- Reports net income for second quarter of 2009 of $15.4 million,
or $0.22 per diluted share - Coal revenues decline due to weak
steel and utility markets - Alpha maintains strong liquidity
position in excess of $1 billion at end of second quarter -
Shareholder vote scheduled for this Friday, July 31st, for
approving merger with Foundation Coal ABINGDON, Va., July 27
/PRNewswire-FirstCall/ -- Alpha Natural Resources, Inc. (NYSE:ANR),
a leading supplier of high-quality Appalachian coal, reported a
decline in revenues and profit compared with last year's record
second quarter, driven by weakened power generation and steel mill
production due to the global economic downturn. For the three
months ended June 30, 2009, Alpha reported coal revenues of $333.9
million and net income of $15.4 million, or $0.22 per diluted
share. This compares with $604.7 million of coal revenues and net
income of $67.1 million, or $0.94 per diluted share, in the second
quarter of 2008, which were record highs for the company. Earnings
before interest, taxes, depreciation, depletion and amortization
(EBITDA) from continuing operations for the quarter just ended
totaled $68.2 million, compared with a record $143.8 million in the
second quarter of 2008. A reconciliation of EBITDA from continuing
operations to income from continuing operations, the most closely
related GAAP measure, is provided in a table included with the
accompanying financial schedules. For the six months ended June 30,
2009, Alpha recorded coal revenues of $758.3 million compared with
$1,027.1 million in the same period of 2008. Net income for the
first half of 2009 was $56.3 million ($0.79 per diluted share),
compared with net income of $92.7 million ($1.35 per diluted share)
in the first half of 2008. EBITDA from continuing operations for
the six months ended June 30, 2009 was $177.8 million, compared
with $232.3 million in the first six months of 2008. "As we
predicted earlier this year, the persistence of weak demand
conditions greatly reduced metallurgical and thermal coal shipments
in the second quarter," said Michael Quillen, Alpha's chairman and
CEO. "While global business conditions certainly aren't anywhere
near where they were at this time last year, we have seen
encouraging early signs of a turnaround in the steel markets and
renewed interest from coal buyers, which had been mostly absent to
this point." Kevin Crutchfield, Alpha's president, added: "Alpha's
been somewhat insulated from the sharp drop in coal-based
electricity generation in this recession due to pricing on thermal
contracts that were settled in vastly more favorable conditions
last year. So pricing has held up for the utility business and
continues to compare quite favorably to last year." Quarterly
Financial & Operating Highlights (in millions, except per-share
and per-ton amounts) Q2 Q2 Q1 2009 2008 2009 ---- ---- ---- Coal
revenues $333.9 $604.7 $424.4 Income from continuing operations
$16.7 $70.6 $46.6 Net income $15.4 $67.1 $41.0 Earnings per diluted
share $0.22 $0.94 $0.58 EBITDA from continuing operations $68.2
$143.8 $109.7 Tons of coal produced and processed 4.0 5.8 5.2 Tons
of coal sold 4.3 7.3 5.2 Coal margin per ton $15.53 $23.24 $23.48
All amounts have been adjusted for discontinued operations and the
second quarter 2008 amounts for Income from continuing operations,
Net income, Earnings per diluted share, and EBITDA from continuing
operations have been adjusted for the adoption of FSP APB 14-1 on
January 1, 2009. A reconciliation of EBITDA from continuing
operations to income from continuing operations is included in a
table accompanying the financial schedules. Financial Performance -
Second Quarter -- Total revenues in the second quarter were $386.2
million, compared with $701.8 million in the same period last year.
Coal revenues were down 45 percent due to substantially lower price
realizations for metallurgical coal and total coal shipments that
were off 3.0 million tons from last year's record level. Other
revenues of $16.9 million were up 52 percent from last year, mostly
because of higher revenues from the company's coal terminaling and
road construction businesses. Freight and handling revenues of
$35.4 million were down $50.6 million period-over-period on the
basis of lower shipments. These revenues are offset in their
entirety by an equivalent cost and have no effect on the company's
profitability. -- Total costs and expenses for the most recent
quarter of $354.4 million were $231.6 million, or 40 percent, lower
than the second quarter of 2008. Cost of coal sales accounted for
$167.2 million of the decline, due to the 41 percent decline in
tons sold period-over-period. Included in costs and expenses for
the quarter just ended was a $14.5 million unrealized gain related
to changes in the fair value of derivative contracts, which
compared with a gain of $6.5 million in the second quarter of 2008.
