SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
-------------------------
FORM 10-Q
(X) QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the Quarter Ended March 31, 1995
OR
( ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the Transition Period from _____to_____
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Commission Registrant, State of Incorporation, I.R.S. Employer
File Number Address and Telephone Number Identification No.
1-3526 The Southern Company 58-0690070
(A Delaware Corporation)
64 Perimeter Center East
Atlanta, Georgia 30346
(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>
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____
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Description of Shares Outstanding
Registrant Common Stock at April 30, 1995
The Southern Company Par Value $5 Per Share 665,468,159
Alabama Power Company Par Value $40 Per Share 5,608,955
Georgia Power Company No Par Value 7,761,500
Gulf Power Company No Par Value 992,717
Mississippi Power Company Without Par Value 1,121,000
Savannah Electric and Power Company Par Value $5 Per Share 10,844,635
</TABLE>
This combined Form 10-Q is separately filed by The Southern Company,
Alabama Power Company, Georgia Power Company, Gulf Power Company, Mississippi
Power Company and Savannah Electric and Power Company. Information contained
herein relating to any individual company is filed by such company on its own
behalf. Each company makes no representation as to information relating to the
other companies.
<PAGE>
3
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Table of Contents
PART I
Page
Definitions
4
The Southern Company and Subsidiary Companies
Management's Opinion as to Fair Statement of Results 6
Condensed Statements of Income 7
Condensed Statements of Cash Flows 8
Condensed Balance Sheets 9
Management's Discussion and Analysis of Results of Operations and Financial Condition 11
Alabama Power Company
Management's Opinion as to Fair Statement of Results 17
Review by Independent Public Accountants 17
Condensed Statements of Income 18
Condensed Statements of Cash Flows 19
Condensed Balance Sheets 20
Management's Discussion and Analysis of Results of Operations and Financial Condition 22
Exhibit 1 - Report of Independent Public Accountants 26
Georgia Power Company
Management's Opinion as to Fair Statement of Results 28
Review by Independent Public Accountants 28
Condensed Statements of Income 29
Condensed Statements of Cash Flows 30
Condensed Balance Sheets 31
Management's Discussion and Analysis of Results of Operations and Financial Condition 33
Exhibit 1 - Report of Independent Public Accountants 38
Gulf Power Company
Management's Opinion as to Fair Statement of Results 40
Condensed Statements of Income 41
Condensed Statements of Cash Flows 42
Condensed Balance Sheets 43
Management's Discussion and Analysis of Results of Operations and Financial Condition 45
Mississippi Power Company
Management's Opinion as to Fair Statement of Results 50
Condensed Statements of Income 51
Condensed Statements of Cash Flows 52
Condensed Balance Sheets 53
Management's Discussion and Analysis of Results of Operations and Financial Condition 55
Savannah Electric and Power Company
Management's Opinion as to Fair Statement of Results 60
Condensed Statements of Income 61
Condensed Statements of Cash Flows 62
Condensed Balance Sheets 63
Management's Discussion and Analysis of Results of Operations and Financial Condition 65
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4
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Table of Contents
(Continued)
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Page
Notes to the Condensed Financial Statements 68
PART II
Item 1. Legal Proceedings 71
Item 6. Exhibits and Reports on Form 8-K 71
Signatures 73
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DEFINITIONS
TERM MEANING
AFUDC..................... Allowance for Funds Used During Construction
ALABAMA................... Alabama Power Company
Clean Air Act ............ Clean Air Act Amendments of 1990
ECO Plan.................. Environmental Compliance Overview Plan
Energy Act................ Energy Policy Act of 1992
FASB...................... Financial Accounting Standards Board
FERC...................... Federal Energy Regulatory Commission
GEORGIA................... Georgia Power Company
GULF...................... Gulf Power Company
IRS....................... Internal Revenue Service
MEAG...................... Municipal Electric Authority of Georgia
MISSISSIPPI............... Mississippi Power Company
NRC....................... Nuclear Regulatory Commission
OPC....................... Oglethorpe Power Corporation
PEP....................... Performance Evaluation Plan
PSC ...................... Public Service Commission
SAVANNAH ................. Savannah Electric and Power Company
SCS....................... Southern Company Services, Inc.
SEC....................... Securities and Exchange Commission
SEGCO..................... Southern Electric Generating Company
SOUTHERN ................. The Southern Company
<PAGE>
5
THE SOUTHERN COMPANY
AND SUBSIDIARY COMPANIES
<PAGE>
6
THE SOUTHERN COMPANY AND SUBSIDIARY COMPANIES
MANAGEMENT'S OPINION AS TO FAIR STATEMENT OF RESULTS
The condensed financial statements of SOUTHERN included herein have been
prepared by SOUTHERN, without audit, pursuant to the rules and regulations of
the SEC. In the opinion of SOUTHERN's management, subject to the effect of such
adjustments, if any, as might have been required had the outcome of the
uncertainty with respect to the actions of the regulators regarding the
recoverability of GEORGIA's investment in the Rocky Mountain pumped storage
hydroelectric project as more fully discussed in Note (F) to the Condensed
Financial Statements herein, been known, the information furnished herein
reflects all adjustments (which, except for the provision for separation
benefits, included only normal recurring adjustments) necessary to present
fairly the results for the periods ended March 31, 1995 and 1994. Certain
information and footnote disclosures normally included in financial statements
prepared in accordance with generally accepted accounting principles have been
condensed or omitted pursuant to such rules and regulations, although SOUTHERN
believes that the disclosures are adequate to make the information presented not
misleading. It is suggested that these condensed financial statements be read in
conjunction with the financial statements and the notes thereto included in
SOUTHERN's latest annual report on Form 10-K.
<PAGE>
7
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THE SOUTHERN COMPANY AND SUBSIDIARY COMPANIES
CONDENSED STATEMENTS OF INCOME (UNAUDITED)
(Stated in Thousands of Dollars)
For the Three Months
Ended March 31,
1995 1994
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OPERATING REVENUES $1,929,043 $1,932,430
---------- ----------
OPERATING EXPENSES:
Operation--
Fuel 449,782 479,991
Purchased power 58,538 80,660
Other 360,013 423,323
Maintenance 159,412 173,787
Depreciation and amortization 212,322 200,210
Amortization of deferred Plant Vogtle expenses, net (Note E) 28,157 12,618
Taxes other than income taxes 123,448 118,936
Federal and state income taxes 151,992 112,593
---------- ----------
Total operating expenses 1,543,664 1,602,118
---------- ----------
OPERATING INCOME 385,379 330,312
OTHER INCOME (EXPENSE):
Allowance for equity funds used during construction 3,119 3,283
Interest income 7,902 6,098
Other, net (16,697) (15,876)
Income taxes applicable to other income 11,680 6,061
---------- ----------
INCOME BEFORE INTEREST CHARGES 391,383 329,878
---------- ----------
INTEREST CHARGES AND PREFERRED DIVIDENDS:
Interest on long-term debt 136,398 142,571
Allowance for debt funds used during construction (5,848) (4,384)
Interest on interim obligations 13,598 9,249
Amortization of debt discount, premium and expense, net 8,119 7,361
Other interest charges 10,324 12,144
Preferred dividends of subsidiary companies 22,450 21,334
---------- ----------
Net interest charges and preferred dividends 185,041 188,275
---------- ----------
CONSOLIDATED NET INCOME $ 206,342 $ 141,603
========== ==========
AVERAGE NUMBER OF SHARES OF
COMMON STOCK OUTSTANDING (Thousands) 661,393 646,452
EARNINGS PER SHARE OF COMMON STOCK $0.31 $0.22
CASH DIVIDENDS PAID PER SHARE
OF COMMON STOCK $0.305 $0.295
The accompanying notes as they relate to SOUTHERN are an integral part of these condensed statements.
</TABLE>
<PAGE>
8
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THE SOUTHERN COMPANY AND SUBSIDIARY COMPANIES
CONDENSED STATEMENTS OF CASH FLOWS (UNAUDITED)
(Stated in Thousands of Dollars)
For the Three Months
Ended March 31,
1995 1994
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OPERATING ACTIVITIES:
Consolidated net income $ 206,342 $ 141,603
Adjustments to reconcile consolidated net income to net cash provided by
operating activities--
Depreciation and amortization 270,448 259,093
Deferred income taxes, net 22,208 (2,844)
Allowance for equity funds used during construction (3,119) (3,283)
Deferred Plant Vogtle costs 28,157 12,618
Provision for separation benefits - 91,466
Other, net 21,340 (30,373)
Changes in certain current assets and liabilities--
Receivables, net 161,465 177,397
Fossil fuel stock (46,374) (30,907)
Materials and supplies 9,418 2,892
Accounts payable (189,441) (94,587)
Other 14,691 (62,362)
--------- ---------
Net cash provided from operating activities 495,135 460,713
--------- ---------
INVESTING ACTIVITIES:
Gross property additions (312,714) (319,410)
Other (70,085) (40,133)
--------- ---------
Net cash used in investing activities (382,799) (359,543)
--------- ---------
FINANCING ACTIVITIES:
Proceeds--
Common stock 180,273 121,767
First mortgage bonds - 35,000
Pollution control bonds - 52,465
Other long-term debt 28,745 264,653
Retirements--
Preferred stock (1,000) (1,000)
First mortgage bonds (1,350) (72,128)
Pollution control bonds (70) (52,465)
Other long-term debt (52,653) (37,652)
Interim obligations, net (95,834) (181,833)
Payment of common stock dividends (201,866) (191,262)
Miscellaneous 4,666 (3,702)
--------- ---------
Net cash provided from (used in) financing activities (139,089) (66,157)
--------- ---------
NET CHANGE IN CASH AND CASH EQUIVALENTS (26,753) 35,013
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD 139,309 178,346
--------- ---------
CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 112,556 $ 213,359
========= =========
SUPPLEMENTAL CASH FLOW INFORMATION:
Cash paid during the period for--
Interest (net of amount capitalized) $161,369 $166,489
Income taxes 8,827 49,356
The accompanying notes as they relate to SOUTHERN are an integral part of these condensed statements.
</TABLE>
<PAGE>
9
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THE SOUTHERN COMPANY AND SUBSIDIARY COMPANIES
CONDENSED BALANCE SHEETS
(Stated in Thousands of Dollars)
ASSETS
At March 31,
1995 At December 31,
(Unaudited) 1994
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UTILITY PLANT:
Plant in service $29,315,862 $29,208,380
Less accumulated provision for depreciation 9,756,993 9,576,577
----------- -----------
19,558,869 19,631,803
Nuclear fuel, at amortized cost 227,156 238,055
Construction work in progress 1,370,530 1,247,427
----------- -----------
Total 21,156,555 21,117,285
------------ -----------
OTHER PROPERTY AND INVESTMENTS:
Argentine operating concession, being amortized 442,946 445,834
Nuclear decommissioning trusts 142,383 125,311
Miscellaneous 238,405 223,504
----------- -----------
Total 823,734 794,649
----------- -----------
CURRENT ASSETS:
Cash and cash equivalents 112,556 139,309
Receivables, less accumulated provisions for uncollectible accounts
of $9,449 at March 31, 1995 and $9,129 at December 31, 1994 903,081 1,057,928
Fossil fuel stock, at average cost 396,914 350,540
Materials and supplies, at average cost 543,391 552,809
Prepayments 227,635 193,983
Miscellaneous 78,052 73,614
----------- -----------
Total 2,261,629 2,368,183
----------- -----------
DEFERRED CHARGES:
Deferred charges related to income taxes 1,436,285 1,454,190
Deferred Plant Vogtle costs (Note E) 403,935 432,092
Debt expense and loss, being amortized 341,760 345,897
Miscellaneous 541,054 530,591
----------- ----------
Total 2,723,034 2,762,770
----------- -----------
TOTAL ASSETS $26,964,952 $27,042,887
=========== ===========
The accompanying notes as they relate to SOUTHERN are an integral part of these condensed statements.
</TABLE>
<PAGE>
10
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THE SOUTHERN COMPANY AND SUBSIDIARY COMPANIES
CONDENSED BALANCE SHEETS
(Stated in Thousands of Dollars)
CAPITALIZATION AND LIABILITIES
At March 31,
1995 At December 31,
(Unaudited) 1994
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CAPITALIZATION:
Common stock, par value $5 per share -
Authorized - 1 billion shares;
Outstanding - March 31, 1995: 665,467,477 shares
December 31, 1994: 656,528,126 shares $ 3,327,337 $ 3,282,643
Paid-in capital 1,846,061 1,711,366
Premium on preferred stock 1,012 1,012
Retained earnings 3,193,995 3,191,228
------------ -----------
8,368,405 8,186,249
Preferred stock of subsidiaries 1,332,203 1,332,203
Guaranteed interest in preferred securities of partnership 100,000 100,000
Long-term debt 7,242,629 7,592,826
------------ -----------
Total 17,043,237 17,211,278
------------- ------------
CURRENT LIABILITIES:
Amount of securities due within one year 554,924 229,925
Notes payable 371,500 575,200
Commercial paper 510,350 402,484
Accounts payable 576,866 806,459
Customer deposits 103,226 101,575
Taxes accrued--
Federal and state income 107,466 243
Other 107,650 152,979
Interest accrued 175,148 190,094
Vacation pay accrued 89,625 87,431
Miscellaneous 242,562 232,325
------------ -----------
Total 2,839,317 2,778,715
------------ -----------
DEFERRED CREDITS AND OTHER LIABILITIES:
Accumulated deferred income taxes 4,002,919 4,007,427
Deferred credits related to income taxes 975,021 986,933
Accumulated deferred investment tax credits 849,406 857,387
Disallowed Plant Vogtle capacity buyback costs 59,607 60,490
Prepaid capacity revenues, net 136,679 138,421
Miscellaneous 1,058,766 1,002,236
----------- -----------
Total 7,082,398 7,052,894
----------- ------------
TOTAL CAPITALIZATION AND LIABILITIES $26,964,952 $27,042,887
=========== ===========
The accompanying notes as they relate to SOUTHERN are an integral part of these condensed statements.
</TABLE>
<PAGE>
11
THE SOUTHERN COMPANY AND SUBSIDIARY COMPANIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS
OF OPERATIONS AND FINANCIAL CONDITION
Results of Operations
Earnings
SOUTHERN's earnings for the first three months of 1995 were higher than earnings
recorded in the same period of 1994 primarily because of costs recorded in the
prior period associated with workforce reduction programs for GEORGIA and the
system service company, SCS. Consolidated net income was $206 million for the
first quarter of 1995, compared to $142 million for the first quarter of 1994.
Earnings per share were $0.31 in the first quarter of 1995, compared to $0.22 in
the corresponding period of 1994. Disregarding the after-tax effect of the
workforce reduction programs of $57 million ($0.09 per share), earnings would
have risen slightly above 1994's results.
Revenues
Despite the adverse effects of weather, retail energy sales rose 2.2% primarily
because of the improvement in the economy. Energy sales to residential,
commercial and industrial customers increased (decreased) (0.4%), 2.3% and 4.1%,
respectively. Wholesale energy sales decreased due to reduced demand and
scheduled reductions in off-system contracts. Capacity revenues for the first
quarter of 1995 were $14 million less than in the first quarter of 1994
primarily because GEORGIA completed the third sale of a portion of Plant Scherer
Unit 4 in June 1994. The final sale in a series of four transactions for the
sale of this generating unit is scheduled for June 1995. The generation from
this unit has been dedicated to unit power sales.
Expenses
Fuel expense for the first three months of 1995, compared to the corresponding
period of 1994, decreased due primarily to the displacement of fossil and
nuclear generation with hydro generation and the lower average cost of fuel
consumed. Purchased power expense decreased because of the reduction in capacity
buyback payments by GEORGIA to the co-owners of Plant Vogtle. See Note (E) to
the Condensed Financial Statements herein for information regarding the Georgia
PSC's retail rate order that required the levelization of capacity buyback
expense for Plant Vogtle.
Other operation expense in the first quarter of 1994 included approximately
$93 million for costs associated with workforce reduction programs. Maintenance
expenses decreased due to the timing of scheduled maintenance on generating
units. The increase in depreciation and amortization is attributable to
increased investment in plant. Income tax expense in the first quarter of 1994
reflects the effect of the workforce reduction programs.
Interest Charges and Dividends on Preferred Stock
The decrease in interest on long-term debt reflects the SOUTHERN system's
efforts to decrease its capital costs. However, since January 1994, interest
rates have risen and SOUTHERN's subsidiaries have outstanding a number of
securities with interest or dividend rates that vary according to prevailing
market conditions. Interest on interim obligations rose because of higher
interest rates on an increased average amount of short-term debt outstanding.
<PAGE>
12
THE SOUTHERN COMPANY AND SUBSIDIARY COMPANIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS
OF OPERATIONS AND FINANCIAL CONDITION
Results of Operations (Continued)
Allowance for Funds Used During Construction
AFUDC represents the cost of capital charged to utility plant under construction
and not included in rate base. The equity portion represents non-cash income.
However, when facilities are completed and included in rate base, previously
capitalized amounts significantly increase cash flow because revenues are higher
as a result of the increased rate base and additional depreciation expense.
Future Earnings Potential
The results of operations discussed above are not necessarily indicative of
future earnings potential. The level of future earnings is contingent upon
numerous factors ranging from growth in energy sales to a less regulated, more
competitive environment.
