As filed with the Securities and Exchange Commission on January 31, 2003
Registration No. 333-101349
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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Amendment No. 2
to
FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
--------------------------------
THE SOUTHERN COMPANY
(Exact name of registrant as specified in its charter)
Delaware 58-0690070
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
270 Peachtree Street, N.W.
Atlanta, Georgia 30303
404-506-5000
(Address, including zip code, and telephone number, including area code, of
registrant's principal executive offices)
TOMMY CHISHOLM, Secretary
THE SOUTHERN COMPANY
270 Peachtree Street, N.W.
Atlanta, Georgia 30303
404-506-0540
(Name, address, including zip code, and telephone number, including area code,
of agent for service)
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The Commission is requested to mail signed copies of all orders,
notices and communications to:
GALE E. KLAPPA JOHN D. McLANAHAN, ESQ.
Executive Vice President, Chief Financial TROUTMAN SANDERS LLP
Officer and Treasurer 600 Peachtree Street, N.E.
THE SOUTHERN COMPANY Suite 5200
270 Peachtree Street, N.W. Atlanta, Georgia 30308-2216
Atlanta, Georgia 30303
Approximate date of commencement of proposed sale to the public: From
time to time after the effective date of this post-effective amendment to the
registration statement.
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If the only securities being registered on this Form are being offered
pursuant to dividend or interest reinvestment plans, please check the following
box. |_|
If any of the securities being registered on this Form are to be offered
on a delayed or continuous basis pursuant to Rule 415 under the Securities Act
of 1933, other than securities offered only in connection with dividend or
interest reinvestment plans, check the following box. |X|
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. |_|
If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. |_|
If delivery of the prospectus is expected to be made pursuant to Rule
434, please check the following box. |_|
CALCULATION OF REGISTRATION FEE
============================= ========================= ======================= ========================= ====================
Proposed Proposed
Title of Each Class Amount Maximum Maximum Amount of
of Securities to be Aggregate Price Aggregate Registration
to be Registered Registered Per Unit (1) Offering Price (1) Fee
----------------------------- ------------------------- ----------------------- ------------------------- --------------------
Common Stock, par value $5 20,000,000 shares $25.58 $511,600,000 $47,068(2)
per share
============================= ========================= ======================= ========================= ====================
(1) Pursuant to Rule 457(c), these figures are based upon the average
of the high and low prices paid for a share of the Company's Common Stock on
November 13, 2002, as reported in the New York Stock Exchange consolidated
reporting system, and are used solely for the purpose of calculating the
registration fee.
(2) Previously paid.
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===============================================================================
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE
OR DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT
SHALL FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF
THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(A),
MAY DETERMINE.
===============================================================================
The within Prospectus contains information required by Rule 429 of the
Commission under the Securities Act of 1933 with respect to 4,109,282 shares
remaining unsold under Registration Statement No. 33-97951, declared effective
March 3, 1995.
PROSPECTUS
THE SOUTHERN COMPANY
Southern Investment Plan
The Southern Company (Southern Company or Company) is pleased to offer the
Southern Investment Plan (Plan), a direct stock purchase plan designed to
provide investors with a convenient method to purchase shares of Southern
Company common stock and reinvest cash dividends in the purchase of additional
shares.
This prospectus is prepared and distributed by Southern Company, the issuer of
the securities offered. This prospectus relates to 4,109,282 shares of common
stock previously registered and is part of a Registration Statement covering an
additional 20,000,000 shares of Southern Company's common stock, $5 par value,
registered for purchase under the Plan.
Shares of common stock will be purchased under the Plan, at the option of the
Company, from original issue shares or shares purchased on the open market. If
purchased from the Company, the price per share will be equal to the average of
high and low market prices for the common stock shares traded on the New York
Stock Exchange on the relevant investment dates. For shares purchased on the
open market, the price per share will be the weighted average price (excluding
broker commissions and related fees) of all shares acquired during an investment
period by a registered broker-dealer acting as an independent agent.
The Company will receive proceeds from the purchase of common stock pursuant to
the Plan only to the extent that such purchases are made directly from the
Company and not from open market purchases. Proceeds received by the Company
(which cannot now be estimated), if any, will be used for general corporate
purposes.
Our common stock is listed on the New York Stock Exchange under the symbol "SO".
SEE PAGE 4 FOR INFORMATION ON CERTAIN RISKS RELATED TO THE PURCHASE OF SOUTHERN
COMPANY COMMON STOCK.
To the extent required by applicable law in any jurisdiction, shares of common
stock offered under the Plan to persons not presently shareholders of record of
common stock are offered only through a registered broker-dealer in such
jurisdiction.
Neither the Securities and Exchange Commission nor any state securities
commission has approved or disapproved of these securities or passed upon the
accuracy or adequacy of this prospectus. Any representation to the contrary is a
criminal offense.
The principal executive offices of the Company are located at 270 Peachtree St.
N.W., Atlanta, Georgia 30303, telephone 404/506-5000. You should read this
prospectus carefully and retain it for future reference.
THE DATE OF THIS PROSPECTUS IS _______________
1
TABLE OF CONTENTS
Southern Investment Plan
Page
PROSPECTUS SUMMARY..................................................3
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RISK FACTORS........................................................4
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SOUTHERN COMPANY OVERVIEW..........................................12
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ADMINISTRATION.....................................................13
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ELIGIBILITY........................................................14
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ENROLLMENT.........................................................14
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DIVIDENDS..........................................................15
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OPTIONAL CASH PAYMENTS.............................................16
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PURCHASE OF COMMON STOCK...........................................18
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PLAN SHARES........................................................19
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SALE OF PLAN SHARES................................................21
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REPORTS TO PARTICIPANTS............................................21
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TERMINATING PLAN PARTICIPATION.....................................22
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COSTS AND EXPENSES.................................................23
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OTHER INFORMATION..................................................24
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INTERPRETATION OF THE PLAN.........................................25
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FEDERAL INCOME TAX CONSEQUENCES....................................25
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WHERE YOU CAN FIND MORE INFORMATION................................26
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EXPERTS............................................................27
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APPENDIX A-FEE SCHEDULE...........................................A-1
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2
PROSPECTUS SUMMARY
ENROLLMENT: The Plan has a direct purchase feature that enables persons not
presently owning Southern Company common stock to apply for enrollment by
submitting an enrollment form and making an initial cash investment of at least
$250 ($25 for employees) for the purchase of common stock. There is a $10
enrollment fee for non-shareholders and non-employees. Shareholders enrolled in
the Plan do not need to take any action to continue to participate. Registered
shareholders may apply for enrollment by submitting the appropriate enrollment
form. If shares of common stock are held in a brokerage account, investors may
participate directly by registering some or all of these shares in the
investor's name or by making arrangements with the broker, bank or other
intermediary account to participate on the investor's behalf.
DIVIDENDS: Participants have the option of receiving or reinvesting the
dividends on Plan and certificated shares. Dividends received can be
electronically deposited to a bank account. Accounts will be credited with
dividends on all whole and fractional shares.
OPTIONAL INVESTMENTS: Participants can invest additional funds through optional
cash payments of at least $25 per single investment up to a maximum total amount
of $300,000 per calendar year. Optional investments can be made occasionally or
at regular intervals. In addition to sending in checks, Participants can also
make monthly optional cash payments via electronic withdrawals (direct debit)
from their bank accounts. Shares will be purchased with cash payments twice a
month.
CERTIFICATES: Stock certificates can be deposited into a Participant's account
as Plan shares.
SALE OF PLAN SHARES: Plan shares credited to an account may be sold through the
Plan, subject to certain restrictions and limitations. A nominal brokerage and
service fee (currently $0.06 per share) and any required tax withholdings and
regulatory fees will be deducted from the proceeds from the sale. Sales requests
are aggregated and generally processed once per week or within five business
days of receipt of the sales request. A check for the proceeds will be made
payable to the registered account owner(s) and mailed via First Class mail three
business days after the sale when the trade settles.
TRANSFER OF SHARES: Participants may direct the transfer of all or a portion of
their Plan shares, subject to standard transfer rules and requirements.
WITHDRAWAL FROM THE PLAN: Participants may terminate participation in the Plan
at any time, except as defined within, by providing written instructions to the
Plan Administrator.
ACCOUNT STATEMENT: Following the end of each calendar quarter, Participants will
be sent a quarterly statement of account that will reflect the shares in the
Plan account, provide a record of dividends reinvested and/or paid, shares
purchased with optional investments, Plan shares sold or transferred and quarter
ending account value.
FEES: Participants are not charged any fees for the purchase of shares through a
Plan account. A one-time enrollment fee of $10 is deducted from the Initial Cash
Payment of non-shareholders and non-employees. A fee/commission of $0.06 per
share is deducted from the proceeds of any sale of Plan shares.
USE OF FUNDS: To the extent that shares for the Plan are purchased from the
Company, the funds will be used for general corporate purposes.
3
RISK FACTORS
You should carefully consider the risks described below as well as other
information contained or incorporated by reference in this prospectus before
buying the securities described in this prospectus. These are risks the Company
considers to be material to your decision whether to invest in the Company's
securities at this time. If any of the following risks occur, the Company's
business, financial condition or results of operations could be materially
harmed. In that case, the value or trading price of the securities described in
this prospectus could decline, and you may lose all or part of your investment.
