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Southern Co Services Inc – ‘U-13-60’ for 12/31/03

On:  Friday, 4/30/04, at 5:55pm ET   ·   Effective:  4/30/04   ·   For:  12/31/03   ·   Accession #:  92122-4-174   ·   File #:  49-00059

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  As Of                Filer                Filing    For·On·As Docs:Size              Issuer               Agent

 4/30/04  Southern Co Services Inc          U-13-60    12/31/03    1:102K                                   Southern Co

Annual Report of a Mutual or Subsidiary Service Company   —   Form U-13-60
Filing Table of Contents

Document/Exhibit                   Description                      Pages   Size 

 1: U-13-60     Annual Report of a Mutual or Subsidiary Service       59    208K 
                          Company                                                


Document Table of Contents

Page (sequential) | (alphabetic) Top
 
11st Page   -   Filing Submission
13Summary
46General Advertising Expenses
47Miscellaneous General Expenses
48Rents
49Taxes Other Than Income Taxes
50Donations
53Other Deductions
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Form U-13-60 Mutual and Subsidiary Service Companies Revised February 7, 1980 ANNUAL REPORT For The Period Beginning January 1, 2003 and Ending December 31, 2003 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: Senior Vice 241 Ralph McGill Blvd., NE W. Dean Hudson President, Comptroller Atlanta, Georgia 30308-3374 and Chief Financial Officer Name of Principal Holding Company Whose Subsidiaries are served by Reporting Company: THE SOUTHERN COMPANY
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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. 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.
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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 ------------------------- SERVICE COMPANY PROPERTY Schedule II 5 ACCUMULATED PROVISION FOR DEPRECIATION AND AMORTIZATION OF SERVICE COMPANY PROPERTY Schedule III 6 INVESTMENTS Schedule IV 7 ACCOUNTS RECEIVABLE FROM ASSOCIATE COMPANIES Schedule V 8 FUEL STOCK EXPENSES UNDISTRIBUTED Schedule VI 9 STORES EXPENSE UNDISTRIBUTED Schedule VII 10 MISCELLANEOUS CURRENT AND ACCRUED ASSETS Schedule VIII 11 MISCELLANEOUS DEFERRED DEBITS Schedule IX 12 RESEARCH, DEVELOPMENT, OR DEMONSTRATION EXPENDITURES Schedule X 13 PROPRIETARY CAPITAL Schedule XI 14 LONG-TERM DEBT Schedule XII 15 CURRENT AND ACCRUED LIABILITIES Schedule XIII 16 NOTES TO FINANCIAL STATEMENTS Schedule XIV 17 COMPARATIVE INCOME STATEMENT Schedule XV 18 ---------------------------- ANALYSIS OF BILLING - ASSOCIATE COMPANIES Account 457 19 ANALYSIS OF BILLING - NONASSOCIATE COMPANIES Account 458 20 ANALYSIS OF CHARGES FOR SERVICE - ASSOCIATE AND NONASSOCIATE COMPANIES Schedule XVI 21
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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 22 DEPARTMENTAL ANALYSIS OF SALARIES Account 920 23 OUTSIDE SERVICES EMPLOYED Account 923 24 EMPLOYEE PENSIONS AND BENEFITS Account 926 25 GENERAL ADVERTISING EXPENSES Account 930.1 26 MISCELLANEOUS GENERAL EXPENSES Account 930.2 27 RENTS Account 931 28 TAXES OTHER THAN INCOME TAXES Account 408 29 DONATIONS Account 426.1 30 OTHER DEDUCTIONS Account 426.5 31 NOTES TO STATEMENT OF INCOME Schedule XVIII 32 ORGANIZATION CHART 33 ------------------ METHODS OF ALLOCATION 34 --------------------- ANNUAL STATEMENT OF COMPENSATION FOR USE OF CAPITAL BILLED 35 -----------------
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4 ANNUAL REPORT OF SOUTHERN COMPANY SERVICES, INC. For the Year Ended December 31, 2003 (Thousands of Dollars) SCHEDULE I - COMPARATIVE BALANCE SHEET Give balance sheet of the Company as of December 31 of the current and prior year. [Enlarge/Download Table] ACCOUNT ASSETS AND OTHER DEBITS AS OF DECEMBER 31 ------- ----------------------- ----------------- CURRENT PRIOR ------- ----- SERVICE COMPANY PROPERTY 101 Service company property (Schedule II) 248,281 238,255 107 Construction work in progress (Schedule II) 241 194 ------- ------- Total Property 248,522 238,449 ------- ------- 108 Less accumulated provision for depreciation and amortization of service company property (Schedule III) 130,780 108,060 ------- ------- Net Service Company Property 117,742 130,389 ------- ------- INVESTMENTS 123 Investments in associate companies (Schedule IV) - - 124 Other investments (Schedule IV) 8,849 7,202 ------- ------- Total Investments 8,849 7,202 ------- ------- CURRENT AND ACCRUED ASSETS 131 Cash 3,379 5,237 134 Special deposits - - 135 Working funds - - 136 Temporary cash investments (Schedule IV) 1,500 14,100 141 Notes receivable - - 143 Accounts receivable 109,434 114,808 146 Accounts receivable from associate companies (Schedule V) 260,195 256,206 152 Fuel stock expenses undistributed (Schedule VI) - - 154 Materials and supplies 1,192 1,341 163 Stores expense undistributed (Schedule VII) - - 165 Prepayments 65,184 72,498 174 Miscellaneous current and accrued assets (Schedule VIII) 1,037 2,548 ------- ------- Total Current and Accrued Assets 441,921 466,738 ------- ------- DEFERRED DEBITS 181 Unamortized debt expense 191 222 184 Clearing accounts 344 526 186 Miscellaneous deferred debits (Schedule IX) 34,010 29,432 188 Research, development, or demonstration expenditures (Schedule X) - - 190 Accumulated deferred income taxes 10,661 8,071 ------- ------- Total Deferred Debits 45,206 38,251 ------- ------- TOTAL ASSETS AND OTHER DEBITS 613,718 642,580 ======= =======
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4A ANNUAL REPORT OF SOUTHERN COMPANY SERVICES, INC. (Thousands of Dollars) SCHEDULE I - COMPARATIVE BALANCE SHEET (Continued) [Download Table] 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) (19,650) (14,840) 215 Appropriated retained earnings (Schedule XI) - - 216 Unappropriated retained earnings (Schedule XI) - - ------- ------- Total Proprietary Capital (18,925) (14,115) ------- ------- LONG-TERM DEBT 223 Advances from associate companies (Schedule XII) - - 224 Other long-term debt (Schedule XII) 51,041 52,145 225 Unamortized premium on long-term debt - - 226 Unamortized discount on long-term debt-debit - - ------- ------- Total Long-Term Debt 51,041 52,145 ------- ------- CURRENT AND ACCRUED LIABILITIES 231 Notes payable 8,031 8,280 232 Accounts payable 161,973 154,185 233 Notes payable to associated companies (Schedule XIII) - - 234 Accounts payable to associate companies (Schedule XIII) 61,986 111,434 236 Taxes accrued 657 622 237 Interest accrued 136 127 238 Dividends declared - - 241 Tax collections payable 1,213 4,388 242 Miscellaneous current and accrued liabilities (Schedule XIII) 162,477 165,772 ------- ------- Total Current and Accrued Liabilities 396,473 444,808 ------- ------- DEFERRED CREDITS 253 Other deferred credits 185,129 159,742 255 Accumulated deferred investment tax credits - - ------- ------- Total Deferred Credits 185,129 159,742 ------- ------- 282 ACCUMULATED DEFERRED INCOME TAXES - - --------------------------------- ------- ------- TOTAL LIABILITIES AND PROPRIETARY CAPITAL 613,718 642,580 ======= =======
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5 ANNUAL REPORT OF SOUTHERN COMPANY SERVICES, INC. For the Year Ended December 31, 2003 (Thousands of Dollars) SCHEDULE II SERVICE COMPANY PROPERTY [Enlarge/Download Table] 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 2,103 107 - - 2,210 306 LEASEHOLD IMPROVEMENTS 17,213 191 - (36) 17,368 307 EQUIPMENT 2/ 68,257 2,487 (2,383) 424 68,785 307 GATX CAPITAL LEASES 2/ 8,858 9,322 - - 18,180 307 MISC. CAPITAL LEASES 2/ 5,317 183 - - 5,500 308 OFFICE FURNITURE AND EQUIPMENT 2/ 19,362 2,988 (128) 59 22,281 309 AUTOMOBILES, OTHER VEHICLES AND RELATED GARAGE EQUIPMENT 2/ 806 139 (72) - 873 310 AIRCRAFT AND AIRPORT EQUIPMENT 2/ 60,064 56 (4,660) (50) 55,410 311 OTHER SERVICE COMPANY PROPERTY 2/ 3/ 56,275 2,790 (1,037) (354) 57,674 ------- ------ ------ ---- ------- SUB-TOTAL 238,255 18,263 (8,280) 43 248,281 ------- ------ ------ ---- ------- 107 CONSTRUCTION WORK IN PROGRESS 4/ 194 467 - (420) 241 ------- ------ ------ ---- ------- TOTAL 238,449 18,730 (8,280) (377) 248,522 ======= ====== ====== ==== ======= 1/ PROVIDE AN EXPLANATION OF THOSE CHANGES CONSIDERED MATERIAL: Re-classed assets from Software category to Equipment Category for 250. Transferred Construction Work In Progress accounts to Software Category for (420). ( ) Denotes red figure (Continued on Page 5A)
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5A 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. 180 10,029 307/04 Personal Computer Equip. 2,277 48,365 307/05 Mainframe Computer Equipment 2 5,279 307/11 Telephone Systems 21 3,918 307/12 Telecommunications Equip. 7 1,194 307/101 GATX Capital Leases 9,322 18,180 307/102 Misc. Capital Leases 183 5,500 308/01 Furniture & Fixtures 1,079 13,392 308/09 Data Handling Equipment & Miscellaneous 1,909 8,889 309/08 Autos, Trucks & Trailers 139 873 310/07 Aircraft 56 55,410 311/10 Software 2,790 56,003 311/13 Coal Pilot Scale Combustion Facility - 1,671 ---------- --------- TOTAL 17,965 228,703 ====== ======= 3/ DESCRIBE OTHER SERVICE COMPANY PROPERTY: 1. Purchased computer software and software licenses. 2. Pulverized coal pilot scale combustion facility. 4/ DESCRIBE CONSTRUCTION WORK IN PROGRESS: Construction Work in Progress ending balance of $241 is for software development of GIMS (hardware/software) and Sea Crate (Equipment) projects.
