Business Context and Reporting Period
This Form 8-K is a combined current report filed on October 31, 2016, by The Southern Company and six of its subsidiaries: Alabama Power Company, Georgia Power Company, Gulf Power Company, Mississippi Power Company, Southern Company Gas, and Southern Power Company. The filing references a press release issued on the same date regarding earnings results for the three-month and nine-month periods ended September 30, 2016.
Key Financial Metrics
The filing text does not provide specific numerical values for revenue, profit, cash flow, margins, debt, or liquidity. These figures are contained within the attached exhibits (Exhibits 99.01 through 99.07), which are referenced but not included in the provided text. The report confirms the presentation of both GAAP and non-GAAP earnings and earnings per share (EPS) for the periods ended September 30, 2016, and 2015.
Material Changes and Non-GAAP Adjustments
The filing details several significant items excluded from non-GAAP financial measures to evaluate ongoing business performance. These adjustments include:
- Charges for estimated probable losses related to Mississippi Power Company's Kemper County integrated coal gasification combined cycle facility (Kemper IGCC).
- Costs related to the acquisition and integration of Southern Company Gas (formerly AGL Resources Inc.).
- Costs related to the acquisitions of PowerSecure International, Inc. and a 50% interest in Southern Natural Gas Company, L.L.C. (SNG).
- Additional costs related to the discontinued operations of Mirant Corporation and the March 2009 settlement with MC Asset Recovery, LLC (MCAR) for the 2015 period.
- Earnings related to the equity return on the Kemper IGCC schedule extension beyond August 31, 2016.
- Earnings, net of acquisition costs, related to Southern Company Gas.
- Debt financing costs related to the Southern Company Gas acquisition.
- Common stock issued to finance a portion of the SNG acquisition.
Guidance, Outlook, and Risks
The filing does not contain specific forward-looking guidance, management commentary on future outlook, or a detailed risk factor section within the text provided. It notes that the information is furnished to provide investors with additional context to evaluate ongoing business activities, specifically regarding the impact of the Kemper IGCC project and recent acquisitions. The report explicitly states that the non-GAAP measures are not a substitute for GAAP financial measures.
Investor Verification Checklist
- Verify the specific GAAP and non-GAAP earnings per share figures in Exhibit 99.01 (Press Release) and Exhibit 99.04 (EPS Earnings Analysis).
- Review the reconciliation of non-GAAP measures to GAAP measures in the attached exhibits to understand the magnitude of the Kemper IGCC charges and acquisition costs.
- Examine Exhibit 99.06 for kilowatt-hour sales data to assess operational volume changes.
- Confirm the impact of the Southern Company Gas and SNG acquisitions on the consolidated balance sheet and cash flow in Exhibit 99.07 (Financial Overview).
- Assess the status of the Kemper IGCC project and the implications of the schedule extension mentioned in the non-GAAP exclusions.