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Alpha Natural Resources Announces Results for Third Quarter 2013

-- Third quarter 2013 revenue and adjusted EBITDA of $1.2 billion and $33 million, respectively
-- Cumberland Mine resumed full production after extensive remediation efforts and longwall move
-- Liquidity position maintained at approximately $2 billion, including approximately $1 billion in cash and marketable securities
-- Non-cash goodwill impairment charge of $253 million and increase in loss contingency accruals of $115 million in Q3
-- Sustainable incremental cost reductions of more than $200 million anticipated annually, to be fully realized in 2014
-- Operational footprint optimization substantially completed; introducing 2014 guidance

BRISTOL, Va., Oct. 31, 2013 /PRNewswire/ -- Alpha Natural Resources, Inc. (NYSE: ANR), a leading U.S. coal producer, reported a third quarter 2013 net loss of $458 million or $2.07 per diluted share compared with a net loss of $46 million or $0.21 per diluted share in the third quarter of 2012.  Excluding the items described in our "Reconciliation of Adjusted Net Loss to Net Loss," the third quarter 2013 adjusted net loss was $134 million or $0.61 per diluted share compared with adjusted net loss of $36 million or $0.16 per diluted share in the third quarter of 2012.

Earnings before interest, taxes, depreciation, depletion and amortization (EBITDA) for the third quarter of 2013 was a loss of $341 million, compared with EBITDA of $144 million in the year ago period.  Excluding the items described in our "Reconciliation of EBITDA and Adjusted EBITDA to Net Loss," the third quarter 2013 Adjusted EBITDA was $33 million, compared with $179 million in the third quarter of 2012. 


Quarterly Financial & Operating Highlights

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



Q3

2013

Q2

2013

Q3

2012

Coal revenues

$1,028.8

$1,123.2

$1,455.7

Net loss

($458.2)

($185.7)

($46.1)

Net loss per diluted share

($2.07)

($0.84)

($0.21)

Adjusted net loss1

($134.4)

($121.0)

($35.7)

Adjusted net loss per diluted share1

($0.61)

($0.55)

($0.16)

EBITDA1

($341.1)

$3.0

$143.9

Adjusted EBITDA1

$33.4

$76.4

$178.5

Tons of coal sold

21.8

21.6

27.9

Weighted average coal margin per ton

$2.47

$2.72

$7.73

Adjusted weighted average coal margin per ton1

$2.69

$3.90

$7.68





1. These are non-GAAP financial measures. A reconciliation of adjusted net loss to net loss, EBITDA

    and adjusted EBITDA to net loss, and adjusted cost of coal sales per ton to cost of coal sales per ton

    are included in tables accompanying the financial schedules. Adjusted weighted average coal margin

    per ton is defined as the weighted average total sales realization per ton, less the adjusted weighted

    average total cost of coal sales per ton.


"During the third quarter, Alpha once again demonstrated its commitment to best-in-class safety performance, with two of our operations, the Chesterfield preparation plant and the Roaring Fork No. 4 facility, receiving Sentinel of Safety awards.  In addition, our Enterprise No. 9 and Sidney M3 operations have been recognized by Kentucky with Underground Safety Awards," said Kevin Crutchfield, chairman and CEO.  "I would like to personally commend our entire workforce for their constant dedication to Alpha's principles of Running Right."

"Although our third quarter results this quarter reflect the tough market environment and downtime at our Cumberland mine, we are encouraged that the metallurgical coal market appears to be gradually improving from its recent apparent low point, and domestic thermal coal inventories have trended down, planting the seeds for healthier market conditions in the future," Mr. Crutchfield continued.  "Regardless, we are not standing still and we continued to make significant progress this quarter enhancing our competitiveness and flexibility by managing those aspects of our business within our direct control." 

Key recent actions include:

As of September 30, 2013, Alpha maintained total liquidity at approximately $2 billion, with cash and marketable securities of approximately $1 billion, levels that have remained essentially flat throughout this year.  However, cash outlays in the fourth quarter of 2013 of approximately $42 million for our annual lease-by-application (LBA) bonus bid payment in the Powder River Basin and approximately $38 million for the satisfaction of our commitment to fund an industry safety trust fund by year-end, along with scheduled cash interest payments that are concentrated in the second and fourth quarters, are anticipated to reduce Alpha's year-end cash and liquidity from current levels.

