-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, M5QL3/b/Qe8DJuDizFNxuaASRXbGRZVVt7siIhX24XcLcWmeBrf5TAdVbTR3XRJo D3e1flZyoGxt7kKRVNJdNA== 0000217216-98-000004.txt : 19980513 0000217216-98-000004.hdr.sgml : 19980513 ACCESSION NUMBER: 0000217216-98-000004 CONFORMED SUBMISSION TYPE: U-13-60 PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 19971231 FILED AS OF DATE: 19980512 SROS: NONE FILER: COMPANY DATA: COMPANY CONFORMED NAME: SOUTHERN CO SERVICES INC CENTRAL INDEX KEY: 0000217216 STANDARD INDUSTRIAL CLASSIFICATION: ELECTRIC SERVICES [4911] IRS NUMBER: 630274273 STATE OF INCORPORATION: GA FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: U-13-60 SEC ACT: SEC FILE NUMBER: 049-00059 FILM NUMBER: 98616866 BUSINESS ADDRESS: STREET 1: 64 PERITMETER CENTER EAST CITY: ATLANTA STATE: GA ZIP: 303346 BUSINESS PHONE: 4046683574 U-13-60 1 SOUTHERN COMPANY SERVICES, INC. Form U-13-60 Mutual and Subsidiary Service Companies Revised February 7, 1980 ANNUAL REPORT For The Period Beginning January 1, 1997 and Ending December 31, 1997 TO THE U. S. SECURITIES AND EXCHANGE COMMISSION OF SOUTHERN COMPANY SERVICES, INC. (Exact Name of Reporting Company) SUBSIDIARY SERVICE COMPANY ("Mutual" or "Subsidiary") Date of Incorporation April 21, 1949 If not Incorporated, Date of Organization State or Sovereign Power Under Which Incorporated or Organized State of Alabama Location of Principal Executive Offices of Reporting Company 241 Ralph McGill Blvd., NE Atlanta, Georgia 30308-3374 Name, title, and address of officer to whom correspondence concerning this report should be addressed: Vice President, 241 Ralph McGill Blvd., NE W. Dean Hudson Comptroller and Atlanta, Georgia 30308-3374 (Name) Chief Financial (Address) Officer (Title) Name of Principal Holding Company Whose Subsidiaries are served by Reporting Company: THE SOUTHERN COMPANY INSTRUCTIONS FOR USE OF FORM U-13-60 1. Time of Filing.--Rule 94 provides that on or before the first day of May in each calendar year, each mutual service company and each subsidiary service company as to which the Commission shall have made a favorable finding pursuant to Rule 88, and every service company whose application for approval or declaration pursuant to Rule 88 is pending shall file with the Commission an annual report on form U-13-60 and in accordance with the Instructions for that form. 2. Number of Copies.--Each annual report shall be filed in duplicate. The company should prepare and retain at least one extra copy for itself in case correspondence with reference to the report become necessary. 3. Period Covered by Report.--The first report filed by any company shall cover the period from the date the Uniform System of Accounts was required to be made effective as to that company under Rules 82 and 93 to the end of that calendar year. Subsequent reports should cover a calendar year. 4. Report Format.--Reports shall be submitted on the forms prepared by the Commission. If the space provided on any sheet of such form is inadequate, additional sheets may be inserted of the same size as a sheet of the form or folded to such size. 5. Money Amounts Displayed.--All money amounts required to be shown in financial statements may be expressed in whole dollars, in thousands of dollars or in hundred thousands of dollars, as appropriate and subject to provisions of Regulation S-X ( 210.3-01(b)). 6. Deficits Displayed.--Deficits and other like entries shall be indicated by the use of either brackets or a parenthesis with corresponding reference in footnotes. (Regulation S-X, 210.3-01(c)) 7. Major Amendments or Corrections.--Any company desiring to amend or correct a major omission or error in a report after it has been filed with the Commission shall submit an amended report including only those pages, schedules, and entries that are to be amended or corrected. A cover letter shall be submitted requesting the Commission to incorporate the amended report changes and shall be signed by a duly authorized officer of the company. INSTRUCTIONS FOR USE OF FORM U-13-60 (Continued) 8. Definitions.--Definitions contained in Instruction 01-8 to the Uniform System of Accounts for Mutual Service companies and Subsidiary Service companies, Public Utility Holding Company Act of 1935, as amended February 2, 1979 shall be applicable to words or terms used specifically within this Form U-13-60. 9. Organization Chart.--The service company shall submit with each annual report a copy of its current organization chart. 10. Methods of Allocation.--The service company shall submit with each annual report a listing of the currently effective methods of allocation being used by the service company and on file with the Securities and Exchange Commission pursuant to the Public Utility Holding Company Act of 1935. 11. Annual Statement of Compensation for Use of Capital Billed.--The service company shall submit with each annual report a copy of the annual statement supplied to each associate company in support of the amount of compensation for use of capital billed during the calendar year.
2 LISTING OF SCHEDULES AND ANALYSIS OF ACCOUNTS Schedule or Page Description of Schedules and Accounts Account Number Number COMPARATIVE BALANCE SHEET Schedule I 4-5 SERVICE COMPANY PROPERTY Schedule II 6-7 ACCUMULATED PROVISION FOR DEPRECIATION AND AMORTIZATION OF SERVICE COMPANY PROPERTY Schedule III 8 INVESTMENTS Schedule IV 9 ACCOUNTS RECEIVABLE FROM ASSOCIATE COMPANIES Schedule V 10 FUEL STOCK EXPENSES UNDISTRIBUTED Schedule VI 11 STORES EXPENSE UNDISTRIBUTED Schedule VII 12 MISCELLANEOUS CURRENT AND ACCRUED ASSETS Schedule VIII 13 MISCELLANEOUS DEFERRED DEBITS Schedule IX 14 RESEARCH, DEVELOPMENT, OR DEMONSTRATION EXPENDITURES Schedule X 15 PROPRIETARY CAPITAL Schedule XI 16 LONG-TERM DEBT Schedule XII 17 CURRENT AND ACCRUED LIABILITIES Schedule XIII 18 NOTES TO FINANCIAL STATEMENTS Schedule XIV 19 COMPARATIVE INCOME STATEMENT Schedule XV 20 ANALYSIS OF BILLING - ASSOCIATE COMPANIES Account 457 21 ANALYSIS OF BILLING - NONASSOCIATE COMPANIES Account 458 22 ANALYSIS OF CHARGES FOR SERVICE - ASSOCIATE AND NONASSOCIATE COMPANIES Schedule XVI 23
3 LISTING OF SCHEDULES AND ANALYSIS OF ACCOUNTS (Continued) Schedule or Page Description of Schedules and Accounts Account Number Number SCHEDULE OF EXPENSE BY DEPARTMENT OR SERVICE FUNCTION Schedule XVII 24-25 DEPARTMENTAL ANALYSIS OF SALARIES Account 920 26 OUTSIDE SERVICES EMPLOYED Account 923 27 EMPLOYEE PENSIONS AND BENEFITS Account 926 28 GENERAL ADVERTISING EXPENSES Account 930.1 29 MISCELLANEOUS GENERAL EXPENSES Account 930.2 30 RENTS Account 931 31 TAXES OTHER THAN INCOME TAXES Account 408 32 DONATIONS Account 426.1 33 OTHER DEDUCTIONS Account 426.5 34 NOTES TO STATEMENT OF INCOME Schedule XVIII 35 FINANCIAL DATA SCHEDULE Schedule XIX 36 ORGANIZATION CHART 37 METHODS OF ALLOCATION 38 ANNUAL STATEMENT OF COMPENSATION FOR USE OF CAPITAL BILLED 39
4 ANNUAL REPORT OF SOUTHERN COMPANY SERVICES, INC. (Thousands of Dollars) SCHEDULE I - COMPARATIVE BALANCE SHEET Give balance sheet of the Company as of December 31 of the current and prior year.
ACCOUNT ASSETS AND OTHER DEBITS AS OF DECEMBER 31 CURRENT PRIOR SERVICE COMPANY PROPERTY 101 Service company property (Schedule II) 209,657 234,904 107 Construction work in progress (Schedule II) 23,106 22,118 ------- ------- Total Property 232,763 257,022 ------- ------- 108 Less accumulated provision for depreciation and amortization of service company property (Schedule III) 135,276 132,535 ------- ------- Net Service Company Property 97,487 124,487 ------- ------- INVESTMENTS 123 Investments in associate companies (Schedule IV) - - 124 Other investments (Schedule IV) 2,877 3,925 ------- ------- Total Investments 2,877 3,925 ------- ------- CURRENT AND ACCRUED ASSETS 131 Cash - - 134 Special deposits - - 135 Working funds 5 5 136 Temporary cash investments (Schedule IV) - 4,602 141 Notes receivable - - 143 Accounts receivable 41,749 38,918 146 Accounts receivable from associate companies (Schedule V) 155,207 91,208 152 Fuel stock expenses undistributed (Schedule VI) - - 154 Materials and supplies 2,116 2,951 163 Stores expense undistributed (Schedule VII) - - 165 Prepayments 4,228 1,937 174 Miscellaneous current and accrued assets (Schedule VIII) - 65 ------- ------- Total Current and Accrued Assets 203,305 139,686 ------- ------- DEFERRED DEBITS 181 Unamortized debt expense - - 184 Clearing accounts 135 108 186 Miscellaneous deferred debits (Schedule IX) 5,642 6,743 188 Research, development, or demonstration expenditures (Schedule X) - - 190 Accumulated deferred income taxes - - ------- ------- Total Deferred Debits 5,777 6,851 ------- ------- TOTAL ASSETS AND OTHER DEBITS 309,446 274,949 ======= =======
5 ANNUAL REPORT OF SOUTHERN COMPANY SERVICES, INC. (Thousands of Dollars) SCHEDULE I - COMPARATIVE BALANCE SHEET ACCOUNT LIABILITIES AND PROPRIETARY CAPITAL AS OF DECEMBER 31 CURRENT PRIOR PROPRIETARY CAPITAL 201 Common stock issued (Schedule XI) 725 725 211 Miscellaneous paid-in-capital (Schedule XI) 150 150 215 Appropriated retained earnings (Schedule XI) - - 216 Unappropriated retained earnings (Schedule XI) - - ------- ------- Total Proprietary Capital 875 875 ------- ------- LONG-TERM DEBT 223 Advances from associate companies (Schedule XII) - - 224 Other long-term debt (Schedule XII) 36,021 47,658 225 Unamortized premium on long-term debt - - 226 Unamortized discount on long-term debt-debit - - ------- ------- Total Long-Term Debt 36,021 47,658 ------- ------- CURRENT AND ACCRUED LIABILITIES 231 Notes payable 2,300 15,792 232 Accounts payable 45,478 29,262 233 Notes payable to associated companies (Schedule XIII) 6,400 - 234 Accounts payable to associate companies (Schedule XIII) 43,384 33,592 236 Taxes accrued 5,275 799 237 Interest accrued 3 62 238 Dividends declared - - 241 Tax collections payable 12,903 605 242 Miscellaneous current and accrued liabilities (Schedule XIII) 81,360 67,731 ------- ------- Total Current and Accrued Liabilities 197,103 147,843 ------- ------- DEFERRED CREDITS 253 Other deferred credits 75,447 78,573 255 Accumulated deferred investment tax credits - - ------- ------- Total Deferred Credits 75,447 78,573 ------- ------- 282 ACCUMULATED DEFERRED INCOME TAXES - - ------- ------- TOTAL LIABILITIES AND PROPRIETARY CAPITAL 309,446 274,949 ======= =======
6 ANNUAL REPORT OF SOUTHERN COMPANY SERVICES, INC. For the Year Ended December 31, 1997 (Thousands of Dollars) SCHEDULE II SERVICE COMPANY PROPERTY
BALANCE AT BALANCE AT BEGINNING RETIREMENTS OTHER 1/ CLOSE OF DESCRIPTION OF YEAR ADDITIONS OR SALES CHANGES YEAR SERVICE COMPANY PROPERTY Account 301 ORGANIZATION - - - - - 303 MISCELLANEOUS INTANGIBLE PLANT - - - - - 304 LAND & LAND RIGHTS - - - - - 305 STRUCTURES AND IMPROVEMENTS 50,781 - - (8,616) 42,165 306 LEASEHOLD IMPROVEMENTS 23,239 2,614 (161) (18,616) 7,076 307 EQUIPMENT 2/ 80,918 6,380 (2,975) (782) 83,541 - 308 OFFICE FURNITURE AND EQUIPMENT 2/ 35,841 1,640 (10,859) 1,537 28,159 - 309 AUTOMOBILES, OTHER VEHICLES AND RELATED GARAGE EQUIPMENT 2/ 783 31 (11) - 803 - 310 AIRCRAFT AND AIRPORT EQUIPMENT 2/ 28,823 - (968) - 27,855 - 311 OTHER SERVICE COMPANY PROPERTY 2/ 3/ 14,519 5,775 (133) (103) 20,058 - - ------- ------- -------- -------- ------- SUB-TOTAL 234,904 16,440 (15,107) (26,580) 209,657 ------- ------- -------- -------- ------- 107 CONSTRUCTION WORK IN PROGRESS 4/ 22,118 988 - - 23,106 - ------- ------- -------- ------- ------- TOTAL 257,022 17,428 (15,107) (26,580) 232,763 ======= ======= ======== ======= ======= 1/ PROVIDE AN EXPLANATION OF THOSE CHANGES CONSIDERED MATERIAL: 305-1, In December 1997, Southern Company Services, Inc. recognized an asset impairment loss on office building resulting in a capital lease basis adjustment. 306-1, In December 1997, Southern Company Services, Inc. recognized an asset impairment loss on office building resulting in a capital lease basis adjustment. ( ) Denotes red figure.
