Southern Company Third Quarter Positive Despite Economic Challenges, Mild Weather

Southern Company Third Quarter Positive Despite Economic Challenges, Mild
Weather

ATLANTA, Oct. 23 /PRNewswire-FirstCall/ -- Southern Company reported third
quarter earnings of $780.4 million, or $1.01 a share. The earnings compared
with $762.0 million, or $1.00 a share, in the third quarter of 2007.
(Logo: http://www.newscom.com/cgi-bin/prnh/20081023/CLTH042 )
Earnings for the first nine months of 2008 were $1.56 billion, or $2.02 a
share, compared with $1.53 billion, or $2.03 a share, for the same period a
year ago.
Earnings for the nine months ended Sept. 30, 2008, included a $67 million
charge, or 9 cents per share, related to three leveraged leases from the 1990s
when Southern Company pursued development of international energy projects.
Earnings for the third quarter and nine months ended Sept. 30, 2007, included
synthetic fuel earnings of 1 cent per share and 7 cents per share,
respectively.
Excluding the impact of synthetic fuel investments, Southern Company
earned $1.01 a share for the third quarter of 2008, compared with 99 cents a
share for the same period in 2007. Excluding the impact of synthetic fuel
investments and charges related to the leveraged leases, earnings for the
first nine months of 2008 were $2.11 a share, compared with $1.96 a share for
the same period in 2007.
Revenues for the third quarter were $5.43 billion compared with $4.83
billion in the third quarter of 2007, a 12.3 percent increase. For the first
nine months of the year, revenues totaled $13.32 billion, compared with $12.01
billion in the same period a year ago, an increase of 10.9 percent.
Chairman, President and CEO David M. Ratcliffe said that despite the
challenges of mild weather, a sluggish economy and turmoil in the financial
markets, Southern Company's businesses continued to perform well overall in
the third quarter, giving the company positive results and keeping the company
on track to deliver on its financial and operational goals for the year.
"We remain committed to the strategy that has provided our customers with
reliable energy and outstanding service at prices below the national average
and that has rewarded investors, even in challenging times," Ratcliffe said.
The economy in the Southeast continues to experience the same stress as
other regions of the country, but to a lesser degree. While customer growth
has slowed, it is still positive. Southern Company is serving more than 28,000
additional customers, compared with the same time last year. This growth
partially offset a decrease in usage.
Positive third quarter earnings drivers include increased retail rates and
revenues from market-response rates offered to commercial and industrial
customers. These positive drivers were primarily offset by mild summer
temperatures as compared to the same period in 2007, and asset depreciation
primarily associated with increased investment in environmental equipment and
transmission and distribution equipment. These investments are needed to
produce cleaner energy and maintain reliability.
In the third quarter, kilowatt-hour sales to retail customers in Southern
Company's four-state service area decreased 4.6 percent compared with sales
during the 2007 third quarter. Residential electricity sales decreased 7.6
percent. Commercial sales decreased 2.3 percent and industrial sales declined
3.4 percent. Total sales of electricity to Southern Company's customers in the
Southeast, including wholesale sales, are down 2.5 percent compared with the
third quarter last year. The major contributor to the decrease in
third quarter sales was the milder weather as compared to the same period last
year.
For the first nine months of 2008, kilowatt-hour sales to Southern
Company's retail customers decreased 1.7 percent compared with sales during
the same period in 2007. Residential electricity sales decreased 3.4 percent,
commercial sales are unchanged and industrial sales declined 1.6 percent as
compared with the first nine months of 2007. Total sales of electricity to
Southern Company's customers in the Southeast, including wholesale sales, are
down 0.4 percent compared with the first nine months of last year.
With 4.4 million customers and more than 42,000 megawatts of generating
capacity, Atlanta-based Southern Company (NYSE: SO) is the premier energy
company serving the Southeast. A leading U.S. producer of electricity,
Southern Company owns electric utilities in four states and a growing
competitive generation company, as well as fiber optics and wireless
communications. Southern Company brands are known for excellent customer
