EDISON INTERNATIONAL LOGO News Release
FOR IMMEDIATE RELEASE
Media Contact: (626) 302-1033
www.edison.com
Edison International Reports
Financial Results for the Third Quarter of 2004
ROSEMEAD, Calif, November 5, 2004 -
o Edison International (EIX) recorded in the third quarter of 2004 consolidated earnings of $2.49 per
share, an increase of 49% over the same period last year.
o The consolidated Mission Energy Holding Company (MEHC) / Edison Mission Energy took a major step toward
the completion of its financial recovery with the sale of its interest in Contact Energy, located in New Zealand,
and an agreement to sell its remaining international assets.
o The sale of MEHC's interest in Contact Energy generated a net gain of 39 cents per share. The sale of
the remaining international assets is also expected to provide a substantial gain.
o Under applicable accounting rules, the company recognized this quarter a "deferred tax benefit" of $327
million. The balance of the gain from the sale of the international assets will be recorded at the completion of
the sale.
Third Quarter 2004 Financial Highlights:
o Earnings per share - $2.49
o Revenues - $3.2 billion
THIRD-QUARTER EARNINGS SUMMARY
For the third quarter of 2004, EIX recorded consolidated earnings of $2.49 per share compared to earnings of
$1.67 per share in the same period last year. The increase is primarily due to net benefits related to the sale of
MEHC's interest in Contact Energy and the planned sale of its international projects, partially offset by reduced
earnings from MEHC's Illinois and Homer City projects and lower net regulatory items at SCE in 2004.
"During the third quarter, the company took a major step to secure the financial recovery of MEHC by selling,
at a substantial gain, its interest in Contact Energy and making excellent progress towards completion of the sale of
the remaining international projects. This step, coupled with constructive prior regulatory decisions for SCE, set a
foundation for an increase in our dividend and a 5-year outlook for earnings growth substantially above our peers'
average," commented John Bryson, Chairman, Edison International.
Beginning in the third quarter of 2004, MEHC reclassified the results of its international projects to
discontinued operations. This reclassification included a 39-cent-per-share net gain on the sale of its interest in
Contact Energy and a deferred tax benefit of $1.00 per share related to the planned sale of its remaining
international projects. The deferred tax benefit was recorded to recognize the higher tax basis of
- more -
MEHC's international holding company (BV) over the related book basis, as required by accounting rules applicable to
discontinued operations.
THIRD-QUARTER EARNINGS DETAIL
Earnings from Continuing Operations
SCE's earnings from continuing operations were $259 million in the third quarter of 2004, compared with $329
million in the third quarter of 2003. The decrease in third quarter earnings primarily reflects a $79 million
reduction in regulatory items. After adjusting for regulatory items, higher revenue authorized in the utility's 2003
general rate case (GRC) for 2004 more than offset the expiration of the incentive mechanism for the San Onofre nuclear
plant and higher operating and maintenance expense. SCE's 2004 third quarter earnings included two positive
regulatory items totaling $64 million resulting from the implementation of the 2003 GRC decision which were partially
offset by $14 million for the anticipated refund of employee safety awards previously recognized. Positive regulatory
items that occurred in the third quarter of 2003 included $79 million related to the California Public Utilities
Commission's (CPUC) decision on cost allocation and $50 million for the disposition of the PROACT account.
MEHC's income from continuing operations was $59 million in the third quarter of 2004 compared to $136 million
in the third quarter of 2003. The decrease was primarily due to Midwest Generation's (MWG) lower capacity payments
received under the Exelon power purchase agreements, an $18 million impairment charge related to MWG's small peaking
plants and reduced earnings from the Homer City facilities due to lower generation and higher fuel costs related to
the cost of emission allowances. The decrease in earnings was also due to the absence of earnings from Four Star Oil
& Gas Company as compared to the third quarter of 2003 due to the sale of MEHC's interest in that project in the first
quarter of 2004. On an annual basis, MEHC's earnings are seasonal with higher earnings expected during the summer
months.
