Business Context and Reporting Period
This Form 8-K is a combined current report filed on February 3, 2016, by The Southern Company and its five subsidiaries: Alabama Power Company, Georgia Power Company, Gulf Power Company, Mississippi Power Company, and Southern Power Company. The filing reports earnings results for the three-month and twelve-month periods ended December 31, 2015.
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 highlights the use of Non-GAAP financial measures to exclude specific charges impacting earnings per share (EPS).
Material Changes and Unusual Items
The filing identifies several significant non-GAAP adjustments and unusual items affecting the reported periods:
- Kemper IGCC Project: Estimated probable losses related to Mississippi Power Company's construction of the integrated coal gasification combined cycle facility in Kemper County, Mississippi, significantly impacted earnings for both the three-month and twelve-month periods ended December 31, 2015, and 2014.
- Mississippi Supreme Court Decision: Reversal of revenues previously recognized in 2013 and 2014 due to a 2015 court decision overturning a 2013 rate order regarding the Kemper IGCC project.
- AGL Resources Acquisition: Costs related to the proposed acquisition of AGL Resources Inc. were excluded from Non-GAAP measures for the 2015 periods.
- Mirant Corporation and MCAR Settlement: Additional costs related to discontinued operations of Mirant Corporation and a 2009 settlement agreement with MC Asset Recovery, LLC were excluded from the twelve-month 2015 Non-GAAP presentation.
Guidance, Outlook, and Management Commentary
Management states that similar charges related to the Kemper IGCC project may occur with uncertain frequency in the future. Further costs related to the proposed acquisition of AGL Resources Inc. are expected to continue during the closing and integration phases. Conversely, further costs related to the MCAR settlement agreement are not expected to occur. Management utilizes the Non-GAAP measures to evaluate ongoing business performance, though they are not a substitute for GAAP measures.
Investor Verification Checklist
- Verify the specific GAAP and Non-GAAP earnings per share figures in Exhibit 99.01 and 99.04.
- Review the magnitude of the Kemper IGCC probable loss charges in Exhibit 99.03.
- Confirm the status and projected timeline of the AGL Resources Inc. acquisition.
- Examine the detailed financial highlights and kilowatt-hour sales data in Exhibits 99.02 and 99.06.
- Assess the impact of the Mississippi Supreme Court decision on future revenue recognition.