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Southern Co Services Inc – ‘U-13-60’ for 12/31/04

On:  Friday, 4/29/05, at 5:07pm ET   ·   Effective:  4/29/05   ·   For:  12/31/04   ·   Accession #:  217216-5-2   ·   File #:  49-00059

Previous ‘U-13-60’:  ‘U-13-60’ on 4/30/04 for 12/31/03   ·   Latest ‘U-13-60’:  This Filing

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

 4/29/05  Southern Co Services Inc          U-13-60    12/31/04    1:112K

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     Form U-13-60 Year Ending 12-31-04                     59    295K 


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, 2004 and Ending December 31, 2004 --------------- ----------------- 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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[Download Table] 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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[Download Table] 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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[Enlarge/Download Table] 4 ANNUAL REPORT OF SOUTHERN COMPANY SERVICES, INC. -------------------------------- For the Year Ended December 31, 2004 ----------------- (Thousands of Dollars) SCHEDULE I - COMPARATIVE BALANCE SHEET -------------------------------------- Give balance sheet of the Company as of December 31 of the current and prior year. ACCOUNT ASSETS AND OTHER DEBITS AS OF DECEMBER 31 ------- ----------------------- ----------------- CURRENT PRIOR ------- ----- SERVICE COMPANY PROPERTY ------------------------ 101 Service company property (Schedule II) 279,725 248,281 107 Construction work in progress (Schedule II) 3,976 241 -------- ------- Total Property 283,701 248,522 ------- ------- 108 Less accumulated provision for depreciation and amortization of service company property (Schedule III) 153,118 130,780 ------- ------- Net Service Company Property 130,583 117,742 ------- ------- INVESTMENTS ----------- 123 Investments in associate companies (Schedule IV) - - 124 Other investments (Schedule IV) 11,331 8,849 -------- -------- Total Investments 11,331 8,849 -------- -------- CURRENT AND ACCRUED ASSETS -------------------------- 131 Cash 100 3,379 134 Special deposits 2,744 - 135 Working funds - - 136 Temporary cash investments (Schedule IV) 20,875 1,500 141 Notes receivable - - 143 Accounts receivable 71,619 109,434 146 Accounts receivable from associate companies (Schedule V) 310,548 260,195 152 Fuel stock expenses undistributed (Schedule VI) - - 154 Materials and supplies 1,907 1,192 163 Stores expense undistributed (Schedule VII) - - 165 Prepayments 67,499 65,184 174 Miscellaneous current and accrued assets (Schedule VIII) 8,061 1,037 ------- ------- Total Current and Accrued Assets 483,353 441,921 ------- ------- DEFERRED DEBITS --------------- 181 Unamortized debt expense 159 191 184 Clearing accounts 1,158 344 186 Miscellaneous deferred debits (Schedule IX) 36,923 34,010 188 Research, development, or demonstration expenditures (Schedule X) - - 190 Accumulated deferred income taxes 13,852 10,661 -------- -------- Total Deferred Debits 52,092 45,206 -------- -------- TOTAL ASSETS AND OTHER DEBITS 677,359 613,718 ======== ========
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[Enlarge/Download Table] 4A ANNUAL REPORT OF SOUTHERN COMPANY SERVICES, INC. --------------------------------- (Thousands of Dollars) SCHEDULE I - COMPARATIVE BALANCE SHEET (Continued) -------------------------------------------------- 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) (25,575) (19,650) 215 Appropriated retained earnings (Schedule XI) - - 216 Unappropriated retained earnings (Schedule XI) - - -------- -------- Total Proprietary Capital (24,850) (18,925) -------- -------- LONG-TERM DEBT -------------- 223 Advances from associate companies (Schedule XII) - - 224 Other long-term debt (Schedule XII) 54,568 51,041 225 Unamortized premium on long-term debt - - 226 Unamortized discount on long-term debt-debit - - -------- -------- Total Long-Term Debt 54,568 51,041 -------- -------- CURRENT AND ACCRUED LIABILITIES ------------------------------- 231 Notes payable 8,466 8,031 232 Accounts payable 149,734 161,973 233 Notes payable to associated companies (Schedule XIII) - - 234 Accounts payable to associate companies (Schedule XIII) 67,843 61,986 236 Taxes accrued 15,267 657 237 Interest accrued 536 136 238 Dividends declared - - 241 Tax collections payable 16,323 1,213 242 Miscellaneous current and accrued liabilities (Schedule XIII) 166,714 162,477 -------- ------- Total Current and Accrued Liabilities 424,883 396,473 -------- ------- DEFERRED CREDITS ---------------- 253 Other deferred credits 222,758 185,129 255 Accumulated deferred investment tax credits - - ------- ------- Total Deferred Credits 222,758 185,129 ------- ------- 282 ACCUMULATED DEFERRED INCOME TAXES - - --------------------------------- ------- -------- TOTAL LIABILITIES AND PROPRIETARY CAPITAL 677,359 613,718 ======= =======
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[Enlarge/Download Table] 5 ANNUAL REPORT OF SOUTHERN COMPANY SERVICES, INC. ------------------------------- For the Year Ended December 31, 2004 ----------------- (Thousands of Dollars) SCHEDULE II ----------- SERVICE COMPANY PROPERTY ------------------------ BALANCE AT BALANCE AT BEGINNING RETIREMENTS OTHER 1/ CLOSE OF DESCRIPTION OF YEAR ADDITIONS OR SALES CHANGES YEAR ----------- ---------- --------- ----------- ------- ---------- SERVICE COMPANY PROPERTY ------------------------ Account 301 ORGANIZATION - - - - - 303 MISCELLANEOUS INTANGIBLE PLANT - - - - - 304 LAND & LAND RIGHTS - - - - - 305 STRUCTURES AND IMPROVEMENTS 2,210 - - - 2,210 306 LEASEHOLD IMPROVEMENTS 17,368 740 (18) - 18,090 307 EQUIPMENT 2/ 68,785 3,933 (4,391) 5,346 73,673 - 307 GATX CAPITAL LEASES 2/ 18,180 13,636 - (666) 31,150 - 307 MISC. CAPITAL LEASES 2/ 5,500 1,902 - - 7,402 - 308 OFFICE FURNITURE AND EQUIPMENT 2/ 22,281 1,859 (417) (55) 23,668 - 309 AUTOMOBILES, OTHER VEHICLES AND RELATED GARAGE EQUIPMENT 2/ 873 39 (60) 87 939 - 310 AIRCRAFT AND AIRPORT EQUIPMENT 2/ 55,410 10,288 (189) - 65,509 - 311 OTHER SERVICE COMPANY PROPERTY 2/ 3/ 57,674 1,744 (1,057) (1,277) 57,084 - - -------- --------- --------- -------- ----------- SUB-TOTAL 248,281 34,141 (6,132) 3,435 279,725 -------- --------- --------- ------- ----------- 107 CONSTRUCTION WORK IN PROGRESS 4/ 241 7,205 - (3,470) 3,976 - --------- --------- --------- ------- ------------ TOTAL 248,522 41,346 (6,132) (35) 283,701 ========= ========= ========= ======== ============ 1/ PROVIDE AN EXPLANATION OF THOSE CHANGES CONSIDERED MATERIAL: - Cost adjustment for GIMS CWIP Project transferred to Capital and several Accrual Reversals for (5,346). ( ) Denotes red figure (Continued on Page 5A)
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[Enlarge/Download Table] 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. 217 10,433 307/04 Personal Computer Equip. 2,910 54,015 307/05 Mainframe Computer Equipment 196 4,149 307/11 Telephone Systems 610 4,051 307/12 Telecommunications Equip. - 1,025 307/101 GATX Capital Leases 13,636 31,150 307/102 Misc. Capital Leases 1,902 7,402 308/01 Furniture & Fixtures 488 13,583 308/09 Data Handling Equipment & Miscellaneous 1,371 10,085 309/08 Autos, Trucks & Trailers 39 939 310/07 Aircraft 10,288 65,509 311/10 Software 1,744 55,413 311/13 Coal Pilot Scale Combustion Facility - 1,671 ---------- --------- TOTAL 33,401 259,425 ========== ========= 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 $3,976 is for development of various (hardware/software) projects such as Dispatch Tool, SHIPS upgrade, E-Sys. Software, etc., projects.
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[Enlarge/Download Table] 6 ANNUAL REPORT OF SOUTHERN COMPANY SERVICES, INC. ------------------------------ For the Year Ended December 31, 2004 ----------------- (Thousands of Dollars) SCHEDULE III ----------- ACCUMULATED PROVISION FOR DEPRECIATION AND AMORTIZATION OF SERVICE COMPANY PROPERTY ---------------------------------------- ADDITIONS OTHER BALANCE AT CHARGED CHARGES BALANCE AT BEGINNING TO RETIREMENTS ADD (1) CLOSE OF DESCRIPTION OF YEAR ACCT #403 OR SALES (2) (DEDUCT) YEAR ----------- --------- --------- -------------- -------- ------------ Account ------- 301 ORGANIZATION - - - - - 303 MISCELLANEOUS INTANGIBLE PLANT - - - - - 304 LAND & LAND RIGHTS - - - - - 305 STRUCTURES AND IMPROVEMENTS 1,568 89 - - 1,657 306 LEASEHOLD IMPROVEMENTS 8,750 1,405 (4) - 10,151 307 EQUIPMENT 54,190 6,473 (3,739) - 56,924 307 GATX CAPITAL LEASES 4,403 - - 6,169 10,572 307 MISC, CAPITAL LEASES 4,849 - - 1,518 6,367 308 OFFICE FURNITURE AND FIXTURES 12,269 1,751 (310) - 13,710 309 AUTOMOBILES, OTHER VEHICLES AND RELATED GARAGE EQUIPMENT 642 76 (60) - 658 310 AIRCRAFT AND AIRPORT EQUIPMENT 6,010 3,292 (124) - 9,178 311 OTHER SERVICE COMPANY PROPERTY 38,099 6,757 (955) - 43,901 --------- ------- -------- -------- -------- TOTAL 130,780 19,843 (5,192) 7,687 153,118 ========= ======= ======== ======== ======== (1) Provide an explanation of those charges considered material: GATX Capital Leases, 6,169 and Misc. Capital Leases, 1,518 amortize to Rent Expense Account 931-00021. (2) Retirements are due to an inventory clean-up of all assets. ( ) Denotes red figure.
