Southern Company Reports Second Quarter Earnings

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Jul 27, 2011, 07:30 ET

ATLANTA, July 27, 2011 /PRNewswire/ -- Southern Company (NYSE: SO) today reported second quarter earnings of $603.3 million, or 71 cents a share, compared with $510.2 million, or 62 cents a share, for the same period a year ago.

For the six months ended June 30, Southern Company's earnings were $1.03 billion, or $1.20 a share, compared with $1.00 billion, or $1.22 a share, for the same period a year ago.

Revenues for the second quarter were $4.52 billion, compared with $4.21 billion for the same period a year ago, a 7.5 percent increase. For the first six months of the year, revenues were $8.53 billion, compared with $8.36 billion for the same period last year, a 2.0 percent increase.

Earnings were positively influenced by regulatory actions at Georgia Power that became effective Jan. 1, 2011, including cash recovery of financing costs related to Plant Vogtle units 3 and 4 that is expected to save Georgia Power customers approximately $300 million. Earnings were further positively influenced by continued strength in manufacturing exports, as well as improved results at the company's Southern Power subsidiary.

Earnings were negatively affected by higher depreciation and amortization – including reduced amortization of the cost of removal obligations at Georgia Power that helped offset the need for a rate request in 2009 – as well as an increase in the number of Southern Company outstanding shares.

"The industrial sector continues to lead the economic recovery in the Southeast," said Southern Company Chairman, President and CEO Thomas A. Fanning. "We believe our region is well positioned for future expansion, and we are already seeing new business development in several parts of our service territory. Southern Company will continue to support this expansion by focusing on our core business strategy of exceptional customer satisfaction, industry-leading reliability and prices below the national average."

Kilowatt-hour sales to retail customers in Southern Company's four-state service area increased 1.6 percent in the second quarter of 2011 compared with the second quarter of 2010. Residential electricity sales increased 2.2 percent, while commercial sales decreased 0.4 percent and industrial sales increased 3.3 percent.

Total energy sales to Southern Company's customers in the Southeast, including wholesale sales, increased 1.2 percent in the second quarter of 2011 compared with the same period in 2010.

Southern Company's financial analyst call will begin at 1 p.m. Eastern time today, during which Fanning and Chief Financial Officer Art P. Beattie will discuss earnings and provide a general business update. Investors, media and the public may listen to a live webcast of the call and view associated slides at http://investor.southerncompany.com/events.cfm. A replay of the webcast only will be available at the site for 12 months.

Southern Company has also posted on its website detailed financial information on its second quarter performance. These materials are available at www.southerncompany.com.

With 4.4 million customers and more than 42,000 megawatts of generating capacity, Atlanta-based Southern Company (NYSE: SO) is the premier energy company serving the Southeast. A leading U.S. producer of electricity, Southern Company is the parent firm of electric utilities in four states and a growing competitive generation company, as well as fiber optics and wireless communications companies. Southern Company brands are known for excellent customer service, high reliability and retail electric prices that are below the national average. Southern Company was named the World's Most Admired Electric and Gas Utility by Fortune magazine in 2011, and is consistently listed among the top U.S. electric service providers in customer satisfaction by the American Customer Satisfaction Index. Visit our website at www.southerncompany.com.

Cautionary Note Regarding Forward-Looking Statements:

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 economic recovery and economic growth. 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 December 31, 2010, and subsequent securities filings, could cause actual results to differ materially from management expectations as suggested by such forward-looking information: the impact of recent and future federal and state regulatory changes, 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, coal combustion byproducts, and emissions of sulfur, nitrogen, carbon, soot, particulate matter, hazardous air pollutants, including mercury, and other substances, financial reform legislation, 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 Environmental Protection Agency civil actions against certain Southern Company subsidiaries, Federal Energy Regulatory Commission matters and Internal Revenue Service audits; 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 and recovery from the recent recession, 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 and avoid cost overruns during the development and construction of facilities; investment performance of Southern Company's employee benefit plans and nuclear decommissioning trust funds; 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 other cost recovery mechanisms; regulatory approvals and actions related to the Plant Vogtle expansion, including Georgia Public Service Commission and Nuclear Regulatory Commission approvals and potential U.S. Department of Energy loan guarantees; regulatory approvals and actions related to the integrated coal gasification combined cycle facility in Kemper County, Mississippi, including Mississippi Public Service Commission approvals and potential U.S. Department of Energy loan guarantees; 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 wholesale customers; 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 influenzas, or other similar occurrences; the direct or indirect effects on Southern Company's business resulting from incidents affecting the U.S. electric grid or operation of generating resources; and the effect of accounting pronouncements issued periodically by standard setting bodies. Southern Company expressly disclaims any obligation to update any forward-looking information.

Southern Company
Financial Highlights
*(In Millions of Dollars Except Earnings Per Share)*


	Three Months Ended June				Year-to-Date June
		2011		2010		2011		2010
Consolidated Earnings–As Reported
(See Notes)
Traditional Operating Companies	$	558	$	475	$	943	$	957
Southern Power		45		32		82		46
Total		603		507		1,025		1,003
Parent Company and Other		0		3		1		2
Net Income–As Reported	$	603	$	510	$	1,026	$	1,005

Basic Earnings Per Share	$	0.71	$	0.62	$	1.20	$	1.22


Average Shares Outstanding (in millions)		855		828		851		825
End of Period Shares Outstanding (in millions)						858		831

Notes
- For the three months and six months ended June 30, 2011 and 2010, dilution does not change basic earnings per share by more than 1 cent and is not material.

- 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 and rounding may be different from final results published in the Form 10-Q.

Southern Company

Significant Factors Impacting EPS

Three Months Ended June

Year-to-Date June

2011

2010

Change

2011

2010

Change

Consolidated Earnings Per Share–

As Reported (See Notes)

$0.71

$0.62

$0.09

$1.20

$1.22

($0.02)

Significant Factors:

Traditional Operating Companies

0.09

(0.02)

Southern Power

0.02

0.04

Parent Company and Other

0.00

Additional Shares

(0.02)

(0.04)

Total–As Reported

$0.09

($0.02)

Notes

- For the three months and six months ended June 30, 2011 and 2010, dilution does not change basic earnings per share by more than 1 cent and is not material.

- 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 and rounding may be different from final results published in the Form 10-Q.

Southern Company EPS Earnings Analysis Three Months Ended June 2011
	Cents	Description
	2	Retail Sales

	14	Retail Revenue Impacts

	1	Weather

	(1)	Wholesale Revenues

	1	Other Operating Revenues

	(5)	Depreciation & Amortization

	(2)	Other Income & Deductions

	1	Interest Expense

	(1)	Taxes Other Than Income Taxes

	(1)	Income Taxes

	9	Total Traditional Operating Companies

	2	Southern Power

	(2)	Increase in Shares

	9	Total Change in QTD EPS


Notes
-	Information contained in this report is subject to audit and adjustments. Certain classifications and rounding may be different from final results published in the Form 10-Q.

