Alpha Natural Resources Logo

Print Print page   Email Email page   PDF Download PDF    Add to Briefcase
« Previous Release | Next Release »



Alpha Natural Resources Announces Results for Second Quarter 2012

BRISTOL, Va., August 8, 2012 /PRNewswire/ --

Alpha Natural Resources, Inc. (NYSE: ANR), a leading U.S. coal producer, reported a second quarter loss of $2.2 billion or $10.14 per diluted share, compared with a loss of $50 million or $0.32 per diluted share in the second quarter of 2011. Excluding impairment and restructuring harges, expenses related to the Upper Big Branch (UBB) mine, net amortization of acquired intangibles, changes in fair value and settlement of derivative instruments, merger-related expenses, certain other items, and related tax impacts of these items and other discrete tax items, the second quarter adjusted net loss was $72 million or $0.33 per diluted share, compared to adjusted net income of $152 million or $0.97 per diluted share last year.

Earnings before interest, taxes, depreciation, depletion and amortization (EBITDA) for the second quarter 2012 was a loss of $2.4 billion, compared with EBITDA of $109 million in the year ago period. Excluding impairment and restructuring charges, UBB expenses, changes in fair value and settlement of derivative instruments, merger-related expenses, and loss on early extinguishment of debt, Adjusted EBITDA was $186 million, compared with Adjusted EBITDA of $369 million in the second quarter of 2011.

In the second quarter, Alpha recorded restructuring and long-lived asset impairment charges totaling $1.0 billion, primarily associated with current market conditions and the continued optimization of Eastern operations which included reductions in operating levels and idling of several operations, as well as actions to streamline the company's organizational structure. The $991 million reduction to long-lived asset carrying values is anticipated to reduce non-cash depletion, depreciation and amortization expense by approximately $80 million on an annualized basis. In addition, Alpha recorded a non-cash goodwill impairment charge of $1.5 billion, reflecting the current coal market conditions, and lower expected production and shipment levels. None of these charges are anticipated to materially impact the company's liquidity position or the future operation of its business.

Quarterly Financial & Operating Highlights



(millions, except per-share and per-ton amounts)







Q2

2012

Q12

2012

Q22

2011


Coal revenues

$1,565.3

$1,639.6

$1,410.9







Net loss

($2,234.7)

($28.8)

($50.1)







Net loss per diluted share

($10.14)

($0.13)

($0.32)







Adjusted net (loss) income1

($72.3)

($58.1)

$152.2







Adjusted net (loss) income per diluted share1

($0.33)

($0.26)

$0.97







EBITDA1

($2,383.7)

$222.0

$108.6







Adjusted EBITDA1

$186.4

$210.5

$368.6







Tons of coal sold

26.8

28.1

23.0







Weighted average coal margin per ton

$6.57

$8.72

$13.75







Adjusted weighted average coal margin per ton1

$8.16

$9.45

$19.11










1. These are non-GAAP financial measures. A reconciliation of adjusted net (loss) income to net loss, a reconciliation of both EBITDA and adjusted EBITDA to net loss, and a reconciliation of adjusted cost of coal sales per ton to cost of coal sales per ton are included in tables accompanying the financial schedules.


2. Adjusted to reflect certain immaterial corrections and the impact of retrospective adjustments made as a result of applying acquisition accounting for Massey.

Kevin Crutchfield, Alpha's Chairman and CEO, said, "These are extremely challenging times in the U.S. coal industry, with softness in both the thermal and now the metallurgical coal markets and the pace at which the fundamentals changed. Alpha has taken decisive actions to ensure that our business is both well-suited to today's demand environment and efficient enough to provide us with the flexibility to ramp-up our world-class asset base once market conditions improve. We have continued to optimize our Central Appalachia operations by adjusting our footprint, idling high cost thermal coal and lower-quality metallurgical coal production while focusing on our higher-margin metallurgical products. Additionally, we have reduced our overhead expenses. Unfortunately, this occurred at a time of heightened and sustained unemployment rates and a very tepid economic recovery in the United States. We sincerely regret the impact our production curtailments have had on good employees and their families, but the market environment with which we are faced left us no other options. We will continue to evaluate market conditions and will make further adjustments if market conditions warrant.

"We have also taken proactive steps to ensure significant financial flexibility by amending our secured credit facility and relaxing certain of our covenants in the near-term. The amendment does not alter our total liquidity position, maintains all of our available credit facilities, does not increase our current borrowing rates, and does not force us to incur any additional debt.

