It’s all about creating value for shareholders. It’s clear in the way we worked in 2000 to unlock and deliver value to you. Now we are focused on the U.S. Southeast. It’s the country’s fastest-growing electricity market, and the region we know best. We’re ready to be the full-service leader in the “Super Southeast.” See it for yourself.
It's right here.

A momentous year
Getting results. That’s what counts. That’s how you measure us and that’s how we measure ourselves. For Southern Company, 2000 was a year of record results. We achieved earnings from operations of $1.40 billion. Earnings per share from operations were $2.13, a 12 percent increase over 1999 and well ahead of our 2000 goal of $2.05.

After costs related to Southern Energy becoming a public company and other non-operating items, our reported earnings for 2000 were $1.31 billion, or $2.01 per share, compared with $1.28 billion, or $1.86 per share, in 1999.

In the year’s most significant event, we completed a successful initial public offering of 19.7 percent of Southern Energy in October, in advance of spinning off our remaining ownership in Southern Energy to Southern Company shareholders this year. In preparation for the spinoff, Southern Energy renamed itself Mirant Corporation.

After working hard to build Mirant into one of the world’s top independent energy producers and marketers, we decided to separate it from the rest of our business. We did this because we believe our traditional business and Mirant are worth more separated than together. From the standpoint of delivering value to you, it clearly was the right move. We have turned one strong energy company into two – Southern Company and Mirant. In doing so, we have unlocked the value we created for our shareholders.

There were many other accomplishments in 2000, some of which are detailed elsewhere in this annual report. The closing price for Southern Company stock at the end of 2000 was $33.25 per share, compared with $23.50 at the end of 1999. So the market value of our company grew by $7.0 billion in 2000.

Our focus
After the changes we initiated in 2000, it may seem we now are a very different company. I’d like to challenge that notion a bit, and give you my thoughts on who we are and where we are going.

Though our geographic perspective has become more focused, Southern Company is committed to doing what we’ve always done best – being a full-service energy provider.

We don’t follow fads and we don’t overreact to short-term developments. We focus on being the best at the fundamentals. To us, the fundamentals mean continually finding better ways to serve our customers’ energy needs more efficiently, reliably, economically, safely, and cleanly. And, in doing so, providing superior, risk-adjusted returns for our shareholders.

The foundation of our company continues to be our regulated business. To four million satisfied customers in Alabama, Florida, Georgia, and Mississippi, our brands are synonymous with excellent customer service, high reliability, and prices that are 15 percent below the national average. Ours is a premier utility franchise in a premier growth region.

We are in a region, the Southeast, with a growing appetite for energy. There’s just no better place for us. Metro Atlanta alone has consistently been one of the nation’s job growth leaders in the past decade, and the demand for energy throughout the Southeast continues to grow at rates above the national average.

This is the region we know best. In addition to our four-state retail business, we’re building on our already sizeable growth-oriented competitive generation business that will serve an expanded “Super Southeast” region. It is a wholesale business with a regional focus, and it should materially increase our earnings growth.

Our wholesale business in the Southeast already is producing more than $100 million in annual earnings. We plan to double the earnings from the competitive generation part of this business over the next five years. A major component of this plan is to significantly increase our generating capacity. Of the 6,600 mega-watts of new generating plants we plan to complete in the Southeast by the end of 2003, approximately 4,700 megawatts will be dedicated to the competitive market. Our approach to the competitive generation market, which primarily utilizes long-term contracts, emphasizes earnings and minimizes risk.

A good example of how we are tapping the potential in this market is the venture we recently announced with the Orlando Utilities Commission, Kissimmee Utility Authority, and Florida Municipal Power Agency to develop more than 600 megawatts of new generation in Central Florida.

Our future
We know this business, and we’re committed to getting better at it all the time. New products – such as EnergyDirect.com, which enhances the ability of our business customers to manage their energy use – are providing additional revenue streams. And we are expanding our expertise in providing energy services to customers throughout the region. We expect these and other energy-related products and services to produce $50 million of annual earnings within the next five years. And we will continue to make the infrastructure investments that have helped our region avoid the reliability problems that some other areas of the country have experienced.

I’ve never been more excited about Southern Company and the direction we’re headed. I take great pride in what we accomplished in 2000, and I’m confident about leading this great company into the future. We owe much of our success to the leadership of my predecessor, Bill Dahlberg, who is a good friend as well as a truly visionary leader. I thank him for his many contributions, and I know you will join me in wishing him well in his new endeavors.

A Salute to Bill Dahlberg

All of us at Southern Company are eager to build on what we’ve achieved so far. We are in a business we fully understand and in the markets we know best. We think that’s a winning combination for success and delivering shareholder value in the years ahead.

Thank you for your continued support.



Allen Franklin
April 2, 2001