UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 14A
Proxy Statement Pursuant to Section 14(A) of the
Securities Exchange Act Of 1934
Filed by the Registrant x |
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Filed by a Party other than the Registrant o |
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Check the appropriate box:
o | Preliminary Proxy Statement |
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x | Definitive Proxy Statement |
o | Definitive Additional Materials |
o | Soliciting Materials Pursuant to Rule 14a-12 |
THE SOUTHERN COMPANY
(Name of Registrant as Specified In Its Charter)
N/A
(Name of Person(s) Filing Proxy Statement if other than Registrant)
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David M. Ratcliffe Chairman, President and Chief Executive Officer | ||
![]() | ||
Dear Fellow Stockholder: | ||
You are invited to attend the 2009 Annual Meeting of Stockholders at 10:00 a.m., ET, on Wednesday, May 27, 2009 at The Lodge Conference Center at Callaway Gardens, Pine Mountain, Georgia. At the meeting, I will report on our business and our plans for the future. Also, we will elect our Board of Directors and vote on the other matters set forth in the accompanying Notice. Your vote is important. Please review the proxy material and vote your proxy as soon as possible. In other matters, you will notice that your proxy package does not include the 2008 Southern Company Annual Report this year. Your proxy statement contains most of the financial information you normally receive. However, because of the economic and financial challenges affecting us all, we made the decision to eliminate the expense of printing thousands of annual reports. This decision not only reduces our costs, but also adds environmental benefits. Our 2008 Summary Annual Report is posted on our website,www. southerncompany.com, and we invite you to read it there. As always, we are managing the costs in our business to ensure reliable service at competitive prices for our customers, while achieving greater efficiency. We are also continuing to invest capital where it’s needed. | ![]() | |
We remain focused on our proven business strategy of making conservative, informed, and balanced decisions based on common sense. Thank you for your confidence in our company. We look forward to seeing you May 27. ![]() David M. Ratcliffe |
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Highway 18
Pine Mountain, Georgia 31822
(5) | Consider and vote on the stockholder proposals if presented at the meeting as described in Item Nos. 5 and 6 of the Proxy Statement; and |
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Q: | When will the Proxy Statement be mailed? | |
A: | The Proxy Statement will be mailed on or about April 13, 2009. | |
Q: | How do I give voting instructions? | |
A: | You may attend the meeting and give instructions in person or give instructions by the Internet, by telephone, or by mail. Information for giving instructions is on the proxy form. The Proxies, named on the enclosed proxy form, will vote all properly executed proxies that are delivered pursuant to this solicitation and not subsequently revoked in accordance with the instructions given by you. | |
Q: | Can I change my vote? | |
A: | Yes, you may revoke your proxy by submitting a subsequent proxy or by written request received by the Company’s corporate secretary before the meeting. | |
Q: | Who can vote? | |
A: | All stockholders of record on the record date of March 30, 2009. On that date, there were 782,865,285 shares of Southern Company common stock (Common Stock) outstanding and entitled to vote. | |
Q: | How much does each share count? | |
A: | Each share counts as one vote, except votes for Directors may be cumulative. Abstentions that are marked on the proxy form are included for the purpose of determining a quorum, but shares that a broker fails to vote are not counted toward a quorum. Neither is counted for or against the matters being considered; however, abstentions and broker non-votes have the effect of a vote against Item No. 4. | |
Q: | What does it mean if I get more than one proxy form? | |
A: | You will receive a proxy form for each account that you have. Please vote proxies for all accounts to ensure that all your shares are voted. If you wish to consolidate multiple registered accounts, please contact Stockholder Services at(800) 554-7626. | |
Q: | Can the Company’s Proxy Statement be accessed from the Internet? | |
A: | Yes. You can access the Company’s website at www.southerncompany.com to view these documents. | |
Q: | Does the Company offer electronic delivery of proxy materials? | |
A: | Yes. Most stockholders can elect to receive ane-mail that will provide an electronic link to the Proxy Statement, which includes the 2008 Annual Report as an appendix. Opting to receive your proxy materials on-line will save us the cost of producing and mailing documents and also will give you an electronic link to the proxy voting site. |
You may sign up for electronic delivery when you vote your proxy via the Internet or: | ||
n Go to our investor website athttp://investor.southerncompany.com/; | ||
n Click on the words “Electronic Delivery of Proxy Materials”; and | ||
n Follow the directions provided to complete your enrollment. |
Once you enroll for electronic delivery, you will receive proxy materials electronically as long as your account remains active or until you cancel your enrollment. If you consent to electronic access, you will be responsible for your usual Internet-related charges (e.g., on-line fees and telephone charges) in connection with electronic viewing and printing of the Proxy Statement, which includes the 2008 Annual Report as an appendix. The Company will continue to distribute printed materials to stockholders who do not consent to access these materials electronically. | ||
Q: | What is “householding”? | |
A: | Certain beneficial owners of the Common Stock sharing a single address may receive only one copy of the Proxy Statement, which includes the 2008 Annual Report as an appendix, unless the broker, bank, or nominee has received |
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contrary instructions from any beneficial owner at that address. This practice — known as householding — is designed to reduce printing and mailing costs. If a beneficial owner would like to either participate or cancel participation in householding, he or she may contact Stockholder Services at(800) 554-7626 or at 30 Ivan Allen Jr. Boulevard NW, Atlanta, Georgia 30308 and ask to receive a Proxy Statement. As noted earlier, beneficial owners may view the Proxy Statement on the Internet. | ||
Q: | When are stockholder proposals due for the 2010 Annual Meeting of Stockholders? | |
A: | The deadline for the receipt of stockholder proposals to be considered for inclusion in the Company’s proxy materials for the 2010 Annual Meeting of Stockholders is December 10, 2009. Proposals must be submitted in writing to Melissa K. Caen, Assistant Corporate Secretary, Southern Company, 30 Ivan Allen Jr. Boulevard NW, Atlanta, Georgia 30308. Additionally, the proxy solicited by the Board of Directors for next year’s meeting will confer discretionary authority to vote on any stockholder proposal presented at that meeting that is not included in the Company’s proxy materials unless the Company is provided written notice of such proposal no later than February 28, 2010. | |
Q: | Who pays the expense of soliciting proxies? | |
A: | These proxies are being solicited on behalf of the Company’s Board of Directors. The Company pays the cost of soliciting proxies. The officers or other employees of the Company or its subsidiaries may solicit proxies to have a larger representation at the meeting. The Company has retained Laurel Hill Advisory Group to assist with the solicitation of proxies for a fee not to exceed $10,000, plus reimbursement of out-of-pocket expenses. |
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n | Code of Ethics | |
n | Political Contributions Policy and Report | |
n | By-Laws of the Company | |
n | Executive Stock Ownership Guidelines | |
n | Board Committee Charters | |
n | Board of Directors — Background and Experience | |
n | Management Council — Background and Experience | |
n | SEC filings | |
n | Composition of Board Committees | |
n | Link for online communication with Board of Directors |
n | The Director was employed by the Company or the Director’s immediate family member was an executive officer of the Company. | |
n | The Director received, or the Director’s immediate family member received, during any12-month period direct compensation from the Company of more than $120,000, other than director and committee fees. (Compensation received by an immediate family member for services as a non-executive employee of the Company need not be considered.) | |
n | The Director was affiliated with or employed by, or the Director’s immediate family member was affiliated or employed in a professional capacity by, a present or former external auditor of the Company. | |
n | The Director was employed, or the Director’s immediate family member was employed, as an executive officer of a company where any member of the Company’s present executives serve on that company’s compensation committee. |
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n | The Director is a current employee, or the Director’s immediate family member is a current executive officer, of a company that has made payments to, or received payments from, the Company for property or services in an amount which, in any of the last three fiscal years, exceeds the greater of $1,000,000 or two percent of that company’s consolidated gross revenues. |
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Annual retainers: | ||
n | $85,000 cash retainer | |
n | $12,500 if serving as a chair of a committee of the Board | |
n | $12,500 if serving as the Presiding Director of the Board | |
Annual equity grant: | ||
n | $90,000 in deferred Common Stock units until Board membership ends | |
Meeting fees: | ||
n | Meeting fees are not paid for participation in the initial eight meetings of the Board in a calendar year. If more than eight meetings of the Board are held in a calendar year, $2,500 will be paid for participation in each meeting of the Board beginning with the ninth meeting. | |
n | Meeting fees are not paid for participation in a meeting of a committee of the Board. |
• | in Common Stock units, which earn dividends as if invested in Common Stock and are distributed in shares of Common Stock upon leaving the Board; or |
• | at prime interest rate, which is paid in cash upon leaving the Board. |
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Change in | ||||||||||||||||||||||||||||
Pension Value | ||||||||||||||||||||||||||||
Fees | and | |||||||||||||||||||||||||||
Earned | Non-Equity | Nonqualified | ||||||||||||||||||||||||||
or Paid | Stock | Option | Incentive Plan | Deferred | All Other | |||||||||||||||||||||||
in Cash | Awards | Awards | Compensation | Compensation | Compensation | |||||||||||||||||||||||
Name | ($)(1) | ($)(2) | ($) | ($) | Earnings ($) | ($)(3) | Total ($) | |||||||||||||||||||||
Juanita Powell Baranco | 101,916 | 90,000 | — | — | — | 790 | 192,706 | |||||||||||||||||||||
Dorrit J. Bern(4) | 58,168 | 52,500 | — | — | — | — | 110,668 | |||||||||||||||||||||
Francis S. Blake | 91,500 | 90,000 | — | — | — | — | 181,500 | |||||||||||||||||||||
Jon A. Boscia | 94,833 | 92,500 | — | — | — | — | 187,333 | |||||||||||||||||||||
Thomas F. Chapman | 105,042 | 90,000 | — | — | — | — | 195,042 | |||||||||||||||||||||
H. William Habermeyer, Jr. | 104,000 | 90,000 | — | — | — | — | 194,000 | |||||||||||||||||||||
Veronica M. Hagen(5) | — | — | — | — | — | — | — | |||||||||||||||||||||
Warren A. Hood, Jr. | 94,833 | 92,500 | — | — | — | — | 187,333 | |||||||||||||||||||||
Donald M. James | 101,916 | 90,000 | — | — | — | 461 | 192,377 | |||||||||||||||||||||
J. Neal Purcell | 104,000 | 90,000 | — | — | — | — | 194,000 | |||||||||||||||||||||
William G. Smith, Jr. | 101,916 | 90,000 | — | — | — | 2,418 | 194,334 | |||||||||||||||||||||
Gerald J. St. Pé | 89,584 | 90,000 | — | — | — | 6,692 | 186,276 | |||||||||||||||||||||
(1) | Includes amounts voluntarily deferred in the Director Deferred Compensation Plan. | |
(2) | Represents deferred Common Stock units. | |
(3) | Consists of tax“gross-ups” for taxes associated with spousal air travel. | |
(4) | Ms. Bern resigned as a Director of the Company on July 21, 2008. | |
(5) | Ms. Hagen became a Director of the Company on December 8, 2008. |
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Committee Charters |
Audit Committee: | ||
n | Members are Mr. Smith(Chair), Mr. Blake, and Mr. Hood (1) | |
n | Met nine times in 2008 | |
n | Oversees the Company’s financial reporting, audit processes, internal controls, and legal, regulatory, and ethical compliance; appoints the Company’s independent registered public accounting firm, approves its services and fees, and establishes and reviews the scope and timing of its audits; reviews and discusses the Company’s financial statements with management and the independent registered public accounting firm, including critical accounting policies and practices, material alternative financial treatments within generally accepted accounting principles, proposed adjustments, control recommendations, significant management judgments and accounting estimates, new accounting policies, changes in accounting principles, any disagreements with management, and other material written communications between the internal auditorsand/or the independent registered public accounting firm and management; and recommends the filing of the Company’s annual financial statements with the SEC. |
Compensation and Management Succession Committee (Compensation Committee): | ||
n | Members are Mr. Purcell(Chair), Mr. Boscia, Mr. Habermeyer, and Mr. James (1) | |
n | Met seven times in 2008 | |
n | Evaluates performance of executive officers and establishes their compensation, administers executive compensation plans, and reviews management succession plans. Annually reviews a tally sheet of all components of the executive officers’ compensation and takes actions required of it under the Pension Plan for employees of the Company. |
Governance |
• | Considering compensation for the named executive officers in the context of all of the components of total compensation. |
• | Considering annual adjustments to pay over the course of two meetings and requiring more than one meeting to make other important decisions. |
• | Receiving meeting materials several days in advance of meetings. |
• | Having regular executive sessions of Compensation Committee members only. |
• | Having direct access to outside compensation consultants. |
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• | Conducting a performance/payout analysis versus peer companies for the annual incentive program to provide a check on the Company’s goal-setting process. |
Finance Committee: | ||
n | Members are Mr. James (Chair), Mr. Boscia, and Mr. Purcell (1) | |
n | Met eight times in 2008 | |
n | Reviews the Company’s financial matters, recommends actions such as dividend philosophy to the Board, and approves certain capital expenditures. |
Governance Committee: | ||
n | Members are Ms. Baranco (Chair), Mr. Chapman, Ms. Hagen, and Mr. St. Pé (1) | |
n | Met seven times in 2008 | |
n | Oversees the composition of the Board and its committees, determines non-employee Directors’ compensation, maintains the Company’s Corporate Governance Guidelines, and coordinates the performance evaluations of the Board and its committees. |
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Nuclear/Operations Committee:(1) | ||
n | Members are Mr. Habermeyer (Chair), Ms. Baranco, Ms. Hagen, and Mr. St. Pé(2) | |
n | Met eight times in 2008 | |
n | Oversees significant information, activities and events relative to significant operations of the Company including nuclear and other generation facilities, transmission and distribution, fuel, and information technology initiatives. |
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Shares Beneficially Owned Include: | ||||||||||||||||
Shares | ||||||||||||||||
Individuals | ||||||||||||||||
Shares | Have Rights to | |||||||||||||||
Beneficially | Deferred Stock | Acquire within | Shares Held by | |||||||||||||
Directors, Nominees, and Executive Officers | Owned(1) | Units(2) | 60 days(3) | Family Members(4) | ||||||||||||
Juanita Powell Baranco | 15,418 | 14,916 | ||||||||||||||
Francis S. Blake | 22,671 | 22,471 | ||||||||||||||
Jon A. Boscia | 6,616 | 2,616 | ||||||||||||||
W. Paul Bowers | 213,714 | 203,597 | ||||||||||||||
Thomas F. Chapman | 33,799 | 33,799 | ||||||||||||||
Thomas A. Fanning | 372,312 | 366,405 | ||||||||||||||
Michael D. Garrett | 268,388 | 266,372 | ||||||||||||||
H. William Habermeyer, Jr. | 4,172 | 4,172 | ||||||||||||||
Veronica M. Hagen | 0 | |||||||||||||||
Warren A. Hood, Jr. | 8,482 | 8,482 | ||||||||||||||
Donald M. James | 48,214 | 46,214 | ||||||||||||||
Charles D. McCrary | 363,802 | 358,541 | ||||||||||||||
J. Neal Purcell | 34,643 | 28,419 | 224 | |||||||||||||
David M. Ratcliffe | 2,127,139 | 2,109,540 | ||||||||||||||
William G. Smith, Jr. | 18,369 | 14,561 | ||||||||||||||
Gerald J. St. Pé | 101,980 | 48,059 | 8,886 | |||||||||||||
Directors, Nominees, and Executive Officers as a Group (20 people) | 4,410,171 | 223,709 | 4,035,880 | 9,110 | ||||||||||||
(1) | “Beneficial ownership” means the sole or shared power to vote, or to direct the voting of, a security, or investment power with respect to a security, or any combination thereof. |
(2) | Indicates the number of Deferred Stock Units held under the Director Deferred Compensation Plan. | |
(3) | Indicates shares of Common Stock that certain executive officers have the right to acquire within 60 days. Shares indicated are included in the Shares Beneficially Owned column. | |
(4) | Each Director disclaims any interest in shares held by family members. Shares indicated are included in the Shares Beneficially Owned column. |
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![]() | Juanita Powell Baranco Age: Director since: Board committees: Principal occupation: Other directorships: | 60 2006 Governance (chair), Nuclear/Operations Executive vice president and chief operating officer of Baranco Automotive Group, automobile sales Cox Radio, Inc. | ||
![]() | Francis S. Blake Age: Director since: Board committee: Principal occupation: Recent business experience: Other directorships: | 59 2004 Audit Chairman of the board and chief executive officer of The Home Depot Inc., home improvement Served as U.S. Deputy Secretary of Energy from May 2001 to April 2002 and as executive vice president of The Home Depot Inc. until January 2007 when he assumed his current position The Home Depot Inc. | ||
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![]() | Jon A. Boscia Age: Director since: Board committees: Principal occupation: Recent business experience: Other directorships: | 56 2007 Compensation and Management Succession, Finance President of Sun Life Financial Inc., financial services Served as chairman of the board and chief executive officer of Lincoln Financial Group, insurance, institutional investments, comprehensive financial planning and advisory services, until his retirement in 2007. He assumed his current position in September 2008. Armstrong World Industries | ||
![]() | Thomas F. Chapman Age: Director since: Board committee: Principal occupation: Recent business experience: Other directorships: | 65 1999, Presiding Director since May 23, 2007 Governance Retired chairman of the board and chief executive officer of Equifax Inc., information services, data analytics, transaction processing, and consumer financial products Served as chairman of the board and chief executive officer of Equifax Inc. until his retirement in 2005 None | ||
![]() | H. William Habermeyer, Jr. Age: Director since: Board committees: Principal occupation: Recent business experience: Other directorships: | 66 2007 Nuclear/Operations (chair), Compensation and Management Succession Retired president and chief executive officer of Progress Energy Florida, Inc. energy Served as president and chief executive officer of Progress Energy Florida, Inc. until his retirement in 2006 Raymond James Financial Inc., USEC Inc. | ||
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![]() | Veronica M. “Ronee” Hagen Age: Director since: Board committees: Principal occupation: Other directorships: | 63 2008 Governance, Nuclear/Operations Chief executive officer of Polymer Group, Inc., engineered materials Polymer Group, Inc., Newmont Mining Corporation | ||
![]() | Warren A. Hood, Jr. Age: Director since: Board committee: Principal occupation: Other directorships: | 57 2007 Audit Chairman of the board and chief executive officer of Hood Companies Incorporated, packaging and construction products Hood Companies Incorporated, BancorpSouth Bank | ||
![]() | Donald M. James Age: Director since: Board committees: Principal occupation: Other directorships: | 60 1999 Finance (chair), Compensation and Management Succession Chairman of the board and chief executive officer of Vulcan Materials Company, construction materials Vulcan Materials Company, Wells Fargo & Company | ||
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![]() | J. Neal Purcell Age: Director since: Board committees: Principal occupation: Recent business experience: Other directorships: | 67 2003 Compensation and Management Succession (chair), Finance Retired vice-chairman, audit operations, of KPMG, audit and accounting Served as KPMG’s vice-chairman in charge of National Audit Practice Operations from October 1998 until his retirement in 2002 Kaiser Permanente Health Care and Hospitals, Synovus Financial Corp. | ||
![]() | David M. Ratcliffe Age: Director since: Principal occupation: Recent business experience: Other directorships: | 60 2003 Chairman of the board, president and chief executive officer of the Company Served as president and chief executive officer of Georgia Power Company from May 1999 until January 2004 and as chairman and chief executive officer of Georgia Power Company from January 2004 until April 2004. He served as executive vice president of the Company from May 1999 until April 2004, and as president of the Company from April 2004 until July 2004, when he assumed his current position Edison Electric Institute (chair), Nuclear Energy Institute, CSX Corporation, Southern system companies -- Alabama Power Company, Georgia Power Company, and Southern Power Company | ||
![]() | William G. Smith, Jr. Age: Director since: Board committee: Principal occupation: Other directorships: | 55 2006 Audit (chair) Chairman of the board, president and chief executive officer of Capital City Bank Group Incorporated, banking Capital City Bank Group, Inc., Capital City Bank | ||
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![]() | Gerald J. St. Pé Age: Director since: Board committees: Principal occupation: Recent business experience: Other directorships: | 69 1995 Governance, Nuclear/Operations Former president of Ingalls Shipbuilding and retired executive vice president of Litton Industries, shipbuilding Served as chief operating officer of Northrop-Grumman Ship Systems from August 1999 to November 2001 Merchants and Marine Bank, Signal International | ||
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Background of This Item |
Amendments |
• | The By-Laws will be amended to remove provisions about cumulative voting for directors in uncontested elections and |
• | The plurality voting provisions in the By-Laws will be replaced with provisions requiring that, in order to be elected in an uncontested election, a nominee for Director must receive the affirmative vote of a majority of the votes cast at a meeting of stockholders; provided that, in contested elections, the affirmative vote of a plurality of the votes cast will be required to elect a Director. |
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Background of This Item |
Amendment |
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Francis S. Blake
Warren A. Hood, Jr.
