- Net income of $775 million versus net loss of $26 million for the
third quarter of 2006 ATLANTA, Nov. 9 /PRNewswire-FirstCall/ --
Mirant Corporation (NYSE:MIR) today reported net income of $775
million for the quarter ended September 30, 2007, compared to a net
loss of $26 million for the same period in 2006. Results for 2007
include a $379 million gain related to the Pepco settlement
resolving bankruptcy and other claims and $13 million of unrealized
mark-to- market gains. Results for 2006 include impairment losses
of $396 million related to the U.S. natural gas assets that were
sold in 2007 and $120 million related to construction and
development costs for the suspended Bowline combined cycle unit and
$228 million of unrealized mark-to-market gains. Diluted earnings
per share for the third quarter of 2007 were $2.74 per share,
compared to a net loss of $0.09 per diluted share for the same
period in 2006. Mirant reported adjusted net income from continuing
operations of $323 million for the third quarter of 2007, or
diluted earnings per share of $1.14, compared to adjusted net
income of $131 million for the same period in 2006, or diluted
earnings per share of $0.44. Adjusted net income from continuing
operations excludes unrealized mark-to-market gains and losses,
$362 million of the gain in 2007 related to the Pepco settlement,
the $120 million impairment in 2006 related to construction and
development costs for the suspended Bowline combined cycle unit and
other non-recurring items. Adjusted EBITDA from continuing
operations, which excludes unrealized mark-to-market gains and
losses, $362 million of the gain related to the Pepco settlement
and other non-recurring items, was $323 million for the third
quarter of 2007, compared to $214 million for the same period in
2006. Adjusted EBITDA from continuing operations in 2006 excludes
unrealized mark- to-market gains and losses, the $120 million
impairment loss related to construction and development costs for
the suspended Bowline combined cycle unit and other non-recurring
items. The period over period increase for the quarter was
principally because of higher capacity revenues as a result of the
implementation of the RPM capacity market in the Mid-Atlantic
during 2007. Net cash provided by operating activities during the
third quarter of 2007 was $318 million. Year-to-Date Net income for
the first nine months of 2007 was $1.979 billion compared to $540
million for the same period in 2006. Results for 2007 include an
after-tax gain of $1.3 billion on the sale of the Philippine
business, $383 million of unrealized mark-to-market losses, the
$379 million gain related to the Pepco settlement and a $175
million impairment related to the Lovett generating facility.
Results for 2006 include $638 million of unrealized mark- to-market
gains, the impairment losses of $396 million related to the U.S.
natural gas assets that were sold in 2007 and $120 million related
to construction and development costs for the suspended Bowline
combined cycle unit. Diluted earnings per share for the first nine
months of 2007 were $6.99 per share, compared to $1.77 diluted
earnings per share for the same period in 2006. Mirant reported
adjusted net income from continuing operations of $614 million for
the first nine months of 2007, or diluted earnings per share of
$2.17, compared to adjusted net income of $219 million for the same
period in 2006, or diluted earnings per share of $0.72. Adjusted
net income from continuing operations excludes unrealized
mark-to-market gains and losses, $362 million of the gain in 2007
related to the Pepco settlement, the $175 million impairment
related to the Lovett generating facility in 2007, the $120 million
impairment loss in 2006 related to construction and development
costs for the suspended Bowline combined cycle unit and other
non-recurring items. Adjusted EBITDA from continuing operations,
which excludes unrealized mark-to-market gains and losses, $362
million of the gain related to the Pepco settlement, the $175
million impairment related to the Lovett generating facility and
other non-recurring items, was $774 million for the first nine
months of 2007, compared to $478 million for the same period in
2006. Adjusted EBITDA from continuing operations in 2006 excludes
unrealized mark-to-market gains and losses, the $120 million
impairment related to construction and development costs for the
suspended Bowline combined cycle unit and other non- recurring
items. The period over period increase was because of higher
capacity revenues as a result of the implementation of the RPM
capacity market in the Mid-Atlantic, favorable fuel oil management
activities, higher electrical energy prices, and lower emission
allowance costs. Net cash provided by operating activities for the
first nine months of 2007 was $833 million. As of September 30,
2007, the company had cash and cash equivalents of $6.325 billion
and total outstanding debt of $3.137 billion. As of September 30,
2007, $946 million in cash and cash equivalents was restricted at
Mirant North America and its subsidiaries and is not available for
distribution to Mirant. Return of Cash to Stockholders Mirant today
announced a conclusion to the strategic review process it had
announced on April 9, 2007. "After a thorough exploration process,
we have determined that the best course of action at this time is
to return to our stockholders a total of $4.6 billion in excess
cash," said Edward R. Muller, chairman and chief executive officer.
