SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 11-K
[X] ANNUAL REPORT PURSUANT TO SECTION 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 1997
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from _______to______
Commission File Number 1-3526
A. Full title of the plan:
THE SOUTHERN COMPANY
EMPLOYEE SAVINGS PLAN
B. Name of issuer of the securities held
pursuant to the plan and the address of its
principal executive office:
THE SOUTHERN COMPANY
270 Peachtree Street, NW
Atlanta, Georgia 30303
<PAGE>
THE SOUTHERN COMPANY EMPLOYEE SAVINGS PLAN
FORM 11-K
DECEMBER 31, 1997
<TABLE>
<CAPTION>
TABLE OF CONTENTS
<S> <C>
Page No.
Exhibit 3
Report of Independent Public Accountants 4
Statement of Net Assets Available for Benefits, With Fund Information--
December 31, 1997 5
Statement of Net Assets Available for Benefits, With Fund Information--
December 31, 1996 7
Statement of Changes in Net Assets Available for Benefits, With Fund Information--
for the Year Ended December 31, 1997 9
Statement of Changes in Net Assets Available for Benefits, With Fund Information--
for the Year Ended December 31, 1996 11
Notes to Financial Statements and Schedules 13
Schedule I - Item 27a - Schedule of Assets Held for Investment Purposes--
December 31, 1997 20
Schedule II - Item 27d - Schedule of Reportable Transactions--for the Year Ended
December 31, 1997 24
Signature 25
</TABLE>
2
<PAGE>
EXHIBIT
A - Amended and Restated Plan Document for The Southern Company
Employee Savings Plan effective July 3, 1995 and Fifth and Sixth
Amendment thereto. (Designated in Form 10-K for the year ended
December 31, 1995, File No. 1-3526 as Exhibit 10(a) 63.)
B - Consent of Independent Public Accountants
3
<PAGE>
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To the Savings Plan Committee of
The Southern Company Employee Savings Plan:
We have audited the accompanying statements of net assets available for
benefits, with fund information of THE SOUTHERN COMPANY EMPLOYEE SAVINGS PLAN
(the "Plan") as of December 31, 1997 and 1996 and the related statements of
changes in net assets available for benefits, with fund information for the
years then ended. These financial statements and the schedules referred to below
are the responsibility of the Savings Plan Committee in its capacity as
administrator of the Plan (the "Administrator"). Our responsibility is to
express an opinion on these financial statements and schedules based on our
audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audits to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by the
Administrator, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for our
opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the net assets available for benefits of the Plan as of
December 31, 1997 and 1996 and the changes in net assets available for benefits
for the years then ended in conformity with generally accepted accounting
principles.
Our audits were performed for the purpose of forming an opinion on the basic
financial statements taken as a whole. The supplemental schedules of assets held
for investment purposes and reportable transactions are presented for the
purpose of additional analysis and are not a required part of the basic
financial statements but are supplementary information required by the
Department of Labor Rules and Regulations for Reporting and Disclosure under the
Employee Retirement Income Security Act of 1974. The fund information in the
statements of net assets available for benefits and the statements of changes in
net assets available for benefits is presented for purposes of additional
analysis rather than to present the net assets available for benefits and
changes in net assets available for benefits of each fund. The supplemental
schedules and fund information have been subjected to the auditing procedures
applied in the audits of the basic financial statements and, in our opinion, are
fairly stated in all material respects in relation to the basic financial
statements taken as a whole.
/s/ ARTHUR ANDERSEN LLP
Atlanta, Georgia
May 15, 1998
4
<PAGE>
<TABLE>
<CAPTION>
Item 1.
THE SOUTHERN COMPANY EMPLOYEE SAVINGS PLAN
STATEMENT OF NET ASSETS AVAILABLE FOR BENEFITS, WITH FUND INFORMATION
DECEMBER 31, 1997
<S> <C> <C> <C> <C> <C> <C>
Page 1 of 2
Fund Information (Notes 1 and 2)
-------------------------------------------------------------------------
Participant Directed Portion
-------------------------------------------------------------------------
Retirement
Preservation Fully Managed Equity Index Core Fixed Special Value
Total Fund Fund Fund Income Fund Fund
ASSETS: -------------- -------------- ------------ ----------- ------------- -------------
Investments, at fair value
(Schedule I and Notes 2 and 3):
Temporary investments $ 9,981,982 $ 164,624 $ 6,944,128 $ 307,172 $ 291,906 $ -
Treasury securities 19,529,875 - 17,882,095 - 1,647,780 -
U. S. government agency securities 1,663,080 - - - 1,663,080 -
Corporate bonds 37,496,238 - 36,370,845 - 1,125,393 -
Corporate medium term notes 5,536,865 5,037,100 499,765
Common stock--excluding common
stock of The Southern Company 106,390,825 - 106,390,825 - -
Common stock--The Southern Company 1,511,836,233 - - - - -
Common/collective trusts 313,913,862 109,478,814 - 204,435,048 - -
Registered investment companies 93,225,307 - - - - 47,823,705
Loans due from participants 81,231,536 - - - - -
-------------- ------------- ------------ ------------- ----------- ------------
Total investments 2,180,805,803 109,643,438 172,624,993 204,742,220 5,227,924 47,823,705
-------------- ------------- ------------ ------------- ----------- ------------
Receivables:
Company contributions 1,731,041 - - - - -
Participant contributions 3,001,813 216,139 352,574 595,353 16,297 193,892
Interest and dividends 1,268,549 - 1,268,549 - - -
Receivable for securities sold 8,788,989 367,623 395,849 560,358 22,144 180,693
-------------- ------------ ------------ ------------ ---------- -----------
Total receivables 14,790,392 583,762 2,016,972 1,155,711 38,441 374,585
-------------- ------------ ------------ ------------ ---------- -----------
NET ASSETS AVAILABLE FOR BENEFITS $2,195,596,195 $110,227,200 $174,641,965 $205,897,931 $5,266,365 $48,198,290
============== ============ ============ ============ ========== ===========
</TABLE>
The accompanying notes are an integral part of this statement.
