================================================================================
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, 1996
OR
( ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the Transition Period from _____to_____
Commission Registrant, State of Incorporation, I.R.S. Employer
File Number Address and Telephone Number Identification No.
1-3526 The Southern Company 58-0690070
(A Delaware Corporation)
270 Peachtree Street, N.W.
Atlanta, Georgia 30303
(770) 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
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<PAGE>
Indicate by check mark whether the registrants (1) have filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrants were required to file such reports), and (2) have been subject to
such filing requirements for the past 90 days. Yes X No____
<TABLE>
<CAPTION>
Description of Shares Outstanding
Registrant Common Stock at April 30, 1996
<S> <C> <C>
The Southern Company Par Value $5 Per Share 670,706,372
Alabama Power Company Par Value $40 Per Share 5,608,955
Georgia Power Company No Par Value 7,761,500
Gulf Power Company No Par Value 992,717
Mississippi Power Company Without Par Value 1,121,000
Savannah Electric and Power Company Par Value $5 Per Share 10,844,635
</TABLE>
This combined Form 10-Q is separately filed by The Southern Company,
Alabama Power Company, Georgia Power Company, Gulf Power Company, Mississippi
Power Company and Savannah Electric and Power Company. Information contained
herein relating to any individual company is filed by such company on its own
behalf. Each company makes no representation as to information relating to the
other companies.
<PAGE>
<TABLE>
<CAPTION>
INDEX TO QUARTERLY REPORT ON FORM 10-Q
MARCH 31, 1996
Page
Number
<S> <C>
DEFINITIONS........................................................................................................ 4
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements (Unaudited) and
Item 2. Management's Discussion and Analysis of Results of Operations and Financial Condition
The Southern Company and Subsidiary Companies
Condensed Statements of Income..................................................................... 6
Condensed Statements of Cash Flows................................................................. 7
Condensed Balance Sheets........................................................................... 8
Management's Discussion and Analysis of Results of Operations and Financial Condition.............. 10
Alabama Power Company
Condensed Statements of Income..................................................................... 15
Condensed Statements of Cash Flows................................................................. 16
Condensed Balance Sheets........................................................................... 17
Management's Discussion and Analysis of Results of Operations and Financial Condition.............. 19
Exhibit 1 - Report of Independent Public Accountants............................................... 22
Georgia Power Company
Condensed Statements of Income..................................................................... 24
Condensed Statements of Cash Flows................................................................. 25
Condensed Balance Sheets........................................................................... 26
Management's Discussion and Analysis of Results of Operations and Financial Condition.............. 28
Exhibit 1 - Report of Independent Public Accountants............................................... 31
Gulf Power Company
Condensed Statements of Income..................................................................... 33
Condensed Statements of Cash Flows................................................................. 34
Condensed Balance Sheets........................................................................... 35
Management's Discussion and Analysis of Results of Operations and Financial Condition.............. 37
Mississippi Power Company
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
Savannah Electric and Power Company
Condensed Statements of Income..................................................................... 49
Condensed Statements of Cash Flows................................................................. 50
Condensed Balance Sheets........................................................................... 51
Management's Discussion and Analysis of Results of Operations and Financial Condition.............. 53
Notes to the Condensed Financial Statements........................................................... 56
PART II - OTHER INFORMATION
Item 1. Legal Proceedings......................................................................................... 60
Item 2. Changes in Securities..................................................................................... Inapplicable
Item 3. Defaults Upon Senior Securities........................................................................... Inapplicable
Item 4. Submission of Matters to a Vote of Security Holders....................................................... Inapplicable
Item 5. Other Information......................................................................................... Inapplicable
Item 6. Exhibits and Reports on Form 8-K.......................................................................... 60
Signatures ............................................................................................... 61
3
</TABLE>
<PAGE>
DEFINITIONS
TERM MEANING
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
EWG...............................Exempt wholesale generator
FASB..............................Financial Accounting Standards Board
FERC..............................Federal Energy Regulatory Commission
Form 10-K.........................Combined Annual Report on Form 10-K of
SOUTHERN, ALABAMA, GEORGIA, GULF, MISSISSIPPI
and SAVANNAH for the year ended
December 31, 1995
FUCO..............................Foreign utility company
GEORGIA...........................Georgia Power Company
GULF..............................Gulf Power Company
MEAG..............................Municipal Electric Authority of Georgia
MISSISSIPPI.......................Mississippi Power Company
OPC...............................Oglethorpe Power Corporation
PEP...............................Performance Evaluation Plan
PSC...............................Public Service Commission
SAVANNAH..........................Savannah Electric and Power Company
SEC...............................Securities and Exchange Commission
SEI...............................Southern Electric International, Inc.
SOUTHERN..........................The Southern Company
SWEB..............................South Western Electricity plc (United Kingdom)
TVA...............................Tennessee Valley Authority
4
<PAGE>
THE SOUTHERN COMPANY
AND SUBSIDIARY COMPANIES
5
<PAGE>
<TABLE>
<CAPTION>
THE SOUTHERN COMPANY AND SUBSIDIARY COMPANIES
CONDENSED STATEMENTS OF INCOME (UNAUDITED)
(Stated in Thousands of Dollars)
For the Three Months
Ended March 31,
1996 1995
<S> <C> <C>
OPERATING REVENUES $ 2,415,618 $ 1,929,043
-------------- --------------
OPERATING EXPENSES:
Operation--
Fuel 502,628 449,782
Purchased power 271,497 58,538
Other 424,578 360,013
Maintenance 186,377 159,412
Depreciation and amortization 244,846 212,322
Amortization of deferred Plant Vogtle costs (Note J) 33,759 28,157
Taxes other than income taxes 168,645 123,448
Income taxes 165,951 151,992
-------------- --------------
Total operating expenses 1,998,281 1,543,664
-------------- --------------
OPERATING INCOME 417,337 385,379
OTHER INCOME:
Allowance for equity funds used during construction 860 3,119
Interest income 15,727 7,902
Other, net 7,724 (13,491)
Income taxes applicable to other income 2,188 11,680
-------------- --------------
INCOME BEFORE INTEREST CHARGES 443,836 394,589
-------------- --------------
INTEREST CHARGES AND OTHER:
Interest on long-term debt 139,768 136,398
Allowance for debt funds used during construction (5,311) (5,848)
Interest on notes payable 22,547 13,598
Amortization of debt discount, premium and expense, net 12,975 8,119
Other interest charges 20,045 10,324
Minority interest in subsidiaries (556) 3,206
Preferred dividends of subsidiary companies 21,493 22,450
-------------- --------------
Net interest charges and other, net 210,961 188,247
-------------- --------------
CONSOLIDATED NET INCOME $ 232,875 $ 206,342
============== ==============
AVERAGE NUMBER OF SHARES OF
COMMON STOCK OUTSTANDING (Thousands) 670,105 661,393
EARNINGS PER SHARE OF COMMON STOCK $0.35 $0.31
CASH DIVIDENDS PAID PER SHARE
OF COMMON STOCK $0.315 $0.305
</TABLE>
The accompanying notes as they relate to SOUTHERN are an integral part
of these condensed statements.
6
<PAGE>
<TABLE>
<CAPTION>
THE SOUTHERN COMPANY AND SUBSIDIARY COMPANIES
CONDENSED STATEMENTS OF CASH FLOWS (UNAUDITED)
(Stated in Thousands of Dollars)
For the Three Months
Ended March 31,
1996 1995
<S> <C> <C>
OPERATING ACTIVITIES:
Consolidated net income $ 232,875 $ 206,342
Adjustments to reconcile net cash provided by
operating activities--
Depreciation and amortization 301,320 270,448
Deferred income taxes and investment tax credits 18,918 22,208
Allowance for equity funds used during construction (860) (3,119)
Amortization of deferred Plant Vogtle costs (Note J) 33,759 28,157
Gain on asset sales (11,072) (115)
Other, net 20,947 21,455
Changes in certain current assets and liabilities--
Receivables, net 130,802 161,465
Fossil fuel stock 25,113 (47,537)
Materials and supplies 11,486 9,418
Prepayments (45,250) (45,925)
Payables (126,490) (189,441)
Customer deposits (85,141) 1,651
Other (105,052) 60,128
------------- -----------
Net cash provided from operating activities 401,355 495,135
------------- -----------
INVESTING ACTIVITIES:
Gross property additions (306,470) (312,714)
Sales of property 1,800 -
Other (74,155) (70,085)
------------- -----------
Net cash used for investing activities (378,825) (382,799)
------------- -----------
FINANCING ACTIVITIES:
Proceeds--
Common stock 18,530 180,273
Preferred securities 97,000 -
First mortgage bonds 40,000 -
Pollution control bonds 21,200 -
Other long-term debt 279,147 28,745
Retirements--
Preferred stock - (1,000)
First mortgage bonds (239,127) (1,350)
Pollution control bonds (6,800) (70)
Other long-term debt (1,074,005) (52,653)
Notes payable, net 618,850 (95,834)
Payment of common stock dividends (211,081) (201,866)
Miscellaneous (26,770) 4,666
------------- -----------
Net cash used for financing activities (483,056) (139,089)
------------- -----------
NET CHANGE IN CASH AND CASH EQUIVALENTS (460,526) (26,753)
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD 772,340 139,309
------------- -----------
CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 311,814 $ 112,556
============= ===========
SUPPLEMENTAL CASH FLOW INFORMATION:
Cash paid during the period for--
Interest (net of amount capitalized) $ 199,455 $ 161,369
Income taxes 56,321 8,827
</TABLE>
The accompanying notes as they relate to SOUTHERN are an integral part
of these condensed statements.
7
<PAGE>
<TABLE>
<CAPTION>
THE SOUTHERN COMPANY AND SUBSIDIARY COMPANIES
CONDENSED BALANCE SHEETS
(Stated in Thousands of Dollars)
ASSETS
At March 31,
1996 At December 31,
(Unaudited) 1995
------------ ---------------
<S> <C> <C>
UTILITY PLANT:
Plant in service $ 32,258,223 $ 31,878,166
Less accumulated provision for depreciation 10,300,678 10,067,081
--------------- ---------------
21,957,545 21,811,085
Nuclear fuel, at amortized cost 211,747 225,386
Construction work in progress 833,939 989,808
--------------- ---------------
Total 23,003,231 23,026,279
--------------- ---------------
OTHER PROPERTY AND INVESTMENTS:
Argentine operating concession, being amortized 427,241 431,212
Goodwill 303,300 343,897
Nuclear decommissioning trusts 231,633 200,641
Miscellaneous 329,367 317,103
--------------- ---------------
Total 1,291,541 1,292,853
--------------- ---------------
CURRENT ASSETS:
Cash and cash equivalents 311,814 772,340
Special deposits 21,291 156,114
Receivables, less accumulated provisions for uncollectible accounts
of $34,628 at March 31, 1996 and $37,119 at December 31, 1995 1,223,526 1,362,912
Fossil fuel stock, at average cost 301,556 326,669
Materials and supplies, at average cost 540,060 551,546
Prepayments 311,529 265,988
Vacation pay deferred 78,618 74,135
--------------- ---------------
Total 2,788,394 3,509,704
--------------- ---------------
DEFERRED CHARGES:
Deferred charges related to income taxes 1,368,170 1,386,116
Deferred Plant Vogtle costs (Note J) 273,879 307,638
Debt expense, being amortized 68,052 68,539
Premium on reacquired debt, being amortized 284,747 294,825
Miscellaneous 638,024 636,327
--------------- ---------------
Total 2,632,872 2,693,445
--------------- ---------------
TOTAL ASSETS $ 29,716,038 $ 30,522,281
=============== ===============
</TABLE>
The accompanying notes as they relate to SOUTHERN are an integral part of
these condensed statements.
8
<PAGE>
<TABLE>
<CAPTION>
THE SOUTHERN COMPANY AND SUBSIDIARY COMPANIES
CONDENSED BALANCE SHEETS
(Stated in Thousands of Dollars)
CAPITALIZATION AND LIABILITIES
At March 31,
1996 At December 31,
(Unaudited) 1995
---------------- ----------------
<S> <C> <C>
CAPITALIZATION:
Common stock, par value $5 per share -
Authorized -- 1 billion shares;
Outstanding -- March 31, 1996: 670,299,642 shares
-- December 31, 1995: 669,542,914 shares $ 3,351,498 $ 3,347,715
Paid-in capital 1,915,094 1,940,823
Retained earnings 3,504,507 3,483,624
------------- -------------
8,771,099 8,772,162
Preferred stock of subsidiaries 1,332,203 1,332,203
Subsidiary obligated mandatorily redeemable preferred securities 197,000 100,000
Long-term debt 7,545,346 8,274,012
------------- -------------
Total 17,845,648 18,478,377
------------- -------------
CURRENT LIABILITIES:
Long-term debt due within one year 100,112 508,572
Notes payable 2,288,588 1,669,738
Accounts payable 592,797 785,490
Customer deposits 131,503 216,644
Taxes accrued--
Income taxes 127,290 92,684
Other 127,135 178,807
Interest accrued 170,937 199,112
Vacation pay accrued 103,871 99,678
Miscellaneous 463,141 530,461
------------- -------------
Total 4,105,374 4,281,186
------------- -------------
DEFERRED CREDITS AND OTHER LIABILITIES:
Accumulated deferred income taxes 4,620,303 4,611,081
Deferred credits related to income taxes 922,073 935,611
Accumulated deferred investment tax credits 812,216 820,127
Minority interest in subsidiaries 229,009 230,500
Prepaid capacity revenues 129,228 131,186
Department of Energy assessments 86,113 86,113
Disallowed Plant Vogtle capacity buyback costs 58,038 58,514
Storm damage reserves 33,323 30,777
Miscellaneous 874,713 858,809
------------- -------------
Total 7,765,016 7,762,718
------------- -------------
TOTAL CAPITALIZATION AND LIABILITIES $ 29,716,038 $ 30,522,281
============= =============
</TABLE>
The accompanying notes as they relate to SOUTHERN are an integral part of
these condensed statements.
9
<PAGE>
THE SOUTHERN COMPANY AND SUBSIDIARY COMPANIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
RESULTS OF OPERATIONS AND FINANCIAL CONDITION
FIRST QUARTER 1996 vs. FIRST QUARTER 1995
RESULTS OF OPERATIONS
Earnings
SOUTHERN's consolidated net income for the first quarter of 1996 was $233
million ($0.35 per share), compared to $206 million ($0.31 per share) for the
same quarter of 1995, representing a 12.9% increase. Colder-than-normal weather
during the first three months of 1996 increased the demand for electricity by
residential and commercial customers which positively affected earnings of the
core business. Compared to the first quarter of 1995, core business earnings
increased 6.9% or $14 million. The performance of the non-core portion of the
business (primarily resulting from the acquisition of SWEB in the third quarter
of 1995) also contributed to the improvement in 1996 earnings. (Reference is
made to Note 14 of SOUTHERN's financial statements in Item 8 of the Form 10-K
for additional information regarding the acquisition of SWEB.)