The first stage will consist of an accelerated share repurchase
program for $1 billion together with open market purchases for an
additional $1 billion. Mirant will determine how best to return
additional cash upon completion of the accelerated share
repurchase. Mirant has entered into an accelerated share repurchase
agreement with JPMorgan for the repurchase of approximately 24
million shares. Under the terms of the agreement JPMorgan will
borrow and deliver to Mirant approximately 24 million shares on
November 13, 2007. Upon completion, the accelerated share
repurchase is subject to an adjustment based on a volume weighted
average price for the Mirant common shares during a period of up to
six months, minus a set discount. Under the terms of the agreement,
Mirant will have the ability to settle the adjustment in cash or
shares. Guidance Mirant today is reinitiating Adjusted EBITDA
guidance for 2007 and 2008 of $1.0 billion and $907 million,
respectively. Mirant had previously suspended its guidance in April
in conjunction with the announcement of its recently completed
strategic exploration. Prior to suspension of guidance, on March 5,
2007, Mirant had provided Adjusted EBITDA guidance of $1.089
billion and $914 million for 2007 and 2008, respectively. Earnings
Call Mirant is hosting an earnings call today to discuss its third
quarter 2007 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 8252428.
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 8252428.
Mirant is a competitive energy company that produces and sells
electricity in the United States. Mirant owns or leases
approximately 10,300 megawatts of electric generating capacity. The
company operates an asset management and energy marketing
organization from its headquarters in Atlanta. For more
information, please visit http://www.mirant.com/. Regulation G
Reconciliations Adjusted Net Income and Adjusted EBITDA Quarter
Ending September 30, 2007 (in millions) EPS(1) -------- Net income
$775 $2.74 Income from discontinued operations 133 0.47 --------
-------- Income from continuing operations 642 2.27 Mark-to-market
gains (13) (0.05) Bankruptcy charges and legal contingencies (1)
(0.00) Bonus plan for dispositions 8 0.03 Pepco settlement (362)
(1.28) Provision for income taxes (valuation allowance adjustment)
49 0.17 -------- -------- Adjusted net income $323 $1.14 ========
Benefit for income taxes (10) Interest, net (23) Depreciation and
amortization 33 -------- Adjusted EBITDA $323 ======== (1) Total
diluted shares: 283 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 September 30, 2007 (in millions) EPS(1) -------- Net income
$1,979 $6.99 Income from discontinued operations 1,553 5.49
-------- -------- Income from continuing operations 426 1.50
Mark-to-market losses 383 1.35 Gain on sales of assets, net (23)
(0.08) Impairment loss 175 0.62 Bankruptcy charges and legal
contingencies 25 0.09 Bonus plan for dispositions 22 0.08 Pepco
settlement (362) (1.28) Postretirement benefit curtailment (32)
(0.11) -------- -------- Adjusted net income $614 $2.17 ========
Provision for income taxes 9 Interest, net 54 Depreciation and
amortization 97 -------- Adjusted EBITDA $774 ======== (1) Total
diluted shares: 283 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 September 30, 2006 (in millions) EPS(1) -------- Net income
$(26) $(0.09) Loss from discontinued operations (274) (0.92)
-------- -------- Income from continuing operations 248 0.83
Mark-to-market gains (228) (0.77) Gain on sales of assets, net (3)
(0.01) Impairment losses 120 0.40 Gain on sales of investments, net
(14) (0.04) Bankruptcy charges and legal contingencies 8 0.03
-------- -------- Adjusted net income $131 $0.44 ======== Provision
for income taxes - Interest, net 48 Depreciation and amortization
35 -------- Adjusted EBITDA $214 ======== (1) Total diluted shares:
298 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
September 30, 2006 (in millions) EPS(1) -------- Net income $540
$1.77 Income from discontinued operations (238) (0.78) --------
-------- Income from continuing operations 778 2.55 Mark-to-market
gains (638) (2.09) Gain on sales of assets, net (49) (0.16)
Impairment losses 120 0.40 Gain on sales of investments, net (17)
(0.06) Bankruptcy charges and legal contingencies 25 0.08 --------
-------- Adjusted net income $219 $0.72 ======== Provision for
income taxes 2 Interest, net 154 Depreciation and amortization 103
-------- Adjusted EBITDA $478 ======== (1) Total diluted shares:
305 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. Current Expected Cash Flow from Operations to Pro
Forma Adjusted EBITDA Guidance For the years ending December 31,
2007 and 2008 (in millions) Year Ending Year Ending December 31,
