A lot has happened in Atlanta in the past 12 months. A lot has happened to our company. Just as the world came here for the Centennial Olympic Games,so too have we gone out into the world.

A year ago, when we met, Southern Company was a regional utility with a handful of international projects. Today, though, Southern Company can be defined as an international energy company — with regional utilities and operations around the world.

We now conduct business on four continents and in eight countries. As any of you who have seen our annual report know, we are the 900-pound gorilla of the electric power industry.

That’s what we’ve been called by competitors, financial analysts and the media for quite some time. And we think it’s an appropriate description of the role we intend to play in the dynamic global energy marketplace.

It’s a description that sets us out as being strong — as being able to move quickly to seize opportunities for our shareholders, our customers and our employees.

As you know, we seized another opportunity this month by agreeing to acquire a stake in Bewag, an electric utility serving 2.1 million customers in Berlin, Germany. Bewag creates an immediate positive impact on our earnings — as well as the potential for further earnings growth in markets throughout Europe — and I will discuss Bewag in more detail in a few minutes.

We told you at this meeting two years ago that our goal was to be America’s best electric utility investment. Our goal has not changed, and, in fact, we think we’re right on target. We think we’re in our best position ever.

· Our core business is a solid performer — producing as strong results as anyone in our industry.

· Our earnings in 1996 were $1.13 billion. That’s a 2.2% increase over 1995.

· Our revenues rose 12.8% to $10.4 billion. That increase reflects our first full year of operation at South Western Electricity in the United Kingdom, as well as a 5% increase in electricity sales in our traditional business area.

· Although our fundamentals are very strong, we were hurt during the first quarter of this year by a mild winter in the Southeast. As a result, net income was $187 million — compared with $233 million for the first quarter of 1996. Earnings per share were 28 cents — compared with 35 cents for the first quarter last year.

· We continue to be one of the 20 most widely held stocks in America. And our market visibility will only increase with our addition this month to the 15 companies that make up the Dow Jones Utilities Average.

· Utility executives continue to rank us as America’s most admired electric utility, as compiled and reported by Fortune magazine.

· In 1996, we again were the No. 1 U.S. electric utility in both total sales and generating capacity. In fact, we are not only the largest generator of electricity in America but now — with our most recent acquisitions — also the fourth largest in the world.

· The average availability rate for both our fossil-fuel plants and our nuclear plants again beat the national average — yet another competitive advantage for our company.

· And also in 1996, we played a leading role in the ongoing legislative and regulatory debate on electricity competition.

We want to make sure that competition is fair to all customers, both big and small ... that all types of energy providers are treated equally ... and that the service commitments we made — that you made — years ago are not trampled in a headlong rush toward competition.

The re-regulation of our industry is proving to be a very complex issue. So complex that it may take several years for it to unfold on a national level.

However, we do know competition is coming, and we know we must be ready.

We know that to be winners in the future energy marketplace, the markets we serve now cannot be the only ones we serve. That’s why you have seen our name increasingly in the marketplace.

In the Southeast, our five utilities have earned a strong brand identity Nationally, we are trying to position ourselves to leverage the value of that strong brand.

We’re already beginning to see positive results from the advertising campaign that we kicked off in January. Southern Company is getting more name recognition in the emerging markets of California and New England. And more doors are opening to our people in the field.

This is all part of our strategy of operating non-traditional businesses that add to the long-standing success of our core business here in the Southeast. As we told you last year, we want 30% of our net income to come from our non-traditional business by 2003.

In 1996, South Western Electricity in England — or SWEB — achieved its earnings goals during its first full calendar year under our management ... as well as record reliability levels.

While we are very pleased with the performance of SWEB, there is a possibility — in fact, a probability — of a windfall profits tax being enacted by the new Labor government, and that could be quite costly for us this year.

Our pending acquisition of Bewag should be finalized in 30 to 60 days, and, like SWEB, it should mean an immediate boost to our earnings.

We are part of a consortium that is buying the utility from the city of Berlin. We will pay approximately $830 million for a 25% stake. Our partners are the second and third largest utilities in Germany.

We are excited about the opportunities that Bewag can provide.

Berlin has a metro area of 6 million people. In two years, it will be the capital of the largest economy in Europe and the third largest economy in the world. Germany is the largest user of electricity in Europe.

All of Europe will begin moving toward one electricity market in 1999. Bewag will give us access to markets in both western and central Europe.

We also are very excited about the growth opportunity Consolidated Electric Power Asia — or CEPA — will provide us. CEPA currently has two operating plants in China, power barges and four other units in the Philippines and several more plants under construction in the Philippines, as well as others in the early stages of work in Indonesia and Pakistan.

Asia is the world’s fastest growing market for electricity. It has one of the world’s lowest rates of electricity consumption per capita, but it also has the world’s highest economic growth rate. And economic growth, of course, demands electricity.

Just as electricity improved the quality of life for so many here in the South and made it the vibrant economic center that it is today, so too can electric energy improve lives and stimulate economies in Asia. We are glad to be bringing electricity to Asia, just like we did to our own franchised service area here in the South.

Now while we believe we are right on target in executing our long-term strategy, you are well aware that the market is not rewarding that fact.

We are very disappointed — and I personally am very disappointed — in the performance of our stock in recent months. And I’m sure you are too. So I want to discuss with you this morning the market trends we see affecting our industry and Southern Company.

First, many investors still see investing in utility stocks as being similar to investing in bonds. When interest rates are down, they invest in utility stocks ... when interest rates are up, they invest in bonds.

As you know, interest rates recently went up — and I think many investors fear they may go up further — and that has dampened the stock price of many electric utilities in recent weeks.

But that’s only a small part of the explanation.

As you know, electric utility stock prices were also depressed much of last year, primarily because of the concern about the transition occurring in our industry — that is, the movement from a regulated to a deregulated market.

There are many unanswered questions about regulatory changes that might or might not take place, and that has negatively affected our stock price ... as well as the stock price of most utilities.

But there’s another factor affecting our stock price specifically — the purchase of Consolidated Electric Power Asia.

Since we announced we were buying CEPA more than seven months ago, our stock has under-performed the electric utility index.

The reasons are obvious:

· It was a large purchase.

· Some analysts see additional risk in investing in Asia. But we see more opportunity than risk.

· And finally, CEPA is not currently boosting our earnings. Until it produces positive cash flow back to Southern Company in a couple of years, the market is going to take a wait-and-see approach.

We’re not the only electric utility this has happened to. There have been others in recent months who have taken a long-term view, made a significant purchase as a result and then watched their stock price drop.

Again, I want to reiterate that we are doing the things that we set out to do ... the things that we know will make us successful for the long-term.

We said we would be winners first in our traditional service territory — by protecting our franchised business through a relentless effort to drive our costs down and our customer satisfaction up. We are doing both those things.

· Our overall customer satisfaction rating in 1996 was an extraordinary 97%. Among our largest customers, our satisfaction rating averaged 99%.

· The cost of our electricity last year was 16% less than the national average for investor-owned utilities, and we intend to stay well under the national average by continuing to improve our cost structure.

· We also intend to be winners outside the Southeast, and we currently are right on track to achieve our goal of 30% earnings from non-traditional business by 2003.

We’ve planted some good seeds ... our strategy is in place. We see great opportunity before us, and we’re confident we’re on the right course. And we’re glad you’re with us.