(Mark One) | |
þ | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the quarterly period ended March 31, 2014 | |
o | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the transition period from to |
Commission File Number | Exact Name of Registrant as specified in its charter | State or Other Jurisdiction of Incorporation or Organization | IRS Employer Identification Number | |||
1-9936 | EDISON INTERNATIONAL | California | 95-4137452 | |||
1-2313 | SOUTHERN CALIFORNIA EDISON COMPANY | California | 95-1240335 |
EDISON INTERNATIONAL | SOUTHERN CALIFORNIA EDISON COMPANY | |
2244 Walnut Grove Avenue (P.O. Box 976) Rosemead, California 91770 (Address of principal executive offices) | 2244 Walnut Grove Avenue (P.O. Box 800) Rosemead, California 91770 (Address of principal executive offices) | |
(626) 302-2222 (Registrant's telephone number, including area code) | (626) 302-1212 (Registrant's telephone number, including area code) |
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer or a smaller reporting company. See the definitions of "accelerated filer," "large accelerated filer," and "smaller reporting company" in Rule 12b-12 of the Exchange Act. (Check One): | ||||
Edison International | Large Accelerated Filer þ | Accelerated Filer ¨ | Non-accelerated Filer ¨ | Smaller Reporting Company ¨ |
Southern California Edison Company | Large Accelerated Filer ¨ | Accelerated Filer ¨ | Non-accelerated Filer þ | Smaller Reporting Company ¨ |
Common Stock outstanding as of April 25, 2014: | ||
Edison International | 325,811,206 shares | |
Southern California Edison Company | 434,888,104 shares |
2013 Form 10-K | Edison International's and SCE's combined Annual Report on Form 10-K for the year-ended December 31, 2013 | |
APS | Arizona Public Service Company | |
ARO(s) | asset retirement obligation(s) | |
Bankruptcy Code | Chapter 11 of the United States Bankruptcy Code | |
Bankruptcy Court | United States Bankruptcy Court for the Northern District of Illinois, Eastern Division | |
Bcf | billion cubic feet | |
CAA | Clean Air Act | |
CAISO | California Independent System Operator | |
CARB | California Air Resources Board | |
CDWR | California Department of Water Resources | |
CEC | California Energy Commission | |
Competitive Businesses | competitive businesses related to the generation, delivery and use of electricity | |
CPUC | California Public Utilities Commission | |
CRRs | congestion revenue rights | |
DOE | U.S. Department of Energy | |
EME | Edison Mission Energy | |
EMG | Edison Mission Group Inc. | |
EPS | earnings per share | |
ERRA | energy resource recovery account | |
FASB | Financial Accounting Standards Board | |
FERC | Federal Energy Regulatory Commission | |
Four Corners | coal fueled electric generating facility located in Farmington, New Mexico in which SCE held a 48% ownership interest | |
GAAP | generally accepted accounting principles | |
GHG | greenhouse gas | |
GRC | general rate case | |
GWh | gigawatt-hours | |
IRS | Internal Revenue Service | |
ISO | Independent System Operator | |
kWh(s) | kilowatt-hour(s) | |
MD&A | Management's Discussion and Analysis of Financial Condition and Results of Operations in this report | |
MHI | Mitsubishi Heavy Industries, Ltd. and related companies | |
Moody's | Moody's Investors Service | |
MW | megawatts | |
MWh | megawatt-hours | |
NAAQS | national ambient air quality standards | |
NERC | North American Electric Reliability Corporation | |
NRC | Nuclear Regulatory Commission | |
OII | Order Instituting Investigation | |
Palo Verde | large pressurized water nuclear electric generating facility located near Phoenix, Arizona in which SCE holds a 15.8% ownership interest | |
PBOP(s) | postretirement benefits other than pension(s) | |
Petition Date | December 17, 2012 (date on which EME and certain of its wholly-owned subsidiaries filed for protection under Chapter 11 of the Bankruptcy Code) | |
PG&E | Pacific Gas & Electric Company |
QF(s) | qualifying facility(ies) | |
ROE | return on common equity | |
S&P | Standard & Poor's Ratings Services | |
San Onofre | retired nuclear generating facility located in south San Clemente, California in which SCE holds a 78.21% ownership interest | |
SCE | Southern California Edison Company | |
SDG&E | San Diego Gas & Electric | |
SEC | U.S. Securities and Exchange Commission | |
SED | Safety and Enforcement Division of the CPUC, formerly known as the Consumer Protection and Safety Division or CPSD | |
US EPA | U.S. Environmental Protection Agency | |
VIE(s) | variable interest entity(ies) |
Consolidated Statements of Income | Edison International | |||||||
Three months ended March 31, | ||||||||
(in millions, except per-share amounts, unaudited) | 2014 | 2013 | ||||||
Operating revenue | $ | 2,926 | $ | 2,632 | ||||
Fuel | 72 | 73 | ||||||
Purchased power | 1,071 | 780 | ||||||
Operation and maintenance | 811 | 873 | ||||||
Depreciation, decommissioning and amortization | 410 | 414 | ||||||
Impairment and other charges | 231 | — | ||||||
Total operating expenses | 2,595 | 2,140 | ||||||
Operating income | 331 | 492 | ||||||
Interest and other income | 23 | 34 | ||||||
Interest expense | (141 | ) | (131 | ) | ||||
Other expenses | (8 | ) | (11 | ) | ||||
Income from continuing operations before income taxes | 205 | 384 | ||||||
Income tax expense (benefit) | (19 | ) | 98 | |||||
Income from continuing operations | 224 | 286 | ||||||
Income (loss) from discontinued operations, net of tax | (22 | ) | 12 | |||||
Net income | 202 | 298 | ||||||
Preferred and preference stock dividend requirements of utility | 26 | 27 | ||||||
Net income attributable to Edison International common shareholders | $ | 176 | $ | 271 | ||||
Amounts attributable to Edison International common shareholders: | ||||||||
Income from continuing operations, net of tax | $ | 198 | $ | 259 | ||||
Income (loss) from discontinued operations, net of tax | (22 | ) | 12 | |||||
Net income attributable to Edison International common shareholders | $ | 176 | $ | 271 | ||||
Basic earnings (loss) per common share attributable to Edison International common shareholders: | ||||||||
Weighted-average shares of common stock outstanding | 326 | 326 | ||||||
Continuing operations | $ | 0.61 | $ | 0.79 | ||||
Discontinued operations | (0.07 | ) | 0.04 | |||||
Total | $ | 0.54 | $ | 0.83 | ||||
Diluted earnings (loss) per common share attributable to Edison International common shareholders: | ||||||||
Weighted-average shares of common stock outstanding, including effect of dilutive securities | 329 | 329 | ||||||
Continuing operations | $ | 0.61 | $ | 0.78 | ||||
Discontinued operations | (0.07 | ) | 0.04 | |||||
Total | $ | 0.54 | $ | 0.82 | ||||
Dividends declared per common share | $ | 0.355 | $ | 0.3375 |
Consolidated Statements of Comprehensive Income | Edison International | |||||||
Three months ended March 31, | ||||||||
(in millions, unaudited) | 2014 | 2013 | ||||||
Net income | $ | 202 | $ | 298 | ||||
Other comprehensive income, net of tax: | ||||||||
Pension and postretirement benefits other than pensions: | ||||||||
Amortization of net loss included in net income | 2 | — | ||||||
Other comprehensive income, net of tax | 2 | — | ||||||
Comprehensive income | 204 | 298 | ||||||
Less: Comprehensive income attributable to noncontrolling interests | 26 | 27 | ||||||
Comprehensive income attributable to Edison International | $ | 178 | $ | 271 |
Consolidated Balance Sheets | Edison International | ||||||
(in millions, unaudited) | March 31, 2014 | December 31, 2013 | |||||
ASSETS | |||||||
Cash and cash equivalents | $ | 149 | $ | 146 | |||
Receivables, less allowances of $67 and $66 for uncollectible accounts at respective dates | 725 | 838 | |||||
Accrued unbilled revenue | 576 | 596 | |||||
Inventory | 268 | 256 | |||||
Derivative assets | 112 | 122 | |||||
Regulatory assets | 931 | 538 | |||||
Deferred income taxes | 369 | 421 | |||||
Other current assets | 390 | 395 | |||||
Total current assets | 3,520 | 3,312 | |||||
Nuclear decommissioning trusts | 4,587 | 4,494 | |||||
Other investments | 220 | 207 | |||||
Total investments | 4,807 | 4,701 | |||||
Utility property, plant and equipment, less accumulated depreciation of $7,691 and $7,493 at respective dates | 30,741 | 30,379 | |||||
Nonutility property, plant and equipment, less accumulated depreciation of $76 and $74 at respective dates | 76 | 76 | |||||
Total property, plant and equipment | 30,817 | 30,455 | |||||
Derivative assets | 240 | 251 | |||||
Regulatory assets | 7,351 | 7,241 | |||||
Other long-term assets | 653 | 686 | |||||
Total long-term assets | 8,244 | 8,178 | |||||
Total assets | $ | 47,388 | $ | 46,646 |
Consolidated Balance Sheets | Edison International | |||||||
(in millions, except share amounts, unaudited) | March 31, 2014 | December 31, 2013 | ||||||
LIABILITIES AND EQUITY | ||||||||
Short-term debt | $ | 611 | $ | 209 | ||||
Current portion of long-term debt | 601 | 601 | ||||||
Accounts payable | 1,116 | 1,407 | ||||||
Accrued taxes | 423 | 358 | ||||||
Customer deposits | 204 | 201 | ||||||
Derivative liabilities | 143 | 152 | ||||||
Regulatory liabilities | 455 | 767 | ||||||
Other current liabilities | 1,004 | 1,186 | ||||||
Total current liabilities | 4,557 | 4,881 | ||||||
Long-term debt | 9,825 | 9,825 | ||||||
Deferred income taxes and credits | 7,437 | 7,346 | ||||||
Derivative liabilities | 985 | 1,042 | ||||||
Pensions and benefits | 1,360 | 1,378 | ||||||
Asset retirement obligations | 3,471 | 3,418 | ||||||
Regulatory liabilities | 5,655 | 4,995 | ||||||
Other deferred credits and other long-term liabilities | 2,096 | 2,070 | ||||||
Total deferred credits and other liabilities | 21,004 | 20,249 | ||||||
Total liabilities | 35,386 | 34,955 | ||||||
Commitments and contingencies (Note 12) | ||||||||
Common stock, no par value (800,000,000 shares authorized; 325,811,206 shares issued and outstanding at respective dates) | 2,417 | 2,403 | ||||||
Accumulated other comprehensive loss | (11 | ) | (13 | ) | ||||
Retained earnings | 7,573 | 7,548 | ||||||
Total Edison International's common shareholders' equity | 9,979 | 9,938 | ||||||
Preferred and preference stock of utility | 2,023 | 1,753 | ||||||
Total noncontrolling interests | 2,023 | 1,753 | ||||||
Total equity | 12,002 | 11,691 | ||||||
Total liabilities and equity | $ | 47,388 | $ | 46,646 |
Consolidated Statements of Cash Flows | Edison International | |||||||
Three months ended March 31, | ||||||||
(in millions, unaudited) | 2014 | 2013 | ||||||
Cash flows from operating activities: | ||||||||
Net income | $ | 202 | $ | 298 | ||||
Less: Income (loss) from discontinued operations | (22 | ) | 12 | |||||
Income from continuing operations | 224 | 286 | ||||||
Adjustments to reconcile to net cash provided by operating activities: | ||||||||
Depreciation, decommissioning and amortization | 410 | 414 | ||||||
Regulatory impacts of net nuclear decommissioning trust earnings | 29 | 25 | ||||||
Impairment and other charges | 231 | — | ||||||
Deferred income taxes and investment tax credits | (6 | ) | 174 | |||||
Other | 23 | 23 | ||||||
Changes in operating assets and liabilities: | ||||||||
Receivables | 112 | (38 | ) | |||||
Inventory | (12 | ) | (11 | ) | ||||
Accounts payable | (63 | ) | (65 | ) | ||||
Other current assets and liabilities | (80 | ) | (120 | ) | ||||
Derivative assets and liabilities, net | (46 | ) | 79 | |||||
Regulatory assets and liabilities, net | (331 | ) | (199 | ) | ||||
Other noncurrent assets and liabilities | 7 | (62 | ) | |||||
Net cash provided by operating activities | 498 | 506 | ||||||
Cash flows from financing activities: | ||||||||
Long-term debt issued, net of premium, discount, and issuance costs of $1 and $4 at respective dates | (1 | ) | 394 | |||||
Long-term debt matured or repurchased | (2 | ) | (1 | ) | ||||
Preference stock issued, net | 270 | 387 | ||||||
Preference stock redeemed | — | (400 | ) | |||||
Short-term debt financing, net | 401 | 245 | ||||||
Settlements of stock-based compensation, net | (42 | ) | (32 | ) | ||||
Dividends to noncontrolling interests | (30 | ) | (30 | ) | ||||
Dividends paid | (116 | ) | (110 | ) | ||||
Net cash provided by financing activities | 480 | 453 | ||||||
Cash flows from investing activities: | ||||||||
Capital expenditures | (940 | ) | (979 | ) | ||||
Proceeds from sale of nuclear decommissioning trust investments | 1,502 | 435 | ||||||
Purchases of nuclear decommissioning trust investments and other | (1,536 | ) | (466 | ) | ||||
Other | (1 | ) | (4 | ) | ||||
Net cash used by investing activities | (975 | ) | (1,014 | ) | ||||
Net increase (decrease) in cash and cash equivalents | 3 | (55 | ) | |||||
Cash and cash equivalents at beginning of period | 146 | 170 | ||||||
Cash and cash equivalents at end of period | $ | 149 | $ | 115 |
Consolidated Statements of Income | Southern California Edison Company |
Three months ended March 31, | ||||||||
(in millions, unaudited) | 2014 | 2013 | ||||||
Operating revenue | $ | 2,924 | $ | 2,629 | ||||
Fuel | 72 | 73 | ||||||
Purchased power | 1,071 | 780 | ||||||
Operation and maintenance | 713 | 785 | ||||||
Depreciation, decommissioning and amortization | 410 | 414 | ||||||
Property and other taxes | 85 | 79 | ||||||
Impairment and other charges | 231 | — | ||||||
Total operating expenses | 2,582 | 2,131 | ||||||
Operating income | 342 | 498 | ||||||
Interest and other income | 23 | 32 | ||||||
Interest expense | (136 | ) | (125 | ) | ||||
Other expenses | (7 | ) | (10 | ) | ||||
Income before income taxes | 222 | 395 | ||||||
Income tax expense (benefit) | (12 | ) | 112 | |||||
Net income | 234 | 283 | ||||||
Less: Preferred and preference stock dividend requirements | 26 | 27 | ||||||
Net income available for common stock | $ | 208 | $ | 256 |
Consolidated Statements of Comprehensive Income | ||||||||
Three months ended March 31, | ||||||||
(in millions, unaudited) | 2014 | 2013 | ||||||
Net income | $ | 234 | $ | 283 | ||||
Other comprehensive income (loss), net of tax: | ||||||||
Pension and postretirement benefits other than pensions: | ||||||||
Net loss arising during the period plus amortization included in net income | 1 | (3 | ) | |||||
Other comprehensive income (loss), net of tax | 1 | (3 | ) | |||||
Comprehensive income | $ | 235 | $ | 280 |
Consolidated Balance Sheets | Southern California Edison Company |
(in millions, unaudited) | March 31, 2014 | December 31, 2013 | ||||||
ASSETS | ||||||||
Cash and cash equivalents | $ | 46 | $ | 54 | ||||
Receivables, less allowances of $67 and $66 for uncollectible accounts at respective dates | 702 | 813 | ||||||
Accrued unbilled revenue | 576 | 596 | ||||||
Inventory | 262 | 256 | ||||||
Derivative assets | 112 | 122 | ||||||
Regulatory assets | 931 | 538 | ||||||
Deferred income taxes | 245 | 303 | ||||||