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6 ANNUAL REPORT OF SOUTHERN COMPANY SERVICES, INC. For the Year Ended December 31, 2003 (Thousands of Dollars) SCHEDULE III ACCUMULATED PROVISION FOR DEPRECIATION AND AMORTIZATION OF SERVICE COMPANY PROPERTY [Enlarge/Download Table] ADDITIONS OTHER BALANCE AT CHARGED CHARGES BALANCE AT BEGINNING TO ADD (1) CLOSE OF DESCRIPTION OF YEAR ACCT #403 RETIREMENTS (DEDUCT) YEAR ----------- --------- --------- ----------- -------- --------------- Account 301 ORGANIZATION - - - - - 303 MISCELLANEOUS INTANGIBLE PLANT - - - - - 304 LAND & LAND RIGHTS - - - - - 305 STRUCTURES AND IMPROVEMENTS 1,482 85 - 1 1,568 306 LEASEHOLD IMPROVEMENTS 7,313 1,441 - (4) 8,750 307 EQUIPMENT 46,880 9,099 (1,834) 45 54,190 307 GATX CAPITAL LEASES 959 - - 3,444 4,403 307 MISC, CAPITAL LEASES 3,292 - - 1,557 4,849 308 OFFICE FURNITURE AND FIXTURES 10,774 1,605 (114) 4 12,269 309 AUTOMOBILES, OTHER VEHICLES AND RELATED GARAGE EQUIPMENT 670 46 (72) (2) 642 310 AIRCRAFT AND AIRPORT EQUIPMENT 5,948 2,394 (2,334) 2 6,010 311 OTHER SERVICE COMPANY PROPERTY 30,742 7,818 (435) (26) 38,099 ------- ------ ------ ----- ------- TOTAL 108,060 22,488 (4,789) 5,021 130,780 ======= ====== ====== ===== ======= (1) Provide an explanation of those charges considered material: GATX Capital Leases, 3,444 and Misc. Capital Leases, 1,557 amortize to Rent Expense Account 931-00021. ( ) Denotes red figure.
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7 ANNUAL REPORT OF SOUTHERN COMPANY SERVICES, INC. For the Year Ended December 31, 2003 (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 Change in Control Trust 6,566 8,392 Employee Energy Loans 562 386 ACE Limited - Reserve 69 69 Employee Computer Loans 5 2 ------- ------- Subtotal 7,202 8,849 ACCOUNT 136 - TEMPORARY CASH INVESTMENTS 14,100 1,500 ------- ------- TOTAL 21,302 10,349 ======= =======
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8 ANNUAL REPORT OF SOUTHERN COMPANY SERVICES, INC. For the Year Ended December 31, 2003 (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 6,619 6,997 Alabama Power Company 67,524 82,795 Georgia Power Company 92,647 67,642 Gulf Power Company 17,920 19,492 Mississippi Power Company 23,574 21,525 Savannah Electric and Power Company 7,248 7,925 Southern Communications Services, Inc. 1,544 1,540 Southern Company Energy Solutions, LLC 630 265 Southern Company Gas, LLC 19,294 17,928 Southern Company Holdings, Inc. 1,342 650 Southern Company Rail Services - 130 Southern Electric Generating Company 1,245 910 Southern Electric Railroad Company 492 342 Southern Information Holding Company, Inc. 1 - Southern Management Development, Inc. 428 375 Southern Nuclear Operating Company, Inc. 9,524 9,244 Southern Power Company 5,668 22,325 Southern Telecom, Inc. 506 110 -------- -------- TOTAL 256,206 260,195 ======== ======== (Continued on Page 8A)
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8A ANNUAL REPORT OF SOUTHERN COMPANY SERVICES, INC. For the Year Ended December 31, 2003 (Thousands of Dollars) (Continued) 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 sub-account should be provided. ANALYSIS OF CONVENIENCE OR ACCOMMODATION PAYMENTS: TOTAL PAYMENTS The Southern Company 823 Alabama Power Company 665,603 Georgia Power Company 575,891 Gulf Power Company 164,566 Mississippi Power Company 188,040 Savannah Electric and Power Company 103,085 Southern Communications Services, Inc. 19,543 Southern Company Energy Solutions, LLC - Southern Company Gas, LLC 236,982 Southern Electric Generating Company 352 Southern Management Development, Inc. 3,708 Southern Nuclear Operating Company, Inc. 156,197 Southern Power Company 171,420 ----------- TOTAL PAYMENTS 2,286,210 ========== The major portion of the above expenses consists of transactions related to Transmission Planning and Operations (TPO); Generation Energy Marketing (GEM) transactions, Southern Gas Billing (SGB) services and transactions relating to third party payroll payments, and transactions relating to Electric Power Research Institute dues.
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9 ANNUAL REPORT OF SOUTHERN COMPANY SERVICES, INC. For the Year Ended December 31, 2003 (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. [Enlarge/Download Table] DESCRIPTION LABOR EXPENSES TOTAL ----------- ----- -------- ----- ACCOUNT 152 - FUEL STOCK EXPENSES UNDISTRIBUTED 8,779 7,582 16,361 Total amount billed during current year as follows: Associated Companies The Southern Company (95) (396) (491) Alabama Power Company (2,613) (2,232) (4,845) Georgia Power Company (3,012) (2,376) (5,388) Gulf Power Company (723) (663) (1,386) Mississippi Power Company (1,160) (1,033) (2,193) Savannah Electric and Power Company (160) (127) (287) Southern Electric Railroad Company (13) (14) (27) Southern Company Energy Solutions, LLC - - - Southern Company Gas, LLC (364) (294) (658) Southern Company Holdings, Inc. (207) (134) (341) Southern Electric Generating Company (155) (140) (295) Southern Nuclear Operating Company, Inc. - - - Southern Company Rail Services (65) (37) (102) Southern Power Company (212) (135) (347) ------- ------- -------- Subtotal Associate Companies (8,779) (7,581) (16,360) ------- ------- -------- Non-Associated Companies: - (1) (1) ------- ------- -------- Subtotal Associate and Non-associate Companies (8,779) (7,582) (16,361) ------- ------- -------- TOTAL 0 0 0 ======= ======= ======== SUMMARY: Fuel services performed by the service company consist 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. The purchase of natural gas for the operating companies is included in the fuel services performed by the service company. Costs associated with this service are included in the above amounts: Labor - 1,764; Expenses - 1,748; Total - 3,512.
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10 ANNUAL REPORT OF SOUTHERN COMPANY SERVICES, INC. For the Year Ended December 31, 2003 (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
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11 ANNUAL REPORT OF SOUTHERN COMPANY SERVICES, INC. For the Year Ended December 31, 2003 (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. [Download Table] BALANCE AT BALANCE AT BEGINNING CLOSE OF DESCRIPTION OF YEAR YEAR ----------- ---------- ---------- ACCOUNT 174 - MISCELLANEOUS CURRENT AND ACCRUED ASSETS Interest Receivable -Temporary Cash Investments 44 4 Assets Held for Sale 2,504 - Intercompany Derivative-Current-SOCO - 1,033 ------ ------ Total 2,548 1,037 ====== ======
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12 ANNUAL REPORT OF SOUTHERN COMPANY SERVICES, INC. For the Year Ended December 31, 2003 (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 Prepaid Telecom Services - 4,492 Deferred Payroll Charge 10,364 9,547 Deposit for Georgia Sales and Use Tax 26 26 Executive Stock Option Taxes 314 175 Wilsonville Clean-up - 91 Intangible Asset - Minimum Pension Obligation 14,916 15,010 Unamortized Leasehold - Inverness 242 185 Unamortized Leasehold - Washington, DC 232 237 Sundry Delayed Clearance 3,338 4,247 ------ ------ Total 29,432 34,010 ====== ======
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13 ANNUAL REPORT OF SOUTHERN COMPANY SERVICES, INC. For the Year Ended December 31, 2003 (Thousands of Dollars) SCHEDULE X RESEARCH, DEVELOPMENT OR DEMONSTRATION EXPENDITURES INSTRUCTIONS: Provide a description of each material research, development, or demonstration project that incurred costs by the service corporation during the year. DESCRIPTION AMOUNT ----------- ------ ACCOUNT 188 - RESEARCH, DEVELOPMENT, OR DEMONSTRATION EXPENDITURES 39,988 Total amount billed/incurred during current year as follows: Government Projects: Clean Coal Technology Projects: Hammond Wall Fired Project (42) Other Government Projects: PSDF/Hot Gas Cleanup Project (23,645) EPRI Projects: RE&A EPRI Contracts (1,737) Advanced End-Use Technologies (8) Engineering EPRI Projects (367) EPRI Bulk Trans. System Reliability (112) Associate Companies: End-Use Research Projects (1,860) Power Delivery Research-Overhead Transmission (684) Power Delivery Research-Transmission Substations (624) Power Delivery Research-Distribution (842) Air Quality Studies (1,821) Combustion & Fuel Effects (1,592) Research Administration (429) Flue Gas Treatment (1,400) Advanced End-Use Technology Research (1,845) Advanced Energy Systems (1,949) Thermal & Fluid Sciences (982) R&D Tech Econ Assessments (49) -------- TOTAL AMOUNT BILLED/INCURRED (39,988) -------- TOTAL 0 ========
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14 ANNUAL REPORT OF SOUTHERN COMPANY SERVICES, INC. For the Year Ended December 31, 2003 (Thousands of Dollars) SCHEDULE XI - PROPRIETARY CAPITAL [Download Table] 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 725 INSTRUCTIONS: Classify amounts in each account with brief explanation, disclosing the general nature of transactions that gave rise to the reported amounts. DESCRIPTION AMOUNT ACCOUNT 211 MISCELLANEOUS PAID-IN CAPITAL 150 OTHER COMPREHENSIVE INCOME (19,800) -------- TOTAL (19,650) ACCOUNT 215 APPROPRIATED RETAINED EARNINGS - TOTAL - 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 non-associates 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 BEGINNING OR DIVIDENDS AT CLOSE DESCRIPTION OF YEAR (LOSS) PAID OF YEAR ----------- ---------- ---------- ------------- -------- ACCOUNT 216 UNAPPROPRIATED RETAINED EARNINGS - - - - TOTAL - - - - ------ TOTAL PROPRIETARY CAPITAL (18,925) ====== ( ) Denotes red figure.
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15 ANNUAL REPORT OF SOUTHERN COMPANY SERVICES, INC. For the Year Ended December 31, 2003 (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. [Enlarge/Download Table] 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: NOTES PAYABLE Merrill Lynch & Co. 12/15/2009 7.625 40,000 40,000 - - 40,000 Equity Office Properpies 12/01/2005 7.25 13,600 3,136 - 3,136 - DERIVATIVE Fair Value Hedge Notional Amount 12/15/2009 Fixed: 7.625% --------------- 40,000 Floating: 6-month Libor + 2.92% 787 - 787 CAPITAL LEASE * ------------- GATX Technology Services 01/31/06 - 11/30/07 4.59 - 5.29 15,991 5,860 7,133 3,378 9,615 IR Mainframe 07/31/03 - 04/30/07 5.00 - 8.00 8,597 3,149 142 2,652 639 ------ ------ --------- -------- --------- TOTAL 78,188 52,145 8,062 9,166 51,041 ====== ====== ======= ======== ======= 1/GIVE AN EXPLANATION OF DEDUCTIONS: Amounts shown were transferred to current maturities. Equity Office - $1,511,633 was transferred to current maturities and $1,624,942 was transferred to deferred credit. * The company has entered into four-year leases for personal computers and other technology equipment. Multiple leases were created; the amount authorized is the total of all capitalized leases prior to amortization.