5
<PAGE>
<TABLE>
<CAPTION>
THE SOUTHERN COMPANY EMPLOYEE SAVINGS PLAN
STATEMENT OF NET ASSETS AVAILABLE FOR BENEFITS, WITH FUND INFORMATION
DECEMBER 31, 1997
<S> <C> <C> <C> <C>
Page 2 of 2
Fund Information (Notes 1 and 2)
------------------------------------------------------------------------------
Non-Participant
Participant Directed Portion Directed Portion
------------------------------------------------------------ ----------------
Global International Participants' The Southern Company Stock
Allocation Fund Equity Fund Loan Fund Fund
--------------- ------------ ------------ -------------------------
ASSETS:
Investments, at fair value (Schedule I and
Notes 2 and 3):
Temporary investments $ - $ - $ - $ 1,042,308 $ 1,231,844
Treasury securities - - - - -
U. S. government agency securities - - - - -
Corporate bonds - - - - -
Corporate medium term notes - - - - -
Common stock--excluding common
stock of The Southern Company - - - - -
Common stock--The Southern Company - - - 692,357,490 819,478,743
Common/collective trusts - - - - -
Registered investment companies 38,382,882 7,018,720 - - -
Loans due from participants - - 81,231,536 - -
----------- ---------- ----------- ------------ ------------
Total investments 38,382,882 7,018,720 81,231,536 693,399,798 820,710,587
----------- ---------- ----------- ------------ ------------
Receivables:
Company contributions - - - - 1,731,041
Participant contributions 163,249 37,952 - 1,426,357 -
Interest and dividends - - - - -
Receivable for securities sold 139,566 29,383 - 7,093,373 -
----------- ---------- ----------- ------------ ------------
Total receivables 302,815 67,335 - 8,519,730 1,731,041
----------- ---------- ----------- ------------ ------------
NET ASSETS AVAILABLE FOR BENEFITS $38,685,697 $7,086,055 $81,231,536 $701,919,528 $822,441,628
=========== ========== =========== ============ ============
The accompanying notes are an integral part of this statement.
</TABLE>
6
<PAGE>
Item 1.
THE SOUTHERN COMPANY EMPLOYEE SAVINGS PLAN
STATEMENT OF NET ASSETS AVAILABLE FOR BENEFITS, WITH FUND INFORMATION
DECEMBER 31, 1996
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
Page 1 of 2
Fund Information (Notes 1 and 2)
---------------------------------------------------------------------
Participant Directed Portion
---------------------------------------------------------------------
Retirement
Preservation Fully Managed Equity Index Core Fixed Special Value
Total Fund Fund Fund Income Fund Fund
----- ------------ ------------ ----------- ------------- -----------
ASSETS:
Investments, at fair value
(Schedule I and Notes 2 and 3):
Temporary investments $ 10,115,361 $ 277,437 $ 6,671,270 $ 2,408,217 $ 686,872 $ -
Treasury securities 14,705,317 - 13,099,220 - 1,606,097 -
U.S. government agency securities 3,233,429 - 1,953,740 - 1,279,689
Corporate bonds 42,247,646 - 41,764,326 - 483,320 -
Corporate medium term notes 7,867,880 - 7,867,880 - - -
Common stock--excluding common
stock of The Southern Company 77,382,575 - 77,382,575 - - -
Common stock--The Southern Company 1,502,343,127 - - - - -
Common/collective trusts 230,730,754 106,339,384 - 124,391,370 - -
Registered investment companies 42,834,688 - - - - 18,964,289
Loans due from participants 85,694,959 - - - - -
-------------- ------------ ------------ ------------ ---------- -----------
Total investments 2,017,155,736 106,616,821 148,739,011 126,799,587 4,055,978 18,964,289
-------------- ------------ ------------ ------------ ---------- -----------
Receivables:
Company contributions 1,719,106 - - - - -
Participant contributions 2,910,385 226,833 330,785 419,135 12,577 87,057
Interest and dividends 1,246,663 - 1,246,663 - - -
Receivable for securities sold 3,883,182 161,262 109,654 185,040 11,048 35,214
-------------- ------------ ------------ ------------ ---------- -----------
Total receivables 9,759,336 388,095 1,687,102 604,175 23,625 122,271
-------------- ------------ ------------ ------------ ---------- -----------
NET ASSETS AVAILABLE FOR BENEFITS $2,026,915,072 $107,004,916 $150,426,113 $127,403,762 $4,079,603 $19,086,560
============== ============ ============ ============ ========== ===========
The accompanying notes are an integral part of this statement.
</TABLE>
7
<PAGE>
<TABLE>
<CAPTION>
THE SOUTHERN COMPANY EMPLOYEE SAVINGS PLAN
STATEMENT OF NET ASSETS AVAILABLE FOR BENEFITS, WITH FUND INFORMATION
DECEMBER 31, 1996
<S> <C> <C> <C> <C>
Page 2 of 2
Fund Information (Notes 1 and 2)
--------------------------------------------------------------------------------
Non-Participant
Participant Directed Portion Directed Portion
Global International Participants' The Southern Company Stock
Allocation Fund Equity Fund Loan Fund Fund
--------------- ----------- ------------- ---------------------------
ASSETS:
Investments, at fair value (Schedule I
and Notes 2 and 3):
Temporary investments $ - $ - $ - $ 58,704 $ 12,861
Treasury securities - - - - -
U.S. government agency securities - - - - -
Corporate bonds - - - - -
Corporate medium term notes - - - - -
Common stock--excluding common
stock of The Southern Company - - - - -
Common stock--The Southern Company - - - 701,330,711 801,012,416
Common/collective trusts - - - - -
Registered investment companies 19,536,790 4,333,609 - - -
Loans due from participants - - 85,694,959 - -
----------- ---------- ----------- ------------ ------------
Total investments 19,536,790 4,333,609 85,694,959 701,389,415 801,025,277
----------- ---------- ----------- ------------ ------------
Receivables:
Company contributions - - - - 1,719,106
Participant contributions 89,522 23,465 - 1,721,011 -
Interest and dividends - - - - -
Receivable for securities sold 29,082 3,915 - 3,347,967 -
----------- ---------- ----------- ------------ ------------
Total receivables 118,604 27,380 - 5,068,978 1,719,106
----------- ---------- ----------- ------------ ------------
NET ASSETS AVAILABLE FOR BENEFITS $19,655,394 $4,360,989 $85,694,959 $706,458,393 $802,744,383
=========== ========== =========== ============ ============
</TABLE>
The accompanying notes are an integral part of this statement.
8
<PAGE>
<TABLE>
<CAPTION>
Item 2.
THE SOUTHERN COMPANY EMPLOYEE SAVINGS PLAN
STATEMENT OF CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS, WITH FUND INFORMATION
FOR THE YEAR ENDED DECEMBER 31, 1997
<S> <C> <C> <C> <C> <C> <C>
Page 1 of 2
Fund Information (Notes 1 and 2)
-------------------------------------------------------------------
Participant Directed Portion
-------------------------------------------------------------------
Retirement
Preservation Fully Managed Equity Index Core Fixed Special Value
Total Fund Fund Fund Income Fund Fund
---------- -------------- ------------- ------------ ----------- -------------
INVESTMENT INCOME:
Interest and dividends $ 107,745,109 $ 7,188,695 $ 574,555 $ 599,528 $ 11,369 $ 4,933,123
Net appreciation in
fair value of investments
(Note 3) 260,049,503 - 31,139,378 45,400,942 355,914 289,801
-------------- ------------- ------------ ------------ ----------- -----------
NET INVESTMENT INCOME 367,794,612 7,188,695 31,713,933 46,000,470 367,283 5,222,924
CONTRIBUTIONS (Note 4):
Participants' 72,779,366 5,477,299 8,431,864 13,158,594 341,272 3,592,322
Company 42,437,774 - - - - -
DISTRIBUTIONS TO PARTICIPANTS (314,330,629) (18,996,986) (18,280,960) (16,850,548) (1,095,376) (3,193,016)
NEW LOANS ISSUED - (2,171,537) (3,015,448) (2,549,448) (88,642) (551,166)
LOAN PRINCIPAL PAYMENTS - 2,086,018 3,138,844 4,051,061 83,474 991,600
NET INTERFUND TRANSFERS - 9,638,795 2,227,619 34,684,040 1,578,751 23,049,066
-------------- ------------- ------------ ----------- ---------- -----------
CHANGE IN NET ASSETS AVAILABLE
FOR BENEFITS DURING YEAR 168,681,123 3,222,284 24,215,852 78,494,169 1,186,762 29,111,730
NET ASSETS AVAILABLE FOR
BENEFITS AT DECEMBER 31, 1996 2,026,915,072 107,004,916 150,426,113 127,403,762 4,079,603 19,086,560
-------------- ------------- ------------ ------------ ---------- -----------
NET ASSETS AVAILABLE FOR
BENEFITS AT DECEMBER 31, 1997 $2,195,596,195 $ 110,227,200 $174,641,965 $205,897,931 $5,266,365 $48,198,290
============== ============= ============= ============ ========== ===========
</TABLE>
The accompanying notes are an integral part of this statement.
