utility plant 1,164,538 1,123,822 1,084,890 1,058,280
Accumulated provision for depreciation 415,135 392,440 366,193 348,085
----------------------------------------------------------------------------------------------------------------------
Total 749,403 731,382 718,697 710,195
----------------------------------------------------------------------------------------------------------------------
Less property-related accumulated deferred income taxes 138,616 139,970 138,071 134,220
----------------------------------------------------------------------------------------------------------------------
Total 610,787 591,412 580,626 575,975
----------------------------------------------------------------------------------------------------------------------
Other Property and Investments:
Securities received from settlement of disputed contracts 4,113 - - -
Miscellaneous 3,954 8,631 7,792 8,153
----------------------------------------------------------------------------------------------------------------------
Total 8,067 8,631 7,792 8,153
----------------------------------------------------------------------------------------------------------------------
Current Assets:
Cash and cash equivalents 28,348 2,256 5,842 11,966
Investment securities - - - -
Receivables, net 27,152 67,734 58,425 43,246
Accrued utility revenues 12,420 10,797 13,854 10,527
Fossil fuel stock, at average cost 22,373 29,812 24,788 26,587
Materials and supplies, at average cost 22,051 25,130 21,232 23,120
Current portion of deferred fuel commitments 933 1,430 3,017 -
Prepayments 6,137 11,392 12,512 12,341
Vacation pay deferred 4,406 3,955 3,910 3,815
----------------------------------------------------------------------------------------------------------------------
Total 123,820 152,506 143,580 131,602
----------------------------------------------------------------------------------------------------------------------
Deferred Charges:
Debt expense, being amortized 981 824 886 949
Premium on reacquired debt, being amortized 4,676 4,919 5,161 5,404
Deferred fuel commitments 31,039 39,020 45,103 50,714
Deferred charges related to income taxes - - - -
Miscellaneous 11,271 2,714 3,422 6,522
----------------------------------------------------------------------------------------------------------------------
Total 47,967 47,477 54,572 63,589
----------------------------------------------------------------------------------------------------------------------
Total Assets $ 790,641 $ 800,026 $ 786,570 $ 779,319
======================================================================================================================
</TABLE>
II-219A
<PAGE>
BALANCE SHEETS
Mississippi Power Company
<TABLE>
<CAPTION>
======================================================================================================================
At December 31, 1987 1986 1985 1984
----------------------------------------------------------------------------------------------------------------------
(Thousands of Dollars)
<S> <C> <C> <C> <C>
ASSETS
Utility Plant:
Production-fossil $ 524,198 $ 509,128 $ 485,665 $ 477,618
Transmission 130,963 125,304 121,405 118,552
Distribution 207,810 195,042 183,003 169,545
General 127,690 114,042 99,788 90,626
Construction work in progress 27,755 33,544 34,862 17,054
----------------------------------------------------------------------------------------------------------------------
Total utility plant 1,018,416 977,060 924,723 873,395
Accumulated provision for depreciation 328,761 312,571 293,167 266,844
----------------------------------------------------------------------------------------------------------------------
Total 689,655 664,489 631,556 606,551
----------------------------------------------------------------------------------------------------------------------
Less property-related accumulated deferred income taxes 127,912 120,990 107,633 98,494
----------------------------------------------------------------------------------------------------------------------
Total 561,743 543,499 523,923 508,057
----------------------------------------------------------------------------------------------------------------------
Other Property and Investments:
Securities received from settlement of disputed contracts - - - -
Miscellaneous 4,122 1,738 641 630
----------------------------------------------------------------------------------------------------------------------
Total 4,122 1,738 641 630
----------------------------------------------------------------------------------------------------------------------
Current Assets:
Cash and cash equivalents 21,943 18,871 21,695 18,976
Investment securities - - - -
Receivables, net 42,218 48,158 42,407 39,137
Accrued utility revenues 12,371 18,431 22,474 20,694
Fossil fuel stock, at average cost 29,989 46,067 40,638 57,225
Materials and supplies, at average cost 20,001 17,631 14,561 10,255
Current portion of deferred fuel commitments - - - -
Prepayments 830 973 805 497
Vacation pay deferred 3,956 3,559 3,337 2,910
----------------------------------------------------------------------------------------------------------------------
Total 131,308 153,690 145,917 149,694
----------------------------------------------------------------------------------------------------------------------
Deferred Charges:
Debt expense, being amortized 1,012 1,212 1,208 1,260
Premium on reacquired debt, being amortized 5,647 2,800 - -
Deferred fuel commitments 55,889 60,663 - -
Deferred charges related to income taxes - - - -
Miscellaneous 4,347 3,508 7,888 889
----------------------------------------------------------------------------------------------------------------------
Total 66,895 68,183 9,096 2,149
----------------------------------------------------------------------------------------------------------------------
Total Assets $ 764,068 $ 767,110 $ 679,577 $ 660,530
======================================================================================================================
</TABLE>
II-219B
<PAGE>
BALANCE SHEETS
Mississippi Power Company
<TABLE>
<CAPTION>
=========================================================================================================
At December 31, 1994 1993 1992
---------------------------------------------------------------------------------------------------------
(Thousands of Dollars)
<S> <C> <C> <C>
CAPITALIZATION AND LIABILITIES
Capitalization:
Common stock $ 37,691 $ 37,691 $ 37,691
Paid-in capital 179,362 154,362 124,326
Premium on preferred stock 372 372 194
Earnings retained in the business 144,328 129,343 118,429
---------------------------------------------------------------------------------------------------------
Total common equity 361,753 321,768 280,640
Preferred stock 74,414 74,414 74,414
Preferred stock subject to mandatory redemption - - -
Long-term debt 306,522 250,391 238,650
---------------------------------------------------------------------------------------------------------
Total (excluding amount due within one year) 742,689 646,573 593,704
---------------------------------------------------------------------------------------------------------
Current Liabilities:
Notes payable to banks - 40,000 31,000
Preferred stock due within one year - - -
Long-term debt due within one year 41,199 19,345 8,878
Accounts payable 34,481 60,928 43,550
Customer deposits 2,712 2,786 2,976
Taxes accrued 31,657 27,138 32,035
Interest accrued 4,427 4,237 3,961
Vacation pay accrued 4,588 4,797 4,651
Miscellaneous 10,025 9,323 10,963
---------------------------------------------------------------------------------------------------------
Total 129,089 168,554 138,014
---------------------------------------------------------------------------------------------------------
Deferred Credits and Other Liabilities:
Accumulated deferred income taxes 129,505 124,334 169
Accumulated deferred investment tax credits 31,228 32,710 34,242
Deferred credits related to income taxes 45,832 48,228 -
Miscellaneous 45,368 29,935 25,154
---------------------------------------------------------------------------------------------------------
Total 251,933 235,207 59,565
---------------------------------------------------------------------------------------------------------
Total Capitalization and Liabilities $1,123,711 $1,050,334 $ 791,283
=========================================================================================================
</TABLE>
II-220
<PAGE>
BALANCE SHEETS
Mississippi Power Company
<TABLE>
<CAPTION>
======================================================================================================================
At December 31, 1991 1990 1989 1988
----------------------------------------------------------------------------------------------------------------------
(Thousands of Dollars)
<S> <C> <C> <C> <C>
CAPITALIZATION AND LIABILITIES
Capitalization:
Common stock $ 37,691 $ 37,691 $ 37,691 $ 37,691
Paid-in capital 124,300 124,300 124,300 124,300
Premium on preferred stock 194 299 299 299
Earnings retained in the business 111,670 117,543 110,867 99,183
----------------------------------------------------------------------------------------------------------------------
Total common equity 273,855 279,833 273,157 261,473
Preferred stock 39,414 39,414 39,414 39,414
Preferred stock subject to mandatory redemption - 3,750 4,500 5,250
Long-term debt 304,150 270,724 277,693 287,525
----------------------------------------------------------------------------------------------------------------------
Total (excluding amount due within one year) 617,419 593,721 594,764 593,662
----------------------------------------------------------------------------------------------------------------------
Current Liabilities:
Notes payable to banks 4,500 30,103 12,957 6,500
Preferred stock due within one year - 368 368 368
Long-term debt due within one year 14,650 7,039 10,717 9,789
Accounts payable 38,213 45,763 47,019 46,937
Customer deposits 3,109 3,430 3,906 3,904
Taxes accrued 29,609 24,935 23,843 21,130
Interest accrued 4,602 4,315 4,280 4,016
Vacation pay accrued 4,406 3,955 3,910 3,815
Miscellaneous 10,236 6,833 7,746 9,347
----------------------------------------------------------------------------------------------------------------------
Total 109,325 126,741 114,746 105,806
----------------------------------------------------------------------------------------------------------------------
Deferred Credits and Other Liabilities:
Accumulated deferred income taxes 4,117 18,992 22,085 24,556
Accumulated deferred investment tax credits 35,657 37,187 38,752 40,435
Deferred credits related to income taxes - - - -
Miscellaneous 24,123 23,385 16,223 14,860
----------------------------------------------------------------------------------------------------------------------
Total 63,897 79,564 77,060 79,851
----------------------------------------------------------------------------------------------------------------------
Total Capitalization and Liabilities $ 790,641 $ 800,026 $ 786,570 $ 779,319
======================================================================================================================
</TABLE>
II-221A
<PAGE>
BALANCE SHEETS
Mississippi Power Company
<TABLE>
<CAPTION>
======================================================================================================================
At December 31, 1987 1986 1985 1984
----------------------------------------------------------------------------------------------------------------------
(Thousands of Dollars)
<S> <C> <C> <C> <C>
CAPITALIZATION AND LIABILITIES
Capitalization:
Common stock $ 37,691 $ 37,691 $ 37,691 $ 37,691
Paid-in capital 124,300 108,300 107,900 107,500
Premium on preferred stock 299 299 299 360
Earnings retained in the business 90,702 80,311 70,197 59,467
----------------------------------------------------------------------------------------------------------------------
Total common equity 252,992 226,601 216,087 205,018
Preferred stock 39,414 39,414 39,414 39,414
Preferred stock subject to mandatory redemption 6,750 8,250 9,750 10,500
Long-term debt 294,811 299,684 261,594 267,051
----------------------------------------------------------------------------------------------------------------------
Total (excluding amount due within one year) 593,967 573,949 526,845 521,983
----------------------------------------------------------------------------------------------------------------------
Current Liabilities:
Notes payable to banks - - - -
Preferred stock due within one year 368 368 368 729
Long-term debt due within one year 5,451 34,724 6,532 300
Accounts payable 45,659 36,490 50,992 46,336
Customer deposits 3,857 3,720 3,521 4,240
Taxes accrued 21,351 29,029 32,015 24,850
Interest accrued 4,474 5,064 5,502 5,577
Vacation pay accrued 3,956 3,559 3,337 2,910
Miscellaneous 6,005 5,746 5,464 6,453
----------------------------------------------------------------------------------------------------------------------
Total 91,121 118,700 107,731 91,395
----------------------------------------------------------------------------------------------------------------------
Deferred Credits and Other Liabilities:
Accumulated deferred income taxes 27,411 25,922 - -
Accumulated deferred investment tax credits 41,427 42,183 41,311 41,063
Deferred credits related to income taxes - - - -
Miscellaneous 10,142 6,356 3,690 6,089
----------------------------------------------------------------------------------------------------------------------
Total 78,980 74,461 45,001 47,152
----------------------------------------------------------------------------------------------------------------------
Total Capitalization and Liabilities $ 764,068 $ 767,110 $ 679,577 $ 660,530
======================================================================================================================
</TABLE>
II-221B
<PAGE>
MISSISSIPPI POWER COMPANY
OUTSTANDING SECURITIES AT DECEMBER 31, 1994
First Mortgage Bonds
Amount Interest Amount
Series Issued Rate Outstanding Maturity
----------------------------------------------------------------
(Thousands) (Thousands)
1993 $ 35,000 5-3/8% $ 35,000 3/1/98
1992 40,000 6-5/8% 40,000 8/1/00
1994 35,000 6.60% 35,000 3/1/04
1991 50,000 9-1/4% 47,072 5/1/21
1993 35,000 7.45% 35,000 6/1/23
-------- --------
$195,000 $192,072
======== ========
Pollution Control Bonds
Amount Interest Amount
Series Issued Rate Outstanding Maturity
----------------------------------------------------------------
(Thousands) (Thousands)
1977 $ 1,000 5.80% $ 980 10/1/07
1992 6,550 Variable 6,550 12/1/20
1992 16,750 Variable 16,750 12/1/22
1993 13,000 6.20% 13,000 4/1/23
1993 25,875 5.65% 25,875 11/1/23
-------- --------
$ 63,175 $ 63,155
======== ========
Preferred Stock
Shares Dividend Amount
Series Outstanding Rate Outstanding
----------------------------------------------------------------
(Thousands)
1947 20,099 4.60% $ 2,010
1956 40,000 4.40% 4,000
1965 50,000 4.72% 5,000
1968 50,000 7.00% 5,000
1992 350,000 7.25% 35,000
1993 150,000 6.32% 15,000
1993 84,040 6.65% 8,404
------- --------
744,139 $ 74,414
======= ========
II-222
<PAGE>
MISSISSIPPI POWER COMPANY
SECURITIES RETIRED DURING 1994
First Mortgage Bonds
Principal Interest
Series Amount Rate
-----------------------------------------------------------------------------
(Thousands)
1964 $10,000 4-5/8%
1965 11,000 4-3/4%
1966 10,000 6%
1991 1,628 9-1/4%
-------
$32,628
=======
Pollution Control Bonds
Principal Interest
Series Amount Rate
-----------------------------------------------------------------------------
(Thousands)
1977 $ 10 5.80%
II-223
<PAGE>
SAVANNAH ELECTRIC AND POWER COMPANY
FINANCIAL SECTION
II-224
<PAGE>
MANAGEMENT'S REPORT
Savannah Electric and Power Company 1994 Annual Report
The management of Savannah Electric and Power Company has prepared -- and is
responsible for -- the financial statements and related information included in
this report. These statements were prepared in accordance with generally
accepted accounting principles appropriate in the circumstances and necessarily
include amounts that are based on the best estimates and judgments of
management. Financial information throughout this annual report is consistent
with the financial statements.
The Company maintains a system of internal accounting controls to provide
reasonable assurance that assets are safeguarded and that books and records
reflect only authorized transactions of the Company. Limitations exist in any
system of internal controls, however, based on a recognition that the cost of
the system should not exceed its benefits. The Company believes its system of
internal accounting controls maintains an appropriate cost/benefit relationship.
The Company's system of internal accounting controls is evaluated on an
ongoing basis by the Company's internal audit staff. The Company's independent
public accountants also consider certain elements of the internal control system
in order to determine their auditing procedures for the purpose of expressing an
opinion on the financial statements.
The audit committee of the board of directors, composed of four directors
who are not employees, provides a broad overview of management's financial
reporting and control functions. Periodically, this committee meets with
management, the internal auditors and the independent public accountants to
ensure that these groups are fulfilling their obligations and to discuss
auditing, internal controls and financial reporting matters. The internal
auditors and the independent public accountants have access to the members of
the audit committee at any time.
Management believes that its policies and procedures provide reasonable
assurance that the Company's operations are conducted according to a high
standard of business ethics. In management's opinion, the financial statements
present fairly, in all material respects, the financial position, results of
operations, and cash flows of Savannah Electric and Power Company in conformity
with generally accepted accounting principles.
/s/ Arthur M. Gignilliat, Jr.
Arthur M. Gignilliat, Jr.
President and Chief Executive Officer
/s/ K. R. Willis
K. R. Willis
Vice-President Treasurer and Chief Financial Officer
II-225
<PAGE>
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
Savannah Electric and Power Company 1994 Annual Report
To the Board of Directors
of Savannah Electric and Power Company:
We have audited the accompanying balance sheets and statements of capitalization
of Savannah Electric and Power Company (a Georgia corporation and a wholly owned
subsidiary of The Southern Company) as of December 31, 1994 and 1993, and the
related statements of income, retained earnings, paid-in capital, and cash flows
for each of the three years in the period ended December 31, 1994. These
financial statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements (pages II-233 through II-246)
referred to above present fairly, in all material respects, the financial
position of Savannah Electric and Power Company as of December 31, 1994 and
1993, and the results of its operations and its cash flows for the periods
stated, in conformity with generally accepted accounting principles.
As explained in Notes 2 and 7 to the financial statements, effective
January 1, 1993, the Company changed its methods of accounting for
postretirement benefits other than pensions and for income taxes.
/s/ Arthur Andersen LLP
Atlanta, Georgia
February 15, 1995
II-226
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND FINANCIAL
CONDITION
Savannah Electric and Power Company 1994 Annual Report
RESULTS OF OPERATIONS
Earnings
Savannah Electric and Power Company's net income after dividends on preferred
stock for 1994 totaled $22.1 million, representing a $0.6 million (3.0 percent)
increase over the prior year. This increase was primarily due to a decrease in
operating expenses, offset somewhat by an increase in interest expense.
In 1993, earnings were $21.5 million, representing a $1.0 million (4.6
percent) increase from the prior year. The revenue impact of an increase in
retail energy sales due to exceptionally hot summer weather was partially offset
by the implementation of a work force reduction program which resulted in a
one-time charge to operating expenses of approximately $4.5 million.
Revenues
Total revenues for 1994 were $211.8 million, reflecting a 3.0 percent decrease
compared to 1993. The revenue impact of an expanding customer base was offset by
moderate weather, reduced industrial energy sales, and an associated decrease in
fuel cost recovery revenues.
The following table summarizes revenue increases and decreases compared to
prior years:
==============================================================
Increase (Decrease)
From Prior Years
--------------------------------
1994 1993 1992
--------------------------------
Retail -- (in thousands)
Change in base rates $ - $(1,450) $(1,350)
Sales growth 7,884 5,980 5,467
Weather (6,589) 4,567 (3,116)
Fuel cost recovery
and other (9,214) 12,404 7,270
--------------------------------------------------------------
Total retail (7,919) 21,501 8,271
--------------------------------------------------------------
Sales for resale--
Non-affiliates (1,235) (1,800) 8
Affiliates 4,013 928 75
--------------------------------------------------------------
Total sales for resale 2,778 (872) 83
--------------------------------------------------------------
Other operating revenues (1,516) 52 (239)
--------------------------------------------------------------
Total operating revenues $(6,657) $20,681 $ 8,115
==============================================================
Percent change (3.0)% 10.5% 4.3%
--------------------------------------------------------------
Retail revenues decreased 3.8 percent in 1994, compared to an increase of
11.5 percent in 1993. The decrease in 1994 retail revenues is attributable to
milder summer weather, reduced industrial energy sales, and substantially lower
fuel cost recovery revenues, offset somewhat by customer growth. Industrial
energ y sales turned down in the fourth quarter of 1994 when operations of a
large industrial customer were temporarily curtailed due to a mechanical failure
of a machine which was a major part of the customer's manufacturing operation.
Under the Company's fuel cost recovery provisions, fuel revenues --including
purchased energy-- generally equal fuel expense and have no effect on earnings.
The $1.5 million decrease in other operating revenues reflects deferral of over
recovery of demand-side management rider revenues during 1994. Revenues from
demand-side management riders (included in retail revenues) recover demand-side
management program costs and have little impact on earnings.
The increase in 1993 retail revenues resulted from customer growth and an
increase in the average annual kilowatt-hour use per customer which was
substantially increased due to hot summer weather.
Revenues from sales to utilities outside the service area under long-term
contracts consist of capacity and energy components. Capacity revenues reflect
the recovery of fixed costs and a return on investment under the contracts.
Energy is generally sold at variable cost. Capacity and energy revenues
decreased in 1994 due to reductions in sales to Florida Power Corporation. The
capacity and energy components were as follows:
========================================================
1994 1993 1992
--------------------------------------------------------
(in thousands)
Capacity $ 448 $ 978 $ 537
Energy 3,052 4,262 7,040
--------------------------------------------------------
Total $3,500 $5,240 $7,577
========================================================
Sales to affiliated companies within the Southern electric system vary from
year to year depending on demand and the availability and cost of generating
resources at each company. These sales have little impact on earnings.
II-227
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS (continued)
Savannah Electric and Power Company 1994 Annual Report
Kilowatt-hour sales for 1994 and the percent change by year were as
follows:
===============================================================
Percent Change
-------------------------
1994
KWH 1994 1993 1992
---------- ------------------------
(in millions)
Residential 1,298 (2.3)% 9.2% 1.8%
Commercial 1,046 2.9 6.5 3.0
Industrial 800 (6.4) (0.8) 4.3
Other 119 3.1 5.2 3.4
------
Total retail 3,263 (1.6) 5.5 2.9
Sales for resale -
Non-affiliates 202 (18.4) (32.7) (1.3)
Affiliates 93 23.4 100.3 15.5
------
Total 3,558 (2.2)% 2.6% 2.6%
======
===============================================================
Expenses
Total operating expenses for 1994 were $175.6 million, reflecting an $8.6
million decrease from 1993. This decrease includes a $5.8 million reduction in
fuel and purchased power expenses, reflecting a decrease in total energy
requirements. The $4.9 million reduction in 1994 in other operation and
maintenance expenses reflects the $4.5 million work force reduction charge in
1993 and a $1.1 million reduction in power generation expenses in 1994. This was
offset by an increase in depreciation expense because of additions to utility
plant, principally two combustion turbine units. Interest expense increased $1.9
million primarily due to the sale in June 1993 of $45 million of first mortgage
bonds.
Total operating expenses for 1993 increased $20.3 million (12.4 percent)
over the prior year. This increase includes a $10.8 million increase in fuel
expense, and an $8.7 million increase in other operation expenses. Fuel expenses
increased primarily because of higher generation due to extremely hot summer
weather and the higher cost of fuel. The increase in other operation expenses
reflects $4.5 million associated with the work force reduction program. The
Company also recognized higher employee benefit costs under new accounting rules
adopted in 1993. See Note 2 to the financial statements for additional
information on these new rules.
Fuel and purchased power costs constitute the single largest expense for
the Company. The mix of energy supply is determined primarily by system load,
the unit cost of fuel consumed and the availability of units.
The amount and sources of energy supply, the average cost of fuel per net
kilowatt-hour generated, and the total average cost of energy supply (including
purchased power) were as follows:
===============================================================
1994 1993 1992
-----------------------
Total energy supply
(millions of kilowatt-hours) 3,768 3,863 3,764
Sources of energy supply
(percent)
Coal 18 21 12
Oil 1 2 1
Gas 1 3 2
Purchased Power 80 74 85
Average cost of fuel per net
kilowatt-hour generated
(cents)
Coal 2.19 2.02 2.28
Oil 3.89 4.11 2.40
Gas 5.19 4.87 4.28
Total average cost of
energy supply 2.02 2.12 1.78
===============================================================
Effects of Inflation
The Company is subject to rate regulation and income tax laws that are based on
the recovery of historical costs. Therefore, inflation creates an economic loss
because the Company is recovering its costs of investments in dollars that have
less purchasing power. While the inflation rate has been relatively low in
recent years, it continues to have an adverse effect on the Company because of
the large investment in long-lived utility plant. Conventional accounting for
historical cost does not recognize this economic loss nor the partially
offsetting gain that arises through financing facilities with fixed-money
obligations such as long-term debt and preferred stock. Any recognition of
inflation by regulatory authorities is reflected in the rate of return allowed.
II-228
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS (continued)
Savannah Electric and Power Company 1994 Annual Report
Future Earnings Potential
The results of operations for the past three years 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.
Future earnings in the near term will depend upon growth in energy sales,
which is subject to a number of factors. Traditionally, these factors 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 the Company's service area. However, the Energy Policy Act of
1992 (Energy Act) is beginning to have a dramatic effect on the future of the
electric utility industry. The Energy Act promotes energy efficiency,
alternative fuel use, and increased competition for electric utilities. The
Company is posturing the business to meet the challenge of this major change in
the traditional practice of selling electricity. The Energy Act allows
independent power producers (IPPs) to access a utility's transmission network to
sell electricity to other utilities. This may enhance the incentives for IPPs to
build cogeneration plants for the Company's large industrial and commercial
customers. Although the Energy Act does not require transmission access to
retail customers, retail wheeling initiatives are rapidly evolving and becoming
very prominent issues in several states. In order to address these initiatives,
numerous questions must be resolved with the most complex ones relating to
transmission pricing and recovery of stranded investments. As the initiatives
become a reality, the structure of the utility industry could radically change.
Therefore, unless the Company remains a low-cost producer and provides quality
service, the Company's retail energy sales growth could be limited, and this
could significantly erode earnings. Conversely, being the low-cost producer
could provide significant opportunities to increase market share and
profitability.
Demand-side options -- programs that enable customers to lower or alter
their peak energy requirements -- have been initiated by the Company and are a
significant part of integrated resource planning. Customers can receive cash
incentives for participating in these programs in addition to reducing their
energy requirements. Besides promoting energy efficiency, another benefit of
these programs could be the ability to defer the need to construct costly
baseload generating facilities further into the future. The ability to defer
major construction projects in conjunction with regulatory precertification
approval processes for both new plant additions and purchase power contracts
should minimize the possibility of not being able to fully recover additional
costs.
The Company is subject to the provisions of Financial Accounting Standards
Board (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, the Company would be required to write off related
regulatory assets and liabilities. See Note 1 to the financial statements under
"Regulatory Assets and Liabilities" for additional information.
Compliance costs related to the Clean Air Act Amendments of 1990 (Clean Air
Act) could reduce earnings if such costs are not fully recovered. The Clean Air
Act is discussed later under "Environmental Matters."
Rates to retail customers served by the Company are regulated by the
Georgia Public Service Commission (GPSC). In May 1992, the Company requested,
and subsequently received, approval by the GPSC to reduce annual base revenues
by $2.8 million, effective June 1992. The reduction included a base rate
reduction of approximately $2.5 million spread among all classes of retail
customers. An additional $0.3 million reduction resulted from the implementation
of an experimental, time-of-use rate for certain commercial customers. As part
of this rate settlement, it was informally agreed that the Company's earned rate
of return on common equity should be 12.95 percent.
FINANCIAL CONDITION
Overview
The principal change in the Company's financial condition in 1994 was the
addition of $30 million to utility plant. The majority of funds needed for gross
property additions since 1992 have been provided from operating activities,
II-229
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS (continued)
Savannah Electric and Power Company 1994 Annual Report
principally from earnings and non-cash charges to income such as depreciation
and deferred income taxes. See Statements of Cash Flows for additional
information.
Capital Structure
As of December 31, 1994, the Company's capital structure consisted of 45.8
percent common equity, 9.9 percent preferred stock and 44.3 percent long-term
debt, excluding amounts due within one year. The Company's long-term financial
objective for capitalization ratios is to maintain a capital structure of common
equity at 45 percent, preferred stock at 10 percent and debt at 45 percent.
Maturities and retirements of long-term debt were $5 million in 1994, $4
million in 1993 and $53 million in 1992.
The composite interest rates and dividend rates for the years 1992 through
1994 as of year-end were as follows:
===================================================================
1994 1993 1992
-----------------------------
Composite interest rates
on long-term debt 8.0% 8.0% 8.5%
Composite preferred stock
dividend rate 6.6% 6.6% 9.5%
===================================================================
The Company's current securities ratings are as follows:
===================================================================
Standard
Moody's & Poor's
------------------------
First Mortgage Bonds A1 A
Preferred Stock "a2" A-
-- --
===================================================================
Capital Requirements for Construction
The Company's projected construction expenditures for the next three years total
$87 million ($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 environmental regulations; revised load projections; the cost and
efficiency of construction labor, equipment and materials; and the cost of
capital. In addition, there can be no assurance that costs related to capital
expenditures will be fully recovered.
Other Capital Requirements
In addition to the funds needed for the construction program, approximately $2.9
million will be needed by the end of 1997 for present sinking fund requirements
and a capital lease buyout.
Environmental Matters
In November 1990, the Clean Air Act was signed into law. Title IV of the Clean
Air Act -- the acid rain compliance provision of the new law --may have a
significant impact on the Company and other subsidiaries of the Southern
electric system. Specific reductions in sulfur dioxide and nitrogen oxide
emissions from fossil-fired generating plants will be required in two phases.
Phase I compliance began in 1995, and affects eight generating plants -- some
10,000 megawatts of capacity or 35 percent of total capacity -- in the Southern
electric system. Phase II compliance is required in 2000, and all fossil-fired
generating plants in the Southern electric system will be affected.
In 1995, the Environmental Protection Agency (EPA) began issuing annual
sulfur dioxide emission allowances through the allowance trading program. An
emission allowance is the authority to emit one ton of sulfur dioxide during a
calendar year. The method for issuing allowances is based on the fossil fuel
consumed from 1985 through 1987 for each affected generating unit. Emission
allowances are transferable and can be bought, sold, or banked and used in the
future.
The sulfur dioxide emission allowance program is expected to minimize the
cost of compliance. The Southern Company's sulfur dioxide compliance strategy is
designed to use allowances as a compliance option.
The Southern Company expects to achieve Phase I sulfur dioxide compliance
at the eight affected plants by switching to low-sulfur coal, and this would
require some equipment upgrades. This compliance strategy is expected to result
in unused emission allowances being banked for later use. Additional
II-230
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS (continued)
Savannah Electric and Power Company 1994 Annual Report
construction expenditures are required to install equipment for the control of
nitrogen oxide emissions at these eight plants. Also, continuous emissions
monitoring equipment has been installed on all fossil-fired units. Construction
expenditures for Phase I compliance are estimated to total approximately $300
million through 1995 for The Southern Company, of which the Company's portion is
approximately $2 million.
For Phase II sulfur dioxide compliance, The Southern Company could use
emission allowances banked during Phase I and increase fuel switching, install
flue gas desulfurization equipment at selected plants, and/or purchase more
allowances, depending on the price and availability of allowances. Also, in
Phase II, equipment to control nitrogen oxide emissions will be installed on
additional system fossil-fired plants as required to meet anticipated Phase II
limits. Therefore, during the period 1996 through 2000, current compliance
strategy could require total estimated construction expenditures of
approximately $150 million. No construction expenditures are expected to be
required of the Company to comply with Phase II requirements. However, the full
impact of Phase II compliance cannot now be determined with certainty, pending
the continuing development of a market for emission allowances, the completion
of EPA regulations, and the possibility of new emission reduction technologies.
An increase of up to 2 percent in annual revenue requirements from
customers could be necessary to fully recover the Company's costs of compliance
for both Phase I and II of the Clean Air Act. Compliance costs include
construction expenditures, increased costs for switching to low-sulfur coal, and
costs related to emission allowances.
Title III of the Clean Air Act requires a multi-year EPA study of power
plant emissions of hazardous air pollutants. The EPA is scheduled to submit a
report to Congress on the results of this study by November 1995. The report
will include a decision on whether additional regulatory control of these
substances is warranted. Compliance with any new control standards could result
in significant additional costs. The impact of new standards -- if any -- will
depend on the development and implementation of applicable regulations.
A significant portion of costs related to the acid rain provision of the
Clean Air Act is expected to be recovered through existing ratemaking
provisions. However, there can be no assurance that all Clean Air Act costs will
be recovered.
The EPA continues to evaluate the need for a new short-term ambient air
quality standard for sulfur dioxide. Preliminary results from an EPA study on
the impact of a new standard indicate that a number of plants could be required
to install sulfur dioxide controls. These controls would be in addition to the
controls already required to meet the acid rain provision of the Clean Air Act.
The EPA issued proposed rules in November 1994 and is required to take final
action on this issue in 1996. The impact of any new standard will depend on the
level chosen for the standard and cannot be determined at this time.
In addition, the EPA is evaluating the need to revise the ambient air
quality standards for particulate matter, nitrogen oxides, and ozone. The impact
of any new standard will depend on the level chosen for the standard and cannot
be determined at this time.
In 1995, the EPA may issue revised rules on air quality control regulations
related to stack height requirements of the Clean Air Act. The full impact of
the final rules cannot be determined at this time, pending their development and
implementation.
In 1993, the EPA issued a ruling confirming the non-hazardous status of
coal ash. However, the EPA has until 1998 to classify co-managed utility
wastes--coal ash and other utility wastes--as either non-hazardous or hazardous.
If the EPA classifies the co-managed wastes as hazardous, then substantial
additional costs for the management of such wastes may be required. The full
impact of any change in the regulatory status will depend on the subsequent
development of co-managed waste requirements.
The Company must comply with other environmental laws and regulations that
cover the handling and disposal of hazardous waste. Under these various laws and
II-231
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS (continued)
Savannah Electric and Power Company 1994 Annual Report
regulations, the Company could incur substantial costs to clean up properties
currently or previously owned. The Company conducts studies to determine the
extent of any required cleanup costs and will recognize in the financial
statements any costs to clean up known sites.
Several major pieces of environmental legislation are being considered for
reauthorization or amendment by Congress. These include: the Clean Water Act;
the Comprehensive Environmental Response, Compensation, and Liability Act; the
Resource Conservation and Recovery Act; and the Endangered Species Act. Changes
to these laws could affect many areas of The Southern Company's operations. The
full impact of these requirements cannot be determined at this time, pending the
development and implementation of applicable regulations.
Compliance with possible new legislation related to global climate change,
electromagnetic fields, and other environmental and health concerns could
significantly affect The Southern Company. The impact of new legislation -- if
any -- will depend on the subsequent development and implementation of
applicable regulations. In addition, the potential exists for liability as the
result of lawsuits alleging damages caused by electromagnetic fields.
Sources of Capital
At December 31, 1994, the Company had $1.6 million of cash and $18 million of
unused credit arrangements with banks to meet its short-term cash needs. The
Company had $2.5 million of short-term bank borrowings at December 31, 1994. In
December 1994, the Company renegotiated a two-year revolving credit arrangement
with three of its existing banks for a total credit line of $20 million. The
primary purpose of this additional credit is to provide interim funding for the
Company's construction program.
It is anticipated that the funds required for construction and other
purposes, including compliance with environmental regulations, will also be
derived from operations and the sale of additional first mortgage bonds and
preferred stock and capital contributions from The Southern Company. The Company
is required to meet certain coverage requirements specified in its mortgage
indenture and corporate charter to issue new first mortgage bonds and preferred
stock. The Company's coverage ratios are sufficiently high enough to permit, at
present interest levels, any foreseeable security sales. The amount of
securities which the Company will be permitted to issue in the future will
depend upon market conditions and other factors prevailing at that time.
II-232
<PAGE>
STATEMENTS OF INCOME
For the Years Ended December 31, 1994, 1993, and 1992
Savannah Electric and Power Company 1994 Annual Report
<TABLE>
<CAPTION>
=============================================================================================
1994 1993 1992
---------------------------------------------------------------------------------------------
(in thousands)
<S> <C> <C> <C>
Operating Revenues (Notes 1, 3, and 6):
Revenues $ 205,339 $ 216,009 $ 196,256
Revenues from affiliates 6,446 2,433 1,505
---------------------------------------------------------------------------------------------
Total operating revenues 211,785 218,442 197,761
---------------------------------------------------------------------------------------------
Operating Expenses:
Operation --
Fuel 18,555 24,976 14,162
Purchased power from non-affiliates 1,839 793 494
Purchased power from affiliates 55,822 56,274 56,492
Other (Note 2) 41,623 45,610 36,884
Maintenance 12,560 13,516 14,232
Depreciation and amortization (Notes 1 and 7) 17,854 16,467 16,829
Taxes other than income taxes 11,074 11,136 10,231
Federal and state income taxes (Notes 1 and 7) 16,289 15,436 14,566
---------------------------------------------------------------------------------------------
Total operating expenses 175,616 184,208 163,890
---------------------------------------------------------------------------------------------
Operating Income 36,169 34,234 33,871
Other Income (Expense):
Allowance for equity funds used during construction (Note 1) 831 958 446
Interest income 54 209 276
Other, net (Note 2) (1,032) (1,841) (1,450)
Income taxes applicable to other income (Notes 1 and 7) 864 1,117 758
---------------------------------------------------------------------------------------------
Income Before Interest Charges 36,886 34,677 33,901
---------------------------------------------------------------------------------------------
Interest Charges:
Interest on long-term debt 12,585 10,696 10,870
Allowance for debt funds used during construction (Note 1) (1,225) (699) (289)
Interest on notes payable 205 240 15
Amortization of debt discount, premium, and expense, net 550 535 427
Other interest charges 337 340 466
---------------------------------------------------------------------------------------------
Net interest charges 12,452 11,112 11,489
---------------------------------------------------------------------------------------------
Net Income 24,434 23,565 22,412
Dividends on Preferred Stock 2,324 2,106 1,900
---------------------------------------------------------------------------------------------
Net Income After Dividends on Preferred Stock $ 22,110 $ 21,459 $ 20,512
=============================================================================================
The accompanying notes are an integral part of these statements.
</TABLE>
II-233
<PAGE>
STATEMENTS OF CASH FLOWS
For the Years Ended December 31, 1994, 1993, and 1992
Savannah Electric and Power Company 1994 Annual Report
<TABLE>
<CAPTION>
==============================================================================================
1994 1993 1992
----------------------------------------------------------------------------------------------
(in thousands)
<S> <C> <C> <C>
Operating Activities:
Net income $ 24,434 $ 23,565 $ 22,412
Adjustments to reconcile net income to net
cash provided by operating activities --
Depreciation and amortization 19,353 17,482 17,757
Deferred income taxes and investment tax credits 1,625 607 5,947
Allowance for equity funds used during construction (831) (958) (446)
Other, net 826 2,853 (1,312)
Changes in certain current assets and liabilities --
Receivables, net 18,481 (16,839) (4,107)
Special deposits - - 350
Inventories 1,144 (3,947) 4,435
Payables (19,957) 18,742 351
Other (117) 3,282 2,083
----------------------------------------------------------------------------------------------
Net cash provided from operating activities 44,958 44,787 47,470
----------------------------------------------------------------------------------------------
Investing Activities:
Gross property additions (30,078) (72,858) (30,132)
Other (841) 1,676 (1,073)
-----------------------------------------------------------------------------------------------
Net cash used for investing activities (30,919) (71,182) (31,205)
-----------------------------------------------------------------------------------------------
Financing Activities and Capital Contributions:
Proceeds:
First mortgage bonds - 45,000 30,000
Preferred stock - 35,000 -
Pollution control bonds - 4,085 13,870
Other long-term debt 8,500 10,000 -
Retirements:
Preferred stock - (20,000) -
First mortgage bonds (5,065) - (38,750)
Pollution control bonds - (4,085) (14,550)
Other long-term debt (823) (10,356) (217)
Notes payable, net (500) (4,500) 7,500
Payment of preferred stock dividends (2,129) (2,222) (1,900)
Payment of common stock dividends (16,300) (21,000) (22,000)
Miscellaneous (74) (3,400) (3,985)
-----------------------------------------------------------------------------------------------
Net cash provided from (used for) financing activities (16,391) 28,522 (30,032)
-----------------------------------------------------------------------------------------------
Net Increase (Decrease) in Cash and Cash Equivalents (2,352) 2,127 (13,767)
Cash and Cash Equivalents at Beginning of Year 3,915 1,788 15,555
-----------------------------------------------------------------------------------------------
Cash and Cash Equivalents at End of Year $ 1,563 $ 3,915 $ 1,788
===============================================================================================
Supplemental Cash Flow Information:
Cash paid during the year for-
Interest (net of amount capitalized) $11,579 $10,712 $9,932
Income taxes 14,441 13,947 6,646
-----------------------------------------------------------------------------------------------
( ) Denotes use of cash.
The accompanying notes are an integral part of these statements.
</TABLE>
II-234
<PAGE>
BALANCE SHEETS
At December 31, 1994 and 1993
Savannah Electric and Power Company 1994 Annual Report
<TABLE>
<CAPTION>
=================================================================================================
Assets 1994 1993
-------------------------------------------------------------------------------------------------
(in thousands)
<S> <C> <C>
Utility Plant:
Plant in service, at original cost (Notes 1, 4, 5, 7, and 9) $ 693,432 $ 622,521
Less accumulated provision for depreciation 267,590 251,565
-------------------------------------------------------------------------------------------------
425,842 370,956
Construction work in progress 5,930 49,797
-------------------------------------------------------------------------------------------------
Total 431,772 420,753
-------------------------------------------------------------------------------------------------
Other Property and Investments 1,790 1,793
-------------------------------------------------------------------------------------------------
Current Assets:
Cash and cash equivalents 1,563 3,915
Receivables-
Customer accounts receivable 17,581 18,551
Other accounts and notes receivable 216 790
Affiliated companies 177 12,924
Accumulated provision for uncollectible accounts (866) (762)
Fuel cost under recovery 3,113 7,112
Fossil fuel stock, at average cost 7,557 8,419
Materials and supplies, at average cost (Note 1) 9,076 9,358
Prepayments 7,446 4,849
-------------------------------------------------------------------------------------------------
Total 45,863 65,156
-------------------------------------------------------------------------------------------------
Deferred Charges:
Deferred charges related to income taxes (Note 7) 23,521 24,890
Premium on reacquired debt, being amortized 3,295 3,792
Cash surrender value of life insurance for deferred compensation plan 7,028 5,907
Miscellaneous 5,036 4,896
-------------------------------------------------------------------------------------------------
Total 38,880 39,485
-------------------------------------------------------------------------------------------------
Total Assets $ 518,305 $ 527,187
=================================================================================================
The accompanying notes are an integral part of these statements.
</TABLE>
II-235
<PAGE>
BALANCE SHEETS
At December 31, 1994 and 1993
Savannah Electric and Power Company 1994 Annual Report
<TABLE>
<CAPTION>
================================================================================================
Capitalization and Liabilities 1994 1993
------------------------------------------------------------------------------------------------
(in thousands)
<S> <C> <C>
Capitalization (See accompanying statements):
Common stock equity $ 161,581 $ 154,269
Preferred stock 35,000 35,000
Long-term debt 155,922 151,338
-------------------------------------------------------------------------------------------------
Total 352,503 340,607
-------------------------------------------------------------------------------------------------
Current Liabilities:
Amount of securities due within one year (Note 10) 2,579 4,499
Notes payable (Note 5) 2,500 3,000
Accounts payable-
Affiliated companies 5,162 6,041
Other 3,829 24,401
Customer deposits 4,698 4,714
Taxes accrued-
Federal and state income 272 342
Other 861 1,187
Interest accrued 6,830 6,730
Vacation pay accrued 1,823 1,638
Pensions accrued (Note 2) 4,783 5,718
Miscellaneous 3,499 2,985
-------------------------------------------------------------------------------------------------
Total 36,836 61,255
-------------------------------------------------------------------------------------------------
Deferred Credits and Other Liabilities:
Accumulated deferred income taxes (Note 7) 70,786 66,947
Accumulated deferred investment tax credits (Note 7) 14,637 15,301
Deferred credits related to income taxes (Note 7) 25,487 26,173
Deferred compensation plans 6,807 6,117
Deferred under-funded accrued benefit obligation (Note 2) 3,022 5,855
Postretirement benefits 3,808 2,074
Miscellaneous 4,419 2,858
-------------------------------------------------------------------------------------------------
Total 128,966 125,325
-------------------------------------------------------------------------------------------------
Commitments and Contingent Matters (Notes 1, 2, 4, 5, and 9)
Total Capitalization and Liabilities $ 518,305 $ 527,187
=================================================================================================
The accompanying notes are an integral part of these statements.
II-236
<PAGE>
STATEMENTS OF CAPITALIZATION
At December 31, 1994 and 1993
Savannah Electric and Power Company 1994 Annual Report
</TABLE>
<TABLE>
<CAPTION>
==================================================================================================
1994 1993 1994 1993
--------------------------------------------------------------------------------------------------
(in thousands) (percent of total)
<S> <C> <C> <C> <C>
Common Stock Equity (Notes 2 and 11):
Common stock, par value $5 per share --
Authorized -- 16,000,000 shares
Outstanding -- 10,844,635 shares in
1994 and 1993 $ 54,223 $ 54,223
Paid-in capital 8,688 8,688
Additional minimum liability
for under-funded pension obligations (546) (2,121)
Retained Earnings 99,216 93,479
--------------------------------------------------------------------------------------------------
Total common stock equity 161,581 154,269 45.8 % 45.3 %
--------------------------------------------------------------------------------------------------
Cumulative Preferred Stock (Note 8):
$25 par value --
Authorized -- 2,200,000 shares
6.64% Series -- Outstanding -- 1,400,000 shares 35,000 35,000
-------------------------------------------------------------------------------------------------
Total (annual dividend requirement -- $2,324,000) 35,000 35,000 9.9 10.3
-------------------------------------------------------------------------------------------------
Long-Term Debt (Note 9):
First mortgage bonds --
Maturity Interest Rates
-------- --------------
April 1, 1994 4 5/8% - 3,715
July 1, 2003 6 3/8% 20,000 20,000
October 1, 2019 9 1/4% 28,950 30,000
July 1, 2021 9 3/8% 29,700 30,000
July 1, 2022 8.30% 30,000 30,000
July 1, 2023 7.40% 25,000 25,000
--------------------------------------------------------------------------------------------------
Total first mortgage bonds 133,650 138,715
Pollution control obligations (Note 9) 17,955 17,955
Other long-term debt (Note 9) 9,988 2,311
Unamortized debt premium (discount), net (3,092) (3,144)
--------------------------------------------------------------------------------------------------
Total long-term debt (annual interest
requirement -- $12,859,000) 158,501 155,837
Less amount due within one year (Note 10) 2,579 4,499
--------------------------------------------------------------------------------------------------
Long-term debt excluding amount due within one year 155,922 151,338 44.3 44.4
--------------------------------------------------------------------------------------------------
Total Capitalization $ 352,503 $ 340,607 100.0% 100.0%
==================================================================================================
The accompanying notes are an integral part of these statements.
</TABLE>
II-237
<PAGE>
STATEMENTS OF RETAINED EARNINGS
For the Years Ended December 31, 1994, 1993, and 1992
Savannah Electric and Power Company 1994 Annual Report
<TABLE>
<CAPTION>
=======================================================================================
1994 1993 1992
---------------------------------------------------------------------------------------
(in thousands)
<S> <C> <C> <C>
Balance at Beginning of Period $ 93,479 $ 95,155 $ 96,643
Net income after dividends on preferred stock 22,110 21,459 20,512
Cash dividends on common stock (16,300) (21,000) (22,000)
Preferred stock transactions, net (73) (2,135) -
---------------------------------------------------------------------------------------
Balance at End of Period (Note 11) $ 99,216 $ 93,479 $ 95,155
=======================================================================================
STATEMENTS OF PAID-IN CAPITAL
For the Years Ended December 31, 1994, 1993, and 1992
=========================================================================================
1994 1993 1992
-----------------------------------------------------------------------------------------
(in thousands)
Balance at Beginning of Period $ 8,688 $ 8,688 $ 8,665
Contributions to capital by parent company - - 23
-----------------------------------------------------------------------------------------
Balance at End of Period $ 8,688 $ 8,688 $ 8,688
=========================================================================================
The accompanying notes are an integral part of these statements.
</TABLE>
II-238
<PAGE>
NOTES TO FINANCIAL STATEMENTS
Savannah Electric and Power Company 1994 Annual Report
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
General
Savannah Electric and Power Company is a wholly owned subsidiary of The Southern
Company, which is the parent company of five operating companies, a system
service company, Southern Communications Services (Southern Communications),
Southern Electric International (Southern Electric), Southern Nuclear Operating
Company (Southern Nuclear), and The Southern Development and Investment Group
(SDIG). The operating companies provide electric service in four southeastern
states. Contracts among the companies -- dealing with jointly owned generating
facilities, interconnecting transmission lines, and the exchange of electric
power -- are regulated by the Federal Energy Regulatory Commission (FERC) or the
Securities and Exchange Commission (SEC). The system service company provides,
at cost, specialized services to The Southern Company and subsidiary companies.
Southern Communications, beginning in mid-1995, will provide digital wireless
communications services -- over the 800-megahertz frequency band -- to The
Southern Company's subsidiaries and also will market these services to the
public within the Southeast. Southern Electric designs, builds, owns, and
operates power production facilities and provides a broad range of technical
services to industrial companies and utilities in the United States and a number
of international markets. Southern Nuclear provides services to The Southern
Company's nuclear power plants. SDIG develops new business opportunities related
to energy products and services.
The Southern Company is registered as a holding company under the Public
Utility Holding Company Act of 1935 (PUHCA). Both The Southern Company and its
subsidiaries are subject to the regulatory provisions of the PUHCA. The Company
also is subject to regulation by the FERC and the Georgia Public Service
Commission (GPSC). The Company follows generally accepted accounting principles
and complies with the accounting policies and practices prescribed by the GPSC.
Certain prior years' data presented in the financial statements have been
reclassified to conform with current year presentation.
Regulatory Assets and Liabilities
The Company is subject to the provisions of FASB Statement No. 71, Accounting
for the Effects of Certain Types of Regulation. Regulatory assets represent
probable future revenues to the Company associated with certain costs that are
expected to be recovered from customers through the ratemaking process.
Regulatory liabilities represent probable future reductions in revenues
associated with amounts that are to be credited to customers through the
ratemaking process. Regulatory assets and (liabilities) reflected in the Balance
Sheets at December 31 relate to:
===============================================================
1994 1993
--------------------
(in thousands)
Deferred income taxes $23,521 $24,890
Premium on reacquired debt 3,295 3,792
Deferred income tax credits (25,487) (26,173)
---------------------------------------------------------------
Total $ 1,329 $ 2,509
===============================================================
In the event that a portion of the Company's operations is no longer
subject to the provisions of Statement No. 71, the Company would be required to
write off related regulatory assets and liabilities. In addition, the Company
would be required to determine any impairment to other assets, including plant,
and write down the assets to their fair value.
Revenues and Fuel Costs
The Company accrues revenues for service rendered but unbilled at the end of
each fiscal period. Fuel costs are expensed as the fuel is used. The Company's
electric rates include provisions to adjust billings for fluctuations in fuel
and purchased power costs. Revenues are adjusted for differences between
recoverable fuel and demand-side management program costs and amounts actually
recovered in current rates.
The Company has a diversified base of customers. No single customer or
industry comprises 10 percent or more of revenues. In 1994, uncollectible
accounts continued to average less than 1 percent of revenues.
II-239
<PAGE>
NOTES (continued)
Savannah Electric and Power Company 1994 Annual Report
Depreciation and Amortization
Depreciation of the original cost of depreciable utility plant in service is
provided primarily by using composite straight-line rates, which approximated
2.9 percent in 1994, 2.9 percent in 1993, and 3.2 percent in 1992. The decrease
in rates following 1992 reflects the Company's implementation of new
depreciation rates approved by the GPSC. These new rates provide for a timely
recovery of the investments in the Company's depreciable properties.
When property subject to depreciation is retired or otherwise disposed of
in the normal course of business, its cost -- together with the cost of removal,
less salvage -- is charged to the accumulated provision for depreciation. Minor
items of property included in the original cost of the plant are retired when
the related property unit is retired.
Income Taxes
The Company, which is included in the consolidated federal income tax return
filed by The Southern Company, provides deferred income taxes for all
significant income tax temporary differences. Investment tax credits utilized
are deferred and amortized to income over the average lives of the related
property.
Effective January 1, 1993, the Company adopted FASB Statement No. 109,
Accounting for Income Taxes. Statement No. 109 required, among other things,
conversion to the liability method of accounting for accumulated deferred income
taxes. See Note 7 for additional information about Statement No. 109.
Allowance for Funds Used During Construction (AFUDC)
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 increases the revenue requirement
over the service life of the plant through a higher rate base and higher
depreciation expense. The composite rates used by the Company to calculate AFUDC
were 8.04 percent in 1994, 8.77 percent in 1993, and 11.27 percent in 1992.
Utility Plant
Utility plant is stated at original cost, which includes: materials; labor;
minor items of property; appropriate administrative and general costs;
payroll-related costs such as taxes, pensions, and other benefits; and the
estimated cost of funds used during construction. The cost of maintenance,
repairs, and replacement of minor items of property is charged to maintenance
expense. The cost of replacements of property (exclusive of minor items of
property) is charged to utility plant.
Cash and Cash Equivalents
For purposes of the Statements of Cash Flows, temporary cash investments are
considered cash equivalents. Temporary cash investments are securities with
original maturities of 90 days or less.
Financial Instruments
In accordance with FASB Statement No. 107, Disclosure About Fair Value of
Financial Instruments, the Company's only financial instrument that the carrying
amount did not approximate fair value at December 31 was as follows:
================================================================
Long-Term Debt
-----------------------
Carrying Fair
Year Amount Value
---- -----------------------
(in millions)
1994 $157 $153
1993 154 164
================================================================
The fair value for long-term debt was based on either closing market prices
or closing prices of comparable instruments.
Materials and Supplies
Generally, materials and supplies include the cost of transmission,
distribution, and generating plant materials. Materials are charged to inventory
when purchased and then expensed or capitalized to plant, as appropriate, when
installed.
II-240
<PAGE>
NOTES (continued)
Savannah Electric and Power Company 1994 Annual Report
2. RETIREMENT BENEFITS
Pension Plan
The Company has a defined benefit, trusteed, non-contributory pension plan that
covers substantially all regular employees. Benefits are based on the greater of
amounts resulting from two different formulas: years of service and final
average pay or years of service and a flat-dollar benefit. The Company uses the
"projected unit credit" actuarial method for funding purposes, subject to
limitations under federal income tax regulations. Amounts funded to the pension
trust are primarily invested in equity and fixed-income securities. FASB
Statement No. 87, Employers' Accounting for Pensions, requires use of the
"projected unit credit" actuarial method for financial reporting purposes.
Postretirement Benefits
The Company also provides certain medical care and life insurance benefits for
retired employees. Substantially all employees may become eligible for these
benefits when they retire. A qualified trust for medical benefits is funded to
the extent deductible under federal income tax regulations. Amounts funded are
primarily invested in debt and equity securities.
Effective January 1, 1993, the Company adopted FASB Statement No. 106,
Employers' Accounting for Postretirement Benefits Other Than Pensions, on a
prospective basis. Statement No. 106 requires that medical care and life
insurance benefits for retired employees be accounted for on an accrual basis
using a specified actuarial method, "benefit/years-of-service." The cost of
postretirement benefits is reflected in rates on a current basis.
Prior to 1993, consistent with regulatory treatment, the Company recognized
costs on a cash basis as payments were made. The total cost of such benefits
recognized by the Company in 1992 was $375 thousand.
Funded Status and Cost of Benefits
Shown in the following tables are actuarial results and assumptions for pension
and postretirement medical and life insurance benefits as computed under the
requirements of FASB Statement Nos. 87 and 106, respectively. The funded status
of the plans at December 31 was as follows:
==================================================================
Pension
-------------------
1994 1993
-------------------
(in thousands)
Actuarial present value of
benefit obligation:
Vested benefits $35,227 $35,818
Non-vested benefits 2,069 1,992
------------------------------------------------------------------
Accumulated benefit obligation 37,296 37,810
Additional amounts related to
projected salary increases 7,393 5,974
------------------------------------------------------------------
Projected benefit obligation 44,689 43,784
Less:
Fair value of plan assets 27,165 26,446
Unrecognized net loss 10,950 9,449
Unrecognized prior service cost 1,510 1,685
Unrecognized net transition
obligation 621 710
Adjustment required to
recognize additional
minimum liability 5,688 5,871
------------------------------------------------------------------
Accrued pension cost recognized
in the Balance Sheets $10,131 $11,365
===================================================================
The weighted average rates assumed in the actuarial calculations for the
pension plan were:
==================================================================
1994 1993 1992
------------------------------
Discount 8.00% 7.50% 8.00%
Annual salary increase 5.25 4.75 5.00
Long-term return on plan assets 9.00 9.25 9.25
===================================================================
In accordance with Statement No. 87, an additional liability related to
under-funded accumulated benefit obligations was reflected at December 31, 1994
and December 31, 1993. Corresponding net-of-tax balances of $0.5 million and
$2.1 million were recognized as separate components of Common Stock Equity in
the 1994 and 1993 Statements of Capitalization.
II-241
<PAGE>
NOTES (continued)
Savannah Electric and Power Company 1994 Annual Report
================================================================
Postretirement
Medical
---------------------
1994 1993
---------------------
(in thousands)
Actuarial present value of
benefit obligation:
Retirees and dependents $ 8,480 $ 8,632
Employees eligible to retire 825 898
Other employees 6,840 6,489
-----------------------------------------------------------------
Accumulated benefit obligation 16,145 16,019
Less:
Fair value of plan assets 393 -
Unrecognized net loss 3,106 4,124
Unrecognized transition
obligation 9,817 10,362
-----------------------------------------------------------------
Accrued liability recognized in the
Balance Sheets $ 2,829 $ 1,533
=================================================================
Postretirement Life
----------------------
1994 1993
----------------------
(in thousands)
Actuarial present value of
benefit obligation:
Retirees and dependents $2,514 $2,536
Employees eligible to retire 59 -
Other employees 1,645 1,577
-------------------------------------------------------------------
Accumulated benefit obligation 4,218 4,113
Less:
Fair value of plan assets - -
Unrecognized net loss 91 262
Unrecognized transition
obligation 3,204 3,382
-------------------------------------------------------------------
Accrued liability recognized in the
Balance Sheets $ 923 $ 469
===================================================================
The weighted average rates assumed in the actuarial calculations for the
postretirement medical and life plans were:
=======================================================
1994 1993
------------------
Discount 8.00% 7.50%
Annual salary increase 5.50 5.00
Long-term return on plan assets 8.50 8.50
=======================================================
An additional assumption used in measuring the accumulated postretirement
medical benefit obligation was a weighted average medical care cost trend rate
of 10.5 percent for 1994, decreasing gradually to 6.0 percent through the year
2000 and remaining at that level thereafter. An annual increase in the assumed
medical care cost trend rate of 1 percent would increase the accumulated medical
benefit obligation at December 31, 1994, by $2.3 million and the aggregate of
the service and interest cost components of the net retiree medical cost by $0.3
million.
Components of the plans' net costs are shown below:
===================================================================
Pension
---------------------------
1994 1993 1992
---------------------------
(in thousands)
Benefits earned during the year $ 1,192 $1,188 $1,053
Interest cost on projected
benefit obligation 3,279 2,741 2,429
Actual (return) loss on plan assets 27 (2,199) (1,266)
Net amortization and deferral (1,474) 716 (227)
-------------------------------------------------------------------
Net pension cost $ 3,024 $2,446 $1,989
===================================================================
Of the above net pension amounts, $2.6 million in 1994, $2.0 million in
1993 and $1.7 million in 1992 were recorded in operating expenses, and the
remainder was recorded in construction and other accounts.
================================================================
Postretirement
Medical
------------------
1994 1993
------------------
(in thousands)
Benefits earned during the year $ 528 346
Interest cost on accumulated
benefit obligation 1,185 855
Amortization of transition obligation 545 545
Actual (return) loss on plan assets 6 -
Net amortization and deferral 111 -
----------------------------------------------------------------
Net postretirement cost $2,375 $1,746
================================================================
==================================================================
Postretirement Life
----------------------
1994 1993
----------------------
(in thousands)
Benefits earned during the year $104 $ 97
Interest cost on accumulated
benefit obligation 307 279
Amortization of transition obligation 178 178
------------------------------------------------------------------
Net postretirement cost $589 $554
==================================================================
II-242
<PAGE>
NOTES (continued)
Savannah Electric and Power Company 1994 Annual Report
Of the above net postretirement medical and life insurance costs, $2.4
million in 1994 and $1.8 million in 1993 were charged to operating expenses, and
the remainder was recorded in construction and other accounts.
The Company has a supplemental retirement plan for certain executive
employees. The plan is unfunded and payable from the general funds of the
Company. The Company has purchased life insurance on participating executives,
and plans to use these policies to satisfy this obligation. Benefit costs
associated with this plan for 1994, 1993 and 1992 were $377 thousand, $980
thousand and $316 thousand, respectively. The 1993 benefit costs reflect a
one-time expense related to employees who were part of the work force reduction
program.
Work Force Reduction Program
In 1993, the Company incurred additional costs for a one-time charge related to
the implementation of a work force reduction program. In 1993, $4.5 million was
charged to operating expenses and $0.6 million was charged to other income
(expense).
3. REGULATORY MATTERS
In May 1992, the Company filed for, and subsequently received, GPSC approval to
implement new base rates designed to decrease base operating revenues by $2.8
million annually. The reduction included a base rate reduction of approximately
$2.5 million spread among all classes of customers, effective June 1992. An
additional $0.3 million reduction resulted from the implementation of an
experimental, time-of-use rate for certain commercial customers in August 1992.
4. CONSTRUCTION PROGRAM
The Company is engaged in a continuous construction program, currently estimated
to total $34 million in 1995, $27 million in 1996 and $26 million in 1997. The
estimates include AFUDC of $0.7 million in 1995 and 1996, and $0.6 million in
1997. The construction program is subject to periodic review and revision, and
actual construction costs may vary from the above estimates because of numerous
factors. These factors include: changes in business conditions; revised load
growth estimates; changes in environmental regulations; increasing cost of
labor, equipment and materials; and changes in cost of capital. The construction
of two combustion turbine peaking units totaling 160 megawatts was completed
during 1994. In addition, construction will continue related to transmission and
distribution facilities and the upgrading and extension of the useful lives of
generating plants.
5. FINANCING AND COMMITMENTS
General
To the extent possible, the Company's construction program is expected to be
financed from internal sources and from the issuance of additional long-term
debt and preferred stock and capital contributions from The Southern Company.
Should the Company be unable to obtain funds from these sources, the Company
would have to use short-term indebtedness or other alternative, and possibly
costlier, means of financing.
The amounts of long-term debt and preferred stock that can be issued in the
future will be contingent on market conditions, the maintenance of adequate
earnings levels, regulatory authorizations and other factors. See Management's
Discussion and Analysis for information regarding the Company's earnings
coverage requirements.
Bank Credit Arrangements
At the beginning of 1995, unused credit arrangements with five banks totaled $18
million and expire at various times during 1995 and 1996.
The Company's revolving credit arrangements of $20 million, of which $11.5
million remained unused as of December 31, 1994, expire in December 1996. These
agreements allow short-term borrowings to be converted into term loans, payable
in 12 equal quarterly installments, with the first installment due at the end of
II-243
<PAGE>
NOTES (continued)
Savannah Electric and Power Company 1994 Annual Report
the first calendar quarter after the applicable termination date or at an
earlier date at the Company's option.
In connection with these credit arrangements, the Company agrees to pay
commitment fees based on the unused portions of the commitments.
Assets Subject to Lien
As amended and supplemented, the Company's Indenture of Mortgage, which secures
the first mortgage bonds issued by the Company, constitutes a direct first lien
on substantially all of the Company's fixed property and franchises.
Operating Leases
The Company has rental agreements with various terms and expiration dates.
Rental expenses totaled $1.5 million for 1994, 1993, and 1992. At December 31,
1994, estimated future minimum lease payments for non-cancelable operating
leases were as follows:
========================================================
Amounts
---------
(in millions)
1995 $1.1
1996 0.9
1997 0.7
1998 0.5
========================================================
6. LONG-TERM POWER SALES AGREEMENTS
The operating subsidiaries of The Southern Company, including the Company, have
entered into long-term contractual agreements for the sale of capacity and
energy to certain non-affiliated utilities located outside the system's service
area. The agreements for non-firm capacity expired in 1994. Other
agreements--expiring at various dates discussed below-- are firm and pertain to
capacity related to specific generating units. Because energy is generally sold
at cost under these agreements, revenues from capacity sales primarily affect
profitability. The Company's portion of capacity revenues has been as follows:
=================================================================
Unit Other
Year Power Long-Term Total
---- -----------------------------------
(in thousands)
1994 $3 $445 $448
1993 2 976 978
1992 3 534 537
=================================================================
7. INCOME TAXES
Effective January 1, 1993, the Company adopted FASB Statement No. 109,
Accounting for Income Taxes. The adoption resulted in the recording of
additional deferred income taxes and related regulatory assets and liabilities.
At December 31, 1994, the tax-related regulatory assets and liabilities were $24
million and $25 million, respectively. These assets are attributable to tax
benefits flowed through to customers in prior years and to taxes applicable to
capitalized AFUDC. These liabilities are attributable to deferred taxes
previously recognized at rates higher than current enacted tax law and to
unamortized investment tax credits.
Details of the federal and state income tax provisions are as follows:
===============================================================
1994 1993 1992
----------------------------
(in thousands)
Total provision for income taxes
Federal --
Currently payable $11,736 $11,663 $ 6,630
Deferred - current year 2,106 1,906 7,407
- reversal of
prior years (755) (1,383) (2,347)
---------------------------------------------------------------
13,087 12,186 11,690
---------------------------------------------------------------
State --
Currently payable 2,064 2,049 1,231
Deferred - current year 188 119 1,079
- reversal of
prior years 86 (35) (192)
---------------------------------------------------------------
2,338 2,133 2,118
---------------------------------------------------------------
Total 15,425 14,319 13,808
Less income taxes charged
(credited) to other income (864) (1,117) (758)
---------------------------------------------------------------
Federal and state income taxes
charged to operations $16,289 $15,436 $14,566
===============================================================
II-244
<PAGE>
NOTES (continued)
Savannah Electric and Power Company 1994 Annual Report
The tax effects of temporary differences between the carrying amounts of
assets and liabilities in the financial statements and their respective tax
bases, which give rise to deferred tax assets and liabilities, are as follows:
================================================================
1994 1993
-----------------
(in thousands)
Deferred tax liabilities:
Accelerated depreciation $57,830 $53,585
Property basis differences 12,956 13,871
Other 2,449 3,922
----------------------------------------------------------------
Total 73,235 71,378
---------------------------------------------------------------
Deferred tax assets:
Pension and other benefits 4,816 4,237
Other 3,959 4,616
----------------------------------------------------------------
Total 8,775 8,853
----------------------------------------------------------------
Net deferred tax liabilities 64,460 62,525
Portions included in current assets, net 6,326 4,422
----------------------------------------------------------------
Accumulated deferred income taxes
in the Balance Sheets $70,786 $66,947
================================================================
Deferred investment tax credits are amortized over the life of the related
property with such amortization normally applied as a credit to reduce
depreciation in the Statements of Income. Credits amortized in this manner
amounted to $0.7 million in 1994, 1993, and 1992. At December 31, 1994, all
investment tax credits available to reduce federal income taxes payable had been
utilized.
A reconciliation of the federal statutory income tax rate to the effective
income tax rate is as follows:
===============================================================
1994 1993 1992
-----------------------------
Statutory federal tax rate 35% 35% 34%
State income tax, net of
federal income tax benefit 4 4 4
Other - (1) -
---------------------------------------------------------------
Total effective tax rate 39% 38% 38%
===============================================================
The Southern Company and its subsidiaries file a consolidated federal
income tax return. Under a joint consolidated income tax agreement, each
company's current and deferred tax expense is computed on a stand-alone basis,
and consolidated tax savings are allocated to each company based on its ratio of
taxable income to total consolidated taxable income.
8. CUMULATIVE PREFERRED STOCK
In 1993, the Company issued 1,400,000 shares of 6.64% Series Preferred Stock
which has redemption provisions of $26.66 per share plus accrued dividends if on
or prior to November 1, 1998, and redemption provisions of $25 per share plus
accrued dividends thereafter.
In December 1993, the Company redeemed all 800,000 shares outstanding of
its 9.5% Series Preferred Stock at the prescribed redemption price of $26.57
plus accrued dividends. Cumulative preferred stock dividends are preferential to
the payment of dividends on common stock.
9. LONG-TERM DEBT
The Company's Indenture related to its First Mortgage Bonds is unlimited as to
the authorized amount of bonds which may be issued, provided that required
property additions, earnings and other provisions of such Indenture are met.
In April 1994, the Company retired the remaining outstanding principal
amount of $3.7 million of its 4 5/8 percent series First Mortgage Bonds due
April 1994.
The sinking fund requirements of first mortgage bonds were satisfied by
certification of property additions in 1993 and by cash redemption in 1994. See
Note 10 "Long-Term Debt Due Within One Year" for details.
Details of pollution control obligations and other long-term debt at
December 31 are as follows:
=================================================================
1994 1993
------------------
(in thousands)
Collateralized obligations incurred
in connection with the sale by public
authorities of tax-exempt pollution
control revenue bonds --
Variable rate (5.65% at 1/1/95)
due 2016 $ 4,085 $ 4,085
6 3/4% due 2022 13,870 13,870
-----------------------------------------------------------------
Total pollution control obligations $17,955 $17,955
-----------------------------------------------------------------
Capital lease obligations --
Combustion turbine equipment $ 980 $ 1,403
Transportation fleet 508 908
Notes Payable:
6.04% due 1995 3,500 -
6.035% due 1995 5,000 -
-----------------------------------------------------------------
Total other long-term debt $ 9,988 $ 2,311
=================================================================
II-245
<PAGE>
NOTES (continued)
Savannah Electric and Power Company 1994 Annual Report
Sinking fund requirements and/or maturities through 1999 applicable to
long-term debt are as follows: $2.6 million in 1995; $0.2 million in 1996; $0.1
million in 1997; and no requirement is needed in 1998 and 1999.
Assets acquired under capital leases are recorded as utility plant in
service, and the related obligation is classified as other long-term debt.
Leases are capitalized at the net present value of the future lease payments.
However, for ratemaking purposes, these obligations are treated as operating
leases, and as such, lease payments are charged to expense as incurred.
The Company leases combustion turbine generating equipment under a
non-cancelable lease expiring in December 1995, with renewal options extending
until 2010. The Company also leases a portion of its transportation fleet. Under
the terms of these leases, the Company is responsible for taxes, insurance and
other expenses.
10. LONG-TERM DEBT DUE WITHIN ONE YEAR
A summary of the improvement fund/sinking fund requirements and scheduled
maturities and redemptions of long-term debt due within one year at December 31
is as follows:
=================================================================
1994 1993
--------------------
(in thousands)
Bond sinking fund requirements $1,350 $1,350
Less:
Portion to be satisfied by
certifying property additions - 1,350
-----------------------------------------------------------------
Cash sinking fund requirements 1,350 -
Other long-term debt maturities 1,229 4,499
-----------------------------------------------------------------
Total $2,579 $4,499
=================================================================
The first mortgage bond improvement (sinking) fund requirements amount to 1
percent of each outstanding series of bonds authenticated under the indentures
prior to January 1 of each year, other than those issued to collateralize
pollution control and other obligations. The requirements may be satisfied by
depositing cash or reacquiring bonds, or by pledging additional property equal
to 1 2/3 times the requirements.
11. COMMON STOCK DIVIDEND RESTRICTIONS
The Company's Charter and Indentures contain certain limitations on the payment
of cash dividends on preferred and common stocks. At December 31, 1994,
approximately $57 million of retained earnings was restricted against the
payment of cash dividends on common stock under the terms of the Mortgage
Indenture.
12. QUARTERLY FINANCIAL INFORMATION (Unaudited)
Summarized quarterly financial data for 1994 and 1993 are as follows (in
thousands):
==================================================================
Net Income After
Operating Operating Dividends on
Quarter Ended Revenue Income Preferred Stock
------------------------------------------------------------------
March 1994 $46,717 $ 7,130 $ 3,898
June 1994 56,377 9,555 6,051
September 1994 63,674 13,495 9,547
December 1994 45,017 5,989 2,614
March 1993 $42,873 $ 6,123 $ 3,019
June 1993 52,875 9,301 6,211
September 1993 74,420 13,326 10,214
December 1993 48,274 5,484 2,015
==================================================================
The Company's business is influenced by seasonal weather conditions and a
seasonal rate structure, among other factors.
II-246
<PAGE>
SELECTED FINANCIAL AND OPERATING DATA
Savannah Electric and Power Company 1994 Annual Report
<TABLE>
<CAPTION>
=============================================================================================
1994 1993 1992
---------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Operating Revenues (in thousands) $211,785 $218,442 $197,761
Net Income after Dividends
on Preferred and Preference Stocks (in thousands) $22,110 $21,459 $20,512
Cash Dividends on Common Stock (in thousands) $16,300 $21,000 $22,000
Return on Average Common Equity (percent) 14.00 13.73 12.89
Total Assets (in thousands) $518,305 $527,187 $352,175
Gross Property Additions (in thousands) $30,078 $72,858 $30,132
---------------------------------------------------------------------------------------------
Capitalization (in thousands):
Common stock equity $161,581 $154,269 $158,376
Preferred stock 35,000 35,000 20,000
Preferred and preference stock subject
to mandatory redemption - - -
Long-term debt 155,922 151,338 110,767
---------------------------------------------------------------------------------------------
Total (excluding amounts due within one year) $352,503 $340,607 $289,143
=============================================================================================
Capitalization Ratios (percent):
Common stock equity 45.8 45.3 54.8
Preferred and preference stock 9.9 10.3 6.9
Long-term debt 44.3 44.4 38.3
---------------------------------------------------------------------------------------------
Total (excluding amounts due within one year) 100.0 100.0 100.0
=============================================================================================
First Mortgage Bonds (in thousands):
Issued - 45,000 30,000
Retired 5,065 - 38,750
Preferred and Preference Stock (in thousands):
Issued - 35,000 -
Retired - 20,000 -
---------------------------------------------------------------------------------------------
Security Ratings:
First Mortgage Bonds -
Moody's A1 A1 A1
Standard and Poor's A A A
Preferred Stock -
Moody's "a2" "a2" "a2"
Standard and Poor's A- A- A-
---------------------------------------------------------------------------------------------
Customers (year-end):
Residential 103,199 101,032 99,164
Commercial 13,015 12,702 12,416
Industrial 65 69 73
Other 1,007 957 940
---------------------------------------------------------------------------------------------
Total 117,286 114,760 112,593
=============================================================================================
Employees (year-end) 616 665 688
Note:
NR = Not Rated
</TABLE>
II-247
<PAGE>
SELECTED FINANCIAL AND OPERATING DATA
Savannah Electric and Power Company 1994 Annual Report
<TABLE>
<CAPTION>
=============================================================================================
1991 1990 1989
---------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Operating Revenues (in thousands) $189,646 $205,635 $201,799
Net Income after Dividends
on Preferred and Preference Stocks (in thousands) $24,030 $26,254 $25,535
Cash Dividends on Common Stock (in thousands) $22,000 $22,000 $20,000
Return on Average Common Equity (percent) 15.13 16.85 16.88
Total Assets (in thousands) $352,505 $340,050 $349,887
Gross Property Additions (in thousands) $19,478 $20,086 $18,831
---------------------------------------------------------------------------------------------
Capitalization (in thousands):
Common stock equity $159,841 $157,811 $153,737
Preferred stock 20,000 20,000 22,300
Preferred and preference stock subject
to mandatory redemption - - 2,884
Long-term debt 119,280 112,377 117,522
---------------------------------------------------------------------------------------------
Total (excluding amounts due within one year) $299,121 $290,188 $296,443
=============================================================================================
Capitalization Ratios (percent):
Common stock equity 53.4 54.4 51.9
Preferred and preference stock 6.7 6.9 8.5
Long-term debt 39.9 38.7 39.6
---------------------------------------------------------------------------------------------
Total (excluding amounts due within one year) 100.0 100.0 100.0
=============================================================================================
First Mortgage Bonds (in thousands):
Issued 30,000 - 30,000
Retired 22,500 9,135 18,275
Preferred and Preference Stock (in thousands):
Issued - - -
Retired - 5,374 6,591
---------------------------------------------------------------------------------------------
Security Ratings:
First Mortgage Bonds -
Moody's A1 A1 A1
Standard and Poor's A A A
Preferred Stock -
Moody's "a2" "a2" "a2"
Standard and Poor's A- A- A-
---------------------------------------------------------------------------------------------
Customers (year-end):
Residential 97,446 96,452 94,766
Commercial 12,153 12,045 12,298
Industrial 73 76 69
Other 897 867 856
---------------------------------------------------------------------------------------------
Total 110,569 109,440 107,989
=============================================================================================
Employees (year-end) 672 648 643
Note:
NR = Not Rated
</TABLE>
II-248A
<PAGE>
SELECTED FINANCIAL AND OPERATING DATA
Savannah Electric and Power Company 1994 Annual Report
<TABLE>
<CAPTION>
=============================================================================================
1988 1987 1986
---------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Operating Revenues (in thousands) $182,440 $174,707 $174,847
Net Income after Dividends
on Preferred and Preference Stocks (in thousands) $24,272 $22,086 $20,452
Cash Dividends on Common Stock (in thousands) $11,700 $10,741 $9,353
Return on Average Common Equity (percent) 17.03 17.03 17.52
Total Assets (in thousands) $347,051 $340,109 $341,826
Gross Property Additions (in thousands) $23,254 $32,276 $26,800
---------------------------------------------------------------------------------------------
Capitalization (in thousands):
Common stock equity $148,883 $136,207 $123,133
Preferred stock 22,300 2,300 2,300
Preferred and preference stock subject
to mandatory redemption 3,075 9,665 10,256
Long-term debt 98,285 129,329 137,821
---------------------------------------------------------------------------------------------
Total (excluding amounts due within one year) $272,543 $277,501 $273,510
=============================================================================================
Capitalization Ratios (percent):
Common stock equity 54.6 49.1 45.0
Preferred and preference stock 9.3 4.3 4.6
Long-term debt 36.1 46.6 50.4
---------------------------------------------------------------------------------------------
Total (excluding amounts due within one year) 100.0 100.0 100.0
=============================================================================================
First Mortgage Bonds (in thousands):
Issued - - 25,000
Retired 12,231 10,239 10,160
Preferred and Preference Stock (in thousands):
Issued 20,000 - -
Retired 553 588 610
---------------------------------------------------------------------------------------------
Security Ratings:
First Mortgage Bonds -
Moody's A1 A3 A3
Standard and Poor's A- A- A-
Preferred Stock -
Moody's "a2" NR NR
Standard and Poor's BBB+ BBB+ BBB+
---------------------------------------------------------------------------------------------
Customers (year-end):
Residential 93,486 92,094 89,951
Commercial 12,135 11,812 11,405
Industrial 69 67 67
Other 828 762 731
---------------------------------------------------------------------------------------------
Total 106,518 104,735 102,154
=============================================================================================
Employees (year-end) 655 655 658
Note:
NR = Not Rated
</TABLE>
II-248B
<PAGE>
SELECTED FINANCIAL AND OPERATING DATA
Savannah Electric and Power Company 1994 Annual Report
<TABLE>
<CAPTION>
==================================================================================
1985 1984
----------------------------------------------------------------------------------
<S> <C> <C>
Operating Revenues (in thousands) $158,643 $148,721
Net Income after Dividends
on Preferred and Preference Stocks (in thousands) $15,279 $14,907
Cash Dividends on Common Stock (in thousands) $8,387 $8,010
Return on Average Common Equity (percent) 14.41 15.31
Total Assets (in thousands) $323,686 $323,318
Gross Property Additions (in thousands) $30,700 $29,724
----------------------------------------------------------------------------------
Capitalization (in thousands):
Common stock equity $110,385 $101,664
Preferred stock 2,300 2,300
Preferred and preference stock subject
to mandatory redemption 10,848 11,446
Long-term debt 128,850 136,709
----------------------------------------------------------------------------------
Total (excluding amounts due within one year) $252,383 $252,119
==================================================================================
Capitalization Ratios (percent):
Common stock equity 43.7 40.3
Preferred and preference stock 5.2 5.5
Long-term debt 51.1 54.2
----------------------------------------------------------------------------------
Total (excluding amounts due within one year) 100.0 100.0
==================================================================================
First Mortgage Bonds (in thousands):
Issued 20,000 -
Retired 5,592 10,532
Preferred and Preference Stock (in thousands):
Issued - -
Retired 588 525
----------------------------------------------------------------------------------
Security Ratings:
First Mortgage Bonds -
Moody's A3 A3
Standard and Poor's A- BBB+
Preferred Stock -
Moody's NR NR
Standard and Poor's BBB+ BBB+
----------------------------------------------------------------------------------
Customers (year-end):
Residential 88,101 86,366
Commercial 10,985 10,659
Industrial 66 76
Other 699 637
----------------------------------------------------------------------------------
Total 99,851 97,738
==================================================================================
Employees (year-end) 653 632
Note:
NR = Not Rated
</TABLE>
II-248C
<PAGE>
SELECTED FINANCIAL AND OPERATING DATA (continued)
Savannah Electric and Power Company 1994 Annual Report
<TABLE>
<CAPTION>
=============================================================================================
1994 1993 1992
---------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Operating Revenues (in thousands):
Residential $89,195 $93,883 $82,670
Commercial 71,227 71,320 64,756
Industrial 32,906 36,180 33,171
Other 7,946 7,810 7,095
---------------------------------------------------------------------------------------------
Total retail 201,274 209,193 187,692
Sales for resale - non-affiliates 4,786 6,021 7,821
Sales for resale - affiliates 6,446 2,433 1,505
---------------------------------------------------------------------------------------------
Total revenues from sales of electricity 212,506 217,647 197,018
Other revenues (721) 795 743
---------------------------------------------------------------------------------------------
Total $211,785 $218,442 $197,761
=============================================================================================
Kilowatt-Hour Sales (in thousands):
Residential 1,298,122 1,329,362 1,216,993
Commercial 1,045,831 1,015,935 953,840
Industrial 799,543 854,324 861,121
Other 119,593 115,969 110,270
---------------------------------------------------------------------------------------------
Total retail 3,263,089 3,315,590 3,142,224
Sales for resale - non-affiliates 201,716 247,203 367,066
Sales for resale - affiliates 93,001 75,384 37,632
---------------------------------------------------------------------------------------------
Total 3,557,806 3,638,177 3,546,922
=============================================================================================
Average Revenue Per Kilowatt-Hour (cents):
Residential 6.87 7.06 6.79
Commercial 6.81 7.02 6.79
Industrial 4.12 4.23 3.85
Total retail 6.17 6.31 5.97
Sale for resale 3.81 2.62 2.30
Total sales 5.97 5.98 5.55
Residential Average Annual Kilowatt-Hour Use Per Customer 12,686 13,269 12,369
Residential Average Annual Revenue Per Customer $871.68 $937.07 $840.23
Plant Nameplate Capacity Ratings (year-end) (megawatts) 788 628 628
Maximum Peak-Hour Demand (megawatts):
Winter 617 524 533
Summer 729 747 695
Annual Load Factor (percent) 54.3 54.1 55.0
Plant Availability - Fossil-Steam (percent) 81.0 90.2 89.1
---------------------------------------------------------------------------------------------
Source of Energy Supply (percent):
Coal 18.6 21.5 12.0
Oil and gas 1.8 4.5 2.9
Purchased power -
From non-affiliates 1.5 0.9 1.0
From affiliates 78.1 73.1 84.1
---------------------------------------------------------------------------------------------
Total 100.0 100.0 100.0
=============================================================================================
Total Fuel Economy Data:
BTU per net kilowatt-hour generated 11,786 11,515 12,547
Cost of fuel per million BTU (cents) 205.03 215.97 201.50
Average cost of fuel per net kilowatt-hour generated (cents) 2.42 2.49 2.53
=============================================================================================
</TABLE>
II-249
<PAGE>
SELECTED FINANCIAL AND OPERATING DATA (continued)
Savannah Electric and Power Company 1994 Annual Report
<TABLE>
<CAPTION>
=============================================================================================
1991 1990 1989
---------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Operating Revenues (in thousands):
Residential $80,541 $87,063 $85,113
Commercial 61,827 65,462 65,474
Industrial 30,492 30,237 28,304
Other 6,561 6,782 6,892
---------------------------------------------------------------------------------------------
Total retail 179,421 189,544 185,783
Sales for resale - non-affiliates 7,813 9,482 8,814
Sales for resale - affiliates 1,430 5,566 6,025
Total revenues from sales of electricity 188,664 204,592 200,622
Other revenues 982 1,043 1,177
---------------------------------------------------------------------------------------------
Total $189,646 $205,635 $201,799
=============================================================================================
Kilowatt-Hour Sales (in thousands):
Residential 1,195,005 1,183,486 1,109,976
Commercial 925,757 892,931 839,756
Industrial 825,862 644,704 561,063
Other 106,683 103,539 101,164
---------------------------------------------------------------------------------------------
Total retail 3,053,307 2,824,660 2,611,959
Sales for resale - non-affiliates 372,085 441,090 437,943
Sales for resale - affiliates 32,581 294,042 303,142
---------------------------------------------------------------------------------------------
Total 3,457,973 3,559,792 3,353,044
=============================================================================================
Average Revenue Per Kilowatt-Hour (cents):
Residential 6.74 7.36 7.67
Commercial 6.68 7.33 7.80
Industrial 3.69 4.69 5.04
Total retail 5.88 6.71 7.11
Sale for resale 2.28 2.05 2.00
Total sales 5.46 5.75 5.98
Residential Average Annual Kilowatt-Hour Use Per Customer 12,323 12,339 11,781
Residential Average Annual Revenue Per Customer $830.54 $907.68 $903.37
Plant Nameplate Capacity Ratings (year-end) (megawatts) 605 605 605
Maximum Peak-Hour Demand (megawatts):
Winter 526 428 548
Summer 691 648 613
Annual Load Factor (percent) 54.1 53.2 52.4
Plant Availability - Fossil-Steam (percent) 76.9 89.6 94.7
---------------------------------------------------------------------------------------------
Source of Energy Supply (percent):
Coal 16.3 52.8 63.5
Oil and gas 1.7 3.4 1.4
Purchased power -
From non-affiliates 0.4 0.8 1.5
From affiliates 81.6 43.0 33.6
---------------------------------------------------------------------------------------------
Total 100.0 100.0 100.0
=============================================================================================
Total Fuel Economy Data:
BTU per net kilowatt-hour generated 10,917 10,741 10,611
Cost of fuel per million BTU (cents) 199.42 188.18 180.48
Average cost of fuel per net kilowatt-hour generated (cents) 2.18 2.02 1.92
=============================================================================================
</TABLE>
II-250A
<PAGE>
SELECTED FINANCIAL AND OPERATING DATA (continued)
Savannah Electric and Power Company 1994 Annual Report
<TABLE>
<CAPTION>
=============================================================================================
1988 1987 1986
---------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Operating Revenues (in thousands):
Residential $81,098 $79,785 $80,348
Commercial 62,640 60,285 59,547
Industrial 26,865 27,422 27,694
Other 6,557 6,315 6,300
---------------------------------------------------------------------------------------------
Total retail 177,160 173,807 173,889
Sales for resale - non-affiliates 808 - -
Sales for resale - affiliates 3,567 - -
---------------------------------------------------------------------------------------------
Total revenues from sales of electricity 181,535 173,807 173,889
Other revenues 905 900 958
---------------------------------------------------------------------------------------------
Total $182,440 $174,707 $174,847
=============================================================================================
Kilowatt-Hour Sales (in thousands):
Residential 1,067,411 1,044,554 1,021,905
Commercial 806,687 775,643 746,133
Industrial 533,604 557,281 515,544
Other 97,072 94,949 92,471
---------------------------------------------------------------------------------------------
Total retail 2,504,774 2,472,427 2,376,053
Sales for resale - non-affiliates 24,168 - -
Sales for resale - affiliates 156,106 - -
---------------------------------------------------------------------------------------------
Total 2,685,048 2,472,427 2,376,053
=============================================================================================
Average Revenue Per Kilowatt-Hour (cents):
Residential 7.60 7.64 7.86
Commercial 7.77 7.77 7.98
Industrial 5.03 4.92 5.37
Total retail 7.07 7.03 7.32
Sale for resale 2.43 - -
Total sales 6.76 7.03 7.32
Residential Average Annual Kilowatt-Hour Use Per Customer 11,489 11,481 11,514
Residential Average Annual Revenue Per Customer $872.87 $876.95 $905.27
Plant Nameplate Capacity Ratings (year-end) (megawatts) 605 605 605
Maximum Peak-Hour Demand (megawatts):
Winter 471 414 464
Summer 574 562 565
Annual Load Factor (percent) 53.4 53.6 51.1
Plant Availability - Fossil-Steam (percent) 77.1 81.2 86.9
---------------------------------------------------------------------------------------------
Source of Energy Supply (percent):
Coal 79.8 74.3 81.9
Oil and gas 5.4 4.4 6.8
Purchased power -
From non-affiliates 5.9 19.9 11.3
From affiliates 8.9 1.4 -
---------------------------------------------------------------------------------------------
Total 100.0 100.0 100.0
=============================================================================================
Total Fuel Economy Data:
BTU per net kilowatt-hour generated 10,683 10,551 10,607
Cost of fuel per million BTU (cents) 178.31 176.10 186.30
Average cost of fuel per net kilowatt-hour generated (cents) 1.90 1.86 1.98
=============================================================================================
</TABLE>
II-250B
<PAGE>
SELECTED FINANCIAL AND OPERATING DATA (continued)
Savannah Electric and Power Company 1994 Annual Report
<TABLE>
<CAPTION>
==================================================================================
1985 1984
----------------------------------------------------------------------------------
<S> <C> <C>
Operating Revenues (in thousands):
Residential $70,377 $65,059
Commercial 53,696 50,538
Industrial 28,335 27,233
Other 5,823 5,505
----------------------------------------------------------------------------------
Total retail 158,231 148,335
Sales for resale - non-affiliates - -
Sales for resale - affiliates - -
----------------------------------------------------------------------------------
Total revenues from sales of electricity 158,231 148,335
Other revenues 412 386
----------------------------------------------------------------------------------
Total $158,643 $148,721
==================================================================================
Kilowatt-Hour Sales (in thousands):
Residential 926,988 883,498
Commercial 694,168 668,309
Industrial 513,270 518,118
Other 87,238 84,798
----------------------------------------------------------------------------------
Total retail 2,221,664 2,154,723
Sales for resale - non-affiliates - -
Sales for resale - affiliates - -
----------------------------------------------------------------------------------
Total 2,221,664 2,154,723
==================================================================================
Average Revenue Per Kilowatt-Hour (cents):
Residential 7.59 7.36
Commercial 7.74 7.56
Industrial 5.52 5.26
Total retail 7.12 6.88
Sale for resale - -
Total sales 7.12 6.88
Residential Average Annual Kilowatt-Hour Use Per Customer 10,536 10,357
Residential Average Annual Revenue Per Customer $799.90 $762.67
Plant Nameplate Capacity Ratings (year-end) (megawatts) 605 605
Maximum Peak-Hour Demand (megawatts):
Winter 440 360
Summer 498 481
Annual Load Factor (percent) 54.7 54.1
Plant Availability - Fossil-Steam (percent) 92.0 86.1
----------------------------------------------------------------------------------
Source of Energy Supply (percent):
Coal 87.5 91.8
Oil and gas 2.6 2.2
Purchased power -
From non-affiliates 9.9 6.0
From affiliates - -
----------------------------------------------------------------------------------
Total 100.0 100.0
==================================================================================
Total Fuel Economy Data:
BTU per net kilowatt-hour generated 10,581 10,498
Cost of fuel per million BTU (cents) 198.80 196.20
Average cost of fuel per net kilowatt-hour generated (cents) 2.10 2.06
==================================================================================
</TABLE>
II-250C
<PAGE>
STATEMENTS OF INCOME
Savannah Electric and Power Company
<TABLE>
<CAPTION>
==========================================================================================================
For the Years Ended December 31, 1994 1993 1992
----------------------------------------------------------------------------------------------------------
(Thousands of Dollars)
<S> <C> <C> <C>
Operating Revenues:
Revenues $ 205,339 $ 216,009 $ 196,256
Revenues from affiliates 6,446 2,433 1,505
----------------------------------------------------------------------------------------------------------
Total operating revenues 211,785 218,442 197,761
----------------------------------------------------------------------------------------------------------
Operating Expenses:
Operation --
Fuel 18,555 24,976 14,162
Purchased power from non-affiliates 1,839 793 494
Purchased power from affiliates 55,822 56,274 56,492
Other 41,623 45,610 36,884
Maintenance 12,560 13,516 14,232
Depreciation and amortization 17,854 16,467 16,829
Taxes other than income taxes 11,074 11,136 10,231
Federal and state income taxes 16,289 15,436 14,566
----------------------------------------------------------------------------------------------------------
Total operating expenses 175,616 184,208 163,890
----------------------------------------------------------------------------------------------------------
Operating Income 36,169 34,234 33,871
Other Income (Expense):
Allowance for equity funds used during construction 831 958 446
Interest income 54 209 276
Other, net (1,032) (1,841) (1,450)
Income taxes applicable to other income 864 1,117 758
----------------------------------------------------------------------------------------------------------
Income Before Interest Charges 36,886 34,677 33,901
----------------------------------------------------------------------------------------------------------
Interest Charges:
Interest on long-term debt 12,585 10,696 10,870
Allowance for debt funds used during construction (1,225) (699) (289)
Interest on notes payable 205 240 15
Amortization of debt discount, premium, and expense, net 550 535 427
Other interest charges 337 340 466
----------------------------------------------------------------------------------------------------------
Net interest charges 12,452 11,112 11,489
----------------------------------------------------------------------------------------------------------
Income Before Cumulative Effect of a
Change in Method of Recording Revenues 24,434 23,565 22,412
Cumulative effect as of January 1, 1988, of accruing unbilled
revenues--less income taxes of $1,164(000) - - -
----------------------------------------------------------------------------------------------------------
Net Income 24,434 23,565 22,412
Dividends on Preferred and Preference Stock 2,324 2,106 1,900
----------------------------------------------------------------------------------------------------------
Net Income After Dividends on Preferred and Preference Stock $ 22,110 $ 21,459 $ 20,512
==========================================================================================================
Pro Forma Net Income After Dividends on Preferred Stock
Assuming Change in Method of Recording
Revenues Was Applied Retroactively $ 22,110 $ 21,459 $ 20,512
</TABLE>
II-251
<PAGE>
STATEMENTS OF INCOME
Savannah Electric and Power Company
<TABLE>
<CAPTION>
====================================================================================================================
For the Years Ended December 31, 1991 1990 1989 1988
--------------------------------------------------------------------------------------------------------------------
(Thousands of Dollars)
<S> <C> <C> <C> <C>
Operating Revenues:
Revenues $ 188,216 $200,069 $195,774 $178,873
Revenues from affiliates 1,430 5,566 6,025 3,567
--------------------------------------------------------------------------------------------------------------------
Total operating revenues 189,646 205,635 201,799 182,440
--------------------------------------------------------------------------------------------------------------------
Operating Expenses:
Operation --
Fuel 14,415 42,630 44,224 46,578
Purchased power from non-affiliates 297 611 616 3,593
Purchased power from affiliates 49,007 34,648 26,361 6,586
Other 32,945 30,630 29,371 28,271
Maintenance 12,475 12,754 12,281 14,261
Depreciation and amortization 16,549 16,118 20,343 19,771
Taxes other than income taxes 10,122 9,798 9,152 9,209
Federal and state income taxes 16,195 17,611 17,571 14,017
--------------------------------------------------------------------------------------------------------------------
Total operating expenses 152,005 164,800 159,919 142,286
--------------------------------------------------------------------------------------------------------------------
Operating Income 37,641 40,835 41,880 40,154
Other Income (Expense):
Allowance for equity funds used during construction 170 193 - 273
Interest income 589 741 719 355
Other, net (879) (803) (672) (1,423)
Income taxes applicable to other income 722 187 192 459
--------------------------------------------------------------------------------------------------------------------
Income Before Interest Charges 38,243 41,153 42,119 39,818
--------------------------------------------------------------------------------------------------------------------
Interest Charges:
Interest on long-term debt 11,486 12,052 12,287 15,603
Allowance for debt funds used during construction (103) (194) (112) (330)
Interest on notes payable 25 116 402 230
Amortization of debt discount, premium, and expense, net 380 241 274 196
Other interest charges 525 665 1,313 336
--------------------------------------------------------------------------------------------------------------------
Net interest charges 12,313 12,880 14,164 16,035
--------------------------------------------------------------------------------------------------------------------
Income Before Cumulative Effect of a
Change in Method of Recording Revenues 25,930 28,273 27,955 23,783
Cumulative effect as of January 1, 1988, of accruing unbilled
revenues--less income taxes of $1,164(000) - - - 1,920
--------------------------------------------------------------------------------------------------------------------
Net Income 25,930 28,273 27,955 25,703
Dividends on Preferred and Preference Stock 1,900 2,019 2,420 1,431
--------------------------------------------------------------------------------------------------------------------
Net Income After Dividends on Preferred and Preference Stock $ 24,030 $ 26,254 $ 25,535 $ 24,272
====================================================================================================================
Pro Forma Net Income After Dividends on Preferred Stock
Assuming Change in Method of Recording
Revenues Was Applied Retroactively $ 24,030 $ 26,254 $ 25,535 $ 22,352
</TABLE>
II-252A
<PAGE>
STATEMENTS OF INCOME
Savannah Electric and Power Company
<TABLE>
<CAPTION>
====================================================================================================================
For the Years Ended December 31, 1987 1986 1985 1984
--------------------------------------------------------------------------------------------------------------------
(Thousands of Dollars)
<S> <C> <C> <C> <C>
Operating Revenues:
Revenues $ 174,707 $ 174,847 $ 158,643 $148,721
Revenues from affiliates - - - -
--------------------------------------------------------------------------------------------------------------------
Total operating revenues 174,707 174,847 158,643 148,721
--------------------------------------------------------------------------------------------------------------------
Operating Expenses:
Operation --
Fuel 38,597 44,393 45,232 44,183
Purchased power from non-affiliates 11,453 6,069 7,577 3,810
Purchased power from affiliates 1,186 2,071 1,526 2,255
Other 25,642 24,114 20,292 18,424
Maintenance 13,629 12,591 12,029 11,195
Depreciation and amortization 18,152 16,443 15,798 14,104
Taxes other than income taxes 9,088 7,863 6,724 6,098
Federal and state income taxes 16,969 21,405 15,495 15,026
--------------------------------------------------------------------------------------------------------------------
Total operating expenses 134,716 134,949 124,673 115,095
--------------------------------------------------------------------------------------------------------------------
Operating Income 39,991 39,898 33,970 33,626
Other Income (Expense):
Allowance for equity funds used during construction 512 27 646 624
Interest income 925 924 943 1,200
Other, net (464) (553) (107) (173)
Income taxes applicable to other income (317) (217) (389) (548)
--------------------------------------------------------------------------------------------------------------------
Income Before Interest Charges 40,647 40,079 35,063 34,729
--------------------------------------------------------------------------------------------------------------------
Interest Charges:
Interest on long-term debt 17,127 17,415 18,089 18,237
Allowance for debt funds used during construction (459) (73) (725) (551)
Interest on notes payable 70 315 437 172
Amortization of debt discount, premium, and expense, net 237 234 302 241
Other interest charges 251 335 213 188
--------------------------------------------------------------------------------------------------------------------
Net interest charges 17,226 18,226 18,316 18,287
--------------------------------------------------------------------------------------------------------------------
Income Before Cumulative Effect of a
Change in Method of Recording Revenues 23,421 21,853 16,747 16,442
Cumulative effect as of January 1, 1988, of accruing unbilled
revenues--less income taxes of $1,164(000) - - - -
--------------------------------------------------------------------------------------------------------------------
Net Income 23,421 21,853 16,747 16,442
Dividends on Preferred and Preference Stock 1,335 1,401 1,468 1,535
--------------------------------------------------------------------------------------------------------------------
Net Income After Dividends on Preferred and Preference Stock $ 22,086 $ 20,452 $ 15,279 $ 14,907
====================================================================================================================
Pro Forma Net Income After Dividends on Preferred Stock
Assuming Change in Method of Recording
Revenues Was Applied Retroactively $ 21,865 $ 20,606 $ 15,744 $ 14,665
</TABLE>
II-252B
<PAGE>
STATEMENTS OF CASH FLOWS
Savannah Electric and Power Company
<TABLE>
<CAPTION>
==================================================================================================
For the Years Ended December 31, 1994 1993 1992
--------------------------------------------------------------------------------------------------
(Thousands of Dollars)
<S> <C> <C> <C>
Operating Activities:
Net income $ 24,434 $ 23,565 $ 22,412
Adjustments to reconcile net income to net
cash provided by operating activities --
Depreciation and amortization 19,353 17,482 17,757
Deferred income taxes, net 1,625 607 5,947
Deferred investment tax credits, net - - -
Allowance for equity funds used during construction (831) (958) (446)
Other, net 826 2,853 (1,312)
Changes in certain current assets and liabilities --
Receivables, net 18,481 (16,839) (4,107)
Special deposits - - 350
Inventories 1,144 (3,947) 4,435
Payables (19,957) 18,742 351
Other (117) 3,282 2,083
--------------------------------------------------------------------------------------------------
Net cash provided from operating activities 44,958 44,787 47,470
--------------------------------------------------------------------------------------------------
Investing Activities:
Gross property additions (30,078) (72,858) (30,132)
Sales of property - - -
Other (841) 1,676 (1,073)
--------------------------------------------------------------------------------------------------
Net cash used for investing activities (30,919) (71,182) (31,205)
--------------------------------------------------------------------------------------------------
Financing Activities:
Proceeds:
Preferred stock - 35,000 -
First mortgage bonds - 45,000 30,000
Pollution control bonds - 4,085 13,870
Other long-term debt 8,500 10,000 -
Common Stock - - -
Retirements:
Preferred and preference stock - (20,000) -
First mortgage bonds (5,065) - (38,750)
Pollution control bonds - (4,085) (14,550)
Other long-term debt (823) (10,356) (217)
Notes payable, net (500) (4,500) 7,500
Payment of preferred and preference stock dividends (2,129) (2,222) (1,900)
Payment of common and class A stock dividends (16,300) (21,000) (22,000)
Miscellaneous (74) (3,400) (3,985)
--------------------------------------------------------------------------------------------------
Net cash provided from (used for) financing activities (16,391) 28,522 (30,032)
--------------------------------------------------------------------------------------------------
Net Increase (Decrease) in Cash and Cash Equivalents (2,352) 2,127 (13,767)
Cash and Cash Equivalents at Beginning of Year 3,915 1,788 15,555
--------------------------------------------------------------------------------------------------
Cash and Cash Equivalents at End of Year $ 1,563 $ 3,915 $ 1,788
==================================================================================================
( ) Denotes use of cash.
</TABLE>
II-253
<PAGE>
STATEMENTS OF CASH FLOWS
Savannah Electric and Power Company
<TABLE>
<CAPTION>
=============================================================================================================
For the Years Ended December 31, 1991 1990 1989 1988
-------------------------------------------------------------------------------------------------------------
(Thousands of Dollars)
<S> <C> <C> <C> <C>
Operating Activities:
Net income $ 25,930 $ 28,273 $ 27,955 $ 25,703
Adjustments to reconcile net income to net
cash provided by operating activities --
Depreciation and amortization 17,501 16,995 21,310 20,592
Deferred income taxes, net 1,601 2,782 3,476 3,568
Deferred investment tax credits, net - - - -
Allowance for equity funds used during construction (170) (193) - (273)
Other, net (1,876) 511 (775) 718
Changes in certain current assets and liabilities --
Receivables, net 5,291 1,541 (6,949) (7,062)
Special deposits 1,348 185 2,708 (558)
Inventories (1,082) 1,246 (1,503) 3,063
Payables 568 (228) 1,086 (1,151)
Other 3,710 (319) 1,544 (1,684)
-------------------------------------------------------------------------------------------------------------
Net cash provided from operating activities 52,821 50,793 48,852 42,916
-------------------------------------------------------------------------------------------------------------
Investing Activities:
Gross property additions (19,478) (20,086) (18,831) (23,254)
Sales of property - - - -
Other 407 (120) 381 (4,042)
-------------------------------------------------------------------------------------------------------------
Net cash used for investing activities (19,071) (20,206) (18,450) (27,296)
-------------------------------------------------------------------------------------------------------------
Financing Activities:
Proceeds:
Preferred stock - - - 20,000
First mortgage bonds 30,000 - 30,000 -
Pollution control bonds - - - -
Other long-term debt - - - -
Common Stock - - - 403
Retirements:
Preferred and preference stock - (5,374) (6,591) (553)
First mortgage bonds (22,500) (9,135) (18,275) (12,231)
Pollution control bonds (515) (485) (455) (430)
Other long-term debt (275) (364) (7,656) (4,401)
Notes payable, net (1,500) 1,500 - -
Payment of preferred and preference stock dividends (1,900) (2,113) (2,318) (1,284)
Payment of common and class A stock dividends (22,000) (22,000) (20,000) (14,407)
Miscellaneous (477) 47 (1,071) (269)
-------------------------------------------------------------------------------------------------------------
Net cash provided from (used for) financing activities (19,167) (37,924) (26,366) (13,172)
-------------------------------------------------------------------------------------------------------------
Net Increase (Decrease) in Cash and Cash Equivalents 14,583 (7,337) 4,036 2,448
Cash and Cash Equivalents at Beginning of Year 972 8,309 4,273 1,825
-------------------------------------------------------------------------------------------------------------
Cash and Cash Equivalents at End of Year $ 15,555 $ 972 $ 8,309 $ 4,273
=============================================================================================================
( ) Denotes use of cash.
</TABLE>
II-254A
<PAGE>
STATEMENTS OF CASH FLOWS
Savannah Electric and Power Company
<TABLE>
<CAPTION>
==============================================================================================================
For the Years Ended December 31, 1987 1986 1985 1984
--------------------------------------------------------------------------------------------------------------
(Thousands of Dollars)
<S> <C> <C> <C> <C>
Operating Activities:
Net income $ 23,421 $ 21,853 $ 16,747 $ 16,442
Adjustments to reconcile net income to net
cash provided by operating activities --
Depreciation and amortization 19,126 16,855 16,484 14,216
Deferred income taxes, net 925 4,443 3,034 3,104
Deferred investment tax credits, net (5) 489 3,084 2,043
Allowance for equity funds used during construction (512) (27) (646) (624)
Other, net (1,016) 474 (1,730) 35
Changes in certain current assets and liabilities --
Receivables, net 1,360 1,456 (1,122) 180
Special deposits (587) (53) (916) (27)
Inventories (503) 663 5,563 (7,006)
Payables (78) (1,750) 2,135 1,637
Other (757) 1,916 2 521
--------------------------------------------------------------------------------------------------------------
Net cash provided from operating activities 41,374 46,319 42,635 30,521
--------------------------------------------------------------------------------------------------------------
Investing Activities:
Gross property additions (32,276) (26,800) (30,700) (29,724)
Sales of property - - 1,145 193
Other 1,296 (824) 2,682 1,561
--------------------------------------------------------------------------------------------------------------
Net cash used for investing activities (30,980) (27,624) (26,873) (27,970)
--------------------------------------------------------------------------------------------------------------
Financing Activities:
Proceeds:
Preferred stock - - - -
First mortgage bonds - 25,000 20,000 -
Pollution control bonds - - - -
Other long-term debt - - - -
Common Stock 1,693 1,691 1,777 1,639
Retirements:
Preferred and preference stock (588) (610) (588) (525)
First mortgage bonds (10,239) (10,160) (5,592) (10,532)
Pollution control bonds (405) (380) (360) (335)
Other long-term debt (3,954) (3,075) (17,721) (2,965)
Notes payable, net - (4,500) (4,500) 9,000
Payment of preferred and preference stock dividends (1,351) (1,418) (1,485) (1,552)
Payment of common and class A stock dividends (10,383) (9,114) (8,347) (7,763)
Miscellaneous - (436) (383) -
--------------------------------------------------------------------------------------------------------------
Net cash provided from (used for) financing activities (25,227) (3,002) (17,199) (13,033)
--------------------------------------------------------------------------------------------------------------
Net Increase (Decrease) in Cash and Cash Equivalents (14,833) 15,693 (1,437) (10,482)
Cash and Cash Equivalents at Beginning of Year 16,658 965 2,402 12,884
--------------------------------------------------------------------------------------------------------------
Cash and Cash Equivalents at End of Year $ 1,825 $ 16,658 $ 965 $ 2,402
==============================================================================================================
( ) Denotes use of cash.
</TABLE>
II-254B
<PAGE>
BALANCE SHEETS
Savannah Electric and Power Company
<TABLE>
<CAPTION>
=================================================================================================
At December 31, 1994 1993 1992
-------------------------------------------------------------------------------------------------
(Thousands of Dollars)
<S> <C> <C> <C>
ASSETS
Utility Plant:
Production-fossil $ 312,215 $ 257,708 $ 258,539
Transmission 100,956 99,791 93,182
Distribution 251,323 237,012 222,024
General 28,938 28,010 25,851
Construction work in progress 5,930 49,797 5,966
-------------------------------------------------------------------------------------------------
Total utility plant 699,362 672,318 605,562
Accumulated provision for depreciation 267,590 251,565 240,094
-------------------------------------------------------------------------------------------------
Total 431,772 420,753 365,468
Less property-related accumulated deferred income taxes - - 65,725
-------------------------------------------------------------------------------------------------
Total 431,772 420,753 299,743
-------------------------------------------------------------------------------------------------
Other Property and Investments 1,790 1,793 1,795
-------------------------------------------------------------------------------------------------
Current Assets:
Cash and cash equivalents 1,563 3,915 1,788
Receivables, net 12,328 27,714 14,480
Accrued unbilled revenues 4,780 3,789 3,401
Fuel cost under recovery 3,113 7,112 3,895
Fossil fuel stock, at average cost 7,557 8,419 4,895
Materials and supplies, at average cost 9,076 9,358 8,935
Prepayments 7,446 4,849 1,599
-------------------------------------------------------------------------------------------------
Total 45,863 65,156 38,993
-------------------------------------------------------------------------------------------------
Deferred Charges:
Deferred charges related to income taxes 23,521 24,890 -
Miscellaneous 15,359 14,595 11,644
-------------------------------------------------------------------------------------------------
Total 38,880 39,485 11,644
-------------------------------------------------------------------------------------------------
Total Assets $ 518,305 $ 527,187 $ 352,175
=================================================================================================
</TABLE>
II-255
<PAGE>
BALANCE SHEETS
Savannah Electric and Power Company
<TABLE>
<CAPTION>
==========================================================================================================
At December 31, 1991 1990 1989 1988
----------------------------------------------------------------------------------------------------------
(Thousands of Dollars)
<S> <C> <C> <C> <C>
ASSETS
Utility Plant:
Production-fossil $ 247,017 $246,278 $ 242,988 $241,833
Transmission 90,198 73,358 72,299 71,601
Distribution 212,576 217,913 204,611 192,335
General 24,283 22,990 22,482 21,686
Construction work in progress 4,211 1,354 2,880 1,684
----------------------------------------------------------------------------------------------------------
Total utility plant 578,285 561,893 545,260 529,139
Accumulated provision for depreciation 225,605 211,725 198,228 178,888
----------------------------------------------------------------------------------------------------------
Total 352,680 350,168 347,032 350,251
Less property-related accumulated deferred income taxes 62,737 58,106 54,418 51,487
----------------------------------------------------------------------------------------------------------
Total 289,943 292,062 292,614 298,764
----------------------------------------------------------------------------------------------------------
Other Property and Investments 39 39 49 49
----------------------------------------------------------------------------------------------------------
Current Assets:
Cash and cash equivalents 15,555 972 8,309 4,273
Receivables, net 14,549 14,450 14,300 15,714
Accrued unbilled revenues 3,252 3,831 4,501 3,889
Fuel cost under recovery - 5,662 6,881 1,838
Fossil fuel stock, at average cost 9,196 8,071 9,706 8,455
Materials and supplies, at average cost 9,069 9,112 8,723 8,471
Prepayments 4,544 1,492 585 1,240
----------------------------------------------------------------------------------------------------------
Total 56,165 43,590 53,005 43,880
----------------------------------------------------------------------------------------------------------
Deferred Charges:
Deferred charges related to income taxes - - - -
Miscellaneous 6,358 4,359 4,219 4,358
----------------------------------------------------------------------------------------------------------
Total 6,358 4,359 4,219 4,358
----------------------------------------------------------------------------------------------------------
Total Assets $ 352,505 $340,050 $ 349,887 $347,051
==========================================================================================================
</TABLE>
II-256A
<PAGE>
BALANCE SHEETS
Savannah Electric and Power Company
<TABLE>
<CAPTION>
==========================================================================================================
At December 31, 1987 1986 1985 1984
----------------------------------------------------------------------------------------------------------
(Thousands of Dollars)
<S> <C> <C> <C> <C>
ASSETS
Utility Plant:
Production-fossil $ 236,587 $232,316 $ 229,765 $215,908
Transmission 69,822 65,215 61,843 55,047
Distribution 177,163 160,346 147,563 136,807
General 17,513 14,838 13,153 10,585
Construction work in progress 7,214 5,270 1,915 10,609
----------------------------------------------------------------------------------------------------------
Total utility plant 508,299 477,985 454,239 428,956
Accumulated provision for depreciation 161,531 144,232 130,279 116,576
----------------------------------------------------------------------------------------------------------
Total 346,768 333,753 323,960 312,380
Less property-related accumulated deferred income taxes 49,255 46,496 41,026 32,859
----------------------------------------------------------------------------------------------------------
Total 297,513 287,257 282,934 279,521
----------------------------------------------------------------------------------------------------------
Other Property and Investments 49 39 39 52
----------------------------------------------------------------------------------------------------------
Current Assets:
Cash and cash equivalents 1,825 16,658 965 2,402
Receivables, net 14,419 13,806 14,472 12,350
Accrued unbilled revenues - - - -
Fuel cost under recovery - 787 1,524 1,609
Fossil fuel stock, at average cost 12,359 12,642 13,615 19,554
Materials and supplies, at average cost 7,630 6,844 6,534 6,157
Prepayments 2,786 978 383 117
----------------------------------------------------------------------------------------------------------
Total 39,019 51,715 37,493 42,189
----------------------------------------------------------------------------------------------------------
Deferred Charges:
Deferred charges related to income taxes - - - -
Miscellaneous 4,127 2,815 3,220 1,556
----------------------------------------------------------------------------------------------------------
Total 4,127 2,815 3,220 1,556
----------------------------------------------------------------------------------------------------------
Total Assets $ 340,708 $341,826 $ 323,686 $323,318
==========================================================================================================
</TABLE>
II-256B
<PAGE>
BALANCE SHEETS
Savannah Electric and Power Company
<TABLE>
<CAPTION>
================================================================================================
At December 31, 1994 1993 1992
------------------------------------------------------------------------------------------------
(Thousands of Dollars)
<S> <C> <C> <C> >
CAPITALIZATION AND LIABILITIES
Capitalization:
Common stock $ 54,223 $ 54,223 $ 54,223
Paid-in capital 8,688 8,688 8,688
Additional minimum liability
for under-funded pension obligations (546) (2,121) -
Retained Earnings 99,216 93,479 95,465
------------------------------------------------------------------------------------------------
Total common equity 161,581 154,269 158,376
Preferred stock 35,000 35,000 20,000
Preferred and preference stock subject to mandatory redemption - - -
Long-term debt 155,922 151,338 110,767
------------------------------------------------------------------------------------------------
Total (excluding amount due within one year) 352,503 340,607 289,143
------------------------------------------------------------------------------------------------
Current Liabilities:
Notes payable to banks 2,500 3,000 7,500
Preferred and preference stock due within one year - - -
Long-term debt due within one year 2,579 4,499 1,319
Accounts payable 8,991 30,442 11,179
Customer deposits 4,698 4,714 4,541
Fuel cost over recovery - - -
Taxes accrued 1,133 1,529 3,016
Interest accrued 6,830 6,730 5,733
Vacation pay accrued 1,823 1,638 1,790
Miscellaneous 8,282 8,703 5,025
------------------------------------------------------------------------------------------------
Total 36,836 61,255 40,103
------------------------------------------------------------------------------------------------
Deferred Credits and Other Liabilities:
Accumulated deferred income taxes 70,786 66,947 -
Accumulated deferred investment tax credits 14,637 15,301 15,964
Deferred credits related to income taxes 25,487 26,173 -
Deferred under-funded accrued benefit obligation 3,022 5,855 -
Miscellaneous 15,034 11,049 6,965
------------------------------------------------------------------------------------------------
Total 128,966 125,325 22,929
------------------------------------------------------------------------------------------------
Total Capitalization and Liabilities $ 518,305 $527,187 $ 352,175
================================================================================================
</TABLE>
II-257
<PAGE>
BALANCE SHEETS
Savannah Electric and Power Company
<TABLE>
<CAPTION>
==========================================================================================================
At December 31, 1991 1990 1989 1988
----------------------------------------------------------------------------------------------------------
(Thousands of Dollars)
<S> <C> <C> <C> <C>
CAPITALIZATION AND LIABILITIES
Capitalization:
Common stock $ 54,223 $ 54,223 $ 54,223 $ 54,223
Paid-in capital 8,665 8,665 8,665 8,665
Additional minimum liability
for under-funded pension obligations - - - -
Retained Earnings 96,953 94,923 90,849 85,995
----------------------------------------------------------------------------------------------------------
Total common equity 159,841 157,811 153,737 148,883
Preferred stock 20,000 20,000 22,300 22,300
Preferred and preference stock subject to mandatory redemption - - 2,884 3,075
Long-term debt 119,280 112,377 117,522 98,285
----------------------------------------------------------------------------------------------------------
Total (excluding amount due within one year) 299,121 290,188 296,443 272,543
----------------------------------------------------------------------------------------------------------
Current Liabilities:
Notes payable to banks - 1,500 - -
Preferred and preference stock due within one year - - 190 6,590
Long-term debt due within one year 2,442 2,358 7,091 23,217
Accounts payable 10,176 8,786 9,078 7,950
Customer deposits 4,528 4,472 4,296 3,983
Fuel cost over recovery 1,603 - - -
Taxes accrued 724 1,387 1,749 1,899
Interest accrued 4,657 3,415 4,287 4,154
Vacation pay accrued 1,672 1,604 1,477 1,412
Miscellaneous 4,823 3,398 2,880 1,705
----------------------------------------------------------------------------------------------------------
Total 30,625 26,920 31,048 50,910
----------------------------------------------------------------------------------------------------------
Deferred Credits and Other Liabilities:
Accumulated deferred income taxes - - - -
Accumulated deferred investment tax credits 16,628 17,292 17,971 19,106
Deferred credits related to income taxes - - - -
Deferred under-funded accrued benefit obligation - - - -
Miscellaneous 6,131 5,650 4,425 4,492
---------------------------------------------------------------------------------------------------------
Total 22,759 22,942 22,396 23,598
----------------------------------------------------------------------------------------------------------
Total Capitalization and Liabilities $ 352,505 $340,050 $ 349,887 $347,051
==========================================================================================================
</TABLE>
II-258A
<PAGE>
BALANCE SHEETS
Savannah Electric and Power Company
<TABLE>
<CAPTION>
==========================================================================================================
At December 31, 1987 1986 1985 1984
----------------------------------------------------------------------------------------------------------
(Thousands of Dollars)
<S> <C> <C> <C> <C>
CAPITALIZATION AND LIABILITIES
Capitalization:
Common stock $ 54,131 $ 53,174 $ 52,332 $ 51,271
Paid-in capital 8,353 7,623 6,774 6,059
Additional minimum liability
for under-funded pension obligations - - - -
Retained Earnings 73,723 62,336 51,279 44,334
----------------------------------------------------------------------------------------------------------
Total common equity 136,207 123,133 110,385 101,664
Preferred stock 2,300 2,300 2,300 2,300
Preferred and preference stock subject to mandatory redemption 9,665 10,256 10,848 11,446
Long-term debt 129,329 137,821 128,850 136,709
----------------------------------------------------------------------------------------------------------
Total (excluding amount due within one year) 277,501 273,510 252,383 252,119
----------------------------------------------------------------------------------------------------------
Current Liabilities:
Notes payable to banks - - 4,500 9,000
Preferred and preference stock due within one year 553 550 568 558
Long-term debt due within one year 8,956 14,836 12,636 8,510
Accounts payable 9,427 10,329 12,584 9,956
Customer deposits 3,729 3,403 3,256 2,846
Fuel cost over recovery 599 - - -
Taxes accrued 3,713 4,834 3,595 8,663
Interest accrued 4,599 4,906 4,984 5,253
Vacation pay accrued 1,306 1,255 1,150 1,086
Miscellaneous 6,257 3,650 3,356 3,336
----------------------------------------------------------------------------------------------------------
Total 39,139 43,763 46,629 49,208
----------------------------------------------------------------------------------------------------------
Deferred Credits and Other Liabilities:
Accumulated deferred income taxes - - - -
Accumulated deferred investment tax credits 20,264 21,663 22,265 20,117
Deferred credits related to income taxes - - - -
Deferred under-funded accrued benefit obligation - - - -
Miscellaneous 3,804 2,890 2,409 1,874
----------------------------------------------------------------------------------------------------------
Total 24,068 24,553 24,674 21,991
----------------------------------------------------------------------------------------------------------
Total Capitalization and Liabilities $ 340,708 $341,826 $ 323,686 $323,318
==========================================================================================================
</TABLE>
II-258B
<PAGE>
SAVANNAH ELECTRIC AND POWER COMPANY
OUTSTANDING SECURITIES AT DECEMBER 31, 1994
First Mortgage Bonds
Amount Interest Amount
Series Issued Rate Outstanding Maturity
-------------------------------------------------------------
(Thousands) (Thousands)
1993 $ 20,000 6-3/8% $ 20,000 7/1/03
1989 30,000 9-1/4% 28,950 10/1/19
1991 30,000 9-3/8% 29,700 7/1/21
1992 30,000 8.30% 30,000 7/1/22
1993 25,000 7.40% 25,000 7/1/23
-------- --------
$135,000 $133,650
======== ========
Pollution Control Bonds
Amount Interest Amount
Series Issued Rate Outstanding Maturity
-------------------------------------------------------------
(Thousands) (Thousands)
1993 $ 4,085 Variable $ 4,085 1/1/16
1992 13,870 6-3/4% 13,870 2/1/22
-------- --------
$ 17,955 $ 17,955
======== ========
Preferred Stock
Shares Dividend Amount
Series Outstanding Rate Outstanding
-------------------------------------------------------------
(Thousands)
1993 1,400,000 6.64% $ 35,000
II-259
<PAGE>
SAVANNAH ELECTRIC AND POWER COMPANY
SECURITIES RETIRED DURING 1994
First Mortgage Bonds
Principal Interest
Series Amount Rate
---------------------------------------------------------------------
(Thousands)
1964 $3,715 4-5/8%
1989 1,050 9-1/4%
1991 300 9-3/8%
------
$5,065
======
II-260
<PAGE>
PART III
Items 10, 11, 12 and 13 for SOUTHERN are incorporated by reference to ELECTION
OF DIRECTORS in SOUTHERN's definitive Proxy Statement relating to the 1995
annual meeting of stockholders.
Item 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANTS
ALABAMA
(a)(1) Identification of directors of ALABAMA.
Elmer B. Harris (1)
President and Chief Executive Officer of ALABAMA
Age 55
Served as Director since 3-1-89
Bill M. Guthrie
Executive Vice President of ALABAMA
Age 61
Served as Director since 12-16-88
Whit Armstrong (2)
Age 47
Served as Director since 9-24-82
Philip E. Austin (2)
Age 53
Served as Director since 1-25-91
Margaret A. Carpenter (2)
Age 70
Served as Director since 2-26-93
A. W. Dahlberg (2)
Age 54
Served as Director since 4-22-94
Peter V. Gregerson, Sr. (2)
Age 66
Served as Director since 10-22-93
Crawford T. Johnson, III (2)
Age 70
Served as Director since 4-18-69
Carl E. Jones, Jr. (2)
Age 54
Served as Director since 4-22-88
Wallace D. Malone, Jr. (2)
Age 58
Served as Director since 6-22-90
William V. Muse (2)
Age 55
Served as Director since 2-26-93
John T. Porter (2)
Age 63
Served as Director since 10-22-93
Gerald H. Powell (2)
Age 68
Served as Director since 2-28-86
Robert D. Powers (2)
Age 45
Served as Director since 1-24-92
John W. Rouse (2)
Age 57
Served as Director since 4-22-88
William J. Rushton, III (2)
Age 65
Served as Director since 9-18-70
James H. Sanford (2)
Age 50
Served as Director since 8-1-83
John C. Webb, IV (2)
Age 52
Served as Director since 4-22-77
John W. Woods (2)
Age 63
Served as Director since 4-20-73
(1) Previously served as Director of ALABAMA from 1980 to 1985.
(2) No position other than Director.
Each of the above is currently a director of ALABAMA, serving a term running
from the last annual meeting of ALABAMA's stockholder (April 22, 1994) for one
year until the next annual meeting or until a successor is elected and
qualified.
III-1
<PAGE>
There are no arrangements or understandings between any of the individuals
listed above and any other person pursuant to which he was or is to be selected
as a director or nominee, other than any arrangements or understandings with
directors or officers of ALABAMA acting solely in their capacities as such.
(b)(1) Identification of executive officers of ALABAMA.
Elmer B. Harris (1)
President, Chief Executive Officer and Director
Age 55
Served as Executive Officer since 3-1-89
Banks H. Farris
Executive Vice President
Age 60
Served as Executive Officer since 12-3-91
William B. Hutchins, III
Executive Vice President and Chief Financial Officer
Age 51
Served as Executive Officer since 12-3-91
Charles D. McCrary
Executive Vice President
Age 43
Served as Executive Officer since 1-1-91
T. Harold Jones
Senior Vice President
Age 64
Served as Executive Officer since 12-1-91
(1) Previously served as executive officer of ALABAMA from 1979 to 1985.
Each of the above is currently an executive officer of ALABAMA, serving a
term running from the last annual meeting of the directors (April 22, 1994) for
one year until the next annual meeting or until his successor is elected and
qualified.
There are no arrangements or understandings between any of the individuals
listed above and any other person pursuant to which he was or is to be selected
as an officer, other than any arrangements or understandings with officers of
ALABAMA acting solely in their capacities as such.
(c)(1) Identification of certain significant employees.
None.
(d)(1) Family relationships.
None.
(e)(1) Business experience.
Elmer B. Harris - Elected in 1989; Chief Executive Officer. He previously served
as Senior Executive Vice President of GEORGIA from 1986 to 1989. Director of
SOUTHERN and AmSouth Bancorporation.
Bill M. Guthrie - Elected in 1988; also served since 1991 as Chief Production
Officer of SOUTHERN system and Executive Vice President and Chief Production
Officer of SCS; Vice President of SOUTHERN, GULF, MISSISSIPPI and SAVANNAH and
Executive Vice President of GEORGIA. Responsible primarily for providing overall
management of materials management, fuel services, operating and planning
services, fossil, hydro and bulk power operations of the Southern electric
system.
Whit Armstrong - President, Chairman and Chief Executive Officer of The
Citizens Bank, Enterprise, Alabama. Also, President and Chairman of the Board of
Enterprise Capital Corporation, Inc.
Philip E. Austin - Chancellor, The University of Alabama System. Previously
President and Chancellor of Colorado State University.
Margaret A. Carpenter - President, Compos-it, Inc. (typographics),
Montgomery, Alabama.
A. W. Dahlberg - Chairman, President and Chief Executive Officer of
SOUTHERN effective March 1, 1995. He previously served as President of SOUTHERN
from 1994 to 1995 and President and Chief Executive Officer of GEORGIA from 1988
through 1993. Director of SOUTHERN, GEORGIA, Trust Company Bank, Trust Company
of Georgia, Protective Life Corporation and Equifax, Inc.
Peter V. Gregerson, Sr. - Chairman Emeritus of Gregerson's Foods, Inc. (retail
groceries), Gadsden, Alabama. Director of AmSouth Bank of Gadsden, Alabama.
III-2
<PAGE>
Crawford T. Johnson, III - Chairman of Coca-Cola Bottling Company United,
Inc., Birmingham, Alabama. Director of Protective Life Corporation, AmSouth
Bancorporation and Russell Corporation.
Carl E. Jones, Jr. - Chairman and Chief Executive Officer of First Alabama
Bank, Mobile, Alabama.
Wallace D. Malone, Jr. - Chairman and Chief Executive Officer of SouthTrust
Corporation, bank holding company, Birmingham, Alabama.
William V. Muse - President and Chief Executive Officer of Auburn University. He
previously served as President of the University of Akron from 1984 to 1992.
John T. Porter - Pastor of Sixth Avenue Baptist Church, Birmingham,
Alabama. Director of Citizen Federal Bank.
Gerald H. Powell - President, Dixie Clay Company of Alabama, Inc.
(refractory clay producer), Jacksonville, Alabama.
Robert D. Powers - President, The Eufaula Agency, Inc. (real estate and
insurance), Eufaula, Alabama.
John W. Rouse - President and Chief Executive Officer of Southern Research
Institute (non-profit research institute), Birmingham, Alabama. Director of
Protective Life Corporation.
William J. Rushton, III - Chairman Emeritus of the Board, Protective Life
Corporation (insurance holding company), Birmingham, Alabama. Director of
SOUTHERN and AmSouth Bancorporation.
James H. Sanford - President, HOME Place Farms Inc. (diversified farmers
and ginners), Prattville, Alabama.
John C. Webb, IV - President, Webb Lumber Company, Inc. (wholesale lumber),
Demopolis, Alabama.
John W. Woods - Chairman and Chief Executive Officer, AmSouth
Bancorporation (multi-bank holding company), Birmingham, Alabama. Director of
Protective Life Corporation.
Banks H. Farris - Elected in 1991; responsible primarily for providing the
overall management of the Human Resources, Information Resources, Power Delivery
and Marketing Departments and the six geographic divisions. He previously served
as Senior Vice President from 1991 to 1994 and Vice President - Human Resources
from 1989 to 1991.
William B. Hutchins, III - Elected in 1991; Chief Financial Officer, responsible
primarily for providing the overall management of accounting and financial
planning activities. He previously served as Senior Vice President and Chief
Financial Officer from 1991 to 1994 and Vice President and Treasurer from 1983
to 1991.
Charles D. McCrary - Elected in 1991; responsible for the External Relations
Department, Operating Services and Corporate Services. He previously served as
Senior Vice President from 1991 to 1994 and Vice President of Administrative
Services - Nuclear of SCS from 1988 to 1991.
T. Harold Jones - Elected in 1991; responsible primarily for providing the
overall management of the Fossil Generation, Hydro Generation, Power Generation
Services and Fuels Departments. He previously served as Vice President - Fossil
Generation from 1986 to 1991.
(f)(1) Involvement in certain legal proceedings.
None.
III-3
<PAGE>
GEORGIA
(a)(2) Identification of directors of GEORGIA.
H. Allen Franklin
President and Chief Executive Officer.
Age 50
Served as Director since 1-1-94.
Warren Y. Jobe
Executive Vice President, Treasurer and Chief Financial Officer.
Age 54
Served as Director since 8-1-82
Bennett A. Brown (1)
Age 65
Served as Director since 5-15-80
A. W. Dahlberg (1)
Age 54
Served as Director since 6-1-88
William A. Fickling, Jr. (1)
Age 62
Served as Director since 4-18-73
L. G. Hardman III (1)
Age 55
Served as Director since 6-25-79
James R. Lientz, Jr. (1)
Age 51
Served as Director since 7-1-93
William A. Parker, Jr. (1)
Age 67
Served as Director since 5-19-65
G. Joseph Prendergast (1)
Age 49
Served as Director since 1-20-93
Herman J. Russell (1)
Age 64
Served as Director since 5-18-88
Gloria M. Shatto (1)
Age 63
Served as Director since 2-20-80
William Jerry Vereen (1)
Age 54
Served as Director since 5-18-88
Carl Ware (1) (2)
Age 51
Served as Director since 2-15-95
Thomas R. Williams (1)
Age 66
Served as Director since 3-17-82
(1) No position other than Director.
(2) Previously served as Director of GEORGIA
from 1980 to 1991.
Each of the above is currently a director of GEORGIA, serving a term running
from the last annual meeting of GEORGIA's stockholder (May 18, 1994) for one
year until the next annual meeting or until a successor is elected and
qualified, except for Mr. Ware whose election was effective on the date
indicated.
There are no arrangements or understandings between any of the individuals
listed above and any other person pursuant to which he/she was or is to be
selected as a director or nominee, other than any arrangements or understandings
with directors or officers of GEORGIA acting solely in their capacities as such.
(b)(2) Identification of executive officers of GEORGIA.
H. Allen Franklin
President, Chief Executive Officer and Director
Age 50
Served as Executive Officer since 1-1-94
Warren Y. Jobe
Executive Vice President, Treasurer, Chief Financial Officer and Director
Age 54
Served as Executive Officer since 5-19-82
Dwight H. Evans
Executive Vice President - External Affairs
Age 46
Served as Executive Officer since 4-19-89
III-4
<PAGE>
W. G. Hairston, III
Executive Vice President - Nuclear
Age 50
Served as Executive Officer since 6-1-93
Gene R. Hodges
Executive Vice President - Customer Operations
Age 56
Served as Executive Officer since 11-19-86
Wayne T. Dahlke
Senior Vice President - Power Delivery
Age 54
Served as Executive Officer since 4-19-89
James K. Davis
Senior Vice President - Corporate Relations
Age 54
Served as Executive Officer since 10-1-93
Robert H. Haubein
Senior Vice President - Fossil/Hydro Power
Age 55
Served as Executive Officer since 2-19-92
Gale E. Klappa
Senior Vice President - Marketing
Age 44
Served as Executive Officer since 2-19-92
Fred D. Williams
Senior Vice President - Bulk Power Markets
Age 50
Served as Executive Officer since 11-18-92
Each of the above is currently an executive officer of GEORGIA, serving a
term running from the last annual meeting of the directors (May 18, 1994) for
one year until the next annual meeting or until his successor is elected and
qualified.
There are no arrangements or understandings between any of the individuals
listed above and any other person pursuant to which he was or is to be selected
as an officer, other than any arrangements or understandings with officers of
GEORGIA acting solely in their capacities as such.
(c)(2) Identification of certain significant employees.
None.
(d)(2) Family relationships.
None.
(e)(2) Business experience.
H. Allen Franklin - President and Chief Executive Officer since January
1994. He previously served as President and Chief Executive Officer of SCS from
1988 through 1993. Director of SOUTHERN and SouthTrust Corporation.
Warren Y. Jobe - Executive Vice President and Chief Financial Officer since 1982
and Treasurer since 1992. Responsible for financial and accounting operations
and planning, internal auditing, procurement, corporate services, corporate
secretary and treasury operations.
Bennett A. Brown - Retired from serving as Chairman of the Board of
NationsBank on December 31, 1992. Previously Chairman of the Board and Chief
Executive Officer of C&S/Sovran Corporation. Director of Cousins Properties.
A. W. Dahlberg - Chairman, President and Chief Executive Officer of
SOUTHERN effective March 1, 1995. He previously served as President of SOUTHERN
from 1994 to 1995 and President and Chief Executive Officer of GEORGIA from 1988
through 1993. Director of SOUTHERN, ALABAMA, Trust Company Bank, Trust Company
of Georgia, Protective Life Corporation and Equifax, Inc.
William A. Fickling, Jr. - Co-Chairman of the Board and Chief Executive
Officer of Beech Street Corporation (provider of managed care services).
L. G. Hardman III - Chairman of the Board of First National Bank of
Commerce, Georgia and Chairman of the Board and Chief Executive Officer of First
Commerce Bancorp, Inc. Chairman of the Board, President and Treasurer of Harmony
Grove Mills, Inc. (real estate investments). Director of SOUTHERN.
James R. Lientz, Jr. - President of NationsBank of Georgia since 1993. He
previously served as President and Chief Executive Officer of former Citizens &
Southern Bank of South Carolina (now NationsBank) from 1990 to 1993.
III-5
<PAGE>
William A. Parker, Jr. - Chairman of the Board, Seminole Investment Co.,
L.L.C. (private investments), Atlanta, Georgia. Director of SOUTHERN, Genuine
Parts Company, Life Insurance Company of Georgia, Atlantic Realty Company, ING
North America Insurance Company, Post Properties, Inc. and Haverty Furniture
Companies, Inc.
G. Joseph Prendergast - Chairman Wachovia Bank of Georgia, N.A. since April
1994. He previously served as President and Chief Executive Officer, Wachovia
Corporation of Georgia and Wachovia Bank of Georgia, N.A. from 1993 to 1994 and
from 1988 to 1993 as Executive Vice President of Wachovia Corporation and
President of Wachovia Corporate Services, Inc.
Herman J. Russell - Chairman of the Board and Chief Executive Officer, H.
J. Russell & Company (construction), Atlanta, Georgia. Chairman of the Board,
Citizens Trust Bank, and Citizens Bancshares Corporation Atlanta, Georgia.
Director of Wachovia Corporation.
Gloria M. Shatto - President, Berry College, Mount Berry, Georgia. Director
of SOUTHERN, Becton Dickinson & Company, Kmart Corporation and Texas
Instruments, Inc.
William Jerry Vereen - President, Treasurer and Chief Executive Officer of
Riverside Manufacturing Company (manufacture and sale of uniforms), Moultrie,
Georgia. Director of Gerber Scientific, Inc., Textile Clothing Technology Group
and Blue Cross/Blue Shield of Georgia.
Carl Ware - President, Africa Group, Coca-Cola International; Senior Vice
President, The Coca-Cola Co.
Thomas R. Williams - President of The Wales Group, Inc. (investments),
Atlanta, Georgia. Director of ConAgra, Inc., BellSouth Corporation, National
Life Insurance Company of Vermont, AppleSouth, Inc., American Software, Inc. and
The Fidelity Group of Funds.
Dwight H. Evans - Executive Vice President - External Affairs since 1989.
W. G. Hairston, III - Executive Vice President - Nuclear since 1993. Also,
he has served as President and Chief Operating Officer of Southern Nuclear since
May 1993 and Chief Executive Officer since December 1993. Executive Vice
President of Southern Nuclear from 1992 to 1993 and Senior Vice President of
Southern Nuclear from 1990 to 1992.
Gene R. Hodges - Executive Vice President - Customer Operations since 1992.
Senior Vice President - Region/Land Operations from 1990 to 1992.
Wayne T. Dahlke - Senior Vice President - Power Delivery since 1992. Senior
Vice President - Marketing from 1989 to 1992.
James K. Davis - Senior Vice President - Corporate Relations since 1993.
Vice President of Corporate Relations from 1988 to 1993.
Robert H. Haubein - Senior Vice President - Fossil/ Hydro Power since June 1994.
Senior Vice President - Administrative Services from 1992 to 1994 and Vice
President - Northern Region from 1990 to 1992.
Gale E. Klappa - Senior Vice President - Marketing since 1992. Vice
President - Public Relations of SCS from 1981 to 1992.
Fred D. Williams - Senior Vice President - Bulk Markets since 1992. Vice
President - Bulk Power Markets from 1984 to 1992.
(f)(2) Involvement in certain legal proceedings.
None.
III-6
<PAGE>
GULF
(a)(3) Identification of directors of GULF.
Travis J. Bowden
President and Chief Executive Officer
Age 56
Served as Director since 2-1-94
Reed Bell, Sr., M.D. (1)
Age 68
Served as Director since 1-17-86
Paul J. DeNicola (1)
Age 46
Served as Director since 4-19-91
Fred C. Donovan (1)
Age 54
Served as Director since 1-18-91
W. D. Hull, Jr. (1)
Age 62
Served as Director since 10-14-83
C. W. Ruckel (1)
Age 67
Served as Director since 4-20-62
J. K. Tannehill (1)
Age 61
Served as Director since 7-19-85
(1) No position other than Director.
Each of the above is currently a director of GULF, serving a term running
from the last annual meeting of GULF's stockholder (June 28, 1994) for one year
until the next annual meeting or until a successor is elected and qualified.
There are no arrangements or understandings between any of the individuals
listed above and any other person pursuant to which he was or is to be selected
as a director or nominee, other than any arrangements or understandings with
directors or officers of GULF acting solely in their capacities as such.
(b)(3) Identification of executive officers of GULF.
Travis J. Bowden
President, Chief Executive Officer and Director
Age 56
Served as Executive Officer since 2-1-94
F. M. Fisher, Jr.
Vice President - Employee and External Relations
Age 46
Served as Executive Officer since 5-19-89
John E. Hodges, Jr.
Vice President - Customer Operations
Age 51
Served as Executive Officer since 5-19-89
G. Edison Holland, Jr. (1)
Vice President - Power Generation/ Transmission and Corporate Counsel
Age 42
Served as Executive Officer since 4-25-92
Earl B. Parsons, Jr. (2)
Vice President - Power Generation and Transmission
Age 56
Served as Executive Officer since 4-14-78
A. E. Scarbrough
Vice President - Finance
Age 58
Served as Executive Officer since 9-21-77
(1) Effective March 13, 1995.
(2) Resigned effective March 11, 1995, to assume the position of Senior
Vice President - Fossil and Hydro Generation at ALABAMA.
Each of the above is currently an executive officer of GULF, serving a term
running from the last annual meeting of the directors (July 22, 1994) for one
year until the next annual meeting or until his successor is elected and
qualified.
III-7
<PAGE>
There are no arrangements or understandings between any of the individuals
listed above and any other person pursuant to which he was or is to be selected
as an officer, other than any arrangements or understandings with officers of
GULF acting solely in their capacities as such.
(c)(3) Identification of certain significant employees.
None.
(d)(3) Family relationships.
None.
(e)(3) Business experience.
Travis J. Bowden - Elected President effective February 1994 and, effective May
1994, Chief Executive Officer. He previously served as Executive Vice President
of ALABAMA from 1985 to 1994.
Reed Bell, Sr., M.D. - Medical Doctor and since 1989, employee of the State
of Florida. He serves as Medical Director of Children's Medical Services,
District 1. He previously served as Medical Director of the Escambia County
Public Health Unit until 1992.
Paul J. DeNicola - President and Chief Executive Officer of SCS effective
January 1994. He previously served as Executive Vice President of SCS from 1991
through 1993 and President and Chief Executive Officer of MISSISSIPPI from 1989
to 1991. Director of SOUTHERN, MISSISSIPPI and SAVANNAH.
Fred C. Donovan - President of Baskerville - Donovan, Inc., Pensacola,
Florida, an architectural and engineering firm. Director of Baptist Health Care,
Inc.
W. D. Hull, Jr. - Vice Chairman of the Sun Bank/West Florida, Panama City,
Florida. He previously served as President and Chief Executive Officer and
Director of the Sun Commercial Bank, Panama City, Florida from 1987 to 1992.
C. W. Ruckel - Chairman of the Board of The Vanguard Bank and Trust
Company, Valparaiso, Florida. President and owner of Ruckel Properties, Inc.,
Valparaiso, Florida.
J. K. Tannehill - President and Chief Executive Officer of Tannehill
International Industries, Lynn Haven, Florida. He previously served as President
and Chief Executive Officer of Stock Equipment Company, Chagrin Falls, Ohio,
until 1991. Director of Florida First Federal Savings Bank, Panama City,
Florida.
F. M. Fisher, Jr. - Elected Vice President - Employee and External
Relations in 1989.
John E. Hodges, Jr. - Elected Vice President - Customer Operations in 1989.
Director of Barnett Bank of West Florida, Pensacola, Florida.
G. Edison Holland, Jr. - Elected Vice President and Corporate Counsel in 1992
and Vice President - Power Generation/Transmission and Corporate Counsel in
March 1995; responsible for generation and transmission of electric energy, all
legal matters associated with GULF and serves as compliance officer. Also
serves, since 1982, as a partner in the law firm, Beggs & Lane.
Earl B. Parsons, Jr. - Elected Vice President - Power Generation and
Transmission in 1989; responsible for generation and transmission of electrical
energy.
A. E. Scarbrough - Elected Vice President - Finance in 1980; responsible
for all accounting and financial services of GULF.
(f)(3) Involvement in certain legal proceedings.
None.
III-8
<PAGE>
MISSISSIPPI
(a)(4) Identification of directors of MISSISSIPPI.
David M. Ratcliffe
President and Chief Executive Officer
Age 46
Served as Director since 4-24-91
Paul J. DeNicola (1)
Age 46
Served as Director since 5-1-89
Edwin E. Downer (1)
Age 63
Served as Director since 4-24-84
Robert S. Gaddis (1)
Age 63
Served as Director since 1-21-86
Walter H. Hurt, III (1)
Age 59
Served as Director since 4-6-82
Aubrey K. Lucas (1)
Age 60
Served as Director since 4-24-84
Gerald J. St. Pe (1)
Age 55
Served as Director since 1-21-86
Dr. Philip J. Terrell (1)
Age 41
Served as Director since 2-22-95
N. Eugene Warr (1)
Age 59
Served as Director since 1-21-86
(1) No position other than Director.
Each of the above is currently a director of MISSISSIPPI, serving a term
running from the last annual meeting of MISSISSIPPI's stockholder (April 5,
1994) for one year until the next annual meeting or until a successor is elected
and qualified, except for Dr. Terrell whose election was effective on the date
indicated.
There are no arrangements or understandings between any of the individuals
listed above and any other person pursuant to which he or she was or is to be
selected as a director or nominee, other than any arrangements or understandings
with directors or officers of MISSISSIPPI acting solely in their capacities as
such.
(b)(4) Identification of executive officers of MISSISSIPPI.
David M. Ratcliffe (1)
President, Chief Executive Officer and Director
Age 46
Served as Executive Officer since 4-24-91
H. E. Blakeslee
Vice President - Customer Services and Marketing
Age 54
Served as Executive Officer since 1-25-84
F. D. Kuester
Vice President - Power Generation and Delivery
Age 44
Served as Executive Officer since 3-1-94
Don E. Mason
Vice President - External Affairs and Corporate Services
Age 53
Served as Executive Officer since 7-27-83
Michael W. Southern
Vice President, Secretary, Treasurer and
Chief Financial Officer
Age 42
Served as Executive Officer since 1-1-95
(1) Elected Senior Vice President of SOUTHERN in March 1995, however, Mr.
Ratcliffe will maintain his present position until his successor is elected.
Each of the above is currently an executive officer of MISSISSIPPI, serving
a term running from the last annual meeting of the directors (April 27, 1994)
for one year until the next annual meeting or until a successor is elected and
qualified, except for Mr. Southern whose election was effective on the date
indicated.
There are no arrangements or understandings between any of the individuals
listed above and any other person pursuant to which he was or is to be selected
as an officer, other than any arrangements or understandings with officers of
MISSISSIPPI acting solely in their capacities as such.
III-9
<PAGE>
(c)(4) Identification of certain significant employees.
None.
(d)(4) Family relationships.
None.
(e)(4) Business experience.
David M. Ratcliffe - President and Chief Executive Officer since 1991. He
previously served as Executive Vice President of SCS from 1989 to 1991 and Vice
President of SCS from 1985 to 1989.
Paul J. DeNicola - President and Chief Executive Officer of SCS effective 1994.
Executive Vice President of SCS from 1991 through 1993. He previously served as
President and Chief Executive Officer of MISSISSIPPI from 1989 to 1991. Director
of SOUTHERN, SAVANNAH and GULF.
Edwin E. Downer - Business consultant specializing in economic analysis,
management controls and procedural studies since 1990. President and Chief
Executive Officer, Unifirst Bank for Savings, F.A., Midland Division, Meridian,
Mississippi from 1985 to 1990.
Robert S. Gaddis - President of the Trustmark National Bank - Laurel,
Mississippi.
Walter H. Hurt, III - President and Director of NPC Inc. (Investments).
Vicar, All Saints Church, Inverness, Mississippi, and St. Thomas Church,
Belzoni, Mississippi. Retired newspaper editor and publisher.
Aubrey K. Lucas - President of the University of Southern Mississippi,
Hattiesburg, Mississippi.
Gerald J. St. Pe - President of Ingalls Shipbuilding and Senior Vice
President of Litton Industries, Inc. since 1985. Director of Merchants and
Marine Bank, Pascagoula, Mississippi.
Dr. Philip J. Terrell - Superintendent of Pass Christian Public School
District and adjunct professor at William Carey College.
N. Eugene Warr - Retailer (Biloxi and Gulfport, Mississippi). Vice chairman
of the Board of SouthTrust Bank of Mississippi, formerly The Jefferson Bank,
Biloxi, Mississippi.
H. E. Blakeslee - Elected Vice President in 1984. Primarily responsible for
rate design, economic analysis and revenue forecasting, economic development,
marketing and district operations.
F. D. Kuester - Elected Vice President in 1994.
Primarily responsible for generating plants, environmental quality, fuel
services, power generation technical services, distribution, transmission,
system planning, bulk power contracts, system operations and control, system
protection and real estate. He previously served as Manager of Business and New
Project Design/Development of SCS from 1993 to 1994 and Vice President of SCS
from 1990 to 1993.
Don E. Mason - Elected Vice President in 1983. Primarily responsible for the
external affairs functions, including governmental and regulatory affairs,
corporate communications, security, materials and general services, as well as
the human resources function.
Michael W. Southern - Elected Vice President, Secretary, Treasurer and Chief
Financial Officer in 1995, responsible primarily for accounting, treasury,
finance, information resources and risk management. He previously served as
Director of Corporate Finance of SCS from 1994 to 1995 and Director of Financial
Planning of SCS from 1990 to 1994.
(f)(4) Involvement in certain legal proceedings.
None.
III-10
<PAGE>
SAVANNAH
(a)(5) Identification of directors of SAVANNAH.
Arthur M. Gignilliat, Jr.
President and Chief Executive Officer
Age 62
Served as Director since 9-1-82
Helen Quattlebaum Artley (1)
Age 67
Served as Director since 5-17-77
Paul J. DeNicola (1)
Age 46
Served as Director since 3-14-91
Brian R. Foster (1)
Age 45
Served as Director since 5-16-89
Walter D. Gnann (1)
Age 59
Served as Director since 5-17-83
Robert B. Miller, III (1)
Age 49
Served as Director since 5-17-83
James M. Piette (1)
Age 70
Served as Director since 6-12-73
Arnold M. Tenenbaum (1)
Age 58
Served as Director since 5-17-77
Frederick F. Williams, Jr. (1)
Age 67
Served as Director since 7-2-75
(1) No Position other than Director.
Each of the above is currently a director of SAVANNAH, serving a term
running from the last annual meeting of SAVANNAH's stockholder (May 17, 1994)
for one year until the next annual meeting or until a successor is elected and
qualified.
There are no arrangements or understandings between any of the individuals
listed above and any other person pursuant to which he/she was or is to be
selected as a director or nominee, other than any arrangements or understandings
with directors or officers of SAVANNAH acting solely in their capacities as
such.
(b)(5) Identification of executive officers of SAVANNAH.
Arthur M. Gignilliat, Jr.
President, Chief Executive Officer and Director
Age 62
Served as Executive Officer since 2-15-72
W. Miles Greer
Vice President - Marketing and Customer Services
Age 51
Served as Executive Officer since 11-20-85
Larry M. Porter
Vice President - Operations
Age 50
Served as Executive Officer since 7-1-91
Kirby R. Willis
Vice President, Treasurer and Chief Financial Officer
Age 43
Served as Executive Officer since 1-1-94
Each of the above is currently an executive officer of SAVANNAH, serving a
term running from the last annual meeting of the directors (May 17, 1994) for
one year until the next annual meeting or until his successor is elected and
qualified.
There are no arrangements or understandings between any of the individuals
listed above and any other person pursuant to which he was or is to be selected
as an officer, other than any arrangements or understandings with officers of
SAVANNAH acting solely in their capacities as such.
(c)(5) Identification of certain significant employees.
None.
(d)(5) Family relationships.
None.
(e)(5) Business experience.
Arthur M. Gignilliat, Jr. - Elected President and Chief Executive Officer
in 1984. Director of Savannah Foods and Industries, Inc.
III-11
<PAGE>
Helen Quattlebaum Artley - Homemaker and Civic Worker.
Paul J. DeNicola - President and Chief Executive Officer of SCS effective
January 1994. Executive Vice President of SCS from 1991 through 1993. He
previously served as President and Chief Executive Officer of MISSISSIPPI from
1989 to 1991. Director of SOUTHERN, GULF and MISSISSIPPI.
Brian R. Foster - President and Chief Executive Officer of NationsBank of
Georgia, N.A., in Savannah since 1988.
Walter D. Gnann - President of Walt's TV, Appliance and Furniture Co.,
Inc., Springfield, Georgia. Past Chairman of the Development Authority of
Effingham County, Georgia.
Robert B. Miller, III - President of American Builders of Savannah.
James M. Piette - Retired Vice Chairman, Board of Directors, Union Camp
Corporation.
Arnold M. Tenenbaum - President and Director of Chatham Steel Corporation.
Director of First Union National Bank of Georgia and Savannah Foods and
Industries, Inc.
Frederick F. Williams, Jr. - Retired Partner and Consultant, Hilb, Rogal
and Hamilton Employee Benefits, Incorporated (Insurance Brokers), formerly
Jones, Hill & Mercer.
W. Miles Greer - Vice President - Marketing and Customer Services effective
1994. Formerly served as Vice President - Economic Development and Corporate
Services from 1989 through 1993.
Larry M. Porter - Vice President - Operations since 1991. Responsible for
managing the areas of fuel procurement, power production, transmission and
distribution, engineering and system operation. Previously he served as
Assistant Plant Manager of GEORGIA's Plant Scherer from 1984 to 1991.
Kirby R. Willis - Vice President, Treasurer and Chief Financial Officer since
1994. Responsible for all financial activities, Information Resources, Human
Resources, Corporate Services, and Environmental Affairs and Safety. He
previously served as Treasurer, Controller and Assistant Secretary from 1991 to
1993 and Treasurer and Secretary from 1987 to 1991.
(f)(5) Involvement in certain legal proceedings.
None.
GEORGIA's Mr. Thomas R. Williams failed to file on a timely basis a single
report disclosing one transaction on Forms 4 and 5 as required by Section 16 of
the Securities Exchange Act of 1934. Mr. William G. Hairston, III also failed to
file on a timely basis a Form 3 as required by Section 16 of the Securities Act
of 1934.
III-12
<PAGE>
ITEM 11. EXECUTIVE COMPENSATION
(a) Summary Compensation Tables. The following tables set forth
information concerning any Chief Executive Officer and the four most highly
compensated executive officers whose total annual salary and bonus exceeded
$100,000 during 1994 for each of the operating affiliates (ALABAMA, GEORGIA,
GULF, MISSISSIPPI and SAVANNAH).
<TABLE>
<CAPTION>
Key terms used in this Item will have the following meanings:-
<S> <C>
AME.........................................Above-market earnings on deferred compensation
ESP.........................................Employee Savings Plan
ESOP........................................Employee Stock Ownership Plan
SBP.........................................Supplemental Benefit Plan
ERISA.......................................Employee Retirement Income Security Act
</TABLE>
<TABLE>
<CAPTION>
ALABAMA
SUMMARY COMPENSATION TABLE
ANNUAL COMPENSATION LONG-TERM COMPENSATION
------------------- ----------------------
Number of
Securities Long-
Name Underlying Term
and Other Annual Stock Incentive All Other
Principal Compensation Options Payouts Compensation
Position Year Salary($) Bonus($) ($)1 (Shares) ($)2 ($)3
-----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
President,
Chief Executive 1994 436,280 96,711 13,882 31,441 236,642 24,467
Officer, 1993 418,818 117,630 23,469 26,892 198,131 39,388
Director 1992 397,499 96,615 9,161 30,036 147,278 24,435
Banks H. Farris 1994 203,508 38,828 52,567 8,331 41,134 9,864
Executive Vice 1993 176,041 17,642 24,222 6,302 28,394 27,418
President 1992 165,746 27,274 6,211 6,906 19,021 8,916
Charles D. McCrary 1994 189,718 35,459 4,254 7,767 38,195 10,260
Executive Vice 1993 163,832 16,103 16,612 5,874 24,928 26,713
President 1992 152,877 24,893 2,087 5,528 15,438 8,023
</TABLE>
III-13
<PAGE>
<TABLE>
<CAPTION>
ALABAMA
SUMMARY COMPENSATION TABLE
(Continued)
ANNUAL COMPENSATION LONG-TERM COMPENSATION
------------------- ----------------------
Number of
Securities Long-
Name Underlying Term
and Other Annual Stock Incentive All Other
Principal Compensation Options Payouts Compensation
Position Year Salary($) Bonus($) ($)1 (Shares) ($)2 ($)3
--------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
William B.
Hutchins, III
Executive Vice
President, 1994 184,995 26,993 1,289 7,551 35,138 9,650
Chief Financial 1993 164,972 16,103 14,791 5,896 26,429 26,817
Officer 1992 156,520 24,893 973 5,652 17,347 8,307
T. Harold Jones 1994 177,367 22,994 1,573 7,101 35,052 8,986
Senior Vice 1993 170,266 11,400 4,032 6,074 27,350 14,093
President 1992 163,164 15,000 32,611 6,784 19,181 8,631
1 Tax reimbursement by ALABAMA and certain personal benefits, including membership fee of $44,014 for Mr. Farris in
1994 and membership fee of $28,402 for Mr. Jones in 1992.
2 Payouts made in 1993, 1994 and 1995 for the four-year performance periods ending December 31, 1992, 1993 and 1994,
respectively.
3 ALABAMA contributions to the ESP, ESOP, and non-pension related accruals under the SBP (ERISA excess plan under
which accruals are made to offset Internal Revenue Code imposed limitations under the ESP and ESOP), for the
following:-
Name ESP ESOP SBP
---- --- ---- ---
Elmer B. Harris $6,750 $1,789 $15,928
Banks H. Farris 6,750 1,686 1,428
Charles D. McCrary 6,750 1,549 1,961
William B. Hutchins, III 6,750 1,572 1,328
T. Harold Jones 6,750 1,405 831
</TABLE>
III-14
<PAGE>
<TABLE>
<CAPTION>
GEORGIA
SUMMARY COMPENSATION TABLE
ANNUAL COMPENSATION LONG-TERM COMPENSATION
------------------- ----------------------
Number of
Securities Long-
Name Underlying Term
and Other Annual Stock Incentive All Other
Principal Compensation Options Payouts Compensation
Position Year Salary($) Bonus($) ($)1 (Shares) ($)2 ($)3
------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
H. Allen Franklin
President, 1994 415,954 87,763 30,078 31,386 203,201 100,201
Chief Executive 1993 365,000 73,584 16,438 23,408 140,650 37,298
Officer, Director 1992 328,198 84,096 2,704 19,366 90,200 17,669
William G.
Hairston, III 1994 287,831 44,521 3,225 15,725 81,662 14,593
Executive 1993 234,454 53,202 15,925 11,782 54,126 30,475
Vice President 1992 198,392 27,990 34,425 8,414 37,320 10,697
Dwight H. Evans 1994 215,887 35,459 2,318 8,610 56,635 11,812
Executive 1993 210,544 34,763 14,642 7,498 48,282 29,519
Vice President 1992 206,980 40,598 3,505 8,414 36,284 10,925
Warren Y. Jobe
Executive
Vice President,
Treasurer, 1994 215,809 27,579 2,744 8,610 56,635 11,736
Chief Financial 1993 210,200 27,038 15,645 7,480 48,282 29,258
Officer, Director 1992 209,249 30,521 2,566 8,434 37,320 11,535
Gene R. Hodges 1994 204,190 27,579 4,601 8,196 52,188 11,093
Executive 1993 206,727 4 28,228 14,903 6,878 35,285 30,629
Vice President 1992 177,966 27,666 2,471 7,212 29,367 9,600
1 Tax reimbursement by GEORGIA on certain personal benefits.
2 Payouts made in 1993, 1994 and 1995 for the four-year performance periods ending December 31, 1992,
1993 and 1994, respectively.
3 GEORGIA contributions to the ESP, ESOP, and non-pension related accruals under the SBP (ERISA excess plan
under which accruals are made to offset Internal Revenue Code imposed limitations under the ESP and ESOP) for
the following:-
Name ESP ESOP SBP
---- --- ---- ---
H. Allen Franklin $6,750 $1,789 $15,043
William G. Hairston, III 6,750 1,789 6,054
Dwight H. Evans 6,750 1,789 3,273
Warren Y. Jobe 6,750 1,789 3,197
Gene R. Hodges 6,750 1,789 2,554
Also included for Mr. Franklin is a relocation allowance of $76,619.
4 Mr. Hodges' 1993 salary included a retroactive pay adjustment of $15,717 to correct underpayment of his 1992 salary.
</TABLE>
III-15
<PAGE>
<TABLE>
<CAPTION>
GULF
SUMMARY COMPENSATION TABLE
ANNUAL COMPENSATION LONG-TERM COMPENSATION
------------------- ----------------------
Number of
Securities Long-
Name Underlying Term
and Other Annual Stock Incentive All Other
Principal Compensation Options Payouts Compensation
Position Year Salary($) Bonus($) ($)1 (Shares) ($)2 ($)3
------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Travis J. Bowden
President, 1994 308,682 42,849 39,642 15,134 86,730 58,109
Chief Executive 1993 257,089 23,161 16,118 12,238 61,524 31,271
Officer, Director 1992 244,139 35,804 1,636 13,604 44,345 13,550
Douglas L. McCrary4
President, 1994 152,353 14,300 1,793 - 102,364 8,707
Chief Executive 1993 310,701 40,856 3,639 14,812 104,719 19,854
Officer, Director 1992 299,960 42,307 1,719 16,702 80,942 16,386
G. Edison
Holland, Jr. 1994 172,092 21,352 1,512 6,893 18,888 9,307
Vice President, 1993 162,651 20,934 9,504 5,840 - 21,015
Corporate Counsel 1992 101,725 17,980 724 5,590 n/e5 -
Earl B. Parsons, Jr. 1994 164,787 21,012 1,513 - 25,889 9,113
Vice President 1993 160,089 19,129 9,572 - 22,072 25,430
1992 155,495 22,050 420 - 17,875 8,460
Arlan E. Scarbrough 1994 163,548 19,511 1,185 - 25,889 8,612
Vice President 1993 155,565 19,129 11,582 - 22,072 24,729
1992 147,418 23,173 185 - 17,060 7,891
John E. Hodges, Jr. 1994 156,831 21,352 1,999 5,455 37,776 8,733
Vice President 1993 147,144 20,934 9,726 4,578 32,206 24,327
1992 139,296 25,360 448 5,064 23,218 7,425
1 Tax reimbursement by GULF on certain personal benefits.
2 Payouts made in 1993, 1994 and 1995 for the four-year performance periods ending December 31, 1992,
1993 and 1994, respectively.
3 GULF contributions to the ESP, ESOP, and non-pension related accruals under the SBP (ERISA excess plan under
which accruals are made to offset Internal Revenue Code imposed limitations under the ESP and ESOP) for the following:-
Name ESP ESOP SBP
---- --- ---- ---
Travis J. Bowden $6,750 $1,789 $6,521
Douglas L. McCrary 5,422 1,709 1,576
G. Edison Holland, Jr. 6,750 1,572 985
Earl B. Parsons, Jr. 6,750 1,719 644
Arlan E. Scarbrough 6,750 1,711 151
John E. Hodges, Jr. 6,750 1,688 295
Also included for Mr. Bowden is a relocation allowance of $43,049.
4 Mr. McCrary retired effective May 1, 1994.
5 Employee and executive officer of GULF since April 25, 1992. Not eligible to
participate in the Long-Term Incentive Plan until January 1, 1993.
</TABLE>
III-16
<PAGE>
<TABLE>
<CAPTION>
MISSISSIPPI
SUMMARY COMPENSATION TABLE
ANNUAL COMPENSATION LONG-TERM COMPENSATION
------------------- ----------------------
Number of
Securities Long-
Name Underlying Term
and Other Annual Stock Incentive All Other
Principal Compensation Options Payouts Compensation
Position Year Salary($) Bonus($) ($)1 (Shares) ($)2 ($)3
------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
David M. Ratcliffe
President, Chief 1994 240,291 61,989 2,581 13,137 100,336 13,349
Executive 1993 226,373 45,917 8,722 8,114 75,378 17,887
Officer, Director 1992 213,095 33,395 6,380 8,652 48,722 10,860
H. E. Blakeslee 1994 156,204 23,808 1,055 5,509 37,776 8,494
Vice President 1993 154,332 15,271 3,528 4,768 32,206 15,650
1992 151,176 15,558 507 5,284 23,728 7,756
Don E. Mason 1994 150,162 22,069 686 - 25,889 8,080
Vice President 1993 148,305 11,016 4,321 - 22,072 15,409
1992 146,153 9,951 1,352 - 17,060 7,505
Thomas A. Fanning4
Vice President,
Chief Financial 1994 130,471 27,189 352 - 20,432 7,075
Officer, Secretary, 1993 122,724 28,244 3,016 - 15,233 14,655
Treasurer 1992 89,089 15,574 16,539 - 10,085 18,364
Frederick D.
Kuester5 1994 127,590 16,481 1,781 - 16,588 19,121
Vice President 1993 - - - - - -
1992 - - - - - -
1 Tax reimbursement by MISSISSIPPI on certain personal benefits.
2 Payouts made in 1993, 1994 and 1995 for the four-year performance periods ending December 31, 1992,
1993 and 1994, respectively.
3 MISSISSIPPI contributions to the ESP, ESOP, and non-pension related accruals under the SBP (ERISA excess plan
under which accruals are made to offset Internal Revenue Code imposed limitations under the ESP and ESOP) for the following:-
Name ESP ESOP SBP
---- --- ---- ---
David M. Ratcliffe $6,750 $1,789 $4,810
H. E. Blakeslee 6,750 1,744 -
Don E. Mason 6,750 1,330 -
Thomas A. Fanning 5,949 1,126 -
Frederick D. Kuester 5,804 1,051 -
Also included for Mr. Kuester is a relocation allowance of $12,266.
4 Effective December 31, 1994, Mr. Fanning resigned to become a vice president of SCS.
5 Mr. Kuester named an executive officer effective March 28, 1994.
</TABLE>
III-17
<PAGE>
<TABLE>
<CAPTION>
SAVANNAH
SUMMARY COMPENSATION TABLE
ANNUAL COMPENSATION LONG-TERM COMPENSATION
------------------- ----------------------
Number of
Securities Long-
Name Underlying Term
and Other Annual Stock Incentive All Other
Principal Compensation Options Payouts Compensation
Position Year Salary($) Bonus($) ($)1 (Shares) ($)2 ($)3
------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Arthur M.
Gignilliat, Jr.
President, 1994 206,964 37,384 194 8,253 76,164 18,617
Chief Executive 1993 202,259 26,470 12,231 7,198 64,932 31,512
Officer, Director 1992 201,338 27,409 - 8,116 50,269 14,466
Larry M. Porter 1994 130,619 15,249 198 - 15,070 7,561
Vice President 1993 126,133 10,070 7,251 - 7,810 21,570
1992 122,274 11,621 4,818 - n/e4 6,142
W. Miles Greer 1994 122,153 14,050 198 - 14,527 7,642
Vice President 1993 117,766 10,337 7,458 - 12,202 21,881
1992 115,114 10,776 34 - 9,243 6,599
Kirby R. Willis5
Vice President, 1994 111,653 14,207 46 - 8,257 6,840
Chief Financial 1993 - - - - - -
Officer, Treasurer 1992 - - - - - -
1 Tax reimbursement by SAVANNAH on certain personal benefits.
2 Payouts made in 1993, 1994 and 1995 for the four-year performance periods ending December 31, 1992, 1993
and 1994, respectively.
3 SAVANNAH contributions to the ESP, under Section 401(k) of the Internal Revenue Code, ESOP, and AME for
the following:-
Name ESP ESOP AME
---- --- ---- ---
Arthur M. Gignilliat $6,750 $1,590 $10,277
Larry M. Porter 5,230 946 1,385
W. Miles Greer 5,144 1,003 1,495
Kirby R. Willis 4,590 793 1,457
4 Not eligible to participate in the Long-term Incentive Plan until January 1, 1992.
5 Mr. Willis was named an executive officer effective in 1994.
</TABLE>
III-18
<PAGE>
STOCK OPTION GRANTS IN 1994
(b) Stock Option Grants. The following table sets forth all stock option
grants to the named executive officers of each operating subsidiary during the
year ending December 31, 1994.
<TABLE>
<CAPTION>
Individual Grants Grant Date Value
# of % of Total
Securities Options Exercise
Underlying Granted to or
Options Employees in Base Price Expiration Grant Date
Name Granted1 Fiscal Year2 ($/Sh)1 Date1 Present Value($)3
------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
ALABAMA
Elmer B. Harris 31,441 7.0% $18.8750 07/18/2004 80,175
Banks H. Farris 8,331 1.9% $18.8750 06/01/2003 21,244
Charles D. McCrary 7,767 1.7% $18.8750 07/18/2004 19,806
William B. Hutchins, III 7,551 1.7% $18.8750 07/18/2004 19,255
T. Harold Jones 7,101 1.6% $18.8750 04/01/1998 7,456
GEORGIA
H. Allen Franklin 31,386 7.0% $18.8750 07/18/2004 80,034
William G. Hairston, III 15,725 3.5% $18.8750 07/18/2004 40,099
Dwight H. Evans 8,610 1.9% $18.8750 07/18/2004 21,956
Warren Y. Jobe 8,610 1.9% $18.8750 07/18/2004 20,900
Gene R. Hodges 8,196 1.8% $18.8750 07/18/2004 21,956
GULF
Travis J. Bowden 15,134 3.4% $18.8750 07/18/2004 38,592
Douglas L. McCrary - - - - -
G. Edison Holland, Jr. 6,893 1.5% $18.8750 07/18/2004 17,577
Earl B. Parsons, Jr. - - - - -
A. E. Scarbrough - - - - -
John E. Hodges, Jr. 5,455 1.2% $18.8750 07/18/2004 13,910
See next page for footnotes.
</TABLE>
III-19
<PAGE>
<TABLE>
<CAPTION>
STOCK OPTION GRANTS IN 1994
Individual Grants Grant Date Value
# of % of Total
Securities Options Exercise
Underlying Granted to or
Options Employees in Base Price Expiration Grant Date
Name Granted1 Fiscal Year2 ($/Sh)1 Date1 Present Value($)3
-----------------------------------------------------------------------------------------------------------
MISSISSIPPI
<S> <C> <C> <C> <C> <C>
David M. Ratcliffe 13,137 2.9% $18.8750 07/18/2004 33,499
H. E. Blakeslee 5,509 1.2% $18.8750 07/18/2004 14,048
Don E. Mason - - - - -
Thomas A. Fanning - - - - -
Frederick D. Kuester - - - - -
SAVANNAH
Arthur M. Gignilliat, Jr. 8,253 1.8% $18.8750 09/03/2000 17,084
Larry M. Porter - - - - -
W. Miles Greer - - - - -
Kirby R.Willis - - - - -
-------------------------
1 Grants were made on July 18, 1994, and vest 25% per year on the anniversary
date of the grant. Grants fully vest upon termination incident to death,
disability, or retirement. The exercie price is the average of the high and low
fair market value of SOUTHERN's common stock on the date granted. In accordance
with the terms of the Executive Stock Plan, Mr. Farris' unexercised options
expire on June 1, 2003, three years after his normal retirement date; Mr. Jones'
unexercised options expire on April 1, 1998, three years after his normal
retirement date; and Mr. Gignilliat's unexercised options expire on September 3,
2000, three years after his normal retirement date. Mr. McCrary's unexercised
options at December 31, 1994 expire on May 1, 1997 three years after his May 1,
1994 retirement date.
2 A total of 446,443 stock options were granted in 1994 to
key executives participating in SOUTHERN's Executive Stock Plan.
3 Based on the Black-Scholes option valuation model. The actual value, if
any, an executive officer may realize ultimately depends on the market value of
SOUTHERN's common stock at a future date. This valuation is provided pursuant to
SEC disclosure rules and there is no assurance that the value realized will be
at or near the value estimated by the Black-Scholes model. Assumptions used to
calculate this value: price volatility - 16.79%; risk-free rate of return -
7.3%; dividend yield - 6.25%; and time to exercise - 10 years.
</TABLE>
III-20
<PAGE>
<TABLE>
<CAPTION>
AGGREGATED STOCK OPTION EXERCISES IN 1994 AND YEAR-END OPTION VALUES
(c) Aggregated Stock Option Exercises. The following table sets forth
information concerning options exercised during the year ending December 31,
1994, by the named executive officers and the value of unexercised options held
by them as of December 31, 1994.
Number of
Securities Value of
Underlying Unexercised
Unexercised In-the-Money
Options at Options at
Fiscal Fiscal
Year-End (#) Year-End($)1
Shares Acquired Value Exercisable/ Exercisable/
Name on Exercise (#) Realized($)2 Unexercisable Unexercisable
--------------------------------------------------------------------------------------------------------------
ALABAMA
<S> <C> <C> <C> <C>
Elmer B. Harris - - 58,867/75,800 276,376/120,463
Banks H. Farris - - 5,028/16,511 6,582/15,954
Charles D. McCrary - - 4,232/14,937 5,269/14,007
William B. Hutchins, III - - 4,300/14,799 5,387/13,882
T. Harold Jones - - 4,910/15,049 6,466/14,454
GEORGIA
H. Allen Franklin - - 40,383/63,905 186,066/86,272
William G. Hairston, III 2,588 19,087 9,658/31,275 23,447/41,137
Dwight H. Evans - - 8,474/20,896 34,426/32,819
Warren Y. Jobe - - 9,416/21,062 41,270/33,885
Gene R. Hodges - - 7,627/19,143 31,287/29,527
GULF
Travis J. Bowden - - 24,019/34,057 108,558/48,103
Douglas. L. McCrary 48,152 241,274 14,812/0 0/0
G. Edison Holland, Jr. - - 4,255/14,068 5,328/13,082
Earl B. Parsons, Jr. - - - -
Arlan E. Scarbrough - - - -
John E. Hodges, Jr. - - 15,714/12,615 85,878/18,314
See next page for footnotes.
</TABLE>
III-21
<PAGE>
<TABLE>
<CAPTION>
AGGREGATED STOCK OPTION EXERCISES IN 1994 AND YEAR-END OPTION VALUES
Number of
Securities Value of
Underlying Unexercised
Unexercised In-the-Money
Options at Options at
Fiscal Fiscal
Year-End (#) Year-End($)1
Shares Acquired Value Exercisable/ Exercisable/
Name on Exercise (#) Realized($)2 Unexercisable Unexercisable
-------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
MISSISSIPPI
David M. Ratcliffe - - 20,046/26,119 95,471/38,847
H. E. Blakeslee - - 6,812/13,371 26,162/21,355
Don E. Mason - - - -
Thomas A. Fanning - - - -
Frederick D. Kuester - - - -
SAVANNAH
Arthur M. Gignilliat, Jr. - - 26,133/20,236 140,184/32,571
Larry M. Porter - - - -
W. Miles Greer - - - -
Kirby R. Willis - - - -
1 This represents the excess of the fair market value of SOUTHERN's common stock
of $20.00 per share, as of December 31, 1994, above the exercise price of the
options. One column reports the "value" of options that are vested and therefore
could be exercised; the other "value" of options that are not vested and
therefore could not be exercised as of December 31, 1994.
2 The "Value Realized" is ordinary income, before taxes, and represents the amount
equal to the excess of the fair market value of the shares at the time of exercise over the exercise
price.
</TABLE>
III-22
<PAGE>
<TABLE>
<CAPTION>
LONG-TERM INCENTIVE PLANS - AWARDS IN 1994
(d) Long-Term Incentive Plans. The following table sets forth the
long-term incentive plan awards made to the named executive officers for the
performance period January 1, 1994 through December 31, 1997.
Estimated Future Payouts under
Non-Stock Price-Based Plans
------------------------------
Number Performance or
of Other Period
Units Until Maturation Threshold Target Maximum
Name (#)1 or Payout ($)2 ($)2 ($)2
----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
ALABAMA
Elmer B. Harris 269,311 4 years 134,656 269,311 538,622
Banks H. Farris 95,170 4 years 47,585 95,170 190,340
Charles D. McCrary 77,251 4 years 38,626 77,251 154,502
William B. Hutchins, III 70,570 4 years 35,285 70,570 141,140
T. Harold Jones 56,360 4 years 28,180 56,360 112,720
GEORGIA
H. Allen Franklin 305,573 4 years 152,787 305,573 611,146
William G. Hairston, III 157,500 4 years 78,750 157,500 315,000
Dwight H. Evans 77,251 4 years 38,626 77,251 154,502
Warren Y. Jobe 77,251 4 years 38,626 77,251 154,502
Gene R. Hodges 77,251 4 years 38,626 77,251 154,502
GULF
Travis J. Bowden 129,576 4 years 64,788 129,576 259,152
Douglas L. McCrary 149,598 4 years 74,799 149,598 299,196
G. Edison Holland, Jr. 56,360 4 years 28,180 56,360 112,720
Earl B. Parsons, Jr. 51,500 4 years 25,750 51,500 103,000
Arlan E. Scarbrough 51,500 4 years 25,750 51,500 103,000
John E. Hodges, Jr. 56,360 4 years 28,180 56,360 112,720
See next page for footnotes.
</TABLE>
III-23
<PAGE>
<TABLE>
<CAPTION>
LONG-TERM INCENTIVE PLANS - AWARDS IN 1994
Estimated Future Payouts under
Non-Stock Price-Based Plans
------------------------------
Number Performance or
of Other Period
Units Until Maturation Threshold Target Maximum
Name (#)1 or Payout ($)2 ($)2 ($)2
-------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
MISSISSIPPI
David M. Ratcliffe 127,038 4 years 63,519 127,038 254,076
H. E. Blakeslee 56,360 4 years 28,180 56,360 112,720
Don E. Mason 51,500 4 years 25,750 51,500 103,000
Thomas A. Fanning 40,298 4 years 20,149 40,298 80,596
Frederick D. Kuester 40,298 4 years 20,149 40,298 80,596
SAVANNAH
Arthur M. Gignilliat, Jr. 92,760 4 years 46,380 92,760 185,520
Larry M. Porter 40,298 4 years 20,149 40,298 80,596
W. Miles Greer 37,156 4 years 18,578 37,156 74,312
Kirby R. Willis 37,156 4 years 18,578 37,156 74,312
1 A performance unit is a method of assigning a dollar value to a performance
award opportunity. The actual number of units granted to a participant will be
based on an award percentage of an individual's base salary range control
mid-point at the beginning of the performance period.
2 The threshold, target and maximum value of a unit is $0.50, $1.00, and $2.00,
respectively, and can vary based on SOUTHERN's return on common equity relative
to a selected group of electric and gas utilities in the Southeastern United States.
If certain minimum performance relative to the selected group is not achieved, there
will be no payout; nor is there a payout if the current earnings of SOUTHERN are not
sufficient to fund the dividend rate paid in the last calendar year. All awards
are payable in cash at the end of the performance period.
</TABLE>
III-24
<PAGE>
DEFINED BENEFIT OR ACTUARIAL PLAN DISCLOSURE
(e)(1) Pension Plan Table. The following table sets forth the estimated
combined annual pension benefits under the pension and supplemental defined
benefit plans in effect during 1994 for ALABAMA, GEORGIA, GULF and MISSISSIPPI.
Employee compensation covered by the pension and supplemental benefit plans for
pension purposes is limited to the average of the highest three of the final 10
years' base salary and wages (reported under column titled "Salary" in the
Summary Compensation Tables on pages III-13 through III-18).
The amounts shown in the table were calculated according to the final
average pay formula and are based on a single life annuity without reduction for
joint and survivor annuities (although married employees are required to have
their pension benefits paid in one of various joint and survivor annuity forms,
unless the employee elects otherwise with the spouse's consent) or computation
of the Social Security offset which would apply in most cases. This offset
amounts to one-half of the estimated Social Security benefit (primary insurance
amount) in excess of $3,000 per year times the number of years of accredited
service, divided by the total possible years of accredited service to normal
retirement age.
<TABLE>
<CAPTION>
Years of Accredited Service
Remuneration 15 20 25 30 35 40
------------ ------------------------------------------------------------------
<C> <C> <C> <C> <C> <C> <C>
$ 50,000 $ 12,750 $ 17,000 $ 21,250 $ 25,500 $ 29,750 $ 34,000
$100,000 25,500 34,000 42,500 51,000 59,500 68,000
$300,000 76,500 102,000 127,500 153,000 178,500 204,000
$500,000 127,500 170,000 212,500 255,000 297,500 340,000
$700,000 178,500 238,000 297,500 357,000 416,500 476,000
$950,000 242,250 323,000 403,750 484,500 565,250 646,000
</TABLE>
As of December 31, 1994, the applicable compensation levels and years of
accredited service are presented in the following tables:
<TABLE>
<CAPTION>
ALABAMA
Compensation
Name Level Years of Service
---- ----- ----------------
<S> <C> <C>
Elmer B. Harris $421,620 36
Banks H. Farris 184,860 35
Charles D. McCrary 171,852 20
Williams B. Hutchins, III 171,396 24
T. Harold Jones 171,408 42
</TABLE>
III-25
<PAGE>
<TABLE>
<CAPTION>
GEORGIA
Compensation
Name Level Years of Service
---- ----- ----------------
<S> <C> <C>
H. Allen Franklin $385,716 23
William G. Hairston, III 259,932 26
Dwight H. Evans 210,600 25
Warren Y. Jobe 210,588 23
Gene R. Hodges 191,616 30
GULF
Compensation
Name Level Years of Service
---- ----- ----------------
Travis J. Bowden $263,832 181
G. Edison Holland, Jr. 169,356 121
Earl B. Parsons, Jr. 161,100 33
Arlan E. Scarbrough 157,104 31
John E. Hodges, Jr. 149,604 28
MISSISSIPPI
Compensation
Name Level Years of Service
---- ----- ----------------
David M. Ratcliffe $228,432 22
H. E. Blakeslee 154,224 28
Don E. Mason 148,500 28
Thomas A. Fanning 125,820 13
Frederick D. Kuester 127,992 22
</TABLE>
SAVANNAH has in effect a qualified, trusteed, noncontributory, defined
benefit pension plan which provides pension benefits to employees upon
retirement at the normal retirement age after designated periods of accredited
service and at a specified compensation level. The plan provides pension
benefits under a formula which includes each participant's years of service with
the Southern system and average annual earnings of the highest three of the
final ten years of service with the Southern system preceding retirement. Plan
benefits are reduced by a portion of the benefits participants are entitled to
receive under Social Security. The plan provides for reduced early retirement
benefits at age 55 and a pension for the surviving spouse equal to one-half of
the deceased retiree's pension.
The following table sets forth the estimated annual pension benefits
under the pension plan in effect during 1994 which are payable by SAVANNAH to
employees upon retirement at the normal retirement age after designated periods
of accredited service and at a specified compensation level.
-----------------------------------
1 The number of accredited years of service includes ten years credited to both
Mr. Bowden and Mr. Holland pursuant to individual supplemental pension
agreements.
III-26
<PAGE>
<TABLE>
<CAPTION>
Average Annual Salary Annual Benefits Exclusive of Social Security1
for Last 36 Months of Years of Service
Employment 15 25 35
------------------------ -- -- --
<S> <C> <C> <C>
$ 90,000 $22,505 $ 37,508 $ 52,511
$120,000 30,006 50,010 70,014
$150,000 37,508 62,513 87,518
$180,000 45,009 75,015 105,021
$210,000 52,511 87,518 122,525
$250,000 62,513 104,188 145,863
</TABLE>
As of December 31, 1994, the applicable compensation levels and years of
accredited service are presented in the following table:-
<TABLE>
<CAPTION>
SAVANNAH
Compensation
Name Level Years of Service
---- ----- ----------------
<S> <C> <C>
Arthur M. Gignilliat $182,625 36
Larry M. Porter 115,500 17
W. Miles Greer 110,685 10
Kirby R. Willis 93,300 20
</TABLE>
(e)(2) Deferred Compensation Plan; Supplemental Executive Retirement Plan.
------------------------------------------------------------------
SAVANNAH has in effect a voluntary deferred compensation plan for certain
executive employees pursuant to which such employees may defer a portion of
their respective annual salaries. In addition, SAVANNAH has a supplemental
executive retirement plan for certain of its executive employees which became
effective January 1, 1984. The deferred compensation plan is designed to provide
supplemental retirement or survivor benefit payments. The supplemental executive
retirement plan is also designed to provide retiring executives of SAVANNAH with
a supplemental retirement benefit, which, in conjunction with social security
and benefits under SAVANNAH's qualified pension plan, will equal 70 percent of
the highest three of the final ten years average annual compensation (including
deferrals under the deferred compensation plan). Both of these plans are
unfunded and the liability is payable from general funds of SAVANNAH. The
deferred compensation plan became effective December 1, 1983, and all of
SAVANNAH's executive officers are participating in the plan. In addition, all
executives are participating in the supplemental executive retirement plan.
In order to provide for its liabilities under the deferred compensation
plan and the supplemental executive retirement plan, SAVANNAH has purchased life
insurance on participating executive employees in actuarially determined amounts
which, based upon assumptions as to mortality experience, policy dividends, tax
effects, and other factors which, if realized, along with compensation deferred
by employees and the death benefits payable to SAVANNAH, are expected to cover
all such insurance premium payments, and all benefit payments to participants,
plus a factor for the cost of funds of SAVANNAH.
-------------------------------
1 The plan benefits are subject to the maximum benefit limitations set forth in
Section 415 of the Internal Revenue Code.
III-27
<PAGE>
(f) Compensation of Directors.
-------------------------
(1) Standard Arrangements. The following table presents compensation paid
to the directors, during 1994 for service as a member of the board of directors
and any board committee(s), except that employee directors received no fees or
compensation for service as a member of the board of directors or any board
committee. All or a portion of these fees may be deferred until membership on
the board is terminated.
<TABLE>
<CAPTION>
ALABAMA GEORGIA GULF MISSISSIPPI SAVANNAH
<S> <C> <C> <C> <C> <C>
Retainer Fee $15,000 $18,000 $12,000 $12,000 $12,000
Meeting Fee 800 900 750 750 750
Committees:
Audit 800 900 750 750 750
Compensation 800 900 750 750 750
Executive 800 900 - - 750
Finance - 900 - 750 -
Nominating 800 - - - -
Nuclear Safety 800 - - - -
Nuclear Operations
Overview - 1,800 - - -
</TABLE>
ALABAMA, GEORGIA, GULF, MISSISSIPPI and SAVANNAH also provide
retirement benefits to non-employee directors who are credited with a minimum of
60 months of service on the board of directors of one or more system companies,
under the Outside Directors Pension Plan. Eligible directors are entitled to
benefits under the Plan upon retirement from the board on the retirement date
designated in the respective companies' by-laws. The annual benefit payable
ranges from 75 to 100 percent of the annual retainer fee in effect on the date
of retirement, based upon length of service. Payments continue for the greater
of the lifetime of the participant or 10 years.
(2) Other Arrangements. No director received other compensation for
services as a director during the year ending December 31, 1994 in addition to
or in lieu of that specified by the standard arrangements specified above.
(g) Employment Contracts and Termination of Employment and Change in
Control Arrangements.
None.
III-28
<PAGE>
(h) Report on Repricing of Options.
------------------------------
None.
(i) Additional Information with Respect to Compensation Committee
Interlocks and Insider Participation in Compensation Decisions.
ALABAMA
Elmer B. Harris serves on the Compensation Committee of AmSouth
Bancorporation. John W. Woods, a director of ALABAMA, is Chairman and
Chief Executive Officer of AmSouth Bancorporation.
III-29
<PAGE>
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
(a) Security ownership of certain beneficial owners.
-----------------------------------------------
SOUTHERN is the beneficial owner of 100% of the outstanding common
stock of registrants: ALABAMA, GEORGIA, GULF, MISSISSIPPI and
SAVANNAH.
<TABLE>
<CAPTION>
Amount and
Name and Address Nature of Percent
of Beneficial Beneficial of
Title of Class Owner Ownership Class
------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Common Stock The Southern Company 100%
64 Perimeter Center East
Atlanta, Georgia 30346
Registrants:
-----------
ALABAMA 5,608,955
GEORGIA 7,761,500
GULF 992,717
MISSISSIPPI 1,121,000
SAVANNAH 10,844,635
</TABLE>
(b) Security ownership of management. The following table shows the
number of shares of SOUTHERN common stock and operating subsidiary preferred
stock owned by the directors, nominees and executive officers as of December 31,
1994. It is based on information furnished by the directors, nominees and
executive officers. The shares owned by all directors, nominees and executive
officers as a group constitute less than one percent of the total number of
shares of the respective classes outstanding on December 31, 1994.
<TABLE>
<CAPTION>
Name of Directors, Number of Shares
Nominees and Beneficially
Executive Officers Title of Class Owned 1,2
------------------ -------------- ----------------
ALABAMA
<S> <C> <C>
Whit Armstrong SOUTHERN Common 13,164
A. W. Dahlberg SOUTHERN Common 92,736
Bill M. Guthrie SOUTHERN Common 93,694
Elmer B. Harris SOUTHERN Common 104,175
</TABLE>
III-30
<PAGE>
<TABLE>
<CAPTION>
Name of Directors, Number of Shares
Nominees and Beneficially
Executive Officers Title of Class Owned 1,2
------------------ -------------- -----------------
<S> <C> <C>
Crawford T. Johnson, III SOUTHERN Common 607
Carl E. Jones, Jr. SOUTHERN Common 8,380
Gerald H. Powell SOUTHERN Common 5,604
Robert Davis Powers SOUTHERN Common 50
John W. Rouse, Jr. SOUTHERN Common 3,585
William J. Rushton, III SOUTHERN Common 6,201
ALABAMA Preferred 20
John C. Webb, IV SOUTHERN Common 7,798
ALABAMA Preferred 989
Banks H. Farris SOUTHERN Common 37,453
William B. Hutchins, III SOUTHERN Common 23,081
T. Harold Jones SOUTHERN Common 24,587
Charles D. McCrary SOUTHERN Common 15,986
The directors, nominees,
and executive officers
as a group SOUTHERN Common 437,101 shares
ALABAMA Preferred 1,009 shares
GEORGIA
Edward L. Addison SOUTHERN Common 313,008
Bennett A. Brown SOUTHERN Common 9,000
A. W. Dahlberg SOUTHERN Common 92,736
W. A. Fickling, Jr. GEORGIA Preferred 50
H. Allen Franklin SOUTHERN Common 61,231
L. G. Hardman III SOUTHERN Common 6,779
</TABLE>
III-31
<PAGE>
<TABLE>
<CAPTION>
Name of Directors, Number of Shares
Nominees and Beneficially
Executive Officers Title of Class Owned 1,2
------------------ -------------- ------------------
<S> <C> <C>
Warren Y. Jobe SOUTHERN Common 36,589
GEORGIA Preferred 403
James R. Lientz, Jr. SOUTHERN Common 42
W. A. Parker, Jr. SOUTHERN Common 26,254
GEORGIA Preferred 2
Gloria M. Shatto SOUTHERN Common 13,351
GEORGIA Preferred 1,200
W. J. Vereen SOUTHERN Common 5,000
GEORGIA Preferred 1,701
Thomas R. Williams GEORGIA Preferred 1,000
Dwight E. Evans SOUTHERN Common 24,844
GEORGIA Preferred 300
William G. Hairston, III SOUTHERN Common 25,550
Gene R. Hodges SOUTHERN Common 33,328
GEORGIA Preferred 800
The directors, nominees
and executive officers
as a group SOUTHERN Common 743,594 shares
GEORGIA Preferred 5,456 shares
GULF
Reed Bell SOUTHERN Common 43
Travis J. Bowden SOUTHERN Common 50,443
Paul J. DeNicola SOUTHERN Common 41,269
W. Deck Hull, Jr. SOUTHERN Common 2,139
C. Walter Ruckel SOUTHERN Common 43
Joseph K. Tannehill SOUTHERN Common 4,043
</TABLE>
III-32
<PAGE>
<TABLE>
<CAPTION>
Name of Directors, Number of Shares
Nominees and Beneficially
Executive Officers Title of Class Owned 1,2
------------------ -------------- ------------------
<S> <C> <C>
John E. Hodges, Jr. SOUTHERN Common 34,870
GULF Preferred 3
G. Edison Holland, Jr. SOUTHERN Common 4,929
Earl B. Parsons, Jr. SOUTHERN Common 14,736
Arlan E. Scarbrough SOUTHERN Common 19,820
The directors, nominees SOUTHERN Common 176,275 shares
and executive officers GULF Preferred 5 shares
as a group
MISSISSIPPI
Paul J. DeNicola SOUTHERN Common 41,269
Edwin E. Downer SOUTHERN Common 1,059
Robert S. Gaddis SOUTHERN Common 3,236
Walter H. Hurt, III SOUTHERN Common 843
MISSISSIPPI Preferred 33
Aubrey K. Lucas SOUTHERN Common 901
Earl D. McLean, Jr. SOUTHERN Common 14,451
David M. Ratcliffe SOUTHERN Common 32,896
Gerald J. St. Pe SOUTHERN Common 16,043
N. Eugene Warr SOUTHERN Common 86
H. E. Blakeslee SOUTHERN Common 15,846
Thomas A. Fanning SOUTHERN Common 4,253
Frederick D. Kuester SOUTHERN Common 9,899
</TABLE>
III-33
<PAGE>
<TABLE>
<CAPTION>
Name of Directors, Number of Shares
Nominees and Beneficially
Executive Officers Title of Class Owned 1,2
------------------ -------------- -------------------
<S> <C> <C>
Don E. Mason SOUTHERN Common 18,160
The directors, nominees
and executive officers SOUTHERN Common 158,942 shares
as a group MISSISSIPPI Preferred 33 shares
SAVANNAH
Helen Quattlebaum Artley SOUTHERN Common 2,461
Paul J. DeNicola SOUTHERN Common 41,269
Brian R. Foster SOUTHERN Common 43
Arthur M. Gignilliat, Jr. SOUTHERN Common 46,914
Walter D. Gnann SOUTHERN Common 1,550
Robert B. Miller, III SOUTHERN Common 2,025
James M. Piette SOUTHERN Common 1,281
Arnold M. Tenenbaum SOUTHERN Common 397
Fred F. Williams SOUTHERN Common 972
W. Miles Greer SOUTHERN Common 1,398
</TABLE>
III-34
<PAGE>
<TABLE>
<CAPTION>
Name of Directors, Number of Shares
Nominees and Beneficially
Executive Officers Title of Class Owned 1,2
------------------ -------------- -------------------
<S> <C> <C>
Larry M. Porter SOUTHERN Common 11,739
Kirby R. Willis SOUTHERN Common 3,547
The directors, nominees
and executive officers
as a group SOUTHERN Common 113,596 shares
(c) Changes in control. SOUTHERN and the operating affiliates know of
no arrangements which may at a subsequent date result in any change in control.
--------
1 As used in this table, "beneficial ownership" means the sole or shared power to vote, or to direct the voting
of, a security and/or investment power with respect to a security (i.e., the power to dispose of, or to direct
the disposition of, a security).
2 The shares shown include shares of SOUTHERN common stock of which certain directors and executive officers have
the right to acquire beneficial ownership within 60 days pursuant to the Executive Stock Plan, as follows: Mr.
Addison, 230,025 shares; Mr. Blakeslee, 6,812 shares; Mr. Bowden, 24,019 shares; Mr. Dahlberg, 45,847 shares; Mr.
DeNicola, 12,139 shares; Mr. Evans, 8,474 shares; Mr. Farris, 5,028 shares; Mr. Franklin, 40,383 shares; Mr.
Gignilliat, 26,133 shares; Mr. Guthrie, 44,968 shares; Mr. Hairston, 9,658 shares; Mr. Harris, 58,867 shares;
Mr. G. R. Hodges, 7,627 shares; Mr. J. E. Hodges, 15,714 shares; Mr. Holland, 4,255 shares; Mr. Hutchins, 4,300
shares; Mr. Jobe, 9,416 shares; Mr. Jones, 4,910 shares; Mr. C. D. McCrary, 4,232 shares; Mr. Ratcliffe, 20,046
shares; and Mr. Williams, 1,416 shares. Also included are shares of SOUTHERN common stock held by the spouses of
the following directors: Mr. Addison, 1,424 shares; Mr. Hardman, 100 shares; Mr. Harris, 310 shares; Mr. Parker,
48 shares; Mr. Powers, 50 shares; and Dr. Shatto, 11,157 shares. Also included are 1,200 shares of GEORGIA
preferred stock held by Dr. Shatto's spouse.
</TABLE>
III-35
<PAGE>
Item 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
ALABAMA
(a) Transactions with management and others.
During 1994, ALABAMA, in the ordinary course of business, paid premiums
amounting to approximately $584,358 for various types of insurance policies
purchased from Protective Life Insurance Company, a subsidiary of Protective
Life Corporation, a company in which Mr. William J. Rushton, III, a director of
ALABAMA, owns an interest and of which he served as Chairman.
ALABAMA believes that these transactions have been on terms representing
competitive market prices that are no less favorable than those available from
others.
(b) Certain business relationships.
None.
(c) Indebtedness of management.
None.
(d) Transactions with promoters.
None.
GEORGIA
(a) Transactions with management and others.
Mr. G. Joseph Prendergast is Chairman of Wachovia Bank of Georgia, N.A.,
and Mr. James R. Lientz, Jr. is President of NationsBank of Georgia. During
1994, these banks furnished a number of regular banking services in the ordinary
course of business to GEORGIA. GEORGIA intends to maintain normal banking
relations with all the aforesaid banks in the future.
In 1994, GEORGIA leased a building from Riverside Manufacturing Co. for
approximately $73,000. Mr. William J. Vereen is Chief Executive Officer,
President, Treasurer and Director of Riverside Manufacturing Co.
(b) Certain business relationships.
None.
(c) Indebtedness of management.
None.
(d) Transactions with promoters.
None.
GULF
(a) Transactions with management and others.
The firm of Beggs & Lane, P.A. serves as local counsel for GULF and
received from GULF approximately $1,095,340 for services rendered. Mr. G. Edison
Holland, Jr. is a partner in the firm and also serves as Vice President and
Corporate Counsel of GULF.
(b) Certain business relationships.
None.
(c) Indebtedness of management.
None.
(d) Transactions with promoters.
None.
MISSISSIPPI
(a) Transactions with management and others.
During 1994, MISSISSIPPI was indebted in a maximum amount of $9 million to
Hancock Bank, of which Mr. Leo W. Seal, Jr. serves as Chairman of the Board and
Chief Executive Officer. Mr. Seal retired from MISSISSIPPI's board of directors
effective September 6, 1994.
(b) Certain business relationships.
None.
(c) Indebtedness of management.
None.
(d) Transactions with promoters.
None.
III-36
<PAGE>
SAVANNAH
(a) Transactions with management and others.
Mr. Tenenbaum is a Director of First Union National Bank of Georgia, and Mr.
Foster is President of NationsBank of Georgia, N.A., in Savannah. During 1994,
these banks furnished a number of regular banking services in the ordinary
course of business to SAVANNAH. SAVANNAH intends to maintain normal banking
relations with all of the aforesaid banks in the future.
(b) Certain business relationships.
None.
(c) Indebtedness of management.
None.
(d) Transactions with promoters.
None.
III-37
<PAGE>
PART IV
Item 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K
(a) The following documents are filed as a part of this report on this Form
10-K:
(1) Financial Statements:
Reports of Independent Public Accountants on the financial
statements for SOUTHERN and Subsidiary Companies, ALABAMA,
GEORGIA, GULF, MISSISSIPPI and SAVANNAH are listed under Item
8 herein.
The financial statements filed as a part of this report for
SOUTHERN and Subsidiary Companies, ALABAMA, GEORGIA, GULF,
MISSISSIPPI and SAVANNAH are listed under Item 8 herein.
(2) Financial Statement Schedules:
Reports of Independent Public Accountants as to Schedules for
SOUTHERN and Subsidiary Companies, ALABAMA, GEORGIA, GULF,
MISSISSIPPI and SAVANNAH are included herein on pages IV-12
through IV-17.
Financial Statement Schedules for SOUTHERN and Subsidiary
Companies, ALABAMA, GEORGIA, GULF, MISSISSIPPI and SAVANNAH
are listed in the Index to the Financial Statement Schedules
at page S-1.
(3) Exhibits:
Exhibits for SOUTHERN, ALABAMA, GEORGIA, GULF, MISSISSIPPI and
SAVANNAH are listed in the Exhibit Index at page E-1.
(b) Reports on Form 8-K: During the fourth quarter of 1994 only the
following registrant filed a Current Report on Form 8-K:
ALABAMA filed a Form 8-K dated November 30, 1994 to facilitate a
security sale.
IV-1
<PAGE>
Pursuant to the requirements of Section 13 or 15(d) 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
By: /s/ Wayne Boston
(Wayne Boston, Attorney-in-fact)
Date: March 23, 1995
Pursuant to the requirements of the Securities Exchange Act of 1934, this report
has been signed below by the following persons on behalf of the registrant and
in the capacities and on the dates indicated. The signature of each of the
undersigned shall be deemed to relate only to matters having reference to the
above-named company and any subsidiaries thereof.
A. W. Dahlberg
Chairman of the Board, President and
Chief Executive Officer
(Principal Executive Officer)
W. L. Westbrook
Financial Vice President and Chief Financial Officer
(Principal Financial and Accounting Officer)
Directors:
W. P. Copenhaver Elmer B. Harris.
A. D. Correll Earl D. McLean, Jr.
Paul J. DeNicola William A. Parker, Jr.
Jack Edwards William J. Rushton, III
H. Allen Franklin Gloria M. Shatto
Bruce S. Gordon Herbert Stockham
L. G. Hardman III
By: /s/ Wayne Boston
(Wayne Boston, Attorney-in-fact)
Date: March 23, 1995
Pursuant to the requirements of Section 13 or 15(d) 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: /s/ Wayne Boston
(Wayne Boston, Attorney-in-fact)
Date: March 23, 1995
Pursuant to the requirements of the Securities Exchange Act of 1934, this report
has been signed below by the following persons on behalf of the registrant and
in the capacities and on the dates indicated. The signature of each of the
undersigned shall be deemed to relate only to matters having reference to the
above-named company and any subsidiaries thereof.
Elmer B. Harris
President, Chief Executive Officer and Director
(Principal Executive Officer)
William B. Hutchins, III
Executive Vice President
(Principal Financial Officer)
David L. Whitson
Vice President and Comptroller
(Principal Accounting Officer)
Directors:
Whit Armstrong Wallace D. Malone, Jr.
Philip E. Austin William V. Muse
Margaret A. Carpenter Gerald H. Powell
A. W. Dahlberg Robert D. Powers
Peter V. Gregerson, Sr. John W. Rouse
Bill M. Guthrie James H. Sanford
Crawford T. Johnson, III John Cox Webb, IV
Carl E. Jones, Jr. John W. Woods
By: /s/Wayne Boston
(Wayne Boston, Attorney-in-fact)
Date: March 23, 1995
IV-2
<PAGE>
Pursuant to the requirements of Section 13 or 15(d) 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
By: /s/ Wayne Boston
(Wayne Boston, Attorney-in-fact)
Date: March 23, 1995
Pursuant to the requirements of the Securities Exchange Act of 1934, this report
has been signed below by the following persons on behalf of the registrant and
in the capacities and on the dates indicated. The signature of each of the
undersigned shall be deemed to relate only to matters having reference to the
above-named company and any subsidiaries thereof.
H. Allen Franklin
President, Chief Executive Officer and Director
(Principal Executive Officer)
Warren Y. Jobe
Executive Vice President, Treasurer,
Chief Financial Officer and Director
(Principal Financial Officer)
C. B. Harreld
Vice President and Comptroller
(Principal Accounting Officer)
Directors:
Bennett A. Brown Herman J. Russell
A. W. Dahlberg William Jerry Vereen
L. G. Hardman III Carl Ware
James R. Lientz, Jr. Thomas R. Williams
G. Joseph Prendergast
By: /s/Wayne Boston
(Wayne Boston, Attorney-in-fact)
Date: March 23, 1995
Pursuant to the requirements of Section 13 or 15(d) 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: /s/Wayne Boston
(Wayne Boston, Attorney-in-fact)
Date: March 23, 1995
Pursuant to the requirements of the Securities Exchange Act of 1934, this report
has been signed below by the following persons on behalf of the registrant and
in the capacities and on the dates indicated. The signature of each of the
undersigned shall be deemed to relate only to matters having reference to the
above-named company and any subsidiaries thereof.
Travis J. Bowden
President, Chief Executive Officer and Director
(Principal Executive Officer)
A. E. Scarbrough
Vice President - Finance
(Principal Financial and Accounting Officer)
Directors:
Reed Bell W. D. Hull, Jr.
Paul J. DeNicola C. W. Ruckel
Fred C. Donovan J. K. Tannehill
By: /s/ Wayne Boston
(Wayne Boston, Attorney-in-fact)
Date: March 23, 1995
IV-3
<PAGE>
Pursuant to the requirements of Section 13 or 15(d) 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: David M. Ratcliffe, President and
Chief Executive Officer
By: /s/ Wayne Boston
(Wayne Boston, Attorney-in-fact)
Date: March 23, 1995
Pursuant to the requirements of the Securities Exchange Act of 1934, this report
has been signed below by the following persons on behalf of the registrant and
in the capacities and on the dates indicated. The signature of each of the
undersigned shall be deemed to relate only to matters having reference to the
above-named company and any subsidiaries thereof.
David M. Ratcliffe
President, Chief Executive Officer and Director
(Principal Executive Officer)
Michael W. Southern
Vice President, Secretary, Treasurer and
Chief Financial Officer
(Principal Financial and Accounting Officer)
Directors:
Paul J. DeNicola Aubrey K. Lucas
Edwin E. Downer Gerald J. St. Pe'
Robert S. Gaddis N. Eugene Warr
Walter H. Hurt, III
By: /s/ Wayne Boston
(Wayne Boston, Attorney-in-fact)
Date: March 23, 1995
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange
Act of 1934, the registrant has duly caused this report to be signed on its
behalf by the undersigned, thereunto duly authorized. The signature of the
undersigned company shall be deemed to relate only to matters having reference
to such company and any subsidiaries thereof.
SAVANNAH ELECTRIC AND POWER COMPANY
By: Arthur M. Gignilliat, Jr., President and
Chief Executive Officer
By: /s/ Wayne Boston
(Wayne Boston, Attorney-in-fact)
Date: March 23, 1995
Pursuant to the requirements of the Securities Exchange Act of 1934, this report
has been signed below by the following persons on behalf of the registrant and
in the capacities and on the dates indicated. The signature of each of the
undersigned shall be deemed to relate only to matters having reference to the
above-named company and any subsidiaries thereof.
Arthur M. Gignilliat, Jr.
President, Chief Executive Officer and Director
(Principal Executive Officer)
Kirby R. Willis
Vice President, Treasurer and
Chief Financial Officer
(Principal Financial and Accounting Officer)
Directors:
Helen Q. Artley Robert B. Miller, III
Paul J. DeNicola James M. Piette
Brian R. Foster Arnold M. Tenenbaum
Walter D. Gnann Frederick F. Williams, Jr.
By: /s/ Wayne Boston
(Wayne Boston, Attorney-in-fact)
Date: March 23, 1995
IV-4
<PAGE>
Exhibit 21. Subsidiaries of the Registrants.
<TABLE>
<CAPTION>
<S> <C>
Name of Company Jurisdiction of Organization
----------------------------------------------------------------- ----------------------------
Alabama Power Company Alabama
Alabama Property Company Alabama
Columbia Fuels, Inc. Alabama
Southern Electric Generating Company Alabama
Georgia Power Company Georgia
Piedmont-Forrest Corporation Georgia
Georgia Power L. P. Holdings Corp. Georgia
Southern Electric Generating Company Alabama
Gulf Power Company Maine
Mississippi Power Company Mississippi
Savannah Electric and Power Company Georgia
Energia de Nuevo Leon, S.A. de C.V. Mexico
Mobile Energy Services Company, Inc. Alabama
SEI Holdings, Inc. Delaware
Asociados de Electricidad, S. A. Argentina
SEI y Asociados de Argentina, S. A. Argentina
Hidroelectrica Alicura, S. A. Argentina
SEI Holdings III, Inc. Delaware
SEI Chile, S. A. Chile
Inversiones SEI Chile Limitada Chile
Electrica SEI Chile Limitada Chile
Empresa Electrica del Norte Grande, S. A. (Edelnor) Chile
SEI Holdings IV, Inc. Delaware
Tesro Holding B.V. Netherlands
SEI Bahamas Argentina II, Inc. Bahamas
SEI Holdings VIII, Inc. Delaware
Delaware
SEI Beteiligungs GmbH Germany
SEI Holdings IX, Inc. Delaware
The Power Generation Company of Trinidad and Tobago Trinidad and Tobago
SEI Holdings X, Inc. Delaware
Southern Electric Brasil Participacoes, Ltda. Brazil
SEI Holdings XI, Inc. Delaware
Southern Electric Brasil Participacoes, Ltda. Brazil
Southern Communications Services, Inc. Delaware
Southern Company Services, Inc. Alabama
Southern Electric Bahamas Holdings, Ltd. Bahamas
Southern Electric Bahamas, Ltd. Bahamas
Freeport Power Company Limited Bahamas
Southern Electric, Inc. Delaware
SEI Bahamas Argentina I, Inc. Bahamas
SEI Inversora, S. A. Argentina
Southern Electric International, Inc. Delaware
SEI Operadora de Argentina, S.A. Argentina
Southern Electric Railroad Company Delaware
Southern Electric Wholesale Generators, Inc. Delaware
Birchwood Development Corp. Delaware
SEI Birchwood, Inc. Delaware
Birchwood Power Partners, L.P. Delaware
SEI Hawaiian Cogenerators, Inc. Delaware
Kalaeloa Partners, L. P. Delaware
Southern Nuclear Operating Company, Inc. Delaware
The Southern Development and Investment Group, Inc. Georgia
</TABLE>
IV-5
<PAGE>
ARTHUR ANDERSEN LLP
Exhibit 23(a)
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the incorporation
of our reports dated February 15, 1995 on the financial statements of The
Southern Company and its subsidiaries and the related financial statement
schedules, included in this Form 10-K, into The Southern Company's previously
filed Registration Statement File Nos. 2-78617, 33-3546, 33-23152, 33-30171,
33-23153, 33-51433, 33-54415, and 33-57951.
/s/ ARTHUR ANDERSEN LLP
Atlanta, Georgia
March 23, 1995
IV-6
<PAGE>
Exhibit 23(b)
ARTHUR ANDERSEN LLP
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the incorporation
of our reports dated February 15, 1995 on the financial statements of Alabama
Power Company and the related financial statement schedules, included in this
Form 10-K, into Alabama Power Company's previously filed Registration Statement
File No. 33-49653.
/s/ ARTHUR ANDERSEN LLP
Birmingham, Alabama
March 23, 1995
IV-7
<PAGE>
Exhibit 23(c)
ARTHUR ANDERSEN LLP
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the incorporation
of our reports dated February 15, 1995 on the financial statements of Georgia
Power Company and the related financial statement schedules, included in this
Form 10-K, into Georgia Power Company's previously filed Registration Statement
File No. 33-49661.
/s/ ARTHUR ANDERSEN LLP
Atlanta, Georgia
March 23, 1995
IV-8
<PAGE>
Exhibit 23(d)
ARTHUR ANDERSEN LLP
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the incorporation
of our reports dated February 15, 1995 on the financial statements of Gulf Power
Company and the related financial statement schedules, included in this Form
10-K, into Gulf Power Company's previously filed Registration Statement File No.
33-50165.
/s/ ARTHUR ANDERSEN LLP
Atlanta, Georgia
March 23, 1995
IV-9
<PAGE>
Exhibit 23(e)
ARTHUR ANDERSEN LLP
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the incorporation
of our reports dated February 15, 1995 on the financial statements of
Mississippi Power Company and the related financial statement schedules,
included in this Form 10-K, into Mississippi Power Company's previously filed
Registration Statement File Nos.
33-49320 and 33-49649.
/s/ ARTHUR ANDERSEN LLP
Atlanta, Georgia
March 23, 1995
IV-10
<PAGE>
Exhibit 23(f)
ARTHUR ANDERSEN LLP
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the incorporation
of our reports dated February 15, 1995 on the financial statements of Savannah
Electric and Power Company and the related financial statement schedules,
included in this Form 10-K, into Savannah Electric and Power Company's
previously filed Registration Statement File Nos. 33-45757 and 33-52509.
/s/ ARTHUR ANDERSEN LLP
Atlanta, Georgia
March 23, 1995
IV-11
<PAGE>
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS AS TO SCHEDULES
To The Southern Company:
We have audited in accordance with generally accepted auditing standards,
the consolidated financial statements of The Southern Company and its
subsidiaries included in this Form 10-K, and have issued our report thereon
dated February 15, 1995. Our report on the consolidated financial statements
includes an explanatory paragraph which states that an uncertainty exists with
respect to the actions of the regulators regarding recoverability of the
investment in the Rocky Mountain pumped storage hydroelectric project, as
discussed in Note 4 to The Southern Company's consolidated financial statements.
Our audits were made for the purpose of forming an opinion on those statements
taken as a whole. The schedules listed under Item 14(a)(2) herein as it relates
to The Southern Company and its subsidiaries (pages S-2 through S-4) are the
responsibility of The Southern Company's management and are presented for
purposes of complying with the Securities and Exchange Commission's rules and
are not part of the basic consolidated financial statements. These schedules
have been subjected to the auditing procedures applied in the audits of the
basic consolidated financial statements and, in our opinion, fairly state in all
material respects the financial data required to be set forth therein in
relation to the basic consolidated financial statements taken as a whole.
/s/ ARTHUR ANDERSEN LLP
Atlanta, Georgia
February 15, 1995
IV-12
<PAGE>
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS AS TO SCHEDULES
To Alabama Power Company:
We have audited in accordance with generally accepted auditing standards,
the financial statements of Alabama Power Company included in this Form 10-K,
and have issued our report thereon dated February 15, 1995. Our audits were made
for the purpose of forming an opinion on those statements taken as a whole. The
schedules listed under Item 14(a)(2) herein as it relates to Alabama Power
Company (pages S-5 through S-7) are the responsibility of Alabama Power
Company's management and are presented for purposes of complying with the
Securities and Exchange Commission's rules and are not part of the basic
financial statements. These schedules have been subjected to the auditing
procedures applied in the audits of the basic financial statements and, in our
opinion, fairly state in all material respects the financial data required to be
set forth therein in relation to the basic financial statements taken as a
whole.
/s/ ARTHUR ANDERSEN LLP
Birmingham, Alabama
February 15, 1995
IV-13
<PAGE>
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS AS TO SCHEDULES
To Georgia Power Company:
We have audited in accordance with generally accepted auditing standards,
the financial statements of Georgia Power Company included in this Form 10-K,
and have issued our report thereon dated February 15, 1995. Our report on the
financial statements includes an explanatory paragraph which states that an
uncertainty exists with respect to the actions of the regulators regarding the
recoverability of Georgia Power Company's investment in the Rocky Mountain
pumped storage hydroelectric project, as discussed in Note 4 to Georgia Power
Company's financial statements. Our audits were made for the purpose of forming
an opinion on those statements taken as a whole. The schedules listed under Item
14(a)(2) herein as it relates to Georgia Power Company (pages S-8 through S-10)
are the responsibility of Georgia Power Company's management and are presented
for purposes of complying with the Securities and Exchange Commission's rules
and are not part of the basic financial statements. These schedules have been
subjected to the auditing procedures applied in the audits of the basic
financial statements and, in our opinion, fairly state in all material respects
the financial data required to be set forth therein in relation to the basic
financial statements taken as a whole.
/s/ ARTHUR ANDERSEN LLP
Atlanta, Georgia
February 15, 1995
IV-14
<PAGE>
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS AS TO SCHEDULES
To Gulf Power Company:
We have audited in accordance with generally accepted auditing standards,
the financial statements of Gulf Power Company included in this Form 10-K, and
have issued our report thereon dated February 15, 1995. Our audits were made for
the purpose of forming an opinion on those statements taken as a whole. The
schedules listed under Item 14(a)(2) herein as it relates to Gulf Power Company
(pages S-11 through S-13) are the responsibility of Gulf Power Company's
management and are presented for purposes of complying with the Securities and
Exchange Commission's rules and are not part of the basic financial statements.
These schedules have been subjected to the auditing procedures applied in the
audits of the basic financial statements and, in our opinion, fairly state in
all material respects the financial data required to be set forth therein in
relation to the basic financial statements taken as a whole.
/s/ ARTHUR ANDERSEN LLP
Atlanta, Georgia
February 15, 1995
IV-15
<PAGE>
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS AS TO SCHEDULES
To Mississippi Power Company:
We have audited in accordance with generally accepted auditing standards,
the financial statements of Mississippi Power Company included in this Form
10-K, and have issued our report thereon dated February 15, 1995. Our audits
were made for the purpose of forming an opinion on those statements taken as a
whole. The schedules listed under Item 14(a)(2) herein as it relates to
Mississippi Power Company (pages S-14 through S-16) are the responsibility of
Mississippi Power Company's management and are presented for purposes of
complying with the Securities and Exchange Commission's rules and are not part
of the basic financial statements. These schedules have been subjected to the
auditing procedures applied in the audits of the basic financial statements and,
in our opinion, fairly state in all material respects the financial data
required to be set forth therein in relation to the basic financial statements
taken as a whole.
/s/ ARTHUR ANDERSEN LLP
Atlanta, Georgia
February 15, 1995
IV-16
<PAGE>
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS AS TO SCHEDULES
To Savannah Electric and Power Company:
We have audited in accordance with generally accepted auditing standards,
the financial statements of Savannah Electric and Power Company included in this
Form 10-K, and have issued our report thereon dated February 15, 1995. Our
audits were made for the purpose of forming an opinion on those statements taken
as a whole. The schedules listed under Item 14(a)(2) herein as it relates to
Savannah Electric and Power Company (pages S-17 through S-19) are the
responsibility of Savannah Electric and Power Company's management and are
presented for purposes of complying with the Securities and Exchange
Commission's rules and are not part of the basic financial statements. These
schedules have been subjected to the auditing procedures applied in the audits
of the basic financial statements and, in our opinion, fairly state in all
material respects the financial data required to be set forth therein in
relation to the basic financial statements taken as a whole.
/s/ ARTHUR ANDERSEN LLP
Atlanta, Georgia
February 15, 1995
IV-17
<PAGE>
INDEX TO FINANCIAL STATEMENT SCHEDULES
<TABLE>
<CAPTION>
<S> <C>
Schedule Page
II Valuation and Qualifying Accounts and Reserves
1994, 1993 and 1992
The Southern Company and Subsidiary Companies.......................................................... S-2
Alabama Power Company.................................................................................. S-5
Georgia Power Company.................................................................................. S-8
Gulf Power Company..................................................................................... S-11
Mississippi Power Company.............................................................................. S-14
Savannah Electric and Power Company.................................................................... S-17
Schedules I through V not listed above are omitted as not applicable or not
required. Columns omitted from schedules filed have been omitted because the
information is not applicable or not required.
</TABLE>
S-1
<PAGE>
THE SOUTHERN COMPANY AND SUBSIDIARY COMPANIES
SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS AND RESERVES
FOR THE YEAR ENDED DECEMBER 31, 1994
(Stated in Thousands of Dollars)
<TABLE>
<CAPTION>
Additions
------------------
Balance at Beginning Charged to Charged to Other Balance at End
Description of Period Income Accounts Deductions of Period
---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Provision for uncollectible
accounts $9,067 $23,322 $8 $23,268 (1) $9,129
Deferred credits:
Provision for property insurance $22,047 $31,306 $236 $1,112 (2) $52,477
Other property and investments:
Nuclear
decommissioning trust (3) $87,487 $18,695 $19,129 - $125,311
Deferred charges:
Uranium enrichment,
decontamination and
decommissioning fund (4) $86,342 - $(938) $6,514 $78,890
-------------------
Notes:
(1) Represents write-off of accounts considered to be uncollectible, less
recoveries of amounts previously written off.
(2) Insurance recoveries net of charges to reserve for purposes for which
reserve was created.
(3) See Note 1 to SOUTHERN's financial statements under "Depreciation and
Nuclear Decommissioning" in Item 8 herein for further information.
(4) See Note 1 to SOUTHERN's financial statements under "Revenues and Fuel
Costs" in Item 8 herein for further information.
</TABLE>
S-2
<PAGE>
THE SOUTHERN COMPANY AND SUBSIDIARY COMPANIES
SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS AND RESERVES
FOR THE YEAR ENDED DECEMBER 31, 1993
(Stated in Thousands of Dollars)
<TABLE>
<CAPTION>
Additions
------------------
Balance at Beginning Charged to Charged to Other Balance at End
Description of Period Income Accounts Deductions of Period
---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Provision for uncollectible
accounts $7,255 $24,040 $2 $22,230 (1) $9,067
Deferred credits:
Provision for property insurance $23,594 $4,164 - $5,711 (2) $22,047
Other property and investments:
Nuclear
decommissioning trust (3) $52,701 $15,759 $19,351 (4) $324 $87,487
Deferred charges:
Uranium enrichment,
decontamination and
decommissioning fund (5) $90,099 - $1,219 $4,976 $86,342
-------------------------
Notes:
(1) Represents write-off of accounts considered to be uncollectible, less
recoveries of amounts previously written off.
(2) Insurance recoveries net of charges to reserve for purposes for which
reserve was created.
(3) See Note 1 to SOUTHERN's financial statements under "Depreciation
and Nuclear Decommissioning" in Item 8 herein for further information.
(4) Represents additional funding to reserve.
(5) See Note 1 to SOUTHERN's financial statements under "Revenues and Fuel
Costs" in Item 8 herein for further information.
</TABLE>
S-3
<PAGE>
THE SOUTHERN COMPANY AND SUBSIDIARY COMPANIES
SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS AND RESERVES
FOR THE YEAR ENDED DECEMBER 31, 1992
(Stated in Thousands of Dollars)
<TABLE>
<CAPTION>
Additions
------------------
Balance at Beginning Charged to Charged to Other Balance at End
Description of Period Income Accounts Deductions of Period
---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Provision for uncollectible
accounts $12,568 $18,366 - $23,679 (1) $7,255
Deferred credits:
Provision for property insurance $20,928 $3,298 $25 (4) $657 $23,594
Other property and investments:
Nuclear
decommissioning trust (2) $25,871 $14,782 $12,189 $141 $52,701
Deferred charges:
Uranium enrichment,
decontamination and
decommissioning fund (3) - - $90,099 - $90,099
-------------------
Notes:
(1) Represents write-off of accounts considered to be uncollectible, less
recoveries of amounts previously written off.
(2) See Note 1 to SOUTHERN's financial statements under "Depreciation
and Nuclear Decommissioning" in Item 8 herein for further information.
(3) See Note 1 to SOUTHERN's financial statements under "Revenues
and Fuel Costs" in Item 8 herein for further information.
(4) Capitalized.
</TABLE>
S-4
<PAGE>
ALABAMA POWER COMPANY
SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS AND RESERVES
FOR THE YEAR ENDED DECEMBER 31, 1994
(Stated in Thousands of Dollars)
<TABLE>
<CAPTION>
Additions
------------------
Balance at Beginning Charged to Charged to Other Balance at End
Description of Period Income Accounts Deductions of Period
---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Provision for uncollectible
accounts $2,632 $4,967 - $5,302 (1) $2,297
Deferred credits:
Provision for natural disaster
reserve (4) - $28,750 - - $28,750
Other property and investments:
Nuclear
decommissioning trust (2) $49,550 $18,143 $3,321 - $71,014
Deferred charges:
Uranium enrichment,
decontamination and
decommissioning fund (3) $45,554 - $69 $2,627 $42,996
-------------------
Notes:
(1) Represents write-off of accounts considered to be uncollectible, less
recoveries of amounts previously written off.
(2) See Note 1 to ALABAMA's financial statements under "Depreciation and
Nuclear Decommissioning" in Item 8 herein for further information.
(3) See Note 1 to ALABAMA's financial statements under "Revenues and Fuel
Costs" in Item 8 herein for further information.
(4) See Note 1 to ALABAMA's financial statements under "Natural Disaster
Reserve" in Item 8 herein for further information.
</TABLE>
S-5
<PAGE>
ALABAMA POWER COMPANY
SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS AND RESERVES
FOR THE YEAR ENDED DECEMBER 31, 1993
(Stated in Thousands of Dollars)
<TABLE>
<CAPTION>
Additions
------------------
Balance at Beginning Charged to Charged to Other Balance at End
Description of Period Income Accounts Deductions of Period
---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Provision for uncollectible
accounts $1,482 $7,157 - $6,007(1) $2,632
Other property and investments:
Nuclear
decommissioning trust (2) $32,390 $13,617 $3,543 (3) - $49,550
Deferred charges:
Uranium enrichment,
decontamination and
decommissioning fund (4) $47,730 - $1,873 $4,049 $45,554
--------------------
Notes:
(1) Represents write-off of accounts considered to be uncollectible, less
recoveries of amounts previously written off.
(2) See Note 1 to ALABAMA's financial statements under "Depreciation
and Nuclear Decommissioning" in Item 8 herein for further information.
(3) Represents additional funding to reserve.
(4) See Note 1 to ALABAMA's financial statements under "Revenues and Fuel
Costs" in Item 8 herein for further information.
</TABLE>
S-6
<PAGE>
ALABAMA POWER COMPANY
SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS AND RESERVES
FOR THE YEAR ENDED DECEMBER 31, 1992
(Stated in Thousands of Dollars)
<TABLE>
<CAPTION>
Additions
------------------
Balance at Beginning Charged to Charged to Other Balance at End
Description of Period Income Accounts Deductions of Period
---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Provision for uncollectible
accounts $1,721 $4,878 - $5,117(1) $1,482
Other property and investments:
Nuclear
decommissioning trust (2) $15,864 $13,617 $2,909 - $32,390
Deferred charges:
Uranium enrichment,
decontamination and
decommissioning fund (3) - - $47,730 - $47,730
-------------------
Notes:
(1) Represents write-off of accounts considered to be uncollectible, less
recoveries of amounts previously written off.
(2) See Note 1 to ALABAMA's financial statements under "Depreciation and
Nuclear Decommissioning" in Item 8 herein for further information.
(3) See Note 1 to ALABAMA's financial statements under "Revenues and Fuel
Costs" in Item 8 herein for further Information.
</TABLE>
S-7
<PAGE>
GEORGIA POWER COMPANY
SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS AND RESERVES
FOR THE YEAR ENDED DECEMBER 31, 1994
(Stated in Thousands of Dollars)
<TABLE>
<CAPTION>
Additions
------------------
Balance at Beginning Charged to Charged to Other Balance at End
Description of Period Income Accounts Deductions of Period
---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Provision for uncollectible
accounts $4,300 $15,424 - $15,224(1) $4,500
Other property and investments:
Nuclear
decommissioning trust (2) $37,937 $552 $15,808(3) - $54,297
Deferred charges:
Uranium enrichment,
decontamination and
decommissioning fund (4) $40,788 - $(1,007) $3,887 $35,894
-------------------
Notes:
(1) Represents write-off of accounts considered to be uncollectible, less
recoveries of amounts previously written off.
(2) See Note 1 to GEORGIA's financial statements under "Depreciation
and Nuclear Decommissioning" in Item 8 herein for further information.
(3) Represents additional funding to reserve.
(4) See Note 1 to GEORGIA's financial statements under "Revenues and Fuel
Costs" in Item 8 herein for further information.
</TABLE>
S-8
<PAGE>
GEORGIA POWER COMPANY
SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS AND RESERVES
FOR THE YEAR ENDED DECEMBER 31, 1993
(Stated in Thousands of Dollars)
<TABLE>
<CAPTION>
Additions
------------------
Balance at Beginning Charged to Charged to Other Balance at End
Description of Period Income Accounts Deductions of Period
---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Provision for uncollectible
accounts $4,121 $14,310 - $14,131 (1) $4,300
Other property and investments:
Nuclear
decommissioning trust (2) $20,311 $2,142 $15,808 (3) $324 $37,937
Deferred charges:
Uranium enrichment,
decontamination and
decommissioning fund (4) $42,369 - $(654) $927 $40,788
-------------------
Notes:
(1) Represents write-off of accounts considered to be uncollectible, less
recoveries of amounts previously written off.
