Edison International Reports Financial Results for the Second Quarter of 2002

August 06, 2002

August 6, 2002

ROSEMEAD, Calif., Aug. 6, 2002--Edison International (EIX) recorded core earnings per share of 56 cents in the second quarter of 2002, compared to 37 cents in the second quarter of 2001.  Core earnings exclude regulatory and procurement-related adjustments at Southern California Edison (SCE) and earnings from discontinued operations.  EIX estimates that its consolidated core earnings for the year ending December 31, 2002, will range between $1.65 and $1.75 per share.
  
SECOND-QUARTER EARNINGS DETAIL

Earnings from Continuing Operations

SCE had core earnings of $215 million in the second quarter of 2002, compared with $91 million in 2001.  This excludes a positive regulatory adjustment of $480 million in the second quarter of 2002 and unrecovered procurement-related expenses of $63 million in the same period last year.  The $124 million increase primarily reflects increased revenues from the implementation of the California Public Utilities Commission’s (CPUC) April 2002 decision in SCE’s performance-based ratemaking (PBR) proceeding.  SCE’s PBR sets distribution revenues, provides performance benchmarks and a cost of capital mechanism.  The April 2002 decision  included a sales adjustment mechanism that provided a positive revenue impact.  The increase in second-quarter earnings also reflects higher interest income and lower interest expense.

In January 2002, the CPUC approved the creation of the Procurement-Related Obligations Account (PROACT), in accordance with the settlement agreement between SCE and the CPUC, for the recovery of SCE’s past procurement-related expenses.  As of June 30, the remaining uncollected PROACT balance was $1.6 billion, reflecting recovery of approximately $2 billion from its beginning balance.

Edison Mission Energy (EME) had less than $1 million in earnings from continuing operations in the second quarter of 2002 compared to earnings of $41 million in the same period last year.  The decrease in earnings is primarily due to lower U.S. energy prices in the second quarter of 2002 compared to the second quarter of 2001, unplanned outages at the Homer City plant and gains during the second quarter of 2001 related to gas swaps from EME's oil and gas activities.  These impacts were partially offset by improved operating results from EME's Illinois plants and income from the Paiton project in Indonesia.  On an annual basis, EME's earnings are seasonal with higher earnings expected during the summer months and operating losses expected during the fall and winter months.       

Edison Capital’s earnings for the second quarter of 2002 were $12 million, compared to $24 million from the same period last year.  The decrease in 2002 is primarily the result of a decrease in earning assets, the impact of adopting the equity method of accounting in conformance with the infrastructure funds’ accounting policies, and no significant asset sales in 2002, partially offset by lower expenses and an absence of affordable housing adjustments made in 2001.

The $24 million loss at Mission Energy Holding Company reflects the interest expense from the mid-2001 financing.  EIX parent company’s loss decreased $13 million primarily from lower EIX interest expense.

In the second quarter of 2002, SCE implemented the CPUC’s April 2002 decision in its utility-retained generation (URG) proceeding that determined ratemaking for SCE’s generating plants.  The decision allows recovery of actual incurred costs for all utility-retained generation, except San Onofre Nuclear Generating Station (SONGS) Units 2 & 3, which retain the incremental cost incentive pricing mechanism through 2003.  Based on this decision, SCE reestablished its unamortized regulatory assets associated with its nuclear facilities and other generation-related assets, resulting in a one-time, after-tax positive earnings adjustment of $480 million.   

Earnings (Loss) from Discontinued Operations

The second-quarter financial results include earnings from discontinued operations of $3 million in 2002.  This contrasts with a loss from discontinued operations of $161 million for the same period last year.  The 2002 earnings resulted from the recovery of an insurance claim related to the operation of the Fiddler’s Ferry and Ferrybridge (FFF) projects prior to their sale in 2001.  The loss in 2001 reflects operating results from FFF and Edison Enterprises and a one-time impairment charge of $117 million, resulting from the sale of the majority of Edison Enterprises’ assets. 

