<PAGE>
===============================================================================
UNITED STATES
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, 2000
OR
( ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the Transition Period from _____to_____
<TABLE>
<CAPTION>
Commission Registrant, State of Incorporation, I.R.S. Employer
File Number Address and Telephone Number Identification No.
<S> <C>
1-3526 The Southern Company 58-0690070
(A Delaware Corporation)
270 Peachtree Street, N.W.
Atlanta, Georgia 30303
(404) 506-5000
1-3164 Alabama Power Company 63-0004250
(An Alabama Corporation)
600 North 18th Street
Birmingham, Alabama 35291
(205) 257-1000
1-6468 Georgia Power Company 58-0257110
(A Georgia Corporation)
241 Ralph McGill Boulevard, N.E.
Atlanta, Georgia 30308
(404) 506-6526
0-2429 Gulf Power Company 59-0276810
(A Maine Corporation)
One Energy Place
Pensacola, Florida 32520
(850) 444-6111
0-6849 Mississippi Power Company 64-0205820
(A Mississippi Corporation)
2992 West Beach
Gulfport, Mississippi 39501
(228) 864-1211
1-5072 Savannah Electric and Power Company 58-0418070
(A Georgia Corporation)
600 East Bay Street
Savannah, Georgia 31401
(912) 644-7171
==================================== ====================================================== ========================
</TABLE>
<PAGE>
Indicate by check mark whether the registrants (1) have filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrants were required to file such reports), and (2) have been subject to
such filing requirements for the past 90 days. Yes X No____
<TABLE>
<CAPTION>
Description of Shares Outstanding
Registrant Common Stock at April 30, 2000
<S> <C> <C>
The Southern Company Par Value $5 Per Share 648,623,748
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
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.
</TABLE>
2
<PAGE>
<TABLE>
<CAPTION>
INDEX TO QUARTERLY REPORT ON FORM 10-Q
March 31, 2000
Page
Number
<S> <C>
DEFINITIONS........................................................................................................ 4
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements (Unaudited)
Item 2. Management's Discussion and Analysis of Results of Operations and Financial Condition
The Southern Company and Subsidiary Companies
Condensed Consolidated Statements of Income........................................................ 7
Condensed Consolidated Statements of Cash Flows.................................................... 8
Condensed Consolidated Balance Sheets.............................................................. 9
Condensed Consolidated Statements of Comprehensive Income and
Accumulated Other Comprehensive Income.......................................................... 11
Management's Discussion and Analysis of Results of Operations and Financial Condition.............. 12
Alabama Power Company
Condensed Statements of Income..................................................................... 18
Condensed Statements of Cash Flows................................................................. 19
Condensed Balance Sheets........................................................................... 20
Management's Discussion and Analysis of Results of Operations and Financial Condition.............. 22
Exhibit 1 - Report of Independent Public Accountants............................................... 25
Georgia Power Company
Condensed Statements of Income..................................................................... 27
Condensed Statements of Cash Flows................................................................. 28
Condensed Balance Sheets........................................................................... 29
Management's Discussion and Analysis of Results of Operations and Financial Condition.............. 31
Exhibit 1 - Report of Independent Public Accountants............................................... 35
Gulf Power Company
Condensed Statements of Income..................................................................... 37
Condensed Statements of Cash Flows................................................................. 38
Condensed Balance Sheets........................................................................... 39
Management's Discussion and Analysis of Results of Operations and Financial Condition.............. 41
Mississippi Power Company
Condensed Statements of Income..................................................................... 45
Condensed Statements of Cash Flows................................................................. 46
Condensed Balance Sheets........................................................................... 47
Management's Discussion and Analysis of Results of Operations and Financial Condition.............. 49
Savannah Electric and Power Company
Condensed Statements of Income..................................................................... 53
Condensed Statements of Cash Flows................................................................. 54
Condensed Balance Sheets........................................................................... 55
Management's Discussion and Analysis of Results of Operations and Financial Condition.............. 57
Notes to the Condensed Financial Statements........................................................... 60
Item 3. Quantitative and Qualitative Disclosures about Market Risk............................................ 61
PART II - OTHER INFORMATION
Item 1. Legal Proceedings......................................................................................... 65
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.......................................................................... 65
Signatures ............................................................................................... 67
</TABLE>
3
<PAGE>
<TABLE>
<CAPTION>
DEFINITIONS
TERM MEANING
<S> <C>
ALABAMA..................................... Alabama Power Company
BEWAG....................................... Berliner Kraft und Licht AG
CEPA........................................ Consolidated Electric Power Asia Limited
Clean Air Act............................... Clean Air Act Amendments of 1990
ECO Plan.................................... Environmental Compliance Overview Plan
Energy Act.................................. Energy Policy Act of 1992
EPA......................................... U. S. Environmental Protection Agency
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, 1999
FUCO........................................ Foreign utility company
GEORGIA..................................... Georgia Power Company
GULF........................................ Gulf Power Company
integrated Southeast utilities.............. ALABAMA, GEORGIA, GULF, MISSISSIPPI, and SAVANNAH
MISSISSIPPI................................. Mississippi Power Company
Mobile Energy............................... Mobile Energy Services Company, L.L.C. and Mobile Energy Services
Holdings, Inc.
OPC......................................... Oglethorpe Power Corporation
PEP......................................... Performance Evaluation Plan
PSC......................................... Public Service Commission
RTO......................................... Regional Transmission Organization
SAVANNAH.................................... Savannah Electric and Power Company
SCS......................................... Southern Company Services, Inc.
SEC......................................... Securities and Exchange Commission
SOUTHERN.................................... The Southern Company
Southern Energy............................. Southern Energy, Inc. including SOUTHERN subsidiaries managed or controlled by
Southern Energy
SOUTHERN system............................. SOUTHERN, integrated Southeast utilities, Southern Energy, and other subsidiaries
TVA......................................... Tennessee Valley Authority
WPD......................................... Western Power Distribution (United Kingdom) (formerly South
Western Electricity plc)
</TABLE>
4
<PAGE>
CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING INFORMATION
This Quarterly Report on Form 10-Q includes forward-looking statements
in addition to historical information. The registrants caution that there are
various important factors that could cause actual results to differ materially
from those indicated in the forward-looking statements; accordingly, there can
be no assurance that such indicated results will be realized. These factors
include legislative and regulatory initiatives regarding deregulation and
restructuring of the electric utility industry; the extent and timing of the
entry of additional competition in the markets of SOUTHERN's subsidiaries;
potential business strategies, including acquisitions or dispositions of assets
or businesses, internal restructuring or other restructuring options, that may
be pursued by the registrants; state and federal rate regulation in the United
States; changes in or application of environmental and other laws and
regulations to which SOUTHERN and its subsidiaries are subject; political, legal
and economic conditions and developments in the United States and in foreign
countries in which the subsidiaries operate; financial market conditions and the
results of financing efforts; changes in commodity prices and interest rates;
weather and other natural phenomena; the performance of projects undertaken by
the non-traditional business and the success of efforts to invest in and develop
new opportunities; and other factors discussed elsewhere herein and in other
reports (including Form 10-K) filed from time to time by the registrants with
the SEC.
5
<PAGE>
THE SOUTHERN COMPANY AND SUBSIDIARY COMPANIES
6
<PAGE>
<TABLE>
<CAPTION>
THE SOUTHERN COMPANY AND SUBSIDIARY COMPANIES
CONDENSED CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)
For the Three Months
Ended March 31,
2000 1999
---------------- ----------------
---------------------------------
(in thousands)
Operating Revenues:
<S> <C> <C>
Retail sales $1,782,708 $1,674,783
Sales for resale 177,929 166,211
Southern Energy revenues 520,984 521,554
Other revenues 90,966 79,017
---------------- ----------------
---------------- ----------------
Total operating revenues 2,572,587 2,441,565
---------------- ----------------
---------------- ----------------
Operating Expenses:
Operation --
Fuel 648,749 512,466
Purchased power 104,421 274,426
Other 471,796 487,069
Maintenance 241,178 221,286
Depreciation and amortization 377,292 315,081
Taxes other than income taxes 159,775 146,262
---------------- ----------------
---------------- ----------------
Total operating expenses 2,003,211 1,956,590
---------------- ----------------
---------------- ----------------
Operating Income 569,376 484,975
Other Income:
Interest income 27,325 29,486
Equity in earnings of unconsolidated subsidiaries 21,157 94,681
Other, net 46,659 26,712
---------------- ----------------
---------------- ----------------
Earnings Before Interest and Income Taxes 664,517 635,854
---------------- ----------------
---------------- ----------------
Interest Charges and Other:
Interest on long-term debt 200,349 166,353
Interest on notes payable 67,104 27,457
Amortization of debt discount, premium and expense, net 8,577 9,020
Other interest charges, net 2,704 13,197
Minority interests in subsidiaries 30,068 21,343
Distributions on capital and preferred securities of subsidiaries 44,066 43,767
Preferred dividends of subsidiaries 4,695 5,633
---------------- ----------------
---------------- ----------------
Total interest charges and other, net 357,563 286,770
---------------- ----------------
---------------- ----------------
Earnings Before Income Taxes 306,954 349,084
Income taxes 61,510 124,768
---------------- ----------------
---------------- ----------------
Consolidated Net Income $245,444 $224,316
================ ================
================ ================
Common Stock Data:
Average number of shares of common stock outstanding (in thousands) 653,134 698,527
Basic and diluted earnings per share of common stock $0.38 $0.32
Cash dividends paid per share of common stock $0.335 $0.335
The accompanying notes as they relate to SOUTHERN are an integral part of these statements.
</TABLE>
7
<PAGE>
<TABLE>
<CAPTION>
THE SOUTHERN COMPANY AND SUBSIDIARY COMPANIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
For the Three Months
Ended March 31,
2000 1999
----------------- -----------------
(in thousands)
Operating Activities:
<S> <C> <C>
Consolidated net income $245,444 $224,316
Adjustments to reconcile consolidated net income
to net cash provided from operating activities --
Depreciation and amortization 407,671 357,985
Deferred income taxes and investment tax credits 9,695 33,503
Equity in earnings of unconsolidated subsidiaries (21,157) (94,681)
Other, net (14,437) 35,896
Changes in certain current assets and liabilities
excluding effects from acquisitions --
Receivables, net 161,770 160,663
Fossil fuel stock (1,879) (64,830)
Materials and supplies (10,264) (3,573)
Accounts payable (148,196) (321,441)
Other (292,500) (138,575)
----------------- -----------------
Net cash provided from operating activities 336,147 189,263
----------------- -----------------
Investing Activities:
Gross property additions (539,599) (504,592)
Southern Energy business acquisitions, net of cash acquired (918) (38,570)
Other (84,914) (53,934)
----------------- -----------------
Net cash used for investing activities (625,431) (597,096)
----------------- -----------------
Financing Activities:
Increase (decrease) in notes payable, net 617,416 476,648
Proceeds --
Other long-term debt 521,812 348,271
Capital and preferred securities - 250,000
Common stock 43 23,705
Retirements/repurchases --
First mortgage bonds (200,000) (504,000)
Other long-term debt (88,612) (223,355)
Preferred stock (279) (85,679)
Common stock repurchased (414,298) -
Payment of common stock dividends (220,557) (233,879)
Other 78,436 38,864
----------------- -----------------
Net cash provided from financing activities 293,961 90,575
----------------- -----------------
Net Increase (Decrease) in Cash and Cash Equivalents 4,677 (317,258)
Cash and Cash Equivalents at Beginning of Year 466,416 871,353
----------------- -----------------
Cash and Cash Equivalents at End of Year $471,093 $554,095
================= =================
Supplemental Cash Flow Information:
Cash paid during the period for --
Interest (net of amount capitalized) $340,050 $286,368
Income taxes (net of refunds) $4,648 $25,057
Southern Energy business acquisitions --
Fair value of assets acquired $918 $38,570
Less cash paid for common stock 918 38,570
----------------- -----------------
Liabilities assumed - -
================= =================
The accompanying notes as they relate to SOUTHERN are an integral part of these statements.
</TABLE>
8
<PAGE>
<TABLE>
<CAPTION>
THE SOUTHERN COMPANY AND SUBSIDIARY COMPANIES
CONDENSED CONSOLIDATED BALANCE SHEETS
At March 31,
2000 At December 31,
Assets (Unaudited) 1999
------------------- -------------------
(in thousands)
Current Assets:
<S> <C> <C>
Cash and cash equivalents $ 471,093 $ 466,416
Special deposits 51,911 72,490
Receivables, less accumulated provisions for uncollectible accounts
of $71,068 at March 31, 2000 and $80,765 at December 31, 1999 1,395,144 1,629,980
Unrecovered retail fuel clause revenue 216,572 243,791
Fossil fuel stock, at average cost 312,514 310,635
Materials and supplies, at average cost 595,344 585,080
Other 271,408 198,823
------------------- -------------------
Total current assets 3,313,986 3,507,215
------------------- -------------------
Property, Plant, and Equipment:
In service 36,918,270 36,763,700
Less accumulated provision for depreciation 14,345,511 14,075,044
------------------- -------------------
22,572,759 22,688,656
Nuclear fuel, at amortized cost 204,068 226,124
Construction work in progress 1,916,514 1,629,701
------------------- -------------------
Total property, plant, and equipment 24,693,341 24,544,481
------------------- -------------------
Other Property and Investments:
Equity investments in unconsolidated subsidiaries 1,355,738 1,376,357
Property rights, net of accumulated amortization
of $249,391 at March 31, 2000 and $226,866 at December 31, 1999 2,185,415 2,202,206
Goodwill, net of accumulated amortization
of $178,437 at March 31, 2000 and $163,560 at December 31, 1999 2,090,904 2,105,859
Other intangibles, net of accumulated amortization
of $17,048 at March 31, 2000 and $13,308 at December 31, 1999 443,187 446,927
Nuclear decommissioning trusts 703,734 658,567
Leveraged leases 550,716 556,419
Other 653,848 578,231
------------------- -------------------
Total other property and investments 7,983,542 7,924,566
------------------- -------------------
Deferred Charges and Other Assets:
Deferred charges related to income taxes 963,317 987,144
Prepaid pension costs 627,455 590,274
Debt expense, being amortized 142,081 145,092
Premium on reacquired debt, being amortized 212,235 217,125
Other 515,557 457,770
------------------- -------------------
Total deferred charges and other assets 2,460,645 2,397,405
------------------- -------------------
------------------- -------------------
Total Assets $38,451,514 $38,373,667
=================== ===================
The accompanying notes as they relate to SOUTHERN are an integral part of these statements.
