SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported) February 16 , 2000
-----------------------------
SAVANNAH ELECTRIC AND POWER COMPANY
- -------------------------------------------------------------------------------
(Exact name of registrant as specified in its charter)
Georgia 1-5072 58-0418070
- -------------------------------------------------------------------------------
(State or other jurisdiction (Commission (IRS Employer
of incorporation) File Number) Identification No.)
600 East Bay Street, Savannah, Georgia 31401
- -------------------------------------------------------------------------------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (912) 644-7171
--------------------------
N/A
- -----------------------------------------------------------------------------
(Former name or former address, if changed since last report.)
<PAGE>
Item 7. Financial Statements and Exhibits.
(c) Exhibits.
23 - Consent of Arthur Andersen LLP.
27 - Financial Data Schedule.
99 - Audited Financial Statements of Savannah Electric
and Power Company as of December 31, 1999.
SIGNATURE
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.
SAVANNAH ELECTRIC AND POWER COMPANY
By /s/Wayne Boston
Wayne Boston
Assistant Secretary
Date: March 2, 2000
Exhibit 23
Arthur Andersen LLP
Suite 2500
133 Peachtree Street, NE
Atlanta, GA 30303-1816
404-658-1776
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the incorporation
of our report dated February 16, 2000 on the financial statements of Savannah
Electric and Power Company, included in this Form 8-K, into Savannah Electric
and Power Company's previously filed Registration Statement File No. 333-46171.
/s/Arthur Andersen LLP
Atlanta, Georgia
February 28, 2000
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<LEGEND>
This schedule contains summary financial information extracted from the
financial statements filed as Exhibit 99 and is qualified in its entirety by
reference to such financial statements.
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<CIK> 0000086940
<NAME> SAVANNAH ELECTRIC AND POWER COMPANY
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<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> Dec-31-1999
<PERIOD-END> Dec-31-1999
<BOOK-VALUE> PER-BOOK
<TOTAL-NET-UTILITY-PLANT> 450,018
<OTHER-PROPERTY-AND-INVEST> 1,506
<TOTAL-CURRENT-ASSETS> 71,237
<TOTAL-DEFERRED-CHARGES> 47,457
<OTHER-ASSETS> 0
<TOTAL-ASSETS> 570,218
<COMMON> 54,223
<CAPITAL-SURPLUS-PAID-IN> 9,787
<RETAINED-EARNINGS> 110,837
<TOTAL-COMMON-STOCKHOLDERS-EQ> 174,847
40,000
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<LONG-TERM-DEBT-NET> 82,155
<SHORT-TERM-NOTES> 34,300
<LONG-TERM-NOTES-PAYABLE> 60,000
<COMMERCIAL-PAPER-OBLIGATIONS> 0
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0
<CAPITAL-LEASE-OBLIGATIONS> 4,992
<LEASES-CURRENT> 704
<OTHER-ITEMS-CAPITAL-AND-LIAB> 173,220
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<GROSS-OPERATING-REVENUE> 251,594
<INCOME-TAX-EXPENSE> 11,808
<OTHER-OPERATING-EXPENSES> 201,531
<TOTAL-OPERATING-EXPENSES> 201,531
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</TABLE>
MANAGEMENT'S REPORT
Savannah Electric and Power Company 1999 Annual Report
The management of Savannah Electric and Power Company has prepared--and is
responsible for--the financial statements and related information included in
this report. These statements were prepared in accordance with generally
accepted accounting principles appropriate in the circumstances and necessarily
include amounts that are based on the best estimates and judgments of
management. Financial information throughout this annual report is consistent
with the financial statements.
The Company maintains a system of internal accounting controls to provide
reasonable assurance that assets are safeguarded and that books and records
reflect only authorized transactions of the Company. Limitations exist in any
system of internal controls, however, based on a recognition that the cost of
the system should not exceed its benefits. The Company believes its system of
internal accounting controls maintains an appropriate cost/benefit relationship.
The Company's system of internal accounting controls is evaluated on an
ongoing basis by the Company's internal audit staff. The Company's independent
public accountants also consider certain elements of the internal control system
in order to determine their auditing procedures for the purpose of expressing an
opinion on the financial statements.
The audit committee of the board of directors, composed of five directors
who are not employees, provides a broad overview of management's financial
reporting and control functions. Periodically, this committee meets with
management, the internal auditors and the independent public accountants to
ensure that these groups are fulfilling their obligations and to discuss
auditing, internal controls and financial reporting matters. The internal
auditors and the independent public accountants have access to the members of
the audit committee at any time.
Management believes that its policies and procedures provide reasonable
assurance that the Company's operations are conducted according to a high
standard of business ethics.
In management's opinion, the financial statements present fairly, in all
material respects, the financial position, results of operations, and cash flows
of Savannah Electric and Power Company in conformity with generally accepted
accounting principles.
/s/G. Edison Holland, Jr
G. Edison Holland, Jr.
President
and Chief Executive Officer
/s/K. R. Willis
K. R. Willis
Vice President,
Treasurer, Chief Financial Officer
and Assistant Secretary
February 16, 2000
1
<PAGE>
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To Savannah Electric and Power Company:
We have audited the accompanying balance sheets and statements of capitalization
of Savannah Electric and Power Company (a Georgia corporation and a wholly owned
subsidiary of Southern Company) as of December 31, 1999 and 1998, and the
related statements of income, common stockholder's equity, and cash flows for
each of the three years in the period ended December 31, 1999. These financial
statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.
We conducted our audits in accordance with auditing standards generally
accepted in the United States. Those standards require that we plan and perform
the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, the financial statements (pages 10-23) referred to above
present fairly, in all material respects, the financial position of Savannah
Electric and Power Company as of December 31, 1999 and 1998, and the results of
its operations and its cash flows for each of the three years in the period
ended December 31, 1999, in conformity with accounting principles generally
accepted in the United States.
/s/Arthur Andersen LLP
Atlanta, Georgia
February 16, 2000
2
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND FINANCIAL
CONDITION
Savannah Electric and Power Company 1999 Annual Report
RESULTS OF OPERATIONS
Earnings
Savannah Electric and Power Company's net income after dividends on preferred
stock for 1999 totaled $23.1 million, representing a decrease of $0.6 million or
2.4 percent from the prior year. Earnings were down primarily due to lower
non-operating revenues.
In 1998, earnings were $23.6 million, representing a $0.2 million, or 0.9
percent decrease from the prior year. This was principally the result of a
decrease in other income, net.
Revenues
Total revenues for 1999 were $251.6 million, reflecting a 1.1 percent decrease
when compared to 1998. The following table summarizes the factors affecting
operating revenues for the past three years:
Increase (Decrease)
From Prior Year
--------------------------------------
1999 1998 1997
--------------------------------------
Retail -- (in thousands)
Growth and price
changes $ 5,633 $ (479) $ 7,664
Weather (5,257) 8,336 (6,186)
Fuel cost recovery
and other (438) 15,012 (10,002)
-----------------------------------------------------------------
Total retail (62) 22,869 (8,524)
-----------------------------------------------------------------
Sales for resale--
Non-affiliates (1,153) 1,081 1,469
Affiliates 1,135 964 (1,078)
-----------------------------------------------------------------
Total sales for resale (18) 2,045 391
-----------------------------------------------------------------
Other operating revenues (2,781) 3,264 336
-----------------------------------------------------------------
Total operating revenues $(2,861) $ 28,178 $ (7,797)
=================================================================
Percent change (1.1)% 12.5% (3.3)%
-----------------------------------------------------------------
Retail revenues were relatively unchanged in 1999 when compared to 1998.
Reduced demand for energy in the industrial sector and a base rate decrease to
the small business customers partially offset by increased demand in the
residential and commercial sectors contributed to this variance.
In 1998, retail revenues increased by 10.4 percent over the prior year due
primarily to unusually hot summer weather that resulted in increased energy
sales to residential and commercial customers. A base rate decrease to the small
business customer class, ordered by the Georgia Public Service Commission
(GPSC), was effective in July 1998. See Note 3 to the financial statements for
additional information.
Under the Company's fuel cost recovery provisions, fuel revenues--including
the fuel component of purchased energy--generally equal fuel expense and have no
effect on earnings.
Revenues from sales to utilities outside the service area under long-term
contracts consist of capacity and energy components. Revenues from these sales
were not material during the three-year period.
Sales to affiliated companies within the Southern electric system vary from
year to year depending on demand and the availability and cost of generating
resources at each company. These sales do not have a significant impact on
earnings.
Energy Sales
Changes in revenues are influenced heavily by the amount of energy sold each
year. Kilowatt-hour (KWH) sales for 1999 and the percent change by year were as
follows:
KWH Percent Change
------------ -----------------------------
1999 1999 1998 1997
------------ -----------------------------
(in millions)
Residential 1,579 2.6% 7.8% (1.9)%
Commercial 1,288 4.2 6.9 1.3
Industrial 713 (20.7) 2.1 5.1
Other 133 1.1 5.3 (1.4)
------------
Total retail 3,713 (2.5) 6.0 0.8
Sales for resale--
Non-affiliates 51 (3.3) (43.5) 2.9
Affiliates 77 31.8 7.2 30.4
------------
Total 3,841 (2.0)% 4.8 % 1.2 %
=====================================================================
Total retail energy sales in 1999 were down by 2.5% from the prior year
reflecting reduced energy sales of 20.7% to industrial customers due to the
shut-down of one industrial customer's facilities in late 1998 and completed
construction of a steam turbine unit by another industrial customer. These
reductions were partially mitigated by increased energy sales of 2.6% and 4.2%
to residential and commercial customers, respectively.