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2008 | 2007 | |||||||
(In thousands) | ||||||||
Audit Fees(a) | $ | 12,439 | $ | 12,525 | ||||
Audit-Related Fees(b) | 900 | 913 | ||||||
Tax Fees | 0 | 0 | ||||||
All Other Fees | 0 | 0 | ||||||
Total | $ | 13,339 | $ | 13,438 | ||||
(a) | Includes services performed in connection with financing transactions. | |
(b) | Includes benefit plan and other non-statutory audit services and accounting consultations in both 2008 and 2007. |
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• | Our actual earnings per share (EPS) and business unit performance, which includes return on equity (ROE) or net income, compared to target performance levels established early in the year, determine the ultimate annual incentive program payouts. |
• | Common Stock price changes result in higher or lower ultimate values of stock options. |
• | Our dividend payout and total shareholder return compared to those of our industry peers lead to higher or lower payouts under the Performance Dividend Program (performance dividends). |
Intended Role and What the Element | ||||
Pay Element | Rewards | Why We Use the Element | ||
Base Salary | Base salary is pay for competence in the executive role, with a focus on scope of responsibilities. | Market practice. Provides a threshold level of cash compensation for job performance. | ||
Annual Incentive | The Company’s annual incentive program rewards achievement of operational, EPS, and business unit financial goals. | Market practice. Focuses attention on achievement of short-term goals that ultimately works to fulfill our mission to customers and leads to increased stockholder value in the long term. | ||
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Intended Role and What the Element | ||||
Pay Element | Rewards | Why We Use the Element | ||
Long-Term Incentive: Stock Options | Stock options reward price increases in the Common Stock over the market price on date of grant, over a 10-year term. | Market practice. Performance-based compensation. Aligns executives’ interests with those of stockholders. | ||
Long-Term Incentive: Performance Dividends | Performance dividends provide cash compensation dependent on the number of stock options held at year end, the Common Stock dividends paid during the year, and the four-year total shareholder return versus industry peers. | Market practice. Performance-based compensation. Enhances the value of stock options and focuses executives on maintaining a significant dividend yield for stockholders. Aligns executives’ interests with stockholders’ interests since payouts are dependent on the returns realized by our stockholders versus those of our industry peers. | ||
Relocation Incentive | Lump sum payment of 10% of base salary provides incentive to geographically relocate. | Enhances the value of the relocation program perquisites. | ||
Retirement Benefits | The Southern Company Deferred Compensation Plan provides the opportunity to defer to future years up to 50% of base salary and all or part of annual incentives or performance dividends in either a prime interest rate or Common Stock account. Executives participate in employee benefit plans available to all employees of the Company, including a 401(k) savings plan and the funded Southern Company Pension Plan (Pension Plan). The Supplemental Benefit Plan counts pay, including deferred salary, ineligible to be counted under the Pension Plan and the 401(k) plan due to Internal Revenue Service rules. The Supplemental Executive Retirement Plan counts annual incentive pay above 15% of base salary for pension purposes. | Market practice. Permitting compensation deferral is a cost-effective method of providing additional cash flow to the Company while enhancing the retirement savings of executives. The purpose of these supplemental plans is to eliminate the effect of tax limitations on the payment of retirement benefits. Represents an important component of competitive market-based compensation in both our peer group and in general industry. | ||
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Intended Role and What the Element | ||||
Pay Element | Rewards | Why We Use the Element | ||
Perquisites and Other Personal Benefits | Personal financial planning maximizes the perceived value of our executive compensation program to executives and allows them to focus on Company operations. Home security systems lower our risk of harm to executives. Club memberships are provided primarily for business use. Relocation benefits cover the costs associated with geographic relocations at the request of the employer. | Perquisites benefit both the Company and executives, at low cost to the Company. | ||
Post-Termination Pay | Change-in-control agreements provide severance pay, accelerated vesting, and payment of short- and long-term incentive awards upon a change in control of the Company coupled with involuntary termination not for “Cause” or a voluntary termination for “Good Reason.” | Market practice. Providing protections to senior executives upon a change in control minimizes disruption during a pending or anticipated change in control. Payment and vesting occur only upon the occurrence of both an actual change in control and loss of the executive’s position. | ||
AGL Resources Inc. | Energy East Corporation | Pinnacle West Capital Corporation | ||
Allegheny Energy Corporation | Entergy Corporation | PPL Corporation | ||
Alliant Energy Corporation | Exelon Corporation | Progress Energy, Inc. | ||
Ameren Corporation | FirstEnergy Corp. | Public Service Enterprise Group Inc. | ||
American Electric Power Company, Inc. | FPL Group, Inc. | Puget Energy, Inc. | ||
Atmos Energy Corporation | Integrys Energy Company, Inc. | Reliant Energy, Inc. | ||
Calpine Corporation | MDU Resources, Inc. | Salt River Project | ||
CenterPoint Energy, Inc | Mirant Corporation | SCANA Corporation | ||
CMS Energy Corporation | New York Power Authority | Sempra Energy | ||
Consolidated Edison, Inc. | Nicor, Inc. | Sierra Pacific Resources | ||
Constellation Energy Group, Inc. | Northeast Utilities | Southern Union Company | ||
Dominion Resources Inc. | NRG Energy, Inc. | Tennessee Valley Authority | ||
Duke Energy Corporation | NSTAR | The Williams Companies, Inc. | ||
Dynegy Inc. | OGE Energy Corp. | Wisconsin Energy Corporation | ||
Edison International | Pepco Holdings, Inc. | Xcel Energy Inc. | ||
El Paso Corporation | PG&E Corporation | |||
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Total Target | ||||||||||||||||
Annual | Long-Term | Compensation | ||||||||||||||
Salary | Incentive | Incentive | Opportunity | |||||||||||||
Name | ($) | ($) | ($) | ($) | ||||||||||||
D. M. Ratcliffe | 1,129,467 | 1,129,467 | 5,647,338 | 7,906,272 | ||||||||||||
W. P. Bowers | 565,098 | 423,824 | 683,763 | 1,672,685 | ||||||||||||
T. A. Fanning | 664,685 | 498,514 | 804,269 | 1,967,468 | ||||||||||||
M. D. Garrett | 695,402 | 521,552 | 841,432 | 2,058,386 | ||||||||||||
C. D. McCrary | 662,242 | 496,681 | 801,306 | 1,960,229 | ||||||||||||
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• | Continued industry-leading reliability and customer satisfaction, while maintaining our low retail prices relative to the national average; and |
• | Meeting energy demand with the best economic and environmental choices. |
• | EPS growth; |
• | ROE in the top quartile of comparable electric utilities; |
• | Dividend growth; |
• | Long-term total shareholder return; and |
• | Financial integrity — an attractive risk-adjusted return, sound financial policy, and a stable “A” credit rating. |
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![(CHART)](https://capedge.com/proxy/DEF 14A/0000092122-09-000030/g18321g1832116.gif)
• | Operational goals for 2008 were safety, customer service, plant availability, transmission and distribution system reliability and inclusion. Each of these operational goals is explained in more detail under Goal Details below. The result of all operational goals is averaged and multiplied by the bonus impact of the EPS and business unit financial goals. The amount for each goal can range from 0.90 to 1.10 or can be 0.00 if a threshold performance level is not achieved as more fully described below. The level of achievement for each operational goal is determined and the results are averaged. Each of our business units has operational goals. For Messrs. Garrett and McCrary, the payout is adjusted up or down based on the operational goal results for Georgia Power Company and Alabama Power Company, respectively. For Messrs. Ratcliffe, Bowers, and Fanning, it is calculated using the corporate-wide weighted average of the operational goal results. |
• | EPS is weighted at 50% of the financial goals. EPS is defined as earnings from continuing operations divided by average shares outstanding during the year. The EPS performance measure is applicable to all participants in the Performance Pay Program, including the named executive officers. |
• | Business unit financial performance is weighted at 50% of the financial goals. For our traditional utility operating companies (Alabama Power Company, Georgia Power Company, Gulf Power Company, and Mississippi Power Company), the business unit financial performance goal is ROE, which is defined as the operating company’s net income divided by average equity for the year. For our other business units, we establish financial performance measures that are tailored to each business unit. |
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Level of | Customer | |||||||||||||
Performance | Service | Reliability | Availability | Safety | Inclusion | |||||||||
Maximum (1.10) | Top quartile for each customer segment | Improve historical performance | 2.00 | % | 0.95 | Significant improvement | ||||||||
Target (1.00) | Top quartile overall | Maintain historical performance | 2.75 | % | 1.25 | Improve | ||||||||
Threshold (0.90) | 3rd quartile | Below historical performance | 3.75 | % | 1.50 | Below expectations | ||||||||
0 Trigger | 4th quartile | Significant issues | 6.00 | % | >1.50 | Significant issues | ||||||||
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Payout Below | ||||||||||||||||||||
Payout Factor at | Threshold for | |||||||||||||||||||
EPS, excluding | Associated Level of | Operational | ||||||||||||||||||
Level of | SILO Tax | Payout | Operational Goal | Goal | ||||||||||||||||
Performance | Impacts | ROE | Factor | Achievement | Achievement | |||||||||||||||
Maximum | $2.45 | 14.25 | % | 2.00 | 2.20 | 0.00 | ||||||||||||||
Target | $2.32 | 13.25 | % | 1.00 | 1.00 | 0.00 | ||||||||||||||
Threshold | $2.24 | 11.00 | % | 0.50 | 0.45 | 0.00 | ||||||||||||||
Below threshold | <$2.24 | <11.00 | % | 0.00 | 0.00 | 0.00 | ||||||||||||||
Business Unit | ||||||||||||||||||||||||||
Operational | EPS, | EPS Goal | Financial | Total Weighted | Total | |||||||||||||||||||||
Goal | excluding | Performance | Performance | Financial | Payout | |||||||||||||||||||||
Multiplier | SILO Tax | Factor | Business Unit | Factor | Performance | Factor | ||||||||||||||||||||
Name | (A) | Impacts | (50 % Weight) | Financial Performance | (50% Weight) | Factor (B) | (A x B) | |||||||||||||||||||
D. M. Ratcliffe | 1.07 | $ | 2.37 | 1.54 | Corporate-wide weighted average | 1.24 | 1.39 | 1.49 | ||||||||||||||||||
W. P. Bowers | 1.07 | $ | 2.37 | 1.54 | Corporate-wide weighted average | 1.24 | 1.39 | 1.49 | ||||||||||||||||||
T. A. Fanning | 1.07 | $ | 2.37 | 1.54 | Corporate-wide weighted average | 1.24 | 1.39 | 1.49 | ||||||||||||||||||
M. D. Garrett | 1.08 | $ | 2.37 | 1.54 | 13.56% ROE | 1.31 | 1.42 | 1.54 | ||||||||||||||||||
C. D. McCrary | 1.07 | $ | 2.37 | 1.54 | 13.30% ROE | 1.05 | 1.29 | 1.39 | ||||||||||||||||||
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Target Annual | Actual Annual | |||||||
Name | Incentive Opportunity ($) | Incentive Payout ($) | ||||||
D. M. Ratcliffe | 1,129,467 | 1,682,906 | ||||||
W. P. Bowers | 423,824 | 632,073 | ||||||
T. A. Fanning | 498,514 | 742,786 | ||||||
M. D. Garrett | 521,552 | 803,190 | ||||||
C. D. McCrary | 496,681 | 690,387 | ||||||
Guideline | Average Daily | Number of Stock | ||||||||||||||||||
Name | Guideline % | Salary | Amount | Stock Price | Options Granted | |||||||||||||||
D. M. Ratcliffe | 2,273% of Salary | $ | 1,129,467 | $ | 25,672,785 | $ | 36.50 | 703,280 | ||||||||||||
W. P. Bowers | 550% of Salary | $ | 565,098 | $ | 3,108,039 | $ | 36.50 | 85,151 | ||||||||||||
T. A. Fanning | 550% of Salary | $ | 664,685 | $ | 3,655,768 | $ | 36.50 | 100,158 | ||||||||||||
M. D. Garrett | 550% of Salary | $ | 695,402 | $ | 3,824,711 | $ | 36.50 | 104,786 | ||||||||||||
C. D. McCrary | 550% of Salary | $ | 662,242 | $ | 3,642,331 | $ | 36.50 | 99,789 | ||||||||||||
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Allegheny Energy, Inc. | Exelon Corporation | Progress Energy, Inc. | ||
Alliant Energy Corporation | FirstEnergy Corporation | Public Service Enterprise Group Inc. | ||
Ameren Corporation | FPL Group, Inc. | Puget Energy, Inc. | ||
American Electric Power Company, Inc. | NiSource Inc. | SCANA Corporation | ||
Consolidated Edison, Inc. | NSTAR | Sempra Energy | ||
DTE Energy Company | OGE Energy Corp. | Sierra Pacific Resources | ||
Energy East Corporation | Pepco Holdings, Inc. | Wisconsin Energy Corporation | ||
Entergy Corporation | Pinnacle West Capital Corp. | Xcel Energy Inc. | ||
Payout (% of Each | ||||
Performance vs. Peer Group | Quarterly Dividend Paid) | |||
90th percentile or higher | 100 | % | ||
50th percentile (Target) | 50 | % | ||
10th percentile or lower | 0 | % | ||
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Allegheny Energy, Inc. | Edison International | Progress Energy, Inc. | ||
Alliant Energy Corporation | Energy East Corporation | Public Service Enterprise Group Inc. | ||
Ameren Corporation | Entergy Corporation | Puget Energy, Inc. | ||
American Electric Power Company, Inc. | Exelon Corporation | SCANA Corporation | ||
Aquila, Inc. | FPL Group, Inc. | Sierra Pacific Resources | ||
Avista Corporation | Hawaiian Electric Industries, Inc. | TECO Energy, Inc. | ||
CMS Energy Corporation | NiSource Inc. | UIL Holdings Corporation | ||
Consolidated Edison, Inc. | Northeast Utilities | Unisource Energy Corporation | ||
Dominion Resources Inc. | NSTAR | Vectren Corporation | ||
DPL Inc. | Pepco Holdings, Inc. | Westar Energy, Inc. | ||
DTE Energy Company | PG&E Corporation | Wisconsin Energy Corporation | ||
Duke Energy Corporation | Pinnacle West Capital Corp. | Xcel Energy Inc. | ||
Payout (% of Each | ||||
Performance vs. Peer Group | Quarterly Dividend Paid) | |||
90th percentile or higher | 100 | % | ||
50th percentile (Target) | 50 | % | ||
10th percentile or lower | 0 | % | ||
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Multiple of Salary without | Multiple of Salary Counting | |||
Name | Counting Stock Options | 1/3 of Vested Options | ||
D. M. Ratcliffe | 2.5 Times | 5 Times | ||
W. P. Bowers | 3 Times | 6 Times | ||
T. A. Fanning | 3 Times | 6 Times | ||
M. D. Garrett | 3 Times | 6 Times | ||
C. D. McCrary | 3 Times | 6 Times | ||
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Change in | ||||||||||||||||||||||||||||||||||||
Pension Value | ||||||||||||||||||||||||||||||||||||
and | ||||||||||||||||||||||||||||||||||||
Non-Equity | Nonqualified | |||||||||||||||||||||||||||||||||||
Incentive | Deferred | |||||||||||||||||||||||||||||||||||
Stock | Option | Plan | Compensation | All Other | ||||||||||||||||||||||||||||||||
Name and Principal | Salary | Bonus | Awards | Awards | Compensation | Earnings | Compensation | Total | ||||||||||||||||||||||||||||
Position | Year | ($) | ($) | ($) | ($) | ($) | ($) | ($) | ($) | |||||||||||||||||||||||||||
(a) | (b) | (c) | (d) | (e) | (f) | (g) | (h) | (i) | (j) | |||||||||||||||||||||||||||
David M. Ratcliffe | 2008 | 1,118,090 | — | — | 1,666,774 | 5,267,878 | 1,481,217 | 79,378 | 9,613,337 | |||||||||||||||||||||||||||
Chairman, President, | 2007 | 1,068,268 | — | — | 2,215,880 | 2,901,883 | 4,683,305 | 88,585 | 10,957,921 | |||||||||||||||||||||||||||
& CEO | 2006 | 1,028,471 | — | — | 2,152,767 | 2,563,680 | 2,036,219 | 73,127 | 7,854,264 | |||||||||||||||||||||||||||
W. Paul Bowers | 2008 | 557,476 | 56,510 | — | 201,808 | 1,001,174 | 185,472 | 770,837 | 2,773,277 | |||||||||||||||||||||||||||
Executive Vice | 2007 | 502,366 | — | — | 291,202 | 669,586 | 582,095 | 42,282 | 2,087,531 | |||||||||||||||||||||||||||
President & CFO | 2006 | 480,371 | 24,249 | — | 465,036 | 674,784 | 140,705 | 38,201 | 1,823,346 | |||||||||||||||||||||||||||
Thomas A. Fanning | 2008 | 658,246 | — | — | 237,374 | 1,348,981 | 235,664 | 49,341 | 2,529,606 | |||||||||||||||||||||||||||
Executive Vice | 2007 | 610,624 | — | — | 520,341 | 954,988 | 814,123 | 43,658 | 2,943,734 | |||||||||||||||||||||||||||
President & COO | 2006 | 583,011 | — | — | 551,320 | 939,527 | 357,950 | 43,041 | 2,474,849 | |||||||||||||||||||||||||||
Michael D. Garrett | 2008 | 679,641 | — | — | 248,343 | 1,283,734 | 666,453 | 48,411 | 2,926,582 | |||||||||||||||||||||||||||
President, Georgia | 2007 | 613,731 | — | — | 413,075 | 828,844 | 2,259,654 | 47,440 | 4,162,744 | |||||||||||||||||||||||||||
Power Company | 2006 | 575,100 | 29,288 | — | 391,843 | 967,002 | 880,636 | 47,183 | 2,891,052 | |||||||||||||||||||||||||||
Charles D. McCrary | 2008 | 656,209 | — | — | 236,500 | 1,287,318 | 639,855 | 57,386 | 2,877,268 | |||||||||||||||||||||||||||
President, Alabama | 2007 | 629,961 | — | — | 421,612 | 983,174 | 1,156,038 | 58,132 | 3,248,917 | |||||||||||||||||||||||||||
Power Company | 2006 | 609,407 | — | — | 411,589 | 900,736 | 203,672 | 55,606 | 2,181,010 | |||||||||||||||||||||||||||
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Annual | Performance | |||||||||||
Incentive | Dividends | Total | ||||||||||
Name | ($) | ($) | ($) | |||||||||
D. M. Ratcliffe | 1,682,906 | 3,584,972 | 5,267,878 | |||||||||
