1) The document provides cautionary statements regarding Southern Company's forward-looking financial information for 2009, noting various factors that could cause actual results to differ from expectations.
2) It summarizes drivers of earnings growth between 2007 and 2008, and provides Southern Company's capital expenditure forecast and major projects for 2009-2011.
3) Southern Company aims for long-term average earnings per share growth of 6% annually and provides earnings per share guidance of $2.30 to $2.45 for 2009.
2. Cautionary Statement Regarding Forward-Looking Information
NOTE: Certain information contained in this presentation 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, capital expenditures, securities issuances, earnings per share
growth, and earnings guidance. Southern Company and its subsidiaries caution 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 and its subsidiaries;
accordingly, there can be no assurance that such suggested results will be realized.
The following factors, in addition to those discussed in the Annual Reports on Form 10-K for the year ended December 31, 2007 of Southern Company and its
subsidiaries, 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.
3. 2008 vs 2007 Earnings Drivers
(Excluding synthetic fuel investments/SILO adjustments)
$2.50
$2.37
+3¢
+1¢
+2¢
+2¢
+56¢ Southern Parent &
AFUDC Other
Other Power
$2.25 $2.21 -18¢ Revenue
-9¢
$2.00 Depr, Amort
& Interest -10¢
Weather
-5¢
Non-fuel -2¢
-4¢
O&M Other
$1.75 Retail
Taxes Shares
Usage & Retail
Growth Revenue
Growth
$1.50
2007 EPS* 2008 EPS*
* Excluding earnings from synthetic fuel investments and SILO adjustments. A reconciliation to EPS reported under
GAAP is included in the appendix
4. 3-Year Capital Expenditures Forecast
($ in billions)
Total
Major Projects 2009 - 2011
2009 2010 2011 '09-'11
Alabama Power $1.4 $1.0 $1.0 $3.4
3 Year Total
Georgia Power 2.7 2.6 2.6 7.9
Vogtle 3&4 (Georgia) $ 1.9
Gulf Power 0.5 0.3 0.4 1.2
McDonough (Georgia) 1.3
Mississippi Power 0.2 0.5 1.0 1.6
IGCC (Mississippi) 1.1
Other 0.1 0.1 0.1 0.3
Transmission & Distribution 4.0
Includes Smart Meters of $0.3
Traditional OpCos $4.9 $4.5 $5.0 $14.4
Environmental Controls 3.1
Southern Power 0.7 0.7 0.8 2.2
Southern Company $5.7 $5.1 $5.8 $16.6
Totals may not add due to rounding
5. EPS Guidance
2009 Guidance: $2.30 to $2.45
Long-term Outlook
2004 - 2008
A track record of In a post-recessionary
Average
Growth Rate
solid EPS growth* economy, we have a goal of
5.4%
a long-term average EPS
growth rate of 6%
$2.37
The fundamentals of our
$2.21
$2.10
business remain strong:
$2.03
$1.92
• Growing service territory
2004 2005 2006 2007 2008
• Constructive regulation
Since the spin of Mirant, the average EPS*
• Strong financial integrity
growth rate for 2001 – 2008 is 6.0%
* Excluding earnings from synthetic fuel investments and SILO adjustments. A reconciliation to EPS reported under
GAAP is included in the appendix