9
<PAGE>
<TABLE>
<CAPTION>
THE SOUTHERN COMPANY EMPLOYEE SAVINGS PLAN
STATEMENT OF CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS, WITH FUND INFORMATION
FOR THE YEAR ENDED DECEMBER 31, 1997
<S> <C> <C> <C> <C> <C>
Page 2 of 2
Fund Information (Notes 1 and 2)
------------------------------------------------------------------------------------
Non-Participant
Participant Directed Portion Directed Portion
----------------------------------------------------------------- ----------------
Global Allocation International Participants' The Southern Company
Fund Equity Fund Loan Fund Stock Fund
---------------- ------------ ----------- -----------------------------
INVESTMENT INCOME:
Interest and dividends $ 4,864,194 $1,379,836 $5,699,245 $38,290,925 $ 44,203,639
Net appreciation (depreciation)
in fair value of investments (Note 3) (1,974,556) (2,016,055) - 85,591,931 101,262,148
----------- ----------- ---------- ----------- ------------
NET INVESTMENT INCOME 2,889,638 (636,219) 5,699,245 123,882,856 145,465,787
CONTRIBUTIONS (Note 4):
Participants' 3,418,738 806,696 - 37,552,581 -
Company - - - - 42,437,774
DISTRIBUTIONS TO PARTICIPANTS (2,630,303) (659,686) (2,415,038) (83,270,802) (166,937,914)
NEW LOANS ISSUED (601,081) (125,628) 30,603,076 (21,500,126) -
LOAN PRINCIPAL PAYMENTS 1,046,592 210,911 (32,650,681) 21,042,181 -
NET INTERFUND TRANSFERS 14,906,719 3,128,992 (5,700,025) (82,245,555) (1,268,402)
----------- ---------- ----------- ------------ ------------
CHANGE IN NET ASSETS AVAILABLE
FOR BENEFITS DURING YEAR 19,030,303 2,725,066 (4,463,423) (4,538,865) 19,697,245
NET ASSETS AVAILABLE FOR
BENEFITS AT DECEMBER 31, 1996 19,655,394 4,360,989 85,694,959 706,458,393 802,744,383
----------- ---------- ----------- ------------ ------------
NET ASSETS AVAILABLE FOR
BENEFITS AT DECEMBER 31, 1997 $38,685,697 $7,086,055 $81,231,536 $701,919,528 $822,441,628
=========== ========== =========== ============ ============
</TABLE>
The accompanying notes are an integral part of this statement.
10
<PAGE>
<TABLE>
<CAPTION>
Item 2.
THE SOUTHERN COMPANY EMPLOYEE SAVINGS PLAN
STATEMENT OF CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS, WITH FUND INFORMATION
FOR THE YEAR ENDED DECEMBER 31, 1996
<S> <C> <C> <C> <C> <C> <C>
Page 1 of 2
Fund Information (Notes 1and 2)
-----------------------------------------------------------------------
Participant Directed Portion
-----------------------------------------------------------------------
Retirement
Preservation Fully Managed Equity Index Core Fixed Special
Total Fund Fund Fund Income Fund Value Fund
-------------- ------------- ------------- ------------- ----------- -----------
INVESTMENT INCOME:
Interest and dividends $ 105,260,838 $ 7,085,768 $ 291,406 $ 234,951 $ 4,468 $ 2,632,231
Net appreciation (depreciation) in
fair value of investments (Note 3) (116,244,094) - 18,576,678 22,053,603 88,311 22,976
--------------- ------------ ------------ ------------ --------- -----------
NET INVESTMENT INCOME (10,983,256) 7,085,768 18,868,084 22,288,554 92,779 2,655,207
CONTRIBUTIONS (Note 4):
Participants' 71,430,176 5,747,851 8,570,923 9,653,318 289,135 1,505,934
Company 42,936,464 - - - - -
DISTRIBUTIONS TO PARTICIPANTS (199,351,700) (17,762,715) (8,747,135) (5,254,057) 329,533 (451,513)
NEW LOANS ISSUED - (2,690,770) (3,248,513) (2,359,668) (49,814) (292,552)
LOAN PRINCIPAL PAYMENTS - 2,142,700 3,188,427 3,285,699 73,765 398,488
NET INTERFUND TRANSFERS - 3,526,540 (7,946,579) 10,010,140 1,666,482 9,963,061
-------------- ------------ ------------- ------------ --------- -----------
CHANGE IN NET ASSETS AVAILABLE
FOR BENEFITS DURING YEAR (95,968,316) (1,950,626) 10,685,207 37,623,986 2,401,880 13,778,625
NET ASSETS AVAILABLE FOR
BENEFITS AT DECEMBER 31, 1995 2,122,883,388 108,955,542 139,740,906 89,779,776 1,677,723 5,307,935
-------------- ------------ ------------ ------------ --------- -----------
NET ASSETS AVAILABLE FOR
BENEFITS AT DECEMBER 31, 1996 $2,026,915,072 $107,004,916 $150,426,113 $127,403,762 $4,079,603 $19,086,560
============== ============ ============ ============ ========== ===========
</TABLE>
11
The accompanying notes are an integral part of this statement.
