ATLANTA – Southern Company (NYSE: SO) Chairman and Chief Executive Bill Dahlberg today reported record third quarter and year-to-date earnings. Dahlberg cited outstanding financial performance from both of Southern Company’s major businesses: its operations in the Southeastern United States and Southern Energy Inc. (NYSE: SOE), a global energy company with operations in Asia, Europe, South America and North America.

Southern Company’s earnings from operations were $668 million, or $1.03 per share, in the third quarter of 2000. That compares with $622 million, or 91 cents per share, during the same period last year -- a 13.2 percent increase in earnings per share.

After charges related to Southern Energy’s transition to becoming a public company and other non-operating items, Southern Company’s reported earnings were $614 million, or 95 cents per share, for the third quarter of 2000. The transition costs amounted to $45 million or 7 cents per share which included a charge of $17 million, or 3 cents per share, related to Southern Energy’s Asian tax planning which changed as a result of the IPO and planned spin-off of Southern Energy. The tax planning involves the repatriation of cash from Asia and will have an impact on Southern Company in each quarter until the planned spin-off of Southern Energy.

Southern Company’s year-to-date earnings from operations for the period ending Sept. 30 were $1.25 billion, or $1.92 per share, compared with $1.16 billion, or $1.68 per share, for the same period last year -- a 14.3 percent increase in earnings per share.

After transition charges related to Southern Energy and other non-operating items, Southern Company’s reported earnings for the year-to-date-period ending Sept. 30 were $1.20 billion, or $1.85 per share, compared with $1.15 billion, or $1.67 per share, for the same period last year.

Southern Company launched an initial public offering of Southern Energy shares on Sept. 27. Total gross proceeds to Southern Energy from the initial public offering and a concurrent securities offering were $1.8 billion.

In the initial public offering priced on Sept. 26, Southern Energy sold 66.7 million shares of common stock, which included 8.7 million shares sold after underwriters exercised an over-allotment option. The 66.7 million shares of common stock represent 19.7 percent of the 338.7 million Southern Energy shares outstanding.

“After our successful IPO, we plan to spin off Southern Company’s remaining ownership of Southern Energy to our shareholders within 6 to 12 months,” Dahlberg said.

Dahlberg reaffirmed Southern Company’s commitment to its financial goals. “We intend to continue our track record of delivering value to shareholders, keeping our promises and building on an already strong platform of credibility,” Dahlberg said. After adjusting for transition costs and the sale of 19.7 percent of Southern Energy, Southern Company expects to earn approximately $2.10 per share in 2000.

In discussing the company’s Southeastern operations, Dahlberg outlined four strategic goals for Southern Company:

• Double the earnings contribution from the company’s competitive generation business in the Southeast over the next 5 years.
• Add significantly to the current base of 4 million retail customers.
• Produce $50 million of annual earnings from new products and services within the next 5 years.
• Continue to evaluate acquisitions that support the company’s growth strategy.

Reviewing operations, Dahlberg said electricity use by retail customers in Southern Company’s traditional service area in the southeastern United States increased 3.8 percent to 115.1 billion kilowatt-hours for the first nine months of 2000. In-home electricity needs were up 3.9 percent to 36.0 billion kilowatt-hours. Electricity consumption by commercial customers – offices, stores and other non-manufacturing firms – rose 5.9 percent to 35.2 billion kilowatt-hours. Industrial energy use increased 2.1 percent to 43.1 billion kilowatt-hours.

Total sales of electricity to Southern Company’s customers in the Southeast, including sales to other utilities, increased 5.6 percent to 134.8 billion kilowatt-hours for the first nine months of 2000.

Southern Company’s e-business presence is expanding rapidly under the three-pronged “e-Customer” initiative: e-Bill, EnergyDirect.com and Online Customer Care. In the first quarter of 2001, customers will be able to pay electric bills and handle service requests online. Large business customers will be able to analyze their energy consumption with EnergyDirect.com, an online energy management tool. Additionally, Southern Company joined 20 other major energy firms to invest in Pantellos, an e-procurement consortium that is planned to launch Jan. 1, 2001.

In conjunction with issuing this earnings announcement, the company has posted on its website a package of detailed financial information on its third quarter performance and a statement regarding its business strategy and goals. These briefing materials are available at http://www.southerncompany.com/site/financial/earnings.asp as of 7:30 a.m. on Monday, Oct. 23.

Southern Company’s financial analyst call will be at 9:30 a.m. EDT on Tuesday, Oct. 24, at which time Dahlberg will discuss third quarter earnings and provide a general business update. Investors, media and the public may listen to a live Internet broadcast of Southern Company’s analyst call by clicking on the audio link at http://www.southerncompany.com/site/financial/earnings.asp.

Southern Company is an international energy company that operates more than 48,000 megawatts of electric generating capacity worldwide. It is the largest producer of electricity in the United States and one of the world’s largest independent power producers. Southern Company subsidiaries and their affiliates serve 12 million retail customers worldwide and millions more through the wholesale market. Based in Atlanta, Southern Company is the parent firm of Alabama Power, Georgia Power, Gulf Power, Mississippi Power, Savannah Electric and Southern Energy.

