þ
|
QUARTERLY
REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
1934
|
o
|
TRANSITION
REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
1934
|
Delaware
|
02-0733940
|
|
(State
or other jurisdiction of
|
(I.R.S.
Employer
|
|
incorporation
or organization)
|
Identification
Number)
|
|
One
Alpha Place, P.O. Box 2345, Abingdon, VA
|
24212
|
|
(Address
of principal executive offices)
|
(Zip
Code)
|
Page
|
||||
PART
I
|
||||
Item 1.
Financial Statements
|
||||
2
|
||||
3
|
||||
4
|
||||
5
|
||||
21
|
||||
31
|
||||
32
|
||||
PART
II
|
||||
33
|
||||
33
|
||||
34
|
||||
34
|
||||
Condensed
Consolidated Statements of Income (Unaudited)
|
|||||||
(In
thousands, except per share amounts)
|
|||||||
Three
Months Ended
|
|||||||
March
31,
|
|||||||
2009
|
2008
|
||||||
Revenues:
|
|||||||
Coal revenues
|
$
|
424,416
|
$
|
422,409
|
|||
Freight and handling revenues
|
46,054
|
59,172
|
|||||
Other revenues
|
16,265
|
11,475
|
|||||
Total
revenues
|
486,735
|
493,056
|
|||||
Costs
and expenses:
|
|||||||
Cost of coal sales (exclusive of items shown separately
below)
|
303,025
|
338,660
|
|||||
Increase in fair value of derivative instruments, net
|
(238
|
) |
(16,684
|
) | |||
Freight and handling costs
|
46,054
|
59,172
|
|||||
Cost of other revenues
|
11,863
|
8,137
|
|||||
Depreciation, depletion and amortization
|
40,205
|
42,545
|
|||||
Selling, general and administrative expenses
|
|||||||
(exclusive of depreciation and amortization shown separately above) |
|
16,466
|
15,324
|
||||
Total costs and expenses
|
417,375
|
447,154
|
|||||
Income from operations
|
69,360
|
45,902
|
|||||
Other
income (expense):
|
|||||||
Interest expense
|
(9,853
|
) |
(9,979
|
) | |||
Interest income
|
625
|
750
|
|||||
Miscellaneous income, net
|
116
|
125
|
|||||
Total other income (expense), net
|
(9,112
|
) |
(9,104
|
) | |||
Income from continuing operations before income taxes
|
60,248
|
36,798
|
|||||
Income
tax expense
|
(13,627
|
) |
(8,808
|
) | |||
Income from continuing operations
|
46,621
|
27,990
|
|||||
Discontinued
operations
|
|||||||
Loss from discontinued operations before income taxes
|
(7,251
|
) |
(3,300
|
) | |||
Income tax benefit
|
1,594
|
840
|
|||||
Loss from discontinued operations
|
(5,657
|
) |
(2,460
|
) | |||
Net income
|
$
|
40,964
|
$
|
25,530
|
|||
Basic
earnings per share:
|
|||||||
Income from continuing operations
|
$
|
0.67
|
$
|
0.43
|
|||
Loss from discontinued operations
|
(0.08
|
) |
(0.04
|
) | |||
Net income
|
$
|
0.59
|
$
|
0.39
|
|||
Diluted
earnings per share:
|
|||||||
Income from continuing operations
|
$
|
0.66
|
$
|
0.43
|
|||
Loss from discontinued operations
|
(0.08
|
) |
(0.04
|
) | |||
Net income
|
$
|
0.58
|
$
|
0.39
|
|||
See accompanying notes to the condensed consolidated financial statements. |
|
||||||
Condensed
Consolidated Balance Sheets (Unaudited)
|
||||||||
(In
thousands, except share and per share amounts)
|
||||||||
March
31,
|
December
31,
|
|||||||
2009
|
2008
|
|||||||
Assets
|
||||||||
Current
assets:
|
||||||||
Cash
and cash equivalents
|
$ | 692,686 | $ | 676,190 | ||||
Trade
accounts receivable, net
|
162,208 | 163,674 | ||||||
Notes
and other receivables
|
13,766 | 15,074 | ||||||
Deferred
income taxes
|
3,105 | - | ||||||
Inventories
|
105,371 | 86,594 | ||||||
Prepaid
expenses and other current assets
|
52,727 | 50,251 | ||||||
Total
current assets
|
1,029,863 | 991,783 | ||||||
Property,
plant, and equipment, net
|
528,852 | 550,098 | ||||||
Goodwill
|
20,547 | 20,547 | ||||||
Other
intangibles, net
|
3,290 | 3,835 | ||||||
Deferred
income taxes
|
76,630 | 83,689 | ||||||
Other
assets
|
55,992 | 59,886 | ||||||
Total
assets
|
$ | 1,715,174 | $ | 1,709,838 | ||||
Liabilities
and Stockholders' Equity
|
||||||||
Current
liabilities:
|
||||||||
Current
portion of long-term debt
|
$ | 178 | $ | 232 | ||||
Note
payable
|
12,872 | 18,288 | ||||||
Trade
accounts payable
|
90,859 | 102,975 | ||||||
Accrued
expenses and other current liabilities
|
115,960 | 140,459 | ||||||
Total
current liabilities
|
219,869 | 261,954 | ||||||
Long-term
debt
|
435,421 | 432,795 | ||||||
Workers’
compensation benefit obligations
|
9,819 | 9,604 | ||||||
Postretirement
medical benefit obligations
|
61,671 | 60,211 | ||||||
Asset
retirement obligation
|
92,023 | 90,565 | ||||||
Deferred
gains on sale of property interests
|
2,250 | 2,421 | ||||||
Other
liabilities
|
55,874 | 56,596 | ||||||
Total
liabilities
|
876,927 | 914,146 | ||||||
Commitments
and contingencies (Note 16)
|
||||||||
Stockholders'
equity:
|
||||||||
Preferred
stock - par value $0.01, 10,000,000 shares
|
||||||||
authorized,
none issued
|
- | - | ||||||
Common
stock - par value $0.01, 100,000,000 shares
|
||||||||
authorized,
71,455,668 issued and 71,348,929 outstanding
|
||||||||
at
March 31, 2009 and 70,513,880 shares issued and
|
||||||||
outstanding
at December 31, 2008
|
715 | 705 | ||||||
Additional
paid-in capital
|
487,372 | 484,261 | ||||||
Accumulated
other comprehensive loss
|
(29,615 | ) | (30,107 | ) | ||||
Treasury
stock, at cost: 106,739 and 0 shares at March 31,
2009
|
||||||||
and
December 31, 2008, respectively
|
(2,022 | ) | - | |||||
Retained
earnings
|
381,797 | 340,833 | ||||||
Total
stockholders' equity
|
838,247 | 795,692 | ||||||
Total
liabilities and stockholders' equity
|
$ | 1,715,174 | $ | 1,709,838 | ||||
See
accompanying notes to condensed consolidated financial
statements.
