Market Overview

Edison International Reports Third Quarter 2012 Results

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ROSEMEAD, Calif.--(BUSINESS WIRE)--

Edison International (NYSE: EIX) today reported third quarter 2012 basic earnings of $0.58 per share, compared to basic earnings of $1.31 per share in the same quarter last year. Third quarter 2012 core earnings were $0.72 per share, compared to core earnings of $1.26 per share in the third quarter of 2011.

The decrease in earnings was primarily related to losses at Edison Mission Group (EMG) and to a delay in the California Public Utilities Commission (CPUC) final decision on Southern California Edison's (SCE) 2012 General Rate Case. SCE incurred higher costs in the quarter to support its ongoing infrastructure investment programs, while the increased revenues to support these investment programs are pending the rate case decision from California regulators.

“SCE's third quarter results reflect the delay in receiving a final rate case decision from California regulators, as well as severance and continued inspection and repair costs related to the San Onofre Nuclear Generating Station,” said Ted Craver, chairman and chief executive officer of Edison International. “A final rate case decision is an important part of moving forward with SCE's capital program to invest in California's electric infrastructure and provide safe, reliable, and affordable power.”

Third Quarter Earnings Detail

SCE's third quarter 2012 basic and core earnings were $1.11 per share compared to $1.25 per share in the third quarter of 2011. The core earnings decrease was primarily due to a delay in the 2012 General Rate Case decision as higher depreciation and interest expenses are not being recovered in currently authorized revenue, and to higher costs at San Onofre Nuclear Generating Station. These include $(0.09) per share of incremental steam generator inspection and repair costs and $(0.06) per share in severance costs, which are both included in core earnings. These costs were partially offset by other operating and maintenance cost reductions. The General Rate Case revenue requirement ultimately adopted by the CPUC will be retroactive to January 1, 2012.

EMG's third quarter 2012 basic losses were $(0.42) per share compared to earnings of $0.10 per share in the third quarter of 2011. Core losses were $(0.28) per share compared to earnings of $0.05 per share in the same quarter last year. Third quarter losses increased primarily due to lower average realized energy and capacity prices, reduced generation, and higher fuel prices partially offset by lower planned maintenance costs and depreciation at Midwest Generation, decreased earnings from natural gas-fired projects, and lower income tax benefits. Non-core items for both quarters included the results for Homer City, which were classified as discontinued operations beginning in the third quarter of 2012. Homer City losses from discontinued operations during the third quarter of 2012 were $(0.24) per share, including an impairment charge of $(0.21) per share, compared to earnings of $0.05 per share in the prior-year period. Non-core items also included a gain of $0.09 per share on the sale of an Edison Capital lease interest in a power plant.

Edison International parent company and other reported a third quarter 2012 basic and core losses of $(0.11) per share compared to $(0.04) per share in the same period last year. Losses increased primarily due to higher consolidated state income taxes of $(0.09) per share.

Year-to-Date Earnings Summary

Edison International reported basic earnings of $1.09 per share for the nine-month period ending September 30, 2012, compared to $2.46 per share for the same period last year. Core earnings for the first nine months of 2012 were $1.40 per share compared to $2.47 per share in the same period last year.

Year-to-Date Earnings Detail

SCE's year-to-date 2012 basic and core earnings were $2.26 per share compared to $2.57 per share for the same period last year. The core earnings decrease was primarily due to the delay in the 2012 General Rate Case decision and the higher costs at the San Onofre Nuclear Generating Station. The higher costs include $(0.17) per share of incremental steam generator inspection and repair costs and the $(0.06) per share in severance costs. These costs were partially offset by other operation and maintenance cost reductions. The General Rate Case revenue requirement ultimately adopted by the CPUC will be retroactive to January 1, 2012.