Southern Company
Consolidated Earnings
*(In Millions of Dollars)*

		Three Months Ended June						Year-to-Date June
		2011		2010		Change		2011		2010		Change
Income Account-
Retail Revenues-
Fuel	$	1,491	$	1,454	$	37	$	2,794	$	2,882	$	(88)
Non-Fuel		2,351		2,117		234		4,444		4,148		296
Wholesale Revenues		507		473		34		956		1,015		(59)
Other Electric Revenues		154		142		12		303		278		25
Non-regulated Operating Revenues		18		21		(3)		36		42		(6)
Total Revenues		4,521		4,207		314		8,533		8,365		168
Fuel and Purchased Power		1,817		1,757		60		3,393		3,529		(136)
Non-fuel O & M		913		918		(5)		1,855		1,827		28
Depreciation and Amortization		429		367		62		848		710		138
Taxes Other Than Income Taxes		227		214		13		447		426		21
Total Operating Expenses		3,386		3,256		130		6,543		6,492		51
Operating Income		1,135		951		184		1,990		1,873		117
Other Income, net		32		42		(10)		69		88		(19)
Interest Charges		199		219		(20)		421		441		(20)
Income Taxes		349		248		101		580		483		97
Net Income		619		526		93		1,058		1,037		21
Dividends on Preferred and Preference Stock of Subsidiaries		16		16		0		32		32		0
NET INCOME AFTER DIVIDENDS ON PREFERRED
AND PREFERENCE STOCK (See Notes)	$	603	$	510	$	93	$	1,026	$	1,005	$	21


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 and rounding may be different from final results published in the Form 10-Q.

Southern Company
Kilowatt-Hour Sales
*(In Millions of KWHs)*

	Three Months Ended June				Year-to-Date June
				Weather				Weather
				Adjusted				Adjusted
As Reported (See Notes)	2011	2010	Change	Change	2011	2010	Change		Change
Kilowatt-Hour Sales-
Total Sales	48,393	47,826	1.2%		93,198	96,285	-3.2%

Total Retail Sales-	40,329	39,676	1.6%	1.5%	78,549	79,446	-1.1%		1.5%
Residential	12,996	12,711	2.2%	1.2%	26,215	27,840	-5.8%		0.1%
Commercial	13,938	13,992	-0.4%	0.0%	26,272	26,743	-1.8%		-0.4%
Industrial	13,160	12,739	3.3%	3.5%	25,590	24,389	4.9%		4.9%
Other	235	234	0.3%	0.1%	472	474	-0.5%		-0.6%

Total Wholesale Sales	8,064	8,150	-1.1%	N/A	14,649	16,839	-13.0%		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 and rounding may be different from final results published in the Form 10-Q.

Southern Company
Financial Overview
*(In Millions of Dollars)*

	Three Months Ended June					Year-to-Date June

		2011		2010	% Change		2011		2010	% Change

Consolidated –
Operating Revenues	$	4,521	$	4,207	7.5%	$	8,533	$	8,365	2.0%
Earnings Before Income Taxes		968		774	25.1%		1,638		1,520	7.7%
Net Income Available to Common		603		510	18.2%		1,026		1,005	2.1%

Alabama Power –
Operating Revenues	$	1,440	$	1,462	-1.5%	$	2,760	$	2,957	-6.7%
Earnings Before Income Taxes		331		319	3.8%		589		654	-9.9%
Net Income Available to Common		190		190	0.0%		342		393	-13.0%

Georgia Power –
Operating Revenues	$	2,265	$	2,000	13.3%	$	4,254	$	3,984	6.8%
Earnings Before Income Taxes		483		359	34.8%		804		694	15.8%
Net Income Available to Common		309		238	29.8%		515		476	8.2%

Gulf Power –
Operating Revenues	$	399	$	403	-1.0%	$	724	$	760	-4.7%
Earnings Before Income Taxes		55		53	3.3%		75		95	-21.2%
Net Income Available to Common		33		32	3.2%		45		58	-21.8%

Mississippi Power –
Operating Revenues	$	286	$	277	3.3%	$	549	$	560	-2.0%
Earnings Before Income Taxes		38		25	54.6%		61		50	20.5%
Net Income Available to Common		25		15	66.1%		40		30	30.9%

Southern Power –
Operating Revenues	$	305	$	248	22.8%	$	587	$	505	16.2%
Earnings Before Income Taxes		69		39	76.1%		127		63	101.5%
Net Income Available to Common		45		32	41.3%		82		46	77.9%




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 and rounding may be different from final results published in the Form 10-Q.