10-QPeriod: Q2 FY2006

EDISON INTERNATIONAL Quarterly Report for Q2 Ended Jun 30, 2006

Filed August 8, 2006For Securities:EIX

Summary

Edison International reported net income of $177 million ($0.54 per share) for the second quarter of 2006, a decrease from $201 million ($0.61 per share) in the same period of the prior year. The six-month period showed net income of $435 million ($1.32 per share), an increase from $403 million ($1.23 per share) in the first half of 2005. Southern California Edison (SCE) was the primary driver of the company's performance, with earnings from continuing operations increasing year-over-year for both periods, largely due to favorable regulatory decisions and higher rates. However, the nonutility power generation segment (EMG) experienced a significant net loss in the second quarter, primarily driven by an $88 million after-tax charge related to debt extinguishment from EME's bond refinancing. The company also advanced its wind project development and faced ongoing regulatory scrutiny regarding performance incentives.

Key Highlights

  • 1Consolidated net income for the second quarter of 2006 was $177 million, down from $201 million in the prior year's quarter, while six-month net income increased to $435 million from $403 million.
  • 2SCE's earnings from continuing operations improved due to the favorable resolution of a state income tax issue and the implementation of the 2006 General Rate Case decision.
  • 3The nonutility power generation segment (EMG) reported a $56 million loss for the quarter, heavily impacted by a $143 million loss on early extinguishment of debt by EME.
  • 4Total operating revenue increased to $3,001 million from $2,649 million for the quarter, driven by higher revenue from SCE.
  • 5The company is actively developing wind energy projects, including the Wildorado wind project expected to be operational in April 2007.
  • 6SCE's capital structure remains strong, with a common equity component exceeding regulatory requirements, allowing for potential dividend payments.
  • 7Edison International is actively managing market risk through derivative financial instruments, particularly for commodity price fluctuations.

Frequently Asked Questions

SCE's improved earnings from higher rates and regulatory approvals were offset by significant losses in the nonutility power generation segment, primarily due to debt extinguishment charges. This led to a year-over-year decrease in consolidated net income for the second quarter.

Edison International has decided not to move forward with efforts to return the Mohave Generating Station to service due to unresolved challenges and the potential for investments not to be cost-effective. The company is evaluating options for the disposition of the plant.

During the second quarter, EME completed a refinancing, issuing $1 billion in senior notes and using the proceeds to retire older, higher-interest debt. This transaction resulted in a $143 million loss on early extinguishment of debt.

SCE received a favorable decision in its 2006 General Rate Case, authorizing revenue increases. The company is also addressing investigations into performance incentive rewards for customer satisfaction and employee injury reporting, which could lead to refunds or penalties.