2014

Arch Coal, Inc. Reports Third Quarter 2012 Results Quarterly Adj. EBITDA increased to $257 million, 21% higher than a year ago

Shipments up 19% versus second quarter 2012 on improving thermal trends

Company reduces cost-per-ton guidance in key regions for full year 2012

ST. LOUIS, Oct. 26, 2012 /PRNewswire/ --











Earnings Highlights



Quarter Ended


Nine Months Ended

In $ millions, except per share data


9/30/12


9/30/11



9/30/12


9/30/11











Revenues


$1,087.6


$1,198.7



$3,190.8


$3,057.1

Income (Loss) from Operations


136.0


76.3



(398.9)


273.8

Net Income (Loss) 1


45.8


8.9



(388.3)


70.8

Diluted EPS/LPS


0.22


0.04



(1.83)


0.39

Adjusted Net Income 1,2


41.8


7.4



12.0


143.9

Adjusted Diluted EPS 2


0.20


0.03



0.06


0.78

Adjusted EBITDA 2


$256.5


$211.5



$617.3


$650.7











1/- Net income attributable to ACI.










2/- Defined and reconciled under "Reconciliation of non-GAAP measures."


























Arch Coal, Inc. (NYSE: ACI) today reported net income of $46 million, or $0.22 per diluted share, for the third quarter of 2012 compared with net income of $9 million, or $0.04 per diluted share, for the third quarter of 2011.  Excluding acquired sales contract amortization, exit costs arising from mine closures and the related tax effect of these items, third quarter adjusted earnings were $0.20 per share.

(Logo: http://photos.prnewswire.com/prnh/20120727/CG47668LOGO)

Arch shipped 37.5 million tons of coal in the third quarter of 2012, a decrease of 6 percent when compared with the third quarter of 2011 but an increase of 19 percent versus the second quarter of 2012.  Adjusted earnings before interest, taxes, depreciation, depletion and amortization ("EBITDA") totaled $257 million in the third quarter of 2012, 21 percent higher than in the prior-year quarter and 41 percent higher than in the second quarter of 2012.  Revenues totaled $1.1 billion in the third quarter of 2012, a decline versus the prior-year quarter but an increase when compared with the second quarter of 2012.  Results for the third quarter of 2012 include an $80 million benefit from the reversal of a previously recorded legal contingency, or $54 million when adjusted for taxes and previously accrued interest expense.

"Arch's third quarter performance reflects improvement over the second quarter due to our cost control efforts and modestly better domestic thermal markets driven by favorable summer weather and higher competing fuel prices," said John W. Eaves, Arch's president and chief executive officer.  "During the third quarter, we saw margins in both of our western regions expand due to increased shipment levels, higher price realizations and strong cost control." 

For the first nine months of 2012, Arch generated adjusted EBITDA of $617 million versus $651 million in the prior-year period.  Revenues rose 4 percent to $3.2 billion year-to-date in 2012.  Over this same time period, cash flow from operations totaled $356 million, while capital expenditures were $304 million, resulting in free cash flow of $52 million.

"Looking ahead, we believe global coal markets are in the process of correcting – with the domestic thermal market building some momentum while metallurgical markets are bottoming out," said Eaves.  "Because we expect global coal market conditions to remain challenging in 2013, Arch is executing a strategy to successfully navigate this weak market.  Our plan is focused on improving operational efficiency, optimizing our asset base and preserving liquidity so we are well positioned to capitalize as the market recovers."

Executing Our Plan
"We are prudently matching our production levels to market demand, reducing costs and lowering capital spending," said Paul A. Lang, Arch's executive vice president and chief operating officer.  "We anticipate that 2013 will be a difficult year for the coal industry, but we believe our ongoing efforts will allow Arch to emerge from this cyclical downturn as an even stronger company."