EMG's year-to-date 2012 basic losses were $(1.02) per share compared to basic losses of $(0.05) per share in the prior-year period. Core losses were $(0.71) per share compared to core losses of $(0.04) per share in the same period last year. Year-to-date core losses increased primarily due to lower average realized energy and capacity prices, reduced generation, and higher fuel prices partially offset by lower planned maintenance costs and depreciation at Midwest Generation, decreased earnings from natural gas-fired projects, and higher income taxes. Non-core items for both periods included the results for Homer City, which were classified as discontinued operations beginning in the third quarter of 2012. Year-to-date losses from discontinued operations were $(0.40) per share, including the third quarter impairment charge of $(0.21) per share. Non-core items for this period also included the $0.09 per share gain on the sale of an Edison Capital lease interest in a power plant.

Edison International parent company and other basic and core losses in the first nine months of 2012 were $(0.15) per share compared to basic and core losses of $(0.06) per share in the first nine months of 2011. Losses increased primarily due higher consolidated state income taxes of $(0.09) per share.

About Edison International

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, Calif., Edison International is the parent company of Southern California Edison, one of the nation's largest electric utilities, and Edison Mission Group, a competitive power generation business.

Appendix

Use of Non-GAAP Financial Measures

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. Our management uses core earnings and core earnings per share (EPS) by principal operating subsidiary internally for financial planning and for analysis of performance. We also use core earnings and core EPS by principal operating subsidiary when communicating with analysts and investors regarding our earnings results and outlook to facilitate comparisons of the Company's performance from period to period. Financial measures referred to net income, basic EPS, core earnings, or core EPS also applies to the description of earnings or earnings per share.

Core earnings and core EPS are non-GAAP financial measures and may not be comparable to those of other companies. Core earnings and core EPS are defined as GAAP earnings and basic EPS excluding income or loss from discontinued operations and income or loss from significant discrete items that management does not consider representative of ongoing earnings. GAAP earnings refer to net income attributable to Edison International common shareholders or attributable to the common shareholders of each subsidiary. Core earnings are reconciled to GAAP earnings in the attached tables. EPS by principal operating subsidiary is based on the principal operating subsidiaries' net income attributable to the common shareholders of each operating subsidiary, respectively, and Edison International's weighted average outstanding common shares. The impact of participating securities (vested stock options that earn dividend equivalents that may participate in undistributed earnings with common stock) for each principal operating subsidiary is not material to each principal operating subsidiary's EPS and is therefore reflected in the results of the Edison International holding company, which we refer to as EIX parent company and other. EIX core EPS and core EPS by principal operating subsidiary are reconciled to basic EPS.

Risk Disclosure Statement

Forward-looking statements about the financial outlook for Edison International and its subsidiaries are included in this news release. 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 of Financial Condition and Results of Operations” in Edison International's 2011 Form 10-K, and most recent Form 10-Q and other reports filed with the Securities and Exchange Commission which are available at: www.edisoninvestor.com. These forward-looking statements represent our expectations only as of the date of this news release, and Edison International assumes no duty to update them to reflect new information, events or circumstances.

Reminder: Edison International Will Hold a Conference Call Today

     
When: Thursday, November 1, 2012, 2:00 p.m. (Pacific Daylight Time)
Telephone Numbers: 1-800-369-2198 (US) and 1-773-756-4618 (Int'l) - Passcode: Edison
Telephone Replay: 1-800-294-5087 (US) and 1-402-220-9780 (Int'l) - Passcode: 468529
Telephone replay available through November 9, 2012
Webcast:

www.edisoninvestor.com

 

Summary Financial Schedules

 

Third Quarter Basic Earnings (Loss) Per Share

             
Quarter Ended September 30,
Earnings (Loss) Per Common Share
Attributable to Edison International (Unaudited)         2012         2011        

Change

SCE $ 1.11       $ 1.25 $ (0.14 )
EMG (0.19 ) 0.05 (0.24 )
EIX parent company and other         (0.11 )       (0.04 )       (0.07 )
EIX earnings (loss) from continuing operations         0.81         1.26         (0.45 )
EIX earnings(loss) from discontinued operations         (0.23 )       0.05         (0.28 )
EIX basic earnings (loss)1         $ 0.58         $ 1.31         $ (0.73 )
EIX diluted earnings (loss)         $ 0.58         $ 1.30         $ (0.72 )
 

1

The impact of participating securities on the per share amounts is included in EIX parent company and other and was zero per share for both quarters.