<PAGE>
<TABLE>
<CAPTION>
THE SOUTHERN COMPANY EMPLOYEE SAVINGS PLAN
STATEMENT OF CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS, WITH FUND INFORMATION
FOR THE YEAR ENDED DECEMBER 31, 1996
<S> <C> <C> <C> <C>
Page 2 of 2
Fund Information (Notes 1 and 2)
-------------------------------------------------------------------------------------
Non-Participant
Participant Directed Portion Directed Portion
------------------------------------------------------------------ ----------------
Global Allocation International Participants' The Southern Company
Fund Equity Fund Loan Fund Stock Fund
----------------- ------------- ------------ -------------------------------
INVESTMENT INCOME:
Interest and dividends $1,725,447 $ 209,558 $ 6,092,198 $ 43,200,739 $ 43,784,072
Net appreciation (depreciation)
in fair value of investments (Note 3) 152,486 (29,812) - (84,347,604) (72,760,732)
----------- ----------- ----------- ------------ ------------
NET INVESTMENT INCOME 1,877,933 179,746 6,092,198 (41,146,865) (28,976,660)
CONTRIBUTIONS (Note 4):
Participants' 1,513,525 471,863 - 43,677,627 -
Company - - - - 42,936,464
DISTRIBUTIONS TO PARTICIPANTS (574,988) (25,913) (2,825,140) (47,101,754) (116,938,018)
NEW LOANS ISSUED (292,433) (100,043) 34,751,106 (25,717,313) -
LOAN PRINCIPAL PAYMENTS 452,153 144,379 (33,072,657) 23,387,046 -
NET INTERFUND TRANSFERS 11,433,481 1,969,905 (6,106,467) (27,139,923) 2,623,360
----------- ---------- ----------- ------------ ------------
CHANGE IN NET ASSETS AVAILABLE
FOR BENEFITS DURING YEAR 14,409,671 2,639,937 (1,160,960) (74,041,182) (100,354,854)
NET ASSETS AVAILABLE FOR
BENEFITS AT DECEMBER 31, 1995 5,245,723 1,721,052 86,855,919 780,499,575 903,099,237
----------- ---------- ----------- ------------ ------------
NET ASSETS AVAILABLE FOR
BENEFITS AT DECEMBER 31, 1996 $19,655,394 $4,360,989 $85,694,959 $706,458,393 $802,744,383
=========== ========== =========== ============ ============
</TABLE>
The accompanying notes are an integral part of this statement.
12
<PAGE>
THE SOUTHERN COMPANY EMPLOYEE SAVINGS PLAN
NOTES TO FINANCIAL STATEMENTS AND SCHEDULES
DECEMBER 31, 1997 and 1996
1. Description of the Plan:
The following is a brief description of The Southern Company Employee Savings
Plan (the "Plan"), and the administration thereof and is provided for general
information purposes only. The Plan includes employees, certain former
employees, and retirees of ten subsidiaries of The Southern Company: Alabama
Power Company, Georgia Power Company, Gulf Power Company, Mississippi Power
Company, Savannah Electric and Power Company, Southern Communications Services,
Inc., Southern Company Services, Inc., Southern Company Energy Solutions, Inc.,
Southern Energy, Inc., and Southern Nuclear Operating Company, Inc. (the
"Employing Companies"). Participants should refer to the plan document or the
summary plan description for a more complete description of the Plan's
provisions.
The original Plan, effective March 1, 1976, is a defined contribution plan
established by The Southern Company System (the "Company") for the primary
purposes of creating added employee interest in the affairs of the Company and
supplementing retirement and death benefits of employees. Under the Plan,
amounts deducted from the compensation or deferred from compensation by an
employee (a "Participant") are contributed to the Plan on the Participant's
behalf and are supplemented by contributions of the Employing Companies. The
Plan is subject to the provisions of the Employee Retirement Income Security Act
of 1974 ("ERISA"), as amended.
The responsibility for operation and administration of the Plan is vested
in The Southern Company Employee Savings Plan Committee (the "Committee"), which
consists of the individuals serving in the positions of Director, System
Compensation and Benefits of The Southern Company; Vice-President, Human
Resources of The Southern Company; and Comptroller of The Southern Company or
any other position or positions that succeed to the duties of the foregoing
positions. However, the Plan allows a Participant to exercise control over the
assets in his account, with the exception of The Southern Company matching
contributions, and is intended to qualify as a plan described in Section 404(c)
of ERISA and Federal Regulation 2550.404(c)-1. The board of directors of
Southern Company Services, Inc. (the "Board") has appointed a trustee for the
Plan and has appointed outside investment managers to manage the portfolio and
investment options in which a Participant may invest his account. The Board has
the responsibility of appointing and removing the trustee. The trustee is
authorized to purchase and sell securities subject to the funding policy
provided by the Pension Fund Investment Review Committee of the Company.
The trustee and recordkeeping functions of the Plan are performed by
Merrill Lynch Trust Company of Florida (the "Trustee") and Merrill Lynch,
Pierce, Fenner & Smith, Inc. (the "Recordkeeper"), respectively. The
Recordkeeper is responsible for maintaining appropriate records of investment
transactions, participant account balances and, under the direction of the
Committee, for distributions from Participants' accounts.
13
<PAGE>
Participation
Generally, all regular employees of the Employing Companies are eligible to
participate in the Plan provided that they have completed at least one year of
service. This eligibility requirement complies with the provisions of the
Internal Revenue Code of 1986 (the "Code") and ERISA, as amended.
Subject to the limitations of the Code, a Participant may contribute into
his investment fund any whole percentage which is not less than 1% nor more than
16% of his compensation, as defined in the Plan ("Voluntary Participant
Contribution"). In addition, a Participant may elect to have his compensation,
as defined in the Plan, reduced by a whole percentage which is not less than 1%
nor more than 16% of his compensation, such amount to be contributed on his
behalf to his account under the Plan ("Elective Employer Contribution"). A
Participant may not contribute or have contributed on his behalf in total more
than 16% of his compensation as defined in the Plan. Participants may invest in
one or more of the investment funds, provided such investments are made in 1%
increments totaling, but not exceeding 100%.
A Participant may prospectively change the percentage of his compensation
that he has authorized as the Elective Employer Contribution to be made on his
behalf or his Voluntary Participant Contribution to another permissible
percentage in accordance with procedures established by the Committee. Such
election shall be effective as soon as practicable after it is made.
The Employing Companies currently contribute on behalf of each of the
Participants in their employ an amount equal to 75% of (a) the Elective Employer
Contribution made on a Participant's behalf plus (b) his Voluntary Participant
Contribution to the extent such contributions, when combined, do not exceed 6%
of his compensation, as defined in the Plan ("Employer Matching Contribution").
All Employer Matching Contributions are invested in The Southern Company Stock
Fund.
Elective Employer Contributions for Participants who are defined as
"highly compensated employees" under Section 414(q) of the Code are subject to
additional limitations designed to prohibit discrimination in favor of the
"highly compensated employees." Certain limitations also apply to Voluntary
Participant Contributions and Employer Matching Contributions allocated to
highly compensated employees.
Loans to Participants
Plan Participants also have the right to borrow a portion of their account
balances under the terms of the Plan. Under the terms of the Plan, all loans are
considered to be earmarked investments of the Participant's account and any
repayment of principal and interest is reinvested in accordance with the
Participant's investment direction in effect on the date of such repayments.
The Committee may direct the Trustee to make a loan or loans from the Plan
to any Participant subject to certain limitations. All loans bear a rate of
interest which remains fixed over the term of the loan and may be secured only
by a Participant's account balance. The repayment of such loans is made through
payroll deductions.
