SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 11-K
[X] ANNUAL REPORT PURSUANT TO SECTION 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934 For the fiscal year
ended December 31, 2001
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
Commission File Number 1-3526
A. Full title of the plan and the address of the plan,
if different from that of the issuer named below:
Mirant Services
Employee Savings Plan
c/o Mirant Services
1155 Perimeter Center W
Atlanta, Georgia 30338
B. Name of issuer of the securities held pursuant to
the plan and the address of its principal executive office:
Mirant Corporation
1155 Perimeter Center W
Atlanta, Georgia 30338
Mirant Services
Employee Savings Plan
Financial Statements and Schedules
December 31, 2001 and 2000
TABLE OF CONTENTS
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
FINANCIAL STATEMENTS
Statements of Net Assets Available for Benefits--December 31, 2001 and 2000
Statements of Changes in Net Assets Available for Benefits for the Year
Ended December 31, 2001 and for the Period From December 19, 2000
(Inception) Through December 31, 2000
NOTES TO FINANCIAL STATEMENTS AND SCHEDULES
SCHEDULES SUPPORTING FINANCIAL STATEMENTS
Schedule I: Schedule H, Line 4i--Schedule of Assets (Held at End of Year)
--December 31, 2001
Schedule II: Schedule H, Line 4i--Schedule of Assets (Held at End of Year)
--December 31, 2000
Exhibits
A - Consent of Independent Public Accountants
B - Letter from Mirant Corporation regarding Arthur Andersen
i
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To the Plan Administrator
of the Mirant Services
Employee Savings Plan:
We have audited the accompanying statements of net assets available for benefits
of the Mirant Services Employee Savings Plan as of December 31, 2001 and 2000
and the related statements of changes in net assets available for benefits for
the year ended December 31, 2001 and for the period from December 19, 2000
(inception) through December 31, 2000. These financial statements and schedules
are the responsibility of the Plan's management. Our responsibility is to
express an opinion on these financial statements and schedules based on our
audits.
We conducted our audits in accordance with the auditing standards generally
accepted in the United States. Those standards require that we plan and perform
the audit to obtain reasonable assurance about whether the financial statements
are free of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements. An
audit also includes assessing the accounting principles used and significant
estimates made by management as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the net assets available for benefits of the Plan as of
December 31, 2001 and 2000 and the changes in its net assets available for
benefits for the year ended December 31, 2001 and for the period from December
19, 2000 (inception) through December 31, 2000 in conformity with accounting
principles generally accepted in the United States.
Our audits were performed for the purpose of forming an opinion on the basic
financial statements taken as a whole. The schedules of assets (held at end of
year) are presented for purposes of additional analysis and are not a required
part of the basic financial statements but are supplementary information
required by Department of Labor Rules and Regulations for Reporting and
Disclosure under the Employee Retirement Income Security Act of 1974. The
schedules have been subjected to the auditing procedures applied in the audits
of the basic financial statements and, in our opinion, are fairly stated in all
material respects in relation to the basic financial statements taken as a
whole.
/s/Arthur Andersen, LLP
- -----------------------
Arthur Andersen, LLP
Atlanta, Georgia
April 16, 2002
Mirant Services
Employee Savings Plan
Sstatements of Net Assets Available for Benefits
December 31, 2001 and 2000
2001 2000
---- ----
Investments, at fair value, as determined by quoted market prices $104,403,266 $39,919
Investments, at contract value (which approximates fair value), as determined
by Trustee 20,700,084 42,948
Company Contributions Receivable 4,475,068 0
Accrued income 93,373 0
------------ -------
Net assets available for benefits $129,671,791 $82,867
============ =======
The accompanying notes are an integral part of these statements.