Earnings in the third quarter of 2004 for Edison Capital were substantially unchanged from the same
period last year. The loss for "EIX parent company and other" decreased by $2 million primarily due to lower net
interest expense.
Earnings from Discontinued Operations
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. The financial results for the third quarter of
2004 included a net after-tax gain on sale of Contact Energy of $126 million, which includes a $141 million gain
on sale partially offset by a $15 million cost on a foreign exchange option. In addition, MEHC recorded a deferred
tax benefit of $327 million to recognize the higher tax basis of its international holding company (BV) over its
book basis as required by accounting rules applicable to discontinued operations. The sale of the remaining
international projects is structured as a sale of the stock of the BV, which held the international assets of
MEHC. The taxable income from the sale of MEHC's interest in Contact Energy increased the stock basis of the BV,
resulting in a reduction to the projected tax on the sale of the remaining projects and recognition under
accounting rules of this deferred tax benefit.
Excluding these items, the earnings from discontinued operations were $47 million during the third quarter
of 2004 compared to $39 million during the third quarter of 2003. The increase in earnings was due to improved
performance at Loy Yang B and First Hydro offset by interest costs related to the $800 million bridge loan
completed in December 2003. The third-quarter 2003 financial results also include a gain on sale of $44 million
from SCE's pipeline business.
-more-
Quarter Ended Sept. 30,
Earnings (Loss) Per Share (Unaudited) 2004 2003 Change
- ------------------------------------- -----------------------------------------------
Southern California Edison $0.79 $1.01 $(0.22)
Mission Energy Holding Company 0.18 0.42 (0.24)
Edison Capital 0.04 0.04 --
EIX parent company and other (0.05) (0.06) 0.01
- ----------------------------------------------------------------------------------------------------------------
EIX Consol. Earnings from Continuing Operations 0.96 1.41 (0.45)
- ----------------------------------------------------------------------------------------------------------------
Earnings from Discontinued Operations - SCE -- 0.14 (0.14)
Earnings from Discontinued Operations - MEHC 1.53 0.12 1.41
- ----------------------------------------------------------------------------------------------------------------
Total EIX Consolidated Earnings $2.49 $1.67 $0.82
================================================================================================================
Quarter Ended Sept. 30,
Earnings (Loss) (in millions) (Unaudited) 2004 2003 Change
- ----------------------------------------- ------------------------------------------------
Southern California Edison $259 $329 $(70)
Mission Energy Holding Company 59 136 (77)
Edison Capital 12 14 (2)
EIX parent company and other (17) (19) 2
- ----------------------------------------------------------------------------------------------------------------
EIX Consol. Earnings from Continuing Operations 313 460 (147)
- ----------------------------------------------------------------------------------------------------------------
Earnings from Discontinued Operations - SCE -- 45 (45)
Earnings from Discontinued Operations - MEHC 500 39 461
- ----------------------------------------------------------------------------------------------------------------
Total EIX Consolidated Earnings $813 $544 $269
================================================================================================================
YEAR-TO-DATE EARNINGS SUMMARY
EIX recorded earnings of $1.65 cents per share for the nine-month period ending September 30, 2004,
compared to $1.92 per share for the same period last year. The results include several non-core adjustments
which are summarized in the table below to reconcile year-to-date reported earnings to core earning.
