Edison International Reports 2007 Second Quarter Earnings

August 09, 2007

August 9, 2007

  • Second quarter 2007 basic earnings per common share were $0.29, down $0.25 per share from the second quarter of 2006, primarily from non-core items, including a second quarter 2007 charge for early debt extinguishment at the independent power business. 
  • Second quarter core earnings1  grew 33% to $0.73 per share primarily due to improved margins at the independent power business.
  • Year-to-date basic earnings per common share were $1.29, down 2% from the prior period, while core earnings were $1.63 per share, up 48% from the prior year period, driven by higher energy margins in the independent power business and solid results at the utility.
  • 2007 total earnings guidance is increased to $2.90 – $3.25 per share, and 2007 core earnings guidance1 is increased to $3.24 – $3.59 per share.

Edison International Financial Highlights

 

 

 

                 Quarter Ended June 30,

      Change  

(In millions, except per share data)

              2007

           2006

         $

          % 


Basic earnings per common share

$0.29

$0.54

        $(0.25)

(46%)

Core earnings per common share

$0.73

$0.55

         $  0.18  

33%

Net income

$   93

$ 177

        $   (84)

(47%)

Net cash provided by operating activities

$ 526

$ 450

        $     76  

17%

Total assets
$ 36,983
$35,151
       $1,832

 5%


1 Core earnings is a non-GAAP financial measure; see reconciliation of core earnings to reported earnings and reconciliation of core earnings guidance to total earnings guidance.


SECOND QUARTER EARNINGS SUMMARY


       ROSEMEAD, Calif., August 9, 2007 – Edison International (NYSE: EIX) today reported consolidated net income of $93 million, or basic earnings per common share of $0.29, in the second quarter of 2007, compared to consolidated net income of $177 million, or $0.54 basic earnings per common share, in the same period last year.  Excluding discontinued operations and other non-core items, Edison International’s second quarter core earnings per share were $0.73, up 33% over core earnings per share in the same period last year.    

        "Edison International’s financial position is strong,” said John E. Bryson, chairman and CEO.  “With a solid first half behind us, and a favorable outlook, this sets the stage for increasing our 2007 earnings guidance.”


SECOND QUARTER EARNINGS DETAIL

Earnings (Loss) from Continuing Operations

        Southern California Edison Company’s (SCE) 2007 second quarter earnings from continuing operations were $144 million, or $0.44 per share, compared to earnings of $234 million, or $0.72 per share, in the same period last year.  SCE’s 2006 second quarter results include a non-core benefit of $81 million, or $0.25 per share, related to the resolution of an outstanding issue involving a portion of revenue collected during 2001-2003 related to state income taxes.  Excluding this item, SCE’s core earnings decreased by $9 million, or $0.03 per share, from the second quarter of 2006.  This decrease was primarily due to the catch-up adjustment upon receipt of the 2006 general rate case decision in May of last year, which was effective back to January 12, 2006, partially offset by the favorable resolution of an outstanding state income tax issue.

        Edison Mission Group’s (EMG) 2007 second quarter loss from continuing operations was $49 million, or $0.15 per share, compared to a loss of $56 million, or $0.17 per share in the same period last year.  EMG's second quarter results in both 2007 and 2006 were impacted by non-core after-tax charges of $148 million and $88 million, respectively, associated with early extinguishment of debt.  Excluding these charges, EMG's 2007 second quarter core earnings were $99 million, or $0.30 per share, an improvement of $67 million, or $0.20 per share, over the second quarter of 2006.  The improvement was primarily due to an increase in energy margins at Midwest Generation, driven by higher generation and average realized energy prices, and higher earnings from Edison Capital.

Earnings from Discontinued Operations

        Edison International’s earnings from discontinued operations were $2 million and $4 million in the second quarter of 2007 and 2006, respectively, or $0.01 per share in each period related to EMG’s former international projects.

