- 2006 net income of $1.864 billion versus a net loss of $1.307
billion for 2005 ATLANTA, March 5 /PRNewswire-FirstCall/ -- Mirant
Corporation (NYSE:MIR) today reported net income of $1.324 billion
for the quarter ended December 31, 2006, compared to net income of
$207 million for the same period in 2005. For 2006, Mirant reported
net income of $1.864 billion, compared to a net loss of $1.307
billion for 2005. Earnings per share for the fourth quarter were
$4.89 per diluted share and earnings per share for the year were
$6.28 per diluted share. In the fourth quarter of 2006, the company
recognized tax benefits of $845 million related to the pending sale
of its Philippine business consisting of $124 million related to
the reversal of a liability for Philippine dividend withholding
taxes with respect to Philippine earnings which will not be
repatriated as dividends and $721 million related to book/tax basis
differences in the shares of the entity being sold and to the
release of the valuation allowance previously recorded against NOLs
and other deferred tax assets which will be used to offset the
taxable gain from the sale. The benefit of $721 million represents
an acceleration into 2006 of the tax effects of the sale of the
Philippine business. As a result, the gain from that transaction to
be recorded in 2007 will be treated as fully taxable for financial
reporting purposes in that year. Mirant reported adjusted net
income of $186 million for the fourth quarter of 2006, resulting in
adjusted earnings per diluted share of $0.69. Adjusted net income
for the quarter excludes the positive effects of the total tax
benefits of $845 million, a $221 million gain recognized for the
settlement of the New York property tax dispute and the net effect
of $72 million of other non-recurring items. Mirant reported
adjusted net income for 2006 of $644 million, resulting in adjusted
earnings per diluted share of $2.17 for the year. Adjusted net
income for the year excludes the positive effect of the total tax
benefits of $845 million, unrealized mark-to-market gains of $667
million, the $221 million gain recognized for the settlement of the
New York property tax dispute and the negative effect of a $375
million impairment for the U.S. natural gas plants, a $120 million
impairment for Bowline unit 3 and the net effect of $18 million of
other non-recurring items. Adjusted EBITDA from continuing
operations was $171 million for the quarter, compared to a loss of
$31 million for the same period in 2005. For 2006, adjusted EBITDA
from continuing operations was $641 million, compared to $169
million for the same period in 2005. The period over period
increases for the quarter and the year resulted primarily from an
increase in the realized value of hedges for the 2006 periods
compared to the 2005 periods, offset in part by lower power prices
and lower generation volumes in 2006. Net cash provided by
operating activities during the fourth quarter was $289 million.
Net cash provided by operating activities was $1.377 billion for
2006, excluding bankruptcy payments of $814 million. As of December
31, 2006, the company's continuing operations had cash and cash
equivalents of $1.142 billion, total available liquidity of $1.8
billion and total outstanding debt of $3.275 billion. Adjusted
EBITDA from discontinued operations was $129 million for the
quarter, compared to $141 million for the same period in 2005. For
2006, adjusted EBITDA from discontinued operations was $662
million, compared to $610 million for the same period in 2005.
Asset Sale Process In December, Mirant entered into a definitive
agreement for the sale of its Philippine business. The transaction
is expected to close in the second quarter of 2007. In January, the
company entered into a definitive agreement for the sale of six
U.S. natural gas plants. The transaction is expected to close in
the second quarter of 2007. The sales process for the company's
Caribbean businesses is underway; the sale is expected to close in
mid-2007. As previously announced, Mirant plans to continue
returning cash to its shareholders upon completion of its planned
asset and business sales. The amount of cash returned will be
determined based on the outlook for the continuing business (1) to
preserve the credit profile of the continuing business, (2) to
maintain adequate liquidity for expected cash requirements
including, among other things, capital expenditures for the
continuing business, and (3) to retain sufficient working capital
to manage fluctuations in commodity prices. Consistent with Mirant
North America's debt covenants, proceeds from the sales of the
Zeeland and Bosque plants, expected to be approximately $500
million, will be reinvested in and/or used to retire debt of Mirant
North America. Chairman's Comment "Mirant's strong financial
performance and the return of $1.3 billion to shareholders enabled
us to create significant shareholder value in the year since the
company emerged from bankruptcy," said Edward R. Muller, chairman
and chief executive officer. "In addition, we have made significant
progress on the divestiture program announced in mid-2006."