7 SCHEDULE II-CONTINUED (Thousands of Dollars) 2/ SUBACCOUNTS ARE REQUIRED FOR EACH CLASS OF EQUIPMENT OWNED. THE SERVICE COMPANY SHALL PROVIDE A LISTING BY SUBACCOUNT OF EQUIPMENT ADDITIONS DURING THE YEAR AND THE BALANCE AT THE CLOSE OF THE YEAR: BALANCE AT CLOSE OF SEC/CLASS SUBACCOUNT DESCRIPTION ADDITIONS YEAR 307/02 Research & Laboratory Equip. 1,147 3,080 307/03 Word Processing/Office Automation Equip. 91 4,974 307/04 Personal Computer Equip. 2,868 33,083 307/05 Computer Equipment 1,305 24,496 307/11 Telephone Systems 878 8,290 307/12 Telecommunications Equip. 91 9,618 308/01 Furniture & Fixtures 1,307 16,780 308/09 Data Handling Equipment & Miscellaneous 333 11,379 309/08 Autos, Trucks & Trailers 31 803 310/07 Aircraft - 27,855 311/10 Software 5,775 18,362 311/13 Coal Pilot Scale Combustion Facility - 1,671 311/14 Boats 25 ------ ------- TOTAL 13,826 160,416 ====== =======
3/ DESCRIBE OTHER SERVICE COMPANY PROPERTY: 1. Purchased computer software and software licenses. 2. Pulverized coal pilot scale combustion facility. 3. Boats, motors, & trailers 4/ DESCRIBE CONSTRUCTION WORK IN PROGRESS: A. An energy management system for the Southern Electric System to be located at Birmingham, Alabama. 8 ANNUAL REPORT OF SOUTHERN COMPANY SERVICES, INC. For the Year Ended December 31, 1997 (Thousands of Dollars) SCHEDULE III ACCUMULATED PROVISION FOR DEPRECIATION AND AMORTIZATION OF SERVICE COMPANY PROPERTY
ADDITIONS OTHER BALANCE AT CHARGED CHARGES BALANCE AT BEGINNING TO ADD CLOSE OF DESCRIPTION OF YEAR ACCT #403 RETIREMENTS (DEDUCT)1/ YEAR Account 301 ORGANIZATION - - - - - 303 MISCELLANEOUS INTANGIBLE PLANT - - - - - 304 LAND & LAND RIGHTS - - - - - 305 STRUCTURES AND IMPROVEMENTS 22,818 1,967 - 1,345 26,130 306 LEASEHOLD IMPROVEMENTS 8,582 1,509 (130) (7,071) 2,890 307 EQUIPMENT 61,541 7,211 (5,132) (22) 63,598 308 OFFICE FURNITURE AND FIXTURES 19,875 2,621 (1,701) (136) 20,659 309 AUTOMOBILES, OTHER VEHICLES AND RELATED GARAGE EQUIPMENT 624 77 (11) 8 698 310 AIRCRAFT AND AIRPORT EQUIPMENT 10,050 1,062 (706) - 10,406 311 OTHER SERVICE COMPANY PROPERTY 9,045 2,007 (122) (35) 10,895 ------- ------ ------ ------ -------- TOTAL 132,535 16,454 (7,802) (5,911) 135,276 ======= ====== ====== ======= ======= 1/ PROVIDE AN EXPLANATION OF THOSE CHANGES CONSIDERED MATERIAL: 305-1, In December 1997, Southern Company Services, Inc. recognized an asset impairment loss on office building resulting in a capital lease basis adjustment. 306-1, In December 1997, Southern Company Services, Inc. recognized an asset impairment loss on office building resulting in a capital lease basis adjustment. ( ) Denotes red figure.
9 ANNUAL REPORT OF SOUTHERN COMPANY SERVICES, INC. For the Year Ended December 31, 1997 (Thousands of Dollars) SCHEDULE IV INVESTMENTS INSTRUCTIONS: Complete the following schedule concerning investments. Under Account 124, "Other Investments", state each investment separately, with description, including the name of issuing company, number of shares or principal amount, etc. Under Account 136, "Temporary Cash Investments", list each investment separately.
BALANCE AT BALANCE AT BEGINNING CLOSE OF DESCRIPTION OF YEAR YEAR ACCOUNT 123 - INVESTMENT IN ASSOCIATE COMPANIES - - ACCOUNT 124 - OTHER INVESTMENTS Employee Merchandise Loans 9 7 Employee Energy Loans 2,520 2,079 Energy Insurance Mutual LTD - Reserve 11 - ACE Limited - Reserve 69 69 Employee Computer Loans 1,038 722 Notes Receivable 86 - Miscellaneous 192 - ACCOUNT 136 - TEMPORARY CASH INVESTMENTS 4,602 - ------ ------ TOTAL 8,527 2,877 ====== ======
10 ANNUAL REPORT OF SOUTHERN COMPANY SERVICES, INC. For the Year Ended December 31, 1997 (Thousands of Dollars) SCHEDULE V ACCOUNTS RECEIVABLE FROM ASSOCIATE COMPANIES INSTRUCTIONS: Complete the following schedule listing accounts receivable from each associate company. Where the service company has provided accommodation or convenience payments for associate companies, a separate listing of total payments for each associate company by subaccount should be provided.
BALANCE AT BALANCE AT BEGINNING CLOSE OF DESCRIPTION OF YEAR YEAR ACCOUNT 146 - ACCOUNTS RECEIVABLE FROM ASSOCIATE COMPANIES The Southern Company 1,039 2,430 Alabama Power Company 23,947 37,117 Georgia Power Company 36,390 64,480 Gulf Power Company 5,547 10,976 Mississippi Power Company 5,594 11,235 Savannah Electric and Power Company 5,992 6,812 Southern Communications Services, Inc. 1,500 2,998 Southern Development & Investment Group, Inc. 662 2,747 Southern Electric Generating Company 401 617 Southern Electric Railroad 99 694 Southern Energy, Inc. 1,356 1,649 Southern Information Holding Company 1 2 Southern Nuclear Operating Company 8,656 13,253 Southern Telecom Holding Company 23 197 Trustee for SCS Pension 1 - ------ ------- TOTAL 91,208 155,207 ====== ======= ANALYSIS OF CONVENIENCE OR ACCOMMODATION PAYMENTS: TOTAL PAYMENTS The Southern Company 838 Alabama Power Company 231,662 Georgia Power Company 364,487 Gulf Power Company 60,172 Mississippi Power Company 77,852 Savannah Electric and Power Company 60,980 Southern Communications Services, Inc. 4,839 Southern Development & Investment Group, Inc. 3,778 Southern Electric Generating Company 204 Southern Electric Railroad - Southern Energy, Inc. 6,012 Southern Nuclear Operating Company 97,706 ------ The major portion of the above expenses consists of the Integrated System Power Pool transactions, transactions relating to the System Pension Plan, transactions relating to the Employee Savings Plan, transactions relating to 3rd party payroll payments, and transactions relating to the Employee Stock Ownership Plan. TOTAL PAYMENTS 908,530 =======
11 ANNUAL REPORT OF SOUTHERN COMPANY SERVICES, INC. For the Year Ended December 31, 1997 (Thousands of Dollars) SCHEDULE VI FUEL STOCK EXPENSES UNDISTRIBUTED INSTRUCTIONS: Report the amount of labor and expenses incurred with respect to fuel stock expenses during the year and indicate amount attributable to each associate company. Under the section headed "Summary" listed below give an overall report of the fuel functions performed by the service company. DESCRIPTION LABOR EXPENSES TOTAL ACCOUNT 152 - FUEL STOCK EXPENSES UNDISTRIBUTED 4,252 3,067 7,319 Total amount billed during current year as follows: Associated Companies The Southern Company (1) (1) (2) Alabama Power Company (1,279) (883) (2,162) Georgia Power Company (1,750) (1,195) (2,945) Gulf Power Company (357) (239) (596) Mississippi Power Company (428) (274) (702) Savannah Electric and Power Company (120) (83) (203) Southern Development & Investment Group (4) (2) (6) Southern Electric Generating Company (65) (57) (122) Southern Electric Railroad - (10) (10) Southern Energy, Inc. (247) (323) (570) Southern Nuclear Operating Company (1) - (1) ------ ------ ------ Subtotal (4,252) (3,067) (7,319) ------ ------ ------ Nonassociated Companies - - - TOTAL 0 0 0 ====== ======= ====== ( ) Denotes red figure.
