Retirement Benefits

12 Months Ended

Dec. 31, 2013

Southern Company has a defined benefit, trusteed, pension plan covering substantially all employees. This qualified pension plan is funded in accordance with requirements of the Employee Retirement Income Security Act of 1974, as amended (ERISA). No contributions were made to the qualified pension plan during 2013. No mandatory contributions to the qualified pension plan are anticipated for the year ending December 31, 2014. Southern Company also provides certain defined benefit pension plans for a selected group of management and highly compensated employees. Benefits under these non-qualified pension plans are funded on a cash basis. In addition, Southern Company provides certain medical care and life insurance benefits for retired employees through other postretirement benefit plans. The traditional operating companies fund related other postretirement trusts to the extent required by their respective regulatory commissions. For the year ending December 31, 2014, other postretirement trust contributions are expected to total approximately $13 million.

Actuarial Assumptions

The weighted average rates assumed in the actuarial calculations used to determine both the benefit obligations as of the measurement date and the net periodic costs for the pension and other postretirement benefit plans for the following year are presented below. Net periodic benefit costs were calculated in 2010 for the 2011 plan year using discount rates for the pension plans and the other postretirement benefit plans of 5.52% and 5.40%, respectively, and an annual salary increase of 3.84%.



	2013		2012		2011
Discount rate:
Pension plans	5.02	%	4.26	%	4.98	%
Other postretirement benefit plans	4.85		4.05		4.88
Annual salary increase	3.59		3.59		3.84
Long-term return on plan assets:
Pension plans	8.20		8.20		8.45
Other postretirement benefit plans	7.13		7.29		7.39

The Company estimates the expected rate of return on pension plan and other postretirement benefit plan assets using a financial model to project the expected return on each current investment portfolio. The analysis projects an expected rate of return on each of seven different asset classes in order to arrive at the expected return on the entire portfolio relying on each trust's target asset allocation and reasonable capital market assumptions. The financial model is based on four key inputs: anticipated returns by asset class (based in part on historical returns), each trust's target asset allocation, an anticipated inflation rate, and the projected impact of a periodic rebalancing of each trust's portfolio.

An additional assumption used in measuring the accumulated other postretirement benefit obligations (APBO) was a weighted average medical care cost trend rate of 7.00% for 2014, decreasing gradually to 5.00% through the year 2021 and remaining at that level thereafter. An annual increase or decrease in the assumed medical care cost trend rate of 1% would affect the APBO and the service and interest cost components at December 31, 2013 as follows:



	1 Percent Increase		1 Percent Decrease
	(in millions)
Benefit obligation	$	103	$	(88	)
Service and interest costs	5		(4		)

Pension Plans

The total accumulated benefit obligation for the pension plans was $8.1 billion at December 31, 2013 and $8.5 billion at December 31, 2012. Changes in the projected benefit obligations and the fair value of plan assets during the plan years ended December 31, 2013 and 2012 were as follows:



	2013			2012
	(in millions)
Change in benefit obligation
Benefit obligation at beginning of year	$	9,302		$	8,079
Service cost	232			198
Interest cost	389			393
Benefits paid	(357		)	(336		)
Actuarial (gain) loss	(703		)	968
Balance at end of year	8,863			9,302
Change in plan assets
Fair value of plan assets at beginning of year	7,953			6,800
Actual return on plan assets	1,098			1,010
Employer contributions	39			479
Benefits paid	(357		)	(336		)
Fair value of plan assets at end of year	8,733			7,953
Accrued liability	$	(130	)	$	(1,349	)

At December 31, 2013, the projected benefit obligations for the qualified and non-qualified pension plans were $8.3 billion and $549 million, respectively. All pension plan assets are related to the qualified pension plan.

Amounts recognized in the balance sheets at December 31, 2013 and 2012 related to the Company's pension plans consist of the following:



	2013			2012
	(in millions)
Prepaid pension costs	$	419		$	—
Other regulatory assets, deferred	1,651			3,013
Other current liabilities	(40		)	(37		)
Employee benefit obligations	(509		)	(1,312		)
Accumulated OCI	64			125

Presented below are the amounts included in accumulated OCI and regulatory assets at December 31, 2013 and 2012 related to the defined benefit pension plans that had not yet been recognized in net periodic pension cost along with the estimated amortization of such amounts for 2014.



	Prior Service Cost		Net (Gain) Loss
	(in millions)
Balance at December 31, 2013:
Accumulated OCI	$	5	$	59
Regulatory assets	75		1,575
Total	$	80	$	1,634
Balance at December 31, 2012:
Accumulated OCI	$	7	$	118
Regulatory assets	100		2,913
Total	$	107	$	3,031
Estimated amortization in net periodic pension cost in 2014:
Accumulated OCI	$	1	$	4
Regulatory assets	25		106
Total	$	26	$	110

The components of OCI and the changes in the balance of regulatory assets related to the defined benefit pension plans for the years ended December 31, 2013 and 2012 are presented in the following table:



	Accumulated OCI			Regulatory Assets
	(in millions)
Balance at December 31, 2011	$	109		$	2,614
Net loss	21			519
Reclassification adjustments:
Amortization of prior service costs	(1		)	(29		)
Amortization of net gain (loss)	(4		)	(91		)
Total reclassification adjustments	(5		)	(120		)
Total change	16			399
Balance at December 31, 2012	$	125		$	3,013
Net gain	(52		)	(1,145		)
Change in prior service costs	—			1
Reclassification adjustments:
Amortization of prior service costs	(1		)	(26		)
Amortization of net gain (loss)	(8		)	(192		)
Total reclassification adjustments	(9		)	(218		)
Total change	(61		)	(1,362		)
Balance at December 31, 2013	$	64		$	1,651

Components of net periodic pension cost were as follows:



	2013			2012			2011
	(in millions)
Service cost	$	232		$	198		$	184
Interest cost	389			393			389
Expected return on plan assets	(603		)	(581		)	(607		)
Recognized net loss	200			95			21
Net amortization	27			30			32
Net periodic pension cost	$	245		$	135		$	19

Net periodic pension cost is the sum of service cost, interest cost, and other costs netted against the expected return on plan assets. The expected return on plan assets is determined by multiplying the expected rate of return on plan assets and the market-related value of plan assets. In determining the market-related value of plan assets, the Company has elected to amortize changes in the market value of all plan assets over five years rather than recognize the changes immediately. As a result, the accounting value of plan assets that is used to calculate the expected return on plan assets differs from the current fair value of the plan assets.

Future benefit payments reflect expected future service and are estimated based on assumptions used to measure the projected benefit obligation for the pension plans. At December 31, 2013, estimated benefit payments were as follows:



	Benefit Payments
	(in millions)
2014	$	399
2015	422
2016	446
2017	471
2018	492
2019 to 2023	2,795

Other Postretirement Benefits

Changes in the APBO and in the fair value of plan assets during the plan years ended December 31, 2013 and 2012 were as follows:



	2013			2012
	(in millions)
Change in benefit obligation
Benefit obligation at beginning of year	$	1,872		$	1,787
Service cost	24			21
Interest cost	74			85
Benefits paid	(94		)	(99		)
Actuarial (gain) loss	(200		)	71
Retiree drug subsidy	6			7
Balance at end of year	1,682			1,872
Change in plan assets
Fair value of plan assets at beginning of year	821			765
Actual return on plan assets	129			93
Employer contributions	39			55
Benefits paid	(88		)	(92		)
Fair value of plan assets at end of year	901			821
Accrued liability	$	(781	)	$	(1,051	)

Amounts recognized in the balance sheets at December 31, 2013 and 2012 related to the Company's other postretirement benefit plans consist of the following:



	2013			2012
	(in millions)
Other regulatory assets, deferred	$	109		$	360
Other current liabilities	(4		)	(3		)
Employee benefit obligations	(777		)	(1,048		)
Other regulatory liabilities, deferred	(36		)	—
Accumulated OCI	1			7

Presented below are the amounts included in accumulated OCI and net regulatory assets (liabilities) at December 31, 2013 and 2012 related to the other postretirement benefit plans that had not yet been recognized in net periodic other postretirement benefit cost along with the estimated amortization of such amounts for 2014.



	Prior Service Cost		Net (Gain) Loss		Transition Obligation
			(in millions)
Balance at December 31, 2013:
Accumulated OCI	$	—	$	1	$	—
Net regulatory assets (liabilities)	9		64		—
Total	$	9	$	65	$	—
Balance at December 31, 2012:
Accumulated OCI	$	—	$	7	$	—
Net regulatory assets (liabilities)	13		342		5
Total	$	13	$	349	$	5
Estimated amortization as net periodic postretirement benefit cost in 2014:
Accumulated OCI	$	—	$	—	$	—
Net regulatory assets (liabilities)	4		2		—
Total	$	4	$	2	$	—

The components of OCI, along with the changes in the balance of net regulatory assets (liabilities), related to the other postretirement benefit plans for the plan years ended December 31, 2013 and 2012 are presented in the following table:



	Accumulated OCI			Net Regulatory Assets (Liabilities)
	(in millions)
Balance at December 31, 2011	$	6		$	345
Net loss	1			35
Reclassification adjustments:
Amortization of transition obligation	—			(10		)
Amortization of prior service costs	—			(4		)
Amortization of net gain (loss)	—			(6		)
Total reclassification adjustments	—			(20		)
Total change	1			15
Balance at December 31, 2012	$	7		$	360
Net gain	(6		)	(266		)
Reclassification adjustments:
Amortization of transition obligation	—			(5		)
Amortization of prior service costs	—			(4		)
Amortization of net gain (loss)	—			(12		)
Total reclassification adjustments	—			(21		)
Total change	(6		)	(287		)
Balance at December 31, 2013	$	1		$	73

Components of the other postretirement benefit plans' net periodic cost were as follows:



	2013			2012			2011
	(in millions)
Service cost	$	24		$	21		$	21
Interest cost	74			85			92
Expected return on plan assets	(56		)	(60		)	(64		)
Net amortization	21			20			20
Net periodic postretirement benefit cost	$	63		$	66		$	69

Future benefit payments, including prescription drug benefits, reflect expected future service and are estimated based on assumptions used to measure the APBO for the other postretirement benefit plans. Estimated benefit payments are reduced by drug subsidy receipts expected as a result of the Medicare Prescription Drug, Improvement, and Modernization Act of 2003 as follows:



	Benefit Payments		Subsidy Receipts			Total
	(in millions)
2014	$	110	$	(9	)	$	101
2015	115		(10		)	105
2016	120		(11		)	109
2017	124		(13		)	111
2018	130		(14		)	116
2019 to 2023	654		(75		)	579

Benefit Plan Assets

Pension plan and other postretirement benefit plan assets are managed and invested in accordance with all applicable requirements, including ERISA and the Internal Revenue Code of 1986, as amended (Internal Revenue Code). The Company's investment policies for both the pension plan and the other postretirement benefit plans cover a diversified mix of assets, including equity and fixed income securities, real estate, and private equity. Derivative instruments are used primarily to gain efficient exposure to the various asset classes and as hedging tools. The Company minimizes the risk of large losses primarily through diversification but also monitors and manages other aspects of risk.