Other current assets | 388 | 393 | ||||||
Total current assets | 3,262 | 3,075 | ||||||
Nuclear decommissioning trusts | 4,587 | 4,494 | ||||||
Other investments | 150 | 140 | ||||||
Total investments | 4,737 | 4,634 | ||||||
Utility property, plant and equipment, less accumulated depreciation of $7,691 and $7,493 at respective dates | 30,741 | 30,379 | ||||||
Nonutility property, plant and equipment, less accumulated depreciation of $72 and $70 at respective dates | 71 | 72 | ||||||
Total property, plant and equipment | 30,812 | 30,451 | ||||||
Derivative assets | 240 | 251 | ||||||
Regulatory assets | 7,351 | 7,241 | ||||||
Other long-term assets | 396 | 398 | ||||||
Total long-term assets | 7,987 | 7,890 | ||||||
Total assets | $ | 46,798 | $ | 46,050 |
Consolidated Balance Sheets | Southern California Edison Company |
(in millions, except share amounts, unaudited) | March 31, 2014 | December 31, 2013 | ||||||
LIABILITIES AND EQUITY | ||||||||
Short-term debt | $ | 405 | $ | 175 | ||||
Current portion of long-term debt | 600 | 600 | ||||||
Accounts payable | 1,089 | 1,373 | ||||||
Customer deposits | 204 | 201 | ||||||
Derivative liabilities | 143 | 152 | ||||||
Regulatory liabilities | 455 | 767 | ||||||
Deferred income taxes | 42 | 39 | ||||||
Other current liabilities | 1,100 | 1,091 | ||||||
Total current liabilities | 4,038 | 4,398 | ||||||
Long-term debt | 9,423 | 9,422 | ||||||
Deferred income taxes and credits | 7,928 | 7,841 | ||||||
Derivative liabilities | 985 | 1,042 | ||||||
Pensions and benefits | 932 | 951 | ||||||
Asset retirement obligations | 3,471 | 3,418 | ||||||
Regulatory liabilities | 5,655 | 4,995 | ||||||
Other deferred credits and other long-term liabilities | 1,885 | 1,845 | ||||||
Total deferred credits and other liabilities | 20,856 | 20,092 | ||||||
Total liabilities | 34,317 | 33,912 | ||||||
Commitments and contingencies (Note 12) | ||||||||
Common stock, no par value (560,000,000 shares authorized; 434,888,104 shares issued and outstanding at respective dates) | 2,168 | 2,168 | ||||||
Additional paid-in capital | 598 | 592 | ||||||
Accumulated other comprehensive loss | (10 | ) | (11 | ) | ||||
Retained earnings | 7,655 | 7,594 | ||||||
Total common shareholder's equity | 10,411 | 10,343 | ||||||
Preferred and preference stock | 2,070 | 1,795 | ||||||
Total equity | 12,481 | 12,138 | ||||||
Total liabilities and equity | $ | 46,798 | $ | 46,050 |
Consolidated Statements of Cash Flows | Southern California Edison Company |
Three months ended March 31, | ||||||||
(in millions, unaudited) | 2014 | 2013 | ||||||
Cash flows from operating activities: | ||||||||
Net income | $ | 234 | $ | 283 | ||||
Adjustments to reconcile to net cash provided by operating activities: | ||||||||
Depreciation, decommissioning and amortization | 410 | 414 | ||||||
Regulatory impacts of net nuclear decommissioning trust earnings | 29 | 25 | ||||||
Impairment and other charges | 231 | — | ||||||
Deferred income taxes and investment tax credits | (12 | ) | 150 | |||||
Other | 22 | 22 | ||||||
Changes in operating assets and liabilities: | ||||||||
Receivables | 111 | 1 | ||||||
Inventory | (7 | ) | (11 | ) | ||||
Accounts payable | (55 | ) | (63 | ) | ||||
Other current assets and liabilities | (80 | ) | (93 | ) | ||||
Derivative assets and liabilities, net | (46 | ) | 79 | |||||
Regulatory assets and liabilities, net | (331 | ) | (199 | ) | ||||
Other noncurrent assets and liabilities | 15 | (47 | ) | |||||
Net cash provided by operating activities | 521 | 561 | ||||||
Cash flows from financing activities: | ||||||||
Long-term debt issued, net of premium, discount, and issuance costs of $4 for the three months ended March 31, 2013 | — | 394 | ||||||
Long-term debt matured or repurchased | (2 | ) | (1 | ) | ||||
Preference stock issued, net | 270 | 387 | ||||||
Preference stock redeemed | — | (400 | ) | |||||
Short-term debt financing, net | 229 | 229 | ||||||
Settlements of stock-based compensation, net | (22 | ) | (29 | ) | ||||
Dividends paid | (30 | ) | (150 | ) | ||||
Net cash provided by financing activities | 445 | 430 | ||||||
Cash flows from investing activities: | ||||||||
Capital expenditures | (939 | ) | (979 | ) | ||||
Proceeds from sale of nuclear decommissioning trust investments | 1,502 | 435 | ||||||
Purchases of nuclear decommissioning trust investments and other | (1,536 | ) | (466 | ) | ||||
Other | (1 | ) | 1 | |||||
Net cash used by investing activities | (974 | ) | (1,009 | ) | ||||
Net decrease in cash and cash equivalents | (8 | ) | (18 | ) | ||||
Cash and cash equivalents, beginning of period | 54 | 45 | ||||||
Cash and cash equivalents, end of period | $ | 46 | $ | 27 |
Edison International | SCE | |||||||||||||||
(in millions) | March 31, 2014 | December 31, 2013 | March 31, 2014 | December 31, 2013 | ||||||||||||
Money market funds | $ | 67 | $ | 68 | $ | 6 | $ | 8 |
Edison International | SCE | |||||||||||||||
(in millions) | March 31, 2014 | December 31, 2013 | March 31, 2014 | December 31, 2013 | ||||||||||||
Cash reclassified to accounts payable | $ | 149 | $ | 168 | $ | 148 | $ | 163 |
Three months ended March 31, | ||||||||
(in millions) | 2014 | 2013 | ||||||
Basic earnings per share – continuing operations: | ||||||||
Income from continuing operations available to common shareholders | $ | 198 | $ | 259 | ||||
Weighted average common shares outstanding | 326 | 326 | ||||||
Basic earnings per share – continuing operations | $ | 0.61 | $ | 0.79 | ||||
Diluted earnings per share – continuing operations: | ||||||||
Income from continuing operations available to common shareholders | $ | 198 | $ | 259 | ||||
Income impact of assumed conversions | — | — | ||||||
Income from continuing operations available to common shareholders and assumed conversions | $ | 198 | $ | 259 | ||||
Weighted average common shares outstanding | 326 | 326 | ||||||
Incremental shares from assumed conversions | 3 | 3 | ||||||
Adjusted weighted average shares – diluted | 329 | 329 | ||||||
Diluted earnings per share – continuing operations | $ | 0.61 | $ | 0.78 |
Equity Attributable to Edison International | Noncontrolling Interests | ||||||||||||||||||||||
(in millions) | Common Stock | Accumulated Other Comprehensive Loss | Retained Earnings | Subtotal | Preferred and Preference Stock | Total Equity | |||||||||||||||||
Balance at December 31, 2013 | $ | 2,403 | $ | (13 | ) | $ | 7,548 | $ | 9,938 | $ | 1,753 | $ | 11,691 | ||||||||||
Net income | — | — | 176 | 176 | 26 | 202 | |||||||||||||||||
Other comprehensive income | — | 2 | — | 2 | — | 2 | |||||||||||||||||
Common stock dividends declared ($0.355 per share) | — | — | (116 | ) | (116 | ) | — | (116 | ) | ||||||||||||||
Dividends, distributions to noncontrolling interests | — | — | — | — | (26 | ) | (26 | ) | |||||||||||||||
Stock-based compensation and other | 9 | — | (50 | ) | (41 | ) | — | (41 | ) | ||||||||||||||
Non-cash stock-based compensation and other | 5 | — | 15 | 20 | — | 20 | |||||||||||||||||
Issuance of preference stock | — | — | — | — | 270 | 270 | |||||||||||||||||
Balance at March 31, 2014 | $ | 2,417 | $ | (11 | ) | $ | 7,573 | $ | 9,979 | $ | 2,023 | $ | 12,002 |
Equity Attributable to Edison International | Noncontrolling Interests | ||||||||||||||||||||||
(in millions) | Common Stock | Accumulated Other Comprehensive Loss | Retained Earnings | Subtotal | Preferred and Preference Stock | Total Equity | |||||||||||||||||
Balance at December 31, 2012 | $ | 2,373 | $ | (87 | ) | $ | 7,146 | $ | 9,432 | $ | 1,759 | $ | 11,191 | ||||||||||
Net income | — | — | 271 | 271 | 27 | 298 | |||||||||||||||||
Common stock dividends declared ($0.3375 per share) | — | — | (110 | ) | (110 | ) | — | (110 | ) | ||||||||||||||
Dividends, distributions to noncontrolling interests | — | — | — | — | (27 | ) | (27 | ) | |||||||||||||||
Stock-based compensation and other | 1 | — | (33 | ) | (32 | ) | — | (32 | ) | ||||||||||||||
Non-cash stock-based compensation and other | 6 | — | (4 | ) | 2 | — | 2 | ||||||||||||||||
Issuance of preference stock | — | — | — | — | 387 | 387 | |||||||||||||||||
Redemption of preference stock | — | — | (8 | ) | (8 | ) | (392 | ) | (400 | ) | |||||||||||||
Balance at March 31, 2013 | $ | 2,380 | $ | (87 | ) | $ | 7,262 | $ | 9,555 | $ | 1,754 | $ | 11,309 |
Equity Attributable to SCE | |||||||||||||||||||||||
(in millions) | Common Stock | Additional Paid-in Capital | Accumulated Other Comprehensive Loss | Retained Earnings | Preferred and Preference Stock | Total Equity | |||||||||||||||||
Balance at December 31, 2013 | $ | 2,168 | $ | 592 | $ | (11 | ) | $ | 7,594 | $ | 1,795 | $ | 12,138 | ||||||||||
Net income | — | — | — | 234 | — | 234 | |||||||||||||||||
Other comprehensive income | — | — | 1 | — | — | 1 | |||||||||||||||||
Dividends declared on common stock | — | — | — | (126 | ) | — | (126 | ) | |||||||||||||||
Dividends on preferred and preference stock | — | — | — | (26 | ) | — | (26 | ) | |||||||||||||||
Stock-based compensation and other | — | 9 | — | (31 | ) | — | (22 | ) | |||||||||||||||
Non-cash stock-based compensation and other | — | 2 | — | 10 | — | 12 | |||||||||||||||||
Issuance of preference stock | — | (5 | ) | — | — | 275 | 270 | ||||||||||||||||
Balance at March 31, 2014 | $ | 2,168 | $ | 598 | $ | (10 | ) | $ | 7,655 | $ | 2,070 | $ | 12,481 |
Equity Attributable to SCE | |||||||||||||||||||||||
(in millions) | Common Stock | Additional Paid-in Capital | Accumulated Other Comprehensive Loss | Retained Earnings | Preferred and Preference Stock | Total Equity | |||||||||||||||||
Balance at December 31, 2012 | $ | 2,168 | $ | 581 | $ | (29 | ) | $ | 7,228 | $ | 1,795 | $ | 11,743 | ||||||||||
Net income | — | — | — | 283 | — | 283 | |||||||||||||||||
Other comprehensive income | — | — | (3 | ) | — | — | (3 | ) | |||||||||||||||
Dividends declared on common stock | — | — | — | (120 | ) | — | (120 | ) | |||||||||||||||
Dividends on preferred and preference stock | — | — | — | (27 | ) | — | (27 | ) | |||||||||||||||
Stock-based compensation and other | — | — | — | (29 | ) | — | (29 | ) | |||||||||||||||
Non-cash stock-based compensation and other | — | 3 | — | 5 | — | 8 | |||||||||||||||||
Issuance of preference stock | — | (13 | ) | — | — | 400 | 387 | ||||||||||||||||
Redemption of preference stock | — | 8 | — | (8 | ) | (400 | ) | (400 | ) | ||||||||||||||
Balance at March 31, 2013 | $ | 2,168 | $ | 579 | $ | (32 | ) | $ | 7,332 | $ | 1,795 | $ | 11,842 |
March 31, 2014 | |||||||||||||||||||
(in millions) | Level 1 | Level 2 | Level 3 | Netting and Collateral1 | Total | ||||||||||||||
Assets at fair value | |||||||||||||||||||
Derivative contracts | $ | — | $ | 20 | $ | 345 | $ | (13 | ) | $ | 352 | ||||||||
Other | 38 | — | — | — | 38 | ||||||||||||||
Nuclear decommissioning trusts: | |||||||||||||||||||
Stocks2 | 2,234 | — | — | — | 2,234 | ||||||||||||||
Fixed Income3 | 777 | 1,221 | — | — | 1,998 | ||||||||||||||
Short-term investments, primarily cash equivalents | 335 | 75 | — | — | 410 | ||||||||||||||
Subtotal of nuclear decommissioning trusts4 | 3,346 | 1,296 | — | — | 4,642 | ||||||||||||||
Total assets | 3,384 | 1,316 | 345 | (13 | ) | 5,032 | |||||||||||||
Liabilities at fair value | |||||||||||||||||||
Derivative contracts | — | 29 | 1,118 | (19 | ) | 1,128 | |||||||||||||
Total liabilities | — | 29 | 1,118 | (19 | ) | 1,128 | |||||||||||||
Net assets (liabilities) | $ | 3,384 | $ | 1,287 | $ | (773 | ) | $ | 6 | $ | 3,904 |
December 31, 2013 | |||||||||||||||||||
(in millions) | Level 1 | Level 2 | Level 3 | Netting and Collateral1 | Total | ||||||||||||||
Assets at fair value | |||||||||||||||||||
Derivative contracts | $ | — | $ | 11 | $ | 372 | $ | (10 | ) | $ | 373 | ||||||||
Other | 39 | — | — | — | 39 | ||||||||||||||
Nuclear decommissioning trusts: | |||||||||||||||||||
Stocks2 | 2,208 | — | — | — | 2,208 | ||||||||||||||
Fixed Income3 | 841 | 1,102 | — | — | 1,943 | ||||||||||||||
Short-term investments, primarily cash equivalents | 331 | — | — | — | 331 | ||||||||||||||
Subtotal of nuclear decommissioning trusts4 | 3,380 | 1,102 | — | — | 4,482 | ||||||||||||||
Total assets | 3,419 | 1,113 | 372 | (10 | ) | 4,894 | |||||||||||||
Liabilities at fair value | |||||||||||||||||||
Derivative contracts | — | 37 | 1,177 | (20 | ) | 1,194 | |||||||||||||
Total liabilities | — | 37 | 1,177 | (20 | ) | 1,194 | |||||||||||||
Net assets (liabilities) | $ | 3,419 | $ | 1,076 | $ | (805 | ) | $ | 10 | $ | 3,700 |
1 | Represents the netting of assets and liabilities under master netting agreements and cash collateral across the levels of the fair value hierarchy. Netting among positions classified within the same level is included in that level. |
2 | Approximately 70% of SCE's equity investments were located in the United States at March 31, 2014 and December 31, 2013, respectively. |
3 | At March 31, 2014 and December 31, 2013, SCE's corporate bonds were diversified and included collateralized mortgage obligations and other asset backed securities of $46 million and $47 million, respectively. |
4 | Excludes net payables of $55 million and net receivables of $12 million at March 31, 2014 and December 31, 2013, respectively, of interest and dividend receivables as well as receivables and payables related to SCE's pending securities sales and purchases. |
Three months ended March 31, | ||||||||
(in millions) | 2014 | 2013 | ||||||
Fair value of net liabilities at beginning of period | $ | (805 | ) | $ | (791 | ) | ||
Total realized/unrealized gains (losses): | ||||||||
Included in regulatory assets and liabilities1 | 31 | (82 | ) | |||||
Purchases | 7 | 18 | ||||||
Settlements | (6 | ) | (27 | ) | ||||
Fair value of net liabilities at end of period | $ | (773 | ) | $ | (882 | ) | ||
Change during the period in unrealized gains and losses related to assets and liabilities held at the end of the period | $ | 22 | $ | (66 | ) |
1 | Due to regulatory mechanisms, SCE's realized and unrealized gains and losses are recorded as regulatory assets and liabilities. |
Fair Value (in millions) | Significant | Range | ||||||||
Assets | Liabilities | Valuation Technique(s) | Unobservable Input | (Weighted Average) | ||||||
Congestion revenue rights | ||||||||||
March 31, 2014 | $ | 345 | $ | — | Market simulation model | Load forecast | 7,603 MW - 24,896 MW | |||
Power prices | $(9.86) - $108.56 | |||||||||
Gas prices | $3.50 - $7.10 | |||||||||
December 31, 2013 | 366 | — | Market simulation model | Load forecast | 7,603 MW - 24,896 MW | |||||
Power prices | $(9.86) - $108.56 | |||||||||
Gas prices | $3.50 - $7.10 | |||||||||
Tolling | ||||||||||
March 31, 2014 | 4 | 1,111 | Option model | Volatility of gas prices | 13% - 31% (18%) | |||||
Volatility of power prices | 26% - 61% (32%) | |||||||||
Power prices | $37.50 - $70.80 ($50.10) | |||||||||