|
||||||||
Condensed
Consolidated Statements of Cash Flows (Unaudited)
|
||||||||
(In
thousands)
|
||||||||
Three
Months Ended
|
||||||||
March
31,
|
||||||||
2009
|
2008
|
|||||||
Operating
activities:
|
||||||||
Net
income
|
$ | 40,964 | $ | 25,530 | ||||
Adjustments
to reconcile net income
|
||||||||
to
net cash provided by operating
|
||||||||
activities:
|
||||||||
Depreciation,
depletion and amortization
|
40,734 | 44,260 | ||||||
Amortization
of debt issuance costs
|
647 | 600 | ||||||
Accretion
of asset retirement obligation
|
2,059 | 1,852 | ||||||
Accretion
of debt discount
|
2,626 | - | ||||||
Share-based
compensation
|
3,225 | 2,989 | ||||||
Amortization
of deferred gains on sales
|
||||||||
of
property interests
|
(171 | ) | (213 | ) | ||||
Gain
on sale of fixed assets and investments
|
(261 | ) | (672 | ) | ||||
Change
in fair value of derivative instruments
|
(238 | ) | (16,684 | ) | ||||
Deferred
income tax expense
|
3,791 | 3,681 | ||||||
Other
|
542 | (469 | ) | |||||
Changes
in operating assets and liabilities:
|
||||||||
Trade
accounts receivable
|
1,466 | (12,506 | ) | |||||
Notes
and other receivables
|
671 | (657 | ) | |||||
Inventories
|
(18,777 | ) | (18,621 | ) | ||||
Prepaid
expenses and other current
|
||||||||
assets
|
(3,187 | ) | 3,789 | |||||
Other
assets
|
2,822 | 6,125 | ||||||
Trade
accounts payable
|
(10,576 | ) | 11,819 | |||||
Accrued
expenses and other current
|
||||||||
liabilities
|
(24,692 | ) | (12,875 | ) | ||||
Workers’
compensation benefits
|
238 | (446 | ) | |||||
Postretirement
medical benefits
|
2,052 | 2,149 | ||||||
Asset
retirement obligation
|
(802 | ) | (1,120 | ) | ||||
Other
liabilities
|
617 | 3,222 | ||||||
Net
cash provided by
|
||||||||
operating
activities
|
$ | 43,750 | $ | 41,753 | ||||
Investing
activities:
|
||||||||
Capital
expenditures
|
$ | (18,136 | ) | $ | (33,797 | ) | ||
Proceeds
from disposition of property, plant,
|
||||||||
and
equipment
|
159 | 786 | ||||||
Investment
in and advances to investee
|
(35 | ) | (29 | ) | ||||
Proceeds
from sale of investment in coal terminal
|
- | 1,500 | ||||||
Purchase
of acquired companies
|
(1,750 | ) | - | |||||
Other
|
- | (5 | ) | |||||
Net
cash used in investing activities
|
$ | (19,762 | ) | $ | (31,545 | ) | ||
Financing
activities:
|
||||||||
Repayments
of note payable
|
$ | (5,416 | ) | $ | (6,210 | ) | ||
Repayments
on long-term debt
|
(54 | ) | (158 | ) | ||||
Debt
issuance costs
|
- | (1,317 | ) | |||||
Decrease
in bank overdraft
|
- | (150 | ) | |||||
Tax
benefit from share-based compensation
|
- | 734 | ||||||
Common
stock repurchases
|
(2,022 | ) | - | |||||
Proceeds
from exercise of stock options
|
- | 1,688 | ||||||
Net
cash used in
|
||||||||
financing
activities
|
$ | (7,492 | ) | $ | (5,413 | ) | ||
Net
increase in cash
|
||||||||
and
cash equivalents
|
$ | 16,496 | $ | 4,795 | ||||
Cash
and cash equivalents at beginning of period
|
676,190 | 54,365 | ||||||
Cash
and cash equivalents at end of period
|
$ | 692,686 | $ | 59,160 | ||||
See
accompanying notes to condensed consolidated financial
statements.
