• Like
southern 2004 4th
Upcoming SlideShare
Loading in...5
×

southern 2004 4th

  • 107 views
Uploaded on

 

  • Full Name Full Name Comment goes here.
    Are you sure you want to
    Your message goes here
    Be the first to comment
    Be the first to like this
No Downloads

Views

Total Views
107
On Slideshare
0
From Embeds
0
Number of Embeds
0

Actions

Shares
Downloads
0
Comments
0
Likes
0

Embeds 0

No embeds

Report content

Flagged as inappropriate Flag as inappropriate
Flag as inappropriate

Select your reason for flagging this presentation as inappropriate.

Cancel
    No notes for slide

Transcript

  • 1. Southern Company 4th Quarter 2004 Earnings December 31, 2004 Contents Press Release 1 Business Outlook 5 Financial Highlights 9 Factors Affecting Earnings 9 Analysis of Consolidated Earnings 10 Kilowatt Hour Sales 10 Financial Overview 11
  • 2. News Media Contact: Marc Rice 404-506-5333 or 1-866-506-5333 media@southerncompany.com www.southerncompany.com Investor Relations Contact: Glen Kundert 404-506-5135 gakunder2@southernco.com Jan. 25, 2005 Economic strength in Southeast drives Southern Company earnings above expectations ATLANTA – Southern Company today reported fourth quarter earnings of $204.5 million, or 27 cents a share, compared with $125.0 million, or 17 cents a share, in the fourth quarter of 2003. For the full year, Southern Company reported earnings of $1.53 billion, or $2.07 per share, compared with reported earnings of $1.47 billion, or 2.03 per share, in 2003. The company’s earnings target for 2004 was in a range of $1.94 and $1.99 per share. Continued economic vitality in the Southeast helped boost electricity sales and was a key contributor to the fourth quarter and full-year results, which exceeded analysts’ expectations. Businesses and individuals continued to be drawn to the Southeast, boosting the number of customers Southern Company serves by 61,342, or 1.5 percent, in 2004. “We are pleased with the excellent results we achieved in 2004,” said Chairman, President and CEO David M. Ratcliffe. “Our people delivered another outstanding performance by continuing to focus on the fundamentals of giving customers reliable power, low prices and great service.”
  • 3. The 2004 earnings included one-time items in the fourth quarter related to the resolution of an Internal Revenue Service audit for the years 2000 and 2001, which had the net effect of increasing earnings by $24 million, or 3 cents per share. Excluding the impact of these items, fourth quarter earnings were $180.4 million, or 24 cents a share. Earnings for the full year, excluding the one-time items, were $1.51 billion, or $2.04 per share. The 2003 earnings for the fourth quarter included a one-time after-tax expense related to a regulatory order in Mississippi which reduced earnings for that period by $37 million, or 5 cents a share. Excluding the impact of that one-time item, earnings for the fourth quarter a year ago were $162.3 million, or 22 cents a share. The full-year results for 2003 also included a one-time after-tax gain of $88 million related to the termination of all long-term wholesale power contracts with Dynegy, Inc. After adjusting for revenues that would have been recognized in 2003 had the contracts remained in place, the adjusted gain for 2003 was $83 million, or 11 cents per share. Excluding the impact of the Dynegy settlement and the Mississippi regulatory order, full- year earnings for 2003 were $1.43 billion, or $1.97 per share. The fourth quarter saw a continuation of the economic rebound that helped boost electricity sales, most notably among large industrial customers, throughout 2004. Particularly strong growth in demand for electricity was seen during the fourth quarter in the building materials, carpet, automobile equipment, steel and paper industries. The strong results for 2004 were achieved despite the extensive damage and economic disruption in Florida and Alabama caused by Hurricane Ivan in September. “Because of the outstanding response by Southern Company employees, with assistance from many other companies and organizations, we were able to restore service to our customers in record time and withstand the most severe storm ever to hit our service territory,” Ratcliffe said. Revenues for the fourth quarter were $2.72 billion, compared with $2.52 billion in the same period a year ago, an increase of 8.0 percent. Revenues for the full year were $11.90 billion, compared with $11.19 billion in 2003, up 6.4 percent. Kilowatt-hour sales to retail customers in Southern Company's four-state service area increased 3.6 percent in 2004, compared with 2003. Residential electricity use increased 3.9 percent. Electricity use by commercial customers -- offices, stores and other non- manufacturing firms – increased 3.4 percent. Industrial energy use increased 3.6 percent. Total sales of electricity to Southern Company's customers in the Southeast, including wholesale sales, increased 0.1 percent in 2004, compared with the previous year. In conjunction with this earnings announcement, Southern Company has posted on its Web site a package of detailed financial information on its fourth quarter and full-year 2004 performance. These materials are available at 7:30 a.m. EST Jan. 25 at www.southerncompany.com.