(2) See Note 1 to GEORGIA's financial statements under "Depreciation and
Nuclear Decommissioning" in Item 8 herein for further information.
(3) Represents additional funding to reserve.
(4) See Note 1 to GEORGIA's financial statements under "Revenues and Fuel
Costs" in Item 8 herein for further information.
</TABLE>
S-9
<PAGE>
GEORGIA POWER COMPANY
SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS AND RESERVES
FOR THE YEAR ENDED DECEMBER 31, 1992
(Stated in Thousands of Dollars)
<TABLE>
<CAPTION>
Additions
------------------
Balance at Beginning Charged to Charged to Other Balance at End
Description of Period Income Accounts Deductions of Period
---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Provision for uncollectible
accounts $7,519 $11,440 - $14,838 (1) $4,121
Other property and investments:
Nuclear
decommissioning trust (2) $10,007 $1,165 $9,280 $141 $20,311
Deferred charges:
Uranium enrichment,
decontamination and
decommissioning fund (3) - - $42,369 - $42,369
-------------------
Notes:
(1) Represents write-off of accounts considered to be uncollectible, less
recoveries of amounts previously written off.
(2) See Note 1 to GEORGIA's financial statements under "Depreciation and
Nuclear Decommissioning" in Item 8 herein for further information.
(3) See Note 1 to GEORGIA's financial statements under "Revenues and Fuel
Costs" in Item 8 herein for further information.
</TABLE>
S-10
<PAGE>
GULF POWER COMPANY
SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS AND RESERVES
FOR THE YEAR ENDED DECEMBER 31, 1994
(Stated in Thousands of Dollars)
<TABLE>
<CAPTION>
Additions
------------------
Balance at Beginning Charged to Charged to Other Balance at End
Description of Period Income Accounts Deductions of Period
---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Provision for uncollectible
accounts $447 $1,195 $9 $1,051 (Note) $600
Deferred credit:
Provision for property insurance $10,509 $1,200 $236 $423 $11,522
-------------------
Note: Represents write-off of accounts considered to be uncollectible,
less recoveries of amounts previously written off.
</TABLE>
S-11
<PAGE>
GULF POWER COMPANY
SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS AND RESERVES
FOR THE YEAR ENDED DECEMBER 31, 1993
(Stated in Thousands of Dollars)
<TABLE>
<CAPTION>
Additions
------------------
Balance at Beginning Charged to Charged to Other Balance at End
Description of Period Income Accounts Deductions of Period
---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Provision for uncollectible
accounts $356 $875 - $784 (Note) $447
Deferred credit:
Provision for property insurance $9,692 $1,200 - $383 $10,509
-------------------
Note: Represents write-off of accounts considered to be uncollectible, less
recoveries of amounts previously written off.
</TABLE>
S-12
<PAGE>
GULF POWER COMPANY
SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS AND RESERVES
FOR THE YEAR ENDED DECEMBER 31, 1992
(Stated in Thousands of Dollars)
<TABLE>
<CAPTION>
Additions
------------------
Balance at Beginning Charged to Charged to Other Balance at End
Description of Period Income Accounts Deductions of Period
--------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Provision for uncollectible
accounts $660 $356 - $660 (Note) $356
Deferred credit:
Provision for property insurance $8,492 $1,200 - - $9,692
-------------------
Note: Represents write-off of accounts considered to be uncollectible, less
recoveries of amounts previously written off.
</TABLE>
S-13
<PAGE>
MISSISSIPPI POWER COMPANY
SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS AND RESERVES
FOR THE YEAR ENDED DECEMBER 31, 1994
(Stated in Thousands of Dollars)
<TABLE>
<CAPTION>
Additions
------------------
Balance at Beginning Charged to Charged to Other Balance at End
Description of Period Income Accounts Deductions of Period
---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Provision for uncollectible
accounts $737 $1,234 $ (1) $1,300 (1) $670
Deferred credit:
Provision for property
insurance $10,538 $1,056 - $689 (2) $10,905
-------------------
Notes:
(1) Represents write-off of accounts considered to be uncollectible, less
recoveries of amounts previously written off.
(2) Net of insurance reimbursement.
</TABLE>
S-14
<PAGE>
MISSISSIPPI POWER COMPANY
SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS AND RESERVES
FOR THE YEAR ENDED DECEMBER 31, 1993
(Stated in Thousands of Dollars)
<TABLE>
<CAPTION>
Additions
------------------
Balance at Beginning Charged to Charged to Other Balance at End
Description of Period Income Accounts Deductions of Period
--------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Provision for uncollectible
accounts $508 $1,326 $2 $1,099 (Note) $737
Deferred credit:
Provision for property insurance $9,294 $1,244 - - $10,538
-------------------
Note: Represents write-off of accounts considered to be uncollectible, less
recoveries of amounts previously written off.
</TABLE>
S-15
<PAGE>
MISSISSIPPI POWER COMPANY
SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS AND RESERVES
FOR THE YEAR ENDED DECEMBER 31, 1992
(Stated in Thousands of Dollars)
<TABLE>
<CAPTION>
Additions
------------------
Balance at Beginning Charged to Charged to Other Balance at End
Description of Period Income Accounts Deductions of Period
---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Provision for uncollectible
accounts $2,102 $1,173 - $2,767 (Note) $508
Deferred credit:
Provision for property insurance $8,216 $1,078 - - $9,294
-------------------
Note: Represents write-off of accounts considered to be uncollectible, less
recoveries of amounts previously written off.
</TABLE>
S-16
<PAGE>
SAVANNAH ELECTRIC AND POWER COMPANY
SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS AND RESERVES
FOR THE YEAR ENDED DECEMBER 31, 1994
(Stated in Thousands of Dollars)
<TABLE>
<CAPTION>
Additions
------------------
Balance at Beginning Charged to Charged to Other Balance at End
Description of Period Income Accounts Deductions of Period
---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Provision for uncollectible
accounts $762 $419 - $315 (Note) $866
Deferred credit:
Provision for property insurance $1,000 $300 - - $1,300
-------------------
Note: Represents write-off of accounts receivable considered to be
uncollectible, less recoveries of amounts previously written off.
</TABLE>
S-17
<PAGE>
SAVANNAH ELECTRIC AND POWER COMPANY
SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS AND RESERVES
FOR THE YEAR ENDED DECEMBER 31, 1993
(Stated in Thousands of Dollars)
<TABLE>
<CAPTION>
Additions
------------------
Balance at Beginning Charged to Charged to Other Balance at End
Description of Period Income Accounts Deductions of Period
---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Provision for uncollectible
accounts $536 $330 - $104 (Note) $762
Deferred credit:
Provision for property insurance $300 $700 - - $1,000
-------------------
Note: Represents write-off of accounts receivable considered to be
uncollectible, less recoveries of amounts previously written off.
</TABLE>
S-18
<PAGE>
SAVANNAH ELECTRIC AND POWER COMPANY
SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS AND RESERVES
FOR THE YEAR ENDED DECEMBER 31, 1992
(Stated in Thousands of Dollars)
<TABLE>
<CAPTION>
Additions
------------------
Balance at Beginning Charged to Charged to Other Balance at End
Description of Period Income Accounts Deductions of Period
---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Provision for uncollectible
accounts $339 $455 - $258 (Note) $536
Deferred credit:
Provision for property insurance $300 - - - $300
--------------------
Note: Represents write-off of accounts receivable considered to be
uncollectible, less recoveries of amounts previously written off.
</TABLE>
S-19
<PAGE>
EXHIBIT INDEX
The following exhibits indicated by an asterisk preceding the exhibit
number are filed herewith. The balance of the exhibits have heretofore been
filed with the SEC, respectively, as the exhibits and in the file numbers
indicated and are incorporated herein by reference. Reference is made to a
duplicate list of exhibits being filed as a part of this Form 10-K, which list,
prepared in accordance with Item 601 of Regulation S-K of the SEC, immediately
precedes the exhibits being physically filed with this Form 10-K.
(3) Articles of Incorporation and By-Laws
SOUTHERN
(a) 1 - Composite Certificate of Incorporation of SOUTHERN,
reflecting all amendments thereto through January 5, 1994.
(Designated in Registration No. 33-3546 as Exhibit 4(a), in
Certificate of Notification, File No. 70-7341, as Exhibit A
and in Certificate of Notification, File No. 70-8181, as
Exhibit A.)
(a) 2 - By-laws of SOUTHERN as amended effective October 21, 1991,
and as presently in effect. (Designated in Form U-1, File
No. 70-8181, as Exhibit A-2.)
ALABAMA
(b) 1 - Charter of ALABAMA and amendments thereto through October
14, 1994. (Designated in Registration Nos. 2-59634 as
Exhibit 2(b), 2-60209 as Exhibit 2(c), 2-60484 as Exhibit
2(b), 2-70838 as Exhibit 4(a)-2, 2-85987 as Exhibit 4(a)-2,
33-25539 as Exhibit 4(a)-2, 33-43917 as Exhibit 4(a)-2, in
Form 8-K dated February 5, 1992, File No. 1-3164, as
Exhibit 4(b)-3, in Form 8-K dated July 8, 1992, File No. 1-
3164, as Exhibit 4(b)-3, in Form 8-K dated October 27,
1993, File No. 1-3164, as Exhibits 4(a) and 4(b), in Form
8-K dated November 16, 1993, File No. 1-3164, as Exhibit
4(a) and in Certificate of Notification, File No. 70-8191,
as Exhibit A.)
(b) 2 - By-laws of ALABAMA as amended effective July 23, 1993, and
as presently in effect. (Designated in Form U-1, File No.
70-8191, as Exhibit A-2.)
GEORGIA
(c) 1 - Charter of GEORGIA and amendments thereto through October
25, 1993. (Designated in Registration Nos. 2-63392 as
Exhibit 2(a)-2, 2-78913 as Exhibits 4(a)-(2) and 4(a)-(3),
2-93039 as Exhibit 4(a)-(2), 2-96810 as Exhibit 4(a)-2, 33-
141 as Exhibit 4(a)-(2), 33-1359 as Exhibit 4(a)(2), 33-
5405 as Exhibit 4(b)(2), 33-14367 as Exhibits 4(b)-(2) and
4(b)-(3), 33-22504 as Exhibits 4(b)-(2), 4(b)-(3) and 4(b)-
(4), in GEORGIA's Form 10-K for the year ended December 31,
1991, File No. 1-6468, as Exhibits 4(a)(2) and 4(a)(3), in
Registration No. 33-48895 as Exhibits 4(b)-(2) and 4(b)-
(3), in Form 8-K dated December 10, 1992, File No. 1-6468
as Exhibit 4(b), in Form 8-K dated June 17, 1993, File No.
1-6468, as Exhibit 4(b) and in Form 8-K dated October 20,
1993, File No. 1-6468, as Exhibit 4(b).)
E-1
<PAGE>
(c) 2 - By-laws of GEORGIA as amended effective July 18, 1990, and
as presently in effect. (Designated in GEORGIA's Form 10-K
for the year ended December 31, 1990, File No. 1-6468, as
Exhibit 3.)
GULF
(d) 1 - Restated Articles of Incorporation of GULF and amendments
thereto through November 8, 1993. (Designated in
Registration No. 33-43739 as Exhibit 4(b)-1, in Form 8-K
dated January 15, 1992, File No. 0-2429, as Exhibit 1(b),
in Form 8-K dated August 18, 1992, File No. 0-2429, as
Exhibit 4(b)-2, in Form 8-K dated September 22, 1993, File
No. 0-2429, as Exhibit 4 and in Form 8-K dated November 3,
1993, File No. 0-2429, as Exhibit 4.)
(d) 2 - By-laws of GULF as amended effective February 25, 1994, and
as presently in effect. (Designated in GULF's Form 10-K
for the year ended December 31, 1993, as Exhibit 3(d)2.)
MISSISSIPPI
(e) 1 - Articles of incorporation of MISSISSIPPI, articles of
merger of Mississippi Power Company (a Maine corporation)
into MISSISSIPPI and articles of amendment to the articles
of incorporation of MISSISSIPPI through August 19, 1993.
(Designated in Registration No. 2-71540 as Exhibit 4(a)-1,
in Form U5S for 1987, File No. 30-222-2, as Exhibit B-10,
in Registration No. 33-49320 as Exhibit 4(b)-(1), in Form
8-K dated August 5, 1992, File No. 0-6849, as Exhibits
4(b)-2 and 4(b)-3, in Form 8-K dated August 4, 1993, File
No. 0-6849, as Exhibit 4(b)-3 and in Form 8-K dated August
18, 1993, File No. 0-6849, as Exhibit 4(b)-3.)
(e) 2 - By-laws of MISSISSIPPI as amended effective August 22,
1989, and as presently in effect. (Designated in
MISSISSIPPI's Form 10-K for the year ended December 31,
1989, as Exhibit 3(b).)
SAVANNAH
(f) 1 - Charter of SAVANNAH and amendments thereto through November
10, 1993. (Designated in Registration Nos. 33-25183 as
Exhibit 4(b)-(1), 33-45757 as Exhibit 4(b)-(2) and in Form
8-K dated November 9, 1993, File No. 1-5072, as Exhibit
4(b).)
(f) 2 - By-laws of SAVANNAH as amended effective February 16, 1994,
and as presently in effect. (Designated in SAVANNAH's Form
10-K for the year ended December 31, 1993, as Exhibit
3(f)2.)
E-2
<PAGE>
(4) Instruments Describing Rights of Security Holders, Including Indentures
ALABAMA
(b) - Indenture dated as of January 1, 1942, between ALABAMA and
Chemical Bank, as Trustee, and indentures supplemental
thereto through that dated as of December 1, 1994.
(Designated in Registration Nos. 2-59843 as Exhibit 2(a)-2,
2-60484 as Exhibits 2(a)-3 and 2(a)-4, 2-60716 as Exhibit
2(c), 2-67574 as Exhibit 2(c), 2-68687 as Exhibit 2(c), 2-
69599 as Exhibit 4(a)-2, 2-71364 as Exhibit 4(a)-2, 2-73727
as Exhibit 4(a)-2, 33-5079 as Exhibit 4(a)-2, 33-17083 as
Exhibit 4(a)-2, 33-22090 as Exhibit 4(a)-2, in ALABAMA's
Form 10-K for the year ended December 31, 1990, File No. 1-
3164, as Exhibit 4(c), in Registration Nos. 33-43917 as
Exhibit 4(a)-2, 33-45492 as Exhibit 4(a)-2, 33-48885 as
Exhibit 4(a)-2, 33-48917 as Exhibit 4(a)-2, in Form 8-K
dated January 20, 1993, File No. 1-3436, as Exhibit 4(a)-3,
in Form 8-K dated February 17, 1993, File No. 1-3436, as
Exhibit 4(a)-3, in Form 8-K dated March 10, 1993, File No.
1-3436, as Exhibit 4(a)-3, in Certificate of Notification,
File No. 70-8069, as Exhibits A and B, in Form 8-K dated
June 24, 1993, File No. 1-3436, as Exhibit 4, in
Certificate of Notification, File No. 70-8069, as Exhibit
A, in Form 8-K dated November 16, 1993, File No. 1-3436, as
Exhibit 4(b), in Certificate of Notification, File No. 70-
8069, as Exhibits A and B, in Certificate of Notification,
File No. 70-8069, as Exhibit A, in Certificate of
Notification, File No. 70-8069, as Exhibit A and in Form 8-
K dated November 30, 1994, File No. 1-3436, as Exhibit 4.)
GEORGIA
(c) 1 - Indenture dated as of March 1, 1941, between GEORGIA and
Chemical Bank, as Trustee, and indentures supplemental
thereto dated as of March 1, 1941, March 3, 1941 (3
indentures), March 6, 1941 (139 indentures), March 1, 1946
(88 indentures) and December 1, 1947, through December 1,
1994. (Designated in Registration Nos. 2-4663 as Exhibits
B-3 and B-3(a), 2-7299 as Exhibit 7(a)-2, 2-61116 as
Exhibit 2(a)-3 and 2(a)-4, 2-62488 as Exhibit 2(a)-3, 2-
63393 as Exhibit 2(a)-4, 2-63705 as Exhibit 2(a)-3, 2-68973
as Exhibit 2(a)-3, 2-70679 as Exhibit 4(a)-(2), 2-72324 as
Exhibit 4(a)-2, 2-73987 as Exhibit 4(a)-(2), 2-77941 as
Exhibits 4(a)-(2) and 4(a)-(3), 2-79336 as Exhibit 4(a)-
(2), 2-81303 as Exhibit 4(a)-(2), 2-90105 as Exhibit 4(a)-
(2), 33-5405 as Exhibit 4(a)-(2), 33-14367 as Exhibits
4(a)-(2) and 4(a)-(3), 33-22504 as Exhibits 4(a)-(2), 4(a)-
(3) and 4(a)-(4), 33-32420 as Exhibit 4(a)-(2), 33-35683
as Exhibit 4(a)-(2), in GEORGIA's Form 10-K for the year
ended December 31, 1990, File No. 1-6468, as Exhibit
4(a)(3), in Form 10-K for the year ended December 31, 1991,
File No. 1-6468, as Exhibit 4(a)(5), in Registration No.
33-48895 as Exhibit 4(a)-(2), in Form 8-K dated August 26,
1992, File No. 1-6468, as Exhibit 4(a)-(3), in Form 8-K
dated September 9, 1992, File No. 1-6468, as Exhibits 4(a)-
(3) and 4(a)-(4), in Form 8-K dated September 23, 1992,
File No. 1-6468, as Exhibit 4(a)-(3), in Form 8-A dated
October 12, 1992, as Exhibit 2(b), in Form 8-K dated
January 27, 1993, File No. 1-6468, as Exhibit 4(a)-(3), in
Registration No. 33-49661 as Exhibit 4(a)-(2), in Form 8-K
dated July 26, 1993, File No. 1-6468, as Exhibit 4, in
Certificate of Notification, File No. 70-7832, as Exhibit
M, in Certificate of Notification, File No. 70-7832, as
Exhibit C, in Certificate of Notification, File No. 70-
7832, as Exhibits K and L, in Certificate of Notification,
File No. 70-8443, as Exhibit C, in Certificate of
Notification, File No. 70-8443, as Exhibit C, in
Certificate of Notification, File No. 70-8443, as Exhibit
E, in Certificate of Notification, File No. 70-8443, as
Exhibit E and in Certificate of Notification, File No. 70-
8443, as Exhibit E.)
E-3
<PAGE>
* (c) 2 - Supplemental Indenture dated as of June 1, 1994, between
GEORGIA and Chemical Bank, as Trustee.
* (c) 3 - Supplemental Indenture dated as of September 1, 1994,
between GEORGIA and Chemical Bank, as Trustee.
(c) 4 - Indenture dated as of December 1, 1994, between GEORGIA and
Trust Company Bank, as Trustee. (Designated in Certificate
of Notification, File No. 70-8461, as Exhibit E.)
(c) 5 - First Supplemental Indenture dated as of December 15, 1994,
between GEORGIA and Trust Company Bank, as Trustee.
(Designated in Certificate of Notification, File No. 70-
8461, as Exhibit F.)
GULF
(d) - Indenture dated as of September 1, 1941, between GULF and
The Chase Manhattan Bank (National Association), as
Trustee, and indentures supplemental thereto through
September 1, 1994. (Designated in Registration Nos. 2-4833
as Exhibit B-3, 2-62319 as Exhibit 2(a)-3, 2-63765 as
Exhibit 2(a)-3, 2-66260 as Exhibit 2(a)-3, 33-2809 as
Exhibit 4(a)-2, 33-43739 as Exhibit 4(a)-2, in GULF's Form
10-K for the year ended December 31, 1991, File No. 0-2429,
as Exhibit 4(b), in Form 8-K dated August 18, 1992, File
No. 0-2429, as Exhibit 4(a)-3, in Registration No. 33-50165
as Exhibit 4(a)-2, in Form 8-K dated July 12, 1993, File
No. 0-2429, as Exhibit 4, in Certificate of Notification,
File No. 70-8229, as Exhibit A and in Certificate of
Notification, File No. 70-8229, as Exhibits E and F.)
MISSISSIPPI
(e) - Indenture dated as of September 1, 1941, between
MISSISSIPPI and Bankers Trust Company, as Successor
Trustee, and indentures supplemental thereto through March
1, 1994. (Designated in Registration Nos. 2-4834 as
Exhibit B-3, 2-62965 as Exhibit 2(b)-2, 2-66845 as Exhibit
2(b)-2, 2-71537 as Exhibit 4(a)-(2), 33-5414 as Exhibit
4(a)-(2), 33-39833 as Exhibit 4(a)-2, in MISSISSIPPI's Form
10-K for the year ended December 31, 1991, File No. 0-6849,
as Exhibit 4(b), in Form 8-K dated August 5, 1992, File No.
0-6849, as Exhibit 4(a)-2, in Second Certificate of
Notification, File No. 70-7941, as Exhibit I, in
MISSISSIPPI's Form 8-K dated February 26, 1993, File No. 0-
6849, as Exhibit 4(a)-2, in Certificate of Notification,
File No. 70-8127, as Exhibit A, in Form 8-K dated June 22,
1993, File No. 0-6849, as Exhibit 1, in Certificate of
Notification, File No. 70-8127, as Exhibit A and in Form 8-
K dated March 8, 1994, File No. 0-6849, as Exhibit 4.)
E-4
<PAGE>
SAVANNAH
(f) - Indenture dated as of March 1, 1945, between SAVANNAH and
NationsBank of Georgia, National Association, as Trustee,
and indentures supplemental thereto through July 1, 1993.
(Designated in Registration Nos. 33-25183 as Exhibit 4(a)-
(1), 33-41496 as Exhibit 4(a)-(2), 33-45757 as Exhibit
4(a)-(2), in SAVANNAH's Form 10-K for the year ended
December 31, 1991, File No. 1-5072, as Exhibit 4(b), in
Form 8-K dated July 8, 1992, File No. 1-5072, as Exhibit
4(a)-3, in Registration No. 33-50587 as Exhibit 4(a)-(2)
and in Form 8-K dated July 22, 1993, File No. 1-5072, as
Exhibit 4.)
(10) Material Contracts
SOUTHERN
(a) 1 - Service contracts dated as of January 1, 1984 and Amendment
No. 1 dated as of September 6, 1985, between SCS and
ALABAMA, GEORGIA, GULF, MISSISSIPPI, SEGCO and SOUTHERN.
(Designated in SOUTHERN's Form 10-K for the year ended
December 31, 1984, File No. 1-3526, as Exhibit 10(a) and in
SOUTHERN's Form 10-K for the year ended December 31, 1985,
File No. 1-3526, as Exhibit 10(a)(3).)
(a) 2 - Service contract dated as of July 17, 1981, between SCS and
SEI. (Designated in SOUTHERN's Form 10-K for the year
ended December 31, 1985, File No. 1-3526, as Exhibit
10(a)(2).)
(a) 3 - Service contract dated as of March 3, 1988, between SCS and
SAVANNAH. (Designated in SAVANNAH's Form 10-K for the year
ended December 31, 1987, File No. 1-5072, as Exhibit 10-p.)
(a) 4 - Service contract dated as of January 15, 1991, between SCS
and Southern Nuclear. (Designated in SOUTHERN's Form 10-K
for the year ended December 31, 1991, File No. 1-3526, as
Exhibit 10(a)(4).)
(a) 5 - Interchange contract dated October 28, 1988, effective
January 1, 1989, between ALABAMA, GEORGIA, GULF,
MISSISSIPPI, SAVANNAH and SCS. (Designated in SAVANNAH's
Form 10-K for the year ended December 31, 1988, File No.
1-5072, as Exhibit 10(b).)
(a) 6 - Agreement dated as of January 27, 1959 and Amendment No. 1
dated as of October 27, 1982, among SEGCO, ALABAMA and
GEORGIA. (Designated in Registration No. 2-59634 as
Exhibit 5(c) and in GEORGIA's Form 10-K for the year ended
December 31, 1982, File No. 1-6468, as Exhibit 10(d)(2).)
E-5
<PAGE>
(a) 7 - Joint Committee Agreement dated as of August 27, 1976,
among GEORGIA, OPC, MEAG and Dalton. (Designated in
Registration No. 2-61116 as Exhibit 5(d).)
(a) 8 - Edwin I. Hatch Nuclear Plant Purchase and Ownership
Participation Agreement dated as of January 6, 1975,
between GEORGIA and OPC. (Designated in Form 8-K for
January, 1975, File No. 1-6468, as Exhibit (b)(1).)
(a) 9 - Edwin I. Hatch Nuclear Plant Operating Agreement dated as
of January 6, 1975, between GEORGIA and OPC. (Designated
in Form 8-K for January, 1975, File No. 1-6468, as Exhibit
(b)(3).)
(a) 10 - Revised and Restated Integrated Transmission System
Agreement dated as of November 12, 1990, between GEORGIA
and OPC. (Designated in GEORGIA's Form 10-K for the year
ended December 31, 1990, File No. 1-6468, as Exhibit
10(g).)
(a) 11 - Plant Hal Wansley Purchase and Ownership Participation
Agreement dated as of March 26, 1976, between GEORGIA and
OPC. (Designated in Certificate of Notification, File No.
70-5592, as Exhibit A.)
(a) 12 - Plant Hal Wansley Operating Agreement dated as of March 26,
1976, between GEORGIA and OPC. (Designated in Certificate
of Notification, File No. 70-5592, as Exhibit B.)
(a) 13 - Edwin I. Hatch Nuclear Plant Purchase and Ownership
Participation Agreement dated as of August 27, 1976,
between GEORGIA, MEAG and Dalton. (Designated in Form 8-K
dated as of June 13, 1977, File No. 1-6468, as Exhibit
(b)(1).)
(a) 14 - Edwin I. Hatch Nuclear Plant Operating Agreement dated as
of August 27, 1976, between GEORGIA, MEAG and Dalton.
(Designated in Form 8-K for February 1977, File No. 1-6468,
as Exhibit (b)(2).)
(a) 15 - Alvin W. Vogtle Nuclear Units Number One and Two Purchase
and Ownership Participation Agreement dated as of August
27, 1976 and Amendment No. 1 dated as of January 18, 1977,
among GEORGIA, OPC, MEAG and Dalton. (Designated in Form
U-1, File No. 70-5792, as Exhibit B-1 and in Form 8-K for
January 1977, File No. 1-6468, as Exhibit (B)(3).)
(a) 16 - Alvin W. Vogtle Nuclear Units Number One and Two Operating
Agreement dated as of August 27, 1976, among GEORGIA, OPC,
MEAG and Dalton. (Designated in Form U-1, File No.
70-5792, as Exhibit B-2.)
(a) 17 - Alvin W. Vogtle Nuclear Units Number One and Two Purchase,
Amendment, Assignment and Assumption Agreement dated as of
November 16, 1983, between GEORGIA and MEAG. (Designated
in GEORGIA's Form 10-K for the year ended December 31,
1983, File No. 1-6468, as Exhibit 10(k)(4).)
E-6
<PAGE>
(a) 18 - Plant Hal Wansley Purchase and Ownership Participation
Agreement dated as of August 27, 1976, between GEORGIA and
MEAG. (Designated in Form 8-K dated as of July 5, 1977,
File No. 1-6468, as Exhibit (b)(2).)
(a) 19 - Plant Hal Wansley Operating Agreement dated as of August
27, 1976, between GEORGIA and MEAG. (Designated in Form
8-K dated as of July 5, 1977, File No. 1-6468, as Exhibit
(b)(4).)
(a) 20 - Integrated Transmission System Agreement dated as of August
27, 1976, between GEORGIA and Dalton. (Designated in Form
8-K dated as of July 5, 1977, File No. 1-6468, as Exhibit
(b)(8).)
(a) 21 - Integrated Transmission System Agreement dated as of August
27, 1976, between GEORGIA and MEAG. (Designated in Form
8-K for February 1977, File No. 1-6468, as Exhibit (b)(4).)
(a) 22 - Plant Hal Wansley Purchase and Ownership Participation
Agreement dated as of April 19, 1977, between GEORGIA and
Dalton. (Designated in Form 8-K dated as of June 13, 1977,
File No. 1-6468, as Exhibit (b)(3).)
(a) 23 - Plant Hal Wansley Operating Agreement dated as of April 19,
1977, between GEORGIA and Dalton. (Designated in Form 8-K
dated as of June 13, 1977, File No. 1-6468, as Exhibit
(b)(7).)
(a) 24 - Plant Robert W. Scherer Units Number One and Two Purchase
and Ownership Participation Agreement dated as of May 15,
1980, Amendment No. 1 dated as of December 30, 1985,
Amendment No. 2 dated as of July 1, 1986, Amendment No. 3
dated as of August 1, 1988 and Amendment No. 4 dated as of
December 31, 1990, among GEORGIA, OPC, MEAG and Dalton.
(Designated in Form U-1, File No. 70-6481, as Exhibit B-3,
in SOUTHERN's Form 10-K for the year ended December 31,
1987, File No. 1-3526, as Exhibit 10(o)(2), in SOUTHERN's
Form 10-K for the year ended December 31, 1989, File No. 1-
3526, as Exhibit 10(n)(2) and in SOUTHERN's Form 10-K for
the year ended December 31, 1993, File No. 1-3526, as
Exhibit 10(a)54.)
(a) 25 - Plant Robert W. Scherer Units Number One and Two Operating
Agreement dated as of May 15, 1980, Amendment No. 1 dated
as of December 3, 1985 and Amendment No. 2 dated as of
December 31, 1990, among GEORGIA, OPC, MEAG and Dalton.
(Designated in Form U-1, File No. 70-6481, as Exhibit B-4,
in SOUTHERN's Form 10-K for the year ended December 31,
1987, File No. 1-3526, as Exhibit 10(o)(4) and in
SOUTHERN's Form 10-K for the year ended December 31, 1993,
File No. 1-3526, as Exhibit 10(a)55.)
(a) 26 - Plant Robert W. Scherer Purchase, Sale and Option Agreement
dated as of May 15, 1980, between GEORGIA and MEAG.
(Designated in Form U-1, File No. 70-6481, as Exhibit B-1.)
E-7
<PAGE>
(a) 27 - Plant Robert W. Scherer Purchase and Sale Agreement dated
as of May 16, 1980, between GEORGIA and Dalton.
(Designated in Form U-1, File No. 70-6481, as Exhibit B-2.)
(a) 28 - Plant Robert W. Scherer Unit Number Three Purchase and
Ownership Participation Agreement dated as of March 1,
1984, Amendment No. 1 dated as of July 1, 1986 and
Amendment No. 2 dated as of August 1, 1988, between GEORGIA
and GULF. (Designated in Form U-1, File No. 70-6573, as
Exhibit B-4, in SOUTHERN's Form 10-K for the year ended
December 31, 1987, as Exhibit 10(o)(2) and in SOUTHERN's
Form 10-K for the year ended December 31, 1989, as Exhibit
10(n)(2).)
(a) 29 - Plant Robert W. Scherer Unit Number Three Operating
Agreement dated as of March 1, 1984, between GEORGIA and
GULF. (Designated in Form U-1, File No. 70-6573, as
Exhibit B-5.)
(a) 30 - Plant Robert W. Scherer Unit No. Four Amended and Restated
Purchase and Ownership Participation Agreement by and among
GEORGIA, FP&L and JEA, dated as of December 31, 1990.
(Designated in Form U-1, File No. 70-7843, as Exhibit B-1.)
(a) 31 - Plant Robert W. Scherer Unit No. Four Operating Agreement
by and among GEORGIA, FP&L and JEA, dated as of December
31, 1990. (Designated in Form U-1, File No. 70-7843, as
Exhibit B-2.)
(a) 32 - Amended and Restated Unit Power Sales Agreement dated
February 18, 1982 and Amendment No. 1 dated May 18, 1982,
between FP&L and ALABAMA, GEORGIA, GULF, MISSISSIPPI and
SCS. (Designated in MISSISSIPPI's Form 10-K for the year
ended December 31, 1981, File No. 0-6849, as Exhibit
10(c)(2) and in GEORGIA's Form 10-K for the year ended
December 31, 1982, File No. 1-6468, as Exhibit 10(r)(3).)
(a) 33 - Amended and Restated Unit Power Sales Agreement dated May
19, 1982, Amendment No. 1 dated August 30, 1984 and
Amendment No. 2 dated October 30, 1987, between JEA and
ALABAMA, GEORGIA, GULF, MISSISSIPPI and SCS. (Designated
in GEORGIA's Form 10-K for the year ended December 31,
1982, File No. 1-6468, as Exhibit 10(s)(2), in SOUTHERN's
Form 10-K for the year ended December 31, 1984, File No.
1-3526, as Exhibit 10(r)(2) and in GEORGIA's Form 10-K for
the year ended December 31, 1990, File No. 1-6468, as
Exhibit 10(s)(2).)
(a) 34 - Unit Power Sales Agreement dated July 19, 1988, between FPC
and ALABAMA, GEORGIA, GULF, MISSISSIPPI, SAVANNAH and SCS.
(Designated in SAVANNAH's Form 10-K for the year ended
December 31, 1988, File No. 1-5072, as Exhibit 10(d).)
E-8
<PAGE>
(a) 35 - Amended Unit Power Sales Agreement dated July 20, 1988,
between FP&L and ALABAMA, GEORGIA, GULF, MISSISSIPPI,
SAVANNAH and SCS. (Designated in SAVANNAH's Form 10-K for
the year ended December 31, 1988, File No. 1-5072, as
Exhibit 10(e).)
(a) 36 - Amended Unit Power Sales Agreement dated August 17, 1988,
between JEA and ALABAMA, GEORGIA, GULF, MISSISSIPPI,
SAVANNAH and SCS. (Designated in SAVANNAH's Form 10-K for
the year ended December 31, 1988, File No. 1-5072, as
Exhibit 10(f).)
(a) 37 - Unit Power Sales Agreement dated December 8, 1990, between
Tallahassee and ALABAMA, GEORGIA, GULF, MISSISSIPPI,
SAVANNAH and SCS. (Designated in GEORGIA's Form 10-K for
the year ended December 31, 1990, File No. 1-6468, as
Exhibit 10(x).)
(a) 38 - The Southern Company Executive Stock Plan For the Southern
Electric System and the First Amendment thereto.
(Designated in Registration No. 33-30171 as Exhibit 4(c).)
(a) 39 - Transition Energy Agreement dated December 31, 1990,
between JEA and ALABAMA, GEORGIA, GULF, MISSISSIPPI,
SAVANNAH and SCS. (Designated in GULF's Form 10-K for the
year ended December 31, 1991, File No. 0-2429, as Exhibit
10(1).)
(a) 40 - Transition Energy Agreement dated December 31, 1990,
between FP&L and ALABAMA, GEORGIA, GULF, MISSISSIPPI,
SAVANNAH and SCS. (Designated in GULF's Form 10-K for the
year ended December 31, 1991, File No. 0-2429, as Exhibit
10(m).)
(a) 41 - Rocky Mountain Pumped Storage Hydroelectric Project
Ownership Participation Agreement dated November 18, 1988,
between OPC and GEORGIA. (Designated in GEORGIA's Form
10-K for the year ended December 31, 1988, File No. 1-6468,
as Exhibit 10(x).)
(a) 42 - Rocky Mountain Pumped Storage Hydroelectric Project
Operating Agreement dated November 18, 1988, between OPC
and GEORGIA. (Designated in GEORGIA's Form 10-K for the
year ended December 31, 1988, File No. 1-6468, as Exhibit
10(y).)
(a) 43 - Purchase and Ownership Agreement for Joint Ownership
Interest in the James H. Miller, Jr. Steam Electric
Generating Plant Units One and Two dated November 18, 1988,
between ALABAMA and AEC. (Designated in Form U-1, File No.
70-7609, as Exhibit B-1.)
(a) 44 - Operating Agreement for Joint Ownership Interest in the
James H. Miller, Jr. Steam Electric Generating Plant Units
One and Two dated November 18, 1988, between ALABAMA and
AEC. (Designated in Form U-1, File No. 70-7609, as Exhibit
B-2.)
E-9
<PAGE>
(a) 45 - Transmission Facilities Agreement dated February 25, 1982,
Amendment No. 1 dated May 12, 1982 and Amendment No. 2
dated December 6, 1983, between Gulf States and
MISSISSIPPI. (Designated in MISSISSIPPI's Form 10-K for
the year ended December 31, 1981, File No. 0-6849, as
Exhibit 10(f), in MISSISSIPPI's Form 10-K for the year
ended December 31, 1982, File No. 0-6849, as Exhibit
10(f)(2) and in MISSISSIPPI's Form 10-K for the year ended
December 31, 1983, File No. 0-6849, as Exhibit 10(f)(3).)
(a) 46 - Form of commitment agreement, Amendment No. 1 and Amendment
No. 2 with respect to SOUTHERN, ALABAMA, GEORGIA and
MISSISSIPPI revolving credits. (Designated in Form U-1,
File No. 70-7738, as Exhibit A-5 and in Form U-1, File No.
70-7937, as A-5(b).)
(a) 47 - Block Power Sale Agreement between GEORGIA and OPC dated as
of November 12, 1990. (Designated in GEORGIA's Form 10-K
for the year ended December 31, 1990, File No. 1-6468, as
Exhibit 10(cc).)
(a) 48 - Coordination Services Agreement between GEORGIA and OPC
dated as of November 12, 1990. (Designated in GEORGIA's
Form 10-K for the year ended December 31, 1990, File No.
1-6468, as Exhibit 10(dd).)
(a) 49 - Amended and Restated Nuclear Managing Board Agreement for
Plant Hatch and Plant Vogtle among GEORGIA, OPC, MEAG and
Dalton dated as of July 1, 1993. (Designated in SOUTHERN's
Form 10-K for the year ended December 31, 1993, File No. 1-
3526, as Exhibit 10(a)49.)
(a) 50 - Integrated Transmission System Agreement, Power Sale and
Coordination Umbrella Agreement between GEORGIA and OPC
dated as of November 12, 1990. (Designated in GEORGIA's
Form 10-K for the year ended December 31, 1990, File No.
1-6468, as Exhibit 10(ff).)
(a) 51 - Revised and Restated Integrated Transmission System
Agreement between GEORGIA and Dalton dated as of December
7, 1990. (Designated in GEORGIA's Form 10-K for the year
ended December 31, 1990, File No. 1-6468, as Exhibit
10(gg).)
(a) 52 - Revised and Restated Integrated Transmission System
Agreement between GEORGIA and MEAG dated as of December 7,
1990. (Designated in GEORGIA's Form 10-K for the year
ended December 31, 1990, File No. 1-6468, as Exhibit
10(hh).)
(a) 53 - Long Term Transmission Service Agreement between Entergy
Power, Inc. and ALABAMA, MISSISSIPPI and SCS. (Designated
in SOUTHERN's Form 10-K for the year ended December 31,
1992, File No. 1-3526, as Exhibit 10(a)53.)
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<PAGE>
(a) 54 - Plant Scherer Managing Board Agreement dated as of December
31, 1990 among GEORGIA, OPC, MEAG, Dalton, GULF, FP&L and
JEA. (Designated in SOUTHERN's Form 10-K for the year
ended December 31, 1993, File No. 1-3526, as Exhibit
10(a)56.)
(a) 55 - Plant McIntosh Combustion Turbine Purchase and Ownership
Participation Agreement between GEORGIA and SAVANNAH dated
as of December 15, 1992. (Designated in SOUTHERN's Form
10-K for the year ended December 31, 1993, File No. 1-3526,
as Exhibit 10(a)57.)
(a) 56 - Plant McIntosh Combustion Turbine Operating Agreement
between GEORGIA and SAVANNAH dated as of December 15, 1992.
(Designated in SOUTHERN's Form 10-K for the year ended
December 31, 1993, File No. 1-3526, as Exhibit 10(a)58.)
(a) 57 - Power Purchase Agreement dated as of December 3, 1993
between GEORGIA and FPC. (Designated in SOUTHERN's Form 10-
K for the year ended December 31, 1993, File No. 1-3526, as
Exhibit 10(a)59.)
* (a) 58 - Service Contract dated as of December 12, 1994, between SCS
and Mobile Energy Services Company, Inc.
(a) 59 - The Southern Company Outside Directors Stock Plan.
(Designated in Registration No. 33-54415 as Exhibit 4(c).)
* (a) 60 - Amendment No. 1 dated as of June 15, 1994, to the Plant
Robert W. Scherer Unit Number Four Amended and Restated
Purchase and Ownership Participation Agreement.
* (a) 61 - Amendment No. 1 dated as of June 15, 1994, to the Plant
Robert W. Scherer Unit Number Four Operating Agreement.
(a) 62 - Operating Agreement for the Joseph M. Farley Nuclear Plant
between ALABAMA and Southern Nuclear dated as of December
23, 1991. (Designated in Form U-1, File No. 70-7530, as
Exhibit B-7.)
(a) 63 - Nuclear Services Agreement between Southern Nuclear and
GEORGIA dated as of October 31, 1991. (Designated in Form
U-1, File No. 70-7530, as Exhibit B-6.)
(a) 64 - Nuclear Managing Board Agreement among GEORGIA, OPC, MEAG
and Dalton dated as of November 12, 1990. (Designated in
GEORGIA's Form 10-K for the year ended December 31, 1990,
File No. 1-6468, as Exhibit 10(ee).)
* (a) 65 - The Southern Company Productivity Improvement Plan, Amended
and Restated effective January 1, 1994.
* (a) 66 - The Southern Company Executive Productivity Improvement
Plan, effective January 1, 1994.
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<PAGE>
(a) 67 - The Southern Company Employee Savings Plan, Amended and
Restated effective January 1, 1989. (Designated in
Registration No. 33-23152 as Exhibit 4(c).)
(a) 68 - The Southern Company Employee Stock Ownership Plan, Amended
and Restated effective January 1, 1989. (Designated in
Form U-1, File No. 70-7654, as Exhibit B-1 and in Form U-1,
File No. 70-8435, as Exhibit B-4(b).)
* (a) 69 - Pension Plan For Employees of ALABAMA, Amended and Restated
effective as of January 1, 1989.
* (a) 70 - Pension Plan For Employees of GEORGIA, Amended and Restated
effective as of January 1, 1989.
* (a) 71 - Pension Plan For Employees of SCS, Amended and Restated
effective as of January 1, 1989.
* (a) 72 - The Southern Company Performance Pay Plan, Amended and
Restated effective January 1, 1993.
* (a) 73 - Supplemental Benefit Plan for ALABAMA.
* (a) 74 - Supplemental Benefit Plan for GEORGIA.
* (a) 75 - Supplemental Benefit Plan for SCS and SEI.
* (a) 76 - The Deferred Compensation Plan for the Directors of The
Southern Company.
* (a) 77 - The Southern Company Outside Directors Pension Plan.
* (a) 78 - The Deferred Compensation Plan for the Southern Electric
System.
ALABAMA
(b) 1 - Service contracts dated as of January 1, 1984 and Amendment
No. 1 dated as of September 6, 1985, between SCS and
ALABAMA, GEORGIA, GULF, MISSISSIPPI, SEGCO and SOUTHERN.
See Exhibit 10(a)1 herein.
(b) 2 - Interchange contract dated October 28, 1988, effective
January 1, 1989, between ALABAMA, GEORGIA, GULF,
MISSISSIPPI, SAVANNAH and SCS. See Exhibit 10(a)5 herein.
(b) 3 - Agreement dated as of January 27, 1959 and Amendment No. 1
dated as of October 27, 1982, among SEGCO, ALABAMA and
GEORGIA. See Exhibit 10(a)6 herein.
(b) 4 - Amended and Restated Unit Power Sales Agreement dated
February 18, 1982 and Amendment No. 1 dated May 18, 1982,
between FP&L and ALABAMA, GEORGIA, GULF, MISSISSIPPI and
SCS. See Exhibit 10(a)32 herein.
E-12
<PAGE>
(b) 5 - Amended and Restated Unit Power Sales Agreement dated May
19, 1982, Amendment No. 1, dated August 30, 1984 and
Amendment No. 2, dated October 30, 1987, between JEA and
ALABAMA, GEORGIA, GULF, MISSISSIPPI and SCS. See Exhibit
10(a)33 herein.
(b) 6 - Unit Power Sales Agreement dated July 19, 1988, between FPC
and ALABAMA, GEORGIA, GULF, MISSISSIPPI, SAVANNAH and SCS.
See Exhibit 10(a)34 herein.
(b) 7 - Amended Unit Power Sales Agreement dated July 20, 1988,
between FP&L and ALABAMA, GEORGIA, GULF, MISSISSIPPI,
SAVANNAH and SCS. See Exhibit 10(a)35 herein.
(b) 8 - Amended Unit Power Sales Agreement dated August 17, 1988,
between JEA and ALABAMA, GEORGIA, GULF, MISSISSIPPI,
SAVANNAH and SCS. See Exhibit 10(a)36 herein.
(b) 9 - Unit Power Sales Agreement dated December 8, 1990, between
Tallahassee and ALABAMA, GEORGIA, GULF, MISSISSIPPI,
SAVANNAH and SCS. See Exhibit 10(a)37 herein.
(b) 10 - Transition Energy Agreement dated December 31, 1990,
between JEA and ALABAMA, GEORGIA, GULF, MISSISSIPPI,
SAVANNAH and SCS. See Exhibit 10(a)39 herein.
(b) 11 - Transition Energy Agreement dated December 31, 1990,
between FP&L and ALABAMA, GEORGIA, GULF, MISSISSIPPI,
SAVANNAH and SCS. See Exhibit 10(a)40 herein.
(b) 12 - Firm Power Purchase Contract between ALABAMA and AMEA.
(Designated in Certificate of Notification, File No. 70-
7212, as Exhibit B.)
(b) 13 - 1991 Firm Power Purchase Contract between ALABAMA and AMEA.
(Designated in Form U-1, File No. 70-7873, as Exhibit B-1.)
(b) 14 - Purchase and Ownership Agreement for Joint Ownership
Interest in the James H. Miller, Jr. Steam Electric
Generating Plant Units One and Two dated November 18, 1988,
between ALABAMA and AEC. See Exhibit 10(a)43 herein.
(b) 15 - Operating Agreement for Joint Ownership Interest in the
James H. Miller, Jr. Steam Electric Generating Plant Units
One and Two dated November 18, 1988, between ALABAMA and
AEC. See Exhibit 10(a)44 herein.
(b) 16 - Form of commitment agreement, Amendment No. 1 and Amendment
No. 2 with respect to SOUTHERN, ALABAMA, GEORGIA and
MISSISSIPPI revolving credits. See Exhibit 10(a)46 herein.
E-13
<PAGE>
(b) 17 - Long Term Transmission Service Agreement between Entergy
Power, Inc. and ALABAMA, MISSISSIPPI and SCS. See Exhibit
10(a)53 herein.
* (b) 18 - Amendment No. 2 dated November 4, 1993 and effective June
1, 1994, to Agreement dated January 27, 1959, among SEGCO,
ALABAMA and GEORGIA.
(b) 19 - Operating Agreement for the Joseph M. Farley Nuclear Plant
between ALABAMA and Southern Nuclear dated as of December
23, 1991. See Exhibit 10(a)62 herein.
* (b) 20 - The Southern Company Productivity Improvement Plan, Amended
and Restated effective January 1, 1994. See Exhibit
10(a)65 herein.
* (b) 21 - The Southern Company Executive Productivity Improvement
Plan, effective January 1, 1994. See Exhibit 10(a)66
herein.
(b) 22 - The Southern Company Employee Savings Plan, Amended and
Restated effective January 1, 1989. See Exhibit 10(a)67
herein.
(b) 23 - The Southern Company Employee Stock Ownership Plan, Amended
and Restated effective January 1, 1989. See Exhibit
10(a)68 herein.
* (b) 24 - Pension Plan For Employees of ALABAMA, Amended and Restated
effective as of January 1, 1989. See Exhibit 10(a)69
herein.
* (b) 25 - The Southern Company Performance Pay Plan, Amended and
Restated effective January 1, 1993. See Exhibit 10(a)72
herein.
* (b) 26 - Supplemental Benefit Plan for ALABAMA. See Exhibit 10(a)73
herein.
* (b) 27 - The Deferred Compensation Plan for the Southern Electric
System. See Exhibit 10(a)78 herein.
* (b) 28 - The Southern Company Outside Directors Pension Plan. See
Exhibit 10(a)77 herein.
GEORGIA
(c) 1 - Service contracts dated as of January 1, 1984 and Amendment
No. 1 dated as of September 6, 1985, between SCS and
ALABAMA, GEORGIA, GULF, MISSISSIPPI, SEGCO and SOUTHERN.
See Exhibit 10(a)1 herein.
(c) 2 - Interchange contract dated October 28, 1988, effective
January 1, 1989, between ALABAMA, GEORGIA, GULF,
MISSISSIPPI, SAVANNAH and SCS. See Exhibit 10(a)5 herein.
E-14
<PAGE>
(c) 3 - Agreement dated as of January 27, 1959 and Amendment No. 1
dated as of October 27, 1982, among SEGCO, ALABAMA and
GEORGIA. See Exhibit 10(a)6 herein.
(c) 4 - Joint Committee Agreement dated as of August 27, 1976,
among GEORGIA, OPC, MEAG and Dalton. See Exhibit 10(a)7
herein.
(c) 5 - Edwin I. Hatch Nuclear Plant Purchase and Ownership
Participation Agreement dated as of January 6, 1975,
between GEORGIA and OPC. See Exhibit 10(a)8 herein.
(c) 6 - Edwin I. Hatch Nuclear Plant Operating Agreement dated as
of January 6, 1975, between GEORGIA and OPC. See Exhibit
10(a)9 herein.
(c) 7 - Revised and Restated Integrated Transmission System
Agreement dated as of November 12, 1990, between GEORGIA
and OPC. See Exhibit 10(a)10 herein.
(c) 8 - Plant Hal Wansley Purchase and Ownership Participation
Agreement dated as of March 26, 1976, between GEORGIA and
OPC. See Exhibit 10(a)11 herein.
(c) 9 - Plant Hal Wansley Operating Agreement dated as of March 26,
1976, between GEORGIA and OPC. See Exhibit 10(a)12 herein.
(c) 10 - Edwin I. Hatch Nuclear Plant Purchase and Ownership
Participation Agreement dated as of August 27, 1976,
between GEORGIA, MEAG and Dalton. See Exhibit 10(a)13
herein.
(c) 11 - Edwin I. Hatch Nuclear Plant Operating Agreement dated as
of August 27, 1976, between GEORGIA, MEAG and Dalton. See
Exhibit 10(a)14 herein.
(c) 12 - Alvin W. Vogtle Nuclear Units Number One and Two Purchase
and Ownership Participation Agreement dated as of August
27, 1976 and Amendment No. 1 dated as of January 18, 1977,
among GEORGIA, OPC, MEAG and Dalton. See Exhibit 10(a)15
herein.
(c) 13 - Alvin W. Vogtle Nuclear Units Number One and Two Operating
Agreement dated as of August 27, 1976, among GEORGIA, OPC,
MEAG and Dalton. See Exhibit 10(a)16 herein.
(c) 14 - Alvin W. Vogtle Nuclear Units Number One and Two Purchase,
Amendment, Assignment and Assumption Agreement dated as of
November 16, 1983, between GEORGIA and MEAG. See Exhibit
10(a)17 herein.
(c) 15 - Plant Hal Wansley Purchase and Ownership Participation
Agreement dated as of August 27, 1976, between GEORGIA and
MEAG. See Exhibit 10(a)18 herein.
E-15
<PAGE>
(c) 16 - Plant Hal Wansley Operating Agreement dated as of August
27, 1976, between GEORGIA and MEAG. See Exhibit 10(a)19
herein.
(c) 17 - Integrated Transmission System Agreement dated as of August
27, 1976, between GEORGIA and Dalton. See Exhibit 10(a)20
herein.
(c) 18 - Integrated Transmission System Agreement dated as of August
27, 1976, between GEORGIA and MEAG. See Exhibit 10(a)21
herein.
(c) 19 - Plant Hal Wansley Purchase and Ownership Participation
Agreement dated as of April 19, 1977, between GEORGIA and
Dalton. See Exhibit 10(a)22 herein.
(c) 20 - Plant Hal Wansley Operating Agreement dated as of April 19,
1977, between GEORGIA and Dalton. See Exhibit 10(a)23
herein.
(c) 21 - Plant Robert W. Scherer Units Number One and Two Purchase
and Ownership Participation Agreement dated as of May 15,
1980, Amendment No. 1 dated as of December 30, 1985,
Amendment No. 2 dated as of July 1, 1986, Amendment No. 3
dated as of August 1, 1988 and Amendment No. 4 dated as of
December 31, 1990, among GEORGIA, OPC, MEAG and Dalton.
See Exhibit 10(a)24 herein.
(c) 22 - Plant Robert W. Scherer Units Number One and Two Operating
Agreement dated as of May 15, 1980, Amendment No. 1 dated
as of December 3, 1985 and Amendment No. 2 dated as of
December 31, 1990, among GEORGIA, OPC, MEAG and Dalton.
See Exhibit 10(a)25 herein.
(c) 23 - Plant Robert W. Scherer Purchase, Sale and Option Agreement
dated as of May 15, 1980, between GEORGIA and MEAG. See
Exhibit 10(a)26 herein.
(c) 24 - Plant Robert W. Scherer Purchase and Sale Agreement dated
as of May 16, 1980, between GEORGIA and Dalton. See
Exhibit 10(a)27 herein.
(c) 25 - Plant Robert W. Scherer Unit Number Three Purchase and
Ownership Participation Agreement dated as of March 1,
1984, Amendment No. 1 dated as of July 1, 1986 and
Amendment No. 2 dated as of August 1, 1988, between GEORGIA
and GULF. See Exhibit 10(a)28 herein.
(c) 26 - Plant Robert W. Scherer Unit Number Three Operating
Agreement dated as of March 1, 1984, between GEORGIA and
GULF. See Exhibit 10(a)29 herein.
(c) 27 - Plant Robert W. Scherer Unit No. Four Amended and Restated
Purchase and Ownership Participation Agreement by and among
GEORGIA, FP&L and JEA dated as of December 31, 1990. See
Exhibit 10(a)30 herein.
(c) 28 - Plant Robert W. Scherer Unit No. Four Operating Agreement
by and among GEORGIA, FP&L and JEA dated as of December 31,
1990. See Exhibit 10(a)31 herein.
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<PAGE>
(c) 29 - Amended and Restated Unit Power Sales Agreement dated
February 18, 1982 and Amendment No. 1 dated May 18, 1982,
between FP&L and ALABAMA, GEORGIA, GULF, MISSISSIPPI and
SCS. See Exhibit 10(a)32 herein.
(c) 30 - Amended and Restated Unit Power Sales Agreement dated May
19, 1982, Amendment No. 1, dated August 30, 1984 and
Amendment No. 2 dated October 30, 1987, between JEA and
ALABAMA, GEORGIA, GULF, MISSISSIPPI and SCS. See Exhibit
10(a)33 herein.
(c) 31 - Unit Power Sales Agreement dated July 19, 1988, between FPC
and ALABAMA, GEORGIA, GULF, MISSISSIPPI, SAVANNAH and SCS.
See Exhibit 10(a)34 herein.
(c) 32 - Amended Unit Power Sales Agreement dated July 20, 1988,
between FP&L and ALABAMA, GEORGIA, GULF, MISSISSIPPI,
SAVANNAH and SCS. See Exhibit 10(a)35 herein.
(c) 33 - Amended Unit Power Sales Agreement dated August 17, 1988,
between JEA and ALABAMA, GEORGIA, GULF, MISSISSIPPI,
SAVANNAH and SCS. See Exhibit 10(a)36 herein.
(c) 34 - Unit Power Sales Agreement dated December 8, 1990, between
Tallahassee and ALABAMA, GEORGIA, GULF, MISSISSIPPI,
SAVANNAH and SCS. See Exhibit 10(a)37 herein.
(c) 35 - Power Purchase Agreement dated as of December 3, 1993
between GEORGIA and FPC. See Exhibit 10(a)57 herein.
(c) 36 - Transition Energy Agreement dated December 31, 1990,
between JEA and ALABAMA, GEORGIA, GULF, MISSISSIPPI,
SAVANNAH and SCS. See Exhibit 10(a)39 herein.
(c) 37 - Transition Energy Agreement dated December 31, 1990,
between FP&L and ALABAMA, GEORGIA, GULF, MISSISSIPPI,
SAVANNAH and SCS. See Exhibit 10(a)40 herein.
(c) 38 - Rocky Mountain Pumped Storage Hydroelectric Project
Ownership Participation Agreement dated November 18, 1988,
between OPC and GEORGIA. See Exhibit 10(a)41 herein.
(c) 39 - Rocky Mountain Pumped Storage Hydroelectric Project
Operating Agreement dated November 18, 1988, between OPC
and GEORGIA. See Exhibit 10(a)42 herein.
(c) 40 - Form of commitment agreement, Amendment No. 1 and Amendment
No. 2 with respect to SOUTHERN, ALABAMA, GEORGIA and
MISSISSIPPI revolving credits. See Exhibit 10(a)46 herein.
E-17
<PAGE>
(c) 41 - Block Power Sale Agreement between GEORGIA and OPC dated as
of November 12, 1990. See Exhibit 10(a)47 herein.
(c) 42 - Coordination Services Agreement between GEORGIA and OPC
dated as of November 12, 1990. See Exhibit 10(a)48 herein.
(c) 43 - Amended and Restated Nuclear Managing Board Agreement for
Plant Hatch and Plant Vogtle among GEORGIA, OPC, MEAG and
Dalton dated as of July 1, 1993. See Exhibit 10(a)49
herein.
(c) 44 - Integrated Transmission System Agreement, Power Sale and
Coordination Umbrella Agreement between GEORGIA and OPC
dated as of November 12, 1990. See Exhibit 10(a)50 herein.
(c) 45 - Revised and Restated Integrated Transmission System
Agreement between GEORGIA and Dalton dated as of December
7, 1990. See Exhibit 10(a)51 herein.
(c) 46 - Revised and Restated Integrated Transmission System
Agreement between GEORGIA and MEAG dated as of December 7,
1990. See Exhibit 10(a)52 herein.
(c) 47 - Plant Scherer Managing Board Agreement dated as of December
31, 1990 among GEORGIA, OPC, MEAG, Dalton, GULF, FP&L and
JEA. See Exhibit 10(a)54 herein.
(c) 48 - Plant McIntosh Combustion Turbine Purchase and Ownership
Participation Agreement between GEORGIA and SAVANNAH dated
as of December 15, 1992. See Exhibit 10(a)55 herein.
(c) 49 - Plant McIntosh Combustion Turbine Operating Agreement
between GEORGIA and SAVANNAH dated as of December 15, 1992.
See Exhibit 10(a)56 herein.
(c) 50 - Certificate of Limited Partnership of Georgia Power
Capital. (Designated in Certificate of Notification, File
No. 70-8461, as Exhibit B.)
(c) 51 - Amended and Restated Agreement of Limited Partnership of
Georgia Power Capital, dated as of December 1, 1994.
(Designated in Certificate of Notification, File No. 70-
8461, as Exhibit C.)
(c) 52 - Action of General Partner of Georgia Power Capital creating
the Series A Preferred Securities. (Designated in
Certificate of Notification, File No. 70-8461, as Exhibit
D.)
(c) 53 - Guarantee Agreement of GEORGIA dated as of December 1,
1994, for the benefit of the holders from time to time of
the Series A Preferred Securities. (Designated in
Certificate of Notification, File No. 70-8461, as Exhibit
G.)
E-18
<PAGE>
* (c) 54 - Amendment No. 1 dated as of June 15, 1994, to the Plant
Robert W. Scherer Unit Number Four Amended and Restated
Purchase and Ownership Participation Agreement. See
Exhibit 10(a)60 herein.
* (c) 55 - Amendment No. 1 dated as of June 15, 1994, to the Plant
Robert W. Scherer Unit Number Four Operating Agreement.
See Exhibit 10(a)61 herein.
* (c) 56 - Amendment No. 2 dated November 4, 1993 and effective June
1, 1994, to Agreement dated as of January 27, 1959, among
SEGCO, ALABAMA and GEORGIA. See Exhibit 10(b)18 herein.
(c) 57 - Nuclear Services Agreement between Southern Nuclear and
GEORGIA dated as of October 31, 1991. See Exhibit 10(a)63
herein.
(c) 58 - Nuclear Managing Board Agreement among GEORGIA, OPC, MEAG
and Dalton dated as of November 12, 1990. See Exhibit
10(a)64 herein.
* (c) 59 - The Southern Company Productivity Improvement Plan, Amended
and Restated effective January 1, 1994. See Exhibit
10(a)65 herein.
* (c) 60 - The Southern Company Executive Productivity Improvement
Plan, effective January 1, 1994. See Exhibit 10(a)66
herein.
(c) 61 - The Southern Company Employee Savings Plan, Amended and
Restated effective January 1, 1989. See Exhibit 10(a)67
herein.
(c) 62 - The Southern Company Employee Stock Ownership Plan, Amended
and Restated effective January 1, 1989. See Exhibit
10(a)68 herein.
* (c) 63 - Pension Plan For Employees of GEORGIA, Amended and Restated
effective as of January 1, 1989. See Exhibit 10(a)70
herein.
* (c) 64 - The Southern Company Performance Pay Plan, Amended and
Restated effective January 1, 1993. See Exhibit 10(a)72
herein.
* (c) 65 - Supplemental Benefit Plan for GEORGIA. See Exhibit 10(a)74
herein.
* (c) 66 - The Deferred Compensation Plan for the Southern Electric
System. See Exhibit 10(a)78 herein.
* (c) 67 - The Southern Company Outside Directors Pension Plan. See
Exhibit 10(a)77 herein.
GULF
(d) 1 - Service contracts dated as of January 1, 1984 and Amendment
No. 1 dated as of September 6, 1985, between SCS and
ALABAMA, GEORGIA, GULF, MISSISSIPPI, SEGCO and SOUTHERN.
See Exhibit 10(a)1 herein.
E-19
<PAGE>
(d) 2 - Interchange contract dated October 28, 1988, effective
January 1, 1989, between ALABAMA, GEORGIA, GULF,
MISSISSIPPI, SAVANNAH and SCS. See Exhibit 10(a)5 herein.
(d) 3 - Plant Robert W. Scherer Unit Number Three Purchase and
Ownership Participation Agreement dated as of March 1,
1984, Amendment No. 1 dated as of July 1, 1986 and
Amendment No. 2 dated as of August 1, 1988, between GEORGIA
and GULF. See Exhibit 10(a)28 herein.
(d) 4 - Plant Robert W. Scherer Unit Number Three Operating
Agreement dated as of March 1, 1984, between GEORGIA and
GULF. See Exhibit 10(a)29 herein.
(d) 5 - Amended and Restated Unit Power Sales Agreement dated
February 18, 1982 and Amendment No. 1 dated May 18, 1982,
between FP&L and ALABAMA, GEORGIA, GULF, MISSISSIPPI and
SCS. See Exhibit 10(a)32 herein.
(d) 6 - Amended and Restated Unit Power Sales Agreement dated May
19, 1982, Amendment No. 1 dated August 30, 1984 and
Amendment No. 2 dated October 30, 1987, between JEA and
ALABAMA, GEORGIA, GULF, MISSISSIPPI and SCS. See Exhibit
10(a)33 herein.
(d) 7 - Unit Power Sales Agreement dated July 19, 1988, between FPC
and ALABAMA, GEORGIA, GULF, MISSISSIPPI, SAVANNAH and SCS.
See Exhibit 10(a)34 herein.
(d) 8 - Amended Unit Power Sales Agreement dated July 20, 1988,
between FP&L and ALABAMA, GEORGIA, GULF, MISSISSIPPI,
SAVANNAH and SCS. See Exhibit 10(a)35 herein.
(d) 9 - Amended Unit Power Sales Agreement dated August 17, 1988,
between JEA and ALABAMA, GEORGIA, GULF, MISSISSIPPI,
SAVANNAH and SCS. See Exhibit 10(a)36 herein.
(d) 10 - Agreement between GULF and AEC, effective August 1, 1985.
(Designated in GULF's Form 10-K for the year ended December
31, 1985, File No. 0-2429, as Exhibit 10(g).)
(d) 11 - Unit Power Sales Agreement dated December 8, 1990, between
Tallahassee and ALABAMA, GEORGIA, GULF, MISSISSIPPI,
SAVANNAH and SCS. See Exhibit 10(a)37 herein.
(d) 12 - Transition Energy Agreement dated December 31, 1990,
between JEA and ALABAMA, GEORGIA, GULF, MISSISSIPPI,
SAVANNAH and SCS. See Exhibit 10(a)39 herein.
(d) 13 - Transition Energy Agreement dated December 31, 1990,
between FP&L and ALABAMA, GEORGIA, GULF, MISSISSIPPI,
SAVANNAH and SCS. See Exhibit 10(a)40 herein.
E-20
<PAGE>
* (d) 14 - The Southern Company Productivity Improvement Plan, Amended
and Restated effective January 1, 1994. See Exhibit
10(a)65 herein.
* (d) 15 - The Southern Company Executive Productivity Improvement
Plan, effective January 1, 1994. See Exhibit 10(a)66
herein.
(d) 16 - The Southern Company Employee Savings Plan, Amended and
Restated effective January 1, 1989. See Exhibit 10(a)67
herein.
(d) 17 - The Southern Company Employee Stock Ownership Plan, Amended
and Restated effective January 1, 1989. See Exhibit
10(a)68 herein.
* (d) 18 - Pension Plan For Employees of GULF, Amended and Restated
effective as of January 1, 1989.
* (d) 19 - The Southern Company Performance Pay Plan, Amended and
Restated effective January 1, 1993. See Exhibit 10(a)72
herein.
* (d) 20 - Supplemental Benefit Plan for GULF.
* (d) 21 - The Deferred Compensation Plan for the Southern Electric
System. See Exhibit 10(a)78 herein.
* (d) 22 - The Southern Company Outside Directors Pension Plan. See
Exhibit 10(a)77 herein.
MISSISSIPPI
(e) 1 - Service contracts dated as of January 1, 1984 and Amendment
No. 1 dated September 6, 1985, between SCS and ALABAMA,
GEORGIA, GULF, MISSISSIPPI, SEGCO and SOUTHERN. See
Exhibit 10(a)1 herein.
(e) 2 - Interchange contract dated October 28, 1988, effective
January 1, 1989, between ALABAMA, GEORGIA, GULF,
MISSISSIPPI, SAVANNAH and SCS. See Exhibit 10(a)5 herein.
(e) 3 - Amended and Restated Unit Power Sales Agreement dated
February 18, 1982 and Amendment No. 1 dated May 18, 1982,
between FP&L and ALABAMA, GEORGIA, GULF, MISSISSIPPI and
SCS. See Exhibit 10(a)32 herein.
(e) 4 - Amended and Restated Unit Power Sales Agreement dated May
19, 1982, Amendment No. 1 dated August 30, 1984, and
Amendment No. 2 dated October 30, 1987, between JEA and
ALABAMA, GEORGIA, GULF, MISSISSIPPI and SCS. See Exhibit
10(a)33 herein.
(e) 5 - Unit Power Sales Agreement dated July 19, 1988, between FPC
and ALABAMA, GEORGIA, GULF, MISSISSIPPI, SAVANNAH and SCS.
See Exhibit 10(a)34 herein.
E-21
<PAGE>
(e) 6 - Amended Unit Power Sales Agreement dated July 20, 1988,
between FP&L and ALABAMA, GEORGIA, GULF, MISSISSIPPI,
SAVANNAH and SCS. See Exhibit 10(a)35 herein.
(e) 7 - Amended Unit Power Sales Agreement dated August 17, 1988,
between JEA and ALABAMA, GEORGIA, GULF, MISSISSIPPI,
SAVANNAH and SCS. See Exhibit 10(a)36 herein.
(e) 8 - Unit Power Sales Agreement dated December 8, 1990, between
Tallahassee and ALABAMA, GEORGIA, GULF, MISSISSIPPI,
SAVANNAH and SCS. See Exhibit 10(a)37 herein.
(e) 9 - Transition Energy Agreement dated December 31, 1990,
between JEA and ALABAMA, GEORGIA, GULF, MISSISSIPPI,
SAVANNAH and SCS. See Exhibit 10(a)39 herein.
(e) 10 - Transition Energy Agreement dated December 31, 1990,
between FP&L and ALABAMA, GEORGIA, GULF, MISSISSIPPI,
SAVANNAH and SCS. See Exhibit 10(a)40 herein.
(e) 11 - Transmission Facilities Agreement dated February 25, 1982,
Amendment No. 1 dated May 12, 1982 and Amendment No. 2
dated December 6, 1983, between Gulf States and
MISSISSIPPI. See Exhibit 10(a)45 herein.
(e) 12 - Form of commitment agreement, Amendment No. 1 and Amendment
No. 2 with respect to SOUTHERN, ALABAMA, GEORGIA and
MISSISSIPPI revolving credits. See Exhibit 10(a)46 herein.
(e) 13 - Long Term Transmission Service Agreement between Entergy
Power, Inc. and ALABAMA MISSISSIPPI and SCS. See Exhibit
10(a)53 herein.
* (e) 14 - The Southern Company Productivity Improvement Plan, Amended
and Restated effective January 1, 1994. See Exhibit
10(a)65 herein.
* (e) 15 - The Southern Company Executive Productivity Improvement
Plan, effective January 1, 1994. See Exhibit 10(a)66
herein.
(e) 16 - The Southern Company Employee Savings Plan, Amended and
Restated effective January 1, 1989. See Exhibit 10(a)67
herein.
(e) 17 - The Southern Company Employee Stock Ownership Plan, Amended
and Restated effective January 1, 1989. See Exhibit
10(a)68 herein.
* (e) 18 - Pension Plan For Employees of MISSISSIPPI, Amended and
Restated effective as of January 1, 1989.
* (e) 19 - The Southern Company Performance Pay Plan, Amended and
Restated effective January 1, 1993. See Exhibit 10(a)72
herein.
E-22
<PAGE>
* (e) 20 - Supplemental Benefit Plan for MISSISSIPPI.
* (e) 21 - The Deferred Compensation Plan for the Southern Electric
System. See Exhibit 10(a)78 herein.
* (e) 22 - The Southern Company Outside Directors Pension Plan. See
Exhibit 10(a)77 herein.
SAVANNAH
(f) 1 - Service contract dated as of March 3, 1988, between SCS and
SAVANNAH. See Exhibit 10(a)3 herein.
(f) 2 - Interchange contract dated October 28, 1988, effective
January 1, 1989, between ALABAMA, GEORGIA, GULF,
MISSISSIPPI, SAVANNAH and SCS. See Exhibit 10(a)5 herein.
(f) 3 - Unit Power Sales Agreement dated July 19, 1988, between FPC
and ALABAMA, GEORGIA, GULF, MISSISSIPPI, SAVANNAH and SCS.
See Exhibit 10(a)34 herein.
(f) 4 - Amended Unit Power Sales Agreement dated July 20, 1988,
between FP&L and ALABAMA, GEORGIA, GULF, MISSISSIPPI,
SAVANNAH and SCS. See Exhibit 10(a)35 herein.
(f) 5 - Amended Unit Power Sales Agreement dated August 17, 1988,
between JEA and ALABAMA, GEORGIA, GULF, MISSISSIPPI,
SAVANNAH and SCS. See Exhibit 10(a)36 herein.
(f) 6 - Unit Power Sales Agreement dated December 8, 1990, between
Tallahassee and ALABAMA, GEORGIA, GULF, MISSISSIPPI,
SAVANNAH and SCS. See Exhibit 10(a)37 herein.
(f) 7 - Transition Energy Agreement dated December 31, 1990,
between JEA and ALABAMA, GEORGIA, GULF, MISSISSIPPI,
SAVANNAH and SCS. See Exhibit 10(a)39 herein.
(f) 8 - Transition Energy Agreement dated December 31, 1990,
between FP&L and ALABAMA, GEORGIA, GULF, MISSISSIPPI,
SAVANNAH and SCS. See Exhibit 10(a)40 herein.
(f) 9 - Plant McIntosh Combustion Turbine Purchase and Ownership
Participation Agreement between GEORGIA and SAVANNAH dated
as of December 15, 1992. See Exhibit 10(a)55 herein.
(f) 10 - Plant McIntosh Combustion Turbine Operating Agreement
between GEORGIA and SAVANNAH dated December 15, 1992. See
Exhibit 10(a)56 herein.
E-23
<PAGE>
* (f) 11 - The Southern Company Productivity Improvement Plan, Amended
and Restated effective January 1, 1994. See Exhibit
10(a)65 herein.
* (f) 12 - The Southern Company Executive Productivity Improvement
Plan, effective January 1, 1994. See Exhibit 10(a)66
herein.
(f) 13 - The Southern Company Employee Savings Plan, Amended and
Restated effective January 1, 1989. See Exhibit 10(a)67
herein.
(f) 14 - The Southern Company Employee Stock Ownership Plan, Amended
and Restated effective January 1, 1989. See Exhibit
10(a)68 herein.
* (f) 15 - Employees' Retirement Plan of SAVANNAH, Amended and
Restated effective January 1, 1989.
* (f) 16 - Supplemental Executive Retirement Plan of SAVANNAH.
* (f) 17 - Deferred Compensation Plan for Key Employees of SAVANNAH.
* (f) 18 - The Southern Company Performance Pay Plan, Amended and
Restated effective January 1, 1993. See Exhibit 10(a)72
herein.
* (f) 19 - The Southern Company Outside Directors Pension Plan. See
Exhibit 10(a)77 herein.
* (f) 20 - Deferred Compensation Plan for Directors of SAVANNAH.
(21) *Subsidiaries of Registrants - Contained herein at page IV-5.
(23) Consents of Experts and Counsel
SOUTHERN
* (a) - The consent of Arthur Andersen LLP is contained herein at
page IV-6.
ALABAMA
* (b) - The consent of Arthur Andersen LLP is contained herein at
page IV-7.
GEORGIA
* (c) - The consent of Arthur Andersen LLP is contained herein at
page IV-8.
GULF
* (d) - The consent of Arthur Andersen LLP is contained herein at
page IV-9.
E-24
<PAGE>
MISSISSIPPI
* (e) - The consent of Arthur Andersen LLP is contained herein at
page IV-10.
SAVANNAH
* (f) - The consent of Arthur Andersen LLP is contained herein at
page IV-11.
(24) Powers of Attorney and Resolutions
SOUTHERN
* (a) - Power of Attorney and resolution.
ALABAMA
* (b) - Power of Attorney and resolution.
E-25
<PAGE>
GEORGIA
* (c) - Power of Attorney and resolution.
GULF
* (d) - Power of Attorney and resolution.
MISSISSIPPI
* (e) - Power of Attorney and resolution.
SAVANNAH
* (f) - Power of Attorney and resolution.
(27) Financial Data Schedule
SOUTHERN
(a) - Financial Data Schedule. (Designated in Form 8-K dated
February 15, 1995, File No. 1-3526, as Exhibit 27.)
ALABAMA
(b) - Financial Data Schedule. (Designated in Form 8-K dated
February 15, 1995, File No. 1-3164, as Exhibit 27.)
GEORGIA
(c) - Financial Data Schedule. (Designated in Form 8-K dated
February 15, 1995, File No. 1-6468, as Exhibit 27.)
GULF
(d) - Financial Data Schedule. (Designated in Form 8-K dated
February 15, 1995, File No. 0-2429, as Exhibit 27.)
MISSISSIPPI
(e) - Financial Data Schedule. (Designated in Form 8-K dated
February 15, 1995, File No. 0-6849, as Exhibit 27.)
SAVANNAH
(f) - Financial Data Schedule. (Designated in Form 8-K dated
February 15, 1995, File No. 1-5072, as Exhibit 27.)
Exhibit 4(d)2
GEORGIA POWER COMPANY
to
CHEMICAL BANK
(Successor by Merger to Chemical Bank New York Trust
Company and The New York Trust Company),
Trustee
SUPPLEMENTAL INDENTURE
Dated as of June 1, 1994
Providing among other things for
FIRST MORTGAGE BONDS
6.35% Pollution Control Series due May 1, 2019
<PAGE>
SUPPLEMENTAL INDENTURE, dated as of June 1, 1994, made and
entered into by and between GEORGIA POWER COMPANY, a corporation
organized and existing under the laws of the State of Georgia
with its principal office in Atlanta, Fulton County, Georgia
(hereinafter commonly referred to as the "Company"), and CHEMICAL
BANK (successor by merger to Chemical Bank New York Trust Company
and The New York Trust Company), a corporation organized and
existing under the laws of the State of New York, with its
principal corporate trust office in the Borough of Manhattan, The
City of New York (hereinafter commonly referred to as the
"Trustee"), as Trustee under the Indenture dated as of March 1,
1941 originally entered into between the Company and The New York
Trust Company, as Trustee (hereinafter sometimes referred to as
the "Original Indenture" and said The New York Trust Company
being hereinafter sometimes referred to as the "Original
Trustee"), securing bonds issued and to be issued as provided
therein, which Original Indenture has heretofore been
supplemented and amended by various supplemental indentures
(which Original Indenture as so supplemented and amended is
hereinafter sometimes referred to as the "Indenture").
WHEREAS the Company and the Original Trustee have executed
and delivered the Original Indenture for the purpose of securing
an issue of bonds of the 3-1/2% Series due 1971 described therein
and such additional bonds as may from time to time be issued
under and in accordance with the terms of the Indenture, the
aggregate principal amount of bonds to be secured thereby being
presently limited to $5,000,000,000 at any one time outstanding
(except as provided in Section 2.01 of the Indenture), and the
Original Indenture is of record in the public office of each
county in the States of Georgia, Alabama, Tennessee and South
Carolina, and in the public office of the District of Columbia,
in which this Supplemental Indenture is to be recorded, and the
Original Indenture is on file at the principal corporate trust
office of the Trustee; and
WHEREAS the Company and the Trustee have executed and
delivered various supplemental indentures for the purpose, among
others, of further securing said bonds and of creating the bonds
of other series described therein, which supplemental indentures
described and set forth additional property conveyed thereby and
are also of record in the public offices of some or all of the
counties in the States of Georgia, Alabama, Tennessee and South
Carolina in which this Supplemental Indenture is to be recorded,
and one of which supplemental indentures is also of record in the
public office of the District of Columbia, and said supplemental
indentures are also on file at the principal corporate trust
office of the Trustee; and
WHEREAS the Company and the Trustee have executed and
delivered the Supplemental Indenture dated as of May 15, 1991, by
which the third paragraph of Section 1.02 of the Indenture was
amended to read as follows:
<PAGE>
"The term 'Board of Directors' shall mean the
Board of Directors of the Company or any committee of
the Board of Directors of the Company authorized, with
respect to any particular matter, to exercise the power
of the Board of Directors of the Company."; and
WHEREAS the Indenture provides for the issuance of bonds
thereunder in one or more series and the Company, by appropriate
corporate action in conformity with the terms of the Indenture,
has duly determined to create a series of bonds under the
Indenture to be designated as "6.35% Pollution Control Series due
May 1, 2019" (hereinafter sometimes referred to as the "new
Bonds"), each of which bonds shall also bear the descriptive
title "First Mortgage Bond", the bonds of such series to bear
interest at the annual rate and to mature on the date designated
in the title thereof; and
WHEREAS by a Plan of Merger dated June 11, 1959, effective
September 8, 1959, between The New York Trust Company and
Chemical Corn Exchange Bank, said The New York Trust Company was
merged into said Chemical Corn Exchange Bank which continued
under the name and style of Chemical Bank New York Trust Company;
and by a Plan of Merger dated November 26, 1968, effective
February 17, 1969, among Chemical New York Corporation, Chemical
Bank New York Trust Company and Chemical Bank, said Chemical Bank
New York Trust Company was merged into said Chemical Bank which
continued under the name and style of Chemical Bank; and by
virtue of said mergers Chemical Bank has become successor to The
New York Trust Company and Chemical Bank New York Trust Company,
as Trustee under the Indenture, and has become vested with all of
the title to the mortgaged property and trust estate; and with
the trusts, powers, discretions, immunities, privileges and all
other matters as were vested in said The New York Trust Company
and said Chemical Bank New York Trust Company under the
Indenture, with like effect as if originally named as Trustee
therein; and
WHEREAS each of the new Bonds is to be substantially in the
following form, with appropriate insertions and deletions, to
wit:
-2-
<PAGE>
[FORM OF NEW BOND]
GEORGIA POWER COMPANY
FIRST MORTGAGE BOND, 6.35% POLLUTION CONTROL SERIES
DUE MAY 1, 2019
No. $
Georgia Power Company, a Georgia corporation (hereinafter
called the "Company"), for value received, hereby promises to pay
to First Union National Bank of Georgia, Charlotte, North
Carolina (as trustee under a Trust Indenture dated as of May 1,
1989 of the Development Authority of Burke County, relating to
the Revenue Bonds (hereinafter mentioned)), or registered
assigns, the principal sum of _____________________ Dollars on
May 1, 2019, and to pay to the registered owner hereof interest
on said sum from the latest semi-annual interest payment date to
which interest has been paid on the bonds of this series
preceding the date hereof, unless the date hereof be an interest
payment date to which interest is being paid, in which case from
the date hereof, or unless the date hereof is prior to
November 1, 1994, in which case from June 21, 1994, at the rate
per annum, until the principal hereof shall have become due and
payable, specified in the title of this bond, payable on May 1
and November 1 in each year.
The obligation of the Company to make payments with respect
to the principal of and premium, if any, and interest on bonds of
this series shall be fully or partially, as the case may be,
satisfied and discharged to the extent that, at any time that any
such payment shall be due, the Company shall have made payments
as required by the Company's Note dated May 9, 1989 issued
pursuant to Section 3.2 of the Loan Agreement dated as of May 1,
1989 between the Development Authority of Burke County and the
Company, relating to the Revenue Bonds (hereinafter mentioned),
sufficient to pay fully or partially the then due principal of
and premium, if any, and interest on the Development Authority of
Burke County (Georgia) Pollution Control Revenue Bonds (Georgia
Power Company Plant Vogtle Project), First Series 1989
(hereinafter referred to as "Revenue Bonds") or there shall be in
the Bond Fund established pursuant to the Trust Indenture dated
as of May 1, 1989 of the Development Authority of Burke County to
First Union National Bank of Georgia, Charlotte, North Carolina,
as trustee, relating to the Revenue Bonds (hereinafter referred
to as the "Revenue Indenture"), sufficient available funds to pay
-3-
<PAGE>
fully or partially the then due principal of and premium, if any,
and interest on the Revenue Bonds.
This bond is one of the bonds issued and to be issued from
time to time under and in accordance with and all secured by an
indenture of mortgage or deed of trust dated as of March 1, 1941
given by the Company to The New York Trust Company, to which
Chemical Bank is successor by merger (hereinafter sometimes
referred to as the "Trustee"), as Trustee, and indentures
supplemental thereto, to which indenture and indentures
supplemental thereto (hereinafter referred to collectively as the
"Indenture") reference is hereby made for a description of the
property mortgaged and pledged, the nature and extent of the
security and the rights, duties and immunities thereunder of the
Trustee and the rights of the holders of said bonds and of the
Trustee and of the Company in respect of such security. By the
terms of the Indenture the bonds to be secured thereby are
issuable in series which may vary as to date, amount, date of
maturity, rate of interest and in other respects as in the
Indenture provided.
Upon notice given by mailing the same, by first class mail
postage prepaid, not less than thirty nor more than forty-five
days prior to the date fixed for redemption to each registered
holder of a bond to be redeemed (in whole or in part) at the last
address of such holder appearing on the registry books, any or
all of the bonds of this series may be redeemed by the Company at
any time and from time to time by the payment of the principal
amount thereof and accrued interest thereon to the date fixed for
redemption, if redeemed by the operation of the improvement fund
or the replacement fund provisions of the Indenture or by the use
of proceeds of released property, as more fully set forth in the
Indenture.
In the manner provided in the Indenture, the bonds of this
series shall also be redeemable in whole, by payment of the
principal amount thereof plus accrued interest thereon to the
date fixed for redemption, upon receipt by the Trustee of a
written demand from the trustee under the Revenue Indenture
stating that the principal amount of all the Revenue Bonds then
outstanding under the Revenue Indenture has been declared
immediately due and payable pursuant to the provisions of
Section 10.02 of the Revenue Indenture. As provided in the
Indenture, the date fixed for such redemption may be not more
than 180 days after receipt by the Trustee of the aforesaid
written demand and shall be specified in a notice of redemption
given not more than 10 nor less than 5 days prior to the date so
fixed for such redemption. As in the Indenture provided, such
notice of redemption shall be rescinded and become null and void
-4-
<PAGE>
for all purposes under the Indenture upon rescission of the
aforesaid written demand or the aforesaid declaration of maturity
under the Revenue Indenture, and thereupon no redemption of the
bonds of this series and no payments in respect thereof as
specified in such notice of redemption shall be effected or
required.
In the manner provided in the Indenture, the bonds of this
series are also redeemable in whole or in part upon receipt by
the Trustee of a written demand from the trustee under the
Revenue Indenture specifying a principal amount of Revenue Bonds
which have been called for redemption pursuant to Section
4.01(c)(iv) of the Revenue Indenture. As provided in the
Indenture, bonds of this series equal in principal amount to the
principal amount of such Revenue Bonds to be redeemed will be
redeemed on the date fixed for redemption of the Revenue Bonds at
the principal amount of such bonds of this series and accrued
interest thereon to the date fixed for redemption, together with
a premium equal to a percentage of the principal amount thereof
determined as set forth in the following tabulation:
If Redeemed During the Twelve Months'
Period Ending June 20
Regular
Redemption
Year Premium
2000 2 %
2001 1 1/2%
2002 1 %
2003 1/2%
and without premium if redeemed on or after June 21, 2003.
In case of certain defaults as specified in the Indenture,
the principal of this bond may be declared or may become due and
payable on the conditions, at the time, in the manner and with
the effect provided in the Indenture.
No recourse shall be had for the payment of the principal of
or premium, if any, or interest on this bond, or for any claim
based hereon, or otherwise in respect hereof or of the Indenture,
to or against any incorporator, stockholder, director or officer,
past, present or future, as such, of the Company, or of any
predecessor or successor company, either directly or through the
Company, or such predecessor or successor company, under any
constitution or statute or rule of law, or by the enforcement of
-5-
<PAGE>
any assessment or penalty, or otherwise, all such liability of
incorporators, stockholders, directors and officers being waived
and released by the holder and owner hereof by the acceptance of
this bond and being likewise waived and released by the terms of
the Indenture.
This bond is transferable by the registered owner hereof, in
person or by attorney duly authorized, at the principal corporate
trust office of the Trustee, in the Borough of Manhattan, The
City of New York, but only in the manner prescribed in the
Indenture, upon the surrender and cancellation of this bond, and
upon any such transfer a new registered bond or bonds, without
coupons, of the same series and maturity date and for the same
aggregate principal amount, in authorized denominations, will be
issued to the transferee in exchange herefor. The Company and
the Trustee may deem and treat the person in whose name this bond
is registered as the absolute owner for the purpose of receiving
payment of or on account of the principal, premium, if any, and
interest due hereon and for all other purposes. Registered bonds
of this series shall be exchangeable for registered bonds of
other authorized denominations having the same aggregate
principal amount, in the manner and upon the conditions
prescribed in the Indenture. However, notwithstanding the
provisions of the Indenture, no charge shall be made upon any
transfer or exchange of bonds of this series other than for any
tax or taxes or other governmental charge required to be paid by
the Company.
This bond shall not be valid or become obligatory for any
purpose unless and until it shall have been authenticated by the
execution by the Trustee or its successor in trust under the
Indenture of the certificate hereon.
IN WITNESS WHEREOF, Georgia Power Company has caused this
bond to be executed in its name by its President or one of its
Vice Presidents by his signature or a facsimile thereof, and its
corporate seal or a facsimile thereof to be hereto affixed and
attested by its Secretary or one of its Assistant Secretaries by
his signature or a facsimile thereof.
Dated,
GEORGIA POWER COMPANY
By:
Attest:
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<PAGE>
TRUSTEE'S CERTIFICATE
This bond is one of the bonds, of the series designated
therein, described in the within-mentioned Indenture.
CHEMICAL BANK, as Trustee
By:
Authorized Officer
AND WHEREAS all acts and things necessary to make the new
Bonds of each series, when authenticated by the Trustee and
issued as in the Indenture and this Supplemental Indenture
provided, the valid, binding and legal obligations of the
Company, and to constitute the Indenture and this Supplemental
Indenture valid, binding and legal instruments for the security
thereof, have been done and performed, and the creation,
execution and delivery of the Indenture and this Supplemental
Indenture and the creation, execution and issue of bonds subject
to the terms hereof and of the Indenture, have in all respects
been duly authorized;
NOW, THEREFORE, in consideration of the premises, and of the
acceptance and purchase by the holders thereof of the bonds
issued and to be issued under the Indenture and of the sum of One
Dollar duly paid by the Trustee to the Company, and of other good
and valuable considerations, the receipt whereof is hereby
acknowledged, and for the purpose of further securing the due and
punctual payment of the principal of and premium, if any, and
interest on the bonds issued and now outstanding under the
Indenture, and the $50,000,000 principal amount of new Bonds
proposed to be issued and all other bonds which shall be issued
under the Indenture, or the Indenture as supplemented and
amended, and for the purpose of further securing the faithful
performance and observance of all covenants and conditions
therein and in any indenture supplemental thereto set forth, the
Company has given, granted, bargained, sold, transferred,
assigned, hypothecated, pledged, mortgaged, warranted, aliened
and conveyed and by these presents does give, grant, bargain,
sell, transfer, assign, hypothecate, pledge, mortgage, warrant,
alien and convey unto Chemical Bank, as Trustee, as provided in
the Indenture, and its successor or successors in the trust
thereby and hereby created, and to its or their assigns forever,
all the right, title and interest of the Company in and to all
premises, property, franchises and rights of every kind and
description, real, personal and mixed, tangible and intangible,
now owned or hereafter acquired by the Company (excepting,
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<PAGE>
however, that which is by the Indenture expressly reserved from
the lien and effect thereof), including but not limited to the
property described in Exhibit "A" attached hereto and by this
reference made a part hereof; unless otherwise noted, such
property is located in the State of Georgia and unless otherwise
noted, references herein to a county or counties shall mean such
county or counties in the State of Georgia;
TOGETHER WITH all and singular the tenements, hereditaments
and appurtenances belonging or in anywise appertaining to the
property, rights and franchises or any thereof, referred to in
the foregoing granting clauses, with the reversion and
reversions, remainder and remainders and (subject to the
provisions of Article X of the Indenture) the tolls, rents,
revenues, issues, earnings, income, products and profits thereof,
and all the estate, right, title and interest and claim
whatsoever, at law as well as in equity, which the Company now
has or may hereafter acquire in and to the aforesaid property,
rights and franchises and every part and parcel thereof.
TO HAVE AND TO HOLD all said property, rights and franchises
hereby conveyed, assigned, pledged or mortgaged, or intended so
to be, unto the Trustee, its successor or successors in trust,
and their assigns forever;
BUT IN TRUST, NEVERTHELESS, with power of sale, for the
equal and proportionate benefit and security of the holders of
all bonds and interest coupons now or hereafter issued under the
Indenture, as supplemented and amended, pursuant to the
provisions thereof, and for the enforcement of the payment of
said bonds and coupons when payable and for the performance of
and compliance with the covenants and conditions of the
Indenture, as supplemented and amended, without any preference,
distinction or priority as to lien or otherwise of any bond or
bonds over others by reason of the difference in time of the
actual issue, sale or negotiation thereof or for any other reason
whatsoever, except as otherwise expressly provided in the
Indenture, as supplemented and amended; and so that each and
every bond now or hereafter issued thereunder shall have the same
lien; and so that the principal of and premium, if any, and
interest on every such bond shall, subject to the terms thereof,
be equally and proportionately secured thereby and hereby, as if
it had been made, executed, delivered, sold and negotiated
simultaneously with the execution and delivery of the Original
Indenture.
AND IT IS EXPRESSLY DECLARED that all bonds issued and
secured under the Indenture and hereunder are to be issued,
authenticated and delivered, and all said property, rights and
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<PAGE>
franchises hereby and by the Indenture conveyed, assigned,
pledged or mortgaged, or intended so to be (including all the
right, title and interest of the Company in and to any and all
premises, property, franchises and rights of every kind and
description, real, personal and mixed, tangible and intangible,
thereafter acquired by the Company and whether or not
specifically described in the Original Indenture or in any
indenture supplemental thereto, except any therein expressly
excepted), are to be dealt with and disposed of, under, upon and
subject to the terms, conditions, stipulations, covenants,
agreements, trusts and uses and purposes expressed in the
Indenture and herein, and it is hereby agreed as follows:
SECTION 1. There is hereby created a series of bonds
designated as hereinabove in the fourth Whereas clause set forth,
each of which shall contain suitable provisions with respect to
the matters hereinafter in this Section specified, and the form
thereof shall be substantially as hereinbefore set forth. New
Bonds shall mature on the date specified in the title thereof,
and the definitive bonds of such series may be issued only as
registered bonds without coupons. New Bonds shall be in such
denominations as the Board of Directors shall approve, and
execution and delivery to the Trustee for authentication shall be
conclusive evidence of such approval. The serial numbers of new
Bonds shall be such as may be approved by any officer of the
Company, the execution thereof by any such officer to be
conclusive evidence of such approval.
New Bonds, until the principal thereof shall have become due
and payable, shall bear interest at the annual rate designated in
the title thereof, payable semi-annually on May 1 and November 1
in each year, commencing November 1, 1994. New Bonds shall be
dated the date of authentication.
The principal of and premium, if any, and interest on the
new Bonds shall be payable in any coin or currency of the United
States of America which at the time of payment is legal tender
for public and private debts, at the office or agency of the
Company in the Borough of Manhattan, The City of New York,
designated for that purpose.
New Bonds may be transferred at the principal corporate
trust office of the Trustee, in the Borough of Manhattan, The
City of New York. New Bonds shall be exchangeable for other
bonds of the same series, in the manner and upon the conditions
prescribed in the Indenture, upon the surrender of such new Bonds
at said principal corporate trust office of the Trustee.
However, notwithstanding the provisions of Section 2.05 of the
Indenture, no charge shall be made upon any transfer or exchange
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<PAGE>
of new Bonds other than for any tax or taxes or other
governmental charge required to be paid by the Company.
Any or all of the new Bonds shall be redeemable at any time
and from time to time, prior to maturity, upon notice given by
mailing the same, by first class mail postage prepaid, not less
than thirty nor more than forty-five days prior to the date fixed
for redemption to each registered holder of a bond to be redeemed
(in whole or in part) at the last address of such holder
appearing on the registry books, at the principal amount thereof
and accrued interest thereon, if any, to the date fixed for
redemption, if redeemed by the operation of Section 4 of the
Supplemental Indenture dated as of November 1, 1962 or of the
improvement fund provisions of any supplemental indenture or by
the use of proceeds of released property.
SECTION 2. The obligation of the Company to make payments
with respect to the principal of and premium, if any, and
interest on the new Bonds shall be fully or partially, as the
case may be, satisfied and discharged, to the extent that, at the
time that any such payment shall be due, the Company shall have
made payments as required by the Company's Note dated May 9, 1989
issued pursuant to Section 3.2 of the Loan Agreement dated as of
May 1, 1989 between the Development Authority of Burke County and
the Company, relating to the Burke Bonds (hereinafter defined),
sufficient to pay fully or partially the then due principal of
and premium, if any, and interest on the Development Authority of
Burke County (Georgia) Pollution Control Revenue Bonds (Georgia
Power Company Plant Vogtle Project), First Series 1989
(hereinafter referred to as the "Burke Bonds") or there shall be
in the related Bond Fund established pursuant to the Trust
Indenture dated as of May 1, 1989 of the Development Authority of
Burke County to First Union National Bank of Georgia, Charlotte,
North Carolina, as trustee, relating to the Burke Bonds
(hereinafter referred to as the "Burke Indenture"), sufficient
available funds to pay fully or partially the then due principal
of and premium, if any, and interest on the Burke Bonds. The
Trustee may conclusively presume that the obligation of the
Company to make payments with respect to the principal of and
premium, if any, and interest on the new Bonds shall have been
fully satisfied and discharged unless and until the Trustee shall
have received a written notice from the trustee under the Burke
Indenture stating (i) that timely payment of principal of or
premium, if any, or interest on the Burke Bonds has not been
made, (ii) that there are not sufficient available funds in such
Bond Fund to make such payment and (iii) the amount of funds
required to make such payment.
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<PAGE>
In addition to the redemption as provided in Section 1
hereof, the new Bonds shall also be redeemable in whole upon
receipt by the Trustee of a written demand for the redemption of
the new Bonds (hereinafter called "Redemption Demand") from the
trustee under the Burke Indenture stating that the principal
amount of all the Burke Bonds then outstanding under the Burke
Indenture has been declared immediately due and payable pursuant
to the provisions of Section 10.02 of the Burke Indenture,
specifying the date from which unpaid interest on the Burke Bonds
has then accrued and stating that such declaration of maturity
has not been rescinded. The Trustee shall within 10 days of
receiving the Redemption Demand mail a copy thereof to the
Company stamped or otherwise marked to indicate the date of
receipt by the Trustee. The Company shall fix a redemption date
for the redemption so demanded (herein called the "Demand
Redemption") and shall mail to the Trustee notice of such date at
least 30 days prior thereto. The date fixed for Demand
Redemption may be any day not more than 180 days after receipt by
the Trustee of the Redemption Demand. If the Trustee does not
receive such notice from the Company within 150 days after
receipt by the Trustee of the Redemption Demand, the date for
Demand Redemption shall be deemed fixed at the 180th day after
such receipt. The Trustee shall mail notice of the date fixed
for Demand Redemption (hereinafter called the "Demand Redemption
Notice") to the trustee under the Burke Indenture (and the
registered holders of the new Bonds if other than said trustee)
not more than 10 nor less than 5 days prior to the date fixed for
Demand Redemption, provided, however, that the Trustee shall mail
no Demand Redemption Notice (and no Demand Redemption shall be
made) if prior to the mailing of the Demand Redemption Notice the
Trustee shall have received written notice of rescission of the
Redemption Demand from the trustee under the Burke Indenture.
Demand Redemption of the new Bonds shall be at the principal
amount thereof, plus accrued interest thereon to the date fixed
for redemption, and such amount shall become and be due and
payable on the date fixed for Demand Redemption as above
provided. Anything in this paragraph contained to the contrary
notwithstanding, if, after mailing of the Demand Redemption
Notice and prior to the date fixed for Demand Redemption, the
Trustee shall have been advised in writing by the trustee under
the Burke Indenture that the Redemption Demand has been
rescinded, the Demand Redemption Notice shall thereupon, without
further act of the Trustee or the Company, be rescinded and
become null and void for all purposes hereunder and no redemption
of the new Bonds and no payments in respect thereof as specified
in the Demand Redemption Notice shall be effected or required.
The new Bonds shall also be redeemable in whole at any time,
or in part from time to time (hereinafter called the "Regular
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<PAGE>
Redemption"), upon receipt by the Trustee of a written demand
(hereinafter referred to as the "Regular Redemption Demand") from
the trustee under the Burke Indenture stating: (1) the principal
amount of Burke Bonds to be redeemed pursuant to Section
4.01(c)(iv) of the Burke Indenture; (2) the date of such
redemption and that notice thereof has been given as required by
the Burke Indenture; (3) that the Trustee shall call for
redemption on the stated date fixed for redemption of the Burke
Bonds a principal amount of the new Bonds equal to the principal
amount of Burke Bonds to be redeemed; and (4) that the trustee
under the Burke Indenture, as holder of all the new Bonds then
outstanding, waives notice of such redemption. The Trustee may
conclusively presume the statements contained in the Regular
Redemption Demand to be correct. Regular Redemption of the new
Bonds shall be at the principal amount thereof and accrued
interest thereon to the date fixed for redemption, together with
a premium equal to a percentage of the principal amount thereof
determined as set forth in the tabulation appearing in the form
of the bond hereinbefore set forth, and such amount shall become
and be due and payable, subject to the first paragraph of this
Section 2, on the date fixed for such Regular Redemption, which
shall be the date specified pursuant to item (2) of the Regular
Redemption Demand as above provided.
SECTION 3. The Company covenants that the provisions of
Section 4 of the Supplemental Indenture dated as of November 1,
1962, shall be in full force and effect so long as any new Bonds
shall be outstanding under the Indenture.
SECTION 4. As supplemented by this Supplemental Indenture,
the Indenture is in all respects ratified and confirmed, and the
Indenture and this Supplemental Indenture shall be read, taken
and construed as one and the same instrument.
SECTION 5. Nothing in this Supplemental Indenture contained
shall, or shall be construed to, confer upon any person other
than a holder of bonds issued under the Indenture, as
supplemented and amended, the Company and the Trustee any right
or interest to avail himself of any benefit under any provision
of the Indenture or of this Supplemental Indenture.
SECTION 6. The Trustee assumes no responsibility for or in
respect of the validity or sufficiency of this Supplemental
Indenture or the due execution hereof by the Company or for or in
respect of the recitals and statements contained herein, all of
which recitals and statements are made solely by the Company.
SECTION 7. This Supplemental Indenture may be executed in
several counterparts and all such counterparts executed and
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<PAGE>
delivered, each as an original, shall constitute but one and the
same instrument.
SECTION 8. Although this Supplemental Indenture, for
convenience and for the purposes of reference, is dated as of the
day and year first above written, the actual dates of execution
by the Company and the Trustee are as indicated by their
respective acknowledgments hereto annexed.
IN WITNESS WHEREOF, said Georgia Power Company has caused
this Supplemental Indenture to be executed in its corporate name
by its President or one of its Vice Presidents and its corporate
seal to be hereunto affixed and to be attested by its Secretary
or one of its Assistant Secretaries, and said Chemical Bank, to
evidence its acceptance hereof, has caused this Supplemental
Indenture to be executed in its corporate name by one of its Vice
Presidents, Senior Trust Officers or Trust Officers and its
corporate seal to be hereunto affixed and to be attested by one
of its Senior Trust Officers, Trust Officers, Assistant Trust
Officers or Assistant Secretaries, in several counterparts, all
as of the day and year first above written.
GEORGIA POWER COMPANY
By:
Vice President
Attest:
Assistant Secretary
Signed, sealed and delivered this
15th day of June, 1994 by Georgia
Power Company in the County of
Fulton, State of Georgia, in the
presence of
Unofficial Witness
Notary Public, Walton County, Georgia
My Commission Expires August 2, 1996
(signatures continued on next page)
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<PAGE>
CHEMICAL BANK
By:
Vice President
Attest:
Senior Trust Officer
Signed, sealed and delivered
this 17th day of June, 1994
by Chemical Bank in the County
of New York, State of New York,
in the presence of
Unofficial Witness
ANNABELLE DeLUCA
Notary Public, State of New York
No. 01DE5013759
Qualified in Kings County
Certificate filed in New York County
Commission Expires July 15, 1995
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<PAGE>
STATE OF GEORGIA )
) SS.:
COUNTY OF FULTON )
On the 15th day of June, 1994, personally appeared before me
Jane F. Genske, a Notary Public in and for the State and County
aforesaid, Sandy Laning, who made oath and said that she was
present and saw the corporate seal of Georgia Power Company
affixed to the above written instrument, that she saw Judy M.
Anderson, Vice President, with Susan M. Carter, Assistant
Secretary, known to her to be such officers of said corporation
respectively, attest the same, and that she, deponent, with
Jane F. Genske, witnessed the execution and delivery of the said
instrument as the free act and deed of said Georgia Power
Company.
Subscribed and sworn to )
before me this 15th day )
of June, 1994 )
Notary Public, Walton County, Georgia
My Commission Expires August 2, 1996
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<PAGE>
STATE OF NEW YORK )
) SS.:
COUNTY OF NEW YORK )
On the 17th day of June, 1994, personally appeared before me
Annabelle DeLuca, a Notary Public in and for the State and County
aforesaid, R. Richards, who made oath and said that she was
present and saw the corporate seal of Chemical Bank affixed to
the above written instrument, that she saw P. J. Gilkeson, Vice
President, with P. Morabito, Senior Trust Officer, known to her
to be such officers of said corporation respectively, attest the
same, and that she, deponent, with Annabelle DeLuca, witnessed
the execution and delivery of the said instrument as the free act
and deed of said Chemical Bank.
Subscribed and sworn to )
before me this 17th day )
of June, 1994 )
ANNABELLE DeLUCA
Notary Public, State of New York
No. 01DE5013759
Qualified in Kings County
Certificate filed in New York County
Commission Expires July 15, 1995
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<PAGE>
STATE OF GEORGIA )
) SS.:
COUNTY OF FULTON )
On the 15th day of June, in the year one thousand nine
hundred and ninety-four, before me personally came Judy M.
Anderson, to me known, who, being by me duly sworn, did depose
and say that she resides at 199 14th Street, N.E., Atlanta,
Georgia; that she is a Vice President of Georgia Power Company,
one of the corporations described in and which executed the
foregoing instrument; that she knows the seal of said
corporation; that the seal affixed to said instrument is such
corporate seal; that it was so affixed by order of the Board of
Directors of said corporation; and that she signed her name
thereto by like order.
Notary Public, Walton
County, Georgia
My Commission Expires
August 2, 1996
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<PAGE>
STATE OF NEW YORK )
) SS.:
COUNTY OF NEW YORK )
On the 17th day of June, in the year one thousand nine
hundred and ninety-four, before me personally came P. J.
Gilkeson, to me known, who, being by me duly sworn, did depose
and say that he resides at 452 Delafield Avenue, Staten Island,
New York; that he is a Vice President of Chemical Bank, one of
the corporations described in and which executed the foregoing
instrument; that he knows the seal of said corporation; that the
seal affixed to said instrument is such corporate seal; that it
was so affixed by order of the Board of Directors of said
corporation; and that he signed his name thereto by like order.
ANNABELLE DeLUCA
Notary Public, State of
New York
No. 01DE5013759
Qualified in Kings County
Certificate filed in New
York County
Commission Expires
July 15, 1995
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<PAGE>
STATE OF GEORGIA )
) SS.:
COUNTY OF FULTON )
On the 15th day of June, 1994, before me appeared Judy M.
Anderson, to me personally known, who, being by me duly sworn,
did say that she is a Vice President of Georgia Power Company,
and that the seal affixed to said instrument is the corporate
seal of said corporation and that said instrument was signed and
sealed in behalf of said corporation by authority of its Board of
Directors, and that said Judy M. Anderson acknowledged said
instrument to be the free act and deed of said corporation.
Given under my hand this 15th day of June, 1994.
Notary Public, Walton
County, Georgia
My Commission Expires
August 2, 1996
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<PAGE>
STATE OF NEW YORK )
) SS.:
COUNTY OF NEW YORK )
On the 17th day of June, 1994, before me appeared P. J.
Gilkeson, to me personally known, who, being by me duly sworn,
did say that he is a Vice President of Chemical Bank, and that
the seal affixed to said instrument is the corporate seal of said
corporation and that said instrument was signed and sealed in
behalf of said corporation by authority of its Board of
Directors, and that said P. J. Gilkeson acknowledged said
instrument to be the free act and deed of said corporation.
Given under my hand this 17th day of June, 1994.
ANNABELLE DeLUCA
Notary Public, State of
New York
No. 01DE5013759
Qualified in Kings County
Certificate filed in New
York County
Commission Expires
July 15, 1995
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<PAGE>
Exhibit 4(d)3
GEORGIA POWER COMPANY
to
CHEMICAL BANK
(Successor by Merger to Chemical Bank New York Trust
Company and The New York Trust Company),
Trustee
SUPPLEMENTAL INDENTURE
Dated as of September 1, 1994
Providing among other things for
FIRST MORTGAGE BONDS
First Pollution Control Series due July 1, 2011
Second Pollution Control Series due July 1, 2011
First Pollution Control Series due July 1, 2019
Second Pollution Control Series due July 1, 2019
Second Pollution Control Series due July 1, 2021
Pollution Control Series due May 1, 2022
<PAGE>
SUPPLEMENTAL INDENTURE, dated as of September 1, 1994, made
and entered into by and between GEORGIA POWER COMPANY, a
corporation organized and existing under the laws of the State of
Georgia with its principal office in Atlanta, Fulton County,
Georgia (hereinafter commonly referred to as the "Company"), and
CHEMICAL BANK (successor by merger to Chemical Bank New York
Trust Company and The New York Trust Company), a corporation
organized and existing under the laws of the State of New York,
with its principal corporate trust office in the Borough of
Manhattan, The City of New York (hereinafter commonly referred to
as the "Trustee"), as Trustee under the Indenture dated as of
March 1, 1941 originally entered into between the Company and The
New York Trust Company, as Trustee (hereinafter sometimes
referred to as the "Original Indenture" and said The New York
Trust Company being hereinafter sometimes referred to as the
"Original Trustee"), securing bonds issued and to be issued as
provided therein, which Original Indenture has heretofore been
supplemented and amended by various supplemental indentures
(which Original Indenture as so supplemented and amended is
hereinafter sometimes referred to as the "Indenture").
WHEREAS the Company and the Original Trustee have executed
and delivered the Original Indenture for the purpose of securing
an issue of bonds of the 3-1/2% Series due 1971 described therein
and such additional bonds as may from time to time be issued
under and in accordance with the terms of the Indenture, the
aggregate principal amount of bonds to be secured thereby being
presently limited to $5,000,000,000 at any one time outstanding
(except as provided in Section 2.01 of the Indenture), and the
Original Indenture is of record in the public office of each
county in the States of Georgia, Alabama, Tennessee and South
Carolina, and in the public office of the District of Columbia,
in which this Supplemental Indenture is to be recorded, and the
Original Indenture is on file at the principal corporate trust
office of the Trustee; and
WHEREAS the Company and the Trustee have executed and
delivered various supplemental indentures for the purpose, among
others, of further securing said bonds and of creating the bonds
of other series described therein, which supplemental indentures
described and set forth additional property conveyed thereby and
are also of record in the public offices of some or all of the
counties in the States of Georgia, Alabama, Tennessee and South
Carolina in which this Supplemental Indenture is to be recorded,
and one of which supplemental indentures is also of record in the
public office of the District of Columbia, and said supplemental
indentures are also on file at the principal corporate trust
office of the Trustee; and
WHEREAS the Company and the Trustee have executed and
delivered the Supplemental Indenture dated as of May 15, 1991, by
which the third paragraph of Section 1.02 of the Indenture was
amended to read as follows:
<PAGE>
"The term 'Board of Directors' shall mean the
Board of Directors of the Company or any committee of
the Board of Directors of the Company authorized, with
respect to any particular matter, to exercise the power
of the Board of Directors of the Company."; and
WHEREAS the Indenture provides for the issuance of bonds
thereunder in one or more series and the Company, by appropriate
corporate action in conformity with the terms of the Indenture,
has duly determined to create six series of bonds under the
Indenture to be designated, respectively, as "First Pollution
Control Series due July 1, 2011" (hereinafter sometimes referred
to as the "new First 2011 Series Bonds"), "Second Pollution
Control Series due July 1, 2011" (hereinafter sometimes referred
to as the "new Second 2011 Series Bonds"), "First Pollution
Control Series due July 1, 2019" (hereinafter sometimes referred
to as the "new First 2019 Series Bonds"), "Second Pollution
Control Series due July 1, 2019" (hereinafter sometimes referred
to as the "new Second 2019 Series Bonds"), "Second Pollution
Control Series due July 1, 2021" (hereinafter sometimes referred
to as the "new Second 2021 Series Bonds") and "Pollution Control
Series due May 1, 2022" (hereinafter sometimes referred to as the
"new 2022 Series Bonds") (the new First 2011 Series Bonds, the
new Second 2011 Series Bonds, the new First 2019 Series Bonds,
the new Second 2019 Series Bonds, the new Second 2021 Series
Bonds and the new 2022 Series Bonds being hereinafter sometimes
referred to collectively as the "new Bonds"), each of which bonds
shall also bear the descriptive title "First Mortgage Bond", the
bonds of each such series to bear interest as herein provided and
to mature on the date designated in the title thereof; and
WHEREAS by a Plan of Merger dated June 11, 1959, effective
September 8, 1959, between The New York Trust Company and
Chemical Corn Exchange Bank, said The New York Trust Company was
merged into said Chemical Corn Exchange Bank which continued
under the name and style of Chemical Bank New York Trust Company;
and by a Plan of Merger dated November 26, 1968, effective
February 17, 1969, among Chemical New York Corporation, Chemical
Bank New York Trust Company and Chemical Bank, said Chemical Bank
New York Trust Company was merged into said Chemical Bank which
continued under the name and style of Chemical Bank; and by
virtue of said mergers Chemical Bank has become successor to The
New York Trust Company and Chemical Bank New York Trust Company,
as Trustee under the Indenture, and has become vested with all of
the title to the mortgaged property and trust estate; and with
the trusts, powers, discretions, immunities, privileges and all
other matters as were vested in said The New York Trust Company
and said Chemical Bank New York Trust Company under the
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<PAGE>
Indenture, with like effect as if originally named as Trustee
therein; and
WHEREAS each of the new Bonds of each series is to be
substantially in the following form, with appropriate insertions
and deletions, to wit:
[FORM OF NEW BOND OF EACH SERIES]
GEORGIA POWER COMPANY
FIRST MORTGAGE BOND, [_____] POLLUTION CONTROL SERIES
DUE ______ 1, ____
No. $
Georgia Power Company, a Georgia corporation (hereinafter
called the "Company"), for value received, hereby promises to pay
to NationsBank of Georgia, National Association, Atlanta, Georgia
(as trustee under a Trust Indenture dated as of ______, ____ of
[the Albany Dougherty Payroll Development Authority] [the
Development Authority of _______ County], relating to the Revenue
Bonds (hereinafter mentioned)), or registered assigns, the
principal sum of _____________________ Dollars on _______ 1,
____, and to pay to the registered owner hereof interest on said
sum from the latest interest payment date to which interest has
been paid on the bonds of this series preceding the date hereof,
unless the date hereof be an interest payment date to which
interest is being paid, in which case from the date hereof, at
the same rates, until the principal hereof shall have become due
and payable, payable on the same dates, as the Revenue Bonds
pursuant to the Revenue Indenture (hereinafter mentioned).
The obligation of the Company to make payments with respect
to the principal of and premium, if any, and interest on bonds of
this series shall be fully or partially, as the case may be,
satisfied and discharged to the extent that, at any time that any
such payment shall be due, the Company shall have made payments
as required by the Company's Note dated ________, ____ issued
pursuant to Section 3.2 of the Loan Agreement dated as of
_________ 1, ____ between [the Albany Dougherty Payroll
Development Authority] [the Development Authority of _______
County] and the Company, relating to the Revenue Bonds
(hereinafter mentioned), sufficient to pay fully or partially the
then due principal of and premium, if any, and interest on [the
Albany Dougherty Payroll Development Authority (Georgia)] [the
Development Authority of _____ County (Georgia)] Pollution
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Control Revenue Bonds (Georgia Power Company Plant ______
Project), _____ Series ____ (hereinafter referred to as the
"Revenue Bonds") or there shall be on deposit with the trustee
pursuant to the Trust Indenture dated as of _______ 1, ____ of
[the Albany Dougherty Payroll Development Authority] [the
Development Authority of _____ County] to NationsBank of Georgia,
National Association, Atlanta, Georgia, as trustee, relating to
the Revenue Bonds (hereinafter referred to as the "Revenue
Indenture"), sufficient available funds to pay fully or partially
the then due principal of and premium, if any, and interest on
the Revenue Bonds.
This bond is one of the bonds issued and to be issued from
time to time under and in accordance with and all secured by an
indenture of mortgage or deed of trust dated as of March 1, 1941
given by the Company to The New York Trust Company, to which
Chemical Bank is successor by merger (hereinafter sometimes
referred to as the "Trustee"), as Trustee, and indentures
supplemental thereto, to which indenture and indentures
supplemental thereto (hereinafter referred to collectively as the
"Indenture") reference is hereby made for a description of the
property mortgaged and pledged, the nature and extent of the
security and the rights, duties and immunities thereunder of the
Trustee and the rights of the holders of said bonds and of the
Trustee and of the Company in respect of such security. By the
terms of the Indenture the bonds to be secured thereby are
issuable in series which may vary as to date, amount, date of
maturity, rate of interest and in other respects as in the
Indenture provided.
Upon notice given by mailing the same, by first class mail
postage prepaid, not less than thirty nor more than forty-five
days prior to the date fixed for redemption to each registered
holder of a bond to be redeemed (in whole or in part) at the last
address of such holder appearing on the registry books, any or
all of the bonds of this series may be redeemed by the Company at
any time and from time to time by the payment of the principal
amount thereof and accrued interest thereon to the date fixed for
redemption, if redeemed by the operation of the improvement fund
or the replacement fund provisions of the Indenture or by the use
of proceeds of released property, as more fully set forth in the
Indenture.
In the manner provided in the Indenture, the bonds of this
series shall also be redeemable in whole, by payment of the
principal amount thereof plus accrued interest thereon to the
date fixed for redemption, upon receipt by the Trustee of a
written demand from the trustee under the Revenue Indenture
stating that the principal amount of all the Revenue Bonds then
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outstanding under the Revenue Indenture has been declared
immediately due and payable pursuant to the provisions of
Section ____ of the Revenue Indenture. As provided in the
Indenture, the date fixed for such redemption may be not more
than 180 days after receipt by the Trustee of the aforesaid
written demand and shall be specified in a notice of redemption
given not more than 10 nor less than 5 days prior to the date so
fixed for such redemption. As in the Indenture provided, such
notice of redemption shall be rescinded and become null and void
for all purposes under the Indenture upon rescission of the
aforesaid written demand or the aforesaid declaration of maturity
under the Revenue Indenture, and thereupon no redemption of the
bonds of this series and no payments in respect thereof as
specified in such notice of redemption shall be effected or
required.
In the manner provided in the Indenture, the bonds of this
series are also redeemable in whole or in part upon receipt by
the Trustee of a written demand from the trustee under the
Revenue Indenture specifying a principal amount of Revenue Bonds
which have been called for redemption pursuant to Section 3.01(c)
of the Revenue Indenture. As provided in the Indenture, bonds of
this series equal in principal amount to the principal amount of
such Revenue Bonds to be redeemed will be redeemed on the date
fixed for redemption of the Revenue Bonds at the principal amount
of such bonds of this series and accrued interest thereon to the
date fixed for redemption, together with a premium equal to the
redemption premium (if any) payable upon such redemption of
Revenue Bonds.
In case of certain defaults as specified in the Indenture,
the principal of this bond may be declared or may become due and
payable on the conditions, at the time, in the manner and with
the effect provided in the Indenture.
No recourse shall be had for the payment of the principal of
or premium, if any, or interest on this bond, or for any claim
based hereon, or otherwise in respect hereof or of the Indenture,
to or against any incorporator, stockholder, director or officer,
past, present or future, as such, of the Company, or of any
predecessor or successor company, either directly or through the
Company, or such predecessor or successor company, under any
constitution or statute or rule of law, or by the enforcement of
any assessment or penalty, or otherwise, all such liability of
incorporators, stockholders, directors and officers being waived
and released by the holder and owner hereof by the acceptance of
this bond and being likewise waived and released by the terms of
the Indenture.
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This bond is transferable by the registered owner hereof, in
person or by attorney duly authorized, at the principal corporate
trust office of the Trustee, in the Borough of Manhattan, The
City of New York, but only in the manner prescribed in the
Indenture, upon the surrender and cancellation of this bond, and
upon any such transfer a new registered bond or bonds, without
coupons, of the same series and maturity date and for the same
aggregate principal amount, in authorized denominations, will be
issued to the transferee in exchange herefor. The Company and
the Trustee may deem and treat the person in whose name this bond
is registered as the absolute owner for the purpose of receiving
payment of or on account of the principal, premium, if any, and
interest due hereon and for all other purposes. Registered bonds
of this series shall be exchangeable for registered bonds of
other authorized denominations having the same aggregate
principal amount, in the manner and upon the conditions
prescribed in the Indenture. However, notwithstanding the
provisions of the Indenture, no charge shall be made upon any
transfer or exchange of bonds of this series other than for any
tax or taxes or other governmental charge required to be paid by
the Company.
This bond shall not be valid or become obligatory for any
purpose unless and until it shall have been authenticated by the
execution by the Trustee or its successor in trust under the
Indenture of the certificate hereon.
IN WITNESS WHEREOF, Georgia Power Company has caused this
bond to be executed in its name by its President or one of its
Vice Presidents by his signature or a facsimile thereof, and its
corporate seal or a facsimile thereof to be hereto affixed and
attested by its Secretary or one of its Assistant Secretaries by
his signature or a facsimile thereof.
Dated,
GEORGIA POWER COMPANY
By:
Attest:
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TRUSTEE'S CERTIFICATE
This bond is one of the bonds, of the series designated
therein, described in the within-mentioned Indenture.
CHEMICAL BANK, as Trustee
By:
Authorized Officer
AND WHEREAS all acts and things necessary to make the new
Bonds of each series, when authenticated by the Trustee and
issued as in the Indenture and this Supplemental Indenture
provided, the valid, binding and legal obligations of the
Company, and to constitute the Indenture and this Supplemental
Indenture valid, binding and legal instruments for the security
thereof, have been done and performed, and the creation,
execution and delivery of the Indenture and this Supplemental
Indenture and the creation, execution and issue of bonds subject
to the terms hereof and of the Indenture, have in all respects
been duly authorized;
NOW, THEREFORE, in consideration of the premises, and of the
acceptance and purchase by the holders thereof of the bonds
issued and to be issued under the Indenture and of the sum of One
Dollar duly paid by the Trustee to the Company, and of other good
and valuable considerations, the receipt whereof is hereby
acknowledged, and for the purpose of further securing the due and
punctual payment of the principal of and premium, if any, and
interest on the bonds issued and now outstanding under the
Indenture, and the $2,120,000 principal amount of new First 2011
Series Bonds, $8,330,000 principal amount of new Second 2011
Series Bonds, $3,200,000 principal amount of new First 2019
Series Bonds, $5,300,000 principal amount of new Second 2019
Series Bonds, $10,125,000 principal amount of new Second 2021
Series Bonds and $13,155,000 principal amount of new 2022 Series
Bonds proposed to be issued and all other bonds which shall be
issued under the Indenture, or the Indenture as supplemented and
amended, and for the purpose of further securing the faithful
performance and observance of all covenants and conditions
therein and in any indenture supplemental thereto set forth, the
Company has given, granted, bargained, sold, transferred,
assigned, hypothecated, pledged, mortgaged, warranted, aliened
and conveyed and by these presents does give, grant, bargain,
sell, transfer, assign, hypothecate, pledge, mortgage, warrant,
alien and convey unto Chemical Bank, as Trustee, as provided in
the Indenture, and its successor or successors in the trust
thereby and hereby created, and to its or their assigns forever,
all the right, title and interest of the Company in and to all
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premises, property, franchises and rights of every kind and
description, real, personal and mixed, tangible and intangible,
now owned or hereafter acquired by the Company (excepting,
however, that which is by the Indenture expressly reserved from
the lien and effect thereof);
TOGETHER WITH all and singular the tenements, hereditaments
and appurtenances belonging or in anywise appertaining to the
property, rights and franchises or any thereof, referred to in
the foregoing granting clauses, with the reversion and
reversions, remainder and remainders and (subject to the
provisions of Article X of the Indenture) the tolls, rents,
revenues, issues, earnings, income, products and profits thereof,
and all the estate, right, title and interest and claim
whatsoever, at law as well as in equity, which the Company now
has or may hereafter acquire in and to the aforesaid property,
rights and franchises and every part and parcel thereof.
TO HAVE AND TO HOLD all said property, rights and franchises
hereby conveyed, assigned, pledged or mortgaged, or intended so
to be, unto the Trustee, its successor or successors in trust,
and their assigns forever;
BUT IN TRUST, NEVERTHELESS, with power of sale, for the
equal and proportionate benefit and security of the holders of
all bonds and interest coupons now or hereafter issued under the
Indenture, as supplemented and amended, pursuant to the
provisions thereof, and for the enforcement of the payment of
said bonds and coupons when payable and for the performance of
and compliance with the covenants and conditions of the
Indenture, as supplemented and amended, without any preference,
distinction or priority as to lien or otherwise of any bond or
bonds over others by reason of the difference in time of the
actual issue, sale or negotiation thereof or for any other reason
whatsoever, except as otherwise expressly provided in the
Indenture, as supplemented and amended; and so that each and
every bond now or hereafter issued thereunder shall have the same
lien; and so that the principal of and premium, if any, and
interest on every such bond shall, subject to the terms thereof,
be equally and proportionately secured thereby and hereby, as if
it had been made, executed, delivered, sold and negotiated
simultaneously with the execution and delivery of the Original
Indenture.
AND IT IS EXPRESSLY DECLARED that all bonds issued and
secured under the Indenture and hereunder are to be issued,
authenticated and delivered, and all said property, rights and
franchises hereby and by the Indenture conveyed, assigned,
pledged or mortgaged, or intended so to be (including all the
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right, title and interest of the Company in and to any and all
premises, property, franchises and rights of every kind and
description, real, personal and mixed, tangible and intangible,
thereafter acquired by the Company and whether or not
specifically described in the Original Indenture or in any
indenture supplemental thereto, except any therein expressly
excepted), are to be dealt with and disposed of, under, upon and
subject to the terms, conditions, stipulations, covenants,
agreements, trusts and uses and purposes expressed in the
Indenture and herein, and it is hereby agreed as follows:
SECTION 1. There are hereby created six series of bonds
designated as hereinabove in the fourth Whereas clause set forth,
each of which shall contain suitable provisions with respect to
the matters hereinafter in this Section specified, and the form
thereof shall be substantially as hereinbefore set forth. New
Bonds of each such series shall mature on the date specified in
the title thereof, and the definitive bonds of each such series
may be issued only as registered bonds without coupons. New
Bonds of each such series shall be in such denominations as the
Board of Directors shall approve, and execution and delivery to
the Trustee for authentication shall be conclusive evidence of
such approval. The serial numbers of new Bonds of each such
series shall be such as may be approved by any officer of the
Company, the execution thereof by any such officer to be
conclusive evidence of such approval.
New Bonds, until the principal thereof shall have become due
and payable, shall bear interest at the same rates, payable on
the same dates, as (i) the Albany Dougherty Bonds pursuant to the
Albany Dougherty Indenture (each as hereinafter defined) in the
case of the new First 2011 Series Bonds, (ii) the Cobb Bonds
pursuant to the Cobb Indenture (each as hereinafter defined) in
the case of the new Second 2011 Series Bonds, (iii) the Bibb
Bonds pursuant to the Bibb Indenture (each as hereinafter
defined) in the case of the new First 2019 Series Bonds, (iv) the
Monroe Bonds pursuant to the Monroe Indenture (each as
hereinafter defined) in the case of the new Second 2019 Series
Bonds, (v) the Coweta Bonds pursuant to the Coweta Indenture
(each as hereinafter defined) in the case of the new Second 2021
Series Bonds and (vi) the Burke Bonds pursuant to the Burke
Indenture (each as hereinafter defined) in the case of the new
2022 Series Bonds. New Bonds of each such series shall be dated
the date of authentication.
The principal of and premium, if any, and interest on the
new Bonds of each such series shall be payable in any coin or
currency of the United States of America which at the time of
payment is legal tender for public and private debts, at the
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office or agency of the Company in the Borough of Manhattan, The
City of New York, designated for that purpose.
New Bonds of each such series may be transferred at the
principal corporate trust office of the Trustee, in the Borough
of Manhattan, The City of New York. New Bonds of each such
series shall be exchangeable for other bonds of the same series,
in the manner and upon the conditions prescribed in the
Indenture, upon the surrender of such new Bonds at said principal
corporate trust office of the Trustee. However, notwithstanding
the provisions of Section 2.05 of the Indenture, no charge shall
be made upon any transfer or exchange of new Bonds of any of said
series other than for any tax or taxes or other governmental
charge required to be paid by the Company.
Any or all of the new Bonds of each such series shall be
redeemable at any time and from time to time, prior to maturity,
upon notice given by mailing the same, by first class mail
postage prepaid, not less than thirty nor more than forty-five
days prior to the date fixed for redemption to each registered
holder of a bond to be redeemed (in whole or in part) at the last
address of such holder appearing on the registry books, at the
principal amount thereof and accrued interest thereon, if any, to
the date fixed for redemption, if redeemed by the operation of
Section 4 of the Supplemental Indenture dated as of November 1,
1962 or of the improvement fund provisions of any supplemental
indenture or by the use of proceeds of released property.
SECTION 2. The obligation of the Company to make payments
with respect to the principal of and premium, if any, and
interest on the new First 2011 Series Bonds shall be fully or
partially, as the case may be, satisfied and discharged, to the
extent that, at the time that any such payment shall be due, the
Company shall have made payments as required by the Company's
Note dated July 30, 1991 issued pursuant to Section 3.2 of the
Loan Agreement dated as of July 1, 1991 between the Albany
Dougherty Payroll Development Authority and the Company, relating
to the Albany Dougherty Bonds (hereinafter defined), sufficient
to pay fully or partially the then due principal of and premium,
if any, and interest on the Albany Dougherty Payroll Development
Authority (Georgia) Pollution Control Revenue Bonds (Georgia
Power Company Plant Mitchell Project), First Series 1991
(hereinafter referred to as the "Albany Dougherty Bonds") or
there shall be on deposit with the trustee pursuant to the Trust
Indenture dated as of July 1, 1991 of the Albany Dougherty
Payroll Development Authority to NationsBank of Georgia, National
Association, Atlanta, Georgia, as trustee, relating to the Albany
Dougherty Bonds (hereinafter referred to as the "Albany Dougherty
Indenture"), sufficient available funds to pay fully or partially
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the then due principal of and premium, if any, and interest on
the Albany Dougherty Bonds. The Trustee may conclusively presume
that the obligation of the Company to make payments with respect
to the principal of and premium, if any, and interest on the new
First 2011 Series Bonds shall have been fully satisfied and
discharged unless and until the Trustee shall have received a
written notice from the trustee under the Albany Dougherty
Indenture stating (i) that timely payment of principal of or
premium, if any, or interest on the Albany Dougherty Bonds has
not been made, (ii) that there are not sufficient available funds
to make such payment and (iii) the amount of funds required to
make such payment.
In addition to the redemption as provided in Section 1
hereof, the new First 2011 Series Bonds shall also be redeemable
in whole upon receipt by the Trustee of a written demand for the
redemption of the new First 2011 Series Bonds (hereinafter called
"First 2011 Series Redemption Demand") from the trustee under the
Albany Dougherty Indenture stating that the principal amount of
all the Albany Dougherty Bonds then outstanding under the Albany
Dougherty Indenture has been declared immediately due and payable
pursuant to the provisions of Section 9.02 of the Albany
Dougherty Indenture, specifying the date from which unpaid
interest on the Albany Dougherty Bonds has then accrued and
stating that such declaration of maturity has not been rescinded.
The Trustee shall within 10 days of receiving the First 2011
Series Redemption Demand mail a copy thereof to the Company
stamped or otherwise marked to indicate the date of receipt by
the Trustee. The Company shall fix a redemption date for the
redemption so demanded (herein called the "First 2011 Series
Demand Redemption") and shall mail to the Trustee notice of such
date at least 30 days prior thereto. The date fixed for First
2011 Series Demand Redemption may be any day not more than 180
days after receipt by the Trustee of the First 2011 Series
Redemption Demand. If the Trustee does not receive such notice
from the Company within 150 days after receipt by the Trustee of
the First 2011 Series Redemption Demand, the date for First 2011
Series Demand Redemption shall be deemed fixed at the 180th day
after such receipt. The Trustee shall mail notice of the date
fixed for First 2011 Series Demand Redemption (hereinafter called
the "First 2011 Series Demand Redemption Notice") to the trustee
under the Albany Dougherty Indenture (and the registered holders
of the new First 2011 Series Bonds if other than said trustee)
not more than 10 nor less than 5 days prior to the date fixed for
First 2011 Series Demand Redemption, provided, however, that the
Trustee shall mail no First 2011 Series Demand Redemption Notice
(and no First 2011 Series Demand Redemption shall be made) if
prior to the mailing of the First 2011 Series Demand Redemption
Notice the Trustee shall have received written notice of
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rescission of the First 2011 Series Redemption Demand from the
trustee under the Albany Dougherty Indenture. First 2011 Series
Demand Redemption of the new First 2011 Series Bonds shall be at
the principal amount thereof, plus accrued interest thereon to
the date fixed for redemption, and such amount shall become and
be due and payable on the date fixed for First 2011 Series Demand
Redemption as above provided. Anything in this paragraph
contained to the contrary notwithstanding, if, after mailing of
the First 2011 Series Demand Redemption Notice and prior to the
date fixed for First 2011 Series Demand Redemption, the Trustee
shall have been advised in writing by the trustee under the
Albany Dougherty Indenture that the First 2011 Series Redemption
Demand has been rescinded, the First 2011 Series Demand
Redemption Notice shall thereupon, without further act of the
Trustee or the Company, be rescinded and become null and void for
all purposes hereunder and no redemption of the new First 2011
Series Bonds and no payments in respect thereof as specified in
the First 2011 Series Demand Redemption Notice shall be effected
or required.
The new First 2011 Series Bonds shall also be redeemable in
whole at any time, or in part from time to time (hereinafter
called the "First 2011 Series Regular Redemption"), upon receipt
by the Trustee of a written demand (hereinafter referred to as
the "First 2011 Series Regular Redemption Demand") from the
trustee under the Albany Dougherty Indenture stating: (1) the
principal amount of Albany Dougherty Bonds to be redeemed
pursuant to Section 3.01(c) of the Albany Dougherty Indenture;
(2) the date of such redemption and that notice thereof has been
given as required by the Albany Dougherty Indenture; (3) that the
Trustee shall call for redemption on the stated date fixed for
redemption of the Albany Dougherty Bonds a principal amount of
the new First 2011 Series Bonds equal to the principal amount of
Albany Dougherty Bonds to be redeemed; and (4) that the trustee
under the Albany Dougherty Indenture, as holder of all the new
First 2011 Series Bonds then outstanding, waives notice of such
redemption. The Trustee may conclusively presume the statements
contained in the First 2011 Series Regular Redemption Demand to
be correct. First 2011 Series Regular Redemption of the new
First 2011 Series Bonds shall be at the principal amount thereof
and accrued interest thereon to the date fixed for redemption,
together with a premium equal to the redemption premium (if any)
payable upon such redemption of the Albany Dougherty Bonds, and
such amount shall become and be due and payable, subject to the
first paragraph of this Section 2, on the date fixed for such
First 2011 Series Regular Redemption, which shall be the date
specified pursuant to item (2) of the First 2011 Series Regular
Redemption Demand as above provided.
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SECTION 3. The obligation of the Company to make payments
with respect to the principal of and premium, if any, and
interest on the new Second 2011 Series Bonds shall be fully or
partially, as the case may be, satisfied and discharged, to the
extent that, at the time that any such payment shall be due, the
Company shall have made payments as required by the Company's
Note dated July 30, 1991 issued pursuant to Section 3.2 of the
Loan Agreement dated as of July 1, 1991 between the Development
Authority of Cobb County and the Company, relating to the Cobb
Bonds (hereinafter defined), sufficient to pay fully or partially
the then due principal of and premium, if any, and interest on
the Development Authority of Cobb County (Georgia) Pollution
Control Revenue Bonds (Georgia Power Company Plant McDonough
Project), First Series 1991 (hereinafter referred to as the "Cobb
Bonds") or there shall be on deposit with the trustee pursuant to
the Trust Indenture dated as of July 1, 1991 of the Development
Authority of Cobb County to NationsBank of Georgia, National
Association, Atlanta, Georgia, as trustee, relating to the Cobb
Bonds (hereinafter referred to as the "Cobb Indenture"),
sufficient available funds to pay fully or partially the then due
principal of and premium, if any, and interest on the Cobb Bonds.
The Trustee may conclusively presume that the obligation of the
Company to make payments with respect to the principal of and
premium, if any, and interest on the new Second 2011 Series Bonds
shall have been fully satisfied and discharged unless and until
the Trustee shall have received a written notice from the trustee
under the Cobb Indenture stating (i) that timely payment of
principal of or premium, if any, or interest on the Cobb Bonds
has not been made, (ii) that there are not sufficient available
funds to make such payment and (iii) the amount of funds required
to make such payment.
In addition to the redemption as provided in Section 1
hereof, the new Second 2011 Series Bonds shall also be redeemable
in whole upon receipt by the Trustee of a written demand for the
redemption of the new Second 2011 Series Bonds (hereinafter
called "Second 2011 Series Redemption Demand") from the trustee
under the Cobb Indenture stating that the principal amount of all
the Cobb Bonds then outstanding under the Cobb Indenture has been
declared immediately due and payable pursuant to the provisions
of Section 9.02 of the Cobb Indenture, specifying the date from
which unpaid interest on the Cobb Bonds has then accrued and
stating that such declaration of maturity has not been rescinded.
The Trustee shall within 10 days of receiving the Second 2011
Series Redemption Demand mail a copy thereof to the Company
stamped or otherwise marked to indicate the date of receipt by
the Trustee. The Company shall fix a redemption date for the
redemption so demanded (herein called the "Second 2011 Series
Demand Redemption") and shall mail to the Trustee notice of such
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date at least 30 days prior thereto. The date fixed for Second
2011 Series Demand Redemption may be any day not more than 180
days after receipt by the Trustee of the Second 2011 Series
Redemption Demand. If the Trustee does not receive such notice
from the Company within 150 days after receipt by the Trustee of
the Second 2011 Series Redemption Demand, the date for Second
2011 Series Demand Redemption shall be deemed fixed at the 180th
day after such receipt. The Trustee shall mail notice of the
date fixed for Second 2011 Series Demand Redemption (hereinafter
called the "Second 2011 Series Demand Redemption Notice") to the
trustee under the Cobb Indenture (and the registered holders of
the new Second 2011 Series Bonds if other than said trustee) not
more than 10 nor less than 5 days prior to the date fixed for
Second 2011 Series Demand Redemption, provided, however, that the
Trustee shall mail no Second 2011 Series Demand Redemption Notice
(and no Second 2011 Series Demand Redemption shall be made) if
prior to the mailing of the Second 2011 Series Demand Redemption
Notice the Trustee shall have received written notice of
rescission of the Second 2011 Series Redemption Demand from the
trustee under the Cobb Indenture. Second 2011 Series Demand
Redemption of the new Second 2011 Series Bonds shall be at the
principal amount thereof, plus accrued interest thereon to the
date fixed for redemption, and such amount shall become and be
due and payable on the date fixed for Second 2011 Series Demand
Redemption as above provided. Anything in this paragraph
contained to the contrary notwithstanding, if, after mailing of
the Second 2011 Series Demand Redemption Notice and prior to the
date fixed for Second 2011 Series Demand Redemption, the Trustee
shall have been advised in writing by the trustee under the Cobb
Indenture that the Second 2011 Series Redemption Demand has been
rescinded, the Second 2011 Series Demand Redemption Notice shall
thereupon, without further act of the Trustee or the Company, be
rescinded and become null and void for all purposes hereunder and
no redemption of the new Second 2011 Series Bonds and no payments
in respect thereof as specified in the Second 2011 Series Demand
Redemption Notice shall be effected or required.
The new Second 2011 Series Bonds shall also be redeemable in
whole at any time, or in part from time to time (hereinafter
called the "Second 2011 Series Regular Redemption"), upon receipt
by the Trustee of a written demand (hereinafter referred to as
the "Second 2011 Series Regular Redemption Demand") from the
trustee under the Cobb Indenture stating: (1) the principal
amount of Cobb Bonds to be redeemed pursuant to Section 3.01(c)
of the Cobb Indenture; (2) the date of such redemption and that
notice thereof has been given as required by the Cobb Indenture;
(3) that the Trustee shall call for redemption on the stated date
fixed for redemption of the Cobb Bonds a principal amount of the
new Second 2011 Series Bonds equal to the principal amount of
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Cobb Bonds to be redeemed; and (4) that the trustee under the
Cobb Indenture, as holder of all the new Second 2011 Series Bonds
then outstanding, waives notice of such redemption. The Trustee
may conclusively presume the statements contained in the Second
2011 Series Regular Redemption Demand to be correct. Second 2011
Series Regular Redemption of the new Second 2011 Series Bonds
shall be at the principal amount thereof and accrued interest
thereon to the date fixed for redemption, together with a premium
equal to the redemption premium (if any) payable upon such
redemption of the Cobb Bonds, and such amount shall become and be
due and payable, subject to the first paragraph of this
Section 3, on the date fixed for such Second 2011 Series Regular
Redemption, which shall be the date specified pursuant to item
(2) of the Second 2011 Series Regular Redemption Demand as above
provided.
SECTION 4. The obligation of the Company to make payments
with respect to the principal of and premium, if any, and
interest on the new First 2019 Series Bonds shall be fully or
partially, as the case may be, satisfied and discharged, to the
extent that, at the time that any such payment shall be due, the
Company shall have made payments as required by the Company's
Note dated July 30, 1991 issued pursuant to Section 3.2 of the
Loan Agreement dated as of July 1, 1991 between the Development
Authority of Bibb County and the Company, relating to the Bibb
Bonds (hereinafter defined), sufficient to pay fully or partially
the then due principal of and premium, if any, and interest on
the Development Authority of Bibb County (Georgia) Pollution
Control Revenue Bonds (Georgia Power Company Plant Arkwright
Project), First Series 1991 (hereinafter referred to as the "Bibb
Bonds") or there shall be on deposit with the trustee pursuant to
the Trust Indenture dated as of July 1, 1991 of the Development
Authority of Bibb County to NationsBank of Georgia, National
Association, Atlanta, Georgia, as trustee, relating to the Bibb
Bonds (hereinafter referred to as the "Bibb Indenture"),
sufficient available funds to pay fully or partially the then due
principal of and premium, if any, and interest on the Bibb Bonds.
The Trustee may conclusively presume that the obligation of the
Company to make payments with respect to the principal of and
premium, if any, and interest on the new First 2019 Series Bonds
shall have been fully satisfied and discharged unless and until
the Trustee shall have received a written notice from the trustee
under the Bibb Indenture stating (i) that timely payment of
principal of or premium, if any, or interest on the Bibb Bonds
has not been made, (ii) that there are not sufficient available
funds to make such payment and (iii) the amount of funds required
to make such payment.
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<PAGE>
In addition to the redemption as provided in Section 1
hereof, the new First 2019 Series Bonds shall also be redeemable
in whole upon receipt by the Trustee of a written demand for the
redemption of the new First 2019 Series Bonds (hereinafter called
"First 2019 Series Redemption Demand") from the trustee under the
Bibb Indenture stating that the principal amount of all the Bibb
Bonds then outstanding under the Bibb Indenture has been declared
immediately due and payable pursuant to the provisions of
Section 9.02 of the Bibb Indenture, specifying the date from
which unpaid interest on the Bibb Bonds has then accrued and
stating that such declaration of maturity has not been rescinded.
The Trustee shall within 10 days of receiving the First 2019
Series Redemption Demand mail a copy thereof to the Company
stamped or otherwise marked to indicate the date of receipt by
the Trustee. The Company shall fix a redemption date for the
redemption so demanded (herein called the "First 2019 Series
Demand Redemption") and shall mail to the Trustee notice of such
date at least 30 days prior thereto. The date fixed for First
2019 Series Demand Redemption may be any day not more than 180
days after receipt by the Trustee of the First 2019 Series
Redemption Demand. If the Trustee does not receive such notice
from the Company within 150 days after receipt by the Trustee of
the First 2019 Series Redemption Demand, the date for First 2019
Series Demand Redemption shall be deemed fixed at the 180th day
after such receipt. The Trustee shall mail notice of the date
fixed for First 2019 Series Demand Redemption (hereinafter called
the "First 2019 Series Demand Redemption Notice") to the trustee
under the Bibb Indenture (and the registered holders of the new
First 2019 Series Bonds if other than said trustee) not more than
10 nor less than 5 days prior to the date fixed for First 2019
Series Demand Redemption, provided, however, that the Trustee
shall mail no First 2019 Series Demand Redemption Notice (and no
First 2019 Series Demand Redemption shall be made) if prior to
the mailing of the First 2019 Series Demand Redemption Notice the
Trustee shall have received written notice of rescission of the
First 2019 Series Redemption Demand from the trustee under the
Bibb Indenture. First 2019 Series Demand Redemption of the new
First 2019 Series Bonds shall be at the principal amount thereof,
plus accrued interest thereon to the date fixed for redemption,
and such amount shall become and be due and payable on the date
fixed for First 2019 Series Demand Redemption as above provided.
Anything in this paragraph contained to the contrary
notwithstanding, if, after mailing of the First 2019 Series
Demand Redemption Notice and prior to the date fixed for First
2019 Series Demand Redemption, the Trustee shall have been
advised in writing by the trustee under the Bibb Indenture that
the First 2019 Series Redemption Demand has been rescinded, the
First 2019 Series Demand Redemption Notice shall thereupon,
without further act of the Trustee or the Company, be rescinded
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<PAGE>
and become null and void for all purposes hereunder and no
redemption of the new First 2019 Series Bonds and no payments in
respect thereof as specified in the First 2019 Series Demand
Redemption Notice shall be effected or required.
The new First 2019 Series Bonds shall also be redeemable in
whole at any time, or in part from time to time (hereinafter
called the "First 2019 Series Regular Redemption"), upon receipt
by the Trustee of a written demand (hereinafter referred to as
the "First 2019 Series Regular Redemption Demand") from the
trustee under the Bibb Indenture stating: (1) the principal
amount of Bibb Bonds to be redeemed pursuant to Section 3.01(c)
of the Bibb Indenture; (2) the date of such redemption and that
notice thereof has been given as required by the Bibb Indenture;
(3) that the Trustee shall call for redemption on the stated date
fixed for redemption of the Bibb Bonds a principal amount of the
new First 2019 Series Bonds equal to the principal amount of Bibb
Bonds to be redeemed; and (4) that the trustee under the Bibb
Indenture, as holder of all the new First 2019 Series Bonds then
outstanding, waives notice of such redemption. The Trustee may
conclusively presume the statements contained in the First 2019
Series Regular Redemption Demand to be correct. First 2019
Series Regular Redemption of the new First 2019 Series Bonds
shall be at the principal amount thereof and accrued interest
thereon to the date fixed for redemption, together with a premium
equal to the redemption premium (if any) payable upon such
redemption of the Bibb Bonds, and such amount shall become and be
due and payable, subject to the first paragraph of this
Section 4, on the date fixed for such First 2019 Series Regular
Redemption, which shall be the date specified pursuant to item
(2) of the First 2019 Series Regular Redemption Demand as above
provided.
SECTION 5. The obligation of the Company to make payments
with respect to the principal of and premium, if any, and
interest on the new Second 2019 Series Bonds shall be fully or
partially, as the case may be, satisfied and discharged, to the
extent that, at the time that any such payment shall be due, the
Company shall have made payments as required by the Company's
Note dated July 30, 1991 issued pursuant to Section 3.2 of the
Loan Agreement dated as of July 1, 1991 between the Development
Authority of Monroe County and the Company, relating to the
Monroe Bonds (hereinafter defined), sufficient to pay fully or
partially the then due principal of and premium, if any, and
interest on the Development Authority of Monroe County (Georgia)
Pollution Control Revenue Bonds (Georgia Power Company Plant
Scherer Project), First Series 1991 (hereinafter referred to as
the "Monroe Bonds") or there shall be on deposit with the trustee
pursuant to the Trust Indenture dated as of July 1, 1991 of the
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<PAGE>
Development Authority of Monroe County to NationsBank of Georgia,
National Association, Atlanta, Georgia, as trustee, relating to
the Monroe Bonds (hereinafter referred to as the "Monroe
Indenture"), sufficient available funds to pay fully or partially
the then due principal of and premium, if any, and interest on
the Monroe Bonds. The Trustee may conclusively presume that the
obligation of the Company to make payments with respect to the
principal of and premium, if any, and interest on the new Second
2019 Series Bonds shall have been fully satisfied and discharged
unless and until the Trustee shall have received a written notice
from the trustee under the Monroe Indenture stating (i) that
timely payment of principal of or premium, if any, or interest on
the Monroe Bonds has not been made, (ii) that there are not
sufficient available funds to make such payment and (iii) the
amount of funds required to make such payment.
In addition to the redemption as provided in Section 1
hereof, the new Second 2019 Series Bonds shall also be redeemable
in whole upon receipt by the Trustee of a written demand for the
redemption of the new Second 2019 Series Bonds (hereinafter
called "Second 2011 Series Redemption Demand") from the trustee
under the Monroe Indenture stating that the principal amount of
all the Monroe Bonds then outstanding under the Monroe Indenture
has been declared immediately due and payable pursuant to the
provisions of Section 9.02 of the Monroe Indenture, specifying
the date from which unpaid interest on the Monroe Bonds has then
accrued and stating that such declaration of maturity has not
been rescinded. The Trustee shall within 10 days of receiving
the Second 2019 Series Redemption Demand mail a copy thereof to
the Company stamped or otherwise marked to indicate the date of
receipt by the Trustee. The Company shall fix a redemption date
for the redemption so demanded (herein called the "Second 2019
Series Demand Redemption") and shall mail to the Trustee notice
of such date at least 30 days prior thereto. The date fixed for
Second 2019 Series Demand Redemption may be any day not more than
180 days after receipt by the Trustee of the Second 2019 Series
Redemption Demand. If the Trustee does not receive such notice
from the Company within 150 days after receipt by the Trustee of
the Second 2019 Series Redemption Demand, the date for Second
2019 Series Demand Redemption shall be deemed fixed at the 180th
day after such receipt. The Trustee shall mail notice of the
date fixed for Second 2019 Series Demand Redemption (hereinafter
called the "Second 2019 Series Demand Redemption Notice") to the
trustee under the Monroe Indenture (and the registered holders of
the new Second 2019 Series Bonds if other than said trustee) not
more than 10 nor less than 5 days prior to the date fixed for
Second 2019 Series Demand Redemption, provided, however, that the
Trustee shall mail no Second 2019 Series Demand Redemption Notice
(and no Second 2019 Series Demand Redemption shall be made) if
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<PAGE>
prior to the mailing of the Second 2019 Series Demand Redemption
Notice the Trustee shall have received written notice of
rescission of the Second 2019 Series Redemption Demand from the
trustee under the Monroe Indenture. Second 2019 Series Demand
Redemption of the new Second 2019 Series Bonds shall be at the
principal amount thereof, plus accrued interest thereon to the
date fixed for redemption, and such amount shall become and be
due and payable on the date fixed for Second 2019 Series Demand
Redemption as above provided. Anything in this paragraph
contained to the contrary notwithstanding, if, after mailing of
the Second 2019 Series Demand Redemption Notice and prior to the
date fixed for Second 2019 Series Demand Redemption, the Trustee
shall have been advised in writing by the trustee under the
Monroe Indenture that the Second 2019 Series Redemption Demand
has been rescinded, the Second 2019 Series Demand Redemption
Notice shall thereupon, without further act of the Trustee or the
Company, be rescinded and become null and void for all purposes
hereunder and no redemption of the new Second 2019 Series Bonds
and no payments in respect thereof as specified in the Second
2019 Series Demand Redemption Notice shall be effected or
required.
The new Second 2019 Series Bonds shall also be redeemable in
whole at any time, or in part from time to time (hereinafter
called the "Second 2019 Series Regular Redemption"), upon receipt
by the Trustee of a written demand (hereinafter referred to as
the "Second 2019 Series Regular Redemption Demand") from the
trustee under the Monroe Indenture stating: (1) the principal
amount of Monroe Bonds to be redeemed pursuant to Section 3.01(c)
of the Monroe Indenture; (2) the date of such redemption and that
notice thereof has been given as required by the Monroe
Indenture; (3) that the Trustee shall call for redemption on the
stated date fixed for redemption of the Monroe Bonds a principal
amount of the new Second 2019 Series Bonds equal to the principal
amount of Monroe Bonds to be redeemed; and (4) that the trustee
under the Monroe Indenture, as holder of all the new Second 2019
Series Bonds then outstanding, waives notice of such redemption.
The Trustee may conclusively presume the statements contained in
the Second 2019 Series Regular Redemption Demand to be correct.
Second 2019 Series Regular Redemption of the new Second 2019
Series Bonds shall be at the principal amount thereof and accrued
interest thereon to the date fixed for redemption, together with
a premium equal to the redemption premium (if any) payable upon
such redemption of the Monroe Bonds, and such amount shall become
and be due and payable, subject to the first paragraph of this
Section 5, on the date fixed for such Second 2019 Series Regular
Redemption, which shall be the date specified pursuant to item
(2) of the Second 2019 Regular Redemption Demand as above
provided.
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<PAGE>
SECTION 6. The obligation of the Company to make payments
with respect to the principal of and premium, if any, and
interest on the new Second 2021 Series Bonds shall be fully or
partially, as the case may be, satisfied and discharged, to the
extent that, at the time that any such payment shall be due, the
Company shall have made payments as required by the Company's
Note dated July 30, 1991 issued pursuant to Section 3.2 of the
Loan Agreement dated as of July 1, 1991 between the Development
Authority of Coweta County and the Company, relating to the
Coweta Bonds (hereinafter defined), sufficient to pay fully or
partially the then due principal of and premium, if any, and
interest on the Development Authority of Coweta County (Georgia)
Pollution Control Revenue Bonds (Georgia Power Company Plant
Yates Project), First Series 1991 (hereinafter referred to as the
"Coweta Bonds") or there shall be on deposit with the trustee
pursuant to the Trust Indenture dated as of July 1, 1991 of the
Development Authority of Coweta County to NationsBank of Georgia,
National Association, Atlanta, Georgia, as trustee, relating to
the Coweta Bonds (hereinafter referred to as the "Coweta
Indenture"), sufficient available funds to pay fully or partially
the then due principal of and premium, if any, and interest on
the Coweta Bonds. The Trustee may conclusively presume that the
obligation of the Company to make payments with respect to the
principal of and premium, if any, and interest on the new Second
2021 Series Bonds shall have been fully satisfied and discharged
unless and until the Trustee shall have received a written notice
from the trustee under the Coweta Indenture stating (i) that
timely payment of principal of or premium, if any, or interest on
the Coweta Bonds has not been made, (ii) that there are not
sufficient available funds to make such payment and (iii) the
amount of funds required to make such payment.
In addition to the redemption as provided in Section 1
hereof, the new Second 2021 Series Bonds shall also be redeemable
in whole upon receipt by the Trustee of a written demand for the
redemption of the new Second 2021 Series Bonds (hereinafter
called "Second 2021 Series Redemption Demand") from the trustee
under the Coweta Indenture stating that the principal amount of
all the Coweta Bonds then outstanding under the Coweta Indenture
has been declared immediately due and payable pursuant to the
provisions of Section 8.02 of the Coweta Indenture, specifying
the date from which unpaid interest on the Coweta Bonds has then
accrued and stating that such declaration of maturity has not
been rescinded. The Trustee shall within 10 days of receiving
the Second 2021 Series Redemption Demand mail a copy thereof to
the Company stamped or otherwise marked to indicate the date of
receipt by the Trustee. The Company shall fix a redemption date
for the redemption so demanded (herein called the "Second 2021
Series Demand Redemption") and shall mail to the Trustee notice
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<PAGE>
of such date at least 30 days prior thereto. The date fixed for
Second 2021 Series Demand Redemption may be any day not more than
180 days after receipt by the Trustee of the Second 2021 Series
Redemption Demand. If the Trustee does not receive such notice
from the Company within 150 days after receipt by the Trustee of
the Second 2021 Series Redemption Demand, the date for Second
2021 Series Demand Redemption shall be deemed fixed at the 180th
day after such receipt. The Trustee shall mail notice of the
date fixed for Second 2021 Series Demand Redemption (hereinafter
called the "Second 2021 Series Demand Redemption Notice") to the
trustee under the Coweta Indenture (and the registered holders of
the new Second 2021 Series Bonds if other than said trustee) not
more than 10 nor less than 5 days prior to the date fixed for
Second 2021 Series Demand Redemption, provided, however, that the
Trustee shall mail no Second 2021 Series Demand Redemption Notice
(and no Second 2021 Series Demand Redemption shall be made) if
prior to the mailing of the Second 2021 Series Demand Redemption
Notice the Trustee shall have received written notice of
rescission of the Second 2021 Series Redemption Demand from the
trustee under the Coweta Indenture. Second 2021 Series Demand
Redemption of the new Second 2021 Series Bonds shall be at the
principal amount thereof, plus accrued interest thereon to the
date fixed for redemption, and such amount shall become and be
due and payable on the date fixed for Second 2021 Series Demand
Redemption as above provided. Anything in this paragraph
contained to the contrary notwithstanding, if, after mailing of
the Second 2021 Series Demand Redemption Notice and prior to the
date fixed for Second 2021 Series Demand Redemption, the Trustee
shall have been advised in writing by the trustee under the
Coweta Indenture that the Second 2021 Series Redemption Demand
has been rescinded, the Second 2021 Series Demand Redemption
Notice shall thereupon, without further act of the Trustee or the
Company, be rescinded and become null and void for all purposes
hereunder and no redemption of the new Second 2021 Series Bonds
and no payments in respect thereof as specified in the Second
2021 Series Demand Redemption Notice shall be effected or
required.
The new Second 2021 Series Bonds shall also be redeemable in
whole at any time, or in part from time to time (hereinafter
called the "Second 2021 Series Regular Redemption"), upon receipt
by the Trustee of a written demand (hereinafter referred to as
the "Second 2021 Series Regular Redemption Demand") from the
trustee under the Coweta Indenture stating: (1) the principal
amount of Coweta Bonds to be redeemed pursuant to Section 3.01(c)
of the Coweta Indenture; (2) the date of such redemption and that
notice thereof has been given as required by the Coweta
Indenture; (3) that the Trustee shall call for redemption on the
stated date fixed for redemption of the Coweta Bonds a principal
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<PAGE>
amount of the new Second 2021 Series Bonds equal to the principal
amount of Coweta Bonds to be redeemed; and (4) that the trustee
under the Coweta Indenture, as holder of all the new Second 2021
Series Bonds then outstanding, waives notice of such redemption.
The Trustee may conclusively presume the statements contained in
the Second 2021 Series Regular Redemption Demand to be correct.
Second 2021 Series Regular Redemption of the new Second 2021
Series Bonds shall be at the principal amount thereof and accrued
interest thereon to the date fixed for redemption, together with
a premium equal to the redemption premium (if any) payable upon
such redemption of the Coweta Bonds, and such amount shall become
and be due and payable, subject to the first paragraph of this
Section 6, on the date fixed for such Second 2021 Series Regular
Redemption, which shall be the date specified pursuant to item
(2) of the Second 2021 Series Regular Redemption Demand as above
provided.
SECTION 7. The obligation of the Company to make payments
with respect to the principal of and premium, if any, and
interest on the new 2022 Series Bonds shall be fully or
partially, as the case may be, satisfied and discharged, to the
extent that, at the time that any such payment shall be due, the
Company shall have made payments as required by the Company's
Note dated May 14, 1992 issued pursuant to Section 3.2 of the
Loan Agreement dated as of May 1, 1992 between the Development
Authority of Burke County and the Company, relating to the Burke
Bonds (hereinafter defined), sufficient to pay fully or partially
the then due principal of and premium, if any, and interest on
the Development Authority of Burke County (Georgia) Pollution
Control Revenue Bonds (Georgia Power Company Plant Vogtle
Project), First Series 1992 (hereinafter referred to as the
"Burke Bonds") or there shall be on deposit with the trustee
pursuant to the Trust Indenture dated as of May 1, 1992 of the
Development Authority of Burke County to NationsBank of Georgia,
National Association, Atlanta, Georgia, as trustee, relating to
the Burke Bonds (hereinafter referred to as the "Burke
Indenture"), sufficient available funds to pay fully or partially
the then due principal of and premium, if any, and interest on
the Burke Bonds. The Trustee may conclusively presume that the
obligation of the Company to make payments with respect to the
principal of and premium, if any, and interest on the new 2022
Series Bonds shall have been fully satisfied and discharged
unless and until the Trustee shall have received a written notice
from the trustee under the Burke Indenture stating (i) that
timely payment of principal of or premium, if any, or interest on
the Burke Bonds has not been made, (ii) that there are not
sufficient available funds to make such payment and (iii) the
amount of funds required to make such payment.
-22-
<PAGE>
In addition to the redemption as provided in Section 1
hereof, the new 2022 Series Bonds shall also be redeemable in
whole upon receipt by the Trustee of a written demand for the
redemption of the new 2022 Series Bonds (hereinafter called "2022
Series Redemption Demand") from the trustee under the Burke
Indenture stating that the principal amount of all the Burke
Bonds then outstanding under the Burke Indenture has been
declared immediately due and payable pursuant to the provisions
of Section 9.02 of the Burke Indenture, specifying the date from
which unpaid interest on the Burke Bonds has then accrued and
stating that such declaration of maturity has not been rescinded.
The Trustee shall within 10 days of receiving the 2022 Series
Redemption Demand mail a copy thereof to the Company stamped or
otherwise marked to indicate the date of receipt by the Trustee.
The Company shall fix a redemption date for the redemption so
demanded (herein called the "2022 Series Demand Redemption") and
shall mail to the Trustee notice of such date at least 30 days
prior thereto. The date fixed for 2022 Series Demand Redemption
may be any day not more than 180 days after receipt by the
Trustee of the 2022 Series Redemption Demand. If the Trustee
does not receive such notice from the Company within 150 days
after receipt by the Trustee of the 2022 Series Redemption
Demand, the date for 2022 Series Demand Redemption shall be
deemed fixed at the 180th day after such receipt. The Trustee
shall mail notice of the date fixed for 2022 Series Demand
Redemption (hereinafter called the "2022 Series Demand Redemption
Notice") to the trustee under the Burke Indenture (and the
registered holders of the new 2022 Series Bonds if other than
said trustee) not more than 10 nor less than 5 days prior to the
date fixed for 2022 Series Demand Redemption, provided, however,
that the Trustee shall mail no 2022 Series Demand Redemption
Notice (and no 2022 Series Demand Redemption shall be made) if
prior to the mailing of the 2022 Series Demand Redemption Notice
the Trustee shall have received written notice of rescission of
the 2022 Series Redemption Demand from the trustee under the
Burke Indenture. 2022 Series Demand Redemption of the new 2022
Series Bonds shall be at the principal amount thereof, plus
accrued interest thereon to the date fixed for redemption, and
such amount shall become and be due and payable on the date fixed
for 2022 Series Demand Redemption as above provided. Anything in
this paragraph contained to the contrary notwithstanding, if,
after mailing of the 2022 Series Demand Redemption Notice and
prior to the date fixed for 2022 Series Demand Redemption, the
Trustee shall have been advised in writing by the trustee under
the Burke Indenture that the 2022 Series Redemption Demand has
been rescinded, the 2022 Series Demand Redemption Notice shall
thereupon, without further act of the Trustee or the Company, be
rescinded and become null and void for all purposes hereunder and
no redemption of the new 2022 Series Bonds and no payments in
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<PAGE>
respect thereof as specified in the 2022 Series Demand Redemption
Notice shall be effected or required.
The new 2022 Series Bonds shall also be redeemable in whole
at any time, or in part from time to time (hereinafter called the
"2022 Series Regular Redemption"), upon receipt by the Trustee of
a written demand (hereinafter referred to as the "2022 Series
Regular Redemption Demand") from the trustee under the Burke
Indenture stating: (1) the principal amount of Burke Bonds to be
redeemed pursuant to Section 3.01(c) of the Burke Indenture;
(2) the date of such redemption and that notice thereof has been
given as required by the Burke Indenture; (3) that the Trustee
shall call for redemption on the stated date fixed for redemption
of the Burke Bonds a principal amount of the new 2022 Series
Bonds equal to the principal amount of Burke Bonds to be
redeemed; and (4) that the trustee under the Burke Indenture, as
holder of all the new 2022 Series Bonds then outstanding, waives
notice of such redemption. The Trustee may conclusively presume
the statements contained in the 2022 Series Regular Redemption
Demand to be correct. 2022 Series Regular Redemption of the new
2022 Series Bonds shall be at the principal amount thereof and
accrued interest thereon to the date fixed for redemption,
together with a premium equal to the redemption premium (if any)
payable upon such redemption of the Burke Bonds, and such amount
shall become and be due and payable, subject to the first
paragraph of this Section 7, on the date fixed for such 2022
Series Regular Redemption, which shall be the date specified
pursuant to item (2) of the 2022 Series Regular Redemption Demand
as above provided.
SECTION 8. The Company covenants that the provisions of
Section 4 of the Supplemental Indenture dated as of November 1,
1962, shall be in full force and effect so long as any new Bonds
of any series shall be outstanding under the Indenture.
SECTION 9. As supplemented by this Supplemental Indenture,
the Indenture is in all respects ratified and confirmed, and the
Indenture and this Supplemental Indenture shall be read, taken
and construed as one and the same instrument.
SECTION 10. Nothing in this Supplemental Indenture
contained shall, or shall be construed to, confer upon any person
other than a holder of bonds issued under the Indenture, as
supplemented and amended, the Company and the Trustee any right
or interest to avail himself of any benefit under any provision
of the Indenture or of this Supplemental Indenture.
SECTION 11. The Trustee assumes no responsibility for or in
respect of the validity or sufficiency of this Supplemental
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<PAGE>
Indenture or the due execution hereof by the Company or for or in
respect of the recitals and statements contained herein, all of
which recitals and statements are made solely by the Company.
SECTION 12. This Supplemental Indenture may be executed in
several counterparts and all such counterparts executed and
delivered, each as an original, shall constitute but one and the
same instrument.
SECTION 13. Although this Supplemental Indenture, for
convenience and for the purposes of reference, is dated as of the
day and year first above written, the actual dates of execution
by the Company and the Trustee are as indicated by their
respective acknowledgments hereto annexed.
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<PAGE>
IN WITNESS WHEREOF, said Georgia Power Company has caused
this Supplemental Indenture to be executed in its corporate name
by its President or one of its Vice Presidents and its corporate
seal to be hereunto affixed and to be attested by its Secretary
or one of its Assistant Secretaries, and said Chemical Bank, to
evidence its acceptance hereof, has caused this Supplemental
Indenture to be executed in its corporate name by one of its Vice
Presidents, Senior Trust Officers or Trust Officers and its
corporate seal to be hereunto affixed and to be attested by one
of its Senior Trust Officers, Trust Officers, Assistant Trust
Officers or Assistant Secretaries, in several counterparts, all
as of the day and year first above written.
GEORGIA POWER COMPANY
By:
Vice President
Attest:
Assistant Secretary
Signed, sealed and delivered this
7th day of September, 1994 by Georgia
Power Company in the County of
Fulton, State of Georgia, in the
presence of
Unofficial Witness
Notary Public, Walton County, Georgia
My Commission Expires August 2, 1996
(signatures continued on next page)
<PAGE>
CHEMICAL BANK
By:
Vice President
Attest:
Assistant Secretary
Signed, sealed and delivered
this 9th day of September, 1994
by Chemical Bank in the County
of New York, State of New York,
in the presence of
Unofficial Witness
ANNABELLE DeLUCA
Notary Public, State of New York
No. 01DE5013759
Qualified in Kings County
Certificate filed in New York County
Commission Expires July 15, 1995
<PAGE>
STATE OF GEORGIA )
) SS.:
COUNTY OF FULTON )
On the 7th day of September, 1994, personally appeared
before me Jane F. Genske, a Notary Public in and for the State
and County aforesaid, David Williams, who made oath and said that
he was present and saw the corporate seal of Georgia Power
Company affixed to the above written instrument, that he saw Judy
M. Anderson, Vice President, with Wayne Boston, Assistant
Secretary, known to him to be such officers of said corporation
respectively, attest the same, and that he, deponent, with
Jane F. Genske, witnessed the execution and delivery of the said
instrument as the free act and deed of said Georgia Power
Company.
Subscribed and sworn to )
before me this 7th day )
of September, 1994 )
Notary Public, Walton County, Georgia
My Commission Expires August 2, 1996
<PAGE>
STATE OF NEW YORK )
) SS.:
COUNTY OF NEW YORK )
On the 9th day of September, 1994, personally appeared
before me Annabelle DeLuca, a Notary Public in and for the State
and County aforesaid, P. Kelly, who made oath and said that she
was present and saw the corporate seal of Chemical Bank affixed
to the above written instrument, that she saw P. J. Gilkeson,
Vice President, with L. O'Brien, Assistant Secretary, known to
her to be such officers of said corporation respectively, attest
the same, and that she, deponent, with Annabelle DeLuca,
witnessed the execution and delivery of the said instrument as
the free act and deed of said Chemical Bank.
Subscribed and sworn to )
before me this 9th day )
of September, 1994 )
ANNABELLE DeLUCA
Notary Public, State of New York
No. 01DE5013759
Qualified in Kings County
Certificate filed in New York County
Commission Expires July 15, 1995
<PAGE>
STATE OF GEORGIA )
) SS.:
COUNTY OF FULTON )
On the 7th day of September, in the year one thousand nine
hundred and ninety-four, before me personally came Judy M.
Anderson, to me known, who, being by me duly sworn, did depose
and say that she resides at 199 14th Street, N.E., Atlanta,
Georgia; that she is a Vice President of Georgia Power Company,
one of the corporations described in and which executed the
foregoing instrument; that she knows the seal of said
corporation; that the seal affixed to said instrument is such
corporate seal; that it was so affixed by order of the Board of
Directors of said corporation; and that she signed her name
thereto by like order.
Notary Public, Walton
County, Georgia
My Commission Expires
August 2, 1996
<PAGE>
STATE OF NEW YORK )
) SS.:
COUNTY OF NEW YORK )
On the 9th day of September, in the year one thousand nine
hundred and ninety-four, before me personally came P. J.
Gilkeson, to me known, who, being by me duly sworn, did depose
and say that he resides at 452 Delafield Avenue, Staten Island,
New York; that he is a Vice President of Chemical Bank, one of
the corporations described in and which executed the foregoing
instrument; that he knows the seal of said corporation; that the
seal affixed to said instrument is such corporate seal; that it
was so affixed by order of the Board of Directors of said
corporation; and that he signed his name thereto by like order.
ANNABELLE DeLUCA
Notary Public, State of
New York
No. 01DE5013759
Qualified in Kings County
Certificate filed in New
York County
Commission Expires
July 15, 1995
<PAGE>
STATE OF GEORGIA )
) SS.:
COUNTY OF FULTON )
On the 7th day of September, 1994, before me appeared Judy
M. Anderson, to me personally known, who, being by me duly sworn,
did say that she is a Vice President of Georgia Power Company,
and that the seal affixed to said instrument is the corporate
seal of said corporation and that said instrument was signed and
sealed in behalf of said corporation by authority of its Board of
Directors, and that said Judy M. Anderson acknowledged said
instrument to be the free act and deed of said corporation.
Given under my hand this 7th day of September, 1994.
Notary Public, Walton
County, Georgia
My Commission Expires
August 2, 1996
<PAGE>
STATE OF NEW YORK )
) SS.:
COUNTY OF NEW YORK )
On the 9th day of September, 1994, before me appeared P. J.
Gilkeson, to me personally known, who, being by me duly sworn,
did say that he is a Vice President of Chemical Bank, and that
the seal affixed to said instrument is the corporate seal of said
corporation and that said instrument was signed and sealed in
behalf of said corporation by authority of its Board of
Directors, and that said P. J. Gilkeson acknowledged said
instrument to be the free act and deed of said corporation.
Given under my hand this 9th day of September, 1994.
ANNABELLE DeLUCA
Notary Public, State of
New York
No. 01DE5013759
Qualified in Kings County
Certificate filed in New
York County
Commission Expires
July 15, 1995
tjh:\wpdocs\25746\75980\supind
<PAGE>
Exhibit 10(a)58
AGREEMENT
THIS AGREEMENT, made and entered into as of December 12,
1994, between SOUTHERN COMPANY SERVICES, INC., a corporation
organized under the laws of the State of Alabama (hereinafter
sometimes referred to as "Service Company"), and MOBILE ENERGY
SERVICES COMPANY, INC. a corporation organized under the laws of
the State of Alabama (hereinafter sometimes referred to as
"Client Company");
W I T N E S S E T H:
THAT, WHEREAS, the parties hereto desire to enter into this
agreement providing for the performance by Service Company for
Client Company of certain services more particularly set forth
herein;
NOW, THEREFORE, in consideration of the premises and of the
mutual agreements herein, the parties hereto hereby agree as
follows:
1. Agreement to Furnish Services
Service Company agrees to furnish to Client Company, upon
the terms and conditions hereinafter set forth, such of the
services described in Article 2 hereof, at such times, for such
periods and in such manner as Client Company may from time to
time request.
<PAGE>
2. Description of Services
Service Company will, as and to the extent required for
Client Company, keep itself and its personnel available and
competent to render to Client Company, the following services;
A. General Executive and Advisory Services To advise and
assist the officers and employees of Client Company in connection
with various phases of its business and operations, including
particularly but not exclusively, those phases which involve
coordination of planning or operation between Client Company and
other client companies or otherwise have a direct effect not only
on Client Company but also on the Southern System or other
members thereof.
B. General Engineering
The maintenance of an organization staffed and equipped to
perform for Client Company general engineering work, including
system production and transmission studies, preparation and
analysis of electrical apparatus specifications, distribution
studies and standards, civil engineering and hydraulic studies
and problems, fuel supply studies, advice and assistance in
connection with analyses of operations and operating and
construction budgets. The members of this group will keep
informed as to improvements and developments in the art of
generation, transmission and distribution of electricity through
frequent contacts with the manufacturers of electrical equipment,
through membership in the various national and regional
-2-
<PAGE>
engineering societies and through participation in the committee
work of such societies and trade associations of the utility
industry. Service Company will make available to Client Company
the information thus gained with respect to such developments.
C. Design Engineering
To perform detailed design work for Client Company for steam
plants, hydro plants, transmission and distribution lines and
substations and otherwise as required by Client Company; to make
available to Client Company and other client companies as
required, the services of a specialist or specialists on various
phases of plant operation; and also to make available as
required, inspection and supervision personnel for generating
plant, transmission line and substation and other construction
and operation.
D. Purchasing
To render services to Client Company in connection with
purchasing, including the coordination of group purchasing, and
to supply expediting services. All requests for bids shall be
made by and purchases confirmed in the name of Client Company or
of Service Company as agent therefor, and all contracts of
purchase shall be likewise made.
E. Accounting and Statistical
To advise and assist Client Company in connection with the
installation of new accounting systems and similar problems,
appearances before regulatory commissions, requirements of
Federal and State regulatory bodies with respect to accounting,
-3-
<PAGE>
studies of accounting procedures and practices to improve
efficiency, book entries resulting from unusual financial
transactions, internal audits, employment of independent
auditors, preparation and analyses of financial and operating
reports and other statistical matters relating to Client Company
and other client companies, analyses of securities of other
utility companies, preparation of annual reports to stockholders,
regulatory commissions, insurance companies and others,
standardization of accounting and statistical forms in the
interest of economy, and other accounting and statistical
matters.
F. Finance and Treasury
To advise and assist Client Company on (a) financing
matters, including determination of types and times of sale of
long and short-term securities, refunding studies, sinking fund
problems, and (b) all treasury matters, including banking
problems and investment of surplus funds, and (c) maintenance of
books of accounts and other related corporate records.
G. Taxes
To advise and assist Client Company in connection with tax
matters, including preparation of Federal and State income and
other tax returns and of protests, claims and briefs where
necessary, tax accruals, and other matters in connection with
Client Company's taxes.
H. Insurance and Pensions
-4-
<PAGE>
To advise and assist Client Company in connection with
insurance and pension matters, including contracts with insurers,
trustees and actuaries and the placing of blanket and group
policies covering Client Company and other client companies, and
other insurance problems as required.
I. Corporate
To advise and assist Client Company in connection with its
corporate affairs, including assistance and suggestions in
connection with the preparation of petitions and applications for
the issuance of securities, contracts for the sale or
underwriting of securities, preparation of schedules of steps
required in connection with major financial and other corporate
matters and the consummation thereof, and the preparation of
various documents required in connection therewith, proceedings
for release of property from mortgage and other mortgage
requirements such as purchase or sale of property, sinking funds,
maintenance and improvement funds, contacts with trustees,
transfer agents and registrars; maintenance of minutes of
directors' and stockholders' meetings and other proceedings and
of other related corporate records; and also arrangements for
stockholders's meetings, including notices, proxies and records
thereof and for other types of meetings relating to its
securities.
J. Rates
To study comparative rate levels for various classes of
service, in different areas and for different operating
-5-
<PAGE>
conditions, and keep in touch with trends in rate design, and to
make such information available to Client Company; to advise
Client Company on matters relating to rates and valuation, the
design of new and improved rate schedules, and their effect upon
Client Company's revenues, the cost of competitive services,
earnings trends, the desirability of rate changes, rate audits,
service rules and regulations, commodity and tax clauses, minimum
charges, metering problems, special industrial contracts, resale
rates and rural extension plans; and to assist Client Company in
the preparation of petitions and applications required in
connection with rate changes.
K. Budgeting
To advise and assist Client Company in matters involving the
preparation and development of construction and operating
budgets, cash and cost forecasts, and budgetary controls.
L. Business Promotion and Public Relations
To advise and assist Client Company in area development
activities, in the development of residential, commercial and
industrial sales programs, in the preparation and use of
advertising, and in the determination and carrying out of public
information programs, including those arising out of regulatory
and legislative matters.
M. Employee Relations
To furnish Client Company with advisory services in
connection with employee relations matters, including
-6-
<PAGE>
recruitment, employee placement, training, compensation, safety,
labor relations and health, welfare and employee benefits.
N. Systems and Procedures
To advise and assist Client Company in the formation of good
operating practices and methods of procedure, the standardization
of forms, the purchase, rental and use of mechanical and
electronic data processing, computing and communications
equipment, in conducting economic research and planning and in
the development of special economic studies.
O. Other Services
To render advice and assistance in connection with such
other matters as Client Company may request and Service Company
may be able to perform with respect to Client Company's business
and operations.
3. Compensation of Service Company
As compensation for such services rendered to it by Service
Company, Client Company hereby agrees to pay to Service Company
the cost of such services. Bills will be rendered for the amount
of such cost on or before the 10th day of the succeeding month
and will be payable on or before the 20th day of such month.
Cost of services to be paid by Client Company shall include
direct charges and Client Company's pro rata share of certain of
Service Company's costs, determined as set forth below:
A. Direct Charges
To the extent that the costs incurred by Service Company in
connection with services rendered by it to Client Company can be
-7-
<PAGE>
identified and related to a particular transaction, direct
charges will be made by Service Company against Client Company.
B. Prorated Charges
Such costs incurred by Service Company each month as cannot
be charged by Service Company directly to the companies for which
it performs services will be distributed among such companies in
a fair and equitable manner as set forth in the Southern Company
Services, Inc. Cost Allocation Manual which is incorporated
herein by reference. The Service Company may revise the Cost
Allocation Manual from time to time, subject to the approval of
the Client Company and to any necessary regulatory approval, and
the revised Cost Allocation Manual shall be incorporated herein
by reference upon the effective date of the revision.
4. Companies to be Served
Service Company agrees that during the term hereof it will
render services as required by companies in the Southern System
and that all such companies will compensate Service Company as
provided in Section 3 hereof.
5. Effective Date - Term - Cancellation
After execution by the parties hereto this agreement shall
become effective as of December 12, 1994, subject to receipt of
any required regulatory approval, and shall remain in effect
until terminated by mutual agreement of said parties.
-8-
<PAGE>
It is also understood and agreed that nothing herein shall
be construed to release the officers and directors of Client
Company from the obligation to perform their respective duties,
or to limit the exercise of their powers in accordance with the
provisions of law or otherwise, and this agreement shall be
cancelled to the extent and from the time that performance
hereunder may conflict with any rule, regulation or order of the
Securities and Exchange Commission adopted before or after the
execution hereof.
IN WITNESS WHEREOF, the parties hereto have caused this
agreement to be executed by their duly authorized officers and
their respective seals to be affixed as of the day and year first
above written.
SOUTHERN COMPANY SERVICES, INC.
By: /s/W. Dean Hudson
Attest: Its: Vice President and Comptroller
/s/Sam H. Dabbs, Jr.
Assistant Secretary
MOBILE ENERGY SERVICES COMPANY, INC.
By: /s/Thomas G. Boren
Attest: Its: President
James A. Ward
Asst. Secretary
-9-
<PAGE>
Exhibit 10(a)60
Execution Copy
AMENDMENT NO.1, DATED AS OF JUNE 15, 1994,
TO THE PLANT ROBERT W. SCHERER UNIT NUMBER FOUR
AMENDED AND RESTATED
PURCHASE AND OWNERSHIP PARTICIPATION AGREEMENT
among
GEORGIA POWER COMPANY
FLORIDA POWER & LIGHT COMPANY
and
JACKSONVILLE ELECTRIC AUTHORITY
<PAGE>
THIS AMENDMENT NO.1, dated as of June 15, 1994, is among
GEORGIA POWER COMPANY, a corporation organized and existing under
the laws of the State of Georgia ("GPC"), FLORIDA POWER & LIGHT
COMPANY, a corporation organized and existing under the laws of
the State of Florida ("FPL"), and JACKSONVILLE ELECTRIC
AUTHORITY, a body politic and corporate and an independent agency
of the City of Jacksonville, Florida, organized and existing
under the laws of the State of Florida, ("JEA"), and is Amendment
No. 1 to that certain Plant Robert W. Scherer Unit Number Four
Amended and Restated Purchase and Ownership Participation
Agreement, dated as of December 31, 1990 (the "Ownership
Agreement"), among GPC, FPL and JEA.
W I T N E S S E T H :
WHEREAS, GPC, FPL and JEA have previously entered into the
Ownership Agreement providing, among other things, to establish
their respective ownership rights in Scherer Unit No. 4, the
Additional Unit Common Facilities, the Plant Scherer Common
Facilities and in the Plant Scherer Coal Stockpile; and
WHEREAS, the parties hereto desire to amend certain
provisions of the Ownership Agreement;
NOW, THEREFORE, in consideration of the mutual agreements
herein set forth, the parties hereto hereby agree as follows:
<PAGE>
1. Certain Definitions. Capitalized terms and phrases
used and not otherwise defined in this Amendment shall have the
respective meanings assigned to them by the Ownership Agreement,
the Operating Agreement, or both, unless the context or use
clearly indicates otherwise. The rules of interpretation,
instruction, or both, set forth in the Ownership Agreement shall
apply with equal force and effect to this Amendment.
2. Amendment to Section 1, DEFINITIONS.
(a) Section 1(q), COMMON COAL STOCKPILE, is hereby amended
to add the following to the end thereof, "pursuant to
Section 6(i), COMMON COAL STOCKPILE AND SEPARATE COAL
STOCKPILES, of this Ownership Agreement."
(b) The first sentence of Section 1(r), COMMON COAL
STOCKPILE COSTS, is hereby amended to delete the words
"Section 3(d), FOSSIL FUEL," and to substitute the
words "subsection (iii) of Section 3(c), SEPARATE FUEL
PROCUREMENT" therefore.
The second sentence of Section 1(r), COMMON COAL
STOCKPILE COSTS, is hereby amended to add the words
"Other Fuel Costs, Separate Coal Stockpile Costs and"
after the words "shall not include."
- 2 -
<PAGE>
(c) Section 1(u), COMMON PROCUREMENT PARTICIPANT, is hereby
amended to add the words "subsection (iii) of" after
the words "exercised its rights under" in subsection
(i) thereof.
Section 1(u), COMMON PROCUREMENT PARTICIPANT, is hereby
amended to delete the words "undivided ownership
interests" and "undivided percentage ownership
interest" and to substitute the words "Pro Forma
Ownership Interest in Plant Scherer" therefore.
(d) The second sentence of Section 1(bo), OTHER FUEL COSTS,
is hereby amended to add the words "Common Coal
Stockpile Costs, Separate Coal Stockpile Costs and"
after the words "shall not include."
(e) Section 1(bz), PLANT SCHERER PARTICIPATION AGREEMENTS,
is hereby amended to delete the words "William J. Wade
as Owner Trustees" and to substitute the words
"NationsBank of Georgia, N.A. (as successor to William
J. Wade) as Owner Trustees, as amended" therefore.
(f) Section 1(cc), PRO FORMA OWNERSHIP INTERESTS IN PLANT
SCHERER, is hereby amended to add words "by four" after
the words "obtained by dividing."
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<PAGE>
Section 1(cc), PRO FORMA OWNERSHIP INTEREST IN PLANT
SCHERER, is hereby amended to delete "(i)" and the
words "by (ii) four" therefrom.
(g) Section 1(cu), SEPARATE COAL STOCKPILE COSTS, is hereby
amended by deleting such Section 1(cu) in its entirety
and by substituting, in lieu thereof, the following:
"(cu) Separate Coal Stockpile Costs. "Separate
Coal Stockpile Costs" shall mean with respect to each
Separate Coal Stockpile Participant all costs incurred
by the Agent for such Separate Coal Stockpile
Participant (or by a Common Procurement Participant in
connection with any contract for fuel entered into in
accordance with the provisions of subsection (iii) of
Section 3(c), SEPARATE FUEL PROCUREMENT, of the
Operating Agreement) that are allocable to the
acquisition, processing, transportation, delivering,
handling, storage, accounting, analysis, measurement
and disposal of coal for such Separate Coal Stockpile
Participant, including, without limitation, all costs
incurred by GPC as Agent in administering fuel and
transportation contracts entered into by such Separate
Coal Stockpile Participant pursuant to any one or more
of Section 6(i), COMMON COAL STOCKPILE AND SEPARATE
COAL STOCKPILES, hereof or subsection (ii) of Section
- 4 -
<PAGE>
3(c), SEPARATE FUEL PROCUREMENT, subsection (i) of
Section 3(d), FOSSIL FUEL or Section 3(e), COMMON COAL
STOCKPILE AND SEPARATE COAL STOCKPILES, of the
Operating Agreement, and including any advance payments
in connection therewith, less credits related to such
costs applied as appropriate, and including that
portion of administrative and general expenses which is
properly and reasonably allocable to acquisition and
management of coal for such Separate Coal Stockpile
Participant's Separate Coal Stockpile and for which the
incurring party has not otherwise been reimbursed.
Separate Coal Stockpile Costs shall not include Common
Coal Stockpile Costs, Other Fuel Costs and amortization
of the Plant Scherer initial fossil fuel supply,
including, without limitation, unrecoverable base
coal."
(h) Section 1(cw), SEPARATE PROCUREMENT PARTICIPANT, is
hereby amended by deleting such Section 1(cw) in its
entirety and by substituting, in lieu thereof, the
following:
"(cw) Separate Procurement Participant.
"Separate Procurement Participant" shall mean each
Separate Coal Stockpile Participant (i) which has
exercised its rights under the applicable subsections
- 5 -
<PAGE>
of Sections 3(c), SEPARATE FUEL PROCUREMENT of the
Operating Agreement, Section 2(c) (iii) of the Units
Operating Agreement, Section 3(c), SEPARATE FUEL
PROCUREMENT of the Unit Three Operating Agreement or
(ii) which has been found by a vote of a majority of
the Pro Forma Ownership Interest in Plant Scherer of
the Common Procurement Participants (excluding the Pro
Forma Ownership Interest in Plant Scherer of the Common
Procurement Participant under consideration) to have
violated the policies and rules for Common Procurement
Participants established from time to time by the Plant
Scherer Managing Board; and which has not been
reestablished as a Common Procurement Participant
pursuant to subsection (i) of Section 3(d), FOSSIL
FUEL, of the Operating Agreement."
(i) Section 1(df), UNIFORM SYSTEM OF ACCOUNTS, is hereby
amended to delete the words "(Class A and Class B)" and
to substitute the words "subject to the provisions of
the Federal Power Act" therefore.
- 6 -
<PAGE>
3. Amendment to Section 3, SALE TO FPL OF UNDIVIDED OWNERSHIP
INTERESTS IN SCHERER UNIT NO. 4.
(a) The first sentence of Section 3(c), CLOSINGS, is hereby
amended to delete the words "June 30, 1991" and to
substitute the words "July 2, 1991" therefore.
(b) The fourth sentence of Section 3(c), CLOSINGS, is
hereby amended to delete the words "June 30, 1991" and
to substitute the words "July 2, 1991" therefore.
4. Amendment to Section 4, SALE TO JEA OF UNDIVIDED OWNERSHIP
INTERESTS IN SCHERER UNIT NO. 4.
(a) The first sentence of Section 4(c), CLOSINGS, is hereby
amended to delete the words "June 30, 1991" and to
substitute the words "July 2, 1991" therefore.
(b) The third sentence of Section 4(c), CLOSINGS, is hereby
amended to delete the words "June 30, 1991" and to
substitute the words "July 2, 1991" therefore.
5. Amendment to Section 6, OWNERSHIP, RIGHTS AND OBLIGATIONS.
(a) Subsection (vii) of Section 6(d), DAMAGE AND
DESTRUCTION, is hereby amended to add the words
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<PAGE>
"actually incurred" after the words "cost of capital"
and to add the following to the end thereof:
"Except as otherwise agreed to by the Participants and
the Additional Unit Participants, the Participants may
not repair or reconstruct the Additional Units or the
Additional Unit Common Facilities and the Additional
Unit Participants may not repair or reconstruct the
Units or the Unit Common Facilities."
(b) Subsections (i), (ii) and (iii) of Section 6(g), FOSSIL
FUEL, are hereby amended to add the words "5(b),
SCHEDULING AND DISPATCHING," after the words "Sections
3(e), COMMON COAL STOCKPILE AND SEPARATE COAL
STOCKPILES," in each of those subsections.
(c) Subsection (ii) of Section 6(i), COMMON COAL STOCKPILE
AND SEPARATE COAL STOCKPILES, is hereby amended to add
the words "5(b), SCHEDULING AND DISPATCHING" after the
words "Sections 3(e), COMMON COAL STOCKPILE AND
SEPARATE COAL STOCKPILES."
(d) Subsection (ii) of Section 6(i), COMMON COAL STOCKPILE
AND SEPARATE COAL STOCKPILES, is hereby amended to add
the following to the end thereof, "except as provided
in subsection (viii) of this Section 6(i)."
- 8 -
<PAGE>
(e) The last sentence of subsection (iii) of Section 6(i),
COMMON COAL STOCKPILE AND SEPARATE COAL STOCKPILES, is
hereby amended to delete the words "undivided ownership
interests" and to substitute the words "Pro Forma
Ownership Interest in Plant Scherer" therefore.
(f) Subsection (vi) of Section 6(i), COMMON COAL STOCKPILE
AND SEPARATE COAL STOCKPILES, is hereby amended to add
the following to the end thereof, "under this Section
6(i)."
6. Amendment to Section 10, MISCELLANEOUS.
The first sentence of Section 10(s), CERTAIN PROVISIONS
APPLICABLE DURING BUY-BACK PERIOD, is hereby amended to delete
the words "Section 5(c)" and to substitute the words "Section
5(b)" therefore.
7. Miscellaneous.
This Amendment shall be construed in connection with and as
a part of the Ownership Agreement, and all terms, conditions and
covenants contained in the Ownership Agreement, except as herein
modified, shall be and remain in full force and effect. The
parties hereto agree that they are bound by the terms and
conditions of the Ownership Agreement as amended hereby.
- 9 -
<PAGE>
This Amendment may be executed in any number of
counterparts, each executed counterpart constituting an original
but altogether one and the same instrument.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
- 10 -
<PAGE>
IN WITNESS WHEREOF, the undersigned Parties hereto have duly
executed this Amendment to the Ownership Agreement under seal as
of the date first above written.
Signed, sealed and delivered GEORGIA POWER COMPANY, as a
in the presence of: Scherer Unit No. 4 Participant
___________________________ By: ________________________
___________________________ Attest: ____________________
Notary Public
(CORPORATE SEAL)
Signed, sealed and delivered FLORIDA POWER & LIGHT COMPANY,
in the presence of: as a Scherer Unit No. 4
Participant
___________________________ By: _________________________
___________________________ Attest: _____________________
Notary Public
(CORPORATE SEAL)
Signed, sealed and delivered JACKSONVILLE ELECTRIC
in the presence of: AUTHORITY, as a Scherer Unit
No. 4 Participant
___________________________ By: _________________________
___________________________ Attest: ____________________
Notary Public
(CORPORATE SEAL)
Signed, sealed and delivered GEORGIA POWER COMPANY, as
in the presence of: Agent
___________________________ By: _________________________
___________________________ Attest: _____________________
Notary Public
(CORPORATE SEAL)
H:\wpdocs\gpc\unit4\amends\owneramd.fnl - 11 -
<PAGE>
Exhibit 10(a)61
Execution Copy
AMENDMENT NO.1, DATED AS OF JUNE 15, 1994,
TO THE PLANT ROBERT W. SCHERER UNIT NUMBER FOUR
OPERATING AGREEMENT
among
GEORGIA POWER COMPANY
FLORIDA POWER & LIGHT COMPANY
and
JACKSONVILLE ELECTRIC AUTHORITY
<PAGE>
THIS AMENDMENT NO.1, dated as of June 15, 1994, is among
GEORGIA POWER COMPANY, a corporation organized and existing under
the laws of the State of Georgia ("GPC"), FLORIDA POWER & LIGHT
COMPANY, a corporation organized and existing under the laws of
the State of Florida ("FPL"), and JACKSONVILLE ELECTRIC
AUTHORITY, a body politic and corporate and an independent agency
of the City of Jacksonville, Florida, organized and existing
under the laws of the State of Florida, ("JEA"), and is Amendment
No. 1 to that certain Plant Robert W. Scherer Unit Number Four
Operating Agreement, dated as of December 31, 1990 (the
"Operating Agreement"), among GPC, FPL and JEA.
W I T N E S S E T H :
WHEREAS, GPC, FPL and JEA have previously entered into the
Operating Agreement to provide, among other things, for the
management, control, operation and maintenance of Scherer Unit
No. 4, the Additional Unit Common Facilities, the Plant Scherer
Common Facilities and in the Plant Scherer Coal Stockpile; and
WHEREAS, the parties hereto desire to amend certain
provisions of the Operating Agreement;
NOW, THEREFORE, in consideration of the mutual agreements
herein set forth, the parties hereto hereby agree as follows:
<PAGE>
1. Certain Definitions. Capitalized terms and phrases
used and not otherwise defined in this Amendment shall have the
respective meanings assigned to them by the Ownership Agreement,
the Operating Agreement, or both, unless the context or use
clearly indicates otherwise. The rules of interpretation,
instruction, or both, set forth in the Operating Agreement shall
apply with equal force and effect to this Amendment.
2. Amendment to Section 1, DEFINITIONS.
(a) Section 1(q), COMMON COAL STOCKPILE, is hereby amended
to add the following to the end thereof, "pursuant to
Section 6(i), COMMON COAL STOCKPILE AND SEPARATE COAL
STOCKPILES, of the Ownership Agreement."
(b) The first sentence of Section 1(r), COMMON COAL
STOCKPILE COSTS, is hereby amended to delete the words
"Section 3(d), FOSSIL FUEL," and to substitute the
words "subsection (iii) of Section 3(c), SEPARATE FUEL
PROCUREMENT" therefore.
The second sentence of Section 1(r), COMMON COAL
STOCKPILE COSTS, is hereby amended to add the words
"Other Fuel Costs, Separate Coal Stockpile Costs and"
after the words "shall not include."
<PAGE>
(c) Section 1(v), COMMON PROCUREMENT PARTICIPANT, is hereby
amended to add the words "subsection (iii) of" after
the words "exercised its rights under" in subsection
(i) thereof.
Section 1(v), COMMON PROCUREMENT PARTICIPANT, is hereby
amended to delete the words "undivided ownership
interests" and "undivided percentage ownership
interest" and to substitute the words "Pro Forma
Ownership Interest in Plant Scherer" therefore.
(d) The second sentence of Section 1(bb), OTHER FUEL COSTS,
is hereby amended to add the words "Common Coal
Stockpile Costs, Separate Coal Stockpile Costs and"
after the words "shall not include."
(e) Section 1(bn), PLANT SCHERER PARTICIPATION AGREEMENTS,
is hereby amended to delete the words "William J. Wade
as Owner Trustees" and to substitute the words
"NationsBank of Georgia, N.A. (as successor to William
J. Wade) as Owner Trustees, as amended" therefore.
(f) Section 1(bq), PRO FORMA OWNERSHIP INTERESTS IN PLANT
SCHERER, is hereby amended to add words "by four" after
the words "obtained by dividing."
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<PAGE>
Section 1(bq), PRO FORMA OWNERSHIP INTEREST IN PLANT
SCHERER, is hereby amended to delete "(i)" and the
words "by (ii) four" therefrom.
(g) Section 1(cf), SEPARATE COAL STOCKPILE COSTS, is hereby
amended by deleting such Section 1(cf) in its entirety
and by substituting, in lieu thereof, the following:
"(cf) Separate Coal Stockpile Costs. "Separate
Coal Stockpile Costs" shall mean with respect to each
Separate Coal Stockpile Participant all costs incurred
by the Agent for such Separate Coal Stockpile
Participant (or by a Common Procurement Participant in
connection with any contract for fuel entered into in
accordance with the provisions of subsection (iii) of
Section 3(c), SEPARATE FUEL PROCUREMENT, hereof) that
are allocable to the acquisition, processing,
transportation, delivering, handling, storage,
accounting, analysis, measurement and disposal of coal
for such Separate Coal Stockpile Participant,
including, without limitation, all costs incurred by
GPC as Agent in administering fuel and transportation
contracts entered into by such Separate Coal Stockpile
Participant pursuant to any one or more of Section
6(i), COMMON COAL STOCKPILE AND SEPARATE COAL
STOCKPILES, of the Ownership Agreement or subsection
- 4 -
<PAGE>
(ii) of Section 3(c), SEPARATE FUEL PROCUREMENT,
subsection (i) of Section 3(d), FOSSIL FUEL or Section
3(e), COMMON COAL STOCKPILE AND SEPARATE COAL
STOCKPILES, hereof, and including any advance payments
in connection therewith, less credits related to such
costs applied as appropriate, and including that
portion of administrative and general expenses which is
properly and reasonably allocable to acquisition and
management of coal for such Separate Coal Stockpile
Participant's Separate Coal Stockpile and for which the
incurring party has not otherwise been reimbursed.
Separate Coal Stockpile Costs shall not include Common
Coal Stockpile Costs, Other Fuel Costs and amortization
of the Plant Scherer initial fossil fuel supply,
including, without limitation, unrecoverable base
coal."
(h) Section 1(ch), SEPARATE PROCUREMENT PARTICIPANT, is
hereby amended by deleting such Section 1(ch) in its
entirety and by substituting, in lieu thereof, the
following:
"(ch) Separate Procurement Participant.
"Separate Procurement Participant" shall mean each
Separate Coal Stockpile Participant (i) which has
exercised its rights under the applicable subsections
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<PAGE>
of Sections 3(c), SEPARATE FUEL PROCUREMENT hereof,
Section 2(c)(iii) of the Units Operating Agreement,
Section 3(c), SEPARATE FUEL PROCUREMENT of the Unit
Three Operating Agreement or (ii) which has been found
by a vote of a majority of the Pro Forma Ownership
Interest in Plant Scherer of the Common Procurement
Participants (excluding the Pro Forma Ownership
Interest in Plant Scherer of the Common Procurement
Participant under consideration) to have violated the
policies and rules for Common Procurement Participants
established from time to time by the Plant Scherer
Managing Board; and which has not been reestablished as
a Common Procurement Participant pursuant to subsection
(i) of Section 3(d), FOSSIL FUEL, hereof."
(i) Section 1(cl), SPOT COAL, is hereby amended by deleting
such Section 1(cl) in its entirety and by substituting,
in lieu thereof, the following:
"(cl) SPOT COAL. "Spot Coal" shall mean all coal
purchased for the Common Coal Stockpile or any Separate
Coal Stockpile under an arrangement of acquisition for
a period of less than one year, or some other period
agreed to by the written approval or consent of those
members of the Plant Scherer Managing Board which
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<PAGE>
collectively own at least a 76% Pro Forma Ownership
Interest in Plant Scherer."
(j) Section 1(df), UNIFORM SYSTEM OF ACCOUNTS, is hereby
amended to delete the words "(Class A and Class B)" and
to substitute the words "subject to the provisions of
the Federal Power Act" therefore.
3. Amendment to Section 3, AUTHORITY AND RESPONSIBILITY FOR
OPERATION.
(a) The first paragraph of subsection (ii)(B) of Section
3(c), SEPARATE FUEL PROCUREMENT, is hereby amended to
add the following to the end thereof, "including,
without limitation, to extend, terminate or renegotiate
the contract or exercise options thereunder and to sue
the supplier."
(b) Subsection (iii) of Section 3(c), SEPARATE FUEL
PROCUREMENT, is hereby amended by deleting such
subsection in its entirety and by substituting, in lieu
thereof, the following:
"(iii) Subject to amendment of the other Plant
Scherer Participation Agreements to be consistent with
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<PAGE>
the following provisions, GPC, FPL and JEA agree as
follows:
In the event that any Common Procurement
Participant (other than GPC, as Agent) should be able
to locate and arrange for a source of coal for the
Common Procurement Participants and (A) the total cost
per Btu of such coal, including, without limitation,
all brokerage, transportation, handling, testing and
storage charges, is equal to or lower than that of the
coal which GPC, as Agent, would be able to procure for
the Common Procurement Participants for the same period
of time; (B) the quality and characteristics of such
coal are in all respects equal to or better than and
compatible with those of the other coal being utilized
or to be utilized in the Common Coal Stockpile during
the period of such contract, and such coal is in all
respects compatible with the Units and the Additional
Units and will enable the Units and the Additional
Units to operate at their normal operational levels in
compliance with all Legal Requirements applying
thereto; (C) transportation for such coal can be
arranged which is at least as reliable as
transportation which would be available for the other
sources of coal for the Common Coal Stockpile for the
same period of time, and such transportation is
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<PAGE>
compatible with the transportation and coal delivery
facilities of the Units and the Additional Units; (D)
all parties materially associated with the supply of
such coal, including, without limitation, the vendor,
broker, mine operator and transporter, are at least as
reliable and technically and financially qualified as
those with whom GPC, as Agent, would be able to
contract for the other coal for the Common Coal
Stockpile during the same period of time; (E)
procurement of such coal would not interfere with,
diminish any benefits of or replicate any other coal
arrangement which GPC, as Agent, has procured for or
entered into for the Common Procurement Participants,
including, without limitation, any options or rights
for renewals or extensions of contacts, and would not
interfere with, diminish any benefits of or replicate
any transportation arrangements, agreements or tariffs;
(F) procurement of such coal would not increase or
diminish the level of coal supply in the Common Coal
Stockpile determined by GPC, as Agent, to be the
appropriate level therefor; and (G) the vendor of such
coal is willing to enter into a contract with GPC and
such of the Separate Coal Stockpile Participants
desiring to participate in such coal supply arrangement
on terms and conditions no less favorable to the Common
Procurement Participants than those then being
- 9 -
<PAGE>
bargained for by GPC; then GPC, as Agent for the Common
Procurement Participants, shall offer such coal supply
arrangement to the Common Procurement Participants in
accordance with the provisions of Section 3(d) hereof.
If GPC, on behalf of the other Common Coal Stockpile
Participants, or if a Separate Coal Stockpile
Participant for its own account, shall enter into one
or more contracts for such coal supply, then GPC shall
thereafter exclusively administer such contract and all
transportation arrangements associated therewith, and
all costs and benefits of such coal supply arrangement
shall be shared pursuant to the other provisions of
this Agreement and of the Ownership Agreement. No
Participant or Additional Unit Participant (other than
GPC, as Agent, or a Separate Coal Stockpile Participant
for its own account) shall enter into any arrangement
or agreement with respect to the procurement of coal
pursuant to this subsection (iii) of Section 3(c), and
any Participant or Additional Unit Participant (other
than GPC, as Agent, or a Separate Coal Stockpile
Participant for its own account) which shall enter into
any such arrangement or agreement (or which is charged
in any suit, action or other proceeding with having
done so) shall indemnify the other Participants and
Additional Unit Participants for all costs, expenses,
judgments and penalties associated therewith and
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<PAGE>
incurred by them, including, without limitation, all
legal fees incurred in connection with any suit, action
or other proceeding."
(c) Subsection (i)(A) of Section 3(d), FOSSIL FUEL, is
hereby amended as follows:
(1) The title of such subsection is hereby amended to
delete the word "Fuel" and to substitute the words
"Coal and Transportation" therefore.
(2) The first sentence of such subsection is hereby
amended to add the words "Section 3(c), SEPARATE
FUEL PROCUREMENT," after the words "Subject to the
provisions of."
(3) The second sentence of such subsection is hereby
amended to add the word "and" after the words
"Common Coal Stockpile."
(d) Subsection (i)(B) of Section 3(d), FOSSIL FUEL, is
hereby amended as follows:
(1) The title of such subsection is hereby amended to
delete the word "Fuel" and to substitute the words
"Coal and Transportation" therefore.
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<PAGE>
(2) The third sentence of such subsection is hereby
amended to add the following to the end thereof,
"including, without limitation, to extend,
terminate or renegotiate the contract or exercise
options thereunder and to sue the supplier."
(e) Subsection (i)(C) of Section 3(d), FOSSIL FUEL, is
hereby amended by deleting the first sentence of such
subsection in its entirety and by substituting, in lieu
thereof, the following:
"Upon (i) exercise by any Separate Coal Stockpile
Participant of a procurement under subsection (ii) of
Section 3(c), SEPARATE FUEL PROCUREMENT, hereof, or
(ii) violation by any Separate Coal Stockpile
Participant, which has been found by a vote of a
majority of the Pro Forma Ownership Interest in Plant
Scherer of the Common Procurement Participants
(excluding the Pro Forma Ownership Interest in Plant
Scherer of the Common Procurement Participant under
consideration) of any policy or rule for Common
Procurement Participants established from time to time
by the Plant Scherer Managing Board, such Separate Coal
Stockpile Participant shall immediately cease to be a
Common Procurement Participant, and GPC shall have no
obligation to procure coal or transportation on behalf
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<PAGE>
of such Separate Coal Stockpile Participant other than
for Spot Coal."
(f) Subsections (iii), (iv) and (v) of Section 3(d), FOSSIL
FUEL are hereby amended to add the words "5(b),
SCHEDULING AND DISPATCHING" after the words "Sections
3(e), COMMON COAL STOCKPILE AND SEPARATE COAL
STOCKPILES" in each of those subsections.
(g) Subsection (ii) of Section 3(e), COMMON COAL STOCKPILE
AND SEPARATE COAL STOCKPILES, is hereby amended to add
the words "5(b), SCHEDULING AND DISPATCHING," after the
words "Sections 3(e), COMMON COAL STOCKPILE AND
SEPARATE COAL STOCK PILES."
(h) Subsection (ii) of Section 3(e), COMMON COAL STOCKPILE
AND SEPARATE COAL STOCKPILES, is hereby amended to add
the following to the end thereof, "except as provided
in subsection (viii) of this Section 3(e)."
(i) The fourth sentence of subsection (iii) of Section
3(e), COMMON COAL STOCKPILE AND SEPARATE COAL
STOCKPILES, is hereby amended to add the word
"undivided" after the words "will equal the."
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<PAGE>
(j) The last sentence of subsection (iii) of Section 3(e),
COMMON COAL STOCKPILE AND SEPARATE COAL STOCKPILES, is
hereby amended to delete the words "undivided ownership
interests" and to substitute the words "Pro Forma
Ownership Interest in Plant Scherer" therefore.
(k) Subsection (vi) of Section 3(e), COMMON COAL STOCKPILE
AND SEPARATE COAL STOCKPILES, is hereby amended by
adding the following to the end thereof, "under this
Section 3(e)."
4. Amendment to Section 5, OPERATION, RIGHTS AND OBLIGATIONS.
(a) Section 5(i), BUSINESS PLAN; OPERATING BUDGET FOR
COMMON FACILITIES, is hereby amended by adding the
following after the second paragraph thereof:
"Section 5.1 of the Plant Scherer Managing Board
Agreement and Appendix A of the Plant Scherer Managing
Board Agreement shall govern and control any
conflicting provision of this Operating Agreement with
regard to operating budgets for the Plant Scherer
Common Facilities."
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<PAGE>
(b) Section 5(l), CAPITAL BUDGET FOR COMMON FACILITIES, is
hereby amended by adding the following after the second
paragraph thereof:
"Section 5.1 of the Plant Scherer Managing Board
Agreement and Appendix A of the Plant Scherer Managing
Board Agreement shall govern and control any
conflicting provision of this Operating Agreement with
regard to capital budgets for the Plant Scherer Common
Facilities."
(d) The third sentence of Section 5(p), INSURANCE, is
hereby amended to delete the words "Section 5(h)
SHARING OF COSTS - GENERAL" and to substitute the words
"Section 5(j), PAYMENT AND SETTLEMENT OF OPERATING
COSTS," therefore.
5. Amendment to Section 6, CERTAIN ADDITIONAL AGREEMENTS AMONG
SCHERER UNIT NO. 4 PARTICIPANTS.
(a) The first sentence of subsection (v) of Section 6(c),
LIABILITY, REMEDIES AND LIMITATIONS OF LIABILITY, is
hereby amended to delete the word "possible" and to
substitute the word "permissible" therefore.
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<PAGE>
(b) The first sentence of Section 6(e), AVAILABILITY OF
RECORDS, is hereby amended to delete the word "Costs"
after the words "with respect to its Separate Coal
Stockpile" and to delete the word "as" before the word
"appropriate" and substitute the word "are" therefore.
6. Miscellaneous.
This Amendment shall be construed in connection with and as
a part of the Operating Agreement, and all terms, conditions and
covenants contained in the Operating Agreement, except as herein
modified, shall be and remain in full force and effect. The
parties hereto agree that they are bound by the terms and
conditions of the Operating Agreement as amended hereby.
This Amendment may be executed in any number of
counterparts, each executed counterpart constituting an original
but altogether one and the same instrument.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
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<PAGE>
IN WITNESS WHEREOF, the undersigned Parties hereto have duly
executed this Amendment to the Operating Agreement under seal as
of the date first above written.
Signed, sealed and delivered GEORGIA POWER COMPANY, as a
in the presence of: Scherer Unit No. 4 Participant
___________________________ By: ________________________
___________________________ Attest: ____________________
Notary Public
(CORPORATE SEAL)
Signed, sealed and delivered FLORIDA POWER & LIGHT COMPANY,
in the presence of: as a Scherer Unit No. 4
Participant
___________________________ By: _________________________
___________________________ Attest: _____________________
Notary Public
(CORPORATE SEAL)
Signed, sealed and delivered JACKSONVILLE ELECTRIC
in the presence of: AUTHORITY, as a Scherer Unit
No. 4 Participant
___________________________ By: _________________________
___________________________ Attest: ____________________
Notary Public
(CORPORATE SEAL)
Signed, sealed and delivered GEORGIA POWER COMPANY, as
in the presence of: Agent
___________________________ By: _________________________
___________________________ Attest: _____________________
Notary Public
(CORPORATE SEAL)
H:\wpdocs\gpc\scherer\unit4\amends\operamd.fnl - 17 -
<PAGE>
Exhibit 10(a)65
THE SOUTHERN COMPANY
PRODUCTIVITY IMPROVEMENT PLAN
AMENDED AND RESTATED
EFFECTIVE JANUARY 1, 1994
<PAGE>
THE SOUTHERN COMPANY
PRODUCTIVITY IMPROVEMENT PLAN
Amended and Restated
Effective January 1, 1994
ARTICLE DESCRIPTION PAGE
I Definitions . . . . . . . . . . . . . . . . . . 2
II Participants . . . . . . . . . . . . . . . . . . 4
III Corporate Financial Performance Award . . . . . 5
IV Election for Deferral of Payment . . . . . . . . 7
V Deferred Compensation Accounts . . . . . . . . . 9
VI Distribution of Deferred Amounts . . . . . . . 11
VII Miscellaneous Provisions . . . . . . . . . . . 13
<PAGE>
THE SOUTHERN COMPANY
PRODUCTIVITY IMPROVEMENT PLAN
Purposes
The purposes of The Southern Company Productivity
Improvement Plan (the "Plan") are to provide a financial
incentive which will focus the efforts of participants on areas
that will have a direct and significant influence on corporate
performance and to provide the potential for levels of
compensation that will enhance the Employing Companies' abilities
to attract, retain and motivate key management employees. In
order to achieve these objectives, the Plan will be based upon
corporate performance.
The effective date of this amendment and restatement of the
Plan shall be January 1, 1994, and except as otherwise provided
herein, the terms of the Plan as in effect prior to January 1,
1994 shall continue to be applicable until such date.
<PAGE>
ARTICLE I
Definitions
For purposes of the Plan, the following terms shall have the
following meanings unless a different meaning is plainly required
by the context:
1.1 "Annual Corporate Financial Performance Award" shall
mean the amount awarded to a Participant in accordance with
Article III.
1.2 "Annual Salary" shall mean the wages paid to a
Participant without including overtime and before deduction of
taxes, FICA, etc.
1.3 "Award" shall mean an Annual Corporate Financial
Performance Award.
1.4 "Award Opportunity" shall mean the standard award a
Participant could receive as an Annual Corporate Financial
Performance Award.
1.5 "Board of Directors" shall mean the Board of Directors
of Southern Company Services, Inc.
1.6 "Chief Executive Officer" shall mean the individual
designated as such by the Board of Directors of an Employing
Company and of The Southern Company.
1.7 "Committee" or "Compensation Committee" shall mean the
Compensation Committee of the Board of Directors of The Southern
Company or the Employing Company.
1.8 "Common Stock" shall mean the common stock of The
Southern Company.
1.9 "Computation Period" shall mean a four-year period
commencing on the first day of the initial year of participation
and thereafter it shall mean a four-year period commencing the
first day of January each year.
1.10 "Deferral Election" shall mean the Participant's
written election to defer all or a portion of his Award pursuant
to Article IV.
1.11 "Deferred Productivity Improvement Plan Account" shall
mean the account maintained for the Participant in accordance
with Article V.
1.12 "Employee" shall mean any person who is currently
employed by an Employing Company but shall not include any
individual who is eligible to participate in The Southern Company
Executive Productivity Improvement Plan.
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<PAGE>
1.13 "Employing Company" shall mean Southern Company
Services, Inc., or any affiliate or subsidiary (direct or
indirect) of The Southern Company, which the Board of Directors
may from time to time determine to bring under the Plan and which
shall adopt the Plan, and any successor of any of them.
The Employing Companies as of January 1, 1994 are:
Alabama Power Company
Georgia Power Company
Gulf Power Company
Mississippi Power Company
Savannah Electric and Power Company
Southern Company Services, Inc.
Southern Nuclear Operating Company, Inc.
1.14 "Investment Election" shall mean the Participant's
written election to have his deferred Award invested pursuant to
Section 5.3 or Section 5.4.
1.15 "Market Value" shall mean the average of the high and
low sale prices of the Common Stock, as published in the Wall
Street Journal in its report of New York Stock Exchange composite
transactions, on the date such Market Value is to be determined,
as specified herein (or the average of the high and low sale
prices on the trading day immediately preceding such date if the
Common Stock is not traded on the New York Stock Exchange on such
date).
1.16 "Participant" shall mean any Employee who satisfies the
criteria referred to in Article II.
1.17 "Plan" shall mean The Southern Company Productivity
Improvement Plan, as described herein or as from time to time
amended.
1.18 "Grade Level" shall mean the evaluation assigned under
the job evaluation system.
1.19 "Grade Level Value" shall mean the assigned dollar
value within the Annual Salary range for a Grade Level in a
Computation Period, upon which awards are based.
1.20 "Supervisor" shall mean the immediate person
responsible for the supervision of the performance of the
Participant.
Where the context requires, words in the masculine gender
shall include the feminine and neuter genders, words in the
singular shall include the plural, and words in the plural shall
include the singular.
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<PAGE>
ARTICLE II
Participants
2.1 The Participants in the Plan shall be limited to those
Employees of an Employing Company who occupy Grade Level 19 and
higher, as well as any other Employee who occupies a grade
recommended for inclusion in the Plan by the Chief Executive
Officer of an Employing Company with the concurrence of the Chief
Executive Officer of The Southern Company, on January 1 of each
calendar year; provided, however, that any additional Employees
who are recommended for inclusion in the Plan by the Chief
Executive Officer of an Employing Company with the concurrence of
the Chief Executive Officer of The Southern Company shall be
identified by Grade Level Value and/or title in an exhibit to the
Plan each January 1.
2.2 A Participant who vacates an eligible grade during a
Computation Period for one of the following reasons shall be
included in the Plan on a pro-rata basis:
(a) retirement,
(b) total disability, as determined by the Social
Security Administration,
(c) death,
(d) demotion due to health related reasons, or
(e) termination of employment, but only in the event
the Participant shall transfer to or be reemployed by
Southern Electric International, Inc. during the same
Computation Period.
The pro-rata amount of an Award shall be determined for the
Computation Period in which such termination occurs by a fraction
which is the number of months employed by an Employing Company
during the Computation Period prior to such termination, divided
by the total number of months in the Computation Period
(generally forty-eight (48)) which ends immediately after such
termination. The actual Awards will be made as soon as
practicable and in accordance with any Deferral Election in
effect. A Participant who vacates an eligible grade for reasons
other than those described above shall forfeit any Award for any
Computation Periods that have not closed as of the date the
Participant vacates such eligible grade.
2.3 The administration of Awards for Participants who are
promoted or transferred from one grade included in the Plan to
another grade included in the Plan, both within an Employing
Company and between Employing Companies, shall be on a pro-rata
basis in accordance with procedures adopted by the Employing
Company or Companies.
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<PAGE>
ARTICLE III
Corporate Financial Performance Award
3.1 The Award Opportunity for each Participant shall be
based upon his Grade Level(s) and shall range from fifty percent
(50%) to five percent (5%) of the Grade Level Value(s) for the
Grade Level(s) held by the Participant during the Computation
Period. In the event a Participant's Grade Level shall change
during a Computation Period, a pro-rata amount of an Award
Opportunity shall be determined for each Grade Level held by the
Participant during the Computation Period. The Award Opportunity
for each Grade Level shall be in the same proportion as the ratio
of the number of months a Grade Level is held by the Participant
during the Computation Period (determined as of the last day of
the month) bears to the total number of months in such
Computation Period (generally forty-eight (48) months). The
Award Opportunity for each Grade Level held by a Participant
shall be determined in accordance with the chart set forth in
Exhibit A herein.
3.2 Each Award Opportunity shall be further adjusted by the
award percentage based on The Southern Company's average return
on common equity ranking during a Computation Period as compared
to the average return on common equity ranking of certain other
member companies of the Southeastern Electric Exchange, as set
forth in Exhibit B herein. In the case of an individual becoming
a Participant subsequent to the initial year of the Plan, said
Participant will participate on a pro-rata basis in each
Computation Period which ends not less than two (2) years after
becoming a Participant. Said pro-rata portion shall be
determined for each Computation Period by a fraction which is the
number of months remaining in the Computation Period after
qualifying as a Participant, divided by the total number of
months in the Computation Period (generally forty-eight (48)). A
new four-year measuring period begins each year in order to
recognize the need to link objectives over longer periods of
time, to recognize changes in the operating environment, and to
encourage Participants to make long-term decisions.
3.3 Notwithstanding the above, an employee of Savannah
Electric and Power Company ("SEPCO") who has been continuously
employed by SEPCO since January 1, 1986 shall participate in the
Award for the Computation Periods ending in 1989, 1990 and 1991
to the same extent he would have been eligible to participate
based on his Grade Level then in effect, if SEPCO had been
acquired by The Southern Company on January 1, 1986.
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<PAGE>
3.4 Notwithstanding the above provisions, an Award will not
be granted for any Computation Period ending with the calendar
year in which the current earnings of The Southern Company are
less than the amount necessary to fund the dividends on its
Common Stock at the rate such dividends were paid for the
immediately preceding calendar year.
3.5 In the discretion of the Compensation Committee of the
Board of Directors, the Award for one or more Computation
Period(s) may be calculated without regard to any extraordinary
item of income or expense incurred by the Southern Company or any
Employing Company, provided such determination is made prior to
the close of the Computation Period.
3.6 The Awards to the Participants will be paid in cash as
soon as is practicable after all evaluations are completed. The
Award payment may be deferred at the option of the Participant in
accordance with Article IV. In the event a Participant shall not
elect to defer a portion of his Award and shall die prior to the
payment of such amount, payment shall be made to the beneficiary
designated by the Participant. In the event a beneficiary
designation has not been made or the designated beneficiary is
deceased or cannot be located, payment shall be made to the
estate of the Participant or former Participant.
- 6 -
<PAGE>
ARTICLE IV
Election for Deferral of Payment
4.1 A Participant may elect to defer payment of an Award
until termination of service with an Employing Company by filing
a Deferral Election with the Employing Company not later than
December 31st of the year preceding the next succeeding
Computation Period.
4.2 Participants may elect to defer payments of any whole
percentage (1% - 100%) of any Award that might be made to him.
If a Deferral Election is duly made pursuant to the provisions of
this Article with respect to an Award, an individual account will
be maintained by the Employing Company as of the date of the
Award.
4.3 The Deferral Election shall be made in writing on a
form prescribed by the Employing Company and said Deferral
Election shall state:
(a) That the Participant wishes to make an election to
defer payment of the Award;
(b) The percentage of the Award to be deferred;
(c) The method of payment, which shall be the payment
of a lump-sum or a series of annual payments not to exceed
ten (10) years; and
(d) The time for commencement of distribution of his
Deferred Productivity Improvement Plan Account, but not
later than the first day of the month coinciding with or
next following the second (2nd) anniversary of his
termination of employment with the Employing Company.
4.4 The Deferral Election shall be made by written notice
to be delivered to the Employing Company prior to the first day
of the next succeeding Computation Period and shall be effective
on the first day of such succeeding Computation Period. A
deferral Election for the Corporate Financial Performance
Component shall be an election for the four-year computation
period. A Participant's termination of participation in the Plan
shall not affect Awards previously deferred.
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<PAGE>
4.5 The initial Deferral Election made with respect to
(a) the method of payment whether it be lump sum or installments,
including the number of installments selected, and (b) the time
for commencement of distribution of a Participant's Account may
not be revoked and shall govern the distribution of a
Participant's Deferred Productivity Improvement Account.
Notwithstanding the foregoing, and except as provided below, upon
application to the senior officer in charge of employee relations
of an Employing Company and the approval of such officer in his
sole discretion, a Participant's Deferral Election may be amended
not prior to the 395th day nor later than the 365th day prior to
a Participant's date of termination in order to change (a) the
form, and/or (b) the time for distribution of his Deferred
Productivity Improvement Plan Account in accordance with the
terms of the Plan; provided, however, that any Participant who is
required to file reports pursuant to Section 16(a) of the
Securities and Exchange Act of 1934, as amended, shall not be
permitted to amend his Deferral Election during any time period
for which such Participant is required to file any such reports.
Each Participant making a Deferral Election in accordance with
this Article IV and his successors, shall be bound as to any
action taken pursuant to the terms thereof or pursuant to the
Plan. Notwithstanding anything to the contrary above, if the
time for distribution of a Participant's Deferred Productivity
Improvement Plan Account is accelerated, such Account shall be
discounted to reasonably reflect the time value of money.
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<PAGE>
ARTICLE V
Deferred Compensation Accounts
5.1 An account shall be established on the Employing
Company books for each Participant electing a deferral pursuant
to Article IV, which shall be designated as the Deferred
Productivity Improvement Plan Account of said Participant. The
Awards deferred in accordance with Article IV, pursuant to each
Participant's Investment Election, the amounts computed in
accordance with Section 5.2 and/or the number of shares computed
in accordance with Section 5.1 shall be credited to the Deferred
Productivity Improvement Plan Account.
5.2 The Deferred Productivity Improvement Plan Account of
each Participant electing to invest his deferred Awards for a
Computation Period pursuant to this Section 5.2 shall be credited
with an amount computed by the Employing Company by treating the
Awards deferred as a sum certain to which the Employing Company
will add in lieu of interest an amount equal to the prime rate of
interest set by Wachovia Bank of Georgia, N.A.. Interest will be
computed as if credited from the date such Award would otherwise
have been paid and will be compounded quarterly at the end of
each calendar quarter. The prime rate in effect on the first day
of each calendar quarter shall be deemed the prime rate in effect
for such calendar quarter. Interest will be treated as if
accrued and will be compounded on any balance until such amount
is fully distributed.
5.3 The Deferred Productivity Improvement Plan Account of
each Participant electing to invest his deferred Award for a
Computation Period pursuant to this Section 5.3 shall be credited
with the number of shares (including fractional shares) of Common
Stock which could have been purchased on the date such deferred
Awards otherwise would have been paid based upon the Common
Stock's Market Value. As of each date of payment of dividends on
the Common Stock there shall be credited with respect to shares
of Common Stock in the Participant's Deferred Productivity
Improvement Plan Account such additional shares (including
fractional shares) of Common Stock as follows:
(a) In the case of cash dividends, such additional
shares as could be purchased at the Market Value as of the
payment date with the dividends which would have been
payable if the credited shares had been outstanding;
(b) In the case of dividends payable in property other
than cash or Common Stock, such additional shares as could
be purchased at the Market Value as of the payment date with
the fair market value of the property which would have been
payable if the credited shares had been outstanding; or
- 9 -
<PAGE>
(c) In the case of dividends payable in Common Stock,
such additional shares as would have been payable on the
credited shares if they had been outstanding.
5.4 The Investment Election by a Participant with respect
to his Deferred Productivity Improvement Plan Account shall be
made in writing on a form prescribed by the Employing Company.
Any Investment Election shall be delivered to the Employing
Company prior to the first day of the next succeeding Computation
Period and shall be effective on the first day of such succeeding
Computation Period. The Investment Election made in accordance
with this Article V shall be irrevocable and shall continue from
Computation Period to Computation Period unless the Participant
changes the Investment Election regarding future deferred Awards
by submitting a written request to the Employing Company on a
form prescribed by the Employing Company. Any such change shall
become effective as of the first day of the Computation Period
next following the Computation Period in which such request is
given.
5.5 At the end of each year, a report shall be issued to
each Participant who has a Deferred Productivity Improvement Plan
Account and said report will set forth the amount and the Market
Value of any shares of Common Stock reflected in such Account.
5.6 The terms and provisions of Articles V and VI in effect
prior to the effective date of this amendment and restatement
shall remain in force and continue to apply to Individual
Performance Annual Awards and Annual Corporate Financial
Performance Awards deferred by Participants prior to January 1,
1994.
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<PAGE>
ARTICLE VI
Distribution of Deferred Amounts
6.1 When a Participant terminates his employment with the
Employing Company, said Participant shall be entitled to receive
the entire amount and the Market Value of any shares of Common
Stock (and Fractions thereof) reflected in his Deferred
Productivity Improvement Plan Account maintained by the Employing
Company in accordance with his Deferral Election made pursuant to
Article IV of the Plan. No portion of a Participant's Deferred
Productivity Improvement Plan Account shall be distributed in
Common Stock.