2002 Second-Quarter Reported Earnings

For the second quarter of 2002, Edison International recorded earnings of $665 million, or $2.04 per share, versus a loss of $102 million, or 31 cents per share, for the second quarter of 2001.

Quarter Ended June 30,

Earnings (Loss) Per Share (Unaudited)                       

      2002

         2001

    Change

Core Earnings:
  Southern California Edison

$0.66

$0.28

$0.38

  Edison Mission Energy

--

0.12

(0.12)

  Edison Capital

0.04

0.08

(0.04)

  Mission Energy Holding Co.

(0.07)

--

(0.07)

  EIX parent company and other                                          

    (0.07)

        (0.11)

           0.04

Edison International Core Earnings                                      

      0.56

          0.37

          0.19

  SCE procurement-related adjustment

--

(0.19)

0.19

  SCE implementation of URG decision                               

      1.47

              --

           1.47

EIX Consol. Earnings from Continuing Ops.

2.03

0.18

1.85

============================================================================

Earnings (Loss) from Discontinued Ops.
  EME’s FFF Projects

0.01

(0.12)

0.13

  Edison Enterprises Companies                                          

           --

        (0.37)

           0.37

EIX Consol. Earnings (Loss) from Discontinued Ops.

0.01

(0.49)

0.50

============================================================================

Total EIX Consolidated Earnings (Loss)

$2.04

$(0.31)

$2.35

============================================================================

Quarter Ended June 30,

Earnings (Loss) (in millions) (Unaudited)                       

        2002

       2001

      Change

Core Earnings:
  Southern California Edison

$215

$91

$124

  Edison Mission Energy

--

41

(41)

  Edison Capital

12

24

(12)

  Mission Energy Holding Co.

(24)

--

(24)

  EIX parent company and other                                              

         (21)

        (34)

               13

Edison International Core Earnings                                          

          182

         122

               60

  SCE procurement-related adjustment

--

(63)

63

  SCE implementation of URG decision                                    

          480

             --

              480

EIX Consol. Earnings from Continuing Ops. 

662

59

603

============================================================================

Earnings (Loss) from Discontinued Ops.
  EME’s FFF Projects

3

(41)

44

  Edison Enterprises Companies                                              

              --

       (120)

             120

EIX Consol. Earnings (Loss) from Discontinued Ops.

3

(161)

164

============================================================================

Total EIX Consolidated Earnings (Loss)

$665

$(102)

$767

============================================================================

YEAR-TO-DATE EARNINGS SUMMARY

Edison International had core earnings of $266 million for the six-month period ended June 30, 2002, compared with core earnings of $153 million for the same period last year.  The core earnings for the current six-month period exclude SCE’s URG implementation adjustment of $480 million and EME’s earnings from discontinued operations of $3 million.  The core earnings for the prior six-month period ending June 30, 2001, exclude SCE’s unrecovered generation-related power costs from the first half of 2001 totaling $724 million, EME’s loss from discontinued operations of $22 million, and Edison Enterprises’ loss from continuing operations of $126 million, which includes the one-time adjustment of $117 million reflecting the sales of Edison Select and Edison Source. 

YEAR-TO-DATE EARNINGS DETAIL

Earnings (Loss) from Continuing Operations

Excluding SCE’s adjustment in 2002 of $480 million to implement the CPUC’s URG decision and its procurement-related charge against earnings in 2001 of $724 million after tax, SCE’s earnings from continuing operations in the first half of 2002 increased by $207 million, compared to the same period last year.  The increase primarily reflects increased revenues from the implementation of the CPUC’s decision in SCE’s PBR proceeding, increased income from SONGS Units 2 & 3, due to an absence of an outage in the first quarter of 2002, higher interest income and lower interest expense.

Earnings from continuing operations for the six-month period ending June 30, 2002, compared to the same period last year decreased at Mission Energy Holding Company by $46 million, decreased at EME by $66 million, and decreased at Edison Capital by $5 million.  For the six-months ended June 30, 2002, the EIX parent company’s loss decreased by $23 million compared to the six-month period ending June 30, 2001.  Explanations for variations in earnings from these units are consistent with the descriptions provided in the preceding quarterly analysis.

