10-KPeriod: FY2010

EDISON INTERNATIONAL Annual Report, Year Ended Dec 31, 2010

Filed February 28, 2011For Securities:EIX

Summary

Edison International's 2010 10-K filing highlights a year of significant capital investment, particularly by its utility subsidiary, Southern California Edison (SCE). SCE's capital expenditures focused on upgrading its transmission and distribution systems, smart meter deployment, and generation asset improvements, with a forecast of $15.6 billion to $17.5 billion in capital expenditures for 2011-2014. The company navigated a complex regulatory environment, including ongoing proceedings for its 2012 General Rate Case and addressing environmental compliance costs associated with its competitive generation segment, Edison Mission Group (EMG). EMG faced profitability challenges due to lower realized energy prices and higher fuel costs, particularly impacting its merchant power plants. The company also disclosed significant financial events, including the ongoing impact of the Global Settlement with the IRS and the effects of federal healthcare legislation on tax benefits.

Financial Highlights

44 data points
Beta

Revenue

$10.00B

Net Income

$1.31B

13.1% Net Margin

EPS (Diluted)

$3.82

Total Assets

$45.53B

Cash & Equivalents

$1.39B

Free Cash Flow

-$303.00M

Financial Statements
Beta
Revenue$10.00B
Operating Expenses$8.18B
Operating Income$1.82B
Interest Expense$440.00M
Net Income$1.31B
EPS (Basic)$3.84
EPS (Diluted)$3.82
Shares Outstanding (Basic)326.00M
Shares Outstanding (Diluted)329.00M

Key Highlights

  • 1SCE is undertaking a substantial capital investment program, forecasting $15.6 billion to $17.5 billion in expenditures from 2011-2014, primarily for infrastructure upgrades and smart meter deployment (EdisonSmartConnect™).
  • 2Edison International's competitive generation segment (EMG) experienced reduced profitability due to lower energy prices and increased fuel costs, leading to a projected net loss in 2011.
  • 3The company is addressing significant environmental regulatory developments, including compliance plans for NOx and SO2 controls at Midwest Generation plants and potential impacts from greenhouse gas regulations.
  • 4SCE is involved in a 2012 General Rate Case proceeding with the California Public Utilities Commission (CPUC), requesting a base rate revenue requirement increase.
  • 5Edison International received a positive after-tax benefit of $175 million in 2010 related to the California impact of the federal Global Settlement with the IRS.
  • 6The company recognized a $39 million after-tax charge in 2010 due to the reversal of federal tax benefits eliminated by new healthcare legislation.
  • 7EMG's credit ratings (EME, Midwest Generation) were on negative outlook, potentially impacting its ability to refinance credit facilities on favorable terms.

Frequently Asked Questions

SCE's financial performance in 2010 was primarily driven by higher operating revenue stemming from rate increases authorized by the CPUC and FERC, along with increased operation and maintenance expenses supporting system reliability and growth programs. Capital expenditures were also significant, focused on infrastructure upgrades.

EMG's primary challenges include declining profitability in its merchant power generation segment due to lower energy prices and higher fuel costs. Additionally, EMG faces significant environmental compliance costs and potential operational impacts from stringent regulations, particularly for its coal-fired plants.

Edison International forecasts substantial capital expenditures for SCE in the coming years, funded through operational cash flows, tax benefits, and capital market financings. The company maintains credit facilities to ensure liquidity. EMG's liquidity is dependent on distributions from its subsidiaries and its ability to manage significant debt obligations and environmental compliance needs.

Edison International and its subsidiaries are subject to extensive environmental laws and regulations. These regulations, particularly those concerning greenhouse gas emissions, air and water quality, and coal combustion waste, may require significant capital expenditures and could affect operational costs and strategies, especially for EMG's coal-fired facilities.