W. P. Bowers | 632,073 | 369,101 | 1,001,174 | |||||||||
T. A. Fanning | 742,786 | 606,195 | 1,348,981 | |||||||||
M. D. Garrett | 803,190 | 480,544 | 1,283,734 | |||||||||
C. D. McCrary | 690,387 | 596,931 | 1,287,318 | |||||||||
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• | Discount rate was increased to 6.75% as of December 31, 2008 from 6.3% as of September 30, 2007. | |
• | 15-month measurement period, as described above. |
Above-Market | ||||||||||||||||
Change in | Earnings on Deferred | |||||||||||||||
Pension Value | Compensation | Total | ||||||||||||||
Name | Year | ($) | ($) | ($) | ||||||||||||
D. M. Ratcliffe | 2008 | 1,481,217 | 0 | 1,481,217 | ||||||||||||
2007 | 4,646,301 | 37,004 | 4,683,305 | |||||||||||||
2006 | 2,002,835 | 33,384 | 2,036,219 | |||||||||||||
W. P. Bowers | 2008 | 185,472 | 0 | 185,472 | ||||||||||||
2007 | 577,633 | 4,462 | 582,095 | |||||||||||||
2006 | 136,681 | 4,024 | 140,705 | |||||||||||||
T. A. Fanning | 2008 | 235,664 | 0 | 235,664 | ||||||||||||
2007 | 809,570 | 4,553 | 814,123 | |||||||||||||
2006 | 353,902 | 4,048 | 357,950 | |||||||||||||
M. D. Garrett | 2008 | 666,453 | 0 | 666,453 | ||||||||||||
2007 | 2,250,828 | 8,826 | 2,259,654 | |||||||||||||
2006 | 872,674 | 7,962 | 880,636 | |||||||||||||
C. D. McCrary | 2008 | 639,855 | 0 | 639,855 | ||||||||||||
2007 | 1,150,499 | 5,539 | 1,156,038 | |||||||||||||
2006 | 198,676 | 4,996 | 203,672 | |||||||||||||
Tax | ||||||||||||||||||||
Perquisites | Reimbursements | ESP | SBP | Total | ||||||||||||||||
Name | ($) | ($) | ($) | ($) | ($) | |||||||||||||||
D. M. Ratcliffe | 17,477 | 5,468 | 11,140 | 45,293 | 79,378 | |||||||||||||||
W. P. Bowers | 439,382 | 303,362 | 11,392 | 16,701 | 770,837 | |||||||||||||||
T. A. Fanning | 11,857 | 4,704 | 11,005 | 21,775 | 49,341 | |||||||||||||||
M. D. Garrett | 7,460 | 6,289 | 11,730 | 22,932 | 48,411 | |||||||||||||||
C. D. McCrary | 14,197 | 11,368 | 10,084 | 21,737 | 57,386 | |||||||||||||||
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All Other | ||||||||||||||||||||||||||||||||
Option | Grant Date | |||||||||||||||||||||||||||||||
Awards: | Exercise | Fair | ||||||||||||||||||||||||||||||
Number of | or Base | Value of | ||||||||||||||||||||||||||||||
Estimated Possible Payouts Under | Securities | Price of | Stock and | |||||||||||||||||||||||||||||
Non-Equity Incentive Plan Awards | Underlying | Option | Option | |||||||||||||||||||||||||||||
Grant | Threshold | Target | Maximum | Options | Awards | Awards | ||||||||||||||||||||||||||
Name | Date | ($) | ($) | ($) | (#) | ($/Sh) | ($) | |||||||||||||||||||||||||
(a) | (b) | (c) | (d) | (e) | (f) | (g) | (h) | |||||||||||||||||||||||||
D. M. Ratcliffe | 2/18/2008 | PPP | 508,260 | 1,129,467 | 2,484,827 | 703,280 | 35.78 | 1,666,774 | ||||||||||||||||||||||||
2/18/2008 | PDP | 229,231 | 2,292,314 | 4,584,628 | ||||||||||||||||||||||||||||
W. P. Bowers | 2/18/2008 | PPP | 190,721 | 423,824 | 932,413 | 85,151 | 35.78 | 201,808 | ||||||||||||||||||||||||
2/18/2008 | PDP | 23,601 | 236,012 | 472,024 | ||||||||||||||||||||||||||||
T. A. Fanning | 2/18/2008 | PPP | 224,331 | 498,514 | 1,096,731 | 100,158 | 35.78 | 237,374 | ||||||||||||||||||||||||
2/18/2008 | PDP | 38,762 | 387,615 | 775,230 | ||||||||||||||||||||||||||||
M. D. Garrett | 2/18/2008 | PPP | 234,698 | 521,552 | 1,147,414 | 104,786 | 35.78 | 248,343 | ||||||||||||||||||||||||
2/18/2008 | PDP | 30,727 | 307,271 | 614,541 | ||||||||||||||||||||||||||||
C. D. McCrary | 2/18/2008 | PPP | 223,506 | 496,681 | 1,092,698 | 99,789 | 35.78 | 236,500 | ||||||||||||||||||||||||
2/18/2008 | PDP | 38,169 | 381,692 | 763,383 | ||||||||||||||||||||||||||||
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Stock Options | Performance Dividend | Performance Dividend | Performance Dividend | |||||||||||||
Held as of | Per Option | Per Option | Per Option Paid at | |||||||||||||
December 31, | Paid at Threshold | Paid at Target | Maximum | |||||||||||||
2008 | Performance | Performance | Performance | |||||||||||||
Name | (#) | ($) | ($) | ($) | ||||||||||||
D. M. Ratcliffe | 2,757,671 | 0.083125 | 0.83125 | 1.6625 | ||||||||||||
W. P. Bowers | 283,924 | 0.083125 | 0.83125 | 1.6625 | ||||||||||||
T. A. Fanning | 466,304 | 0.083125 | 0.83125 | 1.6625 | ||||||||||||
M. D. Garrett | 369,649 | 0.083125 | 0.83125 | 1.6625 | ||||||||||||
C. D. McCrary | 459,178 | 0.083125 | 0.83125 | 1.6625 | ||||||||||||
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Stock Awards | ||||||||||||||||||||||
Equity | ||||||||||||||||||||||
Incentive | ||||||||||||||||||||||
Plan | ||||||||||||||||||||||
Option Awards | Equity | Awards: | ||||||||||||||||||||
Equity | Incentive | Market or | ||||||||||||||||||||
Incentive | Plan | Payout Value | ||||||||||||||||||||
Plan | Market | Awards: | of Unearned | |||||||||||||||||||
Awards: | Number of | Value | Number of | Shares, | ||||||||||||||||||
Number of | Number of | Number of | Shares or | of Shares | Unearned | Units | ||||||||||||||||
Securities | Securities | Securities | Units of | or Units | Shares, | or Other | ||||||||||||||||
Underlying | Underlying | Underlying | Stock | of Stock | Units or | Rights | ||||||||||||||||
Unexercised | Unexercised | Unexercised | Option | That | That Have | Other Rights | That Have | |||||||||||||||
Options | Options | Unearned | Exercise | Option | Have Not | Not | That Have | Not | ||||||||||||||
Exercisable | Unexercisable | Options | Price | Expiration | Vested | Vested | Not Vested | Vested | ||||||||||||||
Name | (#) | (#) | (#) | ($) | Date | (#) | ($) | (#) | ($) | |||||||||||||
(a) | (b) | (c) | (d) | (e) | (f) | (g) | (h) | (i) | (j) | |||||||||||||
D. M. Ratcliffe | 92,521 | 0 | — | 25.26 | 02/15/2012 | — | — | — | — | |||||||||||||
82,265 | 0 | 29.50 | 02/13/2014 | |||||||||||||||||||
273,031 | 0 | 29.315 | 08/02/2014 | |||||||||||||||||||
550,000 | 0 | 32.70 | 02/18/2015 | |||||||||||||||||||
345,826 | 172,913 | 33.81 | 02/20/2016 | |||||||||||||||||||
179,279 | 358,556 | 36.42 | 02/19/2017 | |||||||||||||||||||
0 | 703,280 | 35.78 | 02/18/2018 | |||||||||||||||||||
W. P. Bowers | 60,576 | 0 | — | 32.70 | 02/18/2015 | — | — | — | — | |||||||||||||
45,011 | 22,506 | 33.81 | 02/20/2016 | |||||||||||||||||||
23,560 | 47,120 | 36.42 | 02/19/2017 | |||||||||||||||||||
0 | 85,151 | 35.78 | 02/18/2018 | |||||||||||||||||||
T. A. Fanning | 27,314 | 0 | — | 27.975 | 02/14/2013 | — | — | — | — | |||||||||||||
63,215 | 0 | 29.50 | 02/13/2014 | |||||||||||||||||||
80,843 | 0 | 32.70 | 02/18/2015 | |||||||||||||||||||
63,595 | 31,797 | 33.81 | 02/20/2016 | |||||||||||||||||||
33,128 | 66,254 | 36.42 | 02/19/2017 | |||||||||||||||||||
0 | 100,158 | 35.78 | 02/18/2018 | |||||||||||||||||||
M. D. Garrett | 17,806 | 0 | — | 29.50 | 02/13/2014 | — | — | — | — | |||||||||||||
52,376 | 0 | 32.70 | 02/18/2015 | |||||||||||||||||||
62,947 | 31,473 | 33.81 | 02/20/2016 | |||||||||||||||||||
33,421 | 66,840 | 36.42 | 02/19/2017 | |||||||||||||||||||
0 | 104,786 | 35.78 | 02/18/2018 | |||||||||||||||||||
C. D. McCrary | 71,424 | 0 | — | 29.50 | 02/13/2014 | — | — | — | — | |||||||||||||
86,454 | 0 | 32.70 | 02/18/2015 | |||||||||||||||||||
66,119 | 33,059 | 33.81 | 02/20/2016 | |||||||||||||||||||
34,111 | 68,222 | 36.42 | 02/19/2017 | |||||||||||||||||||
0 | 99,789 | 35.78 | 02/18/2018 | |||||||||||||||||||
Year Option Granted | Expiration Date | Date Fully Vested | ||
2006 | February 20, 2016 | February 20, 2009 | ||
2007 | February 19, 2017 | February 19, 2010 | ||
2008 | February 18, 2018 | February 18, 2011 | ||
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Option Awards | Stock Awards | |||||||||||
Number of Shares | Number of Shares | |||||||||||
Acquired on | Value Realized on | Acquired on | Value Realized on | |||||||||
Exercise | Exercise | Vesting | Vesting | |||||||||
Name | (#) | ($) | (#) | ($) | ||||||||
(a) | (b) | (c) | (d) | (e) | ||||||||
D. M. Ratcliffe | 0 | 0 | 0 | 0 | ||||||||
W. P. Bowers | 148,279 | 1,396,033 | 0 | 0 | ||||||||
T. A. Fanning | 15,000 | 137,514 | 0 | 0 | ||||||||
M. D. Garrett | 0 | 0 | 0 | 0 | ||||||||
C. D. McCrary | 0 | 0 | 0 | 0 | ||||||||
Number of | Present Value of | Payments | ||||||||||
Years Credited | Accumulated | During | ||||||||||
Service | Benefit | Last Fiscal Year | ||||||||||
Name | Plan Name | (#) | ($) | ($) | ||||||||
(a) | (b) | (c) | (d) | (e) | ||||||||
D. M. Ratcliffe | Pension Plan | 36.83 | 974,407 | — | ||||||||
Supplemental Benefit Plan (Pension-Related) | 36.83 | 11,314,975 | — | |||||||||
Supplemental Executive Retirement Plan | 36.83 | 3,485,250 | — | |||||||||
Supplemental Pension Agreement | 0 | 0 | ||||||||||
W. P. Bowers | Pension Plan | 28.67 | 455,034 | — | ||||||||
Supplemental Benefit Plan (Pension-Related) | 28.67 | 1,502,158 | — | |||||||||
Supplemental Executive Retirement Plan | 28.67 | 502,073 | — | |||||||||
Supplemental Pension Agreement | 0 | 0 | ||||||||||
T. A. Fanning | Pension Plan | 27.00 | 421,385 | — | ||||||||
Supplemental Benefit Plan (Pension-Related) | 27.00 | 2,027,730 | — | |||||||||
Supplemental Executive Retirement Plan | 27.00 | 655,003 | — | |||||||||
Supplemental Pension Agreement | 0 | 0 | ||||||||||
M. D. Garrett | Pension Plan | 39.75 | 997,963 | — | ||||||||
Supplemental Benefit Plan (Pension-Related) | 39.75 | 4,993,234 | — | |||||||||
Supplemental Executive Retirement Plan | 39.75 | 1,605,911 | — | |||||||||
Supplemental Pension Agreement | 0 | 0 | ||||||||||
C. D. McCrary | Pension Plan | 34.00 | 753,849 | — | ||||||||
Supplemental Benefit Plan (Pension-Related) | 34.00 | 3,597,419 | — | |||||||||
Supplemental Executive Retirement Plan | 34.00 | 1,168,431 | — | |||||||||
Supplemental Pension Agreement | 0 | 0 | ||||||||||
44
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45
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• | Discount rate — 6.75% as of December 31, 2008 |
• | Retirement date — Normal retirement age (65 for all named executive officers) |
• | Mortality after normal retirement — RP2000 Combined Healthy with generational projections |
• | Mortality, withdrawal, disability and retirement rates prior to normal retirement — None |
• | Form of payment for Pension Benefits: |
• | Unmarried retirees: 100% elect a single life annuity | |
• | Married retirees: 20% elect a single life annuity; 40% elect a joint and 50% survivor annuity; and 40% elect a joint and 100% survivor annuity | |
• | Percent married at retirement — 80% of males and 70% of females |
• | Spouse ages — Wives two years younger than their husbands |
• | Incentives earned but unpaid as of the measurement date — 135% of target percentages times base rate of pay for year incentive is earned |
• | Installment determination — 4.75% discount rate for single sum calculation and 6.75% prime rate during installment payment period |
46
Table of Contents
Executive | Registrant | Aggregate | ||||||||||||||||||
Contributions | Contributions | Aggregate Earnings | Withdrawals/ | Aggregate Balance | ||||||||||||||||
in Last FY | in Last FY | in Last FY | Distributions | at Last FYE | ||||||||||||||||
Name | ($) | ($) | ($) | ($) | ($) | |||||||||||||||
(a) | (b) | (c) | (d) | (e) | (f) | |||||||||||||||
D. M. Ratcliffe | 0 | 45,293 | 211,020 | 0 | 9,488,438 | |||||||||||||||
W. P. Bowers | 201,290 | 16,701 | 41,367 | 0 | 1,040,417 | |||||||||||||||
T. A. Fanning | 65,524 | 21,775 | 28,234 | 0 | 1,072,286 | |||||||||||||||
M. D. Garrett | 0 | 22,932 | 51,335 | 0 | 1,305,970 | |||||||||||||||
C. D. McCrary | 0 | 21,737 | 32,387 | 0 | 1,136,398 | |||||||||||||||
47
Table of Contents
Employer Contributions | ||||||||||||
Amounts Deferred under | under the SBP | |||||||||||
the DCP Prior to 2008 | Prior to 2008 and | |||||||||||
and Reported in Prior | Reported in Prior Years’ | |||||||||||
Years’ Proxy Statements | Proxy Statements | Total | ||||||||||
Name | ($) | ($) | ($) | |||||||||
D. M. Ratcliffe | 5,381,881 | 246,788 | 5,628,669 | |||||||||
W. P. Bowers | 86,675 | 12,199 | 98,874 | |||||||||
T. A. Fanning | 772,898 | 82,163 | 855,061 | |||||||||
M. D. Garrett | 0 | 69,996 | 69,996 | |||||||||
C. D. McCrary | 489,924 | 151,114 | 641,038 | |||||||||
• | Retirement or Retirement Eligible — Termination of a named executive officer who is at least 50 years old and has at least 10 years of credited service. |
• | Resignation — Voluntary termination of a named executive officer who is not retirement eligible. |
• | Lay Off — Involuntary termination not for Cause of a named executive officer who is not retirement eligible. |
• | Involuntary Termination — Involuntary termination of a named executive officer for Cause. Cause includes individual performance below minimum performance standards and misconduct, such as violation of the Company’s Drug and Alcohol Policy. |
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Table of Contents
• | Death or Disability — Termination of a named executive officer due to death or disability. |
• | Southern Change in Control I — Acquisition by another entity of 20% or more of Common Stock or, following a merger with another entity, the Company’s stockholders own 65% or less of the entity surviving the merger. |
• | Southern Change in Control II — Acquisition by another entity of 35% or more of Common Stock or, following a merger with another entity, the Company’s stockholders own less than 50% of the entity surviving the merger. |
• | Southern Termination — A merger or other event and the Company is not the surviving company or Common Stock is no longer publicly traded. |
• | Subsidiary Change in Control — Acquisition by another entity, other than another subsidiary of the Company, of 50% or more of the stock of a subsidiary of the Company, a merger with another entity and the subsidiary is not the surviving company, or the sale of substantially all the assets of the subsidiary. |
• | InvoluntaryChange-in-Control Termination or VoluntaryChange-in-Control Termination for Good Reason — Employment is terminated within two years of a change in control, other than for Cause, or the employee voluntarily terminates for Good Reason. Good Reason for voluntary termination within two years of a change in control is generally satisfied when there is a material reduction in salary, incentive compensation opportunity or benefits, relocation of over 50 miles, or a diminution in duties and responsibilities. |
49
Table of Contents
Lay Off | ||||||||||
(Involuntary | Involuntary | |||||||||
Termination | Death or | Termination | ||||||||
Program | Retirement/Retirement Eligible | Not For Cause) | Resignation | Disability | (For Cause) | |||||
Pension Benefit Plans | Benefits payable as described in the notes following the Pension Benefits Table. | Same as Retirement. | Same as Retirement. | Same as Retirement. | Same as Retirement or Resignation, as the case may be. | |||||
Annual Incentive Program | Pro-rated if terminate before 12/31. | Same as Retirement. | Forfeit. | Same as Retirement. | Forfeit. | |||||
Performance Dividend Program | Paid year of retirement plus two additional years. | Forfeit. | Forfeit. | Payable until options expire or exercised. | Forfeit. | |||||
Stock Options | Vest; expire earlier of original expiration date or five years. | Vested options expire in 90 days; unvested are forfeited. | Same as Lay Off. | Vest; expire earlier of original expiration or three years. | Forfeit. | |||||
Financial Planning Perquisite | Continues for one year. | Terminates. | Terminates. | Continues for one year. | Terminates. | |||||
Deferred Compensation Plan (DCP) | Payable per prior elections (lump sum or up to 10 annual installments). | Same as Retirement. | Same as Retirement. | Payable to beneficiary or disabled participant per prior elections; amounts deferred prior to 2005 can be paid as a lump sum per benefits administration committee’s discretion. | Same as Retirement. | |||||
Supplemental Benefit Plan (SBP) — non-pension related | Payable per prior elections (lump sum or up to 20 annual installments). | Same as Retirement. | Same as Retirement. | Same as the Deferred Compensation Plan. | Same as Retirement. | |||||
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Table of Contents
Involuntary | ||||||||
Change-in- | ||||||||
Control-Related | ||||||||
Termination or | ||||||||
Voluntary | ||||||||
Southern | Change-in- | |||||||
Termination or | Control-Related | |||||||
Southern Change | Southern Change | Subsidiary Change | Termination | |||||
Program | in Control I | in Control II | in Control | for Good Reason | ||||
Nonqualified Pension Benefits | All Supplemental Executive Retirement Plan benefits vest if participant vested in tax-qualified pension benefits; otherwise, no impact. SBP-Pension-Related benefits vest for all participants and single sum value of benefits earned to change-in-control date paid following termination or retirement. | Benefits vest for all participants and single sum value of benefits earned to the change-in-control date paid following termination or retirement. | Same as Southern Change in Control II. | Based on type of change-in-control event. | ||||
Annual Incentive Program | If no plan termination; is paid at greater of target or actual performance. If plan terminated within two years of change in control; pro-rated at target performance level. | Same as Southern Change in Control I. | Pro-rated at target performance level. | If not otherwise eligible for payment, if the annual incentive program still in effect, pro-rated at target performance level. | ||||
Performance Dividend Program | If no plan termination; is paid at greater of target or actual performance. If plan terminated within two years of change in control; pro-rated at greater of target or actual performance level. | Same as Southern Change in Control I. | Pro-rated at greater of actual or target performance level. | If not otherwise eligible for payment, if the performance dividend program is still in effect, greater of actual or target performance level for year of severance only. | ||||
