Edison International Reports Financial Results for 2005

March 07, 2006

March 7, 2006

ROSEMEAD, Calif., March 7, 2006 —

  • Edison International (EIX) recorded consolidated earnings per common share of $3.47 in 2005, compared to $2.81 in 2004. 
  • Higher wholesale energy margins and energy trading income at Mission Energy Holding Company (MEHC) were major earnings drivers in 2005.
  • Reductions and refinancing of debt in 2004 and 2005 resulted in lower interest expense across the company.
  • Core earnings per share of $3.13 in 2005 represented an increase of about 109% over prior year’s core earnings of $1.50 per share.  Core earnings exclude earnings from discontinued operations and other non-core items.

2005 Financial Highlights:

  • Core earnings per common share - $3.13
  • Net Income - $1.1 billion
  • Revenue - $11.9 billion
  • Assets - $34.8 billion 

YEAR 2005 EARNINGS SUMMARY

For the year ending December 31, 2005, EIX recorded consolidated earnings of $1.1 billion compared to earnings of $916 million for the prior year. 

"2005 was a year of strong performance at our company,” said Chairman and CEO John Bryson.  “Earnings increased 23% over the prior year, driven primarily by our unregulated businesses.  We also fully met our ambitious investment goals to strengthen the distribution and transmission system for the benefit of our utility customers."

Results for 2005 and 2004 included several non-core adjustments detailed in the tables presented in this release.

YEAR 2005 EARNINGS DETAIL

Earnings (Loss) from Continuing Operations

Southern California Edison’s (SCE) earnings from continuing operations were $725 million in 2005, compared with $915 million in 2004.  SCE’s 2005 earnings included positive items of $61 million related to a favorable tax settlement, $55 million from a favorable Federal Energy Regulatory Commission (FERC) decision on a SCE transmission proceeding and a $14 million incentive benefit from generator refunds related to the California energy crisis period.  SCE’s 2004 earnings included $329 million of positive regulatory and tax items, primarily from implementation of the 2003 general rate case decision that was received in July 2004.  Excluding these non-core items, core earnings were up $9 million due to higher net revenue, including tax benefits, and lower financing costs, partially offset by the impact of a lower authorized rate of return on common equity in 2005.

MEHC’s income from continuing operations was $322 million in 2005, compared to a loss of $666 million in 2004.  MEHC’s 2005 results include an impairment charge of $34 million related to the March Point project and a $15-million charge related to early debt retirements.  MEHC’s 2004 results included a charge of $590 million for the termination of the Collins Station lease, a net gain of $27 million on the sale of its interest in Four Star Oil and Gas and the Brooklyn Navy Yard projects and a charge of $18 million related to a peaker impairment.  Excluding these non-core items, MEHC’s core earnings increased by $456 million over 2004 to $371 million.  This increase was primarily due to higher wholesale energy margins mainly driven by higher prices, higher energy trading income and lower net interest expense.

Earnings in 2005 for Edison Capital were $91 million compared to $60 million in the same period last year.  The increase primarily reflects higher income from Edison Capital’s investment in the Emerging Europe Infrastructure Fund.  Excluding the 2004 charge related to the early debt retirements of $14 million, the loss for “EIX parent company and other” decreased by $39 million primarily due to lower net interest expense.

Earnings from Discontinued Operations

Earnings from discontinued operations during 2005 primarily reflect positive tax adjustments of $28 million resulting from the sales of international projects, a charge of $25 million related to a tax indemnity on an international project sold in 2004, $24 million in partial dividends from the Lakeland receivership, the sale of CBK and Tri-Energy earlier this year and other items.  Earnings from discontinued operations during 2004, including a gain and recognition of a tax benefit, were $690 million.

 

Year Ended December 31,

 

Earnings (Loss) Per Common Share (Unaudited)

2005

2004

Change




  Southern California Edison

$2.22
$2.81
$(0.59)
  Mission Energy Holding Company
0.98
(2.05)
3.03
  Edison Capital
0.28
0.18
0.10
  EIX parent company and other
(0.10)
(0.25)
0.15



EIX Consol. Earnings from Continuing Operations

3.38
0.69
2.69



Earnings from Discontinued Operations – MEHC

0.09
2.12
(2.03)



Total EIX Consolidated Earnings

$3.47
$2.81
$0.66



 

Year Ended December 31,

 

Earnings (Loss) (in millions) (Unaudited)

2005

2004

Change


  Southern California Edison
$725
$915
$(190)
  Mission Energy Holding Company
322
(666)
988
  Edison Capital
91
60
31
  EIX parent company and other
(30)
(83)
53

