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  • 1. Do You See It?
  • 2. FINANCIAL HIGHLIGHTS Because of the spinoff of Mirant (formerly Southern Energy), figures reflect Mirant as discontinued operations. 2000 1999 change Operating revenues (in millions) $10,066 $9,317 8.0)% Earnings as reported, continuing operations (in millions) $994 $915 8.6)% Earnings as reported, discontinued operations (in millions) $319 $361 (11.6)% Total earnings as reported (in millions) $1,313 $1,276 2.9)% Earnings from operations (in millions)* $1,395 $1,303 7.1)% Basic and diluted earnings per share as reported, continuing operations $1.52 $1.33 14.3)% Basic and diluted earnings per share as reported, discontinued operations $0.49 $0.53 (7.5)% Total basic and diluted earnings per share as reported $2.01 $1.86 8.1)% Earnings per share from operations* $2.13 $1.90 12.1)% Dividends per share $1.34 $1.34 –) Dividend yield (percent) 4.0 5.7 (29.8)% Average shares outstanding (in millions) 653 685 (4.7)% Return on average common equity (percent) 13.20 13.43 (1.7)% Book value per share $$15.69 $13.82 13.5)% 331/4 231/2 Market price (year-end, closing) 41.5)% Total market value of common stock (year-end, in millions) $$22,649 $15,646 44.8)% Total assets (in millions) $31,362 $29,291 7.1)% * Earnings from operations exclude items not related to day-to-day business activities. TABLE OF CONTENTS 1 Letter to our shareholders 4 What is it? 20 Q&A with Allen Franklin 22 Financial Review Chairman, President, See what we’re all about Allen Franklin talks more 60 Directors and CEO Allen Franklin and what we’re doing about our strategy for 62 Officers reviews 2000 and takes to create value for our growth over the next five 64 Shareholder Information a look ahead. shareholders. years.
  • 3. SOUTHERN COMPANY AT A GL ANCE Southern Company is focused on three major businesses in the “Super Southeast.” Regulated Business Competitive Generation New Products and Services Subsidiaries, • Alabama Power • Southern Company Generation • Southern Company Energy Solutions Affiliates & • Georgia Power and Energy Marketing • Southern LINC Business Units • Gulf Power • Southern Power • Southern Telecom • Mississippi Power • Savannah Electric • Southern Nuclear Business • Transmission, distribution, and • Generation and sale of • Energy-related products and services Description 29,000 megawatts of regulated electricity to wholesale to retail customer base in Southeast. generation in service territory. customers in Southeast. • Examples of current products About 4 million retail customers • Wholesale energy trading include energy services, distrubuted in Alabama, Florida, Georgia, and and marketing generation, outdoor lighting, and Mississippi. access to dark fiber. Outlook • Annual demand growth in service • Economically robust region offers • Consumer demand for enhanced territory forecast to be 3 percent demand growth opportunities in reliability, energy services, and with strong customer growth of service territory as well as in the warranty options creates opportuni- 2 percent a year. surrounding states. ties to leverage existing customer relationships. Goals • Add significantly to base of • Significantly increase competitive • Develop innovative energy solutions 4 million retail customers. generation capacity. with products and services that • Efficient operations of • Wholesale already producing more produce $50 million annual earnings the network. than $100 million net income (results within next five years. • High level of customer service included in financial statements of and reliability. regulated utilities). Double earnings • Maintain top-quartile returns. from competitive generation part within next five years. SUPER SOUTHEAST • Service Territory • Competitive Generation Opportunities
  • 4. Southern Company is the premier super- regional energy company in the Southeast, the most economically vibrant region in the country. Our strategy is to grow the busi- ness we know best, in the region we know best with the customers we know best.
