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, 1998
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>
<TABLE>
THE SOUTHERN COMPANY EMPLOYEE SAVINGS PLAN
FORM 11-K
DECEMBER 31, 1998
TABLE OF CONTENTS
<CAPTION>
<S> <C>
Page No.
Exhibits 3
Report of Independent Public Accountants 4
Statement of Net Assets Available for Benefits, With Fund Information--
December 31, 1998 5
Statement of Net Assets Available for Benefits, With Fund Information--
December 31, 1997 9
Statement of Changes in Net Assets Available for Benefits, With Fund Information--
for the year ended December 31, 1998 11
Statement of Changes in Net Assets Available for Benefits, With Fund Information--
for the year ended December 31, 1997 15
Notes to Financial Statements and Schedules 17
Schedule I - Item 27a - Schedule of Assets Held for Investment Purposes--
December 31, 1998 25
Schedule II - Item 27d - Schedule of Reportable Transactions--for the year ended
December 31, 1998 29
Signature 30
Consent of Independent Public Accountants 31
</TABLE>
2
<PAGE>
EXHIBITS
A - Amended and Restated Plan Document for The Southern Company Employee Savings
Plan effective January 1, 1997 and all amendments thereto through Amendment
Number 3. (Designated in Form 10-K for the year ended December 31, 1998,
File No. 1-3526 as Exhibit 10(a) 61.)
B - Consent of Independent Public Accountants. (Contained herein at Page 31.)
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, 1998 and 1997, 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, 1998 and 1997, 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 investments 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
June 18, 1999
4
<PAGE>
<TABLE>
THE SOUTHERN COMPANY EMPLOYEE SAVINGS PLAN
STATEMENT OF NET ASSETS AVAILABLE FOR BENEFITS, WITH FUND INFORMATION
December 31, 1998
Page 1 of 4
<CAPTION>
Fund Information (Notes 1 and 2)
-----------------------------------------------------------------------
Participant-Directed Portion
------------------------------------------------------------------------
Retirement Fully PIMCO Special
Preservation Managed Equity Index Total Return Value
Total Trust Portfolio Trust Fund Fund
------------------- ------------ -------------- ------------- ------------- --------
<S> <C> <C> <C> <C> <C> <C>
ASSETS:
Investments, at fair value
(Schedule I and Notes 2 and 3):
Temporary Investments $ 9,433,710 $ 292,846 $ 6,744,194 $ 164,727 $ - $ -
Treasury securities 19,549,965 - 19,549,965 - - -
Corporate Bonds 32,400,752 - 32,400,752 - - -
Corporate medium-term notes 4,103,330 - 4,103,330 - - -
Common Stock--excluding common
stock of Southern Company 106,485,231 - 106,485,231 - - -
Common Stock--Southern Company 1,598,448,380 - - - - -
Common/collective trusts 427,630,225 132,454,471 - 294,722,578 - -
Registered investment companies 142,687,901 - - - 11,456,644 52,055,472
Loans due from participants 80,102,627 - - - - -
--------------- -------------- --------------- -------------- -------------- -----------
Total investments 2,420,842,121 132,747,317 169,283,472 294,887,305 11,456,644 52,055,472
--------------- ------------- -------------- -------------- ------------- -----------
Receivables:
Interest and dividends 1,338,254 - 1,338,254 - - -
Receivable for securities sold 1,436,717 68,498 87,936 152,021 5,908 26,832
-------------- ------------- ------------- ------------- ------------ ------------
Total receivables 2,774,971 68,498 1,426,190 152,021 5,908 26,832
-------------- ------------- ------------- ------------- ------------ ------------
NET ASSETS AVAILABLE FOR BENEFITS $ 2,423,617,092 $ 132,815,815 $ 170,709,662 $ 295,039,326 $ 11,462,552 $ 52,082,304
=============== ============= ============= ============= ============ ============
The accompanying notes are an integral part of this statement.
</TABLE>
- 5 -
<PAGE>
THE SOUTHERN COMPANY EMPLOYEE SAVINGS PLAN
STATEMENT OF NET ASSETS AVAILABLE FOR BENEFITS, WITH FUND INFORMATION
December 31, 1998
<TABLE>
<CAPTION> Page 2 of 4
Fund Information (Notes 1 and 2)
------------------------------------------------------------------------------------------
Participant-Directed Portion
-----------------------------------------------------------------------------------------
Global Hotchkis & Wiley Brinson MFS Seligman
Growth Allocation International U.S. Equity Massachusetts High Yield
Fund Fund Fund Fund Investors Trust Bond Fund
----- ---------- ---------------- ----------- ---------------- ----------
<S> <C> <C> <C> <C> <C> <C>
ASSETS:
Investments, at fair value
(Schedule I and Notes 2 and 3):
Temporary Investments $ - $ - $ - $ - $ - $ -
Treasury securities - - - - - -
Corporate Bonds - - - - - -
Corporate medium-term notes - - - - - -
Common Stock--excluding common
stock of Southern Company - - - - - -
Common Stock--Southern Company - - - - - -
Common/collective trusts - - - - - -
Registered investment companies 507,171 36,739,507 7,966,539 2,591,479 8,946,399 1,703,374
Loans due from participants - - - - - -
--------- ------------ ----------- ----------- ----------- -----------
Total investments 507,171 36,739,507 7,966,539 2,591,479 8,946,399 1,703,374
--------- ------------ ----------- ----------- ----------- -----------
Receivables:
Interest and dividends - - - - - -
Receivable for securities sold 262 18,931 4,108 1,337 4,614 878
--------- ------------ ----------- ----------- ----------- -----------
Total receivables 262 18,931 4,108 1,337 4,614 878
--------- ------------ ----------- ----------- ----------- -----------
NET ASSETS AVAILABLE FOR BENEFITS $ 507,433 $ 36,758,438 $ 7,970,647 $ 2,592,816 $ 8,951,013 $ 1,704,252
========= ============ =========== =========== =========== ===========
The accompanying notes are an integral part of this statement.
