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, 2003
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
THE SOUTHERN COMPANY EMPLOYEE SAVINGS PLAN
TABLE OF CONTENTS
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Page
Exhibits 3
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM 4
FINANCIAL STATEMENTS AS OF AND FOR THE YEARS ENDED DECEMBER 31, 2003 AND 2002:
Statements of Net Assets Available for Benefits 5
Statements of Changes in Net Assets Available for Benefits 6
Notes to Financial Statements 7-12
SUPPLEMENTAL SCHEDULE AS OF DECEMBER 31, 2003--
Form 5500, Schedule H, Line 4i--Schedule of Assets (Held at End of Year) 14
NOTE:The accompanying financial statements have been prepared for the purpose of
filing with Department of Labor Form 5500. Supplemental schedules required
by 29 CFR 2520.103-10 of the Department of Labor Rules and Regulations for
Reporting and Disclosure under the Employee Retirement Income Security Act
of 1974, other than the supplemental schedule listed above, are omitted
because of the absence of conditions under which they are required.
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EXHIBITS
23.1 - Consent of Deloitte & Touche LLP.
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REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Employee Savings Plan Committee of and
Participants in The Southern Company Employee Savings Plan:
We have audited the accompanying statements of net assets available for benefits
of The Southern Company Employee Savings Plan (the "Plan") as of December 31,
2003 and 2002, and the related statements of changes in net assets available for
benefits for the years then ended. These financial statements are the
responsibility of the Plan's management. Our responsibility is to express an
opinion on these financial statements based on our audits.
We conducted our audits in accordance with standards of the Public Company
Accounting Oversight Board (United States). Those standards require that we plan
and perform the audit 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 management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, such financial statements present fairly, in all material
respects, the net assets available for benefits of the Plan as of December 31,
2003 and 2002, and the changes in net assets available for benefits for the
years then ended in conformity with accounting principles generally accepted in
the United States of America.
Our audits were conducted for the purpose of forming an opinion on the basic
financial statements taken as a whole. The supplemental schedule listed in the
Table of Contents is presented for purposes of additional analysis and is not a
required part of the basic financial statements, but is supplementary
information required by the Department of Labor's Rules and Regulations for
Reporting and Disclosure under the Employee Retirement Income Security Act of
1974. This schedule is the responsibility of the Plan's management. Such
schedule has been subjected to the auditing procedures applied in our audit of
the basic 2003 financial statements and, in our opinion, is fairly stated in all
material respects when considered in relation to the basic financial statements
taken as a whole.
/s/Deloitte & Touche LLP
June 21, 2004
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THE SOUTHERN COMPANY EMPLOYEE SAVINGS PLAN
STATEMENTS OF NET ASSETS AVAILABLE FOR BENEFITS
DECEMBER 31, 2003 AND 2002
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2003 2002
ASSETS:
Investments, at fair value $ 2,956,483,923 $ 2,590,423,502
---------------- ---------------
Receivables:
Due from broker for securities sold 3,282,032 1,693,650
Accrued interest 798,713 775,871
---------------- ---------------
Total receivables 4,080,745 2,469,521
Cash 1,097,219 1,484,980
---------------- ---------------
NET ASSETS AVAILABLE FOR BENEFITS $ 2,961,661,887 $ 2,594,378,003
================ ===============
The accompanying notes are an integral part of these financial statements.
