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Edison International Reports Operating Results (10-Q)

August 05, 2010 | About:
10qk

10qk

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Edison International (EIX) filed Quarterly Report for the period ended 2010-06-30.

Edison International has a market cap of $11.02 billion; its shares were traded at around $33.81 with a P/E ratio of 10.3 and P/S ratio of 0.9. The dividend yield of Edison International stocks is 3.7%. Edison International had an annual average earning growth of 1.4% over the past 10 years.EIX is in the portfolios of Richard Pzena of Pzena Investment Management LLC, HOTCHKIS & WILEY of HOTCHKIS & WILEY Capital Management LLC, John Buckingham of Al Frank Asset Management, Inc., Pioneer Investments, Charles Brandes of Brandes Investment, PRIMECAP Management, Steven Cohen of SAC Capital Advisors, David Dreman of Dreman Value Management, Kenneth Fisher of Fisher Asset Management, LLC, George Soros of Soros Fund Management LLC.

Highlight of Business Operations:

EMG's 2010 core earnings decreased $93 million and $80 million for the quarter and year-to-date, respectively. The decline in core earnings during the second quarter reflects increased coal fleet maintenance activities for scheduled plant outages, impact of unrealized gains and losses and lower generation. In addition, second quarter of 2009 results included $20 million after tax related to the sale of an interest in the Midlands Cogeneration Ventures leverage lease. In addition to the decrease in earnings attributable to the leverage lease transaction, the decrease in the six month results includes the higher scheduled outages during the second quarter, impact of unrealized gains and losses, and lower average realized energy prices. Partially offsetting these decreases in the six month results were higher trading revenues and distributions from two projects recorded in the first quarter.

An earnings benefit of $138 million recorded in the second quarter of 2010 resulting from acceptance by the California Franchise Tax Board of the tax positions finalized with the IRS in 2009 as part of the Global Settlement for tax years 1986 through 2002 (described in "Item 8. Edison International Notes to Consolidated Financial StatementsNote 4. Income Taxes" of the 2009 Form 10-K) and revision to interest recorded on the federal Global Settlement. Edison International is awaiting receipt of final interest calculations from the California Franchise Tax Board. A non-cash charge of $39 million in the first quarter of 2010 to reverse previously recognized federal tax benefits eliminated by the federal health care legislation. The Patient Protection and Affordable Care Act, as modified by the Health Care and Education Reconciliation Act, was enacted in March 2010. The new health care legislation includes a provision that eliminates the federal tax deduction of retiree health care costs to the extent those costs are eligible for federal Medicare Part D subsidies. Although this change does not take effect until January 1, 2013, Edison International is required to recognize the full accounting impact of the legislation in its financial statements in the period of enactment. 53

An after-tax earnings charge of $262 million and $274 million for the three- and six-month periods ended June 30, 2009, respectively, related to the Global Settlement with the IRS and termination of Edison Capital's cross-border leases ($920 million pre-tax loss). SCE Capital Program

SCE's capital investments (including accruals) during the six months ended June 30, 2010 totaled $1.5 billion. SCE projects that capital investments will be in the range of $3.3 billion to $4.0 billion in 2010 and the 2010 2014 total capital investment spending will be in the range of $18 billion to $21.5 billion. The rate of actual capital spending will be affected by permitting, regulatory, market and other factors as discussed further under "SCE: Liquidity and Capital ResourcesCapital Investment Plans" in the 2009 Form 10-K.

On July 19, 2010, SCE submitted to the CPUC's Division of Ratepayer Advocates its notice of intent (NOI) to file a 2012 GRC. The NOI indicates that SCE's GRC application, expected to be filed by year-end 2010, will request a 2012 base rate revenue requirement of $6.3 billion. After considering the effects of sales growth, SCE's request would be a $903 million increase over projected 2011 base rate revenue. If the CPUC approves the requested rate increase and allocates the increase to ratepayer groups on a system average percentage change basis, the percentage increases over current base rates and total rates are estimated to be 16.9% and 7.9%, respectively. The requested revenue requirement increase is driven by the need to maintain system reliability, accommodate customer load growth, and

EME filed a complaint in the Superior Court of the State of California against Mitsubishi Power Systems Americas, Inc. and Mitsubishi Heavy Industries, Ltd. with respect to a wind turbine generator supply agreement. Matters under dispute include, among other things, the requirement to purchase and pay the remaining purchase price for 199 MW of wind turbines, including related services and warranties, among other items, in the approximate amount of $289 million. The complaint asks the Court for, among other things, an order finding the supply agreement void and unenforceable and for an award of monetary damages, including return to EME of deposits of $68 million previously made for the units subject to dispute. See "Legal Proceedings" in Part II of this quarterly report.

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