Additionally, Alpha has made significant progress toward reaching a tentative understanding to settle for $265 million the securities class action brought by Massey stockholders in early 2010 alleging deficiencies in Massey's disclosures of safety information.  Additional material terms must still be negotiated.  If a definitive settlement agreement is achieved and approved by the court, the settlement would result in the dismissal of the action.  Alpha expects insurance recoveries of approximately $70 million to help cover the cost of the settlement.  In connection with these developments, Alpha recorded an increase in its loss contingency accruals of approximately $115 million in the third quarter.  Alpha plans to continue settlement discussions in an effort to resolve all outstanding issues, including the form of consideration. Whether Alpha can resolve those issues, and when, remains uncertain, but if the case can be resolved, it would staunch the uncertainty, distraction, risks and potential costs that pursuing this litigation would involve, and would close the book on the most significant Massey-related litigation issues passed to Alpha in the acquisition.

Financial Performance

Year-to-Date Results

Liquidity and Capital Resources

Cash provided by operating activities for the quarter ended September 30, 2013 was $111 million, compared with cash provided by operating activities of $170 million for the third quarter of 2012.  Capital expenditures for the third quarter of 2013 were $56 million, compared with $87 million in the third quarter of 2012. 

As of the end of the third quarter of 2013, Alpha maintained total liquidity at approximately $2.0 billion, consisting of cash, cash equivalents and marketable securities of just over $1.0 billion, plus slightly more than $0.9 billion available under the company's secured credit facility.  Total long-term debt, including the current portion of long-term debt as of September 30, 2013, was approximately $3.4 billion

Market Overview

After reaching what appears to have been a low point in the third quarter of 2013, market conditions for metallurgical coal have begun to improve, as evidenced by the $7 per metric tonne increase in the fourth quarter global benchmark price announced at $152 per tonne in September.  The increase likely reflects the combination of an 89 percent year-over-year increase in Chinese seaborne metallurgical coal imports during the first nine months of 2013, as well as widespread production cutbacks which have been estimated at greater than 50 million metric tonnes worldwide since the beginning of 2012.  The strong growth in Chinese seaborne imports is likely attributable to China's 10 percent year-to-date growth in steel production, along with pricing arbitrage as domestic production has been nearly flat and Mongolian imports have fallen approximately six million metric tonnes while seaborne imports are on pace to increase by more than 25 million metric tonnes in 2013.  China is currently on pace to account for an estimated 22 percent of the world's consumption of seaborne metallurgical coal in 2013, and the incremental growth in China's seaborne imports has essentially absorbed all incremental export growth from Australia, where shipment volumes have increased due to recovery from earlier storm impacts, the completion of new mining complexes and producers' attempts to contain costs and recapture market share by maximizing metallurgical coal shipments. 

Gradual recovery in Europe has resulted in increasing demand for metallurgical coal in the Western hemisphere after two years of contraction, which should bode well for U.S. producers supplying metallurgical coal into the Atlantic basin.  The current global benchmark, although off of the recent apparent bottom, remains at levels that strain profitability or render uneconomic a portion of the world's metallurgical coal production.  In light of demand growth in China and signs of growth emerging in the Atlantic market, together with current pricing levels, most analysts are forecasting a gradual rise in metallurgical coal prices over the coming quarters; however, any slowdown in Chinese demand may prove to be a risk that could adversely impact a gradually improving supply/demand environment in the near-term.

Domestic utility inventories continued to trend lower during the third quarter of 2013, falling to an estimated 153 million tons by the end of September.  Importantly, inventory levels as measured by days of burn are now below average at utilities served by both Northern Appalachian (NAPP) and the Powder River Basin (PRB) coals, with NAPP coal inventory at 55 days of burn compared with the historical five-year average of 57 days at the end of September, and PRB inventory at 60 days of burn compared with the historical five-year average of 66 days.  The decreasing inventory levels point to improving supply/demand dynamics which should lead to healthier market conditions in the near to intermediate-term.  However, pricing currently remains constrained in both regions.  In the PRB, pricing remains constrained due to latent capacity, and, while supply and demand for NAPP coal appears to be in a state of relative balance, pricing remains constrained due to the availability of relatively low-cost coal from other regions, primarily from the Illinois Basin.