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16 ANNUAL REPORT OF SOUTHERN COMPANY SERVICES, INC. For the Year Ended December 31, 2003 (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 - - ------- ------- TOTAL - - ======= ======= ACCOUNT 234 - ACCOUNTS PAYABLE TO ASSOCIATE COMPANIES The Southern Company 557 - Alabama Power Company 55,767 31,787 Georgia Power Company 7,239 14,354 Gulf Power Company 8,958 9,328 Mississippi Power Company 12,805 2,251 Savannah Electric and Power Company 275 77 Southern Communications Services, Inc. 372 397 Southern Company Gas, LLC 4,749 3,581 Southern Electric Generating Company 20 - Southern Management and Development 62 62 Southern Nuclear Operating Company, Inc. 2,831 - Southern Power Company 17,799 149 ------- ------- TOTAL 111,434 61,986 ======= ======= ACCOUNT 242 - MISCELLANEOUS CURRENT AND ACCRUED LIABILITIES Incentive Pay (PPP) 88,778 81,613 Vacation Clearing Account 20,589 20,158 Accrued Labor & Related Overheads 10,514 12,050 Employee Group Insurance Premiums - 1,001 Employee Group Insurance Claims Reserve 1,812 2,800 Early Retirement Benefits 1,079 1,070 Accumulated Provision for Major Overhaul of Aircraft 748 423 Supplemental Pensions and Benefits 6,525 6,208 Department of Energy 189 509 Flex and Save Benefits 1,789 2,042 Severance Pay 7,564 9,668 Metro Life Advance-Current 301 301 Performance Dividend Plan 20,922 21,817 Employee Merchandise Withholding 24 - (Continued on Page 16A)
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16A ANNUAL REPORT OF SOUTHERN COMPANY SERVICES, INC. For the Year Ended December 31, 2003 (Thousands of Dollars) SCHEDULE XIII - CURRENT AND ACCRUED LIABILITIES (Continued) BALANCE AT BALANCE AT BEGINNING CLOSE OF DESCRIPTION OF YEAR YEAR ----------- ---------- ---------- TPO Study 2,553 371 SCS - U.S. Savings Bonds Withholdings 304 196 Funds Dist-Holders SE P&L Corp. 13 13 SCS-FLEX Benefits Premiums 2,043 2,218 Georgia Power - Legal Withholdings 12 - Associated Companies - Employee Savings Plan 12 29 Washington DC Sublease Deposit - Aircraft Owners & Pilots Assoc. 54 37 Crown - 17 Miscellaneous (16 Beginning) (23 Ending) (53) (64) ------- ------- TOTAL 165,772 162,477 ======= =======
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17 ANNUAL REPORT OF SOUTHERN COMPANY SERVICES, INC. For the Year Ended December 31, 2003 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 other affiliates, as further discussed in Note 2. The financial statements are prepared in conformity with accounting principles generally accepted in the United States, which requires the use of estimates. The actual results may differ from those estimates. Cash and Cash Equivalents The Company considers temporary cash investments with original maturities of 90 days or less to be cash equivalents. 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 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 3 to 12 years). Leasehold improvements are amortized over the lives of the respective leases. 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.
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17A ANNUAL REPORT OF SOUTHERN COMPANY SERVICES, INC. For the Year Ended December 31, 2003 SCHEDULE XIV NOTES TO FINANCIAL STATEMENTS 2. SERVICE AGREEMENTS The Company has entered into agreements under which it renders specialized services, at cost, to Southern Company and its subsidiaries. The Company's affiliates include the following: retail operating companies (Alabama Power Company, Georgia Power Company, Gulf Power Company, Mississippi Power Company, and Savannah Electric); Southern Electric Generating Company (an operating subsidiary owned equally by Alabama Power Company and Georgia Power Company); Southern Communications Services (Southern LINC) (provides digital wireless communications services to the retail operating companies and the public in the Southeast); Southern Company Energy Solutions (develops new business opportunities related to energy products and services); Southern Nuclear Operating Company (operates and provides services to Southern Company's nuclear power plants); Southern Electric Railroad Company (provides railroad services to the retail operating companies); Southern Power Company (constructs, owns, and manages Southern Company's competitive assets and sells electricity at market-based rates in the wholesale market); Southern Telecom (provides fiber cable services within the Southeast); Southern Holdings (an intermediate holding subsidiary for Southern's investments in leveraged leases, synthetic fuels, and an energy services business); and Southern Company Gas (a competitive retail natural gas marketer serving Georgia). The Company's services include general executive and advisory services, general engineering, design engineering, purchasing, accounting and statistical, finance and treasury, tax, information resources, marketing, auditing, 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 the operating utilities, power pool operations. The agreements will 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. 3. RETIREMENT BENEFITS The Company has a defined benefit, trusteed, pension plan that covers substantially all employees. The company also provides certain non-qualified benefit plans for a selected group of management and highly compensated individuals. 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. In 2002, Southern Company adopted several plan changes that had the effect of increasing benefits to both current and future retirees. The measurement date for plan assets and obligations is September 30 for each year.
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17B ANNUAL REPORT OF SOUTHERN COMPANY SERVICES, INC. For the Year Ended December 31, 2003 SCHEDULE XIV NOTES TO FINANCIAL STATEMENTS Pension Plans The accumulated benefit obligation for the pension plans was $644 million in 2003 and $550 million in 2002. Changes during the year in the projected benefit obligations, accumulated benefit obligations, and in the fair value of plan assets were as follows: (in thousands) Projected Benefit Obligations ---------------------------------- 2003 2002 ---- ---- Balance at beginning of year 644,991 566,037 Service cost 20,970 18,931 Interest cost 41,393 41,922 Benefits paid (24,682) (22,571) Plan amendments 1,719 15,662 Actuarial (gain) loss 24,750 25,010 ------- ------- Balance at end of year 709,141 644,991 ======= ======= Plan Assets ----------------------------------- 2003 2002 ---- ---- Balance at beginning of year 609,745 666,092 Actual return on plan assets 97,620 (44,291) Employer contributions 4,855 4,300 Benefits paid (24,682) (22,571) Receivables/Payables due to transfers (20,887) 6,215 ------- ------- Balance at end of year 666,651 609,745 ======= ======= The accrued pension costs recognized in the Balance Sheets are as follows: (in thousands) 2003 2002 ---- ---- Funded status (42,490) (35,245) Unrecognized transition obligation (3,666) (4,951) Unrecognized prior service cost 52,197 55,885 Unrecognized net (gain) loss 20,007 8,687 ------ ------ Prepaid asset, net 26,048 24,376 Portion included in benefit obligations 27,254 22,548 ------ ------ Total prepaid assets recognized in the Balance Sheet 53,302 46,924 ====== ====== In 2003 and 2002, amounts recognized in the Balance Sheets for accumulated other comprehensive income and intangible assets to record the minimum pension liability related to the non-qualified plans were $30 million and $23 million and $15 million and $15 million, respectively.
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17C ANNUAL REPORT OF SOUTHERN COMPANY SERVICES, INC. For the Year Ended December 31, 2003 SCHEDULE XIV NOTES TO FINANCIAL STATEMENTS Components of the pension plan's net periodic cost were as follows: (in thousands) 2003 2002 2001 ---- ---- ---- Service cost 20,970 18,931 18,490 Interest cost 41,393 41,922 39,047 Expected return on plan assets (60,508) (59,841) (56,920) Recognized net gain (4,069) (8,450) (9,377) Net amortization 3,581 2,608 2,062 ------ ------ ------ Net pension cost (income) 1,367 (4,830) (6,698) ====== ====== ====== Postretirement Benefits Changes during the year in the accumulated benefit obligations and in the fair value of plan assets were as follows: (in thousands) Accumulated Benefit Obligations 2003 2002 ---- ---- Balance at beginning of year 154,494 123,808 Service cost 3,192 2,722 Interest cost 9,880 9,116 Benefits paid (6,912) (6,689) Actuarial (gain) loss 2,932 25,537 ------- ------- Balance at end of year 163,586 154,494 ======= ======= Plan Assets --------------------------------- 2003 2002 ---- ---- Balance at beginning of year 24,792 26,642 Actual return on plan assets 4,064 (1,838) Employer contributions 6,887 6,677 Benefits paid (6,912) (6,689) ------ ------ Balance at end of year 28,831 24,792 ====== ====== The accrued postretirement costs recognized in the Balance Sheets are as follows: (in thousands) 2003 2002 ---- ---- Funded status (134,755) (129,701) Unrecognized transition obligation 3,743 4,147 Unrecognized prior service cost 22,878 24,435 Unrecognized net (gain) loss 24,737 23,478 Fourth quarter contributions 1,526 1,856 ------- ------- Accrued liability recognized in the Balance Sheet (81,871) (75,785) ======= =======
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17D ANNUAL REPORT OF SOUTHERN COMPANY SERVICES, INC. For the Year Ended December 31, 2003 SCHEDULE XIV NOTES TO FINANCIAL STATEMENTS Components of the plan's net periodic cost were as follows: (in thousands) 2003 2002 2001 ---- ---- ---- Service cost 3,192 2,722 2,850 Interest cost 9,880 9,116 8,791 Expected return on plan assets (2,598) (2,517) (2,386) Net amortization 2,169 1,811 1,572 ------ ------ ------ Net postretirement cost 12,643 11,132 10,827 ====== ====== ====== The weighted average rates assumed in the actuarial calculations used to determine both the benefit obligations and net periodic costs for the pension and postretirement benefits plans were: 2003 2002 2001 ---- ---- ---- Discount 6.00% 6.50% 7.50% Annual salary increase 3.75% 4.00% 5.00% Long-term return on plan assets 8.50% 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 8.25 percent for 2003 decreasing gradually to 5.25 percent through the year 2010 and remaining at that level thereafter. An annual increase or decrease in the assumed medical care cost trend rate of 1 percent would affect the accumulated benefit obligation and the service and interest cost components at December 31, 2003 as follows: (in thousands) 1 Percent 1 Percent Increase Decrease Benefit obligation 12,302 10,750 Service and interest costs 929 809 Employee Savings Plan The Company also sponsors a 401(k) defined contribution plan covering substantially all employees. The Company provides a 75 percent matching contribution up to 6 percent of an employee's base salary. The total matching contributions made to the plan for the years 2003, 2002, and 2001 were $9 million, $10 million, and $9 million, respectively. Work Force Reduction Programs The Company has incurred additional costs for work force reduction programs. The costs related to these programs were $17 million, $11 million, and $5 million for 2003, 2002, and 2001, respectively. These costs were charged to expense.