In the third quarter, Arch took steps to rationalize its higher-cost metallurgical coal supply, including idling three smaller mines in Appalachia.  The operations affected were Bismarck, Carlos and Imperial, which produced a total of 1.0 million tons of coal in 2011.  At the same time, Arch continued to optimize its diverse, low-cost asset portfolio with the build out of the high-quality Leer metallurgical coal mine in the region.  The Leer mine's development is on track, with the continuous miner equipment and preparation plant now in operation.  On Oct. 23, 2012, Leer shipped its first train, with customers in Europe as the coal's final destination.  Arch currently expects the longwall at Leer to start up in the third quarter of 2013.

Arch also continued to demonstrate strong cost control at its operations during the third quarter, driven by ongoing efforts to improve operational efficiencies across all regions, as well as increased shipment levels in the Powder River Basin and in the Western Bituminous Region.  As a result, the company has further reduced its full year 2012 cash cost guidance range in each of its key operating regions.

Arch continues to evaluate current market conditions when assessing its future capital expenditure plans.  The company expects capital spending of approximately $350 million for 2013, below its estimated 2012 capital spending range of $410 million to $430 million.

Enhancing Liquidity
At Sept. 30, 2012, Arch had $650 million in available funds on its balance sheet, comprising $551 million in cash and $99 million in short-term interest-bearing securities.  The company also had more than $350 million of additional liquidity, primarily consisting of available capacity under its revolving credit facility and other short-term borrowing programs, bringing its total liquidity position at Sept. 30 to more than $1 billion.  Moreover, the company has no significant debt maturities before 2016.

"During the third quarter, we increased our cash position by more than $135 million and ended the quarter with no borrowings under our revolver," said John T. Drexler, Arch's senior vice president and chief financial officer.  "We are free cash flow positive year-to-date in 2012, and expect to end the year with roughly $600 million of cash and available funds on hand.  We remain committed to preserving and enhancing our liquidity as we position Arch to successfully navigate the current market conditions." 

Core Values
Arch operations received nine national, multi-state and statewide safety and environmental awards in the third quarter of 2012.  Most significantly, the Dugout Canyon mine in Utah was honored with the prestigious Sentinels of Safety award as the nation's safest operation in the large underground mine category for 2011.  Also in the third quarter, Arch was the first mining company honored with the Conservation Legacy Award from the National Museum of Forest Service History for the company's voluntary environmental efforts on public and private lands. 

Arch's third quarter 2012 lost-time safety incident rate of 0.67 per 200,000 employee-hours worked was three times better than the national coal industry average and 14 percent better than the company achieved in the third quarter of 2011.  Six of Arch's operations and facilities attained A Perfect Zero – a dual goal of operating without a reportable safety incident or an SMCRA environmental violation – for the three months ended Sept. 30, 2012. 

"We commend the hard work by our employees at the six locations that achieved A Perfect Zero," said Lang.  "We are always striving for continuous improvement in our safety performance – with a goal of achieving A Perfect Zero at all of our operations, every year."

Operational Results
"Strong cost control in the third quarter led to higher cash margins in Arch's western operating regions," said Eaves.  "In Appalachia, the effect of lower thermal volumes drove third quarter cash costs higher versus the second quarter.  In addition, we shipped 2.1 million tons of metallurgical coal from Appalachia in the third quarter – 11 percent more than in the second quarter – and we expect to ship 7.5 million tons of coal into metallurgical markets during 2012."












Arch Coal, Inc.



3Q12



2Q12



3Q11












Tons sold (in millions)


37.5



31.5



39.9


Average sales price per ton


$25.57



$28.44



$27.87


Cash cost per ton


$20.16



$22.42



$21.59


Cash margin per ton


$5.41



$6.02



$6.28


Total operating cost per ton 


$23.50



$26.57



$25.03


Operating margin per ton


$2.07



$1.87



$2.84












Consolidated results may not tie to regional breakout due to exclusion of other assets, rounding.


Operating cost per ton includes depreciation, depletion and amortization per ton.




Amounts reflected in this table have been adjusted for certain transactions.  