  • 5. Allen Franklin Chairman, President, and CEO It’s all about creating value for shareholders. It’s clear in the way we worked in 2000 to unlock and deliver value to you. Now we are focused on the U.S. Southeast. It’s the country’s fastest-growing electricity market, and the region we know best. We’re ready to be the full-service leader in the “Super Southeast.” See it for yourself. It’s right here. 1
  • 6. Letter to our shareholders A momentous year price for Southern Company stock at the end of 2000 was $33.25 per share, compared with $23.50 at the end of 1999. Getting results. That’s what counts. That’s how you measure us So the market value of our company grew by $7.0 billion in 2000. and that’s how we measure ourselves. For Southern Company, 2000 was a year of record results. We achieved earnings from Our focus operations of $1.40 billion. Earnings per share from operations After the changes we initiated in 2000, it may seem we now are were $2.13, a 12 percent increase over 1999 and well ahead of a very different company. I’d like to challenge that notion a bit, our 2000 goal of $2.05. and give you my thoughts on who we are and where we are going. After costs related to Southern Energy becoming a public Though our geographic perspective has become more focused, company and other non-operating items, our reported earnings Southern Company is committed to doing what we’ve always for 2000 were $1.31 billion, or $2.01 per share, compared with done best – being a full-service energy provider. $1.28 billion, or $1.86 per share, in 1999. We don’t follow fads and we don’t overreact to short-term In the year’s most significant event, we completed a successful developments. We focus on being the best at the fundamentals. initial public offering of 19.7 percent of Southern Energy in To us, the fundamentals mean continually finding better ways October, in advance of spinning off our remaining ownership to serve our customers’ energy needs more efficiently, reliably, in Southern Energy to Southern Company shareholders this economically, safely, and cleanly. And, in doing so, providing year. In preparation for the spinoff, Southern Energy renamed superior, risk-adjusted returns for our shareholders. itself Mirant Corporation. The foundation of our company continues to be our regulated After working hard to build Mirant into one of the world’s business. To four million satisfied customers in Alabama, Florida, top independent energy producers and marketers, we decided Georgia, and Mississippi, our brands are synonymous with to separate it from the rest of our business. We did this because excellent customer service, high reliability, and prices that are we believe our traditional business and Mirant are worth more 15 percent below the national average. Ours is a premier utility separated than together. From the standpoint of delivering value franchise in a premier growth region. to you, it clearly was the right move. We have turned one strong We are in a region, the Southeast, with a growing appetite energy company into two – Southern Company and Mirant. for energy. There’s just no better place for us. Metro Atlanta In doing so, we have unlocked the value we created for our alone has consistently been one of the nation’s job growth leaders shareholders. in the past decade, and the demand for energy throughout the There were many other accomplishments in 2000, some of Southeast continues to grow at rates above the national average. which are detailed elsewhere in this annual report. The closing 2
  • 7. A Salute to Bill Dahlberg Bill Dahlberg announced his retirement from Southern Company February 19, 2001, after 40-plus years with the company, the past six as chairman and chief executive officer. Having begun his career as a Georgia Power meter washer, then working in a series of staff, supervisory, and executive positions, Bill knew Southern Company’s business and its people thoroughly. Under his leadership, the world came to know and respect Southern Company. In a time of rapid change and uncertainty in the industry, Bill had a vision for Southern Company. With this vision–and an extraordinary ability to inspire people –he guided the company through a period of unprecedented growth. He successfully transformed Southern Company into an international energy company, focused on creating shareholder value, with operations in 12 countries on five continents. This is the region we know best. In addition to our four-state customers throughout the region. We expect these and other retail business, we’re building on our already sizeable growth- energy-related products and services to produce $50 million of oriented competitive generation business that will serve an annual earnings within the next five years. And we will continue expanded “Super Southeast” region. It is a wholesale business to make the infrastructure investments that have helped our with a regional focus, and it should materially increase our region avoid the reliability problems that some other areas of earnings growth. the country have experienced. Our wholesale business in the Southeast already is producing I’ve never been more excited