</TABLE>
- 6 -
<PAGE>
THE SOUTHERN COMPANY EMPLOYEE SAVINGS PLAN
STATEMENT OF NET ASSETS AVAILABLE FOR BENEFITS, WITH FUND INFORMATION
December 31, 1998
<TABLE>
<CAPTION>
Page 3 of 4
Fund Information (Notes 1 and 2)
----------------------------------------------------------------------------------------
Participant-Directed Portion
----------------------------------------------------------------------------------------
Davis Davis New York Franklin GAM Loomis Sayles
Real Estate Venture Small Cap GAM Global International Small Cap Value
Fund Fund Growth Fund Fund Fund Fund
------------- ------------- ------------ ---------- ------------ -------------
<S> <C> <C> <C> <C> <C> <C>
ASSETS:
Investments, at fair value
(Schedule I and Notes 2 and 3):
Temporary Investments $ - $ - $ - $ - $ - $ -
Treasury securities - - - - - -
Corporate Bonds - - - - - -
Corporate medium-term notes - - - - - -
Common Stock--excluding common
stock of Southern Company - - - - - -
Common Stock--Southern Company - - - - - -
Common/collective trusts - - - - - -
Registered investment companies 264,081 4,967,248 3,306,934 1,918,064 2,491,148 934,343
Loans due from participants - - - - - -
--------- ----------- ----------- ----------- ----------- ---------
Total investments 264,081 4,967,248 3,306,934 1,918,064 2,491,148 934,343
--------- ----------- ----------- ----------- ----------- ---------
Receivables:
Interest and dividends
Receivable for securities sold 136 2,562 1,706 989 1,285 482
--------- ----------- ----------- ----------- ----------- ---------
Total receivables 136 2,562 1,706 989 1,285 482
--------- ----------- ----------- ----------- ----------- ---------
NET ASSETS AVAILABLE FOR BENEFITS $ 264,217 $ 4,969,810 $ 3,308,640 $ 1,919,053 $ 2,492,433 $ 934,825
========= =========== =========== =========== =========== =========
The accompanying notes are an integral part of this statement.
</TABLE>
- 7 -
<PAGE>
<TABLE>
THE SOUTHERN COMPANY EMPLOYEE SAVINGS PLAN
STATEMENT OF NET ASSETS AVAILABLE FOR BENEFITS, WITH FUND INFORMATION
December 31, 1998
Page 4 of 4
<CAPTION>
Fund Information (Notes 1 and 2)
----------------------------------------------------------------------------------
Non Participant-
Participant-Directed Portion Directed Portion
----------------------------------------------------------- ------------------
Goal Manager Participants Southern Company Southern Company
Portfolios Loan Fund Stock Fund Stock Fund
---------------- --------------- ------------------ ------------------
<S> <C> <C> <C> <C>
ASSETS:
Investments, at fair value
(Schedule I and Notes 2 and 3):
Temporary Investments $ - $ - $ 1,050,129 $ 1,181,814
Treasury securities - - - -
Corporate Bonds - - - -
Corporate medium-term notes - - - -
Common Stock--excluding common
stock of Southern Company - - - -
Common Stock--Southern Company - - 752,196,162 846,252,218
Common/collective trusts 453,176 - - -
Registered investment companies 6,839,498 - - -
Loans due from participants - 80,102,627 - -
----------- ------------ ------------- ------------
Total investments 7,292,674 80,102,627 753,246,291 847,434,032
----------- ------------ ------------- ------------
Receivables:
Interest and dividends - - - -
Receivable for securities sold 3,761 - 617,837 436,634
----------- ------------ ------------- ------------
Total receivables 3,761 - 617,837 436,634
----------- ------------ ------------- ------------
NET ASSETS AVAILABLE FOR BENEFITS $ 7,296,435 $ 80,102,627 $ 753,864,128 $ 847,870,666
=========== ============ ============= =============
The accompanying notes are an integral part of this statement.
</TABLE>
- 8 -
<PAGE>
THE SOUTHERN COMPANY EMPLOYEE SAVINGS PLAN
STATEMENT OF NET ASSETS AVAILABLE FOR BENEFITS, WITH FUND INFORMATION
December 31, 1997
Page 1 of 2
<TABLE>
<CAPTION>
Fund Information (Notes 1 and 2)
-------------------------------------------------------------------------
Participant-Directed Portion
-------------------------------------------------------------------------
Retirement Fully Special
Preservation Managed Equity Index Core Fixed Value
Total Trust Portfolio Trust Income Fund Fund
--------------- -------------- ------------ ------------- ---------- -------------
ASSETS:
Investments, at fair value (Schedule I and Notes 2 and 3):
<S> <C> <C> <C> <C> <C> <C>
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 Southern Company 106,390,825 - 106,390,825 - - -
Common Stock--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.
- 9 -
<PAGE>
THE SOUTHERN COMPANY EMPLOYEE SAVINGS PLAN
STATEMENT OF NET ASSETS AVAILABLE FOR BENEFITS, WITH FUND INFORMATION
December 31, 1997
Page 2 of 2
<TABLE>
<CAPTION>
Fund Information (Notes 1 and 2)
----------------------------------------------------------------------
Non Participant-
Participant-Directed Portion Directed Portion
---------------------------------------------------- ------------------
Global Inter- Partici- Southern Southern
Allocation national pants Company Company
Fund Equity Fund Loan Fund Stock Fund Stock Fund
------------- ----------- ------------ ------------- -----------
ASSETS:
Investments, at fair value (Schedule I and Notes 2 and 3):
<S> <C> <C> <C> <C> <C>
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 Southern Company - - - - -
Common Stock--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
=========== ========== =========== ============ ============
</TABLE>
The accompanying notes are an integral part of this statement.
- 10 -
<PAGE>
<PAGE>
<TABLE>
THE SOUTHERN COMPANY EMPLOYEE SAVINGS PLAN
STATEMENT OF CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS, WITH FUND INFORMATION
December 31, 1998
Page 1 of 4
<CAPTION>
Fund Information (Note 1)
--------------------------------------------------------------------------------------
Participant-Directed Portion
--------------------------------------------------------------------------------------
Retirement Fully PIMCO Special
Preservation Managed Equity Index Core Fixed Total Return Value
Total Trust Portfolio Trust Income Fund Fund Fund
--------------- ---------------- --------------- ---------------- ------------- --------------- ---------
<S> <C> <C> <C> <C> <C> <C> <C>
INVESTMENT INCOME:
Interest and dividends $ 99,373,514 $ 8,234,674 $ 2,994 $ 120,044 $ 83 $ 655,873 $ 3,333,773
Net appreciation
(depreciation)
in fair value of
investments
(NOTE 3) 233,820,502 - 4,250,935 63,699,445 270,976 (217,772) (7,442,088)
-------------- ------------ ---------- ----------- --------- ------------ ------------
NET INVESTMENT
INCOME 333,194,016 8,234,674 4,253,929 63,819,489 271,059 438,101 (4,108,315)
CONTRIBUTIONS
(Note 4):
Participants 74,560,797 5,110,744 8,587,172 15,905,143 268,186 262,410 5,296,000
Company 41,728,706 - - - - - -
DISTRIBUTIONS TO
PARTICIPANTS (221,462,622) (25,194,527) (10,576,975) (12,533,376) (367,310) (168,334) (2,860,037)
NEW LOANS ISSUED - (2,357,635) (2,638,889) (3,594,566) (70,801) (66,392) (1,008,590)
LOAN PRINCIPAL
PAYMENTS - 1,797,906 2,852,816 4,692,151 84,020 44,082 1,474,200
NET INTERFUND
TRANSFERS - 34,997,453 (6,410,356) 20,852,554 (5,451,519) 10,952,685 5,090,756
-------------- ------------ ------------ ------------- ---------- ------------- ------------
CHANGE IN NET ASSETS
AVAILABLE FOR
BENEFITS DURING
THE YEAR 228,020,897 22,588,615 (3,932,303) 89,141,395 (5,266,365) 11,462,552 3,884,014
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
-------------- ------------ ------------- -------------- ---------- ----------- -----------
AVAILABLE FOR
BENEFITS AT
DECEMBER 31, 1998 $ 2,423,617,092 $ 132,815,815 $ 170,709,662 $ 295,039,326 $ - $ 11,462,552 $ 52,082,304
=============== ============= ============= ============== ========== ============ ============
The accompanying notes are an integral part of this statement.