|
||||||||
Three
Months Ended March 31,
|
||||||||
2009
|
2008
|
|||||||
Numerator:
|
||||||||
Income from continuing operations
|
$ | 46,621 | $ | 27,990 | ||||
Loss from discontinued operations
|
(5,657 | ) | (2,460 | ) | ||||
Net
income
|
$ | 40,964 | $ | 25,530 | ||||
Denominator:
|
||||||||
Weighted average shares — basic
|
69,884,930 | 65,091,470 | ||||||
Dilutive effect of stock equivalents
|
811,525 | 791,886 | ||||||
Weighted
average shares — diluted
|
70,696,455 | 65,883,356 | ||||||
Basic
earnings per share:
|
||||||||
Income from continuing operations
|
$ | 0.67 | $ | 0.43 | ||||
Loss from discontinued operations
|
(0.08 | ) | (0.04 | ) | ||||
Net
income per basic share
|
$ | 0.59 | $ | 0.39 | ||||
Diluted
earnings per share:
|
||||||||
Income from continuing operations
|
$ | 0.66 | $ | 0.43 | ||||
Loss from discontinued operations
|
(0.08 | ) | (0.04 | ) | ||||
Net
income per diluted share
|
$ | 0.58 | $ | 0.39 | ||||
March
31,
|
December
31,
|
|||||||
2009
|
2008
|
|||||||
Raw
coal
|
$ | 11,339 | $ | 9,018 | ||||
Saleable
coal
|
78,961 | 61,297 | ||||||
Equipment
for resale
|
1,258 | 2,282 | ||||||
Materials
and supplies
|
13,813 | 13,997 | ||||||
Total
inventories
|
$ | 105,371 | $ | 86,594 | ||||
Three
Months Ended
|
||||||||
March
31,
|
||||||||
2009
|
2008
|
|||||||
Continuing
operations
|
$
|
13,627
|
$
|
8,808
|
||||
Discontinued
operations
|
(1,594
|
) |
(840
|
) | ||||
$
|
12,033
|
$
|
7,968
|
|||||
Three
Months Ended
|
||||||||
March
31,
|
||||||||
2009
|
2008
|
|||||||
Federal
statutory income tax expense
|
$
|
21,086
|
$
|
12,879
|
||||
Increases
(reductions) in taxes due to:
|
||||||||
Percentage depletion allowance
|
(7,667
|
) |
(3,114
|
) | ||||
Deduction for domestic production activities
|
(569
|
) |
(222
|
) | ||||
State taxes, net of federal tax impact
|
1,490
|
1,126
|
||||||
Change in valuation allowance
|
(839
|
) |
(2,080
|
) | ||||
Change in state rates
|
-
|
247
|
||||||
Other, net
|
126
|
(28
|
) | |||||
Income tax expense
|
$
|
13,627
|
$
|
8,808
|
||||
March
31,
|
December
31,
|
|||||||
2009
|
2008
|
|||||||
Term
loan due 2012
|
$
|
233,125
|
$
|
233,125
|
||||
2.375%
convertible senior notes due 2015
|
287,500
|
287,500
|
||||||
Capital
lease obligation
|
178
|
232
|
||||||
Total long-term debt, excluding discount
|
520,803
|
520,857
|
||||||
Convertible
senior notes discount
|
(85,204
|
) |
(87,830
|
) | ||||
Total long-term debt, net of discount
|
435,599
|
433,027
|
||||||
Less
current portion
|
178
|
232
|
||||||
Long-term debt, net of current portion
|
$
|
435,421
|
$
|
432,795
|
||||
Total
asset retirement obligation at December 31, 2008
|
$ | 98,940 | ||
Accretion for the period
|
2,059 | |||
Acquisitions during the period
|
336 | |||
Expenditures for the period
|
(802 | ) | ||
Sites added during the period
|
684 | |||
Revisions in estimated cash flows
|
(157 | ) | ||
Total
asset retirement obligation at March 31, 2009
|
$ | 101,060 | ||
Weighted-
|
||||||
Weighted-
|
Average
|
|||||
Average
|
Remaining
|
|||||
Number
of
|
Exercise
|
Contractual
|
||||
Shares
|
Price
|
Term
(Years)
|
||||
Outstanding
at December 31, 2008
|
519,984
|
$
|
17.87
|
|||
Forfeited/Expired
|
(12,142
|
) |
17.37
|
|||
Outstanding
at March 31, 2009
|
507,842
|
17.87
|
5.85
|
|||
Exercisable
at March 31, 2009
|
306,063
|
18.26
|
5.87
|
|||
Weighted-
|
|||||
Average
|
|||||
Number
of
|
Grant
Date
|
||||
Shares
|
Fair
Value
|
||||
Non-vested
shares outstanding at December 31, 2008
|
952,789
|
$
|
19.33
|
||
Granted
|
917,684
|
18.90
|
|||
Vested
|
(383,214
|
) |
19.86
|
||
Forfeited/Expired
|
(11,115
|
) |
17.64
|
||
Non-vested
shares outstanding at March 31, 2009
|
1,476,144
|
18.91
|
|||
Weighted-
|
|||||
Average
|
|||||
Number
of
|
Grant
Date
|
||||
Shares
|
Fair
Value
|
||||
Non-vested
shares outstanding at December 31, 2008
|
527,183
|
$
|
16.59
|
||
Granted
|
403,592
|
24.12
|
|||
Vested
|
(35,219
|
) |
21.15
|
||
Forfeited
or expired
|
(12,936
|
) |
18.05
|
||
Non-vested
shares outstanding at March 31, 2009
|
882,620
|
19.83
|
|||
Asset
Derivatives
|
||||||||||
3/31/2009
|
12/31/2008
|
|||||||||
Balance
Sheet
Location
|
Fair
Value
|
Balance
Sheet
Location
|
Fair
Value
|
|||||||
Derivatives
Designated as
Hedging
Instruments:
|
||||||||||
Diesel fuel derivatives
|
Other
assets
|
$ | 49 |
Other
assets
|
$ | - | ||||
Total
Derivatives Designated as Hedging
Instruments
|
$ | 49 | $ | - | ||||||
Derivatives
Not Designated as
Hedging
Instruments:
|
||||||||||
Forward coal sales
|
Prepaid
expenses and other current assets
|
$ | 4,568 |
Prepaid
expenses and other current assets
|
$ | 2,854 | ||||
Diesel fuel derivatives
|
Prepaid
expenses and other current assets