about Southern Company more than $100 million in annual earnings. We plan to double and the direction we’re headed. I take great pride in what we the earnings from the competitive generation part of this business accomplished in 2000, and I’m confident about leading this over the next five years. A major component of this plan is to great company into the future. We owe much of our success to significantly increase our generating capacity. Of the 6,600 mega- the leadership of my predecessor, Bill Dahlberg, who is a good watts of new generating plants we plan to complete in the friend as well as a truly visionary leader. I thank him for his Southeast by the end of 2003, approximately 4,700 megawatts many contributions, and I know you will join me in wishing will be dedicated to the competitive market. Our approach to him well in his new endeavors. the competitive generation market, which primarily utilizes All of us at Southern Company are eager to build on what long-term contracts, emphasizes earnings and minimizes risk. we’ve achieved so far. We are in a business we fully understand A good example of how we are tapping the potential in this and in the markets we know best. We think that’s a winning market is the venture we recently announced with the Orlando combination for success and delivering shareholder value in the Utilities Commission, Kissimmee Utility Authority, and Florida years ahead. Municipal Power Agency to develop more than 600 megawatts Thank you for your continued support. of new generation in Central Florida. Our future We know this business, and we’re committed to getting better at it all the time. New products – such as EnergyDirect.com, which enhances the ability of our business customers to manage their energy use – are providing additional revenue streams. And Allen Franklin we are expanding our expertise in providing energy services to April 2, 2001 3
  • 8. What is it? It’s all around us. It makes our way of life possible. It’s in everything we do, everything we consume, how we live, work, and enjoy life. It’s energy and we are the largest provider of it in the Southeast ...
  • 9. It’s the e in e-commerce. It’s the juice in your appliances. It’s the light to enlighten. It’s putting customers first. It’s not easy to become the best at satisfying customers. We know, because we’ve worked hard to be No. 1. In 2000, for the third straight year, Southern Company achieved the industry’s best customer satisfac- tion ratings. We’re working hard to stay on top. Great service is just the beginning. We’re also managing our business efficiently, which helps us offer rates that are 15 percent below the national average. 5
  • 10. It’s the region we know best. The Southeast is the fastest-growing energy region in the country. We are at home here. We know how to succeed in this market. We have a large base of low-cost energy. An understanding of customers’ needs. And strong relationships based on our reputation for being a good citi- zen in the communities we serve. A commitment to a growing region Partners in progress We’ve worked in partnership with policymakers to make sure This is where we want to be. We’ve made a commitment to the our region has the facilities that are necessary to provide the Southeast. It has a strong economy with some of the nation’s power our customers need. And by working as partners to plan highest rates of job growth, new housing, and rising incomes. for the future, we’ve maintained a diverse mix of fuel sources for That translates into more demand for energy, and we’re here generation. So when the price of one fuel goes up, the effect on to meet the region’s needs. We’ve made a commitment to be a our customers is moderated. secure, reliable source of energy for the Southeast, and customers We have a tradition of being an active corporate citizen here know they can count on Southern Company. We’ve been wherever we do business. In towns big and small across our here for generations, with a track record of providing reliable Southeast service area, we strive to have a positive impact on electricity at low prices. We are moving forward to further the lives of the communities we serve. We are partners in local strengthen our relationship and extend our reach within the economic development, educational, and environmental efforts. region we know best. It’s something that sets Southern Company apart from the compe- tition. When communities have healthy growth, everyone wins. Already strong Our regulated business in the Southeast is the solid foundation for everything we do. That’s how we’ve earned our customers’ trust. Our system includes more than 26,000 miles of trans- mission lines and 29,000 megawatts of regulated generation. Our facilities are a model of reliability, efficiency, and depend- ability. We’ve planned well for future energy needs, too. This region is growing strong. We’re strong enough to serve it. 6
  • 11. It helps you grow. Annual demand growth in our service territory is expected to be 3 percent. We have approximately 4 million retail customers and expect annual customer growth of about 2 percent.
  • 12. It’s generating excitement.
