Edison International Reports First Quarter 2008 Earnings

Edison International (NYSE: EIX): First quarter 2008 GAAP earnings were $0.91 per share compared to $1.01 per share in the first quarter of 2007. Core earnings increased 2% to $0.92 per share in the first quarter from $0.90 per share in the year-ago quarter, reflecting an increase of $0.01 per share at both Southern California Edison (SCE) and Edison Mission Group (EMG). The increase was largely due to lower net interest expense at SCE and higher gross margin at EMG’s Midwest Generation. Core earnings exclude non-core items and discontinued operations. The current outlook for Edison International 2008 core earnings is around the high end of its guidance range of $3.61 - $4.01 per share. Edison International Financial Highlights   Quarter Ended March 31,   (In millions, except per share data)     2008     2007   Change GAAP earnings per share $ 0.91   $ 1.01 $ (0.10 ) Core earnings per share $ 0.92 $ 0.90 $ 0.02 GAAP earnings $ 299 $ 333 $ (34 ) Core earnings   $ 304   $ 299   $ 5   Note: GAAP earnings refer to net income and GAAP earnings per share refer to basic earnings per share throughout this release. Core earnings is a non-GAAP financial measure; see reconciliation of core earnings to GAAP earnings and reconciliation of core earnings guidance to GAAP earnings guidance. Edison International (NYSE: EIX) today reported first quarter 2008 earnings of $0.91 per share. Excluding non-core items, first quarter 2008 core earnings were $0.92 per share, up two percent compared with $0.90 per share in the year-ago first quarter. "First quarter results were solid. Our improved outlook for the full year reflects positive margin trends in our unregulated power generation business," said John E. Bryson, chairman and chief executive officer of Edison International. Earnings from Continuing Operations SCE’s first-quarter 2008 earnings from continuing operations were $0.46 per share, compared to earnings of $0.55 per share in the same quarter last year; this decrease was primarily due to a non-core tax benefit of $0.10 per share last year from the favorable resolution of the income tax treatment of certain environmental remediation costs. Excluding the tax item, SCE’s core earnings in the first quarter increased $0.01 per share, compared to the same quarter last year. This increase was primarily due to lower net interest expense. EMG’s first-quarter 2008 earnings from continuing operations and core earnings were $0.49 per share, compared to $0.48 per share in the same quarter last year. The increase was primarily due to higher gross margin and the buy-out of a coal contract at Midwest Generation together with higher energy trading results. This was partially offset by lower earnings from Edison Capital and other generation projects together with higher costs associated with EMG’s growth programs. Discontinued Operations Edison International’s loss from discontinued operations was $(0.01) per share in the first quarter of 2008 versus earnings from discontinued operations of $0.01 per share in the first quarter of 2007; both related to the 2004 sale of its international businesses.   Quarter Ended March 31,   Earnings (Loss) Per Share (Unaudited)     2008       2007     Change Southern California Edison Company $ 0.46   $ 0.55 $ (0.09 ) Edison Mission Group 0.49 0.48 0.01 EIX parent company and other     (0.03 )     (0.03 )     --   EIX GAAP earnings per share from continuing operations     0.92       1.00       (0.08 ) EIX GAAP earnings (loss) from discontinued operations     (0.01 )     0.01       (0.02 ) EIX GAAP earnings per share   $ 0.91     $ 1.01     $ (0.10 ) EIX diluted earnings per share   $ 0.91     $ 1.00     $ (0.09 )   Quarter Ended March 31, Earnings (Loss) (in millions) (Unaudited)     2008       2007     Change Southern California Edison Company $ 150 $ 180 $ (30 ) Edison Mission Group 159 155 4 EIX parent company and other     (5 )     (5 )     --   EIX income from continuing operations     304       330       (26 ) Earnings (loss) from discontinued operations     (5 )     3       (8 ) EIX net income   $ 299     $ 333     $ (34 ) First Quarter Reconciliation of Core Earnings to GAAP Earnings     Quarter Ended March 31, Core Earnings1 (Loss) Per Share (Unaudited)     2008       2007     Change Southern California Edison Company $ 0.46   $ 0.45 $ 0.01 Edison Mission Group 0.49 0.48 0.01 EIX parent company and other     (0.03 )     (0.03 )     --   EIX core earnings per share     0.92       0.90       0.02   Non-core items SCE – tax item -- 0.10 (0.10 ) Earnings (loss) from discontinued operations     (0.01 )     0.01       (0.02 ) Total non-core items     (0.01 )     0.11       (0.12 ) EIX GAAP earnings per share   $ 0.91     $ 1.01     $ (0.10 )   Quarter Ended March 31, Core Earnings1 (Loss) (in millions) (Unaudited)     2008       2007     Change Southern California Edison Company $ 150 $ 149 $ 1 Edison Mission Group 159 155 4 EIX parent company and other     (5 )     (5 )     --   EIX core earnings     304       299       5   Non-core items SCE – tax item -- 31 (31 ) Earnings (loss) from discontinued operations     (5 )     3       (8 ) Total non-core items     (5 )     34       (39 ) Total EIX net income   $ 299     $ 333     $ (34 ) 1 See Use of Non-GAAP Financial Measures below. The impact of participating securities is included in EIX parent company and other and was $(0.01) per share in both quarters. 2008 EARNINGS GUIDANCE The company reaffirmed its previously announced 2008 earnings guidance of $3.61 - $4.01 per share. It now sees 2008 core earnings being around the high end of the guidance range. See the risk disclosure statement below and the presentation accompanying the company’s conference call for further information. Reconciliation of Core Earnings Guidance to GAAP Earnings Guidance   Core Earnings Per Share1 2008 Guidance Southern California Edison $2.18 – 2.28 Edison Mission Group $1.57 – 1.87 EIX parent company and other $(0.14) EIX core earnings per share $3.61 – $4.01 Non-core items — EIX GAAP earnings per share $3.61 - $4.01 1 Guidance excludes discontinued operations and non-core items. The expected impact of participating securities is ($0.05) per share and is included in EIX parent company and other. 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 EPS by principal operating subsidiary internally for financial planning and for analysis of performance. We also use core earnings and EPS by principal operating subsidiary as primary performance measurements when communicating with analysts and investors regarding our earnings results and outlook, as it allows us to more accurately compare the company’s ongoing performance across periods. Core earnings exclude discontinued operations and other non-core items and are reconciled to GAAP earnings per share. EPS by principal operating subsidiary is based on the principal operating subsidiary net income 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. EPS and core EPS by principal operating subsidiary are reconciled to GAAP earnings per share. Reminder: Edison International Will Hold a Conference Call Today Today, Edison International will hold a conference call to discuss its first quarter 2008 financial results at 8 a.m. (Pacific Daylight Time). Two-way participation in the telephone call is limited to financial analysts and investors, while all other interested parties are invited to participate in a simultaneous webcast at www.edisoninvestor.com. A presentation accompanying management’s comments on the conference call will be available on the web site as well at www.edisoninvestor.com. The domestic call-in number is (800) 356-8584 and the number for international callers is (850) 429-1225. The ID# is 11600. In addition to the live simulcast, the webcast will remain posted at www.edisoninvestor.com and telephone replays will be available through Thursday, May 15, 2008, at the following numbers: (877) 693-4277 for callers in the United States and (402) 220-0042 for international callers. The ID# is 11601. Risk Disclosure Statement Statements contained in this news release 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 2007 Form 10-K and other