-- Depreciation, depletion and amortization (DD&A) of $36.4
million was $6.5 million less than last year because of lower
depletion expense associated with reduced mine output. Selling,
general and administrative (SG&A) expenses for the most recent
quarter of $22.9 million were $2.2 million higher than the second
quarter last year, primarily due to professional fees related to
the proposed merger with Foundation Coal. -- Interest expense (net)
increased by $1.5 million in the most recent quarter, mostly
because of higher interest income earned last year. -- In the
second quarter of 2008, the company used the net proceeds from the
public offering of the 2.375% convertible senior notes due 2015 and
the concurrent offering of common stock, in part, to repurchase
Alpha's 10% senior notes due 2012, resulting in a $14.7 million
loss on the early extinguishment of debt. -- Income tax expense for
continuing operations for the quarter just ended was $5.3 million,
compared with $22.0 million in the comparable period last year. The
company's effective income tax rate for the quarter just ended was
24.1 percent, compared with 23.8 percent in the second quarter of
2008. -- Loss from discontinued operations for the second quarter
was $1.3 million, $2.2 million less than the comparable period in
2008. A reduction in the activities associated with the closure of
the Whitetail Kittanning mine was the main reason for the lower
loss. Production and Sales - Second Quarter -- Coal margin per ton,
a key profitability measure for the company, declined 33 percent in
the quarter just ended, as the company's higher-margin
metallurgical shipments slipped and pricing declined approximately
$30 per ton from last year's level, offsetting a 37 percent
improvement in thermal coal pricing period-over-period. Margins
were also impacted by a 5 percent increase in cost of coal sales
per ton. Compared to the first quarter of 2009, coal margin per ton
was off 34 percent. The company's overall average realized price
per ton for the quarter was $77.58, down 6 percent from last year
and 5 percent from the preceding quarter. -- For the quarter just
ended, produced and processed tons (representing company and
contractor-operated mines and coal purchased at our processing
plants) of 4.0 million tons were down 31 percent from the same
period last year and 24 percent lower than the first quarter of
this year, as Alpha adjusted mine production schedules and in some
cases accelerated vacation schedules to meet lower shipping levels.
Reduced demand levels also resulted in cuts to outside coal
purchases of 1.2 million tons period-over-period and 182,000 tons
sequentially. -- The company's average cost of coal sales per ton
in the most recent quarter increased 5 percent from the comparable
period in 2008, and 6 percent sequentially. Produced and processed
costs were impacted by fixed costs applied to lower production
levels, which partly resulted from shutdowns taken at company mines
during the second quarter. The unit cost of outside coal purchases,
which tracks coal market prices, were down nominally from last year
but dropped 18 percent sequentially. Quarterly and YTD Production
and Sales Data (in thousands, except per-ton amounts) Q2 Q2 % Q1 %
YTD YTD % 2009 2008 Change 2009 Change 2009 2008 Change ---- ----
------ ---- ------ ---- ---- ------ Production Produced/ processed
3,988 5,780 -31% 5,223 -24% 9,210 11,436 -19% Purchased 211 1,455
-85% 393 -46% 604 2,520 -76% Total 4,199 7,235 -42% 5,616 -25%
9,814 13,956 -30% Tons Sold Steam 2,830 4,099 -31% 3,146 -10% 5,976
7,806 -23% Metallurgical 1,473 3,237 -54% 2,024 -27% 3,498 5,973
-41% Total 4,303 7,336 -41% 5,170 -17% 9,474 13,779 -31% Coal
revenue/ ton Steam $69.83 $51.13 37% $67.70 3% $68.71 $50.78 35%
Metallurgical $92.46 $122.06 -24% $104.47 -11% $99.41 $105.60 -6%
Total $77.58 $82.43 -6% $82.09 -5% $80.05 $74.54 7% Cost of coal
sales/ton(1) Alpha Mines $60.54 $54.66 11% $55.12 10% $57.60 $52.36
10% Contract Mines(2) $73.56 $71.56 3% $73.86 0% $73.73 $65.35 13%
Total Produced and processed $61.73 $57.04 8% $57.08 8% $59.19
$54.08 9% Purchased $66.66 $67.47 -1% $81.39 -18% $74.69 $64.96 15%
Total $62.05 $59.19 5% $58.61 6% $60.17 $56.10 7% Coal margin per
ton(3) $15.53 $23.24 -33% $23.48 -34% $19.88 $18.44 8% (1) Excludes
changes in fair value of derivative instruments, freight &
handling costs, cost of other revenues, DD&A and SG&A (2)
Includes coal purchased from third parties and processed at our
plants prior to resale (3) Coal revenue per ton less cost of coal
sales per ton *All amounts have been adjusted for discontinued
operations. Year-to-Date Results -- For the first six months of
this year, Alpha posted total revenues of $872.9 million, including
$758.3 million in coal revenues. For the comparable period in 2008,
total revenues were $1,194.8 million and coal revenues were
$1,027.1 million. Lower shipments of both metallurgical and thermal
coal were the primary drivers of the decline in coal revenues.