In 1998, total retail energy sales were up 6.0% over the prior year,
reflecting the impact of the hotter-than-normal weather on energy sales to
3
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS (continued)
Savannah Electric and Power Company 1999 Annual Report
residential and commercial customers and high demand from an industrial
customer.
Expenses
Total operating expenses for 1999 were $201.5 million, a slight increase of $1.2
million from the prior year due primarily to increases in purchased power from
non- affiliates and depreciation and amortization. Purchased power from
non-affiliates increased due principally to higher demand for energy and
increased costs associated with these power purchases. Maintenance expenses
decreased this year compared to 1998 due to repair costs in 1998 related to a
major turbine dismantle inspection. Depreciation and amortization increased
reflecting additional depreciation charges related to the GPSC's accounting
order. See Note 3 to the financial statements for additional information on the
GPSC's 1998 accounting order.
In 1998, total operating expenses were $200.3 million reflecting a $27.7
million increase from 1997. Major components of this increase included a $17.5
million increase in fuel, a $7.1 million increase in purchased power from
non-affiliates, and a $5.5 million increase in maintenance expense. These
increases, however, were partially offset by a $6.4 million decrease in
purchased power from affiliates. The increase in fuel expense was primarily
attributed to higher demand for energy. The increase in purchased power from
non-affiliates primarily resulted from increased power marketing activities.
Maintenance expenses were higher primarily due to scheduled turbine dismantle
inspection costs. The decline in purchased power from affiliates was due
primarily to an increase in internal generation reflecting system load growth.
Fuel and purchased power costs constitute the single largest expense for
the Company. The mix of energy supply is determined primarily by system load,
the unit cost of fuel consumed, and the availability of units.
The amount and sources of energy supply and the total average cost of
energy supply were as follows:
1999 1998 1997
--------------------------
Total energy supply
(millions of KWHs) 4,039 4,182 3,964
Sources of energy supply
(percent) --
Coal 45 42 34
Oil 2 1 -
Gas 10 12 5
Purchased Power 43 45 61
Total average cost of
energy supply (cents) 2.44 2.35 2.02
- -----------------------------------------------------------------
Effects of Inflation
The Company is subject to rate regulation and income tax laws that are based on
the recovery of historical costs. Therefore, inflation creates an economic loss
because the Company is recovering its costs of investments in dollars that have
less purchasing power. While the inflation rate has been relatively low in
recent years, it continues to have an adverse effect on the Company because of
the large investment in utility plant with long economic lives. Conventional
accounting for historical cost does not recognize this economic loss nor the
partially offsetting gain that arises through financing facilities with
fixed-money obligations such as long-term debt and preferred securities. Any
recognition of inflation by regulatory authorities is reflected in the rate of
return allowed.
Future Earnings Potential
The results of operations for the past three years are not necessarily
indicative of future earnings potential. The level of future earnings depends on
numerous factors ranging from energy sales growth to a less regulated, more
competitive environment.
Savannah Electric currently operates as a vertically integrated utility
providing electricity to customers within the traditional service area of
southeastern Georgia. Prices for electricity provided by the Company to retail
customers are set by the GPSC. Prices for electricity relating to jointly owned
generating facilities, interconnecting transmission lines, and the exchange of
electric power are set by the Federal Energy Regulatory Commission (FERC).
4
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS (continued)
Savannah Electric and Power Company 1999 Annual Report
Future earnings in the near term will depend upon growth in energy sales,
which is subject to a number of factors. These factors include weather,
competition, new short and long-term contracts with neighboring utilities,
energy conservation practiced by customers, the elasticity of demand, and the
rate of economic growth in the Company's service area.
The electric utility industry in the United States is currently undergoing
a period of dramatic change as a result of regulatory and competitive factors.
Among the primary agents of change has been the Energy Policy Act of 1992
(Energy Act). The Energy Act allows independent power producers (IPPs) to access
the Company's transmission network in order to sell electricity to other
utilities. This enhances the incentive for IPPs to build cogeneration plants for
industrial and commercial customers and sell energy generation to other
utilities. Also, electricity sales for resale rates are being driven down by
wholesale transmission access and numerous potential new energy suppliers,
including power marketers and brokers. The Company is positioning the business
to meet the challenge of this major change in the traditional practice of
selling electricity.
Although the Energy Act does not permit retail customer access, it was a
major catalyst for the current restructuring and consolidation taking place
within the utility industry. Numerous federal and state initiatives are in
varying stages to promote wholesale and retail competition. Among other things,
these initiatives allow customers to choose their electricity provider. As these
initiatives materialize, the structure of the utility industry could radically
change. Some states have approved initiatives that result in a separation of the
ownership and/or operation of generating facilities from the ownership and/or
operation of transmission and distribution facilities. While various
restructuring and competition initiatives have been or are being discussed in
Georgia, none have been enacted to date. Enactment would require numerous issues
to be resolved, including significant ones relating to transmission pricing and
recovery of any stranded investments. The inability of the Company to recover
its investments, including the regulatory assets described in Note 1 to the
financial statements, could have a material adverse effect on financial
condition and results of operation. The Company is attempting to minimize or
reduce its cost exposure.
Continuing to be a low-cost producer could provide opportunities to
increase market share and profitability in markets that evolve with changing
regulation. Conversely, if the Company does not remain a low-cost producer and
provide quality service, then energy sales growth could be limited, and this
could significantly erode earnings.
Compliance costs related to current and future environmental laws and
regulations could affect earnings if such costs are not fully recovered. The
Clean Air Act and other important environmental items are discussed later under
"Environmental Matters."
Rates to retail customers served by the Company are regulated by the GPSC.
As part of the Company's rate settlement in 1992, it was informally agreed that
the Company's earned rate of return on common equity should be 12.95 percent. In
1998, the GPSC issued a four-year accounting order settling its review of the
Company's earnings. See Note 3 to the financial statements for additional
information.
On December 20, 1999, the FERC issued its final rule on Regional
Transmission Organizations (RTOs). The order encourages utilities owning
transmission systems to form RTOs on a voluntary basis. To facilitate the
development of RTOs, the FERC will convene regional conferences for utilities,
customers, and other members of the public to discuss the formation of RTOs. In
addition to participating in the regional conferences, utilities owning
transmission systems, including the Company, are required to make a filing by
October 15, 2000. The filing must contain either a proposal for RTO
participation or a description of the efforts made to participate in an RTO, the
reasons for non-participation, any obstacles to participation, and any plans for
further work toward participation. The RTOs that are proposed in the filings
should be operational by December 15, 2001. The Company is evaluating this issue
and formulating its response. The outcome of this matter cannot now be
determined.
The Company is subject to the provisions of Financial Accounting Standards
Board (FASB) Statement No. 71, Accounting for the Effects of Certain Types of
Regulation. In the event that a portion of the Company's operations is no longer
subject to these provisions, the Company would be required to write off related
regulatory assets and liabilities that are not specifically recoverable, and
determine if any other assets have been impaired. See Note 1 to the financial
5
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS (continued)
Savannah Electric and Power Company 1999 Annual Report
statements under "Regulatory Assets and Liabilities" for additional information.
Exposure to Market Risks
Due to cost-based rate regulation, the Company has limited exposure to market
volatility in interest rates and prices of electricity. To mitigate residual
risks relative to movements in electricity prices, the Company enters into fixed
price contracts for the purchase and sale of electricity through the wholesale
electricity market. Realized gains and losses are recognized in the income
statement as incurred. At December 31, 1999, exposure from these activities was
not material to the Company's financial statements. Also, based on the Company's
overall interest rate exposure at December 31, 1999, a near-term 100 basis point
change in interest rates would not materially affect the financial statements.
New Accounting Standards
The FASB has issued Statement No. 133, Accounting for Derivative Instruments and
Hedging Activities, which must be adopted by January 1, 2001. This statement
establishes accounting and reporting standards for derivative instruments --
including certain derivative instruments embedded in other contracts -- and for
hedging activities. The Company has not yet quantified the impact of adopting
this statement on its financial statements; however, the adoption could increase
volatility in earnings.
Year 2000 Challenge
The work undertaken by the Company to prepare critical computer systems and
other date sensitive devices to function correctly in the Year 2000 was
successful. There were no material incidents reported and no disruption of
electric service within the service area. There were no reports of significant
events regarding third parties that impacted revenues or expenses.
Original projected total costs for Year 2000 readiness were approximately
$1.2 million. Final projected costs are $1.3 million of which $0.1 million is
projected to be spent in 2000. These costs include labor necessary to identify,
test, and renovate affected devices and systems, and costs for reporting
requirements to state and federal agencies. From its inception through December
31, 1999, the Year 2000 program costs, recognized as expense, amounted to $1.2
million.
FINANCIAL CONDITION
Overview
The principal change in the Company's financial condition in 1999 was the
addition of $29.8 million to utility plant. The funds needed for gross property
additions are currently provided from operating activities, principally from
earnings and non-cash charges to income such as depreciation and deferred income
taxes and from financing activities. See Statements of Cash Flows for additional
information.
