Filed by Mirant Corporation
Pursuant to Rule 425 under the Securities Act of 1933
and deemed filed pursuant to Rule 14a-12
of the Securities Exchange Act of 1934, as amended
Subject Company: Mirant Corporation
(Commission File No. 001-16107)
Below is a copy of the presentation that was given by Mirant on its Second Quarter 2010 Earnings Results on August 6, 2010
 Dickerson Generating Station
Mirant Corporation
Second Quarter 2010 Earnings Results
August 6, 2010 |
 2
Safe Harbor Statement
Forward-Looking Statements
This presentation may contain statements, estimates or projections that constitute
“forward-looking statements” as defined under U.S. federal securities
laws. In some cases, one can identify forward-looking statements by terminology
such as “will,” “expect,” “plan,” “lead,” “project” or the negative of these
terms or other comparable terminology. Forward-looking statements are subject to
certain risks and uncertainties that could cause actual results to differ
materially from Mirant’s historical experience and our present expectations or
projections. These risks include, but are not limited to: (i) legislative and
regulatory initiatives relating to the electric utility industry; (ii) changes in, or
changes in the application of, environmental or other laws; (iii) failure of our
assets to perform as expected, including due to outages for unscheduled maintenance or
repair; (iv) changes in market conditions or the entry of additional competition
in our markets; (v) the expected timing and likelihood of completion of the proposed merger with RRI Energy, including the timing, receipt and
terms and conditions of required stockholder, governmental and regulatory approvals
that may reduce anticipated benefits or cause the parties to abandon the merger;
the ability of the parties to arrange debt financing in an amount sufficient to fund the refinancing contemplated in, and on terms consistent with,
the Merger Agreement; the diversion of management’s time and attention from our
ongoing business during the time we are seeking to complete the merger; the
ability to maintain relationships with employees, customers and suppliers; the ability to integrate successfully the businesses and realize cost
savings and any other synergies; and the risk that credit ratings of the combined
company or its subsidiaries may be different from what the companies expect; and
(vi) those factors contained in our periodic reports filed with the SEC, including in our Quarterly Report on Form 10-Q for the period ended
June 30, 2010. The forward-looking information in this document is given as of this
date only, and Mirant assumes no duty to update this information. Non-GAAP Financial Information
The following presentation includes certain “non-GAAP financial measures”
as defined in Regulation G under the Securities Exchange Act of 1934. A schedule
is attached hereto and is posted on the Company’s website at mirant.com (in the Investor Relations - Presentations section) that reconciles the
non-GAAP financial measures included in the following presentation to the most
directly comparable financial measures calculated and presented in accordance
with Generally Accepted Accounting Principles. In addition, the Company has included a more detailed description of each of the non-GAAP
financial measures used in this presentation, together with a discussion of the
usefulness and purpose of these measures as Exhibit 99.2 to the Company’s
Current Report on Form 8-K furnished to the SEC with its earnings press release.
|
 3
Safe Harbor Statement
Additional Information and Where To Find It
This communication does not constitute an offer to sell or the solicitation of an offer
to buy any securities or a solicitation of any vote or approval nor shall there
be any sale of securities in any jurisdiction in which such offer, solicitation or sale would be unlawful prior to registration or qualification
under the securities laws of any such jurisdiction. In connection with the proposed
merger between RRI Energy and Mirant, on May 28, 2010, RRI Energy filed with the
SEC a Registration Statement on Form S-4 that includes a preliminary joint proxy statement of RRI Energy and Mirant and that
also constitutes a preliminary prospectus of RRI Energy. On July 6, 2010, RRI Energy
amended these materials. These materials are not yet final and will be further
amended. RRI Energy and Mirant will distribute the final joint proxy statement/prospectus to their respective shareholders. RRI
Energy and Mirant urge investors and shareholders to read the registration statement,
and any other relevant documents filed with the SEC, including the preliminary
joint proxy statement/prospectus that is a part of the registration statement, and the definitive joint proxy
statement/prospectus, when available, because they contain or will contain important
information. You may obtain copies of all documents filed with the SEC
Participants in The Merger Solicitation
RRI Energy, Mirant, and their respective directors, executive officers and certain
other members of management and employees may be soliciting proxies from RRI
Energy and Mirant shareholders in favor of the merger and related matters. Information regarding the persons who may, under the
rules of the SEC, be deemed participants in the solicitation of RRI Energy and Mirant
shareholders in connection with the proposed merger is contained in the
preliminary joint proxy statement/prospectus and will be contained in the definitive joint proxy statement/prospectus when it
becomes available. You can find information about RRI Energy’s executive officers
and directors in its definitive proxy statement filed with the SEC on April 1,
2010. You can find information about Mirant’s executive officers and directors in its definitive proxy statement filed with the SEC on
March 26, 2010 and supplemented on April 28, 2010. Additional information about RRI
Energy’s executive officers and directors and Mirant’s executive
officers and directors can be found in the above-referenced Registration Statement on Form S-4. You can obtain free copies of these
documents from RRI Energy and Mirant as described above.