RISKS RELATED TO THE ENERGY INDUSTRY
-------------------------------------
THE COMPANY IS SUBJECT TO SUBSTANTIAL GOVERNMENTAL REGULATION. COMPLIANCE WITH
CURRENT AND FUTURE REGULATORY REQUIREMENTS AND PROCUREMENT OF NECESSARY
APPROVALS, PERMITS AND CERTIFICATES MAY RESULT IN SUBSTANTIAL COSTS TO THE
COMPANY.
The Company is subject to substantial regulation from federal, state
and local regulatory agencies. The Company and its subsidiaries are required to
comply with numerous laws and regulations and to obtain numerous permits,
approvals and certificates from the governmental agencies that regulate various
aspects of their businesses, including customer rates, service regulations,
retail service territories, sales of securities, asset acquisitions and sales,
accounting policies and practices, and the operation of fossil-fuel,
hydroelectric and nuclear generating facilities. For example, the rates charged
to wholesale customers by Alabama Power, Georgia Power, Gulf Power, Mississippi
Power and Savannah Electric (collectively, the "operating companies") and by
Southern Power, the Company's wholly-owned wholesale generation subsidiary, must
be approved by the Federal Energy Regulatory Commission ("FERC"). In addition,
the respective state public service commissions must approve the operating
companies' rates for retail customers. The Company believes the necessary
permits, approvals and certificates have been obtained for its existing
operations and that its business is conducted in accordance with applicable
laws; however, the Company is unable to predict the impact on its operating
results from future regulatory activities of these agencies.
The Company is also subject to regulation by the Securities and
Exchange Commission ("SEC") under the Public Utility Holding Company Act of
1935, as amended ("Holding Company Act"). The rules and regulations promulgated
under the Holding Company Act impose a number of restrictions on the operations
of registered utility holding companies and their subsidiaries. These
restrictions include a requirement that, subject to a number of exceptions, the
SEC approve in advance securities issuances, acquisitions and dispositions of
utility assets or of securities of utility companies, and acquisitions of other
businesses. The Holding Company Act also generally limits the operations of a
registered holding company to a single integrated public utility system, plus
additional energy-related businesses. The Holding Company Act rules require that
transactions between affiliated companies in a registered holding company system
be performed at cost, with limited exceptions.
The impact of any future revision or changes in interpretations of
existing regulations or the adoption of new laws and regulations applicable to
the Company or any of its subsidiaries cannot now be predicted. Changes in
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regulation or the imposition of additional regulations could influence the
Company's operating environment and may result in substantial costs to the
Company.
GENERAL RISKS RELATED TO OPERATION OF THE COMPANY'S UTILITY SUBSIDIARIES
------------------------------------------------------------------------
THE REGIONAL POWER MARKET IN WHICH THE COMPANY AND ITS SUBSIDIARIES COMPETE HAS
CHANGING TRANSMISSION REGULATORY STRUCTURES, WHICH COULD AFFECT THE OWNERSHIP OF
THESE ASSETS AND RELATED REVENUES AND EXPENSES.
The operating companies currently own and operate transmission
facilities as part of a vertically integrated utility. Transmission revenues are
not separated from generation and distribution revenues in their approved retail
rates. Federal governmental authorities are advocating the formation of regional
transmission organizations and are proposing the adoption of new regulations
that would impact electric markets, including the transmission regulatory
structure. Under this new transmission regulatory structure, the operating
companies would transfer functional control (but not ownership) of their
transmission facilities to an independent third party. Because it remains
unclear how regional transmission organizations will develop or what new market
rules will be established, the Company is unable to assess fully the impact that
these developments may have on its business. The Company's revenues, expenses,
assets and liabilities could be adversely affected by changes in the
transmission regulatory structure in its regional power market.
RECENT EVENTS IN THE ENERGY MARKETS THAT ARE BEYOND THE COMPANY'S CONTROL HAVE
INCREASED THE LEVEL OF PUBLIC AND REGULATORY SCRUTINY IN THE ENERGY INDUSTRY AND
IN THE CAPITAL MARKETS. THE REACTION TO THESE EVENTS MAY RESULT IN NEW LAWS OR
REGULATIONS RELATED TO THE COMPANY'S BUSINESS OPERATIONS OR THE ACCOUNTING
TREATMENT OF ITS EXISTING OPERATIONS WHICH COULD HAVE A NEGATIVE IMPACT ON THE
COMPANY'S NET INCOME OR ACCESS TO CAPITAL.
As a result of the energy crisis in California during the summer of
2001, the filing of bankruptcy by Enron Corporation and investigations by
governmental authorities into energy trading activities, companies generally in
the regulated and unregulated utility businesses have been under an increased
amount of public and regulatory scrutiny. The capital markets and ratings
agencies also have increased their level of scrutiny. This increased scrutiny
could lead to substantial changes in laws and regulations affecting the Company,
including new accounting standards that could change the way the Company is
required to record revenues, expenses, assets and liabilities. These types of
disruptions in the industry and any resulting regulations may have a negative
impact on the Company's net income or access to capital.
DEREGULATION OR RESTRUCTURING IN THE ELECTRIC INDUSTRY MAY RESULT IN INCREASED
COMPETITION AND UNRECOVERED COSTS WHICH COULD NEGATIVELY IMPACT THE COMPANY'S
EARNINGS.
Increased competition which may result from restructuring efforts could
have a significant adverse financial impact on the Company and its operating
companies. Increased competition could result in increased pressure to lower the
cost of electricity. Any adoption in the territories served by the operating
companies of retail competition and the unbundling of regulated energy service
5
could have a significant adverse financial impact on the Company and its
subsidiaries due to an impairment of assets, a loss of retail customers, lower
profit margins or increased costs of capital. The Company cannot predict if or
when it will be subject to changes in legislation or regulation, nor can the
Company predict the impact of these changes.
Additionally, the electric utility industry has experienced a
substantial increase in competition at the wholesale level, caused by changes in
federal law and regulatory policy. As a result of the Public Utility Regulatory
Policies Act of 1978 and the Energy Policy Act of 1992, competition in the
wholesale electricity market has greatly increased due to a greater
participation by traditional electricity suppliers, non-utility generators,
independent power producers, wholesale power marketers and brokers, and due to
the trading of energy futures contracts on various commodities exchanges. In
1996, the FERC issued new rules on transmission service to facilitate
competition in the wholesale market on a nationwide basis. The rules give
greater flexibility and more choices to wholesale power customers. Also, in July
2002, the FERC issued a notice of proposed rulemaking (which has not yet been
adopted) related to open access transmission service and standard electricity
market design. As a result of the changing regulatory environment and the
relatively low barriers to entry (which include, in addition to open access
transmission service, relatively low construction costs for new generating
facilities), the Company expects competition to steadily increase. This
increased competition could affect the Company's load forecasts, plans for power
supply and wholesale energy sales and related revenues. The effect on the
Company's net income and financial condition could vary depending on the extent
to which: (i) additional generation is built to compete in the wholesale market;
(ii) new opportunities are created for the Company to expand its wholesale load;
or (iii) current wholesale customers elect to purchase from other suppliers
after existing contracts expire.
RISKS RELATED TO ENVIRONMENTAL REGULATION
-----------------------------------------
THE COMPANY'S COSTS OF COMPLIANCE WITH ENVIRONMENTAL LAWS ARE SIGNIFICANT. THE
COSTS OF COMPLIANCE WITH FUTURE ENVIRONMENTAL LAWS AND THE INCURRENCE OF
ENVIRONMENTAL LIABILITIES COULD HARM THE COMPANY'S CASH FLOW AND PROFITABILITY.
The Company and its subsidiaries are subject to extensive federal,
state and local environmental requirements which, among other things, regulate
air emissions, water discharges and the management of hazardous and solid waste
in order to adequately protect the environment. Compliance with these legal
requirements requires the Company to commit significant capital toward
environmental monitoring, installation of pollution control equipment, emissions
fees and permits at all of its facilities. These expenditures are significant
and the Company expects that they will increase in the future. For example,
construction expenditures for achieving compliance with Phase I and II of the
Clean Air Act totaled approximately $400 million. Construction expenditures for
compliance with one-hour ozone non-attainment standards in Atlanta and
Birmingham are expected to total approximately $940 million when completed in
2003.
If the Company fails to comply with environmental laws and regulations,
even if caused by factors beyond its control, that failure may result in the
assessment of civil or criminal penalties and fines against the Company. The
6
Environmental Protection Agency has filed civil actions against Alabama Power,
Georgia Power and Savannah Electric alleging violations of the new source review
provisions of the Clean Air Act. An adverse outcome in any one of these cases
could require substantial capital expenditures that cannot be determined at this
time and could require payment of substantial penalties.
Existing environmental laws and regulations may be revised, or new laws
and regulations seeking to protect the environment may be adopted or become
applicable to the Company. Revised or additional laws and regulations could
result in additional operating restrictions on the Company's facilities or
increased compliance costs which may not be fully recoverable from the Company's
customers and would therefore reduce the Company's net income.
