Edison International Reports Financial Results for the Third Quarter of 2002

November 01, 2002

November 1, 2002

ROSEMEAD, Calif., November 1, 2002 -- Edison International (NYSE: EIX) recorded core earnings per share of $1.08 in the third quarter of 2002, compared to 87 cents in the third quarter of 2001.  Core earnings exclude procurement and generation-related adjustments at Southern California Edison (SCE) and results from discontinued operations. 

THIRD-QUARTER EARNINGS DETAIL

Earnings from Continuing Operations

SCE’s core earnings in the third quarter of 2002 were $234 million compared with $133 million in the third quarter of 2001.  This excludes the recovery of previously incurred procurement and generation-related costs of approximately $518 million, after tax, in the third quarter of 2001.  The $101 million increase in core earnings primarily reflects higher revenues from the implementation of the California Public Utilities Commission’s (CPUC) April decisions regarding SCE’s performance-based ratemaking (PBR) and utility retained generation (URG).  The increase in third quarter earnings also reflects rewards from SCE’s prior year’s performance under its PBR mechanism and lower interest expense.  The increase was partially offset by higher operating and maintenance 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 September 30, the remaining uncollected PROACT balance was $905 million, a recovery of approximately $2.7 billion.

Edison Mission Energy’s (EME) earnings from continuing operations in the third quarter of 2002 were $149 million compared to earnings of $180 million in the same period last year.  The decrease in earnings is primarily due to $66 million (after-tax) in write-offs of capitalized costs and lower energy prices in the United States.  The write-offs included $37 million related to the cancellation of turbine orders, $15 million related to the suspension of capital improvements at the Powerton plant in Illinois, and $14 million of goodwill related to trading and marketing operations.  In addition, there were gains of $15 million, after tax, in the third quarter of 2001 related to accounting for derivatives.  The decrease was partially offset by lower state income taxes, improved operating results at 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 third quarter of 2002 were $27 million, compared to $14 million in the same period last year.  The increase is primarily due to lower state income taxes and interest expense, partially offset by the lack of asset sales in 2002.

The $24 million loss at Mission Energy Holding Company reflects interest expense.  The loss for EIX parent company and other increased $15 million primarily due to a loss at Edison Insurance Services and an asset impairment charge at Edison O&M Services. 

Earnings (Loss) from Discontinued Operations

The earnings (loss) from discontinued operations represent operating results and minor adjustments as well as impairment charges from the sale of EME’s Fiddler’s Ferry and Ferrybridge plants (FFF) and certain Edison Enterprises subsidiaries.  The loss in the third quarter of 2001 includes a one-time impairment charge of $1.15 billion, resulting from the sale of FFF. 

2002 Third-Quarter Reported Earnings

For the third quarter of 2002, Edison International recorded earnings of $352 million, or $1.08 per share, on a reported basis, versus a loss of $413 million, or $1.27 per share, for the third quarter of 2001.

Quarter Ended Sept. 30,

Earnings (Loss) Per Share (Unaudited)                      

      2002

         2001

    Change

Core Earnings:
  Southern California Edison

$0.72 

$0.41

$0.31

  Edison Mission Energy

0.46 

0.55

(0.09)

  Edison Capital

0.08 

0.05

0.03

  Mission Energy Holding Co.

(0.07) 

(0.08)

0.01

  EIX parent company and other                                         

      (0.11)

        (0.06)

        (0.05)

Edison International Core Earnings                                      

        1.08

          0.87

          0.21

  SCE procurement and generation-related adj.                   

            -- 

          1.59

        (1.59)

EIX Consol. Earnings from Continuing Ops.

       1.08 

           2.46

         (1.38)

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

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

-- 

(3.71) 

3.71

  Edison Enterprises Companies                                          

             -- 

        (0.02)

            0.02

EIX Consol. Earnings (Loss) from Discontinued Ops.

--

(3.73)

3.73

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

Total EIX Consolidated Earnings (Loss)

$1.08

$(1.27)

$2.35

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

Quarter Ended Sept. 30,

Earnings (Loss) (in millions) (Unaudited)              

      2002

        2001

    Change

Core Earnings:
  Southern California Edison

$234

$133

$101

  Edison Mission Energy

149

180

(31)

  Edison Capital

27

14

13

  Mission Energy Holding Co.

(24)

(24)

--

  EIX parent company and other                                      

         (35)

           (20)

            (15)

Edison International Core Earnings                                

         351

           283

              68

  SCE procurement and generation-related adj.              

           --

           518

         (518)

EIX Consol. Earnings from Continuing Ops.

351

801

(450)

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

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

--

(1,207)

1,207

  Edison Enterprises Companies                                     

             1

              (7)

                8

EIX Consol. Earnings (Loss) from Discontinued Ops.

1

(1,214)

1,215

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

Total EIX Consolidated Earnings (Loss)

$352

$(413)

$765

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

YEAR-TO-DATE EARNINGS SUMMARY

Edison International had core earnings of $617 million for the nine-month period ended September 30, 2002, compared with core earnings of $435 million for the same period last year.  Core earnings for the current nine-month period exclude an adjustment of approximately $480 million at SCE for the URG implementation and $4 million of earnings from discontinued operations at EME and Edison Enterprises.  Core earnings in the prior nine-month period ended September 30, 2001, exclude SCE’s unrecovered procurement and generation-related costs of $205 million, and a loss from discontinued operations of $1.36 billion at EME and Edison Enterprises. 