regarding
this
transaction,
free
of
charge,
at
the
SEC’s
website
(www.sec.gov).
You
may
also
obtain
these
documents,
free
of
charge,
from
RRI
Energy’s
website
(www.rrienergy.com)
under
the
tab
“Investor
Relations”
and
then
under
the
heading
“Company
Filings.”
You
may
also
obtain
these
documents,
free
of
charge,
from
Mirant’s
website
(www.mirant.com)
under
the
tab
“Investor
Relations”
and
then
under
the
heading
“SEC
Filings.” |
 4
GenOn
Energy –
Merger Update
Filed Amended S-4 in response to SEC comment letter on July 6, 2010
Entered into agreements with financial institutions
Commitment for $750 million to $1.0 billion five-year revolving credit
facility Commercially reasonable efforts to syndicate a $500 million term
loan
Underwrite up to $1.9 billion of senior unsecured notes
Regulatory approvals
Received New York State Public Service Commission clearance on July 20, 2010
Received Federal Energy Regulatory Commission (FERC) approval on
August 2, 2010
Received Hart-Scott-Rodino
second request from the Department of Justice on
July 15, 2010
Merger expected to close by the end of 2010
Operational Performance - Cash Generation - Prudent Growth |
 5
Financial Highlights
($millions)
In Q2, change in Adjusted EBITDA principally attributable to
-
Lower realized value of hedges
-
Lower energy gross margins from fuel oil management activities
Higher energy gross margins from Mid-Atlantic generation
For 6 Months, change in Adjusted EBITDA also attributable to
-
Lower energy gross margins from Northeast generation
-
Lower net gains from sales of emissions allowances
Adjusted EBITDA
149
200
311
395
Q2
6 Months
2010
2009
2010
2009
Operational Performance - Cash Generation - Prudent Growth |
 6
Operations Highlights
Mirant’s safety incident rates remain at low levels
Commercial Availability, the percent of maximum achievable energy gross
margin that was realized in the period, remains at a high level
Commercial Availability
Safety Incident Rates
Lost Time Incident Rate
Lost Time EEI Top Quartile Benchmark
Recordable Incident Rate
Recordable EEI Top Quartile Benchmark
Operational Performance - Cash Generation - Prudent Growth |
 7
Market Update Since May
Near term (2010)
Natural gas prices increased and currently trade around $4.85/mmBtu for the
balance of the year
Power prices in PJM increased and heat rates expanded as power rose more
than natural gas
Northern Appalachian coal prices increased and trade around $62/ton
On-peak dark spreads increased while off-peak dark spreads decreased
Longer term (2011 –
2014)
Natural gas prices decreased and currently trade in a range of $5.20 to
$5.80/mmBtu
Power prices in PJM decreased but heat rates expanded as power declined less
than natural gas
Northern Appalachian coal prices were relatively unchanged and are quoted in a
range of $63–
$75/ton
Dark spreads generally declined
Operational Performance - Cash Generation - Prudent Growth |
 8
Electricity Markets
Reserve Margins
Forecasted reserve margins incorporate the latest information from each ISO
Eastern markets are forecasted to tighten because little generation is being built
Source: Mirant forecasts
Operational Performance - Cash Generation - Prudent Growth
8%
12%
16%
20%
24%
28%
32%
36%
40%
2010
2011
2012
2013
2014
New York East
N.California
PJM East
New England
PJM RTO (ex. COMED)
Target Reserve range |
 9
Hedge Levels
Based on Expected Total Generation
Aggregate
Baseload
Coal
1.