RISKS RELATED TO THE COMPANY AND ITS BUSINESS
---------------------------------------------
THE COMPANY MAY BE UNABLE TO MEET ITS ONGOING AND FUTURE FINANCIAL OBLIGATIONS
AND TO PAY DIVIDENDS ON ITS COMMON STOCK IF ITS SUBSIDIARIES ARE UNABLE TO PAY
UPSTREAM DIVIDENDS OR REPAY FUNDS TO THE COMPANY.
The Company is a holding company and, as such, the Company has no
operations of its own. The Company's ability to meet its financial obligations
and to pay dividends on its common stock at the current rate is primarily
dependent on the earnings and cash flows of its subsidiaries and their ability
to pay upstream dividends or to repay funds to the Company. Prior to funding the
Company, the Company's subsidiaries have financial obligations that must be
satisfied, including among others, debt service and preferred stock dividends.
THE COMPANY'S FINANCIAL PERFORMANCE MAY BE ADVERSELY AFFECTED IF ITS
SUBSIDIARIES ARE UNABLE TO SUCCESSFULLY OPERATE THEIR ELECTRIC GENERATING
FACILITIES.
The Company's financial performance depends on the successful operation
of its subsidiaries' electric generating facilities. Operating electric
generating facilities involves many risks, including:
o operator error and breakdown or failure of equipment or processes;
o operating limitations that may be imposed by environmental or other
regulatory requirements;
o labor disputes;
o fuel supply interruptions; and
o catastrophic events such as fires, earthquakes, explosions, floods or
other similar occurrences.
7
A decrease or elimination of revenues from power produced by the
electric generating facilities or an increase in the cost of operating the
facilities would reduce the Company's net income and could decrease or eliminate
funds available to the Company.
CHANGES IN TECHNOLOGY MAY MAKE THE COMPANY'S ELECTRIC GENERATING FACILITIES LESS
COMPETITIVE.
A key element of the Company's business model is that generating power
at central power plants achieves economies of scale and produces power at
relatively low cost. There are other technologies that produce power, most
notably fuel cells, microturbines, windmills and solar cells. It is possible
that advances in technology will reduce the cost of alternative methods of
producing power to a level that is competitive with that of most central power
station electric production. If this were to happen and if these technologies
achieved economies of scale, the Company's market share could be eroded, and the
value of its electric generating facilities could be reduced. Changes in
technology could also alter the channels through which retail electric customers
buy power, which could reduce the Company's revenues or increase expenses.
OPERATION OF NUCLEAR FACILITIES INVOLVES INHERENT RISKS, INCLUDING
ENVIRONMENTAL, HEALTH, REGULATORY, TERRORISM AND FINANCIAL RISKS THAT COULD
RESULT IN FINES OR THE CLOSURE OF THE COMPANY'S NUCLEAR UNITS, AND WHICH MAY
PRESENT POTENTIAL EXPOSURES IN EXCESS OF THE COMPANY'S INSURANCE COVERAGE.
As of December 31, 2002, the Company owns and operates six nuclear
units through Alabama Power (two units) and through Georgia Power, which holds
undivided interests in, and contracts for operation of, four units. These six
nuclear units represent approximately 3,680 megawatts, or 10.1% of the Company's
generation capacity. The Company's nuclear facilities are subject to
environmental, health and financial risks such as the ability to dispose of
spent nuclear fuel, the ability to maintain adequate reserves for
decommissioning, potential liabilities arising out of the operation of these
facilities and the costs of securing the facilities against possible terrorist
attacks. The Company maintains decommissioning trusts and external insurance
coverage to minimize the financial exposure to these risks; however, it is
possible that damages could exceed the amount of the Company's insurance
coverage.
The Nuclear Regulatory Commission ("NRC") has broad authority under
federal law to impose licensing and safety-related requirements for the
operation of nuclear generation facilities. In the event of non-compliance, the
NRC has the authority to impose fines or shut down a unit, or both, depending
upon its assessment of the severity of the situation, until compliance is
achieved. Recent NRC orders related to increased security measures and any
future safety requirements promulgated by the NRC could require the Company to
make substantial capital expenditures at its nuclear plants. In addition,
although the Company has no reason to anticipate a serious nuclear incident at
its plants, if an incident did occur, it could result in substantial costs to
the Company. A major incident at a nuclear facility anywhere in the world could
cause the NRC to limit or prohibit the operation or licensing of any domestic
nuclear unit.
The Company's facilities require licenses that need to be renewed or
extended in order to continue operating. As a result of potential terrorist
threats and increased public scrutiny of utilities, the licensing process could
8
result in increased licensing or compliance costs that are difficult or
impossible to predict.
THE COMPANY'S GENERATION AND MARKETING OPERATIONS ARE SUBJECT TO RISKS, MANY OF
WHICH ARE BEYOND ITS CONTROL, THAT MAY REDUCE THE COMPANY'S REVENUES AND
INCREASE ITS COSTS.
The Company's generation and marketing operations are subject to
changes in power prices or fuel costs, which could increase the cost of
producing power or decrease the amount the Company receives from the sale of
power. The market prices for these commodities may fluctuate over relatively
short periods of time. The Company attempts to mitigate risks associated with
fluctuating fuel costs by passing these costs on to customers in its power
purchase agreements. Among the factors that could influence power prices and
fuel costs are:
o prevailing market prices for coal, natural gas, fuel oil and other
fuels used in the Company's generation facilities, including
associated transportation costs, and supplies of such commodities;
o demand for energy and the extent of additional supplies of energy
available from current or new competitors;
o liquidity in the general wholesale electricity market;
o weather conditions impacting demand for electricity;
o seasonality;
o transmission or transportation constraints or inefficiencies;
o availability of competitively priced alternative energy sources;
o natural disasters, wars, embargos, acts of terrorism and other
catastrophic events; and
o federal, state and foreign energy and environmental regulation and
legislation.
Certain of these factors could increase the Company's expenses. For the
operating companies, such increases may not be fully recoverable through rates.
Other of these factors could reduce the Company's revenues.
THE COMPANY MAY NOT BE ABLE TO OBTAIN ADEQUATE FUEL SUPPLIES, WHICH COULD LIMIT
ITS ABILITY TO OPERATE ITS FACILITIES.
The Company purchases fuel from a number of suppliers. Disruption in
the delivery of fuel, including disruptions as a result of, among other things,
weather, labor relations or environmental regulations affecting the Company's
fuel suppliers, could limit the Company's ability to operate its facilities, and
thus, reduce its net income.
9
DEMAND FOR POWER COULD EXCEED THE COMPANY'S SUPPLY CAPACITY, RESULTING IN
INCREASED COSTS TO THE COMPANY FOR PURCHASING CAPACITY IN THE OPEN MARKET OR
BUILDING ADDITIONAL GENERATION CAPABILITIES.
The Company is currently obligated to supply power to regulated retail
and wholesale customers. At peak times, the demand for power required to meet
this obligation could exceed the Company's available generation capacity. Market
or competitive forces may require that the Company purchase capacity on the open
market or build additional generation capabilities. Because regulators may not
permit the operating companies to pass all of these purchase or construction
costs on to their customers, the operating companies may not recover any of
these costs or may have exposure to regulatory lag associated with the time
between the incurrence of costs of purchased or constructed capacity and the
operating companies' recovery in customers' rates. Under Southern Power's
long-term, fixed price power purchase agreements, it would not have the ability
to recover any of these costs.
THE COMPANY'S OPERATING RESULTS ARE AFFECTED BY WEATHER CONDITIONS AND MAY
FLUCTUATE ON A SEASONAL AND QUARTERLY BASIS.
Electric power generation is generally a seasonal business. In many
parts of the country, demand for power peaks during the hot summer months, with
market prices also peaking at that time. In other areas, power demand peaks
during the winter. As a result, the Company's overall operating results in the
future may fluctuate substantially on a seasonal basis. In addition, the Company
has historically sold less power, and consequently earned less income, when
weather conditions are milder. Unusually mild weather in the future could reduce
the Company's revenues, net income, available cash and borrowing ability.
RISKS RELATED TO MARKET AND ECONOMIC VOLATILITY
-----------------------------------------------
THE COMPANY'S BUSINESS IS DEPENDENT ON ITS ABILITY TO SUCCESSFULLY ACCESS
CAPITAL MARKETS. THE COMPANY'S INABILITY TO ACCESS CAPITAL MAY LIMIT ITS ABILITY
TO EXECUTE ITS BUSINESS PLAN OR PURSUE IMPROVEMENTS AND MAKE ACQUISITIONS THAT
THE COMPANY MAY OTHERWISE RELY ON FOR FUTURE GROWTH.