"It is a credit to our entire workforce, and to our ongoing dedication to Running Right, that our safety and compliance performance continues to improve despite broader market uncertainty and a regulatory environment that threatens the long-term competitive position of America. During the second quarter, Alpha's overall incident rate improved 13 percent compared with the first quarter of 2012, and our legacy Massey operations improved 9 percent from the prior quarter and a remarkable 39 percent since the third quarter of 2011, the first full quarter following our acquisition of Massey. Seven of our Virginia operations were recognized by the Virginia Coal Mine Safety Board and Department of Mines, Minerals and Energy for their outstanding safety performance, and four of our West Virginia operations received 2011 Joseph A. Holmes Safety Association awards during the quarter. I commend all of the hard working people in the Alpha family for their dedication to Running Right."

Financial Performance

Year-to-Date Results

Liquidity and Capital Resources

Operating cash flow for the quarter ended June 30, 2012 was a use of $31 million, compared with operating cash flow of $126 million in the second quarter of 2011. The year-over-year change in operating cash flow is primarily the result of Alpha's larger second quarter 2012 loss from operations and certain other cash expenditures, including legal settlement payments.

Capital expenditures for the second quarter of 2012 were $119 million, versus $116 million in the comparable period last year. Investing activities during the second quarter also included $36.1 million for the final annual installment payment pertaining to a federal coal lease in the PRB.

At the end of the second quarter, Alpha had total liquidity of approximately $1.6 billion, which includes the $500 million minimum liquidity that must be maintained according to the terms of our recent secured credit facility amendment. Alpha's liquidity as of June 30th consisted of an aggregate $0.5 billion of cash, cash equivalents and marketable securities, plus $1.1 billion available under the company's secured credit facilities. Total long-term debt, including the current portion of long-term debt at June 30, 2012, remained at approximately $3.0 billion.

Market Overview

The domestic market for thermal coal has been extraordinarily weak in the first half of 2012, as the combination of low-priced natural gas and mild winter weather led to a sharp reduction in coal burn and a rapid increase in utility stockpiles. Exacerbating the situation is a regulatory environment designed to constrain the mining and use of coal for electricity generation and promote the use of natural gas and heavily-subsidized renewable sources, raising the prospect of higher electricity prices in the future. Court decisions suggest that environmental regulation has gone too far, demonstrated by the recent decision to reject the EPA's overreaching efforts to direct the process of mine permitting that rightfully belongs to the states, and the decision to overturn the EPA's veto of the Spruce No. 1 permit.

Thermal coal consumption in 2012 is expected to decrease by more than 120 million tons compared with last year, and spot prices for thermal coal in Central Appalachia and the Powder River Basin (PRB) have languished at levels below each basin's typical cash production costs. However, the domestic thermal coal market is showing signs of gradual improvement. Natural gas prices have risen approximately 50 percent from their recent lows. Domestic utility inventories, which peaked at approximately 212 million tons in April, inflected and decreased slightly in the month of May, demonstrating the impact of production cutbacks implemented by U.S. producers in the first half of 2012. Inventories stood at an estimated 204 million tons at the end of June, a level that implies the drawdown was slightly greater than the historical average due to reduced production and a heat wave throughout much of the country. While stockpiles have fallen and thermal coal spot prices have begun to improve, inventories remain elevated, new contracting is limited, and spot pricing remains unattractive, both domestically and in the Atlantic market. As expected, the need for baseload coal-fired generation and an uptick in natural gas prices drove a quick resurgence in PRB shipments, which have recently returned to more historically normal levels for Alpha. Despite the signs of improvement in the domestic thermal coal market, conditions remain challenging. In this environment, Alpha will continue to assess expected demand and adjust its thermal coal production accordingly.

In light of the burgeoning utility inventories in the U.S., producers, traders and some utilities have attempted to move thermal coal onto the seaborne market. As a result, U.S. exports are on pace for a record year, with thermal coal exports in the first five months of 2012 up approximately 77 percent to 25 million tons. Given this significant increase in supply, primarily into the Atlantic basin, seaborne prices for thermal coal have fallen, and opportunities for additional near-term export business have diminished. Metallurgical coal export volumes have remained relatively healthy by historical standards but are down approximately 6 percent year-over-year through May at 28 million tons. Alpha's metallurgical coal exports during the second quarter of 2012 increased to just over 4 million tons, a 17 percent increase from the first quarter.