Positions as of July 13, 2010
Shaded boxes represent net additions to prior guidance; empty boxes represent net
decreases since prior guidance 2.
2010 represents period between August and December
3.
Power hedges include hedges with both power and natural gas
Operational Performance - Cash Generation - Prudent Growth
0%
20%
40%
60%
80%
100%
Power
Fuel
2010
2011 2012
2013
2014 0%
20%
40%
60%
80%
100%
Power
Fuel
2010
2011 2012
2013
2014 3
3
2
2 |
 10
Marsh Landing Generating Station
•
California Energy Commission
preliminary approval of environmental
permits issued on July 26, 2010
Final decision expected on
August 25, 2010
•
CPUC approval of PPA with PG&E
issued on July 29, 2010
•
Project financing to close in Q3
•
Construction expected to begin in
late 2010 and to be completed by
mid-2013
Operational Performance - Cash Generation - Prudent Growth |
 11
Financial Results
(millions, except per share amounts)
1
Per share amount for Q2 2010 net loss is based on basic weighted average shares
outstanding of 145 million Operational Performance - Cash Generation - Prudent Growth
6 Months
2010
2009
2010
2009
Net income (loss)
(263)
$
163
$
144
$
543
$
Unrealized (gains) losses on derivatives
340
14
(12)
(240)
Bankruptcy charges and legal contingencies
-
(62)
1
(62)
Postretirement benefit curtailment gain
(37)
-
(37)
-
Other
6
16
11
5
Adjusted net income
46
131
107
246
Interest, taxes, depreciation & amortization
103
69
204
149
Adjusted EBITDA
149
$
200
$
311
$
395
$
Diluted weighted average shares outstanding
146
145
146
145
Earnings per share:
Net income (loss)
(1.81)
$
1
1.12
$
0.99
$
3.74
$
Adjusted net income
0.32
$
0.90
$
0.73
$
1.70
$
Q2 |
 12
Realized Gross Margin
(millions)
Operational Performance - Cash Generation - Prudent Growth
Q2 2010
Q2 2009
YTD 2010
YTD 2009
Energy
96
71
206
182
Contracted & Capacity
138
137
280
271
Realized Value of Hedges
78
152
147
260
Total Realized Gross Margin
312
360
633
713
$312
$360
$633
$713
$0
$100
$200
$300
$400
$500
$600
$700
$800 |
 13
Adjusted Free Cash Flow
(millions, except per share amounts)
2010
2009
2010
2009
Net cash provided by (used in) operating activities
(152)
$
113
$
150
$
384
$
Bankruptcy claim payments
-
-
-
1
Emission allowance sales proceeds
1
2
3
17
Capitalized interest
(3)
(31)
(3)
(33)
Adjusted net cash provided by (used in) operating activities
(154)
84
150
369
Capital expenditures, excluding capitalized interest
(72)
(176)
(157)
(345)
Adjusted free cash flow
(226)
(92)
(7)
24
MD Healthy Air Act capital expenditures
29
126
77
248
Marsh Landing capital expenditures and working capital
2
-
2
-
Adjusted free cash flow (w/o MD HAA & Marsh Landing)
(195)
$
34
$
72
$
272
$
Diluted weighted average shares outstanding
146
145
146
145
Adjusted free cash flow per share (w/o MD HAA & Marsh Landing)
(1.34)
$
0.23
$
0.49
$
1.88
$
6 Months
Q2
Operational Performance - Cash Generation - Prudent Growth |
 14
Consolidated Debt and Liquidity
(millions)
Debt
$ 2,562
Cash and cash equivalents
Mirant Corporation
1,388
$
Mirant Americas Generation
-
Mirant North America
272
Mirant Mid-Atlantic
159
Other
30
Total cash and cash equivalents
1,849
Less restricted and reserved
(11)
Available cash & cash equivalents
1,838
Revolver & LC availability
662
Total available liquidity
2,500
$
June 30, 2010
Operational Performance - Cash Generation - Prudent Growth |
 15
Capital Expenditures
(millions)
Maryland Healthy Air Act spending prior to 2010 totaled approximately $1.405
billion Normalized maintenance CapEx
of $50 million to $60 million per year