Capital Structure
As of December 31, 1999, the Company's capital structure consisted of 48.3
percent common stockholders' equity, 11.0 percent trust preferred securities,
and 40.7 percent long-term debt, excluding amounts due within one year. The
Company's long-term financial objective for capitalization ratios is to maintain
a capital structure of common stockholders' equity at 48 percent, preferred
securities at 10 percent and debt at 42 percent.
Maturities and retirements of long-term debt were $16 million in 1999,
$30 million in 1998 and $14 million in 1997. Included in the 1999 maturities and
retirements is the purchase by Savannah Electric of all $15 million outstanding
of its 7 7/8% Series First Mortgage Bonds due May 1, 2025.
During 1998, the Company issued $30 million of Series A 6 5/8% senior
retail intermediate bonds maturing in 2015. The Company used these proceeds to
redeem the remaining amount of its 8.30% first mortgage bonds due in 2022. Also
in 1998, the Company redeemed all of its 1,400,000 shares of 6.64% Series
Preferred Stock at a redemption price of $25 per share, plus accrued dividends
through the date of redemption. In December 1998, Savannah Electric Capital
Trust I, of which the Company owns all of the common securities, issued $40
million of 6.85% mandatorily redeemable preferred securities.
6
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS (continued)
Savannah Electric and Power Company 1999 Annual Report
The composite interest rates and dividend rates for the years 1997 through
1999 as of year-end were as follows:
1999 1998 1997
-------------------------------
Composite interest rates
on long-term debt 6.4% 6.5% 6.9%
Preferred stock dividend rate -% -% 6.6%
Trust preferred securities
dividend rate 6.9% 6.9% -%
- -----------------------------------------------------------------
Capital Requirements for Construction
The Company's projected construction expenditures for the next three years total
$91.8 million ($25.6 million in 2000, $30.4 million in 2001, and $35.8 million
in 2002). Actual construction costs may vary from this estimate because of
factors such as changes in: business conditions; environmental regulations; load
projections; the cost and efficiency of construction labor, equipment and
materials; and the cost of capital. In addition, there can be no assurance that
costs related to capital expenditures will be fully recovered. Construction of
transmission and distribution facilities and upgrading of generating plants will
be continuing.
Other Capital Requirements
In addition to the funds needed for the construction program, approximately
$31.8 million will be needed by the end of 2002 for maturities of long-term debt
and present sinking fund requirements.
Environmental Matters
In November 1990, the Clean Air Act was signed into law. Title IV of the Clean
Air Act--the acid rain compliance provision of the law--significantly affected
the Company and other subsidiaries of Southern Company. Specific reductions in
sulfur dioxide and nitrogen oxide emissions from fossil-fired generating plants
are required in two phases. Phase I compliance began in 1995 and initially
affected 28 generating units of Southern Company. As a result of Southern
Company's compliance strategy, an additional 22 generating units, which included
four of the Company's units, were brought into compliance with Phase I
requirements. Phase II compliance is required in 2000, and all fossil-fired
generating plants will be affected.
Southern Company achieved Phase I sulfur dioxide compliance at the affected
plants by switching to low-sulfur coal, which required some equipment upgrades.
Construction expenditures for Phase I nitrogen oxide and sulfur dioxide
emissions compliance totaled approximately $2 million for Savannah Electric.
For Phase II sulfur dioxide compliance, Southern Company currently uses
emission allowances and increased fuel switching. Also, equipment to control
nitrogen oxide emissions was installed on additional system fossil-fired plants
as necessary to meet Phase II limits and ozone non-attainment requirements.
Compliance for Phase II and initial ozone non-attainment requirements increased
total estimated construction expenditures by approximately $105 million. Phase
II compliance is not expected to have a material impact on Savannah Electric.
A significant portion of costs related to the acid rain provision of the
Clean Air Act is expected to be recovered through existing ratemaking
provisions. However, there can be no assurance that all Clean Air Act costs will
be recovered.
On November 3, 1999, the Environmental Protection Agency (EPA), brought a
civil action in the U.S. District Court against Alabama Power, Georgia Power
and the system service company. The complaint alleges violations of the
prevention of significant deterioration and new source review provisions of the
Clean Air Act with respect to five coal-fired generating facilities in
Alabama and Georgia. The EPA concurrently issued to the integrated Southeast
utilities a notice of violation related to 10 generating facilities, which
includes the five facilities mentioned previously and the Company's Plant Kraft.
In early 2000, the EPA filed a motion to amend its complaint to add the
violations alleged in its notice of violation, and to add Gulf Power,
Mississippi Power, and Savannah Electric as defendants. The complaint and
notice of violation are similar to those brought against and issued to
several other electric utilities. These complaints and notices of violation
allege that the utilities had failed to secure necessary permits or install
additional pollution equipment when performing maintenance and construction at
coal burning plants constructed or under construction prior to 1978. Southern
Company believes that its integrated utilities complied with applicable laws
and the EPA's regulations and interpretations in effect at the time the work in
question took place. The Clean Air Act authorizes civil penalties of up to
$27,500 per day per violation at each generating unit. Prior to January 30,
1997, the penalty was $25,000 per
7
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS (continued)
Savannah Electric and Power Company 1999 Annual Report
day. An adverse outcome of this matter could require substantial capital
expenditures that cannot be determined at this time and possibly require payment
of substantial penalties. This could affect future results of operations, cash
flows, and possibly financial condition if such costs are not recovered through
regulated rates.
In July 1997, the EPA revised the national ambient air quality standards
for ozone and particulate matter. This revision makes the standards
significantly more stringent. In September 1998, the EPA issued the final
regional nitrogen oxide rules to the states for implementation. The final rule
affects 22 states including Georgia. The EPA's July 1997 standards and the
September 1998 rule are being challenged in the courts by several states and
industry groups. Implementation of the final state rules for these three
initiatives could require substantial further reductions in nitrogen oxide and
sulfur dioxide emissions from fossil-fired generating facilities and other
industries in these states. Additional compliance costs and capital expenditures
resulting from the implementation of these rules and standards cannot be
determined until the results of legal challenges are known, and the states have
adopted their final rules.
The EPA and state environmental regulatory agencies are reviewing and
evaluating various other matters including: additional controls for hazardous
air pollutant emissions; control strategies to reduce regional haze; and
hazardous waste disposal requirements. The impact of new standards will depend
on the development and implementation of applicable regulations.
The Company must comply with other environmental laws and regulations that
cover the handling and disposal of hazardous waste. Under these various laws and
regulations, the Company could incur substantial costs to clean up properties
currently or previously owned. The Company conducts studies to determine the
extent of any required cleanup costs and will recognize in the financial
statements any costs to clean up known sites.
Several major pieces of environmental legislation are being considered for
reauthorization or amendment by Congress. These include: the Clean Air Act; the
Clean Water Act; the Comprehensive Environmental Response, Compensation, and
Liability Act; the Resource Conservation and Recovery Act; the Toxic Substances
Control Act; and the Endangered Species Act. Changes to these laws could affect
many areas of Southern Company's operations. The full impact of any such changes
cannot be determined at this time.
Compliance with possible additional legislation related to global climate
change, electromagnetic fields, and other environmental and health concerns
could significantly affect Southern Company. The impact of new legislation--if
any--will depend on the subsequent development and implementation of applicable
regulations. In addition, the potential exists for liability as the result of
lawsuits alleging damages caused by electromagnetic fields.
Sources of Capital
At December 31, 1999, the Company had $6.6 million of cash and $26.2 million of
unused short-term and revolving credit arrangements with banks to meet its
short-term cash needs and to provide additional interim funding for the
Company's construction program. Revolving credit arrangements total $20 million,
of which $10 million expires December 31, 2001 and $10 million expires December
31, 2002.
It is anticipated that the funds required for construction and other
purposes, including compliance with environmental regulation, will be derived
from sources similar to those used in the past. These sources were primarily
from the issuances of first mortgage bonds, other long-term debt, and preferred
stock, in addition to pollution control revenue bonds issued for the Company's
benefit by public authorities, to meet long-term external financing
requirements. Recently, the Company's financings have consisted of unsecured
debt and trust preferred securities. The Company is required to meet certain
earnings coverage requirements specified in its mortgage indenture and corporate
charter to issue new first mortgage bonds and preferred stock. The Company's
coverage ratios are sufficiently high to permit, at present interest rate
levels, any foreseeable security sales. In 1998, the Company obtained
stockholder approval to amend the corporate charter including the elimination of
the restrictions on the amount of unsecured indebtedness allowed. The amount of
securities which the Company will be permitted to issue in the future will
depend upon market conditions and other factors prevailing at that time.
8
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS (continued)
Savannah Electric and Power Company 1999 Annual Report
Cautionary Statement Regarding Forward-Looking Information
Savannah Electric and Power Company's 1999 Annual Report contains
forward-looking and historical information. The Company cautions that there are
various important factors that could cause actual results to differ materially
from those indicated in the forward-looking information. 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 Company's markets; potential business
strategies--including acquisitions or dispositions of assets or internal
restructuring--that may be pursued by the Company; state and federal rate
regulation; changes in or application of environmental and other laws and
regulations to which the Company is subject; political, legal and economic
conditions and developments; financial market conditions and the results of
financing efforts; changes in commodity prices and interest rates; weather and
other natural phenomena; and other factors discussed in the reports--including
Form 10-K--filed from time to time by the Company with the Securities and
Exchange Commission.