|
2,761 |
Prepaid
expenses and other current assets
|
5,186 | ||||||
Total
Derivatives Designated as Hedging
Instruments
|
$ | 7,329 | $ | 8,040 | ||||||
Total Derivatives
|
$ | 7,378 | $ | 8,040 | ||||||
Liabilities
Derivatives
|
||||||||||
3/31/2009
|
12/31/2008
|
|||||||||
Balance
Sheet
Location
|
Fair
Value
|
Balance
Sheet
Location
|
Fair
Value
|
|||||||
Derivatives
Designated as
Hedging
Instruments:
|
||||||||||
Diesel fuel derivatives
|
Other
liabilities
|
$ | 40 |
Other
liabilities
|
$ | - | ||||
Interest rate swaps
|
Other
liabilities
|
27,897 |
Other
liabilities
|
27,929 | ||||||
Total
Derivatives Designated as Hedging
Instruments
|
$ | 27,937 | $ | 27,929 | ||||||
Derivatives
Not Designated as
Hedging
Instruments:
|
||||||||||
Forward coal purchases
|
Accrued
expenses and other current liabilities
|
$ | 5,392 |
Accrued
expenses and other current liabilities
|
$ | 3,042 | ||||
Forward coal purchases
|
Other
liabilities
|
225 |
Other
liabilities
|
- | ||||||
Diesel fuel derivatives
|
Accrued
expenses and other current liabilities
|
23,129 |
Accrued
expenses and other current liabilities
|
25,081 | ||||||
Diesel fuel derivatives
|
Other
liabilities
|
15,241 |
Other
liabilities
|
16,812 | ||||||
Total
Derivatives Designated as Hedging
Instruments
|
$ | 43,987 | $ | 44,935 | ||||||
Total Derivatives
|
$ | 71,924 | $ | 72,864 | ||||||
Derivatives
in Cash Flow
Hedging
Relationships
|
Location
of (Gain) or Loss
Recognized
in Income on
Hedged
Item
|
Amount
of (Gain) or Loss
Recognized
in Income on
Hedged
Item
|
Amount
of (Gain) or Loss
Recognized
in OCI on
Derivative
(Effective
Portion)
|
|||||||||||||||
Three
Months Ending March 31,
|
Three
Months Ending March 31,
|
|||||||||||||||||
2009
|
2008
|
2009
|
2008
|
|||||||||||||||
Diesel
fuel derivatives
|
(Increase)
decrease in fair value of
derivative instruments, net
|
$ | - | $ | - | $ | (6 | ) | $ | - | ||||||||
Interest
rate swaps
|
Interest
Expense
|
2,408 | 448 | (24 | ) | (6,409 | ) | |||||||||||
Total
|
$ | 2,408 | $ | 448 | $ | (30 | ) | $ | (6,409 | ) | ||||||||
Derivatives
Not Designated
as
Hedging Instruments
|
Location
of (Gain) or Loss
Recognized
in Income on
Derivative
|
Amount
of (Gain) or Loss
Recognized
in Income on
Derivative
|
||||||||
Three
Months Ending March 31,
|
||||||||||
2009
|
2008
|
|||||||||
Forward
coal sales
|
(Increase)
decrease in fair value of derivative
instruments, net
|
$ | (1,714 | ) | $ | 18,416 | ||||
Forward
coal purchases
|
(Increase)
decrease in fair value of
derivative instruments, net
|
2,575 | (32,734 | ) | ||||||
Diesel
fuel derivatives
|
(Increase)
decrease in fair value of
derivative instruments, net
|
(1,099 | ) | (2,366 | ) | |||||
Total
|
$ | (238 | ) | $ | (16,684 | ) | ||||
As
of March 31, 2009
|
||||||||||||||||||||
Fair
Value Measurements Using:
|
||||||||||||||||||||
Quoted
|
Significant
|
|||||||||||||||||||
Prices
in
|
Other
|
Significant
|
||||||||||||||||||
Active
|
Observable
|
Unobservable
|
||||||||||||||||||
Carrying
|
Total
Fair
|
Markets
|
Inputs
|
Inputs
|
||||||||||||||||
Amount
|
Value
|
(Level
1)
|
(Level
2)
|
(Level
3)
|
||||||||||||||||
Financial
Assets (Liabilities):
|
||||||||||||||||||||
Forward
coal sales
|
$ | 4,568 | $ | 4,568 | $ | - | $ | 4,568 | $ | - | ||||||||||
Forward
coal purchases
|
$ | (5,617 | ) | $ | (5,617 | ) | $ | - | $ | (5,617 | ) | $ | - | |||||||
Diesel
fuel derivatives
|
$ | (35,600 | ) | $ | (35,600 | ) | $ | - | $ | (35,600 | ) | $ | - | |||||||
Interest
rate swaps
|
$ | 27,897 | $ | 27,897 | $ | - | $ | 27,897 | $ | - | ||||||||||
Asset
Retirement Obligations
|
$ | (1,020 | ) | $ | (1,020 | ) | $ | - | $ | - | $ | (1,020 | ) | |||||||
January
1, 2009
|
$
|
-
|
||
Realized
gains (losses)
|
-
|
|||
Unrealized
gains (losses)
|
-
|
|||
Additions
to reclamation liabilities
|
(1,020
|
) | ||
Transfers
in and/or out
|
-
|
|||
March 31,
2009
|
$
|
(1,020
|
) | |
Three
Months Ended
|
||||||||
March
31,
|
||||||||
2009
|
2008
|
|||||||
Service
cost
|
$
|
694
|
$
|
693
|
||||
Interest
cost
|
855
|
873
|
||||||
Amortization
of prior service cost
|
592
|
615
|
||||||
Net
periodic benefit cost
|
$
|
2,141
|
$
|
2,181
|
||||
Net
Income
|
$
|
40,964
|
||
Change
in fair value of cash flow hedge related to interest rate swaps, net of
tax effect of $8 for the period
|
|
24
|
||
Change
in SFAS 158 adjustment related to postretirement medical, net of tax
effect of $147 for the period
|
|
445
|
||
Change
in SFAS 158 adjustment related to black lung obligations, net of tax
effect of $6 for the period
|
|
17
|
||
Change
in fair value of cash flow hedge related to diesel fuel swaps, net of tax
effects of $2 for the period
|
|
6
|
||
Total