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[Enlarge/Download Table] 7 ANNUAL REPORT OF SOUTHERN COMPANY SERVICES, INC. ------------------------------------------------ For the Year Ended December 31, 2004 ------------------------------------ (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 8,392 11,099 Employee Energy Loans 386 230 ACE Limited - Reserve 69 0 Employee Computer Loans 2 2 --------- -------- Subtotal 8,849 11,331 ACCOUNT 136 - TEMPORARY CASH INVESTMENTS 1,500 20,875 --------- -------- TOTAL 10,349 32,206 ========= ========
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[Enlarge/Download Table] 8 ANNUAL REPORT OF SOUTHERN COMPANY SERVICES, INC. ------------------------------------------------ For the Year Ended December 31, 2004 ------------------------------------ (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 6,997 13,669 Alabama Power Company 82,795 79,417 Georgia Power Company 67,642 111,547 Gulf Power Company 19,492 21,650 Mississippi Power Company 21,525 18,363 Savannah Electric and Power Company 7,925 13,471 Southern Company Holdings, Inc. 650 912 Southern Communications Services, Inc. 1,540 2,306 Southern Company Energy Solutions, LLC 265 420 Southern Company Rail Services 130 122 Southern Electric Generating Company 910 499 Southern Electric Railroad Company 342 96 Southern Management Development, Inc. 375 240 Southern Nuclear Operating Company, Inc. 9,244 11,267 Southern Power Company 22,325 19,100 Southern Telecom, Inc. 110 132 Southern Company Gas, LLC 17,928 16,450 SE Finance Capital Corp. II - 732 Alabama Synfuel Energy - 79 Energy Related Activities - 67 Synfuel Services - 3 Southern Company Electrotechnologies - 4 Southern Company Capital Funding - 2 ----------- ------------ TOTAL 260,195 310,548 =========== ============ (Continued on Page 8A)
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8A ANNUAL REPORT OF SOUTHERN COMPANY SERVICES, INC. ------------------------------- For the Year Ended December 31, 2004 ----------------- (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 445 Alabama Power Company 809,163 Georgia Power Company 781,594 Gulf Power Company 195,153 Mississippi Power Company 267,454 Savannah Electric and Power Company 120,318 Southern Communications Services, Inc. 20,060 Southern Company Energy Solutions, LLC - Southern Electric Generating Company 273 Southern Electric Railroad Company 16 Southern Management Development, Inc. 4,340 Southern Nuclear Operating Company, Inc. 180,035 Southern Power Company 147,623 Southern Company Gas, LLC 134,543 ----------- TOTAL PAYMENTS 2,661,017 =========== The major portion of the above expenses consists of Energy Marketing, Southern Gas Billing (SGB) and Southern Gas Financial (SGF) services; transactions relating to third party payroll payments; and transactions relating to Electric Power Research Institute dues.
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[Enlarge/Download Table] 9 ANNUAL REPORT OF SOUTHERN COMPANY SERVICES, INC. ------------------------------------------------ For the Year Ended December 31, 2004 ------------------------------------ (Thousands of Dollars) SCHEDULE VI ----------- FUEL STOCK EXPENSES UNDISTRIBUTED --------------------------------- INSTRUCTIONS: Report the amount of labor and expenses incurred with respect to fuel stock expenses during the year and indicate amount attributable to each associate company. Under the section headed "Summary" listed below give an overall report of the fuel functions performed by the service company. DESCRIPTION LABOR EXPENSES TOTAL ----------- ----- -------- ----- ACCOUNT 152 - FUEL STOCK EXPENSES UNDISTRIBUTED 9,476 8,239 17,715 Total amount billed during current year as follows: Associated Companies The Southern Company (3) (19) (22) Alabama Power Company (2,660) (2,212) (4,872) Georgia Power Company (3,476) (2,753) (6,229) Gulf Power Company (877) (693) (1,570) Mississippi Power Company (1,018) (870) (1,888) Savannah Electric and Power Company (232) (202) (434) Southern Electric Railroad Company (81) (170) (251) Southern Company Energy Solutions, LLC - - - Southern Company Gas, LLC (401) (348) (749) Southern Company Holdings, Inc. (11) (82) (93) Southern Electric Generating Company (125) (113) (238) Southern Nuclear Operating Company, Inc. - - - Southern Company Rail Services (333) (226) (559) Southern Power Company (209) (170) (379) Alabama Synfuel Energy (29) (361) (390) Energy Related Activities (21) (20) (41) ---------- ----------- ---------- Subtotal Associate Companies (9,476) (8,239) (17,715) ---------- --------- ---------- Non-Associated Companies: - - - ---------- ------------ ---------- Subtotal Associate and Non-associate Companies (9,476) (8,239) (17,715) ---------- ------------ ---------- 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 - 2,069; Expenses - 2,106; Total - 4,175.
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[Enlarge/Download Table] 10 ANNUAL REPORT OF SOUTHERN COMPANY SERVICES, INC. ------------------------------- For the Year Ended December 31, 2004 ----------------- (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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[Enlarge/Download Table] 11 ANNUAL REPORT OF SOUTHERN COMPANY SERVICES, INC. ------------------------------- For the Year Ended December 31, 2004 ----------------- (Thousands of Dollars) SCHEDULE VIII -------------- MISCELLANEOUS CURRENT AND ACCRUED ASSETS ---------------------------------------- INSTRUCTIONS: Provide detail of items in this account. Items less than $10,000 may be grouped, showing the number of items in each group. BALANCE AT BALANCE AT BEGINNING CLOSE OF DESCRIPTION OF YEAR YEAR ----------- ------------- ---------- ACCOUNT 174 - MISCELLANEOUS CURRENT AND ACCRUED ASSETS Interest Receivable -Temporary Cash Investments 4 39 Assets Held for Sale - (4) Accounts Payable Suspense - (2) Payroll - 6,771 Miscellaneous - 803 Intercompany Derivative-Current-SOCO 1,033 454 -------- -------- Total 1,037 8,061 ======== ========
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[Enlarge/Download Table] 12 ANNUAL REPORT OF SOUTHERN COMPANY SERVICES, INC. -------------------------------- For the Year Ended December 31, 2004 ---------------- (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 9,547 - Deposit for Georgia Sales and Use Tax 26 26 Executive Stock Option Taxes 175 96 Associate Co. Early Retirement Plans - 17,975 Wilsonville Clean-up 91 - Intangible Asset - Minimum Pension Obligation 15,010 15,211 Intercompany Derivative - Fair Value Hedge - 318 Transmission Service Deposits - 351 Unamortized Leasehold - Inverness 185 742 Unamortized Leasehold - Washington, DC 237 200 Sundry Delayed Clearance 4,247 2,004 -------- -------- Total 34,010 36,923 ======= ========
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[Enlarge/Download Table] 13 ANNUAL REPORT OF SOUTHERN COMPANY SERVICES, INC. For the Year Ended December 31, 2004 (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 35,104 Total amount billed/incurred during current year as follows: Government Projects: PSDF / Hot Gas Cleanup Project (22,842) EPRI Projects: RE&A EPRI Contracts (959) Engineering EPRI Projects (391) EPRI Bulk Trans. System Reliability (12) Associate Companies: End-Use Research Projects (1,435) Power Delivery Research-Overhead Transmission (373) Power Delivery Research-Transmission Substations (510) Power Delivery Research-Distribution (485) Air Quality Studies (224) Combustion & Fuel Effects (855) Research Administration (359) Flue Gas Treatment (1,577) Advanced End-Use Technology Research (2,026) Advanced Energy Systems (2,011) Thermal & Fluid Sciences (994) R&D Tech Econ Assessments (51) ----------- TOTAL AMOUNT BILLED/INCURRED (35,104) ----------- TOTAL 0 ===========
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[Enlarge/Download Table] 14 ANNUAL REPORT OF SOUTHERN COMPANY SERVICES, INC. For the Year Ended December 31, 2004 (Thousands of Dollars) SCHEDULE XI - PROPRIETARY CAPITAL NUMBER OF PAR OR STATED OUTSTANDING ACCOUNT SHARES VALUE CLOSE NUMBER CLASS OF STOCK AUTHORIZED PER SHARE OF PERIOD --------- -------------- ---------- ----------------- --------------- 201 COMMON STOCK NO. OF SHARES ISSUED 17,000 50.00 14,500 TOTAL 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 (25,725) -------- TOTAL (25,575) 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. [Download Table] 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 (24,850) ======= ( ) Denotes red figure.