Guidance Mirant raised its 2007 adjusted EBITDA guidance from $962
million to $1.089 billion for continuing operations and provided
initial 2008 adjusted EBITDA guidance for continuing operations of
$914 million. The company also adjusted its projections for the
capital expenditures required to comply with the Maryland Healthy
Air Act. Previously, the company had expected the expenditures to
be between $1.3 to $1.5 billion by the end of 2009. In light of
changes in the scope of the work and rising costs for materials,
the company now expects those expenditures to be approximately $1.6
billion. Earnings Call Mirant is hosting an earnings call today to
discuss its fourth quarter 2006 financial results and outline
business priorities. The call will be held from 9:00 a.m. to 10:00
a.m. New York City time. The conference call can be accessed via
the investor relations section of the company's website at
http://www.mirant.com/ or analysts are invited to listen to the
call by dialing 800.289.0572 (International 913.981.5543) and
entering pass code 2747399. Presentation slides for the analyst
call have been posted to the company's website. The presentation
may include certain non-GAAP financial measures as defined under
SEC rules. In such event, a reconciliation of those measures to the
most directly comparable GAAP measures will also be available via
the investor relations section of the company's website at
http://www.mirant.com/. A recording of the event will be available
for playback on the company's website beginning today at 12:00 p.m.
New York City time. A replay also will be available by dialing
888.203.1112 (International 719.457.0820) and entering the pass
code 2747399. Mirant is a competitive energy company that produces
and sells electricity in the United States, the Caribbean, and the
Philippines. Mirant owns or leases approximately 17,500 megawatts
of electric generating capacity globally. The company operates an
asset management and energy marketing organization from its
headquarters in Atlanta. For more information, please visit
http://www.mirant.com/. Fourth Quarter Income Statement MIRANT
CORPORATION AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF
OPERATIONS (UNAUDITED) Quarter Ending December 31
-------------------------- 2006 2005 ---------------------- (in
millions) Operating Revenues: Operating Revenues $550 $1,111 Cost
of fuel, electricity and other products 236 582 ------- -------
Gross Margin 314 529 Operating Expenses: Operations and maintenance
63 185 Depreciation and amortization 34 35 Impairment losses (1) -
Gain on sales of assets, net - (10) ------- ------- Total operating
expenses 96 210 ------- ------- Operating Income 218 319 -------
------- Other Expense (Income), net: Interest expense 77 223 Gain
on sales of investments, net (59) (44) Interest income (18) (3)
Other, net (38) 52 ------- ------- Total other expense, net (38)
228 ------- ------- Income From Continuing Operations Before
Reorganization Items, Income Taxes and Minority Interest 256 91
Reorganization items, net (163) (133) Provision (benefit) for
income taxes (580) 10 ------- ------- Income From Continuing
Operations 999 214 ------- ------- Income From Discontinued
Operations, net 325 9 ------- ------- Income Before Cumulative
Effect of a Change in Accounting Principles 1,324 223 Cumulative
Effect of a Change in Accounting Principles - (16) ------- -------
Net Income $1,324 $207 ======= ======= Regulation G Reconciliations
Adjusted Net Income and Adjusted EBITDA Quarter Ending December 31,
2006
-------------------------------------------------------------------------
(in millions) Continuing Discontinued Total Operations EPS(1)
Operations EPS(1) Total EPS(1) ---------- ------ ----------- ------
----- ----- Net income $999 $3.69 $325 $1.20 $1,324 $4.89
Mark-to-market gains (17) (0.06) - - (17) (0.06) Gain on sales of