service, high reliability and retail electric prices that are significantly
below the national average. Southern Company has been listed the top ranking
U.S. electric service provider in customer satisfaction for nine consecutive
years by the American Customer Satisfaction Index (ACSI). Visit our Web site
at www.southerncompany.com.
Cautionary Note Regarding Forward-Looking Statements:
Certain information contained in this release is forward-looking
information based on current expectations and plans that involve risks and
uncertainties. Forward-looking information includes, among other things,
statements concerning results of operations. Southern Company cautions that
there are certain factors that can cause actual results to differ materially
from the forward-looking information that has been provided. The reader is
cautioned not to put undue reliance on this forward-looking information, which
is not a guarantee of future performance and is subject to a number of
uncertainties and other factors, many of which are outside the control of
Southern Company; accordingly, there can be no assurance that such suggested
results will be realized. The following factors, in addition to those
discussed in Southern Company's Annual Report on Form 10-K for the year ended
December 31, 2007, and subsequent securities filings, could cause results to
differ materially from management expectations as suggested by such forward-
looking information: the impact of recent and future federal and state
regulatory change, including legislative and regulatory initiatives regarding
deregulation and restructuring of the electric utility industry,
implementation of the Energy Policy Act of 2005, environmental laws including
regulation of water quality and emissions of sulfur, nitrogen, mercury,
carbon, soot, or particulate matter and other substances, and also changes in
tax and other laws and regulations to which Southern Company and its
subsidiaries are subject, as well as changes in application of existing laws
and regulations; current and future litigation, regulatory investigations,
proceedings, or inquiries, including the pending EPA civil actions against
certain Southern Company subsidiaries, FERC matters, IRS audits, and Mirant
matters; the effects, extent, and timing of the entry of additional
competition in the markets in which Southern Company's subsidiaries operate;
variations in demand for electricity, including those relating to weather, the
general economy, population and business growth (and declines), and the
effects of energy conservation measures; available sources and costs of fuels;
effects of inflation; ability to control costs; investment performance of
Southern Company's employee benefit plans; advances in technology; state and
federal rate regulations and the impact of pending and future rate cases and
negotiations, including rate actions relating to fuel and storm restoration
cost recovery; regulatory approvals related to the potential Plant Vogtle
expansion, including Georgia PSC and NRC approvals; the performance of
projects undertaken by the non-utility businesses and the success of efforts
to invest in and develop new opportunities; internal restructuring or other
restructuring options that may be pursued; potential business strategies,
including acquisitions or dispositions of assets or businesses, which cannot
be assured to be completed or beneficial to Southern Company or its
subsidiaries; the ability of counterparties of Southern Company and its
subsidiaries to make payments as and when due and to perform as required; the
ability to obtain new short- and long-term contracts with neighboring
utilities; the direct or indirect effect on Southern Company's business
resulting from terrorist incidents and the threat of terrorist incidents;
interest rate fluctuations and financial market conditions and the results of
financing efforts, including Southern Company's and its subsidiaries' credit
ratings; the ability of Southern Company and its subsidiaries to obtain
additional generating capacity at competitive prices; catastrophic events such
as fires, earthquakes, explosions, floods, hurricanes, droughts, pandemic
health events such as an avian influenza, or other similar occurrences; the
direct or indirect effects on Southern Company's business resulting from
incidents similar to the August 2003 power outage in the Northeast; and the
effect of accounting pronouncements issued periodically by standard setting
bodies. Southern Company and its subsidiaries expressly disclaim any
obligation to update any forward-looking information.