</TABLE>
- 11 -
<PAGE>
<TABLE>
THE SOUTHERN COMPANY EMPLOYEE SAVINGS PLAN
STATEMENT OF CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS, WITH FUND INFORMATION
DECEMBER 31, 1998
Page 2 of 4
<CAPTION>
Fund Information (Note 1)
-------------------------------------------------------------------------------------------
Participant-Directed Portion
-------------------------------------------------------------------------------------------
Global International Hotchkis & Wiley Brinson MFS Seligman
Growth Allocation Equity International U.S. Equity Massachusetts High Yield
Fund Fund Fund Fund Fund Investors Trust Bond Fund
--------- ------------- ---------- ------------ ------------- ----------------- ------------
<S> <C> <C> <C> <C> <C> <C> <C>
INVESTMENT INCOME:
Interest and dividends $ 5,114 $ 4,635,050 $ 10,316 $ 195,005 $ 142,945 $ 342,129 $ 41,884
Net appreciation
(depreciation)
in fair value
of investments
(Note 3) (1,866) (4,608,670) 543,184 (549,075) 117,334 613,547 (35,459)
--------- ------------ ------------- ------------ ------------ ------------ ------------
NET INVESTMENT INCOME 3,248 26,380 553,500 (354,070) 260,279 955,676 6,425
CONTRIBUTIONS (Note 4):
Participants 30,456 3,816,529 527,893 382,366 79,751 218,483 44,644
Company - - - - - - -
DISTRIBUTIONS TO
PARTICIPANTS (738) (2,993,608) (499,952) (134,203) (5,456) (28,446) (41,032)
NEW LOANS ISSUED (14) (763,035) (132,561) (89,705) (516) (51,857) (42,000)
LOAN PRINCIPAL
PAYMENTS 4,035 1,096,779 145,000 77,420 11,677 38,002 8,490
NET INTERFUND
TRANSFERS 470,446 (3,110,304) (7,679,935) 8,088,839 2,247,081 7,819,155 1,727,725
--------- ------------ ------------- ------------ ------------ ------------ -----------
CHANGE IN NET ASSETS
AVAILABLE FOR
BENEFITS DURING
THE YEAR 507,433 (1,927,259) (7,086,055) 7,970,647 2,592,816 8,951,013 1,704,252
NET ASSETS AVAILABLE
FOR BENEFITS AT
DECEMBER 31, 1997 - 38,685,697 7,086,055 - - - -
--------- ------------ ------------- ------------ ------------ ------------ ------------
NET ASSETS AVAILABLE FOR
BENEFITS AT
DECEMBER 31, 1998 $ 507,433 $ 36,758,438 $ - $ 7,970,647 $ 2,592,816 $ 8,951,013 $ 1,704,252
========= ============ ============= =========== =========== =========== ===========
The accompanying notes are an integral part of this statement.
</TABLE>
- 12 -
<PAGE>
<TABLE>
THE SOUTHERN COMPANY EMPLOYEE SAVINGS PLAN
STATEMENT OF CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS, WITH FUND INFORMATION
December 31, 1998
<CAPTION>
Page 3 of 4
Fund Information (Note 1)
------------------------------------------------------------------------------------------
Participant-Directed Portion
------------------------------------------------------------------------------------------
Davis Davis New York Franklin GAM Loomis Sayles
Real Estate Venture Small Cap GAM Global International Small Cap Value
Fund Fund Growth Fund Fund Fund Fund
--------------- --------------- ------------- --------- ------------- --------------
<S> <C> <C> <C> <C> <C> <C>
INVESTMENT INCOME:
Interest and dividends $ 4,117 $ 99,784 $ 44,911 $ 2,341 $ 10,321 $ -
Net appreciation (depreciation)
in fair value
of investments (Note 3) (2,486) 449,248 420,366 (49,533) (80,608) 76,950
-------- ------------ ------------- ------------ ------------ --------------
NET INVESTMENT INCOME 1,631 549,032 465,277 (47,192) (70,287) 76,950
CONTRIBUTIONS (Note 4):
Participants 13,465 139,070 97,857 80,557 73,963 33,243
Company - - - - - -
DISTRIBUTIONS TO
PARTICIPANTS (116) (3,469) (3,417) (63,800) (669) (14,335)
NEW LOANS ISSUED (3,765) (16,670) (5,993) (26,391) (4,040) (16,097)
LOAN PRINCIPAL PAYMENTS 1,306 32,742 19,811 10,788 16,322 6,938
NET INTERFUND TRANSFERS 251,696 4,269,105 2,735,105 1,965,091 2,477,144 848,126
--------- ---------- ------------- ------------ ----------- ---------
CHANGE IN NET ASSETS
AVAILABLE
FOR BENEFITS
DURING THE YEAR 264,217 4,969,810 3,308,640 1,919,053 2,492,433 934,825
NET ASSETS AVAILABLE FOR
BENEFITS AT
DECEMBER 31, 1997 - - - - - -
-------- ----------- ------------- ------------- ----------- ---------
NET ASSETS
AVAILABLE FOR
BENEFITS AT
DECEMBER 31, 1998 $ 264,217 $ 4,969,810 $ 3,308,640 $ 1,919,053 $ 2,492,433 $ 934,825
========= =========== =========== =========== =========== =========
The accompanying notes are an integral part of this statement.
</TABLE>
- 13 -
<PAGE>
<TABLE>
<CAPTION>
Page 4 of 4
THE SOUTHERN COMPANY EMPLOYEE SAVINGS PLAN
STATEMENT OF CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS, WITH FUND INFORMATION
DECEMBER 31, 1998
Fund Information (Note 1)
----------------------------------------------------------------------
Non Participant-
Participant-Directed Portion Directed Portion
---------------------------------------------------- -----------------
Goal Manager Participants Southern Company Southern Company
Portfolios Loan Fund Stock Fund Stock Fund
<S> <C> <C> <C> <C>
------------ ------------- -------------- ---------------
INVESTMENT INCOME:
Interest and dividends $ 261,121 $ 5,883,045 $ 32,754,152 $ 42,593,838
Net appreciation (depreciation)
in fair value of investments (Note 3
225,511 - 82,636,369 93,504,194
----------- ------------- -------------- --------------
NET INVESTMENT INCOME 486,632 5,883,045 115,390,521 136,098,032
CONTRIBUTIONS (Note 4):
Participants 357,748 - 33,235,117 -
Company - - - 41,728,706
DISTRIBUTIONS TO PARTICIPANTS (42,427) (1,457,576) (51,359,861) (113,112,958)
.