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[Enlarge/Download Table] 15 ANNUAL REPORT OF SOUTHERN COMPANY SERVICES, INC. For the Year Ended December 31, 2004 (Thousands of Dollars) SCHEDULE XII - LONG-TERM DEBT INSTRUCTIONS: Advances from associate companies should be reported separately for advances on notes, and advances on open account. Names of associate companies from which advances were received shall be shown under the class and series of obligation column. For Account 224 - Other Long-Term Debt provide the name of creditor company or organization, terms of the obligation, date of maturity, interest rate, and the amount authorized and outstanding. TERMS OF OBLIG DATE BALANCE AT BALANCE AT CLASS & SERIES OF INTEREST AMOUNT BEGINNING 1/ CLOSE NAME OF CREDITOR OF OBLIGATION MATURITY RATE AUTHORIZED OF YEAR ADDITIONS DEDUCTIONS OF YEAR --------------- ------------- ---------- --------- -------- --------- --------- -------- --------- ACCOUNT 223 - ADVANCES FROM ASSOCIATE `COMPANIES: NOT APPLICABLE ACCOUNT 224 - OTHER LONG-TERM DEBT: NOTES PAYABLE Merrill Lynch & Co. 12/15/2009 7.625 40,000 40,000 - - 40,000 DERIVATIVE Fair Value Hedge Notional Amount --------------- 12/15/2009 Fixed: 7.625% 40,000 Floating: 6-month Libor + 2.92% 787 - 47 740 CAPITAL LEASE * ------------- GATX Technology Services 01/31/06 - 11/30/08 4.33 - 5.29 22,204 9,615 6,213 5,645 10,183 IR Mainframe 07/31/03 - 04/30/07 5.00 - 8.00 9,865 639 1,268 1,257 650 Pacific Rim 1/31/08 - 11/30/08 4.33 - 5.28 3,751 - 3,751 756 2,995 ------ ------- ------- ------- ------ TOTAL 75,820 51,041 11,232 7,705 54,568 ====== ======= ======= ======= ====== 1/ GIVE AN EXPLANATION OF DEDUCTIONS: Amounts shown were transferred to current maturities, with the exception of the Fair - Value Hedge. * 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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[Enlarge/Download Table] 16 ANNUAL REPORT OF SOUTHERN COMPANY SERVICES, INC. ------------------------------ For the Year Ended December 31, 2004 ----------------- (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 - - Alabama Power Company 31,787 44,274 Georgia Power Company 14,354 5,983 Gulf Power Company 9,328 15,696 Mississippi Power Company 2,251 658 Savannah Electric and Power Company 77 98 Southern Communications Services, Inc. 397 357 Southern Company Gas, LLC 3,581 60 Southern Electric Generating Company - - Southern Management and Development 62 16 Southern Nuclear Operating Company, Inc. - - Southern Power Company 149 701 -------- -------- TOTAL 61,986 67,843 ======== ======== ACCOUNT 242 - MISCELLANEOUS CURRENT AND ACCRUED LIABILITIES Incentive Pay (PPP) 81,613 83,216 Vacation Clearing Account 20,158 21,108 Accrued Labor & Related Overheads 12,050 6,022 Employee Group Insurance Premiums 1,001 328 Employee Group Insurance Claims Reserve 2,800 2,396 Early Retirement Benefits 1,070 1,192 Accumulated Provision for Major Overhaul of Aircraft 423 433 Supplemental Pensions and Benefits 6,208 5,648 Department of Energy 509 543 Flex and Save Benefits 2,042 1,922 Severance Pay 9,668 2,637 Metro Life Advance-Current 301 301 Merrill Lynch Investment Management - 725 Performance Dividend Plan 21,817 18,909 TPO Study 371 114 (Continued on Page 16A)
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16A ANNUAL REPORT OF SOUTHERN COMPANY SERVICES, INC. ------------------------------- For the Year Ended December 31, 2004 ---------------- (Thousands of Dollars) SCHEDULE XIII - CURRENT AND ACCRUED LIABILITIES ----------------------------------------------- (Continued) BALANCE AT BALANCE AT BEGINNING CLOSE OF DESCRIPTION OF YEAR YEAR ----------- ----------- ------------- SCS - U.S. Savings Bonds Withholdings 196 28 Funds Dist-Holders SE P&L Corp. 13 13 SCS-FLEX Benefits Premiums 2,218 2,575 Washington DC Sublease Deposit - Aircraft Owners & Pilots Assoc. 37 19 Washington DC Sublease Deposit - Crown 17 17 Associate Companies - Employee Savings Plan 29 6,934 SCS - Employee Savings Plan - 1,336 Associate Companies - Legal Withholding - 219 SCS - Legal Withholding - 15 Associate Companies - Credit Union Withholding - 2,965 SCS - Credit Union Withholding - 484 Associate Companies - Personal Lines Coverage - 95 SCS - Personal Lines Coverage - 14 SNC - Merchandise Withholding - 25 APC - PAC Federal / State Withholding - 28 SCS - Parking Fees Withholding - 20 SCS - PAC Federal / State Withholding - 17 Bank Fee - 857 SCS - Miscellaneous - 295 SCS - Workers Compensation Claim-Reserve - 300 Cost Center variance - 500 Deferred Compensation Plan-Current - 4,118 Hewitt Consulting - 280 Miscellaneous (23 Beginning) (43 Ending) (64) 66 --------- ---------- TOTAL 162,477 166,714 ========= ==========
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17 ANNUAL REPORT OF SOUTHERN COMPANY SERVICES, INC. ------------------------------- For the Year Ended December 31, 2004 ----------------- 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, ("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, 2004 ------------------ 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 Wireless) (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 generation 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 various other energy related businesses); 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 covering 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. The measurement date for plan assets and obligations is September 30 for each year.
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[Enlarge/Download Table] 17B ANNUAL REPORT OF SOUTHERN COMPANY SERVICES, INC. ------------------------------ For the Year Ended December 31, 2004 ------------------- SCHEDULE XIV ------------- NOTES TO FINANCIAL STATEMENTS ------------------------------ Pension Plans ------------- The accumulated benefit obligation for the pension plans was $709 million in 2004 and $644 million in 2003. 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 ------------------------------- 2004 2003 ----- ------ Balance at beginning of year 709,141 644,991 Service cost 22,615 20,970 Interest cost 42,018 41,393 Benefits paid (26,523) (24,682) Plan amendments 1,850 1,719 Actuarial (gain) loss 54,341 24,750 -------- -------- Balance at end of year 803,442 709,141 ======== ======== Plan Assets -------------------------------------- 2004 2003 ---------- ---------- Balance at beginning of year 666,651 609,745 Actual return on plan assets 87,819 97,620 Employer contributions 4,175 4,855 Benefits paid (26,523) (24,682) Receivables/Payables due to transfers (22,588) (20,887) --------- --------- Balance at end of year 709,534 666,651 ========= ========= The accrued pension costs recognized in the Balance Sheets are as follows: (in thousands) 2004 2003 ---------- ---------- Funded status (93,908) (42,490) Unrecognized transition obligation (2,380) (3,666) Unrecognized prior service cost 49,156 52,197 Unrecognized net (gain) loss 67,366 20,007 --------- --------- Prepaid asset, net 20,234 26,048 Portion included in benefit obligations 31,759 27,254 --------- --------- Total prepaid assets recognized in the Balance Sheet 51,993 53,302 ========= ========= In 2004 and 2003, 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 $40 million and $30 million and $15 million and $15 million, respectively.
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[Enlarge/Download Table] 17C ANNUAL REPORT OF SOUTHERN COMPANY SERVICES, INC. ------------------------------ For the Year Ended December 31, 2004 ----------------- SCHEDULE XIV -------------- NOTES TO FINANCIAL STATEMENTS ------------------------------ Components of the pension plan's net periodic cost were as follows: (in thousands) 2004 2003 2002 ----------- ---------- ---------- Service cost 22,615 20,970 18,931 Interest cost 42,018 41,393 41,922 Expected return on plan assets (59,045) (60,508) (59,841) Recognized net (gain) loss 823 (4,069) (8,450) Net amortization 3,687 3,581 2,608 ---------- --------- --------- Net pension cost (income) 10,098 1,367 (4,830) ========== ========= ========= Future benefit payments reflect expected future service and are estimated based on assumptions used to measure the projected benefit obligation for the pension plans. At December 31, 2004, estimated benefit payments were as follows: (In Thousands) 200 526,672 2006 27,694 2007 29,251 2008 31,060 2009 33,036 2010 to 2014 220,912 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 ------------------------------- 2004 2003 ---------- ---------- Balance at beginning of year 163,586 154,494 Service cost 3,386 3,192 Interest cost 9,334 9,880 Benefits paid (8,083) (6,912) Actuarial (gain) loss 10,553 2,932 --------- ---------- Balance at end of year 178,776 163,586 ========= ========= Plan Assets -------------------------------------- 2004 2003 ---------- ---------- Balance at beginning of year 28,831 24,792 Actual return on plan assets 4,059 4,064 Employer contributions 8,083 6,887 Benefits paid (8,083) (6,912) ---------- --------- Balance at end of year 32,890 28,831 ========== =========
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[Enlarge/Download Table] 17D ANNUAL REPORT OF SOUTHERN COMPANY SERVICES, INC. ------------------------------ For the Year Ended December 31, 2004 ----------------- SCHEDULE XIV ------------- NOTES TO FINANCIAL STATEMENTS ------------------------------ The accrued postretirement costs recognized in the Balance Sheets are as follows: (in thousands) 2004 2003 ---------- ---------- Funded status (145,885) (134,755) Unrecognized transition obligation 3,338 3,743 Unrecognized prior service cost 21,321 22,878 Unrecognized net (gain) loss 34,132 24,737 Fourth quarter contributions 1,824 1,526 --------- --------- Accrued liability recognized in the Balance Sheet (85,270) (81,871) ========= ========= [Enlarge/Download Table] Components of the plan's net periodic cost were as follows: (in thousands) 2004 2003 2002 ----------- ---------- ---------- Service cost 3,386 3,192 2,722 Interest cost 9,334 9,880 9,116 Expected return on plan assets (2,775) (2,598) (2,517) Net amortization 2,249 2,169 1,811 -------- --------- --------- Net postretirement cost 12,194 12,643 11,132 ======== ========= ========= In the third quarter 2004, the Company prospectively adopted FASB Staff Position (FSP) 106-2, Accounting and Disclosure Requirements related to the Medicare Prescription Drug, Improvement, and Modernization Act of 2003 (Medicare Act). The Medicare Act provides a 28 percent prescription drug subsidy for Medicare eligible retirees. FSP 106-2 requires recognition of the impacts of the Medicare Act in the accumulated postretirement benefit obligation (APBO) and future cost of service for postretirement medical plan. The effect of the subsidy reduced the Company expenses for the six months ended December 31, 2004 by approximately $.9 million and is expected to have a similar impact on future expenses. The subsidy's impact on the postretirement medical plan APBO was a reduction of approximately $18.2 million. Future benefit payments, including prescription drug benefits, reflect expected future service and are estimated based on assumptions used to measure the accumulated benefit obligation for the postretirement plans. Estimated benefit payments are reduced by drug subsidy receipts expected as a result of the Medicare Act as follows: (in thousands) [Download Table] Benefit Subsidy Payments Receipts Total -------- -------- ----- 2005 7,206 - 7,026 2006 7,765 (815) 6,950 2007 8,709 (926) 7,783 2008 9,572 (1,027) 8,545 2009 10,351 (1,120) 9,231 2010 to 2014 64,365 (7,103) 57,262
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[Enlarge/Download Table] 17E ANNUAL REPORT OF SOUTHERN COMPANY SERVICES, INC. ------------------------------ For the Year Ended December 31, 2004 ---------------- SCHEDULE XIV ------------- NOTES TO FINANCIAL STATEMENTS ------------------------------ 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: 2004 2003 2002 ------- -------- -------- Discount 5.75% 6.00% 6.50% Annual salary increase 3.50% 3.75% 4.00% 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 11 percent for 2004 decreasing gradually to 5 percent through the year 2012 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, 2004 as follows: (in thousands) 1 Percent 1 Percent Increase Decrease ----------- ---------- Benefit obligation 13,479 10,645 Service and interest costs 842 729 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 2004, 2003, and 2002 were $10 million, $9 million, and $10 million, respectively. Work Force Reduction Programs ----------------------------- The Company has incurred additional costs for work force reduction programs. The costs related to these programs were $3 million, $17 million, and $11 million for 2004, 2003, and 2002, respectively. These costs were charged to expense. 4. OPERATING LEASES ---------------- The Company has operating lease agreements with various terms and expiration dates. Rental expense under all operating leases was approximately $45,234,777, $51,977,000, and $61,478,000 in 2004, 2003, and 2002, respectively. Future minimum lease payments under non-cancelable operating leases at December 31, 2004 were as follows: (in thousands) 2005 15,216 2006 9,715 2007 8,284 2008 7,308 2009 7,349 Thereafter 56,720 --------- Total 104,592 =========
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[Enlarge/Download Table] 17F ANNUAL REPORT OF SOUTHERN COMPANY SERVICES, INC. ------------------------------ For the Year Ended December 31, 2004 ----------------- SCHEDULE XIV ------------- NOTES TO FINANCIAL STATEMENTS ------------------------------ 5. FINANCING --------- Details of long-term debt, notes payable - other, and derivatives at December 31 are as follows: (in thousands) 2004 2003 -------- ------- Notes Payable: 7.625% Due 2009 40,000 40,000 7.25% Due 2004 - 1,512 Less Current Maturities - (1,512) -------- --------- Long-Term Notes Payable 40,000 40,000 -------- -------- Derivative: Fair Value Hedge - 6 Month LIBOR + 2.92% on $40 740 787 million nominal amount due 2009 Less Current Maturities - - --------- -------- Long-Term Derivative 740 787 --------- -------- Capitalized Lease Obligations: Total Capitalized Leases 22,294 16,773 Less Current Maturities (8,466) (6,519) --------- --------- Long-Term Capitalized Leases 13,828 10,254 -------- -------- Total Long-Term Debt 54,568 51,041 ======== ======== 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. 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 $916,593 was credited against the client companies' expenses during the year ended December 31, 2004. Maturities over the next five years of the Company's long-term debt outstanding at December 31, 2004 are as follows: (in thousands) 2005 8,466 2006 7,429 2007 4,710 2008 1,689 2009 40,740 Thereafter - ------- Total 63,034 ======= 6. PURCHASE COMMITMENTS -------------------- The Company has various purchase commitments. At December 31, 2004, total capital expenditures are budgeted to be approximately $32 million in 2005.