SUMMARY: Fuel services performed by the service company consists of acting as agent on behalf of all the system operating companies on fossil related matters as defined in an operating agreement with each company. 12 ANNUAL REPORT OF SOUTHERN COMPANY SERVICES, INC. For the Year Ended December 31, 1997 (Thousands of Dollars) SCHEDULE VII - STORES EXPENSE UNDISTRIBUTED INSTRUCTIONS: Report the amount of labor and expenses incurred with respect to stores expense during the year and indicate amount attributable to each associate company. DESCRIPTION LABOR EXPENSES TOTAL ACCOUNT 163 - STORES EXPENSE UNDISTRIBUTED NOT APPLICABLE 13 ANNUAL REPORT OF SOUTHERN COMPANY SERVICES, INC. For the Year Ended December 31, 1997 (Thousands of Dollars) SCHEDULE VIII MISCELLANEOUS CURRENT AND ACCRUED ASSETS INSTRUCTIONS: Provide detail of items in this account. Items less than $10,000 may be grouped, showing the number of items in each group. BALANCE AT BALANCE AT BEGINNING CLOSE OF DESCRIPTION OF YEAR YEAR ACCOUNT 174 - MISCELLANEOUS CURRENT AND ACCRUED ASSETS - INTEREST RECEIVABLE - TEMPORARY CASH INVESTMENTS 65 - 14 ANNUAL REPORT OF SOUTHERN COMPANY SERVICES, INC. For the Year Ended December 31, 1997 (Thousands of Dollars) SCHEDULE IX MISCELLANEOUS DEFERRED DEBITS INSTRUCTIONS: Provide detail of items in this account. Items less than $10,000 may be grouped, showing the number of items in each class. BALANCE AT BALANCE AT BEGINNING CLOSE OF DESCRIPTION OF YEAR YEAR ACCOUNT 186 - MISCELLANEOUS DEFERRED DEBITS Deposit for Georgia Sales and Use Tax 26 26 Wilsonville Clean-up 141 156 Executive Stock Option Taxes 5 - Retire Capital Items 20 280 Unamortized Leasehold - Bldg. 66 2,752 2,449 Unamortized Leasehold - Bldg. 64 - 1,599 Unamortized Leasehold - Inverness - 460 Sundry Delayed Clearance 2,774 672 Power Marketing Trading Floor 1,025 - ------ ------ Total 6,743 5,642 ====== ====== 15 ANNUAL REPORT OF SOUTHERN COMPANY SERVICES, INC. For the Year Ended December 31, 1997 (Thousands of Dollars) SCHEDULE X RESEARCH, DEVELOPMENT OR DEMONSTRATION EXPENDITURES INSTRUCTIONS: Provide a description of each material research, development, or demonstration project which incurred costs by the service corporation during the year. DESCRIPTION AMOUNT ACCOUNT 188 - RESEARCH, DEVELOPMENT, OR DEMONSTRATION EXPENDITURES 35,039 Total amount billed/incurred during current year as follows: Government Projects: Clean Coal Technology Projects: Yates CT-121 Project 262 Hammond Wall Fired Project (272) Crist SCR Project (1) Other Government Projects: Hot Gas Cleanup Project (23,185) Westinghouse AP600 Design Certification (29) Generic NOx Control Intelligent System (12) Westinghouse 1st of Kind Engineering (FOAKE) (1,861) Liquefaction (1,462) EPRI Projects: GNOCIS Demonstration (263) RE&A EPRI Contracts (421) Advanced End-Use Technologies (70) Engineering EPRI Projects (332) EPRI Bulk Trans. System Reliability (88) Associate Companies: End-Use Research Projects (1,669) Pwr Delivery Research-Transmission Substations (237) Pwr Delivery Research-Distribution (111) Air Quality Studies (118) Combustion & Fuel Effects (880) Research Administration (472) Flue Gas Treatment (412) Power Delivery Research (51) Advanced End-Use Technology Research (1,136) Particulate Control Studies (463) Advanced Energy Systems (1,279) Thermal & Fluid Sciences (403) R&D Tech Econ Assessments (74) -------- TOTAL AMOUNT BILLED/INCURRED (35,039) -------- TOTAL 0 ======== ( ) Denotes red figure. 16 ANNUAL REPORT OF SOUTHERN COMPANY SERVICES, INC. For the Year Ended December 31, 1997 (Thousands of Dollars) SCHEDULE XI - PROPRIETARY CAPITAL
NUMBER OF PAR OR STATED OUTSTANDING ACCOUNT SHARES VALUE CLOSE NUMBER CLASS OF STOCK AUTHORIZED PER SHARE OF PERIOD 201 COMMON STOCK NO. OF SHARES ISSUED 17,000 50.00 14,500 TOTAL AMOUNT 725 INSTRUCTIONS: Classify amounts in each account with brief explanation, disclosing the general nature of transactions which gave rise to the reported amounts. DESCRIPTION AMOUNT ACCOUNT 211 MISCELLANEOUS PAID-IN CAPITAL 150 ACCOUNT 215 APPROPRIATED RETAINED EARNINGS - TOTAL 150 INSTRUCTIONS: Give particulars concerning net income or (loss) during the year, distinguishing between compensation for the use of capital owed or net loss remaining from servicing nonassociates per the General Instructions of the Uniform System of Accounts. For dividends paid during the year in cash or otherwise, provide rate percentage, amount of dividend, date declared and date paid. BALANCE AT NET INCOME BALANCE AT BEGINNING OR DIVIDENDS CLOSE DESCRIPTION OF YEAR (LOSS) PAID OF YEAR ACCOUNT 216 UNAPPROPRIATED RETAINED EARNINGS - - - - TOTAL - - - -
17 ANNUAL REPORT OF SOUTHERN COMPANY SERVICES, INC. For the Year Ended December 31, 1997 (Thousands of Dollars) SCHEDULE XII - LONG-TERM DEBT INSTRUCTIONS: Advances from associate companies should be reported separately for advances on notes, and advances on open account. Names of associate companies from which advances were received shall be shown under the class and series of obligation column. For Account 224 - Other Long-Term Debt provide the name of creditor company or organization, terms of the obligation, date of maturity, interest rate, and the amount authorized and outstanding. TERMS OF OBLIG DATE BALANCE AT BALANCE AT CLASS & SERIES OF INTEREST AMOUNT BEGINNING 1/ CLOSE NAME OF CREDITOR OF OBLIGATION MATURITY RATE AUTHORIZED OF YEAR ADDITIONS DEDUCTIONS OF YEAR ACCOUNT 223 - ADVANCES FROM ASSOCIATE COMPANIES: NOT APPLICABLE ACCOUNT 224 - OTHER LONG-TERM DEBT: NOT APPLICABLE OTHER LONG-TERM DEBT: CAPITAL LEASE OBLIGATION Beacon Properties 02/01/2011 9.25 7,225 5,484 - 224 5,260 Beacon Properties 02/01/2006 13.00 41,551 42,174 - 11,413 30,761 ------ ------ --------- ------ ------ Subtotal 48,776 47,658 - 11,637 36,021 ------ ------ --------- ------ ------ TOTAL 48,776 47,658 - 11,637 36,021 ====== ====== ========= ====== ====== 1/ GIVE AN EXPLANATION OF DEDUCTIONS: Beacon Properties - Deductions of $1,010,848.46 tnsferred to current maturities. Also includes an asset impairment write down of $10,626,167.97.
18 ANNUAL REPORT OF SOUTHERN COMPANY SERVICES, INC. For the Year Ended December 31, 1997 (Thousands of Dollars) SCHEDULE XIII - CURRENT AND ACCRUED LIABILITIES INSTRUCTIONS: Provide balance of notes and accounts payable to each associate company. Give description and amount of miscellaneous current and accrued liabilities. Items less than $10,000 may be grouped, showing the number of items in each group. BALANCE AT BALANCE AT BEGINNING CLOSE OF DESCRIPTION OF YEAR YEAR ACCOUNT 233 - NOTES PAYABLE TO ASSOCIATE COMPANIES The Southern Company - 6,400 ------ ------- TOTAL - 6,400 ====== ======= ACCOUNT 234 - ACCOUNTS PAYABLE TO ASSOCIATE COMPANIES The Southern Company - (74) Alabama Power Company 22,818 30,060 Georgia Power Company 1,761 8,142 Gulf Power Company 1,221 2,676 Mississippi Power Company 270 367 Savannah Electric and Power Company 22 420 Southern Electric Generating Company - - Southern Energy, Inc. 967 - Southern Communications Services, Inc. 373 724 Southern Nuclear Operating Company 5,712 1,007 Southern Development & Investment Group 448 62 ------ ------ TOTAL 33,592 43,384 ====== ====== ACCOUNT 242 - MISCELLANEOUS CURRENT AND ACCRUED LIABILITIES Incentive Pay 20,621 22,941 Vacation Clearing Account 16,175 18,197 Accrued Labor & Related Overheads 4,174 5,661 Employee Group Insurance Premiums 704 504 Early Retirement Benefits 1,374 1,376 Productivity Improvement Program 11,926 15,597 Accumulated Provision for Major Overhaul of Aircraft 1,214 865 Supplemental Pensions and Benefits 731 1,680 Department of Energy (75) 24 Flex and Save Benefits 1,658 2,969 Post Employment Benefits 66 66 Severance Pay 8,107 4,975 Metro Life Advance-Current 176 176 (Continued on Page 18A)
18A ANNUAL REPORT OF SOUTHERN COMPANY SERVICES, INC. For the Year Ended December 31, 1997 (Thousands of Dollars) SCHEDULE XIII - CURRENT AND ACCRUED LIABILITIES (Continued) BALANCE AT BALANCE AT BEGINNING CLOSE OF DESCRIPTION OF YEAR YEAR Associate Companies - ESP (761) 4,323 APCO - U.S. Savings Bond Withholdings - - Commitment Fees - Credit Lines 71 85 Accrued Bank Fees 136 60 APCO - Supplemental Life Ins. - Pension (66) - SCS - Employee Savings Plan 567 1,475 MPCO - Contributory Life Ins. Withholdings - Pension 12 - MPCO - Medical Withholdings (565) - APCO - Contributory Life Withholdings 13 - APCO - Personal Auto Maintenance 23 - SCS - U.S. Savings Bonds Withholdings 294 265 GPCO - Contributory Life Withholdings - Pension 17 - SCS - GPCO-Efficiency Store Withholdings 12 - GUPCO - Medical Withholdings 667 - MPCO - Contributory Life Withholdings 422 - MPCO - Medical Withholdings-Pension (12) - Funds Dist-Holders SE P&L Corp. 13 13 Employee Energy/PC Loan W/H - 14 SCS-FLEX Benefits Premiums - 82 Miscellaneous (76 Beginning)(22 Ending) 37 12 ------ ------ TOTAL 67,731 81,360 ====== ====== 19 ANNUAL REPORT OF SOUTHERN COMPANY SERVICES, INC. For the Year Ended December 31, 1997 SCHEDULE XIV NOTES TO FINANCIAL STATEMENTS INSTRUCTIONS: The space below is provided for important notes regarding the financial statements or any account thereof. Furnish particulars as to any significant contingent assets or liabilities existing at the end of the year. Notes relating to financial statements shown elsewhere in this report may be indicated here by reference. 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES General Southern Company Services, Inc. (the "Company") follows the Uniform System of Accounts prescribed by the Securities and Exchange Commission ("SEC") for service companies, as amended, effective January 1, 1980. The Company has no earnings or retained earnings since it primarily renders services at cost to its parent company, The Southern Company, and to that company's subsidiaries, as further discussed in Note 2. The financial statements are prepared in conformity with generally accepted accounting principles which requires the use of estimates. The actual results may differ from those estimates. Cash and Cash Equivalents The Company considers all highly liquid investments with original maturities of 90 days or less to be cash equivalents. The carrying value of cash and cash equivalents approximates fair value. Income Taxes The Company is included in the consolidated federal income tax return with The Southern Company and its subsidiaries. Federal income tax deferrals primarily resulting from the use of accelerated depreciation are fully utilized and accounted for by the operating subsidiaries of The Southern Company. Property, Equipment, and Depreciation and Amortization Property and equipment, including any interest capitalized during construction, are recorded at cost. Depreciation and amortization are provided on the straight-line method over the estimated economic life of the related asset (ranging from 5 to 12 years). Leasehold improvements are amortized over the lives of the respective leases. 19A ANNUAL REPORT OF SOUTHERN COMPANY SERVICES, INC. For the Year Ended December 31, 1997 (Thousands of Dollars) SCHEDULE XIV NOTES TO FINANCIAL STATEMENTS INSTRUCTIONS: The space below is provided for important notes regarding the financial statements or any account thereof. Furnish particulars as to any significant contingent assets or liabilities existing at the end of the year. Notes relating to financial statements shown elsewhere in this report may be indicated here by reference. On retirement or sale of assets, the cost of such assets and the related accumulated depreciation are removed from the accounts, and the gain or loss, if any, is credited or charged to income. 