While export volumes have held up reasonably well, the global market for metallurgical coal has been softening across the board recently. Spot pricing for benchmark quality coals in Asia has disconnected from the third quarter benchmark of $225 per tonne and is reportedly under the $200 per metric tonne mark due to slowing steel production in China and the expected recovery of Australian export volumes following the reported resolution of recent labor disputes. In the face of European economic weakness, year-to-date European steel production is down approximately 4 percent compared with 2011. Given the challenging conditions in Europe, metallurgical coals are being contracted at a discount to similar qualities sold into Asia, and the market is awash with lower-quality metallurgical coals, placing significant downward pressure on pricing. In the near-term, Alpha has pared back production of its lower quality metallurgical coals, but the company believes it is well-positioned to capitalize on improving global market fundamentals for metallurgical coal with up to 30 million tons of export terminal capacity and the ability to rapidly increase metallurgical coal shipments in the future.

Outlook

In 2012, Alpha anticipates total shipment volumes of 100-115 million tons, including 20-23 million tons of Eastern metallurgical coal, 38-44 million tons of Eastern steam coal, and 42-48 million tons of Western steam coal. During the second quarter of 2012, Alpha priced 2.4 million tons of metallurgical coal for delivery in 2012 at average per ton realizations of approximately $105. As of July 18, 2012, based on the midpoint of guidance, 86 percent of Alpha's 2012 Eastern metallurgical coal shipment volume was committed and priced at an average per ton realization of $136.06, and 10 percent was committed and unpriced. Also based on the midpoint of guidance, Alpha's 2012 Eastern steam coal shipment volume was 100 percent committed and priced at an average per ton realization of $66.22, and 100 percent of Alpha's 2012 Western steam coal shipment volume was committed and priced at an average per ton realization of $12.89. Adjusted cost of coal sales in 2012 are anticipated to range from $74.00 to $78.00 per ton in the East (metallurgical and steam), down from the previous range of $75.00 to $79.00 per ton, and in the West the range is unchanged from prior guidance at $10.50 to $11.50 per ton. Guidance ranges for selling, general and administrative expense and for depletion, depreciation and amortization expense in 2012 have both been reduced to $210 million to $225 million and $1.05 billion to $1.15 billion, respectively. Guidance for interest expense in 2012 remains unchanged at $175 million to $185 million. Due to expected reductions in capital purchases and leasing of selected items, Alpha has again reduced its anticipated 2012 capital expenditures to a range of $450 million to $600 million, compared with the prior range of $450 million to $650 million.

As of July 18, 2012, Alpha had 2.7 million tons of Eastern metallurgical coal committed and priced for 2013 at average per ton realizations of $125.24 and 11.0 million tons of Eastern metallurgical coal committed and unpriced. As of the same date, Alpha had 14.6 million tons of Eastern steam coal committed and priced at average per ton realizations of $68.48 and 4.9 million tons committed and unpriced, and in the West, Alpha had 36.8 million tons committed and priced at average realizations of $12.99 per ton.

Guidance


(in millions, except per-ton and percentage amounts)





2012

Average per Ton Sales Realization on

Committed and Priced Coal Shipments1,2


    West

$12.89

    Eastern Steam

$66.22

    Eastern Metallurgical

$136.06

Coal Shipments3

100.0 - 115.0

    West

42.0 - 48.0

    Eastern Steam4

38.0 - 44.0

    Eastern Metallurgical

20.0 - 23.0

Committed and Priced (%)5

97%

    West

100%

    Eastern Steam

100%

    Eastern Metallurgical

86%

Committed and Unpriced (%)5,6

2%

West

0%

Eastern Steam

0%

Eastern Metallurgical

10%

West -- Cost of Coal Sales per Ton

$10.50 - $11.50

East -- Cost of Coal Sales per Ton7

$74.00 - $78.00

Selling, General & Administrative Expense8

(excluding merger-related expenses)

$210 - $225

Depletion, Depreciation & Amortization

$1,050 - $1,150

Interest Expense

$175 - $185

Capital Expenditures9

$450 - $600


Notes:

1. Based on committed and priced coal shipments as of July 18, 2012.

2. Actual average per ton realizations on committed and priced tons recognized in future periods may vary based on actual freight expense in future periods relative to assumed freight expense embedded in projected average per ton realizations.