 
 
 

Third Quarter Reconciliation of Core Earnings (Loss) Per Share

to Basic Earnings (Loss) Per Share

             
Quarter Ended September 30,
Earnings (Loss) Per Common Share
Attributable to Edison International (Unaudited)         2012         2011         Change
Core Earnings (Loss)1      
SCE $ 1.11 $ 1.25 $ (0.14 )
EMG (0.28 ) 0.05 (0.33 )
EIX parent company and other         (0.11 )       (0.04 )       (0.07 )
EIX core earnings (loss)         0.72         1.26         (0.54 )
Non-core items
EMG – Sale of Beaver Valley lease interest 0.09 -- 0.09
Earnings (loss) from discontinued operations
EMG – Homer City2 (0.24 ) 0.05 (0.29 )
EMG – Other         0.01         --         0.01  
Total non-core items         (0.14 )       0.05         (0.19 )
EIX basic earnings (loss)         $ 0.58         $ 1.31         $ (0.73 )
 

1

See Use of Non-GAAP Financial Measures in Appendix. The impact of participating securities on the per share amounts is included in EIX parent company and other and was zero per share for both quarters.

2

Beginning in the third quarter of 2012, Homer City met the definition of a discontinued operation and was classified separately in EME's consolidated statement of operations. Results included an impairment charge of $(0.21) per share.

 
 

Third Quarter Basic Earnings (Loss)

             
Quarter Ended September 30,
Earnings (Loss) (in millions)
Attributable to Edison International (Unaudited)         2012         2011         Change
SCE $ 363       $ 406 $ (43 )
EMG (61 ) 18 (79 )
EIX parent company and other         (36 )       (13 )       (23 )
EIX earnings (loss) from continuing operations         266         411         (145 )
EIX earnings(loss) from discontinued operations         (76 )       15         (91 )
EIX basic earnings (loss)         $ 190         $ 426         $ (236 )
 
 
 

Third Quarter Reconciliation of Core Earnings (Loss) to Basic Earnings (Loss)

             
Quarter Ended September 30,
Earnings (Loss) (in millions)
Attributable to Edison International (Unaudited)         2012         2011         Change
Core Earnings (Loss)1      
SCE $ 363 $ 406 $ (43 )
EMG (92 ) 18 (110 )
EIX parent company and other         (36 )       (13 )       (23 )
EIX core earnings (loss)         235         411         (176 )
Non-core items
EMG – Sale of Beaver Valley lease interest 31 -- 31
Earnings (loss) from discontinued operations
EMG – Homer City2 (79 ) 15 (94 )
EMG – Other         3         --         3  
Total non-core items         (45 )       15         (60 )
EIX basic earnings (loss)         $ 190         $ 426         $ (236 )
 

1

See Use of Non-GAAP Financial Measures in Appendix.

2

Beginning in the third quarter of 2012, Homer City met the definition of a discontinued operation and was classified separately in EME's consolidated statement of operations. Results included an after tax impairment charge of $68 million.

 
 

Year-to-Date Basic Earnings (Loss) Per Share

             
Year-to-Date September 30,
Earnings (Loss) Per Common Share
Attributable to Edison International (Unaudited)         2012         2011        

Change

SCE $ 2.26       $ 2.57 $ (0.31 )
EMG (0.62 ) (0.04 ) (0.58 )
EIX parent company and other         (0.15 )       (0.06 )       (0.09 )
EIX earnings (loss) from continuing operations         1.49         2.47         (0.98 )
EIX earnings(loss) from discontinued operations         (0.40 )       (0.01 )       (0.39 )
EIX basic earnings (loss)1         $ 1.09         $ 2.46         $ (1.37 )
EIX diluted earnings (loss)         $ 1.09         $ 2.45         $ (1.36 )
 

The impact of participating securities on the per share amounts is included in EIX parent company and other and was zero per share for both periods.