  • 4. Southern Company's financial analyst call will be at 1 p.m. EST Jan. 25, at which time Ratcliffe and Chief Financial Officer Tom Fanning will discuss earnings and provide earnings guidance for 2005 as well as a general business update. Investors, media and the public may listen to a live Webcast of the call at www.southerncompany.com. A replay of the Webcast will be available at the site for 12 months. With more than 4 million customers and nearly 39,000 megawatts of generating capacity, Atlanta-based Southern Company (NYSE: SO) is the premier super-regional energy company in the Southeast and a leading U.S. producer of electricity. Southern Company owns electric utilities in four states, a growing competitive generation company, an energy services business and a competitive retail natural gas business, 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 15 percent below the national average. Southern Company has been named three consecutive years No. 1 on Fortune magazine’s “America’s Most Admired Companies” list in the Electric and Gas Utility industry. Southern Company has been ranked the nation’s top energy utility in the American Customer Satisfaction Index five years in a row. Southern Company has more than 500,000 shareholders, making its common stock one of the most widely held in the United States. Visit the Southern Company Web site at www.southerncompany.com. Forward Looking Statements Note: 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 continued customer growth and Southern Company's strategies. 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 Dec. 31, 2003, 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, and also changes in environmental, 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, current IRS audits and Mirant-related 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 and gas, including those relating to weather, the general economy and population and business growth (and declines); available sources and costs of fuels; 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; the performance of projects undertaken by the non-traditional business 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; the ability to obtain new short- and long-term contracts with neighboring utilities; the direct or indirect effect on Southern Company’s
  • 5. 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 credit ratings; the ability of Southern Company and its subsidiaries to obtain additional generating capacity at competitive prices; catastrophic events such as fires, earthquakes, floods, hurricanes 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. ###
  • 6. Page 5 Southern Company Business Outlook Strategy focused on the business, markets and customers we know best 1. Regulated retail business − Transmission, distribution and, with the expected completion of McIntosh units 10 and 11 mid-2005, over 35,000 MW of regulated generation within our five operating companies. − More than 4 million utility customers in Alabama, Georgia, Florida and Mississippi. − Annual revenues of over $11 billion and approximately 26,000 employees. − Average long-term demand growth in our service territory projected to be 2 percent. − Average long-term customer growth projected to be 1.5 percent per year. 2. Competitive wholesale generation business − Focused on competitive wholesale energy business in the Super Southeast. − Competitive generation net income includes Southern Power Company’s results in addition to the existing wholesale businesses in our five operating companies. − 4,785 MW of capacity owned by Southern Power Company. Goals for our Major Businesses 1. Lead the industry in service and customer satisfaction. 2. Earn superior risk adjusted returns. 3. Earn net income of at least $300 million from the company’s competitive wholesale generation business by 2007. See caution regarding forward looking statements on page eight of this document