14
<PAGE>
Account Distributions
Upon separation from service with the Company, the total value of a
Participant's account will be available to him or his beneficiary in the event
of his death. At retirement, a Participant may elect a lump-sum payment or up to
20 annual installments, provided he does not extend installments beyond his life
expectancy. Under certain conditions of financial emergency, the Committee may
accelerate the payment time of a portion or all of the remaining installments.
However, a Participant may also elect to leave all of his funds in the Plan
until mandatory distributions begin at age 70 1/2. Distributions made because of
disability, death, or termination of employment are made only as single lump-sum
distributions. Upon termination of employment for any reason, the value of a
Participant's account will be distributed to him in a single lump sum as soon as
practical if one of the following occurs:
* The vested amount in the account is not more than $3,500; or The
* Participant elects to receive a distribution of his account.
If the value of the account is greater than $3,500, the Participant may
defer the distribution of his account until not later than April 1 of the
calendar year following the calendar year in which he reaches age 70 1/2.
If the distribution is being made after a Participant's death and he has
not named a beneficiary or if that beneficiary has predeceased him, his account
will be distributed, in preferential order to the following:
* His surviving spouse,
* His surviving children (equally),
* His surviving parents (equally),
* His surviving brothers and sisters (equally), or
* His executors or administrators.
If the Participant has been married for at least one year, his beneficiary
will be his spouse, unless his spouse consents in writing not to be his
beneficiary and such written consent is witnessed by a notary public.
The Plan allows Participants to make routine withdrawals from their
accounts in the following order: after-tax contributions, earnings from
after-tax contributions, and up to 50 % of employer matching funds. This type of
withdrawal does not require any hardship qualification. In order to withdraw
before-tax contributions, the participant must establish that a hardship
situation exists. The Committee will determine if a withdrawal is for immediate
and heavy financial need. Early withdrawals can be made for hardship cases, such
as pending eviction from a principal residence, certain medical expenses,
college tuition, or the down payment on the Participant's principal residence.
Rollovers from Other Plans
An eligible employee who is hired or rehired on or after April 1, 1997 and has
received a distribution of his interest in a qualified Retirement Plan of a
former employer may elect to deposit all or any portion of the eligible amount
of such distribution as a rollover to this Plan.
Vesting
Participants are immediately vested in their Elective Employer Contributions,
Voluntary Participant Contributions, and Employer Matching Contributions, plus
actual earnings thereon.
Participants
As of December 31, 1997 and 1996, participants in the Plan totaled 23,349 and
24,499, respectively.
15
<PAGE>
Participants' Accounts
Individual accounts are maintained for each of the Plan's Participants to
reflect the particular Participant's contributions and related employer
contributions, as well as the Participant's share of the Plan's income and any
related administrative expenses.
Participants accounts are valued daily based on the number of units
assigned to their accounts and the unit value of the fund. At December 31, 1997
and 1996, 189,002,224 and 190,142,610 units were assigned to The Plan's
Participants, respectively. Unit values for each investment fund were as follows
at December 31, 1997 and 1996:
1997 1996
------ -----
Retirement Preservation Fund $ 1.00 $1.00
Fully Managed Fund 15.26 12.53
Equity Index Fund 66.42 49.80
Core Fixed Income Fund 11.61 10.64
Special Value Fund 19.53 17.83
Global Allocation Fund 14.14 14.55
International Equity Fund 8.71 11.33
The Southern Company Stock Fund 25.88 22.63
Plan Termination
Although the Company has not expressed any intent to terminate the Plan, the
Company has the right to discontinue its contributions at any time and to
terminate the Plan subject to the provisions of ERISA. In the event of Plan
termination, each Participant's fully vested account balance shall be
distributed to the Participant in a non-discriminatory manner as soon as
practicable after such termination.
2. Investment Options:
The Plan offers eight investment options. Participants may direct their
investments into one or more of the following funds: (1) Retirement Preservation
Fund investing in a common/collective trust which invests primarily in a broadly
diversified portfolio of guaranteed investments contracts and in U.S. government
securities, (2) Fully Managed Fund investing in stocks, bonds, and cash
equivalents, (3) Equity Index Fund investing in a common/collective trust which
invests seeking to approximate the total return of the Standard & Poor's 500
Composite Stock Index, (4) Core Fixed Income Fund investing in all sectors of
the U.S. domestic bond market, (5) Special Value Fund investing in a mutual fund
which invests seeking long-term growth of capital by investing in a diversified
portfolio of securities, (6) Global Allocation Fund investing in a mutual fund
which invests seeking high return from a global portfolio of U.S. and foreign
stocks and bonds and cash equivalents, (7) International Equity Fund investing
in a mutual fund which invests seeking capital appreciation through investment
in a diversified portfolio of primarily equity securities of issuers located in
countries other than the United States, and (8) The Southern Company Stock Fund
investing in common stock of The Southern Company. The Company match will
continue to be non-participant directed and will be invested in The Southern
Company Stock Fund. Investment management and administrative fees for the funds
listed as items (1), (2), (3), and (8) above and certain other plan and trust
expenses are paid by the Employing Companies. Investment management and
administrative fees for the funds listed as items (4), (5), (6), and (7) above
are paid from the particular investment fund to which they relate. The Plan's
brokerage fees are included in the cost of the investments or netted against the
sales proceeds. The objectives of the respective funds are not necessarily an
indicator of actual performance. Investments in common/collective trusts are
stated at the fair value of the underlying assets held by the fund except for
benefit-responsive investment contracts included in the Retirement Preservation
Fund, which are carried at contract value (cost plus accrued interest).
16
<PAGE>
3. Accounting Policies:
Basis of Accounting
The accompanying financial statements have been prepared on the accrual basis of
accounting. The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect net assets available for benefits and changes therein.
Actual results could differ from those estimates.
Investments
Investments are stated at fair value as determined by the trustee from quoted
market price information. The net appreciation (depreciation) in fair value of
investments in the accompanying statements of changes in net assets available
for benefits reflects the net difference between the market value and the cost
of investments bought during the year and the net difference between market
value and the beginning of the year market value of assets held, sold, or
distributed.