 
 
 

Year-to-Date Reconciliation of Core Earnings (Loss) Per Share

to Basic Earnings (Loss) Per Share

             

Year-to-Date September 30,

Earnings (Loss) Per Common Share
Attributable to Edison International (Unaudited)         2012         2011         Change
Core Earnings (Loss)1      
SCE $ 2.26 $ 2.57 $ (0.31 )
EMG (0.71 ) (0.04 ) (0.67 )
EIX parent company and other         (0.15 )       (0.06 )       (0.09 )
EIX core earnings (loss)         1.40         2.47         (1.07 )
Non-core items
EMG – Sale of Beaver Valley interest 0.09 -- 0.09
Earnings (loss) from discontinued operations
EMG – Homer City2 (0.40 ) -- (0.40 )
EMG – Other         --         (0.01 )       0.01  
Total non-core items         (0.31 )       (0.01 )       (0.3 )
EIX basic earnings (loss)         $ 1.09         $ 2.46         $ (1.37 )
 

1

See Use of Non-GAAP Financial Measures in Appendix.

2

Beginning in the third quarter of 2012, Homer City met the definition of a discontinued operation and was classified separately in EME's consolidated statement of operations. Results included an impairment charge of $(0.21) per share from quarter ended September 30, 2012.

 

Year-to-Date Basic Earnings (Loss)

             
Year-to-Date September 30,
Earnings (Loss) (in millions)
Attributable to Edison International (Unaudited)         2012         2011         Change
SCE $ 736       $ 838 $ (102 )
EMG (202 ) (14 ) (188 )
EIX parent company and other         (48 )       (19 )       (29 )
EIX earnings (loss) from continuing operations         486         805         (319 )
EIX earnings(loss) from discontinued operations         (129 )       (3 )       (126 )
EIX basic earnings (loss)1         $ 357         $ 802         $ (445 )
 
 
 

Year-to-Date Reconciliation of Core Earnings (Loss) to Basic Earnings (Loss)

             
Year-to-Date September 30,
Earnings (Loss) (in millions)
Attributable to Edison International (Unaudited)         2012         2011         Change
Core Earnings (Loss)1      
SCE $ 736 $ 838 $ (102 )
EMG (233 ) (14 ) (219 )
EIX parent company and other         (48 )       (19 )       (29 )
EIX core earnings (loss)         455         805         (350 )
Non-core items
EMG – Sale of Beaver Valley interest 31 -- 31
Earnings (loss) from discontinued operations
EMG – Homer City2 (131 ) -- (131 )
EMG – Other         2         (3 )       5  
Total non-core items         (98 )       (3 )       (95 )
EIX basic earnings (loss)         $ 357         $ 802         $ (445 )
 

1

See Use of Non-GAAP Financial Measures in Appendix.

2

Beginning in the third quarter of 2012, Homer City met the definition of a discontinued operation and was classified separately in EME's consolidated statement of operations. Results included an after tax impairment charge of $68 million from quarter ended September 30, 2012.

 
 