The Company relies on access to both short-term money markets and
longer-term capital markets as a significant source of liquidity for capital
requirements not satisfied by the cash flow from its operations. If the Company
is not able to access capital at competitive rates, its ability to implement its
business plan or pursue improvements and make acquisitions that the Company may
otherwise rely on for future growth will be limited. The Company believes that
it will maintain sufficient access to these financial markets based upon current
credit ratings. However, certain market disruptions or a downgrade of the
Company's credit rating may increase its cost of borrowing or adversely affect
its ability to raise capital through the issuance of securities or other
borrowing arrangements. Such disruptions could include:
o an economic downturn;
10
o the bankruptcy of an unrelated energy company;
o capital market conditions generally;
o market prices for electricity and gas;
o terrorist attacks or threatened attacks on the Company's facilities or
unrelated energy companies;
o war or threat of war; or
o the overall health of the utility industry.
THE COMPANY IS SUBJECT TO RISKS ASSOCIATED WITH A CHANGING ECONOMIC ENVIRONMENT,
INCLUDING THE COMPANY'S ABILITY TO OBTAIN INSURANCE, THE FINANCIAL STABILITY OF
ITS CUSTOMERS AND THE COMPANY'S ABILITY TO RAISE CAPITAL.
Due to the September 11, 2001 terrorist attacks and the resulting
ongoing war against terrorism by the United States, the nation's economy and
financial markets have been disrupted in general. Additionally, the bankruptcy
of Enron Corporation and events related to the California electric market crisis
have both limited the availability and increased the cost of capital for the
Company's businesses and that of the Company's competitors. The insurance
industry has also been disrupted by these events. The availability of insurance
covering risks the Company and its competitors typically insure against may
decrease, and the insurance that the Company is able to obtain may have higher
deductibles, higher premiums and more restrictive policy terms. The continuation
of the current economic downturn and disruption of financial markets could also
constrain the capital available to the Company's industry and could reduce the
Company's access to funding for its operations, as well as the financial
stability of its customers and counterparties. These factors could adversely
affect the Company's subsidiaries' ability to achieve energy sales growth,
thereby decreasing the Company's level of future earnings.
11
SOUTHERN COMPANY OVERVIEW
Southern Company (NYSE: SO) is a super-regional energy company with more than
36,000 megawatts of electric generating capacity in the Southeast. It is one of
the largest producers of electricity in the United States. Southern Company
reported earnings for 2001 of $1.12 billion. As of the end of 2001, the Company
employed more than 26,000 people.
Southern Company has paid a dividend to its shareholders for 220 consecutive
quarters - dating back to 1948. For the period March 6, 2000 through June 6,
2002, the dividend rate paid was $.335 per share. For the dividend payment dates
of September 6, 2002 and December 6, 2002, the dividend rate paid was $.3425 per
share.
Southern Company generated 165 billion kilowatt-hours of electricity in 2001 at
its five Southeastern electric utilities: Alabama Power, Georgia Power, Gulf
Power, Mississippi Power and Savannah Electric. Through these utilities,
Southern Company supplies energy to a 120,000 square mile service territory
spanning most of Georgia and Alabama, southeastern Mississippi and the panhandle
region of Florida.
In addition to the electric utilities listed above, Southern Company also owns
an energy services business - Southern Company Energy Solutions, a competitive
retail natural gas business - Southern Company Gas, a nuclear plant operations
subsidiary - Southern Nuclear, wireless communications and fiber optics
businesses - Southern LINC and Southern Telecom, and other subsidiaries
including businesses involved in passive investments in synthetic coal-based
fuel products and generation and energy-related assets in the electric industry.
Through its Southern Power subsidiary, Southern Company participates in the
competitive generation business in the Southeast.
Southern Company has been listed on the New York Stock Exchange ("NYSE") since
September 30, 1949. With more than 500,000 shareholders, Southern Company common
stock is one of the most widely held stocks in the United States.
For more information about Southern Company, visit the web site at
http://www.southerncompany.com.
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ADMINISTRATION
1. WHO ADMINISTERS THE PLAN?
The Plan is administered by Southern Company Services, Inc. ("SCS"), the
Company's stock transfer agent, registrar and dividend disbursing agent. As
Administrator, SCS acts as agent for Participants and keeps records, sends
statements and performs other duties relating to the Plan. If SCS resigns as
Administrator, Southern Company would designate a new administrator.
2. HOW DO I CONTACT THE ADMINISTRATOR?
MAIL COURIER
SCS Stockholder Services SCS Stockholder Services
P. O. Box 54250 270 Peachtree St. N.W.
Atlanta, Georgia 30303-0250 16th Floor
Atlanta, Georgia 30303
PHONE E-MAIL
Toll-free 800/554-7626 stockholders@southerncompany.com
FAX 404/506-0945
When communicating with the Administrator, Participants should provide their
account number, taxpayer identification number and a daytime telephone number.
Plan documents and transaction request forms can be downloaded from the Southern
Company web site at http://www.southerncompany.com.
3. IN WHAT FORM ARE INSTRUCTIONS GIVEN TO THE ADMINISTRATOR?
Generally, instructions from a Participant to the Administrator must be in
writing. In the future, the Administrator may allow certain instructions to be
given in other forms.
4. IS IT IMPORTANT THAT I STAY IN CONTACT WITH THE ADMINISTRATOR?
Yes. Many state unclaimed property laws specify that if an account owner does
not initiate "active contact" with an administrator or agent during any
three-year period, the property in the account may be deemed "abandoned." For
accounts that meet a state's definition of "abandoned," the administrator may be
legally required to transfer the property in the account, including shares and
dividends, to the state of the account's last known residence. To prevent this
from occurring to a Plan account, Participants should immediately notify the
Administrator of any change of address and respond as directed to mailings
requesting they contact the Administrator.
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5. MAY THE PLAN BE AMENDED, SUSPENDED OR TERMINATED?
Yes. Southern Company reserves the right to suspend, modify or terminate the
Plan at any time. All Participants will receive notice of any such suspension,
substantive modification or termination.
6. WHO PURCHASES AND SELLS STOCK FOR THE PLAN?
The Administrator appoints a registered broker-dealer or bank as independent
agent to purchase and sell stock on the open market on behalf of the Plan. The
Administrator reserves the right to change the independent agent without notice.
ELIGIBILITY
7. WHO IS ELIGIBLE TO PARTICIPATE IN THE PLAN?
Any person or legal entity residing in the United States, whether or not a
common stock shareholder of record, is eligible to participate in the Plan.
Citizens or residents of a country other than the United States, its territories
and possessions, are eligible to participate if such participation would not
violate laws applicable to the Company or the Participant.
ENROLLMENT
8. HOW DOES AN INVESTOR APPLY FOR ENROLLMENT IN THE PLAN?
O SHAREHOLDERS OF RECORD:
Shareholders who have a current account but are not enrolled in the Plan may
apply by sending a completed Current Shareholder Enrollment Form to the
Administrator. You can request a Form by calling Stockholder Services or by
downloading the Form from the Company's web site. There is no enrollment fee for
shareholders of record.
O ELIGIBLE INVESTORS:
Eligible investors may apply by completing all required sections of the New
Investor Enrollment Form and sending it to the Administrator. The Form can be
downloaded from the Company's web site. The Form must be accompanied by an
Initial Cash Payment of one check or money order made payable in U.S. dollars to
Southern Company. The minimum amount for an Initial Cash Payment is $250 and the
amount can not exceed $300,000. A $10 enrollment fee will be deducted from the
Initial Cash Payment. Do not send cash or third party checks. No interest will
be paid on Initial Cash Payments held for investment pending the purchase of
shares.
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If the Plan account will be registered in more than one name, all potential
Participants must sign the New Investor Enrollment Form. The Administrator
reserves the right to limit or combine Plan accounts with identical taxpayer
identification numbers and/or legal registrations.
O EMPLOYEES:
Full or part-time employees of the Company or any of its subsidiaries may apply
by returning a completed Employee Enrollment Form and a check for at least $25.
The Form is available from the Administrator. There is no enrollment fee.
Accounts established through the employee enrollment process must contain the
employee's name in the registration. No interest will be paid on Initial Cash
Payments held for investment pending the purchase of shares.
O BENEFICIAL HOLDERS:
Beneficial owners of common stock whose shares are held in "street-name"
brokerage accounts can instruct the broker to register shares in record form and
then apply for enrollment as stated above for Shareholders of Record. In the
alternative, beneficial owners can make arrangements with their broker to
participate on their behalf if such service is offered.
9. WHEN WILL ENROLLMENT TAKE EFFECT?
Investors applying for enrollment will become Participants after a properly
completed enrollment form has been received and accepted by the Administrator.
DIVIDENDS
Dividend record and payment dates are subject to declaration by the Company's
Board of Directors. The dividend record date is the date on which you must be
registered as a shareholder in order to receive a declared dividend. Record
dates are generally the first Monday of February, May, August and November. The
payment date is the day when the dividend is payable to shareholders of record.
Payment dates are generally the sixth day of March, June, September and
December. When a Participant chooses or changes a dividend option, written
instructions must be received by the Administrator on or before a dividend
record date to be effective for the related dividend payment date.
Unless otherwise specified, all Plan shares will be treated as Full Dividend
Reinvestment. A Participant may change a dividend option at any time by sending
written instructions or a signed Transaction Form to the Administrator. No
interest will be paid on dividends held for investment pending the purchase of
shares.