For a description of adjustments, refer to the regional schedule at http://investor.archcoal.com











Third quarter 2012 consolidated per-ton operating margin expanded 11 percent versus the second quarter.  Sales volumes increased 19 percent in the third quarter versus the prior-quarter period, driven by increased shipments in the company's western operating regions.  Consolidated sales price per ton declined 10 percent over the same time period, reflecting a larger percentage of Powder River Basin tons in Arch's overall volume mix as well as lower volumes shipped from Appalachia.  Compared with the second quarter, consolidated cash cost per ton declined 10 percent in the third quarter, driven by strong operating performances in the company's western regions and a larger percentage of lower-cost tons in the company's overall volume mix.   












Powder River Basin




3Q12



2Q12



3Q11












Tons sold (in millions)


27.7



21.8



28.8


Average sales price per ton


$13.79



$13.65



$13.62


Cash cost per ton


$10.92



$11.01



$10.68


Cash margin per ton


$2.87



$2.64



$2.94


Total operating cost per ton 


$12.51



$12.71



$12.16


Operating margin per ton


$1.28



$0.94



$1.46












Operating cost per ton includes depreciation, depletion and amortization per ton.


Amounts reflected in this table have been adjusted for certain transactions.  














In the Powder River Basin, third quarter 2012 operating margin per ton increased 36 percent versus the second quarter, due to higher average realized prices and lower costs per ton.  Sales volumes increased 27 percent in the third quarter versus the prior-quarter period as shipments rose on improving trends in domestic thermal markets.  Average sales price rose $0.14 per ton over the same time period, due to a larger percentage of higher-priced tons in the company's regional volume mix.  Cash cost decreased $0.09 per ton in the third quarter versus the second quarter, benefiting from the effect of higher shipment levels and strong cost control.   












Appalachia



3Q12



2Q12



3Q11












Tons sold (in millions)


4.7



5.2



6.3


Average sales price per ton


$83.84



$85.45



$86.50


Cash cost per ton


$69.19



$67.78



$67.62


Cash margin per ton


$14.65



$17.67



$18.88


Total operating cost per ton 


$82.41



$81.85



$79.23


Operating margin per ton


$1.43



$3.60



$7.27












Operating cost per ton includes depreciation, depletion and amortization per ton.



Amounts reflected in this table have been adjusted for certain transactions.  















In Appalachia, Arch recorded an operating margin of $1.43 per ton in the third quarter of 2012 versus $3.60 per ton in the second quarter.  Sales volumes declined 10 percent in the third quarter compared with the second quarter, as lower thermal sales offset higher metallurgical coal shipments.  Average sales price per ton declined over the same time period, driven by lower prices on metallurgical shipments.  Third quarter cash cost per ton increased slightly versus the prior-quarter period, due to the effect of lower volume levels and a larger percentage of metallurgical sales in the company's regional volume mix.  Third quarter 2012 cash cost per ton in Appalachia would have been $1.35 per ton lower if the impact of previously announced idled operations were excluded.












Western Bituminous Region




3Q12



2Q12



3Q11












Tons sold (in millions)


4.6



4.0



4.2


Average sales price per ton*


$35.50



$33.35



$36.09


Cash cost per ton*


$23.94



$24.25



$25.77


Cash margin per ton


$11.56



$9.10



$10.32


Total operating cost per ton*


$27.84



$28.88



$30.29


Operating margin per ton


$7.66



$4.47



$5.80












*Sales prices and costs in the region are presented f.o.b. point for domestic customers.


Operating cost per ton includes depreciation, depletion and amortization per ton.


Amounts reflected in this table have been adjusted for certain transactions.  














In the Western Bituminous Region, third quarter 2012 operating margin per ton expanded 71 percent when compared with the second quarter.  Shipments rose in the third quarter versus the prior-quarter period despite the planned longwall move at Skyline, as mine inventory across the region was reduced due to improving domestic demand.  Average sales price increased $2.15 per ton over the same time period, benefitting from a favorable mix of customer shipments.  Third quarter cash cost decreased $0.31 per ton versus the second quarter, reflecting solid cost control across the operations, particularly at Arch's West Elk and Sufco mines.  Looking ahead, the longwall at Skyline is expected to restart at the end of October.   