assets, net - - (21) (0.08) (21) (0.08) Gain on sale of investments
(59) (0.22) - - (59) (0.22) Impairment loss (gain) (1) - 1 - - -
California CC8 settlement (26) (0.10) - - (26) (0.10) NY property
tax settlement (prior years) (221) (0.82) - - (221) (0.82)
Bankruptcy charges and pre-petition disputes (4) (0.01) - - (4)
(0.01) NPC settlement and receivable write-off (Philippines) - - 24
0.09 24 0.09 Philippine outage adjustments - - 31 0.12 31 0.12
Benefit for income taxes (valuation allowance adjustment) (580)
(2.14) (141) (0.52) (721) (2.66) Benefit for income taxes (reversal
of accrued tax) - - (124) (0.46) (124) (0.46) ---- ------ -----
------ ----- ------ Adjusted net income $91 $0.34 $95 $0.35 $186
$0.69 ===== ===== ===== Provision for income taxes - 12 12
Interest, net 46 17 63 Depreciation and amortization 34 5 39 ----
---- ---- Adjusted EBITDA $171 $129 $300 ==== ==== ====
--------------------------------------------------------------------------
(1) Total diluted shares: 271 million Adjusted net income and
adjusted EBITDA are non-GAAP financial measures. Management and
some members of the investment community utilize adjusted net
income and adjusted EBITDA to measure financial performance on an
ongoing basis. These measures are not recognized in accordance with
GAAP and should not be viewed as an alternative to GAAP measures of
performance. In evaluating these adjusted measures, the reader
should be aware that in the future Mirant may incur expenses
similar to the adjustments set forth above. Adjusted Net Income and
Adjusted EBITDA Year to Date December 31, 2006
-------------------------------------------------------------------------
(in millions) Continuing Discontinued Total Operations EPS(1)
Operations EPS(1) Total EPS(1) ---------- ------ ----------- ------
----- ------ Net income $1,773 $5.97 $91 $0.31 $1,864 $6.28
Mark-to-market gains (655) (2.21) (12) (0.04) (667) (2.25) Loss
(gain) on sales of assets, net (49) (0.16) 374 1.26 325 1.10 Loss
(gain) on sale of investments (76) (0.26) 4 0.01 (72) (0.25)
Impairment loss 119 0.40 1 - 120 0.40 Impairment loss on minority
owned affiliates - - 7 0.02 7 0.02 Potrero tax settlement (4)
(0.01) - - (4) (0.01) California CC8 settlement (26) (0.09) - -
(26) (0.09) NY property tax settlement (prior years) (221) (0.74) -
- (221) (0.74) Bankruptcy charges and pre-petition disputes 21 0.07
- - 21 0.07 NPC settlement and receivable write-off (Philippines) -
- 24 0.08 24 0.08 Philippine outage adjustments - - 31 0.11 31 0.11
Prepayment penalty and stamp tax - - 15 0.05 15 0.05 Write off of
Philippines deferred tax asset - - 72 0.24 72 0.24 Benefit for
income taxes (valuation allowance adjustment) (580) (1.95) (141)
(0.47) (721) (2.42) Benefit for income taxes (reversal of accrued
tax) - - (124) (0.42) (124) (0.42) ---- ----- ----- ------ -----
------ Adjusted net income $302 $1.02 $342 $1.15 $644 $2.17 =====
====== ====== Provision for income taxes 2 144 146 Interest, net
200 78 278 Depreciation and amortization 137 98 235 ---- ----
------ Adjusted EBITDA $641 $662 $1,303 ==== ==== ======
--------------------------------------------------------------------------
(1)Total diluted shares: 297 million Adjusted net income and
adjusted EBITDA are non-GAAP financial measures. Management and
some members of the investment community utilize adjusted net
income and adjusted EBITDA to measure financial performance on an
ongoing basis. These measures are not recognized in accordance with
GAAP and should not be viewed as an alternative to GAAP measures of
performance. In evaluating these adjusted measures, the reader
should be aware that in the future Mirant may incur expenses
similar to the adjustments set forth above. Adjusted Net Income and
Adjusted EBITDA Quarter Ending December 31, 2005
-------------------------------------------------------------------------