The fair market values of individual assets which represent 5% or more of
the plan's net assets as of December 31, 1997 and 1996 are as follows:
<TABLE>
<CAPTION>
<S> <C> <C>
1997 1996
-------------- --------------
The Southern Company common stock $1,511,836,233 $1,502,343,127
Merrill Lynch Retirement Preservation Trust 109,684,482 106,339,384
Merrill Lynch Equity Index Trust 204,435,048 124,391,370
</TABLE>
4. Contributions:
Contributions to the Plan by the Employing Companies and their respective
Participants for the years ended December 31, 1997 and 1996 are set forth below:
<TABLE>
<CAPTION>
<S> <C> <C>
1997 Contributions
-------------------------------------------------------
Company Participant Total
-------- ----------- -----
Alabama Power Company ...................................... $9,819,639 $16,802,602 $26,622,241
Georgia Power Company....................................... 13,822,357 23,389,950 37,212,307
Gulf Power Company.......................................... 1,963,570 3,667,775 5,631,345
Mississippi Power Company................................... 2,148,123 3,787,727 5,935,850
Savannah Electric and Power Company......................... 854,166 1,511,540 2,365,706
Southern Communications Services, Inc....................... 171,446 300,335 471,781
Southern Company Services, Inc.............................. 6,722,755 11,307,889 18,030,644
Southern Company Energy Solutions........................... 127,169 223,935 351,104
Southern Energy, Inc........................................ 793,732 1,327,559 2,121,291
Southern Nuclear Operating Company, Inc..................... 6,014,817 10,460,054 16,474,871
----------- ----------- ------------
$42,437,774 $72,799,366 $115,217,140
=========== =========== ============
</TABLE>
17
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C> <C>
1996 Contributions
-----------------------------------------------------
Company Participant Total
------- ----------- ------
Alabama Power Company ...................................... $10,483,735 $17,604,696 $28,088,431
Georgia Power Company....................................... 17,664,640 29,145,709 46,810,349
Gulf Power Company.......................................... 2,020,358 3,723,025 5,743,383
Mississippi Power Company................................... 2,140,153 3,674,250 5,814,403
Savannah Electric and Power Company......................... 859,142 1,462,143 2,321,285
Southern Communications Services, Inc....................... 111,278 179,365 290,643
Southern Company Services, Inc.............................. 6,307,797 10,131,143 16,438,940
Southern Development and Investment Group, Inc.............. 104,139 178,261 282,400
Southern Electric International, Inc........................ 656,252 1,086,201 1,742,453
Southern Nuclear Operating Company, Inc..................... 2,588,970 4,245,383 6,834,343
----------- ----------- ------------
$42,936,464 $71,430,176 $114,366,630
=========== =========== ============
</TABLE>
5. Tax Status:
The Plan received a determination letter dated June 10, 1996 from the Internal
Revenue Service which states that the Plan, as amended through March 4, 1996, is
in compliance with Section 401(a) and applicable subsections of Section 410(b)
of the Code as of that date. The Plan has been amended since that date. However,
in the opinion of the Company's management, the Plan is currently operating in
compliance with applicable provisions of the Code. Therefore, the Plan
administrator believes that the Plan was qualified and the related trust was
tax-exempt as of December 31, 1997 and 1996; accordingly, no provision for
income taxes has been made in the accompanying financial statements.
Employer contributions and income of the Plan are not taxable to
Participants until withdrawals or distributions are made.
6. Reconciliation to the Form 5500:
As of December 31, 1997 and 1996, the Plan had approximately $11,273,560 and
$9,636,241, respectively, of pending distributions to Participants who elected
to withdraw from the Plan. These amounts are recorded as a liability in the
Plan's Form 5500; however, these amounts are not recorded as a liability in the
accompanying statements of net assets available for benefits in accordance with
generally accepted accounting principles.
The following table reconciles net assets available for benefits for the
years ended December 31, 1997 and 1996 per the financial statements to the Form
5500 to be filed by the Company:
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
Net Assets Available
for Benefits
Benefits Distributions ----------------------
Payable to Participants 1997 1996
------- ----------------- ---- ----
Per financial statements $ - $314,330,629 $2,195,596,195 $2,026,915,072
Accrued benefit payments 11,273,560 11,273,560 (11,273,560) (9,636,241)
Reversal of 1996 accrual
for benefit payments - (9,636,241) - -
----------- ------------ -------------- --------------
Per Form 5500 $11,273,560 $315,967,948 $2,184,322,635 $2,017,278,831
=========== ============ ============== ==============
</TABLE>
18
<PAGE>
7. Subsequent Events:
Effective January 1, 1998, the Plan was amended to allow certain active
Participants to diversify a portion of their Employer Matching Contribution
account that is invested in Southern Company stock. Any active Participant may
elect at any time on or after the fifth anniversary of the enrollment date on
which he first became a Participant in this Plan to transfer a portion of the
amount credited to his Employer Matching Contribution account into any of the
other investment funds within the Plan. The only exception is that the election
may not exceed 50% of the amount of common stock in the Employer Matching
Contribution account at the time the election is made.
Effective August 3, 1998, the Plan will add ten other investment funds, and four
pre-mixed GoalManager Model Portfolios. The ten investment funds are: The
Seligman High Yield Bond Fund, MFS Massachusetts Investors Trust, Brinson U.S.
Equity Fund, Merrill Lynch Growth Fund, Davis Real Estate Fund, Davis New York
Venture Fund, Franklin Small Cap Growth Fund, GAM Global Fund, GAM International
Fund, and Loomis Sayles Small Cap Value Fund. The GoalManager Model Portfolios
will consist of conservative, moderate, moderate aggressive, and aggressive
investment options. Participants will be allowed to choose one GoalManager Model
Portfolio in addition to the other investment options in the Plan.
Additionally, Merrill Lynch Core Fixed Income and International Equity Funds
will be removed from the Plan's investment options and replaced by PIMCo Total
Return Fund and Hotchkis and Wiley International Fund. Prior to August 3, 1998,
Participants may transfer their balances from Merrill Lynch Core Fixed Income
and Merrill Lynch International Equity Fund to any of the remaining investment
options. If participants do not elect to transfer their balance from Merrill
Lynch Core Fixed Income and Merrill Lynch International Equity Fund to any of
the remaining investment options, those balances will automatically be directed
to PIMCo Total Return Fund and Hotchkis and Wiley International Fund,
respectively.
19
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C> <C>
Schedule I
Page 1 of 4
THE SOUTHERN COMPANY EMPLOYEE SAVINGS PLAN
ITEM 27a - SCHEDULE OF ASSETS HELD FOR INVESTMENT PURPOSES
DECEMBER 31, 1997
Description of Investment Including Maturity Date,
Identity of Issuer, Borrower Rate of Interest, Collateral, Par or Maturity Value,
(a)(b) Lessor, or Similar Party (c) Number of Shares (d)Cost (e)Current Value
------------------------- ------------------------------------------------ ----- -------------
RETIREMENT PRESERVATION FUND:
Temporary Investment:
* Merrill Lynch Trust Company,
Merrill Lynch
CMA Money Fund par $1 164,624 shares $ 164,624 $ 164,624
Common/Collective Trust:
* Merrill Lynch Trust Company,
Merrill Lynch
Retirement Preservation Trust Fund par $1 109,478,814 shares 109,478,814 109,478,814
------------- -----------
Total Retirement Preservation Fund 109,643,438 109,643,438
-------------- -----------
FULLY MANAGED FUND:
Temporary Investment:
* Merrill Lynch Trust Company,
Merrill Lynch
CMA Money Fund par $1 6,944,128 shares 6,944,128 6,944,128
------------ ------------
Treasury Securities:
United States Treasury Note AAA, 6.250%, due 02/28/02 997,656 1,018,280
United States Treasury Note AAA, 5.750%, due 08/15/03 11,648,855 12,007,440
United States Treasury Note AAA, 6.50%, due 05/15/05 1,481,016 1,483,125
United States Treasury Bond AAA, 6.250%, due 08/15/23 3,047,500 3,373,250
------------ ------------
Treasury Securities 17,175,027 17,882,095
------------ ------------
Corporate Bonds:
Anardarko Petroleum Corp Notes 5.875%, due 10/15/03 3,800,360 3,901,000
Argentina-Republic Global Notes BB-, 8.375%, due 12/20/03 1,981,563 1,910,000
Banco Rio De La Plata S A DTD BBB-, 8.750%, due 12/15/03 823,000 798,000
Bank Hawaii Subordinated Note A-, 6.875%, due 06/01/03 3,015,000 3,065,100
Carnival Corporation Notes A-, 6.150%, due 10/01/03 2,953,842 2,965,260
Chase Manhattan Corp
Subordinated Note 6.50%, due 1/15/09 1,996,160 1,974,680
Connecticut Light & Power Co.