</TABLE>
9
<PAGE>
<TABLE>
<CAPTION>
THE SOUTHERN COMPANY AND SUBSIDIARY COMPANIES
CONDENSED CONSOLIDATED BALANCE SHEETS
At March 31,
2000 At December 31,
Liabilities and Stockholders' Equity (Unaudited) 1999
------------------- -------------------
(in thousands)
Current Liabilities:
<S> <C> <C>
Securities due within one year $ 378,919 $ 576,299
Notes payable 4,526,196 3,915,258
Accounts payable 692,587 895,456
Customer deposits 136,326 132,555
Taxes accrued --
Income taxes 196,481 155,326
Other 191,288 263,899
Interest accrued 237,452 281,272
Vacation pay accrued 119,711 120,360
Other 647,593 793,334
------------------- -------------------
Total current liabilities 7,126,553 7,133,759
------------------- -------------------
------------------- -------------------
Long-term debt 12,140,624 11,746,596
------------------- -------------------
Deferred Credits and Other Liabilities:
Accumulated deferred income taxes 4,490,303 4,504,896
Deferred credits related to income taxes 614,343 639,921
Accumulated deferred investment tax credits 685,930 693,422
Employee benefits provisions 526,971 513,395
Prepaid capacity revenues 74,574 79,703
Other 534,769 437,689
------------------- -------------------
Total deferred credits and other liabilities 6,926,890 6,869,026
------------------- -------------------
------------------- -------------------
Minority interests in subsidiaries 751,271 724,610
------------------- -------------------
------------------- -------------------
Company or subsidiary obligated mandatorily redeemable
capital and preferred securities 2,326,015 2,326,835
------------------- -------------------
Cumulative preferred stock of subsidiaries 368,230 368,509
------------------- -------------------
Common Stockholders' Equity:
Common stock, par value $5 per share --
Authorized -- 1 billion shares
Issued -- March 31, 2000: 700,621,976 shares;
-- December 31, 1999: 700,620,486 shares 3,503,110 3,503,102
Paid-in capital 2,480,307 2,480,198
Treasury, at cost -- March 31, 2000: 51,998,228 shares;
-- December 31, 1999: 34,824,901 shares (1,333,396) (918,972)
Retained earnings 4,257,223 4,232,399
Accumulated other comprehensive income (95,313) (92,395)
------------------- -------------------
Total common stockholders' equity 8,811,931 9,204,332
------------------- -------------------
Total Liabilities and Stockholders' Equity $38,451,514 $38,373,667
=================== ===================
The accompanying notes as they relate to SOUTHERN are an integral part of these statements.
</TABLE>
10
<PAGE>
<TABLE>
<CAPTION>
THE SOUTHERN COMPANY AND SUBSIDIARY COMPANIES
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (UNAUDITED)
For the Three Months
Ended March 31,
----------------------------------------
2000 1999
----------------------------------------
(in thousands)
<S> <C> <C>
Consolidated net income $245,444 $224,316
Other comprehensive income:
Foreign currency translation adjustments (4,489) (164,137)
Related income tax benefits 1,571 57,448
------------------ ------------------
CONSOLIDATED COMPREHENSIVE INCOME $242,526 $117,627
================== ==================
</TABLE>
<TABLE>
<CAPTION>
THE SOUTHERN COMPANY AND SUBSIDIARY COMPANIES
CONSOLIDATED STATEMENTS OF ACCUMULATED OTHER COMPREHENSIVE INCOME
At March 31,
2000 At December 31,
(Unaudited) 1999
----------------------------------------
(in thousands)
<S> <C> <C>
Balance at beginning of period ($92,395) $15,400
Change in current period (2,918) (107,795)
------------------ ------------------
BALANCE AT END OF PERIOD ($95,313) ($92,395)
================== ==================
The accompanying notes as they relate to SOUTHERN are an integral part of these statements.
</TABLE>
11
<PAGE>
THE SOUTHERN COMPANY AND SUBSIDIARY COMPANIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
RESULTS OF OPERATIONS AND FINANCIAL CONDITION
FIRST QUARTER 2000 vs. FIRST QUARTER 1999
RESULTS OF OPERATIONS
SOUTHERN's traditional business is primarily represented
by its five integrated Southeast utilities, which provide electric service in
four states. Another significant portion of SOUTHERN's business is represented
by Southern Energy, which owns and manages domestic and international businesses
for SOUTHERN. Businesses acquired by Southern Energy 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 result from such
acquisitions. Reference is made to Note (N) in the "Notes to the Condensed
Financial Statements" herein for information relating to the planned initial
public offering and subsequent spin-off of Southern Energy.
Earnings
SOUTHERN's consolidated net income for the first quarter of 2000 was $245
million ($0.38 per share) compared to $224 million ($0.32 per share) for the
corresponding period of 1999. Earnings for the integrated Southeast utilities
increased during the first quarter of 2000 when compared to the same period in
1999 by $8 million or 3.8% due primarily to increased operating revenues.
Earnings for Southern Energy in the first quarter of 2000 rose $13 million or
14.9% above the amount recorded in the same period of the prior year. The
increase in Southern Energy's earnings is mainly due to the growing
profitability from its Asian business units primarily due to the Sual generating
units being placed in service during the latter part of 1999.
Significant income statement items appropriate for discussion include the
following:
Increase (Decrease)
-----------------------------
First Quarter
(in thousands) %
Operating revenues............................... $131,022 5.4
Fuel expense..................................... 136,283 26.6
Purchased power expense.......................... (170,005) (61.9)
Maintenance expense.............................. 19,892 9.0
Depreciation and amortization expense............ 62,211 19.7
Equity in earnings of unconsolidated subsidiaries (73,524) (77.7)
Other, net....................................... 19,947 74.7
Interest on long-term debt....................... 33,996 20.4
Interest on notes payable........................ 39,647 144.4
Operating revenues. For the integrated Southeast utilities, operating
revenues increased $123 million or 6.6% during the first quarter of 2000 over
the corresponding period in 1999 due primarily to a $108 million increase in
retail revenues. Retail revenues increased as a result of growth in the number
of customers and increased demand for energy. Energy sales to residential,
commercial and industrial customers were up by 3.9%, 7.5% and 2.9%,
respectively.
12
<PAGE>
THE SOUTHERN COMPANY AND SUBSIDIARY COMPANIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
RESULTS OF OPERATIONS AND FINANCIAL CONDITION
Fuel expense. These expenses for the integrated Southeast utilities were up
$53 million or 11.3% when compared to the corresponding period in 1999, due
primarily to higher demand for energy. Southern Energy's fuel expense in the
first quarter of 2000 was up $84 million or 200.5% from the same period in 1999.
This increase is primarily due to the acquisitions in 1999 of generating assets
in New York and California.
Purchased power expense. The first quarter 2000 decrease is attributed
primarily to Southern Energy which had a decrease of $198 million or 86.8% due
to the sale of SWEB's supply business and was partially offset by a $27 million
increase in purchased power expense at the integrated Southeast utilities.
Maintenance expense. Maintenance expenses were up $13 million or 6.3% for
the integrated Southeast utilities during the first quarter of 2000 as compared
to the same period in the prior year. The increase was primarily due to
maintenance performed on steam and nuclear power generation facilities and
distribution lines. Southern Energy's first quarter 2000 maintenance expenses
were up $8 million or 28.9% from the corresponding period in 1999. The increase
was primarily due to the acquisitions in 1999 of generating assets in New York
and California.
Depreciation and amortization expense. This expense for the integrated
Southeast utilities increased $29 million in the first quarter of 2000 as
compared to the corresponding period in 1999, principally due to accelerated
amortization of $36.6 million recorded by GEORGIA under a three-year rate order.
See Note (H) in the "Notes to the Condensed Financial Statements" herein for
further details regarding the retail rate order. Depreciation and amortization
expense for Southern Energy during the first quarter of 2000 increased $32
million or 58.7% primarily due to the increase in assets in Asia and North
America.
Equity in earnings of unconsolidated subsidiaries. During the first quarter
of 2000, the decrease in this item when compared to the same period in 1999 is
attributed to Southern Energy. The decrease is a direct result of the $54
million settlement recognized during the first quarter of 1999 representing
Southern Energy's claims against a contractor relating to the Shajiao C
construction project in China and the improvement in profitability of the
Shajiao C operation which was partially offset by other related expenses and
income taxes included in other income accounts,and a decrease in the sales price
of electricity at BEWAG due to the onset of deregulation and price competition
in Germany.
Other, net. The first quarter of 2000 increased when compared to the
corresponding period in 1999 due primarily to Southern Energy. This increase is
primarily the result of recovery of $29 million in receivables related to
Shajiao C reserved as uncollectible in 1999 which were partially offset by
various contract settlements and gains on asset sales that were recognized
during the first quarter of 1999.
Interest on long-term debt. The increase in this item during the first
quarter of 2000 from the amount recorded in 1999 primarily reflects Southern
Energy's higher outstanding long-term debt.
Interest on notes payable. This first quarter 2000 increase in interest on
notes payable when compared to the same period in 1999 is attributed primarily
to Southern Energy which had an increase of $23 million and, to a lesser extent,
SOUTHERN which had an increase of $11 million as a result of borrowings in
connection with its recently completed common stock repurchase program.
13
<PAGE>
THE SOUTHERN COMPANY AND SUBSIDIARY COMPANIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
RESULTS OF OPERATIONS AND FINANCIAL CONDITION
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 weather to energy sales growth to a less regulated, more
competitive environment, with non-traditional business becoming more
significant. For additional information relating to Southern Energy and other
businesses, see Item 1 - BUSINESS - "Southern Energy" and "Other Business" in
the Form 10-K. Also, reference is made to Note (N) in the "Notes to the
Condensed Financial Statements" herein for information relating to the planned
initial public offering and subsequent spin-off of Southern Energy.
With the enactment of the Energy Act and new legislation being discussed at
federal and state levels to expand customer choice, SOUTHERN 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 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 environmental issues, see Item 7 - MANAGEMENT'S DISCUSSION AND ANALYSIS -
"Environmental Matters" of SOUTHERN in the Form 10-K.
On December 20, 1999, the FERC issued its final rule on RTOs. Reference is
made to Item 7 - MANAGEMENT'S DISCUSSION AND ANALYSIS - "Future Earnings
Potential" of SOUTHERN in the Form 10-K for information on this matter.
Reference is also made to Item 7 - MANAGEMENT'S DISCUSSION AND ANALYSIS -
"Environmental Protection Agency Litigation" and Note 3 to the financial
statements of SOUTHERN in the Form 10-K for information on EPA litigation.
The FASB issued Statement No. 133, Accounting for Derivative Instruments
and Hedging Activities, which must be adopted by January 2001. This statement
establishes accounting and reporting standards for derivative instruments,
including certain derivative instruments embedded in other contracts, and for
hedging activities. SOUTHERN has not yet quantified the impact of adopting this
statement on its financial statements; however, the adoption could increase
volatility in earnings and other comprehensive income.
Reference is made to Notes (B) through (D), (F) through (J), (L), (M) and
(O) 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.
14
<PAGE>
THE SOUTHERN COMPANY AND SUBSIDIARY COMPANIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
RESULTS OF OPERATIONS AND FINANCIAL CONDITION
FINANCIAL CONDITION
Overview
Major changes in SOUTHERN's financial condition during the first three months of
2000 included $539.6 million used for gross property additions to utility plant.
The funds for these additions and other capital requirements were from
operations, short-term borrowings and other long-term debt. See SOUTHERN's
Condensed Consolidated Statements of Cash Flows for further details. Reference
is made to the SOUTHERN's Condensed Consolidated Statements of Comprehensive
Income herein for information relating to other comprehensive income.
Financing Activities
During the first three months of 2000, maturities of the integrated Southeast
utilities' first mortgage bonds totaled $200 million. In February 2000, GEORGIA
issued $300 million of floating rate senior notes due February 22, 2002. The
proceeds of the sale were used to repay a portion of its outstanding short-term
indebtedness. In March 2000, MISSISSIPPI issued $100 million of floating rate
senior notes due March 28, 2002. The proceeds were used to prepay bank loans of
$45 million maturing in November 2001 and $5 million maturing in October 2002.
The balance was applied to repay a portion of its outstanding short-term
indebtedness.
Reference is made to Note (M) in the "Notes to the Condensed Financial
Statements" herein for discussion of a program to repurchase SOUTHERN's common
stock.
The market price of SOUTHERN's common stock at March 31, 2000 was $21.75
per share and the book value was $13.59 per share, representing a market-to-book
ratio of 160%, compared to $23.50, $13.82 and 170%, respectively, at the end of
1999. The dividend for the first quarter of 2000 was $0.335 per share.
Capital Requirements
Reference is made to Item 7 - MANAGEMENT'S DISCUSSION AND ANALYSIS - "Capital
Requirements for Construction", "Other Capital Requirements" and "Environmental
Matters" of SOUTHERN in the Form 10-K for a description of the Southern electric
system's capital requirements for its construction program, sinking fund
requirements and maturing debt, and environmental compliance efforts.
Approximately $379 million will be required by March 31, 2001, for redemptions
and maturities of long-term debt. Also, the integrated Southeast utilities plan
to continue, to the extent possible, a program to retire higher-cost debt and
preferred stock and replace these securities with lower-cost capital.
15
<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 2000, 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.
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, 2000, approximately $471.1 million of cash and cash equivalents and
approximately $5.9 billion of unused credit arrangements with banks. These
unused credit arrangements also provide liquidity support to variable rate
pollution control bonds and commercial paper programs. At March 31, 2000, the
system companies had outstanding approximately $2.2 billion of short-term notes
payable and $2.3 billion of commercial paper. 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) in the "Notes to the Condensed Financial Statements" herein
for discussion of financial derivative contracts entered into by SOUTHERN.
16
<PAGE>
ALABAMA POWER COMPANY
17
<PAGE>
<TABLE>
<CAPTION>
ALABAMA POWER COMPANY
CONDENSED STATEMENTS OF INCOME (UNAUDITED)
For the Three Months
Ended March 31,
2000 1999
---------------- ----------------
(in thousands)
Operating Revenues:
<S> <C> <C>
Retail sales $606,126 $567,900
Sales for resale --
Non-affiliates 96,131 85,565
Affiliates 28,669 47,101
Other revenues 15,251 13,758
---------------- ----------------
Total operating revenues 746,177 714,324
---------------- ----------------
Operating Expenses:
Operation --
Fuel 195,074 188,014
Purchased power --
Non-affiliates 18,872 7,580
Affiliates 26,865 27,427
Other 112,246 117,896
Maintenance 76,834 70,774
Depreciation and amortization 90,472 87,182
Taxes other than income taxes 54,152 53,061
---------------- ----------------
Total operating expenses 574,515 551,934
---------------- ----------------
Operating Income 171,662 162,390
Other Income:
Interest income 5,926 9,446
Equity in earnings of unconsolidated subsidiaries 859 768
Other, net (1,082) (5,503)
---------------- ----------------
Earnings Before Interest and Income Taxes 177,365 167,101
---------------- ----------------
Interest Charges and Other:
Interest on long-term debt 52,052 45,060
Interest on notes payable 2,942 2,675
Amortization of debt discount, premium and expense, net 2,839 2,718
Other interest charges, net 1,075 6,091
Distributions on preferred securities of subsidiary 6,336 5,831
---------------- ----------------
Total interest charges and other, net 65,244 62,375
---------------- ----------------
Earnings Before Income Taxes 112,121 104,726
Income taxes 40,641 37,776
---------------- ----------------
Net Income 71,480 66,950
Dividends on Preferred Stock 3,968 3,875
---------------- ----------------
Net Income After Dividends on Preferred Stock $67,512 $63,075
================ ================
The accompanying notes as they relate to ALABAMA are an integral part of these condensed statements.