The composition of the Company's pension plan and other postretirement benefit plan assets as of December 31, 2013 and 2012, along with the targeted mix of assets for each plan, is presented below:



	Target		2013		2012
Pension plan assets:
Domestic equity	26	%	31	%	28	%
International equity	25		25		24
Fixed income	23		23		27
Special situations	3		1		1
Real estate investments	14		14		13
Private equity	9		6		7
Total	100	%	100	%	100	%
Other postretirement benefit plan assets:
Domestic equity	40	%	40	%	38	%
International equity	21		25		24
Domestic fixed income	25		24		28
Global fixed income	4		4		3
Special situations	1		—		—
Real estate investments	6		5		5
Private equity	3		2		2
Total	100	%	100	%	100	%

The investment strategy for plan assets related to the Company's qualified pension plan is to be broadly diversified across major asset classes. The asset allocation is established after consideration of various factors that affect the assets and liabilities of the pension plan including, but not limited to, historical and expected returns and interest rates, volatility, correlations of asset classes, the current level of assets and liabilities, and the assumed growth in assets and liabilities. Because a significant portion of the liability of the pension plan is long-term in nature, the assets are invested consistent with long-term investment expectations for return and risk. To manage the actual asset class exposures relative to the target asset allocation, the Company employs a formal rebalancing program. As additional risk management, external investment managers and service providers are subject to written guidelines to ensure appropriate and prudent investment practices.

Investment Strategies

Detailed below is a description of the investment strategies for each major asset category for the pension and other postretirement benefit plans disclosed above:


•	Domestic equity. A mix of large and small capitalization stocks with generally an equal distribution of value and growth attributes, managed both actively and through passive index approaches.


•	International equity. A mix of growth stocks and value stocks with both developed and emerging market exposure, managed both actively and through passive index approaches.


•	Fixed income. A mix of domestic and international bonds.


•	Trust-owned life insurance (TOLI). Investments of the Company's taxable trusts aimed at minimizing the impact of taxes on the portfolio.


•	Special situations. Investments in opportunistic strategies with the objective of diversifying and enhancing returns and exploiting short-term inefficiencies as well as investments in promising new strategies of a longer-term nature.


•	Real estate investments. Investments in traditional private market, equity-oriented investments in real properties (indirectly through pooled funds or partnerships) and in publicly traded real estate securities.


•	Private equity. Investments in private partnerships that invest in private or public securities typically through privately-negotiated and/or structured transactions, including leveraged buyouts, venture capital, and distressed debt.

Benefit Plan Asset Fair Values

Following are the fair value measurements for the pension plan and the other postretirement benefit plan assets as of December 31, 2013 and 2012. The fair values presented are prepared in accordance with GAAP. For purposes of determining the fair value of the pension plan and other postretirement benefit plan assets and the appropriate level designation, management relies on information provided by the plan's trustee. This information is reviewed and evaluated by management with changes made to the trustee information as appropriate.

Valuation methods of the primary fair value measurements disclosed in the following tables are as follows:

•

Domestic and international equity. Investments in equity securities such as common stocks, American depositary receipts, and real estate investment trusts that trade on a public exchange are classified as Level 1 investments and are valued at the closing price in the active market. Equity investments with unpublished prices (i.e. pooled funds) are valued as Level 2, when the underlying holdings used to value the investment are comprised of Level 1 or Level 2 equity securities.


•	Fixed income. Investments in fixed income securities are generally classified as Level 2 investments and are valued based on prices reported in the market place. Additionally, the value of fixed income securities takes into consideration certain items such as broker quotes, spreads, yield curves, interest rates, and discount rates that apply to the term of a specific instrument.


•	TOLI. Investments in TOLI policies are classified as Level 2 investments and are valued based on the underlying investments held in the policy's separate account. The underlying assets are equity and fixed income pooled funds that are comprised of Level 1 and Level 2 securities.

•

Real estate investments and private equity. Investments in private equity and real estate are generally classified as Level 3 as the underlying assets typically do not have observable inputs. The fund manager values the assets using various inputs and techniques depending on the nature of the underlying investments. In the case of private equity, techniques may include purchase multiples for comparable transactions, comparable public company trading multiples, and discounted cash flow analysis. Real estate managers generally use prevailing market capitalization rates, recent sales of comparable investments, and independent third-party appraisals to value underlying real estate investments. The fair value of partnerships is determined by aggregating the value of the underlying assets.

The fair values of pension plan assets as of December 31, 2013 and 2012 are presented below. These fair value measurements exclude cash, receivables related to investment income, pending investments sales, and payables related to pending investment purchases. Assets that are considered special situations investments, primarily real estate investments and private equities, are presented in the tables below based on the nature of the investment.



	Fair Value Measurements Using
	Quoted Prices in Active Markets for Identical Assets		Significant Other Observable Inputs			Significant Unobservable Inputs
As of December 31, 2013:	(Level 1)		(Level 2)			(Level 3)		Total
	(in millions)
Assets:
Domestic equity*	$	1,433	$	839		$	—	$	2,272
International equity*	1,101		1,018			—		2,119
Fixed income:
U.S. Treasury, government, and agency bonds	—		599			—		599
Mortgage- and asset-backed securities	—		156			—		156
Corporate bonds	—		978			—		978
Pooled funds	—		471			—		471
Cash equivalents and other	1		223			—		224
Real estate investments	260		—			1,000		1,260
Private equity	—		—			571		571
Total	$	2,795	$	4,284		$	1,571	$	8,650

Liabilities:
Derivatives	—		(3		)	—		(3		)
Total	$	2,795	$	4,281		$	1,571	$	8,647



*	Level 1 securities consist of actively traded stocks while Level 2 securities consist of pooled funds. Management believes that the portfolio is well-diversified with no significant concentrations of risk.



	Fair Value Measurements Using
	Quoted Prices in Active Markets for Identical Assets		Significant Other Observable Inputs		Significant Unobservable Inputs
As of December 31, 2012:	(Level 1)		(Level 2)		(Level 3)		Total
	(in millions)
Assets:
Domestic equity*	$	1,163	$	670	$	—	$	1,833
International equity*	912		979		—		1,891
Fixed income:
U.S. Treasury, government, and agency bonds	—		516		—		516
Mortgage- and asset-backed securities	—		127		—		127
Corporate bonds	—		876		3		879
Pooled funds	—		399		—		399
Cash equivalents and other	5		548		—		553
Real estate investments	258		—		841		1,099
Private equity	—		—		593		593
Total	$	2,338	$	4,115	$	1,437	$	7,890



*	Level 1 securities consist of actively traded stocks while Level 2 securities consist of pooled funds. Management believes that the portfolio is well-diversified with no significant concentrations of risk.

Changes in the fair value measurement of the Level 3 items in the pension plan assets valued using significant unobservable inputs for the years ended December 31, 2013 and 2012 were as follows:



	2013					2012
	Real Estate Investments		Private Equity			Real Estate Investments		Private Equity
	(in millions)
Beginning balance	$	841	$	593		$	782	$	582
Actual return on investments:
Related to investments held at year end	74		8			56		1
Related to investments sold during the year	30		51			3		41
Total return on investments	104		59			59		42
Purchases, sales, and settlements	55		(81		)	—		(31		)
Ending balance	$	1,000	$	571		$	841	$	593

The fair values of other postretirement benefit plan assets as of December 31, 2013 and 2012 are presented below. These fair value measurements exclude cash, receivables related to investment income, pending investments sales, and payables related to pending investment purchases. Assets that are considered special situations investments, primarily real estate investments and private equities, are presented in the tables below based on the nature of the investment.



	Fair Value Measurements Using
	Quoted Prices in Active Markets for Identical Assets		Significant Other Observable Inputs		Significant Unobservable Inputs		Total
As of December 31, 2013:	(Level 1)		(Level 2)		(Level 3)
	(in millions)
Assets:
Domestic equity*	$	157	$	45	$	—	$	202
International equity*	39		82		—		121
Fixed income:
U.S. Treasury, government, and agency bonds	—		34		—		34
Mortgage- and asset-backed securities	—		6		—		6
Corporate bonds	—		35		—		35
Pooled funds	—		46		—		46
Cash equivalents and other	—		19		—		19
Trust-owned life insurance	—		369		—		369
Real estate investments	10		—		36		46
Private equity	—		—		20		20
Total	$	206	$	636	$	56	$	898



*	Level 1 securities consist of actively traded stocks while Level 2 securities consist of pooled funds. Management believes that the portfolio is well-diversified with no significant concentrations of risk.



	Fair Value Measurements Using
	Quoted Prices in Active Markets for Identical Assets		Significant Other Observable Inputs		Significant Unobservable Inputs
As of December 31, 2012:	(Level 1)		(Level 2)		(Level 3)		Total
	(in millions)
Assets:
Domestic equity*	$	140	$	43	$	—	$	183
International equity*	33		75		—		108
Fixed income:
U.S. Treasury, government, and agency bonds	—		24		—		24
Mortgage- and asset-backed securities	—		4		—		4
Corporate bonds	—		31		—		31
Pooled funds	—		42		—		42
Cash equivalents and other	—		44		—		44
Trust-owned life insurance	—		320		—		320
Real estate investments	10		—		30		40
Private equity	—		—		21		21
Total	$	183	$	583	$	51	$	817



*	Level 1 securities consist of actively traded stocks while Level 2 securities consist of pooled funds. Management believes that the portfolio is well-diversified with no significant concentrations of risk.