2. SERVICE AGREEMENTS The Southern Company and each of its operating subsidiaries (Alabama Power Company, Georgia Power Company, Gulf Power Company, Mississippi Power Company, and Savannah Electric and Power Company), Southern Electric Generating Company (an operating subsidiary owned equally by Alabama Power Company and Georgia Power Company), Southern Energy, Inc. (a subsidiary of The Southern Company which designs, builds, owns, and operates power production facilities and provides a broad range of technical services to industrial companies and utilities in the United States and a number of international markets), Southern Development and Investment Group, Inc. (a subsidiary of The Southern Company which researches and develops new business opportunities), Southern Nuclear Operating Company (a subsidiary of The Southern Company which provides services to the Southern electric system nuclear power plants), Southern Electric Railroad Company (a subsidiary of The Southern Company, which provides railroad services to the operating subsidiaries) and Southern Communications Services, Inc. (a subsidiary of The Southern Company, which provides wireless communications services to the operating subsidiaries and their customers) have entered into agreements with the Company under which the Company renders the following services at cost: general executive and advisory services, general engineering, design engineering, purchasing, accounting and statistical, finance and treasury, tax, insurance and pension, rate, budgeting, business promotion and public relations, employee relations, systems and procedures, and other services with respect to business and operations and, in the case of operating subsidiaries, power pool operations. The agreements shall be canceled to the extent and from the time that performance thereunder conflicts with any rule, regulation, or order of the SEC adopted before or after the execution of the agreements. 19B ANNUAL REPORT OF SOUTHERN COMPANY SERVICES, INC. For the Year Ended December 31, 1997 (Thousands of Dollars) SCHEDULE XIV NOTES TO FINANCIAL STATEMENTS INSTRUCTIONS: The space below is provided for important notes regarding the financial statements or any account thereof. Furnish particulars as to any significant contingent assets or liabilities existing at the end of the year. Notes relating to financial statements shown elsewhere in this report may be indicated here by reference. 3. RETIREMENT BENEFITS Pension Costs The Company has a defined benefit, trusteed, pension plan that covers substantially all regular employees. Benefits are based on one of the following formulas: years of service and final average pay or years of service and a flat-dollar benefit. The Company uses the "entry age normal method with frozen initial liability" actuarial method for funding purposes, subject to limitations under federal income tax regulations. Amounts funded to the pension trusts are primarily invested in equity and fixed-income securities. Statement of Financial Accounting Standards No. 87, "Employers' Accounting for Pensions," requires use of the "projected unit credit" actuarial method for financial reporting purposes. Other Postretirement Benefits The Company provides certain medical care and life insurance benefits for retired employees. Substantially all employees may become eligible for these benefits when they retire. Trusts are funded to the extent deductible under federal income tax regulations. Amounts funded are primarily invested in debt and equity securities. Statement of Financial Accounting Standards No. 106, "Employers' Accounting for Postretirement Benefits Other Than Pensions" requires that medical care and life insurance benefits for retired employees be accounted for on an accrual basis, using a specified actuarial method, "benefit/years-of-service." Funded Status and Cost of Benefits The following tables show actuarial results and assumptions for pension and post retirement insurance benefits as computed under the requirements of FASB Statement Nos. 87 and 106, respectively. The funded status of the plans at December 31 was as follows:
19C ANNUAL REPORT OF SOUTHERN COMPANY SERVICES, INC. For the Year Ended December 31, 1997 (Thousands of Dollars) SCHEDULE XIV NOTES TO FINANCIAL STATEMENTS INSTRUCTIONS: The space below is provided for important notes regarding the financial statements or any account thereof. Furnish particulars as to any significant contingent assets or liabilities existing at the end of the year. Notes relating to financial statements shown elsewhere in this report may be indicated here by reference. Pension 1997 1996 Actuarial present value of benefit obligations: Vested benefits 242,812 208,808 Non-vested benefits 11,064 16,361 ------- ------- Accumulated benefit obligation 253,876 225,169 Additional amounts related to projected salary increases 96,443 104,606 ------- ------- Projected benefit obligation 350,319 329,775 Less: Fair value of plan assets 557,333 479,484 Unrecognized net gain (210,194) (151,659) Unrecognized prior service cost 12,324 13,194 Unrecognized net transition asset (11,379) (12,664) -------- -------- Accrued liability recognized in the balance sheets 2,235 1,420 ======= ======= Postretirement Benefits 1997 1996 Actuarial present value of benefit obligation: Retirees and Dependents 40,487 29,321 Employees eligible to retire 6,127 5,480 Other employees 38,549 39,655 ------ ------ Accumulated benefit obligations 85,163 74,456 Less: Fair value of plan assets 22,794 18,674 Unrecognized net loss (gain) 5,335 2,869 Unrecognized prior service cost (18) (19) Unrecognized transition obligation 6,170 6,574 ------ ------ Accrued liability recognized in the balance sheets 50,882 46,358 ====== ======
19D ANNUAL REPORT OF SOUTHERN COMPANY SERVICES, INC. For the Year Ended December 31, 1997 (Thousands of Dollars) SCHEDULE XIV NOTES TO FINANCIAL STATEMENTS INSTRUCTIONS: The space below is provided for important notes regarding the financial statements or any account thereof. Furnish particulars as to any significant contingent assets or liabilities existing at the end of the year. Notes relating to financial statements shown elsewhere in this report may be indicated here by reference. The weighted average rates assumed in the actuarial calculations were: 1997 1996 ---- ---- Discount 7.50% 7.75% Annual salary increase 5.00% 5.25% Long-term return on plan assets 8.50% 8.50% An additional assumption used in measuring the accumulated postretirement benefit obligation was a weighted average medical care cost trend rate of 8.81 percent for 1997 decreasing gradually to 5.50 percent through the year 2005 and remaining at that level thereafter. An annual increase in the assumed medical care cost trend rate of 1 percent would increase the accumulated medical benefit obligation at December 31, 1997, by $6.5 million and the aggregate of the service and interest cost components of the net retiree medical cost by $0.6 million. 19E ANNUAL REPORT OF SOUTHERN COMPANY SERVICES, INC. For the Year Ended December 31, 1997 SCHEDULE XIV NOTES TO FINANCIAL STATEMENTS INSTRUCTIONS: The space below is provided for important notes regarding the financial statements or any account thereof. Furnish particulars as to any significant contingent assets or liabilities existing at the end of the year. Notes relating to financial statements shown elsewhere in this report may be indicated here by reference. Components of the plans net costs are shown below: Pension 1997 1996 Benefits earned during the year 11,961 12,538 Interest cost on projected benefit obligation 24,728 18,031 Actual return on plan assets (76,291) (44,746) Net amortization and deferral 34,586 12,613 ------- ------- Net pension income (5,016) (1,564) ======= ======= Postretirement Benefits 1997 1996 Benefits earned during the year 1,954 2,216 Interest cost on accumulated benefit obligation 6,049 5,134 Amortization of transition obligation 405 405 Actual return on plan assets (2,886) (2,015) Net amortization and deferral 1,622 849 ------ ------ Net postretirement costs 7,144 6,589 ====== ====== Work Force Reduction Programs The Company has incurred additional costs for work force reduction programs. The costs related to these programs were $7 million and $20 million for 1997 and 1996, respectively. These costs were charged to income. 19F ANNUAL REPORT OF SOUTHERN COMPANY SERVICES, INC. For the Year Ended December 31, 1997 SCHEDULE XIV NOTES TO FINANCIAL STATEMENTS INSTRUCTIONS: The space below is provided for important notes regarding the financial statements or any account thereof. Furnish particulars as to any significant contingent assets or liabilities existing at the end of the year. Notes relating to financial statements shown elsewhere in this report may be indicated here by reference. 4. LONG-TERM OPERATING LEASES The Company leases various facilities and equipment under noncancelable operating lease arrangements. Rental expense under all operating leases was approximately $49,931,000 and $23,254,000 in 1997 and 1996, respectively. Future minimum lease payments under these noncancelable operating leases as of December 31, 1997 are as follows: 1998 42,733 1999 35,006 2000 20,609 2001 10,123 2002 9,690 Thereafter 38,967 ------- Total 157,128 ======= 5. LONG-TERM DEBT AND NOTES PAYABLE - OTHER Details of long-term debt and notes payable - other at December 31 are as follows: 1997 1996 ------ ----- (In Thousands) Long-term debt Notes payable: 4.94% due 1997 - 15,000 Less Current Maturities - (15,000) ------- ------- - - ------- ------- Capitalized lease obligations: 9 1/4% building lease 5,484 5,689 13% building lease 32,837 42,761 ------- ------- 38,321 48,450 ------- ------- Less Current Maturities (2,300) (792) -------- ------- 36,021 47,658 ------- ------- Total long-term debt 36,021 47,658 ======= ======= 19G ANNUAL REPORT OF SOUTHERN COMPANY SERVICES, INC. For the Year Ended December 31, 1997 SCHEDULE XIV NOTES TO FINANCIAL STATEMENTS INSTRUCTIONS: The space below is provided for important notes regarding the financial statements or any account thereof. Furnish particulars as to any significant contingent assets or liabilities existing at the end of the year. Notes relating to financial statements shown elsewhere in this report may be indicated here by reference. The Southern Company has guaranteed the payment of the above notes and the rental payments relating to the 13% building lease. Maturities over the next five years of the Company's long-term debt outstanding at December 31, 1997 are as follows: (In Thousands) 1998 2,300 1999 2,726 2000 3,211 2001 3,761 2002 4,387 Thereafter 21,936 ------ Total 38,321 ====== Assets acquired under capital leases are recorded in the Company's balance sheets as office building. In December 1997, Southern Company Services, Inc. recognized an asset impairment loss on office building in the amount of $11,891,014, resulting in a capital lease basis adjustment. The net book value of assets acquired under capitalized leases was approximately $14,866,098 and $26,688,179 at December 31, 1997 and 1996, respectively. Financial Instruments In accordance with Statement of Financial Accounting Standards No. 107, "Disclosure About Fair Value of Financial Instruments," all financial instruments of the Company - for which the carrying amount does not approximate fair value - are shown in the table below as of December 31: Long-Term Debt Carrying Fair Amount Value (In Millions) 1997 00.0 00.0 1996 15.0 14.9 The fair values for long-term debt were based on closing prices of comparable instruments. 6. PURCHASE COMMITMENTS The Company has purchase commitments for computer hardware and software. At December 31, 1997, total capital expenditures are budgeted to be approximately $15,830,000 in 1998.