YTD ADJUSTMENTS REQUIRED TO RECONCILE REPORTED EARNINGS TO CORE EARNINGS 2004 2005
EIX YTD SEPTEMBER 30 EARNINGS PER SHARE ON A REPORTED BASIS $1.65 $1.92
SCE Net positive regulatory items (0.48) (0.58)
SCE Gain and operating results from the sale of the pipeline business -- (0.15)
MEHC Deferred tax benefit from agreement to sell remaining international assets (1.00) --
MEHC Net gain on sale of interest in Contact Energy (0.39) --
MEHC Collins lease termination 1.81 --
MEHC Asset impairments for MWG's small peakers and Gordonsville 0.05 0.47
MEHC Gain on sale of interest in Four Star Oil & Gas Company (0.09) --
MEHC Change in accounting principle -- 0.03
---- ----
(0.10) (0.23)
EIX YTD SEPTEMBER 30 CORE EARNINGS $1.55 $1.69
The 2004 non-core adjustments include earnings of 48 cents per share at SCE from regulatory items
primarily related to its 2003 GRC decision, a $1.00 per share deferred tax benefit at
- more -
MEHC related to the planned sale of its remaining international projects, the net gain on the sale of MEHC's
interest in Contact Energy of 39 cents per share, a charge of $1.81 per share related to the termination of the
Collins Facility lease, asset impairment charges totaling 5 cents per share for MEHC's Midwest Generation peaking
units, and the gain on the sale of MEHC's interest in Four Star Oil & Gas Company of 9 cents per share. The 2003
non-core adjustments include earnings of 58 cents per share at SCE from various positive regulatory items,
discontinued operations along with a gain on sale from SCE's pipeline business of 15 cents per share, a charge of
47 cents per share at MEHC related to the impairment of eight small peaking plants in Illinois and the
Gordonsville facility, and a 3-cent-per-share charge for a change in accounting principles at MEHC related to
asset retirement obligations.
Excluding the non-core items, EIX's earnings were $1.55 per share for the nine-month period ending
September 30, 2004 compared to $1.69 per share for the same period last year. Most of the decrease reflects the
expiration of SCE's incentive mechanism for the San Onofre nuclear plant, lower earnings at MEHC's Homer City
facility, and the absence of earnings from MEHC's interest in the Four Star Oil & Gas Company, which was sold in
the first quarter of 2004. The decrease was partially offset by higher authorized revenue at SCE and improved
operating performance at MEHC's international projects.
YEAR-TO-DATE EARNINGS DETAIL
Earnings (Loss) from Continuing Operations
SCE's earnings from continuing operations for the nine-month period ending September 30, 2004 decreased
by $50 million, compared to the same period last year. The decrease primarily reflects the expiration of the
incentive mechanism for the San Onofre nuclear plant and the net effect of several regulatory items partially
offset by higher authorized revenues. The regulatory items include those discussed above as well as an additional
33 cents per share in 2004 primarily related to the implementation of the 2003 GRC decision and 19 cents per
share in 2003 primarily related to prior period incentive awards at the Palo Verde nuclear plant and the tax
impact of a Federal Energy Regulatory Commission rate case.
MEHC, on a consolidated basis, had a loss from continuing operations of $623 million compared to a loss
of $114 million in the same period last year. MEHC's loss from continuing operations for the nine-month period
ending September 30, 2004, increased by $509 million compared to the same period last year primarily due to the
$608 million in charges for both the termination of the Collins lease and impairment of Illinois small peaking
plants, partially offset by the 2003 asset impairment charge of $150 million related to the Illinois small
peaking plants. MEHC's 2004 results were favorably impacted by the gain on the sale of EME's interest in the
Four Star Oil & Gas Company which offset the earnings recorded in 2003 from the ownership of the Four Star Oil &
Gas investment. The 2004 earnings from the Homer City facilities were lower in 2004 than 2003 due to lower
generation and higher fuel costs related to the cost of emission allowances.
Edison Capital's earnings for the nine-months ended September 30, 2004 were $34 million, down $7 million
from the same period last year. This decrease is primarily due to its maturing lease and housing portfolios
which produce lower income.
The loss for the nine months ended September 30, 2004 for "EIX parent company and other" decreased by $8
million compared to the same period last year mainly due to lower net interest expense.
- more -
Earnings from Discontinued Operations
Earnings from discontinued operations for the nine months ended September 30, 2004, include a gain on
sale and operating results totaling $50 million from SCE's pipeline business which was sold in the third quarter
of 2003. At MEHC, in addition to the net gain on the sale of its interest in Contact Energy and the deferred tax
benefit discussed above, the financial results of discontinued operations for the nine months ended September 30,
2004 were $126 million compared to $66 million for the nine months ended September 30, 2003. Earnings increased
primarily due to the improved performance of First Hydro, Contact Energy, Loy Yang B and Paiton partially offset
by higher interest costs on the $800 million bridge loan completed in December 2003.