Reference is made to the Notes to the Condensed Financial Statements herein
for further discussion of various uncertainties and legal proceedings related
to: the actions of regulators regarding the recovery of GEORGIA's investment in
the Rocky Mountain pumped storage hydroelectric project; a civil suit filed
against ALABAMA related to financing agreements; a tax issue regarding GEORGIA's
tax accounting for the sale in 1984 of an interest in Plant Vogtle and related
capacity and energy buyback commitments; proceedings regarding GEORGIA's
recovery of demand-side conservation program costs; and the outcome of
proceedings initiated by the FERC to determine the appropriate return on equity
on wholesale power and transmission contracts.
Compliance costs related to the Clean Air Act will reduce earnings if such
increased costs cannot be offset. The Clean Air Act is discussed under
"Environmental Matters" in Item 7 - Management's Discussion and Analysis in
SOUTHERN's 1994 Annual Report on Form 10-K.
Future earnings in the near term will also depend upon growth in electric
sales which are subject to a number of factors. Traditionally, these factors
have included changes in contracts with neighboring utilities, energy
conservation practiced by customers, the elasticity of demand, weather,
competition, and the rate of economic growth in SOUTHERN's service area. The
enactment of the Energy Act is beginning to have a dramatic effect on the
electric utility industry. A discussion of the potential impact of the Energy
Act and particularly its effect on competition is found under "Future Earnings
Potential" in Item 7 - Management's Discussion and Analysis in SOUTHERN's 1994
Annual Report on Form 10-K.
The staff of the SEC has questioned certain of the current accounting
practices of the electric utility industry regarding the recognition,
measurement and classification of decommissioning costs for nuclear generating
stations in financial statements. Further discussion of this issue is found in
"Future Earnings Potential" in Item 7 -Management's Discussion and Analysis in
SOUTHERN's 1994 Annual Report on Form 10-K.
Reference is made to Note 3 to the financial statements in Item 8 of
SOUTHERN's 1994 Annual Report on Form 10-K for information on certain
environmental contingencies.
<PAGE>
13
THE SOUTHERN COMPANY AND SUBSIDIARY COMPANIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS
OF OPERATIONS AND FINANCIAL CONDITION
Results of Operations (Continued)
SOUTHERN's operating subsidiaries are subject to the provisions of FASB
Statement No. 71, Accounting for the Effects of Certain Types of Regulation. In
the event that a portion of the company's operations is no longer subject to
these provisions, SOUTHERN would be required to write-off related regulatory
assets and liabilities. See Note 1 to the financial statements in Item 8 of
SOUTHERN's 1994 Annual Report on Form 10-K.
In March 1995, the FASB issued Statement No. 121, Accounting for the
Impairment of Long-Lived Assets and Long-Lived Assets to be Disposed Of. This
statement imposes stricter criteria for regulatory assets by requiring that such
assets be probable of future recovery at each balance sheet date. SOUTHERN
anticipates adopting this standard on January 1, 1996 and does not expect that
adoption will have a material impact on the financial position or results of
operations of SOUTHERN based on the current regulatory structure in which
SOUTHERN operates. This conclusion may change in the future as competitive
factors influence wholesale and retail pricing in this industry.
Financial Condition
Overview
The major changes in SOUTHERN's financial condition during the first three
months of 1995 were the addition of approximately $313 million to utility plant
and the sale by SOUTHERN of additional shares of its common stock for $180
million. The funds for gross property additions and other capital requirements
were derived primarily from operations and the sale of common stock by SOUTHERN.
See SOUTHERN's Condensed Statements of Cash Flows for further details.
Capital Structure
One of SOUTHERN's goals is to maintain common equity as a percent of total
capitalization, including short-term debt and the current portion of
capitalization, within a range of 40 to 45%. This ratio was 45.3% at March 31,
1995, compared to 44.4% at December 31, 1994. The market price of SOUTHERN's
common stock at March 31, 1995, was $20.375 per share, compared to a book value
of $12.58. This represents a market-to-book value ratio of 162%. The dividend
for the first quarter of 1995 was 30.5 cents per share.
Capital Requirements for Construction
The construction program of the Southern electric system is budgeted at $4.0
billion for the three years 1995 through 1997 ($1.4 billion in 1995, $1.3
billion in 1996 and $1.3 billion in 1997). Actual construction costs may vary
from this estimate because of such factors as changes in business conditions;
changes in nuclear plants to meet new regulations; changes in environmental
regulations; revised load growth projections; increasing costs of labor,
equipment and materials; and the cost of capital.
<PAGE>
14
THE SOUTHERN COMPANY AND SUBSIDIARY COMPANIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS
OF OPERATIONS AND FINANCIAL CONDITION
Financial Condition (Continued)
Current energy demand forecasts do not require any additional baseload
generating facilities until well into the future. However, within the service
area, the construction of combustion turbine peaking units of approximately
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.
GEORGIA and OPC have entered into a joint ownership agreement for the latter to
assume responsibility for the construction and completion of the Rocky Mountain
project. This agreement is described further in Note 4 to the financial
statements in Item 8 of SOUTHERN's 1994 Annual Report on Form 10-K. Also, see
Note 6 to the financial statements in Item 8 in SOUTHERN's 1994 Annual Report on
Form 10-K for information regarding GEORGIA's joint ownership agreement for a
combustion turbine unit in Florida.
Changes in environmental regulations could substantially increase the
Southern electric system's capital requirements and operating costs. The acid
rain compliance provision of the Clean Air Act will have a significant impact on
the Southern electric system. This legislation, as well as other legislation and
regulations, are described under "Environmental Matters" in Item 7 -
Management's Discussion and Analysis in SOUTHERN's 1994 Annual Report on Form
10-K. The full impact of these requirements cannot be determined at this time,
pending the development and implementation of applicable regulations.
Other Capital Requirements
In addition to the funds needed for the construction program, approximately $555
million will be required by March 31, 1996, for present sinking fund
requirements and maturities of long-term debt. Also, the operating subsidiaries
plan to continue, to the extent possible, a program to retire high-cost debt and
preferred stock and replace these obligations with lower-cost capital.
Sources of Funds
In addition to the sale of common stock in the first quarter of 1995, SOUTHERN
may require additional equity capital during the remainder of the year. The
amounts and timing of additional equity capital to be raised in 1995, as well as
in subsequent years, will be contingent on SOUTHERN's investment opportunities.
The operating subsidiaries plan to obtain the funds required for construction
and other purposes from sources similar to those used in the past. However, the
type and timing of financings will depend on market conditions, maintenance of
adequate earnings, and regulatory approval. Additionally, GEORGIA expects to
receive approximately $131 million in June 1995 from the sale of its remaining
ownership interest in Plant Scherer Unit 4. This property sale is discussed
further in Note 7 to the financial statements in Item 8 in SOUTHERN's 1994
Annual Report on Form 10-K.
To meet short-term cash needs and contingencies, the SOUTHERN system had at
March 31, 1995, approximately $113 million of cash and cash equivalents and
approximately $1.4 billion of unused credit arrangements with banks.
<PAGE>
15
THE SOUTHERN COMPANY AND SUBSIDIARY COMPANIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS
OF OPERATIONS AND FINANCIAL CONDITION
Financial Condition (Continued)
At March 31, 1995, the system companies had outstanding $372 million of
notes payable and $510 million of commercial paper. The short-term lines of
credit may not be utilized in their entirety without additional regulatory
approval. Since the construction program with respect to major generating
projects has been completed, management believes that the need for working
capital can be adequately met by utilizing lines of credit without maintaining
large cash balances.
In order to issue additional long-term debt and preferred stock, the
operating subsidiaries must comply with certain earnings coverage requirements
outlined in their respective mortgage indentures and corporate charters. The
coverage ratios of SOUTHERN's operating subsidiaries are sufficiently high to
permit, at present interest rate levels, any foreseeable security sales. The
amount of securities which they will be permitted to issue in the future will
depend upon market conditions and other factors prevailing at that time.
<PAGE>
16
ALABAMA POWER COMPANY
<PAGE>
17
ALABAMA POWER COMPANY
MANAGEMENT'S OPINION AS TO FAIR STATEMENT OF RESULTS
The condensed financial statements of ALABAMA included herein have been
prepared by ALABAMA, without audit, pursuant to the rules and regulations of the
SEC. In the opinion of ALABAMA's management, the information regarding ALABAMA
furnished herein reflects all adjustments (which included only normal recurring
adjustments) necessary to present fairly the results for the periods ended March
31, 1995 and 1994. Certain information and footnote disclosures normally
included in financial statements prepared in accordance with generally accepted
accounting principles have been condensed or omitted pursuant to such rules and
regulations, although ALABAMA believes that the disclosures regarding ALABAMA
are adequate to make the information presented not misleading. It is suggested
that these condensed financial statements be read in conjunction with the
financial statements and the notes thereto included in ALABAMA's latest annual
report on Form 10-K.
REVIEW BY INDEPENDENT PUBLIC ACCOUNTANTS
The condensed financial statements of ALABAMA included herein have been
reviewed by ALABAMA's independent public accountants as set forth in their
report included herein as Exhibit 1.
<PAGE>
18
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ALABAMA POWER COMPANY
CONDENSED STATEMENTS OF INCOME (UNAUDITED)
(Stated in Thousands of Dollars)
For the Three Months
Ended March 31,
1995 1994
<S> <C> <C>
OPERATING REVENUES:
Revenues $618,970 $654,313
Revenues from affiliates 27,801 32,534
------ ------
Total operating revenues 646,771 686,847
------- -------
OPERATING EXPENSES:
Operation--
Fuel 157,189 185,000
Purchased power from non-affiliates 2,619 5,258
Purchased power from affiliates 22,961 26,582
Other 112,723 110,634
Maintenance 63,885 67,659
Depreciation and amortization 76,457 72,602
Taxes other than income taxes 47,678 46,423
Federal and state income taxes 40,310 44,066
------ ------
Total operating expenses 523,822 558,224
------- -------
OPERATING INCOME 122,949 128,623
OTHER INCOME (EXPENSE):
Allowance for equity funds used during construction 1,257 667
Interest income 4,895 4,230
Other, net (6,972) (3,748)
Income taxes applicable to other income 4,730 667
----- ---
INCOME BEFORE INTEREST CHARGES 126,859 130,439
------- -------
INTEREST CHARGES:
Interest on long-term debt 45,400 44,489
Allowance for debt funds used during construction (2,041) (683)
Interest on interim obligations 4,006 810
Amortization of debt discount, premium, and expense, net 2,519 2,472
Other interest charges 4,791 4,961
----- -----
Net interest charges 54,675 52,049
------ ------
NET INCOME 72,184 78,390
DIVIDENDS ON PREFERRED STOCK 6,856 6,359
----- -----
NET INCOME AFTER DIVIDENDS ON
PREFERRED STOCK $65,328 $72,031
======= =======
The accompanying notes as they relate to ALABAMA are an integral part of these condensed statements.
</TABLE>
<PAGE>
19
<TABLE>
<CAPTION>
ALABAMA POWER COMPANY
CONDENSED STATEMENTS OF CASH FLOWS (UNAUDITED)
(Stated in Thousands of Dollars)
For the Three Months
Ended March 31,
1995 1994
<S> <C> <C>
OPERATING ACTIVITIES:
Net income $ 72,184 $ 78,390
Adjustments to reconcile net income to net cash provided by operating activities--
Depreciation and amortization 91,746 88,655
Deferred income taxes, net 3,547 (18,561)
Allowance for equity funds used during construction (1,257) (667)
Other, net 52,996 9,289
Change in certain current assets and liabilities--
Receivables, net 32,703 68,069
Inventories (27,442) (6,787)
Payables (137,642) (52,536)
Taxes accrued 45,081 50,245
Energy cost recovery, retail 27,803 1,719
Other (65,887) (51,743)
------- -------
Net cash provided from operating activities 93,832 166,073
------ -------
INVESTING ACTIVITIES:
Gross property additions (126,840) (99,622)
Other (13,643) (10,076)
------- -------
Net cash used for investing activities (140,483) (109,698)
-------- --------
FINANCING ACTIVITIES:
Proceeds:
Other long-term debt - 27,987
Retirements:
First mortgage bonds - (20,387)
Other long-term debt (185) (32,388)
Interim obligations, net 120,169 50,398
Payment of preferred stock dividends (6,589) (5,759)
Payment of common stock dividends (71,900) (66,500)
Miscellaneous (186) (636)
---- ----
Net cash provided from (used for) financing activities 41,309 (47,285)
------ -------
NET CHANGE IN CASH AND CASH EQUIVALENTS (5,342) 9,090
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD 14,676 3,233
------ -----
CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 9,334 $ 12,323
======== ========
Supplemental cash flow information:
Cash paid during the period for--
Interest (net of amount capitalized) $49,600 $48,347
Income taxes 2,500 14,896
The accompanying notes as they relate to ALABAMA are an integral part of these condensed statements.
</TABLE>
<PAGE>
20
<TABLE>
<CAPTION>
ALABAMA POWER COMPANY
CONDENSED BALANCE SHEETS
(Stated in Thousands of Dollars)
ASSETS
At March 31,
1995 At December 31,
(Unaudited) 1994
<S> <C> <C>
UTILITY PLANT:
Plant in service, at original cost $10,108,050 $10,052,772
Less accumulated provision for depreciation 3,668,195 3,598,604
--------- ---------
6,439,855 6,454,168
Nuclear fuel, at amortized cost 94,193 101,630
Construction work in progress 374,882 317,779
------- -------
Total 6,908,930 6,873,577
--------- ---------
OTHER PROPERTY AND INVESTMENTS:
Nuclear decommissioning trusts 71,535 71,014
Other 46,153 43,955
------ ------
Total 117,688 114,969
------- -------
CURRENT ASSETS:
Cash and cash equivalents 9,334 14,676
Receivables --
Customer accounts receivable 275,152 308,561
Other accounts and notes receivable 17,089 22,547
Affiliated companies 25,443 29,303
Accumulated provision for uncollectible accounts (2,653) (2,297)
Refundable income taxes 17,003 16,011
Fossil fuel stock, at average cost 153,382 119,555
Materials and supplies, at average cost 178,215 184,600
Prepayments--
Income taxes 10,999 19,196
Other 129,142 84,354
Vacation pay deferred 20,442 20,442
------ ------
Total 833,548 816,948
------- -------
DEFERRED CHARGES:
Deferred charges related to income taxes 448,173 451,886
Debt expense and loss, being amortized 107,415 109,221
Uranium enrichment decontamination and decommissioning fund 42,996 42,996
Miscellaneous 49,770 49,620
------ ------
Total 648,354 653,723
------- -------
TOTAL ASSETS $ 8,508,520 $ 8,459,217
=========== ===========
The accompanying notes as they relate to ALABAMA are an integral part of these condensed statements.
</TABLE>
<PAGE>
21
<TABLE>
<CAPTION>
ALABAMA POWER COMPANY
CONDENSED BALANCE SHEETS
(Stated in Thousands of Dollars)
CAPITALIZATION AND LIABILITIES
At March 31,
1995 At December 31,
(Unaudited) 1994
<S> <C> <C>
CAPITALIZATION:
Common stock equity --
Common stock, par value $40 per share--authorized
6,000,000 shares, outstanding 5,608,955 shares $ 224,358 $ 224,358
Paid-in capital 1,304,645 1,304,645
Premium on preferred stock 146 146
Retained earnings 1,078,613 1,085,256
--------- ---------
2,607,762 2,614,405
Preferred stock 440,400 440,400
Long-term debt 2,395,363 2,455,013
--------- ---------
Total 5,443,525 5,509,818
--------- ---------
CURRENT LIABILITIES:
Long-term debt due within one year 60,823 796
Notes payable 12,000 -
Commercial paper 288,051 179,882
Accounts payable--
Affiliated companies 47,455 60,334
Other 124,778 258,657
Customer deposits 30,612 30,245
Taxes accrued --
Federal and state income 36,507 6,848
Other 31,488 15,589
Interest accrued 49,711 52,516
Miscellaneous 76,238 77,489
------ ------
Total 757,663 682,356
------- -------
DEFERRED CREDITS AND OTHER LIABILITIES:
Accumulated deferred income taxes 1,177,911 1,181,342
Accumulated deferred investment tax credits 314,143 317,018
Prepaid capacity revenues, net 136,679 138,421
Uranium enrichment decontamination and decommissioning fund 39,413 39,413
Deferred credits related to income taxes 401,190 405,256
Miscellaneous 237,996 185,593
------- -------
Total 2,307,332 2,267,043
--------- ---------
TOTAL CAPITALIZATION AND LIABILITIES $8,508,520 $8,459,217
========== ==========
The accompanying notes as they relate to ALABAMA are an integral part of these condensed statements.
</TABLE>
<PAGE>
22
ALABAMA POWER COMPANY
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
RESULTS OF OPERATIONS AND FINANCIAL CONDITION
Results of Operations
ALABAMA's financial performance during the first quarter of 1995 decreased,
compared to the same period of 1994, due primarily to lower capacity revenues
and higher financing costs. Net income after dividends on preferred stock was
$65.3 million during the first three months of 1995, compared to $72.0 million
in the corresponding period of 1994.