NEW LOANS ISSUED (59,703) 31,812,997 (20,863,777) -
LOAN PRINCIPAL PAYMENTS 53,989 (31,484,330) 19,015,856 -
NET INTERFUND TRANSFERS 6,500,196 (5,883,045) (43,473,256) (39,284,742)
----------- ------------ ------------- --------------
CHANGE IN NET ASSETS AVAILABLE
FOR BENEFITS DURING THE YEAR 7,296,435 (1,128,909) 51,944,600 25,429,038
NET ASSETS AVAILABLE FOR
BENEFITS AT DECEMBER 31, 1997 - 81,231,536 701,919,528 822,441,628
------------ ------------- ------------- --------------
NET ASSETS AVAILABLE FOR
BENEFITS AT DECEMBER 31, 1998 $ 7,296,435 $ 80,102,627 $ 753,864,128 $ 847,870,666
============ ============= ============== =============
The accompanying notes are an integral part of this statement.
</TABLE>
-14 -
<PAGE>
<TABLE>
<CAPTION>
THE SOUTHERN COMPANY EMPLOYEE SAVINGS PLAN
STATEMENT OF CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS, WITH FUND INFORMATION
December 31, 1997
Page 1 of 2
Fund Information (Notes 1 and 2)
----------------------------------------------------------------------------
Participant-Directed Portion
----------------------------------------------------------------------------
Retirement Fully Equity Core Special
Preservation Managed Index Fixed Value
Total Trust Portfolio Trust Income Fund Fund
---------------- -------------- ---------------- ------------- ------------ ---------------
INVESTMENT INCOME:
<S> <C> <C> <C> <C> <C> <C>
Interest and dividends $ 107,745,109 $ 7,188,695 $ 574,555 $ 599,528 $ 11,369 $ 4,933,123
Net appreciation (depreciation)
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 THE 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.
- 15 -
<PAGE>
THE SOUTHERN COMPANY EMPLOYEE SAVINGS PLAN
STATEMENT OF CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS, WITH FUND INFORMATION
December 31, 1997
Page 2 of 2
<TABLE>
<CAPTION>
Fund Information (Notes 1 and 2)
----------------------------------------------------------------------------------
Non Participant-
Participant-Directed Portion Directed Portion
----------------------------------------------------------------- ----------------
Global
Allocation International Participants Southern Company Southern Company
Fund Equity Fund Loan Fund Stock Fund Stock Fund
-------------- ---------------- --------------- ----------------- ----------------
INVESTMENT INCOME:
<S> <C> <C> <C> <C> <C>
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 invest-
ments(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 THE 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.
- 16 -
<PAGE>
THE SOUTHERN COMPANY EMPLOYEE SAVINGS PLAN
NOTES TO FINANCIAL STATEMENTS AND SCHEDULES
DECEMBER 31, 1998 AND 1997
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 Energy Solutions, Inc., Southern Company Services, Inc.,
Southern Energy Resources, 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, as amended ("ERISA").
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, Compensation and Benefits of The Southern Company; Senior 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 certain 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.
17
<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
(on an after-tax basis) 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 a pre-tax basis) 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.
For the 1998 Plan Year, the Employing Companies contributed 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, did not exceed 6% of his compensation, as defined in the Plan
("Employer Matching Contribution").
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.
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, who has retired or
18
<PAGE>
separated from service, 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:
o The vested amount in the account is not more than $5,000; or
o The Participant elects to receive a distribution of his account.
If the value of the account is greater than $5,000, 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:
o his surviving spouse,
o his surviving children (equally),
o his surviving parents (equally),
o his surviving brothers and sisters (equally), or
o 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, rollover contributions including earnings, and, if a
Participant has participated in the Plan for at least 60 months, 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 attain age 59 1/2, separate from service, or establish that a hardship
situation exists. The Committee will determine if a withdrawal is for immediate
and heavy financial need. Early withdrawals of before-tax contributions 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.
Vesting
Participants are immediately vested in their Elective Employer
Contributions, Voluntary Participant Contributions, and Employer Matching
Contributions, plus actual earnings thereon.
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 during the employee's
first 12 months of employment.
19
<PAGE>
Participants
As of December 31, 1998 and 1997, active participants in the Plan
totaled 21,842 and 23,349 respectively.
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.
Participant accounts are valued daily based on the number of units
assigned to their accounts and the unit value of the fund. At December 31, 1998
and 1997, 211,738,654 and 189,002,224 units were assigned to Plan Participants,
respectively. Unit values for each investment fund were as follows at December
31, 1998 and 1997:
1998 1997
---- ----
Merrill Lynch Retirement Preservation Trust $ 1.00 $ 1.00
Merrill Lynch Fully Managed Portfolio 15.68 15.26
Merrill Lynch Equity Index Trust 85.52 66.42
Merrill Lynch Core Fixed Income Portfolio N/A 11.61
Merrill Lynch Special Value Fund, Inc. 17.50 19.53
Merrill Lynch Global Allocation Fund, Inc. 12.61 14.14
Merrill Lynch International Equity Fund N/A 8.71
Southern Company Stock Fund 29.06 25.88
Brinson U.S. Equity Fund 19.45 N/A
Loomis Sayles Small Cap Value Fund 18.14 N/A
GAM International Fund 29.98 N/A
GAM Global Fund 19.04 N/A
Franklin Small Cap Growth Fund 22.57 N/A
Davis Real Estate Fund, Inc. 20.73 N/A
Hotchkis and Wiley International Fund 23.28 N/A
PIMCO Total Return Fund 10.54 N/A
Seligman High Yield Bond Fund 6.95 N/A
Merrill Lynch Growth Fund 21.51 N/A
MFS Massachusetts Investors Trust 20.25 N/A
Davis New York Venture Fund, Inc. 25.01 N/A
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.
20
<PAGE>
2. Investment Options:
The Plan offered eight investment options through August 3, 1998.
Participants could direct their investments into one or more of the following
funds: (1) Retirement Preservation Trust 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
Portfolio investing in stocks, bonds, and cash equivalents, (3) Equity Index
Trust investing in a common/collective trust which seeks to approximate the
total return of the Standard & Poor's 500 Composite Stock Index, (4) Core Fixed
Income Portfolio 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
primarily in common stock of The Southern Company.
