Edison International Reports 2007 Second Quarter Earnings

Edison International (NYSE: EIX): Second quarter 2007 basic earnings per common share were $0.29, down $0.25 per share from the second quarter of 2006, primarily from non-core items, including a second quarter 2007 charge for early debt extinguishment at the independent power business. Second quarter core earnings1 grew 33% to $0.73 per share primarily due to improved margins at the independent power business. Year-to-date basic earnings per common share were $1.29, down 2% from the prior period, while core earnings were $1.63 per share, up 48% from the prior year period, driven by higher energy margins in the independent power business and solid results at the utility. 2007 total earnings guidance is increased to $2.90 – $3.25 per share, and 2007 core earnings guidance1 is increased to $3.24 – $3.59 per share. Edison International Financial Highlights Quarter Ended June 30, Change (In millions, except per share data)     2007     2006     $     %   Basic earnings per common share $ 0.29 $ 0.54 $ (0.25 ) (46 %) Core earnings per common share $ 0.73 $ 0.55 $ 0.18 33 % Net income $ 93 $ 177 $ (84 ) (47 %) Net cash provided by operating activities $ 526 $ 450 $ 76 17 % Total assets   $ 36,983   $ 35,151   $ 1,832     5 % 1 Core earnings is a non-GAAP financial measure; see reconciliation of core earnings to reported earnings and reconciliation of core earnings guidance to total earnings guidance. SECOND QUARTER EARNINGS SUMMARY Edison International (NYSE: EIX) today reported consolidated net income of $93 million, or basic earnings per common share of $0.29, in the second quarter of 2007, compared to consolidated net income of $177 million, or $0.54 basic earnings per common share, in the same period last year. Excluding discontinued operations and other non-core items, Edison International’s second quarter core earnings per share were $0.73, up 33% over core earnings per share in the same period last year. "Edison International’s financial position is strong,” said John E. Bryson, chairman and CEO. "With a solid first half behind us, and a favorable outlook, this sets the stage for increasing our 2007 earnings guidance.” SECOND QUARTER EARNINGS DETAIL Earnings (Loss) from Continuing Operations Southern California Edison Company’s (SCE) 2007 second quarter earnings from continuing operations were $144 million, or $0.44 per share, compared to earnings of $234 million, or $0.72 per share, in the same period last year. SCE’s 2006 second quarter results include a non-core benefit of $81 million, or $0.25 per share, related to the resolution of an outstanding issue involving a portion of revenue collected during 2001-2003 related to state income taxes. Excluding this item, SCE’s core earnings decreased by $9 million, or $0.03 per share, from the second quarter of 2006. This decrease was primarily due to the catch-up adjustment upon receipt of the 2006 general rate case decision in May of last year, which was effective back to January 12, 2006, partially offset by the favorable resolution of an outstanding state income tax issue. Edison Mission Group’s (EMG) 2007 second quarter loss from continuing operations was $49 million, or $0.15 per share, compared to a loss of $56 million, or $0.17 per share in the same period last year. EMG's second quarter results in both 2007 and 2006 were impacted by non-core after-tax charges of $148 million and $88 million, respectively, associated with early extinguishment of debt. Excluding these charges, EMG's 2007 second quarter core earnings were $99 million, or $0.30 per share, an improvement of $67 million, or $0.20 per share, over the second quarter of 2006. The improvement was primarily due to an increase in energy margins at Midwest Generation, driven by higher generation and average realized energy prices, and higher earnings from Edison Capital. Earnings from Discontinued Operations Edison International’s earnings from discontinued operations were $2 million and $4 million in the second quarter of 2007 and 2006, respectively, or $0.01 per share in each period related to EMG’s former international projects. Quarter Ended June 30, Earnings (Loss) Per Common Share (Unaudited)   2007     2006   Change Southern California Edison Company $ 0.44 $ 0.72 $ (0.28 ) Edison Mission Group (0.15 ) (0.17 ) 0.02 EIX parent company and other   (0.01 )   (0.02 )   0.01   EIX basic earnings per common share from continuing operations   0.28     0.53     (0.25 ) Earnings from discontinued operations   0.01     0.01     —   EIX basic earnings