Edison International Reports Financial Results for Third Quarter 2005

November 04, 2005

November 4, 2005

ROSEMEAD, Calif., Nov. 4, 2005—

  • Edison International (EIX) recorded in the third quarter of 2005 consolidated earnings per common share of $1.41, compared to $2.49 for the same period last year.  In both years, reported earnings include discontinued operations that primarily reflect gains related to the sale of Mission Energy Holding Company’s (MEHC) international assets.
  • Core earnings per share were $1.24 in the third quarter of 2005 compared to 87 cents in the same period last year.  Core earnings exclude earnings from discontinued operations and other non-core items.
  • EIX is increasing its 2005 core earnings guidance to $2.80 - $2.90 per share from $2.53 - $2.63 per share. 

Third Quarter 2005 Financial Highlights:

  • Core earnings per common share - $1.24
  • Net Income - $462 million
  • Revenue - $3.8 billion
  • Assets - $35.5 billion

THIRD-QUARTER EARNINGS SUMMARY

For the third quarter of 2005, EIX recorded consolidated earnings of $462 million compared to earnings of $813 million in the same period last year.  The decrease is primarily due to the impacts from the sales of the international assets in 2004 reported as discontinued operations, partially offset by improved operating results at MEHC from higher wholesale energy prices, higher energy trading income, and lower net interest expense.

“Our core earnings for the third quarter were up 43% over the same period last year, driven by strong results at our independent power business,” reported Chairman and CEO, John Bryson.  “SCE continued to increase its core earnings, in part, on its large capital investment to strengthen and modernize the utility power grid.  Based on our current outlook, we are increasing our prior earnings guidance for 2005 by slightly more than 10% to a range of $2.80 to $2.90 per share.”

THIRD-QUARTER EARNINGS DETAIL

Earnings from Continuing Operations

SCE’s earnings from continuing operations were $280 million in the third quarter of 2005, compared with $259 million in the third quarter of 2004.  SCE’s 2005 third-quarter earnings included a positive item of $61 million related to a favorable tax settlement.  Third quarter 2004 earnings included $50 million of positive regulatory items, primarily from implementation of the 2003 general rate case (GRC) decision.  Excluding these non-core items, core earnings were up $10 million on a quarter-to-quarter comparison basis.  Higher net revenue and a tax benefit from a new IRS regulation more than offset the expected timing difference related to the implementation of the 2003 GRC decision in July of last year.

MEHC’s income from continuing operations was $154 million in the third quarter of 2005 compared to $60 million in the third quarter of 2004.  MEHC’s third-quarter 2005 results include an impairment charge of $34 million related to MEHC’s March Point project as the rise in forecast fuel costs lowered projected cash flows.  MEHC’s 2004 third-quarter results included charges of $22 million, primarily from an impairment related to Midwest Generation’s (MWG) small peaking plants and the termination of the Collins Station lease.  Excluding these charges, MEHC’s core earnings increased by $106 million over the third quarter of 2004.  This increase is primarily due to higher wholesale energy prices, higher energy trading income, and lower net corporate interest expense. 

Earnings in the third quarter of 2005 for Edison Capital were $3 million compared to $12 million in the same period last year.  The decrease primarily reflects lower income from Edison Capital’s investment in the Emerging Europe Infrastructure Fund.  The loss for “EIX parent company and other” decreased by $15 million primarily due to lower net interest expense.

Earnings from Discontinued Operations

The third-quarter 2005 earnings from discontinued operations primarily reflect positive tax adjustments of $28 million resulting from the sales of international projects.  Beginning in the third quarter of 2004, MEHC reclassified the results of its international projects to discontinued operations for all periods presented due to completion of the sale of its interest in Contact Energy and its agreement to sell the remaining international projects.  Earnings from discontinued operations during the third quarter of 2004, including a gain and recognition of a tax benefit, were $499 million.