20 ANNUAL REPORT OF SOUTHERN COMPANY SERVICES, INC. For the Year Ended December 31, 1997 (Thousands of Dollars) SCHEDULE XV STATEMENT OF INCOME ACCOUNT DESCRIPTION CURRENT YEAR PRIOR YEAR INCOME 457 Services rendered to associate companies 581,403 506,928 458 Services rendered to nonassociate companies 32,098 31,893 421 Miscellaneous income or loss (7,359) 3,179 ------- ------- Total Income 606,142 542,000 ------- ------- EXPENSE 920 Salaries and wages 225,502 230,023 921 Office supplies and expenses 82,958 66,950 922 Administrative expense transferred- credit - - 923 Outside services employed 135,379 115,690 924 Property insurance 774 748 925 Injuries and damages 119 101 926 Employee pensions and benefits 23,161 22,029 928 Regulatory commission expense 588 606 930.1 General advertising expenses - - 930.2 Miscellaneous general expenses 19,540 20,696 931 Rents 49,931 23,254 932 Maintenance of structures and equipment 27,766 22,118 403 Depreciation and amortization expense 16,471 16,922 408 Taxes other than income taxes 16,076 15,176 409 Income taxes 108 80 410 Provision for deferred income taxes - - 411 Provision for deferred income taxes - credit - - 411.5 Investment tax credit - - 426.1 Donations 1,314 1,014 426.5 Other deductions - - 427 Interest on long-term debt 5,462 6,296 430 Interest on debt to associate companies 788 231 431 Other interest expense 205 66 ------- ------- Total Expense 606,142 542,000 ------- ------- Net Income or (Loss) - - ======= =======
21 ANNUAL REPORT OF SOUTHERN COMPANY SERVICES, INC. For the Year Ended December 31, 1997 (Thousands of Dollars) ANALYSIS OF BILLING ASSOCIATE COMPANIES ACCOUNT 457 DIRECT INDIRECT COMPENSAT'N TOTAL COSTS COSTS FOR USE AMOUNT NAME OF ASSOCIATE COMPANY CHARGED CHARGED OF CAPITAL BILLED 457-1 457-2 457-3 The Southern Company 11,647 2,123 221 13,991 Alabama Power Company 122,257 25,542 1,525 149,324 Georgia Power Company 180,905 34,954 2,890 218,749 Gulf Power Company 29,585 5,757 374 35,716 Mississippi Power Company 27,621 5,991 325 33,937 Savannah Electric & Power Company 10,767 2,174 158 13,099 Southern Communication Services 19,461 1,410 177 21,048 Southern Development and Investment Group, Inc. 14,487 3,932 133 18,552 Southern Electric Generating Company 843 297 7 1,147 Southern Electric Railroad 417 262 2 681 Southern Energy, Inc. 7,955 2,722 205 10,882 Southern Information Holding Co. 8 5 - 13 Southern Nuclear Operating Company 49,954 13,459 423 63,836 Southern Telecommunications Holding Co. 334 88 6 428 ------- ------ ----- ------- TOTAL 476,241 98,716 6,446 581,403 ======= ====== ===== =======
22 ANNUAL REPORT OF SOUTHERN COMPANY SERVICES, INC. For the Year Ended December 31, 1997 (Thousands of Dollars) ANALYSIS OF BILLING NONASSOCIATE COMPANIES ACCOUNT 458 DIRECT INDIRECT COMPENSATION EXCESS TOTAL COSTS COSTS FOR USE TOTAL OR AMOUNT NAME OF NONASSOCIATE COMPANY CHARGED CHARGED OF CAPITAL COST DEFICIENCY BILLED - ---------------------------- ------- ------- -------------- ----- ---------- ------ 458-1 458-2 458-3 458-4 Department of Energy (DOE) $18,901 $2,184 $ 0 $21,085 $ 0 $21,085 Electric Power Research Institute 4,278 179 3 4,460 0 4,460 Westinghouse 1,248 643 (1) 1,890 0 1,890 MindSpring 20 0 0 20 0 20 Delta Com 24 0 0 24 0 24 Alcoa 14 0 0 14 0 14 Bankers Trust Company (Southern System Master Retirement Trust) 510 0 0 510 0 510 VEBA-Alabama Power 8 0 0 8 0 8 Geothermal Heat Pump Consortium 260 13 1 274 0 274 Powerco Federal Credit Union 9 0 0 9 0 9 Electric Authority/ City of Tallahassee/FPC 1,903 33 2 1,938 0 1,938 Oglethorpe Power Corporation 1,245 0 0 1,245 0 1,245 Southeastern Electric Reliability Council 47 0 0 47 0 47 Peabody Holdg Co. (Cost Share) 300 0 0 300 0 300 APC Credit Union 21 0 0 21 0 21 Economic Development Partnership 5 0 0 5 0 5 Motorola 6 0 0 6 0 6 Gulf Power Credit Union 10 0 0 10 0 10 Energy Insurance Bermuda 35 31 3 69 0 69 Comsys 40 3 1 44 0 44 MCI 37 7 0 44 0 44 North American Electric Reliability Council 19 0 0 19 0 19 Oak Ridge Laboratory 17 1 0 18 0 18 Reynolds & Reynolds 24 0 0 24 0 24 GEAC Computer System 214 0 0 214 0 214 Phillips Electronics 59 0 0 59 0 59 Crawford & Co. 8 0 0 8 0 8 GE Capital 26 0 0 26 0 26 Morgan Stanley 7 3 0 10 0 10 Nonassociated Labor Accrual (196) (136) 0 (332) 0 (332) Other (13 items less than $5,000) 24 5 0 29 0 29 ------- ------ --- ------- -- ------- TOTAL $29,123 $2,966 $ 9 $32,098 $0 $32,098 ======= ====== === ======= == =======
22A ANNUAL REPORT OF SOUTHERN COMPANY SERVICES, INC. For the Year Ended December 31, 1997 (Thousands of Dollars) ANALYSIS OF BILLING NONASSOCIATE COMPANIES ACCOUNT 458 INSTRUCTION: Provide a brief description of the services rendered to each nonassociate company: Department of Energy (DOE) - Contract services concerning clean coal technology; hot gas cleanup project, including construction of pilot test facility. Electric Power Research Institute - GNOCIS demonstrations, ash in agriculture and land reclamation; burner balancing; catalyst test facility; NOx reduction & performance; electrokinetic remediation; multimedia diesel cleanup at CT; fine particulates and air toxic control; pinch study; fly ash evaluation; advanced end-use technologies; electroremediation; and bulk transmission system reliability evaluation. Westinghouse - Subcontracts for the research and design of components of nuclear reactors. MindSpring, and Delta Com - Telecommunication services related to fiber optics. Alcoa - Purchase of fiber optic cable. Bankers Trust Co. (Southern System Master Retirement Trust)-Trustee services provided by Bankers for Southern Company Master Retirement Trust. VEBA - Alabama Power - Short-term and Financial Services provided to Voluntary Employee Benefits Association. Geothermal Heat Pump Consortium - Marketing services and marketing research. Oglethorpe Power - Operating and Planning Services (OPS) scheduling fees & Telecommunication services. FP&L, FPC, JEA, and City of Tallahassee - Unit Power Sales (UPS) true-up and scheduling agreements. Southeastern Electric Reliability Council - Occupancy and other related services. Peabody Holdg Co. (Cost Share) - Cost share R&D at the Power Systems Development Facility (PSDF Project.) APC Credit Union, Economic Development Partnership, Motorola, Gulf Power Credit Union - Telecommunication services related to fiber optics. Energy Insurance Bermuda - Risk Management Information System consulting and services charges. Comsys - Computer systems training. MCI - Maintenance and provisioning of fiber equipment. North American Electric Reliability Council - Development of Software. Oak Ridge Laboratory - Marketing Services and Marketing Research. Reynolds & Reynolds - O&M sublease expense at Inverness building. GEAC Computer Systems, Philips Electronics, Crawford & Co., GE Capital - O&M sublease expense at Perimeter Center East building. Morgan Stanley - Transmission Impact Study. Nonassociated Labor Accrual - Accounting estimated labor accrual for non-associate companies.
23 ANNUAL REPORT OF SOUTHERN COMPANY SERVICES, INC. For the Year Ended December 31, 1997 (Thousands of Dollars) SCHEDULE XVI ANALYSIS OF CHARGES FOR SERVICE ASSOCIATE AND NONASSOCIATE COMPANIES INSTRUCTION: Total cost of service will equal for associate and nonassociate companies the total amount billed under their separate analysis of billing schedules. ( ) Denotes red figure. ASSOCIATE COMPANY CHARGES NONASSOCIATE COMPANY CHARGES TOTAL CHARGES FOR SERVICE DIRECT INDIRECT DIRECT INDIRECT DIRECT INDIRECT DESCRIPTION OF ITEMS COST COST TOTAL COST COST TOTAL COST COST TOTAL - -------------------- -------- ------- ----- -------- -------- ----- ------ -------- ----- 920 SALARIES AND WAGES $184,123 $34,641 $218,764 $ 6,477 $ 261 $ 6,738 $190,600 $ 34,902 $225,502 921 OFFICE SUPPLIES & EXPENSES 66,101 9,929 76,030 6,914 14 6,928 73,015 9,943 82,958 922 ADMINISTRATIVE EXP. TRANSFERRED-CREDIT - - - - - - - - - 923 OUTSIDE SERVICES EMPLOYED 114,430 8,125 122,555 12,819 5 12,824 127,249 8,130 135,379 924 PROPERTY INSURANCE 285 246 531 243 - 243 528 246 774 925 INJURIES AND DAMAGES 15 104 119 - - - 15 104 119 926 EMPLOYEE PENSIONS & BENEFITS 3,543 19,183 22,726 - 435 435 3,543 19,618 23,161 928 REGULATORY COMMISSION EXPENSE 588 - 588 - - - 588 - 588 930.1 GENERAL ADVERTISING EXPENSES - - - - - - - - - 930.2 MISCELLANEOUS GENERAL EXPENSES 28,641 (12,948) 15,693 2,309 1,538 3,847 30,950 (11,410) 19,540 931 RENTS 37,002 12,769 49,771 95 65 160 37,097 12,834 49,931 932 MAINTENANCE OF STRUCTURES AND EQUIPMENT 21,953 5,503 27,456 257 53 310 22,210 5,556 27,766 403 DEPRECIATION & AMORTIZATION EXPENSE 8,405 7,960 16,365 8 98 106 8,413 8,058 16,471 408 TAXES OTHER THAN INCOME TAXES 3,077 12,501 15,578 1 497 498 3,078 12,998 16,076 409 INCOME TAXES 3 105 108 - - - 3 105 108 410 PROVISION FOR DEFERRED INCOME TAXES - - - - - - - - - 411 PROVISION FOR DEFERRED INCOME TAXES CREDIT - - - - - - - - - 411.5 INVESTMENT TAX CREDIT - - - - - - - - - 426.1 DONATIONS 716 598 1,314 - - - 716 598 1,314 ------- ------ ------- ------ -------- ------- ------- ------- ------- SUBTOTAL EXPENSES = 468,882 98,716 567,598 29,123 2,966 32,089 498,005 101,682 599,687
23A ANNUAL REPORT OF SOUTHERN COMPANY SERVICES, INC. For the Year Ended December 31, 1997 (Thousands of Dollars) SCHEDULE XVI ANALYSIS OF CHARGES FOR SERVICE ASSOCIATE AND NONASSOCIATE COMPANIES ASSOCIATE COMPANY CHARGES NONASSOCIATE COMPANY CHARGES TOTAL CHARGES FOR SERVICE DIRECT INDIRECT DIRECT INDIRECT DIRECT INDIRECT DESCRIPTION OF ITEMS COST COST TOTAL COST COST TOTAL COST COST TOTAL - -------------------- -------- ----------- ----- -------- ---------- ----- ------ -------- ------ 427 INTEREST ON LONG-TERM DEBT - - 5,453 - - 9 - - 5,462 430 INTEREST ON DEBT TO ASSOCIATE COMPANIES - - 788 - - - - - 788 431 OTHER INTEREST EXPENSE - - 205 - - - - - 205 TOTAL EXPENSES = 468,882 98,716 574,044 29,123 2,966 32,098 498,005 101,682 606,142 421 MISCELLANEOUS GAIN 7,359 - 7,359 - - - 7,359 - 7,359 -------- ------- -------- ------- ------ ------- ------- ------- ------- TOTAL COST OF SERVICE = $476,241 $98,716 $581,403 $29,123 $2,966 $32,098 $505,364 $101,682 $613,501 ======== ======= ======== ======= ====== ======= ======== ======== ========
24 ANNUAL REPORT OF SOUTHERN COMPANY SERVICES, INC. For the Year Ended December 31, 1997 (Thousands of Dollars) SCHEDULE XVII SCHEDULE OF EXPENSE DISTRIBUTION BY DEPARTMENT OR SERVICE FUNCTION INSTRUCTION: Indicate each department or service function. (See Instruction 01-3 General Structure of Accounting System: Uniform System Account) ( ) Denotes red figure. DEPARTMENT OR SERVICE FUNCTION Finance Human Total and Governmental Resources and Information DESCRIPTION OF ITEMS Amount Engineering Executive Accounting Affairs Administration Resources 920 SALARIES AND WAGES $225,502 $49,130 $ 3,118 $17,504 $ 1,489 $18,631 $ 67,697 921 OFFICE SUPPLIES AND EXPENSES 82,958 6,672 600 3,339 420 6,245 45,805 923 OUTSIDE SERVICES EMPLOYED 135,379 16,720 5,169 7,873 1,193 6,704 63,567 924 PROPERTY INSURANCE 774 67 - 16 1 20 80 925 INJURIES AND DAMAGES 119 27 - 7 - 12 34 926 EMPLOYEE PENSIONS & BENEFITS 23,161 4,672 206 1,645 143 2,113 6,814 928 REGULATORY COMMISSION EXPENSE 588 - - - - - - 930.2 MISCELLANEOUS GENERAL EXPENSES 19,540 586 721 466 490 4,684 8,371 931 RENTS 49,931 2,460 220 912 30 1,518 36,757 932 MAINTENANCE OF STRUCTURES & EQUIP 27,766 1,336 1,851 629 44 881 15,291 403 DEPRECIATION & AMORTIZATION, EXPENSE 16,471 2,394 163 1,052 207 815 7,146 408 TAXES OTHER THAN INCOME TAXES 16,076 3,658 65 1,137 59 1,339 5,414 409 INCOME TAXES 108 - - 3 - - - 426.1 DONATIONS 1,314 2 116 1 210 14 - 427 INTEREST ON LONG-TERM DEBT 5,462 190 132 830 - 569 2,185 430 INTEREST ON DEBT TO ASSOCIATE CO. 788 85 27 26 3 46 337 431 OTHER INTEREST EXPENSE 205 (9) (12) (1) (2) 4 (12) -------- ------- ------- ------- ----- ------- ------- TOTAL EXPENSES 606,142 87,990 12,376 35,439 4,287 43,595 259,486 421 MISCELLANEOUS GAIN 7,359 (505) 743 2,127 257 2,617 (1,119) TOTAL COSTS $613,501 $87,485 $13,119 $37,566 $4,544 $46,212 $258,367 ======== ======= ======= ======= ====== ======= ========
25 ANNUAL REPORT OF SOUTHERN COMPANY SERVICES, INC. For the Year Ended December 31, 1997 (Thousands of Dollars) SCHEDULE XVII SCHEDULE OF EXPENSE DISTRIBUTION BY DEPARTMENT OR SERVICE FUNCTION DEPARTMENT OR SERVICE FUNCTION Planning Research and ACCOUNT Internal Market Research Public Environmental System Administrative External NUMBER Audit and Support Production Relations Affairs Aircraft and General Affairs - ------- -------- ---------------- ---------- --------- ------------- -------- ------------ ------- 920 $5,312 $ 6,587 $32,787 $ 2,013 $ 7,197 $2,740 $ 8,956 $ 2,341 921 1,027 1,084 4,308 1,741 7,580 818 2,515 804 923 681 5,383 5,864 1,095 15,686 108 3,442 1,894 924 5 7 29 2 249 4 292 2 925 2 3 14 1 4 5 9 1 926 546 653 3,042 205 652 305 1,947 218 928 - 588 - - - - - - 930.2 407 (479) 523 279 194 (282) 3,410 170 931 294 411 1,572 112 261 332 4,918 134 932 90 139 1,101 47 69 4,052 2,109 127 403 113 344 1,904 244 107 1,270 585 127 408 377 472 2,205 137 491 213 380 129 409 - - - - - - 105 - 426.1 - - 6 465 - - 76 424 427 83 182 127 61 (8) (146) 1,123 134 430 6 9 69 8 9 159 - 4 431 4 - (7) (1) 25 (18) 234 - ------ ------- -------- ------ ------- ------ ------- ------- Expenses 8,947 15,383 53,544 6,409 32,516 9,560 30,101 6,509 421 537 924 (207) 385 (186) (412) 1,807 391 TOTAL COSTS $9,484 $16,307 $53,337 $6,794 $32,330 $9,148 $31,908 $6,900 ====== ======= ======= ====== ======= ====== ======= ====== ( ) Denotes red figure.