  • 13. It’s the attraction of new markets. The “Super Southeast” region presents vast opportunities for our competitive generation business. We have a solid plan to succeed in this market, which includes the four states of our traditional service territory – Alabama, Florida, Georgia, and Mississippi – as well as Kentucky, North Carolina, South Carolina, and Tennessee. Orlando, Florida, is a shining example of the potential we see in competitive generation. It’s new horizons. 9
  • 14. It’s new generation for the next generation. The growing energy needs of the Southeast require plenty of power and provide us with plenty of opportunity to grow. By the end of 2003, we plan to add 6,600 megawatts of generation, including approximately 4,700 megawatts for the competitive market.
  • 15. It’s trading smart. Our fast-growth business Standing tall Competitive generation is the high-growth component of For a concrete example of how we’re building for the future, take Southern Company’s business plan. Our goal is to double the a look at Plant Dahlberg (opposite page) in Georgia. With eight earnings contribution from this part of our business over the units already in operation, and two more under construction, next five years. New generation dedicated to the competitive the plant already is meeting the Southeast’s growing energy needs. market gives us the opportunity to earn higher returns in the The potential to grow the competitive generation business is region’s wholesale markets. The risks are known and manageable huge. It is estimated that in the Southeast, the total amount of because most of this generation will be sold under long-term new generating capacity required in the next 10 years will be more contracts. To ensure this business is run as efficiently as possi- than 60,000 megawatts. Our knowledge of this market is deep ble, we have formed a new subsidiary to own, manage, and and spans decades. We helped create the wholesale generation finance our wholesale generating assets in the Southeast. market when we began selling bulk power to utilities in Florida Meanwhile, our trading floor (above) in Birmingham, Alabama – in the early 1980s. With our expertise and experience in plan- which set the standard for buying and selling wholesale energy – ning, designing, siting, constructing, marketing, and operating continues to help our competitive energy business grow as power plants in this part of the country, we will continue to be well as reduce costs for our regulated retail customers. a leader in the Southeast’s competitive generation business. 11
  • 16. It’s the power to heal. It turns you on. It’s the reliability of our service. Sometimes reliability is a matter of comfort; sometimes much more is at stake. Keeping the lights on takes expert planning and first-class operations. We have both. By carefully forecasting energy needs and securing the most economical energy sources available, we maintain a sufficient supply of electricity for our customers. By operating our assets at high levels of reliability, we keep the power flowing. 13
  • 17. It’s new products and services. Our strong position with customers in the Southeast provides a powerful platform from which to grow our business. We will do that by offering new products and services that match our energy expertise with our customers’ needs. Our goal is to produce $50 million of annual earnings from new products and services within the next five years. We’re the energy experts With our Southern Company Energy Solutions subsidiary, We’re hard at work developing new products and services that we go further to help customers manage energy projects at help make our energy further brighten customers’ lives. We offer facilities throughout the Southeast. And the experience we innovative solutions that help families and businesses manage gained from serving highly competitive markets such as the their energy use more efficiently. Our EnergyDirect.com Web United Kingdom has sharpened our knowledge of how to site, for example, provides business customers with secure, apply our energy expertise to products and services that are around-the-clock access to current and historical energy billing right for our customers and our business. We’re focused on and usage information. And we are helping introduce cutting- developing and offering even more new products in 2001. edge technologies like flywheels and microturbines to provide solutions to customers’ energy needs today. For Michael Hoffer, senior property manager at Cousins Properties Incorporated, the energy data he needs is a click away with EnergyDirect.com. It’s the on in on-line.
  • 18. Enhanced power quality from flywheel technology helps Hardin’s Bakery near Tuscaloosa, Alabama, rise to the occasion. It’s fresh new ideas.
  • 19. It’s seeing what’s important.