3. Eastern shipments in 2012 include an estimated 2.0 to 3.0 million tons of brokered coal per year.

4. The 2012 shipment range for Eastern steam coal reflects the impact of longwall moves at the Cumberland mine in April and at the Emerald mine in March, as well as anticipated longwall moves at the Cumberland mine in September and at the Emerald mine in December/January.

5. As of July 18, 2012, compared to the midpoint of shipment guidance range.

6. In 2012, committed and unpriced Eastern tons include approximately 2.2 million tons of metallurgical coal subject to market pricing, approximately 0.5 million tons of steam coal subject to market pricing, and approximately 0.2 million tons of steam coal subject to average indexed pricing estimated at $66.05 per ton.

7. Excludes merger-related expenses, non-cash charges for the fair value adjustment of acquired coal inventory, UBB charges and weather-related property damage. Alpha has not reconciled the adjusted Eastern cost of coal sales per ton to Eastern cost of coal sales per ton because merger-related expenses, a necessary reconciling item, cannot be reasonably predicted, and Alpha is unable to provide guidance for such expenses.

8. Alpha has not reconciled the adjusted selling, general & administrative expense to selling, general & administrative expense because merger-related expenses, a necessary reconciling item, cannot be reasonably predicted, and Alpha is unable to provide guidance for such expenses.

9. Includes the annual bonus bid payments on the Federal Lease by Applications for the Eagle Butte and Belle Ayr mines of $36.1 million and $28.9 million, respectively.

About Alpha Natural Resources
With $7.1 billion in total revenue in 2011, Alpha Natural Resources ranks as America's second-largest coal producer by revenue and third-largest by production. Alpha is the nation's largest supplier of metallurgical coal used in the steel-making process and is a major supplier of thermal coal to electric utilities and manufacturing industries. In 2011, the Company had more than 200 Customers on five continents. More information about Alpha can be found on the company's Web site at www.alphanr.com.

Forward Looking Statements
This news release includes forward-looking statements as defined in the Private Securities Litigation Reform Act of 1995. These forward-looking statements are based on Alpha's expectations and beliefs concerning future events and involve risks and uncertainties that may cause actual results to differ materially from current expectations. These factors are difficult to predict accurately and may be beyond Alpha's control. The following factors are among those that may cause actual results to differ materially from our forward-looking statements:

These and other risks and uncertainties are discussed in greater detail in Alpha's Annual Reports on Form 10-K and other documents filed with the Securities and Exchange Commission. Forward-looking statements in this news release or elsewhere speak only as of the date made. New uncertainties and risks come up from time to time, and it is impossible for Alpha to predict these events or how they may affect the Company. Alpha has no duty to, and does not intend to, update or revise the forward-looking statements in this news release after the date it is issued. In light of these risks and uncertainties, investors should keep in mind that the results, events or developments disclosed in any forward-looking statement made in this news release may not occur.

FINANCIAL TABLES FOLLOW

Use of Non-GAAP Measures
In addition to the results prepared in accordance with generally accepted accounting principles in the United States (GAAP) provided throughout this press release, Alpha has presented the following non-GAAP financial measures, which management uses to gauge operating performance: EBITDA, adjusted EBITDA, adjusted net income (loss), adjusted diluted earnings (loss) per common share, adjusted cost of coal sales per ton, adjusted coal margin per ton and adjusted weighted average coal margin per ton.

Alpha defines EBITDA as net income (loss) plus interest expense, income tax expense, depreciation, depletion and amortization, and amortization of acquired intangibles less interest income and income tax benefit. Alpha defines adjusted EBITDA as EBITDA plus expenses attributable to mergers, goodwill impairment, long-lived asset impairment and restructuring, losses on early extinguishment of debt, impact of write-off of weather-related property damage, UBB expenses, mineral lease terminations expense, losses from changes in fair value and settlements of derivative instruments, and changes in estimated future costs of water treatment at closed mines less gains or losses from changes in fair value and settlements of derivative instruments and various gains and losses not expected to recur on a quarterly basis. Alpha defines adjusted net income (loss) as net income (loss) plus expenses attributable to mergers, goodwill impairment, long-lived asset impairment and restructuring, losses on early extinguishment of debt, impact of write-off of weather-related property damage, losses from changes in fair value and settlements of derivative instruments, changes in estimated future costs of water treatment at closed mines, amortization of acquired intangibles, UBB expenses, mineral lease terminations expense, income tax charges from valuation allowance adjustments, less gains or losses from changes in fair value and settlements of derivative instruments and various gains and losses that are not expected to recur on a quarterly basis, certain discrete income tax items, adjustments to deferred taxes due to significant law changes and estimated income tax effects of the pre-tax adjustments. Adjusted diluted earnings (loss) per common share is adjusted net income (loss) divided by weighted average diluted shares.