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THE SOUTHERN COMPANY EMPLOYEE SAVINGS PLAN
STATEMENTS OF CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS
YEARS ENDED DECEMBER 31, 2003 AND 2002
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2003 2002
ADDITIONS:
Investment income:
Interest and dividends $ 99,597,432 $ 101,532,729
Net appreciation in fair value of investments 240,334,594 -
-------------- --------------
Total investment income 339,932,026 101,532,729
-------------- --------------
Contributions:
Participants' 112,376,793 102,282,706
Participants' rollovers 1,472,081 1,781,781
Employer's 54,680,122 52,609,684
-------------- --------------
Total contributions 168,528,996 156,674,171
-------------- --------------
Transfer from The Southern Company Performance
Sharing Plan - 19,118,865
-------------- --------------
Total additions 508,461,022 277,325,765
-------------- --------------
DEDUCTIONS:
Investment loss--net depreciation in fair
value of investments - (286,606,693)
Benefits paid to participants (140,523,971) (156,147,370)
Administrative expenses (653,167) (120,566)
-------------- --------------
Total deductions (141,177,138) (442,874,629)
-------------- --------------
NET INCREASE (DECREASE) 367,283,884 (165,548,864)
NET ASSETS AVAILABLE FOR BENEFITS:
Beginning of year 2,594,378,003 2,759,926,867
-------------- --------------
End of year $2,961,661,887 $2,594,378,003
============== ==============
The accompanying notes are an integral part of these financial statements.
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THE SOUTHERN COMPANY EMPLOYEE SAVINGS PLAN
NOTES TO FINANCIAL STATEMENTS
AS OF AND FOR THE YEARS ENDED DECEMBER 31, 2003 AND 2002
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1. DESCRIPTION OF THE PLAN
The following description of The Southern Company Employee Savings Plan
(the "Plan") is provided for general information purposes only.
Participants should refer to the plan document for more complete
information.
General--The Plan is a defined contribution plan administered by The
Southern Company Employee Savings Plan Committee (the "Committee"), as
designated in the Plan. The Plan covers substantially all employees,
certain former employees, and retirees of the following subsidiaries of
The Southern Company (the "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 LLC, Southern Company Services, Inc., and
Southern Nuclear Operating Company, Inc. (collectively referred to as the
"Employing Companies"). The Plan is subject to the provisions of the
Employee Retirement Income Security Act of 1974, as amended ("ERISA").
The Southern Company Performance Sharing Plan Merger--In May 2002, the
Company's Board of Directors approved a resolution to merge The Southern
Company Performance Sharing Plan into the Plan. Assets of The Southern
Company Performance Sharing Plan of $19,118,865 were transferred during
June 2002.
Plan Administration--The trustee and recordkeeper of the Plan are Merrill
Lynch Trust Company, FSB (the "Trustee") and Merrill Lynch, Pierce, Fenner
& Smith, Inc., respectively.
Participation--Employees meeting certain criteria, as defined, may elect
to participate in the Plan immediately after the employee's first day of
employment.
Contributions--Prior to June 21, 2002, participants could elect to
contribute, on a before-tax or after-tax basis, up to 16% of their
eligible compensation, as defined by the Plan. Effective June 21, 2002,
the Plan was amended to provide that a participant could elect to
contribute up to total before-tax and after-tax contributions of 25% of
eligible compensation (12% before-tax and 3% after-tax for highly
compensated employees), as defined by the Plan. Effective April 1, 2003,
the Plan was amended to provide that highly compensated employees may
contribute up to total before-tax and after-tax contributions of 25% of
eligible compensation, with after-tax contributions not to exceed 6%.
Participants may change the percentage of their contributions at any time.
The Employing Companies' contributions ("Employer Matching Contributions")
are discretionary and determined by the Board of Directors of Southern
Company Services, Inc. on an annual basis. For the year ended December 31,
2003, the Employing Companies contributed, on behalf of the participants,
an amount equal to 75% of each participant's contribution, up to 6% of
eligible compensation. Such Board of Directors reserves the right to
discontinue or change the Employer Matching Contributions at any time;
however, they have not expressed any intent to do so at the present time.
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Contributions are subject to certain Internal Revenue Code limitations.
Participants may also contribute by rolling over to the Plan amounts
representing distributions from other qualified defined benefit, defined
contribution plans or eligible individual retirement accounts.