Other revenues of $33.1 million for the first six months of the
year represented a 47 percent improvement over last year, mostly
because of higher revenues from the company's coal terminaling and
road construction businesses. -- Coal sales volumes for the first
six months of 2009 totaled 9.5 million tons, down 4.3 million tons,
or 31 percent, from the first half of 2008. Metallurgical coal
shipments were off 41 percent while thermal coal shipments were off
23 percent. Coal purchases were curtailed by 76 percent in the
first half of this year compared with last year. Unit cost of coal
sales for the first six months of 2009 was $60.17, up 7 percent
from the first six months of 2008, while the company's overall
average realized price per ton increased by 7 percent. Alpha's coal
margin per ton for the first half of 2009 reached $19.88, 8 percent
better than the first half of 2008. Liquidity and Capital Resources
Cash provided by operations for the quarter ended June 30, 2009 was
$13.8 million, compared with $137.7 million in the second quarter
of 2008. Cash from operations (including discontinued operations)
through the first half of 2009 was $57.6 million, compared with
$179.4 million for the first six months of 2008. The company
continues to manage to a lower level of capital outlays given the
current business environment. Capital expenditures for the quarter
just ended totaled $28.0 million and $46.1 million for the first
six months of 2009, compared with $40.4 million and $74.2 million
for the same periods last year. The company had available liquidity
of $1,029.3 million at June 30, 2009, including cash of $667.4
million and $361.9 million available under the company's credit
facility, subject to limitations described in the facility. Total
debt outstanding at June 30, 2009 was $445.5 million, compared with
$451.3 million at December 31, 2008. Debt for both periods is net
of debt discount in the amount of $82.5 million and $87.8 million,
respectively. Outlook A generally weak quarter for metallurgical
coal ended on a high note with June shipments up 600,000 tons from
May levels. Positive signals from the steel, coke and coking coal
markets colored the back end of the second quarter and have
extended into the current quarter. Among recent developments: -- A
survey of steel buyers published earlier this month pointed to a
sharp change in sentiment that inventory levels have been
sufficiently depleted. Through June, total U.S. steel inventory
levels had dropped more than 44 percent from last year, though
anemic demand from end users has kept days-of-inventory levels
fairly stable. -- With U.S. steel prices up 17 percent from their
May lows, steel manufacturing is slowly ramping up off all-time
lows, with mill capacity utilization crossing the 50 percent
threshold earlier this month. -- Globally, the world export price
for hot rolled steel product in the middle of this month had risen
by $87/metric tonne from the low reached in early May. From news
reports, Alpha estimates about a dozen idle blast furnaces resumed
production in June and July. -- Chinese imports of coking coal have
surged and are running at triple the rate of last year on an
annualized basis while in Australia, China's traditional supply
source, congestion is once again plaguing the country's main
coal-exporting facilities. While the U.S. exports little coal to
China, global seaborne supply and demand and trade patterns are
influenced by these developments including in traditional
U.S.-served markets. -- Currency exchange rate movements favoring
foreign currencies have improved the competitiveness of U.S.
exports and ocean freight rates have recovered somewhat, a trend
that favors U.S. exports to Europe relative to more distant
suppliers. For the current calendar year, Alpha had sold or
committed for sale 5.2 million tons of met coal as of June 16 at an
average realization of approximately $101 per ton, which is down
from approximately $114 on average in March. The drop in realized
price on committed tons resulted from re-categorizing about 1
million tons of higher-priced met coal from the committed category
to uncommitted in cases where the company is in litigation,
arbitration or dispute with parties to the contract. Compensating
for that was approximately 1.5 million tons of new spot business
the company either delivered or committed to deliver this year at
prevailing seaborne market prices. As of mid-June, Alpha had less
than half a million tons of metallurgical coal committed and priced
for 2010, with approximately 9.5 million tons open for contract.