YEAR-TO-DATE EARNINGS DETAIL

Earnings from Continuing Operations

SCE’s core earnings were $595 million in the first nine months of 2002, an increase of $308 million compared to the same period last year.  This excludes an adjustment in 2002 of $480 million related to the URG decision and a $205 million charge against earnings in 2001 for procurement and generation-related costs.  The increase primarily reflects higher revenues from the implementation of the CPUC’s decisions regarding the PBR and URG proceedings, lower interest expense and increased income from SONGS Units 2 & 3.  The increase was partially offset by higher operating and maintenance and depreciation expense.

EME had core earnings of $113 million for the nine-month period ending September 30, 2002, compared to $211 million for the same period last year.  The decrease is primarily due to write-offs of $66 million (after-tax) of capitalized costs, lower energy prices in the United States, unplanned outages at the Homer City plant and gains related to gas swaps from EME’s oil and gas activities which occurred in 2001.  The write-offs were recorded in the third quarter of 2002 and included $37 million related to the cancellation of turbine orders, $15 million related to the suspension of capital improvements at the Powerton plant in Illinois, and $14 million of goodwill related to trading and marketing operations.  In addition, there were gains of $15 million, after tax, in the third quarter of 2001 related to accounting for derivatives.  The decrease was partially offset by improved operating results at EME's Illinois plants and the ISAB project in Italy, lower state income taxes and income from the Paiton project in Indonesia. 

Edison Capital’s year-to-date earnings for 2002 were $58 million, compared to $50 million from the same period last year.  The increase includes the result of lower state income taxes and interest expense, partially offset by the lack of asset sales in 2002.

The $70 million loss at Mission Energy Holding Company reflects interest expense.  The loss for EIX parent company and other decreased $10 million primarily from lower interest, partially offset by a loss at Edison Insurance Services and an asset impairment charge at Edison O&M Services.                                       

In the second quarter of 2002, SCE implemented the URG decision issued by the CPUC in April 2002.  This decision allows for the recovery of actual incurred costs for all utility-retained generation, except SONGS Units 2 & 3, which operates under an incremental cost incentive pricing (ICIP) mechanism through 2003.  Based on this URG decision, SCE reestablished its generation-related regulatory assets, resulting in a one-time, after-tax earnings increase of $480 million.   

Earnings (Loss) from Discontinued Operations

The earnings (loss) from discontinued operations represent operating results and minor adjustments as well as impairment charges from the sale of EME’s Fiddler’s Ferry and Ferrybridge plants (FFF) and certain Edison Enterprises subsidiaries.  The 2001 year-to-date loss includes a one-time impairment charge of $1.15 billion, resulting from the sale of FFF and a one-time impairment charge of $117 million resulting from the sale of the majority of Edison Enterprises’ assets. 
     
Year-To-Date Reported Earnings

Edison International, on a reported basis, recorded year-to-date earnings of $1.10 billion compared to a loss of $1.13 billion for the same period last year. 

Nine Months Ended Sept. 30,
Earnings (Loss) Per Share (Unaudited)               

      2002

        2001

    Change

Core Earnings:
  Southern California Edison

$1.83

$0.88

$0.95

  Edison Mission Energy

0.35

0.65

(0.30)

  Edison Capital

0.18

0.15

0.03

  Mission Energy Holding Co.

(0.22)

(0.08)

(0.14)

  EIX parent company and other                                    

        (0.24)

      (0.26)

            0.02

Edison International Core Earnings                               

         1.90

         1.34

            0.56

  SCE procurement and generation-related adj.

--

(0.63)

0.63

  SCE implementation of URG decision                          

         1.47

              --

            1.47

EIX Consol. Earnings from Continuing Ops.

3.37

0.71

2.66

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

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

0.01

(3.77)

3.78

  Edison Enterprises Companies                                    

            --

       (0.41)

           0.41

EIX Consol. Earnings (Loss) from Discontinued Ops.

0.01

(4.18)

4.19

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

Total EIX Consolidated Earnings (Loss)

$3.38

$(3.47)

$6.85

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

Nine Months Ended Sept. 30,
Earnings (Loss) (in millions) (Unaudited)                 

      2002

        2001

    Change

Core Earnings:
  Southern California Edison

$595

$287

$308

  Edison Mission Energy

113

211

(98)

  Edison Capital

58

50

8

  Mission Energy Holding Co.

(70)

(24)

(46)

  EIX parent company and other                                    

              (79)

            (89)

               10

Edison International Core Earnings                               

              617

           435

            182

  SCE procurement and generation-related adj.

--

(205)

205

  SCE implementation of URG decision                          

              480

                --

            480

EIX Consol. Earnings from Continuing Ops.

1,097

230

867

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

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

3

(1,228)

1,231

  Edison Enterprises Companies                                    

               1

          (134)

            135

EIX Consol. Earnings (Loss) from Discontinued Ops.

4

(1,362)

1,366

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

Total EIX Consolidated Earnings (Loss)

$1,101

$(1,132)

$2,233

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

Additional Attachments:

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