Edison International Reports 2002 Financial Results

February 25, 2003

February 25, 2003

ROSEMEAD, Calif., Feb. 25, 2003—Edison International (NYSE:EIX) Edison International recorded earnings of $1.1 billion or $3.31 per share in 2002 compared to $1 billion or $3.18 per share in 2001 on a reported basis.  Core earnings per share were $2.02 in 2002 compared to $1.30 in 2001.  Core earnings exclude earnings related to the implementation of the utility retained generation (URG) decision in 2002 and procurement- and generation-related adjustments in 2001 at Southern California Edison (SCE), and losses from discontinued operations at Edison Mission Energy (EME) and Edison Enterprises. 

“In 2002, we made substantial progress recovering from the California power crisis,” said EIX Chairman John Bryson.  “However, the job is not yet done.  Providing electricity is capital intensive.  To have full access to low-cost capital markets we need to restore fully our credit quality and the ability, by year-end, to declare shareholder dividends.”

2002 Earnings Detail

Earnings from Continuing Operations

SCE’s core earnings were $748 million in 2002, an increase of $340 million compared to last year.  Core earnings exclude $480 million in 2002 earnings related to the implementation of the California Public Utilities Commission’s (CPUC) URG decision in 2002 and an adjustment of $2.0 billion in 2001 to establish the Procurement Related Obligations Account (PROACT) and record the recovery of SCE’s past procurement-related costs.  As of January 31, 2003, the remaining uncollected PROACT balance was $452 million, representing a recovery of more than $3.1 billion since PROACT’s inception.  The 83% increase in SCE’s core earnings primarily reflects increased revenues resulting from the CPUC’s 2002 decision in SCE’s performance-based ratemaking (PBR) proceeding, increased earnings from SCE’s larger rate base in 2002 compared to 2001, lower interest expense, PBR rewards from prior years and increased income from Units 2 & 3 of the San Onofre Nuclear Generation Station.  The increase was partially offset by higher operating and maintenance expense.

EME’s earnings from continuing operations in 2002 were $82 million compared to $113 million in 2001.  The decrease in earnings is primarily due to lower West Coast energy prices, unplanned outages at the Homer City plant, gains related to gas swaps from EME’s oil and gas activities in 2001, the implementation of a new accounting standard for derivatives in 2001 and other net charges during 2002 totaling $50 million, after-tax, or $0.15 per share.  These net charges include a $27-million loss from a settlement agreement that terminates the obligation to build additional generation in Chicago; and a $66-million write-down of assets related to the cancellation of turbine orders, the suspension of the Powerton SCR project, and an impairment of goodwill; partially offset by a gain of $43 million from the settlement of a post-retirement employee benefit liability.  The decrease in earnings from continuing operations was partially offset by improved operating results at EME's Illinois, Loy Yang B and ISAB plants, income from the Paiton project in Indonesia, and lower state income taxes. 

Earnings from continuing operations for Edison Capital were $33 million in 2002 compared with $84 million in 2001.  The decrease in earnings was primarily the result of the write-off of an investment in aircraft leases with United Airlines totaling $34 million, after-tax, or $0.11 per share.   Also contributing to the decline in earnings was lower revenue attributable to a maturing investment portfolio and gains in 2001 associated with asset sales.  The decline in earnings was partially offset by lower interest and higher tax benefits.

The loss at Mission Energy Holding Company increased by $45 million, reflecting the issuance of debt in mid-2001.  The loss for EIX parent company and other decreased $18 million primarily from lower interest expense.                                       

Loss from Discontinued Operations

The 2002 loss from discontinued operations primarily represents the one-time asset impairment charge of $77 million, after-tax, or $0.24 per share, resulting from EME’s Lakeland project being placed into administrative receivership in the U.K., offset by $22 million, or $0.07 per share, in 2002 operating results from the Lakeland project.   The 2002 loss also includes minor adjustments related to the sale of EME’s Fiddler’s Ferry and Ferrybridge (FFF) plants and certain Edison Enterprises subsidiaries in 2001.  The 2001 loss includes one-time impairment charges resulting from the sale of FFF and the majority of Edison Enterprises’ assets, as well as operating results from the discontinued entities. 


2002 Fourth Quarter Earnings Detail
  
For the fourth quarter of 2002, EIX recorded a loss of $24 million or $0.07 per share compared to earnings of $2.2 billion or $6.65 per share for the fourth quarter of 2001 on a reported basis.  EIX’s fourth quarter 2002 core earnings were $56 million or $0.18 per share, compared with a loss of $11 million or $0.03 per share in 2001.  Core earnings exclude SCE’s procurement and generation-related adjustments and losses from discontinued operations at unregulated entities.

Earnings from Continuing Operations

SCE’s core earnings in the fourth quarter of 2002 were $153 million compared with $121 million in 2001, excluding SCE’s 2001 procurement and generation-related adjustments.  The increase of $32 million primarily reflects increased revenue from the implementation of the CPUC’s 2002 PBR decision, PBR rewards from prior years and lower interest expense, partially offset by higher operating and maintenance expense.  
 
EME’s fourth quarter 2002 loss from continuing operations was $13 million compared to a loss of $97 million in 2001.  The decrease in the loss is due in part to improved performance at the Illinois, Loy Yang B and First Hydro plants.  In addition, the fourth quarter of 2002 included a gain on the settlement of a post-retirement employee benefit liability offset by a loss related to a settlement agreement that terminates the obligation to build additional generation in Chicago.  During the fourth quarter of 2001, EME recorded after-tax charges of $24 million related to the impairment of energy projects and a partial termination of a lease for turbines.  EME’s earnings are seasonal with higher earnings during the summer and expected losses during the fall and winter months.

Edison Capital had a loss of $25 million in the fourth quarter of 2002 compared to earnings of $34 million in the same period last year.  The decrease in earnings was mainly the result of the write-off of an investment in aircraft leases with United Airlines totaling $34 million, after-tax, or $0.11 per share.  Also contributing to the decline in earnings is the recognition of 12 months of income in the fourth quarter of 2001 related to an investment that had the recognition of its revenue suspended while it was being marketed for sale as part of Edison Capital’s 2001 asset sales. 

The loss for EIX’s parent company and other decreased by $10 million primarily from a 2001 tax adjustment.

Loss from Discontinued Operations

The 2002 fourth quarter loss from discontinued operations primarily represents the one-time asset impairment charge of $77 million, after-tax, or $0.24 per share, resulting from EME’s Lakeland project being placed into administrative receivership in the U.K.  The 2002 loss also includes minor adjustments related to the sale of certain Edison Enterprises subsidiaries in 2001.  The 2001 loss includes operating results from the discontinued entities. 

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Based in Rosemead, Calif., Edison International is the parent company of Southern California Edison, Edison Mission Energy, and Edison Capital.