Change in Accounting Principle
MEHC's consolidated results for the nine-month period ending September 30, 2003 include a $9-million charge
for the cumulative effect of a change in accounting principle for asset retirement obligations adopted in 2003.
As SCE follows accounting principles for rate-regulated enterprises, implementation of this new standard did not
affect its earnings. Edison Capital's 2004 results for the nine months ended September 30, 2004 include a $1
million charge for the cumulative effect of a change in accounting principle reflecting the impact of Edison
Capital's implementation of an accounting standard that requires the consolidation of certain variable interest
entities.
Year-To-Date Ended Sept. 30,
Earnings (Loss) Per Share (Unaudited) 2004 2003 Change
- ------------------------------------- -----------------------------------------------------
Southern California Edison $1.84 $2.00 $(0.16)
Mission Energy Holding Company (1.91) (0.35) (1.56)
Edison Capital 0.11 0.13 (0.02)
EIX parent company and other (0.17) (0.19) 0.02
- ----------------------------------------------------------------------------------------------------------------
EIX Consol. Earnings (Loss) from Continuing Ops. (0.13) 1.59 (1.72)
- ----------------------------------------------------------------------------------------------------------------
Earnings from Discontinued Ops. - SCE -- 0.15 (0.15)
Earnings from Discontinued Ops. - MEHC 1.78 0.21 1.57
Cumulative Effect of Accounting Change - MEHC -- (0.03) 0.03
- ----------------------------------------------------------------------------------------------------------------
Total EIX Consolidated Earnings $1.65 $1.92 $(0.27)
================================================================================================================
Year-To-Date Ended Sept. 30,
Earnings (Loss) (in millions) (Unaudited) 2004 2003 Change
- ----------------------------------------- -----------------------------------------------------
Southern California Edison $600 $650 $(50)
Mission Energy Holding Company (623) (114) (509)
Edison Capital 34 41 (7)
EIX parent company and other (52) (60) 8
- ----------------------------------------------------------------------------------------------------------------
EIX Consol. Earnings (Loss) from Continuing Ops. (41) 517 (558)
- ----------------------------------------------------------------------------------------------------------------
Earnings from Discontinued Ops. - SCE -- 50 (50)
Earnings from Discontinued Ops. - MEHC 579 66 513
Cumulative Effect of Accounting Change - MEHC -- (9) 9
Cumulative Effect of Accounting Change - EC (1) -- (1)
----------------------------------------------------------------------------------------------------------------
Total EIX Consolidated Earnings $537 $624 $(87)
================================================================================================================
Reminder: EIX Will Hold a Conference Call Today
Today, EIX will hold a conference call to discuss its 2004 third quarter financial results at 9:30 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 10100.
###
Based in Rosemead, Calif., Edison International (NYSE: EIX) is the parent company of Southern California
Edison, Edison Mission Energy and Edison Capital.