December 31, 2013 | 5 | 1,175 | Option model | Volatility of gas prices | 16% - 35% (21%) | |||||
Volatility of power prices | 25% - 45% (30%) | |||||||||
Power prices | $38.00 - $63.90 ($47.40) |
March 31, 2014 | December 31, 2013 | |||||||||||||||
(in millions) | Carrying Value | Fair Value | Carrying Value | Fair Value | ||||||||||||
SCE | $ | 10,023 | $ | 11,012 | $ | 10,022 | $ | 10,656 | ||||||||
Edison International | 10,426 | 11,442 | 10,426 | 11,084 |
March 31, 2014 | ||||||||||||||||||||||||||||
Derivative Assets | Derivative Liabilities | |||||||||||||||||||||||||||
(in millions) | Short-Term | Long-Term | Subtotal | Short-Term | Long-Term | Subtotal | Net Liability | |||||||||||||||||||||
Commodity derivative contracts | ||||||||||||||||||||||||||||
Gross amounts recognized | $ | 135 | $ | 240 | $ | 375 | $ | 170 | $ | 987 | $ | 1,157 | $ | 782 | ||||||||||||||
Gross amounts offset in the consolidated balance sheets | (23 | ) | — | (23 | ) | (23 | ) | — | (23 | ) | — | |||||||||||||||||
Cash collateral posted1 | — | — | — | (4 | ) | (2 | ) | (6 | ) | (6 | ) | |||||||||||||||||
Net amounts presented in the consolidated balance sheets | $ | 112 | $ | 240 | $ | 352 | $ | 143 | $ | 985 | $ | 1,128 | $ | 776 |
December 31, 2013 | ||||||||||||||||||||||||||||
Derivative Assets | Derivative Liabilities | |||||||||||||||||||||||||||
(in millions) | Short-Term | Long-Term | Subtotal | Short-Term | Long-Term | Subtotal | Net Liability | |||||||||||||||||||||
Commodity derivative contracts | ||||||||||||||||||||||||||||
Gross amounts recognized | $ | 141 | $ | 251 | $ | 392 | $ | 178 | $ | 1,045 | $ | 1,223 | $ | 831 | ||||||||||||||
Gross amounts offset in the consolidated balance sheets | (19 | ) | — | (19 | ) | (19 | ) | — | (19 | ) | — | |||||||||||||||||
Cash collateral posted1 | — | — | — | (7 | ) | (3 | ) | (10 | ) | (10 | ) | |||||||||||||||||
Net amounts presented in the consolidated balance sheets | $ | 122 | $ | 251 | $ | 373 | $ | 152 | $ | 1,042 | $ | 1,194 | $ | 821 |
1 | In addition, at March 31, 2014 and December 31, 2013, SCE had posted $7 million and $19 million, respectively, of collateral that is not offset against derivative liabilities and is reflected in "Other current assets" on the consolidated balance sheets. |
Three months ended March 31, | ||||||||
(in millions) | 2014 | 2013 | ||||||
Realized losses | $ | (37 | ) | $ | (16 | ) | ||
Unrealized gains (losses) | 52 | (54 | ) |
Economic Hedges | |||||||
Commodity | Unit of Measure | March 31, 2014 | December 31, 2013 | ||||
Electricity options, swaps and forwards | GWh | 5,086 | 6,274 | ||||
Natural gas options, swaps and forwards | Bcf | 8 | 12 | ||||
Congestion revenue rights | GWh | 135,714 | 149,234 | ||||
Tolling arrangements | GWh | 86,248 | 87,991 |
Edison International | SCE | |||||||||||||||
Three months ended March 31, | ||||||||||||||||
(in millions) | 2014 | 2013 | 2014 | 2013 | ||||||||||||
Income from continuing operations before income taxes | $ | 205 | $ | 384 | $ | 222 | $ | 395 | ||||||||
Provision for income tax at federal statutory rate of 35% | 71 | 134 | 78 | 138 | ||||||||||||
Increase (decrease) in income tax from: | ||||||||||||||||
State tax, net of federal benefit | 1 | 3 | 1 | 14 | ||||||||||||
Property-related | (51 | ) | (41 | ) | (51 | ) | (42 | ) | ||||||||
Change related to uncertain tax positions | 7 | 7 | 7 | 7 | ||||||||||||
San Onofre settlement | (40 | ) | — | (40 | ) | — | ||||||||||
Other | (7 | ) | (5 | ) | (7 | ) | (5 | ) | ||||||||
Total income tax expense (benefit) from continuing operations | $ | (19 | ) | $ | 98 | $ | (12 | ) | $ | 112 | ||||||
Effective tax rate | (9.3 | )% | 25.5 | % | (5.4 | )% | 28.4 | % |
• | A proposed adjustment increasing the taxable gain on the 2004 sale of EME's international assets, which if sustained, would result in a federal tax payment of approximately $208 million, including interest and penalties through March 31, 2014. |
• | A proposed adjustment to disallow a component of SCE's repair allowance deduction, which if sustained, would result in a federal tax payment of approximately $101 million, including interest through March 31, 2014. |
Edison International | SCE | ||||||||||||||
Three months ended March 31, | |||||||||||||||
(in millions) | 2014 | 2013 | 2014 | 2013 | |||||||||||
Service cost | $ | 30 | $ | 38 | $ | 29 | $ | 37 | |||||||
Interest cost | 45 | 42 | 44 | 41 | |||||||||||
Expected return on plan assets | (57 | ) | (57 | ) | (56 | ) | (57 | ) | |||||||
Amortization of prior service cost | 1 | 1 | 1 | 1 | |||||||||||
Amortization of net loss1 | 1 | 15 | — | 14 | |||||||||||
Expense under accounting standards | $ | 20 | $ | 39 | $ | 18 | $ | 36 | |||||||
Regulatory adjustment | 31 | 17 | 31 | 17 | |||||||||||
Total expense recognized | $ | 51 | $ | 56 | $ | 49 | $ | 53 |
1 | Includes the amount of net loss reclassified from other comprehensive loss. The amount reclassified for Edison International and SCE was $2 million and $1 million for the three months ended March 31, 2014, respectively, and $3 million and $2 million for the three months ended March 31, 2013, respectively. |
Edison International | SCE | ||||||||||||||
Three months ended March 31, | |||||||||||||||
(in millions) | 2014 | 2013 | 2014 | 2013 | |||||||||||
Service cost | $ | 11 | $ | 14 | $ | 11 | $ | 13 | |||||||
Interest cost | 27 | 26 | 27 | 26 | |||||||||||
Expected return on plan assets | (28 | ) | (30 | ) | (28 | ) | (30 | ) | |||||||
Amortization of prior service credit | (9 | ) | (9 | ) | (9 | ) | (9 | ) | |||||||
Amortization of net loss | — | 7 | — | 7 | |||||||||||
Total expense | $ | 1 | $ | 8 | $ | 1 | $ | 7 |
(in millions) | ||||
Balance at January 1, 2014 | $ | 54 | ||
Additions | — | |||
Payments | (10 | ) | ||
Balance at March 31, 2014 | $ | 44 |
• | the disallowance of the SGRP investment ($542 million as of May 31, 2013); |
• | refund of revenue related to the SGRP previously recognized of $159 million; and |
• | implementation of the other terms of the Settlement Agreement, including a refund of flow through tax benefits of $71 million and a refund of the authorized return in excess of the return allowed for non-SGRP investments. The refund was offset by recognition of tax benefits in an equal amount. The after-tax impact of the settlement was $96 million. |
Longest Maturity Dates | Amortized Cost | Fair Value | |||||||||||||||
(in millions) | March 31, 2014 | December 31, 2013 | March 31, 2014 | December 31, 2013 | |||||||||||||
Stocks | — | $ | 668 | $ | 656 | $ | 2,234 | $ | 2,208 | ||||||||
Municipal bonds | 2051 | 725 | 675 | 838 | 756 | ||||||||||||
U.S. government and agency securities | 2044 | 812 | 902 | 864 | 947 | ||||||||||||
Corporate bonds | 2054 | 253 | 208 | 296 | 241 | ||||||||||||
Short-term investments and receivables/payables | One-year | 342 | 329 | 355 | 342 | ||||||||||||
Total | $ | 2,800 | $ | 2,770 | $ | 4,587 | $ | 4,494 |
Three months ended March 31, | ||||||||
(in millions) | 2014 | 2013 | ||||||
Balance at beginning of period | $ | 4,494 | $ | 4,048 | ||||
Gross realized gains | 10 | 5 | ||||||
Gross realized losses | — | (1 | ) | |||||
Unrealized gains, net | 62 | 176 | ||||||
Other-than-temporary impairments | (3 | ) | (8 | ) | ||||
Interest, dividends, contributions and other | 24 | 26 | ||||||
Balance at end of period | $ | 4,587 | $ | 4,246 |
(in millions) | March 31, 2014 | December 31, 2013 | |||||
Current: | |||||||
Regulatory balancing accounts | $ | 883 | $ | 484 | |||
Energy derivatives | 48 | 54 | |||||
Total current | 931 | 538 | |||||
Long-term: | |||||||
Deferred income taxes, net | 3,116 | 2,957 | |||||
Pensions and other postretirement benefits | 377 | 369 | |||||
Energy derivatives | 768 | 816 | |||||
Unamortized investments, net | 312 | 332 | |||||
San Onofre | 1,371 | 1,325 | |||||
Unamortized loss on reacquired debt | 216 | 222 | |||||
Nuclear-related investment, net | 33 | 34 | |||||
Regulatory balancing accounts | 819 | 818 | |||||
Other | 339 | 368 | |||||
Total long-term | 7,351 | 7,241 | |||||
Total regulatory assets | $ | 8,282 | $ | 7,779 |
(in millions) | March 31, 2014 | December 31, 2013 | |||||
Current: | |||||||
Regulatory balancing accounts | $ | 417 | $ | 724 | |||
Other | 38 | 43 | |||||
Total current | 455 | 767 | |||||
Long-term: | |||||||
Costs of removal | 2,811 | 2,780 | |||||
Asset retirement obligations | 1,112 | 1,071 | |||||
Regulatory balancing accounts | 1,347 | 1,132 | |||||
San Onofre | 371 | — | |||||
Other | 14 | 12 | |||||
Total long-term | 5,655 | 4,995 | |||||
Total regulatory liabilities | $ | 6,110 | $ | 5,762 |
(in millions) | March 31, 2014 | December 31, 2013 | |||||
Asset (liability) | |||||||
Energy resource recovery account | $ | 1,478 | $ | 1,005 | |||
Four Corners memorandum account | 4 | 145 | |||||
New system generation balancing account | 99 | 132 | |||||
Public purpose programs and energy efficiency programs | (959 | ) | (1,037 | ) | |||
Base rate recovery balancing account | (29 | ) | (247 | ) | |||
Greenhouse gas auction revenue | (470 | ) | (385 | ) | |||
FERC balancing accounts | (13 | ) | (59 | ) | |||
Other | (172 | ) | (108 | ) | |||
Net liability | $ | (62 | ) | $ | (554 | ) |
Edison International | SCE | ||||||||||||
Months ended March 31, | |||||||||||||
(in millions) | 2014 | 2013 | 2014 | 2013 | |||||||||
Beginning balance | $ | (13 | ) | $ | (87 | ) | $ | (11 | ) | $ | (29 | ) | |
Pension and PBOP – net loss: | |||||||||||||
Other comprehensive loss before reclassifications | — | (2 | ) | — | (4 | ) | |||||||
Reclassified from accumulated other comprehensive income1 | 2 | 2 | 1 | 1 | |||||||||
Change | 2 | — | 1 | (3 | ) | ||||||||
Ending Balance | $ | (11 | ) | $ | (87 | ) | $ | (10 | ) | $ | (32 | ) |
1 | These items are included in the computation of net periodic pension and PBOP expense. See Note 8 for additional information. |
Three months ended March 31, | ||||||||
(in millions) | 2014 | 2013 | ||||||
SCE interest and other income: | ||||||||
Equity allowance for funds used during construction | $ | 13 | $ | 21 | ||||
Increase in cash surrender value of life insurance policies | 7 | 7 | ||||||
Interest income | 2 | 2 | ||||||
Other | 1 | 2 | ||||||
Total SCE interest and other income | 23 | 32 | ||||||
Edison International Parent and Other other income | — | 2 | ||||||
Total Edison International interest and other income | $ | 23 | $ | 34 | ||||
SCE other expenses: | ||||||||
Civic, political and related activities and donations | $ | 5 | $ | 5 | ||||
Other | 2 | 5 | ||||||
Total SCE other expenses | 7 | 10 | ||||||
Edison International Parent and Other other expenses | 1 | 1 | ||||||
Total Edison International other expenses | $ | 8 | $ | 11 |
Edison International | SCE | ||||||||||||||
Three months ended March 31, | |||||||||||||||
(in millions) | 2014 | 2013 | 2014 | 2013 | |||||||||||
Cash payments (receipts) for interest and taxes: | |||||||||||||||
Interest, net of amounts capitalized | $ | 157 | $ | 167 | $ | 149 | $ | 159 | |||||||
Tax payments (refunds), net | — | 6 | 3 | (3 | ) | ||||||||||
Non-cash financing and investing activities: | |||||||||||||||
Dividends declared but not paid: | |||||||||||||||
Common stock | $ | 116 | $ | 110 | $ | 126 | $ | — | |||||||
Preferred and preference stock | 4 | 7 | 4 | 7 |
• | ability of SCE to recover its costs in a timely manner from its customers through regulated rates, including regulatory assets related to San Onofre and undercollection of fuel and purchased power costs; |
• | decisions and other actions by the CPUC, the FERC, the NRC and other regulatory authorities and delays in regulatory actions; |
• | ability of Edison International or its subsidiaries to borrow funds and access the capital markets on reasonable terms; |
• | possible customer bypass or departure due to technological advancements, federal and state subsidies, or cumulative rate impacts that make self-generation or use of alternative energy sources economically viable; |
• | risks inherent in the construction of transmission and distribution infrastructure replacement and expansion projects, including those related to project site identification, public opposition, environmental mitigation, construction, permitting, power curtailment costs (payments due under power contracts in the event there is insufficient transmission to enable the acceptance of power delivery), and governmental approvals; |
• | risks associated with the operation of transmission and distribution assets and power generating facilities including: public safety issues, failure, availability, efficiency, and output of equipment and availability and cost of spare parts; |
• | risks associated with the retirement and decommissioning of nuclear generating facilities; |
• | physical security of SCE's critical assets and personnel and the cyber security of SCE's critical information technology systems for grid control, and business and customer data; |
• | cost and availability of electricity, including the ability to procure sufficient resources to meet expected customer needs in the event of power plant outages or significant counterparty defaults under power-purchase agreements; |
• | environmental laws and regulations, at both the state and federal levels, or changes in the application of those laws, that could require additional expenditures or otherwise affect the cost and manner of doing business; |
• | risk that the costs incurred in connection with San Onofre may not be recoverable from SCE's supplier or insurance coverage; |
• | changes in the fair value of investments and other assets; |
• | changes in interest rates and rates of inflation, including escalation rates, which may be adjusted by public utility regulators; |
• | governmental, statutory, regulatory or administrative changes or initiatives affecting the electricity industry, including the market structure rules applicable to each market and price mitigation strategies adopted by the California Independent System Operator, Regional Transmission Organizations, and adjoining regions; |
• | availability and creditworthiness of counterparties and the resulting effects on liquidity in the power and fuel markets and/or the ability of counterparties to pay amounts owed in excess of collateral provided in support of their obligations; |
• | cost and availability of labor, equipment and materials; |
• | ability to obtain sufficient insurance, including insurance relating to SCE's nuclear facilities and wildfire-related liability, and to recover the costs of such insurance or in the absence of insurance the ability to recover uninsured losses; |
• | effects of legal proceedings, changes in or interpretations of tax laws, rates or policies; |
• | potential for penalties or disallowances caused by non-compliance with applicable laws and regulations; |
