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Defining Growth
In the past, our industry's future was different. An electric utility's growth was defined by that of its
traditional service territory.
Today, an electric utility can define its own growth. Competitive market initiatives are making that possible.
High customer satisfaction, low costs, and successful expansion are the keys to growth. I'm happy to report that
we're doing well in all those areas.
That's what makes our future better than ever.
Our strategy is simple. We're working to maintain and improve the financial strength and success of our
traditional business. To that, we're adding the growth of our international business. Our other emerging
businesses-especially energy marketing-should further enhance that growth.
One of our goals is to increase earnings per share an average of 5 percent to 6 percent per year.
That did not happen in 1997.
Reviewing 1997
Earnings per share decreased 26 cents, or 15.5 percent from 1996. Overall earnings dropped 13.8 percent to
$972 million. That's the bad news.
Revenues jumped 21.8 percent to $12.6 billion. Our fast-growing-but low-margin-energy marketing business drove
that increase. The growth of our international business added to it. So did electricity sales increases in our
traditional business.
The good news is that our stock price appreciated 14 percent in 1997. We also paid $1.30 in dividends per share.
Total return to shareholders was 21 percent. In January 1998, we increased our dividend for the seventh time in
as many years. In March 1998, we paid a dividend for the 201st consecutive quarter.
Don't get me wrong. I'm not happy with the decreases in earnings. But there are clear reasons for them. The
windfall profits tax in the United Kingdom reduced our earnings by approximately $111 million. A mild summer in
the Southeast also affected our energy sales. So did the accelerated depreciation of some of our generating
plants, which helps better position us for competition. In addition, our international investments caused
some short-term dilution in exchange for projected future growth.
The better news is that our strategy is working. In 1997, we achieved a great total return to shareholders,
reached a new all-time high stock price, and increased the dividend. And we did this while better positioning
ourselves for competition.
Building on Our Foundation
Our future is better than ever. It's strong because of our traditional business. It's growing because of our
international business. And it's emerging because of our energy marketing business.
We're strong because of our traditional business. There's no question about it. High customer satisfaction plus
low costs equals a strong traditional business. We're aiming to stay strong with ambitious goals in both areas.
Our traditional business now accounts for about 90 percent of our results. It is the absolute foundation of
everything else we do. Success in our traditional business is what allows us to be successful in other parts
of our business.
Growing and Emerging
Our future is growing mainly because of our interna-tional business. By 2003, we're aiming for 30 percent of our
earnings to come from outside our traditional business. That means growing results from our investments. And
that includes Consolidated Electric Power Asia (CEPA), South Western Electricity (SWEB), Berliner Kraft und
Licht AG (Bewag), as well as our South American operations.
We have good functional and geographic balance in our international business. We also have a good mix of growth
and value investments. Our challenge is to make our international business perform.
Our future is emerging. Competitive market initiatives in our industry will continue to create new
opportunities. We plan to take advantage of them.
It is also important to note that-like our past-our future is environmentally sound. Our policy is to meet or
exceed all regulatory requirements. To do that, we're using a combination of the best technologies and voluntary
pollution-prevention programs.
Working to be the Best
Naturally, our future also holds some challenges for us. Georgia Power is required to file a general rate case in
July. The Federal Energy Regulatory Commission continues to review the rates of return that we earn on wholesale
power. In our international business, one of our major goals is completing Sual - our plant under construction
in the Philippines - on schedule. We must also continue improving the performance of our South American
investments.
We're working hard to meet those challenges. And as we do, we continue to be one of the most successful, fastest
growing, and exciting companies in our industry. We also have the best employees in our industry.
As you can tell from our annual reports, we like to have a little fun in our work. I think it's important that
we enjoy what we do. And what we do is work hard to be the best investment in our industry.
A.W. Dahlberg
Chairman, President, and Chief Executive Officer
March 19, 1998
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