comprehensive income
|
$
|
41,456
|
||
Net
Income
|
$
|
25,530
|
||
Change
in fair value of cash flow hedge related to interest rate swaps, net of
tax effect of ($5,435) for the period
|
|
(4,831
|
) | |
Change
in SFAS 158 adjustment related to postretirement medical, net of tax
effect of $151 for the period
|
|
464
|
||
Change
in SFAS 158 adjustment related to black lung obligations, net of tax
effect of $6 for the period
|
17
|
|||
Total
comprehensive income
|
$
|
21,180
|
||
Fair
value of cash flow hedge related to interest rate swaps, net of tax effect
of $6,960
|
$
|
20,937
|
||
SFAS
158 adjustment related to postretirement medical obligations, net of tax
effect of $2,648
|
8,102
|
|||
SFAS
158 adjustment related to black lung obligations, net of tax effect of
$189
|
582
|
|||
Fair
value of cash flow hedge related to diesel fuel swaps, net of tax effect
of ($2)
|
(6
|
) | ||
Total
accumulated other comprehensive loss
|
$
|
29,615
|
||
Fair
value of cash flow hedge related to interest rate swaps, net of tax effect
of $6,968
|
$
|
20,961
|
||
SFAS
158 adjustment related to postretirement medical obligations, net of tax
effect of $2,795
|
8,547
|
|||
SFAS
158 adjustment related to black lung obligations, net of tax effect of
$195
|
599
|
|||
Total
accumulated other comprehensive loss
|
$
|
30,107
|
||
Corporate
|
||||||||||||||||
Coal
|
All
|
and
|
||||||||||||||
Operations
|
Other
|
Eliminations
|
Consolidated
|
|||||||||||||
Revenues
|
$
|
472,700
|
$
|
24,097
|
$
|
(10,062
|
) |
$
|
486,735
|
|||||||
Depreciation,
depletion, and amortization
|
38,198
|
1,431
|
576
|
40,205
|
||||||||||||
EBITDA
from continuing operations
|
117,857
|
7,683
|
(15,859
|
) |
109,681
|
|||||||||||
Capital
expenditures
|
17,134
|
178
|
824
|
18,136
|
||||||||||||
Total
assets
|
1,679,692
|
128,148
|
(92,666
|
) |
1,715,174
|
|||||||||||
Corporate
|
||||||||||||||||
Coal
|
All
|
and
|
||||||||||||||
Operations
|
Other
|
Eliminations
|
Consolidated
|
|||||||||||||
Revenues
|
$ | 483,508 | $ | 22,773 | $ | (13,225 | ) | $ | 493,056 | |||||||
Depreciation,
depletion, and amortization
|
40,850 | 1,287 | 408 | 42,545 | ||||||||||||
EBITDA
from continuing operations
|
99,518 | 4,377 | (15,323 | ) | 88,572 | |||||||||||
Capital
expenditures
|
28,896 | 159 | 360 | 29,415 | ||||||||||||
Total
assets
|
1,383,229 | 102,607 | (229,896 | ) | 1,255,940 | |||||||||||
Three
Months Ended
|
||||||||
March
31,
|
||||||||
2009
|
2008
|
|||||||
EBITDA
from continuing operations
|
$
|
109,681
|
$
|
88,572
|
||||
Interest
expense
|
(9,853
|
) |
(9,979
|
) | ||||
Interest
income
|
625
|
750
|
||||||
Income
tax expense
|
(13,627
|
) |
(8,808
|
) | ||||
Depreciation,
depletion and amortization
|
(40,205
|
) |
(42,545
|
) | ||||
Income
from continuing operations
|
$
|
46,621
|
$
|
27,990
|
||||
Property,
plant, and equipment
|
|
$
|
2,086
|
|
Total
assets acquired
|
|
2,086
|
||
Asset
retirement obligation
|
|
(336
|
) | |
Total
liabilities assumed
|
|
(336
|
) | |
Net
assets acquired
|
|
$
|
1,750
|
|
Total
revenues
|
$ | 580 | ||
Total
costs and expenses
|
(1,995 | ) | ||
Loss from operations | (1,415 | ) | ||
Other
Income
|
20 | |||
Income
Tax benefit
|
621 | |||
Loss from discontinued operations | $ | (774 | ) | |
Three
Months Ended
|
||||||||
March
31,
|
||||||||
2009
|
2008
|
|||||||
Total
revenues
|
$ | 2,907 | $ | 23,270 | ||||
Total
costs and expenses
|
(10,158 | ) | (25,179 | ) | ||||
Loss
from operations
|
(7,251 | ) | (1,909 | ) | ||||
Other
income
|
- | 4 | ||||||
Income
tax benefit
|
1,594 | 219 | ||||||
Loss
from discontinued operations
|
$ | (5,657 | ) | $ | (1,686 | ) | ||
March
31,
|
December
31,
|
|||||||
2009
|
2008
|
|||||||
Current
assets
|
$ | - | $ | 246 | ||||
Property,
plant, and equipment, net
|
5,680 | 12,387 | ||||||
Other
assets
|
440 | 457 | ||||||
Total
assets
|
$ | 6,120 | $ | 13,090 | ||||
Current
liabilities
|
$ | 7,034 | $ | 10,308 | ||||
Noncurrent
liabilities
|
11,313 | 11,606 | ||||||
Total
liabilities
|
$ | 18,347 | $ | 21,914 | ||||
Accrual
at
|
Accrual
at
|
|||||||||||
December
31,
|
March
31,
|
|||||||||||
2008
|
Payments
|
2009
|
||||||||||
|
|
|
||||||||||
Severance
and related personnel expenses
|
$ | 3,433 | $ | 2,046 | $ | 1,387 | ||||||
|
·
|
worldwide
market demand for coal, electricity and
steel;
|
|
·
|
global
economic, capital market or political conditions, including a prolonged
economic recession in the markets in which we
operate;
|
|
·
|
decline
in coal prices;
|
|
·
|
our
liquidity, results of operations and financial
condition;
|
|
·
|
regulatory
and court decisions;
|
|
·
|
competition
in coal markets;
|
|
·
|
changes
in environmental laws and regulations, including those directly affecting