6.2 In the event a Participant elected to receive annual
installments, the first payment shall be made on the first day of
the month selected by the Participant in accordance with the
terms of the Plan, or as soon as reasonably possible thereafter,
and shall be an amount equal to the balance in the Participant's
Deferred Productivity Improvement Plan Account divided by the
number of annual installment payments. Each subsequent annual
payment shall be an amount equal to the balance in the
Participant's Deferred Productivity Improvement Plan Account on
the payment date, divided by the number of the remaining annual
payments and shall be due on the anniversary of the preceding
payment date. The Market Value of any shares of Common Stock
credited to a Participant's Deferred Productivity Improvement
Plan Account shall be determined as of the twenty-fifth (25th)
day of the month immediately preceding the date of any lump sum
or installment distribution.
6.3 Upon the death or total disability of a Participant, or
a former Participant prior to the payment of all amounts and the
Market Value of any shares of Common Stock (and fractions
thereof) credited to said Participant's Deferred Productivity
Improvement Plan Account, the unpaid balance shall be paid in the
sole discretion of the Employing Company (a) in a lump sum to the
designated beneficiary of a Participant or former Participant
within thirty (30) days of the date of death (or as soon as
reasonably possible thereafter) or (b) in accordance with the
Deferral Election made by such Participant or former Participant.
In the event a beneficiary designation is not on file or the
designated beneficiary is deceased or cannot be located, payment
will be made to the estate of the Participant or former
Participant. The Market Value of any shares of Common Stock
credited to a Participant's Deferred productivity Improvement
Plan Account shall be determined as of the twenty-fifth (25th)
day of the month immediately preceding the date of any lump sum
or installment distribution.
6.4 The beneficiary designation may be changed by the
Participant or former Participant at any time, and without the
consent of the prior beneficiary.
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<PAGE>
6.5 The senior officer in charge of employee relations of
an Employing Company, in his sole discretion upon application
made to him, may determine to accelerate payments or, in the
event of death or total disability (as determined by the Social
Security Administration), to extend or otherwise make payments in
a manner different from the manner in which they would be made in
the absence of such determination; provided, however, that if a
payment is accelerated in accordance with this Section 6.5, such
payment shall be discounted to reasonably reflect the time value
of money.
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<PAGE>
ARTICLE VII
Miscellaneous Provisions
7.1 Neither the Participant, his beneficiary, nor his
personal representative shall have any rights to commute, sell,
assign, transfer or otherwise convey the right to receive any
payments hereunder, which payments and the rights thereto are
expressly declared to be nonassignable and nontransferable. Any
attempt to assign or transfer the right to payments of this Plan
shall be void and have no effect.
7.2 The Employing Company shall not reserve or otherwise
set aside funds for the payments of Awards deferred in accordance
with Article IV.
7.3 The Plan may be amended, modified, or terminated by the
Board of Directors in its sole discretion at any time and from
time to time; provided, however, that no such amendment,
modification, or termination shall impair any rights to payments
which have been deferred under the Plan prior to such amendment,
modification, or termination.
7.4 It is expressly understood and agreed that the Awards
made in accordance with the Plan are in addition to any other
benefits or compensation to which a Participant may be entitled
or for which he may be eligible, whether funded or unfunded, by
reason of his employment with the Employing Company.
7.5 There shall be deducted from the payment of each Award
under the Plan the amount of any tax required by any governmental
authority to be withheld and paid over by the Employing Company
to such governmental authority for the account of the person
entitled to such distribution.
7.6 Any Awards paid to a Participant while employed by an
Employing Company shall not be considered in the calculation of
the Participant's benefits under any other employee welfare or
pension benefit plan maintained by an Employing Company, unless
otherwise specifically provided therein.
7.7 This Plan, and all its rights under it, shall be
governed by and construed in accordance with the laws of the
State of Georgia.
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<PAGE>
IN WITNESS WHEREOF, Southern Company Services, Inc., through
its officers duly authorized, hereby amends and restates The
Southern Company Productivity Improvement Plan this ____ day of
____________________, 1994, to be effective January 1, 1994.
SOUTHERN COMPANY SERVICES, INC.
By: _______________________________
Its:
Attest:
By: ________________________
Its:
[CORPORATE SEAL]
(LLC) H:\southern\southern.pip
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<PAGE>
EXPLANATORY NOTES
1. Under the Corporate Financial Component, the average ROCE
for a Computation Period will be determined by
a) calculating the average ROCE for each year in the
Computation Period, b) adding the average ROCE calculations
for all years in the Computation Period; and c) dividing the
total by the number of years in the Computation Period.
2. The peer group companies are as follows:
<PAGE>
THE SOUTHERN COMPANY
PRODUCTIVITY IMPROVEMENT PLAN
EXHIBIT A
Annual Corporate
CEO/Grade Level Financial Performance Opportunity
President/CEO 50%
President/CEO 35%
30 35%
29-28 30%
27-26 25%
25-24 20%
23-22 15%
21-20 10%
19 5%
<PAGE>
THE SOUTHERN COMPANY
PRODUCTIVITY IMPROVEMENT PLAN
EXHIBIT B
AWARD PERCENTAGE SCHEDULE
Position Ranking
12-14 15-17 18-20
Award Percentage Companies Companies Companies
Above Above Above
125% Position 1 Position 1 Position 1
120 1 1 1
115 2 2 2
110 2.5 3 3
105 3 4 4
100 4 4.5 5
95 4.5 5 6
90 5 6 7
85 6 7 8
80 6.5 8 9
75 7 8.5 10
70 8 9 11
65 8.5 10 12
60 9 11 13
55 10 12 14
50 10.5 12.5 14.5
0 Below 10.5 Below 12.5 Below 14.5
<PAGE>
Exhibit 10(a)66
THE SOUTHERN COMPANY
EXECUTIVE PRODUCTIVITY IMPROVEMENT PLAN
EFFECTIVE JANUARY 1, 1994
<PAGE>
THE SOUTHERN COMPANY
EXECUTIVE PRODUCTIVITY IMPROVEMENT PLAN
Amended and Restated
Effective January 1, 1994
ARTICLE DESCRIPTION PAGE
I Definitions . . . . . . . . . . . . . . . . . 2
II Participants . . . . . . . . . . . . . . . . . 5
III Corporate Financial Performance Award . . . . 6
IV Election for Deferral of Payment . . . . . . . 8
V Deferred Compensation Accounts . . . . . . . . 10
VI Distribution of Deferred Amounts . . . . . . . 12
VII Miscellaneous Provisions . . . . . . . . . . . 14
<PAGE>
THE SOUTHERN COMPANY
EXECUTIVE PRODUCTIVITY IMPROVEMENT PLAN
Purposes
The purposes of The Southern Company Executive Productivity
Improvement Plan (the "Plan") are to provide a financial
incentive which will focus the efforts of certain executives on
areas that will have a direct and significant influence on
corporate performance and to provide the potential for levels of
compensation that will enhance the Employing Companies' abilities
to attract, retain and motivate such executives. In order to
achieve these objectives, the Plan will be based upon corporate
performance.
The effective date of this Plan shall be January 1, 1994.
<PAGE>
ARTICLE I
Definitions
For purposes of the Plan, the following terms shall have the
following meanings unless a different meaning is plainly required
by the context:
1.1 "Annual Corporate Financial Performance Award" shall
mean the amount awarded to a Participant in accordance with
Article III.
1.2 "Annual Salary" shall mean the wages paid to a
Participant without including overtime and before deduction of
taxes, FICA, etc.
1.3 "Award" shall mean an Annual Corporate Financial
Performance Award.
1.4 "Award Opportunity" shall mean the standard award a
Participant could receive as an Annual Corporate Financial
Performance Award.
1.5 "Board of Directors" shall mean the Board of Directors
of Southern Company Services, Inc.
1.6 "Chief Executive Officer" shall mean the individual
designated as such by the Board of Directors of an Employing
Company and of The Southern Company.
1.7 "Committee" or "Compensation Committee" shall mean the
Compensation Committee of the Board of Directors of The Southern
Company or the Employing Company.
1.8 "Common Stock" shall mean the common stock of The
Southern Company.
1.9 "Computation Period" shall mean a four-year period
commencing on the first day of the initial year of participation
and thereafter it shall mean a four-year period commencing the
first day of January each year.
1.10 "Deferral Election" shall mean the Participant's
written election to defer all or a portion of his Award pursuant
to Article IV.
1.11 "Deferred Account" shall mean the account maintained
for the Participant in accordance with Article V.
1.12 "Employing Company" shall mean Southern Company
Services, Inc., or any affiliate or subsidiary (direct or
indirect) of The Southern Company, which the Board of Directors
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<PAGE>
may from time to time determine to bring under the Plan and which
shall adopt the Plan, and any successor of any of them.
The Employing Companies as of January 1, 1994 are:
Alabama Power Company
Georgia Power Company
Gulf Power Company
Mississippi Power Company
Savannah Electric and Power Company
Southern Company Services, Inc.
Southern Nuclear Operating Company, Inc.
1.13 "Executive Employee" shall mean any person who is
currently employed by an Employing Company who is an "officer" as
that term is defined in Regulation 16a-1 promulgated by the
Securities Exchange Commission pursuant to the Securities
Exchange Act of 1934, as amended, excluding however any principal
financial officer, principal accounting officer or controller
unless the person holding such position otherwise meets the
definition of "officer" set forth in such Regulation.
1.14 "Investment Election" shall mean the Participant's
written election to have his deferred Award invested pursuant to
Section 5.3 or Section 5.4.
1.15 "Market Value" shall mean the average of the high and
low sale prices of the Common Stock, as published in the Wall
Street Journal in its report of New York Stock Exchange composite
transactions, on the date such Market Value is to be determined,
as specified herein (or the average of the high and low sale
prices on the trading day immediately preceding such date if the
Common Stock is not traded on the New York Stock Exchange on such
date).
1.16 "Participant" shall mean an Executive Employee who
satisfies the criteria referred to in Article II.
1.17 "Plan" shall mean The Southern Company Executive
Productivity Improvement Plan, as described herein or as from
time to time amended.
1.18 "Grade Level" shall mean the evaluation assigned under
the job evaluation system.
1.19 "Grade Level Value" shall mean the assigned dollar
value within the Annual Salary range for a Grade Level in a
Computation Period, upon which awards are based.
1.20 "Supervisor" shall mean the immediate person
responsible for the supervision of the performance of the
Participant.
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<PAGE>
Where the context requires, words in the masculine gender
shall include the feminine and neuter genders, words in the
singular shall include the plural, and words in the plural shall
include the singular.
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<PAGE>
ARTICLE II
Participants
2.1 Participation in the Plan shall be limited to Executive
Employees of the Employing Companies.
2.2 A Participant who vacates an eligible grade during a
Computation Period for one of the following reasons shall be
included in the Plan on a pro-rata basis:
(a) retirement,
(b) total disability, as determined by the Social
Security Administration,
(c) death,
(d) demotion due to health related reasons, or
(e) termination of employment, but only in the event
the Participant shall transfer to or be reemployed by
Southern Electric International, Inc. during the same
Computation Period.
The pro-rata amount of an Award shall be determined for the
Computation Period in which such termination occurs by a fraction
which is the number of months employed by an Employing Company
during the Computation Period prior to such termination, divided
by the total number of months in the Computation Period
(generally forty-eight (48)) which ends immediately after such
termination. The actual Awards will be made as soon as
practicable and in accordance with any Deferral Election in
effect. A Participant who vacates an eligible grade for reasons
other than those described above shall forfeit any Award for any
Computation Periods that have not closed as of the date the
Participant vacates such eligible grade.
2.3 The administration of Awards for Participants who are
promoted or transferred from one grade included in the Plan to
another grade included in the Plan, both within an Employing
Company and between Employing Companies, shall be on a pro-rata
basis in accordance with procedures adopted by the Employing
Company or Companies.
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<PAGE>
ARTICLE III
Corporate Financial Performance Award
3.1 The Award Opportunity for each Participant shall be
based upon his Grade Level(s) and shall range from fifty percent
(50%) to five percent (5%) of the Grade Level Value(s) for the
Grade Level(s) held by the Participant during the Computation
Period. In the event a Participant's Grade Level shall change
during a Computation Period, a pro-rata amount of an Award
Opportunity shall be determined for each Grade Level held by the
Participant during the Computation Period. The Award Opportunity
for each Grade Level shall be in the same proportion as the ratio
of the number of months a Grade Level is held by the Participant
during the Computation Period (determined as of the last day of
the month) bears to the total number of months in such
Computation Period (generally forty-eight (48) months). The
Award Opportunity for each Grade Level held by a Participant
shall be determined in accordance with the chart set forth in
Exhibit A herein.
3.2 Each Award Opportunity shall be further adjusted by the
award percentage based on The Southern Company's average return
on common equity ranking during a Computation Period as compared
to the average return on common equity ranking of the Peer Group
Companies, as set forth in Exhibit B herein. The return on
common equity of the companies set forth on Exhibit B shall be
determined annually by an independent certified public accountant
based on generally accepted accounting principles and shall be
properly adjusted and annualized by such accountant so that each
companies return on common equity may be accurately compared to
that of The Southern Company. In the case of an individual
becoming a Participant subsequent to the initial year of the
Plan, said Participant will participate on a pro-rata basis in
each Computation Period which ends not less than two (2) years
after becoming a Participant. Said pro-rata portion shall be
determined for each Computation Period by a fraction which is the
number of months remaining in the Computation Period after
qualifying as a Participant, divided by the total number of
months in the Computation Period (generally forty-eight (48)). A
new four-year measuring period begins each year in order to
recognize the need to link objectives over longer periods of
time, to recognize changes in the operating environment, and to
encourage Participants to make long-term decisions.
3.3 Notwithstanding the above, an employee of Savannah
Electric and Power Company ("SEPCO") who has been continuously
employed by SEPCO since January 1, 1986 shall participate in the
Award for the Computation Periods ending in 1989, 1990 and 1991
to the same extent he would have been eligible to participate
based on his Grade Level then in effect, if SEPCO had been
acquired by The Southern Company on January 1, 1986.
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<PAGE>
3.4 Notwithstanding the above provisions, an Award will not
be granted for any Computation Period ending with the calendar
year in which the current earnings of The Southern Company are
less than the amount necessary to fund the dividends on its
Common Stock at the rate such dividends were paid for the
immediately preceding calendar year.
3.5 In the discretion of the Compensation Committee of the
Board of Directors, the Award for one or more Computation
Period(s) may be calculated without regard to any extraordinary
item of income incurred by the Southern Company or any Employing
Company, provided such determination is made prior to the close
of the Computation Period.
3.6 The Awards to the Participants will be paid in cash as
soon as is practicable after all evaluations are completed. The
Award payment may be deferred at the option of the Participant in
accordance with Article IV. In the event a Participant shall not
elect to defer a portion of his Award and shall die prior to the
payment of such amount, payment shall be made to the beneficiary
designated by the Participant. In the event a beneficiary
designation has not been made or the designated beneficiary is
deceased or cannot be located, payment shall be made to the
estate of the Participant or former Participant.
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<PAGE>
ARTICLE IV
Election for Deferral of Payment
4.1 A Participant may elect to defer payment of an Award
until termination of service with an Employing Company by filing
a Deferral Election with the Employing Company not later than
December 31st of the year preceding the next succeeding
Computation Period.
4.2 Participants may elect to defer payments of any whole
percentage (1% - 100%) of any Award that might be made to him.
If a Deferral Election is duly made pursuant to the provisions of
this Article with respect to an Award, an individual account will
be maintained by the Employing Company as of the date of the
Award.
4.3 The Deferral Election shall be made in writing on a
form prescribed by the Employing Company and said Deferral
Election shall state:
(a) That the Participant wishes to make an election to
defer payment of the Award;
(b) The percentage of the Award to be deferred;
(c) The method of payment, which shall be the payment
of a lump-sum or a series of annual payments not to exceed
ten (10) years; and
(d) The time for commencement of distribution of his
Deferred Account, but not later than the first day of the
month coinciding with or next following the second (2nd)
anniversary of his termination of employment with the
Employing Company.
4.4 The Deferral Election shall be made by written notice
to be delivered to the Employing Company prior to the first day
of the next succeeding Computation Period and shall be effective
on the first day of such succeeding Computation Period. A
deferral Election for the Corporate Financial Performance
Component shall be an election for the four-year computation
period. A Participant's termination of participation in the Plan
shall not affect Awards previously deferred.
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<PAGE>
4.5 The initial Deferral Election made with respect to
(a) the method of payment whether it be lump sum or installments,
including the number of installments selected, and (b) the time
for commencement of distribution of a Participant's Account may
not be revoked and shall govern the distribution of a
Participant's Deferred Productivity Improvement Account.
Notwithstanding the foregoing, and except as provided below, upon
application to the senior officer in charge of employee relations
of an Employing Company and the approval of such officer in his
sole discretion, a Participant's Deferral Election may be amended
not prior to the 395th day nor later than the 365th day prior to
a Participant's date of termination in order to change (a) the
form, and/or (b) the time for distribution of his Deferred
Account in accordance with the terms of the Plan; provided,
however, that any Participant who is required to file reports
pursuant to Section 16(a) of the Securities and Exchange Act of
1934, as amended, shall not be permitted to amend his Deferral
Election during any time period for which such Participant is
required to file any such reports. Each Participant making a
Deferral Election in accordance with this Article IV and his
successors, shall be bound as to any action taken pursuant to the
terms thereof or pursuant to the Plan. Notwithstanding anything
to the contrary above, if the time for distribution of a
Participant's Deferred Account is accelerated, such Account shall
be discounted to reasonably reflect the time value of money.
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<PAGE>
ARTICLE V
Deferred Compensation Accounts
5.1 An account shall be established on the Employing
Company books for each Participant electing a deferral pursuant
to Article IV, which shall be designated as the Deferred Account
of said Participant. The Awards deferred in accordance with
Article IV, pursuant to each Participant's Investment Election,
the amounts computed in accordance with Section 5.2 and/or the
number of shares computed in accordance with Section 5.1 shall be
credited to the Deferred Account.
5.2 The Deferred Account of each Participant electing to
invest his deferred Awards for a Computation Period pursuant to
this Section 5.2 shall be credited with an amount computed by the
Employing Company by treating the Awards deferred as a sum
certain to which the Employing Company will add in lieu of
interest an amount equal to the prime rate of interest set by
Wachovia Bank of Georgia, N.A.. Interest will be computed as if
credited from the date such Award would otherwise have been paid
and will be compounded quarterly at the end of each calendar
quarter. The prime rate in effect on the first day of each
calendar quarter shall be deemed the prime rate in effect for
such calendar quarter. Interest will be treated as if accrued
and will be compounded on any balance until such amount is fully
distributed.
5.3 The Deferred Account of each Participant electing to
invest his deferred Award for a Computation Period pursuant to
this Section 5.3 shall be credited with the number of shares
(including fractional shares) of Common Stock which could have
been purchased on the date such deferred Awards otherwise would
have been paid based upon the Common Stock's Market Value. As of
each date of payment of dividends on the Common Stock there shall
be credited with respect to shares of Common Stock in the
Participant's Deferred Account such additional shares (including
fractional shares) of Common Stock as follows:
(a) In the case of cash dividends, such additional
shares as could be purchased at the Market Value as of the
payment date with the dividends which would have been
payable if the credited shares had been outstanding;
(b) In the case of dividends payable in property other
than cash or Common Stock, such additional shares as could
be purchased at the Market Value as of the payment date with
the fair market value of the property which would have been
payable if the credited shares had been outstanding; or
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<PAGE>
(c) In the case of dividends payable in Common Stock,
such additional shares as would have been payable on the
credited shares if they had been outstanding.
5.4 The Investment Election by a Participant with respect
to his Deferred Account shall be made in writing on a form
prescribed by the Employing Company. Any Investment Election
shall be delivered to the Employing Company prior to the first
day of the next succeeding Computation Period and shall be
effective on the first day of such succeeding Computation Period.
The Investment Election made in accordance with this Article V
shall be irrevocable and shall continue from Computation Period
to Computation Period unless the Participant changes the
Investment Election regarding future deferred Awards by
submitting a written request to the Employing Company on a form
prescribed by the Employing Company. Any such change shall
become effective as of the first day of the Computation Period
next following the Computation Period in which such request is
given.
5.5 At the end of each year, a report shall be issued to
each Participant who has a Deferred Account and said report will
set forth the amount and the Market Value of any shares of Common
Stock reflected in such Account.
5.6 The terms and provisions of Articles V and VI in effect
prior to the effective date of this amendment and restatement
shall remain in force and continue to apply to Individual
Performance Annual Awards and Annual Corporate Financial
Performance Awards deferred by Participants prior to January 1,
1994.
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<PAGE>
ARTICLE VI
Distribution of Deferred Amounts
6.1 When a Participant terminates his employment with the
Employing Company, said Participant shall be entitled to receive
the entire amount and the Market Value of any shares of Common
Stock (and Fractions thereof) reflected in his Deferred Account
maintained by the Employing Company in accordance with his
Deferral Election made pursuant to Article IV of the Plan. No
portion of a Participant's Deferred Account shall be distributed
in Common Stock.
6.2 In the event a Participant elected to receive annual
installments, the first payment shall be made on the first day of
the month selected by the Participant in accordance with the
terms of the Plan, or as soon as reasonably possible thereafter,
and shall be an amount equal to the balance in the Participant's
Deferred Account divided by the number of annual installment
payments. Each subsequent annual payment shall be an amount
equal to the balance in the Participant's Deferred Account on the
payment date, divided by the number of the remaining annual
payments and shall be due on the anniversary of the preceding
payment date. The Market Value of any shares of Common Stock
credited to a Participant's Deferred Account shall be determined
as of the twenty-fifth (25th) day of the month immediately
preceding the date of any lump sum or installment distribution.
6.3 Upon the death or total disability of a Participant, or
a former Participant prior to the payment of all amounts and the
Market Value of any shares of Common Stock (and fractions
thereof) credited to said Participant's Deferred Account, the
unpaid balance shall be paid in the sole discretion of the
Employing Company (a) in a lump sum to the designated beneficiary
of a Participant or former Participant within thirty (30) days of
the date of death (or as soon as reasonably possible thereafter)
or (b) in accordance with the Deferral Election made by such
Participant or former Participant. In the event a beneficiary
designation is not on file or the designated beneficiary is
deceased or cannot be located, payment will be made to the estate
of the Participant or former Participant. The Market Value of
any shares of Common Stock credited to a Participant's Deferred
productivity Improvement Plan Account shall be determined as of
the twenty-fifth (25th) day of the month immediately preceding
the date of any lump sum or installment distribution.
6.4 The beneficiary designation may be changed by the
Participant or former Participant at any time, and without the
consent of the prior beneficiary.
6.5 The senior officer in charge of employee relations of
an Employing Company, in his sole discretion upon application
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<PAGE>
made to him, may determine to accelerate payments or, in the
event of death or total disability (as determined by the Social
Security Administration), to extend or otherwise make payments in
a manner different from the manner in which they would be made in
the absence of such determination; provided, however, that if a
payment is accelerated in accordance with this Section 6.5, such
payment shall be discounted to reasonably reflect the time value
of money.
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<PAGE>
ARTICLE VII
Miscellaneous Provisions
7.1 Neither the Participant, his beneficiary, nor his
personal representative shall have any rights to commute, sell,
assign, transfer or otherwise convey the right to receive any
payments hereunder, which payments and the rights thereto are
expressly declared to be nonassignable and nontransferable. Any
attempt to assign or transfer the right to payments of this Plan
shall be void and have no effect.
7.2 The Employing Company shall not reserve or otherwise
set aside funds for the payments of Awards deferred in accordance
with Article IV.
7.3 The Plan may be amended, modified, or terminated by the
Board of Directors in its sole discretion at any time and from
time to time; provided, however, that no such amendment,
modification, or termination shall impair any rights to payments
which have been deferred under the Plan prior to such amendment,
modification, or termination.
7.4 It is expressly understood and agreed that the Awards
made in accordance with the Plan are in addition to any other
benefits or compensation to which a Participant may be entitled
or for which he may be eligible, whether funded or unfunded, by
reason of his employment with the Employing Company.
7.5 There shall be deducted from the payment of each Award
under the Plan the amount of any tax required by any governmental
authority to be withheld and paid over by the Employing Company
to such governmental authority for the account of the person
entitled to such distribution.
7.6 Any Awards paid to a Participant while employed by an
Employing Company shall not be considered in the calculation of
the Participant's benefits under any other employee welfare or
pension benefit plan maintained by an Employing Company, unless
otherwise specifically provided therein.
7.7 This Plan, and all its rights under it, shall be
governed by and construed in accordance with the laws of the
State of Georgia.
- 14 -
<PAGE>
IN WITNESS WHEREOF, Southern Company Services, Inc., through
its officers duly authorized, hereby amends and restates The
Southern Company Productivity Improvement Plan this ____ day of
____________________, 1994, to be effective January 1, 1994.
SOUTHERN COMPANY SERVICES, INC.
By: _______________________________
Its:
Attest:
By: ________________________
Its:
[CORPORATE SEAL]
[adamscl] h:\wpdocs\krr\southern\exec.pip
- 15 -
<PAGE>
EXPLANATORY NOTES
1. Under the Corporate Financial Component, the average ROCE
for a Computation Period will be determined by
a) calculating the average ROCE for each year in the
Computation Period, b) adding the average ROCE calculations
for all years in the Computation Period; and c) dividing the
total by the number of years in the Computation Period.
2. The Peer Group Companies are as follows:
TECO Energy, Inc.
Carolina Power & Light Company
SCANA
Central Louisiana Electric Company, Inc.
Duke Power Company
Potomac Electric Power Company
American Electric Power Company, Inc.
Dominion Resources, Inc.
Allegheny Power Systems, Inc.
Florida Progress
Delmarva Power & Light Company
Baltimore Gas and Electric Company
Entergy, Inc.
FPL Group
Kentucky Utilities Energy Corporation
Central and South West Corporation
The Southern Company
<PAGE>
THE SOUTHERN COMPANY
EXECUTIVE PRODUCTIVITY IMPROVEMENT PLAN
EXHIBIT A
Annual Corporate
CEO/Grade Level Financial Performance Opportunity
President/CEO 50%
President/CEO 35%
30 35%
29-28 30%
27-26 25%
25-24 20%
23-22 15%
21-20 10%
19 5%
<PAGE>
THE SOUTHERN COMPANY
EXECUTIVE PRODUCTIVITY IMPROVEMENT PLAN
EXHIBIT B
AWARD PERCENTAGE SCHEDULE
Position Ranking
12-14 15-17 18-20
Award Percentage Companies Companies Companies
Above Above Above
125% Position 1 Position 1 Position 1
120 1 1 1
115 2 2 2
110 2.5 3 3
105 3 4 4
100 4 4.5 5
95 4.5 5 6
90 5 6 7
85 6 7 8
80 6.5 8 9
75 7 8.5 10
70 8 9 11
65 8.5 10 12
60 9 11 13
55 10 12 14
50 10.5 12.5 14.5
0 Below 10.5 Below 12.5 Below 14.5
<PAGE>
Exhibit 10(a)69
PENSION PLAN
FOR EMPLOYEES OF
ALABAMA POWER COMPANY
AS AMENDED AND RESTATED
EFFECTIVE AS OF JANUARY 1, 1989
<PAGE>
TABLE OF CONTENTS
Page
ARTICLE I
Definitions . . . . . . . . . . . 2
ARTICLE II
Eligibility . . . . . . . . . . . 14
2.1 Employees . . . . . . . . . . . . . . . . . . . . . 14
2.2 Employees represented by a collective bargaining
agent . . . . . . . . . . . . . . . . . . . . . . . 14
2.3 Persons in military service and Employees on
authorized leave of absence . . . . . . . . . . . . 14
2.4 Employees reemployed . . . . . . . . . . . . . . . 15
2.5 Participation upon return to eligible class . . . . 15
2.6 Exclusion of certain categories of employees . . . 16
2.7 Waiver of participation . . . . . . . . . . . . . . 16
ARTICLE III
Retirement . . . . . . . . . . . 17
3.1 Retirement at Normal Retirement Date . . . . . . . 17
3.2 Retirement at Early Retirement Date . . . . . . . . 17
3.3 Retirement at Deferred Retirement Date . . . . . . 17
ARTICLE IV
Determination of Accredited Service . . . . . 18
4.1 Accredited Service pursuant to Prior Plan . . . . . 18
4.2 Accredited Service . . . . . . . . . . . . . . . . 18
4.3 Accredited Service and Years of Service in respect
of service of certain Employees previously
employed by the Employer or by Affiliated
Employers . . . . . . . . . . . . . . . . . . . . . 20
4.4 Accrual of Retirement Income during period of
total disability . . . . . . . . . . . . . . . . . 21
4.5 Employees leaving Employer's service . . . . . . . 22
4.6 Transfers to or from Affiliated Employers . . . . . 23
4.7 Transfers from Savannah Electric and Power
Company . . . . . . . . . . . . . . . . . . . . . . 24
4.8 Retirement income for certain former employees of
Southern Electric Generating Company . . . . . . . 25
ARTICLE V
Retirement Income . . . . . . . . . . 26
i
<PAGE>
5.1 Normal Retirement Income . . . . . . . . . . . . . 26
5.2 Minimum Retirement Income payable upon retirement
at Normal Retirement Date or Deferred Retirement
Date . . . . . . . . . . . . . . . . . . . . . . . 26
5.3 Minimum Retirement Income upon retirement at Early
Retirement Date or upon termination of service by
reason of death or otherwise prior to retirement . 27
5.4 Calculation of Social Security Offset . . . . . . . 28
5.5 Early Retirement Income . . . . . . . . . . . . . . 29
5.6 Deferred Retirement Income . . . . . . . . . . . . 29
5.7 Payment of Retirement Income . . . . . . . . . . . 30
5.8 Termination of Retirement Income . . . . . . . . . 31
5.9 Required distributions . . . . . . . . . . . . . . 31
5.10 Suspension of Retirement Income for
reemployment . . . . . . . . . . . . . . . . . . . 33
5.11 Increase in Retirement Income of retired
Employees for service prior to January 1, 1991 . . 33
5.12 Special provisions relating to the treatment of
absence of an Employee from the service of the
Employer to serve in the Armed Forces of the
United States . . . . . . . . . . . . . . . . . . . 34
ARTICLE VI
Limitations on Benefits . . . . . . . . 38
6.1 Maximum Retirement Income . . . . . . . . . . . . . 38
6.2 Adjustment to Defined Benefit Dollar Limitation
for Early or Deferred Retirement . . . . . . . . . 39
6.3 Adjustment of limitation for Years of Service or
participation . . . . . . . . . . . . . . . . . . . 40
6.4 Preservation of Accrued Retirement Income . . . . . 40
6.5 Limitation on benefits from multiple plans . . . . 41
6.6 Special rules for plans subject to overall
limitations under Code Section 415(e) . . . . . . . 42
6.7 Combination of Plans . . . . . . . . . . . . . . . 43
6.8 Incorporation of Code Section 415 . . . . . . . . . 43
ARTICLE VII
Provisional Payee . . . . . . . . . . 44
7.1 Adjustment of Retirement Income to provide for
payment to Provisional Payee . . . . . . . . . . . 44
7.2 Form and time of election and notice requirements . 44
7.3 Circumstances in which election and designation
are inoperative . . . . . . . . . . . . . . . . . . 45
7.4 Pre-retirement death benefit . . . . . . . . . . . 46
7.5 Post-retirement death benefit - qualified joint
and survivor annuity . . . . . . . . . . . . . . . 48
7.6 Election and designation by former Employee
entitled to Retirement Income in accordance with
Article VIII . . . . . . . . . . . . . . . . . . . 48
ii
<PAGE>
7.7 Death benefit for Provisional Payee of former
Employee . . . . . . . . . . . . . . . . . . . . . 50
7.8 Limitations on Employee's and Provisional Payee's
benefits . . . . . . . . . . . . . . . . . . . . . 50
7.9 Effect of election under Article VII . . . . . . . 51
ARTICLE VIII
Termination of Service . . . . . . . . 52
8.1 Vested interest . . . . . . . . . . . . . . . . . . 52
8.2 Early distribution of vested benefit . . . . . . . 52
8.3 Years of Service of reemployed Employees . . . . . 53
8.4 Cash-out and buy-back . . . . . . . . . . . . . . . 54
8.5 Calculation of present value for cash-out of
benefits and for determining amount of benefits . . 55
8.6 Retirement Income under Prior Plan . . . . . . . . 57
8.7 Requirement for Direct Rollovers . . . . . . . . . 57
ARTICLE IX
Contributions . . . . . . . . . . . 59
9.1 Contributions generally . . . . . . . . . . . . . . 59
9.2 Return of Employer contributions . . . . . . . . . 59
9.3 Expenses . . . . . . . . . . . . . . . . . . . . . 60
ARTICLE X
Administration of Plan . . . . . . . . 61
10.1 Retirement Board . . . . . . . . . . . . . . . . . 61
10.2 Organization and transaction of business of
Retirement Board . . . . . . . . . . . . . . . . . 61
10.3 Administrative responsibilities of Retirement
Board . . . . . . . . . . . . . . . . . . . . . . . 61
10.4 Retirement Board, the "Administrator" . . . . . . . 62
10.5 Fiduciary responsibilities . . . . . . . . . . . . 63
10.6 Employment of actuaries and others . . . . . . . . 63
10.7 Accounts and tables . . . . . . . . . . . . . . . . 63
10.8 Indemnity of members of Retirement Board . . . . . 64
10.9 Areas in which the Retirement Board does not have
responsibility . . . . . . . . . . . . . . . . . . 64
10.10 Claims Procedures . . . . . . . . . . . . . . . . 65
ARTICLE XI
Management of Trust . . . . . . . . . 66
11.1 Trust . . . . . . . . . . . . . . . . . . . . . . . 66
11.2 Disbursement of the Trust Fund . . . . . . . . . . 66
11.3 Rights in the Trust . . . . . . . . . . . . . . . . 66
11.4 Merger of the Plan . . . . . . . . . . . . . . . . 67
ARTICLE XII
iii
<PAGE>
Termination of the Plan . . . . . . . . 68
12.1 Termination of the Plan . . . . . . . . . . . . . . 68
12.2 Limitation on benefits for certain highly paid
employees . . . . . . . . . . . . . . . . . . . . . 68
12.3 Allocation of Trust upon termination . . . . . . . 69
ARTICLE XIII
Amendment of the Plan . . . . . . . . . 70
13.1 Amendment of the Plan . . . . . . . . . . . . . . . 70
ARTICLE XIV
Special Provisions . . . . . . . . . 71
14.1 Adoption of Plan by other corporations . . . . . . 71
14.2 Exclusive benefit . . . . . . . . . . . . . . . . . 72
14.3 Assignment or alienation . . . . . . . . . . . . . 72
14.4 Voluntary undertaking . . . . . . . . . . . . . . . 73
14.5 Top-Heavy Plan requirements . . . . . . . . . . . . 73
14.6 Determination of Top-Heavy status . . . . . . 73
14.7 Minimum Retirement Income for Top-Heavy Plan
Years . . . . . . . . . . . . . . . . . . . . . . . 77
14.8 Vesting requirements for Top-Heavy Plan Years . . . 78
14.9 Adjustments to maximum benefits for Top-Heavy
Plans . . . . . . . . . . . . . . . . . . . . . . . 79
ARTICLE XV
Post-retirement Medical Benefits . . . . . . 80
15.1 Definitions . . . . . . . . . . . . . . . . . . . . 80
15.2 Eligibility of Pensioned Employees and their
Spouses . . . . . . . . . . . . . . . . . . . . . . 81
15.3 Medical benefits . . . . . . . . . . . . . . . . . 81
15.4 Termination of coverage . . . . . . . . . . . . . . 81
15.5 Continuation of coverage to certain individuals . . 82
15.6 Contributions to fund medical benefits . . . . . . 83
15.7 Pensioned Employee Contributions . . . . . . . . . 84
15.8 Amendment of Article XV . . . . . . . . . . . . . . 84
15.9 Termination of Article XV . . . . . . . . . . . . . 85
15.10 Reversion of assets upon termination . . . . . . . 85
ARTICLE XVI
Post-retirement Medical Benefits Prior
to Attainment of Normal Retirement Date . . . . 86
16.1 Definitions . . . . . . . . . . . . . . . . . . . 86
16.2 Application for and commencement of Coverage . . . 87
16.3 Medical benefits . . . . . . . . . . . . . . . . . 87
16.4 Termination of coverage . . . . . . . . . . . . . 87
16.5 Continuation of coverage to certain individuals . 88
16.6 Contributions to fund medical benefits . . . . . . 89
16.7 Pensioned Employee Contributions . . . . . . . . . 90
iv
<PAGE>
16.8 Amendment of Article XVI . . . . . . . . . . . . . 91
16.9 Termination of Article XVI . . . . . . . . . . . . 91
16.10 Reversion of Assets upon Termination . . . . . . 92
v
<PAGE>
Introductory Statement
The Pension Plan for Employees of Alabama Power Company, as
amended and restated effective as of January 1, 1989 and
hereinafter set forth (the "Plan"), is a modification and
continuation of the Pension Plan for Employees of Alabama Power
Company which originally became effective July 1, 1944, and has
been amended from time to time.
Since the enactment of the Employee Retirement Income
Security Act of 1974 ("ERISA"), the Plan has been amended
numerous times to comply with changes in the law and to achieve
other administrative goals. Initially, the Plan was amended and
restated in 1976 to comply with ERISA. Thereafter, the Plan was
again amended and restated in 1986 to comply with the Tax Equity
and Fiscal Responsibility Act of 1982, the Retirement Equity Act
of 1984, and the Deficit Reduction Act of 1984. In more recent
years, the Plan has been amended and restated three times to
comply with the Tax Reform Act of 1986 -- first in 1989, second
in 1991 and again as amended and restated herein. The amendment
and restatement set forth herein consolidates those amendments
made in 1989 and 1991 and provides for such other appropriate
changes as are required by the law. Accordingly, this amendment
and restatement is effective as of January 1, 1989. Where
appropriate, amendments to the Plan which have a different
effective date are noted.
Retirement Income of former Employees (or Provisional Payees
of former Employees) who retired in accordance with the
provisions of the Prior Plan, as defined herein, is payable in
accordance with the provisions of the Prior Plan.
All contributions made by the Employer to this Plan are
expressly conditioned upon the continued qualification of the
Plan under Section 401(a) of the Code, including any amendments
to the Plan, and upon the deductibility of such contributions by
the Employer pursuant to Section 404 of the Code.
1
<PAGE>
ARTICLE I
Definitions
The following words and phraseology as used herein have the
following meanings unless a different meaning is plainly required
by the context:
1
1.1 "Accrued Retirement Income" means with respect to any
Employee at any particular date, the Retirement Income,
determined pursuant to Section 5.1, commencing on his Normal
Retirement Date which would be payable to such Employee in the
form of a single life annuity on the basis of his Accredited
Service to the date as of which the computation of Retirement
Income is made.
1.2 "Accredited Service" means with respect to any Employee
included in the Plan, the period of service as provided in
Article IV. For purposes of calculating Accredited Service in
Article IV, such Service shall include, in the case of a former
employee of Birmingham Electric Company ("BECO") who became an
Employee by reason of the merger of BECO into the Employer, any
years of Accredited Service accrued to him to December 1, 1953
under the BECO Plan.
1.3 "Actuarial Equivalent" means a benefit of equivalent
value when computed on the basis of five percent (5%) interest
per annum, compounded annually and the 1951 Group Annuity
Mortality Table for males. The ages for all Employees under the
above table shall be set back six (6) years and the ages for such
Employees' spouses shall be set back one year. All actuarial
adjustments and actuarial determinations required and made under
the terms of the Plan shall be calculated in accordance with such
assumptions.
1.4 "Affiliated Employer" means any corporation which is a
member of a controlled group of corporations (as defined in
Section 414(b) of the Code) which includes the Employer; any
trade or business (whether or not incorporated) which is under
common control (as defined in Section 414(c) of the Code) with
the Employer; any organization (whether or not incorporated)
which is a member of an affiliated service group (as defined in
Section 414(m) of the Code) which includes the Employer; and any
other entity required to be aggregated with the Employer pursuant
to regulations under Section 414(o) of the Code.
2
<PAGE>
1.5 "Average Monthly Earnings" means the greater of:
(a) an Employee's Monthly Earnings averaged over the three (3)
highest Plan Years of participation which shall produce the
highest monthly average within the last ten (10) Plan Years; or
(b) an Employee's Monthly Earnings averaged over the three (3)
highest Plan Years of participation which shall produce the
highest monthly average within the last ten (10) Plan Years
during which the Employee actively performed services for the
Employer. If an Employee has completed less than three (3) Plan
Years of participation upon his termination of employment, his
Average Monthly Earnings will be based on his Earnings during his
participation to his date of termination.
1.6 "Board of Directors" means the Board of Directors of
Alabama Power Company.
1.7 "Code" means the Internal Revenue Code of 1986, as
amended from time to time.
1.8 "Current Accrued Retirement Income" means an Employee's
Accrued Retirement Income under the Plan, determined as if the
Employee had separated from service as of the close of the last
Limitation Year beginning before January 1, 1987, when expressed
as an annual benefit within the meaning of Section 415(b)(2) of
the Code. In determining the amount of an Employee's Current
Accrued Retirement Income, the following shall be disregarded:
(a) any change in the terms and conditions of the Plan
after May 5, 1986; and
(b) any cost of living adjustment occurring after May 5,
1986.
1.9 "Deferred Retirement Date" means the first day of the
month after a retirement subsequent to the Normal Retirement
Date.
Employment subsequent to Normal Retirement Date shall be
deemed to be a retirement if an Employee has less than forty (40)
Hours of Service during a calendar month.
1.10 "Defined Benefit Dollar Limitation" means the
limitation set forth in Section 415(b)(1)(A) or (d) of the Code.
1.11 "Defined Contribution Dollar Limitation" means the
limitation set forth in Section 415(c)(1)(A) of the Code.
1.12 "ERISA" means the Employee Retirement Income Security
Act of 1974, as amended from time to time.
1.13 "Early Retirement Date" means the first day of the
month following the retirement of an Employee on or after his
3
<PAGE>
fifty-fifth (55th) birthday and before his sixty-fifth (65th)
birthday.
1.14 (a) "Earnings" with respect to any Employee including
any Employee whose service is terminated by reason of disability
(as defined in Section 4.4) means (1) the highest annual rate of
salary or wages of an Employee of the Employer or employee of any
Affiliated Employer within any Plan Year before deductions for
taxes, Social Security, etc., (2) all amounts contributed by the
Employer or any Affiliated Employer to The Southern Company
Employee Savings Plan as Elective Employer Contributions, as said
term is described under Section 4.1 of such plan, pursuant to the
Employee's exercise of his deferral option made thereunder in
accordance with the requirements of Section 401(k) of the Code,
and (3) all amounts contributed by the Employer or any Affiliated
Employer to The Southern Electric System Flexible Benefits Plan
or The Southern Company Flexible Benefits Plan on behalf of an
Employee pursuant to his salary reduction election, and applied
to provide one or more of the optional benefits available under
such plan, but (4) shall exclude all amounts deferred under any
non-qualified deferred compensation plan maintained by the
Employer or any Affiliated Employer.
(b) Notwithstanding the above, "Earnings" with respect to
any commissioned salesperson means the salary or wages of an
Employee of the Employer or employee of any Affiliated Employer
within any Plan Year, without including overtime, and before
deductions for taxes, Social Security, etc. but applying those
adjustments identified in paragraphs (a)(2), (3) and (4) above.
(c) With respect to an Employee whose service terminates
because of a disability under Section 4.4, Earnings shall be
deemed to continue in effect throughout the period of the
Employee's Disability Leave, as also defined in Section 4.4.
(d) With respect to calculating the Prior Plan Retirement
Income of an Employee who is a "participant in the Plan" as
provided in Section 5.12, Earnings shall be determined for the
recognized period of his absence to serve in the Armed Forces of
the United States at the rate which is paid to him on the day he
returns to the service of the Employer as provided in
paragraph (a) of Section 5.12 or at the rate which was payable to
him at the time he left the employment of the Employer to enter
the Armed Forces of the United States, if such amount was
greater.
(e) For Plan Years beginning after December 31, 1988 and
prior to January 1, 1994, the annual compensation of each
Employee taken into account for purposes of this Plan shall not
exceed $200,000 (as adjusted by the Secretary of Treasury). The
imposition of this limitation shall not reduce an Employee's
Retirement Income below the amount as determined on December 31,
4
<PAGE>
1988. In addition to other applicable limitations set forth in
the Plan, and notwithstanding any other provision of the Plan to
the contrary, for Plan Years beginning on or after January 1,
1994, the annual compensation of each Employee taken into account
under the Plan shall not exceed $150,000, as adjusted for
increases in the cost of living in accordance with Code
Section 401(a)(17). The cost of living adjustment in effect for
a calendar year applies to any period, not exceeding twelve (12)
months, over which compensation is determined (the "determination
period") beginning in such calendar year. If the determination
period is less than twelve (12) months, the limit shall be
prorated.
If compensation for any prior determination period is taken
into account in determining an Employee's benefits accruing in
the current Plan Year beginning on or after January 1, 1989 or
January 1, 1994, as applicable, the compensation for that prior
determination period is subject to the $200,000 or the $150,000
compensation limit in effect for that prior determination period.
Notwithstanding any other provision in the Plan, each
Employee's Accrued Retirement Income under this Plan will be the
greater of:
(a) the Employee's Accrued Retirement Income as of the last
day of the last Plan Year beginning before January 1,
1994, frozen in accordance with Treasury Regulation
Section 1.401(a)(4)-13, or
(b) the Employee's Accrued Retirement Income determined
with respect to the benefit formula applicable for the
Plan Year beginning on or after January 1, 1994, as
applied to the employee's total Years of Service taken
into account under the Plan for purposes of benefit
accruals.
For purposes of this Section 1.14, the rules of Section
414(q)(6) of the Code shall apply in determining the adjusted
$200,000 or $150,000 limitation, as applicable, except in
applying such rules, the term "family" shall include only the
spouse of the Employee and any lineal descendants of the Employee
who have not attained age nineteen (19) before the close of the
Plan Year. If, as a result of the application of such rules, the
adjusted $200,000 or $150,000 limitation is exceeded, then the
limitation shall be prorated among the affected individuals in
proportion to each individual's Earnings determined under this
Section 1.14 prior to the application of this limitation.
1.15 "Effective Date" means the original effective date of
the Plan, July 1, 1944. The effective date of this amendment and
restatement means January 1, 1989.
5
<PAGE>
1.16 "Eligibility Year of Service" is a Year of Service
commencing on the Employee's date of employment or reemployment
or anniversary date thereof.
1.17 "Employee" means any person who is currently employed
by the Employer as (a) a regular full-time employee, (b) a
regular part-time employee, (c) a cooperative education employee,
or (d) a temporary employee (whether full-time or part-time) paid
directly or indirectly by the Employer. The term also includes
"leased employees" within the meaning of Section 414(n)(2) of the
Code, unless the total number of leased employees constitutes
less than twenty percent (20%) of the Employer's non-highly
compensated workforce within the meaning of Section
414(n)(5)(C)(ii) and such leased employees are covered by a plan
described in Section 414(n)(5)(B) of the Code.
1.18 "Employer" means Alabama Power Company, any successor
or successors thereof and any wholly owned subsidiary thereof
which the Board of Directors may from time to time, and upon such
terms and conditions as may be fixed by the Board of Directors,
determine to bring under the Plan, and any other corporation
which shall adopt this Plan and Trust Agreement pursuant to
Section 14.1 by appropriate resolution authorized by the board of
directors of said adopting corporation.
1.19 "Full Current Costs" means the normal cost, as defined
in Treasury Regulation Section 1.404(a)-6, for all years since
the Effective Date of the Plan, plus interest on any unfunded
liability during such period.
1.20 "Hour of Service" means an Employee shall be credited
with one Hour of Service for each hour for which (a) he is paid,
or entitled to payment, for the performance of duties for the
Employer or an Affiliated Employer, and such hours shall be
credited to the Employee for the computation period or periods in
which the duties are performed; (b) he is paid, or entitled to
payment, by the Employer or an Affiliated Employer on account of
a period of time during which no duties are performed
(irrespective of whether the employment relationship has
terminated) due to vacation, holiday, illness, incapacity
(including disability), layoff, jury duty, military duty, or
leave of absence in which case the Employee shall be credited
with Hours of Service for the computation period or periods in
which the period during which no duties were performed occurs;
(c) back pay, irrespective of mitigation of damages, has been
either awarded or agreed to by the Employer or an Affiliated
Employer, in which case the Employee shall be credited with Hours
of Service for the computation period or periods to which the
award or agreement pertains, rather than the computation period
in which the award, agreement, or payment is made; and (d) solely
for the purpose of calculating Vesting Years of Service, he was
on any form of authorized leave of absence. The same Hours of
6
<PAGE>
Service shall not be credited under clauses (a), (b), (c), and
(d).
An Employee who is entitled to be credited with Hours of
Service in accordance with clause (b) or (d) of this Section
shall be credited with such number of Hours of Service for the
period of time during which no duties were performed as though he
were in the active employment of the Employer during such period
of time. However, an Employee shall not be credited with Hours
of Service in accordance with clause (b) of this Section for
unused vacation for which payment is received at termination of
employment, or if the payment which is made to him or to which he
is entitled in accordance with clause (b) is made or due under a
plan maintained solely for the purpose of complying with
applicable Worker's Compensation, or unemployment compensation or
disability insurance laws, or if such payment is one which solely
reimburses an Employee for medical or medically related expenses
incurred by the Employee.
Provided there is no duplication of Hours of Service
credited in accordance with the foregoing provisions, if an
Employee is "a participant in the Plan" within the meaning of
that term as defined in paragraph (a) of Section 5.12, he shall
be credited with such number of Hours of Service with respect to
all or such portion of the period of his absence to serve in the
Armed Forces of the United States as may be recognized under
paragraph (b) of Section 5.12 as though he were in the active
employment of the Employer during the recognized period of his
absence to serve in the Armed Forces.
For the period from January 1, 1989 to December 31, 1991,
provided there is no duplication of Hours of Service credited in
accordance with the foregoing provisions, an Employee shall be
credited with Hours of Service during an authorized leave of
absence to carry on union business as provided in Section 2.3,
4.1, and 4.2, if such Employee elects to receive credit for Hours
of Service and Accredited Service in accordance with Sections
2.3, 4.1, and 4.2
The rules set forth in paragraphs (b) and (c) of Department
of Labor Regulations 2530.200b-2 are incorporated in the Plan by
this reference and made a part hereof.
1.21 "Limitation Year" means the Plan Year.
1.22 "Monthly Earnings" means one-twelfth (1/12) of the
Earnings of an Employee of the Employer during a Plan Year.
1.23 "Normal Retirement Date" means the first day of the
month following an Employee's sixty-fifth (65th) birthday, except
that the Normal Retirement Date of any Employee hired on or after
7
<PAGE>
his sixtieth (60th) birthday shall be the fifth (5th) anniversary
of his initial participation in the Plan.
1.24 "One-Year Break in Service" means a twelve (12)
consecutive month period commencing on or after January 1, 1976
which would constitute a Year of Service but for the fact that
the Employee has not completed more than 500 Hours of Service
during such period.
Solely for the purpose of determining whether a One-Year
Break in Service has occurred for eligibility or vesting
purposes, an Employee who is absent from work for maternity or
paternity reasons shall receive credit for the Hours of Service
which would otherwise have been credited to such Employee but for
such absence, or in any case in which such hours cannot be
determined, eight (8) Hours of Service per day of such absence.
In no event shall Hours of Service credited under this paragraph
be in excess of the amount necessary to prevent a One-Year Break
in Service from occurring. For purposes of this paragraph, an
absence from work for maternity or paternity reasons means an
absence (a) by reason of the pregnancy of the Employee, (b) by
reason of a birth of a child of the Employee, (c) by reason of
the placement of a child with the Employee in connection with the
adoption of such child by such Employee, or (d) for purposes of
caring for such child for a period beginning immediately
following such birth or placement. The Hours of Service shall be
credited under this paragraph: (a) in the vesting or eligibility
period in which the absence begins if the Hours of Service
credited are necessary to prevent a One-Year Break in Service in
such period, and (b) in all other cases, in the vesting or
eligibility period following the period in which the absence
begins.
1.25 "Past Service" means with respect to any Employee
included in the Plan, the period of his Accredited Service prior
to January 1, 1989 as determined under the Prior Plan.
1.26 "Plan" means the Pension Plan for Employees of Alabama
Power Company, as set forth herein and as hereinafter amended,
effective January 1, 1989.
1.27 "Plan Year" means the twelve (12) month period
commencing on the first day of January and ending on the last day
of December next following.
1.28 "Plan Year of Service" is a Year of Service determined
as if the date of employment or reemployment is the first day of
the Plan Year.
1.29 "Prior Plan" means the Plan in effect prior to January
1, 1989.
8
<PAGE>
1.30 "Provisional Payee" means a spouse designated or
deemed to have been designated by an Employee or former Employee
pursuant to Article VII to receive Retirement Income on the death
of the Employee or former Employee.
1.31 "Qualified Election" means an election by an Employee
or former Employee that concerns the form of distribution of
Retirement Income that must be in writing and must be consented
to by the Employee's Spouse. The Spouse's consent to such an
election must acknowledge the effect of such election, must be in
writing, and must be witnessed by a notary public.
Notwithstanding this consent requirement, if the Employee
establishes to the satisfaction of the Retirement Board that such
written consent may not be obtained because the Spouse cannot be
located or because of such other circumstances as the Secretary
of the Treasury may by regulations prescribe, an election by the
Employee will be deemed a Qualified Election. Any consent
necessary under this provision shall be valid and effective only
with respect to the Spouse who signs the consent, or in the event
of a deemed Qualified Election, with respect to such Spouse.
A revocation of a prior Qualified Election to waive the
payment of Retirement Income to the Employee's Spouse may be made
by the Employee without consent at any time commencing within 90
days before such Employee's 55th birthday but not later than
before the commencement of Retirement Income. A Qualified
Election or the revocation of a Qualified Election shall be on a
form furnished by the Retirement Board and filed within the time
prescribed for making such election.
1.32 "Retirement Board" means the managing board of the
Plan provided for in Article X.
1.33 "Retirement Date" means the Employee's Normal, Early,
or Deferred Retirement Date, whichever is applicable to him.
1.34 "Retirement Income" means the monthly Retirement Income
provided for by the Plan.
1.35 "Social Security Offset" shall mean an amount equal to
one-half (1/2) of the amount, if any, of the Federal primary
Social Security benefit (primary old age insurance benefit) to
which it is estimated that an Employee will become entitled in
accordance with the Social Security Act in force as provided in
subparagraphs (a) through (e) below which shall exceed $168 per
month on and after January 1, 1989, and $250 per month, on and
after January 1, 1991, multiplied by a fraction not greater than
one, the numerator of which shall be the Employee's total
Accredited Service, and the denominator of which shall be the
aggregate Accredited Service the Employee could have accumulated
if he had continued his employment until his Normal Retirement
Date. For purposes of determining the estimated Federal primary
9
<PAGE>
Social Security benefit used in the Social Security Offset, an
Employee shall be deemed to be entitled to receive Federal
primary Social Security benefits after retirement or death, if
earlier, regardless of the fact that he may have disqualified
himself to receive payment thereof. In addition to the
foregoing, the calculation of the Social Security benefit shall
be based on the salary history of the Employee as provided in
Section 5.4(b) and shall be determined pursuant to the following,
as applicable:
(a) With regard to an Employee described in Section 5.2,
the Social Security benefit shall be computed at retirement. In
estimating the amount of the Federal primary Social Security
benefit to which the Employee would be entitled, it shall be
assumed that he will receive no wages for Social Security
purposes after his retirement on his Normal Retirement Date or
Deferred Retirement Date, and it will be further assumed in
calculating his estimated Federal primary Social Security benefit
that the amount thereof will be the amount determined under the
recomputation provision, if applicable, of the Social Security
Act in effect at the time of his retirement.
(b) With regard to an Employee described in Section 5.3(a),
the Social Security benefit to which it is estimated that he will
be entitled at sixty-five (65), shall be computed at the time of
his retirement. In estimating the amount of the Federal primary
Social Security benefit to which the Employee would be entitled
at age sixty-five (65), it shall be assumed that he will receive
no wages for Social Security purposes after his Early Retirement
Date, and it will be further assumed in calculating his estimated
Federal primary Social Security benefit that the amount thereof
will be the amount determined under the recomputation provision,
if applicable, of the Social Security Act in effect at his Early
Retirement Date.
(c) With regard to an Employee described in Section 5.3(b),
the Social Security benefit to which it is estimated that he
would have been entitled to receive at age sixty-five (65) or his
date of death, if later, had he not died, shall be computed at
the time of his death. In estimating the amount of Federal
primary Social Security benefit to which the Employee would have
been entitled at age sixty-five (65) or his date of death, if
later, it shall be assumed that he would not have received any
wages for Social Security purposes after the date of his death,
and it will be further assumed in calculating his Federal primary
Social Security benefit that the amount thereof will be the
amount determined under the recomputation provision, if
applicable, of the Social Security Act in effect at the time of
his death.
(d) With regard to an Employee described in Section 5.3(c),
the Social Security benefit to which it is estimated that he will
10
<PAGE>
become entitled at age sixty-five (65) or his date of
termination, if later, shall be computed at the date of
termination. In estimating the amount of the Federal primary
Social Security benefit to which the Employee would be entitled
at age sixty-five (65) or his date of termination, if later, it
shall be assumed that he will receive no wages for Social
Security purposes after his date of termination, and it will be
further assumed in calculating his estimated Federal primary
Social Security benefit that the amount thereof will be the
amount determined under the recomputation provision, if
applicable, of the Social Security Act in effect at his date of
termination.
(e) With regard to an Employee described in Section 5.3(d),
the Social Security benefit to which it is estimated that he
would have been entitled to receive at age sixty-five (65) or his
initial date of disability, if later, had he not become disabled,
shall be computed at the time of his retirement. In estimating
the amount of Federal primary Social Security benefit to which
the Employee would have been entitled at age sixty-five (65) or
his date of disability, if later, it shall be assumed that he
would have received wages for Social Security purposes as
specified in Section 5.4, and it will be further assumed in
calculating his estimated Federal primary Social Security benefit
that the amount thereof will be the amount determined under the
recomputation provision, if applicable, of the Social Security
Act in effect at the time of his retirement.
1.36 "Social Security Retirement Age" means age sixty-five
(65) if the Employee attains age sixty-two (62) before January 1,
2000 (i.e., born before January 1, 1938), age sixty-six (66) if
the Employee attains age sixty-two (62) after December 31, 1999,
but before January 1, 2017 (i.e., born after December 31, 1937,
but before January 1, 1955), and age sixty-seven (67) if the
Employee attains age sixty-two (62) after December 31, 2016
(i.e., born after December 31, 1954).
1.37 "Trust" or "Trust Fund" means all such money or other
property which shall be held by the Trustee pursuant to the terms
of the Trust Agreement or pursuant to contracts with life
insurance companies.
1.38 "Trust Agreement" means the trust agreement or
agreements between the Employer and the Trustee established for
the purpose of funding the Retirement Income to be paid.
1.39 "Trustee" means the trustee or trustees acting as such
under the Trust Agreement, including any successor or successors.
1.40 "Vesting Year of Service" means an Employee's Years of
Service including: (a) Years of Service with an Affiliated
Employer; (b) in the case of an employee of Birmingham Electric
11
<PAGE>
Company who, prior to his Normal Retirement Date, became and
remained an Employee of the Employer until December 1, 1952, and
was an active Employee of the Employer on January 1, 1961, his
service with Birmingham Electric Company; (c) subject to the
eligibility requirements of Section 2.3, active service with the
Armed Forces of the United States if the Employee entered or
enters active service or training in such Armed Forces directly
from the employ of the Employer and after discharge or release
therefrom returns within ninety (90) days to the employ of the
Employer or is deemed to return under Section 2.3 because of the
death of such Employee while in active service with such Armed
Forces; and (d) any period during which the Employee was on any
other form of authorized leave of absence. For purposes of this
Section 1.40 in determining Vesting Years of Service with respect
to a period of absence referred to in clause (c) or (d) of this
Section 1.40, an Employee shall be credited with Hours of Service
as though the period of absence were a period of active
employment with the Employer.
1.41 "Year of Service" means with respect to an Employee in
the service of the Employer on or after January 1, 1976:
(a) if the Employee was hired prior to January 1, 1976,
each twelve (12) consecutive month period, computed from the
Employee's most recent date of hire by the Employer, during his
last period of continuous service as a full-time regular Employee
(except that service prior to July 1, 1944 need not have been
continuous) with the Employer immediately prior to January 1,
1976 (including service with Commonwealth and predecessor
companies and service with Affiliated Employers and service with
companies or properties heretofore affiliated or associated prior
to the date of severance of such affiliation or association) and
any subsequent twelve (12) consecutive month period commencing on
an anniversary date of such date of hire (or date of reemployment
as provided in Section 2.4), provided that in each such twelve
(12) consecutive month period commencing on or after January 1,
1975 he has completed at least 1000 Hours of Service; or
(b) if the Employee is hired on or after January 1, 1976, a
twelve (12) consecutive month period after December 31, 1975,
commencing on the Employee's most recent date of hire by the
Employer (or date of reemployment as provided in Section 2.4),
and any subsequent twelve (12) consecutive month period
commencing on an anniversary date of such date of hire, provided
he has completed at least 1000 Hours of Service during each such
twelve (12) consecutive month period; and
(c) to the extent not resulting in duplication, each Year
of Service restored to the Employee upon reemployment as provided
in Section 8.3.
12
<PAGE>
An Employee's vested interest in his Accrued Retirement
Income shall be based on his Vesting Years of Service and an
Employee's eligibility to participate in the Plan pursuant to
Article II shall be based on his Eligibility Year of Service.
Breaks in service will be measured on the same computation period
as the Year of Service. Effective on and after January 1, 1995,
an Employee's accrual of Retirement Income shall be based solely
on an Employee's Plan Year of Service, without regard to an
Employee's completion of a Vesting Year of Service ending within
such Plan Year.
In the Plan and Trust Agreement, where the context requires,
words in the masculine gender include the feminine and neuter
genders and words in the singular include the plural and words in
the plural include the singular.
13
<PAGE>
ARTICLE II
Eligibility
2
2.1 Employees. Each Employee participating in the Plan as
of January 1, 1989 shall continue to be included in the Plan.
Each other Employee, except as provided in this Article, shall be
included in the Plan on the first day of the month next following
the date on which he first completes an Eligibility Year of
Service.
2.2 Employees represented by a collective bargaining agent.
An Employee who is represented by a collective bargaining agent
may participate in the Plan, subject to its terms, if the
representative(s) of his bargaining unit and the Employer
mutually agree to participation in the Plan by members of his
bargaining unit.
2.3 Persons in military service and Employees on authorized
leave of absence. Any person not already included in the Plan
who leaves or has left the employ of the Employer to enter the
Armed Forces of the United States or is on authorized leave of
absence without regular pay and who returns to the employ of the
Employer within ninety (90) days after discharge from such
military service or on or before termination of his leave of
absence, shall, upon such return, be included in the Plan
effective as of the first day of the month next following the
date on which he first met or meets the eligibility requirement
of Section 2.1. In determining whether an Employee entering the
service of the Employer has completed an Eligibility Year of
Service, his Hours of Service prior to such authorized leave of
absence without regular pay or entry into the Armed Forces shall
be taken into account, and for purposes of Section 2.4, he shall
be deemed not to have incurred a One-Year Break in Service by
reason of such absence.
If an Employee dies while in active service with the Armed
Forces of the United States, such Employee shall be deemed to
have returned to the employ of the Employer on his date of death.
An Employee not already included in the Plan who is on
authorized leave of absence and receiving his regular pay shall
be considered credited with Hours of Service as though the period
of absence was a period of active employment with the Employer,
and he shall be included in the Plan if and when he meets the
requirements of this Article II regardless of whether he is, on
the date of such inclusion, on such leave of absence.
14
<PAGE>
An Employee not already included in the Plan who is granted
a leave of absence on or after January 1, 1981 to serve as
Business Manager or Assistant Business Manager of System Council
U-19 and who makes timely written election to participate in the
Plan during such leave of absence, shall be credited with Hours
of Service as though the period of absence was a period of active
employment with the Employer for the period (or portion of the
period). Such Employee shall be included in the plan when he
meets the requirements of this Article II if he is, on the date
of such inclusion, on such leave of absence or has returned to
the active employment of the Employer. The crediting of Hours of
Service with respect to such Employee shall continue only so long
as such employee remains on leave in such capacity as stated
above.
2.4 Employees reemployed. An Employee whose service
terminates at any time and who is reemployed as an Employee,
unless excluded under Section 2.6, will be included in the Plan
as provided in Section 2.1 unless:
(a) prior to termination of his service he had completed at
least one Year of Service; and
(b) upon his reemployment, to the extent provided in
Section 8.3 without regard to Section 8.4, he is entitled to
restoration of his Years of Service, in which case he will be
included in the Plan as of the date of his reemployment.
For purposes of determining Years of Service of an Employee
who is reemployed by the Employer subsequent to a One-Year Break
in Service, a Year of Service subsequent to his reemployment
shall be computed on the basis of the twelve (12) consecutive
month period commencing on his date of reemployment or an
anniversary thereof.
2.5 Participation upon return to eligible class. I f a n
Employee is a participant in the Plan before July 1, 1991, the
exclusion from participation provided in Section 2.6, as it
regards temporary employees, shall not apply with respect to such
Employee, and such Employee shall be eligible to participate in
the Plan after July 1, 1991 whether or not he is classified as a
temporary employee.
If an Employee first becomes a participant on or after July
1, 1991, in the event such Employee ceases to be a member of an
eligible class of Employees and becomes ineligible to
participate, but has not incurred a One-Year Break in Service,
such Employee will participate immediately upon returning to an
eligible class of Employees. If such Employee incurred a One-
Year Break in Service, eligibility will be determined under
Section 2.4 of the Plan.
15
<PAGE>
In all other instances, if an Employee is not a member of an
eligible class of Employees but then becomes a member of an
eligible class, such Employee will commence participation in the
Plan as of the first day of the month next following the later of
(a) the date such Employee completes an Eligibility Year of
Service or (b) the date he becomes a member of an eligible class
of Employees.
2.6 Exclusion of certain categories of employees.
Notwithstanding any other provision of this Article II, leased
employees shall not be eligible to participate in the Plan. In
addition, temporary employees, except Employees, as defined in
Section 1.17, participating in the Plan prior to July 1, 1991
shall not be eligible to participate in the Plan. Thirdly, any
person who is employed by Electric City Merchandise Company, Inc.
on or after May 1, 1988, or who is employed by Savannah Electric
and Power Company on or after March 3, 1988, shall not be
entitled to accrue Retirement Income under the Plan while
employed at such companies. Lastly, any person who is a member
of the United Mine Workers at the date of his employment, or on
October 1, 1948, or thereafter becomes a member of said union or
any other mine workers union having a retirement or similar fund,
shall on the date of his employment or on October 1, 1948 or the
date of his becoming a member, whichever is later, be deemed for
purposes of the Plan to have terminated his employment with the
Employer on such date and shall not be eligible to participate in
the Plan; provided that any such person shall again become an
employee eligible to participate in the Plan upon termination of
his membership in such union subject to inclusion in the Plan as
a new employee.
2.7 Waiver of participation. Effective January 1, 1991,
notwithstanding the above, an Employee may, subject to the
approval of the Employer, elect voluntarily not to participate in
the Plan. The election not to participate must be communicated
in writing to the Retirement Board effective on an Employee's
date of hire or an anniversary thereof. Effective January 1,
1995, the election not to participate must be communicated in
writing to and acknowledged by the Retirement Board and shall be
effective as of the date set forth in such written waiver.
16
<PAGE>
ARTICLE III
Retirement
3
3.1 Retirement at Normal Retirement Date. Each Employee
eligible to participate in the Plan shall have a nonforfeitable
right to his Accrued Retirement Income by no later than his
sixty-fifth (65th) birthday, or in the case of any Employee hired
on or after his sixtieth (60th) birthday, the fifth (5th)
anniversary of his initial participation in the Plan.
Notwithstanding the above, an Employee's Normal Retirement Date
shall be as provided in Section 1.23.
3.2 Retirement at Early Retirement Date. An Employee
having at least ten (10) Years of Accredited Service (including
any Accredited Service to which he is entitled under the pension
plan of any Affiliated Employer from which such Employee was
transferred pursuant to Section 4.6 or 4.7, or which was credited
to him in accordance with Section 4.3, and including for purposes
of this Section 3.2, Accredited Service under the Retirement
Income Plan for Employees of Birmingham Electric Company, as
amended ("BECO Plan") may elect to retire on an Early Retirement
Date on or after his fifty-fifth (55th) birthday and before his
sixty-fifth (65th) birthday and to have his Retirement Income
commence on that date, or effective January 1, 1995, the first
day of any month up to and including the Employee's Normal
Retirement Date.
3.3 Retirement at Deferred Retirement Date. An Employee
included in the Plan may remain in active service after his
Normal Retirement Date. The involuntary retirement of an
Employee on or after his Normal Retirement Date shall not be
permitted solely on the basis of the Employee's age, except in
accordance with the provisions of the Age Discrimination in
Employment Act, as amended from time to time. Termination of
service of such an Employee for any reason after Normal
Retirement Date shall be deemed retirement as provided in the
Plan.
17
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ARTICLE IV
Determination of Accredited Service
4
4.1 Accredited Service pursuant to Prior Plan.
(a) Each Employee who participated in the Prior Plan shall
be credited with such Accredited Service, if any, earned under
such Prior Plan as of December 31, 1988.
(b) Each Employee who is on an approved leave of absence
from the Employer to serve as Business Manager or Assistant
Business Manager for System Council U-19, and who has made a
timely written election to participate in the Plan during such
leave in accordance with the Pension Agreement dated May 29,
1981, shall be credited with service for the Plan Year covered by
such elections.
4.2 Accredited Service.
(a) Each Employee meeting the requirements of Article II
shall, in addition to any Accredited Service to which he may be
entitled in accordance with Section 4.1, be credited with
Accredited Service as set forth in (b) below. Any such Employee
who is on authorized leave of absence with regular pay shall be
credited with Accredited Service during the period of such
absence. Any such Employee who is a "participant in the Plan"
within the meaning of that term as defined in paragraph (a) of
Section 5.12 shall be credited with Accredited Service during all
or such portion of the period of his absence to serve in the
Armed Forces of the United States as may be recognized under
paragraph (b) of Section 5.12. Employees on authorized leave of
absence without regular pay, other than Employees deemed to
accrue Hours of Service under Section 4.4, and persons in the
Armed Forces who are not "participants in the Plan" within the
meaning of that term as defined in paragraph (a) of Section 5.12
shall not be credited with Accredited Service for the period of
such absence.
An Employee who is on an approved leave of absence from the
Employer to serve as Business Manager or Assistant Business
Manager for System Council U-19, and who makes timely written
election to participate in the Plan during such leave of absence,
shall be credited with Accredited Service for the period (or
portion of the period) after January 1, 1991 covered by such
timely written election. For the purpose of determining the
Earnings of such Employee during the period (or portion of the
period) after January 1, 1991, of such leave of absence, he shall
be deemed to have received Earnings at the rate of Earnings he
would have been eligible to receive had he remained in the employ
of the Employer.
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<PAGE>
(b) For each Plan Year commencing after December 31, 1988,
an Employee included in the Plan who is credited with a Vesting
Year of Service for the twelve (12) consecutive month period
ending on the anniversary date of his hire which occurs during
such Plan Year shall be credited with Accredited Service as
follows:
(1) if an Employee completes at least 1,680 Hours of
Service in a Plan Year, he shall be credited with one year
of Accredited Service;
(2) if an Employee completes less than 1,680 Hours of
Service in a Plan Year, but not less than 1,000 Hours of
Service, he shall be credited with one-twelfth (1/12) of a
year of Accredited Service for each 140 Hours of Service; or
(3) if an Employee's initial eligibility in the Plan
shall occur after the beginning of the Plan Year, and the
Employee shall therefore have completed less than 1,000
Hours of Service in such Plan Year, he shall be credited
with one-twelfth (1/12) of a year of Accredited Service for
each 140 Hours of Service during such Plan Year after his
inclusion in the Plan.
Notwithstanding the above, effective January 1, 1995, an
Employee's Accredited Service shall be calculated based on an
Employee's accrual of a Plan Year of Service only and without
regard to the requirement of a Vesting Year of Service.
(c) If an Employee (1) who has previously satisfied the
eligibility requirements under Article II shall again be included
in the Plan at such time which is after the beginning of the Plan
Year, or (2) shall terminate his employment for any reason before
the close of such Plan Year and shall therefore have completed
less than 1,000 Hours of Service in such Plan Year, he shall be
credited with one-twelfth (1/12) of a year of Accredited Service
for each 140 Hours of Service during such Plan Year after his
inclusion in the Plan or before his termination of employment in
such Plan Year, as the case may be.
(d) In addition to any Accredited Service credited under
Section 4.1, an Employee shall be entitled to Accredited Service
determined under the Prior Plan, without regard to the age
requirement for eligibility to participate in the Prior Plan, in
excess of the Accredited Service determined under the Prior Plan
(including the age requirement for eligibility to participate in
the Prior Plan). Such Accredited Service shall be considered
Accredited Service after December 31, 1985 for purposes of
calculating an Employee's Retirement Income under Article V.
19
<PAGE>
(e) In addition to the foregoing, Accredited Service may
include Accredited Service accrued subsequent to a One-year Break
in Service including such Accredited Service which may be
restored in accordance with the provisions of Section 8.3.
(f) Notwithstanding the above, the maximum number of years
of Accredited Service with respect to any Employee participating
in the Plan shall not exceed forty (40). Effective January 1,
1991, the maximum number of years of Accredited Service is
increased to forty-three (43).
4.3 Accredited Service and Years of Service in respect of
service of certain Employees previously employed by the Employer
or by Affiliated Employers. An Employee in the service of the
Employer on January 1, 1976 or employed by it thereafter who
meets the requirements of paragraph (a) of this Section 4.3, in
addition to any other Years of Service or Accredited Service to
which he may be entitled under the Plan, upon completion of an
Eligibility Year of Service where required under Section 8.3(c)
(which shall also be considered to be Accredited Service) shall
be credited with such number of Years of Service (and fractions
thereof to the nearest whole month for service prior to January
1, 1976) and such Accredited Service and Retirement Income as
shall be determined in accordance with the provisions of
paragraphs (b) and (c) of this Section 4.3.
(a) (1) Such Employee shall have been employed prior to
January 1, 1976 by the Employer or by one or more Affiliated
Employers; (2) he shall have terminated his service with Employer
or such Affiliated Employer other than by retirement and he shall
not be entitled to receive at any time any retirement income
under the pension plan of any such prior employer in respect of
any period of time for which he shall receive credit for Years of
Service or Accredited Service under this Section 4.3; and (3) for
Employees reemployed on or after January 1, 1985, the number of
consecutive One-Year Breaks in Service incurred by the Employee
prior to the date of his employment by the Employer does not
equal or exceed the greater of (A) five (5), or (B) the aggregate
number of his Years of Service (and fractions thereof to the
nearest whole month for service prior to January 1, 1976) with
the Employer and such Affiliated Employer. The years of
Accredited Service credited to an Employee reemployed prior to
January 1, 1985, with regard to years of Accredited Service
immediately prior to the termination of his service, shall be
determined under the terms of the Plan in effect prior to January
1, 1985.
20
<PAGE>
(b) The number of Years of Service (and fractions thereof
to the nearest whole month for service prior to January 1, 1976)
and the Accredited Service, respectively, which shall be credited
to such Employee shall be equal to the respective number of his
Years of Service (and fractions thereof to the nearest whole
month for service prior to January 1, 1976) and Accredited
Service which were forfeited by the Employee and not restored
under the pension plans of the Employer or an Affiliated
Employer.
(c) There shall be credited to the Employee Retirement
Income equal to retirement income which was accrued by him under
the pension plan of the Employer or an Affiliated Employer during
the period of his Accredited Service which was forfeited and
which is credited under the Plan in accordance with Section 4.3.
The amount of Retirement Income credited in accordance with this
paragraph (c) shall be treated as Prior Plan Retirement Income
for purposes of determining the amount of Retirement Income to
which the Employee is entitled, and shall be determined in
accordance with the provisions of the pension plan of the
Affiliated Employer in effect at the time the Employee's service
with such Affiliated Employer terminated without regard to any
minimum provisions of such pension plan; for this purpose and if
relevant in respect of the Employee it shall be assumed that the
pension plan of the Affiliated Employer in effect at the time the
Employee's service with such Affiliated Employer terminated
contained the provisions of Section 5.12 of the Plan and related
amendments concerning absence from the service of the Employer to
serve in the Armed Forces of the United States which became
effective November 1, 1977. For Plan Years beginning after
December 31, 1987, an Employee who meets the requirements of
paragraph (a) of this Section 4.3 shall be deemed to have
transferred to or from an Affiliated Employer for purposes of the
transfer of assets or liabilities to or from the Plan in
accordance with Section 4.6.
4.4 Accrual of Retirement Income during period of total
disability.
(a) If an Employee included in the Plan shall become
totally disabled, as determined by the Retirement Board on the
basis of medical evidence, after he has completed at least five
(5) Vesting Years of Service and, by reason of such disability,
he shall apply for and be granted either Social Security
disability benefits or long-term disability benefits under a
long-term disability benefit plan of the Employer, he shall be
considered to be on a leave of absence, herein referred to as a
"Disability Leave." An Employee's Disability Leave shall be
deemed to begin on the initial date of the disability, as
determined by the Retirement Board, and shall continue until the
earlier of: (1) the end of the month in which he shall cease to
be entitled to receive Social Security Disability benefits and
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long-term disability benefits under a long-term disability
benefit plan of the Employer; (2) his death; and (3) his
Retirement Date if he elects to have his Retirement Income
commence on such date. During the period of the Employee's
Disability Leave, he shall, for purposes of the Plan, be deemed
to have received Earnings at the regular rate in effect for him.
(b) A disabled Employee who applies for and would be
granted long-term disability benefits under a long-term
disability benefit plan of the Employer, if it were not for the
fact that the deductions therefrom attributable to other
disability benefits equal or exceed the amount of his unreduced
benefit under a long-term disability benefit plan of the
Employer, will be considered as being currently granted benefits
under such long-term disability benefit plan.
(c) An Employee's Disability Leave shall be deemed to be a
period for which Hours of Service shall be credited to the
Employee as though the period of his Disability Leave were a
period of active employment.
(d) If an Employee's Disability Leave shall terminate prior
to his Normal Retirement Date and he shall fail to return to the
employment of the Employer within sixty (60) days after the
termination of such leave, his service shall be deemed to have
terminated upon the termination of his Disability Leave and his
rights shall be determined in accordance with Article VIII,
unless at such time he shall be entitled to retire on an Early
Retirement Date, in which event his termination of service shall
be deemed to constitute his retirement under Section 3.2.
(e) Notwithstanding the above, the years of Accredited
Service for any Employee whose initial date of disability
occurred under the Prior Plan shall be determined under the terms
of the Prior Plan.
4.5 Employees leaving Employer's service. If the service
of an Employee is terminated prior to retirement as provided by
Article III, such Employee will forfeit any Vesting Years of
Service and Accredited Service which he may have subject to
possible restoration of some or all of his Vesting Years of
Service and Accredited Service in accordance with Article VIII.
The provisions of this Section 4.5 shall not affect the rights,
if any, of an Employee under Article VIII nor shall the rights of
an Employee be affected during or by reason of a layoff, due to
lack of work, which continues for a period of one year or less,
except that such period of layoff shall not be deemed to be
service with the Employer. If the service of an Employee is
terminated, or if he is not reemployed before the expiration of
one year after being laid off for lack of work, and he is
subsequently reemployed, he will be treated as provided in
Section 2.4.
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<PAGE>
Forfeitures arising by reason of an Employee's termination
of service for any reason shall not be applied to increase the
benefits any Employee would otherwise receive under the Plan but
shall be used to reduce contributions of the Employer to the
Plan.
4.6 Transfers to or from Affiliated Employers. This
Section 4.6 shall not apply to the transfer by an Employee to the
Employer from Savannah Electric and Power Company on or after
March 3, 1988. In the case of the transfer of an Employee
(including an Employee included in the Prior Plan who was
transferred in accordance with the Prior Plan) to an Affiliated
Employer which has at the time of transfer a pension plan with
substantially the same terms as this Plan, such Employee, if and
when he commences to receive on or after his Normal Retirement
Date retirement income under such pension plan of the Affiliated
Employer to which transferred, shall receive retirement income
under such pension plan attributable to years of Accredited
Service with the Employer prior to the time of his transfer. If
and when such an Employee commences to receive on an Early
Retirement Date retirement income under such pension plan of the
Affiliated Employer to which transferred, the amount of any
retirement income payable under such pension plan and
attributable to Accredited Service with the Employer prior to
such transfer shall be reduced in accordance with the provisions
of the pension plan relating to retirement income payable at
Early Retirement Date, or if such retirement income shall be
payable in a manner similar to the provisions of Section 8.2 or
Section 8.6, reduced in accordance with the applicable provision.
In the case of the transfer to this Employer (not including
transfers by reason of the split-up as of November 1, 1949) of an
Employee of any Affiliated Employer which has at the time of
transfer a pension plan with substantially the same terms as this
Plan, the Employer will, subject to the provisions of Article IX,
make periodic contributions into this Plan to the extent
necessary to provide the portion of the Retirement Income not
provided for him in the pension plan of the company from which he
was transferred.
Upon the transfer of an Employee to or from the Employer,
the Plan and Trust shall be authorized to receive or transfer the
greater of (a) the actuarial equivalent of the Employee's Accrued
Retirement Income or (b) such assets as may be required to fund
the projected Retirement Income of the Employee at his retirement
date attributable to the Plan or the pension plan maintained by
the Affiliated Employer from which the Employee transfers,
determined as of the last day of the Plan Year in which the
transfer occurs using the current funding assumptions for the
Plan Year in which the transfer occurs. The Retirement Board of
the Employer shall be authorized to coordinate the transfer of
assets and liabilities attributable to the benefits of active
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Employees, terminated vested Employees, retired Employees, and
Provisional Payees with any Affiliated Employer which has at such
time a pension plan with substantially the same terms as this
Plan.
Notwithstanding the above, the transferred Employee shall be
entitled to receive a benefit immediately following the transfer
of assets or liabilities to or from the Plan and Trust which is
equal to or greater than the benefit he would have been entitled
to receive immediately before the transfer if the Plan or the
pension plan maintained by the Affiliated Employer from which the
Employee transfers had been terminated. In no event shall assets
be transferred to or from the Plan and Trust without the
concurrent transfer of liabilities attributable to such assets.
In no case, however, shall any such Employee, who retires
pursuant to Section 3.1, 3.2, or 3.3 or the Provisional Payee of
a deceased Employee entitled to payment in accordance with
Article VII, receive Retirement Income attributable to Accredited
Service from both companies aggregating less than the Minimum
Retirement Income specified in Article V (after giving effect to
adjustments, if any, for Provisional Payee designation or deemed
designation), as shall be applicable in his circumstances.
4.7 Transfers from Savannah Electric and Power Company. In
the case of the transfer to the Employer of an employee of
Savannah Electric and Power Company ("SEPCO"), such Employee, if
and when he attains his Normal Retirement Date or Deferred
Retirement Date, shall be entitled to receive Retirement Income
calculated pursuant to Section 5.1 or 5.2, as appropriate, based
upon his Accredited Service with the Employer and Accredited
Service attributable to actual service during his employment with
SEPCO. Such amount calculated in accordance with the preceding
sentence shall be reduced by the amount of retirement income
calculated under the defined benefit pension plan of SEPCO
attributable to Accredited Service during his actual service
during his employment with SEPCO. Any Retirement Income based
upon an Employee's Accredited Service with the Employer and
Accredited Service attributable to actual service during his
employment with SEPCO shall be subject to the provisions of the
Plan relating to Retirement Income payable at an Early Retirement
Date, or if such Retirement Income shall be payable in accordance
with the provisions of Section 8.2 or 8.6, subject to the
provisions of such Section.
This Section 4.7 shall also apply in calculating the
Retirement Income payable under this Plan to a former employee of
SEPCO who is hired by the Employer and is entitled to credit for
years of Accredited Service under the Plan attributable to his
actual service with SEPCO.
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4.8 Retirement income for certain former employees of
Southern Electric Generating Company. This Section 4.8 shall
apply to those former employees of Southern Electric Generating
Company ("SEGCO") who either (a) retired from SEGCO on their
Early, Normal or Deferred Retirement Date under the Pension Plan
for Employees of Southern Electric Generating Company (the "SEGCO
Plan"), or (b) transferred from SEGCO to Alabama By-Products
Corporation ("ABC") in connection with the acquisition by ABC of
SEGCO's Mine No. 1 operation on or about August 1, 1974, and for
whom this Plan has assumed the liability for the payment of their
Retirement Income following the transfer of assets and
liabilities from the SEGCO Plan to this Plan. Each such employee
shall be entitled to receive retirement income under the Plan
attributable to years of Accredited Service with SEGCO prior to
the time of his retirement or transfer, as appropriate,
calculated and payable in accordance with the terms and
provisions of the SEGCO Plan in effect on the date of such
retirement or transfer, subject to any adjustments provided under
Section 8.6 of the Plan and any increases in Retirement Income
for retired employees under Section 5.11 of this Plan.
Notwithstanding the above, each Employee to whom this
Section 4.8 shall apply shall be entitled to receive a benefit
immediately following the transfer of assets or liabilities from
the SEGCO Plan and Trust which is equal to or greater than the
benefit he would have been entitled to receive immediately before
the transfer of assets or liabilities if the SEGCO Plan had been
terminated.
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<PAGE>
ARTICLE V
Retirement Income
5
5.1 Normal Retirement Income. The monthly Retirement
Income payable as a single life annuity to an Employee included
in the Plan who retires from the service of the Employer at his
Normal Retirement Date after January 1, 1989, subject to the
limitations of Article VI, shall be the greater of (a) and (b):
(a) the amount determined under (1) or (2) below, whichever
is greater:
(1) the Accrued Retirement Income determined in
accordance with Section 5.1 of the Prior Plan without
regard to the Minimum Retirement Income requirement,
plus the designated fixed dollar amount times the
Employee's years of Accredited Service earned after
December 31, 1988. For the period on and after January
1, 1989 but ending December 31, 1990, the fixed dollar
amount equals $20.00. For the period on and after
January 1, 1991, the fixed dollar amount equals $25.00;
and
(2) $25.00 times an Employee's years of
Accredited Service; and
(b) the Minimum Retirement Income as determined in
accordance with Section 5.2.
5.2 Minimum Retirement Income payable upon retirement at
Normal Retirement Date or Deferred Retirement Date. The monthly
Minimum Retirement Income payable to an Employee who retires from
the service of the Employer after January 1, 1989 at his Normal
Retirement Date or Deferred Retirement Date (before adjustment
for Provisional Payee designation, if any) shall be an amount
equal to 1.70% of his Average Monthly Earnings multiplied by his
years (and fraction of a year) of Accredited Service to his
Normal Retirement Date or Deferred Retirement Date including a
Social Security Offset.
Any provisions of this Article V to the contrary
notwithstanding, Retirement Income determined in accordance with
this Article V with respect to an Employee who retires on his
Normal Retirement Date or Deferred Retirement Date shall not be
less than the Retirement Income which would have been payable
with respect to such Employee commencing on an Early Retirement
Date had (a) the Employee retired on the Early Retirement Date
which would have resulted in the greatest Retirement Income,
(b) his Retirement Income commencing on such Early Retirement
Date been computed by utilizing the estimated Federal primary
Social Security benefit to which the Employee shall be entitled
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<PAGE>
determined in accordance with the Social Security Act in effect
at his retirement, giving effect to the recomputation provision
of such Social Security Act, if applicable, and (c) such
Retirement Income commencing on such Early Retirement Date been
payable in the same form as his Retirement Income commencing on
his Normal Retirement Date or Deferred Retirement Date.
5.3 Minimum Retirement Income upon retirement at Early
Retirement Date or upon termination of service by reason of death
or otherwise prior to retirement. The monthly Minimum Retirement
Income payable to an Employee (or his Provisional Payee), if he
shall retire on his Early Retirement Date, or if his service
shall terminate by reason of death or otherwise prior to
retirement, shall be determined in accordance with the following
provisions:
(a) Upon retirement at Early Retirement Date his Minimum
Retirement Income (before adjustment for Provisional Payee
designation, if any) shall be an amount equal to 1.70% of his
Average Monthly Earnings multiplied by his years (and fraction of
a year) of Accredited Service to his Early Retirement Date
including a Social Security Offset.
(b) Upon termination of service by reason of the death of
the Employee prior to retirement and after the effective date of
his Provisional Payee designation or deemed designation, the
Minimum Retirement Income for the purpose of determining the
Employee's Accrued Retirement Income upon which payment to his
Provisional Payee in accordance with Section 7.4 shall be based
shall be an amount equal to 1.70% of the Employee's Average
Monthly Earnings multiplied by his years (and fraction of a year)
of Accredited Service to the date of his death including a Social
Security Offset.
(c) For an Employee who terminates his service with the
Employer with entitlement to receive Retirement Income in
accordance with Section 8.1, upon retirement at Early Retirement
Date or Normal Retirement Date his Minimum Retirement Income
(before adjustment for Provisional Payee designation, if any)
shall be an amount equal to 1.70% of his Average Monthly Earnings
multiplied by his years (and fraction of a year) of Accredited
Service to his date of termination including a Social Security
Offset.
(d) Upon termination of service by reason of disability (as
defined in Section 4.4) of the Employee prior to retirement,
provided such Employee does not return to the service of the
Employer prior to his Retirement Date, the Minimum Retirement
Income shall be an amount equal to 1.70% of the Employee's
Average Monthly Earnings multiplied by his years (and fraction of
a year) of Accredited Service to his Retirement Date including a
Social Security Offset.
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<PAGE>
5.4 Calculation of Social Security Offset.
(a) Notwithstanding the Social Security Offset as
calculated in Sections 5.2 and 5.3, in no event shall such Social
Security Offset exceed the limits set forth in Section 401(l) of
the Code and the regulations applicable thereunder which are
incorporated by reference herein.
(b) For purposes of determining the Social Security Offset
in calculating an Employee's Retirement Income under the Plan,
the Social Security Offset shall be determined by using the
actual salary history of the Employee during his employment with
the Employer or any Affiliated Employer, provided that in the
event that the Retirement Board is unable to secure such actual
salary history within 180 days (or such longer period as may be
prescribed by the Retirement Board) following the later of the
date of the Employee's separation from service (by retirement or
otherwise) and the time when the Employee is notified of the
Retirement Income to which he is entitled, the salary history
shall be determined in the following manner:
(1) The salary history shall be estimated by applying
a salary scale, projected backwards, to the Employee's
compensation from the Employer for W-2 purposes for the
first Plan Year following the most recent Plan Year for
which the salary history is estimated. The salary scale
shall be a level percentage per year equal to six percent
(6%) per annum.
(2) The Plan shall give clear written notice to each
Employee of the Employee's right to supply the actual salary
history and of the financial consequences of failing to
supply such history. Such notice shall state that the
actual salary history is available from the Social Security
Administration.
For purposes of determining the Social Security Offset in
calculating the Retirement Income of an Employee entitled to
receive a public pension based on his employment with a Federal,
state, or local government agency, no reduction in such
Employee's Social Security benefit resulting from the receipt of
a public pension shall be recognized.
(c) If the distribution of an Employee's Accrued Retirement
Income begins before the Employee's attainment of the Social
Security Retirement Age (including a benefit commencing at Normal
Retirement Date), the projected Employer derived primary
insurance amount attributable to service by the Employee for the
Employer will be reduced by one-fifteenth (1/15) for each of the
first five (5) years and one-thirtieth (1/30) for each of the
next five (5) years by which the starting date of such benefit
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<PAGE>
precedes the Social Security Retirement Age of the Employee, and
reduced actuarially for each additional year thereafter.
5.5 Early Retirement Income. The monthly amount of
Retirement Income payable to an Employee who retires from the
service of the Employer at his Early Retirement Date subject to
the limitations of Section 6.2, will be equal to his Retirement
Income determined in accordance with Sections 5.1 and 5.3 based
on his Accredited Service to his Early Retirement Date, reduced
by three-tenths of one percent (0.3%) for each calendar month by
which the commencement date of his Retirement Income precedes his
Normal Retirement Date.
At the option of the Employee exercised at or prior to
commencement of his Retirement Income on or after his Early
Retirement Date (provided he shall not have in effect at such
Early Retirement Date a Provisional Payee designation pursuant to
Article VII) he may have his Retirement Income adjusted upwards
in an amount which will make his Retirement Income payable up to
age sixty-five (65) equal, as nearly as may be, to the amount of
his Federal primary Social Security benefit (primary old age
insurance benefit) estimated to become payable after age
sixty-five (65), as computed at the time of his retirement in
accordance with Section 5.3(a), plus a reduced amount, if any, of
Retirement Income actually determined to be payable after age
sixty-five (65). The Federal primary Social Security benefit
used in calculating an Employee's Retirement Income payable under
the Plan shall be determined by using the salary history of the
Employee during his employment with the Employer or any
Affiliated Employer, as calculated in accordance with Section
5.4(b).
5.6 Deferred Retirement Income. The monthly amount of
Retirement Income payable to an Employee who completes at least
one Hour of Service after December 31, 1987 and who retires from
the service of the Employer at his Deferred Retirement Date,
subject to the limitations of Section 6.2, will be equal to his
Retirement Income determined in accordance with Sections 5.1 and
5.2 based on his Accredited Service to his Deferred Retirement
Date. For Employees whose Normal Retirement Date would have
occurred on or before January 1, 1986, but whose Deferred
Retirement Date occurs after January 1, 1988 and on or before
July 1, 1991, the monthly amount of Retirement Income payable to
an Employee who completes at least one Hour of Service after
December 31, 1987, subject to the limitations of Section 6.2,
will be equal to the greater of (a) his Retirement Income
calculated on his Deferred Retirement Date, or (b) his Retirement
Income calculated as of his Normal Retirement Date applying the
applicable percentage increase in his Retirement Income pursuant
to the terms of Section 5.13 of the Prior Plan.
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<PAGE>
5.7 Payment of Retirement Income. The first payment of an
Employee's Retirement Income will be made on his Early Retirement
Date, Normal Retirement Date, Deferred Retirement Date, or date
of commencement of payment of Retirement Income in accordance
with Section 8.2 or 8.6, as the case may be; provided that
commencement of the distribution of an Employee's Retirement
Income shall not be made prior to his Normal Retirement Date
without the consent of such Employee, except as provided in
Section 8.4 of the Plan.
Notwithstanding anything to the contrary above, if in
accordance with this Section 5.7, an Employee is entitled to
receive Retirement Income commencing at his Early Retirement
Date, he may, in lieu of commencing payment of his Retirement
Income upon his Early Retirement Date, elect to receive such
Retirement Income commencing as of the first day of any month
after his Early Retirement Date and preceding his Normal
Retirement Date in an amount equal to his Accrued Retirement
Income determined as of the commencement of his Retirement Income
on or after his Early Retirement Date determined in accordance
with Section 5.5. An election pursuant to this Section 5.7 to
have Retirement Income commence prior to Normal Retirement Date
shall be made on a form prescribed by the Retirement Board and
shall be filed with the Retirement Board at least thirty (30)
days before Retirement Income is to commence.
In the event of the death of an Employee who has designated
a Provisional Payee or is deemed to have done so in accordance
with Article VII, if the designation has become effective, the
first payment to be made to the Provisional Payee pursuant to
Article VII shall be made to the Provisional Payee on the first
day of the month after the later of (a) the Employee's death and
(b) the date on which the Employee would have attained his fifty-
fifth (55th) birthday if he had survived to such date, if the
Provisional Payee shall then be alive and proof of the Employee's
death satisfactory to the Retirement Board shall have been
received by it. Subsequent payments will be made monthly
thereafter until the death of such Provisional Payee.
In any event, payment of Retirement Income to the Employee
shall begin not later than the sixtieth (60th) day after the
later of the close of the Plan Year in which falls (a) the
Employee's Normal Retirement Date or (b) the date the Employee
terminates his service with the Employer or any Affiliated
Employer. Notwithstanding the provisions of the Plan for the
monthly payment of Retirement Income, such income may be adjusted
and payable annually in arrears if the amount of the Retirement
Income is less than $10.00 per month.
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<PAGE>
5.8 Termination of Retirement Income. The monthly payment
of Retirement Income will cease with the last payment preceding
the retired Employee's death; subject, however, to the
continuation of payments to a surviving Provisional Payee, if one
has been designated or deemed to have been designated, which
likewise will cease with the last payment preceding the death of
the Provisional Payee. There shall be no benefits payable under
the Plan on behalf of any Employee whose death occurs prior to
his retirement, except as otherwise provided in Article VII with
respect to a Provisional Payee of an Employee. Following the
death of an Employee and of his Provisional Payee, if any, no
further payments will be made under the Plan on account of such
Employee or to his estate.
5.9 Required distributions.
(a) Once a written claim for benefits is filed with the
Retirement Board and unless the Employee elects to have payment
begin at a later date, payment of benefits to the Employee shall
begin not later than sixty (60) days after the last day of the
Plan Year in which the latest of the following events occurs:
(1) the Employee's Normal Retirement Date;
(2) the tenth (10th) anniversary of the date the
Employee commenced participation in the Plan; or
(3) the Employee's separation from service from the
Employer or any Affiliated Employer.
(b) Required minimum distributions on and after January 1,
1989
(1) Subject to the transitional rules described in
Paragraph (c) below, effective for calendar years beginning
after December 31, 1988, the payment of Retirement Income to
any Employee shall begin no later than April 1 of the
calendar year following the calendar year in which the
Employee attains age 70-1/2, without regard to the actual
date of separation from service. The amount of his
Retirement Income shall be recomputed as of such April 1 and
as of the close of each Plan Year after his Retirement
Income commences and preceding his actual retirement date as
if each such date were the Employee's Deferred Retirement
Date. Any additional Retirement Income he accrues at the
close of any such Plan Year shall be offset (but not below
zero) by the value of the benefit payments received in such
Plan Year.
(2) The receipt by an Employee of any payments or
distributions as a result of his attaining age 70-1/2 prior
to his actual retirement or death shall in no way affect the
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entitlement of an otherwise eligible Employee to additional
accrued benefits.
(c) Age 70-1/2 transitional rule
Any Employee who is not a five-percent owner and who has
attained age 70-1/2 by January 1, 1988, may defer the
commencement of benefit payments under paragraph (b) above until
he actually separates from service with the Employer. This
transitional rule shall only apply if the Employee is not a five-
percent owner at any time during the Plan Year ending with or
within the calendar year in which such owner attains age 66-1/2
and in any subsequent Plan Year.
(d) Distribution upon death of Employee
(1) Death after commencement of benefits
If the Employee dies before his entire nonforfeitable
interest has been distributed to him, the remaining portion
of such interest shall be distributed at least as rapidly as
under the method of distribution selected by the Employee as
of the date of his death.
(2) Death prior to commencement of benefits
If the Employee dies before the distribution of his
nonforfeitable interest has begun, the entire interest shall
be distributed monthly to his Provisional Payee, if any,
over such Provisional Payee's remaining lifetime.
(e) Determining required minimum distributions
Notwithstanding anything in this Plan to the contrary, all
distributions, including the minimum amounts which must be
distributed each calendar year, under this Plan shall be made in
accordance with Code Section 401(a)(9) and the regulations
thereunder.
(f) Minimum distribution transitional rules
Any distribution made pursuant to Section 242(b)(2) of the
Tax Equity and Fiscal Responsibility Act of 1982 shall meet the
requirements of Code Section 401(a)(9) as in effect on December
31, 1983, and shall also satisfy Code Sections 401(a)(11) and
417.
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5.10 Suspension of Retirement Income for reemployment.
(a) If a former Employee who is receiving Retirement Income
shall be reemployed by the Employer or any Affiliated Employer as
an Employee and shall not elect to waive his right to participate
under the Plan or the pension plan of the Affiliated Employer,
whichever applies, his Retirement Income shall cease during each
calendar month after his reemployment in which he completes forty
(40) or more Hours of Service. The Retirement Income payable
upon his subsequent retirement shall be reduced by the Actuarial
Equivalent of any Retirement Income he received prior to his
reemployment.
(b) No payment shall be withheld by the Plan pursuant to
this Section 5.10 unless the Plan notifies the Employee by
personal delivery or first class mail during the first calendar
month in which the Plan withholds payments that his Retirement
Income is suspended.
(c) If the payment of Retirement Income has been suspended,
payments shall resume no later than the first day of the third
calendar month after the calendar month in which the Employee
ceases to be employed in ERISA Section 203(a)(3)(B) service. The
initial payment upon resumption shall include the payment
scheduled to occur in the calendar month when payments resume and
any amounts withheld during the period between the cessation of
ERISA Section 203(a)(3)(B) service and the resumption of
payments.
5.11 Increase in Retirement Income of retired Employees for
service prior to January 1, 1991. Retirement Income payable on
and after January 1, 1991 to an Employee (or to the Provisional
Payee of an Employee) who retired at an Early Retirement Date or
at his Normal Retirement Date on or before January 1, 1991
pursuant to the Plan as in effect prior to January 1, 1991, will
be recalculated to increase the amount thereof by an amount
ranging from a minimum of two percent (2%) to a maximum of forty
percent (40%) in accordance with the following schedule:
Year in which Percentage
retirement occurred increase
1990 2%
1989 4%
1988 6%
1987 8%
1976 - 1986 10%
1971 - 1975 20%
1966 - 1970 30%
1965 and prior years 40%
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A similar adjustment, based on the date of the commencement
of Retirement Income payments to the Employee's Provisional
Payee, rather than the Employee's Retirement Date, will be made
in respect of Retirement Income which is payable on or after
January 1, 1991 where a Provisional Payee election was in effect,
or was deemed to be in effect, when an Employee died while in
service prior to January 1, 1991 and prior to his retirement.
A similar adjustment will be made in respect of Retirement
Income which is payable on or after January 1, 1991 for an
Employee (or the Provisional Payee of an Employee) entitled to
Retirement Income for which payments have commenced on or before
January 1, 1991 in accordance with Article VIII of the Prior
Plan, except for Employees whose Retirement Income has been
cashed-out pursuant to Section 8.4 of this Plan or Section 8.5 of
the Prior Plan.
For purposes of determining the applicable percentage
increase under this Section 5.11, the year of retirement includes
retirement where the last day of employment was December 31 of
such year. An Employee whose Deferred Retirement Date is on or
before January 1, 1988 and who did not retire at his Normal
Retirement Date shall be deemed to have retired at his Normal
Retirement Date for purposes of determining the increase in his
Retirement Income payable at his Deferred Retirement Date.
This Section 5.11 shall not apply with respect to an
Employee who has not retired, but for whom the distribution of
Retirement Income has commenced pursuant to Section 5.9 of the
Plan.
5.12 Special provisions relating to the treatment of
absence of an Employee from the service of the Employer to serve
in the Armed Forces of the United States.
(a) Effective as of November 1, 1977, any provisions of the
Plan to the contrary notwithstanding, the provisions of this
Section 5.12 shall be applicable to determine the period of
absence from the service of the Employer to serve in the Armed
Forces of the United States of a "participant in the Plan" (as
such term is defined in this paragraph (a)):
The term "participant in the Plan" means a person who on or
after November 1, 1977 is either: (1) an Employee who is then or
thereafter in the service of the Employer (including an Employee
on authorized leave of absence), (2) a retired Employee who is
receiving Retirement Income, (3) a deceased Employee who received
Retirement Income under this Plan or the Prior Plan at any time
after its Effective Date, (4) a deceased former Employee who
prior to the time of his death was receiving Retirement Income in
accordance with this Plan or the Prior Plan, (5) a former
Employee whose service terminated prior to January 1, 1976 and
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who is receiving Retirement Income in accordance with the Prior
Plan, (6) a former Employee whose service terminated prior to
November 1, 1977 and who will be entitled to receive Retirement
Income commencing after that date in accordance with this Plan or
the Prior Plan, or (7) a former Employee who was transferred from
the Employer pursuant to Section 4.6 or pursuant to the Prior
Plan and who will be entitled to receive in accordance with
either, Retirement Income commencing after November 1, 1977.
The Employee or former Employee or retired Employee referred
to in this paragraph (a) is one who: (1) left the employment of
the Employer or of BECO to enter the Armed Forces of the United
States (including reserve components thereof, the Public Health
Service, and the National Guard) for the purposes and under
circumstances which are specified in the reemployment provisions
of the Military Selective Service Act and in any amendments or
supplements thereto hereinafter in this Section 5.12 referred to
as the "Selective Service Act," (2) made application for
reemployment by the Employer or by BECO within such time after
discharge or release from such service in the Armed Forces of the
United States as is specified in the reemployment provisions of
the Selective Service Act as is applicable in his circumstances
and was reemployed by the Employer or by BECO and if by BECO
thereafter became an Employee of the Employer on December 1,
1952, (3) served a period of active duty in the Armed Forces of
the United States which did not exceed the maximum period of such
active duty specified in the reemployment provisions of the
Selective Service Act as is applicable in his circumstances, and
(4) performed such service in the Armed Forces after May 1, 1940.
(b) For the purposes of the Plan, the period of absence of
a participant in the Plan to serve in the Armed Forces of the
United States shall be the period determined by the Retirement
Board.
(c) In accordance with the provisions of the Plan as
amended effective as of November 1, 1977 by the addition of this
Section 5.12 and the concurrent amendments associated therewith,
there shall be recalculated effective as of November 1, 1977 the
Retirement Income (1) of each participant in the Plan or that of
his Provisional Payee, if any, who is then receiving Retirement
Income; and (2) of each deceased participant in the Plan and his
deceased Provisional Payee, if any, who received payment of
Retirement Income, who is not then receiving Retirement Income.
(1) If in accordance with such recalculation, a larger
amount of Retirement Income would have been payable to a
participant in the Plan who is currently receiving payment
of Retirement Income and/or to his Provisional Payee, if
any, than was paid to them respectively prior to November 1,
1977, payment in a single sum of the excess of the
recalculated amount over the amounts which were paid prior
35
<PAGE>
to November 1, 1977 with interest thereon as hereinafter
provided, shall be made as soon as practicable after
November 1, 1977 and, commencing as soon as practicable
after November 1, 1977, the Retirement Income payable to
participants in the Plan and/or to their Provisional Payees,
if any, who are currently receiving Retirement Income shall
be increased to an amount which is equal to the larger
recalculated amount to which they shall be entitled in
respect of payments to be made on or after November 1, 1977.
(2) If in accordance with the recalculation a larger
amount of Retirement Income would have been payable to the
date of death prior to November 1, 1977 of a deceased
retired Employee or his Provisional Payee than was paid
prior to his death, payment in a single sum of the excess of
the recalculated amount over the amount which was paid prior
to the date of death, with interest thereon as hereinafter
provided, shall be made to his estate as soon as practicable
after November 1, 1977.
(3) For the purposes of the recalculation to be made
in accordance with this paragraph (c), if a participant in
the Plan left the employment of an Affiliated Employer to
enter the Armed Forces of the United States and was not
reemployed by such Affiliated Employer upon his discharge or
release from service in the Armed Forces but he entered the
employment of the Employer, without intermediate employment,
and within the time prescribed in paragraph (a) of this
Section 5.12, and his period of absence in the Armed Forces
of the United States, as determined by the Retirement Board,
is not taken into account under the pension plan of the
Affiliated Employer whose service he left to enter the Armed
Forces or under Section 4.3, it shall be treated under the
Plan and the Prior Plan as if such period of absence had
been a period of absence from the Employer.
(d) Retirement Income of participants in the Plan who are
not referred to in subparagraphs (1) or (2) of paragraph (c) and
who are not on November 1, 1977 receiving Retirement Income shall
be determined in accordance with the provisions of the Plan as
amended by the addition of this Section 5.12 and the concurrent
amendments associated therewith.
(e) Interest to be paid on any single sum payment to be
made in accordance with subparagraphs (1) or (2) of paragraph (c)
of this Section 5.12 shall be computed at the annual rate of five
percent (5%).
(f) Payment to be made to any payee in accordance with this
Section 5.12 may be conditioned by the Retirement Board upon its
receipt of (1) such information pertaining to absence of an
Employee or former Employee to serve in the Armed Forces of the
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United States as it may request and (2) such form of receipt and
release as it may determine to be appropriate in the
circumstances.
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ARTICLE VI
Limitations on Benefits
6
6.1 Maximum Retirement Income. Notwithstanding any other
provision of the Plan, the amount of Retirement Income shall be
subject to the provisions of Article VI.
(a) The maximum annual amount of Retirement Income payable
with respect to an Employee in the form of a straight life
annuity without any ancillary benefits after any adjustment for a
Provisional Payee designation shall be the lesser of the dollar
limitation determined under Code Section 415(b)(1)(A) as adjusted
under Code Section 415(d), or Code Section 415(b)(1)(B) as
adjusted under Treasury Regulation Section 1.415-5, subject to
the following provisions of Article VI. With respect to any
former Employee who has Accrued Retirement Income under the Plan
or his Provisional Payee, the maximum annual amount shall also be
subject to the adjustment under Code Section 415(d).
(b) For purposes of Section 6.1, the term "average
compensation for his high three (3) years" shall mean the period
of consecutive calendar years (not more than three) during which
the Employee was both an active participant in the Plan and had
the greatest aggregate compensation from the Employer or, if he
is also entitled to receive a pension from a defined benefit plan
of an Affiliated Employer or if assets and liabilities
attributable to the pension of the Employee from a defined
benefit plan of an Affiliated Employer have been transferred to
this Plan, the greatest aggregate compensation from the Employer
and the Affiliated Employer during such high three (3) years.
The limitation described in Section 6.1(a) shall also apply in
the case of the payment of an Employee's Retirement Income with a
Provisional Payee designation.
(c) For purposes of Article VI, the term "compensation"
means an Employee's earned income, wages, salaries, and fees for
professional services, and other amounts received for personal
services actually rendered in the course of employment with the
Employer maintaining the Plan (including, but not limited to,
commissions paid salesmen, compensation for services on the basis
of a percentage of profits, commissions on insurance premiums,
tips and bonuses), and excluding the following:
(1) Employer contributions to a plan of deferred
compensation which are not included in the Employee's gross
income for the taxable year in which contributed or Employer
contributions under a simplified employee pension plan to
the extent such contributions are deductible by the
Employee, or any distributions from a plan of deferred
compensation;
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(2) Amounts realized from the exercise of a
nonqualified stock option, or when restricted stock (or
property) held by the Employee either becomes freely
transferable or is no longer subject to a substantial risk
of forfeiture;
(3) Amounts realized from the sale, exchange, or other
disposition of stock acquired under a qualified stock
option; and
(4) Other amounts which received special tax benefits,
or contributions made by the Employer (whether or not under
a salary reduction agreement) towards the purchase of an
annuity described in Section 403(b) of the Code (whether or
not the amounts are actually excludable from the gross
income of the Employee).
Compensation for any Limitation Year is the compensation actually
paid or includible in gross income during such year.
(d) The foregoing limitations regarding the maximum
Retirement Income shall not apply with respect to an Employee if
the Retirement Income payable under the Plan and under any other
defined benefit plans of the Employer or any Affiliated Employer
does not exceed $10,000 for the calendar year or for any prior
calendar year, and the Employer and any Affiliated Employer has
not at any time maintained a defined contribution plan in which
the Employee has participated. The terms "defined benefit plan"
and "defined contribution plan" shall have the meanings set forth
in Section 415(k) of the Code.
6.2 Adjustment to Defined Benefit Dollar Limitation for
Early or Deferred Retirement.
(a) If the retirement benefit of an Employee commences
before the Employee's Social Security Retirement Age, the Defined
Benefit Dollar Limitation shall be reduced in accordance with
Code Section 415(b)(2)(C) as prescribed by the Secretary of the
Treasury. The reduction shall be made in such manner as the
Secretary of the Treasury may prescribe which is consistent with
the reduction for old-age insurance benefits commencing before
the Social Security Retirement Age under the Social Security Act.
(b) If the retirement benefit of an Employee commences
after the Employee's Social Security Retirement Age, the Defined
Benefit Dollar Limitation shall be adjusted in accordance with
Code Section 415(b)(2)(D) as prescribed by the Secretary of the
Treasury, based on the lesser of the interest rate assumption
under the Plan or on an assumption of five percent (5%) per year.
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6.3 Adjustment of limitation for Years of Service or
participation.
(a) If an Employee has completed less than ten (10) years
of participation, the Employee's accrued benefit shall not exceed
the Defined Benefit Dollar Limitation as adjusted by multiplying
such amount by a fraction, the numerator of which is the
Employee's number of years (or part thereof) of participation in
the Plan, and the denominator of which is ten (10).
(b) If an Employee has completed less than ten (10) Years
of Service with the Employer and any Affiliated Employer, the
limitations described in Sections 415(b)(1)(B), 415(b)(4), and
415(e) of the Code shall be adjusted by multiplying such amounts
by a fraction, the numerator of which is the Employee's number of
years of service (or part thereof), and the denominator of which
is ten (10).
(c) In no event shall Sections 6.3(a) and (b) reduce the
limitations provided under Sections 415(b)(1), 415(b)(4), and
415(e) of the Code to an amount less than one-tenth (1/10) of the
applicable limitation (as determined without regard to this
Section 6.3).
(d) This Section 6.3 shall be applied separately with
respect to each change in the benefit structure of the Plan,
except as is or may be limited by Revenue Procedure 92-42.
6.4 Preservation of Accrued Retirement Income.
(a) Retirement Income payable to an Employee or former
Employee who was an active participant in the Plan before
October 3, 1973 will not be deemed to exceed the amount of
maximum Retirement Income limitations imposed by the provisions
of this Article VI if:
(1) The annual amount of Retirement Income payable to
such Employee on retirement does not exceed 100% of his
annual rate of compensation on the earlier of (A) October 2,
1973, or (B) the date on which he separated from the service
of the Employer;
(2) Such annual Retirement Income is not greater than
the annual amount of Retirement Income which would have been
payable to such Employee on retirement if (A) all terms and
conditions of the Plan in existence on his retirement date
had remained in existence until his retirement and (B) his
compensation taken into account for any period after
October 2, 1973 had not exceeded his annual rate of
compensation on October 2, 1973; and
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<PAGE>
(3) In the case of an Employee whose service with the
Employer terminated prior to October 2, 1973, such annual
Retirement Income is no greater than his vested Accrued
Retirement Income as of the date of such termination of
service.
(b) In the case of an Employee who is a participant in the
Plan prior to January 1, 1983, if the Section 415 requirements
have been met for all Plan Years prior to 1983, then the Defined
Benefit Dollar Limitation described in Section 1.10 applicable to
the payment of such Employee's Retirement Income shall be equal
to his Accrued Retirement Income as of December 31, 1982, (when
expressed as an annual benefit within the meaning of Section
415(b)(2) of the Code, as in effect prior to the Tax Equity and
Fiscal Responsibility Act of 1982), if his Accrued Retirement
Income exceeds such Defined Benefit Dollar Limitation.
(c) This Section 6.4(c) shall apply to defined benefit
plans that were in existence on May 6, 1986, and that met the
applicable requirements of Section 415 of the Code as in effect
for all Limitation Years. If the Current Accrued Retirement
Income of an Employee as of the first day of the Limitation Year
beginning on or after January 1, 1987, exceeds the benefit
limitations under Section 415(b) of the Code (as modified by
Sections 6.2 and 6.3 of the Plan), then, for purposes of Code
Section 415(b) and (e), the Defined Benefit Dollar Limitation
with respect to such Employee shall be equal to such Current
Accrued Retirement Income.
6.5 Limitation on benefits from multiple plans.
(a) In the case of an Employee who is also a participant in
any other defined benefit plan of the Employer or any Affiliated
Employer or in any defined contribution plan of the Employer or
any Affiliated Employer, the Retirement Income provided by the
Plan shall be limited to the extent necessary to prevent the sum
of Fractions A and B below, computed as of the end of the Plan
Year, from exceeding 1.0.
Fraction A
(numerator) Projected annual benefit of the Employee
under the Plan and any other defined benefit plan of
the Employer or any Affiliated Employer (determined as
of the close of the Plan Year).
(denominator) The lesser of (1) the product of 1.25
multiplied by the Defined Benefit Dollar Limitation (or
such higher accrued benefit as of December 31, 1982),
or (2) 1.4 multiplied by the amount determined under
Code Section 415(b)(1)(B) as adjusted under Treasury
Regulation Section 1.415-5.
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<PAGE>
Fraction B
(numerator) The sum of all Annual Additions to the
account of the Employee under any defined contribution
plan of the Employer or any Affiliated Employer as of
the close of the Plan Year.
(denominator) The sum of the lesser of the following
amounts, determined for such Plan Year and for each
prior Plan Year in which the Employee has a Year of
Service, (1) 1.25 multiplied by the Defined
Contribution Dollar Limitation determined under Code
Section 415(c)(1)(A), or (2) 1.4 multiplied by
twenty-five percent (25%) of the Employee's
compensation for the year.
6.6 Special rules for plans subject to overall limitations
under Code Section 415(e).
(a) For purposes of computing the defined contribution plan
fraction of Section 415(e)(1) of the Code, "Annual Addition"
shall mean the amount allocated to an Employee's account during
the Limitation Year as a result of:
(1) employer contributions,
(2) employee contributions,
(3) forfeitures, and
(4) amounts described in Sections 415(1)(1) and
419(A)(d)(2) of the Code.
(b) The Annual Addition for any Limitation Year beginning
before January 1, 1987 shall not be recomputed to treat all
Employee contributions as an Annual Addition.
(c) If the sum of Fractions A and B exceeds 1.0 as of
December 31, 1982, the numerator of Fraction B shall be reduced
by an amount which does not exceed the numerator, so that the sum
of Fraction A and Fraction B does not exceed 1.0.
(d) If the Plan satisfied the applicable requirements of
Section 415 of the Code as in effect for all Limitation Years
beginning before January 1, 1987, an amount shall be subtracted
from the numerator of the defined contribution plan fraction (not
exceeding such numerator) as prescribed by the Secretary of the
Treasury so that the sum of the defined benefit plan fraction and
defined contribution plan fraction computed under Section
415(e)(1) of the Code (as revised by this Article VI) does not
exceed 1.0 for such Limitation Year.
42
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(e) The defined contribution plans and the other defined
benefit plans of the Employer and Affiliated Employers include,
respectively, (1) The Southern Company Employee Savings Plan, The
Southern Company Employee Stock Ownership Plan, and any other
defined contribution plan (as defined in Section 415(k) of the
Code) and (2) any other qualified pension plan in which the
Employee participates in accruing benefits maintained by the
Employer or any Affiliated Employer.
6.7 Combination of Plans. Notwithstanding any provisions
contained herein to the contrary, in the event that an Employee
participates in a defined contribution plan or defined benefit
plan required to be aggregated with this Plan under Code Section
415(g) and the combined benefits with respect to an Employee
exceed the limitations contained in Code Section 415(e),
corrective adjustments shall first be made under this Plan.
However, if an Employee's Retirement Income under this Plan has
already commenced, corrections shall first be made under The
Southern Company Employee Stock Ownership Plan, if possible, and
if not possible, then correction shall be made to the Employee's
Accrued Retirement Income under this Plan.
6.8 Incorporation of Code Section 415. Notwithstanding
anything contained in this Article to the contrary, the
limitations, adjustments and other requirements prescribed in
this Article shall at all times comply with the provisions of
Code Section 415 and the regulations thereunder, the terms of
which are specifically incorporated herein by reference.
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ARTICLE VII
Provisional Payee
7
7.1 Adjustment of Retirement Income to provide for payment
to Provisional Payee. An Employee who desires to have his
Accrued Retirement Income adjusted in accordance with the
provisions of this Article VII to provide a reduced amount of
Retirement Income payable to him for his lifetime commencing on
his Early Retirement Date, his Normal Retirement Date, or his
Deferred Retirement Date, as the case may be, may elect, in
accordance with the provisions of this Article VII, at his
option, either:
(a) that an amount of Retirement Income be payable to him
for his lifetime which is equal to eighty percent (80%) of the
Retirement Income which would otherwise be payable to him, but
for such election (taking into account any reduction required in
accordance with Sections 7.3 and 7.4(a)), with the provision that
the same amount will be continued after his death to his
Provisional Payee until the death of such Provisional Payee, or
(b) that an amount of Retirement Income be payable to him
for his lifetime which is equal to ninety percent (90%) of the
Retirement Income which would otherwise be payable to him, but
for such election (taking into account any reduction required in
accordance with Sections 7.3 and 7.4(a)), with the provision that
one-half (1/2) of the amount payable to the Employee will be
continued after his death to his Provisional Payee until the
death of such Provisional Payee.
7.2 Form and time of election and notice requirements.
(a) An election of payment and designation of a Provisional
Payee in accordance with Section 7.1 shall be made in writing at
the same time on a form prescribed by the Retirement Board and
delivered to it. The election and designation shall specify its
effective date which shall not be sooner than the date received
by the Retirement Board or the Employee's fifty-fifth (55th)
birthday, whichever is later, nor later than the date of
commencement of payments in accordance with this Article VII.
(b) An election of payment to be made in accordance with
paragraph (a) or paragraph (b) of Section 7.1 may be changed from
paragraph (a) to paragraph (b) or vice versa by an Employee,
provided the written election of the change specifies an
effective date which shall not be sooner than the date received
by the Retirement Board or the Employee's fifty-fifth (55th)
birthday, whichever is later, nor later than the date of
commencement of payments in accordance with this Article VII. To
the extent that the new method of payment shall afford the
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Employee changed protection in the event of his death after the
effective date of the new election and prior to retirement, his
Accrued Retirement Income shall be adjusted pursuant to Section
7.4(a) to reflect such changed protection.
(c) With respect to Sections 7.5 and 7.6, within the period
not less than 30 days and not more than 90 days prior to the
commencement of benefits, the Employee shall be furnished, by
mail or personal delivery, a written explanation of: (1) the
terms and conditions of the reduced Retirement Income payable as
provided in paragraph (b) of Section 7.1; (2) the Employee's
right to make, and the effect of, an election to waive the
payment of reduced Retirement Income pursuant to a Provisional
Payee designation; (3) the rights of the Employee's Provisional
Payee; and (4) the right to make, and the effect of, a revocation
of a previous election to waive the payment of reduced Retirement
Income pursuant to a Provisional Payee designation.
Within thirty (30) days following an Employee's written
request received by the Retirement Board during the election
period, but within sixty (60) days from the date the Employee is
furnished all of the information prescribed in the immediately
preceding sentence, the Employee shall be furnished an additional
written explanation, in terms of dollar amounts, of the financial
effect of an election by him not to receive such reduced
Retirement Income. If an Employee makes such request, the
election period herein prescribed shall end not earlier than
sixty (60) calendar days following the day of the mailing or
personal delivery of the additional explanation to the Employee.
Except that if an election made as provided in Section 7.5 or 7.6
is revoked, another election under that Section may be made
during the specified election period.
7.3 Circumstances in which election and designation are
inoperative. An election and designation made pursuant to this
Article shall be inoperative and the regular provisions of the
Plan shall again become applicable as if a Provisional Payee had
not been designated if, prior to the commencement of any payment
in accordance with this Article VII: (a) an Employee's
Provisional Payee shall die, (b) the Employee and the Provisional
Payee shall be divorced under a final decree of divorce, or
(c) the Retirement Board shall have received the written
Qualified Election of the Employee to rescind his election of
payment and designation of a Provisional Payee. If such a
Qualified Election to rescind is made by the Employee, his
Accrued Retirement Income shall be reduced to reflect the
protection afforded the Employee by any Provisional Payee
designation during the period from its effective date to the date
of the Retirement Board's receipt of the Employee's Qualified
Election to rescind if the option as to payments of reduced
Retirement Income was in accordance with either Section 7.1(a),
7.6(a), or 7.6(b). If an Employee remarries subsequent to the
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death or divorce of his Provisional Payee and prior to the
commencement of payments in accordance with this Article VII, and
if such Employee is married prior to the time of the commencement
of payments, then he shall be entitled to designate a new
Provisional Payee in the manner set forth in Section 7.2.
7.4 Pre-retirement death benefit. If prior to his Normal
Retirement Date (or his Deferred Retirement Date, if applicable),
an Employee shall die while in the service of the Employer and is
survived by his spouse to whom he shall be married at the time of
his death, there shall be payable to his surviving spouse (whom
he shall be deemed to have designated as his Provisional Payee)
Retirement Income determined in accordance with paragraph (a) or
paragraph (c) of this Section 7.4, as applicable. Such
Retirement Income shall commence on the first day of the month
following the death of the Employee or the first day of the month
following the date on which he would have attained his
fifty-fifth (55th) birthday if he were still alive, whichever is
later, and shall cease with the last payment preceding the death
of his Provisional Payee.
(a) The amount of Retirement Income payable to the
Provisional Payee of a deceased Employee who prior to his death
had attained his fifty-fifth (55th) birthday shall be equal to
the amount payable to the Provisional Payee as calculated in
Section 7.1(b) determined on the basis of his Accredited Service
to the date of his death, or if the Employee shall have attained
his fifty-fifth (55th) birthday and so elected prior to his
death, such Retirement Income shall be equal to the amount set
forth in Section 7.1(a) determined on the basis of his Accredited
Service to the date of his death reduced as provided in the next
sentence. If such election shall be made by the Employee, the
Retirement Income which shall be payable to the Employee if he
lives to his Early Retirement Date or the first day of the month
following his attainment of age sixty-five (65), if later, shall
be reduced by three-fourths of one percent (0.75%) for each year
(prorated for a fraction of a year from the first day of the
month following the effective date of the election) which has
elapsed from the effective date of his election to the earlier of
(1) the commencement of Retirement Income on or after his Early
Retirement Date or the first day of the month following his
attainment of age sixty-five (65), if later, or (2) the
revocation of such election. If he shall die before the
commencement of Retirement Income on or after his Early
Retirement Date or the first day of the month following his
attainment of age sixty-five (65), if later, his Accrued
Retirement Income to the date of his death shall be reduced by
three-quarters of one percent (0.75%) for each year (prorated for
a fraction of a year from the first day of the month following
the effective date of the election) between the effective date of
his election and the first day of the month following his
attainment of age sixty-five (65). No reduction in the
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Employee's Retirement Income shall be made for the period during
which the election is in effect after the first day of the month
following his attainment of age sixty-five (65).
(b) Retirement Income shall not be payable under paragraph
(a) of this Section 7.4 to the Provisional Payee of a deceased
Employee if at the time of his death there was in effect a
Qualified Election made after August 22, 1984 under this
paragraph (b) that no Retirement Income shall be paid to his
Provisional Payee in the event of his death while in the service
of the Employer (or while in the service of an Affiliated
Employer to which his employment had been transferred in
accordance with Section 4.6) as provided in paragraph (a),
provided the Employee had received at least 180 days prior to his
fifty-fifth (55th) birthday a written explanation of: (1) the
terms and conditions of the Retirement Income payable to his
Provisional Payee as provided in paragraph (a); (2) the
Employee's right to make, and the effect of, an election to waive
the payment of Retirement Income to his Provisional Payee;
(3) the rights of the Employee's Provisional Payee; and (4) the
right to make, and the effect of, a revocation of a previous
election to waive the payment of Retirement Income to the
Employee's Provisional Payee.
A revocation of a prior Qualified Election to waive the
payment of Retirement Income to the Employee's Provisional Payee
may be made by the Employee without the consent of the Employee's
Provisional Payee at any time before the commencement of
benefits. An election under this paragraph (b) may be made and
such election may be revoked by an Employee during the period
commencing ninety (90) days prior to the Employee's fifty-fifth
(55th) birthday and ending on the date of the Employee's death.
(c) The amount of such Retirement Income payable to the
Provisional Payee of a deceased Employee who prior to his death,
had completed at least five (5) Vesting Years of Service and had
not attained his fifty-fifth (55th) birthday shall be equal to
one-half of the reduced amount, as actuarially adjusted to
provide for the payment of such Retirement Income beginning at
the date on which such deceased Employee would have attained his
fifty-fifth (55th) birthday and to provide for the determination
of such Retirement Income on a joint and fifty percent (50%)
survivor basis of the Employee's Accrued Retirement Income,
determined on the basis of his Accredited Service to the date of
his death.
This Section 7.4(c) shall also apply to adjust the future
payment of Retirement Income after December 31, 1990 to a
Provisional Payee with respect to an Employee who died (while in
the service of the Employer prior to his fifty-fifth (55th)
birthday after completing the requisite number of Years of
Service) in order to have a nonforfeitable right to Retirement
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Income under the Plan as in effect on the Employee's date of
death, provided Retirement Income is payable to such Provisional
Payee on or after January 1, 1991. The adjustment under this
Section 7.4(c) shall be determined by adjusting the Retirement
Income that had commenced to the Provisional Payee on or before
January 1, 1986, and then adding the applicable percentage
increase under Section 5.13 of the Prior Plan.
For an Employee, on or after January 1, 1991, who dies while
in the service of the Employer prior to his fifty-fifth (55th)
birthday after completing five (5) Vesting Years of Service, the
amount of such Retirement Income payable to the Provisional Payee
shall be calculated as provided in Section 7.1(b) determined on
the basis of his Accredited Service to the date of his death.
The payment of such Retirement Income to the Provisional Payee
shall begin on the first day of the month following the date on
which such deceased Employee would have attained his fifty-fifth
(55th) birthday.
7.5 Post-retirement death benefit - qualified joint and
survivor annuity. If at his Early Retirement Date, Normal
Retirement Date, or Deferred Retirement Date, as the case may be,
an Employee is married and he has not: (a) designated a
Provisional Payee in accordance with Section 7.1 in respect of
payments to be made commencing on his Early, Normal, or Deferred
Retirement Date or (b) made a Qualified Election that payment be
made to him in the mode of a single life annuity, he shall
nevertheless be deemed to have made an effective designation of a
Provisional Payee under this Section 7.5 and to have specified
the payment of a benefit as provided in Section 7.1(b).
7.6 Election and designation by former Employee entitled to
Retirement Income in accordance with Article VIII. If an
Employee is entitled to receive in accordance with Section 8.1
Retirement Income commencing at Normal Retirement Date, or sooner
in accordance with Section 8.2, he may, on or after his
fifty-fifth (55th) birthday, designate his spouse as his
Provisional Payee and elect to have his Accrued Retirement Income
at the date of termination of his service actuarially adjusted to
provide, at his option, in the event of the commencement of
payment prior to his Normal Retirement Date either:
(a) a reduced amount payable to him for his lifetime with
the provision that such reduced amount will be continued after
his death to his spouse as Provisional Payee until the death of
such Provisional Payee; or
(b) a reduced amount (greater than the amount in (a) above)
payable to him for his lifetime with the provision that one-half
(1/2) of such reduced amount will be continued after his death to
his spouse as Provisional Payee until the death of such
Provisional Payee.
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The Employee's election and designation of his Provisional
Payee made in accordance with this Section 7.6 shall be in
writing on a form prescribed by the Retirement Board and
delivered to it and shall become effective not sooner than the
date received by the Retirement Board or the Employee's
fifty-fifth (55th) birthday, whichever is later, nor later than
the date of commencement of payment in accordance with this
Section 7.6.
If the Employee dies prior to his Normal Retirement Date but
after the effective date of his Provisional Payee designation,
there will be payable to his Provisional Payee for life
commencing on the first day of the calendar month after the
Employee's death Retirement Income in a reduced amount in
accordance with the Employee's election of payments to be made to
his Provisional Payee after the death of the Employee under
paragraph (a) or (b), as the case may be, of this Section 7.6.
However, if prior to the Employee's death, the Retirement Board
has not received such election, payment of a reduced amount of
Retirement Income will be made in accordance with paragraph (b)
of this Section 7.6 to his surviving spouse to whom he is married
at the time of his death, unless (1) at the time of his death
there is in effect a Qualified Election by the Employee that
reduced Retirement Income shall not be paid to his surviving
spouse in accordance with this Section 7.6 should he die between
his fifty-fifth (55th) birthday and his Normal Retirement Date
without having elected that payment be made to a Provisional
Payee and (2) at least 180 days prior to his fifty-fifth (55th)
birthday a written explanation is provided to the Employee of:
(A) the terms and conditions of the Retirement Income payable to
his Provisional Payee as provided in this Section 7.6; (B) the
Employee's right to make, and the effect of, an election to waive
the payment of Retirement Income to his Provisional Payee;
(C) the rights of an Employee's spouse; and (D) the right to
make, and the effect of, a revocation of a previous election to
waive the payment of Retirement Income to his Provisional Payee.
If the Employee is entitled to receive payment of Retirement
Income in accordance with Section 8.2 after his fifty-fifth
(55th) birthday and prior to his Normal Retirement Date and
elects to do so, a reduced amount of Retirement Income determined
in accordance with this Section 7.6 based upon his Accrued
Retirement Income at the date of termination of his service
(actuarially reduced in accordance with Section 8.2) will be
payable to him commencing on the date on which payments commence
prior to Normal Retirement Date in accordance with Section 8.2
with payments in the same or reduced amount to be continued to
his Provisional Payee for life after the Employee's death in
accordance with his election under paragraph (a) or (b), as the
case may be, of this Section 7.6. However, if the Employee is
married and he has not designated a Provisional Payee in respect
of payments to commence to him prior to his Normal Retirement
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Date or elected that payment be made to him in the mode of a
single life annuity pursuant to a Qualified Election, he shall be
deemed to have designated a Provisional Payee pursuant to this
Section 7.6 and thereby specified that a reduced Retirement
Income shall be paid to him during his lifetime as provided in
paragraph (b) of this Section 7.6 and continued after his death
to his Provisional Payee as provided in paragraph (b) of this
Section 7.6.
If the Employee is alive on his Normal Retirement Date and
is married and payment of Retirement Income has not sooner
commenced, the provisions of Section 7.5 shall be applicable to
the payment of his Retirement Income, unless he shall elect at
his Normal Retirement Date to receive payment of his Retirement
Income pursuant to Section 7.1(a) or 7.1(b). However, if an
election and designation in accordance with this Section 7.6 was
in effect prior to his Normal Retirement Date, the Employee's
Accrued Retirement Income at his Normal Retirement Date shall be
actuarially adjusted for the period the election and designation
was in effect.
7.7 Death benefit for Provisional Payee of former Employee.
If an Employee, whose service with the Employer terminates on or
after January 1, 1989, shall die after such termination of
employment, and prior to his death (a) shall have not attained
his fifty-fifth (55th) birthday, (b) shall have completed at
least five (5) Vesting Years of Service, and (c) shall be
survived by his spouse to whom he shall be married at his death,
then there shall be payable to his surviving spouse (whom he
shall be deemed to have designated as his Provisional Payee)
Retirement Income determined in accordance with this Section 7.7.
Such Retirement Income shall be equal to one-half of the reduced
amount, as actuarially adjusted to provide for the payment of
such Retirement Income beginning at the date on which such
deceased Employee would have attained his fifty-fifth (55th)
birthday and to provide for the determination of such Retirement
Income on a joint and fifty percent (50%) survivor basis of the
Employee's Accrued Retirement Income, determined on the basis of
his Accredited Service to the date of his death. Such Retirement
Income shall commence on the first day of the month following the
date on which the former Employee would have attained his
fifty-fifth (55th) birthday if he were still alive, and shall
cease with the last payment preceding the death of his
Provisional Payee.
7.8 Limitations on Employee's and Provisional Payee's
benefits.
(a) With respect to an Employee who does not elect a single
life annuity, the limitation on benefits imposed under Article VI
shall be applied as if such Employee had elected a benefit in the
form of a single life annuity.
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(b) With respect to a Provisional Payee, the limitations on
benefits imposed under Article VI shall be applied consistent
with paragraph (a) above prorated to provide a limitation equal
to or one-half of the Employee's limitation as appropriate in
accordance with annuity form of benefit elected by the Employee.
7.9 Effect of election under Article VII. An election of
payment or a deemed election of payment in accordance with this
Article VII shall be in lieu of any other form or method of
payment of Retirement Income.
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ARTICLE VIII
Termination of Service
8
8.1 Vested interest. If an Employee included in the Plan
terminates for any reason other than death or transfer to an
Affiliated Employer as provided by Section 4.6 or retirement as
provided by Article III, and if such Employee has had at least
five (5) Vesting Years of Service with the Employer, whether or
not Accredited Service, he will be entitled to receive,
commencing at Normal Retirement Date (except as provided in
Section 8.2 and subject to the provisions of Section 7.6)
Retirement Income equal to his Accrued Retirement Income at the
date of the termination of such service, provided that he makes
application to the Employer for the payment of such Retirement
Income. If proper application for payment of Retirement Income
shall not be received by the Employer by the April 1 of the
calendar year following the calendar year in which the Employee
attains age 70 1/2 and the whereabouts of the Employee cannot be
determined by the Employer, Retirement Income shall be paid to
the Employee's Provisional Payee, if any, and if surviving and
the whereabouts known to the Employer, or applied in such other
manner as the Retirement Board shall deem appropriate. The
payment of Retirement Income pursuant to this provision shall
completely discharge all liability of the Retirement Board, the
Employer, and the Trustee or other payor to the extent of the
payments so made. If such Employee terminates with less than
five (5) Vesting Years of Service with the Employer, he shall
immediately forfeit any Accrued Retirement Income under the Plan
based upon his service prior to such termination.
8.2 Early distribution of vested benefit. If an Employee
terminates from service before his fifty-fifth (55th) birthday
and is entitled to receive in accordance with Section 8.1
Retirement Income commencing at his Normal Retirement Date and at
the time his service terminated he had at least ten (10) Years of
Accredited Service, he may, in lieu of receiving payment of such
Retirement Income commencing at Normal Retirement Date, elect to
receive such Retirement Income commencing as of the first day of
any month within the ten-year period preceding his Normal
Retirement Date in an amount equal to his Accrued Retirement
Income at the date of termination of his service actuarially
reduced in accordance with reasonable actuarial assumptions
adopted by the Retirement Board. An election pursuant to this
Section 8.2 to have Retirement Income commence prior to Normal
Retirement Date shall be made on a form prescribed by the
Retirement Board and shall be filed with the Retirement Board at
least thirty (30) days before Retirement Income is to commence.
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8.3 Years of Service of reemployed Employees. If an
Employee whose service terminates is again employed by the
Employer as an Employee or he is employed (other than by reason
of transfer in accordance with Section 4.6) by an Affiliated
Employer which has at the time of his employment by such company
a pension plan with substantially the same terms as this Plan,
his Years of Service with the Employer and his Accredited Service
immediately prior to the termination of his service shall be
treated as provided in this Section 8.3, subject to the
provisions of Section 8.4. For this purpose the terms "again
employed" and "reemployment" shall include employment with an
Affiliated Employer.
(a) If at the time of his reemployment he has not incurred
a One-Year Break in Service, his Years of Service with the
Employer and his Accredited Service will be restored whether or
not he is entitled to receive Retirement Income in accordance
with Section 8.1.
(b) If at the time of termination of his service he is
entitled to receive Retirement Income in accordance with the
provisions of Section 8.1, upon his reemployment his Years of
Service with the Employer immediately prior to the termination of
his service shall be restored whether or not he has incurred a
One-Year Break in Service.
(c) If at the time of reemployment on or after January 1,
1985, he is not entitled to receive Retirement Income in
accordance with Section 8.1 and he (1) has incurred less than
five (5) consecutive One-Year Breaks in Service or (2) has
incurred five (5) or more consecutive One-Year Breaks in Service,
but his Years of Service prior to such One-Year Breaks in Service
exceeded the consecutive One-Year Breaks in Service, then upon
the completion of one Eligibility Year of Service following his
reemployment, provided that if his reemployment date is on or
after January 1, 1995, no such Eligibility Year of Service shall
be required, his Years of Service with the Employer and his
Accredited Service prior to the first One-Year Break in Service
shall be restored, disregarding any Years of Service with the
Employer which are not required to be taken into account by
reason of any previous One-Year Breaks in Service. The Years of
Service and years of Accredited Service credited to an Employee
reemployed prior to January 1, 1985, with regard to his Years of
Service with the Employer and years of Accredited Service
immediately prior to the termination of his service shall be
determined under the terms of the Plan in effect prior to January
1, 1985.
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(d) Years of Service and Accredited Service restored to an
Employee in accordance with this Section 8.3 shall be aggregated
with Years of Service and Accredited Service to which the
Employee may be entitled after his reemployment. If, however,
the Minimum Retirement Income so determined for the Employee upon
his subsequent retirement or termination of service shall be less
than the aggregate of: (1) his Minimum Retirement Income, if
any, determined in respect of the period ending with his prior
termination of service, and (2) his Minimum Retirement Income
determined in respect of the period after his reemployment, the
aggregate of such Minimum Retirement Incomes shall be deemed to
be his Minimum Retirement Income upon such subsequent retirement
or termination of service. In any event, his Retirement Income,
however computed, shall be reduced by the Actuarial Equivalent of
any Retirement Income he received with respect to his prior
period of employment.
(e) If a former Employee to whose credit shall be restored
years of Accredited Service in accordance with this Section 8.3
shall become entitled (or his Provisional Payee shall become
entitled) to receive retirement income under the plan of an
Affiliated Employer by which he should become employed, he shall
be deemed to have transferred to the Affiliated Employer for
purposes of Section 4.6 as of his initial date of participation
in the plan of such Affiliated Employer.
8.4 Cash-out and buy-back. (a) Notwithstanding any other
provision of this Plan, if the present value of Accrued
Retirement Income of an Employee whose service terminates for any
reason other than transfer to an Affiliated Employer under
Section 4.6, or retirement under Article III, is not more than
$3,500 (or such greater amount as permitted by the regulations
prescribed by the Secretary of the Treasury) the Employer shall
direct that such present value of the Employee's Accrued
Retirement Income be paid in a lump sum, in cash, to such
terminated Employee. The present value of the Accrued Retirement
Income shall be calculated as of the last day of the date of
distribution of the lump sum applying the Applicable Interest
Rate as defined in Section 8.5(e) in effect on the first day of
the Plan Year of distribution. For purposes of this Section 8.4,
if the present value of the Employee's vested Accrued Retirement
Income is zero, the Employee shall be deemed to have received a
distribution of such vested Retirement Income.
(b) If such terminated Employee is subsequently reemployed
and becomes covered under this Plan, the calculation of his
Accrued Retirement Income shall be without regard to his years of
Accredited Service prior to any One-Year Breaks in Service,
unless the amount of such payment is repaid to the Trust, plus
interest at the rate determined under Section 411(c)(2)(C) of the
Code. If such amount (plus interest) is repaid, the Employee's
Retirement Income shall be calculated based on his years of
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Accredited Service before and after any One-Year Breaks in
Service. Any repayment of a cash-out made pursuant to this
Section 8.4 shall be made before the earlier of (a) five (5)
years after the date on which the Employee is reemployed by the
Employer or an Affiliated Employer, or (b) the close of the first
period of five (5) consecutive One-Year Breaks in Service
commencing after the distribution. If an Employee has been
deemed to receive a distribution in accordance with paragraph (a)
and is then reemployed, upon such reemployment, the amount of the
deemed distribution shall be restored to the Employee.
8.5 Calculation of present value for cash-out of benefits
and for determining amount of benefits.
(a) This Section 8.5 shall apply to all distributions from
the Plan and from annuity contracts purchased to provide Accrued
Retirement Income other than distributions described in Section
1.417-1T(e)(3) of the income tax regulations issued under the
Retirement Equity Act of 1984.
(b) (1) For purposes of determining whether the present
value of (A) an Employee's vested accrued benefit; (B) a
qualified joint and survivor annuity, within the meaning of
Section 417(b) of the Code; or (C) a qualified preretirement
survivor annuity within the meaning of Section 417(c)(1) of the
Code exceeds $3,500, the present value of such benefits or
annuities shall be calculated by using an interest rate no
greater than the Applicable Interest Rate.
(2) In no event shall the present value of any such
benefit or annuity determined under this Section 8.5(b) be
less than the present value of such benefits or annuities
determined using the Applicable Interest Rate.
(c) (1) For purposes of determining the amount of an
Employee's vested Accrued Retirement Income, the interest rate
used shall not exceed:
(A) the Applicable Interest Rate if the
present value of the benefit (using such rate or
rates) is not in excess of $25,000; or
(B) 120 percent of the Applicable Interest
Rate if the present value of the benefit exceeds
$25,000 (as determined under (A)). In no event
shall the present value determined under this (B)
be less than $25,000.
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(2) In no event shall the amount of the benefit or
annuity determined under this Section 8.5(c) be less than
the greater of:
(A) the amount of such benefit determined under
the Plan's provisions for determining the amount of
benefits other than Sections 8.5; or
(B) the amount of such benefit determined using
the Applicable Interest Rate if the value determined in
Section 8.5(c)(1) is less than $25,000 or 120 percent
of the Applicable Interest Rate if the value determined
in Section 8.5(c)(1) is not less than $25,000.
(d) In no event shall the amount of any benefit or annuity
determined under this Section 8.5 exceed the maximum benefit
permitted under Section 415 of the Code.
(e) (1) For purposes of this Section 8.5, "Applicable
Interest Rate" shall mean the interest rate or rates which would
be used as of the date distribution commences by the Pension
Benefit Guaranty Corporation for purposes of valuing lump sum
payments under the Plan if the Plan had terminated on the date
distribution commences with insufficient assets to provide
benefits guaranteed by the Pension Benefit Guaranty Corporation
on that date.
(2) Notwithstanding the foregoing, if the provisions
of the Plan other than Section 8.5(e) so provide, the
Applicable Interest Rate shall be determined as of the first
day of the Plan Year in which a distribution occurs rather
than as of the date distribution commences.
(f) (1) This Section 8.5 shall apply to distributions in
Plan Years beginning after December 31, 1984, other than
distributions under annuity contracts distributed to or owned by
an Employee prior to September 17, 1985 unless additional
contributions are made under the Plan by the Employer with
respect to such contracts.
(2) Notwithstanding the foregoing, this Section
8.5 shall not apply to any distributions in Plan Years
beginning after December 31, 1984, and before
January 1, 1987, if such distributions were made in
accordance with the requirements of the income tax
regulations issued under the Retirement Equity Act of
1984.
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8.6 Retirement Income under Prior Plan. Any person
entitled to receive Retirement Income under Article VIII of the
Prior Plan shall only be entitled to receive Retirement Income in
accordance with the provisions of such Prior Plan in effect at
the time his service was terminated, except that any such person
whose service terminated prior to January 1, 1976:
(a) with at least twenty (20) years of Accredited Service
may elect to receive Retirement Income commencing prior to his
Normal Retirement Date in accordance with Section 8.2;
(b) who shall have returned to the employment of the
Employer, whether before or after January 1, 1976, and shall be
an Employee who is entitled to receive Retirement Income in
respect of his Accredited Service after January 1, 1976, his
years of Accredited Service under the Prior Plan with respect to
his service before January 1, 1976, shall, for the purpose of
calculating his Minimum Retirement Income, be aggregated with his
years of Accredited Service after his reemployment. His Accrued
Retirement Income to the date of termination of his service
payable in accordance with Article VIII of the Prior Plan shall
be treated as Prior Plan Retirement Income and his Years of
Service prior to the date of termination of his service shall be
restored to his credit. It shall be a condition of the treatment
provided for in this paragraph (b) that: (1) the Employee
rescind any election of payment and designation of a Provisional
Payee which he shall have made under the Prior Plan and which
shall be in effect at the time of his return to the employment of
the Employer and (2) if he is receiving Retirement Income, his
Retirement Income shall cease during his period of employment and
any Retirement Income payable upon his subsequent retirement
shall be reduced by the Actuarial Equivalent of any Retirement
Income he received prior to his reemployment.
8.7 Requirement for Direct Rollovers. This Section 8.7
applies to distributions made from the Plan on or after January
1, 1993. Notwithstanding any provision of the Plan to the
contrary that would otherwise limit a Distributee's election
under this Article VIII, a Distributee may elect, at the time and
in the manner prescribed by the Retirement Board, to have any
portion of an Eligible Rollover Distribution paid directly to an
Eligible Retirement Plan specified by the Distributee in a Direct
Rollover.
(a) Definitions
(1) Eligible Rollover Distribution
An Eligible Rollover Distribution is any distribution
of all or any portion of the balance to the credit of the
Distributee, except that an Eligible Rollover Distribution
does not include:
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(A) any distribution that is one of a series of
substantially equal periodic payments (not less
frequently than annually) made for the life (or life
expectancy) of the Distributee or the joint lives (or
joint life expectancies) of the Distributee and the
Distributee's spouse, or for a specified period of 10
years or more;
(B) any distribution to the extent such
distribution is required under Code Section 401(a)(9);
and
(C) the portion of any distribution that is not
includible in gross income (determined without regard
to the exclusion for net unrealized appreciation with
respect to employer securities).
(2) Eligible Retirement Plan
An Eligible Retirement Plan is an individual retirement
account described in Code Section 408(a), an individual
retirement annuity described in Code Section 408(b), an
annuity plan described in Code Section 403(a), or a
qualified trust described in Code Section 401(a) that
accepts the Distributee's Eligible Rollover Distribution.
However, in the case of an Eligible Rollover Distribution
for a Provisional Payee, an Eligible Retirement Plan is an
individual retirement account or individual retirement
annuity.
(3) Distributee
A Distributee includes an Employee or former Employee.
In addition, a Distributee includes the Employee's or former
Employee's spouse who is an alternate payee under a
qualified domestic relations order, as defined in Code
Section 414(p).
(4) Direct Rollover
A Direct Rollover is a payment by the Plan to the
Eligible Retirement Plan specified by the Distributee.
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ARTICLE IX
Contributions
9
9.1 Contributions generally. All contributions which the
Employer deems necessary to provide the Retirement Incomes under
the Plan in excess of the fund derived from the split-up of the
Commonwealth pension plan will be made from time to time by or on
behalf of the Employer and no contributions will be required of
the Employees. All contributions shall be made to the Trustee
under the Trust Agreement provided for in Article XI, and if a
group annuity contract shall be entered into with a life
insurance company ("contract with an insurance company"),
contributions may also be made to the insurance company.
The minimum amount of contributions to be made by or on
behalf of the Employer for any Plan Year of the Plan shall be
such amount as is required to meet the minimum funding standards
of ERISA and any regulations in respect thereto. However, the
Employer is under no obligation to make any contributions under
the Plan after the Plan is terminated, whether or not Retirement
Income accrued or vested prior to the date of termination has
been fully funded. All contributions are expressly conditioned
upon the deductibility of such contributions by the Employer
pursuant to Section 404 of the Code.
9.2 Return of Employer contributions. All contributions
made pursuant to the Plan shall be held by the Trustee in
accordance with the terms of the Trust Agreement for the
exclusive benefit of those Employees who are Participants under
the Plan, including former Employees and their Beneficiaries, and
shall be applied to provide benefits under the Plan and to pay
expenses of administration of the Plan and Trust, to the extent
that such expenses are not otherwise paid. At no time prior to
the satisfaction of all liabilities with respect to such
Employees and their Beneficiaries shall any part of the Trust
Fund be used for, or diverted to, purposes other than for the
exclusive benefit of such Employees and their Beneficiaries.
However, notwithstanding the provisions of this Section 9.2:
(a) If a contribution is conditioned upon the deductibility
of the contributions under Section 404 of the Code, then, to the
extent the deduction is disallowed, the Trustee shall upon
written request of the Employer, return the contribution (to the
extent disallowed) to the Employer within one year after the date
the deduction is disallowed.
(b) If a contribution or any portion thereof is made by the
Employer by a mistake of fact, the Trustee shall, upon written
request of the Employer, return the contribution or such portion
to the Employer within one year after the date of payment to the
Trustee.
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The amount which may be returned to the Employer under this
Section 9.2, is the excess of (a) the amount contributed over (b)
the amount that would have been contributed had there not
occurred a mistake of fact or a mistake in determining the
deduction. Earnings attributable to the excess contribution
shall not be returned to the Employer, but losses attributable
thereto shall reduce the amount to be so returned.
(c) If permitted under Federal common law, the Company may
recover any other contributions to the Plan or payments to any
other entity to the extent such contributions or payments
unjustly enrich or otherwise gratuitously benefit such entity.
9.3 Expenses. Prior to termination of the Plan, all
investment expenses (including brokerage costs, transfer taxes,
shipping expenses, and charges of correspondent banks of the
Trustee) and any taxes which may be levied against the Trust
shall be charged to the Trust. All other expenses prior to the
termination of the Plan shall be paid by the Employer or charged
to the Trust, as determined in the discretion of The Southern
Company Pension Fund Investment Review Committee. After the
termination of the Plan, all expenses shall be levied against the
Trust and shall be charged to the Trust.
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ARTICLE X
Administration of Plan
10
10.1 Retirement Board. The general administration of the
Plan shall be placed in a Retirement Board of five (5) members
who shall be appointed from time to time by the Board of
Directors to serve at the pleasure of the Board of Directors.
10.2 Organization and transaction of business of Retirement
Board. Any person appointed a member of the Retirement Board
shall signify his acceptance by filing written acceptance with
the Board of Directors. Any member of the Retirement Board may
resign by delivering his written resignation to the Board of
Directors, and such resignation shall become effective at
delivery or at any later date specified therein.
The members of the Retirement Board shall elect a Chairman
from their number, and a Secretary who may be but need not be one
of the members of the Retirement Board, and shall designate an
actuary to act in actuarial matters relating to the Plan. They
may appoint from their number such committees with such powers as
they shall determine, may authorize one or more of their number
or any agent to make any payment in their behalf, or to execute
or deliver any instrument except that a requisition for funds
from the Trustee shall be signed by two (2) members of the
Retirement Board.
The Retirement Board shall hold meetings upon such notice,
at such place or places, and at such time or times as they may
from time to time determine.
A majority of the members of the Retirement Board at the
time in office shall constitute a quorum for the transaction of
business. All resolutions or other actions taken by the
Retirement Board at any meeting shall be by the vote of a
majority of the Retirement Board at the time in office. Any
determination or action of the Retirement Board may be made or
taken without a meeting by a resolution or written memorandum
concurred upon by a majority of the members then in office.
No member of the Retirement Board who is also an Employee of
the Employer shall receive any compensation from the Plan for his
service as such. No bond or other security need be required of
any member in any jurisdiction except as may be required by
ERISA.
10.3 Administrative responsibilities of Retirement Board.
The Retirement Board, in addition to the functions and duties
provided for elsewhere in the Plan, shall have exclusive
discretionary authority for the following:
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(a) construing and interpreting the Plan;
(b) determining all questions affecting the eligibility of
any Employee, retired Employee, Provisional Payee, or alternate
payee;
(c) determining all questions affecting the amount of the
benefit payable hereunder;
(d) ascertaining the persons to whom benefits shall be
payable under the provisions hereof;
(e) to the extent provided in the Plan, authorizing and
directing disbursements of benefits from the Plan;
(f) making final and binding determinations in connection
with any questions of fact which may arise regarding the
operation of the Plan;
(g) making such rules and regulations with reference to the
operation of the Plan as it may deem necessary or advisable,
provided that such rules and regulations shall not be
inconsistent with the express terms of the Plan or ERISA;
(h) prescribing such procedures and adopting such forms as
it determines necessary under the terms of the Plan; and
(i) reviewing such denials of claims for benefits as may
arise.
Any decision, determination, construction, interpretation,
ascertainment, authorization, direction, rule, regulation,
prescription, or review that the Retirement Board may make or
give in carrying out its duties or functions under this Section
10.3 shall be binding and conclusive.
10.4 Retirement Board, the "Administrator". For the
purposes of compliance with the provisions of ERISA, the
Retirement Board shall be deemed the "administrator" of the Plan
as the term "administrator" is defined in ERISA, and the
Retirement Board shall be, with respect to the Plan, a "named
fiduciary" as that term is defined in ERISA. For the purpose of
carrying out its duties, the Retirement Board may, in its
discretion, allocate responsibilities under the Plan among its
members and may, in its discretion, designate in writing, as set
forth in the minutes of the Retirement Board, persons other than
members of the Retirement Board to carry out such
responsibilities of the Retirement Board under the Plan as it may
see fit.
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10.5 Fiduciary responsibilities. It is intended, that to
the maximum extent permitted by ERISA, each person who is a
"fiduciary" with respect to the Plan as that term is defined in
ERISA shall be responsible for the proper exercise of his own
powers, duties, responsibilities, and obligations under the Plan
and the trust or other funding medium as shall each person
designated by any fiduciary to carry out any fiduciary
responsibility with respect to the Plan, the trust or other
funding medium and no fiduciary or other person to whom fiduciary
responsibilities are allocated shall be liable for any act or
omission of any other fiduciary or of any other person delegated
to carry out any fiduciary or other responsibility under the Plan
or the trust or other funding medium.
Any person or group of persons may serve in more than one
fiduciary capacity with respect to the Plan and any fiduciary
with respect to the Plan may serve as a fiduciary with respect to
the Plan in addition to being an officer, employee, agent, or
other representative of a "party in interest" as that term is
defined in ERISA.
10.6 Employment of actuaries and others. The Retirement
Board may employ such "enrolled actuaries" and independent
"qualified public accountants" as such terms are defined in
ERISA, legal counsel who may be of counsel to the Employer, other
specialists, and other persons as the Retirement Board deems
necessary or desirable in connection with the administration of
the Plan. The Retirement Board and any person to whom it may
delegate any duty or power in connection with the administration
of the Plan, the Employer, and the officers and directors thereof
shall be entitled to rely conclusively upon and shall be fully
protected in any action omitted, taken, or suffered by them in
good faith in reliance upon any enrolled actuary, independent
qualified public accountant, counsel, or other specialist or
other person selected by the Retirement Board or in reliance upon
any tables, evaluations, certificates, opinions, or reports which
shall be furnished by any of them or by the Trustee or any
insurance company. Any action so taken, omitted, or suffered in
accordance with the provisions of this Section 10.6 shall be
conclusive upon each Employee, former Employee, and Provisional
Payee covered under the Plan.
10.7 Accounts and tables. The Retirement Board shall
maintain accounts showing the fiscal transactions of the Plan,
and shall keep in convenient form such data as may be necessary
for actuarial valuations with respect to the operation and
administration of the Plan. The Retirement Board shall prepare
annually a report showing in reasonable summary the financial
condition of the Trust and giving a brief account of the
operation of the Plan for the past year, and any further
information which the Board of Directors may require. Such
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report shall be submitted to the Board of Directors and shall be
filed in the office of the Secretary of the Retirement Board.
The Retirement Board may, with the advice of an enrolled
actuary, adopt from time to time mortality and other tables as it
may deem necessary or appropriate for use in calculating benefits
under the Plan.
10.8 Indemnity of members of Retirement Board. To the
extent not compensated for by any applicable insurance, the
Employer shall indemnify and hold harmless each member of the
Retirement Board and each Employee of the Employer designated by
the Retirement Board to carry out any fiduciary responsibility
with respect to the Plan from any and all claims, loss, damages,
expense (including counsel fees approved by the Board of
Directors) and liability (including any amount paid in settlement
with the approval of the Board of Directors) arising from any act
or omission of such member or Employee designated by the
Retirement Board in connection with the Plan or the Trust, except
where the same is determined by the Board of Directors or is
judicially determined to be due to a failure to act in good faith
or is due to the gross negligence or willful misconduct of such
member or Employee. No assets of the Plan may be used for any
such indemnification.
10.9 Areas in which the Retirement Board does not have
responsibility. The Retirement Board shall not have
responsibility with respect to control or management of the
assets of the Plan. The Trustee or an insurance company, if
funds of the Plan shall be held by an insurance company, shall
have the sole responsibility for the administration of the assets
of the Plan as provided in the Trust Agreement or contract with
an insurance company, except to the extent that an "Investment
Manager," as that term is defined in ERISA, appointed by the
Board of Directors shall have responsibility for the management
of the assets of the Plan, or some part thereof, including the
power to acquire and dispose of the assets of the Plan, or some
part thereof.
The responsibility for providing a procedure for
establishing and carrying out a funding policy and method for the
Plan consistent with the objectives of the Plan and the
requirements of Title I of ERISA shall be that of the Board of
Directors or such committee, whether or not comprised of members
of the Board of Directors, as the Board of Directors may from
time to time designate and shall not be the responsibility of the
Retirement Board.
Effective July 23, 1993, the Pension Fund Investment Review
Committee of The Southern Company System shall recommend for
approval by the Board of Directors any Investment Manager that
shall have responsibility with respect to management of any Plan
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assets. In addition, the Pension Fund Investment Review
Committee shall assume all responsibility for providing a
procedure for establishing and carrying out a funding policy and
method for the Plan consistent with the objectives of the Plan
and the requirements of Title I of ERISA.
10.10 Claims Procedures. Consistent with the requirements
of ERISA and the regulations thereunder of the Secretary of Labor
from time to time in effect, the Retirement Board or its
delegatee shall:
(a) provide adequate notice in writing to any Employee,
former Employee, retired Employee, or Provisional Payee (each
being hereinafter in the paragraph referred to as "participant")
whose claim for benefit under the Plan has been denied, setting
forth specific reasons for such denial, written in a manner
calculated to be understood by such participant; and
(b) afford a reasonable opportunity to any participant
whose claim for benefits has been denied for a full and fair
review of the decision denying the claim.
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ARTICLE XI
Management of Trust
11
11.1 Trust. All assets of the Plan shall be held as a
special trust for use in accordance with the Plan.
The funds of the Plan shall be held by a Trustee, or by a
successor trustee appointed from time to time by the Board of
Directors in trust or held by a life insurance company in
accordance with the provisions of a contract with such insurance
company entered into by the Trustee or the Employer. The Trust
Agreement and contract with an insurance company may from time to
time be amended in the manner therein provided.
11.2 Disbursement of the Trust Fund. Subject to the
provisions of the Trust Agreement or contract with an insurance
company the Retirement Board shall determine the manner in which
the funds of the Plan shall be disbursed pursuant to the Plan,
including the form of voucher or warrant to be used in making
disbursements and the due qualification of persons authorized to
approve and sign the same. The responsibility for the retention
and investment of funds held by the Trustee shall lie with the
Trustee and not with the Retirement Board, and the responsibility
for the retention and investment of funds held by an insurance
company shall lie with the insurance company and not with the
Retirement Board. However, if in accordance with a Trust
Agreement forming a part of the Plan (including any pooled trust
agreement in which a trust forming a part of the Plan
participates) a contract with an insurance company shall be held
by the Trustee as an investment of the trust, directions may be
given from time to time to the Trustee by such board of directors
or committee or person or persons as may be specified in the
Trust Agreement to transfer funds of the trust to the life
insurance company which issued such contract or to transfer funds
from the life insurance company to the Trustee, as the case may
be.
11.3 Rights in the Trust. Under no circumstances shall
amounts of money or other things of value contributed by the
Employer to the Plan, or any part of the corpus or income of the
Trust held by the Trustee under the Plan, be recoverable by the
Employer from the Trustee or from any Employee, retired Employee,
or Provisional Payee, or be used for, or diverted to, purposes
other than for the exclusive benefit of the Employees, retired
Employees, and Provisional Payees covered hereunder; provided,
however, that, if after satisfaction of all liabilities of the
Trust with respect to Employees, retired Employees, and
Provisional Payees under the Plan, there is any balance
remaining, the Trustee shall return such balance to the Employer.
Notwithstanding the above, upon the approval of the Internal
Revenue Service or the enactment or promulgation of any laws or
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regulations by any governmental authority, the Employer shall be
authorized to rededicate all or a portion of the assets allocated
to fund Retirement Income under the Plan to the separate account
to fund medical benefits under Article XV of the Plan.
11.4 Merger of the Plan. The Plan shall not be merged or
consolidated with, or any of its assets or liabilities
transferred to, any other plan, unless each Employee included in
the Plan would (if the Plan then terminated) receive a benefit
immediately after the merger, consolidation, or transfer which is
equal to or greater than the benefit he would have been entitled
to receive immediately before the merger, consolidation, or
transfer (if the Plan then terminated).
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ARTICLE XII
Termination of the Plan
12
12.1 Termination of the Plan. The Plan may be terminated at
any time by action of the Board of Directors of the Employer in
accordance with the amendment procedures provided in Section
13.1. Upon such termination or partial termination all Accrued
Retirement Income of Employees to the date of such termination,
to the extent then funded, shall become nonforfeitable and the
assets of the Plan which have not previously been allocated to
provide Retirement Income shall then be paid out to Employees,
former Employees, and Provisional Payees in accordance with the
applicable requirements of ERISA and regulations thereunder
governing termination of "employee pension benefit plans" as
defined in ERISA. If after satisfaction of all liabilities, as
provided above, there is any balance remaining in the Trust, the
Trustee shall return such balance to the Employer.
In the first instance, subject to the foregoing
limitations, such remaining assets shall be allocated among all
persons in the following categories for whom such Retirement
Income or other benefits have not previously been provided,
namely, (a) Employees who have been retired under the Plan,
(b) Employees who at the date of termination of the Plan are
included in the Plan, (c) former Employees who at the date of the
termination of their employment were entitled to payment of
Retirement Income in accordance with Article VIII, and (d) former
Employees who have transferred to an Affiliated Employer in
accordance with Section 4.6 and are still in the employ or
receiving a retirement income from such company (including their
Provisional Payees, if any). Retirement Income already purchased
under any contract with an insurance company will be payable in
accordance with the provisions of that contract.
12.2 Limitation on benefits for certain highly paid
employees.
(a) The annual payments to an Employee described in
paragraph (b) below shall not exceed an amount equal to the
payments that would be made to or on behalf of such Employee
under a single life annuity that is the Actuarial Equivalent of
the sum of the Employee's Accrued Retirement Income and the
Employee's other benefits under this Plan (other than a Social
Security supplement) and any Social Security supplement that the
restricted Employee is entitled to receive. The restrictions in
this paragraph (a) do not apply, however, if --
(1) after payment to an Employee described in
paragraph (b) of all benefits payable to such Employee under
this Plan, the value of this Plan's assets equals or exceeds
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110% of the value of current liabilities, as defined in Code
Section 412(c)(7), or
(2) the value of the benefits payable to such Employee
under this Plan for an Employee described in paragraph (b)
below is less than 1% of the value of current liabilities
before distribution.
(b) The Employees whose benefits are restricted on
distribution include all highly compensated employees and highly
compensated former employees (as such terms are defined in
Treasury Regulation Section 1.401(a)(4)-12); provided, however,
that Employees whose benefits are subject to restriction under
this Section 12.2 shall be limited to only those Employees who in
the current or in any previous Plan Year were one of the 25 non-
excludable Employees of the Employer with the greatest
compensation from the Employer.
12.3 Allocation of Trust upon termination. Subject to the
provisions of Section 12.2, if the Plan is terminated and the
amount of the Trust to be used and applied in accordance with the
provisions of Section 12.1 for the benefit of each retired
Employee, Employee, or former Employee who was a member of the
BECO Plan on January 1, 1974 shall not be less than (x)
multiplied by (y) where (x) equals the amount which would have
been used and applied for the benefit of each such retired
Employee, Employee, or former Employee (including their
Provisional Payees, if any) had the BECO Plan been terminated on
January 1, 1974 and allocation of the trust fund under the BECO
Plan then been effected for the benefit of the retired Employees,
Employees, and former Employees included therein pursuant to the
applicable provisions of the BECO Plan and (y) equals the lesser
of 100%, or a percentage determined by dividing the dollar value
as of the date of such termination of the Plan of the amount of
the Trust allocated to provide Retirement Income for the benefit
of such persons had the BECO Plan been terminated on January 1,
1974. If any Employee, retired Employee, former Employee, or
Provisional Payee shall have received any payment from the Trust
with respect to retirement benefits accrued under the BECO Plan
prior to January 1, 1974, any amount otherwise allocable to such
person in accordance with this Section 12.3 shall be reduced by
the amount of any payments to him.
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ARTICLE XIII
Amendment of the Plan
13
13.1 Amendment of the Plan.
(a) The Plan may be amended or modified at any time by the
Board of Directors pursuant to its written resolutions, provided
that no amendment or modification which will substantially
increase the cost of the Plan will be made by the Board of
Directors without approval, at a meeting of the stockholders duly
called for that purpose, by the vote of a majority of the stock
present and entitled to vote at such meeting.
(b) Such amendments and modifications (without limiting the
generality of the foregoing) may, among other things, make any
changes in the Plan which may become appropriate if, for any
reason, the Employer should in the future find it necessary or
desirable not to complete payment of the past service costs of
the Plan in the manner and within the period now contemplated or
should find it necessary or desirable to reduce the amounts of
Future Service contributions to be paid by the Employer after
such amendment or modification. Such amendments and
modifications may also (without limiting the generality of the
foregoing), make any changes necessary or desirable to make the
costs of the Plan eligible for tax deductions or to make the
income of the Trust exempt from taxation or to bring the Plan
into conformity or compliance with ERISA or with governmental
regulations. Notwithstanding the foregoing, no amendment shall
be made which has the effect of decreasing the Accrued Retirement
Income of any Employee, former Employee or Provisional Payee, or
any former employees of BECO rehired under the BECO Plan and for
whom annuities have not been purchased under the BECO Plan as
provided under the limitations of Section 411(d)(6) of the Code.
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ARTICLE XIV
Special Provisions
14
14.1 Adoption of Plan by other corporations.
(a) Any corporation, whether or not related to the Employer
by function or operation and any affiliate, if such corporation
or affiliate is authorized to do so by a resolution adopted by
the Board of Directors of the Employer, may adopt this Plan as a
separate Plan for all eligible Employees or any separate,
distinct, and identifiable class or group of Employees and the
related Trust Agreement, by action of the board of directors of
such corporation or affiliate. Any such adoption shall be
evidenced by certified copies of the resolutions of the foregoing
board of directors indicating such adoption and by the execution
of the Adoption Agreement by the adopting corporation or
affiliate. Such resolution shall state and define the effective
date of the Plan for the purpose of such adopting corporation
and, for the purpose of Section 415 of the Code, the "limitation
year" as to such corporation. Notwithstanding the foregoing,
however, if the Plan as adopted by an affiliate or other
corporation under the foregoing provision shall fail to receive
the initial approval of the Internal Revenue Service as a
qualified plan, any contributions by such affiliate or other
corporation after payment of all expenses will be returned to
such adopting corporation free of any trust, and the Plan and the
Trust Agreement as to such adopting affiliate or other
corporation shall terminate.
(b) Each adopting affiliate or other corporation shall be
required to use the same Trustee as provided in this Plan.
(c) The Trustee may, but is not required to, commingle,
hold, and invest as one fund all contributions (or any portion
thereof) made by each adopting affiliate or other corporation.
(d) Any contributions made by an affiliate or other
corporation, as provided for in this Plan, shall be paid to and
held by the Trustee for the exclusive benefit of the Employees of
such an affiliate or other corporation and the beneficiaries of
such Employees, subject to all the terms and conditions of this
Plan. On the basis of information furnished by the
administrator, the Trustee shall keep separate books and records
concerning the affairs of each adopting affiliate or other
corporation hereunder.
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14.2 Exclusive benefit. The Employer intends that the Plan
(including the Trust forming a part thereof) shall be a pension
plan of an employer for the exclusive benefit of its Employees
and their beneficiaries subject to Section 11.3, as provided for
in Section 401 of the Code, and as may be provided for in any
similar provisions of subsequent revenue laws, and that the Trust
shall qualify as an employees' trust which shall be exempt under
Section 501(a) of the Code, and any similar provisions of
subsequent revenue laws, as a trust forming part of such a plan.
14.3 Assignment or alienation. No benefit under the Plan
shall be subject in any manner to anticipation, alienation, sale,
transfer, assignment (either at law or in equity), pledge,
encumbrance, charge, garnishment, levy, execution, or other legal
or equitable process and any attempt so to anticipate, alienate,
sell, transfer, assign, pledge, encumber, charge, garnish, levy,
execute, or enforce other legal or equitable process against the
same shall be void, nor shall any such benefit be in any manner
liable for or subject to the debts, contracts, liabilities,
engagements, or torts of the person entitled to such benefit.
If any Employee or retired Employee or any Provisional Payee
under the Plan is adjudicated bankrupt or attempts to anticipate,
alienate, sell, transfer, assign, pledge, encumber, or charge any
benefit under the Plan or if any action shall be taken which is
in violation of the provisions of the immediately preceding
paragraph, then such benefit shall cease and terminate and in
that event the Retirement Board shall hold or apply the same or
any part thereof to or for the benefit of such Employee or
retired Employee or Provisional Payee in such manner as the
Retirement Board may think proper.
Notwithstanding the above, the Retirement Board and Trustee
shall comply with any "domestic relations order" (as defined in
Section 414(p)(1)(B) of the Code) which is a "qualified domestic
relations order" satisfying the requirements of Section 414(p) of
the Code. The Retirement Board shall establish procedures for
(a) notifying Employees and alternate payees who have or may have
an interest in benefits which are the subject of domestic
relations orders, (b) determining whether such domestic relations
orders are qualified domestic relations orders under Section
414(p) of the Code, and (c) distributing benefits which are
subject to qualified domestic relations orders.
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14.4 Voluntary undertaking. This Plan is strictly a
voluntary undertaking on the part of the Employer and shall not
be deemed to constitute a contract between the Employer or any
other company and any Employee or to be a consideration for, or
an inducement or condition of, the employment of any Employee.
Nothing contained in this Plan shall be deemed to give any
Employee the right to be retained in the service of the Employer
or to interfere with the right of the Employer to discharge or
retire any Employee at any time. Inclusion under the Plan will
not give any Employee or Provisional Payee any right or claim to
a Retirement Income except to the extent such right is
specifically fixed under the terms of the Plan and there are
funds available therefor in the hands of the Trustee or of any
insurance company which may hold funds of the Plan.
14.5 Top-Heavy Plan requirements. For any Plan Year the
Plan shall be determined to be a Top-Heavy Plan, the Plan shall
provide the following:
(a) the minimum benefit requirement of Section 14.7; and
(b) the vesting requirement of Section 14.8.
14.6 Determination of Top-Heavy status.
(a) For any Plan Year commencing after December 31, 1983,
the Plan shall be determined to be a "Top-Heavy Plan," if, as of
the Determination Date, (1) the Present Value of Accrued
Retirement Income of Key Employees or (2) the sum of the
Aggregate Accounts of Key Employees under this Plan and any plan
of an Aggregation Group, exceeds sixty percent (60%) of the
Present Value of Accrued Retirement Income or the Aggregate
Accounts of all Employees entitled to participate in this Plan
and any Plan of an Aggregation Group.
(b) For Plan Years beginning after December 31, 1986, the
Accrued Retirement Income of a Non-Key Employee shall be
determined under the accrual method under the Plan.
(c) For any Plan Year commencing after December 31, 1983,
the Plan shall be determined to be a "Super Top-Heavy Plan," if,
as of the Determination Date, (1) the Present Value of Accrued
Retirement Income of Key Employees or (2) the sum of the
Aggregate Accounts of Key Employees under this Plan and any plan
in an Aggregation Group, exceeds ninety percent (90%) of the
Present Value of Accrued Retirement Income or the Aggregate
Accounts of all Employees entitled to participate in this Plan
and any plan of an Aggregation Group.
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For purposes of Sections 14.6(a) and 14.6(b), if any
Employee is a Non-Key Employee for any Plan Year, but such
Employee was a Key Employee for any prior Plan Year, such
Employee's Present Value of Accrued Retirement Income and/ or
Aggregate Account balance shall not be taken into account for
purposes of determining whether this Plan is a Top-Heavy or Super
Top-Heavy Plan (or whether any Aggregation Group which includes
this Plan is a Top-Heavy Group). In addition, for Plan Years
beginning after December 31, 1984, if an Employee or former
Employee has not performed any services for the Employer or any
Affiliated Employer maintaining the Plan at any time during the
five (5) year period ending on the Determination Date, the
Aggregate Account and/or Present Value of Accrued Retirement
Income for such Employee or former Employee shall not be taken
into account for purposes of determining whether this Plan is a
Top-Heavy or Super Top-Heavy Plan.
(d) An Employee's "Aggregate Account" as of the
Determination Date shall be determined under applicable
provisions of the defined contribution plan used in determining
Top-Heavy status.
(e) An "Aggregation Group" shall mean either a Required
Aggregation Group or a Permissive Aggregation Group as
hereinafter determined.
(1) Required Aggregation Group: In determining a
Required Aggregation Group hereunder, each plan of the
Employer in which a Key Employee is a participant, and each
other plan of the Employer which enables any plan in which a
Key Employee participates to meet the requirements of Code
Sections 401(a)(4) or 410, will be required to be
aggregated. Such group shall be known as a Required
Aggregation Group.
In the case of a Required Aggregation Group, each plan
in the group will be considered a Top-Heavy Plan if the
Required Aggregation Group is a Top-Heavy Group. No plan in
the Required Aggregation Group will be considered a
Top-Heavy Plan if the Aggregation Group is not a Top-Heavy
Group.
(2) Permissive Aggregation Group: The Employer may
also include any other plan not required to be included in
the Required Aggregation Group, provided the resulting
group, taken as a whole, would continue to satisfy the
provisions of Code Sections 401(a)(4) or 410. Such group
shall be known as a Permissive Aggregation Group.
In the case of a Permissive Aggregation Group, only a plan
that is part of the Required Aggregation Group will be considered
a Top-Heavy Plan if the Permissive Aggregation Group is a
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Top-Heavy Group. A plan that is not part of the Required
Aggregation Group but that has nonetheless been aggregated as
part of the Permissive Aggregation Group will not be considered a
Top-Heavy Plan even if the Permissive Group is a Top-Heavy Group.
(3) Only those plans of the Employer in which the
Determination Dates fall within the same calendar year shall
be aggregated in order to determine whether such plans are
Top-Heavy Plans.
(f) The "Determination Date" shall mean with respect to any
Plan Year, the last day of the preceding Plan Year, or in the
case of the first Plan Year, the last day of such Plan Year.
(g) A "Key Employee" shall mean any Employee or former
Employee (and his beneficiaries) who, at any time during the Plan
Year or any of the four (4) preceding Plan Years, is:
(1) an officer of the Employer having an annual
compensation from the Employer greater than fifty percent
(50%) of the amount in effect under Code Section
415(b)(1)(A) for any such Plan Year. For purposes of this
Section 14.6(g)(1), only those employers which are
incorporated shall be considered as having officers, and no
more than fifty (50) Employees (or, if lesser, the greater
of three (3) or ten percent (10%) of the Employees) shall be
treated as officers. Annual compensation means compensation
as defined in Section 415(c)(3) of the Code, but including
amounts contributed by the Employer pursuant to a salary
reduction agreement which are excludable from the Employee's
gross income under Section 125, Section 402(a)(8), Section
402(h), or Section 403(b) of the Code.
(2) one of the ten (10) Employees (A) having annual
compensation from the Employer greater than the limitation
in effect under Code Section 415(c)(1)(A) and (B) owning (or
considered as owning within the meaning of Code Section 318)
the largest interests in the Employer. For purposes of this
Section 14.6(g)(2), if two (2) Employees have the same
interest in the Employer, the Employee having the greater
annual compensation from the Employer shall be treated as
having a larger interest.
(3) a "five-percent owner" of the Employer. The term
"five-percent owner" shall mean any person who owns (or is
considered as owning within the meaning of Code Section 318)
more than five percent (5%) of the outstanding stock of the
Employer or stock possessing more than five percent (5%) of
the total combined voting power of all stock of the
Employer. In determining percentage ownership hereunder,
employers that would otherwise be aggregated under Code
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Sections 414(b), (c), and (m) shall be treated as separate
employers.
(4) a "one-percent owner" of the Employer having an
annual compensation from the Employer of more than $150,000.
The term "one-percent owner" shall mean any person who owns
(or is considered as owning within the meaning of Code
Section 318) more than one percent (1%) of the outstanding
stock of the Employer or stock possessing more than one
percent (1%) of the total combined voting power of all stock
of the Employer. In determining percentage ownership
hereunder, employers that would otherwise be aggregated
under Code Sections 414(b), (c), and (m) shall be treated as
separate employers. However, in determining whether an
individual has compensation of more than $150,000,
compensation from each employer required to be aggregated
under Code Sections 414(b), (c), and (m) shall be taken into
account.
(h) A "Non-Key Employee" shall mean any Employee who is not
a Key Employee as defined in Section 14.6(g).
(i) An Employee's "Present Value of Accrued Retirement
Income" shall mean as of the Determination Date, the sum of the
following:
(1) the Present Value of his Accrued Retirement Income
as of the most recent valuation occurring within a twelve
(12) month period ending on the Determination Date.
(2) any Plan distributions made within the Plan Year
that includes the Determination Date or within the four (4)
preceding Plan Years. However, in the case of distributions
made after the valuation date and prior to the Determination
Date, such distributions are not included as distributions
for Top-Heavy purposes to the extent that such distributions
are already included in the Employee's Present Value of
Accrued Retirement Income as of the valuation date.
Notwithstanding anything herein to the contrary, all
distributions, including distributions made prior to
January 1, 1984, and distributions under a terminated plan
which if it had not been terminated would have been required
to be included in an Aggregation Group, will be counted.
(3) any Employee contributions, whether voluntary or
mandatory. However, amounts attributable to qualified
deductible employee contributions shall not be considered to
be a part of the Employee's Present Value of Accrued
Retirement Income.
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(4) with respect to unrelated rollovers and
plan-to-plan transfers (ones which are both initiated by the
Employee and made from a plan maintained by one employer to
a plan maintained by another employer), if this Plan
provides for rollovers or plan-to-plan transfers, it shall
always consider such rollover or plan-to-plan transfer as a
distribution for the purposes of this Section. If this Plan
is the plan accepting such rollovers or plan-to-plan
transfers, it shall not consider such rollovers or
plan-to-plan transfers accepted after December 31, 1983 as
part of the Employee's Present Value of Accrued Retirement
Income. However, rollovers or plan-to-plan transfers
accepted prior to January 1, 1984 shall be considered as
part of the Employee's Present Value of Accrued Retirement
Income.
(5) with respect to related rollovers and plan-to-plan
transfers (ones either not initiated by the Employee or made
to a plan maintained by the same employer), if this Plan
provides for rollovers or plan-to-plan transfers, it shall
not be counted as a distribution for purposes of this
Section. If this Plan is the plan accepting such rollover
or plan-to-plan transfer, it shall consider such rollover or
plan-to-plan transfer as part of the Employee's Present
Value of Accrued Retirement Income, irrespective of the date
on which such rollover or plan-to-plan transfer is accepted.
(j) A "Top-Heavy Group" shall mean an Aggregation Group in
which, as of the Determination Date, the sum of:
(1) the Present Value of Accrued Retirement Income of
Key Employees under all defined benefit plans included in
that group, and
(2) the Aggregate Accounts of Key Employees under all
defined contribution plans included in the group,
exceeds sixty percent (60%) of a similar sum determined for all
Employees.
14.7 Minimum Retirement Income for Top-Heavy Plan Years.
Notwithstanding anything herein to the contrary, for any
Top-Heavy Plan Year, the minimum Accrued Retirement Income
derived from Employer contributions for each Non-Key Employee,
including benefits accrued in years in which the Plan is not a
Top-Heavy Plan, shall equal a percentage of such Non-Key
Employee's highest average compensation not less than the lesser
of: (a) two percent (2%) multiplied by the Employee's number of
Years of Service with the Employer, or (b) twenty percent (20%).
For purposes of the minimum benefit, an Employee's Years of
Service shall exclude (a) Plan Years in which the Plan is not a
Top-Heavy Plan, and (b) Years of Service completed prior to
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January 1, 1984. The minimum benefit required by this Section
14.7 shall be calculated using the Employee's total compensation
and expressed in the form of a single life annuity (with no
ancillary benefits) beginning at such Employee's Normal
Retirement Date. An Employee's average compensation shall be
based on the five (5) consecutive years for which the Employee
had the highest compensation.
Notwithstanding the foregoing, in any Plan Year in which a
Non-Key Employee is an Employee in both this Plan and a defined
contribution plan, and both such plans are Top-Heavy Plans, the
Employer shall not be required to provide a Non-Key Employee with
both the full separate minimum defined benefit and the full
separate minimum defined contribution plan allocation.
Therefore, if a Non-Key Employee is participating in a defined
contribution plan maintained by the Employer and the minimum
allocation under Code Section 416(c)(2) is allocated to the
Non-Key Employee under such defined contribution plan, the
minimum Accrued Retirement Income provided for above shall not be
applicable, and no minimum benefit shall accrue on behalf of the
Non-Key Employee. Alternatively, the Employer may satisfy the
minimum benefit requirement of Code Section 416(c)(1) for the
Non-Key Employee by providing any combination of benefits and/or
contributions that satisfy the safe harbor rules of Treasury
Regulation Section 1.416-1(m-12).
14.8 Vesting requirements for Top-Heavy Plan Years.
Notwithstanding the provisions of Section 8.1, for any Top-Heavy
Plan Year, the vested portion of an Employee's Accrued Retirement
Income shall be determined on the basis of the Employee's Vesting
Years of Service according to the following schedule:
Years of Service Vested Percentage
less than 2 0
2 20
3 40
4 60
5 80
6 or more 100
The minimum Retirement Income for any Top-Heavy Plan Year shall
not be forfeited during any period for which the payment of the
Employee's Retirement Income is required to be suspended under
Section 5.10 of the Plan.
If in any subsequent Plan Year, the Plan ceases to be a
Top-Heavy Plan, the Retirement Board may, in its sole discretion,
elect to (a) continue to apply this vesting schedule in
determining the vested percentage of an Employee's Accrued
Retirement Income or (b) revert to the vesting schedule in effect
before the Plan became a Top-Heavy Plan. Any such reversion
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shall be treated as a Plan amendment pursuant to the terms of the
Plan. No decrease in an Employee's nonforfeitable percentage may
occur in the event the Plan's status as a Top-Heavy Plan changes
for any Plan Year.
14.9 Adjustments to maximum benefits for Top-Heavy Plans.
(a) In the case of an Employee who is a participant in a
defined benefit plan and a defined contribution plan maintained
by the Employer, and such plans as a group are determined to be
Top-Heavy for any limitation year beginning after December 31,
1983, "1.0" shall be substituted for "1.25" in each place it
appears in the denominators of Fractions A and B, as set forth in
Section 6.5 of the Plan, unless the extra minimum benefit is
provided pursuant to Section 14.9(b). Super Top-Heavy Plans
shall be required at all times to substitute "1.0" for "1.25" in
the denominator of each plan fraction.
(b) If a Key Employee is a participant in both a defined
benefit plan and a defined contribution plan that are both part
of a Top-Heavy Group (but neither of such plans is a Super
Top-Heavy Plan), the defined benefit and defined contribution
fractions set forth in Section 6.5 shall remain unchanged,
provided that in Section 14.7 above, "three percent (3%)" shall
be substituted for "two percent (2%)" and "twenty percent (20%)"
shall be increased by one (1) percentage point (but not more than
ten (10) percentage points) for each Year of Service included in
the computations under Section 14.7.
(c) For purposes of this Section 14.9, if the sum of the
defined benefit plan fraction and the defined contribution
fraction shall exceed 1.0 in any Plan Year for any Employee in
this Plan, the Employer shall eliminate any amounts in excess of
the limits set forth in Section 6.5, pursuant to Section 6.7 of
the Plan.
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ARTICLE XV
Post-retirement Medical Benefits
15
15.1 Definitions. The following words and phraseology as
used herein shall have the following meanings unless a different
meaning is plainly required by the context:
(a) "Pensioned Employee" means a former Employee of the
Employer (1) who is eligible to receive Retirement Income after
the attainment of his Normal or Deferred Retirement Date, as
applicable, pursuant to the terms of the Plan, (2) who was
insured under the Employer's program of medical insurance
benefits on the last day worked prior to retirement, (3) who is
not insured under any group insurance plan providing
hospitalization and medical coverage to which the Employer
contributes, (4) who resides in the United States,and (5) who has
become eligible for Medicare and, if the Pensioned Employee's
retirement occurred before attainment of Medicare eligibility,
the premiums for hospitalization and medical coverage were being
deducted from his Retirement Income continuously until his
eligibility for Medicare. A "Pensioned Employee" shall not
include a Key Employee, as defined in Section 14.6(g), or
effective January 1, 1991, any Pensioned Employee of an Employer
that has adopted the Plan pursuant to Section 14.1 hereof but
does not provide medical benefits to its Pensioned Employees.
(b) "Spouse " means the Pensioned Employee's spouse (1) who
is not legally separated from the Pensioned Employee, (2) who was
insured under the Employer's program of medical insurance
benefits on the last day prior to the Pensioned Employee's
retirement, (3) who resides in the United States, (4) who is not
insured under any group insurance plan providing hospitalization
and medical coverage to which the Employer contributes, (5) who
meets the eligibility requirements of the Medicare program, (6)
who has become eligible for Medicare and, if the Pensioned
Employee's retirement occurred before his Spouse became eligible
for Medicare, premiums for hospitalization and medical coverage
for both the Pensioned Employee and his Spouse were being
deducted from his Retirement Income continuously until his Spouse
became eligible for Medicare, and (7) in the case of a surviving
spouse of a deceased Pensioned Employee, who was insured as a
Spouse at the time of the Pensioned Employee's death.
(c) "Covered Individual" means a Pensioned Employee or
Spouse of a Pensioned Employee who is eligible to receive medical
benefits under Article XV.
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15.2 Eligibility of Pensioned Employees and their Spouses.
(a) A person who is a Pensioned Employee on January 1, 1989
shall be eligible for coverage as a Pensioned Employee on
January 1, 1989, provided he was covered as an Employee under a
group medical plan maintained by the Employer immediately prior
to the time he became a Pensioned Employee.
(b) An Employee who becomes a Pensioned Employee on or
after January 1, 1989 shall be eligible for coverage on the date
he becomes a Pensioned Employee, provided he was covered as an
Employee under a group medical plan maintained by the Employer
immediately prior to the time he became a Pensioned Employee.
(c) A Spouse of a Pensioned Employee shall be eligible for
coverage under this Plan on the later of (1) the date the
Pensioned Employee becomes eligible for coverage hereunder and
(2) the date such person becomes a Spouse.
15.3 Medical benefits. The medical benefits provided under
this Article XV by the Employer and each adopting Employer are
set forth in the copy of each such Employer's medical benefits
plan which is attached hereto as Exhibit A and specifically
incorporated herein by reference in its entirety, as may be
amended from time to time. Such medical benefits shall be
subject without limitation to all deductibles, maximums,
exclusions, coordination with Medicare and other medical plans,
and procedures for submitting claims and initiating legal
proceedings provided therein.
15.4 Termination of coverage.
(a) Coverage of any Pensioned Employee shall cease as
follows:
(1) when Article XV is amended, terminated, or
discontinued in accordance with its terms; or
(2) when the Pensioned Employee fails to make when due
any required contribution; or
(3) as otherwise provided in Exhibit A.
(b) Coverage of a Spouse shall cease as follows:
(1) when Article XV is amended, terminated, or
discontinued in accordance with its terms; or
(2) when the Pensioned Employee fails to make when due
any required contribution; or
(3) as otherwise provided in Exhibit A.
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15.5 Continuation of coverage to certain individuals.
(a) Anything in Article XV to the contrary notwithstanding,
a Pensioned Employee or Spouse shall be entitled to elect
continued medical coverage as provided under the terms of Article
XV upon the occurrence of a Qualifying Event, provided such
Pensioned Employee or Spouse was entitled to benefits under
Article XV on the day prior to the Qualifying Event.
(1) "Qualifying Event" means with respect to any
Pensioned Employee or Spouse, as appropriate, (A) the death
of the Pensioned Employee, (B) the divorce or legal
separation of the Pensioned Employee from his Spouse, or
(C) a proceeding in a case under Title 11, United States
Code, with respect to the Employer.
(b) The Pensioned Employee or Spouse electing continued
coverage under this Section 15.5 shall be required to pay such
monthly contributions as determined by the Employer to be equal
to a reasonable estimate of 102% of the cost of providing
coverage for such period for similarly situated beneficiaries
which (1) is determined on an actuarial basis and (2) takes into
account such factors as the Secretary of the Treasury may
prescribe.
(c) The continuation coverage elected by a Pensioned
Employee or Spouse shall begin on the date of the Qualifying
Event and end not earlier than the first to occur of the
following:
(1) The third anniversary of the Qualifying Event;
(2) The termination of Article XV of the Plan;
(3) The failure of the Pensioned Employee or Spouse to
pay any required contribution when due;
(4) The date on which the Pensioned Employee or Spouse
first becomes, after the date of his election, (A) a covered
employee under any other group health plan which does not
contain any exclusion or limitation with respect to any
preexisting condition of such individual, or (B) entitled to
benefits under Title XVIII of the Social Security Act; or
(5) The date the Spouse becomes covered under another
group health plan which does not contain any exclusion or
limitation with respect to any preexisting condition of such
Spouse.
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(d) Any election to continue coverage under this
Section 15.5 shall be made during the election period
(1) beginning not later than the termination date of coverage by
reason of the Qualifying Event and (2) ending sixty (60) days
following the later of the date described in (1) above or the
date any Pensioned Employee or Spouse receives notice of a
Qualifying Event from the Employer.
(e) The Employer shall provide each Pensioned Employee and
Spouse, if any, written notice of the rights provided in this
Section 15.5. The Pensioned Employee or Spouse is required to
notify the Employer within thirty (30) days of any Qualifying
Event described in Section 15.5(a)(1)(B), and the Employer shall
provide the Spouse written notice of the rights provided in this
Section 15.5 within fourteen (14) days thereafter.
15.6 Contributions to fund medical benefits. Any
contributions which the Employer deems necessary to provide the
medical benefits under Article XV will be made from time to time
by or on behalf of the Employer, and contributions shall be
required of the Pensioned Employees to the Employer's medical
benefit plan in amounts determined in the sole discretion of the
Employer from time to time. All Employer contributions shall be
made to the Trustee under the Trust Agreement provided for in
Article XI and shall be allocated to a separate account
maintained solely to fund the medical benefits provided under
Article XV. The Employer shall designate that portion of any
contribution to the Plan allocable to the funding of medical
benefits under this Article XV. In no event at any time prior to
the satisfaction of all liabilities under this Article XV shall
any part of the corpus or income of such separate account be used
for, or diverted to, purposes other than for the exclusive
purpose of providing benefits under this Article XV. Effective
January 1, 1991, subject to the requirements of Code Section 420,
the Employer shall have the right, in its sole discretion, to
transfer any excess corpus or income of the Plan allocated to
fund Retirement Income to the separate account to fund medical
benefits under this Article XV.
The amount of contributions to be made by or on behalf of
the Employer for any Plan Year shall be determined in accordance
with any generally accepted actuarial method which is reasonable
in view of the provisions and coverage of Article XV, the funding
medium, and any other applicable considerations. However, the
Employer is under no obligation to make any contributions under
Article XV after Article XV is terminated, except to fund claims
for medical expenses incurred prior to the date of termination.
The medical benefits provided under this Article XV, when
added to any life insurance protection provided under the Plan,
shall be subordinate to the retirement benefits provided under
the Plan.
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Subject to any transitional rule applicable to contributions
made under this Article XV prior to January 1, 1990, effective
October 3, 1989, the aggregate of costs of the medical benefits
(measured from January 1, 1987) plus the costs of any life
insurance protection shall not exceed twenty-five percent (25%)
of the sum of the aggregate of costs of retirement benefits under
the Plan (other than past service credits), the aggregate of
costs of the medical benefits and the costs of any life insurance
protection (both measured from January 1, 1987). The aggregate
of costs of retirement benefits, other than for past service
credits, and the aggregate of costs of medical benefits provided
under the Plan shall be determined using the projected unit
credit funding method and the actuarial assumptions set forth in
Exhibit B, a copy of which is attached hereto and specifically
incorporated herein by reference in its entirety, and as may be
amended from time to time by the committee responsible for
providing a procedure for establishing and carrying out a funding
policy and method for the Plan pursuant to Section 10.9 of the
Plan. Contributions allocated to any separate account
established for a Pensioned Employee from which medical benefits
will be payable solely to such Pensioned Employee or his Spouse
shall be treated as an Annual Addition as defined in Section
6.6(a) to any defined contribution plan maintained by the
Employer.
15.7 Pensioned Employee Contributions. It shall be the sole
responsibility of the Pensioned Employee to notify the Employer
promptly in writing when a change in the amount of the Pensioned
Employee's contribution is in order because his Spouse has become
ineligible for coverage under this Article XV. No person shall
become covered under this Article XV for whom the Pensioned
Employee has not made the required contribution. Any
contribution paid by a Pensioned Employee for any person after
such person shall have become ineligible for coverage under this
Article XV shall be returned upon written request but only
provided such written request by or on behalf of the Pensioned
Employee is received by the Employer within ninety (90) days from
the date coverage terminates with respect to such ineligible
person.
15.8 Amendment of Article XV. The Employer reserves the
right, through action of its Board of Directors, to amend Article
XV (including Exhibit A) pursuant to Section 13.1 or the Trust
without the consent of any Pensioned Employee or his Spouse,
provided, however, that no amendment of this Article or the Trust
shall cancel the payment or reimbursement of expenses for claims
already incurred by a Pensioned Employee or his Spouse prior to
the date of any amendment, nor shall any such amendment increase
the duties and obligations of the Trustee except with its
consent. This Article XV, as set forth in the Plan document, is
not a contract and non-contributory benefits hereunder are
provided gratuitously, without consideration from any Pensioned
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Employee or his Spouse. The Employer makes no promise to
continue these benefits in the future and rights to future
benefits will never vest. In particular, retirement or the
fulfillment of the prerequisites for a retirement benefit
pursuant to the terms of the Plan or under the terms of any other
employee benefit plan maintained by the Employer shall not confer
upon any Pensioned Employee or his Spouse any right to continued
benefits under this Article XV.
15.9 Termination of Article XV. Although it is the
intention of the Employer that this Article shall be continued
and the contribution shall be made regularly thereto each year,
the Employer, by action of its Board of Directors pursuant to
Section 13.1, may terminate this Article XV or permanently
discontinue contributions at any time in its sole discretion.
This Article XV, as set forth in the Plan document, is not a
contract and non-contributory benefits hereunder are provided
gratuitously, without consideration from any Pensioned Employee
or his Spouse. The Employer makes no promise to continue these
benefits in the future and rights to future benefits will never
vest. In particular, retirement or the fulfillment of the
prerequisites for a retirement benefit pursuant to the terms of
the Plan or under the terms of any other employee benefit plan
maintained by the Employer shall not confer upon any Pensioned
Employee or his Spouse any right to continued benefits under this
Article XV. Effective January 1, 1991, in the event the Employer
or any adopting Employer shall terminate its provision of the
medical benefits described in Exhibit A to Section 15.3 of the
Plan to its Pensioned Employees, this Article XV of the Plan
shall automatically terminate with respect to the Pensioned
Employees and their Spouses of such Employer without the
requirement of any action by such Employer.
15.10 Reversion of assets upon termination. Upon the
termination of this Article XV and the satisfaction of all
liabilities under this Article XV, all remaining assets in the
separate account described in Section 15.6 shall be returned to
the Employer.
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ARTICLE XVI
Post-retirement Medical Benefits Prior
to Attainment of Normal Retirement Date
16.1 Definitions. The following words and phraseology as
used herein shall have the following meanings unless a different
meaning is plainly required by the context:
(a) "Pensioned Employee" means a former Employee of the
Employer who is receiving Retirement Income after his retirement
at his Early Retirement Date and prior to attainment of his
Normal Retirement Date, pursuant to the terms of the Plan, and
who was insured under the Employer's program of medical insurance
benefits on the last day prior to his retirement. The term
"Pensioned Employee" shall not include (1) any former Employee
who terminated his service with the Employer prior to his Early
Retirement Date and who is entitled to Retirement Income under
the Plan or, effective January 1, 1991, (2) a Key Employee, as
defined in Section 14.6(g), or (3) any Pensioned Employee of an
Employer that has adopted the Plan pursuant to Section 14.1
hereof but does not provide medical benefits to its Pensioned
Employees.
(b) "Dependents" means a person who was insured by the
Pensioned Employee under the Employer's program of medical
insurance on the last day prior to retirement and who is:
(1) the spouse of the Pensioned Employee, or
(2) an unmarried child of either or both under
nineteen (19) years of age, or
(3) an unmarried child of either or both under twenty-
three (23) years of age who is a full-time student in a
course of study or training (approved by the Employer), not
employed on a regular full-time basis and chiefly dependent
upon the Pensioned Employee for support, or
(4) an unmarried child of either or both who is
mentally or physically incapacitated and unable to support
himself and chiefly dependent upon the Pensioned Employee
for support, if the incapacity begins and is certified to
the Employer by a Doctor of Medicine or Osteopathy before
the child reaches the age of nineteen (19) years. Whenever
a claim for benefits under Article XVI is submitted, another
certification of incapacity must be with the claim. The
Employer is entitled to have its physician examine such
child prior to acceptance of such child's coverage and
periodically thereafter to ensure the continuation of
incapacity.
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The term "child" as used in this definition is limited to
the following:
(1) Any natural child of the Pensioned Employee;
(2) Any child of the Pensioned Employee's spouse who
regularly and permanently resides with the Pensioned
Employee and such spouse in a parent-child relationship
during the marriage; and
(3) A child placed for adoption with a Pensioned
Employee (as such term is defined in Exhibit C).
16.2 Application for and commencement of Coverage.
(a) Every Pensioned Employee, as defined in Section 16.1,
shall be entitled to apply for coverage for himself and his
eligible Dependents.
(b) If the required contributions for coverage of a covered
individual have been paid in advance in accordance with Article
XVI, the Employer's coverage of a Pensioned Employee and his
Dependents who were continuously covered under a prior medical
plan maintained by the Employer on December 31, 1989 or the day
before the retirement of a Pensioned Employee, shall continue
under Article XVI commencing with such effective date, subject to
any waiting periods. Application for such prior medical plan
shall be deemed to be application for coverage under Article XVI.
16.3 Medical benefits. The medical benefits provided under
this Article XVI by the Employer and each adopting Employer are
set forth in the copy of each such Employer's medical benefits
plan which is attached hereto as Exhibit C and specifically
incorporated herein by reference in its entirety, and as may be
amended from time to time. Such medical benefits shall be
subject without limitation to all deductibles, maximums,
exclusions, coordination with Medicare and other medical plans,
and procedures for submitting claims and initiating legal
proceedings provided therein.
16.4 Termination of coverage.
(a) Coverage of any Pensioned Employee shall cease as
follows:
(1) when Article XVI is amended, terminated, or
discontinued in accordance with its terms; or
(2) when the Pensioned Employee fails to make when due
any required contribution; or
(3) as otherwise provided in Exhibit C.
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(b) Coverage of any Dependent shall cease as follows:
(1) when Article XVI is amended, terminated, or
discontinued in accordance with its terms; or
(2) when the Pensioned Employee fails to make when due
any required contribution; or
(3) as otherwise provided in Exhibit C.
16.5 Continuation of coverage to certain individuals.
(a) Anything in Article XVI to the contrary
notwithstanding, a Pensioned Employee, Dependent spouse, or
Dependent child shall be entitled to elect continued medical
coverage as provided under the terms of Article XVI upon the
occurrence of a Qualifying Event, provided such Pensioned
Employee, Dependent spouse, or Dependent child was entitled to
benefits under Article XVI on the day prior to the Qualifying
Event.
(1) "Qualifying Event" means with respect to any
Pensioned Employee, Dependent spouse, or Dependent child, as
appropriate, (A) the death of the Pensioned Employee,
(B) the divorce or legal separation of the Pensioned
Employee from the Dependent spouse, (C) a Dependent child
ceasing to be a Dependent as defined under the requirements
of Article XVI, or (D) a proceeding in a case under Title
11, United States Code, with respect to the Employer.
(b) The Pensioned Employee or Dependent electing continued
coverage under this Section 16.5 shall be required to pay such
monthly contributions as determined by the Employer to be equal
to a reasonable estimate of 102% of the cost of providing
coverage for such period for similarly situated beneficiaries
which (1) is determined on an actuarial basis and (2) takes into
account such factors as the Secretary of the Treasury may
prescribe.
(c) The continuation coverage elected by a Pensioned
Employee, Dependent spouse, or Dependent child shall begin on the
date of the Qualifying Event and end not earlier than the first
to occur of the following:
(1) The third anniversary of the Qualifying Event;
(2) The termination of Article XVI of the Plan;
(3) The failure of the Pensioned Employee or Dependent
to pay any required contribution when due;
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(4) The date on which the Pensioned Employee or
Dependent first becomes, after the date of his election,
(A) a covered employee under any other group health plan
which does not contain any exclusion or limitation with
respect to any preexisting condition of such individual, or
(B) entitled to benefits under Title XVIII of the Social
Security Act; or
(5) The date the Dependent spouse becomes covered
under another group health plan which does not contain any
exclusion or limitation with respect to any preexisting
condition of such Dependent spouse.
(d) Any election to continue coverage under this Section
16.5 shall be made during the election period (1) beginning not
later than the termination date of coverage by reason of the
Qualifying Event and (2) ending sixty (60) days following the
later of the date described in (1) above or the date any
Pensioned Employee, Dependent spouse, or Dependent child receives
notice of a Qualifying Event from the Employer.
(e) The Employer shall provide each Pensioned Employee and
Dependent spouse, if any, written notice of the rights provided
in this Section 16.5. The Pensioned Employee or Dependent spouse
is required to notify the Employer within thirty (30) days of any
Qualifying Event described in Section 16.5(a)(1)(B) or (C), and
the Employer shall provide the Dependent spouse or Dependent
child written notice of the rights provided in this Section 16.5
within fourteen (14) days thereafter. Notice to the Dependent
spouse shall be deemed notice to each Dependent child residing
with such spouse at the time such notification is made.
16.6 Contributions to fund medical benefits. Any
contributions which the Employer deems necessary to provide the
medical benefits under Article XVI will be made from time to time
by or on behalf of the Employer, and contributions shall be
required of the Pensioned Employees in amounts determined in the
sole discretion of the Employer from time to time. All
contributions shall be made to the Trustee under the Trust
Agreement provided for in Article XI and shall be allocated to a
separate account maintained solely to fund the medical benefits
provided under Article XVI. The Employer shall designate that
portion of any contribution to the Plan allocable to the funding
of medical benefits under this Article XVI. In no event at any
time prior to the satisfaction of all liabilities under this
Article XVI shall any part of the corpus or income of such
separate account be used for, or diverted to, purposes other than
for the exclusive purpose of providing benefits under this
Article XVI. Effective January 1, 1991, subject to the
requirements of Code Section 420, the Employer shall have the
right, in its sole discretion, to transfer any excess corpus or
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income of the Plan allocated to fund Retirement Income to the
separate account to fund medical benefits under this Article XVI.
The minimum amount of contributions to be made by or on
behalf of the Employer for any Plan Year shall be determined in
accordance with any generally accepted actuarial method which is
reasonable in view of the provisions and coverage of Article XVI,
the funding medium, and any other applicable considerations.
However, the Employer is under no obligation to make any
contributions under Article XVI after Article XVI is terminated,
except to fund claims for medical expenses incurred prior to the
date of termination.
The medical benefits provided under this Article XVI, when
added to any life insurance protection provided under the Plan,
shall be subordinate to the retirement benefits provided under
the Plan. Subject to any transitional rule applicable to
contributions made under this Article XVI prior to January 1,
1990, effective October 3, 1989, the aggregate of costs of the
medical benefits (measured from January 1, 1987) plus the costs
of any life insurance protection shall not exceed twenty-five
percent (25%) of the sum of the aggregate of costs of retirement
benefits under the Plan (other than past service credits), the
aggregate of costs of the medical benefits and the costs of any
life insurance protection (both measured from January 1, 1987).
The aggregate of costs of retirement benefits, other than for
past service credits, and the aggregate of costs of medical
benefits provided under the Plan shall be determined using the
projected unit credit funding method and the actuarial
assumptions set forth in Exhibit B, a copy of which is attached
hereto and specifically incorporated herein by reference in its
entirety, and as may be amended from time to time by the
committee responsible for providing a procedure for establishing
and carrying out a funding policy and method for the Plan
pursuant to Section 10.9 of the Plan. Contributions allocated to
any separate account established for a Pensioned Employee from
which medical benefits will be payable solely to such Pensioned
Employee or his Dependents shall be treated as an Annual Addition
as defined in Section 6.6(a) to any defined contribution plan
maintained by the Employer.
16.7 Pensioned Employee Contributions. It shall be the
sole responsibility of the Pensioned Employee to notify the
Employer promptly in writing when a change in the amount of the
Pensioned Employee's contribution is in order because a Dependent
has become ineligible for coverage under this Article XVI. No
person shall become covered under this Article XVI for whom the
Pensioned Employee has not made the required contribution. Any
contribution paid by a Pensioned Employee for any person after
such person shall have become ineligible for coverage under this
Article XVI shall be returned upon written request but only
provided such written request by or on behalf of the Pensioned
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Employee is received by the Employer within ninety (90) days from
the date coverage terminates with respect to such ineligible
person.
16.8 Amendment of Article XVI. The Employer reserves the
right, through action of its Board of Directors pursuant to
Section 13.1, to amend Article XVI (including Exhibit C) or the
Trust without the consent of any Pensioned Employee, or any
Dependent of a Pensioned Employee, provided, however, that no
amendment of this Article or the Trust shall cancel the payment
or reimbursement of expenses for claims already incurred by a
Pensioned Employee or his Dependent prior to the date of any
amendment, nor shall any such amendment increase the duties and
obligations of the Trustee except with its consent. This Article
XVI, as set forth in the Plan document, is not a contract and
non-contributory benefits hereunder are provided gratuitously,
without consideration from any Pensioned Employee or the
Dependent of any Pensioned Employee. The Employer makes no
promise to continue these benefits in the future and rights to
future benefits will never vest. In particular, retirement or
the fulfillment of the prerequisites for a retirement benefit
pursuant to the terms of the Plan or under the terms of any other
employee benefit plan maintained by the Employer shall not confer
upon any Pensioned Employee or the Dependent of any Pensioned
Employee any right to continued benefits under this Article XVI.
16.9 Termination of Article XVI. Although it is the
intention of the Employer that this Article shall be continued
and the contribution shall be made regularly thereto each year,
the Employer, by action of its Board of Directors pursuant to
Section 13.1, may terminate this Article XVI or permanently
discontinue contributions at any time in its sole discretion.
This Article XVI, as set forth in the Plan document, is not a
contract and non-contributory benefits hereunder are provided
gratuitously, without consideration from any Pensioned Employee
or the Dependent of any Pensioned Employee. The Employer makes
no promise to continue these benefits in the future and rights to
future benefits will never vest. In particular, retirement or
the fulfillment of the prerequisites for a retirement benefit
pursuant to the terms of the Plan or under the terms of any other
employee benefit plan maintained by the Employer shall not confer
upon any Pensioned Employee or the Dependent of any Pensioned
Employee any right to continued benefits under this Article XVI.
Effective January 1, 1991, in the event the Employer or any
adopting Employer shall terminate its provision of the medical
benefits described in Exhibit C to Section 16.3 of the Plan to
its Pensioned Employees, this Article XVI of the Plan shall
automatically terminate with respect to the Pensioned Employees
of such Employer without the requirement of any action by such
Employer.
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16.10 Reversion of Assets upon Termination. Upon the
termination of this Article XVI and the satisfaction of all
liabilities under this Article XVI, any remaining assets in the
separate account described in Section 16.6 shall be returned to
the Employer.
92
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IN WITNESS WHEREOF, the Board of Directors of Alabama Power
Company through its authorized officers has adopted this
amendment and restatement of the Pension Plan for Employees of
Alabama Power Company this day of , , to
be effective January 1, 1989.
ALABAMA POWER COMPANY
By:
Its:
ATTEST:
By:
Its:
[CORPORATE SEAL]
[adamscl] h:\wpdocs\mtd\alapower\apc-pens.94
93
<PAGE>
Exhibit 10(a)70
PENSION PLAN
FOR EMPLOYEES OF
GEORGIA POWER COMPANY
AS AMENDED AND RESTATED
EFFECTIVE AS OF JANUARY 1, 1989
<PAGE>
TABLE OF CONTENTS
Page
ARTICLE I
Definitions . . . . . . . . . . . 2
ARTICLE II
Eligibility . . . . . . . . . . . 14
2.1 Employees . . . . . . . . . . . . . . . . . . . . . 14
2.2 Employees represented by a collective bargaining
agent . . . . . . . . . . . . . . . . . . . . . . . 14
2.3 Persons in military service and Employees on
authorized leave of absence . . . . . . . . . . . . 14
2.4 Employees reemployed . . . . . . . . . . . . . . . 15
2.5 Participation upon return to eligible class . . . . 15
2.6 Exclusion of certain categories of employees . . . 15
2.7 Waiver of participation . . . . . . . . . . . . . . 16
ARTICLE III
Retirement . . . . . . . . . . . 17
3.1 Retirement at Normal Retirement Date . . . . . . . 17
3.2 Retirement at Early Retirement Date . . . . . . . . 17
3.3 Retirement at Deferred Retirement Date . . . . . . 17
ARTICLE IV
Determination of Accredited Service . . . . . 18
4.1 Accredited Service pursuant to Prior Plan . . . . . 18
4.2 Accredited Service . . . . . . . . . . . . . . . . 18
4.3 Accredited Service and Years of Service in respect
of service of certain Employees previously
employed by the Employer or by Affiliated
Employers . . . . . . . . . . . . . . . . . . . . . 20
4.4 Accrual of Retirement Income during period of
total disability . . . . . . . . . . . . . . . . . 21
4.5 Employees leaving Employer's service . . . . . . . 22
4.6 Transfers to or from Affiliated Employers . . . . . 23
4.7 Transfers from Savannah Electric and Power
Company . . . . . . . . . . . . . . . . . . . . . . 24
4.8 Retirement income for certain former employees of
Southern Electric Generating Company . . . . . . . 25
ARTICLE V
Retirement Income . . . . . . . . . . 26
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5.1 Normal Retirement Income . . . . . . . . . . . . . 26
5.2 Minimum Retirement Income payable upon retirement
at Normal Retirement Date or Deferred Retirement
Date . . . . . . . . . . . . . . . . . . . . . . . 26
5.3 Minimum Retirement Income upon retirement at Early
Retirement Date or upon termination of service by
reason of death or otherwise prior to retirement . 27
5.4 Calculation of Social Security Offset . . . . . . . 28
5.5 Early Retirement Income . . . . . . . . . . . . . . 29
5.6 Deferred Retirement Income . . . . . . . . . . . . 29
5.7 Payment of Retirement Income . . . . . . . . . . . 30
5.8 Termination of Retirement Income . . . . . . . . . 31
5.9 Required distributions . . . . . . . . . . . . . . 31
5.10 Suspension of Retirement Income for
reemployment . . . . . . . . . . . . . . . . . . . 33
5.11 Increase in Retirement Income of retired
Employees for service prior to January 1, 1991 . . 33
5.12 Special provisions relating to the treatment of
absence of an Employee from the service of the
Employer to serve in the Armed Forces of the
United States . . . . . . . . . . . . . . . . . . . 34
ARTICLE VI
Limitations on Benefits . . . . . . . . 38
6.1 Maximum Retirement Income . . . . . . . . . . . . . 38
6.2 Adjustment to Defined Benefit Dollar Limitation
for Early or Deferred Retirement . . . . . . . . . 39
6.3 Adjustment of limitation for Years of Service or
participation . . . . . . . . . . . . . . . . . . . 40
6.4 Preservation of Accrued Retirement Income . . . . . 40
6.5 Limitation on benefits from multiple plans . . . . 41
6.6 Special rules for plans subject to overall
limitations under Code Section 415(e) . . . . . . . 42
6.7 Combination of Plans . . . . . . . . . . . . . . . 43
6.8 Incorporation of Code Section 415 . . . . . . . . . 43
ARTICLE VII
Provisional Payee . . . . . . . . . . 44
7.1 Adjustment of Retirement Income to provide for
payment to Provisional Payee . . . . . . . . . . . 44
7.2 Form and time of election and notice requirements . 44
7.3 Circumstances in which election and designation
are inoperative . . . . . . . . . . . . . . . . . . 45
7.4 Pre-retirement death benefit . . . . . . . . . . . 46
7.5 Post-retirement death benefit - qualified joint
and survivor annuity . . . . . . . . . . . . . . . 48
7.6 Election and designation by former Employee
entitled to Retirement Income in accordance with
Article VIII . . . . . . . . . . . . . . . . . . . 48
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<PAGE>
7.7 Death benefit for Provisional Payee of former
Employee . . . . . . . . . . . . . . . . . . . . . 50
7.8 Limitations on Employee's and Provisional Payee's
benefits . . . . . . . . . . . . . . . . . . . . . 50
7.9 Effect of election under Article VII . . . . . . . 51
ARTICLE VIII
Termination of Service . . . . . . . . 52
8.1 Vested interest . . . . . . . . . . . . . . . . . . 52
8.2 Early distribution of vested benefit . . . . . . . 52
8.3 Years of Service of reemployed Employees . . . . . 53
8.4 Cash-out and buy-back . . . . . . . . . . . . . . . 54
8.5 Calculation of present value for cash-out of
benefits and for determining amount of benefits . . 55
8.6 Retirement Income under Prior Plan . . . . . . . . 57
8.7 Requirement for Direct Rollovers . . . . . . . . . 57
ARTICLE IX
Contributions . . . . . . . . . . . 59
9.1 Contributions generally . . . . . . . . . . . . . . 59
9.2 Return of Employer contributions . . . . . . . . . 59
9.3 Expenses . . . . . . . . . . . . . . . . . . . . . 60
ARTICLE X
Administration of Plan . . . . . . . . 61
10.1 Retirement Board . . . . . . . . . . . . . . . . . 61
10.2 Organization and transaction of business of
Retirement Board . . . . . . . . . . . . . . . . . 61
10.3 Administrative responsibilities of Retirement
Board . . . . . . . . . . . . . . . . . . . . . . . 61
10.4 Retirement Board, the "Administrator" . . . . . . . 62
10.5 Fiduciary responsibilities . . . . . . . . . . . . 63
10.6 Employment of actuaries and others . . . . . . . . 63
10.7 Accounts and tables . . . . . . . . . . . . . . . . 63
10.8 Indemnity of members of Retirement Board . . . . . 64
10.9 Areas in which the Retirement Board does not have
responsibility . . . . . . . . . . . . . . . . . . 64
10.10 Claims Procedures . . . . . . . . . . . . . . . . 65
ARTICLE XI
Management of Trust . . . . . . . . . 66
11.1 Trust . . . . . . . . . . . . . . . . . . . . . . . 66
11.2 Disbursement of the Trust Fund . . . . . . . . . . 66
11.3 Rights in the Trust . . . . . . . . . . . . . . . . 66
11.4 Merger of the Plan . . . . . . . . . . . . . . . . 67
ARTICLE XII
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<PAGE>
Termination of the Plan . . . . . . . . 68
12.1 Termination of the Plan . . . . . . . . . . . . . . 68
12.2 Limitation on benefits for certain highly paid
employees . . . . . . . . . . . . . . . . . . . . . 68
12.3 Allocation of Trust upon termination . . . . . . . 69
ARTICLE XIII
Amendment of the Plan . . . . . . . . . 71
13.1 Amendment of the Plan . . . . . . . . . . . . . . . 71
ARTICLE XIV
Special Provisions . . . . . . . . . 73
14.1 Adoption of Plan by other corporations . . . . . . 73
14.2 Exclusive benefit . . . . . . . . . . . . . . . . . 74
14.3 Assignment or alienation . . . . . . . . . . . . . 74
14.4 Voluntary undertaking . . . . . . . . . . . . . . . 75
14.5 Top-Heavy Plan requirements . . . . . . . . . . . . 75
14.6 Determination of Top-Heavy status . . . . . . 75
14.7 Minimum Retirement Income for Top-Heavy Plan
Years . . . . . . . . . . . . . . . . . . . . . . . 79
14.8 Vesting requirements for Top-Heavy Plan Years . . . 80
14.9 Adjustments to maximum benefits for Top-Heavy
Plans . . . . . . . . . . . . . . . . . . . . . . . 81
ARTICLE XV
Post-retirement Medical Benefits . . . . . . 82
15.1 Definitions . . . . . . . . . . . . . . . . . . . . 82
15.2 Eligibility of Pensioned Employees and their
Dependents . . . . . . . . . . . . . . . . . . . . 83
15.3 Medical benefits . . . . . . . . . . . . . . . . . 83
15.4 Termination of coverage . . . . . . . . . . . . . . 84
15.5 Continuation of coverage to certain individuals . . 84
15.6 Contributions to fund medical benefits . . . . . . 85
15.7 Pensioned Employee contributions . . . . . . . . . 87
15.8 Amendment of Article XV . . . . . . . . . . . . . . 87
15.9 Termination of Article XV . . . . . . . . . . . . . 87
15.10 Reversion of assets upon termination . . . . . . . 88
ARTICLE XVI
Early Retirement Incentive Program . . . . . 89
16.1 Eligibility . . . . . . . . . . . . . . . . . . . . 89
16.2 Retirement Dates of Eligible Employees . . . . . . 89
16.3 Early retirement incentive program benefits . . . . 90
16.4 Restoration to service . . . . . . . . . . . . . . 90
iv
<PAGE>
Introductory Statement
The Pension Plan for Employees of Georgia Power Company, as
amended and restated effective as of January 1, 1989 and
hereinafter set forth (the "Plan"), is a modification and
continuation of the Pension Plan for Employees of Georgia Power
Company which originally became effective July 1, 1944, and has
been amended from time to time.
Since the enactment of the Employee Retirement Income
Security Act of 1974 ("ERISA"), the Plan has been amended
numerous times to comply with changes in the law and to achieve
other administrative goals. Initially, the Plan was amended and
restated in 1976 to comply with ERISA. Thereafter, the Plan was
again amended and restated in 1986 to comply with the Tax Equity
and Fiscal Responsibility Act of 1982, the Retirement Equity Act
of 1984, and the Deficit Reduction Act of 1984. In more recent
years, the Plan has been amended and restated three times to
comply with the Tax Reform Act of 1986 -- first in 1989, second
in 1991 and again as amended and restated herein. The amendment
and restatement set forth herein consolidates those amendments
made in 1989 and 1991 and provides for such other appropriate
changes as are required by the law. Accordingly, this amendment
and restatement is effective as of January 1, 1989. Where
appropriate, amendments to the Plan which have a different
effective date are noted.
Retirement Income of former Employees (or Provisional Payees
of former Employees) who retired in accordance with the
provisions of the Prior Plan, as defined herein, is payable in
accordance with the provisions of the Prior Plan.
All contributions made by the Employer to this Plan are
expressly conditioned upon the continued qualification of the
Plan under Section 401(a) of the Code, including any amendments
to the Plan, and upon the deductibility of such contributions by
the Employer pursuant to Section 404 of the Code.
1
<PAGE>
ARTICLE I
Definitions
The following words and phraseology as used herein have the
following meanings unless a different meaning is plainly required
by the context:
1
1.1 "Accrued Retirement Income" means with respect to any
Employee at any particular date, the Retirement Income,
determined pursuant to Section 5.1, commencing on his Normal
Retirement Date which would be payable to such Employee in the
form of a single life annuity on the basis of his Accredited
Service to the date as of which the computation of Retirement
Income is made.
1.2 "Accredited Service" means with respect to any Employee
included in the Plan, the period of service as provided in
Article IV. For purposes of calculating Accredited Service in
Article IV such Service shall include, in the case of a former
employee of the former Georgia Power and Light Company ("Power
and Light Company") who became an Employee of the Employer
effective upon acquisition of the assets and properties of Power
and Light Company, the number of years of his Creditable Service,
if any, accrued to July 1, 1957 to which he may be entitled under
the Power and Light Plan, but not to exceed the number of years
of Accredited Service to which he would have been entitled up to
July 1, 1957 determined in accordance with the provisions of the
Prior Plan had his service with Power and Light Company prior to
July 1, 1957 been service with the Employer.
1.3 "Actuarial Equivalent" means a benefit of equivalent
value when computed on the basis of five percent (5%) interest
per annum, compounded annually and the 1951 Group Annuity
Mortality Table for males. The ages for all Employees under the
above table shall be set back six (6) years and the ages for such
Employees' spouses shall be set back one year. All actuarial
adjustments and actuarial determinations required and made under
the terms of the Plan shall be calculated in accordance with such
assumptions.
1.4 "Affiliated Employer" means any corporation which is a
member of a controlled group of corporations (as defined in
Section 414(b) of the Code) which includes the Employer; any
trade or business (whether or not incorporated) which is under
common control (as defined in Section 414(c) of the Code) with
the Employer; any organization (whether or not incorporated)
which is a member of an affiliated service group (as defined in
Section 414(m) of the Code) which includes the Employer; and any
other entity required to be aggregated with the Employer pursuant
to regulations under Section 414(o) of the Code.
2
<PAGE>
1.5 "Average Monthly Earnings" means the greater of:
(a) an Employee's Monthly Earnings averaged over the three (3)
highest Plan Years of participation which shall produce the
highest monthly average within the last ten (10) Plan Years; or
(b) an Employee's Monthly Earnings averaged over the three (3)
highest Plan Years of participation which shall produce the
highest monthly average within the last ten (10) Plan Years
during which the Employee actively performed services for the
Employer. If an Employee has completed less than three (3) Plan
Years of participation upon his termination of employment, his
Average Monthly Earnings will be based on his Earnings during his
participation to his date of termination.
1.6 "Board of Directors" means the Board of Directors of
Georgia Power Company.
1.7 "Code" means the Internal Revenue Code of 1986, as
amended from time to time.
1.8 "Current Accrued Retirement Income" means an Employee's
Accrued Retirement Income under the Plan, determined as if the
Employee had separated from service as of the close of the last
Limitation Year beginning before January 1, 1987, when expressed
as an annual benefit within the meaning of Section 415(b)(2) of
the Code. In determining the amount of an Employee's Current
Accrued Retirement Income, the following shall be disregarded:
(a) any change in the terms and conditions of the Plan
after May 5, 1986; and
(b) any cost of living adjustment occurring after May 5,
1986.
1.9 "Deferred Retirement Date" means the first day of the
month after a retirement subsequent to the Normal Retirement
Date.
Employment subsequent to Normal Retirement Date shall be
deemed to be a retirement if an Employee has less than forty (40)
Hours of Service during a calendar month.
1.10 "Defined Benefit Dollar Limitation" means the
limitation set forth in Section 415(b)(1)(A) or (d) of the Code.
1.11 "Defined Contribution Dollar Limitation" means the
limitation set forth in Section 415(c)(1)(A) of the Code.
1.12 "ERISA" means the Employee Retirement Income Security
Act of 1974, as amended from time to time.
1.13 "Early Retirement Date" means the first day of the
month following the retirement of an Employee on or after his
3
<PAGE>
fifty-fifth (55th) birthday and before his sixty-fifth (65th)
birthday.