The company anticipates settling some of its 2010 open tonnage in
the second half of this year. There have been increasing
expressions of interest from buyers recently, but the timing of
settlements remains unpredictable. Alpha believes that, as
consumption levels for steel rise from current recessionary levels,
margins for high-quality metallurgical coals will be better in 2010
than currently. Consequently management is evaluating whether to
withhold metallurgical tonnage originally projected for production
in 2009 to await more stability in market demand and pricing. The
outlook for thermal coal is impacted by weak industrial demand for
electricity in the U.S., which has dropped sharply due to the
manufacturing slowdown and is down roughly 15 percent nationwide,
with many industrial centers hit harder. This has helped drive down
total electricity generation in every geographic region and 4
percent nationally, which is a rare occurrence over the past 50
years. In tandem, coal stockpiles at U.S. utilities have mounted
steadily so far this year. It will take time and a recovery of
industrial power generation to bring inventories down to normal
levels. In the face of these headwinds, production rationalization
continues in the U.S. with announced cuts from public companies
totaling an estimated 100 million tons on an annualized basis. Most
industry observers expect reductions to continue until such time as
economic activity rebounds and consumption begins to reach parity
with or exceed supply. Alpha is fully committed and priced on its
2009 thermal coal sales, at an average realization of approximately
$70 per ton, which represents an improvement of approximately 36
percent from last year. As of June 16, the company has committed
and priced approximately 6.3 million tons of thermal coal for 2010
at an average price of approximately $76 per ton, an improvement of
approximately 10 percent from 2009 year-to-date prices. The company
had approximately 10 million tons of 2010 thermal coal uncommitted
and unpriced as of June 16. Alpha moved early and decisively this
year to adjust production to align more closely with slipping
demand levels by reducing overtime, taking shifts out and
selectively shutting in some higher-cost mines. The company also
cut back on third-party contractor production, and through the
first half of the year reduced coal purchases to less than a
quarter of 2008 levels because of diminished blending needs. The
company has capably managed the volume-related impact on cost of
coal sales, with unit costs up only 8 percent in the first half on
a 31 percent drop in sales volumes. If Alpha continues to remain on
its current operating schedules, the company's previously projected
2009 sales of 22 million tons could potentially be reduced by two
to three million tons. Conversely, if market demand improves in the
back half of 2009--particularly for metallurgical coal--Alpha has
sufficient operating flexibility to increase shifts and work weeks,
which would enable it to match prior sales guidance. Merger
Agreement with Foundation Coal On May 11, 2009, Alpha Natural
Resources, Inc. and Foundation Coal Holdings, Inc. entered into an
agreement and plan of merger. A definitive joint proxy
statement/prospectus was mailed to Foundation and Alpha
stockholders on or about June 26, 2009 in connection with the
proposed merger, and each company is scheduled to hold a special
meeting of stockholders to vote on the proposed merger later this
week on July 31, 2009. Assuming stockholders of both companies vote
to adopt the agreement and plan of merger, the merger is expected
to close shortly thereafter. Rather than hold a second quarter
earnings conference call to discuss Alpha's results, management
currently plans to schedule a business and market update call in
the near future for the combined Alpha and Foundation entities. The
call will be announced in advance by press release and will be
webcast. About Alpha Natural Resources Alpha is a leading supplier
of high-quality Appalachian coal to the steel industry, electric
utilities and other industries. Approximately 88 percent of Alpha's
reserve base is high Btu coal and 83 percent is low sulfur,
qualities that are valued by electric utilities that use steam
coal. Alpha is also the nation's largest supplier and exporter of