our coal mining and production, and those affecting our customers' coal
usage, including potential carbon or greenhouse gas related
legislation;
|
|
·
|
changes
in safety and health laws and regulations and the ability to comply with
such changes;
|
|
·
|
availability
of skilled employees and other employee workforce factors, such as labor
relations;
|
|
·
|
the
inability of our third-party coal suppliers to make timely deliveries and
our customers refusing to receive coal under agreed contract
terms;
|
|
·
|
ongoing
instability and volatility in worldwide financial
markets;
|
|
·
|
future
legislation and changes in regulations, governmental policies or
taxes;
|
|
·
|
inherent
risks of coal mining beyond our
control;
|
|
·
|
disruption
in coal supplies;
|
|
·
|
the
geological characteristics of Central and Northern Appalachian coal
reserves;
|
|
·
|
our
production capabilities and costs;
|
|
·
|
our
ability to integrate the operations we have acquired or developed with our
existing operations successfully, as well as those operations that we may
acquire or develop in the future;
|
|
·
|
our
plans and objectives for future operations and expansion or
consolidation;
|
|
·
|
the
consummation of financing transactions, acquisitions or dispositions and
the related effects on our
business;
|
|
·
|
our
relationships with, and other conditions affecting, our
customers;
|
|
·
|
changes
in customer coal inventories and the timing of those
changes;
|
|
·
|
changes
in and renewal or acquisition of new long-term coal supply
arrangements;
|
|
·
|
railroad,
barge, truck and other transportation availability, performance and
costs;
|
|
·
|
availability
of mining and processing equipment and
parts;
|
|
·
|
our
assumptions concerning economically recoverable coal reserve
estimates;
|
|
·
|
our
ability to obtain, maintain or renew any necessary permits or rights, and
our ability to mine properties due to defects in title on leasehold
interest;
|
|
·
|
changes
in postretirement benefit
obligations;
|
|
·
|
fair
value of derivative instruments not accounted for as hedges that are being
marked to market;
|
|
·
|
indemnification
of certain obligations not being
met;
|
|
·
|
continued
funding of the road construction business, related costs, and
profitability estimates;
|
|
·
|
restrictive
covenants in our credit facility and the indenture governing our
convertible notes;
|
|
·
|
certain
terms of our convertible notes, including any conversions, that may
adversely impact our liquidity;
|
|
·
|
weather
conditions or catastrophic weather-related damage;
and
|
|
·
|
other
factors, including the other factors discussed in “Overview - Coal Pricing
Trends, Uncertainties and Outlook” below, and Part I, Item 1A, “Risk
Factors,” of our annual report on Form 10-K for the year ended December
31, 2008.
|
Three
Months Ended
|
||||||||
March
31,
|
||||||||
2009
|
2008
|
|||||||
(in
thousands)
|
||||||||
Income
from continuing operations
|
$
|
46,621
|
$
|
27,990
|
||||
Interest
expense
|
9,853
|
9,979
|
||||||
Interest
income
|
(625
|
) |
(750
|
) | ||||
Income
tax expense
|
13,627
|
8,808
|
||||||
Depreciation,
depletion and amortization
|
40,205
|
42,545
|
||||||
EBITDA
from continuing operations
|
$
|
109,681
|
$
|
88,572
|
||||
Three
Months Ended
|
Increase
|
||||||||||||||
March
31,
|
(Decrease)
|
||||||||||||||
2009
|
2008
|
$
or Tons
|
%
|
||||||||||||
(in
thousands, except per ton data)
|
|||||||||||||||
Coal
revenues
|
$
|
424,416
|
$
|
422,409
|
1
|
$
|
2,007
|
-
|
|||||||
Freight
and handling revenues
|
46,054
|
59,172
|
(13,118
|
)
|
(22%
|
) | |||||||||
Other
revenues
|
16,265
|
11,475
|
2
|
4,790
|
42%
|
||||||||||
Total
revenues
|
$
|
486,735
|
$
|
493,056
|
$
|
(6,321
|
)
|
(1%
|
) | ||||||
Tons
Produced:
|
|||||||||||||||
Production/processed
|
5,223
|
5,656
|
1
|
(433
|
)
|
(8%
|
) | ||||||||
Purchased
|
393
|
1,066
|
(673
|
)
|
(63%
|
) | |||||||||
Total
|
5,616
|
6,722
|
(1,106
|
)
|
(16%
|
) | |||||||||
Tons
Sold:
|
|||||||||||||||
Steam
|
3,146
|
3,706
|
1
|
(560
|
)
|
(15%
|
) | ||||||||
Metallurgical
|
2,024
|
2,736
|
1
|
(712
|
)
|
(26%
|
) | ||||||||
Total
|
5,170
|
6,442
|
(1,272
|
)
|
(20%
|
) | |||||||||
Coal
sales realization per ton:
|
|||||||||||||||
Steam
|
$
|
67.70
|
$
|
50.39
|
1
|
$
|
17.31
|
34%
|
|||||||
Metallurgical
|
$
|
104.47
|
$
|
86.12
|
1
|
$
|
18.35
|
21%
|
|||||||
Total
|
$
|
82.09
|
$
|
65.57
|
1
|
$
|
16.52
|
25%
|
|||||||
Notes:
|
|||||||||||||||
1
- 2008 amounts have been adjusted from amounts previously reported to
exclude discontinued operations related to our closure of the Kingwood
operations in the first quarter of 2009.