2
Mirant Services
Employee Savings Plan
Statements of changes in Net Assets Available for benefits
For the year ended December 31, 2001 and For the period
from december 19, 2000 (inception)
Through december 31, 2000
2001 2000
---- ----
ADDITIONS:
Net investment income:
Net appreciation in fair value of investments (Note 3) $ 627,510 $ 0
Dividends 2,744,507 0
Interest 236,429 0
------------ -------
Total investment income 3,608,446 0
------------ -------
Contributions:
Participants 8,505,021 56,747
Company 11,170,372 26,120
Rollovers 1,449,405 0
------------ -------
Total contributions 21,124,798 82,867
------------ -------
Transfer from affiliated plan (Note 2) 283,035 0
------------ -------
Transfer from merged plans (Note 1) 106,398,804 0
------------ -------
Total additions 131,415,083 82,867
------------ -------
DEDUCTIONS:
Benefits paid to participants or beneficiaries (1,820,084) 0
Administrative expenses (6,075) 0
------------ -------
Total deductions (1,826,159) 0
------------ -------
NET INCREASE 129,588,924 82,867
net assets available for benefits:
Beginning of period 82,867 0
------------ -------
End of period $129,671,791 $82,867
============ =======
The accompanying notes are an integral part of these statements.
3
Mirant Services
Employee Savings Plan
Notes to Financial Statements and Schedules
December 31, 2001 and 2000
1. Plan Description
The following description of the Mirant Services Employee Savings Plan (the
"Plan") provides only general information. Participants should refer to the
Summary Plan Description or the plan document for a more complete description of
the Plan's provisions.
General
The Plan is a stock bonus plan sponsored by Mirant Services, LLC (the "Company")
covering all regular full-time and part-time employees of the Company, excluding
persons who are members of a collective bargaining unit, a cooperative education
employee, or a leased or temporary employee, as defined. The Plan is subject to
the applicable provisions of the Employee Retirement Income Security Act of 1974
("ERISA"), as amended.
On January 19, 2001, Southern Energy, Inc. announced, as part of its separation
from Southern Company, that it was changing its name to Mirant Corporation. It
began doing business as Mirant Corporation on January 22, 2001 and legally
changed the name on February 26, 2001. The Company, noted above, is the
employing company and plan sponsor.
Transferred Accounts and Merged Plans
In December 2000, an affiliate of Southern Energy Resources, Inc. acquired
certain assets of Potomac Electric Power Company ("PEPCO"). Pursuant to the
acquisition, certain former employees of PEPCO who were eligible to participate
in the PEPCO Exempt Retirement Savings Plan and the PEPCO Non-Bargaining Unit,
Non-Exempt Retirement Savings Plan became eligible to participate in the Plan on
December 19, 2000. The accounts of the former PEPCO employees who elected to a
Voluntary Trust-to-Trust transfer were transferred into the Plan in early 2001
and were mapped to investments under the Plan with comparable investment
objectives. The portions of the participants' accounts, which were invested in
the PEPCO stock fund prior to the transfer, were invested in PEPCO common stock
under the Plan.
In conjunction with the Company's spin-off from Southern Company, if an employee
was eligible to participate in the Plan on April 2, 2001, his/her accounts under
the Southern Company Employee Savings Plan, Southern Company Employee Stock
Ownership Plan, and the Southern Company Performance Savings Plan were
transferred to the Plan beginning on May 1, 2001 (collectively referred to as
the "Southern Transferred Accounts"). The Southern Transferred Accounts were
mapped to investments under the Plan with comparable investment objectives. The
portions of the participants' accounts, which were invested in the Southern
Company stock fund prior to the transfer, were invested in Southern Company
common stock under the Plan.
In addition, on May 1, 2001, the assets of the Southern Company Energy Marketing
Employee Savings Plan (the "SCEM") merged into the Plan and were mapped to
investments under the Plan with comparable investment objectives. Certain
participants in the SCEM plan previously participated in the Vastar Savings Plan
4
or the Vastar Capital Accumulation Plan. Once the participants' accounts were
transferred to the SCEM plan, the participants could not invest new
contributions in the Atlantic Richfield Company ("ARCO") stock fund. Effective
April 2000, the SCEM plan replaced each share of ARCO stock with 1.64 shares of
BP Amoco stock, as ARCO was acquired by BP Amoco during calendar year 2000. The
portions of the participants' accounts which were invested in the BP Amoco stock
fund prior to the transfer were invested in BP Amoco common stock under the
Plan.
Plan Administration
The Company appointed T. Rowe Price (the "Trustee") as trustee to execute
investment transactions and provide record-keeping services for the Plan. The
Company serves as plan administrator.