10. WHAT ARE THE OPTIONS FOR REINVESTING OR RECEIVING DIVIDENDS?
Participants have three options regarding how their dividends can be treated
under the Plan. Optional Cash Payments can be made under any option.
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A. FULL DIVIDEND REINVESTMENT: Reinvest all dividends payable on Southern
Company common stock shares including certificated shares and Plan shares.
B. PARTIAL DIVIDEND REINVESTMENT:
1. Receive dividends on all certificated shares and reinvest the
dividends on all Plan shares.
2. Reinvest the dividends on a specified number of whole shares and
receive dividends on the remaining shares. Shares specified to
reinvest dividends may be made up of a combination of certificated
shares and Plan shares.
3. Receive dividends on a specified number of whole shares and
reinvest dividends on the remaining shares. Shares specified to
receive dividends may be made up of a combination of certificated
shares and Plan shares.
C. CASH DIVIDENDS: Receive all dividends payable on Southern Company common
stock shares including certificated shares and Plan shares.
11. CAN I HAVE MY CASH DIVIDENDS ELECTRONICALLY DEPOSITED?
Yes. Participants may request that cash dividends be transmitted to a
Participant's pre-designated bank account. No third party accounts can be
utilized. The account must be at a financial institution that is a member of the
National Automated Clearing House Association. To initiate this service,
Participants must send a completed Electronic Dividend Deposit Authorization
Form along with a voided check or savings deposit slip to the Administrator. The
Form can be found on a dividend check stub or can be downloaded from the
Company's web site. Initial set-up or changes to electronic deposit instructions
will be made as soon as practicable.
OPTIONAL CASH PAYMENTS
12. WHAT ARE THE MINIMUM AND MAXIMUM AMOUNTS FOR OPTIONAL CASH PAYMENTS?
The minimum optional cash payment (the "Optional Cash Payment") is $25 per
payment and the maximum is $300,000. The total amount of Optional Cash Payments
that can be credited to any individual account during a calendar year is
$300,000, which includes the Initial Cash Payment. There is no obligation to
make an Optional Cash Payment in any period, and the same amount need not be
sent each time. No interest will be paid on Optional Cash Payments held for
investment pending the purchase of shares.
13. HOW DO I MAKE AN OPTIONAL CASH PAYMENT?
Participants should send one check or money order per account payable in U.S.
dollars to Southern Company. Cash or third party checks are not allowed. The
check should be accompanied by the Optional Cash Payment portion of the
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Participant's Plan Statement and mailed to Stockholder Services. If the check or
money order representing an Optional Cash Payment does not have a Plan account
number written on it, the check or money order may be returned.
14. ARE THERE DEADLINES FOR RECEIPT OF OPTIONAL CASH PAYMENTS?
Yes. Optional Cash Payments must be received at Stockholder Services at least
three business days prior to the 10th and 25th of each month. Payments received
after the deadline will be credited to the Participant's account and used to
purchase shares in the next investment period.
15. CAN I HAVE OPTIONAL CASH PAYMENTS AUTOMATICALLY WITHDRAWN FROM MY BANK
ACCOUNT?
Yes. You can authorize monthly electronic withdrawals (direct debit) from your
account at a financial institution that is a member of the National Automated
Clearing House Association. No third party accounts can be utilized. The minimum
amount for monthly direct debit is $25. To initiate this service, Participants
must send a completed Direct Debit Authorization Form to the Administrator. The
Form can be downloaded from the Company's web site.
Funds will be withdrawn from the Participant's account on the last banking day
of each month and will be used to purchase common stock during the investment
period following the date of such debit. To change any aspect of the
instruction, Participants must send a revised Direct Debit Authorization/Change
Form or written instructions to the Administrator. Initial set-up or changes to
direct debit instructions will be made as soon as practicable.
16. CAN A CASH PAYMENT BE REFUNDED?
Yes. A written request to refund a cash payment must be received by the
Administrator at least three business days prior to the start of an Investment
Period (10th and 25th of each month). Refund checks will be issued only after
confirmation that the monies representing the payment to be refunded have been
received by the Administrator.
17. HOW ARE PAYMENTS WITH "INSUFFICIENT FUNDS" HANDLED?
If the Administrator does not receive credit for a cash payment because of
insufficient funds or incorrect draft information, the Administrator will
consider the request for such purchase null and void and will immediately remove
from the Participant's account any shares already purchased upon the prior
credit of such funds. The Administrator is entitled to place a hold on the Plan
account until an "insufficient funds" fee is received from the Participant or to
sell any such shares to satisfy any uncollected amounts. In the event the net
proceeds of the sale of such shares are insufficient to satisfy the balance of
such uncollected amounts, the Administrator is entitled to sell such additional
shares from the Participant's account as are necessary to satisfy the
uncollected balance. (See Appendix A -- Fee Schedule).
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PURCHASE OF COMMON STOCK
18. WHAT IS THE SOURCE OF COMMON STOCK PURCHASED THROUGH THE PLAN?
At the Company's discretion, common stock for the Plan will be purchased on the
open market or purchased directly from the Company.
19. HOW IS COMMON STOCK PURCHASED ON THE OPEN MARKET?
The Administrator will separately aggregate Participants' dividends for
reinvestment and initial/optional cash payments and notify the independent agent
of the amount available for purchase for the relevant Investment Period. The
independent agent has sole control over the time and price at which it purchases
common stock for the Plan.
20. HOW IS THE PURCHASE PRICE DETERMINED?
The price per share for shares purchased on the open market will be the weighted
average price paid by the independent agent to acquire the shares, excluding
broker commissions and related fees.
The price per share for shares purchased from the Company with dividends will be
equal to the average of the high and low market prices on the dividend payment
date. For shares purchased from the Company with cash payments, the price per
share will be equal to the average of the high and low market prices on the 10th
or 25th of the month, as applicable. The price for shares purchased from the
Company will be calculated based on market prices as reported by the NYSE for
composite transactions or other authoritative source reporting NYSE composite
transactions.
When shares are purchased from the Company and the common stock is not traded on
the NYSE on the days specified above, the price for shares purchased with
dividends will be equal to the average of the high and low market prices on the
trading days immediately preceding and following the dividend payment date. For
shares purchased with cash payments, the price will be the average of the high
and low market prices on the trading day immediately following the 10th or 25th.
The Company will pay the brokerage commission on shares purchased on the open
market. These commissions will be considered as additional income to
Participants for tax purposes and will be reported on IRS Form 1099-DIV year-end
tax statements. There are no commissions on shares purchased from the Company.
21. WHEN ARE THE INVESTMENT PERIODS FOR THE PURCHASE OF SHARES?
DIVIDENDS:
There is one Investment Period per quarter for dividends. If shares are to be
purchased on the open market, purchases may begin up to three business days
before the dividend payment date and will generally be completed within thirty
days after the dividend payment date, except where beginning at an earlier date
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or completion at a later date is necessary or advisable under applicable federal
regulations and securities laws.
CASH PAYMENTS:
There are two Investment Periods each month for cash payments which start on the
10th or 25th of each month, respectively. If shares are to be purchased on the
open market, purchases can begin at the start of the Investment Period or, if
the NYSE is closed, the next business day. Purchases will usually be completed
before the next Investment Period begins, but no longer than thirty days after
receipt of cash payments. However, the independent agent in its sole discretion
may extend the purchase period if completion at a later date is necessary or
advisable under applicable federal regulations and securities laws.
22. WHEN WILL PURCHASED SHARES BE CREDITED TO MY ACCOUNT?
Shares purchased on the open market will be credited to Participant accounts in
book-entry form as of the date the independent agent notifies the Administrator
that purchases of all shares have settled. An advice confirming the transaction
will be mailed after the settlement date.
Shares purchased from the Company with dividends will be credited to Participant
accounts in book-entry form on or about the dividend payment date. Shares
purchased from the Company with cash payments will be credited to Participant
accounts in book-entry form on or about the 10th or 25th of the month.
23. CAN I REQUEST THE PURCHASE OF A SPECIFIC NUMBER OF SHARES, A SPECIFIC
PURCHASE PRICE OR A SPECIFIC PURCHASE DATE?
No.
PLAN SHARES
24. HOW DO I TRANSFER MY PLAN SHARES?
A Participant may transfer the ownership of all or a portion of Plan shares by
sending the Administrator a written transfer request along with a properly
executed "stock power" (which may be obtained from most commercial banks or
brokers). A Stock Transfer Request Form and transfer instructions can be
downloaded from the Company's web site.
Generally, the signatures of all account owners must be "medallion guaranteed"
by a guarantor, generally commercial banks and NYSE member brokers, who
participates in the Securities Transfer Agents Medallion program or other
recognized signature guarantee programs. Plan Participants may not pledge or
assign Plan shares.
Shares from Plan accounts will be transferred in book-entry form. For transfers
to an existing Plan account, the transfer instructions should specify the
recipient's Plan account number. If the transfer results in the establishment of
a new account, all transferred shares will automatically be enrolled as Full
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Dividend Reinvestment. New Plan Participants will be sent Plan information and
forms through which they may make elections with regard to Plan options and
services, including the reinvestment of dividends.
