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Southern Company Reports Solid 2008 Earnings Despite Weak Economy, Mild Weather
2008 earnings equal to that of 2007
PRNewswire
NYSE: SO
CORRECTION: Total energy sales to Southern Company's customers in the Southeast, including wholesale sales, decreased 2.3 percent in 2008 compared with 2007. ATLANTA, Ga. - Jan. 28 - Southern Company today reported full-year 2008 earnings of $1.74 billion, or $2.26 a share, compared with earnings for 2007 of $1.73 billion, or $2.29 a share. Southern Company also reported fourth quarter earnings of $185.6 million, or 24 cents a share, compared with earnings of $204.1 million, or 27 cents a share, in the fourth quarter of 2007. Earnings for the fourth quarter and year ended Dec. 31, 2008, included charges of 2 cents a share and 11 cents a share, respectively, related to three leveraged leases from the 1990s when Southern Company pursued development of international energy projects. Earnings for the fourth quarter and year ended Dec. 31, 2007, included synthetic fuel earnings of 1 cent per share and 8 cents per share, respectively. Excluding the impact of synthetic fuel investments and charges related to the leveraged leases, Southern Company earned $2.37 a share for the full-year 2008, compared with $2.21 a share for the same period in 2007. Excluding the impact of synthetic fuel investments and charges related to the leveraged leases, earnings for the fourth quarter of 2008 were 26 cents a share, compared with 26 cents a share for the same period in 2007. For most of 2008, the Southeast experienced less of an economic downturn than the rest of the nation. The region is now experiencing the same economic stresses that have been plaguing the rest of the nation for some time, as evidenced in part by the continued decline in electricity sales and usage. "Just as our customers are finding ways to manage through this economic recession, we are working to take the necessary steps to manage costs in our business and maintain the level of customer satisfaction and reliability our customers have come to expect," said CEO David M. Ratcliffe. "While we expect these economic challenges to continue through 2009, we're optimistic that the long-term viability of the region remains strong. We continue to execute our proven business strategy while preparing for the future growth of the Southeast," Ratcliffe said. Positive earnings drivers in 2008 include increased retail rates, revenues from market-response rates offered to commercial and industrial customers, and revenues associated with the recovery of investments in environmental equipment. These positive drivers were primarily offset by the weak economy, mild summer temperatures as compared with 2007, higher non-fuel operations and maintenance expenses, and asset depreciation primarily associated with increased investment in environmental equipment and transmission and distribution equipment. These investments are needed to produce cleaner energy and maintain reliability. Revenues for the full year were $17.13 billion, compared with $15.35 billion in 2007, an 11.6 percent increase. Fourth quarter revenues were $3.80 billion, compared with $3.34 billion in the same period a year earlier, an increase of 13.8 percent. Kilowatt-hour sales to retail customers in Southern Company's four-state service area decreased 2.1 percent in 2008, compared with 2007. Residential energy sales decreased 2.0 percent. Commercial energy sales decreased 0.4 percent. Industrial energy sales declined 3.7 percent. Total energy sales to Southern Company's customers in the Southeast, including wholesale sales, decreased 0.8 percent in 2008 compared with 2007. (see correction at top of page) In conjunction with this earnings announcement, Southern Company has posted on its Web site detailed financial information on its fourth quarter and 2008 performance. These materials are available at www.southerncompany.com. Southern Company's financial analyst call will be at 1 p.m. Eastern time Jan. 28, at which time Ratcliffe and Chief Financial Officer Paul Bowers will discuss earnings and earnings guidance 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 4.4 million customers and more than 42,000 megawatts of generating capacity, Atlanta-based Southern Company is the premier energy company serving the Southeast. A leading U.S. producer of electricity, Southern Company owns electric utilities in four states and a growing competitive generation company, 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 significantly below the national average. Southern Company has been listed the top ranking U.S. electric service provider in customer satisfaction for nine consecutive years by the American Customer Satisfaction Index (ACSI). Visit our Web site at www.southerncompany.com.