• | cost and availability of fuel for generating facilities and related transportation to the extent not recovered through regulated rate cost escalation provisions or balancing accounts; |
• | extent of technological change in the generation, storage, transmission, distribution and use of electricity; |
• | cost and availability of emission credits or allowances for emission credits; |
• | risk that competing transmission systems will be built by merchant transmission providers in SCE's service area; and |
• | weather conditions and natural disasters. |
Three months ended March 31, | |||||||||||
(in millions) | 2014 | 2013 | Change | ||||||||
Net income (loss) attributable to Edison International | |||||||||||
Continuing operations | |||||||||||
SCE | $ | 208 | $ | 256 | $ | (48 | ) | ||||
Edison International Parent and Other | (10 | ) | 3 | (13 | ) | ||||||
Discontinued operations | (22 | ) | 12 | (34 | ) | ||||||
Edison International | 176 | 271 | (95 | ) | |||||||
Less: Non-core items | |||||||||||
SCE | (96 | ) | — | (96 | ) | ||||||
Edison International Parent and Other | — | 7 | (7 | ) | |||||||
Discontinued operations | (22 | ) | 12 | (34 | ) | ||||||
Total non-core items | (118 | ) | 19 | (137 | ) | ||||||
Core earnings (losses) | |||||||||||
SCE | 304 | 256 | 48 | ||||||||
Edison International Parent and Other | (10 | ) | (4 | ) | (6 | ) | |||||
Edison International | $ | 294 | $ | 252 | $ | 42 |
• | Impairment and other charges of $231 million ($96 million after tax) in the first quarter of 2014 related to the San Onofre Settlement Agreement. For further information, see "—San Onofre Issues." |
• | An income tax loss of $22 million for the first quarter of 2014 compared to a benefit of $12 million for the first quarter of 2013, respectively, from revised estimates of the tax impact of a tax deconsolidation of EME from Edison International. Edison International continues to consolidate EME for federal and certain combined state tax returns. Changes in the amount of tax attributes during the first quarter of 2014 and 2013 affected income taxes of discontinued operations. For further information, see "—EME Chapter 11 Bankruptcy." |
• | An income tax benefit of $7 million from reduction in state income taxes related to the sale of Edison Capital's interest in Unit No. 2 of the Beaver Valley Power plant. The sale of Edison Capital's lease interest was completed in 2012, however, the final determination of state income taxes paid was not completed until the first quarter of 2013 which resulted in a change in the estimate of state income taxes due. |
• | 85% to SCE and 15% to ratepayers for the first $100 million; |
• | 66.67% to SCE and 33.33% to ratepayers for the next $800 million; and |
• | 25% to SCE and 75% to ratepayers for any additional recoveries over $900 million. |
• | the disallowance of the SGRP investment ($542 million as of May 31, 2013); |
• | refund of revenue related to the SGRP previously recognized of $159 million; and |
• | implementation of the other terms of the Settlement Agreement, including a refund of flow through tax benefits of $71 million and a refund of the authorized return in excess of the return allowed for non-SGRP investments. The refund of flow through tax benefits increased the pre-tax loss from SCE's initial estimate of $155 million. The refund was offset by recognition of tax benefits in an equal amount. The after-tax impact of the settlement was $96 million. |
• | approval of a rate increase from the 2014 ERRA forecast proceeding consistent with the proposed decision discussed above; |
• | approval of the application of refunds provided for in the San Onofre Settlement Agreement, including refunds related to the SGRP and authorized revenue in excess of SCE cost of service during 2013 and 2014 as discussed above under the heading “—San Onofre Issues;” and |
• | approval of SCE’s request to classify the majority of costs incurred at San Onofre since June 7, 2013 as decommissioning costs and reimbursement from SCE’s nuclear decommissioning trust. |
• | Utility earning activities – representing revenue authorized by the CPUC and FERC which is intended to provide SCE a reasonable opportunity to recover its costs and earn a return on its net investment in generation, transmission and distribution assets. The annual revenue requirements are comprised of authorized operation and maintenance costs, depreciation, taxes and a return consistent with the capital structure. Also, included in utility earnings activities are revenue or penalties related to incentive mechanisms, other operating revenue, and regulatory charges or disallowances, if any. |
• | Utility cost-recovery activities – representing CPUC- and FERC-authorized balancing accounts which allow for recovery of specific project or program costs, subject to reasonableness review or compliance with upfront standards. Utility cost-recovery activities include rates which provide recovery, subject to reasonableness review of, among other things, fuel costs, purchased power costs, public purpose related-program costs (including energy efficiency and demand-side management programs), certain operation and maintenance expenses and nuclear decommissioning expenses. |
Three months ended March 31, 2014 | Three months ended March 31, 2013 | |||||||||||||||||
(in millions) | Utility Earning Activities | Utility Cost- Recovery Activities | Total Consolidated | Utility Earning Activities | Utility Cost- Recovery Activities | Total Consolidated | ||||||||||||
Operating revenue | $ | 1,550 | $ | 1,374 | 2,924 | $ | 1,550 | $ | 1,079 | $ | 2,629 | |||||||
Fuel and purchased power | — | 1,143 | 1,143 | — | 853 | 853 | ||||||||||||
Operation and maintenance | 482 | 231 | 713 | 559 | 226 | 785 | ||||||||||||
Depreciation, decommissioning and amortization | 410 | — | 410 | 414 | — | 414 | ||||||||||||
Property and other taxes | 85 | — | 85 | 79 | — | 79 | ||||||||||||
Impairment and other charges | 231 | — | 231 | — | — | — | ||||||||||||
Total operating expenses | 1,208 | 1,374 | 2,582 | 1,052 | 1,079 | 2,131 | ||||||||||||
Operating income | 342 | — | 342 | 498 | — | 498 | ||||||||||||
Interest income and other | 16 | — | 16 | 22 | — | 22 | ||||||||||||
Interest expense | (136 | ) | — | (136 | ) | (125 | ) | — | (125 | ) | ||||||||
Income before income taxes | 222 | — | 222 | 395 | — | 395 | ||||||||||||
Income tax expense (benefit) | (12 | ) | — | (12 | ) | 112 | — | 112 | ||||||||||
Net income | 234 | — | 234 | 283 | — | 283 | ||||||||||||
Preferred and preference stock dividend requirements | 26 | — | 26 | 27 | — | 27 | ||||||||||||
Net income available for common stock | $ | 208 | $ | — | $ | 208 | $ | 256 | $ | — | $ | 256 | ||||||
Core earnings1 | $ | 304 | $ | 256 | ||||||||||||||
Non-core earnings | (96 | ) | — | |||||||||||||||
Total SCE GAAP earnings | $ | 208 | $ | 256 |
1 | See use of non-GAAP financial measures in "Management Overview—Highlights of Operating Results." |
• | Operating revenue was primarily affected by the following: |
• | An increase in CPUC-related revenue of $55 million primarily related to the increase in authorized revenue to support rate base growth partially offset by lower revenue in 2014 due to the sale of SCE's ownership interest in the Four Corners Generating Station in December 2013. |
• | An increase in FERC-related revenue of $30 million primarily related to rate base growth and higher operating costs. |
• | A decrease in San Onofre-related estimated revenue of $82 million, as discussed below. |
• | Lower operation and maintenance expense of $77 million primarily due to a decrease in San Onofre-related expense of $43 million, as discussed below, and lower expense in 2014 due to the sale of Four Corners in December 2013. In addition, in the first quarter of 2013, SCE recorded $16 million of severance costs due to the reductions in workforce (excluding San Onofre) that commenced in 2012. |
• | Higher depreciation, decommissioning and amortization expense of $4 million primarily due to a decrease in San Onofre-related expense of $35 million, as discussed below, and a $31 million increase in depreciation related to transmission and distribution investments, including capitalized software costs. |
• | Lower interest income and other of $6 million primarily due to lower AFUDC equity related to lower rates and construction work in progress balances in 2014, including SCE no longer accruing AFUDC on construction work in progress balances for San Onofre, pending the outcome of the San Onofre OII. |
• | Higher interest expense of $11 million primarily due to higher balances on long-term debt to support rate base growth and lower AFUDC debt due to lower rates and construction work in progress balances in 2014. |
• | Lower income taxes of $124 million primarily due to lower pre-tax income and income tax benefits from the San Onofre Settlement Agreement, as discussed below. See "—Income Taxes" below for more information. |
Three months ended March 31, | |||||||
(in millions) | 2014 | 2013 | |||||
Revenue | $ | 31 | $ | 113 | |||
Operating expenses | |||||||
Operation and maintenance | 26 | 69 | |||||
Depreciation and amortization | — | 35 | |||||
Property and other taxes | 5 | 6 | |||||
Impairment and other charges | 231 | — | |||||
AFUDC | — | (3 | ) | ||||
Total operating expenses | 262 | 107 | |||||
Income (loss) before taxes | $ | (231 | ) | $ | 6 |
• | Higher fuel and purchased power expense of $290 million was primarily driven by higher power and gas prices experienced in 2014 relative to 2013, and higher realized losses on economic hedging activities, partially offset by lower fuel expense in 2014 due to the sale of Four Corners in December 2013. |
(in millions) | ||||
Collateral posted as of March 31, 20141 | $ | 156 | ||
Incremental collateral requirements for power procurement contracts resulting from a potential downgrade of SCE's credit rating to below investment grade | 66 | |||
Posted and potential collateral requirements2 | $ | 222 |
1 | Collateral provided to counterparties and other brokers consisted of $6 million of cash which was offset against net derivative liabilities on the consolidated balance sheets, $7 million of cash reflected in "Other current assets" on the consolidated balance sheets and $143 million in letters of credit and surety bonds. |
2 | SCE does not project a material increase in the total posted and potential collateral requirements based on SCE's forward positions as of March 31, 2014 due to adverse market price movements over the remaining lives of the existing power procurement contracts using a 95% confidence level. |
Three months ended March 31, | |||||||
(in millions) | 2014 | 2013 | |||||
Net cash provided by operating activities | $ | 521 | $ | 561 | |||
Net cash provided by financing activities | 445 | 430 | |||||
Net cash used by investing activities | (974 | ) | (1,009 | ) | |||
Net decrease in cash and cash equivalents | $ | (8 | ) | $ | (18 | ) |
• | $330 million decrease in balancing accounts primarily composed of: |
• | $240 million decrease resulting from higher ERRA balancing account undercollections for fuel and power procurement-related costs in 2014 compared to 2013. The change in the ERRA balancing account decreased operating cash flows by $472 million in 2014 compared to a decrease in operating cash flows of $232 million in 2013. |
• | $90 million decrease primarily due to increased spending and lower funding of public purpose and energy efficiency programs. |
• | higher cash inflow of $90 million due to cash collected in excess of cost of service for San Onofre. |
• | higher cash inflow of $55 million due to the increase in pre-tax income, before depreciation and impairment and other charges, primarily driven by the increase in authorized revenue. |
• | timing of cash receipts and disbursements related to working capital items, including a decrease in customer accounts receivable of approximately $115 million due to lower kWh sales. In addition, SCE had workforce reduction severance costs paid of $10 million and $61 million during the first quarters of 2014 and 2013, respectively. |
Three months ended March 31, | |||||||
(in millions) | 2014 | 2013 | |||||
Issuances of first and refunding mortgage bonds, net | $ | — | $ | 394 | |||
Short-term debt financing, net | 229 | 229 | |||||
Issuances of preference stock, net | 270 | 387 | |||||
Payments of common stock dividends to Edison International | — | (120 | ) | ||||
Redemptions of preference stock | — | (400 | ) | ||||
Payments of preferred and preference stock dividends | (30 | ) | (30 | ) | |||
Other | (24 | ) | (30 | ) | |||
Net cash provided by financing activities | $ | 445 | $ | 430 |
Three months ended March 31, | |||||||
(in millions) | 2014 | 2013 | |||||
Net cash used by operating activities | $ | (23 | ) | $ | (55 | ) | |
Net cash provided by financing activities | 35 | 23 | |||||
Net cash used by investing activities | (1 | ) | (5 | ) | |||
Net increase (decrease) in cash and cash equivalents | $ | 11 | $ | (37 | ) |
• | Paid $116 million of dividends to Edison International common shareholders; and |
• | Borrowed $172 million of short-term debt (net) to fund interim working capital requirements. |
• | Paid $110 million of dividends to Edison International common shareholders; |
• | Received $120 million of dividend payments from SCE; and |
• | Borrowed $16 million under Edison International Parent's line of credit to fund interim working capital requirements. |
March 31, 2014 | |||||||||||
(in millions) | Exposure2 | Collateral | Net Exposure | ||||||||
S&P Credit Rating1 | |||||||||||
A or higher | $ | 352 | $ | — | $ | 352 | |||||
Not rated3 | — | — | — | ||||||||
Total | $ | 352 | $ | — | $ | 352 |
1 | SCE assigns a credit rating based on the lower of a counterparty's S&P or Moody's rating. For ease of reference, the above table uses the S&P classifications to summarize risk, but reflects the lower of the two credit ratings. |
2 | Exposure excludes amounts related to contracts classified as normal purchases and sales and non-derivative contractual commitments that are not recorded on the consolidated balance sheets, except for any related net accounts receivable. |
3 | The exposure in this category relates to long-term power purchase agreements. SCE's exposure is mitigated by regulatory treatment. |
Period | (a) Total Number of Shares (or Units) Purchased1 | (b) Average Price Paid per Share (or Unit)1 | (c) Total Number of Shares (or Units) Purchased as Part of Publicly Announced Plans or Programs | (d) Maximum Number (or Approximate Dollar Value) of Shares (or Units) that May Yet Be Purchased Under the Plans or Programs | ||||||||
January 1, 2014 to January 31, 2014 | 604,589 | $ | 46.01 | — | — | |||||||
