Southern Company Posts Strong First Quarter Earnings

News provided by

Apr 28, 2010, 07:30 ET

ATLANTA, April 28 /PRNewswire-FirstCall/ -- Southern Company today reported first quarter earnings of $494.5 million, or 60 cents a share, as colder than normal temperatures drove increased usage and the economy showed continued signs of stabilization.

The earnings compared with $125.7 million, or 16 cents a share, in the first quarter of 2009, which included a charge of 26 cents a share related to a settlement agreement with MC Asset Recovery LLC. The settlement resolved a lawsuit arising out of the 2003 bankruptcy of Mirant Corp., a Southern Company subsidiary until its 2001 spin-off. Excluding the impact of the 2009 settlement, Southern Company earned 42 cents a share for the first quarter of 2009.

Weather was the primary factor driving earnings, as the Southeast experienced one of the coldest winters in more than a century. Southern Company set its highest ever winter peak, producing 37,224 megawatts of electricity and surpassing last summer's peak demand.

"Our employees did an outstanding job of dealing with record-cold temperatures in our first quarter. We continued to operate at historically high levels of reliability, providing outstanding customer service at prices below the national average," said CEO David M. Ratcliffe. "By remaining focused on our proven business strategy, we continued to produce solid results for our customers and our shareholders."

Increased industrial sales, which also contributed to Southern Company's first quarter earnings, reflect improvement in industrial activity. The industrial activity could signal the beginning of an expected slow economic recovery.

"While the past 18 months have been unique, we are optimistic about the improving industrial activity in our region," Ratcliffe said. "We do believe that the long-term viability of the Southeast remains strong and we continue to prepare for the future growth of our region."

Other positive earnings drivers included the amortization of excess funds set aside for the removal of retired equipment and revenues associated with the recovery of investments in environmental equipment.

The positive earnings drivers in the first quarter were partially offset by higher non-fuel operations and maintenance expenses and an increase in the number of shares outstanding.

Revenues for the first quarter of 2010 were $4.16 billion, compared with $3.67 billion in the same period a year ago, an increase of 13.4 percent.

Kilowatt-hour sales to retail customers in Southern Company's four-state service area increased 10.3 percent in the first quarter, compared with the first quarter of 2009. Residential electricity sales increased 20.6 percent. Electricity sales to commercial customers increased 3.4 percent, and industrial sales increased 6.7 percent.

Total energy sales to Southern Company's customers in the Southeast, including wholesale sales, increased 10.3 percent in the first quarter of 2010 compared with the same period of 2009.

Southern Company's financial analyst call will be at 1 p.m. EDT April 28, at which time Ratcliffe and Chief Financial Officer Paul Bowers will discuss earnings and earnings guidance as well as a general business update. Investors, media and the public may listen to a live webcast of the call and view slides in conjunction with the call at www.southerncompany.com. A replay of the webcast only will be available at the site for 12 months.

Southern Company has also posted on its Web site detailed financial information on its first quarter performance. These materials are available at www.southerncompany.com.

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 below the national average. Southern Company is consistently listed among the top U.S. electric service providers in customer satisfaction 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 economic recovery and growth and shareholder return. 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, 2009, 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, coal combustion byproducts and emissions of sulfur, nitrogen, carbon, soot, particulate matter, hazardous air pollutants, including mercury, 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 Environmental Protection Agency civil actions against certain Southern Company subsidiaries, Federal Energy Regulatory Commission matters, Internal Revenue Service 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 and recovery from the recent recession, 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 and cost overruns during the development and construction of facilities; investment performance of Southern Company's employee benefit plans and nuclear decommissioning trusts; 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 other cost recovery mechanisms; regulatory approvals related to the potential Plant Vogtle expansion, including Georgia Public Service Commission and Nuclear Regulatory Commission approvals and potential U.S. Department of Energy loan guarantees; 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 wholesale customers; 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 influenzas, or other similar occurrences; the direct or indirect effects on Southern Company's business resulting from incidents affecting the U.S. electric grid or operation of generating resources; 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)*


	Three Months Ended March
		2010		2009
Consolidated Earnings–As Reported
(See Notes)
Traditional Operating Companies	$	481	$	303
Southern Power		15		28
Total		496		331
Parent Company and Other		(1)		(205)
Net Income–As Reported	$	495	$	126

Basic Earnings Per Share -	$	0.60	$	0.16


Average Shares Outstanding (in millions)		823		780
End of Period Shares Outstanding (in millions)		825		783


	Three Months Ended March
		2010		2009
Consolidated Earnings–Excluding Items
(See Notes)
Net Income–As Reported	$	495	$	126
MC Asset Recovery Litigation Settlement		0		202
Net Income–Excluding Items	$	495	$	328