Southern Company
Financial Highlights
(In Millions of Dollars Except Earnings Per Share)

3 Months Ended Year-to-Date
September September
2008 2007 2008 2007
Consolidated Earnings-As Reported (Notes) (Notes) (Notes) (Notes)
(See Notes)
Traditional Operating Companies $727 $714 $1,520 $1,382
Southern Power 59 52 124 123
Total 786 766 1,644 1,505
Synthetic Fuels - 15 (1) 55
Parent Company and Other (6) (19) (87) (30)
Net Income - As Reported $780 $762 $1,556 $1,530

Basic Earnings Per Share - (See
Notes) $1.01 $1.00 $2.02 $2.03

Average Shares Outstanding (in
millions) 773 758 769 755
End of Period Shares Outstanding (in
millions) 775 760

3 Months Ended Year-to-Date
September September
2008 2007 2008 2007
Consolidated Earnings-Excluding Items
(See Notes)
Net Income - As Reported $780 $762 $1,556 $1,530
Leveraged Lease Adjustment - - 67 -
Synthetic Fuels - (15) 1 (55)
Net Income-Excluding Items $780 $747 $1,624 $1,475

Basic Earnings Per Share-Excluding
Items $1.01 $0.99 $2.11 $1.96

Significant Factors Impacting EPS

3 Months Ended
September Year-to-Date September
2008 2007 Change 2008 2007 Change

Consolidated Earnings-As
Reported $1.01 $1.00 $0.01 $$2.02 $2.03 $(0.01)
(See Notes)
Significant Factors:
Traditional Operating
Companies 0.02 0.18
Southern Power 0.01 0.00
Synthetic Fuels (0.01) (0.07)
Parent Company and Other 0.01 (0.08)
Additional Shares (0.02) (0.04)
Total-As Reported $0.01 $(0.01)

3 Months Ended September Year-to-Date September
2008 2007 Change 2008 2007 Change

Consolidated
Earnings-Excluding
Items $1.01 $0.99 $0.02 $2.11 $1.96 $0.15
(See Notes)
Total-As Reported 0.01 (0.01)
Leveraged Lease Adjustment 0.00 0.09
Synthetic Fuels 0.01 0.07
Total-Excluding Items $0.02 $0.15

Notes
- For the three months and nine months ended September 30, 2008 and 2007,
diluted earnings per share are not more than 1 cent per share and are
not material.

- The charge related to Southern Company's investments in leveraged lease
transactions significantly impacted the presentation of earnings and
earnings per share for the nine months ended September 30, 2008, and
significant charges related to these investments are not expected to
occur on a regular basis.

- Tax credits associated with Southern Company's synthetic fuel
investments expired December 31, 2007. Synthetic fuel related income no
longer materially contributes to Southern Company's earnings or earnings
per share.

- Certain prior year data has been reclassified to conform with current
year presentation.

- Information contained in this report is subject to audit and
adjustments. Certain classifications may be different from
final results published in the Form 10-Q.

Southern Company
EPS Earnings Analysis
Three Months Ended September 2008

Cents Description

$0.14 Non-Fuel Revenues

(0.07) Weather Impact on Non-Fuel Revenues

(0.04) Depreciation & Amortization

(0.01) Taxes Other Than Income Taxes

$0.02 Total Traditional Operating Companies

0.01 Southern Power

0.01 Parent and Other

(0.02) Increase in Shares

$0.02 Total Change in QTD EPS (x-Items)

(0.01) Synthetic Fuels

$0.01 Total Change in QTD EPS (As Reported)

Notes

- Tax credits associated with Southern Company's synthetic fuel
investments expired December 31, 2007. Synthetic fuel related
income no longer materially contributes to Southern Company's
earnings or earnings per share.
- Information contained in this report is subject to audit and
adjustments. Certain classifications may be different from
final results published in the Form 10-Q.

Southern Company
Consolidated Earnings
(In Millions of Dollars)

3 Months Ended
September Year-to-Date September
2008 2007 Change 2008 2007 Change
Income Account-
Retail Revenue-
Fuel $1,911 $1,600 $311 $4,506 $3,932 $574
Non-Fuel 2,567 2,486 81 6,428 6,003 425
Wholesale Revenues 775 563 212 1,880 1,531 349
Other Electric Revenues 142 131 11 414 381 33
Non-regulated Operating
Revenues 31 52 (21) 97 166 (69)
Total Revenues 5,426 4,832 594 13,325 12,013 1,312
Fuel and Purchased Power 2,531 2,020 511 5,895 4,959 936
Non-fuel O & M 908 911 (3) 2,720 2,634 86
Depreciation and Amortization 367 312 55 1,070 929 141
Taxes Other Than Income Taxes 215 207 8 603 574 29
Total Operating Expenses 4,021 3,450 571 10,288 9,096 1,192
Operating Income 1,405 1,382 23 3,037 2,917 120
Other Income, net 45 68 (23) 70 123 (53)
Interest Charges and
Dividends 235 243 (8) 713 704 9
Income Taxes 435 445 (10) 838 806 32
NET INCOME (See Notes) $780 $762 $18 $1,556 $1,530 $26