Other environmental expenditures include the remaining $33 million deposited in escrow
for control of small
dust
particles
as
part
of
the
Potomac
River agreement
Operational Performance - Cash Generation - Prudent Growth
2010
¹
2011
Environmental
Maryland Healthy Air Act
269
$
-
$
Other
10
33
Maintenance
103
45
Construction
Marsh Landing Generating Station
47
185
Other
30
42
Other
18
11
Total Capital Expenditures²
477
$
316
$
1
Includes
actuals
for
January
through
June
2
Excludes capitalized interest unrelated to the Marsh Landing project financing
Forecast |
 16
Takeaways
Creation of GenOn
Energy will deliver significant value to stockholders
Hedging cushioned Mirant in Q2 2010 from the effects of relatively low
commodity prices
Eastern markets are forecasted to tighten because little generation is
being built
Mirant continues to make progress to permit, finance and commence
construction of its Marsh Landing generating facility later in 2010
Operational Performance - Cash Generation - Prudent Growth |
 Appendix
|
 18
Federal NOL Status
Mirant’s estimated Federal NOL balance at December 31, 2009 was $2.7 billion
An “ownership change”
requires Mirant to reset the limitation that determines
how much annual taxable income may be offset by its NOLs
in future years
An ownership change occurs if there is an increase of more than 50 percentage
points in the ownership of Mirant stock held by large Mirant shareholders from
the date of a previous ownership change
New limitation depends on Mirant stock value on the ownership change date
and an interest rate determined by the IRS
We expect that Mirant will experience an “ownership change”
for federal
income tax purposes on the closing date of the proposed merger with RRI
Energy
RRI Energy has advised us that they expect RRI Energy to experience an
ownership change on the closing date of the merger as well
Operational Performance - Cash Generation - Prudent Growth |
 19
Federal NOL Status (Cont.)
Assuming the shares of Mirant and RRI Energy are at or near current prices on the
closing date of the proposed merger, Mirant expects that
The combined company, GenOn
Energy, will be unable to use any pre merger NOLs
for the first 5 years following the merger
Thereafter, assuming sufficient taxable income, GenOn
will be able to use
approximately $100MM –
$125MM per year of pre merger NOLs
until such NOLs
expire
Based on current commodity price forecasts, Mirant expects that GenOn
Energy
will pay only federal Alternative Minimum Tax and certain state
income taxes
during the 5 years immediately following the merger
Mirant‘s Board of Directors has extended its stockholder rights plan and the plan
was approved at its 2010 Annual Meeting of Stockholders held on May 6, 2010
There is no assurance that the stockholder rights plan will prevent an ownership
change prior to the closing date of the proposed merger
Operational Performance - Cash Generation - Prudent Growth |
 20
Additional Hedge Information
1
Projected as of July 13, 2010
2
Power hedges include hedges with both power and natural gas
3
Realized Value of Hedges are nominal values and do not include certain adjustments
required under fair value accounting ($millions)
Q2
2010
Q2
2009
YTD
2010
YTD
2009
2010
2011
2012
2013
2014
Power
2
91
$
194
$
175
$
323
$
333
$
221
$
172
$
176
$
169
$
Fuel
(13)
(42)
(28)
(63)
(51)
(33)
(35)
(10)
(1)
Realized Value of Hedges
78
$
152
$
147
$
260
$
282
$
188
$
137
$
166
$
168
$
Projected
1,3
Actual
Operational Performance - Cash Generation - Prudent Growth
Aug-Dec 2010
2011
2012