Market Trends
Arch believes several factors will help rebalance global coal market fundamentals and set the stage for the next rebound:

  • Prompt month natural gas prices have risen nearly 25 percent since the end of August and the forward curve is above $4 per million Btu, making western coals a competitively priced fuel for power generation.
  • While U.S. coal demand for power generation is set to decline by more than 100 million tons in 2012 due to one of the mildest winters on record and decade-low natural gas prices, Arch believes coal consumption will grow again in 2013.  Coal demand could regain ground lost to competing fuels, including natural gas and hydroelectric power, and should increase on more normal winter temperatures.
  • Coal stockpiles at U.S. power generators have declined from the record levels set in May 2012, and internal estimates suggest customer stockpiles could dip below 180 million tons at year's end.  Over the course of 2013, Arch expects further liquidation of coal inventories at domestic power generators, helping to set the stage for a more balanced market. 
  • U.S. coal exports are projected to reach a record 125 million tons in 2012 even with anticipated slowing in the fourth quarter.  This record level would represent a more than doubling of coal exports since 2007.  During the next five years, Arch continues to expect U.S. exports to grow meaningfully as domestic port capacity is expanded, new power plants are built around the world and growing global infrastructure needs bolster steel and metallurgical coal demand.
  • Despite strong hydroelectric generation year-to-date and recent reductions in steel production in China, that country is on pace to import between 220 million and 225 million metric tonnes of coal in 2012.  In addition, India's recent blackouts may spur reform in the power and coal sectors, and encourage incremental infrastructure investment and coal imports over time.  Longer term, roughly 85 percent of the world's 7 billion people will live in emerging economies – with 1.3 billion estimated to move into the middle class by 2020.  This class migration will drive resource demand over the next decade. 
  • Metallurgical markets are weak currently, as global steel demand has been temporarily constrained by the economic recession in Europe and slower-than-expected growth in China.  However, announced infrastructure spending in China and Brazil and stimulus spending in developed economies – along with global production curtailments and delayed mining capital investments – should tighten metallurgical markets in the future.

"While our third quarter results benefitted from the modest improvement in domestic thermal demand, the uncertainty in global and domestic economies could affect coal markets in 2013," said Eaves.  "Longer term, we remain encouraged by the opportunities in seaborne coal markets and our forecast of 2 billion tonnes of seaborne coal demand by 2020 has not changed."  

Company Outlook




2012

2013




 Tons 

 $ per ton 

 Tons 

 $ per ton 

Sales Volume (in million tons)






Thermal



 129-135




Metallurgical



7.5











Powder River Basin






Committed, Priced



105.7

$13.63

70.0

$14.14

Committed, Unpriced


0.4


10.9


Total Committed



106.1


80.9









Average Cash Cost




$11.00 - $11.30










Western Bituminous






Committed, Priced



14.9

$35.75

10.7

$39.10

Committed, Unpriced


0.2


0.6


Total Committed



15.1


11.3









Average Cash Cost




$23.00 - $25.50










Appalachia







Committed, Priced Thermal


10.9

$66.26

4.4

$62.12

Committed, Unpriced Thermal


0.3


0.3


Total Committed Thermal


11.2


4.7









Committed, Priced Metallurgical*


7.2

$115.01

0.4

$117.55

Committed, Unpriced Metallurgical


0.1


0.3


Total Committed Metallurgical


7.3


0.7









Average Cash Cost




$68.00 - $71.00










Illinois Basin







Committed, Priced



2.2

$41.49

1.9

$41.72

Average Cash Cost




$34.00 - $36.00










*Includes tonnage shortfall and carry over into 2013











Corporate (in $ millions)






D,D&A



 $500 - $515 



S,G&A



 $125 - $135 



Interest Expense 



 $300 - $310 



Capital Expenditures


 $410 - $430 



"On the marketing front, we continue to manage our exposure by layering in sales as appropriate while maintaining leverage to capture potential upside," said Eaves.  "We are also working with some metallurgical and thermal customers to shift previously committed tons into 2013, and are selectively placing small tonnage into the export market for the fourth quarter."