SOUTHERN's core business is its five electric utility operating companies,
which provide electric service in four Southeastern states. The non-core portion
of the business is primarily represented by SEI, which owns and manages
international and domestic businesses for SOUTHERN. Businesses acquired by SEI
have been included in the consolidated statements of income since the date of
acquisition. Certain changes in operating revenues and expenses from the prior
period are the result of such acquisitions.
Significant income statement items appropriate for discussion include the
following:
Increase (Decrease)
-----------------------------------
(in thousands) %
Operating revenues........................... $486,575 25.2
Fuel expense................................. 52,846 11.7
Purchased power expense...................... 212,959 363.8
Maintenance expense.......................... 26,965 16.9
Depreciation and amortization expense........ 32,524 15.3
Taxes other than income taxes................ 45,197 36.6
Interest on long-term debt................... 3,370 2.5
Interest on notes payable.................... 8,949 65.8
Operating revenues. The increase in operating revenues of the core business
was influenced most heavily by an increase in the amount of retail energy sold.
For the first three months of 1996, total retail kilowatt-hour sales increased
8.0% over the same period of 1995. Retail revenues, excluding those revenues
which represent the pass-through of fuel expense and certain other expenses and
do not affect income, increased $69 million. Residential, commercial and
industrial energy sales increased 13.0%, 10.4% and 3.0%, respectively, primarily
due to colder temperatures and an increase in the number of customers served.
Weather was also a factor in increased wholesale energy sales, which were up
28.5% compared to the corresponding period of 1995. However, capacity revenues
from off-system sales were down $17 million primarily due to the scheduled
decline in megawatts of capacity under long-term contracts compared to the first
quarter of 1995.
10
<PAGE>
THE SOUTHERN COMPANY AND SUBSIDIARY COMPANIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
RESULTS OF OPERATIONS AND FINANCIAL CONDITION
Fuel expense. Fuel expense in the core business rose 10.9% or $48 million
compared to the same period of 1995 primarily due to higher generation necessary
to meet the increased demand for electricity, partially offset by a slightly
lower average cost of fuel.
Purchased power expense. The substantial increase in purchased power
expense is attributable to non-core operations, specifically, SWEB's operations.
(SWEB's main business is the distribution of electricity. It must purchase
essentially all of its power.) Purchased power expense increased only 4.9% or $2
million in the core business.
Maintenance expense. Maintenance expense related to the core business
increased $12 million or 7.6% compared to the first quarter of 1995 due to the
timing of scheduled maintenance performed on generating units.
Depreciation and amortization expense. Depreciation and amortization
expense in the core business increased $17 million or 8.3% compared to the same
period of 1995 mainly due to accelerated depreciation of generating plants and
additional plant investment.
Taxes other than income taxes. For the first three months of 1996, taxes
other than income taxes associated with the core business increased $10 million,
a 7.9% increase, compared to the same quarter of 1995 primarily due to higher
municipal and county franchise taxes resulting from increased sales.
Interest on long-term debt. The increase in interest on long-term debt is
attributable to non-core business activities. In the first quarter of 1996,
interest on long-term debt in the core business decreased $29 million (23.2%)
compared to the corresponding period of 1995 reflecting the redemption and
refinancing of long-term debt by the operating companies.
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 energy sales growth to a less regulated, more competitive
environment, with non-core business becoming more significant.
With respect to non-core activities, SOUTHERN received, in April 1996, an
order from the SEC which in effect allows it to use the proceeds from financings
to increase its aggregate investment in EWGs and FUCOs up to an amount not
exceeding 100% of SOUTHERN's consolidated retained earnings. At March 31, 1996,
SOUTHERN's consolidated retained earnings amounted to $3,505 million, and its
aggregate investment in EWGs and FUCOs amounted to $934 million. For additional
information relating to SOUTHERN's non-core business activities, see Item 1 -
BUSINESS - "New Business Development" in the Form 10-K.
With the enactment of the Energy Act and new legislation being discussed at
federal and state levels to expand customer choice, the Southern electric system
is positioning the business to meet the challenge of increasing competition.
Legislation has been enacted in Alabama that would establish a process for
determining whether utilities would experience "stranded costs" upon the
transfer of an existing customer of a utility to another electric supplier. This
legislation authorizes the Alabama PSC to make a determination of whether
stranded costs would exist as a result of such a transfer by a customer of
ALABAMA and would require the customer seeking an alternative supplier to pay
any stranded costs found to exist. The legislation has termination provisions
keyed to passage of comprehensive retail electric service competition
legislation which addresses stranded costs of existing utilities and eliminates
11
<PAGE>
THE SOUTHERN COMPANY AND SUBSIDIARY COMPANIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
RESULTS OF OPERATIONS AND FINANCIAL CONDITION
the obligation of utilities to provide generating resources. For additional
information, see Item 1 - BUSINESS - "Competition" and Item 7 - MANAGEMENT'S
DISCUSSION AND ANALYSIS - "Future Earnings Potential" of SOUTHERN in the Form
10-K.
Compliance costs related to the Clean Air Act could affect earnings if such
costs cannot be offset. For additional information about the Clean Air Act and
other important environmental issues, see Item 7 - MANAGEMENT'S DISCUSSION AND
ANALYSIS - "Environmental Matters" of SOUTHERN in the Form 10-K.
Reference is made to Notes (B), (C), (E), (F), (G), (I), (J), (K), (L) and
(N) in the "Notes to the Condensed Financial Statements" herein for discussion
of various contingencies and other matters which may affect future earnings
potential. Reference is also made to Part II - Item 1 - "Legal Proceedings"
herein.
FINANCIAL CONDITION
Overview
The major change in SOUTHERN's financial condition during the first three months
of 1996 was the addition of approximately $306 million to utility plant. The
funds for these additions and other capital requirements were derived primarily
from operations and increased short-term debt. See SOUTHERN's Condensed
Statements of Cash Flows for further details.
Financing Activities
During the first three months of 1996, the operating companies sold $40 million
of first mortgage bonds, and through public authorities, $21 million of
pollution control revenue bonds. Retirements, including maturities, of the
operating companies' first mortgage bonds and pollution control revenue bonds
totaled $244 million. A subsidiary of ALABAMA formed as a statutory business
trust sold $97 million of trust preferred securities guaranteed by ALABAMA and
loaned the proceeds of such securities to ALABAMA. See Note (H) to the Condensed
Financial Statements herein for further details.
During the first quarter of 1996, SOUTHERN raised $19 million from the
issuance of new common stock under SOUTHERN's various stock plans. The market
price of SOUTHERN's common stock at March 31, 1996 was $23.875 per share and the
book value was $13.09 per share, representing a market-to-book ratio of 182
percent, compared to $24.625, $13.10 and 188 percent, respectively, at the end
of 1995. The dividend for the first quarter of 1996 was 31.5 cents per share.
Capital Requirements
Reference is made to Item 7 - MANAGEMENT'S DISCUSSION AND ANALYSIS of SOUTHERN
under "Capital Requirements for Construction," "Environmental Matters" and
"Other Capital Requirements" in the Form 10-K for a description of the Southern
electric system's capital requirements for its construction program,
environmental compliance efforts, sinking fund requirements and maturing debt.
Approximately $100 million will be required by March 31, 1997, 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
higher-cost debt and preferred stock and replace these obligations with
lower-cost capital.
12
<PAGE>
THE SOUTHERN COMPANY AND SUBSIDIARY COMPANIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
RESULTS OF OPERATIONS AND FINANCIAL CONDITION
Sources of Capital
In addition to the financing activities previously described, SOUTHERN may
require additional equity capital during the remainder of the year. The amounts
and timing of additional equity capital to be raised in 1996, as well as in
subsequent years, will be contingent on SOUTHERN's investment opportunities. The
operating companies plan to obtain the funds required for construction and other
purposes from sources similar to those used in the past. The amount, type and
timing of any financings--if needed--will depend upon maintenance of adequate
earnings, regulatory approval, prevailing market conditions and other factors.
Currently, each of the operating companies expects to have adequate earnings
coverage ratios for any anticipated security sales through at least 1998. See
Item 1 - BUSINESS - "Financing Programs" in the Form 10-K for additional
information.
To meet short-term cash needs and contingencies, the SOUTHERN system had at
March 31, 1996, approximately $312 million of cash and cash equivalents and
approximately $2.7 billion of unused credit arrangements with banks. At March
31, 1996, the system companies had outstanding approximately $1.4 billion of
short-term notes payable and $932 million of commercial paper. Since SOUTHERN's
construction program with respect to major generating projects in the core
business 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.
See Note (D) to the Condensed Financial Statements herein for discussion of
financial derivative contracts entered into by SOUTHERN.
13
<PAGE>
ALABAMA POWER COMPANY
14
<PAGE>
<TABLE>
<CAPTION>
ALABAMA POWER COMPANY
CONDENSED STATEMENTS OF INCOME (UNAUDITED)
(Stated in Thousands of Dollars)
For the Three Months
Ended March 31,
1996 1995
<S> <C> <C>
OPERATING REVENUES:
Revenues $ 655,401 $ 618,970
Revenues from affiliates 77,408 27,801
------------ -------------
Total operating revenues 732,809 646,771
------------ -------------
OPERATING EXPENSES:
Operation--
Fuel 211,548 157,189
Purchased power from non-affiliates 8,967 2,619
Purchased power from affiliates 15,846 22,961
Other 117,078 112,723
Maintenance 62,934 63,885
Depreciation and amortization 79,898 76,457
Taxes other than income taxes 50,064 47,678
Federal and state income taxes 44,422 40,310
------------ -------------
Total operating expenses 590,757 523,822
------------ -------------
OPERATING INCOME 142,052 122,949
OTHER INCOME (EXPENSE):
Allowance for equity funds used during construction 401 1,257
Income from subsidiary 974 838
Interest income 9,670 4,895
Other, net (7,623) (7,810)
Income taxes applicable to other income (370) 4,730
------------ -------------
INCOME BEFORE INTEREST CHARGES 145,104 126,859
------------ -------------
INTEREST CHARGES:
Interest on long-term debt 42,576 45,400
Allowance for debt funds used during construction (1,876) (2,041)
Interest on interim obligations 5,727 4,006
Amortization of debt discount, premium and expense, net 7,372 2,519
Other interest charges 11,534 4,791
------------ -------------
Net interest charges 65,333 54,675
------------ -------------
NET INCOME 79,771 72,184
DIVIDENDS ON PREFERRED STOCK 6,612 6,856
------------ -------------
NET INCOME AFTER DIVIDENDS ON
PREFERRED STOCK $ 73,159 $ 65,328
============ =============
</TABLE>
The accompanying notes as they relate to ALABAMA are an integral part of
these condensed statements.
15
<PAGE>
<TABLE>
<CAPTION>
ALABAMA POWER COMPANY
CONDENSED STATEMENTS OF CASH FLOWS (UNAUDITED)
(Stated in Thousands of Dollars)
For the Three Months
Ended March 31,
1996 1995
<S> <C> <C>
OPERATING ACTIVITIES:
Net income $ 79,771 $ 72,184
Adjustments to reconcile net income to net cash provided by operating activities--
Depreciation and amortization 101,996 91,746
Deferred income taxes and investment tax credits, net 4,469 3,547
Allowance for equity funds used during construction (401) (1,257)
Other, net (6,600) 52,996
Changes in certain current assets and liabilities--
Receivables, net 6,009 32,703
Inventories 14,268 (27,442)
Payables (66,557) (137,642)
Taxes accrued 53,974 45,081
Energy cost recovery, retail 30,855 27,803
Other (74,959) (65,887)
----------- -----------
Net cash provided from operating activities 142,825 93,832
----------- -----------
INVESTING ACTIVITIES:
Gross property additions (105,663) (126,840)
Other (19,058) (13,643)
----------- -----------
Net cash used for investing activities (124,721) (140,483)
----------- -----------
FINANCING ACTIVITIES:
Proceeds--
Company obligated mandatorily redeemable preferred securities of Alabama
Power Capital Trust I holding Company Junior
Subordinated Notes (Note H) 97,000 -
Retirements--
First mortgage bonds (83,797) -
Other long-term debt (239) (185)
Interim obligations, net 46,014 120,169
Payment of preferred stock dividends (6,638) (6,589)
Payment of common stock dividends (76,000) (71,900)
Miscellaneous (2,869) (186)
----------- -----------
Net cash provided from (used for) financing activities (26,529) 41,309
----------- -----------
NET CHANGE IN CASH AND CASH EQUIVALENTS (8,425) (5,342)
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD 12,616 14,676
----------- -----------
CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 4,191 $ 9,334
=========== ===========
SUPPLEMENTAL CASH FLOW INFORMATION:
Cash paid during the period for--
Interest (net of amount capitalized) $ 56,128 $ 49,600
Income taxes 218 2,500
</TABLE>
The accompanying notes as they relate to ALABAMA are an integral part
of these condensed statements.
16
<PAGE>
<TABLE>
<CAPTION>
ALABAMA POWER COMPANY
CONDENSED BALANCE SHEETS
(Stated in Thousands of Dollars)
ASSETS
At March 31,
1996 At December 31,
(Unaudited) 1995
---------------- ----------------
<S> <C> <C>
UTILITY PLANT:
Plant in service $ 10,503,568 $ 10,430,792
Less accumulated provision for depreciation 3,914,933 3,838,093
-------------- --------------
6,588,635 6,592,699
Nuclear fuel, at amortized cost 89,346 100,537
Construction work in progress 383,298 362,768
-------------- --------------
Total 7,061,279 7,056,004
-------------- --------------
OTHER PROPERTY AND INVESTMENTS:
Southern Electric Generating Company, at equity 26,273 27,232
Nuclear decommissioning trusts 111,918 108,368
Miscellaneous 19,303 19,156
-------------- --------------
Total 157,494 154,756
-------------- --------------
CURRENT ASSETS:
Cash and cash equivalents 4,191 12,616
Receivables--
Customer accounts receivable 322,596 355,833
Other accounts and notes receivable 18,835 28,082
Affiliated companies 69,831 41,819
Accumulated provision for uncollectible accounts (949) (1,212)
Refundable income taxes 2,625 2,635
Fossil fuel stock, at average cost 98,858 106,627
Materials and supplies, at average cost 172,604 179,103
Prepayments 159,203 116,331
Vacation pay deferred 29,365 29,458
-------------- --------------
Total 877,159 871,292
-------------- --------------
DEFERRED CHARGES:
Deferred charges related to income taxes 432,748 436,837
Debt expense, being amortized 7,600 7,648
Premium on reacquired debt, being amortized 83,640 89,967
Uranium enrichment decontamination and decommissioning fund 40,282 40,282
Miscellaneous 92,233 87,574
-------------- --------------
Total 656,503 662,308
-------------- --------------
TOTAL ASSETS $ 8,752,435 $ 8,744,360
============== ==============
</TABLE>
The accompanying notes as they relate to ALABAMA are an integral part of
these condensed statements.