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[Enlarge/Download Table] 18 ANNUAL REPORT OF SOUTHERN COMPANY SERVICES, INC. ------------------------------- For the Year Ended December 31, 2004 ----------------- (Thousands of Dollars) SCHEDULE XV ------------- STATEMENT OF INCOME -------------------- ACCOUNT DESCRIPTION CURRENT YEAR PRIOR YEAR ------- ----------- ------------ ---------- INCOME ------ 457 Services rendered to associate companies 819,610 823,065 458 Services rendered to non-associate companies 32,162 33,231 421 Miscellaneous income or loss 3,222 1,602 --------- --------- Total Income 854,994 857,898 --------- --------- EXPENSE ------- 920 Salaries and wages 364,733 374,710 921 Office supplies and expenses 74,625 88,935 922 Administrative expense transferred-credit - - 923 Outside services employed 157,239 143,182 924 Property insurance 16,151 20,014 925 Injuries and damages 18,387 13,852 926 Employee pensions and benefits 54,212 44,805 928 Regulatory commission expense - 23 930.1 General advertising expenses 12,680 13,675 930.2 Miscellaneous general expenses 9,830 12,183 931 Rents 51,311 54,411 932 Maintenance of structures and equipment 34,637 34,648 403 Depreciation and amortization expense 19,843 22,488 408 Taxes other than income taxes 30,575 24,545 409 Income taxes 648 (125) 410 Provision for deferred income taxes - - 411 Provision for deferred income taxes - credit - - 411.5 Investment tax credit - - 426.1 Donations 6,102 5,705 426.5 Other deductions - - 427 Interest on long-term debt 2,114 2,842 430 Interest on debt to associate companies 54 321 431 Other interest expense 1,853 1,684 --------- --------- Total Expense 854,994 857,898 --------- --------- Net Income - - ========= =========
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[Enlarge/Download Table] 19 ANNUAL REPORT OF SOUTHERN COMPANY SERVICES, INC. ------------------------------ For the Year Ended December 31, 2004 --------------- (Thousands of Dollars) ANALYSIS OF BILLING ------------------ ASSOCIATE COMPANIES ACCOUNT 457 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 45,248 7,485 206 52,939 Alabama Power Company 171,065 52,008 1,080 224,153 Georgia Power Company 224,971 65,802 1,382 292,155 Gulf Power Company 42,295 13,309 266 55,870 Mississippi Power Company 34,932 10,149 225 45,306 Savannah Electric & Power Co. 13,608 3,703 81 17,392 Southern Communications Serv., Inc. 14,534 1,367 32 15,933 Southern Company Energy Solutions, LLC 1,465 323 11 1,799 Southern Company Gas, LLC 9,491 3,266 96 12,853 Southern Company Holdings, Inc. 1,026 255 8 1,289 Southern Company Rail Services 1,185 289 6 1,480 Southern Electric Generating Co. 2,967 803 17 3,787 Southern Electric Railroad Co. 315 81 2 398 Southern Management Development, Inc. 809 167 6 982 Southern Nuclear Operating Co. 32,874 8,653 187 41,714 Southern Power Company 34,495 11,869 301 46,665 Southern Telecom, Inc. 1,155 341 8 1,504 SE Finance Capital Corporation II 2,633 - 8 2,641 Alabama Synfuel Energy 516 - 1 517 Energy Related Activities 72 - - 72 Synfuel Services 28 - - 28 SOCO Electrotechnologies 115 - - 115 Southern Company Capital Funding 18 - - 18 ------- ------- ------ ------- TOTAL 635,817 179,870 3,923 819,610 ======= ======= ====== =======
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[Enlarge/Download Table] 20 ANNUAL REPORT OF SOUTHERN COMPANY SERVICES, INC. ------------------------------- For the Year Ended December 31, 2004 ----------------- (Thousands of Dollars) ANALYSIS OF BILLING -------------------- NONASSOCIATE COMPANIES ACCOUNT 458 DIRECT INDIRECT COMPENSATION EXCESS TOTAL COSTS COSTS FOR USE TOTAL OR AMOUNT NAME OF NONASSOCIATE COMPANY CHARGED CHARGED OF CAPITAL COST DEFICIENCY BILLED ---------------------------- ------- ------- -------------- ----- ---------- -------- 458-1 458-2 458-3 458-4 Department of Energy (DOE) 19,487 3,277 79 22,843 - 22,843 Electric Power Research Institute 1,217 142 3 1,362 - 1,362 APC Credit Union 28 - - 28 - 28 Gulf Power Credit Union 11 - - 11 - 11 GE Power Systems 13 - - 13 - 13 AT & T 12 - - 12 - 12 Southern Interexchange 13 - - 13 - 13 Georgia Charitable Foundation 7 - - 7 - 7 Southern System Master Retirement Trust 1,136 - 13 1,149 - 1,149 POWERCO 19 - - 19 - 19 FP&L; JEA; Tallahassee, FPC (Unit Power Sales) 43 33 1 77 - 77 FP&L; JEA, Tallahassee, FPC(OPS SCH. Fees) 1,798 - - 1,798 - 1,798 Oglethorpe Power Corporation (OPS SCH. Fees) 4,167 - - 4,167 - 4,167 SERC IR & Telecommunications Serv-APC Bldg 19 - - 19 - 19 Alabama Electric Cooperative 14 6 - 20 - 20 Duke Energy Services 8 3 - 11 - 11 Municipal Electric Authority of Georgia 15 6 - 21 - 21 Oglethorpe Power Corporation 43 19 - 62 - 62 South Mississippi Electric Power 10 4 - 14 - 14 Southeastern Electric Power Administration 5 2 - 7 - 7 Transmission - Studies (81 items) 395 86 2 483 - 483 Mirant 5 2 - 7 - 7 Other (17 items less than $5,000) 18 1 - 19 - 19 ------- ------- ----- ------- ------ ------- TOTAL 28,483 3,581 98 32,162 - 32,162 ======= ====== ===== ======= ====== ======= (Continued on 20A)
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20A ANNUAL REPORT OF SOUTHERN COMPANY SERVICES, INC. ------------------------------- For the Year Ended December 31, 2004 ----------------- (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 - Biomass gasification; 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; Hammond agglomeration; Indiglo agglomeration project; Gorgas SCR pilot plant; RTHR package demonstration; Switchgrass pellet project; Slag sensor demo; Evaluation of mercury control options; Testing SNCR pilot; Geochemical modeling study; Beryllium chemical profile; Biloxi MGP ROAM modeling study; Insti chemical fixation; WET ESP Demonstration; Hybrid ION exchange resin evaluation; Testing of ROAM model; Metals sequestration in ash; Phytoremediation of arsenic contaminated soil; Evaluation of the validity of the remedial options assessment; Athens sediment study; Technology review for arsenic at substation sites; TRELLSS-bulk transmission study reliability evaluation. APC Credit Union, Gulf Credit Union, GE Power Systems, POWERCO - 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. 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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[Enlarge/Download Table] 21 ANNUAL REPORT OF SOUTHERN COMPANY SERVICES, INC. ------------------------------- For the Year Ended December 31, 2004 ------------------ (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. 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 342,345 14,838 357,183 7,364 186 7,550 349,709 15,024 364,733 921 OFFICE SUPPLIES & EXPENSES 60,872 8,575 69,447 4,979 199 5,178 65,851 8,774 74,625 922 ADMINISTRATIVE EXP. TRANSFERRED-CREDIT - - - - - - - - - 923 OUTSIDE SERVICES EMPLOYED 141,804 5,020 146,824 10,244 171 10,415 152,048 5,191 157,239 924 PROPERTY INSURANCE 15,604 318 15,922 221 8 229 15,825 326 16,151 925 INJURIES AND DAMAGES 17,955 416 18,371 2 14 16 17,957 430 18,387 926 EMPLOYEE PENSIONS & BENEFITS 10,438 42,869 53,307 - 905 905 10,438 43,774 54,212 928 REGULATORY COMMISSION EXPENSE - - - - - - - - - 930.1 GENERAL ADVERTISING EXPENSES 12,680 - 12,680 - - - 12,680 - 12,680 930.2 MISCELLANEOUS GENERAL EXPENSES (66,922) 69,691 2,769 5,513 1,548 7,061 (61,409) 71,239 9,830 931 RENTS 36,324 14,896 51,220 33 58 91 36,357 14,954 51,311 932 MAINTENANCE OF STRUCTURES AND EQUIPMENT 32,501 2,090 34,591 28 18 46 32,529 2,108 34,637 403 DEPRECIATION & AMORTIZATION EXPENSE 17,553 2,284 19,837 (2) 8 6 17,551 2,292 19,843 408 TAXES OTHER THAN INCOME TAXES 11,139 18,869 30,008 101 466 567 11,240 19,335 30,575 409 INCOME TAXES 648 - 648 - - - 648 - 648 410 PROVISION FOR DEFERRED INCOME TAXES - - - - - - - - - 411 PROVISION FOR DEFERRED INCOME TAXES CREDIT - - - - - - - - - 411.5 INVESTMENT TAX CREDIT - - - - - - - - - 426.1 DONATIONS 6,098 4 6,102 - - - 6,098 4 6,102 -------- ------- ------- ----- ----- ------ ------- ------- ------- SUBTOTAL EXPENSES 639,039 179,870 818,909 28,483 3,581 32,064 667,522 183,451 850,973
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[Enlarge/Download Table] 21A ANNUAL REPORT OF SOUTHERN COMPANY SERVICES, INC. ------------------------------- For the Year Ended December 31, 2004 ----------------- (Thousands of Dollars) SCHEDULE XVI ------------- ANALYSIS OF CHARGES FOR SERVICE ------------------------------- ASSOCIATE AND NONASSOCIATE COMPANIES ASSOCIATE COMPANY CHARGES NONASSOCIATE COMPANY CHARGES TOTAL CHARGES FOR SERVICE ------------------------- ---------------------------- ---------------------------- DIRECT INDIRECT DIRECT INDIRECT DIRECT INDIRECT DESCRIPTION OF ITEMS COST COST TOTAL COST COST TOTAL COST COST TOTAL -------------------- -------- --------- ----- -------- --------- ----- ------ -------- ------ 427 INTEREST ON LONG-TERM DEBT - - 2,062 - - 52 - - 2,114 430 INTEREST ON DEBT TO ASSOCIATE COMPANIES - - 53 - - 1 - - 54 431 OTHER INTEREST EXPENSE - - 1,808 - - 45 - - 1,853 -------- ------- -------- ------ ----- ------- ------- ------- -------- TOTAL EXPENSES 639,039 179,870 822,832 28,483 3,581 32,162 667,522 183,451 854,994 421 MISCELLANEOUS GAIN (3,222) - (3,222) - - - (3,222) - (3,222) -------- ------- -------- ------- ------ ------ -------- ------- ------- TOTAL COST OF SERVICES 635,817 179,870 819,610 28,483 3,581 32,162 664,300 183,451 851,772 ======== ======= ======== ======= ====== ====== ======== ======== ======= ( ) Denotes Red Figure.