</TABLE>
18
<PAGE>
<TABLE>
<CAPTION>
ALABAMA POWER COMPANY
CONDENSED STATEMENTS OF CASH FLOWS (UNAUDITED)
For the Three Months
Ended March 31,
2000 1999
----------------- -----------------
(in thousands)
Operating Activities:
<S> <C> <C>
Net income $71,480 $66,950
Adjustments to reconcile net income
to net cash provided from operating activities --
Depreciation and amortization 101,947 102,538
Deferred income taxes and investment tax credits, net (2,423) 2,526
Other, net (22,451) 17,640
Changes in certain current assets and liabilities --
Receivables, net 40,702 73,983
Fossil fuel stock (8,814) (17,231)
Materials and supplies (7,327) (325)
Accounts payable (48,113) (101,665)
Energy cost recovery, retail 23,037 22,450
Other (17,973) (32,377)
----------------- -----------------
Net cash provided from operating activities 130,065 134,489
----------------- -----------------
Investing Activities:
Gross property additions (193,894) (142,065)
Other (2,365) (21,592)
----------------- -----------------
Net cash used for investing activities (196,259) (163,657)
----------------- -----------------
Financing Activities:
Increase (decrease) in notes payable, net 274,871 322,653
Proceeds --
Preferred securities - 50,000
Redemptions --
First mortgage bonds (100,000) (300,000)
Other long-term debt (1,685) (246)
Preferred stock - (50,000)
Payment of preferred stock dividends (4,028) (4,487)
Payment of common stock dividends (103,600) (98,000)
Other (20) (3,096)
----------------- -----------------
Net cash provided from (used for) financing activities 65,538 (83,176)
----------------- -----------------
Net Change in Cash and Cash Equivalents (656) (112,344)
Cash and Cash Equivalents at Beginning of Period 19,475 134,248
----------------- -----------------
Cash and Cash Equivalents at End of Period $18,819 $21,904
================= =================
Supplemental Cash Flow Information:
Cash paid during the period for --
Interest (net of amount capitalized) $50,316 $60,563
Income taxes (net of refunds) $529 ($14,000)
The accompanying notes as they relate to ALABAMA are an integral part of these condensed statements.
</TABLE>
19
<PAGE>
<TABLE>
<CAPTION>
ALABAMA POWER COMPANY
CONDENSED BALANCE SHEETS
At March 31,
2000 At December 31,
Assets (Unaudited) 1999
------------------ ------------------
(in thousands)
Current Assets:
<S> <C> <C>
Cash and cash equivalents $ 18,819 $ 19,475
Receivables --
Customer accounts receivable 230,138 265,900
Unrecovered retail fuel clause revenue 145,590 168,627
Other accounts and notes receivable 33,827 42,137
Affiliated companies 43,976 40,083
Accumulated provision for uncollectible accounts (4,749) (4,117)
Refundable income taxes 18,106 17,997
Fossil fuel stock, at average cost 93,396 84,582
Materials and supplies, at average cost 174,964 167,637
Other 88,978 46,011
------------------ ------------------
Total current assets 843,045 848,332
------------------ ------------------
Property, Plant, and Equipment:
In service 11,867,549 11,783,078
Less accumulated provision for depreciation 4,960,488 4,901,384
------------------ ------------------
6,907,061 6,881,694
Nuclear fuel, at amortized cost 97,781 106,836
Construction work in progress 788,994 715,153
------------------ ------------------
Total property, plant, and equipment 7,793,836 7,703,683
------------------ ------------------
Other Property and Investments:
Equity investments in unconsolidated subsidiaries 33,179 34,891
Nuclear decommissioning trusts 281,192 286,653
Other 14,790 12,156
------------------ ------------------
Total other property and investments 329,161 333,700
------------------ ------------------
Deferred Charges and Other Assets:
Deferred charges related to income taxes 328,843 330,405
Prepaid pension costs 226,731 213,971
Debt expense, being amortized 9,401 9,563
Premium on reacquired debt, being amortized 81,902 83,895
Department of Energy assessments 27,685 27,685
Other 100,392 97,470
------------------ ------------------
Total deferred charges and other assets 774,954 762,989
------------------ ------------------
Total Assets $9,740,996 $9,648,704
================== ==================
The accompanying notes as they relate to ALABAMA are an integral part of these condensed statements.
</TABLE>
20
<PAGE>
<TABLE>
<CAPTION>
ALABAMA POWER COMPANY
CONDENSED BALANCE SHEETS
At March 31,
2000 At December 31,
Liabilities and Stockholders' Equity (Unaudited) 1999
------------------ ------------------
(in thousands)
Current Liabilities:
<S> <C> <C>
Securities due within one year $ 903 $100,943
Notes payable 371,695 96,824
Accounts payable --
Affiliated 81,506 91,315
Other 98,193 140,842
Customer deposits 33,100 31,704
Taxes accrued --
Income taxes 146,490 100,569
Other 35,439 18,295
Interest accrued 38,467 26,365
Vacation pay accrued 30,112 30,112
Other 35,978 84,267
------------------ ------------------
Total current liabilities 871,883 721,236
------------------ ------------------
Long-term debt 3,189,401 3,190,378
------------------ ------------------
Deferred Credits and Other Liabilities:
Accumulated deferred income taxes 1,237,375 1,240,344
Deferred credits related to income taxes 260,807 265,102
Accumulated deferred investment tax credits 257,556 260,367
Employee benefits provisions 83,342 82,298
Prepaid capacity revenues 74,574 79,703
Other 148,834 155,901
------------------ ------------------
Total deferred credits and other liabilities 2,062,488 2,083,715
------------------ ------------------
Company obligated mandatorily redeemable preferred
securities of subsidiary trusts holding company junior
subordinated notes 347,000 347,000
------------------ ------------------
Cumulative preferred stock 317,512 317,512
------------------ ------------------
Common Stockholder's Equity:
Common stock, par value $40 per share --
Authorized - 6,000,000 shares
Outstanding - 5,608,955 shares
Par value 224,358 224,358
Paid-in capital 1,538,992 1,538,992
Premium on preferred stock 99 99
Retained earnings 1,189,263 1,225,414
------------------ ------------------
Total common stockholder's equity 2,952,712 2,988,863
------------------ ------------------
Total Liabilities and Stockholder's Equity $9,740,996 $9,648,704
================== ==================
The accompanying notes as they relate to ALABAMA are an integral part of these condensed statements.
</TABLE>
21
<PAGE>
ALABAMA POWER COMPANY
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
RESULTS OF OPERATIONS AND FINANCIAL CONDITION
FIRST QUARTER 2000 vs. FIRST QUARTER 1999
RESULTS OF OPERATIONS
Earnings
ALABAMA's net income after dividends on preferred stock for the first quarter of
2000 was $67.5 million compared to $63.1 million for the corresponding period of
1999. First quarter earnings increased $4.4 million or 7% primarily due to an
increase in operating revenues, which was partially offset by an increase in
operating expenses.
Significant income statement items appropriate for discussion include the
following:
Increase (Decrease)
----------------------------------
First Quarter
----------------------------------
(in thousands) %
Retail sales................................ $38,226 6.7
Sales for resale--non-affiliates............ 10,566 12.3
Sales for resale - affiliates .............. (18,432) (39.1)
Purchased power - non-affiliates............ 11,292 149.0
Maintenance expense......................... 6,060 8.6
Interest income............................. (3,520) (37.3)
Interest on long-term debt.................. 6,992 15.5
Other interest charges, net................. (5,016) (82.4)
Retail sales. Excluding fuel revenues, which generally do not affect net
income, retail sales revenues increased for the first quarter 2000 due primarily
to a 3.1% increase in retail energy sales. Retail energy sales increased by
2.3%, 7.5% and 1.5% to residential, commercial and industrial customers,
respectively.
Sales for resale-non-affiliates. Increased revenues from unit power energy
sales was the primary reason for the increase in the first quarter 2000 as
compared to the same period in 1999. Energy is usually sold at variable cost and
has no significant impact on net income.
Sales for resale-affiliates. Revenues from sales to 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 did not have a significant impact on earnings.
Purchased power - non-affiliates. Increased amounts of purchased power were
needed to meet territorial demand in the first quarter of 2000 to offset
decreased nuclear and hydro power generation related to a refueling outage and
lower stream flows, respectively.
Maintenance expense. These expenses increased due primarily to maintenance
performed on the fossil and nuclear power generation facilities.
22
<PAGE>
ALABAMA POWER COMPANY
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
RESULTS OF OPERATIONS AND FINANCIAL CONDITION
Interest income. This item was lower for the first quarter of 2000 when
compared to the first quarter of 1999 due primarily to a decrease in recognized
gains on investments held by the nuclear decommissioning trust. Interest income
related to the nuclear decommissioning trust was offset by a concurrent
reduction of other interest charges in accordance with FERC requirements.
Interest on long-term debt. This first quarter 2000 increase compared to
the same period in 1999 is primarily due to the issuance of senior notes during
the last half of 1999.
Other interest charges, net. The decrease in other interest charges for the
first quarter 2000 is primarily attributable to an increase in Allowance for
Funds Used During Construction resulting in a larger credit to interest expense
than was recorded in the corresponding period for 1999. Also, there was a
decrease in interest charges related to the nuclear decommissioning trust, which
was offset by a concurrent reduction of interest income in accordance with FERC
requirements.
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 weather to 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, ALABAMA 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 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 environmental issues, see Item 7 - MANAGEMENT'S DISCUSSION AND ANALYSIS -
"Environmental Matters" of ALABAMA in the Form 10-K.
On December 20, 1999, the FERC issued its final rule on RTOs. Reference is
made to Item 7 - MANAGEMENT'S DISCUSSION AND ANALYSIS - "Future Earnings
Potential" of ALABAMA in the Form 10-K for information on this matter.
Reference is made to Item 7 - MANAGEMENT'S DISCUSSION AND ANALYSIS -
"Environmental Matters" and Note 3 to the financial statements of ALABAMA in the
Form 10-K for information on EPA litigation.
The FASB has issued Statement No. 133, Accounting for Derivative
Instruments and Hedging Activities, which must be adopted by January 2001. This
statement establishes accounting and reporting standards for derivative
instruments, including certain derivative instruments embedded in other
contracts, and for hedging activities. ALABAMA has not yet quantified the impact
of adopting this statement on its financial statements; however, the adoption
could increase volatility in earnings.
Reference is made to Notes (B), (C), (F), (G) and (O) in the "Notes to the
Condensed Financial Statements" herein for discussion of various contingencies
and other matters which may affect future earnings potential.
23
<PAGE>
ALABAMA POWER COMPANY
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
RESULTS OF OPERATIONS AND FINANCIAL CONDITION
FINANCIAL CONDITION
Overview
Major changes in ALABAMA's financial condition during the first three months of
2000 included the addition of approximately $193.9 million to utility plant. The
funds for these additions and other capital requirements were derived primarily
from operating activities. See ALABAMA's Condensed Statements of Cash Flows for
further details.
Financing Activities
During the first three months of 2000, maturities of first mortgage bonds by
ALABAMA totaled $100 million. ALABAMA will continue to retire higher-cost debt
and preferred stock and replace these securities 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. 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,
2000, approximately $18.8 million of cash and cash equivalents and had unused
committed lines of credit of approximately $907 million (including $418 million
of such lines under which borrowings may be made only to fund purchase
obligations relating to variable rate pollution control bonds). ALABAMA has
regulatory authority for up to $750 million of short-term borrowings. At March
31, 2000, ALABAMA had outstanding $322 million of commercial paper and $50
million of extendible commercial notes.
24
<PAGE>
Exhibit 1
ARTHUR ANDERSEN
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, 2000, and the related condensed statements of income for
the three-month periods ended March 31, 2000 and 1999 and cash flows for the
three-month periods ended March 31, 2000 and 1999. 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 auditing standards generally accepted in the United States, 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 accounting principles generally accepted in the United States.
We have previously audited, in accordance with auditing standards generally
accepted in the United States, the balance sheet of ALABAMA POWER COMPANY as of
December 31, 1999 (not presented herein) and, in our report dated February 16,
2000, 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, 1999 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, 2000
25
<PAGE>
GEORGIA POWER COMPANY
26
<PAGE>
<TABLE>
<CAPTION>
GEORGIA POWER COMPANY
CONDENSED STATEMENTS OF INCOME (UNAUDITED)
For the Three Months
Ended March 31,
2000 1999
---------------- ----------------
(in thousands)
Operating Revenues:
<S> <C> <C>
Retail sales $909,028 $861,777
Sales for resale --
Non-affiliates 43,689 41,755
Affiliates 11,933 7,906
Other revenues 26,989 19,492
---------------- ----------------
Total operating revenues 991,639 930,930
---------------- ----------------
Operating Expenses:
Operation --
Fuel 210,907 178,212
Purchased power --
Non-affiliates 43,110 32,158
Affiliates 47,740 54,921
Other 158,983 168,282
Maintenance 98,133 91,536
Depreciation and amortization 157,767 132,435
Taxes other than income taxes 51,613 49,002
---------------- ----------------
Total operating expenses 768,253 706,546
---------------- ----------------
Operating Income 223,386 224,384
Other Income (Expense):
Interest income 408 250
Equity in earnings of unconsolidated subsidiaries 853 733
Other, net (6,225) (6,637)
---------------- ----------------
Earnings Before Interest and Income Taxes 218,422 218,730
---------------- ----------------
Interest Charges and Other:
Interest on long-term debt 38,872 41,111
Interest on notes payable 8,155 4,216
Amortization of debt discount, premium and expense, net 2,710 3,700
Other interest charges, net (2,760) 1,129
Distributions on preferred securities of subsidiary 14,776 14,971
---------------- ----------------
Total interest charges and other, net 61,753 65,127
---------------- ----------------
Earnings Before Income Taxes 156,669 153,603
Income taxes 62,800 60,821
---------------- ----------------
Net Income 93,869 92,782
Dividends on Preferred Stock 170 1,201
---------------- ----------------
Net Income After Dividends on Preferred Stock $ 93,699 $ 91,581
================ ================
The accompanying notes as they relate to GEORGIA are an integral part of these condensed statements.