February 1, 2014 to February 28, 2014 | 923,047 | 50.80 | — | — | ||||||||
March 1, 2014 to March 31, 2014 | 1,439,663 | 54.29 | — | — | ||||||||
Total | 2,967,299 | 51.52 | — | — |
1 | The shares were purchased by agents acting on Edison International's behalf for delivery to plan participants to fulfill requirements in connection with Edison International's: (i) 401(k) Savings Plan; (ii) Dividend Reinvestment and Direct Stock Purchase Plan; and (iii) long-term incentive compensation plans. The shares were purchased in open-market transactions pursuant to plan terms or participant elections. The shares were never registered in Edison International's name and none of the shares purchased were retired as a result of the transactions. |
Exhibit Number | Description | |
10.1 | Settlement Agreement between Southern California Edison Company, San Diego Gas & Electric Company, the Office of Ratepayer Advocates, and The Utility Reform Network, dated March 27, 2014 (File No. 1-9936, filed as Exhibit 10.1 to Edison International's and Southern California Edison Company's Form 8-K dated March 27, 2014 and filed March 27, 2014)* | |
10.2** | Edison International 2014 Executive Annual Incentive Program | |
10.3** | Edison International 2014 Long-Term Incentives Terms and Conditions | |
10.4** | Edison International Executive Incentive Compensation Plan, as amended and restated effective February 26, 2014 | |
31.1 | Certifications of the Chief Executive Officer and Chief Financial Officer of Edison International pursuant to Section 302 of the Sarbanes-Oxley Act | |
31.2 | Certifications of the Chief Executive Officer and Chief Financial Officer of Southern California Edison Company pursuant to Section 302 of the Sarbanes-Oxley Act | |
32.1 | Certifications of the Chief Executive Officer and the Chief Financial Officer of Edison International required by Section 906 of the Sarbanes-Oxley Act | |
32.2 | Certifications of the Chief Executive Officer and the Chief Financial Officer of Southern California Edison Company required by Section 906 of the Sarbanes-Oxley Act | |
101.1 | Financial statements from the quarterly report on Form 10-Q of Edison International for the quarter ended March 31, 2014, filed on April 29, 2014, formatted in XBRL: (i) the Consolidated Statements of Income; (ii) the Consolidated Statements of Comprehensive Income; (iii) the Consolidated Balance Sheets; (iv) the Consolidated Statements of Cash Flows; and (v) the Notes to Consolidated Financial Statements | |
101.2 | Financial statements from the quarterly report on Form 10-Q of Southern California Edison Company for the quarter ended March 31, 2014, filed on April 29, 2014, formatted in XBRL: (i) the Consolidated Statements of Income; (ii) the Consolidated Statements of Comprehensive Income; (iii) the Consolidated Balance Sheets; (iv) the Consolidated Statements of Cash Flows; and (v) the Notes to Consolidated Financial Statements |
* | Incorporated by reference pursuant to Rule 12b-32. |
** | Indicates a management contract or compensatory plan or arrangement, as required by Item 15(a)3. |
EDISON INTERNATIONAL | SOUTHERN CALIFORNIA EDISON COMPANY | |||
By: | /s/ Mark C. Clarke | By: | /s/ Mark C. Clarke | |
Mark C. Clarke Vice President and Controller (Duly Authorized Officer and Principal Accounting Officer) | Mark C. Clarke Vice President and Controller (Duly Authorized Officer and Principal Accounting Officer) | |||
Date: | April 29, 2014 | Date: | April 29, 2014 |
1. | PURPOSE |
2. | ADMINISTRATION |
3. | AWARDS |
3.1 | Award Grants; Maximum Annual Incentive Amount. Each “Award” granted to a Participant under this Program represents the opportunity to receive a cash payment determined under this Section 3 (an “Annual Incentive”), subject to the terms and conditions of this Program. The maximum amount of the Annual Incentive payable to each Participant (the “Maximum Annual Incentive Amount”) shall be determined by multiplying (i) the Annual Incentive Pool (as defined in Section 3.2 below), by (ii) the Participant’s “Annual Incentive Percentage” as set forth in the following table: |
Participant | Annual Incentive Percentage |
Theodore F. Craver, Jr. | 42% |
Robert L. Adler | 13% |
Ronald L. Litzinger | 13% |
William J. Scilacci, Jr. | 13% |
Bertrand A. Valdman | 9% |
Mark C. Clarke | 5% |
Janet T. Clayton | 5% |
3.2 | Annual Incentive Pool. As soon as practicable after the end of the Corporation’s 2014 fiscal year (the “Performance Period”), the Committee shall determine the amount of the Corporation’s earnings from continuing operations (after interest, taxes, depreciation and amortization, and determined on a consolidated basis) for the Performance Period (the “Performance Level”). The “Annual Incentive Pool” shall be determined by |
3.3 | Committee Discretion. Notwithstanding the foregoing provisions, the Committee shall retain discretion to reduce (but not increase) the Maximum Annual Incentive Amount otherwise payable to any one or more Participants pursuant to Sections 3.1 and 3.2. The Committee may exercise such discretion on any basis it deems appropriate (including, but not limited to, its assessment of the Corporation’s performance relative to its operating or strategic goals for the Performance Period and/or the Participant’s individual performance for such period). For purposes of clarity, if the Committee exercises its discretion to reduce the amount of any Annual Incentive payable hereunder, it may not allocate the amount of such reduction to Annual Incentives payable to other Participants. |
3.4 | Payment of Annual Incentives. Any Annual Incentives shall be paid as soon as practicable following the certification of the Committee’s findings under Section 3.2 and its determination of the final Annual Incentive amount (after giving effect to any exercise of its discretion to reduce Annual Incentives pursuant to Section 3.3) and in all events no later than March 15, 2015; in each case subject (i) to tax withholding pursuant to Section 4.6, and (ii) in the case of a Participant eligible to defer compensation under the EIX 2008 Executive Deferred Compensation Plan (the “EDCP”), to any timely deferral election the Participant may have made pursuant to the terms of the EDCP. |
3.5 | Termination of Employment. |
(a) | Except as provided in Section 3.5(b), in the event that a Participant’s employment with the Corporation and its Subsidiaries terminates at any time during the Performance Period, the Participant’s Award will immediately terminate upon such termination of employment, and the Participant will not be entitled to any Annual Incentive payment in respect of such Award; provided that the Committee may, in its discretion, award a full or partial Annual Incentive for the Performance Period to any Participant whose termination of employment during the Performance Period is due to the Participant’s death, permanent and total disability, or Retirement (with the amount of any such Bonus not to exceed the amount the Participant would have been entitled to had he or she remained employed for the entire Performance Period). For purposes of this Section 3.5, the term “Retirement” with respect to a Participant shall mean a termination of the Participant’s employment on or after the first day of the month in which the Participant (A) attains age 65 or (B) attains age 61 with five “years of service,” as that term is defined in the Edison 401(k) Savings Plan. |
(b) | In the event that the Participant’s employment with the Corporation and its Subsidiaries terminates during the Performance Period in circumstances that entitle the Participant to severance benefits pursuant to the Corporation’s 2008 Executive Severance Plan, and in such circumstances the Participant satisfies the applicable conditions for receiving severance benefits under that plan (including, without limitation, any requirement to execute and deliver a release of claims), then the provisions of this Section 3.5(b) shall control over Section 2.3.1(b) of the 2008 Executive Severance Plan to determine the Participant’s annual incentive for the year in which such termination of employment occurs. If a Participant’s Annual Incentive is to be determined pursuant to this Section 3.5(b), the Participant’s Annual Incentive shall equal the lesser of (A) or (B); where (A) is determined by multiplying (i) the Participant’s highest base salary rate in effect during the 24 months preceding the termination of the Participant’s employment, by (ii) the highest target annual incentive percentage in effect for the Participant during those 24 months, by (iii) a fraction (not greater than 1) the numerator of which is the number of weekdays in the Performance Period from January 1, 2014 through the Participant’s last day of employment prior to such termination and the denominator of which is the number of weekdays in the entire Performance Period; and (B) is determined by multiplying (i) the Participant’s Annual Incentive Percentage, by (ii) one and one-half percent (1.5%), by (iii) the Corporation’s earnings from continuing operations (after interest, taxes, depreciation and amortization, and determined on a consolidated basis) for the portion of the Performance Period through and ending on the last day of the month in which the Participant’s termination of employment occurs. In no case, however, shall the amount of any Annual Incentive exceed the applicable limit set forth in Section 5.2.3 of the Plan. |
(c) | No Participant shall receive any payment under this Section 3.5 unless and until the Committee has certified, by resolution or other appropriate action in writing, the amount of the Annual Incentive due in accordance with the terms, conditions and limits of this Program. Any Annual Incentive amount due pursuant to this Section 3.5 shall be paid as soon as practicable following the Committee’s certification of such amount and in all events no later than March 15, 2015; subject (i) to tax withholding pursuant to Section 4.6, and (ii) in the case of a Participant eligible to defer compensation under the EDCP, to any timely deferral election the Participant may have made pursuant to the terms of the EDCP. |
3.6 | Adjustments. The Committee shall adjust the Performance Level, Annual Incentive Pool and other provisions applicable to Awards granted under this Program to the extent (if any) it determines that the adjustment is necessary or advisable to preserve the intended incentives and benefits to reflect (1) any material change in corporate capitalization, any material corporate transaction (such as a reorganization, combination, separation, merger, acquisition, or any combination of the foregoing), or any complete or partial liquidation of the Corporation, (2) any change in accounting policies or practices, (3) the effects of any special charges to the Corporation’s earnings, or (4) any other similar special circumstances. |
3.7 | Change in Control. If a Change in Control of EIX occurs at any time during the Performance Period, the Performance Period for all outstanding Awards will be shortened so that the Performance Period will be deemed to have ended on the last day prior to such Change in Control of EIX. The Annual Incentive Pool and the Annual Incentives payable with respect to each Award will be determined in accordance with the foregoing provisions of this Section 3 based on such shortened Performance Period. Such Annual Incentives shall be paid (subject to tax withholding pursuant to Section 4.6) as soon as practicable following the date of the Change in Control of EIX. For purposes of this Section 3.7, “Change in Control of EIX” shall have the meaning ascribed to such term in the Corporation’s 2014 Long-Term Incentives Terms and Conditions. |
4. | GENERAL PROVISIONS |
4.1 | Rights of Participants. |
(a) | No Right to Continued Employment. Nothing in this Program (or in any other documents evidencing any Award under this Program) will be deemed to confer on any Participant any right to continue in the employ of the Corporation or any Subsidiary or interfere in any way with the right of the Corporation or any Subsidiary to terminate his or her employment at any time. |
(b) | Program Not Funded. No Participant or other person will have any right or claim to any specific funds, property or assets of the Corporation by reason of any Award hereunder. To the extent that a Participant or other person acquires a right to receive payment pursuant to any Award hereunder, such right shall be no greater than the right of any unsecured general creditor of the Corporation. |
4.2 | Non-Transferability of Benefits and Interests. Except as expressly provided by the Committee in accordance with the provisions of Section 162(m), all Awards are non-transferable, and no benefit payable under this Program shall be subject in any manner to sale, transfer, anticipation, alienation, assignment, pledge, encumbrance or charge. This Section 4.2 shall not apply to an assignment of a contingency or payment due (a) after the death of a Participant to the deceased Participant’s legal representative or beneficiary or (b) after the disability of a Participant to the disabled Participant’s personal representative. |
4.3 | Force and Effect. The various provisions herein are severable in their entirety. Any determination of invalidity or unenforceability of any one provision will have no effect on the continuing force and effect of the remaining provisions. |
4.4 | Governing Law. This Program will be construed under the laws of the State of California. |
4.5 | Construction. |
(a) | Section 162(m). It is the intent of the Corporation that this Program, Awards and Annual Incentives paid hereunder will qualify as performance-based compensation or will otherwise be exempt from deductibility |
(b) | Section 409A. It is the intended that Awards under this Program qualify as “short-term deferrals” within the meaning of the guidance provided by the Internal Revenue Service under Section 409A of the Code and this Program shall be interpreted consistent with that intent. |
4.6 | Tax Withholding. Upon the payment of any Annual Incentive, the Corporation shall have the right to deduct the amount of any federal, state or local taxes that the Corporation or any Subsidiary may be required to withhold with respect to such payment. |
4.7 | Amendment or Termination of Program. The Board or the Committee may at any time terminate, amend, modify or suspend this Program, in whole or in part. Notwithstanding the foregoing, no amendment may be effective without Board and/or shareholder approval if such approval is necessary to comply with the applicable rules of Section 162(m). |
1. | LONG-TERM INCENTIVES |
• | Nonqualified stock options to purchase shares of EIX Common Stock (“EIX Options”) as described in Section 3; |