  • 7. Page 6 Financial Goals for the Company 1. Earnings per Share Growth – 5% long-term growth target 2. Return on Equity – top quartile of electric utilities 3. Dividend Payout – target 70% 4. Dividend Growth – consistent with our payout objectives 5. Capital Structure – maintain common equity ratio of approximately 40% 2005 EPS Guidance: $2.04 - $2.09 This range is based on our 5% long-term growth target and provides for normal variability which might result from: • Moderate weather variances • Changes in energy prices • Economic recovery • Other items within the scope of normal operations Projected Sources and Uses of Funds from 2005 to 2007 Sources 2005-2007 ($ Billions) Funds from Operations $9.4 Equity Issuances - Net Debt and Preferred 1.9 $11.3 Uses Capital Expenditures: $7.9 Detailed Breakout Page 6 Common Dividends 3.4 $11.3 See caution regarding forward looking statements on page eight of this document
  • 8. Page 7 Projected Capital Expenditures 2005 – 2007 ($ Billions) Regulated Infrastructure Fossil/Hydro Retrofits $0.8 Environmental 2.0 Nuclear Fuel & Retrofits 0.5 Transmission & Distribution 3.1 All Other 0.5 Total Regulated Infrastructure $6.9 0.9 Competitive Generation 0.1 Products/Services & Other $ 7.9 Total Capital Expenditures Credit Ratings S&P Moody’s Fitch Senior Commercial Senior Commercial Senior Commercial Unsecured Paper Unsecured Paper Unsecured Paper Alabama Power A A-1** A2 P-1** A+ F-1** Georgia Power A A-1* A2 P-1* A+ F-1* Gulf Power A A-1* A2 P-1* A F-1* Mississippi Power A A-1* A1 P-1* AA- F-1* Savannah Electric A A-1* A2 P-1* - - Southern Power BBB+ A-2 Baa1 P-2 BBB+ - Southern Company A- A-1 A3 P-1 A F-1 Southern Co. Svcs A A3 *Commercial Paper issued through Southern Company Funding Corporation **Alabama Power can issue commercial paper through the Southern Company Funding Corporation or through its own commercial paper program. See caution regarding forward looking statements on page eight of this document
  • 9. Page 8 Forward Looking Statement Disclosure: All of the information contained in this Business Outlook is forward-looking information based on current expectations and plans that involve risks and uncertainties. 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 Dec. 31, 2003, 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, and also changes in environmental, 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, current IRS audits and Mirant related 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 and gas, including those relating to weather, the general economy and population and business growth (and declines); available sources and costs of fuels; 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; the performance of projects undertaken by the non-traditional business 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; 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 credit ratings; the ability of Southern Company and its subsidiaries to obtain additional generating capacity at competitive prices; catastrophic events such as fires, earthquakes, floods, hurricanes 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.
  • 10. Page 9 Southern Company Financial Highlights (In Millions of Dollars Except Earnings Per Share) 3 Months Ended December 12 Months Ended December 2004 2003 2004 2003 (Notes) (Notes) (Notes) (Notes) Consolidated Earnings– (See Notes) $ 122 $ 117 $ 1,200 $ 1,153 Retail Business 44 220 30 224 Competitive Generation Total 166 147 1,420 1,377 Synthetic Fuels 14 14 74 58 Leasing Business 1 8 24 29 (1) (10) (7) (36) Parent Company and Other Net Income - Excluding One-Time Items (See Notes) $ 180 $ 162 $ 1,508 $ 1,428 $ 204 $ 125 $ 1,532 $ 1,474 - As Reported Basic Earnings Per Share–(Notes) $ 0.24 $ 0.22 $ 2.04 $ 1.97 - Excluding One-Time Items (See Notes) $ 0.27 $ 0.17 $ 2.07 $ 2.03 - As Reported $ 2,721 $ 2,520 $ 11,903 $ 11,186 Operating Revenues 741 733 739 727 Average Shares Outstanding(in millions) 741 735 End of Period Shares Outstanding(in millions) Significant Factors Impacting EPS (Notes) 3 Months Ended December 12 Months Ended December 2004 2003 Change 2004 2003 Change $ 0.24 $ 0.22 $ 0.02 $2.04 $1.97 $0.07 Consolidated Earnings- Significant Factors: - 0.06 Retail Business 0.02 (0.01) Competitive Generation - 0.02 Synthetic Fuels - - Leasing Business 0.01 0.04 Parent Company and Other (0.01) (0.04) Impact of Additional Shares $ 0.02 $ 0.07 Total Notes - Excludes a one-time after tax gain of $24 million in December 2004 from the resolution of an IRS audit for the years 2000 and 200 - Excludes a one-time after tax gain of $83 million in May 2003 from the previously announced termination of all long-term wholesa power contracts between Southern Company and Dynegy, Inc. as adjusted for revenues that otherwise would have been recogniz for the remainder of the year - Excludes a regulatory expense of $37 million, after taxes, for Mississippi Power recorded in December, 2003. - Quarterly Earnings Per Share (EPS) is computed by using the current year-to-date EPS less the previous period year-to-date EPS. As a result of using rounded numbers, the EPS for significant factors may not directly correspon to the variance in millions of dollars shown above - Diluted earnings per share are not more than 1 cent for any period reported above and are not materi - Certain prior year data has been reclassified to conform with current year presentation. - Information contained in this report is subject to audit and adjustments and certain classifications may be different from final results published in the Form 10-K.
