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Mirant 3Q Earnings Show Continuing Financial Struggle
Mirant, which is in Chapter 11 bankruptcy, reported minimal financial improvements in the third quarter, including a $33 million net loss, or 8 cents/share, compared $41 million, 10 cents/share, in 3Q2002.
While the company posted higher revenues of $1.6 billion, compared to $1.4 billion, its cost of fuel, electricity and other products also was higher at $1 billion, compared to $726 million for the third quarter of 2002, reflecting significantly higher prices paid for natural gas and oil. As a result, its gross margin was $607 million compared to $644 million in 3Q2002.
Operating expenses were lower at $329 million, including a $23 million gain from the sale of its Canadian marketing and gas aggregation contracts to Cargill. In comparison, operating expenses for the third quarter of 2002 were $552 million, which included a loss of $167 million on its international assets.
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. And as of Dec. 5, 2003, Mirant had $1.734 billion in total cash and cash equivalents, $496 million of which is restricted.
The company said it forecasts net cash outflow rather than inflow over the next six months, primarily as a result of the seasonal nature of its power business and the payment of bankruptcy-related professional fees. The forecast excludes any potential increases in cash from bankruptcy-related power contract negotiations. Mirant said it expects its cash and cash equivalents will be sufficient to fund its operations during the bankruptcy proceedings.
The Atlanta-based merchant energy company filed for Chapter 11 protection in July. The filing, which came as Mirant was due to pay back a $1.13 billion bank loan and conclude a major bond exchange offer, included Mirant Corp., Mirant Americas Generation LLC and substantially all of the companies’ wholly-owned subsidiaries in the United States. Mirant produces and sells electricity in North America, the Caribbean, and the Philippines. It owns or controls more than 22,000 MW of electric generation globally.
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