Revenues
Operating revenues in the first three months of 1995 decreased from the
corresponding period of 1994 due primarily to lower fuel clause revenues and
fewer energy sales to non-affiliated customers. Retail energy sales rose 2.8%
due primarily to an increase in customers served and the improving economy in
Alabama. Weather had a very small negative impact on energy sales in 1995 and a
modestly positive effect in 1994. Also, some reduction in non-affiliated
revenues occurred due to a small decrease in capacity payments received from
these customers. Total energy sales decreased 2.4%.
Revenues from sales to affiliated companies within the Southern electric
system, as well as purchases of energy, will vary from period to period
depending on demand, the availability, and the variable production cost of
generating resources at each company.
Expenses
Fuel expense decreased because of the lower average cost of fuel consumed and
the displacement of fossil and nuclear generation with hydro generation. Total
generation increased marginally. Purchased power from both affiliates and
non-affiliates decreased because of lower demand. Maintenance expenses for the
first quarter of 1995 were lower than the same period of 1994 due primarily to
decreased maintenance on transmission and distribution plant. The increase in
depreciation and amortization reflects additions to utility plant. The decrease
in income tax expense is attributable to the change in earnings.
Allowance for Funds Used During Construction
AFUDC represents the estimated debt and equity costs of capital funds that are
necessary to finance the construction of new facilities. While cash is not
realized currently from such allowance, it is realized over the service life of
the plant through increased revenues resulting from a higher rate base and
higher depreciation expense. The amount of AFUDC recorded will rise as ALABAMA's
investment in the construction of combustion turbine peaking units approach
commercial operation.
Interest Charges and Dividends on Preferred Stock
The increase in interest on long-term debt reflects the sale of additional first
mortgage bonds. Preferred stock dividends increased due to higher dividend rates
on three series of variable rate preferred stock. Interest on interim
obligations rose due to higher interest rates on an increased average amount of
short-term debt outstanding.
<PAGE>
23
ALABAMA POWER COMPANY
MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS
OF OPERATIONS AND FINANCIAL CONDITION
Results of Operations (Continued)
Future Earnings Potential
The results of operations discussed above are not necessarily indicative of
future earnings potential. The level of future earnings depends on numerous
factors ranging from growth in energy sales to a less regulated, more
competitive environment.
Discussed in the Notes to the Condensed Financial Statements herein are
certain regulatory and legal proceedings that may impact ALABAMA's future
earnings. The issues include a civil suit related to financing agreements and
proceedings concerning the reasonableness of the Southern electric system's
wholesale rate schedules and contracts.
Compliance costs related to the Clean Air Act will reduce earnings if such
cost increases cannot be offset. The Clean Air Act and other environmental
issues are discussed under "Environmental Matters" in Item 7 - Management's
Discussion and Analysis in ALABAMA's 1994 Annual Report on Form 10-K.
Future earnings will also depend upon growth in electric sales which are
subject to a number of factors. Traditionally, these factors have included
changes in contracts with neighboring utilities, energy conservation practiced
by customers, the elasticity of demand, weather, competition, and the rate of
economic growth in ALABAMA's service area. However, the enactment of the Energy
Act is beginning to have a dramatic effect on the future of the electric utility
industry. A discussion of the potential impact of the Energy Act and
particularly its effect on competition is found under "Future Earnings
Potential" in Item 7 - Management's Discussion and Analysis in ALABAMA's 1994
Annual Report on Form 10-K.
The staff of the SEC has questioned certain current accounting practices of
the electric utility industry regarding the recognition, measurement and
classification of decommissioning costs for nuclear generating stations in
financial statements. Further discussion of this issue is found under "Future
Earnings Potential" in Item 7 - Management's Discussion and Analysis in
ALABAMA's 1994 Annual Report on Form 10-K.
ALABAMA is subject to the provisions of FASB Statement No. 71, Accounting
for the Effects of Certain Types of Regulation. In the event that a portion of
the company's operations is no longer subject to these provisions, ALABAMA would
be required to write off related regulatory assets and liabilities. See Note 1
to the financial statements in Item 8 in ALABAMA's 1994 Annual Report on Form
10-K for additional information.
In March 1995, the FASB issued Statement No. 121, Accounting for the
Impairment of Long-Lived Assets and Long-Lived Assets to be Disposed Of. This
statement imposes stricter criteria for regulatory assets by requiring that such
assets be probable of future recovery at each balance sheet
<PAGE>
24
ALABAMA POWER COMPANY
MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS
OF OPERATIONS AND FINANCIAL CONDITION
Financial Condition (Continued)
date. ALABAMA anticipates adopting this standard on January 1, 1996 and does not
expect that adoption will have a material impact on the financial position or
results of operations of ALABAMA based on the current regulatory structure in
which ALABAMA operates. This conclusion may change in the future as competitive
factors influence wholesale and retail pricing in this industry.
Financial Condition
Overview
The principal change in ALABAMA's financial condition in the first three months
of 1995 was gross property additions of $126.8 million to utility plant. The
funds for gross property additions were derived from operating activities and an
increase in short-term debt. See ALABAMA's Condensed Statements of Cash Flows
herein for further details. ALABAMA's common equity as a percent of total
capitalization was 47.9% at March 31, 1995, compared to 47.4% at year-end 1994.
Liquidity and Capital Resources
ALABAMA has committed lines of credit and regulatory approval for short-term
borrowings of up to $530 million. At March 31, 1995, ALABAMA had outstanding
$288 million of commercial paper and $12 million of notes payable.
Capital expenditures are estimated to total $1.6 billion for the three
years 1995 through 1997 ($604 million in 1995, $500 million in 1996 and $502
million in 1997). Current energy demand forecasts do not require any additional
baseload generating facilities until well into the future. However, the
construction of combustion turbine peaking units of approximately 720 megawatts
of capacity is planned by 1996 to meet increased peak-hour demands. Five of the
nine units (80 megawatts of capacity each) are scheduled to begin commercial
operation in May 1995. In addition, significant construction of transmission and
distribution facilities and upgrading of generating plants will continue.
The capital budget is subject to periodic review and revision and capital
costs incurred may vary from estimates because of several factors, including
changes in business conditions; revised load growth projections; changes in
environmental regulations; changes in existing nuclear plant to meet new
regulatory requirements; increasing costs of labor, equipment and materials; and
the cost of capital.
In addition to the funds needed for the capital budget, approximately $60.8
million will be required by March 31, 1996, for debt maturities. Also, ALABAMA
will continue to retire higher-cost debt and preferred stock and replace these
obligations with lower-cost capital, as market conditions permit.
<PAGE>
25
ALABAMA POWER COMPANY
MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS
OF OPERATIONS AND FINANCIAL CONDITION
Financial Condition (Continued)
It is anticipated that the funds required will be derived from sources
similar to those used in the past. In order to issue additional first mortgage
bonds and preferred stock, ALABAMA must comply with certain earnings coverage
requirements contained in its mortgage indenture and corporate charter.
ALABAMA's coverages are at a level that would permit any necessary amount of
security sales at current interest and dividend rates.
<PAGE>
26
Exhibit 1
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
TO ALABAMA POWER COMPANY:
We have reviewed the accompanying condensed balance sheet of ALABAMA POWER
COMPANY as of March 31, 1995, and the related condensed statements of income for
the three-month periods ended March 31, 1995 and 1994, and condensed statements
of cash flows for the three-month periods ended March 31, 1995 and 1994. These
financial statements are the responsibility of the Company's management.
We conducted our review in accordance with standards established by the
American Institute of Certified Public Accountants. A review of interim
financial information consists principally of applying analytical procedures to
financial data and making inquiries of persons responsible for financial and
accounting matters. It is substantially less in scope than an audit conducted in
accordance with generally accepted auditing standards, the objective of which is
the expression of an opinion regarding the financial statements taken as a
whole. Accordingly, we do not express such an opinion.
Based on our review, we are not aware of any material modifications that
should be made to the financial statements referred to above for them to be in
conformity with generally accepted accounting principles.
We have previously audited, in accordance with generally accepted auditing
standards, the balance sheet of ALABAMA POWER COMPANY as of December 31, 1994
(not presented herein) and, in our report dated February 15, 1995, we expressed
an unqualified opinion on that statement. In our opinion, the information set
forth in the accompanying condensed balance sheet as of December 31, 1994 is
fairly stated, in all material respects, in relation to the balance sheet from
which it has been derived.
Birmingham, Alabama
May 5, 1995
<PAGE>
27
GEORGIA POWER COMPANY
<PAGE>
28
GEORGIA POWER COMPANY
MANAGEMENT'S OPINION AS TO FAIR STATEMENT OF RESULTS
The condensed financial statements of GEORGIA included herein have been
prepared by GEORGIA, without audit, pursuant to the rules and regulations of the
SEC. As more fully discussed in Note (F) to the Condensed Financial Statements
herein, an uncertainty exists with respect to the actions of the regulators
regarding the recoverability of GEORGIA's investment in the Rocky Mountain
pumped storage hydroelectric project. In the opinion of GEORGIA's management,
subject to the effect of such adjustments, if any, as might have been required
had the outcome of the uncertainty been known, the information regarding GEORGIA
furnished herein reflects all adjustments (which, except for the provision for
separation benefits recorded in 1995 and 1994, included only normal recurring
adjustments) necessary to present fairly the results for the periods ended March
31, 1995 and 1994. Certain information and footnote disclosures normally
included in financial statements prepared in accordance with generally accepted
accounting principles have been condensed or omitted pursuant to SEC rules and
regulations, although GEORGIA believes that the disclosures regarding GEORGIA
are adequate to make the information presented not misleading. It is suggested
that these condensed financial statements be read in conjunction with the
financial statements and the notes thereto included in GEORGIA's latest annual
report on Form 10-K.
REVIEW BY INDEPENDENT PUBLIC ACCOUNTANTS
The condensed financial statements of GEORGIA included herein have been
reviewed by GEORGIA's independent public accountants as set forth in their
report included herein as Exhibit 1.
<PAGE>
29
<TABLE>
<CAPTION>
GEORGIA POWER COMPANY
CONDENSED STATEMENTS OF INCOME (UNAUDITED)
(Stated in Thousands of Dollars)
For the Three Months
Ended March 31,
1995 1994
<S> <C> <C>
OPERATING REVENUES:
Revenues $961,047 $968,059
Revenues from affiliates 13,446 24,273
------ ------
Total operating revenues 974,493 992,332
------- -------
OPERATING EXPENSES:
Operation--
Fuel 200,943 211,995
Purchased power from non-affiliates 41,572 71,757
Purchased power from affiliates 29,730 28,450
Provision for separation benefits 1,060 84,689
Other 161,673 152,626
Maintenance 65,969 75,089
Depreciation and amortization 96,160 94,049
Amortization of deferred Plant Vogtle expenses, net (Note E) 28,157 12,618
Taxes other than income taxes 50,789 49,536
Federal and state income taxes 91,437 54,383
------ ------
Total operating expenses 767,490 835,192
------- -------
OPERATING INCOME 207,003 157,140
OTHER INCOME (EXPENSE):
Allowance for equity funds used during construction 1,671 1,637
Other, net (4,615) (739)
Income taxes applicable to other income 3,561 2,611
----- -----
INCOME BEFORE INTEREST CHARGES 207,620 160,649
------- -------
INTEREST CHARGES:
Interest on long-term debt 68,565 80,099
Allowance for debt funds used during construction (3,614) (2,676)
Interest on interim obligations 5,417 3,527
Amortization of debt discount, premium and expense, net 3,920 3,874
Preferred distribution of subsidiary 2,250 -
Other interest charges 2,632 6,503
----- -----
Net interest charges 79,170 91,327
------ ------
NET INCOME 128,450 69,322
DIVIDENDS ON PREFERRED STOCK 12,313 11,713
------ ------
NET INCOME AFTER DIVIDENDS ON PREFERRED STOCK $116,137 $ 57,609
======== ========
( ) Denotes red figure.
The accompanying notes as they relate to GEORGIA are an integral part of these condensed statements.
</TABLE>
<PAGE>
30
<TABLE>
<CAPTION>
GEORGIA POWER COMPANY
CONDENSED STATEMENTS OF CASH FLOWS (UNAUDITED)
(Stated in Thousands of Dollars)
For the Three Months
Ended March 31,
1995 1994
<S> <C> <C>
OPERATING ACTIVITIES
Net income $ 128,450 $ 69,322
Adjustments to reconcile net income to net cash provided by operating activities--
Depreciation and amortization 124,104 121,351
Deferred income taxes, net 16,077 18,748
Allowance for equity funds used during construction (1,671) (1,637)
Deferred Plant Vogtle costs 28,157 12,618
Provision for separation benefits - 84,275
Other, net 1,462 (18,706)
Changes in current assets and liabilities--
Receivables, net 48,837 86,901
Inventories (8,834) (14,541)
Payables (57,941) (25,863)
Taxes accrued 29,377 (68,762)
Energy cost recovery, retail 20,916 23,219
Other 4,918 (1,346)
----- ------
NET CASH PROVIDED FROM OPERATING ACTIVITIES 333,852 285,579
------- -------
INVESTING ACTIVITIES
Property additions (103,245) (143,034)
Other (49,232) (12,052)
------- -------
NET CASH USED FOR INVESTING ACTIVITIES (152,477) (155,086)
-------- --------
FINANCING ACTIVITIES
Proceeds--
Pollution control bonds - 28,065
Retirements--
Pollution control bonds (70) (28,065)
Other long-term debt - (128)
Interim obligations, net (51,903) (3,226)
Payment of preferred stock dividends (12,208) (11,435)
Payment of common stock dividends (113,900) (106,600)
Miscellaneous (329) (1,569)
---- ------
NET CASH USED FOR FINANCING ACTIVITIES (178,410) (122,958)
-------- --------
NET CHANGE IN CASH AND CASH EQUIVALENTS 2,965 7,535
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD 12,539 5,896
------ -----
CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 15,504 $ 13,431
======== =========
Supplemental Cash Flow Information--
Interest (net of amount capitalized) $81,525 $93,342
Income taxes 3,515 33,967
The accompanying notes as they relate to GEORGIA are an integral part of these condensed statements.
</TABLE>
<PAGE>
31
<TABLE>
<CAPTION>
GEORGIA POWER COMPANY
CONDENSED BALANCE SHEETS
(Stated in Thousands of Dollars)
ASSETS
At March 31,
1995 At December 31,
(Unaudited) 1994
<S> <C> <C>
UTILITY PLANT:
Plant in service $14,088,876 $14,054,917
Less accumulated provision for depreciation 4,128,921 4,054,986
--------- ---------
9,959,955 9,999,931
Nuclear fuel, at amortized cost 132,963 136,425
Construction work in progress 558,193 541,889
------- -------
Total 10,651,111 10,678,245
---------- ----------
OTHER PROPERTY AND INVESTMENTS:
Nuclear decommissioning trusts 70,848 54,297
Miscellaneous 126,878 116,527
------- -------
Total 197,726 170,824
------- -------
CURRENT ASSETS:
Cash and cash equivalents 15,504 12,539
Receivables--
Customer accounts receivable 329,690 377,570
Other accounts and notes receivable 84,545 104,989
Affiliated companies 17,557 14,443
Accumulated provision for uncollectible accounts (4,500) (4,500)
Fossil fuel stock, at average cost 180,017 169,252
Materials and supplies, at average cost 291,533 293,464
Prepayments 61,220 55,383
Vacation pay deferred 40,823 40,823
------ ------
Total 1,016,389 1,063,963
--------- ---------
DEFERRED CHARGES:
Deferred charges related to income taxes 906,009 919,750
Deferred Plant Vogtle costs (Note E) 403,935 432,092
Debt expense and loss, being amortized 187,761 190,899
Miscellaneous 262,745 256,885
------- -------
Total 1,760,450 1,799,626
--------- ---------
TOTAL ASSETS $13,625,676 $13,712,658
=========== ===========
The accompanying notes as they relate to GEORGIA are an integral part of these condensed statements.
</TABLE>
<PAGE>
32
<TABLE>
<CAPTION>
GEORGIA POWER COMPANY
CONDENSED BALANCE SHEETS
(Stated in Thousands of Dollars)
CAPITALIZATION AND LIABILITIES
At March 31,
1995 At December 31,
(Unaudited) 1994
<S> <C> <C>
CAPITALIZATION:
Common stock equity--
Common stock (without par value)--
authorized 15,000,000 shares, outstanding 7,761,500 shares $ 344,250 $ 344,250
Paid-in capital 2,384,348 2,384,348
Premium on preferred stock 413 413
Retained earnings 1,414,779 1,412,543
--------- ---------
4,143,790 4,141,554
Preferred stock 692,787 692,787
Guaranteed interest in preferred securities of partnership 100,000 100,000
Long-term debt 3,508,148 3,757,823
--------- ---------
Total 8,444,725 8,692,164
--------- ---------
CURRENT LIABILITIES:
Long-term debt due within one year 417,427 167,420
Notes payable to banks 150,600 202,200
Commercial paper 222,299 222,602
Accounts payable--
Affiliated companies 39,264 41,760
Other 232,199 313,307
Customer deposits 48,162 47,017
Taxes accrued--
Federal and state income 71,140 2,856
Other 51,256 90,163
Interest accrued 103,981 110,256
Miscellaneous 130,074 109,726
------- -------
Total 1,466,402 1,307,307
--------- ---------
DEFERRED CREDITS AND OTHER LIABILITIES:
Accumulated deferred income taxes 2,481,712 2,477,661
Accumulated deferred investment tax credits 449,185 453,121
Deferred credits related to income taxes 427,274 433,334
Disallowed Plant Vogtle capacity buyback costs 59,607 60,490
Miscellaneous 296,771 288,581
------- -------
Total 3,714,549 3,713,187
--------- ---------
TOTAL CAPITALIZATION AND LIABILITIES $13,625,676 $13,712,658
=========== ===========
The accompanying notes as they relate to GEORGIA are an integral part of these condensed statements.