Consolidated Statements of Income                   Edison International
 
  Three months ended
September 30,
  Nine months ended
September 30,
(in millions, except per-share amounts, unaudited)           2012         2011         2012         2011
Electric utility $ 3,730         $ 3,385 $ 8,791         $ 8,060
Competitive power generation   340           437           1,009           1,277  
Total operating revenue   4,070           3,822           9,800           9,337  
Fuel 270 272 678 671
Purchased power 1,612 1,264 3,049 2,422
Operation and maintenance 1,152 1,071 3,450 3,325
Depreciation, decommissioning and amortization 465 430 1,389 1,272
(Gain) loss on sale of assets and other   (65 )                   (60 )         8  
Total operating expenses   3,434           3,037           8,506           7,698  
Operating income 636 785 1,294 1,639
Interest and dividend income 3 4 19 38
Equity in income from unconsolidated affiliates, net 25 56 42 68
Other income 37 27 105 110
Interest expense (214 ) (203 ) (643 ) (600 )
Other expenses   (10 )         (11 )         (36 )         (37 )
Income from continuing operations before income taxes 477 658 781 1,218
Income tax expense   181           232           217           370  
Income from continuing operations 296 426 564 848
Income (loss) from discontinued operations, net of tax   (76 )         15           (129 )         (3 )
Net income 220 441 435 845
Dividends on preferred and preference stock of utility 25 15 66 44
Other noncontrolling interests   5                     12           (1 )
Net income attributable to Edison International common shareholders   $ 190           $ 426           $ 357           $ 802  
Amounts attributable to Edison International common shareholders:
Income from continuing operations, net of tax $ 266 $ 411 $ 486 $ 805
Income (loss) from discontinued operations, net of tax   (76 )         15           (129 )         (3 )
Net income attributable to Edison International common shareholders   $ 190           $ 426           $ 357           $ 802  
Basic earnings (loss) per common share attributable to Edison International common shareholders:
Weighted-average shares of common stock outstanding 326 326 326 326
Continuing operations $ 0.81 $ 1.26 $ 1.49 $ 2.47
Discontinued operations   (0.23 )         0.05           (0.40 )         (0.01 )
Total   $ 0.58           $ 1.31           $ 1.09           $ 2.46  
Diluted earnings (loss) per common share attributable to Edison International common shareholders:
Weighted-average shares of common stock outstanding, including effect of dilutive securities 329 329 328 329
Continuing operations $ 0.81 $ 1.25 $ 1.48 $ 2.46
Discontinued operations   (0.23 )         0.05           (0.39 )         (0.01 )
Total   $ 0.58           $ 1.30           $ 1.09           $ 2.45  
Dividends declared per common share           $ 0.325           $ 0.320           $ 0.975           $ 0.960  
 
 
Consolidated Balance Sheets           Edison International
       
(in millions, unaudited)          

September 30,
2012

       

December 31,
2011

ASSETS
Cash and cash equivalents $ 1,080 $ 1,390
Receivables, less allowances of $75 for uncollectible accounts at both dates 1,167 908
Accrued unbilled revenue 787 519
Inventory 508 519
Prepaid taxes 36 88
Derivative assets 76 106
Restricted cash and cash equivalents 116 103
Margin and collateral deposits 88 58
Regulatory assets 250 494
Deferred income taxes 231
Other current assets 94 92
Assets of discontinued operations 61           207
Total current assets 4,494           4,484
Nuclear decommissioning trusts 3,997 3,592
Investments in unconsolidated affiliates 544 525
Other investments 189           211
Total investments 4,730           4,328
Utility property, plant and equipment, less accumulated depreciation of $7,378 and $6,894 at respective dates 29,314 27,569
Competitive power generation and other property, plant and equipment, less accumulated depreciation of $1,616 and $1,408 at respective dates 4,544           4,547
Total property, plant and equipment 33,858           32,116
Derivative assets 117 131
Restricted deposits 89 25
Rent payments in excess of levelized rent expense under plant operating leases 855 760
Regulatory assets 5,677 5,466
Other long-term assets 725           684
Total long-term assets 7,463           7,066
Assets of discontinued operations           45
 
 
 
 
Total assets           $ 50,545           $ 48,039
 
 
Consolidated Balance Sheets           Edison International
       
(in millions, except share amounts, unaudited)           September 30,
2012
        December 31,
2011
LIABILITIES AND EQUITY
Short-term debt $ 429 $ 429
Current portion of long-term debt 565 57
Accounts payable 1,257 1,397
Accrued taxes 105 52
Accrued interest 207 205
Customer deposits 193 199
Derivative liabilities 109 268
Regulatory liabilities 493 670
Deferred income taxes 91
Other current liabilities 855 953
Liabilities of discontinued operations 61           27  
Total current liabilities 4,274           4,348  
Long-term debt 13,708           13,689  
Deferred income taxes 5,745 5,396
Deferred investment tax credits 108 89
Customer advances 149 138
Derivative liabilities 717 547
Pensions and benefits 2,884 2,912
Asset retirement obligations 2,804 2,680
Regulatory liabilities 5,249 4,670
Other deferred credits and other long-term liabilities 2,887           2,475  
Total deferred credits and other liabilities 20,543           18,907  
Liabilities of discontinued operations           9  
Total liabilities 38,525           36,953  
Commitments and contingencies
Common stock, no par value (800,000,000 shares authorized; 325,811,206 shares issued and outstanding at each date) 2,385 2,360
Accumulated other comprehensive loss (168 ) (139 )
Retained earnings 7,806           7,834  
Total Edison International's common shareholders' equity 10,023           10,055  
Preferred and preference stock of utility 1,759 1,029
Other noncontrolling interests 238           2  
Total noncontrolling interests 1,997           1,031  
Total equity 12,020           11,086  
Total liabilities and equity           $ 50,545           $ 48,039  
 