EIX Consol. Earnings from Continuing Operations
1,108
226
882

Earnings from Discontinued Operations
30
690
(660)
Change in Accounting Principle
(1)
--
(1)

Total EIX Consolidated Earnings
$1,137
$916
$221

 

Year Ended December 31,

 

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

2005

2004

Change


  Southern California Edison
  Company
$595
$586
$9
  Mission Energy Holding Company
371
(85)
456
  Edison Capital
91
60
31
  EIX parent company and other
(30)
(69)
39

EIX Consolidated Core Earnings
1,027
492
535

Non-core items
  SCE – Regulatory and tax items
130
329
(199)
  MEHC – Collins lease termination
--
(590)
590
  MEHC – March Point impairment
(34)
--
(34)

  MEHC – Net gain on sale of
   Four Star / BNY

--
27
(27)
  MEHC – Peaker impairment
--
(18)
18
  MEHC – Early debt retirements
(15)
--
(15)
  MEHC – Discontinued operations
29
690
(661)
  EIX – Early debt retirements & other
1
(14)
15

 
111
424
(313)
Change in accounting principle
(1)
--
(1)

Total EIX Consolidated Earnings
$1,137
$916
$221

FOURTH-QUARTER EARNINGS SUMMARY

EIX recorded earnings of 83 cents per share for the quarter ending December 31, 2005, compared to $1.16 per share for the same period last year.  The results included non-core adjustments detailed in the tables below.  EIX’s core earnings were 71 cents per share for the three-month period ending December 31, 2005, compared to 35 cents per share for the same period last year.  This increase primarily reflects higher wholesale energy margins mainly driven by higher prices, and higher energy trading income, at MEHC and lower net interest expense, partially offset by higher net operating costs at SCE in the fourth quarter. 

FOURTH-QUARTER EARNINGS DETAIL

Earnings (Loss) from Continuing Operations

SCE’s earnings from continuing operations for the quarter ended December 31, 2005, were $153 million compared to $315 million in the same period last year.  SCE’s results for 2005 included a positive item of $55 million from a favorable FERC decision on SCE’s transmission proceeding and a $10 million incentive benefit from generator refunds related to the California energy crisis period.  SCE’s quarterly results in the prior year included positive regulatory and tax items totaling $157 million.  Excluding these items, SCE’s 2005 core earnings for the quarter were $88 million compared to $158 million in the same period last year.  The decrease in earnings was primarily due to higher operating and tax expenses in the fourth quarter. 

MEHC had earnings from continuing operations and core earnings of $143 million for the quarter ended December 31, 2005, compared to a loss of $52 million in the same period last year.  The increase primarily reflects higher wholesale energy margins driven by higher prices and higher energy trading income and lower net interest expense partially offset by lower generation and higher maintenance expenses at the Homer City plant. 

Edison Capital’s earnings for the quarter ended December 31, 2005, were $11 million compared to $26 million in the same period last year.  This decrease was primarily due to gains recorded in 2004 from the Emerging Europe Infrastructure Fund.

The loss for the quarter ended December 31, 2005, for “EIX parent company and other” decreased by $22 million compared to the same period last year due to the elimination of debt. 

Earnings from Discontinued Operations

MEHC had a loss of $26 million from discontinued operations for the quarter ended December 31, 2005, reflecting a tax charge related to its previously owned international projects.  Earnings from discontinued operations for the quarter ended December 31, 2004, were $120 million.  The 2004 results for the quarter include a $65-million gain on the sale of the international assets that closed in 2004 and earnings from the discontinued international projects of $55 million.

 

Quarter Ended December 31,

 

Earnings (Loss) Per Common Share (Unaudited)

2005

2004

Change


  Southern California Edison
$0.47
$0.97
$(0.50)
  Mission Energy Holding Company
0.44
(0.16)
0.60
  Edison Capital
0.03
0.08
(0.05)
  EIX parent company and other
(0.03)
(0.10)
0.07

EIX Consol. Earnings from Continuing Operations
0.91
0.79
0.12

Earnings from Discontinued Ops. – MEHC
(0.08)
0.37
(0.45)

Total EIX Consolidated Earnings
$0.83
$1.16
$(0.33)

 

Quarter Ended December 31,

 

Earnings (Loss) (in millions) (Unaudited)

2005

2004

Change


  Southern California Edison
$153
$315
$(162)
  Mission Energy Holding Company
143
(52)
195
  Edison Capital
11
26
(15)
  EIX parent company and other
(8)
(30)
22