26 ANNUAL REPORT OF SOUTHERN COMPANY SERVICES, INC. For the Year Ended December 31, 1997 (Thousands of Dollars) DEPARTMENTAL ANALYSIS OF SALARIES ACCOUNT 920 DEPARTMENTAL SALARY EXPENSE NAME OF DEPARTMENT INCLUDED IN AMOUNTS BILLED TO PERSONNEL Indicate each department TOTAL PARENT OTHER NON END OF or service function AMOUNT COMPANY ASSOCIATES ASSOCIATES YEAR ------ ------- ---------- --------- ------ Engineering 49,130 15 46,590 2,525 697 Executive 3,118 505 2,613 - 8 Finance & Accounting 17,504 1,263 15,898 343 176 Governmental Affairs 1,489 18 1,471 - 11 Human Resources & Admin. 18,631 24 18,527 80 241 Information Resources 67,697 70 67,403 224 1,038 Internal Auditing 5,312 243 5,069 - 65 Planning Marketing Research & Support 6,587 5 6,578 4 52 Production 32,787 40 32,429 318 441 Public Relations 2,013 826 1,187 - 36 Research & Environmental Affairs 7,197 - 3,882 3,315 90 System Aircraft 2,740 304 2,436 - 43 External Affairs 8,956 544 8,412 - 48 Administrative & General 2,341 470 1,942 (71) - ------- ----- ------- ----- ----- TOTAL 225,502 4,327 214,437 6,738 2,946 ======= ===== ======= ===== =====
( ) Denotes red figure. 27 ANNUAL REPORT OF SOUTHERN COMPANY SERVICES, INC. For the Year Ended December 31, 1997 (Thousands of Dollars) OUTSIDE SERVICES EMPLOYED ACCOUNT 923 INSTRUCTIONS: Provide a breakdown by subaccount of outside services employed. If the aggregate amounts paid to any one payee and included within one subaccount is less than $100,000, only the aggregate number and amount of all such payments included within the subaccount need be shown. Provide a subtotal for each type of service. RELATIONSHIP "A"=ASSOCIATE DESCRIPTION OF "NA"= NON FROM WHOM PURCHASED LARGEST INVOICE ASSOCIATE AMOUNT Legal Services Balch & Bingham Legal Services NA 1,006 Edison Electric Institute Industry Initiative NA 293 Hunton & Williams Legal Services NA 175 King & Spalding Legal Services NA 117 McDermott, Will & Emery Legal Services NA 332 Troutman, Sanders Legal Services NA 1,930 Twenty-Two Other Items Less than $100,000 NA 296 ------ 4,149 ------ Auditing Service Arthur Andersen LLP Audit Services NA 1,214 Two Other Items Less than $100,000 NA 6 ----- 1,220 ----- (Continued on Page 27A) 27A ANNUAL REPORT OF SOUTHERN COMPANY SERVICES, INC. For the Year Ended December 31, 1997 (Thousands of Dollars) OUTSIDE SERVICES EMPLOYED ACCOUNT 923 INSTRUCTIONS: Provide a breakdown by subaccount of outside services employed. If the aggregate amounts paid to any one payee and included within one subaccount is less than $100,000, only the aggregate number and amount of all such payments included within the subaccount need be shown. Provide a subtotal for each type of service. RELATIONSHIP "A"=ASSOCIATE DESCRIPTION OF "NA"= NON FROM WHOM PURCHASED LARGEST INVOICE ASSOCIATE AMOUNT Engineering Services ABB C-E Services, Inc. Engineering Services NA 183 ADECCO Services Engineering, Personnel Serv. NA 267 The Babcock & Wilcox Co. Contract Engineering Serv. NA 125 BE&K Engineering Co. Contract Engineering Serv. NA 6,562 Bechtel Power Corp. Contract Engineers-Constructors NA 5,879 Comprehensive Computer Consulting, Inc. Contract Programming NA 239 Fossil Energy Research Corp. Contract Engineering Serv. NA 159 Foster Wheeler USA Corp. Power Systems Development-DOE NA 1,453 The M.W. Kellogg Co. Contract Engineering Serv. NA 440 Shook & Fletcher Insulation Co. Power Systems Development-DOE NA 435 Southern Nuclear Oper. Co. Contract Engineering Serv. A 117 Southern Research Institute Power Systems Development-DOE NA 653 Utilities International,Inc. Contract Engineering Serv. NA 141 Westinghouse Electric Corp. Contract Engineering Serv. NA 131 Eighty-Four Other Items Less than $100,000 (266) ------ 16,518 ------ (Continued on Page 27B) 27B ANNUAL REPORT OF SOUTHERN COMPANY SERVICES, INC. For the Year Ended December 31, 1997 (Thousands of Dollars) OUTSIDE SERVICES EMPLOYED ACCOUNT 923 INSTRUCTIONS: Provide a breakdown by subaccount of outside services employed. If the aggregate amounts paid to any one payee and included within one subaccount is less than $100,000, only the aggregate number and amount of all such payments included within the subaccount need be shown. Provide a subtotal for each type of service. RELATIONSHIP "A"=ASSOCIATE DESCRIPTION OF "NA"= NON FROM WHOM PURCHASED LARGEST INVOICE ASSOCIATE AMOUNT Other Services Acorn Communications, Inc. Audio Visual Production Svcs NA 998 Acxiom Corp. Market Research Services NA 151 Accountants on Call Contract Personnel Serv. NA 112 Adecco Services On-Site Clerical Serv. NA 2,648 ADP Proxy Services Mailing Services NA 212 Advanced Strategies, Inc. Consulting & Facilitation Svcs NA 187 Aerotek, Inc. Radio Services NA 141 Alabama CAD/CAM Software Programming NA 125 Alabama Power Company Contract Services A 10,169 Alabama Staff Contract Personnel Serv. NA 147 Alliance Systems, Inc. System Design Services NA 378 America's Registry, Inc. Systems Development NA 1,009 American Process, Inc. Industry Studies NA 150 Andersen Consulting LLP Consulting Services NA 31,297 Ann Randazzo Consulting Services NA 105 Aon Consulting Consulting Services NA 214 Application Tech. Serv. Consulting Services NA 725 Arko Executive Serv., Inc. Security Services NA 356 Arthur Andersen LLP Consulting Services NA 620 Barbour, Griffith & Rogers Consulting Services NA 294 Bowne of Atlanta, Inc. Mail Services NA 215 Brannon & Tully, Inc. Consulting Services NA 144 CC Pace Resources Consulting Services NA 528 Caddell Construction Co. Erection Services NA 3,171 Cauthen & Associates Consulting Services NA 150 Cheyenne Software, Inc. Software Upgrade Services NA 251 Christensen Associates Consulting Services NA 143 Citicorp Securities, Inc. Remarketing Services NA 213 Comms People, Inc. Contract Services NA 260 Comprehensive Computer Consulting Contract Consulting NA 7,354 Comsys, Inc. Programming Services NA 805 Corporate Reports, Inc. Publication Services NA 101 Custom Contract Programming Contract Programming NA 108 (Continued on page 27C) 27C ANNUAL REPORT OF SOUTHERN COMPANY SERVICES, INC. For the Year Ended December 31, 1997 (Thousands of Dollars) OUTSIDE SERVICES EMPLOYED ACCOUNT 923 INSTRUCTIONS: Provide a breakdown by subaccount of outside services employed. If the aggregate amounts paid to any one payee and included within one subaccount is less than $100,000, only the aggregate number and amount of all such payments included within the subaccount need be shown. Provide a subtotal for each type of service. RELATIONSHIP "A"=ASSOCIATE DESCRIPTION OF "NA"= NON FROM WHOM PURCHASED LARGEST INVOICE ASSOCIATE AMOUNT Dataplex Corporation Microfiche Production NA 469 Docucorp International Programming Services NA 314 Drake Beam Morin, Inc. Personnel Services NA 170 Dunn & Bradstreet Info. Marketing Services NA 285 Dun's Marketing Services Marketing Services NA 267 Elrick & Lavidge, Inc. Survey Services NA 395 Electric Pwr Research Inst Industry Studies NA 1,628 Ernst & Young Consulting Services NA 177 Ferguson Harbour Inc. Soil Remediation Services NA 348 First Union National Bank Banking Services NA 480 Form Maker Software, Inc. Software Services NA 1,278 Georgia Power Company Project Support A 5,855 Godwins Booke & Dickenson Personnel Services NA 124 Gulf Power Company Project Support A 1,190 HBL Computer Resources, Inc. Contract Programming NA 159 Henwood Energy Serv, Inc. Marketing Services NA 165 Herman Smith Inspect. Serv. Tower Maintenance Services NA 141 Hewitt Associates Personnel Services NA 2,543 Hogan & Hartson Consulting Services NA 124 Installshield Software Corp. Software Upgrade Services NA 208 Integrated Systems Solutions Consulting Services NA 1,006 Intelligent Mgt. Solutions Consulting Services NA 100 International Bus. Machine Consulting Services NA 1,824 J. P. Morgan Securities,Inc. Financial Services NA 208 James W. Rock Consulting Services NA 101 Kingry Trucking Co. Trucking Services NA 102 Lamalie Amrop International Consulting Services NA 180 Lee Hecht Harrison, Inc. Personnel Services NA 131 Lexis-Nexis Outside Computer Services NA 176 Magi-Ware, Inc. Programming Services NA 127 Mark R. Gearhart Consulting Services NA 181 Marketing & Planning Sys System Development NA 1,582 Marketing Workshop Survey Services NA 164 Maxim Group Programming Services NA 323 (Continued on page 27D) 27D ANNUAL REPORT OF SOUTHERN COMPANY SERVICES, INC. For the Year Ended December 31, 1997 (Thousands of Dollars) OUTSIDE SERVICES EMPLOYED ACCOUNT 923 INSTRUCTIONS: Provide a breakdown by subaccount of outside services employed. If the aggregate amounts paid to any one payee and included within one subaccount is less than $100,000, only the aggregate number and amount of all such payments included within the subaccount need be shown. Provide a subtotal for each type of service. RELATIONSHIP "A"=ASSOCIATE DESCRIPTION OF "NA"= NON FROM WHOM PURCHASED LARGEST INVOICE ASSOCIATE AMOUNT Merrill Lynch Asset Management Financial Services NA 1,042 Merrill Lynch Pierce, Fenner & Smith Financial Services NA 353 Merrill Lynch Trust Co. Financial Services NA 485 Microsoft Corp. Technology Planning Services NA 215 Microsoft Enterprise Serv Consulting Resources NA 397 Mississippi Power Co. Project Support A 467 Mississippi State University Consulting Services NA 123 New York Stock Exchange Financial Services NA 418 NFO Research, Inc. Research Studies NA 164 Novell, Inc. Consulting Services NA 134 OSI Software, Inc. Consulting Services NA 113 Paul Griffin & Assoc. Building Maintenance NA 267 Platinum Technology Software Consulting Services NA 121 Power Energy Services, Inc. Contract Engineering NA 175 Regional Economic Research Consulting Services NA 151 Savannah Electric & Power Project Support A 406 Sawyer & Associates, Inc. Contract Programming NA 351 Scott, Madden & Assoc., Inc. Personnel Services NA 367 Seek Consulting Group, Inc. Consulting Services NA 132 Smith James Group, Inc. Executive Search Services NA 113 Software Spectrum Software Upgrade Services NA 110 Solutions by Design Software Design Services NA 305 Southern Development & Investment Group Project Support A 259 Southern Nuclear Project Support A 214 Southern Research Institute Consulting Services NA 217 Springhill Regional Landfill Soil Remediation Services NA 159 Sprint Paranet, Inc. Contract Programming NA 941 Stern Stewart Management Financial Strategy Services NA 751 Sunbelt Builders, Inc. Erection Services NA 692 Sunbelt Resources, Inc. Soil Remediation Services NA 501 Synet Services Corp. Contract Programming NA 934 System Architechs, Inc. Consulting Services NA 