(in millions) Continuing Discontinued Operations Operations Total
---------- ------------ ----- Net income $198 $9 $207
Mark-to-market losses (gains) (385) 3 (382) Loss (gain) on sales of
assets, net (10) 13 3 Gain on sale of investments, net (44) - (44)
Impairment loss on minority owned affiliates - 23 23 Other
impairment losses and restructuring 10 - 10 Reorganization items,
net (133) 4 (129) Cumulative effect of a change in accounting
principle 16 - 16 Other, net 52 - 52 ------- ------ ------ Adjusted
net income (loss) $(296) $52 $(244) Provision for income taxes 10
25 35 Interest, net 220 22 242 Amortization of transition power
agreements - (1) (1) Depreciation and amortization 35 43 78 -------
------ ------ Adjusted EBITDA $(31) $141 $110 ======= ====== ======
-------------------------------------------------------------------------
Adjusted net income and adjusted EBITDA are non-GAAP financial
measures. Management and some members of the investment community
utilize adjusted net income and adjusted EBITDA to measure
financial performance on an ongoing basis. These measures are not
recognized in accordance with GAAP and should not be viewed as an
alternative to GAAP measures of performance. In evaluating these
adjusted measures, the reader should be aware that in the future
Mirant may incur expenses similar to the adjustments set forth
above. Adjusted Net Income and Adjusted EBITDA Year to Date
December 31, 2005
-------------------------------------------------------------------------
(in millions) Continuing Discontinued Operations Operations Total
---------- ------------ -------- Net income (loss) $(1,406) $99
(1,307) Mark-to-market losses 16 1 17 Loss on sales of assets, net
17 10 27 Gain on sale of investments (45) - (45) Impairment loss on
minority owned affiliates - 23 23 Other impairment losses and
restructuring 23 - 23 Reorganization items, net (18) 89 71
Cumulative effect of a change in accounting principle 16 - 16
Other, net 63 (4) 59 ---------- ------------ -------- Adjusted net
income (loss) $(1,334) $218 $(1,116) Provision (benefit) for income
taxes (18) 141 123 Interest, net 1,395 85 1,480 Amortization of
transition power agreements (9) (5) (14) Depreciation and
amortization 135 171 306 ---------- ------------ -------- Adjusted
EBITDA $169 $610 $779 ========== ============ ========
-------------------------------------------------------------------------
Adjusted net income and adjusted EBITDA are non-GAAP financial
measures. Management and some members of the investment community
utilize adjusted net income and adjusted EBITDA to measure
financial performance on an ongoing basis. These measures are not
recognized in accordance with GAAP and should not be viewed as an
alternative to GAAP measures of performance. In evaluating these
adjusted measures, the reader should be aware that in the future
Mirant may incur expenses similar to the adjustments set forth
above. Adjusted Net Cash Provided by Operating Activities
--------------------------------------------------------------------------
(in millions) 3 Months Ended Year Ended December 31, 2006 December
31,2006 ----------------- ----------------- Net cash provided by
operating activities $289 $563 Bankruptcy payments 49 814
----------------- ----------------- Adjusted net cash provided by
operating activities $338 $1,377 =================
=================
---------------------------------------------------------------------------
Adjusted net cash provided by operating activities is a non-GAAP
financial measure. Management and some members of the investment
community utilize adjusted net cash provided by operating
activities to measure financial performance on an ongoing basis.
This measure is not recognized in accordance with GAAP and should
not be viewed as an alternative to GAAP measures of performance.