EIX Consol. Earnings from Continuing Operations
299
259
40

Earnings from Discontinued Ops.
(26)
120
(146)
Cumulative Effect of Accounting Change
(1)
--
(1)

Total EIX Consolidated Earnings
$272
$379
$(107)

 

Quarter Ended December 31,

 

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

2005

2004

Change


  Southern California Edison
  Company
$88
$158
$(70)
  Mission Energy Holding Company
143
(52)
195
  Edison Capital
11
26
(15)
  EIX parent company and other
(8)
(16)
8

EIX Consolidated Core Earnings
234
116
118

Non-core items
  SCE – Regulatory and tax items
65
157
(92)
  MEHC – Discontinued Operations
(26)
120
(146)
  EIX – Early debt retirements
--
(14)
14

 
39
263
(224)
Cumulative Effect of Accounting Change
(1)
--
(1)

Total EIX Consolidated Earnings
$272
$379
$(107)

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 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 more accurately compare the company’s ongoing performance across periods. 

Reminder:  EIX Will Hold a Conference Call Today

Today, EIX will hold a conference call to discuss its 2005 financial results at 8 a.m. PST.  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.edisoninvestor.com.  Additional financial and other statistical information, if any, presented during the call will be available on the Web site.  The domestic call-in number is (800) 356-8584 and the ID# is 10600.  


Charts that will be referenced in the conference call follow.

Risk Disclosure Statement

This release contains “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995.  Forward-looking statements reflect Edison International’s current expectations and projections about future events based on Edison International’s knowledge of present facts and circumstances and assumptions about future events and include any statement that does not directly relate to a historical or current fact.  In this report and elsewhere, the words “expects,” “believes,” “anticipates,” “estimates,” “projects,” “intends,” “plans,” “probable,” “may,” “will,” “could,” “would,” “should,” and variations of such words and similar expressions, or discussions of strategy or of plans, are intended to identify forward-looking statements.  Such statements necessarily involve risks and uncertainties that could cause actual results to differ materially from those anticipated.  Some of the risks, uncertainties and other important factors that could cause results to differ, or that otherwise could impact Edison International or its subsidiaries, include but are not limited to: 

  • the ability of Edison International to meet its financial obligations and to pay dividends on its common stock if its subsidiaries are unable to pay dividends;
  • the ability of SCE to recover its costs in a timely manner from its customers through regulated rates;
  • decisions and other actions by the California Public Utilities Commission (CPUC) and other regulatory authorities and delays in regulatory actions;
  • market risks affecting SCE’s energy procurement activities;
  • access to capital markets and the cost of capital;
  • changes in interest rates, rates of inflation and foreign exchange rates;
  • governmental, statutory, regulatory or administrative changes or initiatives affecting the electricity industry, including the market structure rules applicable to each market and environmental regulations that could require additional expenditures or otherwise affect the cost and manner of doing business;
  • risks associated with operating nuclear and other power generating facilities, including operating risks, nuclear fuel storage, equipment failure, availability, heat rate and output;
  • the availability of labor, equipment and materials;
  • the ability to obtain sufficient insurance, including insurance relating to SCE’s nuclear facilities;
  • effects of legal proceedings, changes in or interpretations of tax laws, rates or policies, and changes in accounting standards;
  • supply and demand for electric capacity and energy, and the resulting prices and dispatch volumes, in the wholesale markets to which MEHC generating units have access;
  • the cost and availability of coal, natural gas, and fuel oil, nuclear fuel, and associated transportation;
  • the cost and availability of emission credits or allowances for emission credits;
  • transmission congestion in and to each market area and the resulting differences in prices between delivery points;
  • the ability to provide sufficient collateral in support of hedging activities and purchased power and fuel;
  • the extent of additional supplies of capacity, energy and ancillary services from current competitors or new market entrants, including the development of new generation facilities and technologies;
  • general political, economic and business conditions;
  • weather conditions, natural disasters and other unforeseen events; and
  • changes in the fair value of investments and other assets accounted for using fair value accounting.

Additional information about risks and uncertainties, including more detail about the factors described above, is contained in Edison International’s reports filed with the Securities and Exchange Commission. Readers are urged to read such reports and carefully consider the risks, uncertainties and other factors that affect Edison International’s business.  Readers also should review future reports filed by Edison International with the Securities and Exchange Commission.  The information contained in this release is subject to change without notice. Forward-looking statements speak only as of the date they are made and Edison International is not obligated to publicly update or revise forward-looking statements.

Additional Attachments:

Edison International Reports Financial Results for 2005

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Based in Rosemead, Calif., Edison International (NYSE: EIX) is the parent company of Southern California Edison and Edison Mission Group.