Basic Earnings Per Share–Excluding Items	$	0.60	$	0.42

Significant Factors Impacting EPS

	Three Months Ended March
		2010		2009		Change

Consolidated Earnings Per Share–
As Reported (See Notes)	$	0.60	$	0.16	$	0.44

Significant Factors:
Traditional Operating Companies						0.23
Southern Power						(0.02)
Parent Company and Other						0.26
Additional Shares						(0.03)
Total–As Reported					$	0.44

	Three Months Ended March
		2010		2009		Change

Consolidated Earnings Per Share–
Excluding Items (See Notes)	$	0.60	$	0.42	$	0.18

Total–As Reported						0.44
MC Asset Recovery Litigation Settlement						(0.26)
Total–Excluding Items					$	0.18




Notes
- For the three months ended March 31, 2010 and 2009, diluted earnings per share are not more than 1 cent per share and are not material.

- The charge related to Southern Company's MC Asset Recovery litigation settlement significantly impacted the presentation of earnings and earnings per share for the three months ended March 31, 2009, and significant charges related to the Mirant spin-off are not expected to occur in the future.

- 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 March 2010


		Cents	Description

		0.03	Retail Sales

		0.04	Retail Revenue Impacts

		0.10	Weather

		0.03	Non-Fuel Revenues

		(0.03)	Non-Fuel O&M

		0.04	Depreciation & Amortization

		0.02	Taxes

		$0.23	Total Traditional Operating Companies

		(0.02)	Southern Power

		(0.03)	Increase in Shares

		$0.18	Total Change in YTD EPS (x-Items)

		0.26	MC Asset Recovery Litigation Settlement

		$0.44	Total Change in YTD EPS (As Reported)




	Notes
	- The charge related to Southern Company's MC Asset Recovery litigation settlement significantly impacted the presentation of earnings and earnings per share for the three months ended March 31, 2009, and significant charges related to the Mirant spin-off are not expected to occur in the future.

	- 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)*

		Three Months Ended March
		2010		2009		Change
Income Account-
Retail Revenues-
Fuel	$	1,428	$	1,252	$	176
Non-Fuel		2,031		1,813		218
Wholesale Revenues		542		451		91
Other Electric Revenues		135		123		12
Non-regulated Operating Revenues		21		27		(6)
Total Revenues		4,157		3,666		491
Fuel and Purchased Power		1,772		1,514		258
Non-fuel O & M		908		870		38
MCAR Litigation Settlement		0		202		(202)
Depreciation and Amortization		343		390		(47)
Taxes Other Than Income Taxes		212		200		12
Total Operating Expenses		3,235		3,176		59
Operating Income		922		490		432
Other Income, net		47		45		2
Interest Charges		222		226		(4)
Income Taxes		236		167		69
Net Income		511		142		369
Dividends on Preferred and Preference Stock of Subsidiaries		16		16		-
NET INCOME AFTER DIVIDENDS ON PREFERRED
AND PREFERENCE STOCK (See Notes)	$	495	$	126	$	369

Kilowatt-Hour Sales
*(In Millions of KWHs)*

	Three Months Ended March
				Weather
				Adjusted
As Reported (See Notes)	2010	2009	Change	Change
Kilowatt-Hour Sales-
Total Sales	48,459	43,935	10.3%

Total Retail Sales-	39,771	36,043	10.3%	2.6%
Residential	15,129	12,544	20.6%	1.6%
Commercial	12,752	12,337	3.4%	-0.3%
Industrial	11,650	10,921	6.7%	6.9%
Other	240	241	-0.5%	-1.0%

Total Wholesale Sales	8,688	7,892	10.1%	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)*

	Three Months Ended March

		2010		2009	% Change

Consolidated –
Operating Revenues	$	4,157	$	3,666	13.4%
Earnings Before Income Taxes		747		309	141.5%
Net Income Available to Common		495		126	293.3%

Alabama Power –
Operating Revenues	$	1,495	$	1,340	11.6%
Earnings Before Income Taxes		335		241	38.9%
Net Income Available to Common		203		146	38.6%

Georgia Power –
Operating Revenues	$	1,984	$	1,766	12.4%
Earnings Before Income Taxes		335		189	77.4%
Net Income Available to Common		238		122	94.7%

Gulf Power –
Operating Revenues	$	357	$	284	25.5%
Earnings Before Income Taxes		42		26	64.4%
Net Income Available to Common		25		17	52.9%

Mississippi Power –
Operating Revenues	$	284	$	269	5.6%
Earnings Before Income Taxes		25		29	-12.1%
Net Income Available to Common		15		18	-15.1%

Southern Power –
Operating Revenues	$	256	$	232	10.8%
Earnings Before Income Taxes		24		45	-46.3%
Net Income Available to Common		15		28	-46.9%


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.