</TABLE>
<PAGE>
33
GEORGIA POWER COMPANY
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
RESULTS OF OPERATIONS AND FINANCIAL CONDITION
Results of Operations
Earnings
GEORGIA's earnings for the first quarter of 1995 increased compared to the
corresponding quarter of 1994, primarily as a result of charges in 1994 related
to workforce reduction programs at GEORGIA and the system service company, SCS.
Net income after dividends on preferred stock was $116.1 million in the first
quarter of 1995 and $57.6 million in the first quarter of 1994. Disregarding the
after-tax effect of the provision for separation benefits, GEORGIA's earnings
still would have been slightly above earnings in the first quarter of 1994,
primarily due to lower interest charges and higher retail energy sales.
Revenues
Total operating revenues decreased compared to the first quarter of 1994
primarily because of the decrease in energy sales to non-affiliated wholesale
customers. Excluding fuel clause revenues, which represent the pass-through of
fuel expenses and do not affect income, operating revenues for the first quarter
of 1995 increased $7.9 million, compared to the corresponding period of 1994.
Retail - Retail energy sales increased 2.6% primarily because of an
increase in customers served and continued improvement in Georgia's economy.
Residential, commercial and industrial energy sales increased 0.4%, 2.6% and
4.1%, respectively. Mild temperatures in the first quarter of 1995 had a
dampening effect on energy sales increases. Total non-fuel retail revenues
increased $15.9 million. Of this amount, $7.6 million is attributable to
increased revenues from demand-side option programs collected through rate
riders reinstated in December 1994. Revenues from demand-side programs generally
represent the direct recovery of program costs. See Note (G) to the Condensed
Financial Statements herein for additional information on these programs.
Wholesale - Energy sales to non-affiliated wholesale customers for the
first quarter of 1995 decreased 33.2%, compared to the corresponding period of
1994. Capacity revenues from non-affiliated utilities outside the service area
were down $9.3 million. These capacity revenues decreased as scheduled,
coinciding with GEORGIA completing the third in a series of four transactions
for the sale of Plant Scherer Unit 4 in June 1994. The final sale of this unit
is scheduled for June 1995. Energy revenues from non-affiliated utilities
outside the service area decreased $25.1 million. The energy component of
contract sales is priced at approximately the variable production cost and does
not materially affect earnings.
Revenues from sales to affiliated companies within the Southern electric
system, as well as purchases of energy, will vary from period to period
depending on demand and the availability and cost of generating resources at
each company. These transactions do not have a significant impact on earnings.
<PAGE>
34
GEORGIA POWER COMPANY
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
RESULTS OF OPERATIONS AND FINANCIAL CONDITION
Results of Operations (Continued)
Operating Expenses
Fuel and Purchased Power - Fuel expense decreased because of less generation and
the displacement of coal-fired generation with hydro generation. Purchased power
expense for the first quarter of 1995 decreased primarily due to lower energy
purchases from non-affiliated companies and scheduled reductions in capacity
buyback payments to the co-owners of Plant Vogtle. See Note (E) to the Condensed
Financial Statements herein for information regarding the levelization of
capacity buyback expense for Plant Vogtle.
Other - As part of the SOUTHERN system's effort to curtail growth in
operating expenses, both GEORGIA and SCS initiated workforce reduction programs
in the first quarter of 1994. GEORGIA's portion of SCS's costs for such programs
amounted to approximately $12.1 million, while GEORGIA's programs amounted to
approximately $72.6 million in the first quarter of 1994. Other operation
expense for the first quarter of 1995 increased primarily due to costs
associated with demand-side option programs, and environmental remediation costs
at various sites of $3.7 million in 1995, compared to $0.5 million in 1994. The
demand-side option program costs were offset by increases in retail revenues.
The decrease in maintenance expense is attributable to the timing of
maintenance, primarily on coal-fired generating units. Income taxes in the first
quarter of 1994 reflect the effect of the workforce reduction programs.
Allowance for Funds Used During Construction
AFUDC represents the cost of capital charged to utility plant under construction
and is included in rate base. The equity portion of AFUDC represents non-cash
income. The increase in AFUDC during the first quarter of 1995 is primarily the
result of higher short-term borrowing rates. Based upon GEORGIA's construction
budget, AFUDC is estimated to total $27 million in 1995 and $17 million in 1996.
Interest Charges and Dividends on Preferred Stock
Interest charges have declined due to refinancing efforts over the past twelve
months. Also, GEORGIA used the proceeds from the Plant Scherer sale to redeem
high cost securities. Dividends on preferred stock have increased because
GEORGIA has a number of securities outstanding that have variable dividend
rates, which have risen since year-end 1993. Interest on interim obligations
rose due to higher interest rates.
Future Earnings Potential
The results of operations discussed above are not necessarily indicative of
future earnings. The level of future earnings depends on numerous factors
including energy sales and regulatory matters.
<PAGE>
35
GEORGIA POWER COMPANY
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
RESULTS OF OPERATIONS AND FINANCIAL CONDITION
Results of Operations (Continued)
Growth in energy sales is subject to a number of factors which
traditionally have included changes in contracts with neighboring utilities,
energy conservation practiced by customers, the elasticity of demand, weather,
competition, and the rate of economic growth in GEORGIA's service area. The
enactment of the Energy Act is having a dramatic effect on the future of the
electric utility industry. A discussion of the potential impact of the Energy
Act and particularly its effect on competition is found under "Future Earnings
Potential" in Item 7 - Management's Discussion and Analysis in GEORGIA's 1994
Annual Report on Form 10-K.
The scheduled addition of four combustion turbine generating units and the
Rocky Mountain hydroelectric project in 1995 and one jointly-owned combustion
turbine unit in 1996, will increase related operation, maintenance and
depreciation expense.
GEORGIA has entered into a four-year purchase power agreement to meet
peaking needs. Beginning in 1996, GEORGIA will purchase 400 megawatts of
capacity. In 1998, this amount will decline to 200 megawatts for the remaining
two years. Capacity payments are projected to be $6 million in 1996 and 1997 and
$3 million in 1998 and 1999. GEORGIA has also reached an agreement on major
terms and conditions of a purchase power 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.
GEORGIA is scheduled to sell in June 1995 its remaining ownership interest
(16.55%) in Plant Scherer Unit 4 to two Florida utilities. This transaction will
generate approximately $131 million in cash, including an estimated after-tax
gain of approximately $12 million. This transaction coincides with scheduled
reductions in capacity revenues from Florida utilities under unit power sales
contracts of approximately $18 million in 1995 and an additional $10 million in
1996.
As discussed in Note 4 to the financial statements of GEORGIA in Item 8 of
the SOUTHERN system's combined 1994 Annual Report in Form 10-K, regulatory
uncertainties exist related to the Rocky Mountain pumped storage hydroelectric
project. In the event the Georgia PSC does not allow full recovery of the
project's costs, then the portion not allowed may have to be written off.
GEORGIA's total investment in the project at completion is estimated to be
approximately $200 million.
Reference is made to Note 3 to the financial statements of GEORGIA in Item
8 of the SOUTHERN system's combined 1994 Annual Report on Form 10-K for
information regarding proceedings with respect to GEORGIA's recovery of
demand-side conservation program costs and litigation currently pending in the
U. S. Tax Court. Also discussed therein are the joint complaints filed by OPC
<PAGE>
36
GEORGIA POWER COMPANY
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
RESULTS OF OPERATIONS AND FINANCIAL CONDITION
Results of Operations (Continued)
and MEAG in two separate venues seeking to recover from GEORGIA approximately
$16.5 million in alleged partial requirements rates overcharges, plus
approximately $6.3 million in interest.
The FERC regulates wholesale rate schedules and power sales contacts that
GEORGIA has with its sales for resale customers. The FERC currently is reviewing
the rate of return on common equity included in these schedules and contracts
and may require such returns to be lowered, possibly retroactively. See Note 3
to the financial statements in Item 8 in GEORGIA's 1994 Annual Report on Form
10-K for additional information.
The staff of the SEC has questioned certain of the current accounting
practices of the electric utility industry regarding the recognition,
measurement and classification of decommissioning costs for nuclear generating
stations in financial statements. Further discussion of this issue is found in
"Future Earnings Potential" in Item 7 -Management's Discussion and Analysis in
GEORGIA's 1994 Annual Report on Form 10-K.
Reference is made to Note 4 to the financial statements in Item 8 of
GEORGIA's 1994 Annual Report on Form 10-K for information on certain
environmental contingencies.
GEORGIA is subject to the provisions of FASB Statement No. 71, Accounting
for the Effects of Certain Types of Regulation. In the event that a portion of
the company's operations is no longer subject to these provisions, GEORGIA would
be required to write off related regulatory assets and liabilities. See Note 1
to the financial statements in Item 8 of GEORGIA's 1994 Annual Report on Form
10-K for additional information.
In March 1995, the FASB issued Statement No. 121, Accounting for the
Impairment of Long-Lived Assets and Long-Lived Assets to be Disposed Of. This
statement imposes stricter criteria for regulatory assets by requiring that such
assets be probable of future recovery at each balance sheet date. GEORGIA
anticipates adopting this standard on January 1, 1996 and does not expect that
adoption will have a material impact on the financial position or results of
operations of GEORGIA based on the current regulatory structure in which GEORGIA
operates. This conclusion may change in the future as competitive factors
influence wholesale and retail pricing in this industry.
Financial Condition
Overview
The principal changes in GEORGIA's financial condition during the first three
months of 1995 were additions of $103 million to utility plant. The funds needed
<PAGE>
37
GEORGIA POWER COMPANY
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
RESULTS OF OPERATIONS AND FINANCIAL CONDITION
Financial Condition (Continued)
for gross property additions are currently provided from operations. See
GEORGIA's Condensed Statements of Cash Flows for further details.
Construction and Other Capital Requirements
Estimated construction expenditures for the years 1995 through 1997 are $579
million, $626 million and $724 million, respectively. GEORGIA's management has
adopted an initiative to reduce its 1996 and 1997 construction expenditures by
approximately 10% from currently estimated amounts. There can be no assurance
that such reductions will be achieved.
The Clean Air Act will have a significant impact on the capital
requirements of the Southern electric system. This legislation, as well as other
legislation and regulations, is described under "Environmental Issues" in Item 7
- - Management's Discussion and Analysis in GEORGIA's 1994 Annual Report on Form
10-K.
Cash requirements for long-term debt maturities and redemptions total
approximately $417.4 million for the twelve months ending March 31, 1996.
Included in this amount is the redemption of $100 million of first mortgage
bonds funded by an increase in commercial paper.
Sources of Funds
GEORGIA expects to meet future capital requirements primarily using funds from
operations and, if needed, by the issuance of new debt and equity securities,
term loans and short-term borrowings. Cash from operations for the first three
months of 1995 increased, as compared to the corresponding period in 1994,
primarily because of a decrease in income tax and interest payments.
GEORGIA must comply with coverage requirements of its mortgage indenture
and corporate charter to issue new first mortgage bonds and preferred stock.
GEORGIA's ability to satisfy all coverage requirements is such that it could
issue new first mortgage bonds and preferred stock to provide sufficient funds
for all anticipated requirements.
To meet short-term cash needs and contingencies, GEORGIA had approximately
$541 million of unused credit arrangements with banks at March 31, 1995.
Additionally, the completion of the remaining transaction for the sale of Plant
Scherer Unit 4 in June 1995 will generate approximately $131 million.
<PAGE>
38
Exhibit 1
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
TO GEORGIA POWER COMPANY:
We have reviewed the accompanying condensed balance sheet of GEORGIA POWER
COMPANY (a Georgia corporation) as of March 31, 1995, and the related condensed
statements of income for the three-month periods ended March 31, 1995 and 1994,
and the condensed statements of cash flows for the three-month periods ended
March 31, 1995 and 1994. These financial statements are the responsibility of
the Company's management.
We conducted our review in accordance with standards established by the
American Institute of Certified Public Accountants. A review of interim
financial information consists principally of applying analytical procedures to
financial data and making inquiries of persons responsible for financial and
accounting matters. It is substantially less in scope than an audit conducted in
accordance with generally accepted auditing standards, the objective of which is
the expression of an opinion regarding the financial statements taken as a
whole. Accordingly, we do not express such an opinion.
Based on our review, we are not aware of any material modifications that
should be made to the financial statements referred to above for them to be in
conformity with generally accepted accounting principles.
As more fully discussed in Note (F) to the Condensed Financial Statements,
an uncertainty exists with respect to the actions of the regulators regarding
the recoverability of the Company's investment in the Rocky Mountain pumped
storage hydroelectric project. The outcome of this uncertainty cannot presently
be determined. Accordingly, no provision for any writedown of the costs
associated with the Rocky Mountain facility resulting from the potential actions
of the Georgia Public Service Commission has been made in the accompanying
Condensed Financial Statements.
We have previously audited, in accordance with generally accepted auditing
standards, the balance sheet of GEORGIA POWER COMPANY as of December 31, 1994
(not presented herein), and, in our report dated February 15, 1995, we included
an explanatory paragraph which describes an uncertainty with respect to the
actions of the regulators regarding the recoverability of the Company's
investment in the Rocky Mountain pumped storage hydroelectric project. In our
opinion, the information set forth in the accompanying condensed balance sheet
as of December 31, 1994, is fairly stated, in all material respects, in relation
to the balance sheet from which it has been derived.
Atlanta, Georgia
May 5, 1995
<PAGE>
39
GULF POWER COMPANY
<PAGE>
40
GULF POWER COMPANY
MANAGEMENT'S OPINION AS TO FAIR STATEMENT OF RESULTS
The condensed financial statements of GULF included herein have been
prepared by GULF, without audit, pursuant to the rules and regulations of the
SEC. In the opinion of GULF's management, the information regarding GULF
furnished herein reflects all adjustments (which included only normal recurring
adjustments) necessary to present fairly the results for the periods ended March
31, 1995 and 1994. Certain information and footnote disclosures normally
included in financial statements prepared in accordance with generally accepted
accounting principles have been condensed or omitted pursuant to such rules and
regulations, although GULF believes that the disclosures regarding GULF are
adequate to make the information presented not misleading. It is suggested that
these condensed financial statements be read in conjunction with the financial
statements and the notes thereto included in GULF's latest annual report on Form
10-K.
<PAGE>
41
<TABLE>
<CAPTION>
GULF POWER COMPANY
CONDENSED STATEMENTS OF INCOME (UNAUDITED)
(Stated in Thousands of Dollars)
For the Three Months
Ended March 31,
1995 1994
<S> <C> <C>
OPERATING REVENUES:
Revenues $135,776 $134,229
Revenues from affiliates 5,142 3,859
----- -----
Total operating revenues 140,918 138,088
------- -------
OPERATING EXPENSES:
Operation--
Fuel 43,954 35,941
Purchased power from non-affiliates 1,299 2,068
Purchased power from affiliates 6,042 8,791
Other 28,282 30,454
Maintenance 9,632 10,982
Depreciation and amortization 13,655 14,037
Taxes other than income taxes 11,882 10,279
Federal and state income taxes 6,669 6,382
----- -----
Total operating expenses 121,415 118,934
------- -------
OPERATING INCOME 19,503 19,154
OTHER INCOME (EXPENSE):
Allowance for equity funds used during construction 26 160
Interest income 654 259
Other, net (158) (152)
Income taxes applicable to other income (250) (64)
---- ---
INCOME BEFORE INTEREST CHARGES 19,775 19,357
------ ------
INTEREST CHARGES:
Interest on long-term debt 5,920 6,871
Allowance for debt funds used during construction (35) (142)
Interest on notes payable 820 242
Amortization of debt discount, premium and expense, net 499 458
Other interest charges 216 355
--- ---
Net interest charges 7,420 7,784
----- -----
NET INCOME 12,355 11,573
DIVIDENDS ON PREFERRED STOCK 1,475 1,456
----- -----
NET INCOME AFTER DIVIDENDS ON PREFERRED STOCK $ 10,880 $ 10,117
======== ========
The accompanying notes as they relate to GULF are an integral part of these condensed statements.
