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Mirant Admits to Overstating Income

Nov 7, 2002 | AP

Mirant Corp. said it overstated net income by $41 million from 1999 to 2002 as it filed a long-delayed second-quarter financial report with the Securities and Exchange Commission on Thursday.

The energy supplier also filed an amended report for the first quarter and said it will reaudit financial results from 2000 and 2001.

The announcement followed a review of previously reported results for the second quarter and a review dating back to 2000 of accounting errors. The errors were discovered during an internal review earlier this year, the company said.

The Atlanta-based company said it overstated net income by $51 million from 1999 through 2001 and understated profits by $10 million in the first half of 2002.

"The company regrets these errors and any uncertainty they may have caused our investors, employees and other stakeholders," Mirant's president and chief executive, Marce Fuller, said in a statement. "Importantly, the net effect of the errors was modest relative to our overall results and financial condition during the period."

Mirant shares plunged after the announcement, dropping nearly 27 percent, or 79 cents, to close at $2.15 on the New York Stock Exchange. They gained 6 cents in extended trading.

Mirant said KPMG, which replaced Arthur Andersen as its accounting firm in June, will reaudit the company's 2000 and 2001 financial statements to address "accounting errors" discovered in the review and new accounting standards.

Also Thursday, the company said it had agreed to pay $2.8 million in a settlement with the Texas Public Utility Commission over complaints that it overscheduled power last year while Texas was deregulating its electricity industry. The payment will go to scheduling entities who handled the power transactions. The company said the overscheduling resulted from errors.

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