Cautionary Note Regarding Forward-Looking Statements:
Southern Company
Financial Highlights
(In Millions of Dollars Except Earnings Per Share)
Three Months Ended Year-to-Date
December December
------------------ ------------
2008 2007 2008 2007
---- ---- ---- ----
Consolidated Earnings-As Reported
(See Notes)
Traditional Operating Companies $183 $202 $1,703 $1,584
Southern Power 20 8 145 132
-- - --- ---
Total 203 210 1,848 1,716
Synthetic Fuels 1 8 (1) 61
Parent Company and Other (18) (14) (105) (43)
--- --- ---- ---
Net Income-As Reported $186 $204 $1,742 $1,734
==== ==== ====== ======
Basic Earnings Per Share - $0.24 $0.27 $2.26 $2.29
Average Shares Outstanding (in
millions) 776 762 771 756
End of Period Shares Outstanding
(in millions) 778 763
Three Months Ended Year-to-Date
December December
------------------ ------------
2008 2007 2008 2007
---- ---- ---- ----
Consolidated
Earnings-Excluding Items
(See Notes)
Net Income - As Reported $186 $204 $1,742 $1,734
Leveraged Lease Adjustments 16 - 83 -
Synthetic Fuels (1) (8) 1 (61)
-- -- - ---
Net Income-Excluding Items $201 $196 $1,826 $1,673
==== ==== ====== ======
Basic Earnings Per
Share-Excluding Items $0.26 $0.26 $2.37 $2.21
Significant Factors Impacting EPS
Three Months Ended Year-to-Date
December December
------------------ ---------------------
2008 2007 Change 2008 2007 Change
---- ---- ------ ---- ---- ------
Consolidated Earnings-
As Reported $0.24 $0.27 $(0.03) $2.26 $2.29 $(0.03)
(See Notes)
Significant Factors:
--------------------
Traditional Operating
Companies (0.03) 0.16
Southern Power 0.01 0.01
Synthetic Fuels (0.01) (0.08)
Parent Company and Other 0.00 (0.08)
Additional Shares 0.00 (0.04)
---- -----
Total-As Reported $(0.03) $(0.03)
====== ======
Three Months Ended Year-to-Date
December December
------------------ ---------------------
2008 2007 Change 2008 2007 Change
---- ---- ------ ---- ---- ------
Consolidated
Earnings-Excluding Items $0.26 $0.26 $0.00 $2.37 $2.21 $0.16
(See Notes)
Total-As Reported (0.03) (0.03)
Leveraged Lease Adjustments 0.02 0.11
Synthetic Fuels 0.01 0.08
---- ----
Total-Excluding Items $0.00 $0.16
===== =====
Notes
-----
- For the three months and twelve months ended December 31, 2008 and
2007, diluted earnings per share are not more than 1 cent per share and
are not material.
- The charges related to Southern Company's investments in leveraged
lease transactions significantly impacted the presentation of earnings
and earnings per share for the three months and twelve months ended
December 31, 2008, and significant charges related to these investments
are not expected to occur on a regular basis.
- Tax credits associated with Southern Company's synthetic fuel
investments expired December 31, 2007. Synthetic fuel related income no
longer materially contributes to Southern Company's earnings or earnings
per share.
- Certain prior year data has been reclassified to conform with current
year presentation.
- Information contained in this report is subject to audit and
adjustments. Certain classifications may be different from final results
published in the Form 10-K.
Southern Company
EPS Earnings Analysis
Year-to-Date December 2008
----- -----------
Cents Description
----- -----------
$0.54 Non-Fuel Revenues
(0.09) Weather Impact on Non-Fuel Revenues
0.02 Other Operating Revenues
0.02 Other Income & Deductions
(0.10) Non-Fuel O&M
(0.16) Depreciation & Amortization
(0.02) Interest Expense
(0.05) Taxes
----- -------------------------------------
$0.16 Total Traditional Operating Companies
----- -------------------------------------
0.01 Southern Power
0.03 Parent and Other (excluding leveraged lease adjustments)
(0.04) Increase in Shares
----- --------------------------------
$0.16 Total Change in YTD EPS (x-Items)
----- ---------------------------------
(0.11) Leveraged Lease Adjustments
(0.08) Synthetic Fuels
------ ------------------------------------
($0.03) Total Change in YTD EPS (As Reported)
------ -------------------------------------
Notes
-----
- The charges related to Southern Company's investments in leveraged
lease transactions significantly impacted the presentation of earnings
and earnings per share for the three months and twelve months ended
December 31, 2008, and significant charges related to these investments
are not expected to occur on a regular basis.
- Tax credits associated with Southern Company's synthetic fuel
investments expired December 31, 2007. Synthetic fuel related income no
longer materially contributes to Southern Company's earnings or earnings
per share.
- Information contained in this report is subject to audit and
adjustments. Certain classifications may be different from final results
published in the Form 10-K.