Changes in the fair value measurement of the Level 3 items in the other postretirement benefit plan assets valued using significant unobservable inputs for the years ended December 31, 2013 and 2012 were as follows:



	2013					2012
	Real Estate Investments		Private Equity			Real Estate Investments		Private Equity
	(in millions)
Beginning balance	$	30	$	21		$	30	$	23
Actual return on investments:
Related to investments held at year end	3		—			—		—
Related to investments sold during the year	1		2			—		1
Total return on investments	4		2			—		1
Purchases, sales, and settlements	2		(3		)	—		(3		)
Ending balance	$	36	$	20		$	30	$	21

Employee Savings Plan

Southern Company also sponsors a 401(k) defined contribution plan covering substantially all employees. The Company provides an 85% matching contribution on up to 6% of an employee's base salary. Total matching contributions made to the plan for 2013, 2012, and 2011 were $84 million, $82 million, and $78 million, respectively.

Alabama Power [Member]

RETIREMENT BENEFITS

The Company has a defined benefit, trusteed, pension plan covering substantially all employees. This qualified pension plan is funded in accordance with requirements of the Employee Retirement Income Security Act of 1974, as amended (ERISA). No contributions were made to the qualified pension plan during 2013. No mandatory contributions to the qualified pension plan are anticipated for the year ending December 31, 2014. The Company also provides certain defined benefit pension plans for a selected group of management and highly compensated employees. Benefits under these non-qualified pension plans are funded on a cash basis. In addition, the Company provides certain medical care and life insurance benefits for retired employees through other postretirement benefit plans. The Company funds its other postretirement trusts to the extent required by the Alabama PSC and the FERC. No contributions to the other postretirement trusts are expected during the year ending December 31, 2014.

Actuarial Assumptions

The weighted average rates assumed in the actuarial calculations used to determine both the benefit obligations as of the measurement date and the net periodic costs for the pension and other postretirement benefit plans for the following year are presented below. Net periodic benefit costs were calculated in 2010 for the 2011 plan year using discount rates for the pension plans and the other postretirement benefit plans of 5.52% and 5.41%, respectively, and an annual salary increase of 3.84%.



	2013		2012		2011
Discount rate:
Pension plans	5.02	%	4.27	%	4.98	%
Other postretirement benefit plans	4.86		4.06		4.88
Annual salary increase	3.59		3.59		3.84
Long-term return on plan assets:
Pension plans	8.20		8.20		8.45
Other postretirement benefit plans	7.36		7.19		7.39



	1 Percent Increase		1 Percent Decrease
	(in millions)
Benefit obligation	$	26	$	(22	)
Service and interest costs	1		(1		)

Pension Plans

The total accumulated benefit obligation for the pension plans was $1.9 billion at December 31, 2013 and $2.0 billion at December 31, 2012. Changes in the projected benefit obligations and the fair value of plan assets during the plan years ended December 31, 2013 and 2012 were as follows:



	2013			2012
	(in millions)
Change in benefit obligation
Benefit obligation at beginning of year	$	2,218		$	1,932
Service cost	52			44
Interest cost	93			94
Benefits paid	(93		)	(90		)
Actuarial (gain) loss	(158		)	238
Balance at end of year	2,112			2,218
Change in plan assets
Fair value of plan assets at beginning of year	2,077			1,885
Actual return on plan assets	285			274
Employer contributions	9			8
Benefits paid	(93		)	(90		)
Fair value of plan assets at end of year	2,278			2,077
Prepaid pension costs (accrued liability)	$	166		$	(141	)

At December 31, 2013, the projected benefit obligations for the qualified and non-qualified pension plans were $2.0 billion and $110 million, respectively. All pension plan assets are related to the qualified pension plan.

Amounts recognized in the balance sheets at December 31, 2013 and 2012 related to the Company's pension plans consist of the following:



	2013			2012
	(in millions)
Prepaid pension costs	$	276		$	—
Other regulatory assets, deferred	476			822
Other current liabilities	(9		)	(8		)
Employee benefit obligations	(101		)	(133		)

Presented below are the amounts included in regulatory assets at December 31, 2013 and 2012 related to the defined benefit pension plans that had not yet been recognized in net periodic pension cost along with the estimated amortization of such amounts for 2014.



	2013		2012		Estimated Amortization in 2014
			(in millions)
Prior service cost	$	19	$	26	$	7
Net (gain) loss	457		796		31
Regulatory assets	$	476	$	822

The changes in the balance of regulatory assets related to the defined benefit pension plans for the years ended December 31, 2013 and 2012 are presented in the following table:



	2013			2012
	(in millions)
Regulatory assets:
Beginning balance	$	822		$	727
Net (gain) loss	(287		)	125
Reclassification adjustments:
Amortization of prior service costs	(7		)	(7		)
Amortization of net gain (loss)	(52		)	(23		)
Total reclassification adjustments	(59		)	(30		)
Total change	(346		)	95
Ending balance	$	476		$	822

Components of net periodic pension cost (income) were as follows:



	2013			2012			2011
	(in millions)
Service cost	$	52		$	44		$	43
Interest cost	93			94			96
Expected return on plan assets	(157		)	(162		)	(173		)
Recognized net (gain) loss	52			23			4
Net amortization	7			7			9
Net periodic pension cost (income)	$	47		$	6		$	(21	)

Net periodic pension cost (income) is the sum of service cost, interest cost, and other costs netted against the expected return on plan assets. The expected return on plan assets is determined by multiplying the expected rate of return on plan assets and the market-related value of plan assets. In determining the market-related value of plan assets, the Company has elected to amortize changes in the market value of all plan assets over five years rather than recognize the changes immediately. As a result, the accounting value of plan assets that is used to calculate the expected return on plan assets differs from the current fair value of the plan assets.



	Benefit Payments
	(in millions)
2014	$	104
2015	108
2016	113
2017	118
2018	122
2019 to 2023	669

Other Postretirement Benefits

Changes in the APBO and in the fair value of plan assets during the plan years ended December 31, 2013 and 2012 were as follows:



	2013			2012
	(in millions)
Change in benefit obligation
Benefit obligation at beginning of year	$	490		$	470
Service cost	6			5
Interest cost	19			22
Benefits paid	(24		)	(24		)
Actuarial (gain) loss	(62		)	15
Retiree drug subsidy	2			2
Balance at end of year	431			490
Change in plan assets
Fair value of plan assets at beginning of year	343			315
Actual return on plan assets	61			39
Employer contributions	7			11
Benefits paid	(22		)	(22		)
Fair value of plan assets at end of year	389			343
Accrued liability	$	(42	)	$	(147	)

Amounts recognized in the balance sheets at December 31, 2013 and 2012 related to the Company's other postretirement benefit plans consist of the following:



	2013			2012
	(in millions)
Other regulatory assets, deferred	$	6		$	89
Other regulatory liabilities, deferred	(21		)	—
Employee benefit obligations	(42		)	(147		)

Presented below are the amounts included in net regulatory assets (liabilities) at December 31, 2013 and 2012 related to the other postretirement benefit plans that had not yet been recognized in net periodic other postretirement benefit cost along with the estimated amortization of such amounts for 2014.



	2013			2012		Estimated Amortization in 2014
	(in millions)
Prior service cost	$	19		$	22	$	4
Net (gain) loss	(34		)	67		—
Net regulatory assets (liabilities)	$	(15	)	$	89

The changes in the balance of net regulatory assets (liabilities) related to the other postretirement benefit plans for the plan years ended December 31, 2013 and 2012 are presented in the following table:



	2013			2012
	(in millions)
Net regulatory assets (liabilities):
Beginning balance	$	89		$	96
Net gain	(99		)	(1		)
Reclassification adjustments:
Amortization of transition obligation	—			(2		)
Amortization of prior service costs	(3		)	(4		)
Amortization of net gain (loss)	(2		)	—
Total reclassification adjustments	(5		)	(6		)
Total change	(104		)	(7		)
Ending balance	$	(15	)	$	89

Components of the other postretirement benefit plans' net periodic cost were as follows:



	2013			2012			2011
	(in millions)
Service cost	$	6		$	5		$	5
Interest cost	19			22			24
Expected return on plan assets	(23		)	(23		)	(25		)
Net amortization	5			6			7
Net periodic postretirement benefit cost	$	7		$	10		$	11



	Benefit Payments		Subsidy Receipts			Total
	(in millions)
2014	$	30	$	(3	)	$	27
2015	31		(3		)	28
2016	31		(3		)	28
2017	33		(4		)	29
2018	33		(4		)	29
2019 to 2023	164		(22		)	142

Benefit Plan Assets

The composition of the Company's pension plan and other postretirement benefit plan assets as of December 31, 2013 and 2012, along with the targeted mix of assets for each plan, is presented below:



	Target		2013		2012
Pension plan assets:
Domestic equity	26	%	31	%	28	%
International equity	25		25		24
Fixed income	23		23		27
Special situations	3		1		1
Real estate investments	14		14		13
Private equity	9		6		7
Total	100	%	100	%	100	%
Other postretirement benefit plan assets:
Domestic equity	44	%	47	%	46	%
International equity	20		20		20
Domestic fixed income	24		27		28
Special situations	1		—		—
Real estate investments	8		4		4
Private equity	3		2		2
Total	100	%	100	%	100	%

Investment Strategies

Detailed below is a description of the investment strategies for each major asset category for the pension and other postretirement benefit plans disclosed above:


•	Domestic equity. A mix of large and small capitalization stocks with generally an equal distribution of value and growth attributes, managed both actively and through passive index approaches.


•	International equity. A mix of growth stocks and value stocks with both developed and emerging market exposure, managed both actively and through passive index approaches.


•	Fixed income. A mix of domestic and international bonds.


•	Trust-owned life insurance (TOLI). Investments of the Company's taxable trusts aimed at minimizing the impact of taxes on the portfolio.