1.14 (a) "Earnings" with respect to any Employee including
any Employee whose service is terminated by reason of disability
(as defined in Section 4.4) means (1) the highest annual rate of
salary or wages of an Employee of the Employer or employee of any
Affiliated Employer within any Plan Year before deductions for
taxes, Social Security, etc., (2) all amounts contributed by the
Employer or any Affiliated Employer to The Southern Company
Employee Savings Plan as Elective Employer Contributions, as said
term is described under Section 4.1 of such plan, pursuant to the
Employee's exercise of his deferral option made thereunder in
accordance with the requirements of Section 401(k) of the Code,
and (3) all amounts contributed by the Employer or any Affiliated
Employer to The Southern Electric System Flexible Benefits Plan
or The Southern Company Flexible Benefits Plan on behalf of an
Employee pursuant to his salary reduction election, and applied
to provide one or more of the optional benefits available under
such plan, but (4) shall exclude all amounts deferred under any
non-qualified deferred compensation plan maintained by the
Employer or any Affiliated Employer.
(b) Notwithstanding the above, "Earnings" with respect to
any commissioned salesperson means the salary or wages of an
Employee of the Employer or employee of any Affiliated Employer
within any Plan Year, without including overtime, and before
deductions for taxes, Social Security, etc. but applying those
adjustments identified in paragraphs (a)(2), (3) and (4) above.
(c) With respect to an Employee whose service terminates
because of a disability under Section 4.4, Earnings shall be
deemed to continue in effect throughout the period of the
Employee's Disability Leave, as also defined in Section 4.4.
(d) Notwithstanding the above, "Earnings" with respect to
an Employee who is a member of Local Union 84 of I.B.E.W., who is
eligible to be included in the Plan, and who is granted a leave
of absence by the Employer to carry on union business, shall be
determined pursuant to Section 4.2 of the Plan.
(e) With respect to calculating the Prior Plan Retirement
Income of an Employee who is a "participant in the Plan" as
provided in Section 5.12, Earnings shall be determined for the
recognized period of his absence to serve in the Armed Forces of
the United States at the rate which is paid to him on the day he
returns to the service of the Employer as provided in
paragraph (a) of Section 5.12 or at the rate which was payable to
him at the time he left the employment of the Employer to enter
the Armed Forces of the United States, if such amount was
greater.
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<PAGE>
(f) For Plan Years beginning after December 31, 1988 and
prior to January 1, 1994, the annual compensation of each
Employee taken into account for purposes of this Plan shall not
exceed $200,000 (as adjusted by the Secretary of Treasury). The
imposition of this limitation shall not reduce an Employee's
Retirement Income below the amount as determined on December 31,
1988. In addition to other applicable limitations set forth in
the Plan, and notwithstanding any other provision of the Plan to
the contrary, for Plan Years beginning on or after January 1,
1994, the annual compensation of each Employee taken into account
under the Plan shall not exceed $150,000, as adjusted for
increases in the cost of living in accordance with Code
Section 401(a)(17). The cost of living adjustment in effect for
a calendar year applies to any period, not exceeding twelve (12)
months, over which compensation is determined (the "determination
period") beginning in such calendar year. If the determination
period is less than twelve (12) months, the limit shall be
prorated.
If compensation for any prior determination period is taken
into account in determining an Employee's benefits accruing in
the current Plan Year beginning on or after January 1, 1989 or
January 1, 1994, as applicable, the compensation for that prior
determination period is subject to the $200,000 or the $150,000
compensation limit in effect for that prior determination period.
Notwithstanding any other provision in the Plan, each
Employee's Accrued Retirement Income under this Plan will be the
greater of:
(a) the Employee's Accrued Retirement Income as of the last
day of the last Plan Year beginning before January 1,
1994, frozen in accordance with Treasury Regulation
Section 1.401(a)(4)-13, or
(b) the Employee's Accrued Retirement Income determined
with respect to the benefit formula applicable for the
Plan Year beginning on or after January 1, 1994, as
applied to the employee's total Years of Service taken
into account under the Plan for purposes of benefit
accruals.
For purposes of this Section 1.14, the rules of Section
414(q)(6) of the Code shall apply in determining the adjusted
$200,000 or $150,000 limitation, as applicable, except in
applying such rules, the term "family" shall include only the
spouse of the Employee and any lineal descendants of the Employee
who have not attained age nineteen (19) before the close of the
Plan Year. If, as a result of the application of such rules, the
adjusted $200,000 or $150,000 limitation is exceeded, then the
limitation shall be prorated among the affected individuals in
5
<PAGE>
proportion to each individual's Earnings determined under this
Section 1.14 prior to the application of this limitation.
1.15 "Effective Date" means the original effective date of
the Plan, July 1, 1944. The effective date of this amendment and
restatement means January 1, 1989.
1.16 "Eligibility Year of Service" is a Year of Service
commencing on the Employee's date of employment or reemployment
or anniversary date thereof.
1.17 "Employee" means any person who is currently employed
by the Employer as (a) a regular full-time employee, (b) a
regular part-time employee, (c) a cooperative education employee,
or (d) a Temporary Full-Time or Temporary Part-Time employee, as
such terms are defined in the Corporate Guidelines of the
Employer. The term also includes "leased employees" within the
meaning of Section 414(n)(2) of the Code, unless the total number
of leased employees constitutes less than twenty percent (20%) of
the Employer's non-highly compensated workforce within the
meaning of Section 414(n)(5)(C)(ii) and such leased employees are
covered by a plan described in Section 414(n)(5)(B) of the Code.
1.18 "Employer" means Georgia Power Company, any successor
or successors thereof and any wholly owned subsidiary thereof
which the Board of Directors may from time to time, and upon such
terms and conditions as may be fixed by the Board of Directors,
determine to bring under the Plan, and any other corporation
which shall adopt this Plan and Trust Agreement pursuant to
Section 14.1 by appropriate resolution authorized by the board of
directors of said adopting corporation.
1.19 "Full Current Costs" means the normal cost, as defined
in Treasury Regulation Section 1.404(a)-6, for all years since
the Effective Date of the Plan, plus interest on any unfunded
liability during such period.
1.20 "Hour of Service" means an Employee shall be credited
with one Hour of Service for each hour for which (a) he is paid,
or entitled to payment, for the performance of duties for the
Employer or an Affiliated Employer, and such hours shall be
credited to the Employee for the computation period or periods in
which the duties are performed; (b) he is paid, or entitled to
payment, by the Employer or an Affiliated Employer on account of
a period of time during which no duties are performed
(irrespective of whether the employment relationship has
terminated) due to vacation, holiday, illness, incapacity
(including disability), layoff, jury duty, military duty, or
leave of absence in which case the Employee shall be credited
with Hours of Service for the computation period or periods in
which the period during which no duties were performed occurs;
(c) back pay, irrespective of mitigation of damages, has been
6
<PAGE>
either awarded or agreed to by the Employer or an Affiliated
Employer, in which case the Employee shall be credited with Hours
of Service for the computation period or periods to which the
award or agreement pertains, rather than the computation period
in which the award, agreement, or payment is made; and (d) solely
for the purpose of calculating Vesting Years of Service, he was
on any form of authorized leave of absence. The same Hours of
Service shall not be credited under clauses (a), (b), (c), and
(d).
An Employee who is entitled to be credited with Hours of
Service in accordance with clause (b) or (d) of this Section
shall be credited with such number of Hours of Service for the
period of time during which no duties were performed as though he
were in the active employment of the Employer during such period
of time. However, an Employee shall not be credited with Hours
of Service in accordance with clause (b) of this Section for
unused vacation for which payment is received at termination of
employment, or if the payment which is made to him or to which he
is entitled in accordance with clause (b) is made or due under a
plan maintained solely for the purpose of complying with
applicable Worker's Compensation, or unemployment compensation or
disability insurance laws, or if such payment is one which solely
reimburses an Employee for medical or medically related expenses
incurred by the Employee.
Provided there is no duplication of Hours of Service
credited in accordance with the foregoing provisions, if an
Employee is "a participant in the Plan" within the meaning of
that term as defined in paragraph (a) of Section 5.12, he shall
be credited with such number of Hours of Service with respect to
all or such portion of the period of his absence to serve in the
Armed Forces of the United States as may be recognized under
paragraph (b) of Section 5.12 as though he were in the active
employment of the Employer during the recognized period of his
absence to serve in the Armed Forces.
Provided there is no duplication of Hours of Service
credited in accordance with the foregoing provisions, an Employee
shall be credited with Hours of Service as though he were in the
active employment of the Employer during an authorized leave of
absence to carry on union business as provided in Section 4.2, if
such Employee elects to receive credit for Accredited Service in
accordance with Section 4.2.
The rules set forth in paragraphs (b) and (c) of Department
of Labor Regulations 2530.200b-2 are incorporated in the Plan by
this reference and made a part hereof.
1.21 "Limitation Year" means the Plan Year.
7
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1.22 "Monthly Earnings" means one-twelfth (1/12) of the
Earnings of an Employee of the Employer during a Plan Year.
1.23 "Normal Retirement Date" means the first day of the
month following an Employee's sixty-fifth (65th) birthday, except
that the Normal Retirement Date of any Employee hired on or after
his sixtieth (60th) birthday shall be the fifth (5th) anniversary
of his initial participation in the Plan.
1.24 "One-Year Break in Service" means a twelve (12)
consecutive month period commencing on or after January 1, 1976
which would constitute a Year of Service but for the fact that
the Employee has not completed more than 500 Hours of Service
during such period.
Solely for the purpose of determining whether a One-Year
Break in Service has occurred for eligibility or vesting
purposes, an Employee who is absent from work for maternity or
paternity reasons shall receive credit for the Hours of Service
which would otherwise have been credited to such Employee but for
such absence, or in any case in which such hours cannot be
determined, eight (8) Hours of Service per day of such absence.
In no event shall Hours of Service credited under this paragraph
be in excess of the amount necessary to prevent a One-Year Break
in Service from occurring. For purposes of this paragraph, an
absence from work for maternity or paternity reasons means an
absence (a) by reason of the pregnancy of the Employee, (b) by
reason of a birth of a child of the Employee, (c) by reason of
the placement of a child with the Employee in connection with the
adoption of such child by such Employee, or (d) for purposes of
caring for such child for a period beginning immediately
following such birth or placement. The Hours of Service shall be
credited under this paragraph: (a) in the vesting or eligibility
period in which the absence begins if the Hours of Service
credited are necessary to prevent a One-Year Break in Service in
such period, and (b) in all other cases, in the vesting or
eligibility period following the period in which the absence
begins.
1.25 "Past Service" means with respect to any Employee
included in the Plan, the period of his Accredited Service prior
to January 1, 1989 as determined under the Prior Plan.
1.26 "Plan" means the Pension Plan for Employees of Georgia
Power Company, as set forth herein and as hereinafter amended,
effective January 1, 1989.
1.27 "Plan Year" means the twelve (12) month period
commencing on the first day of January and ending on the last day
of December next following.
8
<PAGE>
1.28 "Plan Year of Service" is a Year of Service determined
as if the date of employment or reemployment is the first day of
the Plan Year.
1.29 "Prior Plan" means the Plan in effect prior to January
1, 1989.
1.30 "Provisional Payee" means a spouse designated or
deemed to have been designated by an Employee or former Employee
pursuant to Article VII to receive Retirement Income on the death
of the Employee or former Employee.
1.31 "Qualified Election" means an election by an Employee
or former Employee that concerns the form of distribution of
Retirement Income that must be in writing and must be consented
to by the Employee's Spouse. The Spouse's consent to such an
election must acknowledge the effect of such election, must be in
writing, and must be witnessed by a notary public.
Notwithstanding this consent requirement, if the Employee
establishes to the satisfaction of the Retirement Board that such
written consent may not be obtained because the Spouse cannot be
located or because of such other circumstances as the Secretary
of the Treasury may by regulations prescribe, an election by the
Employee will be deemed a Qualified Election. Any consent
necessary under this provision shall be valid and effective only
with respect to the Spouse who signs the consent, or in the event
of a deemed Qualified Election, with respect to such Spouse.
A revocation of a prior Qualified Election to waive the
payment of Retirement Income to the Employee's Spouse may be made
by the Employee without consent at any time commencing within 90
days before such Employee's 55th birthday but not later than
before the commencement of Retirement Income. A Qualified
Election or the revocation of a Qualified Election shall be on a
form furnished by the Retirement Board and filed within the time
prescribed for making such election.
1.32 "Retirement Board" means the managing board of the
Plan provided for in Article X.
1.33 "Retirement Date" means the Employee's Normal, Early,
or Deferred Retirement Date, whichever is applicable to him.
1.34 "Retirement Income" means the monthly Retirement Income
provided for by the Plan.
1.35 "Social Security Offset" shall mean an amount equal to
one-half (1/2) of the amount, if any, of the Federal primary
Social Security benefit (primary old age insurance benefit) to
which it is estimated that an Employee will become entitled in
accordance with the Social Security Act in force as provided in
subparagraphs (a) through (e) below which shall exceed $168 per
9
<PAGE>
month on and after January 1, 1989, and $250 per month, on and
after January 1, 1991, multiplied by a fraction not greater than
one, the numerator of which shall be the Employee's total
Accredited Service, and the denominator of which shall be the
aggregate Accredited Service the Employee could have accumulated
if he had continued his employment until his Normal Retirement
Date. For purposes of determining the estimated Federal primary
Social Security benefit used in the Social Security Offset, an
Employee shall be deemed to be entitled to receive Federal
primary Social Security benefits after retirement or death, if
earlier, regardless of the fact that he may have disqualified
himself to receive payment thereof. In addition to the
foregoing, the calculation of the Social Security benefit shall
be based on the salary history of the Employee as provided in
Section 5.4(b) and shall be determined pursuant to the following,
as applicable:
(a) With regard to an Employee described in Section 5.2,
the Social Security benefit shall be computed at retirement. In
estimating the amount of the Federal primary Social Security
benefit to which the Employee would be entitled, it shall be
assumed that he will receive no wages for Social Security
purposes after his retirement on his Normal Retirement Date or
Deferred Retirement Date, and it will be further assumed in
calculating his estimated Federal primary Social Security benefit
that the amount thereof will be the amount determined under the
recomputation provision, if applicable, of the Social Security
Act in effect at the time of his retirement.
(b) With regard to an Employee described in Section 5.3(a),
the Social Security benefit to which it is estimated that he will
be entitled at sixty-five (65), shall be computed at the time of
his retirement. In estimating the amount of the Federal primary
Social Security benefit to which the Employee would be entitled
at age sixty-five (65), it shall be assumed that he will receive
no wages for Social Security purposes after his Early Retirement
Date, and it will be further assumed in calculating his estimated
Federal primary Social Security benefit that the amount thereof
will be the amount determined under the recomputation provision,
if applicable, of the Social Security Act in effect at his Early
Retirement Date.
(c) With regard to an Employee described in Section 5.3(b),
the Social Security benefit to which it is estimated that he
would have been entitled to receive at age sixty-five (65) or his
date of death, if later, had he not died, shall be computed at
the time of his death. In estimating the amount of Federal
primary Social Security benefit to which the Employee would have
been entitled at age sixty-five (65) or his date of death, if
later, it shall be assumed that he would not have received any
wages for Social Security purposes after the date of his death,
and it will be further assumed in calculating his Federal primary
10
<PAGE>
Social Security benefit that the amount thereof will be the
amount determined under the recomputation provision, if
applicable, of the Social Security Act in effect at the time of
his death.
(d) With regard to an Employee described in Section 5.3(c),
the Social Security benefit to which it is estimated that he will
become entitled at age sixty-five (65) or his date of
termination, if later, shall be computed at the date of
termination. In estimating the amount of the Federal primary
Social Security benefit to which the Employee would be entitled
at age sixty-five (65) or his date of termination, if later, it
shall be assumed that he will receive no wages for Social
Security purposes after his date of termination, and it will be
further assumed in calculating his estimated Federal primary
Social Security benefit that the amount thereof will be the
amount determined under the recomputation provision, if
applicable, of the Social Security Act in effect at his date of
termination.
(e) With regard to an Employee described in Section 5.3(d),
the Social Security benefit to which it is estimated that he
would have been entitled to receive at age sixty-five (65) or his
initial date of disability, if later, had he not become disabled,
shall be computed at the time of his retirement. In estimating
the amount of Federal primary Social Security benefit to which
the Employee would have been entitled at age sixty-five (65) or
his date of disability, if later, it shall be assumed that he
would have received wages for Social Security purposes as
specified in Section 5.4, and it will be further assumed in
calculating his estimated Federal primary Social Security benefit
that the amount thereof will be the amount determined under the
recomputation provision, if applicable, of the Social Security
Act in effect at the time of his retirement.
1.36 "Social Security Retirement Age" means age sixty-five
(65) if the Employee attains age sixty-two (62) before January 1,
2000 (i.e., born before January 1, 1938), age sixty-six (66) if
the Employee attains age sixty-two (62) after December 31, 1999,
but before January 1, 2017 (i.e., born after December 31, 1937,
but before January 1, 1955), and age sixty-seven (67) if the
Employee attains age sixty-two (62) after December 31, 2016
(i.e., born after December 31, 1954).
1.37 "Trust" or "Trust Fund" means all such money or other
property which shall be held by the Trustee pursuant to the terms
of the Trust Agreement or pursuant to contracts with life
insurance companies.
1.38 "Trust Agreement" means the trust agreement or
agreements between the Employer and the Trustee established for
the purpose of funding the Retirement Income to be paid.
11
<PAGE>
1.39 "Trustee" means the trustee or trustees acting as such
under the Trust Agreement, including any successor or successors.
1.40 "Vesting Year of Service" means an Employee's Years of
Service including: (a) Years of Service with an Affiliated
Employer and Years of Service with companies or properties
heretofore affiliated or associated with the Employer prior to
the date of severance of such affiliation or association and
service with Georgia Power and Light Company; (b) subject to the
eligibility requirements of Section 2.3, active service with the
Armed Forces of the United States if the Employee entered or
enters active service or training in such Armed Forces directly
from the employ of the Employer and after discharge or release
therefrom returns within ninety (90) days to the employ of the
Employer or is deemed to return under Section 2.3 because of the
death of such Employee while in active service with such Armed
Forces; and (c) any period during which the Employee was on any
other form of authorized leave of absence. For purposes of this
Section 1.40 in determining Vesting Years of Service with respect
to a period of absence referred to in clause (b) or (c) of this
Section 1.40, an Employee shall be credited with Hours of Service
as though the period of absence were a period of active
employment with the Employer.
1.41 "Year of Service" means with respect to an Employee in
the service of the Employer on or after January 1, 1976:
(a) if the Employee was hired prior to January 1, 1976,
each twelve (12) consecutive month period, computed from the
Employee's most recent date of hire by the Employer, during his
last period of continuous service as a full-time regular Employee
(except that service prior to July 1, 1944 need not have been
continuous) with the Employer immediately prior to January 1,
1976 (including service with Commonwealth and predecessor
companies and service with Affiliated Employers and service with
companies or properties heretofore affiliated or associated prior
to the date of severance of such affiliation or association) and
any subsequent twelve (12) consecutive month period commencing on
an anniversary date of such date of hire (or date of reemployment
as provided in Section 2.4), provided that in each such twelve
(12) consecutive month period commencing on or after January 1,
1975 he has completed at least 1000 Hours of Service; or
(b) if the Employee is hired on or after January 1, 1976, a
twelve (12) consecutive month period after December 31, 1975,
commencing on the Employee's most recent date of hire by the
Employer (or date of reemployment as provided in Section 2.4),
and any subsequent twelve (12) consecutive month period
commencing on an anniversary date of such date of hire, provided
he has completed at least 1000 Hours of Service during each such
twelve (12) consecutive month period; and
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<PAGE>
(c) to the extent not resulting in duplication, each Year
of Service restored to the Employee upon reemployment as provided
in Section 8.3.
An Employee's vested interest in his Accrued Retirement
Income shall be based on his Vesting Years of Service and an
Employee's eligibility to participate in the Plan pursuant to
Article II shall be based on his Eligibility Year of Service.
Breaks in service will be measured on the same computation period
as the Year of Service. Effective on and after January 1, 1995,
an Employee's accrual of Retirement Income shall be based solely
on an Employee's Plan Year of Service, without regard to an
Employee's completion of a Vesting Year of Service ending within
such Plan Year.
In the Plan and Trust Agreement, where the context requires,
words in the masculine gender include the feminine and neuter
genders and words in the singular include the plural and words in
the plural include the singular.
13
<PAGE>
ARTICLE II
Eligibility
2
2.1 Employees. Each Employee participating in the Plan as
of January 1, 1989 shall continue to be included in the Plan.
Each other Employee, except as provided in this Article, shall be
included in the Plan on the first day of the month next following
the date on which he first completes an Eligibility Year of
Service.
2.2 Employees represented by a collective bargaining agent.
The Employer recognizes Local 84, I.B.E.W., as the exclusive
representative of all employees covered by the Memorandum of
Agreement between Local Union No. 84 of the International
Brotherhood of Electrical Workers and the Employer, and it is
further agreed that these employees are eligible to participate
in accordance with the provisions of the Plan. Any other
Employee who is represented by a collective bargaining agent may
participate in the Plan, subject to its terms, if the
representative(s) of his bargaining unit and the Employer
mutually agree to participation in the Plan by the members of his
bargaining unit.
2.3 Persons in military service and Employees on authorized
leave of absence. Any person not already included in the Plan
who leaves or has left the employ of the Employer to enter the
Armed Forces of the United States or is on authorized leave of
absence without regular pay and who returns to the employ of the
Employer within ninety (90) days after discharge from such
military service or on or before termination of his leave of
absence, shall, upon such return, be included in the Plan
effective as of the first day of the month next following the
date on which he first met or meets the eligibility requirement
of Section 2.1. In determining whether an Employee entering the
service of the Employer has completed an Eligibility Year of
Service, his Hours of Service prior to such authorized leave of
absence without regular pay or entry into the Armed Forces shall
be taken into account, and for purposes of Section 2.4, he shall
be deemed not to have incurred a One-Year Break in Service by
reason of such absence.
If an Employee dies while in active service with the Armed
Forces of the United States, such Employee shall be deemed to
have returned to the employ of the Employer on his date of death.
An Employee not already included in the Plan who is on
authorized leave of absence and receiving his regular pay shall
be considered credited with Hours of Service as though the period
of absence was a period of active employment with the Employer,
and he shall be included in the Plan if and when he meets the
14
<PAGE>
requirements of this Article II regardless of whether he is, on
the date of such inclusion, on such leave of absence.
2.4 Employees reemployed. An Employee whose service
terminates at any time and who is reemployed as an Employee,
unless excluded under Section 2.6, will be included in the Plan
as provided in Section 2.1 unless:
(a) prior to termination of his service he had completed at
least one Year of Service; and
(b) upon his reemployment, to the extent provided in
Section 8.3 without regard to Section 8.4, he is entitled to
restoration of his Years of Service, in which case he will be
included in the Plan as of the date of his reemployment.
For purposes of determining Years of Service of an Employee
who is reemployed by the Employer subsequent to a One-Year Break
in Service, a Year of Service subsequent to his reemployment
shall be computed on the basis of the twelve (12) consecutive
month period commencing on his date of reemployment or an
anniversary thereof.
2.5 Participation upon return to eligible class. If an
Employee is a participant in the Plan before July 1, 1991, the
exclusion from participation provided in Section 2.6, as it
regards temporary employees, shall not apply with respect to such
Employee, and such Employee shall be eligible to participate in
the Plan after July 1, 1991 whether or not he is classified as a
temporary employee.
If an Employee first becomes a participant on or after July
1, 1991, in the event such Employee ceases to be a member of an
eligible class of Employees and becomes ineligible to
participate, but has not incurred a One-Year Break in Service,
such Employee will participate immediately upon returning to an
eligible class of Employees. If such Employee incurred a One-
Year Break in Service, eligibility will be determined under
Section 2.4 of the Plan.
In all other instances, if an Employee is not a member of an
eligible class of Employees but then becomes a member of an
eligible class, such Employee will commence participation in the
Plan as of the first day of the month next following the later of
(a) the date such Employee completes an Eligibility Year of
Service or (b) the date he becomes a member of an eligible class
of Employees.
2.6 Exclusion of certain categories of employees.
Notwithstanding any other provision of this Article II, leased
employees shall not be eligible to participate in the Plan. In
addition, a Temporary Full-Time or Temporary Part-Time employee,
15
<PAGE>
as such terms are defined in the Corporate Guidelines of the
Employer, who was not participating in the Plan as an Employee
prior to July 1, 1990, shall not be considered to be an Employee
for purposes of this Plan and shall not be entitled to any
benefits hereunder. Lastly, any person who is employed by
Electric City Merchandise Company, Inc. on or after May 1, 1988,
or who is employed by Savannah Electric and Power Company on or
after March 3, 1988, shall not be entitled to accrue Retirement
Income under the Plan while employed at such companies.
2.7 Waiver of participation. Effective January 1, 1991,
notwithstanding the above, an Employee may, subject to the
approval of the Employer, elect voluntarily not to participate in
the Plan. The election not to participate must be communicated
in writing to the Retirement Board effective on an Employee's
date of hire or an anniversary thereof. Effective January 1,
1995, the election not to participate must be communicated in
writing to and acknowledged by the Retirement Board and shall be
effective as of the date set forth in such written waiver.
16
<PAGE>
ARTICLE III
Retirement
3
3.1 Retirement at Normal Retirement Date. Each Employee
eligible to participate in the Plan shall have a nonforfeitable
right to his Accrued Retirement Income by no later than his
sixty-fifth (65th) birthday, or in the case of any Employee hired
on or after his sixtieth (60th) birthday, the fifth (5th)
anniversary of his initial participation in the Plan.
Notwithstanding the above, an Employee's Normal Retirement Date
shall be as provided in Section 1.23.
3.2 Retirement at Early Retirement Date. An Employee
having at least ten (10) Years of Accredited Service (including
any Accredited Service to which he is entitled under the pension
plan of any Affiliated Employer from which such Employee was
transferred pursuant to Section 4.6 or 4.7, or which was credited
to him in accordance with Section 4.3) may elect to retire on an
Early Retirement Date on or after his fifty-fifth (55th) birthday
and before his sixty-fifth (65th) birthday and to have his
Retirement Income commence on that date, or effective January 1,
1995, the first day of any month up to and including the
Employee's Normal Retirement Date. For the purposes of this
Section 3.2, Accredited Service shall include Creditable Service
under the Employees' Retirement Plan of Georgia Power and Light
Company [Georgia Power Company, as successor] ("Power and Light
Plan") not to exceed a period equal to the Accredited Service to
which the Employee would have been entitled up to July 1, 1957
had his service with Georgia Power and Light Company prior to
July 1, 1957 been service with the Employer.
3.3 Retirement at Deferred Retirement Date. An Employee
included in the Plan may remain in active service after his
Normal Retirement Date. The involuntary retirement of an
Employee on or after his Normal Retirement Date shall not be
permitted solely on the basis of the Employee's age, except in
accordance with the provisions of the Age Discrimination in
Employment Act, as amended from time to time. Termination of
service of such an Employee for any reason after Normal
Retirement Date shall be deemed retirement as provided in the
Plan.
17
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ARTICLE IV
Determination of Accredited Service
4
4.1 Accredited Service pursuant to Prior Plan. Each
Employee who participated in the Prior Plan shall be credited
with such Accredited Service, if any, earned under such Prior
Plan as of December 31, 1988.
4.2 Accredited Service.
(a) Each Employee meeting the requirements of Article II
shall, in addition to any Accredited Service to which he may be
entitled in accordance with Section 4.1, be credited with
Accredited Service as set forth in (b) below. Any such Employee
who is on authorized leave of absence with regular pay shall be
credited with Accredited Service during the period of such
absence. Any such Employee who is a "participant in the Plan"
within the meaning of that term as defined in paragraph (a) of
Section 5.12 shall be credited with Accredited Service during all
or such portion of the period of his absence to serve in the
Armed Forces of the United States as may be recognized under
paragraph (b) of Section 5.12. Employees on authorized leave of
absence without regular pay, other than Employees deemed to
accrue Hours of Service under Section 4.4, and persons in the
Armed Forces who are not "participants in the Plan" within the
meaning of that term as defined in paragraph (a) of Section 5.12
shall not be credited with Accredited Service for the period of
such absence.
An Employee who is a member of Local Union 84 of I.B.E.W.
who is eligible to be included in the Plan will be credited with
Accredited Service for the period (or portion of the period)
after January 1, 1984, of a leave of absence granted by the
Employer to permit him to carry on union business at the
international office of I.B.E.W., but only if such Employee
elects in writing on or before the beginning of a Plan Year to
receive such credit for Accredited Service for such Plan Year.
For the purposes of determining the Earnings of such Employee
during the period (or portion of the period) after January 1,
1978 of such leave of absence, he shall be deemed to have
received Earnings at the rate of Earnings being paid to him at
the time of his leave of absence for union business commenced,
adjusted from time to time during the period of such leave of
absence for any general wage increase or decrease during such
period applicable to Employees in the category of employment in
which the Employee was employed at the time his leave of absence
commenced.
(b) For each Plan Year commencing after December 31, 1988,
an Employee included in the Plan who is credited with a Vesting
Year of Service for the twelve (12) consecutive month period
18
<PAGE>
ending on the anniversary date of his hire which occurs during
such Plan Year shall be credited with Accredited Service as
follows:
(1) if an Employee completes at least 1,680 Hours of
Service in a Plan Year, he shall be credited with one year
of Accredited Service;
(2) if an Employee completes less than 1,680 Hours of
Service in a Plan Year, but not less than 1,000 Hours of
Service, he shall be credited with one-twelfth (1/12) of a
year of Accredited Service for each 140 Hours of Service; or
(3) if an Employee's initial eligibility in the Plan
shall occur after the beginning of the Plan Year, and the
Employee shall therefore have completed less than 1,000
Hours of Service in such Plan Year, he shall be credited
with one-twelfth (1/12) of a year of Accredited Service for
each 140 Hours of Service during such Plan Year after his
inclusion in the Plan.
Notwithstanding the above, effective January 1, 1995, an
Employee's Accredited Service shall be calculated based on an
Employee's accrual of a Plan Year of Service only and without
regard to the requirement of a Vesting Year of Service.
(c) If an Employee (1) who has previously satisfied the
eligibility requirements under Article II shall again be included
in the Plan at such time which is after the beginning of the Plan
Year, or (2) shall terminate his employment for any reason before
the close of such Plan Year and shall therefore have completed
less than 1,000 Hours of Service in such Plan Year, he shall be
credited with one-twelfth (1/12) of a year of Accredited Service
for each 140 Hours of Service during such Plan Year after his
inclusion in the Plan or before his termination of employment in
such Plan Year, as the case may be.
(d) In addition to any Accredited Service credited under
Section 4.1, an Employee shall be entitled to Accredited Service
determined under the Prior Plan, without regard to the age
requirement for eligibility to participate in the Prior Plan, in
excess of the Accredited Service determined under the Prior Plan
(including the age requirement for eligibility to participate in
the Prior Plan). Such Accredited Service shall be considered
Accredited Service after December 31, 1985 for purposes of
calculating an Employee's Retirement Income under Article V.
(e) In addition to the foregoing, Accredited Service may
include Accredited Service accrued subsequent to a One-year Break
in Service including such Accredited Service which may be
restored in accordance with the provisions of Section 8.3.
19
<PAGE>
(f) Notwithstanding the above, the maximum number of years
of Accredited Service with respect to any Employee participating
in the Plan shall not exceed forty (40). Effective January 1,
1991, the maximum number of years of Accredited Service is
increased to forty-three (43).
4.3 Accredited Service and Years of Service in respect of
service of certain Employees previously employed by the Employer
or by Affiliated Employers. An Employee in the service of the
Employer on January 1, 1976 or employed by it thereafter who
meets the requirements of paragraph (a) of this Section 4.3, in
addition to any other Years of Service or Accredited Service to
which he may be entitled under the Plan, upon completion of an
Eligibility Year of Service where required under Section 8.3(c)
(which shall also be considered to be Accredited Service) shall
be credited with such number of Years of Service (and fractions
thereof to the nearest whole month for service prior to January
1, 1976) and such Accredited Service and Retirement Income as
shall be determined in accordance with the provisions of
paragraphs (b) and (c) of this Section 4.3.
(a) (1) Such Employee shall have been employed prior to
January 1, 1976 by the Employer or by one or more Affiliated
Employers; (2) he shall have terminated his service with Employer
or such Affiliated Employer other than by retirement and he shall
not be entitled to receive at any time any retirement income
under the pension plan of any such prior employer in respect of
any period of time for which he shall receive credit for Years of
Service or Accredited Service under this Section 4.3; and (3) for
Employees reemployed on or after January 1, 1985, the number of
consecutive One-Year Breaks in Service incurred by the Employee
prior to the date of his employment by the Employer does not
equal or exceed the greater of (A) five (5), or (B) the aggregate
number of his Years of Service (and fractions thereof to the
nearest whole month for service prior to January 1, 1976) with
the Employer and such Affiliated Employer. The years of
Accredited Service credited to an Employee reemployed prior to
January 1, 1985, with regard to years of Accredited Service
immediately prior to the termination of his service, shall be
determined under the terms of the Plan in effect prior to January
1, 1985.
(b) The number of Years of Service (and fractions thereof
to the nearest whole month for service prior to January 1, 1976)
and the Accredited Service, respectively, which shall be credited
to such Employee shall be equal to the respective number of his
Years of Service (and fractions thereof to the nearest whole
month for service prior to January 1, 1976) and Accredited
Service which were forfeited by the Employee and not restored
under the pension plans of the Employer or an Affiliated
Employer.
20
<PAGE>
(c) There shall be credited to the Employee Retirement
Income equal to retirement income which was accrued by him under
the pension plan of the Employer or an Affiliated Employer during
the period of his Accredited Service which was forfeited and
which is credited under the Plan in accordance with Section 4.3.
The amount of Retirement Income credited in accordance with this
paragraph (c) shall be treated as Prior Plan Retirement Income
for purposes of determining the amount of Retirement Income to
which the Employee is entitled, and shall be determined in
accordance with the provisions of the pension plan of the
Affiliated Employer in effect at the time the Employee's service
with such Affiliated Employer terminated without regard to any
minimum provisions of such pension plan; for this purpose and if
relevant in respect of the Employee it shall be assumed that the
pension plan of the Affiliated Employer in effect at the time the
Employee's service with such Affiliated Employer terminated
contained the provisions of Section 5.12 of the Plan and related
amendments concerning absence from the service of the Employer to
serve in the Armed Forces of the United States which became
effective November 1, 1977. For Plan Years beginning after
December 31, 1987, an Employee who meets the requirements of
paragraph (a) of this Section 4.3 shall be deemed to have
transferred to or from an Affiliated Employer for purposes of the
transfer of assets or liabilities to or from the Plan in
accordance with Section 4.6.
4.4 Accrual of Retirement Income during period of total
disability.
(a) If an Employee included in the Plan shall become
totally disabled, as determined by the Retirement Board on the
basis of medical evidence, after he has completed at least five
(5) Vesting Years of Service and, by reason of such disability,
he shall apply for and be granted either Social Security
disability benefits or long-term disability benefits under a
long-term disability benefit plan of the Employer, he shall be
considered to be on a leave of absence, herein referred to as a
"Disability Leave." An Employee's Disability Leave shall be
deemed to begin on the initial date of the disability, as
determined by the Retirement Board, and shall continue until the
earlier of: (1) the end of the month in which he shall cease to
be entitled to receive Social Security Disability benefits and
long-term disability benefits under a long-term disability
benefit plan of the Employer; (2) his death; and (3) his
Retirement Date if he elects to have his Retirement Income
commence on such date. During the period of the Employee's
Disability Leave, he shall, for purposes of the Plan, be deemed
to have received Earnings at the regular rate in effect for him.
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(b) A disabled Employee who applies for and would be
granted long-term disability benefits under a long-term
disability benefit plan of the Employer, if it were not for the
fact that the deductions therefrom attributable to other
disability benefits equal or exceed the amount of his unreduced
benefit under a long-term disability benefit plan of the
Employer, will be considered as being currently granted benefits
under such long-term disability benefit plan.
(c) An Employee's Disability Leave shall be deemed to be a
period for which Hours of Service shall be credited to the
Employee as though the period of his Disability Leave were a
period of active employment.
(d) If an Employee's Disability Leave shall terminate prior
to his Normal Retirement Date and he shall fail to return to the
employment of the Employer within sixty (60) days after the
termination of such leave, his service shall be deemed to have
terminated upon the termination of his Disability Leave and his
rights shall be determined in accordance with Article VIII,
unless at such time he shall be entitled to retire on an Early
Retirement Date, in which event his termination of service shall
be deemed to constitute his retirement under Section 3.2.
(e) Notwithstanding the above, the years of Accredited
Service for any Employee whose initial date of disability
occurred under the Prior Plan shall be determined under the terms
of the Prior Plan.
4.5 Employees leaving Employer's service. If the service
of an Employee is terminated prior to retirement as provided by
Article III, such Employee will forfeit any Vesting Years of
Service and Accredited Service which he may have been subject to
possible restoration of some or all of his Vesting Years of
Service and Accredited Service in accordance with Article VIII.
The provisions of this Section 4.5 shall not affect the rights,
if any, of an Employee under Article VIII nor shall the rights of
an Employee be affected during or by reason of a layoff, due to
lack of work, which continues for a period of one year or less,
except that such period of layoff shall not be deemed to be
service with the Employer. If the service of an Employee is
terminated, or if he is not reemployed before the expiration of
one year after being laid off for lack of work, and he is
subsequently reemployed, he will be treated as provided in
Section 2.4.
Forfeitures arising by reason of an Employee's termination
of service for any reason shall not be applied to increase the
benefits any Employee would otherwise receive under the Plan but
shall be used to reduce contributions of the Employer to the
Plan.
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4.6 Transfers to or from Affiliated Employers. This
Section 4.6 shall not apply to the transfer by an Employee to the
Employer from Savannah Electric and Power Company on or after
March 3, 1988. In the case of the transfer of an Employee
(including an Employee included in the Prior Plan who was
transferred in accordance with the Prior Plan) to an Affiliated
Employer which has at the time of transfer a pension plan with
substantially the same terms as this Plan, such Employee, if and
when he commences to receive on or after his Normal Retirement
Date retirement income under such pension plan of the Affiliated
Employer to which transferred, shall receive retirement income
under such pension plan attributable to years of Accredited
Service with the Employer prior to the time of his transfer. If
and when such an Employee commences to receive on an Early
Retirement Date retirement income under such pension plan of the
Affiliated Employer to which transferred, the amount of any
retirement income payable under such pension plan and
attributable to Accredited Service with the Employer prior to
such transfer shall be reduced in accordance with the provisions
of the pension plan relating to retirement income payable at
Early Retirement Date, or if such retirement income shall be
payable in a manner similar to the provisions of Section 8.2 or
Section 8.6, reduced in accordance with the applicable provision.
In the case of the transfer to this Employer (not including
transfers by reason of the split-up as of November 1, 1949) of an
Employee of any Affiliated Employer which has at the time of
transfer a pension plan with substantially the same terms as this
Plan, the Employer will, subject to the provisions of Article IX,
make periodic contributions into this Plan to the extent
necessary to provide the portion of the Retirement Income not
provided for him in the pension plan of the company from which he
was transferred.
Upon the transfer of an Employee to or from the Employer,
the Plan and Trust shall be authorized to receive or transfer the
greater of (a) the actuarial equivalent of the Employee's Accrued
Retirement Income or (b) such assets as may be required to fund
the projected Retirement Income of the Employee at his retirement
date attributable to the Plan or the pension plan maintained by
the Affiliated Employer from which the Employee transfers,
determined as of the last day of the Plan Year in which the
transfer occurs using the current funding assumptions for the
Plan Year in which the transfer occurs. The Retirement Board of
the Employer shall be authorized to coordinate the transfer of
assets and liabilities attributable to the benefits of active
Employees, terminated vested Employees, retired Employees, and
Provisional Payees with any Affiliated Employer which has at such
time a pension plan with substantially the same terms as this
Plan.
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Notwithstanding the above, the transferred Employee shall be
entitled to receive a benefit immediately following the transfer
of assets or liabilities to or from the Plan and Trust which is
equal to or greater than the benefit he would have been entitled
to receive immediately before the transfer if the Plan or the
pension plan maintained by the Affiliated Employer from which the
Employee transfers had been terminated. In no event shall assets
be transferred to or from the Plan and Trust without the
concurrent transfer of liabilities attributable to such assets.
In no case, however, shall any such Employee, who retires
pursuant to Section 3.1, 3.2, or 3.3 or the Provisional Payee of
a deceased Employee entitled to payment in accordance with
Article VII, receive Retirement Income attributable to Accredited
Service from both companies aggregating less than the Minimum
Retirement Income specified in Article V (after giving effect to
adjustments, if any, for Provisional Payee designation or deemed
designation), as shall be applicable in his circumstances.
4.7 Transfers from Savannah Electric and Power Company. In
the case of the transfer to the Employer of an employee of
Savannah Electric and Power Company ("SEPCO"), such Employee, if
and when he attains his Normal Retirement Date or Deferred
Retirement Date, shall be entitled to receive Retirement Income
calculated pursuant to Section 5.1 or 5.2, as appropriate, based
upon his Accredited Service with the Employer and Accredited
Service attributable to actual service during his employment with
SEPCO. Such amount calculated in accordance with the preceding
sentence shall be reduced by the amount of retirement income
calculated under the defined benefit pension plan of SEPCO
attributable to Accredited Service during his actual service
during his employment with SEPCO. Any Retirement Income based
upon an Employee's Accredited Service with the Employer and
Accredited Service attributable to actual service during his
employment with SEPCO shall be subject to the provisions of the
Plan relating to Retirement Income payable at an Early Retirement
Date, or if such Retirement Income shall be payable in accordance
with the provisions of Section 8.2 or 8.6, subject to the
provisions of such Section.
This Section 4.7 shall also apply in calculating the
Retirement Income payable under this Plan to a former employee of
SEPCO who is hired by the Employer and is entitled to credit for
years of Accredited Service under the Plan attributable to his
actual service with SEPCO.
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4.8 Retirement income for certain former employees of
Southern Electric Generating Company. This Section 4.8 shall
apply to those former employees of Southern Electric Generating
Company ("SEGCO") who either (a) retired from SEGCO on their
Early, Normal or Deferred Retirement Date under the Pension Plan
for Employees of Southern Electric Generating Company (the "SEGCO
Plan"), or (b) transferred from SEGCO to Alabama By-Products
Corporation ("ABC") in connection with the acquisition by ABC of
SEGCO's Mine No. 1 operation on or about August 1, 1974, and for
whom this Plan has assumed the liability for the payment of their
retirement income following the transfer of assets and
liabilities from the SEGCO Plan to this Plan. Each such employee
shall be entitled to receive Retirement Income under the Plan
attributable to years of Accredited Service with SEGCO prior to
the time of his retirement or transfer, as appropriate,
calculated and payable in accordance with the terms and
provisions of the SEGCO Plan in effect on the date of such
retirement or transfer, subject to any adjustments provided under
Section 8.6 of this Plan and any increases in Retirement Income
for retired employees under Section 5.11 of this Plan.
Notwithstanding the above, each employee to whom this
Section 4.8 shall apply shall be entitled to receive a benefit
immediately following the transfer of assets or liabilities from
the SEGCO Plan and Trust which is equal to or greater than the
benefit he would have been entitled to receive immediately before
the transfer of assets or liabilities if the SEGCO Plan had been
terminated.
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ARTICLE V
Retirement Income
5
5.1 Normal Retirement Income. The monthly Retirement
Income payable as a single life annuity to an Employee included
in the Plan who retires from the service of the Employer at his
Normal Retirement Date after January 1, 1989, subject to the
limitations of Article VI, shall be the greater of (a) and (b):
(a) the amount determined under (1) or (2) below, whichever
is greater:
(1) the Accrued Retirement Income determined in
accordance with Section 5.1 of the Prior Plan without
regard to the Minimum Retirement Income requirement,
plus the designated fixed dollar amount times the
Employee's years of Accredited Service earned after
December 31, 1988. For the period on and after January
1, 1989 but ending December 31, 1990, the fixed dollar
amount equals $20.00. For the period on and after
January 1, 1991, the fixed dollar amount equals $25.00;
and
(2) $25.00 times an Employee's years of
Accredited Service; and
(b) the Minimum Retirement Income as determined in
accordance with Section 5.2.
5.2 Minimum Retirement Income payable upon retirement at
Normal Retirement Date or Deferred Retirement Date. The monthly
Minimum Retirement Income payable to an Employee who retires from
the service of the Employer after January 1, 1989 at his Normal
Retirement Date or Deferred Retirement Date (before adjustment
for Provisional Payee designation, if any) shall be an amount
equal to 1.70% of his Average Monthly Earnings multiplied by his
years (and fraction of a year) of Accredited Service to his
Normal Retirement Date or Deferred Retirement Date including a
Social Security Offset.
Any provisions of this Article V to the contrary
notwithstanding, Retirement Income determined in accordance with
this Article V with respect to an Employee who retires on his
Normal Retirement Date or Deferred Retirement Date shall not be
less than the Retirement Income which would have been payable
with respect to such Employee commencing on an Early Retirement
Date had (a) the Employee retired on the Early Retirement Date
which would have resulted in the greatest Retirement Income,
(b) his Retirement Income commencing on such Early Retirement
Date been computed by utilizing the estimated Federal primary
Social Security benefit to which the Employee shall be entitled
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determined in accordance with the Social Security Act in effect
at his retirement, giving effect to the recomputation provision
of such Social Security Act, if applicable, and (c) such
Retirement Income commencing on such Early Retirement Date been
payable in the same form as his Retirement Income commencing on
his Normal Retirement Date or Deferred Retirement Date.
5.3 Minimum Retirement Income upon retirement at Early
Retirement Date or upon termination of service by reason of death
or otherwise prior to retirement. The monthly Minimum Retirement
Income payable to an Employee (or his Provisional Payee), if he
shall retire on his Early Retirement Date, or if his service
shall terminate by reason of death or otherwise prior to
retirement, shall be determined in accordance with the following
provisions:
(a) Upon retirement at Early Retirement Date his Minimum
Retirement Income (before adjustment for Provisional Payee
designation, if any) shall be an amount equal to 1.70% of his
Average Monthly Earnings multiplied by his years (and fraction of
a year) of Accredited Service to his Early Retirement Date
including a Social Security Offset.
(b) Upon termination of service by reason of the death of
the Employee prior to retirement and after the effective date of
his Provisional Payee designation or deemed designation, the
Minimum Retirement Income for the purpose of determining the
Employee's Accrued Retirement Income upon which payment to his
Provisional Payee in accordance with Section 7.4 shall be based
shall be an amount equal to 1.70% of the Employee's Average
Monthly Earnings multiplied by his years (and fraction of a year)
of Accredited Service to the date of his death including a Social
Security Offset.
(c) For an Employee who terminates his service with the
Employer with entitlement to receive Retirement Income in
accordance with Section 8.1, upon retirement at Early Retirement
Date or Normal Retirement Date his Minimum Retirement Income
(before adjustment for Provisional Payee designation, if any)
shall be an amount equal to 1.70% of his Average Monthly Earnings
multiplied by his years (and fraction of a year) of Accredited
Service to his date of termination including a Social Security
Offset.
(d) Upon termination of service by reason of disability (as
defined in Section 4.4) of the Employee prior to retirement,
provided such Employee does not return to the service of the
Employer prior to his Retirement Date, the Minimum Retirement
Income shall be an amount equal to 1.70% of the Employee's
Average Monthly Earnings multiplied by his years (and fraction of
a year) of Accredited Service to his Retirement Date including a
Social Security Offset.
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<PAGE>
5.4 Calculation of Social Security Offset.
(a) Notwithstanding the Social Security Offset as
calculated in Sections 5.2 and 5.3, in no event shall such Social
Security Offset exceed the limits set forth in Section 401(l) of
the Code and the regulations applicable thereunder which are
incorporated by reference herein.
(b) For purposes of determining the Social Security Offset
in calculating an Employee's Retirement Income under the Plan,
the Social Security Offset shall be determined by using the
actual salary history of the Employee during his employment with
the Employer or any Affiliated Employer, provided that in the
event that the Retirement Board is unable to secure such actual
salary history within 180 days (or such longer period as may be
prescribed by the Retirement Board) following the later of the
date of the Employee's separation from service (by retirement or
otherwise) and the time when the Employee is notified of the
Retirement Income to which he is entitled, the salary history
shall be determined in the following manner:
(1) The salary history shall be estimated by applying
a salary scale, projected backwards, to the Employee's
compensation from the Employer for W-2 purposes for the
first Plan Year following the most recent Plan Year for
which the salary history is estimated. The salary scale
shall be a level percentage per year equal to six percent
(6%) per annum.
(2) The Plan shall give clear written notice to each
Employee of the Employee's right to supply the actual salary
history and of the financial consequences of failing to
supply such history. Such notice shall state that the
actual salary history is available from the Social Security
Administration.
For purposes of determining the Social Security Offset in
calculating the Retirement Income of an Employee entitled to
receive a public pension based on his employment with a Federal,
state, or local government agency, no reduction in such
Employee's Social Security benefit resulting from the receipt of
a public pension shall be recognized.
(c) If the distribution of an Employee's Accrued Retirement
Income begins before the Employee's attainment of the Social
Security Retirement Age (including a benefit commencing at Normal
Retirement Date), the projected Employer derived primary
insurance amount attributable to service by the Employee for the
Employer will be reduced by one-fifteenth (1/15) for each of the
first five (5) years and one-thirtieth (1/30) for each of the
next five (5) years by which the starting date of such benefit
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precedes the Social Security Retirement Age of the Employee, and
reduced actuarially for each additional year thereafter.
5.5 Early Retirement Income. The monthly amount of
Retirement Income payable to an Employee who retires from the
service of the Employer at his Early Retirement Date subject to
the limitations of Section 6.2, will be equal to his Retirement
Income determined in accordance with Sections 5.1 and 5.3 based
on his Accredited Service to his Early Retirement Date, reduced
by three-tenths of one percent (0.3%) for each calendar month by
which the commencement date of his Retirement Income precedes his
Normal Retirement Date.
At the option of the Employee exercised at or prior to
commencement of his Retirement Income on or after his Early
Retirement Date (provided he shall not have in effect at such
Early Retirement Date a Provisional Payee designation pursuant to
Article VII) he may have his Retirement Income adjusted upwards
in an amount which will make his Retirement Income payable up to
age sixty-five (65) equal, as nearly as may be, to the amount of
his Federal primary Social Security benefit (primary old age
insurance benefit) estimated to become payable after age
sixty-five (65), as computed at the time of his retirement in
accordance with Section 5.3(a), plus a reduced amount, if any, of
Retirement Income actually determined to be payable after age
sixty-five (65). The Federal primary Social Security benefit
used in calculating an Employee's Retirement Income payable under
the Plan shall be determined by using the salary history of the
Employee during his employment with the Employer or any
Affiliated Employer, as calculated in accordance with Section
5.4(b).
5.6 Deferred Retirement Income. The monthly amount of
Retirement Income payable to an Employee who completes at least
one Hour of Service after December 31, 1987 and who retires from
the service of the Employer at his Deferred Retirement Date,
subject to the limitations of Section 6.2, will be equal to his
Retirement Income determined in accordance with Sections 5.1 and
5.2 based on his Accredited Service to his Deferred Retirement
Date. For Employees whose Normal Retirement Date would have
occurred on or before January 1, 1986, but whose Deferred
Retirement Date occurs after January 1, 1988 and on or before
July 1, 1991, the monthly amount of Retirement Income payable to
an Employee who completes at least one Hour of Service after
December 31, 1987, subject to the limitations of Section 6.2,
will be equal to the greater of (a) his Retirement Income
calculated on his Deferred Retirement Date, or (b) his Retirement
Income calculated as of his Normal Retirement Date applying the
applicable percentage increase in his Retirement Income pursuant
to the terms of Section 5.13 of the Prior Plan.
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<PAGE>
5.7 Payment of Retirement Income. The first payment of an
Employee's Retirement Income will be made on his Early Retirement
Date, Normal Retirement Date, Deferred Retirement Date, or date
of commencement of payment of Retirement Income in accordance
with Section 8.2 or 8.6, as the case may be; provided that
commencement of the distribution of an Employee's Retirement
Income shall not be made prior to his Normal Retirement Date
without the consent of such Employee, except as provided in
Section 8.4 of the Plan.
Notwithstanding anything to the contrary above, if in
accordance with this Section 5.7, an Employee is entitled to
receive Retirement Income commencing at his Early Retirement
Date, he may, in lieu of commencing payment of his Retirement
Income upon his Early Retirement Date, elect to receive such
Retirement Income commencing as of the first day of any month
after his Early Retirement Date and preceding his Normal
Retirement Date in an amount equal to his Accrued Retirement
Income determined as of the commencement of his Retirement Income
on or after his Early Retirement Date determined in accordance
with Section 5.5. An election pursuant to this Section 5.7 to
have Retirement Income commence prior to Normal Retirement Date
shall be made on a form prescribed by the Retirement Board and
shall be filed with the Retirement Board at least thirty (30)
days before Retirement Income is to commence.
In the event of the death of an Employee who has designated
a Provisional Payee or is deemed to have done so in accordance
with Article VII, if the designation has become effective, the
first payment to be made to the Provisional Payee pursuant to
Article VII shall be made to the Provisional Payee on the first
day of the month after the later of (a) the Employee's death and
(b) the date on which the Employee would have attained his fifty-
fifth (55th) birthday if he had survived to such date, if the
Provisional Payee shall then be alive and proof of the Employee's
death satisfactory to the Retirement Board shall have been
received by it. Subsequent payments will be made monthly
thereafter until the death of such Provisional Payee.
In any event, payment of Retirement Income to the Employee
shall begin not later than the sixtieth (60th) day after the
later of the close of the Plan Year in which falls (a) the
Employee's Normal Retirement Date or (b) the date the Employee
terminates his service with the Employer or any Affiliated
Employer. Notwithstanding the provisions of the Plan for the
monthly payment of Retirement Income, such income may be adjusted
and payable annually in arrears if the amount of the Retirement
Income is less than $10.00 per month.
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5.8 Termination of Retirement Income. The monthly payment
of Retirement Income will cease with the last payment preceding
the retired Employee's death; subject, however, to the
continuation of payments to a surviving Provisional Payee, if one
has been designated or deemed to have been designated, which
likewise will cease with the last payment preceding the death of
the Provisional Payee. There shall be no benefits payable under
the Plan on behalf of any Employee whose death occurs prior to
his retirement, except as otherwise provided in Article VII with
respect to a Provisional Payee of an Employee. Following the
death of an Employee and of his Provisional Payee, if any, no
further payments will be made under the Plan on account of such
Employee or to his estate.
5.9 Required distributions.
(a) Once a written claim for benefits is filed with the
Retirement Board and unless the Employee elects to have payment
begin at a later date, payment of benefits to the Employee shall
begin not later than sixty (60) days after the last day of the
Plan Year in which the latest of the following events occurs:
(1) the Employee's Normal Retirement Date;
(2) the tenth (10th) anniversary of the date the
Employee commenced participation in the Plan; or
(3) the Employee's separation from service from the
Employer or any Affiliated Employer.
(b) Required minimum distributions on and after January 1,
1989
(1) Subject to the transitional rules described in
Paragraph (c) below, effective for calendar years beginning
after December 31, 1988, the payment of Retirement Income to
any Employee shall begin no later than April 1 of the
calendar year following the calendar year in which the
Employee attains age 70-1/2, without regard to the actual
date of separation from service. The amount of his
Retirement Income shall be recomputed as of such April 1 and
as of the close of each Plan Year after his Retirement
Income commences and preceding his actual retirement date as
if each such date were the Employee's Deferred Retirement
Date. Any additional Retirement Income he accrues at the
close of any such Plan Year shall be offset (but not below
zero) by the value of the benefit payments received in such
Plan Year.
(2) The receipt by an Employee of any payments or
distributions as a result of his attaining age 70-1/2 prior
to his actual retirement or death shall in no way affect the
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entitlement of an otherwise eligible Employee to additional
accrued benefits.
(c) Age 70-1/2 transitional rule
Any Employee who is not a five-percent owner and who has
attained age 70-1/2 by January 1, 1988, may defer the
commencement of benefit payments under paragraph (b) above until
he actually separates from service with the Employer. This
transitional rule shall only apply if the Employee is not a five-
percent owner at any time during the Plan Year ending with or
within the calendar year in which such owner attains age 66-1/2
and in any subsequent Plan Year.
(d) Distribution upon death of Employee
(1) Death after commencement of benefits
If the Employee dies before his entire nonforfeitable
interest has been distributed to him, the remaining portion
of such interest shall be distributed at least as rapidly as
under the method of distribution selected by the Employee as
of the date of his death.
(2) Death prior to commencement of benefits
If the Employee dies before the distribution of his
nonforfeitable interest has begun, the entire interest shall
be distributed monthly to his Provisional Payee, if any,
over such Provisional Payee's remaining lifetime.
(e) Determining required minimum distributions
Notwithstanding anything in this Plan to the contrary, all
distributions, including the minimum amounts which must be
distributed each calendar year, under this Plan shall be made in
accordance with Code Section 401(a)(9) and the regulations
thereunder.
(f) Minimum distribution transitional rules
Any distribution made pursuant to Section 242(b)(2) of the
Tax Equity and Fiscal Responsibility Act of 1982 shall meet the
requirements of Code Section 401(a)(9) as in effect on December
31, 1983, and shall also satisfy Code Sections 401(a)(11) and
417.
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5.10 Suspension of Retirement Income for reemployment.
(a) If a former Employee who is receiving Retirement Income
shall be reemployed by the Employer or any Affiliated Employer as
an Employee and shall not elect to waive his right to participate
under the Plan or the pension plan of the Affiliated Employer,
whichever applies, his Retirement Income shall cease during each
calendar month after his reemployment in which he completes forty
(40) or more Hours of Service. The Retirement Income payable
upon his subsequent retirement shall be reduced by the Actuarial
Equivalent of any Retirement Income he received prior to his
reemployment.
(b) No payment shall be withheld by the Plan pursuant to
this Section 5.10 unless the Plan notifies the Employee by
personal delivery or first class mail during the first calendar
month in which the Plan withholds payments that his Retirement
Income is suspended.
(c) If the payment of Retirement Income has been suspended,
payments shall resume no later than the first day of the third
calendar month after the calendar month in which the Employee
ceases to be employed in ERISA Section 203(a)(3)(B) service. The
initial payment upon resumption shall include the payment
scheduled to occur in the calendar month when payments resume and
any amounts withheld during the period between the cessation of
ERISA Section 203(a)(3)(B) service and the resumption of
payments.
5.11 Increase in Retirement Income of retired Employees for
service prior to January 1, 1991. Retirement Income payable on
and after January 1, 1991 to an Employee (or to the Provisional
Payee of an Employee) who retired at an Early Retirement Date or
at his Normal Retirement Date on or before January 1, 1991
pursuant to the Plan as in effect prior to January 1, 1991, will
be recalculated to increase the amount thereof by an amount
ranging from a minimum of two percent (2%) to a maximum of forty
percent (40%) in accordance with the following schedule:
Year in which Percentage
retirement occurred increase
1990 2%
1989 4%
1988 6%
1987 8%
1976 - 1986 10%
1971 - 1975 20%
1966 - 1970 30%
1965 and prior years 40%
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A similar adjustment, based on the date of the commencement
of Retirement Income payments to the Employee's Provisional
Payee, rather than the Employee's Retirement Date, will be made
in respect of Retirement Income which is payable on or after
January 1, 1991 where a Provisional Payee election was in effect,
or was deemed to be in effect, when an Employee died while in
service prior to January 1, 1991 and prior to his retirement.
A similar adjustment will be made in respect of Retirement
Income which is payable on or after January 1, 1991 for an
Employee (or the Provisional Payee of an Employee) entitled to
Retirement Income for which payments have commenced on or before
January 1, 1991 in accordance with Article VIII of the Prior
Plan, except for Employees whose Retirement Income has been
cashed-out pursuant to Section 8.4 of this Plan or Section 8.5 of
the Prior Plan.
For purposes of determining the applicable percentage
increase under this Section 5.11, the year of retirement includes
retirement where the last day of employment was December 31 of
such year. An Employee whose Deferred Retirement Date is on or
before January 1, 1988 and who did not retire at his Normal
Retirement Date shall be deemed to have retired at his Normal
Retirement Date for purposes of determining the increase in his
Retirement Income payable at his Deferred Retirement Date.
This Section 5.11 shall not apply with respect to an
Employee who has not retired, but for whom the distribution of
Retirement Income has commenced pursuant to Section 5.9 of the
Plan.
5.12 Special provisions relating to the treatment of
absence of an Employee from the service of the Employer to serve
in the Armed Forces of the United States.
(a) Effective as of November 1, 1977, any provisions of the
Plan to the contrary notwithstanding, the provisions of this
Section 5.12 shall be applicable to determine the period of
absence from the service of the Employer to serve in the Armed
Forces of the United States of a "participant in the Plan" (as
such term is defined in this paragraph (a)):
The term "participant in the Plan" means a person who on or
after November 1, 1977 is either: (1) an Employee who is then or
thereafter in the service of the Employer (including an Employee
on authorized leave of absence), (2) a retired Employee who is
receiving Retirement Income, (3) a deceased Employee who received
Retirement Income under this Plan or the Prior Plan at any time
after its Effective Date, (4) a deceased former Employee who
prior to the time of his death was receiving Retirement Income in
accordance with this Plan or the Prior Plan, (5) a former
Employee whose service terminated prior to January 1, 1976 and
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who is receiving Retirement Income in accordance with the Prior
Plan, (6) a former Employee whose service terminated prior to
November 1, 1977 and who will be entitled to receive Retirement
Income commencing after that date in accordance with this Plan or
the Prior Plan, or (7) a former Employee who was transferred from
the Employer pursuant to Section 4.6 or pursuant to the Prior
Plan and who will be entitled to receive in accordance with
either, Retirement Income commencing after November 1, 1977.
The Employee or former Employee or retired Employee referred
to in this paragraph (a) is one who: (1) left the employment of
the Employer or of Georgia Power and Light Company to enter the
Armed Forces of the United States (including reserve components
thereof, the Public Health Service, and the National Guard) for
the purposes and under circumstances which are specified in the
reemployment provisions of the Military Selective Service Act and
in any amendments or supplements thereto hereinafter in this
Section 5.12 referred to as the "Selective Service Act," (2) made
application for reemployment by the Employer or by Georgia Power
and Light Company within such time after discharge or release
from such service in the Armed Forces of the United States as is
specified in the reemployment provisions of the Selective Service
Act as is applicable in his circumstances and was reemployed by
the Employer or by Georgia Power and Light Company thereafter
became an Employee of the Employer on March 1, 1957, (3) served a
period of active duty in the Armed Forces of the United States
which did not exceed the maximum period of such active duty
specified in the reemployment provisions of the Selective Service
Act as is applicable in his circumstances, and (4) performed such
service in the Armed Forces after May 1, 1940.
(b) For the purposes of the Plan, the period of absence of
a participant in the Plan to serve in the Armed Forces of the
United States shall be the period determined by the Retirement
Board.
(c) In accordance with the provisions of the Plan as
amended effective as of November 1, 1977 by the addition of this
Section 5.12 and the concurrent amendments associated therewith,
there shall be recalculated effective as of November 1, 1977 the
Retirement Income (1) of each participant in the Plan or that of
his Provisional Payee, if any, who is then receiving Retirement
Income; and (2) of each deceased participant in the Plan and his
deceased Provisional Payee, if any, who received payment of
Retirement Income, who is not then receiving Retirement Income.
(1) If in accordance with such recalculation, a larger
amount of Retirement Income would have been payable to a
participant in the Plan who is currently receiving payment
of Retirement Income and/or to his Provisional Payee, if
any, than was paid to them respectively prior to November 1,
1977, payment in a single sum of the excess of the
35
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recalculated amount over the amounts which were paid prior
to November 1, 1977 with interest thereon as hereinafter
provided, shall be made as soon as practicable after
November 1, 1977 and, commencing as soon as practicable
after November 1, 1977, the Retirement Income payable to
participants in the Plan and/or to their Provisional Payees,
if any, who are currently receiving Retirement Income shall
be increased to an amount which is equal to the larger
recalculated amount to which they shall be entitled in
respect of payments to be made on or after November 1, 1977.
(2) If in accordance with the recalculation a larger
amount of Retirement Income would have been payable to the
date of death prior to November 1, 1977 of a deceased
retired Employee or his Provisional Payee than was paid
prior to his death, payment in a single sum of the excess of
the recalculated amount over the amount which was paid prior
to the date of death, with interest thereon as hereinafter
provided, shall be made to his estate as soon as practicable
after November 1, 1977.
(3) For the purposes of the recalculation to be made
in accordance with this paragraph (c), if a participant in
the Plan left the employment of an Affiliated Employer to
enter the Armed Forces of the United States and was not
reemployed by such Affiliated Employer upon his discharge or
release from service in the Armed Forces but he entered the
employment of the Employer, without intermediate employment,
and within the time prescribed in paragraph (a) of this
Section 5.12, and his period of absence in the Armed Forces
of the United States, as determined by the Retirement Board,
is not taken into account under the pension plan of the
Affiliated Employer whose service he left to enter the Armed
Forces or under Section 4.3, it shall be treated under the
Plan and the Prior Plan as if such period of absence had
been a period of absence from the Employer.
(d) Retirement Income of participants in the Plan who are
not referred to in subparagraphs (1) or (2) of paragraph (c) and
who are not on November 1, 1977 receiving Retirement Income shall
be determined in accordance with the provisions of the Plan as
amended by the addition of this Section 5.12 and the concurrent
amendments associated therewith.
(e) Interest to be paid on any single sum payment to be
made in accordance with subparagraphs (1) or (2) of paragraph (c)
of this Section 5.12 shall be computed at the annual rate of five
percent (5%).
(f) Payment to be made to any payee in accordance with this
Section 5.12 may be conditioned by the Retirement Board upon its
receipt of (1) such information pertaining to absence of an
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Employee or former Employee to serve in the Armed Forces of the
United States as it may request and (2) such form of receipt and
release as it may determine to be appropriate in the
circumstances.
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ARTICLE VI
Limitations on Benefits
6
6.1 Maximum Retirement Income. Notwithstanding any other
provision of the Plan, the amount of Retirement Income shall be
subject to the provisions of Article VI.
(a) The maximum annual amount of Retirement Income payable
with respect to an Employee in the form of a straight life
annuity without any ancillary benefits after any adjustment for a
Provisional Payee designation shall be the lesser of the dollar
limitation determined under Code Section 415(b)(1)(A) as adjusted
under Code Section 415(d), or Code Section 415(b)(1)(B) as
adjusted under Treasury Regulation Section 1.415-5, subject to
the following provisions of Article VI. With respect to any
former Employee who has Accrued Retirement Income under the Plan
or his Provisional Payee, the maximum annual amount shall also be
subject to the adjustment under Code Section 415(d).
(b) For purposes of Section 6.1, the term "average
compensation for his high three (3) years" shall mean the period
of consecutive calendar years (not more than three) during which
the Employee was both an active participant in the Plan and had
the greatest aggregate compensation from the Employer or, if he
is also entitled to receive a pension from a defined benefit plan
of an Affiliated Employer or if assets and liabilities
attributable to the pension of the Employee from a defined
benefit plan of an Affiliated Employer have been transferred to
this Plan, the greatest aggregate compensation from the Employer
and the Affiliated Employer during such high three (3) years.
The limitation described in Section 6.1(a) shall also apply in
the case of the payment of an Employee's Retirement Income with a
Provisional Payee designation.
(c) For purposes of Article VI, the term "compensation"
means an Employee's earned income, wages, salaries, and fees for
professional services, and other amounts received for personal
services actually rendered in the course of employment with the
Employer maintaining the Plan (including, but not limited to,
commissions paid salesmen, compensation for services on the basis
of a percentage of profits, commissions on insurance premiums,
tips and bonuses), and excluding the following:
(1) Employer contributions to a plan of deferred
compensation which are not included in the Employee's gross
income for the taxable year in which contributed or Employer
contributions under a simplified employee pension plan to
the extent such contributions are deductible by the
Employee, or any distributions from a plan of deferred
compensation;
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(2) Amounts realized from the exercise of a
nonqualified stock option, or when restricted stock (or
property) held by the Employee either becomes freely
transferable or is no longer subject to a substantial risk
of forfeiture;
(3) Amounts realized from the sale, exchange, or other
disposition of stock acquired under a qualified stock
option; and
(4) Other amounts which received special tax benefits,
or contributions made by the Employer (whether or not under
a salary reduction agreement) towards the purchase of an
annuity described in Section 403(b) of the Code (whether or
not the amounts are actually excludable from the gross
income of the Employee).
Compensation for any Limitation Year is the compensation actually
paid or includible in gross income during such year.
(d) The foregoing limitations regarding the maximum
Retirement Income shall not apply with respect to an Employee if
the Retirement Income payable under the Plan and under any other
defined benefit plans of the Employer or any Affiliated Employer
does not exceed $10,000 for the calendar year or for any prior
calendar year, and the Employer and any Affiliated Employer has
not at any time maintained a defined contribution plan in which
the Employee has participated. The terms "defined benefit plan"
and "defined contribution plan" shall have the meanings set forth
in Section 415(k) of the Code.
6.2 Adjustment to Defined Benefit Dollar Limitation for
Early or Deferred Retirement.
(a) If the retirement benefit of an Employee commences
before the Employee's Social Security Retirement Age, the Defined
Benefit Dollar Limitation shall be reduced in accordance with
Code Section 415(b)(2)(C) as prescribed by the Secretary of the
Treasury. The reduction shall be made in such manner as the
Secretary of the Treasury may prescribe which is consistent with
the reduction for old-age insurance benefits commencing before
the Social Security Retirement Age under the Social Security Act.
(b) If the retirement benefit of an Employee commences
after the Employee's Social Security Retirement Age, the Defined
Benefit Dollar Limitation shall be adjusted in accordance with
Code Section 415(b)(2)(D) as prescribed by the Secretary of the
Treasury, based on the lesser of the interest rate assumption
under the Plan or on an assumption of five percent (5%) per year.
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6.3 Adjustment of limitation for Years of Service or
participation.
(a) If an Employee has completed less than ten (10) years
of participation, the Employee's accrued benefit shall not exceed
the Defined Benefit Dollar Limitation as adjusted by multiplying
such amount by a fraction, the numerator of which is the
Employee's number of years (or part thereof) of participation in
the Plan, and the denominator of which is ten (10).
(b) If an Employee has completed less than ten (10) Years
of Service with the Employer and any Affiliated Employer, the
limitations described in Sections 415(b)(1)(B), 415(b)(4), and
415(e) of the Code shall be adjusted by multiplying such amounts
by a fraction, the numerator of which is the Employee's number of
years of service (or part thereof), and the denominator of which
is ten (10).
(c) In no event shall Sections 6.3(a) and (b) reduce the
limitations provided under Sections 415(b)(1), 415(b)(4), and
415(e) of the Code to an amount less than one-tenth (1/10) of the
applicable limitation (as determined without regard to this
Section 6.3).
(d) This Section 6.3 shall be applied separately with
respect to each change in the benefit structure of the Plan,
except as is or may be limited by Revenue Procedure 92-42.
6.4 Preservation of Accrued Retirement Income.
(a) Retirement Income payable to an Employee or former
Employee who was an active participant in the Plan before
October 3, 1973 will not be deemed to exceed the amount of
maximum Retirement Income limitations imposed by the provisions
of this Article VI if:
(1) The annual amount of Retirement Income payable to
such Employee on retirement does not exceed 100% of his
annual rate of compensation on the earlier of (A) October 2,
1973, or (B) the date on which he separated from the service
of the Employer;
(2) Such annual Retirement Income is not greater than
the annual amount of Retirement Income which would have been
payable to such Employee on retirement if (A) all terms and
conditions of the Plan in existence on his retirement date
had remained in existence until his retirement and (B) his
compensation taken into account for any period after
October 2, 1973 had not exceeded his annual rate of
compensation on October 2, 1973; and
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(3) In the case of an Employee whose service with the
Employer terminated prior to October 2, 1973, such annual
Retirement Income is no greater than his vested Accrued
Retirement Income as of the date of such termination of
service.
(b) In the case of an Employee who is a participant in the
Plan prior to January 1, 1983, if the Section 415 requirements
have been met for all Plan Years prior to 1983, then the Defined
Benefit Dollar Limitation described in Section 1.10 applicable to
the payment of such Employee's Retirement Income shall be equal
to his Accrued Retirement Income as of December 31, 1982, (when
expressed as an annual benefit within the meaning of Section
415(b)(2) of the Code, as in effect prior to the Tax Equity and
Fiscal Responsibility Act of 1982), if his Accrued Retirement
Income exceeds such Defined Benefit Dollar Limitation.
(c) This Section 6.4(c) shall apply to defined benefit
plans that were in existence on May 6, 1986, and that met the
applicable requirements of Section 415 of the Code as in effect
for all Limitation Years. If the Current Accrued Retirement
Income of an Employee as of the first day of the Limitation Year
beginning on or after January 1, 1987, exceeds the benefit
limitations under Section 415(b) of the Code (as modified by
Sections 6.2 and 6.3 of the Plan), then, for purposes of Code
Section 415(b) and (e), the Defined Benefit Dollar Limitation
with respect to such Employee shall be equal to such Current
Accrued Retirement Income.
6.5 Limitation on benefits from multiple plans.
(a) In the case of an Employee who is also a participant in
any other defined benefit plan of the Employer or any Affiliated
Employer or in any defined contribution plan of the Employer or
any Affiliated Employer, the Retirement Income provided by the
Plan shall be limited to the extent necessary to prevent the sum
of Fractions A and B below, computed as of the end of the Plan
Year, from exceeding 1.0.
Fraction A
(numerator) Projected annual benefit of the Employee
under the Plan and any other defined benefit plan of
the Employer or any Affiliated Employer (determined as
of the close of the Plan Year).
(denominator) The lesser of (1) the product of 1.25
multiplied by the Defined Benefit Dollar Limitation (or
such higher accrued benefit as of December 31, 1982),
or (2) 1.4 multiplied by the amount determined under
Code Section 415(b)(1)(B) as adjusted under Treasury
Regulation Section 1.415-5.
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<PAGE>
Fraction B
(numerator) The sum of all Annual Additions to the
account of the Employee under any defined contribution
plan of the Employer or any Affiliated Employer as of
the close of the Plan Year.
(denominator) The sum of the lesser of the following
amounts, determined for such Plan Year and for each
prior Plan Year in which the Employee has a Year of
Service, (1) 1.25 multiplied by the Defined
Contribution Dollar Limitation determined under Code
Section 415(c)(1)(A), or (2) 1.4 multiplied by
twenty-five percent (25%) of the Employee's
compensation for the year.
6.6 Special rules for plans subject to overall limitations
under Code Section 415(e).
(a) For purposes of computing the defined contribution plan
fraction of Section 415(e)(1) of the Code, "Annual Addition"
shall mean the amount allocated to an Employee's account during
the Limitation Year as a result of:
(1) employer contributions,
(2) employee contributions,
(3) forfeitures, and
(4) amounts described in Sections 415(1)(1) and
419(A)(d)(2) of the Code.
(b) The Annual Addition for any Limitation Year beginning
before January 1, 1987 shall not be recomputed to treat all
Employee contributions as an Annual Addition.
(c) If the sum of Fractions A and B exceeds 1.0 as of
December 31, 1982, the numerator of Fraction B shall be reduced
by an amount which does not exceed the numerator, so that the sum
of Fraction A and Fraction B does not exceed 1.0.
(d) If the Plan satisfied the applicable requirements of
Section 415 of the Code as in effect for all Limitation Years
beginning before January 1, 1987, an amount shall be subtracted
from the numerator of the defined contribution plan fraction (not
exceeding such numerator) as prescribed by the Secretary of the
Treasury so that the sum of the defined benefit plan fraction and
defined contribution plan fraction computed under Section
415(e)(1) of the Code (as revised by this Article VI) does not
exceed 1.0 for such Limitation Year.
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(e) The defined contribution plans and the other defined
benefit plans of the Employer and Affiliated Employers include,
respectively, (1) The Southern Company Employee Savings Plan, The
Southern Company Employee Stock Ownership Plan, and any other
defined contribution plan (as defined in Section 415(k) of the
Code) and (2) any other qualified pension plan in which the
Employee participates in accruing benefits maintained by the
Employer or any Affiliated Employer.
6.7 Combination of Plans. Notwithstanding any provisions
contained herein to the contrary, in the event that an Employee
participates in a defined contribution plan or defined benefit
plan required to be aggregated with this Plan under Code Section
415(g) and the combined benefits with respect to an Employee
exceed the limitations contained in Code Section 415(e),
corrective adjustments shall first be made under this Plan.
However, if an Employee's Retirement Income under this Plan has
already commenced, corrections shall first be made under The
Southern Company Employee Stock Ownership Plan, if possible, and
if not possible, then correction shall be made to the Employee's
Accrued Retirement Income under this Plan.
6.8 Incorporation of Code Section 415. Notwithstanding
anything contained in this Article to the contrary, the
limitations, adjustments and other requirements prescribed in
this Article shall at all times comply with the provisions of
Code Section 415 and the regulations thereunder, the terms of
which are specifically incorporated herein by reference.
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ARTICLE VII
Provisional Payee
7
7.1 Adjustment of Retirement Income to provide for payment
to Provisional Payee. An Employee who desires to have his
Accrued Retirement Income adjusted in accordance with the
provisions of this Article VII to provide a reduced amount of
Retirement Income payable to him for his lifetime commencing on
his Early Retirement Date, his Normal Retirement Date, or his
Deferred Retirement Date, as the case may be, may elect, in
accordance with the provisions of this Article VII, at his
option, either:
(a) that an amount of Retirement Income be payable to him
for his lifetime which is equal to eighty percent (80%) of the
Retirement Income which would otherwise be payable to him, but
for such election (taking into account any reduction required in
accordance with Sections 7.3 and 7.4(a)), with the provision that
the same amount will be continued after his death to his
Provisional Payee until the death of such Provisional Payee, or
(b) that an amount of Retirement Income be payable to him
for his lifetime which is equal to ninety percent (90%) of the
Retirement Income which would otherwise be payable to him, but
for such election (taking into account any reduction required in
accordance with Sections 7.3 and 7.4(a)), with the provision that
one-half (1/2) of the amount payable to the Employee will be
continued after his death to his Provisional Payee until the
death of such Provisional Payee.
7.2 Form and time of election and notice requirements.
(a) An election of payment and designation of a Provisional
Payee in accordance with Section 7.1 shall be made in writing at
the same time on a form prescribed by the Retirement Board and
delivered to it. The election and designation shall specify its
effective date which shall not be sooner than the date received
by the Retirement Board or the Employee's fifty-fifth (55th)
birthday, whichever is later, nor later than the date of
commencement of payments in accordance with this Article VII.
(b) An election of payment to be made in accordance with
paragraph (a) or paragraph (b) of Section 7.1 may be changed from
paragraph (a) to paragraph (b) or vice versa by an Employee,
provided the written election of the change specifies an
effective date which shall not be sooner than the date received
by the Retirement Board or the Employee's fifty-fifth (55th)
birthday, whichever is later, nor later than the date of
commencement of payments in accordance with this Article VII. To
the extent that the new method of payment shall afford the
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Employee changed protection in the event of his death after the
effective date of the new election and prior to retirement, his
Accrued Retirement Income shall be adjusted pursuant to Section
7.4(a) to reflect such changed protection.
(c) With respect to Sections 7.5 and 7.6, within the period
not less than 30 days and not more than 90 days prior to the
commencement of benefits, the Employee shall be furnished, by
mail or personal delivery, a written explanation of: (1) the
terms and conditions of the reduced Retirement Income payable as
provided in paragraph (b) of Section 7.1; (2) the Employee's
right to make, and the effect of, an election to waive the
payment of reduced Retirement Income pursuant to a Provisional
Payee designation; (3) the rights of the Employee's Provisional
Payee; and (4) the right to make, and the effect of, a revocation
of a previous election to waive the payment of reduced Retirement
Income pursuant to a Provisional Payee designation.
Within thirty (30) days following an Employee's written
request received by the Retirement Board during the election
period, but within sixty (60) days from the date the Employee is
furnished all of the information prescribed in the immediately
preceding sentence, the Employee shall be furnished an additional
written explanation, in terms of dollar amounts, of the financial
effect of an election by him not to receive such reduced
Retirement Income. If an Employee makes such request, the
election period herein prescribed shall end not earlier than
sixty (60) calendar days following the day of the mailing or
personal delivery of the additional explanation to the Employee.
Except that if an election made as provided in Section 7.5 or 7.6
is revoked, another election under that Section may be made
during the specified election period.
7.3 Circumstances in which election and designation are
inoperative. An election and designation made pursuant to this
Article shall be inoperative and the regular provisions of the
Plan shall again become applicable as if a Provisional Payee had
not been designated if, prior to the commencement of any payment
in accordance with this Article VII: (a) an Employee's
Provisional Payee shall die, (b) the Employee and the Provisional
Payee shall be divorced under a final decree of divorce, or
(c) the Retirement Board shall have received the written
Qualified Election of the Employee to rescind his election of
payment and designation of a Provisional Payee. If such a
Qualified Election to rescind is made by the Employee, his
Accrued Retirement Income shall be reduced to reflect the
protection afforded the Employee by any Provisional Payee
designation during the period from its effective date to the date
of the Retirement Board's receipt of the Employee's Qualified
Election to rescind if the option as to payments of reduced
Retirement Income was in accordance with either Section 7.1(a),
7.6(a), or 7.6(b). If an Employee remarries subsequent to the
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death or divorce of his Provisional Payee and prior to the
commencement of payments in accordance with this Article VII, and
if such Employee is married prior to the time of the commencement
of payments, then he shall be entitled to designate a new
Provisional Payee in the manner set forth in Section 7.2.
7.4 Pre-retirement death benefit. If prior to his Normal
Retirement Date (or his Deferred Retirement Date, if applicable),
an Employee shall die while in the service of the Employer and is
survived by his spouse to whom he shall be married at the time of
his death, there shall be payable to his surviving spouse (whom
he shall be deemed to have designated as his Provisional Payee)
Retirement Income determined in accordance with paragraph (a) or
paragraph (c) of this Section 7.4, as applicable. Such
Retirement Income shall commence on the first day of the month
following the death of the Employee or the first day of the month
following the date on which he would have attained his
fifty-fifth (55th) birthday if he were still alive, whichever is
later, and shall cease with the last payment preceding the death
of his Provisional Payee.
(a) The amount of Retirement Income payable to the
Provisional Payee of a deceased Employee who prior to his death
had attained his fifty-fifth (55th) birthday shall be equal to
the amount payable to the Provisional Payee as calculated in
Section 7.1(b) determined on the basis of his Accredited Service
to the date of his death, or if the Employee shall have attained
his fifty-fifth (55th) birthday and so elected prior to his
death, such Retirement Income shall be equal to the amount set
forth in Section 7.1(a) determined on the basis of his Accredited
Service to the date of his death reduced as provided in the next
sentence. If such election shall be made by the Employee, the
Retirement Income which shall be payable to the Employee if he
lives to his Early Retirement Date or the first day of the month
following his attainment of age sixty-five (65), if later, shall
be reduced by three-fourths of one percent (0.75%) for each year
(prorated for a fraction of a year from the first day of the
month following the effective date of the election) which has
elapsed from the effective date of his election to the earlier of
(1) the commencement of Retirement Income on or after his Early
Retirement Date or the first day of the month following his
attainment of age sixty-five (65), if later, or (2) the
revocation of such election. If he shall die before the
commencement of Retirement Income on or after his Early
Retirement Date or the first day of the month following his
attainment of age sixty-five (65), if later, his Accrued
Retirement Income to the date of his death shall be reduced by
three-quarters of one percent (0.75%) for each year (prorated for
a fraction of a year from the first day of the month following
the effective date of the election) between the effective date of
his election and the first day of the month following his
attainment of age sixty-five (65). No reduction in the
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Employee's Retirement Income shall be made for the period during
which the election is in effect after the first day of the month
following his attainment of age sixty-five (65).
(b) Retirement Income shall not be payable under paragraph
(a) of this Section 7.4 to the Provisional Payee of a deceased
Employee if at the time of his death there was in effect a
Qualified Election made after August 22, 1984 under this
paragraph (b) that no Retirement Income shall be paid to his
Provisional Payee in the event of his death while in the service
of the Employer (or while in the service of an Affiliated
Employer to which his employment had been transferred in
accordance with Section 4.6) as provided in paragraph (a),
provided the Employee had received at least 180 days prior to his
fifty-fifth (55th) birthday a written explanation of: (1) the
terms and conditions of the Retirement Income payable to his
Provisional Payee as provided in paragraph (a); (2) the
Employee's right to make, and the effect of, an election to waive
the payment of Retirement Income to his Provisional Payee;
(3) the rights of the Employee's Provisional Payee; and (4) the
right to make, and the effect of, a revocation of a previous
election to waive the payment of Retirement Income to the
Employee's Provisional Payee.
A revocation of a prior Qualified Election to waive the
payment of Retirement Income to the Employee's Provisional Payee
may be made by the Employee without the consent of the Employee's
Provisional Payee at any time before the commencement of
benefits. An election under this paragraph (b) may be made and
such election may be revoked by an Employee during the period
commencing ninety (90) days prior to the Employee's fifty-fifth
(55th) birthday and ending on the date of the Employee's death.
(c) The amount of such Retirement Income payable to the
Provisional Payee of a deceased Employee who prior to his death,
had completed at least five (5) Vesting Years of Service and had
not attained his fifty-fifth (55th) birthday shall be equal to
one-half of the reduced amount, as actuarially adjusted to
provide for the payment of such Retirement Income beginning at
the date on which such deceased Employee would have attained his
fifty-fifth (55th) birthday and to provide for the determination
of such Retirement Income on a joint and fifty percent (50%)
survivor basis of the Employee's Accrued Retirement Income,
determined on the basis of his Accredited Service to the date of
his death.
This Section 7.4(c) shall also apply to adjust the future
payment of Retirement Income after December 31, 1990 to a
Provisional Payee with respect to an Employee who died (while in
the service of the Employer prior to his fifty-fifth (55th)
birthday after completing the requisite number of Years of
Service) in order to have a nonforfeitable right to Retirement
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Income under the Plan as in effect on the Employee's date of
death, provided Retirement Income is payable to such Provisional
Payee on or after January 1, 1991. The adjustment under this
Section 7.4(c) shall be determined by adjusting the Retirement
Income that had commenced to the Provisional Payee on or before
January 1, 1986, and then adding the applicable percentage
increase under Section 5.13 of the Prior Plan.
For an Employee, on or after January 1, 1991, who dies while
in the service of the Employer prior to his fifty-fifth (55th)
birthday after completing five (5) Vesting Years of Service, the
amount of such Retirement Income payable to the Provisional Payee
shall be calculated as provided in Section 7.1(b) determined on
the basis of his Accredited Service to the date of his death.
The payment of such Retirement Income to the Provisional Payee
shall begin on the first day of the month following the date on
which such deceased Employee would have attained his fifty-fifth
(55th) birthday.
7.5 Post-retirement death benefit - qualified joint and
survivor annuity. If at his Early Retirement Date, Normal
Retirement Date, or Deferred Retirement Date, as the case may be,
an Employee is married and he has not: (a) designated a
Provisional Payee in accordance with Section 7.1 in respect of
payments to be made commencing on his Early, Normal, or Deferred
Retirement Date or (b) made a Qualified Election that payment be
made to him in the mode of a single life annuity, he shall
nevertheless be deemed to have made an effective designation of a
Provisional Payee under this Section 7.5 and to have specified
the payment of a benefit as provided in Section 7.1(b).
7.6 Election and designation by former Employee entitled to
Retirement Income in accordance with Article VIII. If an
Employee is entitled to receive in accordance with Section 8.1
Retirement Income commencing at Normal Retirement Date, or sooner
in accordance with Section 8.2, he may, on or after his
fifty-fifth (55th) birthday, designate his spouse as his
Provisional Payee and elect to have his Accrued Retirement Income
at the date of termination of his service actuarially adjusted to
provide, at his option, in the event of the commencement of
payment prior to his Normal Retirement Date either:
(a) a reduced amount payable to him for his lifetime with
the provision that such reduced amount will be continued after
his death to his spouse as Provisional Payee until the death of
such Provisional Payee; or
(b) a reduced amount (greater than the amount in (a) above)
payable to him for his lifetime with the provision that one-half
(1/2) of such reduced amount will be continued after his death to
his spouse as Provisional Payee until the death of such
Provisional Payee.
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The Employee's election and designation of his Provisional
Payee made in accordance with this Section 7.6 shall be in
writing on a form prescribed by the Retirement Board and
delivered to it and shall become effective not sooner than the
date received by the Retirement Board or the Employee's
fifty-fifth (55th) birthday, whichever is later, nor later than
the date of commencement of payment in accordance with this
Section 7.6.
If the Employee dies prior to his Normal Retirement Date but
after the effective date of his Provisional Payee designation,
there will be payable to his Provisional Payee for life
commencing on the first day of the calendar month after the
Employee's death Retirement Income in a reduced amount in
accordance with the Employee's election of payments to be made to
his Provisional Payee after the death of the Employee under
paragraph (a) or (b), as the case may be, of this Section 7.6.
However, if prior to the Employee's death, the Retirement Board
has not received such election, payment of a reduced amount of
Retirement Income will be made in accordance with paragraph (b)
of this Section 7.6 to his surviving spouse to whom he is married
at the time of his death, unless (1) at the time of his death
there is in effect a Qualified Election by the Employee that
reduced Retirement Income shall not be paid to his surviving
spouse in accordance with this Section 7.6 should he die between
his fifty-fifth (55th) birthday and his Normal Retirement Date
without having elected that payment be made to a Provisional
Payee and (2) at least 180 days prior to his fifty-fifth (55th)
birthday a written explanation is provided to the Employee of:
(A) the terms and conditions of the Retirement Income payable to
his Provisional Payee as provided in this Section 7.6; (B) the
Employee's right to make, and the effect of, an election to waive
the payment of Retirement Income to his Provisional Payee;
(C) the rights of an Employee's spouse; and (D) the right to
make, and the effect of, a revocation of a previous election to
waive the payment of Retirement Income to his Provisional Payee.
If the Employee is entitled to receive payment of Retirement
Income in accordance with Section 8.2 after his fifty-fifth
(55th) birthday and prior to his Normal Retirement Date and
elects to do so, a reduced amount of Retirement Income determined
in accordance with this Section 7.6 based upon his Accrued
Retirement Income at the date of termination of his service
(actuarially reduced in accordance with Section 8.2) will be
payable to him commencing on the date on which payments commence
prior to Normal Retirement Date in accordance with Section 8.2
with payments in the same or reduced amount to be continued to
his Provisional Payee for life after the Employee's death in
accordance with his election under paragraph (a) or (b), as the
case may be, of this Section 7.6. However, if the Employee is
married and he has not designated a Provisional Payee in respect
of payments to commence to him prior to his Normal Retirement
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Date or elected that payment be made to him in the mode of a
single life annuity pursuant to a Qualified Election, he shall be
deemed to have designated a Provisional Payee pursuant to this
Section 7.6 and thereby specified that a reduced Retirement
Income shall be paid to him during his lifetime as provided in
paragraph (b) of this Section 7.6 and continued after his death
to his Provisional Payee as provided in paragraph (b) of this
Section 7.6.
If the Employee is alive on his Normal Retirement Date and
is married and payment of Retirement Income has not sooner
commenced, the provisions of Section 7.5 shall be applicable to
the payment of his Retirement Income, unless he shall elect at
his Normal Retirement Date to receive payment of his Retirement
Income pursuant to Section 7.1(a) or 7.1(b). However, if an
election and designation in accordance with this Section 7.6 was
in effect prior to his Normal Retirement Date, the Employee's
Accrued Retirement Income at his Normal Retirement Date shall be
actuarially adjusted for the period the election and designation
was in effect.
7.7 Death benefit for Provisional Payee of former Employee.
If an Employee, whose service with the Employer terminates on or
after January 1, 1989, shall die after such termination of
employment, and prior to his death (a) shall have not attained
his fifty-fifth (55th) birthday, (b) shall have completed at
least five (5) Vesting Years of Service, and (c) shall be
survived by his spouse to whom he shall be married at his death,
then there shall be payable to his surviving spouse (whom he
shall be deemed to have designated as his Provisional Payee)
Retirement Income determined in accordance with this Section 7.7.
Such Retirement Income shall be equal to one-half of the reduced
amount, as actuarially adjusted to provide for the payment of
such Retirement Income beginning at the date on which such
deceased Employee would have attained his fifty-fifth (55th)
birthday and to provide for the determination of such Retirement
Income on a joint and fifty percent (50%) survivor basis of the
Employee's Accrued Retirement Income, determined on the basis of
his Accredited Service to the date of his death. Such Retirement
Income shall commence on the first day of the month following the
date on which the former Employee would have attained his
fifty-fifth (55th) birthday if he were still alive, and shall
cease with the last payment preceding the death of his
Provisional Payee.
7.8 Limitations on Employee's and Provisional Payee's
benefits.
(a) With respect to an Employee who does not elect a single
life annuity, the limitation on benefits imposed under Article VI
shall be applied as if such Employee had elected a benefit in the
form of a single life annuity.
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(b) With respect to a Provisional Payee, the limitations on
benefits imposed under Article VI shall be applied consistent
with paragraph (a) above prorated to provide a limitation equal
to or one-half of the Employee's limitation as appropriate in
accordance with annuity form of benefit elected by the Employee.
7.9 Effect of election under Article VII. An election of
payment or a deemed election of payment in accordance with this
Article VII shall be in lieu of any other form or method of
payment of Retirement Income.
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ARTICLE VIII
Termination of Service
8
8.1 Vested interest. If an Employee included in the Plan
terminates for any reason other than death or transfer to an
Affiliated Employer as provided by Section 4.6 or retirement as
provided by Article III, and if such Employee has had at least
five (5) Vesting Years of Service with the Employer, whether or
not Accredited Service, he will be entitled to receive,
commencing at Normal Retirement Date (except as provided in
Section 8.2 and subject to the provisions of Section 7.6)
Retirement Income equal to his Accrued Retirement Income at the
date of the termination of such service, provided that he makes
application to the Employer for the payment of such Retirement
Income. If proper application for payment of Retirement Income
shall not be received by the Employer by the April 1 of the
calendar year following the calendar year in which the Employee
attains age 70 1/2 and the whereabouts of the Employee cannot be
determined by the Employer, Retirement Income shall be paid to
the Employee's Provisional Payee, if any, and if surviving and
the whereabouts known to the Employer, or applied in such other
manner as the Retirement Board shall deem appropriate. The
payment of Retirement Income pursuant to this provision shall
completely discharge all liability of the Retirement Board, the
Employer, and the Trustee or other payor to the extent of the
payments so made. If such Employee terminates with less than
five (5) Vesting Years of Service with the Employer, he shall
immediately forfeit any Accrued Retirement Income under the Plan
based upon his service prior to such termination.
8.2 Early distribution of vested benefit. If an Employee
terminates from service before his fifty-fifth (55th) birthday
and is entitled to receive in accordance with Section 8.1
Retirement Income commencing at his Normal Retirement Date and at
the time his service terminated he had at least ten (10) Years of
Accredited Service, he may, in lieu of receiving payment of such
Retirement Income commencing at Normal Retirement Date, elect to
receive such Retirement Income commencing as of the first day of
any month within the ten-year period preceding his Normal
Retirement Date in an amount equal to his Accrued Retirement
Income at the date of termination of his service actuarially
reduced in accordance with reasonable actuarial assumptions
adopted by the Retirement Board. An election pursuant to this
Section 8.2 to have Retirement Income commence prior to Normal
Retirement Date shall be made on a form prescribed by the
Retirement Board and shall be filed with the Retirement Board at
least thirty (30) days before Retirement Income is to commence.
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8.3 Years of Service of reemployed Employees. If an
Employee whose service terminates is again employed by the
Employer as an Employee or he is employed (other than by reason
of transfer in accordance with Section 4.6) by an Affiliated
Employer which has at the time of his employment by such company
a pension plan with substantially the same terms as this Plan,
his Years of Service with the Employer and his Accredited Service
immediately prior to the termination of his service shall be
treated as provided in this Section 8.3, subject to the
provisions of Section 8.4. For this purpose the terms "again
employed" and "reemployment" shall include employment with an
Affiliated Employer.
(a) If at the time of his reemployment he has not incurred
a One-Year Break in Service, his Years of Service with the
Employer and his Accredited Service will be restored whether or
not he is entitled to receive Retirement Income in accordance
with Section 8.1.
(b) If at the time of termination of his service he is
entitled to receive Retirement Income in accordance with the
provisions of Section 8.1, upon his reemployment his Years of
Service with the Employer immediately prior to the termination of
his service shall be restored whether or not he has incurred a
One-Year Break in Service.
(c) If at the time of reemployment on or after January 1,
1985, he is not entitled to receive Retirement Income in
accordance with Section 8.1 and he (1) has incurred less than
five (5) consecutive One-Year Breaks in Service or (2) has
incurred five (5) or more consecutive One-Year Breaks in Service,
but his Years of Service prior to such One-Year Breaks in Service
exceeded the consecutive One-Year Breaks in Service, then upon
the completion of one Eligibility Year of Service following his
reemployment, provided that if his reemployment date is on or
after January 1, 1995, no such Eligibility Year of Service shall
be required, his Years of Service with the Employer and his
Accredited Service prior to the first One-Year Break in Service
shall be restored, disregarding any Years of Service with the
Employer which are not required to be taken into account by
reason of any previous One-Year Breaks in Service. The Years of
Service and years of Accredited Service credited to an Employee
reemployed prior to January 1, 1985, with regard to his Years of
Service with the Employer and years of Accredited Service
immediately prior to the termination of his service shall be
determined under the terms of the Plan in effect prior to January
1, 1985.
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(d) Years of Service and Accredited Service restored to an
Employee in accordance with this Section 8.3 shall be aggregated
with Years of Service and Accredited Service to which the
Employee may be entitled after his reemployment. If, however,
the Minimum Retirement Income so determined for the Employee upon
his subsequent retirement or termination of service shall be less
than the aggregate of: (1) his Minimum Retirement Income, if
any, determined in respect of the period ending with his prior
termination of service, and (2) his Minimum Retirement Income
determined in respect of the period after his reemployment, the
aggregate of such Minimum Retirement Incomes shall be deemed to
be his Minimum Retirement Income upon such subsequent retirement
or termination of service. In any event, his Retirement Income,
however computed, shall be reduced by the Actuarial Equivalent of
any Retirement Income he received with respect to his prior
period of employment.
(e) If a former Employee to whose credit shall be restored
years of Accredited Service in accordance with this Section 8.3
shall become entitled (or his Provisional Payee shall become
entitled) to receive retirement income under the plan of an
Affiliated Employer by which he should become employed, he shall
be deemed to have transferred to the Affiliated Employer for
purposes of Section 4.6 as of his initial date of participation
in the plan of such Affiliated Employer.
8.4 Cash-out and buy-back. (a) Notwithstanding any other
provision of this Plan, if the present value of Accrued
Retirement Income of an Employee whose service terminates for any
reason other than transfer to an Affiliated Employer under
Section 4.6, or retirement under Article III, is not more than
$3,500 (or such greater amount as permitted by the regulations
prescribed by the Secretary of the Treasury) the Employer shall
direct that such present value of the Employee's Accrued
Retirement Income be paid in a lump sum, in cash, to such
terminated Employee. The present value of the Accrued Retirement
Income shall be calculated as of the last day of the date of
distribution of the lump sum applying the Applicable Interest
Rate as defined in Section 8.5(e) in effect on the first day of
the Plan Year of distribution. For purposes of this Section 8.4,
if the present value of the Employee's vested Accrued Retirement
Income is zero, the Employee shall be deemed to have received a
distribution of such vested Retirement Income.
(b) If such terminated Employee is subsequently reemployed
and again becomes covered under this Plan, the calculation of his
Accrued Retirement Income shall be without regard to his years of
Accredited Service prior to any One-Year Breaks in Service,
unless the amount of such payment is repaid to the Trust, plus
interest at the rate determined under Section 411(c)(2)(C) of the
Code. If such amount (plus interest) is repaid, the Employee's
Retirement Income shall be calculated based on his years of
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Accredited Service before and after any One-Year Breaks in
Service. Any repayment of a cash-out made pursuant to this
Section 8.4 shall be made before the earlier of (a) five (5)
years after the date on which the Employee is reemployed by the
Employer or an Affiliated Employer, or (b) the close of the first
period of five (5) consecutive One-Year Breaks in Service
commencing after the distribution. If an Employee has been
deemed to receive a distribution in accordance with paragraph (a)
and is then reemployed, upon such reemployment, the amount of the
deemed distribution shall be restored to the Employee.
8.5 Calculation of present value for cash-out of benefits
and for determining amount of benefits.
(a) This Section 8.5 shall apply to all distributions from
the Plan and from annuity contracts purchased to provide Accrued
Retirement Income other than distributions described in Section
1.417-1T(e)(3) of the income tax regulations issued under the
Retirement Equity Act of 1984.
(b) (1) For purposes of determining whether the present
value of (A) an Employee's vested accrued benefit; (B) a
qualified joint and survivor annuity, within the meaning of
Section 417(b) of the Code; or (C) a qualified preretirement
survivor annuity within the meaning of Section 417(c)(1) of the
Code exceeds $3,500, the present value of such benefits or
annuities shall be calculated by using an interest rate no
greater than the Applicable Interest Rate.
(2) In no event shall the present value of any such
benefit or annuity determined under this Section 8.5(b) be
less than the present value of such benefits or annuities
determined using the Applicable Interest Rate.
(c) (1) For purposes of determining the amount of an
Employee's vested Accrued Retirement Income, the interest rate
used shall not exceed:
(A) the Applicable Interest Rate if the
present value of the benefit (using such rate or
rates) is not in excess of $25,000; or
(B) 120 percent of the Applicable Interest
Rate if the present value of the benefit exceeds
$25,000 (as determined under (A)). In no event
shall the present value determined under this (B)
be less than $25,000.
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(2) In no event shall the amount of the benefit or
annuity determined under this Section 8.5(c) be less than
the greater of:
(A) the amount of such benefit determined under
the Plan's provisions for determining the amount of
benefits other than Sections 8.5; or
(B) the amount of such benefit determined using
the Applicable Interest Rate if the value determined in
Section 8.5(c)(1) is less than $25,000 or 120 percent
of the Applicable Interest Rate if the value determined
in Section 8.5(c)(1) is not less than $25,000.
(d) In no event shall the amount of any benefit or annuity
determined under this Section 8.5 exceed the maximum benefit
permitted under Section 415 of the Code.
(e) (1) For purposes of this Section 8.5, "Applicable
Interest Rate" shall mean the interest rate or rates which would
be used as of the date distribution commences by the Pension
Benefit Guaranty Corporation for purposes of valuing lump sum
payments under the Plan if the Plan had terminated on the date
distribution commences with insufficient assets to provide
benefits guaranteed by the Pension Benefit Guaranty Corporation
on that date.
(2) Notwithstanding the foregoing, if the provisions
of the Plan other than Section 8.5(e) so provide, the
Applicable Interest Rate shall be determined as of the first
day of the Plan Year in which a distribution occurs rather
than as of the date distribution commences.
(f) (1) This Section 8.5 shall apply to distributions in
Plan Years beginning after December 31, 1984, other than
distributions under annuity contracts distributed to or owned by
an Employee prior to September 17, 1985 unless additional
contributions are made under the Plan by the Employer with
respect to such contracts.
(2) Notwithstanding the foregoing, this Section
8.5 shall not apply to any distributions in Plan Years
beginning after December 31, 1984, and before
January 1, 1987, if such distributions were made in
accordance with the requirements of the income tax
regulations issued under the Retirement Equity Act of
1984.
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8.6 Retirement Income under Prior Plan. Any person
entitled to receive Retirement Income under Article VIII of the
Prior Plan shall only be entitled to receive Retirement Income in
accordance with the provisions of such Prior Plan in effect at
the time his service was terminated, except that any such person
whose service terminated prior to January 1, 1976:
(a) with at least twenty (20) years of Accredited Service
may elect to receive Retirement Income commencing prior to his
Normal Retirement Date in accordance with Section 8.2;
(b) who shall have returned to the employment of the
Employer, whether before or after January 1, 1976, and shall be
an Employee who is entitled to receive Retirement Income in
respect of his Accredited Service after January 1, 1976, his
years of Accredited Service under the Prior Plan with respect to
his service before January 1, 1976, shall, for the purpose of
calculating his Minimum Retirement Income, be aggregated with his
years of Accredited Service after his reemployment. His Accrued
Retirement Income to the date of termination of his service
payable in accordance with Article VIII of the Prior Plan shall
be treated as Prior Plan Retirement Income and his Years of
Service prior to the date of termination of his service shall be
restored to his credit. It shall be a condition of the treatment
provided for in this paragraph (b) that: (1) the Employee
rescind any election of payment and designation of a Provisional
Payee which he shall have made under the Prior Plan and which
shall be in effect at the time of his return to the employment of
the Employer and (2) if he is receiving Retirement Income, his
Retirement Income shall cease during his period of employment and
any Retirement Income payable upon his subsequent retirement
shall be reduced by the Actuarial Equivalent of any Retirement
Income he received prior to his reemployment.
8.7 Requirement for Direct Rollovers. This Section 8.7
applies to distributions made from the Plan on or after January
1, 1993. Notwithstanding any provision of the Plan to the
contrary that would otherwise limit a Distributee's election
under this Article VIII, a Distributee may elect, at the time and
in the manner prescribed by the Retirement Board, to have any
portion of an Eligible Rollover Distribution paid directly to an
Eligible Retirement Plan specified by the Distributee in a Direct
Rollover.
(a) Definitions
(1) Eligible Rollover Distribution
An Eligible Rollover Distribution is any distribution
of all or any portion of the balance to the credit of the
Distributee, except that an Eligible Rollover Distribution
does not include:
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(A) any distribution that is one of a series of
substantially equal periodic payments (not less
frequently than annually) made for the life (or life
expectancy) of the Distributee or the joint lives (or
joint life expectancies) of the Distributee and the
Distributee's spouse, or for a specified period of 10
years or more;
(B) any distribution to the extent such
distribution is required under Code Section 401(a)(9);
and
(C) the portion of any distribution that is not
includible in gross income (determined without regard
to the exclusion for net unrealized appreciation with
respect to employer securities).
(2) Eligible Retirement Plan
An Eligible Retirement Plan is an individual retirement
account described in Code Section 408(a), an individual
retirement annuity described in Code Section 408(b), an
annuity plan described in Code Section 403(a), or a
qualified trust described in Code Section 401(a) that
accepts the Distributee's Eligible Rollover Distribution.
However, in the case of an Eligible Rollover Distribution
for a Provisional Payee, an Eligible Retirement Plan is an
individual retirement account or individual retirement
annuity.
(3) Distributee
A Distributee includes an Employee or former Employee.
In addition, a Distributee includes the Employee's or former
Employee's spouse who is an alternate payee under a
qualified domestic relations order, as defined in Code
Section 414(p).
(4) Direct Rollover
A Direct Rollover is a payment by the Plan to the
Eligible Retirement Plan specified by the Distributee.
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ARTICLE IX
Contributions
9
9.1 Contributions generally. All contributions which the
Employer deems necessary to provide the Retirement Incomes under
the Plan in excess of the fund derived from the split-up of the
Commonwealth pension plan will be made from time to time by or on
behalf of the Employer and no contributions will be required of
the Employees. All contributions shall be made to the Trustee
under the Trust Agreement provided for in Article XI, and if a
group annuity contract shall be entered into with a life
insurance company ("contract with an insurance company"),
contributions may also be made to the insurance company.
The minimum amount of contributions to be made by or on
behalf of the Employer for any Plan Year of the Plan shall be
such amount as is required to meet the minimum funding standards
of ERISA and any regulations in respect thereto. However, the
Employer is under no obligation to make any contributions under
the Plan after the Plan is terminated, whether or not Retirement
Income accrued or vested prior to the date of termination has
been fully funded. All contributions are expressly conditioned
upon the deductibility of such contributions by the Employer
pursuant to Section 404 of the Code.
9.2 Return of Employer contributions. All contributions
made pursuant to the Plan shall be held by the Trustee in
accordance with the terms of the Trust Agreement for the
exclusive benefit of those Employees who are Participants under
the Plan, including former Employees and their Beneficiaries, and
shall be applied to provide benefits under the Plan and to pay
expenses of administration of the Plan and Trust, to the extent
that such expenses are not otherwise paid. At no time prior to
the satisfaction of all liabilities with respect to such
Employees and their Beneficiaries shall any part of the Trust
Fund be used for, or diverted to, purposes other than for the
exclusive benefit of such Employees and their Beneficiaries.
However, notwithstanding the provisions of this Section 9.2:
(a) If a contribution is conditioned upon the deductibility
of the contributions under Section 404 of the Code, then, to the
extent the deduction is disallowed, the Trustee shall upon
written request of the Employer, return the contribution (to the
extent disallowed) to the Employer within one year after the date
the deduction is disallowed.
(b) If a contribution or any portion thereof is made by the
Employer by a mistake of fact, the Trustee shall, upon written
request of the Employer, return the contribution or such portion
to the Employer within one year after the date of payment to the
Trustee.
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The amount which may be returned to the Employer under this
Section 9.2, is the excess of (a) the amount contributed over (b)
the amount that would have been contributed had there not
occurred a mistake of fact or a mistake in determining the
deduction. Earnings attributable to the excess contribution
shall not be returned to the Employer, but losses attributable
thereto shall reduce the amount to be so returned.
(c) If permitted under Federal common law, the Company may
recover any other contributions to the Plan or payments to any
other entity to the extent such contributions or payments
unjustly enrich or otherwise gratuitously benefit such entity.
9.3 Expenses. Prior to termination of the Plan, all
investment expenses (including brokerage costs, transfer taxes,
shipping expenses, and charges of correspondent banks of the
Trustee) and any taxes which may be levied against the Trust
shall be charged to the Trust. All other expenses prior to the
termination of the Plan shall be paid by the Employer or charged
to the Trust, as determined in the discretion of The Southern
Company Pension Fund Investment Review Committee. After the
termination of the Plan, all expenses shall be levied against the
Trust and shall be charged to the Trust.
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ARTICLE X
Administration of Plan
10
10.1 Retirement Board. The general administration of the
Plan shall be placed in a Retirement Board of five (5) members
who shall be appointed from time to time by the Board of
Directors to serve at the pleasure of the Board of Directors.
10.2 Organization and transaction of business of Retirement
Board. Any person appointed a member of the Retirement Board
shall signify his acceptance by filing written acceptance with
the Board of Directors. Any member of the Retirement Board may
resign by delivering his written resignation to the Board of
Directors, and such resignation shall become effective at
delivery or at any later date specified therein.
The members of the Retirement Board shall elect a Chairman
from their number, and a Secretary who may be but need not be one
of the members of the Retirement Board, and shall designate an
actuary to act in actuarial matters relating to the Plan. They
may appoint from their number such committees with such powers as
they shall determine, may authorize one or more of their number
or any agent to make any payment in their behalf, or to execute
or deliver any instrument except that a requisition for funds
from the Trustee shall be signed by two (2) members of the
Retirement Board.
The Retirement Board shall hold meetings upon such notice,
at such place or places, and at such time or times as they may
from time to time determine.
A majority of the members of the Retirement Board at the
time in office shall constitute a quorum for the transaction of
business. All resolutions or other actions taken by the
Retirement Board at any meeting shall be by the vote of a
majority of the Retirement Board at the time in office. Any
determination or action of the Retirement Board may be made or
taken without a meeting by a resolution or written memorandum
concurred upon by a majority of the members then in office.
No member of the Retirement Board who is also an Employee of
the Employer shall receive any compensation from the Plan for his
service as such. No bond or other security need be required of
any member in any jurisdiction except as may be required by
ERISA.
10.3 Administrative responsibilities of Retirement Board.
The Retirement Board, in addition to the functions and duties
provided for elsewhere in the Plan, shall have exclusive
discretionary authority for the following:
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(a) construing and interpreting the Plan;
(b) determining all questions affecting the eligibility of
any Employee, retired Employee, Provisional Payee, or alternate
payee;
(c) determining all questions affecting the amount of the
benefit payable hereunder;
(d) ascertaining the persons to whom benefits shall be
payable under the provisions hereof;
(e) to the extent provided in the Plan, authorizing and
directing disbursements of benefits from the Plan;
(f) making final and binding determinations in connection
with any questions of fact which may arise regarding the
operation of the Plan;
(g) making such rules and regulations with reference to the
operation of the Plan as it may deem necessary or advisable,
provided that such rules and regulations shall not be
inconsistent with the express terms of the Plan or ERISA;
(h) prescribing such procedures and adopting such forms as
it determines necessary under the terms of the Plan; and
(i) reviewing such denials of claims for benefits as may
arise.
Any decision, determination, construction, interpretation,
ascertainment, authorization, direction, rule, regulation,
prescription, or review that the Retirement Board may make or
give in carrying out its duties or functions under this Section
10.3 shall be binding and conclusive.
10.4 Retirement Board, the "Administrator". For the
purposes of compliance with the provisions of ERISA, the
Retirement Board shall be deemed the "administrator" of the Plan
as the term "administrator" is defined in ERISA, and the
Retirement Board shall be, with respect to the Plan, a "named
fiduciary" as that term is defined in ERISA. For the purpose of
carrying out its duties, the Retirement Board may, in its
discretion, allocate responsibilities under the Plan among its
members and may, in its discretion, designate in writing, as set
forth in the minutes of the Retirement Board, persons other than
members of the Retirement Board to carry out such
responsibilities of the Retirement Board under the Plan as it may
see fit.
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10.5 Fiduciary responsibilities. It is intended, that to
the maximum extent permitted by ERISA, each person who is a
"fiduciary" with respect to the Plan as that term is defined in
ERISA shall be responsible for the proper exercise of his own
powers, duties, responsibilities, and obligations under the Plan
and the trust or other funding medium as shall each person
designated by any fiduciary to carry out any fiduciary
responsibility with respect to the Plan, the trust or other
funding medium and no fiduciary or other person to whom fiduciary
responsibilities are allocated shall be liable for any act or
omission of any other fiduciary or of any other person delegated
to carry out any fiduciary or other responsibility under the Plan
or the trust or other funding medium.
Any person or group of persons may serve in more than one
fiduciary capacity with respect to the Plan and any fiduciary
with respect to the Plan may serve as a fiduciary with respect to
the Plan in addition to being an officer, employee, agent, or
other representative of a "party in interest" as that term is
defined in ERISA.
10.6 Employment of actuaries and others. The Retirement
Board may employ such "enrolled actuaries" and independent
"qualified public accountants" as such terms are defined in
ERISA, legal counsel who may be of counsel to the Employer, other
specialists, and other persons as the Retirement Board deems
necessary or desirable in connection with the administration of
the Plan. The Retirement Board and any person to whom it may
delegate any duty or power in connection with the administration
of the Plan, the Employer, and the officers and directors thereof
shall be entitled to rely conclusively upon and shall be fully
protected in any action omitted, taken, or suffered by them in
good faith in reliance upon any enrolled actuary, independent
qualified public accountant, counsel, or other specialist or
other person selected by the Retirement Board or in reliance upon
any tables, evaluations, certificates, opinions, or reports which
shall be furnished by any of them or by the Trustee or any
insurance company. Any action so taken, omitted, or suffered in
accordance with the provisions of this Section 10.6 shall be
conclusive upon each Employee, former Employee, and Provisional
Payee covered under the Plan.
10.7 Accounts and tables. The Retirement Board shall
maintain accounts showing the fiscal transactions of the Plan,
and shall keep in convenient form such data as may be necessary
for actuarial valuations with respect to the operation and
administration of the Plan. The Retirement Board shall prepare
annually a report showing in reasonable summary the financial
condition of the Trust and giving a brief account of the
operation of the Plan for the past year, and any further
information which the Board of Directors may require. Such
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report shall be submitted to the Board of Directors and shall be
filed in the office of the Secretary of the Retirement Board.
The Retirement Board may, with the advice of an enrolled
actuary, adopt from time to time mortality and other tables as it
may deem necessary or appropriate for use in calculating benefits
under the Plan.
10.8 Indemnity of members of Retirement Board. To the
extent not compensated for by any applicable insurance, the
Employer shall indemnify and hold harmless each member of the
Retirement Board and each Employee of the Employer designated by
the Retirement Board to carry out any fiduciary responsibility
with respect to the Plan from any and all claims, loss, damages,
expense (including counsel fees approved by the Board of
Directors) and liability (including any amount paid in settlement
with the approval of the Board of Directors) arising from any act
or omission of such member or Employee designated by the
Retirement Board in connection with the Plan or the Trust, except
where the same is determined by the Board of Directors or is
judicially determined to be due to a failure to act in good faith
or is due to the gross negligence or willful misconduct of such
member or Employee. No assets of the Plan may be used for any
such indemnification.
10.9 Areas in which the Retirement Board does not have
responsibility. The Retirement Board shall not have
responsibility with respect to control or management of the
assets of the Plan. The Trustee or an insurance company, if
funds of the Plan shall be held by an insurance company, shall
have the sole responsibility for the administration of the assets
of the Plan as provided in the Trust Agreement or contract with
an insurance company, except to the extent that an "Investment
Manager," as that term is defined in ERISA, appointed by the
Board of Directors shall have responsibility for the management
of the assets of the Plan, or some part thereof, including the
power to acquire and dispose of the assets of the Plan, or some
part thereof.
The responsibility for providing a procedure for
establishing and carrying out a funding policy and method for the
Plan consistent with the objectives of the Plan and the
requirements of Title I of ERISA shall be that of the Board of
Directors or such committee, whether or not comprised of members
of the Board of Directors, as the Board of Directors may from
time to time designate and shall not be the responsibility of the
Retirement Board.
Effective July 21, 1993, the Pension Fund Investment Review
Committee of The Southern Company System shall recommend for
approval by the Board of Directors any Investment Manager that
shall have responsibility with respect to management of any Plan
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assets. In addition, the Pension Fund Investment Review
Committee shall assume all responsibility for providing a
procedure for establishing and carrying out a funding policy and
method for the Plan consistent with the objectives of the Plan
and the requirements of Title I of ERISA.
10.10 Claims Procedures. Consistent with the requirements
of ERISA and the regulations thereunder of the Secretary of Labor
from time to time in effect, the Retirement Board or its
delegatee shall:
(a) provide adequate notice in writing to any Employee,
former Employee, retired Employee, or Provisional Payee (each
being hereinafter in the paragraph referred to as "participant")
whose claim for benefit under the Plan has been denied, setting
forth specific reasons for such denial, written in a manner
calculated to be understood by such participant; and
(b) afford a reasonable opportunity to any participant
whose claim for benefits has been denied for a full and fair
review of the decision denying the claim.
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ARTICLE XI
Management of Trust
11
11.1 Trust. All assets of the Plan shall be held as a
special trust for use in accordance with the Plan.
The funds of the Plan shall be held by a Trustee, or by a
successor trustee appointed from time to time by the Board of
Directors in trust or held by a life insurance company in
accordance with the provisions of a contract with such insurance
company entered into by the Trustee or the Employer. The Trust
Agreement and contract with an insurance company may from time to
time be amended in the manner therein provided.
11.2 Disbursement of the Trust Fund. Subject to the
provisions of the Trust Agreement or contract with an insurance
company the Retirement Board shall determine the manner in which
the funds of the Plan shall be disbursed pursuant to the Plan,
including the form of voucher or warrant to be used in making
disbursements and the due qualification of persons authorized to
approve and sign the same. The responsibility for the retention
and investment of funds held by the Trustee shall lie with the
Trustee and not with the Retirement Board, and the responsibility
for the retention and investment of funds held by an insurance
company shall lie with the insurance company and not with the
Retirement Board. However, if in accordance with a Trust
Agreement forming a part of the Plan (including any pooled trust
agreement in which a trust forming a part of the Plan
participates) a contract with an insurance company shall be held
by the Trustee as an investment of the trust, directions may be
given from time to time to the Trustee by such board of directors
or committee or person or persons as may be specified in the
Trust Agreement to transfer funds of the trust to the life
insurance company which issued such contract or to transfer funds
from the life insurance company to the Trustee, as the case may
be.
11.3 Rights in the Trust. Under no circumstances shall
amounts of money or other things of value contributed by the
Employer to the Plan, or any part of the corpus or income of the
Trust held by the Trustee under the Plan, be recoverable by the
Employer from the Trustee or from any Employee, retired Employee,
or Provisional Payee, or be used for, or diverted to, purposes
other than for the exclusive benefit of the Employees, retired
Employees, and Provisional Payees covered hereunder; provided,
however, that, if after satisfaction of all liabilities of the
Trust with respect to Employees, retired Employees, and
Provisional Payees under the Plan, there is any balance
remaining, the Trustee shall return such balance to the Employer.
Notwithstanding the above, upon the approval of the Internal
Revenue Service or the enactment or promulgation of any laws or
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regulations by any governmental authority, the Employer shall be
authorized to rededicate all or a portion of the assets allocated
to fund Retirement Income under the Plan to the separate account
to fund medical benefits under Article XV of the Plan.
11.4 Merger of the Plan. The Plan shall not be merged or
consolidated with, or any of its assets or liabilities
transferred to, any other plan, unless each Employee included in
the Plan would (if the Plan then terminated) receive a benefit
immediately after the merger, consolidation, or transfer which is
equal to or greater than the benefit he would have been entitled
to receive immediately before the merger, consolidation, or
transfer (if the Plan then terminated).
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ARTICLE XII
Termination of the Plan
12
12.1 Termination of the Plan. The Plan may be terminated at
any time by action of the Board of Directors of the Employer in
accordance with the amendment procedures provided in Section
13.1. Upon such termination or partial termination all Accrued
Retirement Income of Employees to the date of such termination,
to the extent then funded, shall become nonforfeitable and the
assets of the Plan which have not previously been allocated to
provide Retirement Income shall then be paid out to Employees,
former Employees, and Provisional Payees in accordance with the
applicable requirements of ERISA and regulations thereunder
governing termination of "employee pension benefit plans" as
defined in ERISA. If after satisfaction of all liabilities, as
provided above, there is any balance remaining in the Trust, the
Trustee shall return such balance to the Employer.
In the first instance, subject to the foregoing
limitations, such remaining assets shall be allocated among all
persons in the following categories for whom such Retirement
Income or other benefits have not previously been provided,
namely, (a) Employees who have been retired under the Plan,
(b) Employees who at the date of termination of the Plan are
included in the Plan, (c) former Employees who at the date of the
termination of their employment were entitled to payment of
Retirement Income in accordance with Article VIII, and (d) former
Employees who have transferred to an Affiliated Employer in
accordance with Section 4.6 and are still in the employ or
receiving a retirement income from such company (including their
Provisional Payees, if any). Retirement Income already purchased
under any contract with an insurance company will be payable in
accordance with the provisions of that contract.
12.2 Limitation on benefits for certain highly paid
employees.
(a) The annual payments to an Employee described in
paragraph (b) below shall not exceed an amount equal to the
payments that would be made to or on behalf of such Employee
under a single life annuity that is the Actuarial Equivalent of
the sum of the Employee's Accrued Retirement Income and the
Employee's other benefits under this Plan (other than a Social
Security supplement) and any Social Security supplement that the
restricted Employee is entitled to receive. The restrictions in
this paragraph (a) do not apply, however, if --
(1) after payment to an Employee described in
paragraph (b) of all benefits payable to such Employee under
this Plan, the value of this Plan's assets equals or exceeds
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110% of the value of current liabilities, as defined in Code
Section 412(c)(7), or
(2) the value of the benefits payable to such Employee
under this Plan for an Employee described in paragraph (b)
below is less than 1% of the value of current liabilities
before distribution.
(b) The Employees whose benefits are restricted on
distribution include all highly compensated employees and highly
compensated former employees (as such terms are defined in
Treasury Regulation Section 1.401(a)(4)-12); provided, however,
that Employees whose benefits are subject to restriction under
this Section 12.2 shall be limited to only those Employees who in
the current or in any previous Plan Year were one of the 25 non-
excludable Employees of the Employer with the greatest
compensation from the Employer.
12.3 Allocation of Trust upon termination. Subject to the
provisions of Section 12.2 above, if, subsequent to the effective
date of merger and consolidation of the Employees' Retirement
Plan of Georgia Power and Light Company [Georgia Power, as
successor] (hereinafter in this subsection referred to as the
"Retirement Plan") with the Plan, the Plan is terminated and the
amount of the Trust to be used and applied in accordance with the
provisions of Section 12.1 for the benefit of the persons therein
referred to shall not be equal to the sum of: (a) an amount equal
to the actuarially determined present values at the date of
termination of the Plan of the respective Retirement Incomes or
Accrued Retirement Incomes, as the case may be, of each retired
Employee, Employee, or former Employee (including their
Provisional Payees, if any) referred to in Section 12.1, plus (b)
an amount equal to the actuarially determined present values at
the date of termination of the Plan of the retirement allowance
under the Retirement Plan of each Member or retired Member
(including their Optional Payees, if any) with respect to his
service with Georgia Power and Light Company and the Company
prior to July 1, 1957, the amount of the Trust to be used and
applied for the benefit of each of such persons shall in no event
be less that (x) multiplied by (y) where (x) equals the amount
which would have been used and applied for the benefit of each
such retired Employee, Employee, or former Employee (including
their Provisional Payees, if any) and Members and retired Members
(including their Optional Payees, if any) had the Plan and the
Retirement Plan each been terminated on the day preceding the
effective date of the merger and consolidation of the Retirement
Plan and the Plan and allocation of the trust funds under the
respective Plans then been effected for the benefit of the
retired Employees, Employees, and former Employees included
therein pursuant to the provisions of Section 12.1 of the Plan
and for the benefit of Members and retired Members and their
beneficiaries pursuant to Section 11.6 of the Retirement Plan and
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(y) equals the lesser of 100%, or a percentage determined by
dividing the dollar value as of the date of termination of the
Plan of $1 contributed to the Trust on the effective date of the
merger of the Retirement Plan and the Plan, adjusted to reflect
earnings and realized and unrealized gains and losses thereon, by
$1.
The determination of such dollar value shall be made by the
Trustee and its determination shall be conclusive.
To the extent that: (a) any retired Employee or former
Employee (including their Provisional Payees, if any) referred to
in Section 12.1 and (b) any Member or retired Member (or his
Optional Payee) of the Retirement Plan shall, subsequent to the
effective date of the merger and consolidation of the Retirement
Plan and the Plan, have received from the Trust Retirement Income
or retirement allowance, which in either case includes Accrued
Retirement Income or retirement allowance accrued to the
effective date of the merger and consolidation of the Retirement
Plan and the Plan or shall have received the return of
contributions to the Retirement Plan with interest, any amount to
be used or applied for his benefit which is determined in
accordance with this Section 12.3 shall be reduced to take
account of the amount of such payments to him.
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ARTICLE XIII
Amendment of the Plan
13
13.1 Amendment of the Plan.
(a) The Plan may be amended or modified at any time by the
Board of Directors pursuant to its written resolutions, provided
that no amendment or modification which will substantially
increase the cost of the Plan will be made by the Board of
Directors without approval, at a meeting of the stockholders duly
called for that purpose, by the vote of a majority of the stock
present and entitled to vote at such meeting.
(b) Such amendments and modifications (without limiting the
generality of the foregoing) may, among other things, make any
changes in the Plan which may become appropriate if, for any
reason, the Employer should in the future find it necessary or
desirable not to complete payment of the past service costs of
the Plan in the manner and within the period now contemplated or
should find it necessary or desirable to reduce the amounts of
Future Service contributions to be paid by the Employer after
such amendment or modification. Such amendments and
modifications may also (without limiting the generality of the
foregoing), make any changes necessary or desirable to make the
costs of the Plan eligible for tax deductions or to make the
income of the Trust exempt from taxation or to bring the Plan
into conformity or compliance with ERISA or with governmental
regulations. Notwithstanding the foregoing, no amendment shall
be made which has the effect of decreasing the Accrued Retirement
Income of any Employee, former Employee, or Provisional Payee as
provided under the limitations of Section 411(d)(6) of the Code.
(c) Notwithstanding the foregoing, the Plan may also be
amended by the Management Council of the Company if such
amendment does not involve an increase or decrease in the cost of
the Plan to the Company in excess of a dollar amount to be
determined from time to time by the Board of Directors, is
necessary, proper or desirable in order to comply with laws or
regulations promulgated by any federal or state governmental
authority, or is necessary to maintain the qualification of the
Plan under the Code and ERISA. The Board of Directors of the
Company shall from time to time determine the dollar amount
referenced in the foregoing sentence and may from time to time by
written instruction to the Management Council limit or suspend
Management Council's authority to amend the Plan pursuant to the
foregoing sentence.
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(d) The Plan may also be amended from time to time for any
reason by the Compensation Committee of the Board of the Company
subject to the limitations on amendments to the Plan set forth in
subsection (a) above. The Board of Directors may from time to
time by written instruction to the Compensation Committee limit
or suspend the Committee's authority to amend the Plan as
permitted by the foregoing sentence.
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ARTICLE XIV
Special Provisions
14
14.1 Adoption of Plan by other corporations.
(a) Any corporation, whether or not related to the Employer
by function or operation and any affiliate, if such corporation
or affiliate is authorized to do so by a resolution adopted by
the Board of Directors of the Employer, may adopt this Plan as a
separate Plan for all eligible Employees or any separate,
distinct, and identifiable class or group of Employees and the
related Trust Agreement, by action of the board of directors of
such corporation or affiliate. Any such adoption shall be
evidenced by certified copies of the resolutions of the foregoing
board of directors indicating such adoption and by the execution
of the Adoption Agreement by the adopting corporation or
affiliate. Such resolution shall state and define the effective
date of the Plan for the purpose of such adopting corporation
and, for the purpose of Section 415 of the Code, the "limitation
year" as to such corporation. Notwithstanding the foregoing,
however, if the Plan as adopted by an affiliate or other
corporation under the foregoing provision shall fail to receive
the initial approval of the Internal Revenue Service as a
qualified plan, any contributions by such affiliate or other
corporation after payment of all expenses will be returned to
such adopting corporation free of any trust, and the Plan and the
Trust Agreement as to such adopting affiliate or other
corporation shall terminate.
(b) Each adopting affiliate or other corporation shall be
required to use the same Trustee as provided in this Plan.
(c) The Trustee may, but is not required to, commingle,
hold, and invest as one fund all contributions (or any portion
thereof) made by each adopting affiliate or other corporation.
(d) Any contributions made by an affiliate or other
corporation, as provided for in this Plan, shall be paid to and
held by the Trustee for the exclusive benefit of the Employees of
such an affiliate or other corporation and the beneficiaries of
such Employees, subject to all the terms and conditions of this
Plan. On the basis of information furnished by the
administrator, the Trustee shall keep separate books and records
concerning the affairs of each adopting affiliate or other
corporation hereunder.
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14.2 Exclusive benefit. The Employer intends that the Plan
(including the Trust forming a part thereof) shall be a pension
plan of an employer for the exclusive benefit of its Employees
and their beneficiaries subject to Section 11.3, as provided for
in Section 401 of the Code, and as may be provided for in any
similar provisions of subsequent revenue laws, and that the Trust
shall qualify as an employees' trust which shall be exempt under
Section 501(a) of the Code, and any similar provisions of
subsequent revenue laws, as a trust forming part of such a plan.
14.3 Assignment or alienation. No benefit under the Plan
shall be subject in any manner to anticipation, alienation, sale,
transfer, assignment (either at law or in equity), pledge,
encumbrance, charge, garnishment, levy, execution, or other legal
or equitable process and any attempt so to anticipate, alienate,
sell, transfer, assign, pledge, encumber, charge, garnish, levy,
execute, or enforce other legal or equitable process against the
same shall be void, nor shall any such benefit be in any manner
liable for or subject to the debts, contracts, liabilities,
engagements, or torts of the person entitled to such benefit.
If any Employee or retired Employee or any Provisional Payee
under the Plan is adjudicated bankrupt or attempts to anticipate,
alienate, sell, transfer, assign, pledge, encumber, or charge any
benefit under the Plan or if any action shall be taken which is
in violation of the provisions of the immediately preceding
paragraph, then such benefit shall cease and terminate and in
that event the Retirement Board shall hold or apply the same or
any part thereof to or for the benefit of such Employee or
retired Employee or Provisional Payee in such manner as the
Retirement Board may think proper.
Notwithstanding the above, the Retirement Board and Trustee
shall comply with any "domestic relations order" (as defined in
Section 414(p)(1)(B) of the Code) which is a "qualified domestic
relations order" satisfying the requirements of Section 414(p) of
the Code. The Retirement Board shall establish procedures for
(a) notifying Employees and alternate payees who have or may have
an interest in benefits which are the subject of domestic
relations orders, (b) determining whether such domestic relations
orders are qualified domestic relations orders under Section
414(p) of the Code, and (c) distributing benefits which are
subject to qualified domestic relations orders.
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14.4 Voluntary undertaking. This Plan is strictly a
voluntary undertaking on the part of the Employer and shall not
be deemed to constitute a contract between the Employer or any
other company and any Employee or to be a consideration for, or
an inducement or condition of, the employment of any Employee.
Nothing contained in this Plan shall be deemed to give any
Employee the right to be retained in the service of the Employer
or to interfere with the right of the Employer to discharge or
retire any Employee at any time. Inclusion under the Plan will
not give any Employee or Provisional Payee any right or claim to
a Retirement Income except to the extent such right is
specifically fixed under the terms of the Plan and there are
funds available therefor in the hands of the Trustee or of any
insurance company which may hold funds of the Plan.
14.5 Top-Heavy Plan requirements. For any Plan Year the
Plan shall be determined to be a Top-Heavy Plan, the Plan shall
provide the following:
(a) the minimum benefit requirement of Section 14.7; and
(b) the vesting requirement of Section 14.8.
14.6 Determination of Top-Heavy status.
(a) For any Plan Year commencing after December 31, 1983,
the Plan shall be determined to be a "Top-Heavy Plan," if, as of
the Determination Date, (1) the Present Value of Accrued
Retirement Income of Key Employees or (2) the sum of the
Aggregate Accounts of Key Employees under this Plan and any plan
of an Aggregation Group, exceeds sixty percent (60%) of the
Present Value of Accrued Retirement Income or the Aggregate
Accounts of all Employees entitled to participate in this Plan
and any Plan of an Aggregation Group.
(b) For Plan Years beginning after December 31, 1986, the
Accrued Retirement Income of a Non-Key Employee shall be
determined under the accrual method under the Plan.
(c) For any Plan Year commencing after December 31, 1983,
the Plan shall be determined to be a "Super Top-Heavy Plan," if,
as of the Determination Date, (1) the Present Value of Accrued
Retirement Income of Key Employees or (2) the sum of the
Aggregate Accounts of Key Employees under this Plan and any plan
in an Aggregation Group, exceeds ninety percent (90%) of the
Present Value of Accrued Retirement Income or the Aggregate
Accounts of all Employees entitled to participate in this Plan
and any plan of an Aggregation Group.
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For purposes of Sections 14.6(a) and 14.6(b), if any
Employee is a Non-Key Employee for any Plan Year, but such
Employee was a Key Employee for any prior Plan Year, such
Employee's Present Value of Accrued Retirement Income and/ or
Aggregate Account balance shall not be taken into account for
purposes of determining whether this Plan is a Top-Heavy or Super
Top-Heavy Plan (or whether any Aggregation Group which includes
this Plan is a Top-Heavy Group). In addition, for Plan Years
beginning after December 31, 1984, if an Employee or former
Employee has not performed any services for the Employer or any
Affiliated Employer maintaining the Plan at any time during the
five (5) year period ending on the Determination Date, the
Aggregate Account and/or Present Value of Accrued Retirement
Income for such Employee or former Employee shall not be taken
into account for purposes of determining whether this Plan is a
Top-Heavy or Super Top-Heavy Plan.
(d) An Employee's "Aggregate Account" as of the
Determination Date shall be determined under applicable
provisions of the defined contribution plan used in determining
Top-Heavy status.
(e) An "Aggregation Group" shall mean either a Required
Aggregation Group or a Permissive Aggregation Group as
hereinafter determined.
(1) Required Aggregation Group: In determining a
Required Aggregation Group hereunder, each plan of the
Employer in which a Key Employee is a participant, and each
other plan of the Employer which enables any plan in which a
Key Employee participates to meet the requirements of Code
Sections 401(a)(4) or 410, will be required to be
aggregated. Such group shall be known as a Required
Aggregation Group.
In the case of a Required Aggregation Group, each plan
in the group will be considered a Top-Heavy Plan if the
Required Aggregation Group is a Top-Heavy Group. No plan in
the Required Aggregation Group will be considered a
Top-Heavy Plan if the Aggregation Group is not a Top-Heavy
Group.
(2) Permissive Aggregation Group: The Employer may
also include any other plan not required to be included in
the Required Aggregation Group, provided the resulting
group, taken as a whole, would continue to satisfy the
provisions of Code Sections 401(a)(4) or 410. Such group
shall be known as a Permissive Aggregation Group.
In the case of a Permissive Aggregation Group, only a plan
that is part of the Required Aggregation Group will be considered
a Top-Heavy Plan if the Permissive Aggregation Group is a
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Top-Heavy Group. A plan that is not part of the Required
Aggregation Group but that has nonetheless been aggregated as
part of the Permissive Aggregation Group will not be considered a
Top-Heavy Plan even if the Permissive Group is a Top-Heavy Group.
(3) Only those plans of the Employer in which the
Determination Dates fall within the same calendar year shall
be aggregated in order to determine whether such plans are
Top-Heavy Plans.
(f) The "Determination Date" shall mean with respect to any
Plan Year, the last day of the preceding Plan Year, or in the
case of the first Plan Year, the last day of such Plan Year.
(g) A "Key Employee" shall mean any Employee or former
Employee (and his beneficiaries) who, at any time during the Plan
Year or any of the four (4) preceding Plan Years, is:
(1) an officer of the Employer having an annual
compensation from the Employer greater than fifty percent
(50%) of the amount in effect under Code Section
415(b)(1)(A) for any such Plan Year. For purposes of this
Section 14.6(g)(1), only those employers which are
incorporated shall be considered as having officers, and no
more than fifty (50) Employees (or, if lesser, the greater
of three (3) or ten percent (10%) of the Employees) shall be
treated as officers. Annual compensation means compensation
as defined in Section 415(c)(3) of the Code, but including
amounts contributed by the Employer pursuant to a salary
reduction agreement which are excludable from the Employee's
gross income under Section 125, Section 402(a)(8), Section
402(h), or Section 403(b) of the Code.
(2) one of the ten (10) Employees (A) having annual
compensation from the Employer greater than the limitation
in effect under Code Section 415(c)(1)(A) and (B) owning (or
considered as owning within the meaning of Code Section 318)
the largest interests in the Employer. For purposes of this
Section 14.6(g)(2), if two (2) Employees have the same
interest in the Employer, the Employee having the greater
annual compensation from the Employer shall be treated as
having a larger interest.
(3) a "five-percent owner" of the Employer. The term
"five-percent owner" shall mean any person who owns (or is
considered as owning within the meaning of Code Section 318)
more than five percent (5%) of the outstanding stock of the
Employer or stock possessing more than five percent (5%) of
the total combined voting power of all stock of the
Employer. In determining percentage ownership hereunder,
employers that would otherwise be aggregated under Code
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Sections 414(b), (c), and (m) shall be treated as separate
employers.
(4) a "one-percent owner" of the Employer having an
annual compensation from the Employer of more than $150,000.
The term "one-percent owner" shall mean any person who owns
(or is considered as owning within the meaning of Code
Section 318) more than one percent (1%) of the outstanding
stock of the Employer or stock possessing more than one
percent (1%) of the total combined voting power of all stock
of the Employer. In determining percentage ownership
hereunder, employers that would otherwise be aggregated
under Code Sections 414(b), (c), and (m) shall be treated as
separate employers. However, in determining whether an
individual has compensation of more than $150,000,
compensation from each employer required to be aggregated
under Code Sections 414(b), (c), and (m) shall be taken into
account.
(h) A "Non-Key Employee" shall mean any Employee who is not
a Key Employee as defined in Section 14.6(g).
(i) An Employee's "Present Value of Accrued Retirement
Income" shall mean as of the Determination Date, the sum of the
following:
(1) the Present Value of his Accrued Retirement Income
as of the most recent valuation occurring within a twelve
(12) month period ending on the Determination Date.
(2) any Plan distributions made within the Plan Year
that includes the Determination Date or within the four (4)
preceding Plan Years. However, in the case of distributions
made after the valuation date and prior to the Determination
Date, such distributions are not included as distributions
for Top-Heavy purposes to the extent that such distributions
are already included in the Employee's Present Value of
Accrued Retirement Income as of the valuation date.
Notwithstanding anything herein to the contrary, all
distributions, including distributions made prior to
January 1, 1984, and distributions under a terminated plan
which if it had not been terminated would have been required
to be included in an Aggregation Group, will be counted.
(3) any Employee contributions, whether voluntary or
mandatory. However, amounts attributable to qualified
deductible employee contributions shall not be considered to
be a part of the Employee's Present Value of Accrued
Retirement Income.
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(4) with respect to unrelated rollovers and
plan-to-plan transfers (ones which are both initiated by the
Employee and made from a plan maintained by one employer to
a plan maintained by another employer), if this Plan
provides for rollovers or plan-to-plan transfers, it shall
always consider such rollover or plan-to-plan transfer as a
distribution for the purposes of this Section. If this Plan
is the plan accepting such rollovers or plan-to-plan
transfers, it shall not consider such rollovers or
plan-to-plan transfers accepted after December 31, 1983 as
part of the Employee's Present Value of Accrued Retirement
Income. However, rollovers or plan-to-plan transfers
accepted prior to January 1, 1984 shall be considered as
part of the Employee's Present Value of Accrued Retirement
Income.
(5) with respect to related rollovers and plan-to-plan
transfers (ones either not initiated by the Employee or made
to a plan maintained by the same employer), if this Plan
provides for rollovers or plan-to-plan transfers, it shall
not be counted as a distribution for purposes of this
Section. If this Plan is the plan accepting such rollover
or plan-to-plan transfer, it shall consider such rollover or
plan-to-plan transfer as part of the Employee's Present
Value of Accrued Retirement Income, irrespective of the date
on which such rollover or plan-to-plan transfer is accepted.
(j) A "Top-Heavy Group" shall mean an Aggregation Group in
which, as of the Determination Date, the sum of:
(1) the Present Value of Accrued Retirement Income of
Key Employees under all defined benefit plans included in
that group, and
(2) the Aggregate Accounts of Key Employees under all
defined contribution plans included in the group,
exceeds sixty percent (60%) of a similar sum determined for all
Employees.
14.7 Minimum Retirement Income for Top-Heavy Plan Years.
Notwithstanding anything herein to the contrary, for any
Top-Heavy Plan Year, the minimum Accrued Retirement Income
derived from Employer contributions for each Non-Key Employee,
including benefits accrued in years in which the Plan is not a
Top-Heavy Plan, shall equal a percentage of such Non-Key
Employee's highest average compensation not less than the lesser
of: (a) two percent (2%) multiplied by the Employee's number of
Years of Service with the Employer, or (b) twenty percent (20%).
For purposes of the minimum benefit, an Employee's Years of
Service shall exclude (a) Plan Years in which the Plan is not a
Top-Heavy Plan, and (b) Years of Service completed prior to
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January 1, 1984. The minimum benefit required by this Section
14.7 shall be calculated using the Employee's total compensation
and expressed in the form of a single life annuity (with no
ancillary benefits) beginning at such Employee's Normal
Retirement Date. An Employee's average compensation shall be
based on the five (5) consecutive years for which the Employee
had the highest compensation.
Notwithstanding the foregoing, in any Plan Year in which a
Non-Key Employee is an Employee in both this Plan and a defined
contribution plan, and both such plans are Top-Heavy Plans, the
Employer shall not be required to provide a Non-Key Employee with
both the full separate minimum defined benefit and the full
separate minimum defined contribution plan allocation.
Therefore, if a Non-Key Employee is participating in a defined
contribution plan maintained by the Employer and the minimum
allocation under Code Section 416(c)(2) is allocated to the
Non-Key Employee under such defined contribution plan, the
minimum Accrued Retirement Income provided for above shall not be
applicable, and no minimum benefit shall accrue on behalf of the
Non-Key Employee. Alternatively, the Employer may satisfy the
minimum benefit requirement of Code Section 416(c)(1) for the
Non-Key Employee by providing any combination of benefits and/or
contributions that satisfy the safe harbor rules of Treasury
Regulation Section 1.416-1(m-12).
14.8 Vesting requirements for Top-Heavy Plan Years.
Notwithstanding the provisions of Section 8.1, for any Top-Heavy
Plan Year, the vested portion of an Employee's Accrued Retirement
Income shall be determined on the basis of the Employee's Vesting
Years of Service according to the following schedule:
Years of Service Vested Percentage
less than 2 0
2 20
3 40
4 60
5 80
6 or more 100
The minimum Retirement Income for any Top-Heavy Plan Year shall
not be forfeited during any period for which the payment of the
Employee's Retirement Income is required to be suspended under
Section 5.10 of the Plan.
If in any subsequent Plan Year, the Plan ceases to be a
Top-Heavy Plan, the Retirement Board may, in its sole discretion,
elect to (a) continue to apply this vesting schedule in
determining the vested percentage of an Employee's Accrued
Retirement Income or (b) revert to the vesting schedule in effect
before the Plan became a Top-Heavy Plan. Any such reversion
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shall be treated as a Plan amendment pursuant to the terms of the
Plan. No decrease in an Employee's nonforfeitable percentage may
occur in the event the Plan's status as a Top-Heavy Plan changes
for any Plan Year.
14.9 Adjustments to maximum benefits for Top-Heavy Plans.
(a) In the case of an Employee who is a participant in a
defined benefit plan and a defined contribution plan maintained
by the Employer, and such plans as a group are determined to be
Top-Heavy for any limitation year beginning after December 31,
1983, "1.0" shall be substituted for "1.25" in each place it
appears in the denominators of Fractions A and B, as set forth in
Section 6.5 of the Plan, unless the extra minimum benefit is
provided pursuant to Section 14.9(b). Super Top-Heavy Plans
shall be required at all times to substitute "1.0" for "1.25" in
the denominator of each plan fraction.
(b) If a Key Employee is a participant in both a defined
benefit plan and a defined contribution plan that are both part
of a Top-Heavy Group (but neither of such plans is a Super
Top-Heavy Plan), the defined benefit and defined contribution
fractions set forth in Section 6.5 shall remain unchanged,
provided that in Section 14.7 above, "three percent (3%)" shall
be substituted for "two percent (2%)" and "twenty percent (20%)"
shall be increased by one (1) percentage point (but not more than
ten (10) percentage points) for each Year of Service included in
the computations under Section 14.7.
(c) For purposes of this Section 14.9, if the sum of the
defined benefit plan fraction and the defined contribution
fraction shall exceed 1.0 in any Plan Year for any Employee in
this Plan, the Employer shall eliminate any amounts in excess of
the limits set forth in Section 6.5, pursuant to Section 6.7 of
the Plan.
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ARTICLE XV
Post-retirement Medical Benefits
15
15.1 Definitions. The following words and phraseology as
used herein shall have the following meanings unless a different
meaning is plainly required by the context:
(a) "Pensioned Employee" means a former Employee of the
Employer who is eligible to receive Retirement Income after his
retirement at his Early, Normal, or Deferred Retirement Date, as
applicable, pursuant to the terms of the Plan, but shall not
include any former Employee who terminated his service with the
Employer prior to his Early, Normal, or Deferred Retirement Date
and who is entitled to Retirement Income under the Plan. A
"Pensioned Employee" shall not include a Key Employee, as defined
in Section 14.6(g), or effective January 1, 1991 any Pensioned
Employee of an Employer that has adopted the Plan pursuant to
Section 14.1 hereof but does not provide medical benefits to its
Pensioned Employees.
(b) "Dependents" means the Pensioned Employee's spouse who
is not legally separated or, effective January 1, 1991, divorced
from the Pensioned Employee and the Pensioned Employee's
unmarried children (both natural and legally adopted) within the
prescribed age limit set forth below. The term "children"
includes stepchildren and foster children who reside with the
Pensioned Employee in a regular parent-child relationship and are
dependent upon the Pensioned Employee for principal support and
maintenance. The term Dependent shall not include any person who
is covered, or eligible for coverage, under the Plan as a
Pensioned Employee or who is entitled to any benefits under any
provisions of this Plan because of having been covered as a
Pensioned Employee.
Children shall be considered to be within the prescribed age
limit if they are less than nineteen (19) years of age, except
that unmarried children shall continue to be eligible until the
December 31 coinciding with or next following attainment of age
nineteen (19). Unmarried children age nineteen (19), but less
than age twenty-five (25), shall continue to be within the
prescribed age limit if they are regularly attending school on a
full-time basis. Effective January 1, 1991, for purposes of this
Article XV, an unmarried child shall be considered to be
regularly attending school on a full-time basis if such child is
enrolled in and regularly attending a secondary school or an
accredited vocational school, College or University (as defined
under Exhibit A) and meets the minimum requirements of such
school, College or University to maintain full-time status. This
shall also include an unmarried child who is enrolled as a part-
time student at one of the above institutions while such
individual is taking a course load that is equivalent to the
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minimum course load required for full-time student status at such
institution.
If both a husband and his wife are covered under this Plan
as Pensioned Employees of the Employer, either, but not both, may
elect to cover their eligible children as Dependents.
Any person covered or eligible for coverage under Article XV
as a Pensioned Employee, or under any group medical plan
maintained by the Employer as an Employee, shall not be
considered as a Dependent.
15.2 Eligibility of Pensioned Employees and their
Dependents.
(a) A person who is a Pensioned Employee on January 1, 1989
shall be eligible for coverage as a Pensioned Employee on
January 1, 1989, provided he was covered as an Employee under a
group medical plan maintained by the Employer immediately prior
to the time he became a Pensioned Employee.
(b) An Employee who becomes a Pensioned Employee on or
after January 1, 1989 shall be eligible for coverage on the date
he becomes a Pensioned Employee, provided he was covered as an
Employee under a group medical plan maintained by the Employer
immediately prior to the time he became a Pensioned Employee.
(c) Effective January 1, 1989, a Dependent of a Pensioned
Employee shall be eligible for coverage under this Plan on the
later of (1) the date the Pensioned Employee becomes eligible for
coverage hereunder and (2) the date such person becomes a
Dependent and (3) the date of the payment of any contribution
required of the Pensioned Employee with respect to the Dependent.
(d) Notwithstanding paragraph (c) above, effective January
1, 1991, a Dependent of a Pensioned Employee shall be eligible
for coverage under this Plan on the later of (1) the date the
Pensioned Employee becomes eligible for coverage hereunder and
(2) the date such person becomes a Dependent.
15.3 Medical benefits. The medical benefits provided under
this Article XV by the Employer and each adopting Employer are
set forth in the copy of each such Employer's medical benefits
plan which is attached hereto as Exhibit A and specifically
incorporated herein by reference in its entirety, as may be
amended from time to time. Such medical benefits shall be
subject without limitation to all deductibles, maximums,
exclusions, coordination with Medicare Parts A and B and other
medical plans, and procedures for submitting claims and
initiating legal proceedings provided therein.
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15.4 Termination of coverage.
(a) Coverage of any Pensioned Employee shall cease as
follows:
(1) when Article XV is amended, terminated, or
discontinued in accordance with its terms; or
(2) when the Pensioned Employee fails to make when due
any required contribution; or
(3) as otherwise provided in Exhibit A.
(b) Coverage of any Dependent shall cease as follows:
(1) when Article XV is amended, terminated, or
discontinued in accordance with its terms; or
(2) when the Pensioned Employee fails to make when due
any required contribution; or
(3) as otherwise provided in Exhibit A.
15.5 Continuation of coverage to certain individuals.
(a) Anything in Article XV to the contrary notwithstanding,
a Pensioned Employee, Dependent spouse, or Dependent child shall
be entitled to elect continued medical coverage as provided under
the terms of Article XV upon the occurrence of a Qualifying
Event, provided such Pensioned Employee, Dependent spouse, or
Dependent child was entitled to benefits under Article XV on the
day prior to the Qualifying Event.
(1) "Qualifying Event" means with respect to any
Pensioned Employee, Dependent spouse, or Dependent child, as
appropriate, (A) the death of the Pensioned Employee,
(B) the divorce or legal separation of the Pensioned
Employee from the Dependent spouse, (C) a Dependent child
ceasing to be a Dependent as defined under the requirements
of Article XV, or (D) a proceeding in a case under Title 11,
United States Code, with respect to the Employer.
(b) The Pensioned Employee or Dependent electing continued
coverage under this Section 15.5 shall be required to pay such
monthly contributions as determined by the Employer to be equal
to a reasonable estimate of 102% of the cost of providing
coverage for such period for similarly situated beneficiaries
which (1) is determined on an actuarial basis and (2) takes into
account such factors as the Secretary of the Treasury may
prescribe.
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(c) The continuation coverage elected by a Pensioned
Employee, Dependent spouse, or Dependent child shall begin on the
date of the Qualifying Event and end not earlier than the first
to occur of the following:
(1) The third anniversary of the Qualifying Event;
(2) The termination of Article XV of the Plan;
(3) The failure of the Pensioned Employee or Dependent
to pay any required contribution when due;
(4) The date on which the Pensioned Employee or
Dependent first becomes, after the date of his election,
(A) a covered employee under any other group health plan
which does not contain any exclusion or limitation with
respect to any preexisting condition of such individual, or
(B) entitled to benefits under Title XVIII of the Social
Security Act; or
(5) The date the Dependent spouse becomes covered
under another group health plan which does not contain any
exclusion or limitation with respect to any preexisting
condition of such Dependent spouse.
(d) Any election to continue coverage under this
Section 15.5 shall be made during the election period
(1) beginning not later than the termination date of coverage by
reason of the Qualifying Event and (2) ending sixty (60) days
following the later of the date described in (1) above or the
date any Pensioned Employee, Dependent spouse, or Dependent child
receives notice of a Qualifying Event from the Employer.
(e) The Employer shall provide each Pensioned Employee and
Dependent spouse, if any, written notice of the rights provided
in this Section 15.5. The Pensioned Employee or Dependent spouse
is required to notify the Employer within thirty (30) days of any
Qualifying Event described in Section 15.5(a)(1)(B) or (C), and
the Employer shall provide the Dependent spouse or Dependent
child written notice of the rights provided in this Section 15.5
within fourteen (14) days thereafter. Notice to the Dependent
spouse shall be deemed notice to each Dependent child residing
with such spouse at the time such notification is made.
15.6 Contributions to fund medical benefits. Any
contributions which the Employer deems necessary to provide the
medical benefits under Article XV will be made from time to time
by or on behalf of the Employer, and contributions shall be
required of the Pensioned Employees to the Employer's medical
benefit plan in amounts determined in the sole discretion of the
Employer from time to time. All Employer contributions shall be
made to the Trustee under the Trust Agreement provided for in
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Article XI and shall be allocated to a separate account
maintained solely to fund the medical benefits provided under
Article XV. The Employer shall designate that portion of any
contribution to the Plan allocable to the funding of medical
benefits under this Article XV. In no event at any time prior to
the satisfaction of all liabilities under this Article XV shall
any part of the corpus or income of such separate account be used
for, or diverted to, purposes other than for the exclusive
purpose of providing benefits under this Article XV. Effective
January 1, 1991, subject to the requirements of Code Section 420,
the Employer shall have the right, in its sole discretion, to
transfer any excess corpus or income of the Plan allocated to
fund Retirement Income to the separate account to fund medical
benefits under this Article XV.
The amount of contributions to be made by or on behalf of
the Employer for any Plan Year shall be determined in accordance
with any generally accepted actuarial method which is reasonable
in view of the provisions and coverage of Article XV, the funding
medium, and any other applicable considerations. However, the
Employer is under no obligation to make any contributions under
Article XV after Article XV is terminated, except to fund claims
for medical expenses incurred prior to the date of termination.
The medical benefits provided under this Article XV, when
added to any life insurance protection provided under the Plan,
shall be subordinate to the retirement benefits provided under
the Plan.
Subject to any transitional rule applicable to contributions
made under this Article XV prior to January 1, 1990, effective
October 3, 1989, the aggregate of costs of the medical benefits
(measured from January 1, 1987) plus the costs of any life
insurance protection shall not exceed twenty-five percent (25%)
of the sum of the aggregate of costs of retirement benefits under
the Plan (other than past service credits), the aggregate of
costs of the medical benefits and the costs of any life insurance
protection (both measured from January 1, 1987). The aggregate
of costs of retirement benefits, other than for past service
credits, and the aggregate of costs of medical benefits provided
under the Plan shall be determined using the projected unit
credit funding method and the actuarial assumptions set forth in
Exhibit B, a copy of which is attached hereto and specifically
incorporated herein by reference in its entirety, and as may be
amended from time to time by the committee responsible for
providing a procedure for establishing and carrying out a funding
policy and method for the Plan pursuant to Section 10.9 of the
Plan. Contributions allocated to any separate account
established for a Pensioned Employee from which medical benefits
will be payable solely to such Pensioned Employee or his
Dependents shall be treated as an Annual Addition as defined in
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Section 6.6(a) to any defined contribution plan maintained by the
Employer.
15.7 Pensioned Employee contributions. It shall be the sole
responsibility of the Pensioned Employee to notify the Employer
promptly in writing when a change in the amount of the Pensioned
Employee's contribution is in order because a Dependent has
become ineligible for coverage under this Article XV. No person
shall become covered under this Article XV for whom the Pensioned
Employee has not made the required contribution. Any
contribution paid by a Pensioned Employee for any person after
such person shall have become ineligible for coverage under this
Article XV shall be returned upon written request but only
provided such written request by or on behalf of the Pensioned
Employee is received by the Employer within ninety (90) days from
the date coverage terminates with respect to such ineligible
person.
15.8 Amendment of Article XV. The Employer reserves the
right, through action of its Board of Directors, to amend Article
XV (including Exhibit A) pursuant to Section 13.1 or the Trust
without the consent of any Pensioned Employee, or his Dependents,
provided, however, that no amendment of this Article or the Trust
shall cancel the payment or reimbursement of expenses for claims
already incurred by a Pensioned Employee or his Dependent prior
to the date of any amendment, nor shall any such amendment
increase the duties and obligations of the Trustee except with
its consent. This Article XV, as set forth in the Plan document,
is not a contract and non-contributory benefits hereunder are
provided gratuitously, without consideration from any Pensioned
Employee or his Dependents. The Employer makes no promise to
continue these benefits in the future and rights to future
benefits will never vest. In particular, retirement or the
fulfillment of the prerequisites for a retirement benefit
pursuant to the terms of the Plan or under the terms of any other
employee benefit plan maintained by the Employer shall not confer
upon any Pensioned Employee or Dependents any right to continued
benefits under this Article XV.
15.9 Termination of Article XV. Although it is the
intention of the Employer that this Article shall be continued
and the contribution shall be made regularly thereto each year,
the Employer, by action of its Board of Directors pursuant to
Section 13.1, may terminate this Article XV or permanently
discontinue contributions at any time in its sole discretion.
This Article XV, as set forth in the Plan document, is not a
contract and non-contributory benefits hereunder are provided
gratuitously, without consideration from any Pensioned Employee
or his Dependents. The Employer makes no promise to continue
these benefits in the future and rights to future benefits will
never vest. In particular, retirement or the fulfillment of the
prerequisites for a retirement benefit pursuant to the terms of
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the Plan or under the terms of any other employee benefit plan
maintained by the Employer shall not confer upon any Pensioned
Employee or his Dependents any right to continued benefits under
this Article XV. Effective January 1, 1991, in the event the
Employer or any adopting Employer shall terminate its provision
of the medical benefits described in Exhibit A to Section 15.3 of
the Plan to its Pensioned Employees, this Article XV of the Plan
shall automatically terminate with respect to the Pensioned
Employees and their Dependents of such Employer without the
requirement of any action by such Employer.
15.10 Reversion of assets upon termination. Upon the
termination of this Article XV and the satisfaction of all
liabilities under this Article XV, all remaining assets in the
separate account described in Section 15.6 shall be returned to
the Employer.
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ARTICLE XVI
Early Retirement Incentive Program
16
16.1 Eligibility. This Article XVI is effective as of March
1, 1994. All Employees of the Employer other than Nuclear
Generation Employees, who: (a) are classified on the Employer's
payroll as actively employed on the last day preceding their
Retirement Date; (b) who have or will complete ten (10) or more
years of Accredited Service on or before December 31, 1994; and
(c) have or will attain age fifty-five (55) on or before December
31, 1994 ("Eligible Employee") shall be eligible to receive the
benefits described in Section 16.3 below if, during the period
from April 1, 1994 through 5:00 p.m. EDT on April 30, 1994, such
Employee elects to retire by filing an election form and waiver
agreement with the Retirement Board no later than 5:00 p.m. EDT
on April 30, 1994 and allows such election form and waiver
agreement to become effective. In the event an Eligible Employee
does not submit an election form and waiver agreement by 5:00
p.m. EDT on April 30, 1994 and allow such Agreement to become
effective, the Retirement Board shall interpret such failure as
an election not to receive the benefits provided under this
Article XVI.
16.2 Retirement Dates of Eligible Employees.
(a) Employees who satisfy eligibility criteria by May 31,
1994. The Early Retirement Date of an Eligible Employee who
elects to retire in accordance with the provisions of this
Article XVI and who is age fifty-five (55) or older with ten (10)
or more years of Accredited Service by May 31, 1994 shall be June
1, 1994.
(b) Employees who satisfy eligibility criteria subsequent
to May 31, 1994. The Early Retirement Date of an Eligible
Employee who elects to retire in accordance with the provisions
of this Article XVI and who attains age fifty-five (55) or older
with ten (10) or more years of Accredited Service subsequent to
May 31, 1994, but prior to December 31, 1994, shall be the first
day of the first month following the date such Eligible Employee
satisfies the age and service criteria described in this Section
16.2(b).
(c) Exception for critical projects. Notwithstanding the
foregoing, in the sole discretion of the Employer, the Early
Retirement Date of an Eligible Employee may be postponed beyond
the Eligible Employee's Early Retirement Date determined in
accordance with the provisions of paragraph (a) or (b) above,
whichever is applicable, provided, however, that no Eligible
Employee's Early Retirement Date shall be postponed beyond May
31, 1995.
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16.3 Early retirement incentive program benefits.
(a) Early retirement replacement benefit. In addition to
any Retirement Income to which an Eligible Employee may be
entitled in accordance with the provisions of Article V of the
Plan, if an Eligible Employee retires from the service of the
Employer in accordance with the provisions of this Article XVI
prior to his Normal Retirement Date and elects to commence his
Retirement Income prior to his Normal Retirement Date pursuant to
the provisions of Section 5.7 of the Plan, the amount of
Retirement Income to be received by such Eligible Employee under
Section 5.5 shall not be reduced due to early commencement of
such Retirement Income.
(b) Social Security Bridge Benefit. An Eligible Employee
who retires in accordance with the provisions of this Article XVI
prior to the attainment of age sixty-two (62) shall be paid an
amount equal to the estimated monthly Social Security benefits
such Eligible Employee would become entitled to beginning at age
sixty-five (65) based upon the Social Security Act in effect at
the time of such Employee's retirement and such Eligible
Employee's estimated Social Security earnings while employed with
the Employer or an Affiliated Employer through his Early
Retirement Date. This "Social Security Bridge Benefit" shall be
paid monthly commencing on the Employee's Early Retirement Date
(determined in accordance with Section 16.2 above) and shall
continue to be paid on the first day of each month thereafter up
to and including the first day of the month in which such
Eligible Employee attains age sixty-two (62).
(c) Provisional Payees. The benefits described in this
Section 16.3 shall be subject to and administered in accordance
with the provisions of Article VII of the Plan; provided,
however, that in the event of the Eligible Employee's death prior
to his sixty-second (62nd) birthday, one hundred percent (100%)
of the monthly Social Security Bridge Benefit to which the
Eligible Employee is entitled shall continue to be paid to his
Provisional Payee through the first day of the month in which
such Eligible Employee would have attained age sixty-two (62) had
the Eligible Employee not died.
16.4 Restoration to service. Notwithstanding any provisions
of Section 5.10 to the contrary, in the event an Eligible
Employee who retires in accordance with the provisions of this
Article XVI subsequently returns to the service of the Employer
or any Affiliated Employer, all benefits payable to such Eligible
Employee under this Article XVI shall cease and upon such
Eligible Employee's subsequent retirement, the Eligible Employee
shall receive the Actuarial Equivalent of the greater of:
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(a) the Retirement Income the Eligible Employee would
receive under the Plan based upon his Accredited Service and age
at the date of his subsequent retirement, reduced by the
Actuarial Equivalent of any Retirement Income, including any
amount payable under Section 16.3(b), which the Employee received
prior to his reemployment; or
(b) the Retirement Income the Eligible Employee was
actually receiving prior to his reemployment plus any amounts
payable under Section 16.3(b).
IN WITNESS WHEREOF, the Board of Directors of Georgia Power
Company through its authorized officers has adopted this
amendment and restatement of the Pension Plan for Employees of
Georgia Power Company this day of , , to
be effective January 1, 1989.
GEORGIA POWER COMPANY
By:
Its:
ATTEST:
By:
Its:
[CORPORATE SEAL]
adamscl] h:\wpdocs\mtd\gpc\gpc-pens.94
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Exhibit 10(a)71
PENSION PLAN
FOR EMPLOYEES OF
SOUTHERN COMPANY SERVICES, INC.
AS AMENDED AND RESTATED
EFFECTIVE AS OF JANUARY 1, 1989
<PAGE>
TABLE OF CONTENTS
Page
ARTICLE I Definitions . . . . . . . . . . . . . . . . . . 2
ARTICLE II Eligibility . . . . . . . . . . . . . . . . . 13
2.1 Employees . . . . . . . . . . . . . . . . . . 13
2.2 Employees represented by a collective
bargaining agent . . . . . . . . . . . . 13
2.3 Persons in military service and
Employees
on authorized leave of absence . . . . . 13
2.4 Employees reemployed . . . . . . . . . . . . . 13
2.5 Participation upon return to eligible class . 14
2.6 Exclusion of certain categories of employees . 14
2.7 Waiver of participation . . . . . . . . . . . 14
ARTICLE III Retirement . . . . . . . . . . . . . . . . . . 16
3.1 Retirement at Normal Retirement Date . . . . . 16
3.2 Retirement at Early Retirement Date . . . . . 16
3.3 Retirement at Deferred Retirement Date . . . . 16
ARTICLE IV Determination of Accredited Service . . . . . 17
4.1 Accredited Service pursuant to Prior Plan . . 17
4.2 Accredited Service . . . . . . . . . . . . . . 17
4.3 Accredited Service and Years of Service
in respect of service of certain
Employees previously employed by the
Employer or by Affiliated Employers . . . 18
4.4 Accrual of Retirement Income during
period of total disability . . . . . . . 20
4.5 Employees leaving Employer's service . . . . . 21
4.6 Transfers to or from Affiliated Employers . . 21
4.7 Transfers from Savannah Electric and
Power Company . . . . . . . . . . . . . . 23
ARTICLE V Retirement Income . . . . . . . . . . . . . . 24
5.1 Normal Retirement Income . . . . . . . . . . . 24
5.2 Minimum Retirement Income payable upon
retirement at Normal Retirement Date
or Deferred Retirement Date . . . . . . . 24
5.3 Minimum Retirement Income upon
retirement
at Early Retirement Date or upon
termination of service by reason of
death or otherwise prior to retirement . 25
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5.4 Calculation of Social Security Offset . . . . 26
5.5 Early Retirement Income . . . . . . . . . . . 27
5.6 Deferred Retirement Income . . . . . . . . . . 27
5.7 Payment of Retirement Income . . . . . . . . . 28
5.8 Termination of Retirement Income . . . . . . . 29
5.9 Required distributions . . . . . . . . . . . . 29
5.10 Suspension of Retirement Income for
reemployment . . . . . . . . . . . . . . 31
5.11 Increase in Retirement Income of retired
Employees for service prior to
January 1, 1991 . . . . . . . . . . . . . 31
5.12 Special provisions relating to the
treatment of absence of an Employee
from the service of the Employer to
serve in the Armed Forces of the
United States . . . . . . . . . . . . . . 32
ARTICLE VI Limitations on Benefits . . . . . . . . . . . 36
6.1 Maximum Retirement Income . . . . . . . . . . 36
6.2 Adjustment to Defined Benefit Dollar
Limitation for Early or Deferred
Retirement . . . . . . . . . . . . . . . 37
6.3 Adjustment of limitation for Years of
Service or participation . . . . . . . . 38
6.4 Preservation of Accrued Retirement Income . . 38
6.5 Limitation on benefits from multiple plans . . 39
6.6 Special rules for plans subject to
overall limitations under Code
Section 415(e) . . . . . . . . . . . . . 40
6.7 Combination of Plans . . . . . . . . . . . . . 41
6.8 Incorporation of Code Section 415 . . . . . . 41
ARTICLE VII Provisional Payee . . . . . . . . . . . . . . 42
7.1 Adjustment of Retirement Income to
provide for payment to Provisional
Payee . . . . . . . . . . . . . . . . . . 42
7.2 Form and time of election and notice
requirements . . . . . . . . . . . . . . 42
7.3 Circumstances in which election and
designation are inoperative . . . . . . . 43
7.4 Pre-retirement death benefit . . . . . . . . . 44
7.5 Post-retirement death benefit -
qualified joint and survivor annuity . . 46
7.6 Election and designation by former
Employee entitled to Retirement
Income in accordance with Article VIII . 46
7.7 Death benefit for Provisional Payee of
former Employee . . . . . . . . . . . . . 48
7.8 Limitations on Employee's and
Provisional
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Payee's benefits . . . . . . . . . . . . 48
7.9 Effect of election under Article VII . . . . . 49
ARTICLE VIII Termination of Service . . . . . . . . . . . . 50
8.1 Vested interest . . . . . . . . . . . . . . . 50
8.2 Early distribution of vested benefit . . . . . 50
8.3 Years of Service of reemployed Employees . . . 51
8.4 Cash-out and buy-back . . . . . . . . . . . . 52
8.5 Calculation of present value for
cash-out
of benefits and for determining amount
of benefits . . . . . . . . . . . . . . . 53
8.6 Retirement Income under Prior Plan . . . . . . 55
8.7 Requirement for Direct Rollovers . . . . . . . 55
ARTICLE IX Contributions . . . . . . . . . . . . . . . . 57
9.1 Contributions generally . . . . . . . . . . . 57
9.2 Return of Employer contributions . . . . . . . 57
9.3 Expenses . . . . . . . . . . . . . . . . . . . 58
ARTICLE X Administration of Plan . . . . . . . . . . . . 59
10.1 Retirement Board . . . . . . . . . . . . . . . 59
10.2 Organization and transaction of business
of Retirement Board . . . . . . . . . . . 59
10.3 Administrative responsibilities of
Retirement Board . . . . . . . . . . . . 59
10.4 Retirement Board, the "Administrator" . . . . 60
10.5 Fiduciary responsibilities . . . . . . . . . . 61
10.6 Employment of actuaries and others . . . . . . 61
10.7 Accounts and tables . . . . . . . . . . . . . 61
10.8 Indemnity of members of Retirement Board . . . 62
10.9 Areas in which the Retirement Board does
not have responsibility . . . . . . . . . 62
10.10 Claims Procedures . . . . . . . . . . . . . . 63
ARTICLE XI Management of Trust . . . . . . . . . . . . . 64
11.1 Trust . . . . . . . . . . . . . . . . . . . . 64
11.2 Disbursement of the Trust Fund . . . . . . . . 64
11.3 Rights in the Trust . . . . . . . . . . . . . 64
11.4 Merger of the Plan . . . . . . . . . . . . . . 65
ARTICLE XII Termination of the Plan . . . . . . . . . . . 66
12.1 Termination of the Plan . . . . . . . . . . . 66
12.2 Limitation on benefits for certain
highly
paid employees . . . . . . . . . . . . . 66
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ARTICLE XIII Amendment of the Plan . . . . . . . . . . . . 68
13.1 Amendment of the Plan . . . . . . . . . . . . 68
ARTICLE XIV Special Provisions . . . . . . . . . . . . . . 69
14.1 Adoption of Plan by other corporations . . . . 69
14.2 Exclusive benefit . . . . . . . . . . . . . . 70
14.3 Assignment or alienation . . . . . . . . . . . 70
14.4 Voluntary undertaking . . . . . . . . . . . . 71
14.5 Top-Heavy Plan requirements . . . . . . . . . 71
14.6 Determination of Top-Heavy status . . . . . . 71
14.7 Minimum Retirement Income for Top-Heavy
Plan Years . . . . . . . . . . . . . . . 75
14.8 Vesting requirements for Top-Heavy Plan
Years . . . . . . . . . . . . . . . . . . 76
14.9 Adjustments to maximum benefits for
Top-Heavy Plans . . . . . . . . . . . . . 77
ARTICLE XV Post-retirement Medical Benefits . . . . . . . 78
15.1 Definitions . . . . . . . . . . . . . . . . . 78
15.2 Eligibility of Pensioned Employees and
their Dependents . . . . . . . . . . . . 79
15.3 Medical benefits . . . . . . . . . . . . . . . 79
15.4 Termination of coverage . . . . . . . . . . . 79
15.5 Continuation of coverage to certain
individuals . . . . . . . . . . . . . . . 80
15.6 Contributions to fund medical benefits . . . . 81
15.7 Pensioned Employee contributions . . . . . . . 82
15.8 Amendment of Article XV . . . . . . . . . . . 83
15.9 Termination of Article XV . . . . . . . . . . 83
15.10 Reversion of assets upon termination . . . . . 83
ARTICLE XVI Early Retirement Incentive Program . . . . . 84
16.1 Eligibility . . . . . . . . . . . . . . . . . 84
16.2 Retirement Dates of Eligible Employees . . . . 84
16.3 Early retirement incentive program benefits . 85
16.4 Restoration to service . . . . . . . . . . . . 85
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Introductory Statement
The Pension Plan for Employees of Southern Company Services,
Inc., as amended and restated effective as of January 1, 1989 and
hereinafter set forth (the "Plan"), is a modification and
continuation of the Pension Plan for Employees of Southern
Company Services, Inc. which originally became effective
November 1, 1949, and has been amended from time to time.
Since the enactment of the Employee Retirement Income
Security Act of 1974 ("ERISA"), the Plan has been amended
numerous times to comply with changes in the law and to achieve
other administrative goals. Initially, the Plan was amended and
restated in 1976 to comply with ERISA. Thereafter, the Plan was
again amended and restated in 1986 to comply with the Tax Equity
and Fiscal Responsibility Act of 1982, the Retirement Equity Act
of 1984, and the Deficit Reduction Act of 1984. In more recent
years, the Plan has been amended and restated three times to
comply with the Tax Reform Act of 1986 -- first in 1989, second
in 1991 and again as amended and restated herein. The amendment
and restatement set forth herein consolidates those amendments
made in 1989 and 1991 and provides for such other appropriate
changes as are required by the law. Accordingly, this amendment
and restatement is effective as of January 1, 1989. Where
appropriate, amendments to the Plan which have a different
effective date are noted.
Retirement Income of former Employees (or Provisional Payees
of former Employees) who retired in accordance with the
provisions of the Prior Plan, as defined herein, is payable in
accordance with the provisions of the Prior Plan.
All contributions made by the Employer to this Plan are
expressly conditioned upon the continued qualification of the
Plan under Section 401(a) of the Code, including any amendments
to the Plan, and upon the deductibility of such contributions by
the Employer pursuant to Section 404 of the Code.
1
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ARTICLE I
Definitions
The following words and phraseology as used herein have the
following meanings unless a different meaning is plainly required
by the context:
1
1.1 "Accrued Retirement Income" means with respect to any
Employee at any particular date, the Retirement Income,
determined pursuant to Section 5.1, commencing on his Normal
Retirement Date which would be payable to such Employee in the
form of a single life annuity on the basis of his Accredited
Service to the date as of which the computation of Retirement
Income is made.
1.2 "Accredited Service" means with respect to any Employee
included in the Plan, the period of service as provided in
Article IV.
1.3 "Actuarial Equivalent" means a benefit of equivalent
value when computed on the basis of five percent (5%) interest
per annum, compounded annually and the 1951 Group Annuity
Mortality Table for males. The ages for all Employees under the
above table shall be set back six (6) years and the ages for such
Employees' spouses shall be set back one year. All actuarial
adjustments and actuarial determinations required and made under
the terms of the Plan shall be calculated in accordance with such
assumptions.
1.4 "Affiliated Employer" means any corporation which is a
member of a controlled group of corporations (as defined in
Section 414(b) of the Code) which includes the Employer; any
trade or business (whether or not incorporated) which is under
common control (as defined in Section 414(c) of the Code) with
the Employer; any organization (whether or not incorporated)
which is a member of an affiliated service group (as defined in
Section 414(m) of the Code) which includes the Employer; and any
other entity required to be aggregated with the Employer pursuant
to regulations under Section 414(o) of the Code.
1.5 "Average Monthly Earnings" means the greater of:
(a) an Employee's Monthly Earnings averaged over the three (3)
highest Plan Years of participation which shall produce the
highest monthly average within the last ten (10) Plan Years; or
(b) an Employee's Monthly Earnings averaged over the three (3)
highest Plan Years of participation which shall produce the
highest monthly average within the last ten (10) Plan Years
during which the Employee actively performed services for the
Employer. If an Employee has completed less than three (3) Plan
Years of participation upon his termination of employment, his
2
<PAGE>
Average Monthly Earnings will be based on his Earnings during his
participation to his date of termination.
1.6 "Board of Directors" means the Board of Directors of
Southern Company Services, Inc.
1.7 "Code" means the Internal Revenue Code of 1986, as
amended from time to time.
1.8 "Current Accrued Retirement Income" means an Employee's
Accrued Retirement Income under the Plan, determined as if the
Employee had separated from service as of the close of the last
Limitation Year beginning before January 1, 1987, when expressed
as an annual benefit within the meaning of Section 415(b)(2) of
the Code. In determining the amount of an Employee's Current
Accrued Retirement Income, the following shall be disregarded:
(a) any change in the terms and conditions of the Plan
after May 5, 1986; and
(b) any cost of living adjustment occurring after May 5,
1986.
1.9 "Deferred Retirement Date" means the first day of the
month after a retirement subsequent to the Normal Retirement
Date.
Employment subsequent to Normal Retirement Date shall be
deemed to be a retirement if an Employee has less than forty (40)
Hours of Service during a calendar month.
1.10 "Defined Benefit Dollar Limitation" means the
limitation set forth in Section 415(b)(1)(A) or (d) of the Code.
1.11 "Defined Contribution Dollar Limitation" means the
limitation set forth in Section 415(c)(1)(A) of the Code.
1.12 "ERISA" means the Employee Retirement Income Security
Act of 1974, as amended from time to time.
1.13 "Early Retirement Date" means the first day of the
month following the retirement of an Employee on or after his
fifty-fifth (55th) birthday and before his sixty-fifth (65th)
birthday.
1.14 (a) "Earnings" with respect to any Employee including
any Employee whose service is terminated by reason of disability
(as defined in Section 4.4) means (1) the highest annual rate of
salary or wages of an Employee of the Employer or employee of any
Affiliated Employer within any Plan Year before deductions for
taxes, Social Security, etc., (2) all amounts contributed by the
Employer or any Affiliated Employer to The Southern Company
3
<PAGE>
Employee Savings Plan as Elective Employer Contributions, as said
term is described under Section 4.1 of such plan, pursuant to the
Employee's exercise of his deferral option made thereunder in
accordance with the requirements of Section 401(k) of the Code,
and (3) all amounts contributed by the Employer or any Affiliated
Employer to The Southern Electric System Flexible Benefits Plan
or The Southern Company Flexible Benefits Plan on behalf of an
Employee pursuant to his salary reduction election, and applied
to provide one or more of the optional benefits available under
such plan, but (4) shall exclude all amounts deferred under any
non-qualified deferred compensation plan maintained by the
Employer or any Affiliated Employer.
(b) Notwithstanding the above, "Earnings" with respect to
any commissioned salesperson means the salary or wages of an
Employee of the Employer or employee of any Affiliated Employer
within any Plan Year, without including overtime, and before
deductions for taxes, Social Security, etc. but applying those
adjustments identified in paragraphs (a)(2), (3) and (4) above.
(c) With respect to an Employee whose service terminates
because of a disability under Section 4.4, Earnings shall be
deemed to continue in effect throughout the period of the
Employee's Disability Leave, as also defined in Section 4.4.
(d) With respect to calculating the Prior Plan Retirement
Income of an Employee who is a "participant in the Plan" as
provided in Section 5.12, Earnings shall be determined for the
recognized period of his absence to serve in the Armed Forces of
the United States at the rate which is paid to him on the day he
returns to the service of the Employer as provided in
paragraph (a) of Section 5.12 or at the rate which was payable to
him at the time he left the employment of the Employer to enter
the Armed Forces of the United States, if such amount was
greater.
(e) For Plan Years beginning after December 31, 1988 and
prior to January 1, 1994, the annual compensation of each
Employee taken into account for purposes of this Plan shall not
exceed $200,000 (as adjusted by the Secretary of Treasury). The
imposition of this limitation shall not reduce an Employee's
Retirement Income below the amount as determined on December 31,
1988. In addition to other applicable limitations set forth in
the Plan, and notwithstanding any other provision of the Plan to
the contrary, for Plan Years beginning on or after January 1,
1994, the annual compensation of each Employee taken into account
under the Plan shall not exceed $150,000, as adjusted for
increases in the cost of living in accordance with Code
Section 401(a)(17). The cost of living adjustment in effect for
a calendar year applies to any period, not exceeding twelve (12)
months, over which compensation is determined (the "determination
period") beginning in such calendar year. If the determination
4
<PAGE>
period is less than twelve (12) months, the limit shall be
prorated.
If compensation for any prior determination period is taken
into account in determining an Employee's benefits accruing in
the current Plan Year beginning on or after January 1, 1989 or
January 1, 1994, as applicable, the compensation for that prior
determination period is subject to the $200,000 or the $150,000
compensation limit in effect for that prior determination period.
Notwithstanding any other provision in the Plan, each
Employee's Accrued Retirement Income under this Plan will be the
greater of:
(a) the Employee's Accrued Retirement Income as of the last
day of the last Plan Year beginning before January 1,
1994, frozen in accordance with Treasury Regulation
Section 1.401(a)(4)-13, or
(b) the Employee's Accrued Retirement Income determined
with respect to the benefit formula applicable for the
Plan Year beginning on or after January 1, 1994, as
applied to the employee's total Years of Service taken
into account under the Plan for purposes of benefit
accruals.
For purposes of this Section 1.14, the rules of Section
414(q)(6) of the Code shall apply in determining the adjusted
$200,000 or $150,000 limitation, as applicable, except in
applying such rules, the term "family" shall include only the
spouse of the Employee and any lineal descendants of the Employee
who have not attained age nineteen (19) before the close of the
Plan Year. If, as a result of the application of such rules, the
adjusted $200,000 or $150,000 limitation is exceeded, then the
limitation shall be prorated among the affected individuals in
proportion to each individual's Earnings determined under this
Section 1.14 prior to the application of this limitation.
1.15 "Effective Date" means the original effective date of
the Plan, November 1, 1949. The effective date of this amendment
and restatement means January 1, 1989.
1.16 "Eligibility Year of Service" is a Year of Service
commencing on the Employee's date of employment or reemployment
or anniversary date thereof.
1.17 "Employee" means any person who is currently employed
by the Employer as (a) a regular full-time employee, (b) a
regular part-time employee, (c) a cooperative education employee,
or (d) a temporary employee (whether full-time or part-time) paid
directly or indirectly by the Employer. The term also includes
"leased employees" within the meaning of Section 414(n)(2) of the
5
<PAGE>
Code, unless the total number of leased employees constitutes
less than twenty percent (20%) of the Employer's non-highly
compensated workforce within the meaning of Section
414(n)(5)(C)(ii) and such leased employees are covered by a plan
described in Section 414(n)(5)(B) of the Code.
1.18 "Employer" means Southern Company Services, Inc., any
successor or successors thereof and any wholly owned subsidiary
thereof which the Board of Directors may from time to time, and
upon such terms and conditions as may be fixed by the Board of
Directors, determine to bring under the Plan, and any other
corporation which shall adopt this Plan and Trust Agreement
pursuant to Section 14.1 by appropriate resolution authorized by
the board of directors of said adopting corporation.
1.19 "Full Current Costs" means the normal cost, as defined
in Treasury Regulation Section 1.404(a)-6, for all years since
the Effective Date of the Plan, plus interest on any unfunded
liability during such period.
1.20 "Hour of Service" means an Employee shall be credited
with one Hour of Service for each hour for which (a) he is paid,
or entitled to payment, for the performance of duties for the
Employer or an Affiliated Employer, and such hours shall be
credited to the Employee for the computation period or periods in
which the duties are performed; (b) he is paid, or entitled to
payment, by the Employer or an Affiliated Employer on account of
a period of time during which no duties are performed
(irrespective of whether the employment relationship has
terminated) due to vacation, holiday, illness, incapacity
(including disability), layoff, jury duty, military duty, or
leave of absence in which case the Employee shall be credited
with Hours of Service for the computation period or periods in
which the period during which no duties were performed occurs;
(c) back pay, irrespective of mitigation of damages, has been
either awarded or agreed to by the Employer or an Affiliated
Employer, in which case the Employee shall be credited with Hours
of Service for the computation period or periods to which the
award or agreement pertains, rather than the computation period
in which the award, agreement, or payment is made; and (d) solely
for the purpose of calculating Vesting Years of Service, he was
on any form of authorized leave of absence. The same Hours of
Service shall not be credited under clauses (a), (b), (c), and
(d).
An Employee who is entitled to be credited with Hours of
Service in accordance with clause (b) or (d) of this Section
shall be credited with such number of Hours of Service for the
period of time during which no duties were performed as though he
were in the active employment of the Employer during such period
of time. However, an Employee shall not be credited with Hours
of Service in accordance with clause (b) of this Section for
6
<PAGE>
unused vacation for which payment is received at termination of
employment, or if the payment which is made to him or to which he
is entitled in accordance with clause (b) is made or due under a
plan maintained solely for the purpose of complying with
applicable Worker's Compensation, or unemployment compensation or
disability insurance laws, or if such payment is one which solely
reimburses an Employee for medical or medically related expenses
incurred by the Employee.
Provided there is no duplication of Hours of Service
credited in accordance with the foregoing provisions, if an
Employee is "a participant in the Plan" within the meaning of
that term as defined in paragraph (a) of Section 5.12, he shall
be credited with such number of Hours of Service with respect to
all or such portion of the period of his absence to serve in the
Armed Forces of the United States as may be recognized under
paragraph (b) of Section 5.12 as though he were in the active
employment of the Employer during the recognized period of his
absence to serve in the Armed Forces.
The rules set forth in paragraphs (b) and (c) of Department
of Labor Regulations 2530.200b-2 are incorporated in the Plan by
this reference and made a part hereof.
1.21 "Limitation Year" means the Plan Year.
1.22 "Monthly Earnings" means one-twelfth (1/12) of the
Earnings of an Employee of the Employer during a Plan Year.
1.23 "Normal Retirement Date" means the first day of the
month following an Employee's sixty-fifth (65th) birthday, except
that the Normal Retirement Date of any Employee hired on or after
his sixtieth (60th) birthday shall be the fifth (5th) anniversary
of his initial participation in the Plan.
1.24 "One-Year Break in Service" means a twelve (12)
consecutive month period commencing on or after January 1, 1976
which would constitute a Year of Service but for the fact that
the Employee has not completed more than 500 Hours of Service
during such period.
Solely for the purpose of determining whether a One-Year
Break in Service has occurred for eligibility or vesting
purposes, an Employee who is absent from work for maternity or
paternity reasons shall receive credit for the Hours of Service
which would otherwise have been credited to such Employee but for
such absence, or in any case in which such hours cannot be
determined, eight (8) Hours of Service per day of such absence.
In no event shall Hours of Service credited under this paragraph
be in excess of the amount necessary to prevent a One-Year Break
in Service from occurring. For purposes of this paragraph, an
absence from work for maternity or paternity reasons means an
7
<PAGE>
absence (a) by reason of the pregnancy of the Employee, (b) by
reason of a birth of a child of the Employee, (c) by reason of
the placement of a child with the Employee in connection with the
adoption of such child by such Employee, or (d) for purposes of
caring for such child for a period beginning immediately
following such birth or placement. The Hours of Service shall be
credited under this paragraph: (a) in the vesting or eligibility
period in which the absence begins if the Hours of Service
credited are necessary to prevent a One-Year Break in Service in
such period, and (b) in all other cases, in the vesting or
eligibility periodfollowing the periodin which theabsence begins.
1.25 "Past Service" means with respect to any Employee
included in the Plan, the period of his Accredited Service prior
to January 1, 1989 as determined under the Prior Plan.
1.26 "Plan" means the Pension Plan for Employees of
Southern Company Services, Inc., as set forth herein and as
hereinafter amended, effective January 1, 1989.
1.27 "Plan Year" means the twelve (12) month period
commencing on the first day of January and ending on the last day
of December next following.
1.28 "Plan Year of Service" is a Year of Service determined
as if the date of employment or reemployment is the first day of
the Plan Year.
1.29 "Prior Plan" means the Plan in effect prior to January
1, 1989.
1.30 "Provisional Payee" means a spouse designated or
deemed to have been designated by an Employee or former Employee
pursuant to Article VII to receive Retirement Income on the death
of the Employee or former Employee.
1.31 "Qualified Election" means an election by an Employee
or former Employee that concerns the form of distribution of
Retirement Income that must be in writing and must be consented
to by the Employee's Spouse. The Spouse's consent to such an
election must acknowledge the effect of such election, must be in
writing, and must be witnessed by a notary public.
Notwithstanding this consent requirement, if the Employee
establishes to the satisfaction of the Retirement Board that such
written consent may not be obtained because the Spouse cannot be
located or because of such other circumstances as the Secretary
of the Treasury may by regulations prescribe, an election by the
Employee will be deemed a Qualified Election. Any consent
necessary under this provision shall be valid and effective only
with respect to the Spouse who signs the consent, or in the event
of a deemed Qualified Election, with respect to such Spouse.
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A revocation of a prior Qualified Election to waive the
payment of Retirement Income to the Employee's Spouse may be made
by the Employee without consent at any time commencing within 90
days before such Employee's 55th birthday but not later than
before the commencement of Retirement Income. A Qualified
Election or the revocation of a Qualified Election shall be on a
form furnished by the Retirement Board and filed within the time
prescribed for making such election.
1.32 "Retirement Board" means the managing board of the
Plan provided for in Article X.
1.33 "Retirement Date" means the Employee's Normal, Early,
or Deferred Retirement Date, whichever is applicable to him.
1.34 "Retirement Income" means the monthly Retirement Income
provided for by the Plan.
1.35 "Social Security Offset" shall mean an amount equal to
one-half (1/2) of the amount, if any, of the Federal primary
Social Security benefit (primary old age insurance benefit) to
which it is estimated that an Employee will become entitled in
accordance with the Social Security Act in force as provided in
subparagraphs (a) through (e) below which shall exceed $168 per
month on and after January 1, 1989, and $250 per month, on and
after January 1, 1991, multiplied by a fraction not greater than
one, the numerator of which shall be the Employee's total
Accredited Service, and the denominator of which shall be the
aggregate Accredited Service the Employee could have accumulated
if he had continued his employment until his Normal Retirement
Date. For purposes of determining the estimated Federal primary
Social Security benefit used in the Social Security Offset, an
Employee shall be deemed to be entitled to receive Federal
primary Social Security benefits after retirement or death, if
earlier, regardless of the fact that he may have disqualified
himself to receive payment thereof. In addition to the
foregoing, the calculation of the Social Security benefit shall
be based on the salary history of the Employee as provided in
Section 5.4(b) and shall be determined pursuant to the following,
as applicable:
(a) With regard to an Employee described in Section 5.2,
the Social Security benefit shall be computed at retirement. In
estimating the amount of the Federal primary Social Security
benefit to which the Employee would be entitled, it shall be
assumed that he will receive no wages for Social Security
purposes after his retirement on his Normal Retirement Date or
Deferred Retirement Date, and it will be further assumed in
calculating his estimated Federal primary Social Security benefit
that the amount thereof will be the amount determined under the
recomputation provision, if applicable, of the Social Security
Act in effect at the time of his retirement.
9
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(b) With regard to an Employee described in Section 5.3(a),
the Social Security benefit to which it is estimated that he will
be entitled at sixty-five (65), shall be computed at the time of
his retirement. In estimating the amount of the Federal primary
Social Security benefit to which the Employee would be entitled
at age sixty-five (65), it shall be assumed that he will receive
no wages for Social Security purposes after his Early Retirement
Date, and it will be further assumed in calculating his estimated
Federal primary Social Security benefit that the amount thereof
will be the amount determined under the recomputation provision,
if applicable, of the Social Security Act in effect at his Early
Retirement Date.
(c) With regard to an Employee described in Section 5.3(b),
the Social Security benefit to which it is estimated that he
would have been entitled to receive at age sixty-five (65) or his
date of death, if later, had he not died, shall be computed at
the time of his death. In estimating the amount of Federal
primary Social Security benefit to which the Employee would have
been entitled at age sixty-five (65) or his date of death, if
later, it shall be assumed that he would not have received any
wages for Social Security purposes after the date of his death,
and it will be further assumed in calculating his Federal primary
Social Security benefit that the amount thereof will be the
amount determined under the recomputation provision, if
applicable, of the Social Security Act in effect at the time of
his death.
(d) With regard to an Employee described in Section 5.3(c),
the Social Security benefit to which it is estimated that he will
become entitled at age sixty-five (65) or his date of
termination, if later, shall be computed at the date of
termination. In estimating the amount of the Federal primary
Social Security benefit to which the Employee would be entitled
at age sixty-five (65) or his date of termination, if later, it
shall be assumed that he will receive no wages for Social
Security purposes after his date of termination, and it will be
further assumed in calculating his estimated Federal primary
Social Security benefit that the amount thereof will be the
amount determined under the recomputation provision, if
applicable, of the Social Security Act in effect at his date of
termination.
(e) With regard to an Employee described in Section 5.3(d),
the Social Security benefit to which it is estimated that he
would have been entitled to receive at age sixty-five (65) or his
initial date of disability, if later, had he not become disabled,
shall be computed at the time of his retirement. In estimating
the amount of Federal primary Social Security benefit to which
the Employee would have been entitled at age sixty-five (65) or
his date of disability, if later, it shall be assumed that he
would have received wages for Social Security purposes as
10
<PAGE>
specified in Section 5.4, and it will be further assumed in
calculating his estimated Federal primary Social Security benefit
that the amount thereof will be the amount determined under the
recomputation provision, if applicable, of the Social Security
Act in effect at the time of his retirement.
1.36 "Social Security Retirement Age" means age sixty-five
(65) if the Employee attains age sixty-two (62) before January 1,
2000 (i.e., born before January 1, 1938), age sixty-six (66) if
the Employee attains age sixty-two (62) after December 31, 1999,
but before January 1, 2017 (i.e., born after December 31, 1937,
but before January 1, 1955), and age sixty-seven (67) if the
Employee attains age sixty-two (62) after December 31, 2016
(i.e., born after December 31, 1954).
1.37 "Trust" or "Trust Fund" means all such money or other
property which shall be held by the Trustee pursuant to the terms
of the Trust Agreement or pursuant to contracts with life
insurance companies.
1.38 "Trust Agreement" means the trust agreement or
agreements between the Employer and the Trustee established for
the purpose of funding the Retirement Income to be paid.
1.39 "Trustee" means the trustee or trustees acting as such
under the Trust Agreement, including any successor or successors.
1.40 "Vesting Year of Service" means an Employee's Years of
Service including: (a) Years of Service with an Affiliated
Employer; (b) in the case of an employee of Birmingham Electric
Company who, prior to his Normal Retirement Date, became and
remained an Employee of the Employer until December 1, 1952, and
was an active Employee of the Employer on January 1, 1961, his
service with Birmingham Electric Company; (c) subject to the
eligibility requirements of Section 2.3, active service with the
Armed Forces of the United States if the Employee entered or
enters active service or training in such Armed Forces directly
from the employ of the Employer and after discharge or release
therefrom returns within ninety (90) days to the employ of the
Employer or is deemed to return under Section 2.3 because of the
death of such Employee while in active service with such Armed
Forces; and (d) any period during which the Employee was on any
other form of authorized leave of absence. For purposes of this
Section 1.40 in determining Vesting Years of Service with respect
to a period of absence referred to in clause (c) or (d) of this
Section 1.40, an Employee shall be credited with Hours of Service
as though the period of absence were a period of active
employment with the Employer.
1.41 "Year of Service" means with respect to an Employee in
the service of the Employer on or after January 1, 1976:
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(a) if the Employee was hired prior to January 1, 1976,
each twelve (12) consecutive month period, computed from the
Employee's most recent date of hire by the Employer, during his
last period of continuous service as a full-time regular Employee
(except that service prior to July 1, 1944 need not have been
continuous) with the Employer immediately prior to January 1,
1976 (including service with Commonwealth and predecessor
companies and service with Affiliated Employers and service with
companies or properties heretofore affiliated or associated prior
to the date of severance of such affiliation or association) and
any subsequent twelve (12) consecutive month period commencing on
an anniversary date of such date of hire (or date of reemployment
as provided in Section 2.4), provided that in each such twelve
(12) consecutive month period commencing on or after January 1,
1975 he has completed at least 1000 Hours of Service; or
(b) if the Employee is hired on or after January 1, 1976, a
twelve (12) consecutive month period after December 31, 1975,
commencing on the Employee's most recent date of hire by the
Employer (or date of reemployment as provided in Section 2.4),
and any subsequent twelve (12) consecutive month period
commencing on an anniversary date of such date of hire, provided
he has completed at least 1000 Hours of Service during each such
twelve (12) consecutive month period; and
(c) to the extent not resulting in duplication, each Year
of Service restored to the Employee upon reemployment as provided
in Section 8.3.
An Employee's vested interest in his Accrued Retirement
Income shall be based on his Vesting Years of Service and an
Employee's eligibility to participate in the Plan pursuant to
Article II shall be based on his Eligibility Year of Service.
Breaks in service will be measured on the same computation period
as the Year of Service. Effective on and after January 1, 1995,
an Employee's accrual of Retirement Income shall be based solely
on an Employee's Plan Year of Service, without regard to an
Employee's completion of a Vesting Year of Service ending within
such Plan Year.
In the Plan and Trust Agreement, where the context requires,
words in the masculine gender include the feminine and neuter
genders and words in the singular include the plural and words in
the plural include the singular.
12
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ARTICLE II
Eligibility
2
2.1 Employees. Each Employee participating in the Plan as
of January 1, 1989 shall continue to be included in the Plan.
Each other Employee, except as provided in this Article, shall be
included in the Plan on the first day of the month next following
the date on which he first completes an Eligibility Year of
Service.
2.2 Employees represented by a collective bargaining agent.
An Employee who is represented by a collective bargaining agent
may participate in the Plan, subject to its terms, if the
representative(s) of his bargaining unit and the Employer
mutually agree to participation in the Plan by members of his
bargaining unit.
2.3 Persons in military service and Employees on authorized
leave of absence. Any person not already included in the Plan
who leaves or has left the employ of the Employer to enter the
Armed Forces of the United States or is on authorized leave of
absence without regular pay and who returns to the employ of the
Employer within ninety (90) days after discharge from such
military service or on or before termination of his leave of
absence, shall, upon such return, be included in the Plan
effective as of the first day of the month next following the
date on which he first met or meets the eligibility requirement
of Section 2.1. In determining whether an Employee entering the
service of the Employer has completed an Eligibility Year of
Service, his Hours of Service prior to such authorized leave of
absence without regular pay or entry into the Armed Forces shall
be taken into account, and for purposes of Section 2.4, he shall
be deemed not to have incurred a One-Year Break in Service by
reason of such absence.
If an Employee dies while in active service with the Armed
Forces of the United States, such Employee shall be deemed to
have returned to the employ of the Employer on his date of death.
An Employee not already included in the Plan who is on
authorized leave of absence and receiving his regular pay shall
be considered credited with Hours of Service as though the period
of absence was a period of active employment with the Employer,
and he shall be included in the Plan if and when he meets the
requirements of this Article II regardless of whether he is, on
the date of such inclusion, on such leave of absence.
2.4 Employees reemployed. An Employee whose service
terminates at any time and who is reemployed as an Employee,
unless excluded under Section 2.6, will be included in the Plan
as provided in Section 2.1 unless:
13
<PAGE>
(a) prior to termination of his service he had completed at
least one Year of Service; and
(b) upon his reemployment, to the extent provided in
Section 8.3 without regard to Section 8.4, he is entitled to
restoration of his Years of Service, in which case he will be
included in the Plan as of the date of his reemployment.
For purposes of determining Years of Service of an Employee
who is reemployed by the Employer subsequent to a One-Year Break
in Service, a Year of Service subsequent to his reemployment
shall be computed on the basis of the twelve (12) consecutive
month period commencing on his date of reemployment or an
anniversary thereof.
2.5 Participation upon return to eligible class. I f a n
Employee is a participant in the Plan before July 1, 1991, the
exclusion from participation provided in Section 2.6, as it
regards temporary employees, shall not apply with respect to such
Employee, and such Employee shall be eligible to participate in
the Plan after July 1, 1991 whether or not he is classified as a
temporary employee.
If an Employee first becomes a participant on or after July
1, 1991, in the event such Employee ceases to be a member of an
eligible class of Employees and becomes ineligible to
participate, but has not incurred a One-Year Break in Service,
such Employee will participate immediately upon returning to an
eligible class of Employees. If such Employee incurred a One-
Year Break in Service, eligibility will be determined under
Section 2.4 of the Plan.
In all other instances, if an Employee is not a member of an
eligible class of Employees but then becomes a member of an
eligible class, such Employee will commence participation in the
Plan as of the first day of the month next following the later of
(a) the date such Employee completes an Eligibility Year of
Service or (b) the date he becomes a member of an eligible class
of Employees.
2.6 Exclusion of certain categories of employees.
Notwithstanding any other provision of this Article II, leased
employees shall not be eligible to participate in the Plan. In
addition, temporary employees, except Employees, as defined in
Section 1.17, participating in the Plan prior to July 1, 1991
shall not be eligible to participate in the Plan. Any person who
is employed by Electric City Merchandise Company, Inc. on or
after May 1, 1988, or who is employed by Savannah Electric and
Power Company on or after March 3, 1988, shall not be entitled to
accrue Retirement Income under the Plan while employed at such
companies.
14
<PAGE>
2.7 Waiver of participation. Effective January 1, 1991,
notwithstanding the above, an Employee may, subject to the
approval of the Employer, elect voluntarily not to participate in
the Plan. The election not to participate must be communicated
in writing to the Retirement Board effective on an Employee's
date of hire or an anniversary thereof. Effective January 1,
1995, the election not to participate must be communicated in
writing to and acknowledged by the Retirement Board and shall be
effective as of the date set forth in such written waiver.
15
<PAGE>
ARTICLE III
Retirement
3
3.1 Retirement at Normal Retirement Date. Each Employee
eligible to participate in the Plan shall have a nonforfeitable
right to his Accrued Retirement Income by no later than his
sixty-fifth (65th) birthday, or in the case of any Employee hired
on or after his sixtieth (60th) birthday, the fifth (5th)
anniversary of his initial participation in the Plan.
Notwithstanding the above, an Employee's Normal Retirement Date
shall be as provided in Section 1.23.
3.2 Retirement at Early Retirement Date. An Employee
having at least ten (10) Years of Accredited Service (including
any Accredited Service to which he is entitled under the pension
plan of any Affiliated Employer from which such Employee was
transferred pursuant to Section 4.6 or 4.7, or which was credited
to him in accordance with Section 4.3) may elect to retire on an
Early Retirement Date on or after his fifty-fifth (55th) birthday
and before his sixty-fifth (65th) birthday and to have his
Retirement Income commence on that date, or effective January 1,
1995, the first day of any month up to and including the
Employee's Normal Retirement Date.
3.3 Retirement at Deferred Retirement Date. An Employee
included in the Plan may remain in active service after his
Normal Retirement Date. The involuntary retirement of an
Employee on or after his Normal Retirement Date shall not be
permitted solely on the basis of the Employee's age, except in
accordance with the provisions of the Age Discrimination in
Employment Act, as amended from time to time. Termination of
service of such an Employee for any reason after Normal
Retirement Date shall be deemed retirement as provided in the
Plan.
16
<PAGE>
ARTICLE IV
Determination of Accredited Service
4
4.1 Accredited Service pursuant to Prior Plan. Each
Employee who participated in the Prior Plan shall be credited
with such Accredited Service, if any, earned under such Prior
Plan as of December 31, 1988.
4.2 Accredited Service.
(a) Each Employee meeting the requirements of Article II
shall, in addition to any Accredited Service to which he may be
entitled in accordance with Section 4.1, be credited with
Accredited Service as set forth in (b) below. Any such Employee
who is on authorized leave of absence with regular pay shall be
credited with Accredited Service during the period of such
absence. Any such Employee who is a "participant in the Plan"
within the meaning of that term as defined in paragraph (a) of
Section 5.12 shall be credited with Accredited Service during all
or such portion of the period of his absence to serve in the
Armed Forces of the United States as may be recognized under
paragraph (b) of Section 5.12. Employees on authorized leave of
absence without regular pay, other than Employees deemed to
accrue Hours of Service under Section 4.4, and persons in the
Armed Forces who are not "participants in the Plan" within the
meaning of that term as defined in paragraph (a) of Section 5.12
shall not be credited with Accredited Service for the period of
such absence.
(b) For each Plan Year commencing after December 31, 1988,
an Employee included in the Plan who is credited with a Vesting
Year of Service for the twelve (12) consecutive month period
ending on the anniversary date of his hire which occurs during
such Plan Year shall be credited with Accredited Service as
follows:
(1) if an Employee completes at least 1,680 Hours of
Service in a Plan Year, he shall be credited with one year
of Accredited Service;
(2) if an Employee completes less than 1,680 Hours of
Service in a Plan Year, but not less than 1,000 Hours of
Service, he shall be credited with one-twelfth (1/12) of a
year of Accredited Service for each 140 Hours of Service; or
(3) if an Employee's initial eligibility in the Plan
shall occur after the beginning of the Plan Year, and the
Employee shall therefore have completed less than 1,000
Hours of Service in such Plan Year, he shall be credited
with one-twelfth (1/12) of a year of Accredited Service for
17
<PAGE>
each 140 Hours of Service during such Plan Year after his
inclusion in the Plan.
Notwithstanding the above, effective January 1, 1995, an
Employee's Accredited Service shall be calculated based on an
Employee's accrual of a Plan Year of Service only and without
regard to the requirement of a Vesting Year of Service.
(c) If an Employee (1) who has previously satisfied the
eligibility requirements under Article II shall again be included
in the Plan at such time which is after the beginning of the Plan
Year, or (2) shall terminate his employment for any reason before
the close of such Plan Year and shall therefore have completed
less than 1,000 Hours of Service in such Plan Year, he shall be
credited with one-twelfth (1/12) of a year of Accredited Service
for each 140 Hours of Service during such Plan Year after his
inclusion in the Plan or before his termination of employment in
such Plan Year, as the case may be.
(d) In addition to any Accredited Service credited under
Section 4.1, an Employee shall be entitled to Accredited Service
determined under the Prior Plan, without regard to the age
requirement for eligibility to participate in the Prior Plan, in
excess of the Accredited Service determined under the Prior Plan
(including the age requirement for eligibility to participate in
the Prior Plan). Such Accredited Service shall be considered
Accredited Service after December 31, 1985 for purposes of
calculating an Employee's Retirement Income under Article V.
(e) In addition to the foregoing, Accredited Service may
include Accredited Service accrued subsequent to a One-year Break
in Service including such Accredited Service which may be
restored in accordance with the provisions of Section 8.3.
(f) Notwithstanding the above, the maximum number of years
of Accredited Service with respect to any Employee participating
in the Plan shall not exceed forty (40). Effective January 1,
1991, the maximum number of years of Accredited Service is
increased to forty-three (43).
4.3 Accredited Service and Years of Service in respect of
service of certain Employees previously employed by the Employer
or by Affiliated Employers. An Employee in the service of the
Employer on January 1, 1976 or employed by it thereafter who
meets the requirements of paragraph (a) of this Section 4.3, in
addition to any other Years of Service or Accredited Service to
which he may be entitled under the Plan, upon completion of an
Eligibility Year of Service where required under Section 8.3(c)
(which shall also be considered to be Accredited Service) shall
be credited with such number of Years of Service (and fractions
thereof to the nearest whole month for service prior to January
1, 1976) and such Accredited Service and Retirement Income as
18
<PAGE>
shall be determined in accordance with the provisions of
paragraphs (b) and (c) of this Section 4.3.
(a) (1) Such Employee shall have been employed prior to
January 1, 1976 by the Employer or by one or more Affiliated
Employers; (2) he shall have terminated his service with Employer
or such Affiliated Employer other than by retirement and he shall
not be entitled to receive at any time any retirement income
under the pension plan of any such prior employer in respect of
any period of time for which he shall receive credit for Years of
Service or Accredited Service under this Section 4.3; and (3) for
Employees reemployed on or after January 1, 1985, the number of
consecutive One-Year Breaks in Service incurred by the Employee
prior to the date of his employment by the Employer does not
equal or exceed the greater of (A) five (5), or (B) the aggregate
number of his Years of Service (and fractions thereof to the
nearest whole month for service prior to January 1, 1976) with
the Employer and such Affiliated Employer. The years of
Accredited Service credited to an Employee reemployed prior to
January 1, 1985, with regard to years of Accredited Service
immediately prior to the termination of his service, shall be
determined under the terms of the Plan in effect prior to January
1, 1985.
(b) The number of Years of Service (and fractions thereof
to the nearest whole month for service prior to January 1, 1976)
and the Accredited Service, respectively, which shall be credited
to such Employee shall be equal to the respective number of his
Years of Service (and fractions thereof to the nearest whole
month for service prior to January 1, 1976) and Accredited
Service which were forfeited by the Employee and not restored
under the pension plans of the Employer or an Affiliated
Employer.
(c) There shall be credited to the Employee Retirement
Income equal to retirement income which was accrued by him under
the pension plan of the Employer or an Affiliated Employer during
the period of his Accredited Service which was forfeited and
which is credited under the Plan in accordance with Section 4.3.
The amount of Retirement Income credited in accordance with this
paragraph (c) shall be treated as Prior Plan Retirement Income
for purposes of determining the amount of Retirement Income to
which the Employee is entitled, and shall be determined in
accordance with the provisions of the pension plan of the
Affiliated Employer in effect at the time the Employee's service
with such Affiliated Employer terminated without regard to any
minimum provisions of such pension plan; for this purpose and if
relevant in respect of the Employee it shall be assumed that the
pension plan of the Affiliated Employer in effect at the time the
Employee's service with such Affiliated Employer terminated
contained the provisions of Section 5.12 of the Plan and related
amendments concerning absence from the service of the Employer to
19
<PAGE>
serve in the Armed Forces of the United States which became
effective November 1, 1977. For Plan Years beginning after
December 31, 1987, an Employee who meets the requirements of
paragraph (a) of this Section 4.3 shall be deemed to have
transferred to or from an Affiliated Employer for purposes of the
transfer of assets or liabilities to or from the Plan in
accordance with Section 4.6.
4.4 Accrual of Retirement Income during period of total
disability.
(a) If an Employee included in the Plan shall become
totally disabled, as determined by the Retirement Board on the
basis of medical evidence, after he has completed at least five
(5) Vesting Years of Service and, by reason of such disability,
he shall apply for and be granted either Social Security
disability benefits or long-term disability benefits under a
long-term disability benefit plan of the Employer, he shall be
considered to be on a leave of absence, herein referred to as a
"Disability Leave." An Employee's Disability Leave shall be
deemed to begin on the initial date of the disability, as
determined by the Retirement Board, and shall continue until the
earlier of: (1) the end of the month in which he shall cease to
be entitled to receive Social Security Disability benefits and
long-term disability benefits under a long-term disability
benefit plan of the Employer; (2) his death; and (3) his
Retirement Date if he elects to have his Retirement Income
commence on such date. During the period of the Employee's
Disability Leave, he shall, for purposes of the Plan, be deemed
to have received Earnings at the regular rate in effect for him.
(b) A disabled Employee who applies for and would be
granted long-term disability benefits under a long-term
disability benefit plan of the Employer, if it were not for the
fact that the deductions therefrom attributable to other
disability benefits equal or exceed the amount of his unreduced
benefit under a long-term disability benefit plan of the
Employer, will be considered as being currently granted benefits
under such long-term disability benefit plan.
(c) An Employee's Disability Leave shall be deemed to be a
period for which Hours of Service shall be credited to the
Employee as though the period of his Disability Leave were a
period of active employment.
(d) If an Employee's Disability Leave shall terminate prior
to his Normal Retirement Date and he shall fail to return to the
employment of the Employer within sixty (60) days after the
termination of such leave, his service shall be deemed to have
terminated upon the termination of his Disability Leave and his
rights shall be determined in accordance with Article VIII,
unless at such time he shall be entitled to retire on an Early
20
<PAGE>
Retirement Date, in which event his termination of service shall
be deemed to constitute his retirement under Section 3.2.
(e) Notwithstanding the above, the years of Accredited
Service for any Employee whose initial date of disability
occurred under the Prior Plan shall be determined under the terms
of the Prior Plan.
4.5 Employees leaving Employer's service. If the service
of an Employee is terminated prior to retirement as provided by
Article III, such Employee will forfeit any Vesting Years of
Service and Accredited Service which he may have subject to
possible restoration of some or all of his Vesting Years of
Service and Accredited Service in accordance with Article VIII.
The provisions of this Section 4.5 shall not affect the rights,
if any, of an Employee under Article VIII nor shall the rights of
an Employee be affected during or by reason of a layoff, due to
lack of work, which continues for a period of one year or less,
except that such period of layoff shall not be deemed to be
service with the Employer. If the service of an Employee is
terminated, or if he is not reemployed before the expiration of
one year after being laid off for lack of work, and he is
subsequently reemployed, he will be treated as provided in
Section 2.4.
Forfeitures arising by reason of an Employee's termination
of service for any reason shall not be applied to increase the
benefits any Employee would otherwise receive under the Plan but
shall be used to reduce contributions of the Employer to the
Plan.
4.6 Transfers to or from Affiliated Employers. This
Section 4.6 shall not apply to the transfer by an Employee to the
Employer from Savannah Electric and Power Company on or after
March 3, 1988. In the case of the transfer of an Employee
(including an Employee included in the Prior Plan who was
transferred in accordance with the Prior Plan) to an Affiliated
Employer which has at the time of transfer a pension plan with
substantially the same terms as this Plan, such Employee, if and
when he commences to receive on or after his Normal Retirement
Date retirement income under such pension plan of the Affiliated
Employer to which transferred, shall receive retirement income
under such pension plan attributable to years of Accredited
Service with the Employer prior to the time of his transfer. If
and when such an Employee commences to receive on an Early
Retirement Date retirement income under such pension plan of the
Affiliated Employer to which transferred, the amount of any
retirement income payable under such pension plan and
attributable to Accredited Service with the Employer prior to
such transfer shall be reduced in accordance with the provisions
of the pension plan relating to retirement income payable at
Early Retirement Date, or if such retirement income shall be
21
<PAGE>
payable in a manner similar to the provisions of Section 8.2 or
Section 8.6, reduced in accordance with the applicable provision.
In the case of the transfer to this Employer (not including
transfers by reason of the split-up as of November 1, 1949) of an
Employee of any Affiliated Employer which has at the time of
transfer a pension plan with substantially the same terms as this
Plan, the Employer will, subject to the provisions of Article IX,
make periodic contributions into this Plan to the extent
necessary to provide the portion of the Retirement Income not
provided for him in the pension plan of the company from which he
was transferred.
Upon the transfer of an Employee to or from the Employer,
the Plan and Trust shall be authorized to receive or transfer the
greater of (a) the actuarial equivalent of the Employee's Accrued
Retirement Income or (b) such assets as may be required to fund
the projected Retirement Income of the Employee at his retirement
date attributable to the Plan or the pension plan maintained by
the Affiliated Employer from which the Employee transfers,
determined as of the last day of the Plan Year in which the
transfer occurs using the current funding assumptions for the
Plan Year in which the transfer occurs. The Retirement Board of
the Employer shall be authorized to coordinate the transfer of
assets and liabilities attributable to the benefits of active
Employees, terminated vested Employees, retired Employees, and
Provisional Payees with any Affiliated Employer which has at such
time a pension plan with substantially the same terms as this
Plan.
Notwithstanding the above, the transferred Employee shall be
entitled to receive a benefit immediately following the transfer
of assets or liabilities to or from the Plan and Trust which is
equal to or greater than the benefit he would have been entitled
to receive immediately before the transfer if the Plan or the
pension plan maintained by the Affiliated Employer from which the
Employee transfers had been terminated. In no event shall assets
be transferred to or from the Plan and Trust without the
concurrent transfer of liabilities attributable to such assets.
In no case, however, shall any such Employee, who retires
pursuant to Section 3.1, 3.2, or 3.3 or the Provisional Payee of
a deceased Employee entitled to payment in accordance with
Article VII, receive Retirement Income attributable to Accredited
Service from both companies aggregating less than the Minimum
Retirement Income specified in Article V (after giving effect to
adjustments, if any, for Provisional Payee designation or deemed
designation), as shall be applicable in his circumstances.
22
<PAGE>
4.7 Transfers from Savannah Electric and Power Company. In
the case of the transfer to the Employer of an employee of
Savannah Electric and Power Company ("SEPCO"), such Employee, if
and when he attains his Normal Retirement Date or Deferred
Retirement Date, shall be entitled to receive Retirement Income
calculated pursuant to Section 5.1 or 5.2, as appropriate, based
upon his Accredited Service with the Employer and Accredited
Service attributable to actual service during his employment with
SEPCO. Such amount calculated in accordance with the preceding
sentence shall be reduced by the amount of retirement income
calculated under the defined benefit pension plan of SEPCO
attributable to Accredited Service during his actual service
during his employment with SEPCO. Any Retirement Income based
upon an Employee's Accredited Service with the Employer and
Accredited Service attributable to actual service during his
employment with SEPCO shall be subject to the provisions of the
Plan relating to Retirement Income payable at an Early Retirement
Date, or if such Retirement Income shall be payable in accordance
with the provisions of Section 8.2 or 8.6, subject to the
provisions of such Section.
This Section 4.7 shall also apply in calculating the
Retirement Income payable under this Plan to a former employee of
SEPCO who is hired by the Employer and is entitled to credit for
years of Accredited Service under the Plan attributable to his
actual service with SEPCO.
23
<PAGE>
ARTICLE V
Retirement Income
5
5.1 Normal Retirement Income. The monthly Retirement
Income payable as a single life annuity to an Employee included
in the Plan who retires from the service of the Employer at his
Normal Retirement Date after January 1, 1989, subject to the
limitations of Article VI, shall be the greater of (a) and (b):
(a) the amount determined under (1) or (2) below, whichever
is greater:
(1) the Accrued Retirement Income determined in
accordance with Section 5.1 of the Prior Plan without
regard to the Minimum Retirement Income requirement,
plus the designated fixed dollar amount times the
Employee's years of Accredited Service earned after
December 31, 1988. For the period on and after January
1, 1989 but ending December 31, 1990, the fixed dollar
amount equals $20.00. For the period on and after
January 1, 1991, the fixed dollar amount equals $25.00;
and
(2) $25.00 times an Employee's years of
Accredited Service; and
(b) the Minimum Retirement Income as determined in
accordance with Section 5.2.
5.2 Minimum Retirement Income payable upon retirement at
Normal Retirement Date or Deferred Retirement Date. The monthly
Minimum Retirement Income payable to an Employee who retires from
the service of the Employer after January 1, 1989 at his Normal
Retirement Date or Deferred Retirement Date (before adjustment
for Provisional Payee designation, if any) shall be an amount
equal to 1.70% of his Average Monthly Earnings multiplied by his
years (and fraction of a year) of Accredited Service to his
Normal Retirement Date or Deferred Retirement Date including a
Social Security Offset.
Any provisions of this Article V to the contrary
notwithstanding, Retirement Income determined in accordance with
this Article V with respect to an Employee who retires on his
Normal Retirement Date or Deferred Retirement Date shall not be
less than the Retirement Income which would have been payable
with respect to such Employee commencing on an Early Retirement
Date had (a) the Employee retired on the Early Retirement Date
which would have resulted in the greatest Retirement Income,
(b) his Retirement Income commencing on such Early Retirement
Date been computed by utilizing the estimated Federal primary
Social Security benefit to which the Employee shall be entitled
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<PAGE>
determined in accordance with the Social Security Act in effect
at his retirement, giving effect to the recomputation provision
of such Social Security Act, if applicable, and (c) such
Retirement Income commencing on such Early Retirement Date been
payable in the same form as his Retirement Income commencing on
his Normal Retirement Date or Deferred Retirement Date.
5.3 Minimum Retirement Income upon retirement at Early
Retirement Date or upon termination of service by reason of death
or otherwise prior to retirement. The monthly Minimum Retirement
Income payable to an Employee (or his Provisional Payee), if he
shall retire on his Early Retirement Date, or if his service
shall terminate by reason of death or otherwise prior to
retirement, shall be determined in accordance with the following
provisions:
(a) Upon retirement at Early Retirement Date his Minimum
Retirement Income (before adjustment for Provisional Payee
designation, if any) shall be an amount equal to 1.70% of his
Average Monthly Earnings multiplied by his years (and fraction of
a year) of Accredited Service to his Early Retirement Date
including a Social Security Offset.
(b) Upon termination of service by reason of the death of
the Employee prior to retirement and after the effective date of
his Provisional Payee designation or deemed designation, the
Minimum Retirement Income for the purpose of determining the
Employee's Accrued Retirement Income upon which payment to his
Provisional Payee in accordance with Section 7.4 shall be based
shall be an amount equal to 1.70% of the Employee's Average
Monthly Earnings multiplied by his years (and fraction of a year)
of Accredited Service to the date of his death including a Social
Security Offset.
(c) For an Employee who terminates his service with the
Employer with entitlement to receive Retirement Income in
accordance with Section 8.1, upon retirement at Early Retirement
Date or Normal Retirement Date his Minimum Retirement Income
(before adjustment for Provisional Payee designation, if any)
shall be an amount equal to 1.70% of his Average Monthly Earnings
multiplied by his years (and fraction of a year) of Accredited
Service to his date of termination including a Social Security
Offset.
(d) Upon termination of service by reason of disability (as
defined in Section 4.4) of the Employee prior to retirement,
provided such Employee does not return to the service of the
Employer prior to his Retirement Date, the Minimum Retirement
Income shall be an amount equal to 1.70% of the Employee's
Average Monthly Earnings multiplied by his years (and fraction of
a year) of Accredited Service to his Retirement Date including a
Social Security Offset.
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<PAGE>
5.4 Calculation of Social Security Offset.
(a) Notwithstanding the Social Security Offset as
calculated in Sections 5.2 and 5.3, in no event shall such Social
Security Offset exceed the limits set forth in Section 401(l) of
the Code and the regulations applicable thereunder which are
incorporated by reference herein.
(b) For purposes of determining the Social Security Offset
in calculating an Employee's Retirement Income under the Plan,
the Social Security Offset shall be determined by using the
actual salary history of the Employee during his employment with
the Employer or any Affiliated Employer, provided that in the
event that the Retirement Board is unable to secure such actual
salary history within 180 days (or such longer period as may be
prescribed by the Retirement Board) following the later of the
date of the Employee's separation from service (by retirement or
otherwise) and the time when the Employee is notified of the
Retirement Income to which he is entitled, the salary history
shall be determined in the following manner:
(1) The salary history shall be estimated by applying
a salary scale, projected backwards, to the Employee's
compensation from the Employer for W-2 purposes for the
first Plan Year following the most recent Plan Year for
which the salary history is estimated. The salary scale
shall be a level percentage per year equal to six percent
(6%) per annum.
(2) The Plan shall give clear written notice to each
Employee of the Employee's right to supply the actual salary
history and of the financial consequences of failing to
supply such history. Such notice shall state that the
actual salary history is available from the Social Security
Administration.
For purposes of determining the Social Security Offset in
calculating the Retirement Income of an Employee entitled to
receive a public pension based on his employment with a Federal,
state, or local government agency, no reduction in such
Employee's Social Security benefit resulting from the receipt of
a public pension shall be recognized.
(c) If the distribution of an Employee's Accrued Retirement
Income begins before the Employee's attainment of the Social
Security Retirement Age (including a benefit commencing at Normal
Retirement Date), the projected Employer derived primary
insurance amount attributable to service by the Employee for the
Employer will be reduced by one-fifteenth (1/15) for each of the
first five (5) years and one-thirtieth (1/30) for each of the
next five (5) years by which the starting date of such benefit
26
<PAGE>
precedes the Social Security Retirement Age of the Employee, and
reduced actuarially for each additional year thereafter.
5.5 Early Retirement Income. The monthly amount of
Retirement Income payable to an Employee who retires from the
service of the Employer at his Early Retirement Date subject to
the limitations of Section 6.2, will be equal to his Retirement
Income determined in accordance with Sections 5.1 and 5.3 based
on his Accredited Service to his Early Retirement Date, reduced
by three-tenths of one percent (0.3%) for each calendar month by
which the commencement date of his Retirement Income precedes his
Normal Retirement Date.
At the option of the Employee exercised at or prior to
commencement of his Retirement Income on or after his Early
Retirement Date (provided he shall not have in effect at such
Early Retirement Date a Provisional Payee designation pursuant to
Article VII) he may have his Retirement Income adjusted upwards
in an amount which will make his Retirement Income payable up to
age sixty-five (65) equal, as nearly as may be, to the amount of
his Federal primary Social Security benefit (primary old age
insurance benefit) estimated to become payable after age
sixty-five (65), as computed at the time of his retirement in
accordance with Section 5.3(a), plus a reduced amount, if any, of
Retirement Income actually determined to be payable after age
sixty-five (65). The Federal primary Social Security benefit
used in calculating an Employee's Retirement Income payable under
the Plan shall be determined by using the salary history of the
Employee during his employment with the Employer or any
Affiliated Employer, as calculated in accordance with Section
5.4(b).
5.6 Deferred Retirement Income. The monthly amount of
Retirement Income payable to an Employee who completes at least
one Hour of Service after December 31, 1987 and who retires from
the service of the Employer at his Deferred Retirement Date,
subject to the limitations of Section 6.2, will be equal to his
Retirement Income determined in accordance with Sections 5.1 and
5.2 based on his Accredited Service to his Deferred Retirement
Date. For Employees whose Normal Retirement Date would have
occurred on or before January 1, 1986, but whose Deferred
Retirement Date occurs after January 1, 1988 and on or before
July 1, 1991, the monthly amount of Retirement Income payable to
an Employee who completes at least one Hour of Service after
December 31, 1987, subject to the limitations of Section 6.2,
will be equal to the greater of (a) his Retirement Income
calculated on his Deferred Retirement Date, or (b) his Retirement
Income calculated as of his Normal Retirement Date applying the
applicable percentage increase in his Retirement Income pursuant
to the terms of Section 5.13 of the Prior Plan.