Stock Options | Not affected by change-in-control events. | Same as Southern Change in Control I. | Vest and convert to surviving company’s securities; if cannot convert, pay spread in cash; if participant is an employee of a subsidiary, stock options vest upon a Subsidiary Change in Control. | Vest. | ||||
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Table of Contents
Involuntary | ||||||||
Change-in- | ||||||||
Control-Related | ||||||||
Termination or | ||||||||
Voluntary | ||||||||
Southern | Change-in- | |||||||
Termination or | Control-Related | |||||||
Southern Change | Southern Change | Subsidiary Change | Termination | |||||
Program | in Control I | in Control II | in Control | for Good Reason | ||||
Severance Benefits | Not applicable. | Not applicable. | Not applicable. | Three times base salary plus target annual incentive program amount plus tax gross-up if severance amounts exceed Code Section 280G “excess parachute payment” by 10% or more. | ||||
Health Benefits | Not applicable. | Not applicable. | Not applicable. | Up to five years participation in group health plan plus payment of three years’ premium amounts. | ||||
Outplacement Services | Not applicable. | Not applicable. | Not applicable. | Six months. | ||||
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Resignation or | Death | |||||||||||||
Involuntary Retirement | (payments | |||||||||||||
Retirement | (monthly payments) | to a spouse) | ||||||||||||
Name | ($) | ($) | ($) | |||||||||||
D. M. Ratcliffe | Pension Plan | 9,062 | All plans treated as | 4,937 | ||||||||||
Supplemental Benefit Plan | 1,438,814 | retiring | 1,438,814 | |||||||||||
Supplemental Executive Retirement Plan | 443,185 | 443,185 | ||||||||||||
W. P. Bowers | Pension Plan | 4,579 | All plans treated as | 3,873 | ||||||||||
Supplemental Benefit Plan | 241,283 | retiring | 241,283 | |||||||||||
Supplemental Executive Retirement Plan | 80,645 | 80,645 | ||||||||||||
T. A. Fanning | Pension Plan | 4,237 | All plans treated as | 3,646 | ||||||||||
Supplemental Benefit Plan | 326,673 | retiring | 326,673 | |||||||||||
Supplemental Executive Retirement Plan | 105,523 | 105,523 | ||||||||||||
M. D. Garrett | Pension Plan | 9,445 | All plans treated as | 5,359 | ||||||||||
Supplemental Benefit Plan | 659,790 | retiring | 659,790 | |||||||||||
Supplemental Executive Retirement Plan | 212,200 | 212,200 | ||||||||||||
C. D. McCrary | Pension Plan | 7,386 | All plans treated as | 4,648 | ||||||||||
Supplemental Benefit Plan | 514,157 | retiring | 514,157 | |||||||||||
Supplemental Executive Retirement Plan | 166,997 | 166,997 | ||||||||||||
SBP-P | SERP | Total | ||||||||||
Name | ($) | ($) | ($) | |||||||||
D. M. Ratcliffe | 14,388,141 | 4,431,850 | 18,819,991 | |||||||||
W. P. Bowers | 2,412,831 | 806,452 | 3,219,283 | |||||||||
T. A. Fanning | 3,266,730 | 1,055,228 | 4,321,958 | |||||||||
M. D. Garrett | 6,597,901 | 2,122,000 | 8,719,901 | |||||||||
C. D. McCrary | 5,141,567 | 1,669,966 | 6,811,533 | |||||||||
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Total Payable in | ||||||||||||
Total Number of | Cash | |||||||||||
Number of | Options Following | under a Southern | ||||||||||
Options with | Accelerated Vesting | Termination without | ||||||||||
Accelerated | under a Southern | Conversion of Stock | ||||||||||
Name | Vesting (#) | Termination (#) | Options ($) | |||||||||
D. M. Ratcliffe | 1,234,749 | 2,757,671 | 8,991,151 | |||||||||
W. P. Bowers | 154,777 | 283,924 | 620,735 | |||||||||
T. A. Fanning | 198,209 | 466,304 | 1,552,381 | |||||||||
M. D. Garrett | 203,099 | 369,649 | 845,952 | |||||||||
C. D. McCrary | 201,070 | 459,178 | 1,404,906 | |||||||||
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Table of Contents
Severance Amount | ||||
Name | ($) | |||
D. M. Ratcliffe | 6,776,802 | |||
W. P. Bowers | 2,966,766 | |||
T. A. Fanning | 3,489,597 | |||
M. D. Garrett | 3,650,862 | |||
C. D. McCrary | 3,476,771 | |||
55
Table of Contents
Table of Contents
FOR AUDIT AND NON-AUDIT SERVICES
A. | Southern Company (including its subsidiaries) will not engage the independent auditor to perform any services that are prohibited by the Sarbanes-Oxley Act of 2002. It shall further be the policy of the Company not to retain the independent auditor for non-audit services unless there is a compelling reason to do so and such retention is otherwise pre-approved consistent with this policy. Non-audit services that are prohibited include: |
1. | Bookkeeping and other services related to the preparation of accounting records or financial statements of the Company or its subsidiaries. | |
2. | Financial information systems design and implementation. | |
3. | Appraisal or valuation services, fairness opinions, orcontribution-in-kind reports. | |
4. | Actuarial services. | |
5. | Internal audit outsourcing services. | |
6. | Management functions or human resources. | |
7. | Broker or dealer, investment adviser, or investment banking services. | |
8. | Legal services or expert services unrelated to financial statement audits. | |
9. | Any other service that the Public Company Accounting Oversight Board determines, by regulation, is impermissible. |
B. | Effective January 1, 2003, officers of the Company (including its subsidiaries) may not engage the independent auditor to perform any personal services, such as personal financial planning or personal income tax services. |
C. | All audit services (including providing comfort letters and consents in connection with securities issuances) and permissible non-audit services provided by the independent auditor must be pre-approved by the Southern Company Audit Committee. |
D. | Under this Policy, the Audit Committee’s approval of the independent auditor’s annual arrangements letter shall constitute pre-approval for all services covered in the letter. |
E. | By adopting this Policy, the Audit Committee hereby pre-approves the engagement of the independent auditor to provide services related to the issuance of comfort letters and consents required for securities sales by the Company and its subsidiaries and services related to consultation on routine accounting and tax matters. The actual amounts expended for such services each calendar quarter shall be reported to the Committee at a subsequent Committee meeting. |
F. | The Audit Committee also delegates to its Chairman the authority to grant pre-approvals for the engagement of the independent auditor to provide any permissible service up to a limit of $50,000 per engagement. Any engagements pre-approved by the Chairman shall be presented to the full Committee at its next scheduled regular meeting. |
G. | The Southern Company Comptroller shall establish processes and procedures to carry out this Policy. |
December 9, 2002
Table of Contents
Table of Contents
Southern Company Common Stock and Dividend Information | ii | |||
Five-Year Cumulative Performance Graph | ii | |||
Management’s Report on Internal Control over Financial Reporting | C-1 | |||
Report of Independent Registered Public Accounting Firm | C-2 | |||
Management’s Discussion and Analysis of Financial Condition and Results of Operations | C-4 | |||
Quantitative and Qualitative Disclosures about Market Risk | C-36 | |||
Cautionary Statement Regarding Forward-Looking Statements | C-41 | |||
Consolidated Statements of Income | C-42 | |||
Consolidated Statements of Cash Flows | C-43 | |||
Consolidated Balance Sheets | C-44 | |||
Consolidated Statements of Capitalization | C-46 | |||
Consolidated Statements of Common Stockholders’ Equity | C-48 | |||
Consolidated Statements of Comprehensive Income | C-48 | |||
Notes to Financial Statements | C-49 | |||
Selected Consolidated Financial and Operating Data | C-98 | |||
Board of Directors | C-100 | |||
Management Council | C-102 | |||
Stockholder Information | C-104 | |||
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Table of Contents
High | Low | Dividend | ||||||||||
2008 | ||||||||||||
First Quarter | $ | 40.60 | $ | 33.71 | $ | 0.4025 | ||||||
Second Quarter | 37.81 | 34.28 | 0.4200 | |||||||||
Third Quarter | 40.00 | 34.46 | 0.4200 | |||||||||
Fourth Quarter | 38.18 | 29.82 | 0.4200 | |||||||||
2007 | ||||||||||||
First Quarter | $ | 37.25 | $ | 34.85 | $ | 0.3875 | ||||||
Second Quarter | 38.90 | 33.50 | 0.4025 | |||||||||
Third Quarter | 37.70 | 33.16 | 0.4025 | |||||||||
Fourth Quarter | 39.35 | 35.15 | 0.4025 | |||||||||
![(PERFORMANCE GRAPH)](https://capedge.com/proxy/DEF 14A/0000092122-09-000030/g18321g1832119.gif)
ii
David M. Ratcliffe
Chairman, President, and Chief Executive Officer
W. Paul Bowers
Executive Vice President and Chief Financial Officer
C-1
Southern Company
C-2
Atlanta, Georgia
February 25, 2009
C-3
Southern Company and Subsidiary Companies 2008 Annual Report
C-4
Southern Company and Subsidiary Companies 2008 Annual Report
2008 Target | 2008 Actual | |||||||
Key Performance Indicator | Performance | Performance | ||||||
Top quartile in | ||||||||
Customer Satisfaction | customer surveys | Top quartile | ||||||
Peak Season EFOR — fossil/hydro | 2.75% or less | 1.68 | % | |||||
Peak Season EFOR — nuclear | 2.00% or less | 1.98 | % | |||||
Basic EPS | $ | 2.28 — $2.36 | $ | 2.26 | ||||
EPS, excluding leveraged lease charges | — | $ | 2.37 |
C-5
Southern Company and Subsidiary Companies 2008 Annual Report
Increase (Decrease) | ||||||||||||||||
Amount | from Prior Year | |||||||||||||||
2008 | 2008 | 2007 | 2006 | |||||||||||||
(in millions) | ||||||||||||||||
Electric operating revenues | $ | 17,000 | $ | 1,860 | $ | 1,052 | $ | 810 | ||||||||
Fuel | 6,817 | 973 | 701 | 655 | ||||||||||||
Purchased power | 815 | 300 | (28 | ) | (188 | ) | ||||||||||
Other operations and maintenance | 3,584 | 111 | 183 | 70 | ||||||||||||
Depreciation and amortization | 1,414 | 199 | 51 | 27 | ||||||||||||
Taxes other than income taxes | 794 | 56 | 23 | 39 | ||||||||||||
Total electric operating expenses | 13,424 | 1,639 | 930 | 603 | ||||||||||||
Operating income | 3,576 | 221 | 122 | 207 | ||||||||||||
Other income (expense), net | 145 | 24 | 68 | (9 | ) | |||||||||||
Interest expense and dividends | 837 | 25 | 61 | 75 | ||||||||||||
Income taxes | 1,037 | 87 | 1 | 50 | ||||||||||||
Net income | $ | 1,847 | $ | 133 | $ | 128 | $ | 73 | ||||||||
Amount | ||||||||||||
2008 | 2007 | 2006 | ||||||||||
(in millions) | ||||||||||||
Retail — prior year | $ | 12,639 | $ | 11,801 | $ | 11,165 | ||||||
Estimated change in — | ||||||||||||
Rates and pricing | 668 | 161 | 9 | |||||||||
Sales growth | — | 60 | 115 | |||||||||
Weather | (106 | ) | 54 | 35 | ||||||||
Fuel and other cost recovery | 854 | 563 | 477 | |||||||||
Retail — current year | 14,055 | 12,639 | 11,801 | |||||||||
Wholesale revenues | 2,400 | 1,988 | 1,822 | |||||||||
Other electric operating revenues | 545 | 513 | 465 | |||||||||
Electric operating revenues | $ | 17,000 | $ | 15,140 | $ | 14,088 | ||||||
Percent change | 12.3 | % | 7.5 | % | 6.1 | % | ||||||
C-6
Southern Company and Subsidiary Companies 2008 Annual Report
2008 | 2007 | 2006 | ||||||||||
(in millions) | ||||||||||||
Other power sales — | ||||||||||||
Capacity and other | $ | 538 | $ | 533 | $ | 499 | ||||||
Energy | 1,319 | 989 | 841 | |||||||||
Total | $ | 1,857 | $ | 1,522 | $ | 1,340 | ||||||
C-7
Southern Company and Subsidiary Companies 2008 Annual Report
2008 | 2007 | 2006 | ||||||||||
(in millions) | ||||||||||||
Unit power sales — | ||||||||||||
Capacity | $ | 223 | $ | 202 | $ | 208 | ||||||
Energy | 320 | 264 | 274 | |||||||||
Total | $ | 543 | $ | 466 | $ | 482 | ||||||
KWHs | Percent Change | |||||||||||||||
2008 | 2008 | 2007 | 2006 | |||||||||||||
(in billions) | ||||||||||||||||
Residential | 52.3 | (2.0 | )% | 1.8 | % | 2.5 | % | |||||||||
Commercial | 54.4 | (0.4 | ) | 3.2 | 2.2 | |||||||||||
Industrial | 52.7 | (3.7 | ) | (0.7 | ) | (0.2 | ) | |||||||||
Other | 0.9 | (2.9 | ) | 4.4 | (7.6 | ) | ||||||||||
Total retail | 160.3 | (2.1 | ) | 1.4 | 1.4 | |||||||||||
Wholesale | 39.3 | (3.4 | ) | 5.9 | 3.7 | |||||||||||
Total energy sales | 199.6 | (2.3 | ) | 2.3 | 1.9 | |||||||||||
KWHs | Percent Change | |||||||||||||||||||||||
Total | Total | |||||||||||||||||||||||
Quarter Ended | Retail | Wholesale | Energy Sales | Retail | Wholesale | Energy Sales | ||||||||||||||||||
(in millions) | ||||||||||||||||||||||||
March 2008 | 38,576 | 9,590 | 48,166 | 1.4 | % | (1.9 | )% | 0.7 | % | |||||||||||||||
June 2008 | 39,882 | 10,049 | 49,931 | (1.2 | ) | 1.0 | (0.7 | ) | ||||||||||||||||
September 2008 | 45,800 | 10,969 | 56,769 | (4.6 | ) | (2.2 | ) | (4.1 | ) | |||||||||||||||
December 2008 | 36,001 | 8,760 | 44,761 | (3.3 | ) | (10.6 | ) | (4.8 | ) |
C-8
Southern Company and Subsidiary Companies 2008 Annual Report
2008 | 2007 | 2006 | ||||||||||
Total generation(billions of KWHs) | 198 | 206 | 201 | |||||||||
Total purchased power(billions of KWHs) | 11 | 8 | 8 | |||||||||
Sources of generation(percent) — | ||||||||||||
Coal | 68 | 70 | 70 | |||||||||
Nuclear | 15 | 14 | 15 | |||||||||
Gas | 16 | 15 | 13 | |||||||||
Hydro | 1 | 1 | 2 | |||||||||
Cost of fuel, generated(cents per net KWH) — | ||||||||||||
Coal | 3.27 | 2.60 | 2.40 | |||||||||
Nuclear | 0.50 | 0.50 | 0.47 | |||||||||
Gas | 7.58 | 6.64 | 6.63 | |||||||||
Average cost of fuel, generated(cents per net KWH) | 3.52 | 2.89 | 2.63 | |||||||||
Average cost of purchased power(cents per net KWH) | 7.85 | 7.20 | 6.82 | |||||||||
C-9
Southern Company and Subsidiary Companies 2008 Annual Report
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Southern Company and Subsidiary Companies 2008 Annual Report
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Southern Company and Subsidiary Companies 2008 Annual Report
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Southern Company and Subsidiary Companies 2008 Annual Report
Increase (Decrease) | ||||||||||||||||
Amount | from Prior Year | |||||||||||||||
2008 | 2008 | 2007 | 2006 | |||||||||||||
(in millions) | ||||||||||||||||
Operating revenues | $ | 127 | $ | (86 | ) | $ | (55 | ) | $ | (8 | ) | |||||
Other operations and maintenance | 165 | (44 | ) | (29 | ) | (59 | ) | |||||||||
Depreciation and amortization | 29 | (1 | ) | (6 | ) | (3 | ) | |||||||||
Taxes other than income taxes | 3 | — | — | (1 | ) | |||||||||||
Total operating expenses | 197 | (45 | ) | (35 | ) | (63 | ) | |||||||||
Operating income (loss) | (70 | ) | (41 | ) | (20 | ) | 55 | |||||||||
Equity in income (losses) of unconsolidated subsidiaries | 10 | 35 | 35 | 62 | ||||||||||||
Leveraged lease income (losses) | (85 | ) | (125 | ) | (29 | ) | (5 | ) | ||||||||
Other income (expense), net | 12 | (29 | ) | 73 | (19 | ) | ||||||||||
Interest expense | 94 | (28 | ) | (27 | ) | 48 | ||||||||||
Income taxes | (122 | ) | (7 | ) | 53 | 136 | ||||||||||
Net income (loss) | $ | (105 | ) | $ | (125 | ) | $ | 33 | $ | (91 | ) | |||||
C-13
Southern Company and Subsidiary Companies 2008 Annual Report
C-14
Southern Company and Subsidiary Companies 2008 Annual Report
C-15
Southern Company and Subsidiary Companies 2008 Annual Report
C-16
Southern Company and Subsidiary Companies 2008 Annual Report
C-17
Southern Company and Subsidiary Companies 2008 Annual Report
C-18
Southern Company and Subsidiary Companies 2008 Annual Report
C-19
Southern Company and Subsidiary Companies 2008 Annual Report
C-20
Southern Company and Subsidiary Companies 2008 Annual Report
C-21
Southern Company and Subsidiary Companies 2008 Annual Report
C-22
Southern Company and Subsidiary Companies 2008 Annual Report
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Southern Company and Subsidiary Companies 2008 Annual Report
C-24
Southern Company and Subsidiary Companies 2008 Annual Report
C-25
Southern Company and Subsidiary Companies 2008 Annual Report
C-26
Southern Company and Subsidiary Companies 2008 Annual Report
C-27
Southern Company and Subsidiary Companies 2008 Annual Report
C-28
Southern Company and Subsidiary Companies 2008 Annual Report
C-29
Southern Company and Subsidiary Companies 2008 Annual Report
C-30
Southern Company and Subsidiary Companies 2008 Annual Report
C-31
Southern Company and Subsidiary Companies 2008 Annual Report
• | Changes in existing state or federal regulation by governmental authorities having jurisdiction over air quality, water quality, control of toxic substances, hazardous and solid wastes, and other environmental matters. | |
• | Changes in existing income tax regulations or changes in IRS or state revenue department interpretations of existing regulations. | |
• | Identification of additional sites that require environmental remediation or the filing of other complaints in which Southern Company or its subsidiaries may be asserted to be a potentially responsible party. | |
• | Identification and evaluation of other potential lawsuits or complaints in which Southern Company or its subsidiaries may be named as a defendant. | |
• | Resolution or progression of new or existing matters through the legislative process, the court systems, the IRS, the FERC, or the EPA. |
C-32
Southern Company and Subsidiary Companies 2008 Annual Report
C-33
Southern Company and Subsidiary Companies 2008 Annual Report
C-34
Southern Company and Subsidiary Companies 2008 Annual Report
C-35
Southern Company and Subsidiary Companies 2008 Annual Report
C-36
Southern Company and Subsidiary Companies 2008 Annual Report
2008 | 2007 | |||||||
Changes | Changes | |||||||
Fair Value | ||||||||
(in millions) | ||||||||
Contracts outstanding at the beginning of the period, assets (liabilities), net | $ | 4 | $ | (82 | ) | |||
Contracts realized or settled | (150 | ) | 80 | |||||
Current period changes(a) | (139 | ) | 6 | |||||
Contracts outstanding at the end of the period, assets (liabilities), net | $ | (285 | ) | $ | 4 | |||
(a) | Current period changes also include the changes in fair value of new contracts entered into during the period, if any. |
2008 | 2007 | |||||||
(in millions) | ||||||||
Regulatory hedges | $ | (288 | ) | $ | — | |||
Cash flow hedges | (1 | ) | 1 | |||||
Non-accounting hedges | 4 | 3 | ||||||