metallurgical coal, a key ingredient in steel manufacturing. Alpha
and its subsidiaries currently operate mining complexes in four
states, consisting of 52 mines supplying 10 coal preparation and
blending plants. Alpha and its subsidiaries employ more than 3,200
people. ANRG 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: --
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; -- the risk that the businesses of Alpha and Foundation
will not be integrated successfully or such integration may be more
difficult, time-consuming or costly than expected; -- the adoption
of the merger agreement at the Alpha special meeting and at the
Foundation special meeting; -- the ability to obtain governmental
approvals of the merger on the proposed terms and schedule; -- the
timing of the completion of the merger; -- 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; and -- weather conditions or catastrophic
weather-related damage. These and other risks and uncertainties are
discussed in greater detail in Alpha's Annual Report 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. Important Additional Information and Where
to Find It In connection with the proposed Merger, Foundation has
filed with the SEC a registration statement on Form S-4 (commission
file number 333-159801), as amended, that includes a preliminary
joint proxy statement/prospectus of Alpha and Foundation regarding
the proposed Merger. The registration statement was declared
effective by the SEC on June 24, 2009, and a definitive joint proxy
statement/prospectus has been mailed to Foundation and Alpha
stockholders on or about June 26, 2009 in connection with the
proposed merger. INVESTORS ARE URGED TO READ THE JOINT PROXY
STATEMENT/PROSPECTUS (INCLUDING ALL AMENDMENTS AND SUPPLEMENTS
THERETO) AND OTHER DOCUMENTS RELATING TO THE MERGER FILED WITH THE
SEC WHEN THEY BECOME AVAILABLE, BECAUSE THEY WILL CONTAIN IMPORTANT
INFORMATION ABOUT THE PROPOSED MERGER. You may obtain copies of all
documents filed with the SEC regarding the proposed Merger, free of
charge, at the SEC's website (http://www.sec.gov/). Free copies may
also be obtained by accessing Foundation's website
(http://www.foundationcoal.com/) under "Investors/Financial
Information & SEC Filings" or Alpha's website
(http://www.alphanr.com/) under "Investor Relations/SEC Filings",
or by directing a request to Foundation at 999 Corporate Boulevard,
Suite 300, Linthicum Heights, Maryland 21090, Attn: Investor
Relations or to Alpha at One Alpha Place, P.O. Box 2345, Abingdon,
Virginia 24212, Attn: Investor Relations. Participants in
Solicitation Alpha, Foundation and their respective directors,
executive officers and certain other members of management and
employees may be deemed to be participants in the solicitation of
proxies in favor of the proposed Merger. Information regarding the
persons who may, under the rules of the SEC, be considered
participants in the solicitation of proxies in favor of the
proposed Merger may be found in the definitive joint proxy
statement/prospectus filed by Alpha and Foundation with the SEC on
June 25, 2009. You can find information about Alpha's and
Foundation's directors and executive officers in their respective
definitive proxy statements filed with the SEC on April 3, 2009.
You can obtain free copies of these documents from Alpha or
Foundation using the contact information above. NOTES TO
ACCOMPANYING CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
Reconciliation of EBITDA from Continuing Operations EBITDA from
continuing operations is a non-GAAP financial measure used by
management to gauge operating performance. Alpha defines EBITDA
from continuing operations as income from continuing operations
plus interest expense, income tax expense, and depreciation,
depletion and amortization, less interest income. Management
presents EBITDA from continuing operations as a supplemental
measure of the company's performance and debt-service capacity that
may be useful to securities analysts, investors and others. EBITDA
from continuing operations is not, however, a measure of financial
performance under U.S. GAAP and should not be considered as an
alternative to net income, income from continuing operations,
operating income or cash flow as determined in accordance with U.S.