per common share $ 0.29   $ 0.54   $ (0.25 ) EIX diluted earnings per common share $ 0.28   $ 0.54   $ (0.26 )     Quarter Ended June 30, Earnings (Loss) (in millions) (Unaudited)   2007     2006   Change Southern California Edison Company $ 144 $ 234 $ (90 ) Edison Mission Group (49 ) (56 ) 7 EIX parent company and other   (4 )   (5 )   1   EIX income from continuing operations   91     173     (82 ) Income from discontinued operations   2     4     (2 ) EIX net income $ 93   $ 177   $ (84 ) YEAR-TO-DATE EARNINGS SUMMARY Edison International recorded net income of $426 million, or $1.29 per share, for the six-month period ending June 30, 2007, compared to $435 million, or $1.32 per share, for the same period last year. Edison International had earnings from continuing operations of $421 million, or $1.28 per share, for the six-month period ended June 30, 2007, compared with $357 million, or $1.08 per share, for the same period last year. Excluding earnings from discontinued operations and other non-core items, Edison International’s core earnings for the six-month period were $538 million, or $1.63 per share, in 2007, compared to $364 million, or $1.10 per share, in the same period in 2006. YEAR-TO-DATE EARNINGS DETAIL Earnings (Loss) from Continuing Operations SCE’s earnings from continuing operations in the first half of 2007 were $325 million, or $1.00 per share, a decrease of $30 million, or $0.09 per share, compared to the same period last year. SCE’s 2007 results include a non-core tax benefit of $31 million, or $0.10 per share, primarily reflecting progress on an appeal with the Internal Revenue Service related to the income tax treatment of certain costs associated with environmental remediation. SCE’s 2006 results include a non-core benefit of $81 million, or $0.25 per share, related to the resolution of an outstanding issue involving a portion of revenue collected during 2001-2003 related to state income taxes. Excluding non-core items, SCE’s core earnings were $294 million, or $0.90 per share, compared to $274 million, or $0.84 per share, in the same period last year, mainly due to higher revenue associated with the 2006 general rate case decision and lower taxes from the favorable resolution of an outstanding state income tax issue. EMG’s earnings from continuing operations for the first six months of 2007 were $106 million, or $0.33 per share, up $89 million, or $0.28 per share, from the same period last year. Both 2007 and 2006 results were impacted by non-core after-tax charges of $148 million and $88 million, or $0.45 and $0.27 per share, respectively, associated with early extinguishment of debt. Excluding non-core items, EMG’s core earnings were $254 million, or $0.78 per share, an increase of $149 million, or $0.46 per share. This increase primarily reflects higher energy margins at Midwest Generation and Homer City mainly due to higher average realized energy prices and generation, and higher earnings from Edison Capital. Earnings from Discontinued Operations Edison International’s earnings from discontinued operations were $5 million for the six-month period ending June 30, 2007, compared to $77 million for the same period last year, with both years’ earnings resulting primarily from distributions from EMG’s Lakeland project in administrative receivership in the United Kingdom. Year-to-Date June 30, Earnings (Loss) Per Common Share (Unaudited)   2007     2006   Change Southern California Edison Company $ 1.00 $ 1.09 $ (0.09 ) Edison Mission Group 0.33 0.05 0.28 EIX parent company and other   (0.05 )   (0.06 )   0.01   EIX basic earnings per common share from continuing operations   1.28     1.08     0.20   Earnings from discontinued operations   0.01     0.24     (0.23 ) EIX basic earnings per common share $ 1.29   $ 1.32   $ (0.03 ) EIX diluted earnings per common share $ 1.29   $ 1.32   $ (0.03 )     Year-to-Date June 30, Earnings (Loss) (in millions) (Unaudited)   2007     2006   Change Southern California Edison Company $ 325 $ 355 $ (30 ) Edison Mission Group 106 17 89 EIX parent company and other   (10 )   (15 )   5   EIX income from continuing operations   421     357     64   Income from discontinued operations 5 77 (72 ) Cumulative effect of accounting change – net of tax   —     1     (1 ) EIX net income $ 426   $ 435   $ (9 ) Reconciliation of Core Earnings Guidance to Total Earnings Guidance   2007 2007 Guidance Guidance Core EPS   Effective 5/9/07   Updated 8/9/07 Southern California Edison Company $1.97 – 2.07 $1.97 – 2.07 Edison Mission Group 1.21 – 1.51 1.40 – 1.65 EIX Holding Co.     (0.13 )   (0.13 ) Core     $3.05 – 3.45     $3.24 – 3.59     Non-Core Items1 Southern California Edison Company 0.10 0.10 Edison Mission Group     (0.45 )   (0.44 ) Total Non-Core Items     (0.35 )   (0.34 )             Total     $2.70 – 3.10     $2.90 – 3.25     1 2007 non-core items reflect refinancing costs of $(0.45) for EMG and a tax benefit of $0.10 for SCE. The 2007 guidance effective 08/09/07 also reflects $0.01 from discontinued operations. 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 certain 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 better compare the company’s ongoing performance across periods. Core earnings per share are reconciled to basic earnings per common share. Second Quarter Reconciliation of Core Earnings to Reported Earnings   Quarter Ended June 30, Core Earnings (Loss) Per Common Share (Unaudited)   2007     2006   Change Southern California Edison Company $ 0.44 $ 0.47 $ (0.03 ) Edison Mission Group 0.30 0.10 0.20 EIX parent company and other   (0.01 )   (0.02 )   0.01   EIX core earnings per share   0.73     0.55     0.18     Non-core items SCE – regulatory/tax item — 0.25 (0.25 ) EMG – early debt retirement (0.45 ) (0.27 ) (0.18 ) EMG – earnings from discontinued operations   0.01     0.01     —   Total non-core items   (0.44 )   (0.01 )   (0.43 )         EIX basic earnings per common share $ 0.29   $ 0.54   $ (0.25 )     Quarter Ended June 30, Core Earnings (Loss) (in millions) (Unaudited)   2007     2006   Change Southern California Edison Company $ 144 $ 153 $ (9 ) Edison Mission Group 99 32 67 EIX parent company and other   (4 )   (5 )   1   EIX core earnings   239     180     59     Non-core items SCE – regulatory/tax item — 81 (81 ) EMG – early debt retirement (148 ) (88 ) (60 ) EMG – income from discontinued operations   2     4     (2 ) Total non-core items   (146 )   (3 )   (143 ) Total EIX net income $ 93   $ 177   $ (84 ) Year-to-Date Reconciliation of Core Earnings to Reported Earnings   Year-to-date June 30, Core Earnings (Loss) Per Common Share (Unaudited)   2007     2006   Change Southern California Edison Company $ 0.90 $ 0.84 $ 0.06 Edison Mission Group 0.78 0.32 0.46 EIX parent company and other   (0.05 )   (0.06 )   0.01   EIX core earnings per share   1.63     1.10     0.53     Non-core items SCE – regulatory/tax items 0.10 0.25 (0.15 ) EMG – early debt retirement (0.45 ) (0.27 ) (0.18 ) EMG – earnings from discontinued operations   0.01     0.24     (0.23 ) Total non-core items   (0.34 )   0.22     (0.56 )         EIX basic earnings per common share $ 1.29   $ 1.32   $ (0.03 )     Year-to-date June 30, Core Earnings (Loss) (in millions) (Unaudited)   2007     2006   Change Southern California Edison Company $ 294 $ 274 $ 20 Edison Mission Group 254 105 149 EIX parent company and other   (10 )   (15 )   5   EIX core earnings   538     364     174     Non-core items SCE – regulatory/tax items 31 81 (50 ) EMG – early debt retirement (148 ) (88 ) (60 ) EMG – income from discontinued operations   5     77     (72 ) Total non-core items   (112 )   70     (182 )   Cumulative effect of accounting change – net of tax — 1 (1 )         Total EIX net income $ 426   $ 435   $ (9 ) Reminder: Edison International Will Hold a Conference Call Today Today, Edison International will hold a conference call to discuss its second quarter 2007 financial results at 8 a.m. (Pacific daylight time). 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.edison.com. A presentation accompanying management’s comments on the conference call will be available on the web site as well. The domestic call-in number is (800) 356-8584 and the ID# is 11300. In addition to the live simulcast, the webcast will remain posted on the Edison International Web site and telephone replays will be available through Thursday, August 16, 2007, at the following numbers: (877) 693-4277 – for callers in the U.S.; and (402) 220-0042 – for international callers. The PIN Number is 11301. Risk Disclosure Statement Statements contained in this presentation about future performance, including, without limitation, earnings, asset and rate base growth, load growth, capital investments, and other statements that are not purely historical, are forward-looking statements. 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” in Edison International’s 2006 Form 10-K and subsequent reports filed with the Securities and Exchange Commission and are available on our website: www.edison.com. These forward-looking statements represent our expectations only as of the date of this presentation, and Edison International assumes no duty to update them to reflect new information, events or circumstances. 