9
<PAGE>
<TABLE>
<CAPTION>
STATEMENTS OF INCOME
For the Years Ended December 31, 1999, 1998, and 1997
Savannah Electric and Power Company 1999 Annual Report
- --------------------------------------------------------------------------------------------------------------------
1999 1998 1997
- --------------------------------------------------------------------------------------------------------------------
(in thousands)
<S> <C> <C> <C>
Operating Revenues (Note 1):
Retail sales $242,265 $242,327 $219,458
Sales for resale --
Non-affiliates 3,395 4,548 3,467
Affiliates 4,151 3,016 2,052
Other revenues 1,783 4,564 1,300
- --------------------------------------------------------------------------------------------------------------------
Total operating revenues 251,594 254,455 226,277
- --------------------------------------------------------------------------------------------------------------------
Operating Expenses:
Operation --
Fuel 50,530 53,021 35,563
Purchased power --
Non-affiliates 14,398 9,460 2,347
Affiliates 33,398 35,687 42,107
Other 50,341 49,055 47,735
Maintenance 16,333 18,711 13,236
Depreciation and amortization (Notes 1 and 3) 23,841 22,032 20,152
Taxes other than income taxes 12,690 12,342 11,494
- --------------------------------------------------------------------------------------------------------------------
Total operating expenses 201,531 200,308 172,634
- --------------------------------------------------------------------------------------------------------------------
Operating Income 50,063 54,147 53,643
Other Income (Expense):
Interest income 169 384 279
Other, net (663) (1,698) (542)
- --------------------------------------------------------------------------------------------------------------------
Earnings Before Interest and Income Taxes 49,569 52,833 53,380
- --------------------------------------------------------------------------------------------------------------------
Interest Charges and Other:
Interest on long-term debt 9,300 10,383 10,907
Interest on notes payable 879 278 172
Amortization of debt discount, premium and expense, net 948 853 739
Other interest charges 811 341 205
Distributions on preferred securities of subsidiary 2,740 167 -
- --------------------------------------------------------------------------------------------------------------------
Total interest charges and other, net 14,678 12,022 12,023
- --------------------------------------------------------------------------------------------------------------------
Earnings Before Income Taxes 34,891 40,811 41,357
Income taxes (Notes 1 and 6) 11,808 15,101 15,186
- --------------------------------------------------------------------------------------------------------------------
Net Income 23,083 25,710 26,171
Dividends on Preferred Stock - 2,066 2,324
- --------------------------------------------------------------------------------------------------------------------
Net Income After Dividends on Preferred Stock $ 23,083 $ 23,644 $ 23,847
====================================================================================================================
The accompanying notes are an integral part of these statements.
</TABLE>
10
<PAGE>
<TABLE>
<CAPTION>
STATEMENTS OF CASH FLOWS
For the Years Ended December 31, 1999, 1998, and 1997
Savannah Electric and Power Company 1999 Annual Report
- ------------------------------------------------------------------------------------------------------------------------
1999 1998 1997
- ------------------------------------------------------------------------------------------------------------------------
(in thousands)
<S> <C> <C> <C>
Operating Activities:
Net income $ 23,083 $ 25,710 $ 26,171
Adjustments to reconcile net income
to net cash provided from operating activities --
Depreciation and amortization 25,454 23,531 21,083
Deferred income taxes and investment tax credits, net (3,353) 7,011 3,841
Other, net (47) (89) (2,816)
Changes in certain current assets and liabilities --
Receivables, net (5,999) (9,875) (1,938)
Fossil fuel stock (2,125) 221 687
Materials and supplies (1,906) 484 1,033
Accounts payable 1,133 470 (1,608)
Other 1,731 (4,859) 3,366
- ------------------------------------------------------------------------------------------------------------------------
Net cash provided from operating activities 37,971 42,604 49,819
- ------------------------------------------------------------------------------------------------------------------------
Investing Activities:
Gross property additions (29,833) (18,071) (18,846)
Other (1,715) 1,617 (1,418)
- ------------------------------------------------------------------------------------------------------------------------
Net cash used for investing activities (31,548) (16,454) (20,264)
- ------------------------------------------------------------------------------------------------------------------------
Financing Activities:
Increase (decrease) in notes payable, net 34,300 - (5,000)
Proceeds --
Other long-term debt - 30,000 13,870
Preferred securities - 40,000 -
Capital contribution from parent company 1,099 - -
Retirements --
First mortgage bonds (15,800) (30,000) -
Other long-term debt (481) (478) (14,303)
Preferred stock - (35,000) -
Payment of preferred stock dividends - (2,556) (2,324)
Payment of common stock dividends (25,200) (23,500) (20,500)
Other 250 (4,798) (368)
- ------------------------------------------------------------------------------------------------------------------------
Net cash used for financing activities (5,832) (26,332) (28,625)
- ------------------------------------------------------------------------------------------------------------------------
Net Change in Cash and Cash Equivalents 591 (182) 930
Cash and Cash Equivalents at Beginning of Period 5,962 6,144 5,214
- ------------------------------------------------------------------------------------------------------------------------
Cash and Cash Equivalents at End of Period $ 6,553 $ 5,962 $ 6,144
========================================================================================================================
Supplemental Cash Flow Information:
Cash paid during the period for --
Interest (net of amount capitalized) $14,212 $12,198 $11,619
Income taxes (net of refunds) 12,647 9,666 11,150
- ------------------------------------------------------------------------------------------------------------------------
The accompanying notes are an integral part of these statements.
</TABLE>
11
<PAGE>
<TABLE>
<CAPTION>
BALANCE SHEETS
At December 31, 1999 and 1998
Savannah Electric and Power Company 1999 Annual Report
- -------------------------------------------------------------------------------------------------------------------
Assets 1999 1998
- -------------------------------------------------------------------------------------------------------------------
(in thousands)
<S> <C> <C>
Current Assets:
Cash and cash equivalents $ 6,553 $ 5,962
Receivables --
Customer accounts receivable 20,752 18,030
Unrecovered retail fuel clause revenue 21,089 17,628
Other accounts and notes receivable 3,505 3,543
Affiliated companies 1,195 1,388
Accumulated provision for uncollectible accounts (237) (284)
Fossil fuel stock, at average cost 7,109 4,984
Materials and supplies, at average cost (Note 1) 8,402 6,496
Other 2,869 4,772
- -------------------------------------------------------------------------------------------------------------------
Total current assets 71,237 62,519
- -------------------------------------------------------------------------------------------------------------------
Property, Plant and Equipment:
In service (Notes 1 and 8) 804,096 781,964
Less accumulated provision for depreciation 360,639 341,930
- -------------------------------------------------------------------------------------------------------------------
443,457 440,034
Construction work in progress 6,561 2,908
- -------------------------------------------------------------------------------------------------------------------
Total property, plant and equipment 450,018 442,942
- -------------------------------------------------------------------------------------------------------------------
Other Property and Investments 1,506 1,420
- -------------------------------------------------------------------------------------------------------------------
Deferred Charges and Other Assets:
Deferred charges related to income taxes (Note 6) 16,063 17,130
Cash surrender value of life insurance for deferred compensation plans 16,305 14,179
Prepaid pension costs (Note 2) 1,201 3,281
Debt expense, being amortized 3,155 3,554
Premium on reacquired debt, being amortized 8,385 8,570
Other 2,348 2,204
- -------------------------------------------------------------------------------------------------------------------
Total deferred charges and other assets 47,457 48,918
- -------------------------------------------------------------------------------------------------------------------
Total Assets $570,218 $555,799
===================================================================================================================
The accompanying notes are an integral part of these balance sheets.
</TABLE>
12
<PAGE>
<TABLE>
<CAPTION>
BALANCE SHEETS
At December 31, 1999 and 1998
Savannah Electric and Power Company 1999 Annual Report
- ------------------------------------------------------------------------------------------------------------------
Liabilities and Stockholder's Equity 1999 1998
- ------------------------------------------------------------------------------------------------------------------
(in thousands)
<S> <C> <C>
Current Liabilities:
Securities due within one year (Note 8) $ 704 $ 689
Notes payable 34,300 -
Accounts payable --
Affiliated 4,632 5,014
Other 11,118 10,833
Customer deposits 5,426 5,224
Taxes accrued --
Income taxes 3,046 2,467
Other 3,013 2,891
Interest accrued 3,237 3,815
Vacation pay accrued 2,142 1,978
Other 5,742 6,700
- ------------------------------------------------------------------------------------------------------------------
Total current liabilities 73,360 39,611
- ------------------------------------------------------------------------------------------------------------------
Long-term debt (See accompanying statements) 147,147 163,443
- ------------------------------------------------------------------------------------------------------------------
Deferred Credits and Other Liabilities:
Accumulated deferred income taxes (Note 6) 80,318 82,778
Deferred credits related to income taxes (Note 6) 19,687 21,349
Accumulated deferred investment tax credits (Note 6) 11,280 11,943
Deferred compensation plans 10,624 9,788
Employee benefits provisions (Note 2) 7,805 7,620
Other 5,150 3,402
- ------------------------------------------------------------------------------------------------------------------
Total deferred credits and other liabilities 134,864 136,880
- --------------------------------------------------------------------------------------------------------------------
Company obligated mandatorily redeemable preferred
securities of subsidiary trust holding company junior
subordinated notes (See accompanying statements) (Note 7) 40,000 40,000
- ------------------------------------------------------------------------------------------------------------------
Common stockholder's equity (See accompanying statements) 174,847 175,865
- ------------------------------------------------------------------------------------------------------------------
Total Liabilities and Stockholder's Equity $570,218 $555,799
==================================================================================================================
The accompanying notes are an integral part of these balance sheets.