The Employer Matching contributions are non-participant-directed and
are invested in The Southern Company Stock Fund. Effective January 1, 1998, the
Plan was amended to allow certain participants to diversify a portion of their
Employer Matching Contribution account that is invested in The Southern Company
Stock Fund. Any 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 added twelve Investment Funds, and
four pre-mixed GoalManager Model Portfolios. The Plan added the following twelve
funds: (1) PIMCO Total Return Fund seeking to maximize total return, consistent
with preservation of capital and prudent investment management, (2) Merrill
Lynch Growth Fund seeking to invest in equity securities, placing principal
emphasis on those securities that fund management believes are undervalued, (3)
Hotchkis and Wiley International Fund seeking to provide current income and
long-term growth of income, accompanied by growth of capital, (4) Brinson U.S.
Equity Fund investing in a wide range of equity securities of U.S. companies
that are traded on major stock exchanges as well as in the over-the-counter
market, (5) MFS Massachusetts Investors Trust primarily investing in a
conservative portfolio of equity securities selected for their high or improving
investment quality, (6) Seligman High Yield Bond Fund investing in a diversified
portfolio of high-yield, high-risk, medium- and lower-quality corporate bonds
and notes, (7) Davis Real Estate Fund investing primarily in securities of
companies principally engaged in or related to the real estate industry, (8)
Davis New York Venture Fund investing primarily in common stocks, (9) Franklin
Small Cap Growth Fund investing the majority of its assets in equity securities
of small-capitalization companies, (10) GAM Global Fund investing in securities
issued by companies in any country, (11) GAM International Fund investing in
securities issued by countries other than the U.S., and (12) Loomis Sayles Small
Cap Value Fund investing primarily in equity securities of small-capitalization
companies with good earnings growth potential and which are believed to be
undervalued by the market. The GoalManager Model Portfolios consist of
conservative, moderate, moderate to aggressive, and aggressive investment
options. These portfolios have investment balances of $670,513, $1,302,243,
$3,718,781 and $1,604,898, respectively, and are aggregated for financial
reporting purposes. Participants are allowed to choose one GoalManager Model
Portfolio in addition to the other investment options in the Plan.
21
<PAGE>
Effective August 3, 1998, Merrill Lynch Core Fixed Income Portfolio and
International Equity Fund were removed from the Plan's investment options and
replaced with PIMCO Total Return Fund and Hotchkis and Wiley International Fund.
Prior to August 3, 1998, participants could transfer their balances from Merrill
Lynch Core Fixed Income Portfolio and Merrill Lynch International Equity Fund to
any of the remaining investment options. If participants did not elect to
transfer their balance from Merrill Lynch Core Fixed Income Portfolio and
Merrill Lynch International Equity Fund to any of the remaining investment
options, those balances were automatically directed to PIMCO Total Return Fund
and Hotchkis and Wiley International Fund, respectively.
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 the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported activity during the reporting period. Actual results
could differ from these estimates. Certain prior year amounts have been
reclassified to conform with current presentation.
Administrative Expenses
Southern Company Services and its affiliated companies normally pay the
Trustee's fees and other administrative costs. Brokerage commissions, transfer
taxes, and any other expenses resulting from purchases and sales of securities
are charged to the various investment funds. In addition, for Employer Matching
Contributions, investment management fees for all funds except The Southern
Company Stock Fund are deducted from fund earnings. For Voluntary Participant
Contributions and Elective Employer Contributions, investment management fees
for the Merrill Lynch Retirement Preservation Trust, the Merrill Lynch Fully
Managed Portfolio, and the Merrill Lynch Equity Index Trust are paid by the
Company, and investment management fees for all other funds are deducted from
fund earnings.
Investments
Investments in marketable securities are stated at fair value as
determined by the Trustee from quoted market price information. 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 Trust which are carried at contract value (cost plus
accrued interest). 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, 1998 and 1997 are as follows:
<TABLE>
<CAPTION>
1998 1997
-------------------- -----------------
<S> <C> <C>
The Southern Company common stock $1,598,448,380 $1,511,836,233
Merrill Lynch Retirement Preservation Trust 132,454,471 109,478,814
Merrill Lynch Equity Index Trust 294,722,578 204,435,048
</TABLE>
22
<PAGE>
4. Contributions:
Contributions to the Plan by the Employing Companies and their
respective Participants for the years ended December 31, 1998 and 1997, are set
forth below:
<TABLE>
<CAPTION>
1998 Contributions
--------------------------------------------------
Company Participants' Total
------- ------------ -----
<S> <C> <C> <C>
Alabama Power Company $ 9,453,344 $16,591,456 $ 26,044,800
Georgia Power Company 13,449,667 23,467,476 36,917,143
Gulf Power Company 1,885,421 3,617,218 5,502,639
Mississippi Power Company 1,981,998 3,658,791 5,640,789
Savannah Electric and Power Company 791,865 1,469,758 2,261,623
Southern Communications Services, Inc. 243,086 438,994 682,080
Southern Company Energy Solutions, Inc. 205,547 392,377 597,924
Southern Company Services, Inc. 6,805,558 12,218,321 19,023,879
Southern Energy Resources, Inc. 1,058,599 1,931,719 2,990,318
Southern Nuclear Operating Company, Inc. 5,853,621 10,774,687 16,628,308
----------- ----------- ------------
$41,728,706 $74,560,797 $116,289,503
=========== =========== ============
1997 Contributions
----------------------------------------------------
Company Participants' 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 Development and Investment Group, Inc. 127,169 223,935 351,104
Southern Company Services, Inc. 6,722,755 11,307,889 18,030,644
Southern Electric International, 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 $72,779,366 $115,217,140
=========== =========== ============
</TABLE>
5. Tax Status
The Plan received a determination letter dated February 2, 1999 from
the Internal Revenue Service which states that the Plan, as amended through
August 6, 1998, is in compliance with Section 401(a) and applicable subsections
of Section 410(b) of the Code as of that date. 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, 1998 and
1997; 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.
23
<PAGE>
6. Reconciliation to the Form 5500:
As of December 31, 1998 and 1997, the Plan had approximately $2,264,080
and $11,273,560, 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, 1998 and 1997 per the financial statements to the
Form 5500 to be filed by the Company:
<TABLE>
<CAPTION>
Net Assets Available
for Benefits
Benefits Distributions ------------------------------------------
Payable to Participants 1998 1997
------- --------------- ---- ----
<S> <C> <C> <C> <C>
Per financial statements $ - $221,462,622 $2,423,617,092 $2,195,596,195
Accrued benefit payments 2,264,080 2,264,080 (2,264,080) (11,273,560)
Reversal of 1997 accrual
for benefit payments - (11,273,560) - -
---------- ------------- -------------- --------------
Per Form 5500 $2,264,080 $212,453,142 $2,421,353,012 $2,184,322,635
========= ============ ============== ==============
</TABLE>
7. Subsequent Event:
Effective January 1, 1999, the Plan was amended to also be an employee
stock ownership plan.