• | Contingent EIX performance units (“Performance Shares”) as described in Section 4; and |
• | Restricted EIX stock units (“Restricted Stock Units”) as described in Section 5. |
2. | VESTING OF LTI |
2.1 | EIX Options. The EIX Options will vest over a four-year period as described in this Section 2 (the “Vesting Period”). The effective “initial vesting date” will be January 2, 2015, or six months after the date of the grant, whichever date is later. The EIX Options will vest as follows: |
• | On the initial vesting date, one-fourth of the award will vest. |
• | On January 4, 2016, an additional one-fourth of the award will vest. |
• | On January 3, 2017, an additional one-fourth of the award will vest. |
• | On January 2, 2018, the balance of the award will vest. |
2.2 | Performance Shares. The Performance Shares will vest and become payable to the extent earned as determined at the end of the three-calendar-year period commencing on January 1, 2014, and ending December 31, 2016 (the “Performance Period”), subject to the provisions of Section 4. |
2.3 | Restricted Stock Units. The Restricted Stock Units will vest and become payable on January 3, 2017. |
2.4 | Continuance of Employment/Service Required. The vesting schedule requires continued employment or service through each applicable vesting date as a condition for the vesting of the applicable installment of the LTI and the rights and benefits thereunder. Employment or service for only a portion of the vesting period, even if a substantial portion, will not entitle the Holder to any proportionate vesting or avoid or mitigate a termination of rights and benefits upon or following a termination of employment or services except as provided in Sections 8 and 9 below. |
3. | EIX OPTIONS |
3.1 | Exercise Price. The exercise price of an EIX Option stated in the award certificate is the closing price (in regular trading) of a share of EIX Common Stock on the New York Stock Exchange for the effective date of the grant. |
3.2 | Cumulative Exercisability; Term of Option. The vested portions of the EIX Options will accumulate to the extent not exercised, and be exercisable by the Holder subject to the provisions of this Section 3 and Sections 8 and 9, in whole or in part, in any subsequent period but not later than January 2, 2024. |
3.3 | Method of Exercise. The Holder may exercise an EIX Option by providing written notice to EIX on the form prescribed by the Committee for this purpose, or completion of such other EIX Option exercise procedures as EIX may prescribe, accompanied by full payment of the applicable exercise price. Payment must be in cash or its equivalent acceptable to EIX. At the discretion of the Holder, EIX Common Stock valued on the exercise date at a per-share price equal to the closing price of EIX Common Stock on the New York Stock Exchange may be used to pay the exercise price, provided the Company can comply with any legal requirements. A broker-assisted “cashless” exercise may be accommodated for EIX Options at the discretion of EIX. Until payment is accepted, the Holder will have no rights in the optioned stock. The provisions of Section 10 must be satisfied as a condition precedent to the effectiveness of any purported exercise. |
3.4 | Automatic Exercise. Except as may otherwise be determined by the Committee in advance of the applicable exercise date and subject to the conditions below, the Holder’s then-outstanding vested EIX Options shall automatically be exercised by EIX on behalf of the Holder on the last day of the term of such options (including any shortened term as a result of a termination of employment or in connection with a Change in Control of EIX as provided in Articles 8 and 9), to the extent such options are not otherwise exercised on or before that date. In connection with any automatic exercise of outstanding vested EIX Options, EIX shall satisfy the exercise price of the EIX Options and the minimum applicable withholding obligation by withholding that number of EIX shares of Common Stock otherwise issuable pursuant to the options having a value (based on the closing price of EIX Common Stock on the New York Stock Exchange on the exercise date, or if no sales of EIX Common Stock were reported on the New York Stock Exchange on that date, the closing price of EIX Common Stock on the New York Stock Exchange on the next preceding day on which sales of EIX Common Stock were reported) equal to the exercise price of the EIX Options and the minimum applicable withholding obligation. Outstanding vested EIX Options shall only be automatically exercised by EIX on behalf of the Holder if (i) the EIX Options have an exercise price that is lower than the price of a share of EIX Common Stock on the New York Stock Exchange at the time of exercise so that the options are “in-the-money,” and (ii) the exercise by EIX complies with all legal requirements applicable to EIX. |
4. | PERFORMANCE SHARES |
4.1 | Performance Shares. Performance Shares are EIX Common Stock-based units subject to a performance vesting requirement. A target number of contingent Performance Shares will be awarded on the initial grant date. Fifty percent (50%) of the grant date value (based on EIX’s valuation methodology for the award) of the contingent Performance Shares will be a target number of contingent Performance Shares subject to a performance measure based on the percentile ranking of EIX total shareholder return (“TSR”) among the TSRs for the stocks comprising the Comparison Group (as defined below) over the entire Performance Period (these contingent Performance Shares are referred to as the “TSR Performance Shares”). The other fifty percent (50%) of the grant date value (based on EIX’s valuation methodology for the award) of the contingent Performance Shares will be a target number of contingent Performance Shares subject to a performance measure based on EIX’s average core earnings per share (“EPS”) over the entire Performance Period (these contingent Performance Shares are referred to as the “EPS Performance Shares”). The TSR Performance Shares and EPS Performance Shares will be increased by any additional Performance Shares created by “reinvestment” of dividend equivalents as provided in Section 4.5. |
4.2 | TSR Performance Shares. The actual amount of TSR Performance Shares to be paid will depend on EIX’s TSR percentile ranking on the Performance Measurement Date (as defined herein). If EIX’s TSR is below the 25th percentile, no TSR Performance Shares will be paid. Twenty-five percent (25%) of the |
4.3 | EPS Performance Shares. The Committee shall establish an EIX EPS target for each of calendar 2014, 2015 and 2016, which are the three calendar years comprising the Performance Period. The Committee shall establish the EIX EPS target for each calendar year no later than during the first 90 days of the applicable calendar year, and while performance relating to the EIX EPS target remains substantially uncertain. |
4.4 | Payment of Performance Shares. Fifty percent of the total number of Performance Shares that are earned pursuant to Sections 4.2, 4.3, and 4.5 (rounded up to the nearest whole share) will be paid on a one-for-one basis in EIX Common Stock under the Plan. The remainder of the Performance Shares earned (including any fractional share) will be paid in cash. The value of each whole Performance Share paid in cash will be equal to the closing price per share of EIX Common Stock on the New York Stock Exchange for the date of the Committee’s certification in Section 4.2 and Section 4.3 above. Any fractional Performance Share will be paid in cash based on the closing price per share of EIX Common Stock on the New York Stock Exchange for the date of the Committee’s certification in Section 4.2 and Section 4.3 above. The cash and stock payable for the earned Performance Shares will be delivered as soon as practicable for EIX following the Committee’s certification in Section 4.2 and Section 4.3 above, as applicable, and in all events no later than March 15, 2017. The Performance Shares are subject to termination and other conditions specified in Sections 8 and 9, and to the provisions of Section 10. The provisions of this Section 4.4 regarding the determination of the cash value of a Performance Share (or fractional Performance Share, as the case may be) based on the closing price per share of EIX Common Stock on the New York Stock Exchange for the date of the applicable certification by the Committee shall apply to any previously-granted and currently outstanding performance shares granted by EIX in 2012 and 2013, and such provisions control as to any inconsistency with the Terms and Conditions applicable to such previously-granted LTI regarding such subject matter. |
4.5 | Dividend Equivalent Reinvestment. For each dividend on EIX Common Stock for which the ex-dividend date falls within the Performance Period and after the date of grant of the Performance Shares, the Holder of the Performance Shares will be credited with an additional number of target Performance Shares. The additional number of shares added on each ex-dividend date will be equal to (i) the per-share cash dividend paid by EIX on its Common Stock with respect to the related ex-dividend date, multiplied by (ii) the Holder’s number of target Performance Shares (including any additional target Performance Shares previously credited under this Section 4.5), divided by (iii) the closing price of a share of EIX Common Stock on the related ex-dividend date, with the result rounded to six decimal places. Any target Performance Shares added pursuant to the foregoing provisions of this Section 4.5 will be subject to the same vesting, payment, termination and other terms, conditions and restrictions as the original target Performance Shares to which they relate (including, as applicable, application of the TSR payment multiple as contemplated by Section 4.2 or the EPS performance payment multiple as contemplated by Section 4.3). |
5. | RESTRICTED STOCK UNITS |
5.1 | Restricted Stock Units. Restricted Stock Units are EIX Common Stock-based units that vest based on the passage of time. As soon as practicable for EIX following January 3, 2017 (and in all events within 90 days after such date), EIX will pay Restricted Stock Units that have vested, except that if the Restricted Stock Units vest pursuant to Section 8.2, 8.3, 8.4, 8.5 or 9, the Restricted Stock Units will become payable as provided in the applicable section below and as follows. Whole Restricted Stock Units that have vested will be paid on a one-for-one basis in EIX Common Stock under the Plan. Any fractional Restricted Stock Unit will be paid in cash based on the closing price per share of EIX Common Stock on January 3, 2017 or, as to any fractional Restricted Stock Units that have vested pursuant to Section 8.3, 8.4, 8.5 or 9 (including any payment made pursuant to Section 14.7, but excluding any payment where the time for payment is determined by reference to Section 8.2(C)), the closing price per share of EIX Common Stock on the New York Stock Exchange for the business day immediately preceding the day of payment. The preceding sentence regarding settling fractional Restricted Stock Units in cash (but with “January 3, 2017” replaced by “January 2, 2015” and “January 2, 2016” for Restricted Stock Units granted in 2012 and 2013, respectively), and the first sentence of Section 5.2 regarding the period for which dividends are credited, also apply to any previously-granted and currently outstanding Restricted Stock Units, and such provisions control as to any inconsistency with the Terms and Conditions applicable to such previously-granted Restricted Stock Units regarding such subject matter. The Restricted Stock Units are subject to termination and other conditions specified in Sections 8 and 9, and to the provisions of Section 10. |
5.2 | Dividend Equivalent Reinvestment. For each dividend declared on EIX Common Stock with an ex-dividend date on or after the date an award of Restricted Stock Units is granted and before all of such Restricted Stock Units either have been paid (or converted into a cash amount, as the case may be) pursuant to Section 5.1 (including any payment made pursuant to Section 14.7) or have terminated pursuant to Section 8 or 9, the Holder of such award will be credited with an additional number of Restricted Stock Units equal to (i) the per-share cash dividend paid by EIX on its Common Stock with respect to the related ex-dividend date, multiplied by (ii) the total number of outstanding and unpaid Restricted Stock Units (including any Restricted Stock Units previously credited under this Section 5.2) subject to such award as of such ex-dividend date, divided by (iii) the closing price of a share of EIX Common Stock on the related ex-dividend date, with the result rounded to six decimal places. Any additional Restricted Stock Units credited pursuant to the foregoing provisions of this Section 5.2 will be subject to the same vesting, payment, termination and other terms, conditions and restrictions as the original Restricted Stock Units to which they relate; provided, however, that the Committee shall retain discretion to pay any Restricted Stock Units in cash rather than shares of EIX Common Stock if and to the extent that payment in shares would exceed the applicable share limits of the Plan. No crediting of Restricted Stock Units will be made pursuant to this Section 5.2 with respect to any Restricted Stock Units which, as of the related ex-dividend date, have either been paid pursuant to Section 5.1 or terminated pursuant to Section 8 or 9. |
6. | DELAYED PAYMENT OR DELIVERY OF LTI GAINS |
7. | TRANSFER AND BENEFICIARY |
7.1 | Limitations on Transfers. Except as provided below and in Section 10, the LTI will not be transferable by the Holder and, during the lifetime of the Holder, the LTI will be exercisable only by him or her. The |
7.2 | Exceptions. Notwithstanding the foregoing, the LTI of the Chief Executive Officers and Presidents of EIX and Southern California Edison Company, and of the Executive Vice Presidents of EIX, are transferable to a spouse, children or grandchildren, or trusts or other vehicles established exclusively for their benefit. Any transfer request must specifically be authorized by EIX in writing and shall be subject to any conditions, restrictions or requirements as the Committee may determine. Restricted Stock Units may not, however, be transferred to the extent the transfer would violate (and result in any tax, penalty or interest under) Section 409A of the Internal Revenue Code of 1986, as amended (the “Code”). |
8. | TERMINATION OF EMPLOYMENT |