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<PAGE>
5.7 Payment of Retirement Income. The first payment of an
Employee's Retirement Income will be made on his Early Retirement
Date, Normal Retirement Date, Deferred Retirement Date, or date
of commencement of payment of Retirement Income in accordance
with Section 8.2 or 8.6, as the case may be; provided that
commencement of the distribution of an Employee's Retirement
Income shall not be made prior to his Normal Retirement Date
without the consent of such Employee, except as provided in
Section 8.4 of the Plan.
Notwithstanding anything to the contrary above, if in
accordance with this Section 5.7, an Employee is entitled to
receive Retirement Income commencing at his Early Retirement
Date, he may, in lieu of commencing payment of his Retirement
Income upon his Early Retirement Date, elect to receive such
Retirement Income commencing as of the first day of any month
after his Early Retirement Date and preceding his Normal
Retirement Date in an amount equal to his Accrued Retirement
Income determined as of the commencement of his Retirement Income
on or after his Early Retirement Date determined in accordance
with Section 5.5. An election pursuant to this Section 5.7 to
have Retirement Income commence prior to Normal Retirement Date
shall be made on a form prescribed by the Retirement Board and
shall be filed with the Retirement Board at least thirty (30)
days before Retirement Income is to commence.
In the event of the death of an Employee who has designated
a Provisional Payee or is deemed to have done so in accordance
with Article VII, if the designation has become effective, the
first payment to be made to the Provisional Payee pursuant to
Article VII shall be made to the Provisional Payee on the first
day of the month after the later of (a) the Employee's death and
(b) the date on which the Employee would have attained his fifty-
fifth (55th) birthday if he had survived to such date, if the
Provisional Payee shall then be alive and proof of the Employee's
death satisfactory to the Retirement Board shall have been
received by it. Subsequent payments will be made monthly
thereafter until the death of such Provisional Payee.
In any event, payment of Retirement Income to the Employee
shall begin not later than the sixtieth (60th) day after the
later of the close of the Plan Year in which falls (a) the
Employee's Normal Retirement Date or (b) the date the Employee
terminates his service with the Employer or any Affiliated
Employer. Notwithstanding the provisions of the Plan for the
monthly payment of Retirement Income, such income may be adjusted
and payable annually in arrears if the amount of the Retirement
Income is less than $10.00 per month.
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<PAGE>
5.8 Termination of Retirement Income. The monthly payment
of Retirement Income will cease with the last payment preceding
the retired Employee's death; subject, however, to the
continuation of payments to a surviving Provisional Payee, if one
has been designated or deemed to have been designated, which
likewise will cease with the last payment preceding the death of
the Provisional Payee. There shall be no benefits payable under
the Plan on behalf of any Employee whose death occurs prior to
his retirement, except as otherwise provided in Article VII with
respect to a Provisional Payee of an Employee. Following the
death of an Employee and of his Provisional Payee, if any, no
further payments will be made under the Plan on account of such
Employee or to his estate.
5.9 Required distributions.
(a) Once a written claim for benefits is filed with the
Retirement Board and unless the Employee elects to have payment
begin at a later date, payment of benefits to the Employee shall
begin not later than sixty (60) days after the last day of the
Plan Year in which the latest of the following events occurs:
(1) the Employee's Normal Retirement Date;
(2) the tenth (10th) anniversary of the date the
Employee commenced participation in the Plan; or
(3) the Employee's separation from service from the
Employer or any Affiliated Employer.
(b) Required minimum distributions on and after January 1,
1989
(1) Subject to the transitional rules described in
Paragraph (c) below, effective for calendar years beginning
after December 31, 1988, the payment of Retirement Income to
any Employee shall begin no later than April 1 of the
calendar year following the calendar year in which the
Employee attains age 70-1/2, without regard to the actual
date of separation from service. The amount of his
Retirement Income shall be recomputed as of such April 1 and
as of the close of each Plan Year after his Retirement
Income commences and preceding his actual retirement date as
if each such date were the Employee's Deferred Retirement
Date. Any additional Retirement Income he accrues at the
close of any such Plan Year shall be offset (but not below
zero) by the value of the benefit payments received in such
Plan Year.
(2) The receipt by an Employee of any payments or
distributions as a result of his attaining age 70-1/2 prior
to his actual retirement or death shall in no way affect the
29
<PAGE>
entitlement of an otherwise eligible Employee to additional
accrued benefits.
(c) Age 70-1/2 transitional rule
Any Employee who is not a five-percent owner and who has
attained age 70-1/2 by January 1, 1988, may defer the
commencement of benefit payments under paragraph (b) above until
he actually separates from service with the Employer. This
transitional rule shall only apply if the Employee is not a five-
percent owner at any time during the Plan Year ending with or
within the calendar year in which such owner attains age 66-1/2
and in any subsequent Plan Year.
(d) Distribution upon death of Employee
(1) Death after commencement of benefits
If the Employee dies before his entire nonforfeitable
interest has been distributed to him, the remaining portion
of such interest shall be distributed at least as rapidly as
under the method of distribution selected by the Employee as
of the date of his death.
(2) Death prior to commencement of benefits
If the Employee dies before the distribution of his
nonforfeitable interest has begun, the entire interest shall
be distributed monthly to his Provisional Payee, if any,
over such Provisional Payee's remaining lifetime.
(e) Determining required minimum distributions
Notwithstanding anything in this Plan to the contrary, all
distributions, including the minimum amounts which must be
distributed each calendar year, under this Plan shall be made in
accordance with Code Section 401(a)(9) and the regulations
thereunder.
(f) Minimum distribution transitional rules
Any distribution made pursuant to Section 242(b)(2) of the
Tax Equity and Fiscal Responsibility Act of 1982 shall meet the
requirements of Code Section 401(a)(9) as in effect on December
31, 1983, and shall also satisfy Code Sections 401(a)(11) and
417.
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5.10 Suspension of Retirement Income for reemployment.
(a) If a former Employee who is receiving Retirement Income
shall be reemployed by the Employer or any Affiliated Employer as
an Employee and shall not elect to waive his right to participate
under the Plan or the pension plan of the Affiliated Employer,
whichever applies, his Retirement Income shall cease during each
calendar month after his reemployment in which he completes forty
(40) or more Hours of Service. The Retirement Income payable
upon his subsequent retirement shall be reduced by the Actuarial
Equivalent of any Retirement Income he received prior to his
reemployment.
(b) No payment shall be withheld by the Plan pursuant to
this Section 5.10 unless the Plan notifies the Employee by
personal delivery or first class mail during the first calendar
month in which the Plan withholds payments that his Retirement
Income is suspended.
(c) If the payment of Retirement Income has been suspended,
payments shall resume no later than the first day of the third
calendar month after the calendar month in which the Employee
ceases to be employed in ERISA Section 203(a)(3)(B) service. The
initial payment upon resumption shall include the payment
scheduled to occur in the calendar month when payments resume and
any amounts withheld during the period between the cessation of
ERISA Section 203(a)(3)(B) service and the resumption of
payments.
5.11 Increase in Retirement Income of retired Employees for
service prior to January 1, 1991. Retirement Income payable on
and after January 1, 1991 to an Employee (or to the Provisional
Payee of an Employee) who retired at an Early Retirement Date or
at his Normal Retirement Date on or before January 1, 1991
pursuant to the Plan as in effect prior to January 1, 1991, or to
the plan of Southern, will be recalculated to increase the amount
thereof by an amount ranging from a minimum of two percent (2%)
to a maximum of forty percent (40%) in accordance with the
following schedule:
Year in which Percentage
retirement occurred increase
1990 2%
1989 4%
1988 6%
1987 8%
1976 - 1986 10%
1971 - 1975 20%
1966 - 1970 30%
1965 and prior years 40%
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<PAGE>
A similar adjustment, based on the date of the commencement
of Retirement Income payments to the Employee's Provisional
Payee, rather than the Employee's Retirement Date, will be made
in respect of Retirement Income which is payable on or after
January 1, 1991 where a Provisional Payee election was in effect,
or was deemed to be in effect, when an Employee died while in
service prior to January 1, 1991 and prior to his retirement.
A similar adjustment will be made in respect of Retirement
Income which is payable on or after January 1, 1991 for an
Employee (or the Provisional Payee of an Employee) entitled to
Retirement Income for which payments have commenced on or before
January 1, 1991 in accordance with Article VIII of the Prior
Plan, except for Employees whose Retirement Income has been
cashed-out pursuant to Section 8.4 of this Plan or Section 8.5 of
the Prior Plan.
For purposes of determining the applicable percentage
increase under this Section 5.11, the year of retirement includes
retirement where the last day of employment was December 31 of
such year. An Employee whose Deferred Retirement Date is on or
before January 1, 1988 and who did not retire at his Normal
Retirement Date shall be deemed to have retired at his Normal
Retirement Date for purposes of determining the increase in his
Retirement Income payable at his Deferred Retirement Date.
This Section 5.11 shall not apply with respect to an
Employee who has not retired, but for whom the distribution of
Retirement Income has commenced pursuant to Section 5.9 of the
Plan.
5.12 Special provisions relating to the treatment of
absence of an Employee from the service of the Employer to serve
in the Armed Forces of the United States.
(a) Effective as of November 1, 1977, any provisions of the
Plan to the contrary notwithstanding, the provisions of this
Section 5.12 shall be applicable to determine the period of
absence from the service of the Employer to serve in the Armed
Forces of the United States of a "participant in the Plan" (as
such term is defined in this paragraph (a)):
The term "participant in the Plan" means a person who on or
after November 1, 1977 is either: (1) an Employee who is then or
thereafter in the service of the Employer (including an Employee
on authorized leave of absence), (2) a retired Employee who is
receiving Retirement Income, (3) a deceased Employee who received
Retirement Income under this Plan or the Prior Plan at any time
after its Effective Date, (4) a deceased former Employee who
prior to the time of his death was receiving Retirement Income in
accordance with this Plan or the Prior Plan, (5) a former
Employee whose service terminated prior to January 1, 1976 and
32
<PAGE>
who is receiving Retirement Income in accordance with the Prior
Plan, (6) a former Employee whose service terminated prior to
November 1, 1977 and who will be entitled to receive Retirement
Income commencing after that date in accordance with this Plan or
the Prior Plan, or (7) a former Employee who was transferred from
the Employer pursuant to Section 4.6 or pursuant to the Prior
Plan and who will be entitled to receive in accordance with
either, Retirement Income commencing after November 1, 1977.
The Employee or former Employee or retired Employee referred
to in this paragraph (a) is one who: (1) left the employment of
the Employer or of Commonwealth Services, Inc. (formerly known as
The Commonwealth & Southern Corporation (New York)
("Commonwealth")) or of The Southern Company ("Southern") to
enter the Armed Forces of the United States (including reserve
components thereof, the Public Health Service, and the National
Guard) for the purposes and under circumstances which are
specified in the reemployment provisions of the Military
Selective Service Act and in any amendments or supplements
thereto hereinafter in this Section 5.12 referred to as the
"Selective Service Act," (2) made application for reemployment by
the Employer or by Commonwealth or Southern within such time
after discharge or release from such service in the Armed Forces
of the United States as is specified in the reemployment
provisions of the Selective Service Act as is applicable in his
circumstances and was reemployed by the Employer or by Southern
or by Commonwealth and if by Commonwealth thereafter became an
Employee of Southern or of the Employer, (3) served a period of
active duty in the Armed Forces of the United States which did
not exceed the maximum period of such active duty specified in
the reemployment provisions of the Selective Service Act as is
applicable in his circumstances, and (4) performed such service
in the Armed Forces after May 1, 1940.
(b) For the purposes of the Plan, the period of absence of
a participant in the Plan to serve in the Armed Forces of the
United States shall be the period determined by the Retirement
Board.
(c) In accordance with the provisions of the Plan as
amended effective as of November 1, 1977 by the addition of this
Section 5.12 and the concurrent amendments associated therewith,
there shall be recalculated effective as of November 1, 1977 the
Retirement Income (1) of each participant in the Plan or that of
his Provisional Payee, if any, who is then receiving Retirement
Income; and (2) of each deceased participant in the Plan and his
deceased Provisional Payee, if any, who received payment of
Retirement Income, who is not then receiving Retirement Income.
(1) If in accordance with such recalculation, a larger
amount of Retirement Income would have been payable to a
participant in the Plan who is currently receiving payment
33
<PAGE>
of Retirement Income and/or to his Provisional Payee, if
any, than was paid to them respectively prior to November 1,
1977, payment in a single sum of the excess of the
recalculated amount over the amounts which were paid prior
to November 1, 1977 with interest thereon as hereinafter
provided, shall be made as soon as practicable after
November 1, 1977 and, commencing as soon as practicable
after November 1, 1977, the Retirement Income payable to
participants in the Plan and/or to their Provisional Payees,
if any, who are currently receiving Retirement Income shall
be increased to an amount which is equal to the larger
recalculated amount to which they shall be entitled in
respect of payments to be made on or after November 1, 1977.
(2) If in accordance with the recalculation a larger
amount of Retirement Income would have been payable to the
date of death prior to November 1, 1977 of a deceased
retired Employee or his Provisional Payee than was paid
prior to his death, payment in a single sum of the excess of
the recalculated amount over the amount which was paid prior
to the date of death, with interest thereon as hereinafter
provided, shall be made to his estate as soon as practicable
after November 1, 1977.
(3) For the purposes of the recalculation to be made
in accordance with this paragraph (c), if a participant in
the Plan left the employment of an Affiliated Employer to
enter the Armed Forces of the United States and was not
reemployed by such Affiliated Employer upon his discharge or
release from service in the Armed Forces but he entered the
employment of the Employer, without intermediate employment,
and within the time prescribed in paragraph (a) of this
Section 5.12, and his period of absence in the Armed Forces
of the United States, as determined by the Retirement Board,
is not taken into account under the pension plan of the
Affiliated Employer whose service he left to enter the Armed
Forces or under Section 4.3, it shall be treated under the
Plan and the Prior Plan as if such period of absence had
been a period of absence from the Employer.
(d) Retirement Income of participants in the Plan who are
not referred to in subparagraphs (1) or (2) of paragraph (c) and
who are not on November 1, 1977 receiving Retirement Income shall
be determined in accordance with the provisions of the Plan as
amended by the addition of this Section 5.12 and the concurrent
amendments associated therewith.
(e) Interest to be paid on any single sum payment to be
made in accordance with subparagraphs (1) or (2) of paragraph (c)
of this Section 5.12 shall be computed at the annual rate of five
percent (5%).
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<PAGE>
(f) Payment to be made to any payee in accordance with this
Section 5.12 may be conditioned by the Retirement Board upon its
receipt of (1) such information pertaining to absence of an
Employee or former Employee to serve in the Armed Forces of the
United States as it may request and (2) such form of receipt and
release as it may determine to be appropriate in the
circumstances.
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ARTICLE VI
Limitations on Benefits
6
6.1 Maximum Retirement Income. Notwithstanding any other
provision of the Plan, the amount of Retirement Income shall be
subject to the provisions of Article VI.
(a) The maximum annual amount of Retirement Income payable
with respect to an Employee in the form of a straight life
annuity without any ancillary benefits after any adjustment for a
Provisional Payee designation shall be the lesser of the dollar
limitation determined under Code Section 415(b)(1)(A) as adjusted
under Code Section 415(d), or Code Section 415(b)(1)(B) as
adjusted under Treasury Regulation Section 1.415-5, subject to
the following provisions of Article VI. With respect to any
former Employee who has Accrued Retirement Income under the Plan
or his Provisional Payee, the maximum annual amount shall also be
subject to the adjustment under Code Section 415(d).
(b) For purposes of Section 6.1, the term "average
compensation for his high three (3) years" shall mean the period
of consecutive calendar years (not more than three) during which
the Employee was both an active participant in the Plan and had
the greatest aggregate compensation from the Employer or, if he
is also entitled to receive a pension from a defined benefit plan
of an Affiliated Employer or if assets and liabilities
attributable to the pension of the Employee from a defined
benefit plan of an Affiliated Employer have been transferred to
this Plan, the greatest aggregate compensation from the Employer
and the Affiliated Employer during such high three (3) years.
The limitation described in Section 6.1(a) shall also apply in
the case of the payment of an Employee's Retirement Income with a
Provisional Payee designation.
(c) For purposes of Article VI, the term "compensation"
means an Employee's earned income, wages, salaries, and fees for
professional services, and other amounts received for personal
services actually rendered in the course of employment with the
Employer maintaining the Plan (including, but not limited to,
commissions paid salesmen, compensation for services on the basis
of a percentage of profits, commissions on insurance premiums,
tips and bonuses), and excluding the following:
(1) Employer contributions to a plan of deferred
compensation which are not included in the Employee's gross
income for the taxable year in which contributed or Employer
contributions under a simplified employee pension plan to
the extent such contributions are deductible by the
Employee, or any distributions from a plan of deferred
compensation;
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<PAGE>
(2) Amounts realized from the exercise of a
nonqualified stock option, or when restricted stock (or
property) held by the Employee either becomes freely
transferable or is no longer subject to a substantial risk
of forfeiture;
(3) Amounts realized from the sale, exchange, or other
disposition of stock acquired under a qualified stock
option; and
(4) Other amounts which received special tax benefits,
or contributions made by the Employer (whether or not under
a salary reduction agreement) towards the purchase of an
annuity described in Section 403(b) of the Code (whether or
not the amounts are actually excludable from the gross
income of the Employee).
Compensation for any Limitation Year is the compensation actually
paid or includible in gross income during such year.
(d) The foregoing limitations regarding the maximum
Retirement Income shall not apply with respect to an Employee if
the Retirement Income payable under the Plan and under any other
defined benefit plans of the Employer or any Affiliated Employer
does not exceed $10,000 for the calendar year or for any prior
calendar year, and the Employer and any Affiliated Employer has
not at any time maintained a defined contribution plan in which
the Employee has participated. The terms "defined benefit plan"
and "defined contribution plan" shall have the meanings set forth
in Section 415(k) of the Code.
6.2 Adjustment to Defined Benefit Dollar Limitation for
Early or Deferred Retirement.
(a) If the retirement benefit of an Employee commences
before the Employee's Social Security Retirement Age, the Defined
Benefit Dollar Limitation shall be reduced in accordance with
Code Section 415(b)(2)(C) as prescribed by the Secretary of the
Treasury. The reduction shall be made in such manner as the
Secretary of the Treasury may prescribe which is consistent with
the reduction for old-age insurance benefits commencing before
the Social Security Retirement Age under the Social Security Act.
(b) If the retirement benefit of an Employee commences
after the Employee's Social Security Retirement Age, the Defined
Benefit Dollar Limitation shall be adjusted in accordance with
Code Section 415(b)(2)(D) as prescribed by the Secretary of the
Treasury, based on the lesser of the interest rate assumption
under the Plan or on an assumption of five percent (5%) per year.
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6.3 Adjustment of limitation for Years of Service or
participation.
(a) If an Employee has completed less than ten (10) years
of participation, the Employee's accrued benefit shall not exceed
the Defined Benefit Dollar Limitation as adjusted by multiplying
such amount by a fraction, the numerator of which is the
Employee's number of years (or part thereof) of participation in
the Plan, and the denominator of which is ten (10).
(b) If an Employee has completed less than ten (10) Years
of Service with the Employer and any Affiliated Employer, the
limitations described in Sections 415(b)(1)(B), 415(b)(4), and
415(e) of the Code shall be adjusted by multiplying such amounts
by a fraction, the numerator of which is the Employee's number of
years of service (or part thereof), and the denominator of which
is ten (10).
(c) In no event shall Sections 6.3(a) and (b) reduce the
limitations provided under Sections 415(b)(1), 415(b)(4), and
415(e) of the Code to an amount less than one-tenth (1/10) of the
applicable limitation (as determined without regard to this
Section 6.3).
(d) This Section 6.3 shall be applied separately with
respect to each change in the benefit structure of the Plan,
except as is or may be limited by Revenue Procedure 92-42.
6.4 Preservation of Accrued Retirement Income.
(a) Retirement Income payable to an Employee or former
Employee who was an active participant in the Plan before
October 3, 1973 will not be deemed to exceed the amount of
maximum Retirement Income limitations imposed by the provisions
of this Article VI if:
(1) The annual amount of Retirement Income payable to
such Employee on retirement does not exceed 100% of his
annual rate of compensation on the earlier of (A) October 2,
1973, or (B) the date on which he separated from the service
of the Employer;
(2) Such annual Retirement Income is not greater than
the annual amount of Retirement Income which would have been
payable to such Employee on retirement if (A) all terms and
conditions of the Plan in existence on his retirement date
had remained in existence until his retirement and (B) his
compensation taken into account for any period after
October 2, 1973 had not exceeded his annual rate of
compensation on October 2, 1973; and
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(3) In the case of an Employee whose service with the
Employer terminated prior to October 2, 1973, such annual
Retirement Income is no greater than his vested Accrued
Retirement Income as of the date of such termination of
service.
(b) In the case of an Employee who is a participant in the
Plan prior to January 1, 1983, if the Section 415 requirements
have been met for all Plan Years prior to 1983, then the Defined
Benefit Dollar Limitation described in Section 1.10 applicable to
the payment of such Employee's Retirement Income shall be equal
to his Accrued Retirement Income as of December 31, 1982, (when
expressed as an annual benefit within the meaning of Section
415(b)(2) of the Code, as in effect prior to the Tax Equity and
Fiscal Responsibility Act of 1982), if his Accrued Retirement
Income exceeds such Defined Benefit Dollar Limitation.
(c) This Section 6.4(c) shall apply to defined benefit
plans that were in existence on May 6, 1986, and that met the
applicable requirements of Section 415 of the Code as in effect
for all Limitation Years. If the Current Accrued Retirement
Income of an Employee as of the first day of the Limitation Year
beginning on or after January 1, 1987, exceeds the benefit
limitations under Section 415(b) of the Code (as modified by
Sections 6.2 and 6.3 of the Plan), then, for purposes of Code
Section 415(b) and (e), the Defined Benefit Dollar Limitation
with respect to such Employee shall be equal to such Current
Accrued Retirement Income.
6.5 Limitation on benefits from multiple plans.
(a) In the case of an Employee who is also a participant in
any other defined benefit plan of the Employer or any Affiliated
Employer or in any defined contribution plan of the Employer or
any Affiliated Employer, the Retirement Income provided by the
Plan shall be limited to the extent necessary to prevent the sum
of Fractions A and B below, computed as of the end of the Plan
Year, from exceeding 1.0.
Fraction A
(numerator) Projected annual benefit of the Employee
under the Plan and any other defined benefit plan of
the Employer or any Affiliated Employer (determined as
of the close of the Plan Year).
(denominator) The lesser of (1) the product of 1.25
multiplied by the Defined Benefit Dollar Limitation (or
such higher accrued benefit as of December 31, 1982),
or (2) 1.4 multiplied by the amount determined under
Code Section 415(b)(1)(B) as adjusted under Treasury
Regulation Section 1.415-5.
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Fraction B
(numerator) The sum of all Annual Additions to the
account of the Employee under any defined contribution
plan of the Employer or any Affiliated Employer as of
the close of the Plan Year.
(denominator) The sum of the lesser of the following
amounts, determined for such Plan Year and for each
prior Plan Year in which the Employee has a Year of
Service, (1) 1.25 multiplied by the Defined
Contribution Dollar Limitation determined under Code
Section 415(c)(1)(A), or (2) 1.4 multiplied by
twenty-five percent (25%) of the Employee's
compensation for the year.
6.6 Special rules for plans subject to overall limitations
under Code Section 415(e).
(a) For purposes of computing the defined contribution plan
fraction of Section 415(e)(1) of the Code, "Annual Addition"
shall mean the amount allocated to an Employee's account during
the Limitation Year as a result of:
(1) employer contributions,
(2) employee contributions,
(3) forfeitures, and
(4) amounts described in Sections 415(1)(1) and
419(A)(d)(2) of the Code.
(b) The Annual Addition for any Limitation Year beginning
before January 1, 1987 shall not be recomputed to treat all
Employee contributions as an Annual Addition.
(c) If the sum of Fractions A and B exceeds 1.0 as of
December 31, 1982, the numerator of Fraction B shall be reduced
by an amount which does not exceed the numerator, so that the sum
of Fraction A and Fraction B does not exceed 1.0.
(d) If the Plan satisfied the applicable requirements of
Section 415 of the Code as in effect for all Limitation Years
beginning before January 1, 1987, an amount shall be subtracted
from the numerator of the defined contribution plan fraction (not
exceeding such numerator) as prescribed by the Secretary of the
Treasury so that the sum of the defined benefit plan fraction and
defined contribution plan fraction computed under Section
415(e)(1) of the Code (as revised by this Article VI) does not
exceed 1.0 for such Limitation Year.
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(e) The defined contribution plans and the other defined
benefit plans of the Employer and Affiliated Employers include,
respectively, (1) The Southern Company Employee Savings Plan, The
Southern Company Employee Stock Ownership Plan, and any other
defined contribution plan (as defined in Section 415(k) of the
Code) and (2) any other qualified pension plan in which the
Employee participates in accruing benefits maintained by the
Employer or any Affiliated Employer.
6.7 Combination of Plans. Notwithstanding any provisions
contained herein to the contrary, in the event that an Employee
participates in a defined contribution plan or defined benefit
plan required to be aggregated with this Plan under Code Section
415(g) and the combined benefits with respect to an Employee
exceed the limitations contained in Code Section 415(e),
corrective adjustments shall first be made under this Plan.
However, if an Employee's Retirement Income under this Plan has
already commenced, corrections shall first be made under The
Southern Company Employee Stock Ownership Plan, if possible, and
if not possible, then correction shall be made to the Employee's
Accrued Retirement Income under this Plan.
6.8 Incorporation of Code Section 415. Notwithstanding
anything contained in this Article to the contrary, the
limitations, adjustments and other requirements prescribed in
this Article shall at all times comply with the provisions of
Code Section 415 and the regulations thereunder, the terms of
which are specifically incorporated herein by reference.
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ARTICLE VII
Provisional Payee
7
7.1 Adjustment of Retirement Income to provide for payment
to Provisional Payee. An Employee who desires to have his
Accrued Retirement Income adjusted in accordance with the
provisions of this Article VII to provide a reduced amount of
Retirement Income payable to him for his lifetime commencing on
his Early Retirement Date, his Normal Retirement Date, or his
Deferred Retirement Date, as the case may be, may elect, in
accordance with the provisions of this Article VII, at his
option, either:
(a) that an amount of Retirement Income be payable to him
for his lifetime which is equal to eighty percent (80%) of the
Retirement Income which would otherwise be payable to him, but
for such election (taking into account any reduction required in
accordance with Sections 7.3 and 7.4(a)), with the provision that
the same amount will be continued after his death to his
Provisional Payee until the death of such Provisional Payee, or
(b) that an amount of Retirement Income be payable to him
for his lifetime which is equal to ninety percent (90%) of the
Retirement Income which would otherwise be payable to him, but
for such election (taking into account any reduction required in
accordance with Sections 7.3 and 7.4(a)), with the provision that
one-half (1/2) of the amount payable to the Employee will be
continued after his death to his Provisional Payee until the
death of such Provisional Payee.
7.2 Form and time of election and notice requirements.
(a) An election of payment and designation of a Provisional
Payee in accordance with Section 7.1 shall be made in writing at
the same time on a form prescribed by the Retirement Board and
delivered to it. The election and designation shall specify its
effective date which shall not be sooner than the date received
by the Retirement Board or the Employee's fifty-fifth (55th)
birthday, whichever is later, nor later than the date of
commencement of payments in accordance with this Article VII.
(b) An election of payment to be made in accordance with
paragraph (a) or paragraph (b) of Section 7.1 may be changed from
paragraph (a) to paragraph (b) or vice versa by an Employee,
provided the written election of the change specifies an
effective date which shall not be sooner than the date received
by the Retirement Board or the Employee's fifty-fifth (55th)
birthday, whichever is later, nor later than the date of
commencement of payments in accordance with this Article VII. To
the extent that the new method of payment shall afford the
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Employee changed protection in the event of his death after the
effective date of the new election and prior to retirement, his
Accrued Retirement Income shall be adjusted pursuant to Section
7.4(a) to reflect such changed protection.
(c) With respect to Sections 7.5 and 7.6, within the period
not less than 30 days and not more than 90 days prior to the
commencement of benefits, the Employee shall be furnished, by
mail or personal delivery, a written explanation of: (1) the
terms and conditions of the reduced Retirement Income payable as
provided in paragraph (b) of Section 7.1; (2) the Employee's
right to make, and the effect of, an election to waive the
payment of reduced Retirement Income pursuant to a Provisional
Payee designation; (3) the rights of the Employee's Provisional
Payee; and (4) the right to make, and the effect of, a revocation
of a previous election to waive the payment of reduced Retirement
Income pursuant to a Provisional Payee designation.
Within thirty (30) days following an Employee's written
request received by the Retirement Board during the election
period, but within sixty (60) days from the date the Employee is
furnished all of the information prescribed in the immediately
preceding sentence, the Employee shall be furnished an additional
written explanation, in terms of dollar amounts, of the financial
effect of an election by him not to receive such reduced
Retirement Income. If an Employee makes such request, the
election period herein prescribed shall end not earlier than
sixty (60) calendar days following the day of the mailing or
personal delivery of the additional explanation to the Employee.
Except that if an election made as provided in Section 7.5 or 7.6
is revoked, another election under that Section may be made
during the specified election period.
7.3 Circumstances in which election and designation are
inoperative. An election and designation made pursuant to this
Article shall be inoperative and the regular provisions of the
Plan shall again become applicable as if a Provisional Payee had
not been designated if, prior to the commencement of any payment
in accordance with this Article VII: (a) an Employee's
Provisional Payee shall die, (b) the Employee and the Provisional
Payee shall be divorced under a final decree of divorce, or
(c) the Retirement Board shall have received the written
Qualified Election of the Employee to rescind his election of
payment and designation of a Provisional Payee. If such a
Qualified Election to rescind is made by the Employee, his
Accrued Retirement Income shall be reduced to reflect the
protection afforded the Employee by any Provisional Payee
designation during the period from its effective date to the date
of the Retirement Board's receipt of the Employee's Qualified
Election to rescind if the option as to payments of reduced
Retirement Income was in accordance with either Section 7.1(a),
7.6(a), or 7.6(b). If an Employee remarries subsequent to the
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death or divorce of his Provisional Payee and prior to the
commencement of payments in accordance with this Article VII, and
if such Employee is married prior to the time of the commencement
of payments, then he shall be entitled to designate a new
Provisional Payee in the manner set forth in Section 7.2.
7.4 Pre-retirement death benefit. If prior to his Normal
Retirement Date (or his Deferred Retirement Date, if applicable),
an Employee shall die while in the service of the Employer and is
survived by his spouse to whom he shall be married at the time of
his death, there shall be payable to his surviving spouse (whom
he shall be deemed to have designated as his Provisional Payee)
Retirement Income determined in accordance with paragraph (a) or
paragraph (c) of this Section 7.4, as applicable. Such
Retirement Income shall commence on the first day of the month
following the death of the Employee or the first day of the month
following the date on which he would have attained his
fifty-fifth (55th) birthday if he were still alive, whichever is
later, and shall cease with the last payment preceding the death
of his Provisional Payee.
(a) The amount of Retirement Income payable to the
Provisional Payee of a deceased Employee who prior to his death
had attained his fifty-fifth (55th) birthday shall be equal to
the amount payable to the Provisional Payee as calculated in
Section 7.1(b) determined on the basis of his Accredited Service
to the date of his death, or if the Employee shall have attained
his fifty-fifth (55th) birthday and so elected prior to his
death, such Retirement Income shall be equal to the amount set
forth in Section 7.1(a) determined on the basis of his Accredited
Service to the date of his death reduced as provided in the next
sentence. If such election shall be made by the Employee, the
Retirement Income which shall be payable to the Employee if he
lives to his Early Retirement Date or the first day of the month
following his attainment of age sixty-five (65), if later, shall
be reduced by three-fourths of one percent (0.75%) for each year
(prorated for a fraction of a year from the first day of the
month following the effective date of the election) which has
elapsed from the effective date of his election to the earlier of
(1) the commencement of Retirement Income on or after his Early
Retirement Date or the first day of the month following his
attainment of age sixty-five (65), if later, or (2) the
revocation of such election. If he shall die before the
commencement of Retirement Income on or after his Early
Retirement Date or the first day of the month following his
attainment of age sixty-five (65), if later, his Accrued
Retirement Income to the date of his death shall be reduced by
three-quarters of one percent (0.75%) for each year (prorated for
a fraction of a year from the first day of the month following
the effective date of the election) between the effective date of
his election and the first day of the month following his
attainment of age sixty-five (65). No reduction in the
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Employee's Retirement Income shall be made for the period during
which the election is in effect after the first day of the month
following his attainment of age sixty-five (65).
(b) Retirement Income shall not be payable under paragraph
(a) of this Section 7.4 to the Provisional Payee of a deceased
Employee if at the time of his death there was in effect a
Qualified Election made after August 22, 1984 under this
paragraph (b) that no Retirement Income shall be paid to his
Provisional Payee in the event of his death while in the service
of the Employer (or while in the service of an Affiliated
Employer to which his employment had been transferred in
accordance with Section 4.6) as provided in paragraph (a),
provided the Employee had received at least 180 days prior to his
fifty-fifth (55th) birthday a written explanation of: (1) the
terms and conditions of the Retirement Income payable to his
Provisional Payee as provided in paragraph (a); (2) the
Employee's right to make, and the effect of, an election to waive
the payment of Retirement Income to his Provisional Payee;
(3) the rights of the Employee's Provisional Payee; and (4) the
right to make, and the effect of, a revocation of a previous
election to waive the payment of Retirement Income to the
Employee's Provisional Payee.
A revocation of a prior Qualified Election to waive the
payment of Retirement Income to the Employee's Provisional Payee
may be made by the Employee without the consent of the Employee's
Provisional Payee at any time before the commencement of
benefits. An election under this paragraph (b) may be made and
such election may be revoked by an Employee during the period
commencing ninety (90) days prior to the Employee's fifty-fifth
(55th) birthday and ending on the date of the Employee's death.
(c) The amount of such Retirement Income payable to the
Provisional Payee of a deceased Employee who prior to his death,
had completed at least five (5) Vesting Years of Service and had
not attained his fifty-fifth (55th) birthday shall be equal to
one-half of the reduced amount, as actuarially adjusted to
provide for the payment of such Retirement Income beginning at
the date on which such deceased Employee would have attained his
fifty-fifth (55th) birthday and to provide for the determination
of such Retirement Income on a joint and fifty percent (50%)
survivor basis of the Employee's Accrued Retirement Income,
determined on the basis of his Accredited Service to the date of
his death.
This Section 7.4(c) shall also apply to adjust the future
payment of Retirement Income after December 31, 1990 to a
Provisional Payee with respect to an Employee who died (while in
the service of the Employer prior to his fifty-fifth (55th)
birthday after completing the requisite number of Years of
Service) in order to have a nonforfeitable right to Retirement
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Income under the Plan as in effect on the Employee's date of
death, provided Retirement Income is payable to such Provisional
Payee on or after January 1, 1991. The adjustment under this
Section 7.4(c) shall be determined by adjusting the Retirement
Income that had commenced to the Provisional Payee on or before
January 1, 1986, and then adding the applicable percentage
increase under Section 5.13 of the Prior Plan.
For an Employee on or after January 1, 1991, who dies while
in the service of the Employer prior to his fifty-fifth birthday
after completing five (5) Vesting Years of Service, the amount of
such Retirement Income payable to the Provisional Payee shall be
calculated as provided in Section 7.1(b) determined on the basis
of his Accredited Service to the date of his death. The payment
of such Retirement Income to the Provisional Payee shall begin on
the first day of the month following the date on which such
deceased Employee would have attained his fifty-fifth (55th)
birthday.
7.5 Post-retirement death benefit - qualified joint and
survivor annuity. If at his Early Retirement Date, Normal
Retirement Date, or Deferred Retirement Date, as the case may be,
an Employee is married and he has not: (a) designated a
Provisional Payee in accordance with Section 7.1 in respect of
payments to be made commencing on his Early, Normal, or Deferred
Retirement Date or (b) made a Qualified Election that payment be
made to him in the mode of a single life annuity, he shall
nevertheless be deemed to have made an effective designation of a
Provisional Payee under this Section 7.5 and to have specified
the payment of a benefit as provided in Section 7.1(b).
7.6 Election and designation by former Employee entitled to
Retirement Income in accordance with Article VIII. If an
Employee is entitled to receive in accordance with Section 8.1
Retirement Income commencing at Normal Retirement Date, or sooner
in accordance with Section 8.2, he may, on or after his
fifty-fifth (55th) birthday, designate his spouse as his
Provisional Payee and elect to have his Accrued Retirement Income
at the date of termination of his service actuarially adjusted to
provide, at his option, in the event of the commencement of
payment prior to his Normal Retirement Date either:
(a) a reduced amount payable to him for his lifetime with
the provision that such reduced amount will be continued after
his death to his spouse as Provisional Payee until the death of
such Provisional Payee; or
(b) a reduced amount (greater than the amount in (a) above)
payable to him for his lifetime with the provision that one-half
(1/2) of such reduced amount will be continued after his death to
his spouse as Provisional Payee until the death of such
Provisional Payee.
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The Employee's election and designation of his Provisional
Payee made in accordance with this Section 7.6 shall be in
writing on a form prescribed by the Retirement Board and
delivered to it and shall become effective not sooner than the
date received by the Retirement Board or the Employee's
fifty-fifth (55th) birthday, whichever is later, nor later than
the date of commencement of payment in accordance with this
Section 7.6.
If the Employee dies prior to his Normal Retirement Date but
after the effective date of his Provisional Payee designation,
there will be payable to his Provisional Payee for life
commencing on the first day of the calendar month after the
Employee's death Retirement Income in a reduced amount in
accordance with the Employee's election of payments to be made to
his Provisional Payee after the death of the Employee under
paragraph (a) or (b), as the case may be, of this Section 7.6.
However, if prior to the Employee's death, the Retirement Board
has not received such election, payment of a reduced amount of
Retirement Income will be made in accordance with paragraph (b)
of this Section 7.6 to his surviving spouse to whom he is married
at the time of his death, unless (1) at the time of his death
there is in effect a Qualified Election by the Employee that
reduced Retirement Income shall not be paid to his surviving
spouse in accordance with this Section 7.6 should he die between
his fifty-fifth (55th) birthday and his Normal Retirement Date
without having elected that payment be made to a Provisional
Payee and (2) at least 180 days prior to his fifty-fifth (55th)
birthday a written explanation is provided to the Employee of:
(A) the terms and conditions of the Retirement Income payable to
his Provisional Payee as provided in this Section 7.6; (B) the
Employee's right to make, and the effect of, an election to waive
the payment of Retirement Income to his Provisional Payee;
(C) the rights of an Employee's spouse; and (D) the right to
make, and the effect of, a revocation of a previous election to
waive the payment of Retirement Income to his Provisional Payee.
If the Employee is entitled to receive payment of Retirement
Income in accordance with Section 8.2 after his fifty-fifth
(55th) birthday and prior to his Normal Retirement Date and
elects to do so, a reduced amount of Retirement Income determined
in accordance with this Section 7.6 based upon his Accrued
Retirement Income at the date of termination of his service
(actuarially reduced in accordance with Section 8.2) will be
payable to him commencing on the date on which payments commence
prior to Normal Retirement Date in accordance with Section 8.2
with payments in the same or reduced amount to be continued to
his Provisional Payee for life after the Employee's death in
accordance with his election under paragraph (a) or (b), as the
case may be, of this Section 7.6. However, if the Employee is
married and he has not designated a Provisional Payee in respect
of payments to commence to him prior to his Normal Retirement
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Date or elected that payment be made to him in the mode of a
single life annuity pursuant to a Qualified Election, he shall be
deemed to have designated a Provisional Payee pursuant to this
Section 7.6 and thereby specified that a reduced Retirement
Income shall be paid to him during his lifetime as provided in
paragraph (b) of this Section 7.6 and continued after his death
to his Provisional Payee as provided in paragraph (b) of this
Section 7.6.
If the Employee is alive on his Normal Retirement Date and
is married and payment of Retirement Income has not sooner
commenced, the provisions of Section 7.5 shall be applicable to
the payment of his Retirement Income, unless he shall elect at
his Normal Retirement Date to receive payment of his Retirement
Income pursuant to Section 7.1(a) or 7.1(b). However, if an
election and designation in accordance with this Section 7.6 was
in effect prior to his Normal Retirement Date, the Employee's
Accrued Retirement Income at his Normal Retirement Date shall be
actuarially adjusted for the period the election and designation
was in effect.
7.7 Death benefit for Provisional Payee of former Employee.
If an Employee, whose service with the Employer terminates on or
after January 1, 1989, shall die after such termination of
employment, and prior to his death (a) shall have not attained
his fifty-fifth (55th) birthday, (b) shall have completed at
least five (5) Vesting Years of Service, and (c) shall be
survived by his spouse to whom he shall be married at his death,
then there shall be payable to his surviving spouse (whom he
shall be deemed to have designated as his Provisional Payee)
Retirement Income determined in accordance with this Section 7.7.
Such Retirement Income shall be equal to one-half of the reduced
amount, as actuarially adjusted to provide for the payment of
such Retirement Income beginning at the date on which such
deceased Employee would have attained his fifty-fifth (55th)
birthday and to provide for the determination of such Retirement
Income on a joint and fifty percent (50%) survivor basis of the
Employee's Accrued Retirement Income, determined on the basis of
his Accredited Service to the date of his death. Such Retirement
Income shall commence on the first day of the month following the
date on which the former Employee would have attained his
fifty-fifth (55th) birthday if he were still alive, and shall
cease with the last payment preceding the death of his
Provisional Payee.
7.8 Limitations on Employee's and Provisional Payee's
benefits.
(a) With respect to an Employee who does not elect a single
life annuity, the limitation on benefits imposed under Article VI
shall be applied as if such Employee had elected a benefit in the
form of a single life annuity.
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(b) With respect to a Provisional Payee, the limitations on
benefits imposed under Article VI shall be applied consistent
with paragraph (a) above prorated to provide a limitation equal
to or one-half of the Employee's limitation as appropriate in
accordance with annuity form of benefit elected by the Employee.
7.9 Effect of election under Article VII. An election of
payment or a deemed election of payment in accordance with this
Article VII shall be in lieu of any other form or method of
payment of Retirement Income.
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ARTICLE VIII
Termination of Service
8
8.1 Vested interest. If an Employee included in the Plan
terminates for any reason other than death or transfer to an
Affiliated Employer as provided by Section 4.6 or retirement as
provided by Article III, and if such Employee has had at least
five (5) Vesting Years of Service with the Employer, whether or
not Accredited Service, he will be entitled to receive,
commencing at Normal Retirement Date (except as provided in
Section 8.2 and subject to the provisions of Section 7.6)
Retirement Income equal to his Accrued Retirement Income at the
date of the termination of such service, provided that he makes
application to the Employer for the payment of such Retirement
Income. If proper application for payment of Retirement Income
shall not be received by the Employer by the April 1 of the
calendar year following the calendar year in which the Employee
attains age 70 1/2 and the whereabouts of the Employee cannot be
determined by the Employer, Retirement Income shall be paid to
the Employee's Provisional Payee, if any, and if surviving and
the whereabouts known to the Employer, or applied in such other
manner as the Retirement Board shall deem appropriate. The
payment of Retirement Income pursuant to this provision shall
completely discharge all liability of the Retirement Board, the
Employer, and the Trustee or other payor to the extent of the
payments so made. If such Employee terminates with less than
five (5) Vesting Years of Service with the Employer, he shall
immediately forfeit any Accrued Retirement Income under the Plan
based upon his service prior to such termination.
8.2 Early distribution of vested benefit. If an Employee
terminates from service before his fifty-fifth (55th) birthday
and is entitled to receive in accordance with Section 8.1
Retirement Income commencing at his Normal Retirement Date and at
the time his service terminated he had at least ten (10) Years of
Accredited Service, he may, in lieu of receiving payment of such
Retirement Income commencing at Normal Retirement Date, elect to
receive such Retirement Income commencing as of the first day of
any month within the ten-year period preceding his Normal
Retirement Date in an amount equal to his Accrued Retirement
Income at the date of termination of his service actuarially
reduced in accordance with reasonable actuarial assumptions
adopted by the Retirement Board. An election pursuant to this
Section 8.2 to have Retirement Income commence prior to Normal
Retirement Date shall be made on a form prescribed by the
Retirement Board and shall be filed with the Retirement Board at
least thirty (30) days before Retirement Income is to commence.
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8.3 Years of Service of reemployed Employees. If an
Employee whose service terminates is again employed by the
Employer as an Employee or he is employed (other than by reason
of transfer in accordance with Section 4.6) by an Affiliated
Employer which has at the time of his employment by such company
a pension plan with substantially the same terms as this Plan,
his Years of Service with the Employer and his Accredited Service
immediately prior to the termination of his service shall be
treated as provided in this Section 8.3, subject to the
provisions of Section 8.4. For this purpose the terms "again
employed" and "reemployment" shall include employment with an
Affiliated Employer.
(a) If at the time of his reemployment he has not incurred
a One-Year Break in Service, his Years of Service with the
Employer and his Accredited Service will be restored whether or
not he is entitled to receive Retirement Income in accordance
with Section 8.1.
(b) If at the time of termination of his service he is
entitled to receive Retirement Income in accordance with the
provisions of Section 8.1, upon his reemployment his Years of
Service with the Employer immediately prior to the termination of
his service shall be restored whether or not he has incurred a
One-Year Break in Service.
(c) If at the time of reemployment on or after January 1,
1985, he is not entitled to receive Retirement Income in
accordance with Section 8.1 and he (1) has incurred less than
five (5) consecutive One-Year Breaks in Service or (2) has
incurred five (5) or more consecutive One-Year Breaks in Service,
but his Years of Service prior to such One-Year Breaks in Service
exceeded the consecutive One-Year Breaks in Service, then upon
the completion of one Eligibility Year of Service following his
reemployment, provided that if his reemployment date is on or
after January 1, 1995, no such Eligibility Year of Service shall
be required, his Years of Service with the Employer and his
Accredited Service prior to the first One-Year Break in Service
shall be restored, disregarding any Years of Service with the
Employer which are not required to be taken into account by
reason of any previous One-Year Breaks in Service. The Years of
Service and years of Accredited Service credited to an Employee
reemployed prior to January 1, 1985, with regard to his Years of
Service with the Employer and years of Accredited Service
immediately prior to the termination of his service shall be
determined under the terms of the Plan in effect prior to January
1, 1985.
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(d) Years of Service and Accredited Service restored to an
Employee in accordance with this Section 8.3 shall be aggregated
with Years of Service and Accredited Service to which the
Employee may be entitled after his reemployment. If, however,
the Minimum Retirement Income so determined for the Employee upon
his subsequent retirement or termination of service shall be less
than the aggregate of: (1) his Minimum Retirement Income, if
any, determined in respect of the period ending with his prior
termination of service, and (2) his Minimum Retirement Income
determined in respect of the period after his reemployment, the
aggregate of such Minimum Retirement Incomes shall be deemed to
be his Minimum Retirement Income upon such subsequent retirement
or termination of service. In any event, his Retirement Income,
however computed, shall be reduced by the Actuarial Equivalent of
any Retirement Income he received with respect to his prior
period of employment.
(e) If a former Employee to whose credit shall be restored
years of Accredited Service in accordance with this Section 8.3
shall become entitled (or his Provisional Payee shall become
entitled) to receive retirement income under the plan of an
Affiliated Employer by which he should become employed, he shall
be deemed to have transferred to the Affiliated Employer for
purposes of Section 4.6 as of his initial date of participation
in the plan of such Affiliated Employer.
8.4 Cash-out and buy-back. (a) Notwithstanding any other
provision of this Plan, if the present value of Accrued
Retirement Income of an Employee whose service terminates for any
reason other than transfer to an Affiliated Employer under
Section 4.6, or retirement under Article III, is not more than
$3,500 (or such greater amount as permitted by the regulations
prescribed by the Secretary of the Treasury) the Employer shall
direct that such present value of the Employee's Accrued
Retirement Income be paid in a lump sum, in cash, to such
terminated Employee. The present value of the Accrued Retirement
Income shall be calculated as of the last day of the date of
distribution of the lump sum applying the Applicable Interest
Rate as defined in Section 8.5(e) in effect on the first day of
the Plan Year of distribution. For purposes of this Section 8.4,
if the present value of the Employee's vested Accrued Retirement
Income is zero, the Employee shall be deemed to have received a
distribution of such vested Retirement Income.
(b) If such terminated Employee is subsequently reemployed
and becomes covered under this Plan, the calculation of his
Accrued Retirement Income shall be without regard to his years of
Accredited Service prior to any One-Year Breaks in Service,
unless the amount of such payment is repaid to the Trust, plus
interest at the rate determined under Section 411(c)(2)(C) of the
Code. If such amount (plus interest) is repaid, the Employee's
Retirement Income shall be calculated based on his years of
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Accredited Service before and after any One-Year Breaks in
Service. Any repayment of a cash-out made pursuant to this
Section 8.4 shall be made before the earlier of (a) five (5)
years after the date on which the Employee is reemployed by the
Employer or an Affiliated Employer, or (b) the close of the first
period of five (5) consecutive One-Year Breaks in Service
commencing after the distribution. If an Employee has been
deemed to receive a distribution in accordance with paragraph (a)
and is then reemployed, upon such reemployment, the amount of the
deemed distribution shall be restored to the Employee.
8.5 Calculation of present value for cash-out of benefits
and for determining amount of benefits.
(a) This Section 8.5 shall apply to all distributions from
the Plan and from annuity contracts purchased to provide Accrued
Retirement Income other than distributions described in Section
1.417-1T(e)(3) of the income tax regulations issued under the
Retirement Equity Act of 1984.
(b) (1) For purposes of determining whether the present
value of (A) an Employee's vested accrued benefit; (B) a
qualified joint and survivor annuity, within the meaning of
Section 417(b) of the Code; or (C) a qualified preretirement
survivor annuity within the meaning of Section 417(c)(1) of the
Code exceeds $3,500, the present value of such benefits or
annuities shall be calculated by using an interest rate no
greater than the Applicable Interest Rate.
(2) In no event shall the present value of any such
benefit or annuity determined under this Section 8.5(b) be
less than the present value of such benefits or annuities
determined using the Applicable Interest Rate.
(c) (1) For purposes of determining the amount of an
Employee's vested Accrued Retirement Income, the interest rate
used shall not exceed:
(A) the Applicable Interest Rate if the
present value of the benefit (using such rate or
rates) is not in excess of $25,000; or
(B) 120 percent of the Applicable Interest
Rate if the present value of the benefit exceeds
$25,000 (as determined under (A)). In no event
shall the present value determined under this (B)
be less than $25,000.
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(2) In no event shall the amount of the benefit or
annuity determined under this Section 8.5(c) be less than
the greater of:
(A) the amount of such benefit determined under
the Plan's provisions for determining the amount of
benefits other than Sections 8.5; or
(B) the amount of such benefit determined using
the Applicable Interest Rate if the value determined in
Section 8.5(c)(1) is less than $25,000 or 120 percent
of the Applicable Interest Rate if the value determined
in Section 8.5(c)(1) is not less than $25,000.
(d) In no event shall the amount of any benefit or annuity
determined under this Section 8.5 exceed the maximum benefit
permitted under Section 415 of the Code.
(e) (1) For purposes of this Section 8.5, "Applicable
Interest Rate" shall mean the interest rate or rates which would
be used as of the date distribution commences by the Pension
Benefit Guaranty Corporation for purposes of valuing lump sum
payments under the Plan if the Plan had terminated on the date
distribution commences with insufficient assets to provide
benefits guaranteed by the Pension Benefit Guaranty Corporation
on that date.
(2) Notwithstanding the foregoing, if the provisions
of the Plan other than Section 8.5(e) so provide, the
Applicable Interest Rate shall be determined as of the first
day of the Plan Year in which a distribution occurs rather
than as of the date distribution commences.
(f) (1) This Section 8.5 shall apply to distributions in
Plan Years beginning after December 31, 1984, other than
distributions under annuity contracts distributed to or owned by
an Employee prior to September 17, 1985 unless additional
contributions are made under the Plan by the Employer with
respect to such contracts.
(2) Notwithstanding the foregoing, this Section
8.5 shall not apply to any distributions in Plan Years
beginning after December 31, 1984, and before
January 1, 1987, if such distributions were made in
accordance with the requirements of the income tax
regulations issued under the Retirement Equity Act of
1984.
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8.6 Retirement Income under Prior Plan. Any person
entitled to receive Retirement Income under Article VIII of the
Prior Plan shall only be entitled to receive Retirement Income in
accordance with the provisions of such Prior Plan in effect at
the time his service was terminated, except that any such person
whose service terminated prior to January 1, 1976:
(a) with at least twenty (20) years of Accredited Service
may elect to receive Retirement Income commencing prior to his
Normal Retirement Date in accordance with Section 8.2;
(b) who shall have returned to the employment of the
Employer, whether before or after January 1, 1976, and shall be
an Employee who is entitled to receive Retirement Income in
respect of his Accredited Service after January 1, 1976, his
years of Accredited Service under the Prior Plan with respect to
his service before January 1, 1976, shall, for the purpose of
calculating his Minimum Retirement Income, be aggregated with his
years of Accredited Service after his reemployment. His Accrued
Retirement Income to the date of termination of his service
payable in accordance with Article VIII of the Prior Plan shall
be treated as Prior Plan Retirement Income and his Years of
Service prior to the date of termination of his service shall be
restored to his credit. It shall be a condition of the treatment
provided for in this paragraph (b) that: (1) the Employee
rescind any election of payment and designation of a Provisional
Payee which he shall have made under the Prior Plan and which
shall be in effect at the time of his return to the employment of
the Employer and (2) if he is receiving Retirement Income, his
Retirement Income shall cease during his period of employment and
any Retirement Income payable upon his subsequent retirement
shall be reduced by the Actuarial Equivalent of any Retirement
Income he received prior to his reemployment.
8.7 Requirement for Direct Rollovers. This Section 8.7
applies to distributions made from the Plan on or after January
1, 1993. Notwithstanding any provision of the Plan to the
contrary that would otherwise limit a Distributee's election
under this Article VIII, a Distributee may elect, at the time and
in the manner prescribed by the Retirement Board, to have any
portion of an Eligible Rollover Distribution paid directly to an
Eligible Retirement Plan specified by the Distributee in a Direct
Rollover.
(a) Definitions
(1) Eligible Rollover Distribution
An Eligible Rollover Distribution is any distribution
of all or any portion of the balance to the credit of the
Distributee, except that an Eligible Rollover Distribution
does not include:
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(A) any distribution that is one of a series of
substantially equal periodic payments (not less
frequently than annually) made for the life (or life
expectancy) of the Distributee or the joint lives (or
joint life expectancies) of the Distributee and the
Distributee's spouse, or for a specified period of 10
years or more;
(B) any distribution to the extent such
distribution is required under Code Section 401(a)(9);
and
(C) the portion of any distribution that is not
includible in gross income (determined without regard
to the exclusion for net unrealized appreciation with
respect to employer securities).
(2) Eligible Retirement Plan
An Eligible Retirement Plan is an individual retirement
account described in Code Section 408(a), an individual
retirement annuity described in Code Section 408(b), an
annuity plan described in Code Section 403(a), or a
qualified trust described in Code Section 401(a) that
accepts the Distributee's Eligible Rollover Distribution.
However, in the case of an Eligible Rollover Distribution
for a Provisional Payee, an Eligible Retirement Plan is an
individual retirement account or individual retirement
annuity.
(3) Distributee
A Distributee includes an Employee or former Employee.
In addition, a Distributee includes the Employee's or former
Employee's spouse who is an alternate payee under a
qualified domestic relations order, as defined in Code
Section 414(p).
(4) Direct Rollover
A Direct Rollover is a payment by the Plan to the
Eligible Retirement Plan specified by the Distributee.
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ARTICLE IX
Contributions
9
9.1 Contributions generally. All contributions which the
Employer deems necessary to provide the Retirement Incomes under
the Plan in excess of the fund derived from the split-up of the
Commonwealth pension plan will be made from time to time by or on
behalf of the Employer and no contributions will be required of
the Employees. All contributions shall be made to the Trustee
under the Trust Agreement provided for in Article XI, and if a
group annuity contract shall be entered into with a life
insurance company ("contract with an insurance company"),
contributions may also be made to the insurance company.
The minimum amount of contributions to be made by or on
behalf of the Employer for any Plan Year of the Plan shall be
such amount as is required to meet the minimum funding standards
of ERISA and any regulations in respect thereto. However, the
Employer is under no obligation to make any contributions under
the Plan after the Plan is terminated, whether or not Retirement
Income accrued or vested prior to the date of termination has
been fully funded. All contributions are expressly conditioned
upon the deductibility of such contributions by the Employer
pursuant to Section 404 of the Code.
9.2 Return of Employer contributions. All contributions
made pursuant to the Plan shall be held by the Trustee in
accordance with the terms of the Trust Agreement for the
exclusive benefit of those Employees who are Participants under
the Plan, including former Employees and their Beneficiaries, and
shall be applied to provide benefits under the Plan and to pay
expenses of administration of the Plan and Trust, to the extent
that such expenses are not otherwise paid. At no time prior to
the satisfaction of all liabilities with respect to such
Employees and their Beneficiaries shall any part of the Trust
Fund be used for, or diverted to, purposes other than for the
exclusive benefit of such Employees and their Beneficiaries.
However, notwithstanding the provisions of this Section 9.2:
(a) If a contribution is conditioned upon the deductibility
of the contributions under Section 404 of the Code, then, to the
extent the deduction is disallowed, the Trustee shall upon
written request of the Employer, return the contribution (to the
extent disallowed) to the Employer within one year after the date
the deduction is disallowed.
(b) If a contribution or any portion thereof is made by the
Employer by a mistake of fact, the Trustee shall, upon written
request of the Employer, return the contribution or such portion
to the Employer within one year after the date of payment to the
Trustee.
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The amount which may be returned to the Employer under this
Section 9.2, is the excess of (a) the amount contributed over (b)
the amount that would have been contributed had there not
occurred a mistake of fact or a mistake in determining the
deduction. Earnings attributable to the excess contribution
shall not be returned to the Employer, but losses attributable
thereto shall reduce the amount to be so returned.
(c) If permitted under Federal common law, the Company may
recover any other contributions to the Plan or payments to any
other entity to the extent such contributions or payments
unjustly enrich or otherwise gratuitously benefit such entity.
9.3 Expenses. Prior to termination of the Plan, all
investment expenses (including brokerage costs, transfer taxes,
shipping expenses, and charges of correspondent banks of the
Trustee) and any taxes which may be levied against the Trust
shall be charged to the Trust. All other expenses prior to the
termination of the Plan shall be paid by the Employer or charged
to the Trust, as determined in the discretion of The Southern
Company Pension Fund Investment Review Committee. After the
termination of the Plan, all expenses shall be levied against the
Trust and shall be charged to the Trust.
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ARTICLE X
Administration of Plan
10
10.1 Retirement Board. The general administration of the
Plan shall be placed in a Retirement Board of five (5) members
who shall be appointed from time to time by the Board of
Directors to serve at the pleasure of the Board of Directors.
10.2 Organization and transaction of business of Retirement
Board. Any person appointed a member of the Retirement Board
shall signify his acceptance by filing written acceptance with
the Board of Directors. Any member of the Retirement Board may
resign by delivering his written resignation to the Board of
Directors, and such resignation shall become effective at
delivery or at any later date specified therein.
The members of the Retirement Board shall elect a Chairman
from their number, and a Secretary who may be but need not be one
of the members of the Retirement Board, and shall designate an
actuary to act in actuarial matters relating to the Plan. They
may appoint from their number such committees with such powers as
they shall determine, may authorize one or more of their number
or any agent to make any payment in their behalf, or to execute
or deliver any instrument except that a requisition for funds
from the Trustee shall be signed by two (2) members of the
Retirement Board.
The Retirement Board shall hold meetings upon such notice,
at such place or places, and at such time or times as they may
from time to time determine.
A majority of the members of the Retirement Board at the
time in office shall constitute a quorum for the transaction of
business. All resolutions or other actions taken by the
Retirement Board at any meeting shall be by the vote of a
majority of the Retirement Board at the time in office. Any
determination or action of the Retirement Board may be made or
taken without a meeting by a resolution or written memorandum
concurred upon by a majority of the members then in office.
No member of the Retirement Board who is also an Employee of
the Employer shall receive any compensation from the Plan for his
service as such. No bond or other security need be required of
any member in any jurisdiction except as may be required by
ERISA.
10.3 Administrative responsibilities of Retirement Board.
The Retirement Board, in addition to the functions and duties
provided for elsewhere in the Plan, shall have exclusive
discretionary authority for the following:
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(a) construing and interpreting the Plan;
(b) determining all questions affecting the eligibility of
any Employee, retired Employee, Provisional Payee, or alternate
payee;
(c) determining all questions affecting the amount of the
benefit payable hereunder;
(d) ascertaining the persons to whom benefits shall be
payable under the provisions hereof;
(e) to the extent provided in the Plan, authorizing and
directing disbursements of benefits from the Plan;
(f) making final and binding determinations in connection
with any questions of fact which may arise regarding the
operation of the Plan;
(g) making such rules and regulations with reference to the
operation of the Plan as it may deem necessary or advisable,
provided that such rules and regulations shall not be
inconsistent with the express terms of the Plan or ERISA;
(h) prescribing such procedures and adopting such forms as
it determines necessary under the terms of the Plan; and
(i) reviewing such denials of claims for benefits as may
arise.
Any decision, determination, construction, interpretation,
ascertainment, authorization, direction, rule, regulation,
prescription, or review that the Retirement Board may make or
give in carrying out its duties or functions under this Section
10.3 shall be binding and conclusive.
10.4 Retirement Board, the "Administrator". For the
purposes of compliance with the provisions of ERISA, the
Retirement Board shall be deemed the "administrator" of the Plan
as the term "administrator" is defined in ERISA, and the
Retirement Board shall be, with respect to the Plan, a "named
fiduciary" as that term is defined in ERISA. For the purpose of
carrying out its duties, the Retirement Board may, in its
discretion, allocate responsibilities under the Plan among its
members and may, in its discretion, designate in writing, as set
forth in the minutes of the Retirement Board, persons other than
members of the Retirement Board to carry out such
responsibilities of the Retirement Board under the Plan as it may
see fit.
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10.5 Fiduciary responsibilities. It is intended, that to
the maximum extent permitted by ERISA, each person who is a
"fiduciary" with respect to the Plan as that term is defined in
ERISA shall be responsible for the proper exercise of his own
powers, duties, responsibilities, and obligations under the Plan
and the trust or other funding medium as shall each person
designated by any fiduciary to carry out any fiduciary
responsibility with respect to the Plan, the trust or other
funding medium and no fiduciary or other person to whom fiduciary
responsibilities are allocated shall be liable for any act or
omission of any other fiduciary or of any other person delegated
to carry out any fiduciary or other responsibility under the Plan
or the trust or other funding medium.
Any person or group of persons may serve in more than one
fiduciary capacity with respect to the Plan and any fiduciary
with respect to the Plan may serve as a fiduciary with respect to
the Plan in addition to being an officer, employee, agent, or
other representative of a "party in interest" as that term is
defined in ERISA.
10.6 Employment of actuaries and others. The Retirement
Board may employ such "enrolled actuaries" and independent
"qualified public accountants" as such terms are defined in
ERISA, legal counsel who may be of counsel to the Employer, other
specialists, and other persons as the Retirement Board deems
necessary or desirable in connection with the administration of
the Plan. The Retirement Board and any person to whom it may
delegate any duty or power in connection with the administration
of the Plan, the Employer, and the officers and directors thereof
shall be entitled to rely conclusively upon and shall be fully
protected in any action omitted, taken, or suffered by them in
good faith in reliance upon any enrolled actuary, independent
qualified public accountant, counsel, or other specialist or
other person selected by the Retirement Board or in reliance upon
any tables, evaluations, certificates, opinions, or reports which
shall be furnished by any of them or by the Trustee or any
insurance company. Any action so taken, omitted, or suffered in
accordance with the provisions of this Section 10.6 shall be
conclusive upon each Employee, former Employee, and Provisional
Payee covered under the Plan.
10.7 Accounts and tables. The Retirement Board shall
maintain accounts showing the fiscal transactions of the Plan,
and shall keep in convenient form such data as may be necessary
for actuarial valuations with respect to the operation and
administration of the Plan. The Retirement Board shall prepare
annually a report showing in reasonable summary the financial
condition of the Trust and giving a brief account of the
operation of the Plan for the past year, and any further
information which the Board of Directors may require. Such
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report shall be submitted to the Board of Directors and shall be
filed in the office of the Secretary of the Retirement Board.
The Retirement Board may, with the advice of an enrolled
actuary, adopt from time to time mortality and other tables as it
may deem necessary or appropriate for use in calculating benefits
under the Plan.
10.8 Indemnity of members of Retirement Board. To the
extent not compensated for by any applicable insurance, the
Employer shall indemnify and hold harmless each member of the
Retirement Board and each Employee of the Employer designated by
the Retirement Board to carry out any fiduciary responsibility
with respect to the Plan from any and all claims, loss, damages,
expense (including counsel fees approved by the Board of
Directors) and liability (including any amount paid in settlement
with the approval of the Board of Directors) arising from any act
or omission of such member or Employee designated by the
Retirement Board in connection with the Plan or the Trust, except
where the same is determined by the Board of Directors or is
judicially determined to be due to a failure to act in good faith
or is due to the gross negligence or willful misconduct of such
member or Employee. No assets of the Plan may be used for any
such indemnification.
10.9 Areas in which the Retirement Board does not have
responsibility. The Retirement Board shall not have
responsibility with respect to control or management of the
assets of the Plan. The Trustee or an insurance company, if
funds of the Plan shall be held by an insurance company, shall
have the sole responsibility for the administration of the assets
of the Plan as provided in the Trust Agreement or contract with
an insurance company, except to the extent that an "Investment
Manager," as that term is defined in ERISA, appointed by the
Board of Directors shall have responsibility for the management
of the assets of the Plan, or some part thereof, including the
power to acquire and dispose of the assets of the Plan, or some
part thereof.
The responsibility for providing a procedure for
establishing and carrying out a funding policy and method for the
Plan consistent with the objectives of the Plan and the
requirements of Title I of ERISA shall be that of the Board of
Directors or such committee, whether or not comprised of members
of the Board of Directors, as the Board of Directors may from
time to time designate and shall not be the responsibility of the
Retirement Board.
Effective August 5, 1993, the Pension Fund Investment Review
Committee of The Southern Company System shall recommend for
approval by the Board of Directors any Investment Manager that
shall have responsibility with respect to management of any Plan
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assets. In addition, the Pension Fund Investment Review
Committee shall assume all responsibility for providing a
procedure for establishing and carrying out a funding policy and
method for the Plan consistent with the objectives of the Plan
and the requirements of Title I of ERISA.
10.10 Claims Procedures. Consistent with the requirements
of ERISA and the regulations thereunder of the Secretary of Labor
from time to time in effect, the Retirement Board or its
delegatee shall:
(a) provide adequate notice in writing to any Employee,
former Employee, retired Employee, or Provisional Payee (each
being hereinafter in the paragraph referred to as "participant")
whose claim for benefit under the Plan has been denied, setting
forth specific reasons for such denial, written in a manner
calculated to be understood by such participant; and
(b) afford a reasonable opportunity to any participant
whose claim for benefits has been denied for a full and fair
review of the decision denying the claim.
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ARTICLE XI
Management of Trust
11
11.1 Trust. All assets of the Plan shall be held as a
special trust for use in accordance with the Plan.
The funds of the Plan shall be held by a Trustee, or by a
successor trustee appointed from time to time by the Board of
Directors in trust or held by a life insurance company in
accordance with the provisions of a contract with such insurance
company entered into by the Trustee or the Employer. The Trust
Agreement and contract with an insurance company may from time to
time be amended in the manner therein provided.
11.2 Disbursement of the Trust Fund. Subject to the
provisions of the Trust Agreement or contract with an insurance
company the Retirement Board shall determine the manner in which
the funds of the Plan shall be disbursed pursuant to the Plan,
including the form of voucher or warrant to be used in making
disbursements and the due qualification of persons authorized to
approve and sign the same. The responsibility for the retention
and investment of funds held by the Trustee shall lie with the
Trustee and not with the Retirement Board, and the responsibility
for the retention and investment of funds held by an insurance
company shall lie with the insurance company and not with the
Retirement Board. However, if in accordance with a Trust
Agreement forming a part of the Plan (including any pooled trust
agreement in which a trust forming a part of the Plan
participates) a contract with an insurance company shall be held
by the Trustee as an investment of the trust, directions may be
given from time to time to the Trustee by such board of directors
or committee or person or persons as may be specified in the
Trust Agreement to transfer funds of the trust to the life
insurance company which issued such contract or to transfer funds
from the life insurance company to the Trustee, as the case may
be.
11.3 Rights in the Trust. Under no circumstances shall
amounts of money or other things of value contributed by the
Employer to the Plan, or any part of the corpus or income of the
Trust held by the Trustee under the Plan, be recoverable by the
Employer from the Trustee or from any Employee, retired Employee,
or Provisional Payee, or be used for, or diverted to, purposes
other than for the exclusive benefit of the Employees, retired
Employees, and Provisional Payees covered hereunder; provided,
however, that, if after satisfaction of all liabilities of the
Trust with respect to Employees, retired Employees, and
Provisional Payees under the Plan, there is any balance
remaining, the Trustee shall return such balance to the Employer.
Notwithstanding the above, upon the approval of the Internal
Revenue Service or the enactment or promulgation of any laws or
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regulations by any governmental authority, the Employer shall be
authorized to rededicate all or a portion of the assets allocated
to fund Retirement Income under the Plan to the separate account
to fund medical benefits under Article XV of the Plan.
11.4 Merger of the Plan. The Plan shall not be merged or
consolidated with, or any of its assets or liabilities
transferred to, any other plan, unless each Employee included in
the Plan would (if the Plan then terminated) receive a benefit
immediately after the merger, consolidation, or transfer which is
equal to or greater than the benefit he would have been entitled
to receive immediately before the merger, consolidation, or
transfer (if the Plan then terminated).
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ARTICLE XII
Termination of the Plan
12
12.1 Termination of the Plan. The Plan may be terminated at
any time by action of the Board of Directors of the Employer in
accordance with the amendment procedures provided in Section
13.1. Upon such termination or partial termination all Accrued
Retirement Income of Employees to the date of such termination,
to the extent then funded, shall become nonforfeitable and the
assets of the Plan which have not previously been allocated to
provide Retirement Income shall then be paid out to Employees,
former Employees, and Provisional Payees in accordance with the
applicable requirements of ERISA and regulations thereunder
governing termination of "employee pension benefit plans" as
defined in ERISA. If after satisfaction of all liabilities, as
provided above, there is any balance remaining in the Trust, the
Trustee shall return such balance to the Employer.
In the first instance, subject to the foregoing
limitations, such remaining assets shall be allocated among all
persons in the following categories for whom such Retirement
Income or other benefits have not previously been provided,
namely, (a) Employees who have been retired under the Plan,
(b) Employees who at the date of termination of the Plan are
included in the Plan, (c) former Employees who at the date of the
termination of their employment were entitled to payment of
Retirement Income in accordance with Article VIII, and (d) former
Employees who have transferred to an Affiliated Employer in
accordance with Section 4.6 and are still in the employ or
receiving a retirement income from such company (including their
Provisional Payees, if any). Retirement Income already purchased
under any contract with an insurance company will be payable in
accordance with the provisions of that contract.
12.2 Limitation on benefits for certain highly paid
employees.
(a) The annual payments to an Employee described in
paragraph (b) below shall not exceed an amount equal to the
payments that would be made to or on behalf of such Employee
under a single life annuity that is the Actuarial Equivalent of
the sum of the Employee's Accrued Retirement Income and the
Employee's other benefits under this Plan (other than a Social
Security supplement) and any Social Security supplement that the
restricted Employee is entitled to receive. The restrictions in
this paragraph (a) do not apply, however, if --
(1) after payment to an Employee described in
paragraph (b) of all benefits payable to such Employee under
this Plan, the value of this Plan's assets equals or exceeds
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110% of the value of current liabilities, as defined in Code
Section 412(c)(7), or
(2) the value of the benefits payable to such Employee
under this Plan for an Employee described in paragraph (b)
below is less than 1% of the value of current liabilities
before distribution.
(b) The Employees whose benefits are restricted on
distribution include all highly compensated employees and highly
compensated former employees (as such terms are defined in
Treasury Regulation Section 1.401(a)(4)-12); provided, however,
that Employees whose benefits are subject to restriction under
this Section 12.2 shall be limited to only those Employees who in
the current or in any previous Plan Year were one of the 25 non-
excludable Employees of the Employer with the greatest
compensation from the Employer.
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ARTICLE XIII
Amendment of the Plan
13
13.1 Amendment of the Plan.
(a) The Plan may be amended or modified at any time by the
Board of Directors pursuant to its written resolutions, provided
that no amendment or modification which will substantially
increase the cost of the Plan will be made by the Board of
Directors without approval, at a meeting of the stockholders duly
called for that purpose, by the vote of a majority of the stock
present and entitled to vote at such meeting.
(b) Such amendments and modifications (without limiting the
generality of the foregoing) may, among other things, make any
changes in the Plan which may become appropriate if, for any
reason, the Employer should in the future find it necessary or
desirable not to complete payment of the past service costs of
the Plan in the manner and within the period now contemplated or
should find it necessary or desirable to reduce the amounts of
Future Service contributions to be paid by the Employer after
such amendment or modification. Such amendments and
modifications may also (without limiting the generality of the
foregoing), make any changes necessary or desirable to make the
costs of the Plan eligible for tax deductions or to make the
income of the Trust exempt from taxation or to bring the Plan
into conformity or compliance with ERISA or with governmental
regulations. Notwithstanding the foregoing, no amendment shall
be made which has the effect of decreasing the Accrued Retirement
Income of any Employee, former Employee, or Provisional Payee as
provided under the limitations of Section 411(d)(6) of the Code.
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ARTICLE XIV
Special Provisions
14
14.1 Adoption of Plan by other corporations.
(a) Any corporation, whether or not related to the Employer
by function or operation and any affiliate, if such corporation
or affiliate is authorized to do so by a resolution adopted by
the Board of Directors of the Employer, may adopt this Plan as a
separate Plan for all eligible Employees or any separate,
distinct, and identifiable class or group of Employees and the
related Trust Agreement, by action of the board of directors of
such corporation or affiliate. Any such adoption shall be
evidenced by certified copies of the resolutions of the foregoing
board of directors indicating such adoption and by the execution
of the Adoption Agreement by the adopting corporation or
affiliate. Such resolution shall state and define the effective
date of the Plan for the purpose of such adopting corporation
and, for the purpose of Section 415 of the Code, the "limitation
year" as to such corporation. Notwithstanding the foregoing,
however, if the Plan as adopted by an affiliate or other
corporation under the foregoing provision shall fail to receive
the initial approval of the Internal Revenue Service as a
qualified plan, any contributions by such affiliate or other
corporation after payment of all expenses will be returned to
such adopting corporation free of any trust, and the Plan and the
Trust Agreement as to such adopting affiliate or other
corporation shall terminate.
(b) Each adopting affiliate or other corporation shall be
required to use the same Trustee as provided in this Plan.
(c) The Trustee may, but is not required to, commingle,
hold, and invest as one fund all contributions (or any portion
thereof) made by each adopting affiliate or other corporation.
(d) Any contributions made by an affiliate or other
corporation, as provided for in this Plan, shall be paid to and
held by the Trustee for the exclusive benefit of the Employees of
such an affiliate or other corporation and the beneficiaries of
such Employees, subject to all the terms and conditions of this
Plan. On the basis of information furnished by the
administrator, the Trustee shall keep separate books and records
concerning the affairs of each adopting affiliate or other
corporation hereunder.
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14.2 Exclusive benefit. The Employer intends that the Plan
(including the Trust forming a part thereof) shall be a pension
plan of an employer for the exclusive benefit of its Employees
and their beneficiaries subject to Section 11.3, as provided for
in Section 401 of the Code, and as may be provided for in any
similar provisions of subsequent revenue laws, and that the Trust
shall qualify as an employees' trust which shall be exempt under
Section 501(a) of the Code, and any similar provisions of
subsequent revenue laws, as a trust forming part of such a plan.
14.3 Assignment or alienation. No benefit under the Plan
shall be subject in any manner to anticipation, alienation, sale,
transfer, assignment (either at law or in equity), pledge,
encumbrance, charge, garnishment, levy, execution, or other legal
or equitable process and any attempt so to anticipate, alienate,
sell, transfer, assign, pledge, encumber, charge, garnish, levy,
execute, or enforce other legal or equitable process against the
same shall be void, nor shall any such benefit be in any manner
liable for or subject to the debts, contracts, liabilities,
engagements, or torts of the person entitled to such benefit.
If any Employee or retired Employee or any Provisional Payee
under the Plan is adjudicated bankrupt or attempts to anticipate,
alienate, sell, transfer, assign, pledge, encumber, or charge any
benefit under the Plan or if any action shall be taken which is
in violation of the provisions of the immediately preceding
paragraph, then such benefit shall cease and terminate and in
that event the Retirement Board shall hold or apply the same or
any part thereof to or for the benefit of such Employee or
retired Employee or Provisional Payee in such manner as the
Retirement Board may think proper.
Notwithstanding the above, the Retirement Board and Trustee
shall comply with any "domestic relations order" (as defined in
Section 414(p)(1)(B) of the Code) which is a "qualified domestic
relations order" satisfying the requirements of Section 414(p) of
the Code. The Retirement Board shall establish procedures for
(a) notifying Employees and alternate payees who have or may have
an interest in benefits which are the subject of domestic
relations orders, (b) determining whether such domestic relations
orders are qualified domestic relations orders under Section
414(p) of the Code, and (c) distributing benefits which are
subject to qualified domestic relations orders.
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14.4 Voluntary undertaking. This Plan is strictly a
voluntary undertaking on the part of the Employer and shall not
be deemed to constitute a contract between the Employer or any
other company and any Employee or to be a consideration for, or
an inducement or condition of, the employment of any Employee.
Nothing contained in this Plan shall be deemed to give any
Employee the right to be retained in the service of the Employer
or to interfere with the right of the Employer to discharge or
retire any Employee at any time. Inclusion under the Plan will
not give any Employee or Provisional Payee any right or claim to
a Retirement Income except to the extent such right is
specifically fixed under the terms of the Plan and there are
funds available therefor in the hands of the Trustee or of any
insurance company which may hold funds of the Plan.
14.5 Top-Heavy Plan requirements. For any Plan Year the
Plan shall be determined to be a Top-Heavy Plan, the Plan shall
provide the following:
(a) the minimum benefit requirement of Section 14.7; and
(b) the vesting requirement of Section 14.8.
14.6 Determination of Top-Heavy status.
(a) For any Plan Year commencing after December 31, 1983,
the Plan shall be determined to be a "Top-Heavy Plan," if, as of
the Determination Date, (1) the Present Value of Accrued
Retirement Income of Key Employees or (2) the sum of the
Aggregate Accounts of Key Employees under this Plan and any plan
of an Aggregation Group, exceeds sixty percent (60%) of the
Present Value of Accrued Retirement Income or the Aggregate
Accounts of all Employees entitled to participate in this Plan
and any Plan of an Aggregation Group.
(b) For Plan Years beginning after December 31, 1986, the
Accrued Retirement Income of a Non-Key Employee shall be
determined under the accrual method under the Plan.
(c) For any Plan Year commencing after December 31, 1983,
the Plan shall be determined to be a "Super Top-Heavy Plan," if,
as of the Determination Date, (1) the Present Value of Accrued
Retirement Income of Key Employees or (2) the sum of the
Aggregate Accounts of Key Employees under this Plan and any plan
in an Aggregation Group, exceeds ninety percent (90%) of the
Present Value of Accrued Retirement Income or the Aggregate
Accounts of all Employees entitled to participate in this Plan
and any plan of an Aggregation Group.
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For purposes of Sections 14.6(a) and 14.6(b), if any
Employee is a Non-Key Employee for any Plan Year, but such
Employee was a Key Employee for any prior Plan Year, such
Employee's Present Value of Accrued Retirement Income and/ or
Aggregate Account balance shall not be taken into account for
purposes of determining whether this Plan is a Top-Heavy or Super
Top-Heavy Plan (or whether any Aggregation Group which includes
this Plan is a Top-Heavy Group). In addition, for Plan Years
beginning after December 31, 1984, if an Employee or former
Employee has not performed any services for the Employer or any
Affiliated Employer maintaining the Plan at any time during the
five (5) year period ending on the Determination Date, the
Aggregate Account and/or Present Value of Accrued Retirement
Income for such Employee or former Employee shall not be taken
into account for purposes of determining whether this Plan is a
Top-Heavy or Super Top-Heavy Plan.
(d) An Employee's "Aggregate Account" as of the
Determination Date shall be determined under applicable
provisions of the defined contribution plan used in determining
Top-Heavy status.
(e) An "Aggregation Group" shall mean either a Required
Aggregation Group or a Permissive Aggregation Group as
hereinafter determined.
(1) Required Aggregation Group: In determining a
Required Aggregation Group hereunder, each plan of the
Employer in which a Key Employee is a participant, and each
other plan of the Employer which enables any plan in which a
Key Employee participates to meet the requirements of Code
Sections 401(a)(4) or 410, will be required to be
aggregated. Such group shall be known as a Required
Aggregation Group.
In the case of a Required Aggregation Group, each plan
in the group will be considered a Top-Heavy Plan if the
Required Aggregation Group is a Top-Heavy Group. No plan in
the Required Aggregation Group will be considered a
Top-Heavy Plan if the Aggregation Group is not a Top-Heavy
Group.
(2) Permissive Aggregation Group: The Employer may
also include any other plan not required to be included in
the Required Aggregation Group, provided the resulting
group, taken as a whole, would continue to satisfy the
provisions of Code Sections 401(a)(4) or 410. Such group
shall be known as a Permissive Aggregation Group.
In the case of a Permissive Aggregation Group, only a plan
that is part of the Required Aggregation Group will be considered
a Top-Heavy Plan if the Permissive Aggregation Group is a
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Top-Heavy Group. A plan that is not part of the Required
Aggregation Group but that has nonetheless been aggregated as
part of the Permissive Aggregation Group will not be considered a
Top-Heavy Plan even if the Permissive Group is a Top-Heavy Group.
(3) Only those plans of the Employer in which the
Determination Dates fall within the same calendar year shall
be aggregated in order to determine whether such plans are
Top-Heavy Plans.
(f) The "Determination Date" shall mean with respect to any
Plan Year, the last day of the preceding Plan Year, or in the
case of the first Plan Year, the last day of such Plan Year.
(g) A "Key Employee" shall mean any Employee or former
Employee (and his beneficiaries) who, at any time during the Plan
Year or any of the four (4) preceding Plan Years, is:
(1) an officer of the Employer having an annual
compensation from the Employer greater than fifty percent
(50%) of the amount in effect under Code Section
415(b)(1)(A) for any such Plan Year. For purposes of this
Section 14.6(g)(1), only those employers which are
incorporated shall be considered as having officers, and no
more than fifty (50) Employees (or, if lesser, the greater
of three (3) or ten percent (10%) of the Employees) shall be
treated as officers. Annual compensation means compensation
as defined in Section 415(c)(3) of the Code, but including
amounts contributed by the Employer pursuant to a salary
reduction agreement which are excludable from the Employee's
gross income under Section 125, Section 402(a)(8), Section
402(h), or Section 403(b) of the Code.
(2) one of the ten (10) Employees (A) having annual
compensation from the Employer greater than the limitation
in effect under Code Section 415(c)(1)(A) and (B) owning (or
considered as owning within the meaning of Code Section 318)
the largest interests in the Employer. For purposes of this
Section 14.6(g)(2), if two (2) Employees have the same
interest in the Employer, the Employee having the greater
annual compensation from the Employer shall be treated as
having a larger interest.
(3) a "five-percent owner" of the Employer. The term
"five-percent owner" shall mean any person who owns (or is
considered as owning within the meaning of Code Section 318)
more than five percent (5%) of the outstanding stock of the
Employer or stock possessing more than five percent (5%) of
the total combined voting power of all stock of the
Employer. In determining percentage ownership hereunder,
employers that would otherwise be aggregated under Code
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Sections 414(b), (c), and (m) shall be treated as separate
employers.
(4) a "one-percent owner" of the Employer having an
annual compensation from the Employer of more than $150,000.
The term "one-percent owner" shall mean any person who owns
(or is considered as owning within the meaning of Code
Section 318) more than one percent (1%) of the outstanding
stock of the Employer or stock possessing more than one
percent (1%) of the total combined voting power of all stock
of the Employer. In determining percentage ownership
hereunder, employers that would otherwise be aggregated
under Code Sections 414(b), (c), and (m) shall be treated as
separate employers. However, in determining whether an
individual has compensation of more than $150,000,
compensation from each employer required to be aggregated
under Code Sections 414(b), (c), and (m) shall be taken into
account.
(h) A "Non-Key Employee" shall mean any Employee who is not
a Key Employee as defined in Section 14.6(g).
(i) An Employee's "Present Value of Accrued Retirement
Income" shall mean as of the Determination Date, the sum of the
following:
(1) the Present Value of his Accrued Retirement Income
as of the most recent valuation occurring within a twelve
(12) month period ending on the Determination Date.
(2) any Plan distributions made within the Plan Year
that includes the Determination Date or within the four (4)
preceding Plan Years. However, in the case of distributions
made after the valuation date and prior to the Determination
Date, such distributions are not included as distributions
for Top-Heavy purposes to the extent that such distributions
are already included in the Employee's Present Value of
Accrued Retirement Income as of the valuation date.
Notwithstanding anything herein to the contrary, all
distributions, including distributions made prior to
January 1, 1984, and distributions under a terminated plan
which if it had not been terminated would have been required
to be included in an Aggregation Group, will be counted.
(3) any Employee contributions, whether voluntary or
mandatory. However, amounts attributable to qualified
deductible employee contributions shall not be considered to
be a part of the Employee's Present Value of Accrued
Retirement Income.
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(4) with respect to unrelated rollovers and
plan-to-plan transfers (ones which are both initiated by the
Employee and made from a plan maintained by one employer to
a plan maintained by another employer), if this Plan
provides for rollovers or plan-to-plan transfers, it shall
always consider such rollover or plan-to-plan transfer as a
distribution for the purposes of this Section. If this Plan
is the plan accepting such rollovers or plan-to-plan
transfers, it shall not consider such rollovers or
plan-to-plan transfers accepted after December 31, 1983 as
part of the Employee's Present Value of Accrued Retirement
Income. However, rollovers or plan-to-plan transfers
accepted prior to January 1, 1984 shall be considered as
part of the Employee's Present Value of Accrued Retirement
Income.
(5) with respect to related rollovers and plan-to-plan
transfers (ones either not initiated by the Employee or made
to a plan maintained by the same employer), if this Plan
provides for rollovers or plan-to-plan transfers, it shall
not be counted as a distribution for purposes of this
Section. If this Plan is the plan accepting such rollover
or plan-to-plan transfer, it shall consider such rollover or
plan-to-plan transfer as part of the Employee's Present
Value of Accrued Retirement Income, irrespective of the date
on which such rollover or plan-to-plan transfer is accepted.
(j) A "Top-Heavy Group" shall mean an Aggregation Group in
which, as of the Determination Date, the sum of:
(1) the Present Value of Accrued Retirement Income of
Key Employees under all defined benefit plans included in
that group, and
(2) the Aggregate Accounts of Key Employees under all
defined contribution plans included in the group,
exceeds sixty percent (60%) of a similar sum determined for all
Employees.
14.7 Minimum Retirement Income for Top-Heavy Plan Years.
Notwithstanding anything herein to the contrary, for any
Top-Heavy Plan Year, the minimum Accrued Retirement Income
derived from Employer contributions for each Non-Key Employee,
including benefits accrued in years in which the Plan is not a
Top-Heavy Plan, shall equal a percentage of such Non-Key
Employee's highest average compensation not less than the lesser
of: (a) two percent (2%) multiplied by the Employee's number of
Years of Service with the Employer, or (b) twenty percent (20%).
For purposes of the minimum benefit, an Employee's Years of
Service shall exclude (a) Plan Years in which the Plan is not a
Top-Heavy Plan, and (b) Years of Service completed prior to
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January 1, 1984. The minimum benefit required by this Section
14.7 shall be calculated using the Employee's total compensation
and expressed in the form of a single life annuity (with no
ancillary benefits) beginning at such Employee's Normal
Retirement Date. An Employee's average compensation shall be
based on the five (5) consecutive years for which the Employee
had the highest compensation.
Notwithstanding the foregoing, in any Plan Year in which a
Non-Key Employee is an Employee in both this Plan and a defined
contribution plan, and both such plans are Top-Heavy Plans, the
Employer shall not be required to provide a Non-Key Employee with
both the full separate minimum defined benefit and the full
separate minimum defined contribution plan allocation.
Therefore, if a Non-Key Employee is participating in a defined
contribution plan maintained by the Employer and the minimum
allocation under Code Section 416(c)(2) is allocated to the
Non-Key Employee under such defined contribution plan, the
minimum Accrued Retirement Income provided for above shall not be
applicable, and no minimum benefit shall accrue on behalf of the
Non-Key Employee. Alternatively, the Employer may satisfy the
minimum benefit requirement of Code Section 416(c)(1) for the
Non-Key Employee by providing any combination of benefits and/or
contributions that satisfy the safe harbor rules of Treasury
Regulation Section 1.416-1(m-12).
14.8 Vesting requirements for Top-Heavy Plan Years.
Notwithstanding the provisions of Section 8.1, for any Top-Heavy
Plan Year, the vested portion of an Employee's Accrued Retirement
Income shall be determined on the basis of the Employee's Vesting
Years of Service according to the following schedule:
Years of Service Vested Percentage
less than 2 0
2 20
3 40
4 60
5 80
6 or more 100
The minimum Retirement Income for any Top-Heavy Plan Year shall
not be forfeited during any period for which the payment of the
Employee's Retirement Income is required to be suspended under
Section 5.10 of the Plan.
If in any subsequent Plan Year, the Plan ceases to be a
Top-Heavy Plan, the Retirement Board may, in its sole discretion,
elect to (a) continue to apply this vesting schedule in
determining the vested percentage of an Employee's Accrued
Retirement Income or (b) revert to the vesting schedule in effect
before the Plan became a Top-Heavy Plan. Any such reversion
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shall be treated as a Plan amendment pursuant to the terms of the
Plan. No decrease in an Employee's nonforfeitable percentage may
occur in the event the Plan's status as a Top-Heavy Plan changes
for any Plan Year.
14.9 Adjustments to maximum benefits for Top-Heavy Plans.
(a) In the case of an Employee who is a participant in a
defined benefit plan and a defined contribution plan maintained
by the Employer, and such plans as a group are determined to be
Top-Heavy for any limitation year beginning after December 31,
1983, "1.0" shall be substituted for "1.25" in each place it
appears in the denominators of Fractions A and B, as set forth in
Section 6.5 of the Plan, unless the extra minimum benefit is
provided pursuant to Section 14.9(b). Super Top-Heavy Plans
shall be required at all times to substitute "1.0" for "1.25" in
the denominator of each plan fraction.
(b) If a Key Employee is a participant in both a defined
benefit plan and a defined contribution plan that are both part
of a Top-Heavy Group (but neither of such plans is a Super
Top-Heavy Plan), the defined benefit and defined contribution
fractions set forth in Section 6.5 shall remain unchanged,
provided that in Section 14.7 above, "three percent (3%)" shall
be substituted for "two percent (2%)" and "twenty percent (20%)"
shall be increased by one (1) percentage point (but not more than
ten (10) percentage points) for each Year of Service included in
the computations under Section 14.7.
(c) For purposes of this Section 14.9, if the sum of the
defined benefit plan fraction and the defined contribution
fraction shall exceed 1.0 in any Plan Year for any Employee in
this Plan, the Employer shall eliminate any amounts in excess of
the limits set forth in Section 6.5, pursuant to Section 6.7 of
the Plan.
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ARTICLE XV
Post-retirement Medical Benefits
15
15.1 Definitions. The following words and phraseology as
used herein shall have the following meanings unless a different
meaning is plainly required by the context:
(a) "Pensioned Employee" means a former Employee of the
Employer who is eligible to receive Retirement Income after his
retirement at his Early, Normal, or Deferred Retirement Date, as
applicable, pursuant to the terms of the Plan, but shall not
include any former Employee who terminated his service with the
Employer prior to his Early, Normal, or Deferred Retirement Date
and who is entitled to Retirement Income under the Plan. A
"Pensioned Employee" shall not include a Key Employee, as defined
in Section 14.6(g), or effective January 1, 1991 any Pensioned
Employee of an employer that has adopted the Plan pursuant to
Section 14.1 hereof but does not provide medical benefits to its
Pensioned Employees.
(b) "Dependents" means the Pensioned Employee's spouse who
is not legally separated from the Pensioned Employee and the
Pensioned Employee's unmarried children (both natural and legally
adopted) within the prescribed age limit set forth below. The
term "children" includes stepchildren and foster children who
reside with the Pensioned Employee in a regular parent-child
relationship and are dependent upon the Pensioned Employee for
principal support and maintenance. The term Dependent shall not
include any person who is covered, or eligible for coverage,
under the Plan as a Pensioned Employee or who is entitled to any
benefits under any provisions of this Plan because of having been
covered as a Pensioned Employee.
Children shall be considered to be within the prescribed age
limit if they are less than nineteen (19) years of age.
Unmarried children age nineteen (19) but less than age
twenty-four (24) continue to be within the prescribed age limit
if they are (1) attending school on a full-time basis as defined
by the school and are dependent upon the Pensioned Employee for
more than half of their support, or (2) attending school on a
part-time basis, receiving medical treatment prescribed by an
attending physician, and are dependent upon the Pensioned
Employee for more than half of their support. The attending
physician must also certify that the Dependent is mentally or
physically unable to attend school on a full-time basis.
If both a husband and his wife are covered under this Plan
as Pensioned Employees of the Employer, either, but not both, may
elect to cover their eligible children as Dependents.
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Any person covered or eligible for coverage under Article XV
as a Pensioned Employee, or under any group medical plan
maintained by the Employer as an Employee, shall not be
considered as a Dependent.
(c) "Covered Individual" means a Pensioned Employee or
Dependent of a Pensioned Employee who is eligible to receive
medical benefits under Article XV.
15.2 Eligibility of Pensioned Employees and their
Dependents.
(a) A person who is a Pensioned Employee on January 1, 1989
shall be eligible for coverage as a Pensioned Employee on
January 1, 1989, provided he was covered as an Employee under a
group medical plan maintained by the Employer immediately prior
to the time he became a Pensioned Employee.
(b) An Employee who becomes a Pensioned Employee on or
after January 1, 1989 shall be eligible for coverage on the date
he becomes a Pensioned Employee, provided he was covered as an
Employee under a group medical plan maintained by the Employer
immediately prior to the time he became a Pensioned Employee.
(c) A Dependent of a Pensioned Employee shall be eligible
for coverage under this Plan on the later of (1) the date the
Pensioned Employee becomes eligible for coverage hereunder and
(2) the date such person becomes a Dependent.
15.3 Medical benefits. The medical benefits provided under
this Article XV by the Employer and each adopting Employer are
set forth in the copy of each such Employer's medical benefits
plan which is attached hereto as Exhibit A and specifically
incorporated herein by reference in its entirety, as may be
amended from time to time. Such medical benefits shall be
subject without limitation to all deductibles, maximums,
exclusions, coordination with Medicare and other medical plans,
and procedures for submitting claims and initiating legal
proceedings provided therein.
15.4 Termination of coverage.
(a) Coverage of any Pensioned Employee shall cease as
follows:
(1) when Article XV is amended, terminated, or
discontinued in accordance with its terms; or
(2) when the Pensioned Employee fails to make when due
any required contribution; or
(3) as otherwise provided in Exhibit A.
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(b) Coverage of any Dependent shall cease as follows:
(1) when Article XV is amended, terminated, or
discontinued in accordance with its terms; or
(2) when the Pensioned Employee fails to make when due
any required contribution; or
(3) as otherwise provided in Exhibit A.
15.5 Continuation of coverage to certain individuals.
(a) Anything in Article XV to the contrary notwithstanding,
a Pensioned Employee, Dependent spouse, or Dependent child shall
be entitled to elect continued medical coverage as provided under
the terms of Article XV upon the occurrence of a Qualifying
Event, provided such Pensioned Employee, Dependent spouse, or
Dependent child was entitled to benefits under Article XV on the
day prior to the Qualifying Event.
(1) "Qualifying Event" means with respect to any
Pensioned Employee, Dependent spouse, or Dependent child, as
appropriate, (A) the death of the Pensioned Employee,
(B) the divorce or legal separation of the Pensioned
Employee from the Dependent spouse, (C) a Dependent child
ceasing to be a Dependent as defined under the requirements
of Article XV, or (D) a proceeding in a case under Title 11,
United States Code, with respect to the Employer.
(b) The Pensioned Employee or Dependent electing continued
coverage under this Section 15.5 shall be required to pay such
monthly contributions as determined by the Employer to be equal
to a reasonable estimate of 102% of the cost of providing
coverage for such period for similarly situated beneficiaries
which (1) is determined on an actuarial basis and (2) takes into
account such factors as the Secretary of the Treasury may
prescribe.
(c) The continuation coverage elected by a Pensioned
Employee, Dependent spouse, or Dependent child shall begin on the
date of the Qualifying Event and end not earlier than the first
to occur of the following:
(1) The third anniversary of the Qualifying Event;
(2) The termination of Article XV of the Plan;
(3) The failure of the Pensioned Employee or Dependent
to pay any required contribution when due;
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(4) The date on which the Pensioned Employee or
Dependent first becomes, after the date of his election,
(A) a covered employee under any other group health plan
which does not contain any exclusion or limitation with
respect to any preexisting condition of such individual, or
(B) entitled to benefits under Title XVIII of the Social
Security Act; or
(5) The date the Dependent spouse becomes covered
under another group health plan which does not contain any
exclusion or limitation with respect to any preexisting
condition of such Dependent spouse.
(d) Any election to continue coverage under this
Section 15.5 shall be made during the election period
(1) beginning not later than the termination date of coverage by
reason of the Qualifying Event and (2) ending sixty (60) days
following the later of the date described in (1) above or the
date any Pensioned Employee, Dependent spouse, or Dependent child
receives notice of a Qualifying Event from the Employer.
(e) The Employer shall provide each Pensioned Employee and
Dependent spouse, if any, written notice of the rights provided
in this Section 15.5. The Pensioned Employee or Dependent spouse
is required to notify the Employer within thirty (30) days of any
Qualifying Event described in Section 15.5(a)(1)(B) or (C), and
the Employer shall provide the Dependent spouse or Dependent
child written notice of the rights provided in this Section 15.5
within fourteen (14) days thereafter. Notice to the Dependent
spouse shall be deemed notice to each Dependent child residing
with such spouse at the time such notification is made.
15.6 Contributions to fund medical benefits. Any
contributions which the Employer deems necessary to provide the
medical benefits under Article XV will be made from time to time
by or on behalf of the Employer, and contributions shall be
required of the Pensioned Employees to the Employer's medical
benefit plan in amounts determined in the sole discretion of the
Employer from time to time. All Employer contributions shall be
made to the Trustee under the Trust Agreement provided for in
Article XI and shall be allocated to a separate account
maintained solely to fund the medical benefits provided under
Article XV. The Employer shall designate that portion of any
contribution to the Plan allocable to the funding of medical
benefits under this Article XV. In no event at any time prior to
the satisfaction of all liabilities under this Article XV shall
any part of the corpus or income of such separate account be used
for, or diverted to, purposes other than for the exclusive
purpose of providing benefits under this Article XV. Effective
January 1, 1991, subject to the requirements of Code Section 420,
the Employer shall have the right, in its sole discretion, to
transfer any excess corpus or income of the Plan allocated to
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fund Retirement Income to the separate account to fund medical
benefits under this Article XV.
The amount of contributions to be made by or on behalf of
the Employer for any Plan Year shall be determined in accordance
with any generally accepted actuarial method which is reasonable
in view of the provisions and coverage of Article XV, the funding
medium, and any other applicable considerations. However, the
Employer is under no obligation to make any contributions under
Article XV after Article XV is terminated, except to fund claims
for medical expenses incurred prior to the date of termination.
The medical benefits provided under this Article XV, when
added to any life insurance protection provided under the Plan,
shall be subordinate to the retirement benefits provided under
the Plan.
Subject to any transitional rule applicable to contributions
made under this Article XV prior to January 1, 1990, effective
October 3, 1989, the aggregate of costs of the medical benefits
(measured from January 1, 1987) plus the costs of any life
insurance protection shall not exceed twenty-five percent (25%)
of the sum of the aggregate of costs of retirement benefits under
the Plan (other than past service credits), the aggregate of
costs of the medical benefits and the costs of any life insurance
protection (both measured from January 1, 1987). The aggregate
of costs of retirement benefits, other than for past service
credits, and the aggregate of costs of medical benefits provided
under the Plan shall be determined using the projected unit
credit funding method and the actuarial assumptions set forth in
Exhibit B, a copy of which is attached hereto and specifically
incorporated herein by reference in its entirety, and as may be
amended from time to time by the committee responsible for
providing a procedure for establishing and carrying out a funding
policy and method for the Plan pursuant to Section 10.9 of the
Plan. Contributions allocated to any separate account
established for a Pensioned Employee from which medical benefits
will be payable solely to such Pensioned Employee or his
Dependents shall be treated as an Annual Addition as defined in
Section 6.6(a) to any defined contribution plan maintained by the
Employer.
15.7 Pensioned Employee contributions. It shall be the sole
responsibility of the Pensioned Employee to notify the Employer
promptly in writing when a change in the amount of the Pensioned
Employee's contribution is in order because a Dependent has
become ineligible for coverage under this Article XV. No person
shall become covered under this Article XV for whom the Pensioned
Employee has not made the required contribution. Any
contribution paid by a Pensioned Employee for any person after
such person shall have become ineligible for coverage under this
Article XV shall be returned upon written request but only
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provided such written request by or on behalf of the Pensioned
Employee is received by the Employer within ninety (90) days from
the date coverage terminates with respect to such ineligible
person.
15.8 Amendment of Article XV. The Employer reserves the
right, through action of its Board of Directors, to amend Article
XV (including Exhibit A) pursuant to Section 13.1 or the Trust
without the consent of any Pensioned Employee, or his Dependents,
provided, however, that no amendment of this Article or the Trust
shall cancel the payment or reimbursement of expenses for claims
already incurred by a Pensioned Employee or his Dependent prior
to the date of any amendment, nor shall any such amendment
increase the duties and obligations of the Trustee except with
its consent. This Article XV, as set forth in the Plan document,
is not a contract and non-contributory benefits hereunder are
provided gratuitously, without consideration from any Pensioned
Employee or his Dependents. The Employer makes no promise to
continue these benefits in the future and rights to future
benefits will never vest. In particular, retirement or the
fulfillment of the prerequisites for a retirement benefit
pursuant to the terms of the Plan or under the terms of any other
employee benefit plan maintained by the Employer shall not confer
upon any Pensioned Employee or Dependents any right to continued
benefits under this Article XV.
15.9 Termination of Article XV. Although it is the
intention of the Employer that this Article shall be continued
and the contribution shall be made regularly thereto each year,
the Employer, by action of its Board of Directors pursuant to
Section 13.1, may terminate this Article XV or permanently
discontinue contributions at any time in its sole discretion.
This Article XV, as set forth in the Plan document, is not a
contract and non-contributory benefits hereunder are provided
gratuitously, without consideration from any Pensioned Employee
or his Dependents. The Employer makes no promise to continue
these benefits in the future and rights to future benefits will
never vest. In particular, retirement or the fulfillment of the
prerequisites for a retirement benefit pursuant to the terms of
the Plan or under the terms of any other employee benefit plan
maintained by the Employer shall not confer upon any Pensioned
Employee or his Dependents any right to continued benefits under
this Article XV. Effective January 1, 1991, in the event the
Employer or any adopting Employer shall terminate its provision
of the medical benefits described in Exhibit A to Section 15.3 of
the Plan to its Pensioned Employees, this Article XV of the Plan
shall automatically terminate with respect to the Pensioned
Employees and their Dependents of such Employer without the
requirement of any action by such Employer.
15.10 Reversion of assets upon termination. Upon the
termination of this Article XV and the satisfaction of all
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liabilities under this Article XV, all remaining assets in the
separate account described in Section 15.6 shall be returned to
the Employer.
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ARTICLE XVI
Early Retirement Incentive Program
16
16.1 Eligibility. All Employees of the Employer who:
(a) are classified on the Employer's payroll as actively employed
on the last day preceding their Retirement Date; (b) who have or
will complete ten (10) or more years of Accredited Service on or
before December 31, 1994; and (c) have or will attain age fifty-
five (55) on or before December 31, 1994 ("Eligible Employee")
shall be eligible to receive the benefits described in Section
16.3 below if, during the period from May 1, 1994 through 5:00
p.m. on May 31, 1994, such Employee elects to retire by filing an
election form and waiver agreement with the Retirement Board no
later than 5:00 p.m. on May 31, 1994 and allows such election
form and waiver agreement to become effective. In the event an
Eligible Employee does not submit an election form and waiver
agreement by 5:00 p.m. on May 31, 1994 and allow such Agreement
to become effective, the Retirement Board shall interpret such
failure as an election not to receive the benefits provided under
this Article XVI.
16.2 Retirement Dates of Eligible Employees.
(a) Employees who satisfy eligibility criteria by June 30,
1994. The Early Retirement Date of an Eligible Employee who
elects to retire in accordance with the provisions of this
Article XVI and who is age fifty-five (55) or older with ten (10)
or more years of Accredited Service by June 30, 1994 shall be
July 1, 1994.
(b) Employees who satisfy eligibility criteria subsequent
to June 30, 1994. The Early Retirement Date of an Eligible
Employee who elects to retire in accordance with the provisions
of this Article XVI and who attains age fifty-five (55) or older
with ten (10) or more years of Accredited Service subsequent to
June 30, 1994, but prior to December 31, 1994, shall be the first
day of the first month following the date such Eligible Employee
satisfies the age and service criteria described in this Section
16.2(b).
(c) Exception for critical projects. Notwithstanding the
foregoing, in the sole discretion of the Employer, the Early
Retirement Date of an Eligible Employee may be postponed beyond
the Eligible Employee's Early Retirement Date determined in
accordance with the provisions of paragraph (a) or (b) above,
whichever is applicable, provided, however, that no Eligible
Employee's Early Retirement Date shall be postponed beyond June
30, 1995.
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<PAGE>
16.3 Early retirement incentive program benefits.
(a) Early retirement replacement benefit. In addition to
any Retirement Income to which an Eligible Employee may be
entitled in accordance with the provisions of Article V of the
Plan, if an Eligible Employee retires from the service of the
Employer in accordance with the provisions of this Article XVI
prior to his Normal Retirement Date and elects to commence his
Retirement Income prior to his Normal Retirement Date pursuant to
the provisions of Section 5.7 of the Plan, the amount of
Retirement Income to be received by such Eligible Employee under
Section 5.5 shall not be reduced due to early commencement of
such Retirement Income.
(b) Social Security Bridge Benefit. An Eligible Employee
who retires in accordance with the provisions of this Article XVI
prior to the attainment of age sixty-two (62) shall be paid an
amount equal to the estimated monthly Social Security benefits
such Eligible Employee would become entitled to beginning at age
sixty-five (65) based upon the Social Security Act in effect at
the time of such Employee's retirement and such Eligible
Employee's estimated Social Security earnings while employed with
the Employer or an Affiliated Employer through his Early
Retirement Date. This "Social Security Bridge Benefit" shall be
paid monthly commencing on the Employee's Early Retirement Date
(determined in accordance with Section 16.2 above) and shall
continue to be paid on the first day of each month thereafter up
to and including the first day of the month in which such
Eligible Employee attains age sixty-two (62).
(c) Provisional Payees. The benefits described in this
Section 16.3 shall be subject to and administered in accordance
with the provisions of Article VII of the Plan; provided,
however, that in the event of the Eligible Employee's death prior
to his sixty-second (62nd) birthday, one hundred percent (100%)
of the monthly Social Security Bridge Benefit to which the
Eligible Employee is entitled shall continue to be paid to his
Provisional Payee through the first day of the month in which
such Eligible Employee would have attained age sixty-two (62) had
the Eligible Employee not died.
16.4 Restoration to service. Notwithstanding any provisions
of Section 5.10 to the contrary, in the event an Eligible
Employee who retires in accordance with the provisions of this
Article XVI subsequently returns to the service of the Employer
or any Affiliated Employer, all benefits payable to such Eligible
Employee under this Article XVI shall cease and upon such
Eligible Employee's subsequent retirement, the Eligible Employee
shall receive the Actuarial Equivalent of the greater of:
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(a) the Retirement Income the Eligible Employee would
receive under the Plan based upon his Accredited Service and age
at the date of his subsequent retirement, reduced by the
Actuarial Equivalent of any Retirement Income, including any
amount payable under Section 16.3(b), which the Employee received
prior to his reemployment; or
(b) the Retirement Income the Eligible Employee was
actually receiving prior to his reemployment plus any amounts
payable under Section 16.3(b).
IN WITNESS WHEREOF, the Board of Directors of Southern
Company Services, Inc. through its authorized officers has
adopted this amendment and restatement of the Pension Plan for
Employees of Southern Company Services, Inc. this day of
, , to be effective January 1, 1989.
SOUTHERN COMPANY SERVICES, INC.
By:
William C. Archer III
Vice President
ATTEST:
By:
Tommy Chisholm
Secretary
[CORPORATE SEAL]
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87
<PAGE>
[D R A F T]
FIRST AMENDMENT TO THE
PENSION PLAN
FOR EMPLOYEES OF
SOUTHERN COMPANY SERVICES, INC.
WHEREAS, the Board of Directors of Southern Company
Services, Inc. (the "Company") heretofore adopted the amendment
and restatement of the Pension Plan for Employees of Southern
Company Services, Inc. (the "Plan"), effective January 1, 1989,
in order to comply with the Internal Revenue Code of 1986, as
amended (hereinafter referred to as the "Code"); and
WHEREAS, the Pension Plan has also been adopted by, and
covers the eligible employees of, Southern Electric
International, Inc. ("SEI"); and
WHEREAS, effective as of December 16, 1994, SEI acquired a
power generation facility from Scott Paper Company ("Scott")
located in Mobile, Alabama; and
WHEREAS, SEI employed certain of Scott's salaried employees
after the acquisition; and
WHEREAS, the Board of Directors wishes to amend the Pension
Plan to allow former employees of Scott who are now salaried
employees of SEI to immediately participate in the Pension Plan,
to recognize for benefit accrual and vesting purposes under the
Pension Plan service accrued under any Scott pension plan
maintained for such salaried employees, and to offset in the
Pension Plan any benefits these salaried employees may have
accrued under such Scott pension plans; and
WHEREAS, the Board of Directors of the Company is authorized
pursuant to Section 13.1 of the Plan to amend the Plan at any
time.
NOW, THEREFORE, effective , the Board
of Directors of the Company hereby amends the Plan by adding the
following Article:
<PAGE>
17
ARTICLE XVII
Special Provisions Concerning Certain Employees
of Southern Electric International, Inc.
17.1 Eligibility and Recognition of Service for Former
Employees of Scott Paper Company.
(a) Notwithstanding any other provision of the Plan to the
contrary, with respect to a former, non-collective bargaining
unit employee of Scott Paper Company who was employed by Southern
Electric International, Inc. effective December 17, 1994,
(1) Such employee shall be eligible to participate in
the Plan effective January 1, 1995.
(2) Such Employee, if and when he attains his Early
Retirement Date, Normal Retirement Date, or Deferred
Retirement Date, or terminates service for any other reason
subject to the requirements of Section 8.1 or 8.2, shall be
entitled to receive Retirement Income calculated pursuant to
Section 5.1, 5.2, 5.3, 8.1, or 8.2, as appropriate, based on
his Accredited Service with the Employer and Accredited
Service equal to service accrued under any salaried, non-
collectively bargained pension benefit plan ("Salaried
Plan(s)") maintained by Scott Paper Company. The Retirement
Income calculated according to the preceding sentence shall
be reduced by the amount of retirement income such Employee
would receive under such Salaried Plan(s), assuming he
retired at his normal retirement age, as that term is
defined therein on December 17, 1994, from Scott Paper
Company.
(3) For purposes of calculating such Employee's Social
Security Offset under Section 5.4, the Social Security
Offset shall be determined by using the actual salary
history of the Employee during his employment with the
Employer, or an Affiliated Employer, and Scott Paper
Company. If the actual salary history is not available from
Scott Paper Company, such history shall be estimated in
accordance with Section 5.4(b)(1) and (2) of the Plan.
(4) For vesting purposes, such Employee shall be
entitled to receive Vesting Years of Service as provided in
Section 1.40 and, in addition, shall be entitled to vesting
service equal to the sum of the years of service accrued
under each defined benefit pension plan maintained by Scott
Paper Company in which such Employee participated.
2
<PAGE>
18
Except as amended herein by this First Amendment, the Plan
shall remain in full force and effect as amended and restated by
the Company prior to the adoption of this First Amendment.
IN WITNESS WHEREOF, Southern Company Services, Inc., through
its duly authorized officers, has adopted this First Amendment to
the Pension Plan for Employees of Southern Company Services, Inc.
this ____ day of _________________, 1995, to be effective as
stated herein.
SOUTHERN COMPANY SERVICES,
INC.
By:
Its:
ATTEST:
By:
Its:
[CORPORATE SEAL]
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3
<PAGE>
Exhibit 10(a)72
THE SOUTHERN COMPANY
PERFORMANCE PAY PLAN
As Amended and Restated
Effective January 1, 1993
ARTICLE DESCRIPTION PAGE
I Definitions . . . . . . . . . . . . . . . 2
II Participation . . . . . . . . . . . . . . 5
III Funding of Incentive Pay Awards . . . . . 7
IV Incentive Pay Award Opportunities . . . . 10
V Administration of Plan . . . . . . . . . 12
VI Miscellaneous Provisions . . . . . . . . 14
<PAGE>
THE SOUTHERN COMPANY
PERFORMANCE PAY PLAN
Purposes
The purposes of the Performance Pay Plan are to focus the
attention and efforts of employees on goals which have a direct
and significant influence on individual, organizational and
corporate performance; to improve the correlation between pay and
performance for the achievement of individual, organizational and
corporate goals; and to provide the potential for levels of
compensation that will enhance the ability of the Operating
Companies to attract, retain, and motivate employees. In order
to achieve these objectives, the Performance Pay Plan is intended
to pay additional compensation to eligible employees based upon
individual, organizational and corporate performance. Such
compensation shall be paid out of the general assets of The
Southern Company. No benefits under the Performance Pay Plan
shall be deferred or held in trust for the benefit of eligible
employees. The Performance Pay Plan is not intended to be an
employee benefit plan or any other plan subject to regulation by
the Employee Retirement Income Security Act of 1974.
The Performance Pay Plan was established effective January
1, 1989 and was first amended and restated effective January 1,
1991. The Board of Directors of Southern Company Services, Inc.
now desires to amend and restate the Performance Pay Plan to
incorporate numerous changes including provisions modifying the
allocation of funds under the Performance Pay Plan. The
effective date of this amendment and restatement (the
"Restatement Effective Date") of the Performance Pay Plan shall
be January 1, 1993
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<PAGE>
ARTICLE I
Definitions
For purposes of the Performance Pay Plan, the following
terms shall have the following meanings, unless a different
meaning is plainly required by the context:
1.1 "Annual Salary" shall mean with respect to Non-Covered
Employees the base salary or wages paid to a Participant before
deductions for taxes, social security, etc., including all
amounts contributed by an Operating Company to The Southern
Electric System Flexible Benefits Plan or The Southern Company
Flexible Benefits Plan on behalf of a Participant, amounts
contributed by any Operating Company to The Southern Company
Employee Savings Plan as Elective Employer Contributions, as said
term is defined in Section 4.1 therein, pursuant to the
Participant's exercise of his deferral option made in accordance
with Section 401(k) of the Internal Revenue Code, and amounts
contributed to the Deferred Compensation Plan for The Southern
Electric System, but excluding all awards under The Southern
Company Performance Pay Plan and The Southern Company
Productivity Improvement Plan, overtime pay, shift differential
and substitution pay. With respect to Covered Employees, "Annual
Salary" shall be defined in the Covered Employee Plan established
by an Operating Company for the benefit of Covered Employees.
1.2 "Board of Directors" shall mean the Board of Directors
of Southern Company Services, Inc.
1.3 "Company Goal Funding Rate" shall mean the rate at
which funding of the Incentive Pay Award Pool is achieved for
each of the Company Goals, which rates shall be established and
committed to writing by no later than the end of each Performance
Period by The Southern Company Management Council.
1.4 "Company Goals" shall mean the Organizational Goal,
Customer Satisfaction Goal, Competitive Cost Goal and Earnings
Goal, as is applicable.
1.5 "Covered Employee" shall mean an employee of an
Operating Company covered by a collective bargaining agreement
between the Operating Company and a union or other employee
representative who participates in a Covered Employee Plan.
1.6 "Covered Employee Plan" shall mean a performance based
plan established for the benefit of Covered Employees by an
Operating Company pursuant to a collective bargaining agreement
which plan is maintained in conjunction with this Performance Pay
Plan.
- 2 -
<PAGE>
1.7 "Earnings Thresholds" shall mean The Southern Company
Earnings Threshold and the Operating Company Earnings Threshold
set forth at Section 3.1 of the Plan.
1.8 "Effective Date" shall mean January 1, 1989. The
"Restatement Effective Date" shall mean January 1, 1993.
1.9 "Funding Unit" shall mean each organizational unit
established by an Operating Company for which Company Goals are
established and assessed for the purpose of paying Incentive Pay
Awards.
1.10 "Funding Unit Head" shall mean the individual
responsible for managing a Funding Unit.
1.11 "Grade" shall mean the evaluation assigned under the
job evaluation system.
1.12 "Grade Value" shall mean with respect to Non-Covered
Employees the assigned dollar value within the Annual Salary
range for a Grade Level in a Performance Period and upon which
Incentive Pay Awards are based. Grade Values of Non-Covered
Employees who commence service during a Performance Period and
Grade Values of Non-Covered Employees who terminate their
employment for one of the reasons set forth in Section 2.1(b)(1)-
(4) shall be prorated based upon their date of commencement or
termination of service with their Operating Company in accordance
with Schedule I or Schedule II, as appropriate. With respect to
Covered Employees, "Grade Value" shall be defined in the Covered
Employee Plan established by the Operating Company in which such
Covered Employee participates.
1.13 "Incentive Pay Award" shall mean the amount awarded to
a Participant in accordance with Article IV.
1.14 "Incentive Pay Award Pool" shall mean the pool of funds
established in accordance with Article III either for the benefit
of Non-Covered Employees or for the benefit of Covered Employees,
respectively, and which funds are allocated to each Operating
Company.
1.15 "Non-Covered Employee" shall mean each active full-time
and regular part-time employee of an Operating Company,
regardless of their classification as an exempt or non-exempt
employee, who is not covered by a collective bargaining agreement
between their Operating Company and a union or other employee
representative. The term "Non-Covered Employee" shall not
include any person who is a temporary employee, cooperative
employee or a contractor of an Operating Company. In addition,
the term "Employee" shall not include any employee who is
eligible to participate in any incentive compensation program
- 3 -
<PAGE>
maintained by his Operating Company that specifically provides
that an eligible employee under such program shall not be
entitled to also receive Incentive Pay Awards under this Plan.
1.16 "Operating Companies" shall mean Southern Company
Services, Inc., or any affiliate or subsidiary (direct or
indirect) of The Southern Company, which the Board of Directors
may from time to time determine to be eligible to participate
under the Plan and which shall adopt the Plan, and any successor
of any such affiliate or subsidiary. The Operating Companies as
of the Restatement Effective Date are as follows: Alabama Power
Company, Georgia Power Company, Gulf Power Company, Mississippi
Power Company, Savannah Electric and Power Company, Southern
Company Services, Inc. and Southern Nuclear Operating Company,
Inc.
1.17 "Participant" shall mean all Non-Covered and Covered
Employees who satisfy the criteria set forth in Article II.
1.18 "Performance Period" shall mean each 12-month period
commencing on the first day of January and ending on the last day
of December next following.
1.19 "Plan" shall mean The Southern Company Performance Pay
Plan, as described herein or as from time to time amended.
1.20 "Plan Administrator" shall mean Compensation Department
of each Operating Company.
1.21 "ROE" shall mean return on equity.
1.22 "The Southern Company Earnings Test" shall mean the
test set forth at Section 3.2(b) of the Plan.
1.23 "The Southern Company Earnings Threshold" shall mean
the percentage ROE determined under Section 3.1(a).
1.24 "Threshold for Funding" shall mean the minimum level of
performance established for each of the Company Goals before the
commencement of each Performance Period by The Southern Company
Management Council.
Where the context requires, words in the masculine gender
include the feminine and neuter genders and words in the singular
include the plural and words in the plural include the singular.
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<PAGE>
ARTICLE II
Participation
2.1 Non-Covered Employees. All Non-Covered Employees of an
Operating Company shall be eligible to participate in the Plan
and receive Incentive Pay Awards.
(a) Non-Covered Employees who commence service with an
Operating Company after January 1 and before December
15 of a Performance Period shall be eligible to receive
Incentive Pay Awards in the same proportion as the
ratio of the number of months employed during a
Performance Period bears to the total number of months
in a Performance Period. For purposes of calculating
the number of months of employment with an Operating
Company under this Section 2.1:
(1) Non-Covered Employees whose effective date of
employment is on or before the fourteenth (14th)
day of a month shall be considered Employees as of
the first day of such month; and
(2) Non-Covered Employees whose effective date of
employment is on or after the fifteenth (15th) day
of a month shall not be considered Employees until
the first day of the next succeeding month.
Non-Covered Employees whose effective date of
employment is on or after December 15 of a Performance
Period shall not be eligible to participate until the
next succeeding Performance Period.
(b) Non-Covered Employees whose employment with an
Operating Company is terminated during a Performance
Period for one of the following reasons shall be
eligible to receive an Incentive Pay Award for such
Performance Period on a pro-rata basis:
(1) retirement,
(2) total disability (as determined by the Social
Security Administration),
(3) death, or
(4) termination of employment, but only in the event
the Participant shall transfer to or be reemployed
by Southern Electric International, Inc. during
such Performance Period.
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<PAGE>
The pro-rata amount of an Incentive Pay Award shall be
determined for the Performance Period in which such
termination described above occurs by a fraction which
is the number of months of employment with an Operating
Company during the Performance Period, divided by the
total number of months in the Performance Period. For
purposes of calculating the number of months of
employment with an Operating Company under this Section
2.(1)(b) for a Non-Covered Employee whose service is
terminated for one of the reasons described above:
(1) The month in which the Non-Covered Employee's
service terminates shall not be considered if such
terminating event occurs on or before the
fourteenth (14th) day of the month; and
(2) The month in which the Non-Covered Employee's
service terminates shall be considered if such
terminating event occurs on or after the fifteenth
(15th) day of the month.
A Non-Covered Employee whose employment with an
Operating Company is terminated during a Performance
Period for any reason other the reasons described above
shall not be eligible to receive an Incentive Pay Award
for such Performance Period.
2.2 Covered Employees. All Covered Employees of an
Operating Company who are covered under a Covered Employee Plan
shall not be eligible to participate in the Plan, but shall be
eligible to participate in the Covered Employee Plan and to
receive Incentive Pay Awards in accordance with the terms of such
Covered Employee Plan.
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<PAGE>
ARTICLE III
Funding of Incentive Pay Awards
3.1 Earnings Thresholds. Incentive Pay Award Pools shall
be eligible for funding for the Performance Period in an amount
determined in accordance with this Article III of the Plan for
each Operating Company, provided both of the following Earnings
Thresholds are achieved:
(a) Southern Company Earnings Threshold - The Southern
Company achieves earnings during the Performance Period
equal to or greater than a percentage return on equity,
which percentage is designated by The Southern Company
Management Council by no later than the end of each
Performance Period and which percentage and its dollar
equivalent shall be set forth on Schedule III; and
(b) Operating Company Earnings Threshold - Each Operating
Company achieves earnings during the Performance Period
equal to or greater than a percentage return on equity,
which percentage is designated by The Southern Company
Management Council by no later than the end of each
Performance Period and which percentage and its dollar
equivalent shall be set forth on Schedule IV.
If, during the Performance Period, The Southern Company Earnings
Threshold is not satisfied, no Incentive Pay Award Pool for any
Operating Company shall be eligible for funding. If, during the
Performance Period, The Southern Company Earnings Threshold is
satisfied, but an Operating Company fails to satisfy its
Operating Company Earnings Threshold, such Operating Company's
Incentive Pay Award Pool shall not be eligible for funding. If,
during the Performance Period, The Southern Company Earnings
Threshold is satisfied and the Operating Company satisfies its
Operating Company Earnings Threshold, such Operating Company's
Incentive Pay Award Pools shall be eligible for funding in
accordance with this Article III.
3.2 Funding for Non-Covered Employee Participants. Subject
to Paragraph (c) of this Section 3.2, Plan funding for the
Incentive Pay Award Pool benefiting Non-Covered Employees for
each Operating Company shall equal for any given Performance
Period the funding achieved under the Company Goals set forth in
Paragraph (a) below, unless such amount is reduced by application
of The Southern Company Earnings Test set forth in Paragraph (b)
below.
- 7 -
<PAGE>
(a) Company Goals. Each of the Company Goals provides for
a Threshold for Funding, which must be achieved in
order to obtain funding under any particular Goal. The
Threshold for Funding and the Company Goal Funding Rate
shall be designated by no later than the end of each
Performance Period by The Southern Company Management
Council on Schedule V. Funding under each Company Goal
shall be calculated at the end of each Performance
Period in accordance with Appendix A.
(b) The Southern Company Earnings Test. The Southern
Company Earnings Test shall be applied, as set forth in
Appendix B, at the end of each Performance Period to
total amount calculated for each Operating Company
under the Company Goals.
(c) If a Non-Covered Employee Participant transfers from
one Funding Unit to another Funding Unit during a
Performance Period, the transferee Funding Unit will
fund such Participant's Incentive Pay Award for the
entire Performance Period, and shall include such
Participant's Grade Value in the calculation of the
Incentive Pay Award Pool for the transferee Funding
Unit without prorating the Grade Value of such
Participant for the Performance Period.
3.3 Funding for Covered Employee Participants. With
respect to a Covered Employee Plan sponsored by an Operating
Company, such Plan shall be funded in accordance with this
Section 3.3.
(a) A Covered Employee Plan shall be eligible for funding
provided the Earnings Thresholds set forth in Section
3.1 are satisfied.
(b) Provided the Incentive Pay Award Pool for a Covered
Employee Plan is eligible for funding under Paragraph
(a) above, the Incentive Pay Award Pool for a Covered
Employee Plan shall be funded in accordance with its
terms, except that the maximum dollar amount of the
Incentive Pay Award Pool for the Covered Employee Plan
shall be subject to and may be limited by The Southern
Company Earnings Test.
- 8 -
<PAGE>
3.4 Extraordinary Item Exception. If requested by an
Operating Company, at the discretion of the Chief Executive
Officer of The Southern Company, the Incentive Pay Award Pool for
a Performance Period may be calculated without regard to any
extraordinary item of income or expense ("Extraordinary Item")
incurred by The Southern Company or any Operating Company,
provided such determination is made prior to the close of the
Performance Period. If the Chief Executive Officer of The
Southern Company approves an Extraordinary Item, it shall be
identified in Schedule VI, and, in addition, an explanation as to
how such Extraordinary Item shall impact upon the funding of the
Plan and the Incentive Pay Award Pool of the Operating Company
requesting approval of the Extraordinary Item shall be set forth
therein.
3.5 Appliance Sales Performance Plan. The portion of the
Incentive Pay Award Pool otherwise distributable under the terms
of the Plan on behalf of Non-Covered Employees of Gulf Power
Company shall be reduced by the amount necessary (the "Necessary
Amount") to fund the Gulf Power Company Appliance Sales
Performance Pay Plan (hereinafter referred to as the "Gulf Plan")
as determined by the executive committee (as that term is defined
under the Gulf Plan) of the Gulf Plan. Such Necessary Amount
shall be distributed directly to the Gulf Plan from the Incentive
Pay Award Pool and shall be further distributed in accordance
with the terms of the Gulf Plan. The portion of the Incentive
Pay Award Pool otherwise payable on behalf of Employees of Gulf
Power Company but not payable to the Gulf Plan in accordance with
this Section 3.5 shall be subject to and distributed in
accordance with the provisions of this Plan. Except as provided
in Section 3.5(a) below, in no event shall a Gulf Power Company
Appliance Sales Department employee be entitled to receive a
distribution from both this Plan and the Gulf Plan.
(a) If an employee of the Gulf Power Company Appliance
Sales Department transfers between the Appliance Sales
Department and another department of Gulf Power Company
or another Operating Company, such employee shall be
entitled to receive a pro-rata award under the Plan for
that portion of the Performance Period in which such
employee participates in the Plan. The accrual rate of
the pro-rata award to be awarded to such employee under
this Section 3.5(a) shall be determined in accordance
with Schedule I of the Plan.
(b) Grade Values for employees transferring to or from the
Appliance Sales Department as described in Section
3.5(a) above shall be prorated based upon the
employee's time of participation in this Plan.
3.6 Determination of Funding Amount. Funding in accordance
with this Article III shall be fixed in all events by the end of
each Performance Period.
- 9 -
<PAGE>
ARTICLE IV
Incentive Pay Award Opportunities
4.1 Non-Covered Employee Participants.
(a) The Incentive Pay Award Pool benefiting Non-Covered
Employee Participants of an Operating Company shall be
allocated to each Funding Unit by the Plan
Administrator of the Operating Company in accordance
with performance goals established by the Operating
Company and each of its Funding Unit Heads. The amount
allocated to each Funding Unit shall then be allocated
among Participants employed in such Funding Unit in
accordance with individual, team, departmental or other
criteria established by the respective Funding Unit
Head. All Funding Unit Heads for a Performance Period
shall be identified before the first day of the next
succeeding Performance Period. The Funding Unit Heads
shall be responsible for publishing the criteria
established for the purpose of allocating its portion
of the Incentive Pay Award Pool attributable to their
respective Funding Units within a reasonable period of
time after commencement of each Performance Period, and
shall also communicate such criteria to the Plan
Administrator prior to the close of each Performance
Period.
(b) The Plan Administrator shall be solely responsible for
calculating each Participant's Incentive Pay Award and
distributing such Incentive Pay Award in accordance
with the criteria established by the Funding Unit
Heads.
(c) The Plan Administrator shall endeavor to pay the
Incentive Pay Awards for a Performance Period to the
Participants not later than two and one-half (2 1/2)
months following the close of the preceding Performance
Period, or such shorter or longer period of time
following the close of the preceding Performance Period
as may be required under the Internal Revenue Code to
preserve the federal income tax deduction for Incentive
Pay Awards paid with respect to such Performance
Period. The Incentive Pay Award payment shall be made
in cash or its functional equivalent and the receipt of
such payment may not be deferred at the option of the
Participant. In the event of a Participant's death
prior to the payment of any Incentive Pay Award payable
to the Participant, such amount shall be paid to the
estate of the Participant.
- 10 -
<PAGE>
4.2 Covered Employee Participants.
(a) The Incentive Pay Award Pool benefiting Covered
Employees of an Operating Company shall be allocated
among Covered Employee Participants in the Covered
Employee Plan in accordance with the terms of such
Covered Employee Plan.
(2) The Plan Administrator shall be solely responsible for
calculating and distributing each Participant's
Incentive Pay Award in accordance with the terms of the
Covered Employee Plan in which the Covered Employee
Participant participates.
- 11 -
<PAGE>
ARTICLE V
Administration of Plan
5.1 Employment of Agents. The Plan Administrator shall be
responsible for the daily administration of the Plan and may
appoint other persons or entities to perform or assist in the
performance of any of its fiduciary duties, subject to its review
and approval. The Plan Administrator shall have the right to
remove any such appointee from his position without cause upon
notice. Any person, group of persons, or entity may serve in
more than one fiduciary capacity.
5.2 Record Keeping and Reporting.
(a) The Plan Administrator shall maintain permanent records
and accounts of Participants and shall be responsible for all
receipts, disbursements, transfers and other transactions
concerning the Plan. Such accounts, books, and records relating
thereto shall be open to inspection and audit by the Boards of
Directors of the Operating Companies and any persons designated
thereby at all reasonable times.
(b) The Plan Administrator shall undertake the preparation
and filing of all documents and forms required by any
governmental agency. The Plan Administrator shall keep all such
books of account records, and other data as may be necessary for
proper administration of the Plan.
5.3 Responsibilities in General. The Plan Administrator
shall administer the Plan in accordance with its terms and shall
have all powers necessary to carry out the provisions of the Plan
as more particularly set forth herein. The Plan Administrator
shall interpret the Plan and shall determine all questions
concerning eligibility, administration, interpretation, and
application of the Plan, and all such determinations shall be
conclusive and binding on all Participants and interested
persons. The Plan Administrator shall adopt such procedures and
guidelines as it deems necessary and/or desirable in order to
discharge its duties hereunder.
- 12 -
<PAGE>
5.4 Indemnification. The Operating Companies shall
indemnify the Plan Administrator against any and all claims,
losses, damages, expenses, and liability arising from its actions
or omissions, except when the same is finally adjudicated to be
due to gross negligence or willful misconduct. The Operating
Companies may purchase at their own expense sufficient liability
insurance for the Plan Administrator to cover any and all claims,
losses, damages, and expenses arising from any action or omission
in connection with the execution of the duties as the Plan
Administrator.
5.5 Service of Process. The Plan Administrator shall be
the appointed agent for the service of process.
- 13 -
<PAGE>
ARTICLE VI
Miscellaneous Provisions
6.1 No Right of Assignment or Alienation. Neither the
Participant nor his personal representative shall have any rights
to commute, sell, assign, transfer or otherwise convey the right
to receive any payments hereunder, which payments and the rights
thereto are expressly declared to be nonassignable and
nontransferable. Any attempt to assign or transfer the right to
payments of this Plan shall be void and have no effect.
6.2 No Trust Requirement. The Operating Company shall not
reserve or otherwise set aside funds for the payments of
Incentive Pay Awards under the Plan.
6.3 Amendment and Termination of Plan. The Board of
Directors may terminate the Plan at any time or may from time to
time amend the Plan; provided, however, that no amendment shall
impair any rights to payments which have been earned under the
Plan prior to the termination or amendment. Notwithstanding the
foregoing, in the event that the Plan is terminated before
funding is fixed at the end of a Performance Period, no Incentive
Pay Award shall be funded, and accordingly, no Incentive Pay
Awards shall be paid for such Performance Period.
6.4 Incentive Pay Award as Compensation.
(a) Incentive Pay Awards made in accordance with the Plan
are in addition to any other benefits or compensation to which a
Participant may be entitled or for which he may be eligible,
whether funded or unfunded, by reason of his employment with the
Operating Company.
(b) There shall be deducted from each Incentive Pay Award
to a Participant the amount of any tax required to be withheld by
any governmental authority and paid over by the Operating Company
to such governmental authority.
6.5 Coordination with Benefit Plans. Any Incentive Pay
Awards paid to a Participant while employed by an Operating
Company shall not be considered in the calculation of the
Participant's benefits under any employee welfare or pension
benefit plan maintained by an Operating Company, unless otherwise
specifically provided therein.
6.6 Plan Not a Contract. The Plan shall not be deemed to
constitute a contract between an Operating Company and any Non-
Covered or Covered Employee, nor shall anything herein contained
be deemed to give any Non-Covered or Covered Employee any right
to be retained in the employ of an Operating Company or interfere
with the right of the Operating Company to discharge any Non-
Covered or Covered Employee at any time and to treat him without
regard to the effect which such treatment might have upon him as
a Participant.
- 14 -
<PAGE>
6.7 Choice of Law. This Plan shall be governed by and
construed in accordance with the laws of the State of Georgia.
IN WITNESS WHEREOF, Southern Company Services, Inc., through
its officers duly authorized, hereby amends and restates The
Southern Company Performance Pay Plan this _____ day of
_________________, _____, to be effective January 1, 1993.
SOUTHERN COMPANY SERVICES, INC.
By: ____________________________
W. C. Archer III
Vice President
Attest:
By: ___________________________
Tommy Chisholm
Secretary
[CORPORATE SEAL]
- 15 -
<PAGE>
THE SOUTHERN COMPANY
PERFORMANCE PAY PLAN
Amended and Restated
Effective January 1, 1993
SCHEDULE I
Employment Date Accrual Factor
--------------- ------- ------
January 1 - January 14 12/12 = 1.00
January 15 - February 14 11/12 = .92
February 15 - March 14 10/12 = .83
March 15 - April 14 9/12 = .75
April 15 - May 14 8/12 = .67
May 15 - June 14 7/12 = .58
June 15 - July 14 6/12 = .50
July 15 - August 14 5/12 = .42
August 15 - September 14 4/12 = .33
September 15 - October 14 3/12 = .25
October 15 - November 14 2/12 = .17
November 15 - December 14 1/12 = .08
December 15 - December 31 0/12 = .00
- 16 -
<PAGE>
THE SOUTHERN COMPANY
PERFORMANCE PAY PLAN
Amended and Restated
Effective January 1, 1993
SCHEDULE II
Termination Date Accrual Factor
---------------- ------- ------
December 15 - December 31 12/12 = 1.00
November 15 - December 14 11/12 = .92
October 15 - November 14 10/12 = .83
September 15 - October 14 9/12 = .75
August 15 - September 14 8/12 = .67
July 15 - August 14 7/12 = .58
June 15 - July 14 6/12 = .50
May 15 - June 14 5/12 = .42
April 15 - May 14 4/12 = .33
March 15 - April 14 3/12 = .25
February 15 - March 14 2/12 = .17
January 15 - February 14 1/12 = .08
January 1 - January 14 0/12 = .00
- 17 -
<PAGE>
THE SOUTHERN COMPANY
PERFORMANCE PAY PLAN
Amended and Restated
Effective January 1, 1993
SCHEDULE III
THE SOUTHERN COMPANY EARNINGS THRESHOLD
Year Percentage ROE/
Dollar Equivalent
-----------------
1993 11.50% / $1,335,397,000
1994
- 18 -
<PAGE>
<TABLE>
THE SOUTHERN COMPANY
PERFORMANCE PAY PLAN
Amended and Restated
Effective January 1, 1993
SCHEDULE IV
OPERATING COMPANY EARNINGS THRESHOLD
Percentage ROE / Dollar Equivalent ($000)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Southern
Year Alabama Georgia Gulf Mississippi Savannah Nuclear SCS SOCO
---- ------- ------- ---- ----------- -------- -------- --- ----
1993 12% 12% 12% 12% 12% n/a n/a n/a
$ 461,900 $ 757,500 $ 77,700 $ 57,400 $ 30,900
1994
</TABLE>
- 19 -
<PAGE>
<TABLE>
THE SOUTHERN COMPANY
PERFORMANCE PAY PLAN
Amended and Restated
Effective January 1, 1993
SCHEDULE V
COMPANY GOALS FUNDING THRESHOLDS/RATES
Effective 1993
($000)
<S> <C> <C> <C> <C> <C> <C> <C>
Southern
Alabama Georgia Gulf Mississippi Savannah Nuclear SCS
------- ------- ---- ----------- -------- -------- ---
ROE/ $ 492,757 $ 808,100 $ 82,900 $ 61,200 $ 32,845 n/a n/a
Earnings
Goal $0.10 $0.20 $0.10 $0.28 $0.09
Threshold/
Rate
Cost Goal $ 969,343 $1,424,000 $ 228,000 n/a $ 138,500 $ 611,000 n/a
Threshold/
Rate $0.10 $0.20 $0.10 $0.10 $0.10
Customer 60.1% 58.0% 56.6% 67.0% 60.8% n/a n/a
Satisfaction
Goal .6% .5% .5% 1.0% .5%
Threshold/
Rate
*Organizational _____ n/a _____ _____ _____ _____ n/a
Goal
Threshold/
Rate
* Level 5 - 4%
4 - 3
3 - 2
2 - 1
1 - 0%
</TABLE>
-20-
THE SOUTHERN COMPANY
PERFORMANCE PAY PLAN
Amended and Restated
Effective January 1, 1993
SCHEDULE VI
EXTRAORDINARY ITEMS
- 21 -
<PAGE>
Exhibit 10(a)73
SUPPLEMENTAL BENEFIT PLAN
FOR
ALABAMA POWER COMPANY
<PAGE>
SUPPLEMENTAL BENEFIT PLAN
FOR
ALABAMA POWER COMPANY
Page
ARTICLE I - PURPOSE AND ADOPTION OF PLAN . . . . . . . 1
1.1 Adoption . . . . . . . . . . . . . . . . 1
1.2 Purpose. . . . . . . . . . . . . . . . . 1
ARTICLE II - DEFINITIONS . . . . . . . . . . . . . . . 2
2.1 Account. . . . . . . . . . . . . . . . . 2
2.2 Administrative Committee . . . . . . . . 2
2.3 Affiliated Employer. . . . . . . . . . . 2
2.4 Beneficiary. . . . . . . . . . . . . . . 2
2.5 Board of Directors . . . . . . . . . . . 2
2.6 Code . . . . . . . . . . . . . . . . . . 2
2.7 Common Stock . . . . . . . . . . . . . . 2
2.8 Company. . . . . . . . . . . . . . . . . 2
2.9 Deferred Compensation Plan . . . . . . . 3
2.10 Effective Date . . . . . . . . . . . . . 3
2.11 Employee . . . . . . . . . . . . . . . . 3
2.12 ESOP . . . . . . . . . . . . . . . . . . 3
2.13 Non Pension Benefit. . . . . . . . . . . 3
2.14 Participant. . . . . . . . . . . . . . . 3
-i-
<PAGE>
2.15 Pension Benefit. . . . . . . . . . . . . 3
2.16 Pension Plan . . . . . . . . . . . . . . 3
2.17 Plan . . . . . . . . . . . . . . . . . . 3
2.18 Plan Year. . . . . . . . . . . . . . . . 4
2.19 Savings Plan. . . . . . . . . . . . . . 4
ARTICLE III - ADMINISTRATION OF PLAN . . . . . . . . . 4
3.1 Administrator. . . . . . . . . . . . . . 4
3.2 Powers . . . . . . . . . . . . . . . . . 4
3.3 Duties of the Administrative
Committee. . . . . . . . . . . . . . . 5
3.4 Indemnification. . . . . . . . . . . . . 6
ARTICLE IV - ELIGIBILITY . . . . . . . . . . . . . . . 7
4.1 Eligibility Requirements . . . . . . . . 7
4.2 Determination of Eligibility . . . . . . 7
ARTICLE V - BENEFITS . . . . . . . . . . . . . . . . . 8
5.1 Pension Benefit. . . . . . . . . . . . . 8
5.2 Non Pension Benefit. . . . . . . . . . . 10
5.3 Distribution of Benefits . . . . . . . . 13
5.4 Funding of Benefits. . . . . . . . . . . 16
5.5 Withholding. . . . . . . . . . . . . . . 16
-ii-
<PAGE>
ARTICLE VI - MISCELLANEOUS . . . . . . . . . . . . . . 17
6.1 Assignment . . . . . . . . . . . . . . . 17
6.2 Amendment and Termination. . . . . . . . 17
6.3 No Guarantee of Employment . . . . . . . 17
6.4 Construction . . . . . . . . . . . . . . 18
-iii-
<PAGE>
SUPPLEMENTAL BENEFIT PLAN
FOR
ALABAMA POWER COMPANY
ARTICLE I - PURPOSE AND ADOPTION OF PLAN
1.1 Adoption: Alabama Power Company hereby adopt and
establish the Supplemental Benefit Plan for Alabama Power
Company. The Plan shall be an unfunded deferred compensation
arrangement whose benefits shall be paid solely from the general
assets of the Company.
1.2 Purpose: The Plan is designed to provide certain
retirement and other deferred compensation benefits primarily for
a select group of management or highly compensated employees
which are not otherwise payable or cannot otherwise be provided
by the Company under the Pension Plan for Employees of Alabama
Power Company, the Employee Savings Plan for The Southern Company
System, and the Employee Stock Ownership Plan of The Southern
Company System, as a result of the limitations set forth under
Sections 401(a)(17), 402(g), and 415 of the Internal Revenue Code
of 1986, as amended from time to time.
-1-
<PAGE>
ARTICLE II DEFINITIONS
2.1 "Account" shall mean the account or accounts
established and maintained by a Company to reflect the interest
of a Participant in the Plan resulting from a Participant's Non
Pension Benefit calculated in accordance with Section 5.2.
2.2 "Administrative Committee" shall mean the Retirement
Board of the Pension Plan.
2.3 "Affiliated Employer" shall mean any corporation which
is a member of the controlled group of corporations of which The
Southern Company is the common parent corporation.
2.4 "Beneficiary" shall mean any person, estate, trust, or
organization entitled to receive any payment under the Plan upon
the death of a Participant.
2.5 "Board of Directors" shall mean the Board of Directors
of the Company.
2.6 "Code" shall mean the Internal Revenue Code of 1986,
as amended from time to time.
2.7 "Common Stock" shall mean common stock of The Southern
Company.
2.8 "Company" shall mean Alabama Power Company.
2.9 "Deferred Compensation Plan" shall mean the Deferred
Compensation Plan for The Southern Electric System, as amended
-2-
<PAGE>
from time to time, following its adoption by the Board of
Directors.
2.10 "Effective Date" shall mean January 1, 1983. The
Effective Date of this amendment and restatement shall mean
January 1, 1988.
2.11 "Employee" shall mean any person who is currently
employed by the Company.
2.12 "ESOP" shall mean the Employee Stock Ownership Plan of
The Southern Company System, as amended from time to time.
2.13 "Non Pension Benefit" shall mean the benefit described
in Section 5.2.
2.14 "Participant" shall mean an Employee or former
Employee of a Company who is eligible to receive benefits
provided by the Plan.
2.15 "Pension Benefit" shall mean the benefit described in
Section 5.1.
2.16 "Pension Plan" shall mean the defined benefit pension
plan maintained by the Company or an Affiliated Employer, as
amended from time to time.
2.17 "Plan" shall mean the Supplemental Benefit Plan for
Alabama Power Company, as amended from time to time.
2.18 "Plan Year" shall mean the calendar year.
-3-
<PAGE>
2.19 "Savings Plan" shall mean the Employee Savings Plan
for The Southern Company System, as amended from time to time.
Where the context requires, the definitions of all terms set
forth in the Pension Plan, the ESOP, the Savings Plan and the
Deferred Compensation Plan shall apply with equal force and
effect for purposes of interpretation and administration of the
Plan, unless said terms are otherwise specifically defined in the
Plan. The masculine pronoun shall be construed to include the
feminine pronoun and the singular shall include the plural, where
the context so requires.
ARTICLE III ADMINISTRATION OF PLAN
3.1 Administrator. The general administration of the Plan
shall be placed in the Administrative Committee.
3.2 Powers. The Administrative Committee shall administer
the Plan in accordance with its terms and shall have all powers
necessary to carry out the provisions of the Plan more
particularly set forth herein. It shall interpret the Plan and
shall determine all questions arising in the administration,
interpretation and application of the Plan. Any such
determination by it shall be conclusive and binding on all
persons. It may adopt such regulations as it deems desirable for
-4-
<PAGE>
the conduct of its affairs. It may appoint such accountants,
counsel, actuaries, specialists and other persons as it deems
necessary or desirable in connection with the administration of
this Plan, and shall be the agent for the service of process.
3.3 Duties of the Administrative Committee.
(a) The Administrative Committee is responsible for
the daily administration of the Plan. It may appoint other
persons or entities to perform any of its fiduciary functions.
The Administrative Committee and any such appointee may employ
advisors and other persons necessary or convenient to help it
carry out its duties, including its fiduciary duties. The
Administrative Committee shall have the right to remove any such
appointee from his position. Any person, group of persons or
entity may serve in more than one fiduciary capacity.
(b) The Administrative Committee shall maintain
accurate and detailed records and accounts of Participants and of
their rights under the Plan and of all receipts, disbursements,
transfers and other transactions concerning the Plan. Such
accounts, books and records relating thereto shall be open at all
reasonable times to inspection and audit by persons designated by
the Administrative Committee.
-5-
<PAGE>
(c) The Administrative Committee shall take all steps
necessary to ensure that the Plan complies with the law at all
times. These steps shall include such items as the preparation
and filing of all documents and forms required by any
governmental agency; maintaining of adequate Participants'
records; recording and transmission of all notices required to be
given to Participants and their Beneficiaries; the receipt and
dissemination, if required, of all reports and information
received from an Employing Company; securing of such fidelity
bonds as may be required by law; and doing such other acts
necessary for the proper administration of the Plan. The
Administrative Committee shall keep a record of all of its
proceedings and acts, and shall keep all such books of account,
records and other data as may be necessary for proper
administration of the Plan.
3.4 Indemnification. The Company shall indemnify the
Administrative Committee against any and all claims, losses,
damages, expenses and liability arising from an action or failure
to act, except when the same is finally judicially determined to
be due to gross negligence or willful misconduct. The Company
may purchase at their own expense sufficient liability insurance
for the Administrative Committee to cover any and all claims,
-6-
<PAGE>
losses, damages and expenses arising from any action or failure
to act in connection with the execution of the duties as
Administrative Committee. No member of the Administrative
Committee who is also an Employee of the Company shall receive
any compensation from the Plan for his service as such.
ARTICLE IV ELIGIBILITY
4.1 Eligibility Requirements. All Employees (a) whose
benefits under the Pension Plan of the Company are limited by the
limitations set forth in Sections 401(a)(17) and 415 of the Code,
(b) for whom contributions by the Company to the Savings Plan are
limited by the limitations set forth in Sections 401(a)(17),
401(k), 401(m), 402(g) and 415 of the Code, or (c) for whom
contributions by the Company to the ESOP are limited by the
limitations set forth in Sections 401(a)(17) and 415 of the Code,
shall be eligible to receive benefits under the Plan.
4.2 Determination of Eligibility. The Administrative
Committee shall determine which Employees are eligible to
participate. Upon becoming a Participant, an Employee shall be
deemed to have assented to the Plan and to any amendments
hereafter adopted. The Administrative Committee shall be
authorized to rescind the eligibility of any Participant if
-7-
<PAGE>
necessary to insure that the Plan is maintained primarily for the
purpose of providing deferred compensation to a select group of
management or highly compensated employees under the Employee
Retirement Income Security Act of 1974, as amended.
ARTICLE V BENEFITS
5.1 Pension Benefit.
(a) If a Participant has Accredited Service with
respect to the Pension Plan of the Company, but not with respect
to the Pension Plan of any Affiliated Employer, he shall be
entitled to a Pension Benefit equal to that portion of his
Retirement Income under the Pension Plan of the Company which is
not payable under such Pension Plan as a result of the
limitations imposed by Sections 401(a)(17), 415(b), and 415(e) of
the Code.
(b) If a Participant has Accredited Service with
respect to the Pension Plan of the Company and with respect to
the Pension Plan of one or more Affiliated Employers, his Pension
Benefit payable by the Company, and any Affiliated Employer(s)
shall be equal to that portion of his combined Retirement Income
under each Pension Plan which is not payable under any of such
Pension Plans as a result of the limitations described by
-8-
<PAGE>
Sections 401(a)(17), 415(b), and 415(e) of the Code, multiplied
by a fraction, the sum of the individual fractions not to exceed
one (1), the numerator of which is his years of Accredited
Service under the Pension Plan of the Company or any Affiliated
Employer(s) and the denominator which is his total years of
Accredited Service under the Pension Plans of the Company and any
Affiliated Employer(s).
(c) For purposes of this Section 5.1, the Pension
Benefit of a Participant shall be calculated based on the
Participant's Earnings that are considered under the Pension Plan
of the Company in calculating his Retirement Income, without
regard to the limitation of Section 401(a)(17) of Code, but
excluding any portion of his Compensation he may have elected to
defer under the Deferred Compensation Plan.
(d) To the extent that a Participant's Retirement
Income under a Pension Plan is recalculated as a result of an
amendment to such Pension Plan in order to increase the amount of
his Retirement Income, the Participant's Pension Benefit shall
also be recalculated in order to properly reflect such increase
in determining payments of the Participant's Pension Benefit made
on or after the effective date of such increase.
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<PAGE>
5.2 Non Pension Benefit.
(a) A Participant shall be entitled to a Non Pension
Benefit which is determined under this Section 5.2. An Account
shall be established for the Participant by the Company, as of
his initial Plan Year of participation in the Plan. Each Plan
Year such Account shall be credited with an amount equal to the
amount that the Company is prohibited from contributing (1) to
the Savings Plan on behalf of the Participant as a result of the
limitations imposed by Sections 401(a)(17), 401(k), 401(m),
402(g), 415(c), and 415(e) of the Code and (2) to the ESOP on
behalf of the Participant as a result of the limitations imposed
by Sections 401(a)(17), 415(c), and 415(e) of the Code.
(b) For purposes of this Section 5.2, the Non Pension
Benefit of a Participant shall be calculated based on the
Participant's Compensation that would have been considered in
calculating allocations to his accounts under the Savings Plan
and ESOP, without regard to the limitations of Section 401(a)(17)
or Section 402(g) of the Code, but excluding any portion of his
Compensation he may have elected to defer under the Deferred
Compensation Plan.
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(c) All amounts so credited to the Account of the
Participant shall be deemed to be invested in the Common Stock at
the same time that such amounts would have been so invested if
they had been contributed by the Company to the Savings Plan or
the ESOP, as the case may be. In addition, such Account shall be
credited with respect to shares of Common Stock allocated to the
Participant's Account as follows:
(1) In the case of cash dividends, such
additional shares as could be purchased with the dividends
which would have been payable if the credited shares had
been outstanding;
(2) In the case of dividends payable in property
other than cash or Common Stock, such additional shares as
could be purchased with the fair market value of the
property which would have been payable if the credited
shares had been outstanding; or
(3) In the case of dividends payable in Common
Stock, such additional shares as would have been payable on
the credited shares if they had been outstanding.
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<PAGE>
(d) As soon as practicable following the first day of
his eligibility to have benefits credited to his Account, a
Participant shall designate in writing on a form to be prescribed
by the Company the method of payment of his Account, which shall
be the payment of a single lump sum or a series of annual
installments not to exceed twenty (20). The method of
distribution initially designated by a Participant shall not be
revoked and shall govern the distribution of each Account
established for the benefit of the Participant by the Company.
Notwithstanding, in the sole discretion of the Administrative
Committee upon application by the Participant, the method of
distribution designated by such Participant may be modified not
prior to 395 days nor later than 365 days prior to a
Participant's date of separation from service in order to change
the form of distribution of his Account in accordance with the
terms of the Plan. Each Participant, his Beneficiary, and legal
representative shall be bound as to any action taken pursuant to
the method of distribution elected by a Participant and the terms
of the Plan.
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5.3 Distribution of Benefits.
(a) The Pension Benefit, as determined in accordance
with Section 5.1, shall be payable in monthly increments on the
first day of the month concurrently with and in the same manner
as the Participant's Retirement Income under the Pension Plan.
The Beneficiary of a Participant's Pension Benefit shall be the
same as the beneficiary of the Participant's Retirement Income
under the Pension Plan.
(b) When a Participant terminates his employment with
the Company, said Participant shall be entitled to receive the
market value of any shares of Common Stock (and fractions
thereof) reflected in any Account maintained by the Company for
his benefit under the Plan in a single lump sum distribution or
annual installments not to exceed twenty (20). Such distribution
shall be made not later than sixty (60) days following the close
of the calendar quarter in which his termination of employment
occurs, or as soon as reasonably practicable thereafter. The
transfer by a Participant between companies in the Southern
electric system shall not be deemed to be a termination of
employment with the Company. No portion of a Participant's
Account shall be distributed in Common Stock.
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<PAGE>
(c) In the event a Participant elects to receive the
distribution of his Account in annual installments, the first
payment shall be made not later than sixty (60) days following
the close of the calendar quarter in which his termination of
employment occurs, or as soon as reasonably practicable
thereafter, and shall be an amount equal to the balance in the
Participant's Account divided by the number of annual installment
payments. Each subsequent annual payment shall be an amount
equal to the balance in the Participant's Account divided by the
number of the remaining annual payments and shall be due on the
anniversary of the preceding payment date. No portion of a
Participant's Account shall be distributed in Common Stock.
(d) Upon the death of a Participant, or a former
Participant prior to the payment of all amounts credited to said
Participant's Account, the unpaid balance shall be paid in the
sole discretion of the Administrative Committee (1) in a lump sum
to the designated Beneficiary of a Participant or former
Participant within sixty (60) days following the close of the
calendar quarter in which the Administrative Committee is
provided evidence of the Participant's death (or as soon as
reasonably practicable thereafter) or (2) in accordance with the
distribution method chosen by such Participant or former
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<PAGE>
Participant. The Beneficiary designation may be changed by the
Participant or former Participant at any time without the consent
of the prior Beneficiary. In the event a Beneficiary designation
is not on file or the designated Beneficiary is deceased or
cannot be located, payment will be made to the estate of the
Participant or former Participant. No portion of a Participant's
Account shall be distributed in Common Stock.
(e) Upon the total disability of a Participant or
former Participant, as determined by the Social Security
Administration, the unpaid balance of his Account shall be paid
in the sole discretion of the Administrative Committee (1) in a
lump sum to the Participant or former Participant, or his legal
representative within sixty (60) days following the notification
of the Administrative Committee of the determination of
disability by the Social Security Administration (or as soon as
reasonably practicable thereafter) or (2) in accordance with the
distribution method elected by such Participant or former
Participant. No portion of a Participant's Account shall be
distributed in Common Stock.
(f) The Administrative Committee in its sole
discretion upon application made by the Participant, a designated
Beneficiary, or their legal representative, may determine to
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<PAGE>
accelerate payments or, in the event of death or total disability
(as determined by Social Security Administration), to extend or
otherwise make payments in a manner different from the manner in
which such payment would be made under the method of distribution
elected by the Participant in the absence of such determination.
5.4 Funding of Benefits. The Company maintaining an
Account for the benefit of a Participant shall not reserve or
otherwise set aside funds for the payment of its obligations
under the Plan, and such obligations shall be paid solely from
the general assets of the Company. Notwithstanding that a
Participant shall be entitled to receive the balance of his
Account under the Plan, the assets from which such amount shall
be paid at all times remain subject to the claims of the
creditors of the Company.
5.5 Withholding. There shall be deducted from the payment
of any Pension Benefit or Non Pension Benefit due under the Plan
the amount of any tax required by any governmental authority to
be withheld and paid over by the Company to such governmental
authority for the account of the Participant or Beneficiary
entitled to such payment.
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<PAGE>
ARTICLE VI MISCELLANEOUS
6.1 Assignment. Neither the Participant, his Beneficiary,
or his legal representative shall have any rights to sell,
assign, transfer or otherwise convey the right to receive the
payment of any Pension Benefit or Non Pension Benefit due
hereunder, which payment and the right thereto are expressly
declared to be nonassignable and nontransferable. Any attempt to
assign or transfer the right to payment under the Plan shall be
null and void and of no effect.
6.2 Amendment and Termination. The Plan may be amended or
terminated at any time by the Board of Directors, provided that
no amendment or termination shall cause a forfeiture or reduction
in any benefits accrued as of the date of such amendment or
termination.
6.3 No Guarantee of Employment. Participation hereunder
shall not be construed as creating any contract of employment
between the Company and a Participant, nor shall it limit the
right of the Company to suspend, terminate, alter, modify,
whether or not for cause, the employment relationship between the
Company and a Participant.
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6.4 Construction. This Plan shall be construed in
accordance with and governed by the laws of the State of Alabama,
to the extent such laws are not otherwise superseded by the laws
of the United States.
IN WITNESS WHEREOF, the Plan has been executed by duly
authorized officers of Alabama Power Company, pursuant to
resolutions of the Board of Directors of the Alabama Power
Company, this day of , .
ALABAMA POWER COMPANY
(CORPORATE SEAL)
By:
Attest:
[adamscl] h:\wpdocs\mtd\alapower\sup-ben.pln
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<PAGE>
Exhibit 10(a)74
SUPPLEMENTAL BENEFIT PLAN
FOR
GEORGIA POWER COMPANY
<PAGE>
SUPPLEMENTAL BENEFIT PLAN
FOR
GEORGIA POWER COMPANY
Page
ARTICLE I - PURPOSE AND ADOPTION OF PLAN . . . . . . . 1
1.1 Adoption . . . . . . . . . . . . . . . . 1
1.2 Purpose. . . . . . . . . . . . . . . . . 1
ARTICLE II - DEFINITIONS . . . . . . . . . . . . . . . 2
2.1 Account. . . . . . . . . . . . . . . . . 2
2.2 Affiliated Employer. . . . . . . . . . . 2
2.3 Beneficiary. . . . . . . . . . . . . . . 2
2.4 Board of Directors . . . . . . . . . . . 2
2.5 Code . . . . . . . . . . . . . . . . . . 2
2.6 Common Stock . . . . . . . . . . . . . . 2
2.7 Company. . . . . . . . . . . . . . . . . 2
2.8 Deferred Compensation Plan . . . . . . . 2
2.9 Effective Date . . . . . . . . . . . . . 3
2.10 Employee . . . . . . . . . . . . . . . . 3
2.11 ESOP . . . . . . . . . . . . . . . . . . 3
2.12 Non Pension Benefit. . . . . . . . . . . 3
2.13 Participant. . . . . . . . . . . . . . . 3
2.14 Pension Benefit. . . . . . . . . . . . . 3
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2.15 Pension Plan . . . . . . . . . . . . . . 3
2.16 Plan . . . . . . . . . . . . . . . . . . 3
2.17 Plan Year. . . . . . . . . . . . . . . . 3
2.18 Savings Plan. . . . . . . . . . . . . . 3
ARTICLE III - ADMINISTRATION OF PLAN . . . . . . . . . 4
3.1 Administrator. . . . . . . . . . . . . . 4
3.2 Powers . . . . . . . . . . . . . . . . . 4
3.3 Duties of the Board of
Directors. . . . . . . . . . . . . . . 5
3.4 Indemnification. . . . . . . . . . . . . 6
ARTICLE IV - ELIGIBILITY . . . . . . . . . . . . . . . 7
4.1 Eligibility Requirements . . . . . . . . 7
4.2 Determination of Eligibility . . . . . . 7
ARTICLE V - BENEFITS . . . . . . . . . . . . . . . . . 8
5.1 Pension Benefit. . . . . . . . . . . . . 8
5.2 Non Pension Benefit. . . . . . . . . . . 10
5.3 Distribution of Benefits . . . . . . . . 13
5.4 Funding of Benefits. . . . . . . . . . . 16
5.5 Withholding. . . . . . . . . . . . . . . 16
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ARTICLE VI - MISCELLANEOUS . . . . . . . . . . . . . . 17
6.1 Assignment . . . . . . . . . . . . . . . 17
6.2 Amendment and Termination. . . . . . . . 17
6.3 No Guarantee of Employment . . . . . . . 17
6.4 Construction . . . . . . . . . . . . . . 18
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<PAGE>
SUPPLEMENTAL BENEFIT PLAN
FOR
GEORGIA POWER COMPANY
ARTICLE I - PURPOSE AND ADOPTION OF PLAN
1.1 Adoption: Georgia Power Company hereby adopt and
establish the Supplemental Benefit Plan for Georgia Power
Company. The Plan shall be an unfunded deferred compensation
arrangement whose benefits shall be paid solely from the general
assets of the Company.
1.2 Purpose: The Plan is designed to provide certain
retirement and other deferred compensation benefits primarily for
a select group of management or highly compensated employees
which are not otherwise payable or cannot otherwise be provided
by the Company under the Pension Plan for Employees of Georgia
Power Company, the Employee Savings Plan for The Southern Company
System, and the Employee Stock Ownership Plan of The Southern
Company System, as a result of the limitations set forth under
Sections 401(a)(17), 402(g), and 415 of the Internal Revenue Code
of 1986, as amended from time to time.
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<PAGE>
ARTICLE II DEFINITIONS
2.1 "Account" shall mean the account or accounts
established and maintained by a Company to reflect the interest
of a Participant in the Plan resulting from a Participant's Non
Pension Benefit calculated in accordance with Section 5.2.
2.2 "Affiliated Employer" shall mean any corporation which
is a member of the controlled group of corporations of which The
Southern Company is the common parent corporation.
2.3 "Beneficiary" shall mean any person, estate, trust, or
organization entitled to receive any payment under the Plan upon
the death of a Participant.
2.4 "Board of Directors" shall mean the Board of Directors
of the Company.
2.5 "Code" shall mean the Internal Revenue Code of 1986,
as amended from time to time.
2.6 "Common Stock" shall mean common stock of The Southern
Company.
2.7 "Company" shall mean Georgia Power Company.
2.8 "Deferred Compensation Plan" shall mean the Deferred
Compensation Plan for The Southern Electric System, as amended
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<PAGE>
from time to time, following its adoption by the Board of
Directors.
2.9 "Effective Date" shall mean January 1, 1983. The
Effective Date of this amendment and restatement shall mean
January 1, 1988.
2.10 "Employee" shall mean any person who is currently
employed by the Company.
2.11 "ESOP" shall mean the Employee Stock Ownership Plan of
The Southern Company System, as amended from time to time.
2.12 "Non Pension Benefit" shall mean the benefit described
in Section 5.2.
2.13 "Participant" shall mean an Employee or former
Employee of a Company who is eligible to receive benefits
provided by the Plan.
2.14 "Pension Benefit" shall mean the benefit described in
Section 5.1.
2.15 "Pension Plan" shall mean the defined benefit pension
plan maintained by the Company or an Affiliated Employer, as
amended from time to time.
2.16 "Plan" shall mean the Supplemental Benefit Plan for
Georgia Power Company, as amended from time to time.
2.17 "Plan Year" shall mean the calendar year.
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<PAGE>
2.18 "Savings Plan" shall mean the Employee Savings Plan
for The Southern Company System, as amended from time to time.
Where the context requires, the definitions of all terms set
forth in the Pension Plan, the ESOP, the Savings Plan and the
Deferred Compensation Plan shall apply with equal force and
effect for purposes of interpretation and administration of the
Plan, unless said terms are otherwise specifically defined in the
Plan. The masculine pronoun shall be construed to include the
feminine pronoun and the singular shall include the plural, where
the context so requires.
ARTICLE III ADMINISTRATION OF PLAN
3.1 Administrator. The general administration of the Plan
shall be placed in the Board of Directors.
3.2 Powers. The Board of Directors shall administer the
Plan in accordance with its terms and shall have all powers
necessary to carry out the provisions of the Plan more
particularly set forth herein. It shall interpret the Plan and
shall determine all questions arising in the administration,
interpretation and application of the Plan. Any such
determination by it shall be conclusive and binding on all
persons. It may adopt such regulations as it deems desirable for
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<PAGE>
the conduct of its affairs. It may appoint such accountants,
counsel, actuaries, specialists and other persons as it deems
necessary or desirable in connection with the administration of
this Plan, and shall be the agent for the service of process.
3.3 Duties of the Board of Directors.
(a) The Board of Directors is responsible for the
daily administration of the Plan. It may appoint other persons
or entities to perform any of its fiduciary functions. The Board
of Directors and any such appointee may employ advisors and other
persons necessary or convenient to help it carry out its duties,
including its fiduciary duties. The Board of Directors shall
have the right to remove any such appointee from his position.
Any person, group of persons or entity may serve in more than one
fiduciary capacity.
(b) The Board of Directors shall maintain accurate
and detailed records and accounts of Participants and of their
rights under the Plan and of all receipts, disbursements,
transfers and other transactions concerning the Plan. Such
accounts, books and records relating thereto shall be open at all
reasonable times to inspection and audit by persons designated by
the Board of Directors.
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<PAGE>
(c) The Board of Directors shall take all steps
necessary to ensure that the Plan complies with the law at all
times. These steps shall include such items as the preparation
and filing of all documents and forms required by any
governmental agency; maintaining of adequate Participants'
records; recording and transmission of all notices required to be
given to Participants and their Beneficiaries; the receipt and
dissemination, if required, of all reports and information
received from an Employing Company; securing of such fidelity
bonds as may be required by law; and doing such other acts
necessary for the proper administration of the Plan. The Board
of Directors shall keep a record of all of its proceedings and
acts, and shall keep all such books of account, records and other
data as may be necessary for proper administration of the Plan.
3.4 Indemnification. The Company shall indemnify the
Board of Directors against any and all claims, losses, damages,
expenses and liability arising from an action or failure to act,
except when the same is finally judicially determined to be due
to gross negligence or willful misconduct. The Company may
purchase at their own expense sufficient liability insurance for
the Board of Directors to cover any and all claims, losses,
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<PAGE>
damages and expenses arising from any action or failure to act in
connection with the execution of the duties as Board of
Directors.
ARTICLE IV ELIGIBILITY
4.1 Eligibility Requirements. All Employees (a) whose
benefits under the Pension Plan of the Company are limited by the
limitations set forth in Sections 401(a)(17) and 415 of the Code,
(b) for whom contributions by the Company to the Savings Plan are
limited by the limitations set forth in Sections 401(a)(17),
401(k), 401(m), 402(g) and 415 of the Code, or (c) for whom
contributions by the Company to the ESOP are limited by the
limitations set forth in Sections 401(a)(17) and 415 of the Code,
shall be eligible to receive benefits under the Plan.
4.2 Determination of Eligibility. The Board of Directors
shall determine which Employees are eligible to participate.
Upon becoming a Participant, an Employee shall be deemed to have
assented to the Plan and to any amendments hereafter adopted.
The Board of Directors shall be authorized to rescind the
eligibility of any Participant if necessary to insure that the
Plan is maintained primarily for the purpose of providing
deferred compensation to a select group of management or highly
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<PAGE>
compensated employees under the Employee Retirement Income
Security Act of 1974, as amended.
ARTICLE V BENEFITS
5.1 Pension Benefit.
(a) If a Participant has Accredited Service with
respect to the Pension Plan of the Company, but not with respect
to the Pension Plan of any Affiliated Employer, he shall be
entitled to a Pension Benefit equal to that portion of his
Retirement Income under the Pension Plan of the Company which is
not payable under such Pension Plan as a result of the
limitations imposed by Sections 401(a)(17), 415(b), and 415(e) of
the Code.
(b) If a Participant has Accredited Service with
respect to the Pension Plan of the Company and with respect to
the Pension Plan of one or more Affiliated Employers, his Pension
Benefit payable by the Company, and any Affiliated Employer(s)
shall be equal to that portion of his combined Retirement Income
under each Pension Plan which is not payable under any of such
Pension Plans as a result of the limitations described by
Sections 401(a)(17), 415(b), and 415(e) of the Code, multiplied
by a fraction, the sum of the individual fractions not to exceed
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<PAGE>
one (1), the numerator of which is his years of Accredited
Service under the Pension Plan of the Company or any Affiliated
Employer(s) and the denominator which is his total years of
Accredited Service under the Pension Plans of the Company and any
Affiliated Employer(s).
(c) For purposes of this Section 5.1, the Pension
Benefit of a Participant shall be calculated based on the
Participant's Earnings that are considered under the Pension Plan
of the Company in calculating his Retirement Income, without
regard to the limitation of Section 401(a)(17) of Code, but
excluding any portion of his Compensation he may have elected to
defer under the Deferred Compensation Plan.
(d) To the extent that a Participant's Retirement
Income under a Pension Plan is recalculated as a result of an
amendment to such Pension Plan in order to increase the amount of
his Retirement Income, the Participant's Pension Benefit shall
also be recalculated in order to properly reflect such increase
in determining payments of the Participant's Pension Benefit made
on or after the effective date of such increase.
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<PAGE>
5.2 Non Pension Benefit.
(a) A Participant shall be entitled to a Non Pension
Benefit which is determined under this Section 5.2. An Account
shall be established for the Participant by the Company, as of
his initial Plan Year of participation in the Plan. Each Plan
Year such Account shall be credited with an amount equal to the
amount that the Company is prohibited from contributing (1) to
the Savings Plan on behalf of the Participant as a result of the
limitations imposed by Sections 401(a)(17), 401(k), 401(m),
402(g), 415(c), and 415(e) of the Code and (2) to the ESOP on
behalf of the Participant as a result of the limitations imposed
by Sections 401(a)(17), 415(c), and 415(e) of the Code.
(b) For purposes of this Section 5.2, the Non Pension
Benefit of a Participant shall be calculated based on the
Participant's Compensation that would have been considered in
calculating allocations to his accounts under the Savings Plan
and ESOP, without regard to the limitations of Section 401(a)(17)
or Section 402(g) of the Code, but excluding any portion of his
Compensation he may have elected to defer under the Deferred
Compensation Plan.
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<PAGE>
(c) All amounts so credited to the Account of the
Participant shall be deemed to be invested in the Common Stock at
the same time that such amounts would have been so invested if
they had been contributed by the Company to the Savings Plan or
the ESOP, as the case may be. In addition, such Account shall be
credited with respect to shares of Common Stock allocated to the
Participant's Account as follows:
(1) In the case of cash dividends, such
additional shares as could be purchased with the dividends
which would have been payable if the credited shares had
been outstanding;
(2) In the case of dividends payable in property
other than cash or Common Stock, such additional shares as
could be purchased with the fair market value of the
property which would have been payable if the credited
shares had been outstanding; or
(3) In the case of dividends payable in Common
Stock, such additional shares as would have been payable on
the credited shares if they had been outstanding.
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<PAGE>
(d) As soon as practicable following the first day of
his eligibility to have benefits credited to his Account, a
Participant shall designate in writing on a form to be prescribed
by the Company the method of payment of his Account, which shall
be the payment of a single lump sum or a series of annual
installments not to exceed twenty (20). The method of
distribution initially designated by a Participant shall not be
revoked and shall govern the distribution of each Account
established for the benefit of the Participant by the Company.
Notwithstanding, in the sole discretion of the Board of Directors
upon application by the Participant, the method of distribution
designated by such Participant may be modified not prior to 395
days nor later than 365 days prior to a Participant's date of
separation from service in order to change the form of
distribution of his Account in accordance with the terms of the
Plan. Each Participant, his Beneficiary, and legal
representative shall be bound as to any action taken pursuant to
the method of distribution elected by a Participant and the terms
of the Plan.
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<PAGE>
5.3 Distribution of Benefits.
(a) The Pension Benefit, as determined in accordance
with Section 5.1, shall be payable in monthly increments on the
first day of the month concurrently with and in the same manner
as the Participant's Retirement Income under the Pension Plan.
The Beneficiary of a Participant's Pension Benefit shall be the
same as the beneficiary of the Participant's Retirement Income
under the Pension Plan.
(b) When a Participant terminates his employment with
the Company, said Participant shall be entitled to receive the
market value of any shares of Common Stock (and fractions
thereof) reflected in any Account maintained by the Company for
his benefit under the Plan in a single lump sum distribution or
annual installments not to exceed twenty (20). Such distribution
shall be made not later than sixty (60) days following the close
of the calendar quarter in which his termination of employment
occurs, or as soon as reasonably practicable thereafter. The
transfer by a Participant between companies in the Southern
electric system shall not be deemed to be a termination of
employment with the Company. No portion of a Participant's
Account shall be distributed in Common Stock.
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<PAGE>
(c) In the event a Participant elects to receive the
distribution of his Account in annual installments, the first
payment shall be made not later than sixty (60) days following
the close of the calendar quarter in which his termination of
employment occurs, or as soon as reasonably practicable
thereafter, and shall be an amount equal to the balance in the
Participant's Account divided by the number of annual installment
payments. Each subsequent annual payment shall be an amount
equal to the balance in the Participant's Account divided by the
number of the remaining annual payments and shall be due on the
anniversary of the preceding payment date. No portion of a
Participant's Account shall be distributed in Common Stock.
(d) Upon the death of a Participant, or a former
Participant prior to the payment of all amounts credited to said
Participant's Account, the unpaid balance shall be paid in the
sole discretion of the Board of Directors (1) in a lump sum to
the designated Beneficiary of a Participant or former Participant
within sixty (60) days following the close of the calendar
quarter in which the Board of Directors is provided evidence of
the Participant's death (or as soon as reasonably practicable
thereafter) or (2) in accordance with the distribution method
chosen by such Participant or former Participant. The
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Beneficiary designation may be changed by the Participant or
former Participant at any time without the consent of the prior
Beneficiary. In the event a Beneficiary designation is not on
file or the designated Beneficiary is deceased or cannot be
located, payment will be made to the estate of the Participant or
former Participant. No portion of a Participant's Account shall
be distributed in Common Stock.
(e) Upon the total disability of a Participant or
former Participant, as determined by the Social Security
Administration, the unpaid balance of his Account shall be paid
in the sole discretion of the Board of Directors (1) in a lump
sum to the Participant or former Participant, or his legal
representative within sixty (60) days following the notification
of the Board of Directors of the determination of disability by
the Social Security Administration (or as soon as reasonably
practicable thereafter) or (2) in accordance with the
distribution method elected by such Participant or former
Participant. No portion of a Participant's Account shall be
distributed in Common Stock.
(f) The Board of Directors in its sole discretion
upon application made by the Participant, a designated
Beneficiary, or their legal representative, may determine to
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accelerate payments or, in the event of death or total disability
(as determined by Social Security Administration), to extend or
otherwise make payments in a manner different from the manner in
which such payment would be made under the method of distribution
elected by the Participant in the absence of such determination.
5.4 Funding of Benefits. The Company maintaining an
Account for the benefit of a Participant shall not reserve or
otherwise set aside funds for the payment of its obligations
under the Plan, and such obligations shall be paid solely from
the general assets of the Company. Notwithstanding that a
Participant shall be entitled to receive the balance of his
Account under the Plan, the assets from which such amount shall
be paid at all times remain subject to the claims of the
creditors of the Company.
5.5 Withholding. There shall be deducted from the payment
of any Pension Benefit or Non Pension Benefit due under the Plan
the amount of any tax required by any governmental authority to
be withheld and paid over by the Company to such governmental
authority for the account of the Participant or Beneficiary
entitled to such payment.
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<PAGE>
ARTICLE VI MISCELLANEOUS
6.1 Assignment. Neither the Participant, his Beneficiary,
or his legal representative shall have any rights to sell,
assign, transfer or otherwise convey the right to receive the
payment of any Pension Benefit or Non Pension Benefit due
hereunder, which payment and the right thereto are expressly
declared to be nonassignable and nontransferable. Any attempt to
assign or transfer the right to payment under the Plan shall be
null and void and of no effect.
6.2 Amendment and Termination. The Plan may be amended or
terminated at any time by the Board of Directors, provided that
no amendment or termination shall cause a forfeiture or reduction
in any benefits accrued as of the date of such amendment or
termination.
6.3 No Guarantee of Employment. Participation hereunder
shall not be construed as creating any contract of employment
between the Company and a Participant, nor shall it limit the
right of the Company to suspend, terminate, alter, modify,
whether or not for cause, the employment relationship between the
Company and a Participant.
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<PAGE>
6.4 Construction. This Plan shall be construed in
accordance with and governed by the laws of the State of Georgia,
to the extent such laws are not otherwise superseded by the laws
of the United States.
IN WITNESS WHEREOF, the Plan has been executed by duly
authorized officers of Georgia Power Company, pursuant to
resolutions of the Board of Directors of the Georgia Power
Company, this day of , .
GEORGIA POWER COMPANY
(CORPORATE SEAL)
By:
Attest:
[adamscl] h:\wpdocs\mtd\gpc\sup-ben.pln
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<PAGE>
Exhibit 10(a)75
SUPPLEMENTAL BENEFIT PLAN
FOR
SOUTHERN COMPANY SERVICES, INC.
AND
SOUTHERN ELECTRIC INTERNATIONAL, INC.
<PAGE>
SUPPLEMENTAL BENEFIT PLAN
FOR
SOUTHERN COMPANY SERVICES, INC.
AND
SOUTHERN ELECTRIC INTERNATIONAL, INC.
Page
ARTICLE I - PURPOSE AND ADOPTION OF PLAN . . . . . . . 1
1.1 Adoption . . . . . . . . . . . . . . . . 1
1.2 Purpose. . . . . . . . . . . . . . . . . 1
ARTICLE II - DEFINITIONS . . . . . . . . . . . . . . . 2
2.1 Account. . . . . . . . . . . . . . . . . 2
2.2 Affiliated Employer. . . . . . . . . . . 2
2.3 Beneficiary. . . . . . . . . . . . . . . 2
2.4 Board of Directors . . . . . . . . . . . 2
2.5 Code . . . . . . . . . . . . . . . . . . 2
2.6 Common Stock . . . . . . . . . . . . . . 2
2.7 Company. . . . . . . . . . . . . . . . . 2
2.8 Deferred Compensation Plan . . . . . . . 2
2.9 Effective Date . . . . . . . . . . . . . 3
2.10 Employee . . . . . . . . . . . . . . . . 3
2.11 Employing Company. . . . . . . . . . . . 3
2.12 ESOP . . . . . . . . . . . . . . . . . . 3
2.13 Non Pension Benefit. . . . . . . . . . . 3
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<PAGE>
2.14 Participant. . . . . . . . . . . . . . . 3
2.15 Pension Benefit. . . . . . . . . . . . . 3
2.16 Pension Plan . . . . . . . . . . . . . . 4
2.17 Plan . . . . . . . . . . . . . . . . . . 4
2.18 Plan Year. . . . . . . . . . . . . . . . 4
2.19 Savings Plan. . . . . . . . . . . . . . 4
ARTICLE III - ADMINISTRATION OF PLAN . . . . . . . . . 4
3.1 Administrator. . . . . . . . . . . . . . 4
3.2 Powers . . . . . . . . . . . . . . . . . 5
3.3 Duties of the Board of
Directors. . . . . . . . . . . . . . . 5
3.4 Indemnification. . . . . . . . . . . . . 7
ARTICLE IV - ELIGIBILITY . . . . . . . . . . . . . . . 7
4.1 Eligibility Requirements . . . . . . . . 7
4.2 Determination of Eligibility . . . . . . 8
ARTICLE V - BENEFITS . . . . . . . . . . . . . . . . . 8
5.1 Pension Benefit. . . . . . . . . . . . . 8
5.2 Non Pension Benefit. . . . . . . . . . . 10
5.3 Distribution of Benefits . . . . . . . . 13
5.4 Funding of Benefits. . . . . . . . . . . 16
5.5 Withholding. . . . . . . . . . . . . . . 16
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<PAGE>
ARTICLE VI - MISCELLANEOUS . . . . . . . . . . . . . . 17
6.1 Assignment . . . . . . . . . . . . . . . 17
6.2 Amendment and Termination. . . . . . . . 17
6.3 No Guarantee of Employment . . . . . . . 18
6.4 Construction . . . . . . . . . . . . . . 18
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<PAGE>
SUPPLEMENTAL BENEFIT PLAN
FOR
SOUTHERN ELECTRIC SERVICES, INC.
AND
SOUTHERN ELECTRIC INTERNATIONAL, INC.
ARTICLE I - PURPOSE AND ADOPTION OF PLAN
1.1 Adoption: Southern Company Services, Inc. and
Southern Electric International, Inc. hereby adopt and establish
the Supplemental Benefit Plan for Southern Company Services, Inc.
and Southern Electric International, Inc. The Plan shall be an
unfunded deferred compensation arrangement whose benefits shall
be paid solely from the general assets of the Employing
Companies.
1.2 Purpose: The Plan is designed to provide certain
retirement and other deferred compensation benefits primarily for
a select group of management or highly compensated employees
which are not otherwise payable or cannot otherwise be provided
by the Employing Companies under the Pension Plan for Employees
of Southern Company Services, Inc., the Employee Savings Plan for
The Southern Company System, and the Employee Stock Ownership
Plan of The Southern Company System, as a result of the
limitations set forth under Sections 401(a)(17), 402(g), and 415
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<PAGE>
of the Internal Revenue Code of 1986, as amended from time to
time.
ARTICLE II DEFINITIONS
2.1 "Account" shall mean the account or accounts
established and maintained by an Employing Company to reflect the
interest of a Participant in the Plan resulting from a
Participant's Non Pension Benefit calculated in accordance with
Section 5.2.
2.2 "Affiliated Employer" shall mean any corporation which
is a member of the controlled group of corporations of which The
Southern Company is the common parent corporation.
2.3 "Beneficiary" shall mean any person, estate, trust, or
organization entitled to receive any payment under the Plan upon
the death of a Participant.
2.4 "Board of Directors" shall mean the Board of Directors
of the Company.
2.5 "Code" shall mean the Internal Revenue Code of 1986,
as amended from time to time.
2.6 "Common Stock" shall mean common stock of The Southern
Company.
2.7 "Company" shall mean Southern Company Services, Inc.
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<PAGE>
2.8 "Deferred Compensation Plan" shall mean the Deferred
Compensation Plan for The Southern Electric System, as amended
from time to time, following its adoption by the Boards of
Directors of Employing Companies.
2.9 "Effective Date" shall mean January 1, 1983. The
Effective Date of this amendment and restatement shall mean
January 1, 1988.
2.10 "Employee" shall mean any person who is currently
employed by an Employing Company.
2.11 "Employing Company" shall mean the Company, Southern
Electric International, Inc., and any affiliate or subsidiary of
The Southern Company which the Board of Directors may from time
to time determine to bring under the Plan and which shall adopt
the Plan, and any successor of any of them. The Employing
Companies as of January 1, 1988 are Southern Company Services,
Inc. and Southern Electric International, Inc.
2.12 "ESOP" shall mean the Employee Stock Ownership Plan of
The Southern Company System, as amended from time to time.
2.13 "Non Pension Benefit" shall mean the benefit described
in Section 5.2.
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<PAGE>
2.14 "Participant" shall mean an Employee or former
Employee of an Employing Company who is eligible to receive
benefits provided by the Plan.
2.15 "Pension Benefit" shall mean the benefit described in
Section 5.1.
2.16 "Pension Plan" shall mean the defined benefit pension
plan maintained by an Employing Company or Affiliated Employer,
as amended from time to time.
2.17 "Plan" shall mean the Supplemental Benefit Plan for
Southern Company Services, Inc. and Southern Electric
International, Inc., as amended from time to time.
2.18 "Plan Year" shall mean the calendar year.
2.19 "Savings Plan" shall mean the Employee Savings Plan
for The Southern Company System, as amended from time to time.
Where the context requires, the definitions of all terms set
forth in the Pension Plan, the ESOP, the Savings Plan and the
Deferred Compensation Plan shall apply with equal force and
effect for purposes of interpretation and administration of the
Plan, unless said terms are otherwise specifically defined in the
Plan. The masculine pronoun shall be construed to include the
feminine pronoun and the singular shall include the plural, where
the context so requires.
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<PAGE>
ARTICLE III ADMINISTRATION OF PLAN
3.1 Administrator. The general administration of the Plan
shall be placed in the Board of Directors.
3.2 Powers. The Board of Directors shall administer the
Plan in accordance with its terms and shall have all powers
necessary to carry out the provisions of the Plan more
particularly set forth herein. It shall interpret the Plan and
shall determine all questions arising in the administration,
interpretation and application of the Plan. Any such
determination by it shall be conclusive and binding on all
persons. It may adopt such regulations as it deems desirable for
the conduct of its affairs. It may appoint such accountants,
counsel, actuaries, specialists and other persons as it deems
necessary or desirable in connection with the administration of
this Plan, and shall be the agent for the service of process.
3.3 Duties of the Board of Directors.
(a) The Board of Directors is responsible for the
daily administration of the Plan. It may appoint other persons
or entities to perform any of its fiduciary functions. The Board
of Directors and any such appointee may employ advisors and other
persons necessary or convenient to help it carry out its duties,
including its fiduciary duties. The Board of Directors shall
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<PAGE>
have the right to remove any such appointee from his position.
Any person, group of persons or entity may serve in more than one
fiduciary capacity.
(b) The Board of Directors shall maintain accurate
and detailed records and accounts of Participants and of their
rights under the Plan and of all receipts, disbursements,
transfers and other transactions concerning the Plan. Such
accounts, books and records relating thereto shall be open at all
reasonable times to inspection and audit by persons designated by
the Board of Directors.
(c) The Board of Directors shall take all steps
necessary to ensure that the Plan complies with the law at all
times. These steps shall include such items as the preparation
and filing of all documents and forms required by any
governmental agency; maintaining of adequate Participants'
records; recording and transmission of all notices required to be
given to Participants and their Beneficiaries; the receipt and
dissemination, if required, of all reports and information
received from an Employing Company; securing of such fidelity
bonds as may be required by law; and doing such other acts
necessary for the proper administration of the Plan. The Board
of Directors shall keep a record of all of its proceedings and
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<PAGE>
acts, and shall keep all such books of account, records and other
data as may be necessary for proper administration of the Plan.
3.4 Indemnification. The Employing Companies shall
indemnify the Board of Directors against any and all claims,
losses, damages, expenses and liability arising from an action or
failure to act, except when the same is finally judicially
determined to be due to gross negligence or willful misconduct.
The Employing Companies may purchase at their own expense
sufficient liability insurance for the Board of Directors to
cover any and all claims, losses, damages and expenses arising
from any action or failure to act in connection with the
execution of the duties as Board of Directors.
ARTICLE IV ELIGIBILITY
4.1 Eligibility Requirements. All Employees (a) whose
benefits under the Pension Plan of their Employing Company are
limited by the limitations set forth in Sections 401(a)(17) and
415 of the Code, (b) for whom contributions by their Employing
Company to the Savings Plan are limited by the limitations set
forth in Sections 401(a)(17), 401(k), 401(m), 402(g) and 415 of
the Code, or (c) for whom contributions by their Employing
Company to the ESOP are limited by the limitations set forth in
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<PAGE>
Sections 401(a)(17) and 415 of the Code, shall be eligible to
receive benefits under the Plan.
4.2 Determination of Eligibility. The Board of Directors
shall determine which Employees are eligible to participate.
Upon becoming a Participant, an Employee shall be deemed to have
assented to the Plan and to any amendments hereafter adopted.
The Board of Directors shall be authorized to rescind the
eligibility of any Participant if necessary to insure that the
Plan is maintained primarily for the purpose of providing
deferred compensation to a select group of management or highly
compensated employees under the Employee Retirement Income
Security Act of 1974, as amended.
ARTICLE V BENEFITS
5.1 Pension Benefit.
(a) If a Participant has Accredited Service with
respect to the Pension Plan of his Employing Company, but not
with respect to the Pension Plan of any other Employing Company
or Affiliated Employer, he shall be entitled to a Pension Benefit
equal to that portion of his Retirement Income under the Pension
Plan of his Employing Company which is not payable under such
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<PAGE>
Pension Plan as a result of the limitations imposed by Sections
401(a)(17), 415(b), and 415(e) of the Code.
(b) If a Participant has Accredited Service with
respect to the Pension Plan of his Employing Company and with
respect to the Pension Plan of any other Employing Company or one
or more Affiliated Employers, his Pension Benefit payable by his
Employing Company, his former Employing Company, and/or
Affiliated Employer(s) shall be equal to that portion of his
combined Retirement Income under each Pension Plan which is not
payable under any of such Pension Plans as a result of the
limitations described by Sections 401(a)(17), 415(b), and 415(e)
of the Code, multiplied by a fraction, the sum of the individual
fractions not to exceed one (1), the numerator of which is his
years of Accredited Service under the Pension Plan of each
Employing Company or Affiliated Employer and the denominator
which is his total years of Accredited Service under the Pension
Plans of all of his Employing Companies and Affiliated Employers.
(c) For purposes of this Section 5.1, the Pension
Benefit of a Participant shall be calculated based on the
Participant's Earnings that are considered under the Pension Plan
of his Employing Company in calculating his Retirement Income,
without regard to the limitation of Section 401(a)(17) of Code,
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<PAGE>
but excluding any portion of his Compensation he may have elected
to defer under the Deferred Compensation Plan.
(d) To the extent that a Participant's Retirement
Income under a Pension Plan is recalculated as a result of an
amendment to such Pension Plan in order to increase the amount of
his Retirement Income, the Participant's Pension Benefit shall
also be recalculated in order to properly reflect such increase
in determining payments of the Participant's Pension Benefit made
on or after the effective date of such increase.
5.2 Non Pension Benefit.
(a) A Participant shall be entitled to a Non Pension
Benefit which is determined under this Section 5.2. An Account
shall be established for the Participant by his Employing
Company, as of his initial Plan Year of participation in the
Plan, and by each other Employing Company by which the
Participant is subsequently employed. Each Plan Year such
Account shall be credited with an amount equal to the amount that
his Employing Company is prohibited from contributing (1) to the
Savings Plan on behalf of the Participant as a result of the
limitations imposed by Sections 401(a)(17), 401(k), 401(m),
402(g), 415(c), and 415(e) of the Code and (2) to the ESOP on
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<PAGE>
behalf of the Participant as a result of the limitations imposed
by Sections 401(a)(17), 415(c), and 415(e) of the Code.
(b) For purposes of this Section 5.2, the Non Pension
Benefit of a Participant shall be calculated based on the
Participant's Compensation that would have been considered in
calculating allocations to his accounts under the Savings Plan
and ESOP, without regard to the limitations of Section 401(a)(17)
or Section 402(g) of the Code, but excluding any portion of his
Compensation he may have elected to defer under the Deferred
Compensation Plan.
(c) All amounts so credited to the Account of the
Participant shall be deemed to be invested in the Common Stock at
the same time that such amounts would have been so invested if
they had been contributed by his Employing Company to the Savings
Plan or the ESOP, as the case may be. In addition, such Account
shall be credited with respect to shares of Common Stock
allocated to the Participant's Account as follows:
(1) In the case of cash dividends, such
additional shares as could be purchased with the dividends
which would have been payable if the credited shares had
been outstanding;
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<PAGE>
(2) In the case of dividends payable in property
other than cash or Common Stock, such additional shares as
could be purchased with the fair market value of the
property which would have been payable if the credited
shares had been outstanding; or
(3) In the case of dividends payable in Common
Stock, such additional shares as would have been payable on
the credited shares if they had been outstanding.
(d) As soon as practicable following the first day of
his eligibility to have benefits credited to his Account, a
Participant shall designate in writing on a form to be prescribed
by the Company the method of payment of his Account, which shall
be the payment of a single lump sum or a series of annual
installments not to exceed twenty (20). The method of
distribution initially designated by a Participant shall not be
revoked and shall govern the distribution of each Account
established for the benefit of the Participant by his Employing
Companies. Notwithstanding, in the sole discretion of the Board
of Directors upon application by the Participant, the method of
distribution designated by such Participant may be modified not
prior to 395 days nor later than 365 days prior to a
Participant's date of separation from service in order to change
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<PAGE>
the form of distribution of his Account in accordance with the
terms of the Plan. Each Participant, his Beneficiary, and legal
representative shall be bound as to any action taken pursuant to
the method of distribution elected by a Participant and the terms
of the Plan.
5.3 Distribution of Benefits.
(a) The Pension Benefit, as determined in accordance
with Section 5.1, shall be payable in monthly increments on the
first day of the month concurrently with and in the same manner
as the Participant's Retirement Income under the Pension Plan.
The Beneficiary of a Participant's Pension Benefit shall be the
same as the beneficiary of the Participant's Retirement Income
under the Pension Plan.
(b) When a Participant terminates his employment with
an Employing Company, said Participant shall be entitled to
receive the market value of any shares of Common Stock (and
fractions thereof) reflected in any Account maintained by an
Employing Company for his benefit under the Plan in a single lump
sum distribution or annual installments not to exceed twenty
(20). Such distribution shall be made not later than sixty (60)
days following the close of the calendar quarter in which his
termination of employment occurs, or as soon as reasonably
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<PAGE>
practicable thereafter. The transfer by a Participant between
companies in the Southern electric system shall not be deemed to
be a termination of employment with an Employing Company. No
portion of a Participant's Account shall be distributed in Common
Stock.
(c) In the event a Participant elects to receive the
distribution of his Account in annual installments, the first
payment shall be made not later than sixty (60) days following
the close of the calendar quarter in which his termination of
employment occurs, or as soon as reasonably practicable
thereafter, and shall be an amount equal to the balance in the
Participant's Account divided by the number of annual installment
payments. Each subsequent annual payment shall be an amount
equal to the balance in the Participant's Account divided by the
number of the remaining annual payments and shall be due on the
anniversary of the preceding payment date. No portion of a
Participant's Account shall be distributed in Common Stock.
(d) Upon the death of a Participant, or a former
Participant prior to the payment of all amounts credited to said
Participant's Account, the unpaid balance shall be paid in the
sole discretion of the Board of Directors (1) in a lump sum to
the designated Beneficiary of a Participant or former Participant
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<PAGE>
within sixty (60) days following the close of the calendar
quarter in which the Board of Directors is provided evidence of
the Participant's death (or as soon as reasonably practicable
thereafter) or (2) in accordance with the distribution method
chosen by such Participant or former Participant. The
Beneficiary designation may be changed by the Participant or
former Participant at any time without the consent of the prior
Beneficiary. In the event a Beneficiary designation is not on
file or the designated Beneficiary is deceased or cannot be
located, payment will be made to the estate of the Participant or
former Participant. No portion of a Participant's Account shall
be distributed in Common Stock.
(e) Upon the total disability of a Participant or
former Participant, as determined by the Social Security
Administration, the unpaid balance of his Account shall be paid
in the sole discretion of the Board of Directors (1) in a lump
sum to the Participant or former Participant, or his legal
representative within sixty (60) days following the notification
of the Board of Directors of the determination of disability by
the Social Security Administration (or as soon as reasonably
practicable thereafter) or (2) in accordance with the
distribution method elected by such Participant or former
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<PAGE>
Participant. No portion of a Participant's Account shall be
distributed in Common Stock.
(f) The Board of Directors in its sole discretion
upon application made by the Participant, a designated
Beneficiary, or their legal representative, may determine to
accelerate payments or, in the event of death or total disability
(as determined by Social Security Administration), to extend or
otherwise make payments in a manner different from the manner in
which such payment would be made under the method of distribution
elected by the Participant in the absence of such determination.
5.4 Funding of Benefits. Any Employing Company
maintaining an Account for the benefit of a Participant shall not
reserve or otherwise set aside funds for the payment of its
obligations under the Plan, and such obligations shall be paid
solely from the general assets of the Employing Companies.
Notwithstanding that a Participant shall be entitled to receive
the balance of his Account under the Plan, the assets from which
such amount shall be paid at all times remain subject to the
claims of the creditors of the Participant's Employing Companies.
5.5 Withholding. There shall be deducted from the payment
of any Pension Benefit or Non Pension Benefit due under the Plan
the amount of any tax required by any governmental authority to
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<PAGE>
be withheld and paid over by an Employing Company to such
governmental authority for the account of the Participant or
Beneficiary entitled to such payment.
ARTICLE VI MISCELLANEOUS
6.1 Assignment. Neither the Participant, his Beneficiary,
or his legal representative shall have any rights to sell,
assign, transfer or otherwise convey the right to receive the
payment of any Pension Benefit or Non Pension Benefit due
hereunder, which payment and the right thereto are expressly
declared to be nonassignable and nontransferable. Any attempt to
assign or transfer the right to payment under the Plan shall be
null and void and of no effect.
6.2 Amendment and Termination. The Plan may be amended or
terminated at any time by the Board of Directors, provided that
no amendment or termination shall cause a forfeiture or reduction
in any benefits accrued as of the date of such amendment or
termination.
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<PAGE>
6.3 No Guarantee of Employment. Participation hereunder
shall not be construed as creating any contract of employment
between any Employing Company and a Participant, nor shall it
limit the right of an Employing Company to suspend, terminate,
alter, modify, whether or not for cause, the employment
relationship between such Employing Company and a Participant.
6.4 Construction. This Plan shall be construed in
accordance with and governed by the laws of the State of Georgia,
to the extent such laws are not otherwise superseded by the laws
of the United States.
IN WITNESS WHEREOF, the Plan has been executed by duly
authorized officers of Southern Company Services, Inc., pursuant
to resolutions of the Board of Directors of the Employing
Companies, this day of , .
SOUTHERN COMPANY SERVICES, INC.
(CORPORATE SEAL)
By:
Thomas A. Nunnelly
Executive Vice President
Attest:
Tommy Chisholm
Secretary
[adamscl] h:\wpdocs\mtd\southern\scssupbe.ft
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<PAGE>
Exhibit 10(a)76
DEFERRED COMPENSATION PLAN
FOR
DIRECTORS OF THE SOUTHERN COMPANY
Amended and Restated Effective October 20, 1986
Article I
Definitions
1.1 "Account" shall mean the Deferred Compensation Account
established for each Director electing to participate in the
Plan pursuant to Article VI.
1.2 "Board of Directors" or "Board" shall mean the Board of
Directors of The Southern Company.
1.3 "Common Stock" shall mean the common stock of The Southern
Company.
1.4 "Company" shall mean The Southern Company.
1.5 "Compensation" shall mean the compensation payable to the
Directors of the Company, including retainer fees and
meeting fees, as determined from time to time by the Board
of Directors.
1.6 "Deferral Election" shall mean the written election by a
Director to defer payment of all or a portion of his
Compensation under the Plan pursuant to Article VI.
1.7 "Director" shall mean a member of the Board of Directors and
shall include an Advisory Director.
1.8 "Investment Election" shall mean the written election by a
Director to have his deferred Compensation invested pursuant
to Section 7.2 or Section 7.3.
1.9 "Market Value" shall mean the average of the high and low
prices of the Common Stock, as published in the Wall Street
Journal in its report of New York Stock Exchange composite
transactions, on the date such Market Value is to be
determined, as specified herein (or the average of the high
and low sale prices on the trading day immediately preceding
such date if the Common Stock is not traded on the New York
Stock Exchange on such date).
1.10 "Plan" shall mean the Deferred Compensation Plan for
Directors of The Southern Company.
1.11 "Plan Period" shall mean the period designated in Article V.
<PAGE>
Article II
Purpose
2.1 the Plan provides a method of deferring payment to a
Director of his Compensation until a date following the
termination of his membership on the Board of Directors.
Article III
Eligibility
3.1 An individual who serves as a Director and is not otherwise
actively employed by the Company or any of its subsidiaries
or affiliates shall be eligible to participate in the Plan.
Article IV
Administration
4.1 The Plan shall be administered by the Compensation Committee
of the Board of Directors, as appointed from time to time.
The Compensation Committee shall have the power to interpret
the Plan and, subject to its provisions, to make all
determinations necessary or desirable for the Plan's
administration.
Article V
Plan Periods
5.1 The first Plan Period shall commence February 1, 1981. Said
first Plan Period shall be an eleven-month period and all
subsequent Plan Periods shall be on a calendar year basis,
except that the initial Plan Period applicable to any person
elected to fill a vacancy on the Board of Directors who was
not a Director on the preceding December 31 shall begin on
the first day of such Director's membership on the Board of
Directors.
Article VI
Participation
6.1 Prior to the beginning of any Plan Period, a Director may
elect to participate in the Plan by directing that payment
of all or any part of the Compensation which would otherwise
be paid to the Director in the next succeeding Plan Period
be deferred until the Director terminates his membership on
the Board of Directors and elects to commence distribution
of his Deferred Compensation Account pursuant to the terms
of the Plan.
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<PAGE>
6.2 The Deferral Election shall be in writing on a form
prescribed by the Compensation Committee and shall state
(a) that the Director wishes to make an election to defer
payment of his Compensation, (b) the percentage/dollar
amount of Compensation to be deferred, (c) the method of
payment, which shall be the payment of a lump sum or a
series of annual payments not to exceed ten (10), and
(d) the time for commencement of distribution of his Account
balance, which shall be not later than the first day of the
month coinciding with or next following the second
anniversary of the termination of his membership on the
Board of Directors. Each Director making a Deferral
Election in accordance with the terms of the Plan, and his
successors, heirs and assigns shall be bound as to any
action taken pursuant to the terms thereof and to the terms
of the Plan.
6.3 The Deferral Election shall be made by written notice
delivered to the Secretary of the Company prior to the first
day of the next succeeding Plan Period and shall be
effective on the first day of such succeeding Plan Period.
The Deferral Election made in accordance with this Article
shall be irrevocable. Such Deferral Election shall continue
from Plan Period to Plan Period unless the Director
terminates participation or changes the Deferral Election
regarding future payments by submitting a written request to
the Secretary of the Company on a form prescribed by the
Compensation Committee. Any such termination or change
shall become effective as of the first day of the Plan
Period next following the Plan Period in which such request
is given. A termination of participation in the Plan or
change in Deferral Election regarding future payments shall
not affect amounts previously deferred. The initial
Deferral Election made after the effective date of this
Amendment and Restatement with respect to (a) the method of
payment, whether it be lump sum or installments, including
the number of installments selected, and (b) the time for
commencement of distribution of a Participant's Account may
not be revoked and shall govern the distribution of a
Participant's Account, except as provided in Section 6.5.
6.4 A Director who has filed a termination of Deferral Election
may thereafter file a new Deferral Election to participate
for Plan Periods subsequent to the Plan Period of the filing
of such Deferral Election. The new Deferral Election shall
not affect amounts previously deferred.
6.5 A Director may amend a prior Deferral Election on a form
prescribed by the Compensation Committee not prior to the
sixtieth (60th) day not later than the thirtieth (30th) day
prior to his termination on the Board of Directors in order
to change (a) the form, and/or (b) the time for commencement
-3-
<PAGE>
of his Deferred Compensation Account in accordance with the
terms of the Plan.
Article VII
Deferred Compensation Accounts
7.1 An Account shall be established on the Company books for
each Director electing to defer all or a portion of his
Compensation, which shall be credited with (a) any
Compensation deferred in accordance with Article VI and
(b) pursuant to each Director's Investment Election, the
amounts computed in accordance with Section 7.2 and/or the
number of shares computed in accordance with Section 7.3.
7.2 The Deferred Compensation Account of each Director electing
to invest his deferred Compensation for a Plan Period
pursuant to this Section 7.2 shall be credited with an
amount computed by the Company by treating the amount
deferred as a sum certain to which the Company will add in
lieu of interest an amount equal to the prime rate of
interest set by the First National Bank of Atlanta.
Interest shall be computed as if credited from the date such
Compensation would otherwise have been paid and shall be
compounded quarterly at the end of each calendar quarter.
The prime rate in effect on the first day of each calendar
quarter shall be deemed the prime rate in effect for each
calendar quarter. Interest will be treated as if accrued
and will be compounded on any balance until such amount is
fully distributed.
7.3 The Deferred Compensation Account of each Director electing
to invest his deferred Compensation for a Plan Period
pursuant to this Section 7.3 shall be credited with the
number of shares (including fractional shares) of Common
Stock which could have been purchased on the date such
deferred Compensation otherwise would have been paid based
upon the Common Stock's Market Value. As of each date of
payment of dividends on the Common Stock, there shall be
credited with respect to shares of Common Stock in the
Director's Deferred Compensation Account such additional
shares (including fractional shares) of Common Stock as
follows:
(a) In the case of cash dividends, such additional
shares as could be purchased at the Market Value
as of the dividend payment date with the dividends
which would have been payable if the credited
shares had been outstanding;
(b) In the case of dividends payable in property other
than cash or Common Stock, such additional shares
-4-
<PAGE>
as could be purchased at the Market Value as of
the payment date with the fair market value of the
property which would have been payable if the
credited shares had been outstanding; or
(c) In the case of dividends payable in Common Stock,
such additional shares as would have been payable
on the credited shares if they had been
outstanding.
7.4 The Investment Election by a Director with respect to his
Deferred Compensation Account shall be made in writing on a
form prescribed by the Compensation Committee and delivered
to the Secretary of the Company prior to the first day of
the next succeeding Plan Period and shall be effective on
the first day of such succeeding Plan Period. The
Investment Election made in accordance with this Article VII
shall be irrevocable. Such Investment Election shall
continue from Plan Period to Plan Period unless the Director
changes the Investment Election regarding future deferred
Compensation by submitting a written request to the
Secretary of the Company on a form prescribed by the
Compensation Committee. Any such change shall become
effective as of the first day of the Plan Period next
following the Plan Period in which such request is given.
7.5 At the end of each Plan Period, a report shall be issued to
each Director who has a deferred Compensation Account which
sets forth the amount and Market Value of any shares of
Common Stock (and fractions thereof) reflected in such
Account.
Article VIII
Distribution of Accounts
8.1 When a Director terminates his membership on the Board of
Directors, said Director shall be entitled to receive the
entire amount and the Market Value of any shares of Common
Stock (and fractions thereof) reflected in his Deferred
Compensation Account payable in cash in accordance with his
Deferral Election. No portion of a Director's Deferred
Compensation Account shall be distributed in Common Stock.
In the event a Director shall have elected to receive the
balance of his Deferred Compensation Account in a lump sum,
distribution shall be made on the first day of the month
selected by the Director in accordance with the terms of the
Plan, or as soon as reasonably possible thereafter. In the
event the Director shall have elected to receive annual
installments, the first payment shall be on the first day of
the month selected by a Director, or as soon as reasonably
possible thereafter, and shall be paid an amount equal to
-5-
<PAGE>
the balance in the Director's Account on such date divided
by the number of annual installment payments. Each
subsequent annual payment shall be an amount equal to the
balance in the Director's Account on the payment date
divided by the number of remaining annual payments and shall
be paid on the anniversary of the preceding payment date.
The Market Value of any shares of Common Stock credited to a
Director's Deferred Compensation Account shall be determined
as of the twenty-fifth (25th) day of the month immediately
preceding the date of any lump sum or installment
distribution.
8.2 Upon the death of a Director, or a former Director prior to
the payment of all amounts and the Market Value of any
shares of Common Stock (and fractions thereof) credited to
said Director's Account, the unpaid balance shall be paid in
the sole discretion of the Compensation Committee (a) in a
lump sum to the designated beneficiary of such Director or
former Director within thirty (30) days of the date of death
(or as soon as reasonably possible thereafter) or (b) in
accordance with the Deferral Election made by such Director
or former Director. In the event a beneficiary designation
has not been made, or the designated beneficiary is deceased
or cannot be located, payment shall be made to the estate of
the Director or former Director. The Market Value of any
shares of Common Stock credited to a Director's Deferred
Compensation Account shall be determined as of the
twenty-fifth (25th) day of the month immediately preceding
the date of any lump sum or installment distribution.
8.3 The beneficiary designation referred to above may be changed
by a Director or former Director at any time, and without
the consent of the prior beneficiary, on a form to be
provided by the Secretary of the Company.
Article IX
Miscellaneous
9.1 No Director or beneficiary shall have any right to sell,
assign, transfer, encumber or otherwise convey the right to
receive payment of any benefit payable hereunder, which
payment and the right thereto are expressly declared to be
nonassignable and nontransferable. Any attempt to do so
shall be null and void and of no effect.
9.2 The Company shall not reserve or otherwise set aside funds
for the payment of its obligations hereunder, which
obligations will be paid from the general assets of the
Company. Notwithstanding that a Director shall be entitled
to receive the entire amount in his Deferred Compensation
Account as provided in Section 8.1, any amounts credited to
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<PAGE>
a Director's Account to be paid to such Director shall at
all times be subject to the claims of the Company's
creditors.
9.3 The Board of Directors may terminate the Plan at any time or
may, from time to time, amend the Plan; provided, however,
that no such amendment or termination shall impair any
rights to payments which had been deferred under the Plan
prior to the termination or amendment.
9.4 This Plan shall be construed in accordance with and governed
by the laws of the State of Georgia.
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<PAGE>
IN WITNESS WHEREOF, the Plan, as amended and restated
effective October 20, 1986, has been executed pursuant to
resolutions of the Board of Directors of The Southern
Company, this ____ day of _________________, ____.
THE SOUTHERN COMPANY
By:
Robert H. Radcliff, Jr.
Chairman
Compensation Committee
Attest:
By:
Tommy Chisholm
Secretary and Assistant Treasurer
The Southern Company
[Corporate Seal]
(adamscl) h:\wpdocs\mtd\southern\def-comp.pln
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<PAGE>
FIRST AMENDMENT TO THE
DEFERRED COMPENSATION PLAN
FOR THE DIRECTORS OF THE SOUTHERN COMPANY
WHEREAS, the Deferred Compensation Plan for Directors of The
Southern Company (the "Plan") was amended and restated effective
October 20, 1986, which amendment and restatement included
changes to permit eligible Directors of The Southern Company (the
"Company") (1) to elect to treat compensation deferred under the
Plan as though invested in fixed income or common stock of The
Southern Company, (2) to receive distribution of deferred amounts
in a lump sum or up to ten (10) annual installments beginning not
later than the second anniversary of the termination of their
membership on the Board of Directors, and (3) to change the
method of payment of their account balance under the Plan from
lump sum to installments, or vice versa, shortly before their
termination of membership on the Board of Directors; and
WHEREAS, The Board of Directors of the Company desires to
amend the Plan (1) to change the period of time during which a
Director may elect to change the method of payment of his account
balance under the Plan, (2) to require that any such change in
the method of payment be contingent upon the Director's
completion of his term of membership on the Board of Directors,
except in the event of disability or death, and (3) to authorize
the Compensation Committee to accelerate installment
distributions in its sole discretion for cause upon request by a
Director or his legal representative; and
WHEREAS, the Board of Directors of the Company has the
authority to amend the Plan from time to time in accordance with
Section 9.3 of the Plan;
NOW, THEREFORE, effective January 19, 1987, the Board of
Directors of The Southern Company hereby amends the Deferred
Compensation Plan for Directors of The Southern Company as
follows:
I.
The Plan shall be amended by deleting Section 6.5 of the
Plan in its entirety and substituting therefor the following
language as Section 6.5 therein:
6.5 With the approval of the compensation Committee, a
Director may amend a prior Deferral Election on a form
prescribed by the Compensation Committee not prior to the
390th day nor later than the 360th day prior to his
terminating of membership on the Board of Directors in order
to change (a) the form and/or (b) the time for commencement
of the distribution of his Deferred Compensation Account in
accordance with the terms of the Plan. Any such amendment
to a prior Deferral Election, as described in this
<PAGE>
Section 6.5, shall be contingent upon the Director's
completion of his term of membership on the Board of
Directors, except in the event of the disability or death of
such Director.
II.
Section 8.1 of the Plan shall be amended by deleting said
Section in its entirety and substituting therefor the following
language as Section 8.1 therein:
8.1 When a Director terminates his membership on the
Board of Directors, said Director shall be entitled to
receive the entire amount and the Market Value of any shares
of Common Stock (and fractions thereof) reflected in his
Deferred Compensation Account payable in cash in accordance
with his Deferral Election. No portion of a Director's
Deferred Compensation Account shall be distributed in Common
Stock. In the event a Director shall have elected to
receive the balance of his Deferred Compensation Account in
a lump sum, distribution shall be made on the first day of
the month selected by the Director in accordance with the
terms of the Plan, or as soon as reasonably possible
thereafter. In the event the Director shall have elected to
receive annual installments, the first payment shall be on
the first day of the month selected by the Director, or as
soon as reasonably possible thereafter, and shall be an
amount equal to the balance in the Director's Deferred
Compensation Account on such date divided by the number of
annual installment payments. Each subsequent annual payment
shall be an amount equal to the balance of the Director's
Account on the payment date divided by the number of
remaining annual payments and shall be paid on the
anniversary of the preceding payment date. Notwithstanding
a Director's election to receive his Deferred Compensation
Account balance in annual installments, the Compensation
Committee, in its sole discretion upon request of the
Director or his legal representative, may accelerate the
payment of any such installments for cause. The Market
Value of any shares of Common Stock credited to a Director's
Deferred Compensation Account shall be determined as of the
twenty-fifth (25th) day of the month immediately preceding
the date of any lump sum or installment distribution.
III.
Except as amended by this First Amendment, the Plan shall
remain in full force and effect as amended and restated by the
Company effective October 20, 1986.
-2-
<PAGE>
IN WITNESS WHEREOF, this First Amendment has been executed
pursuant to resolutions of the Board of Directors of The Southern
Company, this ____ day of ____________, 19__.
THE SOUTHERN COMPANY
By:
Robert H. Radcliff, Jr.
Chairman
Compensation Committee
Attest:
By:
Tommy Chisholm
Secretary
The Southern Company
[CORPORATE SEAL]
[adamscl] h:\wpdocs\mtd\southern\def-comp.1st
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<PAGE>
SECOND AMENDMENT
TO THE DEFERRED COMPENSATION PLAN
FOR THE DIRECTORS OF THE SOUTHERN COMPANY
WHEREAS, the Board of Directors of The Southern Company (the
"Company") heretofore adopted the amendment and restatement of
the Deferred Compensation Plan for the Directors of The Southern
Company (the "Plan") effective as of October 20, 1986; and
WHEREAS, the Board of Directors of the Company desires to
amend the Plan to comply with changes in the Securities and
Exchange Act of 1934; and
WHEREAS, under Section 9.3 of the Plan, the Board of
Directors has the authority to amend the Plan at any time;
NOW THEREFORE, effective as of the date of execution, the
Board of Directors hereby amends the Plan as follows:
1.
Section 6.5 of the Plan shall be amended by deleting said
Section in its entirety and substituting therefore the following
language:
6.5 Except as provided below, with the approval of the
Compensation Committee, a Director may amend a prior Deferral
Election on a form prescribed by the Compensation Committee not
prior to the 390th day nor later than the 360th day prior to his
termination of membership on the Board of Directors in order to
change (a) the form, and/or (b) the time for commencement of the
distribution of his Deferred Compensation Account in accordance
with the terms of the Plan; provided, however, that any Director
who is required to file reports pursuant to Section 16(a) of the
Securities and Exchange Act of 1934, as amended, with respect to
equity securities of the Company shall not be permitted to amend
his Deferral Election during any time period for which such
Director is required to file any such reports with respect to the
portion of his Deferred Compensation Account invested in
accordance with the provisions of Section 7.3 of the Plan. Any
such amendment to a prior Deferral Election, as described in this
Section 6.5, shall be contingent upon the Director's completion
of his term of membership on the Board of Directors, except in
the event of the disability or death of such Director.
2.
Except as amended herein by this Second Amendment, the Plan
shall remain in full force and effect as adopted and amended by
the Company prior to the adoption of this Second Amendment.
<PAGE>
IN WITNESS WHEREOF, this Second Amendment has been executed
pursuant to resolutions of the Board of Directors of The Southern
Company this day of , 19 , to be
effective as of the date of execution.
THE SOUTHERN COMPANY
By:
Its:
Attest:
By:
Its:
(CORPORATE SEAL]
(wb) h:\wpdocs\scs\dc-dir.2D
-2-
<PAGE>
Exhibit 10(a)77
THE SOUTHERN COMPANY
OUTSIDE DIRECTORS
PENSION PLAN
TABLE OF CONTENTS
PAGE
ARTICLE I - PURPOSE AND ADOPTION OF PLAN . . . . . . . . . . 1
1.1 Adoption . . . . . . . . . . . . . . . . . . . 1
1.2 Purpose . . . . . . . . . . . . . . . . . . . 1
ARTICLE II - DEFINITIONS . . . . . . . . . . . . . . . . . . 2
2.1 "Affiliated Employer" . . . . . . . . . . . . 2
2.2 "Beneficiary" . . . . . . . . . . . . . . . . 2
2.3 "Board of Directors" . . . . . . . . . . . . . 2
2.4 "Code" . . . . . . . . . . . . . . . . . . . . 2
2.5 "Director" . . . . . . . . . . . . . . . . . . 2
2.6 "Early Retirement Date" . . . . . . . . . . . 2
2.7 "Effective Date" . . . . . . . . . . . . . . . 2
2.8 "Eligibility Date" . . . . . . . . . . . . . . 2
2.9 "Month of Service" . . . . . . . . . . . . . . 2
2.10 "Normal Retirement Date" . . . . . . . . . . . 3
2.11 "Participant" . . . . . . . . . . . . . . . . 3
2.12 "Plan" . . . . . . . . . . . . . . . . . . . . 3
2.13 "Plan Administrator" . . . . . . . . . . . . . 3
2.14 "Plan Year" . . . . . . . . . . . . . . . . . 3
2.15 "Retainer Fee" . . . . . . . . . . . . . . . . 3
2.16 "System Company" . . . . . . . . . . . . . . . 3
ARTICLE III - ADMINISTRATION OF PLAN . . . . . . . . . . . . 4
3.1 Administrator . . . . . . . . . . . . . . . . 4
3.2 Powers . . . . . . . . . . . . . . . . . . . . 4
3.3 Duties of the Plan Administrator . . . . . . . 4
3.4 Indemnification . . . . . . . . . . . . . . . 5
ARTICLE IV - ELIGIBILITY . . . . . . . . . . . . . . . . . . 6
4.1 Eligibility Requirements . . . . . . . . . . . 6
4.2 Determination of Eligibility . . . . . . . . . 6
4.3 Termination or Death Prior to Eligibility . . 6
ARTICLE V - BENEFITS . . . . . . . . . . . . . . . . . . . . 7
5.1 Normal Retirement Income . . . . . . . . . . . 7
5.2 Early Retirement Income . . . . . . . . . . . 7
5.3 Distribution of Retirement Income . . . . . . 8
5.4 Death After Commencement of Benefits at Early
or Normal Retirement Date . . . . . . . . . . 8
5.5 Death After Normal Retirement Date and Before
Commencement of Benefits . . . . . . . . . . . 8
5.6 Death Prior to Early or Normal Retirement
Date . . . . . . . . . . . . . . . . . . . . . 9
5.7 Beneficiary Designation . . . . . . . . . . . 9
5.8 Funding of Benefits . . . . . . . . . . . . . 10
<PAGE>
5.9 Withholding . . . . . . . . . . . . . . . . . 10
ARTICLE VI - MISCELLANEOUS . . . . . . . . . . . . . . . . . 11
6.1 Assignment . . . . . . . . . . . . . . . . . . 11
6.2 Amendment and Termination . . . . . . . . . . 11
6.3 No Guarantee of Continued or Future Service
on a Board of Directors . . . . . . . . . . . 11
6.4 Construction . . . . . . . . . . . . . . . . . 11
<PAGE>
THE SOUTHERN COMPANY
OUTSIDE DIRECTORS
PENSION PLAN
ARTICLE I - PURPOSE AND ADOPTION OF PLAN
1.1 Adoption. The Southern Company hereby amends and
restates The Southern Company Outside Directors Pension Plan
effective January 1, 1992. The terms of the Plan prior to this
amendment and restatement shall generally remain in force to the
extent that they do not conflict with this amendment and
restatement and for purposes of the treatment of transactions
occurring prior to January 1, 1992. This amendment and
restatement shall not be applicable to former Participants or
Beneficiaries of former Participants whose service on the Board
of Directors of one of more System Companies terminated prior to
January 1, 1992, unless otherwise provided herein. The Plan
shall be an unfunded deferred compensation arrangement whose
benefits shall be paid solely from the general assets of the
System Companies.
1.2 Purpose. The Plan is designed to provide retirement
benefits for certain individuals who have retired from service on
a Board of Directors of a System Company. The Plan is intended
to constitute a plan which is unfunded and maintained primarily
for the purpose of providing deferred compensation for a select
group of management or highly compensated employees under the
Employee Retirement Income Security Act of 1974, as amended.
<PAGE>
ARTICLE II - DEFINITIONS
2.1 "Affiliated Employer" shall mean any corporation which
is a member of the controlled group of corporations of which The
Southern Company is the common parent corporation.
2.2 "Beneficiary" shall mean any person, estate, trust, or
organization entitled to receive any payment under the Plan upon
the death of a Participant.
2.3 "Board of Directors" shall mean the Board of Directors
of each System Company.
2.4 "Code" shall mean the Internal Revenue Code of 1986, as
amended from time to time.
2.5 "Director" shall mean any person (a) who serves on the
Board of Directors of one or more System Companies on or after
January 1, 1992, (b) who is not an employee of The Southern
Company or an Affiliated Employer, and (c) who is not eligible to
receive retirement income under the defined benefit pension plan
maintained by an Affiliated Employer as a result of his having
retired after reaching his early retirement date, normal
retirement date or deferred retirement date under such plan.
2.6 "Early Retirement Date" shall mean the date on which a
Participant is first eligible to retire from a Board of Directors
of a System Company on which he serves, which date shall not
precede (a) such Participant's Eligibility Date, nor (b) such
Participant's Normal Retirement Date by more than five (5) years.
2.7 "Effective Date" shall mean the original effective date
of the Plan, January 1, 1991. The Effective Date of this
amendment and restatement shall be January 1, 1992.
2.8 "Eligibility Date" shall mean the date a Director first
meets the eligibility requirements of Section 4.1 of the Plan.
2.9 "Month of Service" shall mean each calendar month
during which a Director serves at least one day on the Board of
Directors of a System Company. Months of Service served
concurrently on more than one Board of Directors shall be counted
separately for purposes of determining a Director's eligibility
to participate and benefits hereunder. Months of Service
completed prior to the Effective Date of the Plan or after a
Participant's Normal Retirement Date shall be recognized.
2
<PAGE>
2.10 "Normal Retirement Date" shall mean the date a Director
is required to retire from the Board of Directors of a System
Company on which he serves, as set forth in such System Company's
by-laws, notwithstanding any agreement to serve beyond such date.
2.11 "Participant" shall mean each Director on the Board of
Directors of a System Company who meets the requirements of
Section 4.1 of the Plan.
2.12 "Plan" shall mean The Southern Company Outside
Directors Pension Plan, as amended from time to time.
2.13 "Plan Administrator" shall mean the Committee so named,
as provided in Article III.
2.14 "Plan Year" shall mean the calendar year.
2.15 "Retainer Fee" shall mean the monthly rate of the fees
paid to a Director for service on the Board of Directors of a
System Company, but excluding reimbursements for expenses and any
fees or compensation for (a) attendance at the meetings of the
Board of Directors or any committee, (b) service on a committee,
and (c) service at the request of the Board of Directors or a
committee.
2.16 "System Company" shall mean The Southern Company, and
any affiliate or subsidiary of The Southern Company which the
Board of Directors of The Southern Company may from time to time
determine to bring under the Plan and which shall adopt the Plan,
and any successor of any of them.
The masculine pronoun shall be construed to include the
feminine pronoun and the singular shall include the plural, where
the context so requires.
3
<PAGE>
ARTICLE III - ADMINISTRATION OF PLAN
3.1 Administrator. The general administration of the Plan
shall be the responsibility of The Southern Company Human
Resources Committee.