Effective January 1, 1999, each Participant may elect to receive a cash
distribution of all or a portion of the dividends payable on the shares of
common stock of The Southern Company ("Common Stock") credited to the
Participant's account as of the record date of the Common Stock. The Committee
shall establish administrative procedures to enable Participants to make
elections. The dividends payable on the shares of Common Stock credited to the
account of a Participant who does not elect to receive a cash distribution shall
be invested into the Plan. Payment of cash distributions for dividends payable
shall be made as soon as administratively practicable after the payable date of
the shares of Common Stock, but in no event later than 90 days after the end of
the Plan Year which includes such payable date. A Participant's election to
receive cash distributions of dividends payable on Common Stock shall be revoked
automatically upon the Participant's death.
Effective June 1, 1999, the Plan replaced the Merrill Lynch Fully
Managed Portfolio with a new investment option. The new option is the Mellon
Balanced Portfolio. If participants did not elect to transfer their balance from
the Merrill Lynch Fully Managed Portfolio to any of the remaining investment
options prior to June 1, 1999, those balances were automatically transferred to
the Mellon Balanced Portfolio.
The Employee Savings Plan Committee is in the process of adopting the
Fourth Amendment to the Plan. The Fourth Amendment will provide that hardship
distributions made from the Plan on and after January 1, 2000 are not "Eligible
Rollover Distributions" and that the Pension Fund Investment Review Committee of
The Southern Company is authorized to appoint an investment advisor (who
qualifies as an Investment Manager as defined in ERISA) to manage the assets of
the Plan.
24
<PAGE>
<TABLE>
Schedule I
Page 1 of 4
THE SOUTHERN COMPANY EMPLOYEE SAVINGS PLAN
ITEM 27a - SCHEDULE OF ASSETS HELD FOR INVESTMENT PURPOSES
DECEMBER 31, 1998
<CAPTION>
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
---------------------------- --------------------------------------------------- ---- ------------
<S> <C> <C> <C> <C>
RETIREMENT PRESERVATION TRUST:
Temporary Investment:
* Merrill Lynch Trust Company,
Merrill Lynch
CMA Money Fund par $1 292,846 shares $ 292,846 $292,846
Common/Collective Trust:
Merrill Lynch Trust Company,
Merrill Lynch
Retirement Preservation Trust par $1 132,454,471 shares 132,454,471 132,454,471
------------ -------------
Total Retirement Preservation Trust $132,747,317 $ 132,747,317
------------ -------------
FULLY MANAGED PORTFOLIO:
Temporary Investment:
* Merrill Lynch Trust Company,
Merrill Lynch
CMA Money Fund par $1 7,194,916 shares 6,744,194 6,744,194
----------- ------------
Treasury Securities:
United States Treasury Note AAA, 5.875%, due 7/31/99 2,511,615 2,516,800
United States Treasury Note AAA, 6.375%, due 9/30/01 1,045,703 1,043,750
United States Treasury Note AAA, 5.875%, due 11/15/05 1,071,719 1,066,720
United States Treasury Note AAA, 5.625%, due 2/15/06 9,500,303 10,019,555
United States Treasury Inflation Note AAA, 3.625%, due 1/15/08 497,942 490,470
United States Treasury Note AAA, 5.500%, due 2/15/08 1,050,742 1,059,690
United States Treasury Bond AAA, 6.250%, due 08/15/23 2,791,603 3,352,980
----------- -----------
Total Treasury Securities $18,469,627 $19,549,965
----------- -----------
U.S. Corporate Bonds:
Banco Rio De La Plata S A BBB-, 8.750%, due 12/15/03 823,000 744,000
Champion Intl. Corp. BBB, 6.650%, due 12/15/37 500,000 509,350
Connecticut Light & Power Co. First Mtge BB, 7.750%, 6/1/02 698,110 726,124
Enersis S A A-, 6.600%, due 12/1/26 475,015 466,595
Enron Corporation Senior Subordinated Note BBB, 6.750%, due 07/1/05 3,966,680 4,110,280
Equistar Chemicals BBB-, 6.500%, due 2/15/06 987,330 930,610
FirstBank Puerto Rico Subordinated Note BB+, 7.625%, due 12/20/05 733,118 727,928
Hertz Corporation Senior Notes BBB+, 6.375%, due 10/15/05 1,004,610 1,023,060
Loewen Group International Inc. BB+, 6.700%, due 10/1/99 499,075 467,375
Nabisco Incorporated Notes BBB, 6.125%, due 02/1/33 2,489,400 2,437,875
Nabisco Inc. BBB, 6.375%, due 2/1/35 496,500 484,090
Niagara Mohawk Power Co First Mtge BBB-, 5.875%, due 9/1/02 975,210 972,210
Northwest Airlines BB, 7.625%, due 3/15/05 1,505,835 1,421,940
Occidental Petroleum BBB, 6.5%, due 4/1/05 996,690 979,110
R&B Falcon Corporation BBB-, 6.75%, due 4/15/05 982,750 950,580
Royal Carribbean Cruises LTD BBB-,7.250%, due 8/15/06 2,613,950 2,540,950
Royal Carribbean Cruises BBB-,6.75 %, due 3/15/08 498,135 492,075
Union Carbide Debentures BBB, 6.790%, due 6/1/25 1,019,500 1,050,350
USD YPF Sociedad Anomina BBB-, 8.000%, due 2/15/04 2,992,500 2,850,000
Williams Holdings of Delaware BBB-, 6.250%, due 2/1/06 3,979,160 3,960,120
----------- -----------
Total U.S. Corporate Bonds $28,236,568 $27,844,622
----------- -----------
Foreign Corporate Bonds:
ARS Argentina Republic of Unsubordinated 8.750%, due 7/10/02 1,810,000 1,810,000
Coca-Cola FEMSA BB+, 8.950%, due 11/1/06 497,250 492,500
Empressa Nacional Electric Yankee Bonds A-, 7.325%, due 2/1/37 506,875 440,745
Perez Comanc SA Note 144A 8.125%, due 7/15/07 495,385 495,385
Republic of Colombia Global Bonds BBB-, 7.625%, due 2/15/07 469,725 417,500
Turkey Republic Unsecd 144A B, 10.000%, due 9/19/07 503,750 435,000
United Global States BB, 8.625%, due 3/12/08 485,438 465,000
------- -------
Total Foreign Corporate Bonds $4,768,423 $4,556,130
---------- ----------
Total Corporate Bonds $33,004,991 $32,400,752
----------- ------------
</TABLE>
25
<PAGE>
<TABLE>