17
<PAGE>
<TABLE>
<CAPTION>
ALABAMA POWER COMPANY
CONDENSED BALANCE SHEETS
(Stated in Thousands of Dollars)
CAPITALIZATION AND LIABILITIES
At March 31,
1996 At December 31,
(Unaudited) 1995
-------------- ---------------
<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 1,158,459 1,161,225
------------ ------------
2,687,608 2,690,374
Preferred stock 440,400 440,400
Company obligated mandatorily redeemable preferred securities of
Alabama Power Capital Trust I holding Company Junior
Subordinated Notes (Note H) 97,000 -
Long-term debt 2,372,817 2,374,948
------------ ------------
Total 5,597,825 5,505,722
------------ ------------
CURRENT LIABILITIES:
Long-term debt due within one year 910 84,682
Notes payable to banks 10,000 -
Commercial paper 426,030 390,016
Accounts payable--
Affiliated companies 70,250 76,326
Other 109,554 182,401
Customer deposits 30,901 30,353
Taxes accrued--
Federal and state income 51,747 13,599
Other 32,036 18,158
Interest accrued 47,428 53,527
Vacation pay accrued 29,365 29,458
Miscellaneous 66,551 70,543
------------ ------------
Total 874,772 949,063
------------ ------------
DEFERRED CREDITS AND OTHER LIABILITIES:
Accumulated deferred income taxes 1,199,816 1,191,591
Accumulated deferred investment tax credits 302,526 305,372
Prepaid capacity revenues, net 129,228 131,186
Uranium enrichment decontamination and decommissioning fund 36,620 36,620
Deferred credits related to income taxes 380,140 386,038
Natural disaster reserve 19,979 17,959
Miscellaneous 211,529 220,809
------------ ------------
Total 2,279,838 2,289,575
------------ ------------
TOTAL CAPITALIZATION AND LIABILITIES $ 8,752,435 $ 8,744,360
============ ============
</TABLE>
The accompanying notes as they relate to ALABAMA are an integral part of
these condensed statements.
18
<PAGE>
ALABAMA POWER COMPANY
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
RESULTS OF OPERATIONS AND FINANCIAL CONDITION
FIRST QUARTER 1996 vs. FIRST QUARTER 1995
RESULTS OF OPERATIONS
Earnings
ALABAMA's net income after dividends on preferred stock for the first quarter of
1996 was $73.2 million, compared to $65.3 million for the same quarter of 1995.
This 12.0% increase in earnings is principally the result of an increase in
operating revenues offset somewhat by an increase in operating expenses.
Significant income statement items appropriate for discussion include the
following:
Increase (Decrease)
--------------------------------
(in thousands) %
Revenues........................................ $36,431 5.9
Revenues from affiliates........................ 49,607 178.4
Fuel expense.................................... 54,359 34.6
Interest income................................. 4,775 97.5
Interest on long-term debt...................... (2,824) (6.2)
Amortization of debt discount, premium and
expense, net.................................. 4,853 192.6
Other interest charges.......................... 6,743 140.7
Revenues. Excluding fuel revenues, which represent the pass-through of fuel
expenses and do not affect income, revenues for the first quarter of 1996
increased $21.7 million, compared to the corresponding period of 1995. The
increase in revenues was influenced most heavily by an increase in the amount of
retail energy sold. For the first three months of 1996, total retail
kilowatt-hour sales increased 8.6% over the same period of 1995, and retail
revenues, excluding fuel revenues, increased $26.0 million. Residential,
commercial and industrial energy sales increased 13.9%, 13.8% and 2.8%,
respectively. Weather and a strong economy in ALABAMA's service territory had a
positive effect on retail sales.
Revenues from affiliates. Revenues from sales to affiliated companies
within the Southern electric system, as well as purchases of energy, will vary
from period to period depending on demand, the availability, and cost of
generating resources at each company. These transactions did not have a
significant impact on earnings.
Fuel expense. The increase in fuel expense for the first quarter of 1996 as
compared to the same quarter of 1995 can be attributed to higher generation
necessary to meet the increased demand for electricity.
Interest income and Other interest charges. Interest income increased
approximately $5 million as the result of the recognition of gains from the
sales of securities from the nuclear decommissioning trust. This increase in
income was offset by a concurrent recognition of other interest charges in
accordance with FERC requirements.
Interest on long-term debt. The decline in interest on long-term debt
reflects the redemption and refinancing of long-term debt over the past twelve
months.
19
<PAGE>
ALABAMA POWER COMPANY
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
RESULTS OF OPERATIONS AND FINANCIAL CONDITION
Amortization of debt discount, premium and expense, net. This increase is
the result of ALABAMA's reducing the asset account, as allowed by the Alabama
PSC, relating to premiums incurred in connection with the refinancing of
high-cost debt. See Note (G) to the Condensed Financial Statements herein for
further details.
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 energy sales growth to a less regulated, more competitive
environment.
With the enactment of the Energy Act and new legislation being discussed at
federal and state levels to expand customer choice, the Southern electric system
is positioning the business to meet the challenge of increasing competition.
Legislation has been enacted in Alabama that would establish a process for
determining whether utilities would experience "stranded costs" upon the
transfer of an existing customer of a utility to another electric supplier. This
legislation authorizes the Alabama PSC to make a determination of whether
stranded costs would exist as a result of such a transfer by a customer of
ALABAMA and would require the customer seeking an alternative supplier to pay
any stranded costs found to exist. The legislation has termination provisions
keyed to passage of comprehensive retail electric service competition
legislation which addresses stranded costs of existing utilities and eliminates
the obligation of utilities to provide generating resources. For additional
information, see Item 1 - BUSINESS "Competition" and Item 7 - MANAGEMENT'S
DISCUSSION AND ANALYSIS - "Future Earnings Potential" of ALABAMA in the Form
10-K.
Compliance costs related to the Clean Air Act could affect earnings if such
costs cannot be offset. For additional information about the Clean Air Act and
other important environmental issues, see Item 7 - MANAGEMENT'S DISCUSSION AND
ANALYSIS - "Environmental Matters" of ALABAMA in the Form 10-K.
Reference is made to Notes (B), (C), (F) and (G) in the "Notes to the
Condensed Financial Statements" herein for discussion of various contingencies
and other matters which may affect future earnings potential. Reference is also
made to Part II - Item 1 - "Legal Proceedings" herein.
FINANCIAL CONDITION
Overview
The major change in ALABAMA's financial condition during the first three months
of 1996 was the addition of approximately $105.7 million to utility plant. The
funds for these additions and other capital requirements were derived primarily
from operating activities and an increase in short-term debt. See ALABAMA's
Condensed Statements of Cash Flows for further details.
Financing Activities
In January 1996, Alabama Power Capital Trust I, a statutory business trust
established for the sole purpose of holding ALABAMA's junior subordinated notes
and issuing preferred securities, sold $97,000,000 of its 7.375% trust preferred
securities which are guaranteed by ALABAMA. See Note (H) to the Condensed
Financial Statements herein for further details. Also in January, ALABAMA
redeemed $23.8 million of its 9 1/4% first mortgage bonds due 2021. ALABAMA's
4 1/2% first mortgage bonds in the principal amount of $60.0 million matured on
March 1, 1996.
20
<PAGE>
ALABAMA POWER COMPANY
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
RESULTS OF OPERATIONS AND FINANCIAL CONDITION
ALABAMA will continue to retire higher-cost debt and preferred stock and
replace these obligations with lower-cost capital, as market conditions permit.
Capital Requirements
Reference is made to Item 7 - MANAGEMENT'S DISCUSSION AND ANALYSIS of ALABAMA
under "Capital Requirements," "Other Capital Requirements" and "Environmental
Matters" in the Form 10-K for a description of ALABAMA's capital requirements
for its construction program, maturing debt and environmental compliance
efforts.
Sources of Capital
In addition to the financing activities previously described herein, ALABAMA
plans to obtain the funds required for construction and other purposes from
sources similar to those used in the past. The amount, type and timing of any
financings--if needed--will depend upon maintenance of adequate earnings,
regulatory approval, prevailing market conditions and other factors. Currently,
ALABAMA expects to have adequate earnings coverage ratios for any anticipated
security sales through at least 1998. See Item 1 - BUSINESS - "Financing
Programs" in the Form 10-K for additional information.
To meet short-term cash needs and contingencies, ALABAMA had at March 31,
1996, approximately $4.2 million of cash and cash equivalents and had committed
lines of credit of approximately $488 million with regulatory authority for up
to $750 million of short-term borrowing. At March 31, 1996, ALABAMA had
outstanding $10.0 million of short-term notes payable to banks and $426.0
million of commercial paper. As of May 3, 1996, the committed lines of credit
had been increased to approximately $608 million. Since ALABAMA has no major
generating plants under construction, management believes that the need for
working capital can be adequately met by utilizing lines of credit without
maintaining large cash balances.
21
<PAGE>
Exhibit 1
ARTHUR ANDERSEN LLP
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, 1996, and the related condensed statements of income for
the three-month periods ended March 31, 1996 and 1995, and condensed statements
of cash flows for the three-month periods ended March 31, 1996 and 1995. 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, 1995
(not presented herein) and, in our report dated February 21, 1996, 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, 1995 is
fairly stated, in all material respects, in relation to the balance sheet from
which it has been derived.
/s/Arthur Andersen LLP
Birmingham, Alabama
May 9, 1996
22
<PAGE>
GEORGIA POWER COMPANY
23
<PAGE>
<TABLE>
<CAPTION>
GEORGIA POWER COMPANY
CONDENSED STATEMENTS OF INCOME (UNAUDITED)
(Stated in Thousands of Dollars)
For the Three Months
Ended March 31,
1996 1995
<S> <C> <C>
OPERATING REVENUES:
Revenues $ 1,015,353 $ 961,047
Revenues from affiliates 13,466 13,446
------------ ----------
Total operating revenues 1,028,819 974,493
------------ ----------
OPERATING EXPENSES:
Operation--
Fuel 188,494 200,943
Purchased power from non-affiliates 36,920 41,572
Purchased power from affiliates 65,476 29,730
Provision for separation benefits 18,500 1,060
Other 165,544 161,673
Maintenance 75,826 65,969
Depreciation and amortization 107,520 96,160
Amortization of deferred Plant Vogtle costs (Note J) 33,759 28,157
Taxes other than income taxes 55,146 50,789
Federal and state income taxes 89,684 91,437
------------ ----------
Total operating expenses 836,869 767,490
------------ ----------
OPERATING INCOME 191,950 207,003
OTHER INCOME (EXPENSE):
Allowance for equity funds used during construction 255 1,671
Equity in earnings of unconsolidated subsidiary 973 838
Interest income 901 281
Other, net (3,673) (5,734)
Income taxes applicable to other income 138 3,561
------------ ----------
INCOME BEFORE INTEREST CHARGES 190,544 207,620
------------ ----------
INTEREST CHARGES:
Interest on long-term debt 53,430 68,565
Allowance for debt funds used during construction (3,190) (3,614)
Interest on interim obligations 5,039 5,417
Amortization of debt discount, premium and expense, net 3,847 3,920
Other interest charges 5,365 4,882
------------ ----------
Net interest charges 64,491 79,170
------------ ----------
NET INCOME 126,053 128,450
DIVIDENDS ON PREFERRED STOCK 11,652 12,313
------------ ----------
NET INCOME AFTER DIVIDENDS ON
PREFERRED STOCK $ 114,401 $ 116,137
============ ==========
</TABLE>
The accompanying notes as they relate to GEORGIA are an integral part of
these condensed statements.
24
<PAGE>
<TABLE>
<CAPTION>
GEORGIA POWER COMPANY
CONDENSED STATEMENTS OF CASH FLOWS (UNAUDITED)
(Stated in Thousands of Dollars)
For the Three Months
Ended March 31,
1996 1995
<S> <C> <C>
OPERATING ACTIVITIES:
Net income $ 126,053 $ 128,450
Adjustments to reconcile net income to net cash provided by operating activities--
Depreciation and amortization 133,095 124,104
Deferred income taxes and investment tax credits, net 9,399 16,077
Allowance for equity funds used during construction (255) (1,671)
Amortization of deferred Plant Vogtle costs (Note J) 33,759 28,157
Other, net 10,576 1,462
Changes in certain current assets and liabilities--
Receivables, net 42,945 48,837
Inventories 14,250 (8,834)
Payables (25,785) (57,941)
Taxes accrued 28,253 29,377
Energy cost recovery, retail 15,980 20,916
Other (32,232) 4,918
----------- -----------
Net cash provided from operating activities 356,038 333,852
----------- -----------
INVESTING ACTIVITIES:
Gross property additions (111,998) (103,245)
Sales of property 1,800 -
Other (53,502) (49,232)
----------- -----------
Net cash used for investing activities (163,700) (152,477)
----------- -----------
FINANCING ACTIVITIES:
Proceeds--
First mortgage bonds 10,000 -
Retirements--
First mortgage bonds (150,000) -
Pollution control bonds (6,800) (70)
Interim obligations, net 72,810 (51,903)
Payment of preferred stock dividends (11,518) (12,208)
Payment of common stock dividends (121,500) (113,900)
Miscellaneous (86) (329)
----------- -----------
Net cash used for financing activities (207,094) (178,410)
----------- -----------
NET CHANGE IN CASH AND CASH EQUIVALENTS (14,756) 2,965
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD 28,930 12,539
----------- -----------
CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 14,174 $ 15,504
=========== ===========
SUPPLEMENTAL CASH FLOW INFORMATION:
Cash paid during the period for--
Interest (net of amount capitalized) $ 75,312 $ 81,525
Income taxes 10,460 3,515
</TABLE>
The accompanying notes as they relate to GEORGIA are an integral part
of these condensed statements.
25
<PAGE>
<TABLE>
<CAPTION>
GEORGIA POWER COMPANY
CONDENSED BALANCE SHEETS
(Stated in Thousands of Dollars)
ASSETS
At March 31,
1996 At December 31,
(Unaudited) 1995
-------------- ---------------
<S> <C> <C>
UTILITY PLANT:
Plant in service $ 14,578,574 $ 14,538,595
Less accumulated provision for depreciation 4,524,223 4,417,120
-------------- --------------
10,054,351 10,121,475
Nuclear fuel, at amortized cost 122,401 124,849
Construction work in progress 277,352 236,715
-------------- --------------
Total 10,454,104 10,483,039
-------------- --------------
OTHER PROPERTY AND INVESTMENTS:
Southern Electric Generating Company, at equity 27,009 27,232
Nuclear decommissioning trusts, at market 119,715 92,273
Miscellaneous 127,721 120,383
-------------- --------------
Total 274,445 239,888
-------------- --------------
CURRENT ASSETS:
Cash and cash equivalents 14,174 28,930
Receivables--
Customer accounts receivable 382,098 418,749
Other accounts and notes receivable 84,851 102,953
Affiliated companies 18,668 15,482
Accumulated provision for uncollectible accounts (5,000) (5,000)
Fossil fuel stock, at average cost 131,856 145,151
Materials and supplies, at average cost 285,849 286,804
Prepayments 113,422 107,764
Vacation pay deferred 40,119 35,543
-------------- --------------
Total 1,066,037 1,136,376
-------------- --------------
DEFERRED CHARGES:
Deferred charges related to income taxes 858,360 871,783
Deferred Plant Vogtle costs (Note J) 273,879 307,638
Premium on reacquired debt, being amortized 170,991 174,018
Debt expense, being amortized 26,834 27,227
Miscellaneous 221,691 230,306
-------------- --------------
Total 1,551,755 1,610,972
-------------- --------------
TOTAL ASSETS $ 13,346,341 $ 13,470,275
============== ==============
</TABLE>
The accompanying notes as they relate to GEORGIA are an integral part of
these condensed statements.