Southern Company has operations in 12 countries on five continents and has a growing presence in North America outside the Southeast. Southern Company also provides energy-related marketing, risk management and technical services in the United States and Europe and offers Southern LINC wireless telecommunications.

Forward-looking Statements – Third Quarter 2000 Earnings Release

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 the plan to spin off Southern Energy, the outlined four strategic goals for Southern Company and the projected 2000 Southern Company earnings per share. Although Southern Company believes that this forward-looking information is accurate, its business is dependent on various regulatory issues, general economic conditions and future trends, and these factors 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.

The following factors, in addition to those discussed in the company’s Annual Report on Form 10-K for the year ended December 31, 1999, 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 and other laws and regulations to which Southern Company and its subsidiaries are subject, as well as changes in application of existing such laws; current and future litigation, including the EPA civil action against Georgia Power and potentially other of our subsidiaries and the diversity litigation against certain of our subsidiaries; the effects of increased competition in the markets in which Southern Company’s subsidiaries operate; the impact of fluctuations in commodity prices, interest rates and customer demand; 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 the company; the effects of, and changes in, economic conditions in the areas in which Southern Company’s subsidiaries operate; financial market conditions and the results of financing efforts; the timing and acceptance of the company’s new product and service offerings; the ability of Southern Company to obtain additional generating capacity at competitive prices; weather and other natural phenomena; and the ability of Southern Company to meet the conditions for the spin off of Southern Energy, which include regulatory and other approvals.

Southern Company Business Outlook After the Spin-Off of Southern Energy

• We will be focused on three major businesses:
  1. Competitive generation
     • We plan to complete more than 5,500 MW of additional competitive generation by 2004 to serve rapid demand growth in the “super Southeast”. The current construction schedule for competitive generation is as follows:
       2000    640 MW
       2001    433 MW
       2002    1,700 MW
       2003    2,750 MW
       Total    5,523 MW
     • This is in addition to our existing wholesale business that generates about $100 million in net income for our operating companies today.
  2. Products and services for energy consumers
     • We will leverage our existing infrastructure and customer base to deliver additional products and services.
     • Currently this includes Southern Company Energy Solutions, Southern Telecom, and Southern LINC. Examples of current products offered include energy services, outdoor lighting, and access to dark optical fiber.
  3. Our regulated infrastructure businesses
     • Transmission, distribution, and approximately 29,000 MW of regulated generation within our traditional operating companies.
     • Annual demand growth in our service territory expected to be 3 percent
     • Strong customer growth of approximately 2 percent per year
  
  
  
• Goals for our Major Businesses
  1. Double the earnings contribution from the company’s competitive generation business in the southeast over the next five years.
  2. Add significantly to the current base of four million retail customers.
  3. Produce $50 million of annual earnings from new products and services within the next five years.
  4. Continue to evaluate acquisitions that support the company’s growth strategy.
  
  
  
• Financial Goals for the Company
  1. Earnings per Share Growth – approximately 5% annual growth
  2. Return of Equity – top quartile of electric utilities
  3. Dividend Payout – move to 75% gradually over time
  4. Dividend Growth – half of earnings per share growth consistent with our payout objectives
  5. Capital Structure – reach a minimum 38% equity ratio by 2003
  
  
  
• We are targeting strong earnings results in 2001 while maintaining our current annual dividend of $1.34 per share.
  
  Projected Earnings per Share Growth (Southern Energy excluded from all values)
  
   20002001 Competitive Generation0.140.17 Products and Services0.010.02 Regulated Infrastructure1.531.55 Other*0.040.05 Holding Company(0.20)(0.18) Total$1.52$1.60
  
  * Includes the leasing subsidiary previously managed at Southern Energy.
  
  The distribution of these earnings in 2001 should be roughly 35% in the first half and 65% in the second half of the year.
  
  
• Expected Sources and Uses of Funds from 2000 to 2003
  All Values in Billions
  
  Sources  Funds from Operations$10.1 Equity Issuances   1.9 Net Debt and Preferred   2.3  $14.3 Uses  Investments$10.6 Common Dividends   3.7  $14.3

Forward-Looking Statement Disclosure

Note: All of the information contained in this Business Outlook is forward-looking information based on current expectations and plans that involve risks and uncertainties. Although Southern Company believes that this forward-looking information is accurate, its business is dependent on various regulatory issues, general economic conditions and future trends, and these factors 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.

The following factors, in addition to those discussed in the company’s Annual Report on Form 10-K for the year ended December 31, 1999, 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 and other laws and regulations to which Southern Company and its subsidiaries are subject, as well as changes in application of existing such laws; current and future litigation, including the pending EPA civil action against Georgia Power and potentially other of our subsidiaries and the diversity litigation against certain of our subsidiaries; the effects of increased competition in the markets in which Southern Company’s subsidiaries operate; the impact of fluctuations in commodity prices, interest rates and customer demand; 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 the company; the effects of, and changes in, economic conditions in the areas in which Southern Company subsidiaries operate; financial market conditions and the results of financing efforts; the timing and acceptance of the company’s new product and service offerings; the ability of Southern Company to obtain additional generating capacity at competitive prices; weather and other natural phenomena; and the ability of Southern Company to meet the conditions to the spin off of Southern Energy, which include regulatory and other approvals.