Schedule I
Page 2 of 4
THE SOUTHERN COMPANY EMPLOYEE SAVINGS PLAN
ITEM 27a - SCHEDULE OF ASSETS HELD FOR INVESTMENT PURPOSES
<CAPTION>
DECEMBER 31, 1998
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
--------------------------------- -------------------------------------------- ---- -------------
<S> <C> <C> <C>
U.S. Corporate Medium-term Notes:
Chase Credit Corporation Medium A-, 5.950%, due 8/1/00 999,170 1,004,330
NM Airgas Inc BE BBB-, 7.140%, due 3/8/04 1,001,870 1,056,500
NM Reynolds & Reynolds BE BBB+, 6.120%, due 3/2/01 500,000 505,920
NM Ryder Systems BE A-, 6.300%, due 7/21/03 1,000,000 1,020,480
Union Tx Petroleum BE BBB-, 6.700%, due 11/18/02 497,970 516,100
-------- --------
Total U.S. Corporate Medium-term Notes $3,999,010 $4,103,330
---------- ----------
U.S. Common Stocks:
AllState Corporation 55,000 shares 1,173,150 2,117,500
American Intl Group, Inc. 25,000 shares 2,550,603 2,415,625
Carnival Corporation 60,000 shares 693,496 2,880,000
Chase Manhattan Corp 35,000 shares 2,627,100 2,485,000
Citigroup, Inc. 60,000 shares 2,058,491 2,981,220
Coastal Corporation 60,000 shares 1,417,450 2,107,500
Corning Inc. 65,000 shares 2,307,954 2,925,000
Diageo PLC SPSD ADR 55,000 shares 2,022,944 2,543,750
Du Pont E I De Nemours & Co. 37,500 shares 2,583,077 1,989,825
El Paso Energy Corp Del 65,000 shares 2,615,062 2,262,780
Exel Limited (New) Class A 35,000 shares 2,916,071 2,625,000
Federal Mogul Corp 45,000 shares 2,867,063 2,677,500
Federal National Mortgage Association 30,000 shares 683,558 2,220,000
Fremont Genl Corp. 90,000 shares 2,524,641 2,266,830
Frontier Corp. 75,000 shares 2,511,522 2,550,000
Fruit of the Loom, Inc 80,000 shares 1,983,100 1,104,960
Gencorp Inc. 60,000 shares 1,725,118 1,496,220
General Electric Company 25,000 shares 479,776 2,550,000
Glaxo Wellcome PLC England 30,000 shares 1,865,071 2,085,000
Goodyear Tire & Rubber Co. 35,400 shares 2,204,670 1,785,470
Halliburton Co. 45,000 shares 1,830,825 1,333,125
Harrah's Entertainment Incorporated 100,000 shares 1,848,561 1,568,700
Horace Mann Educators Corp. 70,000 shares 2,261,339 1,995,000
ITT Inds Inc. 55,000 shares 2,029,444 2,186,250
Kansas City Southern Industries, Inc 70,000 shares 1,467,275 3,443,090
Kimberly Clark Corp. 45,000 shares 2,257,288 2,452,500
Lockheed Martin Corp. 20,000 shares 2,101,811 1,695,000
Masco Corporation 90,000 shares 1,372,585 2,587,500
McDonald's Corporation 30,000 shares 1,413,353 2,304,360
Monsanto Co. 46,800 shares 2,016,959 2,223,000
Motorola Inc. 45,000 shares 2,390,435 2,747,790
Nextel Communications, Inc. 75,000 shares 1,445,396 1,771,875
Nike, Inc 42,500 shares 1,895,407 1,723,885
Philips Electrs NV 15,000 shares 1,328,759 1,015,305
Provident Cos Inc 60,000 shares 1,635,655 2,490,000
Rite Aid Corp. 65,000 shares 2,690,777 3,233,750
Sun International Hotels Ltd 45,000 shares 1,655,365 2,044,665
Tenet Healthcare Corp. 75,000 shares 2,236,358 1,968,750
Transamerica Corp 17,500 shares 1,207,409 2,021,250
Union PAC Corp 40,000 shares 2,369,178 1,802,480
United Technologies Corp. 30,000 shares 2,788,050 3,262,500
Unocal Corp. 50,000 shares 1,951,768 1,459,350
Waste Management Inc. 50,000 shares 2,548,344 2,331,250
Williams Companies Delaware 75,000 shares 1,429,471 2,339,025
YPF Sociedad Anonima 75,000 shares 1,468,993 2,095,275
----------- ------------
Total U.S. Common Stocks $87,450,722 $100,164,855
----------- ------------
Foreign Common Stocks:
Lucasvarity PLC 65,000 shares 1,978,274 2,177,500
Nestle CHF Par Ordinary 1,000 shares 2,334,871 2,177,012
Novartis CHF Par Ordinary 1,000 shares 1,695,077 1,965,864
--------- ---------
Total Foreign Common Stocks $6,008,222 $6,320,376
---------- ----------
Total Common Stocks $93,458,944 $106,485,231
----------- ------------
Total Fully Managed Portfolio $155,676,766 $169,283,472
------------ ------------
</TABLE>
26
<PAGE>
<TABLE>
Schedule I
Page 3 of 4
THE SOUTHERN COMPANY EMPLOYEE SAVINGS PLAN
ITEM 27a - SCHEDULE OF ASSETS HELD FOR INVESTMENT PURPOSES
DECEMBER 31, 1998
<CAPTION>
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
---------------------------------- ------------------------------------------------- ---- -------------
<S> <C> <C> <C>
EQUITY INDEX TRUST:
Temporary Investment:
* Merrill Lynch Trust Company, Merrill Lynch
CMA Money Fund par $1 164,727 shares $ 164,727 $ 164,727
Common/Collective Trust:
* Merrill Lynch Trust Company, Merrill Lynch
Equity Index Trust -- Tier III par $1 3,446,161 shares 235,744,510 294,722,578
----------- -----------
Total Equity Index Fund 235,909,237 294,887,305
SPECIAL VALUE FUND:
Investment in Registered Securities:
* Merrill Lynch Asset Management, Merrill Lynch -
Special Value Fund, Inc. -- Class A par $0.10 2,972,479 shares 57,987,812 52,055,472
---------- ----------
GLOBAL ALLOCATION FUND:
Investment in Registered Securities:
* Merrill Lynch Asset Management, Merrill Lynch
Global Allocation Fund, Inc. -- Class A par $0.10 2,910,369 shares 40,861,472 36,739,507
---------- ----------
BRINSON U.S. EQUITY FUND:
Investment in Registered Securities:
The Brinson Funds -
Brinson U.S. Equity Fund-Class N 133,234 shares 2,472,274 2,591,479
--------- ---------
LOOMIS SAYLES SMALL CAP VALUE FUND:
Investment in Registered Securities:
Loomis Sayles Funds -
Small Cap Value Fund-Admin Class 51,496 shares 861,585 934,343
------- -------
GAM INTERNATIONAL FUND:
Investment in Registered Securities:
GAM Funds, Inc. -
GAM International Fund-Class A 83,093 shares 2,524,298 2,491,148
--------- ---------
GAM GLOBAL FUND:
Investment in Registered Securities:
GAM Funds, Inc. -
GAM Global Fund-Class A 100,692 shares 1,954,510 1,918,064