2013
2.41
$
2.79
$
3.32
$
3.28
$
Average contract price of hedged coal before delivery
($/mmBtu) |
 21
Quarterly Generation by Dispatch Type
Operational Performance - Cash Generation - Prudent Growth
Net MW
Net MWh
Generated
EAF (%) (1)
Net Capacity
Factor (%)
Net MW
Net MWh
Generated
EAF (%) (1)
Net Capacity
Factor (%)
Baseload
MidAtlantic
2,729
3,061,916
70.9
51.3
2,765
3,441,013
84.3
57.0
Northeast
238
355,283
88.8
70.2
238
333,034
84.7
65.8
California
0
0
0
0
Total Baseload
2,967
3,417,199
72.3
52.7
3,003
3,774,047
84.3
57.7
Intermediate
MidAtlantic
1,400
277,198
51.7
9.3
1,400
34,807
37.5
1.2
Northeast
2,265
49,278
80.6
1.0
2,265
37,562
70.1
0.8
California
2,191
88,587
94.1
1.9
2,191
213,600
78.4
4.5
Total Intermediate
5,856
415,063
79.0
3.3
5,856
285,969
65.6
2.3
Peaking
MidAtlantic
1,065
63,694
88.9
2.6
1,065
4,505
93.7
0.2
Northeast
32
941
85.4
1.4
32
63
98.3
0.1
California
156
(433)
98.3
0.0
156
271
75.3
0.1
Total Peaking
1,253
64,202
89.9
2.3
1,253
4,839
91.6
0.2
Total Mirant
10,076
3,896,464
78.4
17.7
10,112
4,064,855
74.5
18.4
(1) Equivalent Availability Factor -
the total hours a unit is available in a period minus the sum of all full and partial
outage equivalent hours, expressed as a percent of all hours in a period.
Generation by Dispatch Type
Second Quarter 2010
Second Quarter 2009 |
 22
Year to Date Generation by Dispatch Type
Operational Performance - Cash Generation - Prudent Growth
Net MW
Net MWh
Generated
EAF (%) (1)
Net Capacity
Factor (%)
Net MW
Net MWh
Generated
EAF (%) (1)
Net Capacity
Factor (%)
Baseload
MidAtlantic
2,729
7,034,084
77.4
59.3
2,765
7,167,376
83.6
59.7
Northeast
238
719,693
92.6
70.6
238
698,244
89.6
68.5
California
0
0
0
0
Total Baseload
2,967
7,753,777
78.6
60.2
3,003
7,865,620
84.0
60.4
Intermediate
MidAtlantic
1,400
331,890
44.6
5.5
1,400
139,181
36.0
2.3
Northeast
2,265
58,154
86.7
0.6
2,265
571,590
83.0
5.8
California
2,191
211,853
88.6
2.2
2,191
389,246
80.0
4.1
Total Intermediate
5,856
601,897
77.5
2.4
5,856
1,100,017
70.8
4.3
Peaking
MidAtlantic
1,065
70,054
90.7
1.4
1,065
35,512
92.6
0.7
Northeast
32
1,327
89.0
1.0
32
369
98.1
0.3
California
156
(588)
97.2
0.0
156
502
83.9
0.1
Total Peaking
1,253
70,793
91.4
1.2
1,253
36,383
91.7
0.6
Total Mirant
10,076
8,426,467
79.7
19.1
10,112
9,002,020
77.5
20.4
(1) Equivalent Availability Factor -
the total hours a unit is available in a period minus the sum of all full and partial
outage equivalent hours, expressed as a percent of all hours in a period.
Generation by Dispatch Type
YTD 2010
YTD 2009 |
 23
Equivalent Forced Outage Rate (EFOR)
EFOR =
Forced Outage Hours
Forced Outage Hours + Service Hours
2010
2009
2010
2009
Mid-Atlantic Baseload Coal
7%
10%
6%
10%
Q2
YTD
Operational Performance - Cash Generation - Prudent Growth |
 24
Mirant Operations
10,076 MW
Power plants sized by capacity
Canal
Pittsburgh
Contra
Costa
Chalk Point
Morgantown
Dickerson
Potomac River
Dickerson
Potomac River
Northeast
3,054 MW
Mid Atlantic
5,256 MW
Contra
Costa
Dickerson
Potomac River
Dickerson
Potomac River
Northeast
3,054 MW
Contra
Costa
Dickerson
Potomac River
Dickerson
Potomac River
Northeast
3,054 MW
Kendall
California
2,347 MW
Bowline
Martha’s Vineyard
Potrero
Capacity by Fuel Type
Operational Performance - Cash Generation - Prudent Growth
Coal
29%
Gas
24%
Oil
10%
Dual
37% |
 25
Development Opportunities
•
Potential
to
add
2,500
–
3,500
MWs
of
capacity
Entered into ten-year Power Purchase Agreement with
PG&E for new 760 MW Marsh Landing Generating Station
California
Northeast
Mid Atlantic
Boston
N.Y.C.