26
<PAGE>
<TABLE>
<CAPTION>
GEORGIA POWER COMPANY
CONDENSED BALANCE SHEETS
(Stated in Thousands of Dollars)
CAPITALIZATION AND LIABILITIES
At March 31,
1996 At December 31,
(Unaudited) 1995
-------------- ---------------
<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 2,384,444 2,384,444
Premium on preferred stock 413 413
Retained earnings 1,562,806 1,569,905
------------- -------------
4,291,913 4,299,012
Preferred stock 692,787 692,787
Company obligated mandatorily redeemable preferred securities 100,000 100,000
Long-term debt 3,319,012 3,315,460
------------- -------------
Total 8,403,712 8,407,259
------------- -------------
CURRENT LIABILITIES:
Long-term debt due within one year 383 150,446
Notes payable to banks 254,825 178,000
Commercial paper 218,315 222,330
Accounts payable--
Affiliated companies 91,360 72,878
Other 236,972 316,278
Customer deposits 56,355 53,145
Taxes accrued--
Federal and state income 77,447 7,759
Other 55,198 96,633
Interest accrued 81,314 96,162
Vacation pay accrued 38,739 34,233
Miscellaneous 139,064 137,184
------------- -------------
Total 1,249,972 1,365,048
------------- -------------
DEFERRED CREDITS AND OTHER LIABILITIES:
Accumulated deferred income taxes 2,511,756 2,510,458
Accumulated deferred investment tax credits 428,277 432,184
Deferred credits related to income taxes 404,058 410,016
Disallowed Plant Vogtle capacity buyback costs 58,038 58,514
Miscellaneous 290,528 286,796
------------- -------------
Total 3,692,657 3,697,968
------------- -------------
TOTAL CAPITALIZATION AND LIABILITIES $ 13,346,341 $ 13,470,275
============= =============
</TABLE>
The accompanying notes as they relate to GEORGIA are an integral part of
these condensed statements.
27
<PAGE>
GEORGIA POWER COMPANY
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
RESULTS OF OPERATIONS AND FINANCIAL CONDITION
FIRST QUARTER 1996 vs. FIRST QUARTER 1995
RESULTS OF OPERATIONS
Earnings
GEORGIA's net income after dividends on preferred stock for the first quarter of
1996 was $114.4 million, compared to $116.1 million for the same quarter of
1995. The increase in operating expenses outpaced the increase in operating
revenues for the quarter, resulting in a 1.5% decline in earnings.
Significant income statement items appropriate for discussion include the
following:
Increase (Decrease)
----------------------------------
(in thousands) %
Revenues...................................... $ 54,306 5.7
Fuel expense.................................. (12,449) (6.2)
Purchased power from affiliates............... 35,746 120.2
Provision for separation benefits............. 17,440 1645.3
Maintenance expense........................... 9,857 14.9
Depreciation and amortization expense......... 11,360 11.8
Interest on long-term debt.................... (15,135) (22.1)
Revenues. Excluding fuel revenues, which represent the pass-through of fuel
expenses and do not affect income, revenues for the first quarter of 1996
increased $26.2 million, compared to the corresponding period of 1995. The
increase in revenues was influenced most heavily by an increase in the amount of
retail energy sold. For the first three months of 1996, total retail
kilowatt-hour sales increased 7.0% over the same period of 1995, and retail
revenues, excluding fuel revenues, increased 5.0% or $33.8 million. Residential,
commercial and industrial energy sales increased 11.0%, 8.8% and 3.2%,
respectively. Colder-than-normal temperatures and a slight increase in the
number of customers served had a positive effect on retail sales. Energy sales
to non-affiliated wholesale customers for the first quarter of 1996 increased
16.0% compared to the corresponding period of 1995 primarily due to increased
demand by municipalities and cooperatives in Georgia. However, capacity revenues
from sales to non-affiliated utilities outside the service territory fell $10.3
million primarily due to the scheduled decline in megawatts of capacity under
long-term contracts.
Fuel expense. Fuel expense decreased primarily due to a decrease in
generation by GEORGIA resulting from the timing of maintenance at fossil plants
and a slightly lower average cost of fuel. (See Purchased power from affiliates
below.)
Purchased power from affiliates. As a result of the timing of maintenance
at fossil plants discussed above, purchased power from affiliates increased
compared to the same period of 1995. 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.
28
<PAGE>
GEORGIA POWER COMPANY
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
RESULTS OF OPERATIONS AND FINANCIAL CONDITION
Provision for separation benefits. The increase in provision for separation
benefits for the first quarter of 1996 compared to the first quarter of 1995 is
attributable to work force reduction programs, which have been implemented to
control growth in future operating expenses.
Maintenance expense. The increase in maintenance expense is attributable to
the timing of maintenance performed primarily on fossil plants.
Depreciation and amortization expense. Depreciation and amortization
increased in the first quarter of 1996 primarily due to accelerated depreciation
of generating plants pursuant to a new retail rate plan effective January 1,
1996, an increase in plant-in-service and an increase in nuclear decommissioning
expense.
Interest on long-term debt. The decline in interest on long-term debt
reflects the redemption and refinancing of long-term debt over the past twelve
months.
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 energy sales growth to a less regulated, more competitive
environment.
With the enactment of the Energy Act and new legislation being discussed at
federal and state levels to expand customer choice, the Southern electric system
is positioning the business to meet the challenge of increasing competition. For
additional information, see Item 1 - BUSINESS - "Competition" and Item 7 -
MANAGEMENT'S DISCUSSION AND ANALYSIS - "Future Earnings Potential" of GEORGIA in
the Form 10-K.
Effective January 1, 1996, GEORGIA began operating under a three-year
retail rate plan. Under the plan, GEORGIA's earnings will be evaluated against a
retail return on common equity range of 10% to 12.5%. GEORGIA is required to
absorb cost increases of approximately $29.0 million annually during the plan's
three-year operation, including $14.0 million annually of accelerated
depreciation of electric plant. Reference is made to Note (I) to the Condensed
Financial Statements herein for additional information.
Compliance costs related to the Clean Air Act could affect earnings if such
costs cannot be offset. For additional information about the Clean Air Act and
other important environmental issues, see Item 7 - MANAGEMENT'S DISCUSSION AND
ANALYSIS - "Environmental Issues" of GEORGIA in the Form 10-K.
Reference is made to Notes (B), (C), (F) and (I) through (N) in the "Notes
to the Condensed Financial Statements" herein for discussion of various
contingencies and other matters which may affect future earnings potential.
Reference is also made to Part II - Item 1 - "Legal Proceedings" herein.
FINANCIAL CONDITION
Overview
The major change in GEORGIA's financial condition during the first three months
of 1996 was the addition of approximately $112.0 million to utility plant. The
funds for these additions and other capital requirements were derived primarily
from operations. See GEORGIA's Condensed Statements of Cash Flows for further
details.
29
<PAGE>
GEORGIA POWER COMPANY
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
RESULTS OF OPERATIONS AND FINANCIAL CONDITION
Financing Activities
In January 1996, GEORGIA sold $10.0 million of 6.07% first mortgage bonds
secured medium-term notes due 2005. In February 1996, $6.8 million of proceeds
from such sale were applied to the redemption of three outstanding series of
industrial development bonds at rates ranging from 6 3/8% to 6 3/4%. GEORGIA's
4 3/4% first mortgage bonds in the principal amount of $150.0 million matured
on March 1, 1996.
GEORGIA plans to continue, to the extent possible, a program to retire
higher-cost debt and preferred stock and replace these obligations with
lower-cost capital.
Capital Requirements
Reference is made to Item 7 - MANAGEMENT'S DISCUSSION AND ANALYSIS of GEORGIA
under "Liquidity and Capital Requirements" and "Environmental Issues" in the
Form 10-K for a description of GEORGIA's capital requirements for its
construction program and environmental compliance efforts.
Sources of Capital
In addition to the financing activities previously described herein, GEORGIA
plans to obtain the funds required for construction and other purposes from
sources similar to those used in the past. The amount, type and timing of any
financings--if needed--will depend upon maintenance of adequate earnings,
regulatory approval, prevailing market conditions and other factors. Currently,
GEORGIA expects to have adequate earnings coverage ratios for any anticipated
security sales through at least 1998. See Item 1 - BUSINESS - "Financing
Programs" in the Form 10-K for additional information.
To meet short-term cash needs and contingencies, GEORGIA had at March 31,
1996, approximately $14.2 million of cash and cash equivalents and approximately
$740.0 million of unused credit arrangements with banks. At March 31, 1996,
GEORGIA had outstanding $254.8 million of short-term notes payable to banks and
$218.3 million of commercial paper. Since GEORGIA has no major generating plants
under construction, management believes that the need for working capital can be
adequately met by utilizing lines of credit without maintaining large cash
balances.
30
<PAGE>
Exhibit 1
ARTHUR ANDERSEN LLP
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, 1996, and the related condensed
statements of income for the three-month periods ended March 31, 1996 and 1995,
and the condensed statements of cash flows for the three-month periods ended
March 31, 1996 and 1995. 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 GEORGIA POWER COMPANY as of December 31, 1995
(not presented herein), and, in our report dated February 21, 1996, 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, 1995, is
fairly stated, in all material respects, in relation to the balance sheet from
which it has been derived.
/s/Arthur Andersen LLP
Atlanta, Georgia
May 9, 1996
31
<PAGE>
GULF POWER COMPANY
32
<PAGE>
<TABLE>
<CAPTION>
GULF POWER COMPANY
CONDENSED STATEMENTS OF INCOME (UNAUDITED)
(Stated in Thousands of Dollars)
For the Three Months
Ended March 31,
1996 1995
<S> <C> <C>
OPERATING REVENUES:
Revenues $ 153,670 $ 135,776
Revenues from affiliates 1,251 5,142
---------- -----------
Total operating revenues 154,921 140,918
---------- -----------
OPERATING EXPENSES:
Operation--
Fuel 38,213 43,954
Purchased power from non-affiliates 1,676 1,299
Purchased power from affiliates 19,319 6,042
Other 25,636 28,282
Maintenance 15,047 9,632
Depreciation and amortization 14,085 13,655
Taxes other than income taxes 13,466 11,882
Federal and state income taxes 7,278 6,669
---------- -----------
Total operating expenses 134,720 121,415
---------- -----------
OPERATING INCOME 20,201 19,503
OTHER INCOME (EXPENSE):
Allowance for equity funds used during construction 9 26
Interest income 349 654
Other, net (471) (158)
Income taxes applicable to other income 4 (250)
---------- -----------
INCOME BEFORE INTEREST CHARGES 20,092 19,775
---------- -----------
INTEREST CHARGES:
Interest on long-term debt 6,148 5,920
Other interest charges 282 216
Interest on notes payable 504 820
Amortization of debt discount, premium, and expense, net 525 499
Allowance for debt funds used during construction (48) (35)
---------- -----------
Net interest charges 7,411 7,420
---------- -----------
NET INCOME 12,681 12,355
DIVIDENDS ON PREFERRED STOCK 1,423 1,475
---------- -----------
NET INCOME AFTER DIVIDENDS ON
PREFERRED STOCK $ 11,258 $ 10,880
========== ===========
</TABLE>
The accompanying notes as they relate to GULF are an integral part of
these condensed statements.
33
<PAGE>
<TABLE>
<CAPTION>
GULF POWER COMPANY
CONDENSED STATEMENTS OF CASH FLOWS (UNAUDITED)
(Stated in Thousands of Dollars)
For the Three Months
Ended March 31,
1996 1995
<S> <C> <C>
OPERATING ACTIVITIES:
Net income $ 12,681 $ 12,355
Adjustments to reconcile net income to net cash provided by operating activities--
Depreciation and amortization 18,255 18,834
Deferred income taxes, net 2,268 (125)
Allowance for equity funds used during construction (9) (26)
Other, net 3,004 1,458
Changes in certain current assets and liabilities--
Receivables, net 6,351 3,400
Inventories 3,377 (634)
Payables (10,690) 1,061
Taxes accrued 2,562 3,588
Other (9,898) (1,385)
---------- ----------
Net cash provided from operating activities 27,901 38,526
---------- ----------
INVESTING ACTIVITIES:
Gross property additions (16,692) (14,816)
Other (1,640) (1,407)
---------- ----------
Net cash used for investing activities (18,332) (16,223)
---------- ----------
FINANCING ACTIVITIES:
Proceeds--
First mortgage bonds 30,000 -
Pollution control bonds 21,200
Other long-term debt 22,147 -
Retirements--
Preferred stock subject to mandatory redemption - (1,000)
First mortgage bonds (1,750) -
Other long-term debt - (2,430)
Notes payable, net (45,000) (6,000)
Special deposits - redemption funds (21,291) -
Payment of preferred stock dividends (1,423) (1,475)
Payment of common stock dividends (12,300) (11,700)
Miscellaneous (939) (13)
---------- ----------
Net cash used for financing activities (9,356) (22,618)
---------- ----------
NET CHANGE IN CASH AND CASH EQUIVALENTS 213 (315)
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD 680 902
---------- ----------
CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 893 $ 587
========== ==========
SUPPLEMENTAL CASH FLOW INFORMATION:
Cash paid during the period for--
Interest (net of amount capitalized) $ 4,743 $ 4,733
Income taxes 49 2,705
</TABLE>
The accompanying notes as they relate to GULF are an integral part of
these condensed statements.