Inventories of Central Appalachian (CAPP) thermal coals have also been decreasing but remain elevated at 119 days of burn at the end of September 2013, compared with the five-year historical average of 82 days of burn.  However, most CAPP thermal coal production remains out of the money relative to natural gas at today's prices, and demand for CAPP thermal coal continues to decline with utilities such as TVA and Southern Company announcing plans to decrease reliance on CAPP coal.  We continue to believe that a significant portion of the decreased consumption of CAPP thermal coal is structural, driven by fuel switching in favor of gas, regulatory-driven plant retirements that are disproportionately impacting the regions served by CAPP coal, and encroachment of other lower cost coals, such as from the Illinois Basin.  In light of decreased demand for CAPP thermal coals, Alpha significantly reduced its production of CAPP thermal coal beginning in 2012 and continuing through the most recent quarter.  In addition to contracting activity in the domestic utility market, Alpha has recently placed approximately 4 million tons of CAPP thermal coal for 2014 with various European customers at prices tied to the API 2 index.  As a result of these actions, Alpha's current level of CAPP thermal coal production is approaching a level that Alpha believes to be sustainable over the intermediate term.      

Outlook

Currently, Alpha expects to ship between 86 and 91 million tons during 2013, including 20 to 21 million tons of Eastern metallurgical coal, 28 to 30 million tons of Eastern steam coal, and 38 to 40 million tons of Western PRB coal.  As of October 18, 2013, 96 percent of the midpoint of anticipated 2013 metallurgical coal shipments were committed and priced at an average per ton realization of $99.20, including over 1 million tons of crossover thermal coal at realizations slightly better than were available in the thermal markets, and 4 percent was committed and unpriced.  Based on the midpoint of guidance, 100 percent of anticipated Eastern steam coal shipments were committed and priced at an average per ton realization of $62.07; and 100 percent of the midpoint of anticipated PRB shipments were committed and priced at an average per ton realization of $12.60.  For 2013, Alpha has reduced its guidance ranges for its Eastern and Western adjusted cost of coal sales per ton.  Guidance for Eastern cost of coal sales per ton has been reduced to a range of $71.00 to $73.00, down from the previous range of $72.00 to $76.00, and guidance for Western costs of coal sales per ton has been reduced to a range of $9.75 to $10.00 per ton, down from the previous range of $10.00 to $10.50 per ton.  Guidance for DD&A has been reduced to a range of $825 million to $900 million compared to the previous range of $875 million to $950 million, and guidance for capital expenditures in 2013 has also been reduced to a range of $260 million to $290 million, down from the previous range of $275 million to $325 million.  All other guidance for 2013 remains unchanged.

Alpha is introducing 2014 guidance, and currently anticipates total 2014 coal shipments between 79 and 90 million tons, including between 18 and 22 million tons of metallurgical coal, between 24 and 28 million tons of Eastern steam coal, and between 37 and 40 million tons of Western PRB coal.  As of October 18, 2013, based on the midpoint of the current shipment volume guidance: 3 percent of Alpha's anticipated 2014 metallurgical coal volume was committed and priced at average per-ton realizations of $86.20 which primarily represents a single legacy contract; 59 percent of Alpha's anticipated 2014 Eastern steam coal volume was committed and priced at average per-ton realizations of $60.32; and 86 percent of Alpha's anticipated 2014 PRB volume was committed and priced at average per-ton realizations of $12.32.  Alpha currently expects that its adjusted cost of coal sales in the East will range between $64.00 and $70.00 per ton, and adjusted cost of coal sales in the West will range between $9.50 and $10.50 per ton.  SG&A expense is anticipated to be within $110 million and $140 million in 2014, and DD&A is anticipated to be within $700 million and $800 million.  Interest expense in 2014 is expected to remain relatively stable between $240 million and $255 million, and capital expenditures are expected to be in the $250 million to $350 million range.  


