10-QPeriod: Q1 FY2008

EDISON INTERNATIONAL Quarterly Report for Q1 Ended Mar 31, 2008

Filed May 8, 2008For Securities:EIX

Summary

Edison International reported net income of $299 million for the first quarter of 2008, a decrease from $333 million in the same period of 2007. This decline was primarily driven by lower net income from its electric utility segment (Southern California Edison), which saw a decrease of $30 million year-over-year. The nonutility power generation segment (Edison Mission Group) experienced a slight increase in earnings, up by $6 million to $159 million. The company's results were impacted by various regulatory matters, tax reserves, and operational costs. Despite the decrease in net income, Edison International maintained a strong liquidity position with substantial availability under its credit facilities. The company also provided updates on ongoing regulatory proceedings, capital expenditure plans, and market risk exposures across its segments.

Key Highlights

  • 1Net income decreased by $34 million to $299 million for the first quarter of 2008 compared to $333 million in the prior year.
  • 2Southern California Edison (SCE), the electric utility segment, reported lower earnings of $150 million, down from $180 million in Q1 2007, impacted by tax reserve changes and operating costs.
  • 3Edison Mission Group (EMG), the nonutility power generation segment, saw an increase in earnings to $159 million from $155 million in Q1 2007, driven by higher gross margins and energy trading results.
  • 4The company's effective tax rate increased to 35% in Q1 2008 from 28% in Q1 2007, primarily due to a reduction in income tax reserves in the prior year.
  • 5Edison International amended its credit facilities on March 12, 2008, extending maturities to February 2013 and retaining existing borrowing costs.
  • 6Capital expenditures for the first quarter of 2008 totaled $684 million for continuing operations, with significant investments in transmission and distribution assets by SCE.
  • 7The company is actively managing significant tax contingencies, including ongoing disputes with the IRS related to lease transactions and other tax positions.

Frequently Asked Questions

Edison International reported net income of $299 million, or $0.91 per diluted share, for the first quarter of 2008, compared to $333 million, or $1.00 per diluted share, for the same period in 2007. Earnings from continuing operations were $304 million in Q1 2008 versus $330 million in Q1 2007.

The decrease in net income was primarily driven by lower earnings from Southern California Edison (SCE), the electric utility segment, which fell by $30 million year-over-year. This was partially offset by a slight increase in earnings from Edison Mission Group (EMG), the nonutility power generation segment. A significant factor was an increase in the effective tax rate due to a tax benefit recorded in the prior year's first quarter related to environmental remediation costs.

Edison International and SCE amended their existing credit facilities on March 12, 2008, extending maturities to February 2013 with options to extend further. As of March 31, 2008, SCE had approximately $1.88 billion available under its credit facility for liquidity purposes. The parent company also has a $1.5 billion credit facility with the full amount available. The company expects to meet its short-term obligations through operating cash flows and existing credit facilities.

Yes, Edison International is involved in several significant matters. These include ongoing audits and appeals with the IRS concerning complex lease transactions, which could have a material impact on earnings and cash flow. Additionally, SCE is facing potential refunds and penalties related to investigations into its performance-based ratemaking (PBR) mechanisms for customer satisfaction and employee safety. The company is also subject to various environmental regulations and potential liabilities. Details on these matters can be found in the 'Commitments and Contingencies' and 'Other Developments' sections of the filing.