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[Enlarge/Download Table] 22 ANNUAL REPORT OF SOUTHERN COMPANY SERVICES, INC. ------------------------------ For the Year Ended December 31, 2004 ----------------- (Thousands of Dollars) SCHEDULE XVII -------------- SCHEDULE OF EXPENSE DISTRIBUTION BY ----------------------------------- DEPARTMENT OR SERVICE FUNCTION ------------------------------- DEPARTMENT OR SERVICE FUNCTION ------------------------------- INSTRUCTION: Indicate each department or service function. (See Instruction 01-3 General Structure of Accounting System: Uniform System Account) Administration Finance Total and Corporate Customer External and DESCRIPTION OF ITEMS Amount General Counsel Service Engineering Executive Affairs Accounting -------------------- ------ ---------- -------- -------- ----------- --------- ------- ---------- 920 SALARIES AND WAGES 364,733 9,420 9,394 6,924 89,931 6,195 8,780 23,789 921 OFFICE SUPPLIES AND EXPENSES 74,625 2,689 886 14,421 10,041 118 1,881 5,508 923 OUTSIDE SERVICES EMPLOYED 157,239 9,238 25,137 6,770 24,690 535 6,340 8,936 924 PROPERTY INSURANCE 16,151 893 - - - - - 15,081 925 INJURIES AND DAMAGES 18,387 815 - - 4 - - 17,558 926 EMPLOYEE PENSIONS & BENEFITS 54,212 53,965 3 9 74 14 29 15 930.1 GENERAL ADVERTISING EXPENSES 12,680 - - - - - 12,309 42 930.2 MISCELLANEOUS GENERAL EXPENSES 9,830 (5,650) 567 424 4,422 852 3,019 1,333 931 RENTS 51,311 24,037 133 110 3,205 57 9 18 932 MAINTENANCE OF STRUCTURES & EQUIP 34,637 2,119 100 743 839 25 16 170 403 DEPRECIATION & AMORTIZATION, EXPENSE 19,843 1,635 54 1,492 1,037 15 50 72 408 TAXES OTHER THAN INCOME TAXES 30,575 30,565 - - - - - - 409 INCOME TAXES 648 648 - - - - - - 426.1 DONATIONS 6,102 140 157 3 18 997 4,062 41 427 INTEREST ON LONG-TERM DEBT 2,114 1,747 - - - - - - 430 INTEREST ON DEBT TO ASSOCIATE CO. 54 54 - - - - - - 431 OTHER INTEREST EXPENSE 1,853 831 - - - - - - -------- -------- ------- ------- -------- ------- ------- -------- TOTAL EXPENSES 854,994 133,146 36,431 30,896 134,261 8,808 36,495 72,563 421 MISCELLANEOUS LOSS (GAIN) (3,222) (3,222) - - - - - - -------- -------- ------- ------ -------- ------- ------- -------- TOTAL COSTS 851,772 129,924 36,431 30,896 134,261 8,808 36,495 72,563 ======== ======== ======= ======= ======== ======= ======= ======= ( ) Denotes Red Figure.
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[Enlarge/Download Table] 22A ANNUAL REPORT OF SOUTHERN COMPANY SERVICES, INC. ------------------------------ For the Year Ended December 31, 2004 ------------------ (Thousands of Dollars) SCHEDULE XVII -------------- SCHEDULE OF EXPENSE DISTRIBUTION BY ----------------------------------- DEPARTMENT OR SERVICE FUNCTION ------------------------------- DEPARTMENT OR SERVICE FUNCTION 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 34,467 24,009 85,581 6,662 9,617 5,702 12,940 6,106 5,125 20,091 921 4,985 2,333 19,279 699 1,033 452 6,780 283 1,518 1,719 923 4,622 9,678 32,347 230 3,508 1,974 19,735 435 99 2,965 924 - - - - - - 221 - (44) - 925 4 - - - - - 6 - - - 926 41 20 22 1 2 2 2 1 10 2 930.1 2 5 - - 114 - 1 207 - - 930.2 3,656 1,955 4,165 131 581 546 (2,247) 55 272 (4,251) 931 258 285 22,612 126 184 81 59 2 71 64 932 305 88 22,491 4 284 731 70 7 4,960 1,685 403 671 1,181 5,278 7 949 7 526 - 3,405 3,464 408 17 - (8) - - - - - 1 - 409 - - - - - - - - - - 426.1 279 60 2 - 25 1 310 7 - - 427 - - 367 - - - - - - - 430 - - - - - - - - - - 431 - - 1,022 - - - - - - - ------ ------ ------- ------ ------ ----- ------- ------ ------- ------- Total Expenses 49,307 39,614 193,158 7,860 16,297 9,496 38,403 7,103 15,417 25,739 421 - - - - - - - - - ------- ------ -------- ------ ------- ------ -------- ------ -------- ------- TOTAL COSTS 49,307 39,614 193,158 7,860 16,297 9,496 38,403 7,103 15,417 25,739 ======= ====== ======== ======= ======= ====== ======== ====== ======= ====== ( ) Denotes Red Figure.
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[Enlarge/Download Table] 23 ANNUAL REPORT OF SOUTHERN COMPANY SERVICES, INC. ------------------------------ For the Year Ended December 31, 2004 ----------------- (Thousands of Dollars) DEPARTMENTAL ANALYSIS OF SALARIES --------------------------------- ACCOUNT 920 DEPARTMENTAL SALARY EXPENSE --------------------------- NAME OF DEPARTMENT INCLUDED IN AMOUNTS BILLED TO PERSONNEL ------------------ ------------------------------ --------- Indicate each department TOTAL PARENT OTHER NON- END OF or service function AMOUNT COMPANY ASSOCIATES ASSOCIATES YEAR ------ ------- ---------- ---------- --------- Administration and General 9,420 (384) 10,752 (948) - Corporate Counsel 9,394 3,922 5,314 158 52 Customer Service 6,924 6 6,918 - 80 Engineering 89,931 10,943 73,484 5,504 805 Executive 6,195 1,188 5,007 - 6 External Affairs 8,780 4,625 4,155 - 49 Finance & Accounting 23,789 24,604 (1,619) 804 178 Generation Services 34,467 113 34,330 24 283 Human Resources 24,009 96 23,766 147 219 Information Resources 85,581 1,689 82,815 1,077 922 Internal Auditing 6,662 702 5,960 - 67 Marketing 9,617 757 8,860 - 75 Procurement & Materials 5,702 150 5,101 451 62 Research & Environmental Affairs 12,940 87 (20,885) 33,738 103 Southern Company Gas 6,106 - 6,106 - 54 System Air 5,125 612 4,513 - 54 Transmission Planning 20,091 4 19,428 659 172 --------- -------- -------- ------- ------ TOTAL 364,733 49,114 274,005 41,614 3,181 ========= ======== ======== ======= ====== ( ) Denotes red figure.