EDISON INTERNATIONAL
SUMMARY OF CONSOLIDATED EARNINGS
(UNAUDITED)
IN MILLIONS, EXCEPT PER-SHARE AMOUNTS QUARTER ENDED SEPTEMBER 30, YEAR TO DATE SEPTEMBER 30,
- -----------------------------------------------------------------------------------------------------------------------
2004 2003 2004 2003
- -----------------------------------------------------------------------------------------------------------------------
ELECTRIC UTILITY $ 2,655 $ 2,794 $ 6,527 $ 6,994
NONUTILITY POWER GENERATION 509 602 1,228 1,326
FINANCIAL SERVICES AND OTHER 24 25 85 73
- -----------------------------------------------------------------------------------------------------------------------
TOTAL OPERATING REVENUE 3,188 3,421 7,840 8,393
- -----------------------------------------------------------------------------------------------------------------------
FUEL 415 239 1,010 630
PURCHASED POWER 915 1,013 2,022 2,187
PROVISIONS FOR REGULATORY ADJUSTMENT CLAUSES - NET (34) 332 (85) 1,141
OTHER OPERATION AND MAINTENANCE 782 709 2,351 2,096
ASSET IMPAIRMENT AND LOSS ON LEASE TERMINATION 35 - 989 251
DEPRECIATION, DECOMMISSIONING AND AMORTIZATION 232 253 752 726
PROPERTY AND OTHER TAXES 50 50 148 130
NET GAIN ON SALE OF UTILITY PLANT - (5) - (5)
- -----------------------------------------------------------------------------------------------------------------------
TOTAL OPERATING EXPENSES 2,395 2,591 7,187 7,156
- -----------------------------------------------------------------------------------------------------------------------
OPERATING INCOME 793 830 653 1,237
INTEREST AND DIVIDEND INCOME 9 19 32 107
EQUITY IN INCOME FROM PARTNERSHIPS AND
UNCONSOLIDATED SUBSIDIARIES - NET 30 119 57 196
OTHER NONOPERATING INCOME 5 26 97 66
INTEREST EXPENSE - NET OF AMOUNTS CAPITALIZED (254) (262) (746) (753)
OTHER NONOPERATING DEDUCTIONS (12) (11) (50) (31)
MINORITY INTEREST (76) - (119) -
DIVIDENDS ON PREFERRED SECURITIES
SUBJECT TO MANDATORY REDEMPTION - - - (52)
DIVIDENDS ON UTILITY PREFERRED STOCK
NOT SUBJECT TO MANDATORY REDEMPTION (1) (1) (4) (4)
- -----------------------------------------------------------------------------------------------------------------------
INCOME (LOSS) FROM CONTINUING OPERATIONS BEFORE TAX 494 720 (80) 766
INCOME TAX (BENEFIT) 181 260 (39) 249
- -----------------------------------------------------------------------------------------------------------------------
INCOME (LOSS) FROM CONTINUING OPERATIONS 313 460 (41) 517
INCOME FROM DISCONTINUED OPERATIONS - NET OF TAX 500 84 579 116
- -----------------------------------------------------------------------------------------------------------------------
INCOME BEFORE ACCOUNTING CHANGE 813 544 538 633
CUMULATIVE EFFECT OF ACCOUNTING CHANGE - NET OF TAX - - (1) (9)
- -----------------------------------------------------------------------------------------------------------------------
NET INCOME $ 813 $ 544 $ 537 $ 624
=======================================================================================================================
WEIGHTED-AVERAGE SHARES
OF COMMON STOCK OUTSTANDING 326 326 326 326
BASIC EARNINGS (LOSS) PER SHARE:
CONTINUING OPERATIONS $ 0.96 $ 1.41 $ (0.13) $ 1.59
DISCONTINUED OPERATIONS 1.53 0.26 1.78 0.36
CUMULATIVE EFFECT OF ACCOUNTING CHANGE - - - (0.03)
------------- --------------- ----------- ---------------
TOTAL $ 2.49 $ 1.67 $ 1.65 $ 1.92