Guidance

(in millions, except per ton and percentage amounts)



2013

2014

Average per Ton Sales Realization on

Committed and Priced Coal Shipments1,2,3



    West

$12.60

$12.32

    Eastern Steam

$62.07

$60.32

    Eastern Metallurgical

$99.20

$86.20

Coal Shipments (tons)3,4,5

86 — 91

79 — 90

    West

38 — 40

37 — 40

    Eastern Steam

28 — 30

24 — 28

    Eastern Metallurgical

20 — 21

18 — 22

Committed and Priced (%)3,6

99%

58%

    West

100%

86%

    Eastern Steam

100%

59%

    Eastern Metallurgical

96%

3%

Committed and Unpriced (%)3,6,7

1%

16%

    West

0%

0%

    Eastern Steam

0%

12%

    Eastern Metallurgical

4%

51%

West — Adjusted Cost of Coal Sales per Ton8

$9.75$10.00

$9.50$10.50

East — Adjusted Cost of Coal Sales per Ton8

$71.00$73.00

$64.00$70.00

Selling, General & Administrative Expense

$140$160

$110$140

Depletion, Depreciation & Amortization

$825$900

$700$800

Interest Expense

$235$245

$240$255

Capital Expenditures9

$260$290

$250$350

 


Notes:

1.

Based on committed and priced coal shipments as of October 18, 2013.

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.

Contain estimates of future coal shipments based upon contract terms and anticipated delivery schedules. Actual coal shipments may vary from these estimates.

4.

Eastern shipments in 2013 and 2014 include an estimated 0.5 to 1.0 million tons of brokered coal.

5.

The 2013 shipment range for Eastern steam coal reflects the impact of a September/October longwall moves and remediation work during the third quarter at the Cumberland mine and a longwall move at the Emerald mine in September/October. The 2014 shipment range for Eastern steam coal reflects the impact of a June/July longwall move at the Cumberland mine and longwall moves at the Emerald mine in March and late December.

6.

As of October 18, 2013, compared with the midpoint of shipment guidance range.

7.

In 2014, committed and unpriced Eastern tons include approximately 10.3 million tons of metallurgical coal subject to market pricing, and approximately 3.2 million tons of steam coal subject to average indexed pricing estimated at approximately $52.44 per ton.

8.

Actual results may be adjusted for various items, such as merger-related expenses, that cannot reasonably be predicted, and Alpha is unable to provide guidance for such items.

9.

Includes the annual bonus bid payment on the Federal Lease by Application for the Belle Ayr mine of $42 million.

 

About Alpha Natural Resources
Alpha Natural Resources is one of the largest and most regionally diversified coal suppliers in the United States. With mining operations in Virginia, West Virginia, Kentucky, Pennsylvania and Wyoming, Alpha supplies metallurgical coal to the steel industry and thermal coal to generate power to customers on five continents.  Alpha is committed to being a leader in mine safety with our Running Right safety process, and an environmental steward in the communities where we operate. For more information, visit Alpha's official website 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, Quarterly Reports on Form 10-Q, 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 arise 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 loss, adjusted diluted loss per common share, adjusted cost of coal sales per ton, adjusted coal margin per ton, and adjusted weighted average coal margin per ton.   These non-GAAP financial measures exclude various items detailed in the attached "Reconciliation of EBITDA and Adjusted EBITDA to Net Loss" and "Reconciliation of Adjusted Net Loss to Net Loss." 

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 finds useful in assessing the company's financial performance and 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.  

 

Alpha Natural Resources, Inc. and Subsidiaries

Condensed Consolidated Statements of Operations

(In Thousands Except Shares and Per Share Data)

(Unaudited)













Three Months

Ended

September 30,



Nine Months

Ended

September 30,



2013


2012



2013


2012











Revenues:










   Coal revenues

$

1,028,847

$

1,455,702


$

3,292,412

$

4,660,541

   Freight and handling

   revenues


135,931


154,450



448,316


597,157

   Other revenues


26,316


23,657



119,080


158,833

      Total revenues


1,191,094


1,633,809



3,859,808


5,416,531











Costs and expenses:










   Cost of coal sales

   (exclusive of items

   shown separately

   below)


988,995


1,259,174



3,082,330


4,080,964

   Freight and handling

   costs


135,931


154,450



448,316


597,157

   Other expenses


120,698


13,357



155,479


43,194

   Depreciation,

   depletion and

   amortization


196,292


238,894



650,021


797,516

   Amortization of

   acquired intangibles,

   net


2,748


(11,682)



908


(64,480)

   Selling, general and

   administrative expenses

   (exclusive of depreciation,








      depletion and

      amortization

      shown separately

      above)


38,899


49,604



120,664


160,626

   Asset impairment

   and restructuring


2,017


13,676



24,358


1,028,610

   Goodwill impairment


253,102


-



253,102


1,525,332

      Total costs and

      expenses


1,738,682


1,717,473



4,735,178


8,168,919











Loss from operations


(547,588)