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[Enlarge/Download Table] 24 ANNUAL REPORT OF SOUTHERN COMPANY SERVICES, INC. ------------------------------- For the Year Ended December 31, 2004 ----------------- (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. RELATIONSHIP "A"=ASSOCIATE DESCRIPTION OF "NA"= NON FROM WHOM PURCHASED LARGEST INVOICE ASSOCIATE AMOUNT ------------------- --------------- ------------- ------ Legal Services -------------- Baker & Hostetler, LLP Legal Services NA 1,243 Balch & Bingham LLP Legal Services NA 8,372 Bouhan, Williams & Levy, LLP Legal Services NA 132 Chadbourne & Parke, LLP Legal Services NA 199 Dorsey & Whitney Legal Services NA 127 Edison Electric Institute Legal Services NA 422 Fulbright & Jaworski, LLP Legal Services NA 1,291 Hunton & Williams Legal Services NA 1,660 McDermott, Will & Emergy, LLP Legal Services NA 190 McNatt & Greene Legal Services NA 176 Miller & Chevalier Legal Services NA 907 National Economic Research Associates, Inc. Legal Services NA 196 Parker, Hudson, Rainer & Dobbs, LLP Legal Services NA 353 Patton, Boggs, LLP Legal Services NA 319 Powell, Goldstein, Frazer & Murphy, LLP Legal Services NA 373 Troutman, Sanders LLP Legal Services NA 7,013 Wilmer, Cutler & Pickering Legal Services NA 449 Fifty-Three Other Items Less than $100,000 NA 945 -------- Subtotal - Legal Services 24,367 -------- Auditing Service ---------------- Deloitte & Touche, LLP Audit Services NA 2,657 Three Other Items Less than $100,000 NA 16 -------- Subtotal - Auditing Services 2,673 -------- (Continued on Page 24A)
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[Enlarge/Download Table] 24A ANNUAL REPORT OF SOUTHERN COMPANY SERVICES, INC. ------------------------------- For the Year Ended December 31, 2004 ----------------- (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. RELATIONSHIP "A"=ASSOCIATE DESCRIPTION OF "NA"= NON FROM WHOM PURCHASED LARGEST INVOICE ASSOCIATE AMOUNT ------------------- --------------- ------------- ------ Engineering Services ADECCO Services Temporary Services NA 204 Alabama Power Company Project Support A 146 Alstom Power, Inc. Contract Engineering Serv. NA 256 B. Moore, Inc. Contract Engineering Serv. NA 152 BE&K Engineering Co. Contract Engineering Serv. NA 7,721 BHA Group, Inc. Inspection Services NA 332 BSE Industrial Contractors, Inc. Power Systems Development NA 158 Caddell Construction Co., Inc. Construction Services NA 820 CB & A Project Management Serv. Project Management NA 947 CDI Technical Services Contract Engineering Serv. NA 102 E. on Engineering Contract Engineering Serv. NA 117 Energy Design & Control Serv., Inc. Contract Engineering Serv. NA 185 Flue Gas Services, LLC Precipitator Technical Services NA 230 Global Supply Group, Inc. Contract Engineers-Constructors NA 184 Hamon Research-Cottrell, Inc. Contract Engineering Serv. NA 179 Indigo Technologies, LLC Environmental Serv. NA 574 Kellogg Brown & Root, Inc. Contract Engineering Serv. NA 403 L.G. Byrnes Contract Engineering Serv. NA 101 NWL Contract Engineering Serv. NA 304 Parsons Energy & Chemicals Group, Inc. Inspection Services NA 167 Ranger Consulting, Inc. Drilling Contractor NA 113 Service Electric Company Environmental Remediation Serv. NA 209 Siemens Westinghouse Power Systems Development NA 118 Southern Research Institute Power Systems Development NA 882 The E Group Project Management NA 1,548 The LRB Group, Inc. Inspection Services NA 165 Universal Resources, Inc. Contract Engineering Serv. NA 4,987 Eighty-Nine Other Items Less than $100,000 NA 1,266 ------- Subtotal - Engineering Services 22,570 ------- (Continued on Page 24B)
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[Enlarge/Download Table] 24B ANNUAL REPORT OF SOUTHERN COMPANY SERVICES, INC. ------------------------------ For the Year Ended December 31, 2004 --------------- (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. RELATIONSHIP "A"=ASSOCIATE DESCRIPTION OF "NA"= NON FROM WHOM PURCHASED LARGEST INVOICE ASSOCIATE AMOUNT ------------------- --------------- -------------- ------ Other Services -------------- Accenture, LLP Consulting Services NA 4,582 Acxiom Corporation Information Technology Services NA 144 ADECCO USA, Inc. Temporary Services NA 619 ADP Investor Communication Serv. Investor Relations NA 831 Alabama Power Company Project Support A 9,652 Alden Research Laboratory, Inc. Research & Development NA 159 Alexander Strategy Group, Inc. Consulting Services NA 180 Alpha-Omega Power Technologies Consulting Services NA 100 Analysis Group Economics Consulting Services NA 510 Ann Randazzo Consulting Services NA 106 Aspen Systems Corporation Information Technology Services NA 189 Atkearney Software Consulting Services NA 305 Atmospheric Research & Analysis Consulting Services NA 2,562 Barbour, Griffith & Rogers Consulting Services NA 260 Barton Security Services NA 152 Bellomy Research, Inc. Consulting Services NA 101 Block Box Network Services Telecommunications Services NA 356 Blankenship & Seay Consulting Group, Inc. Consulting Services NA 204 Booz-Allen & Hamilton, Inc. Financial Services NA 252 Bowne of Atlanta, Inc. Stockholder Services NA 230 Caddell Construction Co. Construction Services NA 1,438 Callahan & Associates, Inc. Telecommunications Services NA 186 Carter & Associates Property Management NA 240 Cauthen & Associates Consulting Services NA 160 Charles River Associates, Inc. Environmental Services NA 473 CIT Systems Leasing Information Technology Services NA 185 Clean Air Engineering, Inc. Environmental Services NA 134 CMI Marketing Services NA 298 Comprehensive Computer Consulting, Inc. Information Technology Services NA 5,408 (Continued on page 24C)
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[Enlarge/Download Table] 24C ANNUAL REPORT OF SOUTHERN COMPANY SERVICES, INC. ------------------------------- For the Year Ended December 31, 2004 ------------------ (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. RELATIONSHIP "A"=ASSOCIATE DESCRIPTION OF "NA"= NON FROM WHOM PURCHASED LARGEST INVOICE ASSOCIATE AMOUNT ------------------- --------------- ---------------- ------ COMSYS Information Technology Services NA 158 Corporate Executive Board Consulting Services NA 103 Corporate Temps 2000 Personnel Services NA 108 Creative Financial Group, LTD Financial Services NA 258 Dell Marketing, LP Information Technology Services NA 185 Deloitte & Touche LLP Consulting Services NA 479 Doozer Software, Inc. Software Consulting Services NA 1,212 Electric Power Research Institute Research and Development NA 5,022 Enspiria Solutions, Inc. Information Technology Services NA 189 Equifax Credit Info. Serv. Credit Information Services NA 727 Ernst & Young, LLP Consulting Services NA 1,804 Fiberglass Structural Eng., Inc. Consulting Services NA 165 Forrester Research, Inc. Information Technology Services NA 222 GATX Technology Services, Inc. Information Technology Services NA 152 GCI Group Public Relations Services NA 274 GE Energy Management Serv., Inc. Information Technology Services NA 128 GE Purchase Card Services Financial Services NA 116 Georgia Power Company Project Support A 11,522 Georgia Tech Research Corporation Research and Development NA 426 Group 1 Software, Inc. Software Consulting Services NA 456 Gulf Power Company Project Support A 842 Hawthorn Group Consulting Services NA 480 Hendrick Associates Interior Design Services NA 105 Hewitt Associates Personnel Services NA 5,958 Hire.Com, Inc. Personnel Services NA 259 Hurt, Norton & Associates Consulting Services NA 102 Indus International, Inc. Software Consulting Services NA 222 Integrated Economic Solutions Risk Management Services NA 250 Intelligent Technology Systems Information Technology Services NA 324 Invensys Systems, Inc. Consulting Services NA 368 (Continued on page 24D)
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[Enlarge/Download Table] 24D ANNUAL REPORT OF SOUTHERN COMPANY SERVICES, INC. ------------------------------ For the Year Ended December 31, 2004 ----------------- (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. RELATIONSHIP "A"=ASSOCIATE DESCRIPTION OF "NA"= NON FROM WHOM PURCHASED LARGEST INVOICE ASSOCIATE AMOUNT ------------------- --------------- ---------------- ------ Jeffcoat & Associates, LP Information Technology Services NA 324 Jefferson Wells International, Inc. Consulting Services NA 632 KPMG, LLP Consulting Services NA 281 Lariat Delivery Services NA 164 LEGC, LLC Risk Management Services NA 375 Lithographix,Inc. Printing Services NA 464 Lone Star Railroad Contractors Construction Services NA 133 Lumigent Technologies,Inc. Software Consulting Services NA 254 Mannings Construction Services NA 108 Market Strategies Marketing Services NA 405 Matrix Resources, Inc. Consulting Services NA 117 McLaren Software, Inc. Software Consulting Services NA 456 Mercer Human Resources Consulting Personnel Services NA 133 Merrill Lynch Investment Managers Financial Services NA 166 Merrill Lynch Trust Company Financial Services NA 1,712 Merrill Lynch, Pierce, Fenner, & Smith, Inc. Financial Services NA 1,341 Mesa Solutions, Inc. Consulting Services NA 270 Microsoft Corporation Information Technology Services NA 424 Microsoft Services Information Technology Services NA 229 Mississippi Power Company Project Support A 561 ML Strategies, LLC Consulting Services NA 120 MRO Software, Inc. Software Consulting Services NA 179 New York Stock Exchange, Inc. Financial Services NA 645 Open Access Technology International, Inc. Information Technology Services NA 303 ORACLE Corporation Software Consulting Services NA 2,277 Pantellos Group Limited Partnership Procurement Services NA 2,924 Parson Consulting Company Consulting Services NA 589 Paul N. Lesner Consulting Services NA 174 (Continued on page 24E)
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[Enlarge/Download Table] 24E ANNUAL REPORT OF SOUTHERN COMPANY SERVICES, INC. ------------------------------ For the Year Ended December 31, 2004 ---------------- (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. RELATIONSHIP "A"=ASSOCIATE DESCRIPTION OF "NA"= NON FROM WHOM PURCHASED LARGEST INVOICE ASSOCIATE AMOUNT ------------------- --------------- ---------------- ------ Peoplesoft, Inc. Software Consulting Services NA 464 Phil Kent Consulting, Inc. Consulting Services NA 121 Powerplan Consultants Software Consulting Services NA 136 Pricewaterhouse, Coopers, LLP Software Consulting Services NA 115 RB Management Security Servcies NA 107 Red Clay Consulting, Inc. Software Consulting Services NA 238 Robert T. Cobb Consulting Services NA 244 Ronald S. Terry Construction Co. Construction Services NA 254 Russell Reynolds Associates, Inc. Consulting Services NA 173 SAS Institute, Inc. Software Consulting Services NA 136 Savannah Electric & Power Co. Project Support A 142 Scott, Madden & Associates, Inc. Consulting Services NA 1,256 Securitas Security Services US Security Services NA 363 Software House International, Inc. Information Technology Services NA 1,080 Southern Research Institute Consulting Services NA 217 Staging Directions Event Services NA 133 Stahl Technology Services Information Technology Services NA 125 Standard & Poor's Corporation Financial Services NA 410 Structural Integrity Associates, Inc. Inspection Services NA 115 Sumtotal Systems, Inc. Software Consulting Services NA 137 Sungard CSS Software Software Consulting Services NA 400 Superheat Services, Inc. Consulting Services NA 124 Synergis Software Consulting Services NA 2,018 Syntellect, Inc. Software Consulting Services NA 801 System Architechs, Inc. Software Consulting Services NA 237 Systems Applications International Consulting Services NA 177 Tech Providers, Inc. Personnel Services NA 311 Teksystems Information Technology Services NA 660 Telewares Communications, LLC Telecommunications Services NA 1,077 (Continued on page 24F)