 

Quarter Ended September 30,

 

Earnings (Loss) Per Common Share (Unaudited)

2005

2004

Change


 

  Southern California Edison

$0.86
$0.79
$0.07

  Mission Energy Holding Company

0.48
0.18
0.30

  Edison Capital

0.01
0.04
(0.03)

  EIX parent company and other

(0.02)
(0.05)
0.03

 

EIX Consol. Earnings from Continuing Operations

1.33
0.96
0.37



Earnings from Discontinued Operations – MEHC

0.08
1.53
(1.45)

 

Total EIX Consolidated Earnings

$1.41
$2.49
$(1.08)


  

 

 

 Quarter Ended September 30,

 

Earnings (Loss) (in millions) (Unaudited)

2005

2004

Change


 

  Southern California Edison

$280

$259

$21

  Mission Energy Holding Company

154

60

94

  Edison Capital

3

12

(9)

  EIX parent company and other

(2)

(17)

15



 

EIX Consol. Earnings from Continuing Operations

435

314

121


 

Earnings from Discontinued Operations - MEHC

27

499

(472)


 

Total EIX Consolidated Earnings

$462

$813

$(351)


  

 

 

Quarter Ended September 30,

 

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

2005

2004

Change


 

  Southern California Edison
    Company

$219

$209

$10

  Mission Energy Holding Company

188

82

106

  Edison Capital

3

12

(9)

  EIX parent company and other

(2)

(17)

15


 

EIX Consolidated Core Earnings

408

286

122


 

Non-core items

 

 

 

  SCE – Regulatory and tax items

61

50

11

  MEHC – March Point impairment

(34)

--

(34)

  MEHC – Peaker impairment

--

(18)

18

  MEHC – Collins lease termination

--

(4)

4

  MEHC – Discontinued operations

27

499

(472)


 

 

54

527

(473)


 

Total EIX Consolidated Earnings

$462

$813

$(351)


  

YEAR-TO-DATE EARNINGS SUMMARY

EIX recorded earnings of $2.64 per share for the nine-month period ending September 30, 2005, compared to $1.65 per share for the same period last year.  The results included several non-core adjustments detailed in the tables below.  EIX’s core earnings were $2.43 per share for the nine-month period ending September 30, 2005, compared to $1.15 per share for the same period last year.  This increase reflects higher wholesale energy prices and higher energy trading income at MEHC, lower net interest expense, higher net revenue and tax items at SCE, and gains from Edison Capital’s Emerging Europe Infrastructure Fund. 

YEAR-TO-DATE EARNINGS DETAIL

Earnings (Loss) from Continuing Operations

SCE’s earnings from continuing operations for the nine-month period ending September 30, 2005, of $572 million decreased by $28 million, compared to the same period last year.  SCE’s results for 2005 included a positive item of $61 million from a favorable IRS settlement.  SCE’s results in 2004 included net positive regulatory items of $172 million primarily related to the implementation of SCE’s 2003 GRC decision.  Excluding these items, SCE’s core earnings were $511 million, an increase of $83 million compared to the same period last year.  SCE’s increased earnings were primarily from higher net revenue for 2005, favorable resolution of tax issues, and the impact of a new tax regulation.  

MEHC had earnings from continuing operations of $179 million for the nine months ended September 30, 2005, compared to a loss of $614 million in the same period last year.  MEHC’s earnings in 2005 included a $34 million charge related to the March Point plant impairment, and a $15 million charge related to early debt retirements.  MEHC’s 2004 results included a $590 million charge 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 items, MEHC’s core earnings were $228 million, an increase of $261 million.  This increase primarily reflects higher wholesale energy prices, higher energy trading income, and lower net corporate interest expense. 

Edison Capital’s earnings for the nine months ended September 30, 2005, were $80 million, up $46 million from the same period last year.  This increase is primarily due to gains from its Emerging Europe Infrastructure Fund.