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17E ANNUAL REPORT OF SOUTHERN COMPANY SERVICES, INC. For the Year Ended December 31, 2003 SCHEDULE XIV NOTES TO FINANCIAL STATEMENTS 4. OPERATING LEASES The Company has operating lease agreements with various terms and expiration dates. Rental expense under all operating leases was approximately $51,977,000, $61,478,000, and $69,697,000 in 2003, 2002, and 2001, respectively. Future minimum lease payments under non-cancelable operating leases at December 31, 2003 were as follows: (in thousands) 2004 17,647 2005 13,217 2006 6,959 2007 2,762 2008 1,550 Thereafter 5,020 --------- Total 47,155 5. FINANCING Details of long-term debt, notes payable - other, and derivatives at December 31 are as follows: (in thousands) 2003 2002 ---- ---- Notes Payable: 7.625% Due 2009 40,000 40,000 7.25% Due 2004 1,512 4,543 Less Current Maturities (1,512) (1,407) ------ ------ Long-Term Notes Payable 40,000 43,136 ------ ------ Derivative: Fair Value Hedge - 6 Month LIBOR + 2.92% on $40 787 - million nominal amount due 2009 Less Current Maturities - - ------ ------ Long-Term Derivative 787 - ------ ------ Capitalized Lease Obligations: Total Capitalized Leases 16,773 15,882 Less Current Maturities (6,519) (6,873) ------ ------ Long-Term Capitalized Leases 10,254 9,009 ------ ------ Total Long-Term Debt 51,041 52,145 ====== ======
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17F ANNUAL REPORT OF SOUTHERN COMPANY SERVICES, INC. For the Year Ended December 31, 2003 SCHEDULE XIV NOTES TO FINANCIAL STATEMENTS In December 1999, the Company entered into a lease buyout agreement with Equity Office Properties on long-term capital lease obligations of Perimeter Center East. This lease payment obligation has been reflected as a long-term Notes Payable in the amount of $6,575,000 amortized at 7.25% for five years, ending December 1, 2004. On December 15, 1999, the Company issued $40,000,000 of Series A 7.625% Senior Notes to Merrill Lynch & Co. with proceeds being used to repay short-term debt to Southern Company and for various other corporate purposes. The entire principal will be due and payable on December 15, 2009. The Southern Company has guaranteed the principal and interest. In 2003, the Company entered into a derivative to hedge exposure to interest rate changes related to this note. The derivative is accounted for as a fair value hedge and was structured to match the critical terms of the hedged debt; therefore, no ineffectiveness has been recorded in earnings. The Company receives the fixed rate of 7.625% and pays six-month LIBOR plus 2.92%. As a result, interest of $482,504 was credited against the client companies' expenses during the year ended December 31, 2003. Maturities over the next five years of the Company's long-term debt outstanding at December 31, 2003 are as follows: (in thousands) 2004 8,031 2005 5,211 2006 3,838 2007 1,206 2008 - Thereafter 40,787 ------- Total 59,073 ======= 6. PURCHASE COMMITMENTS The Company has various purchase commitments. At December 31, 2003, total capital expenditures are budgeted to be approximately $27 million in 2004.
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18 ANNUAL REPORT OF SOUTHERN COMPANY SERVICES, INC. For the Year Ended December 31, 2003 (Thousands of Dollars) SCHEDULE XV STATEMENT OF INCOME ACCOUNT DESCRIPTION CURRENT YEAR PRIOR YEAR ------- ----------- ------------ ---------- INCOME 457 Services rendered to associate companies 823,065 853,111 458 Services rendered to non-associate companies 33,231 30,319 421 Miscellaneous income or loss 1,602 (3,808) ------- ------- Total Income 857,898 879,622 ------- ------- EXPENSE 920 Salaries and wages 374,710 397,714 921 Office supplies and expenses 88,935 92,154 922 Administrative expense transferred-credit - - 923 Outside services employed 143,182 162,797 924 Property insurance 20,014 (787) 925 Injuries and damages 13,852 12,838 926 Employee pensions and benefits 44,805 31,686 928 Regulatory commission expense 23 104 930.1 General advertising expenses 13,675 15,971 930.2 Miscellaneous general expenses 12,183 12,639 931 Rents 54,411 62,010 932 Maintenance of structures and equipment 34,648 34,624 403 Depreciation and amortization expense 22,488 23,043 408 Taxes other than income taxes 24,545 25,450 409 Income taxes (125) (1,274) 410 Provision for deferred income taxes - - 411 Provision for deferred income taxes - credit - - 411.5 Investment tax credit - - 426.1 Donations 5,705 4,413 426.5 Other deductions - - 427 Interest on long-term debt 2,842 4,068 430 Interest on debt to associate companies 321 89 431 Other interest expense 1,684 2,083 ------- ------- Total Expense 857,898 879,622 ------- ------- Net Income - - ======= =======
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19 ANNUAL REPORT OF SOUTHERN COMPANY SERVICES, INC. For the Year Ended December 31, 2003 (Thousands of Dollars) ANALYSIS OF BILLING ASSOCIATE COMPANIES ACCOUNT 457 [Download Table] DIRECT INDIRECT COMPENSATION TOTAL COSTS COSTS FOR USE AMOUNT NAME OF ASSOCIATE COMPANY CHARGED CHARGED OF CAPITAL BILLED ------------------------- ------- ------- ------------ ------ 457-1 457-2 457-3 The Southern Company 44,488 8,032 210 52,730 Alabama Power Company 170,592 45,275 1,270 217,137 Georgia Power Company 237,126 64,305 1,765 303,196 Gulf Power Company 42,954 12,050 317 55,321 Mississippi Power Company 36,759 9,045 267 46,071 Savannah Electric & Power Co. 13,076 3,086 91 16,253 Southern Communications Services, Inc. 17,329 1,155 34 18,518 Southern Company Energy Solutions, LLC 1,655 845 21 2,521 Southern Company Gas, LLC 8,236 2,495 91 10,822 Southern Company Holdings, Inc. 2,359 584 20 2,963 Southern Company Rail Services 256 94 2 352 Southern Electric Generating Co. 3,918 1,099 29 5,046 Southern Electric Railroad Co. 248 57 1 306 Southern Management Development, Inc. 2,626 707 28 3,361 Southern Nuclear Operating Co. 31,059 8,156 219 39,434 Southern Power Company 39,063 8,081 359 47,503 Southern Telecom, Inc. 1,247 277 7 1,531 ------- ------- ----- ------- TOTAL 652,991 165,343 4,731 823,065 ======= ======= ===== =======
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20 ANNUAL REPORT OF SOUTHERN COMPANY SERVICES, INC. For the Year Ended December 31, 2003 (Thousands of Dollars) ANALYSIS OF BILLING NONASSOCIATE COMPANIES ACCOUNT 458 [Enlarge/Download Table] 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) 20,654 2,943 90 23,687 - 23,687 Electric Power Research Institute 1,996 225 5 2,226 - 2,226 Vogt-NEM 11 - - 11 - 11 APC Credit Union 28 - - 28 - 28 Gulf Power Credit Union 11 - - 11 - 11 AT & T 30 - - 30 - 30 Southern Interexchange 12 - - 12 - 12 Georgia Charitable Foundation 7 - - 7 - 7 Southern System Master Retirement Trust 1,013 - 14 1,027 - 1,027 POWERCO 16 - - 16 - 16 FP&L; JEA; Tallahassee, FPC (Unit Power Sales) 45 31 1 77 - 77 FP&L; JEA, Tallahassee, FPC(OPS SCH. Fees) 1,803 - - 1,803 - 1,803 Oglethorpe Power Corporation (OPS SCH. Fees) 4,874 - - 4,874 - 4,874 SERC IR & Telecommunications Serv-APC Bldg 9 - - 9 - 9 Alabama Electric Cooperative 12 5 - 17 - 17 Duke Energy Services 7 2 - 9 - 9 Municipal Electric Authority of Georgia 13 4 - 17 - 17 Oglethorpe Power Corporation 37 12 1 50 - 50 South Mississippi Electric Power 9 3 - 12 - 12 Southeastern Electric Power Administration 4 2 - 6 - 6 Transmission - Studies (81 items) (993) 133 4 (856) - (856) Mirant 74 52 1 127 - 127 Other (17 items less than $5,000) 30 1 - 31 - 31 ------ ------ --- ------ --- ------ TOTAL 29,702 3,413 116 33,231 - 33,231 ====== ===== === ====== === ====== (Continued on Page 20A)
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20A ANNUAL REPORT OF SOUTHERN COMPANY SERVICES, INC. For the Year Ended December 31, 2003 (Thousands of Dollars) (Continued) ANALYSIS OF BILLING NONASSOCIATE COMPANIES ACCOUNT 458 INSTRUCTION: Provide a brief description of the services rendered to each non-associate company: Department of Energy (DOE) - Contract services concerning clean coal technology, Power System Development Facility/hot gas cleanup project. Electric Power Research Institute - Testing SNCR Pilot; Clyde Bergermann smartcannon demonstration; Demonstration carbon in ash monitor; Emission and performance impacts of CT inlet fogging; Improved power plant dynamics performance; Gadsden switchgrass project; Indiglo agglomeration project; Gorgas SCR pilot plant; RTHR package demonstration; Demonstration and evaluation of SNCR trim; Switchgrass pellet project; Slag sensor demo; Flywheel evaluation; Arsenic mobility; Green screen; Biloxi MGP roam modeling; Insitu chemical fixation; Sources of groundwater contamination at MGP sites; Hybrid ion exchange resin evaluation; Metals sequestration in ash; Phytoremediation of arsenic contaminated soil; Evaluation of validity of remedial options assessment; Sedimant study; PCB soils treatment; Insitu solidification; Technology review for arsenic at substation sites; TRELSS-bulk transmission system reliability evaluation. Vogt-NEM - Developing test procedures and conducting performance retest on the Barry 7 HRSG's. APC Credit Union, Gulf Credit Union - Telecommunication services. AT&T, Southern Interexchange - Telecommunication services related to fiber optics. Georgia Charitable Foundation - Financial Services Chase Manhattan Bank (Southern System Master Retirement Trust) - Management and administration of Pension Fund for the Southern Company. POWERCO - Telecommunications services. FP&L, FPC, JEA, and City of Tallahassee - Unit Power Sales (UPS) true-up and scheduling agreement. Oglethorpe Power Corporation - Transmission Planning Operations (TPO) scheduling fees. Southeastern Electric Reliability Council - Occupancy, telecommunications and other related services. Ala. Electric Coop, Duke Energy Svcs; MEAG, OPC, S. Miss Elec Pwr., SEPA - Southeastern Electric Reliability Council (SERC) security coordinator. Transmission-Studies - Studies to determine impact of and availability to third party wholesale usage of transmission lines. Mirant - Various engineering and technical services.