</TABLE>
<PAGE>
42
<TABLE>
<CAPTION>
GULF POWER COMPANY
CONDENSED STATEMENTS OF CASH FLOWS (UNAUDITED)
(Stated in Thousands of Dollars)
For the Three Months
Ended March 31,
1995 1994
<S> <C> <C>
OPERATING ACTIVITIES:
Net income $ 12,355 $ 11,573
Adjustments to reconcile net income to net cash provided by operating activities--
Depreciation and amortization 18,834 21,571
Deferred income taxes, net (125) 899
Allowance for equity funds used during construction (26) (160)
Other, net 1,458 (341)
Changes in certain current assets and liabilities--
Receivables, net 3,400 9,204
Inventories (634) (933)
Payables 1,061 (4,919)
Other 2,203 3,315
----- -----
Net Cash Provided From Operating Activities 38,526 40,209
------ ------
INVESTING ACTIVITIES:
Gross property additions (14,816) (20,723)
Other (1,407) (4,522)
------ ------
Net Cash Used For Investing Activities (16,223) (25,245)
------- -------
FINANCING ACTIVITIES:
Retirements:
Preferred stock subject to mandatory redemption (1,000) (1,000)
First mortgage bonds - (29,370)
Other long-term debt (2,430) (2,224)
Notes payable, net (6,000) 27,447
Payment of preferred stock dividends (1,475) (1,456)
Payment of common stock dividends (11,700) (10,900)
Miscellaneous (13) (317)
--- ----
Net Cash Used For Financing Activities (22,618) (17,820)
------- -------
NET CHANGE IN CASH AND CASH EQUIVALENTS (315) (2,856)
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD 902 5,576
--- -----
CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 587 $ 2,720
======= =======
SUPPLEMENTAL CASH FLOW INFORMATION:
Cash paid during the period for:
Interest (net of amounts capitalized) $4,733 $3,223
Income taxes 2,705 2,036
The accompanying notes as they relate to GULF are an integral part of these condensed statements.
</TABLE>
<PAGE>
43
<TABLE>
<CAPTION>
GULF POWER COMPANY
CONDENSED BALANCE SHEETS
(Stated in Thousands of Dollars)
ASSETS
At March 31,
1995 At December 31,
(Unaudited) 1994
<S> <C> <C>
UTILITY PLANT:
Plant in service, at original cost $1,662,127 $1,656,367
Less accumulated provision for depreciation 633,011 622,911
------- -------
1,029,116 1,033,456
Construction work in progress 29,589 24,288
------ ------
Total 1,058,705 1,057,744
--------- ---------
OTHER PROPERTY AND INVESTMENTS 8,003 7,997
----- -----
CURRENT ASSETS:
Cash and cash equivalents 587 902
Receivables--
Customer accounts receivable 54,051 57,637
Other accounts and notes receivable 2,122 2,268
Affiliated companies 1,369 1,079
Accumulated provision for uncollectible accounts (558) (600)
Fuel stock, at average cost 36,713 35,686
Materials and supplies, at average cost 34,864 35,257
Current portion of deferred coal contract costs 3,427 2,521
Regulatory clauses under recovery 6,816 5,002
Prepayments 4,444 4,354
Vacation pay deferred 4,172 4,172
----- -----
Total 148,007 148,278
------- -------
DEFERRED CHARGES:
Deferred charges related to income taxes 30,339 30,433
Debt expense and loss, being amortized 21,701 22,119
Deferred coal contract costs 33,178 38,169
Miscellaneous 11,673 10,802
------ ------
Total 96,891 101,523
------ -------
TOTAL ASSETS $1,311,606 $1,315,542
========== ==========
The accompanying notes as they relate to GULF are an integral part of these condensed statements.
</TABLE>
<PAGE>
44
<TABLE>
<CAPTION>
GULF POWER COMPANY
CONDENSED BALANCE SHEETS
(Stated in Thousands of Dollars)
CAPITALIZATION AND LIABILITIES
At March 31,
1995 At December 31,
(Unaudited) 1994
<S> <C> <C>
CAPITALIZATION:
Common stock equity--
Common stock (without par value)--
authorized and outstanding 992,717 shares $ 38,060 $ 38,060
Paid-in capital 218,380 218,380
Premium on preferred stock 81 81
Retained earnings 168,130 168,951
------- -------
424,651 425,472
Preferred stock 89,602 89,602
Long-term debt 354,713 356,393
------- -------
Total 868,966 871,467
------- -------
CURRENT LIABILITIES:
Preferred stock due within one year - 1,000
Long-term debt due within one year 12,759 13,439
Notes payable 47,500 53,500
Accounts payable--
Affiliated companies 7,327 9,132
Other 16,909 14,524
Customer deposits 13,573 13,609
Taxes accrued--
Federal and state income 9,901 5,990
Other 6,723 7,475
Interest accrued 8,035 6,106
Regulatory clauses over recovery 2,653 3,960
Vacation pay accrued 4,172 4,172
Miscellaneous 8,667 7,828
----- -----
Total 138,219 140,735
------- -------
DEFERRED CREDITS AND OTHER LIABILITIES:
Accumulated deferred income taxes 152,874 151,681
Deferred credits related to income taxes 70,980 71,964
Accumulated deferred investment tax credits 37,797 38,391
Accumulated provision for property damage 11,822 11,522
Accumulated provision for postretirement benefits 14,446 13,680
Miscellaneous 16,502 16,102
------ ------
Total 304,421 303,340
------- -------
TOTAL CAPITALIZATION AND LIABILITIES $1,311,606 $1,315,542
========== ==========
The accompanying notes as they relate to GULF are an integral part of these condensed statements.
</TABLE>
<PAGE>
45
GULF POWER COMPANY
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
RESULTS OF OPERATIONS AND FINANCIAL CONDITION
Results of Operations
Earnings
GULF's net income after dividends on preferred stock for the first three months
of 1995 was $10.9 million, compared to $10.1 million for the same period of
1994. The rise in earnings was primarily due to decreased non-fuel operation
expenses as discussed below.
Revenues
Retail energy sales for the first quarter of 1995 decreased 0.5% from the
corresponding period of 1994 due primarily to the mild temperatures experienced
in the winter of 1995. However, retail revenues increased because of higher
regulatory cost recovery clause revenues. The regulatory clause recovery
provisions equal the related expenses and have no material effect on net income.
Wholesale energy sales to non-affiliates also decreased with capacity revenues
$1.3 million lower than in the first quarter of 1994. Also, included in
operating revenues for the first quarter of 1995 is $1.4 million collected to
recover county franchise fees. These collections are also included in taxes
other than income taxes and have no impact on earnings (see discussion under
"Expenses"). Including energy sales to affiliated companies, total energy sales
increased 1.8%.
Expenses
Fuel expenses for the first quarter of 1995 increased over the same period of
1994 due to an increase in generation. Purchased power transactions (both sales
and purchases) among the affiliated companies within the Southern electric
system will vary from period to period depending on demand and the availability
and cost of generating resources at each company. Other operation expenses for
the first quarter of 1995, compared to the first quarter of last year, were
lower due primarily to a reduction in costs associated with a coal supply
suspension agreement, which was essentially fully amortized by year-end 1994.
See Note 5 to the financial statements in Item 8 in GULF's 1994 Annual Report on
Form 10-K for additional information. Maintenance expenses decreased due
primarily to the scheduling of maintenance on production facilities. The
decrease in depreciation and amortization is attributable to the amortization of
limited-term property, which was fully amortized by December 1994. The increase
in taxes other than income taxes is attributable to $1.4 million of county
franchise fees in the first three months of 1995 as discussed above.
Interest Charges and Dividends on Preferred Stock
The decrease in interest on long-term debt reflects GULF's efforts to decrease
its capital costs through refinancings of higher-cost issues. The increase in
dividends on preferred stock is due to an increase in the dividend rate on
GULF's adjustable rate preferred stock, reflecting higher interest rates
prevailing since year-end 1993. Interest on notes payable rose because of higher
interest rates on an increased average outstanding amount of notes payable. To
the extent it is economically feasible, GULF will continue its efforts to lower
its capital costs.
<PAGE>
46
GULF POWER COMPANY
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
RESULTS OF OPERATIONS AND FINANCIAL CONDITION
Results of Operations (Continued)
Future Earnings Potential
The results of operations discussed above are not necessarily indicative of
future earnings potential. The level of future earnings depends on a number of
factors ranging from growth in energy sales to the effects of a less regulated,
more competitive environment.
Future earnings in the near term will depend upon growth in energy sales,
which is subject to a number of factors. Traditionally, these factors have
included changes in contracts with neighboring utilities, energy conservation
practiced by customers, the elasticity of demand, weather, competition, and the
rate of economic growth in GULF's service area. The enactment of the Energy Act
is beginning to have a dramatic effect on the future of the electric utility
industry. A discussion of the potential impact of the Energy Act and
particularly its effect on competition is found under "Future Earnings
Potential" in Item 7 - Management's Discussion and Analysis in GULF's 1994
Annual Report on Form 10-K.
See Note 3 to the financial statements in Item 8 in GULF's 1994 Annual
Report on Form 10-K for a discussion of the hearings ordered by the FERC
regarding the reasonableness of the return on common equity on certain of the
Southern electric system's wholesale rate schedules and contracts.
Compliance costs related to the Clean Air Act could reduce earnings if such
increased costs are not fully recovered. The Clean Air Act is discussed further
under "Environmental Matters" in Item 7 - Management's Discussion and Analysis
in GULF's 1994 Annual Report on Form 10-K. See also Note 3 to the financial
statements in Item 8 in GULF's 1994 Annual Report on Form 10-K for a discussion
of the Environmental Cost Recovery clause which provides for the recovery of
such costs.
GULF is subject to the provisions of FASB Statement No. 71, Accounting for
the Effects of Certain Types of Regulation. In the event that a portion of the
company's operations is no longer subject to these provisions, GULF would be
required to write off related regulatory assets and liabilities. See Note 1 to
the financial statements in Item 8 in GULF's 1994 Annual Report on Form 10-K for
additional information.
In March 1995, the FASB issued Statement No. 121, Accounting for the
Impairment of Long-Lived Assets to be Disposed Of. This statement imposes
stricter criteria for regulatory assets by requiring that such assets be
probable of future recovery at each balance sheet date. GULF anticipates
adopting this standard by January 1, 1996 and does not expect that adoption will
have a material impact on the financial position or results of operations of
GULF based on the current regulatory structure in which GULF operates. This
conclusion may change in the future as competitive factors influence wholesale
and retail pricing in this industry.
<PAGE>
47
GULF POWER COMPANY
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
RESULTS OF OPERATIONS AND FINANCIAL CONDITION
Financial Condition
Overview
The major change in GULF's financial condition during the first three months of
1995 was gross property additions of $14.8 million. The principal sources of
funds for these additions and other capital requirements were provided from
operations. See the Condensed Statements of Cash Flows for further details.
Capital Requirements for Construction
GULF's gross property additions, including those amounts related to
environmental compliance, are estimated to total approximately $225 million for
the three years 1995 through 1997 ($62 million in 1995, $79 million in 1996 and
$84 million in 1997). The estimates of property additions for the three-year
period include $13 million committed to meeting the requirements of the Clean
Air Act, the cost of which is expected to be recovered through the Environmental
Cost Recovery clause. Actual construction costs may vary from these estimates
because of factors such as 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. GULF does not have any baseload generating plants under construction,
however, construction related to maintenance and upgrading transmission and
distribution facilities and generating plants will continue.
Various environmental legislation and other related regulations are
described in "Environmental Matters" in Item 7 - Management's Discussion and
Analysis in GULF's 1994 Annual Report on Form 10-K. The full impact of these
requirements cannot be determined at this time, pending the development and
implementation of applicable regulations.
In addition to the funds required for the construction program, $12.8
million will be required by March 31, 1996, in connection with improvement fund
requirements, maturities and redemptions of long-term debt. GULF plans to
continue a program to retire higher-cost debt and preferred stock and replace
these obligations with lower-cost capital as market conditions and terms of the
instruments permit.
At March 31, 1995, GULF had $37 million of unused credit arrangements with
banks to meet its short-term cash needs. GULF had $47.5 million of short-term
bank borrowings outstanding at March 31, 1995.
It is anticipated that the funds required for construction and other
purposes, including compliance with environmental regulations, will be derived
from operations, the sale of additional first mortgage bonds and preferred
stock, and capital contributions from SOUTHERN. GULF is required to meet certain
coverage requirements specified in its mortgage indenture and corporate charter
to issue new first mortgage bonds and preferred stock. GULF's coverage ratios
are sufficient to permit, at present interest rate levels, any foreseeable
security sales. The amount of securities which GULF will be permitted to issue
<PAGE>
48
GULF POWER COMPANY
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
RESULTS OF OPERATIONS AND FINANCIAL CONDITION
Financial Condition (Continued)
in the future will depend upon market conditions and other factors prevailing
at that time.
<PAGE>
49
MISSISSIPPI POWER COMPANY
<PAGE>
50
MISSISSIPPI POWER COMPANY
MANAGEMENT'S OPINION AS TO FAIR STATEMENT OF RESULTS
The condensed financial statements of MISSISSIPPI included herein have been
prepared by MISSISSIPPI, without audit, pursuant to the rules and regulations of
the SEC. In the opinion of MISSISSIPPI's management, the information regarding
MISSISSIPPI furnished herein reflects all adjustments (which, except for the
provision for separation benefits recorded in the first quarter of 1995,
included only normal recurring adjustments) necessary to present fairly the
results for the periods ended March 31, 1995 and 1994. Certain information and
footnote disclosures normally included in financial statements prepared in
accordance with generally accepted accounting principles have been condensed or
omitted pursuant to such rules and regulations, although MISSISSIPPI believes
that the disclosures regarding MISSISSIPPI are adequate to make the information
presented not misleading. It is suggested that these condensed financial
statements be read in conjunction with the financial statements and the notes
thereto included in MISSISSIPPI's latest annual report on Form 10-K.
<PAGE>
51
<TABLE>
<CAPTION>
MISSISSIPPI POWER COMPANY
CONDENSED STATEMENTS OF INCOME (UNAUDITED)
(Stated in Thousands of Dollars)
For the Three Months
Ended March 31,
1995 1994
<S> <C> <C>
OPERATING REVENUES:
Revenues $107,199 $111,700
Revenues from affiliates 2,373 2,434
----- -----
Total operating revenues 109,572 114,134
------- -------
OPERATING EXPENSES:
Operation--
Fuel 24,790 17,601
Purchased power from non-affiliates 916 966
Purchased power from affiliates 9,547 24,156
Other 25,334 21,381
Maintenance 8,527 13,146
Depreciation and amortization 9,918 9,299
Taxes other than income taxes 9,378 9,805
Federal and state income taxes 5,433 4,870
----- -----
Total operating expenses 93,843 101,224
------ -------
OPERATING INCOME 15,729 12,910
OTHER INCOME (EXPENSE):
Allowance for equity funds used during construction 123 405
Other, net 1,387 1,528
Income taxes applicable to other income (379) (445)
----- ----
INCOME BEFORE INTEREST CHARGES 16,860 14,398
------ ------
INTEREST CHARGES:
Interest on long-term debt 5,657 4,512
Allowance for debt funds used during construction (71) (370)
Interest on notes payable 200 326
Amortization of debt discount, premium and expense, net 373 357
Other interest charges 207 82
--- --
Net interest charges 6,366 4,907
----- -----
NET INCOME 10,494 9,491
DIVIDENDS ON PREFERRED STOCK 1,225 1,225
----- -----
NET INCOME AFTER DIVIDENDS ON PREFERRED STOCK $ 9,269 $ 8,266
======= =======
( ) Denotes negative figure.
The accompanying notes as they relate to MISSISSIPPI are an integral part of these condensed statements.
</TABLE>
<PAGE>
52
<TABLE>
<CAPTION>
MISSISSIPPI POWER COMPANY
CONDENSED STATEMENTS OF CASH FLOWS (UNAUDITED)
(Stated in Thousands of Dollars)
For the Three Months
Ended March 31,
1995 1994
<S> <C> <C>
OPERATING ACTIVITIES:
Net income $10,494 $ 9,491
Adjustments to reconcile net income to net cash provided by operating activities--
Depreciation and amortization 13,100 11,609
Deferred income taxes, net (626) (3,260)
Allowance for equity funds used during construction (123) (405)
Other, net 941 (3,868)
Change in certain current assets and liabilities--
Receivables, net 5,366 7,762
Inventories 943 (5,661)
Payables 581 (5,146)
Taxes accrued (20,130) (11,140)
Other 2,224 3,115
----- -----
Net cash provided from operating activities 12,770 2,497
------ -----
INVESTING ACTIVITIES:
Gross property additions (16,337) (27,022)
Other (3,325) (13,925)
------ -------
Net cash used for investing activities (19,662) (40,947)
------- -------
FINANCING ACTIVITIES:
Proceeds--
First mortgage bonds - 35,000
Other long-term debt - 50,309
Retirements--
First mortgage bonds - (22,371)
Other long-term debt (4,119) (2,647)
Notes payable, net 22,000 (11,000)
Payment of preferred stock dividends (1,225) (1,225)
Payment of common stock dividends (9,900) (8,500)
Miscellaneous - (989)
- ----
Net cash provided (used) from financings 6,756 38,577
----- ------
NET CHANGE IN CASH AND CASH EQUIVALENTS (136) 127
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD 1,317 878
----- ---
CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 1,181 $ 1,005
======= =======
SUPPLEMENTAL CASH FLOW INFORMATION:
Cash paid during the period for--
Interest (net of amount capitalized) $5,021 $3,224
Income taxes (refunded) (384) (1,743)
The accompanying notes as they relate to MISSISSIPPI are an integral part of these condensed statements.