First Mtge BB+, 7.750%, 6/1/02 698,110 714,427
Diamond Shamrock Inc. 7.650%, due 7/1/26 1,996,900 2,196,920
Enron Corporation Senior
Subordinated Note 6.750%, due 07/01/05 3,966,680 4,048,200
FirstBank Puerto Rico
Subordinated Note BB+, 7.625%, due 12/20/05 733,118 727,928
Hertz Corporation Senior Notes A, 6.375%, due 10/15/05 1,004,610 984,950
Loewen Group International Inc. BB+, 6.700%, due 10/01/99 499,075 501,000
Nabisco Incorporated Notes BBB, 6.700%, due 06/15/02 3,969,200 4,051,360
Philadelphia Electric Co First
and Refunding Mtg BBB+, 5.625%, due 11/01/01 960,280 978,200
Soloman Smith Barney Holding Inc. A-, 7.000%, due 3/15/07 498,795 513,990
Tenet Healthcare Corporation BB, 8.000%, due 1/15/05 1,491,375 1,526,250
Williams Holdings of Delaware BBB-, 6.250%, due 2/1/06 3,979,159 3,954,080
------------ ------------
Corporate Bonds 34,367,227 34,811,345
------------ ------------
Foreign Corporate Bonds:
Coca Cola FEMSA 8.950%, due 11/1/06 497,250 515,000
United Mexican States Global Bonds 9.875%, due 1/15/07 1,065,000 1,044,500
------------ ------------
Foreign Corporate Bonds 1,562,250 1,559,500
------------ ------------
Total Corporate Bonds 35,929,477 36,370,845
------------ ------------
Corporate Medium Term Notes:
NM General Motors Acceptance 6.625%, due 9/19/02 3,996,400 4,038,400
NationsBank Subordinated Note A, 6.200%, due 8/15/03 1,006,540 998,700
------------ ------------
Corporate Medium Term Notes 5,002,940 5,037,100
------------ ------------
</TABLE>
20
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C> <C>
Schedule I
Page 2 of 4
THE SOUTHERN COMPANY EMPLOYEE SAVINGS PLAN
ITEM 27a - SCHEDULE OF ASSETS HELD FOR INVESTMENT PURPOSES
DECEMBER 31, 1997
Description of Investment Including Maturity Date,
Identity of Issuer, Borrower Rate of Interest, Collateral, Par or Maturity Value,
(a) (b) Lessor, or Similar Party (c) Number of Shares (d)Cost (e)Current Value
--------------------------- --------------------------------------------------- ---- -------------
Common Stocks:
AllState Corporation 40,000 shares 1,706,400 3,620,000
American Standard Companies Incorporated 65,000 shares 3,100,718 2,490,280
Belden Incorporated 70,000 shares 2,450,240 2,467,500
Berkley W R Corp 65,000 shares 2,260,503 2,851,875
Birmingham Steel Corporation 120,000 shares 1,923,225 1,890,000
Carnival Corporation 60,000 shares 1,386,992 3,322,500
Coastal Corporation 50,000 shares 2,362,416 3,096,850
Computer Association International Inc 60,000 shares 1,749,117 3,180,000
Diageo PLC SPSD ADR 75,000 shares 2,334,483 2,840,625
El Paso Natural Gas Company 47,500 shares 4,489,053 3,158,750
Federal National Mortgage Association 50,000 shares 1,054,513 2,853,100
Fruit of the Loom, Inc 105,000 shares 3,011,439 2,690,625
General Electric Company 40,000 shares 767,642 2,935,000
Glaxo Wellcome PLC England 60,000 shares 1,456,231 2,872,500
Harrah's Entertainment Incorporated 135,000 shares 2,517,361 2,548,125
Imperial Chemical Industries PLC 50,000 shares 2,614,540 3,246,850
Kansas City Southern Industries, Inc 100,000 shares 1,855,814 3,175,000
Masco Corporation 60,000 shares 1,770,074 3,052,500
McDonalds Corporation 60,000 shares 2,826,706 2,865,000
Nike Inc 65,000 shares 3,040,823 2,539,030
Nokia Corporation 40,000 shares 1,847,082 2,780,000
PennCorp Financial Group Inc 80,000 shares 2,705,188 2,854,960
Provident Cos Inc 90,000 shares 2,435,310 3,476,250
Reynolds & Reynolds Co 145,000 shares 2,989,786 2,673,365
SPX Corporation 45,000 shares 2,633,196 3,105,000
Sun International Hotels Ltd 75,000 shares 2,753,751 2,821,875
Sunbeam Corporation 72,500 shares 2,820,116 3,063,125
Tenneco Inc 60,000 shares 434,911 2,370,000
Transamerica Corp 30,000 shares 2,069,844 3,195,000
Travelers Group Inc 65,000 shares 1,400,497 3,501,875
Union PAC Corp 45,000 shares 2,800,800 2,818,125
Unocal Corp 70,000 shares 2,820,444 2,716,840
Varian Associates Inc Delaware 55,000 shares 2,913,422 2,780,910
Wal Mart Stores Inc 80,000 shares 2,013,404 3,154,960
Weyerhaeuser Co 50,000 shares 2,173,067 2,453,100
Williams Companies Delaware 65,000 shares 1,516,451 1,852,500
YPF Sociedad Anon American Depository Receipts 90,000 shares 1,762,791 3,076,830
----------- -----------
Common Stocks 82,768,350 106,390,825
----------- -----------
Total Fully Managed Fund 147,819,923 172,624,993
----------- -----------
</TABLE>
21
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C> <C>
Schedule I
Page 3 of 4
THE SOUTHERN COMPANY EMPLOYEE SAVINGS PLAN
ITEM 27a - SCHEDULE OF ASSETS HELD FOR INVESTMENT PURPOSES
DECEMBER 31, 1997
Description of Investment Including Maturity Date,
Identity of Issuer, Borrower Rate of Interest, Collateral, Par or Maturity Value,
(a) (b) Lessor, or Similar Party (c) Number of Shares (d)Cost (e) Current Value
------------------------- ---------------------------------------------------- ---- -------------
EQUITY INDEX FUND:
Temporary Investment:
* Merrill Lynch Trust Company,
Merrill Lynch
CMA Money Fund par $1 307,172 shares $ 307,172 307,172
Common/Collective Trust:
* Merrill Lynch Trust Company,
Merrill Lynch
Equity Index Trust -- Tier III par $1 3,077,775 shares 138,136,902 204,435,048
--------------- -----------
Total Equity Index Fund 138,444,074 204,742,220
--------------- -----------
CORE FIXED INCOME FUND:
Temporary Investments:
* Merrill Lynch Trust Company,
Merrill Lynch
CMA Money Fund par $1 291,906 shares 291,906 291,906
-------------- -----------
*
Temporary Investments 291,906 291,906
-------------- -----------
Treasury Securities:
United States, U. S. Treasury Note AAA, 5.750%, due 10/31/00 598,184 600,750
United States, U S. Treasury Note AAA, 6.500%, due 10/15/06 1,032,188 1,047,030
-------------- -----------
Treasury Securities 1,630,372 1,647,780
-------------- -----------
U.S. Government Agency Obligations:
Federal Home Loan Mortgage
Corporate Callable
Debenture 6.500%, due 04/01/12 756,382 774,010
Government National
Mortgage Association 6.500%, due 03/15/26 186,656 190,443
Government National
Mortgage Association 7.000%, due 12/01/27 696,790 698,627
-------------- -----------
Total U.S. Government Agency Obligations 1,639,828 1,663,080
-------------- -----------
Other Notes and Bonds:
Assets Backed Securities:
First Sierra Receivables 6.350%, due 12/10/01 499,765 499,765
U S Corporate Medium Term Note:
Federal National
Mortgage Association AAA, 6.210%, due 11/07/07 496,225 501,955
Federal National
Mortgage Association 6.400%, due 12/26/07 622,019 623,438
-------------- -----------
Total Other Notes & Bonds 118,244 1,125,393
Total Core Fixed Income Fund -------------- -----------
5,180,115 5,227,924
-------------- -----------
SPECIAL VALUE FUND:
Investment in Registered Securities:
* Merrill Lynch Asset Management,
Merrill Lynch
Special Value Fund, Inc.-- Class A par $0.10 2,445,065 shares 47,955,430 47,823,705
-------------- -----------
GLOBAL ALLOCATION FUND:
Investment in Registered Securities:
* Merrill Lynch Asset Management,
Merrill Lynch
Global Allocation Fund, Inc. -- Class A par $0.10 2,710,431 shares 40,625,940 38,382,882
------------ -----------
INTERNATIONAL EQUITY FUND:
Investment in Registered Securities:
* Merrill Lynch Asset Management,
Merrill Lynch
International Equity Fund -- Class A par $0.10 804,628 shares 9,020,211 7,018,720
------------ -----------
LOANS DUE FROM PARTICIPANTS (interest rates vary from 6.0% to 11.5%) 81,231,536 81,231,536
------------ -----------
22
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C> <C>
Schedule I
Page 4 of 4
THE SOUTHERN COMPANY EMPLOYEE SAVINGS PLAN
ITEM 27a - SCHEDULE OF ASSETS HELD FOR INVESTMENT PURPOSES
DECEMBER 31, 1997
Description of Investment Including Maturity Date,
Identity of Issuer, Borrower Rate of Interest, Collateral, Par or Maturity Value,
(a) (b) Lessor, or Similar Party (c) Number of Shares (d)Cost (e) Current Value
--------------------------- ---------------------------------------------------- ---- -------------
THE SOUTHERN COMPANY STOCK FUND--PARTICIPANT DIRECTED PORTION:
Temporary Investment:
* Merrill Lynch Trust Company,
Merrill Lynch
CMA Money Fund par $1 1,042,308 shares 1,042,308 1,042,308
Common Stock:
* The Southern Company, The Southern
Company Common Stock par $5 26,757,788 shares 459,447,178 692,357,490
----------- -----------
Total Southern Company Stock Fund
-- Participant Directed Portion 460,489,486 693,399,798
----------- -----------
THE SOUTHERN COMPANY STOCK FUND--
NON-PARTICIPANT DIRECTED PORTION:
Temporary Investment:
* Merrill Lynch Trust Company,
Merrill Lynch
CMA Money Fund par $1 1,231,844 shares $ 1,231,844 $ 1,231,844
Common Stock:
* The Southern Company,
The Southern Company
Common Stock par $5 31,670,676 shares 538,401,493 819,478,743
-------------- --------------
Total Southern Company Stock Fund
--Non-Participant Directed Portion 539,633,337 820,710,587
-------------- --------------
TOTAL INVESTMENT OF ALL FUNDS $1,580,044,445 $2,180,805,803
============== ==============
(NOTE) The last sale price (New York Stock Exchange composite transactions) for The Southern Company common stock on May 15, 1998
was $25.6250 as compared to a price of $25.875 on December 31, 1997.
</TABLE>
* Represents a party-in-interest to the Plan.
The accompanying notes are an integral part of this schedule.
23
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C>
Schedule II
THE SOUTHERN COMPANY EMPLOYEE SAVINGS PLAN
Item 27(d) - SCHEDULE OF REPORTABLE TRANSACTIONS
FOR THE YEAR ENDED DECEMBER 31, 1997
(h) Current
(b) Description of asset value of asset
(a) Identity of (include interest rate and (c)Purchase (d)Selling (e)Lease (f)Expense (g) Cost of on transaction
party involved maturity in case of a loan) price price rental incurred asset date (i)Net gain
-------------- --------------------------- --------- ---------- ------ -------- ---------- ------------- -----------
Merrill Lynch Merrill Lynch Retirement
Trust Company Preservation Trust
of Florida 823 transactions $54,147,693
908 transactions $50,779,151 $50,779,151 $ 0
Merrill Lynch Merrill Lynch Pending
Trust Company Settlement Fund
of Florida 253 transactions 101,765,935
250 transactions 98,658,601 98,658,601 0
The Southern Common stock
Company 789 transactions 240,801,769 - - - - - -
1,062 transactions - 312,219,310 - - 240,801,769 312,219,310 71,417,541
</TABLE>
24
The accompanying notes are an integral part of this schedule.
<PAGE>
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934,
The Southern Company Employee Savings Plan Committee has duly caused this annual
report to be signed by the undersigned thereunto duly authorized.
THE SOUTHERN COMPANY
EMPLOYEE SAVINGS PLAN
/s/ Chris Womack
Chris Womack, Chairman
Savings Plan Committee
June 26, 1998
EXHIBIT B
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the incorporation by
reference of our report dated May 15, 1998, included in this annual report of
The Southern Company Employee Savings Plan on Form 11-K for the year ended
December 31, 1997 into the Plan's previously filed Registration Statement No.
33-23152.
/s/ ARTHUR ANDERSEN LLP
Atlanta, Georgia
June 24, 1998