Cash and Cash Equivalents to Liquidity At December 31, 2006
--------------------------------------------------------------------------
(in millions) Continuing Operations --------------------- Cash and
cash equivalents $1,142 Less: cash restricted due to bankruptcy of
New York entities and reserved for working capital or other
purposes (115) Available under credit facilities 796
--------------------- Total available liquidity $1,823
=====================
--------------------------------------------------------------------------
Liquidity is a non-GAAP financial measure. Management and some
members of the investment community utilize liquidity to measure
financial performance on an ongoing basis. This measure is not
recognized in accordance with GAAP and should not be viewed as an
alternative to GAAP measures of performance. Fourth Quarter 2006
Pro Forma Adjusted EBITDA Guidance to Expected Cash Flow from
Operations For the years ending December 31, 2007 and 2008
------------------------------------------------------------------------
(in millions) Year Ending Year Ending December 31, 2007 December
31, 2008 ------------------------------------ Continuing Continuing
Operations Operations ---------- ---------- U.S. realized gross
margin $1,785 $1,626 U.S. O&M and other (696) (712) ----------
---------- Adjusted EBITDA $1,089 $914 Interest, net (178) (179)
Income taxes paid (25) (11) Working capital changes 44 (25)
---------- ---------- Adjusted cash flow from operations $930 $699
Adjustments - - ---------- ---------- Cash provided by (used in)
operating activities $930 $699 ========== ==========
--------------------------------------------------------------------------
Adjusted EBITDA and adjusted cash flow from operations are non-GAAP
financial measures. Management and some members of the investment
community utilize adjusted EBITDA and adjusted cash flow from
operations to measure financial performance on an ongoing basis.
These measures are not recognized in accordance with GAAP and
should not be viewed as an alternative to GAAP measures of
performance. Third Quarter 2006 Pro Forma Adjusted EBITDA Guidance
to Expected Cash Flow from Operations For the year ending December
31, 2007
--------------------------------------------------------------------------
(in millions) Year Ending Period Ending December 31, 2007 June 30,
2007 --------------------------------------- Continuing
Discontinued Operations Operations Total ---------- ------------
------- U.S. realized gross margin $1,693 $47 $1,740 U.S. O&M
and other (731) (25) (756) International businesses adj. EBITDA -
277 277 ---------- ------------ ------- Adjusted EBITDA $962 $299
$1,261 Interest, net (228) (59) (287) Income taxes paid (7) (91)
(98) Working capital changes (113) - (113) ---------- ------------
------- Adjusted cash flow from operations $614 $149 $763
Adjustments - - - ---------- ------------ ------- Cash provided by
operating activities $614 $149 $763 ========== ============ =======
----------------------------------------------------------------------------
Adjusted EBITDA and adjusted cash flow from operations are non-GAAP
financial measures. Management and some members of the investment
community utilize adjusted EBITDA and adjusted cash flow from
operations to measure financial performance on an ongoing basis.
These measures are not recognized in accordance with GAAP and
should not be viewed as an alternative to GAAP measures of
performance. Cautionary Language Regarding Forward-Looking
Statements Some of the statements included herein involve
forward-looking information. Mirant cautions that these statements
involve known and unknown risks and that there can be no assurance
that such results will occur. There are various important factors
that could cause actual results to differ materially from those
indicated in the forward-looking statements, such as, but not
limited to, legislative and regulatory initiatives regarding
deregulation, regulation or restructuring of the industry of
generating, transmitting and distributing electricity; changes in
state, federal and other regulations (including rate and other
regulations); changes in, or changes in the application of,
environmental and other laws and regulations to which Mirant and
its subsidiaries and affiliates are or could become subject; the
failure of Mirant's assets to perform as expected, including
outages for unscheduled maintenance or repair, and the timely
completion of the repairs on the Sual generating facility; Mirant's
ability to divest its Caribbean business at a price and on terms
that it would be willing to accept, and its ability to consummate
the sale of its Philippine business and the sale of its U.S.