GAAP. Moreover, EBITDA from continuing operations is not calculated
identically by all companies. A reconciliation of EBITDA from
continuing operations to income from continuing operations, the
most directly comparable U.S. GAAP measure, is provided in the
accompanying tables. ALPHA NATURAL RESOURCES, INC. AND SUBSIDIARIES
Condensed Consolidated Statements of Income (Unaudited) (In
thousands, except per share amounts) Three Months Ended Six Months
Ended June 30, June 30, -------- -------- 2009 2008 2009 2008 ----
---- ---- ---- Revenues: Coal revenues $333,857 $604,666 $758,273
$1,027,075 Freight and handling revenues 35,445 86,015 81,499
145,187 Other revenues 16,867 11,086 33,132 22,561 ------ ------
------ ------ Total revenues 386,169 701,767 872,904 1,194,823
------- ------- ------- --------- Costs and expenses: Cost of coal
sales (exclusive of items shown separately below) 267,014 434,244
570,039 772,904 Increase in fair value of derivative instruments,
net (14,531) (6,516) (14,769) (23,200) Freight and handling costs
35,445 86,015 81,499 145,187 Cost of other revenues 7,235 8,763
19,098 16,900 Depreciation, depletion and amortization 36,352
42,848 76,557 85,393 Selling, general and administrative expenses
(exclusive of depreciation and amortization shown separately above)
22,907 20,702 39,373 36,026 ------ ------ ------ ------ Total costs
and expenses 354,422 586,056 771,797 1,033,210 ------- -------
------- --------- Income from operations 31,747 115,711 101,107
161,613 ------ ------- ------- ------- Other income (expense):
Interest expense (10,166) (10,522) (20,019) (20,501) Interest
income 355 2,227 980 2,977 Loss on early extinguishment of debt -
(14,669) - (14,669) Miscellaneous income (expense), net 65 (129)
181 (4) -- ---- --- -- Total other expense, net (9,746) (23,093)
(18,858) (32,197) ------ ------- ------- ------- Income from
continuing operations before income taxes 22,001 92,618 82,249
129,416 Income tax expense (5,323) (22,012) (18,950) (30,820)
------ ------- ------- ------- Income from continuing operations
16,678 70,606 63,299 98,596 ------ ------ ------ ------
Discontinued operations Loss from discontinued operations before
income taxes (2,059) (4,522) (9,310) (7,822) Income tax benefit 740
1,048 2,334 1,888 --- ----- ----- ----- Loss from discontinued
operations (1,319) (3,474) (6,976) (5,934) ------ ------ ------
------ Net income $15,359 $67,132 $56,323 $92,662 ======= =======
======= ======= Basic earnings per share: Income from continuing
operations $0.24 $1.02 $0.91 $1.47 Loss from discontinued
operations (0.02) (0.05) (0.10) (0.09) ----- ----- ----- ----- Net
income $0.22 $0.97 $0.81 $1.38 ===== ===== ===== ===== Diluted
earnings per share: Income from continuing operations $0.24 $0.99
$0.90 $1.44 Loss from discontinued operations (0.02) (0.05) (0.10)
(0.09) ----- ----- ----- ----- Net income $0.22 $0.94 $0.80 $1.35
===== ===== ===== ===== Weighted average shares-basic 69,920,621
69,455,450 69,902,874 67,273,460 ========== ========== ==========
========== Weighted average shares-diluted 70,894,017 71,421,253
70,795,334 68,625,866 ========== ========== ========== ==========
ALPHA NATURAL RESOURCES, INC. AND SUBSIDIARIES Condensed
Consolidated Balance Sheets (In thousands, except share and per
share amounts) June 30, December 31, 2009 2008 ---- ----
(Unaudited) Assets Current assets: Cash and cash equivalents
$667,368 $676,190 Trade accounts receivable, net 158,062 163,674
Notes and other receivables 12,878 15,074 Deferred income taxes
1,361 - Inventories 99,664 86,594 Prepaid expenses and other
current assets 77,397 50,251 ------ ------ Total current assets
1,016,730 991,783 Property, plant, and equipment, net 518,641
550,098 Goodwill 20,547 20,547 Other intangibles, net 2,689 3,835
Deferred income taxes 71,217 83,689 Other assets 62,682 59,886
------ ------ Total assets $1,692,506 $1,709,838 ==========
========== Liabilities and Stockholders' Equity Current
liabilities: Current portion of long-term debt $204,980 $232 Note
payable 7,396 18,288 Trade accounts payable 77,125 102,975 Accrued
expenses and other current liabilities 96,646 140,459 ------
------- Total current liabilities 386,147 261,954 Long-term debt
233,125 432,795 Workers' compensation benefit obligations 10,062