Participant Accounts--Individual accounts are maintained for each plan
participant. Each participant's account is credited with the participant's
contributions, the Employer Matching Contributions, and an allocation of
plan earnings, and charged with any withdrawals and allocations of plan
losses and administrative expenses. The benefit to which a participant is
entitled is the benefit that can be provided from the participant's vested
account.
Investment Options--Participants' contributions may be invested in 1%
increments into any of the investment options offered by the Plan. The
Plan offers a participant-directed brokerage account that allows
participants to purchase publicly traded securities. Participants may
change their investment options at any time, with the following
exceptions:
Employer Matching Contributions are made by the Employing Companies in
shares of the Company's stock. Prior to July 12, 2002, participants could
elect at any time on or after the fifth anniversary of their enrollment in
the Plan to redirect up to 50% of their investment in Employer Matching
Contributions to any other investment option. Effective July 12, 2002, the
Committee eliminated this restriction regarding fund transfers of Employer
Matching Contributions.
Participants may have Mirant Corporation common stock in their Plan
accounts as a result of the Company's spin-off of Mirant Corporation in
April 2001. In that spin-off, plan participants with the Company's common
stock in their accounts received a dividend in the form of Mirant
Corporation common stock. The investment is held in the Mirant Corporation
Stock Fund.
Participants who received Mirant Corporation common stock in the spin-off
were given five years (until July 1, 2006) to liquidate the Mirant
Corporation Stock Fund and reinvest the proceeds in one of the investment
options permitted under the Plan. The Plan has never permitted additional
investments into the Mirant Corporation Stock Fund beyond the shares that
participants received as a dividend in the spin-off. The spin-off did not
impact the number of the Company's shares held in the participants'
accounts.
Vesting--Participants are immediately vested in their accounts.
Participant Loans--Participants may borrow from their fund accounts a
minimum of $1,000 up to a maximum of $50,000 or 50% of their account
balances, whichever is less. The loans are secured by the balance in the
participant's account and bear interest at rates commensurate with
prevailing rates as determined by the plan administrator.
Payment of Benefits--Upon retirement, a participant may elect to receive
either a lump-sum amount equal to the value of the participant's vested
interest in his or her account, or annual installments over a period of up
to twenty years. On termination of service due to death, disability, or
for other reasons, a participant may receive the value of the vested
interest in his or her account as a lump-sum distribution.
Each participant may elect to receive a cash distribution of all or a
portion of the dividends payable on the shares of the Company's common
stock credited to the participant's account as of the record date of the
dividend. The dividends payable on the shares of the Company's common
stock credited to the account of a participant who does not elect to
receive a cash distribution are reinvested in the participant's account in
shares of the Company's common stock. Payments of the cash distributions
for dividends payable are made as soon as administratively practicable
after the payable date of the dividend, but no later than 90 days after
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the end of the plan year which includes such payable date. A participant's
election to receive cash distributions of dividends payable on the
Company's common stock is revoked automatically upon his/her death.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of Accounting--The accompanying financial statements have been
prepared in accordance with accounting principles generally accepted in
the United States of America.
Risks and Uncertainties--The preparation of financial statements in
conformity with accounting principles generally accepted in the United
States of America requires management to make estimates and assumptions
that affect the reported amounts of net assets available for benefits and
changes therein. Actual results could differ from those estimates. The
Plan utilizes various investment instruments. Investment securities, in
general, are exposed to various risks, such as interest rate, credit, and
overall market volatility. Due to the level of risk associated with
certain investment securities, including common stock of the Company and
Mirant Corporation, it is reasonably possible that changes in the values
of investment securities will occur in the near term and that such changes
could materially affect the amounts reported in the financial statements.
Investment Valuation and Income Recognition--The Plan's investments are
stated at fair value except for its benefit-responsive investment
contract, the Merrill Lynch Retirement Preservation Trust, which is valued
at contract value which approximates fair value. Quoted market prices are
used to value investments. Shares of common collective trust funds are
valued at the net asset value of shares held by the Plan at year-end.