  • 11. Page 10 Southern Company Analysis of Consolidated Earnings (In Millions of Dollars) 3 Months Ended December 12 Months Ended December 2004 2003 Change 2004 2003 Change Income Account- Retail Revenue $ 1,968 $ 226 $ 8,875 $ 856 $ 2,194 $ 9,731 Wholesale Revenue 324 (19) 1,358 (15) 305 1,343 Other Electric Revenues 105 - 373 19 105 392 Contract Termination - - 142 (142) - - 117 437 123 (6) 438 (1) Non-regulated Operating Revenues 2,721 11,903 2,520 201 11,186 717 Total Revenues Fuel and Purchased Power 824 124 3,594 571 948 4,165 Non-fuel O & M 953 31 3,174 155 984 3,329 Depreciation and Amortization 263 (23) 1,027 (72) 240 955 153 627 139 14 586 41 Taxes Other Than Income Taxes 2,325 9,076 2,179 146 8,381 695 Total Operating Expenses Operating Income 341 55 2,805 22 396 2,827 Other Income, net (10) (5) (20) 9 (15) (11) Interest Charges and Dividends 180 (1) 699 (1) 179 698 (2) 586 26 (28) 612 (26) Income Taxes $ 125 $ 79 $ 1,474 $ 58 $ 204 $ 1,532 NET INCOME AS REPORTED (See Note) $ 162 $ 18 $ 1,428 $ 80 $ 180 $ 1,508 NET INCOME EXCLUDING ONE-TIME ITEMS Kilowatt-Hour Sales (In Millions of KWHs) 3 Months Ended December 12 Months Ended December 2004 2003 Change 2004 2003 Change Kilowatt-Hour Sales- 45,217 47,147 -4.1% 192,382 192,138 0.1% Total Sales 37,056 35,474 4.5% 157,143 151,618 3.6% Total Retail Sales- 10,748 10,275 4.6% 49,703 47,833 3.9% Residential 12,020 11,460 4.9% 50,037 48,372 3.4% Commercial 14,039 13,492 4.0% 56,399 54,415 3.6% Industrial 8,161 11,673 -30.1% 35,239 40,520 -13.0% Total Wholesale Sales Note - Includes a one-time after tax gain of $24 million in December 2004 from the resolution of an IRS audit for the years 2000 and 2001. - Includes a one-time after tax gain of $83 million in May 2003 from the previously announced termination of all long-term wholesale power contracts between Southern Company and Dynegy, Inc as adjusted for revenues that otherwise would have been recognized for the remainder of the year. - Includes a regulatory expense of $37 million, after taxes, for Mississippi Power recorded in December, 2003. - Certain prior year data has been reclassified to conform with current year presentation. - Information contained in this report is subject to audit and adjustments and certain classifications may be different from final results published in the Form 10-K.
  • 12. Page 11 Southern Company Financial Overview (In Millions of Dollars) 3 Months Ended December 12 Months Ended December 2004 2003 % Change 2004 2003 % Change Consolidated – Operating Revenues $2,721 $2,520 8.0% $11,903 $11,186 6.4% Earnings Before Income Taxes 202 151 33.9% 2,118 2,086 1.5% Net Income As Reported (See Note) 204 125 63.6% 1,532 1,474 4.0% Alabama Power – Operating Revenues $971 $904 7.5% $4,236 $3,960 7.0% Earnings Before Income Taxes 117 102 13.5% 818 781 4.6% Net Income Available to Common 66 58 14.7% 481 473 1.8% Georgia Power – Operating Revenues $1,238 $1,111 11.5% $5,372 $4,914 9.3% Earnings Before Income Taxes 106 122 -13.0% 1,038 998 4.0% Net Income Available to Common 71 74 -3.7% 658 631 4.3% Gulf Power – Operating Revenues $235 $212 10.8% $960 $878 9.4% Earnings Before Income Taxes 1 4 -76.8% 108 110 -1.8% Net Income Available to Common 0 3 -86.1% 68 69 -1.1% Mississippi Power – Operating Revenues $210 $184 14.1% $911 $870 4.7% - Earnings Before Income Taxes 5 (58) 131 121 8.1% - Net Income Available to Common (See Note) 2 (36) 77 73 4.5% Savannah Electric – Operating Revenues $85 $68 25.6% $355 $314 13.2% - Earnings Before Income Taxes 3 (1) 40 38 4.6% - Net Income Available to Common 2 (1) 24 23 5.1% Southern Power – Operating Revenues $154 $128 20.9% $701 $682 2.9% Earnings Before Income Taxes 43 20 106.2% 185 240 -23.1% Net Income Available to Common (See Note) 25 12 95.2% 112 155 -28.1% Note - Includes a one-time after tax gain of $24 million in December 2004 from the resolution of an IRS audit for the years 2000 and 2001. - Includes a one-time after tax gain of $83 million in May 2003 from the termination of all long-term wholesale power contracts between Southern Company and Dynegy, Inc. as adjusted for revenues that otherwise would have been recognized for the remainder of the year. - Includes a regulatory expense of $37 million, after taxes, for Mississippi Power recorded in December, 2003. - Certain prior year data has been reclassified to conform with current year presentation. - Information contained in this report is subject to audit and adjustments and certain classifications may be different from final results published in the Form 10-K.