Total fair value | $ | (285 | ) | $ | 4 | |||
C-37
Southern Company and Subsidiary Companies 2008 Annual Report
December 31, 2008 | ||||||||||||||||
Fair Value Measurements | ||||||||||||||||
Total | Maturity | |||||||||||||||
Fair Value | Year 1 | Years 2&3 | Years 4&5 | |||||||||||||
(in millions) | ||||||||||||||||
Level 1 | $ | — | $ | — | $ | — | $ | — | ||||||||
Level 2 | (285 | ) | (203 | ) | (77 | ) | (5 | ) | ||||||||
Level 3 | — | — | — | — | ||||||||||||
Fair value of contracts outstanding at end of period | $ | (285 | ) | $ | (203 | ) | $ | (77 | ) | $ | (5 | ) | ||||
C-38
Southern Company and Subsidiary Companies 2008 Annual Report
C-39
Southern Company and Subsidiary Companies 2008 Annual Report
2010- | 2012- | After | Uncertain | |||||||||||||||||||||
2009 | 2011 | 2013 | 2013 | Timing(d) | Total | |||||||||||||||||||
(in millions) | ||||||||||||||||||||||||
Long-term debt(a) — | ||||||||||||||||||||||||
Principal | $ | 617 | $ | 1,972 | $ | 2,745 | $ | 12,119 | $ | — | $ | 17,453 | ||||||||||||
Interest | 858 | 1,616 | 1,424 | 11,102 | — | 15,000 | ||||||||||||||||||
Preferred and preference stock dividends(b) | 65 | 130 | 130 | — | — | 325 | ||||||||||||||||||
Other derivative obligations(c) — | ||||||||||||||||||||||||
Energy-related | 224 | 78 | 5 | — | — | 307 | ||||||||||||||||||
Interest | 21 | — | — | — | — | 21 | ||||||||||||||||||
Operating leases | 143 | 212 | 81 | 146 | — | 582 | ||||||||||||||||||
Unrecognized tax benefits and interest(d) | 145 | — | — | — | 16 | 161 | ||||||||||||||||||
Purchase commitments(e) — | ||||||||||||||||||||||||
Capital(f) | 5,467 | 10,644 | — | — | — | 16,111 | ||||||||||||||||||
Limestone(g) | 13 | 70 | 72 | 144 | — | 299 | ||||||||||||||||||
Coal | 4,608 | 5,999 | 2,602 | 3,421 | — | 16,630 | ||||||||||||||||||
Nuclear fuel | 187 | 301 | 275 | 43 | — | 806 | ||||||||||||||||||
Natural gas(h) | 1,507 | 1,609 | 1,242 | 3,798 | — | 8,156 | ||||||||||||||||||
Purchased power | 217 | 455 | 413 | 1,938 | — | 3,023 | ||||||||||||||||||
Long-term service agreements(i) | 85 | 203 | 255 | 1,731 | — | 2,274 | ||||||||||||||||||
Trusts — | ||||||||||||||||||||||||
Nuclear decommissioning | 3 | 7 | 7 | 53 | — | 70 | ||||||||||||||||||
Postretirement benefits(j) | 56 | 116 | — | — | — | 172 | ||||||||||||||||||
Total | $ | 14,216 | $ | 23,412 | $ | 9,251 | $ | 34,495 | $ | 16 | $ | 81,390 | ||||||||||||
(a) | All amounts are reflected based on final maturity dates. Southern Company and its subsidiaries plan to continue to retire higher-cost securities and replace these obligations with lower-cost capital if market conditions permit. Variable rate interest obligations are estimated based on rates as of January 1, 2009, as reflected in the statements of capitalization. Fixed rates include, where applicable, the effects of interest rate derivatives employed to manage interest rate risk. | |
(b) | Preferred and preference stock do not mature; therefore, amounts are provided for the next five years only. | |
(c) | For additional information, see Notes 1 and 6 to the financial statements. | |
(d) | The timing related to the $16 million in unrecognized tax benefits and interest payments in individual years beyond 12 months cannot be reasonably and reliably estimated due to uncertainties in the timing of the effective settlement of tax positions. See Notes 3 and 5 to the financial statements for additional information. | |
(e) | Southern Company generally does not enter into non-cancelable commitments for other operations and maintenance expenditures. Total other operations and maintenance expenses for 2008, 2007, and 2006 were $3.8 billion, $3.7 billion, and $3.5 billion, respectively. | |
(f) | Southern Company forecasts capital expenditures over a three-year period. Amounts represent current estimates of total expenditures excluding those amounts related to contractual purchase commitments for nuclear fuel. At December 31, 2008, significant purchase commitments were outstanding in connection with the construction program. | |
(g) | As part of Southern Company’s program to reduce sulfur dioxide emissions from its coal plants, the traditional operating companies have begun construction of flue gas desulfurization projects and have entered into various long-term commitments for the procurement of limestone to be used in such equipment. | |
(h) | Natural gas purchase commitments are based on various indices at the time of delivery. Amounts reflected have been estimated based on the New York Mercantile Exchange future prices at December 31, 2008. | |
(i) | Long-term service agreements include price escalation based on inflation indices. | |
(j) | Southern Company forecasts postretirement trust contributions over a three-year period. Southern Company expects that the earliest that cash may have to be contributed to the pension trust fund is 2011 and such contribution could be significant; however, projections of the amount vary significantly depending on interpretations of and decisions related to federal legislation passed during 2008 as well as other key variables including future trust fund performance and cannot be determined at this time. Therefore, no amounts related to the pension trust fund are included in the table. See Note 2 to the financial statements for additional information related to the pension and postretirement plans, including estimated benefit payments. Certain benefit payments will be made through the related trusts. Other benefit payments will be made from Southern Company’s corporate assets. |
C-40
Southern Company and Subsidiary Companies 2008 Annual Report
• | 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 and other 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 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; | |
• | the effect of accounting pronouncements issued periodically by standard setting bodies; and | |
• | other factors discussed elsewhere herein and in other reports (including the Form 10-K) filed by the Company from time to time with the SEC. |
C-41
2008 | 2007 | 2006 | ||||||||||
(in millions) | ||||||||||||
Operating Revenues: | ||||||||||||
Retail revenues | $ | 14,055 | $ | 12,639 | $ | 11,801 | ||||||
Wholesale revenues | 2,400 | 1,988 | 1,822 | |||||||||
Other electric revenues | 545 | 513 | 465 | |||||||||
Other revenues | 127 | 213 | 268 | |||||||||
Total operating revenues | 17,127 | 15,353 | 14,356 | |||||||||
Operating Expenses: | ||||||||||||
Fuel | 6,818 | 5,856 | 5,152 | |||||||||
Purchased power | 815 | 515 | 543 | |||||||||
Other operations and maintenance | 3,748 | 3,670 | 3,519 | |||||||||
Depreciation and amortization | 1,443 | 1,245 | 1,200 | |||||||||
Taxes other than income taxes | 797 | 741 | 718 | |||||||||
Total operating expenses | 13,621 | 12,027 | 11,132 | |||||||||
Operating Income | 3,506 | 3,326 | 3,224 | |||||||||
Other Income and (Expense): | ||||||||||||
Allowance for equity funds used during construction | 152 | 106 | 50 | |||||||||
Interest income | 33 | 45 | 41 | |||||||||
Equity in income (losses) of unconsolidated subsidiaries | 11 | (24 | ) | (57 | ) | |||||||
Leveraged lease (losses) income | (85 | ) | 40 | 69 | ||||||||
Impairment loss on equity method investments | — | — | (16 | ) | ||||||||
Interest expense, net of amounts capitalized | (866 | ) | (886 | ) | (866 | ) | ||||||
Preferred and preference dividends of subsidiaries | (65 | ) | (48 | ) | (34 | ) | ||||||
Other income (expense), net | (29 | ) | 10 | (58 | ) | |||||||
Total other income and (expense) | (849 | ) | (757 | ) | (871 | ) | ||||||
Earnings Before Income Taxes | 2,657 | 2,569 | 2,353 | |||||||||
Income taxes | 915 | 835 | 780 | |||||||||
Consolidated Net Income | $ | 1,742 | $ | 1,734 | $ | 1,573 | ||||||
Common Stock Data: | ||||||||||||
Earnings per share— | ||||||||||||
Basic | $ | 2.26 | $ | 2.29 | $ | 2.12 | ||||||
Diluted | 2.25 | 2.28 | 2.10 | |||||||||
Average number of shares of common stock outstanding — (in millions) | ||||||||||||
Basic | 771 | 756 | 743 | |||||||||
Diluted | 775 | 761 | 748 | |||||||||
Cash dividends paid per share of common stock | $ | 1.6625 | $ | 1.595 | $ | 1.535 | ||||||
C-42
2008 | 2007 | 2006 | ||||||||||
(in millions) | ||||||||||||
Operating Activities: | ||||||||||||
Consolidated net income | $ | 1,742 | $ | 1,734 | $ | 1,573 | ||||||
Adjustments to reconcile consolidated net income to net cash provided from operating activities — | ||||||||||||
Depreciation and amortization | 1,704 | 1,486 | 1,421 | |||||||||
Deferred income taxes and investment tax credits | 215 | 7 | 202 | |||||||||
Deferred revenues | 120 | (2 | ) | (1 | ) | |||||||
Allowance for equity funds used during construction | (152 | ) | (106 | ) | (50 | ) | ||||||
Equity in (income) losses of unconsolidated subsidiaries | (11 | ) | 24 | 57 | ||||||||
Leveraged lease losses (income) | 85 | (40 | ) | (69 | ) | |||||||
Pension, postretirement, and other employee benefits | 21 | 39 | 46 | |||||||||
Stock based compensation expense | 20 | 28 | 28 | |||||||||
Derivative fair value adjustments | (1 | ) | (30 | ) | 32 | |||||||
Hedge settlements | 15 | 10 | 13 | |||||||||
Hurricane Katrina grant proceeds-property reserve | — | 60 | — | |||||||||
Other, net | (97 | ) | 60 | 51 | ||||||||
Changes in certain current assets and liabilities — | ||||||||||||
Receivables | (176 | ) | 165 | (69 | ) | |||||||
Fossil fuel stock | (303 | ) | (39 | ) | (246 | ) | ||||||
Materials and supplies | (23 | ) | (71 | ) | 7 | |||||||
Other current assets | (36 | ) | — | 73 | ||||||||
Accounts payable | (74 | ) | 105 | (173 | ) | |||||||
Hurricane Katrina grant proceeds | — | 14 | 120 | |||||||||
Accrued taxes | 293 | (19 | ) | (103 | ) | |||||||
Accrued compensation | 36 | (40 | ) | (24 | ) | |||||||
Other current liabilities | 20 | 10 | (68 | ) | ||||||||
Net cash provided from operating activities | 3,398 | 3,395 | 2,820 | |||||||||
Investing Activities: | ||||||||||||
Property additions | (3,961 | ) | (3,545 | ) | (2,994 | ) | ||||||
Investment in restricted cash from pollution control bonds | (96 | ) | (157 | ) | — | |||||||
Distribution of restricted cash from pollution control bonds | 69 | 78 | — | |||||||||
Nuclear decommissioning trust fund purchases | (720 | ) | (783 | ) | (751 | ) | ||||||
Nuclear decommissioning trust fund sales | 712 | 775 | 743 | |||||||||
Proceeds from property sales | 34 | 33 | 150 | |||||||||
Hurricane Katrina capital grant proceeds | 7 | 35 | 153 | |||||||||
Investment in unconsolidated subsidiaries | (1 | ) | (37 | ) | (64 | ) | ||||||
Cost of removal net of salvage | (123 | ) | (108 | ) | (90 | ) | ||||||
Other | (47 | ) | — | 19 | ||||||||
Net cash used for investing activities | (4,126 | ) | (3,709 | ) | (2,834 | ) | ||||||
Financing Activities: | ||||||||||||
Increase (decrease) in notes payable, net | (314 | ) | (669 | ) | 683 | |||||||
Proceeds — | ||||||||||||
Long-term debt | 3,686 | 3,826 | 1,564 | |||||||||
Preferred and preference stock | — | 470 | 150 | |||||||||
Common stock | 474 | 538 | 137 | |||||||||
Redemptions — | ||||||||||||
Long-term debt | (1,469 | ) | (2,566 | ) | (1,366 | ) | ||||||
Preferred and preference stock | (125 | ) | — | (15 | ) | |||||||
Payment of common stock dividends | (1,280 | ) | (1,205 | ) | (1,140 | ) | ||||||
Other | (28 | ) | (46 | ) | (34 | ) | ||||||
Net cash provided from (used for) financing activities | 944 | 348 | (21 | ) | ||||||||
Net Change in Cash and Cash Equivalents | 216 | 34 | (35 | ) | ||||||||
Cash and Cash Equivalents at Beginning of Year | 201 | 167 | 202 | |||||||||
Cash and Cash Equivalents at End of Year | $ | 417 | $ | 201 | $ | 167 | ||||||
C-43
Assets | 2008 | 2007 | ||||||||||
(in millions) | ||||||||||||
Current Assets: | ||||||||||||
Cash and cash equivalents | $ | 417 | $ | 201 | ||||||||
Restricted cash | 103 | 68 | ||||||||||
Receivables — | ||||||||||||
Customer accounts receivable | 1,054 | 1,000 | ||||||||||
Unbilled revenues | 320 | 294 | ||||||||||
Under recovered regulatory clause revenues | 646 | 716 | ||||||||||
Other accounts and notes receivable | 301 | 348 | ||||||||||
Accumulated provision for uncollectible accounts | (26 | ) | (22 | ) | ||||||||
Fossil fuel stock, at average cost | 1,018 | 710 | ||||||||||
Materials and supplies, at average cost | 757 | 725 | ||||||||||
Vacation pay | 140 | 135 | ||||||||||
Prepaid expenses | 302 | 146 | ||||||||||
Other | 326 | 411 | ||||||||||
Total current assets | 5,358 | 4,732 | ||||||||||
Property, Plant, and Equipment: | ||||||||||||
In service | 50,618 | 47,176 | ||||||||||
Less accumulated depreciation | 18,286 | 17,413 | ||||||||||
32,332 | 29,763 | |||||||||||
Nuclear fuel, at amortized cost | 510 | 336 | ||||||||||
Construction work in progress | 3,036 | 3,228 | ||||||||||
Total property, plant, and equipment | 35,878 | 33,327 | ||||||||||
Other Property and Investments: | ||||||||||||
Nuclear decommissioning trusts, at fair value | 864 | 1,132 | ||||||||||
Leveraged leases | 897 | 984 | ||||||||||
Other | 227 | 238 | ||||||||||
Total other property and investments | 1,988 | 2,354 | ||||||||||
Deferred Charges and Other Assets: | ||||||||||||
Deferred charges related to income taxes | 973 | 910 | ||||||||||
Prepaid pension costs | — | 2,369 | ||||||||||
Unamortized debt issuance expense | 208 | 191 | ||||||||||
Unamortized loss on reacquired debt | 271 | 289 | ||||||||||
Deferred under recovered regulatory clause revenues | 606 | 389 | ||||||||||
Other regulatory assets | 2,637 | 768 | ||||||||||
Other | 428 | 460 | ||||||||||
Total deferred charges and other assets | 5,123 | 5,376 | ||||||||||
Total Assets | $ | 48,347 | $ | 45,789 | ||||||||
C-44
At December 31, 2008 and 2007
Southern Company and Subsidiary Companies 2008 Annual Report
Liabilities and Stockholders’ Equity | 2008 | 2007 | ||||||||||
(in millions) | ||||||||||||
Current Liabilities: | ||||||||||||
Securities due within one year | $ | 617 | $ | 1,178 | ||||||||
Notes payable | 953 | 1,272 | ||||||||||
Accounts payable | 1,250 | 1,214 | ||||||||||
Customer deposits | 302 | 274 | ||||||||||
Accrued taxes — | ||||||||||||
Income taxes | 197 | 52 | ||||||||||
Unrecognized tax benefits | 131 | 165 | ||||||||||
Other | 396 | 330 | ||||||||||
Accrued interest | 196 | 218 | ||||||||||
Accrued vacation pay | 179 | 171 | ||||||||||
Accrued compensation | 447 | 408 | ||||||||||
Liabilities from risk management activities | 261 | 63 | ||||||||||
Other | 297 | 286 | ||||||||||
Total current liabilities | 5,226 | 5,631 | ||||||||||
Long-term Debt(See accompanying statements) | 16,816 | 14,143 | ||||||||||
Deferred Credits and Other Liabilities: | ||||||||||||
Accumulated deferred income taxes | 6,080 | 5,839 | ||||||||||
Deferred credits related to income taxes | 259 | 272 | ||||||||||
Accumulated deferred investment tax credits | 455 | 479 | ||||||||||
Employee benefit obligations | 2,057 | 1,492 | ||||||||||
Asset retirement obligations | 1,183 | 1,200 | ||||||||||
Other cost of removal obligations | 1,321 | 1,308 | ||||||||||
Other regulatory liabilities | 262 | 1,613 | ||||||||||
Other | 330 | 347 | ||||||||||
Total deferred credits and other liabilities | 11,947 | 12,550 | ||||||||||
Total Liabilities | 33,989 | 32,324 | ||||||||||
Preferred and Preference Stock of Subsidiaries(See accompanying statements) | 1,082 | 1,080 | ||||||||||
Common Stockholders’ Equity(See accompanying statements) | 13,276 | 12,385 | ||||||||||
Total Liabilities and Stockholders’ Equity | $ | 48,347 | $ | 45,789 | ||||||||
Commitments and Contingent Matters(See notes) | ||||||||||||
C-45
2008 | 2007 | 2008 | 2007 | |||||||||||||||
(in millions) | (percent of total) | |||||||||||||||||
Long-Term Debt: | ||||||||||||||||||
Long-term debt payable to affiliated trusts — | ||||||||||||||||||
Maturity | Interest Rates | |||||||||||||||||
2042 through 2044 | 5.50% to 5.88% | $ | 412 | $ | 412 | |||||||||||||
Long-term senior notes and debt — | ||||||||||||||||||
Maturity | Interest Rates | |||||||||||||||||
2008 | 2.54% to 7.00% | — | 459 | |||||||||||||||
2009 | 4.10% to 7.00% | 128 | 127 | |||||||||||||||
2010 | 4.70% | 102 | 102 | |||||||||||||||
2011 | 4.00% to 5.57% | 303 | 302 | |||||||||||||||
2012 | 4.85% to 6.25% | 1,778 | 1,478 | |||||||||||||||
2013 | 4.35% to 6.00% | 936 | 236 | |||||||||||||||
2014 through 2048 | 4.88% to 8.20% | 8,437 | 7,824 | |||||||||||||||
Adjustable rates (at 1/1/09): | ||||||||||||||||||
2008 | 4.94% to 5.00% | — | 550 | |||||||||||||||
2009 | 2.3288% to 2.36% | 440 | 440 | |||||||||||||||
2010 | 2.42% to 6.10% | 1,034 | 202 | |||||||||||||||
2011 | 1.645% to 2.35% | 490 | — | |||||||||||||||
Total long-term senior notes and debt | 13,648 | 11,720 | ||||||||||||||||
Other long-term debt — | ||||||||||||||||||
Pollution control revenue bonds — | ||||||||||||||||||
Maturity | Interest Rates | |||||||||||||||||
2016 through 2048 | 1.95% to 6.00% | 2,030 | 812 | |||||||||||||||
Variable rates (at 1/1/09): | ||||||||||||||||||
2011 through 2041 | 0.80% to 3.00% | 1,257 | 2,170 | |||||||||||||||
Total other long-term debt | 3,287 | 2,982 | ||||||||||||||||
Capitalized lease obligations | 106 | 101 | ||||||||||||||||
Unamortized debt premium (discount), net | (20 | ) | (19 | ) | ||||||||||||||
Total long-term debt (annual interest requirement — $858 million) | 17,433 | 15,196 | ||||||||||||||||
Less amount due within one year | 617 | 1,053 | ||||||||||||||||
Long-term debt excluding amount due within one year | 16,816 | 14,143 | 53.9 | % | 51.2 | % | ||||||||||||
C-46
At December 31, 2008 and 2007
Southern Company and Subsidiary Companies 2008 Annual Report
2008 | 2007 | 2008 | 2007 | |||||||||||||||
(in millions) | (percent of total) | |||||||||||||||||
Preferred and Preference Stock of Subsidiaries: | ||||||||||||||||||
Cumulative preferred stock | ||||||||||||||||||
$100 par or stated value — 4.20% to 5.44% | ||||||||||||||||||
Authorized — 20 million shares | ||||||||||||||||||
Outstanding — 1 million shares | 81 | 81 | ||||||||||||||||
$1 par value — 4.95% to 5.83% | ||||||||||||||||||
Authorized — 28 million shares | ||||||||||||||||||