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, California, Edison International is the parent company of Southern California Edison, a regulated electric utility, and Edison Mission Group, a competitive power generation business and parent company to Edison Mission Energy and Edison Capital. Edison International Consolidated Statements of Income     Three Months Ended June 30, Six Months Ended June 30, In millions, except per-share amounts   2007     2006     2007     2006   (Unaudited) Electric utility $ 2,459 $ 2,521 $ 4,681 $ 4,739 Nonutility power generation 569 460 1,241 970 Financial services and other   19     20     37     44   Total operating revenue   3,047     3,001     5,959     5,753   Fuel 438 380 924 840 Purchased power 829 769 1,146 1,783 Provisions for regulatory adjustment clauses – net (33 ) (10 ) 255 (371 ) Other operation and maintenance 999 933 1,879 1,818 Depreciation, decommissioning and amortization 313 339 627 631 Net gain on sale of utility property and plant   —     (1 )   (1 )   (1 ) Total operating expenses   2,546     2,410     4,830     4,700   Operating income 501 591 1,129 1,053 Interest and dividend income 45 43 85 80 Equity in income from partnerships andunconsolidated subsidiaries – net 20 10 37 14 Other nonoperating income 22 33 39 74 Interest expense – net of amounts capitalized (188 ) (209 ) (386 ) (409 ) Loss on early extinguishment of debt (241 ) (143 ) (241 ) (143 ) Other nonoperating deductions   (9 )   (10 )   (22 )   (22 ) Income from continuing operations before tax and minority interest 150 315 641 647 Income tax expense — 95 129 206 Dividends on preferred and preference stock of utility not subject to mandatory redemption 13 13 26 25 Minority interest   46     34     65     59   Income from continuing operations 91 173 421 357 Income from discontinued operations – net of tax   2     4     5     77   Income before accounting change 93 177 426 434 Cumulative effect of accounting change – net of tax   —     —     —     1   Net income $ 93   $ 177   $ 426   $ 435     Weighted-average shares of common stock outstanding 326 326 326 326 Basic earnings per common share: Continuing operations $ 0.28 $ 0.53 $ 1.28 $ 1.08 Discontinued operations   0.01     0.01     0.01     0.24   Total $ 0.29   $ 0.54   $ 1.29   $ 1.32     Weighted-average shares, including effect of dilutive securities 330 330 331 331 Diluted earnings per common share: Continuing operations $ 0.28 $ 0.53 $ 1.28 $ 1.09 Discontinued operations   —     0.01     0.01     0.23   Total $ 0.28   $ 0.54   $ 1.29   $ 1.32   Dividends declared per common share $ 0.29 $ 0.27 $ 0.58 $ 0.54 Edison International Consolidated Balance Sheets   In millions June 30, 2007 December 31, 2006 (Unaudited) ASSETS Cash and equivalents $ 1,219 $ 1,795 Restricted cash 52 59 Margin and collateral deposits 232 124 Receivables, less allowances of $26 and $29 for uncollectible accounts at respective dates 1,050 1,014 Accrued unbilled revenue 480 303 Fuel inventory 133 122 Materials and supplies 282 270 Accumulated deferred income taxes – net 349 203 Derivative assets 277 328 Regulatory assets 385 554 Short-term investments 317 558 Other current assets   215     152   Total current assets   4,991     5,482   Nonutility property – less accumulated provision for depreciation of $1,688 and $1,627 at respective dates 4,534 4,356 Nuclear decommissioning trusts 3,304 3,184 Investments in partnerships and unconsolidated subsidiaries 271 308 Investments in leveraged leases 2,507 2,495 Other investments   108     91   Total investments and other assets   10,724     10,434   Utility plant, at original cost: Transmission and distribution 18,138 17,606 Generation 1,481 1,465 Accumulated provision for depreciation (4,927 ) (4,821 ) Construction work in progress 1,684 1,486 Nuclear fuel, at amortized cost   168     177   Total utility plant   16,544     15,913   Regulatory assets 2,821 2,818 Restricted cash 62 91 Margin and collateral deposits 14 4 Derivative assets 107 131 Rent payments in excess of levelized rent expense under plant operating leases 668 556 Other long-term assets   1,052     832   Total long-term assets   4,724     4,432     Total assets $ 36,983   $ 36,261   Edison International Consolidated Balance Sheets   In millions, except share amounts June 30, 2007   December 31, 2006 (Unaudited) LIABILITIES AND SHAREHOLDERS’ EQUITY Short-term debt $ 175 $ — Long-term debt due within one year 330 488 Accounts payable 853 926 Accrued taxes 163 