============= =============== =========== ===============
WEIGHTED-AVERAGE SHARES, INCLUDING
EFFECT OF DILUTIVE SECURITIES 330 329 330 329
DILUTED EARNINGS (LOSS) PER SHARE:
CONTINUING OPERATIONS $ 0.95 $ 1.40 $ (0.13) $ 1.57
DISCONTINUED OPERATIONS 1.51 0.25 1.76 0.35
CUMULATIVE EFFECT OF ACCOUNTING CHANGE - - - (0.02)
------------- --------------- ----------- ---------------
TOTAL $ 2.46 $ 1.65 $ 1.63 $ 1.90
============= =============== =========== ===============
DIVIDENDS DECLARED PER COMMON SHARE $ 0.20 $ - $ 0.60 $ -
EDISON INTERNATIONAL
Financial Overview
September 30, 2004
UNAUDITED
Dollars in Millions, Except Per-Share Amounts
EDISON INTERNATIONAL (Consolidated Totals)
Third Quarter Year-to-Date
------------- ------------
2004 2003 2004 2003
---- ---- ---- ----
Assets $33,643 $35,622 $33,643 $35,622
Common Equity $5,648 $5,213 $5,648 $5,213
Revenue $3,188 $3,421 $7,840 $8,393
Earnings* $813 $544 $537 $624
Earnings Per Share* $2.49 $1.67 $1.65 $1.92
Book Value Per Share $17.34 $16.00 $17.34 $16.00
*includes parent company
SOUTHERN CALIFORNIA EDISON (Electric Utility)
Third Quarter Year-to-Date
------------- ------------
2004 2003 2004 2003
---- ---- ---- ----
Assets $19,704 $20,225 $19,704 $20,255
Common Equity $4,363 $5,092 $4,363 $5,092
Revenue $2,655 $2,794 $6,527 $6,994
Earnings $259 $374 $600 $700
Earnings Per Share $0.79 $1.15 $1.84 $2.15
MISSION ENERGY HOLDING COMPANY-CONSOLIDATED (Nonutility Power Generation)
Third Quarter Year-to-Date
------------- ------------
2004 2003 2004 2003
---- ---- ---- ----
Assets $10,168 $12,056 $10,168 $12,056
Common Equity $713 $820 $713 $820
Revenue $509 $602 $1,228 $1,326
Earnings (Loss) $559 $175 $(44) $(57)
Earnings (Loss) Per Share $1.71 $0.54 $(0.13) $(0.17)
EDISON CAPITAL (Capital and Financial Services Provider)
Third Quarter Year-to-Date
------------- ------------
2004 2003 2004 2003
---- ---- ---- ----
Assets $3,630 $3,543 $3,630 $3,543
Common Equity $660 $824 $660 $824
Revenue $22 $21 $78 $65
Earnings $12 $14 $33 $41
Earnings Per Share $0.04 $0.04 $0.11 $0.13
SOUTHERN CALIFORNIA EDISON
kWh Sales (In thousands)
September 30, 2004
QUARTER ENDED SEPTEMBER 30, 2004
--------------------------------
INCREASE/(DECREASE)
FROM
KwH LAST YEAR %
-----------------------------------------------
RESIDENTIAL 8,431,331 (222,432) (2.57)
AGRICULTURAL 440,641 32,628 8.00
COMMERCIAL 10,571,228 66,971 0.64
INDUSTRIAL 2,850,885 71,940 2.59
PUBLIC AUTHORITIES 1,671,251 (27,251) (1.60)
RAILROADS & RAILWAYS 15,508 (145) (0.93)
INTERDEPARTMENTAL 180 38 26.76
----------------------------------
SALES TO ULTIMATE CONSUMERS 23,981,024 (78,251) (0.33)
RESALE SALES 3,014,125 484,899 19.17
----------------------------------
TOTAL KWH SALES 26,995,149 406,648 1.53
==================================
NINE MONTHS ENDED SEPTEMBER 30, 2004
------------------------------------
INCREASE/(DECREASE)
FROM
KwH LAST YEAR %
-----------------------------------------------
RESIDENTIAL 21,331,583 845,496 4.13
AGRICULTURAL 978,260 132,970 15.73
COMMERCIAL 28,795,118 1,122,148 4.06
INDUSTRIAL 8,242,503 164,374 2.03
PUBLIC AUTHORITIES 4,613,211 84,304 1.86
RAILROADS & RAILWAYS 46,208 80 0.17
INTERDEPARTMENTAL 478 174 57.24
----------------------------------
SALES TO ULTIMATE CONSUMERS 64,007,361 2,349,546 3.81
RESALE SALES 10,333,520 3,457,718 50.29
----------------------------------
TOTAL KWH SALES 74,340,881 5,807,264 8.47
==================================