188 Systems Applications Intl Consulting Services NA 511 (Continued on page 27E) 27E ANNUAL REPORT OF SOUTHERN COMPANY SERVICES, INC. For the Year Ended December 31, 1997 (Thousands of Dollars) OUTSIDE SERVICES EMPLOYED ACCOUNT 923 INSTRUCTIONS: Provide a breakdown by subaccount of outside services employed. If the aggregate amounts paid to any one payee and included within one subaccount is less than $100,000, only the aggregate number and amount of all such payments included within the subaccount need be shown. Provide a subtotal for each type of service. RELATIONSHIP "A"=ASSOCIATE DESCRIPTION OF "NA"= NON FROM WHOM PURCHASED LARGEST INVOICE ASSOCIATE AMOUNT TATA Consultancy Services Systems Support NA 1,224 TCE, Inc. Soil Remediation Services NA 118 The Hawthorn Group Survey Services NA 709 The Indus Group, Inc. Software Evaluation NA 395 The Richmark Group, Inc. Power Quality Study NA 181 The Smith-Free Group Consulting Services NA 144 Toolbox Design, Inc. Web Site Development NA 627 Towers Perrin Survey Services NA 520 UBICS, Inc. Consulting Services NA 186 UGA Research Foundation Environmental Studies NA 174 Wells Fargo Guard Services Security Services NA 534 Xerox Corporation Facilities Management NA 721 1,004 Other Items Less Than $100,000 NA 10,177 ------- 113,492 ------- 135,379 ======= 28 ANNUAL REPORT OF SOUTHERN COMPANY SERVICES, INC. For the Year Ended December 31, 1997 (Thousands of Dollars) EMPLOYEE PENSIONS AND BENEFITS ACCOUNT 926 INSTRUCTIONS: Provide a listing of each pension plan and benefit program provided by the service company. Such listing should be limited to $25,000. DESCRIPTION AMOUNT Pensions $ (2,653) Early Retirement Benefits 697 Flexible Credit Benefits - Company Contributions 10,776 Post Retirement Medical Benefits 5,051 Post Retirement Life Benefits 2,093 Educational Assistance Plan 149 Minority Scholarship Program 36 Employee Savings Plan/ESOP - Company Contribution 6,467 Employee Health and Physical Examinations 68 Post Employment Benefits (27) Other (Employees' Professional Fees and Other Employee Fringe Benefits) 504 ------- TOTAL $23,161 ======= 29 ANNUAL REPORT OF SOUTHERN COMPANY SERVICES, INC. For the Year Ended December 31, 1997 (Thousands of Dollars) GENERAL ADVERTISING EXPENSES ACCOUNT 930.1 INSTRUCTIONS: Provide a listing of the amount included in Account 930.1, "General Advertising Expenses", classifying the items according to the nature of the advertising and as defined in the account definition. If a particular class includes an amount in excess of $3,000 applicable to a single payee, show separately the name of the payee and the aggregate amount applicable thereto. DESCRIPTION NAME OF PAYEE AMOUNT NOT APPLICABLE 30 ANNUAL REPORT OF SOUTHERN COMPANY SERVICES, INC. For the Year Ended December 31, 1997 (Thousands of Dollars) MISCELLANEOUS GENERAL EXPENSES ACCOUNT 930.2 INSTRUCTIONS: Provide a list of the amount included in Account 930.2, " Miscellaneous General Expenses", classifying the items according to their nature. Payments and expenses permitted by Section 321 (b)(2) of the Federal Election Campaign Act, as amended by Public Law 94-284 in 1976 (2 U.S.C.S. 441 (b) (2) shall be separately classified. DESCRIPTION AMOUNT Employee Training 4,642 Expenses of SCS Employees Located at Operating Co. 9,928 Meals, Lodging, & Incidentals Related to Meetings & Conferences 3,108 Dues and Memberships 1,487 Recruiting, Interviewing, & Placement of Employees 334 Corporate Moving Expenses 599 Other General Expenses (558) ------ TOTAL 19,540 ====== 31 ANNUAL REPORT OF SOUTHERN COMPANY SERVICES, INC. For the Year Ended December 31, 1997 (Thousands of Dollars) RENTS ACCOUNT 931 INSTRUCTIONS: Provide a listing of the amount included in Account 931, "Rents", classifying such expenses by major groupings of property, as defined in the account definition of the Uniform System of Accounts. DESCRIPTION AMOUNT Office Rents $16,910 Computer and Other Data Processing Equipment Rental 27,582 Software Rental 2,873 All Other (Automobile, Office Furniture & Equipment, Miscellaneous Storage, Equipment Rental & Aircraft) 2,566 ------- TOTAL $49,931 ======= 32 ANNUAL REPORT OF SOUTHERN COMPANY SERVICES, INC. For the Year Ended December 31, 1997 (Thousands of Dollars) TAXES OTHER THAN INCOME TAXES ACCOUNT 408 INSTRUCTIONS: Provide an analysis of Account 408, "Taxes Other Than Income Taxes". Separate the analysis into two groups: (1) other than U.S. Government taxes, and (2) U.S. Government taxes. Specify each of the various kinds of taxes and show the amounts thereof. Provide a subtotal for each class of tax. KIND OF TAX AMOUNT Other Than U.S. Government Taxes State Unemployment 100 City/Business License Tax 4 Property and Other City and State 1,102 ------- Subtotal - Other 1,206 ------- U.S. Government Taxes Federal Insurance Contributions Act 14,674 Federal Unemployment 196 ------- Subtotal - U.S. Government 14,870 ------- TOTAL 16,076 ====== 33
ANNUAL REPORT OF SOUTHERN COMPANY SERVICES, INC. For the Year Ended December 31, 1997 (Thousands of Dollars) DONATIONS ACCOUNT 426.1 INSTRUCTIONS: Provide a listing of the amount included in Account 426.1, "Donations", classifying such expenses by its purpose. The aggregate number and amount of all items of less than $3,000 may be shown in lieu of details. NAME OF RECIPIENT PURPOSE OF DONATION AMOUNT 100 Black Men of Atlanta, Inc. Civic & Charitable 3 American Heart Association Civic & Charitable 9 American Jewish Committee Civic & Charitable 5 Arts Festival of Atlanta Civic & Charitable 25 Atlanta 150 Committee, Inc. Civic & Charitable 5 Atlanta Chamber of Commerce Civic & Charitable 5 Auburn University Foundation Educational Matching 6 BBA Campaign Fund Civic & Charitable 25 BCDCA - WF `97 Civic & Charitable 5 Birmingham Area Chamber of Commerce Civic & Charitable 11 Boy Scouts of America Civic & Charitable 8 Cahaba Girl Scouts Civic & Charitable 17 Callanwolde Fine Arts Center Civic & Charitable 5 Carter/Mondale Alumni Association Civic & Charitable 35 Congressional Black Caucus Foundation Civic & Charitable 3 Egleston Children's Hospital Civic & Charitable 15 Eisenhower Center Building Fund Support of Program 40 Fort Bend CASA Civic & Charitable 3 Foundation for Student Communications Civic & Charitable 5 Georgia Institute of Technology Educational Matching 17 Georgia Tech Foundation, Inc. Civic & Charitable 3 Georgia Youth Science & Technology Center, Zoo Atlanta Civic & Charitable 15 Global Climate Coalition Support of Program 50 Global Climate Information Project Civic & Charitable 200 Houston Grand Opera Civic & Charitable 15 Junior Achievement of Greater Birmingham Civic & Charitable 7 Keep America Beautiful, Inc. Civic & Charitable 6 Kennedy Center Civic & Charitable 5 Mara Reid Rogers Civic & Charitable 3 March of Dimes Civic & Charitable 8 National Nutrition Service Civic & Charitable 4 National Race for the Cure Civic & Charitable 5 National Republican Comm. Building Fund Support of Program 15 Opportunity XXI Civic & Charitable 10 PUHCA Now Coalition Support of Program 45 Republican Senate/House Dinner Building Fund Support of Program 20 Resources for the Future Civic & Charitable 10
33A ANNUAL REPORT OF SOUTHERN COMPANY SERVICES, INC. For the Year Ended December 31, 1997 (Thousands of Dollars) DONATIONS ACCOUNT 426.1 INSTRUCTIONS: Provide a listing of the amount included in Account 426.1, "Donations", classifying such expenses by its purpose. The aggregate number and amount of all items of less than $3,000 may be shown in lieu of details. NAME OF RECIPIENT PURPOSE OF DONATION AMOUNT Smithsonian Institute Civic & Charitable 17 Southern Governors' Association Support of Program 5 Southern Growth Civic & Charitable 5 Southern States Energy Board Support of Program 3 State Legislative Leaders Foundation Civic & Charitable 25 Taste of the South 1995 Support of Program 10 The Atlanta Ballet Civic & Charitable 5 The Carter Center Civic & Charitable 25 The Jefferson Islands Club Support of Program 5 The Progress & Freedom Foundation Civic & Charitable 50 Trustees of the University Pennsylvania Civic & Charitable 10 TVA Watch Group Civic & Charitable 117 U.S. Department of Education Civic & Charitable 3 United States Energy Association Support of Program 3 United Way of Central Alabama, Inc. Civic & Charitable 103 United Way of Metropolitan Atlanta Civic & Charitable 90 University of Alabama Educational Matching 11 University of Alabama at Birmingham Civic & Charitable 6 Utility Business Education Coalition Civic & Charitable 5 Virginia Dwyer Memorial Scholarship Civic & Charitable 5 Washington Legal Foundation Civic & Charitable 5 Woodruff Arts Center Civic & Charitable 10 83 Other Items (Less than $3,000) Civic & Charitable 96 79 Other Items (Less than $3,000) Employee Matching Gift 32 ----- TOTAL 1,314 ===== 34 ANNUAL REPORT OF SOUTHERN COMPANY SERVICES, INC. For the Year Ended December 31, 1997 (Thousands of Dollars) OTHER DEDUCTIONS ACCOUNT 426.5 INSTRUCTIONS: Provide a listing of the amount included in Account 426.5,"Other Deductions", classifying such expenses according to their nature. DESCRIPTION NAME OF PAYEE AMOUNT NOT APPLICABLE 35 ANNUAL REPORT OF SOUTHERN COMPANY SERVICES, INC. For the Year Ended December 31, 1997 (Thousands of Dollars) SCHEDULE XVIII NOTES TO STATEMENT OF INCOME INSTRUCTIONS: The space below is provided for important notes regarding the statement of income or any account thereof. Furnish particulars as to any significant increase in services rendered or expenses incurred during the year. Notes relating to financial statements shown elsewhere in this report may be indicated here by reference. See Notes to Financial Statements on Pages 19 - 19G. 36 ANNUAL REPORT OF SOUTHERN COMPANY SERVICES, INC. For the Year Ended December 31, 1997 (Thousands of Dollars) SCHEDULE XIX FINANCIAL DATA SCHEDULE Net Service Company Property 97,487 Total Investments 2,877 Total Current and Accrued Assets 203,305 Total Deferred Debits 5,777 Balancing Amount for Total Assets and Other Debits - Total Assets and Other Debits 309,446 Total Proprietary Capital 875 Total Long-Term Debt 36,021 Notes Payable 2,300 Notes Payable to Associate Companies 6,400 Balancing Amount for Total Current and Accrued Liabilities 188,403 Total Deferred Credits 75,447 Accumulated Deferred Income Tax Credits - Total Liabilities and Proprietary Capital 309,446 Services Rendered to Associate Companies 581,403 Services Rendered to Nonassociate Companies 32,098 Miscellaneous Income or Loss (7,359) Total Income 606,142 Salaries and Wages 225,502 Employee Pensions and Benefits 23,161 Balancing Amount for Total Expenses 357,479 Total Expenses 606,142 Net Income (Loss) - Total Cost of Service (Direct Costs) 505,364 Total Cost of Service (Indirect Costs) 101,682 Total Cost of Service (Total) 613,501 Number of Personnel End of Year 2,946 ( ) Denotes red figure. 37