34
<PAGE>
<TABLE>
<CAPTION>
GULF POWER COMPANY
CONDENSED BALANCE SHEETS
(Stated in Thousands of Dollars)
ASSETS
At March 31,
1996 At December 31,
(Unaudited) 1995
------------- ---------------
<S> <C> <C>
UTILITY PLANT:
Plant in service $ 1,699,857 $ 1,695,814
Less accumulated provision for depreciation 670,814 658,806
------------ ------------
1,029,043 1,037,008
Construction work in progress 35,586 26,301
------------ ------------
Total 1,064,629 1,063,309
------------ ------------
OTHER PROPERTY AND INVESTMENTS: 657 740
------------ ------------
CURRENT ASSETS:
Cash and cash equivalents 893 680
Special deposits - redemption funds 21,291 -
Receivables--
Customer accounts receivable 62,196 69,166
Other accounts and notes receivable 2,968 3,393
Affiliated companies 1,826 802
Accumulated provision for uncollectible accounts (747) (768)
Fossil fuel stock, at average cost 35,164 37,875
Materials and supplies, at average cost 33,020 33,686
Current portion of deferred coal contract costs 15,155 12,767
Regulatory clauses under recovery 10,173 3,432
Prepaid income taxes - 4,232
Other prepayments 8,900 8,000
Vacation pay deferred 4,419 4,419
------------ ------------
Total 195,258 177,684
------------ ------------
DEFERRED CHARGES:
Deferred charges related to income taxes 28,958 29,093
Debt expense and loss, being amortized 20,589 20,459
Deferred coal contract costs 28,695 33,768
Deferred storm charges 6,748 7,502
Miscellaneous 10,105 9,304
------------ ------------
Total 95,095 100,126
------------ ------------
TOTAL ASSETS $ 1,355,639 $ 1,341,859
============ ============
</TABLE>
The accompanying notes as they relate to GULF are an integral part of
these condensed statements.
35
<PAGE>
<TABLE>
<CAPTION>
GULF POWER COMPANY
CONDENSED BALANCE SHEETS
(Stated in Thousands of Dollars)
CAPITALIZATION AND LIABILITIES
At March 31,
1996 At December 31,
(Unaudited) 1995
------------ ---------------
<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 218,438 218,438
Premium on preferred stock 81 81
Retained earnings 178,621 179,663
------------ ------------
435,200 436,242
Preferred stock 89,602 89,602
Long-term debt 385,658 323,376
------------ ------------
Total 910,460 849,220
------------ ------------
CURRENT LIABILITIES:
Long-term debt due within one year 40,578 31,548
Notes payable 35,500 80,500
Accounts payable--
Affiliated companies 16,193 14,447
Other 12,947 27,196
Customer deposits 13,132 13,195
Taxes accrued--
Federal and state income 4,586 -
Other 7,051 9,547
Interest accrued 8,362 5,719
Regulatory clauses over recovery 2,710 2,800
Vacation pay accrued 4,419 4,419
Miscellaneous 4,998 7,356
------------ ------------
Total 150,476 196,727
------------ ------------
DEFERRED CREDITS AND OTHER LIABILITIES:
Accumulated deferred income taxes 161,459 162,345
Deferred credits related to income taxes 66,740 67,481
Accumulated deferred investment tax credits 35,464 36,052
Accumulated provision for postretirement benefits 16,846 16,301
Miscellaneous 14,194 13,733
------------ ------------
Total 294,703 295,912
------------ ------------
TOTAL CAPITALIZATION AND LIABILITIES $ 1,355,639 $ 1,341,859
============ ============
</TABLE>
The accompanying notes as they relate to GULF are an integral part of
these condensed statements.
36
<PAGE>
GULF POWER COMPANY
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
RESULTS OF OPERATIONS AND FINANCIAL CONDITION
FIRST QUARTER 1996 vs. FIRST QUARTER 1995
RESULTS OF OPERATIONS
Earnings
GULF's net income after dividends on preferred stock for the first quarter of
1996 was $11.3 million, compared to $10.9 million for the same quarter of 1995.
This 3.5% increase in earnings is principally the result of an increase in
retail revenues offset somewhat by an increase in operating expenses.
Significant income statement items appropriate for discussion include the
following:
Increase (Decrease)
-------------------------------------
(in thousands) %
Revenues................................ $17,894 13.2
Fuel expense............................ (5,741) (13.1)
Purchased power from affiliates......... 13,277 219.7
Other operation expense................. (2,646) (9.4)
Maintenance expense..................... 5,415 56.2
Revenues. Of the $17.9 million increase in revenues, approximately $6.8
million impacted earnings. Territorial revenues, excluding those revenues which
represent the pass-through of fuel expense and certain other expenses and do not
affect income, increased $6.4 million. The increase in retail revenues was
influenced significantly by an 11.3% increase in total retail kilowatt-hour
sales over the same period of 1995. The change in retail energy sales is
primarily due to higher residential and commercial sales as a result of
colder-than-normal winter weather and a slight increase in the number of
customers served. Industrial sales were also up 3.9% compared to one year ago;
however, industrial revenues were down slightly mainly due to increased
participation in the Real-Time-Pricing program. The increase in revenues can
also be attributed to higher capacity revenues from sales to non-affiliated
utilities outside the service territory of $379,000.
Fuel expense. The reduction in fuel expense is primarily attributable to
decreased generation by GULF due to the scheduled maintenance outages at Plant
Crist and Plant Daniel during the first quarter of 1996. (See Purchased power
from affiliates below.) The average cost of fuel was unchanged from the
corresponding period in 1995.
Purchased power from affiliates. As a result of the maintenance outages
discussed above, purchased power from affiliates increased compared to the same
period of 1995. 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 expense. Other operation expense decreased primarily due to
a reduction in amortization costs related to the buyout of long-term contracts
for the supply of coal to Plant Daniel and also a decrease in various
administrative and general expenses.
37
<PAGE>
GULF POWER COMPANY
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
RESULTS OF OPERATIONS AND FINANCIAL CONDITION
Maintenance expense. The increase in maintenance expense is attributable to
the scheduled maintenance of production facilities at Plant Crist and Plant
Daniel during the first quarter of 1996.
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 energy sales growth to a less regulated, more competitive
environment.
With the enactment of the Energy Act and new legislation being discussed at
federal and state levels to expand customer choice, the Southern electric system
is positioning the business to meet the challenge of increasing competition. In
September 1995, GULF filed with the Florida PSC a petition for approval of its
proposed Commercial/Industrial Service Rider, which would be applicable to the
rate schedules serving GULF's largest and most at-risk customers. During the
first quarter of 1996, testimony was filed, interrogatories were answered, and
hearings were held. GULF filed its post-hearing brief with the Florida PSC on
April 8, 1996. A decision by the Florida PSC is expected by late May. For
additional information, see Item 7 - MANAGEMENT'S DISCUSSION AND ANALYSIS -
"Future Earnings Potential" of GULF and Item 1 - BUSINESS - "Competition" in the
Form 10-K.
Compliance costs related to the Clean Air Act could affect earnings if such
costs are not fully recovered through GULF's environmental cost recovery clause.
For additional information about the Clean Air Act and other important
environmental issues, see Item 7 - MANAGEMENT'S DISCUSSION AND ANALYSIS -
"Environmental Matters" of GULF in the Form 10-K.
Reference is made to Notes (B) and (F) in the "Notes to the Condensed
Financial Statements" herein for discussion of various contingencies and other
matters which may affect future earnings potential.
FINANCIAL CONDITION
Overview
The major change in GULF's financial condition during the first three months of
1996 was the addition of approximately $16.7 million to utility plant. The funds
for these additions and other capital requirements were derived primarily from
operations. See GULF's Condensed Statements of Cash Flows for further details.
Financing Activities
In January 1996, GULF sold $30.0 million of 6.875% first mortgage bonds due
2026. The proceeds were used to repay a portion of GULF's outstanding short-term
debt. GULF's first mortgage bond indenture contains various common stock
dividend restrictions which remain in effect as long as the bonds are
outstanding. Under the terms of GULF's supplemental indenture dated as of
January 1, 1996, retained earnings of $127 million were restricted against the
payment of cash dividends on common stock at March 31, 1996.
38
<PAGE>
GULF POWER COMPANY
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
RESULTS OF OPERATIONS AND FINANCIAL CONDITION
In February 1996, GULF sold through a public authority, $21.2 million of
5.5% pollution control revenue refunding bonds due 2026. The proceeds were
applied to the redemption on April 1, 1996 of $21.2 million outstanding
principal amount of 7.125% pollution control revenue refunding bonds. In
February 1996, GULF issued a $22.1 million 5.2125% bank note due 1998. The
proceeds were used to buy out a portion of an existing coal contract. Bond
retirements during the first quarter of 1996 totaled $1.8 million to meet
improvement fund requirements.
In April 1996, GULF sold through a public authority, $12.075 million of
5.25% pollution control revenue refunding bonds due 2006. The proceeds will be
applied to the redemption in May 1996 of $12.075 million outstanding principal
amount of 6% pollution control revenue bonds. GULF plans to continue, to the
extent possible, a program to retire higher-cost debt and preferred stock and
replace these obligations with lower-cost capital.
Capital Requirements
Reference is made to Item 7 - MANAGEMENT'S DISCUSSION AND ANALYSIS of GULF under
"Capital Requirements for Construction," "Environmental Matters" and "Other
Capital Requirements" in the Form 10-K for a description of GULF's capital
requirements for its construction program, environmental compliance efforts and
maturing debt. Approximately $40.6 million will be required by March 31, 1997,
for maturities of long-term debt.
Sources of Capital
In addition to the financing activities previously described herein, GULF plans
to obtain the funds required for construction and other purposes from sources
similar to those used in the past. The amount, type and timing of any
financings--if needed--will depend upon maintenance of adequate earnings,
regulatory approval, prevailing market conditions and other factors. Currently,
GULF expects to have adequate earnings coverage ratios for any anticipated
security sales through at least 1998. See Item 1 - BUSINESS - "Financing
Programs" in the Form 10-K for additional information.
To meet short-term cash needs and contingencies, GULF had at March 31,
1996, approximately $0.9 million of cash and cash equivalents and $36.0 million
of unused committed lines of credit with banks. At March 31, 1996, GULF had
outstanding $35.5 million of short-term notes payable to banks. Since GULF has
no major generating plants under construction, management believes that the need
for working capital can be adequately met by utilizing lines of credit without
maintaining large cash balances.
39
<PAGE>
MISSISSIPPI POWER COMPANY
40
<PAGE>
<TABLE>
<CAPTION>
MISSISSIPPI POWER COMPANY
CONDENSED STATEMENTS OF INCOME (UNAUDITED)
(Stated in Thousands of Dollars)
For the Three Months
Ended March 31,
1996 1995
<S> <C> <C>
OPERATING REVENUES:
Revenues $ 124,960 $ 107,199
Revenues from affiliates 1,994 2,373
----------- ------------
Total operating revenues 126,954 109,572
----------- ------------
OPERATING EXPENSES:
Operation--
Fuel 29,900 24,790
Purchased power from non-affiliates 1,693 916
Purchased power from affiliates 12,998 9,547
Other 24,758 25,334
Maintenance 10,296 8,527
Depreciation and amortization 11,373 9,918
Taxes other than income taxes 10,723 9,378
Federal and state income taxes 7,139 5,433
----------- ------------
Total operating expenses 108,880 93,843
----------- ------------
OPERATING INCOME 18,074 15,729
OTHER INCOME (EXPENSE):
Allowance for equity funds used during construction 95 123
Interest income 56 25
Other, net 1,430 1,362
Income taxes applicable to other income (552) (379)
----------- ------------
INCOME BEFORE INTEREST CHARGES 19,103 16,860
----------- ------------
INTEREST CHARGES:
Interest on long-term debt 5,493 5,657
Allowance for debt funds used during construction (104) (71)
Interest on notes payable 230 200
Amortization of debt discount, premium, and expense, net 373 373
Other interest charges 191 207
----------- ------------
Net interest charges 6,183 6,366
----------- ------------
NET INCOME 12,920 10,494
DIVIDENDS ON PREFERRED STOCK 1,225 1,225
----------- ------------
NET INCOME AFTER DIVIDENDS ON
PREFERRED STOCK $ 11,695 $ 9,269
=========== ============
</TABLE>
The accompanying notes as they relate to MISSISSIPPI are an integral part
of these condensed statements.
41
<PAGE>
<TABLE>
<CAPTION>
MISSISSIPPI POWER COMPANY
CONDENSED STATEMENTS OF CASH FLOWS (UNAUDITED)
(Stated in Thousands of Dollars)
For the Three Months
Ended March 31,
1996 1995
<S> <C> <C>
OPERATING ACTIVITIES:
Net income $ 12,920 $ 10,494
Adjustments to reconcile net income to net cash provided by operating activities--
Depreciation and amortization 13,422 13,100
Deferred income taxes (2,012) (626)
Allowance for equity funds used during construction (95) (123)
Other, net (1,454) 941
Changes in certain current assets and liabilities--
Receivables, net 1,945 5,366
Inventories 2,922 943
Payables (10,679) 581
Taxes accrued (12,238) (20,130)
Other (781) 2,224
---------- ----------
Net cash provided from operating activities 3,950 12,770
---------- ----------
INVESTING ACTIVITIES:
Gross property additions (12,165) (16,337)
Other (1,476) (3,325)
---------- ----------
Net cash used for investing activities (13,641) (19,662)
---------- ----------
FINANCING ACTIVITIES:
Proceeds--
Capital contribution 27 -
Retirements--
Other long-term debt (20,000) (4,119)
Notes payable, net 31,000 22,000
Payment of preferred stock dividends (1,225) (1,225)
Payment of common stock dividends (10,600) (9,900)
---------- ----------
Net cash provided from (used for) financing activities (798) 6,756
---------- ----------
NET CHANGE IN CASH AND CASH EQUIVALENTS (10,489) (136)
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD 12,641 1,317
---------- ----------
CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 2,152 $ 1,181
========== ==========
SUPPLEMENTAL CASH FLOW INFORMATION:
Cash paid during the period for--
Interest (net of amount capitalized) $ 4,568 $ 5,021
Income taxes 1 (384)
</TABLE>
The accompanying notes as they relate to MISSISSIPPI are an integral part
of these condensed statements.
42
<PAGE>
<TABLE>
<CAPTION>
MISSISSIPPI POWER COMPANY
CONDENSED BALANCE SHEETS
(Stated in Thousands of Dollars)
ASSETS
At March 31,
1996 At December 31,
(Unaudited) 1995
------------- ---------------
<S> <C> <C>
UTILITY PLANT:
Plant in service, at original cost $ 1,440,505 $ 1,434,327
Less accumulated provision for depreciation 507,280 499,308
------------- -------------
933,225 935,019
Construction work in progress 44,284 41,210
------------- -------------
Total 977,509 976,229
------------- -------------
OTHER PROPERTY AND INVESTMENTS: 3,403 4,160
------------- -------------
CURRENT ASSETS:
Cash and cash equivalents 2,152 12,641
Receivables--
Customer accounts receivable 25,688 30,761
Other accounts and notes receivable 13,473 9,438
Affiliated companies 8,193 9,213
Accumulated provision for uncollectible accounts (689) (802)
Fossil fuel stock, at average cost 13,713 15,666
Materials and supplies, at average cost 21,589 22,558
Current portion of deferred fuel charges 582 1,546
Current portion of accumulated deferred income taxes 4,489 5,180
Prepayments 5,378 2,404
Vacation pay deferred 4,715 4,715
------------- -------------
Total 99,283 113,320
------------- -------------
DEFERRED CHARGES:
Debt expense and loss, being amortized 9,748 10,039
Deferred charges related to income taxes 23,280 23,384
Deferred early retirement program costs 7,036 7,286
Miscellaneous 14,766 14,535
------------- -------------
Total 54,830 55,244
------------- -------------
TOTAL ASSETS $ 1,135,025 $ 1,148,953
============= =============
</TABLE>
The accompanying notes as they relate to MISSISSIPPI are an integral part of
these condensed statements.