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21 ANNUAL REPORT OF SOUTHERN COMPANY SERVICES, INC. For the Year Ended December 31, 2003 (Thousands of Dollars) SCHEDULE XVI ANALYSIS OF CHARGES FOR SERVICE ASSOCIATE AND NONASSOCIATE COMPANIES INSTRUCTION: Total cost of service will equal for associate and non-associate companies the total amount billed under their separate analysis of billing schedules. [Enlarge/Download Table] 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 357,437 9,461 366,898 7,584 228 7,812 365,021 9,689 374,710 921 OFFICE SUPPLIES & EXPENSES 74,104 9,098 83,202 5,535 198 5,733 79,639 9,296 88,935 922 ADMINISTRATIVE EXP. TRANSFERRED-CREDIT - - - - - - - - - 923 OUTSIDE SERVICES EMPLOYED 126,997 4,774 131,771 11,258 153 11,411 138,255 4,927 143,182 924 PROPERTY INSURANCE 19,395 416 19,811 193 10 203 19,588 426 20,014 925 INJURIES AND DAMAGES 13,677 169 13,846 2 4 6 13,679 173 13,852 926 EMPLOYEE PENSIONS & BENEFITS 9,477 34,561 44,038 - 767 767 9,477 35,328 44,805 928 REGULATORY COMMISSION EXPENSE 23 - 23 - - - 23 - 23 930.1 GENERAL ADVERTISING EXPENSES 13,675 - 13,675 - - - 13,675 - 13,675 930.2 MISCELLANEOUS GENERAL EXPENSES (62,106) 67,801 5,695 5,021 1,467 6,488 (57,085) 69,268 12,183 931 RENTS 39,302 14,975 54,277 77 57 134 39,379 15,032 54,411 932 MAINTENANCE OF STRUCTURES AND EQUIPMENT 32,011 2,589 34,600 20 28 48 32,031 2,617 34,648 403 DEPRECIATION & AMORTIZATION EXPENSE 19,926 2,538 22,464 12 12 24 19,938 2,550 22,488 408 TAXES OTHER THAN INCOME TAXES 5,100 18,956 24,056 - 489 489 5,100 19,445 24,545 409 INCOME TAXES (125) - (125) - - - (125) - (125) 410 PROVISION FOR DEFERRED INCOME TAXES - - - - - - - - - 411 PROVISION FOR DEFERRED INCOME TAXES CREDIT - - - - - - - - - 411.5 INVESTMENT TAX CREDIT - - - - - - - - - 426.1 DONATIONS 5,700 5 5,705 - - - 5,700 5 5,705 ------------------ -------------------- -------- ----------- --------------------------------- SUBTOTAL EXPENSES 654,593 165,343 819,936 29,702 3,413 33,115 684,295 168,756 853,051
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21A ANNUAL REPORT OF SOUTHERN COMPANY SERVICES, INC. For the Year Ended December 31, 2003 (Thousands of Dollars) SCHEDULE XVI ANALYSIS OF CHARGES FOR SERVICE ASSOCIATE AND NONASSOCIATE COMPANIES [Enlarge/Download Table] 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 - - 2,774 - - 68 - - 2,842 430 INTEREST ON DEBT TO ASSOCIATE COMPANIES - - 313 - - 8 - - 321 431 OTHER INTEREST EXPENSE - - 1,644 - - 40 - - 1,684 ------- ------- ------- ------ ----- ------ ------- ------- ------- TOTAL EXPENSES 654,593 165,343 824,667 29,702 3,413 33,231 684,295 168,756 857,898 421 MISCELLANEOUS GAIN (1,602) - (1,602) - - - (1,602) - (1,602) ------- ------- ------- ------ ----- ------ ------- ------- ------- TOTAL COST OF SERVICES 652,991 165,343 823,065 29,702 3,413 33,231 682,693 168,756 856,296 ======= ======= ======== ====== ====== ======= ======== ======== ======= ( ) Denotes Red Figure.
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22 ANNUAL REPORT OF SOUTHERN COMPANY SERVICES, INC. For the Year Ended December 31, 2003 (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) DEPARTMENT OR SERVICE FUNCTION [Enlarge/Download Table] Administration Finance Total and Corporate Customer External and DESCRIPTION OF ITEMS Amount General Counsel Service Engineering Executive Affairs Accounting -------------------- ------- ------- -------- -------- ----------- --------- -------- --------- 920 SALARIES AND WAGES 374,710 20,178 8,986 7,615 57,973 6,370 7,458 22,196 921 OFFICE SUPPLIES AND EXPENSES 88,935 3,043 1,143 12,851 8,362 164 2,433 6,109 923 OUTSIDE SERVICES EMPLOYED 143,182 8,335 21,862 7,769 18,023 1,249 4,654 5,932 924 PROPERTY INSURANCE 20,014 1,049 - - - - - 18,772 925 INJURIES AND DAMAGES 13,852 207 - - 4 - - 13,638 926 EMPLOYEE PENSIONS & BENEFITS 44,805 44,557 19 10 10 1 2 20 928 REGULATORY COMMISSION EXPENSE 23 23 - - - - - - 930.1 GENERAL ADVERTISING EXPENSES 13,675 33 - - - 300 13,158 12 930.2 MISCELLANEOUS GENERAL EXPENSES 12,183 1,512 754 24 858 494 1,918 (190) 931 RENTS 54,411 24,232 87 6 2,684 10 42 36 932 MAINTENANCE OF STRUCTURES & EQUIP 34,648 3,680 15 373 658 11 67 180 403 DEPRECIATION & AMORTIZATION, EXPENSE 22,488 1,674 55 1,090 360 15 58 42 408 TAXES OTHER THAN INCOME TAXES 24,545 24,542 - - - - - - 409 INCOME TAXES (125) 18 - - - - - (263) 426.1 DONATIONS 5,705 112 1,164 2 36 822 2,934 33 427 INTEREST ON LONG-TERM DEBT 2,842 2,475 - - - - - - 430 INTEREST ON DEBT TO ASSOCIATE CO. 321 321 - - - - - - 431 OTHER INTEREST EXPENSE 1,684 729 - - - - - - ------- ------- ------ ------ ------ ----- ------ ------ TOTAL EXPENSES 857,898 136,720 34,085 29,740 88,968 9,436 32,724 66,517 421 MISCELLANEOUS LOSS (GAIN) (1,602) (252) (63) (55) (312) (18) (61) (123) ------- ------- ------ ------ ------ ----- ------ ------ TOTAL COSTS 856,296 136,468 34,022 29,685 88,656 9,418 32,663 66,394 ======= ======= ====== ======= ====== ===== ====== ====== ( ) Denotes Red Figure.
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22A ANNUAL REPORT OF SOUTHERN COMPANY SERVICES, INC. For the Year Ended December 31, 2003 (Thousands of Dollars) SCHEDULE XVII SCHEDULE OF EXPENSE DISTRIBUTION BY DEPARTMENT OR SERVICE FUNCTION DEPARTMENT OR SERVICE FUNCTION [Enlarge/Download Table] Procurement Research & Southern ACCOUNT Generation Human Information Internal and Environmental Company System Transmission NUMBER Services Resources Resources Auditing Marketing Materials Affairs Gas Air Planning 920 74,509 24,587 83,673 6,133 8,459 5,228 12,274 4,521 4,888 19,662 921 10,052 2,408 28,586 592 873 493 7,428 773 1,674 1,951 923 12,595 7,940 24,951 180 3,280 1,645 21,802 362 98 2,505 924 - - - - - - 193 - - - 925 - - 1 - - - 2 - - - 926 115 25 25 2 4 4 1 - 7 3 928 - - - - - - - - - - 930.1 8 1 - - - - - 163 - - 930.2 3,472 2,005 6,322 119 1,023 526 (1,070) (3) 1,167 (6,748) 931 556 381 25,277 135 188 76 102 - 545 54 932 735 104 23,567 20 408 794 46 28 2,663 1,299 403 1,513 1,149 6,284 7 1,053 11 551 - 2,493 6,133 408 - - - - - - - - 3 - 409 120 - - - - - - - - - 426.1 418 59 2 - 7 - 116 - - - 427 - - 367 - - - - - - - 430 - - - - - - - - - - 431 - - 955 - - - - - - - ------- ------ ------- ----- ------ ----- ------ ----- ------ ------ Total Expenses 104,093 38,659 200,010 7,188 15,295 8,777 41,445 5,844 13,538 24,859 421 (184) (72) (181) (13) (29) (16) (144) (11) (25) (43) ------- ------ ------- ----- ------ ----- ------ ----- ------ ------- TOTAL COSTS 103,909 38,587 199,829 7,175 15,266 8,761 41,301 5,833 13,513 24,816 ======= ====== ======= ===== ====== ===== ====== ===== ====== ====== ( ) Denotes Red Figure.
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23 ANNUAL REPORT OF SOUTHERN COMPANY SERVICES, INC. For the Year Ended December 31, 2003 (Thousands of Dollars) DEPARTMENTAL ANALYSIS OF SALARIES ACCOUNT 920 DEPARTMENTAL SALARY EXPENSE [Enlarge/Download Table] 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 ------ ------- ---------- ---------- --------- Administration and General 20,178 (2,283) 22,444 17 - Corporate Counsel 8,986 1,040 7,885 61 53 Customer Service 7,615 - 7,615 - 104 Engineering 57,973 688 56,478 807 467 Executive 6,370 958 5,412 - 7 External Affairs 7,458 2,735 4,723 - 47 Finance & Accounting 22,196 5,382 16,058 756 180 Generation Services 74,509 4,098 70,329 82 616 Human Resources 24,587 25 24,421 141 232 Information Resources 83,673 85 83,519 69 930 Internal Auditing 6,133 379 5,754 - 58 Marketing 8,459 153 8,306 - 66 Procurement & Materials 5,228 12 5,106 110 50 Research & Environmental Affairs 12,274 42 6,827 5,405 106 Southern Company Gas 4,521 - 4,521 - 38 System Air 4,888 268 4,620 - 55 Transmission Planning 19,662 1 19,297 364 170 ---------- ----------- ---------- -------- -------- TOTAL 374,710 13,583 353,315 7,812 3,179 ======== ======= ======== ====== ====== ( ) Denotes red figure.
