Exhibit 99.2
Investor Call
May 7, 2003
Marce Fuller Harvey Wagner
President and CEO Executive Vice President and CFO
Caution Regarding
Forward-Looking Statements
Forward-looking statements are only predictions. Actual events or results may
differ materially from any forward-looking statement as a result of various
factors, which include:
1. legislative and regulatory initiatives regarding deregulation, regulation
or restructuring of the electric utility industry;
2. the failure of our assets to perform as expected or the extent and timing
of the entry of additional competition in the markets of our subsidiaries
and affiliates;
3. our pursuit of potential business strategies, including the disposition of
assets, termination of construction of certain projects or internal
restructuring;
4. changes in state, federal and other regulations (including rate and other
regulations);
5. changes in or application of environmental and other laws and regulations
to which we and our subsidiaries and affiliates are subject;
6. political, legal and economic conditions and developments;
7. changes in market conditions, including developments in energy and
commodity supply, demand, volume and pricing;
8. weather and other natural phenomena;
9. war or the occurrence of a catastrophic loss;
10. deterioration in the financial condition of our counterparties and the
resulting failure to pay amounts owed to us or perform obligations or
services due to us;
11. financial market conditions and the results of Mirant's financial
restructuring efforts, including its inability to obtain long-term or
working capital on terms that are not prohibitive and the effects that
would result on our liquidity and business;
12. the direct or indirect effects on our business of a lowering of our credit
rating or that of Mirant Americas Generation or Mirant Americas Energy
Marketing (or actions taken by us or our affiliates in response to changing
credit ratings criteria), including, increased collateral requirements to
execute our business plan, demands for increased collateral by our current
counterparties, curtailment of certain business operations in order to
reduce the amount of required collateral, refusal by our current or
potential counterparties or customers to enter into transactions with us
and our inability to obtain credit or capital in amounts needed or on terms
favorable to us;
13. the disposition of the pending litigation described in our Form 10-K;
14. the direct or indirect effects of the "going concern" explanatory paragraph
contained in our, or our subsidiaries' independent auditors' reports; and
15. other factors, including the risks discussed in our Form 10-K.
2
Responding to
the Market Environment
o Filed 10Ks for Mirant Corp, Mirant Americas Generation, and Mirant Mid
Atlantic
- Restatements reduced Net Income for 2000 and 2001 combined by $188
million
o Continued progress on operational restructuring
- Exiting markets through asset sales and office closings
- Suspending or terminating construction projects
- Cutting costs
- Reducing collateral requirements
o Completed a debt restructuring plan to present to lenders
- Should enable Mirant to manage through the temporary downturn in
market fundamentals
- Based on a conservative, market-based financial outlook
3
Completion of 2000 and 2001
Reaudits and 2002 Audit
o No evidence of fraud
o Resolution of material control weakness
o Audit Opinion includes a "going concern" explanatory paragraph reflecting
refinancing risk
4
Status of Filings
o Completed:
- MAGI 10K, MIRMA 10K
- Mirant 10K, excluding 2001 and 2002 quarterly data
o Remaining:
- Mirant Corp. 2001 and 2002 quarterly reviews and amended 2002 10K
- Mirant Corp., MAGI and MIRMA amended 2002 10Qs as necessary
- Mirant, MAGI, and MIRMA Q1 2003 10Qs
5
Full Year Results
2002 2001(restated)
---- ----
Total Operating Revenues (in millions)(1) $ 6,436 $ 8,524
Net Income (Loss) (in millions) $ (2,438) $ 409
Earnings (Loss) Per Share $ (6.06) $ 1.19
Share Count (in millions) (2) 402 (basic) 357 (diluted)
(1) Operating revenues reflect the effect of the EITF 02-03 accounting change
from a gross to a net basis for commodity contracts
(2) The share count reflects the 60 million common share offering completed in
December 2001
6
2002 4th Quarter and Full Year Charges ($ In Millions)
As reported
for Q3 10-Q Q4(1) Full Year
Operating Expenses
Impairment losses and restructuring charges $ 802 $ 171 $ 973
(Gain) on sales of assets, net (33) (8) (41)
Goodwill Impairment 697 697
Other Expenses
(Gain) on sales of investments, net (276) (53) (329)
Impairment loss on minority owned affiliates 335 132 467
Taxes
Deferred income tax valuation adjustments 1,088 1,088
Provisions for income taxes on accumulated
foreign earnings 468 468
----- ----- -----
Total $ 828 $2,495 $3,323
===== ===== =====
(1) Q4 amount includes items booked in Q4 and restatements resulting
from re-audit.