"Looking ahead, we will prudently manage our capital, control our costs and preserve our liquidity under current market conditions," added Eaves.  "We will also retain the flexibility to respond to improving coal market fundamentals, which we believe will occur over the course of 2013 and 2014.  As market conditions improve, Arch will leverage its superior low-cost asset base to create substantial value for shareholders."

A conference call regarding Arch Coal's third quarter 2012 financial results will be webcast live today at 11 a.m. Eastern time.  The conference call can be accessed via the "investor" section of the Arch Coal website (http://investor.archcoal.com).

U.S.-based Arch Coal is a top five global coal producer and marketer.  Arch is the most diversified American coal company, with mining complexes across every major U.S. coal supply basin.  Its core business is supplying cleaner-burning, low-sulfur thermal and metallurgical coal to power generators and steel manufacturers on five continents.

Forward-Looking Statements:  This press release contains "forward-looking statements" – that is, statements related to future, not past, events.  In this context, forward-looking statements often address our expected future business and financial performance, and often contain words such as "expects," "anticipates," "intends," "plans," "believes," "seeks," or "will."  Forward-looking statements by their nature address matters that are, to different degrees, uncertain.  For us, particular uncertainties arise from changes in the demand for our coal by the domestic electric generation industry; from legislation and regulations relating to the Clean Air Act and other environmental initiatives; from operational, geological, permit, labor and weather-related factors; from fluctuations in the amount of cash we generate from operations; from future integration of acquired businesses; and from numerous other matters of national, regional and global scale, including those of a political, economic, business, competitive or regulatory nature.  These uncertainties may cause our actual future results to be materially different than those expressed in our forward-looking statements.  We do not undertake to update our forward-looking statements, whether as a result of new information, future events or otherwise, except as may be required by law.  For a description of some of the risks and uncertainties that may affect our future results, you should see the risk factors described from time to time in the reports we file with the Securities and Exchange Commission.

Arch Coal, Inc. and Subsidiaries

Condensed Consolidated Statements of Operations

(In thousands, except per share data)










 Three Months Ended


 Nine Months Ended


  September 30, 


  September 30, 


2012


2011


2012


2011


 (Unaudited) 


 (Unaudited) 









Revenues

$  1,087,618


$  1,198,673


$  3,190,807


$  3,057,139









Costs, expenses and other 








  Cost of sales

896,809


952,850


2,628,939


2,322,124

  Depreciation, depletion and amortization

126,838


139,547


399,672


320,320

  Amortization of acquired sales contracts, net

(4,093)


(12,698)


(22,561)


(5,492)

  Change in fair value of coal derivatives and coal trading activities, net

5,840


8,360


(29,827)


9,248

  Selling, general and administrative expenses

33,266


33,275


99,305


92,749

  Legal contingencies 

(79,532)


-


(79,532)


-

  Mine closure and asset impairment costs

(2,194)


-


523,568


7,316

  Goodwill impairment

-


-


115,791


-

  Acquisition and transition costs - ICG

-


4,694


-


46,044

  Other operating income, net

(25,276)


(3,611)


(45,605)


(9,018)


951,658


1,122,417


3,589,750


2,783,291

















      Income (loss) from operations

135,960


76,256


(398,943)


273,848









Interest expense, net:








  Interest expense 

(75,710)


(77,694)


(229,210)


(154,523)

  Interest and investment income 

1,459


840


3,568


2,341


(74,251)


(76,854)


(225,642)


(152,182)

Other nonoperating expenses








  Bridge financing costs related to ICG

-


-


-


(49,490)

  Net loss resulting from early retirement and refinancing of debt

-


(1,708)


(19,042)


(1,958)


-


(1,708)


(19,042)


(51,448)

      Income (loss) before income taxes

61,709


(2,306)


(643,627)


70,218

Provision for (benefit from) income taxes

15,958


(11,427)


(255,363)


(1,407)

      Net income (loss)

45,751


9,121


(388,264)


71,625

      Less: Net income attributable to noncontrolling interest

-


(231)


(268)


(822)

      Net income (loss) attributable to Arch Coal, Inc.