9,604 Postretirement medical benefit obligations 55,905 60,211
Asset retirement obligation 92,658 90,565 Other liabilities 46,800
59,017 ------ ------ Total liabilities 824,697 914,146 -------
------- Commitments and contingencies 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, 71,468,407 issued and 71,361,470 outstanding at June
30, 2009 and 70,513,880 issued and outstanding at December 31, 2008
715 705 Additional paid-in capital 492,162 484,261 Accumulated
other comprehensive loss (20,197) (30,107) Treasury stock, at cost:
106,937 and 0 shares at June 30, 2009 and December 31, 2008,
respectively (2,027) - Retained earnings 397,156 340,833 -------
------- Total stockholders' equity 867,809 795,692 ------- -------
Total liabilities and stockholders' equity $1,692,506 $1,709,838
========== ========== ALPHA NATURAL RESOURCES, INC. AND
SUBSIDIARIES Condensed Consolidated Statements of Cash Flows
(Unaudited) (In thousands) Six Months Ended June 30, -------- 2009
2008 ---- ---- Operating activities: Net income $56,323 $92,662
Adjustments to reconcile net income to net cash provided by
operating activities: Depreciation, depletion and amortization
79,196 89,170 Amortization of debt issuance costs 1,296 1,270
Accretion of asset retirement obligation 4,143 3,708 Accretion of
convertible debt discount 5,310 2,594 Loss on early extinguishment
of debt - 14,669 Share-based compensation 7,471 14,575 Gain on sale
of fixed assets and investments (683) (1,789) Change in fair value
of derivative instruments (14,769) (23,200) Deferred income tax
expense 7,838 5,841 Other 64 (569) Changes in operating assets and
liabilities: Trade accounts receivable 5,612 (73,316) Notes and
other receivables 909 (1,642) Inventories (13,070) (14,638) Prepaid
expenses and other current assets (31,646) 21,488 Other assets
1,591 3,048 Trade accounts payable (23,586) 28,830 Accrued expenses
and other current liabilities (30,578) 16,759 Workers' compensation
benefits obligations 504 (164) Postretirement medical benefits
obligations 2,932 4,497 Asset retirement obligation (2,261) (2,650)
Other liabilities 980 (1,706) --- ------ Net cash provided by
operating activities $57,576 $179,437 ------- -------- Investing
activities: Capital expenditures $(46,111) $(74,207) Proceeds from
disposition of property, plant, and equipment 387 2,775 Proceeds
from sale of investment in coal terminal - 1,500 Investment in
Dominion Terminal Facility - (2,824) Purchase of acquired companies
(1,750) - Other (75) (1,095) --- ------ Net cash used in investing
activities $(47,549) $(73,851) -------- -------- Financing
activities: Repayments of note payable $(10,892) $(12,485) Proceeds
from issuance of convertible debt - 287,500 Repayments on long-term
debt (232) (176,028) Proceeds from issuance of common stock, net -
164,666 Debt issuance costs (5,277) (10,861) Premium payment on
early extinguishment of debt - (10,703) Tax benefit from
share-based compensation - 1,790 Common stock repurchases (2,027) -
Proceeds from exercise of stock options 230 3,128 Other (651) (464)
---- ---- Net cash provided by (used in) financing activities
$(18,849) $246,543 -------- -------- Net increase (decrease) in
cash and cash equivalents $(8,822) $352,129 Cash and cash
equivalents at beginning of period 676,190 54,365 ------- ------
Cash and cash equivalents at end of period $667,368 $406,494
======== ======== The following table reconciles EBITDA from
continuing operations to income from continuing operations, the
most directly comparable GAAP measure: Three Months Ended Six
Months Ended June 30, June 30, -------- -------- 2009 2008 2009
2008 ---- ---- ---- ---- (In thousands) Income from continuing
operations $16,678 $70,606 $63,299 $98,596 Interest expense 10,166
10,522 20,019 20,501 Interest income (355) (2,227) (980) (2,977)
Income tax expense 5,323 22,012 18,950 30,820 Depreciation,
depletion and amortization 36,352 42,848 76,557 85,393 ------
------ ------ ------ EBITDA from continuing operations $68,164
$143,761 $177,845 $232,333 ======= ======== ======== ========
DATASOURCE: Alpha Natural Resources, Inc. CONTACT: Ted Pile of
Alpha Natural Resources, +1-276-623-2920 Web Site:
http://www.alphanr.com/
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