--------- ---------
FRANKLIN SMALL CAP GROWTH FUND:
Investment in Registered Securities:
Franklin Strategic Series -
Franklin Small Cap Growth Fund-Class I 146,517 shares 2,898,712 3,306,934
--------- ---------
DAVIS REAL ESTATE FUND:
Investment in Registered Securities:
Davis Series, Inc. -
Davis Real Estate Fund-Class A 12,739 shares 264,953 264,081
------- -------
DAVIS NEW YORK VENTURE FUND:
Investment in Registered Securities:
Davis New York Venture Fund, Inc. -
Davis New York Venture Fund-Class A 198,609 shares 4,523,362 4,967,248
--------- ---------
</TABLE>
27
<PAGE>
<TABLE>
Schedule I
Page 4 of 4
THE SOUTHERN COMPANY EMPLOYEE SAVINGS PLAN
ITEM 27a - SCHEDULE OF ASSETS HELD FOR INVESTMENT PURPOSES
DECEMBER 31, 1998
<CAPTION>
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
----------------------------- ------------------------------------------------- ---- -------------
<S> <C> <C> <C>
HOTCHKIS & WILEY INTERNATIONAL FUND:
Investment in Registered Securities:
* Merrill Lynch Asset Management,
Merrill Lynch - Hotchkis & Wiley
International Fund 342,128 shares 8,400,643 7,966,539
--------- ---------
PIMCO TOTAL RETURN FUND:
Investment in Registered Securities:
PIMCO Funds -
PIMCO Total Return Fund-Class A 1,086,747 shares 11,686,996 11,456,644
---------- ----------
SELIGMAN HIGH YIELD BOND FUND:
Investment in Registered Securities:
Seligman High Yield Bond Fund Series -
Seligman High Yield Bond Fund-Class A 245,008 shares 1,728,792 1,703,374
--------- ---------
GROWTH FUND:
Investment in Registered Securities:
* Merrill Lynch Asset Management,
Merrill Lynch -
Growth Fund-Class A 23,578 shares 505,286 507,171
------- -------
MFS MASSACHUSETTS INVESTORS TRUST:
Investment in Registered Securities:
MFS Investment Management -
MFS Massachusetts Investors Trust-
Class A 441,778 shares 8,332,575 8,946,399
--------- ---------
GOAL MANAGER PORTFOLIOS:
Investment in Registered Securities:
Retirement Preservation Trust Goal Manager par $1 453,176 shares 453,130 453,176
Special Value Fund, Inc. Goal Manager par $0.10 39,774 shares 654,379 696,082
Brinson U.S. Equity Fund-Class N Goal Manager 66,556 shares 1,236,183 1,294,552
Hotchkis & Wiley International Fund Goal Manager 52,200 shares 1,176,321 1,215,308
PIMCO Total Return Fund-Class A Goal Manager 168,894 shares 1,825,445 1,780,325
MFS Massachusetts Investors Trust Goal Manager 91,433 shares 1,720,921 1,851,702
Goal Manager Investment 1,529 shares 1,529 1,529
--------- ----------
Total Goal Manager Portfolios 7,067,908 7,292,674
--------- ----------
* LOANS DUE FROM PARTICIPANTS (interest rates vary from 8.25% to 8.75%) 80,102,627 80,102,627
---------- ----------
THE SOUTHERN COMPANY STOCK FUND--PARTICIPANT-DIRECTED PORTION:
Temporary Investment:
Merrill Lynch Trust Company, Merrill Lynch
CMA Money Fund par $1 1,050,129 shares 1,050,129 1,050,129
Common Stock:
* The Southern Company, The Southern
Company Common Stock par $5 25,882,473 shares 693,842,676 752,196,162
----------- -----------
Total Southern Company Stock Fund - Participant-Directed Portion 694,892,805 753,246,291
THE SOUTHERN COMPANY STOCK FUND--
NON PARTICIPANT-DIRECTED PORTION:
Temporary Investment:
Merrill Lynch Trust Company, Merrill Lynch
CMA Money Fund par $1 1,181,814 shares 1,181,814 1,181,814
Common Stock:
* The Southern Company, The Southern Company
Common Stock par $1 1,181,814 shares 752,747,928 846,252,218
-------------- --------------
Total Southern Company Stock Fund - Non Participant-Directed Portion 753,929,742 847,434,032
-------------- -------------
TOTAL INVESTMENT OF ALL FUNDS $2,205,329,672 $2,420,842,121
============== ==============
* Represents a party in interest to the Plan.
The accompanying notes are an integral part of this schedule.
</TABLE>
28
<PAGE>
<TABLE>
Schedule II
THE SOUTHERN COMPANY EMPLOYEE SAVINGS PLAN
Item 27(d) - SCHEDULE OF REPORTABLE TRANSACTIONS
FOR THE YEAR ENDED DECEMBER 31, 1998
<CAPTION>
(b) Description of asset (f) Current
(a) Identify of (include interest rate and (c)Purchase (d)Selling (e)Cost of value of asset (g) Net gain
party involved maturity in case of a loan) price price asset on transaction date or (loss)
-------------- --------------------------- ------- ------- -------- -------------------- ---------
<S> <C> <C> <C> <C> <C> <C>
* Merrill Lynch Merrill Lynch Retirement
Trust Company Preservation Trust
Of Florida 838 transactions 97,691,716 97,691,716
909 transactions 74,603,022 74,603,022 74,603,022 -
* Merrill Lynch Merrill Lynch Equity
Trust Company Index Trust
Of Florida 640 transactions 76,475,707 76,475,707
923 transactions 49,887,621 37,963,435 49,887,621 11,924,186
* Merrill Lynch Merrill Lynch Pending
Trust Company Settlement Fund
Of Florida 252 transactions 118,720,104 118,720,104
253 transactions 122,673,872 122,673,872 122,673,872 -
* The Southern Common Stock
Company 818 transactions 202,442.146 202,442.146
1, 197 transactions 253,445,592 171,306,797 253,445,592 82,138,795
* Represents a party in interest to the Plan.
The accompanying notes are an integral part of this schedule.
</TABLE>
29
<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/Christopher C. Womack
Christopher C. Womack, Chairman
Employee Savings Plan Committee
June 28, 1999
30
<PAGE>
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the incorporation by
reference of our report dated June 18, 1999, included in this annual report of
The Southern Company Employee Savings Plan on Form 11-K for the year ended
December 31, 1998 into the Plan's previously filed Registration Statement No.
33-23152.
/s/Arthur Andersen LLP
Arthur Andersen LLP
Atlanta, Georgia
June 28, 1999
31
