XML 82 R54.htm IDEA: XBRL DOCUMENT v3.24.3
Financing and Leases
 9 Months Ended
Sep. 30, 2024
Debt Disclosure [Abstract]  
Financing and Leases FINANCING AND LEASES
Bank Credit Arrangements
See Note 8 to the financial statements under "Bank Credit Arrangements" in Item 8 of the Form 10-K for additional information.
At September 30, 2024, committed credit arrangements with banks were as follows:
Expires
Company2025202620272029TotalUnusedExpires within
One Year
(in millions)
Southern Company parent(a)
$150 $— $— $1,850 $2,000 $1,998 $150 
Alabama Power— 650 — 700 1,350 1,350 — 
Georgia Power300 — — 1,750 2,050 2,026 300 
Mississippi Power— — 275 — 275 275 — 
Southern Power(a)(b)
— — — 600 600 600 — 
Southern Company Gas(c)
100 — — 1,500 1,600 1,598 100 
SEGCO30 — — — 30 30 30 
Southern Company$580 $650 $275 $6,400 $7,905 $7,877 $580 
(a)Arrangement expiring in 2029 represents a $2.45 billion combined arrangement for Southern Company and Southern Power as borrowers. Pursuant to the combined facility, the allocations between Southern Company and Southern Power may be adjusted.
(b)Does not include Southern Power Company's $75 million and $100 million continuing letter of credit facilities for standby letters of credit, expiring in 2025 and 2026, respectively, of which $10 million and $11 million, respectively, was unused at September 30, 2024. Southern Power's subsidiaries are not parties to its bank credit arrangements or letter of credit facilities.
(c)Southern Company Gas, as the parent entity, guarantees the obligations of Southern Company Gas Capital, which is the borrower of $800 million of the credit arrangement expiring in 2029. Southern Company Gas' committed credit arrangement expiring in 2029 also includes $700 million for which Nicor Gas is the borrower and which is restricted for working capital needs of Nicor Gas. Pursuant to the multi-year credit arrangement expiring in 2029, the allocations between Southern Company Gas Capital and Nicor Gas may be adjusted. Nicor Gas is also the borrower under a $100 million credit arrangement expiring in 2025.
As reflected in the table above, in March 2024, Mississippi Power amended and restated a $125 million multi-year credit arrangement, which, among other things, extended the maturity date from 2025 to 2027. In May 2024, (i) Alabama Power, Georgia Power, and Southern Company Gas Capital, along with Nicor Gas, extended the maturity
dates of certain of their multi-year credit arrangements from 2028 to 2029; (ii) Southern Company and Southern Power extended the maturity date of their combined multi-year credit arrangement from 2028 to 2029; (iii) Southern Company, Nicor Gas, and SEGCO amended their credit arrangements aggregating $150 million, $100 million, and $30 million, respectively, which extended the maturity dates from 2024 to 2025; and (iv) Georgia Power entered into two new credit arrangements aggregating $300 million, which mature in 2025. In June 2024, Mississippi Power amended certain of its multi-year credit arrangements aggregating $150 million, which extended the maturity dates from 2026 to 2027.
Subject to applicable market conditions, Southern Company and its subsidiaries expect to renew or replace their bank credit arrangements as needed, prior to expiration. In connection therewith, Southern Company and its subsidiaries may extend the maturity dates and/or increase or decrease the lending commitments thereunder.
These bank credit arrangements, as well as the term loan arrangements of the Registrants, Nicor Gas, and SEGCO, contain covenants that limit debt levels and contain cross-acceleration provisions to other indebtedness (including guarantee obligations) that are restricted only to the indebtedness of the individual company. The cross-acceleration provisions to other indebtedness would trigger an event of default if the applicable borrower defaulted on indebtedness, the payment of which was then accelerated. At September 30, 2024, the Registrants, Nicor Gas, and SEGCO were in compliance with all such covenants. None of the bank credit arrangements contain material adverse change clauses at the time of borrowings.
A portion of the unused credit with banks is allocated to provide liquidity support to certain revenue bonds of the traditional electric operating companies and the commercial paper programs of the Registrants, Nicor Gas, and SEGCO. At September 30, 2024, outstanding variable rate demand revenue bonds of the traditional electric operating companies with allocated liquidity support totaled approximately $1.7 billion (comprised of approximately $796 million at Alabama Power, $819 million at Georgia Power, and $69 million at Mississippi Power). In addition, at September 30, 2024, Alabama Power and Georgia Power had approximately $207 million and $157 million, respectively, of fixed rate revenue bonds outstanding that are required to be remarketed within the next 12 months. Alabama Power's $207 million of fixed rate revenue bonds are classified as securities due within one year on its balance sheets as they are not covered by long-term committed credit. All other variable rate demand revenue bonds and fixed rate revenue bonds required to be remarketed within the next 12 months are classified as long-term debt on the balance sheets as a result of available long-term committed credit.
Convertible Senior Notes
In May 2024, Southern Company issued $1.5 billion aggregate principal amount of Series 2024A 4.50% Convertible Senior Notes due June 15, 2027 (Series 2024A Convertible Senior Notes).