Alpha defines adjusted cost of coal sales per ton as the cost of coal sales per ton less per ton expenses attributable to mergers, UBB expenses and various expenses, gains and losses that are not expected to recur on a quarterly basis. Alpha defines adjusted coal margin per ton as the average realized price per ton sold less the adjusted cost of coal sales per ton. Alpha defines adjusted weighted average coal margin per ton as the weighted average realized price per ton sold less the adjusted weighted average total cost of coal sales per ton.

The definition of these non-GAAP measures may be changed periodically by management to adjust for significant items important to an understanding of operating trends. These measures are not intended to replace financial performance measures determined in accordance with GAAP. Rather, they are presented as supplemental measures of the Company's performance that management believes are useful to securities analysts, investors and others in assessing the Company's performance over time. Moreover, these measures are not calculated identically by all companies and therefore may not be comparable to similarly titled measures used by other companies. A reconciliation of each of these measures to its most directly comparable GAAP measure is provided in the tables below.

Alpha Natural Resources, Inc. and Subsidiaries

Condensed Consolidated Statements of Operations

(In Thousands Except Shares and Per Share Data)

(Unaudited)













Three Months Ended June 30,



Six Months Ended June 30,



2012


2011(1)



2012


2011(1)











Revenues:










    Coal revenues

$

1,565,281

$

1,410,892


$

3,204,839

$

2,397,870

    Freight and handling revenues


233,357


150,871



442,707


266,926

    Other revenues


49,471


36,275



135,176


63,980

        Total revenues


1,848,109


1,598,038



3,782,722


2,728,776











Costs and expenses:










    Cost of coal sales (exclusive of items shown separately below)


1,406,394


1,106,999



2,821,790


1,841,984

    Freight and handling costs


233,357


150,871



442,707


266,926

    Other expenses


10,444


38,227



29,837


56,806

    Depreciation, depletion and amortization


272,850


147,111



558,622


235,749

    Amortization of acquired intangibles, net


(17,286)


(8,928)



(52,798)


17,055

    Selling, general and administrative expenses (exclusive of depreciation,









depletion and amortization shown separately above)


46,011


189,671



111,022


256,955

    Asset impairment and restructuring


1,010,878


-



1,014,934


-

    Goodwill impairment


1,525,332


-



1,525,332


-

        Total costs and expenses


4,487,980


1,623,951



6,451,446


2,675,475











Income (loss) from operations


(2,639,871)


(25,913)



(2,668,724)


53,301











Other income (expense):










    Interest expense


(46,534)


(29,968)



(91,968)


(45,578)

    Interest income


1,324


1,012



2,421


2,057

    Loss on early extinguishment of debt


-


(4,556)



-


(4,556)

    Miscellaneous income, net


627


859



1,266


25

        Total other expense, net


(44,583)


(32,653)



(88,281)


(48,052)











Income (loss) before income taxes


(2,684,454)


(58,566)



(2,757,005)


5,249

Income tax benefit (expense)


449,798


8,498



493,583


(5,469)

Net loss


(2,234,656)


(50,068)



(2,263,422)


(220)





















Loss per common share:










    Basic loss per common share:

$

(10.14)

$

(0.32)


$

(10.29)

$

(0.00)

    Diluted loss per common share:

$

(10.14)

$

(0.32)


$

(10.29)

$

(0.00)











Weighted average shares outstanding:










    Weighted average shares--basic


220,295,415


155,238,304



220,040,698


137,723,715

    Weighted average shares--diluted


220,295,415


155,238,304



220,040,698


137,723,715





















(1) The results for the three and six months ended June 30, 2011 have been restated to reflect the impact of certain adjustments made to the provisional opening balance sheet of Massey and certain immaterial corrections.







This information is intended to be reviewed in conjunction with the company's filings with the U.S. Securities and Exchange Commission.