3.2 Powers. The Plan Administrator shall administer the
Plan in accordance with its terms and shall have all powers
necessary to carry out the provisions of the Plan more
particularly set forth herein. It shall interpret the Plan and
shall determine all questions arising in the administration,
interpretation and application of the Plan. Any such
determination by it shall be conclusive and binding on all
persons. It may adopt such regulations as it deems desirable for
the conduct of its affairs. It may appoint such accountants,
counsel, actuaries, specialists and other persons as it deems
necessary or desirable in connection with the administration of
this Plan, and shall be the agent for the service of process.
3.3 Duties of the Plan Administrator.
(a) The Plan Administrator is responsible for the daily
administration of the Plan. It may appoint other persons or
entities to perform any of its fiduciary functions. The Plan
Administrator and any such appointee may employ advisors and
other persons necessary or convenient to help it carry out its
duties, including its fiduciary duties. The Plan Administrator
shall have the right to remove any such appointee from his
position. Any person, group of persons or entity may serve in
more than one fiduciary capacity.
(b) The Plan Administrator shall maintain accurate and
detailed records and accounts of Participants and of their rights
under the Plan and of all receipts, disbursements, transfers and
other transactions concerning the Plan. Such accounts, books and
records relating thereto shall be open at all reasonable times to
inspection and audit by persons designated by the Board of
Directors of each System Company.
(c) The Plan Administrator shall take all steps necessary
to ensure that the Plan complies with the law at all times.
These steps shall include such items as the preparation and
filing of all documents and forms required by any governmental
agency; maintaining of adequate Participants' records; recording
and transmission of all notices required to be given to
Participants and their Beneficiaries; the receipt and
dissemination, if required, of all reports and information
received from a System Company; securing of such fidelity bonds
as may be required by law; and doing such other acts necessary
for the proper administration of the Plan. The Plan
Administrator shall keep a record of all of its proceedings and
4
<PAGE>
acts, and shall keep all such books of account, records and other
data as may be necessary for proper administration of the Plan.
3.4 Indemnification. The System Companies shall indemnify
the Plan Administrator against any and all claims, losses,
damages, expenses and liability arising from an action or failure
to act, except when the same is finally judicially determined to
be due to gross negligence or willful misconduct. The System
Companies may purchase at their own expense sufficient liability
insurance for the Plan Administrator to cover any and all claims,
losses, damages and expenses arising from any action or failure
to act in connection with the execution of the duties as Plan
Administrator.
5
<PAGE>
ARTICLE IV - ELIGIBILITY
4.1 Eligibility Requirements. Each Director shall be
eligible to participate under the Plan on the first date such
Director:
(a) Serves on the Board of Directors of a System Company on
or after January 1, 1992, and
(b) Is credited with at least sixty (60) Months of Service
on the Board(s) of Directors of one or more System Companies.
4.2 Determination of Eligibility. The Plan Administrator
shall determine which Directors are eligible to participate.
Upon becoming a Participant, a Director shall be deemed to have
assented to the Plan and to any amendments hereafter adopted.
The Plan Administrator shall be authorized to rescind the
eligibility of any Participant if necessary to insure that the
Plan is maintained primarily to provide deferred compensation to
a select group of management or highly compensated employees
under the Employee Retirement Income Security Act of 1974, as
amended.
4.3 Termination or Death Prior to Eligibility. No
benefits shall be payable under the Plan to a Director or any
designated Beneficiary if a Director (a) shall terminate his
service on the Board(s) of Directors of all System Companies on
which he serves prior to his Eligibility Date, or (b) shall die
prior to his Eligibility Date.
6
<PAGE>
ARTICLE V - BENEFITS
5.1 Normal Retirement Income.
(a) The monthly benefit payable as a single life annuity,
guaranteed for a term certain of ten (10) years from the date
distribution of the monthly benefit commences, to a Participant
who retires on or after his Normal Retirement Date, shall equal
the following percentage of his Retainer Fee based upon his
credited Months of Service:
Months of Service Percentage
120 or more 100%
108 95%
96 90%
84 85%
72 80%
60 75%
(b) If a Director is credited with Months of Service on the
Boards of Directors of two (2) or more System Companies, the
greatest Retainer Fee being paid on the date of the Participant's
retirement by a System Company on whose Board of Directors the
Participant served prior to his retirement shall be used for
purposes of calculating the Participant's benefits under Section
5.1 of the Plan, notwithstanding that the Participant may not
have reached his Early Retirement Date or Normal Retirement Date
with respect to the Board of Directors whose Retainer Fee is used
for the benefit calculation. Each System Company on whose Board
of Directors the Participant is credited with Months of Service
shall pay a portion of the monthly benefit payment based on the
following fraction:
(numerator) the product of the Retainer Fee being paid by
such System Company on the date of the Participant's
retirement and the Months of Service credited to the
Participant on the Board of Directors of such System
Company, over
(denominator) the sum of the above numerators for the
System Companies sharing in the benefit payment.
5.2 Early Retirement Income. The monthly benefit payable
to a Participant who retires on his Early Retirement Date shall
be calculated in the same manner as provided in Section 5.1
above. The payment of the monthly benefit to a Participant shall
not extend beyond the lesser of (a) the life of the Participant,
(b) the number of the Participant's credited Months of Service
under the Plan, or (c) fifteen (15) years. Notwithstanding the
above, payment of the monthly benefit provided under this Section
5.2 shall be guaranteed for a term not to exceed the lesser of
7
<PAGE>
(a) the Participant's credited Months of Service, or (b) ten (10)
years. Such benefits shall be paid by the System Companies based
on the fraction set forth in Section 5.1(b) above.
5.3 Distribution of Retirement Income. The first monthly
payment of a Participant's benefit shall be made on the first day
of the month following his actual retirement from the last Board
of Directors on which the Participant serves on or after his
Eligibility Date, or as soon as practicable thereafter, and
subsequent monthly payments shall be made on the first day of
each month thereafter. The monthly payment of benefits shall
cease with the last payment preceding the death of the
Participant, subject to the payment of any death benefits under
Section 5.4 below.
5.4 Death After Commencement of Benefits at Early or Normal
Retirement Date. If a Participant dies after the payment of his
benefit commences following his retirement on his Early or Normal
Retirement Date, but before the payment of all benefits
guaranteed under the Plan, any remaining guaranteed monthly
payments shall be continued after his death to the Participant's
Beneficiary, in the same time and manner such payments would have
been made to the Participant if he had survived, until all such
guaranteed payments have been made.
5.5 Death After Normal Retirement Date and Before
Commencement of Benefits.
(a) If a Participant dies after his Normal Retirement Date
with respect to the Board of Directors of a System Company on
which he has served, but prior to his actual retirement from the
last Board of Directors of a System Company on which he serves,
the monthly benefit (calculated in the same manner as provided in
Section 5.1 above) payable to his Beneficiary shall be based on
(1) the Participant's credited Months of Service as of his date
of death, and (2) the greatest Retainer Fee then being paid by a
System Company on whose Board of Directors the Participant served
prior to his date of death. Such benefits shall be paid by the
System Companies on whose Board(s) of Directors the Participant
served prior to his death based on the fraction set forth in
Section 5.1(b) above, notwithstanding that the Participant may
not have attained his Early or Normal Retirement Date with
respect to all of the Board(s) of Directors of such System
Companies.
(b) The first monthly payment to a designated Beneficiary
shall be made on the first day of the month following the death
of the Participant, or as soon as practicable thereafter, and
subsequent monthly payments shall be made on the first day of
each month thereafter until a total of one hundred-twenty (120)
monthly payments has been made.
8
<PAGE>
5.6 Death Prior to Early or Normal Retirement Date.
(a) This Section 5.6 shall apply if a Participant (1) dies
after his Early Retirement Date with respect to the Board of
Directors of a System Company on which he has served, but prior
to his Normal Retirement Date and his actual retirement from the
Board of Directors of a System Company, or (2) dies after his
Eligibility Date while serving on the Board of Directors of a
System Company, but prior to his Early Retirement Date.
(b) The monthly benefit (calculated in the same manner as
provided in Section 5.1 above) payable to a Participant's
Beneficiary under this Section 5.6 shall be based on (1) the
Participant's credited Months of Service as of his date of death,
and (2) the greatest Retainer Fee then being paid by a System
Company on whose Board of Directors the Participant served prior
to his date of death. Such benefits shall be paid by the System
Companies on whose Board(s) of Directors the Participant served
prior to his death based on the fraction set forth in Section
5.1(b) above, notwithstanding that the Participant may not have
attained his Early Retirement Date with respect to all of the
Board(s) of Directors of such System Companies.
(c) The first monthly payment to a Beneficiary shall be
made on the first day of the month following the death of the
Participant, or as soon as practicable thereafter, and subsequent
monthly payments shall be made on the first day of each month
thereafter. The payment of the monthly benefit to the designated
Beneficiary shall not extend beyond the lesser of (a) the number
of the Participant's credited Months of Service under the Plan,
or (b) ten (10) years.
5.7 Beneficiary Designation. A Beneficiary designation may
be changed by the Participant at any time without the consent of
the prior Beneficiary. In the event a Beneficiary designation is
not on file or the designated Beneficiary is deceased, cannot be
located, or dies prior to the payment of all guaranteed payments
without the Participant having named a contingent Beneficiary,
payment shall be made to the following classes of successive
preference, if then living:
(1) The Participant's spouse.
(2) The Participant's children, equally.
(3) The Participant's brothers and sisters, equally.
(4) The Participant's executors or administrators.
The payment of benefits to one or more such persons shall
completely discharge the System Companies with respect to the
amount so paid.
9
<PAGE>
5.8 Funding of Benefits. Each System Company responsible
for the payment of benefits to a Participant or his Beneficiary
shall not reserve or otherwise set aside funds for the payment of
its obligations under the Plan, and such obligations shall be
paid solely from the general assets of the System Companies.
Notwithstanding that a Participant shall be entitled to receive
benefits under the Plan for his lifetime guaranteed for a term
certain, the assets from which such amounts shall be paid at all
times remain subject to the claims of the creditors of the System
Companies on whose Board(s) of Directors the Participant served.
5.9 Withholding. There shall be deducted from the payment
of any benefits due under the Plan the amount of any tax required
by any governmental authority to be withheld and paid over by a
System Company to such governmental authority for the account of
the Participant or Beneficiary entitled to such payment.
10
<PAGE>
ARTICLE VI - MISCELLANEOUS
6.1 Assignment. Neither the Participant, his Beneficiary,
nor his legal representative shall have any rights to sell,
assign, transfer or otherwise convey the right to receive the
payment of any benefit due hereunder, which payment and the right
thereto are expressly declared to be nonassignable and
nontransferable. Any attempt to assign or transfer the right to
payment under the Plan shall be null and void and of no effect.
6.2 Amendment and Termination. The Plan may be amended or
terminated at any time by the Board of Directors of The Southern
Company, provided that no amendment or termination shall cause a
forfeiture or reduction in any benefits in pay status as of the
date of such amendment or termination.
6.3 No Guarantee of Continued or Future Service on a Board
of Directors. Participation hereunder shall not be construed as
creating a right in any Director to continued service or future
service on the Board of Directors of any System Company.
6.4 Construction. This Plan shall be construed in
accordance with and governed by the laws of the State of Georgia,
to the extent such laws are not otherwise superseded by the laws
of the United States.
IN WITNESS WHEREOF, the Board of Directors of The Southern
Company, through its duly authorized officers, has adopted this
amendment and restatement of The Southern Company Outside
Directors Pension Plan this day of ,
, to be effective January 1, 1992.
THE SOUTHERN COMPANY
(CORPORATE SEAL)
By:______________________________
Edward L. Addison
President
Attest:
By: ________________________
Tommy Chisholm
Secretary
[adamscl] h:\wpdocs\mtd\southern\1992odir.pen
11
<PAGE>
THE SOUTHERN COMPANY
OUTSIDE DIRECTORS
PENSION PLAN
As Amended and Restated
Effective January 1, 1992
<PAGE>
FIRST AMENDMENT TO
THE SOUTHERN COMPANY
OUTSIDE DIRECTORS PENSION PLAN
WHEREAS, the Boards of Directors of The Southern Company and
its subsidiaries (hereinafter collectively referred to as the
"System Companies") heretofore established The Southern Company
Outside Directors Pension Plan (hereinafter referred to as the
"Plan") in order to provide retirement income to eligible
Directors who are not employed by a System Company; and
WHEREAS, the Board of Directors of The Southern Company
subsequently amended and restated the Plan effective January 1,
1992; and
WHEREAS, the Board of Directors of The Southern Company
desires to amend the Plan in order to clarify the Normal
Retirement Date applicable to each Board of Directors of a System
Company on which Participants under the Plan may serve; and
WHEREAS, the Board of Directors of The Southern Company is
authorized pursuant to Section 6.2 of the Plan to amend the Plan
at any time.
NOW, THEREFORE, effective January 1, 1992, the Board of
Directors of The Southern Company hereby amends the Plan as
follows:
I.
Section 2.10 of the Plan shall be amended by deleting said
Section in its entirety and substituting therefor the following
language:
2.10 "Normal Retirement Date" shall mean, with
respect to each Board of Directors on which a
Participant serves, the first day of the month next
following the normal retirement event set forth on
Exhibit A, a copy of which is attached hereto and
incorporated herein by reference, notwithstanding any
agreement by a Participant to serve beyond such date.
II.
Except as amended herein by this First Amendment, the Plan
shall remain in full force and effect as amended and restated by
The Southern Company prior to the adoption of this First
Amendment.
13
<PAGE>
IN WITNESS WHEREOF, the Board of Directors of The Southern
Company, through its duly authorized officers, has adopted this
First Amendment to The Southern Company Outside Directors Pension
Plan this 30th day of April, 1992 to be effective January 1,
1992.
THE SOUTHERN COMPANY
[CORPORATE SEAL]
By:
Edward L. Addison
President
Attest:
By:
Tommy Chisholm
Secretary
- 14 -14
<PAGE>
EXHIBIT A
THE SOUTHERN COMPANY
OUTSIDE DIRECTORS PENSION PLAN
NORMAL RETIREMENT EVENTS FOR THE SYSTEM COMPANIES
BOARD OF DIRECTORS NORMAL RETIREMENT
DATE
THE SOUTHERN COMPANY The annual meeting next
following a Participant's 70th
birthday.
ALABAMA POWER COMPANY A Participant's 70th birthday.
GEORGIA POWER COMPANY A Participant's 70th birthday.
GULF POWER COMPANY The annual meeting next
following a Participant's 70th
birthday.
MISSISSIPPI POWER COMPANY A Participant's 70th birthday.
SAVANNAH ELECTRIC & POWER The annual meeting next
COMPANY following a Participant's 70th
birthday.
- 15 -15
<PAGE>
EXHIBIT A
THE SOUTHERN COMPANY
OUTSIDE DIRECTORS PENSION PLAN
NORMAL RETIREMENT EVENTS FOR THE SYSTEM COMPANIES
BOARD OF DIRECTORS NORMAL RETIREMENT
DATE
THE SOUTHERN COMPANY The annual meeting next
following a Participant's 70th
birthday.
ALABAMA POWER COMPANY The annual meeting next
following a Participant's 70th
birthday.
GEORGIA POWER COMPANY A Participant's 70th birthday.
GULF POWER COMPANY The annual meeting next
following a Participant's 70th
birthday.
MISSISSIPPI POWER COMPANY A Participant's 70th birthday.
SAVANNAH ELECTRIC & POWER The annual meeting next
COMPANY following a Participant's 70th
birthday.
- 3 -3
<PAGE>
Exhibit 10(a)78
DEFERRED COMPENSATION PLAN
FOR
THE SOUTHERN ELECTRIC SYSTEM
<PAGE>
DEFERRED COMPENSATION PLAN
FOR
THE SOUTHERN ELECTRIC SYSTEM
ARTICLE DESCRIPTION PAGE
I Purpose and Adoption of Plan 1
II Definitions 1
III Administration of Plan 5
IV Eligibility 8
V Election for Deferral of Payment 9
VI Deferred Compensation Accounts 12
VII Distribution of Deferred Compensation Accounts 17
VIII Miscellaneous Provisions 20
i
<PAGE>
DEFERRED COMPENSATION PLAN
FOR
THE SOUTHERN ELECTRIC SYSTEM
ARTICLE I
Purpose and Adoption of Plan
1.1 Adoption: Southern Company Services, Inc. and the other
Employing Companies hereby adopt and establish the Deferred
Compensation Plan for The Southern Electric System. The Plan
shall be an unfunded deferred compensation arrangement whose
benefits shall be paid solely from the general assets of the
Employing Companies.
1.2 Purpose: The Plan is designed to permit a select group
of management or highly compensated employees to elect to defer a
portion of their Compensation during each payroll period until
their death, disability, retirement, or termination of employment
with their Employing Company.
ARTICLE II
Definitions
For purposes of the Deferred Compensation Plan the following
terms shall have the following meanings unless a different
meaning is plainly required by the context:
2.1 "Account" shall mean the account or accounts
established and maintained by the Company or the Employing
Company to reflect the interest of a Participant in the Plan
resulting from a Participant's deferred Compensation and
adjustments thereto to reflect income, gains, losses, and other
credits or charges.
<PAGE>
2.2 "Administrative Committee" shall mean the committee
referred to in Section 3.1.
2.3 "Beneficiary" shall mean any person, estate, trust, or
organization entitled to receive any payment under the Plan upon
the death of a Participant.
2.4 "Board of Directors" shall mean the Board of Directors
of the Company.
2.5 "Closing Price" shall mean the closing price on any
trading day of a share of the Common Stock based on consolidated
trading as defined by the Consolidated Tape Association and
reported as part of the consolidated trading prices of New York
Stock Exchange listed securities.
2.6 "Common Stock" shall mean the common stock of The
Southern Company.
2.7 "Company" shall mean Southern Company Services, Inc.
2.8 "Compensation" shall mean the monthly rate of an
Employee's base wages or salary paid by any Employing Company to
an Employee, including amounts contributed by an Employing
Company to the Employee Savings Plan as Elective Employer
Contributions, as said term is defined in Section 4.1 therein,
pursuant to the Employee's exercise of his deferral option made
in accordance with Section 401(k) of the Internal Revenue Code
and amounts contributed by an Employing Company to the Southern
Electric System Flexible Benefits Plan on behalf of the Employee
pursuant to his salary reduction election under such plan; but
disregarding overtime, such amounts which are reimbursements to
2
<PAGE>
an Employee paid by any Employing Company including, but not
limited to, reimbursement for such items as moving expenses,
automobile expenses, tax preparation expenses, travel and
entertainment expenses, and health and life insurance premiums.
2.9 "Deferral Election" shall mean the Participant's
written election to defer a portion of his Compensation pursuant
to Article III.
2.10 "Earnings" shall have the same meaning as set forth in
the Pension Plan.
2.11 "Effective Date" shall mean the first day of the first
payroll period the Administrative Committee shall permit a
Participant to defer Compensation under the Plan.
2.12 "Employee" shall mean any person who is currently
employed by an Employing Company.
2.13 "Employee Savings Plan" shall mean the Employee Savings
Plan for The Southern Company System and the Employee Savings
Plan of Savannah Electric and Power Company, as amended from time
to time.
2.14 "Employee Stock Ownership Plan' shall mean the Employee
Stock Ownership Plan of The Southern Company System and the
Employee Stock Ownership Plan of Savannah Electric and Power
Company, as amended from time to time.
2.15 "Employer Matching Contribution" shall have the same
meaning as set forth in the Employee Savings Plan.
3
<PAGE>
2.16 "Employing Company" shall mean the Company, or any
affiliate or subsidiary (direct or indirect) of The Southern
Company, which the Board of Directors may from time to time
determine to bring under the Plan and which shall adopt the Plan,
and any successor of any of them. The term "Employing Company"
shall not include Electric City Merchandise Company. The
Employing Companies as of the Effective Date are:
Alabama Power Company
Georgia Power Company
Gulf Power Company
Mississippi Power Company
Savannah Electric and Power Company
Southern Company Services, Inc.
Southern Electric International, Inc.
2.17 "Enrollment Date" shall mean the Effective Date,
January 1 of each Plan Year, and such other dates as may be
determined from time to time by the Administrative Committee.
2.18 "Investment Election" shall mean the Participant's
written election to have his deferred Compensation invested
pursuant to Section 6.5 or Section 6.6.
2.19 "Participant" shall mean an Employee or former Employee
of an Employing Company who is eligible to receive benefits under
the Plan.
2.20 "Pension Plan" shall mean the defined benefit pension
plan maintained by the Employing Company of the Participant, as
amended from time to time.
4
<PAGE>
2.21 "Plan" shall mean the Deferred Compensation Plan for
The Southern Electric System, as amended from time to time.
2.22 "Plan Year" shall mean the twelve (12) month period
commencing January 1st and ending on the last day of December
next following, except for the first Plan Year which shall begin
on the Effective Date and end on the last day of the calendar
year in which the Effective Date occurs.
2.23 "Retirement Income" shall have the same meaning as set
forth in the Pension Plan.
2.24 "Supplemental Benefit Plan" shall mean the Supplemental
Benefit Plan of the Employing Company and the Supplemental
Executive Retirement Plan of Savannah Electric and Power Company,
as amended from time to time.
Where the context requires, the definitions of all terms set
forth in the Pension Plan, Savings Plan, the ESOP, and the
Supplemental Benefit Plan shall apply with equal force and effect
for purposes of interpretation and administration of the Plan,
unless said terms are otherwise specifically defined in the Plan.
The words in the masculine gender shall include the feminine and
neuter genders and words in the singular shall include the plural
and words in the plural shall include the singular.
5
<PAGE>
ARTICLE III
Administration of Plan
3.1 The general administration of the Plan shall be placed
in the Administrative Committee. The Administrative Committee
shall consist of at least one employee of each Employing Company,
except Southern Electric International, Inc., and such additional
number of persons, if any, as shall be determined from time to
time by the Board of Directors. Members shall be appointed by
the boards of directors of the Employing Companies. Any member
may resign or be removed by his board of directors and new
members may be appointed by such board of directors. The
Administrative Committee shall be chaired by the representative
of the Company and may select a Secretary (who may, but need not,
be a member of the Administrative Committee) to keep its records
or to assist it in the discharge of its duties. A majority of
the members of the Administrative Committee shall constitute a
quorum for the transaction of business at any meeting. Any
determination or action of the Administrative Committee may be
made or taken by a majority of the members present at any meeting
thereof, or without a meeting by resolution or written memorandum
concurred in by a majority of the members.
3.2 No member of the Administrative Committee shall receive
any compensation from the Plan for his service.
6
<PAGE>
3.3 The Administrative Committee shall administer the Plan
in accordance with its terms and shall have all powers necessary
to carry out the provisions of the Plan more particularly set
forth herein. It shall interpret the Plan and shall determine
all questions arising in the administration, interpretation and
application of the Plan. Any such determination by it shall be
conclusive and binding on all persons. It may adopt such
regulations as it deems desirable for the conduct of its affairs.
It may appoint such accountants, counsel, actuaries, specialists
and other persons as it deems necessary or desirable in
connection with the administration of this Plan, and shall be the
agent for the service of process.
3.4 The Administrative Committee shall be reimbursed by the
Employing Companies for all reasonable expenses incurred by it in
the fulfillment of its duties. Such expenses shall include any
expenses incident to its functioning, including, but not limited
to, fees of accountants, counsel, actuaries, and other
specialists, and other costs of administering the Plan.
3.5 (a) The Administrative Committee is responsible for
the daily administration of the Plan. It may appoint other
persons or entities to perform any of its fiduciary functions.
The Administrative Committee and any such appointee may employ
advisors and other persons necessary or convenient to help it
carry out its duties, including its fiduciary duties. The
Administrative Committee shall review the work and performance of
each such appointee, and shall have the right to remove any such
7
<PAGE>
appointee from his position. Any person, group of persons or
entity may serve in more than one fiduciary capacity.
(b) The Administrative Committee shall maintain
accurate and detailed records and accounts of Participants and of
their rights under the Plan and of all receipts, disbursements,
transfers and other transactions concerning the Plan. Such
accounts, books and records relating thereto shall be open at all
reasonable times to inspection and audit by the Board of
Directors and by persons designated thereby.
(c) The Administrative Committee shall take all steps
necessary to ensure that the Plan complies with the law at all
times. These steps shall include such items as the preparation
and filing of all documents and forms required by any
governmental agency; maintaining of adequate Participants'
records; recording and transmission of all notices required to be
given to Participants and their Beneficiaries; the receipt and
dissemination, if required, of all reports and information
received from an Employing Company; securing of such fidelity
bonds as may be required by law; and doing such other acts
necessary for the proper administration of the Plan. The Admini-
strative Committee shall keep a record of all of its proceedings
and acts, and shall keep all such books of account, records and
other data as may be necessary for proper administration of the
Plan. The Administrative Committee shall notify the Company upon
its request of any action taken by it, and when required, shall
notify any other interested person or persons.
8
<PAGE>
ARTICLE IV
Eligibility
4.1 Any Employee whose Compensation equals or exceeds such
minimum amount as may be established by the Administrative
Committee from time to time, may elect to participate in the Plan
beginning on any Enrollment Date by electing to have his
Compensation reduced and such amounts contributed to the Plan in
accordance with Article V, and directing the investment of such
contributions in accordance with Article VI. The Administrative
Committee shall be authorized to establish the minimum
Compensation required for eligibility to participate in the Plan
to be effective as of the first day of the next succeeding Plan
Year.
4.2 Notwithstanding the above, the Administrative Committee
shall be authorized to modify the minimum Compensation amount and
rescind the eligibility of any Participant if necessary to insure
that the Plan is maintained primarily for the purpose of
providing deferred compensation to a select group of management
or highly compensated employees under the Employee Retirement
Income Security Act of 1974, as amended.
9
<PAGE>
ARTICLE V
Election for Deferral of Payment
5.1 A Participant may elect to defer payment of a portion
of his Compensation otherwise payable to him during each payroll
period of the next succeeding Plan Year by any whole percentage
not to exceed twenty-five percent (25%) of his Compensation, or
such greater or lesser amount as shall be determined by the
Administrative Committee from time to time, such amount to be
credited to his Account under the Plan.
5.2 An Account shall be established for each Participant by
the Company or the Employing Company as of the effective date of
such Participant's initial Deferral Election.
5.3 The Deferral Election shall be made in writing on a
form prescribed by the Company and said Deferral Election shall
state:
(a) That the Participant wishes to make an election to
defer the receipt of a portion of his
Compensation;
(b) The whole percentage of the Compensation to be
deferred; and
(c) The method of payment, which shall be the payment
of a lump-sum or a series of annual payments not
to exceed ten (10) years.
5.4 The initial Deferral Election of a new Participant
shall be made by written notice signed by the Participant and
delivered to the Participant's Employing Company not later than
10
<PAGE>
the first (1st) day of the month immediately preceding the
Participant's Enrollment Date and shall be effective on such
Enrollment Date. Any modification or revocation of the most
recent Deferral Election shall be made by written notice signed
by the Participant and delivered to the Participant's Employing
Company not later than the first (1st) day of the month prior to
the next succeeding Plan Year and shall be effective on the first
day of such succeeding Plan Year. A Deferral Election with
respect to the deferral of future Compensation shall be an annual
election for each Plan Year unless otherwise modified or revoked
as provided herein. The termination of participation in the Plan
shall not affect Compensation previously deferred by a
Participant under the Plan.
5.5 Notwithstanding the provisions of Section 5.4 of the
Plan, the Administrative Committee, in its sole discretion upon
written application by a Participant, may authorize the
suspension of a Participant's Deferral Election in the event of
an unforeseen emergency or hardship of the Participant. A
suspension will be on account of hardship if it is necessary in
light of immediate and heavy financial needs of the Participant
and such needs cannot reasonably be met from other resources of
the Participant. For this purpose, amounts held in the
Participant's accounts in the Employee Savings Plan and the
Employee Stock Ownership shall not be deemed to be reasonably
available. Any suspension authorized by the Administrative
Committee shall become effective as of the first payroll period
11
<PAGE>
beginning thirty (30) days after receipt by the Participant's
Employing Company of the suspension application, or as soon as
practicable after the receipt of such application. Such
suspension shall be effective for the remainder of the Plan Year
and shall be deemed an annual election for each succeeding Plan
Year unless modified under Section 5.4 of the Plan.
5.6 The initial Deferral Election specifying the method of
distribution, whether it be lump sum or annual installments not
to exceed ten (10), may not be revoked and shall govern the
distribution of a Participant's Account. Notwithstanding, in the
sole discretion of the Administrative Committee upon application
by the Participant, the Deferral Election may be amended not
prior to 395 days nor later than 365 days prior to a
Participant's date of termination in order to change the form of
distribution of his Account in accordance with the terms of the
Plan. Each Participant making a Deferral Election in accordance
with this Article III and his successors, shall be bound as to
any action taken pursuant to the terms of the Participant's
Deferral Election and the Plan.
ARTICLE VI
Deferred Compensation Accounts
6.1 The Compensation deferred in accordance with Article
III, the amounts credited pursuant to Sections 6.2 and 6.3, and,
pursuant to each Participant's Investment Election, the amounts
computed in accordance with Section 6.5 and/or the number of
12
<PAGE>
shares computed in accordance with Section 6.6 shall be credited
to the Participant's Account.
6.2 The Account of each Participant electing to defer a
portion of his Compensation shall be credited as of the last day
of each calendar quarter with an amount equal to the difference
between the Employer Matching Contribution allocated to the
Participant's account under the Employee Savings Plan and the
Employer Matching Contribution that would have been allocated to
the Participant's account under the Employee Savings Plan if the
Compensation deferred under this Plan during such calendar
quarter were considered as compensation under the Employee
Savings Plan. The amount to be credited to a Participant's
Account under this Section 6.2 shall be calculated based on the
Participant's Compensation that would have been considered in
calculating allocations to his account under the Employee Savings
Plan, without regard to the limitations of Section 401(a)(17),
Section 401(k), Section 401(m), Section 402(g), or Section 415 of
the Code, if the Compensation deferred under this Plan during a
calendar quarter were considered as compensation under the
Employee Savings Plan.
6.3 The Account of each Participant electing to defer a
portion of his Compensation shall be credited as of the last day
of such calendar quarter with an amount equal to the difference
between the Employing Company contribution allocated to his
account under the Employee Stock Ownership Plan and the Employing
Company contribution that would have been allocated to the
13
<PAGE>
Participant's account under the Employee Stock Ownership Plan if
the Compensation deferred under this Plan during such calendar
quarter were considered as compensation under the Employee Stock
Ownership Plan. The amount to be credited to a Participant's
Account under this Section 6.3 shall be calculated based on the
Participant's Compensation that would have been considered in
calculating allocations to his account under the Employee Stock
Ownership Plan, without regard to the limitations of Section
401(a)(17) or Section 415 of the Code, if the Compensation
deferred under this Plan during a calendar quarter were
considered as compensation under the Employee Stock Ownership
Plan.
6.4 Each Participant electing to defer a portion of his
Compensation shall also be entitled to receive a monthly amount
from his Employing Company equal to the difference between his
Retirement Income under the Pension Plan of his Employing Company
and the Retirement Income he would be entitled to receive if his
Compensation deferred were considered as Earnings (as of the
calendar quarter such Compensation is deferred) for purposes of
calculating his Retirement Income under such Pension Plan. The
additional monthly Retirement Income under this Section 6.4 shall
be calculated without regard to the limitations of
Section 401(a)(17) or Section 415 of the Code. In no event shall
any amounts payable under this Section 6.4 duplicate any Pension
Benefit payable under the Supplemental Benefit Plan. Such
monthly amount shall be recalculated from time to time to reflect
14
<PAGE>
any future increases in Retirement Income of retirees under the
Pension Plan following the Participant's retirement at his Early
Retirement Date, Normal Retirement Date, or Deferred Retirement
Date under the Pension Plan, as appropriate.
6.5 The Account of each Participant electing to invest his
deferred Compensation and amounts credited pursuant to
Sections 6.2 and 6.3 of the Plan for a Plan Year in accordance
with this Section 6.5 shall be credited as of the last day of
each calendar quarter with an amount computed by the Company by
treating the Account balance as of the first day of such calendar
quarter as a sum certain to which the Employing Company will add
in lieu of interest an amount equal to the prime rate of interest
set by The First National Bank of Atlanta. Interest will be
compounded quarterly at the end of each succeeding calendar
quarter on any balance until such amount is fully distributed.
The prime rate in effect at the close of business on the first
business day of each calendar quarter shall be deemed the prime
rate in effect for such calendar quarter.
6.6 The Account of each Participant electing to invest his
deferred Compensation and amounts credited pursuant to
Sections 6.2 and 6.3 of the Plan for a Plan Year in accordance
with this Section 6.6 shall be credited as of the last day of the
calendar quarter with the number of shares (including fractional
shares) of Common Stock which could have been purchased on the
last day of such calendar quarter, based upon the Common Stock's
Closing Price on the last trading day of such calendar quarter.
15
<PAGE>
As of the last day of each calendar quarter in which occurs the
payment of dividends on the Common Stock there shall be credited
with respect to shares of Common Stock in the Participant's
Account as of the first day of such calendar quarter such
additional shares (including fractional shares) of Common Stock
as follows:
(a) In the case of cash dividends, such additional
shares as could be purchased at the Closing Price
on the last trading day during the calendar
quarter in which the payment date occurs with the
dividends which would have been payable if the
credited shares had been outstanding;
(b) In the case of dividends payable in property other
than cash or Common Stock, such additional shares
as could be purchased at the Closing Price on the
last trading day during the calendar quarter in
which the payment date occurs with the fair market
value of the property which would have been
payable if the credited shares had been
outstanding; or
(c) In the case of dividends payable in Common Stock,
such additional shares as would have been payable
on the credited shares if they had been
outstanding.
6.7 The Investment Election by a Participant with respect
to his Account shall be made in writing on a form prescribed by
16
<PAGE>
the Company. Any Investment Election shall be delivered to the
Participant's Employing Company prior to the first (1st) day of
the month immediately prior to his Enrollment Date or the next
succeeding Plan Year, as appropriate, and shall be effective on
such Enrollment Date or the first day of such succeeding Plan
Year. The Investment Election made in accordance with this
Article IV shall be irrevocable and shall continue from Plan Year
to Plan Year unless the Participant changes the Investment
Election regarding future deferred Compensation by submitting a
written request to his Employing Company on a form prescribed by
the Company not later than the first day of the month prior to
the next succeeding Plan Year. Any such change shall become
effective as of the first day of the Plan Year next following the
Plan Year in which such request is submitted to an Employing
Company. No transfer of amounts between investment options shall
be permitted under the Plan.
6.8 At the end of each Plan Year, a report shall be issued
to each Participant who has an Account and said report will set
forth the amount and the market value of any shares of Common
Stock reflected in such Account.
ARTICLE VII
Distribution of Deferred Compensation Accounts
7.1 When a Participant retires or terminates his employment
with an Employing Company, said Participant shall be entitled to
receive the market value of any shares of Common Stock (and
17
<PAGE>
fractions thereof ) reflected in his Account maintained by the
Company that has established an Account for his benefit in
accordance with his Deferral Election made pursuant to Article
III of the Plan. Such distribution shall be made not later than
sixty (60) days following the close of the calendar quarter in
which his termination of employment occurs, or as soon as
reasonably practicable thereafter. The transfer by a Participant
between companies in the Southern electric system shall not be
deemed to be a termination of employment with an Employing
Company. The market value of any shares of Common Stock credited
to a Participant's Account shall be based on the Closing Price of
such Common Stock on the last trading day of the calendar quarter
immediately preceding a lump sum distribution. No portion of a
Participant's Account shall be distributed in Common Stock.
7.2 In the event a Participant elected to receive the
distribution of his Account in annual installments, the first
payment shall be made not later than sixty (60) days following
the close of the calendar quarter in which his termination of
employment occurs, or as soon as reasonably practicable
thereafter, and shall be an amount equal to the balance in the
Participant's Account divided by the number of annual installment
payments. Each subsequent annual payment shall be an amount
equal to the balance in the Participant's Account as of the close
of the calendar quarter preceding the payment date, divided by
the number of the remaining annual payments and shall be due on
the anniversary of the preceding payment date. The market value
18
<PAGE>
of any shares of Common Stock credited to a Participant's Account
shall be based on the Closing Price of such Common Stock on the
last trading day of the calendar quarter immediately preceding an
installment distribution. No portion of a Participant's Account
shall be distributed in Common Stock.
7.3 Upon the death of a Participant, or a former
Participant prior to the payment of all amounts and the market
value of any shares of Common Stock (and fractions thereof)
credited to said Participant's Account, the unpaid balance shall
be paid in the sole discretion of the Administrative Committee
(a) in a lump sum to the designated beneficiary of a Participant
or former Participant within sixty (60) days following the close
of the calendar quarter in which the Administrative Committee is
provided evidence of the Participant's death (or as soon as
reasonably practicable thereafter) or (b) in accordance with the
Deferral Election made by such Participant or former Participant.
In the event a beneficiary designation is not on file or the
designated beneficiary is deceased or cannot be located, payment
will be made to the estate of the Participant or former
Participant. The market value of any shares of Common Stock
credited to a Participant's Account shall be based on the Closing
Price of such Common Stock on the last day of the calendar
quarter immediately preceding the date of any lump sum or
installment distribution. No portion of a Participant's Account
shall be distributed in Common Stock.
7.4 The beneficiary designation may be changed by the
19
<PAGE>
Participant or former Participant at any time without the consent
of the prior beneficiary.
7.5 Upon the total disability of a Participant or former
Participant, as determined by the Social Security Administration,
the unpaid balance of his Account shall be paid in the sole
discretion of the Administrative Committee (a) in a lump sum to
the Participant, or former Participant, or his legal
representative within sixty (60) days following the close of the
calendar quarter in which the Administrative Committee receives
notification of the determination of disability by the Social
Security Administration (or as soon as reasonable practicable
thereafter) or (b) in accordance with the Deferral Election made
by such Participant or former Participant. The market value of
any shares of Common Stock credited to a Participant's Account
shall be based on the Closing Price of such Common Stock on the
last trading day of the calendar quarter immediately preceding
the date of any lump sum or installment distribution. No portion
of a Participant's Account shall be distributed in Common Stock.
7.6 The Administrative Committee in its sole discretion
upon application made by the Participant, a designated
beneficiary, or their legal representative, may determine to
accelerate payments or, in the event of death or total disability
(as determined by Social Security Administration), to extend or
otherwise make payments in a manner different from the manner in
which such payment would be made under the Participant's Deferral
Election in the absence of such determination.
20
<PAGE>
7.7 The amount calculated in accordance with Section 6.4
with respect to the Pension Plan shall be paid in monthly amounts
on the first day of each month concurrently with and in the same
manner as the Participant's Retirement Income under the Pension
Plan.
ARTICLE VIII
Miscellaneous Provisions
8.1 Neither the Participant, his beneficiary, nor his legal
representative shall have any rights to commute, sell, assign,
transfer or otherwise convey the right to receive any payments
hereunder, which payments and the rights thereto are expressly
declared to be nonassignable and nontransferable. Any attempt to
assign or transfer the right to payments of this Plan shall be
void and have no effect.
8.2 An Employing Company maintaining an Account for the
benefit of a Participant shall not reserve or specifically set
aside funds for the payment of its obligations under the Plan,
and such obligations shall be paid solely from the general assets
of the Employing Companies. Notwithstanding that a Participant
shall be entitled to receive the balance of his Account under the
Plan, the assets from which such amount shall at all times be
subject to the claims of the creditors of the Participants
Employing Companies.
21
<PAGE>
8.3 The Plan may be amended, modified, or terminated by the
Board of Directors in its sole discretion at any time and from
time to time; provided, however, that no such amendment,
modification, or termination shall impair any rights to
Compensation which has been deferred under the Plan prior to such
amendment, modification, or termination. The Plan may also be
amended or modified by the Administrative Committee if such
amendment or modification does not involve a substantial increase
in cost to any Employing Company.
8.4 It is expressly understood and agreed that the payments
made in accordance with the Plan are in addition to any other
benefits or compensation to which a Participant may be entitled
or for which he may be eligible, whether funded or unfunded, by
reason of his employment with any Employing Company.
8.5 There shall be deducted from each payment under the
Plan the amount of any tax required by any governmental authority
to be withheld and paid over by an Employing Company to such
governmental authority for the account of the person entitled to
such distribution.
8.6 Any Compensation deferred by a Participant while
employed by an Employing Company shall not be considered
"compensation," as the term is defined in the Employee Savings
Plan, the Employee Stock Ownership Plan, or the Pension Plan.
Distributions from a Participant's Account shall not be
considered wages, salaries or compensation under any other
employee benefit plan.
22
<PAGE>
8.7 No provision of this Plan shall be construed to affect
in any manner the existing rights of an Employing Company to
suspend, terminate, alter, modify, whether or not for cause, the
employment relationship of the Participant and his Employing
Company.
8.8 This Plan, and all its rights under it, shall be
governed by and construed in accordance with the laws of the
State of Georgia.
IN WITNESS WHEREOF, the Plan has been executed pursuant to
resolutions of the Board of Directors of Southern Company
Services, Inc., this ____ day of _____________, 19__ to be
effective as provided herein.
SOUTHERN COMPANY SERVICES, INC.
By:
[CORPORATE SEAL] Thomas A. Nunnelly
Executive Vice President
Attest:
By:
Tommy Chisholm
Secretary
23
<PAGE>
(adamscl) h:\wpdocs\mtd\southern\dcom-ses.pln
24
<PAGE>
FIRST AMENDMENT TO THE
DEFERRED COMPENSATION PLAN FOR THE
SOUTHERN ELECTRIC SYSTEM
WHEREAS, the Boards of Directors of Alabama Power Company,
Georgia Power Company, Gulf Power Company, Mississippi Power
Company, Savannah Electric and Power Company, Southern Company
Services, Inc., and Southern Electric International, Inc.
(hereinafter collectively referred to as the "Employing
Companies") heretofore established the Deferred Compensation Plan
for The Southern Electric System (hereinafter referred to as the
"Plan") in order to provide certain employees of the Employing
Companies with the opportunity to elect to defer a portion of
their compensation until their death, disability, or termination
of employment with their Employing Company; and
WHEREAS, certain employees of Alabama Power Company, Georgia
Power Company, and Southern Company Services, Inc. will be
transferred to and employed by Southern Nuclear Operating Company
upon the approval by the Securities and Exchange Commission of an
application to form Southern Nuclear Operating Company as a
service company and the creation and organization of Southern
Nuclear Operating Company as a subsidiary of The Southern
Company; and
WHEREAS, the Board of Directors of Southern Company
Services, Inc. (hereinafter referred to as the "Company") desires
to amend the Plan to permit the employees of Southern Nuclear
Operating Company to participate in the Plan, upon the later of
October 1, 1988 or the approval by the Securities and Exchange
Commission of an application to form Southern Nuclear Operating
Company as a service company and the creation and organization of
Southern Nuclear Operating Company as a subsidiary of The
Southern Company; and
WHEREAS, the Board of Directors of the Company is authorized
pursuant to Section 8.3 of the Plan to amend the Plan at any
time.
NOW, THEREFORE, effective as stated herein, the Board of
Directors of the Company hereby amends the Plan as follows:
I.
Section 2.16 of the Plan shall be amended by deleting said
Section in its entirety and substituting therefor the following
language effective upon the later of October 1, 1988 or the
approval by the Securities and Exchange Commission of an
application to form Southern Nuclear Operating Company as a
service company and the creation and organization of Southern
Nuclear Operating Company as a subsidiary of The Southern
Company:
<PAGE>
2.16 "Employing Company" shall mean the Company,
or any affiliate or subsidiary (direct or indirect) of
The Southern Company, which the Board of Directors may
from time to time determine to bring under the Plan and
which shall adopt the Plan, and any successor of them.
The term "Employing Company" shall not include Electric
City Merchandise Company. The Employing Companies as
of the effective date of this amendment are:
Alabama Power Company
Georgia Power Company
Gulf Power Company
Mississippi Power Company
Savannah Electric and Power Company
Southern Company Services, Inc.
Southern Electric International, Inc.
Southern Nuclear Operating Company
II.
Except as amended herein by this First Amendment, the Plan
shall remain in full force and effect as adopted by the Employing
Companies prior to the adoption of this First Amendment.
IN WITNESS WHEREOF, Southern Company Services, Inc., through
its authorized officers, has adopted this First Amendment to the
Deferred Compensation Plan for The Southern Electric System this
____ day of __________________, ____, to be effective as stated
herein.
SOUTHERN COMPANY SERVICES, INC.
By:
Thomas A Nunnelly
Executive Vice President
Attest:
By:
Tommy Chisholm
Secretary
[CORPORATE SEAL]
(adamscl) h:\wpdocs\mtd\southern\dcom-ses.1am
-2-
<PAGE>
SECOND AMENDMENT TO THE
DEFERRED COMPENSATION PLAN FOR THE
SOUTHERN ELECTRIC SYSTEM
WHEREAS, the Boards of Directors of Alabama Power Company,
Georgia Power Company, Gulf Power Company, Mississippi Power
Company, Savannah Electric and Power Company, Southern Company
Services, Inc., Southern Electric International, Inc. and
Southern Nuclear Operating Company heretofore adopted the
Deferred Compensation Plan for the Southern Electric System (the
"Plan"); and
WHEREAS, the Board of Directors of Southern Company
Services, Inc. (the "Company") desires to amend the Plan to
comply with changes in the Securities and Exchange Act of 1934;
and
WHEREAS, under Section 8.3 of the Plan, the Board of
Directors of the Company has the authority to amend the Plan at
any time;
NOW, THEREFORE, effective as of the date of execution, the
Board of Directors hereby amends the Plan as follows:
1.
Section 5.6 of the Plan shall be amended by deleting said
Section in its entirety and substituting therefore the following
language:
5.6 The initial Deferral Election specifying the method of
distribution, whether it be lump sum or annual installments not
to exceed ten (10) may not be revoked and shall govern the
distribution of a Participant's Account. Notwithstanding the
foregoing, and except as provided below, in the sole discretion
of the Administrative Committee upon application by a
Participant, a Participant's Deferral Election may be amended not
prior to the 395th day nor later than the 365th day prior to a
Participant's date of termination in order to change the form of
distribution of his Account in accordance with the terms of the
Plan; provided, however, that any Participant who is required to
file reports pursuant to Section 16(a) of the Securities and
Exchange Act of 1934, as amended, with respect to equity
securities of The Southern Company shall not be permitted to
amend his Deferral Election during any time period for which such
Participant is required to file any such reports with respect to
the portion of his deferred Compensation invested in accordance
with the provisions of Section 6.6 of the Plan. Each Participant
making a Deferral Election in accordance with this Article V and
his successors, shall be bound as to any action taken pursuant to
the terms of the Participant's Deferral Election and the Plan.
<PAGE>
2.
Except as amended herein by this Second Amendment, the Plan
shall remain in full force and effect as adopted and amended by
the Company prior to the adoption of this Second Amendment.
IN WITNESS WHEREOF, Southern Company Services, Inc., through
its duly authorized officers, has adopted this Second Amendment
to the Deferred Compensation Plan for The Southern Electric
System this ____ day of _______________, 19__, to be effective as
of the date of execution.
SOUTHERN COMPANY SERVICES, INC.
By:
Its:
Attest:
By:
Its:
[CORPORATE SEAL]
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<PAGE>
Exhibit 10(b)18
Amendment No. 2 to
The Power Contract between
Southern Electric Generating Company,
Alabama Power Company and Georgia Power Company
This Amendment No. 2 to the Power Contract dated January 27, 1959, is
made and entered into this 4th day of November, 1993, by and between Southern
Electric Generating Company (SEGCO), a corporation organized and existing under
the laws of the State of Alabama with its principal office in Birmingham,
Alabama; Alabama Power Company (ALABAMA), a corporation organized and existing
under the laws of the State of Alabama with its principal office in Birmingham,
Alabama; and Georgia Power Company (GEORGIA), a corporation organized and
existing under the laws of the State of Georgia with its principal office in
Atlanta, Georgia.
W I T N E S S E T H
WHEREAS, SEGCO is a subsidiary of ALABAMA and GEORGIA, each of which
owns 50% of the outstanding common stock of SEGCO;
WHEREAS, both ALABAMA and GEORGIA are wholly-owned subsidiaries of The
Southern Company, a registered holding company under the Public Utility Holding
Company Act of 1935;
WHEREAS, SEGCO was formed to make available to ALABAMA and GEORGIA the
benefit of economies resulting from low-cost fuel and large generating units;
WHEREAS, in furtherance of this purpose SEGCO constructed and now owns
a share of the Ernest C. Gaston Steam Plant located near Wilsonville, Alabama,
which share consists of four coal-fired steam generating units and one
combustion turbine unit with an aggregate nameplate rating of 1,019,680
kilowatts;
WHEREAS, ALABAMA acts as SEGCO's agent in the operating of its share of
the Ernest C. Gaston Steam Plant and performs certain other functions, including
accounting, under an agreement between SEGCO and ALABAMA;
<PAGE>
- 2 -
WHEREAS, SEGCO sells the entire capacity and output of its generating
units to ALABAMA and GEORGIA pursuant to the provisions of a Power Contract
dated January 27, 1959 ("the Power Contract"), which has been amended from time
to time;
WHEREAS, the Power Contract is set to expire by its terms on June 1,
1994;
WHEREAS, extension of the Power Contract is necessary and appropriate
to avoid expiration; and
WHEREAS, the parties wish to avoid expiration of the Power
Contract by extending the term of the Power Contract.
NOW, THEREFORE, in consideration of the foregoing and the mutual
covenants and agreements hereinafter stated, SEGCO, ALABAMA and GEORGIA agree
and contract as follows:
1. This Amendment No. 2 to the Power Contract shall become effective
on June 1, 1994.
2. Article IX, Section 9.08 of the Power Contract is amended by
deleting such provision in its entirety and substituting therefore the following
revised Article IX, Section 9.08:
Section 9.08 Term of Agreement: This Agreement shall continue in
effect until the 31st day of May, 1996, and thereafter shall be
automatically extended for succeeding periods of two (2) years, unless
terminated by any party to this Contract upon two (2) years written notice
to the other parties to this Contract; provided, however, that the
provisions of Article VI and of Section 9.11 shall continue in full force
and effect in accordance with the terms of Article VI.
IN WITNESS WHEREOF, the parties hereto have caused this Amendment No. 2 to
the Power Contract to be executed by their duly authorized officers.
<PAGE>
- 3 -
ATTEST: SOUTHERN ELECTRIC GENERATING COMPANY
_____________________ By _____________________________________
Secretary Mr. E. B. Harris
President
ATTEST: ALABAMA POWER COMPANY
---------------------
Secretary By _____________________________________
Mr. W. B. Hutchins, III
Senior Vice President and Chief Financial Officer
ATTEST: GEORGIA POWER COMPANY
_____________________ By _____________________________________
Secretary Mr. A. W. Dahlberg
President and Chief Executive Officer
Exhibit 10(d)18
PENSION PLAN
FOR EMPLOYEES OF
GULF POWER COMPANY
AS AMENDED AND RESTATED
EFFECTIVE AS OF JANUARY 1, 1989
<PAGE>
TABLE OF CONTENTS
Page
ARTICLE I
Definitions . . . . . . . . . . . 2
ARTICLE II
Eligibility . . . . . . . . . . . 13
2.1 Employees . . . . . . . . . . . . . . . . . . . . . 13
2.2 Employees represented by a collective bargaining
agent . . . . . . . . . . . . . . . . . . . . . . . 13
2.3 Persons in military service and Employees on
authorized leave of absence . . . . . . . . . . . . 13
2.4 Employees reemployed . . . . . . . . . . . . . . . 14
2.5 Participation upon return to eligible class . . . . 14
2.6 Exclusion of certain categories of employees . . . 14
2.7 Waiver of participation . . . . . . . . . . . . . . 15
ARTICLE III
Retirement . . . . . . . . . . . 16
3.1 Retirement at Normal Retirement Date . . . . . . . 16
3.2 Retirement at Early Retirement Date . . . . . . . . 16
3.3 Retirement at Deferred Retirement Date . . . . . . 16
ARTICLE IV
Determination of Accredited Service . . . . . 17
4.1 Accredited Service pursuant to Prior Plan . . . . . 17
4.2 Accredited Service . . . . . . . . . . . . . . . . 17
4.3 Accredited Service and Years of Service in respect
of service of certain Employees previously
employed by the Employer or by Affiliated
Employers . . . . . . . . . . . . . . . . . . . . . 18
4.4 Accrual of Retirement Income during period of
total disability . . . . . . . . . . . . . . . . . 20
4.5 Employees leaving Employer's service . . . . . . . 21
4.6 Transfers to or from Affiliated Employers . . . . . 21
4.7 Transfers from Savannah Electric and Power
Company . . . . . . . . . . . . . . . . . . . . . . 23
ARTICLE V
Retirement Income . . . . . . . . . . 24
5.1 Normal Retirement Income . . . . . . . . . . . . . 24
i
<PAGE>
5.2 Minimum Retirement Income payable upon retirement
at Normal Retirement Date or Deferred Retirement
Date . . . . . . . . . . . . . . . . . . . . . . . 24
5.3 Minimum Retirement Income upon retirement at Early
Retirement Date or upon termination of service by
reason of death or otherwise prior to retirement . 25
5.4 Calculation of Social Security Offset . . . . . . . 26
5.5 Early Retirement Income . . . . . . . . . . . . . . 27
5.6 Deferred Retirement Income . . . . . . . . . . . . 27
5.7 Payment of Retirement Income . . . . . . . . . . . 28
5.8 Termination of Retirement Income . . . . . . . . . 29
5.9 Required distributions . . . . . . . . . . . . . . 29
5.10 Suspension of Retirement Income for
reemployment . . . . . . . . . . . . . . . . . . . 31
5.11 Increase in Retirement Income of retired
Employees for service prior to January 1, 1991 . . 31
5.12 Special provisions relating to the treatment of
absence of an Employee from the service of the
Employer to serve in the Armed Forces of the
United States . . . . . . . . . . . . . . . . . . . 32
ARTICLE VI
Limitations on Benefits . . . . . . . . 36
6.1 Maximum Retirement Income . . . . . . . . . . . . . 36
6.2 Adjustment to Defined Benefit Dollar Limitation
for Early or Deferred Retirement . . . . . . . . . 37
6.3 Adjustment of limitation for Years of Service or
participation . . . . . . . . . . . . . . . . . . . 38
6.4 Preservation of Accrued Retirement Income . . . . . 38
6.5 Limitation on benefits from multiple plans . . . . 39
6.6 Special rules for plans subject to overall
limitations under Code Section 415(e) . . . . . . . 40
6.7 Combination of Plans . . . . . . . . . . . . . . . 41
6.8 Incorporation of Code Section 415 . . . . . . . . . 41
ARTICLE VII
Provisional Payee . . . . . . . . . . 42
7.1 Adjustment of Retirement Income to provide for
payment to Provisional Payee . . . . . . . . . . . 42
7.2 Form and time of election and notice requirements . 42
7.3 Circumstances in which election and designation
are inoperative . . . . . . . . . . . . . . . . . . 43
7.4 Pre-retirement death benefit . . . . . . . . . . . 44
7.5 Post-retirement death benefit - qualified joint
and survivor annuity . . . . . . . . . . . . . . . 46
7.6 Election and designation by former Employee
entitled to Retirement Income in accordance with
Article VIII . . . . . . . . . . . . . . . . . . . 46
7.7 Death benefit for Provisional Payee of former
Employee . . . . . . . . . . . . . . . . . . . . . 48
ii
<PAGE>
7.8 Limitations on Employee's and Provisional Payee's
benefits . . . . . . . . . . . . . . . . . . . . . 48
7.9 Effect of election under Article VII . . . . . . . 49
ARTICLE VIII
Termination of Service . . . . . . . . 50
8.1 Vested interest . . . . . . . . . . . . . . . . . . 50
8.2 Early distribution of vested benefit . . . . . . . 50
8.3 Years of Service of reemployed Employees . . . . . 51
8.4 Cash-out and buy-back . . . . . . . . . . . . . . . 52
8.5 Calculation of present value for cash-out of
benefits and for determining amount of benefits . . 53
8.6 Retirement Income under Prior Plan . . . . . . . . 55
8.7 Requirement for Direct Rollovers . . . . . . . . . 55
ARTICLE IX
Contributions . . . . . . . . . . . 57
9.1 Contributions generally . . . . . . . . . . . . . . 57
9.2 Return of Employer contributions . . . . . . . . . 57
9.3 Expenses . . . . . . . . . . . . . . . . . . . . . 58
ARTICLE X
Administration of Plan . . . . . . . . 59
10.1 Retirement Board . . . . . . . . . . . . . . . . . 59
10.2 Organization and transaction of business of
Retirement Board . . . . . . . . . . . . . . . . . 59
10.3 Administrative responsibilities of Retirement
Board . . . . . . . . . . . . . . . . . . . . . . . 59
10.4 Retirement Board, the "Administrator" . . . . . . . 60
10.5 Fiduciary responsibilities . . . . . . . . . . . . 61
10.6 Employment of actuaries and others . . . . . . . . 61
10.7 Accounts and tables . . . . . . . . . . . . . . . . 61
10.8 Indemnity of members of Retirement Board . . . . . 62
10.9 Areas in which the Retirement Board does not have
responsibility . . . . . . . . . . . . . . . . . . 62
10.10 Claims Procedures . . . . . . . . . . . . . . . . 63
ARTICLE XI
Management of Trust . . . . . . . . . 64
11.1 Trust . . . . . . . . . . . . . . . . . . . . . . . 64
11.2 Disbursement of the Trust Fund . . . . . . . . . . 64
11.3 Rights in the Trust . . . . . . . . . . . . . . . . 64
11.4 Merger of the Plan . . . . . . . . . . . . . . . . 65
ARTICLE XII
Termination of the Plan . . . . . . . . 66
12.1 Termination of the Plan . . . . . . . . . . . . . . 66
iii
<PAGE>
12.2 Limitation on benefits for certain highly paid
employees . . . . . . . . . . . . . . . . . . . . . 66
ARTICLE XIII
Amendment of the Plan . . . . . . . . . 68
13.1 Amendment of the Plan . . . . . . . . . . . . . . . 68
ARTICLE XIV
Special Provisions . . . . . . . . . 69
14.1 Adoption of Plan by other corporations . . . . . . 69
14.2 Exclusive benefit . . . . . . . . . . . . . . . . . 70
14.3 Assignment or alienation . . . . . . . . . . . . . 70
14.4 Voluntary undertaking . . . . . . . . . . . . . . . 71
14.5 Top-Heavy Plan requirements . . . . . . . . . . . . 71
14.6 Determination of Top-Heavy status . . . . . . 71
14.7 Minimum Retirement Income for Top-Heavy Plan
Years . . . . . . . . . . . . . . . . . . . . . . . 75
14.8 Vesting requirements for Top-Heavy Plan Years . . . 76
14.9 Adjustments to maximum benefits for Top-Heavy
Plans . . . . . . . . . . . . . . . . . . . . . . . 77
ARTICLE XV
Post-retirement Medical Benefits . . . . . . 78
15.1 Definitions . . . . . . . . . . . . . . . . . . . . 78
15.2 Eligibility of Pensioned Employees and their
Dependents . . . . . . . . . . . . . . . . . . . . 80
15.3 Medical benefits . . . . . . . . . . . . . . . . . 82
15.4 Termination of coverage . . . . . . . . . . . . . . 82
15.5 Continuation of coverage to certain individuals . . 82
15.6 Contributions to fund medical benefits . . . . . . 83
15.7 Pensioned Employee contributions . . . . . . . . . 84
15.8 Amendment of Article XV . . . . . . . . . . . . . . 84
15.9 Termination of Article XV . . . . . . . . . . . . . 85
15.10 Reversion of assets upon termination . . . . . . . 85
iv
<PAGE>
Introductory Statement
The Pension Plan for Employees of Gulf Power Company, as
amended and restated effective as of January 1, 1989 and
hereinafter set forth (the "Plan"), is a modification and
continuation of the Pension Plan for Employees of Gulf Power
Company which originally became effective July 1, 1944, and has
been amended from time to time.
Since the enactment of the Employee Retirement Income
Security Act of 1974 ("ERISA"), the Plan has been amended
numerous times to comply with changes in the law and to achieve
other administrative goals. Initially, the Plan was amended and
restated in 1976 to comply with ERISA. Thereafter, the Plan was
again amended and restated in 1986 to comply with the Tax Equity
and Fiscal Responsibility Act of 1982, the Retirement Equity Act
of 1984, and the Deficit Reduction Act of 1984. In more recent
years, the Plan has been amended and restated three times to
comply with the Tax Reform Act of 1986 -- first in 1989, second
in 1991 and again as amended and restated herein. The amendment
and restatement set forth herein consolidates those amendments
made in 1989 and 1991 and provides for such other appropriate
changes as are required by the law. Accordingly, this amendment
and restatement is effective as of January 1, 1989. Where
appropriate, amendments to the Plan which have a different
effective date are noted.
Retirement Income of former Employees (or Provisional Payees
of former Employees) who retired in accordance with the
provisions of the Prior Plan, as defined herein, is payable in
accordance with the provisions of the Prior Plan.
All contributions made by the Employer to this Plan are
expressly conditioned upon the continued qualification of the
Plan under Section 401(a) of the Code, including any amendments
to the Plan, and upon the deductibility of such contributions by
the Employer pursuant to Section 404 of the Code.
1
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ARTICLE I
Definitions
The following words and phraseology as used herein have the
following meanings unless a different meaning is plainly required
by the context:
1
1.1 "Accrued Retirement Income" means with respect to any
Employee at any particular date, the Retirement Income,
determined pursuant to Section 5.1, commencing on his Normal
Retirement Date which would be payable to such Employee in the
form of a single life annuity on the basis of his Accredited
Service to the date as of which the computation of Retirement
Income is made.
1.2 "Accredited Service" means with respect to any Employee
included in the Plan, the period of service as provided in
Article IV.
1.3 "Actuarial Equivalent" means a benefit of equivalent
value when computed on the basis of five percent (5%) interest
per annum, compounded annually and the 1951 Group Annuity
Mortality Table for males. The ages for all Employees under the
above table shall be set back six (6) years and the ages for such
Employees' spouses shall be set back one year. All actuarial
adjustments and actuarial determinations required and made under
the terms of the Plan shall be calculated in accordance with such
assumptions.
1.4 "Affiliated Employer" means any corporation which is a
member of a controlled group of corporations (as defined in
Section 414(b) of the Code) which includes the Employer; any
trade or business (whether or not incorporated) which is under
common control (as defined in Section 414(c) of the Code) with
the Employer; any organization (whether or not incorporated)
which is a member of an affiliated service group (as defined in
Section 414(m) of the Code) which includes the Employer; and any
other entity required to be aggregated with the Employer pursuant
to regulations under Section 414(o) of the Code.
1.5 "Average Monthly Earnings" means the greater of:
(a) an Employee's Monthly Earnings averaged over the three (3)
highest Plan Years of participation which shall produce the
highest monthly average within the last ten (10) Plan Years; or
(b) an Employee's Monthly Earnings averaged over the three (3)
highest Plan Years of participation which shall produce the
highest monthly average within the last ten (10) Plan Years
during which the Employee actively performed services for the
Employer. If an Employee has completed less than three (3) Plan
Years of participation upon his termination of employment, his
2
<PAGE>
Average Monthly Earnings will be based on his Earnings during his
participation to his date of termination.
1.6 "Board of Directors" means the Board of Directors of
Gulf Power Company.
1.7 "Code" means the Internal Revenue Code of 1986, as
amended from time to time.
1.8 "Current Accrued Retirement Income" means an Employee's
Accrued Retirement Income under the Plan, determined as if the
Employee had separated from service as of the close of the last
Limitation Year beginning before January 1, 1987, when expressed
as an annual benefit within the meaning of Section 415(b)(2) of
the Code. In determining the amount of an Employee's Current
Accrued Retirement Income, the following shall be disregarded:
(a) any change in the terms and conditions of the Plan
after May 5, 1986; and
(b) any cost of living adjustment occurring after May 5,
1986.
1.9 "Deferred Retirement Date" means the first day of the
month after a retirement subsequent to the Normal Retirement
Date.
Employment subsequent to Normal Retirement Date shall be
deemed to be a retirement if an Employee has less than forty (40)
Hours of Service during a calendar month.
1.10 "Defined Benefit Dollar Limitation" means the
limitation set forth in Section 415(b)(1)(A) or (d) of the Code.
1.11 "Defined Contribution Dollar Limitation" means the
limitation set forth in Section 415(c)(1)(A) of the Code.
1.12 "ERISA" means the Employee Retirement Income Security
Act of 1974, as amended from time to time.
1.13 "Early Retirement Date" means the first day of the
month following the retirement of an Employee on or after his
fifty-fifth (55th) birthday and before his sixty-fifth (65th)
birthday.
1.14 (a) "Earnings" with respect to any Employee including
any Employee whose service is terminated by reason of disability
(as defined in Section 4.4) means (1) the highest annual rate of
salary or wages of an Employee of the Employer or employee of any
Affiliated Employer within any Plan Year before deductions for
taxes, Social Security, etc., (2) all amounts contributed by the
Employer or any Affiliated Employer to The Southern Company
3
<PAGE>
Employee Savings Plan as Elective Employer Contributions, as said
term is described under Section 4.1 of such plan, pursuant to the
Employee's exercise of his deferral option made thereunder in
accordance with the requirements of Section 401(k) of the Code,
and (3) all amounts contributed by the Employer or any Affiliated
Employer to The Southern Electric System Flexible Benefits Plan
or The Southern Company Flexible Benefits Plan on behalf of an
Employee pursuant to his salary reduction election, and applied
to provide one or more of the optional benefits available under
such plan, but (4) shall exclude all amounts deferred under any
non-qualified deferred compensation plan maintained by the
Employer or any Affiliated Employer.
(b) Notwithstanding the above, "Earnings" with respect to
any commissioned salesperson means the salary or wages of an
Employee of the Employer or employee of any Affiliated Employer
within any Plan Year, without including overtime, and before
deductions for taxes, Social Security, etc. but applying those
adjustments identified in paragraphs (a)(2), (3) and (4) above.
(c) With respect to an Employee whose service terminates
because of a disability under Section 4.4, Earnings shall be
deemed to continue in effect throughout the period of the
Employee's Disability Leave, as also defined in Section 4.4.
(d) With respect to calculating the Prior Plan Retirement
Income of an Employee who is a "participant in the Plan" as
provided in Section 5.12, Earnings shall be determined for the
recognized period of his absence to serve in the Armed Forces of
the United States at the rate which is paid to him on the day he
returns to the service of the Employer as provided in
paragraph (a) of Section 5.12 or at the rate which was payable to
him at the time he left the employment of the Employer to enter
the Armed Forces of the United States, if such amount was
greater.
(e) For Plan Years beginning after December 31, 1988 and
prior to January 1, 1994, the annual compensation of each
Employee taken into account for purposes of this Plan shall not
exceed $200,000 (as adjusted by the Secretary of Treasury). The
imposition of this limitation shall not reduce an Employee's
Retirement Income below the amount as determined on December 31,
1988. In addition to other applicable limitations set forth in
the Plan, and notwithstanding any other provision of the Plan to
the contrary, for Plan Years beginning on or after January 1,
1994, the annual compensation of each Employee taken into account
under the Plan shall not exceed $150,000, as adjusted for
increases in the cost of living in accordance with Code
Section 401(a)(17). The cost of living adjustment in effect for
a calendar year applies to any period, not exceeding twelve (12)
months, over which compensation is determined (the "determination
period") beginning in such calendar year. If the determination
4
<PAGE>
period is less than twelve (12) months, the limit shall be
prorated.
If compensation for any prior determination period is taken
into account in determining an Employee's benefits accruing in
the current Plan Year beginning on or after January 1, 1989 or
January 1, 1994, as applicable, the compensation for that prior
determination period is subject to the $200,000 or the $150,000
compensation limit in effect for that prior determination period.
Notwithstanding any other provision in the Plan, each
Employee's Accrued Retirement Income under this Plan will be the
greater of:
(a) the Employee's Accrued Retirement Income as of the last
day of the last Plan Year beginning before January 1,
1994, frozen in accordance with Treasury Regulation
Section 1.401(a)(4)-13, or
(b) the Employee's Accrued Retirement Income determined
with respect to the benefit formula applicable for the
Plan Year beginning on or after January 1, 1994, as
applied to the employee's total Years of Service taken
into account under the Plan for purposes of benefit
accruals.
For purposes of this Section 1.14, the rules of Section
414(q)(6) of the Code shall apply in determining the adjusted
$200,000 or $150,000 limitation, as applicable, except in
applying such rules, the term "family" shall include only the
spouse of the Employee and any lineal descendants of the Employee
who have not attained age nineteen (19) before the close of the
Plan Year. If, as a result of the application of such rules, the
adjusted $200,000 or $150,000 limitation is exceeded, then the
limitation shall be prorated among the affected individuals in
proportion to each individual's Earnings determined under this
Section 1.14 prior to the application of this limitation.
1.15 "Effective Date" means the original effective date of
the Plan, July 1, 1944. The effective date of this amendment and
restatement means January 1, 1989.
1.16 "Eligibility Year of Service" is a Year of Service
commencing on the Employee's date of employment or reemployment
or anniversary date thereof.
1.17 "Employee" means any person who is currently employed
by the Employer as (a) a regular full-time employee, (b) a
regular part-time employee, (c) a cooperative education employee,
or (d) a temporary employee (whether full-time or part-time) paid
directly or indirectly by the Employer. The term also includes
"leased employees" within the meaning of Section 414(n)(2) of the
5
<PAGE>
Code, unless the total number of leased employees constitutes
less than twenty percent (20%) of the Employer's non-highly
compensated workforce within the meaning of Section
414(n)(5)(C)(ii) and such leased employees are covered by a plan
described in Section 414(n)(5)(B) of the Code.
1.18 "Employer" means Gulf Power Company, any successor or
successors thereof and any wholly owned subsidiary thereof which
the Board of Directors may from time to time, and upon such terms
and conditions as may be fixed by the Board of Directors,
determine to bring under the Plan, and any other corporation
which shall adopt this Plan and Trust Agreement pursuant to
Section 14.1 by appropriate resolution authorized by the board of
directors of said adopting corporation.
1.19 "Full Current Costs" means the normal cost, as defined
in Treasury Regulation Section 1.404(a)-6, for all years since
the Effective Date of the Plan, plus interest on any unfunded
liability during such period.
1.20 "Hour of Service" means an Employee shall be credited
with one Hour of Service for each hour for which (a) he is paid,
or entitled to payment, for the performance of duties for the
Employer or an Affiliated Employer, and such hours shall be
credited to the Employee for the computation period or periods in
which the duties are performed; (b) he is paid, or entitled to
payment, by the Employer or an Affiliated Employer on account of
a period of time during which no duties are performed
(irrespective of whether the employment relationship has
terminated) due to vacation, holiday, illness, incapacity
(including disability), layoff, jury duty, military duty, or
leave of absence in which case the Employee shall be credited
with Hours of Service for the computation period or periods in
which the period during which no duties were performed occurs;
(c) back pay, irrespective of mitigation of damages, has been
either awarded or agreed to by the Employer or an Affiliated
Employer, in which case the Employee shall be credited with Hours
of Service for the computation period or periods to which the
award or agreement pertains, rather than the computation period
in which the award, agreement, or payment is made; and (d) solely
for the purpose of calculating Vesting Years of Service, he was
on any form of authorized leave of absence. The same Hours of
Service shall not be credited under clauses (a), (b), (c), and
(d).
An Employee who is entitled to be credited with Hours of
Service in accordance with clause (b) or (d) of this Section
shall be credited with such number of Hours of Service for the
period of time during which no duties were performed as though he
were in the active employment of the Employer during such period
of time. However, an Employee shall not be credited with Hours
of Service in accordance with clause (b) of this Section for
6
<PAGE>
unused vacation for which payment is received at termination of
employment, or if the payment which is made to him or to which he
is entitled in accordance with clause (b) is made or due under a
plan maintained solely for the purpose of complying with
applicable Worker's Compensation, or unemployment compensation or
disability insurance laws, or if such payment is one which solely
reimburses an Employee for medical or medically related expenses
incurred by the Employee.
Provided there is no duplication of Hours of Service
credited in accordance with the foregoing provisions, if an
Employee is "a participant in the Plan" within the meaning of
that term as defined in paragraph (a) of Section 5.12, he shall
be credited with such number of Hours of Service with respect to
all or such portion of the period of his absence to serve in the
Armed Forces of the United States as may be recognized under
paragraph (b) of Section 5.12 as though he were in the active
employment of the Employer during the recognized period of his
absence to serve in the Armed Forces.
The rules set forth in paragraphs (b) and (c) of Department
of Labor Regulations 2530.200b-2 are incorporated in the Plan by
this reference and made a part hereof.
1.21 "Limitation Year" means the Plan Year.
1.22 "Monthly Earnings" means one-twelfth (1/12) of the
Earnings of an Employee of the Employer during a Plan Year.
1.23 "Normal Retirement Date" means the first day of the
month following an Employee's sixty-fifth (65th) birthday, except
that the Normal Retirement Date of any Employee hired on or after
his sixtieth (60th) birthday shall be the fifth (5th) anniversary
of his initial participation in the Plan.
1.24 "One-Year Break in Service" means a twelve (12)
consecutive month period commencing on or after January 1, 1976
which would constitute a Year of Service but for the fact that
the Employee has not completed more than 500 Hours of Service
during such period.
Solely for the purpose of determining whether a One-Year
Break in Service has occurred for eligibility or vesting
purposes, an Employee who is absent from work for maternity or
paternity reasons shall receive credit for the Hours of Service
which would otherwise have been credited to such Employee but for
such absence, or in any case in which such hours cannot be
determined, eight (8) Hours of Service per day of such absence.
In no event shall Hours of Service credited under this paragraph
be in excess of the amount necessary to prevent a One-Year Break
in Service from occurring. For purposes of this paragraph, an
absence from work for maternity or paternity reasons means an
7
<PAGE>
absence (a) by reason of the pregnancy of the Employee, (b) by
reason of a birth of a child of the Employee, (c) by reason of
the placement of a child with the Employee in connection with the
adoption of such child by such Employee, or (d) for purposes of
caring for such child for a period beginning immediately
following such birth or placement. The Hours of Service shall be
credited under this paragraph: (a) in the vesting or eligibility
period in which the absence begins if the Hours of Service
credited are necessary to prevent a One-Year Break in Service in
such period, and (b) in all other cases, in the vesting or
eligibility period following the period in which the absence
begins.
1.25 "Past Service" means with respect to any Employee
included in the Plan, the period of his Accredited Service prior
to January 1, 1989 as determined under the Prior Plan.
1.26 "Plan" means the Pension Plan for Employees of Gulf
Power Company, as set forth herein and as hereinafter amended,
effective January 1, 1989.
1.27 "Plan Year" means the twelve (12) month period
commencing on the first day of January and ending on the last day
of December next following.
1.28 "Plan Year of Service" is a Year of Service determined
as if the date of employment or reemployment is the first day of
the Plan Year.
1.29 "Prior Plan" means the Plan in effect prior to January
1, 1989.
1.30 "Provisional Payee" means a spouse designated or
deemed to have been designated by an Employee or former Employee
pursuant to Article VII to receive Retirement Income on the death
of the Employee or former Employee.
1.31 "Qualified Election" means an election by an Employee
or former Employee that concerns the form of distribution of
Retirement Income that must be in writing and must be consented
to by the Employee's Spouse. The Spouse's consent to such an
election must acknowledge the effect of such election, must be in
writing, and must be witnessed by a notary public.
Notwithstanding this consent requirement, if the Employee
establishes to the satisfaction of the Retirement Board that such
written consent may not be obtained because the Spouse cannot be
located or because of such other circumstances as the Secretary
of the Treasury may by regulations prescribe, an election by the
Employee will be deemed a Qualified Election. Any consent
necessary under this provision shall be valid and effective only
with respect to the Spouse who signs the consent, or in the event
of a deemed Qualified Election, with respect to such Spouse.
8
<PAGE>
A revocation of a prior Qualified Election to waive the
payment of Retirement Income to the Employee's Spouse may be made
by the Employee without consent at any time commencing within 90
days before such Employee's 55th birthday but not later than
before the commencement of Retirement Income. A Qualified
Election or the revocation of a Qualified Election shall be on a
form furnished by the Retirement Board and filed within the time
prescribed for making such election.
1.32 "Retirement Board" means the managing board of the
Plan provided for in Article X.
1.33 "Retirement Date" means the Employee's Normal, Early,
or Deferred Retirement Date, whichever is applicable to him.
1.34 "Retirement Income" means the monthly Retirement Income
provided for by the Plan.
1.35 "Social Security Offset" shall mean an amount equal to
one-half (1/2) of the amount, if any, of the Federal primary
Social Security benefit (primary old age insurance benefit) to
which it is estimated that an Employee will become entitled in
accordance with the Social Security Act in force as provided in
subparagraphs (a) through (e) below which shall exceed $168 per
month on and after January 1, 1989, and $250 per month, on and
after January 1, 1991, multiplied by a fraction not greater than
one, the numerator of which shall be the Employee's total
Accredited Service, and the denominator of which shall be the
aggregate Accredited Service the Employee could have accumulated
if he had continued his employment until his Normal Retirement
Date. For purposes of determining the estimated Federal primary
Social Security benefit used in the Social Security Offset, an
Employee shall be deemed to be entitled to receive Federal
primary Social Security benefits after retirement or death, if
earlier, regardless of the fact that he may have disqualified
himself to receive payment thereof. In addition to the
foregoing, the calculation of the Social Security benefit shall
be based on the salary history of the Employee as provided in
Section 5.4(b) and shall be determined pursuant to the following,
as applicable:
(a) With regard to an Employee described in Section 5.2,
the Social Security benefit shall be computed at retirement. In
estimating the amount of the Federal primary Social Security
benefit to which the Employee would be entitled, it shall be
assumed that he will receive no wages for Social Security
purposes after his retirement on his Normal Retirement Date or
Deferred Retirement Date, and it will be further assumed in
calculating his estimated Federal primary Social Security benefit
that the amount thereof will be the amount determined under the
recomputation provision, if applicable, of the Social Security
Act in effect at the time of his retirement.
9
<PAGE>
(b) With regard to an Employee described in Section 5.3(a),
the Social Security benefit to which it is estimated that he will
be entitled at sixty-five (65), shall be computed at the time of
his retirement. In estimating the amount of the Federal primary
Social Security benefit to which the Employee would be entitled
at age sixty-five (65), it shall be assumed that he will receive
no wages for Social Security purposes after his Early Retirement
Date, and it will be further assumed in calculating his estimated
Federal primary Social Security benefit that the amount thereof
will be the amount determined under the recomputation provision,
if applicable, of the Social Security Act in effect at his Early
Retirement Date.
(c) With regard to an Employee described in Section 5.3(b),
the Social Security benefit to which it is estimated that he
would have been entitled to receive at age sixty-five (65) or his
date of death, if later, had he not died, shall be computed at
the time of his death. In estimating the amount of Federal
primary Social Security benefit to which the Employee would have
been entitled at age sixty-five (65) or his date of death, if
later, it shall be assumed that he would not have received any
wages for Social Security purposes after the date of his death,
and it will be further assumed in calculating his Federal primary
Social Security benefit that the amount thereof will be the
amount determined under the recomputation provision, if
applicable, of the Social Security Act in effect at the time of
his death.
(d) With regard to an Employee described in Section 5.3(c),
the Social Security benefit to which it is estimated that he will
become entitled at age sixty-five (65) or his date of
termination, if later, shall be computed at the date of
termination. In estimating the amount of the Federal primary
Social Security benefit to which the Employee would be entitled
at age sixty-five (65) or his date of termination, if later, it
shall be assumed that he will receive no wages for Social
Security purposes after his date of termination, and it will be
further assumed in calculating his estimated Federal primary
Social Security benefit that the amount thereof will be the
amount determined under the recomputation provision, if
applicable, of the Social Security Act in effect at his date of
termination.
(e) With regard to an Employee described in Section 5.3(d),
the Social Security benefit to which it is estimated that he
would have been entitled to receive at age sixty-five (65) or his
initial date of disability, if later, had he not become disabled,
shall be computed at the time of his retirement. In estimating
the amount of Federal primary Social Security benefit to which
the Employee would have been entitled at age sixty-five (65) or
his date of disability, if later, it shall be assumed that he
would have received wages for Social Security purposes as
10
<PAGE>
specified in Section 5.4, and it will be further assumed in
calculating his estimated Federal primary Social Security benefit
that the amount thereof will be the amount determined under the
recomputation provision, if applicable, of the Social Security
Act in effect at the time of his retirement.
1.36 "Social Security Retirement Age" means age sixty-five
(65) if the Employee attains age sixty-two (62) before January 1,
2000 (i.e., born before January 1, 1938), age sixty-six (66) if
the Employee attains age sixty-two (62) after December 31, 1999,
but before January 1, 2017 (i.e., born after December 31, 1937,
but before January 1, 1955), and age sixty-seven (67) if the
Employee attains age sixty-two (62) after December 31, 2016
(i.e., born after December 31, 1954).
1.37 "Trust" or "Trust Fund" means all such money or other
property which shall be held by the Trustee pursuant to the terms
of the Trust Agreement or pursuant to contracts with life
insurance companies.
1.38 "Trust Agreement" means the trust agreement or
agreements between the Employer and the Trustee established for
the purpose of funding the Retirement Income to be paid.
1.39 "Trustee" means the trustee or trustees acting as such
under the Trust Agreement, including any successor or successors.
1.40 "Vesting Year of Service" means an Employee's Years of
Service including: (a) Years of Service with an Affiliated
Employer; (b) in the case of an employee of Birmingham Electric
Company who, prior to his Normal Retirement Date, became and
remained an Employee of the Employer until December 1, 1952, and
was an active Employee of the Employer on January 1, 1961, his
service with Birmingham Electric Company; (c) subject to the
eligibility requirements of Section 2.3, active service with the
Armed Forces of the United States if the Employee entered or
enters active service or training in such Armed Forces directly
from the employ of the Employer and after discharge or release
therefrom returns within ninety (90) days to the employ of the
Employer or is deemed to return under Section 2.3 because of the
death of such Employee while in active service with such Armed
Forces; and (d) any period during which the Employee was on any
other form of authorized leave of absence. For purposes of this
Section 1.40 in determining Vesting Years of Service with respect
to a period of absence referred to in clause (c) or (d) of this
Section 1.40, an Employee shall be credited with Hours of Service
as though the period of absence were a period of active
employment with the Employer.
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<PAGE>
1.41 "Year of Service" means with respect to an Employee in
the service of the Employer on or after January 1, 1976:
(a) if the Employee was hired prior to January 1, 1976,
each twelve (12) consecutive month period, computed from the
Employee's most recent date of hire by the Employer, during his
last period of continuous service as a full-time regular Employee
(except that service prior to July 1, 1944 need not have been
continuous) with the Employer immediately prior to January 1,
1976 (including service with Commonwealth and predecessor
companies and service with Affiliated Employers and service with
companies or properties heretofore affiliated or associated prior
to the date of severance of such affiliation or association) and
any subsequent twelve (12) consecutive month period commencing on
an anniversary date of such date of hire (or date of reemployment
as provided in Section 2.4), provided that in each such twelve
(12) consecutive month period commencing on or after January 1,
1975 he has completed at least 1000 Hours of Service; or
(b) if the Employee is hired on or after January 1, 1976, a
twelve (12) consecutive month period after December 31, 1975,
commencing on the Employee's most recent date of hire by the
Employer (or date of reemployment as provided in Section 2.4),
and any subsequent twelve (12) consecutive month period
commencing on an anniversary date of such date of hire, provided
he has completed at least 1000 Hours of Service during each such
twelve (12) consecutive month period; and
(c) to the extent not resulting in duplication, each Year
of Service restored to the Employee upon reemployment as provided
in Section 8.3.
An Employee's vested interest in his Accrued Retirement
Income shall be based on his Vesting Years of Service and an
Employee's eligibility to participate in the Plan pursuant to
Article II shall be based on his Eligibility Year of Service.
Breaks in service will be measured on the same computation period
as the Year of Service. Effective on and after January 1, 1995,
an Employee's accrual of Retirement Income shall be based solely
on an Employee's Plan Year of Service, without regard to an
Employee's completion of a Vesting Year of Service ending within
such Plan Year.
In the Plan and Trust Agreement, where the context requires,
words in the masculine gender include the feminine and neuter
genders and words in the singular include the plural and words in
the plural include the singular.
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ARTICLE II
Eligibility
2
2.1 Employees. Each Employee participating in the Plan as
of January 1, 1989 shall continue to be included in the Plan.
Each other Employee, except as provided in this Article, shall be
included in the Plan on the first day of the month next following
the date on which he first completes an Eligibility Year of
Service.
2.2 Employees represented by a collective bargaining agent.
An Employee who is represented by a collective bargaining agent
may participate in the Plan, subject to its terms, if the
representative(s) of his bargaining unit and the Employer
mutually agree to participation in the Plan by members of his
bargaining unit.
2.3 Persons in military service and Employees on authorized
leave of absence. Any person not already included in the Plan
who leaves or has left the employ of the Employer to enter the
Armed Forces of the United States or is on authorized leave of
absence without regular pay and who returns to the employ of the
Employer within ninety (90) days after discharge from such
military service or on or before termination of his leave of
absence, shall, upon such return, be included in the Plan
effective as of the first day of the month next following the
date on which he first met or meets the eligibility requirement
of Section 2.1. In determining whether an Employee entering the
service of the Employer has completed an Eligibility Year of
Service, his Hours of Service prior to such authorized leave of
absence without regular pay or entry into the Armed Forces shall
be taken into account, and for purposes of Section 2.4, he shall
be deemed not to have incurred a One-Year Break in Service by
reason of such absence.
If an Employee dies while in active service with the Armed
Forces of the United States, such Employee shall be deemed to
have returned to the employ of the Employer on his date of death.
An Employee not already included in the Plan who is on
authorized leave of absence and receiving his regular pay shall
be considered credited with Hours of Service as though the period
of absence was a period of active employment with the Employer,
and he shall be included in the Plan if and when he meets the
requirements of this Article II regardless of whether he is, on
the date of such inclusion, on such leave of absence.
13
<PAGE>
2.4 Employees reemployed. An Employee whose service
terminates at any time and who is reemployed as an Employee,
unless excluded under Section 2.6, will be included in the Plan
as provided in Section 2.1 unless:
(a) prior to termination of his service he had completed at
least one Year of Service; and
(b) upon his reemployment, to the extent provided in
Section 8.3 without regard to Section 8.4, he is entitled to
restoration of his Years of Service, in which case he will be
included in the Plan as of the date of his reemployment.
For purposes of determining Years of Service of an Employee
who is reemployed by the Employer subsequent to a One-Year Break
in Service, a Year of Service subsequent to his reemployment
shall be computed on the basis of the twelve (12) consecutive
month period commencing on his date of reemployment or an
anniversary thereof.
2.5 Participation upon return to eligible class. I f a n
Employee is a participant in the Plan before July 1, 1991, the
exclusion from participation provided in Section 2.6, as it
regards temporary employees, shall not apply with respect to such
Employee, and such Employee shall be eligible to participate in
the Plan after July 1, 1991 whether or not he is classified as a
temporary employee.
If an Employee first becomes a participant on or after July
1, 1991, in the event such Employee ceases to be a member of an
eligible class of Employees and becomes ineligible to
participate, but has not incurred a One-Year Break in Service,
such Employee will participate immediately upon returning to an
eligible class of Employees. If such Employee incurred a One-
Year Break in Service, eligibility will be determined under
Section 2.4 of the Plan.
In all other instances, if an Employee is not a member of an
eligible class of Employees but then becomes a member of an
eligible class, such Employee will commence participation in the
Plan as of the first day of the month next following the later of
(a) the date such Employee completes an Eligibility Year of
Service or (b) the date he becomes a member of an eligible class
of Employees.
2.6 Exclusion of certain categories of employees.
Notwithstanding any other provision of this Article II, leased
employees shall not be eligible to participate in the Plan. In
addition, temporary employees, except Employees, as defined in
Section 1.17, participating in the Plan prior to July 1, 1991
shall not be eligible to participate in the Plan. Any person who
is employed by Electric City Merchandise Company, Inc. on or
14
<PAGE>
after May 1, 1988, or who is employed by Savannah Electric and
Power Company on or after March 3, 1988, shall not be entitled to
accrue Retirement Income under the Plan while employed at such
companies.
2.7 Waiver of participation. Effective January 1, 1991,
notwithstanding the above, an Employee may, subject to the
approval of the Employer, elect voluntarily not to participate in
the Plan. The election not to participate must be communicated
in writing to the Retirement Board effective on an Employee's
date of hire or an anniversary thereof. Effective January 1,
1995, the election not to participate must be communicated in
writing to and acknowledged by the Retirement Board and shall be
effective as of the date set forth in such written waiver.
15
<PAGE>
ARTICLE III
Retirement
3
3.1 Retirement at Normal Retirement Date. Each Employee
eligible to participate in the Plan shall have a nonforfeitable
right to his Accrued Retirement Income by no later than his
sixty-fifth (65th) birthday, or in the case of any Employee hired
on or after his sixtieth (60th) birthday, the fifth (5th)
anniversary of his initial participation in the Plan.
Notwithstanding the above, an Employee's Normal Retirement Date
shall be as provided in Section 1.23.
3.2 Retirement at Early Retirement Date. An Employee
having at least ten (10) Years of Accredited Service (including
any Accredited Service to which he is entitled under the pension
plan of any Affiliated Employer from which such Employee was
transferred pursuant to Section 4.6 or 4.7, or which was credited
to him in accordance with Section 4.3) may elect to retire on an
Early Retirement Date on or after his fifty-fifth (55th) birthday
and before his sixty-fifth (65th) birthday and to have his
Retirement Income commence on that date, or effective January 1,
1995, the first day of any month up to and including the
Employee's Normal Retirement Date.
3.3 Retirement at Deferred Retirement Date. An Employee
included in the Plan may remain in active service after his
Normal Retirement Date. The involuntary retirement of an
Employee on or after his Normal Retirement Date shall not be
permitted solely on the basis of the Employee's age, except in
accordance with the provisions of the Age Discrimination in
Employment Act and Section 760.10 of the Florida Statutes
Annotated, as amended from time to time. Termination of service
of such an Employee for any reason after Normal Retirement Date
shall be deemed retirement as provided in the Plan.
16
<PAGE>
ARTICLE IV
Determination of Accredited Service
4
4.1 Accredited Service pursuant to Prior Plan. Each
Employee who participated in the Prior Plan shall be credited
with such Accredited Service, if any, earned under such Prior
Plan as of December 31, 1988.
4.2 Accredited Service.
(a) Each Employee meeting the requirements of Article II
shall, in addition to any Accredited Service to which he may be
entitled in accordance with Section 4.1, be credited with
Accredited Service as set forth in (b) below. Any such Employee
who is on authorized leave of absence with regular pay shall be
credited with Accredited Service during the period of such
absence. Any such Employee who is a "participant in the Plan"
within the meaning of that term as defined in paragraph (a) of
Section 5.12 shall be credited with Accredited Service during all
or such portion of the period of his absence to serve in the
Armed Forces of the United States as may be recognized under
paragraph (b) of Section 5.12. Employees on authorized leave of
absence without regular pay, other than Employees deemed to
accrue Hours of Service under Section 4.4, and persons in the
Armed Forces who are not "participants in the Plan" within the
meaning of that term as defined in paragraph (a) of Section 5.12
shall not be credited with Accredited Service for the period of
such absence.
(b) For each Plan Year commencing after December 31, 1988,
an Employee included in the Plan who is credited with a Vesting
Year of Service for the twelve (12) consecutive month period
ending on the anniversary date of his hire which occurs during
such Plan Year shall be credited with Accredited Service as
follows:
(1) if an Employee completes at least 1,680 Hours of
Service in a Plan Year, he shall be credited with one year
of Accredited Service;
(2) if an Employee completes less than 1,680 Hours of
Service in a Plan Year, but not less than 1,000 Hours of
Service, he shall be credited with one-twelfth (1/12) of a
year of Accredited Service for each 140 Hours of Service; or
(3) if an Employee's initial eligibility in the Plan
shall occur after the beginning of the Plan Year, and the
Employee shall therefore have completed less than 1,000
Hours of Service in such Plan Year, he shall be credited
with one-twelfth (1/12) of a year of Accredited Service for
17
<PAGE>
each 140 Hours of Service during such Plan Year after his
inclusion in the Plan.
Notwithstanding the above, effective January 1, 1995, an
Employee's Accredited Service shall be calculated based on an
Employee's accrual of a Plan Year of Service only and without
regard to the requirement of a Vesting Year of Service.
(c) If an Employee (1) who has previously satisfied the
eligibility requirements under Article II shall again be included
in the Plan at such time which is after the beginning of the Plan
Year, or (2) shall terminate his employment for any reason before
the close of such Plan Year and shall therefore have completed
less than 1,000 Hours of Service in such Plan Year, he shall be
credited with one-twelfth (1/12) of a year of Accredited Service
for each 140 Hours of Service during such Plan Year after his
inclusion in the Plan or before his termination of employment in
such Plan Year, as the case may be.
(d) In addition to any Accredited Service credited under
Section 4.1, an Employee shall be entitled to Accredited Service
determined under the Prior Plan, without regard to the age
requirement for eligibility to participate in the Prior Plan, in
excess of the Accredited Service determined under the Prior Plan
(including the age requirement for eligibility to participate in
the Prior Plan). Such Accredited Service shall be considered
Accredited Service after December 31, 1985 for purposes of
calculating an Employee's Retirement Income under Article V.
(e) In addition to the foregoing, Accredited Service may
include Accredited Service accrued subsequent to a One-year Break
in Service including such Accredited Service which may be
restored in accordance with the provisions of Section 8.3.
(f) Notwithstanding the above, the maximum number of years
of Accredited Service with respect to any Employee participating
in the Plan shall not exceed forty (40). Effective January 1,
1991, the maximum number of years of Accredited Service is
increased to forty-three (43).
4.3 Accredited Service and Years of Service in respect of
service of certain Employees previously employed by the Employer
or by Affiliated Employers. An Employee in the service of the
Employer on January 1, 1976 or employed by it thereafter who
meets the requirements of paragraph (a) of this Section 4.3, in
addition to any other Years of Service or Accredited Service to
which he may be entitled under the Plan, upon completion of an
Eligibility Year of Service where required under Section 8.3(c)
(which shall also be considered to be Accredited Service) shall
be credited with such number of Years of Service (and fractions
thereof to the nearest whole month for service prior to January
1, 1976) and such Accredited Service and Retirement Income as
18
<PAGE>
shall be determined in accordance with the provisions of
paragraphs (b) and (c) of this Section 4.3.
(a) (1) Such Employee shall have been employed prior to
January 1, 1976 by the Employer or by one or more Affiliated
Employers; (2) he shall have terminated his service with Employer
or such Affiliated Employer other than by retirement and he shall
not be entitled to receive at any time any retirement income
under the pension plan of any such prior employer in respect of
any period of time for which he shall receive credit for Years of
Service or Accredited Service under this Section 4.3; and (3) for
Employees reemployed on or after January 1, 1985, the number of
consecutive One-Year Breaks in Service incurred by the Employee
prior to the date of his employment by the Employer does not
equal or exceed the greater of (A) five (5), or (B) the aggregate
number of his Years of Service (and fractions thereof to the
nearest whole month for service prior to January 1, 1976) with
the Employer and such Affiliated Employer. The years of
Accredited Service credited to an Employee reemployed prior to
January 1, 1985, with regard to years of Accredited Service
immediately prior to the termination of his service, shall be
determined under the terms of the Plan in effect prior to January
1, 1985.
(b) The number of Years of Service (and fractions thereof
to the nearest whole month for service prior to January 1, 1976)
and the Accredited Service, respectively, which shall be credited
to such Employee shall be equal to the respective number of his
Years of Service (and fractions thereof to the nearest whole
month for service prior to January 1, 1976) and Accredited
Service which were forfeited by the Employee and not restored
under the pension plans of the Employer or an Affiliated
Employer.
(c) There shall be credited to the Employee Retirement
Income equal to retirement income which was accrued by him under
the pension plan of the Employer or an Affiliated Employer during
the period of his Accredited Service which was forfeited and
which is credited under the Plan in accordance with Section 4.3.
The amount of Retirement Income credited in accordance with this
paragraph (c) shall be treated as Prior Plan Retirement Income
for purposes of determining the amount of Retirement Income to
which the Employee is entitled, and shall be determined in
accordance with the provisions of the pension plan of the
Affiliated Employer in effect at the time the Employee's service
with such Affiliated Employer terminated without regard to any
minimum provisions of such pension plan; for this purpose and if
relevant in respect of the Employee it shall be assumed that the
pension plan of the Affiliated Employer in effect at the time the
Employee's service with such Affiliated Employer terminated
contained the provisions of Section 5.12 of the Plan and related
amendments concerning absence from the service of the Employer to
19
<PAGE>
serve in the Armed Forces of the United States which became
effective November 1, 1977. For Plan Years beginning after
December 31, 1987, an Employee who meets the requirements of
paragraph (a) of this Section 4.3 shall be deemed to have
transferred to or from an Affiliated Employer for purposes of the
transfer of assets or liabilities to or from the Plan in
accordance with Section 4.6.
4.4 Accrual of Retirement Income during period of total
disability.
(a) If an Employee included in the Plan shall become
totally disabled, as determined by the Retirement Board on the
basis of medical evidence, after he has completed at least five
(5) Vesting Years of Service and, by reason of such disability,
he shall apply for and be granted either Social Security
disability benefits or long-term disability benefits under a
long-term disability benefit plan of the Employer, he shall be
considered to be on a leave of absence, herein referred to as a
"Disability Leave." An Employee's Disability Leave shall be
deemed to begin on the initial date of the disability, as
determined by the Retirement Board, and shall continue until the
earlier of: (1) the end of the month in which he shall cease to
be entitled to receive Social Security Disability benefits and
long-term disability benefits under a long-term disability
benefit plan of the Employer; (2) his death; and (3) his
Retirement Date if he elects to have his Retirement Income
commence on such date. During the period of the Employee's
Disability Leave, he shall, for purposes of the Plan, be deemed
to have received Earnings at the regular rate in effect for him.
(b) A disabled Employee who applies for and would be
granted long-term disability benefits under a long-term
disability benefit plan of the Employer, if it were not for the
fact that the deductions therefrom attributable to other
disability benefits equal or exceed the amount of his unreduced
benefit under a long-term disability benefit plan of the
Employer, will be considered as being currently granted benefits
under such long-term disability benefit plan.
(c) An Employee's Disability Leave shall be deemed to be a
period for which Hours of Service shall be credited to the
Employee as though the period of his Disability Leave were a
period of active employment.
(d) If an Employee's Disability Leave shall terminate prior
to his Normal Retirement Date and he shall fail to return to the
employment of the Employer within sixty (60) days after the
termination of such leave, his service shall be deemed to have
terminated upon the termination of his Disability Leave and his
rights shall be determined in accordance with Article VIII,
unless at such time he shall be entitled to retire on an Early
20
<PAGE>
Retirement Date, in which event his termination of service shall
be deemed to constitute his retirement under Section 3.2.
(e) Notwithstanding the above, the years of Accredited
Service for any Employee whose initial date of disability
occurred under the Prior Plan shall be determined under the terms
of the Prior Plan.
4.5 Employees leaving Employer's service. If the service
of an Employee is terminated prior to retirement as provided by
Article III, such Employee will forfeit any Vesting Years of
Service and Accredited Service which he may have subject to
possible restoration of some or all of his Vesting Years of
Service and Accredited Service in accordance with Article VIII.
The provisions of this Section 4.5 shall not affect the rights,
if any, of an Employee under Article VIII nor shall the rights of
an Employee be affected during or by reason of a layoff, due to
lack of work, which continues for a period of one year or less,
except that such period of layoff shall not be deemed to be
service with the Employer. If the service of an Employee is
terminated, or if he is not reemployed before the expiration of
one year after being laid off for lack of work, and he is
subsequently reemployed, he will be treated as provided in
Section 2.4.
Forfeitures arising by reason of an Employee's termination
of service for any reason shall not be applied to increase the
benefits any Employee would otherwise receive under the Plan but
shall be used to reduce contributions of the Employer to the
Plan.
4.6 Transfers to or from Affiliated Employers. This
Section 4.6 shall not apply to the transfer by an Employee to the
Employer from Savannah Electric and Power Company on or after
March 3, 1988. In the case of the transfer of an Employee
(including an Employee included in the Prior Plan who was
transferred in accordance with the Prior Plan) to an Affiliated
Employer which has at the time of transfer a pension plan with
substantially the same terms as this Plan, such Employee, if and
when he commences to receive on or after his Normal Retirement
Date retirement income under such pension plan of the Affiliated
Employer to which transferred, shall receive retirement income
under such pension plan attributable to years of Accredited
Service with the Employer prior to the time of his transfer. If
and when such an Employee commences to receive on an Early
Retirement Date retirement income under such pension plan of the
Affiliated Employer to which transferred, the amount of any
retirement income payable under such pension plan and
attributable to Accredited Service with the Employer prior to
such transfer shall be reduced in accordance with the provisions
of the pension plan relating to retirement income payable at
Early Retirement Date, or if such retirement income shall be
21
<PAGE>
payable in a manner similar to the provisions of Section 8.2 or
Section 8.6, reduced in accordance with the applicable provision.
In the case of the transfer to this Employer (not including
transfers by reason of the split-up as of November 1, 1949) of an
Employee of any Affiliated Employer which has at the time of
transfer a pension plan with substantially the same terms as this
Plan, the Employer will, subject to the provisions of Article IX,
make periodic contributions into this Plan to the extent
necessary to provide the portion of the Retirement Income not
provided for him in the pension plan of the company from which he
was transferred.
Upon the transfer of an Employee to or from the Employer,
the Plan and Trust shall be authorized to receive or transfer the
greater of (a) the actuarial equivalent of the Employee's Accrued
Retirement Income or (b) such assets as may be required to fund
the projected Retirement Income of the Employee at his retirement
date attributable to the Plan or the pension plan maintained by
the Affiliated Employer from which the Employee transfers,
determined as of the last day of the Plan Year in which the
transfer occurs using the current funding assumptions for the
Plan Year in which the transfer occurs. The Retirement Board of
the Employer shall be authorized to coordinate the transfer of
assets and liabilities attributable to the benefits of active
Employees, terminated vested Employees, retired Employees, and
Provisional Payees with any Affiliated Employer which has at such
time a pension plan with substantially the same terms as this
Plan.
Notwithstanding the above, the transferred Employee shall be
entitled to receive a benefit immediately following the transfer
of assets or liabilities to or from the Plan and Trust which is
equal to or greater than the benefit he would have been entitled
to receive immediately before the transfer if the Plan or the
pension plan maintained by the Affiliated Employer from which the
Employee transfers had been terminated. In no event shall assets
be transferred to or from the Plan and Trust without the
concurrent transfer of liabilities attributable to such assets.
In no case, however, shall any such Employee, who retires
pursuant to Section 3.1, 3.2, or 3.3 or the Provisional Payee of
a deceased Employee entitled to payment in accordance with
Article VII, receive Retirement Income attributable to Accredited
Service from both companies aggregating less than the Minimum
Retirement Income specified in Article V (after giving effect to
adjustments, if any, for Provisional Payee designation or deemed
designation), as shall be applicable in his circumstances.
22
<PAGE>
4.7 Transfers from Savannah Electric and Power Company. In
the case of the transfer to the Employer of an employee of
Savannah Electric and Power Company ("SEPCO"), such Employee, if
and when he attains his Normal Retirement Date or Deferred
Retirement Date, shall be entitled to receive Retirement Income
calculated pursuant to Section 5.1 or 5.2, as appropriate, based
upon his Accredited Service with the Employer and Accredited
Service attributable to actual service during his employment with
SEPCO. Such amount calculated in accordance with the preceding
sentence shall be reduced by the amount of retirement income
calculated under the defined benefit pension plan of SEPCO
attributable to Accredited Service during his actual service
during his employment with SEPCO. Any Retirement Income based
upon an Employee's Accredited Service with the Employer and
Accredited Service attributable to actual service during his
employment with SEPCO shall be subject to the provisions of the
Plan relating to Retirement Income payable at an Early Retirement
Date, or if such Retirement Income shall be payable in accordance
with the provisions of Section 8.2 or 8.6, subject to the
provisions of such Section.
This Section 4.7 shall also apply in calculating the
Retirement Income payable under this Plan to a former employee of
SEPCO who is hired by the Employer and is entitled to credit for
years of Accredited Service under the Plan attributable to his
actual service with SEPCO.
23
<PAGE>
ARTICLE V
Retirement Income
5
5.1 Normal Retirement Income. The monthly Retirement
Income payable as a single life annuity to an Employee included
in the Plan who retires from the service of the Employer at his
Normal Retirement Date after January 1, 1989, subject to the
limitations of Article VI, shall be the greater of (a) and (b):
(a) the amount determined under (1) or (2) below, whichever
is greater:
(1) the Accrued Retirement Income determined in
accordance with Section 5.1 of the Prior Plan without
regard to the Minimum Retirement Income requirement,
plus the designated fixed dollar amount times the
Employee's years of Accredited Service earned after
December 31, 1988. For the period on and after January
1, 1989 but ending December 31, 1990, the fixed dollar
amount equals $20.00. For the period on and after
January 1, 1991, the fixed dollar amount equals $25.00;
and
(2) $25.00 times an Employee's years of
Accredited Service; and
(b) the Minimum Retirement Income as determined in
accordance with Section 5.2.
5.2 Minimum Retirement Income payable upon retirement at
Normal Retirement Date or Deferred Retirement Date. The monthly
Minimum Retirement Income payable to an Employee who retires from
the service of the Employer after January 1, 1989 at his Normal
Retirement Date or Deferred Retirement Date (before adjustment
for Provisional Payee designation, if any) shall be an amount
equal to 1.70% of his Average Monthly Earnings multiplied by his
years (and fraction of a year) of Accredited Service to his
Normal Retirement Date or Deferred Retirement Date including a
Social Security Offset.
Any provisions of this Article V to the contrary
notwithstanding, Retirement Income determined in accordance with
this Article V with respect to an Employee who retires on his
Normal Retirement Date or Deferred Retirement Date shall not be
less than the Retirement Income which would have been payable
with respect to such Employee commencing on an Early Retirement
Date had (a) the Employee retired on the Early Retirement Date
which would have resulted in the greatest Retirement Income,
(b) his Retirement Income commencing on such Early Retirement
Date been computed by utilizing the estimated Federal primary
Social Security benefit to which the Employee shall be entitled
24
<PAGE>
determined in accordance with the Social Security Act in effect
at his retirement, giving effect to the recomputation provision
of such Social Security Act, if applicable, and (c) such
Retirement Income commencing on such Early Retirement Date been
payable in the same form as his Retirement Income commencing on
his Normal Retirement Date or Deferred Retirement Date.
5.3 Minimum Retirement Income upon retirement at Early
Retirement Date or upon termination of service by reason of death
or otherwise prior to retirement. The monthly Minimum Retirement
Income payable to an Employee (or his Provisional Payee), if he
shall retire on his Early Retirement Date, or if his service
shall terminate by reason of death or otherwise prior to
retirement, shall be determined in accordance with the following
provisions:
(a) Upon retirement at Early Retirement Date his Minimum
Retirement Income (before adjustment for Provisional Payee
designation, if any) shall be an amount equal to 1.70% of his
Average Monthly Earnings multiplied by his years (and fraction of
a year) of Accredited Service to his Early Retirement Date
including a Social Security Offset.
(b) Upon termination of service by reason of the death of
the Employee prior to retirement and after the effective date of
his Provisional Payee designation or deemed designation, the
Minimum Retirement Income for the purpose of determining the
Employee's Accrued Retirement Income upon which payment to his
Provisional Payee in accordance with Section 7.4 shall be based
shall be an amount equal to 1.70% of the Employee's Average
Monthly Earnings multiplied by his years (and fraction of a year)
of Accredited Service to the date of his death including a Social
Security Offset.
(c) For an Employee who terminates his service with the
Employer with entitlement to receive Retirement Income in
accordance with Section 8.1, upon retirement at Early Retirement
Date or Normal Retirement Date his Minimum Retirement Income
(before adjustment for Provisional Payee designation, if any)
shall be an amount equal to 1.70% of his Average Monthly Earnings
multiplied by his years (and fraction of a year) of Accredited
Service to his date of termination including a Social Security
Offset.
(d) Upon termination of service by reason of disability (as
defined in Section 4.4) of the Employee prior to retirement,
provided such Employee does not return to the service of the
Employer prior to his Retirement Date, the Minimum Retirement
Income shall be an amount equal to 1.70% of the Employee's
Average Monthly Earnings multiplied by his years (and fraction of
a year) of Accredited Service to his Retirement Date including a
Social Security Offset.
25
<PAGE>
5.4 Calculation of Social Security Offset.
(a) Notwithstanding the Social Security Offset as
calculated in Sections 5.2 and 5.3, in no event shall such Social
Security Offset exceed the limits set forth in Section 401(l) of
the Code and the regulations applicable thereunder which are
incorporated by reference herein.
(b) For purposes of determining the Social Security Offset
in calculating an Employee's Retirement Income under the Plan,
the Social Security Offset shall be determined by using the
actual salary history of the Employee during his employment with
the Employer or any Affiliated Employer, provided that in the
event that the Retirement Board is unable to secure such actual
salary history within 180 days (or such longer period as may be
prescribed by the Retirement Board) following the later of the
date of the Employee's separation from service (by retirement or
otherwise) and the time when the Employee is notified of the
Retirement Income to which he is entitled, the salary history
shall be determined in the following manner:
(1) The salary history shall be estimated by applying
a salary scale, projected backwards, to the Employee's
compensation from the Employer for W-2 purposes for the
first Plan Year following the most recent Plan Year for
which the salary history is estimated. The salary scale
shall be a level percentage per year equal to six percent
(6%) per annum.
(2) The Plan shall give clear written notice to each
Employee of the Employee's right to supply the actual salary
history and of the financial consequences of failing to
supply such history. Such notice shall state that the
actual salary history is available from the Social Security
Administration.
For purposes of determining the Social Security Offset in
calculating the Retirement Income of an Employee entitled to
receive a public pension based on his employment with a Federal,
state, or local government agency, no reduction in such
Employee's Social Security benefit resulting from the receipt of
a public pension shall be recognized.
(c) If the distribution of an Employee's Accrued Retirement
Income begins before the Employee's attainment of the Social
Security Retirement Age (including a benefit commencing at Normal
Retirement Date), the projected Employer derived primary
insurance amount attributable to service by the Employee for the
Employer will be reduced by one-fifteenth (1/15) for each of the
first five (5) years and one-thirtieth (1/30) for each of the
next five (5) years by which the starting date of such benefit
26
<PAGE>
precedes the Social Security Retirement Age of the Employee, and
reduced actuarially for each additional year thereafter.
5.5 Early Retirement Income. The monthly amount of
Retirement Income payable to an Employee who retires from the
service of the Employer at his Early Retirement Date subject to
the limitations of Section 6.2, will be equal to his Retirement
Income determined in accordance with Sections 5.1 and 5.3 based
on his Accredited Service to his Early Retirement Date, reduced
by three-tenths of one percent (0.3%) for each calendar month by
which the commencement date of his Retirement Income precedes his
Normal Retirement Date.
At the option of the Employee exercised at or prior to
commencement of his Retirement Income on or after his Early
Retirement Date (provided he shall not have in effect at such
Early Retirement Date a Provisional Payee designation pursuant to
Article VII) he may have his Retirement Income adjusted upwards
in an amount which will make his Retirement Income payable up to
age sixty-five (65) equal, as nearly as may be, to the amount of
his Federal primary Social Security benefit (primary old age
insurance benefit) estimated to become payable after age
sixty-five (65), as computed at the time of his retirement in
accordance with Section 5.3(a), plus a reduced amount, if any, of
Retirement Income actually determined to be payable after age
sixty-five (65). The Federal primary Social Security benefit
used in calculating an Employee's Retirement Income payable under
the Plan shall be determined by using the salary history of the
Employee during his employment with the Employer or any
Affiliated Employer, as calculated in accordance with Section
5.4(b).
5.6 Deferred Retirement Income. The monthly amount of
Retirement Income payable to an Employee who completes at least
one Hour of Service after December 31, 1987 and who retires from
the service of the Employer at his Deferred Retirement Date,
subject to the limitations of Section 6.2, will be equal to his
Retirement Income determined in accordance with Sections 5.1 and
5.2 based on his Accredited Service to his Deferred Retirement
Date. For Employees whose Normal Retirement Date would have
occurred on or before January 1, 1986, but whose Deferred
Retirement Date occurs after January 1, 1988 and on or before
July 1, 1991, the monthly amount of Retirement Income payable to
an Employee who completes at least one Hour of Service after
December 31, 1987, subject to the limitations of Section 6.2,
will be equal to the greater of (a) his Retirement Income
calculated on his Deferred Retirement Date, or (b) his Retirement
Income calculated as of his Normal Retirement Date applying the
applicable percentage increase in his Retirement Income pursuant
to the terms of Section 5.13 of the Prior Plan.
27
<PAGE>
5.7 Payment of Retirement Income. The first payment of an
Employee's Retirement Income will be made on his Early Retirement
Date, Normal Retirement Date, Deferred Retirement Date, or date
of commencement of payment of Retirement Income in accordance
with Section 8.2 or 8.6, as the case may be; provided that
commencement of the distribution of an Employee's Retirement
Income shall not be made prior to his Normal Retirement Date
without the consent of such Employee, except as provided in
Section 8.4 of the Plan.
Notwithstanding anything to the contrary above, if in
accordance with this Section 5.7, an Employee is entitled to
receive Retirement Income commencing at his Early Retirement
Date, he may, in lieu of commencing payment of his Retirement
Income upon his Early Retirement Date, elect to receive such
Retirement Income commencing as of the first day of any month
after his Early Retirement Date and preceding his Normal
Retirement Date in an amount equal to his Accrued Retirement
Income determined as of the commencement of his Retirement Income
on or after his Early Retirement Date determined in accordance
with Section 5.5. An election pursuant to this Section 5.7 to
have Retirement Income commence prior to Normal Retirement Date
shall be made on a form prescribed by the Retirement Board and
shall be filed with the Retirement Board at least thirty (30)
days before Retirement Income is to commence.
In the event of the death of an Employee who has designated
a Provisional Payee or is deemed to have done so in accordance
with Article VII, if the designation has become effective, the
first payment to be made to the Provisional Payee pursuant to
Article VII shall be made to the Provisional Payee on the first
day of the month after the later of (a) the Employee's death and
(b) the date on which the Employee would have attained his fifty-
fifth (55th) birthday if he had survived to such date, if the
Provisional Payee shall then be alive and proof of the Employee's
death satisfactory to the Retirement Board shall have been
received by it. Subsequent payments will be made monthly
thereafter until the death of such Provisional Payee.
In any event, payment of Retirement Income to the Employee
shall begin not later than the sixtieth (60th) day after the
later of the close of the Plan Year in which falls (a) the
Employee's Normal Retirement Date or (b) the date the Employee
terminates his service with the Employer or any Affiliated
Employer. Notwithstanding the provisions of the Plan for the
monthly payment of Retirement Income, such income may be adjusted
and payable annually in arrears if the amount of the Retirement
Income is less than $10.00 per month.
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<PAGE>
5.8 Termination of Retirement Income. The monthly payment
of Retirement Income will cease with the last payment preceding
the retired Employee's death; subject, however, to the
continuation of payments to a surviving Provisional Payee, if one
has been designated or deemed to have been designated, which
likewise will cease with the last payment preceding the death of
the Provisional Payee. There shall be no benefits payable under
the Plan on behalf of any Employee whose death occurs prior to
his retirement, except as otherwise provided in Article VII with
respect to a Provisional Payee of an Employee. Following the
death of an Employee and of his Provisional Payee, if any, no
further payments will be made under the Plan on account of such
Employee or to his estate.
5.9 Required distributions.
(a) Once a written claim for benefits is filed with the
Retirement Board and unless the Employee elects to have payment
begin at a later date, payment of benefits to the Employee shall
begin not later than sixty (60) days after the last day of the
Plan Year in which the latest of the following events occurs:
(1) the Employee's Normal Retirement Date;
(2) the tenth (10th) anniversary of the date the
Employee commenced participation in the Plan; or
(3) the Employee's separation from service from the
Employer or any Affiliated Employer.
(b) Required minimum distributions on and after January 1,
1989
(1) Subject to the transitional rules described in
Paragraph (c) below, effective for calendar years beginning
after December 31, 1988, the payment of Retirement Income to
any Employee shall begin no later than April 1 of the
calendar year following the calendar year in which the
Employee attains age 70-1/2, without regard to the actual
date of separation from service. The amount of his
Retirement Income shall be recomputed as of such April 1 and
as of the close of each Plan Year after his Retirement
Income commences and preceding his actual retirement date as
if each such date were the Employee's Deferred Retirement
Date. Any additional Retirement Income he accrues at the
close of any such Plan Year shall be offset (but not below
zero) by the value of the benefit payments received in such
Plan Year.
(2) The receipt by an Employee of any payments or
distributions as a result of his attaining age 70-1/2 prior
to his actual retirement or death shall in no way affect the
29
<PAGE>
entitlement of an otherwise eligible Employee to additional
accrued benefits.
(c) Age 70-1/2 transitional rule
Any Employee who is not a five-percent owner and who has
attained age 70-1/2 by January 1, 1988, may defer the
commencement of benefit payments under paragraph (b) above until
he actually separates from service with the Employer. This
transitional rule shall only apply if the Employee is not a five-
percent owner at any time during the Plan Year ending with or
within the calendar year in which such owner attains age 66-1/2
and in any subsequent Plan Year.
(d) Distribution upon death of Employee
(1) Death after commencement of benefits
If the Employee dies before his entire nonforfeitable
interest has been distributed to him, the remaining portion
of such interest shall be distributed at least as rapidly as
under the method of distribution selected by the Employee as
of the date of his death.
(2) Death prior to commencement of benefits
If the Employee dies before the distribution of his
nonforfeitable interest has begun, the entire interest shall
be distributed monthly to his Provisional Payee, if any,
over such Provisional Payee's remaining lifetime.
(e) Determining required minimum distributions
Notwithstanding anything in this Plan to the contrary, all
distributions, including the minimum amounts which must be
distributed each calendar year, under this Plan shall be made in
accordance with Code Section 401(a)(9) and the regulations
thereunder.
(f) Minimum distribution transitional rules
Any distribution made pursuant to Section 242(b)(2) of the
Tax Equity and Fiscal Responsibility Act of 1982 shall meet the
requirements of Code Section 401(a)(9) as in effect on December
31, 1983, and shall also satisfy Code Sections 401(a)(11) and
417.
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5.10 Suspension of Retirement Income for reemployment.
(a) If a former Employee who is receiving Retirement Income
shall be reemployed by the Employer or any Affiliated Employer as
an Employee and shall not elect to waive his right to participate
under the Plan or the pension plan of the Affiliated Employer,
whichever applies, his Retirement Income shall cease during each
calendar month after his reemployment in which he completes forty
(40) or more Hours of Service. The Retirement Income payable
upon his subsequent retirement shall be reduced by the Actuarial
Equivalent of any Retirement Income he received prior to his
reemployment.
(b) No payment shall be withheld by the Plan pursuant to
this Section 5.10 unless the Plan notifies the Employee by
personal delivery or first class mail during the first calendar
month in which the Plan withholds payments that his Retirement
Income is suspended.
(c) If the payment of Retirement Income has been suspended,
payments shall resume no later than the first day of the third
calendar month after the calendar month in which the Employee
ceases to be employed in ERISA Section 203(a)(3)(B) service. The
initial payment upon resumption shall include the payment
scheduled to occur in the calendar month when payments resume and
any amounts withheld during the period between the cessation of
ERISA Section 203(a)(3)(B) service and the resumption of
payments.
5.11 Increase in Retirement Income of retired Employees for
service prior to January 1, 1991. Retirement Income payable on
and after January 1, 1991 to an Employee (or to the Provisional
Payee of an Employee) who retired at an Early Retirement Date or
at his Normal Retirement Date on or before January 1, 1991
pursuant to the Plan as in effect prior to January 1, 1991, or to
the plan of Southern, will be recalculated to increase the amount
thereof by an amount ranging from a minimum of two percent (2%)
to a maximum of forty percent (40%) in accordance with the
following schedule:
Year in which Percentage
retirement occurred increase
1990 2%
1989 4%
1988 6%
1987 8%
1976 - 1986 10%
1971 - 1975 20%
1966 - 1970 30%
1965 and prior years 40%
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<PAGE>
A similar adjustment, based on the date of the commencement
of Retirement Income payments to the Employee's Provisional
Payee, rather than the Employee's Retirement Date, will be made
in respect of Retirement Income which is payable on or after
January 1, 1991 where a Provisional Payee election was in effect,
or was deemed to be in effect, when an Employee died while in
service prior to January 1, 1991 and prior to his retirement.
A similar adjustment will be made in respect of Retirement
Income which is payable on or after January 1, 1991 for an
Employee (or the Provisional Payee of an Employee) entitled to
Retirement Income for which payments have commenced on or before
January 1, 1991 in accordance with Article VIII of the Prior
Plan, except for Employees whose Retirement Income has been
cashed-out pursuant to Section 8.4 of this Plan or Section 8.5 of
the Prior Plan.
For purposes of determining the applicable percentage
increase under this Section 5.11, the year of retirement includes
retirement where the last day of employment was December 31 of
such year. An Employee whose Deferred Retirement Date is on or
before January 1, 1988 and who did not retire at his Normal
Retirement Date shall be deemed to have retired at his Normal
Retirement Date for purposes of determining the increase in his
Retirement Income payable at his Deferred Retirement Date.
This Section 5.11 shall not apply with respect to an
Employee who has not retired, but for whom the distribution of
Retirement Income has commenced pursuant to Section 5.9 of the
Plan.
5.12 Special provisions relating to the treatment of
absence of an Employee from the service of the Employer to serve
in the Armed Forces of the United States.
(a) Effective as of November 1, 1977, any provisions of the
Plan to the contrary notwithstanding, the provisions of this
Section 5.12 shall be applicable to determine the period of
absence from the service of the Employer to serve in the Armed
Forces of the United States of a "participant in the Plan" (as
such term is defined in this paragraph (a)):
The term "participant in the Plan" means a person who on or
after November 1, 1977 is either: (1) an Employee who is then or
thereafter in the service of the Employer (including an Employee
on authorized leave of absence), (2) a retired Employee who is
receiving Retirement Income, (3) a deceased Employee who received
Retirement Income under this Plan or the Prior Plan at any time
after its Effective Date, (4) a deceased former Employee who
prior to the time of his death was receiving Retirement Income in
accordance with this Plan or the Prior Plan, (5) a former
Employee whose service terminated prior to January 1, 1976 and
32
<PAGE>
who is receiving Retirement Income in accordance with the Prior
Plan, (6) a former Employee whose service terminated prior to
November 1, 1977 and who will be entitled to receive Retirement
Income commencing after that date in accordance with this Plan or
the Prior Plan, or (7) a former Employee who was transferred from
the Employer pursuant to Section 4.6 or pursuant to the Prior
Plan and who will be entitled to receive in accordance with
either, Retirement Income commencing after November 1, 1977.
The Employee or former Employee or retired Employee referred
to in this paragraph (a) is one who: (1) left the employment of
the Employer or of Commonwealth Services, Inc. (formerly known as
The Commonwealth & Southern Corporation (New York)
("Commonwealth")) or of The Southern Company ("Southern") to
enter the Armed Forces of the United States (including reserve
components thereof, the Public Health Service, and the National
Guard) for the purposes and under circumstances which are
specified in the reemployment provisions of the Military
Selective Service Act and in any amendments or supplements
thereto hereinafter in this Section 5.12 referred to as the
"Selective Service Act," (2) made application for reemployment by
the Employer or by Commonwealth or Southern within such time
after discharge or release from such service in the Armed Forces
of the United States as is specified in the reemployment
provisions of the Selective Service Act as is applicable in his
circumstances and was reemployed by the Employer or by Southern
or by Commonwealth and if by Commonwealth thereafter became an
Employee of Southern or of the Employer, (3) served a period of
active duty in the Armed Forces of the United States which did
not exceed the maximum period of such active duty specified in
the reemployment provisions of the Selective Service Act as is
applicable in his circumstances, and (4) performed such service
in the Armed Forces after May 1, 1940.
(b) For the purposes of the Plan, the period of absence of
a participant in the Plan to serve in the Armed Forces of the
United States shall be the period determined by the Retirement
Board.
(c) In accordance with the provisions of the Plan as
amended effective as of November 1, 1977 by the addition of this
Section 5.12 and the concurrent amendments associated therewith,
there shall be recalculated effective as of November 1, 1977 the
Retirement Income (1) of each participant in the Plan or that of
his Provisional Payee, if any, who is then receiving Retirement
Income; and (2) of each deceased participant in the Plan and his
deceased Provisional Payee, if any, who received payment of
Retirement Income, who is not then receiving Retirement Income.
(1) If in accordance with such recalculation, a larger
amount of Retirement Income would have been payable to a
participant in the Plan who is currently receiving payment
33
<PAGE>
of Retirement Income and/or to his Provisional Payee, if
any, than was paid to them respectively prior to November 1,
1977, payment in a single sum of the excess of the
recalculated amount over the amounts which were paid prior
to November 1, 1977 with interest thereon as hereinafter
provided, shall be made as soon as practicable after
November 1, 1977 and, commencing as soon as practicable
after November 1, 1977, the Retirement Income payable to
participants in the Plan and/or to their Provisional Payees,
if any, who are currently receiving Retirement Income shall
be increased to an amount which is equal to the larger
recalculated amount to which they shall be entitled in
respect of payments to be made on or after November 1, 1977.
(2) If in accordance with the recalculation a larger
amount of Retirement Income would have been payable to the
date of death prior to November 1, 1977 of a deceased
retired Employee or his Provisional Payee than was paid
prior to his death, payment in a single sum of the excess of
the recalculated amount over the amount which was paid prior
to the date of death, with interest thereon as hereinafter
provided, shall be made to his estate as soon as practicable
after November 1, 1977.
(3) For the purposes of the recalculation to be made
in accordance with this paragraph (c), if a participant in
the Plan left the employment of an Affiliated Employer to
enter the Armed Forces of the United States and was not
reemployed by such Affiliated Employer upon his discharge or
release from service in the Armed Forces but he entered the
employment of the Employer, without intermediate employment,
and within the time prescribed in paragraph (a) of this
Section 5.12, and his period of absence in the Armed Forces
of the United States, as determined by the Retirement Board,
is not taken into account under the pension plan of the
Affiliated Employer whose service he left to enter the Armed
Forces or under Section 4.3, it shall be treated under the
Plan and the Prior Plan as if such period of absence had
been a period of absence from the Employer.
(d) Retirement Income of participants in the Plan who are
not referred to in subparagraphs (1) or (2) of paragraph (c) and
who are not on November 1, 1977 receiving Retirement Income shall
be determined in accordance with the provisions of the Plan as
amended by the addition of this Section 5.12 and the concurrent
amendments associated therewith.
(e) Interest to be paid on any single sum payment to be
made in accordance with subparagraphs (1) or (2) of paragraph (c)
of this Section 5.12 shall be computed at the annual rate of five
percent (5%).
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<PAGE>
(f) Payment to be made to any payee in accordance with this
Section 5.12 may be conditioned by the Retirement Board upon its
receipt of (1) such information pertaining to absence of an
Employee or former Employee to serve in the Armed Forces of the
United States as it may request and (2) such form of receipt and
release as it may determine to be appropriate in the
circumstances.
35
<PAGE>
ARTICLE VI
Limitations on Benefits
6
6.1 Maximum Retirement Income. Notwithstanding any other
provision of the Plan, the amount of Retirement Income shall be
subject to the provisions of Article VI.
(a) The maximum annual amount of Retirement Income payable
with respect to an Employee in the form of a straight life
annuity without any ancillary benefits after any adjustment for a
Provisional Payee designation shall be the lesser of the dollar
limitation determined under Code Section 415(b)(1)(A) as adjusted
under Code Section 415(d), or Code Section 415(b)(1)(B) as
adjusted under Treasury Regulation Section 1.415-5, subject to
the following provisions of Article VI. With respect to any
former Employee who has Accrued Retirement Income under the Plan
or his Provisional Payee, the maximum annual amount shall also be
subject to the adjustment under Code Section 415(d).
(b) For purposes of Section 6.1, the term "average
compensation for his high three (3) years" shall mean the period
of consecutive calendar years (not more than three) during which
the Employee was both an active participant in the Plan and had
the greatest aggregate compensation from the Employer or, if he
is also entitled to receive a pension from a defined benefit plan
of an Affiliated Employer or if assets and liabilities
attributable to the pension of the Employee from a defined
benefit plan of an Affiliated Employer have been transferred to
this Plan, the greatest aggregate compensation from the Employer
and the Affiliated Employer during such high three (3) years.
The limitation described in Section 6.1(a) shall also apply in
the case of the payment of an Employee's Retirement Income with a
Provisional Payee designation.
(c) For purposes of Article VI, the term "compensation"
means an Employee's earned income, wages, salaries, and fees for
professional services, and other amounts received for personal
services actually rendered in the course of employment with the
Employer maintaining the Plan (including, but not limited to,
commissions paid salesmen, compensation for services on the basis
of a percentage of profits, commissions on insurance premiums,
tips and bonuses), and excluding the following:
(1) Employer contributions to a plan of deferred
compensation which are not included in the Employee's gross
income for the taxable year in which contributed or Employer
contributions under a simplified employee pension plan to
the extent such contributions are deductible by the
Employee, or any distributions from a plan of deferred
compensation;
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<PAGE>
(2) Amounts realized from the exercise of a
nonqualified stock option, or when restricted stock (or
property) held by the Employee either becomes freely
transferable or is no longer subject to a substantial risk
of forfeiture;
(3) Amounts realized from the sale, exchange, or other
disposition of stock acquired under a qualified stock
option; and
(4) Other amounts which received special tax benefits,
or contributions made by the Employer (whether or not under
a salary reduction agreement) towards the purchase of an
annuity described in Section 403(b) of the Code (whether or
not the amounts are actually excludable from the gross
income of the Employee).
Compensation for any Limitation Year is the compensation actually
paid or includible in gross income during such year.
(d) The foregoing limitations regarding the maximum
Retirement Income shall not apply with respect to an Employee if
the Retirement Income payable under the Plan and under any other
defined benefit plans of the Employer or any Affiliated Employer
does not exceed $10,000 for the calendar year or for any prior
calendar year, and the Employer and any Affiliated Employer has
not at any time maintained a defined contribution plan in which
the Employee has participated. The terms "defined benefit plan"
and "defined contribution plan" shall have the meanings set forth
in Section 415(k) of the Code.
6.2 Adjustment to Defined Benefit Dollar Limitation for
Early or Deferred Retirement.
(a) If the retirement benefit of an Employee commences
before the Employee's Social Security Retirement Age, the Defined
Benefit Dollar Limitation shall be reduced in accordance with
Code Section 415(b)(2)(C) as prescribed by the Secretary of the
Treasury. The reduction shall be made in such manner as the
Secretary of the Treasury may prescribe which is consistent with
the reduction for old-age insurance benefits commencing before
the Social Security Retirement Age under the Social Security Act.
(b) If the retirement benefit of an Employee commences
after the Employee's Social Security Retirement Age, the Defined
Benefit Dollar Limitation shall be adjusted in accordance with
Code Section 415(b)(2)(D) as prescribed by the Secretary of the
Treasury, based on the lesser of the interest rate assumption
under the Plan or on an assumption of five percent (5%) per year.
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6.3 Adjustment of limitation for Years of Service or
participation.
(a) If an Employee has completed less than ten (10) years
of participation, the Employee's accrued benefit shall not exceed
the Defined Benefit Dollar Limitation as adjusted by multiplying
such amount by a fraction, the numerator of which is the
Employee's number of years (or part thereof) of participation in
the Plan, and the denominator of which is ten (10).
(b) If an Employee has completed less than ten (10) Years
of Service with the Employer and any Affiliated Employer, the
limitations described in Sections 415(b)(1)(B), 415(b)(4), and
415(e) of the Code shall be adjusted by multiplying such amounts
by a fraction, the numerator of which is the Employee's number of
years of service (or part thereof), and the denominator of which
is ten (10).
(c) In no event shall Sections 6.3(a) and (b) reduce the
limitations provided under Sections 415(b)(1), 415(b)(4), and
415(e) of the Code to an amount less than one-tenth (1/10) of the
applicable limitation (as determined without regard to this
Section 6.3).
(d) This Section 6.3 shall be applied separately with
respect to each change in the benefit structure of the Plan,
except as is or may be limited by Revenue Procedure 92-42.
6.4 Preservation of Accrued Retirement Income.
(a) Retirement Income payable to an Employee or former
Employee who was an active participant in the Plan before
October 3, 1973 will not be deemed to exceed the amount of
maximum Retirement Income limitations imposed by the provisions
of this Article VI if:
(1) The annual amount of Retirement Income payable to
such Employee on retirement does not exceed 100% of his
annual rate of compensation on the earlier of (A) October 2,
1973, or (B) the date on which he separated from the service
of the Employer;
(2) Such annual Retirement Income is not greater than
the annual amount of Retirement Income which would have been
payable to such Employee on retirement if (A) all terms and
conditions of the Plan in existence on his retirement date
had remained in existence until his retirement and (B) his
compensation taken into account for any period after
October 2, 1973 had not exceeded his annual rate of
compensation on October 2, 1973; and
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(3) In the case of an Employee whose service with the
Employer terminated prior to October 2, 1973, such annual
Retirement Income is no greater than his vested Accrued
Retirement Income as of the date of such termination of
service.
(b) In the case of an Employee who is a participant in the
Plan prior to January 1, 1983, if the Section 415 requirements
have been met for all Plan Years prior to 1983, then the Defined
Benefit Dollar Limitation described in Section 1.10 applicable to
the payment of such Employee's Retirement Income shall be equal
to his Accrued Retirement Income as of December 31, 1982, (when
expressed as an annual benefit within the meaning of Section
415(b)(2) of the Code, as in effect prior to the Tax Equity and
Fiscal Responsibility Act of 1982), if his Accrued Retirement
Income exceeds such Defined Benefit Dollar Limitation.
(c) This Section 6.4(c) shall apply to defined benefit
plans that were in existence on May 6, 1986, and that met the
applicable requirements of Section 415 of the Code as in effect
for all Limitation Years. If the Current Accrued Retirement
Income of an Employee as of the first day of the Limitation Year
beginning on or after January 1, 1987, exceeds the benefit
limitations under Section 415(b) of the Code (as modified by
Sections 6.2 and 6.3 of the Plan), then, for purposes of Code
Section 415(b) and (e), the Defined Benefit Dollar Limitation
with respect to such Employee shall be equal to such Current
Accrued Retirement Income.
6.5 Limitation on benefits from multiple plans.
(a) In the case of an Employee who is also a participant in
any other defined benefit plan of the Employer or any Affiliated
Employer or in any defined contribution plan of the Employer or
any Affiliated Employer, the Retirement Income provided by the
Plan shall be limited to the extent necessary to prevent the sum
of Fractions A and B below, computed as of the end of the Plan
Year, from exceeding 1.0.
Fraction A
(numerator) Projected annual benefit of the Employee
under the Plan and any other defined benefit plan of
the Employer or any Affiliated Employer (determined as
of the close of the Plan Year).
(denominator) The lesser of (1) the product of 1.25
multiplied by the Defined Benefit Dollar Limitation (or
such higher accrued benefit as of December 31, 1982),
or (2) 1.4 multiplied by the amount determined under
Code Section 415(b)(1)(B) as adjusted under Treasury
Regulation Section 1.415-5.
39
<PAGE>
Fraction B
(numerator) The sum of all Annual Additions to the
account of the Employee under any defined contribution
plan of the Employer or any Affiliated Employer as of
the close of the Plan Year.
(denominator) The sum of the lesser of the following
amounts, determined for such Plan Year and for each
prior Plan Year in which the Employee has a Year of
Service, (1) 1.25 multiplied by the Defined
Contribution Dollar Limitation determined under Code
Section 415(c)(1)(A), or (2) 1.4 multiplied by
twenty-five percent (25%) of the Employee's
compensation for the year.
6.6 Special rules for plans subject to overall limitations
under Code Section 415(e).
(a) For purposes of computing the defined contribution plan
fraction of Section 415(e)(1) of the Code, "Annual Addition"
shall mean the amount allocated to an Employee's account during
the Limitation Year as a result of:
(1) employer contributions,
(2) employee contributions,
(3) forfeitures, and
(4) amounts described in Sections 415(1)(1) and
419(A)(d)(2) of the Code.
(b) The Annual Addition for any Limitation Year beginning
before January 1, 1987 shall not be recomputed to treat all
Employee contributions as an Annual Addition.
(c) If the sum of Fractions A and B exceeds 1.0 as of
December 31, 1982, the numerator of Fraction B shall be reduced
by an amount which does not exceed the numerator, so that the sum
of Fraction A and Fraction B does not exceed 1.0.
(d) If the Plan satisfied the applicable requirements of
Section 415 of the Code as in effect for all Limitation Years
beginning before January 1, 1987, an amount shall be subtracted
from the numerator of the defined contribution plan fraction (not
exceeding such numerator) as prescribed by the Secretary of the
Treasury so that the sum of the defined benefit plan fraction and
defined contribution plan fraction computed under Section
415(e)(1) of the Code (as revised by this Article VI) does not
exceed 1.0 for such Limitation Year.
40
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(e) The defined contribution plans and the other defined
benefit plans of the Employer and Affiliated Employers include,
respectively, (1) The Southern Company Employee Savings Plan, The
Southern Company Employee Stock Ownership Plan, and any other
defined contribution plan (as defined in Section 415(k) of the
Code) and (2) any other qualified pension plan in which the
Employee participates in accruing benefits maintained by the
Employer or any Affiliated Employer.
6.7 Combination of Plans. Notwithstanding any provisions
contained herein to the contrary, in the event that an Employee
participates in a defined contribution plan or defined benefit
plan required to be aggregated with this Plan under Code Section
415(g) and the combined benefits with respect to an Employee
exceed the limitations contained in Code Section 415(e),
corrective adjustments shall first be made under this Plan.
However, if an Employee's Retirement Income under this Plan has
already commenced, corrections shall first be made under The
Southern Company Employee Stock Ownership Plan, if possible, and
if not possible, then correction shall be made to the Employee's
Accrued Retirement Income under this Plan.
6.8 Incorporation of Code Section 415. Notwithstanding
anything contained in this Article to the contrary, the
limitations, adjustments and other requirements prescribed in
this Article shall at all times comply with the provisions of
Code Section 415 and the regulations thereunder, the terms of
which are specifically incorporated herein by reference.
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ARTICLE VII
Provisional Payee
7
7.1 Adjustment of Retirement Income to provide for payment
to Provisional Payee. An Employee who desires to have his
Accrued Retirement Income adjusted in accordance with the
provisions of this Article VII to provide a reduced amount of
Retirement Income payable to him for his lifetime commencing on
his Early Retirement Date, his Normal Retirement Date, or his
Deferred Retirement Date, as the case may be, may elect, in
accordance with the provisions of this Article VII, at his
option, either:
(a) that an amount of Retirement Income be payable to him
for his lifetime which is equal to eighty percent (80%) of the
Retirement Income which would otherwise be payable to him, but
for such election (taking into account any reduction required in
accordance with Sections 7.3 and 7.4(a)), with the provision that
the same amount will be continued after his death to his
Provisional Payee until the death of such Provisional Payee, or
(b) that an amount of Retirement Income be payable to him
for his lifetime which is equal to ninety percent (90%) of the
Retirement Income which would otherwise be payable to him, but
for such election (taking into account any reduction required in
accordance with Sections 7.3 and 7.4(a)), with the provision that
one-half (1/2) of the amount payable to the Employee will be
continued after his death to his Provisional Payee until the
death of such Provisional Payee.
7.2 Form and time of election and notice requirements.
(a) An election of payment and designation of a Provisional
Payee in accordance with Section 7.1 shall be made in writing at
the same time on a form prescribed by the Retirement Board and
delivered to it. The election and designation shall specify its
effective date which shall not be sooner than the date received
by the Retirement Board or the Employee's fifty-fifth (55th)
birthday, whichever is later, nor later than the date of
commencement of payments in accordance with this Article VII.
(b) An election of payment to be made in accordance with
paragraph (a) or paragraph (b) of Section 7.1 may be changed from
paragraph (a) to paragraph (b) or vice versa by an Employee,
provided the written election of the change specifies an
effective date which shall not be sooner than the date received
by the Retirement Board or the Employee's fifty-fifth (55th)
birthday, whichever is later, nor later than the date of
commencement of payments in accordance with this Article VII. To
the extent that the new method of payment shall afford the
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Employee changed protection in the event of his death after the
effective date of the new election and prior to retirement, his
Accrued Retirement Income shall be adjusted pursuant to Section
7.4(a) to reflect such changed protection.
(c) With respect to Sections 7.5 and 7.6, within the period
not less than 30 days and not more than 90 days prior to the
commencement of benefits, the Employee shall be furnished, by
mail or personal delivery, a written explanation of: (1) the
terms and conditions of the reduced Retirement Income payable as
provided in paragraph (b) of Section 7.1; (2) the Employee's
right to make, and the effect of, an election to waive the
payment of reduced Retirement Income pursuant to a Provisional
Payee designation; (3) the rights of the Employee's Provisional
Payee; and (4) the right to make, and the effect of, a revocation
of a previous election to waive the payment of reduced Retirement
Income pursuant to a Provisional Payee designation.
Within thirty (30) days following an Employee's written
request received by the Retirement Board during the election
period, but within sixty (60) days from the date the Employee is
furnished all of the information prescribed in the immediately
preceding sentence, the Employee shall be furnished an additional
written explanation, in terms of dollar amounts, of the financial
effect of an election by him not to receive such reduced
Retirement Income. If an Employee makes such request, the
election period herein prescribed shall end not earlier than
sixty (60) calendar days following the day of the mailing or
personal delivery of the additional explanation to the Employee.
Except that if an election made as provided in Section 7.5 or 7.6
is revoked, another election under that Section may be made
during the specified election period.
7.3 Circumstances in which election and designation are
inoperative. An election and designation made pursuant to this
Article shall be inoperative and the regular provisions of the
Plan shall again become applicable as if a Provisional Payee had
not been designated if, prior to the commencement of any payment
in accordance with this Article VII: (a) an Employee's
Provisional Payee shall die, (b) the Employee and the Provisional
Payee shall be divorced under a final decree of divorce, or
(c) the Retirement Board shall have received the written
Qualified Election of the Employee to rescind his election of
payment and designation of a Provisional Payee. If such a
Qualified Election to rescind is made by the Employee, his
Accrued Retirement Income shall be reduced to reflect the
protection afforded the Employee by any Provisional Payee
designation during the period from its effective date to the date
of the Retirement Board's receipt of the Employee's Qualified
Election to rescind if the option as to payments of reduced
Retirement Income was in accordance with either Section 7.1(a),
7.6(a), or 7.6(b). If an Employee remarries subsequent to the
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death or divorce of his Provisional Payee and prior to the
commencement of payments in accordance with this Article VII, and
if such Employee is married prior to the time of the commencement
of payments, then he shall be entitled to designate a new
Provisional Payee in the manner set forth in Section 7.2.
7.4 Pre-retirement death benefit. If prior to his Normal
Retirement Date (or his Deferred Retirement Date, if applicable),
an Employee shall die while in the service of the Employer and is
survived by his spouse to whom he shall be married at the time of
his death, there shall be payable to his surviving spouse (whom
he shall be deemed to have designated as his Provisional Payee)
Retirement Income determined in accordance with paragraph (a) or
paragraph (c) of this Section 7.4, as applicable. Such
Retirement Income shall commence on the first day of the month
following the death of the Employee or the first day of the month
following the date on which he would have attained his
fifty-fifth (55th) birthday if he were still alive, whichever is
later, and shall cease with the last payment preceding the death
of his Provisional Payee.
(a) The amount of Retirement Income payable to the
Provisional Payee of a deceased Employee who prior to his death
had attained his fifty-fifth (55th) birthday shall be equal to
the amount payable to the Provisional Payee as calculated in
Section 7.1(b) determined on the basis of his Accredited Service
to the date of his death, or if the Employee shall have attained
his fifty-fifth (55th) birthday and so elected prior to his
death, such Retirement Income shall be equal to the amount set
forth in Section 7.1(a) determined on the basis of his Accredited
Service to the date of his death reduced as provided in the next
sentence. If such election shall be made by the Employee, the
Retirement Income which shall be payable to the Employee if he
lives to his Early Retirement Date or the first day of the month
following his attainment of age sixty-five (65), if later, shall
be reduced by three-fourths of one percent (0.75%) for each year
(prorated for a fraction of a year from the first day of the
month following the effective date of the election) which has
elapsed from the effective date of his election to the earlier of
(1) the commencement of Retirement Income on or after his Early
Retirement Date or the first day of the month following his
attainment of age sixty-five (65), if later, or (2) the
revocation of such election. If he shall die before the
commencement of Retirement Income on or after his Early
Retirement Date or the first day of the month following his
attainment of age sixty-five (65), if later, his Accrued
Retirement Income to the date of his death shall be reduced by
three-quarters of one percent (0.75%) for each year (prorated for
a fraction of a year from the first day of the month following
the effective date of the election) between the effective date of
his election and the first day of the month following his
attainment of age sixty-five (65). No reduction in the
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Employee's Retirement Income shall be made for the period during
which the election is in effect after the first day of the month
following his attainment of age sixty-five (65).
(b) Retirement Income shall not be payable under paragraph
(a) of this Section 7.4 to the Provisional Payee of a deceased
Employee if at the time of his death there was in effect a
Qualified Election made after August 22, 1984 under this
paragraph (b) that no Retirement Income shall be paid to his
Provisional Payee in the event of his death while in the service
of the Employer (or while in the service of an Affiliated
Employer to which his employment had been transferred in
accordance with Section 4.6) as provided in paragraph (a),
provided the Employee had received at least 180 days prior to his
fifty-fifth (55th) birthday a written explanation of: (1) the
terms and conditions of the Retirement Income payable to his
Provisional Payee as provided in paragraph (a); (2) the
Employee's right to make, and the effect of, an election to waive
the payment of Retirement Income to his Provisional Payee;
(3) the rights of the Employee's Provisional Payee; and (4) the
right to make, and the effect of, a revocation of a previous
election to waive the payment of Retirement Income to the
Employee's Provisional Payee.
A revocation of a prior Qualified Election to waive the
payment of Retirement Income to the Employee's Provisional Payee
may be made by the Employee without the consent of the Employee's
Provisional Payee at any time before the commencement of
benefits. An election under this paragraph (b) may be made and
such election may be revoked by an Employee during the period
commencing ninety (90) days prior to the Employee's fifty-fifth
(55th) birthday and ending on the date of the Employee's death.
(c) The amount of such Retirement Income payable to the
Provisional Payee of a deceased Employee who prior to his death,
had completed at least five (5) Vesting Years of Service and had
not attained his fifty-fifth (55th) birthday shall be equal to
one-half of the reduced amount, as actuarially adjusted to
provide for the payment of such Retirement Income beginning at
the date on which such deceased Employee would have attained his
fifty-fifth (55th) birthday and to provide for the determination
of such Retirement Income on a joint and fifty percent (50%)
survivor basis of the Employee's Accrued Retirement Income,
determined on the basis of his Accredited Service to the date of
his death.
This Section 7.4(c) shall also apply to adjust the future
payment of Retirement Income after December 31, 1990 to a
Provisional Payee with respect to an Employee who died (while in
the service of the Employer prior to his fifty-fifth (55th)
birthday after completing the requisite number of Years of
Service) in order to have a nonforfeitable right to Retirement
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Income under the Plan as in effect on the Employee's date of
death, provided Retirement Income is payable to such Provisional
Payee on or after January 1, 1991. The adjustment under this
Section 7.4(c) shall be determined by adjusting the Retirement
Income that had commenced to the Provisional Payee on or before
January 1, 1986, and then adding the applicable percentage
increase under Section 5.13 of the Prior Plan.
For an Employee, on or after January 1, 1991, who dies while
in the service of the Employer prior to his fifty-fifth (55th)
birthday after completing five (5) Vesting Years of Service, the
amount of such Retirement Income payable to the Provisional Payee
shall be calculated as provided in Section 7.1(b) determined on
the basis of his Accredited Service to the date of his death.
The payment of such Retirement Income to the Provisional Payee
shall begin on the first day of the month following the date on
which such deceased Employee would have attained his fifty-fifth
(55th) birthday.
7.5 Post-retirement death benefit - qualified joint and
survivor annuity. If at his Early Retirement Date, Normal
Retirement Date, or Deferred Retirement Date, as the case may be,
an Employee is married and he has not: (a) designated a
Provisional Payee in accordance with Section 7.1 in respect of
payments to be made commencing on his Early, Normal, or Deferred
Retirement Date or (b) made a Qualified Election that payment be
made to him in the mode of a single life annuity, he shall
nevertheless be deemed to have made an effective designation of a
Provisional Payee under this Section 7.5 and to have specified
the payment of a benefit as provided in Section 7.1(b).
7.6 Election and designation by former Employee entitled to
Retirement Income in accordance with Article VIII. If an
Employee is entitled to receive in accordance with Section 8.1
Retirement Income commencing at Normal Retirement Date, or sooner
in accordance with Section 8.2, he may, on or after his
fifty-fifth (55th) birthday, designate his spouse as his
Provisional Payee and elect to have his Accrued Retirement Income
at the date of termination of his service actuarially adjusted to
provide, at his option, in the event of the commencement of
payment prior to his Normal Retirement Date either:
(a) a reduced amount payable to him for his lifetime with
the provision that such reduced amount will be continued after
his death to his spouse as Provisional Payee until the death of
such Provisional Payee; or
(b) a reduced amount (greater than the amount in (a) above)
payable to him for his lifetime with the provision that one-half
(1/2) of such reduced amount will be continued after his death to
his spouse as Provisional Payee until the death of such
Provisional Payee.
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The Employee's election and designation of his Provisional
Payee made in accordance with this Section 7.6 shall be in
writing on a form prescribed by the Retirement Board and
delivered to it and shall become effective not sooner than the
date received by the Retirement Board or the Employee's
fifty-fifth (55th) birthday, whichever is later, nor later than
the date of commencement of payment in accordance with this
Section 7.6.
If the Employee dies prior to his Normal Retirement Date but
after the effective date of his Provisional Payee designation,
there will be payable to his Provisional Payee for life
commencing on the first day of the calendar month after the
Employee's death Retirement Income in a reduced amount in
accordance with the Employee's election of payments to be made to
his Provisional Payee after the death of the Employee under
paragraph (a) or (b), as the case may be, of this Section 7.6.
However, if prior to the Employee's death, the Retirement Board
has not received such election, payment of a reduced amount of
Retirement Income will be made in accordance with paragraph (b)
of this Section 7.6 to his surviving spouse to whom he is married
at the time of his death, unless (1) at the time of his death
there is in effect a Qualified Election by the Employee that
reduced Retirement Income shall not be paid to his surviving
spouse in accordance with this Section 7.6 should he die between
his fifty-fifth (55th) birthday and his Normal Retirement Date
without having elected that payment be made to a Provisional
Payee and (2) at least 180 days prior to his fifty-fifth (55th)
birthday a written explanation is provided to the Employee of:
(A) the terms and conditions of the Retirement Income payable to
his Provisional Payee as provided in this Section 7.6; (B) the
Employee's right to make, and the effect of, an election to waive
the payment of Retirement Income to his Provisional Payee;
(C) the rights of an Employee's spouse; and (D) the right to
make, and the effect of, a revocation of a previous election to
waive the payment of Retirement Income to his Provisional Payee.
If the Employee is entitled to receive payment of Retirement
Income in accordance with Section 8.2 after his fifty-fifth
(55th) birthday and prior to his Normal Retirement Date and
elects to do so, a reduced amount of Retirement Income determined
in accordance with this Section 7.6 based upon his Accrued
Retirement Income at the date of termination of his service
(actuarially reduced in accordance with Section 8.2) will be
payable to him commencing on the date on which payments commence
prior to Normal Retirement Date in accordance with Section 8.2
with payments in the same or reduced amount to be continued to
his Provisional Payee for life after the Employee's death in
accordance with his election under paragraph (a) or (b), as the
case may be, of this Section 7.6. However, if the Employee is
married and he has not designated a Provisional Payee in respect
of payments to commence to him prior to his Normal Retirement
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Date or elected that payment be made to him in the mode of a
single life annuity pursuant to a Qualified Election, he shall be
deemed to have designated a Provisional Payee pursuant to this
Section 7.6 and thereby specified that a reduced Retirement
Income shall be paid to him during his lifetime as provided in
paragraph (b) of this Section 7.6 and continued after his death
to his Provisional Payee as provided in paragraph (b) of this
Section 7.6.
If the Employee is alive on his Normal Retirement Date and
is married and payment of Retirement Income has not sooner
commenced, the provisions of Section 7.5 shall be applicable to
the payment of his Retirement Income, unless he shall elect at
his Normal Retirement Date to receive payment of his Retirement
Income pursuant to Section 7.1(a) or 7.1(b). However, if an
election and designation in accordance with this Section 7.6 was
in effect prior to his Normal Retirement Date, the Employee's
Accrued Retirement Income at his Normal Retirement Date shall be
actuarially adjusted for the period the election and designation
was in effect.
7.7 Death benefit for Provisional Payee of former Employee.
If an Employee, whose service with the Employer terminates on or
after January 1, 1989, shall die after such termination of
employment, and prior to his death (a) shall have not attained
his fifty-fifth (55th) birthday, (b) shall have completed at
least five (5) Vesting Years of Service, and (c) shall be
survived by his spouse to whom he shall be married at his death,
then there shall be payable to his surviving spouse (whom he
shall be deemed to have designated as his Provisional Payee)
Retirement Income determined in accordance with this Section 7.7.
Such Retirement Income shall be equal to one-half of the reduced
amount, as actuarially adjusted to provide for the payment of
such Retirement Income beginning at the date on which such
deceased Employee would have attained his fifty-fifth (55th)
birthday and to provide for the determination of such Retirement
Income on a joint and fifty percent (50%) survivor basis of the
Employee's Accrued Retirement Income, determined on the basis of
his Accredited Service to the date of his death. Such Retirement
Income shall commence on the first day of the month following the
date on which the former Employee would have attained his
fifty-fifth (55th) birthday if he were still alive, and shall
cease with the last payment preceding the death of his
Provisional Payee.
7.8 Limitations on Employee's and Provisional Payee's
benefits.
(a) With respect to an Employee who does not elect a single
life annuity, the limitation on benefits imposed under Article VI
shall be applied as if such Employee had elected a benefit in the
form of a single life annuity.
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(b) With respect to a Provisional Payee, the limitations on
benefits imposed under Article VI shall be applied consistent
with paragraph (a) above prorated to provide a limitation equal
to or one-half of the Employee's limitation as appropriate in
accordance with annuity form of benefit elected by the Employee.
7.9 Effect of election under Article VII. An election of
payment or a deemed election of payment in accordance with this
Article VII shall be in lieu of any other form or method of
payment of Retirement Income.
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ARTICLE VIII
Termination of Service
8
8.1 Vested interest. If an Employee included in the Plan
terminates for any reason other than death or transfer to an
Affiliated Employer as provided by Section 4.6 or retirement as
provided by Article III, and if such Employee has had at least
five (5) Vesting Years of Service with the Employer, whether or
not Accredited Service, he will be entitled to receive,
commencing at Normal Retirement Date (except as provided in
Section 8.2 and subject to the provisions of Section 7.6)
Retirement Income equal to his Accrued Retirement Income at the
date of the termination of such service, provided that he makes
application to the Employer for the payment of such Retirement
Income. If proper application for payment of Retirement Income
shall not be received by the Employer by the April 1 of the
calendar year following the calendar year in which the Employee
attains age 70 1/2 and the whereabouts of the Employee cannot be
determined by the Employer, Retirement Income shall be paid to
the Employee's Provisional Payee, if any, and if surviving and
the whereabouts known to the Employer, or applied in such other
manner as the Retirement Board shall deem appropriate. The
payment of Retirement Income pursuant to this provision shall
completely discharge all liability of the Retirement Board, the
Employer, and the Trustee or other payor to the extent of the
payments so made. If such Employee terminates with less than
five (5) Vesting Years of Service with the Employer, he shall
immediately forfeit any Accrued Retirement Income under the Plan
based upon his service prior to such termination.
8.2 Early distribution of vested benefit. If an Employee
terminates from service before his fifty-fifth (55th) birthday
and is entitled to receive in accordance with Section 8.1
Retirement Income commencing at his Normal Retirement Date and at
the time his service terminated he had at least ten (10) Years of
Accredited Service, he may, in lieu of receiving payment of such
Retirement Income commencing at Normal Retirement Date, elect to
receive such Retirement Income commencing as of the first day of
any month within the ten-year period preceding his Normal
Retirement Date in an amount equal to his Accrued Retirement
Income at the date of termination of his service actuarially
reduced in accordance with reasonable actuarial assumptions
adopted by the Retirement Board. An election pursuant to this
Section 8.2 to have Retirement Income commence prior to Normal
Retirement Date shall be made on a form prescribed by the
Retirement Board and shall be filed with the Retirement Board at
least thirty (30) days before Retirement Income is to commence.
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8.3 Years of Service of reemployed Employees. If an
Employee whose service terminates is again employed by the
Employer as an Employee or he is employed (other than by reason
of transfer in accordance with Section 4.6) by an Affiliated
Employer which has at the time of his employment by such company
a pension plan with substantially the same terms as this Plan,
his Years of Service with the Employer and his Accredited Service
immediately prior to the termination of his service shall be
treated as provided in this Section 8.3, subject to the
provisions of Section 8.4. For this purpose the terms "again
employed" and "reemployment" shall include employment with an
Affiliated Employer.
(a) If at the time of his reemployment he has not incurred
a One-Year Break in Service, his Years of Service with the
Employer and his Accredited Service will be restored whether or
not he is entitled to receive Retirement Income in accordance
with Section 8.1.
(b) If at the time of termination of his service he is
entitled to receive Retirement Income in accordance with the
provisions of Section 8.1, upon his reemployment his Years of
Service with the Employer immediately prior to the termination of
his service shall be restored whether or not he has incurred a
One-Year Break in Service.
(c) If at the time of reemployment on or after January 1,
1985, he is not entitled to receive Retirement Income in
accordance with Section 8.1 and he (1) has incurred less than
five (5) consecutive One-Year Breaks in Service or (2) has
incurred five (5) or more consecutive One-Year Breaks in Service,
but his Years of Service prior to such One-Year Breaks in Service
exceeded the consecutive One-Year Breaks in Service, then upon
the completion of one Eligibility Year of Service following his
reemployment, provided that if his reemployment date is on or
after January 1, 1995, no such Eligibility Year of Service shall
be required, his Years of Service with the Employer and his
Accredited Service prior to the first One-Year Break in Service
shall be restored, disregarding any Years of Service with the
Employer which are not required to be taken into account by
reason of any previous One-Year Breaks in Service. The Years of
Service and years of Accredited Service credited to an Employee
reemployed prior to January 1, 1985, with regard to his Years of
Service with the Employer and years of Accredited Service
immediately prior to the termination of his service shall be
determined under the terms of the Plan in effect prior to January
1, 1985.
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(d) Years of Service and Accredited Service restored to an
Employee in accordance with this Section 8.3 shall be aggregated
with Years of Service and Accredited Service to which the
Employee may be entitled after his reemployment. If, however,
the Minimum Retirement Income so determined for the Employee upon
his subsequent retirement or termination of service shall be less
than the aggregate of: (1) his Minimum Retirement Income, if
any, determined in respect of the period ending with his prior
termination of service, and (2) his Minimum Retirement Income
determined in respect of the period after his reemployment, the
aggregate of such Minimum Retirement Incomes shall be deemed to
be his Minimum Retirement Income upon such subsequent retirement
or termination of service. In any event, his Retirement Income,
however computed, shall be reduced by the Actuarial Equivalent of
any Retirement Income he received with respect to his prior
period of employment.
(e) If a former Employee to whose credit shall be restored
years of Accredited Service in accordance with this Section 8.3
shall become entitled (or his Provisional Payee shall become
entitled) to receive retirement income under the plan of an
Affiliated Employer by which he should become employed, he shall
be deemed to have transferred to the Affiliated Employer for
purposes of Section 4.6 as of his initial date of participation
in the plan of such Affiliated Employer.
8.4 Cash-out and buy-back. (a) Notwithstanding any other
provision of this Plan, if the present value of Accrued
Retirement Income of an Employee whose service terminates for any
reason other than transfer to an Affiliated Employer under
Section 4.6, or retirement under Article III, is not more than
$3,500 (or such greater amount as permitted by the regulations
prescribed by the Secretary of the Treasury) the Employer shall
direct that such present value of the Employee's Accrued
Retirement Income be paid in a lump sum, in cash, to such
terminated Employee. The present value of the Accrued Retirement
Income shall be calculated as of the last day of the date of
distribution of the lump sum applying the Applicable Interest
Rate as defined in Section 8.5(e) in effect on the first day of
the Plan Year of distribution. For purposes of this Section 8.4,
if the present value of the Employee's vested Accrued Retirement
Income is zero, the Employee shall be deemed to have received a
distribution of such vested Retirement Income.
(b) If such terminated Employee is subsequently reemployed
and becomes covered under this Plan, the calculation of his
Accrued Retirement Income shall be without regard to his years of
Accredited Service prior to any One-Year Breaks in Service,
unless the amount of such payment is repaid to the Trust, plus
interest at the rate determined under Section 411(c)(2)(C) of the
Code. If such amount (plus interest) is repaid, the Employee's
Retirement Income shall be calculated based on his years of
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Accredited Service before and after any One-Year Breaks in
Service. Any repayment of a cash-out made pursuant to this
Section 8.4 shall be made before the earlier of (a) five (5)
years after the date on which the Employee is reemployed by the
Employer or an Affiliated Employer, or (b) the close of the first
period of five (5) consecutive One-Year Breaks in Service
commencing after the distribution. If an Employee has been
deemed to receive a distribution in accordance with paragraph (a)
and is then reemployed, upon such reemployment, the amount of the
deemed distribution shall be restored to the Employee.
8.5 Calculation of present value for cash-out of benefits
and for determining amount of benefits.
(a) This Section 8.5 shall apply to all distributions from
the Plan and from annuity contracts purchased to provide Accrued
Retirement Income other than distributions described in Section
1.417-1T(e)(3) of the income tax regulations issued under the
Retirement Equity Act of 1984.
(b) (1) For purposes of determining whether the present
value of (A) an Employee's vested accrued benefit; (B) a
qualified joint and survivor annuity, within the meaning of
Section 417(b) of the Code; or (C) a qualified preretirement
survivor annuity within the meaning of Section 417(c)(1) of the
Code exceeds $3,500, the present value of such benefits or
annuities shall be calculated by using an interest rate no
greater than the Applicable Interest Rate.
(2) In no event shall the present value of any such
benefit or annuity determined under this Section 8.5(b) be
less than the present value of such benefits or annuities
determined using the Applicable Interest Rate.
(c) (1) For purposes of determining the amount of an
Employee's vested Accrued Retirement Income, the interest rate
used shall not exceed:
(A) the Applicable Interest Rate if the
present value of the benefit (using such rate or
rates) is not in excess of $25,000; or
(B) 120 percent of the Applicable Interest
Rate if the present value of the benefit exceeds
$25,000 (as determined under (A)). In no event
shall the present value determined under this (B)
be less than $25,000.
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(2) In no event shall the amount of the benefit or
annuity determined under this Section 8.5(c) be less than
the greater of:
(A) the amount of such benefit determined under
the Plan's provisions for determining the amount of
benefits other than Sections 8.5; or
(B) the amount of such benefit determined using
the Applicable Interest Rate if the value determined in
Section 8.5(c)(1) is less than $25,000 or 120 percent
of the Applicable Interest Rate if the value determined
in Section 8.5(c)(1) is not less than $25,000.
(d) In no event shall the amount of any benefit or annuity
determined under this Section 8.5 exceed the maximum benefit
permitted under Section 415 of the Code.
(e) (1) For purposes of this Section 8.5, "Applicable
Interest Rate" shall mean the interest rate or rates which would
be used as of the date distribution commences by the Pension
Benefit Guaranty Corporation for purposes of valuing lump sum
payments under the Plan if the Plan had terminated on the date
distribution commences with insufficient assets to provide
benefits guaranteed by the Pension Benefit Guaranty Corporation
on that date.
(2) Notwithstanding the foregoing, if the provisions
of the Plan other than Section 8.5(e) so provide, the
Applicable Interest Rate shall be determined as of the first
day of the Plan Year in which a distribution occurs rather
than as of the date distribution commences.
(f) (1) This Section 8.5 shall apply to distributions in
Plan Years beginning after December 31, 1984, other than
distributions under annuity contracts distributed to or owned by
an Employee prior to September 17, 1985 unless additional
contributions are made under the Plan by the Employer with
respect to such contracts.
(2) Notwithstanding the foregoing, this Section
8.5 shall not apply to any distributions in Plan Years
beginning after December 31, 1984, and before
January 1, 1987, if such distributions were made in
accordance with the requirements of the income tax
regulations issued under the Retirement Equity Act of
1984.
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8.6 Retirement Income under Prior Plan. Any person
entitled to receive Retirement Income under Article VIII of the
Prior Plan shall only be entitled to receive Retirement Income in
accordance with the provisions of such Prior Plan in effect at
the time his service was terminated, except that any such person
whose service terminated prior to January 1, 1976:
(a) with at least twenty (20) years of Accredited Service
may elect to receive Retirement Income commencing prior to his
Normal Retirement Date in accordance with Section 8.2;
(b) who shall have returned to the employment of the
Employer, whether before or after January 1, 1976, and shall be
an Employee who is entitled to receive Retirement Income in
respect of his Accredited Service after January 1, 1976, his
years of Accredited Service under the Prior Plan with respect to
his service before January 1, 1976, shall, for the purpose of
calculating his Minimum Retirement Income, be aggregated with his
years of Accredited Service after his reemployment. His Accrued
Retirement Income to the date of termination of his service
payable in accordance with Article VIII of the Prior Plan shall
be treated as Prior Plan Retirement Income and his Years of
Service prior to the date of termination of his service shall be
restored to his credit. It shall be a condition of the treatment
provided for in this paragraph (b) that: (1) the Employee
rescind any election of payment and designation of a Provisional
Payee which he shall have made under the Prior Plan and which
shall be in effect at the time of his return to the employment of
the Employer and (2) if he is receiving Retirement Income, his
Retirement Income shall cease during his period of employment and
any Retirement Income payable upon his subsequent retirement
shall be reduced by the Actuarial Equivalent of any Retirement
Income he received prior to his reemployment.
8.7 Requirement for Direct Rollovers. This Section 8.7
applies to distributions made from the Plan on or after January
1, 1993. Notwithstanding any provision of the Plan to the
contrary that would otherwise limit a Distributee's election
under this Article VIII, a Distributee may elect, at the time and
in the manner prescribed by the Retirement Board, to have any
portion of an Eligible Rollover Distribution paid directly to an
Eligible Retirement Plan specified by the Distributee in a Direct
Rollover.
(a) Definitions
(1) Eligible Rollover Distribution
An Eligible Rollover Distribution is any distribution
of all or any portion of the balance to the credit of the
Distributee, except that an Eligible Rollover Distribution
does not include:
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(A) any distribution that is one of a series of
substantially equal periodic payments (not less
frequently than annually) made for the life (or life
expectancy) of the Distributee or the joint lives (or
joint life expectancies) of the Distributee and the
Distributee's spouse, or for a specified period of 10
years or more;
(B) any distribution to the extent such
distribution is required under Code Section 401(a)(9);
and
(C) the portion of any distribution that is not
includible in gross income (determined without regard
to the exclusion for net unrealized appreciation with
respect to employer securities).
(2) Eligible Retirement Plan
An Eligible Retirement Plan is an individual retirement
account described in Code Section 408(a), an individual
retirement annuity described in Code Section 408(b), an
annuity plan described in Code Section 403(a), or a
qualified trust described in Code Section 401(a) that
accepts the Distributee's Eligible Rollover Distribution.
However, in the case of an Eligible Rollover Distribution
for a Provisional Payee, an Eligible Retirement Plan is an
individual retirement account or individual retirement
annuity.
(3) Distributee
A Distributee includes an Employee or former Employee.
In addition, a Distributee includes the Employee's or former
Employee's spouse who is an alternate payee under a
qualified domestic relations order, as defined in Code
Section 414(p).
(4) Direct Rollover
A Direct Rollover is a payment by the Plan to the
Eligible Retirement Plan specified by the Distributee.
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ARTICLE IX
Contributions
9
9.1 Contributions generally. All contributions which the
Employer deems necessary to provide the Retirement Incomes under
the Plan in excess of the fund derived from the split-up of the
Commonwealth pension plan will be made from time to time by or on
behalf of the Employer and no contributions will be required of
the Employees. All contributions shall be made to the Trustee
under the Trust Agreement provided for in Article XI, and if a
group annuity contract shall be entered into with a life
insurance company ("contract with an insurance company"),
contributions may also be made to the insurance company.
The minimum amount of contributions to be made by or on
behalf of the Employer for any Plan Year of the Plan shall be
such amount as is required to meet the minimum funding standards
of ERISA and any regulations in respect thereto. However, the
Employer is under no obligation to make any contributions under
the Plan after the Plan is terminated, whether or not Retirement
Income accrued or vested prior to the date of termination has
been fully funded. All contributions are expressly conditioned
upon the deductibility of such contributions by the Employer
pursuant to Section 404 of the Code.
9.2 Return of Employer contributions. All contributions
made pursuant to the Plan shall be held by the Trustee in
accordance with the terms of the Trust Agreement for the
exclusive benefit of those Employees who are Participants under
the Plan, including former Employees and their Beneficiaries, and
shall be applied to provide benefits under the Plan and to pay
expenses of administration of the Plan and Trust, to the extent
that such expenses are not otherwise paid. At no time prior to
the satisfaction of all liabilities with respect to such
Employees and their Beneficiaries shall any part of the Trust
Fund be used for, or diverted to, purposes other than for the
exclusive benefit of such Employees and their Beneficiaries.
However, notwithstanding the provisions of this Section 9.2:
(a) If a contribution is conditioned upon the deductibility
of the contributions under Section 404 of the Code, then, to the
extent the deduction is disallowed, the Trustee shall upon
written request of the Employer, return the contribution (to the
extent disallowed) to the Employer within one year after the date
the deduction is disallowed.
(b) If a contribution or any portion thereof is made by the
Employer by a mistake of fact, the Trustee shall, upon written
request of the Employer, return the contribution or such portion
to the Employer within one year after the date of payment to the
Trustee.
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The amount which may be returned to the Employer under this
Section 9.2, is the excess of (a) the amount contributed over (b)
the amount that would have been contributed had there not
occurred a mistake of fact or a mistake in determining the
deduction. Earnings attributable to the excess contribution
shall not be returned to the Employer, but losses attributable
thereto shall reduce the amount to be so returned.
(c) If permitted under Federal common law, the Company may
recover any other contributions to the Plan or payments to any
other entity to the extent such contributions or payments
unjustly enrich or otherwise gratuitously benefit such entity.
9.3 Expenses. Prior to termination of the Plan, all
investment expenses (including brokerage costs, transfer taxes,
shipping expenses, and charges of correspondent banks of the
Trustee) and any taxes which may be levied against the Trust
shall be charged to the Trust. All other expenses prior to the
termination of the Plan shall be paid by the Employer or charged
to the Trust, as determined in the discretion of The Southern
Company Pension Fund Investment Review Committee. After the
termination of the Plan, all expenses shall be levied against the
Trust and shall be charged to the Trust.
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ARTICLE X
Administration of Plan
10
10.1 Retirement Board. The general administration of the
Plan shall be placed in a Retirement Board of five (5) members
who shall be appointed from time to time by the Board of
Directors to serve at the pleasure of the Board of Directors.
10.2 Organization and transaction of business of Retirement
Board. Any person appointed a member of the Retirement Board
shall signify his acceptance by filing written acceptance with
the Board of Directors. Any member of the Retirement Board may
resign by delivering his written resignation to the Board of
Directors, and such resignation shall become effective at
delivery or at any later date specified therein.
The members of the Retirement Board shall elect a Chairman
from their number, and a Secretary who may be but need not be one
of the members of the Retirement Board, and shall designate an
actuary to act in actuarial matters relating to the Plan. They
may appoint from their number such committees with such powers as
they shall determine, may authorize one or more of their number
or any agent to make any payment in their behalf, or to execute
or deliver any instrument except that a requisition for funds
from the Trustee shall be signed by two (2) members of the
Retirement Board.
The Retirement Board shall hold meetings upon such notice,
at such place or places, and at such time or times as they may
from time to time determine.
A majority of the members of the Retirement Board at the
time in office shall constitute a quorum for the transaction of
business. All resolutions or other actions taken by the
Retirement Board at any meeting shall be by the vote of a
majority of the Retirement Board at the time in office. Any
determination or action of the Retirement Board may be made or
taken without a meeting by a resolution or written memorandum
concurred upon by a majority of the members then in office.
No member of the Retirement Board who is also an Employee of
the Employer shall receive any compensation from the Plan for his
service as such. No bond or other security need be required of
any member in any jurisdiction except as may be required by
ERISA.
10.3 Administrative responsibilities of Retirement Board.
The Retirement Board, in addition to the functions and duties
provided for elsewhere in the Plan, shall have exclusive
discretionary authority for the following:
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(a) construing and interpreting the Plan;
(b) determining all questions affecting the eligibility of
any Employee, retired Employee, Provisional Payee, or alternate
payee;
(c) determining all questions affecting the amount of the
benefit payable hereunder;
(d) ascertaining the persons to whom benefits shall be
payable under the provisions hereof;
(e) to the extent provided in the Plan, authorizing and
directing disbursements of benefits from the Plan;
(f) making final and binding determinations in connection
with any questions of fact which may arise regarding the
operation of the Plan;
(g) making such rules and regulations with reference to the
operation of the Plan as it may deem necessary or advisable,
provided that such rules and regulations shall not be
inconsistent with the express terms of the Plan or ERISA;
(h) prescribing such procedures and adopting such forms as
it determines necessary under the terms of the Plan; and
(i) reviewing such denials of claims for benefits as may
arise.
Any decision, determination, construction, interpretation,
ascertainment, authorization, direction, rule, regulation,
prescription, or review that the Retirement Board may make or
give in carrying out its duties or functions under this Section
10.3 shall be binding and conclusive.
10.4 Retirement Board, the "Administrator". For the
purposes of compliance with the provisions of ERISA, the
Retirement Board shall be deemed the "administrator" of the Plan
as the term "administrator" is defined in ERISA, and the
Retirement Board shall be, with respect to the Plan, a "named
fiduciary" as that term is defined in ERISA. For the purpose of
carrying out its duties, the Retirement Board may, in its
discretion, allocate responsibilities under the Plan among its
members and may, in its discretion, designate in writing, as set
forth in the minutes of the Retirement Board, persons other than
members of the Retirement Board to carry out such
responsibilities of the Retirement Board under the Plan as it may
see fit.
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10.5 Fiduciary responsibilities. It is intended, that to
the maximum extent permitted by ERISA, each person who is a
"fiduciary" with respect to the Plan as that term is defined in
ERISA shall be responsible for the proper exercise of his own
powers, duties, responsibilities, and obligations under the Plan
and the trust or other funding medium as shall each person
designated by any fiduciary to carry out any fiduciary
responsibility with respect to the Plan, the trust or other
funding medium and no fiduciary or other person to whom fiduciary
responsibilities are allocated shall be liable for any act or
omission of any other fiduciary or of any other person delegated
to carry out any fiduciary or other responsibility under the Plan
or the trust or other funding medium.
Any person or group of persons may serve in more than one
fiduciary capacity with respect to the Plan and any fiduciary
with respect to the Plan may serve as a fiduciary with respect to
the Plan in addition to being an officer, employee, agent, or
other representative of a "party in interest" as that term is
defined in ERISA.
10.6 Employment of actuaries and others. The Retirement
Board may employ such "enrolled actuaries" and independent
"qualified public accountants" as such terms are defined in
ERISA, legal counsel who may be of counsel to the Employer, other
specialists, and other persons as the Retirement Board deems
necessary or desirable in connection with the administration of
the Plan. The Retirement Board and any person to whom it may
delegate any duty or power in connection with the administration
of the Plan, the Employer, and the officers and directors thereof
shall be entitled to rely conclusively upon and shall be fully
protected in any action omitted, taken, or suffered by them in
good faith in reliance upon any enrolled actuary, independent
qualified public accountant, counsel, or other specialist or
other person selected by the Retirement Board or in reliance upon
any tables, evaluations, certificates, opinions, or reports which
shall be furnished by any of them or by the Trustee or any
insurance company. Any action so taken, omitted, or suffered in
accordance with the provisions of this Section 10.6 shall be
conclusive upon each Employee, former Employee, and Provisional
Payee covered under the Plan.
10.7 Accounts and tables. The Retirement Board shall
maintain accounts showing the fiscal transactions of the Plan,
and shall keep in convenient form such data as may be necessary
for actuarial valuations with respect to the operation and
administration of the Plan. The Retirement Board shall prepare
annually a report showing in reasonable summary the financial
condition of the Trust and giving a brief account of the
operation of the Plan for the past year, and any further
information which the Board of Directors may require. Such
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report shall be submitted to the Board of Directors and shall be
filed in the office of the Secretary of the Retirement Board.
The Retirement Board may, with the advice of an enrolled
actuary, adopt from time to time mortality and other tables as it
may deem necessary or appropriate for use in calculating benefits
under the Plan.
10.8 Indemnity of members of Retirement Board. To the
extent not compensated for by any applicable insurance, the
Employer shall indemnify and hold harmless each member of the
Retirement Board and each Employee of the Employer designated by
the Retirement Board to carry out any fiduciary responsibility
with respect to the Plan from any and all claims, loss, damages,
expense (including counsel fees approved by the Board of
Directors) and liability (including any amount paid in settlement
with the approval of the Board of Directors) arising from any act
or omission of such member or Employee designated by the
Retirement Board in connection with the Plan or the Trust, except
where the same is determined by the Board of Directors or is
judicially determined to be due to a failure to act in good faith
or is due to the gross negligence or willful misconduct of such
member or Employee. No assets of the Plan may be used for any
such indemnification.
10.9 Areas in which the Retirement Board does not have
responsibility. The Retirement Board shall not have
responsibility with respect to control or management of the
assets of the Plan. The Trustee or an insurance company, if
funds of the Plan shall be held by an insurance company, shall
have the sole responsibility for the administration of the assets
of the Plan as provided in the Trust Agreement or contract with
an insurance company, except to the extent that an "Investment
Manager," as that term is defined in ERISA, appointed by the
Board of Directors shall have responsibility for the management
of the assets of the Plan, or some part thereof, including the
power to acquire and dispose of the assets of the Plan, or some
part thereof.
The responsibility for providing a procedure for
establishing and carrying out a funding policy and method for the
Plan consistent with the objectives of the Plan and the
requirements of Title I of ERISA shall be that of the Board of
Directors or such committee, whether or not comprised of members
of the Board of Directors, as the Board of Directors may from
time to time designate and shall not be the responsibility of the
Retirement Board.
Effective October 23, 1993, the Pension Fund Investment
Review Committee of The Southern Company System shall recommend
for approval by the Board of Directors any Investment Manager
that shall have responsibility with respect to management of any
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Plan assets. In addition, the Pension Fund Investment Review
Committee shall assume all responsibility for providing a
procedure for establishing and carrying out a funding policy and
method for the Plan consistent with the objectives of the Plan
and the requirements of Title I of ERISA.
10.10 Claims Procedures. Consistent with the requirements
of ERISA and the regulations thereunder of the Secretary of Labor
from time to time in effect, the Retirement Board or its
delegatee shall:
(a) provide adequate notice in writing to any Employee,
former Employee, retired Employee, or Provisional Payee (each
being hereinafter in the paragraph referred to as "participant")
whose claim for benefit under the Plan has been denied, setting
forth specific reasons for such denial, written in a manner
calculated to be understood by such participant; and
(b) afford a reasonable opportunity to any participant
whose claim for benefits has been denied for a full and fair
review of the decision denying the claim.
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ARTICLE XI
Management of Trust
11
11.1 Trust. All assets of the Plan shall be held as a
special trust for use in accordance with the Plan.
The funds of the Plan shall be held by a Trustee, or by a
successor trustee appointed from time to time by the Board of
Directors in trust or held by a life insurance company in
accordance with the provisions of a contract with such insurance
company entered into by the Trustee or the Employer. The Trust
Agreement and contract with an insurance company may from time to
time be amended in the manner therein provided.
11.2 Disbursement of the Trust Fund. Subject to the
provisions of the Trust Agreement or contract with an insurance
company the Retirement Board shall determine the manner in which
the funds of the Plan shall be disbursed pursuant to the Plan,
including the form of voucher or warrant to be used in making
disbursements and the due qualification of persons authorized to
approve and sign the same. The responsibility for the retention
and investment of funds held by the Trustee shall lie with the
Trustee and not with the Retirement Board, and the responsibility
for the retention and investment of funds held by an insurance
company shall lie with the insurance company and not with the
Retirement Board. However, if in accordance with a Trust
Agreement forming a part of the Plan (including any pooled trust
agreement in which a trust forming a part of the Plan
participates) a contract with an insurance company shall be held
by the Trustee as an investment of the trust, directions may be
given from time to time to the Trustee by such board of directors
or committee or person or persons as may be specified in the
Trust Agreement to transfer funds of the trust to the life
insurance company which issued such contract or to transfer funds
from the life insurance company to the Trustee, as the case may
be.
11.3 Rights in the Trust. Under no circumstances shall
amounts of money or other things of value contributed by the
Employer to the Plan, or any part of the corpus or income of the
Trust held by the Trustee under the Plan, be recoverable by the
Employer from the Trustee or from any Employee, retired Employee,
or Provisional Payee, or be used for, or diverted to, purposes
other than for the exclusive benefit of the Employees, retired
Employees, and Provisional Payees covered hereunder; provided,
however, that, if after satisfaction of all liabilities of the
Trust with respect to Employees, retired Employees, and
Provisional Payees under the Plan, there is any balance
remaining, the Trustee shall return such balance to the Employer.
Notwithstanding the above, upon the approval of the Internal
Revenue Service or the enactment or promulgation of any laws or
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regulations by any governmental authority, the Employer shall be
authorized to rededicate all or a portion of the assets allocated
to fund Retirement Income under the Plan to the separate account
to fund medical benefits under Article XV of the Plan.
11.4 Merger of the Plan. The Plan shall not be merged or
consolidated with, or any of its assets or liabilities
transferred to, any other plan, unless each Employee included in
the Plan would (if the Plan then terminated) receive a benefit
immediately after the merger, consolidation, or transfer which is
equal to or greater than the benefit he would have been entitled
to receive immediately before the merger, consolidation, or
transfer (if the Plan then terminated).
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ARTICLE XII
Termination of the Plan
12
12.1 Termination of the Plan. The Plan may be terminated at
any time by action of the Board of Directors of the Employer in
accordance with the amendment procedures provided in Section
13.1. Upon such termination or partial termination all Accrued
Retirement Income of Employees to the date of such termination,
to the extent then funded, shall become nonforfeitable and the
assets of the Plan which have not previously been allocated to
provide Retirement Income shall then be paid out to Employees,
former Employees, and Provisional Payees in accordance with the
applicable requirements of ERISA and regulations thereunder
governing termination of "employee pension benefit plans" as
defined in ERISA. If after satisfaction of all liabilities, as
provided above, there is any balance remaining in the Trust, the
Trustee shall return such balance to the Employer.
In the first instance, subject to the foregoing
limitations, such remaining assets shall be allocated among all
persons in the following categories for whom such Retirement
Income or other benefits have not previously been provided,
namely, (a) Employees who have been retired under the Plan,
(b) Employees who at the date of termination of the Plan are
included in the Plan, (c) former Employees who at the date of the
termination of their employment were entitled to payment of
Retirement Income in accordance with Article VIII, and (d) former
Employees who have transferred to an Affiliated Employer in
accordance with Section 4.6 and are still in the employ or
receiving a retirement income from such company (including their
Provisional Payees, if any). Retirement Income already purchased
under any contract with an insurance company will be payable in
accordance with the provisions of that contract.
12.2 Limitation on benefits for certain highly paid
employees.
(a) The annual payments to an Employee described in
paragraph (b) below shall not exceed an amount equal to the
payments that would be made to or on behalf of such Employee
under a single life annuity that is the Actuarial Equivalent of
the sum of the Employee's Accrued Retirement Income and the
Employee's other benefits under this Plan (other than a Social
Security supplement) and any Social Security supplement that the
restricted Employee is entitled to receive. The restrictions in
this paragraph (a) do not apply, however, if --
(1) after payment to an Employee described in
paragraph (b) of all benefits payable to such Employee under
this Plan, the value of this Plan's assets equals or exceeds
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110% of the value of current liabilities, as defined in Code
Section 412(c)(7), or
(2) the value of the benefits payable to such Employee
under this Plan for an Employee described in paragraph (b)
below is less than 1% of the value of current liabilities
before distribution.
(b) The Employees whose benefits are restricted on
distribution include all highly compensated employees and highly
compensated former employees (as such terms are defined in
Treasury Regulation Section 1.401(a)(4)-12); provided, however,
that Employees whose benefits are subject to restriction under
this Section 12.2 shall be limited to only those Employees who in
the current or in any previous Plan Year were one of the 25 non-
excludable Employees of the Employer with the greatest
compensation from the Employer.
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ARTICLE XIII
Amendment of the Plan
13
13.1 Amendment of the Plan.
(a) The Plan may be amended or modified at any time by the
Board of Directors pursuant to its written resolutions, provided
that no amendment or modification which will substantially
increase the cost of the Plan will be made by the Board of
Directors without approval, at a meeting of the stockholders duly
called for that purpose, by the vote of a majority of the stock
present and entitled to vote at such meeting.
(b) Such amendments and modifications (without limiting the
generality of the foregoing) may, among other things, make any
changes in the Plan which may become appropriate if, for any
reason, the Employer should in the future find it necessary or
desirable not to complete payment of the past service costs of
the Plan in the manner and within the period now contemplated or
should find it necessary or desirable to reduce the amounts of
Future Service contributions to be paid by the Employer after
such amendment or modification. Such amendments and
modifications may also (without limiting the generality of the
foregoing), make any changes necessary or desirable to make the
costs of the Plan eligible for tax deductions or to make the
income of the Trust exempt from taxation or to bring the Plan
into conformity or compliance with ERISA or with governmental
regulations. Notwithstanding the foregoing, no amendment shall
be made which has the effect of decreasing the Accrued Retirement
Income of any Employee, former Employee, or Provisional Payee as
provided under the limitations of Section 411(d)(6) of the Code.
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ARTICLE XIV
Special Provisions
14
14.1 Adoption of Plan by other corporations.
(a) Any corporation, whether or not related to the Employer
by function or operation and any affiliate, if such corporation
or affiliate is authorized to do so by a resolution adopted by
the Board of Directors of the Employer, may adopt this Plan as a
separate Plan for all eligible Employees or any separate,
distinct, and identifiable class or group of Employees and the
related Trust Agreement, by action of the board of directors of
such corporation or affiliate. Any such adoption shall be
evidenced by certified copies of the resolutions of the foregoing
board of directors indicating such adoption and by the execution
of the Adoption Agreement by the adopting corporation or
affiliate. Such resolution shall state and define the effective
date of the Plan for the purpose of such adopting corporation
and, for the purpose of Section 415 of the Code, the "limitation
year" as to such corporation. Notwithstanding the foregoing,
however, if the Plan as adopted by an affiliate or other
corporation under the foregoing provision shall fail to receive
the initial approval of the Internal Revenue Service as a
qualified plan, any contributions by such affiliate or other
corporation after payment of all expenses will be returned to
such adopting corporation free of any trust, and the Plan and the
Trust Agreement as to such adopting affiliate or other
corporation shall terminate.
(b) Each adopting affiliate or other corporation shall be
required to use the same Trustee as provided in this Plan.
(c) The Trustee may, but is not required to, commingle,
hold, and invest as one fund all contributions (or any portion
thereof) made by each adopting affiliate or other corporation.
(d) Any contributions made by an affiliate or other
corporation, as provided for in this Plan, shall be paid to and
held by the Trustee for the exclusive benefit of the Employees of
such an affiliate or other corporation and the beneficiaries of
such Employees, subject to all the terms and conditions of this
Plan. On the basis of information furnished by the
administrator, the Trustee shall keep separate books and records
concerning the affairs of each adopting affiliate or other
corporation hereunder.
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14.2 Exclusive benefit. The Employer intends that the Plan
(including the Trust forming a part thereof) shall be a pension
plan of an employer for the exclusive benefit of its Employees
and their beneficiaries subject to Section 11.3, as provided for
in Section 401 of the Code, and as may be provided for in any
similar provisions of subsequent revenue laws, and that the Trust
shall qualify as an employees' trust which shall be exempt under
Section 501(a) of the Code, and any similar provisions of
subsequent revenue laws, as a trust forming part of such a plan.
14.3 Assignment or alienation. No benefit under the Plan
shall be subject in any manner to anticipation, alienation, sale,
transfer, assignment (either at law or in equity), pledge,
encumbrance, charge, garnishment, levy, execution, or other legal
or equitable process and any attempt so to anticipate, alienate,
sell, transfer, assign, pledge, encumber, charge, garnish, levy,
execute, or enforce other legal or equitable process against the
same shall be void, nor shall any such benefit be in any manner
liable for or subject to the debts, contracts, liabilities,
engagements, or torts of the person entitled to such benefit.
If any Employee or retired Employee or any Provisional Payee
under the Plan is adjudicated bankrupt or attempts to anticipate,
alienate, sell, transfer, assign, pledge, encumber, or charge any
benefit under the Plan or if any action shall be taken which is
in violation of the provisions of the immediately preceding
paragraph, then such benefit shall cease and terminate and in
that event the Retirement Board shall hold or apply the same or
any part thereof to or for the benefit of such Employee or
retired Employee or Provisional Payee in such manner as the
Retirement Board may think proper.
Notwithstanding the above, the Retirement Board and Trustee
shall comply with any "domestic relations order" (as defined in
Section 414(p)(1)(B) of the Code) which is a "qualified domestic
relations order" satisfying the requirements of Section 414(p) of
the Code. The Retirement Board shall establish procedures for
(a) notifying Employees and alternate payees who have or may have
an interest in benefits which are the subject of domestic
relations orders, (b) determining whether such domestic relations
orders are qualified domestic relations orders under Section
414(p) of the Code, and (c) distributing benefits which are
subject to qualified domestic relations orders.
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14.4 Voluntary undertaking. This Plan is strictly a
voluntary undertaking on the part of the Employer and shall not
be deemed to constitute a contract between the Employer or any
other company and any Employee or to be a consideration for, or
an inducement or condition of, the employment of any Employee.
Nothing contained in this Plan shall be deemed to give any
Employee the right to be retained in the service of the Employer
or to interfere with the right of the Employer to discharge or
retire any Employee at any time. Inclusion under the Plan will
not give any Employee or Provisional Payee any right or claim to
a Retirement Income except to the extent such right is
specifically fixed under the terms of the Plan and there are
funds available therefor in the hands of the Trustee or of any
insurance company which may hold funds of the Plan.
14.5 Top-Heavy Plan requirements. For any Plan Year the
Plan shall be determined to be a Top-Heavy Plan, the Plan shall
provide the following:
(a) the minimum benefit requirement of Section 14.7; and
(b) the vesting requirement of Section 14.8.
14.6 Determination of Top-Heavy status.
(a) For any Plan Year commencing after December 31, 1983,
the Plan shall be determined to be a "Top-Heavy Plan," if, as of
the Determination Date, (1) the Present Value of Accrued
Retirement Income of Key Employees or (2) the sum of the
Aggregate Accounts of Key Employees under this Plan and any plan
of an Aggregation Group, exceeds sixty percent (60%) of the
Present Value of Accrued Retirement Income or the Aggregate
Accounts of all Employees entitled to participate in this Plan
and any Plan of an Aggregation Group.
(b) For Plan Years beginning after December 31, 1986, the
Accrued Retirement Income of a Non-Key Employee shall be
determined under the accrual method under the Plan.
(c) For any Plan Year commencing after December 31, 1983,
the Plan shall be determined to be a "Super Top-Heavy Plan," if,
as of the Determination Date, (1) the Present Value of Accrued
Retirement Income of Key Employees or (2) the sum of the
Aggregate Accounts of Key Employees under this Plan and any plan
in an Aggregation Group, exceeds ninety percent (90%) of the
Present Value of Accrued Retirement Income or the Aggregate
Accounts of all Employees entitled to participate in this Plan
and any plan of an Aggregation Group.
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For purposes of Sections 14.6(a) and 14.6(b), if any
Employee is a Non-Key Employee for any Plan Year, but such
Employee was a Key Employee for any prior Plan Year, such
Employee's Present Value of Accrued Retirement Income and/ or
Aggregate Account balance shall not be taken into account for
purposes of determining whether this Plan is a Top-Heavy or Super
Top-Heavy Plan (or whether any Aggregation Group which includes
this Plan is a Top-Heavy Group). In addition, for Plan Years
beginning after December 31, 1984, if an Employee or former
Employee has not performed any services for the Employer or any
Affiliated Employer maintaining the Plan at any time during the
five (5) year period ending on the Determination Date, the
Aggregate Account and/or Present Value of Accrued Retirement
Income for such Employee or former Employee shall not be taken
into account for purposes of determining whether this Plan is a
Top-Heavy or Super Top-Heavy Plan.
(d) An Employee's "Aggregate Account" as of the
Determination Date shall be determined under applicable
provisions of the defined contribution plan used in determining
Top-Heavy status.
(e) An "Aggregation Group" shall mean either a Required
Aggregation Group or a Permissive Aggregation Group as
hereinafter determined.
(1) Required Aggregation Group: In determining a
Required Aggregation Group hereunder, each plan of the
Employer in which a Key Employee is a participant, and each
other plan of the Employer which enables any plan in which a
Key Employee participates to meet the requirements of Code
Sections 401(a)(4) or 410, will be required to be
aggregated. Such group shall be known as a Required
Aggregation Group.
In the case of a Required Aggregation Group, each plan
in the group will be considered a Top-Heavy Plan if the
Required Aggregation Group is a Top-Heavy Group. No plan in
the Required Aggregation Group will be considered a
Top-Heavy Plan if the Aggregation Group is not a Top-Heavy
Group.
(2) Permissive Aggregation Group: The Employer may
also include any other plan not required to be included in
the Required Aggregation Group, provided the resulting
group, taken as a whole, would continue to satisfy the
provisions of Code Sections 401(a)(4) or 410. Such group
shall be known as a Permissive Aggregation Group.
In the case of a Permissive Aggregation Group, only a plan
that is part of the Required Aggregation Group will be considered
a Top-Heavy Plan if the Permissive Aggregation Group is a
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Top-Heavy Group. A plan that is not part of the Required
Aggregation Group but that has nonetheless been aggregated as
part of the Permissive Aggregation Group will not be considered a
Top-Heavy Plan even if the Permissive Group is a Top-Heavy Group.
(3) Only those plans of the Employer in which the
Determination Dates fall within the same calendar year shall
be aggregated in order to determine whether such plans are
Top-Heavy Plans.
(f) The "Determination Date" shall mean with respect to any
Plan Year, the last day of the preceding Plan Year, or in the
case of the first Plan Year, the last day of such Plan Year.
(g) A "Key Employee" shall mean any Employee or former
Employee (and his beneficiaries) who, at any time during the Plan
Year or any of the four (4) preceding Plan Years, is:
(1) an officer of the Employer having an annual
compensation from the Employer greater than fifty percent
(50%) of the amount in effect under Code Section
415(b)(1)(A) for any such Plan Year. For purposes of this
Section 14.6(g)(1), only those employers which are
incorporated shall be considered as having officers, and no
more than fifty (50) Employees (or, if lesser, the greater
of three (3) or ten percent (10%) of the Employees) shall be
treated as officers. Annual compensation means compensation
as defined in Section 415(c)(3) of the Code, but including
amounts contributed by the Employer pursuant to a salary
reduction agreement which are excludable from the Employee's
gross income under Section 125, Section 402(a)(8), Section
402(h), or Section 403(b) of the Code.
(2) one of the ten (10) Employees (A) having annual
compensation from the Employer greater than the limitation
in effect under Code Section 415(c)(1)(A) and (B) owning (or
considered as owning within the meaning of Code Section 318)
the largest interests in the Employer. For purposes of this
Section 14.6(g)(2), if two (2) Employees have the same
interest in the Employer, the Employee having the greater
annual compensation from the Employer shall be treated as
having a larger interest.
(3) a "five-percent owner" of the Employer. The term
"five-percent owner" shall mean any person who owns (or is
considered as owning within the meaning of Code Section 318)
more than five percent (5%) of the outstanding stock of the
Employer or stock possessing more than five percent (5%) of
the total combined voting power of all stock of the
Employer. In determining percentage ownership hereunder,
employers that would otherwise be aggregated under Code
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Sections 414(b), (c), and (m) shall be treated as separate
employers.
(4) a "one-percent owner" of the Employer having an
annual compensation from the Employer of more than $150,000.
The term "one-percent owner" shall mean any person who owns
(or is considered as owning within the meaning of Code
Section 318) more than one percent (1%) of the outstanding
stock of the Employer or stock possessing more than one
percent (1%) of the total combined voting power of all stock
of the Employer. In determining percentage ownership
hereunder, employers that would otherwise be aggregated
under Code Sections 414(b), (c), and (m) shall be treated as
separate employers. However, in determining whether an
individual has compensation of more than $150,000,
compensation from each employer required to be aggregated
under Code Sections 414(b), (c), and (m) shall be taken into
account.
(h) A "Non-Key Employee" shall mean any Employee who is not
a Key Employee as defined in Section 14.6(g).
(i) An Employee's "Present Value of Accrued Retirement
Income" shall mean as of the Determination Date, the sum of the
following:
(1) the Present Value of his Accrued Retirement Income
as of the most recent valuation occurring within a twelve
(12) month period ending on the Determination Date.
(2) any Plan distributions made within the Plan Year
that includes the Determination Date or within the four (4)
preceding Plan Years. However, in the case of distributions
made after the valuation date and prior to the Determination
Date, such distributions are not included as distributions
for Top-Heavy purposes to the extent that such distributions
are already included in the Employee's Present Value of
Accrued Retirement Income as of the valuation date.
Notwithstanding anything herein to the contrary, all
distributions, including distributions made prior to
January 1, 1984, and distributions under a terminated plan
which if it had not been terminated would have been required
to be included in an Aggregation Group, will be counted.
(3) any Employee contributions, whether voluntary or
mandatory. However, amounts attributable to qualified
deductible employee contributions shall not be considered to
be a part of the Employee's Present Value of Accrued
Retirement Income.
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(4) with respect to unrelated rollovers and
plan-to-plan transfers (ones which are both initiated by the
Employee and made from a plan maintained by one employer to
a plan maintained by another employer), if this Plan
provides for rollovers or plan-to-plan transfers, it shall
always consider such rollover or plan-to-plan transfer as a
distribution for the purposes of this Section. If this Plan
is the plan accepting such rollovers or plan-to-plan
transfers, it shall not consider such rollovers or
plan-to-plan transfers accepted after December 31, 1983 as
part of the Employee's Present Value of Accrued Retirement
Income. However, rollovers or plan-to-plan transfers
accepted prior to January 1, 1984 shall be considered as
part of the Employee's Present Value of Accrued Retirement
Income.
(5) with respect to related rollovers and plan-to-plan
transfers (ones either not initiated by the Employee or made
to a plan maintained by the same employer), if this Plan
provides for rollovers or plan-to-plan transfers, it shall
not be counted as a distribution for purposes of this
Section. If this Plan is the plan accepting such rollover
or plan-to-plan transfer, it shall consider such rollover or
plan-to-plan transfer as part of the Employee's Present
Value of Accrued Retirement Income, irrespective of the date
on which such rollover or plan-to-plan transfer is accepted.
(j) A "Top-Heavy Group" shall mean an Aggregation Group in
which, as of the Determination Date, the sum of:
(1) the Present Value of Accrued Retirement Income of
Key Employees under all defined benefit plans included in
that group, and
(2) the Aggregate Accounts of Key Employees under all
defined contribution plans included in the group,
exceeds sixty percent (60%) of a similar sum determined for all
Employees.
14.7 Minimum Retirement Income for Top-Heavy Plan Years.
Notwithstanding anything herein to the contrary, for any
Top-Heavy Plan Year, the minimum Accrued Retirement Income
derived from Employer contributions for each Non-Key Employee,
including benefits accrued in years in which the Plan is not a
Top-Heavy Plan, shall equal a percentage of such Non-Key
Employee's highest average compensation not less than the lesser
of: (a) two percent (2%) multiplied by the Employee's number of
Years of Service with the Employer, or (b) twenty percent (20%).
For purposes of the minimum benefit, an Employee's Years of
Service shall exclude (a) Plan Years in which the Plan is not a
Top-Heavy Plan, and (b) Years of Service completed prior to
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January 1, 1984. The minimum benefit required by this Section
14.7 shall be calculated using the Employee's total compensation
and expressed in the form of a single life annuity (with no
ancillary benefits) beginning at such Employee's Normal
Retirement Date. An Employee's average compensation shall be
based on the five (5) consecutive years for which the Employee
had the highest compensation.
Notwithstanding the foregoing, in any Plan Year in which a
Non-Key Employee is an Employee in both this Plan and a defined
contribution plan, and both such plans are Top-Heavy Plans, the
Employer shall not be required to provide a Non-Key Employee with
both the full separate minimum defined benefit and the full
separate minimum defined contribution plan allocation.
Therefore, if a Non-Key Employee is participating in a defined
contribution plan maintained by the Employer and the minimum
allocation under Code Section 416(c)(2) is allocated to the
Non-Key Employee under such defined contribution plan, the
minimum Accrued Retirement Income provided for above shall not be
applicable, and no minimum benefit shall accrue on behalf of the
Non-Key Employee. Alternatively, the Employer may satisfy the
minimum benefit requirement of Code Section 416(c)(1) for the
Non-Key Employee by providing any combination of benefits and/or
contributions that satisfy the safe harbor rules of Treasury
Regulation Section 1.416-1(m-12).
14.8 Vesting requirements for Top-Heavy Plan Years.
Notwithstanding the provisions of Section 8.1, for any Top-Heavy
Plan Year, the vested portion of an Employee's Accrued Retirement
Income shall be determined on the basis of the Employee's Vesting
Years of Service according to the following schedule:
Years of Service Vested Percentage
less than 2 0
2 20
3 40
4 60
5 80
6 or more 100
The minimum Retirement Income for any Top-Heavy Plan Year shall
not be forfeited during any period for which the payment of the
Employee's Retirement Income is required to be suspended under
Section 5.10 of the Plan.
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If in any subsequent Plan Year, the Plan ceases to be a
Top-Heavy Plan, the Retirement Board may, in its sole discretion,
elect to (a) continue to apply this vesting schedule in
determining the vested percentage of an Employee's Accrued
Retirement Income or (b) revert to the vesting schedule in effect
before the Plan became a Top-Heavy Plan. Any such reversion
shall be treated as a Plan amendment pursuant to the terms of the
Plan. No decrease in an Employee's nonforfeitable percentage may
occur in the event the Plan's status as a Top-Heavy Plan changes
for any Plan Year.
14.9 Adjustments to maximum benefits for Top-Heavy Plans.
(a) In the case of an Employee who is a participant in a
defined benefit plan and a defined contribution plan maintained
by the Employer, and such plans as a group are determined to be
Top-Heavy for any limitation year beginning after December 31,
1983, "1.0" shall be substituted for "1.25" in each place it
appears in the denominators of Fractions A and B, as set forth in
Section 6.5 of the Plan, unless the extra minimum benefit is
provided pursuant to Section 14.9(b). Super Top-Heavy Plans
shall be required at all times to substitute "1.0" for "1.25" in
the denominator of each plan fraction.
(b) If a Key Employee is a participant in both a defined
benefit plan and a defined contribution plan that are both part
of a Top-Heavy Group (but neither of such plans is a Super
Top-Heavy Plan), the defined benefit and defined contribution
fractions set forth in Section 6.5 shall remain unchanged,
provided that in Section 14.7 above, "three percent (3%)" shall
be substituted for "two percent (2%)" and "twenty percent (20%)"
shall be increased by one (1) percentage point (but not more than
ten (10) percentage points) for each Year of Service included in
the computations under Section 14.7.
(c) For purposes of this Section 14.9, if the sum of the
defined benefit plan fraction and the defined contribution
fraction shall exceed 1.0 in any Plan Year for any Employee in
this Plan, the Employer shall eliminate any amounts in excess of
the limits set forth in Section 6.5, pursuant to Section 6.7 of
the Plan.
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ARTICLE XV
Post-retirement Medical Benefits
15
15.1 Definitions. The following words and phraseology as
used herein shall have the following meanings unless a different
meaning is plainly required by the context:
(a) "Pensioned Employee" means a former Employee of the
Employer who is eligible to receive Retirement Income after his
retirement at his Early, Normal, or Deferred Retirement Date, as
applicable, pursuant to the terms of the Plan, but shall not
include any former Employee who terminated his service with the
Employer prior to his Early, Normal, or Deferred Retirement Date
and who is entitled to Retirement Income under the Plan. A
"Pensioned Employee" shall not include a Key Employee, as defined
in Section 14.6(g), or effective January 1, 1991, any Pensioned
Employee of an Employer that has adopted the Plan pursuant to
Section 14.1 hereof, but does not provide medical benefits to its
Pensioned Employees.
(b) "Dependents" means (1) a Pensioned Employee's spouse,
or (2) a Pensioned Employee's unmarried child from birth until
his or her nineteenth (19th) birthday. A "Dependent" shall not
include anyone who (1) lives outside the United States or Canada,
(2) is in the armed forces of any country, or (3) has coverage
under another medical plan maintained by the Employer as an
employee or as a dependent of another person. The term "child"
includes (1) an adopted child, or (2) a step-child or foster-
child under a Pensioned Employee's legal guardianship, but only
if such step-child or foster-child is dependent on the Pensioned
Employee for support and maintenance and if the step-child or
foster-child lives with the Pensioned Employee in a parent-child
relationship. An unmarried child who is nineteen (19) years old
will be considered a Dependent until his or her twenty-third
(23rd) birthday, if the child (1) is enrolled as a full-time
student at an accredited school or college, and (2) is not
employed on a full-time basis, and (3) has the same permanent
home address as the Pensioned Employee.
The age limit that applies to Dependent children will not
apply to any covered child who becomes incapable of working and
remains a Dependent of a Pensioned Employee for support and
maintenance (1) before reaching the age limit, (2) due to
physical handicap or mental retardation, and (3) while covered.
If a claim is denied with respect to a handicapped child because
he or she has reached the age limit, written proof of his or her
incapacity and dependency must be furnished to the Employer.
Upon receipt of this proof, further consideration will be given
to the denied claim.
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The Dependent coverage being kept in force under the terms
of this Article XV will automatically terminate (1) on the date
the child is no longer incapacitated and dependent on the
Pensioned Employee, or (2) on the date the child's coverage would
terminate in the absence of this provision. This provision
applies only to Dependent coverage under Article XV that provides
benefits based on expenses incurred for (1) medical services, (2)
surgical services, or (3) dental services. It will not apply to
any other type of coverage that provides benefits based on death,
dismemberment, or loss of sight.
If a Pensioned Employee's Dependents are covered by
Dependent coverage when he dies, that coverage will be continued
without payment of premiums for a maximum period of one year
after the date of the Pensioned Employee's death. This continued
coverage may be terminated before the end of the maximum period.
The coverage for any Dependent will terminate on the date Article
XV terminates or the earliest of:
(1) the date he or she reaches the age limit;
(2) the date he or she marries or remarries;
(3) the date he or she becomes covered as an employee
under a medical plan maintained by the Employer; or
(4) the date he or she is no longer a Dependent.
If a Pensioned Employee's wife is pregnant when he dies, the
Dependent coverage continued under these provisions will
automatically extend to the newborn child or children born from
that pregnancy. This coverage will take effect on the date of
birth. No other Dependents acquired by a Pensioned Employee's
spouse after his death will be covered by this continued
coverage.
If both a husband and his wife are covered under this Plan
as Pensioned Employees of the Employer, or if the husband or wife
of a Pensioned Employee is covered as an Employee under any
medical plan maintained by the Employer, either, but not both,
may elect to cover their eligible children as Dependents.
Any person covered or eligible for coverage under Article XV
as a Pensioned Employee, or under any group medical plan
maintained by the Employer as an Employee, shall not be
considered as a Dependent.
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15.2 Eligibility of Pensioned Employees and their
Dependents.
(a) A person who is a Pensioned Employee on January 1, 1989
shall be eligible for coverage as a Pensioned Employee on
January 1, 1989, provided he was covered as an Employee under a
group medical plan maintained by the Employer immediately prior
to the time he became a Pensioned Employee.
(b) An Employee who becomes a Pensioned Employee on or
after January 1, 1989 shall be eligible for coverage on the date
he becomes a Pensioned Employee, provided he was covered as an
Employee under a group medical plan maintained by the Employer
immediately prior to the time he became a Pensioned Employee.
(c) A Dependent of a Pensioned Employee shall be eligible
for coverage under Article XV on the later of (1) the date the
Pensioned Employee becomes eligible for coverage hereunder, (2)
the date such person becomes a Dependent, and (3) the first of
the month following the date that the Pensioned Employee properly
elects to have Dependents covered and pays any contribution
required of the Pensioned Employee with respect to the Dependent.
(d) Notwithstanding the foregoing provisions of this
Section 15.2, each person subject to the conditions described
below will become eligible on the date indicated:
(1) The following applies if a person was at one time
covered under Article XV and is again applying for coverage:
(A) Any person who was in an eligible class when
his or her coverage was terminated due to nonpayment of
premiums must prove to the Employer that he or she is
in good health.
(B) If a person obtained an individual conversion
policy after his or her coverage terminated, that
person must prove to the Employer that he or she is in
good health.
For a person to prove that he or she is in good health, a
physician's statement of health and/or physical exam may be
required. Any cost for this must be paid by the person. If a
person becomes ineligible for coverage before approval is given,
but becomes eligible again at a later date and reapplies for
coverage, this person will have to prove he or she is in good
health at that time.
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(e) For a newborn child, Dependent coverage will take
effect as follows:
(1) If a Pensioned Employee has Dependents covered on
the child's date of birth, coverage for the newborn will
take effect on that date. If an increase in premium is
required, the Pensioned Employee must:
(A) apply in writing for the coverage; and
(B) pay the required premium that applies.
(2) If the Pensioned Employee does not have any
Dependents covered, coverage for the newborn will not take
effect until he applies for Dependent coverage. The
coverage will then take effect as set forth in 15.2(c)
above.
Newborn coverage will be for injury or sickness, including
care or treatment of (1) congenital defects, (2) birth
abnormalities, or (3) premature birth. It will not include any
benefits for normal newborn child care.
Newborn coverage also includes coverage for the
transportation of a newborn child to and from the nearest
available facility. This facility must be staffed and equipped
to treat his or her condition. A physician must certify that the
transportation is necessary to protect the health and safety of
the child. The Employer shall not pay more than $1000 at such
facility.
(f) There are cases in which coverage will not begin on the
usual effective date. These cases are as follows:
(1) Coverage of a Pensioned Employee confined in a
hospital or other facility due to sickness or injury on the
date coverage would normally take effect shall not take
effect until the Pensioned Employee has been discharged.
(2) Coverage of a Dependent, other than a newborn
child, confined in a hospital or other facility due to
sickness or injury on the date his or her coverage would
normally take effect will not take effect until he or she
has been discharged.
Coverage for a Dependent will not take effect before
coverage for a Pensioned Employee takes effect.
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15.3 Medical benefits. The medical benefits provided under
this Article XV by the Employer and each adopting Employer are
set forth in the copy of each such Employer's medical benefits
plan which is attached hereto as Exhibit A and specifically
incorporated herein by reference in its entirety, as may be
amended from time to time. Such medical benefits shall be
subject without limitation to all deductibles, maximums,
exclusions, coordination with Medicare and other medical plans,
and procedures for submitting claims and initiating legal
proceedings provided therein.
15.4 Termination of coverage.
(a) Coverage of any Pensioned Employee shall cease as
follows:
(1) when Article XV is amended, terminated, or
discontinued in accordance with its terms; or
(2) when the Pensioned Employee fails to make when due
any required contribution; or
(3) as otherwise provided in Exhibit A.
(b) Coverage of any Dependent shall cease as follows:
(1) when Article XV is amended, terminated, or
discontinued in accordance with its terms; or
(2) when the Pensioned Employee fails to make when due
any required contribution; or
(3) as otherwise provided in Exhibit A.
15.5 Continuation of coverage to certain individuals.
(a) Continuation Coverage. Each Pensioned Employee,
Dependent spouse or Dependent child who is a "qualified
beneficiary" and who would lose coverage under Article XV as a
result of a "qualifying event" shall be entitled to elect, within
the "election period", "continuation coverage" under the Plan.
For purposes of this Section 15.5, the terms "qualified
beneficiary", "qualifying event", "election period" and
"continuation coverage" shall have the same meanings as those
provided under Section 4980B of the Code and Title I, Subtitle B,
Part 6 of ERISA.
(b) Premium Requirements. The qualified beneficiary shall
be required to make payment of a premium during the period of
continuation coverage up to the maximum premium amount permitted
under Section 4980B(f) of the Code and Title I, Subtitle B, Part
6 of ERISA for such continuation coverage. Such premium shall be
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periodically determined by the Plan Administrator and
communicated to the qualified beneficiary.
(c) Conversion Option. Each qualified beneficiary who
elects to receive continuation coverage under Article XV shall
have the right during the 180-day period ending on the date such
continuation coverage expires to enroll under a conversion health
plan if such a plan is then offered by the Employer.
(d) Notice Requirements. The Plan, the Plan Administrator
and the Employer shall each provide such notice regarding
continuation coverage as they may be required to provide under
Section 4980B of the Code and Title I, Subtitle B, Part 6 of
ERISA.
(e) Election. Except as otherwise specified in an
election, an election to receive continuation coverage that is
made by a Pensioned Employee or his spouse shall be deemed to
include an election for continuation coverage on behalf of any
other qualified beneficiary who would lose coverage under Article
XV by reason of the qualifying event giving rise to the election.
15.6 Contributions to fund medical benefits. Any
contributions which the Employer deems necessary to provide the
medical benefits under Article XV will be made from time to time
by or on behalf of the Employer, and contributions shall be
required of the Pensioned Employees to the Employer's medical
benefit plan in amounts determined in the sole discretion of the
Employer from time to time. All Employer contributions shall be
made to the Trustee under the Trust Agreement provided for in
Article XI and shall be allocated to a separate account
maintained solely to fund the medical benefits provided under
Article XV. The Employer shall designate that portion of any
contribution to the Plan allocable to the funding of medical
benefits under this Article XV. In no event at any time prior to
the satisfaction of all liabilities under this Article XV shall
any part of the corpus or income of such separate account be used
for, or diverted to, purposes other than for the exclusive
purpose of providing benefits under this Article XV. Effective
January 1, 1991, subject to the requirements of Code Section 420,
the Employer shall have the right, in its sole discretion, to
transfer any excess corpus or income of the Plan allocated to
fund Retirement Income to the separate account to fund medical
benefits under this Article XV.
The amount of contributions to be made by or on behalf of
the Employer for any Plan Year shall be determined in accordance
with any generally accepted actuarial method which is reasonable
in view of the provisions and coverage of Article XV, the funding
medium, and any other applicable considerations. However, the
Employer is under no obligation to make any contributions under
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Article XV after Article XV is terminated, except to fund claims
for medical expenses incurred prior to the date of termination.
The medical benefits provided under this Article XV, when
added to any life insurance protection provided under the Plan,
shall be subordinate to the retirement benefits provided under
the Plan.
Subject to any transitional rule applicable to contributions
made under this Article XV prior to January 1, 1990, effective
October 3, 1989, the aggregate of costs of the medical benefits
(measured from January 1, 1987) plus the costs of any life
insurance protection shall not exceed twenty-five percent (25%)
of the sum of the aggregate of costs of retirement benefits under
the Plan (other than past service credits), the aggregate of
costs of the medical benefits and the costs of any life insurance
protection (both measured from January 1, 1987). The aggregate
of costs of retirement benefits, other than for past service
credits, and the aggregate of costs of medical benefits provided
under the Plan shall be determined using the projected unit
credit funding method and the actuarial assumptions set forth in
Exhibit B, a copy of which is attached hereto and specifically
incorporated herein by reference in its entirety, and as may be
amended from time to time by the committee responsible for
providing a procedure for establishing and carrying out a funding
policy and method for the Plan pursuant to Section 10.9 of the
Plan. Contributions allocated to any separate account
established for a Pensioned Employee from which medical benefits
will be payable solely to such Pensioned Employee or his
Dependents shall be treated as an Annual Addition as defined in
Section 6.6(a) to any defined contribution plan maintained by the
Employer.
15.7 Pensioned Employee contributions. It shall be the sole
responsibility of the Pensioned Employee to notify the Employer
promptly in writing when a change in the amount of the Pensioned
Employee's contribution is in order because a Dependent has
become ineligible for coverage under this Article XV. No person
shall become covered under this Article XV for whom the Pensioned
Employee has not made the required contribution. Any
contribution paid by a Pensioned Employee for any person after
such person shall have become ineligible for coverage under this
Article XV shall be returned upon written request but only
provided such written request by or on behalf of the Pensioned
Employee is received by the Employer within ninety (90) days from
the date coverage terminates with respect to such ineligible
person.
15.8 Amendment of Article XV. The Employer reserves the
right, through action of its Board of Directors, to amend Article
XV (including Exhibit A) pursuant to Section 13.1 or the Trust
without the consent of any Pensioned Employee, or his Dependents,
84
<PAGE>
provided, however, that no amendment of this Article or the Trust
shall cancel the payment or reimbursement of expenses for claims
already incurred by a Pensioned Employee or his Dependent prior
to the date of any amendment, nor shall any such amendment
increase the duties and obligations of the Trustee except with
its consent. This Article XV, as set forth in the Plan document,
is not a contract and non-contributory benefits hereunder are
provided gratuitously, without consideration from any Pensioned
Employee or his Dependents. The Employer makes no promise to
continue these benefits in the future and rights to future
benefits will never vest. In particular, retirement or the
fulfillment of the prerequisites for a retirement benefit
pursuant to the terms of the Plan or under the terms of any other
employee benefit plan maintained by the Employer shall not confer
upon any Pensioned Employee or Dependents any right to continued
benefits under this Article XV.
15.9 Termination of Article XV. Although it is the
intention of the Employer that this Article shall be continued
and the contribution shall be made regularly thereto each year,
the Employer, by action of its Board of Directors pursuant to
Section 13.1, may terminate this Article XV or permanently
discontinue contributions at any time in its sole discretion.
This Article XV, as set forth in the Plan document, is not a
contract and non-contributory benefits hereunder are provided
gratuitously, without consideration from any Pensioned Employee
or his Dependents. The Employer makes no promise to continue
these benefits in the future and rights to future benefits will
never vest. In particular, retirement or the fulfillment of the
prerequisites for a retirement benefit pursuant to the terms of
the Plan or under the terms of any other employee benefit plan
maintained by the Employer shall not confer upon any Pensioned
Employee or his Dependents any right to continued benefits under
this Article XV. Effective January 1, 1991, in the event the
Employer or any adopting Employer shall terminate its provision
of the medical benefits described in Exhibit A to Section 15.3 of
the Plan to its Pensioned Employees, this Article XV of the Plan
shall automatically terminate with respect to the Pensioned
Employees and their Dependents of such Employer without the
requirement of any action by such Employer.
15.10 Reversion of assets upon termination. Upon the
termination of this Article XV and the satisfaction of all
liabilities under this Article XV, all remaining assets in the
separate account described in Section 15.6 shall be returned to
the Employer.
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<PAGE>
IN WITNESS WHEREOF, the Board of Directors of Gulf Power
Company, through its authorized officers has adopted this
amendment and restatement of the Pension Plan for Employees of
Gulf Power Company, this day of , , to be
effective January 1, 1989.
GULF POWER COMPANY
By:
Its:
ATTEST:
By:
Its:
[CORPORATE SEAL]
[adamscl] h:\wpdocs\mtd\gulf\gulf-pens.94
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<PAGE>
Exhibit 10(d)20
SUPPLEMENTAL BENEFIT PLAN
FOR
GULF POWER COMPANY
<PAGE>
SUPPLEMENTAL BENEFIT PLAN
FOR
GULF POWER COMPANY
Page
ARTICLE I - PURPOSE AND ADOPTION OF PLAN . . . . . . . 1
1.1 Adoption . . . . . . . . . . . . . . . . 1
1.2 Purpose. . . . . . . . . . . . . . . . . 1
ARTICLE II - DEFINITIONS . . . . . . . . . . . . . . . 2
2.1 Account. . . . . . . . . . . . . . . . . 2
2.2 Affiliated Employer. . . . . . . . . . . 2
2.3 Beneficiary. . . . . . . . . . . . . . . 2
2.4 Board of Directors . . . . . . . . . . . 2
2.5 Code . . . . . . . . . . . . . . . . . . 2
2.6 Common Stock . . . . . . . . . . . . . . 2
2.7 Company. . . . . . . . . . . . . . . . . 2
2.8 Deferred Compensation Plan . . . . . . . 2
2.9 Effective Date . . . . . . . . . . . . . 3
2.10 Employee . . . . . . . . . . . . . . . . 3
2.11 ESOP . . . . . . . . . . . . . . . . . . 3
2.12 Non Pension Benefit. . . . . . . . . . . 3
2.13 Participant. . . . . . . . . . . . . . . 3
2.14 Pension Benefit. . . . . . . . . . . . . 3
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2.15 Pension Plan . . . . . . . . . . . . . . 3
2.16 Plan . . . . . . . . . . . . . . . . . . 3
2.17 Plan Year. . . . . . . . . . . . . . . . 3
2.18 Savings Plan. . . . . . . . . . . . . . 3
ARTICLE III - ADMINISTRATION OF PLAN . . . . . . . . . 4
3.1 Administrator. . . . . . . . . . . . . . 4
3.2 Powers . . . . . . . . . . . . . . . . . 4
3.3 Duties of the Board of
Directors. . . . . . . . . . . . . . . 5
3.4 Indemnification. . . . . . . . . . . . . 6
ARTICLE IV - ELIGIBILITY . . . . . . . . . . . . . . . 7
4.1 Eligibility Requirements . . . . . . . . 7
4.2 Determination of Eligibility . . . . . . 7
ARTICLE V - BENEFITS . . . . . . . . . . . . . . . . . 8
5.1 Pension Benefit. . . . . . . . . . . . . 8
5.2 Non Pension Benefit. . . . . . . . . . . 10
5.3 Distribution of Benefits . . . . . . . . 13
5.4 Funding of Benefits. . . . . . . . . . . 16
5.5 Withholding. . . . . . . . . . . . . . . 16
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<PAGE>
ARTICLE VI - MISCELLANEOUS . . . . . . . . . . . . . . 17
6.1 Assignment . . . . . . . . . . . . . . . 17
6.2 Amendment and Termination. . . . . . . . 17
6.3 No Guarantee of Employment . . . . . . . 17
6.4 Construction . . . . . . . . . . . . . . 18
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<PAGE>
SUPPLEMENTAL BENEFIT PLAN
FOR
GULF POWER COMPANY
ARTICLE I - PURPOSE AND ADOPTION OF PLAN
1.1 Adoption: Gulf Power Company hereby adopt and
establish the Supplemental Benefit Plan for Gulf Power Company.
The Plan shall be an unfunded deferred compensation arrangement
whose benefits shall be paid solely from the general assets of
the Company.
1.2 Purpose: The Plan is designed to provide certain
retirement and other deferred compensation benefits primarily for
a select group of management or highly compensated employees
which are not otherwise payable or cannot otherwise be provided
by the Company under the Pension Plan for Employees of Gulf Power
Company, the Employee Savings Plan for The Southern Company
System, and the Employee Stock Ownership Plan of The Southern
Company System, as a result of the limitations set forth under
Sections 401(a)(17), 402(g), and 415 of the Internal Revenue Code
of 1986, as amended from time to time.
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<PAGE>
ARTICLE II DEFINITIONS
2.1 "Account" shall mean the account or accounts
established and maintained by a Company to reflect the interest
of a Participant in the Plan resulting from a Participant's Non
Pension Benefit calculated in accordance with Section 5.2.
2.2 "Affiliated Employer" shall mean any corporation which
is a member of the controlled group of corporations of which The
Southern Company is the common parent corporation.
2.3 "Beneficiary" shall mean any person, estate, trust, or
organization entitled to receive any payment under the Plan upon
the death of a Participant.
2.4 "Board of Directors" shall mean the Board of Directors
of the Company.
2.5 "Code" shall mean the Internal Revenue Code of 1986,
as amended from time to time.
2.6 "Common Stock" shall mean common stock of The Southern
Company.
2.7 "Company" shall mean Gulf Power Company.
2.8 "Deferred Compensation Plan" shall mean the Deferred
Compensation Plan for The Southern Electric System, as amended
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<PAGE>
from time to time, following its adoption by the Board of
Directors.
2.9 "Effective Date" shall mean January 1, 1983. The
Effective Date of this amendment and restatement shall mean
January 1, 1988.
2.10 "Employee" shall mean any person who is currently
employed by the Company.
2.11 "ESOP" shall mean the Employee Stock Ownership Plan of
The Southern Company System, as amended from time to time.
2.12 "Non Pension Benefit" shall mean the benefit described
in Section 5.2.
2.13 "Participant" shall mean an Employee or former
Employee of a Company who is eligible to receive benefits
provided by the Plan.
2.14 "Pension Benefit" shall mean the benefit described in
Section 5.1.
2.15 "Pension Plan" shall mean the defined benefit pension
plan maintained by the Company or an Affiliated Employer, as
amended from time to time.
2.16 "Plan" shall mean the Supplemental Benefit Plan for
Gulf Power Company, as amended from time to time.
2.17 "Plan Year" shall mean the calendar year.
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<PAGE>
2.18 "Savings Plan" shall mean the Employee Savings Plan
for The Southern Company System, as amended from time to time.
Where the context requires, the definitions of all terms set
forth in the Pension Plan, the ESOP, the Savings Plan and the
Deferred Compensation Plan shall apply with equal force and
effect for purposes of interpretation and administration of the
Plan, unless said terms are otherwise specifically defined in the
Plan. The masculine pronoun shall be construed to include the
feminine pronoun and the singular shall include the plural, where
the context so requires.
ARTICLE III ADMINISTRATION OF PLAN
3.1 Administrator. The general administration of the Plan
shall be placed in the Board of Directors.
