Mirant reports $33 million net loss for third quarter


ATLANTA, Dec. 22, 2003 — Mirant reported a $33 million net loss for the third quarter of 2003, or 8 cents per diluted share compared to a restated net loss of $41 million, or 10 cents per diluted share, for the third quarter of 2002.

Total operating revenue for the third quarter of 2003 was $1.6 billion compared to $1.4 billion for the third quarter of 2002, reflecting higher market prices for power.

Cost of fuel, electricity and other products for the third quarter of 2003 was $1 billion, compared to $726 million for the third quarter of 2002, reflecting significantly higher prices paid for natural gas and oil.

Gross margin for the third quarter of 2003 was $607 million compared to $644 million for the third quarter of 2002.

Operating expenses for the third quarter of 2003 were $329 million and included a gain of $23 million related primarily to the sale of a portion of the company’s Canadian business. In comparison, operating expenses for the third quarter of 2002 were $552 million, which included an impairment loss of $167 million, reflecting a write down of development projects in the International business segment in the third quarter of 2002.

Net cash provided by operating activities for the first nine months of 2003 was $21 million, compared to $705 million for the first nine months of 2002.

In the first nine months of 2003, working capital changes resulted in an outflow of $231 million, as compared to an inflow of $439 million in the first nine months of 2002.

Net of working capital changes, the net cash provided by operating activities was $252 million for the first nine months of 2003 compared to $266 million in the first nine months of 2002.

As of Dec. 5, 2003, Mirant had $1.734 billion in total cash and cash equivalents, $496 million of which is either legally restricted or held for operating, working capital or other purposes at various subsidiaries. Mirant’s total cash and cash equivalents as of Dec. 5, 2003 were $152 million more than the $1.582 billion recorded as of September 30, 2003, including approximately $67 million in proceeds from the sale of Mirant’s interest in its Birchwood asset.

The company forecasts net cash outflow over the next six months, primarily as a result of the seasonal nature of the business and the payment of bankruptcy related professional fees. This forecast excludes certain potential increases in cash resulting from actions taken in connection with bankruptcy proceedings, including the benefit realized by the rejection or re-negotiation of certain pre- petition contracts.

Mirant anticipates that its total cash and cash equivalents, which includes certain deposits together with debtor-in-possession financing, will be sufficient to fund its operations during the bankruptcy proceedings.


Quarterly Review of Operations by Business Segment

North American operations reported income from continuing operations before reorganization items and income taxes of $113 million for the third quarter of 2003, compared to income from continuing operations before income taxes of $116 million for the third quarter 2002 (as restated).

International operations reported income from continuing operations before reorganization items and income taxes of $55 million, compared to a loss from continuing operations before income taxes of $61 million for the third quarter 2002 (as restated). The loss in the third quarter of 2002 reflects an impairment charge of $134 million related to the company’s former investment in international greenfield power plant development projects in Italy, Norway and Korea.

Corporate (and other income and expenses) reported a loss from continuing operations before reorganization items and income taxes of $48 million, including $25 million of interest expense, compared to a loss from continuing operations before income taxes of $81 million, including $43 million of interest expense, for the third quarter 2002 (as restated).

Accounting for Reorganization

Mirant’s third quarter financials have been prepared in accordance with Statement of Position 90-7 (“SOP 90-7”), “Financial Reporting by Entities in Reorganization Under the Bankruptcy Code.”

Reorganization items under the bankruptcy filings are expense or income items that were incurred or realized as a result of Chapter 11 and are presented separately in the unaudited condensed consolidated statement of operations. These items include professional fees and similar types of expenses incurred directly related to the bankruptcy filings, loss accruals or gains or losses resulting from activities of the reorganization process, and interest earned on cash accumulated by the company while it is not paying its pre-petition liabilities.

Mirant expensed $182 million in reorganization items for the third quarter 2003, consisting primarily of impairments due to contract terminations.

Mirant is a competitive energy company that produces and sells electricity in North America, the Caribbean, and the Philippines. Mirant owns or controls more than 22,000 megawatts of electric generating capacity globally. The company operates an integrated asset management and energy marketing organization from our headquarters in Atlanta. For more information, please visit www.mirant.com .

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