Purchases and sales of securities are recorded on a trade-date basis.
Interest income is recorded on the accrual basis. Dividends are recorded
on the ex-dividend date.
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 within investment funds will be
charged to the various investment funds. Commissions on individual
securities traded through the self direct option will be charged to the
participant making the trade.
In addition, for Company matching contributions, investment management
fees for all funds, except Company stock and Mirant Corporation stock, are
deducted from fund earnings. For participant contributions, investment
management fees for the Merrill Lynch Retirement Preservation Trust,
Merrill Lynch Equity Index Trust Tier III, and Merrill Lynch Aggregate
Bond Index Trust are paid by the Company, and investment management fees
for all other funds are deducted from fund earnings.
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3. INVESTMENTS
The Plan's investments that represented 5% or more of the Plan's net
assets available for benefits as of December 31, 2003 and 2002 are as
follows:
2003 2002
------------------------------------ ------------------------------------
------------------------------------ ------------------------------------
Number of Fair Number of Fair
Shares Value Shares Value
Southern Company
common stock 55,874,014 $ 1,690,188,934 55,283,174 $ 1,569,489,293
Merrill Lynch Small Cap
Index Plus Trust 11,680,352 159,203,198 * *
Merrill Lynch Equity
Index Trust Tier III 5,158,456 428,925,657 5,150,783 332,843,574
Merrill Lynch Retirement
Preservation Trust 399,549,702 399,549,702 346,635,638 346,635,638
* Investment does not exceed 5% of net assets available for benefits as of
December 31, 2002
During the years ended December 31, 2003 and 2002, the Plan's investments
(including gains and losses on investments bought and sold as well as held
during the year) appreciated (depreciated) in value as follows:
2003 2002
Common stock $ 77,607,589 $(157,990,192)
Preferred stock (13,283) -
Common collective trust funds 162,740,288 (128,616,581)
------------ -------------
Total $240,334,594 $(286,606,773)
============ =============
4. RELATED-PARTY TRANSACTIONS
Certain plan investments are units of common collective trusts managed by
Merrill Lynch Investment Managers. Merrill Lynch Trust Company, FSB is the
trustee as defined by the Plan and, therefore, these transactions qualify
as party-in-interest transactions. Fees paid by the Plan for investment
management services were included as a reduction of the return earned on
each fund.
At December 31, 2003 and 2002, the Plan held 55,874,014 and 55,283,174
shares, respectively, of common stock of the Company, the sponsoring
employer, at a fair value of $1,690,188,934 and $1,569,489,293,
respectively, with a cost basis of $953,999,535 and $856,386,083,
respectively. During the years ended December 31, 2003 and 2002, the Plan
recorded related dividend income of $77,119,774 and $74,961,697,
respectively.
5. PLAN TERMINATION
Although it has not expressed any intention to do so, the Company has the
right under the Plan to discontinue its contributions at any time and to
terminate the Plan subject to the provisions set forth in ERISA. In the
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event that the Plan is terminated, participants are already 100% vested in
their accounts.
6. FEDERAL INCOME TAX STATUS
The Internal Revenue Service has determined and informed the Company by a
letter dated January 31, 2003 that the Plan and related trust were
designed in accordance with the applicable regulations of the Internal
Revenue Code. The Plan has been amended since receiving the determination
letter; however, the Company and the plan administrator believe that the
Plan is currently designed and operated in compliance with the applicable
requirements of the Internal Revenue Code and the Plan and related trust
continue to be tax-exempt. Therefore, no provision for income taxes has
been included in the Plan's financial statements.
7. RECONCILIATION TO FORM 5500
The net assets available for benefits of the Plan at December 31, 2003 and
2002 include $992,872 and $1,041,109, respectively, for participants who
had requested distributions from their accounts but had not yet been paid
at year-end. These amounts are reflected as benefit claims payable and are
included in benefit payments to participants or beneficiaries in the Form
5500 for the Plan for the years ended December 31, 2003 and 2002.