The loss for the nine months ended September 30, 2005, for “EIX parent company and other” decreased by $30 million compared to the same period last year, mainly due to lower net interest expense.

Earnings from Discontinued Operations

Earnings from discontinued operations for the nine months ended September 30, 2005, were $55 million, including positive tax adjustments of $28 million related to the international asset sales and distributions from the Lakeland project of $24 million.  Earnings from discontinued operations for the nine months ended September 30, 2004, were $570 million representing the operating results, gain on sale and recognition of tax benefits related to MEHC’s international projects.  

 

Year-To-Date Ended
Sept. 30,

 

Earnings (Loss) Per Common Share (Unaudited)

2005

2004

Change


 

  Southern California Edison

$1.75
$1.84
$(0.09)

  Mission Energy Holding Company

0.55
(1.88)
2.43

  Edison Capital

0.25
0.11
0.14

  EIX parent company and other

(0.08)
(0.17)
0.09

 

EIX Consol. Earnings (Loss) from Continuing Ops.

2.47
(0.10)
2.57

 

Earnings from Discontinued Ops.
- MEHC

0.17
1.75
(1.58)

 

Total EIX Consolidated Earnings

$2.64
$1.65
$0.99


  

 

 

Year-To-Date Ended
Sept. 30,

 

Earnings (Loss) (in millions) (Unaudited)

2005

2004

Change



 

  Southern California Edison

$572

$600

$(28)

  Mission Energy Holding Company

179

(614)

793

  Edison Capital

80

34

46

  EIX parent company and other

(22)

(52)

30


 

EIX Consol. Earnings (Loss) from Continuing Ops.

809

(32)

841


 

Earnings from Discontinued Ops.
  - MEHC

55

570

(515)

Cumulative Effect of Accounting Change
  - EC

--

(1)

1


 

Total EIX Consolidated Earnings

$864

$537

$327


  

 

 

 Year-to-Date Ended
Sept. 30,

 

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

2005

2004

Change


 

  Southern California Edison Company

$511

$428

$83

  Mission Energy Holding Company

228

(33)

261

  Edison Capital

80

34

46

  EIX parent company and other

(22)

(52)

30




EIX Consolidated Core Earnings

797

377

420


 

Non-core items

 

 

 

  SCE – Regulatory and tax items

61

172

(111)

  MEHC – Collins lease termination

--

(590)

590

  MEHC – March Point impairment

(34)

--

(34)

  MEHC – Gain on sale re: Four Star
    Oil & Gas

--

29

(29)

  MEHC – Peaker impairment

--

(18)

18

  MEHC – Early debt retirements

(15)

--

(15)

  MEHC – Loss on sale re: Brooklyn
    Navy Yard

--

(2)

2

  MEHC – Discontinued Operations

55

570

(515)


 

 

67

161

(94)

Cumulative Effect of Accounting Change

(1)

1


 

Total EIX Consolidated Earnings

$864

$537

$327



  

Reminder:  EIX Will Hold a Conference Call Today

Today, EIX will hold a conference call to discuss its 2005 third-quarter 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 10500.  

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 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 and rates of inflation;
  • 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, equipment failure, availability, heat rate and output;
  • the availability of labor, equipment, and materials;
  • the ability to obtain sufficient insurance;
  • effects of legal proceedings, changes in 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 Edison Mission Energy’s (EME) generating units have access;
  • the cost of and availability of coal, natural gas, and fuel oil, and associated transportation costs;
  • the cost of and availability of emission credits or allowances for emission credits for EME and its subsidiaries;
  • transmission congestion in and to each market area and the resulting differences in prices between delivery points in which EME and its subsidiaries operate;
  • the ability to provide sufficient collateral in support of hedging activities and purchases of fuel and electric energy;
  • 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, including new plants and technologies that may be developed in the future;
  • general political, economic and business conditions;
  • weather conditions, natural disasters and other unforeseen events; and
  • changes in the fair value of investments 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:

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