</TABLE>
13
<PAGE>
<TABLE>
<CAPTION>
STATEMENTS OF CAPITALIZATION
At December 31, 1999 and 1998
Savannah Electric and Power Company 1999 Annual Report
- ------------------------------------------------------------------------------------------------------------------------------------
1999 1998 1999 1998
- ------------------------------------------------------------------------------------------------------------------------------------
(in thousands) (percent of total)
Long-Term Debt (Note 8):
First mortgage bonds --
Maturity Interest Rates
-------- --------------
<S> <C> <C> <C> <C> <C>
July 1, 2003 6.375% $20,000 $20,000
May 1, 2006 6.90% 20,000 20,000
July 1, 2023 7.40% 24,200 25,000
May 1, 2025 7.875% - 15,000
- ------------------------------------------------------------------------------------------------------------------------------------
Total first mortgage bonds 64,200 80,000
- ------------------------------------------------------------------------------------------------------------------------------------
Long-term notes payable --
6.88% due June 1, 2001 10,000 10,000
6.625% due March 17, 2015 30,000 30,000
Adjustable rates (6.28% and 6.66% at 1/1/00)
due 2001 20,000 20,000
- ------------------------------------------------------------------------------------------------------------------------------------
Total long-term notes payable 60,000 60,000
- ------------------------------------------------------------------------------------------------------------------------------------
Other long-term debt --
Pollution control revenue bonds --
Collateralized:
Variable rates (4.00% at 1/1/99)
due 2016 - 4,085
Non-collateralized:
Variable rates (3.65% to 3.95% at 1/1/00)
due 2016-2037 17,955 13,870
- ------------------------------------------------------------------------------------------------------------------------------------
Total other long-term debt 17,955 17,955
- ------------------------------------------------------------------------------------------------------------------------------------
Capitalized lease obligations 5,696 6,177
- ------------------------------------------------------------------------------------------------------------------------------------
Total long-term debt (annual interest
requirement -- $9.5 million) 147,851 164,132
Less amount due within one year (Note 8) 704 689
- ------------------------------------------------------------------------------------------------------------------------------------
Total long-term debt excluding amount due within one year 147,147 163,443 40.7% 43.1%
- ------------------------------------------------------------------------------------------------------------------------------------
Company Obligated Mandatorily
Redeemable Preferred Securities (Note 7):
$25 liquidation value --
6.85% 40,000 40,000
- ------------------------------------------------------------------------------------------------------------------------------------
Total (annual distribution requirement -- $2.7 million) 40,000 40,000 11.0 10.5
- ------------------------------------------------------------------------------------------------------------------------------------
Common Stockholder's Equity (Note 9):
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 8,688
Retained earnings 110,837 112,954
- ------------------------------------------------------------------------------------------------------------------------------------
Total common stockholder's equity 174,847 175,865 48.3 46.4
- ------------------------------------------------------------------------------------------------------------------------------------
Total Capitalization $361,994 $379,308 100.0% 100.0%
====================================================================================================================================
The accompanying notes are an integral part of these statements.
</TABLE>
14
<PAGE>
<TABLE>
<CAPTION>
STATEMENTS OF COMMON STOCKHOLDER'S EQUITY
For the Years Ended December 31, 1999, 1998, and 1997
Savannah Electric and Power Company 1999 Annual Report
- ---------------------------------------------------------------------------------------------------------------------------------
Common Paid-In Retained
Stock Capital Earnings Total
- ---------------------------------------------------------------------------------------------------------------------------------
(in thousands)
<S> <C> <C> <C> <C>
Balance at January 1, 1997 $54,223 $8,688 $109,373 $172,284
Net income after dividends on preferred stock - - 23,847 23,847
Cash dividends - - (20,500) (20,500)
- ---------------------------------------------------------------------------------------------------------------------------------
Balance at December 31, 1997 54,223 8,688 112,720 175,631
Net income after dividends on preferred stock - - 23,644 23,644
Cash dividends - - (23,500) (23,500)
Other - - 90 90
- ---------------------------------------------------------------------------------------------------------------------------------
Balance at December 31, 1998 54,223 8,688 112,954 175,865
Net income after dividends on preferred stock - - 23,083 23,083
Capital contributions from parent company - 1,099 - 1,099
Cash dividends - - (25,200) (25,200)
- ---------------------------------------------------------------------------------------------------------------------------------
Balance at December 31, 1999 (Note 9) $54,223 $9,787 $110,837 $174,847
=================================================================================================================================
The accompanying notes are an integral part of these statements.
</TABLE>
15
<PAGE>
NOTES TO FINANCIAL STATEMENTS
Savannah Electric and Power Company 1999 Annual Report
1. SUMMARY OF SIGNIFICANT ACCOUNTING
POLICIES
General
Savannah Electric and Power Company (the Company), is a wholly owned subsidiary
of Southern Company, which is the parent company of five integrated Southeast
utilities, Southern Company Services, Inc. (SCS), Southern Communications
Services (Southern LINC), Southern Company Energy Solutions, Southern Energy,
Inc. (Southern Energy), Southern Nuclear Operating Company (Southern Nuclear),
and other direct and indirect subsidiaries. The integrated Southeast utilities
provide electric service in four states. Contracts among the integrated
Southeast utilities--related to jointly owned generating facilities,
interconnecting transmission lines, and the exchange of electric power--are
regulated by the Federal Energy Regulatory Commission (FERC) and/or the
Securities and Exchange Commission. SCS, a system service company provides, at
cost, specialized services to Southern Company and subsidiary companies.
Southern LINC provides digital wireless communications services to the operating
companies and also markets these services to the public within the Southeast.
Southern Company Energy Solutions develops new business opportunities related to
energy products and services. Southern Nuclear provides services to Southern
Company's nuclear power plants. Southern Energy acquires, develops, builds, owns
and operates power production and delivery facilities and provides a broad range
of energy-related services to utilities and industrial companies in selected
countries around the world. Southern Energy businesses include independent power
projects, integrated utilities, a distribution company, and energy trading and
marketing businesses outside the southeastern United States.
Southern Company is registered as a holding company under the Public
Utility Holding Company Act of 1935 (PUHCA). Both Southern Company and its
subsidiaries are subject to the regulatory provisions of the PUHCA. The Company
also is subject to regulation by the FERC and the Georgia Public Service
Commission (GPSC). The Company follows generally accepted accounting principles
and complies with the accounting policies and practices prescribed by the GPSC.
The preparation of financial statements in conformity with generally accepted
accounting principles requires the use of estimates, and the actual results may
differ from those estimates.
Certain prior years' data presented in the financial statements has been
reclassified to conform with the current year presentation.
Related-Party Transactions
The Company has an agreement with SCS under which the following services are
rendered to the Company at cost: general and design engineering, purchasing,
accounting and statistical, finance and treasury, tax, information resources,
marketing, auditing, insurance and pension, human resources, systems and
procedures, and other services with respect to business and operations and power
pool operations. Costs for these services amounted to $16.0 million, $15.3
million, and $13.3 million during 1999, 1998, and 1997, respectively.
Regulatory Assets and Liabilities
The Company is subject to the provisions of Financial Accounting Standards Board
(FASB) Statement No. 71, Accounting for the Effects of Certain Types of
Regulation. Regulatory assets represent probable future revenues to the Company
associated with certain costs that are expected to be recovered from customers
through the ratemaking process. Regulatory liabilities represent probable future
reductions in revenues associated with amounts that are expected to be credited
to customers through the ratemaking process. Regulatory assets and (liabilities)
reflected in the Balance Sheets at December 31 relate to:
1999 1998
--------------------------
(in thousands)
Deferred income tax charges $ 16,063 $ 17,130
Premium on reacquired debt 8,385 8,570
Deferred income tax credits (19,687) (21,349)
Storm damage reserves (1,392) (1,580)
Accelerated depreciation (3,000) (1,000)
- ---------------------------------------------------------------
Total $ 369 $ 1,771
===============================================================
In the event that a portion of the Company's operations is no longer
subject to the provisions of FASB Statement No. 71, the Company would be
required to write off related regulatory assets and liabilities that are not
specifically recoverable through regulated rates. In addition, the Company would
be required to determine if any impairment to other assets exists, including
plant, and write down the assets, if impaired, to their fair value.
16
<PAGE>
NOTES (continued)
Savannah Electric and Power Company 1999 Annual Report
Revenues and Fuel Costs
The Company currently operates as a vertically integrated utility providing
electricity to retail customers within its traditional service area of
southeastern Georgia, and to wholesale customers in the Southeast.