 
Consolidated Statements of Cash Flows           Edison International

Nine months ended
September 30,

(in millions, unaudited)           2012         2011
Cash flows from operating activities:        
Net income $ 435 $ 845
Adjustments to reconcile to net cash provided by operating activities:
Depreciation, decommissioning and amortization 1,389 1,272
Regulatory impacts of net nuclear decommissioning trust earnings 147 131
Other amortization 73 112
Gain on sale of assets and other (60 ) 6
Stock-based compensation 28 22
Equity in income from unconsolidated affiliates (42 ) (68 )
Distributions from unconsolidated affiliates 15 52
Deferred income taxes and investment tax credits (20 ) 373
Income from leveraged leases (4 ) (4 )
Proceeds from U.S. treasury grants 73 310
Changes in operating assets and liabilities:
Receivables (293 ) (205 )
Inventory 11 (25 )
Margin and collateral deposits, net of collateral received (31 ) 6
Prepaid taxes 52 318
Other current assets (264 ) (321 )
Rent payments in excess of levelized rent expense (95 ) (96 )
Accounts payable 347 178
Accrued taxes 61 76
Other current liabilities (87 ) (189 )
Derivative assets and liabilities, net (8 ) 137
Regulatory assets and liabilities, net 210 (73 )
Other assets (30 ) (20 )
Other liabilities 256           1  
Operating cash flows from continuing operations 2,163 2,838
Operating cash flows from discontinued operations, net (5 )         (14 )
Net cash provided by operating activities 2,158           2,824  
Cash flows from financing activities:
Long-term debt issued 549 686
Long-term debt issuance costs (12 ) (24 )
Long-term debt repaid (36 ) (97 )
Bonds purchased (86 )
Preference stock issued, net 804 123
Preference stock redeemed (75 )
Short-term debt financing, net (10 ) 573
Settlements of stock-based compensation, net (45 ) (14 )
Cash contributions from noncontrolling interests 238
Dividends and distributions to noncontrolling interests (75 ) (43 )
Dividends paid (318 )         (313 )
Net cash provided by financing activities from continuing operations           $ 1,020           $ 805  
 
 
Consolidated Statements of Cash Flows           Edison International
Nine months ended
September 30,
(in millions, unaudited)           2012         2011
Cash flows from investing activities:        
Capital expenditures $ (3,371 ) $ (3,481 )
Purchase of interest in acquired companies (3 )
Proceeds from sale of nuclear decommissioning trust investments 1,525 2,108
Purchases of nuclear decommissioning trust investments and other (1,689 ) (2,254 )
Proceeds from sale of interest in project, net 107
Proceeds from partnerships and unconsolidated subsidiaries, net of investment 7 6
Restricted deposits and restricted cash and cash equivalents (75 ) 4
Customer advances for construction and other investments 3           (4 )
Investing cash flows from continuing operations (3,493 ) (3,624 )
Investing cash flows from discontinued operations, net (19 )         (10 )
Net cash used by investing activities (3,512 )         (3,634 )
Net (decrease) increase in cash and cash equivalents from continuing operations (310 ) 19
Cash and cash equivalents at beginning of period from continuing operations 1,390           1,261  
Cash and cash equivalents at end of period from continuing operations $ 1,080           $ 1,280  
 
Net decrease in cash and cash equivalents from discontinued operations $ (24 ) $ (24 )
Cash and cash equivalents at beginning of period from discontinued operations 79           128  
Cash and cash equivalents at end of period from discontinued operations           $ 55           $ 104  

Edison International
Media relations contact:
Charles Coleman, 626-302-7982
or
Investor relations contact:
Scott Cunningham, 626-302-2540

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