Alpha Natural Resources, Inc. and Subsidiaries

Supplemental Sales, Operations and Financial Data

(In Thousands, Except Per Ton and Percentage Data)

(Unaudited)













Three Months Ended June 30,



Six Months Ended June 30,



2012


2011



2012


2011











Tons sold (1):










Powder River Basin


10,161


11,011



21,933


23,498

Eastern steam


11,043


7,673



22,519


12,532

Eastern metallurgical


5,595


4,363



10,493


7,983

Total


26,799


23,047



54,945


44,013





















Average realized price per ton sold (2)(9):










Powder River Basin

$

12.96

$

11.92


$

12.96

$

11.92

Eastern steam


65.05


66.65



66.29


66.74

Eastern metallurgical


127.83


176.08



136.08


160.52

Weighted average total

$

58.41

$

61.22


$

58.33

$

54.48











Coal revenues:










Powder River Basin

$

131,733

$

131,223


$

284,174

$

280,002

Eastern steam


718,416


511,430



1,492,840


836,441

Eastern metallurgical


715,132


768,239



1,427,825


1,281,427

Total coal revenues

$

1,565,281

$

1,410,892


$

3,204,839

$

2,397,870





















Adjusted cost of coal sales per ton (3)(7)(8)(11)(12):










Powder River Basin

$

11.01

$

10.66


$

10.99

$

10.13

East (4)

$

74.21

$

70.88


$

75.09

$

71.05

Adjusted weighted average total

$

50.25

$

42.11


$

49.50

$

38.52











Adjusted weighted average coal margin per ton (9)

$

8.16

$

19.11


$

8.83

$

15.96

Adjusted weighted average coal margin percentage (10)


14.0%


31.2%



15.1%


29.3%











Cost of coal sales per ton (3)(7)(11)(12):










Powder River Basin

$

11.01

$

10.66


$

10.99

$

10.13

East (4)

$

76.78

$

81.14


$

77.01

$

77.07

Weighted average total

$

51.84

$

47.47


$

50.66

$

41.33











Weighted average coal margin per ton (5)

$

6.57

$

13.75


$

7.67

$

13.15

Weighted average coal margin percentage (6)


11.2%


22.5%



13.1%


24.1%











Net cash provided by (used in) operating activities

$

(31,280)

$

126,456


$

135,349

$

294,874

Capital expenditures

$

119,470

$

115,567


$

245,244

$

172,668





















(1) Stated in thousands of short tons.






(2) Coal revenues divided by tons sold. This statistic is stated as free on board (FOB) at the processing plant.

(3) Cost of coal sales divided by tons sold. The cost of coal sales per ton only includes costs in our Eastern and Western Coal Operations.

(4) East includes the Company's operations in Central Appalachia (CAPP) and Northern Appalachia (NAPP).

(5) Weighted average total sales realization per ton less weighted average total cost of coal sales per ton.

(6) Weighted average coal margin per ton divided by weighted average total sales realization per ton.

(7) Amounts per ton calculated based on unrounded revenues, cost of coal sales and tons sold.

(8) For the three and six months ended June 30, 2012 and June 30, 2011, adjusted cost of coal sales per ton for East includes adjustments to exclude the impact of certain non-cash charges that resulted from recording Massey's beginning inventory at fair value, merger-related compensation and severance expenses, merger-related expenses for contract matters, costs related to UBB and expenses related to the impact of weather-related property damage loss.

(9) Weighted average total sales realization per ton less adjusted weighted average total cost of coal sales per ton.

(10) Adjusted weighted average coal margin per ton divided by weighted average total sales realization per ton.

(11) Adjusted cost of coal sales per ton, adjusted weighted average coal margin per ton and adjusted weighted average coal margin percentage for our Eastern Operations are reconciled to their unadjusted amounts as follows:












Three months ended



Six months ended



June 30, 2012


June 30, 2011



June 30, 2012


June 30, 2011

Adjusted cost of coal sales per ton-East

$

74.21

$

70.88


$

75.09

$

71.05

Impact of merger-related expenses


1.81


9.78



1.03


5.74

Impact of UBB expenses


0.76


0.48



0.82


0.28

Impact of write-off of weather-related property damage


-


-



0.07


-

Cost of coal sales per ton-East

$

76.78

$

81.14


$

77.01

$

77.07











(12) The results for the three and six months ended June 30, 2011 have been restated to reflect the impact of certain adjustments made to the provisional opening balance sheet of Massey and certain immaterial corrections.











This information is intended to be reviewed in conjunction with the company's filings with the U.S. Securities and Exchange Commission.