Revenues are accrued for service rendered but unbilled at the end of each
fiscal period. Fuel costs are expensed as the fuel is used. Electric rates for
the Company include provisions to adjust billings for fluctuations in fuel
costs, the energy component of purchased power costs, and certain other costs.
Revenues are adjusted for differences between recoverable fuel costs and amounts
actually recovered in current regulated rates.
The Company has a diversified base of customers. No single customer or
industry comprises 10 percent or more of revenues. For all periods presented,
uncollectible accounts averaged less than 1 percent of revenues.
In 1999, the GPSC approved increases of slightly over three-tenths of a cent
per kilowatt-hour in the Company's fuel allowance.
Depreciation and Amortization
Depreciation of the original cost of plant in service is provided primarily by
using composite straight-line rates, which approximated 3.0 percent in 1999, and
2.9 percent in 1998 and 1997. When property subject to depreciation is retired
or otherwise disposed of in the normal course of business, its cost--together
with the cost of removal, less salvage--is charged to the accumulated provision
for depreciation. Minor items of property included in the original cost of the
plant are retired when the related property unit is retired. Depreciation
expense includes an amount for the expected cost of removal of certain
facilities. See Note 3 to the financial statements for more information.
Income Taxes
The Company, which is included in the consolidated federal income tax return
filed by Southern Company, uses the liability method of accounting for deferred
income taxes and provides deferred income taxes for all significant income tax
temporary differences. Investment tax credits utilized are deferred and
amortized to income over the average lives of the related property.
Allowance for Funds Used During Construction
(AFUDC)
AFUDC represents the estimated debt and equity costs of capital funds that are
necessary to finance the construction of new facilities. While cash is not
realized currently from such allowance, it increases the revenue requirement
over the service life of the plant through a higher rate base and higher
depreciation expense. The composite rates used by the Company to calculate AFUDC
were 6.26 percent in 1999, 8.00 percent in 1998 and 9.24 percent in 1997.
Property, Plant and Equipment
Property, plant and equipment is stated at original cost less regulatory
disallowances and impairments. Original cost includes: materials; labor; minor
items of property; appropriate administrative and general costs; payroll-related
costs such as taxes, pensions, and other benefits; and the estimated cost of
funds used during construction. The cost of maintenance, repairs, and
replacement of minor items of property is charged to maintenance expense. The
cost of replacements of property (exclusive of minor items of property) is
capitalized.
Cash and Cash Equivalents
For purposes of the financial statements, temporary cash investments are
considered cash equivalents. Temporary cash investments are securities with
original maturities of 90 days or less.
17
<PAGE>
NOTES (continued)
Savannah Electric and Power Company 1999 Annual Report
Financial Instruments
The Company's financial instruments for which the carrying amounts did not equal
fair value at December 31 were as follows:
Carrying Fair
Amount Value
--------------------------
(in millions)
Long-term debt:
At December 31, 1999 $142 $136
At December 31, 1998 158 162
Trust preferred securities:
At December 31, 1999 $40 $31
At December 31, 1998 40 40
The fair values for long-term debt and preferred securities were based on
either closing market prices or closing prices of comparable instruments.
Materials and Supplies
Generally, materials and supplies include the costs of transmission,
distribution, and generating plant materials. Materials are charged to inventory
when purchased and then expensed or capitalized to plant, as appropriate, when
installed.
2. RETIREMENT BENEFITS
The Company has defined benefit, trusteed, non-contributory pension plans that
cover substantially all employees. The Company provides certain medical care and
life insurance benefits for retired employees. Substantially all these employees
may become eligible for such benefits when they retire. The Company funds trusts
to the extent required by the GPSC. The measurement date for plan assets and
obligations is September 30 of each year.
Pension Plans
Changes during the year in the projected benefit obligations and in the fair
value of plan assets were as follows:
Projected
Benefit Obligations
---------------------------
1999 1998
- ---------------------------------------------------------------
(in thousands)
Balance at beginning of year $59,207 $51,720
Service cost 1,746 1,495
Interest cost 3,893 3,806
Benefits paid (3,414) (3,392)
Actuarial (gain) loss and
employee transfers (1,856) 4,343
Amendments 385 1,235
- ---------------------------------------------------------------
Balance at end of year $59,961 $59,207
===============================================================
Plan Assets
---------------------------
1999 1998
- ---------------------------------------------------------------
(in thousands)
Balance at beginning of year $49,630 $50,630
Actual return on plan assets 8,168 171
Employer contributions - 2,464
Benefits paid (3,414) (3,392)
Employee transfers 96 (243)
- ---------------------------------------------------------------
Balance at end of year $54,480 $49,630
===============================================================
The accrued pension costs recognized in the Balance Sheets were as
follows:
1999 1998
- -----------------------------------------------------------------
(in thousands)
Funded status $(5,481) $(9,577)
Unrecognized transition
obligation 178 266
Unrecognized prior service cost 2,996 2,874
Unrecognized net loss 3,508 9,718
- -----------------------------------------------------------------
Prepaid asset recognized in
the Balance Sheets $ 1,201 $ 3,281
=================================================================
18
<PAGE>
NOTES (continued)
Savannah Electric and Power Company 1999 Annual Report
Components of the plans' net periodic cost were as follows:
1999 1998 1997
- -----------------------------------------------------------------
(in thousands)
Service cost $1,746 $1,495 $1,393
Interest cost 3,893 3,806 3,556
Expected return on plan
assets (4,063) (3,992) (3,782)
Recognized net loss 152 2 475
Net amortization 352 334 280
- -----------------------------------------------------------------
Net pension cost $2,080 $1,645 $1,922
=================================================================
Postretirement Benefits
Changes during the year in the accumulated benefit obligations and in the fair
value of plan assets were as follows:
Accumulated
Benefit Obligations
---------------------------
1999 1998
- ---------------------------------------------------------------
(in thousands)
Balance at beginning of year $23,556 $20,899
Service cost 404 348
Interest cost 1,549 1,528
Benefits paid (756) (839)
Actuarial (gain) loss and
employee transfers (1,849) 1,620
- ---------------------------------------------------------------
Balance at end of year $22,904 $23,556
===============================================================
Plan Assets
---------------------------
1999 1998
- ---------------------------------------------------------------
(in thousands)
Balance at beginning of year $3,803 $3,110
Actual return on plan assets 476 85
Employer contributions 1,731 1,447
Benefits paid (756) (839)
- ---------------------------------------------------------------
Balance at end of year $5,254 $3,803
===============================================================
The accrued postretirement costs recognized in the Balance Sheets were as
follows:
1999 1998
- ---------------------------------------------------------------
(in thousands)
Funded status $(17,650) $(19,753)
Unrecognized transition
obligation 6,419 6,913
Unrecognized net loss 3,311 5,444
Fourth quarter contributions 1,336 1,152
- ---------------------------------------------------------------
Accrued liability recognized in
the Balance Sheets $(6,584) $ (6,244)
===============================================================
Components of the plans' net periodic cost were as follows:
1999 1998 1997
- ----------------------------------------------------------------
(in thousands)
Service cost $ 404 $ 348 $ 319
Interest cost 1,549 1,528 1,499
Expected return on plan assets (345) (276) (211)
Recognized net loss 152 104 125
Net amortization 494 494 494
- ----------------------------------------------------------------
Net postretirement cost $2,254 $2,198 $2,226
================================================================
The weighted average rates assumed in the actuarial calculations for both
the pension plans and postretirement benefits were:
1999 1998
- ---------------------------------------------------------------
Discount 7.50% 6.75%
Annual salary increase 5.00 4.25
Long-term return on plan assets 8.50 8.50
- ---------------------------------------------------------------
An additional assumption used in measuring the accumulated postretirement
benefit obligations was a weighted average medical care cost trend rate of 7.74
percent for 1999, decreasing gradually to 5.50 percent through the year 2005,
and remaining at that level thereafter. An annual increase or decrease in the
assumed medical care cost trend rate of 1 percent would affect the accumulated
benefit obligation and the service and interest cost components at December 31,
1999 as follows:
19
<PAGE>
NOTES (continued)
Savannah Electric and Power Company 1999 Annual Report
1 Percent 1 Percent
Increase Decrease
- ---------------------------------------------------------------
(in thousands)
Benefit obligation $1,316 $(1,244)
Service and interest costs 106 (100)
===============================================================
The Company has a supplemental retirement plan for certain executive
employees. The plan is unfunded and payable from the general funds of the
Company. The Company has purchased life insurance on participating executives,
and plans to use these policies to satisfy this obligation. Benefit costs
associated with this plan were $0.5 million for 1999, and $0.4 million for 1998
and 1997.
Work Force Reduction Program
In 1997, the Company incurred a $1.9 million, one-time charge to other operation
expense for costs related to the implementation of a work force reduction
program.