Outstanding — 12 million shares: $25 stated value | 294 | 294 | ||||||||||||||||
Outstanding — 2008: 0 shares | — | 123 | ||||||||||||||||
Outstanding — 2007: 1,250 shares: $100,000 stated capital | ||||||||||||||||||
Non-cumulative preferred stock | ||||||||||||||||||
$25 par value — 6.00% to 6.13% | ||||||||||||||||||
Authorized — 60 million shares | ||||||||||||||||||
Outstanding — 2 million shares | 45 | 45 | ||||||||||||||||
Preference stock | ||||||||||||||||||
Authorized — 65 million shares | ||||||||||||||||||
Outstanding — $1 par value — 5.63% to 6.50% | 343 | 343 | ||||||||||||||||
— 14 million shares (non-cumulative) | ||||||||||||||||||
— $100 par or stated value — 6.00% to 6.50% | 319 | 319 | ||||||||||||||||
— 3 million shares (non-cumulative) | ||||||||||||||||||
Total preferred and preference stock of subsidiaries | ||||||||||||||||||
(annual dividend requirement — $65 million) | 1,082 | 1,205 | ||||||||||||||||
Less amount due within one year | — | 125 | ||||||||||||||||
Preferred and preference stock of subsidiaries excluding amount due within one year | 1,082 | 1,080 | 3.5 | 3.9 | ||||||||||||||
Common Stockholders’ Equity: | ||||||||||||||||||
Common stock, par value $5 per share — | 3,888 | 3,817 | ||||||||||||||||
Authorized — 1 billion shares | ||||||||||||||||||
Issued — 2008: 778 million shares | ||||||||||||||||||
— 2007: 764 million shares | ||||||||||||||||||
Treasury — 2008: 0.4 million shares | ||||||||||||||||||
— 2007: 0.4 million shares | ||||||||||||||||||
Paid-in capital | 1,893 | 1,454 | ||||||||||||||||
Treasury, at cost | (12 | ) | (11 | ) | ||||||||||||||
Retained earnings | 7,612 | 7,155 | ||||||||||||||||
Accumulated other comprehensive income (loss) | (105 | ) | (30 | ) | ||||||||||||||
Total common stockholders’ equity | 13,276 | 12,385 | 42.6 | 44.9 | ||||||||||||||
Total Capitalization | $ | 31,174 | $ | 27,608 | 100.0 | % | 100.0 | % | ||||||||||
C-47
Common Stock | Accumulated | |||||||||||||||||||||||
Par | Paid-In | Retained | Other Comprehensive | |||||||||||||||||||||
Value | Capital | Treasury | Earnings | Income (Loss) | Total | |||||||||||||||||||
(in millions) | ||||||||||||||||||||||||
Balance at December 31, 2005 | $ | 3,759 | $ | 1,085 | $ | (359 | ) | $ | 6,332 | $ | (128 | ) | $ | 10,689 | ||||||||||
Net income | — | — | — | 1,573 | — | 1,573 | ||||||||||||||||||
Other comprehensive income | — | — | — | — | 19 | 19 | ||||||||||||||||||
Adjustment to initially apply FASB Statement No. 158, net of tax | — | — | — | — | 52 | 52 | ||||||||||||||||||
Stock issued | — | 11 | 168 | — | — | 179 | ||||||||||||||||||
Cash dividends | — | — | — | (1,140 | ) | — | (1,140 | ) | ||||||||||||||||
Other | — | — | (1 | ) | — | — | (1 | ) | ||||||||||||||||
Balance at December 31, 2006 | 3,759 | 1,096 | (192 | ) | 6,765 | (57 | ) | 11,371 | ||||||||||||||||
Net income | — | — | — | 1,734 | — | 1,734 | ||||||||||||||||||
Other comprehensive income | — | — | — | — | 27 | 27 | ||||||||||||||||||
Stock issued | 58 | 356 | 183 | — | — | 597 | ||||||||||||||||||
Adjustment to initially apply FIN 48, net of tax | — | — | — | (15 | ) | — | (15 | ) | ||||||||||||||||
Adjustment to initially apply FSP 13-2, net of tax | — | — | — | (125 | ) | — | (125 | ) | ||||||||||||||||
Cash dividends | — | — | — | (1,204 | ) | — | (1,204 | ) | ||||||||||||||||
Other | — | 2 | (2 | ) | — | — | — | |||||||||||||||||
Balance at December 31, 2007 | 3,817 | 1,454 | (11 | ) | 7,155 | (30 | ) | 12,385 | ||||||||||||||||
Net income | — | — | — | 1,742 | — | 1,742 | ||||||||||||||||||
Other comprehensive loss | — | — | — | — | (75 | ) | (75 | ) | ||||||||||||||||
Stock issued | 71 | 438 | — | — | — | 509 | ||||||||||||||||||
Cash dividends | — | — | — | (1,279 | ) | — | (1,279 | ) | ||||||||||||||||
Other | — | 1 | (1 | ) | (6 | ) | — | (6 | ) | |||||||||||||||
Balance at December 31, 2008 | $ | 3,888 | $ | 1,893 | $ | (12 | ) | $ | 7,612 | $ | (105 | ) | $ | 13,276 | ||||||||||
2008 | 2007 | 2006 | ||||||||||
(in millions) | ||||||||||||
Consolidated Net Income | $ | 1,742 | $ | 1,734 | $ | 1,573 | ||||||
Other comprehensive income (loss): | ||||||||||||
Qualifying hedges: | ||||||||||||
Changes in fair value, net of tax of $(19), $(3), and $(5), respectively | (30 | ) | (5 | ) | (8 | ) | ||||||
Reclassification adjustment for amounts included in net income, net of tax of $7, $6, and $-, respectively | 11 | 9 | 1 | |||||||||
Marketable securities: | ||||||||||||
Changes in fair value, net of tax of $(4), $3, and $4, respectively | (7 | ) | 4 | 8 | ||||||||
Reclassification adjustment for amounts included in net income, net of tax of $-, $-, and $-, respectively | — | (1 | ) | — | ||||||||
Pension and other postretirement benefit plans: | ||||||||||||
Benefit plan net gain (loss), net of tax of $(32), $13, and $-, respectively | (51 | ) | 20 | — | ||||||||
Additional prior service costs from amendment to non-qualified pension plans, net of tax of $-, $(2), and $-, respectively | — | (2 | ) | — | ||||||||
Change in additional minimum pension liability, net of tax of $-, $-, and $10, respectively | — | — | 18 | |||||||||
Reclassification adjustment for amounts included in net income, net of tax of $1, $1, and $-, respectively | 2 | 2 | — | |||||||||
Total other comprehensive income (loss) | (75 | ) | 27 | 19 | ||||||||
Consolidated Comprehensive Income | $ | 1,667 | $ | 1,761 | $ | 1,592 | ||||||
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Southern Company and Subsidiary Companies 2008 Annual Report
2008 | 2007 | Note | ||||||||||
(in millions) | ||||||||||||
Deferred income tax charges | $ | 972 | $ | 911 | (a | ) | ||||||
Asset retirement obligations-asset | 236 | 50 | (a | ) | ||||||||
Asset retirement obligations-liability | (5 | ) | (154 | ) | (a | ) | ||||||
Other cost of removal obligations | (1,321 | ) | (1,308 | ) | (a | ) | ||||||
Deferred income tax credits | (260 | ) | (275 | ) | (a | ) | ||||||
Loss on reacquired debt | 271 | 289 | (b | ) | ||||||||
Vacation pay | 140 | 135 | (c | ) | ||||||||
Under recovered regulatory clause revenues | 432 | 371 | (d | ) | ||||||||
Building lease | 48 | 49 | (d | ) | ||||||||
Generating plant outage costs | 45 | 46 | (d | ) | ||||||||
Under recovered storm damage costs | 27 | 43 | (d | ) | ||||||||
Property damage reserves | (97 | ) | (90 | ) | (d | ) | ||||||
Fuel hedging (realized and unrealized) losses | 314 | 25 | (d | ) | ||||||||
Fuel hedging (realized and unrealized) gains | (10 | ) | (20 | ) | (d | ) | ||||||
Other assets | 164 | 88 | (d | ) | ||||||||
Environmental remediation-asset | 67 | 67 | (d | ) | ||||||||
Environmental remediation-liability | (19 | ) | (22 | ) | (d | ) | ||||||
Deferred purchased power | (156 | ) | (20 | ) | (d | ) | ||||||
Other liabilities | (25 | ) | (21 | ) | (d | ) | ||||||
Overfunded retiree benefit plans | — | (1,288 | ) | (e | ) | |||||||
Underfunded retiree benefit plans | 2,068 | 547 | (e | ) | ||||||||
Total assets (liabilities), net | $ | 2,891 | $ | (577 | ) | |||||||
Note: The recovery and amortization periods for these regulatory assets and (liabilities) are as follows: | ||
(a) | Asset retirement and removal liabilities are recorded, deferred income tax assets are recovered, and deferred tax liabilities are amortized over the related property lives, which may range up to 65 years. Asset retirement and removal liabilities will be settled and trued up following completion of the related activities. | |
(b) | Recovered over either the remaining life of the original issue or, if refinanced, over the life of the new issue, which may range up to 50 years. | |
(c) | Recorded as earned by employees and recovered as paid, generally within one year. | |
(d) | Recorded and recovered or amortized as approved by the appropriate state PSCs. | |
(e) | Recovered and amortized over the average remaining service period which may range up to 14 years. See Note 2 for additional information. |
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2008 | 2007 | |||||||
(in millions) | ||||||||
Generation | $ | 26,154 | $ | 23,879 | ||||
Transmission | 7,085 | 6,761 | ||||||
Distribution | 13,856 | 13,134 | ||||||
General | 2,750 | 2,619 | ||||||
Plant acquisition adjustment | 43 | 43 | ||||||
Utility plant in service | 49,888 | 46,436 | ||||||
IT equipment and software | 240 | 230 | ||||||
Communications equipment | 450 | 452 | ||||||
Other | 40 | 58 | ||||||
Other plant in service | 730 | 740 | ||||||
Total plant in service | $ | 50,618 | $ | 47,176 | ||||
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Southern Company and Subsidiary Companies 2008 Annual Report
2008 | 2007 | |||||||
(in millions) | ||||||||
Balance beginning of year | $ | 1,203 | $ | 1,137 | ||||
Liabilities incurred | 4 | 1 | ||||||
Liabilities settled | (4 | ) | (8 | ) | ||||
Accretion | 75 | 74 | ||||||
Cash flow revisions | (93 | ) | (1 | ) | ||||
Balance end of year | $ | 1,185 | $ | 1,203 | ||||
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Plant Farley | Plant Hatch | Plant Vogtle | ||||||||||
(in millions) | ||||||||||||
External trust funds | $ | 404 | $ | 280 | $ | 168 | ||||||
Internal reserves | 26 | — | — | |||||||||
Total | $ | 430 | $ | 280 | $ | 168 | ||||||
Plant Farley | Plant Hatch | Plant Vogtle | ||||||||||
Decommissioning periods: | ||||||||||||
Beginning year | 2037 | 2034 | 2027 | |||||||||
Completion year | 2065 | 2061 | 2051 | |||||||||
(in millions) | ||||||||||||
Site study costs: | ||||||||||||
Radiated structures | $ | 1,060 | $ | 544 | $ | 507 | ||||||
Non-radiated structures | 72 | 46 | 67 | |||||||||
Total | $ | 1,132 | $ | 590 | $ | 574 | ||||||
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Southern Company and Subsidiary Companies 2008 Annual Report
2008 | 2007 | |||||||
(in millions) | ||||||||
Net rentals receivable | $ | 492 | $ | 494 | ||||
Unearned income | (230 | ) | (244 | ) | ||||
Investment in leveraged leases | 262 | 250 | ||||||
Deferred taxes from leveraged leases | (189 | ) | (163 | ) | ||||
Net investment in leveraged leases | $ | 73 | $ | 87 | ||||
2008 | 2007 | 2006 | ||||||||||
(in millions) | ||||||||||||
Pretax leveraged lease income | $ | 14 | $ | 16 | $ | 20 | ||||||
Income tax expense | (6 | ) | (7 | ) | (9 | ) | ||||||
Net leveraged lease income | $ | 8 | $ | 9 | $ | 11 | ||||||
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Southern Company and Subsidiary Companies 2008 Annual Report
2008 | 2007 | |||||||
(in millions) | ||||||||
Net rentals receivable | $ | 1,298 | $ | 1,298 | ||||
Unearned income | (663 | ) | (563 | ) | ||||
Investment in leveraged leases | 635 | 735 | ||||||
Current taxes payable | (120 | ) | — | |||||
Deferred taxes from leveraged leases | (117 | ) | (316 | ) | ||||
Net investment in leveraged leases | $ | 398 | $ | 419 | ||||
2008 | 2007 | 2006 | ||||||||||
(in millions) | ||||||||||||
Pretax leveraged lease income (loss) | $ | (99 | ) | $ | 24 | $ | 49 | |||||
Income tax benefit (expense) | 35 | (8 | ) | (17 | ) | |||||||
Net leveraged lease income (loss) | $ | (64 | ) | $ | 16 | $ | 32 | |||||
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Southern Company and Subsidiary Companies 2008 Annual Report
Carrying Amount | Fair Value | |||||||
(in millions) | ||||||||
Long-term debt: | ||||||||
2008 | $ | 17,327 | $ | 17,114 | ||||
2007 | $ | 15,095 | $ | 14,931 |
Pension and Other | Accumulated Other | |||||||||||||||
Qualifying | Marketable | Postretirement | Comprehensive | |||||||||||||
Hedges | Securities | Benefit Plans | Income (Loss) | |||||||||||||
(in millions) | ||||||||||||||||
Balance at December 31, 2007 | $ | (54 | ) | $ | 13 | $ | 11 | $ | (30 | ) | ||||||
Current period change | (19 | ) | (7 | ) | (49 | ) | (75 | ) | ||||||||
Balance at December 31, 2008 | $ | (73 | ) | $ | 6 | $ | (38 | ) | $ | (105 | ) | |||||
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Southern Company and Subsidiary Companies 2008 Annual Report
2008 | 2007 | |||||||
(in millions) | ||||||||
Change in benefit obligation | ||||||||
Benefit obligation at beginning of year | $ | 5,660 | $ | 5,491 | ||||
Service cost | 182 | 147 | ||||||
Interest cost | 435 | 324 | ||||||
Benefits paid | (324 | ) | (241 | ) | ||||
Plan amendments | — | 50 | ||||||
Actuarial gain | (74 | ) | (111 | ) | ||||
Balance at end of year | 5,879 | 5,660 | ||||||
Change in plan assets | ||||||||
Fair value of plan assets at beginning of year | 7,624 | 6,693 | ||||||
Actual return (loss) on plan assets | (2,234 | ) | 1,153 | |||||
Employer contributions | 27 | 19 | ||||||
Benefits paid | (324 | ) | (241 | ) | ||||
Fair value of plan assets at end of year | 5,093 | 7,624 | ||||||
Funded status at end of year | (786 | ) | 1,964 | |||||
Fourth quarter contributions | — | 5 | ||||||
(Accrued liability) prepaid pension asset | $ | (786 | ) | $ | 1,969 | |||
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Southern Company and Subsidiary Companies 2008 Annual Report
Target | 2008 | 2007 | ||||||||||
Domestic equity | 36 | % | 34 | % | 38 | % | ||||||
International equity | 24 | 23 | 24 | |||||||||
Fixed income | 15 | 14 | 15 | |||||||||
Real estate | 15 | 19 | 16 | |||||||||
Private equity | 10 | 10 | 7 | |||||||||
Total | 100 | % | 100 | % | 100 | % | ||||||
2008 | 2007 | |||||||
(in millions) | ||||||||
Prepaid pension costs | $ | — | $ | 2,369 | ||||
Other regulatory assets | 1,579 | 188 | ||||||
Current liabilities, other | (23 | ) | (21 | ) | ||||
Other regulatory liabilities | — | (1,288 | ) | |||||
Employee benefit obligations | (763 | ) | (379 | ) | ||||
Accumulated other comprehensive income | 54 | (26 | ) | |||||
Prior Service Cost | Net(Gain)Loss | |||||||
(in millions) | ||||||||
Balance at December 31, 2008: | ||||||||
Accumulated other comprehensive income | $ | 12 | $ | 42 | ||||
Regulatory assets | 220 | 1,359 | ||||||
Regulatory liabilities | — | — | ||||||
Total | $ | 232 | $ | 1,401 | ||||
Balance at December 31, 2007: | ||||||||
Accumulated other comprehensive income | $ | 14 | $ | (40 | ) | |||
Regulatory assets | 66 | 122 | ||||||
Regulatory liabilities | 198 | (1,486 | ) | |||||
Total | $ | 278 | $ | (1,404 | ) | |||
Estimated amortization in net periodic pension cost in 2009: | ||||||||
Accumulated other comprehensive income | $ | 2 | $ | — | ||||
Regulatory assets | 33 | 7 | ||||||
Regulatory liabilities | — | — | ||||||
Total | $ | 35 | $ | 7 | ||||
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Southern Company and Subsidiary Companies 2008 Annual Report
Accumulated Other | ||||||||||||
Comprehensive Income | Regulatory Assets | Regulatory Liabilities | ||||||||||
(in millions) | ||||||||||||
Balance at December 31, 2006 | $ | — | $ | 158 | $ | (507 | ) | |||||
Net gain | (28 | ) | — | (753 | ) | |||||||
Change in prior service costs | 4 | 46 | — | |||||||||
Reclassification adjustments: | ||||||||||||
Amortization of prior service costs | (2 | ) | (7 | ) | (28 | ) | ||||||
Amortization of net gain | — | (9 | ) | — | ||||||||
Total reclassification adjustments | (2 | ) | (16 | ) | (28 | ) | ||||||
Total change | (26 | ) | 30 | (781 | ) | |||||||
Balance at December 31, 2007 | (26 | ) | 188 | (1,288 | ) | |||||||
Net loss | 83 | 1,412 | 1,322 | |||||||||
Change in prior service costs | — | — | — | |||||||||
Reclassification adjustments: | ||||||||||||
Amortization of prior service costs | (2 | ) | (10 | ) | (34 | ) | ||||||
Amortization of net gain | (1 | ) | (11 | ) | — | |||||||
Total reclassification adjustments | (3 | ) | (21 | ) | (34 | ) | ||||||
Total change | 80 | 1,391 | 1,288 | |||||||||
Balance at December 31, 2008 | $ | 54 | $ | 1,579 | $ | — | ||||||
2008 | 2007 | 2006 | ||||||||||
(in millions) | ||||||||||||
Service cost | $ | 146 | $ | 147 | $ | 153 | ||||||
Interest cost | 348 | 324 | 300 | |||||||||
Expected return on plan assets | (525 | ) | (481 | ) | (456 | ) | ||||||
Recognized net loss | 9 | 10 | 16 | |||||||||
Net amortization | 37 | 35 | 26 | |||||||||
Net periodic pension cost | $ | 15 | $ | 35 | $ | 39 | ||||||
Benefit Payments | ||||
(in millions) | ||||
2009 | $ | 289 | ||
2010 | 304 | |||
2011 | 322 | |||
2012 | 341 | |||
2013 | 362 | |||
2014 to 2018 | 2,187 | |||
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Southern Company and Subsidiary Companies 2008 Annual Report
2008 | 2007 | |||||||
(in millions) | ||||||||
Change in benefit obligation | ||||||||
Benefit obligation at beginning of year | $ | 1,797 | $ | 1,830 | ||||
Service cost | 36 | 27 | ||||||
Interest cost | 138 | 107 | ||||||
Benefits paid | (108 | ) | (83 | ) | ||||
Actuarial gain | (139 | ) | (90 | ) | ||||
Retiree drug subsidy | 9 | 6 | ||||||
Balance at end of year | 1,733 | 1,797 | ||||||
Change in plan assets | ||||||||
Fair value of plan assets at beginning of year | 820 | 731 | ||||||
Actual return (loss) on plan assets | (232 | ) | 105 | |||||
Employer contributions | 142 | 61 | ||||||
Benefits paid | (99 | ) | (77 | ) | ||||
Fair value of plan assets at end of year | 631 | 820 | ||||||
Funded status at end of year | (1,102 | ) | (977 | ) | ||||
Fourth quarter contributions | — | 65 | ||||||
Accrued liability | $ | (1,102 | ) | $ | (912 | ) | ||
Target | 2008 | 2007 | ||||||||||
Domestic equity | 44 | % | 34 | % | 45 | % | ||||||
International equity | 17 | 18 | 20 | |||||||||
Fixed income | 30 | 38 | 26 | |||||||||
Real estate | 5 | 7 | 6 | |||||||||
Private equity | 4 | 3 | 3 | |||||||||
Total | 100 | % | 100 | % | 100 | % | ||||||
2008 | 2007 | |||||||
(in millions) | ||||||||
Other regulatory assets | $ | 489 | $ | 360 | ||||
Current liabilities, other | (3 | ) | (3 | ) | ||||
Employee benefit obligations | (1,099 | ) | (909 | ) | ||||
Accumulated other comprehensive income | 8 | 8 | ||||||
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Southern Company and Subsidiary Companies 2008 Annual Report
Prior Service | Net(Gain) | Transition | ||||||||||
Cost | Loss | Obligation | ||||||||||
(in millions) | ||||||||||||
Balance at December 31, 2008: | ||||||||||||
Accumulated other comprehensive income | $ | 3 | $ | 5 | $ | — | ||||||