Alpha Natural Resources, Inc. and Subsidiaries

Condensed Consolidated Balance Sheets and Supplemental Liquidity Data

(In Thousands)

(Unaudited)










June 30, 2012


December 31, 2011 (1)







Cash and cash equivalents

$

252,192

$

585,882

Trade accounts receivable, net


534,562


641,975

Inventories, net


503,565


492,022

Short-term marketable securities


101,112


80,342

Prepaid expenses and other current assets


574,633


747,854

Total current assets


1,966,064


2,548,075

Property, equipment and mine development costs, net


2,394,587


2,812,069

Owned and leased mineral rights and land, net


7,483,048


8,284,328

Goodwill, net


755,859


2,281,191

Long-term marketable securities


149,776


20,489

Other non-current assets


591,357


647,893

Total assets

$

13,340,691

$

16,594,045







Current portion of long-term debt

$

68,720

$

46,029

Trade accounts payable


364,223


504,059

Accrued expenses and other current liabilities


1,035,581


1,359,160

Total current liabilities


1,468,524


1,909,248

Long-term debt


2,919,529


2,922,052

Pension and postretirement medical benefit obligations


1,275,310


1,214,724

Asset retirement obligations


863,585


743,613

Deferred income taxes


953,698


1,507,923

Other non-current liabilities


785,250


921,441

Total liabilities


8,265,896


9,219,001







Total stockholders' equity


5,074,795


7,375,044

Total liabilities and stockholders' equity

$

13,340,691

$

16,594,045










As of




June 30, 2012


December 31, 2011

Liquidity ($ in 000's):





Cash and cash equivalents

$

252,192

$

585,882

Marketable securities with maturities of less than one year


101,112


80,342

Marketable securities with maturities of greater than one year


149,776


20,489

Total cash, cash equivalents and marketable securities


503,080


686,713

Unused revolving credit and A/R securitization facilities (2)


1,093,300


1,114,700

Total liquidity

$

1,596,380

$

1,801,413







(1) During the six months ended June 30, 2012, the Company recorded certain adjustments to the provisional opening balance sheet of Massey. Accordingly, the December 31, 2011 balance sheet was adjusted to reflect these changes as if they were recorded on the acquisition date in accordance with generally accepted accounting principles related to acquisition accounting. The Company also recorded the effects of certain immaterial corrections which are also reflected in the December 31, 2011 balance sheet.







(2) During the three months ended June 30, 2012, the Company amended its secured credit facility. The amount available for borrowings under the revolving credit facility is subject to a minimum liquidity requirement of $500 million.













This information is intended to be reviewed in conjunction with the company's filings with the U.S. Securities and Exchange Commission.







Alpha Natural Resources, Inc. and Subsidiaries

Condensed Consolidated Statements of Cash Flows

(In Thousands)

(Unaudited)








Six Months Ended June 30,



2012


2011(1)






Operating activities:





Net loss

$

(2,263,422)

$

(220)

Adjustments to reconcile net loss to net cash provided by





operating activities:





Depreciation, depletion, accretion and amortization


612,019


257,806

Amortization of acquired intangibles, net


(52,798)


17,055

Mark-to-market adjustments for derivatives


(43,641)


4,276

Stock-based compensation


(2,464)


47,009

Employee benefit plans, net


36,916


24,993

Goodwill impairment


1,525,332


-

Asset impairment and restructuring


1,014,934


-

Loss on early extinguishment of debt


-


4,556

Deferred income taxes


(496,054)


2,893

Other, net


2,786


(12,070)

Changes in operating assets and liabilities:





Trade accounts receivable, net


107,413


(194,931)

Inventories, net


(11,544)


61,740

Prepaid expenses and other current assets


169,277


5,046

Other non-current assets


520


(15,230)

Trade accounts payable


(126,389)


88,141

Accrued expenses and other current liabilities


(275,141)


(40,857)

Pension and postretirement medical benefit obligations


(24,220)


(25,086)

Asset retirement obligations


(22,287)


(4,833)

Other non-current liabilities


(15,888)


74,586

Net cash provided by operating activities


135,349


294,874






Investing activities:





Cash paid for acquisition, net of cash acquired


-


(711,387)

Capital expenditures


(245,244)


(172,668)

Acquisition of mineral rights under federal leases


(36,108)


(36,108)

Purchases of marketable securities


(261,990)


(298,015)

Sales of marketable securities


109,288


200,173

Purchase of equity-method investments


(10,100)


(4,000)

Other, net


5,973


(3,185)

Net cash used in investing activities


(438,181)