7
Reconciliation of
Adjusted Earnings Per Share
2002 2001 (Restated)
------ ------
Net Income (Loss) $(2,438) $409
------- ------
Adjustments: (after-tax)
Impairment loss and restructuring charge 973 82
Goodwill impairment 697 --
Impairment loss on minority owned affiliates 467 3
Gain on sales of assets, net (41) (2)
Gain on sales of investments, net (329) --
Discontinued operations (after-tax) 86 56
Tax valulation allowance 1,088 --
Tax related to APB 23 468 --
Tax related adjustments (793) (30)
Accounting Methodology Change 216 2
------ -------
Total adjustments 2,832 111
------- -------
Adjusted Earnings $ 394 $520
======= =======
Weighted Average Diluted Shares 439.4 356.9
Adjusted Earnings Per Diluted Share $ 0.94 $1.50
Assumes approximately 38% effective tax rate
8
Adjustments Resulting from Re-Audit
Prior to Cumulative
2001 2000 2000 Adjustments
---- ---- ---- ----
Accounting Methodology Changes* $ 2 $ 27 $(72) $ (43)
Corrections $(108) $ 30 $ 51 $ (27)
Other Adjustments - primarily tax $ (53) $ (86) $ 74 $ (65)
------ ------ ------ -------
Total Adjustments Resulting from Re-Audit $(159) $ (29) $ 53 $ (135)
====== ====== ====== =======
*Note: 2002 impact from accounting methodology changes was $216 million pre-tax.
9
Cash and Available Credit
April 25, 2003 December 31, 2002
-------------- -----------------
Cash:
Mirant Corporation $ 492 $ 862
Mirant Americas Generation (1) 70 212
Mirant Mid Atlantic (1) 175 70
Other Subsidiaries (2) 659 * 812
------- -------
Total Cash (2) 1,396 1,956
======= =======
Available under credit facilities:
Mirant Corporation 6 51
Mirant Americas Generation - -
Mirant Canada Energy Marketing - -
------- -------
Total cash and available credit (2) $1,402 $2,007
======= =======
*Estimated
(1) The ability of Mirant Americas Generation and Mirant Mid Atlantic to
distribute cash to Mirant is subject to various covenants under their debt
and lease agreements. We note that Mirant Mid Atlantic is currently
restricted from making dividends and, based on projected ratio
calculations, is expected to remain restricted until at least the date on
which the financial statements for the fiscal quarter ended September 30,
2003 are delivered.
(2) The amount includes an estimated $447 million as of April 25, 2003 and $619
million as of December 31, 2002 at various subsidiaries that either is
required for operating, working capital or other purposes at each
respective subsidiary or the distribution of which is restricted by the
subsidiaries' debt agreements and therefore is not available for immediate
payment to Mirant Corporation.
10
Total Cash and Available Credit
Major Sources and Uses in 2003
December 31, 2002 Cash and Available Credit Lines $ 2,007
Collateral and Other Operating Requirements $ (269)
Capital Expenditures $ (160)
Turbine Cancellation Payments $ (125)
Reduction in Committed Credit $ (73)
Purchase of TIERS $ (51)
Paydown of amortizing debt at Pagbilao and Sual $ (80)
Payment for Pagbilao puts $ (30)
Other Operating Requirements $ (50)
Asset Sale Proceeds $ 233
--------
April 25, 2003 Total Cash and Available Credit Lines $ 1,402
========
11
Debt Balances
Balance Sheet Debt at 12/31/2001 $8,490
Accounting Adjustments During 2002
Turbine Facilities On-Balance Sheet $400
Perryville Tolling - Capital Lease 280
Gas Prepay On-Balance Sheet 221
------
Total 901
Borrowings During 2002:
Corporate Revolvers $476
Convertibles 370
MAG Revolver 227
Turbine Facilities 168
Caribbean (Curacao and Jamaica) 79
Other 49
------
Total 1,369
Repayments During 2002
Asia Holding Company Debt $(792)
Bewag (566)
Turbine Facilities (209)
Sual and Pagbilao Project Loans (167)
Other (139)
------
Total (1,873)
--------
Balance Sheet Debt at 12/31/2002 $8,887
========
12
Refinancing Plan
o Multi-year - seeking extensions of certain maturities
o Maturities include $4.5 billion at Mirant Corp. and $800 million at MAGI
o Expect increase in interest rates
o Expect to pledge all available unencumbered assets
o Do not expect to ask for new money
o Objectives should allow us to:
- maintain sufficient liquidity and flexibility
- minimize financial risk
- reduce overall leverage over time
Goal is to bridge the current market downturn
