10-KPeriod: FY2015

SOUTHERN CO Annual Report, Year Ended Dec 31, 2015

Filed February 26, 2016For Securities:SOSOJESOJFSOJCSOJDSOMN

Summary

Southern Company (SO) operates as a holding company with its primary business focused on electricity sales through its four traditional operating companies and Southern Power Company. The filing details the company's diverse operations, including generation, transmission, and distribution of electricity across Alabama, Georgia, Florida, and Mississippi. Southern Power specifically engages in wholesale electricity sales at market-based rates, with a growing portfolio of renewable energy projects. A significant development highlighted is Southern Company's August 2015 merger agreement to acquire AGL Resources, a natural gas distribution company, a move that will expand its energy services footprint into the natural gas sector. The report also details ongoing construction programs, including the significant investments in Plant Vogtle Units 3 and 4 and the Kemper IGCC project, which present both opportunities and risks related to cost overruns and regulatory approvals. The company's financial performance in 2015 showed an increase in net income compared to the previous year, primarily driven by rate increases at its operating companies and a reduction in charges related to the Kemper IGCC project.

Financial Highlights

47 data points
Beta

Revenue

$17.49B

Net Income

$2.44B

13.9% Net Margin

EPS (Diluted)

$2.59

Total Assets

$78.32B

Cash & Equivalents

$1.40B

Free Cash Flow

$600.00M

Financial Statements
Beta
Revenue$17.49B
Operating Expenses$13.21B
Operating Income$4.28B
Net Income$2.44B
EPS (Basic)$2.60
EPS (Diluted)$2.59
Shares Outstanding (Basic)910.00M
Shares Outstanding (Diluted)914.00M

Key Highlights

  • 1Southern Company is a major utility holding company with operations in four Southeastern states through its traditional operating companies (Alabama Power, Georgia Power, Gulf Power, Mississippi Power) and Southern Power Company, which focuses on wholesale electricity sales and renewables.
  • 2The company is undergoing a significant strategic expansion through its proposed acquisition of AGL Resources, which will add natural gas distribution to its portfolio.
  • 3Major construction projects, notably Plant Vogtle Units 3 & 4 and the Kemper IGCC, are underway and represent substantial capital investments with associated risks of cost overruns and project delays.
  • 4Southern Company's financial results for 2015 showed an increase in net income, benefiting from rate increases at its operating subsidiaries and a reduction in charges related to the Kemper IGCC project.
  • 5The company emphasizes customer satisfaction, plant availability, and system reliability as key performance indicators.
  • 6Environmental regulations and compliance costs remain a significant focus, with substantial capital expenditures planned for emissions controls and CCR facility management.

Frequently Asked Questions

Southern Company's primary business segments are the sale of electricity by its four traditional operating companies (Alabama Power, Georgia Power, Gulf Power, and Mississippi Power) and its wholesale electricity business operated by Southern Power Company. Southern Power also has a growing portfolio of renewable energy projects.

Southern Company entered into a merger agreement with AGL Resources in August 2015. The transaction was subject to regulatory approvals from various state commissions and the FCC, with Southern Company expecting to complete the transaction in the second half of 2016. The merger will expand Southern Company's business into natural gas distribution.

The two largest construction projects are Plant Vogtle Units 3 and 4, which are nuclear generating units under construction in Georgia, and Mississippi Power's Kemper IGCC facility, which is an integrated coal gasification combined cycle project. These projects represent significant capital investments and carry risks related to construction schedules and costs.

Southern Company is subject to extensive federal and state environmental regulations impacting air, water, and land resources. The company has invested significantly in environmental capital retrofit projects and anticipates substantial future expenditures for compliance, including those related to emissions controls, ash pond management (CCR Rule), and potential greenhouse gas regulations. The company expects to recover a major portion of these costs through existing ratemaking provisions or market-based contracts.

The Kemper IGCC project significantly impacted Southern Company's financial performance, with the company recording pre-tax charges for estimated probable losses of $365 million in 2015 related to costs exceeding the construction cost cap. These charges negatively affected the company's earnings per share for the year.