43
<PAGE>
<TABLE>
<CAPTION>
MISSISSIPPI POWER COMPANY
CONDENSED BALANCE SHEETS
(Stated in Thousands of Dollars)
CAPITALIZATION AND LIABILITIES
At March 31,
1996 At December 31,
(Unaudited) 1995
------------- ---------------
<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 179,389 179,362
Premium on preferred stock 372 372
Retained earnings 158,553 157,459
------------ ------------
376,005 374,884
Preferred stock 74,414 74,414
Long-term debt 288,901 288,820
------------ ------------
Total 739,320 738,118
------------ ------------
CURRENT LIABILITIES:
Long-term debt due within one year 37,229 57,229
Notes payable 31,000 -
Accounts payable--
Affiliated companies 8,178 13,646
Other 30,116 37,129
Customer deposits 2,778 2,716
Taxes accrued--
Federal and state income 9,516 97
Other 10,159 31,816
Interest accrued 5,920 4,701
Miscellaneous 13,378 13,453
------------ ------------
Total 148,274 160,787
------------ ------------
DEFERRED CREDITS AND OTHER LIABILITIES:
Accumulated deferred income taxes 127,641 129,711
Accumulated deferred investment tax credits 29,414 29,773
Deferred credits related to income taxes 42,547 43,266
Accumulated provision for property damage 12,394 12,018
Miscellaneous 35,435 35,280
------------ ------------
Total 247,431 250,048
------------ ------------
TOTAL CAPITALIZATION AND LIABILITIES $ 1,135,025 $ 1,148,953
============ ============
</TABLE>
The accompanying notes as they relate to MISSISSIPPI are an integral part of
these condensed statements.
44
<PAGE>
MISSISSIPPI POWER COMPANY
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
RESULTS OF OPERATIONS AND FINANCIAL CONDITION
FIRST QUARTER 1996 vs. FIRST QUARTER 1995
RESULTS OF OPERATIONS
Earnings
MISSISSIPPI's net income after dividends on preferred stock for the first
quarter of 1996 was $11.7 million, compared to $9.3 million for the same quarter
of 1995. This 26.2% increase in earnings is principally the result of an
increase in revenues offset somewhat by an increase in operating expenses.
Significant income statement items appropriate for discussion include the
following:
Increase (Decrease)
-----------------------------------
(in thousands) %
Revenues..................................... $17,761 16.6
Fuel expense................................. 5,110 20.6
Purchased power from affiliates.............. 3,451 36.1
Maintenance expense.......................... 1,769 20.7
Depreciation and amortization expense........ 1,455 14.7
Taxes other than income taxes................ 1,345 14.3
Revenues. The increase in revenues was influenced most heavily by an
increase in the amount of retail energy sold. For the first three months of
1996, total retail kilowatt-hour sales increased 9.5% over the same period of
1995. Retail revenues, excluding those revenues which represent the recovery of
fuel expense and certain other expenses and do not affect income, increased $4.6
million. Colder-than-normal winter weather and a slight increase in the number
of customers served had a positive effect on retail sales. Residential,
commercial and industrial energy sales increased 16.2%, 12.1% and 5.0%,
respectively. Colder temperatures also positively impacted sales to territorial
wholesale customers. Revenues from territorial wholesale customers, excluding
fuel revenues which do not affect income, increased $4.2 million compared to the
same period of 1995, with an increase in energy sales of 20%.
Fuel expense. The increase in fuel expense for the first quarter of 1996 as
compared to the same quarter of 1995 can be attributed to higher generation
necessary to meet the increased demand for electricity and a slightly higher
average cost of fuel.
Purchased power from affiliates. 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.
Maintenance expense. The increase in maintenance expense is primarily
attributable to maintenance performed at Plant Daniel during the first quarter
of 1996. In 1995, maintenance normally performed during the first quarter was
postponed until later in the year.
45
<PAGE>
MISSISSIPPI POWER COMPANY
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
RESULTS OF OPERATIONS AND FINANCIAL CONDITION
Depreciation and amortization expense. Due to additional plant investment,
depreciation expense for the first quarter of 1996 increased approximately $0.5
million compared to the first quarter of 1995. Increased amortization of
regulatory assets, primarily those assets related to the ECO plan, accounted for
the remaining $1.0 million increase in this item.
Taxes other than income taxes. Taxes other than income taxes rose above the
amount recorded for the first quarter of 1995 due to higher retail revenues
which resulted in higher municipal franchise taxes.
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 energy sales growth 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. MISSISSIPPI's 1996
annual filing under the ECO plan with the Mississippi PSC resulted in an
approved annual revenue requirement decrease of $3.0 million, effective April
1996.
MISSISSIPPI has entered into agreements to purchase summer peaking power
and options for power for the years 1996 through 2000. For June through
September of 1996, MISSISSIPPI has entered into an agreement to buy 242
megawatts of capacity and energy from another electric utility. For June through
September of 1997 through 2000, MISSISSIPPI has purchased from power marketers
options for up to 250 megawatts of peaking power in 1997; 300 megawatts in 1998;
350 megawatts in 1999; and 400 megawatts in 2000. In April 1996, MISSISSIPPI
filed a petition with the Mississippi PSC requesting that MISSISSIPPI be allowed
to earn a return on the capacity portion of such agreements. MISSISSIPPI
anticipates a decision from the PSC within 120 days.
With the enactment of the Energy Act and new legislation being discussed at
federal and state levels to expand customer choice, the Southern electric system
is positioning the business to meet the challenge of increasing competition. For
additional information, see Item 1 - BUSINESS - "Competition" and Item 7 -
MANAGEMENT'S DISCUSSION AND ANALYSIS - "Future Earnings Potential" of
MISSISSIPPI in the Form 10-K.
Compliance costs related to the Clean Air Act could affect earnings if such
costs cannot be recovered. For additional information about the Clean Air Act
and other important environmental issues, see Item 7 - MANAGEMENT'S DISCUSSION
AND ANALYSIS - "Environmental Matters" of MISSISSIPPI in the Form 10-K.
Reference is made to Notes (B) and (F) in the "Notes to the Condensed
Financial Statements" herein for discussion of various contingencies and other
matters which may affect future earnings potential. Reference is also made to
Part II - Item 1 - "Legal Proceedings" herein.
FINANCIAL CONDITION
Overview
The major change in MISSISSIPPI's financial condition during the first three
months of 1996 was the addition of approximately $12.2 million to utility plant.
The funds for these additions and other capital requirements were derived
primarily from operations and an increase in short-term debt. See MISSISSIPPI's
Condensed Statements of Cash Flows for further details.
46
<PAGE>
MISSISSIPPI POWER COMPANY
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
RESULTS OF OPERATIONS AND FINANCIAL CONDITION
Financing Activities
During the first three months of 1996, maturities of long-term notes to banks
totaled $20.0 million, while short-term indebtedness to banks increased $31.0
million.
MISSISSIPPI plans to continue, to the extent possible, a program to retire
higher-cost debt and preferred stock and replace these obligations with
lower-cost capital.
Capital Requirements
Reference is made to Item 7 - MANAGEMENT'S DISCUSSION AND ANALYSIS of
MISSISSIPPI under "Capital Requirements for Construction," "Environmental
Matters" and "Other Capital Requirements" in the Form 10-K for a description of
MISSISSIPPI's capital requirements for its construction program, environmental
compliance efforts, sinking fund requirements and maturities of long-term debt.
Approximately $37.2 million will be required by March 31, 1997, for present
sinking fund requirements and maturities of long-term debt.
Sources of Capital
In addition to the financing activities previously described herein, MISSISSIPPI
plans to obtain the funds required for construction and other purposes from
sources similar to those used in the past. The amount, type and timing of any
financings--if needed--will depend upon maintenance of adequate earnings,
regulatory approval, prevailing market conditions and other factors. Currently,
MISSISSIPPI expects to have adequate earnings coverage ratios for any
anticipated security sales through at least 1998. See Item 1 - BUSINESS -
"Financing Programs" in the Form 10-K for additional information.
To meet short-term cash needs and contingencies, MISSISSIPPI had at March
31, 1996, approximately $2.2 million of cash and cash equivalents and
approximately $97.0 million of unused committed credit arrangements with banks.
At March 31, 1996, MISSISSIPPI had outstanding $31.0 million of short-term notes
payable to banks. Since MISSISSIPPI has no major generating plants under
construction, management believes that the need for working capital can be
adequately met by utilizing lines of credit without maintaining large cash
balances.
47
<PAGE>
SAVANNAH ELECTRIC
AND
POWER COMPANY
48
<PAGE>
<TABLE>
<CAPTION>
SAVANNAH ELECTRIC AND POWER COMPANY
CONDENSED STATEMENTS OF INCOME (UNAUDITED)
(Stated in Thousands of Dollars)
For the Three Months
Ended March 31,
1996 1995
<S> <C> <C>
OPERATING REVENUES:
Revenues $ 49,367 $ 45,016
Revenues from affiliates 1,208 1,727
---------- ----------
Total operating revenues 50,575 46,743
---------- ----------
OPERATING EXPENSES:
Operation--
Fuel 3,949 1,350
Purchased power from non-affiliates 550 349
Purchased power from affiliates 15,850 15,236
Other 10,283 10,203
Maintenance 3,130 3,236
Depreciation and amortization 4,902 4,747
Taxes other than income taxes 3,020 2,961
Federal and state income taxes 2,329 2,193
---------- ----------
Total operating expenses 44,013 40,275
---------- ----------
OPERATING INCOME 6,562 6,468
OTHER INCOME (EXPENSE):
Allowance for equity funds used during construction 83 22
Interest income 2 9
Other, net (316) (133)
Income taxes applicable to other income 117 48
---------- ----------
INCOME BEFORE INTEREST CHARGES 6,448 6,414
---------- ----------
INTEREST CHARGES:
Interest on long-term debt 2,914 3,129
Allowance for debt funds used during construction (82) (73)
Interest on notes payable 102 84
Amortization of debt discount, premium, and expense, net 104 138
Other interest charges 89 135
---------- ----------
Net interest charges 3,127 3,413
---------- ----------
NET INCOME 3,321 3,001
DIVIDENDS ON PREFERRED STOCK 581 581
---------- ----------
NET INCOME AFTER DIVIDENDS ON
PREFERRED STOCK $ 2,740 $ 2,420
========== ==========
</TABLE>
The accompanying notes as they relate to SAVANNAH are an integral part of
these condensed statements.
49
<PAGE>
<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,
1996 1995
<S> <C> <C>
OPERATING ACTIVITIES:
Net income $ 3,321 $ 3,001
Adjustments to reconcile net income to net cash provided by operating activities--
Depreciation and amortization 116 5,116
Deferred income taxes and investment tax credits, net 1,038 163
Allowance for equity funds used during construction (83) (22)
Other, net 691 (84)
Changes in certain current assets and liabilities--
Receivables, net 3,623 2,860
Inventories 1,535 (836)
Payables (297) 1,736
Taxes accrued 2,457 2,253
Other (5,200) (2,501)
--------- ---------
Net cash provided from operating activities 7,201 11,686
--------- ---------
INVESTING ACTIVITIES:
Gross property additions (6,655) (7,627)
Other (563) (1,563)
--------- ---------
Net cash used for investing activities (7,218) (9,190)
--------- ---------
FINANCING ACTIVITIES:
Proceeds--
Other long-term debt 7,000 3,500
Retirements--
First mortgage bonds (1,200) (1,350)
Other long-term debt (70) (1,697)
Notes payable, net (500) 500
Payment of preferred stock dividends (581) (581)
Payment of common stock dividends (4,800) (4,400)
--------- ---------
Net cash used for financing activities (151) (4,028)
--------- ---------
NET CHANGE IN CASH AND CASH EQUIVALENTS (168) (1,532)
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD 877 1,563
--------- ---------
CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 709 $ 31
========= =========
SUPPLEMENTAL CASH FLOW INFORMATION:
Cash paid during the period for--
Interest (net of amount capitalized) $ 4,982 $ 4,871
Income taxes 104 444
</TABLE>
The accompanying notes as they relate to SAVANNAH are an integral part
of these condensed statements.
50
<PAGE>
<TABLE>
<CAPTION>
SAVANNAH ELECTRIC AND POWER COMPANY
CONDENSED BALANCE SHEETS
(Stated in Thousands of Dollars)
ASSETS
At March 31,
1996 At December 31,
(Unaudited) 1995
------------ ---------------
<S> <C> <C>
UTILITY PLANT:
Plant in service, at original cost $ 721,828 $ 715,146
Less accumulated provision for depreciation 291,355 287,004
----------- -----------
430,473 428,142
Construction work in progress 10,841 6,707
----------- -----------
Total 441,314 434,849
----------- -----------
OTHER PROPERTY AND INVESTMENTS: 1,787 1,788
----------- -----------
CURRENT ASSETS:
Cash and cash equivalents 709 877
Receivables--
Customer accounts receivable 16,992 19,574
Other accounts and notes receivable 5,720 7,251
Affiliated companies 1,130 614
Accumulated provision for uncollectible accounts (1,009) (983)
Fossil fuel stock, at average cost 4,216 6,076
Materials and supplies, at average cost 8,564 8,239
Prepayments 7,630 6,467
----------- -----------
Total 43,952 48,115
----------- -----------
DEFERRED CHARGES:
Deferred charges related to income taxes 21,379 21,557
Premium on reacquired debt, being amortized 5,225 5,316
Cash surrender value of life insurance for deferred compensation plans 8,560 8,560
Miscellaneous 4,373 4,477
----------- -----------
Total 39,537 39,910
----------- -----------
TOTAL ASSETS $ 526,590 $ 524,662
=========== ===========
</TABLE>
The accompanying notes as they relate to SAVANNAH are an integral part of
these condensed statements.