(83,664)



(875,370)


(2,752,388)











Other income

(expense):










   Interest expense


(62,233)


(47,345)



(182,587)


(139,313)

   Interest income


1,008


1,328



3,133


3,749

   Gain (loss) on early

   extinguishment of

   debt


158


-



(33,039)


-

   Miscellaneous

   income, net


7,277


353



24,131


1,619

      Total other 

      expense, net


(53,790)


(45,664)



(188,362)


(133,945)











Loss before income

taxes 


(601,378)


(129,328)



(1,063,732)


(2,886,333)

Income tax benefit 


143,137


83,182



309,022


576,765

Net loss

$

(458,241)

$

(46,146)


$

(754,710)

$

(2,309,568)





















Loss per common

share:










   Basic loss per

   common share:

$

(2.07)

$

(0.21)


$

(3.42)

$

(10.49)

   Diluted loss per

   common share:

$

(2.07)

$

(0.21)


$

(3.42)

$

(10.49)











Weighted average shares outstanding:










   Weighted average

   shares--basic


220,960,449


220,417,448



220,850,020


220,167,198

   Weighted average

   shares--diluted


220,960,449


220,417,448



220,850,020


220,167,198































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

Nine Months Ended

September 30,


September

30,

2013

June

30,

2013

September

30,

2012

2013

2012







Tons

sold (1):






   Powder

   River

   Basin

10,087

8,785

13,219

28,825

35,152

   Eastern

   steam

6,726

7,152

9,849

21,779

32,368

   Eastern

   metallurgical

5,034

5,620

4,860

15,705

15,353

       Total

21,847

21,557

27,928

66,309

82,873













Average

realized price

per ton sold

(2)(9):






   Powder

   River Basin

$      12.58

$      12.37

$        12.87

$      12.67

$      12.92

   Eastern

   steam

$      63.21

$      62.54

$        66.40

$      62.51

$      66.32

   Eastern

   metallurgical

$      94.73

$    100.95

$      129.96

$      99.70

$    134.15

      Weighted

      average

      total

$      47.09

$      52.10

$        52.12

$      49.65

$      56.24







Coal

revenues:






   Powder

   River Basin

$   126,865

$   108,633

$    170,160

$   365,188

$   454,334

   Eastern

   steam

425,097

447,246

653,948

1,361,387

2,146,788

   Eastern

   metallurgical

476,885

567,297

631,594

1,565,837

2,059,419

      Total coal

      revenues

$ 1,028,847

$ 1,123,176

$ 1,455,702

$ 3,292,412

$ 4,660,541













Adjusted cost

of coal sales

per ton (3)(7)

(8)(11):






   Powder

   River Basin

$        9.29

$      10.08

$        9.40

$        9.79

$      10.39

   East (4)

$      74.52

$      74.42

$      75.93

$      72.73

$      75.34

      Adjusted

      weighted

      average

      total

$      44.40

$      48.20

$      44.44

$      45.37

$      47.79







Adjusted

weighted

average coal

margin per

ton (9)

$        2.69

$        3.90

$        7.68

$        4.28

$        8.45

Adjusted

weighted

average coal

margin

percentage

(10)

5.7%

7.5%

14.7%

8.6%

15.0%







Cost of coal

sales per ton

(3)(7)(11):






   Powder

   River Basin

$        9.29

$      10.08

$        9.40

$        9.79

$      10.39

   East (4)

$      74.93

$      76.41

$      75.84

$      73.60

$      76.65

      Weighted

      average

      total

$      44.62

$      49.38

$      44.39

$      45.86

$      48.54







Weighted

average coal

margin per

ton (5)

$        2.47

$        2.72

$        7.73

$        3.79

$        7.70

Weighted

average coal

margin

percentage

(6)

5.2%

5.2%

14.8%

7.6%

13.7%







Net cash

provided by

operating

activities 

$  111,083

$      2,098

$   170,298

$   178,579

$   305,647

Capital

expenditures 

$    56,123

$    62,820

$     87,348

$   163,129

$   332,592













(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 months ended September 30, 2013, June 30, 2013, and September 30, 2012, and for the nine months

ended September 30, 2013 and September 30, 2012, adjusted cost of coal sales per ton for East includes adjustments

to exclude the impact of certain charges set forth in the table below.