Washington, DC
•
Potential to add 1,000 –
1,500 MWs
of capacity
•
Potential to add 4,000 –
5,000 MWs
of capacity
Pittsburgh
Dickerson
Bowline
Chalk Point
Morgantown
Canal
San Francisco
Contra
Costa
Operational Performance - Cash Generation - Prudent Growth
Lovett |
 26
Share Count
(millions)
Operational Performance - Cash Generation - Prudent Growth
Weighted average shares outstanding -
basic
145
145
145
145
Effect of dilutive securities
1
0
1
0
Weighted average shares outstanding -
diluted
146
145
146
145
Shares outstanding at quarter end -
basic
145
145
145
145
Effect of dilutive securities
1
0
1
0
Shares outstanding at end of quarter -
diluted
146
145
146
145
Three
Three
Six
Six
Months Ending
June 30, 2009
Months Ending
Months Ending
Months Ending
June 30, 2010
June 30, 2009
June 30, 2010 |
 27
Regulation G Reconciliation
Operational Performance - Cash Generation - Prudent Growth
(in millions except per share)
Net Income (Loss)
(263)
$
(1.81)
$
163
$
1.12
$
Unrealized losses
340
2.34
14
0.10
Bankruptcy charges and legal contingencies
-
-
(62)
(0.43)
Severance and bonus plan for dispositions
-
-
13
0.09
Postretirement benefit curtailment gain
(37)
(0.25)
-
-
Other
6
0.04
3
0.02
Adjusted Net Income
46
$
0.32
$
131
$
0.90
$
Provision for income taxes
1
-
Interest expense, net
49
33
Depreciation and amortization
53
36
Adjusted EBITDA
149
$
200
$
June 30, 2010
June 30, 2009
1
Per share amounts for 2010 are based on basic weighted average shares
outstanding of 145 million, for all amounts except adjusted net
income which is based on diluted weighted average shares outstanding of 146 million. Per share amounts for 2009
are based on diluted weighted average shares outstanding of 145
million. Table 1
Net Income (Loss) to Adjusted Net Income and Adjusted EBITDA
Quarter Ending
Quarter Ending
Per
Share
¹
Per
Share
¹ |
 28
Regulation G Reconciliation
Operational Performance - Cash Generation - Prudent Growth
(in millions except per share)
Per
Share
¹
Per
Share
¹
Net Income
144
$
0.99
$
543
$
3.74
$
Unrealized gains
(12)
(0.08)
(240)
(1.65)
Bankruptcy charges and legal contingencies
1
-
(62)
(0.43)
Severance and bonus plan for dispositions
-
-
13
0.09
Lower of cost or market inventory adjustments, net
6
0.04
(11)
(0.07)
Postretirement benefit curtailment gain
(37)
(0.25)
-
-
Other
5
0.03
3
0.02
Adjusted Net Income
107
$
0.73
$
246
$
1.70
$
Provision for income taxes
1
8
Interest expense, net
99
69
Depreciation and amortization
104
72
Adjusted EBITDA
311
$
395
$
1
Per
share
amounts
for
2010
are
based
on
diluted
weighted
average
shares
outstanding
of
146
million.