Additional Note: Mirant has no obligation to update any projections provided
13
Strategies Underlying Plan
Long Term Strategy:
o Focus on core markets
- Well designed markets where we have critical mass
- North America - New York, New England, Mid Atlantic, & West
o Continue to pursue integrated business model
- International- Philippines and Caribbean
Shorter Term Initiatives:
o Maintain adequate liquidity
- Asset Sales
- Collateral Reduction
o Reduce Capital Expenditures
o Continue to lower OH Costs
o Realize Operating Efficiencies
o Reduce Uncertainty in California
Additional Note: Mirant has no obligation to update any projections provided
14
Consolidated EBITDA
$ in millions Actual Projected (1)
2002 2003
------ ------
Gross margin (2) $2,222 $2,290
Non-Fuel operating expenses (3),(4) 3,130 1,440
------ ------
Operating income (908) 850
+ Depreciation and amortizion 288 310
------ ------
EBITDA $(620) $1,160
Adjustments to EBITDA:
+ Impairment losses and restructuring charges 973 20 (4)
+ Goodwill impairment 697 -
- - (Gain) on sales of assets, net (41) -
+ Equity in income of affiliates 168 30
- - Amortization of obligations (5) (458) (600)
+ PEPCO Deferred Purchase (6) 110 190
------ ------
Adjusted EBITDA $ 829 $ 800
====== ======
Notes:
(1) These estimates do not incorporate changes which may result from
reclassifying various commodity financial transactions from an accrual to
market-to-market basis.
(2) 2002 gross margin equals Total Operating revenues of $6,436 minus Cost of
fuel, electricity, and other products of $4,214.
(3) 2002 non-fuel operating expenses equals Operating expenses of $7,344, as
defined on Mirant's Consolidated Statements of Operations, minus cost of
fuel, electricity and other products of $4,214.
(4) Impairment losses and restructuring charges in 2003 are primarily
associated with employee severance.
(5) Amortization of obligations includes $423 million of Amortization of
obligations under energy delivery and purchase commitments, as reported in
Mirant's Consolidated Statements of Cash Flows. This includes the sum of
Transition Power Agreements and other agreements. This amortization
reflects non-cash amounts in gross margin. The 2002 total also includes $35
MM of non-cash amortization of PPA's included in "Price Risk Management
Activities, Net".
(6) PEPCO deferred purchase consists of the cash payments associated with the
out of market obligations assumed as part of the purchase of the PEPCO
assets that expire by the end of 2005; Note that because the
Panda-Brandywine Power Purchase Agreement extends past 2005, the associated
cash payments are not included.
Additional Note: Mirant has no obligation to update any projections provided
15
Adjusted EBITDA Improvement
o We expect improvement of $100 million from 2003 to 2004 primarily
reflecting cost cuts
o Beginning in 2005, management expects significant improvement in operating
profitability, driven primarily by improving domestic market fundamentals
- Market price improvements
- Increased capacity value
- Reduction of reserve margins
- Increasing capacity factors
o Projections have not incorporated any impact of changes in accounting from
an accrual basis to mark to market
Additional Note: Mirant has no obligation to update any projections provided
16
Consolidated Capital Expenditures
(Projected)
[chart]
(in millions)
2003 2004 2005 2006 2007
---- ---- ---- ---- ----
North America $230 $110 $180 $245 $300
International $ 80 $ 55 $ 40 $ 50 $ 40
Corporate $ 15 $ 10 $ 10 $ 10 $ 10
---- ---- ---- ---- ----
Total $325 $175 $230 $305 $350
==== ==== ==== ==== ====
2003 2004 2005 2006 2007
---- ---- ---- ---- ----
Maintenance $105 $100 $125 $120 $150
Environmental $ 45 $ 45 $ 70 $150 $145
- -------------------------------------------------------------------------------
Ongoing Operations $150 $145 $195 $270 $295
Construction $175 $ - $ - $ - $ -
Discretionary $ - $ 30 $ 35 $ 35 $ 55
---- ---- ---- ---- ----
Total $325 $175 $230 $305 $350
==== ==== ==== ==== ====
Discretionary Capital Expenditures, as described here and throughout the
presentation, include power plant efficiency upgrades, growth of
International business unit and information systems.