(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 for our Eastern Operations reconciled to their unadjusted amounts is as

follows:








Three months

ended

Nine months

ended


September

30,

2013

June

30,

2013

September

30,

2012

September

30,

2013

September

30,

2012

Cost of coal

sales per ton-

East

$       74.93

$       76.41

$       75.84

$       73.60

$       76.65

Impact of

provision for

regulatory

costs

-

(1.82)

-

(0.62)

-

Impact of

merger-

related

expenses

(0.41)

(0.17)

0.09

(0.25)

(1.26)

Impact of

write-off of

weather-

related

property

damage

-

-

-

-

(0.05)

Adjusted cost

of coal sales

per ton-East

$       74.52

$       74.42

$       75.93

$       72.73

$       75.34













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)










 September 30,

2013 


 December 31,

2012 







Cash and cash equivalents

$

668,102

$

730,723

Trade accounts receivable, net


299,950


418,166

Inventories, net


333,111


398,060

Short-term marketable securities


350,721


297,452

Prepaid expenses and other current assets


475,599


488,821

      Total current assets


2,127,483


2,333,222

Property, equipment and mine development

costs, net


1,897,685


2,219,016

Owned and leased mineral rights and land, net


7,194,116


7,428,192

Goodwill, net


308,651


567,665

Long-term marketable securities


2,250


755

Other non-current assets


566,820


540,956

      Total assets

$

12,097,005

$

13,089,806







Current portion of long-term debt

$

29,016

$

95,015

Trade accounts payable


224,893


255,191

Accrued expenses and other current liabilities


1,002,415


872,402

      Total current liabilities


1,256,324


1,222,608

Long-term debt


3,344,736


3,291,037

Pension and postretirement medical benefit

obligations


1,005,163


1,195,187

Asset retirement obligations


813,443


763,482

Deferred income taxes


790,529


971,001

Other non-current liabilities


514,120


678,676

      Total liabilities


7,724,315


8,121,991







Total stockholders' equity 


4,372,690


4,967,815

      Total liabilities and stockholders' equity

$

12,097,005

$

13,089,806










 As of 




 September 30,

2013 


 December 31,

2012 

Liquidity ($ in 000's):





   Cash and cash equivalents

$

668,102

$

730,723

   Marketable securities with maturities of less

   than one year 


350,721


297,452

   Marketable securities with maturities of

   greater than one year 


2,250


755

      Total cash, cash equivalents and

      marketable securities


1,021,073


1,028,930

   Unused revolving credit and A/R

   securitization facilities (1)


949,379


1,023,300

      Total liquidity

$

1,970,452

$

2,052,230













(1) The revolving credit facility is subject to a minimum liquidity requirement of $300 million and we terminated the A/R

facility in May, 2013.







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)








Nine Months Ended September 30,



2013


2012






Operating activities:





   Net loss

$

(754,710)

$

(2,309,568)

   Adjustments to reconcile net loss to net cash provided by





      operating activities:





      Depreciation, depletion, accretion and amortization


733,282


878,924

      Amortization of acquired intangibles, net


908


(64,480)

      Mark-to-market adjustments for derivatives 


1,312


(12,820)

      Stock-based compensation


18,360


3,945

      Goodwill impairment


253,102


1,525,332

      Asset impairment and restructuring


24,358


1,028,610

      Employee benefit plans, net


43,352


56,033

      Loss on early extinguishment of debt


33,039


-

      Deferred income taxes


(306,488)


(577,744)

      Other, net


(16,020)


(16,271)

   Changes in operating assets and liabilities:





      Trade accounts receivable, net


118,216


186,737

      Inventories, net


61,116


34,826

      Prepaid expenses and other current assets


30,728


170,642

      Other non-current assets


7,052


(729)

      Trade accounts payable


(28,332)


(195,607)

      Accrued expenses and other current liabilities


152,816


(342,838)

      Pension and postretirement medical benefit obligations


(36,647)


(35,667)

      Asset retirement obligations


(31,519)


(37,611)

      Other non-current liabilities


(125,346)


13,933

Net cash provided by operating activities


178,579


305,647






Investing activities:





   Capital expenditures


(163,129)


(332,592)

   Acquisition of mineral rights under federal leases


-


(53,501)

   Purchases of marketable securities


(738,800)


(419,275)

   Sales of marketable securities


680,452


307,137

   Purchase of equity-method investments


-


(10,100)