</TABLE>
27
<PAGE>
<TABLE>
<CAPTION>
GEORGIA POWER COMPANY
CONDENSED STATEMENTS OF CASH FLOWS (UNAUDITED)
For the Three Months
Ended March 31,
2000 1999
--------------- ----------------
(in thousands)
Operating Activities:
<S> <C> <C>
Net income $93,869 $92,782
Adjustments to reconcile net income
to net cash provided from operating activities --
Depreciation and amortization 165,288 149,086
Deferred income taxes and investment tax credits, net (11,679) (1,894)
Other, net 28,602 7,003
Changes in certain current assets and liabilities --
Receivables, net 48,673 86,184
Fossil fuel stock 7,412 (37,135)
Materials and supplies (1,361) (613)
Accounts payable (65,168) (90,358)
Energy cost recovery, retail (9,930) 10,997
Other (3,060) (28,486)
--------------- ----------------
Net cash provided from operating activities 252,646 187,566
--------------- ----------------
Investing Activities:
Gross property additions (212,360) (163,030)
Other (74,899) (26,920)
--------------- ----------------
Net cash used for investing activities (287,259) (189,950)
--------------- ----------------
Financing Activities:
Increase (decrease) in notes payable, net (50,097) 97,308
Proceeds --
Other long-term debt 300,000 100,000
Preferred securities - 200,000
Retirements --
First mortgage bonds (100,000) (204,000)
Preferred stock (279) (35,679)
Payment of preferred stock dividends (125) 38
Payment of common stock dividends (136,500) (133,100)
Other (43) (20,576)
--------------- ----------------
Net cash provided from financing activities 12,956 3,991
--------------- ----------------
Net Change in Cash and Cash Equivalents (21,657) 1,607
Cash and Cash Equivalents at Beginning of Period 34,660 16,272
--------------- ----------------
Cash and Cash Equivalents at End of Period $13,003 $17,879
=============== ================
Supplemental Cash Flow Information:
Cash paid during the period for --
Interest (net of amount capitalized) $56,096 $65,971
Income taxes (net of refunds) $1,604 $18,929
The accompanying notes as they relate to GEORGIA are an integral part of these condensed statements.
</TABLE>
28
<PAGE>
<TABLE>
<CAPTION>
GEORGIA POWER COMPANY
CONDENSED BALANCE SHEETS
At March 31,
2000 At December 31,
Assets (Unaudited) 1999
------------------ -------------------
(in thousands)
Current Assets:
<S> <C> <C>
Cash and cash equivalents $ 13,003 $ 34,660
Receivables --
Customer accounts receivable 386,894 438,161
Other accounts and notes receivable 94,317 102,544
Affiliated companies 15,341 16,006
Accumulated provision for uncollectible accounts (5,100) (7,000)
Fossil fuel stock, at average cost 118,886 126,298
Materials and supplies, at average cost 255,255 253,894
Other 71,645 63,990
------------------ -------------------
Total current assets 950,241 1,028,553
------------------ -------------------
Property, Plant, and Equipment:
In service 15,850,589 15,798,624
Less accumulated provision for depreciation 6,666,595 6,538,574
------------------ -------------------
9,183,994 9,260,050
Nuclear fuel, at amortized cost 106,287 119,288
Construction work in progress 563,929 425,975
------------------ -------------------
Total property, plant, and equipment 9,854,210 9,805,313
------------------ -------------------
Other Property and Investments:
Equity investments in unconsolidated subsidiaries 23,305 25,024
Nuclear decommissioning trusts 422,542 371,914
Other 36,467 33,766
------------------ -------------------
Total other property and investments 482,314 430,704
------------------ -------------------
Deferred Charges and Other Assets:
Deferred charges related to income taxes 584,264 590,893
Prepaid pension costs 159,486 145,801
Debt expense, being amortized 55,239 55,824
Premium on reacquired debt, being amortized 97,303 99,331
Other 126,894 120,441
------------------ -------------------
Total deferred charges and other assets 1,023,186 1,012,290
------------------ -------------------
------------------ -------------------
Total Assets $12,309,951 $12,276,860
================== ===================
The accompanying notes as they relate to GEORGIA are an integral part of these condensed statements.
</TABLE>
29
<PAGE>
<TABLE>
<CAPTION>
GEORGIA POWER COMPANY
CONDENSED BALANCE SHEETS
At March 31,
2000 At December 31,
Liabilities and Stockholder's Equity (Unaudited) 1999
------------------ -------------------
(in thousands)
Current Liabilities:
<S> <C> <C>
Securities due within one year $ 56,056 $155,772
Notes payable and commercial paper 586,144 636,241
Accounts payable --
Affiliated 68,510 76,591
Other 251,542 346,785
Customer deposits 76,388 74,695
Taxes accrued --
Income taxes 80,789 7,914
Other 50,596 127,414
Interest accrued 61,612 58,665
Vacation pay accrued 37,927 38,143
Other 154,316 153,767
------------------ -------------------
Total current liabilities 1,423,880 1,675,987
------------------ -------------------
Long-term debt 2,988,038 2,688,358
------------------ -------------------
Deferred Credits and Other Liabilities:
Accumulated deferred income taxes 2,192,520 2,202,565
Deferred credits related to income taxes 262,430 267,083
Accumulated deferred investment tax credits 363,414 367,114
Employee benefits provisions 185,314 181,529
Other 195,023 151,812
------------------ -------------------
Total deferred credits and other liabilities 3,198,701 3,170,103
------------------ -------------------
Company obligated mandatorily redeemable preferred
securities of subsidiary trusts holding company junior
subordinated notes 789,250 789,250
------------------ -------------------
Preferred stock 14,673 14,952
------------------ -------------------
Common stockholder's equity
Common stock, without par value--
Authorized - 15,000,000 shares
Outstanding - 7,761,500 shares 344,250 344,250
Paid-in capital 1,815,983 1,815,983
Premium on preferred stock 40 40
Retained earnings 1,735,136 1,777,937
------------------ -------------------
Total common stockholder's equity 3,895,409 3,938,210
------------------ -------------------
Total Liabilities and Stockholder's Equity $12,309,951 $12,276,860
================== ===================
The accompanying notes as they relate to GEORGIA are an integral part of these condensed statements.
</TABLE>
30
<PAGE>
GEORGIA POWER COMPANY
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
RESULTS OF OPERATIONS AND FINANCIAL CONDITION
FIRST QUARTER 2000 vs. FIRST QUARTER 1999
RESULTS OF OPERATIONS
Earnings
GEORGIA's net income after dividends on preferred stock for the first quarter of
2000 was $93.7 million compared to $91.6 million for the corresponding period in
1999. This $2.1 million or 2.3% increase in first quarter earnings was primarily
due to higher revenues and lower interest charges, partially offset by higher
depreciation and amortization expense.
Significant income statement items appropriate for discussion include the
following:
Increase (Decrease)
----------------------------------
First Quarter
----------------------------------
(in thousands) %
Retail sales............................. $47,251 5.5
Sales for resale - affiliates............ 4,027 50.9
Other operating revenues................. 7,497 38.5
Fuel expense............................. 32,695 18.3
Purchased power from non-affiliates ..... 10,952 34.1
Purchased power from affiliates.......... (7,181) (13.1)
Other operation expense.................. (9,299) (5.5)
Maintenance expense...................... 6,597 7.2
Depreciation and amortization expense.... 25,332 19.1
Interest on long-term debt............... (2,239) (5.4)
Retail sales. Retail sales revenues, excluding fuel revenues which
generally do not affect income, increased $17.5 million during the first quarter
of 2000 when compared to the same period in 1999 due primarily to a 4.7%
increase in retail energy sales. This increase had no significant effect on
earnings due to additional depreciation and amortization under GEORGIA's retail
rate order as discussed below.
Sales for resale - affiliates and Purchased power from affiliates. Revenues
from sales for resale to affiliated companies within the Southern electric
system, as well as purchases of energy, will vary from period to period
depending on demand and the availability and cost of generating resources at
each company. These transactions did not have a significant impact on earnings.
Other operating revenues. This first quarter increase is mainly due to
recognition of the open-access transmission tariff settlement in 1999.
Fuel expense. The increase in this expense for the first quarter 2000, when
compared to the corresponding period of 1999, is primarily a result of increased
generation to meet energy demands and lower hydro generation in 2000 when
compared to 1999.
31
<PAGE>
GEORGIA POWER COMPANY
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
RESULTS OF OPERATIONS AND FINANCIAL CONDITION
Purchased power from non-affiliates. The first quarter of 2000 increase
when compared to the same period of 1999 results from higher demand for energy.
Other operation expense. For the current quarter of 2000 these expenses
decreased when compared to the corresponding period in 1999 due primarily to
lower injuries and damages claims and a larger nuclear insurance refund.
Maintenance expense. These costs increased during the first quarter of 2000
as compared to the first quarter of 1999 due primarily to maintenance performed
on nuclear plant and distribution lines.
Depreciation and amortization expense. The increase in this first quarter
when compared to the same period in 1999 is a result of increased plant and
equipment in service and accelerated amortization and depreciation required
under the three-year rate order which became effective in January 1, 1999. See
Note (H) in the "Notes to the Condensed Financial Statements" herein for further
details regarding the retail rate order.
Interest on long-term debt. The decrease in this charge during the first
quarter of 2000 compared to the same period in 1999 is primarily due to the
refinancing of higher cost debt.
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 including weather, regulatory matters and energy sales.
With the enactment of the Energy Act and new legislation being discussed at
federal and state levels to expand customer choice, GEORGIA 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, 1999, GEORGIA began operating under a new three-year
retail rate order. Under the order, GEORGIA's earnings are evaluated against a
retail return on common equity range of 10% to 12.5%. In compliance with the
order, retail rates were decreased by $24 million on an annual basis effective
January 1, 2000. Reference is made to Note (H) in the "Notes to the Condensed
Financial Statements" herein and Item 7 - MANAGEMENT'S DISCUSSION AND ANALYSIS -
"Future Earnings Potential" of GEORGIA in the Form 10-K for additional
information.
Effective June 1, 2000, the Georgia PSC will modify the calculation of
prices under certain of GEORGIA's retail commercial and industrial rates. These
modifications will reduce retail revenues by approximately $14 million in 2000
and $20 million in 2001.
Compliance costs related to the Clean Air Act and other environmental
issues could affect earnings. For additional information, see Item 7 -
MANAGEMENT'S DISCUSSION AND ANALYSIS - "Environmental Issues" of GEORGIA in the
Form 10-K.
32
<PAGE>
GEORGIA POWER COMPANY
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
RESULTS OF OPERATIONS AND FINANCIAL CONDITION
The FASB issued Statement No. 133, Accounting for Derivative Instruments
and Hedging Activities, which must be adopted by January 2001. This statement
establishes accounting and reporting standards for derivative instruments,
including certain derivative instruments embedded in other contracts - and for
hedging activities. GEORGIA has not yet quantified the impact of adopting this
statement on its financial statements; however, the adoption could increase
volatility in earnings.
Reference is made to Notes (B), (C), (H), (I) and (O) 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 GEORGIA's financial condition during the first three months
of 2000 was the addition of approximately $212 million to gross 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.
Financing Activities
During the first three months of 2000, maturities of first mortgage bonds by
GEORGIA totaled $100 million. In February 2000, GEORGIA issued $300 million of
floating rate senior notes due February 22, 2002. The proceeds of the sale were
used to repay a portion of its outstanding short-term indebtedness. GEORGIA
plans to continue, to the extent possible, a program to retire higher-cost debt
and preferred stock and replace these securities 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. See Item 1
- - BUSINESS - "Financing Programs" in the Form 10-K for additional information.
33
<PAGE>
GEORGIA POWER COMPANY
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
RESULTS OF OPERATIONS AND FINANCIAL CONDITION
To meet short-term cash needs and contingencies, GEORGIA had at March 31,
2000, approximately $13 million of cash and cash equivalents and approximately
$1.5 billion of unused credit arrangements with banks. The credit arrangements
provide liquidity support to GEORGIA's obligations with respect to variable rate
pollution control bonds and its commercial paper program. At March 31, 2000,
GEORGIA had $134.8 million and $451.3 million outstanding in short-term notes
payable to banks and commercial paper, respectively. Management believes that
the need for working capital can be adequately met by utilizing lines of credit
without maintaining large cash balances.
34
<PAGE>
Arthur Andersen
Exhibit 1
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
TO GEORGIA POWER COMPANY:
We have reviewed the accompanying condensed balance sheet of GEORGIA POWER
COMPANY (a Georgia corporation) as of March 31, 2000, and the related condensed
statements of income for the three-month periods ended March 31, 2000 and 1999
and cash flows for the three-month periods ended March 31, 2000 and 1999. 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 auditing standards generally accepted in the United States, 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 accounting principles generally accepted in the United States.
We have previously audited, in accordance with auditing standards generally
accepted in the United States, the balance sheet of GEORGIA POWER COMPANY as of
December 31, 1999 (not presented herein), and, in our report dated February 16,
2000, 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, 1999, 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, 2000
35
<PAGE>
GULF POWER COMPANY
36
<PAGE>
<TABLE>
<CAPTION>
GULF POWER COMPANY
CONDENSED STATEMENTS OF INCOME (UNAUDITED)
For the Three Months
Ended March 31,
2000 1999
--------------- --------------
------------------------------
(in thousands)
Operating Revenues:
<S> <C> <C>
Retail sales $116,807 $107,281
Sales for resale --
Non-affiliates 10,978 11,194
Affiliates 8,667 7,071
Other revenues 2,046 8,960
--------------- --------------
Total operating revenues 138,498 134,506
--------------- --------------
Operating Expenses:
Operation --
Fuel 41,643 38,753
Purchased power --
Non-affiliates 6,614 4,156
Affiliates 3,158 3,575
Other 27,188 27,142
Maintenance 14,176 16,593
Depreciation and amortization 16,367 16,078
Taxes other than income taxes 13,345 12,544
--------------- --------------
Total operating expenses 122,491 118,841
--------------- --------------
Operating Income 16,007 15,665
Other Income (Expense):
Interest income 438 241
Other, net (504) (812)
--------------- --------------
Earnings Before Interest and Income Taxes 15,941 15,094
--------------- --------------
Interest Charges and Other:
Interest on long-term debt 5,620 4,950
Interest on notes payable 773 485
Amortization of debt discount, premium and expense, net 503 498
Other interest charges, net 172 278
Distributions on preferred securities of subsidiary 1,550 1,550
--------------- --------------
Total interest charges and other, net 8,618 7,761
--------------- --------------
Earnings Before Income Taxes 7,323 7,333
Income taxes 2,616 2,480
--------------- --------------
Net Income 4,707 4,853
Dividends on Preferred Stock 54 54
--------------- --------------
Net Income After Dividends on Preferred Stock $4,653 $4,799
=============== ==============
The accompanying notes as they relate to GULF are an integral part of these condensed statements.