|
|||||||||||||||
2
- 2008 amounts have been adjusted from amounts previously reported to
exclude discontinued operations related to our sale of Gallatin Materials,
LLC in the third quarter of 2008.
|
|||||||||||||||
Three
Months Ended
|
Increase
|
|||||||||||||||
March
31,
|
(Decrease)
|
|||||||||||||||
2009
|
2008
|
$
|
%
|
|||||||||||||
(in
thousands, except per ton data)
|
||||||||||||||||
Cost
of coal sales (exclusive of items shown separately below)
|
$ | 303,025 | $ | 338,660 |
1,
3
|
$ | (35,635 | ) | (11% | ) | ||||||
Increase
in fair value of derivative instruments, net
|
(238 | ) | (16,684 | ) |
3
|
16,446 | (99% | ) | ||||||||
Freight
and handling costs
|
46,054 | 59,172 | (13,118 | ) | (22% | ) | ||||||||||
Cost
of other revenues
|
11,863 | 8,137 |
2
|
3,726 | 46% | |||||||||||
Depreciation,
depletion and amortization
|
40,205 | 42,545 |
1,
2
|
(2,340 | ) | (6% | ) | |||||||||
Selling,
general and administrative expenses
|
16,466 | 15,324 |
2
|
1,142 | 7% | |||||||||||
Total
costs and expenses
|
$ | 417,375 | $ | 447,154 | $ | (29,779 | ) | (7% | ) | |||||||
Cost
of coal sales per ton:
|
||||||||||||||||
Company
mines
|
$ | 55.12 | $ | 49.93 |
1,
3
|
$ | 5.19 | 10% | ||||||||
Contract
mines (including purchased and processed)
|
73.86 | 57.71 |
1
|
16.15 | 28% | |||||||||||
Total
produced and processed
|
57.08 | 50.89 |
1,
3
|
6.19 | 12% | |||||||||||
Purchased
and sold without processing
|
81.39 | 61.30 |
1,
3
|
20.09 | 33% | |||||||||||
Cost
of coal sales per ton
|
58.61 | 52.57 |
1,
3
|
6.04 | 11% | |||||||||||
Notes:
|
||||||||||||||||
1
- 2008 amounts have been adjusted from amounts previously reported to
exclude discontinued operations related to our closure of the Kingwood
operations in the first quarter of 2009.
|
||||||||||||||||
2
- 2008 amounts have been adjusted from amounts previously reported to
exclude discontinued operations related to our sale of Gallatin Materials,
LLC in the third quarter of 2008.
|
||||||||||||||||
3
- 2008 amounts have been adjusted from amounts previously reported to
exclude changes in the presentation of fair value of diesel fuel
derivative instruments, which are now recorded as a component of costs and
expenses, to conform to current year income statement presentation. The
adjustments have no effect on previously reported income from operations
or net income.
|
||||||||||||||||
March
31,
|
||||
2009
|
||||
Term
loan
|
$
|
233,125
|
||
2.375%
convertible senior notes due 2015
|
287,500
|
|||
Capital
lease obligations
|
178
|
|||
Total long-term debt
|
520,803
|
|||
Convertible
senior notes discount
|
(85,204
|
) | ||
Total long-term debt, net of discount
|
435,599
|
|||
Less
current portion
|
178
|
|||
Long-term debt, net of current portion
|
$
|
435,421
|
||
|
·
|
We
must maintain a maximum leverage ratio, defined as the ratio of
consolidated debt less unrestricted cash and cash equivalents to EBITDA
(as defined in the Credit Agreement, “Adjusted EBITDA”), of not more than
3.50:1.0 for the period of four fiscal quarters ended on March 31, 2009
and for each period of four fiscal quarters ending on each quarter end
thereafter.
|
|
·
|
We
must maintain a minimum interest coverage ratio, defined as the ratio of
Adjusted EBITDA to cash interest expense, of not less than 2.50:1.0 for
the four fiscal quarters ending on the last day of any fiscal
quarter.
|
|
·
|
We
must have a maximum senior secured leverage ratio, defined as the ratio of
consolidated debt that is secured by a lien less unrestricted cash and
cash equivalents to Adjusted EBITDA, of
2.0:1.0.
|
|
·
|
We
must satisfy a liquidity test, i.e., the sum of the
unused commitments under the Credit Agreement’s revolving line of credit
plus our unrestricted cash and cash equivalents must not be less than
$100.0 million.