51
<PAGE>
<TABLE>
<CAPTION>
SAVANNAH ELECTRIC AND POWER COMPANY
CONDENSED BALANCE SHEETS
(Stated in Thousands of Dollars)
CAPITALIZATION AND LIABILITIES
At March 31,
1996 At December 31,
(Unaudited) 1995
--------------- ---------------
<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 (1,116) (132)
Retained earnings 102,973 105,033
----------- -----------
164,768 167,812
Preferred stock 35,000 35,000
Long-term debt 160,250 153,679
----------- -----------
Total 360,018 356,491
----------- -----------
CURRENT LIABILITIES:
Long-term debt due within one year 579 1,407
Notes payable 3,500 4,000
Accounts payable--
Affiliated companies 5,492 5,742
Other 4,856 5,620
Fuel cost over recovery 254 865
Customer deposits 5,110 5,054
Taxes accrued--
Federal and state income 1,640 570
Other 2,401 1,014
Interest accrued 4,299 6,331
Vacation pay accrued 1,935 1,916
Pensions accrued 393 685
Miscellaneous 3,402 5,185
----------- -----------
Total 33,861 38,389
----------- -----------
DEFERRED CREDITS AND OTHER LIABILITIES:
Accumulated deferred income taxes 75,143 74,152
Accumulated deferred investment tax credits 13,768 13,934
Deferred credits related to income taxes 24,275 24,419
Deferred compensation plans 7,983 7,690
Deferred under-funded accrued benefit obligation 3,727 2,123
Postretirement benefits 5,086 4,728
Miscellaneous 2,729 2,736
----------- -----------
Total 132,711 129,782
----------- -----------
TOTAL CAPITALIZATION AND LIABILITIES $ 526,590 $ 524,662
=========== ===========
</TABLE>
The accompanying notes as they relate to SAVANNAH are an integral part
of these condensed statements.
52
<PAGE>
SAVANNAH ELECTRIC AND POWER COMPANY
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
RESULTS OF OPERATIONS AND FINANCIAL CONDITION
FIRST QUARTER 1996 vs. FIRST QUARTER 1995
RESULTS OF OPERATIONS
Earnings
SAVANNAH's net income after dividends on preferred stock for the first quarter
of 1996 was $2.7 million, compared to $2.4 million for the same quarter of 1995.
This 13.2% increase in earnings is principally the result of an increase in
retail revenues and a decrease in interest expense offset somewhat by an
increase in operating expenses.
Significant income statement items appropriate for discussion include the
following:
Increase (Decrease)
-------------------------------------
(in thousands) %
Revenues................................ $4,351 9.7
Fuel expense............................ 2,599 192.5
Interest on long-term debt.............. (215) (6.9)
Revenues. Excluding fuel revenues, which represent the pass-through of fuel
expenses and do not affect income, revenues for the first quarter of 1996
increased approximately $466,000, compared to the corresponding period of 1995.
The increase in revenues was influenced most heavily by an increase in the
amount of retail energy sold. For the first three months of 1996, total retail
kilowatt-hour sales increased 6.1% over the same period of 1995, and retail
revenues, excluding fuel revenues, increased approximately $767,000.
Colder-than-normal winter weather and a slight increase in the number of
customers served accounted for most of the 13.8% increase in residential demand
and 11% increase commercial demand. Kilowatt-hour sales to the industrial sector
were down 8.8% and industrial revenues were down 6.2%, primarily due to a
reduction in the production schedule, and hence energy requirements, of one of
SAVANNAH's major industrial customers and the implementation of new time-of-use
rates for industrial customers in the first quarter of 1996.
Fuel expense. The increase in fuel expense for the first quarter of 1996 as
compared to the same quarter of 1995 can be attributed to higher generation
necessary to meet the increased demand for electricity, partially offset by a
lower average cost of fuel.
Interest on long-term debt. Interest on long-term debt decreased in the
first quarter of 1996 as compared to the same period of 1995 primarily as a
result of the replacement by SAVANNAH, during the second quarter of 1995, of its
9 1/4% first mortgage bonds with 7 7/8% first mortgage bonds and variable rate
bank notes.
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 energy sales growth to a less regulated, more competitive
environment.
53
<PAGE>
SAVANNAH ELECTRIC AND POWER COMPANY
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
RESULTS OF OPERATIONS AND FINANCIAL CONDITION
With the enactment of the Energy Act and new legislation being discussed at
federal and state levels to expand customer choice, the Southern electric system
is positioning the business to meet the challenge of increasing competition. For
additional information, see Item 1 - BUSINESS - "Competition" and Item 7 -
MANAGEMENT'S DISCUSSION AND ANALYSIS - "Future Earnings Potential" of SAVANNAH
in the Form 10-K.
Compliance costs related to the Clean Air Act could affect earnings if such
costs cannot be offset. For additional information about the Clean Air Act and
other important environmental issues, see Item 7 - MANAGEMENT'S DISCUSSION AND
ANALYSIS - "Environmental Matters" of SAVANNAH in the Form 10-K.
Reference is made to Notes (B), (O) and (P) in the "Notes to the Condensed
Financial Statements" herein for discussion of various contingencies and other
matters which may affect future earnings potential.
FINANCIAL CONDITION
Overview
The major change in SAVANNAH's financial condition during the first three months
of 1996 was the addition of approximately $6.7 million to utility plant. The
funds for these additions and other capital requirements were derived primarily
from internal sources and bank debt. See SAVANNAH's Condensed Statements of Cash
Flows for further details.
Financing Activities
During the first three months of 1996, SAVANNAH issued no new securities and
retired $1.2 million of its 9 3/8% first mortgage bonds to meet sinking fund
requirements. SAVANNAH entered into arrangements with the Savannah Economic
Development Authority to provide for the financing of a new coal handling
facility at Plant Kraft. The related capitalized lease amount at March 31, 1996
was $7.0 million.
SAVANNAH plans to continue, to the extent possible, a program to retire
higher-cost debt and replace these obligations with lower-cost capital.
Capital Requirements
Reference is made to Item 7 - MANAGEMENT'S DISCUSSION AND ANALYSIS of SAVANNAH
under "Capital Requirements for Construction," "Environmental Matters" and
"Other Capital Requirements" in the Form 10-K for a description of SAVANNAH's
capital requirements for its construction program, environmental compliance
efforts, sinking fund requirements and long-term debt maturities. Approximately
$0.6 million will be required by March 31, 1997, for maturities of long-term
debt.
Sources of Capital
SAVANNAH plans to obtain the funds required for construction and other purposes
from sources similar to those used in the past. The amount, type and timing of
any financings--if needed--will depend upon maintenance of adequate earnings,
regulatory approval, prevailing market conditions and other factors. Currently,
SAVANNAH expects to have adequate earnings coverage ratios for any anticipated
security sales through at least 1998. See Item 1 - BUSINESS - "Financing
Programs" in the Form 10-K for additional information.
54
<PAGE>
SAVANNAH ELECTRIC AND POWER COMPANY
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
RESULTS OF OPERATIONS AND FINANCIAL CONDITION
To meet short-term cash needs and contingencies, SAVANNAH had at March 31,
1996, approximately $0.7 million of cash and cash equivalents and approximately
$37.0 million of unused credit arrangements with banks. At March 31, 1996,
SAVANNAH had outstanding $3.5 million of short-term notes payable to banks.
Since SAVANNAH has no major generating plants under construction, management
believes that the need for working capital can be adequately met by utilizing
lines of credit.
55
<PAGE>
NOTES TO THE CONDENSED FINANCIAL STATEMENTS
FOR
THE SOUTHERN COMPANY AND SUBSIDIARY COMPANIES
ALABAMA POWER COMPANY
GEORGIA POWER COMPANY
GULF POWER COMPANY
MISSISSIPPI POWER COMPANY
SAVANNAH ELECTRIC AND POWER COMPANY
INDEX TO APPLICABLE NOTES TO
FINANCIAL STATEMENTS BY REGISTRANT
Registrant Applicable Notes
SOUTHERN A, B, C, D, E, F, G, H, I, J, K, L, N
ALABAMA A, B, C, F, G, H
GEORGIA A, B, C, F, I, J, K, L, M, N
GULF A, B, F
MISSISSIPPI A, B, F
SAVANNAH A, B, O, P
56
<PAGE>
THE SOUTHERN COMPANY AND SUBSIDIARY COMPANIES
ALABAMA POWER COMPANY
GEORGIA POWER COMPANY
GULF POWER COMPANY
MISSISSIPPI POWER COMPANY
SAVANNAH ELECTRIC AND POWER COMPANY
NOTES TO CONDENSED FINANCIAL STATEMENTS:
(A) The condensed financial statements of the registrants included herein have
been prepared by each registrant, without audit, pursuant to the rules and
regulations of the SEC. In the opinion of each registrant's management, the
information regarding such registrant furnished herein reflects all
adjustments (which included only normal recurring adjustments) necessary to
present fairly the results for the periods ended March 31, 1996 and 1995.
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 each registrant believes that the disclosures
regarding such registrant 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 each registrant's latest annual report on Form 10-K. Certain
prior-period amounts have been reclassified to conform with current-period
presentation.
The condensed financial statements of ALABAMA and GEORGIA included
herein have been reviewed by ALABAMA's and GEORGIA's independent public
accountants as set forth in their reports included herein as Exhibit 1 to
ALABAMA's and GEORGIA's condensed financial statements.
(B) SOUTHERN's operating affiliates 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 a company's operations is no
longer subject to these provisions, the company would be required to write
off related regulatory assets and liabilities, and determine if any other
assets have been impaired. For additional information, see Note 1 to the
financial statements of each registrant in Item 8 of the Form 10-K.
(C) The staff of the SEC has questioned certain of the current accounting
practices of the electric utility industry--including
SOUTHERN's--regarding the recognition, measurement and classification of
decommissioning costs for nuclear generating facilities in the financial
statements. In response to these questions, the FASB has decided to review
the accounting for liabilities related to closure and removal of
long-lived assets, including nuclear decommissioning. Reference is made to
MANAGEMENT'S DISCUSSION AND ANALYSIS - "Future Earnings Potential" of
SOUTHERN, ALABAMA and GEORGIA in Item 7 and Note 1 to the financial
statements of SOUTHERN, ALABAMA and GEORGIA under "Depreciation and
Nuclear Decommissioning" in Item 8 of the Form 10-K.
(D) The SOUTHERN system utilizes certain financial derivative contracts solely
for the purpose of risk management. The companies' participation in
derivative contracts has been to hedge non-core business exposure to
fluctuations in interest rates and foreign currency exchange rates. At
March 31, 1996, the status of outstanding derivative contracts was as
follows:
Maturity or Notional Unrealized
Type Termination Amount Gain (Loss)
---- ----------- -------- -----------
(in thousands)
Interest rate swaps 1999-2006 $423,503 $4,233
Foreign currency forwards Renewed monthly 386,724 464
57
<PAGE>
NOTES TO CONDENSED FINANCIAL STATEMENTS: (Continued)
(E) Reference is made to Note 3 to the financial statements of SOUTHERN in
Item 8 of the Form 10-K for a description of the proceedings related to a
derivative action filed against certain current and former directors and
officers of SOUTHERN.
(F) Reference is made to Note 3 to each of the registrant's, except
SAVANNAH's, financial statements in Item 8 of the 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.
(G) In June 1995, the Alabama PSC issued a rate order granting ALABAMA's
request for gradual adjustments to move toward parity among customer
classes. This order also calls for a moratorium on any periodic retail
rate increases (but not decreases) until July 2001. In December 1995, the
Alabama PSC issued an order authorizing ALABAMA to reduce balance sheet
items--such as plant and deferred charges--at any time ALABAMA's actual
base rate revenues exceed the budgeted revenues. Reference is made to Note
3 to the financial statements of SOUTHERN and ALABAMA in Item 8 of the
Form 10-K for additional information.
(H) In January 1996, Alabama Power Capital Trust I (the "Trust"), of which
ALABAMA owns all the common securities, issued $97 million of 7.375%
mandatory redeemable preferred securities. Substantially all of the assets
of the Trust are $100 million aggregate principal amount of ALABAMA's
7.375% Junior Subordinated Notes due March 31, 2026. ALABAMA considers
that the mechanisms and obligations relating to the preferred securities,
taken together, constitute a full and unconditional guarantee by ALABAMA
of the Trust's payment obligations with respect to the preferred
securities.
(I) On February 16, 1996, the Georgia PSC approved a three-year retail rate
plan for GEORGIA effective January 1, 1996. For additional information,
reference is made to Note 3 to the financial statements of SOUTHERN and
GEORGIA in Item 8 of the Form 10-K.
(J) Pursuant to orders from the Georgia PSC, GEORGIA deferred financing and
depreciation costs under phase-in plans for Plant Vogtle Units 1 and 2
until the allowed investment was fully reflected in rates as of October
1991. In addition, the Georgia PSC issued two separate accounting orders
that required GEORGIA to defer substantially all operating and financing
costs related to both units until rate orders addressed these costs. The
Georgia PSC orders provide for recovery of deferred costs within 10 years.
The Georgia PSC also ordered GEORGIA to levelize declining capacity
buyback expense from the co-owners of the plant over a six-year period
beginning October 1991. The unamortized balance of these deferred costs
at March 31, 1996, was $273.9 million. See Note 3 to the financial
statements of GEORGIA in Item 8 of the Form 10-K for additional
information.
(K) Reference is made to Note 3 to the financial statements of SOUTHERN and
GEORGIA in Item 8 of the Form 10-K for information concerning the recovery
by GEORGIA of its costs associated with the Rocky Mountain pumped storage
hydroelectric plant.
(L) Reference is made to Note 3 to the financial statements of SOUTHERN and
GEORGIA in Item 8 of the Form 10-K for information regarding recovery by
GEORGIA of its costs associated with its discontinued demand-side
conservation programs.
(M) Reference is made to Note 3 to the financial statements of GEORGIA in Item
8 of the 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.
58
<PAGE>
NOTES TO CONDENSED FINANCIAL STATEMENTS: (Continued)
(N) Reference is made to Note 3 to the financial statements of SOUTHERN and
GEORGIA in Item 8 of the Form 10-K for information regarding GEORGIA's
designation as a potentially responsible party under the Comprehensive
Environmental Response, Compensation and Liability Act and other
environmental contingencies.
(O) Reference is made to Note 3 to the financial statements of SAVANNAH in
Item 8 of the Form 10-K for information regarding SAVANNAH's discontinued
demand-side conservation programs.
(P) SAVANNAH is currently undergoing an earnings review by the Georgia PSC,
and to date, the Georgia PSC has made no determination.
59
<PAGE>
PART II - OTHER INFORMATION
Item 1. Legal Proceedings.
(1) Reference is made to the Notes to the Condensed
Financial Statements herein for information regarding
certain legal and administrative proceedings in which
SOUTHERN and its reporting subsidiaries are involved.
(2) Reference is made to Item 3 - LEGAL PROCEEDINGS in the
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.
(3) Reference is made to Item 3 - LEGAL PROCEEDINGS in the
Form 10-K for information regarding an action filed by
ALABAMA, GEORGIA and MISSISSIPPI in January 1996 which
seeks to enjoin the TVA from violating a 1959 act that
prohibits the TVA from selling power outside the area
that was being served by it in 1957.
Item 6. Exhibits and Reports on Form 8-K.
(a) Exhibits.
Exhibit 24 - Powers of Attorney and resolutions.