25. CAN I OBTAIN A STOCK CERTIFICATE FOR MY PLAN SHARES?
Yes. Participants can obtain a certificate for any or all of their whole Plan
shares by sending a written request to the Administrator. A single certificate
will be issued within two business days of receipt of the written request if no
sale of shares is involved. The issuance of Plan shares in certificate form will
not change a Participant's reinvestment instructions unless otherwise directed.
Shares issued from a Plan account in certificate form will be produced in the
name(s) in which the account is registered. A certificate for a fraction of a
share cannot be issued.
26. CAN I "GIFT" SHARES TO OTHERS?
Yes. To "gift" Plan shares requires a legal transfer to or the purchase of
shares for another person. No provision is available through the Plan for
delaying confirmation of the transaction to the recipient of either a transfer
or purchase. Shares of common stock may be provided in three ways:
A. Submit a completed New Investor Enrollment Form with a minimum Initial
Cash Payment of $250 to establish a Plan account in the recipient's name.
B. Submit an Optional Cash Payment of at least $25 on behalf of a person
who is currently a Participant and provide Participant's account number.
C. Transfer shares from existing Participant's account to another person.
Shares purchased or transferred in any of the above ways will be credited to the
recipient's account in book-entry form. All Plan provisions relating to the
establishment of a new account, processing of cash payments and the transfer of
shares apply to the above.
27. CAN I HAVE MY STOCK CERTIFICATES DEPOSITED TO A PLAN ACCOUNT?
Yes. Participants may send the Administrator their common stock certificate(s)
and request in writing that they be deposited as Plan shares into their account.
It is suggested that stock certificates be sent "registered and insured" mail or
by some other safe means as the Participant bears the risk of loss in transit.
The certificate(s) should not be endorsed.
A completed Current Shareholder Enrollment Form must also be provided if the
account is not already enrolled in the Plan. The Form can be downloaded from the
Company's web site. Shares deposited in the Plan will be in book-entry form.
Deposited shares will be enrolled as Full Dividend Reinvestment unless otherwise
instructed.
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SALE OF PLAN SHARES
28. HOW DO I REQUEST THAT MY PLAN SHARES BE SOLD?
Participants should send a completed Sell portion of a Plan statement or a
written sales request to the Administrator. The request must be signed by ALL
account owners. Only Plan shares can be sold through the Plan. Participants may
request the sale of all or a specified number of whole Plan shares. Certificated
shares must first be deposited to a properly enrolled Plan account as book-entry
shares before they can be sold.
Plan shares cannot be sold outside of the Plan. To sell shares outside the Plan
through a private transaction or through a broker, Participants should request
that a stock certificate be issued and sent to them.
29. HOW AND WHEN ARE PLAN SHARES SOLD?
Sales requests are aggregated and generally processed once per week or within
five business days of receipt. The Administrator forwards sales instructions to
the independent agent who will process the order on the open market. The
Participant will receive the proceeds of the sale, less any applicable broker
commission and related service and regulatory fees (see Appendix A --Fee
Schedule). A check for the sale proceeds will be made payable to the registered
account owner(s) and will be mailed First Class by the Administrator three
business days after the sale date when the trade settles.
30. IS THERE A TIME WHEN I CANNOT SELL PLAN SHARES?
Yes. Shares will not be sold during the dividend posting period which extends
from ex-dividend date, as established by the NYSE, to four business days after
dividend record date. Any sales requests received during this period will be
processed after the dividend posting period ends.
31. CAN I REQUEST THE SALE OF MY SHARES AT A SPECIFIC PRICE OR ON A SPECIFIC
DATE?
No.
REPORTS TO PARTICIPANTS
32. WHAT REPORTS WILL I RECEIVE AS A PARTICIPANT?
Following the end of each calendar quarter, the Administrator will send
statements to Plan Participants. Generally, these statements will be placed in
the mail within five to seven business days after the end of the quarter. The
statement will reflect the shares in the Plan account and provide a record of
dividends paid and/or reinvested, shares purchased with Initial and Optional
Cash Payments, certificates deposited, shares sold or transferred and quarter
ending account value. You can also view your account information online (see Q.
45).
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Participants will also receive a year-end statement summarizing Plan
activity during the year and IRS Form 1099-DIV showing total dividends paid. If
applicable, IRS Form 1099-B will be provided separately representing the
proceeds of any stock sale. Each Participant will also receive any
communications sent to record holders of common stock.
Participants should retain all statements. These statements provide cost basis
information which is necessary for certain tax calculations. Requests for
replacement account activity information may entail a service fee.
TERMINATING PLAN PARTICIPATION
33. HOW DO I TERMINATE MY PARTICIPATION IN THE PLAN?
Participants can terminate participation in the Plan by sending the
Administrator a signed written request. The request must be signed by ALL
account owners. Based on these instructions, the Administrator will:
A. Issue a certificate for the whole Plan shares and forward the
certificate and a check for the proceeds from the sale of any fractional
share (less applicable broker commissions and service fees); OR
B. Issue a certificate for a portion of the whole Plan shares, sell all
remaining Plan shares and forward the certificate and a check for the
proceeds from the sale of shares (less applicable broker commissions and
service fees); OR
C. Sell all Plan shares and forward a check for the proceeds (less
applicable broker commissions and service fees).
A check for the proceeds from any sale will generally be mailed First Class by
the Administrator three business days after the sale date when the trade
settles. Future dividends on certificated shares previously enrolled in the Plan
will be paid by check. All Plan provisions relating to the sale of shares
through the Plan apply in terminating participation in the Plan.
If a request to terminate participation is received after the dividend posting
period ends, but before the related dividend payment date, a dividend check will
be mailed separately to the Participant as soon as practicable following the
dividend payment date.
34. IS THERE A TIME WHEN I CANNOT TERMINATE MY PLAN PARTICIPATION?
Yes. During the dividend posting period which extends from the ex-dividend date,
as established by the NYSE, to four business days after dividend record date,
Plan participation cannot be terminated. Requests received during this period
will be processed when the dividend posting period ends.
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35. CAN THE ADMINISTRATOR TERMINATE MY PARTICIPATION IN THE PLAN?
Yes. If the book-entry share balance in a Plan account is less than one whole
share, the Administrator reserves the right to terminate the account without
advance notice. A check for the value of any fractional share (based on the then
current market price, less applicable broker commissions and service fees) will
be sent to the Participant. The Administrator reserves the right to waive
certain sales fees when terminating participation of accounts with a fractional
share. Further, the Administrator reserves the right to modify, suspend or
terminate participation in the Plan by otherwise eligible persons in order to
eliminate practices which are inconsistent with the purpose of the Plan.
COSTS AND EXPENSES
36. ARE THERE ANY COSTS TO ENROLL IN THE PLAN?
Yes. There is a one time fee to enroll in the Plan for eligible investors other
than shareholders of record and employees of the Company or any of its
subsidiaries. (See Appendix A -- Fee Schedule).
37. ARE THERE ANY COSTS IN CONNECTION WITH MY PARTICIPATION OR STOCK PURCHASES
UNDER THE PLAN?
No. All costs of administration of the Plan and purchase commissions are paid by
the Company.
38. IS THERE A COST TO SELL SHARES THROUGH THE PLAN?
Yes. Participants pay a broker commission/service fee on each share of stock
sold through the Plan (see Appendix A -- Fee Schedule).
39. CAN THE FEE SCHEDULE BE CHANGED?
Yes. The Administrator reserves the right to impose or modify any or all fees in
the future. Changes in the Fee Schedule will be announced to Participants
approximately 60 days prior to the effective date. Any such change will be
deemed to be accepted by Participants who do not terminate participation in the
Plan prior to the effective date of the change. Participants should contact the
Administrator to obtain current fee information.
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OTHER INFORMATION
40. WHAT IMPACT WILL A STOCK DIVIDEND OR STOCK SPLIT HAVE ON MY ACCOUNT?
Any dividends payable in common stock or common stock split shares distributed
by the Company on shares in a Plan account will be added to the Participant's
account in book-entry form.
41. HOW DO I VOTE MY PLAN SHARES?
All Plan shares are voted in the same manner as shares of common stock
registered in a shareholder of record's name. Participants will receive proxy
materials from the Company for each stockholder meeting, including a form of
proxy covering all Plan shares as of the proxy record date. If no instructions
are received on a returned and signed form of proxy with respect to any item
thereon, all of a Participant's whole and fractional shares will be voted in
accordance with the recommendations of the Company's Board of Directors. If the
form of proxy is not returned or is returned unsigned, none of the Participant's
shares will be voted unless the Participant votes in person or appoints another
person as proxy to vote his or her shares.
42. HOW WILL MY PLAN ACCOUNT BE IMPACTED IF SOUTHERN COMPANY HAS A RIGHTS
OFFERING?
If the Company has a rights offering, warrants representing the rights on all
Plan shares registered in the name of Southern Company Services, Inc. (or its
nominee) will be issued to SCS who will sell such rights, credit each
Participant's account in proportion to the full and fractional shares held on
the record date for such rights and treat the proceeds as an optional cash
payment. The proceeds will not be subject to the annual $300,000 cash maximum.