intermediate and peaking natural gas-fired plants, as well as any
adverse impacts on its credit ratings that may result from such
sales; changes in market conditions, including developments in the
supply, demand, volume and pricing of electricity and other
commodities in the energy markets, or the extent and timing of the
entry of additional competition in Mirant's markets or those of its
subsidiaries and affiliates; increased margin requirements, market
volatility or other market conditions that could increase Mirant's
obligations to post collateral beyond amounts which are expected;
Mirant's inability to access effectively the over-the-counter and
exchange-based commodity markets or changes in commodity market
liquidity or other commodity market conditions, which may affect
Mirant's ability to engage in asset management and proprietary
trading activities as expected, or result in material extraordinary
gains or losses from open positions in fuel or other commodities;
Mirant's ability to borrow additional funds and access capital
markets; strikes, union activity or labor unrest; hazards customary
to the power generation industry and the possibility that Mirant
may not have adequate insurance to cover losses as a result of such
hazards; the cost and availability of emissions allowances;
curtailment of operations due to transmission constraints; Mirant's
inability to complete construction of emissions reduction equipment
by January 2010 to meet the requirements of the Maryland Healthy
Air Act, which may result in reduced unit operations and reduced
cash flows and revenues from operations; restrictions on the
ability of Mirant's subsidiaries to pay dividends, make
distributions or otherwise transfer funds to Mirant, including
restrictions on Mirant North America and Mirant Asia-Pacific
Limited contained in their financing agreements and restrictions on
Mirant Mid-Atlantic contained in its leveraged lease documents,
which may affect Mirant's ability to access the cash flow of those
subsidiaries to make debt service and other payments; Mirant's
inability to enter into intermediate and long-term contracts to
sell power and procure fuel, including its transportation, on terms
and prices acceptable to it; weather and other natural phenomena,
including hurricanes and earthquakes; war, terrorist activities or
the occurrence of a catastrophic loss; environmental regulations
that restrict Mirant's ability to operate its business, including
regulations related to the emission of carbon dioxide and other
greenhouse gases; price mitigation strategies employed by
independent system operators or regional transmission organizations
that reduce Mirant's revenue and may result in a failure to
compensate Mirant's generation units adequately for all their
costs; volatility in Mirant's gross margin as a result of its
accounting for derivative financial instruments used in its asset
management activities and volatility in its cash flow from
operations resulting from working capital requirements, including
collateral, to support its asset management and proprietary trading
activities; deterioration in the financial condition of Mirant's
counterparties and the resulting failure to pay amounts owed to
Mirant or to perform obligations or services due to Mirant beyond
collateral posted; the disposition of the pending litigation
described in Mirant's Form 10-K for the year ended December 31,
2006, filed with the Securities and Exchange Commission; factors
that affect Mirant's international subsidiaries, such as political
instability, local security concerns, tax increases, expropriation
of property, cancellation of contract rights and environmental
regulations; the inability of Mirant's operating subsidiaries to
generate sufficient cash flow to support its operations; the
resolution of claims and obligations that were not resolved during
the Chapter 11 process that may have a material adverse effect on
Mirant's results of operations; and other factors discussed in
Mirant's Form 10-K for the year ended December 31, 2006. Mirant
undertakes no obligation to update or revise any forward-looking
statements, whether as a result of new information, future events
or otherwise. The Adjusted EBITDA guidance is an estimate as of
today's date, March 5, 2007, and is based on assumptions believed
to be reasonable as of such date. Mirant expressly disclaims any
current intention to update such guidance. The foregoing review of
factors that could cause Mirant's actual results to differ
materially from those contemplated in the forward-looking
statements included in this news release should be considered in
connection with information regarding risks and uncertainties that
may affect Mirant's future results included in Mirant's filings
with the Securities and Exchange Commission at http://www.sec.gov/.
Stockholder inquiries: 678 579 7777 DATASOURCE: Mirant Corporation
CONTACT: Media, Felicia Browder, +1-678-579-3111, or , or investor
relations, Mary Ann Arico, +1-678-579-7553, or , or Sarah Stashak,
+1-678-579-6940, or , or stockholder inquiries, +1-678-579-7777 Web
site: http://www.mirant.com/
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