(Designated in the Form 10-K for the year
ended December 31, 1995, 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.)
Exhibits 27 - Financial Data Schedules
(a) SOUTHERN
(b) ALABAMA
(c) GEORGIA
(d) GULF
(e) MISSISSIPPI
(f) SAVANNAH
(b) Reports on Form 8-K.
GULF filed a Current Report on Form 8-K dated
January 17, 1996:
Items reported: Item 5
Item 7
Financial statements filed: None
SOUTHERN, ALABAMA, GEORGIA, GULF, MISSISSIPPI and
SAVANNAH each filed a Current Report on Form 8-K dated
February 21, 1996:
Item reported: Item 7
Financial statements filed: Each registrant's
audited financial statements for the year ended
December 31, 1995
60
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized. The signature of the undersigned company
shall be deemed to relate only to matters having reference to such company and
any subsidiaries thereof.
THE SOUTHERN COMPANY
By A. W. Dahlberg
Chairman, President and Chief Executive Officer
(Principal Executive Officer)
By W. L. Westbrook
Financial Vice President, Chief Financial Officer and Treasurer
(Principal Financial and Accounting Officer)
By /s/ Wayne Boston
(Wayne Boston, Attorney-in-fact)
Date: May 13, 1996
- - --------------------------------------------------------------------------------
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
(Principal Executive Officer)
By William B. Hutchins, III
Executive Vice President and Chief Financial Officer
(Principal Financial Officer)
By /s/ Wayne Boston
(Wayne Boston, Attorney-in-fact)
Date: May 13, 1996
61
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized. The signature of the undersigned company
shall be deemed to relate only to matters having reference to such company and
any subsidiaries thereof.
GEORGIA POWER COMPANY
By H. Allen Franklin
President and Chief Executive Officer
(Principal Executive Officer)
By Warren Y. Jobe
Executive Vice President, Treasurer and Chief Financial Officer
(Principal Financial Officer)
By /s/ Wayne Boston
(Wayne Boston, Attorney-in-fact)
Date: May 13, 1996
- - --------------------------------------------------------------------------------
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
(Principal 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 13, 1996
62
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized. The signature of the undersigned company
shall be deemed to relate only to matters having reference to such company and
any subsidiaries thereof.
MISSISSIPPI POWER COMPANY
By Dwight H. Evans
President and Chief Executive Officer
(Principal 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 13, 1996
- - --------------------------------------------------------------------------------
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 and Chief Executive Officer
(Principal Executive Officer)
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 13, 1996
63
<TABLE> <S> <C>
<ARTICLE> UT
<LEGEND>
This schedule contains summary financial information extracted from the Form
10-Q for March 31, 1996, 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-31-1995
<PERIOD-END> MAR-31-1996
<BOOK-VALUE> PER-BOOK
<TOTAL-NET-UTILITY-PLANT> 23,003,231
<OTHER-PROPERTY-AND-INVEST> 1,291,541
<TOTAL-CURRENT-ASSETS> 2,788,394
<TOTAL-DEFERRED-CHARGES> 2,632,872
<OTHER-ASSETS> 0
<TOTAL-ASSETS> 29,716,038
<COMMON> 3,351,498
<CAPITAL-SURPLUS-PAID-IN> 1,915,094
<RETAINED-EARNINGS> 3,504,507
<TOTAL-COMMON-STOCKHOLDERS-EQ> 8,771,099
197,000
1,332,203
<LONG-TERM-DEBT-NET> 7,172,129
<SHORT-TERM-NOTES> 1,356,596
<LONG-TERM-NOTES-PAYABLE> 223,113
<COMMERCIAL-PAPER-OBLIGATIONS> 931,992
<LONG-TERM-DEBT-CURRENT-PORT> 97,413
0
<CAPITAL-LEASE-OBLIGATIONS> 150,104
<LEASES-CURRENT> 2,699
<OTHER-ITEMS-CAPITAL-AND-LIAB> 9,481,690
<TOT-CAPITALIZATION-AND-LIAB> 29,716,038
<GROSS-OPERATING-REVENUE> 2,415,618
<INCOME-TAX-EXPENSE> 165,951
<OTHER-OPERATING-EXPENSES> 1,832,330
<TOTAL-OPERATING-EXPENSES> 1,998,281
<OPERATING-INCOME-LOSS> 417,337
<OTHER-INCOME-NET> 26,499
<INCOME-BEFORE-INTEREST-EXPEN> 443,836
<TOTAL-INTEREST-EXPENSE> 189,468
<NET-INCOME> 254,368
21,493
<EARNINGS-AVAILABLE-FOR-COMM> 232,875
<COMMON-STOCK-DIVIDENDS> 211,081
<TOTAL-INTEREST-ON-BONDS> 0
<CASH-FLOW-OPERATIONS> 401,355
<EPS-PRIMARY> 0.35
<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, 1996, 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-31-1995
<PERIOD-END> MAR-31-1996
<BOOK-VALUE> PER-BOOK
<TOTAL-NET-UTILITY-PLANT> 7,061,279
<OTHER-PROPERTY-AND-INVEST> 157,494
<TOTAL-CURRENT-ASSETS> 877,159
<TOTAL-DEFERRED-CHARGES> 656,503
<OTHER-ASSETS> 0
<TOTAL-ASSETS> 8,752,435
<COMMON> 224,358
<CAPITAL-SURPLUS-PAID-IN> 1,304,791
<RETAINED-EARNINGS> 1,158,459
<TOTAL-COMMON-STOCKHOLDERS-EQ> 2,687,608
97,000
440,400
<LONG-TERM-DEBT-NET> 2,365,002
<SHORT-TERM-NOTES> 10,000
<LONG-TERM-NOTES-PAYABLE> 0
<COMMERCIAL-PAPER-OBLIGATIONS> 426,030
<LONG-TERM-DEBT-CURRENT-PORT> 0
0
<CAPITAL-LEASE-OBLIGATIONS> 7,815
<LEASES-CURRENT> 910
<OTHER-ITEMS-CAPITAL-AND-LIAB> 2,717,670
<TOT-CAPITALIZATION-AND-LIAB> 8,752,435
<GROSS-OPERATING-REVENUE> 732,809
<INCOME-TAX-EXPENSE> 44,422
<OTHER-OPERATING-EXPENSES> 546,335
<TOTAL-OPERATING-EXPENSES> 590,757
<OPERATING-INCOME-LOSS> 142,052
<OTHER-INCOME-NET> 3,052
<INCOME-BEFORE-INTEREST-EXPEN> 145,104
<TOTAL-INTEREST-EXPENSE> 65,333
<NET-INCOME> 79,771
6,612
<EARNINGS-AVAILABLE-FOR-COMM> 73,159
<COMMON-STOCK-DIVIDENDS> 76,000
<TOTAL-INTEREST-ON-BONDS> 0
<CASH-FLOW-OPERATIONS> 142,825
<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, 1996, 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-31-1995
<PERIOD-END> MAR-31-1996
<BOOK-VALUE> PER-BOOK
<TOTAL-NET-UTILITY-PLANT> 10,454,104
<OTHER-PROPERTY-AND-INVEST> 274,445
<TOTAL-CURRENT-ASSETS> 1,066,037
<TOTAL-DEFERRED-CHARGES> 1,551,755
<OTHER-ASSETS> 0
<TOTAL-ASSETS> 13,346,341
<COMMON> 344,250
<CAPITAL-SURPLUS-PAID-IN> 2,384,857
<RETAINED-EARNINGS> 1,562,806
<TOTAL-COMMON-STOCKHOLDERS-EQ> 4,291,913
100,000
692,787
<LONG-TERM-DEBT-NET> 3,232,026
<SHORT-TERM-NOTES> 254,825
<LONG-TERM-NOTES-PAYABLE> 0
<COMMERCIAL-PAPER-OBLIGATIONS> 218,315
<LONG-TERM-DEBT-CURRENT-PORT> 40
0
<CAPITAL-LEASE-OBLIGATIONS> 86,986
<LEASES-CURRENT> 343
<OTHER-ITEMS-CAPITAL-AND-LIAB> 4,469,106
<TOT-CAPITALIZATION-AND-LIAB> 13,346,341
<GROSS-OPERATING-REVENUE> 1,028,819
<INCOME-TAX-EXPENSE> 89,684
<OTHER-OPERATING-EXPENSES> 747,185
<TOTAL-OPERATING-EXPENSES> 836,869
<OPERATING-INCOME-LOSS> 191,950
<OTHER-INCOME-NET> (1,406)
<INCOME-BEFORE-INTEREST-EXPEN> 190,544
<TOTAL-INTEREST-EXPENSE> 64,491
<NET-INCOME> 126,053
11,652
<EARNINGS-AVAILABLE-FOR-COMM> 114,401
<COMMON-STOCK-DIVIDENDS> 121,500
<TOTAL-INTEREST-ON-BONDS> 0
<CASH-FLOW-OPERATIONS> 356,038
<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, 1996, 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-31-1995
<PERIOD-END> MAR-31-1996
<BOOK-VALUE> PER-BOOK
<TOTAL-NET-UTILITY-PLANT> 1,064,629
<OTHER-PROPERTY-AND-INVEST> 657
<TOTAL-CURRENT-ASSETS> 195,258
<TOTAL-DEFERRED-CHARGES> 95,095
<OTHER-ASSETS> 0
<TOTAL-ASSETS> 1,355,639
<COMMON> 38,060
<CAPITAL-SURPLUS-PAID-IN> 218,519
<RETAINED-EARNINGS> 178,621
<TOTAL-COMMON-STOCKHOLDERS-EQ> 435,200
0
89,602
<LONG-TERM-DEBT-NET> 366,815
<SHORT-TERM-NOTES> 35,500
<LONG-TERM-NOTES-PAYABLE> 18,843
<COMMERCIAL-PAPER-OBLIGATIONS> 0
<LONG-TERM-DEBT-CURRENT-PORT> 40,578
0
<CAPITAL-LEASE-OBLIGATIONS> 0
<LEASES-CURRENT> 0
<OTHER-ITEMS-CAPITAL-AND-LIAB> 369,101
<TOT-CAPITALIZATION-AND-LIAB> 1,355,639
<GROSS-OPERATING-REVENUE> 154,921
<INCOME-TAX-EXPENSE> 7,278
<OTHER-OPERATING-EXPENSES> 127,442
<TOTAL-OPERATING-EXPENSES> 134,720
<OPERATING-INCOME-LOSS> 20,201
<OTHER-INCOME-NET> (109)
<INCOME-BEFORE-INTEREST-EXPEN> 20,092
<TOTAL-INTEREST-EXPENSE> 7,411
<NET-INCOME> 12,681
1,423
<EARNINGS-AVAILABLE-FOR-COMM> 11,258
<COMMON-STOCK-DIVIDENDS> 12,300
<TOTAL-INTEREST-ON-BONDS> 0
<CASH-FLOW-OPERATIONS> 27,901
<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, 1996, 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-31-1995
<PERIOD-END> MAR-31-1996
<BOOK-VALUE> PER-BOOK
<TOTAL-NET-UTILITY-PLANT> 977,509
<OTHER-PROPERTY-AND-INVEST> 3,403
<TOTAL-CURRENT-ASSETS> 99,283
<TOTAL-DEFERRED-CHARGES> 54,830
<OTHER-ASSETS> 0
<TOTAL-ASSETS> 1,135,025
<COMMON> 37,691
<CAPITAL-SURPLUS-PAID-IN> 179,761
<RETAINED-EARNINGS> 158,553
<TOTAL-COMMON-STOCKHOLDERS-EQ> 376,005
0
74,414
<LONG-TERM-DEBT-NET> 288,901
<SHORT-TERM-NOTES> 31,000
<LONG-TERM-NOTES-PAYABLE> 0
<COMMERCIAL-PAPER-OBLIGATIONS> 0
<LONG-TERM-DEBT-CURRENT-PORT> 37,229
0
<CAPITAL-LEASE-OBLIGATIONS> 0
<LEASES-CURRENT> 0
<OTHER-ITEMS-CAPITAL-AND-LIAB> 327,476
<TOT-CAPITALIZATION-AND-LIAB> 1,135,025
<GROSS-OPERATING-REVENUE> 126,954
<INCOME-TAX-EXPENSE> 7,139
<OTHER-OPERATING-EXPENSES> 101,741
<TOTAL-OPERATING-EXPENSES> 108,880
<OPERATING-INCOME-LOSS> 18,074
<OTHER-INCOME-NET> 1,029
<INCOME-BEFORE-INTEREST-EXPEN> 19,103
<TOTAL-INTEREST-EXPENSE> 6,183
<NET-INCOME> 12,920
1,225
<EARNINGS-AVAILABLE-FOR-COMM> 11,695
<COMMON-STOCK-DIVIDENDS> 10,600
<TOTAL-INTEREST-ON-BONDS> 0
<CASH-FLOW-OPERATIONS> 3,950
<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, 1996, 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-31-1995
<PERIOD-END> MAR-31-1996
<BOOK-VALUE> PER-BOOK
<TOTAL-NET-UTILITY-PLANT> 441,314
<OTHER-PROPERTY-AND-INVEST> 1,787
<TOTAL-CURRENT-ASSETS> 43,952
<TOTAL-DEFERRED-CHARGES> 39,537
<OTHER-ASSETS> 0
<TOTAL-ASSETS> 526,590
<COMMON> 54,223
<CAPITAL-SURPLUS-PAID-IN> 8,688
<RETAINED-EARNINGS> 101,857
<TOTAL-COMMON-STOCKHOLDERS-EQ> 164,768
0
35,000
<LONG-TERM-DEBT-NET> 133,414
<SHORT-TERM-NOTES> 3,500
<LONG-TERM-NOTES-PAYABLE> 20,000
<COMMERCIAL-PAPER-OBLIGATIONS> 0
<LONG-TERM-DEBT-CURRENT-PORT> 0
0
<CAPITAL-LEASE-OBLIGATIONS> 6,836
<LEASES-CURRENT> 579
<OTHER-ITEMS-CAPITAL-AND-LIAB> 162,493
<TOT-CAPITALIZATION-AND-LIAB> 526,590
<GROSS-OPERATING-REVENUE> 50,575
<INCOME-TAX-EXPENSE> 2,329
<OTHER-OPERATING-EXPENSES> 41,684
<TOTAL-OPERATING-EXPENSES> 44,013
<OPERATING-INCOME-LOSS> 6,562
<OTHER-INCOME-NET> (114)
<INCOME-BEFORE-INTEREST-EXPEN> 6,448
<TOTAL-INTEREST-EXPENSE> 3,127
<NET-INCOME> 3,321
581
<EARNINGS-AVAILABLE-FOR-COMM> 2,740
<COMMON-STOCK-DIVIDENDS> 4,800
<TOTAL-INTEREST-ON-BONDS> 0
<CASH-FLOW-OPERATIONS> 7,201
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
</TABLE>
