Bankrupt Mirant Corp. reported a massive $2.2 billion net loss for the second quarter of 2003, or a loss of $5.44 per diluted share, after taking a $2.1 billion pre-tax, non-cash charge related to the total impairment of its North American goodwill due to declining power plant values.

The Atlanta-based company, which has 7,000 employees, also said in a filing with the Securities and Exchange Commission that it will cut 350 jobs. Severance costs related to the cuts are estimated to be $18 million and will be taken in the fourth quarter. The reductions are expected to result in $45 million in annual savings.

Mirant, which filed for bankruptcy July 14, said lower power production, because of milder weather, higher fuel costs and a reassessment of how it accounts for its earnings led to the substantial loss for the quarter. The company also restated a net loss of $182 million, or 45 cents per diluted share, for the second quarter 2002.

Nevertheless, Mirant said the non-cash goodwill impairment charge will not impact its plans to emerge from Chapter 11. The company also expects to have adequate liquidity to fund its operations through the bankruptcy proceeding.

Its 2Q2003 operating revenue was higher at $1.25 billion compared to $1.12 billion for 2002, reflecting higher market prices for power. But the increase was partially offset by a decrease in power production and higher fuel costs — $785 million compared to $576 million in 2Q2002. Its gross margin fell to $463 million compared to $541 million.

In the first six months of 2003, working capital changes resulted in an outflow of $373 million, as compared to an inflow of $177 million in the first six months of 2002. The increase in working capital was primarily the result of a $100 million increase in collateral posted to counterparties and the return to counterparties of $125 million in collateral previously held, Mirant said.

As of Oct. 17, Mirant had $1.62 billion in total cash and cash equivalents, $568 million of which is either legally restricted or held for operating, working capital or other purposes at various subsidiaries. The total cash and cash equivalents as of Oct. were $371 million more than the $1.25 billion recorded as of June 30.

During the second quarter the company’s North American operations reported a loss from continuing operations before taxes and interest of $2.1 billion, compared to income from continuing operations before income taxes and minority interest of $72 million for the second quarter 2002. International operations reported income from continuing operations before income taxes and minority interest of $73 million, compared to a loss from continuing operations before income taxes and minority interest of $197 million for the second quarter 2002.

Mirant owns or controls more than 22,000 MW of electric generating capacity globally and operates an integrated asset management and energy marketing operation.

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