Southern Company
Consolidated Earnings
(In Millions of Dollars)
Three Months Ended December Year-to-Date December
--------------------------- ---------------------
2008 2007 Change 2008 2007 Change
---- ---- ------ ---- ---- ------
Income Account-
Retail Revenue-
Fuel $1,406 $1,102 $304 $5,912 $5,034 $878
Non-Fuel 1,715 1,602 113 8,143 7,605 538
Wholesale Revenues 520 457 63 2,400 1,988 412
Other Electric Revenues 131 132 (1) 545 514 31
Non-regulated Operating
Revenues 30 47 (17) 127 212 (85)
-- -- --- --- --- ---
Total Revenues 3,802 3,340 462 17,127 15,353 1,774
----- ----- --- ------ ------ -----
Fuel and Purchased
Power 1,738 1,412 326 7,633 6,371 1,262
Non-fuel O & M 1,034 1,036 (2) 3,754 3,670 84
Depreciation and
Amortization 373 316 57 1,443 1,245 198
Taxes Other Than
Income Taxes 194 167 27 797 741 56
--- --- -- --- --- --
Total Operating
Expenses 3,339 2,931 408 13,627 12,027 1,600
----- ----- --- ------ ------ -----
Operating Income 463 409 54 3,500 3,326 174
Other Income, net 18 54 (36) 88 177 (89)
Interest Charges and
Dividends 218 230 (12) 931 934 (3)
Income Taxes 77 29 48 915 835 80
-- ---
NET INCOME (See Notes) $186 $204 $(18) $1,742 $1,734 $8
==== ==== ==== ====== ====== ==
Kilowatt-Hour Sales
(In Millions of KWHs)
Three Months Ended December
---------------------------
Weather
Adjusted
As Reported (See Notes) 2008 2007 Change Change
---- ---- ------ --------
Kilowatt-Hour Sales-
Total Sales 46,107 47,031 -2.0%
Total Retail Sales- 36,001 37,230 -3.3% -2.6%
Residential 11,278 10,914 3.3% 3.2%
Commercial 12,543 12,762 -1.7% 0.1%
Industrial 11,948 13,313 -10.3% -10.0%
Other 232 241 -3.5% -3.7%
Total Wholesale Sales 10,106 9,801 3.1% N/A
Year-to-Date December
---------------------
Weather
Adjusted
As Reported (See Notes) 2008 2007 Change Change
---- ---- ------ --------
Kilowatt-Hour Sales-
Total Sales 202,826 204,360 -0.8%
Total Retail Sales- 160,259 163,614 -2.1% -0.9%
Residential 52,262 53,326 -2.0% 0.0%
Commercial 54,427 54,665 -0.4% 1.0%
Industrial 52,636 54,662 -3.7% -3.5%
Other 934 961 -2.9% -2.7%
Total Wholesale Sales 42,567 40,746 4.5% N/A
Notes
-----
- Certain prior year data has been reclassified to conform with current
year presentation.
- Information contained in this report is subject to audit and
adjustments. Certain classifications may be different from final results
published in the Form 10-K.
Southern Company
Financial Overview
(In Millions of Dollars)
Three Months Ended Year-to-Date
December December
------------------ ---------------------
2008 2007 % Change 2008 2007 % Change
---- ---- -------- ---- ---- --------
Consolidated -
Operating Revenues $3,802 $3,340 13.8% $17,127 $15,353 11.6%
Earnings Before Income
Taxes 263 233 13.2% 2,657 2,569 3.4%
Net Income 186 204 -9.0% 1,742 1,734 0.4%
Alabama Power -
Operating Revenues $1,405 $1,192 17.9% $6,077 $5,360 13.4%
Earnings Before Income
Taxes 136 114 19.0% 1,023 967 5.8%
Net Income Available to
Common 81 71 13.9% 616 580 6.3%
Georgia Power -
Operating Revenues $1,791 $1,627 10.1% $8,412 $7,572 11.1%
Earnings Before Income
Taxes 116 137 -15.9% 1,408 1,260 11.8%
Net Income Available to
Common 77 117 -34.0% 903 836 8.0%
Gulf Power -
Operating Revenues $304 $289 5.3% $1,387 $1,260 10.1%
Earnings Before Income
Taxes 22 14 53.8% 159 135 17.4%
Net Income Available to
Common 14 10 47.5% 98 84 16.9%
Mississippi Power -
Operating Revenues $292 $251 16.4% $1,257 $1,114 12.8%
Earnings Before Income
Taxes 16 7 125.0% 136 138 -1.1%
Net Income Available to
Common 10 4 161.0% 86 84 2.3%
Southern Power -
Operating Revenues $266 $188 41.4% $1,314 $972 35.1%
Earnings Before Income
Taxes 34 11 227.5% 237 215 10.3%
Net Income Available to
Common 20 8 145.5% 144 132 9.7%
Notes
-----
- Certain prior year data has been reclassified to conform with current
year presentation.
- Information contained in this report is subject to audit and
adjustments. Certain classifications may be different from final results
published in the Form 10-K.
Photo: http://www.newscom.com/cgi-bin/prnh/20080801/SOCOLOGO SOURCE: Southern Company Web site: http://www.southerncompany.com/
CORRECTION: Total energy sales to Southern Company's customers in the Southeast, including wholesale sales, decreased 2.3 percent in 2008 compared with 2007. ###
Media Contact: Jason Cuevas, Southern Company Corporate Communications, (+1.404) 506.5333 or (+1.866) 506.5333, media@southerncompany.com
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