Interest on the Series 2024A Convertible Senior Notes is payable semiannually, beginning December 15, 2024. The Series 2024A Convertible Senior Notes will mature on June 15, 2027, unless earlier converted or repurchased, but are not redeemable at the option of Southern Company. The Series 2024A Convertible Senior Notes are direct, unsecured, and unsubordinated obligations of Southern Company, ranking equally with all of Southern Company's other unsecured and unsubordinated indebtedness from time to time outstanding, and are effectively subordinated to all secured indebtedness of Southern Company.
Holders may convert their Series 2024A Convertible Senior Notes at their option prior to the close of business on the business day preceding March 15, 2027, but only under the following circumstances:
•during any calendar quarter (and only during such calendar quarter), if the last reported sale price of Southern Company's common stock for at least 20 trading days (whether or not consecutive) during the period of 30 consecutive trading days ending on, and including, the last trading day of the immediately preceding calendar quarter is greater than or equal to 130% of the conversion price on each applicable trading day as determined by Southern Company;
•during the five business day period after any 10 consecutive trading day period (Measurement Period) in which the trading price per $1,000 principal amount of Series 2024A Convertible Senior Notes for each trading day of the Measurement Period was less than 98% of the product of the last reported sale price of the common stock and the conversion rate on each such trading day; or
•upon the occurrence of certain corporate events specified in the indenture governing the Series 2024A Convertible Senior Notes.
On or after March 15, 2027, a holder may convert all or any portion of its Series 2024A Convertible Senior Notes at any time prior to the close of business on the second scheduled trading day immediately preceding the maturity date regardless of the foregoing conditions.
Southern Company will settle conversions of the Series 2024A Convertible Senior Notes by paying cash up to the aggregate principal amount of the Series 2024A Convertible Senior Notes to be converted and paying or delivering, as the case may be, cash, shares of common stock, or a combination of cash and shares of common stock, at Southern Company's election, in respect of the remainder, if any, of Southern Company's conversion obligation in excess of the aggregate principal amount of the Series 2024A Convertible Senior Notes being converted. The Series 2024A Convertible Senior Notes are initially convertible at a rate of 10.8166 shares of common stock per $1,000 principal amount converted, which is approximately equal to $92.45 per share of common stock. The conversion rate will be subject to adjustment upon the occurrence of certain specified events but will not be adjusted for accrued and unpaid interest. In addition, upon the occurrence of a make-whole fundamental change (as defined in the indenture governing the Series 2024A Convertible Senior Notes), Southern Company will, in certain circumstances, increase the conversion rate by a number of additional shares of common stock for conversions in connection with the make-whole fundamental change.
Upon the occurrence of a fundamental change (as defined in the indenture governing the Series 2024A Convertible Senior Notes), holders of the Series 2024A Convertible Senior Notes may require Southern Company to purchase all or a portion of their Series 2024A Convertible Senior Notes, in principal amounts equal to $1,000 or an integral multiple thereof, for cash at a price equal to 100% of the principal amount of the Series 2024A Convertible Senior Notes to be purchased plus any accrued and unpaid interest.
Earnings per Share
For Southern Company, the only difference in computing basic and diluted earnings per share (EPS) is attributable to awards outstanding under stock-based compensation plans and the Series 2023A convertible senior notes and Series 2024A Convertible Senior Notes. EPS dilution resulting from stock-based compensation plans is determined using the treasury stock method, and EPS dilution resulting from the Series 2023A convertible senior notes and Series 2024A Convertible Senior Notes is determined using the net share settlement method. See "Convertible Senior Notes" herein and Note 8 to the financial statements under "Convertible Senior Notes" and Note 12 to the financial statements in Item 8 of the Form 10-K for additional information. Shares used to compute diluted EPS were as follows:
Three Months Ended September 30,Nine Months Ended September 30,
2024202320242023
 (in millions)
As reported shares1,097 1,092 1,096 1,092 
Effect of stock-based compensation6 7 6 6 
Diluted shares1,103 1,099 1,102 1,098 
For all periods presented, an immaterial number of stock-based compensation awards was excluded from the diluted EPS calculation because the awards were anti-dilutive.
For the three and nine months ended September 30, 2024, there was no dilution resulting from the Series 2024A Convertible Senior Notes, and the dilution resulting from the Series 2023A convertible senior notes was immaterial.
For the three and nine months ended September 30, 2023, there was no dilution resulting from the Series 2023A convertible senior notes or Series 2024A Convertible Senior Notes
Georgia Power Lease Modification
See Note 9 to the financial statements in Item 8 of the Form 10-K for information on Georgia Power's leases. In June 2024, Georgia Power recognized a lease modification related to an existing affiliate PPA with Southern Power which converted from an operating lease to a finance lease upon its approval by the FERC. As a result, Georgia Power removed from its balance sheet operating lease right-of-use assets, net of amortization of $8 million and lease obligations of $10 million maturing through 2025 and recorded finance lease right-of-use assets of $44 million and lease obligations of $45 million maturing through 2035. See Note (B) under "Georgia Power – Integrated Resource Plans" for additional information.