 

 

Quarter Ended June 30,

 

Earnings (Loss) Per Common Share (Unaudited)

                  2007

                2006

           Change


 

     Southern California Edison Company

                  $0.44

             $0.72

             $(0.28)

     Edison Mission Group

                   (0.15)

              (0.17)

                0.02

     EIX parent company and other

                   (0.01)

              (0.02)

                0.01


 

EIX basic earnings per common share from        
continuing operations


                    0.28


        0.53


   (0.25)


 

Earnings from discontinued operations

                    0.01

                 0.01

 —  


 

EIX basic earnings per common share

                  $0.29

               $0.54

               $(0.25)


 

EIX diluted earnings per common share

  $0.28

      $0.54

    $(0.26)


         

 

Quarter Ended June 30,

 

Earnings (Loss) (in millions) (Unaudited)

                   2007

              2006

           Change


     Southern California Edison Company

                   $144

            $234

               $(90)

     Edison Mission Group

                      (49)

               (56)

                   7

     EIX parent company and other

                        (4) 

                   (5)  

                   1


 

EIX income from continuing operations

                       91

              173

                 (82)


 

Income from discontinued operations

                         2

                  4

                    (2)  


 

EIX net income

          $93  

       $177   

       $(84)



YEAR-TO-DATE EARNINGS SUMMARY

        Edison International recorded net income of $426 million, or $1.29 per share, for the six-month period ending June 30, 2007, compared to $435 million, or $1.32 per share, for the same period last year.  Edison International had earnings from continuing operations of $421 million, or $1.28 per share, for the six-month period ended June 30, 2007, compared with $357 million, or $1.08 per share, for the same period last year.  Excluding earnings from discontinued operations and other non-core items, Edison International’s core earnings for the six-month period were $538 million, or $1.63 per share, in 2007, compared to $364 million, or $1.10 per share, in the same period in 2006.   


YEAR-TO-DATE EARNINGS DETAIL

Earnings (Loss) from Continuing Operations

        SCE’s earnings from continuing operations in the first half of 2007 were $325 million, or $1.00 per share, a decrease of $30 million, or $0.09 per share, compared to the same period last year.  SCE’s 2007 results include a non-core tax benefit of $31 million, or $0.10 per share, primarily reflecting progress on an appeal with the Internal Revenue Service related to the income tax treatment of certain costs associated with environmental remediation.  SCE’s 2006 results include a non-core benefit of $81 million, or $0.25 per share, related to the resolution of an outstanding issue involving a portion of revenue collected during 2001-2003 related to state income taxes.  Excluding non-core items, SCE’s core earnings were $294 million, or $0.90 per share, compared to $274 million, or $0.84 per share, in the same period last year, mainly due to higher revenue associated with the 2006 general rate case decision and lower taxes from the favorable resolution of an outstanding state income tax issue.

        EMG’s earnings from continuing operations for the first six months of 2007 were $106 million, or $0.33 per share, up $89 million, or $0.28 per share, from the same period last year.  Both 2007 and 2006 results were impacted by non-core after-tax charges of $148 million and $88 million, or $0.45 and $0.27 per share, respectively, associated with early extinguishment of debt.  Excluding non-core items, EMG’s core earnings were $254 million, or $0.78 per share, an increase of $149 million, or $0.46 per share.  This increase primarily reflects higher energy margins at Midwest Generation and Homer City mainly due to higher average realized energy prices and generation, and higher earnings from Edison Capital. 
 

Earnings from Discontinued Operations

        Edison International’s earnings from discontinued operations were $5 million for the six-month period ending June 30, 2007, compared to $77 million for the same period last year, with both years’ earnings resulting primarily from distributions from EMG’s Lakeland project in administrative receivership in the United Kingdom.