  • 20. It’s environmental responsibility. Our commitment to being a leader in environmental solutions is long- standing. It includes action to further reduce our emissions per kilowatt- hour generated. In addition to improving air and water quality, Southern Company is in the forefront of research to generate energy from new and cleaner sources. Reducing the impact Systems Development Facility (opposite page) in Wilsonville, Alabama, we are participating with the U.S. Department of Our goal is to have as little impact on the environment as Energy in a $270 million effort to develop a technology for possible while continuing to meet the needs of those who turning coal–our nation’s most abundant energy source – to gas depend on the energy and services we provide. During the in an economical fashion while reducing emissions of nitrogen past decade, we invested $4 billion in environmental control oxide, sulfur dioxide, and carbon dioxide by one-third. Rising systems, research, and development. Over the next three years, natural gas prices make this technology more important than we’re planning to spend another $1 billion to install control ever. We also are part of two extensive fuel cell research efforts systems at selected plants to reduce emissions of nitrogen oxides to determine the viability of this environmentally friendly tech- that contribute to ozone formation. Those reductions will reach nology as an energy option. And we’re working on a $6.7 million as much as 85 percent at some facilities. Many of our efforts effort at Alabama Power’s Plant Gaston to evaluate a mercury are undertaken voluntarily and go beyond the requirements of control system that could reduce emissions up to 70 percent. environmental laws. In metro Atlanta, for example, we’re spending $125 million to build cooling towers at Georgia Power’s plants Working to make things better McDonough and Yates to help improve water quality in the Our responsibilities reach beyond the requirements of laws and Chattahoochee River. The towers also will ensure the plants regulations. In 2000, we worked closely with agencies and citi- can operate at full capacity, showing again that doing the right zen groups to contribute to the health and enhancement of the thing is good for the environment and for our business. natural environment in local communities. Our activities ranged A research leader from an employee-led river clean-up campaign to working with local landowners in providing incentives to protect and enhance We believe that creating environmental solutions just makes wildlife to creating new saltmarshes, seagrass beds, and oyster sense. So while we implement proven technology, we’re also reefs along coastal areas. looking into other ways to help the environment. At the Power 17
  • 21. It’s seeing the value we create. Size. Strength. Reputation. A robust region. A proven track record in the business we know best. And a good plan to make it all work for you. It’s easy to see why we are excited about Southern Company’s future.
  • 22. It’s feeling good about yourself.
  • 23. Allen Franklin Chairman, President, and CEO It’s having solid answers. A conversation with Allen Franklin. Why did we decide to spin off Mirant? service. In other words, we’re sticking with what we do best. It’s pretty clear that companies that focus on the things they Both Mirant and our traditional business were very successful do best and areas where they understand the market better and were continuing to meet or exceed all our financial targets. than anyone else have the best risk-adjusted returns. We are But we were not seeing the value of Mirant reflected in our one of the few remaining vertically integrated companies in stock price. The two parts of the business each offered some- our industry. That leaves us with all of our options and gives thing different to investors, and there was not a strong investor us synergies that benefit shareholders and customers. constituency for both under the same roof. As separate compa- nies, investors have a clear choice between two “pure play” What’s so great about the Southeast? investments. The two businesses are worth more separated than Lots of things. First, this region has strong economic growth, they were together. With Mirant having grown big enough and and our business is tied directly to the economic growth of our strong enough to succeed independently, the time was right and markets. The faster the region grows, the faster we grow. Also, it made good sense in the interests of our shareholders to sepa- the Southeast is a business-friendly region where we can work rate. We have created two strong energy companies – Southern as partners rather than adversaries with policymakers and the Company and Mirant –from one. In the process, we delivered people we serve. And, importantly, people in the Southeast the value of Mirant to our shareholders. understand the necessity of maintaining a reliable energy infra- What sets Southern Company apart from the pack now? structure. So we are able to build the facilities that are needed to provide power to our customers. We are clearly focusing all of our resources and efforts on the business we know best in the region we know best. With the What kind of growth do you see for the company? separation, we now are in a position to grow our Southeastern We have set a goal of growing earnings per share 5 percent a business to its full potential. We are a full-service provider of year, and we have a solid plan to achieve it. Excluding Mirant, electricity. We’re accepting the responsibility to assure a reliable our earnings per share target in 2001 is $1.60. Most of our electric supply to our customers. This includes generation, earnings still come from our regulated business, which we transmission, distribution, and the highest level of customer 20