Numbers rounded to nearest $5 million
Additional Note: Mirant has no obligation to update any projections provided
17
Mirant's Current North American Portfolio of Assets (MW)
[chart]
Geographic Diversity
West 23%
Northeast 20%
Mid Atlantic 36%
Other 21%
Operational Diversity
Base 30%
Intermediate 41%
Peak 29%
Fuel Diversity
Gas 37%
Oil 7%
Dual fuel (oil & gas) 33%
Coal 23%
Hydros 0%
Additional Note: Mirant has no obligation to update any projections provided
18
North America Gross Margin - 2003
[chart]
Assets, including Spot Sales, Risk Management & Marketing $1.4 billion (92%)
(including $600 million of non cash amortization associated with the
acquisition of PEPCO assets)
Discretionary Trading Around Assets $120 million (8%)
2003 Projected North America Gross Margin Total = $1.52 billion
Gross Margins associated with Discretionary Trading Around Assets are included
in the reported totals for Net Trading Revenues on the Income Statement.
North American Gross Margins equal North American segment Total
Operating Revenues less Cost of fuel, electricity, and other products.
Additional Note: Mirant has no obligation to update any projections provided
19
2003 Contract Positions
MWs Under % of
MWs Contract* Capacity
-----------------------------
Mirant California 2,942 2,350 80%
Apex I 533 225 42%
Mirant New York 1,659 75 5%
Mirant New England 1,231 635 52%
Birchwood 238 238 100%
Mirant Zeeland 808 505 63%
Mirant Mid-Atlantic 5,988 4,521 76%
Mirant Wichita Falls 77 77 100%
Mirant Texas (Bosque) 538 538 100%
Wrightsville Project 587 0 0%
Sugar Creek 259 0 0%
Coyote Springs 2 133 0 0%
West Georgia 615 615 100%
Shady Hills 474 474 100%
----------------------------
16,082 10,253 64%
* Includes 4,207 MW for firm contracts and 6,046 Peak MWs for load contracts
Additional Note: Mirant has no obligation to update any projections provided
20
Market Pricing Assumptions in Plan
2003 2004 2005 2006 2007
---- ---- ---- ---- ----
On-Peak Power Prices ($/MWh)
New York (NY Zone G) $50 $50 $46 $48 $52
New England (NEPOOL Seller's Choice) $40 $39 $41 $44 $46
Mid-Atlantic (PJM West) $38 $38 $44 $47 $52
California (NP-15) $46 $47 $42 $44 $45
Regional Natural Gas Prices ($/mmbtu)
Henry Hub $4.00 $3.90 $3.80 $3.70 $3.70
New York (Algonquin CG) $4.60 $4.50 $4.40 $4.30 $4.30
New England (Algonquin CG) $4.60 $4.50 $4.40 $4.30 $4.30
Mid-Atlantic (Transco Z6 non-NY) $4.50 $4.40 $4.40 $4.30 $4.30
California (PG&E CG) $4.10 $4.00 $4.00 $3.90 $3.90
Oil & Coal Prices ($/mmbtu)
Residual Oil 0.3% Sulfur (NY Harbor) $3.90 $3.50 $3.60 $3.70 $3.70
Average PJM delivered Coal* $1.70 $1.60 $1.40 $1.40 $1.40
Notes:
Power prices are rounded to the nearest $1.00, and gas prices are rounded to
the nearest $0.10.
Gas prices are for regional trading hubs and do not include LDC charges and
taxes.
2003 and 2004 numbers are based on forward-market prices. 2005 to 2007 are based
on fundamental modeling.
Curve date for NY, NE, and CA is 10/31/02. Henry Hub price assumption shown here
was for that date.
Curve date for Mid-Atlantic is 11/15/02. Henry Hub gas price assumption used for
PJM was $3.9 in '03 and $3.8 in '04 (rest unchanged.)
*Refects Mirant's existing coal contracts
Additional Note: Mirant has no obligation to update any projections provided
21
2003 Generation Breakdown For North America
(percent by MWh)
[in chart]
Baseload 58%
Intermediate 35%
Peaking 7%
[in chart]
Coal 56%
Gas 19%
Oil/Gas 14%
Oil 11%
Total expected generation for 2003 (excluding California RMR) = 35 million MWh
Additional Note: Mirant has no obligation to update any projections provided
22
Reserve Margins Estimates (Forecasts are weather and hydro normalized.