     

 

Year-to-Date June 30,

 

Earnings (Loss) Per Common Share (Unaudited)

                  2007

                2006

           Change


     Southern California Edison Company

                  $1.00

              $1.09

             $(0.09)

     Edison Mission Group

                    0.33

                0.05

                0.28 

     EIX parent company and other

                    (0.05)

               (0.06)

                0.01


EIX basic earnings per common share
from continuing operations

                  
                     1.28

             
 1.08 

              
0.20


Earnings from discontinued operations

                    0.01

           0.24 

                (0.23)


EIX basic earnings per common share

                  $1.29

            $1.32 

            $(0.03)


EIX diluted earnings per common share

                   $1.29

           $1.32 

            $(0.03)


           

 

Year-to-Date June 30,

 

Earnings (Loss) (in millions) (Unaudited)

                   2007

              2006

           Change


     Southern California Edison Company

                   $325

            $355

               $(30)

     Edison Mission Group

                     106

                17

                 89

     EIX parent company and other

                       (10)  

                 (15) 

                   5


EIX income from continuing operations

                      421

              357

                 64


Income from discontinued operations

                         5

                77

                  (72)


Cumulative effect of accounting change – net of tax

                     —

                  1

                    (1)


EIX net income                      $426               $435                   $(9)



Reconciliation of Core Earnings Guidance to Total Earnings Guidance

 

 

 

 

2007

 

2007

 

 

 

 

Guidance

 

Guidance

 

Core EPS

 

 

Effective 5/9/07

 

Updated 8/9/07


 

      Southern California Edison Company

 

 

$1.97 – 2.07

 

$1.97 – 2.07

 

      Edison Mission Group

 

 

  1.21 – 1.51

 

  1.40 – 1.65

 

      EIX Holding Co.

 

 

(0.13)

 

(0.13)


 

          Core

 

 

$3.05 – 3.45

 

$3.24 – 3.59


 

 Non-Core Items1

 

 

 

 

 

 

      Southern California Edison Company

 

 

0.10

 

0.10

 

      Edison Mission Group

 

 

(0.45)

 

(0.44)


 

          Total Non-Core Items

 

 

(0.35)

 

(0.34)


 

          Total

 

 

$2.70 – 3.10

 

$2.90 – 3.25


1

2007 non-core items reflect refinancing costs of $(0.45) for EMG and a tax benefit of $0.10 for SCE.  The 2007 guidance effective 08/09/07 also reflects $0.01 from discontinued operations.

        Edison International's earnings are prepared in accordance with generally accepted accounting principles used in the United States and represent the company's earnings as reported to the Securities and Exchange Commission.  Edison International's management uses core earnings, which exclude earnings from discontinued operations and certain other non-core items, internally for financial planning and for analysis of performance.  Edison International also uses core earnings as the primary performance measurement when communicating with analysts and investors regarding its earnings results and outlook as it allows them to better compare the company’s ongoing performance across periods.  Core earnings per share are reconciled to basic earnings per common share. 


Second Quarter Reconciliation of Core Earnings to Reported Earnings

 

Quarter Ended June 30,

 

Core Earnings (Loss) Per Common Share (Unaudited)

2007

2006

Change


     Southern California Edison Company

                 $0.44

            $0.47

      $(0.03)

     Edison Mission Group

                   0.30

              0.10

               0.20

     EIX parent company and other

                  (0.01)

             (0.02)

               0.01


EIX core earnings per share

    0.73 

               0.55

               0.18


Non-core items

 

 

 

     SCE – regulatory/tax item

                    —

            0.25

              (0.25)

     EMG – early debt retirement

                   (0.45)

             (0.27)

              (0.18)

     EMG – earnings from discontinued operations

                   0.01

             0.01

                —


Total non-core items    

                   (0.44)

             (0.01)

              (0.43)


 

EIX basic earnings per common share

                 $0.29

           $0.54

            $(0.25)





 

Quarter Ended June 30,

 

Core Earnings (Loss) (in millions) (Unaudited)

                 2007

               2006

         Change


 

     Southern California Edison Company

                  $144

             $153

               $(9)

     Edison Mission Group

                      99

                 32

                67

     EIX parent company and other

                       (4)

                   (5)

                  1


 

EIX core earnings

                    239

                 180  

                59


 

 

 

 

 

Non-core items

 

 

 

     SCE – regulatory/tax item

                 —

                81  

               (81)

     EMG – early debt retirement

                    (148)

                 (88)

               (60)

     EMG – income from discontinued operations

                        2

                    4 

                  (2)