8.1 | General. In the event of termination of the employment of the Holder for any reason other than those specified in Sections 8.2, 8.3, 8.4 or 9, the LTI will terminate as follows: (i) the Holder’s unvested EIX Options will terminate for no value as of the date such employment terminates, (ii) the Holder’s vested EIX Options will terminate for no value 180 days from the date on which such employment terminated (or, if earlier, on the last day of the applicable EIX Option term) to the extent not theretofore exercised, (iii) the Holder’s unearned Performance Shares will terminate for no value as of the date such employment terminates, and (iv) the Holder’s unvested Restricted Stock Units will terminate for no value as of the date such employment terminates. Any fractional vested EIX Options will be rounded up to the next whole share. |
8.2 | Retirement. If the Holder terminates employment on or after the first day of the month in which he or she (i) attains age 65 or (ii) attains age 61 with five “years of service,” as that term is defined in the Edison 401(k) Savings Plan (a “Retirement”), then the vesting and exercise or payment provisions of this Section 8.2 will apply. |
(A) | EIX Options. The EIX Options will remain outstanding and eligible to vest; provided, however, that in the event the Holder’s Retirement occurs within calendar 2014, the portion of the option that remains outstanding and eligible to vest following the Holder’s Retirement will be prorated by multiplying the total number of shares subject to the option by a fraction (not greater than 1), the numerator of which shall be the number of whole months in calendar 2014 that the Holder was employed by one or more of the Companies, and the denominator of which shall be twelve (12). In no event shall the Holder be credited with services performed during any portion of a calendar month (even if a substantial portion) if the Holder is not employed by one or more of the Companies as of the last day of such calendar month. The portion of the option not eligible to vest following the Holder’s Retirement after giving effect to the proration described in the preceding two sentences shall terminate as of the Holder’s Retirement, and the Holder shall have no further rights with respect to such terminated portion. Any fractional EIX Options eligible to vest under this Section 8.2 will be rounded up to the next whole number. EIX Options that remain outstanding and eligible to vest following Retirement will vest and become exercisable on the schedule under which they would have been vested had the Holder not retired (one-fourth of the option grant on the effective initial vesting date (January 2, 2015 or six months after the date of grant, whichever is later) and an additional one-fourth on January 4, 2016, January 3, 2017, and January 2, 2018), except that if the Holder dies, the then-outstanding portion of the option will immediately vest and become exercisable as of the date of the Holder’s death. In the event prorated vesting is required in connection with the Holder’s Retirement, the portion of the option that remains outstanding and eligible to vest will vest and become exercisable first on the effective initial vesting date (up to the maximum number of shares that would have vested and become exercisable on that date had no termination of employment occurred) and so on until the portion of the option that remains outstanding and eligible to vest becomes vested and exercisable, except that if the Holder dies, the then-outstanding portion of the option will immediately vest and become exercisable as of the date of the Holder’s death. Once exercisable, EIX Options will remain exercisable as provided in Section 3 for the remainder of the original EIX Option term. |
(B) | Performance Shares. The Performance Shares will vest and become payable at the end of the Performance Period to the extent they would have vested and become payable if the Holder’s employment had continued through the last day of the Performance Period; provided, however, that if |
(C) | Restricted Stock Units. The Restricted Stock Units will remain outstanding and eligible to vest following the Holder’s Retirement and will vest and be payable on or as soon as practicable for EIX following January 3, 2017 (and in all events within 90 days after such date); provided, however, that in the event the Holder’s termination of employment occurs within calendar 2014, the number of Restricted Stock Units that remain outstanding and eligible to vest following the Holder’s Retirement will be prorated by multiplying the total number of Restricted Stock Units subject to the award by a fraction (not greater than 1), the numerator of which shall be the number of whole months in calendar 2014 that the Holder was employed by one or more of the Companies, and the denominator of which shall be twelve (12), with the result rounded up to the nearest whole share. For this purpose, the number of “whole months” shall be calculated as provided in Section 8.2(A) above. Any Restricted Stock Units not eligible to vest following the Holder’s Retirement (after application of the foregoing vesting provisions) will terminate for no value. Notwithstanding the foregoing provisions, if the Holder dies after Retirement and prior to the date the then outstanding Restricted Stock Units are paid, the then outstanding Restricted Stock Units will vest and be paid as soon as practicable for EIX (and in all events within 90 days) following the date of the Holder’s death. |
8.3 | Death or Disability. If, prior to the Holder’s termination of employment with a Company, the Holder dies or incurs a “disability” (as such term is defined for purposes of Section 409A of the Code), the provisions of this Section 8.3 will apply. |
(A) | EIX Options. Any unvested EIX Options will immediately vest. The EIX Options will be exercisable immediately as of the date of such termination and will remain exercisable as provided in Section 3 for the remainder of the original EIX Option term. |
(B) | Performance Shares. The Performance Shares will vest and become payable at the end of the Performance Period as provided in Section 4.4 to the extent they would have vested and become payable if the Holder’s employment had continued through the last day of the Performance Period. |
(C) | Restricted Stock Units. Any unvested Restricted Stock Units will immediately vest and become payable as soon as practicable for EIX (and in all events within 90 days) after the date of the Holder’s death or disability, as applicable. |
8.4 | Involuntary Termination Not for Cause. Except as may otherwise be provided in Section 9, upon involuntary termination of the Holder’s employment by his or her employer not for cause (and other than due to the Holder’s death or disability), the provisions of this Section 8.4 shall apply. |
(A) | EIX Options. Unvested EIX Options will vest to the extent necessary to cause the aggregate number of shares subject to vested EIX Options (including any shares acquired pursuant to previously exercised EIX Options) to equal the number of shares granted multiplied by a fraction (not greater than 1), the numerator of which is the number of whole months in the period from January 1 of the year of grant of the award through the one-year anniversary of the Holder’s last day of employment prior to termination of the Holder’s employment, and the denominator of which is forty-eight (48). For purposes of determining such fraction, no fractional month shall be taken into account. The Holder will have one year following the date of termination in which to exercise the EIX Options, or until the end of the EIX Option term, whichever occurs earlier. The Holder’s vested options will terminate for |
(B) | Performance Shares. The Performance Shares will vest and become payable at the end of the Performance Period to the extent they would have vested and become payable if the Holder’s employment had continued through the last day of the Performance Period; provided, however, that the number of each of the TSR Performance Shares and EPS Performance Shares that remain outstanding and eligible to vest following termination of the Holder’s employment will be prorated by multiplying the number of TSR Performance Shares or EPS Performance Shares, respectively, subject to the award by a fraction (not greater than 1), the numerator of which shall be the number of whole months the Holder was employed by one or more of the Companies from January 1, 2014 through the one-year anniversary of the Holder’s last day of employment prior to termination of the Holder’s employment, and the denominator of which is thirty-six (36). For purposes of determining such fraction, no fractional month shall be taken into account. Such vested Performance Shares will be payable to the Holder as provided in Section 4.4 to the extent, as applicable, of the EIX TSR ranking achieved as provided in Section 4.2 or the Performance Period EPS Multiple achieved as specified in Section 4.3. Any unvested Performance Shares (after application of the foregoing vesting provisions) will terminate for no value as of the date of the Holder’s termination of employment. |
(C) | Restricted Stock Units. The Restricted Stock Units will vest to the extent necessary to cause the aggregate number of vested Restricted Stock Units to equal the number of Restricted Stock Units subject to the award multiplied by a fraction (not greater than 1), the numerator of which is the number of whole months in the period from January 1 of the year of grant of the award through the one-year anniversary of the Holder’s last day of employment prior to termination of the Holder’s employment, and the denominator of which is thirty-six (36). For purposes of determining such fraction, no fractional month shall be taken into account. Any unvested Restricted Stock Units (after application of the foregoing vesting provisions) will terminate for no value as of the date of the Holder’s termination of employment. Vested Restricted Stock Units will be paid as soon as practicable for EIX (and in all events within 90 days) following the date of the Holder’s Separation from Service, if the Separation from Service occurs prior to any other applicable payment event otherwise provided for in these Terms. If such period for payment spans two calendar years, and if Section 8.4(D) applies and the period for delivery of the Holder’s release of claims and any applicable revocation period also spans those two calendar years, the applicable payment will be made (subject to the satisfaction of Section 8.4(D)) within the prescribed period of time but in the second of those two calendar years. For purposes of the LTI, a “Separation from Service” means the Holder’s “separation from service” with the Company as that term is used for purposes of Section 409A of the Code. |
(D) | Conditions of Benefits. Notwithstanding the foregoing provisions, if at the time of the Holder’s involuntary termination the Holder is covered by a severance plan of EIX or any of its affiliates, the Holder shall be entitled to the accelerated vesting provided in this Section 8.4 only if the Holder satisfies the applicable conditions for receiving severance benefits under that plan (including, without limitation, any requirement to execute and deliver a release of claims) in connection with such involuntary termination. In the event that such conditions are not satisfied, the provisions of Section 8.1 above shall apply, and the Holder shall not be entitled to any accelerated vesting under this Section 8.4. |
8.5 | Effect of Change of Employer. For purposes of the LTI only, involuntary termination of employment will be deemed to occur on the date the Holder’s employing company is no longer a member of the EIX controlled group of corporations as defined in Section 1563(a) of the Code, regardless of whether the Holder’s employment continues with that entity or a successor entity outside of the EIX controlled group. A termination of employment will not be deemed to occur for purposes of the LTI if a Holder’s employment by one EIX Company terminates but immediately thereafter the Holder is employed by another EIX Company. |
9. | CHANGE IN CONTROL; EARLY TERMINATION OF LTI |
9.1 | EIX Options. In the event the EIX Options are to terminate pursuant to Section 7.2 of the Plan in connection with a Change in Control of EIX, then upon (or, as may be necessary to effect the acceleration, immediately prior to) the Change in Control of EIX the then-outstanding and unvested EIX Options will become fully vested; provided, however, that this automatic acceleration provision will not apply with respect to any EIX Options to the extent the Committee has made a provision for the substitution, assumption, exchange or other continuation of the EIX Options. In the event of such a termination where the Committee has not provided for a cash settlement of the EIX Options as described below, the Holder of each EIX Option that is to be so terminated will be given reasonable advance notice of the impending termination and a reasonable opportunity to exercise such EIX Option in accordance with its terms before such termination (except that in no event will more than 10 days’ notice of the accelerated vesting and impending termination be required). The Committee may provide, as to each EIX Option that is to be terminated in connection with a Change in Control of EIX, to settle the EIX Option by a cash payment to the Holder of such option based upon the distribution or consideration payable to the holders of the EIX Common Stock upon or in respect of such event, such cash payment to be made as soon as practicable for EIX after the Change in Control of EIX. |
9.2 | Performance Shares. In the event the Performance Shares are to terminate pursuant to Section 7.2 of the Plan in connection with a Change in Control of EIX, then the Performance Period for all outstanding Performance Shares will be shortened so that the Performance Period will be deemed to have ended on the last day prior to such Change in Control of EIX, and the Performance Shares that will vest and become payable will be determined in accordance with Section 4.2 (TSR Performance Shares) or 4.3 (EPS Performance Shares) based on such shortened Performance Period (and, with respect to the EPS Performance Shares, after giving effect to a proportionate adjustment by the Committee to the EIX EPS target established for the year in which the Change in Control of EIX occurs to pro-rate such target for the portion of such year elapsed through the last day prior to such Change in Control of EIX); provided, however, that this automatic acceleration provision will not apply with respect to any Performance Shares to the extent the Committee has made a provision for the substitution, assumption, exchange or other |