$      45,751


$        8,890


$   (388,532)


$      70,803









Earnings (loss) per common share 








Basic earnings (loss) per common share

$          0.22


$          0.04


$         (1.83)


$          0.39

Diluted earnings (loss) per common share

$          0.22


$          0.04


$         (1.83)


$          0.39









Weighted average shares outstanding








  Basic

212,053


211,337


211,931


182,898

  Diluted

212,076


211,974


211,931


183,850









Dividends declared per common share  

$          0.03


$          0.11


$          0.17


$          0.32









Adjusted EBITDA (A)

$    256,511


$    211,458


$    617,259


$    650,739









(A)Adjusted EBITDA is defined and reconciled under "Reconciliation of Non-GAAP Measures" later in this release.


 

Arch Coal, Inc. and Subsidiaries

Condensed Consolidated Balance Sheets

(In thousands)






  September 30, 


 December 31, 


2012


2011


 (Unaudited) 

Assets




  Current assets




    Cash and cash equivalents

$         550,756


$       138,149

    Restricted cash

3,450


10,322

    Short term investments

99,359


-

    Trade accounts receivable

277,634


380,595

    Other receivables

71,114


88,584

    Inventories

391,526


377,490

    Prepaid royalties

12,120


21,944

    Deferred income taxes

65,395


42,051

    Coal derivative assets

40,837


13,335

    Other

67,495


110,304

                              Total current assets

1,579,686


1,182,774





  Property, plant and equipment, net

7,372,063


7,949,150





  Other assets




    Prepaid royalties

85,842


86,626

    Goodwill

480,312


596,103

    Equity investments

237,645


225,605

    Other

180,306


173,701

                              Total other assets

984,105


1,082,035

                              Total assets

$       9,935,854


$   10,213,959





Liabilities and Stockholders' Equity




  Current liabilities




    Accounts payable

$         304,442


$       383,782

    Coal derivative liabilities

3,498


7,828

    Accrued expenses and other current liabilities

355,448


348,207

    Current maturities of debt and short-term borrowings

115,695


280,851

                              Total current liabilities

779,083


1,020,668

  Long-term debt

4,465,445


3,762,297

  Asset retirement obligations

426,044


446,784

  Accrued pension benefits

45,160


48,244

  Accrued postretirement benefits other than pension

41,061


42,309

  Accrued workers' compensation

85,251


71,948

  Deferred income taxes

746,079


976,753

  Other noncurrent liabilities

182,464


255,382

                              Total liabilities

6,770,587


6,624,385





    Redeemable noncontrolling interest

-


11,534





 Stockholders' Equity




    Common stock

2,141


2,136

    Paid-in capital

3,024,435


3,015,349

    Treasury stock, at cost

(53,848)


(53,848)

    Retained earnings 

197,749


622,353

    Accumulated other comprehensive loss

(5,210)


(7,950)

                              Total stockholders' equity

3,165,267


3,578,040

                              Total liabilities and stockholders' equity

$9,935,854


$   10,213,959

 

Arch Coal, Inc. and Subsidiaries

Condensed Consolidated Statements of Cash Flows

(In thousands)










 Nine Months Ended September 30, 


2012


2011


(Unaudited)

Operating activities




Net income (loss)

$ (388,264)


$    71,625

Adjustments to reconcile to cash  provided by operating activities:




  Depreciation, depletion and amortization

399,672


320,320

  Amortization of acquired sales contracts, net

(22,561)


(5,492)

  Bridge financing costs related to ICG

-


49,490

  Net loss resulting from early retirement of debt and refinancing activities

19,042


1,958

  Noncash mine closure and asset impairment costs

501,942


7,316

  Goodwill impairment

115,791


-

  Prepaid royalties expensed

19,802


26,880

  Employee stock-based compensation expense

9,435


9,019

  Amortization relating to financing activities

14,345


9,854

  Changes in:




      Receivables

102,252


(35,874)

      Inventories

(16,635)


(23,716)

      Coal derivative assets and liabilities

(29,523)


15,199

      Accounts payable, accrued expenses and other current liabilities

(51,968)


3,742

      Income taxes, net

22,048


(21,971)

      Deferred income taxes

(255,530)