•	Special situations. Investments in opportunistic strategies with the objective of diversifying and enhancing returns and exploiting short-term inefficiencies as well as investments in promising new strategies of a longer-term nature.


•	Real estate investments. Investments in traditional private market, equity-oriented investments in real properties (indirectly through pooled funds or partnerships) and in publicly traded real estate securities.


•	Private equity. Investments in private partnerships that invest in private or public securities typically through privately-negotiated and/or structured transactions, including leveraged buyouts, venture capital, and distressed debt.

Benefit Plan Asset Fair Values

Valuation methods of the primary fair value measurements disclosed in the following tables are as follows:

•


•	Fixed income. Investments in fixed income securities are generally classified as Level 2 investments and are valued based on prices reported in the market place. Additionally, the value of fixed income securities takes into consideration certain items such as broker quotes, spreads, yield curves, interest rates, and discount rates that apply to the term of a specific instrument.


•	TOLI. Investments in TOLI policies are classified as Level 2 investments and are valued based on the underlying investments held in the policy's separate account. The underlying assets are equity and fixed income pooled funds that are comprised of Level 1 and Level 2 securities.

•



	Fair Value Measurements Using
	Quoted Prices in Active Markets for Identical Assets		Significant Other Observable Inputs			Significant Unobservable Inputs
As of December 31, 2013:	(Level 1)		(Level 2)			(Level 3)		Total
	(in millions)
Assets:
Domestic equity*	$	374	$	219		$	—	$	593
International equity*	287		265			—		552
Fixed income:
U.S. Treasury, government, and agency bonds	—		156			—		156
Mortgage- and asset-backed securities	—		41			—		41
Corporate bonds	—		255			—		255
Pooled funds	—		123			—		123
Cash equivalents and other	—		58			—		58
Real estate investments	68		—			261		329
Private equity	—		—			149		149
Total	$	729	$	1,117		$	410	$	2,256

Liabilities:
Derivatives	—		(1		)	—		(1		)
Total	$	729	$	1,116		$	410	$	2,255



*	Level 1 securities consist of actively traded stocks while Level 2 securities consist of pooled funds. Management believes that the portfolio is well-diversified with no significant concentrations of risk.



	Fair Value Measurements Using
	Quoted Prices in Active Markets for Identical Assets		Significant Other Observable Inputs		Significant Unobservable Inputs
As of December 31, 2012:	(Level 1)		(Level 2)		(Level 3)		Total
	(in millions)
Assets:
Domestic equity*	$	304	$	175	$	—	$	479
International equity*	238		256		—		494
Fixed income:
U.S. Treasury, government, and agency bonds	—		135		—		135
Mortgage- and asset-backed securities	—		33		—		33
Corporate bonds	—		230		1		231
Pooled funds	—		104		—		104
Cash equivalents and other	1		143		—		144
Real estate investments	67		—		220		287
Private equity	—		—		155		155
Total	$	610	$	1,076	$	376	$	2,062



*	Level 1 securities consist of actively traded stocks while Level 2 securities consist of pooled funds. Management believes that the portfolio is well-diversified with no significant concentrations of risk.

Changes in the fair value measurement of the Level 3 items in the pension plan assets valued using significant unobservable inputs for the years ended December 31, 2013 and 2012 were as follows:



	2013					2012
	Real Estate Investments		Private Equity			Real Estate Investments		Private Equity
	(in millions)
Beginning balance	$	220	$	155		$	217	$	161
Actual return on investments:
Related to investments held at year end	19		2			2		—
Related to investments sold during the year	8		13			1		2
Total return on investments	27		15			3		2
Purchases, sales, and settlements	14		(21		)	—		(8		)
Ending balance	$	261	$	149		$	220	$	155



	Fair Value Measurements Using
	Quoted Prices in Active Markets for Identical Assets		Significant Other Observable Inputs		Significant Unobservable Inputs
As of December 31, 2013:	(Level 1)		(Level 2)		(Level 3)		Total
	(in millions)
Assets:
Domestic equity*	$	67	$	11	$	—	$	78
International equity*	14		13		—		27
Fixed income:
U.S. Treasury, government, and agency bonds	—		17		—		17
Mortgage- and asset-backed securities	—		2		—		2
Corporate bonds	—		12		—		12
Pooled funds	—		6		—		6
Cash equivalents and other	—		10		—		10
Trust-owned life insurance	—		211		—		211
Real estate investments	4		—		13		17
Private equity	—		—		7		7
Total	$	85	$	282	$	20	$	387



*	Level 1 securities consist of actively traded stocks while Level 2 securities consist of pooled funds. Management believes that the portfolio is well-diversified with no significant concentrations of risk.



	Fair Value Measurements Using
	Quoted Prices in Active Markets for Identical Assets		Significant Other Observable Inputs		Significant Unobservable Inputs
As of December 31, 2012:	(Level 1)		(Level 2)		(Level 3)		Total
	(in millions)
Assets:
Domestic equity*	$	62	$	9	$	—	$	71
International equity*	12		13		—		25
Fixed income:
U.S. Treasury, government, and agency bonds	—		7		—		7
Mortgage- and asset-backed securities	—		2		—		2
Corporate bonds	—		11		—		11
Pooled funds	—		5		—		5
Cash equivalents and other	—		19		—		19
Trust-owned life insurance	—		178		—		178
Real estate investments	4		—		11		15
Private equity	—		—		8		8
Total	$	78	$	244	$	19	$	341



*	Level 1 securities consist of actively traded stocks while Level 2 securities consist of pooled funds. Management believes that the portfolio is well-diversified with no significant concentrations of risk.



	2013					2012
	Real Estate Investments		Private Equity			Real Estate Investments		Private Equity
	(in millions)
Beginning balance	$	11	$	8		$	11	$	8
Actual return on investments:
Related to investments held at year end	1		—			—		—
Related to investments sold during the year	—		—			—		—
Total return on investments	1		—			—		—
Purchases, sales, and settlements	1		(1		)	—		—
Ending balance	$	13	$	7		$	11	$	8

Employee Savings Plan

The Company also sponsors a 401(k) defined contribution plan covering substantially all employees. The Company provides an 85% matching contribution on up to 6% of an employee's base salary. Total matching contributions made to the plan for 2013, 2012, and 2011 were $20 million, $19 million, and $18 million, respectively.

Georgia Power [Member]

RETIREMENT BENEFITS

The Company has a defined benefit, trusteed, pension plan covering substantially all employees. This qualified pension plan is funded in accordance with requirements of the Employee Retirement Income Security Act of 1974, as amended (ERISA). No contributions to the qualified pension plan were made during 2013. No mandatory contributions to the qualified pension plan are anticipated for the year ending December 31, 2014. The Company also provides certain defined benefit pension plans for a selected group of management and highly compensated employees. Benefits under these non-qualified pension plans are funded on a cash basis. In addition, the Company provides certain medical care and life insurance benefits for retired employees through other postretirement benefit plans. The Company funds its other postretirement trusts to the extent required by the Georgia PSC and the FERC. For the year ending December 31, 2014, other postretirement trust contributions are expected to total approximately $13 million.

Actuarial Assumptions



	2013		2012		2011
Discount rate:
Pension plans	5.02	%	4.27	%	4.98	%
Other postretirement benefit plans	4.85		4.04		4.87
Annual salary increase	3.59		3.59		3.84
Long-term return on plan assets:
Pension plans	8.20		8.20		8.45
Other postretirement benefit plans	6.74		7.24		7.25



	1 Percent Increase		1 Percent Decrease
	(in millions)
Benefit obligation	$	51	$	(43	)
Service and interest costs	2		(2		)

Pension Plans

The total accumulated benefit obligation for the pension plans was $2.9 billion at December 31, 2013 and $3.1 billion at December 31, 2012. Changes in the projected benefit obligations and the fair value of plan assets during the plan years ended December 31, 2013 and 2012 were as follows:



	2013			2012
	(in millions)
Change in benefit obligation
Benefit obligation at beginning of year	$	3,312		$	2,909
Service cost	69			60
Interest cost	138			141
Benefits paid	(141		)	(136		)
Actuarial (gain) loss	(262		)	338
Balance at end of year	3,116			3,312
Change in plan assets
Fair value of plan assets at beginning of year	2,827			2,575
Actual return on plan assets	387			377
Employer contributions	12			11
Benefits paid	(141		)	(136		)
Fair value of plan assets at end of year	3,085			2,827
Accrued liability	$	(31	)	$	(485	)

At December 31, 2013, the projected benefit obligations for the qualified and non-qualified pension plans were $3.0 billion and $148 million, respectively. All pension plan assets are related to the qualified pension plan.

Amounts recognized in the balance sheets at December 31, 2013 and 2012 related to the Company's pension plans consist of the following:



	2013			2012
	(in millions)
Prepaid pension costs	$	118		$	—
Other regulatory assets, deferred	610			1,132
Current liabilities, other	(12		)	(11		)
Employee benefit obligations	(137		)	(474		)



	2013		2012		Estimated Amortization in 2014
	(in millions)
Prior service cost	$	26	$	37	$	10
Net (gain) loss	584		1,095		41
Regulatory assets	$	610	$	1,132

The changes in the balance of regulatory assets related to the defined benefit pension plans for the years ended December 31, 2013 and 2012 are presented in the following table:



	2013			2012
	(in millions)
Regulatory assets:
Beginning balance	$	1,132		$	995
Net (gain) loss	(438		)	182
Reclassification adjustments:
Amortization of prior service costs	(10		)	(12		)
Amortization of net gain (loss)	(74		)	(33		)
Total reclassification adjustments	(84		)	(45		)
Total change	(522		)	137
Ending balance	$	610		$	1,132

Components of net periodic pension cost (income) were as follows:



	2013			2012			2011
	(in millions)
Service cost	$	69		$	60		$	57
Interest cost	138			141			144
Expected return on plan assets	(212		)	(221		)	(234		)
Recognized net loss	74			33			6
Net amortization	10			12			12
Net periodic pension cost (income)	$	79		$	25		$	(15	)



	Benefit Payments
	(in millions)
2014	$	154
2015	161
2016	167
2017	175
2018	181
2019 to 2023	995

Other Postretirement Benefits

Changes in the APBO and in the fair value of plan assets during the plan years ended December 31, 2013 and 2012 were as follows:



	2013			2012
	(in millions)
Change in benefit obligation
Benefit obligation at beginning of year	$	800		$	774
Service cost	7			7
Interest cost	31			37
Benefits paid	(45		)	(46		)
Actuarial (gain) loss	(73		)	25
Retiree drug subsidy	3			3
Balance at end of year	723			800
Change in plan assets
Fair value of plan assets at beginning of year	382			365
Actual return on plan assets	56			43
Employer contributions	11			17
Benefits paid	(42		)	(43		)
Fair value of plan assets at end of year	407			382
Accrued liability	$	(316	)	$	(418	)

Amounts recognized in the balance sheets at December 31, 2013 and 2012 related to the Company's other postretirement benefit plans consist of the following:



	2013			2012
	(in millions)
Other regulatory assets, deferred	$	69		$	187
Employee benefit obligations	(316		)	(418		)

Presented below are the amounts included in regulatory assets at December 31, 2013 and 2012 related to the other postretirement benefit plans that had not yet been recognized in net periodic other postretirement benefit cost along with the estimated amortization of such amounts for 2014.



