01—Abstract
Summary
Summary of the 10-K filed February 26, 2013. Cited figures are marked; the original filing is the authoritative source.
Edison International (EIX) reported a net loss of $0.56a per share for the fiscal year ended December 31, 2012.
This loss was primarily driven by a significant charge related to the bankruptcy filing of its subsidiary, Edison Mission Energy (EME), which resulted in a $1.3 billionb after-tax impairment charge. Despite the net loss, Southern California Edison (SCE), the primary operating subsidiary, demonstrated resilience with income from continuing operations of $1.569 billion. SCE's performance was bolstered by a rate base growth and lower income taxes following the 2012 CPUC General Rate Case decision.
However, SCE also faced operational challenges, notably the ongoing outage and inspection issues at its San Onofre nuclear facility, which incurred significant inspection and repair costs and resulted in lost revenue from purchased power. The company is actively managing these situations, including contract disputes with the steam generator manufacturer and regulatory reviews regarding cost recovery. Financially, Edison International's liquidity depends on SCE's ability to pay dividends, and SCE remains subject to CPUC dividend policy regulations.
The company's capital program is focused on transmission and distribution system upgrades. Investors should note the significant impact of EME's bankruptcy on Edison International's consolidated results, the ongoing regulatory scrutiny of SCE's San Onofre nuclear operations, and the company's substantial capital expenditure plans.
02—Key points
Key Highlights
- Edison International reported a net loss of $0.56 per share for FY 2012, largely due to a $1.3 billion impairment charge related to the EME bankruptcy.
- Southern California Edison (SCE) posted solid income from continuing operations of $1.569 billion, benefiting from rate base growth and a favorable 2012 General Rate Case decision.
- SCE is addressing significant operational issues at the San Onofre nuclear facility, including steam generator wear, which has led to extended outages and incurred substantial repair costs.
- The company's capital program for 2013-2014 is substantial, focusing on transmission and distribution system improvements, with projected expenditures of $7.3 billion to $8.2 billion.
- Edison International's liquidity is heavily reliant on dividends from SCE, which is subject to regulatory restrictions on dividend payments to the parent company.
- The EME bankruptcy filing in December 2012 led to its deconsolidation from Edison International's financial statements, significantly impacting the parent company's net income.
- SCE continues to manage market risk for commodities through hedging programs, with costs expected to be recovered through regulatory mechanisms.
03—One dollar
04—Financials
Financial Highlights
Figures from 10-KFY2012filed February 26, 2013Financial Statements
FY2012 against FY2011
| Line item | FY2012FY2011 | Change |
|---|---|---|
| Revenue | $11.86B$10.59B | +12.0% |
| Operating Expenses | $9.58B$8.53B | +12.3% |
| Operating Income | $2.29B$2.06B | +10.9% |
| Interest Expense | $521.00M$485.00M | +7.4% |
| Net Income | -$92.00M$22.00M | −518.2% |
| EPS (Basic) | $-0.56$-0.11 | −409.1% |
| EPS (Diluted) | $-0.56$-0.11 | −409.1% |
| Shares Outstanding (Basic) | 326.00M326.00M | 0.0% |
| Shares Outstanding (Diluted) | 330.00M329.00M | +0.3% |
05—Questions
Frequently Asked Questions
What was the primary driver of Edison International's net loss in 2012?
The primary driver of Edison International's net loss in 2012 was a $1.3 billion after-tax impairment charge recognized in the fourth quarter due to the bankruptcy filing and deconsolidation of its subsidiary, Edison Mission Energy (EME).
What are the main operational challenges facing Southern California Edison (SCE)?
SCE is facing significant challenges related to the extended outage and inspection of its San Onofre nuclear facility due to steam generator wear and leaks. This has resulted in substantial repair costs and the need to purchase replacement power, impacting operational expenses and potentially future regulatory outcomes.
How does SCE recover its costs and manage regulatory risks?
SCE recovers its costs through rates approved by the California Public Utilities Commission (CPUC) and the Federal Energy Regulatory Commission (FERC). The company utilizes balancing accounts to track and recover specific costs like fuel and purchased power, subject to reasonableness reviews. Regulatory risks include potential disallowances of costs by regulators, changes in regulations, and the impact of public policy initiatives on rates.
What is the significance of the EME bankruptcy for Edison International's financial health?
The bankruptcy of EME led to its deconsolidation from Edison International's financial statements and a significant impairment charge, resulting in a substantial net loss for the parent company. Edison International's future performance is now more concentrated on its regulated utility operations.
06—Continue