3.2 Powers. The Board of Directors shall administer the
Plan in accordance with its terms and shall have all powers
necessary to carry out the provisions of the Plan more
particularly set forth herein. It shall interpret the Plan and
shall determine all questions arising in the administration,
interpretation and application of the Plan. Any such
determination by it shall be conclusive and binding on all
persons. It may adopt such regulations as it deems desirable for
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<PAGE>
the conduct of its affairs. It may appoint such accountants,
counsel, actuaries, specialists and other persons as it deems
necessary or desirable in connection with the administration of
this Plan, and shall be the agent for the service of process.
3.3 Duties of the Board of Directors.
(a) The Board of Directors is responsible for the
daily administration of the Plan. It may appoint other persons
or entities to perform any of its fiduciary functions. The Board
of Directors and any such appointee may employ advisors and other
persons necessary or convenient to help it carry out its duties,
including its fiduciary duties. The Board of Directors shall
have the right to remove any such appointee from his position.
Any person, group of persons or entity may serve in more than one
fiduciary capacity.
(b) The Board of Directors shall maintain accurate
and detailed records and accounts of Participants and of their
rights under the Plan and of all receipts, disbursements,
transfers and other transactions concerning the Plan. Such
accounts, books and records relating thereto shall be open at all
reasonable times to inspection and audit by persons designated by
the Board of Directors.
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<PAGE>
(c) The Board of Directors shall take all steps
necessary to ensure that the Plan complies with the law at all
times. These steps shall include such items as the preparation
and filing of all documents and forms required by any
governmental agency; maintaining of adequate Participants'
records; recording and transmission of all notices required to be
given to Participants and their Beneficiaries; the receipt and
dissemination, if required, of all reports and information
received from an Employing Company; securing of such fidelity
bonds as may be required by law; and doing such other acts
necessary for the proper administration of the Plan. The Board
of Directors shall keep a record of all of its proceedings and
acts, and shall keep all such books of account, records and other
data as may be necessary for proper administration of the Plan.
3.4 Indemnification. The Company shall indemnify the
Board of Directors against any and all claims, losses, damages,
expenses and liability arising from an action or failure to act,
except when the same is finally judicially determined to be due
to gross negligence or willful misconduct. The Company may
purchase at their own expense sufficient liability insurance for
the Board of Directors to cover any and all claims, losses,
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<PAGE>
damages and expenses arising from any action or failure to act in
connection with the execution of the duties as Board of
Directors.
ARTICLE IV ELIGIBILITY
4.1 Eligibility Requirements. All Employees (a) whose
benefits under the Pension Plan of the Company are limited by the
limitations set forth in Sections 401(a)(17) and 415 of the Code,
(b) for whom contributions by the Company to the Savings Plan are
limited by the limitations set forth in Sections 401(a)(17),
401(k), 401(m), 402(g) and 415 of the Code, or (c) for whom
contributions by the Company to the ESOP are limited by the
limitations set forth in Sections 401(a)(17) and 415 of the Code,
shall be eligible to receive benefits under the Plan.
4.2 Determination of Eligibility. The Board of Directors
shall determine which Employees are eligible to participate.
Upon becoming a Participant, an Employee shall be deemed to have
assented to the Plan and to any amendments hereafter adopted.
The Board of Directors shall be authorized to rescind the
eligibility of any Participant if necessary to insure that the
Plan is maintained primarily for the purpose of providing
deferred compensation to a select group of management or highly
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<PAGE>
compensated employees under the Employee Retirement Income
Security Act of 1974, as amended.
ARTICLE V BENEFITS
5.1 Pension Benefit.
(a) If a Participant has Accredited Service with
respect to the Pension Plan of the Company, but not with respect
to the Pension Plan of any Affiliated Employer, he shall be
entitled to a Pension Benefit equal to that portion of his
Retirement Income under the Pension Plan of the Company which is
not payable under such Pension Plan as a result of the
limitations imposed by Sections 401(a)(17), 415(b), and 415(e) of
the Code.
(b) If a Participant has Accredited Service with
respect to the Pension Plan of the Company and with respect to
the Pension Plan of one or more Affiliated Employers, his Pension
Benefit payable by the Company, and any Affiliated Employer(s)
shall be equal to that portion of his combined Retirement Income
under each Pension Plan which is not payable under any of such
Pension Plans as a result of the limitations described by
Sections 401(a)(17), 415(b), and 415(e) of the Code, multiplied
by a fraction, the sum of the individual fractions not to exceed
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<PAGE>
one (1), the numerator of which is his years of Accredited
Service under the Pension Plan of the Company or any Affiliated
Employer(s) and the denominator which is his total years of
Accredited Service under the Pension Plans of the Company and any
Affiliated Employer(s).
(c) For purposes of this Section 5.1, the Pension
Benefit of a Participant shall be calculated based on the
Participant's Earnings that are considered under the Pension Plan
of the Company in calculating his Retirement Income, without
regard to the limitation of Section 401(a)(17) of Code, but
excluding any portion of his Compensation he may have elected to
defer under the Deferred Compensation Plan.
(d) To the extent that a Participant's Retirement
Income under a Pension Plan is recalculated as a result of an
amendment to such Pension Plan in order to increase the amount of
his Retirement Income, the Participant's Pension Benefit shall
also be recalculated in order to properly reflect such increase
in determining payments of the Participant's Pension Benefit made
on or after the effective date of such increase.
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<PAGE>
5.2 Non Pension Benefit.
(a) A Participant shall be entitled to a Non Pension
Benefit which is determined under this Section 5.2. An Account
shall be established for the Participant by the Company, as of
his initial Plan Year of participation in the Plan. Each Plan
Year such Account shall be credited with an amount equal to the
amount that the Company is prohibited from contributing (1) to
the Savings Plan on behalf of the Participant as a result of the
limitations imposed by Sections 401(a)(17), 401(k), 401(m),
402(g), 415(c), and 415(e) of the Code and (2) to the ESOP on
behalf of the Participant as a result of the limitations imposed
by Sections 401(a)(17), 415(c), and 415(e) of the Code.
(b) For purposes of this Section 5.2, the Non Pension
Benefit of a Participant shall be calculated based on the
Participant's Compensation that would have been considered in
calculating allocations to his accounts under the Savings Plan
and ESOP, without regard to the limitations of Section 401(a)(17)
or Section 402(g) of the Code, but excluding any portion of his
Compensation he may have elected to defer under the Deferred
Compensation Plan.
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<PAGE>
(c) All amounts so credited to the Account of the
Participant shall be deemed to be invested in the Common Stock at
the same time that such amounts would have been so invested if
they had been contributed by the Company to the Savings Plan or
the ESOP, as the case may be. In addition, such Account shall be
credited with respect to shares of Common Stock allocated to the
Participant's Account as follows:
(1) In the case of cash dividends, such
additional shares as could be purchased with the dividends
which would have been payable if the credited shares had
been outstanding;
(2) In the case of dividends payable in property
other than cash or Common Stock, such additional shares as
could be purchased with the fair market value of the
property which would have been payable if the credited
shares had been outstanding; or
(3) In the case of dividends payable in Common
Stock, such additional shares as would have been payable on
the credited shares if they had been outstanding.
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<PAGE>
(d) As soon as practicable following the first day of
his eligibility to have benefits credited to his Account, a
Participant shall designate in writing on a form to be prescribed
by the Company the method of payment of his Account, which shall
be the payment of a single lump sum or a series of annual
installments not to exceed twenty (20). The method of
distribution initially designated by a Participant shall not be
revoked and shall govern the distribution of each Account
established for the benefit of the Participant by the Company.
Notwithstanding, in the sole discretion of the Board of Directors
upon application by the Participant, the method of distribution
designated by such Participant may be modified not prior to 395
days nor later than 365 days prior to a Participant's date of
separation from service in order to change the form of
distribution of his Account in accordance with the terms of the
Plan. Each Participant, his Beneficiary, and legal
representative shall be bound as to any action taken pursuant to
the method of distribution elected by a Participant and the terms
of the Plan.
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<PAGE>
5.3 Distribution of Benefits.
(a) The Pension Benefit, as determined in accordance
with Section 5.1, shall be payable in monthly increments on the
first day of the month concurrently with and in the same manner
as the Participant's Retirement Income under the Pension Plan.
The Beneficiary of a Participant's Pension Benefit shall be the
same as the beneficiary of the Participant's Retirement Income
under the Pension Plan.
(b) When a Participant terminates his employment with
the Company, said Participant shall be entitled to receive the
market value of any shares of Common Stock (and fractions
thereof) reflected in any Account maintained by the Company for
his benefit under the Plan in a single lump sum distribution or
annual installments not to exceed twenty (20). Such distribution
shall be made not later than sixty (60) days following the close
of the calendar quarter in which his termination of employment
occurs, or as soon as reasonably practicable thereafter. The
transfer by a Participant between companies in the Southern
electric system shall not be deemed to be a termination of
employment with the Company. No portion of a Participant's
Account shall be distributed in Common Stock.
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<PAGE>
(c) In the event a Participant elects to receive the
distribution of his Account in annual installments, the first
payment shall be made not later than sixty (60) days following
the close of the calendar quarter in which his termination of
employment occurs, or as soon as reasonably practicable
thereafter, and shall be an amount equal to the balance in the
Participant's Account divided by the number of annual installment
payments. Each subsequent annual payment shall be an amount
equal to the balance in the Participant's Account divided by the
number of the remaining annual payments and shall be due on the
anniversary of the preceding payment date. No portion of a
Participant's Account shall be distributed in Common Stock.
(d) Upon the death of a Participant, or a former
Participant prior to the payment of all amounts credited to said
Participant's Account, the unpaid balance shall be paid in the
sole discretion of the Board of Directors (1) in a lump sum to
the designated Beneficiary of a Participant or former Participant
within sixty (60) days following the close of the calendar
quarter in which the Board of Directors is provided evidence of
the Participant's death (or as soon as reasonably practicable
thereafter) or (2) in accordance with the distribution method
chosen by such Participant or former Participant. The
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<PAGE>
Beneficiary designation may be changed by the Participant or
former Participant at any time without the consent of the prior
Beneficiary. In the event a Beneficiary designation is not on
file or the designated Beneficiary is deceased or cannot be
located, payment will be made to the estate of the Participant or
former Participant. No portion of a Participant's Account shall
be distributed in Common Stock.
(e) Upon the total disability of a Participant or
former Participant, as determined by the Social Security
Administration, the unpaid balance of his Account shall be paid
in the sole discretion of the Board of Directors (1) in a lump
sum to the Participant or former Participant, or his legal
representative within sixty (60) days following the notification
of the Board of Directors of the determination of disability by
the Social Security Administration (or as soon as reasonably
practicable thereafter) or (2) in accordance with the
distribution method elected by such Participant or former
Participant. No portion of a Participant's Account shall be
distributed in Common Stock.
(f) The Board of Directors in its sole discretion
upon application made by the Participant, a designated
Beneficiary, or their legal representative, may determine to
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<PAGE>
accelerate payments or, in the event of death or total disability
(as determined by Social Security Administration), to extend or
otherwise make payments in a manner different from the manner in
which such payment would be made under the method of distribution
elected by the Participant in the absence of such determination.
5.4 Funding of Benefits. The Company maintaining an
Account for the benefit of a Participant shall not reserve or
otherwise set aside funds for the payment of its obligations
under the Plan, and such obligations shall be paid solely from
the general assets of the Company. Notwithstanding that a
Participant shall be entitled to receive the balance of his
Account under the Plan, the assets from which such amount shall
be paid at all times remain subject to the claims of the
creditors of the Company.
5.5 Withholding. There shall be deducted from the payment
of any Pension Benefit or Non Pension Benefit due under the Plan
the amount of any tax required by any governmental authority to
be withheld and paid over by the Company to such governmental
authority for the account of the Participant or Beneficiary
entitled to such payment.
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ARTICLE VI MISCELLANEOUS
6.1 Assignment. Neither the Participant, his Beneficiary,
or his legal representative shall have any rights to sell,
assign, transfer or otherwise convey the right to receive the
payment of any Pension Benefit or Non Pension Benefit due
hereunder, which payment and the right thereto are expressly
declared to be nonassignable and nontransferable. Any attempt to
assign or transfer the right to payment under the Plan shall be
null and void and of no effect.
6.2 Amendment and Termination. The Plan may be amended or
terminated at any time by the Board of Directors, provided that
no amendment or termination shall cause a forfeiture or reduction
in any benefits accrued as of the date of such amendment or
termination.
6.3 No Guarantee of Employment. Participation hereunder
shall not be construed as creating any contract of employment
between the Company and a Participant, nor shall it limit the
right of the Company to suspend, terminate, alter, modify,
whether or not for cause, the employment relationship between the
Company and a Participant.
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6.4 Construction. This Plan shall be construed in
accordance with and governed by the laws of the State of Florida,
to the extent such laws are not otherwise superseded by the laws
of the United States.
IN WITNESS WHEREOF, the Plan has been executed by duly
authorized officers of Gulf Power Company, pursuant to
resolutions of the Board of Directors of the Gulf Power Company,
this day of , .
GULF POWER COMPANY
(CORPORATE SEAL)
By:
Attest:
[adamscl] h:\wpdocs\mtd\gulf\sup-ben.pln
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Exhibit 10(e)18
PENSION PLAN
FOR EMPLOYEES OF
MISSISSIPPI POWER COMPANY
AS AMENDED AND RESTATED
EFFECTIVE AS OF JANUARY 1, 1989
<PAGE>
TABLE OF CONTENTS
Page
ARTICLE I
Definitions . . . . . . . . . . . 2
ARTICLE II
Eligibility . . . . . . . . . . . 13
2.1 Employees . . . . . . . . . . . . . . . . . . . . . 13
2.2 Employees represented by a collective bargaining
agent . . . . . . . . . . . . . . . . . . . . . . . 13
2.3 Persons in military service and Employees on
authorized leave of absence . . . . . . . . . . . . 13
2.4 Employees reemployed . . . . . . . . . . . . . . . 14
2.5 Participation upon return to eligible class . . . . 14
2.6 Exclusion of certain categories of employees . . . 15
2.7 Waiver of participation . . . . . . . . . . . . . . 15
ARTICLE III
Retirement . . . . . . . . . . . 16
3.1 Retirement at Normal Retirement Date . . . . . . . 16
3.2 Retirement at Early Retirement Date . . . . . . . . 16
3.3 Retirement at Deferred Retirement Date . . . . . . 16
ARTICLE IV
Determination of Accredited Service . . . . . 17
4.1 Accredited Service pursuant to Prior Plan . . . . . 17
4.2 Accredited Service . . . . . . . . . . . . . . . . 17
4.3 Accredited Service and Years of Service in respect
of service of certain Employees previously
employed by the Employer or by Affiliated
Employers . . . . . . . . . . . . . . . . . . . . . 18
4.4 Accrual of Retirement Income during period of
total disability . . . . . . . . . . . . . . . . . 20
4.5 Employees leaving Employer's service . . . . . . . 21
4.6 Transfers to or from Affiliated Employers . . . . . 21
4.7 Transfers from Savannah Electric and Power
Company . . . . . . . . . . . . . . . . . . . . . . 23
ARTICLE V
Retirement Income . . . . . . . . . . 24
5.1 Normal Retirement Income . . . . . . . . . . . . . 24
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5.2 Minimum Retirement Income payable upon retirement
at Normal Retirement Date or Deferred Retirement
Date . . . . . . . . . . . . . . . . . . . . . . . 24
5.3 Minimum Retirement Income upon retirement at Early
Retirement Date or upon termination of service by
reason of death or otherwise prior to retirement . 25
5.4 Calculation of Social Security Offset . . . . . . . 26
5.5 Early Retirement Income . . . . . . . . . . . . . . 27
5.6 Deferred Retirement Income . . . . . . . . . . . . 27
5.7 Payment of Retirement Income . . . . . . . . . . . 28
5.8 Termination of Retirement Income . . . . . . . . . 29
5.9 Required distributions . . . . . . . . . . . . . . 29
5.10 Suspension of Retirement Income for
reemployment . . . . . . . . . . . . . . . . . . . 31
5.11 Increase in Retirement Income of retired
Employees for service prior to January 1, 1991 . . 31
5.12 Special provisions relating to the treatment of
absence of an Employee from the service of the
Employer to serve in the Armed Forces of the
United States . . . . . . . . . . . . . . . . . . . 32
ARTICLE VI
Limitations on Benefits . . . . . . . . 36
6.1 Maximum Retirement Income . . . . . . . . . . . . . 36
6.2 Adjustment to Defined Benefit Dollar Limitation
for Early or Deferred Retirement . . . . . . . . . 37
6.3 Adjustment of limitation for Years of Service or
participation . . . . . . . . . . . . . . . . . . . 38
6.4 Preservation of Accrued Retirement Income . . . . . 38
6.5 Limitation on benefits from multiple plans . . . . 39
6.6 Special rules for plans subject to overall
limitations under Code Section 415(e) . . . . . . . 40
6.7 Combination of Plans . . . . . . . . . . . . . . . 41
6.8 Incorporation of Code Section 415 . . . . . . . . . 41
ARTICLE VII
Provisional Payee . . . . . . . . . . 42
7.1 Adjustment of Retirement Income to provide for
payment to Provisional Payee . . . . . . . . . . . 42
7.2 Form and time of election and notice requirements . 42
7.3 Circumstances in which election and designation
are inoperative . . . . . . . . . . . . . . . . . . 43
7.4 Pre-retirement death benefit . . . . . . . . . . . 44
7.5 Post-retirement death benefit - qualified joint
and survivor annuity . . . . . . . . . . . . . . . 46
7.6 Election and designation by former Employee
entitled to Retirement Income in accordance with
Article VIII . . . . . . . . . . . . . . . . . . . 46
7.7 Death benefit for Provisional Payee of former
Employee . . . . . . . . . . . . . . . . . . . . . 48
ii
<PAGE>
7.8 Limitations on Employee's and Provisional Payee's
benefits . . . . . . . . . . . . . . . . . . . . . 48
7.9 Effect of election under Article VII . . . . . . . 49
ARTICLE VIII
Termination of Service . . . . . . . . 50
8.1 Vested interest . . . . . . . . . . . . . . . . . . 50
8.2 Early distribution of vested benefit . . . . . . . 50
8.3 Years of Service of reemployed Employees . . . . . 51
8.4 Cash-out and buy-back . . . . . . . . . . . . . . . 52
8.5 Calculation of present value for cash-out of
benefits and for determining amount of benefits . . 53
8.6 Retirement Income under Prior Plan . . . . . . . . 55
8.7 Requirement for Direct Rollovers . . . . . . . . . 55
ARTICLE IX
Contributions . . . . . . . . . . . 57
9.1 Contributions generally . . . . . . . . . . . . . . 57
9.2 Return of Employer contributions . . . . . . . . . 57
9.3 Expenses . . . . . . . . . . . . . . . . . . . . . 58
ARTICLE X
Administration of Plan . . . . . . . . 59
10.1 Retirement Board . . . . . . . . . . . . . . . . . 59
10.2 Organization and transaction of business of
Retirement Board . . . . . . . . . . . . . . . . . 59
10.3 Administrative responsibilities of Retirement
Board . . . . . . . . . . . . . . . . . . . . . . . 59
10.4 Retirement Board, the "Administrator" . . . . . . . 60
10.5 Fiduciary responsibilities . . . . . . . . . . . . 61
10.6 Employment of actuaries and others . . . . . . . . 61
10.7 Accounts and tables . . . . . . . . . . . . . . . . 61
10.8 Indemnity of members of Retirement Board . . . . . 62
10.9 Areas in which the Retirement Board does not have
responsibility . . . . . . . . . . . . . . . . . . 62
10.10 Claims Procedures . . . . . . . . . . . . . . . . 63
ARTICLE XI
Management of Trust . . . . . . . . . 64
11.1 Trust . . . . . . . . . . . . . . . . . . . . . . . 64
11.2 Disbursement of the Trust Fund . . . . . . . . . . 64
11.3 Rights in the Trust . . . . . . . . . . . . . . . . 64
11.4 Merger of the Plan . . . . . . . . . . . . . . . . 65
ARTICLE XII
Termination of the Plan . . . . . . . . 66
12.1 Termination of the Plan . . . . . . . . . . . . . . 66
iii
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12.2 Limitation on benefits for certain highly paid
employees . . . . . . . . . . . . . . . . . . . . . 66
ARTICLE XIII
Amendment of the Plan . . . . . . . . . 68
13.1 Amendment of the Plan . . . . . . . . . . . . . . . 68
ARTICLE XIV
Special Provisions . . . . . . . . . 69
14.1 Adoption of Plan by other corporations . . . . . . 69
14.2 Exclusive benefit . . . . . . . . . . . . . . . . . 70
14.3 Assignment or alienation . . . . . . . . . . . . . 70
14.4 Voluntary undertaking . . . . . . . . . . . . . . . 71
14.5 Top-Heavy Plan requirements . . . . . . . . . . . . 71
14.6 Determination of Top-Heavy status . . . . . . 71
14.7 Minimum Retirement Income for Top-Heavy Plan
Years . . . . . . . . . . . . . . . . . . . . . . . 75
14.8 Vesting requirements for Top-Heavy Plan Years . . . 76
14.9 Adjustments to maximum benefits for Top-Heavy
Plans . . . . . . . . . . . . . . . . . . . . . . . 77
ARTICLE XV
Post-retirement Medical Benefits . . . . . . 78
15.1 Definitions . . . . . . . . . . . . . . . . . . . . 78
15.2 Eligibility of Pensioned Employees and their
Dependents . . . . . . . . . . . . . . . . . . . . 79
15.3 Medical benefits . . . . . . . . . . . . . . . . . 79
15.4 Termination of coverage . . . . . . . . . . . . . . 80
15.5 Continuation of coverage to certain individuals . . 80
15.6 Contributions to fund medical benefits . . . . . . 81
15.7 Pensioned Employee contributions . . . . . . . . . 83
15.8 Amendment of Article XV . . . . . . . . . . . . . . 83
15.9 Termination of Article XV . . . . . . . . . . . . . 83
15.10 Reversion of assets upon termination . . . . . . . 84
ARTICLE XVI
Early Retirement Incentive Program . . . . . 85
16.1 Eligibility . . . . . . . . . . . . . . . . . . . . 85
16.2 Retirement Dates of Eligible Employees . . . . . . 85
16.3 Early retirement incentive program benefits . . . . 86
16.4 Restoration to service . . . . . . . . . . . . . . 86
iv
<PAGE>
Introductory Statement
The Pension Plan for Employees of Mississippi Power Company,
as amended and restated effective as of January 1, 1989 and
hereinafter set forth (the "Plan"), is a modification and
continuation of the Pension Plan for Employees of Mississippi
Power Company which originally became effective July 1, 1944, and
has been amended from time to time.
Since the enactment of the Employee Retirement Income
Security Act of 1974 ("ERISA"), the Plan has been amended
numerous times to comply with changes in the law and to achieve
other administrative goals. Initially, the Plan was amended and
restated in 1976 to comply with ERISA. Thereafter, the Plan was
again amended and restated in 1986 to comply with the Tax Equity
and Fiscal Responsibility Act of 1982, the Retirement Equity Act
of 1984, and the Deficit Reduction Act of 1984. In more recent
years, the Plan has been amended and restated three times to
comply with the Tax Reform Act of 1986 -- first in 1989, second
in 1991 and again as amended and restated herein. The amendment
and restatement set forth herein consolidates those amendments
made in 1989 and 1991 and provides for such other appropriate
changes as are required by the law. Accordingly, this amendment
and restatement is effective as of January 1, 1989. Where
appropriate, amendments to the Plan which have a different
effective date are noted.
Retirement Income of former Employees (or Provisional Payees
of former Employees) who retired in accordance with the
provisions of the Prior Plan, as defined herein, is payable in
accordance with the provisions of the Prior Plan.
All contributions made by the Employer to this Plan are
expressly conditioned upon the continued qualification of the
Plan under Section 401(a) of the Code, including any amendments
to the Plan, and upon the deductibility of such contributions by
the Employer pursuant to Section 404 of the Code.
1
<PAGE>
ARTICLE I
Definitions
The following words and phraseology as used herein have the
following meanings unless a different meaning is plainly required
by the context:
1
1.1 "Accrued Retirement Income" means with respect to any
Employee at any particular date, the Retirement Income,
determined pursuant to Section 5.1, commencing on his Normal
Retirement Date which would be payable to such Employee in the
form of a single life annuity on the basis of his Accredited
Service to the date as of which the computation of Retirement
Income is made.
1.2 "Accredited Service" means with respect to any Employee
included in the Plan, the period of service as provided in
Article IV.
1.3 "Actuarial Equivalent" means a benefit of equivalent
value when computed on the basis of five percent (5%) interest
per annum, compounded annually and the 1951 Group Annuity
Mortality Table for males. The ages for all Employees under the
above table shall be set back six (6) years and the ages for such
Employees' spouses shall be set back one year. All actuarial
adjustments and actuarial determinations required and made under
the terms of the Plan shall be calculated in accordance with such
assumptions.
1.4 "Affiliated Employer" means any corporation which is a
member of a controlled group of corporations (as defined in
Section 414(b) of the Code) which includes the Employer; any
trade or business (whether or not incorporated) which is under
common control (as defined in Section 414(c) of the Code) with
the Employer; any organization (whether or not incorporated)
which is a member of an affiliated service group (as defined in
Section 414(m) of the Code) which includes the Employer; and any
other entity required to be aggregated with the Employer pursuant
to regulations under Section 414(o) of the Code.
1.5 "Average Monthly Earnings" means the greater of:
(a) an Employee's Monthly Earnings averaged over the three (3)
highest Plan Years of participation which shall produce the
highest monthly average within the last ten (10) Plan Years; or
(b) an Employee's Monthly Earnings averaged over the three (3)
highest Plan Years of participation which shall produce the
highest monthly average within the last ten (10) Plan Years
during which the Employee actively performed services for the
Employer. If an Employee has completed less than three (3) Plan
Years of participation upon his termination of employment, his
2
<PAGE>
Average Monthly Earnings will be based on his Earnings during his
participation to his date of termination.
1.6 "Board of Directors" means the Board of Directors of
Mississippi Power Company.
1.7 "Code" means the Internal Revenue Code of 1986, as
amended from time to time.
1.8 "Current Accrued Retirement Income" means an Employee's
Accrued Retirement Income under the Plan, determined as if the
Employee had separated from service as of the close of the last
Limitation Year beginning before January 1, 1987, when expressed
as an annual benefit within the meaning of Section 415(b)(2) of
the Code. In determining the amount of an Employee's Current
Accrued Retirement Income, the following shall be disregarded:
(a) any change in the terms and conditions of the Plan
after May 5, 1986; and
(b) any cost of living adjustment occurring after May 5,
1986.
1.9 "Deferred Retirement Date" means the first day of the
month after a retirement subsequent to the Normal Retirement
Date.
Employment subsequent to Normal Retirement Date shall be
deemed to be a retirement if an Employee has less than forty (40)
Hours of Service during a calendar month.
1.10 "Defined Benefit Dollar Limitation" means the
limitation set forth in Section 415(b)(1)(A) or (d) of the Code.
1.11 "Defined Contribution Dollar Limitation" means the
limitation set forth in Section 415(c)(1)(A) of the Code.
1.12 "ERISA" means the Employee Retirement Income Security
Act of 1974, as amended from time to time.
1.13 "Early Retirement Date" means the first day of the
month following the retirement of an Employee on or after his
fifty-fifth (55th) birthday and before his sixty-fifth (65th)
birthday.
1.14 (a) "Earnings" with respect to any Employee including
any Employee whose service is terminated by reason of disability
(as defined in Section 4.4) means (1) the highest annual rate of
salary or wages of an Employee of the Employer or employee of any
Affiliated Employer within any Plan Year before deductions for
taxes, Social Security, etc., (2) all amounts contributed by the
Employer or any Affiliated Employer to The Southern Company
3
<PAGE>
Employee Savings Plan as Elective Employer Contributions, as said
term is described under Section 4.1 of such plan, pursuant to the
Employee's exercise of his deferral option made thereunder in
accordance with the requirements of Section 401(k) of the Code,
and (3) all amounts contributed by the Employer or any Affiliated
Employer to The Southern Electric System Flexible Benefits Plan
or The Southern Company Flexible Benefits Plan on behalf of an
Employee pursuant to his salary reduction election, and applied
to provide one or more of the optional benefits available under
such plan, but (4) shall exclude all amounts deferred under any
non-qualified deferred compensation plan maintained by the
Employer or any Affiliated Employer.
(b) Notwithstanding the above, "Earnings" with respect to
any commissioned salesperson means the salary or wages of an
Employee of the Employer or employee of any Affiliated Employer
within any Plan Year, without including overtime, and before
deductions for taxes, Social Security, etc. but applying those
adjustments identified in paragraphs (a)(2), (3) and (4) above.
(c) With respect to an Employee whose service terminates
because of a disability under Section 4.4, Earnings shall be
deemed to continue in effect throughout the period of the
Employee's Disability Leave, as also defined in Section 4.4.
(d) With respect to calculating the Prior Plan Retirement
Income of an Employee who is a "participant in the Plan" as
provided in Section 5.12, Earnings shall be determined for the
recognized period of his absence to serve in the Armed Forces of
the United States at the rate which is paid to him on the day he
returns to the service of the Employer as provided in
paragraph (a) of Section 5.12 or at the rate which was payable to
him at the time he left the employment of the Employer to enter
the Armed Forces of the United States, if such amount was
greater.
(e) For Plan Years beginning after December 31, 1988 and
prior to January 1, 1994, the annual compensation of each
Employee taken into account for purposes of this Plan shall not
exceed $200,000 (as adjusted by the Secretary of Treasury). The
imposition of this limitation shall not reduce an Employee's
Retirement Income below the amount as determined on December 31,
1988. In addition to other applicable limitations set forth in
the Plan, and notwithstanding any other provision of the Plan to
the contrary, for Plan Years beginning on or after January 1,
1994, the annual compensation of each Employee taken into account
under the Plan shall not exceed $150,000, as adjusted for
increases in the cost of living in accordance with Code
Section 401(a)(17). The cost of living adjustment in effect for
a calendar year applies to any period, not exceeding twelve (12)
months, over which compensation is determined (the "determination
period") beginning in such calendar year. If the determination
4
<PAGE>
period is less than twelve (12) months, the limit shall be
prorated.
If compensation for any prior determination period is taken
into account in determining an Employee's benefits accruing in
the current Plan Year beginning on or after January 1, 1989 or
January 1, 1994, as applicable, the compensation for that prior
determination period is subject to the $200,000 or the $150,000
compensation limit in effect for that prior determination period.
Notwithstanding any other provision in the Plan, each
Employee's Accrued Retirement Income under this Plan will be the
greater of:
(a) the Employee's Accrued Retirement Income as of the last
day of the last Plan Year beginning before January 1,
1994, frozen in accordance with Treasury Regulation
Section 1.401(a)(4)-13, or
(b) the Employee's Accrued Retirement Income determined
with respect to the benefit formula applicable for the
Plan Year beginning on or after January 1, 1994, as
applied to the employee's total Years of Service taken
into account under the Plan for purposes of benefit
accruals.
For purposes of this Section 1.14, the rules of Section
414(q)(6) of the Code shall apply in determining the adjusted
$200,000 or $150,000 limitation, as applicable, except in
applying such rules, the term "family" shall include only the
spouse of the Employee and any lineal descendants of the Employee
who have not attained age nineteen (19) before the close of the
Plan Year. If, as a result of the application of such rules, the
adjusted $200,000 or $150,000 limitation is exceeded, then the
limitation shall be prorated among the affected individuals in
proportion to each individual's Earnings determined under this
Section 1.14 prior to the application of this limitation.
1.15 "Effective Date" means the original effective date of
the Plan, July 1, 1944. The effective date of this amendment and
restatement means January 1, 1989.
1.16 "Eligibility Year of Service" is a Year of Service
commencing on the Employee's date of employment or reemployment
or anniversary date thereof.
1.17 "Employee" means any person who is currently employed
by the Employer as (a) a regular full-time employee, (b) a
regular part-time employee, (c) a cooperative education employee,
or (d) a temporary employee (whether full-time or part-time) paid
directly or indirectly by the Employer. The term also includes
"leased employees" within the meaning of Section 414(n)(2) of the
5
<PAGE>
Code, unless the total number of leased employees constitutes
less than twenty percent (20%) of the Employer's non-highly
compensated workforce within the meaning of Section
414(n)(5)(C)(ii) and such leased employees are covered by a plan
described in Section 414(n)(5)(B) of the Code.
1.18 "Employer" means Mississippi Power Company, any
successor or successors thereof and any wholly owned subsidiary
thereof which the Board of Directors may from time to time, and
upon such terms and conditions as may be fixed by the Board of
Directors, determine to bring under the Plan, and any other
corporation which shall adopt this Plan and Trust Agreement
pursuant to Section 14.1 by appropriate resolution authorized by
the board of directors of said adopting corporation. The term
"Employer" shall not include Electric City Merchandise Company,
Inc.
1.19 "Full Current Costs" means the normal cost, as defined
in Treasury Regulation Section 1.404(a)-6, for all years since
the Effective Date of the Plan, plus interest on any unfunded
liability during such period.
1.20 "Hour of Service" means an Employee shall be credited
with one Hour of Service for each hour for which (a) he is paid,
or entitled to payment, for the performance of duties for the
Employer or an Affiliated Employer, and such hours shall be
credited to the Employee for the computation period or periods in
which the duties are performed; (b) he is paid, or entitled to
payment, by the Employer or an Affiliated Employer on account of
a period of time during which no duties are performed
(irrespective of whether the employment relationship has
terminated) due to vacation, holiday, illness, incapacity
(including disability), layoff, jury duty, military duty, or
leave of absence in which case the Employee shall be credited
with Hours of Service for the computation period or periods in
which the period during which no duties were performed occurs;
(c) back pay, irrespective of mitigation of damages, has been
either awarded or agreed to by the Employer or an Affiliated
Employer, in which case the Employee shall be credited with Hours
of Service for the computation period or periods to which the
award or agreement pertains, rather than the computation period
in which the award, agreement, or payment is made; and (d) solely
for the purpose of calculating Vesting Years of Service, he was
on any form of authorized leave of absence. The same Hours of
Service shall not be credited under clauses (a), (b), (c), and
(d).
An Employee who is entitled to be credited with Hours of
Service in accordance with clause (b) or (d) of this Section
shall be credited with such number of Hours of Service for the
period of time during which no duties were performed as though he
were in the active employment of the Employer during such period
6
<PAGE>
of time. However, an Employee shall not be credited with Hours
of Service in accordance with clause (b) of this Section for
unused vacation for which payment is received at termination of
employment, or if the payment which is made to him or to which he
is entitled in accordance with clause (b) is made or due under a
plan maintained solely for the purpose of complying with
applicable Worker's Compensation, or unemployment compensation or
disability insurance laws, or if such payment is one which solely
reimburses an Employee for medical or medically related expenses
incurred by the Employee.
Provided there is no duplication of Hours of Service
credited in accordance with the foregoing provisions, if an
Employee is "a participant in the Plan" within the meaning of
that term as defined in paragraph (a) of Section 5.12, he shall
be credited with such number of Hours of Service with respect to
all or such portion of the period of his absence to serve in the
Armed Forces of the United States as may be recognized under
paragraph (b) of Section 5.12 as though he were in the active
employment of the Employer during the recognized period of his
absence to serve in the Armed Forces.
The rules set forth in paragraphs (b) and (c) of Department
of Labor Regulations 2530.200b-2 are incorporated in the Plan by
this reference and made a part hereof.
1.21 "Limitation Year" means the Plan Year.
1.22 "Monthly Earnings" means one-twelfth (1/12) of the
Earnings of an Employee of the Employer during a Plan Year.
1.23 "Normal Retirement Date" means the first day of the
month following an Employee's sixty-fifth (65th) birthday, except
that the Normal Retirement Date of any Employee hired on or after
his sixtieth (60th) birthday shall be the fifth (5th) anniversary
of his initial participation in the Plan.
1.24 "One-Year Break in Service" means a twelve (12)
consecutive month period commencing on or after January 1, 1976
which would constitute a Year of Service but for the fact that
the Employee has not completed more than 500 Hours of Service
during such period.
Solely for the purpose of determining whether a One-Year
Break in Service has occurred for eligibility or vesting
purposes, an Employee who is absent from work for maternity or
paternity reasons shall receive credit for the Hours of Service
which would otherwise have been credited to such Employee but for
such absence, or in any case in which such hours cannot be
determined, eight (8) Hours of Service per day of such absence.
In no event shall Hours of Service credited under this paragraph
be in excess of the amount necessary to prevent a One-Year Break
7
<PAGE>
in Service from occurring. For purposes of this paragraph, an
absence from work for maternity or paternity reasons means an
absence (a) by reason of the pregnancy of the Employee, (b) by
reason of a birth of a child of the Employee, (c) by reason of
the placement of a child with the Employee in connection with the
adoption of such child by such Employee, or (d) for purposes of
caring for such child for a period beginning immediately
following such birth or placement. The Hours of Service shall be
credited under this paragraph: (a) in the vesting or eligibility
period in which the absence begins if the Hours of Service
credited are necessary to prevent a One-Year Break in Service in
such period, and (b) in all other cases, in the vesting or
eligibility period following the period in which the absence
begins.
1.25 "Past Service" means with respect to any Employee
included in the Plan, the period of his Accredited Service prior
to January 1, 1989 as determined under the Prior Plan.
1.26 "Plan" means the Pension Plan for Employees of
Mississippi Power Company, as set forth herein and as hereinafter
amended, effective January 1, 1989.
1.27 "Plan Year" means the twelve (12) month period
commencing on the first day of January and ending on the last day
of December next following.
1.28 "Plan Year of Service" is a Year of Service determined
as if the date of employment or reemployment is the first day of
the Plan Year.
1.29 "Prior Plan" means the Plan in effect prior to January
1, 1989.
1.30 "Provisional Payee" means a spouse designated or
deemed to have been designated by an Employee or former Employee
pursuant to Article VII to receive Retirement Income on the death
of the Employee or former Employee.
1.31 "Qualified Election" means an election by an Employee
or former Employee that concerns the form of distribution of
Retirement Income that must be in writing and must be consented
to by the Employee's Spouse. The Spouse's consent to such an
election must acknowledge the effect of such election, must be in
writing, and must be witnessed by a notary public.
Notwithstanding this consent requirement, if the Employee
establishes to the satisfaction of the Retirement Board that such
written consent may not be obtained because the Spouse cannot be
located or because of such other circumstances as the Secretary
of the Treasury may by regulations prescribe, an election by the
Employee will be deemed a Qualified Election. Any consent
necessary under this provision shall be valid and effective only
8
<PAGE>
with respect to the Spouse who signs the consent, or in the event
of a deemed Qualified Election, with respect to such Spouse.
A revocation of a prior Qualified Election to waive the
payment of Retirement Income to the Employee's Spouse may be made
by the Employee without consent at any time commencing within 90
days before such Employee's 55th birthday but not later than
before the commencement of Retirement Income. A Qualified
Election or the revocation of a Qualified Election shall be on a
form furnished by the Retirement Board and filed within the time
prescribed for making such election.
1.32 "Retirement Board" means the managing board of the
Plan provided for in Article X.
1.33 "Retirement Date" means the Employee's Normal, Early,
or Deferred Retirement Date, whichever is applicable to him.
1.34 "Retirement Income" means the monthly Retirement Income
provided for by the Plan.
1.35 "Social Security Offset" shall mean an amount equal to
one-half (1/2) of the amount, if any, of the Federal primary
Social Security benefit (primary old age insurance benefit) to
which it is estimated that an Employee will become entitled in
accordance with the Social Security Act in force as provided in
subparagraphs (a) through (e) below which shall exceed $168 per
month on and after January 1, 1989, and $250 per month, on and
after January 1, 1991, multiplied by a fraction not greater than
one, the numerator of which shall be the Employee's total
Accredited Service, and the denominator of which shall be the
aggregate Accredited Service the Employee could have accumulated
if he had continued his employment until his Normal Retirement
Date. For purposes of determining the estimated Federal primary
Social Security benefit used in the Social Security Offset, an
Employee shall be deemed to be entitled to receive Federal
primary Social Security benefits after retirement or death, if
earlier, regardless of the fact that he may have disqualified
himself to receive payment thereof. In addition to the
foregoing, the calculation of the Social Security benefit shall
be based on the salary history of the Employee as provided in
Section 5.4(b) and shall be determined pursuant to the following,
as applicable:
(a) With regard to an Employee described in Section 5.2,
the Social Security benefit shall be computed at retirement. In
estimating the amount of the Federal primary Social Security
benefit to which the Employee would be entitled, it shall be
assumed that he will receive no wages for Social Security
purposes after his retirement on his Normal Retirement Date or
Deferred Retirement Date, and it will be further assumed in
calculating his estimated Federal primary Social Security benefit
9
<PAGE>
that the amount thereof will be the amount determined under the
recomputation provision, if applicable, of the Social Security
Act in effect at the time of his retirement.
(b) With regard to an Employee described in Section 5.3(a),
the Social Security benefit to which it is estimated that he will
be entitled at sixty-five (65), shall be computed at the time of
his retirement. In estimating the amount of the Federal primary
Social Security benefit to which the Employee would be entitled
at age sixty-five (65), it shall be assumed that he will receive
no wages for Social Security purposes after his Early Retirement
Date, and it will be further assumed in calculating his estimated
Federal primary Social Security benefit that the amount thereof
will be the amount determined under the recomputation provision,
if applicable, of the Social Security Act in effect at his Early
Retirement Date.
(c) With regard to an Employee described in Section 5.3(b),
the Social Security benefit to which it is estimated that he
would have been entitled to receive at age sixty-five (65) or his
date of death, if later, had he not died, shall be computed at
the time of his death. In estimating the amount of Federal
primary Social Security benefit to which the Employee would have
been entitled at age sixty-five (65) or his date of death, if
later, it shall be assumed that he would not have received any
wages for Social Security purposes after the date of his death,
and it will be further assumed in calculating his Federal primary
Social Security benefit that the amount thereof will be the
amount determined under the recomputation provision, if
applicable, of the Social Security Act in effect at the time of
his death.
(d) With regard to an Employee described in Section 5.3(c),
the Social Security benefit to which it is estimated that he will
become entitled at age sixty-five (65) or his date of
termination, if later, shall be computed at the date of
termination. In estimating the amount of the Federal primary
Social Security benefit to which the Employee would be entitled
at age sixty-five (65) or his date of termination, if later, it
shall be assumed that he will receive no wages for Social
Security purposes after his date of termination, and it will be
further assumed in calculating his estimated Federal primary
Social Security benefit that the amount thereof will be the
amount determined under the recomputation provision, if
applicable, of the Social Security Act in effect at his date of
termination.
(e) With regard to an Employee described in Section 5.3(d),
the Social Security benefit to which it is estimated that he
would have been entitled to receive at age sixty-five (65) or his
initial date of disability, if later, had he not become disabled,
shall be computed at the time of his retirement. In estimating
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the amount of Federal primary Social Security benefit to which
the Employee would have been entitled at age sixty-five (65) or
his date of disability, if later, it shall be assumed that he
would have received wages for Social Security purposes as
specified in Section 5.4, and it will be further assumed in
calculating his estimated Federal primary Social Security benefit
that the amount thereof will be the amount determined under the
recomputation provision, if applicable, of the Social Security
Act in effect at the time of his retirement.
1.36 "Social Security Retirement Age" means age sixty-five
(65) if the Employee attains age sixty-two (62) before January 1,
2000 (i.e., born before January 1, 1938), age sixty-six (66) if
the Employee attains age sixty-two (62) after December 31, 1999,
but before January 1, 2017 (i.e., born after December 31, 1937,
but before January 1, 1955), and age sixty-seven (67) if the
Employee attains age sixty-two (62) after December 31, 2016
(i.e., born after December 31, 1954).
1.37 "Trust" or "Trust Fund" means all such money or other
property which shall be held by the Trustee pursuant to the terms
of the Trust Agreement or pursuant to contracts with life
insurance companies.
1.38 "Trust Agreement" means the trust agreement or
agreements between the Employer and the Trustee established for
the purpose of funding the Retirement Income to be paid.
1.39 "Trustee" means the trustee or trustees acting as such
under the Trust Agreement, including any successor or successors.
1.40 "Vesting Year of Service" means an Employee's Years of
Service including: (a) Years of Service with an Affiliated
Employer; (b) in the case of an employee of Birmingham Electric
Company who, prior to his Normal Retirement Date, became and
remained an Employee of the Employer until December 1, 1952, and
was an active Employee of the Employer on January 1, 1961, his
service with Birmingham Electric Company; (c) subject to the
eligibility requirements of Section 2.3, active service with the
Armed Forces of the United States if the Employee entered or
enters active service or training in such Armed Forces directly
from the employ of the Employer and after discharge or release
therefrom returns within ninety (90) days to the employ of the
Employer or is deemed to return under Section 2.3 because of the
death of such Employee while in active service with such Armed
Forces; and (d) any period during which the Employee was on any
other form of authorized leave of absence. For purposes of this
Section 1.40 in determining Vesting Years of Service with respect
to a period of absence referred to in clause (c) or (d) of this
Section 1.40, an Employee shall be credited with Hours of Service
as though the period of absence were a period of active
employment with the Employer.
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1.41 "Year of Service" means with respect to an Employee in
the service of the Employer on or after January 1, 1976:
(a) if the Employee was hired prior to January 1, 1976,
each twelve (12) consecutive month period, computed from the
Employee's most recent date of hire by the Employer, during his
last period of continuous service as a full-time regular Employee
(except that service prior to July 1, 1944 need not have been
continuous) with the Employer immediately prior to January 1,
1976 (including service with Commonwealth and predecessor
companies and service with Affiliated Employers and service with
companies or properties heretofore affiliated or associated prior
to the date of severance of such affiliation or association) and
any subsequent twelve (12) consecutive month period commencing on
an anniversary date of such date of hire (or date of reemployment
as provided in Section 2.4), provided that in each such twelve
(12) consecutive month period commencing on or after January 1,
1975 he has completed at least 1000 Hours of Service; or
(b) if the Employee is hired on or after January 1, 1976, a
twelve (12) consecutive month period after December 31, 1975,
commencing on the Employee's most recent date of hire by the
Employer (or date of reemployment as provided in Section 2.4),
and any subsequent twelve (12) consecutive month period
commencing on an anniversary date of such date of hire, provided
he has completed at least 1000 Hours of Service during each such
twelve (12) consecutive month period; and
(c) to the extent not resulting in duplication, each Year
of Service restored to the Employee upon reemployment as provided
in Section 8.3.
An Employee's vested interest in his Accrued Retirement
Income shall be based on his Vesting Years of Service and an
Employee's eligibility to participate in the Plan pursuant to
Article II shall be based on his Eligibility Year of Service.
Breaks in service will be measured on the same computation period
as the Year of Service. Effective on and after January 1, 1995,
an Employee's accrual of Retirement Income shall be based solely
on an Employee's Plan Year of Service, without regard to an
Employee's completion of a Vesting Year of Service ending within
such Plan Year.
In the Plan and Trust Agreement, where the context requires,
words in the masculine gender include the feminine and neuter
genders and words in the singular include the plural and words in
the plural include the singular.
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ARTICLE II
Eligibility
2
2.1 Employees. Each Employee participating in the Plan as
of January 1, 1989 shall continue to be included in the Plan.
Each other Employee, except as provided in this Article, shall be
included in the Plan on the first day of the month next following
the date on which he first completes an Eligibility Year of
Service.
2.2 Employees represented by a collective bargaining agent.
An Employee who is represented by a collective bargaining agent
may participate in the Plan, subject to its terms, if the
representative(s) of his bargaining unit and the Employer
mutually agree to participation in the Plan by members of his
bargaining unit.
2.3 Persons in military service and Employees on authorized
leave of absence. Any person not already included in the Plan
who leaves or has left the employ of the Employer to enter the
Armed Forces of the United States or is on authorized leave of
absence without regular pay and who returns to the employ of the
Employer within ninety (90) days after discharge from such
military service or on or before termination of his leave of
absence, shall, upon such return, be included in the Plan
effective as of the first day of the month next following the
date on which he first met or meets the eligibility requirement
of Section 2.1. In determining whether an Employee entering the
service of the Employer has completed an Eligibility Year of
Service, his Hours of Service prior to such authorized leave of
absence without regular pay or entry into the Armed Forces shall
be taken into account, and for purposes of Section 2.4, he shall
be deemed not to have incurred a One-Year Break in Service by
reason of such absence.
If an Employee dies while in active service with the Armed
Forces of the United States, such Employee shall be deemed to
have returned to the employ of the Employer on his date of death.
An Employee not already included in the Plan who is on
authorized leave of absence and receiving his regular pay shall
be considered credited with Hours of Service as though the period
of absence was a period of active employment with the Employer,
and he shall be included in the Plan if and when he meets the
requirements of this Article II regardless of whether he is, on
the date of such inclusion, on such leave of absence.
13
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2.4 Employees reemployed. An Employee whose service
terminates at any time and who is reemployed as an Employee,
unless excluded under Section 2.6, will be included in the Plan
as provided in Section 2.1 unless:
(a) prior to termination of his service he had completed at
least one Year of Service; and
(b) upon his reemployment, to the extent provided in
Section 8.3 without regard to Section 8.4, he is entitled to
restoration of his Years of Service, in which case he will be
included in the Plan as of the date of his reemployment.
For purposes of determining Years of Service of an Employee
who is reemployed by the Employer subsequent to a One-Year Break
in Service, a Year of Service subsequent to his reemployment
shall be computed on the basis of the twelve (12) consecutive
month period commencing on his date of reemployment or an
anniversary thereof.
2.5 Participation upon return to eligible class. If an
Employee is a participant in the Plan before July 1, 1991, the
exclusion from participation provided in Section 2.6, as it
regards temporary employees, shall not apply with respect to such
Employee, and such Employee shall be eligible to participate in
the Plan after July 1, 1991 whether or not he is classified as a
temporary employee.
If an Employee first becomes a participant on or after July
1, 1991, in the event such Employee ceases to be a member of an
eligible class of Employees and becomes ineligible to
participate, but has not incurred a One-Year Break in Service,
such Employee will participate immediately upon returning to an
eligible class of Employees. If such Employee incurred a One-
Year Break in Service, eligibility will be determined under
Section 2.4 of the Plan.
In all other instances, if an Employee is not a member of an
eligible class of Employees but then becomes a member of an
eligible class, such Employee will commence participation in the
Plan as of the first day of the month next following the later of
(a) the date such Employee completes an Eligibility Year of
Service or (b) the date he becomes a member of an eligible class
of Employees.
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2.6 Exclusion of certain categories of employees.
Notwithstanding any other provision of this Article II, leased
employees shall not be eligible to participate in the Plan. In
addition, temporary employees, except Employees, as defined in
Section 1.17, participating in the Plan prior to July 1, 1991
shall not be eligible to participate in the Plan. Any person who
is employed by Electric City Merchandise Company, Inc. on or
after May 1, 1988, or who is employed by Savannah Electric and
Power Company on or after March 3, 1988, shall not be entitled to
accrue Retirement Income under the Plan while employed at such
companies.
2.7 Waiver of participation. Effective January 1, 1991,
notwithstanding the above, an Employee may, subject to the
approval of the Employer, elect voluntarily not to participate in
the Plan. The election not to participate must be communicated
in writing to the Retirement Board effective on an Employee's
date of hire or an anniversary thereof. Effective January 1,
1995, the election not to participate must be communicated in
writing to and acknowledged by the Retirement Board and shall be
effective as of the date set forth in such written waiver.
15
<PAGE>
ARTICLE III
Retirement
3
3.1 Retirement at Normal Retirement Date. Each Employee
eligible to participate in the Plan shall have a nonforfeitable
right to his Accrued Retirement Income by no later than his
sixty-fifth (65th) birthday, or in the case of any Employee hired
on or after his sixtieth (60th) birthday, the fifth (5th)
anniversary of his initial participation in the Plan.
Notwithstanding the above, an Employee's Normal Retirement Date
shall be as provided in Section 1.23.
3.2 Retirement at Early Retirement Date. An Employee
having at least ten (10) Years of Accredited Service (including
any Accredited Service to which he is entitled under the pension
plan of any Affiliated Employer from which such Employee was
transferred pursuant to Section 4.6 or 4.7, or which was credited
to him in accordance with Section 4.3) may elect to retire on an
Early Retirement Date on or after his fifty-fifth (55th) birthday
and before his sixty-fifth (65th) birthday and to have his
Retirement Income commence on that date, or effective January 1,
1995, the first day of any month up to and including the
Employee's Normal Retirement Date.
3.3 Retirement at Deferred Retirement Date. An Employee
included in the Plan may remain in active service after his
Normal Retirement Date. The involuntary retirement of an
Employee on or after his Normal Retirement Date shall not be
permitted solely on the basis of the Employee's age, except in
accordance with the provisions of the Age Discrimination in
Employment Act, as amended from time to time. Termination of
service of such an Employee for any reason after Normal
Retirement Date shall be deemed retirement as provided in the
Plan.
16
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ARTICLE IV
Determination of Accredited Service
4
4.1 Accredited Service pursuant to Prior Plan. Each
Employee who participated in the Prior Plan shall be credited
with such Accredited Service, if any, earned under such Prior
Plan as of December 31, 1988.
4.2 Accredited Service.
(a) Each Employee meeting the requirements of Article II
shall, in addition to any Accredited Service to which he may be
entitled in accordance with Section 4.1, be credited with
Accredited Service as set forth in (b) below. Any such Employee
who is on authorized leave of absence with regular pay shall be
credited with Accredited Service during the period of such
absence. Any such Employee who is a "participant in the Plan"
within the meaning of that term as defined in paragraph (a) of
Section 5.12 shall be credited with Accredited Service during all
or such portion of the period of his absence to serve in the
Armed Forces of the United States as may be recognized under
paragraph (b) of Section 5.12. Employees on authorized leave of
absence without regular pay, other than Employees deemed to
accrue Hours of Service under Section 4.4, and persons in the
Armed Forces who are not "participants in the Plan" within the
meaning of that term as defined in paragraph (a) of Section 5.12
shall not be credited with Accredited Service for the period of
such absence.
(b) For each Plan Year commencing after December 31, 1988,
an Employee included in the Plan who is credited with a Vesting
Year of Service for the twelve (12) consecutive month period
ending on the anniversary date of his hire which occurs during
such Plan Year shall be credited with Accredited Service as
follows:
(1) if an Employee completes at least 1,680 Hours of
Service in a Plan Year, he shall be credited with one year
of Accredited Service;
(2) if an Employee completes less than 1,680 Hours of
Service in a Plan Year, but not less than 1,000 Hours of
Service, he shall be credited with one-twelfth (1/12) of a
year of Accredited Service for each 140 Hours of Service; or
(3) if an Employee's initial eligibility in the Plan
shall occur after the beginning of the Plan Year, and the
Employee shall therefore have completed less than 1,000
Hours of Service in such Plan Year, he shall be credited
with one-twelfth (1/12) of a year of Accredited Service for
17
<PAGE>
each 140 Hours of Service during such Plan Year after his
inclusion in the Plan.
Notwithstanding the above, effective January 1, 1995, an
Employee's Accredited Service shall be calculated based on an
Employee's accrual of a Plan Year of Service only and without
regard to the requirement of a Vesting Year of Service.
(c) If an Employee (1) who has previously satisfied the
eligibility requirements under Article II shall again be included
in the Plan at such time which is after the beginning of the Plan
Year, or (2) shall terminate his employment for any reason before
the close of such Plan Year and shall therefore have completed
less than 1,000 Hours of Service in such Plan Year, he shall be
credited with one-twelfth (1/12) of a year of Accredited Service
for each 140 Hours of Service during such Plan Year after his
inclusion in the Plan or before his termination of employment in
such Plan Year, as the case may be.
(d) In addition to any Accredited Service credited under
Section 4.1, an Employee shall be entitled to Accredited Service
determined under the Prior Plan, without regard to the age
requirement for eligibility to participate in the Prior Plan, in
excess of the Accredited Service determined under the Prior Plan
(including the age requirement for eligibility to participate in
the Prior Plan). Such Accredited Service shall be considered
Accredited Service after December 31, 1985 for purposes of
calculating an Employee's Retirement Income under Article V.
(e) In addition to the foregoing, Accredited Service may
include Accredited Service accrued subsequent to a One-year Break
in Service including such Accredited Service which may be
restored in accordance with the provisions of Section 8.3.
(f) Notwithstanding the above, the maximum number of years
of Accredited Service with respect to any Employee participating
in the Plan shall not exceed forty (40). Effective January 1,
1991, the maximum number of years of Accredited Service is
increased to forty-three (43).
4.3 Accredited Service and Years of Service in respect of
service of certain Employees previously employed by the Employer
or by Affiliated Employers. An Employee in the service of the
Employer on January 1, 1976 or employed by it thereafter who
meets the requirements of paragraph (a) of this Section 4.3, in
addition to any other Years of Service or Accredited Service to
which he may be entitled under the Plan, upon completion of an
Eligibility Year of Service where required under Section 8.3(c)
(which shall also be considered to be Accredited Service) shall
be credited with such number of Years of Service (and fractions
thereof to the nearest whole month for service prior to January
1, 1976) and such Accredited Service and Retirement Income as
18
<PAGE>
shall be determined in accordance with the provisions of
paragraphs (b) and (c) of this Section 4.3.
(a) (1) Such Employee shall have been employed prior to
January 1, 1976 by the Employer or by one or more Affiliated
Employers; (2) he shall have terminated his service with Employer
or such Affiliated Employer other than by retirement and he shall
not be entitled to receive at any time any retirement income
under the pension plan of any such prior employer in respect of
any period of time for which he shall receive credit for Years of
Service or Accredited Service under this Section 4.3; and (3) for
Employees reemployed on or after January 1, 1985, the number of
consecutive One-Year Breaks in Service incurred by the Employee
prior to the date of his employment by the Employer does not
equal or exceed the greater of (A) five (5), or (B) the aggregate
number of his Years of Service (and fractions thereof to the
nearest whole month for service prior to January 1, 1976) with
the Employer and such Affiliated Employer. The years of
Accredited Service credited to an Employee reemployed prior to
January 1, 1985, with regard to years of Accredited Service
immediately prior to the termination of his service, shall be
determined under the terms of the Plan in effect prior to January
1, 1985.
(b) The number of Years of Service (and fractions thereof
to the nearest whole month for service prior to January 1, 1976)
and the Accredited Service, respectively, which shall be credited
to such Employee shall be equal to the respective number of his
Years of Service (and fractions thereof to the nearest whole
month for service prior to January 1, 1976) and Accredited
Service which were forfeited by the Employee and not restored
under the pension plans of the Employer or an Affiliated
Employer.
(c) There shall be credited to the Employee Retirement
Income equal to retirement income which was accrued by him under
the pension plan of the Employer or an Affiliated Employer during
the period of his Accredited Service which was forfeited and
which is credited under the Plan in accordance with Section 4.3.
The amount of Retirement Income credited in accordance with this
paragraph (c) shall be treated as Prior Plan Retirement Income
for purposes of determining the amount of Retirement Income to
which the Employee is entitled, and shall be determined in
accordance with the provisions of the pension plan of the
Affiliated Employer in effect at the time the Employee's service
with such Affiliated Employer terminated without regard to any
minimum provisions of such pension plan; for this purpose and if
relevant in respect of the Employee it shall be assumed that the
pension plan of the Affiliated Employer in effect at the time the
Employee's service with such Affiliated Employer terminated
contained the provisions of Section 5.12 of the Plan and related
amendments concerning absence from the service of the Employer to
19
<PAGE>
serve in the Armed Forces of the United States which became
effective November 1, 1977. For Plan Years beginning after
December 31, 1987, an Employee who meets the requirements of
paragraph (a) of this Section 4.3 shall be deemed to have
transferred to or from an Affiliated Employer for purposes of the
transfer of assets or liabilities to or from the Plan in
accordance with Section 4.6.
4.4 Accrual of Retirement Income during period of total
disability.
(a) If an Employee included in the Plan shall become
totally disabled, as determined by the Retirement Board on the
basis of medical evidence, after he has completed at least five
(5) Vesting Years of Service and, by reason of such disability,
he shall apply for and be granted either Social Security
disability benefits or long-term disability benefits under a
long-term disability benefit plan of the Employer, he shall be
considered to be on a leave of absence, herein referred to as a
"Disability Leave." An Employee's Disability Leave shall be
deemed to begin on the initial date of the disability, as
determined by the Retirement Board, and shall continue until the
earlier of: (1) the end of the month in which he shall cease to
be entitled to receive Social Security Disability benefits and
long-term disability benefits under a long-term disability
benefit plan of the Employer; (2) his death; and (3) his
Retirement Date if he elects to have his Retirement Income
commence on such date. During the period of the Employee's
Disability Leave, he shall, for purposes of the Plan, be deemed
to have received Earnings at the regular rate in effect for him.
(b) A disabled Employee who applies for and would be
granted long-term disability benefits under a long-term
disability benefit plan of the Employer, if it were not for the
fact that the deductions therefrom attributable to other
disability benefits equal or exceed the amount of his unreduced
benefit under a long-term disability benefit plan of the
Employer, will be considered as being currently granted benefits
under such long-term disability benefit plan.
(c) An Employee's Disability Leave shall be deemed to be a
period for which Hours of Service shall be credited to the
Employee as though the period of his Disability Leave were a
period of active employment.
(d) If an Employee's Disability Leave shall terminate prior
to his Normal Retirement Date and he shall fail to return to the
employment of the Employer within sixty (60) days after the
termination of such leave, his service shall be deemed to have
terminated upon the termination of his Disability Leave and his
rights shall be determined in accordance with Article VIII,
unless at such time he shall be entitled to retire on an Early
20
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Retirement Date, in which event his termination of service shall
be deemed to constitute his retirement under Section 3.2.
(e) Notwithstanding the above, the years of Accredited
Service for any Employee whose initial date of disability
occurred under the Prior Plan shall be determined under the terms
of the Prior Plan.
4.5 Employees leaving Employer's service. If the service
of an Employee is terminated prior to retirement as provided by
Article III, such Employee will forfeit any Vesting Years of
Service and Accredited Service which he may have subject to
possible restoration of some or all of his Vesting Years of
Service and Accredited Service in accordance with Article VIII.
The provisions of this Section 4.5 shall not affect the rights,
if any, of an Employee under Article VIII nor shall the rights of
an Employee be affected during or by reason of a layoff, due to
lack of work, which continues for a period of one year or less,
except that such period of layoff shall not be deemed to be
service with the Employer. If the service of an Employee is
terminated, or if he is not reemployed before the expiration of
one year after being laid off for lack of work, and he is
subsequently reemployed, he will be treated as provided in
Section 2.4.
Forfeitures arising by reason of an Employee's termination
of service for any reason shall not be applied to increase the
benefits any Employee would otherwise receive under the Plan but
shall be used to reduce contributions of the Employer to the
Plan.
4.6 Transfers to or from Affiliated Employers. This
Section 4.6 shall not apply to the transfer by an Employee to the
Employer from Savannah Electric and Power Company on or after
March 3, 1988. In the case of the transfer of an Employee
(including an Employee included in the Prior Plan who was
transferred in accordance with the Prior Plan) to an Affiliated
Employer which has at the time of transfer a pension plan with
substantially the same terms as this Plan, such Employee, if and
when he commences to receive on or after his Normal Retirement
Date retirement income under such pension plan of the Affiliated
Employer to which transferred, shall receive retirement income
under such pension plan attributable to years of Accredited
Service with the Employer prior to the time of his transfer. If
and when such an Employee commences to receive on an Early
Retirement Date retirement income under such pension plan of the
Affiliated Employer to which transferred, the amount of any
retirement income payable under such pension plan and
attributable to Accredited Service with the Employer prior to
such transfer shall be reduced in accordance with the provisions
of the pension plan relating to retirement income payable at
Early Retirement Date, or if such retirement income shall be
21
<PAGE>
payable in a manner similar to the provisions of Section 8.2 or
Section 8.6, reduced in accordance with the applicable provision.
In the case of the transfer to this Employer (not including
transfers by reason of the split-up as of November 1, 1949) of an
Employee of any Affiliated Employer which has at the time of
transfer a pension plan with substantially the same terms as this
Plan, the Employer will, subject to the provisions of Article IX,
make periodic contributions into this Plan to the extent
necessary to provide the portion of the Retirement Income not
provided for him in the pension plan of the company from which he
was transferred.
Upon the transfer of an Employee to or from the Employer,
the Plan and Trust shall be authorized to receive or transfer the
greater of (a) the actuarial equivalent of the Employee's Accrued
Retirement Income or (b) such assets as may be required to fund
the projected Retirement Income of the Employee at his retirement
date attributable to the Plan or the pension plan maintained by
the Affiliated Employer from which the Employee transfers,
determined as of the last day of the Plan Year in which the
transfer occurs using the current funding assumptions for the
Plan Year in which the transfer occurs. The Retirement Board of
the Employer shall be authorized to coordinate the transfer of
assets and liabilities attributable to the benefits of active
Employees, terminated vested Employees, retired Employees, and
Provisional Payees with any Affiliated Employer which has at such
time a pension plan with substantially the same terms as this
Plan.
Notwithstanding the above, the transferred Employee shall be
entitled to receive a benefit immediately following the transfer
of assets or liabilities to or from the Plan and Trust which is
equal to or greater than the benefit he would have been entitled
to receive immediately before the transfer if the Plan or the
pension plan maintained by the Affiliated Employer from which the
Employee transfers had been terminated. In no event shall assets
be transferred to or from the Plan and Trust without the
concurrent transfer of liabilities attributable to such assets.
In no case, however, shall any such Employee, who retires
pursuant to Section 3.1, 3.2, or 3.3 or the Provisional Payee of
a deceased Employee entitled to payment in accordance with
Article VII, receive Retirement Income attributable to Accredited
Service from both companies aggregating less than the Minimum
Retirement Income specified in Article V (after giving effect to
adjustments, if any, for Provisional Payee designation or deemed
designation), as shall be applicable in his circumstances.
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4.7 Transfers from Savannah Electric and Power Company. In
the case of the transfer to the Employer of an employee of
Savannah Electric and Power Company ("SEPCO"), such Employee, if
and when he attains his Normal Retirement Date or Deferred
Retirement Date, shall be entitled to receive Retirement Income
calculated pursuant to Section 5.1 or 5.2, as appropriate, based
upon his Accredited Service with the Employer and Accredited
Service attributable to actual service during his employment with
SEPCO. Such amount calculated in accordance with the preceding
sentence shall be reduced by the amount of retirement income
calculated under the defined benefit pension plan of SEPCO
attributable to Accredited Service during his actual service
during his employment with SEPCO. Any Retirement Income based
upon an Employee's Accredited Service with the Employer and
Accredited Service attributable to actual service during his
employment with SEPCO shall be subject to the provisions of the
Plan relating to Retirement Income payable at an Early Retirement
Date, or if such Retirement Income shall be payable in accordance
with the provisions of Section 8.2 or 8.6, subject to the
provisions of such Section.
This Section 4.7 shall also apply in calculating the
Retirement Income payable under this Plan to a former employee of
SEPCO who is hired by the Employer and is entitled to credit for
years of Accredited Service under the Plan attributable to his
actual service with SEPCO.
23
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ARTICLE V
Retirement Income
5
5.1 Normal Retirement Income. The monthly Retirement
Income payable as a single life annuity to an Employee included
in the Plan who retires from the service of the Employer at his
Normal Retirement Date after January 1, 1989, subject to the
limitations of Article VI, shall be the greater of (a) and (b):
(a) the amount determined under (1) or (2) below, whichever
is greater:
(1) the Accrued Retirement Income determined in
accordance with Section 5.1 of the Prior Plan without
regard to the Minimum Retirement Income requirement,
plus the designated fixed dollar amount times the
Employee's years of Accredited Service earned after
December 31, 1988. For the period on and after January
1, 1989 but ending December 31, 1990, the fixed dollar
amount equals $20.00. For the period on and after
January 1, 1991, the fixed dollar amount equals $25.00;
and
(2) $25.00 times an Employee's years of
Accredited Service; and
(b) the Minimum Retirement Income as determined in
accordance with Section 5.2.
5.2 Minimum Retirement Income payable upon retirement at
Normal Retirement Date or Deferred Retirement Date. The monthly
Minimum Retirement Income payable to an Employee who retires from
the service of the Employer after January 1, 1989 at his Normal
Retirement Date or Deferred Retirement Date (before adjustment
for Provisional Payee designation, if any) shall be an amount
equal to 1.70% of his Average Monthly Earnings multiplied by his
years (and fraction of a year) of Accredited Service to his
Normal Retirement Date or Deferred Retirement Date including a
Social Security Offset.
Any provisions of this Article V to the contrary
notwithstanding, Retirement Income determined in accordance with
this Article V with respect to an Employee who retires on his
Normal Retirement Date or Deferred Retirement Date shall not be
less than the Retirement Income which would have been payable
with respect to such Employee commencing on an Early Retirement
Date had (a) the Employee retired on the Early Retirement Date
which would have resulted in the greatest Retirement Income,
(b) his Retirement Income commencing on such Early Retirement
Date been computed by utilizing the estimated Federal primary
Social Security benefit to which the Employee shall be entitled
24
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determined in accordance with the Social Security Act in effect
at his retirement, giving effect to the recomputation provision
of such Social Security Act, if applicable, and (c) such
Retirement Income commencing on such Early Retirement Date been
payable in the same form as his Retirement Income commencing on
his Normal Retirement Date or Deferred Retirement Date.
5.3 Minimum Retirement Income upon retirement at Early
Retirement Date or upon termination of service by reason of death
or otherwise prior to retirement. The monthly Minimum Retirement
Income payable to an Employee (or his Provisional Payee), if he
shall retire on his Early Retirement Date, or if his service
shall terminate by reason of death or otherwise prior to
retirement, shall be determined in accordance with the following
provisions:
(a) Upon retirement at Early Retirement Date his Minimum
Retirement Income (before adjustment for Provisional Payee
designation, if any) shall be an amount equal to 1.70% of his
Average Monthly Earnings multiplied by his years (and fraction of
a year) of Accredited Service to his Early Retirement Date
including a Social Security Offset.
(b) Upon termination of service by reason of the death of
the Employee prior to retirement and after the effective date of
his Provisional Payee designation or deemed designation, the
Minimum Retirement Income for the purpose of determining the
Employee's Accrued Retirement Income upon which payment to his
Provisional Payee in accordance with Section 7.4 shall be based
shall be an amount equal to 1.70% of the Employee's Average
Monthly Earnings multiplied by his years (and fraction of a year)
of Accredited Service to the date of his death including a Social
Security Offset.
(c) For an Employee who terminates his service with the
Employer with entitlement to receive Retirement Income in
accordance with Section 8.1, upon retirement at Early Retirement
Date or Normal Retirement Date his Minimum Retirement Income
(before adjustment for Provisional Payee designation, if any)
shall be an amount equal to 1.70% of his Average Monthly Earnings
multiplied by his years (and fraction of a year) of Accredited
Service to his date of termination including a Social Security
Offset.
(d) Upon termination of service by reason of disability (as
defined in Section 4.4) of the Employee prior to retirement,
provided such Employee does not return to the service of the
Employer prior to his Retirement Date, the Minimum Retirement
Income shall be an amount equal to 1.70% of the Employee's
Average Monthly Earnings multiplied by his years (and fraction of
a year) of Accredited Service to his Retirement Date including a
Social Security Offset.
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5.4 Calculation of Social Security Offset.
(a) Notwithstanding the Social Security Offset as
calculated in Sections 5.2 and 5.3, in no event shall such Social
Security Offset exceed the limits set forth in Section 401(l) of
the Code and the regulations applicable thereunder which are
incorporated by reference herein.
(b) For purposes of determining the Social Security Offset
in calculating an Employee's Retirement Income under the Plan,
the Social Security Offset shall be determined by using the
actual salary history of the Employee during his employment with
the Employer or any Affiliated Employer, provided that in the
event that the Retirement Board is unable to secure such actual
salary history within 180 days (or such longer period as may be
prescribed by the Retirement Board) following the later of the
date of the Employee's separation from service (by retirement or
otherwise) and the time when the Employee is notified of the
Retirement Income to which he is entitled, the salary history
shall be determined in the following manner:
(1) The salary history shall be estimated by applying
a salary scale, projected backwards, to the Employee's
compensation from the Employer for W-2 purposes for the
first Plan Year following the most recent Plan Year for
which the salary history is estimated. The salary scale
shall be a level percentage per year equal to six percent
(6%) per annum.
(2) The Plan shall give clear written notice to each
Employee of the Employee's right to supply the actual salary
history and of the financial consequences of failing to
supply such history. Such notice shall state that the
actual salary history is available from the Social Security
Administration.
For purposes of determining the Social Security Offset in
calculating the Retirement Income of an Employee entitled to
receive a public pension based on his employment with a Federal,
state, or local government agency, no reduction in such
Employee's Social Security benefit resulting from the receipt of
a public pension shall be recognized.
(c) If the distribution of an Employee's Accrued Retirement
Income begins before the Employee's attainment of the Social
Security Retirement Age (including a benefit commencing at Normal
Retirement Date), the projected Employer derived primary
insurance amount attributable to service by the Employee for the
Employer will be reduced by one-fifteenth (1/15) for each of the
first five (5) years and one-thirtieth (1/30) for each of the
next five (5) years by which the starting date of such benefit
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precedes the Social Security Retirement Age of the Employee, and
reduced actuarially for each additional year thereafter.
5.5 Early Retirement Income. The monthly amount of
Retirement Income payable to an Employee who retires from the
service of the Employer at his Early Retirement Date subject to
the limitations of Section 6.2, will be equal to his Retirement
Income determined in accordance with Sections 5.1 and 5.3 based
on his Accredited Service to his Early Retirement Date, reduced
by three-tenths of one percent (0.3%) for each calendar month by
which the commencement date of his Retirement Income precedes his
Normal Retirement Date.
At the option of the Employee exercised at or prior to
commencement of his Retirement Income on or after his Early
Retirement Date (provided he shall not have in effect at such
Early Retirement Date a Provisional Payee designation pursuant to
Article VII) he may have his Retirement Income adjusted upwards
in an amount which will make his Retirement Income payable up to
age sixty-five (65) equal, as nearly as may be, to the amount of
his Federal primary Social Security benefit (primary old age
insurance benefit) estimated to become payable after age
sixty-five (65), as computed at the time of his retirement in
accordance with Section 5.3(a), plus a reduced amount, if any, of
Retirement Income actually determined to be payable after age
sixty-five (65). The Federal primary Social Security benefit
used in calculating an Employee's Retirement Income payable under
the Plan shall be determined by using the salary history of the
Employee during his employment with the Employer or any
Affiliated Employer, as calculated in accordance with Section
5.4(b).
5.6 Deferred Retirement Income. The monthly amount of
Retirement Income payable to an Employee who completes at least
one Hour of Service after December 31, 1987 and who retires from
the service of the Employer at his Deferred Retirement Date,
subject to the limitations of Section 6.2, will be equal to his
Retirement Income determined in accordance with Sections 5.1 and
5.2 based on his Accredited Service to his Deferred Retirement
Date. For Employees whose Normal Retirement Date would have
occurred on or before January 1, 1986, but whose Deferred
Retirement Date occurs after January 1, 1988 and on or before
July 1, 1991, the monthly amount of Retirement Income payable to
an Employee who completes at least one Hour of Service after
December 31, 1987, subject to the limitations of Section 6.2,
will be equal to the greater of (a) his Retirement Income
calculated on his Deferred Retirement Date, or (b) his Retirement
Income calculated as of his Normal Retirement Date applying the
applicable percentage increase in his Retirement Income pursuant
to the terms of Section 5.13 of the Prior Plan.
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5.7 Payment of Retirement Income. The first payment of an
Employee's Retirement Income will be made on his Early Retirement
Date, Normal Retirement Date, Deferred Retirement Date, or date
of commencement of payment of Retirement Income in accordance
with Section 8.2 or 8.6, as the case may be; provided that
commencement of the distribution of an Employee's Retirement
Income shall not be made prior to his Normal Retirement Date
without the consent of such Employee, except as provided in
Section 8.4 of the Plan.
Notwithstanding anything to the contrary above, if in
accordance with this Section 5.7, an Employee is entitled to
receive Retirement Income commencing at his Early Retirement
Date, he may, in lieu of commencing payment of his Retirement
Income upon his Early Retirement Date, elect to receive such
Retirement Income commencing as of the first day of any month
after his Early Retirement Date and preceding his Normal
Retirement Date in an amount equal to his Accrued Retirement
Income determined as of the commencement of his Retirement Income
on or after his Early Retirement Date determined in accordance
with Section 5.5. An election pursuant to this Section 5.7 to
have Retirement Income commence prior to Normal Retirement Date
shall be made on a form prescribed by the Retirement Board and
shall be filed with the Retirement Board at least thirty (30)
days before Retirement Income is to commence.
In the event of the death of an Employee who has designated
a Provisional Payee or is deemed to have done so in accordance
with Article VII, if the designation has become effective, the
first payment to be made to the Provisional Payee pursuant to
Article VII shall be made to the Provisional Payee on the first
day of the month after the later of (a) the Employee's death and
(b) the date on which the Employee would have attained his fifty-
fifth (55th) birthday if he had survived to such date, if the
Provisional Payee shall then be alive and proof of the Employee's
death satisfactory to the Retirement Board shall have been
received by it. Subsequent payments will be made monthly
thereafter until the death of such Provisional Payee.
In any event, payment of Retirement Income to the Employee
shall begin not later than the sixtieth (60th) day after the
later of the close of the Plan Year in which falls (a) the
Employee's Normal Retirement Date or (b) the date the Employee
terminates his service with the Employer or any Affiliated
Employer. Notwithstanding the provisions of the Plan for the
monthly payment of Retirement Income, such income may be adjusted
and payable annually in arrears if the amount of the Retirement
Income is less than $10.00 per month.
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5.8 Termination of Retirement Income. The monthly payment
of Retirement Income will cease with the last payment preceding
the retired Employee's death; subject, however, to the
continuation of payments to a surviving Provisional Payee, if one
has been designated or deemed to have been designated, which
likewise will cease with the last payment preceding the death of
the Provisional Payee. There shall be no benefits payable under
the Plan on behalf of any Employee whose death occurs prior to
his retirement, except as otherwise provided in Article VII with
respect to a Provisional Payee of an Employee. Following the
death of an Employee and of his Provisional Payee, if any, no
further payments will be made under the Plan on account of such
Employee or to his estate.
5.9 Required distributions.
(a) Once a written claim for benefits is filed with the
Retirement Board and unless the Employee elects to have payment
begin at a later date, payment of benefits to the Employee shall
begin not later than sixty (60) days after the last day of the
Plan Year in which the latest of the following events occurs:
(1) the Employee's Normal Retirement Date;
(2) the tenth (10th) anniversary of the date the
Employee commenced participation in the Plan; or
(3) the Employee's separation from service from the
Employer or any Affiliated Employer.
(b) Required minimum distributions on and after January 1,
1989
(1) Subject to the transitional rules described in
Paragraph (c) below, effective for calendar years beginning
after December 31, 1988, the payment of Retirement Income to
any Employee shall begin no later than April 1 of the
calendar year following the calendar year in which the
Employee attains age 70-1/2, without regard to the actual
date of separation from service. The amount of his
Retirement Income shall be recomputed as of such April 1 and
as of the close of each Plan Year after his Retirement
Income commences and preceding his actual retirement date as
if each such date were the Employee's Deferred Retirement
Date. Any additional Retirement Income he accrues at the
close of any such Plan Year shall be offset (but not below
zero) by the value of the benefit payments received in such
Plan Year.
(2) The receipt by an Employee of any payments or
distributions as a result of his attaining age 70-1/2 prior
to his actual retirement or death shall in no way affect the
29
<PAGE>
entitlement of an otherwise eligible Employee to additional
accrued benefits.
(c) Age 70-1/2 transitional rule
Any Employee who is not a five-percent owner and who has
attained age 70-1/2 by January 1, 1988, may defer the
commencement of benefit payments under paragraph (b) above until
he actually separates from service with the Employer. This
transitional rule shall only apply if the Employee is not a five-
percent owner at any time during the Plan Year ending with or
within the calendar year in which such owner attains age 66-1/2
and in any subsequent Plan Year.
(d) Distribution upon death of Employee
(1) Death after commencement of benefits
If the Employee dies before his entire nonforfeitable
interest has been distributed to him, the remaining portion
of such interest shall be distributed at least as rapidly as
under the method of distribution selected by the Employee as
of the date of his death.
(2) Death prior to commencement of benefits
If the Employee dies before the distribution of his
nonforfeitable interest has begun, the entire interest shall
be distributed monthly to his Provisional Payee, if any,
over such Provisional Payee's remaining lifetime.
(e) Determining required minimum distributions
Notwithstanding anything in this Plan to the contrary, all
distributions, including the minimum amounts which must be
distributed each calendar year, under this Plan shall be made in
accordance with Code Section 401(a)(9) and the regulations
thereunder.
(f) Minimum distribution transitional rules
Any distribution made pursuant to Section 242(b)(2) of the
Tax Equity and Fiscal Responsibility Act of 1982 shall meet the
requirements of Code Section 401(a)(9) as in effect on December
31, 1983, and shall also satisfy Code Sections 401(a)(11) and
417.
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5.10 Suspension of Retirement Income for reemployment.
(a) If a former Employee who is receiving Retirement Income
shall be reemployed by the Employer or any Affiliated Employer as
an Employee and shall not elect to waive his right to participate
under the Plan or the pension plan of the Affiliated Employer,
whichever applies, his Retirement Income shall cease during each
calendar month after his reemployment in which he completes forty
(40) or more Hours of Service. The Retirement Income payable
upon his subsequent retirement shall be reduced by the Actuarial
Equivalent of any Retirement Income he received prior to his
reemployment.
(b) No payment shall be withheld by the Plan pursuant to
this Section 5.10 unless the Plan notifies the Employee by
personal delivery or first class mail during the first calendar
month in which the Plan withholds payments that his Retirement
Income is suspended.
(c) If the payment of Retirement Income has been suspended,
payments shall resume no later than the first day of the third
calendar month after the calendar month in which the Employee
ceases to be employed in ERISA Section 203(a)(3)(B) service. The
initial payment upon resumption shall include the payment
scheduled to occur in the calendar month when payments resume and
any amounts withheld during the period between the cessation of
ERISA Section 203(a)(3)(B) service and the resumption of
payments.
5.11 Increase in Retirement Income of retired Employees for
service prior to January 1, 1991. Retirement Income payable on
and after January 1, 1991 to an Employee (or to the Provisional
Payee of an Employee) who retired at an Early Retirement Date or
at his Normal Retirement Date on or before January 1, 1991
pursuant to the Plan as in effect prior to January 1, 1991, or to
the plan of Southern, will be recalculated to increase the amount
thereof by an amount ranging from a minimum of two percent (2%)
to a maximum of forty percent (40%) in accordance with the
following schedule:
Year in which Percentage
retirement occurred increase
1990 2%
1989 4%
1988 6%
1987 8%
1976 - 1986 10%
1971 - 1975 20%
1966 - 1970 30%
1965 and prior years 40%
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A similar adjustment, based on the date of the commencement
of Retirement Income payments to the Employee's Provisional
Payee, rather than the Employee's Retirement Date, will be made
in respect of Retirement Income which is payable on or after
January 1, 1991 where a Provisional Payee election was in effect,
or was deemed to be in effect, when an Employee died while in
service prior to January 1, 1991 and prior to his retirement.
A similar adjustment will be made in respect of Retirement
Income which is payable on or after January 1, 1991 for an
Employee (or the Provisional Payee of an Employee) entitled to
Retirement Income for which payments have commenced on or before
January 1, 1991 in accordance with Article VIII of the Prior
Plan, except for Employees whose Retirement Income has been
cashed-out pursuant to Section 8.4 of this Plan or Section 8.5 of
the Prior Plan.
For purposes of determining the applicable percentage
increase under this Section 5.11, the year of retirement includes
retirement where the last day of employment was December 31 of
such year. An Employee whose Deferred Retirement Date is on or
before January 1, 1988 and who did not retire at his Normal
Retirement Date shall be deemed to have retired at his Normal
Retirement Date for purposes of determining the increase in his
Retirement Income payable at his Deferred Retirement Date.
This Section 5.11 shall not apply with respect to an
Employee who has not retired, but for whom the distribution of
Retirement Income has commenced pursuant to Section 5.9 of the
Plan.
5.12 Special provisions relating to the treatment of
absence of an Employee from the service of the Employer to serve
in the Armed Forces of the United States.
(a) Effective as of November 1, 1977, any provisions of the
Plan to the contrary notwithstanding, the provisions of this
Section 5.12 shall be applicable to determine the period of
absence from the service of the Employer to serve in the Armed
Forces of the United States of a "participant in the Plan" (as
such term is defined in this paragraph (a)):
The term "participant in the Plan" means a person who on or
after November 1, 1977 is either: (1) an Employee who is then or
thereafter in the service of the Employer (including an Employee
on authorized leave of absence), (2) a retired Employee who is
receiving Retirement Income, (3) a deceased Employee who received
Retirement Income under this Plan or the Prior Plan at any time
after its Effective Date, (4) a deceased former Employee who
prior to the time of his death was receiving Retirement Income in
accordance with this Plan or the Prior Plan, (5) a former
Employee whose service terminated prior to January 1, 1976 and
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<PAGE>
who is receiving Retirement Income in accordance with the Prior
Plan, (6) a former Employee whose service terminated prior to
November 1, 1977 and who will be entitled to receive Retirement
Income commencing after that date in accordance with this Plan or
the Prior Plan, or (7) a former Employee who was transferred from
the Employer pursuant to Section 4.6 or pursuant to the Prior
Plan and who will be entitled to receive in accordance with
either, Retirement Income commencing after November 1, 1977.
The Employee or former Employee or retired Employee referred
to in this paragraph (a) is one who: (1) left the employment of
the Employer or of Commonwealth Services, Inc. (formerly known as
The Commonwealth & Southern Corporation (New York)
("Commonwealth")) or of The Southern Company ("Southern") to
enter the Armed Forces of the United States (including reserve
components thereof, the Public Health Service, and the National
Guard) for the purposes and under circumstances which are
specified in the reemployment provisions of the Military
Selective Service Act and in any amendments or supplements
thereto hereinafter in this Section 5.12 referred to as the
"Selective Service Act," (2) made application for reemployment by
the Employer or by Commonwealth or Southern within such time
after discharge or release from such service in the Armed Forces
of the United States as is specified in the reemployment
provisions of the Selective Service Act as is applicable in his
circumstances and was reemployed by the Employer or by Southern
or by Commonwealth and if by Commonwealth thereafter became an
Employee of Southern or of the Employer, (3) served a period of
active duty in the Armed Forces of the United States which did
not exceed the maximum period of such active duty specified in
the reemployment provisions of the Selective Service Act as is
applicable in his circumstances, and (4) performed such service
in the Armed Forces after May 1, 1940.
(b) For the purposes of the Plan, the period of absence of
a participant in the Plan to serve in the Armed Forces of the
United States shall be the period determined by the Retirement
Board.
(c) In accordance with the provisions of the Plan as
amended effective as of November 1, 1977 by the addition of this
Section 5.12 and the concurrent amendments associated therewith,
there shall be recalculated effective as of November 1, 1977 the
Retirement Income (1) of each participant in the Plan or that of
his Provisional Payee, if any, who is then receiving Retirement
Income; and (2) of each deceased participant in the Plan and his
deceased Provisional Payee, if any, who received payment of
Retirement Income, who is not then receiving Retirement Income.
(1) If in accordance with such recalculation, a larger
amount of Retirement Income would have been payable to a
participant in the Plan who is currently receiving payment
33
<PAGE>
of Retirement Income and/or to his Provisional Payee, if
any, than was paid to them respectively prior to November 1,
1977, payment in a single sum of the excess of the
recalculated amount over the amounts which were paid prior
to November 1, 1977 with interest thereon as hereinafter
provided, shall be made as soon as practicable after
November 1, 1977 and, commencing as soon as practicable
after November 1, 1977, the Retirement Income payable to
participants in the Plan and/or to their Provisional Payees,
if any, who are currently receiving Retirement Income shall
be increased to an amount which is equal to the larger
recalculated amount to which they shall be entitled in
respect of payments to be made on or after November 1, 1977.
(2) If in accordance with the recalculation a larger
amount of Retirement Income would have been payable to the
date of death prior to November 1, 1977 of a deceased
retired Employee or his Provisional Payee than was paid
prior to his death, payment in a single sum of the excess of
the recalculated amount over the amount which was paid prior
to the date of death, with interest thereon as hereinafter
provided, shall be made to his estate as soon as practicable
after November 1, 1977.
(3) For the purposes of the recalculation to be made
in accordance with this paragraph (c), if a participant in
the Plan left the employment of an Affiliated Employer to
enter the Armed Forces of the United States and was not
reemployed by such Affiliated Employer upon his discharge or
release from service in the Armed Forces but he entered the
employment of the Employer, without intermediate employment,
and within the time prescribed in paragraph (a) of this
Section 5.12, and his period of absence in the Armed Forces
of the United States, as determined by the Retirement Board,
is not taken into account under the pension plan of the
Affiliated Employer whose service he left to enter the Armed
Forces or under Section 4.3, it shall be treated under the
Plan and the Prior Plan as if such period of absence had
been a period of absence from the Employer.
(d) Retirement Income of participants in the Plan who are
not referred to in subparagraphs (1) or (2) of paragraph (c) and
who are not on November 1, 1977 receiving Retirement Income shall
be determined in accordance with the provisions of the Plan as
amended by the addition of this Section 5.12 and the concurrent
amendments associated therewith.
(e) Interest to be paid on any single sum payment to be
made in accordance with subparagraphs (1) or (2) of paragraph (c)
of this Section 5.12 shall be computed at the annual rate of five
percent (5%).
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<PAGE>
(f) Payment to be made to any payee in accordance with this
Section 5.12 may be conditioned by the Retirement Board upon its
receipt of (1) such information pertaining to absence of an
Employee or former Employee to serve in the Armed Forces of the
United States as it may request and (2) such form of receipt and
release as it may determine to be appropriate in the
circumstances.
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ARTICLE VI
Limitations on Benefits
6
6.1 Maximum Retirement Income. Notwithstanding any other
provision of the Plan, the amount of Retirement Income shall be
subject to the provisions of Article VI.
(a) The maximum annual amount of Retirement Income payable
with respect to an Employee in the form of a straight life
annuity without any ancillary benefits after any adjustment for a
Provisional Payee designation shall be the lesser of the dollar
limitation determined under Code Section 415(b)(1)(A) as adjusted
under Code Section 415(d), or Code Section 415(b)(1)(B) as
adjusted under Treasury Regulation Section 1.415-5, subject to
the following provisions of Article VI. With respect to any
former Employee who has Accrued Retirement Income under the Plan
or his Provisional Payee, the maximum annual amount shall also be
subject to the adjustment under Code Section 415(d).
(b) For purposes of Section 6.1, the term "average
compensation for his high three (3) years" shall mean the period
of consecutive calendar years (not more than three) during which
the Employee was both an active participant in the Plan and had
the greatest aggregate compensation from the Employer or, if he
is also entitled to receive a pension from a defined benefit plan
of an Affiliated Employer or if assets and liabilities
attributable to the pension of the Employee from a defined
benefit plan of an Affiliated Employer have been transferred to
this Plan, the greatest aggregate compensation from the Employer
and the Affiliated Employer during such high three (3) years.
The limitation described in Section 6.1(a) shall also apply in
the case of the payment of an Employee's Retirement Income with a
Provisional Payee designation.
(c) For purposes of Article VI, the term "compensation"
means an Employee's earned income, wages, salaries, and fees for
professional services, and other amounts received for personal
services actually rendered in the course of employment with the
Employer maintaining the Plan (including, but not limited to,
commissions paid salesmen, compensation for services on the basis
of a percentage of profits, commissions on insurance premiums,
tips and bonuses), and excluding the following:
(1) Employer contributions to a plan of deferred
compensation which are not included in the Employee's gross
income for the taxable year in which contributed or Employer
contributions under a simplified employee pension plan to
the extent such contributions are deductible by the
Employee, or any distributions from a plan of deferred
compensation;
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<PAGE>
(2) Amounts realized from the exercise of a
nonqualified stock option, or when restricted stock (or
property) held by the Employee either becomes freely
transferable or is no longer subject to a substantial risk
of forfeiture;
(3) Amounts realized from the sale, exchange, or other
disposition of stock acquired under a qualified stock
option; and
(4) Other amounts which received special tax benefits,
or contributions made by the Employer (whether or not under
a salary reduction agreement) towards the purchase of an
annuity described in Section 403(b) of the Code (whether or
not the amounts are actually excludable from the gross
income of the Employee).
Compensation for any Limitation Year is the compensation actually
paid or includible in gross income during such year.
(d) The foregoing limitations regarding the maximum
Retirement Income shall not apply with respect to an Employee if
the Retirement Income payable under the Plan and under any other
defined benefit plans of the Employer or any Affiliated Employer
does not exceed $10,000 for the calendar year or for any prior
calendar year, and the Employer and any Affiliated Employer has
not at any time maintained a defined contribution plan in which
the Employee has participated. The terms "defined benefit plan"
and "defined contribution plan" shall have the meanings set forth
in Section 415(k) of the Code.
6.2 Adjustment to Defined Benefit Dollar Limitation for
Early or Deferred Retirement.
(a) If the retirement benefit of an Employee commences
before the Employee's Social Security Retirement Age, the Defined
Benefit Dollar Limitation shall be reduced in accordance with
Code Section 415(b)(2)(C) as prescribed by the Secretary of the
Treasury. The reduction shall be made in such manner as the
Secretary of the Treasury may prescribe which is consistent with
the reduction for old-age insurance benefits commencing before
the Social Security Retirement Age under the Social Security Act.
(b) If the retirement benefit of an Employee commences
after the Employee's Social Security Retirement Age, the Defined
Benefit Dollar Limitation shall be adjusted in accordance with
Code Section 415(b)(2)(D) as prescribed by the Secretary of the
Treasury, based on the lesser of the interest rate assumption
under the Plan or on an assumption of five percent (5%) per year.
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6.3 Adjustment of limitation for Years of Service or
participation.
(a) If an Employee has completed less than ten (10) years
of participation, the Employee's accrued benefit shall not exceed
the Defined Benefit Dollar Limitation as adjusted by multiplying
such amount by a fraction, the numerator of which is the
Employee's number of years (or part thereof) of participation in
the Plan, and the denominator of which is ten (10).
(b) If an Employee has completed less than ten (10) Years
of Service with the Employer and any Affiliated Employer, the
limitations described in Sections 415(b)(1)(B), 415(b)(4), and
415(e) of the Code shall be adjusted by multiplying such amounts
by a fraction, the numerator of which is the Employee's number of
years of service (or part thereof), and the denominator of which
is ten (10).
(c) In no event shall Sections 6.3(a) and (b) reduce the
limitations provided under Sections 415(b)(1), 415(b)(4), and
415(e) of the Code to an amount less than one-tenth (1/10) of the
applicable limitation (as determined without regard to this
Section 6.3).
(d) This Section 6.3 shall be applied separately with
respect to each change in the benefit structure of the Plan,
except as is or may be limited by Revenue Procedure 92-42.
6.4 Preservation of Accrued Retirement Income.
(a) Retirement Income payable to an Employee or former
Employee who was an active participant in the Plan before
October 3, 1973 will not be deemed to exceed the amount of
maximum Retirement Income limitations imposed by the provisions
of this Article VI if:
(1) The annual amount of Retirement Income payable to
such Employee on retirement does not exceed 100% of his
annual rate of compensation on the earlier of (A) October 2,
1973, or (B) the date on which he separated from the service
of the Employer;
(2) Such annual Retirement Income is not greater than
the annual amount of Retirement Income which would have been
payable to such Employee on retirement if (A) all terms and
conditions of the Plan in existence on his retirement date
had remained in existence until his retirement and (B) his
compensation taken into account for any period after
October 2, 1973 had not exceeded his annual rate of
compensation on October 2, 1973; and
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(3) In the case of an Employee whose service with the
Employer terminated prior to October 2, 1973, such annual
Retirement Income is no greater than his vested Accrued
Retirement Income as of the date of such termination of
service.
(b) In the case of an Employee who is a participant in the
Plan prior to January 1, 1983, if the Section 415 requirements
have been met for all Plan Years prior to 1983, then the Defined
Benefit Dollar Limitation described in Section 1.10 applicable to
the payment of such Employee's Retirement Income shall be equal
to his Accrued Retirement Income as of December 31, 1982, (when
expressed as an annual benefit within the meaning of Section
415(b)(2) of the Code, as in effect prior to the Tax Equity and
Fiscal Responsibility Act of 1982), if his Accrued Retirement
Income exceeds such Defined Benefit Dollar Limitation.
(c) This Section 6.4(c) shall apply to defined benefit
plans that were in existence on May 6, 1986, and that met the
applicable requirements of Section 415 of the Code as in effect
for all Limitation Years. If the Current Accrued Retirement
Income of an Employee as of the first day of the Limitation Year
beginning on or after January 1, 1987, exceeds the benefit
limitations under Section 415(b) of the Code (as modified by
Sections 6.2 and 6.3 of the Plan), then, for purposes of Code
Section 415(b) and (e), the Defined Benefit Dollar Limitation
with respect to such Employee shall be equal to such Current
Accrued Retirement Income.
6.5 Limitation on benefits from multiple plans.
(a) In the case of an Employee who is also a participant in
any other defined benefit plan of the Employer or any Affiliated
Employer or in any defined contribution plan of the Employer or
any Affiliated Employer, the Retirement Income provided by the
Plan shall be limited to the extent necessary to prevent the sum
of Fractions A and B below, computed as of the end of the Plan
Year, from exceeding 1.0.
Fraction A
(numerator) Projected annual benefit of the Employee
under the Plan and any other defined benefit plan of
the Employer or any Affiliated Employer (determined as
of the close of the Plan Year).
(denominator) The lesser of (1) the product of 1.25
multiplied by the Defined Benefit Dollar Limitation (or
such higher accrued benefit as of December 31, 1982),
or (2) 1.4 multiplied by the amount determined under
Code Section 415(b)(1)(B) as adjusted under Treasury
Regulation Section 1.415-5.
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Fraction B
(numerator) The sum of all Annual Additions to the
account of the Employee under any defined contribution
plan of the Employer or any Affiliated Employer as of
the close of the Plan Year.
(denominator) The sum of the lesser of the following
amounts, determined for such Plan Year and for each
prior Plan Year in which the Employee has a Year of
Service, (1) 1.25 multiplied by the Defined
Contribution Dollar Limitation determined under Code
Section 415(c)(1)(A), or (2) 1.4 multiplied by
twenty-five percent (25%) of the Employee's
compensation for the year.
6.6 Special rules for plans subject to overall limitations
under Code Section 415(e).
(a) For purposes of computing the defined contribution plan
fraction of Section 415(e)(1) of the Code, "Annual Addition"
shall mean the amount allocated to an Employee's account during
the Limitation Year as a result of:
(1) employer contributions,
(2) employee contributions,
(3) forfeitures, and
(4) amounts described in Sections 415(1)(1) and
419(A)(d)(2) of the Code.
(b) The Annual Addition for any Limitation Year beginning
before January 1, 1987 shall not be recomputed to treat all
Employee contributions as an Annual Addition.
(c) If the sum of Fractions A and B exceeds 1.0 as of
December 31, 1982, the numerator of Fraction B shall be reduced
by an amount which does not exceed the numerator, so that the sum
of Fraction A and Fraction B does not exceed 1.0.
(d) If the Plan satisfied the applicable requirements of
Section 415 of the Code as in effect for all Limitation Years
beginning before January 1, 1987, an amount shall be subtracted
from the numerator of the defined contribution plan fraction (not
exceeding such numerator) as prescribed by the Secretary of the
Treasury so that the sum of the defined benefit plan fraction and
defined contribution plan fraction computed under Section
415(e)(1) of the Code (as revised by this Article VI) does not
exceed 1.0 for such Limitation Year.
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(e) The defined contribution plans and the other defined
benefit plans of the Employer and Affiliated Employers include,
respectively, (1) The Southern Company Employee Savings Plan, The
Southern Company Employee Stock Ownership Plan, and any other
defined contribution plan (as defined in Section 415(k) of the
Code) and (2) any other qualified pension plan in which the
Employee participates in accruing benefits maintained by the
Employer or any Affiliated Employer.
6.7 Combination of Plans. Notwithstanding any provisions
contained herein to the contrary, in the event that an Employee
participates in a defined contribution plan or defined benefit
plan required to be aggregated with this Plan under Code Section
415(g) and the combined benefits with respect to an Employee
exceed the limitations contained in Code Section 415(e),
corrective adjustments shall first be made under this Plan.
However, if an Employee's Retirement Income under this Plan has
already commenced, corrections shall first be made under The
Southern Company Employee Stock Ownership Plan, if possible, and
if not possible, then correction shall be made to the Employee's
Accrued Retirement Income under this Plan.
6.8 Incorporation of Code Section 415. Notwithstanding
anything contained in this Article to the contrary, the
limitations, adjustments and other requirements prescribed in
this Article shall at all times comply with the provisions of
Code Section 415 and the regulations thereunder, the terms of
which are specifically incorporated herein by reference.
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ARTICLE VII
Provisional Payee
7
7.1 Adjustment of Retirement Income to provide for payment
to Provisional Payee. An Employee who desires to have his
Accrued Retirement Income adjusted in accordance with the
provisions of this Article VII to provide a reduced amount of
Retirement Income payable to him for his lifetime commencing on
his Early Retirement Date, his Normal Retirement Date, or his
Deferred Retirement Date, as the case may be, may elect, in
accordance with the provisions of this Article VII, at his
option, either:
(a) that an amount of Retirement Income be payable to him
for his lifetime which is equal to eighty percent (80%) of the
Retirement Income which would otherwise be payable to him, but
for such election (taking into account any reduction required in
accordance with Sections 7.3 and 7.4(a)), with the provision that
the same amount will be continued after his death to his
Provisional Payee until the death of such Provisional Payee, or
(b) that an amount of Retirement Income be payable to him
for his lifetime which is equal to ninety percent (90%) of the
Retirement Income which would otherwise be payable to him, but
for such election (taking into account any reduction required in
accordance with Sections 7.3 and 7.4(a)), with the provision that
one-half (1/2) of the amount payable to the Employee will be
continued after his death to his Provisional Payee until the
death of such Provisional Payee.
7.2 Form and time of election and notice requirements.
(a) An election of payment and designation of a Provisional
Payee in accordance with Section 7.1 shall be made in writing at
the same time on a form prescribed by the Retirement Board and
delivered to it. The election and designation shall specify its
effective date which shall not be sooner than the date received
by the Retirement Board or the Employee's fifty-fifth (55th)
birthday, whichever is later, nor later than the date of
commencement of payments in accordance with this Article VII.
(b) An election of payment to be made in accordance with
paragraph (a) or paragraph (b) of Section 7.1 may be changed from
paragraph (a) to paragraph (b) or vice versa by an Employee,
provided the written election of the change specifies an
effective date which shall not be sooner than the date received
by the Retirement Board or the Employee's fifty-fifth (55th)
birthday, whichever is later, nor later than the date of
commencement of payments in accordance with this Article VII. To
the extent that the new method of payment shall afford the
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Employee changed protection in the event of his death after the
effective date of the new election and prior to retirement, his
Accrued Retirement Income shall be adjusted pursuant to Section
7.4(a) to reflect such changed protection.
(c) With respect to Sections 7.5 and 7.6, within the period
not less than 30 days and not more than 90 days prior to the
commencement of benefits, the Employee shall be furnished, by
mail or personal delivery, a written explanation of: (1) the
terms and conditions of the reduced Retirement Income payable as
provided in paragraph (b) of Section 7.1; (2) the Employee's
right to make, and the effect of, an election to waive the
payment of reduced Retirement Income pursuant to a Provisional
Payee designation; (3) the rights of the Employee's Provisional
Payee; and (4) the right to make, and the effect of, a revocation
of a previous election to waive the payment of reduced Retirement
Income pursuant to a Provisional Payee designation.
Within thirty (30) days following an Employee's written
request received by the Retirement Board during the election
period, but within sixty (60) days from the date the Employee is
furnished all of the information prescribed in the immediately
preceding sentence, the Employee shall be furnished an additional
written explanation, in terms of dollar amounts, of the financial
effect of an election by him not to receive such reduced
Retirement Income. If an Employee makes such request, the
election period herein prescribed shall end not earlier than
sixty (60) calendar days following the day of the mailing or
personal delivery of the additional explanation to the Employee.
Except that if an election made as provided in Section 7.5 or 7.6
is revoked, another election under that Section may be made
during the specified election period.
7.3 Circumstances in which election and designation are
inoperative. An election and designation made pursuant to this
Article shall be inoperative and the regular provisions of the
Plan shall again become applicable as if a Provisional Payee had
not been designated if, prior to the commencement of any payment
in accordance with this Article VII: (a) an Employee's
Provisional Payee shall die, (b) the Employee and the Provisional
Payee shall be divorced under a final decree of divorce, or
(c) the Retirement Board shall have received the written
Qualified Election of the Employee to rescind his election of
payment and designation of a Provisional Payee. If such a
Qualified Election to rescind is made by the Employee, his
Accrued Retirement Income shall be reduced to reflect the
protection afforded the Employee by any Provisional Payee
designation during the period from its effective date to the date
of the Retirement Board's receipt of the Employee's Qualified
Election to rescind if the option as to payments of reduced
Retirement Income was in accordance with either Section 7.1(a),
7.6(a), or 7.6(b). If an Employee remarries subsequent to the
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death or divorce of his Provisional Payee and prior to the
commencement of payments in accordance with this Article VII, and
if such Employee is married prior to the time of the commencement
of payments, then he shall be entitled to designate a new
Provisional Payee in the manner set forth in Section 7.2.
7.4 Pre-retirement death benefit. If prior to his Normal
Retirement Date (or his Deferred Retirement Date, if applicable),
an Employee shall die while in the service of the Employer and is
survived by his spouse to whom he shall be married at the time of
his death, there shall be payable to his surviving spouse (whom
he shall be deemed to have designated as his Provisional Payee)
Retirement Income determined in accordance with paragraph (a) or
paragraph (c) of this Section 7.4, as applicable. Such
Retirement Income shall commence on the first day of the month
following the death of the Employee or the first day of the month
following the date on which he would have attained his
fifty-fifth (55th) birthday if he were still alive, whichever is
later, and shall cease with the last payment preceding the death
of his Provisional Payee.
(a) The amount of Retirement Income payable to the
Provisional Payee of a deceased Employee who prior to his death
had attained his fifty-fifth (55th) birthday shall be equal to
the amount payable to the Provisional Payee as calculated in
Section 7.1(b) determined on the basis of his Accredited Service
to the date of his death, or if the Employee shall have attained
his fifty-fifth (55th) birthday and so elected prior to his
death, such Retirement Income shall be equal to the amount set
forth in Section 7.1(a) determined on the basis of his Accredited
Service to the date of his death reduced as provided in the next
sentence. If such election shall be made by the Employee, the
Retirement Income which shall be payable to the Employee if he
lives to his Early Retirement Date or the first day of the month
following his attainment of age sixty-five (65), if later, shall
be reduced by three-fourths of one percent (0.75%) for each year
(prorated for a fraction of a year from the first day of the
month following the effective date of the election) which has
elapsed from the effective date of his election to the earlier of
(1) the commencement of Retirement Income on or after his Early
Retirement Date or the first day of the month following his
attainment of age sixty-five (65), if later, or (2) the
revocation of such election. If he shall die before the
commencement of Retirement Income on or after his Early
Retirement Date or the first day of the month following his
attainment of age sixty-five (65), if later, his Accrued
Retirement Income to the date of his death shall be reduced by
three-quarters of one percent (0.75%) for each year (prorated for
a fraction of a year from the first day of the month following
the effective date of the election) between the effective date of
his election and the first day of the month following his
attainment of age sixty-five (65). No reduction in the
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Employee's Retirement Income shall be made for the period during
which the election is in effect after the first day of the month
following his attainment of age sixty-five (65).
(b) Retirement Income shall not be payable under paragraph
(a) of this Section 7.4 to the Provisional Payee of a deceased
Employee if at the time of his death there was in effect a
Qualified Election made after August 22, 1984 under this
paragraph (b) that no Retirement Income shall be paid to his
Provisional Payee in the event of his death while in the service
of the Employer (or while in the service of an Affiliated
Employer to which his employment had been transferred in
accordance with Section 4.6) as provided in paragraph (a),
provided the Employee had received at least 180 days prior to his
fifty-fifth (55th) birthday a written explanation of: (1) the
terms and conditions of the Retirement Income payable to his
Provisional Payee as provided in paragraph (a); (2) the
Employee's right to make, and the effect of, an election to waive
the payment of Retirement Income to his Provisional Payee;
(3) the rights of the Employee's Provisional Payee; and (4) the
right to make, and the effect of, a revocation of a previous
election to waive the payment of Retirement Income to the
Employee's Provisional Payee.
A revocation of a prior Qualified Election to waive the
payment of Retirement Income to the Employee's Provisional Payee
may be made by the Employee without the consent of the Employee's
Provisional Payee at any time before the commencement of
benefits. An election under this paragraph (b) may be made and
such election may be revoked by an Employee during the period
commencing ninety (90) days prior to the Employee's fifty-fifth
(55th) birthday and ending on the date of the Employee's death.
(c) The amount of such Retirement Income payable to the
Provisional Payee of a deceased Employee who prior to his death,
had completed at least five (5) Vesting Years of Service and had
not attained his fifty-fifth (55th) birthday shall be equal to
one-half of the reduced amount, as actuarially adjusted to
provide for the payment of such Retirement Income beginning at
the date on which such deceased Employee would have attained his
fifty-fifth (55th) birthday and to provide for the determination
of such Retirement Income on a joint and fifty percent (50%)
survivor basis of the Employee's Accrued Retirement Income,
determined on the basis of his Accredited Service to the date of
his death.
This Section 7.4(c) shall also apply to adjust the future
payment of Retirement Income after December 31, 1990 to a
Provisional Payee with respect to an Employee who died (while in
the service of the Employer prior to his fifty-fifth (55th)
birthday after completing the requisite number of Years of
Service) in order to have a nonforfeitable right to Retirement
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Income under the Plan as in effect on the Employee's date of
death, provided Retirement Income is payable to such Provisional
Payee on or after January 1, 1991. The adjustment under this
Section 7.4(c) shall be determined by adjusting the Retirement
Income that had commenced to the Provisional Payee on or before
January 1, 1986, and then adding the applicable percentage
increase under Section 5.13 of the Prior Plan.
For an Employee, on or after January 1, 1991, who dies while
in the service of the Employer prior to his fifty-fifth (55th)
birthday after completing five (5) Vesting Years of Service, the
amount of such Retirement Income payable to the Provisional Payee
shall be calculated as provided in Section 7.1(b) determined on
the basis of his Accredited Service to the date of his death.
The payment of such Retirement Income to the Provisional Payee
shall begin on the first day of the month following the date on
which such deceased Employee would have attained his fifty-fifth
(55th) birthday.
7.5 Post-retirement death benefit - qualified joint and
survivor annuity. If at his Early Retirement Date, Normal
Retirement Date, or Deferred Retirement Date, as the case may be,
an Employee is married and he has not: (a) designated a
Provisional Payee in accordance with Section 7.1 in respect of
payments to be made commencing on his Early, Normal, or Deferred
Retirement Date or (b) made a Qualified Election that payment be
made to him in the mode of a single life annuity, he shall
nevertheless be deemed to have made an effective designation of a
Provisional Payee under this Section 7.5 and to have specified
the payment of a benefit as provided in Section 7.1(b).
7.6 Election and designation by former Employee entitled to
Retirement Income in accordance with Article VIII. If an
Employee is entitled to receive in accordance with Section 8.1
Retirement Income commencing at Normal Retirement Date, or sooner
in accordance with Section 8.2, he may, on or after his
fifty-fifth (55th) birthday, designate his spouse as his
Provisional Payee and elect to have his Accrued Retirement Income
at the date of termination of his service actuarially adjusted to
provide, at his option, in the event of the commencement of
payment prior to his Normal Retirement Date either:
(a) a reduced amount payable to him for his lifetime with
the provision that such reduced amount will be continued after
his death to his spouse as Provisional Payee until the death of
such Provisional Payee; or
(b) a reduced amount (greater than the amount in (a) above)
payable to him for his lifetime with the provision that one-half
(1/2) of such reduced amount will be continued after his death to
his spouse as Provisional Payee until the death of such
Provisional Payee.
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The Employee's election and designation of his Provisional
Payee made in accordance with this Section 7.6 shall be in
writing on a form prescribed by the Retirement Board and
delivered to it and shall become effective not sooner than the
date received by the Retirement Board or the Employee's
fifty-fifth (55th) birthday, whichever is later, nor later than
the date of commencement of payment in accordance with this
Section 7.6.
If the Employee dies prior to his Normal Retirement Date but
after the effective date of his Provisional Payee designation,
there will be payable to his Provisional Payee for life
commencing on the first day of the calendar month after the
Employee's death Retirement Income in a reduced amount in
accordance with the Employee's election of payments to be made to
his Provisional Payee after the death of the Employee under
paragraph (a) or (b), as the case may be, of this Section 7.6.
However, if prior to the Employee's death, the Retirement Board
has not received such election, payment of a reduced amount of
Retirement Income will be made in accordance with paragraph (b)
of this Section 7.6 to his surviving spouse to whom he is married
at the time of his death, unless (1) at the time of his death
there is in effect a Qualified Election by the Employee that
reduced Retirement Income shall not be paid to his surviving
spouse in accordance with this Section 7.6 should he die between
his fifty-fifth (55th) birthday and his Normal Retirement Date
without having elected that payment be made to a Provisional
Payee and (2) at least 180 days prior to his fifty-fifth (55th)
birthday a written explanation is provided to the Employee of:
(A) the terms and conditions of the Retirement Income payable to
his Provisional Payee as provided in this Section 7.6; (B) the
Employee's right to make, and the effect of, an election to waive
the payment of Retirement Income to his Provisional Payee;
(C) the rights of an Employee's spouse; and (D) the right to
make, and the effect of, a revocation of a previous election to
waive the payment of Retirement Income to his Provisional Payee.
If the Employee is entitled to receive payment of Retirement
Income in accordance with Section 8.2 after his fifty-fifth
(55th) birthday and prior to his Normal Retirement Date and
elects to do so, a reduced amount of Retirement Income determined
in accordance with this Section 7.6 based upon his Accrued
Retirement Income at the date of termination of his service
(actuarially reduced in accordance with Section 8.2) will be
payable to him commencing on the date on which payments commence
prior to Normal Retirement Date in accordance with Section 8.2
with payments in the same or reduced amount to be continued to
his Provisional Payee for life after the Employee's death in
accordance with his election under paragraph (a) or (b), as the
case may be, of this Section 7.6. However, if the Employee is
married and he has not designated a Provisional Payee in respect
of payments to commence to him prior to his Normal Retirement
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Date or elected that payment be made to him in the mode of a
single life annuity pursuant to a Qualified Election, he shall be
deemed to have designated a Provisional Payee pursuant to this
Section 7.6 and thereby specified that a reduced Retirement
Income shall be paid to him during his lifetime as provided in
paragraph (b) of this Section 7.6 and continued after his death
to his Provisional Payee as provided in paragraph (b) of this
Section 7.6.
If the Employee is alive on his Normal Retirement Date and
is married and payment of Retirement Income has not sooner
commenced, the provisions of Section 7.5 shall be applicable to
the payment of his Retirement Income, unless he shall elect at
his Normal Retirement Date to receive payment of his Retirement
Income pursuant to Section 7.1(a) or 7.1(b). However, if an
election and designation in accordance with this Section 7.6 was
in effect prior to his Normal Retirement Date, the Employee's
Accrued Retirement Income at his Normal Retirement Date shall be
actuarially adjusted for the period the election and designation
was in effect.
7.7 Death benefit for Provisional Payee of former Employee.
If an Employee, whose service with the Employer terminates on or
after January 1, 1989, shall die after such termination of
employment, and prior to his death (a) shall have not attained
his fifty-fifth (55th) birthday, (b) shall have completed at
least five (5) Vesting Years of Service, and (c) shall be
survived by his spouse to whom he shall be married at his death,
then there shall be payable to his surviving spouse (whom he
shall be deemed to have designated as his Provisional Payee)
Retirement Income determined in accordance with this Section 7.7.
Such Retirement Income shall be equal to one-half of the reduced
amount, as actuarially adjusted to provide for the payment of
such Retirement Income beginning at the date on which such
deceased Employee would have attained his fifty-fifth (55th)
birthday and to provide for the determination of such Retirement
Income on a joint and fifty percent (50%) survivor basis of the
Employee's Accrued Retirement Income, determined on the basis of
his Accredited Service to the date of his death. Such Retirement
Income shall commence on the first day of the month following the
date on which the former Employee would have attained his
fifty-fifth (55th) birthday if he were still alive, and shall
cease with the last payment preceding the death of his
Provisional Payee.
7.8 Limitations on Employee's and Provisional Payee's
benefits.
(a) With respect to an Employee who does not elect a single
life annuity, the limitation on benefits imposed under Article VI
shall be applied as if such Employee had elected a benefit in the
form of a single life annuity.
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(b) With respect to a Provisional Payee, the limitations on
benefits imposed under Article VI shall be applied consistent
with paragraph (a) above prorated to provide a limitation equal
to or one-half of the Employee's limitation as appropriate in
accordance with annuity form of benefit elected by the Employee.
7.9 Effect of election under Article VII. An election of
payment or a deemed election of payment in accordance with this
Article VII shall be in lieu of any other form or method of
payment of Retirement Income.
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ARTICLE VIII
Termination of Service
8
8.1 Vested interest. If an Employee included in the Plan
terminates for any reason other than death or transfer to an
Affiliated Employer as provided by Section 4.6 or retirement as
provided by Article III, and if such Employee has had at least
five (5) Vesting Years of Service with the Employer, whether or
not Accredited Service, he will be entitled to receive,
commencing at Normal Retirement Date (except as provided in
Section 8.2 and subject to the provisions of Section 7.6)
Retirement Income equal to his Accrued Retirement Income at the
date of the termination of such service, provided that he makes
application to the Employer for the payment of such Retirement
Income. If proper application for payment of Retirement Income
shall not be received by the Employer by the April 1 of the
calendar year following the calendar year in which the Employee
attains age 70 1/2 and the whereabouts of the Employee cannot be
determined by the Employer, Retirement Income shall be paid to
the Employee's Provisional Payee, if any, and if surviving and
the whereabouts known to the Employer, or applied in such other
manner as the Retirement Board shall deem appropriate. The
payment of Retirement Income pursuant to this provision shall
completely discharge all liability of the Retirement Board, the
Employer, and the Trustee or other payor to the extent of the
payments so made. If such Employee terminates with less than
five (5) Vesting Years of Service with the Employer, he shall
immediately forfeit any Accrued Retirement Income under the Plan
based upon his service prior to such termination.
8.2 Early distribution of vested benefit. If an Employee
terminates from service before his fifty-fifth (55th) birthday
and is entitled to receive in accordance with Section 8.1
Retirement Income commencing at his Normal Retirement Date and at
the time his service terminated he had at least ten (10) Years of
Accredited Service, he may, in lieu of receiving payment of such
Retirement Income commencing at Normal Retirement Date, elect to
receive such Retirement Income commencing as of the first day of
any month within the ten-year period preceding his Normal
Retirement Date in an amount equal to his Accrued Retirement
Income at the date of termination of his service actuarially
reduced in accordance with reasonable actuarial assumptions
adopted by the Retirement Board. An election pursuant to this
Section 8.2 to have Retirement Income commence prior to Normal
Retirement Date shall be made on a form prescribed by the
Retirement Board and shall be filed with the Retirement Board at
least thirty (30) days before Retirement Income is to commence.
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8.3 Years of Service of reemployed Employees. If an
Employee whose service terminates is again employed by the
Employer as an Employee or he is employed (other than by reason
of transfer in accordance with Section 4.6) by an Affiliated
Employer which has at the time of his employment by such company
a pension plan with substantially the same terms as this Plan,
his Years of Service with the Employer and his Accredited Service
immediately prior to the termination of his service shall be
treated as provided in this Section 8.3, subject to the
provisions of Section 8.4. For this purpose the terms "again
employed" and "reemployment" shall include employment with an
Affiliated Employer.
(a) If at the time of his reemployment he has not incurred
a One-Year Break in Service, his Years of Service with the
Employer and his Accredited Service will be restored whether or
not he is entitled to receive Retirement Income in accordance
with Section 8.1.
(b) If at the time of termination of his service he is
entitled to receive Retirement Income in accordance with the
provisions of Section 8.1, upon his reemployment his Years of
Service with the Employer immediately prior to the termination of
his service shall be restored whether or not he has incurred a
One-Year Break in Service.
(c) If at the time of reemployment on or after January 1,
1985, he is not entitled to receive Retirement Income in
accordance with Section 8.1 and he (1) has incurred less than
five (5) consecutive One-Year Breaks in Service or (2) has
incurred five (5) or more consecutive One-Year Breaks in Service,
but his Years of Service prior to such One-Year Breaks in Service
exceeded the consecutive One-Year Breaks in Service, then upon
the completion of one Eligibility Year of Service following his
reemployment, provided that if his reemployment date is on or
after January 1, 1995, no such Eligibility Year of Service shall
be required, his Years of Service with the Employer and his
Accredited Service prior to the first One-Year Break in Service
shall be restored, disregarding any Years of Service with the
Employer which are not required to be taken into account by
reason of any previous One-Year Breaks in Service. The Years of
Service and years of Accredited Service credited to an Employee
reemployed prior to January 1, 1985, with regard to his Years of
Service with the Employer and years of Accredited Service
immediately prior to the termination of his service shall be
determined under the terms of the Plan in effect prior to January
1, 1985.
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(d) Years of Service and Accredited Service restored to an
Employee in accordance with this Section 8.3 shall be aggregated
with Years of Service and Accredited Service to which the
Employee may be entitled after his reemployment. If, however,
the Minimum Retirement Income so determined for the Employee upon
his subsequent retirement or termination of service shall be less
than the aggregate of: (1) his Minimum Retirement Income, if
any, determined in respect of the period ending with his prior
termination of service, and (2) his Minimum Retirement Income
determined in respect of the period after his reemployment, the
aggregate of such Minimum Retirement Incomes shall be deemed to
be his Minimum Retirement Income upon such subsequent retirement
or termination of service. In any event, his Retirement Income,
however computed, shall be reduced by the Actuarial Equivalent of
any Retirement Income he received with respect to his prior
period of employment.
(e) If a former Employee to whose credit shall be restored
years of Accredited Service in accordance with this Section 8.3
shall become entitled (or his Provisional Payee shall become
entitled) to receive retirement income under the plan of an
Affiliated Employer by which he should become employed, he shall
be deemed to have transferred to the Affiliated Employer for
purposes of Section 4.6 as of his initial date of participation
in the plan of such Affiliated Employer.
8.4 Cash-out and buy-back. (a) Notwithstanding any other
provision of this Plan, if the present value of Accrued
Retirement Income of an Employee whose service terminates for any
reason other than transfer to an Affiliated Employer under
Section 4.6, or retirement under Article III, is not more than
$3,500 (or such greater amount as permitted by the regulations
prescribed by the Secretary of the Treasury) the Employer shall
direct that such present value of the Employee's Accrued
Retirement Income be paid in a lump sum, in cash, to such
terminated Employee. The present value of the Accrued Retirement
Income shall be calculated as of the last day of the date of
distribution of the lump sum applying the Applicable Interest
Rate as defined in Section 8.5(e) in effect on the first day of
the Plan Year of distribution. For purposes of this Section 8.4,
if the present value of the Employee's vested Accrued Retirement
Income is zero, the Employee shall be deemed to have received a
distribution of such vested Retirement Income.
(b) If such terminated Employee is subsequently reemployed
and becomes covered under this Plan, the calculation of his
Accrued Retirement Income shall be without regard to his years of
Accredited Service prior to any One-Year Breaks in Service,
unless the amount of such payment is repaid to the Trust, plus
interest at the rate determined under Section 411(c)(2)(C) of the
Code. If such amount (plus interest) is repaid, the Employee's
Retirement Income shall be calculated based on his years of
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Accredited Service before and after any One-Year Breaks in
Service. Any repayment of a cash-out made pursuant to this
Section 8.4 shall be made before the earlier of (a) five (5)
years after the date on which the Employee is reemployed by the
Employer or an Affiliated Employer, or (b) the close of the first
period of five (5) consecutive One-Year Breaks in Service
commencing after the distribution. If an Employee has been
deemed to receive a distribution in accordance with paragraph (a)
and is then reemployed, upon such reemployment, the amount of the
deemed distribution shall be restored to the Employee.
8.5 Calculation of present value for cash-out of benefits
and for determining amount of benefits.
(a) This Section 8.5 shall apply to all distributions from
the Plan and from annuity contracts purchased to provide Accrued
Retirement Income other than distributions described in Section
1.417-1T(e)(3) of the income tax regulations issued under the
Retirement Equity Act of 1984.
(b) (1) For purposes of determining whether the present
value of (A) an Employee's vested accrued benefit; (B) a
qualified joint and survivor annuity, within the meaning of
Section 417(b) of the Code; or (C) a qualified preretirement
survivor annuity within the meaning of Section 417(c)(1) of the
Code exceeds $3,500, the present value of such benefits or
annuities shall be calculated by using an interest rate no
greater than the Applicable Interest Rate.
(2) In no event shall the present value of any such
benefit or annuity determined under this Section 8.5(b) be
less than the present value of such benefits or annuities
determined using the Applicable Interest Rate.
(c) (1) For purposes of determining the amount of an
Employee's vested Accrued Retirement Income, the interest rate
used shall not exceed:
(A) the Applicable Interest Rate if the
present value of the benefit (using such rate or
rates) is not in excess of $25,000; or
(B) 120 percent of the Applicable Interest
Rate if the present value of the benefit exceeds
$25,000 (as determined under (A)). In no event
shall the present value determined under this (B)
be less than $25,000.
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(2) In no event shall the amount of the benefit or
annuity determined under this Section 8.5(c) be less than
the greater of:
(A) the amount of such benefit determined under
the Plan's provisions for determining the amount of
benefits other than Sections 8.5; or
(B) the amount of such benefit determined using
the Applicable Interest Rate if the value determined in
Section 8.5(c)(1) is less than $25,000 or 120 percent
of the Applicable Interest Rate if the value determined
in Section 8.5(c)(1) is not less than $25,000.
(d) In no event shall the amount of any benefit or annuity
determined under this Section 8.5 exceed the maximum benefit
permitted under Section 415 of the Code.
(e) (1) For purposes of this Section 8.5, "Applicable
Interest Rate" shall mean the interest rate or rates which would
be used as of the date distribution commences by the Pension
Benefit Guaranty Corporation for purposes of valuing lump sum
payments under the Plan if the Plan had terminated on the date
distribution commences with insufficient assets to provide
benefits guaranteed by the Pension Benefit Guaranty Corporation
on that date.
(2) Notwithstanding the foregoing, if the provisions
of the Plan other than Section 8.5(e) so provide, the
Applicable Interest Rate shall be determined as of the first
day of the Plan Year in which a distribution occurs rather
than as of the date distribution commences.
(f) (1) This Section 8.5 shall apply to distributions in
Plan Years beginning after December 31, 1984, other than
distributions under annuity contracts distributed to or owned by
an Employee prior to September 17, 1985 unless additional
contributions are made under the Plan by the Employer with
respect to such contracts.
(2) Notwithstanding the foregoing, this Section
8.5 shall not apply to any distributions in Plan Years
beginning after December 31, 1984, and before
January 1, 1987, if such distributions were made in
accordance with the requirements of the income tax
regulations issued under the Retirement Equity Act of
1984.
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8.6 Retirement Income under Prior Plan. Any person
entitled to receive Retirement Income under Article VIII of the
Prior Plan shall only be entitled to receive Retirement Income in
accordance with the provisions of such Prior Plan in effect at
the time his service was terminated, except that any such person
whose service terminated prior to January 1, 1976:
(a) with at least twenty (20) years of Accredited Service
may elect to receive Retirement Income commencing prior to his
Normal Retirement Date in accordance with Section 8.2;
(b) who shall have returned to the employment of the
Employer, whether before or after January 1, 1976, and shall be
an Employee who is entitled to receive Retirement Income in
respect of his Accredited Service after January 1, 1976, his
years of Accredited Service under the Prior Plan with respect to
his service before January 1, 1976, shall, for the purpose of
calculating his Minimum Retirement Income, be aggregated with his
years of Accredited Service after his reemployment. His Accrued
Retirement Income to the date of termination of his service
payable in accordance with Article VIII of the Prior Plan shall
be treated as Prior Plan Retirement Income and his Years of
Service prior to the date of termination of his service shall be
restored to his credit. It shall be a condition of the treatment
provided for in this paragraph (b) that: (1) the Employee
rescind any election of payment and designation of a Provisional
Payee which he shall have made under the Prior Plan and which
shall be in effect at the time of his return to the employment of
the Employer and (2) if he is receiving Retirement Income, his
Retirement Income shall cease during his period of employment and
any Retirement Income payable upon his subsequent retirement
shall be reduced by the Actuarial Equivalent of any Retirement
Income he received prior to his reemployment.
8.7 Requirement for Direct Rollovers. This Section 8.7
applies to distributions made from the Plan on or after January
1, 1993. Notwithstanding any provision of the Plan to the
contrary that would otherwise limit a Distributee's election
under this Article VIII, a Distributee may elect, at the time and
in the manner prescribed by the Retirement Board, to have any
portion of an Eligible Rollover Distribution paid directly to an
Eligible Retirement Plan specified by the Distributee in a Direct
Rollover.
(a) Definitions
(1) Eligible Rollover Distribution
An Eligible Rollover Distribution is any distribution
of all or any portion of the balance to the credit of the
Distributee, except that an Eligible Rollover Distribution
does not include:
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(A) any distribution that is one of a series of
substantially equal periodic payments (not less
frequently than annually) made for the life (or life
expectancy) of the Distributee or the joint lives (or
joint life expectancies) of the Distributee and the
Distributee's spouse, or for a specified period of 10
years or more;
(B) any distribution to the extent such
distribution is required under Code Section 401(a)(9);
and
(C) the portion of any distribution that is not
includible in gross income (determined without regard
to the exclusion for net unrealized appreciation with
respect to employer securities).
(2) Eligible Retirement Plan
An Eligible Retirement Plan is an individual retirement
account described in Code Section 408(a), an individual
retirement annuity described in Code Section 408(b), an
annuity plan described in Code Section 403(a), or a
qualified trust described in Code Section 401(a) that
accepts the Distributee's Eligible Rollover Distribution.
However, in the case of an Eligible Rollover Distribution
for a Provisional Payee, an Eligible Retirement Plan is an
individual retirement account or individual retirement
annuity.
(3) Distributee
A Distributee includes an Employee or former Employee.
In addition, a Distributee includes the Employee's or former
Employee's spouse who is an alternate payee under a
qualified domestic relations order, as defined in Code
Section 414(p).
(4) Direct Rollover
A Direct Rollover is a payment by the Plan to the
Eligible Retirement Plan specified by the Distributee.
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ARTICLE IX
Contributions
9
9.1 Contributions generally. All contributions which the
Employer deems necessary to provide the Retirement Incomes under
the Plan in excess of the fund derived from the split-up of the
Commonwealth pension plan will be made from time to time by or on
behalf of the Employer and no contributions will be required of
the Employees. All contributions shall be made to the Trustee
under the Trust Agreement provided for in Article XI, and if a
group annuity contract shall be entered into with a life
insurance company ("contract with an insurance company"),
contributions may also be made to the insurance company.
The minimum amount of contributions to be made by or on
behalf of the Employer for any Plan Year of the Plan shall be
such amount as is required to meet the minimum funding standards
of ERISA and any regulations in respect thereto. However, the
Employer is under no obligation to make any contributions under
the Plan after the Plan is terminated, whether or not Retirement
Income accrued or vested prior to the date of termination has
been fully funded. All contributions are expressly conditioned
upon the deductibility of such contributions by the Employer
pursuant to Section 404 of the Code.
9.2 Return of Employer contributions. All contributions
made pursuant to the Plan shall be held by the Trustee in
accordance with the terms of the Trust Agreement for the
exclusive benefit of those Employees who are Participants under
the Plan, including former Employees and their Beneficiaries, and
shall be applied to provide benefits under the Plan and to pay
expenses of administration of the Plan and Trust, to the extent
that such expenses are not otherwise paid. At no time prior to
the satisfaction of all liabilities with respect to such
Employees and their Beneficiaries shall any part of the Trust
Fund be used for, or diverted to, purposes other than for the
exclusive benefit of such Employees and their Beneficiaries.
However, notwithstanding the provisions of this Section 9.2:
(a) If a contribution is conditioned upon the deductibility
of the contributions under Section 404 of the Code, then, to the
extent the deduction is disallowed, the Trustee shall upon
written request of the Employer, return the contribution (to the
extent disallowed) to the Employer within one year after the date
the deduction is disallowed.
(b) If a contribution or any portion thereof is made by the
Employer by a mistake of fact, the Trustee shall, upon written
request of the Employer, return the contribution or such portion
to the Employer within one year after the date of payment to the
Trustee.
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The amount which may be returned to the Employer under this
Section 9.2, is the excess of (a) the amount contributed over (b)
the amount that would have been contributed had there not
occurred a mistake of fact or a mistake in determining the
deduction. Earnings attributable to the excess contribution
shall not be returned to the Employer, but losses attributable
thereto shall reduce the amount to be so returned.
(c) If permitted under Federal common law, the Company may
recover any other contributions to the Plan or payments to any
other entity to the extent such contributions or payments
unjustly enrich or otherwise gratuitously benefit such entity.
9.3 Expenses. Prior to termination of the Plan, all
investment expenses (including brokerage costs, transfer taxes,
shipping expenses, and charges of correspondent banks of the
Trustee) and any taxes which may be levied against the Trust
shall be charged to the Trust. All other expenses prior to the
termination of the Plan shall be paid by the Employer or charged
to the Trust, as determined in the discretion of The Southern
Company Pension Fund Investment Review Committee. After the
termination of the Plan, all expenses shall be levied against the
Trust and shall be charged to the Trust.
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ARTICLE X
Administration of Plan
10
10.1 Retirement Board. The general administration of the
Plan shall be placed in a Retirement Board of five (5) members
who shall be appointed from time to time by the Board of
Directors to serve at the pleasure of the Board of Directors.
10.2 Organization and transaction of business of Retirement
Board. Any person appointed a member of the Retirement Board
shall signify his acceptance by filing written acceptance with
the Board of Directors. Any member of the Retirement Board may
resign by delivering his written resignation to the Board of
Directors, and such resignation shall become effective at
delivery or at any later date specified therein.
The members of the Retirement Board shall elect a Chairman
from their number, and a Secretary who may be but need not be one
of the members of the Retirement Board, and shall designate an
actuary to act in actuarial matters relating to the Plan. They
may appoint from their number such committees with such powers as
they shall determine, may authorize one or more of their number
or any agent to make any payment in their behalf, or to execute
or deliver any instrument except that a requisition for funds
from the Trustee shall be signed by two (2) members of the
Retirement Board.
The Retirement Board shall hold meetings upon such notice,
at such place or places, and at such time or times as they may
from time to time determine.
A majority of the members of the Retirement Board at the
time in office shall constitute a quorum for the transaction of
business. All resolutions or other actions taken by the
Retirement Board at any meeting shall be by the vote of a
majority of the Retirement Board at the time in office. Any
determination or action of the Retirement Board may be made or
taken without a meeting by a resolution or written memorandum
concurred upon by a majority of the members then in office.
No member of the Retirement Board who is also an Employee of
the Employer shall receive any compensation from the Plan for his
service as such. No bond or other security need be required of
any member in any jurisdiction except as may be required by
ERISA.
10.3 Administrative responsibilities of Retirement Board.
The Retirement Board, in addition to the functions and duties
provided for elsewhere in the Plan, shall have exclusive
discretionary authority for the following:
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(a) construing and interpreting the Plan;
(b) determining all questions affecting the eligibility of
any Employee, retired Employee, Provisional Payee, or alternate
payee;
(c) determining all questions affecting the amount of the
benefit payable hereunder;
(d) ascertaining the persons to whom benefits shall be
payable under the provisions hereof;
(e) to the extent provided in the Plan, authorizing and
directing disbursements of benefits from the Plan;
(f) making final and binding determinations in connection
with any questions of fact which may arise regarding the
operation of the Plan;
(g) making such rules and regulations with reference to the
operation of the Plan as it may deem necessary or advisable,
provided that such rules and regulations shall not be
inconsistent with the express terms of the Plan or ERISA;
(h) prescribing such procedures and adopting such forms as
it determines necessary under the terms of the Plan; and
(i) reviewing such denials of claims for benefits as may
arise.
Any decision, determination, construction, interpretation,
ascertainment, authorization, direction, rule, regulation,
prescription, or review that the Retirement Board may make or
give in carrying out its duties or functions under this Section
10.3 shall be binding and conclusive.
10.4 Retirement Board, the "Administrator". For the
purposes of compliance with the provisions of ERISA, the
Retirement Board shall be deemed the "administrator" of the Plan
as the term "administrator" is defined in ERISA, and the
Retirement Board shall be, with respect to the Plan, a "named
fiduciary" as that term is defined in ERISA. For the purpose of
carrying out its duties, the Retirement Board may, in its
discretion, allocate responsibilities under the Plan among its
members and may, in its discretion, designate in writing, as set
forth in the minutes of the Retirement Board, persons other than
members of the Retirement Board to carry out such
responsibilities of the Retirement Board under the Plan as it may
see fit.
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10.5 Fiduciary responsibilities. It is intended, that to
the maximum extent permitted by ERISA, each person who is a
"fiduciary" with respect to the Plan as that term is defined in
ERISA shall be responsible for the proper exercise of his own
powers, duties, responsibilities, and obligations under the Plan
and the trust or other funding medium as shall each person
designated by any fiduciary to carry out any fiduciary
responsibility with respect to the Plan, the trust or other
funding medium and no fiduciary or other person to whom fiduciary
responsibilities are allocated shall be liable for any act or
omission of any other fiduciary or of any other person delegated
to carry out any fiduciary or other responsibility under the Plan
or the trust or other funding medium.
Any person or group of persons may serve in more than one
fiduciary capacity with respect to the Plan and any fiduciary
with respect to the Plan may serve as a fiduciary with respect to
the Plan in addition to being an officer, employee, agent, or
other representative of a "party in interest" as that term is
defined in ERISA.
10.6 Employment of actuaries and others. The Retirement
Board may employ such "enrolled actuaries" and independent
"qualified public accountants" as such terms are defined in
ERISA, legal counsel who may be of counsel to the Employer, other
specialists, and other persons as the Retirement Board deems
necessary or desirable in connection with the administration of
the Plan. The Retirement Board and any person to whom it may
delegate any duty or power in connection with the administration
of the Plan, the Employer, and the officers and directors thereof
shall be entitled to rely conclusively upon and shall be fully
protected in any action omitted, taken, or suffered by them in
good faith in reliance upon any enrolled actuary, independent
qualified public accountant, counsel, or other specialist or
other person selected by the Retirement Board or in reliance upon
any tables, evaluations, certificates, opinions, or reports which
shall be furnished by any of them or by the Trustee or any
insurance company. Any action so taken, omitted, or suffered in
accordance with the provisions of this Section 10.6 shall be
conclusive upon each Employee, former Employee, and Provisional
Payee covered under the Plan.
10.7 Accounts and tables. The Retirement Board shall
maintain accounts showing the fiscal transactions of the Plan,
and shall keep in convenient form such data as may be necessary
for actuarial valuations with respect to the operation and
administration of the Plan. The Retirement Board shall prepare
annually a report showing in reasonable summary the financial
condition of the Trust and giving a brief account of the
operation of the Plan for the past year, and any further
information which the Board of Directors may require. Such
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report shall be submitted to the Board of Directors and shall be
filed in the office of the Secretary of the Retirement Board.
The Retirement Board may, with the advice of an enrolled
actuary, adopt from time to time mortality and other tables as it
may deem necessary or appropriate for use in calculating benefits
under the Plan.
10.8 Indemnity of members of Retirement Board. To the
extent not compensated for by any applicable insurance, the
Employer shall indemnify and hold harmless each member of the
Retirement Board and each Employee of the Employer designated by
the Retirement Board to carry out any fiduciary responsibility
with respect to the Plan from any and all claims, loss, damages,
expense (including counsel fees approved by the Board of
Directors) and liability (including any amount paid in settlement
with the approval of the Board of Directors) arising from any act
or omission of such member or Employee designated by the
Retirement Board in connection with the Plan or the Trust, except
where the same is determined by the Board of Directors or is
judicially determined to be due to a failure to act in good faith
or is due to the gross negligence or willful misconduct of such
member or Employee. No assets of the Plan may be used for any
such indemnification.
10.9 Areas in which the Retirement Board does not have
responsibility. The Retirement Board shall not have
responsibility with respect to control or management of the
assets of the Plan. The Trustee or an insurance company, if
funds of the Plan shall be held by an insurance company, shall
have the sole responsibility for the administration of the assets
of the Plan as provided in the Trust Agreement or contract with
an insurance company, except to the extent that an "Investment
Manager," as that term is defined in ERISA, appointed by the
Board of Directors shall have responsibility for the management
of the assets of the Plan, or some part thereof, including the
power to acquire and dispose of the assets of the Plan, or some
part thereof.
The responsibility for providing a procedure for
establishing and carrying out a funding policy and method for the
Plan consistent with the objectives of the Plan and the
requirements of Title I of ERISA shall be that of the Board of
Directors or such committee, whether or not comprised of members
of the Board of Directors, as the Board of Directors may from
time to time designate and shall not be the responsibility of the
Retirement Board.
Effective July 28, 1993, the Pension Fund Investment Review
Committee of The Southern Company System shall recommend for
approval by the Board of Directors any Investment Manager that
shall have responsibility with respect to management of any Plan
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assets. In addition, the Pension Fund Investment Review
Committee shall assume all responsibility for providing a
procedure for establishing and carrying out a funding policy and
method for the Plan consistent with the objectives of the Plan
and the requirements of Title I of ERISA.
10.10 Claims Procedures. Consistent with the requirements
of ERISA and the regulations thereunder of the Secretary of Labor
from time to time in effect, the Retirement Board or its
delegatee shall:
(a) provide adequate notice in writing to any Employee,
former Employee, retired Employee, or Provisional Payee (each
being hereinafter in the paragraph referred to as "participant")
whose claim for benefit under the Plan has been denied, setting
forth specific reasons for such denial, written in a manner
calculated to be understood by such participant; and
(b) afford a reasonable opportunity to any participant
whose claim for benefits has been denied for a full and fair
review of the decision denying the claim.
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ARTICLE XI
Management of Trust
11
11.1 Trust. All assets of the Plan shall be held as a
special trust for use in accordance with the Plan.
The funds of the Plan shall be held by a Trustee, or by a
successor trustee appointed from time to time by the Board of
Directors in trust or held by a life insurance company in
accordance with the provisions of a contract with such insurance
company entered into by the Trustee or the Employer. The Trust
Agreement and contract with an insurance company may from time to
time be amended in the manner therein provided.
11.2 Disbursement of the Trust Fund. Subject to the
provisions of the Trust Agreement or contract with an insurance
company the Retirement Board shall determine the manner in which
the funds of the Plan shall be disbursed pursuant to the Plan,
including the form of voucher or warrant to be used in making
disbursements and the due qualification of persons authorized to
approve and sign the same. The responsibility for the retention
and investment of funds held by the Trustee shall lie with the
Trustee and not with the Retirement Board, and the responsibility
for the retention and investment of funds held by an insurance
company shall lie with the insurance company and not with the
Retirement Board. However, if in accordance with a Trust
Agreement forming a part of the Plan (including any pooled trust
agreement in which a trust forming a part of the Plan
participates) a contract with an insurance company shall be held
by the Trustee as an investment of the trust, directions may be
given from time to time to the Trustee by such board of directors
or committee or person or persons as may be specified in the
Trust Agreement to transfer funds of the trust to the life
insurance company which issued such contract or to transfer funds
from the life insurance company to the Trustee, as the case may
be.
11.3 Rights in the Trust. Under no circumstances shall
amounts of money or other things of value contributed by the
Employer to the Plan, or any part of the corpus or income of the
Trust held by the Trustee under the Plan, be recoverable by the
Employer from the Trustee or from any Employee, retired Employee,
or Provisional Payee, or be used for, or diverted to, purposes
other than for the exclusive benefit of the Employees, retired
Employees, and Provisional Payees covered hereunder; provided,
however, that, if after satisfaction of all liabilities of the
Trust with respect to Employees, retired Employees, and
Provisional Payees under the Plan, there is any balance
remaining, the Trustee shall return such balance to the Employer.
Notwithstanding the above, upon the approval of the Internal
Revenue Service or the enactment or promulgation of any laws or
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regulations by any governmental authority, the Employer shall be
authorized to rededicate all or a portion of the assets allocated
to fund Retirement Income under the Plan to the separate account
to fund medical benefits under Article XV of the Plan.
11.4 Merger of the Plan. The Plan shall not be merged or
consolidated with, or any of its assets or liabilities
transferred to, any other plan, unless each Employee included in
the Plan would (if the Plan then terminated) receive a benefit
immediately after the merger, consolidation, or transfer which is
equal to or greater than the benefit he would have been entitled
to receive immediately before the merger, consolidation, or
transfer (if the Plan then terminated).
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ARTICLE XII
Termination of the Plan
12
12.1 Termination of the Plan. The Plan may be terminated at
any time by action of the Board of Directors of the Employer in
accordance with the amendment procedures provided in Section
13.1. Upon such termination or partial termination all Accrued
Retirement Income of Employees to the date of such termination,
to the extent then funded, shall become nonforfeitable and the
assets of the Plan which have not previously been allocated to
provide Retirement Income shall then be paid out to Employees,
former Employees, and Provisional Payees in accordance with the
applicable requirements of ERISA and regulations thereunder
governing termination of "employee pension benefit plans" as
defined in ERISA. If after satisfaction of all liabilities, as
provided above, there is any balance remaining in the Trust, the
Trustee shall return such balance to the Employer.
In the first instance, subject to the foregoing
limitations, such remaining assets shall be allocated among all
persons in the following categories for whom such Retirement
Income or other benefits have not previously been provided,
namely, (a) Employees who have been retired under the Plan,
(b) Employees who at the date of termination of the Plan are
included in the Plan, (c) former Employees who at the date of the
termination of their employment were entitled to payment of
Retirement Income in accordance with Article VIII, and (d) former
Employees who have transferred to an Affiliated Employer in
accordance with Section 4.6 and are still in the employ or
receiving a retirement income from such company (including their
Provisional Payees, if any). Retirement Income already purchased
under any contract with an insurance company will be payable in
accordance with the provisions of that contract.
12.2 Limitation on benefits for certain highly paid
employees.
(a) The annual payments to an Employee described in
paragraph (b) below shall not exceed an amount equal to the
payments that would be made to or on behalf of such Employee
under a single life annuity that is the Actuarial Equivalent of
the sum of the Employee's Accrued Retirement Income and the
Employee's other benefits under this Plan (other than a Social
Security supplement) and any Social Security supplement that the
restricted Employee is entitled to receive. The restrictions in
this paragraph (a) do not apply, however, if --
(1) after payment to an Employee described in
paragraph (b) of all benefits payable to such Employee under
this Plan, the value of this Plan's assets equals or exceeds
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110% of the value of current liabilities, as defined in Code
Section 412(c)(7), or
(2) the value of the benefits payable to such Employee
under this Plan for an Employee described in paragraph (b)
below is less than 1% of the value of current liabilities
before distribution.
(b) The Employees whose benefits are restricted on
distribution include all highly compensated employees and highly
compensated former employees (as such terms are defined in
Treasury Regulation Section 1.401(a)(4)-12); provided, however,
that Employees whose benefits are subject to restriction under
this Section 12.2 shall be limited to only those Employees who in
the current or in any previous Plan Year were one of the 25 non-
excludable Employees of the Employer with the greatest
compensation from the Employer.
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ARTICLE XIII
Amendment of the Plan
13
13.1 Amendment of the Plan.
(a) The Plan may be amended or modified at any time by the
Board of Directors pursuant to its written resolutions, provided
that no amendment or modification which will substantially
increase the cost of the Plan will be made by the Board of
Directors without approval, at a meeting of the stockholders duly
called for that purpose, by the vote of a majority of the stock
present and entitled to vote at such meeting.
(b) Such amendments and modifications (without limiting the
generality of the foregoing) may, among other things, make any
changes in the Plan which may become appropriate if, for any
reason, the Employer should in the future find it necessary or
desirable not to complete payment of the past service costs of
the Plan in the manner and within the period now contemplated or
should find it necessary or desirable to reduce the amounts of
Future Service contributions to be paid by the Employer after
such amendment or modification. Such amendments and
modifications may also (without limiting the generality of the
foregoing), make any changes necessary or desirable to make the
costs of the Plan eligible for tax deductions or to make the
income of the Trust exempt from taxation or to bring the Plan
into conformity or compliance with ERISA or with governmental
regulations. Notwithstanding the foregoing, no amendment shall
be made which has the effect of decreasing the Accrued Retirement
Income of any Employee, former Employee, or Provisional Payee as
provided under the limitations of Section 411(d)(6) of the Code.
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ARTICLE XIV
Special Provisions
14
14.1 Adoption of Plan by other corporations.
(a) Any corporation, whether or not related to the Employer
by function or operation and any affiliate, if such corporation
or affiliate is authorized to do so by a resolution adopted by
the Board of Directors of the Employer, may adopt this Plan as a
separate Plan for all eligible Employees or any separate,
distinct, and identifiable class or group of Employees and the
related Trust Agreement, by action of the board of directors of
such corporation or affiliate. Any such adoption shall be
evidenced by certified copies of the resolutions of the foregoing
board of directors indicating such adoption and by the execution
of the Adoption Agreement by the adopting corporation or
affiliate. Such resolution shall state and define the effective
date of the Plan for the purpose of such adopting corporation
and, for the purpose of Section 415 of the Code, the "limitation
year" as to such corporation. Notwithstanding the foregoing,
however, if the Plan as adopted by an affiliate or other
corporation under the foregoing provision shall fail to receive
the initial approval of the Internal Revenue Service as a
qualified plan, any contributions by such affiliate or other
corporation after payment of all expenses will be returned to
such adopting corporation free of any trust, and the Plan and the
Trust Agreement as to such adopting affiliate or other
corporation shall terminate.
(b) Each adopting affiliate or other corporation shall be
required to use the same Trustee as provided in this Plan.
(c) The Trustee may, but is not required to, commingle,
hold, and invest as one fund all contributions (or any portion
thereof) made by each adopting affiliate or other corporation.
(d) Any contributions made by an affiliate or other
corporation, as provided for in this Plan, shall be paid to and
held by the Trustee for the exclusive benefit of the Employees of
such an affiliate or other corporation and the beneficiaries of
such Employees, subject to all the terms and conditions of this
Plan. On the basis of information furnished by the
administrator, the Trustee shall keep separate books and records
concerning the affairs of each adopting affiliate or other
corporation hereunder.
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14.2 Exclusive benefit. The Employer intends that the Plan
(including the Trust forming a part thereof) shall be a pension
plan of an employer for the exclusive benefit of its Employees
and their beneficiaries subject to Section 11.3, as provided for
in Section 401 of the Code, and as may be provided for in any
similar provisions of subsequent revenue laws, and that the Trust
shall qualify as an employees' trust which shall be exempt under
Section 501(a) of the Code, and any similar provisions of
subsequent revenue laws, as a trust forming part of such a plan.
14.3 Assignment or alienation. No benefit under the Plan
shall be subject in any manner to anticipation, alienation, sale,
transfer, assignment (either at law or in equity), pledge,
encumbrance, charge, garnishment, levy, execution, or other legal
or equitable process and any attempt so to anticipate, alienate,
sell, transfer, assign, pledge, encumber, charge, garnish, levy,
execute, or enforce other legal or equitable process against the
same shall be void, nor shall any such benefit be in any manner
liable for or subject to the debts, contracts, liabilities,
engagements, or torts of the person entitled to such benefit.
If any Employee or retired Employee or any Provisional Payee
under the Plan is adjudicated bankrupt or attempts to anticipate,
alienate, sell, transfer, assign, pledge, encumber, or charge any
benefit under the Plan or if any action shall be taken which is
in violation of the provisions of the immediately preceding
paragraph, then such benefit shall cease and terminate and in
that event the Retirement Board shall hold or apply the same or
any part thereof to or for the benefit of such Employee or
retired Employee or Provisional Payee in such manner as the
Retirement Board may think proper.
Notwithstanding the above, the Retirement Board and Trustee
shall comply with any "domestic relations order" (as defined in
Section 414(p)(1)(B) of the Code) which is a "qualified domestic
relations order" satisfying the requirements of Section 414(p) of
the Code. The Retirement Board shall establish procedures for
(a) notifying Employees and alternate payees who have or may have
an interest in benefits which are the subject of domestic
relations orders, (b) determining whether such domestic relations
orders are qualified domestic relations orders under Section
414(p) of the Code, and (c) distributing benefits which are
subject to qualified domestic relations orders.
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14.4 Voluntary undertaking. This Plan is strictly a
voluntary undertaking on the part of the Employer and shall not
be deemed to constitute a contract between the Employer or any
other company and any Employee or to be a consideration for, or
an inducement or condition of, the employment of any Employee.
Nothing contained in this Plan shall be deemed to give any
Employee the right to be retained in the service of the Employer
or to interfere with the right of the Employer to discharge or
retire any Employee at any time. Inclusion under the Plan will
not give any Employee or Provisional Payee any right or claim to
a Retirement Income except to the extent such right is
specifically fixed under the terms of the Plan and there are
funds available therefor in the hands of the Trustee or of any
insurance company which may hold funds of the Plan.
14.5 Top-Heavy Plan requirements. For any Plan Year the
Plan shall be determined to be a Top-Heavy Plan, the Plan shall
provide the following:
(a) the minimum benefit requirement of Section 14.7; and
(b) the vesting requirement of Section 14.8.
14.6 Determination of Top-Heavy status.
(a) For any Plan Year commencing after December 31, 1983,
the Plan shall be determined to be a "Top-Heavy Plan," if, as of
the Determination Date, (1) the Present Value of Accrued
Retirement Income of Key Employees or (2) the sum of the
Aggregate Accounts of Key Employees under this Plan and any plan
of an Aggregation Group, exceeds sixty percent (60%) of the
Present Value of Accrued Retirement Income or the Aggregate
Accounts of all Employees entitled to participate in this Plan
and any Plan of an Aggregation Group.
(b) For Plan Years beginning after December 31, 1986, the
Accrued Retirement Income of a Non-Key Employee shall be
determined under the accrual method under the Plan.
(c) For any Plan Year commencing after December 31, 1983,
the Plan shall be determined to be a "Super Top-Heavy Plan," if,
as of the Determination Date, (1) the Present Value of Accrued
Retirement Income of Key Employees or (2) the sum of the
Aggregate Accounts of Key Employees under this Plan and any plan
in an Aggregation Group, exceeds ninety percent (90%) of the
Present Value of Accrued Retirement Income or the Aggregate
Accounts of all Employees entitled to participate in this Plan
and any plan of an Aggregation Group.
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For purposes of Sections 14.6(a) and 14.6(b), if any
Employee is a Non-Key Employee for any Plan Year, but such
Employee was a Key Employee for any prior Plan Year, such
Employee's Present Value of Accrued Retirement Income and/ or
Aggregate Account balance shall not be taken into account for
purposes of determining whether this Plan is a Top-Heavy or Super
Top-Heavy Plan (or whether any Aggregation Group which includes
this Plan is a Top-Heavy Group). In addition, for Plan Years
beginning after December 31, 1984, if an Employee or former
Employee has not performed any services for the Employer or any
Affiliated Employer maintaining the Plan at any time during the
five (5) year period ending on the Determination Date, the
Aggregate Account and/or Present Value of Accrued Retirement
Income for such Employee or former Employee shall not be taken
into account for purposes of determining whether this Plan is a
Top-Heavy or Super Top-Heavy Plan.
(d) An Employee's "Aggregate Account" as of the
Determination Date shall be determined under applicable
provisions of the defined contribution plan used in determining
Top-Heavy status.
(e) An "Aggregation Group" shall mean either a Required
Aggregation Group or a Permissive Aggregation Group as
hereinafter determined.
(1) Required Aggregation Group: In determining a
Required Aggregation Group hereunder, each plan of the
Employer in which a Key Employee is a participant, and each
other plan of the Employer which enables any plan in which a
Key Employee participates to meet the requirements of Code
Sections 401(a)(4) or 410, will be required to be
aggregated. Such group shall be known as a Required
Aggregation Group.
In the case of a Required Aggregation Group, each plan
in the group will be considered a Top-Heavy Plan if the
Required Aggregation Group is a Top-Heavy Group. No plan in
the Required Aggregation Group will be considered a
Top-Heavy Plan if the Aggregation Group is not a Top-Heavy
Group.
(2) Permissive Aggregation Group: The Employer may
also include any other plan not required to be included in
the Required Aggregation Group, provided the resulting
group, taken as a whole, would continue to satisfy the
provisions of Code Sections 401(a)(4) or 410. Such group
shall be known as a Permissive Aggregation Group.
In the case of a Permissive Aggregation Group, only a plan
that is part of the Required Aggregation Group will be considered
a Top-Heavy Plan if the Permissive Aggregation Group is a
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Top-Heavy Group. A plan that is not part of the Required
Aggregation Group but that has nonetheless been aggregated as
part of the Permissive Aggregation Group will not be considered a
Top-Heavy Plan even if the Permissive Group is a Top-Heavy Group.
(3) Only those plans of the Employer in which the
Determination Dates fall within the same calendar year shall
be aggregated in order to determine whether such plans are
Top-Heavy Plans.
(f) The "Determination Date" shall mean with respect to any
Plan Year, the last day of the preceding Plan Year, or in the
case of the first Plan Year, the last day of such Plan Year.
(g) A "Key Employee" shall mean any Employee or former
Employee (and his beneficiaries) who, at any time during the Plan
Year or any of the four (4) preceding Plan Years, is:
(1) an officer of the Employer having an annual
compensation from the Employer greater than fifty percent
(50%) of the amount in effect under Code Section
415(b)(1)(A) for any such Plan Year. For purposes of this
Section 14.6(g)(1), only those employers which are
incorporated shall be considered as having officers, and no
more than fifty (50) Employees (or, if lesser, the greater
of three (3) or ten percent (10%) of the Employees) shall be
treated as officers. Annual compensation means compensation
as defined in Section 415(c)(3) of the Code, but including
amounts contributed by the Employer pursuant to a salary
reduction agreement which are excludable from the Employee's
gross income under Section 125, Section 402(a)(8), Section
402(h), or Section 403(b) of the Code.
(2) one of the ten (10) Employees (A) having annual
compensation from the Employer greater than the limitation
in effect under Code Section 415(c)(1)(A) and (B) owning (or
considered as owning within the meaning of Code Section 318)
the largest interests in the Employer. For purposes of this
Section 14.6(g)(2), if two (2) Employees have the same
interest in the Employer, the Employee having the greater
annual compensation from the Employer shall be treated as
having a larger interest.
(3) a "five-percent owner" of the Employer. The term
"five-percent owner" shall mean any person who owns (or is
considered as owning within the meaning of Code Section 318)
more than five percent (5%) of the outstanding stock of the
Employer or stock possessing more than five percent (5%) of
the total combined voting power of all stock of the
Employer. In determining percentage ownership hereunder,
employers that would otherwise be aggregated under Code
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Sections 414(b), (c), and (m) shall be treated as separate
employers.
(4) a "one-percent owner" of the Employer having an
annual compensation from the Employer of more than $150,000.
The term "one-percent owner" shall mean any person who owns
(or is considered as owning within the meaning of Code
Section 318) more than one percent (1%) of the outstanding
stock of the Employer or stock possessing more than one
percent (1%) of the total combined voting power of all stock
of the Employer. In determining percentage ownership
hereunder, employers that would otherwise be aggregated
under Code Sections 414(b), (c), and (m) shall be treated as
separate employers. However, in determining whether an
individual has compensation of more than $150,000,
compensation from each employer required to be aggregated
under Code Sections 414(b), (c), and (m) shall be taken into
account.
(h) A "Non-Key Employee" shall mean any Employee who is not
a Key Employee as defined in Section 14.6(g).
(i) An Employee's "Present Value of Accrued Retirement
Income" shall mean as of the Determination Date, the sum of the
following:
(1) the Present Value of his Accrued Retirement Income
as of the most recent valuation occurring within a twelve
(12) month period ending on the Determination Date.
(2) any Plan distributions made within the Plan Year
that includes the Determination Date or within the four (4)
preceding Plan Years. However, in the case of distributions
made after the valuation date and prior to the Determination
Date, such distributions are not included as distributions
for Top-Heavy purposes to the extent that such distributions
are already included in the Employee's Present Value of
Accrued Retirement Income as of the valuation date.
Notwithstanding anything herein to the contrary, all
distributions, including distributions made prior to
January 1, 1984, and distributions under a terminated plan
which if it had not been terminated would have been required
to be included in an Aggregation Group, will be counted.
(3) any Employee contributions, whether voluntary or
mandatory. However, amounts attributable to qualified
deductible employee contributions shall not be considered to
be a part of the Employee's Present Value of Accrued
Retirement Income.
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(4) with respect to unrelated rollovers and
plan-to-plan transfers (ones which are both initiated by the
Employee and made from a plan maintained by one employer to
a plan maintained by another employer), if this Plan
provides for rollovers or plan-to-plan transfers, it shall
always consider such rollover or plan-to-plan transfer as a
distribution for the purposes of this Section. If this Plan
is the plan accepting such rollovers or plan-to-plan
transfers, it shall not consider such rollovers or
plan-to-plan transfers accepted after December 31, 1983 as
part of the Employee's Present Value of Accrued Retirement
Income. However, rollovers or plan-to-plan transfers
accepted prior to January 1, 1984 shall be considered as
part of the Employee's Present Value of Accrued Retirement
Income.
(5) with respect to related rollovers and plan-to-plan
transfers (ones either not initiated by the Employee or made
to a plan maintained by the same employer), if this Plan
provides for rollovers or plan-to-plan transfers, it shall
not be counted as a distribution for purposes of this
Section. If this Plan is the plan accepting such rollover
or plan-to-plan transfer, it shall consider such rollover or
plan-to-plan transfer as part of the Employee's Present
Value of Accrued Retirement Income, irrespective of the date
on which such rollover or plan-to-plan transfer is accepted.
(j) A "Top-Heavy Group" shall mean an Aggregation Group in
which, as of the Determination Date, the sum of:
(1) the Present Value of Accrued Retirement Income of
Key Employees under all defined benefit plans included in
that group, and
(2) the Aggregate Accounts of Key Employees under all
defined contribution plans included in the group,
exceeds sixty percent (60%) of a similar sum determined for all
Employees.
14.7 Minimum Retirement Income for Top-Heavy Plan Years.
Notwithstanding anything herein to the contrary, for any
Top-Heavy Plan Year, the minimum Accrued Retirement Income
derived from Employer contributions for each Non-Key Employee,
including benefits accrued in years in which the Plan is not a
Top-Heavy Plan, shall equal a percentage of such Non-Key
Employee's highest average compensation not less than the lesser
of: (a) two percent (2%) multiplied by the Employee's number of
Years of Service with the Employer, or (b) twenty percent (20%).
For purposes of the minimum benefit, an Employee's Years of
Service shall exclude (a) Plan Years in which the Plan is not a
Top-Heavy Plan, and (b) Years of Service completed prior to
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January 1, 1984. The minimum benefit required by this Section
14.7 shall be calculated using the Employee's total compensation
and expressed in the form of a single life annuity (with no
ancillary benefits) beginning at such Employee's Normal
Retirement Date. An Employee's average compensation shall be
based on the five (5) consecutive years for which the Employee
had the highest compensation.
Notwithstanding the foregoing, in any Plan Year in which a
Non-Key Employee is an Employee in both this Plan and a defined
contribution plan, and both such plans are Top-Heavy Plans, the
Employer shall not be required to provide a Non-Key Employee with
both the full separate minimum defined benefit and the full
separate minimum defined contribution plan allocation.
Therefore, if a Non-Key Employee is participating in a defined
contribution plan maintained by the Employer and the minimum
allocation under Code Section 416(c)(2) is allocated to the
Non-Key Employee under such defined contribution plan, the
minimum Accrued Retirement Income provided for above shall not be
applicable, and no minimum benefit shall accrue on behalf of the
Non-Key Employee. Alternatively, the Employer may satisfy the
minimum benefit requirement of Code Section 416(c)(1) for the
Non-Key Employee by providing any combination of benefits and/or
contributions that satisfy the safe harbor rules of Treasury
Regulation Section 1.416-1(m-12).
14.8 Vesting requirements for Top-Heavy Plan Years.
Notwithstanding the provisions of Section 8.1, for any Top-Heavy
Plan Year, the vested portion of an Employee's Accrued Retirement
Income shall be determined on the basis of the Employee's Vesting
Years of Service according to the following schedule:
Years of Service Vested Percentage
less than 2 0
2 20
3 40
4 60
5 80
6 or more 100
The minimum Retirement Income for any Top-Heavy Plan Year shall
not be forfeited during any period for which the payment of the
Employee's Retirement Income is required to be suspended under
Section 5.10 of the Plan.
If in any subsequent Plan Year, the Plan ceases to be a
Top-Heavy Plan, the Retirement Board may, in its sole discretion,
elect to (a) continue to apply this vesting schedule in
determining the vested percentage of an Employee's Accrued
Retirement Income or (b) revert to the vesting schedule in effect
before the Plan became a Top-Heavy Plan. Any such reversion
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shall be treated as a Plan amendment pursuant to the terms of the
Plan. No decrease in an Employee's nonforfeitable percentage may
occur in the event the Plan's status as a Top-Heavy Plan changes
for any Plan Year.
14.9 Adjustments to maximum benefits for Top-Heavy Plans.
(a) In the case of an Employee who is a participant in a
defined benefit plan and a defined contribution plan maintained
by the Employer, and such plans as a group are determined to be
Top-Heavy for any limitation year beginning after December 31,
1983, "1.0" shall be substituted for "1.25" in each place it
appears in the denominators of Fractions A and B, as set forth in
Section 6.5 of the Plan, unless the extra minimum benefit is
provided pursuant to Section 14.9(b). Super Top-Heavy Plans
shall be required at all times to substitute "1.0" for "1.25" in
the denominator of each plan fraction.
(b) If a Key Employee is a participant in both a defined
benefit plan and a defined contribution plan that are both part
of a Top-Heavy Group (but neither of such plans is a Super
Top-Heavy Plan), the defined benefit and defined contribution
fractions set forth in Section 6.5 shall remain unchanged,
provided that in Section 14.7 above, "three percent (3%)" shall
be substituted for "two percent (2%)" and "twenty percent (20%)"
shall be increased by one (1) percentage point (but not more than
ten (10) percentage points) for each Year of Service included in
the computations under Section 14.7.
(c) For purposes of this Section 14.9, if the sum of the
defined benefit plan fraction and the defined contribution
fraction shall exceed 1.0 in any Plan Year for any Employee in
this Plan, the Employer shall eliminate any amounts in excess of
the limits set forth in Section 6.5, pursuant to Section 6.7 of
the Plan.
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ARTICLE XV
Post-retirement Medical Benefits
15
15.1 Definitions. The following words and phraseology as
used herein shall have the following meanings unless a different
meaning is plainly required by the context:
(a) "Pensioned Employee" means a former Employee of the
Employer who is eligible to receive Retirement Income after his
retirement at his Early, Normal, or Deferred Retirement Date, as
applicable, pursuant to the terms of the Plan, but shall not
include any former Employee who terminated his service with the
Employer prior to his Early, Normal, or Deferred Retirement Date
and who is entitled to Retirement Income under the Plan. A
"Pensioned Employee" shall not include a Key Employee, as defined
in Section 14.6(g), or effective January 1, 1991, any Pensioned
Employee of an Employer that has adopted the Plan pursuant to
Section 14.1 hereof but does not provide medical benefits to its
Pensioned Employees.
(b) "Dependents" means the Pensioned Employee's spouse who
is not legally separated from the Pensioned Employee and the
Pensioned Employee's unmarried children (both natural and legally
adopted) within the prescribed age limit set forth below. The
term "children" includes stepchildren and foster children who
reside with the Pensioned Employee in a regular parent-child
relationship and are dependent upon the Pensioned Employee for
principal support and maintenance. The term Dependent shall not
include any person who is covered, or eligible for coverage,
under the Plan as a Pensioned Employee or who is entitled to any
benefits under any provisions of this Plan because of having been
covered as a Pensioned Employee.
Children shall be considered to be within the prescribed age
limit if they are less than nineteen (19) years of age.
Unmarried children age nineteen (19) but less than age
twenty-five (25) continue to be within the prescribed age limit
if they are (1) dependent upon the Pensioned Employee for their
support and maintenance, or (2) qualify as a dependent on the
Pensioned Employee's tax return. Effective March 1, 1993,
unmarried children age nineteen (19) but less than age twenty-
five (25) continue to be within the prescribed age limit only if
they are (1) dependent upon the Pensioned Employee for support
and maintenance, and (2) regularly attending school on a full-
time basis. For purposes of this Article XV, an unmarried child
shall be considered to be regularly attending school on a full-
time basis if such child is enrolled in and regularly attending a
secondary school or an accredited vocational school, College or
University (as defined in Exhibit A) and meets the minimum
requirements of such school, College or University to maintain
full-time status. This shall also include an unmarried child who
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is enrolled as a part-time student at one of the above
institutions while such individual is taking a course load that
is equivalent to the minimum course load required for full-time
student status at such institution.
If both a husband and his wife are covered under this Plan
as Pensioned Employees of the Employer, either, but not both, may
elect to cover their eligible children as Dependents.
Any person covered or eligible for coverage under Article XV
as a Pensioned Employee, or under any group medical plan
maintained by the Employer as an Employee, shall not be
considered as a Dependent.
(c) "Covered Individual" means a Pensioned Employee or
Dependent of a Pensioned Employee who is eligible to receive
medical benefits under Article XV.
15.2 Eligibility of Pensioned Employees and their
Dependents.
(a) A person who is a Pensioned Employee on January 1, 1989
shall be eligible for coverage as a Pensioned Employee on
January 1, 1989, provided he was covered as an Employee under a
group medical plan maintained by the Employer immediately prior
to the time he became a Pensioned Employee.
(b) An Employee who becomes a Pensioned Employee on or
after January 1, 1989 shall be eligible for coverage on the date
he becomes a Pensioned Employee, provided he was covered as an
Employee under a group medical plan maintained by the Employer
immediately prior to the time he became a Pensioned Employee.
(c) A Dependent of a Pensioned Employee shall be eligible
for coverage under this Plan on the later of (1) the date the
Pensioned Employee becomes eligible for coverage hereunder and
(2) the date such person becomes a Dependent, and (3) the date of
payment by the Pensioned Employee of any required contributions
with respect to a Dependent.
15.3 Medical benefits. The medical benefits provided under
this Article XV by the Employer and each adopting Employer are
set forth in the copy of each such Employer's medical benefits
plan which is attached hereto as Exhibit A and specifically
incorporated herein by reference in its entirety, as may be
amended from time to time. Such medical benefits shall be
subject without limitation to all deductibles, maximums,
exclusions, coordination with Medicare and other medical plans,
and procedures for submitting claims and initiating legal
proceedings provided therein.
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15.4 Termination of coverage.
(a) Coverage of any Pensioned Employee shall cease as
follows:
(1) when Article XV is amended, terminated, or
discontinued in accordance with its terms; or
(2) when the Pensioned Employee fails to make when due
any required contribution; or
(3) as otherwise provided in Exhibit A.
(b) Coverage of any Dependent shall cease as follows:
(1) when Article XV is amended, terminated, or
discontinued in accordance with its terms; or
(2) when the Pensioned Employee fails to make when due
any required contribution; or
(3) as otherwise provided in Exhibit A.
15.5 Continuation of coverage to certain individuals.
(a) Anything in Article XV to the contrary notwithstanding,
a Pensioned Employee, Dependent spouse, or Dependent child shall
be entitled to elect continued medical coverage as provided under
the terms of Article XV upon the occurrence of a Qualifying
Event, provided such Pensioned Employee, Dependent spouse, or
Dependent child was entitled to benefits under Article XV on the
day prior to the Qualifying Event.
(1) "Qualifying Event" means with respect to any
Pensioned Employee, Dependent spouse, or Dependent child, as
appropriate, (A) the death of the Pensioned Employee,
(B) the divorce or legal separation of the Pensioned
Employee from the Dependent spouse, (C) a Dependent child
ceasing to be a Dependent as defined under the requirements
of Article XV, or (D) a proceeding in a case under Title 11,
United States Code, with respect to the Employer.
(b) The Pensioned Employee or Dependent electing continued
coverage under this Section 15.5 shall be required to pay such
monthly contributions as determined by the Employer to be equal
to a reasonable estimate of 102% of the cost of providing
coverage for such period for similarly situated beneficiaries
which (1) is determined on an actuarial basis and (2) takes into
account such factors as the Secretary of the Treasury may
prescribe.
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(c) The continuation coverage elected by a Pensioned
Employee, Dependent spouse, or Dependent child shall begin on the
date of the Qualifying Event and end not earlier than the first
to occur of the following:
(1) The third anniversary of the Qualifying Event;
(2) The termination of Article XV of the Plan;
(3) The failure of the Pensioned Employee or Dependent
to pay any required contribution when due;
(4) The date on which the Pensioned Employee or
Dependent first becomes, after the date of his election,
(A) a covered employee under any other group health plan
which does not contain any exclusion or limitation with
respect to any preexisting condition of such individual, or
(B) entitled to benefits under Title XVIII of the Social
Security Act; or
(5) The date the Dependent spouse becomes covered
under another group health plan which does not contain any
exclusion or limitation with respect to any preexisting
condition of such Dependent spouse.
(d) Any election to continue coverage under this
Section 15.5 shall be made during the election period
(1) beginning not later than the termination date of coverage by
reason of the Qualifying Event and (2) ending sixty (60) days
following the later of the date described in (1) above or the
date any Pensioned Employee, Dependent spouse, or Dependent child
receives notice of a Qualifying Event from the Employer.
(e) The Employer shall provide each Pensioned Employee and
Dependent spouse, if any, written notice of the rights provided
in this Section 15.5. The Pensioned Employee or Dependent spouse
is required to notify the Employer within thirty (30) days of any
Qualifying Event described in Section 15.5(a)(1)(B) or (C), and
the Employer shall provide the Dependent spouse or Dependent
child written notice of the rights provided in this Section 15.5
within fourteen (14) days thereafter. Notice to the Dependent
spouse shall be deemed notice to each Dependent child residing
with such spouse at the time such notification is made.
15.6 Contributions to fund medical benefits. Any
contributions which the Employer deems necessary to provide the
medical benefits under Article XV will be made from time to time
by or on behalf of the Employer, and contributions shall be
required of the Pensioned Employees to the Employer's medical
benefit plan in amounts determined in the sole discretion of the
Employer from time to time. All Employer contributions shall be
made to the Trustee under the Trust Agreement provided for in
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Article XI and shall be allocated to a separate account
maintained solely to fund the medical benefits provided under
Article XV. The Employer shall designate that portion of any
contribution to the Plan allocable to the funding of medical
benefits under this Article XV. In no event at any time prior to
the satisfaction of all liabilities under this Article XV shall
any part of the corpus or income of such separate account be used
for, or diverted to, purposes other than for the exclusive
purpose of providing benefits under this Article XV. Effective
January 1, 1991, subject to the requirements of Code Section 420,
the Employer shall have the right, in its sole discretion, to
transfer any excess corpus or income of the Plan allocated to
fund Retirement Income to the separate account to fund medical
benefits under this Article XV.
The amount of contributions to be made by or on behalf of
the Employer for any Plan Year shall be determined in accordance
with any generally accepted actuarial method which is reasonable
in view of the provisions and coverage of Article XV, the funding
medium, and any other applicable considerations. However, the
Employer is under no obligation to make any contributions under
Article XV after Article XV is terminated, except to fund claims
for medical expenses incurred prior to the date of termination.
The medical benefits provided under this Article XV, when
added to any life insurance protection provided under the Plan,
shall be subordinate to the retirement benefits provided under
the Plan.
Subject to any transitional rule applicable to contributions
made under this Article XV prior to January 1, 1990, effective
October 3, 1989, the aggregate of costs of the medical benefits
(measured from January 1, 1987) plus the costs of any life
insurance protection shall not exceed twenty-five percent (25%)
of the sum of the aggregate of costs of retirement benefits under
the Plan (other than past service credits), the aggregate of
costs of the medical benefits and the costs of any life insurance
protection (both measured from January 1, 1987). The aggregate
of costs of retirement benefits, other than for past service
credits, and the aggregate of costs of medical benefits provided
under the Plan shall be determined using the projected unit
credit funding method and the actuarial assumptions set forth in
Exhibit B, a copy of which is attached hereto and specifically
incorporated herein by reference in its entirety, and as may be
amended from time to time by the committee responsible for
providing a procedure for establishing and carrying out a funding
policy and method for the Plan pursuant to Section 10.9 of the
Plan. Contributions allocated to any separate account
established for a Pensioned Employee from which medical benefits
will be payable solely to such Pensioned Employee or his
Dependents shall be treated as an Annual Addition as defined in
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Section 6.6(a) to any defined contribution plan maintained by the
Employer.
15.7 Pensioned Employee contributions. It shall be the sole
responsibility of the Pensioned Employee to notify the Employer
promptly in writing when a change in the amount of the Pensioned
Employee's contribution is in order because a Dependent has
become ineligible for coverage under this Article XV. No person
shall become covered under this Article XV for whom the Pensioned
Employee has not made the required contribution. Any
contribution paid by a Pensioned Employee for any person after
such person shall have become ineligible for coverage under this
Article XV shall be returned upon written request but only
provided such written request by or on behalf of the Pensioned
Employee is received by the Employer within ninety (90) days from
the date coverage terminates with respect to such ineligible
person.
15.8 Amendment of Article XV. The Employer reserves the
right, through action of its Board of Directors, to amend Article
XV (including Exhibit A) pursuant to Section 13.1 or the Trust
without the consent of any Pensioned Employee, or his Dependents,
provided, however, that no amendment of this Article or the Trust
shall cancel the payment or reimbursement of expenses for claims
already incurred by a Pensioned Employee or his Dependent prior
to the date of any amendment, nor shall any such amendment
increase the duties and obligations of the Trustee except with
its consent. This Article XV, as set forth in the Plan document,
is not a contract and non-contributory benefits hereunder are
provided gratuitously, without consideration from any Pensioned
Employee or his Dependents. The Employer makes no promise to
continue these benefits in the future and rights to future
benefits will never vest. In particular, retirement or the
fulfillment of the prerequisites for a retirement benefit
pursuant to the terms of the Plan or under the terms of any other
employee benefit plan maintained by the Employer shall not confer
upon any Pensioned Employee or Dependents any right to continued
benefits under this Article XV.
15.9 Termination of Article XV. Although it is the
intention of the Employer that this Article shall be continued
and the contribution shall be made regularly thereto each year,
the Employer, by action of its Board of Directors pursuant to
Section 13.1, may terminate this Article XV or permanently
discontinue contributions at any time in its sole discretion.
This Article XV, as set forth in the Plan document, is not a
contract and non-contributory benefits hereunder are provided
gratuitously, without consideration from any Pensioned Employee
or his Dependents. The Employer makes no promise to continue
these benefits in the future and rights to future benefits will
never vest. In particular, retirement or the fulfillment of the
prerequisites for a retirement benefit pursuant to the terms of
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the Plan or under the terms of any other employee benefit plan
maintained by the Employer shall not confer upon any Pensioned
Employee or his Dependents any right to continued benefits under
this Article XV. Effective January 1, 1991, in the event the
Employer or any adopting Employer shall terminate its provision
of the medical benefits described in Exhibit A to Section 15.3 of
the Plan to its Pensioned Employees, this Article XV of the Plan
shall automatically terminate with respect to the Pensioned
Employees and their Dependents of such Employer without the
requirement of any action by such Employer.
15.10 Reversion of assets upon termination. Upon the
termination of this Article XV and the satisfaction of all
liabilities under this Article XV, all remaining assets in the
separate account described in Section 15.6 shall be returned to
the Employer.
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ARTICLE XVI
Early Retirement Incentive Program
16
16.1 Eligibility. This Article XVI is effective as of May
1, 1994. All Employees of the Employer including, solely for
purposes of this Article, those individuals who are currently
receiving long term disability benefits from a welfare benefit
plan sponsored by the Employer: (a) who have or will complete ten
(10) or more years of Accredited Service on or before December
31, 1994; and (b) have or will attain age fifty-five (55) on or
before December 31, 1994 ("Eligible Employee") shall be eligible
to receive the benefits described in Section 16.3 below if,
during the period from July 16, 1994 through 5:00 p.m. CDST on
August 31, 1994, such Employee elects to retire by filing an
election form and waiver agreement with the Retirement Board no
later than 5:00 p.m. CDST on August 31, 1994 and allows such
election form and waiver agreement to become effective. In the
event an Eligible Employee does not submit an election form and
waiver agreement by 5:00 p.m. CDST on August 31, 1994 and allow
such Agreement to become effective, the Retirement Board shall
interpret such failure as an election not to receive the benefits
provided under this Article XVI.
16.2 Retirement Dates of Eligible Employees.
(a) Employees who satisfy eligibility criteria by October
31, 1994. The Early Retirement Date of an Eligible Employee who
elects to retire in accordance with the provisions of this
Article XVI and who is age fifty-five (55) or older with ten (10)
or more years of Accredited Service by October 31, 1994 shall be
November 1, 1994.
(b) Employees who satisfy eligibility criteria subsequent
to October 31, 1994. The Early Retirement Date of an Eligible
Employee who elects to retire in accordance with the provisions
of this Article XVI and who attains age fifty-five (55) or older
with ten (10) or more years of Accredited Service subsequent to
October 31, 1994, but prior to December 31, 1994, shall be the
first day of the first month following the date such Eligible
Employee satisfies the age and service criteria described in this
Section 16.2(b).
(c) Exception for critical projects. Notwithstanding the
foregoing, in the sole discretion of the Employer, the Early
Retirement Date of an Eligible Employee may be postponed beyond
the Eligible Employee's Early Retirement Date determined in
accordance with the provisions of paragraph (a) or (b) above,
whichever is applicable, provided, however, that no Eligible
Employee's Early Retirement Date shall be postponed beyond
October 31, 1995.
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16.3 Early retirement incentive program benefits.
(a) Early retirement replacement benefit. In addition to
any Retirement Income to which an Eligible Employee may be
entitled in accordance with the provisions of Article V of the
Plan, if an Eligible Employee retires from the service of the
Employer in accordance with the provisions of this Article XVI
prior to his Normal Retirement Date and elects to commence his
Retirement Income prior to his Normal Retirement Date pursuant to
the provisions of Section 5.7 of the Plan, the amount of
Retirement Income to be received by such Eligible Employee under
Section 5.5 shall not be reduced due to early commencement of
such Retirement Income.
(b) Social Security Bridge Benefit. An Eligible Employee
who retires in accordance with the provisions of this Article XVI
prior to the attainment of age sixty-two (62) shall be paid an
amount equal to the estimated monthly Social Security benefits
such Eligible Employee would become entitled to beginning at age
sixty-five (65) based upon the Social Security Act in effect at
the time of such Employee's retirement and such Eligible
Employee's estimated Social Security earnings while employed with
the Employer or an Affiliated Employer through his Early
Retirement Date. This "Social Security Bridge Benefit" shall be
paid monthly commencing on the Employee's Early Retirement Date
(determined in accordance with Section 16.2 above) and shall
continue to be paid on the first day of each month thereafter up
to and including the first day of the month in which such
Eligible Employee attains age sixty-two (62).
(c) Provisional Payees. The benefits described in this
Section 16.3 shall be subject to and administered in accordance
with the provisions of Article VII of the Plan; provided,
however, that in the event of the Eligible Employee's death prior
to his sixty-second (62nd) birthday, one hundred percent (100%)
of the monthly Social Security Bridge Benefit to which the
Eligible Employee is entitled shall continue to be paid to his
Provisional Payee through the first day of the month in which
such Eligible Employee would have attained age sixty-two (62) had
the Eligible Employee not died.
16.4 Restoration to service. Notwithstanding any provisions
of Section 5.10 to the contrary, in the event an Eligible
Employee who retires in accordance with the provisions of this
Article XVI subsequently returns to the service of the Employer
or any Affiliated Employer, all benefits payable to such Eligible
Employee under this Article XVI shall cease and upon such
Eligible Employee's subsequent retirement, the Eligible Employee
shall receive the Actuarial Equivalent of the greater of:
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(a) the Retirement Income the Eligible Employee would
receive under the Plan based upon his Accredited Service and age
at the date of his subsequent retirement, reduced by the
Actuarial Equivalent of any Retirement Income, including any
amount payable under Section 16.3(b), which the Employee received
prior to his reemployment; or
(b) the Retirement Income the Eligible Employee was
actually receiving prior to his reemployment plus any amounts
payable under Section 16.3(b).
IN WITNESS WHEREOF, the Board of Directors of Mississippi
Power Company through its authorized officers has adopted this
amendment and restatement of the Pension Plan for Employees of
Mississippi Power Company this day of , ,
to be effective January 1, 1989.
MISSISSIPPI POWER COMPANY
By:
Its:
ATTEST:
By:
Its:
[CORPORATE SEAL]
[adamscl] h:\wpdocs\mtd\mpc\mpc-pens.94
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Exhibit 10(e)20
SUPPLEMENTAL BENEFIT PLAN
FOR
MISSISSIPPI POWER COMPANY
<PAGE>
SUPPLEMENTAL BENEFIT PLAN
FOR
MISSISSIPPI POWER COMPANY
Page
ARTICLE I - PURPOSE AND ADOPTION OF PLAN . . . . . . . 1
1.1 Adoption . . . . . . . . . . . . . . . . 1
1.2 Purpose. . . . . . . . . . . . . . . . . 1
ARTICLE II - DEFINITIONS . . . . . . . . . . . . . . . 2
2.1 Account. . . . . . . . . . . . . . . . . 2
2.2 Affiliated Employer. . . . . . . . . . . 2
2.3 Beneficiary. . . . . . . . . . . . . . . 2
2.4 Board of Directors . . . . . . . . . . . 2
2.5 Code . . . . . . . . . . . . . . . . . . 2
2.6 Common Stock . . . . . . . . . . . . . . 2
2.7 Company. . . . . . . . . . . . . . . . . 2
2.8 Deferred Compensation Plan . . . . . . . 2
2.9 Effective Date . . . . . . . . . . . . . 3
2.10 Employee . . . . . . . . . . . . . . . . 3
2.11 ESOP . . . . . . . . . . . . . . . . . . 3
2.12 Non Pension Benefit. . . . . . . . . . . 3
2.13 Participant. . . . . . . . . . . . . . . 3
2.14 Pension Benefit. . . . . . . . . . . . . 3
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2.15 Pension Plan . . . . . . . . . . . . . . 4
2.16 Plan . . . . . . . . . . . . . . . . . . 4
2.17 Plan Year. . . . . . . . . . . . . . . . 4
2.18 Savings Plan. . . . . . . . . . . . . . 4
ARTICLE III - ADMINISTRATION OF PLAN . . . . . . . . . 4
3.1 Administrator. . . . . . . . . . . . . . 4
3.2 Powers . . . . . . . . . . . . . . . . . 5
3.3 Duties of the Board of
Directors. . . . . . . . . . . . . . . 5
3.4 Indemnification. . . . . . . . . . . . . 7
ARTICLE IV - ELIGIBILITY . . . . . . . . . . . . . . . 7
4.1 Eligibility Requirements . . . . . . . . 7
4.2 Determination of Eligibility . . . . . . 8
ARTICLE V - BENEFITS . . . . . . . . . . . . . . . . . 8
5.1 Pension Benefit. . . . . . . . . . . . . 8
5.2 Non Pension Benefit. . . . . . . . . . . 10
5.3 Distribution of Benefits . . . . . . . . 13
5.4 Funding of Benefits. . . . . . . . . . . 16
5.5 Withholding. . . . . . . . . . . . . . . 16
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ARTICLE VI - MISCELLANEOUS . . . . . . . . . . . . . . 17
6.1 Assignment . . . . . . . . . . . . . . . 17
6.2 Amendment and Termination. . . . . . . . 17
6.3 No Guarantee of Employment . . . . . . . 18
6.4 Construction . . . . . . . . . . . . . . 18
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<PAGE>
SUPPLEMENTAL BENEFIT PLAN
FOR
MISSISSIPPI POWER COMPANY
ARTICLE I - PURPOSE AND ADOPTION OF PLAN
1.1 Adoption: Mississippi Power Company hereby adopt and
establish the Supplemental Benefit Plan for Mississippi Power
Company. The Plan shall be an unfunded deferred compensation
arrangement whose benefits shall be paid solely from the general
assets of the Company.
1.2 Purpose: The Plan is designed to provide certain
retirement and other deferred compensation benefits primarily for
a select group of management or highly compensated employees
which are not otherwise payable or cannot otherwise be provided
by the Company under the Pension Plan for Employees of
Mississippi Power Company, the Employee Savings Plan for The
Southern Company System, and the Employee Stock Ownership Plan of
The Southern Company System, as a result of the limitations set
forth under Sections 401(a)(17), 402(g), and 415 of the Internal
Revenue Code of 1986, as amended from time to time.
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ARTICLE II DEFINITIONS
2.1 "Account" shall mean the account or accounts
established and maintained by a Company to reflect the interest
of a Participant in the Plan resulting from a Participant's Non
Pension Benefit calculated in accordance with Section 5.2.
2.2 "Affiliated Employer" shall mean any corporation which
is a member of the controlled group of corporations of which The
Southern Company is the common parent corporation.
2.3 "Beneficiary" shall mean any person, estate, trust, or
organization entitled to receive any payment under the Plan upon
the death of a Participant.
2.4 "Board of Directors" shall mean the Board of Directors
of the Company.
2.5 "Code" shall mean the Internal Revenue Code of 1986,
as amended from time to time.
2.6 "Common Stock" shall mean common stock of The Southern
Company.
2.7 "Company" shall mean Mississippi Power Company.
2.8 "Deferred Compensation Plan" shall mean the Deferred
Compensation Plan for The Southern Electric System, as amended
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from time to time, following its adoption by the Board of
Directors.
2.9 "Effective Date" shall mean January 1, 1983. The
Effective Date of this amendment and restatement shall mean
January 1, 1988.
2.10 "Employee" shall mean any person who is currently
employed by the Company.
2.11 "ESOP" shall mean the Employee Stock Ownership Plan of
The Southern Company System, as amended from time to time.
2.12 "Non Pension Benefit" shall mean the benefit described
in Section 5.2.
2.13 "Participant" shall mean an Employee or former
Employee of a Company who is eligible to receive benefits
provided by the Plan.
2.14 "Pension Benefit" shall mean the benefit described in
Section 5.1.
2.15 "Pension Plan" shall mean the defined benefit pension
plan maintained by the Company or an Affiliated Employer, as
amended from time to time.
2.16 "Plan" shall mean the Supplemental Benefit Plan for
Mississippi Power Company, as amended from time to time.
2.17 "Plan Year" shall mean the calendar year.
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2.18 "Savings Plan" shall mean the Employee Savings Plan
for The Southern Company System, as amended from time to time.
Where the context requires, the definitions of all terms set
forth in the Pension Plan, the ESOP, the Savings Plan and the
Deferred Compensation Plan shall apply with equal force and
effect for purposes of interpretation and administration of the
Plan, unless said terms are otherwise specifically defined in the
Plan. The masculine pronoun shall be construed to include the
feminine pronoun and the singular shall include the plural, where
the context so requires.
ARTICLE III ADMINISTRATION OF PLAN
3.1 Administrator. The general administration of the Plan
shall be placed in the Board of Directors.
3.2 Powers. The Board of Directors shall administer the
Plan in accordance with its terms and shall have all powers
necessary to carry out the provisions of the Plan more
particularly set forth herein. It shall interpret the Plan and
shall determine all questions arising in the administration,
interpretation and application of the Plan. Any such
determination by it shall be conclusive and binding on all
persons. It may adopt such regulations as it deems desirable for
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the conduct of its affairs. It may appoint such accountants,
counsel, actuaries, specialists and other persons as it deems
necessary or desirable in connection with the administration of
this Plan, and shall be the agent for the service of process.
3.3 Duties of the Board of Directors.
(a) The Board of Directors is responsible for the
daily administration of the Plan. It may appoint other persons
or entities to perform any of its fiduciary functions. The Board
of Directors and any such appointee may employ advisors and other
persons necessary or convenient to help it carry out its duties,
including its fiduciary duties. The Board of Directors shall
have the right to remove any such appointee from his position.
Any person, group of persons or entity may serve in more than one
fiduciary capacity.
(b) The Board of Directors shall maintain accurate
and detailed records and accounts of Participants and of their
rights under the Plan and of all receipts, disbursements,
transfers and other transactions concerning the Plan. Such
accounts, books and records relating thereto shall be open at all
reasonable times to inspection and audit by persons designated by
the Board of Directors.
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(c) The Board of Directors shall take all steps
necessary to ensure that the Plan complies with the law at all
times. These steps shall include such items as the preparation
and filing of all documents and forms required by any
governmental agency; maintaining of adequate Participants'
records; recording and transmission of all notices required to be
given to Participants and their Beneficiaries; the receipt and
dissemination, if required, of all reports and information
received from an Employing Company; securing of such fidelity
bonds as may be required by law; and doing such other acts
necessary for the proper administration of the Plan. The Board
of Directors shall keep a record of all of its proceedings and
acts, and shall keep all such books of account, records and other
data as may be necessary for proper administration of the Plan.
3.4 Indemnification. The Company shall indemnify the
Board of Directors against any and all claims, losses, damages,
expenses and liability arising from an action or failure to act,
except when the same is finally judicially determined to be due
to gross negligence or willful misconduct. The Company may
purchase at their own expense sufficient liability insurance for
the Board of Directors to cover any and all claims, losses,
damages and expenses arising from any action or failure to act in
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connection with the execution of the duties as Board of
Directors.
ARTICLE IV ELIGIBILITY
4.1 Eligibility Requirements. All Employees (a) whose
benefits under the Pension Plan of the Company are limited by the
limitations set forth in Sections 401(a)(17) and 415 of the Code,
(b) for whom contributions by the Company to the Savings Plan are
limited by the limitations set forth in Sections 401(a)(17),
401(k), 401(m), 402(g) and 415 of the Code, or (c) for whom
contributions by the Company to the ESOP are limited by the
limitations set forth in Sections 401(a)(17) and 415 of the Code,
shall be eligible to receive benefits under the Plan.
4.2 Determination of Eligibility. The Board of Directors
shall determine which Employees are eligible to participate.
Upon becoming a Participant, an Employee shall be deemed to have
assented to the Plan and to any amendments hereafter adopted.
The Board of Directors shall be authorized to rescind the
eligibility of any Participant if necessary to insure that the
Plan is maintained primarily for the purpose of providing
deferred compensation to a select group of management or highly
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compensated employees under the Employee Retirement Income
Security Act of 1974, as amended.
ARTICLE V BENEFITS
5.1 Pension Benefit.
(a) If a Participant has Accredited Service with
respect to the Pension Plan of the Company, but not with respect
to the Pension Plan of any Affiliated Employer, he shall be
entitled to a Pension Benefit equal to that portion of his
Retirement Income under the Pension Plan of the Company which is
not payable under such Pension Plan as a result of the
limitations imposed by Sections 401(a)(17), 415(b), and 415(e) of
the Code.
(b) If a Participant has Accredited Service with
respect to the Pension Plan of the Company and with respect to
the Pension Plan of one or more Affiliated Employers, his Pension
Benefit payable by the Company, and any Affiliated Employer(s)
shall be equal to that portion of his combined Retirement Income
under each Pension Plan which is not payable under any of such
Pension Plans as a result of the limitations described by
Sections 401(a)(17), 415(b), and 415(e) of the Code, multiplied
by a fraction, the sum of the individual fractions not to exceed
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one (1), the numerator of which is his years of Accredited
Service under the Pension Plan of the Company or any Affiliated
Employer(s) and the denominator which is his total years of
Accredited Service under the Pension Plans of the Company and any
Affiliated Employer(s).
(c) For purposes of this Section 5.1, the Pension
Benefit of a Participant shall be calculated based on the
Participant's Earnings that are considered under the Pension Plan
of the Company in calculating his Retirement Income, without
regard to the limitation of Section 401(a)(17) of Code, but
excluding any portion of his Compensation he may have elected to
defer under the Deferred Compensation Plan.
(d) To the extent that a Participant's Retirement
Income under a Pension Plan is recalculated as a result of an
amendment to such Pension Plan in order to increase the amount of
his Retirement Income, the Participant's Pension Benefit shall
also be recalculated in order to properly reflect such increase
in determining payments of the Participant's Pension Benefit made
on or after the effective date of such increase.
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5.2 Non Pension Benefit.
(a) A Participant shall be entitled to a Non Pension
Benefit which is determined under this Section 5.2. An Account
shall be established for the Participant by the Company, as of
his initial Plan Year of participation in the Plan. Each Plan
Year such Account shall be credited with an amount equal to the
amount that the Company is prohibited from contributing (1) to
the Savings Plan on behalf of the Participant as a result of the
limitations imposed by Sections 401(a)(17), 401(k), 401(m),
402(g), 415(c), and 415(e) of the Code and (2) to the ESOP on
behalf of the Participant as a result of the limitations imposed
by Sections 401(a)(17), 415(c), and 415(e) of the Code.
(b) For purposes of this Section 5.2, the Non Pension
Benefit of a Participant shall be calculated based on the
Participant's Compensation that would have been considered in
calculating allocations to his accounts under the Savings Plan
and ESOP, without regard to the limitations of Section 401(a)(17)
or Section 402(g) of the Code, but excluding any portion of his
Compensation he may have elected to defer under the Deferred
Compensation Plan.
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(c) All amounts so credited to the Account of the
Participant shall be deemed to be invested in the Common Stock at
the same time that such amounts would have been so invested if
they had been contributed by the Company to the Savings Plan or
the ESOP, as the case may be. In addition, such Account shall be
credited with respect to shares of Common Stock allocated to the
Participant's Account as follows:
(1) In the case of cash dividends, such
additional shares as could be purchased with the dividends
which would have been payable if the credited shares had
been outstanding;
(2) In the case of dividends payable in property
other than cash or Common Stock, such additional shares as
could be purchased with the fair market value of the
property which would have been payable if the credited
shares had been outstanding; or
(3) In the case of dividends payable in Common
Stock, such additional shares as would have been payable on
the credited shares if they had been outstanding.
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(d) As soon as practicable following the first day of
his eligibility to have benefits credited to his Account, a
Participant shall designate in writing on a form to be prescribed
by the Company the method of payment of his Account, which shall
be the payment of a single lump sum or a series of annual
installments not to exceed twenty (20). The method of
distribution initially designated by a Participant shall not be
revoked and shall govern the distribution of each Account
established for the benefit of the Participant by the Company.
Notwithstanding, in the sole discretion of the Board of Directors
upon application by the Participant, the method of distribution
designated by such Participant may be modified not prior to 395
days nor later than 365 days prior to a Participant's date of
separation from service in order to change the form of
distribution of his Account in accordance with the terms of the
Plan. Each Participant, his Beneficiary, and legal
representative shall be bound as to any action taken pursuant to
the method of distribution elected by a Participant and the terms
of the Plan.
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5.3 Distribution of Benefits.
(a) The Pension Benefit, as determined in accordance
with Section 5.1, shall be payable in monthly increments on the
first day of the month concurrently with and in the same manner
as the Participant's Retirement Income under the Pension Plan.
The Beneficiary of a Participant's Pension Benefit shall be the
same as the beneficiary of the Participant's Retirement Income
under the Pension Plan.
(b) When a Participant terminates his employment with
the Company, said Participant shall be entitled to receive the
market value of any shares of Common Stock (and fractions
thereof) reflected in any Account maintained by the Company for
his benefit under the Plan in a single lump sum distribution or
annual installments not to exceed twenty (20). Such distribution
shall be made not later than sixty (60) days following the close
of the calendar quarter in which his termination of employment
occurs, or as soon as reasonably practicable thereafter. The
transfer by a Participant between companies in the Southern
electric system shall not be deemed to be a termination of
employment with the Company. No portion of a Participant's
Account shall be distributed in Common Stock.
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(c) In the event a Participant elects to receive the
distribution of his Account in annual installments, the first
payment shall be made not later than sixty (60) days following
the close of the calendar quarter in which his termination of
employment occurs, or as soon as reasonably practicable
thereafter, and shall be an amount equal to the balance in the
Participant's Account divided by the number of annual installment
payments. Each subsequent annual payment shall be an amount
equal to the balance in the Participant's Account divided by the
number of the remaining annual payments and shall be due on the
anniversary of the preceding payment date. No portion of a
Participant's Account shall be distributed in Common Stock.
(d) Upon the death of a Participant, or a former
Participant prior to the payment of all amounts credited to said
Participant's Account, the unpaid balance shall be paid in the
sole discretion of the Board of Directors (1) in a lump sum to
the designated Beneficiary of a Participant or former Participant
within sixty (60) days following the close of the calendar
quarter in which the Board of Directors is provided evidence of
the Participant's death (or as soon as reasonably practicable
thereafter) or (2) in accordance with the distribution method
chosen by such Participant or former Participant. The
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<PAGE>
Beneficiary designation may be changed by the Participant or
former Participant at any time without the consent of the prior
Beneficiary. In the event a Beneficiary designation is not on
file or the designated Beneficiary is deceased or cannot be
located, payment will be made to the estate of the Participant or
former Participant. No portion of a Participant's Account shall
be distributed in Common Stock.
(e) Upon the total disability of a Participant or
former Participant, as determined by the Social Security
Administration, the unpaid balance of his Account shall be paid
in the sole discretion of the Board of Directors (1) in a lump
sum to the Participant or former Participant, or his legal
representative within sixty (60) days following the notification
of the Board of Directors of the determination of disability by
the Social Security Administration (or as soon as reasonably
practicable thereafter) or (2) in accordance with the
distribution method elected by such Participant or former
Participant. No portion of a Participant's Account shall be
distributed in Common Stock.
(f) The Board of Directors in its sole discretion
upon application made by the Participant, a designated
Beneficiary, or their legal representative, may determine to
-15-
<PAGE>
accelerate payments or, in the event of death or total disability
(as determined by Social Security Administration), to extend or
otherwise make payments in a manner different from the manner in
which such payment would be made under the method of distribution
elected by the Participant in the absence of such determination.
5.4 Funding of Benefits. The Company maintaining an
Account for the benefit of a Participant shall not reserve or
otherwise set aside funds for the payment of its obligations
under the Plan, and such obligations shall be paid solely from
the general assets of the Company. Notwithstanding that a
Participant shall be entitled to receive the balance of his
Account under the Plan, the assets from which such amount shall
be paid at all times remain subject to the claims of the
creditors of the Company.
5.5 Withholding. There shall be deducted from the payment
of any Pension Benefit or Non Pension Benefit due under the Plan
the amount of any tax required by any governmental authority to
be withheld and paid over by the Company to such governmental
authority for the account of the Participant or Beneficiary
entitled to such payment.
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<PAGE>
ARTICLE VI MISCELLANEOUS
6.1 Assignment. Neither the Participant, his Beneficiary,
or his legal representative shall have any rights to sell,
assign, transfer or otherwise convey the right to receive the
payment of any Pension Benefit or Non Pension Benefit due
hereunder, which payment and the right thereto are expressly
declared to be nonassignable and nontransferable. Any attempt to
assign or transfer the right to payment under the Plan shall be
null and void and of no effect.
6.2 Amendment and Termination. The Plan may be amended or
terminated at any time by the Board of Directors, provided that
no amendment or termination shall cause a forfeiture or reduction
in any benefits accrued as of the date of such amendment or
termination.
6.3 No Guarantee of Employment. Participation hereunder
shall not be construed as creating any contract of employment
between the Company and a Participant, nor shall it limit the
right of the Company to suspend, terminate, alter, modify,
whether or not for cause, the employment relationship between the
Company and a Participant.
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<PAGE>
6.4 Construction. This Plan shall be construed in
accordance with and governed by the laws of the State of
Mississippi, to the extent such laws are not otherwise superseded
by the laws of the United States.
IN WITNESS WHEREOF, the Plan has been executed by duly
authorized officers of Mississippi Power Company, pursuant to
resolutions of the Board of Directors of the Mississippi Power
Company, this day of , .
MISSISSIPPI POWER COMPANY
(CORPORATE SEAL)
By:
Attest:
[adamscl] h:\wpdocs\mtd\mpc\sup-ben.pln
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<PAGE>
Exhibit 10(f)15
EMPLOYEES' RETIREMENT PLAN
OF
SAVANNAH ELECTRIC AND POWER COMPANY
As Amended and Restated Effective January 1, 1989
<PAGE>
EMPLOYEES' RETIREMENT PLAN
OF
SAVANNAH ELECTRIC AND POWER COMPANY
As Amended To and Including
TABLE OF CONTENTS
Page No.
ARTICLE 1 - DEFINITIONS . . . . . . . . . . . . . . . . . . . 1
ARTICLE 2 - RETIREMENT ANNUITIES PURCHASED UNDER
GROUP ANNUITY CONTRACT AND CHANGE OF FUNDING . . . 9
ARTICLE 3 - MEMBERSHIP . . . . . . . . . . . . . . . . . . . 10
ARTICLE 4 - SERVICE . . . . . . . . . . . . . . . . . . . . . 12
4.01 Continuous Service . . . . . . . . . . . . . . 12
4.02 Credited Service . . . . . . . . . . . . . . . 12
4.03 Breaks in Service . . . . . . . . . . . . . . 14
4.04 Disabled Members . . . . . . . . . . . . . . . 15
4.05 Service with Certain Other Employers . . . . . 15
ARTICLE 5 - BENEFITS . . . . . . . . . . . . . . . . . . . . 17
5.01 Normal and Late Retirement . . . . . . . . . . 17
5.02 Early Retirement . . . . . . . . . . . . . . . 19
5.03 Termination of Employment . . . . . . . . . . 20
5.04 Adjustment of Retirement Allowance for Social
Security Benefits . . . . . . . . . . . . . . 21
5.05 Restoration of Retired Member or Former
Member to Service . . . . . . . . . . . . . . 21
5.06 Additional Monthly Benefit . . . . . . . . . . 24
5.07 Written Application . . . . . . . . . . . . . 25
ARTICLE 6 - LIMITATIONS ON BENEFITS . . . . . . . . . . . . . 26
6.01 Maximum Benefits . . . . . . . . . . . . . . . 26
ARTICLE 7 - DISTRIBUTION OF BENEFITS . . . . . . . . . . . . 32
7.01 Surviving Spouse Benefit . . . . . . . . . . . 32
7.02 Qualified Joint and Survivor Annuity . . . . . 32
7.03 Qualified Preretirement Survivor Annuity . . . 32
7.04 Definitions . . . . . . . . . . . . . . . . . 36
7.05 Notice Requirements . . . . . . . . . . . . . 37
i
<PAGE>
7.06 Transitional Rules . . . . . . . . . . . . . . 38
7.07 Alternative Forms of Distribution . . . . . . 38
7.08 Cash-Out of Annuity Benefits . . . . . . . . . 39
7.09 Commencement of Benefits . . . . . . . . . . . 40
7.10 TEFRA 242(b)(2) Transitional Rules . . . . . . 42
7.11 Requirement for Direct Rollovers . . . . . . . 42
ARTICLE 8 - CONTRIBUTIONS . . . . . . . . . . . . . . . . . . 44
ARTICLE 9 - ADMINISTRATION OF THE PLAN . . . . . . . . . . . 45
ARTICLE 10 - MANAGEMENT OF FUNDS . . . . . . . . . . . . . . 48
ARTICLE 11 - CERTAIN RIGHTS AND LIMITATIONS . . . . . . . . . 49
ARTICLE 12 - NON-ALIENATION OF BENEFITS . . . . . . . . . . . 52
ARTICLE 13 - AMENDMENTS . . . . . . . . . . . . . . . . . . . 53
ARTICLE 14 - CONSTRUCTION . . . . . . . . . . . . . . . . . . 54
ARTICLE 15 - TOP-HEAVY PROVISIONS . . . . . . . . . . . . . . 55
15.01 Top-Heavy Plan Requirements . . . . . . . . . 55
15.02 Determination of Top-Heavy Status . . . . . . 55
15.03 Minimum Retirement Income for Top-Heavy Plan
Years . . . . . . . . . . . . . . . . . . . . 60
15.04 Vesting Requirements for Top-Heavy Plan
Years . . . . . . . . . . . . . . . . . . . . 61
15.05 Adjustments to Maximum Benefits for Top-Heavy
Plans . . . . . . . . . . . . . . . . . . . . 62
ARTICLE 16 - EARLY RETIREMENT INCENTIVE PROGRAM . . . . . . . 64
16.01 Eligibility . . . . . . . . . . . . . . . . . 64
16.02 Benefits . . . . . . . . . . . . . . . . . . . 64
16.03 Restoration to Service . . . . . . . . . . . . 65
ARTICLE 17 - RETIREE MEDICAL BENEFITS . . . . . . . . . . . . 66
17.01 Provision of Medical Benefits . . . . . . . . 66
17.02 Eligibility for Medical Benefits . . . . . . . 66
17.03 Contributions to the Medical Benefits
Account . . . . . . . . . . . . . . . . . . . 67
17.04 Medical Benefits Covered by the System . . . . 68
17.05 Amendment and Termination of Medical
Benefits . . . . . . . . . . . . . . . . . . . 69
17.06 Definitions . . . . . . . . . . . . . . . . . 69
ii
<PAGE>
The Employees' Retirement Plan of Savannah Electric and
Power Company, as amended and restated effective January 1, 1989,
(the "Plan") is a continuation and modification of the Retirement
Annuity Plan for Employees of Savannah Electric and Power Company
effective as of April 1, 1947, which was last amended and
restated effective January 1, 1986. The Plan, except as
specifically provided herein and hereinafter set forth, is
designed to provide a retirement Allowance to eligible employees
and their Spouses following the termination of their employment
with Savannah Electric and Power Company (the "Company"). It is
intended that the Plan and the Employees' Retirement Plan of
Savannah Electric and Power Company Trust (the "Trust"), meet all
the requirements of the Internal Revenue Code of 1986 (the
"Code"), and that the Plan and Trust shall be interpreted,
wherever possible, to comply with the terms of the Code and the
Employee Retirement Income Security Act of 1974 ("ERISA"), and
all formal regulations and rulings issued under the Code and
ERISA.
ARTICLE 1 - DEFINITIONS
i
1.01 "Accrued Benefit" shall mean the amount of retirement
Allowance computed at a specific date, in accordance
with Article 5, based on Compensation and Credited
Service to such date.
1.02 "Affiliated Company" shall mean any company not
participating in the Plan which is a Member of a
controlled group of corporations (determined under Code
Section 1563(a) without regard to Sections 1563(a)(4)
and (e)(3)(C)) which also includes as a member the
Company, except that with respect to Section 6.01 "more
than 50 percent" shall be substituted for "at least 80
percent" where it appears in Code Section 1563(a)(1).
The term "Affiliated Company" shall also include any
trade or business under common control (as defined in
Code Section 414(c)) with the Company, or a Member of
an affiliated service group (as defined in Code
Section 414(m)) which includes the Company or any other
entity required to be aggregated with the Company
pursuant to regulations under Code Section 414(o).
1.03 "Allowance" shall mean payments under the Plan payable
as provided in Article 5 or Article 7.
1.04 "Annuity Starting Date" shall mean the first day of the
first period for which an amount is paid as an annuity
or in any other form.
1.05 "Board of Directors" shall mean the Board of Directors
of Savannah Electric and Power Company or the board of
directors of any successor.
1
<PAGE>
1.06 "Break in Service" shall mean a period which
constitutes a break in an Employee's Continuous
Service, as provided in Section 4.03.
1.07 "Code" means the Internal Revenue Code of 1986, as
amended from time to time.
1.08 "Company" shall mean Savannah Electric and Power
Company or any successor by merger, purchase or
otherwise, with respect to its employees; or any other
company participating in the Plan as provided in
Section 4.05, with respect to its employees.
1.09 "Compensation" shall mean the actual remuneration paid
to an employee for services rendered to the Company,
determined prior to any pre-tax contributions under a
"qualified cash or deferred arrangement" (as defined
under Code Section 401(k) and its applicable
regulations) or under a "cafeteria plan" (as defined
under Code Section 125 and its applicable regulations),
including payments made under any short term disability
plan maintained by the Company which shall equal the
rate of Compensation of the Member at the time of
disability, but excluding any bonuses, pay for
overtime, compensation deferred under any deferred
compensation plan or arrangement, separation pay,
imputed income and relocation pay, and excluding the
Company's cost for any public or private employee
benefit plan, including this Plan, under rules
uniformly applicable to all employees similarly
situated, provided further, effective as of January
1, 1989, any workers' compensation received by an
employee shall be excluded from "compensation" for
purposes of determining his benefit under the Plan.
For purposes of this Section 1.09, actual remuneration
means regular straight time pay, straight time
differential pay, substitution straight time pay,
substitution flat rate pay, earned vacation pay and the
difference between military pay and regular straight
time pay a Member would have been paid if such Member
had been working for the Company.
Notwithstanding the foregoing, effective as of January
1, 1989, compensation taken into account for any
purpose under the Plan shall not exceed $200,000 per
year, provided that the imposition of the limit on
compensation shall not reduce a Member's Accrued
Benefit below the amount of Accrued Benefit determined
as of December 31, 1988. As of January 1 of each
calendar year on and after January 1, 1990, the
applicable limitation as determined by the Commissioner
2
<PAGE>
of the Internal Revenue Service for that calendar year
shall become effective as the maximum compensation to
be taken into account for Plan purposes for that
calendar year in lieu of the $200,000 limitation set
forth in the preceding sentence.
In addition to other applicable limitations set forth
in the Plan, and notwithstanding any other provision of
the Plan to the contrary, for Plan Years beginning on
or after January 1, 1994, the annual compensation of
each Employee taken into account under the Plan shall
not exceed the Omnibus Budget Reconciliation Act of
1993 ("OBRA `93") annual compensation limit. The OBRA
`93 annual compensation limit is $150,000, as adjusted
by the Commissioner for increases in the cost of living
in accordance with Code Section 401(a)(17)(B). The
cost of living adjustment in effect for a calendar year
applies to any period, not exceeding 12 months, over
which compensation is determined (determination period)
beginning in such calendar year. If a determination
period consists of fewer than 12 months, the OBRA `93
annual compensation limit will be multiplied by a
fraction, the numerator of which is the number of
months in the determination period, and the denominator
of which is 12.
For Plan Years beginning on or after January 1, 1994,
any reference in this Plan to the limitation under Code
Section 401(a)(17) shall mean the OBRA `93 annual
compensation limit set forth in this provision.
If compensation for any prior determination period is
taken into account in determining an Employee's
benefits accruing in the current Plan Year, the
compensation for that prior determination period is
subject to the OBRA `93 annual compensation limit in
effect for that prior determination period. For this
purpose, for determination periods beginning on or
after January 1, 1994, the OBRA `93 annual compensation
limit is $150,000.
For purposes of this Section 1.09, the rules of Code
Section 414(q) shall apply in determining the adjusted
$150,000 limitation above, except in applying such
rules, the term "family" shall include only the Spouse
of the Employee and any lineal descendants of the
Employee who have not attained age nineteen (19) before
the close of the Plan Year. If as a result of the
application of such rules, the adjusted $150,000
limitation is exceeded, then the limitation shall be
prorated among the affected individuals in proportion
to each individual's compensation determined under this
3
<PAGE>
Section 1.09 prior to the application of this
limitation.
1.10 Effective January 1, 1989, "Computation Year" means the
calendar year. Prior to January 1, 1989, "Computation
Year" meant the 12-month period from April 1 to March
31.
1.11 "Continuous Service" shall mean service recognized for
purposes of determining eligibility for membership in
the Plan and eligibility for certain benefits under the
Plan, determined as provided in Section 4.01.
1.12 "Credited Service" shall mean service recognized for
purposes of computing the amount of any benefit under
the Plan, determined as provided in Section 4.02.
1.13 "Effective Date of the Plan" as amended, shall mean
April 1, 1959. The "Amendment and Restatement
Effective Date" shall mean January 1, 1989.
1.14 "Employee" shall mean any person regularly employed by
the Company who receives regular stated salary, or
wages paid directly by the Company as (a) a regular
full-time employee, (b) a regular part-time employee,
(c) a cooperative education employee or (d) a temporary
employee paid directly or indirectly by the Company.
For purposes of this Section 1.14, temporary employee
means a full-time or part-time employee who provides
services to the Company for a stated period of time
after which period such employee will be terminated
from employment. The term Employee shall also include
Leased Employees within the meaning of Code
Section 414(n)(2). Notwithstanding the foregoing, if
such Leased Employees constitute less than twenty
percent (20%) of the Employer's non-highly compensated
workforce within the meaning of Code
Section 414(n)(5)(C)(ii), the term Employee shall not
include those Leased Employees covered by a plan
described in Code Section 414(n)(5).
1.15 "Equivalent Actuarial Value" shall mean equivalent
value when computed at 6 per centum per annum on the
basis of the 1971 Group Annuity Mortality Table (Male)
for Members, and 1971 Group Annuity Mortality Table
(Female) for contingent annuitants under optional forms
of Allowances.
1.16 "Fund" shall mean the trust fund established under the
trust agreement with the Trustee from which the amounts
of retirement Allowances are to be paid.
4
<PAGE>
1.17 "Group Annuity Contract" shall mean Group Annuity
Contract No. AC 766 issued by The Equitable Life
Assurance Society of the United States to Savannah
Electric and Power Company.
1.18 "Hour of Service" means, with respect to any applicable
computation period:
(a) each hour for which the Employee is paid or
entitled to payment for the performance of duties
for the Company or an Affiliated Company;
(b) each hour for which an Employee is paid or
entitled to payment by the Company or an
Affiliated Company on account of a period during
which no duties are performed, whether or not the
employment relationship has terminated, due to
vacation, holiday, illness, incapacity (including
disability), layoff, jury duty, military duty or
leave of absence, but not more than 501 hours for
any single continuous period;
(c) each hour for which back pay, irrespective of
mitigation of damages, is either awarded or agreed
to by the Company or an Affiliated Company,
excluding any hour credited under (a) or (b),
which shall be credited to the computation period
or periods to which the award, agreement or
payment pertains, rather than to the computation
period in which the award, agreement or payment is
made; and
(d) solely for purposes of determining whether an
Employee has incurred a Break in Service under the
Plan, each hour for which an Employee would
normally be credited under Paragraphs (a) or (b)
above during a period of Parental Leave but not
more than 501 hours for any single continuous
period. However, the number of hours credited to
an Employee under this Paragraph (d) during the
computation period in which the Parental Leave
began, when added to the hours credited to an
Employee under Paragraphs (a) through (c) above
during that computation period, shall not exceed
501. If the number of hours credited under this
Paragraph (d) for the computation period in which
the Parental Leave began is zero, the provisions
of this Paragraph (d) shall apply as though the
Parental Leave began in the immediately following
computation period.
5
<PAGE>
No hours shall be credited on account of any period
during which the Employee performs no duties and
receives payment solely for the purpose of complying
with unemployment compensation, workers' compensation
or disability insurance laws. The Hours of Service
credited shall be determined as required by Title 29 of
the Code of Federal Regulations, Sections 2530.200b-
2(b) and (c).
1.19 "Leased Employee" means any person as so defined in
Code Section 414(n). In the case of a person who is a
Leased Employee immediately before or after a period of
service as an Employee, the entire period during which
he has performed services for the Company as a Leased
Employee shall be counted as Continuous Service for
purposes of determining eligibility for participation
and vesting, to the extent such service would be
recognized with respect to other employees under the
Plan; however, he shall not, by reason of that status,
be eligible to become a Member of the Plan.
1.20 "Member" shall mean any person included in the
membership of the Plan as provided in Article 3.
1.21 "Normal Retirement Date" shall mean the first day of
the calendar month next following the 65th anniversary
of an Employee's birth.
1.22 "Parental Leave" means a period commencing on or after
January 1, 1985, in which the Employee is absent from
work because of the pregnancy of the Employee, the
birth of a child of the Employee or the placement of a
child with the Employee in connection with adoption
proceedings, or for purposes of caring for that child
for a period beginning immediately following such birth
or placement.
1.23 "Plan" shall mean Employees' Retirement Plan of
Savannah Electric and Power Company as previously
described in the Group Annuity Contract and as
described and amended herein or as hereafter amended.
1.24 "Plan Year" shall mean the 12-month period from January
1 to December 31.
1.25 "Qualified Joint and Survivor Annuity" shall mean an
annuity of Equivalent Actuarial Value to the Allowance
otherwise payable, providing for a reduced Allowance
payable to the Member during his life, and after his
death providing that one-half of that reduced Allowance
will continue to be paid during the life of, and to,
6
<PAGE>
the spouse to whom he was married at his Annuity
Starting Date.
1.26 "Qualified Preretirement Survivor Annuity" shall mean
an annuity for the life of a Surviving Spouse
calculated in accordance with Section 7.03.
1.27 "Retirement Annuity" shall mean the amount of the
annuity purchased under the Group Annuity Contract as
provided by that Contract at actual retirement date, at
or after the attainment of age 65, prior to any
conversion to a contingent annuity.
1.28 "Retirement Committee" shall mean the administrator of
the Plan as provided in Article 9. The Administrative
Benefits Committee of the Company shall comprise the
Retirement Committee for purposes of administration of
the Plan.
1.29 "Social Security Benefit" shall mean the annual primary
old-age insurance benefit which the Member is entitled
to receive under Title II of the Social Security Act as
in effect on the date he retires or otherwise
terminates employment, or would be entitled to receive
if he did not disqualify himself by receiving the same
by entering into covered employment or otherwise. In
the case of early retirement, the Social Security
Benefit shall be computed on the assumption that he
will receive no income after early retirement and
before age 65 which would be treated as wages for
purposes of the Social Security Act. In the case of
vested retirement, the Social Security Benefit shall be
computed on the assumption that he will continue to
receive compensation until age 65 which would be
treated as wages for purposes of the Social Security
Act at the same rate as in effect on his termination of
service.
In computing any Social Security Benefit, no wage index
adjustment or cost-of-living adjustment shall be
assumed with respect to any period after the end of the
calendar year before the year in which the Member
retires or terminates service. The Member's Social
Security Benefit shall be determined on the basis of
the Employee's actual earnings, where available from
Company records, in conjunction with a salary increase
assumption based on the actual yearly change in
national average wages as determined by the Social
Security Administration for all other years prior to
retirement or other termination of employment with the
Company where actual earnings are not so available.
If, within three months after the later of the date of
retirement or other termination of employment or the
date on which a Member is notified of the Allowance to
which he is entitled, the Member provides documentation
7
<PAGE>
as to his actual earnings history with respect to those
prior years, his Allowance shall be redetermined using
the actual earnings history, if the recalculation would
result in an increased benefit. Any adjustment to
Allowance payments shall be made retroactively.
1.30 The term "Spouse or Surviving Spouse" shall mean the
spouse or surviving spouse of a Member, provided that a
former Spouse will be treated as the spouse or
surviving spouse and a current spouse will not be
treated as the spouse or surviving spouse to the extent
provided under a qualified domestic relations order as
described in Code Section 414(p).
1.31 "Suspendible Month" means a month in which the Member
completes at least 40 hours of service with the
Company.
1.32 "Trustee" shall mean the trustee or trustees by whom
the funds of the Plan are held as provided in Article
10.
8
<PAGE>
ARTICLE 2 - RETIREMENT ANNUITIES PURCHASED UNDER
GROUP ANNUITY CONTRACT AND CHANGE OF FUNDING
ii
All Retirement Annuities payable under the Plan as in
effect prior to April 1, 1959 with respect to service thereunder
prior to such date, have been purchased from The Equitable Life
Assurance Society of the United States pursuant to the terms of
Group Annuity Contract No. AC 766.
Effective as of April 1, 1959, the purchase of
Retirement Annuities under the Group Annuity Contract was
discontinued in accordance with the terms and provisions of such
Contract. Subject to the provisions of the Plan, with respect to
service under the Plan from and after April 1, 1959, and as a
supplement to the Retirement Annuities purchased under the Group
Annuity Contract for service prior to April 1, 1959, retirement
Allowances will be provided by means of contributions to the Fund
by the Company. Such retirement Allowances will be in addition
to Retirement Annuities purchased as described in the preceding
paragraph with respect to services prior to April 1, 1959.
The rights of Members of the Retirement Annuities
purchased for them under the Group Annuity Contract with respect
to service prior to April 1, 1959 will not be adversely affected
by the discontinuance of such purchases and such Retirement
Annuities will be payable by The Equitable Life Assurance Society
of the United States in accordance with the terms, conditions and
provisions of the Group Annuity Contract.
9
<PAGE>
ARTICLE 3 - MEMBERSHIP
iii
3.01 Every Employee in Company service on January 1, 1985,
who was a Member on December 31, 1984, shall continue
to be a Member of the Plan on and after January 1,
1985, provided he remains eligible under the terms of
the Plan.
3.02 Every other Employee on January 1, 1985, and every
person becoming an Employee after that date shall
become a Member on the first day of the calendar month,
beginning with January 1, 1985, coincident with or next
following (i) the date he completes one year of
Continuous Service or (ii) the 21st anniversary of his
birth, whichever is later. For this purpose, a year of
Continuous Service shall be a 12-month period during
which an Employee completes at least 1,000 hours
commencing with the date of employment, or if in such
period he has not completed at least 1,000 hours,
commencing with the first day of the Computation Year
after the date of his employment. If an Employee has
incurred a one-year Break in Service prior to becoming
eligible for membership, any Continuous Service prior
the break shall be disregarded in determining
eligibility for membership unless he shall complete at
least one year of Continuous Service following the
Break in Service; provided that an Employee's
Continuous Service prior to the break shall not be
recognized for purposes of determining his eligibility
for membership if his consecutive number of one-year
Breaks in Service equal or exceed the greater of
(i) five or (ii) his aggregate years of Continuous
Service prior to the Break in Service.
3.03 An Employee who is represented by a collective
bargaining agent may participate in the Plan if the
representative(s) of his bargaining unit and the Compa-
ny mutually agree to participation in the Plan by the
members of his bargaining unit.
3.04 An Employee's membership in the Plan shall terminate
only if he dies or his employment with the Company
terminates other than by reason of retirement or
termination with vested benefits under the Plan.
Membership shall be continued during a period while on
leave of absence from service without pay approved by
the Company, but no benefit credit shall be allowed
with respect to such period unless credit is allowed
for service in the Armed Forces of the United States as
provided in Section 4.03(c). Membership shall be
continued during a period of disability for which
Continuous Service is granted as provided in Section
4.04.