	2013			2012			Estimated Amortization in 2014
	(in millions)
Prior service cost	$	(4	)	$	(4	)	$	—
Net (gain) loss	73			186			2
Transition obligation	—			5			—
Regulatory assets	$	69		$	187

The changes in the balance of regulatory assets related to the other postretirement benefit plans for the plan years ended December 31, 2013 and 2012 are presented in the following table:



	2013			2012
	(in millions)
Regulatory assets:
Beginning balance	$	187		$	186
Net (gain) loss	(106		)	11
Reclassification adjustments:
Amortization of transition obligation	(4		)	(6		)
Amortization of prior service costs	—			—
Amortization of net gain (loss)	(8		)	(4		)
Total reclassification adjustments	(12		)	(10		)
Total change	(118		)	1
Ending balance	$	69		$	187

Components of the other postretirement benefit plans' net periodic cost were as follows:



	2013			2012			2011
	(in millions)
Service cost	$	7		$	7		$	7
Interest cost	31			37			41
Expected return on plan assets	(24		)	(29		)	(30		)
Net amortization	12			10			11
Net periodic postretirement benefit cost	$	26		$	25		$	29



	Benefit Payments		Subsidy Receipts			Total
	(in millions)
2014	$	49	$	(4	)	$	45
2015	50		(4		)	46
2016	53		(5		)	48
2017	54		(5		)	49
2018	58		(6		)	52
2019 to 2023	287		(30		)	257

Benefit Plan Assets

The composition of the Company's pension plan and other postretirement benefit plan assets as of December 31, 2013 and 2012, along with the targeted mix of assets for each plan, is presented below:



	Target		2013		2012
Pension plan assets:
Domestic equity	26	%	31	%	28	%
International equity	25		25		24
Fixed income	23		23		27
Special situations	3		1		1
Real estate investments	14		14		13
Private equity	9		6		7
Total	100	%	100	%	100	%
Other postretirement benefit plan assets:
Domestic equity	41	%	36	%	34	%
International equity	21		30		27
Domestic fixed income	24		21		27
Global fixed income	8		8		7
Special situations	1		—		—
Real estate investments	3		3		3
Private equity	2		2		2
Total	100	%	100	%	100	%

Investment Strategies

Detailed below is a description of the investment strategies for each major asset category for the pension and other postretirement benefit plans disclosed above:


•	Domestic equity. A mix of large and small capitalization stocks with generally an equal distribution of value and growth attributes, managed both actively and through passive index approaches.


•	International equity. A mix of growth stocks and value stocks with both developed and emerging market exposure, managed both actively and through passive index approaches.


•	Fixed income. A mix of domestic and international bonds.


•	Trust-owned life insurance (TOLI). Investments of the Company's taxable trusts aimed at minimizing the impact of taxes on the portfolio.


•	Special situations. Investments in opportunistic strategies with the objective of diversifying and enhancing returns and exploiting short-term inefficiencies as well as investments in promising new strategies of a longer-term nature.


•	Real estate investments. Investments in traditional private market, equity-oriented investments in real properties (indirectly through pooled funds or partnerships) and in publicly traded real estate securities.


•	Private equity. Investments in private partnerships that invest in private or public securities typically through privately-negotiated and/or structured transactions, including leveraged buyouts, venture capital, and distressed debt.

Benefit Plan Asset Fair Values

Valuation methods of the primary fair value measurements disclosed in the following tables are as follows:

•


•	Fixed income. Investments in fixed income securities are generally classified as Level 2 investments and are valued based on prices reported in the market place. Additionally, the value of fixed income securities takes into consideration certain items such as broker quotes, spreads, yield curves, interest rates, and discount rates that apply to the term of a specific instrument.


•	TOLI. Investments in TOLI policies are classified as Level 2 investments and are valued based on the underlying investments held in the policy's separate account. The underlying assets are equity and fixed income pooled funds that are comprised of Level 1 and Level 2 securities.

•



	Fair Value Measurements Using
	Quoted Prices in Active Markets for Identical Assets		Significant Other Observable Inputs			Significant Unobservable Inputs
As of December 31, 2013:	(Level 1)		(Level 2)			(Level 3)		Total
	(in millions)
Assets:
Domestic equity*	$	506	$	296		$	—	$	802
International equity*	389		359			—		748
Fixed income:
U.S. Treasury, government, and agency bonds	—		212			—		212
Mortgage- and asset-backed securities	—		55			—		55
Corporate bonds	—		346			—		346
Pooled funds	—		166			—		166
Cash equivalents and other	—		79			—		79
Real estate investments	92		—			353		445
Private equity	—		—			202		202
Total	$	987	$	1,513		$	555	$	3,055

Liabilities:
Derivatives	—		(1		)	—		(1		)
Total	$	987	$	1,512		$	555	$	3,054



*	Level 1 securities consist of actively traded stocks while Level 2 securities consist of pooled funds. Management believes that the portfolio is well-diversified with no significant concentrations of risk.



	Fair Value Measurements Using
	Quoted Prices in Active Markets for Identical Assets		Significant Other Observable Inputs		Significant Unobservable Inputs
As of December 31, 2012:	(Level 1)		(Level 2)		(Level 3)		Total
	(in millions)
Assets:
Domestic equity*	$	413	$	238	$	—	$	651
International equity*	324		348		—		672
Fixed income:
U.S. Treasury, government, and agency bonds	—		183		—		183
Mortgage- and asset-backed securities	—		45		—		45
Corporate bonds	—		312		1		313
Pooled funds	—		142		—		142
Cash equivalents and other	2		195		—		197
Real estate investments	92		—		299		391
Private equity	—		—		211		211
Total	$	831	$	1,463	$	511	$	2,805



*	Level 1 securities consist of actively traded stocks while Level 2 securities consist of pooled funds. Management believes that the portfolio is well-diversified with no significant concentrations of risk.

Changes in the fair value measurement of the Level 3 items in the pension plan assets valued using significant unobservable inputs for the years ended December 31, 2013 and 2012 were as follows:



	2013					2012
	Real Estate Investments		Private Equity			Real Estate Investments		Private Equity
	(in millions)
Beginning balance	$	299	$	211		$	296	$	220
Actual return on investments:
Related to investments held at year end	25		3			2		—
Related to investments sold during the year	10		17			1		2
Total return on investments	35		20			3		2
Purchases, sales, and settlements	19		(29		)	—		(11		)
Ending balance	$	353	$	202		$	299	$	211



	Fair Value Measurements Using
	Quoted Prices in Active Markets for Identical Assets		Significant Other Observable Inputs		Significant Unobservable Inputs
As of December 31, 2013:	(Level 1)		(Level 2)		(Level 3)		Total
	(in millions)
Assets:
Domestic equity*	$	74	$	25	$	—	$	99
International equity*	12		57		—		69
Fixed income:
U.S. Treasury, government, and agency bonds	—		7		—		7
Mortgage- and asset-backed securities	—		2		—		2
Corporate bonds	—		11		—		11
Pooled funds	—		34		—		34
Cash equivalents and other	—		6		—		6
Trust-owned life insurance	—		158		—		158
Real estate investments	3		—		11		14
Private equity	—		—		6		6
Total	$	89	$	300	$	17	$	406



*	Level 1 securities consist of actively traded stocks while Level 2 securities consist of pooled funds. Management believes that the portfolio is well-diversified with no significant concentrations of risk.



	Fair Value Measurements Using
	Quoted Prices in Active Markets for Identical Assets		Significant Other Observable Inputs		Significant Unobservable Inputs
As of December 31, 2012:	(Level 1)		(Level 2)		(Level 3)		Total
	(in millions)
Assets:
Domestic equity*	$	65	$	27	$	—	$	92
International equity*	10		51		—		61
Fixed income:
U.S. Treasury, government, and agency bonds	—		6		—		6
Mortgage- and asset-backed securities	—		1		—		1
Corporate bonds	—		10		—		10
Pooled funds	—		32		—		32
Cash equivalents and other	—		18		—		18
Trust-owned life insurance	—		142		—		142
Real estate investments	3		—		10		13
Private equity	—		—		7		7
Total	$	78	$	287	$	17	$	382



*	Level 1 securities consist of actively traded stocks while Level 2 securities consist of pooled funds. Management believes that the portfolio is well-diversified with no significant concentrations of risk.



	2013					2012
	Real Estate Investments		Private Equity			Real Estate Investments		Private Equity
	(in millions)
Beginning balance	$	10	$	7		$	9	$	7
Actual return on investments:
Related to investments held at year end	1		—			1		—
Related to investments sold during the year	—		—			—		—
Total return on investments	1		—			1		—
Purchases, sales, and settlements	—		(1		)	—		—
Ending balance	$	11	$	6		$	10	$	7

Employee Savings Plan

The Company also sponsors a 401(k) defined contribution plan covering substantially all employees. The Company provides an 85% matching contribution on up to 6% of an employee's base salary. Total matching contributions made to the plan for 2013, 2012, and 2011 were $24 million, $24 million, and $24 million, respectively.