</TABLE>
37
<PAGE>
<TABLE>
<CAPTION>
GULF POWER COMPANY
CONDENSED STATEMENTS OF CASH FLOWS (UNAUDITED)
For the Three Months
Ended March 31,
2000 1999
--------------- ---------------
(in thousands)
Operating Activities:
<S> <C> <C>
Net income $4,707 $4,853
Adjustments to reconcile net income
to net cash provided from operating activities --
Depreciation and amortization 17,342 17,026
Deferred income taxes and investment tax credits, net (3,587) (1,060)
Other, net (725) 6,015
Changes in certain current assets and liabilities --
Receivables, net 10,856 8,090
Fossil fuel stock (5,319) (17,544)
Materials and supplies 925 152
Accounts payable (782) (5,832)
Other 7,185 (2,859)
--------------- ---------------
Net cash provided from operating activities 30,602 8,841
--------------- ---------------
Investing Activities:
Gross property additions (18,605) (12,529)
Other (8,795) (9,962)
--------------- ---------------
Net cash used for investing activities (27,400) (22,491)
--------------- ---------------
Financing Activities:
Increase (decrease) in notes payable, net (2,500) 28,500
Retirements --
Other long-term debt (20) -
Payment of preferred stock dividends (54) (54)
Payment of common stock dividends (14,600) (15,000)
Other (22) (5)
--------------- ---------------
Net cash provided from (used for) financing activities (17,196) 13,441
--------------- ---------------
Net Change in Cash and Cash Equivalents (13,994) (209)
Cash and Cash Equivalents at Beginning of Period 15,753 969
--------------- ---------------
Cash and Cash Equivalents at End of Period $1,759 $760
=============== ===============
Supplemental Cash Flow Information:
Cash paid during the period for --
Interest (net of amount capitalized) $9,762 $7,219
Income taxes (net of refunds) - -
The accompanying notes as they relate to GULF are an integral part of these condensed statements.
</TABLE>
38
<PAGE>
<TABLE>
<CAPTION>
GULF POWER COMPANY
CONDENSED BALANCE SHEETS
At March 31,
2000 At December 31,
Assets (Unaudited) 1999
---------------- ----------------
(in thousands)
Current Assets:
<S> <C> <C>
Cash and cash equivalents $ 1,759 $ 15,753
Receivables --
Customer accounts receivable 46,096 55,108
Other accounts and notes receivable 5,542 4,325
Affiliated companies 4,034 7,104
Accumulated provision for uncollectible accounts (1,017) (1,026)
Fossil fuel stock, at average cost 35,188 29,869
Materials and supplies, at average cost 29,163 30,088
Regulatory clauses under recovery 7,666 11,611
Other 7,115 5,354
---------------- ----------------
Total current assets 135,546 158,186
---------------- ----------------
Property, Plant, and Equipment:
In service 1,861,262 1,853,664
Less accumulated provision for depreciation 837,043 821,970
---------------- ----------------
1,024,219 1,031,694
Construction work in progress 44,030 34,164
---------------- ----------------
Total property, plant, and equipment 1,068,249 1,065,858
---------------- ----------------
Other Property and Investments 4,468 1,481
---------------- ----------------
Deferred Charges and Other Assets:
Deferred charges related to income taxes 16,960 25,264
Prepaid pension costs 19,051 17,734
Debt expense, being amortized 2,510 2,526
Premium on reacquired debt, being amortized 16,981 17,360
Other 21,799 20,086
---------------- ----------------
Total deferred charges and other assets 77,301 82,970
---------------- ----------------
Total Assets $1,285,564 $1,308,495
================ ================
The accompanying notes as they relate to GULF are an integral part of these condensed statements.
</TABLE>
39
<PAGE>
<TABLE>
<CAPTION>
GULF POWER COMPANY
CONDENSED BALANCE SHEETS
At March 31,
2000 At December 31,
Liabilities and Stockholder's Equity (Unaudited) 1999
---------------- ----------------
(in thousands)
Current Liabilities:
<S> <C> <C>
Notes payable $ 52,500 $ 55,000
Accounts payable --
Affiliated 11,105 14,878
Other 20,871 22,581
Customer deposits 12,990 12,778
Taxes accrued --
Income taxes 11,028 4,889
Other 6,981 7,707
Interest accrued 7,609 9,255
Vacation pay accrued 4,199 4,199
Other 5,434 4,961
---------------- ----------------
Total current liabilities 132,717 136,248
---------------- ----------------
---------------- ----------------
Long-term debt 367,515 367,449
---------------- ----------------
Deferred Credits and Other Liabilities:
Accumulated deferred income taxes 160,338 162,776
Deferred credits related to income taxes 40,856 49,693
Accumulated deferred investment tax credits 27,232 27,712
Employee benefits provisions 32,802 31,735
Other 22,502 21,333
---------------- ----------------
Total deferred credits and other liabilities 283,730 293,249
---------------- ----------------
Company obligated mandatorily redeemable preferred
securities of subsidiary trusts holding company junior
subordinated notes 85,000 85,000
---------------- ----------------
Preferred stock 4,236 4,236
---------------- ----------------
Common stockholder's equity
Common stock, without par value--
Authorized - 992,717 shares
Outstanding - 992,717 shares 38,060 38,060
Paid-in capital 221,254 221,254
Premium on preferred stock 12 12
Retained earnings 153,040 162,987
---------------- ----------------
Total common stockholder's equity 412,366 422,313
---------------- ----------------
Total Liabilities and Stockholder's Equity $1,285,564 $1,308,495
================ ================
The accompanying notes as they relate to GULF are an integral part of these condensed statements.
</TABLE>
40
<PAGE>
GULF POWER COMPANY
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
RESULTS OF OPERATIONS AND FINANCIAL CONDITION
FIRST QUARTER 2000 vs. FIRST QUARTER 1999
RESULTS OF OPERATIONS
Earnings
GULF's net income after dividends on preferred stock for the first quarter of
2000 was $4.7 million compared to $4.8 million for the same period in 1999. The
slight decrease in earnings was primarily due to an increase in total interest
charges and other, net.
Significant income statement items appropriate for discussion include the
following:
Increase (Decrease)
----------------------------------
First Quarter
---------------------------------
(in thousands) %
Retail sales................................ 9,526 8.9
Sales for resale - affiliates............... 1,596 22.6
Other operating revenues.................... (6,914) (77.2)
Fuel expense................................ 2,890 7.5
Purchased power from non-affiliates ........ 2,458 59.1
Maintenance expense......................... (2,417) (14.6)
Interest on long-term debt.................. 670 13.5
Retail sales. Excluding recovery of fuel expense and certain other expenses
that do not effect net income, retail sales revenues remained relatively flat
during the first quarter of 2000 when compared to the first quarter of 1999.
Retail energy sales increased 5.3% during the first three months of 2000 when
compared to the same period of the prior year due, mostly, to growth in the
number of retail customers served by GULF. Retail energy sales to residential,
commercial and industrial customers were up 5.4%, 5.3% and 4.8%, respectively.
This increase in energy sales was offset, for the most part, by retail base rate
reductions and the recording of estimated revenues to be shared under GULF's
Sharing Plan, which was approved by the Florida PSC in October 1999. For
additional information regarding the reduction to retail base rates and the
Sharing Plan, see Item 7 - MANAGEMENT'S DISCUSSION AND ANALYSIS - "Future
Earnings Potential" of GULF in the Form 10-K.
Sales for resale - affiliates. Revenues from sales for resale to 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 operating revenues. This decrease in the first quarter of 2000 when
compared to the same period in 1999 is mainly due to a decrease in fuel,
conservation and capacity clause revenues. The decrease in these revenues was a
result of adjustments to reflect differences between recoverable costs and the
amounts actually reflected in current rates. The recovery provisions generally
equal the related expenses and have no material effect on net income.
Fuel expense. The increase in fuel expense for the first three months of
2000 when compared to the same period in 1999 can be attributed, for the most
part, to increased generation due to a higher demand for energy and a higher
average cost of fuel consumed.
41
<PAGE>
GULF POWER COMPANY
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
RESULTS OF OPERATIONS AND FINANCIAL CONDITION
Purchased power from non-affiliates. This increase in the first quarter
2000 when compared to the same period in 1999 is attributed primarily to an
increase in energy purchases due to increased power marketing activities, the
majority of which were resold to non-affiliated third parties. These
transactions had no significant effect on net income.
Maintenance expense. These expenses decreased in the first quarter of 2000
when compared to the first quarter of 1999 mainly due to scheduled outages
during the first quarter of 1999.
Interest on long-term debt. This increase for the first quarter of 2000
is primarily due to the sale of senior notes during the third quarter of 1999.
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 weather to 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, GULF is positioning the
business to meet the challenge of increasing competition. 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 environmental
issues, see Item 7 - MANAGEMENT'S DISCUSSION AND ANALYSIS - "Environmental
Matters" of GULF in the Form 10-K.
On November 4, 1999, the Florida PSC approved GULF's plan to reduce its
authorized rate of return, reduce retail base rates and share revenues with its
customers. For additional information, see Item 7 - MANAGEMENT'S DISCUSSION AND
ANALYSIS - "Future Earnings Potential" of GULF in the Form 10-K.
On December 20, 1999, the FERC issued its final rule on RTOs. Reference is
made to Item 7 - MANAGEMENT'S DISCUSSION AND ANALYSIS - "Future Earnings
Potential" of GULF in the Form 10-K for information on this matter.
Reference is also made to Item 7 - MANAGEMENT'S DISCUSSION AND ANALYSIS -
"Environmental Protection Agency Litigation" and Note 3 to the financial
statements of GULF in the Form 10-K for information on EPA litigation.
The FASB issued Statement No. 133, Accounting for Derivative Instruments
and Hedging Activities, which must be adopted by January 2001. This statement
establishes accounting and reporting standards for derivative instruments,
including certain derivative instruments embedded in other contracts, and for
hedging activities. GULF has not yet quantified the impact of adopting this
statement on its financial statements; however, the adoption could increase
volatility in earnings.
42
<PAGE>
GULF POWER COMPANY
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
RESULTS OF OPERATIONS AND FINANCIAL CONDITION
Reference is made to Notes (B) and (O) 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
Major changes in GULF's financial condition during the first three months of
2000 included the addition of approximately $18.6 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
GULF plans to continue, to the extent possible, a program to retire higher-cost
debt and preferred stock and replace these securities 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.
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. 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,
2000, approximately $1.8 million of cash and cash equivalents and $41.5 million
of unused committed lines of credit with banks in addition to $61.9 million
liquidity support for GULF's obligations with respect to variable rate pollution
control bonds. At March 31, 2000, GULF had $52.5 million outstanding of notes
payable to banks. Management believes that the need for working capital can be
adequately met by utilizing lines of credit without maintaining large cash
balances.
43
<PAGE>
MISSISSIPPI POWER COMPANY
44
<PAGE>
<TABLE>
<CAPTION>
MISSISSIPPI POWER COMPANY
CONDENSED STATEMENTS OF INCOME (UNAUDITED)
For the Three Months
Ended March 31,
2000 1999
------------------------------
(in thousands)
Operating Revenues:
<S> <C> <C>
Retail sales $100,962 $92,018
Sales for resale --
Non-affiliates 26,562 27,229
Affiliates 4,581 1,035
Other revenues 2,600 2,153
--------------- --------------
Total operating revenues 134,705 122,435
--------------- --------------
Operating Expenses:
Operation --
Fuel 37,060 31,522
Purchased power --
Non-affiliates 4,008 2,345
Affiliates 11,622 8,902
Other 26,731 27,047
Maintenance 12,937 11,601
Depreciation and amortization 11,713 11,789
Taxes other than income taxes 12,041 11,107
--------------- --------------
Total operating expenses 116,112 104,313
--------------- --------------
Operating Income 18,593 18,122
Other Income:
Interest income 99 81
Other, net 354 634
--------------- --------------
Earnings Before Interest and Income Taxes 19,046 18,837
--------------- --------------
Interest Charges and Other:
Interest on long-term debt 5,424 5,010
Interest on notes payable 1,045 412
Amortization of debt discount, premium and expense, net 357 356
Other interest charges, net 128 82
Distributions on preferred securities of subsidiary 699 699
--------------- --------------
Total interest charges and other, net 7,653 6,559
--------------- --------------
Earnings Before Income Taxes 11,393 12,278
Income taxes 4,168 4,582
--------------- --------------
Net Income 7,225 7,696
Dividends on Preferred Stock 503 503
--------------- --------------
Net Income After Dividends on Preferred Stock $6,722 $ 7,193
=============== ==============
The accompanying notes as they relate to MISSISSIPPI are an integral part of these condensed statements.
</TABLE>
45
<PAGE>
<TABLE>
<CAPTION>
MISSISSIPPI POWER COMPANY
CONDENSED STATEMENTS OF CASH FLOWS (UNAUDITED)
For the Three Months
Ended March 31,
2000 1999
-------------- ---------------
(in thousands)
Operating Activities:
<S> <C> <C>
Net income $7,225 $7,696
Adjustments to reconcile net income
to net cash provided from operating activities --
Depreciation and amortization 12,826 12,801
Deferred income taxes and investment tax credits, net (7,811) (991)
Other, net (1,402) (2,927)
Changes in certain current assets and liabilities --
Receivables, net 18,649 2,570
Fossil fuel stock 3,999 (6,173)
Materials and supplies (371) 64
Accounts payable (4,542) (8,912)
Other (11,490) (19,332)
-------------- ---------------
Net cash provided from (used for) operating activities 17,083 (15,204)
-------------- ---------------
Investing Activities:
Gross property additions (16,372) (12,897)
Other (5,881) (6,314)
-------------- ---------------
Net cash used for investing activities (22,253) (19,211)
-------------- ---------------
Financing Activities:
Increase (decrease) in notes payable, net (30,500) 48,500
Proceeds --
Other long-term debt 100,000 -
Retirements --
Other long-term debt (50,208) -
Payment of preferred stock dividends (503) (503)
Payment of common stock dividends (13,600) (13,800)
Other - -
-------------- ---------------
Net cash provided from financing activities 5,189 34,197
-------------- ---------------
Net Change in Cash and Cash Equivalents 19 (218)
Cash and Cash Equivalents at Beginning of Period 173 1,327
-------------- ---------------
Cash and Cash Equivalents at End of Period $192 $1,109
============== ===============
Supplemental Cash Flow Information:
Cash paid during the period for --
Interest (net of amount capitalized) $5,882 $4,543
Income taxes (net of refunds) $73 $1,900
The accompanying notes as they relate to MISSISSIPPI are an integral part of these condensed statements.
</TABLE>
46
<PAGE>
<TABLE>
<CAPTION>
MISSISSIPPI POWER COMPANY
CONDENSED BALANCE SHEETS
At March 31,
2000 At December 31,
Assets (Unaudited) 1999
---------------- ----------------
(in thousands)
Current Assets:
<S> <C> <C>
Cash and cash equivalents $ 192 $ 173
Receivables --
Customer accounts receivable 49,093 61,274
Other accounts and notes receivable 29,920 23,490
Affiliated companies 2,953 16,097
Accumulated provision for uncollectible accounts (451) (697)
Fossil fuel stock, at average cost 21,798 25,797
Materials and supplies, at average cost 21,009 20,638
Other 16,860 10,013
---------------- ----------------
Total current assets 141,374 156,785
---------------- ----------------
Property, Plant, and Equipment:
In service 1,611,082 1,601,399
Less accumulated provision for depreciation 637,816 626,841
---------------- ----------------
973,266 974,558
Construction work in progress 74,238 68,721
---------------- ----------------
Total property, plant, and equipment 1,047,504 1,043,279
---------------- ----------------
Other Property and Investments 1,898 1,389
---------------- ----------------
Deferred Charges and Other Assets:
Deferred charges related to income taxes 14,569 21,557
Prepaid pension costs 3,428 2,488
Debt expense, being amortized 4,314 4,355
Premium on reacquired debt, being amortized 7,866 8,154
Other 19,053 13,129
---------------- ----------------
Total deferred charges and other assets 49,230 49,683
---------------- ----------------
Total Assets $1,240,006 $1,251,136
================ ================
The accompanying notes as they relate to MISSISSIPPI are an integral part of these condensed statements.