Per
share
amounts
for 2009 are based on diluted weighted average shares outstanding of
145 million. Table 2
Net Income to Adjusted Net Income and Adjusted EBITDA
Year to Date
Year to Date
June 30, 2010
June 30, 2009 |
 29
Regulation G Reconciliation
(in millions )
Mid-
Atlantic
Northeast
California
Other
Operations
Eliminations
Total
Net Income (Loss)
(233)
$
(12)
$
4
$
(22)
$
-
$
(263)
$
Unrealized losses
317
10
-
13
-
340
Lower of cost or market inventory adjustments, net
(4)
-
-
7
-
3
Postretirement benefit curtailment gain
-
-
-
(37)
-
(37)
Merger-related costs
-
-
-
3
-
3
Adjusted Net Income (Loss)
80
$
(2)
$
4
$
(36)
$
-
$
46
$
Provision for income taxes
-
-
-
1
-
1
Interest expense, net
-
1
-
48
-
49
Depreciation and amortization
36
6
7
4
-
53
Adjusted EBITDA
116
$
5
$
11
$
17
$
-
$
149
$
Table 3
Adjusted Net Income (Loss) and Adjusted EBITDA
Quarter Ending June 30, 2010
Operational Performance - Cash Generation - Prudent Growth |
 30
Regulation G Reconciliation
(in millions )
Mid-
Atlantic
Northeast
California
Other
Operations
Eliminations
Total
Net Income (Loss)
206
$
(14)
$
6
$
(54)
$
-
$
144
$
Unrealized losses (gains)
(29)
14
-
3
-
(12)
Bankruptcy charges and legal contingencies
-
-
-
1
-
1
Lower of cost or market inventory adjustments, net
1
-
-
5
-
6
Postretirement benefit curtailment gain
-
-
-
(37)
-
(37)
Merger-related costs
-
-
-
5
-
5
Adjusted Net Income (Loss)
178
$
-
$
6
$
(77)
$
-
$
107
$
Provision for income taxes
-
-
-
1
-
1
Interest expense, net
1
1
-
97
-
99
Depreciation and amortization
69
12
15
8
-
104
Adjusted EBITDA
248
$
13
$
21
$
29
$
-
$
311
$
Table 4
Adjusted Net Income (Loss) and Adjusted EBITDA
Year to Date June 30, 2010
Operational Performance - Cash Generation - Prudent Growth |
 31
Regulation G Reconciliation
(in millions )
Mid-
Atlantic
Northeast
California
Other
Operations
Eliminations
Total
Net Income
133
$
5
$
-
$
25
$
-
$
163
$
Unrealized losses (gains)
-
(20)
-
34
-
14
Bankruptcy charges and legal contingencies
-
-
-
(62)
-
(62)
Severance and bonus plan for dispositions
-
-
-
13
-
13
Lovett shut down costs
-
2
-
-
-
2
Lower of cost or market inventory adjustments, net
3
-
-
(2)
-
1
Adjusted Net Income (Loss)
136
$
(13)
$
-
$
8
$
-
$
131
$
Interest expense, net
1
-
-
32
-
33
Depreciation and amortization
24
5
5
2
-
36
Adjusted EBITDA
161
$
(8)
$
5
$
42
$
-
$
200
$
Table 5
Adjusted Net Income (Loss) and Adjusted EBITDA
Quarter Ending June 30, 2009
Operational Performance - Cash Generation - Prudent Growth |
 32
Regulation G Reconciliation
(in millions )
Mid-
Atlantic
Northeast
California
Other
Operations
Eliminations
Total
Net Income (Loss)
518
$
35
$
3
$
(14)
$
1
$
543
$
Unrealized losses (gains)
(243)
(46)
-
49
-
(240)
Bankruptcy charges and legal contingencies
-
-
-
(62)
-
(62)
Severance and bonus plan for dispositions
-
-
-
13
-
13
Lovett shut down costs
-
3
-
-
-
3
Lower of cost or market inventory adjustments, net
7
(1)
1
(18)
-
(11)
Adjusted Net Income (Loss)
282
$
(9)
$
4
$
(32)
$
1
$
246
$
Provision for income taxes
-
-
-
8
-
8
Interest expense, net
2
-
1
66
-
69
Depreciation and amortization
48
9
10
5
-
72
Adjusted EBITDA
332
$
-
$
15
$
47
$
1
$
395
$
Table 6
Adjusted Net Income (Loss) and Adjusted EBITDA
Year to Date June 30, 2009
