10-Q - Edison International

Some of the power procurement contracts contain provisions that require SCE to maintain an investment grade credit ratingfrom the major credit rating agencies. If SCE's credit rating were to fall below investment grade, SCE may be required to paythe liability or post additional collateral.The table below provides the amount of collateral posted by SCE to its counterparties as well as the potential collateral thatwould be required as of March 31, 2012.(in millions)Collateral posted as of March 31, 2012 1 $ 164Incremental collateral requirements for power procurement contracts resulting from apotential downgrade of SCE's credit rating to below investment grade 140Posted and potential collateral requirements 2 $ 30412Collateral provided to counterparties and other brokers consisted of $81 million of cash which was offset against netderivative liabilities on the consolidated balance sheets, $20 million of cash reflected in "Other current assets" on theconsolidated balance sheets and $63 million in letters of credit.There would be no increase to SCE's total posted and potential collateral requirements based on SCE's forwardpositions as of March 31, 2012 due to adverse market price movements over the remaining lives of the existing powerprocurement contracts using a 95% confidence level.Workers Compensation Self-Insurance FundFor a discussion of potential collateral requirements related to its self-insured workers compensation plan, refer to "Liquidityand Capital Resources—Workers Compensation Self-Insurance Fund" in the year ended 2011 MD&A.Historical Consolidated Cash FlowsThe table below sets forth condensed historical cash flow information for SCE.Three months ended March 31,(in millions) 2012 2011Net cash provided by operating activities $ 775 $ 672Net cash provided by financing activities 500 190Net cash used by investing activities (1,269) (1,066)Net increase (decrease) in cash and cash equivalents $ 6 $ (204)Net Cash Provided by Operating ActivitiesNet cash provided by operating activities increased $103 million in the first quarter of 2012 compared to the same period in2011. The increase in cash flows provided by operating activities was primarily due to the timing of cash receipts anddisbursements related to working capital items, partially offset by lower net tax receipts in 2012.30