Any Participant who wishes to exercise stock purchase rights on his or her Plan
shares must request, prior to the record date for any such rights, that SCS
forward to him or her a certificate for full shares. Warrants representing
rights on shares held directly by Participants will be mailed directly to them
in the same manner as to shareholders not participating in the Plan.
43. WHAT ARE THE RESPONSIBILITIES OF THE COMPANY AND THE ADMINISTRATOR UNDER THE
PLAN?
The Company and SCS, in administering the Plan, will not be liable for any act
performed in good faith or for any good faith omission to act, including,
without limitation, any claim of liability arising out of failure to close a
Participant's account upon such Participant's death prior to receipt of notice
in writing of such death. However, the Company remains liable for violations of
the federal securities laws.
44. ARE SHARES ISSUED THROUGH THE DIRECT REGISTRATION SYSTEM ELIGIBLE FOR
PARTICIPATION IN THE PLAN?
If and when Southern Company common stock becomes eligible for issuance through
the Direct Registration System (DRS), such DRS shares will be eligible for
participation in the Plan.
45. WHAT INFORMATION IS AVAILABLE ABOUT THE PLAN THROUGH THE INTERNET?
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Extensive information about the Company and the Plan is available through the
Company web site at http://www.southerncompany.com. Within the Investor
Relations/Stockholder Services section you can download various transaction
request forms, review responses to Frequently Asked Questions about the Plan and
obtain on-line access to stockholder account information, including shares and
transactions associated with the Plan.
46. AM I PROTECTED AGAINST LOSSES BY PARTICIPATING IN THE PLAN?
No. Participants should recognize that neither the Company nor SCS can assure
them of profit or protect them against a loss on the shares purchased or sold
under the Plan. See "Risk Factors" beginning on page 4 for a description of
risks related to the purchase of Southern Company common stock.
INTERPRETATION OF THE PLAN
The Company may in its absolute discretion interpret and regulate the Plan as
deemed necessary or desirable in connection with the operation of the Plan and
direct the Administrator with respect to resolving questions or ambiguities
concerning the various provisions of the Plan.
FEDERAL INCOME TAX CONSEQUENCES
Participants are advised to consult their own tax or financial advisor with
respect to the tax consequences of participation in the Plan (including federal,
state, local and other tax laws and U. S. withholding laws).
In general, the dividends paid on common stock are considered taxable income,
whether the shares are held in certificate, book-entry or through the Plan and
whether the dividends are received in cash or reinvested through the Plan. The
information sent to you and reported to the IRS after each year-end will provide
the information required to complete your income tax return.
The tax basis of shares acquired through the reinvestment of dividends will be
equal to the value of dividends reinvested. The tax basis of shares purchased
with cash investments will be equal to the amount of such investments.
Upon the sale of either a portion or all shares from the Plan, a Participant
may, in general, recognize a capital gain or loss based on the difference
between the sales proceeds and the tax basis in the shares sold, including any
fractional share. The capital gain or loss will be long-term if the shares were
held for more than one year.
For participants who are subject to U.S. withholding or foreign taxes, the
Company will withhold the required taxes from the gross dividends or proceeds
from the sale of shares. The dividends or proceeds received by the Participant,
or dividends reinvested on behalf of the Participant, will be net of the
required taxes. Voluntary tax withholding is not an option.
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Participants should retain all statements. These statements provide cost basis
information which is necessary for certain tax calculations. Requests for
replacement account activity information may entail a service fee.
WHERE YOU CAN FIND MORE INFORMATION
Southern Company is subject to the informational requirements of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), and accordingly files
annual, quarterly and current reports and other information with the SEC. Such
reports, proxy statements and other information can be inspected and copied at
the SEC Public Reference Room at 450 Fifth Street, N.W., Washington, D.C. 20549.
Information on the operation of the Public Reference Room may be obtained by
calling the SEC at 800/SEC-0330. The SEC maintains a web site that contains
reports, proxy and information statements and other information regarding
registrants including Southern Company that file electronically at
http://www.sec.gov. The common stock of Southern Company is listed on the NYSE
and reports, proxy statements and other information concerning Southern Company
can be inspected at 20 Broad Street, New York, New York 10005.
The SEC allows us to "incorporate by reference" the information we file with it,
which means that we can disclose important information to you by referring to
these documents. The information incorporated by reference is an important part
of this prospectus and should be read with the same care. Information that we
file later with the SEC will automatically update and supersede that
information.
The following documents are incorporated in and made part of this prospectus by
reference:
1. Annual Report on Form 10-K for the year ended December 31, 2001.
2. Quarterly Reports on Form 10-Q for the quarters ended March 31, 2002,
June 30, 2002 and September 30, 2002.
3. Current Reports on Form 8-K dated January 29, 2002, January 30, 2002,
February 13, 2002, March 28, 2002, July 24, 2002, August 12, 2002 and
November 25, 2002.
4. The description of Southern Company's common stock contained in
Registration No. 333-64871 filed under the Securities Act of 1933, as
amended.
Any documents that we file in the future with the SEC under Section 13(a),
13(c), 14 or 15(d) of the Exchange Act will also be incorporated by reference in
this prospectus until we sell all of the securities being registered.
Southern Company hereby undertakes to provide without charge to each person to
whom a copy of this prospectus has been delivered, on the written or oral
request of any such person, a copy of any or all of the documents referred to
herein under the caption "Where You Can Find More Information" which have been
or may be incorporated by reference in this prospectus, other than exhibits to
such documents unless such exhibits are specifically incorporated by reference.
You may request a copy of these filings by writing or calling us at the
following address or the following telephone number:
SCS Stockholder Services
26
P.O. Box 54250
Atlanta, GA 30303-0250
800/554-7626
EXPERTS
Certain of the Company's financial statements incorporated by reference in this
prospectus have been audited by Arthur Andersen LLP ("Andersen"), independent
public accountants, as indicated in their reports with respect to the financial
statements, and are incorporated by reference in this prospectus in reliance
upon the authority of Andersen as experts in giving such reports. On March 28,
2002, the Company's Board of Directors, upon recommendation of its Audit
Committee, decided not to engage Andersen as the Company's principal public
accountants. The Company has not obtained a reissued report from Andersen and
has been unable to obtain, after reasonable efforts, Andersen's written consent
to incorporate by reference Andersen's reports on the financial statements.
Under these circumstances, Rule 437a under the Securities Act of 1933, as
amended (the "Securities Act"), permits this prospectus to be filed without a
written consent from Andersen. The absence of such written consent from Andersen
may limit a shareholder's ability to assert claims against Andersen under
Section 11(a) of the Securities Act for any untrue statement of a material fact
contained in the financial statements audited by Andersen or any omissions to
state a material fact required to be stated in the financial statements.
27
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APPENDIX A
SOUTHERN INVESTMENT PLAN
Fee Schedule*
ITEM FEE/COMMISSION
Enrollment Fee $10.00 (deducted from Initial Cash Payment -
applies to non-shareholders of record and
non-employees)
Sale of Shares $0.06 per share
Insufficient Funds
- Check or Direct Debit $25 per item
Replacement Documents
- IRS Form No charge
- Check No charge
- Account Statements (1998 to current year) No charge
Account Activity Information $20 per account request if not current account
- 1985 through 2002 holder
Dividend Reinvestment Plan Purchase Price
Information
- 1975 through 1987 No charge
Subject to Revision* -- See Question 39
Contact SCS Stockholder Services to obtain current fee information.
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PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
Item 14. Other Expenses of Issuance and Distribution.
The estimated expenses of issuance and distribution to be borne by
Southern are as follows:
Filing fee of Securities and Exchange Commission
relating to registration statement $ 47,068
Listing on New York Stock Exchange 100,300
Charges of Plan Administrator 15,000
Charges of transfer agent and registrar 15,000
Printing and preparation of registration statement,
prospectus, etc. 50,000
Fee of counsel 25,000
Fee of accountants 30,000
Services of Southern Company Services, Inc. 20,000
Miscellaneous 7,632
--------
Total $310,000
========
Item 15. Indemnification of Directors and Officers.