2007 December 31, 2008 Net cash provided by operating activities of
continuing operations $984 $769 Bankruptcy payments 34 - --------
-------- Adjusted cash flow from operations $1,018 $769 Interest,
net 50 65 Income taxes paid 2 35 Working capital and other changes
(70) 38 -------- -------- Adjusted EBITDA $1,000 $907 ========
======== Current Pro Forma Adjusted EBITDA Guidance to Pro Forma
Realized Gross Margin For the years ending December 31, 2007 and
2008 (in millions) Year Ending Year Ending December 31, 2007
December 31, 2008 Adjusted EBITDA $1,000 $907 Operating expenses
and other expenses 676 693 -------- -------- Realized gross margin
$1,676 $1,600 ======== ======== Adjusted EBITDA, realized gross
margin and adjusted cash flow from operations are non-GAAP
financial measures. Management and some members of the investment
community utilize adjusted EBITDA, realized gross margin 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. Previous Expected Cash Flow from
Operations to Pro Forma Adjusted EBITDA Guidance For the years
ending December 31, 2007 and 2008 (in millions) Year Ending Year
Ending December 31, 2007 December 31, 2008 Net cash provided by
operating activities of continuing operations $930 $699 Bankruptcy
payments - - -------- -------- Adjusted cash flow from operations
$930 $699 Interest, net 178 179 Income taxes paid 25 11 Working
capital and other changes (44) 25 -------- -------- Adjusted EBITDA
$1,089 $914 ======== ======== Previous Pro Forma Adjusted EBITDA
Guidance to Pro Forma Realized Gross Margin For the years ending
December 31, 2007 and 2008 (in millions) Year Ending Year Ending
December 31, 2007 December 31, 2008 Adjusted EBITDA $1,089 $914
Operating expenses and other expenses 696 712 -------- --------
Realized gross margin $1,785 $1,626 ======== ======== Adjusted
EBITDA, realized gross margin and adjusted cash flow from
operations are non-GAAP financial measures. Management and some
members of the investment community utilize adjusted EBITDA,
realized gross margin 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 (the "electricity
industry"); changes in state, federal and other regulations
affecting the electricity industry (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; 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 oil or other
commodities; deterioration in the financial condition of Mirant's
counterparties and the resulting failure to pay amounts owed to
Mirant or to perform obligations due to Mirant beyond collateral
posted; 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; price mitigation strategies
employed by ISOs or RTOs that reduce Mirant's revenue and may
result in a failure to compensate Mirant's generation units
adequately for all their costs; changes in the rules used to
calculate capacity and energy payments in the markets in which
Mirant operates; volatility in Mirant's gross margin as a result of
Mirant's 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; 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; the inability of Mirant's operating subsidiaries to generate
sufficient cash flow to support its operations; Mirant's ability to
borrow additional funds and access capital markets; strikes, union
activity or labor unrest; weather and other natural phenomena,
including hurricanes and earthquakes; the cost and availability of
emissions allowances; Mirant's ability to obtain adequate supply
and delivery of fuel for its facilities; curtailment of operations
due to transmission constraints; environmental regulations that
restrict Mirant's ability or render it uneconomic to operate its
business, including regulations related to the emission of carbon
dioxide and other greenhouse gases; 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; war, terrorist activities or the
occurrence of a catastrophic loss; Mirant's substantial
consolidated indebtedness and the possibility that Mirant or its
subsidiaries may incur additional indebtedness in the future;
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 contained in
its 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; and, the disposition of the
pending litigation described in Mirant's Form 10-Q for the quarter
ended September 30, 2007, filed with the Securities and Exchange
Commission. Mirant undertakes no obligation to update publicly or
revise any forward- looking statements to reflect events or
circumstances that may arise. 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 CONTACT: Media, Felicia Browder,
+1-678-579-3111, , or Investor Relations, Mary Ann Arico,
+1-678-579-7553, , or Steve Himes, +1-678-579-3655, ; Stockholder
inquiries: +1-678-579-7777 Web site: http://www.mirant.com/
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