Contributions
Participants may elect to contribute, on a pretax or after-tax basis, in 1%
increments up to 19% of their compensation, subject to certain limitations
defined by the Plan, into any of the 12 core investment funds offered by the
Plan. Participants may change their contribution percentages at any time. The
Company provides a matching contribution equal to 75% of the participant's
contribution up to a maximum of 6% of the participant's base compensation. The
Company's matching contribution is invested in the company stock fund; however,
participants may redirect these contributions to any of the investment funds
offered by the Plan.
Profit-Sharing Arrangement
For all nonunion full-time and part-time employees who do not participate in a
defined benefit plan, the Company will contribute to the Plan a quarterly fixed
profit-sharing contribution equal to 3% of each eligible participant's
compensation. In addition, the Company may elect to make a discretionary annual
profit-sharing contribution to the Plan ranging from 0% to 7% of the
participant's eligible compensation to be allocated pro rata. Eligible
compensation is the participant's actual base salary pay plus short-term
incentive pay received during the period. For the year ended December 31, 2001,
the discretionary contribution was $4,475,068. There were no discretionary
profit-sharing contributions from December 19, 2000 (inception) through December
31, 2000.
For the 2001 plan year, certain participants formerly employed by PEPCO received
an additional company matching contribution equal to 25% of the total of the
participant's elective contributions, up to a maximum of $250 for 2001.
Participant Accounts
Each participant's account is credited with the participant's contribution, the
Company's matching contributions, profit-sharing contributions (if applicable),
and plan earnings (losses).
Benefits
Upon termination of service, death, or disability, a participant or his/her
beneficiary (upon the death of the participant) may elect to receive an amount
equal to the value of his/her account in a lump-sum distribution. If account
balances are less than $5,000, participants will automatically receive a
lump-sum payment. If a participant retires, he/she may elect to receive a
lump-sum distribution or annual installments for a period not to exceed 20 years
or life expectancy. Distributions upon termination of service, retirement,
disability, or death are normally made in cash unless shares of common stock are
requested.
Rollovers
Participants may roll over a distribution from a qualified retirement plan of a
previous employer to the Plan.
5
Vesting
Participants are immediately vested in their before-tax and after-tax
contributions, and roll-over contributions. Active employees as of April 2, 2001
are always 100% vested in the company matching contribution. The vested
percentage of the participant's fixed profit-sharing and discretionary
profit-sharing contributions is based on the participant's years of service.
Company matching for new hires after April 2, 2001 also vests based on the
participant's years of service. Vesting percentages are as follows:
Company Matching and Fixed Vested
Profit-Sharing Contributions Percent
------------------------------------------------------------- -----------
Years of service:
Less than one 0%
One but less than two 33 1/3
Two but less than three 66 2/3
Three or more 100
Vested
Discretionary Profit-Sharing Contributions Percent
------------------------------------------------------------- -----------
Years of service:
Less than three 0%
Three or more 100
Participants with a Transferred Performance Sharing Plan account are 100% vested
after five years of service.
Investment Options
A participant may direct his/her contributions and the fixed profit-sharing
contributions into any of the investment fund options offered by the Plan. A
participant may change his/her election options at any time. Company matching
and discretionary profit-sharing contributions are initially invested in the
company stock fund until the participant elects to redirect the contributions to
another investment fund.
Participants with investments held in the Southern Company stock fund, PEPCO
stock fund, and BP Amoco stock fund will have five years (until March 31, 2006)
to liquidate the stock and transfer it into other investment options within the
Plan. These investments are considered frozen; therefore, no new contributions
may be made into these options. There are no other restrictions on transferring
in or out of any other investments within the Plan.
Loans to Participants
A participant may borrow the lesser of $50,000, less the highest outstanding
loan balance in the previous 12 months, or 50% of his/her vested account
balance, with a minimum loan amount of $1,000. Loans are repayable through
payroll deductions over the respective term of the loan. The interest rate is
determined by the plan administrator based on the current prime rate at the time
of the loan and is fixed over the life of the note. A participant may have up to
two general-purpose loans and one loan for a residence outstanding at any given
time.
2. Summary of Significant Accounting Policies
Basis of Accounting
The accompanying financial statements have been prepared using the accrual
method of accounting.
6
Use of Estimates
The preparation of financial statements in conformity with accounting principles
generally accepted in the United States requires the Plan's management to use
estimates and assumptions that affect the net assets available for benefits and
the changes therein. Actual results could differ from these estimates.