10
<PAGE>
3.05 In the event a Member ceases to participate because he
enters an ineligible class under Article III and
becomes ineligible to participate, but has not incurred
a break in service under Section 4.03(a), such Employee
will participate as of the first day of the month
coinciding with or next following his return to an
eligible class of Employees. If such Employee incurs a
break in service under Section 4.03(a), eligibility
will be determined under Section 3.02. In the event an
Employee who is not in an eligible class to participate
enters an eligible class, such Employee will
participate as of the first day of the month coinciding
with or next following his employment if he has
satisfied Section 3.02 and would have otherwise
previously been eligible to participate in the Plan.
3.06 Subject to Section 3.05, if an Employee's membership in
the Plan terminates and he again becomes an Employee,
he shall be considered a new Employee for all purposes
of the Plan, except as provided in Section 5.05.
3.07 Notwithstanding any other provision of this Article 3,
Leased Employees shall not be eligible to participate.
In addition, temporary employees as defined in Section
1.14 of the Plan who were not participating in the Plan
as temporary employees prior to October 13, 1994, shall
not be eligible to participate in the Plan.
3.08 An Employee may, subject to the approval of the
Retirement Committee, elect voluntarily not to
participate in the Plan. The election not to
participate must be communicated in writing to the
Retirement Committee effective on an Employee's date of
hire or anniversary thereof.
11
<PAGE>
ARTICLE 4 - SERVICE
iv
4.01 Continuous Service
(a) Effective January 1, 1988, except as hereinafter
provided, all service performed as an Employee of
the Company or an Affiliated Company shall be
Continuous Service for Plan purposes. If an
Employee completes at least 1,000 Hours of Service
in any Computation Year, he shall receive credit
for a full year of Continuous Service. If an
Employee completes fewer than 1,000 Hours of
Service in any Computation Year, no Continuous
Service shall be recognized for such Computation
Year.
(b) Any Employee employed by the Company on or after
January 1, 1989 shall, due to the change in the
definition of Computation Year, receive two years
of Continuous Service for vesting purposes for the
Computation Years (1) beginning April 1, 1988 and
ending on March 31, 1989; and (2) beginning
January 1, 1989 and ending on December 31, 1989,
provided that the Employee completes 1,000 Hours
of Service in each of those two Computation Years.
(c) Any person employed by the Company on March 31,
1976 shall receive Continuous Service for service
performed before that date equal to the Credited
Service recognized through March 31, 1976 under
the Plan as in effect on that date. However, if
such a person became a Member after April 1, 1959,
Continuous Service shall also include his service
after April 1, 1959, and before his date of
membership.
4.02 Credited Service
(a) Effective January 1, 1989, Credited Service shall
be calculated based on Periods of Service.
A "Period of Service" shall mean twelve (12) month
periods of employment as a Member, or fractions
thereof, running from the date that a Member
commences participation in the Plan and terminates
on his first severance from service date. A
severance from service shall occur as of the
earlier of the date a Member quits, retires, is
discharged or dies, or the first anniversary of
absence for any other reason. Thereafter, subject
to 4.03(b), if a Member becomes reemployed, his
Period of Service for each subsequent period shall
12
<PAGE>
commence with the reemployment commencement date,
which is the first date following a one year
period of severance on which a Member performs an
Hour of Service and shall terminate on his next
severance from service.
In the case of an Employee who transfers from a
class of employees whose service is determined on
the basis of Hours of Service to a class of
employees whose service is determined under this
Paragraph (a), such Employee shall receive credit
for a Period of Service consisting of (i) a number
of years equal to the number of years of service
credited to the Employee before the computation
period during which the transfer occurs and
(ii) the greater of (1) the Period of Service that
would be credited to the Employee under this
Paragraph (a) during the entire computation period
in which the transfer occurs or (2) the service
taken into account under the Hours of Service
method as of the date of the transfer.
In addition, the Employee shall receive credit for
Periods of Service subsequent to the transfer
commencing on the day after the last day of the
computation period in which the transfer occurs.
In the case of an Employee who transfers from a
class of employees whose service is determined
pursuant to this Paragraph (a) to a class of
employees whose service is determined on the basis
of Hours of Service (i) the Employee shall receive
credit, as of the date of transfer, for the
numbers of Years of Service equal to the number of
one year Periods of Service credited to the
Employee as of the date of the transfer and
(ii) the Employee shall receive credit in the
computation period which includes the date of the
transfer, for a number of Hours of Service
determined by applying the equivalency set forth
in 29 C.F.R. Section 2530.200b-3(e)(1)(i) to any
fractional part of a year credited to the Employee
under this Section as of the date of the transfer.
13
<PAGE>
4.03 Breaks in Service
(a) Effective for any Computation Year beginning on or
after April 1, 1976, there shall be a Break in
Service of one year for any Computation Year after
the year in which a person first becomes employed
during which he does not complete more than 500
Hours of Service. If an Employee terminates his
service with the Company and is reemployed after
incurring a Break in Service, his service before
the Break in Service shall be excluded from his
Continuous Service, except as provided in Section
5.05.
(b) Effective for any Computation Year beginning on or
after January 1, 1989, for purposes of calculating
Credited Service only, there shall be a one year
Period of Severance if during the 12 consecutive
month period after a severance from service date,
as defined in Section 4.02(a) the Employee fails
to perform an Hour of Service. If an Employee
terminates his service with the Company and is
reemployed after incurring a one year Period of
Severance, his service before the Period of
Severance shall be excluded unless he thereafter
completes a one year Period of Service. In the
case of a non-vested member, the Period of Service
accrued prior to a one year Period of Severance
shall not be taken into account if at such time
the consecutive Period of Severance equals or
exceeds the greater of 5 or of prior Periods of
Service, whether or not consecutive.
(c) If an Employee shall have been absent from the
service of the Company because of service in the
Armed Forces of the United States and if he shall
have returned to the service of the Company within
90 days either (i) after having become entitled to
release from active duty in the Armed Forces or
(ii) after hospitalization continuing after
discharge for a period of not more than one year,
such absence shall not count as a Break in
Service, but instead shall be considered as
Continuous Service.
14
<PAGE>
4.04 Disabled Members
If a Member is eligible for and continuously receiving
disability benefits under the long-term disability plan
provided by the Company, he shall continue to be a
Member of the Plan and shall continue to accrue service
until he retires in the same amount and manner as
though he had continued in the active employment of the
Company and he shall be deemed to receive Compensation
during such period based upon his rate of Compensation
at the time of disability. In the event that a Member
no longer qualifies for benefits under the long-term
disability plan before his Normal Retirement Date and
he does not resume active employment with the Company,
he shall be eligible to receive a vested retirement
Allowance as provided in Section 5.03 or to retire on
an early retirement Allowance as provided in Section
5.02, if otherwise eligible for such Allowance as of
the date of such disqualification. In either case, the
Allowance shall be computed on the basis of his
Compensation and Credited Service at the date of such
disqualification. In the event that a Member does not
qualify for disability benefits under the Social
Security Act, the Allowance accrued under Section
5.01(c)(i)(A) for purposes of this Section 4.04 for
Credited Service during such period of nonqualification
shall be increased by 5/6 per centum of the part of
each year's Compensation which is not in excess of
$3,600 per annum.
4.05 Service with Certain Other Employers
(a) An Employee hired prior to November 9, 1989, who
becomes a Member and continues as a Member without
a break in membership, shall receive Continuous
Service and Credited Service for all service not
otherwise recognized, in the employ of another
electric utility company or a company or corpora-
tion furnishing advisory or consulting service to
the Company, provided that such service would be
recognized if it had been rendered to the Company
and provided that any benefit payable under this
Plan on account of such service, so recognized,
shall be reduced by the amount of benefit provided
under the pension or retirement plan of such other
company with respect to the same period. The
Company shall calculate such service based on
actual employment records where available, but if
such records are not available, the Company shall
request that the Employee obtain information from
the Social Security Administration which documents
the Employee's Social Security eligible
15
<PAGE>
compensation or from such other entity as the
Company deems appropriate. Based on such
documents, the Company shall calculate the
Employee's service and Compensation for purposes
of this Section 4.05. In the event no such
documentation can be obtained, the Company shall
make its best effort to estimate such service and
Compensation.
(b) An Employee hired on or after November 9, 1989,
who becomes a Member and continues as a Member
without a break in membership, shall receive
Continuous Service and Credited Service for all
service not otherwise recognized, in the employ of
an Affiliated Company, provided that such service
would be recognized if it had been rendered to the
Company and provided that any benefit payable
under this Plan on account of such service, so
recognized shall be reduced by the amount of
benefit provided under the pension or retirement
plan of such other company with respect to the
same period.
16
<PAGE>
ARTICLE 5 - BENEFITS
v
5.01 Normal and Late Retirement
(a) The right of a Member to his normal retirement
Allowance shall be non-forfeitable upon attaining
age 65. A Member may retire from service on a
normal retirement Allowance upon reaching his
Normal Retirement Date or he may postpone his
retirement and remain in service after his Normal
Retirement Date. During any such deferment the
Member shall be retired from service on a normal
retirement Allowance on the first day of the
calendar month next following receipt by the
Retirement Committee of written application
therefor made by the Member.
(b) Subject to the provisions of Section 5.01(e), the
annual normal retirement Allowance payable upon
retirement on the Normal Retirement Date shall be
computed pursuant to Paragraphs (c) and (d) below.
The annual retirement Allowance payable upon
retirement after a Member's Normal Retirement Date
shall be equal to (i) the amount determined in
accordance with Paragraphs (c) and (d) below,
based on the Member's Credited Service and average
annual Compensation as of his late retirement date
or, if greater, (ii) the amount of Allowance to
which the Member would have been entitled under
Paragraphs (c) and (d) below as of his Normal
Retirement Date increased by an amount of
Equivalent Actuarial Value to the monthly payments
which would have been payable with respect to each
month during the postponement period which is not
a Suspendible Month, with any such monthly payment
amount determined as if the Member had retired as
of the first day of the Plan Year during which
payment would have been made or, if later, his
Normal Retirement Date.
(c) The normal retirement Allowance shall be computed
as an annuity payable for the life of the Member
and shall consist of:
(i) For service credited while a Member on
or after April 1, 1969, an Allowance
equal to 1-1/6 per centum of the part of
each year's Compensation which is not in
excess of $3,600 per annum plus 2 per
centum of the part of such Compensation
in excess of $3,600 per annum; and
17
<PAGE>
(ii) For service credited between the
effective date of the Plan and March 31,
1969, an Allowance equal to 1 per centum
of the part of each year's Compensation
which is not in excess of $3,000 per
annum plus 2 per centum of the part of
such Compensation in excess of $3,000
per annum; and
(iii) For service credited prior to the
effective date of the Plan, an Allowance
which, when added to his Retirement
Annuity, shall be equal to 1 per centum
of the part of the Member's average
annual Compensation for the three
calendar years (1956, 1957 and 1958)
which is not in excess of $3,000 plus 1-
1/2 per centum of the part of such
Compensation in excess of $3,000,
multiplied by the number of years of his
Credited Service to the effective date
of the Plan.
(d) The benefit determined in Paragraph (c) above,
when added to a Member's Retirement Annuity, if
any, shall not be less than:
(i) 1-2/3 per centum of his average annual
Compensation, multiplied by his years of
Credited Service not in excess of 36
years, reduced by
(ii) 1-1/2 per centum of his primary Social
Security Benefit multiplied by his years
of Credited Service, the product not to
exceed 50 per centum of his primary
Social Security Benefit,
where average annual Compensation is calculated
during the 36 highest consecutive months within
the 120 months preceding retirement.
(e) If the Member is married on his Annuity Starting
Date and if he has not elected an optional form of
benefit as provided in Section 7.07, the
retirement Allowance shall be payable in the form
of a 50% Qualified Joint and Survivor Annuity.
18
<PAGE>
(f) Notwithstanding any other provision of the Plan,
each Member;s normal retirement allowance is the
greater of
(i) the sum of:
(A) the normal retirement allowance
determined under this Section 5.01 as of
December 31, 1993, plus
(B) the normal retirement allowance
determined under this Section 5.01 based
on Credited Service and Compensation
after December 31, 1993 (with Credited
Service used in this paragraph (f)(i)(B)
being added to the Credited Service used
in paragraph (f)(i)(A) for purposes of
determining whether paragraph (d)(i)
36-year limit and (d)(ii) 50 per centum
offset limit have been exceeded); or
(ii) the normal retirement allowance determined
under this Section 5.01 as applied to all
Credited Service and Compensation.
5.02 Early Retirement
(a) A Member who has not reached his Normal Retirement
Date but who has reached the 55th anniversary of
his birth shall be retired from service on an
early retirement Allowance on the first day of the
calendar month next following receipt by the
Retirement Committee of written application
therefor made by the Member.
(b) At the time of retirement the Member may elect to
receive either (i) a deferred early retirement
Allowance commencing on the Member's Normal
Retirement Date which shall be computed as a
normal retirement Allowance, in accordance with
Section 5.01(b), on the basis of his Compensation
and Credited Service at the time of early
retirement or (ii) an immediate early retirement
Allowance beginning on the first day of any month
before his Normal Retirement Date which shall be
computed in accordance with Sections 5.01(c) and
(d) and shall be reduced by 1/12 of 5% for each
month by which the date the Member's early
retirement Allowance begins precedes age 62.
19
<PAGE>
(c) If the Member is married on the date his
retirement Allowance commences, the early
retirement Allowance shall be computed on the same
basis as in Paragraph (b) above, in accordance
with Section 5.01(e).
5.03 Termination of Employment
(a) A Member shall be 100% vested in, and have a non-
forfeitable right to, his Accrued Benefit upon
completion of five years of Continuous Service
since the first day of the Computation Period in
which the 18th anniversary of his birth occurs.
If the Member's employment with the Company is
subsequently terminated for reasons other than
retirement or death, he shall be eligible for a
vested Allowance upon application therefor. If a
Member's employment with the Company terminates
before completion of five (5) years of Continuous
Service or before becoming eligible for an early
retirement or normal retirement Allowance, such
Member's Accrued Benefit shall be forfeited upon
termination of employment subject to restoration
under Section 5.05.
(b) The vested Allowance shall be a deferred Allowance
commencing on the former Member's Normal
Retirement Date and shall be determined by
computing a normal retirement Allowance, in
accordance with Section 5.01, on the basis of his
Compensation and Credited Service at his date of
termination and the benefit formula in effect on
that date.
(c) Instead of deferring his Allowance to his Normal
Retirement Date, the Member can elect to receive a
reduced Allowance commencing on the first day of
any month next following his attainment of age 55
but prior to his Normal Retirement Date. The
reduction shall be 1/12 of 5% for each month by
which his Annuity Starting Date precedes his
Normal Retirement Date, provided that such
reduction shall be made prior to the application
of the maximum limitation provided under Article 6
and such reduced Allowance shall be subject to
such limitation.
20
<PAGE>
5.04 Adjustment of Retirement Allowance for Social Security
Benefits
When an Allowance commences prior to the attainment of
age 65, the Member may elect to convert the Allowance
otherwise payable to him into an Allowance of
Equivalent Actuarial Value of such amount that, with
his Retirement Annuity, if any, and his old-age
insurance benefit under Title II of the Social Security
Act, he will receive, so far as possible, the same
amount each year before and after such benefit
commences.
5.05 Restoration of Retired Member or Former Member to
Service
(a) If a Member in receipt of an Allowance is restored
to service as an Employee on or after his Normal
Retirement Date, the following shall apply:
(i) His Allowance shall be suspended for
each month during the period of
restoration which is a Suspendible
Month.
(ii) Upon the death of the Member during the
period of restoration, any Allowance
that would have been payable to his
surviving Spouse had he not been
restored to service shall be payable or,
alternatively, any payments under an
optional benefit, if one has been
elected and becomes effective, shall
begin.
(iii) Upon later retirement, payment of the
Member's Allowance shall resume no later
than the third month after the latest
Suspendible Month during the period of
restoration, and shall be adjusted, if
necessary, in compliance with Title 29
of the Code of Federal Regulations,
Section 2530.203-3 in a consistent and
nondiscriminatory manner.
(b) If a Member in receipt of an Allowance is restored
to service with the Company before his Normal
Retirement Date, the following shall apply:
(i) His Allowance shall cease and any
election of an optional benefit in
effect shall be void.
21
<PAGE>
(ii) Any Continuous and Credited Service to
which he was entitled when he retired or
terminated service shall be restored to
him.
(iii) Upon later retirement or termination,
his Allowance shall be based on the
benefit formula then in effect and his
Compensation and Credited Service before
and after the period when he was not in
the service of the Company, reduced by
an amount of Equivalent Actuarial Value
to the benefits, if any, he received
before the date of his restoration to
service.
(iv) The part of the Member's Allowance upon
later retirement payable with respect to
Credited Service rendered before his
previous retirement or termination of
service shall never be less than the
amount of his previous Allowance
modified to reflect any option in effect
on his later retirement.
(c) If a Member not in receipt of an Allowance or a
former Member is restored to service without
having had a Break in Service, his Continuous
Service shall be determined as provided in Section
4.01, and, if applicable, he shall again become a
Member as of his date of restoration to service.
(d) If a vested Member not in receipt of an Allowance
or a former Member who received a lump sum
settlement in lieu of his Allowance is restored to
service with the Company after having had a Break
in Service, the following shall apply:
(i) Upon completion of one year of
Continuous Service following the Break
in Service, the Continuous Service to
which he was previously entitled shall
be restored to him, and, if applicable,
he shall again become a Member as of his
date of restoration to service.
(ii) If a Member has received a distribution
of his Allowance and the Member is
restored to service with the Company,
the Member shall have the right to
restore his or her Accrued Benefit to
the extent forfeited upon the repayment
22
<PAGE>
to the Plan of the full amount of the
distribution plus interest, compounded
annually from the date of distribution
at the rate determined for purposes of
Code Section 411(c)(2)(C). Such
repayment must be made before the
earlier of five (5) years after the
first date on which the Member is
subsequently reemployed by the Company,
or the date the Member incurs five (5)
consecutive one year Breaks in Service
following the date of distribution.
If an Member has been deemed to receive
a distribution under the Plan, and the
Member is restored to service with the
Company, upon the reemployment of such
Member, the Accrued Benefit will be
restored to the amount of such Accrued
Benefit on the date of deemed
distribution.
(iii) Upon later termination or retirement of
a Member whose previous Credited Service
has been restored under this
Paragraph (d), his Allowance shall be
based on the benefit formula then in
effect and his Compensation and Credited
Service before and after the period when
he was not in the service of the
Company.
(e) If any other former Member is restored to service
with the Company after having had a Break in
Service, the following shall apply:
(i) Upon completion of one year of
Continuous Service following the Break
in Service, he shall again become a
Member as of his date of restoration to
service.
(ii) Upon becoming a Member in accordance
with (i) above, the Continuous Service
to which he was previously entitled
shall be restored to him, if the total
number of consecutive one-year Breaks in
Service does not equal or exceed the
greater of (a) five, or (b) the total
number of years of his Continuous
Service before the Break in Service,
determined at the time of the Break in
23
<PAGE>
Service, excluding any Continuous
Service disregarded under this
Paragraph (e) by reason of any earlier
Break in Service.
(iii) Any Credited Service to which the Member
was entitled at the time of his
termination of service which is included
in the Continuous Service so restored
shall be restored to him.
(iv) Upon later termination or retirement of
a Member whose previous Credited Service
has been restored under this
Paragraph (e), his Allowance, if any,
shall be based on the benefit formula
then in effect and his Compensation and
Credited Service before and after the
period when he was not in the service of
the Company.
5.06 Additional Monthly Benefit
(a) Effective June 1, 1991, in addition to other
benefits provided in this Article 5, the following
monthly benefits are payable as a life annuity to
eligible Members as defined in Paragraph (b)
below,
The "additional monthly amount" is calculated
as (i) a percentage of the Member's first
$300 of monthly Allowance, multiplied by
(ii) the number of years the Member was
retired prior to January 1, 1990, with a
minimum of $25.00 per month. The percentage
is as follows:
Years Since
Retirement Percentage
as of 1/1/90
Less than 5 3-3/4
5 to 10 4
10 to 15 4-1/2
15 or more 5
(b) Members eligible for the additional monthly amount
are those retired Members as of June 1, 1991, who
entered retired status directly from active
status.
24
<PAGE>
(c) If an adjustment of retirement Allowance for
Social Security benefits option was elected
pursuant to Section 5.04, the additional monthly
benefit was calculated based on the Allowance
before such adjustment.
(d) Upon the death of a Member eligible for an
additional monthly amount, such amount shall be
continued to the Member's Spouse regardless of the
method of distribution elected by a Member.
5.07 Written Application
Each Member, before any benefit shall be payable to him
or his account under the Plan, shall file with the
Retirement Committee such information as it shall
require to establish his rights and benefits under the
Plan.
25
<PAGE>
ARTICLE 6 - LIMITATIONS ON BENEFITS
vi
6.01 Maximum Benefits
(a) The maximum annual retirement Allowance payable to
a Member under the Plan, when added to any
retirement Allowance attributable to contributions
of the Company or an Affiliated Company provided
to the Member under any other qualified defined
benefit plan, shall be equal to the lesser of
(1) $90,000, as adjusted under Code Section
415(d), or (2) the Member's average annual
remuneration during the three consecutive calendar
years in his Credited Service as a Member
affording the highest such average, or during all
of the years in his Credited Service as a Member,
if less than three years, subject to the following
adjustments:
(i) If the Member has not been a Member of
the Plan for at least 10 years, the
maximum annual retirement Allowance in
clause (1) above shall be multiplied by
the ratio which the number of years of
his membership in the Plan bears to 10.
This adjustment shall be applied
separately to the amount of the Member's
retirement Allowance resulting from each
change in the benefit structure of the
Plan, with the number of the years of
membership in the Plan being measured
from the effective date of each such
change.
(ii) If the Member has not completed 10 years
of Continuous Service, the maximum
annual retirement Allowance in clause
(2) above shall be multiplied by the
ratio which the number of years of his
Continuous Service bears to 10.
(iii) If the retirement Allowance begins
before the Member's social security
retirement age (as defined below), but
on or after his 62nd birthday, the
maximum retirement Allowance in clause
(1) above shall be reduced by 5/9 of 1%
for each of the first 36 months plus
5/12 of 1% for each additional month by
which the Member is younger than the
social security retirement age at the
date his retirement Allowance begins.
26
<PAGE>
If the retirement Allowance begins
before the Member's 62nd birthday, the
maximum retirement Allowance in clause
(1) above shall be of Equivalent
Actuarial Value to the maximum benefit
payable to age 62 as determined in
accordance with the preceding sentence.
(iv) If the retirement Allowance begins after
the Member's social security retirement
age (as defined below), the maximum
retirement Allowance in clause (1) above
shall be of Equivalent Actuarial Value,
based on an interest rate of 5% per year
in lieu of the interest rate otherwise
used in the determination of Equivalent
Actuarial Value, to that maximum benefit
payable at the social security
retirement age.
(v) If the Member's retirement Allowance is
payable as a joint and survivor
Allowance with his Spouse as the
contingent annuitant, the modification
of the retirement Allowance for that
form of payment shall be made before the
application of the maximum limitation,
and, as so modified, shall be subject to
the limitation.
(b) As of January 1 of each calendar year on or after
January 1, 1988, the dollar limitation as
determined by the Commissioner of Internal Revenue
for that calendar year shall become effective as
the maximum permissible dollar amount of
retirement Allowances payable under the Plan
during that calendar year, including retirement
Allowances payable to Members who retired prior to
that calendar year, in lieu of the dollar amount
in (1) of Paragraph (a) above.
(c) In the case of a Member who is also a Member of a
defined contribution plan of the Company or an
Affiliated Company, his maximum benefit limitation
shall not exceed an adjusted limitation computed
as follows:
(i) Determine the defined contribution
fraction.
(ii) Subtract the result of (i) from 1.0.
27
<PAGE>
(iii) Multiply the dollar amount in (1) of
Paragraph (a) above by 1.25.
(iv) Multiply the amount described in (2) of
Paragraph (a) above by 1.4.
(v) Multiply the lesser of the result of
(iii) or the result of (iv) by the
result of (ii) to determine the adjusted
maximum benefit limitation applicable to
a Member.
(d) For purposes of this Section:
(i) the defined contribution fraction for a
Member who is a Member of one or more
defined contribution plans of the
Company or an Affiliated Company shall
be a fraction the numerator of which is
the sum of the following:
(A) the Company's and Affiliated
Companies' contributions credited
to the Member's accounts under the
defined contribution plan or plans.
(B) with respect to calendar years
beginning before 1987, the lesser
of the part of the Member's
contributions in excess of 6% of
his Compensation or one-half of his
total contributions to such plan or
plans, and with respect to calendar
years beginning after 1986, all
Member's contributions to such plan
or plans, and
(C) any forfeitures allocated to his
accounts under such plan or plans,
but reduced by any amount permitted by
regulations promulgated by the
Commissioner of Internal Revenue; and
the denominator of which is the lesser
of the following amounts determined for
each year of the Member's Continuous
Service:
(D) 1.25 multiplied by the maximum
dollar amount allowed by law for
that year; or
28
<PAGE>
(E) 1.4 multiplied by 25% of the
Member's remuneration for that
year.
At the direction of the Retirement
Committee, the portion of the
denominator of that fraction with
respect to calendar years before 1983
shall be computed as the denominator for
1982, as determined under the law as
then in effect, multiplied by a fraction
of the numerator of which is the lesser
of:
(F) $51,875, or
(G) 1.4 multiplied by 25% of the
Member's remuneration for 1981;
and the denominator of which is the
lesser of:
(H) $41,500, or
(I) 25% of the Member's remuneration
for 1981;
(ii) a defined contribution plan means a
pension plan which provides for an
individual account for each Member and
for benefits based solely upon the
amount contributed to the Member's
account, and any income, expenses, gains
and losses, and any forfeitures of
accounts of other Members which may be
allocated to that Member's accounts,
subject to (iii) below; and
(iii) a defined benefit plan means any pension
plan which is not a defined contribution
plan; however, in the case of a defined
benefit which is based partly on the
balance of the separate account of a
Member, that plan shall be treated as a
defined contribution plan to the extent
benefits are based on the separate
account of a Member and as a defined
benefit plan with respect to the
remaining portion of the benefits under
the plan.
29
<PAGE>
(iv) the term "remuneration" with respect to
any Member shall mean the wages,
salaries and other amounts paid in
respect of such Member by the Company or
an Affiliated Company for personal
services actually rendered, determined
after any pre-tax contributions under
"qualified cash or deferred arrangement"
(as defined under Code Section 401(k)
and its applicable regulations) or under
a "cafeteria plan" (as defined under
Code Section 125 and its applicable
regulations), and shall include, but not
by way of limitation, bonuses, overtime
payments and commissions; and shall
exclude deferred compensation, stock
options and other distributions which
receive special tax benefits under the
Code; and
(v) the term "social security retirement
age" shall mean age 65 with respect to a
Member who was born before January 1,
1938; age 66 with respect to a Member
who was born after December 1, 1937 and
before December 1, 1955; and age 67 with
respect to a Member who was born after
December 31, 1954.
(e) Notwithstanding the preceding paragraphs of this
Section, a Member's annual retirement Allowance
payable under this Plan, prior to any reduction
required by operation of Paragraph (c) above,
shall in no event be less than:
(i) the benefit that the Member had accrued
under the Plan as of the end of the Plan
Year beginning in 1982, with no changes
in the terms and conditions of the Plan
on or after July 1, 1982 taken into
account in determining that benefit, or
(ii) the benefit that the Member had accrued
under the Plan as of the end of the Plan
Year beginning in 1986, with no changes
in the terms and conditions of the Plan
on or after May 5, 1986 taken into
account in determining that benefit.
30
<PAGE>
(f) Notwithstanding any provisions contained herein to
the contrary, in the event that a Member
participates in a defined contribution plan or
defined benefit plan required to be aggregated
with this Plan under Code Section 415(g) and the
combined benefits with respect to a Member exceed
the limitations contained in Code Section 415(e),
corrective adjustments shall first be made under
this Plan. However, if a Member's Allowance under
this Plan has already commenced, corrections shall
first be made under The Southern Company Employee
Stock Ownership Plan, if possible, and if not
possible, then correction shall be made to the
Member's Accrued Benefit under this Plan.
(g) Notwithstanding anything contained in this Article
to the contrary, the limitations, adjustments and
other requirements prescribed in this Article
shall at all times comply with the provisions of
Code Section 415 and the regulations thereunder,
the terms of which are specifically incorporated
herein by reference.
31
<PAGE>
ARTICLE 7 - DISTRIBUTION OF BENEFITS
vii
7.01 Surviving Spouse Benefit
On and after August 23, 1984, if a married Member:
(a) dies in active service prior to his Annuity
Starting Date after having met the requirements
for an Allowance, or
(b) dies after retiring on any Allowance or after
terminating service on or after August 23, 1984,
with entitlement to a vested Allowance, but in
either case before his Annuity Starting Date, or
(c) dies after he is credited with at least one Hour
of Service with the Company on or after August 23,
1984 but prior to his Annuity Starting Date,
there shall be payable to his Surviving Spouse a
Qualified Preretirement Survivor Annuity as provided in
Section 7.03.
7.02 Qualified Joint and Survivor Annuity
Provided an optional form of benefit as set forth in
Section 7.07 is not elected pursuant to a Qualified
Election within the 90-day period ending on the Annuity
Starting Date, a married Member's Accrued Benefit will
be paid in the form of a Qualified Joint and Survivor
Annuity and an unmarried Member's Accrued Benefit will
be paid in the form of an annuity for his lifetime.
7.03 Qualified Preretirement Survivor Annuity
(a) Provided that a Member and his or her Spouse have
been married throughout the one-year period ending
on his or her date of death and provided an
optional form of benefit as set forth in Section
7.07 has not been elected by a Member eligible to
waive the Qualified Preretirement Survivor Annuity
within the Election Period pursuant to a Qualified
Election, if a Participant dies before the Annuity
Starting Date, the Member's Accrued Benefit shall
be payable as an annuity for the life of the
Surviving Spouse in accordance with this Section
7.03.
32
<PAGE>
(b) The Qualified Preretirement Survivor Annuity shall
commence on what would have been the Member's
Normal Retirement Date or, on the first day of the
month following the death of the Member, if later,
and shall cease with the last monthly payment
prior to the death of the Spouse. However:
(i) if the Member dies in active service
after having met the requirements for
early retirement, after having completed
twenty years of service, or after
retiring early but before payments
commence, the Spouse may elect to begin
receiving payments as of the first day
of the month following the Member's date
of death; and
(ii) in the case of the death of any other
Member, the Spouse may elect to begin
receiving payments as of the first day
of any month following what would have
been the Member's Earliest Retirement
Age which is his 55th birthday.
(c) Before reduction in accordance with Paragraph (d)
below, the Qualified Preretirement Survivor
Annuity shall be equal to:
(i) in the case of a Member who dies while
in active service after having met the
requirements for early retirement, after
having completed twenty years of
service, or after retiring early but
before payments commence, the following
per centum of a normal retirement
Allowance computed as provided in
Section 5.01(c) and 5.01(d) on the basis
of the deceased Member's Compensation
and Credited Service prior to his death,
provided that if the Spouse was born
more than 60 months after the deceased
Member, the Qualified Preretirement
Survivor Annuity so determined shall be
reduced by 1/6 of 1% for each month in
33
<PAGE>
excess of 60 by which her date of birth
followed the deceased Member's date of
birth.
Age Member
Would Have Been
At Commencement Per Centum
40 to 45 40%
46 41%
47 42%
48 43%
49 44%
50 45%
51 46%
52 47%
53 48%
54 49%
55 or over 50%
(ii) in the case of any other Member, 50% of
the amount of vested Allowance to which
the Member would have been entitled at
his Normal Retirement Date, reduced as
follows:
- reduction for a 50% joint and
survivor annuity option (based on
the Member's age and his Spouse's
age had the Member survived to the
date benefits commence), and
- reduction to reflect early
commencement, if applicable, of
payments in accordance with Section
5.03(c).
(iii) If within the 90 day period prior to his
Annuity Starting Date a Member has
elected Option (ii) under Section 7.07
naming his spouse as contingent
annuitant, the amount payable to his
spouse under this Section 7.03 as a
Qualified Preretirement Survivor Annuity
shall be the amount that would have been
payable to his spouse under Option (ii)
if such amount is greater than the
amount of the Qualified Preretirement
Survivor Annuity otherwise payable under
34
<PAGE>
subparagraphs (c)(i) or (c)(ii) above,
as applicable.
(d) The Allowance subsequently payable to a Member
whose Spouse would have been entitled to a
Qualified Preretirement Survivor Annuity under
this Section had the Member's death occurred, or
the Qualified Preretirement Survivor Annuity
payable to his Spouse after his death, whichever
is applicable, shall be reduced by the applicable
percentage shown in the following table for the
period, or periods, that the provisions of this
Section 7.03 are in effect with respect to the
Member. No such reduction shall be made with
respect to:
(i) coverage during active employment, or
(ii) any period before the commencement of
the election period specified in Para-
graph (e) below.
Annual Reduction for Spouse's Coverage
after Retirement or Other Termination
of Service
Age Reduction
Under 35 0%
35 - 39 2/10 of 1%
40 - 49 3/10 of 1%
50 - 54 4/10 of 1%
55 - 59 5/10 of 1%
60 and over 1%
(e) The Company shall furnish to each married Member
within the one year period commencing on the date
he terminates service a written explanation in
non-technical language which describes (1) the
terms and conditions of the Qualified
Preretirement Survivor Annuity, (2) the Member's
right to make, and the effect of, an election to
waive the Qualified Preretirement Survivor
Annuity, (3) the rights of the Member's Spouse and
(4) the right to make, and the effect of, a
revocation of such election.
35
<PAGE>
7.04 Definitions
For purposes of this Article 7, the following
definitions shall apply:
(a) The term "Election Period" shall mean the period
which begins on the first day of the Plan Year in
which a Member attains age 35 and ends on the date
of the Member's death. If a Member separates from
service prior to the first day of the Plan Year in
which age 35 is attained, with respect to the
Accrued Benefit as of the date of separation, the
Election Period shall begin on the date of
separation.
(b) The term "Earliest Retirement Age" shall mean the
earliest date on which, under the Plan, the Member
could elect to receive retirement benefits.
(c) The term "Qualified Election" shall mean waiver
of a Qualified Joint and Survivor Annuity or a
Qualified Preretirement Survivor Annuity. Any
waiver of a Qualified Joint and Survivor Annuity
or a Qualified Preretirement Survivor Annuity
shall not be effective unless: (a) the Member's
Spouse consents in writing to the election;
(b) the election designates a contingent
annuitant, which may not be changed without
spousal consent (or the Spouse expressly permits
designations by the Participant without any
further spousal consent); (c) the Spouse's consent
acknowledges the effect of the election; and (d)
the Spouse's consent is witnessed by a Plan
representative designated by the Retirement
Committee or notary public. Additionally, a
Member's waiver of the Qualified Joint and
Survivor Annuity shall not be effective unless the
election designates a form of benefit payment
which may not be changed without spousal consent
(or the Spouse expressly permits designations by
the Member without any further spousal consent).
If it is established to the satisfaction of a the
Retirement Committee that there is no Spouse or
that the Spouse cannot be located, a waiver
without spousal consent will be deemed a Qualified
Election.
Any consent by a Spouse obtained under this
provision (or establishment that the consent of a
Spouse may not be obtained) shall be effective
only with respect to such Spouse. A consent that
permits designations by the Member without any
requirement of further consent by such Spouse must
acknowledge that the Spouse has the right to limit
consent to a specific Beneficiary, and a specific
36
<PAGE>
form of benefit where applicable, and that the
Spouse voluntarily elects to relinquish both of
such rights. A revocation of a prior waiver may
be made by a Member without the consent of the
Spouse at any time before the commencement of
benefits. The number of revocations shall not be
limited. No consent obtained under this provision
shall be valid unless the Member has received
notice as provided in Section 7.05 below.
7.05 Notice Requirements
(a) In the case of a Qualified Joint and Survivor
Annuity or a single life annuity, the Retirement
Committee shall provide, no less than 30 days and
no more than 90 days prior to the Annuity Starting
Date, each Member with a written explanation of:
(1) the terms and conditions of a Qualified Joint
and Survivor Annuity or single life annuity;
(2) the Member's right to make and the effect of
an election to waive the Qualified Joint and
Survivor Annuity or single life annuity form of
benefit; (3) the rights of a Member's Spouse; and
(4) the right to make, and the effect of, a
revocation of a previous election to waive the
qualified Joint and Survivor Annuity or single
life annuity.
(b) In the case of a Qualified Preretirement Survivor
Annuity, the Retirement Committee shall provide
each Member within the applicable period for such
Member a written explanation of the Qualified
Preretirement Survivor Annuity in such terms and
in such manner as would be comparable to the
explanation provided for meeting the requirements
of Paragraph (a) above applicable to a Qualified
Joint and Survivor Annuity or a single life
annuity.
The applicable period for a Member is whichever of
the following periods ends last: (1) the period
beginning with the first day of the Plan Year in
which the Member attains age 32 and ending with
the close of the Plan Year preceding the Plan Year
in which the Member attains age 35; (2) a
reasonable period ending after the individual
becomes a Member; (3) a reasonable period ending
after the Member's Qualified Preretirement
Survivor Annuity ceases to be fully subsidized;
(4) a reasonable period ending after this Article
first applies to the Member. Notwithstanding the
foregoing, notice must be provided within a
reasonable period ending after separation from
service in the case of a Member who separates from
service before attaining age 35.
37
<PAGE>
For purposes of applying the preceding paragraph,
a reasonable period ending after the enumerated
events described in (2), (3) and (4) is the end of
the two-year period beginning one year prior to
the date the applicable event occurs, and ending
one year after that date. In the case of a Member
who separates from service before the Plan Year in
which age 35 is attained, notice shall be provided
within the two-year period beginning one year
prior to separation and ending one year after
separation. If such a Member thereafter returns
to employment with the employer, the applicable
period for such Member shall be redetermined.
7.06 Transitional Rules
Any living Member not receiving benefits on August 23,
1984, who would otherwise not receive the benefits
prescribed by the previous Sections of this Article
must be given the opportunity to elect to have the
prior Sections of this Article apply if such Member is
credited with at least one Hour of Service under this
Plan or a predecessor plan in a Plan Year beginning on
or after January 1, 1976, and such Member is entitled
to a vested Allowance.
7.07 Alternative Forms of Distribution
(a) Any Member may, subject to the election procedures
applicable to Qualified Joint and Survivor
Annuities and Qualified Preretirement Survivor
Annuities, elect to convert his retirement
Allowance into an optional benefit of Equivalent
Actuarial Value determined as of the Annuity
Starting Date, in accordance with one of the
options named below:
Option (i) a retirement Allowance payable for
the Member's life, with no
Allowance payable after his death;
or
Option (ii) a modified retirement Allowance
payable during the Member's life
with the provision that after his
death either a 50%, 75% or a 100%
joint and survivor annuity shall be
paid during the life of, and to,
the contingent annuitant nominated
by him.
38
<PAGE>
(b) The election of an optional form of benefit shall
become effective as follows:
(i) If the Member retired on his Normal
Retirement Date, or if he retires on an
early retirement Allowance or a vested
retirement Allowance deferred to
commence on his Normal Retirement Date,
the election shall become effective on
his Normal Retirement Date.
(ii) If the Member retires on an early
retirement allowance commencing prior to
his Normal Retirement Date, the election
shall become effective on the date due
of the first monthly installment.
(iii) If the Member continues in service as an
Employee after his Normal Retirement
Date and the notice of his election is
received by the Retirement Committee
prior to his Normal Retirement Date, the
election shall become effective on his
Normal Retirement Date, or if the notice
of the election is received by the
Retirement Committee after the Member's
Normal Retirement Date, the election
shall become effective on the date it is
received by the Retirement Committee.
In the event of the death of a Member in
service as an Employee on or after his
Normal Retirement Date and after his
election has become effective, payments
of the benefit under the option computed
as of the time it became effective shall
commence on the first day of the month
next following the month of death if the
contingent annuitant designated under
the option is then living; or, upon the
retirement of such a Member, the amount
under the option computed as of the time
it became effective shall be payable to
the Member, but no payments shall
commence or accrue to him until the date
of retirement.
7.08 Cash-Out of Annuity Benefits
Although Allowances shall normally be payable in
monthly installments, a lump sum payment of Equivalent
Actuarial Value shall be made in lieu thereof if the
present value of a Member's Allowance upon termination
of employment is less than $3,500. The Equivalent
Actuarial Value shall be determined by using an
interest rate assumption equal to the interest rate
39
<PAGE>
used by the Pension Benefit Guaranty Corporation for
valuing a lump sum distribution for single employer
plans that terminate on the first day of the
Computation Year in which the Annuity Starting Date
occurs. In determining the amount of a lump sum
payable prior to a Member's Normal Retirement Date,
Equivalent Actuarial Value shall be calculated as a
benefit which would otherwise have been provided
commencing at the Member's Normal Retirement Date, or,
if larger, the benefit payable at the earliest possible
commencement date, but in no event earlier than the
date as of which the lump sum is paid. The lump sum
payment shall be made as soon as practicable on or
after the date the Member terminates employment.
Notwithstanding the foregoing, if the present value of
the Member's vested Allowance is zero, the Member shall
be deemed to have received a distribution of such
Member's Accrued Benefit.
7.09 Commencement of Benefits
(a) Required Distributions
Once a written claim for benefits is filed with
the Retirement Committee and unless the Member
elects to have payment begin at a later date,
payment of benefits to the Member shall begin not
later than sixty (60) days after the last day of
the Plan Year in which the latest of the following
events occur:
(i) the Member's Normal Retirement Date;
(ii) the tenth (10th) anniversary of the date
the Employee became a Member; or
(iii) the Member's separation from service.
(b) Required Minimum Distributions On and After
January 1, 1989
(i) Subject to the transitional rules
described in Paragraph (c) below,
effective for taxable years beginning
after December 31, 1988, the payment of
benefits to any Member shall begin no
later than April 1 of the calendar year
following the calendar year in which the
Member attains age 70-1/2, without
regard to the actual date of separation
from service. The amount of his
Allowance shall be recomputed as of such
April 1 and as of the close of each Plan
Year after his Allowance commences and
preceding his actual retirement date as
40
<PAGE>
if each such date were the Member's late
retirement date. Any additional
Allowance he accrues at the close of any
such Plan Year shall be offset (but not
below zero) by the value of the benefit
payments received in such Plan Year.
(ii) The receipt by a Member of any payments
or distributions as a result of his
attaining age 70-1/2 prior to his actual
retirement or death shall in no way
affect the entitlement of an otherwise
eligible Member to additional accrued
benefits.
(c) Transitional Rule
Any Member who is not a five percent owner and who
has attained age 70-1/2 by January 1, 1988, may
defer the commencement of benefit payments under
Paragraph (b) above until he actually separates
from service with the Company. This transitional
rule shall only apply if the Member is not a five
percent owner at any time during the Plan Year
ending with or within the calendar year in which
such owner attains age 66-1/2 and in any
subsequent Plan Year.
(d) Distribution Upon Death of Member
(i) Death After Commencement of Benefits
If the Member dies before his entire
nonforfeitable interest has been
distributed to him, the remaining
portion of such interest shall be
distributed at least as rapidly as under
the method of distribution selected by
the Member as of the date of his death.
(ii) Death Prior to Commencement of Benefits
If the Member dies before the distribu-
tion of his nonforfeitable interest has
begun, the entire interest shall be
distributed within five years after the
death of such Member.
(e) Determining Required Minimum Distributions
Notwithstanding anything in this Plan to the
contrary, all distributions under this Plan shall
be made in accordance with Section 401(a)(9) of
the Code and the regulations thereunder and the
minimum amount which must be distributed each
41
<PAGE>
calendar year shall be determined in accordance
with the provisions of Code Section 401(a)(9) and
applicable Treasury Regulations.
7.10 TEFRA 242(b)(2) Transitional Rules
Any distribution made pursuant to a TEFRA transitional
rule distribution election shall meet the requirements
of Code Section 401(a)(9) as in effect on December 31,
1983, and shall also satisfy Code Sections 401(a)(11)
and 417.
7.11 Requirement for Direct Rollovers
This Section applies to distributions made on or after
January 1, 1993. Notwithstanding any provision of the
Plan to the contrary that would otherwise limit a
Distributee's election under this Article 7, a
Distributee may elect, at the time and in the manner
prescribed by the Retirement Committee, to have any
portion of an Eligible Rollover Distribution paid
directly to an Eligible Retirement Plan specified by
the Distributee in a Direct Rollover.
(a) Definitions
(i) Eligible Rollover Distribution
An Eligible Rollover Distribution is any
distribution of all or any portion of
the balance to the credit of the
Distributee, except that an Eligible
Rollover Distribution does not include:
(A) any distribution that is one of a
series of substantially equal
periodic payments (not less
frequently than annually) made for
the life (or life expectancy) of
the Distributee or the joint lives
(or joint life expectancies) of the
Distributee and the Distributee's
designated beneficiary, or for a
specified period of 10 years or
more;
(B) any distribution to the extent such
distribution is required under Code
Section 401(a)(9); and
(C) the portion of any distribution
that is not includible in gross
income (determined without regard
to the exclusion for net unrealized
42
<PAGE>
appreciation with respect to
employer securities).
(ii) Eligible Retirement Plan
An Eligible Retirement Plan is an
individual retirement account described
in Section Code 408(a), an individual
retirement annuity described in Code
Section 408(b), an annuity plan
described in Code Section 403(a), or a
qualified trust described in Code
Section 401(a) that accepts the
Distributee's Eligible Rollover
Distribution. However, in the case of
an Eligible Rollover Distribution to a
surviving Spouse, an Eligible Retirement
Plan is an individual retirement account
or individual retirement annuity.
(iii) Distributee
A Distributee includes a Member or
former Member. In addition, the
Member's or former Member's Surviving
Spouse and the Member's or former
Member's Spouse or former Spouse who is
an alternate payee under a qualified
domestic relations order, as defined in
Code Section 414(p), are Distributees
with regard to the interest of the
Spouse or former Spouse.
(iv) Direct Rollover
A Direct Rollover is a payment by the
Plan to the Eligible Retirement Plan
specified by the Distributee.
43
<PAGE>
ARTICLE 8 - CONTRIBUTIONS
viii
8.01 It is the intention of the Company to continue the Plan
and make such contributions to the Trustee each year in
such amounts as are necessary to maintain the Plan on a
sound actuarial basis and to meet minimum funding
standards as prescribed by any applicable law.
However, subject to the provisions of Article 9, the
Company may discontinue its contributions for any
reason at any time. Any forfeitures shall be used to
reduce the Company contributions otherwise payable, and
will not be applied to increase the benefits any Member
would otherwise receive under the Plan.
44
<PAGE>
ARTICLE 9 - ADMINISTRATION OF THE PLAN
ix
9.01 The general administration of the Plan and the
responsibility for carrying out the provisions of the
Plan shall be placed in a Retirement Committee of not
less than three persons appointed from time to time by
the Board of Directors to serve at the pleasure of the
Board of Directors. Any Member of the Retirement
Committee may resign by delivering his written
resignation to the Board of Directors and the Secretary
of the Retirement Committee.
9.02 The Members of the Retirement Committee shall elect a
Chairman from their number and a Secretary who may be
but need not be one of the Members of the Retirement
Committee; may appoint from their number such
committees with such powers as they shall determine;
may authorize one or more of their number or any agent
to execute or deliver any instrument or make any
payment on their behalf; may retain counsel, employ
agents and provide for such clerical, accounting and
actuarial services as they may require in carrying out
the provisions of the Plan; and may allocate among
themselves or delegate to other persons all or such
portion of their duties hereunder, other than those
granted to the Trustee under the Trust instrument
adopted for use in implementing the Plan, as they, in
their sole discretion shall decide.
9.03 The Retirement Committee, in addition to the functions
and duties provided for elsewhere in the Plan, shall
have exclusive discretionary authority for the
following:
(a) Construing and interpreting the Plan;
(b) Determining all questions affecting the
eligibility of any Member, retired Member, Spouse
or beneficiary;
(c) Determining all questions affecting the amount of
the Allowance payable hereunder;
(d) Ascertaining the persons to whom benefits shall be
payable under the provisions hereof;
(e) To the extent provided in the Plan, authorizing
and directing disbursements of benefits from the
Plan;
(f) Making final and binding determinations in
connection with any questions of fact which may
arise regarding the operation of the Plan;
45
<PAGE>
(g) Making such rules and regulations with reference
to the operation of the Plan as it may deem
necessary or advisable, provided that such rules
and regulations shall not be inconsistent with the
express terms of the Plan or ERISA;
(h) Prescribing such procedures and adopting such
forms as it determines necessary under the terms
of the Plan;
(i) Reviewing such denials of claims for benefits as
may arise under Section 9.04 below and making
decisions on such review. [claims procedure]
Any decision, determination, construction,
interpretation, ascertainment, authorization direction,
rule, regulation, prescription or review that the
Retirement Committee may make or give in carrying out
its duties or functions under this Section 9.03 shall
be binding and conclusive.
9.04 Consistent with the requirements of ERISA and the
regulations thereunder of the Secretary of Labor as
from time to time in effect, the Retirement Committee
shall: (a) provide adequate notice in writing to any
Member or contingent annuitant (each being hereinafter
in this paragraph referred to as "Member") whose claim
for benefits under the Plan has been denied setting
forth specific reasons for such denial, written in a
manner calculated to be understood by such Member; and
(b) afford a reasonable opportunity to any Member whose
claim for benefits has been denied for a full and fair
review of the decision denying the claim.
9.05 The Retirement Committee shall hold meetings upon such
notice, at such place or places, and at such time or
times as it may from time to time determine.
9.06 Any act which the Plan authorizes or requires the
Retirement Committee to do may be done by a majority of
its Members. The action of such majority expressed
from time to time by a vote at a meeting or in writing
without a meeting shall constitute the action of the
Retirement Committee and shall have the same effect for
all purposes as if assented to by all Members of the
Retirement Committee at the time in office.
9.07 No Member of the Retirement Committee shall receive any
Compensation for his services as such.
9.08 Subject to the limitations of the Plan, the Retirement
Committee from time to time shall establish rules for
the administration of the Plan and the transaction of
its business. The determination of the Retirement
Committee asto anydisputed question shallbe conclusive.
46
<PAGE>
9.09 As an aid to the Retirement Committee fixing the rates
of Company contributions payable to the Plan, the
actuary designated by the Retirement Committee shall
make annual actuarial valuations and shall submit to
the Retirement Committee such amounts of contribution
as he recommends for use. The Retirement Committee
shall maintain accounts showing the fiscal transactions
of the Plan, and shall keep in convenient form such
data as may be necessary for actuarial valuations of
the Plan. The Retirement Committee shall submit a
report each year to the Board of Directors, giving a
brief account of the operation of the Plan during the
past year.
9.10 The Members of the Retirement Committee shall use that
degree of care, skill, prudence and diligence that a
prudent man acting in a like capacity and familiar with
such matters would use in his conduct of a similar
situation.
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ARTICLE 10 - MANAGEMENT OF FUNDS
x
All the funds of the Plan except those held by an
insurance company shall be held by a Trustee or Trustees
appointed from time to time by the Board of Directors, in trust
under a trust instrument adopted, or as amended, by the Board of
Directors for use in providing the benefits of the Plan and
paying its expenses not paid directly by the Company; provided
that, except as otherwise herein provided, no part of the corpus
or income of the Trust shall be used for, or diverted to,
purposes other than for the exclusive benefit of Members and
contingent annuitants under the Plan, prior to the satisfaction
of all liabilities with respect to them; and provided that no
person shall have any interest in or right to any part of the
earnings of the Trust, or any rights in, or to, or under the
Trust or any part of the assets thereof, except as and to the
extent expressly provided in the Plan and in the trust
instrument, and the Company shall have no liability for the
payment of benefits under the Plan nor for the administration of
the funds paid over to the Trustee or Trustees.
The Company's contributions to the Plan are conditioned
upon their deductibility under Code Section 404. If all or part
of the Company's deductions for contributions to the Plan are
disallowed by the Internal Revenue Service, the portion of the
contributions to which that disallowance applies shall be
returned to the Company without interest, but reduced by any
investment loss attributable to those contributions. The return
shall be made within one year after the date of the disallowance
of deduction. The Company may recover without interest the
amount of its contributions to the Plan made on account of a
mistake in fact, reduced by any investment loss attributable to
those contributions, if recovery is made within one year after
the date of those contributions. Furthermore, if permitted under
federal common law, the Company may recover any other
contributions to the Plan or payments to any other entity to the
extent such contributions or payments unjustly enrich or
otherwise gratuitously benefit such entity(s).
48
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ARTICLE 11 - CERTAIN RIGHTS AND LIMITATIONS
xi
The following provisions shall apply in all cases
whenever a Member or other person is affected thereby.
11.01 The Board of Directors may terminate the Plan for any
reason at any time. In case of complete or partial
termination of the Plan, the rights of affected Members
to the benefits accrued under the Plan to the date of
such termination, to the extent then funded, shall be
non-forfeitable. The funds of the Plan shall be used
for the exclusive benefit of Members, Spouses, former
Members, retired Members, and contingent annuitants
under the Plan as of the date of such termination
except that any residual assets which are not required
to satisfy all liabilities of the Plan for benefits
because of erroneous actuarial computation as defined
in Treasury Regulation Section 1.401-2 shall be
returned to the Company. Upon termination, the
Retirement Committee shall determine and pay benefits
to each Member, Spouse, and contingent annuitant in
accordance with the provisions of Title IV of ERISA.
11.02 The establishment of the Plan shall not be construed as
conferring any legal rights upon any Employee or other
person for a continuation of employment, nor shall it
interfere with the rights of the Company to discharge
any Employee and to treat him without regard to the
effect which such treatment might have upon him as a
Member of the Plan.
11.03
(a) The annual payments to a Member described in
subparagraph (b) below shall not exceed an amount
equal to the payments that would be made to or on
behalf of such Member under a single life annuity
that is the Actuarial Equivalent of the sum of the
Member's Accrued Benefit and the Member's other
benefits under this Plan (other than a Social
Security supplement) and any Social Security
supplement that the restricted employee is
entitled to receive. The restrictions in this
subparagraph (a) do not apply, however, if --
(i) after payment to a Member described in
subparagraph (b) of all benefits payable
to such Member under this Plan, the
value of this Plan's assets equals or
exceeds 110% of the value of current
liabilities, as defined in Code Section
412(a)(7), or
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(ii) the value of the benefits payable to
such Member under this Plan for a Member
described in subparagraph (b) below is
less than 1% of the value of current
liabilities before distribution.
(b) The Members whose benefits are restricted on
distribution include all highly compensated
employees and highly compensated former employees
(as such terms are defined in Treasury Regulation
Section 1.401(a)(4)-12); provided, however, that
Members whose benefits are subject to restriction
under this Section 11.03 shall be limited to only
those Members who in the current or in any
previous Plan Year were one of the 25 non-
excludible Members of the Company with the
greatest compensation from the Company.
11.04 In the event that the Retirement Committee shall find
that a Member or other person entitled to a benefit is
unable to care for his affairs because of illness or
accident or is a minor or has died, the Retirement
Committee may direct that any benefit payment due him,
unless a claim shall have been made therefor by a duly
appointed legal representative, be paid to his Spouse,
a child, a parent or other blood relative, or to a
person with whom he resides, and any such payment so
made shall be a complete discharge of the liabilities
of the Plan therefor.
11.05 The Retirement Committee shall, upon direction of the
Board of Directors uniformly applicable to all
Employees similarly situated, deduct from the part of
any retirement Allowance under the Plan, all or part of
any amount paid or payable to or on account of any
Member under the provisions of any present or future
law, pension or benefit scheme of any sovereign
government, or any political subdivision thereof, on
account of which contributions have been made or
premiums or taxes paid by the Company with respect
thereto; provided that benefits payable under Title II
of the Social Security Act are not to be used to reduce
the benefits otherwise provided under this Plan except
as specifically provided in Section 5.01(d)(ii).
11.06 If any company hereafter becomes a subsidiary or
Affiliated Company of the Company, the Board of
Directors may include the employees of such subsidiary
or Affiliated Company in the membership of the Plan
upon appropriate action by such company necessary to
adopt the Plan. In such event, or if any persons
become Employees of the Company as the result of merger
or consolidation or as the result of acquisition by the
Company of all or part of the assets or business of
another company, the Board of Directors shall determine
50
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to what extent, if any, credit and benefits shall be
granted for previous service with such subsidiary,
affiliated or other company, but subject to the
continued qualification of the trust for the Plan as a
tax exempt trust under the Code. Any such subsidiary
or Affiliated Company may terminate its participation
in the Plan upon appropriate action by it, in which
event the funds of the Plan held on account of Members
of such company shall be determined by the Retirement
Committee on the basis of actuarial valuation, and
shall be applied as provided in Section 11.01 in the
manner there provided if the Plan should be terminated,
or shall be segregated by the Trustee as a separate
trust, pursuant to certification to the Trustee by the
Retirement Committee, continuing the Plan as a separate
Plan for the Employees of such company under which the
board of directors of such company shall succeed to all
the powers and duties of the Board of Directors
including the appointment of the Members of the
Retirement Committee.
11.07 The Plan may not be merged or consolidated with, nor
may its assets or liabilities be transferred to, any
other plan unless each Member, Spouse, former Member,
retired Member, or contingent annuitant under the Plan
would, if the resulting plan were then terminated,
receive a benefit immediately after the merger,
consolidation, or transfer which is equal to or greater
than the benefit he would have been entitled to receive
immediately before the merger, consolidation, or
transfer if the Plan had then terminated.
51
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ARTICLE 12 - NON-ALIENATION OF BENEFITS
xii
Except as required by any applicable law, no benefit
under the Plan shall in any manner be anticipated, assigned or
alienated, and any attempt to do so shall be void. However,
payment shall be made in accordance with the provisions of any
judgment, decree, or order which:
(a) creates for, or assigns to, a Spouse, former
Spouse, child or other dependent of a Member the
right to receive all or a portion of the Member's
benefits under the Plan for the purpose of
providing child support, alimony payments or
marital property rights to that Spouse, child or
dependent,
(b) is made pursuant to a State domestic relations
law,
(c) does not require the Plan to provide any type of
benefit, or any option, not otherwise provided
under the Plan, and
(d) otherwise meets the requirements of Code
Section 414(p).
52
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ARTICLE 13 - AMENDMENTS
xiii
The Board of Directors reserves the right at any time
and from time to time, and retroactively if deemed necessary or
appropriate to conform with governmental regulations or other
policies, to modify or amend in whole or in part any or all of
the provisions of the Plan; provided that no such modification or
amendment shall make it possible for any part of the funds of the
Plan to be used for, or diverted to, purposes other than for the
exclusive benefit of Members or contingent annuitants under the
Plan, prior to the satisfaction of all liabilities with respect
to them; that no modification or amendment may be made in Section
11.01 without the consent of every participating Company; and
that no modification or amendment shall be made which has the
effect of decreasing the accrued benefit of any Member or of
reducing the non-forfeitable percentage of the accrued benefit of
a Member below that non-forfeitable percentage thereof computed
under the Plan as in effect on the later of the date on which the
amendment is adopted or becomes effective pursuant to Code
Section 411(d)(6). Any modification or amendment of the
provisions of the Plan shall be voted on by a quorum of the Board
of Directors necessary to transact business and such
modifications or amendments shall be set forth in resolutions
duly adopted by the Board of Directors.
53
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ARTICLE 14 - CONSTRUCTION
xiv
14.01 The Plan shall be construed, regulated and administered
under the laws of the State of Georgia.
14.02 The masculine pronoun shall mean the feminine pronoun,
and feminine the masculine, wherever appropriate.
54
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ARTICLE 15 - TOP-HEAVY PROVISIONS
xv
15.01 Top-Heavy Plan Requirements
For any Plan Year the Plan shall be determined to be a
Top-Heavy Plan, the Plan shall provide the following:
(a) the minimum benefit requirement of Section 15.03;
and
(b) the vesting requirement of Section 15.04.
15.02 Determination of Top-Heavy Status
(a) For any Plan Year commencing after December 31,
1983, the Plan shall be determined to be a
"Top-Heavy Plan," if, as of the Determination
Date, (1) the Present Value of Accrued Retirement
Income of Key Employees or (2) the sum of the
Aggregate Accounts of Key Employees under this
Plan and any plan of an Aggregation Group, exceeds
sixty percent (60%) of the Present Value of
Accrued Retirement Income or the Aggregate
Accounts of all Members entitled to participate in
this Plan and any Plan of an Aggregation Group.
For purposes of determining whether the Plan is
top-heavy, proportional subsidies shall be ignored
while non-proportional subsidies shall be taken
into account.
(b) For Plan Years beginning after December 31, 1986,
the Accrued Retirement Income of a Non-Key
Employee shall be determined under the accrual
method under the Plan.
(c) For any Plan Year commencing after December 31,
1983, the Plan shall be determined to be a "Super
Top-Heavy Plan," if, as of the Determination Date,
(1) the Present Value of Accrued Retirement Income
of Key Employees or (2) the sum of the Aggregate
Accounts of Key Employees under this Plan and any
plan in an Aggregation Group, exceeds ninety
percent (90%) of the Present Value of Accrued
Retirement Income or the Aggregate Accounts of all
Members entitled to participate in this Plan and
any plan of an Aggregation Group.
55
<PAGE>
For purposes of Sections 15.02(a) and 15.02(b), if
any Member is a Non-Key Employee for any Plan
Year, but such Member was a Key Employee for any
prior Plan Year, such Member's Present Value of
Accrued Retirement Income and/ or Aggregate
Account balance shall not be taken into account
for purposes of determining whether this Plan is a
Top-Heavy or Super Top-Heavy Plan (or whether any
Aggregation Group which includes this Plan is a
Top-Heavy Group). In addition, for Plan Years
beginning after December 31, 1984, if a Member or
former Member has not performed any services for
the Company or any Affiliated Company maintaining
the Plan at any time during the five (5) year
period ending on the Determination Date, the
Aggregate Account and/or Present Value of Accrued
Retirement Income for such Member or former Member
shall not be taken into account for purposes of
determining whether this Plan is a Top-Heavy or
Super Top-Heavy Plan.
(d) An Member's "Aggregate Account" as of the
Determination Date shall be determined under
applicable provisions of the defined contribution
plan used in determining Top-Heavy status.
(e) An "Aggregation Group" shall mean either a
Required Aggregation Group or a Permissive
Aggregation Group as hereinafter determined.
(i) Required Aggregation Group: In
determining a Required Aggregation Group
hereunder, each plan of the Company in
which a Key Employee is a participant,
and each other plan of the Company which
enables any plan in which a Key Employee
participates to meet the requirements of
Code Sections 401(a)(4) or 410, will be
required to be aggregated. Such group
shall be known as a Required Aggregation
Group.
In the case of a Required Aggregation
Group, each plan in the group will be
considered a Top-Heavy Plan if the
Required Aggregation Group is a
Top-Heavy Group. No plan in the
Required Aggregation Group will be
considered a Top-Heavy Plan if the
Aggregation Group is not a Top-Heavy
Group.
56
<PAGE>
(ii) Permissive Aggregation Group: The
Company may also include any other plan
not required to be included in the
Required Aggregation Group, provided the
resulting group, taken as a whole, would
continue to satisfy the provisions of
Code Sections 401(a)(4) or 410. Such
group shall be known as a Permissive
Aggregation Group.
In the case of a Permissive Aggregation
Group, only a plan that is part of the
Required Aggregation Group will be
considered a Top-Heavy Plan if the
Permissive Aggregation Group is a
Top-Heavy Group. A plan that is not
part of the Required Aggregation Group
but that has nonetheless been aggregated
as part of the Permissive Aggregation
Group will not be considered a Top-Heavy
Plan even if the Permissive Group is a
Top-Heavy Group.
(iii) Only those plans of the Employer in
which the Determination Dates fall
within the same calendar year shall be
aggregated in order to determine whether
such plans are Top-Heavy Plans.
(f) The "Determination Date" shall mean with respect
to any Plan Year, the last day of the preceding
Plan Year, or in the case of the first Plan Year,
the last day of such Plan Year.
(g) A "Key Employee" shall mean any Member or former
Member (and his beneficiaries) who, at any time
during the Plan Year or any of the four (4)
preceding Plan Years, is:
(i) an officer of the Company having an
annual compensation from the Company
greater than fifty percent (50%) of the
amount in effect under Code
Section 415(b)(1)(A) for any such Plan
Year. For purposes of this Section
15.02(g)(i), only those employers which
are incorporated shall be considered as
having officers, and no more than fifty
(50) Members (or, if lesser, the greater
of three (3) or ten percent (10%) of the
Members) shall be treated as officers.
Annual compensation means compensation
57
<PAGE>
as defined in Code Section 415(c)(3),
but including amounts contributed by the
Company pursuant to a salary reduction
agreement which are excludable from the
Member's gross income under Code
Section 125, Code Section 402(a)(8),
Code Section 402(h), or Code
Section 403(b).
(ii) one of the ten (10) Members (A) having
annual compensation from the Company
greater than the limitation in effect
under Code Sections 415(c)(1)(A) and (B)
owning (or considered as owning within
the meaning of Code Section 318) the
largest interests in the Company. For
purposes of this Section 15.06(g)(ii),
if two (2) Members have the same
interest in the Company, the Member
having the greater annual compensation
from the Company shall be treated as
having a larger interest.
(iii) a "five percent owner" of the Company.
The term "five percent owner" shall mean
any person who owns (or is considered as
owning within the meaning of Code
Section 318) more than five percent (5%)
of the outstanding stock of the Company
or stock possessing more than five
percent (5%) of the total combined
voting power of all stock of the
Company. In determining percentage
ownership hereunder, employers that
would otherwise be aggregated under Code
Sections 414(b), (c), and (m) shall be
treated as separate employers.
(iv) a "one percent owner" of the Company
having an annual compensation from the
Company of more than $150,000. The term
"one percent owner" shall mean any
person who owns (or is considered as
owning within the meaning of Code
Section 318) more than one percent (1%)
of the outstanding stock of the Company
or stock possessing more than one
percent (1%) of the total combined
voting power of all stock of the
Company. In determining percentage
ownership hereunder, employers that
would otherwise be aggregated under Code
58
<PAGE>
Sections 414(b), (c), and (m) shall be
treated as separate employers. However,
in determining whether an individual has
compensation of more than $150,000,
compensation from each employer required
to be aggregated under Code
Sections 414(b), (c), and (m) shall be
taken into account.
(h) A "Non-Key Employee" shall mean any Employee who
is not a Key Employee as defined in
Section 15.02(g).
(i) An Employee's "Present Value of Accrued Retirement
Income" shall mean as of the Determination Date,
the sum of the following:
(i) the Present Value of his Accrued Benefit
as of the most recent valuation
occurring within a twelve (12) month
period ending on the Determination Date.
(ii) any Plan distributions made within the
Plan Year that includes the
Determination Date or within the four
(4) preceding Plan Years. However, in
the case of distributions made after the
valuation date and prior to the
Determination Date, such distributions
are not included as distributions for
Top-Heavy purposes to the extent that
such distributions are already included
in the Member's Present Value of Accrued
Retirement Income as of the valuation
date. Notwithstanding anything herein
to the contrary, all distributions,
including distributions made prior to
January 1, 1984, and distributions under
a terminated plan which if it had not
been terminated would have been required
to be included in an Aggregation Group,
will be counted.
(iii) with respect to unrelated rollovers and
plan-to-plan transfers (ones which are
both initiated by the Member and made
from a plan maintained by one employer
to a plan maintained by another
employer), if this Plan provides for
rollovers or plan-to-plan transfers, it
shall always consider such rollover or
plan-to-plan transfer as a distribution
59
<PAGE>
for the purposes of this Section. If
this Plan is the plan accepting such
rollovers or plan-to-plan transfers, it
shall not consider such rollovers or
plan-to-plan transfers accepted after
December 31, 1983 as part of the
Employee's Present Value of Accrued
Retirement Income. However, rollovers
or plan-to-plan transfers accepted prior
to January 1, 1984 shall be considered
as part of the Employee's Present Value
of Accrued Retirement Income.
(iv) with respect to related rollovers and
plan-to-plan transfers (ones either not
initiated by the Employee or made to a
plan maintained by the same employer),
if this Plan provides for rollovers or
plan-to-plan transfers, it shall not be
counted as a distribution for purposes
of this Section. If this Plan is the
plan accepting such rollover or
plan-to-plan transfer, it shall consider
such rollover or plan-to-plan transfer
as part of the Employee's Present Value
of Accrued Retirement Income,
irrespective of the date on which such
rollover or plan-to-plan transfer is
accepted.
(j) A "Top-Heavy Group" shall mean an Aggregation
Group in which, as of the Determination Date, the
sum of:
(i) the Present Value of Accrued Retirement
Income of Key Employees under all
defined benefit plans included in that
group, and
(ii) the Aggregate Accounts of Key Employees
under all defined contribution plans
included in the group,
exceeds sixty percent (60%) of a similar sum
determined for all Employees.
15.03 Minimum Retirement Income for Top-Heavy Plan Years
Notwithstanding anything herein to the contrary, for
any Top-Heavy Plan Year, the minimum Accrued Retirement
Income derived from Company contributions for each
Non-Key Employee, including benefits accrued in years
60
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in which the Plan is not a Top-Heavy Plan, shall equal
a percentage of such Non-Key Employee's highest average
compensation not less than the lesser of: (a) two
percent (2%) multiplied by the Member's number of
Credited Service with the Company, or (b) twenty
percent (20%). For purposes of the minimum benefit, a
Member's Credited Service shall exclude (a) Plan Years
in which the Plan is not a Top-Heavy Plan, and
(b) Credited Service completed prior to January 1,
1984. The minimum benefit required by this Section
15.03 shall be calculated using the Member's total
compensation and expressed in the form of a single life
annuity (with no ancillary benefits) beginning at such
Member's Normal Retirement Date. A Member's average
compensation shall be based on the five (5) consecutive
years for which the Member had the highest
compensation.
Notwithstanding the foregoing, in any Plan Year in
which a Non-Key Employee participates in both this Plan
and a defined contribution plan, and both such plans
are Top-Heavy Plans, the Company shall not be required
to provide a Non-Key Employee with both the full
separate minimum defined benefit and the full separate
minimum defined contribution plan allocation.
Therefore, if a Non-Key Employee is participating in a
defined contribution plan maintained by the Employer
and the minimum allocation under Code Section 416(c)(2)
is allocated to the Non-Key Employee under such defined
contribution plan, the minimum Accrued Retirement
Income provided for above shall not be applicable, and
no minimum benefit shall accrue on behalf of the
Non-Key Employee. Alternatively, the Company may
satisfy the minimum benefit requirement of Code
Section 416(c)(1) for the Non-Key Employee by providing
any combination of benefits and/or contributions that
satisfy the safe harbor rules of Treasury Regulation
Section 1.416-1(m-12).
15.04 Vesting Requirements for Top-Heavy Plan Years
Notwithstanding any other provisions of the Plan, for
any Top-Heavy Plan Year, the vested portion of a
Member's Accrued Retirement Income shall be determined
on the basis of the Member's Continuous Service
according to the following schedule:
Years of Service Vested Percentage
less than 2 0%
2 20%
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3 40%
4 60%
5 80%
6 or more 100%
The minimum Retirement Income for any Top-Heavy Plan
Year shall not be forfeited during any period for which
the payment of the Member's Retirement Income is
required to be suspended under the Plan.
If in any subsequent Plan Year, the Plan ceases to be a
Top-Heavy Plan, the Retirement Committee may, in its
sole discretion, elect to (a) continue to apply this
vesting schedule in determining the vested percentage
of an Employee's Accrued Retirement Income or
(b) revert to the vesting schedule in effect before the
Plan became a Top-Heavy Plan. Any such reversion shall
be treated as a Plan amendment pursuant to the terms of
the Plan. No decrease in an Employee's nonforfeitable
percentage may occur in the event the Plan's status as
a Top-Heavy Plan changes for any Plan Year.
Members with three (3) or more years of Continuous
Service may elect to remain under the above Top-Heavy
Plan vesting schedule in any year the Plan ceases to be
top heavy.
15.05 Adjustments to Maximum Benefits for Top-Heavy Plans
(a) In the case of a Member who is a participant in a
defined benefit plan and a defined contribution
plan maintained by the Company, and such plans as
a group are determined to be Top-Heavy for any
limitation year beginning after December 31,
1983,t "1.0" shall be substituted for "1.25" in
each place it appears in the denominators of
fractions, as set forth in Article 6 of the Plan,
unless the extra minimum benefit is provided
pursuant to Section 15.01(b). Super Top-Heavy
Plans shall be required at all times to substitute
"1.0" for "1.25" in the denominator of each plan
fraction.
(b) If a Key Employee is a participant in both a
defined benefit plan and a defined contribution
plan that are both part of a Top-Heavy Group (but
neither of such plans is a Super Top-Heavy Plan),
the defined benefit and defined contribution
fractions set forth in Article 6 shall remain
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unchanged, provided that in Section 15.03 above,
"three percent (3%)" shall be substituted for "two
percent (2%)" and "twenty percent (20%)" shall be
increased by one (1) percentage point (but not
more than ten (10) percentage points) for each
year of Service included in the computations under
Section 15.03.
(c) For purposes of this Section 15.05, if the sum of
the defined benefit plan fraction and the defined
contribution fraction shall exceed 1.0 in any Plan
Year for any Member in this Plan, the Company
shall eliminate any amounts in excess of the
limits set forth in Article 6, pursuant to Section
6.01(f) of the Plan.
63
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ARTICLE 16 - EARLY RETIREMENT INCENTIVE PROGRAM
xvi
16.01 Eligibility
(a) Subject to the conditions described in Section
16.01(b) below, all Members of the Plan who
(i) have completed ten or more years of Continuous
Service and have attained age 55 on or prior to
December 31, 1993; (ii) are active Employees of
the Company or are disabled and currently accruing
service under Section 4.04 of the Plan on December
31, 1993; and (iii) who elect to receive the
benefits provided under this Article 16 by
executing and allowing to become effective an
Election Form and Waiver Agreement ("Eligible
Member") shall be eligible to receive the benefits
described in Section 16.02 below. Notwithstanding
the foregoing, the benefits payable under Section
16.02 shall only be payable to an Eligible Member
who elects during the period from October 1, 1993
to November 15, 1993 (the "Window Period") to
retire on or before December 31, 1993, by filing
and allowing to become effective an Election Form
and Waiver Agreement with the Retirement Committee
no later than November 15, 1993. In the event an
Eligible Member does not submit and allow to
become effective an Election Form and Waiver
Agreement by November 15, 1993, the Retirement
Committee shall interpret such failure as an
election not to receive the benefits provided
under this Article 16.
(b) The retirement date of an Eligible Member who
elects to retire during the Window Period shall be
December 31, 1993; provided, however, that in the
sole discretion of the Company, the retirement
date of certain Eligible Members may be postponed
beyond December 31, 1993, but in no event shall
any Eligible Member's retirement date be postponed
until or beyond October 1, 1994.
16.02 Benefits
(a) In addition to any Early or Normal Retirement
Allowance to which an Eligible Member may be
entitled in accordance with the provisions of
Article 5 of the Plan, if an Eligible Member
retires from the Company in accordance with the
provisions of this Article 16 prior to his Normal
Retirement Date and elects to receive an immediate
Early Retirement Allowance in accordance with
Section 5.02, the immediate Early Retirement
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Allowance to be received by such Eligible Member
under Section 5.02(b) shall not be reduced due to
early commencement of benefits.
(b) An Eligible Member who retires in accordance with
the provisions of Article 16 prior to the
attainment of age 62 shall be paid an amount equal
to the monthly Social Security benefits such
Eligible Member would become entitled to beginning
at age 65 based upon the Social Security law in
effect on December 31, 1993 and such Eligible
Member's Social Security earnings through his
retirement date. This Social Security Bridge
Benefit shall be paid monthly commencing on the
first day of the month next following the Eligible
Member's retirement date and shall continue to be
paid on the first day of each month thereafter up
to and including the first day of the month
following the month in which such Eligible Member
attains age 62.
16.03 Restoration to Service
Notwithstanding any provisions of Section 5.05 to the
contrary, in the event an Eligible Member who retires
in accordance with the provisions of this Article 16
subsequently returns to the service of the Company, all
benefits payable to such Eligible Member under this
Article 16 shall cease and upon the Eligible Member's
subsequent retirement, the Eligible Member shall
receive the greater of:
(a) the retirement Allowance the Member would receive
under the Plan based upon his Credited Service and
age at the date of his subsequent retirement,
reduced by the Equivalent Actuarial Value of the
retirement Allowance, excluding any amount payable
under Section 16.02(b) which the Member received
prior to his restoration to service and prior to
his normal retirement date; or
(b) the retirement Allowance the Member was actually
receiving excluding any amounts payable under
Section 16.02(b) or if the retirement Allowance
had not commenced, the retirement Allowance such
Member is eligible to receive under this Article
16.
65
<PAGE>
ARTICLE 17 - RETIREE MEDICAL BENEFITS
xvii
17.01 Provision of Medical Benefits
The provisions of this Article 17 of the Retirement
System provide for the payment of medical benefits to
eligible retired employees of the Company and to their
spouses and dependents as provided in this Article 17.
The Board of Directors makes no promise to continue
these benefits in the future and has the right to
discontinue providing such benefits at any time, as
well as the right to change any aspect of the
arrangements for their provision, including without
limitation the class of eligible retired employees and
the classes of eligible spouses and dependents of
retired former employees, the types of benefits
covered, the amounts paid for payment or reimbursement
of retired former employees, spouses and dependents for
medical services, the identity of any insurer involved,
the means by which the medical benefits are provided
and the institution of a requirement for contributions
by covered retired employees or covered spouses or
dependents of retired employees. In the event of any
such discontinuance or change, payments or
reimbursement of covered expenses incurred prior to the
effective date of the discontinuance or change would
not be adversely affected.
17.02 Eligibility for Medical Benefits
(a) Effective September 15, 1993, a member who retires
and is receiving a distribution from the Plan
pursuant to Sections 5.01 and 5.02 or a retired
member who is entitled to receive a distribution
from the Plan pursuant to Sections 5.01 or 5.02
after retirement will be eligible for
reimbursement or payment of covered medical
expenses, as hereinafter described, provided the
member (1) was covered by the Georgia Power
Company Medical Benefits Plan immediately before
retirement; (2) is not eligible as a spouse or
dependent or otherwise for coverage under the
Georgia Power Company Medical Benefits Plan; and
(3) continues to satisfy the eligibility
requirements applicable to retired employees as
set forth in the provisions of the Georgia Power
Company Medical Benefits Plan, which is attached
hereto as Exhibit A and incorporated herein by
reference and may be changed in accordance with
the terms of the Georgia Power Company Medical
Benefits Plan. Notwithstanding the foregoing, a
former employee who was a key employee pursuant to
66
<PAGE>
Section 15.02(g) on the date of his retirement
shall not be eligible to receive any benefits
under this Article 17.
(b) The spouses and dependents of retired members who
are eligible for reimbursement or payment of
covered medical expenses pursuant to paragraph (a)
and who were covered under the Georgia Power
Company Medical Benefits Plan immediately prior to
the member's retirement are also eligible for
reimbursement or payment of covered medical
expenses to the extent, if any, provided in the
Georgia Power Company Medical Benefits Plan, a
copy of which is attached as Exhibit A.
Notwithstanding the foregoing, a spouse or
dependent who is eligible for coverage under the
"active employee" portion of the Georgia Power
Company Medical Benefits Plan shall not be
eligible for reimbursement of medical expenses or
payment of premiums hereunder.
Coverage shall terminate (1) upon termination of
the Plan or this Article 17, or (2) in accordance
with the provisions of the Georgia Power Company
Medical Benefit Plan relating to termination of
coverage, whichever is earlier.
17.03 Contributions to the Medical Benefits Account
(a) There is hereby established a separate account to
provide the medical benefits payable pursuant to
this Article 17, called the Medical Benefits
Account. All contributions and transfers to the
Medical Benefits Account shall be held in trust by
a trustee for the payment of medical benefits
hereunder. All such contributions and transfers
shall be specifically designated to provide for
the payment of medical benefits. If such
contributions or transfers are held by a trustee
or trustees holding funds for the payment of
retirement benefits under the Plan, such
contributions and transfers (although held in a
separate account as provided above) need not be
segregated or separately invested by the trustee.
A portion of the earnings on trust assets for the
payment of both retirement and medical benefits
that have been jointly invested shall be allocated
to the Medical Benefits Account in an equitable
and reasonable manner.
Prior to the satisfaction of all liabilities for
medical benefits under this Article 17 of the
Plan, no part of the corpus or income in the
Medical Benefits Account shall be used for, or
diverted to, any purpose other than the providing
67
<PAGE>
of such benefits. Reimbursement of the Company
for payments of premiums under the Georgia Power
Company Medical Benefits Plan for the provision of
medical benefits thereunder for Eligible
Recipients and reimbursement of the Company for
direct payment or reimbursement to Eligible
Recipients of covered medical expenses is
considered a means of providing such benefits and
is specifically permitted.
In no event shall the Company contribute any
amount under this Article 17 for any retired
employee who is or was a "key employee" (as
defined in Section 15.02(g)).
(b) Eligible Recipients shall not contribute to the
Medical Benefits Account described in paragraph
(a) but may be required to contribute under the
Georgia Power Company Medical Benefits Plan
through which such coverage is provided in such
amounts as shall be determined from time to time
by the Board of Directors. The Company shall from
time to time contribute to such Medical Benefits
Account such amounts as the Retirement Committee
shall determine, but not in excess of the
actuarially determined total cost of providing the
medical benefits described in paragraph (d) below
taking into account any Member contributions and
any transfers of excess pension assets to the
Medical Benefits Account. Anything in this Plan
to the contrary notwithstanding, the aggregate
amount of the actual contributions to the Medical
Benefits Account described in paragraph (a) may
not exceed 25% of the total actual contributions
to the Plan for all benefits under the Plan
(exclusive of contributions that may be made to
fund past service credits) on and after September
15, 1993. In the event that an Eligible
Recipient's interest in the Medical Benefits
Account is forfeited prior to termination of the
Plan, an amount equal to the amount of the
forfeiture must be applied, as soon as possible,
to reduce any Company contributions to fund the
Medical Benefits Account.
17.04 Medical Benefits Covered by the System
Medical benefits under the Plan shall be provided
through the Georgia Power Company Medical Benefits Plan
by the payment of premiums thereunder or through
reimbursement to the Company of direct payment by the
Company or reimbursement by the Company to Eligible
68
<PAGE>
Recipients of medical expenses in accordance with the
terms and conditions, and subject to the limitations,
set forth in the provisions of the Georgia Power
Company Medical Benefits Plan attached hereto as
Exhibit A and which may be changed in accordance with
the terms of the Georgia Power Company Medical Benefit
Plan. Medical benefits shall be provided under the
Plan only to the extent there are sufficient funds to
provide such benefits available in the Medical Benefits
Account described in Section 17.03(a). In no event
shall any benefits be paid under the Plan to the extent
the same benefits are payable under any other plan,
program or arrangement of the Company. The Retirement
Committee may establish claims procedures and
administrative rules relating to the provision of
medical benefits hereunder to the extent that the
claims procedures and administrative rules under the
applicable group medical plan do not apply.
17.05 Amendment and Termination of Medical Benefits
The Board of Directors may amend, suspend, terminate,
withdraw or modify this Article 17 of the Plan in whole
or in part at any time subject to the provisions of the
Georgia Power Company Medical Benefits Plan relating to
benefits following termination or conversion rights.
The Board of Directors may permanently discontinue
contributions under this Article 17 at any time in its
sole discretion. Upon the satisfaction of all Plan
liabilities for medical benefits under the Plan, all
amounts held in the Medical Benefits Account described
in Section 17.03(a) of the Plan will be returned to the
Company. In the event the Plan is terminated, the
Company's obligation to contribute to the Medical
Benefits Account after termination shall cease, except
for benefits payable hereunder with respect to medical
expenses either paid or incurred by an Eligible
Recipient prior to the date of termination. A
termination of the provisions of this Article shall not
constitute a termination or partial termination of the
Plan for purposes of Section 11.01.
17.06 Definitions
(a) "Eligible Recipient" means a retired employee, the
employee's spouse, and the employee's dependents,
all of whom are eligible for retiree medical
benefits under the provisions of Section 17.02.
69
<PAGE>
IN WITNESS WHEREOF, the Board of Directors of Savannah
Electric and Power Company, through its authorized officers has
adopted this amendment and restatement of the Employees'
Retirement Plan of Savannah Electric and Power Company this
day of , 199__, to be effective January
1, 1989.
SAVANNAH ELECTRIC AND POWER COMPANY
By:
Arthur M. Gignilliat, Jr.
President and Chief Executive
Officer
ATTEST:
By:
Lavonne K. Calandra
Corporate Secretary
[CORPORATE SEAL]
[adamscl] h:\wpdocs\mtd\savannah\pension.pln
70
<PAGE>
FIRST AMENDMENT TO THE EMPLOYEES' RETIREMENT
PLAN OF SAVANNAH ELECTRIC AND POWER COMPANY
(AS AMENDED AND RESTATED EFFECTIVE
JANUARY 1, 1989)
WHEREAS, the Board of Directors of Savannah Electric and Power
Company (the "Company") heretofore adopted the amendment and
restatement of the Employees' Retirement Plan of Savannah
Electric and Power Company (the "Plan"), effective January 1,
1989, in order to comply with the Internal Revenue Code of 1986,
as amended; and
WHEREAS, the Company has authorized appropriate officers to
take proper actions which accomplish its overall intent to amend
and restate the Plan; and
WHEREAS, the Company is authorized pursuant to Article XIII of
the Plan to amend the Plan from time to time.
NOW, THEREFORE, effective January 16, 1995, the Company hereby
amends the Plan as follows:
17.07
Section 5.05(a) of the Plan is amended by deleting said
Section in its entirety and substituting the following in lieu
thereof:
5.05 Restoration of Retired Member or Former Member
to Service
(a) If a Member in receipt of an Allowance is
restored to service as an Employee on or after
his Normal Retirement Date, the following shall
apply, except with respect to temporary
employees on and after January 16, 1995:
(i) His Allowance shall be suspended for
each month during the period of
restoration which is a Suspendible
Month.
(ii) Upon the death of the Member during
the period of restoration, any
Allowance that would have been
payable to his surviving Spouse had
he not been restored to service shall
be payable or, alternatively, any
payments under an optional benefit,
if one has been elected and becomes
effective, shall begin.
<PAGE>
(iii) Upon later retirement, payment
of the Member's Allowance shall
resume no later than the third
month after the latest
Suspendible Month during the
period of restoration, and shall
be adjusted, if necessary, in
compliance with Title 29 of the
Code of Federal Regulations,
Section 2530.203-3 in a
consistent and nondiscriminatory
manner.
17.08
Section 5.05(b) of the Plan is amended by deleting said
Section in its entirety and substituting the following in lieu
thereof:
(b) If a Member in receipt of an Allowance is
restored to service as an Employee before his
Normal Retirement Date, the following shall
apply, except with respect to temporary
employees on and after January 16, 1995:
(i) His Allowance shall cease and any
election of an optional benefit in
effect shall be void.
(ii) Any Continuous and Credited Service
to which he was entitled when he
retired or terminated service shall
be restored to him.
(iii) Upon later retirement or
termination, his Allowance shall
be based on the benefit formula
then in effect and his
Compensation and Credited
Service before and after the
period when he was not in the
service of the Company, reduced
by an amount of Equivalent
Actuarial Value to the benefits,
if any, he received before the
date of his restoration to
service.
(iv) The part of the Member's Allowance
upon later retirement payable with
respect to Credited Service rendered
before his previous retirement or
2
<PAGE>
termination of service shall never be
less than the amount of his previous
Allowance modified to reflect any
option in effect on his later
retirement.
17.09
Except as amended herein by this First Amendment, the Plan
shall remain in full force and effect as amended and restated by
the Company prior to the adoption of this First Amendment.
IN WITNESS WHEREOF, the Company, through its duly authorized
officers, adopts this First Amendment to the Plan this 16th day
of January, 1995, to be effective as stated herein.
SAVANNAH ELECTRIC AND POWER COMPANY
By:
Arthur M. Gignilliat, Jr.
President and Chief Executive
Officer
ATTEST:
By:
Lavonne K. Calandra
Corporate Secretary
[CORPORATE SEAL]
[adamscl] h:\wpdocs\mtd\savannah\pension.1am
3
<PAGE>
Exhibit 10(f)16
SUPPLEMENTAL EXECUTIVE RETIREMENT PLAN
OF
SAVANNAH ELECTRIC AND POWER COMPANY
1As Amended and Restated, Effective July 23, 1986.
<PAGE>
Designation of Beneficiary
Supplemental Executive Retirement Plan
of
Savannah Electric and Power Company
As a Participant in the Supplemental Executive Retirement
Plan of Savannah Electric and Power Company, I hereby designate
the following person(s) as "Designated Beneficiary," as that term
is defined and used in the Plan:
_________________________________________________________________
_____________
_________________________________________________________________
_____________
_________________________________________________________________
_____________
_________________________________________________________________
_____________
_________________________________________________________________
_____________
_________________________________________________________________
_____________
_________________________________________________________________
_____________
_________________________________________________________________
_____________
_________________________________________________________________
_____________
_________________________________________________________________
_____________
I understand that the Designated Beneficiary named above may be
changed or revoked by me at any time by filing a new designation
in writing with the Committee.
<PAGE>
Date_____________________________
___________________________________
Signature of Participant
<PAGE>
TABLE OF CONTENTS
ARTICLE I - STATEMENT OF PURPOSE 1
ARTICLE II - DEFINITIONS 1
2.01 Terms . . . . . . . . . . . . . . . . . . . . . . . 1
2.02 Accrued SERP Retirement Benefit . . . . . . . . . . 1
2.03 Assumed Pension Plan Retirement Benefit . . . . . . 1
2.04 Committee . . . . . . . . . . . . . . . . . . . . . 2
2.05 Company . . . . . . . . . . . . . . . . . . . . . . 2
2.06 Credited Service . . . . . . . . . . . . . . . . . 2
2.07 Designated Beneficiary . . . . . . . . . . . . . . 2
2.08 Disability Benefit . . . . . . . . . . . . . . . . 2
2.09 Disability Date . . . . . . . . . . . . . . . . . . 2
2.10 Early Retirement Date . . . . . . . . . . . . . . . 2
2.11 Early Retirement Factor . . . . . . . . . . . . . . 2
2.12 Eligible Spouse . . . . . . . . . . . . . . . . . . 3
2.13 Final Average Salary . . . . . . . . . . . . . . . 3
2.14 Normal Retirement Date . . . . . . . . . . . . . . 3
2.15 Participant . . . . . . . . . . . . . . . . . . . . 3
2.16 Pension Plan . . . . . . . . . . . . . . . . . . . 3
2.17 Pension Plan Spouse's Allowance . . . . . . . . . . 3
2.18 Plan . . . . . . . . . . . . . . . . . . . . . . . 3
2.19 Postponed Retirement Date . . . . . . . . . . . . . 3
2.20 Salary . . . . . . . . . . . . . . . . . . . . . . 4
2.21 SERP Death Benefit . . . . . . . . . . . . . . . . 4
2.22 SERP Disability Benefit . . . . . . . . . . . . . . 4
2.23 SERP Retirement Benefit . . . . . . . . . . . . . . 4
2.24 Severance Date . . . . . . . . . . . . . . . . . . 4
2.25 Social Security Amount . . . . . . . . . . . . . . 4
2.26 Total Disability and Totally Disabled . . . . . . . 4
2.27 Vested Percentage . . . . . . . . . . . . . . . . . 5
ARTICLE III - ELIGIBILITY AND PARTICIPATION 5
3.01 Eligibility . . . . . . . . . . . . . . . . . . . . 5
3.02 Participation . . . . . . . . . . . . . . . . . . . 5
ARTICLE IV - RETIREMENT BENEFITS 5
4.01 Normal Retirement . . . . . . . . . . . . . . . . . 5
4.02 Early Retirement . . . . . . . . . . . . . . . . . 6
4.03 Postponed Retirement . . . . . . . . . . . . . . . 6
4.04 Commencement of Payment . . . . . . . . . . . . . . 7
4.05 Re-employment of Retired Participant . . . . . . . 7
ARTICLE V - PRERETIREMENT DEATH BENEFITS 7
5.01 Death Benefit . . . . . . . . . . . . . . . . . . . 7
5.02 Payment . . . . . . . . . . . . . . . . . . . . . . 8
ARTICLE VI - DISABILITY BENEFITS 8
6.01 Disability Prior to Retirement Date . . . . . . . . 8
6.02 Benefit at Retirement Date . . . . . . . . . . . . . 9
i
<PAGE>
ARTICLE VII - SEVERANCE BENEFITS 10
7.01 Eligibility . . . . . . . . . . . . . . . . . . . . 10
7.02 Participant Benefit . . . . . . . . . . . . . . . . 10
7.03 Spousal Benefit . . . . . . . . . . . . . . . . . . 10
7.04 Resumption of Employment After Severance . . . . . 11
ARTICLE VIII - ADMINISTRATIVE COMMITTEE 11
8.01 Authority . . . . . . . . . . . . . . . . . . . . . 11
8.02 Voting . . . . . . . . . . . . . . . . . . . . . . 11
8.03 Records . . . . . . . . . . . . . . . . . . . . . . 11
8.04 Liability . . . . . . . . . . . . . . . . . . . . . 12
ARTICLE IX - AMENDMENT AND TERMINATION 12
ARTICLE X - MISCELLANEOUS 12
10.01 Non-Alienation of Benefits . . . . . . . . . . 12
10.02 No Trust Created . . . . . . . . . . . . . . . 13
10.03 No Employment Agreement . . . . . . . . . . . 13
10.04 Binding Effect . . . . . . . . . . . . . . . . 13
10.05 Suicide . . . . . . . . . . . . . . . . . . . 13
10.06 Claims for Benefits . . . . . . . . . . . . . 13
10.07 Entire Plan . . . . . . . . . . . . . . . . . 14
10.08 Merger or Consolidation . . . . . . . . . . . 14
10.09 Age Differential of Spouse . . . . . . . . . . 14
ARTICLE XI - CONSTRUCTION 14
11.01 Governing Law . . . . . . . . . . . . . . . . 14
11.02 Gender . . . . . . . . . . . . . . . . . . . . 15
11.03 Headings, etc. . . . . . . . . . . . . . . . . 15
11.04 Children . . . . . . . . . . . . . . . . . . . 15
11.05 Action . . . . . . . . . . . . . . . . . . . . 15
ii
<PAGE>
ARTICLE I
STATEMENT OF PURPOSE
This Plan is designed and implemented for the purpose of
enhancing the earnings and growth of Savannah Electric and Power
Company by providing to the limited group of management employees
largely responsible for such earnings and long-term growth
deferred compensation in the form of supplemental retirement
income benefits, thereby increasing the incentive of such key
management employees to make the Company more profitable. The
benefits are normally payable to Participants upon retirement,
disability or death. The terms of the benefits operate in
conjunction with the Participant's benefits payable under the
Company's Employees' Retirement Plan of Savannah Electric and
Power Company (the "Pension Plan") and the Savannah Electric and
Power Company Long-Term Disability Plan, and are designed to
supplement such Pension Plan benefits and provide the participant
with additional financial security upon retirement, disability or
death.
ARTICLE II
DEFINITIONS
2.01 Terms - Unless otherwise clearly required by the
context, the terms used herein shall have the following meanings.
2.02 Accrued SERP Retirement Benefit shall mean the amount
determined by multiplying the Participant's SERP Retirement
Benefit times a fraction (not exceeding 1.0, the numerator of
which is the number of years and months of Credited Service
completed on the Participant's Early Retirement Date, Severance
Date or any other date (but not beyond his Normal Retirement
Date), whichever is applicable, and the denominator of which
shall be the greater of (i) the number of years and months of
Credited Service which the Participant would have completed upon
attainment of age 62 if he had remained employed until such time
or (ii) 15 years of Credited Service.] 1
1
<PAGE>
2.03 Assumed Pension Plan Retirement Benefit shall mean the
actual annual retirement benefit a Participant would receive
pursuant to the Pension Plan calculated with the following
assumptions:
(a) A married Participant selects to receive his
retirement benefit under Option B of Section 5.06(a) of the
Pension Plan on a life and 75% joint survivor basis.
(b) A single Participant selects to receive his
retirement benefit under Option A of Section 5.06(a) of the
Pension Plan on a life and ten-year certain basis.
2.04 Committee - The Administrative Committee appointed by
the Board of Directors of the Company to administer this Plan.
2.05 Company shall mean Savannah Electric and Power Company
and any successor to Savannah Electric and Power Company by
merger, purchase or otherwise.
2.06 Credited Service shall have the same meaning as set
forth in Article 4, Section 4.02 of the Pension Plan.
2.07 Designated Beneficiary - One or more beneficiaries, as
designated by a Participant in writing delivered to the
Committee, to whom certain Pre-Retirement Death Benefit payments
shall be made pursuant to the provisions of Article 5.02. In the
event no such written designation is made by the Participant or
if such beneficiary shall not be living or in existence at the
time for commencement of payment, the Participant shall be deemed
to have designated his estate as such beneficiary.
2.08 Disability Benefit shall mean a totally disabled
Participant's actual annual disability benefit paid pursuant to
the Savannah Electric and Power Company Long-Term Disability
Income Plan.
2.09 Disability Date shall have the same meaning as
"Elimination Period" as set forth in the Savannah Electric and
Power Company Long-Term Disability Income Plan.
2.10 Early Retirement Date shall have the same meaning as
set forth in Article 5, Section 5.02(a) of the Pension Plan.
2.11 Early Retirement Factor shall be a fraction, the
numerator of which shall be [the number of years and months of
<PAGE>
Credited Service which the Participant would have, completed at
the commencement of benefits from this Plan if he had remained
employed until such time and the denominator of which shall be
the Participant's number of years and months of Credited Service
which he would have completed at attainment of age 62 if he had
remained employed until such age.]1
2.12 Eligible Spouse shall mean the spouse of a Participant
who under the laws of the state where the marriage was
contracted, is deemed married to that Participant on the date on
which the payments from this Plan are to begin to the
Participant, except that for purposes of Article V - Pre-
Retirement Death Benefits, Eligible Spouse shall mean a person
who is married to a Participant for a period of at least twelve
months prior to his death.
2.13 Final Average Salary shall mean a Participant's average
yearly Salary (as defined in Article 2.20) during the 36 months
of highest compensation within the 120 month period immediately
preceding the earliest to occur of the Participant's Severance
Date, Disability Date, date of death, Early Retirement Date, or
Normal Retirement Date, whichever is applicable. In the event
the Participant does not have at least 36 months of regular
employment with the Company, Final Average Salary shall mean the
average yearly Salary for the Participant's total number of
calendar months of employment. Provided, however, if a
Participant dies during Total Disability, Final Average Salary
shall be determined for the appropriate months immediately
preceding the Participant's Disability Date.
2.14 Normal Retirement Date shall mean the first day of the
calendar month following the birthday on which a Participant
attains the age of 65.
2.15 Participant shall mean an employee of the Company who
is eligible and is participating in the Plan in accordance with
Article Ill of this Plan.
3
<PAGE>
2.16 Pension Plan shall mean the "Employees' Retirement Plan
of Savannah Electric and Power Company" (amended to January 1,
1986), as it may from time to time be amended in the future.
2.17 Pension Plan Spouse's Allowance shall mean an Eligible
Spouse's actual pre-retirement death benefit pursuant to Article
5, Section 5.04 of the Pension Plan.
2.18 Plan shall mean the "Supplemental Executive Retirement
Plan of Savannah Electric and Power Company" as contained herein
and as may be amended from time to time hereafter.
2.19 Postponed Retirement Date shall mean the first day of
the calendar month on which a Participant actually retires after
his Normal Retirement Date.
2.20 Salary shall mean the annual compensation paid by the
Company to a Participant as reflected in Internal Revenue Service
Form W-2, plus amounts of compensation deferred under any
deferred compensation plan or arrangement (including, without
limitation, the Deferred Compensation Plan for Key Employees of
Savannah Electric and Power Company and which but for the
deferral would have been reflected in Form W-2).
2.21 SERP Death Benefit shall mean an amount equal to:
Fifty-two and one-half percent (52 1/2%) of the Participant's
Final Average Salary, reduced by both of the following:
(1) the Participant's Pension Plan Pre-Retirement
Death Benefit (Spouse's Benefit), if any, and
(2) [fifty percent (50%)]1 of the Participant's Social
Security Amount.
2.22 SERP Disability Benefit shall mean an amount equal to:
Seventy percent (70%) of the Participant's Final Average Salary,
reduced by both of the following:
(1) the Participant's Disability Benefit, if any, and
(2) the Participant's Social Security Amount.
2.23 SERP Retirement Benefit shall mean an amount equal to:
Seventy percent (70%) of the Participant's Final Average Salary,
reduced by both of the following:
4
<PAGE>
(1) the Participant's Assumed Pension Plan Retirement
Benefit, and
(2) [fifty percent (50%)]1 of the Participant's Social
Security Amount.
2.24 Severance Date shall mean the date a Participant leaves
the employ of the Company other than for retirement, Total
Disability or death.
2.25 Social Security Amount shall have the same meaning as
set forth in Article I Section 1.19 of the Pension Plan.
2.26 Total Disability and Totally Disabled shall have the
same meaning as set forth in the Savannah Electric and Power
Company Long-Term Disability Plan.
2.27 Vested Percentage - a Participant's Vested Percentage
shall be determined as follows:
Years of Credited
Service at Severance Date Vested Percentage
6 10%
7 20%
8 30%
9 40%
10 50%
11 60%
12 70%
13 80%
14 90%
15 or more 100%
Provided, however, the Vested Percentage of a Participant who has
attained age 60 shall be 100%.
ARTICLE III
ELIGIBILITY AND PARTICIPATION
3.01 Eligibility. The Committee shall have the sole
discretion to determine the employees that are eligible to become
Participants in accordance with the purposes of the Plan.
3.02 Participation. The Committee shall notify those
employees selected as Participants of their participation and
resulting benefits.
5
<PAGE>
ARTICLE IV
RETIREMENT BENEFITS
4.01 Normal Retirement.
(a) Participant Benefit. Upon retirement at his
Normal Retirement Date, a Participant becomes entitled to the
"Normal Retirement Benefit" as defined in this Article 4.01(a).
The Normal Retirement Benefit is an amount equal to 1/12th of the
Participant's SERP Retirement Benefit, payable monthly during the
Participant's lifetime.
(b) Spousal Benefit. Upon the death of a retired
Participant either receiving or entitled to receive a Normal
Retirement Benefit survived by an Eligible Spouse, such Eligible
Spouse becomes entitled to the benefit defined in this Article
4.01(b). The Eligible Spouse's benefit is a monthly amount equal
to 75% of the deceased Participant's Normal Retirement Benefit,
payable monthly to the Eligible Spouse during her lifetime.
4.02 Early Retirement.
(a) Participant Benefit. Upon retirement at his Early
Retirement Date, a Participant becomes entitled to the "Early
Retirement Benefit" as defined in this Article 4.02(a). The Early
Retirement Benefit is an amount equal to 1/12th of the
Participant's Accrued SERP Retirement Benefit (as adjusted below,
where applicable), payable monthly during the Participant's
lifetime. [For purposes of determining the Participant's Accrued
SERP Retirement Benefit, 70% of Final Average Salary shall be
reduced by the Early Retirement Factor where the Participant's
Retirement Income from the Pension Plan commences prior to the
Participant's attainment of age 62.]1
(b) Spousal Benefit. Upon the death of a retired
Participant either receiving or entitled to receive an Early
Retirement Benefit survived by an Eligible Spouse, such Eligible
Spouse becomes entitled to the benefit defined in this Article
4.02(b). If the Participant was receiving his Early Retirement
Benefit at the time of his death, the Eligible Spouse's benefit
is a monthly amount equal to 75% of the deceased Participant's
6
<PAGE>
actual Early Retirement Benefit, payable monthly to the Eligible
Spouse during her lifetime. If the Participant's death occurs
prior to commencement of payment of his Early Retirement Benefit,
the Eligible Spouse's benefit is a monthly amount equal to 75% of
the deceased Participant's Early Retirement Benefit calculated as
if payment of such Participant's Early Retirement Benefit had
commenced at his date of death, payable monthly to the Eligible
Spouse during her lifetime.
4.03 Postponed Retirement.
(a) Participant Benefit. Upon retirement at a
Postponed Retirement Date, a Participant becomes entitled to the
"Postponed Retirement Benefit" as defined in this Article
4.03(a). The Postponed Retirement Benefit shall be equal to the
Participant's Normal Retirement Benefit (as defined in Article
4.01(a)) as if he had retired on his Normal Retirement Date. No
additional benefits shall accrue to any Participant after his
Normal Retirement Date.
(b) Spousal Benefit. Upon the death of a retired
Participant receiving or entitled to receive a Postponed
Retirement Benefit survived by an Eligible Spouse, such Eligible
Spouse becomes entitled to the benefit defined in this Article
4.03(b). The Eligible Spouse's benefit is a monthly amount equal
to 75% of the deceased Participant's Postponed Retirement
Benefit, payable monthly to the Eligible Spouse during her
lifetime.
(c) Death Benefit. In the event a Participant, whose
retirement is postponed beyond his Normal Retirement Date, dies
prior to his Postponed Retirement Date, he shall be considered to
have retired on his Normal Retirement Date for the purpose of
determining retirement benefits payable to his surviving Eligible
Spouse.
4.04 Commencement of Payment. The payment of all
Participant retirement benefits under this Article IV shall
commence at the same time as retirement income payments from the
Pension Plan. All benefits payable to an Eligible Spouse under
7
<PAGE>
this Article IV shall commence within 60 days of the
Participant's death.
4.05 Re-employment of Retired Participant. A retired
Participant receiving or eligible to receive retirement benefits
under this Article IV who is re-employed by the Company shall be
ineligible to again participate in the Plan.
ARTICLE V
PRERETIREMENT DEATH BENEFITS
5.01 Death Benefit. Upon the death of a Participant while
employed, or while receiving disability retirement benefits
pursuant to Article 6.01 hereof, prior to the earlier of either
his Early Retirement Date or Normal Retirement Date, a "Pre--
Retirement Death Benefit" as defined in this Article 5.01 shall
be payable; provided, however, such Pre-Retirement Death Benefit
shall be payable only if the deceased Participant is survived by
either an Eligible Spouse or children under age 21. The Pre-
Retirement Death Benefit is an amount equal to 1/12th of the
Participant's SERP Death Benefit.
5.02 Payment.
(a) If the deceased Participant is survived by an
Eligible Spouse, the Pre-Retirement Death Benefit shall be paid
monthly to such Eligible Spouse during her lifetime. Provided,
further, that if upon the death of such Eligible Spouse there be
then living any children of the Participant under age 21, the
Pre-Retirement Death Benefit shall be paid monthly to the
Participant's Designated Beneficiary until the last such
surviving child reaches age 21.
(b) If the deceased Participant is not survived by an
Eligible Spouse but is survived by children under age 21, the
Pre-Retirement Death Benefit shall be paid monthly to the
Participant's Designated Beneficiary until the last such
surviving child reaches age 21.
ARTICLE VI
8
<PAGE>
DISABILITY BENEFITS
6.01 Disability Prior to Retirement Date.
(a) Benefit. In the event of the Total Disability of
a Participant prior to his Normal Retirement Date, the
Participant becomes entitled to a disability retirement benefit
as defined in this Article 6.01(a). Said disability retirement
benefit shall be determined at the Participant's Disability Date
and shall be equal to 1/12th of the Participant's SERP Disability
Benefit.
(b) Payment. Such disability benefits shall be
payable monthly to the disabled Participant until the earliest
of:
(i) he resumes working;
(ii) he refuses to submit to a medical examination
or a related series of examinations by a physician or physicians
acceptable to the Committee when such examination or related
series of examinations is requested by the Committee (but not
more often than semi-annually), to determine whether he is
eligible for continuation of his disability retirement benefit.
These examinations requested by the Committee shall be at the
expense of the Company;
(iii) the Committee determines on the basis of
a medical examination herein authorized, or other evidence
obtained by said Committee that he has sufficiently recovered to
work;
(iv) he dies;
(v) he elects to retire at his Early Retirement
Date; or
(vi) he reaches his Normal Retirement Date.
(c) Re-employment of Disabled Participant. A Totally
Disabled Participant who returns to regular active employment
with the Company shall be considered to have been on an
authorized leave of absence during the period he was disabled
and, if he shall in due course become entitled to retirement
benefits hereunder, the period of his Total Disability shall be
9
<PAGE>
included in his Credited Service and his Salary during such
period of Total Disability shall be considered to have been at
the rate of his annual salary in effect during the calendar year
next preceding commencement of his Total Disability.
6.02 Benefit at Retirement Date.
(a) Benefit. Upon reaching the earlier of his Early
Retirement Date or his Normal Retirement Date, a Participant
receiving the disability retirement benefit defined in Article
6.01 above shall become entitled to disability retirement
benefits, in lieu of the retirement benefits of Article IV, as
defined in this Article 6.02(a). Said benefits shall be
calculated at either the Participant's Early Retirement Date or
Normal Retirement Date, as the case may be, and shall be equal to
either the Participant's Early Retirement Benefit (and associated
Eligible Spouse's benefit) or Normal Retirement Benefit (and
associated Eligible Spouse's benefit), as the case may be, as
described in Articles 4.01 and 4.02 as if such disabled
Participant had actually retired upon his Early Retirement Date
or his Normal Retirement Date, with the prior period of Total
Disability being treated as Credited Service. Provided, however,
in determining said Early Retirement Benefit or Normal Retirement
Benefit, as the case may be, the Participant's Final Average
Salary shall be calculated as of his Disability Date.
(b) Payment. Said disability retirement benefit(s)
shall be payable in the same manner as the retirement benefits in
Article 4.01 - Normal Retirement or Article 4.02 - Early
Retirement, as the case may be, as if the Participant had
actually retired.
ARTICLE VII
SEVERANCE BENEFITS
7.01 Eligibility. A Participant whose employment is
terminated other than by death, Total Disability or retirement
prior to completing five (5) years of Credited Service shall not
be entitled to receive any benefits under this Plan.
10
<PAGE>
7.02 Participant Benefit. A Participant whose employment is
terminated (other than by death, Total Disability or retirement)
after completing five (5) years of Credited Service shall be
entitled to receive the "Severance Benefit" described in this
Article 7.02. The Severance Benefit is an amount equal to 1/12th
of the Participant's Vested Percentage of his Accrued SERP
Retirement Benefit calculated as of his Severance Date, adjusted
as follows: For purposes of determining the Participant's Accrued
SERP Retirement Benefit, 70% of Final Average Salary shall be
reduced by the Early Retirement Factor under the Pension Plan
where the Participant's retirement benefit commences prior to the
Participant's attainment of age 62.
A Participant's Severance Benefit shall be paid monthly to
him for his lifetime, beginning at the same time when retirement
income payments under the Pension Plan commence.
7.03 Spousal Benefit. Upon the death of a Participant who
(i) has attained age 55; (ii) is either receiving or entitled to
receive a Severance Benefit; and (iii) is survived by an Eligible
Spouse, such Eligible Spouse becomes entitled to the benefit
defined in this Article 7.03. If the Participant was receiving
his Severance Benefit at the time of his death, the Eligible
Spouse's benefit is an amount equal to 75% of the deceased
Participant's actual Severance Benefit, payable monthly to the
Eligible Spouse for her lifetime. If the Participant's death
occurs prior to commencement of payment of his Severance Benefit,
the Eligible Spouse's benefit is a monthly amount equal to 75% of
the deceased Participant's Severance Benefit calculated as if
payment of such Participant's Severance Benefit had commenced at
his date of death, payable monthly to the Eligible Spouse during
her lifetime. All benefit payments to an Eligible Spouse
11
<PAGE>
hereunder shall commence within 60 days of the Participant's
death.
7.04 Resumption of Employment After Severance. In the event
a Participant entitled to a Severance Benefit but prior to
commencement of payment of such benefit is re-employed by the
Company in a capacity which entitles him to participate in this
Plan, he shall forfeit such Severance Benefit and shall
participate in the Plan as if his service with the Company had
never terminated; provided, however, he shall not receive any
Credited Service for time between his termination of employment
and his re-employment. Anything in the foregoing to the contrary
notwithstanding, however, if at the time of the Participant's re-
employment payment of his Severance Benefit has already
commenced, he shall be ineligible to again commence participation
in this Plan and shall, therefore, have no right, claim or
entitlement to any benefits hereunder other than to payment of
such Severance Benefit.
ARTICLE VIII
ADMINISTRATIVE COMMITTEE
8.01 Authority. This Plan shall be administered by an
Administrative Committee of not less than three (3) members
appointed by the Board of Directors of Savannah Electric and
Power Company. The Board of Directors may from time to time
appoint members of the Committee in substitution for the members
previously appointed and may fill vacancies, however caused. The
Committee shall have all powers necessary to enable it to carry
out its duties in the administration of the Plan. Not in
limitation, but in application of the foregoing, the Committee
shall have the duty and power to determine all questions that may
arise hereunder as to the status and rights of participants in
the Plan.
8.02 Voting. The Committee shall act by a majority of the
number then constituting the Committee, and such action may be
12
<PAGE>
taken either by a vote at a meeting or in writing without a
meeting.
8.03 Records. The Committee shall keep a complete record of
all its proceedings and all data relating to the administration
of the Plan. The Committee shall select one of its members as a
Chairman. The Committee shall appoint a Secretary to keep
minutes of its meetings and the Secretary may or may not be a
member of the Committee. The Committee shall make such rules and
regulationsfor theconduct ofits businessasit shalldeem advisable.
8.04 Liability. No member of the Committee shall be
personally liable for any actions taken by the Committee unless
the member's action involves willful misconduct.
ARTICLE IX
AMENDMENT AND TERMINATION
The Company reserves the right, at any time or from time to
time, by action of its Board of Directors, to modify or amend in
whole or in part any or all provisions of the Plan. In addition,
the Company reserves the right by action of its Board of
Directors to terminate the Plan in whole or in part. Provided,
however, such termination shall not affect any vested accrued
benefits of participants hereunder.
Notwithstanding any provision of this Plan, should there be
a change in the Internal Revenue Code prior to January 1, 1985,
which would adversely affect the Company's operation of this
Plan, the Board of Directors may, at its option, terminate this
Plan and distribute the amounts deferred to the Participants plus
compound interest at the rate of nine percent (9%) per annum.
ARTICLE X
MISCELLANEOUS
10.01 Non-Alienation of Benefits. No right or benefit
under the Plan shall be subject to anticipation, alienation,
sale, assignment, pledge, encumbrance or charge, and any attempt
to anticipate, alienate, sell, assign, pledge, encumber or charge
13
<PAGE>
any right or benefit under the Plan shall be void. No right or
benefit hereunder shall in any manner be liable for or subject to
the debts, contracts, liabilities or torts of the person entitled
to such benefits. If the Participant, Eligible Spouse, or any
other beneficiary hereunder shall become bankrupt, or attempt to
anticipate, alienate, sell, assign, pledge, encumber, or charge
any right hereunder, then such right or benefit shall, in the
discretion of the Committee, cease and terminate, and in such
event, the Committee may hold or apply the same or any part
thereof for the benefit of the Participant or his spouse,
children or other dependents, or any of them, in such manner and
in such amounts and proportions as the Committee may deem proper.
10.02 No Trust Created. The obligations of the Company
to make payments hereunder shall constitute a liability of the
Company to a Participant. Such payments shall be made from the
general funds of the Company, and the Company shall not be
required to establish or maintain any special or separate fund,
or purchase or acquire life insurance on a Participant's life, or
otherwise to segregate assets to assure that such payment shall
be made, and neither a Participant, Eligible Spouse, or any other
beneficiary shall have any interest in any particular asset of
the Company by reason of its obligations hereunder. Nothing
contained in the Plan shall create or be construed as creating a
trust of any kind or any other fiduciary relationship between the
Company and a Participant or any other person.
10.03 No Employment Agreement. Neither the execution of
this Plan nor any action taken by the Company pursuant to this
Plan shall be held or construed to confer on a Participant any
legal right to be continued as an Employee of the Company in an
executive position or in any other capacity whatsoever. This
Plan shall not be deemed to constitute a contract of employment
between the Company and a Participant, nor shall any provision
herein restrict the right of any Participant to terminate his
employment with the Company.
14
<PAGE>
10.04 Binding Effect. Obligations incurred by the
Company pursuant to this Plan shall be binding upon and inure to
the benefit of the Company, its successors and assigns, and the
Participant, his Eligible Spouse or other beneficiary.
10.05 Suicide. Except as hereinafter provided, no
benefit shall be payable under the Plan to a Participant,
Eligible Spouse or other beneficiary where such Participant dies
as a result of suicide within two (2) years of his commencement
of participation herein.
10.06 Claims for Benefits. Each Participant or
beneficiary must claim any benefit to which he is entitled under
this Plan by a written notification to the Committee. If a claim
is denied, it must be denied within a reasonable period of time,
and be contained in a written notice stating the following:
A. The specific reason for the denial.
B. Specific reference to the Plan provision on which the
denial is based.
C. Description of additional information necessary for the
claimant to present his claim, if any, and an explanation of why
such material is necessary.
D. An explanation of the Plan's claims review procedure.
The claimant will have 60 days to request a review of the
denial by the Committee, which will provide a full and fair
review. The request for review must be in writing delivered to
the Committee. The claimant may review pertinent documents, and
he may submit issues and comments in writing.
The decision by the Committee with respect to the review
must be given within 60 days after receipt of the request, unless
special circumstances require an extension (such as for a
hearing). In no event shall the decision be delayed beyond 120
days after receipt of the request for review. The decision shall
be written in a manner calculated to be understood by the
claimant, and it shall include specific reasons and refer to
special Plan provisions as to its effect.
15
<PAGE>
10.07 Entire Plan. This document and any amendments
contain all the terms and provisions of the Plan and shall
constitute the entire Plan, any other alleged terms or provisions
being of no effect.
10.08 Merger or Consolidation. In the event of a merger
or a consolidation by the Company with another corporation, or
the acquisition of substantially all of the assets or outstanding
stock of the Company by another corporation, then and in such
event the obligations and responsibilities of the Company under
this Plan shall be assumed by any such successor or acquiring
corporation, and all of the rights, privileges and benefits of
the Participants hereunder shall continue.
10.09 Age Differential of Spouse. If a Participant's
Eligible Spouse at the time of commencement of a (i) Normal
Retirement Benefit; (ii) Early Retirement Benefit;
(iii) Postponed Retirement Benefit; (iv) Pre-Retirement Death
Benefit; or (v) Severance Benefit, is more than ten years younger
than the Participant, the monthly benefits payable hereunder
shall be reduced actuarially using actuarial assumptions under
Section 5.06 of the Pension Plan and assuming that the Eligible
Spouse is ten years older than such spouse's attained age.
ARTICLE XI
CONSTRUCTION
11.01 Governing Law. This Plan shall be construed and
governed in accordance with the laws of the State of Georgia.
11.02 Gender. The masculine gender, where appearing in
the Plan, shall be deemed to include the feminine gender, and the
singular may include the plural, unless the context clearly
indicates to the contrary.
11.03 Headings, etc. The cover page of this Plan, the
Table of Contents and all headings used in this Plan are for
convenience of reference only and are not part of the substance
of this Plan.
16
<PAGE>
11.04 Children. All references in the Plan to a
Participant's children shall include both natural and adopted
children.
11.05 Action. Any action under this Plan required or
permitted by the Company shall be by action of its Board of
Directors or its duly authorized designee.
This Plan in its original form was adopted and became
effective on January 1, 1984. This Plan, as amended on July 23,
1986 (Amendment No. 1), herein described is effective as of, and
with respect to Supplemental Executive Retirement Plan Agreements
entered into on or after, January 1, 1987.
SAVANNAH ELECTRIC AND POWER COMPANY
By:
A.M. Gignilliat, Jr.
President and Chief Executive
Officer
ATTEST:
K. R. Willis
Treasurer and Secretary
/sd
(Corporate Seal)
17
<PAGE>
SAVANNAH ELECTRIC AND POWER COMPANY
C E R T I F I C A T E
I, Grace E. Arnold, DO HEREBY CERTIFY, that I am Secretary
of Savannah Electric and Power Company (hereinafter called the
"Company") , a Georgia corporation, and attached hereto is a
true, correct and complete copy of certain resolutions duly
adopted by the Board of Directors of Savannah Electric and Power
Company at a meeting duly convened and held on May 21, 1991, at
which meeting a quorum for the transaction of business was
present and acting throughout and that said resolutions have not
been altered, amended or rescinded and that the same is now in
full force and effect.
WITNESS my hand and the corporate seal of Savannah Electric
and Power Company, this 28th day of May, 1991.
Secretary of
Savannah Electric and Power Company
/sd
<PAGE>
RESOLVED: To amend Section 2.20 of the Supplemental Executive
Retirement Plan (SERP) effective January 1, 1991, as follows:
2.20 Salary shall mean the annual compensation, excluding any
incentive plan compensation, paid by the Company to a Participant
plus amounts of compensation deferred under any deferred
compensation plan or arrangement (including, without limitation,
the Deferred Compensation Plan for Key Employees of Savannah
Electric and Power Company.)
<PAGE>
RESOLVED: That the Manager-Human Resources be, and hereby is,
named as a member of the Administrative Committee for each of the
following plans: Savannah Electric and Power Company Employees'
Retirement Plan, the Employee Stock Ownership Plan of Savannah
Electric and Power Company, the 401(k) Employee Savings Plan, the
Supplemental Executive Retirement Plan, the Deferred Compensation
Plan for Key Employees and the Deferred Compensation Plan for
Directors.
###
<PAGE>
IN WITNESS WHEREOF, Savannah Electric and Power Company has
caused these Amendments to be duly adopted and the same to be
executed by its duly authorized corporate officers and its
corporate seal to be affixed hereto, this 21st day of May, 1991.
SAVANNAH ELECTRIC AND POWER COMPANY
By:
A. M. Gignilliat, Jr., President &
CEO
Attest:
G. E. Arnold, Secretary
(Corporate Seal)
<PAGE>
RESOLVED: To amend section 2.20 of the Supplemental Executive
Retirement Plan (SERP) effective January 1, 1991, as follows:
2.20 Salary shall mean the annual compensation, excluding any
incentive plan compensation, paid by the Company to a Participant
plus amounts of compensation deferred under any deferred
compensation plan or arrangement (including, without limitation,
the Deferred Compensation Plan for Key Employees of Savannah
Electric and Power Company.)
(adamscl) h:\wpdocs\mtd\savannah\serp.pln
<PAGE>
THIRD AMENDMENT TO THE SUPPLEMENTAL
EXECUTIVE RETIREMENT PLAN OF
SAVANNAH ELECTRIC AND POWER COMPANY
(AS AMENDED AND RESTATED EFFECTIVE
JULY 23, 1986)
WHEREAS, the Board of Directors of Savannah Electric
and Power Company (the "Company") heretofore adopted the
Supplemental Executive Retirement Plan of Savannah Electric and
Power Company (the "Supplemental Plan") in order to provide
certain key management employees of the Company with additional
retirement compensation; and
WHEREAS, the Plan is intended to operate in conjunction
with the Employees' Retirement Plan of Savannah Electric and
Power Company (the "Pension Plan"); and
WHEREAS, the Pension Plan has been amended and restated
to comply with the Tax Reform Act of 1986; and
WHEREAS, it is the Company's desire to amend the
Supplemental Plan at this time to acknowledge the changes to the
Pension Plan and to address other issues concerning the operation
of the Supplemental Plan; and
WHEREAS, the Company has reserved the right to amend
the Supplemental Plan at any time in Article IX.
NOW, THEREFORE, effective October 12, 1994, the Company
hereby amends the Plan as follows:
1.
Article I is amended by clarifying the reference to the
Savannah Electric and Power Company Long-Term Disability Plan to
mean the Savannah Electric and Power Company Long Term Disability
Income Plan.
2.
Section 2.02 of the Plan is amended by deleting such
Section in its entirety and inserting the following:
Accrued SERP Retirement Benefit shall mean
the amount determined by multiplying the
Participant's SERP Retirement Benefit times a
fraction [not exceeding 1.0, the numerator of
which is the number of years and months of
Credited Service completed on the
Participant's Early Retirement Date,
Severance Date or any other date, whichever
is applicable, and the denominator of which
shall be greater of (i) the number of years
and months of Credited Service which the
Participant would have completed upon
attainment of age 62 if he had remained
<PAGE>
employed until such time or (ii) 15 years of
Credited Service.]1
3.
Section 2.03(a) is amended by deleting such provision
in its entirety and inserting the following:
(a) A married Participant elects to receive
his retirement benefit on a life and
seventy-five percent (75%) joint
survivor basis.
4.
Section 2.03(b) is amended by deleting such provision
in its entirety and inserting the following:
(b) A single Participant elects to receive
his retirement benefit on a life and
ten-year certain basis.
5.
Section 2.04 is amended by deleting such provision in its
entirety and inserting the following:
Committee shall mean the Administrative
Benefits Committee appointed by the Board of
Directors of the Company to administer the
Plan.
6.
Section 2.06 is amended by deleting such provision in its
entirety and inserting the following:
Credited Service shall have the same meaning
as set forth in Article 4, Sections 4.02 and
4.05 of the Pension Plan.
7.
Section 2.11 of the Plan is amended by deleting such
provision in its entirety and inserting the following:
Early Retirement Factor shall be a fraction
not exceeding 1.0, the numerator of which
shall be [the number of years and months of
Credited Service which the Participant would
have completed at the commencement of
benefits from this Plan if he had remained
employed until such time and the denominator
of which shall be the Participant's number of
years and months of Credited Service which he
-2-
<PAGE>
would have completed at attainment of age 62
if he had remained employed until such age.]1
8.
Section 2.13 of the Plan is amended by deleting the first
sentence of this provision and inserting the following:
Final Average Salary shall mean a
Participant's average yearly Salary (as
defined in Article 2.20) during the 36 months
of highest compensation within the 120 month
period immediately preceding the earliest to
occur of the Participant's Severance Date,
Disability Date, date of death, Early
Retirement Date, Normal Retirement Date, or
Postponed Retirement Date, whichever is
applicable.
9.
Section 2.16 is amended by deleting such provision in
its entirety and inserting the following:
2.16 Pension Plan shall mean the
"Employees' Retirement Plan of Savannah
Electric and Power Company" (amended and
restated effective January 1, 1989), as it
may from time to time be amended in the
future.
10.
Section 2.17 is amended by deleting such provision in
its entirety and inserting the following:
2.17 Pension Plan Spouse's Allowance
shall mean the preretirement death benefit
determined pursuant to Section 7.03 of the
Pension Plan.
11.
Section 2.25 is amended by deleting such provision in
its entirety and inserting the following:
2.25 Social Security Amount shall have
the same meaning as set forth in Section 1.29
of the Pension Plan.
-3-
<PAGE>
12.
Section 2.26 is amended by deleting such provision in
its entirety and inserting the following:
2.26 Total Disability and Totally
Disabled shall have the same meaning as set
forth in the Savannah Electric and Power
Company Long Term Disability Income Plan.
13.
Section 4.03(a) of the Plan is amended by deleting the
second and third sentences thereof in their entirety and by
inserting the following:
The Postponed Retirement Benefit shall be
equal to 1/12th of the Participant's SERP
Retirement Benefit payable monthly during the
Participant's lifetime.
14.
Section 4.03(c) of the Plan is amended by deleting such
provision in its entirety.
IN WITNESS WHEREOF, the Board of Directors of Savannah
Electric and Power Company hereby approves this Third Amendment
to the Supplemental Executive Retirement Plan of Savannah
Electric and Power Company, as executed by the undersigned
authorized officer, and further authorizes such other actions
necessary to implement this Amendment this _____ day of
________________, 1994, to be effective as of October 12, 1994.
SAVANNAH ELECTRIC AND POWER COMPANY
By:
Arthur M. Gignilliat, Jr.
President and Chief Executive
Officer
ATTEST:
By:
Lavonne K. Calandra
Corporate Secretary
(CORPORATE SEAL)
[adamscl] h:\wpdocs\mtd\savannah\serp.3am
-4-
<PAGE>
Exhibit 10(f)17
DEFERRED COMPENSATION PLAN
FOR
______________________
KEY EMPLOYEES
_____________________
OF
SAVANNAH ELECTRIC AND POWER COMPANY
1As Amended July 23, 1986. Effective July 23, 1986.
2As Amended September 16, 1987. Effective January 1,
1987.
<PAGE>
TABLE OF CONTENTS
ARTICLE I STATEMENT OF PURPOSE . . . . . . . . . . . . . 1
ARTICLE II DEFINITIONS . . . . . . . . . . . . . . . 1
ARTICLE III ELIGIBILITY AND PARTICIPATION . . . . . . 3
ARTICLE IV RETIREMENT BENEFITS . . . . . . . . . . . . . 5
ARTICLE V SURVIVOR BENEFITS . . . . . . . . . . . . . . 7
ARTICLE VI DISABILITY BENEFITS . . . . . . . . . . . . . 9
ARTICLE VII SEVERANCE BENEFITS . . . . . . . . . . . . . . 10
ARTICLE VIII ADDITIONAL BENEFITS . . . . . . . . . . . . . 11
ARTICLE IX ACCRUAL OF BENEFITS . . . . . . . . . . . . . 11
ARTICLE X ADMINISTRATIVE COMMITTEE . . . . . . . . . . . 11
ARTICLE XI AMENDMENT AND TERMINATION . . . . . . . . . . 13
ARTICLE XII MISCELLANEOUS . . . . . . . . . . . . . . . . 13
ARTICLE XIII CONSTRUCTION . . . . . . . . . . . . . . . . . 16
i
<PAGE>
ARTICLE I
STATEMENT OF PURPOSE
The purpose of this Plan is to benefit Savannah Electric and
Power Company through increased incentive on the part of key
employees of the Company and to further the long-term growth and
earnings of the Company by offering long-term incentives in
addition to current compensation to the limited group of
management employees of the Company who will be largely
responsible for such growth.
ARTICLE II
DEFINITIONS
When used herein the following terms shall have the meanings
indicated unless a different meaning is clearly required by the
context.
1. "Annuity Starting Date": The date on which payment of
a benefit payable hereunder is to commence.
2. "Committee": The Administrative Committee appointed by
the Board of Directors of the Company to administer this Plan.
3. "Company": Savannah Electric and Power Company, a
Georgia corporation, and its corporate successors.
4. "Deferred Compensation Agreement": [The written
agreement between the Company and a Participant in substantially
the form attached hereto as Exhibit A and made a part hereof.]2
5. "Defined Contribution Plan": Shall include, but not be
limited to, any of the following qualified employer contribution
plans: (i) 401-K, cash or deferred profit sharing plan;
(ii) Thrift plans; (iii) defined contribution pension plans;
(iv) profit sharing plan; (v) employee stock ownership plan
(ESOP); and (vi) any other qualified defined contribution plan
meeting the qualifications prescribed by the Internal Revenue
<PAGE>
Code, as described in TEFRA, or any subsequent amendments
thereto.
6. "Designated Beneficiary": One or more beneficiaries,
as designated in writing to the Committee, to whom payments
otherwise due to or for the benefit of the Participant hereunder
shall be made in the event of his death prior to the complete
payment of such benefit. In the event no such written
designation is made by a participant or if such beneficiary shall
not be in existence at the Participant's death or if such
beneficiary predeceases the Participant, the Participant shall be
deemed to have designated his estate as such beneficiary.
7. "Disability Retirement": Retirement from the employ of
the Company because of Total Disability.
8. "Disability Retirement Date": The date upon which a
Participant retires from the employ of the Company because of
Total Disability.
9. "Early Retirement": Retirement from the employ of the
Company upon or after attaining age sixty (60) but prior to age
sixty-five (65).
10. "Early Retirement Date": The date upon which a
Participant who has attained an age of at least sixty (60) but
has not yet reached age sixty-five (65) retires from the employ
of the Company.
11. "Employee": A person who is employed by the Company.
12. "Insurable": The life of a Participant is insurable at
the time of an election to defer compensation under this Plan by
an insurance company approved by the Committee and at premium
rates acceptable to the Committee in the exercise of its sole and
absolute discretion.
13. "Normal Retirement": Retirement from the employ of the
Company upon the Normal Retirement Date.
14. "Normal Retirement Date": The date upon which such
Participant attains the age of sixty-five (65).
15. "Participant": An Employee who is or hereafter becomes
eligible to participate in the Plan and does participate by
2
<PAGE>
electing, in the manner specified herein, to defer compensation
pursuant to this Plan.
16. "Plan": The Deferred Compensation Plan for Key
Employees of Savannah Electric and Power Company contained
herein, and as may be amended from time to time hereafter.
17. "Postponed Retirement": Retirement from the employ of
the Company after attaining age sixty-five (65).
18. "Postponed Retirement Date": The date upon which a
Participant over age sixty-five (65) retires from the employ of
the Company.
19. "Salary": The annual compensation paid by the Company
to a Participant including (i) any payments from an executive
incentive compensation plan and (ii) amounts of compensation
deferred under any deferred compensation plan or arrangement.
20. "Total Disability": A Participant is to be deemed
totally disabled when he has been wholly and continuously
disabled by reason of sickness or injury, and has been under the
regular care of a physician approved by the Committee during the
preceding six (6) months. The Participant shall thereafter be
deemed to be permanently disabled so long as he is prevented from
engaging in any occupation as determined by the Committee, for
which he is reasonably qualified, by training, education,
background and experience, as a result of said sickness or
injury, provided he is still under the regular care of a
physician acceptable to the Committee.
21. "Year of Service": A period of twelve (12) consecutive
months (no month to be counted in more than one Year of Service)
during which the Participant has been or hereafter (i) is
continuously employed by the Company, or (ii) is continuously on
leave of absence approved by the Company.
ARTICLE III
ELIGIBILITY AND PARTICIPATION
3
<PAGE>
1. Eligibility. The Committee shall have the sole
discretion to determine the employees that are eligible to become
Participants in accordance with the purposes of the Plan.
2. Participation.
[(a) An eligible Employee participates in the Plan by
irrevocably electing, in the manner specified herein, to defer
future Salary at an annual rate for one (1) or four (4)
consecutive calendar years (or such fewer years remaining until
the Employee's Normal Retirement Date). An eligible employee]2
may defer a minimum of $1,000 per year under the four (4) year
election and $2,500 per year under the one (1) year election.
The maximum annual amount of Salary which may be deferred shall
be equal to fifty (50) percent of such Employee's Salary (as
defined in Article II) for the calendar year in which such
election is made;
(b) An eligible Employee becomes a Participant in the
Plan upon the execution and delivery of a Deferred Compensation
Agreement. Such Agreement must be executed on or before December
31 to defer compensation to be earned in succeeding calendar
years;
(c) During a deferral period(s), the annual amount of
compensation to be deferred shall be deferred on a basis as
determined by the Committee.
(d) The Committee shall be vested with the authority to
deny Participants the right to defer Salary pursuant to the Plan
in any calendar year, provided, however, any such denial shall
apply to all eligible Participants.
3. Benefits. [Benefits payable pursuant to any election
made hereunder will be calculated and based upon both a
Participant's age at the time of a deferral election and the
amount of deferrals. In addition, the amount of Survivor
Benefits will depend on whether the Participant is Insurable or
non-Insurable.]2
[4. Conditions Subsequent. The Committee shall be vested
with the authority to condition the Company's obligations under a
4
<PAGE>
Deferred Compensation Agreement upon the nonoccurrence of a
legislative, judicial or regulatory development or change which
adversely affects the Company's ability to informally finance
such obligations, including, but not limited to, a change in any
of the following federal income tax provisions:
(a) the current provisions related to the exclusion
from gross income of proceeds of life insurance contracts payable
upon the death of the insured;
(b) the current exclusion from income of any increase
in the "cash value" or "inside build up" of life insurance
contracts from time to time;
(c) the current exclusion from income of any "policy
loan" obtained by the owner of a life insurance contract;
(d) the current exclusion from income of "dividends"
on a life insurance contract which are used to purchase
additional insurance; and
(e) the current provisions related to the
deductibility of interest paid on policy loans.
In the event the Company's obligations under a Deferred
Compensation Agreement are so conditioned, and the event
constituting the condition subsequent occurs, the Company shall
have the right, for a period of one (1) year following such
event, to refund to the Participant or his Designated Beneficiary
the deferrals made under the Deferred Compensation Agreement with
interest from the date of deferral accrued at the rate of nine
percent (9%) per annum compounded annually. The payment of such
refund shall fully and completely discharge the Company's
obligations under the Deferred Compensation Agreement and shall
fully and completely satisfy all the Participant's and his
Designated Beneficiary's rights thereunder.]1
ARTICLE IV
RETIREMENT BENEFITS
1. Normal Retirement Benefit.
5
<PAGE>
(a) Upon the Normal Retirement of a Participant, such
Participant becomes entitled to his Normal Retirement Benefit.
The Normal Retirement Benefit is a level fifteen (15) year
annuity payable in one hundred eighty (180) equal monthly
installments in the amount stated in the Participant's Deferred
Compensation Agreement. Payment of the Normal Retirement Benefit
shall commence on the January 1st immediately following the
Participant's Normal Retirement Date (such date being the
"Regular Annuity Starting Date") and shall continue on the first
day of each month thereafter until one hundred eighty (180)
monthly payments have been made.
(b) The Normal Retirement Benefit amount which the
Company will agree to pay depends upon a number of factors,
including, among other things, the amount of the deferral and the
length of time between the date of the deferral and the Annuity
Starting Date of the benefit.]2
2. Postponed Retirement Benefit.
(a) Upon the Postponed Retirement of a Participant,
such Participant becomes entitled to his Postponed Retirement
Benefit. The Postponed Retirement Benefit is a level fifteen
(15) year annuity payable in equal monthly installments. Payment
of the Postponed Retirement Benefit shall commence on the January
1st immediately following the Participant's Postponed Retirement
Date (such date being the "Postponed Annuity Starting Date"), and
shall continue on the first day of each month thereafter until
one hundred eighty (180) monthly payments have been made.
(b) The monthly benefit of the Postponed Retirement
Benefit shall be an amount equal to the monthly benefit of the
Normal Retirement Benefit increased by six percent (6%)
compounded annually for each year that the Regular Annuity
Starting Date precedes his Postponed Annuity Starting Date.
3. Early Retirement Benefit.
(a) Upon the Early Retirement of a Participant, such
Participant becomes entitled to his Early Retirement Benefit.
The Early Retirement Benefit is a level fifteen (15) year annuity
6
<PAGE>
payable in equal monthly installments, the amount of which shall
be the same as those of the Normal Retirement Benefit. Subject
to Sections 3(b) and 3(c) of this Article IV, payment of the
Early Retirement Benefit shall commence on the January 1st
immediately following the Participant's Normal Retirement Date
(such date being the "Regular Annuity Starting Date"), and shall
continue on the first day of each month thereafter until one
hundred eighty (180) monthly payments have been made.
(b) A Participant is entitled to elect to have payment
of his Early Retirement Benefit commence on any January 1st
following his Early Retirement Date and preceding his Regular
Annuity Starting Date (such date being the "Accelerated Annuity
Starting Date"). Such election shall be made in writing
delivered to the Committee at least thirty (30) days prior to
such accelerated Annuity Starting Date.
(c) In the event a Participant elects an Accelerated
Annuity Starting Date, his Early Retirement Benefit shall be
reduced by [seven percent (7%)]2 compounded annually for each
year that the Accelerated Annuity Starting Date precedes his
Regular Annuity Starting Date.
4. Death Prior to Commencement of Benefit. Anything
herein to the contrary notwithstanding, in the event a
Participant dies after becoming entitled to his Normal Retirement
Benefit or Early Retirement Benefit and prior to the Annuity
Starting Date of such Retirement Benefit, the Participant's
Designated Beneficiary shall receive, in lieu of such Retirement
Benefit, the Survivor Benefit specified in Article V hereof.
5. Payments to Beneficiary. In the event a Participant
dies prior to full payment of his Retirement Benefit under this
Article IV, all remaining payments due hereunder shall be made to
such Participant's Designated Beneficiary.
7
<PAGE>
ARTICLE V
SURVIVOR BENEFITS
1. Survivor Benefit. [Upon the occurrence of any of the
following events, the Company shall pay to the Participant's
Designated Beneficiary the Survivor Benefits as defined in this
Article V. The Survivor Benefits payable hereunder are in lieu
of any other benefit under this Plan.
(a) The death of the Participant while employed by the
Company;
(b) The death of the Participant after becoming
entitled to a Retirement Benefit of Article IV hereof, but prior
to commencement of payment of such benefit;
(c) The death of the Participant after becoming
entitled to the Disability Benefit of Article VI, Section 2,
hereof, but prior to commencement of payment of such benefit; or
(d) The death of the Participant after becoming
entitled to the Severance Benefit of Article VII, Section l(b),
hereof, but prior to commencement of payment of such benefit.]2
2. Payment. [Payment of the Survivor Benefit will]2
commence on the first day of the month following receipt by the
Committee of written proof of the Participant's death and shall
continue on the first day of each month thereafter until one
hundred eighty (180) monthly payments have been made.
3. Amount.
(a) [If the Participant is Insurable, then the
Survivor Benefit is a level fifteen (15) year annuity payable to
his Designated Beneficiary in one hundred eighty (180) equal
monthly installments in the amount(s) stated in the Participant's
Deferred Compensation Agreement.
(b) If the Participant is not Insurable and his death
both (i) occurs after attaining age sixty (60) and
(ii) constitutes one of the events described in Sections l(a),
l(b), and l(c) of this Article V, then the Survivor Benefit is a
level fifteen (15) year annuity payable in one hundred eighty
8
<PAGE>
(180) equal monthly installments in a monthly amount equal to the
present value at the Participant's date of death of the Partici-
pant's monthly Normal Retirement Benefit, as set forth in the
Participants Deferred Compensation Agreement, discounted, for the
period between the Participant's Regular Annuity Starting Date
(as defined in Article IV, Section 1) and the Participant's date
of death, by the Present Value Interest Rate stated in the
Participant's Deferred Compensation Agreement or, if no such rate
is so stated, ten percent (10%) per annum, compounded annually.
(c) Anything to the contrary herein notwithstanding,
if the Survivor Benefit is payable by reason of the Participant's
death occurring at a time when, had he retired on the day of his
death, he would have been entitled to the Postponed Retirement
Benefit (as provided in Article IV, Section 2), then the monthly
amount of the Survivor Benefit shall equal the monthly amount of
the Participant's Normal Retirement Benefit, as set forth in the
Participant's Deferred Compensation Agreement, increased by six
percent (6%) per annum compounded annually for the period between
the Participant's Regular Annuity Starting Date (as defined in
Article IV, Section 1) and the Participant's death.
(d) If the Participant is not Insurable and either the
Participant has not attained age sixty (60) at the time of his
death or his death constitutes the event described in Section
l(d) of this Article V, then the total amount of the Survivor
Benefit shall equal his actual gross deferrals plus interest
thereon at nine percent (9%) per annum compounded annually until
his date of death. Such amount shall be payable to the
Participant's Designated Beneficiary at the option of the
Committee in either a lump sum on the first day of the month
immediately following receipt by the Committee of written proof
of the Participant's death or in up to one hundred eighty (180)
equal consecutive monthly installments with interest at nine
percent (9%) per annum, compounded annually, commencing on the
first day of the month immediately following receipt by the
Committee of proof of the Participant's death.
9
<PAGE>
(e) Notwithstanding anything herein to the contrary,
in the event the Participant's death occurs prior to April 1 of
the year following the year in which the Participant enters into
a Deferred Compensation Agreement, then no Survivor Benefit shall
be payable pursuant to such Deferred Compensation Agreement. In
lieu of any such Survivor Benefit, the Company shall pay to the
Participant's Designated Beneficiary, in one lump sum, the actual
gross deferrals made, if any, pursuant to such Deferred
Compensation Agreement plus interest thereon at nine percent (9%)
per annum until date of payment.]2
ARTICLE VI
DISABILITY BENEFITS
1. Entitlement. [Upon Disability Retirement a Participant
becomes entitled to the Disability Benefit described in this
Article VI.
2. Disability Benefit.
(a) The Disability Benefit shall be a benefit
identical to the Retirement Benefits as provided in Article IV
hereof (either the Normal Retirement Benefit or Early Retirement
Benefit, as the case may be), to which the retired Participant
would have become entitled if he had retired]2 after attaining
age sixty (60). Provided, however, in the event such Participant
dies prior to commencement of payment of such Disability Benefit,
the Participant's Designated Beneficiary shall receive, in lieu
of such Disability Benefit, the Survivor Benefit specified in
Article V hereof.
(b) Notwithstanding the foregoing, such retired
Participant may request to receive, in lieu of the Disability
Benefit provided by subparagraph (a) above, a benefit equal to
his actual gross deferrals plus interest thereon at nine percent
(9%) per annum compounded annually until his Disability
Retirement Date. Payment of such benefit is at the discretion of
the Committee and shall commence on the first day of the month
10
<PAGE>
following both (i) the retired Participant's Disability
Retirement Date and (ii) the expiration of six (6) months of
Total Disability. Such benefit shall be payable in the option of
the Committee either in a [lump sum or in up to sixty (60) equal
consecutive monthly installments with interest at nine percent
(9%) per annum.]2
[3. Re-Employment. In the event a retired Participant
entitled to a Disability Benefit hereunder but prior to
commencement of payment of such benefit is reemployed by the
Company in a capacity which entitles]2 him to participate in the
Plan, he shall forfeit such Disability Benefit and shall
participate in the Plan as if his service with the Company had
never terminated. Anything in the foregoing to the contrary
notwithstanding, however, if at the time of the retired
Participant's reemployment payment of his Disability Benefit
hereunder has already commenced, he shall be ineligible to again
commence participation in the Plan and shall, therefore, have no
right, claim or entitlement to any benefits hereunder other than
full payment of such Disability Benefit.
[4. Payments to Beneficiary. In the event that a retired
disabled Participant dies after commencement of the payment of
his disability benefit under this Article VI but prior to full
payment of such Disability Benefit,]2 all remaining payments due
hereunder shall be made to such Participant's Designated
Beneficiary.
ARTICLE VII
SEVERANCE BENEFITS
1. Severance Benefits.
(a) In the event a Participant's employment with the
Company terminates for any reason other than death, Total
Disability, Early Retirement or Normal Retirement, and at the
time of such termination such Participant has neither accrued
fifteen (15) Years of Service nor attained age fifty-five (55)
11
<PAGE>
the Participant's participation in the Plan shall cease as of the
date of such termination. In such event, the Company shall pay
the former Participant the amount of his actual gross deferrals
plus interest thereon at [seven percent (7%) per annum,
compounded annually. Such amount shall be payable to the former
Participant at the option of the Committee in either a lump sum
within ninety (90) days following such termination or in up to
sixty (60) equal consecutive monthly installments with interest
at seven percent (7%) per annum commencing within ninety (90)
days following such termination.]2
(b) In the event a Participant's employment with the
Company terminates for any reason other than death, Total
Disability, Early Retirement or Normal Retirement, and at the
time of such termination such Participant has either accrued
fifteen (15) or more Years of Service or attained age fifty-five
(55) such Participant shall receive a benefit identical to the
Retirement Benefits of Article IV (either the Early Retirement
Benefit or Normal Retirement Benefit, as the case may be) to
which such Participant would have become entitled if he retired
upon or after attaining age sixty (60). Provided, however, in
the event a Participant dies prior to commencement of payment of
such Severance Benefit, the Participant's Designated Beneficiary
shall receive, in lieu of such Severance Benefit, the Survivor
Benefit specified in Article V hereof.
2. Payments to Beneficiary. In the event a Participant
dies prior to full payment of his Severance Benefit under this
Article VII, all remaining payments due hereunder shall be made
to such Participant's Designated Beneficiary.
ARTICLE VIII
ADDITIONAL BENEFITS
1. Loss of Benefits. It is possible that the deferral of
a Participant's Salary pursuant to this Plan will result in a
loss of benefits through a reduction of amounts actually or
12
<PAGE>
potentially credited to his account(s) under a qualified Defined
Contribution Plan sponsored by the Company.
2. Additional Benefits. If the Committee determines that
a Participant has suffered a Benefit Loss in any year, additional
benefits shall be provided to the Participant under this Plan as
if the Participant had made a one (1) year deferral election to
defer Salary in an amount equal to the Benefit Loss. Such one
(1) year deferral election shall be deemed to occur in the same
year in which the deferral under this Plan causes such Benefit
Loss.
ARTICLE IX
ACCRUAL OF BENEFITS
1. If the employment of a Participant terminates for any
reason prior to the completion of the deferrals agreed upon in
the Deferred Compensation Agreement or if the agreed deferrals
are not made for any other reason, then all of his benefits under
the Plan shall be reduced by a fraction, the numerator of which
is the amount of the gross deferrals agreed to be deferred which
were not deferred, and the denominator of which is the amount of
gross deferrals agreed to be deferred.
2. The reduction of benefits under Section 1 of this
Article IX shall not apply to any benefits receivable by a
Participant or his Designated Beneficiary under:
(a) [Article V, Section 1, (a) only, but only when the
Participant is Insurable;
(b) Article V, Section 3, (d) only;
(c) Article VI, Section 2, (b) only;
(d) Article VII, Section 1, (a) only;
(e) Article VIII.]2
ARTICLE X
ADMINISTRATIVE COMMITTEE
13
<PAGE>
1. This Plan shall be administered by an Administrative
Committee of not less than three (3) members appointed by the
Board of Directors of the Company. The Board of Directors may
from time to time appoint members of the Committee in
substitution for the members previously appointed and may fill
vacancies, however caused. The Committee shall have all powers
necessary to enable it to carry out its duties in the
administration of the Plan. Not in limitation, but in
application of the foregoing, the Committee shall have the duty
and power to determine all questions that may arise hereunder as
to the status and rights of participants in the Plan.
2. The Committee shall act by a majority of the number
then constituting the Committee, and such action may be taken
either by a vote at a meeting or in writing without a meeting.
3. The Committee shall keep a complete record of all its
proceedings and all data relating to the administration of the
Plan.
4. The Committee shall select one of its members as a
Chairman. The Committee shall appoint a Secretary to keep
minutes of its meetings and the Secretary may or may not be a
member of the Committee. The Committee shall make such rules and
regulations for the conduct of its business as it shall deem
advisable.
5. No member of the Committee shall be personally liable
for any actions taken by the Committee unless the member's action
involves willful misconduct.
14
<PAGE>
ARTICLE XI
AMENDMENT AND TERMINATION
The Company reserves the right, at any time or from time to
time, by action of its Board of Directors, to modify or amend in
whole or in part any or all provisions of the Plan. In addition,
the Company reserves the right by action of its Board of
Directors to terminate the Plan in whole or in part. Provided,
however, such termination shall not affect the Deferred
Compensation Agreements then in effect.
Notwithstanding any provision of this Plan, should there be
a change in the Internal Revenue Code prior to January 1, 1985,
which would adversely affect the Company's operation of this
Plan, the Board of Directors may, at its option, terminate this
Plan. Upon such termination all amounts previously deferred
shall be refunded to the respective Participants together with
interest thereon at nine percent (9%) per annum.
ARTICLE XII
MISCELLANEOUS
1. Suicide. Except as hereafter provided, no benefit
shall be payable under the Plan with respect to a deferral
election to a Participant or his Designated Beneficiary who dies
as a result of suicide with twenty-five (25) months of the
December 31st preceding a deferral period to defer compensation
to be earned in the succeeding calendar year or years.
In the event of such suicide, the Participant's Designated
Beneficiary shall receive within a reasonable period the actual
gross deferrals, if any, made by such Participant with interest
at seven percent (7%) per annum to date of payment.
2. Non-Alienation of Benefits. No right or benefit under
the Plan shall be subject to anticipation, alienation, sale,
assignment, pledge, encumbrance or charge, and any attempt to
anticipate, alienate, sell, assign, pledge, encumber or charge
15
<PAGE>
any right or benefit under this Agreement shall be void. No
right or benefit hereunder shall in any manner be liable for or
subject to the debts, contracts, liabilities or torts of the
person entitled to such benefits. If the Participant or any
beneficiary hereunder shall become bankrupt, or attempt to
anticipate, alienate, sell, assign, pledge, encumber, or charge
any right hereunder, then such right or benefit shall, in the
discretion of the Committee, cease and terminate, and in such
event, the Committee may hold or apply the same or any part
thereof for the benefit of the Participant or his beneficiary,
spouse, children or other dependents, or any of them in such
manner and in such amounts and proportions as the Committee may
deem proper.
3. No Trust Created. The obligations of the Company to
make payments hereunder shall constitute a liability of the
Company to a Participant. Such payments shall be made from the
general funds of the Company, and the Company shall not be
required to establish or maintain any special or separate fund,
or purchase or acquire life insurance on a Participant's life, or
otherwise to segregate assets to assure that such payment shall
be made, and neither a Participant, his estate nor Designated
Beneficiary shall have any interest in any particular asset of
the Company by reason of its obligations hereunder. Nothing
contained in the Plan shall create or be construed as creating a
trust of any kind or other fiduciary relationship between the
Company and a Participant or any other person.
4. No Employment Agreement. Neither the execution of this
Plan nor any action taken by the Company pursuant to this Plan
shall be held or construed to confer on a Participant any legal
right to be continued as an Employee of the Company in an
executive position or in any other capacity whatsoever. This
Plan shall not be deemed to constitute a contract of employment
between the Company and a Participant, nor shall any provision
herein restrict the right of the Company to discharge any
16
<PAGE>
Participant or restrict the right of any Participant to terminate
his employment with the Company.
5. Designation of Beneficiary. Participants shall file
with the Company a notice in writing designating one or more
Designated Beneficiaries to whom payments otherwise due to or for
the benefit of the Participant hereunder shall be made in the
event of his death prior to the complete payment of such benefit.
Participants shall have the right to change the beneficiary or
beneficiaries so designated from time to time; provided, however,
that any change shall not become effective until received in
writing by the Committee.
6. Claims for Benefits. Each Participant or beneficiary
must claim any benefit to which he is entitled under this Plan by
a written notification to the Committee. If a claim is denied,
it must be denied within a reasonable period of time, and be con-
tained in a written notice stating the following:
A. The specific reason for the denial.
B. Specific reference to the Plan provision on which
the denial is based.
C. Description of additional information necessary
for the claimant to present his claim, if any, and an explanation
of why such material is necessary.
D. An explanation of the Plan's claims review
procedure.
The claimant will have 60 days to request a review of the
denial by the Committee, which will provide a full and fair
review. The request for review must be in writing delivered to
the Committee. The claimant may review pertinent documents, and
he may submit issues and comments in writing.
17
<PAGE>
The decision by the Committee with respect to the review
must be given within 60 days after receipt of the request, unless
special circumstances require an extension (such as for a
hearing). In no event shall the decision be delayed beyond 120
days after receipt of the request for review. The decision shall
be written in a manner calculated to be understood by the
claimant, and it shall include specific reasons and refer to
special Plan provisions as to its effect.
7. Binding Effect. Obligations incurred by the Company
pursuant to this Plan shall be binding upon and inure to the
benefit of the Company, its successors and assigns, and the
Participant and the beneficiary or beneficiaries designated
pursuant to Article IX, Section 5 hereinabove.
8. Entire Plan. This document and any amendments contains
all the terms and provisions of the Plan and shall constitute the
entire Plan, any other alleged terms or provisions being of no
effect.
9. Merger or Consolidation. In the event of a merger or a
consolidation by the Company with another corporation, or the
acquisition of substantially all of the assets or outstanding
stock of the Company by another corporation, then and in such
event the obligations and responsibilities of the Company under
this Plan shall be assumed by any such successor or acquiring
corporation, and all of the rights, privileges and benefits of
the Participants hereunder shall continue.
ARTICLE XIII
CONSTRUCTION
1. Governing Law. This Plan shall be construed and
governed in accordance with the laws of the State of Georgia.
2. Gender. The masculine gender, where appearing in the
Plan, shall be deemed to include the feminine gender, and the
singular may include the plural, unless the context clearly
indicates to the contrary.
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<PAGE>
3. Headings, etc. The cover page of this Plan, the Table
of Contents and all headings used in this Plan are for
convenience of reference only and are not part of the substance
of this Plan.
THIS PLAN in its original form was adopted and became
effective on December 1, 1983. This Plan, as amended on July 23,
1986 (Amendment No. 1), and as amended on September 16, 1987
(Amendment No. 2), herein described is effective as of, and with
respect to Deferred Compensation Agreements entered into on or
after, January 1, 1987.
SAVANNAH ELECTRIC AND POWER COMPANY
By:
A.M. Gignilliat, Jr.
President and Chief Executive Officer
ATTEST:
K. R. Willis
Treasurer and Secretary
/sd
(Corporate Seal)
19
<PAGE>
EXHIBIT A
DEFERRED COMPENSATION AGREEMENT
THIS AGREEMENT is made this _______________ day of
___________________ 19__, between SAVANNAH ELECTRIC AND POWER
COMPANY, a Georgia corporation (hereinafter the "Company"), and
______________________________________, a Key Employee of the
Company (hereinafter called "Participant").
WHEREAS, the Board of Directors of the Company has approved
a Deferred Compensation Plan for the purpose of attracting and
retaining in the employment of
the Company outstanding Key Employees; and
WHEREAS, such Deferred Compensation Plan provides that the
Participant becomes eligible to participate upon execution of a
Deferred Compensation Agreement;
NOW, THEREFORE, in consideration of the mutual agreements
herein contained, the Company and the Participant agree as
follows:
1. Participation. This Agreement is made to evidence the
Participant's participation in the Deferred Compensation Plan for
Key Employees of SAVANNAH ELECTRIC AND POWER COMPANY (hereinafter
the "Plan"), to set forth the amount of the Participant's
compensation to be [deferred, to establish the amount of the
Participant's Normal Retirement Benefit and certain Survivor
Benefits under the Plan, and to set forth the Present Value
Interest Rate.]2
2. Adoption of Plan. The Plan (and all its provisions),
as it now exists and as it may be amended hereafter, is
incorporated herein and made a part of this Agreement.
3. Definitions. When used herein, the terms which are
defined in the Plan shall have the meanings given them in the
Plan, unless a different meaning is clearly required by the
context.
4. No Interest Created. Neither the Participant nor his
Designated Beneficiary shall have any interest in any assets of
A-1
<PAGE>
the Company, including policies of insurance. The Participant
and his Designated Beneficiary shall have only the right to
receive the benefits under the Plan and this Agreement.
5. Deferrals. Pursuant to Article III of the Plan, the
Participant hereby elects to defer the receipt of, and the
Company hereby elects to defer the payment of, Salary in the
a m o u n t o f
_______________________________________________________________
[Dollars ($______________) per year as follows:
(a) One (1) year deferral: for the calendar year
_______________.
(b) Four (4) year deferral: for the calendar years
________, ________, ________, and _____________.]2
6. Normal Retirement Benefit. The Participant's Normal
Retirement Benefit, as defined in Article IV of the Plan, is
_________________________________________________ [Dollars
($_____________)]2 per month, payable for 180 months.
7. Survivor Benefit. [If the Participant is Insurable,
the Participant's Survivor Benefit, payable pursuant to Section
3(a) of Article V of the Plan,]2 is the appropriate monthly
amount, payable for 180 months, as follows:
Participant's Age Monthly Amount
at Date of Death (payable for 180 months)
8. [Present Value Interest Rate. If the Participant is
not Insurable, the interest rate for purposes of determining the
Participant's Survivor Benefit, if any, pursuant to ARTICLE V,
Section 3(b) (i.e., the present value of the Participant's
A-2
<PAGE>
monthly Normal Retirement Benefit), shall be ______________
percent compounded annually.]2
[9. Condition Subsequent. The Company's obligations to pay
the Participant or his Designated Beneficiary the benefits
provided for herein are conditioned upon the nonoccurrence of the
following event(s):
[Insert here description of event(s) constituting condition
subsequent, asdetermined from time to time by the Committee]
If any of such events occur, the Company shall have the
right, for a period of one (1) year following such event, to
refund to the Participant or his Designated Beneficiary, as
applicable, the deferrals the Participant has made hereunder with
interest from the date of a deferral accrued at the rate of nine
percent (9%) per annum compounded annually. The payment of such
refund shall fully and completely discharge the Company's
obligations hereunder and shall fully and completely satisfy all
the participant's and his Designated Beneficiary's rights
hereunder.]1,2
[10. Entire Agreement. This Agreement contains the entire
agreement and understanding by and between the Company and the
Participant with respect to the subject matter hereof, and no
representations, promises, agreements, or understandings, written
or oral, not contained herein shall be of any force or effect.]1,2
IN WITNESS WHEREOF, the parties have executed this Agreement
in duplicate originals as of the day and year first above
written.
SAVANNAH ELECTRIC AND POWER COMPANY
By:
A. M. Gignilliat, Jr.
President and Chief Executive
Officer
ATTEST:
A-3
<PAGE>
K. R. Willis
Treasurer and Secretary
(Corporate Seal)
Employee:
(L.S.)
Participant
A-4
<PAGE>
Designation of Beneficiary
Deferred Compensation Plan for Key Employees
of
Savannah Electric and Power Company
As a Participant in the Deferred Compensation Plan for Key
Employees of Savannah Electric and Power Company, I hereby
designate the following person(s) as "Designated Beneficiary," as
that term is defined and used in the Plan:
_________________________________________________________________
_____________
_________________________________________________________________
_____________
_________________________________________________________________
_____________
_________________________________________________________________
_____________
_________________________________________________________________
_____________
_________________________________________________________________
_____________
_________________________________________________________________
_____________
_________________________________________________________________
_____________
_________________________________________________________________
_____________
_________________________________________________________________
_____________
I understand that the Designated Beneficiary named above may be
changed or revoked by me at any time by filing a new designation
in writing with the Committee.
<PAGE>
Date_____________________________
___________________________________
Signature of Participant
[adamscl] h:\wpdocs\mtd\savannah\d-comp-ee.pln
<PAGE>
FIRST AMENDMENT TO THE DEFERRED
COMPENSATION PLAN FOR KEY EMPLOYEES OF
SAVANNAH ELECTRIC AND POWER COMPANY
WHEREAS, the Board of Directors of Savannah Electric
and Power Company (the "Company") heretofore adopted the Deferred
Compensation Plan for Key Employees of Savannah Electric and
Power Company (the "Plan"), in order to provide key management
employees of the Company with long-term compensation incentives;
and
WHEREAS, the Plan has been amended from time to time to
change the terms of these long-term compensation incentives; and
WHEREAS, it is the Company's desire to amend the Plan
at this time to clarify administration of the Plan; and
WHEREAS, the Company has reserved the right to amend
the Plan at any time in Article XI of the Plan.
NOW, THEREFORE, effective October 12, 1994, the Company
hereby amends the Plan as follows:
11.
Section 2.2 of the Plan is amended by deleting such
provision in its entirety and
inserting the following:
"Committee": The Administrative Benefits
Committee appointed by the Board of Directors
of the Company to administer the Plan.
IN WITNESS WHEREOF, the Board of Directors of Savannah
Electric and Power Company hereby approves this First Amendment
to the Deferred Compensation Plan for Key Employees of Savannah
Electric and Power Company, as executed by the undersigned
authorized officer, and further authorizes such other actions
necessary to implement this Amendment this _____ day of
________________, 1994, to be effective as of October 12, 1994.
SAVANNAH ELECTRIC AND POWER COMPANY
By:
Arthur M. Gignilliat, Jr.
President and Chief Executive
Officer
ATTEST:
Lavonne K. Calandra
Corporate Secretary
(CORPORATE SEAL)
<PAGE>
Exhibit 10(f)20
DEFERRED COMPENSATION PLAN
FOR
___________________________
DIRECTORS
___________________________
OF
SAVANNAH ELECTRIC AND POWER COMPANY
1As Amended July 23, 1986. Effective July 23, 1986.
2As Amended September 18, 1987. Effective January 1, 1987
3As Amended May 15, 1990. Effective January 1, 1991.
<PAGE>
TABLE OF CONTENTS
ARTICLE I STATEMENT OF PURPOSE . . . . . . . . . . . . . 1
ARTICLE II DEFINITIONS . . . . . . . . . . . . . . . 1
ARTICLE III ELIGIBILITY AND PARTICIPATION . . . . . . 3
ARTICLE IV RETIREMENT BENEFITS . . . . . . . . . . . . . 5
ARTICLE V SURVIVOR BENEFITS . . . . . . . . . . . . . . 8
ARTICLE VI SEVERANCE BENEFITS . . . . . . . . . . . . . . 10
ARTICLE VII ACCRUAL OF BENEFITS . . . . . . . . . . . . . 12
ARTICLE VIII ADMINISTRATIVE COMMITTEE . . . . . . . . . . . 12
ARTICLE IX AMENDMENT AND TERMINATION . . . . . . . . . . 13
ARTICLE X MISCELLANEOUS . . . . . . . . . . . . . . . . 14
ARTICLE XI CONSTRUCTION . . . . . . . . . . . . . . . . . 17
i
<PAGE>
ARTICLE I
STATEMENT OF PURPOSE
The purpose of this Plan is to benefit Savannah Electric and
Power Company through increased incentive on the part of
Directors of the Company; to further the long-term growth and
earnings of the Company by offering long-term incentives to
Directors in addition to current fees; and to attract and retain
outstanding individuals as Directors of the Company through
enhancement of the value of fees paid to individuals.
ARTICLE II
DEFINITIONS
When used herein the following terms shall have the meanings
indicated unless a different meaning clearly required by the
context.
1. "Annuity Starting Date": The date on which payment of
a benefit payable hereunder is to commence.
2. "Committee": The Administrative Committee appointed by
the Board of Directors of the Company to administer this Plan.
3. "Company": Savannah Electric and Power Company, a
Georgia corporation, and its corporate successors.
4. "Deferred Compensation Agreement": Written agreement
between the Company and a Participant in substantially the form
attached hereto as Exhibit A and made a part hereof.
5. "Designated Beneficiary": One or more beneficiaries,
as designated in writing to the Committee, to whom payments
otherwise due to or for the benefit of the Participant hereunder
shall be made in the event of his death prior to the complete
<PAGE>
payment of such benefit. In the event no such written
designation made by a participant or if such beneficiary shall
not be in existence at the Participant's death or if such
beneficiary predeceases the Participant, the Participant shall be
deemed to have designated his estate as such beneficiary.
6. "Director": A person who is a duly qualified and
acting member of the Board of Directors of the Company.
7. "Early Retirement": Retirement from the Directorship
of the Company after attaining age sixty (60) but prior to age
sixty-five (65) for those under age fifty (50) at time of
election and prior to age seventy (70) for those fifty (50) years
of age and over at time of election.
8. "Early Retirement Date": The date upon which
Participants have attained an age of at least sixty (60) but have
not yet reached ages sixty-five (65) or seventy (70),
respectively, retires from the Directorship of the Company.
9. "Insurable": The life of a Participant is insurable by
an insurance company approved by the Committee and at premium
rates acceptable to the Committee in the exercise of its sole and
absolute discretion.
10. "Normal Retirement": Retirement from the Directorship
of the Company upon or after attaining age sixty-five (65) for
those under age fifty (50) at time of election and age seventy
(70) for those fifty (50) years of age and older at time of
election.
2
<PAGE>
11. "Normal Retirement Date": The date upon which
Participants who have attained an age of at least sixty-five (65)
or seventy (70), respectively, as the case shall be, retire from
the Directorship of the Company.
12. "Participant": A Director who is or hereafter becomes
eligible to participate in the Plan and does participate by
electing, in the manner specified herein, to defer compensation
pursuant to this Plan.
13. "Plan": The Deferred Compensation Plan for Directors
of Savannah Electric and Power Company contained herein, and as
may be amended from time to time hereafter.
14. "Plan Year": The period commencing January 1 and
ending the following December 31.
15. "Postponed Retirement": Retirement from the
Directorship of the Company after continuing to serve as such
following attainment of: (i) age sixty-five (65) for a
Participant under age fifty (50) at time of deferral election and
(ii) age seventy (70) for a Participant fifty (50) years of age
and older at time of deferral election.
16. "Postponed Retirement Date": The date upon which a
Participant who has Postponed Retirement retires from the
Directorship of the Company.
ARTICLE III
ELIGIBILITY AND PARTICIPATION
1. Eligibility. [Any Director of the Company is eligible
to participate in this Plan.]2
3
<PAGE>
2. Participation.
(a) [An eligible Director participates in the Plan by
irrevocably electing, in the manner specified herein, to defer
all or any part of future Director's fees at an annual rate of
from one (1) to four (4) consecutive Plan Years. The Deferred
Compensation Agreement shall stipulate, with respect to each such
Plan Year, the [percentage of fees to be deferred or the fixed
dollar amount to be deferred];3 provided, however, the annual
deferral amount shall not be less than $1,000.00.]2
(b) An eligible Director becomes a Participant in the Plan
upon the execution and delivery of a Deferred Compensation
Agreement. Such Agreement must be executed on or before the
December 31st next preceding succeeding Plan Years to defer
Director's fees to be earned in such Plan Years.
3. [Benefits. Benefits payable pursuant to any election
made hereunder will be calculated and based upon both the
Participant's age at the time of the deferral election and the
amount of deferrals. In addition, the amount of Survivor
Benefits will depend upon whether the Participant is Insurable or
non-Insurable.]2
[4. Conditions Subsequent. The Committee shall be vested
with the authority to condition the Company's obligations under a
Deferred Compensation Agreement upon the nonoccurrence of a
legislative, judicial or regulatory development or change which
adversely affects the Company's ability to informally finance
4
<PAGE>
such obligations, including, but not limited to, a change in any
of the following federal income tax provisions:
(a) the current provisions related to the exclusion
from gross income of proceeds of life insurance contracts payable
upon the death of the insured;
(b) the current exclusion from income of any increase
in the "cash value" or "inside build up" of life insurance
contracts from time to time;
(c) the current exclusion from income of any "policy
loan" obtained by the owner of a life insurance contract;
(d) the current exclusion from income of "dividends"
on a life insurance contract which are used to purchase
additional insurance; and
(e) the current provisions related to the
deductibility of interest paid on policy loans.
In the event the Company's obligations under a Deferred
Compensation Agreement are so conditioned, and the event
constituting the condition subsequent occurs, the Company shall
have the right, for a period of one (1) year following such
event, to refund to the Participant or his Designated Beneficiary
the deferrals made under the Deferred Compensation Agreement with
interest from the date of deferral accrued at the rate of nine
percent (9%) per annum compounded annually. The payment of such
refund shall fully and completely discharge the Company's
obligations under the Deferred Compensation Agreement and shall
5
<PAGE>
fully and completely satisfy all the Participant's and his
Designated Beneficiary's rights thereunder.]1
ARTICLE IV
RETIREMENT BENEFITS
1. Normal Retirement Benefit.
(a) Upon the Normal Retirement of a participant, such
Participant becomes entitled to his Normal Retirement Benefit.
The Normal Retirement Benefit is a level fifteen (15) year
annuity payable in one hundred eighty (180) equal monthly
installments in the amount stated in the Participant's Deferred
Compensation Agreement. Payment of the Normal Retirement Benefit
shall commence on the January 1st immediately following the
Participant's Normal Retirement Date (such date being the
"Regular Annuity Starting Date" and shall continue on the first
day of each month thereafter until one hundred eighty (180)
monthly payments have been made.
(b) The Normal Retirement Benefit amount which the
Company will agree to pay depends on a number of factors,
including among other things, the amount of the deferral, and the
length of time between the time of the deferral and the Annuity
Starting Date of the benefit.
2. Postponed Retirement Benefit.
(a) Upon the Postponed Retirement of a Participant,
such Participant becomes entitled to the Postponed Retirement
Benefit. The Postponed Retirement Benefit is a level fifteen
(15) year annuity payable in equal monthly installments. Payment
6
<PAGE>
of the Postponed Retirement Benefit shall commence on the
January 1st immediately following the Participant's Postponed
Retirement Date (such date being the "Postponed Annuity Starting
Date"), and shall continue on the first day of each month
thereafter until one hundred eighty (180) monthly payments have
been made.
(b) The monthly benefit of the Postponed Retirement
Benefit shall be an amount equal to the monthly benefit of the
Normal Retirement Benefit increased by eight percent (8%)
compounded annually for each year that the Regular Annuity
Starting Date precedes his Postponed Annuity Starting Date.
3. Early Retirement Benefit.
(a) Upon the Early Retirement of a Participant, such
Participant becomes entitled to his Early Retirement Benefit.
The Early Retirement Benefit is a level fifteen (15) year annuity
payable in equal monthly installments of cash, the amount of
which shall be the same as those of the Normal Retirement
Benefit. Subject to Sections 3(b) and 3(c) of this Article IV,
payment of the Early Retirement Benefit shall commence on the
January 1st immediately following the Participant's sixty-fifth
(65th) birthday for those under age fifty (50) at time of
deferral election and age seventy (70) for those fifty (50) years
of age and older at time of deferral election (such date being
the "Regular Annuity Staring Date"), and shall continue on the
first day of each month thereafter until one hundred eight (180)
monthly payments have been made.
7
<PAGE>
(b) A Participant is entitled to elect to have payment
of his Early Retirement Benefit commence on any January 1st
following his Early Retirement Date and preceding his Regular
Annuity Starting Date (such date being the "Accelerated Annuity
Starting Date"). Such election shall be made in writing
delivered to the Committee at least thirty (30) days prior to
such accelerated Annuity Starting Date.
(c) In the event a Participant elects an Accelerated
Annuity Starting Date, his Early Retirement Benefit shall be
reduced by the early retirement percentage as specified in
Participant's Deferred Compensation Agreement compounded for each
year that the Accelerated Annuity Starting Date precedes his
Regular Annuity Starting Date.
4. Death Prior to Commencement of Benefit. Anything
herein to the contrary notwithstanding, in the event a
Participant dies after becoming entitled to his Normal Retirement
Benefit or Early Retirement Benefit and prior to the Annuity
Starting Date of such Retirement Benefit, the Participant's
Designated Beneficiary shall receive, in lieu of such Retirement
Benefit, the Survivor Benefit specified in Article V hereof.
5. Payments to Beneficiary. In the event a Participant
dies prior to full payment of his Retirement Benefit under this
Article IV, all remaining payments due hereunder shall be made to
such Participant's Designated Beneficiary.
8
<PAGE>
ARTICLE V
SURVIVOR BENEFITS
1. [Survivor Benefit. Upon the occurrence of any of the
following events, the Company shall pay to a Participant's
Designated Beneficiary the Survivor Benefits as defined in this
Article V. The Survivor Benefits payable hereunder are in lieu
of any other benefit under this Plan.
(a) The death of the Participant while serving as a
Director of the Company;
(b) The death of the Participant after becoming
entitled to a Retirement Benefit of Article IV hereof, but prior
to commencement of payment of such benefit; or
(c) The death of the Participant after becoming
entitled to the Severance Benefit of Article VI, Section 1,
hereof, but prior to commencement of payment of such benefit.
2. Payment. Payment of the Survivor Benefit will commence
on the first day of the month following receipt by the Committee
of written proof of the Participant's death and shall continue on
the first day of each month thereafter until one hundred eighty
(180) monthly payments have been made.
9
<PAGE>
3. Amount.
(a) If the Participant is Insurable, then the Survivor
Benefit is a level fifteen (15) year annuity payable to his
Designated Beneficiary in one hundred eighty (180) equal monthly
installments in the amount stated in the Participant's Deferred
Compensation Agreement.
(b) If the Participant is not Insurable and his death
occurs at a time when, had he retired on the day of his death, he
would have been entitled to a Retirement Benefit of Article IV,
then the Survivor Benefit is a level fifteen (15) year annuity
payable in one hundred eighty (180) equal monthly installments in
a monthly amount equal to the present value at the Participant's
date of death of the Participant's monthly Normal Retirement
Benefit, as set forth in the Participant's Deferred Compensation
Agreement, discounted, for the period between the Participant's
Regular Annuity Starting Date (as defined in Article IV,
Section 1(a)) and the Participant's date of death, by the early
retirement percentage stated in the Participant's Deferred
Compensation Agreement compounded annually.
(c) Anything to the contrary herein notwithstanding,
if the Survivor Benefit is payable by reason of the Participant's
death occurring at a time when, had he retired on the day of his
death, he would have been entitled to the Postponed Retirement
Benefit (as provided in Article IV, Section 2), then the monthly
amount of the Survivor Benefit shall equal the monthly amount of
the Participant's Normal Retirement Benefit, as set forth in the
10
<PAGE>
Participant's Deferred Compensation Agreement, increased by eight
percent (8%) per annum compounded annually for the period between
the Participant's Regular Annuity Starting Date (as defined in
Article IV, Section 1) and the Participant's death.
(d) If the Participant is not Insurable and his death
occurs at a time when, had he retired on the day of his death, he
would not have been entitled to a Retirement Benefit of
Article IV, then the total amount of the Survivor Benefit shall
equal his actual gross deferrals plus interest thereon at nine
percent (9%) per annum compounded annually until his date of
death. Such amount shall be payable to the Participant's
Designated Beneficiary at the option of the Committee in either a
lump sum on the first day of the month immediately following
receipt by the Committee of written proof of the Participant's
death or in one hundred eighty (180) equal consecutive monthly
installments with interest at nine percent (9%) per annum,
compounded annually, commencing on the first day of the month
immediately following receipt by the Committee of proof of the
Participant's death.
(e) Notwithstanding anything herein to the contrary,
in the event the Participant's death occurs prior to April 1 of
the year following the year in which the Participant enters into
a Deferred Compensation Agreement, then no Survivor Benefit shall
be payable pursuant to such Deferred Compensation Agreement. In
lieu of any such Survivor Benefit, the Company shall pay to the
Participant's Designated Beneficiary, in one lump sum, the actual
11
<PAGE>
gross deferrals made, if any, pursuant to such Deferred
Compensation Agreement plus interest thereon at nine percent (9%)
per annum until date of payment.]2
ARTICLE VI
SEVERANCE BENEFITS
1. In the event a Participant's relationship as a Director
of the Company terminates for any reason other than death, Early
Retirement or Normal Retirement, such Participant shall be
entitled to receive a benefit identical to the Retirement
Benefits of Article IV (either the Early Retirement Benefit or
Normal Retirement Benefit, as the case may be) to which such
Participant would have become entitled if he retired upon or
after attaining age sixty (60). Provided, however, in the event
a Participant dies prior to commencement of payment of such
Severance Benefit, the Participant's Designated Beneficiary shall
receive, in lieu of such Severance Benefit, the Survivor Benefit
specified in Article V hereof.
2. Notwithstanding the foregoing, such terminated
Participant may request to receive, in lieu of the Severance
Benefit provided by Section 1 of this Article VI, a benefit equal
to his actual gross deferrals plus interest thereon at nine
percent (9%) per annum compounded annually until such
termination. Payment of such benefit is at the discretion of the
Committee and shall commence on the first day of the month
following approval of such request. Such benefit shall be
payable in the option of the Committee either in a lump sum or in
12
<PAGE>
up to sixty (60) equal consecutive monthly installments with
interest at nine percent (9%) per annum.
3. In the event a Participant dies prior to full payment
of his Severance Benefit under this Article VI, all remaining
payments due hereunder shall be made to such Participant's
Designated Beneficiary.
ARTICLE VII
ACCRUAL OF BENEFITS
1. If a Participant's relationship with the Company as a
Director terminates for any reason prior to the completion of the
deferrals agreed upon in the Deferred Compensation Agreement or
if the agreed deferrals are not made for any other reason, then
all of his benefits under the Plan shall be reduced by a
fraction, the numerator of which is the amount of the gross
deferrals agreed to be deferred which were not deferred, and the
denominator of which is the amount of gross deferrals agreed to
be deferred.
2. The reduction of benefits under Section 1 of this
Article VII shall not apply to any benefits receivable by a
Participant or his Designated Beneficiary under:
(a) Article V, Section 1(a) only, [but only when the
Participant is Insurable;
(b) Article V, Section 3(d) only;]2 or
(c) Article VI, Section 2 [only.]2
ARTICLE VIII
13
<PAGE>
ADMINISTRATIVE COMMITTEE
1. This Plan shall be administered by an Administrative
Committee of not less than three (3) members appointed by the
Savannah Electric and Power Company. The Board of Directors may
from time to time appoint members of the Committee in
substitution for the members previously appointed and may fill
vacancies, however caused. The Committee shall have all powers
necessary to enable it to carry out its duties in the
administration of the Plan. Not in limitation, but in
application of the foregoing, the Committee shall have the duty
and power to determined all questions that may arise hereunder as
to the status and rights of participants in the Plan.
2. The Committee shall act by a majority of the number
then constituting the Committee, and such action may be taken
either by a vote at a meeting or in writing without a meeting.
3. The Committee shall keep a complete record of all its
proceedings and all data relating to the administration of the
Plan.
4. The Committee shall select one of its members as a
Chairman. The Committee shall appoint a Secretary to keep
minutes of its meetings and the Secretary may or may not be a
member of the Committee. The Committee shall make such rules and
regulations for the conduct of its business as it shall deem
advisable.
14
<PAGE>
5. No member of the Committee shall be personally liable
for any actions taken by the Committee unless the member's action
involves willful misconduct.
ARTICLE IX
AMENDMENT AND TERMINATION
The Company reserves the right, at any time or from time to
time, by action of its Board of Directors, to modify or amend in
whole or in part any or all provisions of the Plan. In addition,
the Company reserves the right by action of its Board of
Directors to terminate the Plan in whole or in part. Provided,
however, such termination shall not affect the Deferred
Compensation Agreements then in effect.
Notwithstanding any provision of this Plan, should there be
a change in the Internal Revenue Code prior to January 1, 1985,
which would adversely affect the Company's operation of this
Plan, the Board of Directors may, at its option, terminate this
Plan. Upon such termination all amounts previously deferred
shall be refunded to the respective Participants together with
interest thereon at nine percent (9%) per annum.
15
<PAGE>
ARTICLE X
MISCELLANEOUS
1. Suicide. Except as hereafter provided, no benefit
shall be payable under the Plan with respect to a deferral
election to a Participant or his Designated Beneficiary who dies
as a result of suicide within twenty-five (25) months of the
December 31st preceding a deferral period to defer compensation
to be earned in the succeeding calendar year or years.
In the event of such suicide, the Participant's Designated
Beneficiary shall receive within a reasonable period the actual
gross deferrals, if any, made by such Participant with interest
at seven percent (7%) per annum to date of payment.
2. Non-Alienation of Benefits. No right or benefit under
the Plan shall be subject to anticipation, alienation, sale,
assignment, pledge, encumbrance or charge, and any attempt to
anticipate, alienate, sell, assign, pledge, encumber or charge
any right or benefit under this Agreement shall be void. No
right or benefit hereunder shall in any manner be liable for or
subject to the debts, contracts, liabilities or torts of the
person entitled to such benefits. If the Participant or any
beneficiary hereunder shall become bankrupt, or attempt to
anticipate, alienate, sell, assign, pledge, encumber, or charge
any right hereunder, then such right or benefit shall, in the
discretion of the Committee, cease and terminate, and in such
event, the Committee may hold or apply the same or any part
thereof for the benefit of the Participant or his beneficiary,
spouse, children or other dependents, or any of them in such
16
<PAGE>
manner and in such amounts and proportions as the Committee may
deem proper.
3. No Trust Created. The obligations of the Company to
make payments hereunder shall constitute a liability of the
Company to a Participant. Such payments shall be made from the
general funds of the Company, and the Company shall not be
required to establish or maintain any special or separate fund,
or purchase or acquire life insurance on a Participant's life, or
otherwise to segregate assets to assure that such payment shall
be made, and neither a Participant, his estate nor Designated
Beneficiary shall have any interest in any particular asset of
the Company by reason of its obligations hereunder. Nothing
contained in the Plan shall create or be construed as creating a
trust of any kind or other fiduciary relationship between the
Company and a Participant or any other person.
4. No Employment Agreement. Neither the execution of this
Plan nor any action taken by the Company pursuant to this Plan
shall be held or construed to confer on a Participant any legal
right to be continued as a Director of the Company. No provision
herein shall restrict the right of the Company to terminate a
Participant as a member of the Board of Directors, or restrict
the right of any Participant to terminate his role as a Director
of the Company.
5. Designation of Beneficiary. Participants shall file
with the Company a notice in writing designating one or more
Designated Beneficiaries to whom payments otherwise due to or for
17
<PAGE>
the benefit of the Participant hereunder shall be made in the
event of his death prior to the complete payment of such benefit.
Participants shall have the right to change the beneficiary or
beneficiaries so designated from time to time; provided, however,
that any change shall not become effective until received in
writing by the Committee.
6. Claims for Benefits. Each Participant or beneficiary
must claim any benefit to which he is entitled under this Plan by
a written notification to the Committee. If a claim is denied,
it must be denied within a reasonable period of time, and be
contained in a written notice stating the following:
(a) The specific reason for the denial.
(b) Specific reference to the Plan provision on which
the denial is based.
(c) Description of additional information necessary
for the claimant to present his claim, if any, and an explanation
of why such material is necessary.
(d) An explanation of the Plan's claims review
procedure.
The claimant will have 60 days to request a review of the
denial by the Committee, which will provide a full and fair
review. The request for review must be in writing delivered to
the Committee. The claimant may review pertinent documents, and
he may submit issues and comments in writing.
The decision by the Committee with respect to the review
must be given within 60 days after receipt of the request, unless
18
<PAGE>
special circumstances require an extension (such as for a
hearing). In no event shall the decision be delayed beyond 120
days after receipt of the request for review. The decision shall
be written in a manner calculated to be understood by the
claimant, and it shall include specific reasons and refer to
special Plan provisions as to its effect.
7. Binding Effect. Obligations incurred by the Company
pursuant to this Plan shall be binding upon and inure to the
benefit of the Company, its successors and assigns, and the
Participant and the beneficiary or beneficiaries designated
pursuant to Article X, Section 5 hereinabove.
8. Entire Plan. This documents and any amendments
contains all the terms and provisions of the Plan and shall
constitute the entire Plan, any other alleged terms or provisions
being of no effect.
ARTICLE XI
CONSTRUCTION
1. Governing Law. This Plan shall be construed and
governed in accordance with the laws of the State of Georgia.
2. Gender. The masculine gender, where appearing in the
Plan, shall be deemed to include the feminine gender, and the
singular may include the plural, unless the context clearly
indicates to the contrary.
3. Headings, etc. The cover page of this Plan, the Table
of Contents and all headings used in this Plan are for
19
<PAGE>
convenience of reference only and are not part of the substance
of this Plan.
(Continued on Next Page)
20
<PAGE>
This Plan in its original form was adopted and became
effective on December 1, 1983. This Plan, as amended on July 23,
1988 (Amendment No. 1), as amended on September 16, 1987
(Amendment No. 2), and as amended on May 15, 1990 (Amendment
No. 3), herein described is effective as of, and with respect to
Deferred Compensation Agreements entered into on or after,
January 1, 1991.
SAVANNAH ELECTRIC AND POWER COMPANY
By:
A.M. Gignilliat, Jr.
President and Chief Executive
Officer
ATTEST:
K.R. Willis
Treasurer and Secretary
/sd
[Corporate Seal]
21
<PAGE>
EXHIBIT A
DEFERRED COMPENSATION AGREEMENT
THIS AGREEMENT is made this ____ day of
_____________________, 19__, between SAVANNAH ELECTRIC AND POWER
COMPANY, a Georgia corporation (hereinafter the "Company"), and
_______________________________________________, a Director of
the Company (hereinafter called "Participant").
[WHEREAS, the Board of Directors of the Company has approved
a Deferred Compensation Plan for the purpose of attracting and
retaining outstanding Directors of the Company;]2 and
WHEREAS, such Deferred Compensation Plan provides that the
Participant becomes eligible to participate upon execution of a
Deferred Compensation Agreement;
NOW, THEREFORE, in consideration of the mutual agreements
herein contained, the Company and the Participant agree as
follows:
1. Participation. This Agreement is made to evidence the
Participant's participation in the Deferred Compensation Plan for
Directors of SAVANNAH ELECTRIC AND POWER COMPANY (hereinafter the
"Plan"), to set forth the [percentage or the fixed dollar]3
amount of the Participant's [fees to be deferred, to establish
the amount of the Participant's Normal Retirement Benefit and
certain Survivor Benefits under the Plan, and to set forth the
Early Retirement Percentage.]2
A-1
<PAGE>
2. Adoption of Plan. The Plan (and all its provisions),
as it now exists and as it may be amended hereafter, is
incorporated herein and made a part of this Agreement.
3. Definitions. When used herein, the terms which and
defined in the Plan shall have the meanings given them in the
Plan, unless a different meaning is clearly required by the
context.
4. [No Interest Created. Neither the Participant nor his
Designated Beneficiary shall have any interest in any assets of
the Company, including policies of insurance. The Participant
and his Designated Beneficiary shall have only the right to
receive the benefits under the Plan and this Agreement.]2
5. Early Retirement Percentage. The Participant's Early
Retirement Percentage is _____________ [percent (____%)].2
6. [Deferrals. Pursuant to Article III of the Plan, the
Participant hereby elects to defer the receipt of, and the
Company hereby elects to defer the payment of, director's fees in
the [percentage(s) or the fixed dollar amount(s) and for the
calendar year(s) indicated below:
Fixed Dollar
Percentage (or) Amount Calendar Year
(i) $
%
(ii) $
%
(iii) $
%
(iv) $
% 2,3
A-2
<PAGE>
7. Normal Retirement Benefit. The Participant's Normal
Retirement Benefit, as defined in Article IV of the Plan, is
_____________________________________________ [Dollars
($_____________________)]2 per month, payable for 180 months.
8. Survivor Benefit. [If the Participant is Insurable,
the Participant's Survivor Benefit, payable pursuant to
Section 3(a) of Article V of the Plan, is the appropriate monthly
amount, payable for 180 months, as follows:
Participant's Age at Date of Monthly Amount (payable for
Death 180 months)
If the Participant is not Insurable, the discount for
interest for purposes of determining the Participant's Survivor
Benefit, if any, pursuant to ARTICLE V, Section 3(b) (i.e., the
present value of the Participant's monthly Normal Retirement
Benefit), shall be the Early Retirement Percentage set forth in
Paragraph 5 above, compounded annually.]2
[9. Condition Subsequent. The Company's obligations to pay
the Participant or this Designated Beneficiary the benefits
provided for herein are conditioned upon the nonoccurrence of the
following event(s):
[Insert description of event(s) constituting condition
subsequent as determined from time to time by the Committee]
A-3
<PAGE>
If any such events occur, the Company shall have the right,
for a period of one (1) year following such event, to refund to
the Participant or his Designated Beneficiary, as applicable, the
deferrals the Participant has made hereunder with interest from
the date of deferral accrued at the rate of nine percent (9%) per
annum compounded annually. The payment of such refund shall
fully and completely discharge the Company's obligations
hereunder and shall fully and completely satisfy all the
participant's and his Designated Beneficiary's rights
hereunder.]1,2
10. Entire Agreement. This Agreement contains the entire
agreement and understanding by and between the Company and the
Participant [with respect to the subject matter hereof, and no
representations, promises, agreements, or understandings, written
or oral, not contained herein shall be of any force or effect.]1.2
IN WITNESS WHEREOF, the parties have executed this Agreement
in duplicate originals as of the day and year first above
written.
SAVANNAH ELECTRIC AND POWER COMPANY
By:
A.M. Gignilliat, Jr.
President and Chief Executive
Officer
ATTEST:
A-4
<PAGE>
K.R. Willis
Treasurer and Secretary
[Corporate Seal]
Participating Director
(L.S.)
Participant
A-5
<PAGE>
Designation of Beneficiary
Deferred Compensation Plan for Directors
of
Savannah Electric and Power Company
As a Participant in the Deferred Compensation Plan for
Directors of Savannah Electric and Power Company, I hereby
Designate the following person(s) as "Designated Beneficiary," as
that term is defined and used in the Plan:
_________________________________________________________________
_____________
_________________________________________________________________
_____________
_________________________________________________________________
_____________
_________________________________________________________________
_____________
_________________________________________________________________
_____________
_________________________________________________________________
_____________
_________________________________________________________________
_____________
_________________________________________________________________
_____________
_________________________________________________________________
_____________
<PAGE>
_________________________________________________________________
_____________
I understand that the Designated Beneficiary named above may be
changed or revoked by me at any time by filing a new designation
in writing with the Committee.
Date______________________________
________________________________________
Signature of Participant
(adamscl) h:\wpdocs\mtd\savannah\def-comp.pln
<PAGE>
FIRST AMENDMENT TO THE DEFERRED
COMPENSATION PLAN FOR DIRECTORS OF
SAVANNAH ELECTRIC AND POWER COMPANY
(AS AMENDED AND RESTATED EFFECTIVE
JANUARY 1, 1991)
WHEREAS, the Board of Directors of Savannah Electric
and Power Company, Inc. (the "Company") heretofore adopted the
Deferred Compensation Plan for Directors of Savannah Electric and
Power Company (the "Plan"), originally effective December 1,
1983, in order to provide Directors of the Company with long-term
compensation incentives; and
WHEREAS, the Plan has been amended from time to time to
change the terms of these long-term compensation incentives; and
WHEREAS, it is the Company's desire to amend the Plan
at this time to provide a more flexible distribution provision
under the Plan; and
WHEREAS, the Company has reserved the right to amend
the Plan at any time in Article IX of the Plan.
NOW, THEREFORE, effective May 1, 1994, the Company
hereby amends the Plan as follows:
Section 4.1(a) is amended by deleting the third
sentence of such Section in its entirety and replacing it with
the following:
Payment of the Normal Retirement Benefit
shall commence on the first day of the month
immediately following the Participant's
Normal Retirement Date (such date being the
"Regular Annuity Starting Date") and shall
continue on the first day of each month
thereafter until one hundred and eighty (180)
monthly payments have been made.
Section 4.2(a) is amended by deleting the third
sentence of such Section in its entirety and replacing it with
the following:
Payment of the Postponed Retirement Benefit
shall commence on the first day of the month
immediately following the Participant's
Postponed Retirement Date (such date being
the "Postponed Annuity Starting Date") and
shall continue on the first day of each month
thereafter until one hundred and eighty (180)
monthly payments have been made.
<PAGE>
Section 4.3(a) is amended by deleting the third
sentence of such Section in its entirety and replacing it with
the following:
Subject to Sections 3(b) and 3(c) of this
Article IV, payment of Early Retirement
Benefits shall commence on the Regular
Annuity Starting Date and shall continue on
the first day of each month thereafter until
one hundred and eighty (180) monthly payments
have been made.
Section 4.3(b) is amended by deleting the first
sentence of such Section in its entirety and replacing it with
the following:
A Participant is entitled to elect to have
payment of his Early Retirement Benefit
commence on the first day of the month
immediately following his Early Retirement
Date and preceding his Regular Annuity
Starting Date (such date being the
"Accelerated Annuity Starting Date").
IN WITNESS WHEREOF, the Executive Committee of the
Board of Directors of Savannah Electric and Power Company, which
is authorized to act on behalf of the full Board, hereby approves
this First Amendment to the Deferred Compensation Plan for
Directors of Savannah Electric and Power Company, as executed by
the undersigned authorized officer, and further authorizes such
other actions necessary to implement this Amendment this _____
day of ________________, 1994, to be effective as of May 1, 1994.
SAVANNAH ELECTRIC AND POWER
COMPANY, INC.
By:
Title:
ATTEST:
By:
Title:
[adamscl] h:\wpdocs\mtd\savannah\def-comp.1am
2
<PAGE>
SECOND AMENDMENT TO THE DEFERRED
COMPENSATION PLAN FOR DIRECTORS OF
SAVANNAH ELECTRIC AND POWER COMPANY
(AS AMENDED AND RESTATED EFFECTIVE
JANUARY 1, 1991)
WHEREAS, the Board of Directors of Savannah Electric
and Power Company (the "Company") heretofore adopted the Deferred
Compensation Plan for Directors of Savannah Electric and Power
Company (the "Plan"), originally effective December 1, 1983, in
order to provide Directors of the Company with long-term
compensation incentives; and
WHEREAS, the Plan has been amended from time to time to
change the terms of these long-term compensation incentives; and
WHEREAS, it is the Company's desire to amend the Plan
at this time to clarify the treatment of Director's Fees
occurring mid-term during a Plan Year; and
WHEREAS, the Company has reserved the right to amend
the Plan at any time in Article IX of the Plan.
NOW, THEREFORE, effective July 29, 1994, the Company
hereby amends the Plan as follows:
Section 3.2(a) is amended by adding to the end thereof
the following:
Notwithstanding the foregoing, no deferral
election shall be effective with respect to
any increase in Director's Fees, whether
denominated as retainer fees or meeting fees,
which increase occurs mid-term during a Plan
Year. However, such increase shall be
subject to the deferral election procedures
set forth in paragraph (b) below, beginning
on the first day of the first Plan Year
following such increase.
IN WITNESS WHEREOF, the Executive Committee of the
Board of Directors of Savannah Electric and Power Company, which
is authorized to act on behalf of the full Board, hereby approves
this Second Amendment to the Deferred Compensation Plan for
Directors of Savannah Electric and Power Company, as executed by
the undersigned authorized officer, and further authorizes such
other actions necessary to implement this Amendment this _____
day of ________________, 1994, to be effective as of July 29,
1994.
<PAGE>
SAVANNAH ELECTRIC AND POWER
COMPANY
By:
Title:
ATTEST:
By:
Title:
[adamscl] h:\wpdocs\mtd\savannah\def-comp.2am
-2-
<PAGE>
THIRD AMENDMENT TO THE DEFERRED
COMPENSATION PLAN FOR DIRECTORS OF
SAVANNAH ELECTRIC AND POWER COMPANY
(AS AMENDED AND RESTATED EFFECTIVE
JANUARY 1, 1991)
WHEREAS, the Board of Directors of Savannah Electric
and Power Company (the "Company") heretofore adopted the Deferred
Compensation Plan for Directors of Savannah Electric and Power
Company (the "Plan"), originally effective December 1, 1983, in
order to provide Directors of the Company with long-term
compensation incentives; and
WHEREAS, the Plan has been amended from time to time to
change the terms of these long-term compensation incentives; and
WHEREAS, it is the Company's desire to amend the Plan
at this time to address the increased payment of compensation in
the form of stock and fees to Participants in the Plan; and
WHEREAS, the Company has reserved the right to amend
the Plan at any time in Article IX of the Plan.
NOW, THEREFORE, effective October 12, 1994, the Company
hereby amends the Plan as follows:
(i)
Section 2.2 of the Plan is amended by deleting such
provision in its entirety and
inserting the following:
"Committee": The Administrative Benefits
Committee appointed by the Board of Directors
of the Company to administer the Plan.
(ii)
Section 2.7 of the Plan is amended by deleting such Section
in its entirety and inserting the following:
"Early Retirement": Retirement from the
Directorship of the Company after attaining
age sixty (60) but prior to age sixty-five
(65) for those under age fifty (50) at the
time of deferral election and prior to age
seventy (70) for those fifty (50) years of
age and over at the time of deferral
election.
<PAGE>
(iii)
Section 2.10 of the Plan is amended by deleting such Section
in its entirety and inserting the following:
"Normal Retirement": Retirement from the
Directorship of the Company upon or after
attaining age sixty-five (65) for those under
age fifty (50) at the time of deferral
election and age seventy (70) for those fifty
(50) years of age and older at the time of
deferral election.
(iv)
Article II is amended by adding a new paragraph 17 as
follows:
"Director's Fees" shall mean the compensation
payable to the Directors of the Company,
including retainer fees and meeting fees, but
excluding any amount paid in the form of
stock, as determined from time to time by the
Board of Directors.
(v)
Section 3.2(b) of the Plan is amended by adding to the
end of such Section the following language:
If the Director's Fees paid to a Director are
increased during a Plan Year, such Director
shall receive a Deferred Compensation
Agreement proscribed by the Committee and
shall be entitled to make a new deferral
election regarding such increase which shall
be effective as of the first day of the next
following Plan Year.
(vi)
The Deferred Compensation Agreement whereby
Participants elect to defer Director's Fees is amended as set
forth in Exhibit A.
(vii)
For purposes of new Section 3.2(b) above, the
Supplemental Deferred Compensation Agreement is adopted as is set
forth in Exhibit B.
-2-
<PAGE>
IN WITNESS WHEREOF, the Board of Directors of Savannah
Electric and Power Company hereby approves this Third Amendment
to the Deferred Compensation Plan for Directors of Savannah
Electric and Power Company, as executed by the undersigned
authorized officer, and further authorizes such other actions
necessary to implement this Amendment this _____ day of
________________, 1994, to be effective as of October 12, 1994.
SAVANNAH ELECTRIC AND POWER COMPANY
By:
Arthur M. Gignilliat, Jr.
President and Chief Executive
Officer
ATTEST:
Lavonne K. Calandra
Corporate Secretary
(CORPORATE SEAL)
[adamscl] h:\wpdocs\mtd\savannah\def-comp.3am
-3-
<PAGE>
EXHIBIT A
DEFERRED COMPENSATION AGREEMENT
THIS AGREEMENT is made this ____ day of _______________,
19___, between SAVANNAH ELECTRIC AND POWER COMPANY, a Georgia
corporation (hereinafter the "Company"), and
_____________________________________, a Director of the Company
(hereinafter called "Participant").
[WHEREAS, the Board of Directors of the Company has approved
a Deferred Compensation Plan for the purpose of attracting and
retaining outstanding Directors of the Company;]2 and
WHEREAS, such Deferred Compensation Plan provides that the
Participant becomes eligible to participate upon execution of a
Deferred Compensation Agreement;
NOW, THEREFORE, in consideration of the mutual agreements
herein contained, the Company and the Participant agree as
follows:
(viii) Participation. This Agreement is made to evidence
the Participant's participation in the Deferred Compensation Plan
for Directors of SAVANNAH ELECTRIC AND POWER COMPANY (hereinafter
the "Plan"), to set forth the [percentage or the fixed dollar]3
amount of the Participant's [fees to be deferred, to establish
the amount of the Participant's Normal Retirement Benefit and
certain Survivor Benefits under the Plan, and to set forth the
Early Retirement Percentage.]2
(ix) Adoption of Plan. The Plan (and all its provisions),
as it now exists and as it may be amended hereafter, is
incorporated herein and made a part of this Agreement.
A-1
<PAGE>
(x) Definitions. When used herein, the terms which are
defined in the Plan shall have the meanings given them in the
Plan, unless a different meaning is clearly required by the
context.
(xi) [No Interest Created. Neither the Participant nor his
Designated Beneficiary shall have any interest in any assets of
the Company, including policies of insurance. The Participant
and his Designated Beneficiary shall have only the right to
receive the benefits under the Plan and this Agreement.]2
(xii) Early Retirement Percentage. The Participant's
Early Retirement Percentage is ____________________ [percent
(___%)].2
(xiii) [Deferrals. Pursuant to Article III of the Plan,
the Participant hereby elects to defer the receipt of, and the
Company hereby elects to defer the payment of, director's fees in
the [percentage(s) or the fixed dollar amount(s) and for the
calendar year(s) indicated below:
Fixed Calendar
Percentage (or) Dollar Year
Amount
(i) ___________ $__________ _________
% __
(ii) ___________ $__________ _________
% __
(iii) ___________ $__________ _________
% __
(iv) ___________ $__________ _________]2,
% __ 3
(xiv) Normal Retirement Benefit. The Participant's
Normal Retirement Benefit, as defined in Article IV of the Plan,
A-2
<PAGE>
is ________________________________________ [Dollars
($_______________)]2 per month, payable for 180 months.
(xv) Survivor Benefit. [If the Participant is Insurable,
the Participant's Survivor Benefit, payable pursuant to Section
3(a) of Article V of the Plan, is the appropriate monthly amount,
payable for 180 months, as follows:
Participant's Age Monthly Amount
at Date of Death (payable for 180 months)
If the Participant is not Insurable, the discount for
interest for purposes of determining the Participant's Survivor
Benefit, if any, pursuant to ARTICLE V, Section 3(b) (i.e., the
present value of the Participant's monthly Normal Retirement
Benefit), shall be the Early Retirement Percentage set forth in
Paragraph 5 above, compounded annually.]2
[(xvi) Commencement of Benefits. Benefits provided under
the Plan shall commence on the first day of the month next
following the Participant's Early, Normal or Postponed Retirement
Date.]4
[(xvii) Condition Subsequent. The Company's obligations
to pay the Participant or his Designated Beneficiary the benefits
provided for herein are conditioned upon the nonoccurrence of the
following event(s):
[Insert description of event(s) constituting condition
subsequent as determined from time to time by the
Committee]
A-3
<PAGE>
If any such events occur, the Company shall have the right,
for a period of one (1) year following such event, to refund to
the Participant or his Designated Beneficiary, as applicable, the
deferrals the Participant has made hereunder with interest from
the date of deferral accrued at the rate of nine percent (9%) per
annum compounded annually. The payment of such refund shall
fully and completely discharge the Company's obligations
hereunder and shall fully and completely satisfy all the
Participant's and his Designated Beneficiary's rights
hereunder.]1,2
(xviii) Entire Agreement. This Agreement contains the
entire agreement and understanding by and between the Company and
the Participant [with respect to the subject matter hereof, and
no representations, promises, agreements, or understandings,
written or oral, not contained herein shall be of any force or
effect.]1,2
IN WITNESS WHEREOF, the parties have executed this Agreement
in duplicate originals as of the day and year first above
written.
SAVANNAH ELECTRIC AND POWER COMPANY
By:
Arthur M. Gignilliat, Jr.
President and Chief Executive
Officer
ATTEST:
Lavonne Calandra
A-4
<PAGE>
Corporate Secretary
(CORPORATE SEAL)
Participating Director:
(L.S.)
Participant
1 As Amended July 23, 1986. Effective July 23, 1986.
2 As Amended September 16, 1987. Effective January 1, 1987.
3 As Amended May 15, 1990. Effective January 1, 1991.
4 As Amended May 26, 1994. Effective May 1, 1994.
[adamscl] h:\wpdocs\mtd\savannah\def-comp.agt
A-5
<PAGE>
EXHIBIT B
SUPPLEMENTAL DEFERRED COMPENSATION AGREEMENT
THIS AGREEMENT is made this ____ day of _______________,
19___, between SAVANNAH ELECTRIC AND POWER COMPANY, a Georgia
corporation (hereinafter the "Company"), and
_____________________________________, a Director of the Company
(hereinafter called "Participant").
WHEREAS, the Board of Directors of the Company has approved
a Deferred Compensation Plan for the purpose of attracting and
retaining outstanding Directors of the Company; and
WHEREAS, such Deferred Compensation Plan provides that the
Participant becomes eligible to participate upon execution of a
Deferred Compensation Agreement; and
WHEREAS, the Board of Directors of the Company has approved
an increase in Director's Fees; and
WHEREAS, the Participant may elect to defer all or a portion
of the increased Director's Fees.
NOW, THEREFORE, in consideration of the mutual agreements
herein contained, the Company and the Participant agree as
follows:
(xix) Participation. This Agreement is made to evidence
the Participant's participation in the Deferred Compensation Plan
for Directors of SAVANNAH ELECTRIC AND POWER COMPANY (hereinafter
the "Plan"), to set forth the percentage or the fixed dollar
amount of the Participant's fees to be deferred, to establish the
amount of the Participant's Normal Retirement Benefit and certain
B-1
<PAGE>
Survivor Benefits under the Plan, and to set forth the Early
Retirement Percentage.
(xx) Adoption of Plan. The Plan (and all its provisions),
as it now exists and as it may be amended hereafter, is
incorporated herein and made a part of this Agreement.
(xxi) Definitions. When used herein, the terms which
are defined in the Plan shall have the meanings given them in the
Plan, unless a different meaning is clearly required by the
context.
(xxii) No Interest Created. Neither the Participant nor
his Designated Beneficiary shall have any interest in any assets
of the Company, including policies of insurance. The Participant
and his Designated Beneficiary shall have only the right to
receive the benefits under the Plan and this Agreement.
(xxiii) Early Retirement Percentage. The Participant's
Early Retirement Percentage with respect to this Supplemental
Deferred Compensation Agreement is ____________________ percent
(___%).
(xxiv) Deferrals. Pursuant to Article III of the Plan,
the Participant hereby elects to defer the receipt of, and the
Company hereby elects to defer the payment of, increased
Director's Fees in the [percentage(s) or the fixed dollar
amount(s) and for the calendar year(s) indicated below, which
years should equal the same number of calendar years remaining
with respect to the Deferred Compensation Agreement currently in
effect for the Participant:
B-2
<PAGE>
Fixed Calendar
Percentage (or) Dollar Year
Amount
(i) ___________ $__________ _________
% __
(ii) ___________ $__________ _________
% __
(iii) ___________ $__________ _________
% __
(iv) ___________ $__________ _________
% __
(xxv) Normal Retirement Benefit. The Participant's
Normal Retirement Benefit with respect to this Supplemental
Deferred Compensation Agreement, as defined in Article IV of the
Plan, is ________________________________________ Dollars
($_______________) per month, payable for 180 months.
(xxvi) Survivor Benefit. If the Participant is
Insurable, the Participant's Survivor Benefit, payable pursuant
to Section 3(a) of Article V of the Plan, is the appropriate
monthly amount, payable for 180 months, as follows:
Participant's Age Monthly Amount
at Date of Death (payable for 180 months)
If the Participant is not Insurable, the discount for
interest for purposes of determining the Participant's Survivor
Benefit, if any, pursuant to ARTICLE V, Section 3(b) (i.e., the
present value of the Participant's monthly Normal Retirement
B-3
<PAGE>
Benefit), shall be the Early Retirement Percentage set forth in
Paragraph 5 above, compounded annually.
(xxvii) Commencement of Benefits. Benefits provided under
the Plan shall commence on the first day of the month next
following the Participant's Early, Normal or Postponed Retirement
Date.
(xxviii) Condition Subsequent. The Company's obligations
to pay the Participant or his Designated Beneficiary the benefits
provided for herein are conditioned upon the nonoccurrence of the
following event(s):
[Insert description of event(s) constituting condition
subsequent as determined from time to time by the
Committee]
If any such events occur, the Company shall have the right,
for a period of one (1) year following such event, to refund to
the Participant or his Designated Beneficiary, as applicable, the
deferrals made under this Supplemental Deferred Compensation
Agreement the Participant has made hereunder with interest from
the date of deferral accrued at the rate of nine percent (9%) per
annum compounded annually. The payment of such refund shall
fully and completely discharge the Company's obligations
hereunder and shall fully and completely satisfy all the
Participant's and his Designated Beneficiary's rights hereunder.
(xxix) Entire Agreement. This Agreement contains the
entire agreement and understanding by and between the Company and
B-4
<PAGE>
the Participant with respect to the subject matter hereof, and no
representations, promises, agreements, or understandings, written
or oral, not contained herein shall be of any force or effect.
IN WITNESS WHEREOF, the parties have executed this Agreement
in duplicate originals as of the day and year first above
written.
SAVANNAH ELECTRIC AND POWER COMPANY
By:
Arthur M. Gignilliat, Jr.
President and Chief Executive
Officer
ATTEST:
Lavonne K. Calandra
Corporate Secretary
(CORPORATE SEAL)
Participating Director:
(L.S.)
Participant
[adamscl] h:\wpdocs\mtd\savannah\def-comp.sup
B-5
Exhibit 24(a)
January 16, 1995
A. W. Dahlberg, W. L. Westbrook, Tommy Chisholm and Wayne Boston
Dear Sirs:
The Southern Company proposes to file or join in the filing
of statements under the Securities Exchange Act of 1934, as
amended, with the Securities and Exchange Commission with respect
to the following: (1) the filing of this Company's Annual Report
on Form 10-K for the year ended December 31, 1994, and (2) the
filing of Quarterly Reports on Form 10-Q and Current Reports on
Form 8-K during 1995.
The Southern Company also proposes to file a registration
statement or statements under the Securities Act of 1933, as
amended, with the Securities and Exchange Commission with respect
to the issuance by this Company of additional shares of its
common stock pursuant to the Dividend Reinvestment and Stock
Purchase Plan.
The Southern Company and the undersigned directors and
officers of said Company, individually as a director and/or as an
officer of the Company, hereby make, constitute and appoint each
of you our true and lawful Attorney for each of us and in each of
our names, places and steads to sign and cause to be filed with
the Securities and Exchange Commission in connection with the<PAGE>
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foregoing said Annual Report on Form 10-K and any appropriate
amendment or amendments thereto and any necessary exhibits, said
Quarterly Reports on Form 10-Q and any necessary exhibits, any
Current Reports on Form 8-K and any necessary exhibits, and said
registration statement or statements and appropriate amendment or
amendments (including post-effective amendments) thereto, to be
accompanied by a prospectus or prospectuses and any appropriately
amended or supplemented prospectus or prospectuses and any
necessary exhibits.
Yours very truly,
THE SOUTHERN COMPANY
By /s/A. W. Dahlberg
President<PAGE>
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/s/Elmer B. Harris
/s/W. P. Copenhaver /s/Earl D. McLean, Jr.
/s/A. D. Correll /s/William A. Parker, Jr.
/s/A. W. Dahlberg /s/William J. Rushton, III
/s/Paul J. DeNicola /s/Gloria M. Shatto
/s/Jack Edwards /s/Herbert Stockham
/s/H. Allen Franklin /s/W. L. Westbrook
/s/Bruce S. Gordon /s/Tommy Chisholm
/s/L. G. Hardman III /s/W. Dean Hudson<PAGE>
Extract from minutes of meeting of the board of directors of The
Southern Company.
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RESOLVED: That for the purpose of signing the
Company s Annual Report on Form 10-K for the year ended
December 31, 1994, 1995 Quarterly Reports on Form 10-Q, and
Current Reports on Form 8-K and of remedying any
deficiencies with respect thereto by appropriate amendment
or amendments, this Company, the members of its board of
directors, and its officers, are authorized to give their
several powers of attorney to A. W. Dahlberg, W. L.
Westbrook, Tommy Chisholm, and Wayne Boston.
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The undersigned officer of The Southern Company does
hereby certify that the foregoing is a true and correct copy of a
resolution duly and regularly adopted at a meeting of the board
of directors of The Southern Company, duly held on January 16,
1995, at which a quorum was in attendance and voting throughout,
and that said resolution has not since been rescinded but is
still in full force and effect.
Dated March 23, 1995 THE SOUTHERN COMPANY
By /s/Tommy Chisholm
Secretary<PAGE>
Exhibit 24(b)
February 24, 1995
W. L. Westbrook and Wayne Boston
64 Perimeter Center East
Atlanta, Georgia 30346
Dear Sirs:
Alabama Power Company proposes to file with the Securities
and Exchange Commission, under the Securities Exchange Act of
1934, (1) its Annual Report on Form 10-K for the year ended
December 31, 1994, and (2) its quarterly reports on Form 10-Q
during 1995.
Alabama Power Company and the undersigned directors and
officers of said Company, individually as a director and/or as an
officer of the Company, hereby make, constitute and appoint
W. L. Westbrook and Wayne Boston our true and lawful Attorneys
for each of us and in each of our names, places and steads to
sign and cause to be filed with the Securities and Exchange
Commission in connection with the foregoing said Annual Report on
Form 10-K, quarterly reports on Form 10-Q, and any appropriate
amendment or amendments thereto and any necessary exhibits.
Yours very truly,
ALABAMA POWER COMPANY
By /s/Elmer B. Harris
President and Chief Executive
Officer<PAGE>
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______________________________
/s/Whit Armstrong John T. Porter
/s/Philip E. Austin /s/Gerald H. Powell
/s/Margaret A. Carpenter /s/Robert D. Powers
/s/A. W. Dahlberg /s/John W. Rouse
______________________________
/s/Peter V. Gregerson, Sr. William J. Rushton, III
/s/Bill M. Guthrie /s/James H. Sanford
/s/Elmer B. Harris /s/John Cox Webb, IV
/s/Crawford T. Johnson, III /s/John W. Woods
/s/Carl E. Jones, Jr. /s/William B. Hutchins, III
/s/Wallace D. Malone, Jr. /s/Art P. Beattie
/s/William V. Muse /s/David L. Whitson<PAGE>
Extract from minutes of meeting of the board of directors of
Alabama Power Company.
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RESOLVED: That for the purpose of signing and filing
with the Securities and Exchange Commission under the
Securities Exchange Act of 1934, Alabama Power Company's
annual report on Form 10-K for the year ended December 31,
1994, and of remedying any deficiencies with respect thereto
by appropriate amendment or amendments, and also filing
quarterly reports on Form 10-Q, Alabama Power Company, the
members of its Board of Directors, and its officers are
authorized to give their several powers of attorney to
W. L. Westbrook and Wayne Boston, in substantially the form
of power of attorney presented to this meeting.
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The undersigned officer of Alabama Power Company does
hereby certify that the foregoing is a true and correct copy of
resolution duly and regularly adopted at a meeting of the board
of directors of Alabama Power Company, duly held on February 24,
1995, at which a quorum was in attendance and voting throughout,
and that said resolution has not since been rescinded but is
still in full force and effect.
Dated March 23, 1995 ALABAMA POWER COMPANY
By /s/Wayne Boston
Assistant Secretary<PAGE>
Exhibit 24(c)
February 15, 1995
W. L. Westbrook and Wayne Boston
Dear Sirs:
Georgia Power Company proposes to file or join in the filing
of statements under the Securities Exchange Act of 1934 with the
Securities and Exchange Commission with respect to the following:
(1) the filing of its Annual Report on Form 10-K for the year
ended December 31, 1994, and (2) the filing of its quarterly
reports on Form 10-Q during 1995.
Georgia Power Company and the undersigned directors and
officers of said Company, individually as a director and/or as an
officer of the Company, hereby make, constitute and appoint each
of you our true and lawful Attorney for each of us and in each of
our names, places and steads to sign and cause to be filed with
the Securities and Exchange Commission in connection with the
foregoing said Annual Report on Form 10-K, quarterly reports on
Form 10-Q and any appropriate amendment or amendments thereto and
any necessary exhibits.
Yours very truly,
GEORGIA POWER COMPANY
By /s/H. Allen Franklin
President and Chief Executive
Officer<PAGE>
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/s/Bennett A. Brown /s/G. Joseph Prendergast
/s/A. W. Dahlberg /s/Herman J. Russell
______________________________ ______________________________
William A. Fickling, Jr. Gloria M. Shatto
/s/H. Allen Franklin /s/William Jerry Vereen
/s/L. G. Hardman III /s/Carl Ware
/s/Warren Y. Jobe /s/Thomas R. Williams
/s/James R. Lientz, Jr. /s/C. B. Harreld
______________________________
William A. Parker, Jr. /s/Judy M. Anderson<PAGE>
Extract from minutes of meeting of the board of directors of
Georgia Power Company.
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RESOLVED: That for the purpose of signing reports
under the Securities Exchange Act of 1934 to be filed with
the Securities and Exchange Commission with respect to (a)
the filing of the Company's Annual Report on Form 10-K for
the year ended December 31, 1994, and (b) quarterly filings
on Form 10-Q during 1995; and of remedying any deficiencies
with respect thereto by appropriate amendment or amendments,
this Company and the members of its Board of Directors
authorize their several powers of attorney to W. L.
Westbrook and Wayne Boston.
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The undersigned officer of Georgia Power Company does
hereby certify that the foregoing is a true and correct copy of
resolution duly and regularly adopted at a meeting of the board
of directors of Georgia Power Company, duly held on February 15,
1995, at which a quorum was in attendance and voting throughout,
and that said resolution has not since been rescinded but is
still in full force and effect.
Dated March 23, 1995 GEORGIA POWER COMPANY
By /s/Wayne Boston
Assistant Secretary<PAGE>
Exhibit 24(d)
February 24, 1995
Mr. W. L. Westbrook Mr. Wayne Boston
Southern Company Services, Inc. Southern Company Services, Inc.
64 Perimeter Center East 64 Perimeter Center East
Atlanta, Georgia 30346 Atlanta, Georgia 30346
Dear Sirs:
Re: Forms 10-K and 10-Q
Gulf Power Company proposes to file or join in the filing of
statements under the Securities Exchange Act of 1934 with the
Securities and Exchange Commission with respect to the following:
(1) its Annual Report on Form 10-K for the year ended
December 31, 1994, and (2) its 1995 quarterly reports on Form
10-Q.
Gulf Power Company and the undersigned Directors and
Officers of said Company, individually as a Director and/or as an
Officer of the Company, hereby make, constitute and appoint each
of you our true and lawful Attorney for each of us and in each of
our names, places and steads to sign and cause to be filed with
the Securities and Exchange Commission in connection with the
foregoing said Annual Report on Form 10-K, quarterly reports on
Form 10-Q and any appropriate amendment or amendments thereto and
any necessary exhibits.
Yours very truly,
GULF POWER COMPANY
By /s/Travis J. Bowden
President and Chief Executive
Officer<PAGE>
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/s/Reed Bell /s/C. Walter Ruckel
/s/Travis J. Bowden /s/Joseph K. Tannehill
/s/Paul J. DeNicola /s/Arlan E. Scarbrough
/s/Fred C. Donovan /s/Ronnie R. Labrato
/s/W. D. Hull, Jr. /s/Warren E. Tate<PAGE>
Extract from minutes of meeting of the board of directors of Gulf
Power Company.
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RESOLVED, That for the purpose of signing the
statements under the Securities Exchange Act of 1934 to be
filed with the Securities and Exchange Commission with
respect to the filing of this Company's Annual Report on
Form 10-K for the year ended December 31, 1994, and its 1995
quarterly reports on Form 10-Q, and of remedying any
deficiencies with respect thereto by appropriate amendment
or amendments (both before and after such statements become
effective), this Company, the members of its Board of
Directors, and its Officers, are authorized to give their
several powers of attorney to W. L. Westbrook and Wayne
Boston.
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The undersigned officer of Gulf Power Company does
hereby certify that the foregoing is a true and correct copy of
resolution duly and regularly adopted at a meeting of the board
of directors of Gulf Power Company, duly held on February 24,
1995, at which a quorum was in attendance and voting throughout,
and that said resolution has not since been rescinded but is
still in full force and effect.
Dated March 23, 1995 GULF POWER COMPANY
By /s/Wayne Boston
Assistant Secretary<PAGE>
Exhibit 24(e)
February 22, 1995
W. L. Westbrook and Wayne Boston
Dear Sirs:
Mississippi Power Company proposes to file or join in the
filing of statements under the Securities Exchange Act of 1934
with the Securities and Exchange Commission with respect to the
following: (1) the filing of its Annual Report on Form 10-K for
the year ended December 31, 1994, and (2) the filing of its
quarterly reports on Form 10-Q during 1995.
Mississippi Power Company and the undersigned directors and
officers of said Company, individually as a director and/or as an
officer of the Company, hereby make, constitute and appoint each
of you our true and lawful Attorney for each of us and in each of
our names, places and steads to sign and cause to be filed with
the Securities and Exchange Commission in connection with the
foregoing said Annual Report on Form 10-K, quarterly reports on
Form 10-Q and any appropriate amendment or amendments thereto and
any necessary exhibits.
Yours very truly,
MISSISSIPPI POWER COMPANY
By /s/David M. Ratcliffe
President and Chief Executive
Officer<PAGE>
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/s/Paul J. DeNicola /s/David M. Ratcliffe
/s/Edwin E. Downer /s/Gerald J. St. Pe'
/s/Robert S. Gaddis /s/N. Eugene Warr
/s/Walter H. Hurt, III /s/Michael W. Southern
/s/Aubrey K. Lucas /s/Frances V. Turnage<PAGE>
Extract from minutes of meeting of the board of directors of
Mississippi Power Company.
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RESOLVED: That the members of this Company's Board of
Directors and its officers are authorized to give their
several powers of attorney to W. L. Westbrook and Wayne
Boston for the purpose of signing the statements under the
Securities Exchange Act of 1934 to be filed with the
Securities and Exchange Commission with respect to the
filing of the Company's Annual Report on Form 10-K for the
year ended December 31, 1994, and the filing of this
Company's quarterly reports to the Securities and Exchange
Commission on Form 10-Q for the year 1995.
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The undersigned officer of Mississippi Power Company
does hereby certify that the foregoing is a true and correct copy
of resolution duly and regularly adopted at a meeting of the
board of directors of Mississippi Power Company, duly held on
February 22, 1995, at which a quorum was in attendance and voting
throughout, and that said resolution has not since been rescinded
but is still in full force and effect.
Dated March 23, 1995 MISSISSIPPI POWER COMPANY
By /s/Wayne Boston
Assistant Secretary<PAGE>
Exhibit 24(f)
February 15, 1995
W. L. Westbrook and Wayne Boston
Dear Sirs:
Savannah Electric and Power Company proposes to file with
the Securities and Exchange Commission, under the Securities
Exchange Act of 1934, (1) its Annual Report on Form 10-K for the
year ended December 31, 1994, and (2) its quarterly reports on
Form 10-Q during 1995.
Savannah Electric and Power Company and the undersigned
directors and officers of said Company, individually as a
director and/or as an officer of the Company, hereby make,
constitute and appoint W. L. Westbrook and Wayne Boston our true
and lawful Attorneys for each of us and in each of our names,
places and steads to sign and cause to be filed with the
Securities and Exchange Commission in connection with the
foregoing said Annual Report on Form 10-K, quarterly reports on
Form 10-Q, and any appropriate amendment or amendments thereto
and any necessary exhibits.
Yours very truly,
SAVANNAH ELECTRIC AND POWER COMPANY
By /s/Arthur M. Gignilliat, Jr.
President and Chief Executive
Officer<PAGE>
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/s/Helen Q. Artley /s/James M. Piette
/s/Paul J. DeNicola /s/Arnold M. Tenenbaum
/s/Brian R. Foster /s/Frederick F. Williams, Jr.
/s/Arthur M. Gignilliat, Jr. /s/K. R. Willis
/s/Walter D. Gnann /s/Lavonne K. Calandra
/s/Robert B. Miller, III /s/Nancy E. Frankenhauser<PAGE>
Extract from minutes of meeting of the board of directors of
Savannah Electric and Power Company.
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RESOLVED: That for the purpose of signing statements
required to be filed by the Company under the Securities
Exchange Act of 1934 to be filed with the Securities and
Exchange Commission including (a) the filing of this
Company's Annual Report on Form 10-K for the year ended
December 31, 1994, and (b) quarterly reports on Form 10-Q
during calendar year 1995; and of remedying any deficiencies
with respect thereto by appropriate amendment or amendments,
this Company and the members of its Board of Directors, and
its officers, be and they are hereby authorized to give
their several powers of attorney to W. L. Westbrook and
Wayne Boston for the purposes set out above.
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The undersigned officer of Savannah Electric and Power
Company does hereby certify that the foregoing is a true and
correct copy of resolution duly and regularly adopted at a
meeting of the board of directors of Savannah Electric and Power
Company, duly held on February 15, 1995, at which a quorum was in
attendance and voting throughout, and that said resolution has
not since been rescinded but is still in full force and effect.
Dated March 23, 1995 SAVANNAH ELECTRIC AND POWER COMPANY
By /s/Wayne Boston
Assistant Secretary<PAGE>