   Other, net


7,075


7,420

Net cash used in investing activities


(214,402)


(500,911)






Financing activities:





   Proceeds from borrowings on long-term debt


964,369


-

   Principal repayments of long-term debt


(951,894)


(30,000)

   Principal repayments of capital lease obligations 


(12,604)


(3,862)

   Debt issuance costs


(24,317)


(6,737)

   Common stock repurchases


(1,352)


(6,985)

   Other


(1,000)


(830)

Net cash used in financing activities


(26,798)


(48,414)






Net decrease in cash and cash equivalents

$

(62,621)

$

(243,678)

Cash and cash equivalents at beginning of period

$

730,723

$

585,882

Cash and cash equivalents at end of period

$

668,102

$

342,204






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


Nine Months

Ended

September 30,



September

30,

2013


June

30,

2013


September

30,

2012


2013


2012












Net loss

$

(458,241)

$

(185,681)

$

(46,146)

$

(754,710)

$

(2,309,568)

Interest

expense


62,233


60,953


47,345


182,587


139,313

Interest

income


(1,008)


(1,099)


(1,328)


(3,133)


(3,749)

Income

tax benefit


(143,137)


(89,527)


(83,182)


(309,022)


(576,765)

Depreciation,

depletion and

amortization


196,292


214,716


238,894


650,021


797,516

Amortization

of acquired

intangibles,

net


2,748


3,591


(11,682)


908


(64,480)

   EBITDA


(341,113)


2,953


143,901


(233,349)


(2,017,733)

Goodwill

impairment


253,102


-


-


253,102


1,525,332

Asset

impairment

and

restructuring


2,017


11,265


13,676


24,358


1,028,610

Change in

fair value

and

settlement

of derivative

instruments


(1,865)


(10,974)


28,581


(7,671)


(15,385)

Merger

related

expense

(benefit)


119,824


6,432


(7,640)


122,725


52,185

Provision

for

regulatory

costs


-


25,000


-


25,000


-

Loss on

assets

contributed

to equity

affiliate


1,622


8,495


-


10,117


-

(Gain) loss

on early

extinguishment

of debt


(158)


33,197


-


33,039


-

Impact of

write-off of

weather-

related

property

damage


-


-


-


-


2,300

   Adjusted

   EBITDA

$

33,429

$

76,368

$

178,518

$

227,321

$

575,309












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 Loss to Net Loss

(In Thousands Except Shares and Per Share Data)

(Unaudited)














Three Months

Ended

Nine Months

Ended

September 30,


September

30,

2013

June

30,

2013

September

30,

2012

2013

2012







Net loss

$   (458,241)

$   (185,681)

$   (46,146)

$   (754,710)

$   (2,309,568)

Goodwill impairment

253,102

-

-

253,102

1,525,332

Asset impairment

and restructuring

2,017

11,265

13,676

24,358

1,028,610

Change in

fair value

and

settlement

of derivative instruments

(1,865)

(10,974)

28,581

(7,671)

(15,385)

Merger

related

expense

(benefit)

119,824

6,432

(7,640)

122,725

52,185

Provision

for

regulatory costs

-

25,000

-

25,000

-

Loss on

assets contributed

to equity

affiliate

1,622

8,495

-

10,117

-

Gain (loss)

on early

extinguishment

of debt

(158)

33,197

-

33,039

-

Impact of

write-off of

weather-

related

property

damage

-

-

-

-

2,300

Amortization

of acquired

intangibles,

net

2,748

3,591

(11,682)

908

(64,480)

Estimated

income tax

effect of

above

adjustments

(45,873)

(17,944)

(10,401)

(66,494)

(398,519)

Discrete tax

charge from

valuation

allowance

adjustment

(5,070)

5,601

(2,048)

2,614

20,706

Discrete tax

charge from

state

statutory

tax rate and

apportionment

change, net

of federal tax

impact

(2,524)

-

-

(2,524)

(6,397)

   Adjusted

   net loss

$   (134,418)

$   (121,018)

$   (35,660)

$   (359,536)

$   (165,216)







   Weighted

   average

   shares--

   diluted

220,960,449

220,840,989

220,417,448

220,850,020

220,167,198







   Adjusted

   diluted loss

   per

   common 

   share 

$         (0.61)

$         (0.55)

$         (0.16)

$         (1.63)

$         (0.75)







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.

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