We want to be the best investment in our industry. Everything we do is aimed at that goal.

In 1998, our total return to shareholders was 18 percent. Our common stock closed the year at 29 1/16. That's a new year-end record.

The strategy we put in place three years ago has worked well. We continue to improve the financial strength and success of our traditional business. And our international and North American businesses continue to grow.

Net earnings were $977 million in 1998. Earnings per share were $1.40. Those results include a $200 million charge to write down assets held for sale. Also included is a $21 million charge related to a hydroelectric plant in Georgia.

Compared with 1997, net earnings were up slightly. Earnings per share were down slightly. A $111 million charge affected our 1997 results. That charge was for a windfall profits tax assessed in the United Kingdom.

Reviewing Our Strategy
We're meeting the intermediate goals of our strategy. The goals include targets in areas of costs, revenues, growth, and customer satisfaction.

I'm happy about that. I'm especially proud of our customer satisfaction efforts. Our five operating companies in the Southeast rank as the top five in an independent survey measuring satisfaction among large customers. That's a tribute to the employees who serve our customers every day.

I'm not as happy about where we are in meeting our Bold Aggressive Goal. I call that our BAG. It's our overall goal of being the best investment in our industry.

We're making progress. But we're not where we want to be. I want us to be the best. We have a smart strategy. We're meeting our intermediate goals. But we're not achieving the BAG.

With that in mind, we spent a great deal of time last summer thinking about our future. It was a strategic review looking at the next 10 years.

The result is a revised strategy that adds more growth to our plans. We intend to expand our growth, sharpen our focus, and achieve our BAG.

Growing More Aggressively
We are taking a more aggressive approach to growth in the United States. In the Southeast, that will include investments in additional generation to serve retail and wholesale customers.

Outside the Southeast, our emphasis is on four specific regions. They are the Northeast, the Midwest, California, and Texas/Louisiana. We will continue to acquire and build generating facilities to serve wholesale customers in those regions.

Regardless of region, we're planning for any new generation we build in the United States to be low-cost, gas-fired, and more environmentally friendly.

We'll also continue to look for opportunities to integrate natural gas capability with our electric generation and energy trading and marketing capabilities. That should help us achieve more aggressive growth.

Internationally, sharpening our focus means we're not going to be in every country in the world. Our main markets will include the European Union nations, Brazil in South America, and China, the Philippines, and India in Asia. As in the North American markets, our concentration is on competitive wholesale energy supply.

Sharpening our focus throughout the world enables us to concentrate our efforts on fewer areas. That will help us expand our growth and achieve our BAG.

Working to be the Best
We are a very successful company. That's because we produce low-cost, reliable energy. Also because our employees are the best at keeping customers satisfied. And because we're taking advantage of new opportunities.

In addition, we're a good citizen wherever we serve. We work to improve the economic health and quality of life in the communities we serve. One way we do that is by continuing to improve our environmental performance. A clean and healthy environment is an important economic development asset.

As I've mentioned before, we enjoy what we do. And what we do is continue to work hard to be the best investment in our industry.

A. W. Dahlberg
Chairman, President, and Chief Executive Officer
March 12, 1999