Total non-core items

                    (146)

                  (3)

              (143)


 

Total EIX net income

                     $93

              $177

              $(84)




Year-to-Date Reconciliation of Core Earnings to Reported Earnings

 

Year-to-date June 30,

 

Core Earnings (Loss) Per Common Share (Unaudited)

2007

  2006

Change


     Southern California Edison Company

                 $0.90

            $0.84

             $0.06

     Edison Mission Group

                   0.78

              0.32

               0.46

     EIX parent company and other

                  (0.05)

             (0.06)

               0.01


 

EIX core earnings per share

                    1.63

               1.10

               0.53


 

 

 

 

Non-core items

 

 

 

     SCE – regulatory/tax items

                   0.10

       0.25 

              (0.15)

     EMG – early debt retirement

                   (0.45)

             (0.27)

              (0.18)

     EMG – earnings from discontinued operations

                   0.01

             0.24

              (0.23)


 

Total non-core items    

                   (0.34)

             0.22

              (0.56)


 

 

 

 

 

EIX basic earnings per common share

                 $1.29

           $1.32

            $(0.03)

 


 

Year-to-date June 30,

 

Core Earnings (Loss) (in millions) (Unaudited)

                 2007

               2006

         Change


     Southern California Edison Company

                  $294

             $274

                $20 

     Edison Mission Group

                    254

               105

                149 

     EIX parent company and other

                      (10)

                 (15)

                   5 


 

EIX core earnings

                    538

                364

               174 


 

 

 

 

Non-core items

 

 

 

     SCE – regulatory/tax items

                      31

                 81  

               (50)

     EMG – early debt retirement

                    (148)

                 (88) 

               (60)

     EMG – income from discontinued operations

                        5

                  77 

             (72)


Total non-core items

                    (112)

                 70 

             (182)


 

 

 

 

Cumulative effect of accounting change – net of tax

                 —

                   1

                   (1)


 

 

 

 

Total EIX net income

                   $426

             $435

               $(9)


Reminder:  Edison International Will Hold a Conference Call Today

       Today, Edison International will hold a conference call to discuss its second quarter 2007 financial results at 8 a.m. (Pacific daylight time).  Although two-way participation in the telephone call is limited to financial analysts and investors, all other interested parties are invited to participate in a “listen-only mode” through a simultaneous webcast on the company’s Web site at www.edison.com.  A presentation accompanying management’s comments on the conference call will be available on the web site as well.  The domestic call-in number is (800) 356-8584 and the ID# is 11300.  In addition to the live simulcast, the webcast will remain posted on the Edison International Web site and telephone replays will be available through Thursday, August 16, 2007, at the following numbers:  (877) 693-4277 – for callers in the U.S.; and (402) 220-0042 – for international callers.  The PIN Number is 11301. 
  

Risk Disclosure Statement 

       Statements contained in this presentation about future performance, including, without limitation, earnings, asset and rate base growth, load growth, capital investments, and other statements that are not purely historical, are forward-looking statements.  These forward-looking statements reflect our current expectations; however, such statements involve risks and uncertainties.  Actual results could differ materially from current expectations.  Important factors that could cause different results are discussed under the headings “Risk Factors” and “Management’s Discussion and Analysis” in Edison International’s 2006 Form 10-K and subsequent reports filed with the Securities and Exchange Commission and are available on our website: www.edison.com. These forward-looking statements represent our expectations only as of the date of this presentation, and Edison International assumes no duty to update them to reflect new information, events or circumstances.

# # #


       Edison International, through its subsidiaries, is a generator and distributor of electric power and an investor in infrastructure and energy assets, including renewable energy.  Headquartered in Rosemead, California, Edison International is the parent company of Southern California Edison, a regulated electric utility, and Edison Mission Group, a competitive power generation business and parent company to Edison Mission Energy and Edison Capital.

 

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Investor Relations: Scott Cunningham, (626) 302-2540
www.edisoninvestor.com

Media Relations: Charles Coleman, (626) 302-7982
www.edisonnews.com

Edison International Reports 2007 Second Quarter Earnings