Administrative Expenses
Record-keeping expenses are paid by the Plan. Participants are responsible for
loan origination fees and Tradelink Brokerage fees. All other administrative
expenses are paid by the Company.
Investment Valuation
Investments other than investment contracts are valued at quoted market prices.
Securities traded on a national securities exchange are valued at the last
reported sales price on the last business day of the year; investments traded in
the over-the-counter market and listed securities for which no sale was reported
on the last day of the plan year are valued at the last reported bid price. The
Plan's investment in the T. Rowe Price Stable Value Fund is fully
benefit-responsive and is stated at contract value in accordance with Statement
of Position 94-4, "Reporting of Investment Contracts Held by Health and Welfare
Benefit Plans and Defined Contribution Pension Plans."
Investment securities, in general, are exposed to various risks, such as
interest rate, credit, and overall market volatility risks. Due to the level of
risk associated with certain investment securities, it is reasonably possible
that changes in the values of investment securities will occur in the near term,
and such changes could materially affect the amounts reported in the statements
of net assets available for benefits.
Net Appreciation in Fair Value of Investments
Net realized gains (losses) and unrealized appreciation (depreciation) are
recorded in the accompanying statements of changes in net assets available for
benefits as net appreciation in fair value of investments.
Transfers From Affiliated Plan
During 2001, due to changes in employment status, the Plan received transferred
account balances of certain participants from the Mirant Services Bargaining
Unit Employee Savings Plan.
Forfeitures
A participant will forfeit the value of his/her account if he/she separates from
service prior to becoming vested. Such forfeitures are utilized to reduce future
employer contributions. For the year ended December 31, 2001, $0 was used to
reduce employer contributions. As of December 31, 2001 and 2000, forfeitures
totaled $122,686 and $0, respectively.
Related-Party Transactions
For the 2001 and 2000 plan years, certain plan investments are managed by T.
Rowe Price. Therefore, these transactions qualify as party-in-interest
transactions.
7
3. Investments
Individual assets that represent 5% or more of the Plan's net assets available
for benefits as of December 31, 2001 and 2000 are as follows:
2001 2000
----------- -------
T. Rowe Price Stable Value Fund $17,426,118 $42,948
Mirant Corporation Stock Fund 16,463,171 26,807
T. Rowe Price Equity Index Trust Fund 15,436,438 N/A
T. Rowe Price Personal Strategy Balanced Fund 7,262,655 N/A
T. Rowe Price Small Cap Stock Fund 6,698,243 N/A
T. Rowe Price Blue Chip Growth Fund 14,496,273 4,447
PEPCO Stock Fund 8,007,764 0
Southern Company Stock Fund 22,755,754 0
The Plan's investments (including gains and losses on investments bought and
sold as well as held during the year) appreciated (depreciated) as follows for
the year ended December 31, 2001:
Common stock $4,178,287
Mutual funds (3,550,777)
----------
$ 627,510
==========
4. Tax Status
The Company has applied for a determination letter with the Internal Revenue
Service. However, the plan administrator believes that the Plan is currently
designed and is being operated in compliance with the applicable requirements of
the Internal Revenue Code. Therefore, the plan administrator believes that the
Plan is qualified and the related trust is tax-exempt as of December 31, 2001
and 2000.
5. Plan Termination
Although it has not expressed any intent to do so, the Company has the right
under the Plan to discontinue its contributions at any time and to terminate the
Plan subject to the provisions of ERISA.
8
Mirant Services
Employee Savings Plan
Schedule H, Line 4i--Achedule of Assets (held at end of year)
December 31, 2001
Current
Identify of Issuer and Description of Investment Cost Value
---------------------------------------------------------------- ---- -----------
Franklin Small Cap Growth Fund, 108,246 shares (a) $ 3,374,025
Scudder International Fund, 47,241 shares (a) 1,731,863
American New Perspective Fund, 43,135 shares (a) 935,603
* T. Rowe Price Stable Value Fund, 17,426,118 shares (a) 17,426,118
* Mirant Corporation Stock Fund, 1,027,663 shares (a) 16,463,171
PIMCO Total Return Fund, 284,536 shares (a) 2,976,240
* T. Rowe Price Equity Index Trust Fund, 500,695 shares (a) 15,436,438
* T. Rowe Price Personal Strategy Income Fund, 40,797 shares (a) 522,612
* T. Rowe Price Personal Strategy Balanced Fund, 481,289 shares (a) 7,262,655
* T. Rowe Price Personal Strategy Growth Fund, 156,697 shares (a) 2,748,476
* T. Rowe Price Small Cap Stock Fund, 264,334 shares (a) 6,698,243
* T. Rowe Price Blue Chip Growth Fund, 500,389 shares (a) 14,496,273
* T. Rowe Price Tradelink Investments, 242,141 shares (a) 242,141
BP Amoco Stock Fund, 16,168 shares (a) 752,008
* PEPCO Stock Fund, 354,797 shares (a) 8,007,764
* Southern Company Stock Fund, 897,663 shares (a) 22,755,754
* Participant loans (interest rates ranging from 4.75% to 11%) (a) 3,273,966
------------
(a) $125,103,350
============
*Represents a party in interest.