ANNUAL REPORT OF SOUTHERN COMPANY SERVICES, INC. ORGANIZATION CHART Chairman, President & CEO Southern Company President & CEO Southern Co. Services VP -Human Sr. VP- Director Exec. VP- Sr. VP & President Sr. VP- Resources(1) External Internal Finance,(2) General Fossil/Hydro Group Transmission Affairs(2) Auditing(1) Treasurer, Counsel(2) Planning & Operations & CFO Exec. VP Sr. VP- VP Corporate VP-Financial Engineering Chief Information Communications(1) Planning Officer VP Research & VP-Governmental Treasurer Environmental VP Marketing Affairs Affairs & New Business Director Development VP-Environmental Trust VP Procurement Policy Finance & Materials VP-Comptroller & CFO VP-Secretary Director VP Fuel & House Risk Services Counsel Management VP Southern Wholesale Energy VPs Senior Production Officers (5 positions) (1) Report to the President & CEO of Southern Company Services for SCS related matters only. (2) Direct reports to Chairman, President & CEO of Southern Company.
38 ANNUAL REPORT OF SOUTHERN COMPANY SERVICES, INC. For the Year Ended December 31, 1997 METHODS OF ALLOCATION The allocation statistics for each of the methods described below were calculated using a three-year rolling average with a one-year lag in implementation; i.e., the 1997 ratios used the average annual statistics for the years 1993, 1994, and 1995. As of January 1, 1998, SCS began using statistics based on a single year rather than a three-year rolling average. The one-year lag feature is being retained; therefore, 1998 allocations are based on 1996 statistics. 1. Annual Operating Area Territorial Load Basis Each Client Operating Company, other than Southern Electric Generating Company (SEGCO), will be charged that percentage of the total Service Company charges to be distributed by this method which its annual operating area territorial load is of the total annual operating area territorial load of the Southern electric system, defined as total energy generated plus energy received minus energy deliveried. 2. Customer Basis Each Client Operating Company, other than SEGCO, will be charged that percentage of the total Service Company charges to be distributed by this method which its average number of customers is to the total average number of customers of the Southern electric system, other than SEGCO. 3. Employee Basis Each Client Company, other than SEGCO, will be charged that percentage of the total Service Company charges to be distributed by this method which its average number of employees is of the total average number of employees of all Client Companies, other than SEGCO. Employee groups not benefiting from the services are not included in the allocation. 4. Direct Billing Basis Each Client Company will be charged that percentage of the total Service Company charges to be distributed by this method which its applicable Service Company direct billings is to the total Service Company direct billings. 38A ANNUAL REPORT OF SOUTHERN COMPANY SERVICES, INC. For the Year Ended December 31, 1997 METHODS OF ALLOCATION 5. Financial Basis Each Client Company will be charged that percentage of the total Service Company charges to be distributed by this method which its average of the percentages of net fixed assets, operating expenses and operating revenue sources is to the total Client Company net fixed assets, operating expenses and operating revenue of the Southern electric system. 6. Fossil Fuel Generation Basis Each Client Operating Company will be charged that percentage of the total Service Company charges to be distributed by this method which its generation from fossil fuel sources is to the total generation from fossil fuel sources of the Southern electric system. 7. Fossil and Hydro Capacity Basis Each Client Company will be charged the factor determined by dividing the total fossil and hydro generating capacity for each company, including capacity attributed to joint owners of system plants, by the total fossil and hydro generating capacity for the Southern electric system. 8. Insurance Premium Basis Each Client Company will be charged that percentage of the total Service Company charges to be distributed by this method which its applicable insurance premiums is to the total applicable insurance premiums of the Southern electric system. 9. Net Fixed Assets Basis Each Client Company will be charged that percentage of the total Service Company charges to be distributed by this method which its net fixed assets is to the total net fixed assets of the Southern electric system. This method was not used in 1997. 10. Number of Nuclear Plants Each Client Company will be charged that percentage of the total Service Company charges to be distributed by this method which its number of nuclear plants is to the total nuclear plants. This method was not used in 1997. 11. Number of Vehicles Basis Each Client Company will be charged that percentage of the total Service Company charges to be distributed by this method which its number of vehicles is to the total vehicles for the Southern electric system. 38B ANNUAL REPORT OF SOUTHERN COMPANY SERVICES, INC. For the Year Ended December 31, 1997 METHODS OF ALLOCATION 12. Nuclear Plant Capacity Basis Each Client Company will be charged that percentage of the total Service Company charges to be distributed by this method which its name plate kilowatt capacity of nuclear plants is to the total kilowatt capacity of all nuclear plants. This method was not used in 1997. 13. Nuclear Plant Generation Basis Each Client Company will be charged that percentage of the total Service Company charges to be distributed by this method which its net generation of nuclear plants is to the total net generation of all nuclear plants. This method was not used in 1997. 14. Preferred Stockholder Basis Each Client Company will be charged that percentage of the total Service Company charges to be distributed by this method which its number of preferred stockholders is to the total preferred stockholders for the Southern electric system. This method was not used in 1997. 15. Salary Basis Each client company will be charged that percentage of the total service company charges to be distributed by this method which its amount of historical labor is to the total historical labor of all applicable companies. In addition, overhead charges are allocated to the applicable companies based on actual labor charges in the current period. 16. Southern System Basis (Capitalization) Each Client Company will be charged for the charges to be distributed by this method in the ratio of such Client Company's total capitalization to the sum of the total capitalization of all Client Operating Companies. 17. System Aircraft Passengers on system aircraft are charged a rate based on comparable, non-discounted commercial fares for the itinerary flown. Residual expenses not billed to client companies through the commercial fares are allocated to all associate companies as an availability fee based on the number of executives at each company. 39 ANNUAL REPORT OF SOUTHERN COMPANY SERVICES, INC. For the Year Ended December 31, 1997 ANNUAL STATEMENT OF COMPENSATION FOR USE OF CAPITAL BILLED The following annual statement was supplied to each associate client company regarding interest billed for compensation of equity capital and borrowed capital in 1997: Pursuant to the amended Uniform System of Accounts for Mutual and Subsidiary Service Companies implemented in January 1980, Southern Company Services is required to submit an annual statement to its associate client companies stating the amount and calculation of interest billed for compensation of equity capital and borrowed capital. Southern Company Services does not bill its associate client companies for compensation of equity capital. In 1997, Southern Company Services initiated short-term borrowings exclusively from The Southern Company; other outside banking institutions were not used. The interest rates on these borrowings ranged from 5.505% to 5.924%. Interest in the amount of $788,379.35 was accrued on The Southern Company and was billed to the client companies. The interest was distributed to each company either on the appropriate fixed percentage allocation basis or on the salary allocation basis in accordance with the SEC orders and our service contracts. In addition, as of December 31, 1997, Southern Company Services had long-term debt outstanding from various institutions in the amounts of $38,320,592.29. The interest rates on these borrowings ranged from 4.94% to 13.0%. Interest of $5,666,758.03 was accrued and billed to the client companies. The interest was distributed to each company either on the appropriate fixed percentage allocation basis or on the salary allocation basis in accordance with the SEC orders and service contracts. The interest on total service company indebtedness was billed to the associate and nonassociate companies as follows: The Southern Company $ 220,878.53 Alabama Power Company 1,525,031.10 Georgia Power Company 2,889,917.61 Gulf Power Company 373,569.03 Mississippi Power Company 325,012.03 Savannah Electric & Power Company 157,650.77 Southern Electric Generating Company 7,006.00 Southern Energy, Inc. 205,626.03 Southern Nuclear Operating Company 422,945.64 Southern Development & Investment Group, Inc.132,940.28 Southern Communications Services, Inc. 177,511.40 Southern Electric Railroad Company 1,960.21 Southern Telecommunications Holding Co. 6,106.61 Southern Information Holding Co. 108.23 Nonassociate 8,873.91 ------------- $6,455,137.38 ============= 40 ANNUAL REPORT OF SOUTHERN COMPANY SERVICES, INC. For the Year Ended December 31, 1997 SIGNATURE CLAUSE Pursuant to the requirements of the Public Utility Holding Company Act of 1935 and the rules and regulations of the Securities and Exchange Commission issued thereunder, the undersigned company has duly caused this report to be signed on its behalf by the undersigned officer thereunto duly authorized. Southern Company Services, Inc. (Name of Reporting Company) By: (Signature of Signing Officer) /s/ W. Dean Hudson W. Dean Hudson, Vice President, Comptroller and Chief Financial Officer (Printed Name and Title of Signing Officer) Date: April 29, 1998 -----END PRIVACY-ENHANCED MESSAGE-----