3. REGULATORY MATTERS
On November 3, 1999, the Environmental Protection Agency (EPA), brought a civil
action in the U.S. District Court against Alabama Power, Georgia Power
and the system service company. The complaint alleges violations of the
prevention of significant deterioration and new source review provisions of the
Clean Air Act with respect to five coal-fired generating facilities in Alabama
and Georgia. The EPA concurrently issued to the integrated Southeast utilities a
notice of violation related to 10 generating facilities, which includes the five
facilities mentioned previously and the Company's Plant Kraft. In early 2000,
the EPA filed a motion to amend its complaint to add the violations alleged in
its notice of violation, and to add Gulf Power, Mississippi Power, and Savannah
Electric as defendants. The complaint and notice of violation are similar to
those brought against and issued to several other electric utilities. These
complaints and notices of violation allege that the utilities had failed to
secure necessary permits or install additional pollution equipment when
performing maintenance and construction at coal burning plants constructed or
under construction prior to 1978. Southern Company believes that its integrated
utilities complied with applicable laws and the EPA's regulations and
interpretations in effect at the time the work in question took place. The Clean
Air Act authorizes civil penalties of up to $27,500 per day per violation at
each generating unit. Prior to January 30, 1997, the penalty was $25,000 per
day. An adverse outcome of this matter could require substantial capital
expenditures that cannot be determined at this time and possibly require payment
of substantial penalties. This could affect future results of operations, cash
flows, and possibly financial condition if such costs are not recovered through
regulated rates.
Rates to retail customers served by the Company are regulated by the GPSC.
As part of the Company's rate settlement in 1992, it was informally agreed that
the Company's earned rate of return on common equity should be 12.95 percent.
In 1998, the GPSC approved a four-year accounting order for the Company.
Under this order, the Company will reduce the electric rates of its small
business customers by approximately $11 million over the next four years. The
Company will also expense an additional $1.95 million in storm damage accruals
and accrue an additional $8 million in depreciation on generating assets over
the term of the order. The additional depreciation will be accumulated in a
regulatory liability account to be available to mitigate any potential stranded
costs. In addition, the Company has discretionary authority to provide up to an
additional $0.3 million per year in storm damage accruals and up to an
additional $4.0 million in depreciation expense over the four years. The Company
is also precluded from asking for a rate increase except upon significant
changes in economic conditions, new laws, or regulations. There will be a
quarterly monitoring of the Company's earnings performance.
4. CONSTRUCTION PROGRAM
The Company is engaged in a continuous construction program, currently estimated
to total $25.6 million in 2000, $30.4 million in 2001, and $35.8 million in
2002. The construction program is subject to periodic review and revision, and
actual construction costs may vary from the above estimates because of numerous
factors. These factors include: changes in business conditions; revised load
growth estimates; changes in environmental regulations; increasing costs of
labor, equipment, and materials; and changes in cost of capital. The Company
does not have any traditional baseload generating plants under construction.
However, construction related to transmission and distribution facilities and
the upgrading of generating plants will continue.
20
<PAGE>
NOTES (continued)
Savannah Electric and Power Company 1999 Annual Report
5. FINANCING AND COMMITMENTS
General
To the extent possible, the Company's construction program is expected to be
financed from internal sources and from the issuance of additional long-term
debt and capital contributions from Southern Company.
The amounts of long-term debt and preferred securities that can be issued
in the future will be contingent on market conditions, the maintenance of
adequate earnings levels, regulatory authorizations, and other factors.
Bank Credit Arrangements
At the end of 1999, unused credit arrangements with six banks totaled $26.2
million and expire at various times during 2000.
The Company has revolving credit arrangements of $20 million, of which $10
million expires December 31, 2001 and $10 million expires December 31, 2002.
These agreements allow short-term borrowings to be converted into term loans,
payable in 12 equal quarterly installments, with the first installment due at
the end of the first calendar quarter after the applicable termination date or
at an earlier date at the Company's option.
In connection with these credit arrangements, the Company agrees to pay
commitment fees based on the unused portions of the commitments.
Assets Subject to Lien
As amended and supplemented, the Company's Indenture of Mortgage, which secures
the first mortgage bonds issued by the Company, constitutes a direct first lien
on substantially all of the Company's fixed property and franchises. A second
lien for $10 million of bank debt is secured by a portion of the Plant Kraft
property and a second lien for $34 million in bank notes is secured by a portion
of the Plant McIntosh property.
Fuel and Purchased Power Commitments
To supply a portion of the fuel requirements of its generating plants, the
Company has entered into long-term commitments for the procurement of fuel. In
most cases, these contracts contain provisions for price escalations, minimum
purchase levels, and other financial commitments. The Company has fuel
commitments of $15 million and $9 million for 2000 and 2001, respectively.
In 1999, the Company entered into a purchased power agreement for 200
megawatts of capacity from Georgia Power Company's combined cycle combustion
turbine units currently under construction at Plant Wansley and due to begin
operation in 2002.
Operating Leases
The Company has rental agreements with various terms and expiration dates.
Rental expenses totaled $0.5 million for 1999, $1.1 million for 1998 and $1.2
million for 1997.
At December 31, 1999, estimated future minimum lease payments for
noncancelable operating leases were as follows:
Rental Commitments
--------------------
(in thousands)
2000 $ 483
2001 483
2002 483
2003 483
2004 483
2005 and thereafter $6,485
- -------------------------------------------------------------
6. INCOME TAXES
At December 31, 1999, tax-related regulatory assets and liabilities were $16.1
million and $19.7 million, respectively. The assets are attributable to tax
benefits flowed through to customers in prior years and to taxes applicable to
capitalized AFUDC. The liabilities are attributable to deferred taxes previously
recognized at rates higher than current enacted tax law and to unamortized
investment tax credits.
21
<PAGE>
NOTES (continued)
Savannah Electric and Power Company 1999 Annual Report
Details of income tax provisions are as follows:
1999 1998 1997
--------------------------------
(in thousands)
Total provision for income taxes
Federal --
Currently payable $12,968 $ 6,763 $ 9,743
Deferred -- current year 354 8,377 4,522
-- reversal of
prior years (3,683) (2,565) (1,381)
- ------------------------------------------------------------------
9,639 12,575 12,884
- ------------------------------------------------------------------
State --
Currently payable 2,193 1,327 1,603
Deferred -- current year (34) 1,174 569
-- reversal of
prior years 10 25 130
- ------------------------------------------------------------------
2,169 2,526 2,302
- ------------------------------------------------------------------
Total $11,808 $15,101 $15,186
==================================================================
The tax effects of temporary differences between the carrying amounts of
assets and liabilities in the financial statements and their respective tax
bases, which give rise to deferred tax assets and liabilities, are as follows:
1999 1998
--------------------
Deferred tax liabilities: (in thousands)
Accelerated depreciation $73,400 $75,187
Property basis differences 6,917 7,591
Other 12,031 10,187
- ----------------------------------------------------------------
Total 92,348 92,965
- ----------------------------------------------------------------
Deferred tax assets:
Pension and other benefits 6,925 4,892
Other 2,935 2,828
- ----------------------------------------------------------------
Total 9,860 7,720
- ----------------------------------------------------------------
Net deferred tax liabilities 82,488 85,245
Portions included in current assets, net (2,170) (2,467)
- ----------------------------------------------------------------
Accumulated deferred income taxes
in the Balance Sheets $80,318 $82,778
================================================================
Deferred investment tax credits are amortized over the lives of the related
property with such amortization normally applied as a credit to reduce
depreciation in the Statements of Income. Credits amortized in this manner
amounted to $0.7 million in 1999, 1998 and 1997. At December 31, 1999, all
investment tax credits available to reduce federal income taxes payable had been
utilized.
A reconciliation of the federal statutory income tax rate to the effective
income tax rate is as follows:
1999 1998 1997
-----------------------------
Federal statutory tax rate 35% 35% 35%
State income tax, net of
federal income tax benefit 4 4 4
Other (5) (2) (2)
----------------------------------------------------------------
Effective income tax rate 34% 37% 37%
================================================================
Southern Company files a consolidated federal income tax return. Under a
joint consolidated income tax agreement, each subsidiary's current and deferred
tax expense is computed on a stand-alone basis.
7. CUMULATIVE PREFERRED STOCK AND
TRUST PREFERRED SECURITIES
In November 1998, the Company redeemed all of its 1,400,000 shares of 6.64%
Series Preferred Stock at a redemption price of $25 per share, plus accrued
dividends through the date of redemption.
In December 1998, Savannah Electric Capital Trust I, of which the Company
owns all of the common securities, issued $40 million of 6.85% mandatorily
redeemable preferred securities. Substantially all of the assets of the Trust
are $40 million aggregate principal amount of the Company's 6.85% junior
subordinated notes due December 31, 2028.
The Company considers that the mechanisms and obligations relating to the
preferred securities, taken together, constitute a full and unconditional
guarantee by the Company of payment obligations with respect to the preferred
securities of Savannah Electric Capital Trust I.
Savannah Electric Capital Trust I is a subsidiary of the Company, and
accordingly is consolidated in the Company's financial statements.
8. LONG-TERM DEBT AND LONG-TERM DEBT
DUE WITHIN ONE YEAR
The Company's Indenture related to its First Mortgage Bonds is unlimited as to
the authorized amount of bonds which may be issued, provided that required
property additions, earnings and other provisions of such Indenture are met.
22
<PAGE>
NOTES (continued)
Savannah Electric and Power Company 1999 Annual Report
Maturities and retirements of long-term debt were $16 million in 1999,
$30 million in 1998 and $14 million in 1997. Included in the 1999 maturities and
retirements is the purchase by Savannah Electric of all $15 million outstanding
of its 7 7/8% Series First Mortgage Bonds due May 1, 2025.