</TABLE>
<PAGE>
53
<TABLE>
<CAPTION>
MISSISSIPPI POWER COMPANY
CONDENSED BALANCE SHEETS
(Stated in Thousands of Dollars)
ASSETS
At March 31,
1995 At December 31,
(Unaudited) 1994
<S> <C> <C>
UTILITY PLANT:
Plant in service, at original cost $1,397,942 $1,385,032
Less accumulated provision for depreciation 487,216 477,098
------- -------
Total 910,726 907,934
Construction work in progress 47,206 44,838
------ ------
Total 957,932 952,772
------- -------
OTHER PROPERTY AND INVESTMENTS 3,334 3,353
----- -----
CURRENT ASSETS:
Cash and cash equivalents 1,181 1,317
Receivables--
Customer accounts receivable 24,833 27,865
Other accounts and notes receivable 6,340 6,599
Affiliated companies 3,761 6,058
Accumulated provision for uncollectible accounts (447) (670)
Fuel stock, at average cost 16,492 16,885
Materials and supplies, at average cost 24,751 25,301
Current portion of deferred fuel charges 1,325 1,068
Current portion of accumulated deferred income taxes 5,273 5,410
Prepaid federal income taxes 673 5,019
Prepayments 2,638 760
Vacation pay deferred 4,588 4,588
----- -----
Total 91,408 100,200
------ -------
DEFERRED CHARGES:
Deferred charges related to income taxes 24,902 25,036
Deferred fuel charges 6,570 9,000
Debt expense and loss, being amortized 10,636 10,929
Deferred early retirement program costs 10,536 11,286
Miscellaneous 11,786 11,135
------ ------
Total 64,430 67,386
------ ------
TOTAL ASSETS $1,117,104 $1,123,711
========== ==========
The accompanying notes as they relate to MISSISSIPPI are an integral part of these condensed statements.
</TABLE>
<PAGE>
54
<TABLE>
<CAPTION>
MISSISSIPPI POWER COMPANY
CONDENSED BALANCE SHEETS
(Stated in Thousands of Dollars)
CAPITALIZATION AND LIABILITIES
At March 31,
1995 At December 31,
(Unaudited) 1994
<S> <C> <C>
CAPITALIZATION:
Common stock equity--
Common stock (without par value), authorized
1,130,000 shares, outstanding 1,121,000 shares $ 37,691 $ 37,691
Paid-in capital 179,362 179,362
Premium on preferred stock 372 372
Retained earnings 143,696 144,328
------- -------
361,121 361,753
Cumulative preferred stock 74,414 74,414
Long-term debt 285,602 306,522
------- -------
Total 721,137 742,689
------- -------
CURRENT LIABILITIES:
Long-term debt due within one year 58,080 41,199
Notes payable 22,000 -
Accounts payable--
Affiliated companies 7,328 3,337
Other 24,112 31,144
Customer deposits 2,678 2,712
Taxes accrued--
Federal and state income 2,910 433
Other 8,617 31,224
Interest accrued 5,062 4,427
Miscellaneous 13,948 14,613
------ ------
Total 144,735 129,089
------- -------
DEFERRED CREDITS AND OTHER LIABILITIES:
Accumulated deferred income taxes 129,214 129,505
Accumulated deferred investment tax credits 30,863 31,228
Deferred credits related to income taxes 45,227 45,832
Accumulated provision for property damage 11,280 10,905
Miscellaneous 34,648 34,463
------ ------
Total 251,232 251,933
------- -------
TOTAL CAPITALIZATION AND LIABILITIES $1,117,104 $1,123,711
========== ==========
The accompanying notes as they relate to MISSISSIPPI are an integral part of these condensed statements.
</TABLE>
<PAGE>
55
MISSISSIPPI POWER COMPANY
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
RESULTS OF OPERATIONS AND FINANCIAL CONDITION
Results of Operations
Net Income
MISSISSIPPI's net income after dividends on preferred stock for the first
quarter of 1995 was $9.3 million, compared to $8.3 million for the corresponding
period of 1994. Net income rose primarily because of lower maintenance expenses
and a retail rate increase under the ECO plan.
Revenues
Revenues for the first three months of 1995 decreased, compared to the same
period of 1994, because of decreases of 0.9% in retail energy sales and
approximately 44% in non-affiliated non-territorial wholesale energy sales.
However, revenues were positively impacted by a retail rate increase of $7.6
million annually under the ECO plan effective April 1994. Energy sales to
wholesale customers in MISSISSIPPI's service territory were up a small amount.
Energy sales to commercial customers increased 2.6% reflecting sales to casinos
and service industries supporting casinos in coastal Mississippi. Total energy
sales decreased 2.4%. Non-affiliated wholesale capacity revenues decreased
approximately $0.5 million.
Expenses
Fuel and purchased power expenses combined decreased in the first quarter of
1995, compared to the corresponding period of 1994, due to lower energy sales.
Purchased power transactions (both sales and purchases) among the affiliated
companies within the Southern electric system will vary from period to period
depending on demand and the availability and cost of generating resources at
each company.
Other operation expenses in the first quarter of 1995, compared to the
corresponding period in 1994, increased primarily due to the amortization of
workforce reduction programs and, pursuant to the Clean Air Act, the recognition
of emission allowance expense. Such emission allowances are a recoverable
expense under the ECO plan. The decrease in maintenance expense is attributable
to the timing of scheduled maintenance on production facilities. Taxes other
than income taxes decreased because of lower revenues. The increase in income
tax expense reflects higher earnings.
The increase in interest was because of the sale or issuance of additional
debt instruments and higher interest rates on $23.3 million of pollution control
bonds that have variable interest rates.
Allowance for Funds Used During Construction
AFUDC represents the cost of capital charged to utility plant under
construction. The equity portion of AFUDC represents non-cash income. However,
when facilities are completed and included in rate base, previously capitalized
amounts increase cash flow because revenues are higher as a result of the
increased rate base and additional depreciation expense. The amount of AFUDC
recorded in 1994 was higher because of MISSISSIPPI's investment in the
construction of a combustion turbine generating unit. This unit began commercial
operation in May 1994.
<PAGE>
56
MISSISSIPPI POWER COMPANY
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
RESULTS OF OPERATIONS AND FINANCIAL CONDITION
Results of Operations (Continued)
Future Earnings Potential
The results of operations discussed above are not necessarily indicative of
future earnings potential. The level of future earnings depends on numerous
factors ranging from regulatory matters to growth in energy sales to a less
regulated, more competitive environment. Operating revenues will be affected by
any changes in rates under the PEP and ECO plans. The PEP has proven to be a
stabilizing force on electric rates, with only moderate changes in rates taking
place. Also see Notes (B) and (C) to the Condensed Financial Statements herein
for information regarding FERC's review of equity returns and workforce
reduction programs, respectively.
MISSISSIPPI's 1995 annual filing under the ECO plan with the Mississippi
PSC resulted in an approved annual revenue requirement, effective in May 1995,
of $3.7 million, including $1.6 million of 1994 carryover.
Future earnings in the near term will also depend upon growth in electric
sales which are subject to a number of factors. Traditionally, these factors
have included the rate of economic growth in MISSISSIPPI's service area,
customer growth, competition, weather, changes in contracts with neighboring
utilities, energy conservation practiced by customers, and the elasticity of
demand. The enactment of the Energy Act is beginning to have a dramatic effect
on the future of the electric utility industry. A discussion of the potential
impact of the Energy Act and particularly its effect on competition is found
under "Future Earnings Potential" in Item 7 - Management's Discussion and
Analysis in MISSISSIPPI's 1994 Annual Report on Form 10-K.
MISSISSIPPI is subject to the provisions of FASB Statement No. 71,
Accounting for the Effects of Certain Types of Regulation. In the event that a
portion of the company's operations is no longer subject to these provisions,
MISSISSIPPI would be required to write off related regulatory assets and
liabilities. See Note 1 to the financial statements in Item 8 in MISSISSIPPI's
1994 Annual Report on Form 10-K for additional information.
In March 1995, the FASB issued Statement No. 121, Accounting for the
Impairment of Long-Lived Assets and Long-Lived Assets to be Disposed Of. This
statement imposes stricter criteria for regulatory assets by requiring that such
assets be probable of future recovery at each balance sheet date. MISSISSIPPI
anticipates adopting this standard on January 1, 1996 and does not expect that
adoption will have a material impact on the financial position or results of
operations of MISSISSIPPI based on the current regulatory structure in which
MISSISSIPPI operates. This conclusion may change in the future as competitive
factors influence wholesale and retail pricing in this industry.
<PAGE>
57
MISSISSIPPI POWER COMPANY
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
RESULTS OF OPERATIONS AND FINANCIAL CONDITION
Financial Condition
Overview
During the first three months of 1995, gross property additions were $16.3
million. The funds for these additions and other capital requirements were
derived primarily from internal sources and an increase in short-term debt. See
the Condensed Statements of Cash Flows for further details.
At March 31, 1995, cash totaled approximately $1.2 million and MISSISSIPPI
had $97 million of unused credit arrangements with banks to meet short-term cash
needs. MISSISSIPPI had $22 million of notes payable outstanding at quarter-end.
It is MISSISSIPPI's strategy to maintain a permanent layer of short-term debt,
approximately $40 million through the end of 1995, consistent with its overall
risk capital strategy.
Capital Requirements
MISSISSIPPI's gross property additions for the next three years are estimated to
be $223 million ($78 million in 1995, $73 million in 1996 and $72 million in
1997). The major emphasis within the construction program will be on upgrading
existing facilities. Included in these construction estimates is $2.9 million
committed to meeting the requirements of the Clean Air Act regulations.
Revisions may be necessary because of factors such as revised load projections,
the availability and cost of capital and changes in environmental regulations.
In addition to the funds required for the construction program,
approximately $58.1 million will be required by March 31, 1996, for maturities
of long-term debt. It is anticipated that the funds required for construction
and other purposes, including compliance with environmental regulations, will be
derived from operations, the sale of additional first mortgage bonds, pollution
control bonds and preferred stock and the receipt of additional capital
contributions from SOUTHERN. MISSISSIPPI is required to meet certain coverage
requirements specified in its mortgage indenture and corporate charter to issue
new first mortgage bonds and preferred stock. MISSISSIPPI's coverage ratios are
sufficiently high to permit, at present interest rate levels, any foreseeable
security sales. The amount of securities which MISSISSIPPI will be able to issue
in the future will depend upon market conditions and other factors prevailing at
that time.
Environmental Matters
Changes in environmental regulations could substantially increase the Southern
electric system's capital requirements and operating costs. The acid rain
compliance provision of the Clean Air Act will have a significant impact on the
Southern electric system. This legislation, as well as other legislation and
regulations, are described under "Environmental Matters" in Item 7 -
Management's Discussion and Analysis in MISSISSIPPI's 1994 Annual Report on Form
10-K. The full impact of these requirements cannot be determined at this time
pending the development and implementation of applicable regulations.
MISSISSIPPI's management believes that the ECO plan will provide for retail
recovery of the Clean Air Act costs.
<PAGE>
58
MISSISSIPPI POWER COMPANY
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
RESULTS OF OPERATIONS AND FINANCIAL CONDITION
Financial Condition (Continued)
MISSISSIPPI must comply with other environmental laws and regulations that
cover the handling and disposal of hazardous waste. Under these various laws and
regulations, MISSISSIPPI could incur costs to clean up properties currently or
previously owned. Upon identifying potential sites, the company conducts
studies, when possible, to determine the extent of any required 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 MISSISSIPPI's ownership is under investigation for potential
remediation, but no prediction can presently be made regarding the extent, if
any, of contamination or possible cleanup. Results of this investigation are
expected to be available in early 1995. If this site were required to be
remediated, industry studies show MISSISSIPPI could incur cleanup costs ranging
from $1.5 million to $10 million before giving consideration to possible
recovery of clean-up costs from other parties. Accordingly, no accrual has been
made for remediation in the accompanying Condensed Financial Statements.
<PAGE>
59
SAVANNAH ELECTRIC
AND
POWER COMPANY
<PAGE>
60
SAVANNAH ELECTRIC AND POWER COMPANY
MANAGEMENT'S OPINION AS TO FAIR STATEMENT OF RESULTS
The condensed financial statements of SAVANNAH included herein have been
prepared by SAVANNAH, without audit, pursuant to the rules and regulations of
the SEC. In the opinion of SAVANNAH's management, the information regarding
SAVANNAH furnished herein reflects all adjustments (which, except for the
provision for separation benefits recorded in the first quarter of 1994,
included only normal recurring adjustments) necessary to present fairly the
results for the periods ended March 31, 1995 and 1994. Certain information and
footnote disclosures normally included in financial statements prepared in
accordance with generally accepted accounting principles have been condensed or
omitted pursuant to such rules and regulations, although SAVANNAH believes that
the disclosures regarding SAVANNAH are adequate to make the information
presented not misleading. It is suggested that these condensed financial
statements be read in conjunction with the financial statements and the notes
thereto included in SAVANNAH's latest annual report on Form 10-K.
<PAGE>
61
<TABLE>
<CAPTION>
SAVANNAH ELECTRIC AND POWER COMPANY
CONDENSED STATEMENTS OF INCOME (UNAUDITED)
(Stated in Thousands of Dollars)
For the Three Months
Ended March 31,
1995 1994
<S> <C> <C>
OPERATING REVENUES:
Revenues $45,016 $46,400
Revenues from affiliates 1,727 317
----- ---
Total operating revenues 46,743 46,717
------ ------
OPERATING EXPENSES:
Operation--
Fuel 1,350 2,139
Purchased power from non-affiliates 349 359
Purchased power from affiliates 15,236 15,229
Other 10,203 9,428
Maintenance 3,236 2,647
Depreciation and amortization 4,747 4,250
Taxes other than income taxes 2,961 2,562
Federal and state income taxes 2,193 2,973
----- -----
Total operating expenses 40,275 39,587
------ ------
OPERATING INCOME 6,468 7,130
OTHER INCOME (EXPENSE):
Allowance for equity funds used during construction 22 387
Other, net (124) (231)
Income taxes applicable to other income 48 88
-- --
INCOME BEFORE INTEREST CHARGES 6,414 7,374
----- -----
INTEREST CHARGES:
Interest on long-term debt 3,129 3,152
Allowance for debt funds used during construction (73) (500)
Amortization of debt discount, premium and expense, net 138 137
Other interest charges 219 106
--- ---
Net interest charges 3,413 2,895
----- -----
NET INCOME 3,001 4,479
DIVIDENDS ON PREFERRED STOCK 581 581
--- ---
NET INCOME AFTER DIVIDENDS ON PREFERRED STOCK $ 2,420 $ 3,898
======= =======
( ) Denotes red figure.
The accompanying notes as they relate to SAVANNAH are an integral part of these condensed statements.
</TABLE>
<PAGE>
62
<TABLE>
<CAPTION>
SAVANNAH ELECTRIC AND POWER COMPANY
CONDENSED STATEMENTS OF CASH FLOWS (UNAUDITED)
(Stated in Thousands of Dollars)
For the Three Months
Ended March 31,
1995 1994
<S> <C> <C>
OPERATING ACTIVITIES:
Net income $3,001 $ 4,479
Adjustments to reconcile net income to net cash provided by operating activities--
Depreciation and amortization 5,116 4,617
Deferred taxes, net 163 704
Allowance for equity funds used during construction (22) (387)
Other, net (84) (85)
Changes in certain current assets and liabilities--
Receivables, net 2,860 15,175
Inventories (836) 69
Payables 1,736 (16,994)
Taxes accrued 2,253 3,454
Other (2,501) (2,376)
------ ------
Net Cash Provided From Operating Activities 11,686 8,656
------ -----
INVESTING ACTIVITIES:
Gross property additions (7,627) (7,766)
Other (1,563) (916)
------ ----
Net Cash Used For Investing Activities (9,190) (8,682)
------ ------
FINANCING ACTIVITIES:
Proceeds:
Other long-term debt 3,500 6,000
Retirements:
First mortgage bonds (1,350) -
Other long-term debt (1,697) (198)
Notes payable, net 500 (1,000)
Payment of preferred stock dividends (581) (387)
Payment of common stock dividends (4,400) (4,100)
Miscellaneous - (48)
- ---
Cash Provided From (Used For) Financing Activities (4,028) 267
------ ---
NET CHANGE IN CASH AND CASH EQUIVALENTS (1,532) 241
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD 1,563 3,915
----- -----
CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 31 $ 4,156
======= =======
Supplemental cash flow information:
Cash paid (received) during the period for--
Interest (net of amount capitalized) $4,871 $4,236
Income taxes (refunded) 444 (155)
The accompanying notes as they relate to SAVANNAH are an integral part of these condensed statements.
</TABLE>
<PAGE>
63
<TABLE>
<CAPTION>
SAVANNAH ELECTRIC AND POWER COMPANY
CONDENSED BALANCE SHEETS
(Stated in Thousands of Dollars)
ASSETS
At March 31,
1995 At December 31,
(Unaudited) 1994
<S> <C> <C>
UTILITY PLANT:
Plant in service, at original cost $694,935 $693,432
Less accumulated provision for depreciation 271,912 267,590
------- -------
423,023 425,842
Construction work in progress 11,364 5,930
------ -----
Total 434,387 431,772
------- -------
OTHER PROPERTY AND INVESTMENTS 1,790 1,790
----- -----
CURRENT ASSETS:
Cash and cash equivalents 31 1,563
Receivables--
Customer accounts receivable 16,808 17,581
Other accounts and notes receivable 223 216
Affiliated companies 537 177
Accumulated provision for uncollectible accounts (893) (866)
Fuel cost under recovery 680 3,113
Fuel stock, at average cost 8,474 7,557
Materials and supplies, at average cost 8,995 9,076
Prepayments 9,282 7,446
----- -----
Total 44,137 45,863
------ ------
DEFERRED CHARGES:
Deferred charges related to income taxes 23,289 23,521
Debt expense and loss, being amortized 6,249 6,387
Cash surrender value of life insurance for deferred compensation plan 7,028 7,028
Miscellaneous 2,450 1,944
----- -----
Total 39,016 38,880
------ ------
TOTAL ASSETS $519,330 $518,305
======== ========
The accompanying notes as they relate to SAVANNAH are an integral part of these condensed statements.