Gulf Power [Member]

RETIREMENT BENEFITS

The Company has a defined benefit, trusteed, pension plan covering substantially all employees. This qualified pension plan is funded in accordance with requirements of the Employee Retirement Income Security Act of 1974, as amended (ERISA). No contributions were made to the qualified pension plan during 2013. No mandatory contributions to the qualified pension plan are anticipated for the year ending December 31, 2014. The Company also provides certain defined benefit pension plans for a selected group of management and highly compensated employees. Benefits under these non-qualified pension plans are funded on a cash basis. In addition, the Company provides certain medical care and life insurance benefits for retired employees through other postretirement benefit plans. The Company funds its other postretirement trusts to the extent required by the FERC. For the year ending December 31, 2014, no other postretirement trust contributions are expected.

Actuarial Assumptions

The weighted average rates assumed in the actuarial calculations used to determine both the benefit obligations as of the measurement date and the net periodic costs for the pension and other postretirement benefit plans for the following year are presented below. Net periodic benefit costs were calculated in 2010 for the 2011 plan year using discount rates for the pension plans and the other postretirement benefit plans of 5.53% and 5.41%, respectively, and an annual salary increase of 3.84%.



	2013		2012		2011
Discount rate:
Pension plans	5.02	%	4.27	%	4.98	%
Other postretirement benefit plans	4.86		4.06		4.88
Annual salary increase	3.59		3.59		3.84
Long-term return on plan assets:
Pension plans	8.20		8.20		8.45
Other postretirement benefit plans	8.04		8.02		8.11



	1 Percent Increase		1 Percent Decrease
	(in thousands)
Benefit obligation	$	2,884	$	(2,479	)
Service and interest costs	138		(119		)

Pension Plans

The total accumulated benefit obligation for the pension plans was $353 million at December 31, 2013 and $371 million at December 31, 2012. Changes in the projected benefit obligations and the fair value of plan assets during the plan years ended December 31, 2013 and 2012 were as follows:



	2013			2012
	(in thousands)
Change in benefit obligation
Benefit obligation at beginning of year	$	413,501		$	352,834
Service cost	11,128			9,101
Interest cost	17,321			17,199
Benefits paid	(14,831		)	(14,046		)
Plan amendments	—			426
Actuarial (gain) loss	(31,791		)	47,987
Balance at end of year	395,328			413,501
Change in plan assets
Fair value of plan assets at beginning of year	350,260			304,324
Actual return on plan assets	49,076			45,762
Employer contributions	1,134			14,220
Benefits paid	(14,831		)	(14,046		)
Fair value of plan assets at end of year	385,639			350,260
Accrued liability	$	(9,689	)	$	(63,241	)

At December 31, 2013, the projected benefit obligations for the qualified and non-qualified pension plans were $374 million and $21 million, respectively. All pension plan assets are related to the qualified pension plan.

Amounts recognized in the balance sheets at December 31, 2013 and 2012 related to the Company's pension plans consist of the following:



	2013			2012
	(in thousands)
Prepaid pension costs	$	11,533		$	—
Other regulatory assets, deferred	75,280			139,261
Current liabilities, other	(1,183		)	(855		)
Employee benefit obligations	(20,039		)	(62,386		)



	2013		2012		Estimated Amortization in 2014
	(in thousands)
Prior service cost	$	4,401	$	5,565	$	1,115
Net (gain) loss	70,879		133,696		4,559
Regulatory assets	$	75,280	$	139,261

The changes in the balance of regulatory assets related to the defined benefit pension plans for the years ended December 31, 2013 and 2012 are presented in the following table:



	2013			2012
	(in thousands)
Regulatory assets:
Beginning balance	$	139,261		$	115,853
Net (gain) loss	(54,432		)	28,157
Change in prior service costs	—			426
Reclassification adjustments:
Amortization of prior service costs	(1,164		)	(1,262		)
Amortization of net gain (loss)	(8,385		)	(3,913		)
Total reclassification adjustments	(9,549		)	(5,175		)
Total change	(63,981		)	23,408
Ending balance	$	75,280		$	139,261

Components of net periodic pension cost were as follows:



	2013			2012			2011
	(in thousands)
Service cost	$	11,128		$	9,101		$	8,431
Interest cost	17,321			17,199			17,074
Expected return on plan assets	(26,435		)	(25,932		)	(27,232		)
Recognized net (gain) loss	8,385			3,913			512
Net amortization	1,164			1,262			1,262
Net periodic pension cost	$	11,563		$	5,543		$	47



	Benefit Payments
	(in thousands)
2014	$	16,548
2015	17,440
2016	18,405
2017	19,649
2018	20,681
2019 to 2023	121,864

Other Postretirement Benefits

Changes in the APBO and in the fair value of plan assets during the plan years ended December 31, 2013 and 2012 were as follows:



	2013			2012
	(in thousands)
Change in benefit obligation
Benefit obligation at beginning of year	$	75,395		$	70,923
Service cost	1,355			1,167
Interest cost	2,982			3,367
Benefits paid	(3,583		)	(3,854		)
Actuarial (gain) loss	(7,900		)	3,468
Retiree drug subsidy	330			324
Balance at end of year	68,579			75,395
Change in plan assets
Fair value of plan assets at beginning of year	16,227			14,978
Actual return on plan assets	2,119			2,131
Employer contributions	2,381			2,648
Benefits paid	(3,253		)	(3,530		)
Fair value of plan assets at end of year	17,474			16,227
Accrued liability	$	(51,105	)	$	(59,168	)

Amounts recognized in the balance sheets at December 31, 2013 and 2012 related to the Company's other postretirement benefit plans consist of the following:



	2013			2012
	(in thousands)
Other regulatory assets, deferred	$	—		$	2,169
Current liabilities, other	(687		)	(661		)
Other regulatory liabilities, deferred	(6,984		)	—
Employee benefit obligations	(50,418		)	(58,507		)



	2013			2012		Estimated Amortization in 2014
	(in thousands)
Prior service cost	$	138		$	324	$	186
Net (gain) loss	(7,122		)	1,845		(24		)
Net regulatory assets (liabilities)	$	(6,984	)	$	2,169



	2013			2012
	(in thousands)
Net regulatory assets (liabilities):
Beginning balance	$	2,169		$	239
Net (gain) loss	(8,967		)	2,309
Reclassification adjustments:
Amortization of transition obligation	—			(193		)
Amortization of prior service costs	(186		)	(186		)
Amortization of net gain (loss)	—			—
Total reclassification adjustments	(186		)	(379		)
Total change	(9,153		)	1,930
Ending balance	$	(6,984	)	$	2,169

Components of the other postretirement benefit plans' net periodic cost were as follows:



	2013			2012			2011
	(in thousands)
Service cost	$	1,355		$	1,167		$	1,132
Interest cost	2,982			3,367			3,658
Expected return on plan assets	(1,238		)	(1,311		)	(1,445		)
Net amortization	186			379			396
Net periodic postretirement benefit cost	$	3,285		$	3,602		$	3,741



	Benefit Payments		Subsidy Receipts			Total
	(in thousands)
2014	$	4,447	$	(409	)	$	4,038
2015	4,630		(456		)	4,174
2016	4,856		(504		)	4,352
2017	4,994		(557		)	4,437
2018	5,168		(611		)	4,557
2019 to 2023	26,272		(3,251		)	23,021

Benefit Plan Assets

The composition of the Company's pension plan and other postretirement benefit plan assets as of December 31, 2013 and 2012, along with the targeted mix of assets for each plan, is presented below:



	Target		2013		2012
Pension plan assets:
Domestic equity	26	%	31	%	28	%
International equity	25		25		24
Fixed income	23		23		27
Special situations	3		1		1
Real estate investments	14		14		13
Private equity	9		6		7
Total	100	%	100	%	100	%
Other postretirement benefit plan assets:
Domestic equity	25	%	30	%	27	%
International equity	24		24		23
Domestic fixed income	25		25		29
Special situations	3		1		1
Real estate investments	14		14		13
Private equity	9		6		7
Total	100	%	100	%	100	%

Investment Strategies

Detailed below is a description of the investment strategies for each major asset category for the pension and other postretirement benefit plans disclosed above:


•	Domestic equity. A mix of large and small capitalization stocks with generally an equal distribution of value and growth attributes, managed both actively and through passive index approaches.


•	International equity. A mix of growth stocks and value stocks with both developed and emerging market exposure, managed both actively and through passive index approaches.


•	Fixed income. A mix of domestic and international bonds.


•	Special situations. Investments in opportunistic strategies with the objective of diversifying and enhancing returns and exploiting short-term inefficiencies as well as investments in promising new strategies of a longer-term nature.


•	Real estate investments. Investments in traditional private market, equity-oriented investments in real properties (indirectly through pooled funds or partnerships) and in publicly traded real estate securities.


•	Private equity. Investments in private partnerships that invest in private or public securities typically through privately-negotiated and/or structured transactions, including leveraged buyouts, venture capital, and distressed debt.

Benefit Plan Asset Fair Values

Valuation methods of the primary fair value measurements disclosed in the following tables are as follows:

•


•	Fixed income. Investments in fixed income securities are generally classified as Level 2 investments and are valued based on prices reported in the market place. Additionally, the value of fixed income securities takes into consideration certain items such as broker quotes, spreads, yield curves, interest rates, and discount rates that apply to the term of a specific instrument.

•



	Fair Value Measurements Using
	Quoted Prices in Active Markets for Identical Assets		Significant Other Observable Inputs			Significant Unobservable Inputs
As of December 31, 2013:	(Level 1)		(Level 2)			(Level 3)		Total
	(in thousands)
Assets:
Domestic equity*	$	63,269	$	37,037		$	—	$	100,306
International equity*	48,606		44,941			—		93,547
Fixed income:
U.S. Treasury, government, and agency bonds	—		26,461			—		26,461
Mortgage- and asset-backed securities	—		6,873			—		6,873
Corporate bonds	—		43,222			—		43,222
Pooled funds	—		20,810			—		20,810
Cash equivalents and other	38		9,851			—		9,889
Real estate investments	11,493		—			44,139		55,632
Private equity	—		—			25,201		25,201
Total	$	123,406	$	189,195		$	69,340	$	381,941

Liabilities:
Derivatives	—		(115		)	—		(115		)
Total	$	123,406	$	189,080		$	69,340	$	381,826



*	Level 1 securities consist of actively traded stocks while Level 2 securities consist of pooled funds. Management believes that the portfolio is well-diversified with no significant concentrations of risk.