reports filed with the Securities and Exchange Commission and are available on our Web site 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. Edison International (NYSE:EIX), 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, the largest electric utility in California, 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 EndedMarch 31, In millions, except per-share amounts     2008       2007     (Unaudited) Electric utility $ 2,349   $ 2,222 Nonutility power generation 719 672 Financial services and other     15       18   Total operating revenue     3,083       2,912   Fuel 537 486 Purchased power 491 317 Provisions for regulatory adjustment clauses – net 172 289 Other operation and maintenance 974 880 Depreciation, decommissioning and amortization 298 313 Gain on buyout of contract and sale of assets     (17 )     —   Total operating expenses     2,455       2,285   Operating income 628 627 Interest and dividend income 14 39 Equity in income from partnerships and unconsolidated subsidiaries – net 2 17 Other nonoperating income 25 17 Interest expense – net of amounts capitalized (171 ) (198 ) Other nonoperating deductions     (12 )     (11 ) Income from continuing operations before tax and minority interest 486 491 Income tax expense 161 129 Dividends on preferred and preference stock of utility not subject to mandatory redemption 13 13 Minority interest     8       19   Income from continuing operations 304 330 Income (loss) from discontinued operations – net of tax     (5 )     3   Net income   $ 299     $ 333   Weighted-average shares of common stock outstanding 326 326 Basic earnings (loss) per common share: Continuing operations $ 0.92 $ 1.00 Discontinued operations     (0.01 )     0.01   Total   $ 0.91     $ 1.01   Weighted-average shares, including effect of dilutive securities 329 330 Diluted earnings (loss) per common share: Continuing operations $ 0.92 $ 0.99 Discontinued operations     (0.01 )     0.01   Total   $ 0.91     $ 1.00   Dividends declared per common share $ 0.305 $ 0.29 Edison International Consolidated Balance Sheets   In millions   March 31,2008   December 31,2007   (Unaudited)   ASSETS Cash and equivalents $ 1,545 $ 1,441 Short-term investments 35 81 Receivables, less allowance of $34 for uncollectible accounts at each date 1,038 1,033 Accrued unbilled revenue 342 370 Fuel inventory 120 116 Materials and supplies 311 316 Derivative assets 192 109 Restricted cash 3 3 Margin and collateral deposits 147 121 Regulatory assets 128 197 Accumulated deferred income taxes – net 218 167 Other current assets     339       290   Total current assets     4,418       4,244   Nonutility property – less accumulated provision for depreciation of $1,822 and $1,765 at respective dates 4,951 4,906 Nuclear decommissioning trusts 3,195 3,378 Investments in partnerships and unconsolidated subsidiaries 260 272 Investments in leveraged leases 2,486 2,473 Other investments     108       96   Total investments and other assets     11,000       11,125   Utility plant, at original cost: Transmission and distribution 19,158 18,940 Generation 1,795 1,767 Accumulated provision for depreciation (5,306 ) (5,174 ) Construction work in progress 1,820 1,693 Nuclear fuel, at amortized cost     231       177   Total utility plant     17,698       17,403   Derivative assets 135 122 Restricted cash 45 48 Rent payments in excess of levelized rent expense under plant operating leases 765 716 Regulatory assets 2,726 2,721 Other long-term assets     1,164       1,144   Total long-term assets     4,835       4,751     Total assets   $ 37,951     $ 37,523   Edison International Consolidated Balance Sheets   In millions   March 31,2008   December 31,2007   (Unaudited)   LIABILITIES AND SHAREHOLDERS’ EQUITY Short-term debt $ 400 $ 500 Long-term debt due within one year 164 18 Accounts payable 807 979 Accrued taxes 119 49 Accrued interest 223 160 Counterparty collateral 48 42 Customer deposits 221 219 Book overdrafts 192 212 Derivative liabilities 203 125 Regulatory liabilities 1,201 1,019 Other current liabilities     814       933   Total current liabilities     