(1,025,190)






Financing activities:





Principal repayments on long-term debt


(15,000)


(737,610)

Payment to redemption trust


-


(264,017)

Proceeds from borrowings of long-term debt


-


2,100,000

Principal repayments on capital lease obligations


(1,767)


-

Debt issuance costs


(6,436)


(84,041)

Excess tax benefit from stock-based awards


-


4,777

Common stock repurchases


(6,804)


(32,310)

Proceeds from exercise of stock options


149


3,030

Other


(1,000)


-

Net cash (used in) provided by financing activities


(30,858)


989,829






Net increase (decrease) in cash and cash equivalents

$

(333,690)

$

259,513

Cash and cash equivalents at beginning of period

$

585,882

$

554,772

Cash and cash equivalents at end of period

$

252,192

$

814,285






(1) The six months ended June 30, 2011 have been restated to reflect the impact of certain adjustments made to the provisional opening balance sheet of Massey and certain immaterial corrections.






This information is intended to be reviewed in conjunction with the company's filings with the U. S. Securities and Exchange Commission.

Alpha Natural Resources, Inc. and Subsidiaries

Reconciliation of EBITDA and Adjusted EBITDA to Net Loss

(In Thousands)

(Unaudited)













Three Months Ended June 30,



Six Months Ended June 30,



2012


2011



2012


2011











Net loss

$

(2,234,656)

$

(50,068)


$

(2,263,422)

$

(220)

Interest expense


46,534


29,968



91,968


45,578

Interest income


(1,324)


(1,012)



(2,421)


(2,057)

Income tax expense (benefit)


(449,798)


(8,498)



(493,583)


5,469

Depreciation, depletion and amortization


272,850


147,111



558,622


235,749

Amortization of acquired intangibles, net


(17,286)


(8,928)



(52,798)


17,055

EBITDA


(2,383,680)


108,573



(2,161,634)


301,574

Goodwill impairment


1,525,332


-



1,525,332


-

Asset impairment and restructuring


1,010,878


-



1,014,934


-

UBB expenses


12,674


5,781



27,018


5,781

Change in fair value and settlement of

derivative instruments


(8,027)


2,096



(43,635)


2,002

Merger related expenses


29,224


247,586



32,589


269,654

Loss on early extinguishment of debt


-


4,556



-


4,556

Impact of write-off of weather-related

property damage


-


-



2,300


-

Adjusted EBITDA

$

186,401

$

368,592


$

396,904

$

583,567










This information is intended to be reviewed in conjunction with the company's filings with the U.S. Securities and Exchange

Commission.










Alpha Natural Resources, Inc. and Subsidiaries

Reconciliation of Adjusted Net Income (Loss) to Net Loss

(In Thousands Except Shares and Per Share Data)

(Unaudited)























Three Months Ended June 30,



Six Months Ended June 30,



2012


2011



2012


2011











Net loss

$

(2,234,656)

$

(50,068)


$

(2,263,422)

$

(220)

Goodwill impairment


1,525,332


-



1,525,332


-

Asset impairment and restructuring


1,010,878


-



1,014,934


-

UBB expenses


12,674


5,781



27,018


5,781

Amortization of acquired intangibles, net


(17,286)


(8,928)



(52,798)


17,055

Change in fair value and settlement of derivative instruments


(8,027)


2,096



(43,635)


2,002

Merger related expenses


29,224


247,586



32,589


269,654

Impact of write-off of weather-related property damage


-


-



2,300


-

Loss on early extinguishment of debt


-


4,556



-


4,556

Estimated income tax effect of above adjustments


(405,321)


(54,739)



(388,118)


(73,213)

Discrete tax charge from valuation allowance adjustment


21,300


-



22,754


-

Discrete tax charge from state statutory tax rate change, net of federal tax impact

(6,397)


-



(6,397)


-

Discrete tax charge from non-deductible transaction costs


-


5,961



-


5,961

Adjusted net income (loss)

$

(72,279)

$

152,245


$

(129,443)

$

231,576











Weighted average shares--diluted


220,295,415


157,034,233



220,040,698


139,632,310











Adjusted diluted earnings (loss) per common share

$

(0.33)

$

0.97


$

(0.59)

$

1.66











This information is intended to be reviewed in conjunction with the company's filings with the U.S. Securities and Exchange Commission.

 

SOURCE Alpha Natural Resources, Inc.

News Provided by Acquire Media

Close window | Back to top