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24 ANNUAL REPORT OF SOUTHERN COMPANY SERVICES, INC. For the Year Ended December 31, 2003 (Thousands of Dollars) OUTSIDE SERVICES EMPLOYED ACCOUNT 923 INSTRUCTIONS: Provide a breakdown by sub-account of outside services employed. If the aggregate amounts paid to any one payee and included within one sub-account is less than $100,000, only the aggregate number and amount of all such payments included within the sub-account need be shown. Provide a subtotal for each type of service. [Enlarge/Download Table] RELATIONSHIP "A"=ASSOCIATE DESCRIPTION OF "NA"= NON FROM WHOM PURCHASED LARGEST INVOICE ASSOCIATE AMOUNT ------------------- --------------- ------------- ------ Legal Services Baker & Hostetler, LLP Legal Services NA 2,122 Balch & Bingham, LLP Legal Services NA 6,980 Dorsey & Whitney Legal Services NA 556 Edison Electric Institute Legal Services NA 493 Hunton & Williams Legal Services NA 1,706 Keith Bissell Legal Services NA 126 McNatt & Greene Legal Services NA 164 Powell, Goldstein, Frazer & Murphy, LLP Legal Services NA 421 Troutman, Sanders, LLP Legal Services NA 7,119 Wilmer, Cutler & Pickering Legal Services NA 238 Forty-Four Other Items Less than $100,000 NA 966 -------- Subtotal - Legal Services 20,891 ------ Auditing Service Deloitte & Touche, LLP Audit Services NA 2,051 One Other Items Less than $100,000 NA 9 ----------- Subtotal - Auditing Services 2,060 -------- (Continued on Page 24A)
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24A ANNUAL REPORT OF SOUTHERN COMPANY SERVICES, INC. For the Year Ended December 31, 2003 (Thousands of Dollars) OUTSIDE SERVICES EMPLOYED ACCOUNT 923 INSTRUCTIONS: Provide a breakdown by sub-account of outside services employed. If the aggregate amounts paid to any one payee and included within one sub-account is less than $100,000, only the aggregate number and amount of all such payments included within the sub-account need be shown. Provide a subtotal for each type of service. [Enlarge/Download Table] RELATIONSHIP "A"=ASSOCIATE DESCRIPTION OF "NA"= NON FROM WHOM PURCHASED LARGEST INVOICE ASSOCIATE AMOUNT ------------------- --------------- ------------- ------ Engineering Services ADECCO Services Temporary Services NA 324 Airco Industrial Contractors, Inc. Contract Engineering Serv. NA 175 Alabama Power Company Project Support A 213 Alstom Power, Inc. Contract Engineering Serv. NA 256 BE&K Engineering Co. Contract Engineering Serv. NA 7,813 BHA Group, Inc. Inspection Services NA 373 Caddell Construction Co., Inc. Construction Services NA 227 CB & A Project Management Serv. Project Management NA 1,229 Comprehensive Computer Consulting, Inc. Information Technology Serv. NA 139 Energy Design & Control Serv., Inc. Contract Engineering Serv. NA 327 Global Supply Group, Inc. Contract Engineers-Constructors NA 395 Hamon Research-Cottrell, Inc. Contract Engineering Serv. NA 199 Kellogg Brown & Root, Inc. Contract Engineering Serv. NA 219 Kinney Power Services Contract Engineering Serv. NA 173 NWL Contract Engineering Serv. NA 207 Parsons Energy & Chemicals Group, Inc. Inspection Services NA 133 Sargent & Lundy, LLC Contract Engineering Serv. NA 161 Siemens Westinghouse Power Systems Development NA 321 Southern Research Institute Power Systems Development NA 1,199 The E Group Project Management NA 1,035 The LRB Group, Inc. Inspection Services NA 115 Think Resources, Inc. Contract Engineering Serv. NA 105 United Dynamics Corp. Inspection Services NA 161 Universal Resources, Inc. Contract Engineering Serv. NA 4,055 Vital Inspection Professionals Inspection Services NA 222 One Hundred Other Items Less than $100,000 NA 1,537 -------- Subtotal - Engineering Services 21,313 ------- (Continued on Page 24B)
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24B ANNUAL REPORT OF SOUTHERN COMPANY SERVICES, INC. For the Year Ended December 31, 2003 (Thousands of Dollars) OUTSIDE SERVICES EMPLOYED ACCOUNT 923 INSTRUCTIONS: Provide a breakdown by sub-account of outside services employed. If the aggregate amounts paid to any one payee and included within one sub-account is less than $100,000, only the aggregate number and amount of all such payments included within the sub-account need be shown. Provide a subtotal for each type of service. [Enlarge/Download Table] RELATIONSHIP "A"=ASSOCIATE DESCRIPTION OF "NA"= NON FROM WHOM PURCHASED LARGEST INVOICE ASSOCIATE AMOUNT ------------------- --------------- --------------- ------ Other Services Accenture, LLP Consulting Services NA 5,208 Acxiom Corporation Information Technology Services NA 111 ADECCO USA, Inc. Temporary Services NA 706 ADP Investor Communication Serv. Investor Relations NA 750 Alabama Power Company Project Support A 10,567 Alexander Strategy Group, Inc. Consulting Services NA 173 Ann Randazzo Consulting Services NA 131 Artemis International Solutions Information Technology Services NA 195 Atmospheric Research & Analysis Consulting Services NA 2,271 Autodesk, Inc. Software Consulting services NA 161 Avaya, Inc. Information Technology Services NA 118 Barbour, Griffith & Rogers Consulting Services NA 221 Bellomy Research, Inc. Consulting Services NA 260 Black & Veatch Information Technology Services NA 103 Blankenship & Seay Consulting Group, Inc. Consulting Services NA 178 Boston Consulting Group, Inc. Consulting Services NA 799 Bowne of Atlanta, Inc. Stockholder Services NA 254 Caddell Construction Co. Construction Services NA 1,263 Callahan & Associated, Inc. Telecommunications Services NA 121 Carter & Associates Property Management NA 258 Cauthen & Associates Consulting Services NA 219 Checkfree Services Corporation Consulting Services NA 184 Chesley Brown International, Inc. Security Management Services NA 134 Click2Learn.Com Information Technology Services NA 291 CMI Marketing Services NA 365 Comprehensive Computer Consulting, Inc. Information Technology Services NA 5,739 (Continued on page 24C)
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24C ANNUAL REPORT OF SOUTHERN COMPANY SERVICES, INC. For the Year Ended December 31, 2003 (Thousands of Dollars) OUTSIDE SERVICES EMPLOYED ACCOUNT 923 INSTRUCTIONS: Provide a breakdown by sub-account of outside services employed. If the aggregate amounts paid to any one payee and included within one sub-account is less than $100,000, only the aggregate number and amount of all such payments included within the sub-account need be shown. Provide a subtotal for each type of service. [Enlarge/Download Table] RELATIONSHIP "A"=ASSOCIATE DESCRIPTION OF "NA"= NON FROM WHOM PURCHASED LARGEST INVOICE ASSOCIATE AMOUNT ------------------- --------------- ---------------- ------ Computer Technology Solutions, Inc. Information Technology Services NA 356 COMSYS Information Technology Services NA 294 Creative Financial Group, LTD Financial Services NA 250 Crossaccess Corporation Software Consulting Services NA 241 Cybervault Services, Inc. Information Technology Services NA 103 Daniel J. Edelman, Inc. Consulting Services NA 173 Dell Marketing, LP Information Technology Services NA 416 Deloitte & Touche LLP Consulting Services NA 826 Dewey Ballantine Financial Services NA 758 Docucorp International Programming Services NA 121 Doozer Software, Inc. Software Consulting Services NA 537 Drotter Human Resources, Inc. Consulting Services NA 100 Dun & Bradstreet Software Consulting Services NA 133 Earth Tech, Inc. Consulting Services NA 112 Electric Power Research Institute Research and Development NA 5,367 Energy Ventures Analysis, Inc. Marketing Services NA 101 Entec Services, Inc. Consulting Services NA 148 Equifax Credit Info. Serv. Credit Information Services NA 673 Ernst & Young, LLP Consulting Services NA 465 ESRI Business Information Solutions Information Technology Services NA 107 Forrester Research, Inc. Information Technology Services NA 136 Fossil Energy Research Corp. Research and Development NA 195 GCI Group Public Relations Services NA 424 GE Energy Management Serv., Inc. Information Technology Services NA 122 GE Purchase Card Services Financial Services NA 115 Georgia Power Company Project Support A 9,796 (Continued on page 24D)
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24D ANNUAL REPORT OF SOUTHERN COMPANY SERVICES, INC. For the Year Ended December 31, 2003 (Thousands of Dollars) OUTSIDE SERVICES EMPLOYED ACCOUNT 923 INSTRUCTIONS: Provide a breakdown by sub-account of outside services employed. If the aggregate amounts paid to any one payee and included within one sub-account is less than $100,000, only the aggregate number and amount of all such payments included within the sub-account need be shown. Provide a subtotal for each type of service. [Enlarge/Download Table] RELATIONSHIP "A"=ASSOCIATE DESCRIPTION OF "NA"= NON FROM WHOM PURCHASED LARGEST INVOICE ASSOCIATE AMOUNT ------------------- --------------- ---------------- ------ Georgia Tech Research Corporation Research and Development NA 312 Georgia Transmission Corporation Transmission Services NA 341 Grubb & Ellis Management Serv. Personnel Services NA 173 Gulf Power Company Project Support A 1,617 Hawthorn Group Consulting Services NA 329 Hewitt Associates Personnel Services NA 5,072 Intelligent Technology Systems Information Technology Services NA 161 Intergraph Corporation Software Consulting Services NA 239 Intermat, Inc. Software Consulting Services NA 211 Iron Mountain Records Management Records Management NA 101 James B. McClanahan Environmental Services NA 169 Jeffcoat & Associates, LP Information Technology Services NA 140 Korn/Ferry International Executive Search Services NA 164 Lee Hecht Harrison, Inc. Personnel Services NA 116 Lehigh University Research and Development NA 113 Liebman & Associates, Inc. Research and Development NA 134 Lucid Partners, Inc. Investor Relations NA 102 M&D Power Constructors, Inc. Construction Services NA 1,006 Market Strategies Marketing Services NA 104 Matrix Resources, Inc. Consulting Services NA 251 Maximus Information Technology Services NA 167 McDermott, Will & Emery Consulting Services NA 505 McLaren Consulting, Inc. Software Consulting Services NA 250 Merrill Lynch Trust Company Financial Services NA 1,624 Merrill Lynch, Pierce, Fenner, & Smith, Inc. Financial Services NA 1,163 Mesa Solutions, Inc. Consulting Services NA 293 Microsoft Services Information Technology Services NA 564 Mississippi Power Company Project Support A 731 Moody's Investor Services Financial Services NA 420 MSLI Western Region Collection Information Technology Services NA 181 (Continued on page 24E)
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24E ANNUAL REPORT OF SOUTHERN COMPANY SERVICES, INC. For the Year Ended December 31, 2003 (Thousands of Dollars) OUTSIDE SERVICES EMPLOYED ACCOUNT 923 INSTRUCTIONS: Provide a breakdown by sub-account of outside services employed. If the aggregate amounts paid to any one payee and included within one sub-account is less than $100,000, only the aggregate number and amount of all such payments included within the sub-account need be shown. Provide a subtotal for each type of service. [Enlarge/Download Table] RELATIONSHIP "A"=ASSOCIATE DESCRIPTION OF "NA"= NON FROM WHOM PURCHASED LARGEST INVOICE ASSOCIATE AMOUNT ------------------- --------------- ---------------- ------ New York Stock Exchange, Inc. Financial Services NA 596 Open Access Technology International, Inc. Information Technology Services NA 283 ORACLE Corporation Software Consulting Services NA 1,860 PA Consulting Services, Inc. Consulting Services NA 366 Pantellos Group Limited Partnership Procurement Services NA 1,194 Parson Consulting Company Consulting Services NA 266 Peoplesoft, Inc. Software Consulting Services NA 169 Powertech Labs, Inc. Software Consulting Services NA 101 Praeos Technologies, Inc. Information Technology Services NA 168 Queen City Railroad Construction Railcar Services NA 323 R.W. Beck, Inc. Financial Services NA 323 Robert T. Cobb Consulting Services NA 214 Russell Reynolds Associates, Inc. Consulting Services NA 194 Sage Advantage, Inc. Call Monitoring Services NA 104 SAS Institute, Inc. Software Consulting Services NA 235 Savannah Electric & Power Co. Project Support A 179 Scott, Madden & Associates, Inc. Consulting Services NA 770 SCR-Tech, LLC Environmental Services NA 585 Securitas Security Services US Security Services NA 378 Setrans Consulting Services NA 168 Sideview Partners Consulting Services NA 102 Software House International, Inc. Information Technology Services NA 881 Southern Company Energy Solutions Project Support A 133 Southern Research Institute Consulting Services NA 280 Standard & Poor's Corporation Financial Services NA 728 Sungard CSS Software Software Consulting Services NA 129 Synergis Software Consulting Services NA 1,310 System Architechs, Inc. Software Consulting Services NA 285 Systems Applications Intl Consulting Services NA 252 (Continued on page 24F)