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[Enlarge/Download Table] 24F ANNUAL REPORT OF SOUTHERN COMPANY SERVICES, INC. ------------------------------ For the Year Ended December 31, 2004 ----------------- (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. RELATIONSHIP "A"=ASSOCIATE DESCRIPTION OF "NA"= NON FROM WHOM PURCHASED LARGEST INVOICE ASSOCIATE AMOUNT ------------------- --------------- ---------------- ------ The North Highland Company, Inc. Consulting Services NA 1,837 The Smith-Free Group Consulting Services NA 180 The University of Alabama Research and Development NA 144 Thomson Financial / Carson Financial Services NA 109 Time and Money Consulting, Inc. Consulting Services NA 140 TMP Worldwide Personnel Services NA 207 TQS Research, Inc. Market Research Studies NA 122 TRAX Corporation Software Consulting Services NA 153 Van Scoyoc Associates Consulting Services NA 110 Verisign, Inc. Software Consulting Services NA 103 Veritas Software Global, LLC Software Consulting Services NA 446 Verity, Inc. Software Consulting Services NA 101 Vital Inspection Professionals Inspection Services NA 365 Vitria Technology, Inc. Software Consulting Services NA 193 Windham Brannon, P.C. CPAS Consulting Services NA 1,120 Witness Systems, Inc. Software Consulting Services NA 136 Young, Clark & Associates, Inc. Consulting Services NA 319 Z Solutions Consulting Services NA 104 1,076 Other Items Less Than $100,000 NA 11,577 --------- Subtotal - Other Services 107,629 -------- TOTAL 157,239 ========
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25 ANNUAL REPORT OF SOUTHERN COMPANY SERVICES, INC. ------------------------------- For the Year Ended December 31, 2004 ---------------- (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 9,201 Early Retirement Benefits 1,314 Flexible Credit Benefits - Company Contributions 17,906 Post Retirement Medical Benefits 9,027 Post Retirement Life Benefits 3,788 Post Retirement Medical Benefits-Medicare Act Subsidy (932) Minority Scholarship Program 30 Educational Assistance Plan 339 Employee Savings Plan/ESOP - Company Contribution 9,761 Employee Health and Physical Examinations 39 Other (Employees' Professional Fees, Executive Financial Planning and Other Employee Fringe Benefits) 3,739 -------- TOTAL 54,212 ========
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[Enlarge/Download Table] 26 ANNUAL REPORT OF SOUTHERN COMPANY SERVICES, INC. ------------------------------- For the Year Ended December 31, 2004 ------------------ (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. 2004 advertising expenses are as follows: NAME OF PAYEE DESCRIPTION AMOUNT ------------- ----------- ------ Arena Advertising (Alvin Alley Dance Theatre) Corporate Branding 12 Advertising Diversity, Inc. Corporate Branding 35 Billy Andrade Sports Marketing 40 Bobby Dodd Coach of the Year Foundation Sports Marketing 160 Faircount, LLC Sports Marketing 27 Fitzgerald & Co. Corporate Branding 5,573 Georgia Public Broadcasting Corporate Branding 50 Grey Worldwide Atlanta Corporate Branding 814 Joe Inman, Inc. Sports Marketing 124 Lattimer Moffitt Communication Corporate Branding 785 National Association of Investors Corp. Corporate Branding 7 Ontelcom, Inc. Corporate Branding 166 Outfitters Association of America Sports Marketing 105 PGA Tour, Inc. Sports Marketing 3,049 Public Broadcasting Atlanta Corporate Branding 20 Scholarship Program Administrator, Inc. Corporate Branding 31 Southern Golf Association Sports Marketing 15 Steve M. Scruggs Sports Marketing 5 Tom Mann, Jr. Sports Marketing 50 Turner South Corporate Branding 1,540 Unlimited Outdoors Sports Marketing 50 Women in Technology Corporate Branding 5 WP Productions Sports Marketing 90 All other Items less than $3,000 (73) -------- TOTAL 12,680 ========
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27 ANNUAL REPORT OF SOUTHERN COMPANY SERVICES, INC. ------------------------------- For the Year Ended December 31, 2004 ----------------- (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 2,228 Expenses of SCS Employees Located at Operating Co. 3,068 Meals, Lodging, & Incidentals Related to Meetings & Conferences 5,087 Dues and Memberships 2,201 Recruiting, Interviewing, & Placement of Employees 481 Other General Expenses * (3,235) ------- TOTAL 9,830 ======= * 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, 2004 ----------------- (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 25,775 Computer and Other Data Processing Equipment Rental 11,552 IR Equipment - Capital Lease 6,076 Software 3,373 All Other (Automobile, Office Furniture & Equipment, Miscellaneous Storage, Equipment Rental & Aircraft) 4,535 ------- TOTAL 51,311 =======
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29 ANNUAL REPORT OF SOUTHERN COMPANY SERVICES, INC. ------------------------------- For the Year Ended December 31, 2004 ----------------- (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 499 City/Business License Tax - Property and Other City and State 976 ------- Subtotal - Other 1,475 ------- U.S. Government Taxes Federal Insurance Contributions Act 28,811 Federal Unemployment 289 -------- Subtotal - U.S. Government 29,100 ------- TOTAL 30,575 =======
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[Enlarge/Download Table] 30 ANNUAL REPORT OF SOUTHERN COMPANY SERVICES, INC. ------------------------------- For the Year Ended December 31, 2004 ----------------- (Thousands of Dollars) DONATIONS --------- ACCOUNT 426.1 INSTRUCTIONS: Provide a listing of the amount included in Account 426.1, "Donations", classifying such expenses by its purpose. The aggregate number and amount of all items of less than $3,000 may be shown in lieu of details. NAME OF RECIPIENT PURPOSE OF DONATION AMOUNT ----------------- ------------------- ------ 55th Presidential Inaugural Committee Support of Program 250 ACCF Center for Policy Research Support of Program 15 Alabama Clean Water Partnership Civic & Charitable 7 Alabama Power Service Organization Civic & Charitable 12 Alexander-Tharpe Fund Civic & Charitable 16 American Association for Aerosol Research Civic & Charitable 4 American Association of Blacks in Energy Civic & Charitable 7 American Heart Association Civic & Charitable 6 American Legislative Exchange Council Support of Program 17 Americans for Balanced Energy Choices Support of Program 1,000 Atlanta University Center Civic & Charitable 7 Auburn University Foundation Civic & Charitable 15 Auburn University Foundation Educational Matching 27 Bennett College for Women Civic & Charitable 4 Black Enterprise - MJ Berkeley Foundation Civic & Charitable 5 Business Institute for Political Analysis Support of Program 250 Camp Sunshine Civic & Charitable 100 Cancer Research and Prevention Civic & Charitable 10 Friends of CDC (c/o Capitol Associates) Civic & Charitable 10 Career Communications Group Civic & Charitable 10 Carnegie Mellon University Civic & Charitable 50 Center for Legislative Energy & Env. Research Support of Program 5 CHCI (Congressional Hispanic Caucus Institute) Support of Program 25 Chick-Fil-A Peach Bowl Civic & Charitable 7 Children's Hospital Foundation Civic & Charitable 10 Chris Kids, Inc. Civic & Charitable 5 Congressional Sportsmen's Foundation Support of Program 30 Council for Technology & the Individual Civic & Charitable 10 Danny Thompson Memorial Fund Civic & Charitable 10 Democratic Leadership Council Support of Program 15 Edison Electric Institute Support of Program 505 Electricity Reform Accountability Project Support of Program 80 Emory University Educational Matching 7 Families First Civic & Charitable 5 Florida House Civic & Charitable 10
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30A ANNUAL REPORT OF SOUTHERN COMPANY SERVICES, INC. ------------------------------- For the Year Ended December 31, 2004 ----------------- (Thousands of Dollars) DONATIONS --------- ACCOUNT 426.1 INSTRUCTIONS: Provide a listing of the amount included in Account 426.1, "Donations", classifying such expenses by its purpose. The aggregate number and amount of all items of less than $3,000 may be shown in lieu of details. NAME OF RECIPIENT PURPOSE OF DONATION AMOUNT ----------------- ------------------- ------ Ford's Theatre Society Civic & Charitable 90 Foundation for Student Communication Civic & Charitable 5 Foundation to Eradicate Duchenne, Inc. Civic & Charitable 20 Frontiers of Freedom Institute Civic & Charitable 100 Georgia Business Forum, Inc. Civic & Charitable 8 Georgia Institute of Technology Civic & Charitable 201 Georgia Institute of Technology Educational Matching 26 Georgia Southern University Foundation Educational Matching 5 Georgia State University Educational Matching 10 Georgia Tech Athletic Association Civic & Charitable 10 Greater Alabama Council - Boy Scouts of America Civic & Charitable 11 Gresham Middle School Civic & Charitable 5 Harvard University Civic & Charitable 100 Hayes & Associates, LC Support of Program 5 Hispanic Alliance for Progress Civic & Charitable 5 Horton's Kids Inc. Civic & Charitable 5 Junior Achievement of Greater Birmingham, Inc. Civic & Charitable 7 Keep Georgia Beautiful Foundation Civic & Charitable 3 Kennedy Center Civic & Charitable 10 KW Productions LLC (National Black College Job Fair) Civic & Charitable 3 Lakeshore Foundation Civic & Charitable 10 Louisiana Alive Inc. Support of Program 13 March of Dimes Civic & Charitable 8 Metro Atlanta Chamber of Commerce Civic & Charitable 10 National Black MBA Association Civic & Charitable 12 National Coalition of 100 Black Women, Inc. Civic & Charitable 4 National Collegiate Sales Competition Civic & Charitable 5 National Fish & Wildlife Foundation Civic & Charitable 12 National Governors Assn. Center for Best Practices Civic & Charitable 12 National Minority Junior Golf Scholarship Association Support of Program 8 National Multiple Sclerosis Society Civic & Charitable 5 National Parks Conservation Association Civic & Charitable 10 National Press Foundation Civic & Charitable 3 Oklahoma State University Foundation Civic & Charitable 10 On the Curve Civic & Charitable 23 Open Fairways Civic & Charitable 8 PDK Park Restoration Project Civic & Charitable 25 PGA Tour-Payne Stewart Award Civic & Charitable 300 Public Broadcasting Atlanta Civic & Charitable 5 Quality Deer Management Association Civic & Charitable 5