|
Twelve
|
||||||||||||||||||||
Months
|
||||||||||||||||||||
Three
Months Ended
|
Ended
|
|||||||||||||||||||
June
30,
2008
|
September
30,
2008
|
December
31,
2008
|
March
31,
2009
|
March
31,
2009
|
||||||||||||||||
(in
thousands)
|
||||||||||||||||||||
Net
income
|
$ | 67,132 | $ | 67,431 | $ | 5,608 | $ | 40,964 | $ | 181,135 | ||||||||||
Interest
expense
|
11,001 | 11,117 | 9,587 | 9,853 | 41,558 | |||||||||||||||
Interest
income
|
(2,234 | ) | (2,728 | ) | (1,650 | ) | (625 | ) | (7,237 | ) | ||||||||||
Income
tax expense
|
20,964 | 9,609 | 2,666 | 12,033 | 45,272 | |||||||||||||||
Depreciation,
depletion and amortization
|
44,910 | 42,197 | 41,203 | 40,734 | 169,044 | |||||||||||||||
EBITDA
|
141,773 | 127,626 | 57,414 | 102,959 | 429,772 | |||||||||||||||
Unrestricted
subsidiary
|
1,131 | 3,504 | 13 | - | 4,648 | |||||||||||||||
Change
in fair value of derivative instruments,
net
|
(6,516 | ) | 34,294 | 36,171 | (238 | ) | 63,711 | |||||||||||||
Write-off
of assets
|
- | - | 25,687 | - | 25,687 | |||||||||||||||
Other
allowance adjustments
|
131 | 914 | 1,235 | 1,590 | 3,870 | |||||||||||||||
Accretion
expense
|
1,855 | 1,846 | 1,947 | 2,059 | 7,707 | |||||||||||||||
Amortization
of deferred gains
|
(205 | ) | (177 | ) | (84 | ) | (171 | ) | (637 | ) | ||||||||||
Loss
on early extinguishment of debt
|
14,669 | 33 | - | - | 14,702 | |||||||||||||||
Stock-based
compensation charges
|
11,456 | 635 | 1,999 | 3,226 | 17,316 | |||||||||||||||
Adjusted
EBITDA
|
$ | 164,294 | $ | 168,675 | $ | 124,382 | $ | 109,425 | $ | 566,776 | ||||||||||
Leverage
ratio (1)
|
NM
|
|||||||||||||||||||
Interest
coverage ratio (2)
|
25.26 | |||||||||||||||||||
Senior
Secured Leverage Ratio (3)
|
NM
|
|||||||||||||||||||
(1)
|
Leverage
ratio is defined in our Credit Agreement as total net debt divided by
Adjusted EBITDA.
|
(2)
|
Interest
coverage ratio is defined in our Credit Agreement as Adjusted EBITDA
divided by cash interest
expense.
|
(3)
|
The
senior secured leverage ratio is defined as consolidated debt that is
secured by a lien less unrestricted cash and cash equivalents to Adjusted
EBITDA.
|
Purchase
Contracts
|
Purchase Price
Range
|
|
Tons
Outstanding
|
Delivery
Period
|
Fair
Value (In Millions) (Liability)
|
|||||
$
|
50-60
|
150,000
|
04/01/09-12/31/09
|
$
|
(1.2
|
) | ||||
60-70
|
300,000
|
04/01/09-12/31/10
|
(2.4
|
) | ||||||
110-120
|
30,000
|
04/01/09-06/30/09
|
(2.0
|
) | ||||||
480,000
|
$
|
(5.6
|
) | |||||||
Sales
Contracts
|
Selling
Price Range
|
Tons
Outstanding
|
Delivery
Period
|
Fair
Value (In Millions) Asset
|
||||||
$
|
50-60
|
90,000
|
04/01/09-12/31/09
|
$
|
0.9
|
|||||
60-70
|
90,000
|
04/01/09-12/31/09
|
1.1
|
|||||||
70-80
|
90,000
|
04/01/09-12/31/09
|
2.5
|
|||||||
270,000
|
$
|
4.5
|
||||||||
Total
Number of Shares Purchased (1)
|
Average
Price Paid per Share
|
Total
Number of
Shares
Purchased as
Part
of Publicly
Announced
Share
Repurchase
Program
(2)
|
Approximate
Dollar
Value
of Shares that
May
Yet Be
Purchased
Under
the
Program (3)
|
|
||||||||||||
January
1, 2009 through January 31, 2009
|
97,944 | $ | 18.80 | - | - | |||||||||||
February
1, 2009 through February 28, 2009
|
7,670 | 20.91 | - | - | ||||||||||||
March
1, 2009 through March 31, 2009
|
1,125 | 20.12 | - | - | ||||||||||||
Total
|
106,739 | 18.96 | - | - | ||||||||||||
(1 | ) |
On
December 12, 2008, the Board of Directors authorized the Company to
repurchase common shares from employees to satisfy the employees’ minimum
statutory tax withholdings upon the vesting of restricted stock and
performance shares. During the three months ended March 31, 2009, the
Company issued 418,433 shares of common stock to employees upon vesting of
restricted stock.
|
|
|||||||||||||
(2 | ) |
We
currently do not have a publicly announced share repurchase program with
the exception of the Board approved program described in footnote
(1).
|
|
|||||||||||||
(3 | ) |
Management
cannot estimate the number of shares or the related dollar value that may
be repurchased because purchases are based on vesting of issued common
shares to employees and directors, and participants have the ability to
elect the net share settlement option.
|
|
|||||||||||||
ALPHA
NATURAL RESOURCES, INC.
|
||||||
By:/s/
Eddie W. Neely
|
||||||
Name:
Eddie W. Neely
|
||||||
Title:
Executive
Vice President, Chief Financial Officer, Assistant Secretary and
Controller
|
Exhibit
No
|
Description
of Exhibit
|
|
3.1
|
Restated
Certificate of Incorporation of Alpha Natural Resources,
Inc. (Incorporated by reference to Exhibit 3.1 to the Annual Report
on Form 10-K of Alpha Natural Resources, Inc. (File No. 1-32423) filed on
March 30, 2005)
|
|
3.2
|
Amended
and Restated Bylaws of Alpha Natural Resources, Inc. (Incorporated by
reference to Exhibit 3.2 to the Annual Report on Form 10-K of Alpha
Natural Resources, Inc. (File No. 1-32423) filed on March 1,
2007)
|
|
12.1*
|
||
12.2*
|
||
31(a)*
|
||
31(b)*
|
||
32(a)*
|
||
32(b)*
|
||
101.INS |
XBRL
instance document
|
|
101.SCH |
XBRL
taxonomy extension schema
|
|
101.CAL |
XBRL
taxonomy extension calculation linkbase
|
|
101.LAB |
XBRL
taxonomy extension label linkbase
|
|
101.PRE |
XBRL
taxonomy extension presentation linkbase
|
|
*
|
Filed
herewith.
|