4,392       4,256   Long-term debt     9,325       9,016   Accumulated deferred income taxes – net 5,201 5,196 Accumulated deferred investment tax credits 112 114 Customer advances 149 155 Derivative liabilities 111 101 Power-purchase contracts 22 22 Accumulated provision for pensions and benefits 1,133 1,089 Asset retirement obligations 2,925 2,892 Regulatory liabilities 3,256 3,433 Other deferred credits and other long-term liabilities     1,654       1,595   Total deferred credits and other liabilities     14,563       14,597   Total liabilities     28,280       27,869   Minority interest     282       295   Preferred and preference stock of utility not subject to mandatory redemption     907       915   Common stock, no par value (325,811,206 shares outstanding at each date) 2,238 2,225 Accumulated other comprehensive loss (242 ) (92 ) Retained earnings     6,486       6,311   Total common shareholders’ equity     8,482       8,444       Total liabilities and shareholders’ equity   $ 37,951     $ 37,523   Edison International Consolidated Statements of Cash Flows       Three Months EndedMarch 31, In millions     2008       2007     (Unaudited) Cash flows from operating activities:   Net income $ 299 $ 333 Less: Income (loss) from discontinued operations     (5 )     3   Income from continuing operations 304 330 Adjustments to reconcile to net cash provided by operating activities: Depreciation, decommissioning and amortization 298 313 Realized loss on impairment of nuclear decommissioning trusts 45 8 Other amortization 27 31 Gain on buyout of contract and sale of assets (17 ) — Stock based compensation 6 6 Minority interest 8 19 Deferred income taxes and investment tax credits 31 (158 ) Equity in income from partnerships and unconsolidated subsidiaries (2 ) (16 ) Income from leveraged leases (13 ) (16 ) Regulatory assets 77 173 Regulatory liabilities 186 152 Levelized rent expense (48 ) (49 ) Derivative assets (96 ) (105 ) Derivative liabilities (162 ) (201 ) Other assets (20 ) (14 ) Other liabilities 92 226 Margin and collateral deposits – net of collateral received (21 ) (7 ) Receivables and accrued unbilled revenue 22 77 Inventory and other current assets (35 ) (90 ) Book overdraft (20 ) 24 Accrued interest and taxes 133 266 Accounts payable and other current liabilities (215 ) (238 ) Distributions and dividends from unconsolidated entities (2 ) (1 ) Operating cash flows from discontinued operations     (5 )     3   Net cash provided by operating activities     573       733   Cash flows from financing activities: Long-term debt issued 677 30 Long-term debt issuance costs (9 ) (1 ) Long-term debt repaid (7 ) (95 ) Bonds repurchased (212 ) — Preference stock redeemed (7 ) — Rate reduction notes repaid — (62 ) Short-term debt financing – net (100 ) 120 Shares purchased for stock-based compensation (24 ) (106 ) Proceeds from stock option exercises 7 39 Excess tax benefits related to stock option exercises 6 17 Dividends to minority shareholders (17 ) (24 ) Dividends paid     (99 )     (94 ) Net cash provided (used) by financing activities   $ 215     $ (176 ) Edison International Consolidated Statements of Cash Flows       Three Months EndedMarch 31, In millions     2008       2007     (Unaudited) Cash flows from investing activities:   Capital expenditures $ (705 ) $ (691 ) Purchase of interest of acquired companies — (4 ) Proceeds from sale of property and interests in projects 2 — Proceeds from nuclear decommissioning trust sales 829 1,029 Purchases of nuclear decommissioning trust investments and other (859 ) (1,062 ) Proceeds from partnerships and unconsolidated subsidiaries, net of investment 9 15 Maturities and sales of short-term investments 47 1,422 Purchase of short-term investments (1 ) (1,339 ) Restricted cash 2 38 Customer advances for construction and other investments     (8 )     (59 ) Net cash used by investing activities     (684 )     (651 ) Net increase (decrease) in cash and equivalents 104 (94 ) Cash and equivalents, beginning of period     1,441       1,795   Cash and equivalents, end of period   $ 1,545     $ 1,701