In 1998, the Company issued $30 million of Series A 6 5/8% senior retail
intermediate bonds maturing in 2015. The Company used these proceeds to redeem
the remaining amount of its 8.30% first mortgage bonds due in 2022.
Assets acquired under capital leases are recorded as utility plant in
service, and the related obligation is classified as other long-term debt.
Leases are capitalized at the net present value of the future lease payments.
However, for ratemaking purposes, these obligations are treated as operating
leases, and as such, lease payments are charged to expense as incurred.
A summary of the sinking fund requirements and scheduled maturities and
redemptions of long-term debt due within one year at December 31 is as follows:
1999 1998
---------------------
(in thousands)
Bond sinking fund requirement $650 $800
Less:
Portion to be satisfied by
certifying property additions 650 -
Reacquired bonds and/or cash deposits - 800
- -------------------------------------------------------------------
Cash sinking fund requirement - -
Other long-term debt maturities 704 689
- -------------------------------------------------------------------
Total $704 $689
===================================================================
The first mortgage bond improvement (sinking) fund requirements amount to 1
percent of each outstanding series of bonds authenticated under the Indenture
prior to January 1 of each year, other than those issued to collateralize
pollution control and other obligations. The requirements may be satisfied by
depositing cash or reacquiring bonds, or by pledging additional property equal
to 1 2/3 times the requirements.
The sinking fund requirements of first mortgage bonds were satisfied by
cash redemption in 1999 and 1998. It is anticipated that the 2000 requirement
will be satisfied by certifying property additions. Sinking fund requirements
and/or maturities through 2004 applicable to long-term debt are as follows: $0.7
million in 2000; $30.6 million in 2001; $0.5 million in 2002; $20.4 million in
2003; and $0.4 million in 2004.
9. COMMON STOCK DIVIDEND RESTRICTIONS
The Company's Indenture contains certain limitations on the payment of cash
dividends on common stock. At December 31, 1999, approximately $68 million of
retained earnings was restricted against the payment of cash dividends on common
stock under the terms of the Indenture.
10. QUARTERLY FINANCIAL INFORMATION
(UNAUDITED)
Summarized quarterly financial data for 1999 and 1998 are as follows (in
thousands):
Net Income After
Operating Operating Dividends on
Quarter Ended Revenues Income Preferred Stock
- ------------------------------------------------------------------
March 1999 $47,098 $ 5,637 $ 1,209
June 1999 61,692 12,495 5,268
September 1999 91,849 27,081 13,705
December 1999 50,955 4,850 2,901
March 1998 $48,381 $ 8,277 $ 2,426
June 1998 69,616 17,269 7,807
September 1998 84,224 24,777 12,518
December 1998 52,234 3,824 893
- ------------------------------------------------------------------
The Company's business is influenced by seasonal weather conditions and a
seasonal rate structure, among other factors.
The quarterly operating income information above has been reclassified to
reflect the Company's current presentation of income tax expense.
23
<PAGE>
<TABLE>
<CAPTION>
SELECTED FINANCIAL AND OPERATING DATA 1995-1999
Savannah Electric and Power Company 1999 Annual Report
- --------------------------------------------------------------------------------------------------------------------------------
1999 1998 1997 1996 1995
- --------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Operating Revenues (in thousands) $251,594 $254,455 $226,277 $234,074 $225,729
Net Income after Dividends
on Preferred Stock (in thousands) $23,083 $23,644 $23,847 $23,940 $23,395
Cash Dividends
on Common Stock (in thousands) $25,200 $23,500 $20,500 $19,600 $17,600
Return on Average Common Equity (percent) 13.16 13.45 13.71 14.08 14.20
Total Assets (in thousands) $570,218 $555,799 $547,352 $544,900 $524,662
Gross Property Additions (in thousands) $29,833 $18,071 $18,846 $28,950 $26,503
- --------------------------------------------------------------------------------------------------------------------------------
Capitalization (in thousands):
Common stock equity $174,847 $175,865 $175,631 $172,284 $167,812
Preferred stock - - 35,000 35,000 35,000
Company obligated mandatorily
redeemable preferred securities 40,000 40,000 - - -
Long-term debt 147,147 163,443 142,846 164,406 153,679
- --------------------------------------------------------------------------------------------------------------------------------
Total (excluding amounts due within one year) $361,994 $379,308 $353,477 $371,690 $356,491
================================================================================================================================
Capitalization Ratios (percent):
Common stock equity 48.3 46.4 49.7 46.4 47.1
Preferred stock - - 9.9 9.4 9.8
Company obligated mandatorily
redeemable preferred securities 11.0 10.5 - - -
Long-term debt 40.7 43.1 40.4 44.2 43.1
- --------------------------------------------------------------------------------------------------------------------------------
Total (excluding amounts due within one year) 100.0 100.0 100.0 100.0 100.0
================================================================================================================================
Security Ratings:
First Mortgage Bonds -
Moody's A1 A1 A1 A1 A1
Standard and Poor's AA- AA- AA- A+ A+
Preferred Stock -
Moody's a2 a2 a2 a2 a2
Standard and Poor's A- A A A A
================================================================================================================================
Customers (year-end):
Residential 112,891 110,437 109,092 106,657 104,624
Commercial 15,433 15,328 14,233 13,877 13,339
Industrial 67 63 64 65 65
Other 417 377 1,129 1,097 1,048
- --------------------------------------------------------------------------------------------------------------------------------
Total 128,808 126,205 124,518 121,696 119,076
================================================================================================================================
Employees (year-end): 533 542 535 571 584
- --------------------------------------------------------------------------------------------------------------------------------
</TABLE>
24
<PAGE>
<TABLE>
<CAPTION>
SELECTED FINANCIAL AND OPERATING DATA 1995-1999 (continued)
Savannah Electric and Power Company 1999 Annual Report
- -----------------------------------------------------------------------------------------------------------------------------
1999 1998 1997 1996 1995
- -----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Operating Revenues (in thousands):
Residential $ 112,371 $109,393 $ 96,587 $ 101,607 $ 95,208
Commercial 88,449 86,231 78,949 80,494 75,117
Industrial 32,233 37,865 35,301 37,077 36,040
Other 9,212 8,838 8,621 8,804 8,386
- -----------------------------------------------------------------------------------------------------------------------------
Total retail 242,265 242,327 219,458 227,982 214,751
Sales for resale - non-affiliates 3,395 4,548 3,467 1,998 1,851
Sales for resale - affiliates 4,151 3,016 2,052 3,130 7,200
- -----------------------------------------------------------------------------------------------------------------------------
Total revenues from sales of electricity 249,811 249,891 224,977 233,110 223,802
Other revenues 1,783 4,564 1,300 964 1,927
- -----------------------------------------------------------------------------------------------------------------------------
Total $251,594 $254,455 $226,277 $234,074 $225,729
=============================================================================================================================
Kilowatt-Hour Sales (in thousands):
Residential 1,579,068 1,539,792 1,428,337 1,456,651 1,402,148
Commercial 1,287,832 1,236,337 1,156,078 1,141,218 1,099,570
Industrial 713,448 900,012 881,261 838,753 887,141
Other 132,555 131,142 124,490 126,215 126,057
- -----------------------------------------------------------------------------------------------------------------------------
Total retail 3,712,903 3,807,283 3,590,166 3,562,837 3,514,916
Sales for resale - non-affiliates 51,548 53,294 94,280 91,610 87,747
Sales for resale - affiliates 76,988 58,415 54,509 41,808 63,731
- -----------------------------------------------------------------------------------------------------------------------------
Total 3,841,439 3,918,992 3,738,955 3,696,255 3,666,394
=============================================================================================================================
Average Revenue Per Kilowatt-Hour (cents):
Residential 7.12 7.10 6.76 6.98 6.79
Commercial 6.87 6.97 6.83 7.05 6.83
Industrial 4.52 4.21 4.01 4.42 4.06
Total retail 6.52 6.36 6.11 6.40 6.11
Sales for resale 5.87 6.77 3.71 3.84 5.98
Total sales 6.50 6.38 6.02 6.31 6.10
Residential Average Annual
Kilowatt-Hour Use Per Customer 14,100 14,061 13,231 13,771 13,478
Residential Average Annual
Revenue Per Customer $1,003.39 $998.94 $894.73 $960.58 $915.15
Plant Nameplate Capacity
Ratings (year-end) (megawatts) 788 788 788 788 788
Maximum Peak-Hour Demand (megawatts):
Winter 719 582 625 666 630
Summer 875 846 802 811 811
Annual Load Factor (percent) 51.2 54.9 54.3 53.1 52.9
Plant Availability Fossil-Steam (percent): 72.8 72.9 93.7 77.6 83.3
- -----------------------------------------------------------------------------------------------------------------------------
Source of Energy Supply (percent):
Coal 44.6 41.6 34.4 27.7 23.9
Oil and gas 12.3 12.9 5.2 3.1 5.9
Purchased power -
From non-affiliates 5.3 3.4 1.4 2.1 2.3
From affiliates 37.8 42.1 59.0 67.1 67.9
- -----------------------------------------------------------------------------------------------------------------------------
Total 100.0 100.0 100.0 100.0 100.0
=============================================================================================================================
</TABLE>
25