(a) Participant-directed.
The accompanying notes are an integral part of this schedule.
9
Mirant Services
Employee Savings Plan
Schedule H, Line 4i--Schedule of Sssets (held at end of year)
December 31, 2000
Current
Identity of Issuer and Description of Investment Cost Value
------------------------------------------------------------ ---- --------
Franklin Small Cap Growth Fund, 97 shares (a) $ 3,821
Scudder International Fund, 7 shares (a) 357
American New Perspective Fund, 32 shares (a) 766
* T. Rowe Price Stable Value Fund, 42,948 shares (a) 42,948
* Mirant Corporation Stock Fund, 946 shares (a) 26,807
PIMCO Total Return Fund, 19 shares (a) 197
* T. Rowe Price Equity Index Trust Fund, 28 shares (a) 976
* T. Rowe Price Personal Strategy Income Fund, 3 shares (a) 36
* T. Rowe Price Personal Strategy Balanced Fund, 55 shares (a) 885
* T. Rowe Price Personal Strategy Growth Fund, 33 shares (a) 631
* T. Rowe Price Small Cap Stock Fund, 42 shares (a) 996
* T. Rowe Price Blue Chip Growth Fund, 131 shares (a) 4,447
-------
(a) $82,867
=======
*Represents a party in interest.
(a) Participant-directed.
The accompanying notes are an integral part of this schedule.
10
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934,
the trustees (or other persons who administer the employee benefit plan) have
duly caused this annual report to be signed by the undersigned thereunto duly
authorized.
MIRANT SERVICES, LLC
EMPLOYEE SAVINGS PLAN
By:/ s/ Vance Booker
----------------------------
Vance Booker
Senior Vice President
Administration and Technical
May 1, 2002
Exhibit A
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the incorporation of our
report included in this Form 11-K into Mirant Corporation's previously filed
Registration Statement File No. 333-84670.
/s/ Arthur Andersen, LLP
- ------------------------
Arthur Andersen, LLP
Atlanta, Georgia
April 25, 2002
Exhibit B
Mirant Corporation
1155 Perimeter Center West
Atlanta, Georgia 30338
May 1, 2002
Securities and Exchange Commission
450 Fifth Street
Washington, D.C. 20549
Re: Report of Independent Audit by Arthur Andersen
Ladies and Gentlemen:
In connection with the delivery of the report of independent public accountants
relating to the audit of the statements of net assets available for benefits of
the Mirant Services Employee Savings Plan (the "Plan") as of December 31, 2001
and 2000, and the related statements of changes in net assets available for
benefits for the year ended December 31, 2001 and for the period from December
19, 2000 (inception) through December 31, 2000 by Arthur Andersen LLP ("Arthur
Andersen") which has been included by Mirant Corporation ( "Mirant") in its
Annual Report for the Plan on Form 11-K for the fiscal year ended December 31,
2001, Arthur Andersen has represented to Mirant that the audit was subject to
Arthur Andersen's quality control system for the US accounting and auditing
practice to provide reasonable assurance that the engagement was conducted in
compliance with professional standards, that there was appropriate continuity of
Arthur Andersen personnel working on the audit, availability of national office
consultation, and availability of personnel at foreign affiliates of Arthur
Andersen to conduct the relevant portions of the audit.
Very truly yours,
Mirant Corporation
By:/ s/ Vance Booker
-----------------------------------
Vance Booker
Senior Vice President
Administration and Technical