Regulatory assets | 88 | 335 | 66 | |||||||||
Total | $ | 91 | $ | 340 | $ | 66 | ||||||
Balance at December 31, 2007: | ||||||||||||
Accumulated other comprehensive income | $ | 4 | $ | 4 | $ | — | ||||||
Regulatory assets | 99 | 177 | 84 | |||||||||
Total | $ | 103 | $ | 181 | $ | 84 | ||||||
Estimated amortization as net periodic postretirement benefit cost in 2009: | ||||||||||||
Accumulated other comprehensive income | $ | — | $ | — | $ | — | ||||||
Regulatory assets | 9 | 5 | 15 | |||||||||
Total | $ | 9 | $ | 5 | $ | 15 | ||||||
Accumulated Other | ||||||||
Comprehensive Income | Regulatory Assets | |||||||
(in millions) | ||||||||
Balance at December 31, 2006 | $ | 14 | $ | 539 | ||||
Net gain | (6 | ) | (141 | ) | ||||
Change in prior service costs | — | — | ||||||
Reclassification adjustments: | ||||||||
Amortization of transition obligation | — | (15 | ) | |||||
Amortization of prior service costs | — | (9 | ) | |||||
Amortization of net gain | — | (14 | ) | |||||
Total reclassification adjustments | — | (38 | ) | |||||
Total change | (6 | ) | (179 | ) | ||||
Balance at December 31, 2007 | 8 | 360 | ||||||
Net loss | 1 | 166 | ||||||
Change in prior service costs | — | — | ||||||
Reclassification adjustments: | ||||||||
Amortization of transition obligation | — | (18 | ) | |||||
Amortization of prior service costs | (1 | ) | (11 | ) | ||||
Amortization of net gain | — | (8 | ) | |||||
Total reclassification adjustments | (1 | ) | (37 | ) | ||||
Total change | — | 129 | ||||||
Balance at December 31, 2008 | $ | 8 | $ | 489 | ||||
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Southern Company and Subsidiary Companies 2008 Annual Report
2008 | 2007 | 2006 | ||||||||||
(in millions) | ||||||||||||
Service cost | $ | 28 | $ | 27 | $ | 30 | ||||||
Interest cost | 111 | 107 | 98 | |||||||||
Expected return on plan assets | (59 | ) | (52 | ) | (49 | ) | ||||||
Net amortization | 31 | 38 | 43 | |||||||||
Net postretirement cost | $ | 111 | $ | 120 | $ | 122 | ||||||
Benefit Payments | Subsidy Receipts | Total | ||||||||||
(in millions) | ||||||||||||
2009 | $ | 100 | $ | (8 | ) | $ | 92 | |||||
2010 | 110 | (10 | ) | 100 | ||||||||
2011 | 120 | (11 | ) | 109 | ||||||||
2012 | 127 | (13 | ) | 114 | ||||||||
2013 | 134 | (14 | ) | 120 | ||||||||
2014 to 2018 | 746 | (100 | ) | 646 | ||||||||
2008 | 2007 | 2006 | ||||||||||
Discount | 6.75 | % | 6.30 | % | 6.00 | % | ||||||
Annual salary increase | 3.75 | 3.75 | 3.50 | |||||||||
Long-term return on plan assets | 8.50 | 8.50 | 8.50 | |||||||||
1 Percent | 1 Percent | |||||||
Increase | Decrease | |||||||
(in millions) | ||||||||
Benefit obligation | $ | 122 | $ | 126 | ||||
Service and interest costs | 9 | 7 | ||||||
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Southern Company and Subsidiary Companies 2008 Annual Report
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Southern Company and Subsidiary Companies 2008 Annual Report
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Southern Company and Subsidiary Companies 2008 Annual Report
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Southern Company and Subsidiary Companies 2008 Annual Report
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Southern Company and Subsidiary Companies 2008 Annual Report
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Southern Company and Subsidiary Companies 2008 Annual Report
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Southern Company and Subsidiary Companies 2008 Annual Report
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Southern Company and Subsidiary Companies 2008 Annual Report
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Southern Company and Subsidiary Companies 2008 Annual Report
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Southern Company and Subsidiary Companies 2008 Annual Report
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Southern Company and Subsidiary Companies 2008 Annual Report
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Southern Company and Subsidiary Companies 2008 Annual Report
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Southern Company and Subsidiary Companies 2008 Annual Report
Percent | Amount of | Accumulated | ||||||||||
Ownership | Investment | Depreciation | ||||||||||
(in millions) | ||||||||||||
Plant Vogtle (nuclear) | 45.7 | % | $ | 3,303 | $ | 1,918 | ||||||
Plant Hatch (nuclear) | 50.1 | 953 | 521 | |||||||||
Plant Miller (coal) Units 1 and 2 | 91.8 | 986 | 425 | |||||||||
Plant Scherer (coal) Units 1 and 2 | 8.4 | 117 | 68 | |||||||||
Plant Wansley (coal) | 53.5 | 552 | 189 | |||||||||
Rocky Mountain (pumped storage) | 25.4 | 175 | 102 | |||||||||
Intercession City (combustion turbine) | 33.3 | 12 | 3 | |||||||||
Plant Stanton (combined cycle) Unit A | 65.0 | 151 | 14 | |||||||||
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Southern Company and Subsidiary Companies 2008 Annual Report
2008 | 2007 | 2006 | ||||||||||
(in millions) | ||||||||||||
Federal — | ||||||||||||
Current | $ | 628 | $ | 715 | $ | 465 | ||||||
Deferred | 177 | 11 | 207 | |||||||||
805 | 726 | 672 | ||||||||||
State — | ||||||||||||
Current | 72 | 114 | 110 | |||||||||
Deferred | 38 | (5 | ) | (2 | ) | |||||||
110 | 109 | 108 | ||||||||||
Total | $ | 915 | $ | 835 | $ | 780 | ||||||
2008 | 2007 | |||||||
(in millions) | ||||||||
Deferred tax liabilities — | ||||||||
Accelerated depreciation | $ | 5,356 | $ | 4,878 | ||||
Property basis differences | 968 | 950 | ||||||
Leveraged lease basis differences | 306 | 479 | ||||||
Employee benefit obligations | 364 | 856 | ||||||
Under recovered fuel clause | 516 | 443 | ||||||
Premium on reacquired debt | 107 | 114 | ||||||
Regulatory assets associated with employee benefit obligations | 869 | 303 | ||||||
Regulatory assets associated with asset retirement obligations | 480 | 483 | ||||||
Other | 132 | 140 | ||||||
Total | 9,098 | 8,646 | ||||||
Deferred tax assets — | ||||||||
Federal effect of state deferred taxes | 354 | 305 | ||||||
State effect of federal deferred taxes | 105 | 97 | ||||||
Employee benefit obligations | 1,325 | 656 | ||||||
Other property basis differences | 144 | 147 | ||||||
Deferred costs | 99 | 131 | ||||||
Unbilled revenue | 100 | 90 | ||||||
Other comprehensive losses | 82 | 48 | ||||||
Regulatory liabilities associated with employee benefit obligations | — | 514 | ||||||
Asset retirement obligations | 480 | 483 | ||||||
Other | 279 | 259 | ||||||
Total | 2,968 | 2,730 | ||||||
Total deferred tax liabilities, net | 6,130 | 5,916 | ||||||
Portion included in prepaid expenses (accrued income taxes), net | (90 | ) | (106 | ) | ||||
Deferred state tax assets | 103 | 88 | ||||||
Valuation allowance | (63 | ) | (59 | ) | ||||
Accumulated deferred income taxes | $ | 6,080 | $ | 5,839 | ||||
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Southern Company and Subsidiary Companies 2008 Annual Report
2008 | 2007 | 2006 | ||||||||||
Federal statutory rate | 35.0 | % | 35.0 | % | 35.0 | % | ||||||
State income tax, net of federal deduction | 2.6 | 2.7 | 2.9 | |||||||||
Synthetic fuel tax credits | — | (1.4 | ) | (2.7 | ) | |||||||
Employee stock plans dividend deduction | (1.3 | ) | (1.3 | ) | (1.4 | ) | ||||||
Non-deductible book depreciation | 0.8 | 0.9 | 1.0 | |||||||||
Difference in prior years’ deferred and current tax rate | (0.2 | ) | (0.2 | ) | (0.3 | ) | ||||||
AFUDC-Equity | (1.9 | ) | (1.4 | ) | (0.7 | ) | ||||||
Production activities deduction | (0.4 | ) | (0.8 | ) | (0.2 | ) | ||||||
Donations | — | (0.8 | ) | — | ||||||||
Other | (1.0 | ) | (0.8 | ) | (0.9 | ) | ||||||
Effective income tax rate | 33.6 | % | 31.9 | % | 32.7 | % | ||||||
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Southern Company and Subsidiary Companies 2008 Annual Report
2008 | 2007 | |||||||
(in millions) | ||||||||
Unrecognized tax benefits at beginning of year | $ | 264 | $ | 211 | ||||
Tax positions from current periods | 49 | 46 | ||||||
Tax positions from prior periods | 130 | 7 | ||||||
Reductions due to settlements | (297 | ) | — | |||||
Balance at end of year | $ | 146 | $ | 264 | ||||
2008 | 2007 | Change | ||||||||||
(in millions) | ||||||||||||
Tax positions impacting the effective tax rate | $ | 143 | $ | 96 | $ | 47 | ||||||
Tax positions not impacting the effective tax rate | 3 | 168 | (165 | ) | ||||||||
Balance of unrecognized tax benefits | $ | 146 | $ | 264 | $ | (118 | ) | |||||
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Southern Company and Subsidiary Companies 2008 Annual Report
2008 | 2007 | |||||||
(in millions) | ||||||||
Interest accrued at beginning of year | $ | 31 | $ | 27 | ||||
Interest reclassified due to settlements | (49 | ) | — | |||||
Interest accrued during the year | 33 | 4 | ||||||
Balance at end of year | $ | 15 | $ | 31 | ||||
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Southern Company and Subsidiary Companies 2008 Annual Report
2008 | 2007 | |||||||
(in millions) | ||||||||
Capitalized leases | $ | 20 | $ | 15 | ||||
Senior notes | 565 | 1,005 | ||||||
Other long-term debt | 32 | 33 | ||||||
Preferred stock | — | 125 | ||||||
Total | $ | 617 | $ | 1,178 | ||||
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Southern Company and Subsidiary Companies 2008 Annual Report
Expires | ||||||||||||||||||||
Company | Total | Unused | 2009 | 2011 | 2012 | |||||||||||||||
(in millions) | ||||||||||||||||||||
Alabama Power | $ | 1,256 | $ | 1,256 | $ | 466 | $ | 25 | $ | 765 | ||||||||||
Georgia Power | 1,345 | 1,333 | 225 | — | 1,120 | |||||||||||||||
Gulf Power | 120 | 120 | 120 | — | — | |||||||||||||||
Mississippi Power | 99 | 99 | 99 | — | — | |||||||||||||||
Southern Company | 950 | 950 | — | — | 950 | |||||||||||||||
Southern Power | 400 | 400 | — | — | 400 | |||||||||||||||
Other | 60 | 60 | 60 | — | — | |||||||||||||||
Total | $ | 4,230 | $ | 4,218 | $ | 970 | $ | 25 | $ | 3,235 | ||||||||||
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Southern Company and Subsidiary Companies 2008 Annual Report
2008 | 2007 | |||||||
(in millions) | ||||||||
Regulatory hedges | $ | (288 | ) | $ | — | |||
Cash flow hedges | ( 1 | ) | 1 | |||||
Non-accounting hedges | 4 | 3 | ||||||
Total fair value | $ | (285 | ) | $ | 4 | |||
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Southern Company and Subsidiary Companies 2008 Annual Report
Weighted | Fair Value | |||||||||||||||||||
Notional | Variable Rate | Average | Hedge Maturity | Gain (Loss) | ||||||||||||||||
Amount | Received | Fixed Rate Paid | Date | December 31, 2008 | ||||||||||||||||
(in millions) | (in millions) | |||||||||||||||||||
Cash Flow Hedges on Existing Debt | ||||||||||||||||||||
Alabama Power* | $ | 576 | SIFMA Index | 2.69 | % | February 2010 | $ | (11 | ) | |||||||||||
Georgia Power* | 301 | SIFMA Index | 2.22 | % | December 2009 | (3 | ) | |||||||||||||
Georgia Power | 150 | 3-month LIBOR | 2.63 | % | February 2009 | (- | ) | |||||||||||||
Georgia Power | 300 | 1-month LIBOR | 2.43 | % | April 2010 | (5 | ) | |||||||||||||
Cash Flow Hedges on Forecasted Debt | ||||||||||||||||||||
Georgia Power | 100 | 3-month LIBOR | 4.98 | % | February 2019 | (21 | ) |
* | Hedged using the Securities Industry and Financial Markets Association Municipal Swap Index (SIFMA) (formerly the Bond Market Association/PSA Municipal Swap Index) |
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Southern Company and Subsidiary Companies 2008 Annual Report
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Southern Company and Subsidiary Companies 2008 Annual Report
Commitments | ||||||||||||||||
Natural Gas | Coal | Nuclear Fuel | Purchased Power | |||||||||||||
(in millions) | ||||||||||||||||
2009 | $ | 1,507 | $ | 4,608 | $ | 187 | $ | 217 | ||||||||
2010 | 969 | 3,333 | 151 | 239 | ||||||||||||
2011 | 640 | 2,666 | 150 | 216 | ||||||||||||
2012 | 611 | 1,370 | 152 | 222 | ||||||||||||
2013 | 631 | 1,232 | 123 | 191 | ||||||||||||
2014 and thereafter | 3,798 | 3,421 | 43 | 1,938 | ||||||||||||
Total | $ | 8,156 | $ | 16,630 | $ | 806 | $ | 3,023 | ||||||||
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Southern Company and Subsidiary Companies 2008 Annual Report
Minimum Lease Payments | ||||||||||||||||
Plant Daniel | Barges & Rail Cars | Other | Total | |||||||||||||
(in millions) | ||||||||||||||||
2009 | $ | 29 | $ | 66 | $ | 48 | $ | 143 | ||||||||
2010 | 28 | 46 | 42 | 116 | ||||||||||||
2011 | 28 | 34 | 34 | 96 | ||||||||||||
2012 | — | 21 | 25 | 46 | ||||||||||||
2013 | — | 18 | 17 | 35 | ||||||||||||
2014 and thereafter | — | 40 | 106 | 146 | ||||||||||||
Total | $ | 85 | $ | 225 | $ | 272 | $ | 582 | ||||||||
C-90
Southern Company and Subsidiary Companies 2008 Annual Report
Year Ended December 31 | 2008 | 2007 | 2006 | |||||||||
Expected volatility | 13.1 | % | 14.8 | % | 16.9 | % | ||||||
Expected term(in years) | 5.0 | 5.0 | 5.0 | |||||||||
Interest rate | 2.8 | % | 4.6 | % | 4.6 | % | ||||||
Dividend yield | 4.5 | % | 4.3 | % | 4.4 | % | ||||||
Weighted average grant-date fair value | $ | 2.37 | $ | 4.12 | $ | 4.15 |
Shares Subject | Weighted Average | |||||||
To Option | Exercise Price | |||||||
Outstanding at December 31, 2007 | 34,074,622 | $ | 30.77 | |||||
Granted | 7,084,902 | 35.78 | ||||||
Exercised | (4,112,651 | ) | 27.42 | |||||
Cancelled | (105,600 | ) | 34.70 | |||||
Outstanding at December 31, 2008 | 36,941,273 | $ | 32.09 | |||||
Exercisable at December 31, 2008 | 24,194,943 | $ | 30.20 | |||||
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Southern Company and Subsidiary Companies 2008 Annual Report
Average Common Stock Shares | ||||||||||||
2008 | 2007 | 2006 | ||||||||||
(in thousands) | ||||||||||||
As reported shares | 771,039 | 756,350 | 743,146 | |||||||||
Effect of options | 3,809 | 4,666 | 4,739 | |||||||||
Diluted shares | 774,848 | 761,016 | 747,885 | |||||||||
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Southern Company and Subsidiary Companies 2008 Annual Report
• | Level 1 consists of observable market data in an active market for identical assets or liabilities. |
• | Level 2 consists of observable market data, other than that included in Level 1, that is either directly or indirectly observable. |
• | Level 3 consists of unobservable market data. The input may reflect the assumptions of the Company of what a market participant would use in pricing an asset or liability. If there is little available market data, then the Company’s own assumptions are the best available information. |
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Southern Company and Subsidiary Companies 2008 Annual Report
At December 31, 2008: | Level 1 | Level 2 | Level 3 | Total | ||||||||||||
(in millions) | ||||||||||||||||
Assets: | ||||||||||||||||
Energy-related derivatives | $ | — | $ | 22 | $ | — | $ | 22 | ||||||||
Nuclear decommissioning trusts(a) | 498 | 364 | — | 862 | ||||||||||||
Cash equivalents and restricted cash | 469 | — | — | 469 | ||||||||||||
Other | 2 | 46 | 35 | 83 | ||||||||||||
Total fair value | $ | 969 | $ | 432 | $ | 35 | $ | 1,436 | ||||||||
Liabilities: | ||||||||||||||||
Energy-related derivatives | $ | — | $ | 307 | $ | — | $ | 307 | ||||||||
Interest rate derivatives | — | 40 | — | 40 | ||||||||||||
Total fair value | $ | — | $ | 347 | $ | — | $ | 347 | ||||||||
(a) | Excludes receivables related to investment income, pending investment sales, and payables related to pending investment purchases. |
Level 3 | ||||
Other | ||||
(in millions) | ||||
Beginning balance at December 31, 2007 | $ | 50 | ||
Total gains (losses) — realized/unrealized: | ||||
Included in other comprehensive income | (12 | ) | ||
Purchases, issuances and settlements | 1 | |||
Transfers in and/or out of Level 3 | (4 | ) | ||
Ending balance at December 31, 2008 | $ | 35 | ||
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Southern Company and Subsidiary Companies 2008 Annual Report
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Southern Company and Subsidiary Companies 2008 Annual Report
Electric Utilities | ||||||||||||||||||||||||||||
Traditional | ||||||||||||||||||||||||||||
Operating | Southern | All | ||||||||||||||||||||||||||
Companies | Power | Eliminations | Total | Other | Eliminations | Consolidated | ||||||||||||||||||||||
(in millions) | ||||||||||||||||||||||||||||
2008 | ||||||||||||||||||||||||||||
Operating revenues | $ | 16,521 | $ | 1,314 | $ | (835 | ) | $ | 17,000 | $ | 182 | $ | (55 | ) | $ | 17,127 | ||||||||||||
Depreciation and amortization | 1,325 | 89 | — | 1,414 | 29 | — | 1,443 | |||||||||||||||||||||
Interest income | 32 | 1 | — | 33 | — | — | 33 | |||||||||||||||||||||
Interest expense | 689 | 83 | — | 772 | 94 | — | 866 | |||||||||||||||||||||
Income taxes | 944 | 93 | — | 1,037 | (122 | ) | — | 915 | ||||||||||||||||||||
Segment net income (loss) | 1,703 | 144 | — | 1,847 | (104 | ) | (1 | ) | 1,742 | |||||||||||||||||||
Total assets | 44,794 | 2,813 | (139 | ) | 47,468 | 1,407 | (528 | ) | 48,347 | |||||||||||||||||||
Gross property additions | 4,058 | 50 | — | 4,108 | 14 | — | 4,122 | |||||||||||||||||||||
Electric Utilities | ||||||||||||||||||||||||||||
Traditional | ||||||||||||||||||||||||||||
Operating | Southern | All | ||||||||||||||||||||||||||
Companies | Power | Eliminations | Total | Other | Eliminations | Consolidated | ||||||||||||||||||||||
(in millions) | ||||||||||||||||||||||||||||
2007 | ||||||||||||||||||||||||||||
Operating revenues | $ | 14,851 | $ | 972 | $ | (683 | ) | $ | 15,140 | $ | 380 | $ | (167 | ) | $ | 15,353 | ||||||||||||
Depreciation and amortization | 1,141 | 74 | — | 1,215 | 30 | — | 1,245 | |||||||||||||||||||||
Interest income | 31 | 1 | — | 32 | 14 | (1 | ) | 45 | ||||||||||||||||||||
Interest expense | 685 | 79 | — | 764 | 122 | — | 886 | |||||||||||||||||||||
Income taxes | 866 | 84 | — | 950 | (115 | ) | — | 835 | ||||||||||||||||||||
Segment net income (loss) | 1,582 | 132 | — | 1,714 | 22 | (2 | ) | 1,734 | ||||||||||||||||||||
Total assets | 41,812 | 2,769 | (122 | ) | 44,459 | 1,767 | (437 | ) | 45,789 | |||||||||||||||||||