</TABLE>
<PAGE>
64
<TABLE>
<CAPTION>
SAVANNAH ELECTRIC AND POWER COMPANY
CONDENSED BALANCE SHEETS
(Stated in Thousands of Dollars)
CAPITALIZATION AND LIABILITIES
At March 31,
1995 At December 31,
(Unaudited) 1994
<S> <C> <C>
CAPITALIZATION:
Common stock equity--
Common stock ($5 par value)--authorized 16,000,000 shares;
outstanding 10,844,635 shares $ 54,223 $ 54,223
Paid-in capital 8,688 8,688
Additional minimum liability for under-funded pension obligations (2,181) (546)
Retained earnings 97,236 99,216
------ ------
157,966 161,581
Preferred stock 35,000 35,000
Long-term debt 157,856 155,922
------- -------
Total 350,822 352,503
------- -------
CURRENT LIABILITIES:
Amount of securities due within one year 1,111 2,579
Notes payable 3,000 2,500
Accounts payable--
Affiliated companies 4,782 5,162
Other 4,428 3,829
Customer deposits 4,768 4,698
Taxes accrued--
Federal and state income 1,055 272
Other 2,331 861
Interest accrued 5,170 6,830
Vacation pay accrued 1,841 1,823
Pensions accrued 4,680 4,783
Miscellaneous 2,445 3,499
----- -----
Total 35,611 36,836
------ ------
DEFERRED CREDITS:
Accumulated deferred income taxes 71,878 70,786
Accumulated deferred investment tax credits 14,471 14,637
Deferred credits related to income taxes 25,359 25,487
Deferred compensation plans 7,030 6,807
Deferred under-funded accrued benefit obligation 5,688 3,022
Postretirement benefits 4,232 3,808
Miscellaneous 4,239 4,419
----- -----
Total 132,897 128,966
------- -------
TOTAL CAPITALIZATION AND LIABILITIES $519,330 $518,305
======== ========
The accompanying notes as they relate to SAVANNAH are an integral part of these condensed statements.
</TABLE>
<PAGE>
65
SAVANNAH ELECTRIC AND POWER COMPANY
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
RESULTS OF OPERATIONS AND FINANCIAL CONDITION
Results of Operations
Earnings
SAVANNAH's net income after dividends on preferred stock for the first three
months of 1995 was $2.4 million, compared to $3.9 million in the corresponding
period of 1994. The decrease in net income was primarily due to higher operation
and maintenance expenses and lower construction related credits.
Revenues
Although revenues for the first quarter of 1995 were comparable to the
corresponding period in 1994, earnings suffered because of the change in the
composition of energy sales. Retail energy sales increased 1.1%, with the
industrial sector offsetting decreases from residential and commercial
customers. Industrial energy sales were higher primarily because a major
customer performed maintenance on its cogeneration facility in the first quarter
of 1995 and purchased replacement energy under a rate schedule that has a
smaller profit margin than for typical residential and commercial customers.
Wholesale energy sales to non-affiliated companies decreased; however, only the
capacity revenues of such sales have any measurable effect on earnings. Capacity
revenues fell $113,000.
Expenses
Fuel expenses during the first quarter of 1995 decreased, compared to those
recorded in the first quarter of 1994, because generation was lower by
one-third. The change in generation was due to demand in SAVANNAH's service area
and elsewhere in the Southeast. Purchased power transactions among the
affiliated companies within the Southern electric system will vary from period
to period depending on demand and the availability and cost of generating
resources at each company. These transactions do not have a significant impact
on earnings. Other operation expenses for the first three months of 1995
increased over the corresponding period in 1994 for a variety of reasons
including employee compensation and consulting costs for training and increased
expenses related to demand side option programs. The change in maintenance
expense reflects the unscheduled maintenance at Plant McIntosh. Depreciation and
amortization rose because of the commercial operation of two combustion turbine
peaking units in April and May 1994. Income taxes were lower because of the
change in taxable income.
Allowance for Funds Used During Construction
AFUDC represents the cost of capital charged to utility plant under construction
and is included in rate base. The equity portion of AFUDC represents non-cash
income. In addition, when facilities are completed and included in rate base,
previously capitalized amounts increase cash flow because revenues are higher as
a result of the increased rate base and additional depreciation expense. The
amount of AFUDC recorded in 1994 was higher because of SAVANNAH's investment in
the construction of two 80 megawatt combustion turbine peaking units. These
units were placed in service in April and May 1994.
<PAGE>
66
SAVANNAH ELECTRIC AND POWER COMPANY
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
RESULTS OF OPERATIONS AND FINANCIAL CONDITION
Results of Operations (Continued)
Future Earnings Potential
The results of operations discussed above are not necessarily indicative of
future earnings potential. The level of future earnings depends on numerous
factors ranging from growth in energy sales to a less regulated, more
competitive environment.
Compliance costs related to the Clean Air Act will reduce earnings if such
increased costs cannot be offset. The Clean Air Act is discussed under
"Environmental Matters" in Item 7 - Management's Discussion and Analysis in
SAVANNAH's 1994 Annual Report on Form 10-K.
Future earnings in the near term will also depend upon growth in electric
sales which are subject to a number of factors. Traditionally, these factors
have included changes in contracts with neighboring utilities, energy
conservation practiced by customers, the elasticity of demand, weather,
competition, and the rate of economic growth in SAVANNAH's service area. The
enactment of the Energy Act is beginning to have a dramatic effect on the future
of the electric utility industry. A discussion of the potential impact of the
Energy Act and particularly its effect on competition is found under "Future
Earnings Potential" in Item 7 - Management's Discussion and Analysis in
SAVANNAH's 1994 Annual Report on Form 10-K.
SAVANNAH is subject to the provisions of FASB Statement No. 71, Accounting
for the Effects of Certain Types of Regulation. In the event that a portion of
the company's operations is no longer subject to these provisions, SAVANNAH
would be required to write off related regulatory assets and liabilities. See
Note 1 to the financial statements in Item 8 of SAVANNAH's 1994 Annual Report on
Form 10-K for additional information.
In March 1995, the FASB issued Statement No. 121, Accounting for the
Impairment of Long-Lived Assets and Long-Lived Assets to be Disposed Of. This
statement imposes stricter criteria for regulatory assets by requiring that such
assets be probable of future recovery at each balance sheet date. SAVANNAH
anticipates adopting this standard on January 1, 1996 and does not expect that
adoption will have a material impact on the financial position or results of
operations of SAVANNAH based on the current regulatory structure in which
SAVANNAH operates. This conclusion may change in the future as competitive
factors influence wholesale and retail pricing in this industry.
Financial Condition
Overview
During the first three months of 1995, SAVANNAH made gross property additions to
utility plant of $7.6 million. The funds for these additions and other capital
requirements came from operating activities, principally from earnings and
noncash charges to income such as depreciation. See the Condensed Statements of
Cash Flows for further details.
<PAGE>
67
SAVANNAH ELECTRIC AND POWER COMPANY
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
RESULTS OF OPERATIONS AND FINANCIAL CONDITION
Financial Condition (Continued)
Capital Requirements for Construction
SAVANNAH's construction program is budgeted at $87 million for the three years
1995 through 1997 ($34 million in 1995, $27 million in 1996 and $26 million in
1997). Actual construction costs may vary from this estimate because of such
factors as changes in business conditions; changes in environmental regulations;
the cost and efficiency of construction labor, equipment and materials; revised
load growth estimates and changes in cost of capital. Such construction
expenditures will be incurred for transmission and distribution facilities and
the upgrading and extension of the useful lives of generating plants.
Changes in environmental regulations could substantially increase the
Southern electric system's capital requirements and operating costs. The acid
rain compliance provision of the Clean Air Act will have a significant impact on
the Southern electric system. This legislation, as well as other legislation and
regulations, are described under "Environmental Matters" in Item 7 -
Management's Discussion and Analysis in SAVANNAH's 1994 Annual Report on Form
10-K. The full impact of these requirements cannot be determined at this time,
pending the development and implementation of applicable regulations. There can
be no assurance that compliance costs will be recovered through corresponding
increases in rates.
Sources of Capital
At March 31, 1995, SAVANNAH had $27.0 million of unused credit arrangements with
banks to meet its short-term cash needs. SAVANNAH had $3.0 million of short-term
debt outstanding at quarter-end. Additionally, SAVANNAH has $1.1 million of
leases maturing by March 31, 1996. SAVANNAH has received the authority from the
SEC to have outstanding at any one time an amount of up to $70 million in
short-term borrowings.
It is anticipated that the funds required for construction and other
purposes, including compliance with environmental regulations, will be derived
from operations and the sale of additional first mortgage bonds and preferred
stock and capital contributions from SOUTHERN. SAVANNAH is required to meet
certain coverage requirements specified in its mortgage indenture and corporate
charter to issue new first mortgage bonds and preferred stock. SAVANNAH's
coverage ratios are sufficiently high to permit, at present interest rate
levels, any foreseeable security sales. The amount of securities which SAVANNAH
will be permitted to issue in the future will depend upon market conditions and
other factors prevailing at that time.
<PAGE>
68
NOTES TO THE CONDENSED FINANCIAL STATEMENTS
FOR
THE SOUTHERN COMPANY AND SUBSIDIARY COMPANIES
ALABAMA POWER COMPANY
GEORGIA POWER COMPANY
GULF POWER COMPANY
MISSISSIPPI POWER COMPANY
SAVANNAH ELECTRIC AND POWER COMPANY
INDEX TO APPLICABLE NOTES TO
FINANCIAL STATEMENTS BY REGISTRANT
Registrant Applicable Notes
SOUTHERN A, B, C, D, E, F, G, H, J
ALABAMA B, C, D
GEORGIA B, C, E, F, G, H, I, J
GULF B, C
MISSISSIPPI B, C
SAVANNAH C
<PAGE>
69
THE SOUTHERN COMPANY AND SUBSIDIARY COMPANIES
ALABAMA POWER COMPANY
GEORGIA POWER COMPANY
GULF POWER COMPANY
MISSISSIPPI POWER COMPANY
SAVANNAH ELECTRIC AND POWER COMPANY
NOTES TO CONDENSED FINANCIAL STATEMENTS:
(A) Reference is made to Item 3 - LEGAL PROCEEDINGS in the SOUTHERN system's
combined Annual Report on Form 10-K for the year ended December 31, 1994
for a description of the proceedings related to a derivative action filed
against certain current and former directors and officers of SOUTHERN.
(B) Reference is made to Note 3 to each of the registrant's, except
SAVANNAH's, notes to the financial statements in Item 8 in the SOUTHERN
system's combined 1994 Annual Report on Form 10-K for a discussion of the
proceedings initiated by the FERC regarding the reasonableness of the
return on common equity on certain of the Southern electric system's
wholesale rate schedules and contracts.
(C) Certain of the registrants and SCS, the system service company, instituted
workforce reduction programs. The expenses recognized and the unamortized
balance of deferred expenses under these programs were as follows: (in
thousands)
<TABLE>
<CAPTION>
Three Months Ended Unamortized Balance
March 31, at March 31, 1995
------------------- -------------------
1995 1994
---- ----
<S> <C> <C> <C>
ALABAMA $1,445 $ 9,700 $ 3,105
GEORGIA 1,060 84,689 -
GULF - 657 -
MISSISSIPPI 750 - 10,536
SAVANNAH - 551 -
- --- -
SOUTHERN system $3,255 $95,597 $13,641
====== ======= =======
</TABLE>
(D) Reference is made to Note 3 to the financial statements of SOUTHERN and
ALABAMA in Item 8 of the SOUTHERN system's combined 1994 Annual Report on
Form 10-K for information with respect to a civil complaint filed
regarding ALABAMA's financing of heat pumps and other merchandise.
(E) Pursuant to orders from the Georgia PSC, GEORGIA deferred financing and
depreciation costs under phase-in plans for Plant Vogtle units 1 and 2
until the allowed investment was fully reflected in rates as of October
1991. In addition, the Georgia PSC issued two separate accounting orders
that required GEORGIA to defer substantially all operating and financing
costs related to both units until rate orders addressed these costs. The
Georgia PSC orders provide for recovery of deferred costs within 10 years.
<PAGE>
70
NOTES TO CONDENSED FINANCIAL STATEMENTS: (Continued)
The Georgia PSC also ordered GEORGIA to levelize declining capacity buyback
expense from the co-owners of the plant over a six-year period beginning
October 1991. The unamortized balance of these deferred costs at March 31,
1995, was $404 million.
(F) Reference is made to Note 4 to the financial statements of SOUTHERN and
GEORGIA in Item 8 of the SOUTHERN system's combined 1994 Annual Report on
Form 10-K for information concerning the uncertainty related to the
actions of regulatory authorities with respect to the recovery of costs of
the Rocky Mountain pumped storage hydroelectric project. The ultimate
outcome of this matter cannot now be determined.
(G) Reference is made to Note 3 to the financial statements of SOUTHERN and
GEORGIA in Item 8 of the SOUTHERN system's combined 1994 Annual Report on
Form 10-K for information regarding recovery of GEORGIA's costs from
demand-side conservation programs. The final outcome of this matter cannot
now be determined; however, in management's opinion, the final outcome
will not have a material adverse effect on SOUTHERN's or GEORGIA's
Condensed Financial Statements.
(H) Reference is made to Note 3 to the financial statements of SOUTHERN and
GEORGIA in Item 8 of the SOUTHERN system's combined 1994 Annual Report on
Form 10-K for information regarding a tax deficiency notice received from
the Internal Revenue Service relating to GEORGIA's tax accounting for the
sale in 1984 of an interest in Plant Vogtle and related capacity and
energy buyback commitments. The final outcome of this matter cannot now be
determined; however, in management's opinion, the final outcome will not
have a material adverse effect on SOUTHERN's or GEORGIA's Condensed
Financial Statements.
(I) Reference is made to Note 3 to the financial statements of GEORGIA in Item
8 of the SOUTHERN system's combined 1994 Annual Report on Form 10-K for
information regarding joint complaints filed by OPC and MEAG seeking
recovery from GEORGIA for alleged partial requirements rates overcharges
plus interest. While the outcome of this matter cannot now be determined,
in management's opinion, it will not have a material adverse effect on
GEORGIA's Condensed Financial Statements.
(J) Reference is made to Note 3 and Note 4 to the financial statements of
SOUTHERN and GEORGIA, respectively, in Item 8 of the SOUTHERN system's
combined 1994 Annual Report on Form 10-K for information on certain
environmental contingencies.
<PAGE>
71
PART II - OTHER INFORMATION
Item 1. Legal Proceedings.
(1) Reference is made to the Notes to Condensed Financial
Statements herein for information regarding certain legal
and administrative proceedings in which SOUTHERN and its
reporting subsidiaries are involved.
(2) In May 1994, GEORGIA received a notice of violation from the
NRC proposing a civil penalty in the amount of $200,000
based upon allegedly inaccurate and incomplete information
relating to Plant Vogtle reported to the NRC in 1990. The
NRC also issued demands for information regarding alleged
performance failures by six individual employees to enable
the NRC to determine whether additional enforcement actions
are necessary. GEORGIA submitted responses to such notice of
violation and demands in August 1994 and February 1995.
In February 1995, the NRC issued a modified notice of
violation in which it withdrew one of the five violations
initially alleged and again proposed a $200,000 civil
penalty. The NRC also determined that, subject to certain
commitments with respect to one individual employee, no
additional enforcement sanctions were warranted.
GEORGIA has paid the civil penalty proposed by the NRC,
and this matter is now concluded.
(3) Reference is made to Item 3 - LEGAL PROCEEDINGS in the
SOUTHERN system's combined 1994 Annual Report on Form 10-K
for information regarding GEORGIA's designation as a
potentially responsible party under the Comprehensive
Environmental Response, Compensation and Liability Act.
Item 6. Exhibits and Reports on Form 8-K.
(a) Exhibits.
Exhibit 24(a) - Powers of Attorney and resolutions.
(Designated in the SOUTHERN system's combined Form 10-K for
the year ended December 31, 1994, File Nos. 1-3526, 1-3164,
1-6468, 0-2429, 0-6849 and 1-5072 as Exhibits 24(a), 24(b),
24(c), 24(d), 24(e) and 24(f), respectively, and
incorporated herein by reference.)
Exhibit 24(b) - Power of Attorney relating to Chief
Executive Officer of MISSISSIPPI.
<PAGE>
72
Item 6. Exhibits and Reports on Form 8-K. (Continued)
Exhibit 27 - Financial Data Schedules (a) SOUTHERN (b)
ALABAMA (c) GEORGIA (d) GULF (e) MISSISSIPPI (f) SAVANNAH
(b) Reports on Form 8-K.