</TABLE>
47
<PAGE>
<TABLE>
<CAPTION>
MISSISSIPPI POWER COMPANY
CONDENSED BALANCE SHEETS
At March 31,
2000 At December 31,
Liabilities and Stockholders' Equity (Unaudited) 1999
---------------- ----------------
(in thousands)
Current Liabilities:
<S> <C> <C>
Securities due within one year $ 30,020 $ 30,020
Notes payable 27,000 57,500
Accounts payable --
Affiliated 13,908 17,002
Other 37,506 43,105
Customer deposits 4,077 3,749
Taxes accrued --
Income taxes 19,818 6,865
Other 11,841 35,534
Interest accrued 7,452 6,733
Vacation pay accrued 5,218 5,218
Other 8,446 7,497
---------------- ----------------
Total current liabilities 165,286 213,223
---------------- ----------------
Long-term debt 371,623 321,802
---------------- ----------------
Deferred Credits and Other Liabilities:
Accumulated deferred income taxes 136,180 139,564
Deferred credits related to income taxes 27,433 34,765
Accumulated deferred investment tax credits 24,391 24,695
Employee benefits provisions 34,694 34,268
Workforce reduction plan 10,882 11,272
Other 17,618 12,770
---------------- ----------------
Total deferred credits and other liabilities 251,198 257,334
---------------- ----------------
Company obligated mandatorily redeemable preferred
securities of subsidiary trust holding company junior
subordinated notes 35,000 35,000
---------------- ----------------
Preferred stock 31,809 31,809
---------------- ----------------
Common stockholder's equity
Common stock, par value $40 per share --
Authorized - 6,000,000 shares
Outstanding - 5,608,955 shares
Par value 37,691 37,691
Paid-in capital 181,502 181,502
Premium on preferred stock 326 326
Retained earnings 165,571 172,449
---------------- ----------------
Total common stockholder's equity 385,090 391,968
---------------- ----------------
Total Liabilities and Stockholder's Equity $1,240,006 $1,251,136
================ ================
The accompanying notes as they relate to MISSISSIPPI are an integral part of these condensed statements.
</TABLE>
48
<PAGE>
MISSISSIPPI POWER COMPANY
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
RESULTS OF OPERATIONS AND FINANCIAL CONDITION
FIRST QUARTER 2000 vs. FIRST QUARTER 1999
RESULTS OF OPERATIONS
Earnings
MISSISSIPPI's net income after dividends on preferred stock for the first
quarter of 2000 was $6.7 million compared to $7.2 million for the corresponding
period of 1999. Earnings during this first quarter of 2000 were down as a 10%
increase in operating revenues was offset by a 11.3% increase in operating
expenses and a 16.7% increase in total interest charges and other, net.
Significant income statement items appropriate for discussion include the
following:
Increase (Decrease)
-------------------------------
First Quarter
-------------------------------
(in thousands) %
Retail sales................................ $8,944 9.7
Sales for resale - affiliates............... 3,546 342.6
Other operating revenues.................... 447 20.8
Fuel expense................................ 5,538 17.6
Purchased power from non-affiliates ........ 1,663 70.9
Purchased power from affiliates............. 2,720 30.6
Maintenance expense......................... 1,336 11.5
Interest on notes payable................... 633 153.6
Retail sales. Retail sales revenues were up in the first quarter due to a
9.9% increase in retail energy sales which resulted from growth in the number of
customers. Energy sales to residential, commercial and industrial customers
during the first quarter of 2000 when compared to the same period in 1999 were
up 4.8%, 9.7% and 12.4%, respectively.
Sales for resale - affiliates and Purchased power from affiliates. Revenues
from sales for resale to affiliated companies, as well as purchases of energy,
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 operating revenues. The increase in these revenues primarily reflects
increased revenues from the transmission of electricity for others.
Fuel expense. During the first quarter of 2000 compared to the same period
in 1999, fuel expense increased due to higher demand for energy.
Purchased power from non-affiliates. The increase in the current quarter
when compared to the same period in 1999 is reflective of increased demand for
energy.
49
<PAGE>
MISSISSIPPI POWER COMPANY
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
RESULTS OF OPERATIONS AND FINANCIAL CONDITION
Maintenance expense. This expense was up during the first quarter of 2000
as compared to the corresponding period of 1999 principally due to additional
maintenance performed on steam power generation facilities.
Interest on notes payable. This item has increased due primarily to
increased borrowing at higher interest rates during the first quarter of 2000
compared to the same period in 1999.
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 weather to 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. For
additional information, see Item 7 - MANAGEMENT'S DISCUSSION AND ANALYSIS -
"Future Earnings Potential" of MISSISSIPPI in the Form 10-K. See Note (J) in the
"Notes to the Condensed Financial Statements" herein for information regarding
an agreement between MISSISSIPPI and certain of its wholesale customers to
reduce rates.
With the enactment of the Energy Act and new legislation being discussed at
federal and state levels to expand customer choice, MISSISSIPPI 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. MISSISSIPPI's 2000 ECO Plan filing was approved, as
filed, by the Mississippi PSC on March 22, 2000 and resulted in a slight
decrease in customer prices. For additional information about the Clean Air Act
and other environmental issues, see Item 7 - MANAGEMENT'S DISCUSSION AND
ANALYSIS - "Environmental Matters" of MISSISSIPPI in the Form 10-K.
On December 20, 1999, the FERC issued its final rule on RTOs. Reference is
made to Item 7 - MANAGEMENT'S DISCUSSION AND ANALYSIS - "Future Earnings
Potential" of MISSISSIPPI in the Form 10-K for information on this matter.
Reference is also made to Item 7 - MANAGEMENT'S DISCUSSION AND ANALYSIS -
"Environmental Matters" and Note 3 to the financial statements of MISSISSIPPI in
the Form 10-K for information on EPA litigation.
In May 2000, the Mississippi PSC ordered that its docket reviewing
restructuring of the electric industry in the State of Mississippi be suspended.
The Mississippi PSC found that retail competition may not be in the public
interest at this time and ordered that no further formal hearings would be held
on this subject. It found that the current regulatory structure had produced
reliable low cost power and "should not be changed without clear and convincing
demonstration that change would be in the public interest." The Mississippi PSC
will continue to monitor retail and wholesale restructuring activities
throughout the United States and reserved "its right to order further formal
hearings on the matter should new evidence demonstrate that retail competition
would be in the public interest and all customers could receive a reduction in
the total cost of their electric service."
50
<PAGE>
MISSISSIPPI POWER COMPANY
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
RESULTS OF OPERATIONS AND FINANCIAL CONDITION
The FASB issued Statement No. 133, Accounting for Derivative Instruments
and Hedging Activities, which must be adopted by January 2001. This statement
establishes accounting and reporting standards for derivative instruments,
including certain derivative instruments embedded in other contracts, and for
hedging activities. MISSISSIPPI has not yet quantified the impact of adopting
this statement on its financial statements; however, the adoption could increase
volatility in earnings.
Reference is made to Notes (B), (J) and (O) 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
Major changes in MISSISSIPPI's financial condition during the first three months
of 2000 included the addition of approximately $16.4 million to utility plant.
The funds for these additions and other capital requirements were derived
primarily from operations. See MISSISSIPPI's Condensed Statements of Cash Flows
for further details.
Financing Activities
In March 2000, MISSISSIPPI issued $100 million of floating rate senior notes due
March 28, 2002. The proceeds were used to prepay bank loans of $45 million
maturing in November 2001 and $5 million maturing in October 2002. The balance
was applied to repay a portion of its outstanding short-term indebtedness.
MISSISSIPPI plans to continue, to the extent possible, a program to retire
higher-cost debt and replace these securities 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" and Note 3 to the financial statements
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.
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. 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, 2000, approximately $192 thousand of cash and cash equivalents and
approximately $124.3 million of unused committed credit arrangements with banks.
At March 31, 2000, MISSISSIPPI had short-term notes payable outstanding of $27
million. Management believes that the need for working capital can be adequately
met by utilizing lines of credit without maintaining large cash balances.
51
<PAGE>
SAVANNAH ELECTRIC
AND
POWER COMPANY
52
<PAGE>
<TABLE>
<CAPTION>
SAVANNAH ELECTRIC AND POWER COMPANY
CONDENSED STATEMENTS OF INCOME (UNAUDITED)
For the Three Months
Ended March 31,
2000 1999
------------------------------
(in thousands)
Operating Revenues:
<S> <C> <C>
Retail sales $49,785 $45,807
Sales for resale --
Non-affiliates 569 468
Affiliates 1,721 366
Other revenues 315 457
--------------- --------------
Total operating revenues 52,390 47,098
--------------- --------------
Operating Expenses:
Operation --
Fuel 9,747 6,593
Purchased power --
Non-affiliates 2,188 1,092
Affiliates 8,050 9,177
Other 11,803 11,279
Maintenance 4,666 4,439
Depreciation and amortization 6,309 5,977
Taxes other than income taxes 3,044 2,904
--------------- --------------
Total operating expenses 45,807 41,461
--------------- --------------
Operating Income 6,583 5,637
Other Income (Expense):
Interest income 41 36
Other, net (386) (423)
--------------- --------------
Earnings Before Interest and Income Taxes 6,238 5,250
--------------- --------------
Interest Charges and Other:
Interest on long-term debt 2,272 2,475
Interest on notes payable 453 21
Amortization of debt discount, premium and expense, net 240 233
Other interest charges, net 56 65
Distributions on preferred securities of subsidiary 685 685
--------------- --------------
Total interest charges and other, net 3,706 3,479
--------------- --------------
Earnings Before Income Taxes 2,532 1,771
Income taxes 889 562
--------------- --------------
Net Income $ 1,643 $ 1,209
=============== ==============
The accompanying notes as they relate to SAVANNAH are an integral part of these condensed statements.
</TABLE>
53
<PAGE>
<TABLE>
<CAPTION>
SAVANNAH ELECTRIC AND POWER COMPANY
CONDENSED STATEMENTS OF CASH FLOWS (UNAUDITED)
For the Three Months
Ended March 31,
2000 1999
--------------- ---------------
(in thousands)
Operating Activities:
<S> <C> <C>
Net income $1,643 $1,209
Adjustments to reconcile net income
to net cash provided from operating activities --
Depreciation and amortization 6,777 6,438
Deferred income taxes and investment tax credits, net (1,342) (555)
Other, net 1,563 1,308
Changes in certain current assets and liabilities --
Receivables, net 2,753 2,913
Fossil fuel stock 955 195
Materials and supplies (588) (543)
Accounts payable 2,364 (4,064)
Other (731) (8)
--------------- ---------------
Net cash provided from operating activities 13,394 6,893
--------------- ---------------
Investing Activities:
Gross property additions (7,049) (9,398)
Other, net (2,683) 175
--------------- ---------------
Net cash used for investing activities (9,732) (9,223)
--------------- ---------------
Financing Activities:
Increase (decrease) in notes payable, net (400) 6,500
Retirements --
Other long-term debt (182) (182)
Payment of common stock dividends (6,100) (6,200)
Other - (12)
--------------- ---------------
Net cash provided from (used for) financing activities (6,682) 106
--------------- ---------------
Net Change in Cash and Cash Equivalents (3,020) (2,224)
Cash and Cash Equivalents at Beginning of Period 6,553 5,962
--------------- ---------------
Cash and Cash Equivalents at End of Period $3,533 $3,738
=============== ===============
Supplemental Cash Flow Information:
Cash paid during the period for --
Interest (net of amount capitalized) $2,170 $3,209
Income taxes (net of refunds) 920 -
The accompanying notes as they relate to SAVANNAH are an integral part of these condensed statements.
</TABLE>
54
<PAGE>
<TABLE>
<CAPTION>
SAVANNAH ELECTRIC AND POWER COMPANY
CONDENSED BALANCE SHEETS
At March 31,
2000 At December 31,
Assets (Unaudited) 1999
----------------- ------------------
(in thousands)
Current Assets:
<S> <C> <C>
Cash and cash equivalents $ 3,533 $ 6,553
Receivables --
Customer accounts receivable 21,096 20,752
Unrecovered retail fuel clause revenue 17,999 21,089
Other accounts and notes receivable 3,638 3,505
Affiliated companies 1,051 1,195
Accumulated provision for uncollectible accounts (233) (237)
Fossil fuel stock, at average cost 6,154 7,109
Materials and supplies, at average cost 8,990 8,402
Other 1,443 2,869
----------------- ------------------
Total current assets 63,671 71,237
----------------- ------------------
Property, Plant, and Equipment:
In service 807,396 804,096
Less accumulated provision for depreciation 365,752 360,639
----------------- ------------------
441,644 443,457
Construction work in progress 10,235 6,561
----------------- ------------------
Total property, plant, and equipment 451,879 450,018
----------------- ------------------
Other Property and Investments 1,982 1,506
----------------- ------------------
Deferred Charges and Other Assets:
Deferred charges related to income taxes 15,719 16,063
Cash surrender value of life insurance for deferred compensation plans 16,305 16,305
Prepaid pension costs 601 1,201
Debt expense, being amortized 3,118 3,155
Premium on reacquired debt, being amortized 8,183 8,385
Other 2,254 2,348
----------------- ------------------
Total deferred charges and other assets 46,180 47,457
----------------- ------------------
Total Assets $563,712 $570,218
================= ==================
The accompanying notes as they relate to SAVANNAH are an integral part of these condensed statements.
</TABLE>
55
<PAGE>
<TABLE>
<CAPTION>
SAVANNAH ELECTRIC AND POWER COMPANY
CONDENSED BALANCE SHEETS
At March 31,
2000 At December 31,
Liabilities and Stockholders' Equity (Unaudited) 1999
----------------- ------------------
(in thousands)
Current Liabilities:
<S> <C> <C>
Securities due within one year $ 688 $ 704
Notes payable 33,900 34,300
Accounts payable --
Affiliated 4,869 4,632
Other 11,930 11,118
Customer deposits 5,490 5,426
Taxes accrued --
Income taxes 786 3,046
Other 2,354 3,013
Interest accrued 4,551 3,237
Vacation pay accrued 2,163 2,142
Other 3,439 5,742
----------------- ------------------
Total current liabilities 70,170 73,360
----------------- ------------------
Long-term debt 146,981 147,147
----------------- ------------------
Deferred Credits and Other Liabilities:
Accumulated deferred income taxes 80,841 80,318
Deferred credits related to income taxes 19,143 19,687
Accumulated deferred investment tax credits 11,114 11,280
Deferred compensation plans 10,860 10,624
Employee benefits provisions 8,149 7,805
Other 6,064 5,150
----------------- ------------------
Total deferred credits and other liabilities 136,171 134,864
----------------- ------------------
Company obligated mandatorily redeemable preferred
securities of subsidiary trusts holding company junior
subordinated notes 40,000 40,000
----------------- ------------------
Common stockholder's equity
Common stock, par value $5 per share --
Authorized - 16,000,000 shares
Outstanding - 10,844,635 shares
Par value 54,223 54,223
Paid-in capital 9,787 9,787
Retained earnings 106,380 110,837
----------------- ------------------
Total common stockholder's equity 170,390 174,847
----------------- ------------------
Total Liabilities and Stockholder's Equity $563,712 $570,218
================= ==================
The accompanying notes as they relate to SAVANNAH are an integral part of these condensed statements.