The following are reconciliations of net assets available for benefits,
benefits payable to participants, and benefits paid to participants per
the financial statements to the Form 5500 as of and for the years ended
December 31, 2003 and 2002:
2003 2002
Net assets available for benefits per the
financial statements $2,961,661,887 $2,594,378,003
Benefits payable to participants (992,872) (1,041,109)
-------------- --------------
Net assets available for benefits per Form 5500 $2,960,669,015 $2,593,336,894
============== ==============
Benefits payable to participants per the
financial statements $ - $ -
Benefits payable to participants 992,872 1,041,109
-------------- --------------
Benefits payable to participants per Form 5500 $ 992,872 $ 1,041,109
============== ==============
Benefits paid to participants per the
financial statements $ 140,524,092 $ 156,147,370
Benefits payable to participants:
Beginning of year (1,041,109) (583,756)
End of year 992,872 1,041,109
-------------- --------------
Benefits paid to participants per Form 5500 $ 140,475,855 $ 156,604,723
============== ==============
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8. NONPARTICIPANT-DIRECTED INVESTMENTS
Information about the net assets and the significant components of the
changes in net assets relating to Southern Company common stock
(nonparticipant-directed) as of December 31, 2002 and 2001 and for the
year ended December 31, 2002 are as follows:
Changes in net assets:
Contributions $ 26,253,679
Dividends 18,327,781
Net appreciation in fair value of Southern Company common
stock (nonparticipant-directed) 25,957,713
Benefits paid to participants (34,268,913)
Transfers to (from) participant-directed investments, net (739,215,046)
------------
Net change (702,944,786)
Southern Company common stock (nonparticipant-directed):
Beginning of year 702,944,786
------------
End of year $ -
============
As discussed in Note 1, effective July 12, 2002, all restrictions on
investment options for participants were eliminated.
******
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SUPPLEMENTAL SCHEDULE
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THE SOUTHERN COMPANY EMPLOYEE SAVINGS PLAN
FORM 5500, SCHEDULE H, LINE 4i--SCHEDULE OF ASSETS
(HELD AT END OF YEAR)
DECEMBER 31, 2003
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2956483923
Description of Investment,
Including Maturity Date,
Identity of Issue, Borrower, Rate of Interest, Collateral, Current
Lessor, or Similar Party Par or Maturity Value Cost Value
* The Southern Company Common stock ** $1,690,188,934
Mirant Corporation Common stock ** 6,941,900
* Merrill Lynch Equity Index Trust Tier III Common collective trust ** 428,925,657
* Merrill Lynch Equity Index Trust Tier III - Goal Manager Common collective trust ** 38,654,264
* Merrill Lynch Retirement Preservation Trust Common collective trust ** 399,549,702
* Merrill Lynch Retirement Preservation Trust - Goal Manager Common collective trust ** 7,097,770
* Merrill Lynch Small Cap Index Plus Trust Common collective trust ** 159,203,198
* Merrill Lynch Small Cap Index Plus Trust - Goal Manager Common collective trust ** 7,754,724
* Merrill Lynch Intl. Index Plus Trust Common collective trust ** 27,277,310
* Merrill Lynch Intl. Index Plus Trust - Goal Manager Common collective trust ** 16,435,757
* Merrill Lynch Aggregate Bond Index Trust Common collective trust ** 32,018,657
* Merrill Lynch Aggregate Bond Index Trust - Goal Manager Common collective trust ** 30,911,990
* Participants Loans to participants,
with interest rates ranging
from 4.0% to 11.5% ** 77,391,329
Various Self-directed accounts ** 34,132,731
----------
Total investments $2,956,483,923
==============
* Party-in-interest.
** Cost information is not required for participant-directed investments and,
therefore, is not included.
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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/Ellen N. Lindemann
Ellen N. Lindemann, Chairperson
The Southern Company Employee
Savings Plan Committee
June 28, 2004
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