	Fair Value Measurements Using
	Quoted Prices in Active Markets for Identical Assets		Significant Other Observable Inputs		Significant Unobservable Inputs
As of December 31, 2012:	(Level 1)		(Level 2)		(Level 3)		Total
	(in thousands)
Assets:
Domestic equity*	$	51,215	$	29,499	$	—	$	80,714
International equity*	40,166		43,120		—		83,286
Fixed income:
U.S. Treasury, government, and agency bonds	—		22,724		—		22,724
Mortgage- and asset-backed securities	—		5,594		—		5,594
Corporate bonds	—		38,534		139		38,673
Pooled funds	—		17,581		—		17,581
Cash equivalents and other	208		24,148		—		24,356
Real estate investments	11,362		—		37,039		48,401
Private equity	—		—		26,129		26,129
Total	$	102,951	$	181,200	$	63,307	$	347,458



*	Level 1 securities consist of actively traded stocks while Level 2 securities consist of pooled funds. Management believes that the portfolio is well-diversified with no significant concentrations of risk.

Changes in the fair value measurement of the Level 3 items in the pension plan assets valued using significant unobservable inputs for the years ended December 31, 2013 and 2012 were as follows:



	2013					2012
	Real Estate Investments		Private Equity			Real Estate Investments		Private Equity
	(in thousands)
Beginning balance	$	37,039	$	26,129		$	34,989	$	26,053
Actual return on investments:
Related to investments held at year end	3,357		376			1,918		44
Related to investments sold during the year	1,310		2,282			132		1,396
Total return on investments	4,667		2,658			2,050		1,440
Purchases, sales, and settlements	2,433		(3,586		)	—		(1,364		)
Ending balance	$	44,139	$	25,201		$	37,039	$	26,129



	Fair Value Measurements Using
	Quoted Prices in Active Markets for Identical Assets		Significant Other Observable Inputs			Significant Unobservable Inputs
As of December 31, 2013:	(Level 1)		(Level 2)			(Level 3)		Total
	(in thousands)
Assets:
Domestic equity*	$	2,778	$	1,628		$	—	$	4,406
International equity*	2,136		1,973			—		4,109
Fixed income:
U.S. Treasury, government, and agency bonds	—		1,161			—		1,161
Mortgage- and asset-backed securities	—		303			—		303
Corporate bonds	—		1,897			—		1,897
Pooled funds	—		1,417			—		1,417
Cash equivalents and other	1		433			—		434
Real estate investments	504		—			1,939		2,443
Private equity	—		—			1,108		1,108
Total	$	5,419	$	8,812		$	3,047	$	17,278

Liabilities:
Derivatives	—		(5		)	—		(5		)
Total	$	5,419	$	8,807		$	3,047	$	17,273



*	Level 1 securities consist of actively traded stocks while Level 2 securities consist of pooled funds. Management believes that the portfolio is well-diversified with no significant concentrations of risk.



	Fair Value Measurements Using
	Quoted Prices in Active Markets for Identical Assets		Significant Other Observable Inputs		Significant Unobservable Inputs
As of December 31, 2012:	(Level 1)		(Level 2)		(Level 3)		Total
	(in thousands)
Assets:
Domestic equity*	$	2,290	$	1,319	$	—	$	3,609
International equity*	1,795		1,928		—		3,723
Fixed income:
U.S. Treasury, government, and agency bonds	—		1,016		—		1,016
Mortgage- and asset-backed securities	—		250		—		250
Corporate bonds	—		1,722		6		1,728
Pooled funds	—		1,298		—		1,298
Cash equivalents and other	9		1,078		—		1,087
Real estate investments	508		—		1,667		2,175
Private equity	—		15		1,155		1,170
Total	$	4,602	$	8,626	$	2,828	$	16,056



*	Level 1 securities consist of actively traded stocks while Level 2 securities consist of pooled funds. Management believes that the portfolio is well-diversified with no significant concentrations of risk.



	2013					2012
	Real Estate Investments		Private Equity			Real Estate Investments			Private Equity
	(in thousands)
Beginning balance	$	1,667	$	1,155		$	1,657		$	1,232
Actual return on investments:
Related to investments held at year end	108		16			107			(1		)
Related to investments sold during the year	57		104			6			80
Total return on investments	165		120			113			79
Purchases, sales, and settlements	107		(167		)	(103		)	(156		)
Ending balance	$	1,939	$	1,108		$	1,667		$	1,155

Employee Savings Plan

The Company also sponsors a 401(k) defined contribution plan covering substantially all employees. The Company provides an 85% matching contribution on up to 6% of an employee's base salary. Total matching contributions made to the plan for 2013, 2012, and 2011 were $4.1 million, $4.0 million, and $3.7 million, respectively.

Mississippi Power [Member]

RETIREMENT BENEFITS

The Company has a defined benefit, trusteed, pension plan covering substantially all employees. This qualified pension plan is funded in accordance with requirements of the Employee Retirement Income Security Act of 1974, as amended (ERISA). No contributions were made to the qualified pension plan during 2013. No mandatory contributions to the qualified pension plan are anticipated for the year ending December 31, 2014. The Company also provides certain defined benefit pension plans for a selected group of management and highly compensated employees. Benefits under these non-qualified pension plans are funded on a cash basis. In addition, the Company provides certain medical care and life insurance benefits for retired employees through other postretirement benefit plans. The Company funds its other postretirement trusts to the extent required by the FERC. For the year ending December 31, 2014, no other postretirement trust contributions are expected.

Actuarial Assumptions

The weighted average rates assumed in the actuarial calculations used to determine both the benefit obligations as of the measurement date and the net periodic costs for the pension and other postretirement benefit plans for the following year are presented below. Net periodic benefit costs were calculated in 2010 for the 2011 plan year using discount rates for the pension plans and the other postretirement benefit plans of 5.51% and 5.39%, respectively, and an annual salary increase of 3.84%.



	2013		2012		2011
Discount rate:
Pension plans	5.01	%	4.26	%	4.98	%
Other postretirement benefit plans	4.85		4.04		4.87
Annual salary increase	3.59		3.59		3.84
Long-term return on plan assets:
Pension plans	8.20		8.20		8.45
Other postretirement benefit plans	7.04		6.96		7.53



	1 Percent Increase		1 Percent Decrease
	(in thousands)
Benefit obligation	$	4,665	$	(4,004	)
Service and interest costs	224		(192		)

Pension Plans

The total accumulated benefit obligation for the pension plans was $370 million at December 31, 2013 and $392 million at December 31, 2012. Changes in the projected benefit obligations and the fair value of plan assets during the plan years ended December 31, 2013 and 2012 were as follows:



	2013			2012
	(in thousands)
Change in benefit obligation
Benefit obligation at beginning of year	$	432,553		$	369,680
Service cost	11,067			9,416
Interest cost	18,062			18,019
Benefits paid	(16,207		)	(14,949		)
Actuarial (gain) loss	(36,080		)	50,387
Balance at end of year	409,395			432,553
Change in plan assets
Fair value of plan assets at beginning of year	351,749			282,100
Actual return on plan assets	49,431			39,668
Employer contributions	2,430			44,930
Benefits paid	(16,207		)	(14,949		)
Fair value of plan assets at end of year	387,403			351,749
Accrued liability	$	(21,992	)	$	(80,804	)

At December 31, 2013, the projected benefit obligations for the qualified and non-qualified pension plans were $382 million and $28 million, respectively. All pension plan assets are related to the qualified pension plan.

Amounts recognized in the balance sheets at December 31, 2013 and 2012 related to the Company's pension plans consist of the following:



	2013			2012
	(in thousands)
Prepaid pension costs	$	5,698		$	—
Other regulatory assets, deferred	77,572			146,838
Other current liabilities	(2,134		)	(2,087		)
Employee benefit obligations	(25,556		)	(78,717		)



	2013		2012		Estimated Amortization in 2014
	(in thousands)
Prior service cost	$	4,118	$	5,261	$	1,088
Net (gain) loss	73,454		141,577		4,937
Regulatory assets	$	77,572	$	146,838

The changes in the balance of regulatory assets related to the defined benefit pension plans for the years ended December 31, 2013 and 2012 are presented in the following table:



	2013			2012
	(in thousands)
Regulatory assets:
Beginning balance	$	146,838		$	117,354
Net (gain) loss	(58,662		)	34,893
Reclassification adjustments:
Amortization of prior service costs	(1,143		)	(1,309		)
Amortization of net gain (loss)	(9,461		)	(4,100		)
Total reclassification adjustments	(10,604		)	(5,409		)
Total change	(69,266		)	29,484
Ending balance	$	77,572		$	146,838

Components of net periodic pension cost were as follows:



	2013			2012			2011
	(in thousands)
Service cost	$	11,067		$	9,416		$	8,838
Interest cost	18,062			18,019			17,827
Expected return on plan assets	(26,849		)	(24,121		)	(25,166		)
Recognized net (gain) loss	9,461			4,100			1,114
Net amortization	1,143			1,309			1,309
Net periodic pension cost	$	12,884		$	8,723		$	3,922



	Benefit Payments
	(in thousands)
2014	$	17,245
2015	18,076
2016	18,993
2017	20,172
2018	21,237
2019 to 2023	124,728

Other Postretirement Benefits

Changes in the APBO and in the fair value of plan assets during the plan years ended December 31, 2013 and 2012 were as follows:



	2013			2012
	(in thousands)
Change in benefit obligation
Benefit obligation at beginning of year	$	91,783		$	87,447
Service cost	1,151			1,038
Interest cost	3,619			4,155
Benefits paid	(4,080		)	(4,432		)
Actuarial (gain) loss	(11,959		)	3,166
Retiree drug subsidy	426			409
Balance at end of year	80,940			91,783
Change in plan assets
Fair value of plan assets at beginning of year	21,990			20,534
Actual return on plan assets	2,379			2,427
Employer contributions	2,562			3,052
Benefits paid	(3,654		)	(4,023		)
Fair value of plan assets at end of year	23,277			21,990
Accrued liability	$	(57,663	)	$	(69,793	)

Amounts recognized in the balance sheets at December 31, 2013 and 2012 related to the Company's other postretirement benefit plans consist of the following:



	2013			2012
	(in thousands)
Other regulatory assets, deferred	$	5,227		$	15,454
Other regulatory liabilities, deferred	(3,111		)	—
Employee benefit obligations	(57,663		)	(69,793		)



	2013			2012			Estimated Amortization in 2014
	(in thousands)
Prior service cost	$	(2,311	)	$	(2,498	)	$	(188	)
Net (gain) loss	4,427			17,952			—
Net regulatory assets (liabilities)	$	2,116		$	15,454



	2013			2012
	(in thousands)
Net regulatory assets (liabilities):
Beginning balance	$	15,454		$	13,324
Net (gain) loss	(12,867		)	2,600
Reclassification adjustments:
Amortization of transition obligation	—			(171		)
Amortization of prior service costs	188			188
Amortization of net gain (loss)	(659		)	(487		)
Total reclassification adjustments	(471		)	(470		)
Total change	(13,338		)	2,130
Ending balance	$	2,116		$	15,454

Components of the other postretirement benefit plans' net periodic cost were as follows:



	2013			2012			2011
	(in thousands)
Service cost	$	1,151		$	1,038		$	1,012
Interest cost	3,619			4,155			4,292
Expected return on plan assets	(1,472		)	(1,552		)	(1,763		)
Net amortization	471			470			274
Net periodic postretirement benefit cost	$	3,769		$	4,111		$	3,815



	Benefit Payments		Subsidy Receipts			Total
	(in thousands)
2014	$	5,051	$	(526	)	$	4,525
2015	5,335		(577		)	4,758
2016	5,569		(632		)	4,937
2017	5,849		(689		)	5,160
2018	6,091		(748		)	5,343
2019 to 2023	32,600		(3,793		)	28,807

Benefit Plan Assets

The composition of the Company's pension plan and other postretirement benefit plan assets as of December 31, 2013 and 2012, along with the targeted mix of assets for each plan, is presented below:



	Target		2013		2012
Pension plan assets:
Domestic equity	26	%	31	%	28	%
International equity	25		25		24
Fixed income	23		23		27
Special situations	3		1		1
Real estate investments	14		14		13
Private equity	9		6		7
Total	100	%	100	%	100	%
Other postretirement benefit plan assets:
Domestic equity	21	%	25	%	22	%
International equity	20		20		19
Fixed income	38		38		42
Special situations	3		1		1
Real estate investments	11		11		10
Private equity	7		5		6
Total	100	%	100	%	100	%

Investment Strategies

Detailed below is a description of the investment strategies for each major asset category for the pension and other postretirement benefit plans disclosed above:


•	Domestic equity. A mix of large and small capitalization stocks with generally an equal distribution of value and growth attributes, managed both actively and through passive index approaches.


•	International equity. A mix of growth stocks and value stocks with both developed and emerging market exposure, managed both actively and through passive index approaches.


•	Fixed income. A mix of domestic and international bonds.


•	Special situations. Investments in opportunistic strategies with the objective of diversifying and enhancing returns and exploiting short-term inefficiencies as well as investments in promising new strategies of a longer-term nature.


•	Real estate investments. Investments in traditional private market, equity-oriented investments in real properties (indirectly through pooled funds or partnerships) and in publicly traded real estate securities.


•	Private equity. Investments in private partnerships that invest in private or public securities typically through privately-negotiated and/or structured transactions, including leveraged buyouts, venture capital, and distressed debt.

Benefit Plan Asset Fair Values

Valuation methods of the primary fair value measurements disclosed in the following tables are as follows:

•


•	Fixed income. Investments in fixed income securities are generally classified as Level 2 investments and are valued based on prices reported in the market place. Additionally, the value of fixed income securities takes into consideration certain items such as broker quotes, spreads, yield curves, interest rates, and discount rates that apply to the term of a specific instrument.

•



	Fair Value Measurements Using
	Quoted Prices in Active Markets for Identical Assets		Significant Other Observable Inputs			Significant Unobservable Inputs
As of December 31, 2013:	(Level 1)		(Level 2)			(Level 3)		Total
	(in thousands)
Assets:
Domestic equity*	$	63,558	$	37,206		$	—	$	100,764
International equity*	48,829		45,146			—		93,975
Fixed income:
U.S. Treasury, government, and agency bonds	—		26,582			—		26,582
Mortgage- and asset-backed securities	—		6,904			—		6,904
Corporate bonds	—		43,420			—		43,420
Pooled funds	—		20,905			—		20,905
Cash equivalents and other	38		9,896			—		9,934
Real estate investments	11,546		—			44,341		55,887
Private equity	—		—			25,316		25,316
Total	$	123,971	$	190,059		$	69,657	$	383,687

Liabilities:
Derivatives	—		(115		)	—		(115		)
Total	$	123,971	$	189,944		$	69,657	$	383,572



*	Level 1 securities consist of actively traded stocks while Level 2 securities consist of pooled funds. Management believes that the portfolio is well-diversified with no significant concentrations of risk.



	Fair Value Measurements Using
	Quoted Prices in Active Markets for Identical Assets		Significant Other Observable Inputs		Significant Unobservable Inputs
As of December 31, 2012:	(Level 1)		(Level 2)		(Level 3)		Total
	(in thousands)
Assets:
Domestic equity*	$	51,433	$	29,624	$	—	$	81,057
International equity*	40,337		43,303		—		83,640
Fixed income:
U.S. Treasury, government, and agency bonds	—		22,820		—		22,820
Mortgage- and asset-backed securities	—		5,618		—		5,618
Corporate bonds	—		38,696		140		38,836
Pooled funds	—		17,656		—		17,656
Cash equivalents and other	209		24,251		—		24,460
Real estate investments	11,410		—		37,196		48,606
Private equity	—		—		26,240		26,240
Total	$	103,389	$	181,968	$	63,576	$	348,933



*	Level 1 securities consist of actively traded stocks while Level 2 securities consist of pooled funds. Management believes that the portfolio is well-diversified with no significant concentrations of risk.

Changes in the fair value measurement of the Level 3 items in the pension plan assets valued using significant unobservable inputs for the years ended December 31, 2013 and 2012 were as follows:



	2013					2012
	Real Estate Investments		Private Equity			Real Estate Investments		Private Equity
	(in thousands)
Beginning balance	$	37,196	$	26,240		$	32,434	$	24,151
Actual return on investments:
Related to investments held at year end	3,385		378			4,629		44
Related to investments sold during the year	1,316		2,300			133		3,415
Total return on investments	4,701		2,678			4,762		3,459
Purchases, sales, and settlements	2,444		(3,602		)	—		(1,370		)
Ending balance	$	44,341	$	25,316		$	37,196	$	26,240



	Fair Value Measurements Using
	Quoted Prices in Active Markets for Identical Assets		Significant Other Observable Inputs			Significant Unobservable Inputs
As of December 31, 2013:	(Level 1)		(Level 2)			(Level 3)		Total
	(in thousands)
Assets:
Domestic equity*	$	3,089	$	1,809		$	—	$	4,898
International equity*	2,375		2,193			—		4,568
Fixed income:
U.S. Treasury, government, and agency bonds	—		5,213			—		5,213
Mortgage- and asset-backed securities	—		337			—		337
Corporate bonds	—		2,109			—		2,109
Pooled funds	—		1,016			—		1,016
Cash equivalents and other	1		968			—		969
Real estate investments	560		—			2,156		2,716
Private equity	—		—			1,231		1,231
Total	$	6,025	$	13,645		$	3,387	$	23,057

Liabilities:
Derivatives	—		(5		)	—		(5		)
Total	$	6,025	$	13,640		$	3,387	$	23,052



*	Level 1 securities consist of actively traded stocks while Level 2 securities consist of pooled funds. Management believes that the portfolio is well-diversified with no significant concentrations of risk.



	Fair Value Measurements Using
	Quoted Prices in Active Markets for Identical Assets		Significant Other Observable Inputs		Significant Unobservable Inputs
As of December 31, 2012:	(Level 1)		(Level 2)		(Level 3)		Total
	(in thousands)
Assets:
Domestic equity*	$	2,561	$	1,475	$	—	$	4,036
International equity*	2,008		2,156		—		4,164
Fixed income:
U.S. Treasury, government, and agency bonds	—		5,187		—		5,187
Mortgage- and asset-backed securities	—		280		—		280
Corporate bonds	—		1,925		7		1,932
Pooled funds	—		879		—		879
Cash equivalents and other	11		1,612		—		1,623
Real estate investments	569		—		1,865		2,434
Private equity	—		14		1,293		1,307
Total	$	5,149	$	13,528	$	3,165	$	21,842



*	Level 1 securities consist of actively traded stocks while Level 2 securities consist of pooled funds. Management believes that the portfolio is well-diversified with no significant concentrations of risk.



	2013					2012
	Real Estate Investments		Private Equity			Real Estate Investments			Private Equity
	(in thousands)
Beginning balance	$	1,865	$	1,293		$	1,851		$	1,377
Actual return on investments:
Related to investments held at year end	158		18			119			(1		)
Related to investments sold during the year	64		110			7			90
Total return on investments	222		128			126			89
Purchases, sales, and settlements	69		(190		)	(112		)	(173		)
Ending balance	$	2,156	$	1,231		$	1,865		$	1,293

Employee Savings Plan

The Company also sponsors a 401(k) defined contribution plan covering substantially all employees. The Company provides an 85% matching contribution on up to 6% of an employee's base salary. Total matching contributions made to the plan for 2013, 2012, and 2011 were $4.1 million, $3.9 million, and $3.8 million, respectively.