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24F ANNUAL REPORT OF SOUTHERN COMPANY SERVICES, INC. For the Year Ended December 31, 2003 (Thousands of Dollars) OUTSIDE SERVICES EMPLOYED ACCOUNT 923 INSTRUCTIONS: Provide a breakdown by sub-account of outside services employed. If the aggregate amounts paid to any one payee and included within one sub-account is less than $100,000, only the aggregate number and amount of all such payments included within the sub-account need be shown. Provide a subtotal for each type of service. [Enlarge/Download Table] RELATIONSHIP "A"=ASSOCIATE DESCRIPTION OF "NA"= NON FROM WHOM PURCHASED LARGEST INVOICE ASSOCIATE AMOUNT ------------------- --------------- ---------------- ------ Tech Providers, Inc. Personnel Services NA 119 Teksystems Information Technology Services NA 708 The North Highland Company, Inc. Consulting Services NA 221 The Smith-Free Group Consulting Services NA 136 The Tiger Group, Inc. Information Technology Services NA 105 The University of Alabama At Birmingham Research and Development NA 246 Thomson Financial / Carson Financial Services NA 136 Time and Money Consulting, Inc. Consulting Services NA 104 TQS Research, Inc. Market Research Studies NA 102 URS Corporation Environmental Services NA 263 Veritas Software Global, LLC Software Consulting Services NA 205 Verity, Inc. Software Consulting Services NA 130 Vitria Technology, Inc. Software Consulting Services NA 476 Whitehead Construction, Inc. Construction Services NA 293 Z Solutions Consulting Services NA 223 1,138 Other Items Less Than $100,000 NA 13,273 --------- Subtotal - Other Services 98,918 --------- TOTAL 143,182 =======
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25 ANNUAL REPORT OF SOUTHERN COMPANY SERVICES, INC. For the Year Ended December 31, 2003 (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 409 Early Retirement Benefits 958 Flexible Credit Benefits - Company Contributions 17,135 Post Retirement Medical Benefits 8,978 Post Retirement Life Benefits 3,665 Post Employment Benefits 1,058 Minority Scholarship Program - Educational Assistance Plan 325 Employee Savings Plan/ESOP - Company Contribution 10,005 Employee Health and Physical Examinations 67 Other (Employees' Professional Fees and Other Employee Fringe Benefits) 2,205 ------- TOTAL 44,805 =======
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26 ANNUAL REPORT OF SOUTHERN COMPANY SERVICES, INC. For the Year Ended December 31, 2003 (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. In the past, advertising expenses were paid directly by the Southern Company. In 1999, however, the Company began to reflect these expenses on its books. While these costs are billed to the holding company, the change was made to recognize the Service Company's role in managing these expenses and to add efficiency to the operations of the Company. 2003 advertising expenses are as follows: NAME OF PAYEE DESCRIPTION AMOUNT ------------- ----------- ------ Arena Advertising (Alvin Alley Dance Theatre) Corporate Branding 8 Atlanta Braves Sports Marketing 470 Billy Andrade Sports Marketing 103 Financial Times, LTD Corporate Branding 6 Fitzgerald & Co. Corporate Branding 6,148 Fortune Magazine Corporate Branding 5 GCI Group Corporate Branding 5 Georgia Public Broadcasting Corporate Branding 50 Grey Worldwide Atlanta Corporate Branding 586 Joe Inman, Inc. Sports Marketing 175 Lattimer Moffitt Communication Corporate Branding 708 Leaders Magazine, Inc. Corporate Branding 17 Ontelcom, Inc. Corporate Branding 64 PGA Tournament Corporation, Inc. Sports Marketing 3,520 Public Broadcasting Atlanta Corporate Branding 7 Scholarship Program Administrators Corporate Branding 33 Stewart Cink Sports Marketing 88 Tasteful Events, Inc. Corporate Branding 6 The Game, LLC Sports Marketing 18 Turner South Corporate Branding 1,541 Unlimited Outdoors Sports Marketing 50 WP Productions, Inc. Sports Maketing 45 All other Items less than $3,000 22 ---------- TOTAL 13,675 ========
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27 ANNUAL REPORT OF SOUTHERN COMPANY SERVICES, INC. For the Year Ended December 31, 2003 (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 2,488 Expenses of SCS Employees Located at Operating Co. 2,174 Meals, Lodging, & Incidentals Related to Meetings & Conferences 6,552 Dues and Memberships 1,320 Recruiting, Interviewing, & Placement of Employees 232 Other General Expenses * (583) --------- TOTAL 12,183 ======= * Credit includes expenses transferred to CWIP and funds received for transmission impact and facilities studies. ( ) Denotes red figure.
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28 ANNUAL REPORT OF SOUTHERN COMPANY SERVICES, INC. For the Year Ended December 31, 2003 (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 26,293 Computer and Other Data Processing Equipment Rental 18,947 IR Equipment - Capital Lease 2,435 Software 2,047 All Other (Automobile, Office Furniture & Equipment, Miscellaneous Storage, Equipment Rental & Aircraft) 4,689 ------- TOTAL 54,411 =======
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29 ANNUAL REPORT OF SOUTHERN COMPANY SERVICES, INC. For the Year Ended December 31, 2003 (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 187 City/Business License Tax - Property and Other City and State 1,066 ------ Subtotal - Other 1,253 ------ U.S. Government Taxes Federal Insurance Contributions Act 23,014 Federal Unemployment 278 ------- Subtotal - U.S. Government 23,292 ------- TOTAL 24,545 =======
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30 ANNUAL REPORT OF SOUTHERN COMPANY SERVICES, INC. For the Year Ended December 31, 2003 (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. [Download Table] NAME OF RECIPIENT PURPOSE OF DONATION AMOUNT ----------------- ------------------- ------ 100 Black Men of Atlanta, Inc. Civic & Charitable 10 Alvin Alley American Dance Foundation Civic & Charitable 75 American Heart Association Civic & Charitable 19 American Legislative Exchange Council Support of Program 7 Americans for Balanced Energy Choices Support of Program 1,000 Atlanta University Center Civic & Charitable 11 Auburn University Foundation Civic & Charitable 12 Auburn University Foundation Educational Matching 19 Auburn University Minority Engineering Program Civic & Charitable 5 Boy Scouts of America Civic & Charitable 5 Business Institute for Political Analysis Support of Program 10 Camp Smile-A-Mile Civic & Charitable 5 Cancer Research Foundation of America Support of Program 12 Capitol Hill Club Civic & Charitable 5 Center for Legislative Energy & Env. Research Support of Program 5 Chamber of Commerce of the USA Support of Program 30 Chick-Fil-A Peach Bowl Civic & Charitable 7 Children's Healthcare Civic & Charitable 100 Citizens for a Sound Economy Foundation Civic & Charitable 5 City of Marion Civic & Charitable 70 Congressional Coalition on Adoption Institute Civic & Charitable 5 Congressional Sportsmen's Foundation Support of Program 34 Council of Republicans for Environmental Advocacy Support of Program 30 Danny Thompson Memorial Fund Civic & Charitable 10 Democratic Leadership Council Support of Program 25 Electric Reliability Coordinating Council Support of Program 1,120 Electricity Reform Accountability Project Support of Program 580 Emory University Educational Matching 8 Florida House Civic & Charitable 10 Florida Minority Supplier Development Council Civic & Charitable 5 Ford's Theatre Society Civic & Charitable 90 Georgia Institute of Technology Civic & Charitable 115 Georgia Institute of Technology Educational Matching 24 Georgia State University Educational Matching 7 Global Environmental Management Initiative Civic & Charitable 20 Gresham Middle School Civic & Charitable 5 Habitat for Humanity Civic & Charitable 31 Harvard University Civic & Charitable 50 Horton's Kids, Inc. Civic & Charitable 5 Idaho State Society Civic & Charitable 5 Inroads / Birmingham, Inc. Civic & Charitable 6
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30A ANNUAL REPORT OF SOUTHERN COMPANY SERVICES, INC. For the Year Ended December 31, 2003 (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. [Download Table] NAME OF RECIPIENT PURPOSE OF DONATION AMOUNT ----------------- ------------------- ------ Junior Achievement of Greater Birmingham, Inc. Civic & Charitable 4 Kennedy Center Civic & Charitable 8 KW Productions LLC (National Black College Job Fair) Civic & Charitable 3 Lakeshore Foundation Civic & Charitable 9 Louisiana Alive, Inc. Support of Program 6 March of Dimes Civic & Charitable 8 Metro Atlanta Chamber of Commerce Civic & Charitable 10 Metropolitan Development Board Civic & Charitable 15 Mississippi State University Educational Matching 4 MUSC Health Sciences Foundation Civic & Charitable 10 National Fish & Wildlife Foundation Civic & Charitable 1,200 National Governors Assn Center for Best Practices Civic & Charitable 24 National Multiple Sclerosis Society Support of Program 8 National Press Foundation Civic & Charitable 3 National Wild Turkey Federation Support of Program 7 Omega Media, Inc. (Inspired Cultural Excellence Awards) Civic & Charitable 5 Open Fairways Civic & Charitable 8 Prattville Fire Department Civic & Charitable 7 Roopville Elementary School Civic & Charitable 5 Society of Hispanic Professional Engineers Civic & Charitable 3 Society of Women Engineers Civic & Charitable 15 Southeastern Junior Golf Tour Civic & Charitable 10 Students in Free Enterprise Civic & Charitable 25 Syracuse University Educational Matching 3 Taste of the South Support of Program 10 Tennessee State University Civic & Charitable 10 Tennessee Technological University Civic & Charitable 3 The Annapolis Center Civic & Charitable 175 The Carter Center Civic & Charitable 13 The Delay Foundation Golf Invitational Civic & Charitable 25 The Federalist Society for Law & Public Policy Studies Civic & Charitable 10 The Foundation for Hospital Art Civic & Charitable 7 The Manufacturing Institute Civic & Charitable 20 The Progress & Freedom Foundation Support of Program 100 The University of Alabama Educational Matching 7 Tuskegee University Civic & Charitable 5 U.S. Capitol Historical Society Civic & Charitable 12 United Way Civic & Charitable 196
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30B ANNUAL REPORT OF SOUTHERN COMPANY SERVICES, INC. For the Year Ended December 31, 2003 (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. [Download Table] NAME OF RECIPIENT PURPOSE OF DONATION AMOUNT ----------------- ------------------- ------ University of Georgia Educational Matching 3 University of North Alabama Educational Matching 5 Warehouse Productions, LLC Support of Program 10 Waterfall Committee Civic & Charitable 17 Wesleyan College Educational Matching 3 Wolf Trap Foundation for the Performing Arts Civic & Charitable 17 81 Other Items (Less than $3,000) Civic & Charitable 81 69 Other Items (Less than $3,000) Employee Matching Gift 29 6 Other Items (Less than $3,000) Support of Program 7 Refunds of 2002 Donations Support of Program (57) ----------- TOTAL 5,705 ========
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31 ANNUAL REPORT OF SOUTHERN COMPANY SERVICES, INC. For the Year Ended December 31, 2003 (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
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32 ANNUAL REPORT OF SOUTHERN COMPANY SERVICES, INC. For the Year Ended December 31, 2003 (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 Page 17