Section 145 of Title 8 of the Delaware Code gives a corporation power
to indemnify any person who was or is a party or is threatened to be made a
party to any threatened, pending or completed action, suit or proceeding,
whether civil, criminal, administrative or investigative (other than an action
by or in the right of the corporation) by reason of the fact that the person is
or was a director, officer, employee or agent of the corporation, or is or was
serving at the request of the corporation as a director, officer, employee or
agent of another corporation, partnership, joint venture, trust or other
enterprise, against expenses (including attorneys' fees), judgments, fines and
amounts paid in settlement actually and reasonably incurred by the person in
connection with such action, suit or proceeding if the person acted in good
faith and in a manner the person reasonably believed to be in or not opposed to
the best interests of the corporation, and, with respect to any criminal action
or proceeding, had no reasonable cause to believe the person's conduct was
unlawful. The same Section also gives a corporation power to indemnify any
person who was or is a party or is threatened to be made a party to any
threatened, pending or completed action or suit by or in the right of the
corporation to procure a judgment in its favor by reason of the fact that the
person is or was a director, officer, employee or agent of the corporation, or
is or was serving at the request of the corporation as a director, officer,
employee or agent of another corporation, partnership, joint venture, trust or
other enterprise against expenses (including attorneys' fees) actually and
reasonably incurred by the person in connection with the defense or settlement
of such action or suit if the person acted in good faith and in a manner the
person reasonably believed to be in or not opposed to the best interests of the
corporation and except that no indemnification shall be made in respect of any
claim, issue or matter as to which such person shall have been adjudged to be
liable to the corporation unless and only to the extent that the Court of
Chancery or the court in which such action or suit was brought shall determine
upon application that, despite the adjudication of liability but in view of all
the circumstances of the case, such person is fairly and reasonably entitled to
indemnity for such expenses which the Court of Chancery or such other court
shall deem proper. Also, the Section states that, to the extent that a present
or former director or officer of a corporation has been successful on the merits
or otherwise in defense of any such action, suit or proceeding, or in defense of
any claim, issue or matter therein, such person shall be indemnified against
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expenses (including attorneys' fees) actually and reasonably incurred by such
person in connection therewith.
The By-Laws of SOUTHERN provide in substance that no present or future
director or officer of SOUTHERN shall be liable for any act, omission, step or
conduct taken or had in good faith which is required, authorized or approved by
order issued pursuant to the Public Utility Holding Company Act of 1935, the
Federal Power Act, or any state statute regulating SOUTHERN or its subsidiaries
by reason of their being public utility companies or public utility holding
companies, or any amendment to any thereof. In the event that such provisions
are found by a court not to constitute a valid defense, each such director and
officer shall be reimbursed for, or indemnified against, all expenses and
liabilities incurred by him or imposed on him, in connection with, or arising
out of, any such action, suit or proceeding based on any act, omission, step or
conduct taken or had in good faith as in such By-Laws described.
The By-Laws of SOUTHERN also provide in pertinent part as follows:
"Each person who is or was a director or officer of the
Corporation and who was or is a party or was or is threatened to be
made a party to any threatened, pending or completed claim, action,
suit or proceeding, whether civil, criminal, administrative or
investigative, by reason of the fact that he is or was a director or
officer of the Corporation, or is or was serving at the request of the
Corporation as a director, officer, employee, agent or trustee of
another corporation, partnership, joint venture, trust, employee
benefit plan or other enterprise, shall be indemnified by the
Corporation as a matter of right against any and all expenses
(including attorneys' fees) actually and reasonably incurred by him and
against any and all claims, judgments, fines, penalties, liabilities
and amounts paid in settlement actually incurred by him in defense of
such claim, action, suit or proceeding, including appeals, to the full
extent permitted by applicable law. The indemnification provided by
this Section shall inure to the benefit of the heirs, executors and
administrators of such person.
Expenses (including attorneys' fees) incurred by a director or
officer of the Corporation with respect to the defense of any such
claim, action, suit or proceeding may be advanced by the Corporation
prior to the final disposition of such claim, action, suit or
proceeding, as authorized by the Board of Directors in the specific
case, upon receipt of an undertaking by or on behalf of such person to
repay such amount unless it shall ultimately be determined that such
person is entitled to be indemnified by the Corporation under this
Section or otherwise; provided, however, that the advancement of such
expenses shall not be deemed to be indemnification unless and until it
shall ultimately be determined that such person is entitled to be
indemnified by the Corporation."
SOUTHERN has an insurance policy covering its liabilities and expenses
which might arise in connection with its lawful indemnification of its directors
and officers for certain of their liabilities and expenses and also covering its
officers and directors against certain other liabilities and expenses.
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Item 16. Exhibits.
Exhibit
Number
4.1 Composite Certificate of Incorporation of Southern reflecting all
amendments to date. (Designated in Registration No. 33-3546 as
Exhibit 4(a), in Certificate of Notification, File No. 70-7341,
as Exhibit A, and in Certificate of Notification, File No.
70-8181, as Exhibit A.)
4.2 By-Laws of Southern as amended effective October 21, 1991 and
presently in effect. (Designated in Form U-1, File No. 70-8181,
as Exhibit A-2.)
4.3 Form of Certificate of common stock for Southern.*
5.1 Opinion of Troutman Sanders LLP, counsel for Southern.*
23.1 Consent of Troutman Sanders LLP (included in Exhibit 5.1 above).
24.1 Powers of Attorney and resolution.*
Exhibits listed above which have heretofore been filed with the
Securities and Exchange Commission, and which were designated as noted above,
are hereby incorporated herein by reference and made a part hereof with the same
effect as if filed herewith.
------------
* Previously filed.
Item 17. Undertakings.
(a) Undertaking related to Rule 415 offering:
The undersigned registrant hereby undertakes:
(1) To file, during any period in which offers or sales are
being made, a post-effective amendment to this registration statement:
(i) To include any prospectus required by Section
10(a)(3) of the Securities Act of 1933;
(ii) To reflect in the prospectus any facts or events
arising after the effective date of the registration statement
(or the most recent post-effective amendment thereof) which,
individually or in the aggregate, represent a fundamental
change in the information set forth in the registration
statement; Notwithstanding the foregoing, any increase or
decrease in volume of securities offered (if the total dollar
value of securities offered would not exceed that which was
registered) and any deviation from the low or high end of the
estimated maximum offering range may be reflected in the form
of prospectus filed with the Commission pursuant to Rule
424(b) if, in the aggregate, the changes in volume and price
represent no more than 20% change in the maximum aggregate
offering price set forth in the "Calculation of Registration
Fee" table in the effective registration statement;
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(iii) To include any material information with
respect to the plan of distribution not previously disclosed
in the registration statement or any material change to such
information in the registration statement;
Provided, however, that paragraphs (a)(1)(i) and (a)(1)(ii) do
not apply if the registration statement is on Form S-3, S-8 or F-3 and
the information required to be included in a post-effective amendment
by those paragraphs is contained in periodic reports filed by the
registrant pursuant to Section 13 or Section 15(d) of the Securities
Exchange Act of 1934 that are incorporated by reference in the
registration statement.
(2) That, for the purpose of determining any liability under
the Securities Act of 1933, each such post-effective amendment shall be
deemed to be a new registration statement relating to the securities
offered therein, and the offering of such securities at that time shall
be deemed to be the initial bona fide offering thereof.
(3) To remove from registration by means of a post-effective
amendment any of the securities being registered which remain unsold at
the termination of the offering.
(b) Undertaking related to filings incorporating subsequent Securities
Exchange Act of 1934 documents by reference:
The undersigned registrant hereby undertakes that, for
purposes of determining any liability under the Securities Act of 1933,
each filing of the registrant's annual report pursuant to Section 13(a)
or Section 15(d) of the Securities Exchange Act of 1934 that is
incorporated by reference in the registration statement shall be deemed
to be a new registration statement relating to the securities offered
therein, and the offering of such securities at that time shall be
deemed to be the initial bona fide offering thereof.
(c) Undertaking related to acceleration of effectiveness:
Insofar as indemnification for liabilities arising under the
Securities Act of 1933 may be permitted to directors, officers and
controlling persons of the registrant pursuant to the foregoing
provisions or otherwise, the registrant has been advised that in the
opinion of the Securities and Exchange Commission such indemnification
is against public policy as expressed in the Act and is, therefore,
unenforceable. In the event that a claim for indemnification against
such liabilities (other than the payment by the registrant of expenses
incurred or paid by a director, officer or controlling person of the
registrant in the successful defense of any action, suit or proceeding)
is asserted by such director, officer or controlling person in
connection with the securities being registered, the registrant will,
unless in the opinion of its counsel the matter has been settled by
controlling precedent, submit to a court of appropriate jurisdiction
the question whether such indemnification by it is against public
policy as expressed in the Act and will be governed by the final
adjudication of such issue.
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SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the
registrant certifies that it has reasonable grounds to believe that it meets all
of the requirements for filing on Form S-3 and has duly caused this amendment to
the registration statement to be signed on its behalf by the undersigned,
thereunto duly authorized, in the City of Atlanta, State of Georgia, on the 31st
day of January, 2003.
THE SOUTHERN COMPANY
By: H. Allen Franklin
Chairman of the Board, President
and Chief Executive Officer
By: /s/Wayne Boston
(Wayne Boston, Attorney-in-Fact)
Pursuant to the requirements of the Securities Act of 1933, this
amendment to the registration statement has been signed by the following persons
in the capacities and on the dates indicated.
Signature Title Date
H. Allen Franklin Director and Chairman of the
Board, President and Chief Executive Officer
(Principal Executive Officer)
Gale E. Klappa Executive Vice President, Chief Financial
Officer and Treasurer
(Principal Financial Officer)
W. Dean Hudson Comptroller and Chief Accounting
Officer (Chief Accounting Officer)
Daniel P. Amos )
Dorrit J. Bern )
Thomas F. Chapman )
Bruce S. Gordon ) Directors
L. G. Hardman, III)
Donald M. James )
Zack T. Pate )
Gerald J. St. Pe )
By: /s/Wayne Boston January 31, 2003
(Wayne Boston, Attorney-in-Fact)
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