Kilowatt-Hour Sales
(In Millions of KWHs)

3 Months Ended September
Weather
Adjusted
As Reported (See Notes) 2008 2007 Change Change
Kilowatt-Hour Sales-
Total Sales 57,706 59,205 -2.5%

Total Retail Sales- 45,800 47,989 -4.6% -1.4%
Residential 16,153 17,488 -7.6% -2.4%
Commercial 15,546 15,910 -2.3% 1.1%
Industrial 13,866 14,348 -3.4% -3.0%
Other 235 243 -3.0% -2.4%

Total Wholesale Sales 11,906 11,216 6.2% N/A

Kilowatt-Hour Sales
(In Millions of KWHs)

Year-to-Date September
Weather
Adjusted
As Reported (See Notes) 2008 2007 Change Change
Kilowatt-Hour Sales-
Total Sales 156,719 157,329 -0.4%

Total Retail Sales- 124,258 126,384 -1.7% -0.4%
Residential 40,983 42,412 -3.4% -0.9%
Commercial 41,885 41,903 0.0% 1.3%
Industrial 40,688 41,349 -1.6% -1.5%
Other 702 720 -2.6% -2.4%

Total Wholesale Sales 32,461 30,945 4.9% N/A

Notes
- Certain prior year data has been reclassified to conform with
current year presentation.

- Information contained in this report is subject to audit and
adjustments. Certain classifications may be different from final
results published in the form 10-Q.

Southern Company
Financial Overview
(In Millions of Dollars)

3 Months Ended September Year-to-Date September
2008 2007 %Change 2008 2007 %Change

Consolidated -
Operating Revenues $5,426 $4,832 12.3% $13,325 $12,013 10.9%
Earnings Before
Income Taxes 1,215 1,207 0.6% 2,394 2,336 2.5%
Net Income 780 762 2.4% 1,556 1,530 1.7%

Alabama Power -
Operating Revenues $1,865 $1,635 14.1% $4,672 $4,168 12.1%
Earnings Before
Income Taxes 418 408 2.5% 888 853 4.1%
Net Income Available
to Common 252 246 2.2% 535 508 5.2%

Georgia Power -
Operating Revenues $2,644 $2,444 8.2% $6,620 $5,945 11.4%
Earnings Before
Income Taxes 644 630 2.2% 1,292 1,122 15.1%
Net Income Available
to Common 402 399 0.6% 826 719 14.8%

Gulf Power -
Operating Revenues $422 $377 12.0% $1,083 $971 11.5%
Earnings Before
Income Taxes 62 55 12.5% 137 121 13.2%
Net Income Available
to Common 37 34 9.3% 84 74 12.9%

Mississippi Power -
Operating Revenues $381 $333 14.5% $965 $863 11.8%
Earnings Before
Income Taxes 56 56 0.8% 121 131 -7.8%
Net Income Available
to Common 36 34 5.1% 76 80 -4.9%

Southern Power -
Operating Revenues $516 $348 48.3% $1,048 $784 33.6%
Earnings Before
Income Taxes 97 86 13.5% 203 205 -0.9%
Net Income Available
to Common 60 51 15.8% 124 123 0.5%

Notes
- Certain prior year data has been reclassified to conform with current
year presentation.

- Information contained in this report is subject to audit and
adjustments. Certain classifications may be different from
final results published in the Form 10-Q.

SOURCE Southern Company

Media, Terri Cohilas, +1-404-506-5333 or +1-866-506-5333,
media@southerncompany.com; or Investor Relations, Glen Kundert,
+1-404-506-5135, gakunder2@southernco.com