Gross property additions | 3,465 | 184 | (4 | ) | 3,645 | 13 | — | 3,658 | ||||||||||||||||||||
Electric Utilities | ||||||||||||||||||||||||||||
Traditional | ||||||||||||||||||||||||||||
Operating | Southern | All | ||||||||||||||||||||||||||
Companies | Power | Eliminations | Total | Other | Eliminations | Consolidated | ||||||||||||||||||||||
(in millions) | ||||||||||||||||||||||||||||
2006 | ||||||||||||||||||||||||||||
Operating revenues | $ | 13,920 | $ | 777 | $ | (609 | ) | $ | 14,088 | $ | 413 | $ | (145 | ) | $ | 14,356 | ||||||||||||
Depreciation and amortization | 1,098 | 66 | — | 1,164 | 37 | (1 | ) | 1,200 | ||||||||||||||||||||
Interest income | 33 | 2 | — | 35 | 7 | (1 | ) | 41 | ||||||||||||||||||||
Interest expense | 637 | 80 | — | 717 | 149 | — | 866 | |||||||||||||||||||||
Income taxes | 867 | 82 | — | 949 | (169 | ) | — | 780 | ||||||||||||||||||||
Segment net income (loss) | 1,462 | 124 | — | 1,586 | (11 | ) | (2 | ) | 1,573 | |||||||||||||||||||
Total assets | 38,825 | 2,691 | (110 | ) | 41,406 | 1,933 | (481 | ) | 42,858 | |||||||||||||||||||
Gross property additions | 2,561 | 501 | (16 | ) | 3,046 | 26 | — | 3,072 | ||||||||||||||||||||
Electric Utilities’ Revenues | ||||||||||||||||
Year | Retail | Wholesale | Other | Total | ||||||||||||
(in millions) | ||||||||||||||||
2008 | $ | 14,055 | $ | 2,400 | $ | 545 | $ | 17,000 | ||||||||
2007 | 12,639 | 1,988 | 513 | 15,140 | ||||||||||||
2006 | 11,801 | 1,822 | 465 | 14,088 | ||||||||||||
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Southern Company and Subsidiary Companies 2008 Annual Report
Per Common Share | ||||||||||||||||||||||||||||
Trading | ||||||||||||||||||||||||||||
Operating | Operating | Consolidated | Basic | Price Range | ||||||||||||||||||||||||
Quarter Ended | Revenues | Income | Net Income | Earnings | Dividends | High | Low | |||||||||||||||||||||
(in millions) | ||||||||||||||||||||||||||||
March 2008 | $ | 3,683 | $ | 708 | $ | 359 | $ | 0.47 | $ | 0.4025 | $ | 40.60 | $ | 33.71 | ||||||||||||||
June 2008 | 4,215 | 924 | 417 | 0.54 | 0.4200 | 37.81 | 34.28 | |||||||||||||||||||||
September 2008 | 5,427 | 1,405 | 780 | 1.01 | 0.4200 | 40.00 | 34.46 | |||||||||||||||||||||
December 2008 | 3,802 | 469 | 186 | 0.24 | 0.4200 | 38.18 | 29.82 | |||||||||||||||||||||
March 2007 | $ | 3,409 | $ | 691 | $ | 339 | $ | 0.45 | $ | 0.3875 | $ | 37.25 | $ | 34.85 | ||||||||||||||
June 2007 | 3,772 | 844 | 429 | 0.57 | 0.4025 | 38.90 | 33.50 | |||||||||||||||||||||
September 2007 | 4,832 | 1,382 | 762 | 1.00 | 0.4025 | 37.70 | 33.16 | |||||||||||||||||||||
December 2007 | 3,340 | 409 | 204 | 0.27 | 0.4025 | 39.35 | 35.15 |
C-97
For the Periods Ended December 2004 through 2008
Southern Company and Subsidiary Companies 2008 Annual Report
2008 | 2007 | 2006 | 2005 | 2004 | ||||||||||||||||
Operating Revenues (in millions) | $ | 17,127 | $ | 15,353 | $ | 14,356 | $ | 13,554 | $ | 11,729 | ||||||||||
Total Assets (in millions) | $ | 48,347 | $ | 45,789 | $ | 42,858 | $ | 39,877 | $ | 36,955 | ||||||||||
Gross Property Additions (in millions) | $ | 4,122 | $ | 3,658 | $ | 3,072 | $ | 2,476 | $ | 2,099 | ||||||||||
Return on Average Common Equity (percent) | 13.57 | 14.60 | 14.26 | 15.17 | 15.38 | |||||||||||||||
Cash Dividends Paid Per Share of Common Stock | $ | 1.6625 | $ | 1.595 | $ | 1.535 | $ | 1.475 | $ | 1.415 | ||||||||||
Consolidated Net Income (in millions): | $ | 1,742 | $ | 1,734 | $ | 1,573 | $ | 1,591 | $ | 1,532 | ||||||||||
Earnings Per Share — | ||||||||||||||||||||
Basic | $ | 2.26 | $ | 2.29 | $ | 2.12 | $ | 2.14 | $ | 2.07 | ||||||||||
Diluted | 2.25 | 2.28 | 2.10 | 2.13 | 2.06 | |||||||||||||||
Capitalization (in millions): | ||||||||||||||||||||
Common stock equity | $ | 13,276 | $ | 12,385 | $ | 11,371 | $ | 10,689 | $ | 10,278 | ||||||||||
Preferred and preference stock | 1,082 | 1,080 | 744 | 596 | 561 | |||||||||||||||
Long-term debt | 16,816 | 14,143 | 12,503 | 12,846 | 12,449 | |||||||||||||||
Total (excluding amounts due within one year) | $ | 31,174 | $ | 27,608 | $ | 24,618 | $ | 24,131 | $ | 23,288 | ||||||||||
Capitalization Ratios (percent): | ||||||||||||||||||||
Common stock equity | 42.6 | 44.9 | 46.2 | 44.3 | 44.1 | |||||||||||||||
Preferred and preference stock | 3.5 | 3.9 | 3.0 | 2.5 | 2.4 | |||||||||||||||
Long-term debt | 53.9 | 51.2 | 50.8 | 53.2 | 53.5 | |||||||||||||||
Total (excluding amounts due within one year) | 100.0 | 100.0 | 100.0 | 100.0 | 100.0 | |||||||||||||||
Other Common Stock Data: | ||||||||||||||||||||
Book value per share | $ | 17.08 | $ | 16.23 | $ | 15.24 | $ | 14.42 | $ | 13.86 | ||||||||||
Market price per share: | ||||||||||||||||||||
High | $ | 40.60 | $ | 39.35 | $ | 37.40 | $ | 36.47 | $ | 33.96 | ||||||||||
Low | 29.82 | 33.16 | 30.48 | 31.14 | 27.44 | |||||||||||||||
Close (year-end) | 37.00 | 38.75 | 36.86 | 34.53 | 33.52 | |||||||||||||||
Market-to-book ratio (year-end) (percent) | 216.6 | 238.8 | 241.9 | 239.5 | 241.8 | |||||||||||||||
Price-earnings ratio (year-end) (times) | 16.4 | 16.9 | 17.4 | 16.1 | 16.2 | |||||||||||||||
Dividends paid (in millions) | $ | 1,279 | $ | 1,204 | $ | 1,140 | $ | 1,098 | $ | 1,044 | ||||||||||
Dividend yield (year-end) (percent) | 4.5 | 4.1 | 4.2 | 4.3 | 4.2 | |||||||||||||||
Dividend payout ratio (percent) | 73.5 | 69.5 | 72.4 | 69.0 | 68.3 | |||||||||||||||
Shares outstanding (in thousands): | ||||||||||||||||||||
Average | 771,039 | 756,350 | 743,146 | 743,927 | 738,879 | |||||||||||||||
Year-end | 777,192 | 763,104 | 746,270 | 741,448 | 741,495 | |||||||||||||||
Stockholders of record (year-end) | 97,324 | 102,903 | 110,259 | 118,285 | 125,975 | |||||||||||||||
Traditional Operating Company Customers (year-end) (in thousands): | ||||||||||||||||||||
Residential | 3,785 | 3,756 | 3,706 | 3,642 | 3,600 | |||||||||||||||
Commercial | 594 | 600 | 596 | 586 | 578 | |||||||||||||||
Industrial | 15 | 15 | 15 | 15 | 14 | |||||||||||||||
Other | 8 | 6 | 5 | 5 | 5 | |||||||||||||||
Total | 4,402 | 4,377 | 4,322 | 4,248 | 4,197 | |||||||||||||||
Employees (year-end) | 27,276 | 26,742 | 26,091 | 25,554 | 25,642 | |||||||||||||||
C-98
For the Periods Ended December 2004 through 2008
Southern Company and Subsidiary Companies 2008 Annual Report
2008 | 2007 | 2006 | 2005 | 2004 | ||||||||||||||||
Operating Revenues (in millions): | ||||||||||||||||||||
Residential | $ | 5,476 | $ | 5,045 | $ | 4,716 | $ | 4,376 | $ | 3,848 | ||||||||||
Commercial | 5,018 | 4,467 | 4,117 | 3,904 | 3,346 | |||||||||||||||
Industrial | 3,445 | 3,020 | 2,866 | 2,785 | 2,446 | |||||||||||||||
Other | 116 | 107 | 102 | 100 | 92 | |||||||||||||||
Total retail | 14,055 | 12,639 | 11,801 | 11,165 | 9,732 | |||||||||||||||
Wholesale | 2,400 | 1,988 | 1,822 | 1,667 | 1,341 | |||||||||||||||
Total revenues from sales of electricity | 16,455 | 14,627 | 13,623 | 12,832 | 11,073 | |||||||||||||||
Other revenues | 672 | 726 | 733 | 722 | 656 | |||||||||||||||
Total | $ | 17,127 | $ | 15,353 | $ | 14,356 | $ | 13,554 | $ | 11,729 | ||||||||||
Kilowatt-Hour Sales (in millions): | ||||||||||||||||||||
Residential | 52,262 | 53,326 | 52,383 | 51,082 | 49,702 | |||||||||||||||
Commercial | 54,427 | 54,665 | 52,987 | 51,857 | 50,037 | |||||||||||||||
Industrial | 52,636 | 54,662 | 55,044 | 55,141 | 56,399 | |||||||||||||||
Other | 934 | 962 | 920 | 996 | 1,005 | |||||||||||||||
Total retail | 160,259 | 163,615 | 161,334 | 159,076 | 157,143 | |||||||||||||||
Sales for resale | 39,368 | 40,745 | 38,460 | 37,072 | 34,568 | |||||||||||||||
Total | 199,627 | 204,360 | 199,794 | 196,148 | 191,711 | |||||||||||||||
Average Revenue Per Kilowatt-Hour (cents): | ||||||||||||||||||||
Residential | 10.48 | 9.46 | 9.00 | 8.57 | 7.74 | |||||||||||||||
Commercial | 9.22 | 8.17 | 7.77 | 7.53 | 6.69 | |||||||||||||||
Industrial | 6.54 | 5.52 | 5.21 | 5.05 | 4.34 | |||||||||||||||
Total retail | 8.77 | 7.72 | 7.31 | 7.02 | 6.19 | |||||||||||||||
Wholesale | 6.10 | 4.88 | 4.74 | 4.50 | 3.88 | |||||||||||||||
Total sales | 8.24 | 7.16 | 6.82 | 6.54 | 5.78 | |||||||||||||||
Average Annual Kilowatt-Hour | ||||||||||||||||||||
Use Per Residential Customer | 13,844 | 14,263 | 14,235 | 14,084 | 13,879 | |||||||||||||||
Average Annual Revenue | ||||||||||||||||||||
Per Residential Customer | $ | 1,451 | $ | 1,349 | $ | 1,282 | $ | 1,207 | $ | 1,074 | ||||||||||
Plant Nameplate Capacity | ||||||||||||||||||||
Ratings (year-end) (megawatts) | 42,607 | 41,948 | 41,785 | 40,509 | 38,622 | |||||||||||||||
Maximum Peak-Hour Demand (megawatts): | ||||||||||||||||||||
Winter | 32,604 | 31,189 | 30,958 | 30,384 | 28,467 | |||||||||||||||
Summer | 37,166 | 38,777 | 35,890 | 35,050 | 34,414 | |||||||||||||||
System Reserve Margin (at peak) (percent) | 15.3 | 11.2 | 17.1 | 14.4 | 20.2 | |||||||||||||||
Annual Load Factor (percent) | 58.7 | 57.6 | 60.8 | 60.2 | 61.4 | |||||||||||||||
Plant Availability (percent): | ||||||||||||||||||||
Fossil-steam | 90.5 | 90.5 | 89.3 | 89.0 | 88.5 | |||||||||||||||
Nuclear | 91.3 | 90.8 | 91.5 | 90.5 | 92.8 | |||||||||||||||
Source of Energy Supply (percent): | ||||||||||||||||||||
Coal | 64.0 | 67.1 | 67.2 | 67.4 | 65.0 | |||||||||||||||
Nuclear | 14.0 | 13.4 | 14.0 | 14.0 | 14.5 | |||||||||||||||
Hydro | 1.4 | 0.9 | 1.9 | 3.1 | 2.9 | |||||||||||||||
Oil and gas | 15.4 | 15.0 | 12.9 | 10.9 | 10.9 | |||||||||||||||
Purchased power | 5.2 | 3.6 | 4.0 | 4.6 | 6.7 | |||||||||||||||
Total | 100.0 | 100.0 | 100.0 | 100.0 | 100.0 | |||||||||||||||
C-99
Table of Contents
Industries
Newmont Mining Corporation
Incorporated, BancorpSouth Bank
Synovus Financial Corp.
C-100
Table of Contents
C-101
Table of Contents
Chairman, President, and CEO
Executive Vice President and
Chief Financial Officer
Executive Vice President and
Chief Operating Officer
Executive Vice President
President and CEO, Georgia Power
Executive Vice President, General Counsel,
and Corporate Secretary
Executive Vice President
President and CEO, Southern Company Services
C-102
Table of Contents
Executive Vice President
President and CEO, Alabama Power
President and CEO,
Southern Nuclear
President and CEO, Gulf Power
President and CEO, Mississippi Power
Executive Vice President and
President, External Affairs
C-103
Table of Contents
C-104
Table of Contents
Senior Vice President, Research and Environmental Affairs
600 North 18th St.
Bin 14N-8195
Birmingham, AL35203-2206
C-105
Table of Contents
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THE SOUTHERN COMPANY 30 IVAN ALLEN, JR. BLVD. NW 11TH FLOOR-BIN SC1100 ATLANTA, GA 30308
| Please consider furnishing your voting instructions electronically by Internet or phone. Processing paper forms is more than twice as expensive as electronic instructions. If you vote by Internet or phone, please do not mail this form. VOTE BY INTERNET - www.proxyvote.com Use the Internet to transmit your voting instructions and for electronic delivery of information up until 11:59 P.M. Eastern Time the day before the cut-off date or meeting date. Have your proxy card in hand when you access the web site and follow the instructions to obtain your records and to create an electronic voting instruction form. ELECTRONIC DELIVERY OF FUTURE PROXY MATERIALS If you would like to reduce the costs incurred by The Southern Company in mailing proxy materials, you can consent to receiving all future proxy statements, proxy cards and annual reports electronically via the Internet. To sign up for electronic delivery, please follow the instructions above to vote using the Internet and, when prompted, indicate that you agree to receive materials electronically in future years. VOTE BY PHONE - 1-800-690-6903 Use any touch-tone telephone to transmit your voting instructions up until 11:59 P.M. Eastern Time the day before the cut-off date or meeting date. Have your proxy card in hand when you call and then follow the instructions. VOTE BY MAIL Mark, sign and date this form and return it in the postage-paid envelope we have provided or return it to The Southern Company, c/o Broadridge, 51 Mercedes Way, Edgewood, NY 11717. THANK YOU VIEW THE PROXY STATEMENT ON THE INTERNET www.southerncompany.com |
TO VOTE, MARK BLOCKS BELOW IN BLUE OR BLACK INK AS FOLLOWS:x | M11946 | KEEP THIS PORTION FOR YOUR RECORDS |
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THIS FORM OF PROXY OR TRUSTEE VOTING INSTRUCTION FORM IS VALID ONLY WHEN SIGNED AND DATED. | DETACH AND RETURN THIS PORTION ONLY |
THE SOUTHERN COMPANY | For All
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| For All Except | To withhold authority to vote for any individual nominee(s), mark “For All Except” and write the number(s) of the nominee(s) on the line below. |
The Board of Directors recommends a vote FOR Items 1, 2, 3 and 4 and AGAINST Items 5 and 6. |
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1. ELECTION OF DIRECTORS |
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| Nominees: |
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| 01) | J. P. Baranco | 07) | W. A. Hood, Jr. |
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| 02) | F. S. Blake | 08) | D. M. James |
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| 03) | J. A. Boscia | 09) | J. N. Purcell |
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| 04) | T. F. Chapman | 10) | D. M. Ratcliffe |
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| 05) | H. W. Habermeyer, Jr. | 11) | W. G. Smith, Jr. |
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| 06) | V. M. Hagen | 12) | G. J. St Pé |
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| For | Against | Abstain |
2. | RATIFICATION OF THE APPOINTMENT OF DELOITTE & TOUCHE LLP AS THE COMPANY'S INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM FOR 2009 | 0 | 0 | 0 |
3. | AMENDMENT OF COMPANY'S BY-LAWS REGARDING MAJORITY VOTING AND CUMULATIVE VOTING | 0 | 0 | 0 |
4. | AMENDMENT OF COMPANY'S CERTIFICATE OF INCORPORATION REGARDING CUMULATIVE VOTING | 0 | 0 | 0 |
5. | STOCKHOLDER PROPOSAL ON ENVIRONMENTAL REPORT | 0 | 0 | 0 |
6. | STOCKHOLDER PROPOSAL ON PENSION POLICY | 0 | 0 | 0 |
UNLESS OTHERWISE SPECIFIED ABOVE, THE SHARES WILL BE VOTED "FOR" ITEMS 1, 2, 3 and 4 and "AGAINST" ITEMS 5 AND 6.
NOTE: The last instructions received either paper or electronic prior to the deadline will be the instructions included in the final tabulation.
If you desire to cumulate your votes and cast all of them for any individual nominee or distribute your votes in any manner, please check this box and write it on the reverse where indicated. | 0 |
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Signature [PLEASE SIGN WITHIN BOX] | Date |
| Signature (Joint Owners) | Date |
Admission Ticket
(Not Transferable)
2009 Annual Meeting of Stockholders 10 a.m. ET, May 27, 2009
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The Lodge Conference Center at Callaway Gardens Highway 18 Pine Mountain, GA 31822
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Please present this Admission Ticket in order to gain admittance to the meeting. | Ticket admits only the stockholder(s) listed on reverse side and is not transferable. |
Directions to Meeting Site:
From Atlanta, GA - Take I-85 south to I-185 (exit 21), then Exit 34, Georgia Highway 18. Take Georgia
Highway 18 east to Callaway.
From Birmingham, AL - Take U.S. Highway 280 east to Opelika, AL, then I-85 north to Georgia Highway 18 (Exit 2). Take Georgia Highway 18 east to Callaway.
Important Notice Regarding Internet Availability of Proxy Materials for the Annual Meeting:
The 2009 Notice and Proxy Statement are available at www.proxyvote.com.
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M11947
FORM OF PROXY OR TRUSTEE VOTING INSTRUCTION FORM | FORM OF PROXY OR TRUSTEE VOTING INSTRUCTION FORM |
PROXY SOLICITED ON BEHALF OF BOARD OF DIRECTORS AND ESP TRUSTEE
If a stockholder of record, the undersigned hereby appoints D. M. Ratcliffe, W. P. Bowers, and G. E. Holland, Jr., or any of them, Proxies, with full power of substitution in each, to vote all shares the undersigned is entitled to vote at the Annual Meeting of Stockholders of The Southern Company, to be held at The Lodge Conference Center at Callaway Gardens in Pine Mountain, Georgia, on May 27, 2009, at 10:00 a.m., ET, and any adjournments thereof, on all matters properly coming before the meeting, including, without limitation, the items listed on the reverse side of this form.
If a beneficial owner holding shares through the Employee Savings Plan (ESP), the undersigned directs the Trustee of the ESP to vote all shares the undersigned is entitled to vote at the Annual Meeting of Stockholders, and any adjournments thereof, on all matters properly coming before the meeting, including, without limitation, the items listed on the reverse side of this form.
This Form of Proxy or Trustee Voting Instruction Form is solicited jointly by the Board of Directors of The Southern Company and the Trustee of the ESP pursuant to a separate Notice of Annual Meeting and Proxy Statement. If not voted electronically, this form should be mailed in the enclosed envelope to the Company's proxy tabulator at 51 Mercedes Way, Edgewood, NY 11717. The deadline for receipt of Trustee Voting Instruction Forms for the ESP is 5:00 p.m. on Monday, May 25, 2009. The deadline for receipt of shares of record voted through the Form of Proxy is 9:00 a.m. on Wednesday, May 27, 2009. The deadline for receipt of instructions provided electronically is 11:59 p.m. on Tuesday, May 26, 2009.
The proxy tabulator will report separately to the Proxies named above and to the Trustee as to proxies received and voting instructions provided, respectively.
THIS FORM OF PROXY OR TRUSTEE VOTING INSTRUCTION FORM WILL BE VOTED AS SPECIFIED
BY THE UNDERSIGNED. IF NO CHOICE IS INDICATED, THE SHARES WILL BE VOTED AS THE
BOARD OF DIRECTORS RECOMMENDS.
Continued and to be voted and signed on reverse side.
CUMULATIVE VOTING -If you exercise cumulative voting, please check the box on the reverse side.
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