Earnings (Loss) from Discontinued Operations

The financial results for the six months ended June 30, 2002 include earnings from discontinued operations of $3 million in 2002 and a loss from discontinued operations of $148 million for the same period last year.  The 2002 earnings resulted from the recovery of an insurance claim related to the operation of the FFF Projects prior to their sale in 2001.  The loss in 2001 reflects operating results from FFF and Edison Enterprises and a one-time impairment charge resulting from the sale of the majority of Edison Enterprises’ assets. 
      
Year-To-Date Reported Earnings

Edison International recorded earnings of $749 million on a reported basis, year-to-date, compared to a loss of $719 million for the same period last year.

Year-To-Date Ended June 30,

Earnings (Loss) Per Share (Unaudited)                     

      2002

         2001

    Change

Core Earnings:

 

 

 

  Southern California Edison

$1.11

$0.47

$0.64

  Edison Mission Energy

(0.11)

0.10

(0.21)

  Edison Capital

0.09

0.11

(0.02)

  Mission Energy Holding Co.

(0.14)

--

(0.14)

  EIX parent company and other                                        

    (0.13)

      (0.21)

           0.08

Edison International Core Earnings                                   

     0.82

         0.47

           0.35

  SCE procurement-related adjustment

--

(2.22)

2.22

  SCE implementation of URG decision                             

     1.47

             --

           1.47

EIX Consol. Earnings (Loss) from Continuing Ops.

2.29

(1.75)

4.04

==========================================================================

Earnings (Loss) from Discontinued Ops.
  EME’s FFF Projects

0.01

(0.07)

0.08

  Edison Enterprises Companies                                       

         --

       (0.39)

          0.39

EIX Consol. Earnings (Loss) from Discontinued Ops.

0.01

(0.46)

0.47

==========================================================================

Total EIX Consolidated Earnings (Loss)

$2.30

$(2.21)

$4.51

==========================================================================

Year-To-Date Ended June 30

Earnings (Loss) (in millions) (Unaudited)                   

     2002

         2001

    Change

Core Earnings:

 

 

 

  Southern California Edison

$361

$154

$207

  Edison Mission Energy

(36)

30

(66)

  Edison Capital

31

36

(5)

  Mission Energy Holding Co.

(46)

--

(46)

  EIX parent company and other                                        

    (44)

         (67)

              23

Edison International Core Earnings                                   

     266

         153

             113

  SCE procurement-related adjustment

--

(724)

724

  SCE implementation of URG decision                             

     480

             --

           480

EIX Consol. Earnings (Loss) from Continuing Ops.

746

(571)

1,317

==========================================================================

Earnings (Loss) from Discontinued Ops.
  EME’s FFF Projects

3

(22)

25

  Edison Enterprises Companies                                       

         --

       (126)

          126

EIX Consol. Earnings (Loss) from Discontinued Ops.

3

(148)

151

==========================================================================

Total EIX Consolidated Earnings (Loss)

$749

$(719)

$1,468

==========================================================================

Liquidity at June 30, 2002
($ millions) (Unaudited)

EIX Only

SCE

MEHC Only

EME Only

EC

Cash and equivalents (a)   

135

842

30

31 (b)

224

Short-term debt

--

--

--

--

19

Credit available under existing credit lines

--

--

--

681 (c)

--

(a)  Excludes restricted cash.
(b)  Consolidated EME equals $343
(c)  $538 expires on September 17, 2002.

This release contains forward-looking statements about the future earnings of Edison International and its subsidiaries.  We believe these statements to be accurate and well-founded.  However, actual results could differ materially from current expectations.  Some important factors that could cause different results are set forth in Edison International's Annual Report on Form 10-K for the year ended December 31, 2001, Quarterly Report on Form 10-Q for the quarter ended March 31, 2002, and Current Report on Form 8-K dated July 1, 2002.  Readers also are encouraged to read Edison International's second quarter Form 10-Q report when it is filed next week.

Additional Attachments:

# # #

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