  • 24. expect to grow about 3 percent a year. We also operate a very The situation following deregulation in California has put a great successful and growing wholesale business here in the Southeast. deal of attention on the direction our industry is headed. What We plan to double the earnings from the competitive generation impact do you see in Southern Company’s region? part of this business within five years, and we are well on our I don’t see any immediate impact here in the Southeast. What way to achieving this goal. This will be a significant growth happened in California does highlight, among other things, the engine going forward. Combining the traditional regulated importance of having generating capacity keep pace with eco- business with our much higher-growth competitive generation nomic growth, and of having a diverse mix of fuel sources. In our business, plus the potential we see in new products and services, service area, we’ve never stopped building generating plants and gets us to an overall 5 percent growth rate. transmission lines. We’ve kept our eyes on the reliability of the system. And we have, I believe, a judicious mix of fuel sources, What challenges do we face in meeting our targets? including coal, nuclear, natural gas, oil, and hydro. The policies The No. 1 priority is to maintain good returns in our regulated of this company and of policy leaders in the Southeast have business. The key to doing that is continuing to serve our cus- resulted in very reliable and affordable energy in this region. tomers with reliable, competitively priced energy and excellent customer service. Customer service is embedded in our culture – Does the environment continue to be a major emphasis for us? it’s part of what we call Southern Style – but we’ve got to do It always has been and always will be. Energy companies have an even better than before. Even though we continue to score high impact on the environment. It’s just the nature of the business. in customer satisfaction surveys, we’ve been re-emphasizing the The question is, how do we manage the business so that we importance of customer service throughout the company. minimize the environmental impact in a way that is affordable to consumers and fair to shareholders. Day to day and year to How are we approaching the competitive generation business? year, we work to find the right balance. Of course, we strive to We are participating in the same competitive generation market operate our facilities in full compliance with all laws and regula- as many other well-known independent power producers. But tions. We also do many things voluntarily, like the $125 million we’re doing it differently than most. Our power is generally cooling tower project we announced last summer to protect the sold under long-term contracts that are structured to give us Chattahoochee River in Georgia. Through our partnerships in a positive earnings contribution quickly and to minimize the a number of significant research programs, we strive even further price risk associated with volatile natural gas supplies. We par- to find meaningful solutions to environmental issues. ticipate in this market in a way that matches the risk and earn- ings our shareholders expect. How does the future look for Southern Company? We’re in a great position. We have the opportunity to put all Are mergers or acquisitions part of our strategy? our talent and resources behind what we do best, in the best Mergers and acquisitions are driven in large part by oppor- market in the country. Our view of the industry over the past tunities that arise from time to time. We evaluate all of these few years turned out to be right on target and led to record opportunities against a set of strict criteria. We are looking for financial and operating results. Looking ahead, we know where long-term value consistent with the price we would pay, plus we are going. Our basic strategy for the Southeast matches up a positive contribution to earnings in the near term. very well with what’s in front of us. We have a lot of exciting things going on. I’m very confident. 21