</TABLE>
56
<PAGE>
SAVANNAH ELECTRIC AND POWER COMPANY
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
RESULTS OF OPERATIONS AND FINANCIAL CONDITION
FIRST QUARTER 2000 vs. FIRST QUARTER 1999
RESULTS OF OPERATIONS
Earnings
SAVANNAH's net income after dividends on preferred stock for the first quarter
of 2000 was $1.6 million as compared to $1.2 million for the corresponding
period of 1999. First quarter 2000 earnings were up due primarily to increased
operating revenues.
Significant income statement items appropriate for discussion include the
following:
Increase (Decrease)
-------------------------------
First Quarter
-------------------------------
(in thousands) %
Retail sales............................. $3,978 8.7
Sales for resale - affiliates............ 1,355 370.2
Fuel expense............................. 3,154 47.8
Purchased power from non-affiliates...... 1,096 100.4
Purchased power from affiliates.......... (1,127) (12.3)
Interest on notes payable................ 432 N/M
N/M - Not meaningful
Retail sales. Retail sales revenues were higher in the first quarter of
2000 than in the same period of the prior year due to an 8% increase in retail
energy sales. Energy sales to residential, commercial and industrial customers
were up by 8.4%, 9.9% and 5.8%, respectively. These energy sales increases were
a direct result of growth in the number of customers.
Sales for resale - affiliates and Purchased power from affiliates. Revenues
from sales for resale to affiliated companies within the Southern electric
system, as well as purchases of energy, will vary from period to period
depending on demand and the availability and cost of generating resources at
each company. These transactions do not have a significant impact on earnings.
Fuel expense. This first quarter 2000 increase over the corresponding
period in 1999 is principally due to increased demand for energy and increased
use of higher cost fuel.
Purchased power from non-affiliates. This expense increased in the first
quarter of 2000 reflecting the increased demand for energy and increased costs
for purchased power.
Interest on notes payable. For the first quarter of 2000, these expenses
increased from the same period in 1999 due primarily to SAVANNAH's purchase
during 1999 of long-term fixed rate debt with the proceeds from lower cost
short-term debt. This short-term debt is being carried until there is a
favorable opportunity to refinance.
57
<PAGE>
SAVANNAH ELECTRIC AND POWER COMPANY
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
RESULTS OF OPERATIONS AND FINANCIAL CONDITION
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 weather to energy sales growth to a less regulated, more
competitive environment.
In 1998, the Georgia PSC approved a four-year accounting order for
SAVANNAH. Reference is made to Note (K) in the "Notes to the Condensed Financial
Statements" herein and Item 7 - MANAGEMENT'S DISCUSSION AND ANALYSIS - "Future
Earnings Potential" of SAVANNAH in the Form 10-K for additional information.
With the enactment of the Energy Act and new legislation being discussed at
federal and state levels to expand customer choice, SAVANNAH 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 environmental issues, see Item 7 - MANAGEMENT'S DISCUSSION AND ANALYSIS -
"Environmental Matters" of SAVANNAH in the Form 10-K.
On December 20, 1999, the FERC issued its final rule on RTOs. Reference is
made to Item 7 - MANAGEMENT'S DISCUSSION AND ANALYSIS - "Future Earnings
Potential" of SAVANNAH in the Form 10-K for information on this matter.
Reference is also made to Item 7 - MANAGEMENT'S DISCUSSION AND ANALYSIS -
"Environmental Matters" and Note 3 to the financial statements of SAVANNAH in
the Form 10-K for information on EPA litigation.
The FASB issued Statement No. 133, Accounting for Derivative Instruments
and Hedging Activities, which must be adopted by January 2001. This statement
establishes accounting and reporting standards for derivative instruments,
including certain derivative instruments embedded in other contracts, and for
hedging activities. SAVANNAH has not yet quantified the impact of adopting this
statement on its financial statements; however, the adoption could increase
volatility in earnings.
Reference is made to Notes (B), (K) and (O) in the "Notes to the Condensed
Financial Statements" herein for discussion of various contingencies and other
matters which may affect future earnings potential.
58
<PAGE>
SAVANNAH ELECTRIC AND POWER COMPANY
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
RESULTS OF OPERATIONS AND FINANCIAL CONDITION
FINANCIAL CONDITION
Overview
Major changes in SAVANNAH's financial condition during the first three months of
2000 included the addition of approximately $7 million to utility plant. The
funds for these additions and other capital requirements were derived primarily
from operations and credit arrangements with banks. See SAVANNAH's Condensed
Statements of Cash Flows for further details.
Financing Activities
SAVANNAH plans to continue, to the extent possible, a program to retire
higher-cost debt and replace these obligations with lower-cost capital.
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. See Item 1
- - BUSINESS - "Financing Programs" in the Form 10-K for additional information.
To meet short-term cash needs and contingencies, SAVANNAH had at March 31,
2000, approximately $3.5 million of cash and cash equivalents and approximately
$42.1 million of unused credit arrangements with banks. At March 31, 2000,
SAVANNAH had $33.9 million outstanding of 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.
59
<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, L, M, N, O
ALABAMA A, B, C, F, G, O
GEORGIA A, B, C, H, I, O
GULF A, B, O
MISSISSIPPI A, B, J, O
SAVANNAH A, B, K, O
60
<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 THE 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 necessary to
present fairly the results of operations for the periods
ended March 31, 2000 and 1999. Certain information and footnote
disclosures normally included in financial statements prepared
in accordance with accounting principles generally accepted in the
United States 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 of each registrant be
read in conjunction with the financial statements of such registrant and
the notes thereto included in the Form 10-K. Certain
prior period amounts have been reclassified to conform with current
period presentation. Due to seasonal variations in the
demand for energy, operating results for the periods presented do not
necessarily indicate operating results for the entire year.
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 unrecoverable 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 obligations related to the retirement 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) SOUTHERN engages in price risk management activities. Reference is made to
MANAGEMENT'S DISCUSSION AND ANALYSIS - "Derivative Financial Instruments"
and Note 1 to the financial statements of SOUTHERN in Item 8 of the Form
10-K for a discussion of these activities. Activities for non-trading
purposes consist of transactions that are employed to mitigate SOUTHERN's
risk related to interest rate and foreign currency exchange rate
fluctuations. At March 31, 2000, the status of outstanding non-trading
related derivative contracts was as follows:
61
<PAGE>
NOTES TO THE CONDENSED FINANCIAL STATEMENTS: (Continued)
<TABLE>
<CAPTION>
Year of
Maturity or Notional Unrecognized
Type Termination Amount Gain (Loss)
---- ------------ ------ -----------
(in thousands)
<S> <C> <C> <C>
Interest rate swaps 2000-2012 $1,971,846 $(1,066)
2001-2012 (pound)600,000 $(46,093)
2002-2007 DM691,000 $(5,141)
Cross currency swaps 2001-2007 (pound)394,300 $5,274
Cross currency swaption 2003 DM435,000 $22,041
(pound) - Denotes British pounds sterling. DM - Denotes Deutschemark.
</TABLE>
In January 1998, Southern Energy and Vastar Resources, Inc. combined their
energy trading and marketing activities to form a joint venture. Southern
Energy's investment in the joint venture is accounted for under the equity
method of accounting. SOUTHERN and Vastar have made guarantees to certain
counterparties regarding performance of contractual commitments by the
joint venture. At March 31, 2000, outstanding guarantees related to the
estimated fair value of net contractual commitments were approximately
$196.8 million. Reference is made to MANAGEMENT'S DISCUSSION AND ANALYSIS
- "Future Earnings Potential" of SOUTHERN in Item 7 and Notes 1 and 5 to
the financial statements of SOUTHERN under the captions "Financial
Instruments for Trading Activities" and "Energy Trading and Marketing
Commitments", respectively, in Item 8 of the Form 10-K.
(E) SOUTHERN's principal business segment -- or its traditional business -- is
the five integrated Southeast utilities that provide electric service in
four states. The other reportable business segment is non-traditional
energy services provided by Southern Energy, which develops and manages
electricity and other energy-related projects both in the United States
and abroad. Intersegment revenues are not material. Financial data for
business segments for the periods covered in the Form 10-Q are as follows:
<TABLE>
<CAPTION>
Integrated All
Southeast Southern Other Reconciling
Utilities Energy (Note) Eliminations Consolidated
------------ ---------- --------- ------------- ---------------
Three Months Ended March 31, 2000:
<S> <C> <C> <C> <C> <C>
Operating revenues $ 2,005 $ 521 $ 57 $ (10) $ 2,573
Segment net income (loss) 176 101 (29) (3) 245
Total assets at March 31, 2000 25,399 13,945 399 (1,291) 38,452
----------------------------------------- ------------ ---------- --------- ------------- ---------------
Three Months Ended March 31, 1999:
Operating revenues $ 1,882 $ 522 $ 43 $ (5) $ 2,442
Segment net income (loss) 168 88 (33) 1 224
Total assets at December 31, 1999 25,251 13,872 440 (1,189) 38,374
------------------------------------------ ----------- ---------- --------- ------------- ----------------
</TABLE>
62
<PAGE>
NOTES TO THE CONDENSED FINANCIAL STATEMENTS: (Continued)
(Note) The all other category includes parent SOUTHERN, which does not
allocate operating expenses to business segments. Also, this category
includes segments below the quantitative threshold for separate
disclosure. These segments include a wireless communication company and a
developmental company for energy products and services. Amounts for
Southern Energy exclude interest expense to parent SOUTHERN.
(F) Reference is made to Note 3 to the financial statements of SOUTHERN and
ALABAMA in Item 8 of the Form 10-K for information
relating to retail rate adjustment procedures.
(G) Reference is made to Note 3 to the financial statements of SOUTHERN and
ALABAMA in Item 8 of the Form 10-K for information relating to a judgment
against ALABAMA arising from discharges into Lake Martin.
(H) 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 a three-year rate order approved by the Georgia PSC effective
January 1, 1999. The order decreased annual retail
rates by $262 million effective January 1, 1999 and by an additional
$24 million effective January 1, 2000. The order further
provides for $85 million each year, plus up to $50 million annually of
any earnings in excess of a 12.5% retail return on common
equity during the second and third years, to be applied to accelerated
amortization or depreciation of assets. Two-thirds of
any additional earnings above the 12.5% return will be applied to rate
reductions and the remaining one-third retained by
GEORGIA. Pursuant to this provision, GEORGIA recognized accelerated
amortization of $36.6 million in the first quarter of 2000
and $21.3 million in the first quarter of 1999.
(I) 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.
(J) In April 2000, MISSISSIPPI reached an agreement with certain of its
wholesale customers to reduce its rates effective
January 1, 2000. The agreement results in an annual rate reduction of
approximately $3 million and a temporary annualized rate
reduction of approximately $3 million for a period of 18 months ending
June 30, 2001. MISSISSIPPI and its customers will file
the agreement with the FERC for its approval. In anticipation of FERC
approval, MISSISSIPPI recognized a liability for
approximately $1.5 million in revenues subject to refund during the first
quarter ended March 31, 2000 related to energy
delivered during the first quarter. In addition, MISSISSIPPI and its
customers agreed that neither party would seek a
unilateral change to the new rates prior to January 1, 2002, except for
changes due to the operation of the fuel cost adjustment
clause under the tariff.
(K) In 1998, the Georgia PSC approved a new accounting order for SAVANNAH.
Under this order, SAVANNAH will reduce electric rates to its small
business customers, expense additional storm damage accruals and accrue
additional depreciation on generating assets. For additional information
concerning the four-year accounting order approved by the Georgia PSC in
June 1998, reference is made to Note 3 to the financial statements of
SAVANNAH in Item 8 of the Form 10-K.
63
<PAGE>
NOTES TO THE CONDENSED FINANCIAL STATEMENTS: (Continued)
(L) Reference is made to Note 3 to the financial statements of SOUTHERN in
Item 8 and to Legal Proceedings in Item 3 of the Form
10-K for information relating to (i) petitions for Chapter 11 bankruptcy
relief which were filed in the U. S. Bankruptcy Court
for the Southern District of Alabama and (ii) proposed settlement
discussions among the affected parties. At March 31, 2000,
Mobile Energy had total assets of $391.9 million and senior debt
outstanding of $190 million of first mortgage bonds and $72.2
million related to tax-exempt bonds. In connection with the bond
financings, SOUTHERN provided certain limited guarantees, in
lieu of funding debt service and maintenance reserve accounts with cash.
As of March 31, 2000, under an agreement with the
bondholders, SOUTHERN had paid $38.3 million pursuant to the guarantees.
SOUTHERN continues to have guarantees outstanding of
certain potential environmental and other obligations of Mobile Energy
that represent a maximum contingent liability of $21
million at March 31, 2000. The final outcome of this matter cannot now
be determined.
(M) In April 1999, SOUTHERN's board approved the repurchase of up to 50
million shares of SOUTHERN's common stock over the next two years through
open market or privately negotiated transactions. The program did not
establish a target stock price or timetable for specific repurchases. As
of March 31, 2000, a total of 50 million shares had been purchased, thus
completing the program.
(N) On April 17, 2000, SOUTHERN announced that its board of directors approved
an initial public offering of up to 19.9 percent of its Southern Energy
subsidiary. SOUTHERN also announced that it is planning to spin-off to
holders of SOUTHERN common stock the remaining ownership of Southern
Energy within 12 months of the initial public offering. The spin-off will
be subject to a number of market and other conditions. Reference is made
to SOUTHERN's Current Report on Form 8-K dated April 17, 2000 for
additional information.
On April 21, 2000, Southern Energy filed a registration statement with the
SEC for the initial public offering of Southern Energy shares. The
offering is expected to take place as soon as practicable after the
effective date of the registration statement.
(O) Reference is made to Note 3 to the financial statements of SOUTHERN,
ALABAMA , GEORGIA, GULF, MISSISSIPPI and SAVANNAH in Item 8 of the Form
10-K for information on EPA Litigation.
64
<PAGE>
PART II - OTHER INFORMATION
Item 1. Legal Proceedings.