During the first quarter of 1995, each of the registrants
filed a Form 8-K dated February 15, 1995, whereby their
respective audited financial statements as of December 31,
1994, were made a part of the public record. Additionally,
SOUTHERN filed a Form 8-K dated January 25, 1995, to
facilitate a security sale.
<PAGE>
73
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized. The signature of the undersigned company
shall be deemed to relate only to matters having reference to such company and
any subsidiaries thereof.
THE SOUTHERN COMPANY
By A. W. Dahlberg
Chairman, President and Chief Executive Officer
(Principal Executive Officer)
By W. L. Westbrook
Financial Vice President
(Principal Financial and
Accounting Officer)
By /s/ Wayne Boston
(Wayne Boston, Attorney-in-fact)
Date: May 11, 1995
- -------------------------------------------------------------------------------
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized. The signature of the undersigned company
shall be deemed to relate only to matters having reference to such company and
any subsidiaries thereof.
ALABAMA POWER COMPANY
By Elmer B. Harris, President and Chief
Executive Officer
By William B. Hutchins, III, Executive Vice President
(Principal Financial Officer)
By /s/ Wayne Boston
(Wayne Boston, Attorney-in-fact)
Date: May 11, 1995
<PAGE>
74
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized. The signature of the undersigned company
shall be deemed to relate only to matters having reference to such company and
any subsidiaries thereof.
GEORGIA POWER COMPANY
By H. Allen Franklin
President and Chief Executive Officer
(Principal Executive Officer)
By Warren Y. Jobe
Executive Vice President, Treasurer and Chief Financial Officer
(Principal Financial Officer)
By /s/ Wayne Boston
(Wayne Boston, Attorney-in-fact)
Date: May 11, 1995
- -----------------------------------------------------------------------------
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized. The signature of the undersigned company
shall be deemed to relate only to matters having reference to such company and
any subsidiaries thereof.
GULF POWER COMPANY
By Travis J. Bowden, President and Chief Executive Officer
By A. E. Scarbrough, Vice President - Finance
(Principal Financial and Accounting Officer)
By /s/ Wayne Boston
(Wayne Boston, Attorney-in-fact)
Date: May 11, 1995
<PAGE>
75
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized. The signature of the undersigned company
shall be deemed to relate only to matters having reference to such company and
any subsidiaries thereof.
MISSISSIPPI POWER COMPANY
By Dwight H. Evans, President and Chief Executive Officer
By Michael W. Southern, Vice President, Secretary, Treasurer and
Chief Financial Officer
(Principal Financial and Accounting Officer)
By /s/ Wayne Boston
(Wayne Boston, Attorney-in-fact)
Date: May 11, 1995
- -----------------------------------------------------------------------------
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized. The signature of the undersigned company
shall be deemed to relate only to matters having reference to such company and
any subsidiaries thereof.
SAVANNAH ELECTRIC AND POWER COMPANY
By Arthur M. Gignilliat, Jr., President
By Kirby R. Willis, Vice President, Treasurer and Chief
Financial Officer
(Principal Financial and Accounting Officer)
By /s/ Wayne Boston
(Wayne Boston, Attorney-in-fact)
Date: May 11, 1995
<PAGE>
Exhibit 24(b)
<PAGE>
76
May 3, 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 its quarterly reports on Form 10-Q during
1995.
Mississippi Power Company and the undersigned officer of said Company,
individually as an officer of the Company, hereby make, constitute and appoint
each of you our true and lawful Attorney 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 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/Dwight H. Evans
Dwight H. Evans
President and Chief Executive
Officer
<TABLE> <S> <C>
<ARTICLE> UT
<LEGEND>
This schedule contains summary financial information extracted
from the Form 10-Q for March 31, 1995, and is qualified in its
entirety by reference to such financial statements.
</LEGEND>
<CIK> 0000092122
<NAME> THE SOUTHERN COMPANY
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1994
<PERIOD-END> MAR-31-1995
<BOOK-VALUE> PER-BOOK
<TOTAL-NET-UTILITY-PLANT> 21,156,555
<OTHER-PROPERTY-AND-INVEST> 823,734
<TOTAL-CURRENT-ASSETS> 2,261,629
<TOTAL-DEFERRED-CHARGES> 2,723,034
<OTHER-ASSETS> 0
<TOTAL-ASSETS> 26,964,952
<COMMON> 3,327,337
<CAPITAL-SURPLUS-PAID-IN> 1,847,073
<RETAINED-EARNINGS> 3,193,995
<TOTAL-COMMON-STOCKHOLDERS-EQ> 8,368,405
100,000
1,332,203
<LONG-TERM-DEBT-NET> 7,332,271
<SHORT-TERM-NOTES> 371,500
<LONG-TERM-NOTES-PAYABLE> 317,419
<COMMERCIAL-PAPER-OBLIGATIONS> 510,350
<LONG-TERM-DEBT-CURRENT-PORT> (552,204)
0
<CAPITAL-LEASE-OBLIGATIONS> 147,863
<LEASES-CURRENT> (2,720)
<OTHER-ITEMS-CAPITAL-AND-LIAB> 9,039,865
<TOT-CAPITALIZATION-AND-LIAB> 26,964,952
<GROSS-OPERATING-REVENUE> 1,929,043
<INCOME-TAX-EXPENSE> 151,992
<OTHER-OPERATING-EXPENSES> 1,391,672
<TOTAL-OPERATING-EXPENSES> 1,543,664
<OPERATING-INCOME-LOSS> 385,379
<OTHER-INCOME-NET> 6,004
<INCOME-BEFORE-INTEREST-EXPEN> 391,383
<TOTAL-INTEREST-EXPENSE> 162,591
<NET-INCOME> 228,792
22,450
<EARNINGS-AVAILABLE-FOR-COMM> 206,342
<COMMON-STOCK-DIVIDENDS> 201,866
<TOTAL-INTEREST-ON-BONDS> 0
<CASH-FLOW-OPERATIONS> 495,135
<EPS-PRIMARY> 0.31
<EPS-DILUTED> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> UT
<LEGEND>
This schedule contains summary financial information extracted
from the Form 10-Q for March 31, 1995, and is qualified in its
entirety by reference to such financial statements.
</LEGEND>
<CIK> 0000003153
<NAME> ALABAMA POWER COMPANY
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1994
<PERIOD-END> MAR-31-1995
<BOOK-VALUE> PER-BOOK
<TOTAL-NET-UTILITY-PLANT> 6,908,930
<OTHER-PROPERTY-AND-INVEST> 117,688
<TOTAL-CURRENT-ASSETS> 833,548
<TOTAL-DEFERRED-CHARGES> 648,354
<OTHER-ASSETS> 0
<TOTAL-ASSETS> 8,508,520
<COMMON> 224,358
<CAPITAL-SURPLUS-PAID-IN> 1,304,791
<RETAINED-EARNINGS> 1,078,613
<TOTAL-COMMON-STOCKHOLDERS-EQ> 2,607,762
0
440,400
<LONG-TERM-DEBT-NET> 2,446,617
<SHORT-TERM-NOTES> 12,000
<LONG-TERM-NOTES-PAYABLE> 0
<COMMERCIAL-PAPER-OBLIGATIONS> 288,051
<LONG-TERM-DEBT-CURRENT-PORT> (60,000)
0
<CAPITAL-LEASE-OBLIGATIONS> 9,569
<LEASES-CURRENT> (823)
<OTHER-ITEMS-CAPITAL-AND-LIAB> 2,764,944
<TOT-CAPITALIZATION-AND-LIAB> 8,508,520
<GROSS-OPERATING-REVENUE> 646,771
<INCOME-TAX-EXPENSE> 40,310
<OTHER-OPERATING-EXPENSES> 483,512
<TOTAL-OPERATING-EXPENSES> 523,822
<OPERATING-INCOME-LOSS> 122,949
<OTHER-INCOME-NET> 3,910
<INCOME-BEFORE-INTEREST-EXPEN> 126,859
<TOTAL-INTEREST-EXPENSE> 54,675
<NET-INCOME> 72,184
6,856
<EARNINGS-AVAILABLE-FOR-COMM> 65,328
<COMMON-STOCK-DIVIDENDS> 71,900
<TOTAL-INTEREST-ON-BONDS> 0
<CASH-FLOW-OPERATIONS> 93,832
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> UT
<LEGEND>
This schedule contains summary financial information extracted
from the Form 10-Q for March 31, 1995, and is qualified in its
entirety by reference to such financial statements.
</LEGEND>
<CIK> 0000041091
<NAME> GEORGIA POWER COMPANY
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1994
<PERIOD-END> MAR-31-1995
<BOOK-VALUE> PER-BOOK
<TOTAL-NET-UTILITY-PLANT> 10,651,111
<OTHER-PROPERTY-AND-INVEST> 197,726
<TOTAL-CURRENT-ASSETS> 1,016,389
<TOTAL-DEFERRED-CHARGES> 1,760,450
<OTHER-ASSETS> 0
<TOTAL-ASSETS> 13,625,676
<COMMON> 344,250
<CAPITAL-SURPLUS-PAID-IN> 2,384,761
<RETAINED-EARNINGS> 1,414,779
<TOTAL-COMMON-STOCKHOLDERS-EQ> 4,143,790
100,000
692,787
<LONG-TERM-DEBT-NET> 3,800,960
<SHORT-TERM-NOTES> 150,600
<LONG-TERM-NOTES-PAYABLE> 37,000
<COMMERCIAL-PAPER-OBLIGATIONS> 222,299
<LONG-TERM-DEBT-CURRENT-PORT> (417,110)
0
<CAPITAL-LEASE-OBLIGATIONS> 87,615
<LEASES-CURRENT> (317)
<OTHER-ITEMS-CAPITAL-AND-LIAB> 4,808,052
<TOT-CAPITALIZATION-AND-LIAB> 13,625,676
<GROSS-OPERATING-REVENUE> 974,493
<INCOME-TAX-EXPENSE> 91,437
<OTHER-OPERATING-EXPENSES> 676,053
<TOTAL-OPERATING-EXPENSES> 767,490
<OPERATING-INCOME-LOSS> 207,003
<OTHER-INCOME-NET> 617
<INCOME-BEFORE-INTEREST-EXPEN> 207,620
<TOTAL-INTEREST-EXPENSE> 79,170
<NET-INCOME> 128,450
12,313
<EARNINGS-AVAILABLE-FOR-COMM> 116,137
<COMMON-STOCK-DIVIDENDS> 113,900
<TOTAL-INTEREST-ON-BONDS> 0
<CASH-FLOW-OPERATIONS> 333,852
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> UT
<LEGEND>
This schedule contains summary financial information extracted
from the Form 10-Q for March 31, 1995, and is qualified in its
entirety by reference to such financial statements.
</LEGEND>
<CIK> 0000044545
<NAME> GULF POWER COMPANY
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1994
<PERIOD-END> MAR-31-1995
<BOOK-VALUE> PER-BOOK
<TOTAL-NET-UTILITY-PLANT> 1,058,705
<OTHER-PROPERTY-AND-INVEST> 8,003
<TOTAL-CURRENT-ASSETS> 148,007
<TOTAL-DEFERRED-CHARGES> 96,891
<OTHER-ASSETS> 0
<TOTAL-ASSETS> 1,311,606
<COMMON> 38,060
<CAPITAL-SURPLUS-PAID-IN> 218,461
<RETAINED-EARNINGS> 168,130
<TOTAL-COMMON-STOCKHOLDERS-EQ> 424,651
0
89,602
<LONG-TERM-DEBT-NET> 319,514
<SHORT-TERM-NOTES> 47,500
<LONG-TERM-NOTES-PAYABLE> 47,958
<COMMERCIAL-PAPER-OBLIGATIONS> 0
<LONG-TERM-DEBT-CURRENT-PORT> (12,759)
0
<CAPITAL-LEASE-OBLIGATIONS> 0
<LEASES-CURRENT> 0
<OTHER-ITEMS-CAPITAL-AND-LIAB> 395,140
<TOT-CAPITALIZATION-AND-LIAB> 1,311,606
<GROSS-OPERATING-REVENUE> 140,918
<INCOME-TAX-EXPENSE> 6,669
<OTHER-OPERATING-EXPENSES> 114,746
<TOTAL-OPERATING-EXPENSES> 121,415
<OPERATING-INCOME-LOSS> 19,503
<OTHER-INCOME-NET> 272
<INCOME-BEFORE-INTEREST-EXPEN> 19,775
<TOTAL-INTEREST-EXPENSE> 7,420
<NET-INCOME> 12,355
1,475
<EARNINGS-AVAILABLE-FOR-COMM> 10,880
<COMMON-STOCK-DIVIDENDS> 11,700
<TOTAL-INTEREST-ON-BONDS> 0
<CASH-FLOW-OPERATIONS> 38,526
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> UT
<LEGEND>
This schedule contains summary financial information extracted
from the Form 10-Q for March 31, 1995, and is qualified in its
entirety by reference to such financial statements.
</LEGEND>
<CIK> 0000066904
<NAME> MISSISSIPPI POWER COMPANY
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1994
<PERIOD-END> MAR-31-1995
<BOOK-VALUE> PER-BOOK
<TOTAL-NET-UTILITY-PLANT> 957,932
<OTHER-PROPERTY-AND-INVEST> 3,334
<TOTAL-CURRENT-ASSETS> 91,408
<TOTAL-DEFERRED-CHARGES> 64,430
<OTHER-ASSETS> 0
<TOTAL-ASSETS> 1,117,104
<COMMON> 37,691
<CAPITAL-SURPLUS-PAID-IN> 179,734
<RETAINED-EARNINGS> 143,696
<TOTAL-COMMON-STOCKHOLDERS-EQ> 361,121
0
74,414
<LONG-TERM-DEBT-NET> 252,112
<SHORT-TERM-NOTES> 22,000
<LONG-TERM-NOTES-PAYABLE> 91,570
<COMMERCIAL-PAPER-OBLIGATIONS> 0
<LONG-TERM-DEBT-CURRENT-PORT> (58,080)
0
<CAPITAL-LEASE-OBLIGATIONS> 0
<LEASES-CURRENT> 0
<OTHER-ITEMS-CAPITAL-AND-LIAB> 373,967
<TOT-CAPITALIZATION-AND-LIAB> 1,117,104
<GROSS-OPERATING-REVENUE> 109,572
<INCOME-TAX-EXPENSE> 5,433
<OTHER-OPERATING-EXPENSES> 88,410
<TOTAL-OPERATING-EXPENSES> 93,843
<OPERATING-INCOME-LOSS> 15,729
<OTHER-INCOME-NET> 1,131
<INCOME-BEFORE-INTEREST-EXPEN> 16,860
<TOTAL-INTEREST-EXPENSE> 6,366
<NET-INCOME> 10,494
1,225
<EARNINGS-AVAILABLE-FOR-COMM> 9,269
<COMMON-STOCK-DIVIDENDS> 9,900
<TOTAL-INTEREST-ON-BONDS> 0
<CASH-FLOW-OPERATIONS> 12,770
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> UT
<LEGEND>
This schedule contains summary financial information extracted
from the Form 10-Q for March 31, 1995, and is qualified in its
entirety by reference to such financial statements.
</LEGEND>
<CIK> 0000086940
<NAME> SAVANNAH ELECTRIC AND POWER COMPANY
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1994
<PERIOD-END> MAR-31-1995
<BOOK-VALUE> PER-BOOK
<TOTAL-NET-UTILITY-PLANT> 434,387
<OTHER-PROPERTY-AND-INVEST> 1,790
<TOTAL-CURRENT-ASSETS> 44,137
<TOTAL-DEFERRED-CHARGES> 39,016
<OTHER-ASSETS> 0
<TOTAL-ASSETS> 519,330
<COMMON> 54,223
<CAPITAL-SURPLUS-PAID-IN> 8,688
<RETAINED-EARNINGS> 95,055
<TOTAL-COMMON-STOCKHOLDERS-EQ> 157,966
0
35,000
<LONG-TERM-DEBT-NET> 147,176
<SHORT-TERM-NOTES> 3,000
<LONG-TERM-NOTES-PAYABLE> 10,500
<COMMERCIAL-PAPER-OBLIGATIONS> 0
<LONG-TERM-DEBT-CURRENT-PORT> 0
0
<CAPITAL-LEASE-OBLIGATIONS> 1,291
<LEASES-CURRENT> (1,111)
<OTHER-ITEMS-CAPITAL-AND-LIAB> 165,508
<TOT-CAPITALIZATION-AND-LIAB> 519,330
<GROSS-OPERATING-REVENUE> 46,743
<INCOME-TAX-EXPENSE> 2,193
<OTHER-OPERATING-EXPENSES> 38,082
<TOTAL-OPERATING-EXPENSES> 40,275
<OPERATING-INCOME-LOSS> 6,468
<OTHER-INCOME-NET> (54)
<INCOME-BEFORE-INTEREST-EXPEN> 6,414
<TOTAL-INTEREST-EXPENSE> 3,413
<NET-INCOME> 3,001
581
<EARNINGS-AVAILABLE-FOR-COMM> 2,420
<COMMON-STOCK-DIVIDENDS> 4,400
<TOTAL-INTEREST-ON-BONDS> 0
<CASH-FLOW-OPERATIONS> 11,686
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
</TABLE>