  • 25. SHAREHOLDER INFORMATION Transfer Agent Annual Meeting SCS Stockholder Services is Southern Company’s transfer The 2001 Annual Meeting of Stockholders will be held on agent, dividend paying agent, investment plan administrator, Wednesday, May 23, at 10 a.m. EDT at the Savannah and registrar. If you have questions concerning your Southern International Trade & Convention Center in Savannah, GA. Company stockholder account, please contact: SCS Stockholder Services Common Stock P.O. Box 54250 The common stock of Southern Company is listed and traded Atlanta, GA 30308-0250 on the New York Stock Exchange. In addition, the stock is traded on regional exchanges across the United States. The Stockholder Services’ Web site www.southerncompany.com ticker symbol for Southern Company stock is SO, and the provides transfer instructions, service request forms, and symbol SouthCo is used in newspaper stock listings. frequently asked questions and answers. You may also call the Stockholder Information Line at Auditors (800) 554-7626. Representatives are available Monday Arthur Anderson LLP through Friday, 9 a.m. to 5 p.m. Eastern Time. 133 Peachtree Street, N.E. Atlanta, GA 30303 Southern Investment Plan Southern Investment Plan (SIP) provides current Southern Investor Information Line Company shareholders with a convenient and economical For recorded information about earnings and dividends, way to increase their holdings. SIP also enables investors who stock quotes, and current news releases, call toll-free are not currently shareholders to purchase common stock (866) 762-6411. directly through the plan. Access www.southerncompany.com to review the Prospectus and Enrollment Form. Institutional Investor Inquiries Southern Company maintains an investor relations office in Atlanta, (404) 506-5195, to meet the information needs of Dividend Payments The entire amount of dividends paid during 2000 is taxable institutional investors and security analysts. as ordinary income. The board of directors sets the record and payment dates Eliminate Duplicate Mailings for quarterly dividends. A dividend of 33.5 cents was paid in If you are a stockholder of record and receive multiple copies March 2001. of the annual report and proxy statement, or wish to access For the remainder of 2001, projected record dates are these documents electronically in the future, you may May 7, Aug. 6, and Nov. 5. Projected payment dates for authorize Southern Company to suspend future mailings dividends declared during the remainder of 2001 are: of these documents to a specific account. To do so, consent June 6, Sept. 6, and Dec. 6. when you vote your proxy or check the box on the dividend check stub or investment plan statement and mail it to SCS Stockholder Services. Environmental Information Information about what Southern Company is doing to improve the environment is available at our environmental Internet site: www.southerncompany.com/site/planetpower. Or by writing to: Dr. Charles H. Goodman Senior Vice President, Research and Environmental Affairs 600 North 18th Street P.O. Box 2641 Birmingham, AL 35203-2206 64 Southern Company and Subsidiary Companies 2000 Annual Report
  • 26. GLOSSARY Competitive generation business – linking assets with trading and marketing to provide energy to wholesale customers who can choose their suppliers based on price, reliability, capacity, and other market needs. Earnings as reported – total net income, including items – such as gains on asset sales, write-downs of assets and work force reductions – not related to normal day-to-day business activities. Earnings from operations – net income, excluding items – such as gains on asset sales, write-downs of assets and work force reductions – not related to normal day-to-day business activities. Earnings per share – total net earnings divided by the average number of shares of common stock outstanding. Energy trading and marketing – the buying and selling of energy according to market needs without the restriction of defined service areas. Generating capacity – the amount of energy we can produce using all of our power generation facilities. Independent power producer – builds and/or owns and operates generating facilities without any geographic or service area restrictions or relationships to traditional regulated utilities. Payout ratio – the percentage of earnings that is paid to shareholders in the form of dividends. Regulated business – the part of our business that generates, transmits and distributes electricity to commercial, industrial, and residential customers in most of Alabama and Georgia, the Florida panhandle, and southeastern Mississippi. Retail markets – markets in which energy is directly sold and delivered to the ultimate end users of that energy. Southern Company 270 Peachtree Street, N.W. Super Southeast – the nation’s fastest-growing energy market, including the four states of our tradional Atlanta, GA 30303 Southeast service area as well as surrounding states. The region we know best. (404) 506-5000 Wholesale customers – energy marketers, electric and gas utilities, municipal utilities, industrials, other energy 1130 Connecticut Avenue, N.W. producers and generators, national companies, and other large energy users. Suite 830 Washington, D.C. 20036 Wholesale markets – markets in which relatively large amounts of energy are sold to customers who may then (202) 261-5000 sell it in retail markets or – in the case of large industrial customers – use it. Internet Current information about Southern Company is available on the Internet at www.southerncompany.com. The 2000 annual report is submitted for shareholders’ information. It is not intended for use in connection with any sale or purchase of, or any solicitation of offers to buy or sell, securities. Printed on recycled paper. Writing and Project Management: Marc Rice. Financial Review: L.M. Thomas III. Design: Lucid, Atlanta, GA. Major Photography: James Schnepf; Printing: George Rice & Sons.