(1) An administrative law judge held hearings in March 2000 in connection with
a FERC proceeding that will determine the percentage of a settled $158.8
million revenue requirement for the period from June 1, 1999 through
December 31, 2001 to be paid to Southern Energy California, L.L.C. and its
subsidiaries (collectively, "SE California") under reliability must-run
agreements between SE California and the California Independent System
Operator ("CAISO"). SE California has proposed to allocate approximately
75% of the responsibility for payment of the revenue requirement to the
CAISO, while CAISO and other aligned parties argue that CAISO should pay no
more than approximately 7%. The outcome of this proceeding cannot now be
determined.
(2) 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.
Item 6. Exhibits and Reports on Form 8-K.
(a) Exhibits.
--------
Exhibits 15 - Letter re: unaudited interim financial information
(a) ALABAMA
(b) GEORGIA
Exhibit 24 - (a) Powers of Attorney and resolutions.
(Designated in the Form 10-K for the
year ended December 31, 1999,
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 Schedule
(a) SOUTHERN
(b) ALABAMA
(c) GEORGIA
(d) GULF
(e) MISSISSIPPI
(f) SAVANNAH
65
<PAGE>
Item 6. Exhibits and Reports on Form 8-K. (Continued)
(b) Reports on Form 8-K.
-------------------
GEORGIA filed a Current Report on Form 8-K dated February 15, 2000:
Items reported: Item 5
Item 7
Financial statements filed: None
SOUTHERN, ALABAMA, GEORGIA, GULF, MISSISSIPPI and
SAVANNAH filed Current Reports on Form 8-K dated
February 16, 2000:
Items reported: Item 7
Financial statements filed:
Each registrant's
audited financial
statements for the
year ended
December 31, 1999.
MISSISSIPPI filed a Current Report on Form 8-K dated March 22, 2000:
Items reported: Item 5
Item 7
Financial statements filed: None
66
<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 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 12, 2000
- --------------------------------------------------------------------------------
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, Chief Financial Officer and Treasurer
(Principal Financial Officer)
By /s/ Wayne Boston
(Wayne Boston, Attorney-in-fact)
Date: May 12, 2000
67
<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 David M. Ratcliffe
President and Chief Executive Officer
(Principal Executive Officer)
By Thomas A. Fanning
Executive Vice President, Treasurer and Chief Financial Officer
(Principal Financial Officer)
By /s/ Wayne Boston
(Wayne Boston, Attorney-in-fact)
Date: May 12, 2000
- ------------------------------------------------------------------------------
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 12, 2000
68
<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 12, 2000
- -------------------------------------------------------------------------------
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 G. Edison Holland, 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 12, 2000
69
Arthur Andersen
EXHIBIT 15(a)
May 9, 2000
Alabama Power Company
600 North 18th Street
Birmingham, Alabama 35291
Ladies and Gentlemen:
We are aware that Alabama Power Company has incorporated by reference in
Registration Statement 333-67453 its Form 10-Q for the quarter ended March 31,
2000 which includes our report on Alabama Power Company dated May 9, 2000
covering the unaudited interim financial information contained therein. Pursuant
to Regulation C of the Securities Act of 1933 (the "Act"), such report is not
considered a part of the Registration Statement prepared or certified by our
firm or a report prepared or certified by our firm within the meaning of
Sections 7 and 11 of the Act.
Very truly yours,
/s/ Arthur Andersen LLP
Arthur Andersen
EXHIBIT 15(b)
May 9, 2000
Georgia Power Company
241 Ralph McGill Boulevard, NE
Atlanta, Georgia 30308
Ladies and Gentlemen:
We are aware that Georgia Power Company has incorporated by reference in
Registration Statement 333-75193 its Form 10-Q for the quarter ended March 31,
2000 which includes our report on Georgia Power Company dated May 9, 2000
covering the unaudited interim financial information contained therein. Pursuant
to Regulation C of the Securities Act of 1933 (the "Act"), such report is not
considered a part of the Registration Statement prepared or certified by our
firm or a report prepared or certified by our firm within the meaning of
Sections 7 and 11 of the Act.
Very truly yours,
/s/ Arthur Andersen LLP
<TABLE> <S> <C>
<ARTICLE> UT
<LEGEND>
This schedule contains summary financial information extracted from the Form
10-Q for March 31, 2000, 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-31-2000
<PERIOD-END> Mar-31-2000
<BOOK-VALUE> PER-BOOK
<TOTAL-NET-UTILITY-PLANT> 24,693,341
<OTHER-PROPERTY-AND-INVEST> 7,983,542
<TOTAL-CURRENT-ASSETS> 3,313,986
<TOTAL-DEFERRED-CHARGES> 2,460,645
<OTHER-ASSETS> 0
<TOTAL-ASSETS> 38,451,514
<COMMON> 3,503,110
<CAPITAL-SURPLUS-PAID-IN> 1,146,911
<RETAINED-EARNINGS> 4,161,910
<TOTAL-COMMON-STOCKHOLDERS-EQ> 8,811,931
2,326,015
368,230
<LONG-TERM-DEBT-NET> 3,933,881
<SHORT-TERM-NOTES> 2,192,324
<LONG-TERM-NOTES-PAYABLE> 8,113,176
<COMMERCIAL-PAPER-OBLIGATIONS> 2,333,872
<LONG-TERM-DEBT-CURRENT-PORT> 376,372
0
<CAPITAL-LEASE-OBLIGATIONS> 93,567
<LEASES-CURRENT> 2,547
<OTHER-ITEMS-CAPITAL-AND-LIAB> 9,899,599
<TOT-CAPITALIZATION-AND-LIAB> 38,451,514
<GROSS-OPERATING-REVENUE> 2,572,587
<INCOME-TAX-EXPENSE> 61,510
<OTHER-OPERATING-EXPENSES> 2,003,211
<TOTAL-OPERATING-EXPENSES> 2,003,211
<OPERATING-INCOME-LOSS> 569,376
<OTHER-INCOME-NET> 95,141
<INCOME-BEFORE-INTEREST-EXPEN> 603,007
<TOTAL-INTEREST-EXPENSE> 352,868
<NET-INCOME> 250,139
4,695
<EARNINGS-AVAILABLE-FOR-COMM> 245,444
<COMMON-STOCK-DIVIDENDS> 220,557
<TOTAL-INTEREST-ON-BONDS> 0
<CASH-FLOW-OPERATIONS> 336,147
<EPS-BASIC> 0.38
<EPS-DILUTED> 0.38
</TABLE>
<TABLE> <S> <C>
<ARTICLE> UT
<LEGEND>
This schedule contains summary financial information extracted from the Form
10-Q for March 31, 2000, 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-31-2000
<PERIOD-END> Mar-31-2000
<BOOK-VALUE> PER-BOOK
<TOTAL-NET-UTILITY-PLANT> 7,793,836
<OTHER-PROPERTY-AND-INVEST> 329,161
<TOTAL-CURRENT-ASSETS> 843,045
<TOTAL-DEFERRED-CHARGES> 774,954
<OTHER-ASSETS> 0
<TOTAL-ASSETS> 9,740,996
<COMMON> 224,358
<CAPITAL-SURPLUS-PAID-IN> 1,539,091
<RETAINED-EARNINGS> 1,189,263
<TOTAL-COMMON-STOCKHOLDERS-EQ> 2,952,712
347,000
317,512
<LONG-TERM-DEBT-NET> 988,056
<SHORT-TERM-NOTES> 0
<LONG-TERM-NOTES-PAYABLE> 2,197,383
<COMMERCIAL-PAPER-OBLIGATIONS> 371,695
<LONG-TERM-DEBT-CURRENT-PORT> 0
0
<CAPITAL-LEASE-OBLIGATIONS> 3,962
<LEASES-CURRENT> 903
<OTHER-ITEMS-CAPITAL-AND-LIAB> 2,561,773
<TOT-CAPITALIZATION-AND-LIAB> 9,740,996
<GROSS-OPERATING-REVENUE> 746,177
<INCOME-TAX-EXPENSE> 40,641
<OTHER-OPERATING-EXPENSES> 574,515
<TOTAL-OPERATING-EXPENSES> 574,515
<OPERATING-INCOME-LOSS> 171,662
<OTHER-INCOME-NET> 5,703
<INCOME-BEFORE-INTEREST-EXPEN> 136,724
<TOTAL-INTEREST-EXPENSE> 65,244
<NET-INCOME> 71,480
3,968
<EARNINGS-AVAILABLE-FOR-COMM> 67,512
<COMMON-STOCK-DIVIDENDS> 103,600
<TOTAL-INTEREST-ON-BONDS> 0
<CASH-FLOW-OPERATIONS> 130,065
<EPS-BASIC> 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, 2000, 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-31-2000
<PERIOD-END> Mar-31-2000
<BOOK-VALUE> PER-BOOK
<TOTAL-NET-UTILITY-PLANT> 9,854,210
<OTHER-PROPERTY-AND-INVEST> 482,314
<TOTAL-CURRENT-ASSETS> 950,241
<TOTAL-DEFERRED-CHARGES> 1,023,186
<OTHER-ASSETS> 0
<TOTAL-ASSETS> 12,309,951
<COMMON> 344,250
<CAPITAL-SURPLUS-PAID-IN> 1,816,023
<RETAINED-EARNINGS> 1,735,136
<TOTAL-COMMON-STOCKHOLDERS-EQ> 3,895,409
789,250
14,673
<LONG-TERM-DEBT-NET> 2,008,259
<SHORT-TERM-NOTES> 134,800
<LONG-TERM-NOTES-PAYABLE> 895,000
<COMMERCIAL-PAPER-OBLIGATIONS> 451,344
<LONG-TERM-DEBT-CURRENT-PORT> 55,100
0
<CAPITAL-LEASE-OBLIGATIONS> 84,779
<LEASES-CURRENT> 956
<OTHER-ITEMS-CAPITAL-AND-LIAB> 3,980,381
<TOT-CAPITALIZATION-AND-LIAB> 12,309,951
<GROSS-OPERATING-REVENUE> 991,639
<INCOME-TAX-EXPENSE> 62,800
<OTHER-OPERATING-EXPENSES> 768,253
<TOTAL-OPERATING-EXPENSES> 768,253
<OPERATING-INCOME-LOSS> 223,386
<OTHER-INCOME-NET> (4,964)
<INCOME-BEFORE-INTEREST-EXPEN> 155,622
<TOTAL-INTEREST-EXPENSE> 61,753
<NET-INCOME> 93,869
170
<EARNINGS-AVAILABLE-FOR-COMM> 93,699
<COMMON-STOCK-DIVIDENDS> 136,500
<TOTAL-INTEREST-ON-BONDS> 0
<CASH-FLOW-OPERATIONS> 252,646
<EPS-BASIC> 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, 2000, 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-31-2000
<PERIOD-END> Mar-31-2000
<BOOK-VALUE> PER-BOOK
<TOTAL-NET-UTILITY-PLANT> 1,068,249
<OTHER-PROPERTY-AND-INVEST> 4,468
<TOTAL-CURRENT-ASSETS> 135,546
<TOTAL-DEFERRED-CHARGES> 77,301
<OTHER-ASSETS> 0
<TOTAL-ASSETS> 1,285,564
<COMMON> 38,060
<CAPITAL-SURPLUS-PAID-IN> 221,266
<RETAINED-EARNINGS> 153,040
<TOTAL-COMMON-STOCKHOLDERS-EQ> 412,366
85,000
4,236
<LONG-TERM-DEBT-NET> 247,609
<SHORT-TERM-NOTES> 52,500
<LONG-TERM-NOTES-PAYABLE> 119,906
<COMMERCIAL-PAPER-OBLIGATIONS> 0
<LONG-TERM-DEBT-CURRENT-PORT> 0
0
<CAPITAL-LEASE-OBLIGATIONS> 0
<LEASES-CURRENT> 0
<OTHER-ITEMS-CAPITAL-AND-LIAB> 363,947
<TOT-CAPITALIZATION-AND-LIAB> 1,285,564
<GROSS-OPERATING-REVENUE> 138,498
<INCOME-TAX-EXPENSE> 2,616
<OTHER-OPERATING-EXPENSES> 122,491
<TOTAL-OPERATING-EXPENSES> 122,491
<OPERATING-INCOME-LOSS> 16,007
<OTHER-INCOME-NET> (66)
<INCOME-BEFORE-INTEREST-EXPEN> 13,325
<TOTAL-INTEREST-EXPENSE> 8,618
<NET-INCOME> 4,707
54
<EARNINGS-AVAILABLE-FOR-COMM> 4,653
<COMMON-STOCK-DIVIDENDS> 14,600
<TOTAL-INTEREST-ON-BONDS> 0
<CASH-FLOW-OPERATIONS> 30,602
<EPS-BASIC> 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, 2000, 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-31-2000
<PERIOD-END> Mar-31-2000
<BOOK-VALUE> PER-BOOK
<TOTAL-NET-UTILITY-PLANT> 1,047,504
<OTHER-PROPERTY-AND-INVEST> 1,898
<TOTAL-CURRENT-ASSETS> 141,374
<TOTAL-DEFERRED-CHARGES> 49,230
<OTHER-ASSETS> 0
<TOTAL-ASSETS> 1,240,006
<COMMON> 37,691
<CAPITAL-SURPLUS-PAID-IN> 181,828
<RETAINED-EARNINGS> 165,571
<TOTAL-COMMON-STOCKHOLDERS-EQ> 385,090
35,000
31,809
<LONG-TERM-DEBT-NET> 182,267
<SHORT-TERM-NOTES> 27,000
<LONG-TERM-NOTES-PAYABLE> 189,356
<COMMERCIAL-PAPER-OBLIGATIONS> 0
<LONG-TERM-DEBT-CURRENT-PORT> 30,020
0
<CAPITAL-LEASE-OBLIGATIONS> 0
<LEASES-CURRENT> 0
<OTHER-ITEMS-CAPITAL-AND-LIAB> 359,464
<TOT-CAPITALIZATION-AND-LIAB> 1,240,006
<GROSS-OPERATING-REVENUE> 134,705
<INCOME-TAX-EXPENSE> 4,168
<OTHER-OPERATING-EXPENSES> 116,112
<TOTAL-OPERATING-EXPENSES> 116,112
<OPERATING-INCOME-LOSS> 18,593
<OTHER-INCOME-NET> 453
<INCOME-BEFORE-INTEREST-EXPEN> 14,878
<TOTAL-INTEREST-EXPENSE> 7,653
<NET-INCOME> 7,225
503
<EARNINGS-AVAILABLE-FOR-COMM> 6,722
<COMMON-STOCK-DIVIDENDS> 13,600
<TOTAL-INTEREST-ON-BONDS> 0
<CASH-FLOW-OPERATIONS> 17,083
<EPS-BASIC> 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, 2000, 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-31-2000
<PERIOD-END> Mar-31-2000
<BOOK-VALUE> PER-BOOK
<TOTAL-NET-UTILITY-PLANT> 451,879
<OTHER-PROPERTY-AND-INVEST> 1,982
<TOTAL-CURRENT-ASSETS> 63,671
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40,000
0
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0
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0
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</TABLE>