9.3 | Restricted Stock Units. This Section 9.3 applies to the Restricted Stock Units notwithstanding anything to the contrary in Section 7.2 of the Plan. The Committee may not exercise any discretion to change the payment date(s) of the Restricted Stock Units except as otherwise expressly provided in this Section 9.3 or as otherwise compliant with (so as to not result in any tax, penalty or interest under) Section 409A of the Code. The Restricted Stock Units may only be terminated in connection with a Change in Control of EIX to the extent the termination satisfies the requirements of Treasury Regulation Section 1.409A-3(j)4(ix) (Plan Terminations and Liquidations). In the event the Restricted Stock Units are to terminate in connection with such an event, then upon (or, as may be necessary to effect the acceleration, immediately prior to) the Change in Control of EIX, the then-outstanding and unvested Restricted Stock Units will become fully vested. In the event the Restricted Stock Units are not to be so terminated in connection with such an event, the Committee shall make provision for the substitution, assumption, exchange or other continuation of the Restricted Stock Units in a manner that is compliant with (and does not result in any tax, penalty or interest under) Section 409A of the Code and the Restricted Stock Units shall be paid at the first applicable time otherwise provided in these Terms. |
9.4 | Severance Plan Benefits. If a Holder is a participant in the EIX 2008 Executive Severance Plan (or any similar successor plan) and experiences a Qualifying Termination Event as defined in the EIX 2008 Executive Severance Plan (or a similar employment termination under a successor plan) associated with a Change in Control as defined in the EIX 2008 Executive Severance Plan (or any similar successor plan), then (i) the Holder’s outstanding EIX Options will immediately vest, (ii) the Holder will have two years following the date of termination in which to exercise such EIX options if the Holder is a Senior Vice President or Executive Vice President (three years if the Holder is the Chief Executive Officer, General Counsel, or Chief Financial Officer of EIX, or the Chief Executive Officer or President of Southern California Edison Company), in each case subject to earlier termination at the end of the applicable option term or as provided in Section 9.1 above, (iii) any then outstanding Performance Shares shall be treated as provided for in Section 8.3(B) above, if the applicable performance period has not been shortened pursuant to Section 9.2 above, and (iv) any then outstanding Restricted Stock Units will immediately and fully vest, and will be paid as soon as practicable for EIX (and in all events within 90 days) following the date of the Holder’s Separation from Service, if vesting had not otherwise been triggered by Section 9.3 above. |
9.5 | Other Acceleration Rules. Any acceleration of LTI pursuant to this Section 9 will comply with applicable legal requirements and, if necessary to accomplish the purposes of the acceleration or if the circumstances require, may be deemed by the Committee to occur within a limited period of time not greater than 30 days prior to the Change in Control of EIX. Without limiting the generality of the foregoing, the Committee may deem an acceleration to occur immediately prior to the applicable event and/or reinstate the original terms of a LTI if the event giving rise to acceleration does not occur. |
9.6 | Definition of Change in Control of EIX. A “Change in Control of EIX” shall be deemed to have occurred as of the first day, after the date of grant, that any one or more of the following conditions shall have been satisfied: |
(A) | Any Person (other than a trustee or other fiduciary holding securities under an employee benefit plan of EIX) becomes the Beneficial Owner, directly or indirectly, of securities of EIX representing thirty percent (30%) or more of the combined voting power of EIX’s then outstanding securities. For purposes of this clause, “Person” shall mean any individual, entity or group (within the meaning of Section 13(d)(3) or 14(d)(2) of the Exchange Act, except that such term shall not include one or more underwriters acquiring newly-issued voting securities (or securities convertible into voting securities) directly from EIX with a view towards distribution; and the term “Beneficial Owner” shall mean as defined under Rule 13d-3 promulgated under the Exchange Act. |
(B) | On any day after the date of grant (the “Reference Date”) Continuing Directors cease for any reason to constitute a majority of the Board. A director is a “Continuing Director” if he or she either: |
(i) | was a member of the Board on the applicable Initial Date (an “Initial Director”); or |
(ii) | was elected to the Board, or was nominated for election by EIX’s shareholders, by a vote of at least two-thirds (2/3) of the Initial Directors then in office. |
(C) | EIX is liquidated; all or substantially all of EIX’s assets are sold in one or a series of related transactions; or EIX is merged, consolidated, or reorganized with or involving any other corporation, other than a merger, consolidation, or reorganization that results in the voting securities of EIX outstanding immediately prior thereto continuing to represent (either by remaining outstanding or by being converted into voting securities of the surviving entity) more than fifty percent (50%) of the combined voting power of the voting securities of EIX (or such surviving entity) outstanding immediately after such merger, consolidation, or reorganization. Notwithstanding the foregoing, a bankruptcy of EIX or a sale or spin-off of an affiliate of EIX (short of a dissolution of EIX or a liquidation of substantially all of EIX’s assets, determined on an aggregate basis) will not constitute a Change in Control of EIX. |
(D) | The consummation of such other transaction that the Board may, in its discretion in the circumstances, declare to be a Change in Control of EIX for purposes of the Plan. |
10. | TAXES AND OTHER WITHHOLDING |
• | require the Holder (or the Holder’s personal representative or beneficiary, as the case may be) to pay or provide for payment of at least the minimum amount of any taxes which the Company may be required to withhold with respect to such LTI event or payment; or |
• | deduct from any amount otherwise payable in cash to the Holder (or the Holder’s personal representative or beneficiary, as the case may be) the minimum amount of any taxes which the Company may be required to withhold with respect to such cash payment. |
11. | CONTINUED EMPLOYMENT |
12. | INSIDER TRADING; SECTION 16 |
12.1 | Insider Trading. Each Holder shall comply with all EIX notice, trading and other policies regarding transactions in and involving EIX securities (including, without limitation, policies prohibiting insider trading). |
12.2 | Section 16. If an LTI is granted to a person who later becomes subject to the provisions of Section 16 of the Exchange Act (“Section 16”) in respect of EIX, the LTI will immediately and automatically become subject to the requirements of Rule 16b-3(d) and/or 16b-3(e) ( the “Rule”) and may not be exercised, transferred or (to the extent permitted by Section 409A of the Code without triggering any tax, penalty or interest thereunder) paid until the Rule has been satisfied. Approval of these Terms is intended to satisfy the Rule. However, in its sole discretion, the Committee may take any other action to assure compliance with the requirements of the Rule, including (to the extent permitted by Section 409A of the Code without triggering any tax, penalty or interest thereunder) withholding delivery to Holder (or any other person) of any security or of any other payment in any form until the requirements of the Rule have been satisfied. The Secretary of EIX may waive compliance with the requirements of the Rule if he or she determines the transaction to be exempt from the provisions of paragraph (b) of Section 16. |
12.3 | Notice of Disposition. The Holder agrees that if he or she should plan to dispose of any shares of stock acquired on the exercise or payment of LTI awards (including a disposition by sale, exchange, gift or transfer of legal title) and the Holder is a person who is required to preclear EIX securities transactions, the Holder will notify EIX prior to such disposition. |
13. | AMENDMENT |
14. | MISCELLANEOUS |
14.1 | Force and Effect. The various provisions herein are severable in their entirety. Any determination of invalidity or unenforceability of any one provision will have no effect on the continuing force and effect of the remaining provisions. |
14.2 | Governing Law. These Terms will be construed under the laws of the State of California. |
14.3 | Notice. Unless waived by EIX, any notice required under or relating to the LTI must be in writing, with postage prepaid, addressed to: Edison International, Attn: Corporate Secretary, P.O. Box 800, Rosemead, CA 91770. |
14.4 | Construction. These Terms shall be construed and interpreted to comply with Section 409A of the Code. Additionally, when any provision of this document refers to a date, including a date implied by the end of a specified period, and that date falls on a holiday or weekend, the date shall be deemed to be the immediately preceding business day on which the New York Stock Exchange is open, except that the last day of the Performance Period shall occur on December 31, 2016 and in no event shall the term of an EIX Option extend beyond its maximum 10-year term. Any determination of trading price or fair market value for purposes of these Terms shall be made consistent with the resolutions adopted by the EIX Board of Directors on July 19, 2001 entitled “Fair Market Value Measure for Equity-Based Awards.” EIX Options and Performance Shares are intended to qualify as performance-based compensation exempt from the deductibility limitations of Section 162(m) of the Code and these Terms shall be construed and interpreted consistent with that intent. |
14.5 | Transfer Representations. The Holder agrees that any securities acquired by him or her hereunder are being acquired for his or her own account for investment and not with a view to or for sale in connection with any distribution thereof and that he or she understands that such securities may not be sold, |
14.6 | Award Not Funded. The Holder will have no right or claim to any specific funds, property or assets of the Companies as to any award of LTI. |
14.7 | Section 409A. Notwithstanding any provision of these Terms to the contrary, if the Holder is a “specified employee” as defined in Section 409A of the Code, the Holder shall not be entitled to any payment with respect to any LTI subject to Section 409A in connection with the Holder’s Separation from Service until the earlier of (a) the date which is six (6) months after the Holder’s Separation From Service for any reason other than the Holder’s death, or (b) the date of the Holder’s death. Any amounts otherwise payable to the Holder following the Holder’s Separation From Service that are not so paid by reason of this Section 14.7 shall be paid as soon as practicable for EIX (and in all events within ninety (90) days) after the date that is six (6) months after the Holder’s Separation From Service (or, if earlier, the date of the Holder’s death). The provisions of this Section 14.7 shall only apply if, and to the extent, required to comply with Section 409A of the Code. |
14.8 | Claw-Back. Notwithstanding any provision of these Terms to the contrary, the LTI, as well as any shares of Common Stock, cash or other property that may be issued, delivered or paid in respect of the LTI, as well as any consideration that may be received in respect of a sale or other disposition of any such shares or property, shall be subject to any recoupment, “clawback” or similar provisions of applicable law, as well as any recoupment, “clawback” or similar policies of the Company that may be in effect from time to time. |
/s/ THEODORE F. CRAVER, JR. |
THEODORE F. CRAVER, JR. Chief Executive Officer |
/s/ W. JAMES SCILACCI |
W. JAMES SCILACCI Chief Financial Officer |
/s/ RONALD L. LITZINGER |
RONALD L. LITZINGER President |
/s/ STUART R. HEMPHILL |
STUART R. HEMPHILL Chief Financial Officer |
1. | The Quarterly Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934 (15 U.S.C. 78m(a) or 78o(d)); and |
2. | The information contained in the Quarterly Report fairly presents, in all material respects, the financial condition and results of operations of the Company. |
/s/ THEODORE F. CRAVER, JR. |
THEODORE F. CRAVER, JR. Chief Executive Officer Edison International |
/s/ W. JAMES SCILACCI |
W. JAMES SCILACCI Chief Financial Officer Edison International |
1. | The Quarterly Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934 (15 U.S.C. 78m(a) or 78o(d)); and |
2. | The information contained in the Quarterly Report fairly presents, in all material respects, the financial condition and results of operations of the Company. |
/s/ RONALD L. LITZINGER |
RONALD L. LITZINGER President Southern California Edison Company |
/s/ STUART R. HEMPHILL |
STUART R. HEMPHILL Chief Financial Officer Southern California Edison Company |
Compensation and Benefit Plans (Textual) (Details) (USD $)
In Millions, unless otherwise specified |
3 Months Ended |
---|---|
Mar. 31, 2014
|
|
Pension Plans
|
|
Pension and Other Postretirement Benefits | |
Employer contributions | $ 6 |
Estimated future contributions in remainder of 2014 | 202 |
Postretirement Benefits Other Than Pensions
|
|
Pension and Other Postretirement Benefits | |
Employer contributions | 4 |
Estimated future contributions in remainder of 2014 | 11 |
Southern California Edison | Pension Plans
|
|
Pension and Other Postretirement Benefits | |
Estimated future contributions in remainder of 2014 | 185 |
Employee severance | Southern California Edison
|
|
Pension and Other Postretirement Benefits | |
Estimated cash severance payments | $ 213 |
Derivative Instruments (Notional Values) (Details) (Southern California Edison, Electric Utility, Economic hedges)
|
Mar. 31, 2014
GWh
|
Dec. 31, 2013
GWh
|
---|---|---|
Electricity options, swaps and forwards (GWh)
|
||
Derivatives | ||
Notional volumes of derivative instruments | 5,086 | 6,274 |
Natural gas options, swaps and forwards (Bcf)
|
||
Derivatives | ||
Notional volumes of derivative instruments | 8 | 12 |
Congestion revenue rights (GWh)
|
||
Derivatives | ||
Notional volumes of derivative instruments | 135,714 | 149,234 |
Tolling arrangements (GWh)
|
||
Derivatives | ||
Notional volumes of derivative instruments | 86,248 | 87,991 |
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