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33 ANNUAL REPORT OF SOUTHERN COMPANY SERVICES, INC. ORGANIZATION CHART [Enlarge/Download Table] -------------------------------------------------------------------------------------------------------------------------- Chairman, President and Chief Executive Officer Southern Company -------------------------------------------------------------------------------------------------------------------------- --------------------- ------------------ ---------------- ------------- ---------------- --------------- ------------- President Southern Exec. VP - Chief Exec. VP - VP - Exec. VP, & Exec. VP & President & Co. Generation & Marketing Officer External Internal SoCo CFO & General CEO SoCo Gas Energy Mkt. Affairs Auditing Treasurer Counsel --------------------- ------------------ ---------------- ------------- ---------------- --------------- ------------- --------------------- ------------------ ---------------- ------------- ---------------- --------------- ------------- --------------------- ------------------ ---------------- ------------- ---------------- --------------- ------------- --------------------- ------------------ ---------------- ------------- ---------------- --------------- ------------- VP - SCS & So. VP - Product VP - Corporate Internal Sr. VP - VP and Sr. Power CFO Management Communication Auditing Comptroller & Counsel Directors SCS CFO (4 VP & Assoc. Positions) Gen. Counsel (3 Positions) --------------------- ------------------ ---------------- ------------- ---------------- --------------- ------------- --------------------- ------------------ ---------------- ------------- ---------------- --------------- ------------- --------------------- ------------------ ---------------- ------------- ---------------- --------------- ------------- --------------------- ------------------ ---------------- ------------- ---------------- --------------- ------------- Sr. VP Engineering VP - Marketing VP - VP - Finance Sr. VP - & Construction Services Governmental Chief Services Affairs Transmission Officer VP - Technical Services Sr. VP - Transmission VP Fossil/Hydro Planning & Eng., Procurement & Operations Construction --------------------- ------------------ ---------------- ------------- ---------------- --------------- ------------- --------------------- ------------------ ---------------- ------------- ---------------- --------------- ------------- --------------------- ------------------ ---------------- ------------- ---------------- --------------- ------------- --------------------- ------------------ ---------------- ------------- ---------------- --------------- ------------- Sr.VP - Research & Director - VP - Supply Assistant VP - Environmental Customer Service Chain Treasurer & Corporate Affairs Management Director Trust Sec. & Assoc. Finance Gen. Counsel --------------------- ------------------ ---------------- ------------- ---------------- --------------- ------------- --------------------- ------------------ ---------------- ------------- ---------------- --------------- ------------- --------------------- ------------------ ---------------- ------------- ---------------- --------------- ------------- --------------------- ------------------ ---------------- ------------- ---------------- --------------- ------------- Executive VP - Director - Director - Sr. VP -Human Generation External Risk Management Resources Affairs Sr. VP - Energy VP Compensation - Marketing & Benefits VP - Business Development VP-Employee Relations & VP - Fleet Oper. & Associate Trading General Counsel VP - Generation Planning & Dev. HR Directors (7 Positions) VP - Fuel Services Director - Fin. & Contract Services Director - Portfolio Management --------------------- ------------------ ---------------- ------------- ---------------- --------------- ------------- --------------------- ------------------ ---------------- ------------- ---------------- --------------- ------------- --------------------- ------------------ ---------------- ------------- ---------------- --------------- ------------- --------------------- ------------------ ---------------- ------------- ---------------- --------------- ------------- Exec. VP & Chief Sr. VP - Production Officer Information Technology VP - Senior Production Officers Chief (5 Positions) Information Officers (5 Positions) VP-Comp. & Network Serv. Director Technology Planning --------------------- ------------------ ---------------- ------------- ---------------- --------------- ------------- --------------------- ------------------ ---------------- ------------- ---------------- --------------- ------------- --------------------- ------------------ ---------------- ------------- ---------------- --------------- ------------- --------------------- ------------------ ---------------- ------------- ---------------- --------------- ------------- VP & Associate Director - General Counsel Policy & Planning --------------------- ------------------ ---------------- ------------- ---------------- --------------- ------------- --------------------- ------------------ ---------------- ------------- ---------------- --------------- ------------- --------------------- ------------------ ---------------- ------------- ---------------- --------------- ------------- --------------------- ------------------ ---------------- ------------- ---------------- --------------- ------------- Director - Admin. Serv. & Security --------------------- ------------------ ---------------- ------------- ---------------- --------------- -------------
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34 ANNUAL REPORT OF SOUTHERN COMPANY SERVICES, INC. For the Year Ended December 31, 2003 METHODS OF ALLOCATION SCS uses statistics based on a single year with a one-year lag; therefore, 2003 allocations were based on 2001 statistics. Each participating company receives a pro rata share based upon its statistics defined by the following methods. Multiple versions of the bases are available to reflect the exclusion of specific companies if they do not participate in or benefit from particular projects or services. In the following discussion, Client Operating Companies refer to Southern system companies that generate power, and Client Companies include all affiliates. 1. Load Basis Annual operating area territorial load (defined as kilowatt-hours of total energy generated plus energy received minus energy delivered) plus other firm wholesale commitments of each Client Operating Company other than Southern Electric Generating Company (SEGCO). 2. Customer Basis Number of year-end customers of each Client Operating Company (other than SEGCO and Southern Power) and Southern Company Gas. 3. Employee Basis Number of year-end employees of each Client Company. Employee groups not benefiting from certain services are not included in every allocation. 4. Financial Basis Average of the percentages of net fixed assets, operating expenses, and operating revenues of each Client Company. 5. Fossil Fuel Generation Basis Generation (kilowatt-hours) from all fossil fuel sources of each Client Operating Company. Generation from plants operated by the Southern system but jointly owned by external parties is included. Generation from plants jointly owned by Southern affiliates but operated by external parties is excluded. Generation jointly owned by Southern Company affiliates is assigned on an ownership basis. To equitably allocate a portion of general fuel-related costs to Southern Company Gas, the generation allocation was modified to recognize its share of total Southern system gas consumption. 6. Coal Generation Basis Generation (kilowatt-hours) from coal fuel sources of each Client Operating Company. Generation from plants operated by the Southern system but jointly owned by external parties is included. Generation from plants jointly owned by Southern affiliates but operated by external parties is excluded. Generation jointly owned by Southern Company affiliates is assigned on an ownership basis. 7. Gas Generation Basis Generation (kilowatt-hours) from gas fuel sources of each Client Operating Company. Generation from plants operated by the Southern system but jointly owned by external parties is included. Generation from plants jointly owned by Southern affiliates but operated by external parties is excluded. Generation jointly owned by Southern Company affiliates is assigned on an ownership basis. To equitably allocate a portion of general fuel-related costs to Southern Company Gas, the generation allocation was modified to recognize its share of total Southern system gas consumption.
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34A ANNUAL REPORT OF SOUTHERN COMPANY SERVICES, INC. For the Year Ended December 31, 2003 METHODS OF ALLOCATION 8. Fossil and Hydro Capacity Basis Fossil and hydro nameplate generating capacity (kilowatts) for each Client Operating company. Capacity operated by the Southern system but jointly owned by external parties is included. Capacity jointly owned by Southern affiliates but operated by external parties is excluded. Capacity jointly owned by Southern Company affiliates is assigned on an ownership basis. 9. Fossil Capacity Basis Fossil nameplate generating capacity (kilowatts) for each Client Operating company. Capacity operated by the Southern system but jointly owned by external parties is included. Capacity jointly owned by Southern affiliates but operated by external parties is excluded. Capacity jointly owned by Southern Company affiliates is assigned on an ownership basis. 10. Coal Capacity Basis Coal nameplate generating capacity (kilowatts) for each Client Operating company. Capacity operated by the Southern system but jointly owned by external parties is included. Capacity jointly owned by Southern affiliates but operated by external parties is excluded. Capacity jointly owned by Southern Company affiliates is assigned on an ownership basis. 11. Insurance Premium Basis Insurance premiums of each Client Company. 12. Salary Basis Service Company labor billed to each Client Company. In addition, overhead charges are allocated to the applicable companies based on standard rates applied to actual labor charges in the current period. 13. Information Technology Division Salary Basis Service Company Information Technology labor billed to each Client Company. 14. Capitalization Basis (Southern System Basis) Book capitalization (defined as long-term debt excluding the short-term portion, preferred securities, cumulative preferred stock and common shareholder equity) of each Client Company. 15. Market-Based Equity Basis Book equity adjusted to estimated fair market value of each Client Company. 16. Personal Computers Basis Number of personal computers of each Client Company. Organizations not benefiting from certain types of computers are not included in every allocation. 17. System Aircraft Availability Basis Number of executives authorized to call out flights at each Client Company. Utilization of system aircraft is billed based on a comparable undiscounted commercial fare for the itinerary flow. An "availability fee," which represents the remaining costs of system aircraft operations, is allocated to the Client Companies on this basis.
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35 ANNUAL REPORT OF SOUTHERN COMPANY SERVICES, INC. For the Year Ended December 31, 2003 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 2003: Pursuant to the amended Uniform System of Accounts for Mutual and Subsidiary Service Companies implemented in January 1980, the Company 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. The Company does not bill its associate client companies for compensation of equity capital. In 2003, the Company initiated short-term borrowing exclusively from the Southern Company; other outside banking institutions were not used. The interest rates on these borrowings ranged from 4.57% to 5.14%. Interest in the amount of $320,609 was accrued on the Southern Company borrowing and was billed to the client companies. As of December 31, 2003, the Company reflected long-term debt outstanding from various institutions in the amount of $41,511,633. The interest rates on these borrowings ranged from 7.25% to 7.625%. Interest of $3,324,739 was accrued and billed to the client companies. Other long-term debt related to capitalized leases in the amount of $16,773,189 was outstanding. The interest rates on these capitalized leases ranged from 4.59% to 8.00%. Interest of $955,693 was accrued and billed to the client companies. In 2003, the Company entered into a derivative to hedge exposure to interest rate changes. The derivative is accounted for as a fair value hedge. The Company receives the fixed rate of 7.625% and pays six-month LIBOR plus 2.92%. As a result, interest of $482,504 was credited against the client companies' expenses during 2003. In addition, during 2003, the Company incurred other interest of $696,495 related to the Transmission Access deposits and $32,290 related to Miscellaneous Expenses. All interest was billed 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 non-associate companies as follows: The Southern Company $ 210,397 Alabama Power Company 1,269,549 Georgia Power Company 1,765,049 Gulf Power Company 317,191 Mississippi Power Company 266,630 Savannah Electric & Power Company 90,707 Southern Electric Generating Company 29,006 Southern Nuclear Operating Company, Inc. 219,073 Southern Company Energy Solutions, LLC 21,405 Southern Company Holdings, Inc. 19,908 Southern Management Development 27,626 Southern Communications Services, Inc. 33,920 Southern Electric Railroad Company 1,164 Southern Power Company 359,295 Southern Telecom Inc. 6,941 Southern Company Gas, LLC 90,584 Southern Company Rail Services 2,425 Non-associate Companies 116,452 ------------ $4,847,322
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36 ANNUAL REPORT OF SOUTHERN COMPANY SERVICES, INC. For the Year Ended December 31, 2003 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: /s/W. Dean Hudson ----------------- (Signature of Signing Officer) W. Dean Hudson, Senior Vice President, Comptroller and Chief Financial Officer (Printed Name and Title of Signing Officer) Date: April 30, 2004

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12/15/0928None on these Dates
12/1/0428
Filed on / Effective on:4/30/0459
For Period End:12/31/03159
1/1/031
12/15/9928
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