155 Accrued interest 182 196 Counterparty collateral 40 36 Customer deposits 212 198 Book overdrafts 222 140 Derivative liabilities 123 181 Regulatory liabilities 1,120 1,000 Other current liabilities   859       983 Total current liabilities   4,279       4,303 Long-term debt   9,091       9,101 Accumulated deferred income taxes – net 5,309 5,297 Accumulated deferred investment tax credits 119 122 Customer advances 161 160 Derivative liabilities 65 86 Power-purchase contracts 27 32 Accumulated provision for pensions and benefits 1,152 1,099 Asset retirement obligations 2,810 2,759 Regulatory liabilities 3,234 3,140 Other deferred credits and other long-term liabilities   1,494       1,267 Total deferred credits and other liabilities   14,371       13,962 Total liabilities   27,741       27,366 Minority interest   292       271 Preferred and preference stock of utility not subject to mandatory redemption   915       915 Common stock, no par value (325,811,206 shares outstanding at each date)   2,106       2,080 Accumulated other comprehensive income (loss)   (18 )     78 Retained earnings   5,947       5,551 Total common shareholders’ equity   8,035       7,709   Total liabilities and shareholders’ equity $ 36,983     $ 36,261 Edison International Consolidated Statements of Cash Flows     Six Months Ended June 30, In millions   2007     2006   (Unaudited) Cash flows from operating activities: Net income $ 426 $ 435 Less: income from discontinued operations – net of tax   5     77   Income from continuing operations   421     358   Adjustments to reconcile to net cash provided by operating activities: Cumulative effect of accounting change – net of tax — (1 ) Depreciation, decommissioning and amortization 627 631 Realized loss on nuclear decommissioning trusts 23 — Other amortization 64 43 Minority interest 65 59 Deferred income taxes and investment tax credits (193 ) 160 Equity in income from partnerships and unconsolidated subsidiaries (37 ) (14 ) Income from leveraged leases (31 ) (36 ) Levelized rent expense (112 ) (112 ) Loss on early extinguishment of debt 241 143 Regulatory assets – long-term 76 112 Regulatory liabilities – long-term (1 ) (174 ) Derivative assets – long-term (4 ) 14 Derivative liabilities – long-term (57 ) 38 Other assets (22 ) (96 ) Other liabilities 251 (14 ) Margin and collateral deposits – net of collateral received (113 ) 263 Receivables and accrued unbilled revenue (189 ) (78 ) Derivative assets – short-term (40 ) 171 Derivative liabilities – short-term (63 ) 42 Inventory and other current assets (42 ) (47 ) Regulatory assets – short-term 169 (204 ) Regulatory liabilities – short-term 121 29 Accrued interest and taxes 205 (4 ) Accounts payable and other current liabilities (151 ) (333 ) Distributions and dividends from unconsolidated entities 21 26 Operating cash flows from discontinued operations   5     82   Net cash provided by operating activities   1,234     1,058   Cash flows from financing activities: Long-term debt issued 2,905 1,815 Premium paid on extinguishment of debt and issuance costs (240 ) (26 ) Long-term debt repaid (2,965 ) (1,818 ) Issuance of preference stock — 196 Rate reduction notes repaid (116 ) (116 ) Short-term debt financing – net 175 518 Change in book overdrafts 82 (64 ) Shares purchased for stock-based compensation (180 ) (101 ) Proceeds from stock option exercises 72 33 Excess tax benefits related to stock option exercises 35 14 Dividends to minority shareholders (32 ) (63 ) Dividends paid   (189 )   (176 ) Net cash provided (used) by financing activities $ (453 ) $ 212   Edison International Consolidated Statements of Cash Flows     Six Months Ended June 30, In millions   2007     2006   (Unaudited) Cash flows from investing activities: Capital expenditures $ (1,335 ) $ (1,207 ) Purchase of interest of acquired companies (23 ) (18 ) Proceeds from sale of property and interests in projects — 44 Proceeds from nuclear decommissioning trust sales 2,017 1,461 Purchases of nuclear decommissioning trust investments (2,084 ) (1,544 ) Proceeds from partnerships and unconsolidated subsidiaries, net of investment 31 13 Maturities and sales of short-term investments 270 97 Purchase of short-term investments (30 ) (173 ) Restricted cash 30 (15 ) Turbine deposits (241 ) (17 ) Customer advances for construction and other investments   8     54   Net cash used by investing activities   (1,357 )   (1,305 ) Net decrease in cash and equivalents (576 ) (35 ) Cash and equivalents, beginning of period   1,795     1,893   Cash and equivalents, end of period $ 1,219   $ 1,858