Operational Performance - Cash Generation - Prudent Growth |
 33
Regulation G Reconciliation
(in millions)
Mid-Atlantic
Northeast
California
Other
Operations
Eliminations
Total
Energy
78
$
4
$
-
$
14
$
-
$
96
$
Contracted & capacity
85
24
29
-
-
138
Incremental realized value of hedges
74
4
-
-
-
78
Realized gross margin
237
32
29
14
-
312
Unrealized gross margin
(317)
(10)
-
(13)
-
(340)
Gross margin
(80)
$
22
$
29
$
1
$
-
$
(28)
$
(in millions)
Mid-Atlantic
Northeast
California
Other
Operations
Eliminations
Total
Energy
19
$
3
$
-
$
49
$
-
$
71
$
Contracted & capacity
86
22
29
-
-
137
Incremental realized value of hedges
152
-
-
-
-
152
Realized gross margin
257
25
29
49
-
360
Unrealized gross margin
-
20
-
(34)
-
(14)
Gross margin
257
$
45
$
29
$
15
$
-
$
346
$
Gross Margin
Quarter Ending June 30, 2010
Table 7
Quarter Ending June 30, 2009
Operational Performance - Cash Generation - Prudent Growth |
 34
Regulation G Reconciliation
(in millions)
Mid-Atlantic
Northeast
California
Other
Operations
Eliminations
Total
Energy
170
$
1
$
-
$
35
$
-
$
206
$
Contracted & capacity
174
47
59
-
-
280
Incremental realized value of hedges
131
16
-
-
-
147
Realized gross margin
475
64
59
35
-
633
Unrealized gross margin
29
(14)
-
(3)
-
12
Gross margin
504
$
50
$
59
$
32
$
-
$
645
$
(in millions)
Mid-Atlantic
Northeast
California
Other
Operations
Eliminations
Total
Energy
91
$
18
$
-
$
76
$
(3)
$
182
$
Contracted & capacity
171
44
56
-
-
271
Incremental realized value of hedges
259
1
-
-
-
260
Realized gross margin
521
63
56
76
(3)
713
Unrealized gross margin
243
46
-
(49)
-
240
Gross margin
764
$
109
$
56
$
27
$
(3)
$
953
$
Table 8
Gross Margin
Year to Date June 30, 2010
Year to Date June 30, 2009
Operational Performance - Cash Generation - Prudent Growth |
 35
Regulation G Reconciliation
(in millions)
Gross margin
(28)
$
346
$
Unrealized gross margin
340
14
Lower of cost or market inventory adjustments, net
3
1
Adjusted gross margin
315
361
Operations and maintenance expenses
(132)
(114)
Bankruptcy charges and legal contingencies
-
(62)
Severance and bonus plan for dispositions
-
13
Merger-related costs
3
-
Postretirement benefit curtailment gain
(37)
-
Lovett shutdown costs
-
2
Adjusted operations and maintenance expenses
(166)
(161)
Gain on sales of emissions allowances, net
1
2
Other income (expense), net
(1)
(2)
Adjusted EBITDA
149
$
200
$
Table 9
Gross Margin to Adjusted EBITDA
Quarter Ending
Quarter Ending
June 30, 2010
June 30, 2009
Operational Performance - Cash Generation - Prudent Growth |
 36
Regulation G Reconciliation
(in millions)
Gross margin
645
$
953
$
Unrealized gross margin
(12)
(240)
Lower of cost or market inventory adjustments, net
6
(11)
Adjusted gross margin
639
702
Operations and maintenance expenses
(298)
(276)
Bankruptcy charges and legal contingencies
-
(62)
Severance and bonus plan for dispositions
-
13
Merger-related costs
5
-
Postretirement benefit curtailment gain
(37)
-
Lovett shutdown costs
-
3
Adjusted operations and maintenance expenses
(330)
(322)
Gain on sales of emissions allowances, net
3
17
Other expense, net
(1)
(2)
Adjusted EBITDA
311
$
395
$
Table 10
Gross Margin to Adjusted EBITDA
Year to Date
Year to Date
June 30, 2010
June 30, 2009
Operational Performance - Cash Generation - Prudent Growth |