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30B ANNUAL REPORT OF SOUTHERN COMPANY SERVICES, INC. -------------------------------- For the Year Ended December 31, 2004 ----------------- (Thousands of Dollars) DONATIONS --------- ACCOUNT 426.1 INSTRUCTIONS: Provide a listing of the amount included in Account 426.1, "Donations", classifying such expenses by its purpose. The aggregate number and amount of all items of less than $3,000 may be shown in lieu of details. NAME OF RECIPIENT PURPOSE OF DONATION AMOUNT ----------------- ------------------- ------ Radio & Television News Directors Foundation Civic & Charitable 20 Ripon Educational Fund Civic & Charitable 30 Royal Adelaide Hospital Civic & Charitable 10 Salvation Army Civic & Charitable 5 SEC Capital Kickoff Support of Program 5 Southeastern Regional Cooperative Educational Conf. Civic & Charitable 5 Society of Hispanic Professional Engineers Civic & Charitable 3 Southeastern Junior Golf Tour Civic & Charitable 5 Southeastern Legal Foundation, Inc. Support of Program 25 Syracuse University Educational Matching 3 Taste of the South Civic & Charitable 10 Techbridge, Inc. Civic & Charitable 15 Tennessee State University Civic & Charitable 10 Texas State Society Support of Program 50 The Annapolis Center Civic & Charitable 150 The Bayou Jesters Support of Program 5 The Congressional Institute, Inc. Support of Program 25 The Georgia Aquarium Civic & Charitable 1,500 The Manufacturing Institute Civic & Charitable 21 The Progress & Freedom Foundation Civic & Charitable 25 The University of Alabama Civic & Charitable 19 The University of Alabama Educational Matching 17 The University of Alabama at Birmingham Civic & Charitable 21 The University of Georgia Civic & Charitable 3 The University of Georgia Educational Matching 3 U.S. Capitol Historical Society Civic & Charitable 10 UAB School of Engineering Civic & Charitable 5 United Way of Central Alabama Civic & Charitable 150 United Way of Metropolitan Atlanta Civic & Charitable 12 University of North Alabama Educational Matching 5 Utility Business Education Coalition Civic & Charitable 25 Washington National Opera Civic & Charitable 25 Waterfall Committee Civic & Charitable 35 Wesleyan College Educational Matching 3 Wolf Trap Civic & Charitable 10 World of Hope Civic & Charitable 25 Wyoming Congressional Award Council Civic & Charitable 5 YWCA of Central Alabama Civic & Charitable 6 116 Other Items (Less than $3,000) Civic & Charitable 102 73 Other Items (Less than $3,000) Employee Matching Gift 34 2 Other Items (Less than $3,000) Support of Program 2 -------- TOTAL 6,102 ========
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31 ANNUAL REPORT OF SOUTHERN COMPANY SERVICES, INC. -------------------------------- For the Year Ended December 31, 2004 ------------------ (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, 2004 ------------------ (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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[Enlarge/Download Table] 33 ANNUAL REPORT OF SOUTHERN COMPANY SERVICES, INC. ----------------------------------------------- ORGANIZATION CHART ------------------- ---------------------------------------------------------------------------------------------------------------------------------- Chairman, President and Chief Executive Officer Southern Company | | | | --------------------------------------------------------------------|-----------|------------|---------------|--------------------- President |Exec. VP - | Exec. VP - | VP - Internal | Exec. VP, & |Exec. VP & |President & |VP - Diversity | Sr. VP & Chief Southern Co.|Chief | External | Auditing | SoCo CFO |General |CEO SoCo Gas| & Chief |Transmission Gen. |Marketing | Affairs | | & Treasurer |Counsel | |Diversity | Officer |Officer | | | | | |Officer | | | | | | | | | --------------------------------------|---------------|-------------|-----------|------------|---------------|--------------------- VP -SCS | VP - | VP - | |Sr. VP - | VP & Sr. | | | Sr. VP - & So. |Marketing |Corporaten | |Comptroller | Counsel | | | Trans. Power CFO |Services |Communication| |& SCS CFO | VP & | | | Plannin|g & | | | | | General | | | Operations | | | | | Assoc. | | | | | | | | Counsel | | | | | | | |(3 | | | | | | | | Positions)| | | ------------|-----------|-------------|---------------|-------------|-----------|------------|------------------------------------- Exec. VP | | VP - | |Sr. VP - |VP-Sec.& | | | VP - Engineering | |Governmental | |Finance & |Corporate | | | Transmission | | Affairs | |Treasurer |Assoc. | | | VP Technical| | | | |Gen. | | | Services | | | | |Counsel | | | | | | |VP - | | | | VP - | | | |Financial & | | | | Construction| | | |Planning | | | | | | | |Risk Mtgt. | | | | | | | | | | | | ------------|-----------|-------------|---------------|-------------------------|------------|---------------|--------------------- Sr. VP | | VP | |Exec. VP |Sr. VP - | | | Research & | | Supply | |& CFO |Human | | | Enviromenta l| | Chain |Transmission |Resources | | | Policy | | Management | | | | | | | | | | VP | | | Sr. VP - | | | |VP & |Compensatio|n | | Environmental| | | |General |& Benefits | | | Affairs | | | |Manager SCES | | | | | | | | | | | | | | | | |VP - | | | | | | | |Employee | | | | | | | |Relations | | | | | | | |& Associate| | | | | | | |General | | | | | | | |Counsel | | | ------------ | -------- | ------------| ------------- | ----------- | ----------|---------- -|---------------|--------------------- Executive VP | | | | | Sr.VP - | | | - Competitive| | | | | Informatio|n | | Gen. | | | | | Technology| | | | | | | | | | | Sr. VP - So | | | | | VP - | | | Power Sr. | | | | | Computing | | | Prod. Officer| | | | | & Network | | | | | | | Services | | | VP - Business| | | | | | | | Dev. | | | | | | | | -------------|-------- | ----------- | ------------- | ----------- | ----------|------------|---------------|--------------------- Sr. VP | | | | | | | | Operations & | | | | | | | | Gen. Serv. | | | | | | | | | | | | | | | | VP - Fleet | | | | | | | | Oper. & | | | | | | | | Trading | | | | | | | | | | | | | | | | VP - Fuel | | | | | | | | Services | | | | | | | | ------------------------|-------------|---------------|-------------|-----------|---------- -|---------------|--------------------- Exec. VP & | | | | | | | | Chief | | | | | | | | Prod. | | | | | | | | Officer | | | | | | | | | | | | | | | | VP - Senior | | | | | | | | Prod. | | | | | | | | Officers | | | | | | | | (2 Positions)| | | | | | | | | | | | | | | | Sr. VP - | | | | | | | | Generation | | | | | | | | -------------|--------- |-------------|---------------|-------------| ----------|------------|---------------|--------------------- Sr. VP & | | | | | | | | Gemeral | | | | | | | | Counsel | | | | | | | | -----------------------------------------------------------------------------------------------------------------------------------
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34 ANNUAL REPORT OF SOUTHERN COMPANY SERVICES, INC. ------------------------------- For the Year Ended December 31, 2004 ------------------ METHODS OF ALLOCATION --------------------- The Company uses statistics based on a single year with a one-year lag; therefore, 2004 allocations were based on 2002 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 discussion below, 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 (no longer used after August 2004) ---------------------------------------------------------------- Generation (kilowatt-hours) from 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 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 jointly owned by Southern Company affiliates is assigned on an ownership basis. 7. Gas Burned Basis ----------------- Volume of gas consumed (BTUs) by each Client Operating Company and Southern Company Gas.
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34A ANNUAL REPORT OF SOUTHERN COMPANY SERVICES, INC. ------------------------------- For the Year Ended December 31, 2004 ------------------- 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 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 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 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 -------------------- Book capitalization (defined as long-term debt, preferred stock, 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 flown. An "availability fee," which represents the remaining costs of system aircraft operations, is allocated to the Client Companies.
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35 ANNUAL REPORT OF SOUTHERN COMPANY SERVICES, INC. ------------------------------- For the Year Ended December 31, 2004 ------------------ 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 2004: 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 2004, the Company initiated short-term borrowings exclusively from Southern Company; other outside banking institutions were not used. The interest rates on these borrowings ranged from 4.33% to 5.29%. Interest in the amount of $53,671 was accrued on Southern Company borrowings and was billed to the client companies. As of December 31, 2004, the Company reflected long-term debt outstanding from various institutions in the amount of $40,000,000. The interest rate on these borrowings was 7.625%. Interest of $3,031,050 was accrued and billed to the client companies. Other long-term debt related to capitalized leases in the amount of $22,293,956 was outstanding. The interest rates on these capitalized leases ranged from 4.33% to 8.00%. Interest of $1,021,922 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 $916,593 was credited against the client companies' expenses during 2004. In addition, during 2004, the Company incurred other interest of $384,343 related to the Transmission Access deposits and $414,404 related to various federal and state taxation and $32,315 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 $ 206,283 Alabama Power Company 1,080,473 Georgia Power Company 1,382,458 Gulf Power Company 265,796 Mississippi Power Company 224,780 Savannah Electric & Power Company 81,226 Southern Electric Generating Company 16,889 Southern Nuclear Operating Company, Inc. 187,384 Southern Company Energy Solutions, LLC 10,857 Southern Company Holdings, Inc. 7,640 Southern Management Development 5,630 Southern Communications Services, Inc. 31,767 Southern Electric Railroad Company 1,608 Southern Power Company 300,779 Southern Telecom Inc. 7,640 Southern Company Gas, LLC 96,105 Southern Company Rail Services 6,032 SE Finance Capital Corporation II 8,444 Alabama Synfuel Energy 804 Energy Related Activities 402 Non-associate Companies 98,115 ---------- $4,021,112 ==========
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36 ANNUAL REPORT OF SOUTHERN COMPANY SERVICES, INC. ------------------------------- For the Year Ended December 31, 2004 ------------------ 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 28, 2005

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Filed on / Effective on:4/29/05
4/28/0559
For Period End:12/31/04159
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12/15/9928
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