2002 is based on actual load)
[chart]
Notes
Reserve margins are for the entire respective market regions.
Reserve margins are calculated based on Mirant's estimate of summer peak load,
capacity and interruptible load in each region for each year.
Additional Note: Mirant has no obligation to update any projections provided
23
Forecasted Capacity Factors
2002
Actual 2003 2004 2005 2006 2007
---- ---- ---- ---- ---- ----
New England
Intermediate 46% 41% 53% 53% 53% 53%
Peaking 12% 1% 5% 1% 1% 2%
New York
Baseload 49% 78% 74% 83% 83% 83%
Intermediate 16% 18% 32% 34% 31% 34%
Peaking 11% 11% 15% 17% 17% 18%
Mid-Atlantic
Baseload 69% 69% 74% 74% 74% 72%
Intermediate 16% 25% 26% 38% 37% 39%
Peaking 6% 4% 5% 3% 5% 6%
2002
Actual 2003 2004 2005 2006 2007
---- ---- ---- ---- ---- ----
Baseload 59% 59% 61% 64% 61% 60%
Intermediate 24% 21% 28% 33% 33% 34%
Peaking 5% 6% 5% 6% 4% 5%
Notes:
- - Capacity factors are annual averages weighted by capacity
- - California capacity factors are not applicable due to Reliability Must Run
(RMR) status
Additional Note: Mirant has no obligation to update any projections provided
24
Drivers for Collateral Reduction
o 2002 Actions:
- Significant reductions in purchased gas volumes for winter of 2002-03
- Reduced gas marketing volumes by approximately 40% from peak
- Removed $700 million of ratings triggers
o 2003 Actions:
- Sale of the majority of Canadian business
- Natural roll-off of winter positions
- Expiring deals
- BP volume reductions
- Increase use of clearing mechanisms
Additional Note: Mirant has no obligation to update any projections provided
25
Collateral
(in millions)
[chart]
April 25, 2003 $869 million
January 1, 2004 $500* million
Assets, including spot sales, risk management and marketing
Discretionary trading around assets
Collateral as shown is not reduced by collateral we hold from others and does
not include certain collateral associated with North American and Asian
assets, such as debt service reserves.
* Projected
Additional Note: Mirant has no obligation to update any projections provided
26
Capital Expenditures Forecast
for North America
[chart]
2003 2004 2005 2006 2007
---- ---- ---- ---- ----
Maintenance $ 75 $ 65 $ 90 $ 85 $115
Environmental $ 40 $ 45 $ 70 $150 $145
- ----------------------------------------------------------------------------
Ongoing Operations $115 $110 $160 $235 $260
Construction $115 $ - $ - $ - $ -
Discretionary $ - $ - $ 20 $ 10 $ 40
---- ---- ---- ---- ----
Total $230 $110 $180 $245 $300
==== ==== ==== ==== ====
Discretionary Capital Expenditures, as described here and throughout the
presentation, include power plant efficiency upgrades
2007 level represents a fair estimate of the run rate going forward
Numbers rounded to nearest $5 million
Additional Note: Mirant has no obligation to update any projections provided
27
International Business Segment
o International Assets
- Own or control 2,260 MW in the Philippines and 1,100 MW in the
Caribbean
- 64 MW under construction
o Profits in the Philippines are primarily from long term contracts at
Pagbilao and Sual
o Caribbean businesses are either regulated franchises or power generation
sold under long term contracts
Additional Note: Mirant has no obligation to update any projections provided
28
Capital Expenditures Forecast
for International
[chart]
2003 2004 2005 2006 2007
---- ---- ---- ---- ----
Maintenance $30 $35 $35 $35 $35
Environmental $ 5 $ - $ - $ - $ -
- ----------------------------------------------------------------------------
Ongoing Operations $35 $35 $35 $35 $35
Construction $45 $20 $ 5 $15 $ 5
---- ---- ---- ---- ----
Total $80 $55 $40 $50 $40
==== ==== ==== ==== ====
Discretionary Capital Expenditures, as described here and throughout the
presentation, include power plant efficiency upgrades, growth of
International business unit and information systems.
Numbers rounded to nearest $5 million
Additional Note: Mirant has no obligation to update any projections provided
29
Mirant
See the Opportunity
Copyright 2003 Mirant Corporation | 0503-EX013-A