17,062

      Other

(83,453)


25,955





    Cash provided by operating activities

356,395


471,367





Investing activities




Acquisition of ICG, net of cash acquired

-


(2,894,339)

Change in restricted cash

6,872


(5,939)

Capital expenditures

(303,968)


(215,899)

Proceeds from dispositions of property, plant and equipment

22,624


25,133

Purchases of short term investments

(99,628)


-

Investments in and advances to affiliates

(12,685)


(56,827)

Purchase of noncontrolling interest

(17,500)


-

Additions to prepaid royalties

(9,192)


(26,135)





    Cash used in investing activities

(413,477)


(3,174,006)





Financing activities




Proceeds from the issuance of senior notes

-


2,000,000

Proceeds from term note

1,386,000


-

Proceeds from the issuance of common stock, net

-


1,267,776

Payments to retire debt

(452,806)


(604,096)

Net increase (decrease) in borrowings under lines of credit and commercial paper program 

(381,300)


283,096

Payments on term note

(3,500)


-

Net payments on other debt

(13,078)


(8,792)

Debt financing costs

(34,686)


(114,587)

Dividends paid

(36,072)


(57,470)

Issuance of common stock under incentive plans 

5,131


1,628





    Cash provided by financing activities

469,689


2,767,555





Increase in cash and cash equivalents

412,607


64,916

Cash and cash equivalents, beginning of period

138,149


93,593





Cash and cash equivalents, end of period

$ 550,756


$  158,509

 

Arch Coal, Inc. and Subsidiaries

Schedule of Consolidated Debt

(In thousands)








September 30,


December 31,



2012


2011



(Unaudited)




Indebtedness to banks under credit facilities


$   100,000


$   481,300

Term loan due 2018


1,383,375


-

6.75% senior notes ($450.0 million face value) due 2013


-


450,971

8.75% senior notes ($600.0 million face value) due 2016


590,475


588,974

7.00% senior notes due in 2019 at par


1,000,000


1,000,000

7.25% senior notes due 2020 at par


500,000


500,000

7.25% senior notes due 2021 at par


1,000,000


1,000,000

Other


7,290


21,903



4,581,140


4,043,148

Less: current maturities of debt and short-term borrowings


115,695


280,851

Long-term debt


$4,465,445


$3,762,297

 

Arch Coal, Inc. and Subsidiaries

Reconciliation of Non-GAAP Measures

(In thousands)










Included in the accompanying release, we have disclosed certain non-GAAP measures as defined by Regulation G. 

The following reconciles these items to net income and cash flows as reported under GAAP.










Adjusted EBITDA


















Adjusted EBITDA is defined as net income attributable to the Company before the effect of net interest expense, income taxes, depreciation, depletion and amortization, and the amortization of acquired sales contracts.  Adjusted EBITDA may also be adjusted for items that may not reflect the trend of future results.










Adjusted EBITDA is not a measure of financial performance in accordance with generally accepted accounting principles, and items excluded from Adjusted EBITDA are significant in understanding and assessing our financial condition. Therefore, Adjusted EBITDA should not be considered in isolation, nor as an alternative to net income, income from operations, cash flows from operations or as a measure of our profitability, liquidity or performance under generally accepted accounting principles. We believe that Adjusted EBITDA presents a useful measure of our ability to incur and service debt based on ongoing operations. Furthermore, analogous measures are used by industry analysts to evaluate our operating performance. In addition, acquisition related expenses are excluded to make results more comparable between periods.  Investors should be aware that our presentation of Adjusted EBITDA may not be comparable to similarly titled measures used by other companies. The table below shows how we calculate Adjusted EBITDA.





















 Three Months Ended


 Nine Months Ended



 September 30,


 September 30,



2012


2011


2012


2011



(Unaudited)


Net income (loss) 

$  45,751


$    9,121


$(388,264)


$  71,625


   Income tax expense (benefit)

15,958


(11,427)


(255,363)


(1,407)


     Interest expense, net

74,251

-

76,854


225,642


152,182


     Depreciation, depletion and amortization 

126,838


139,547


399,672


320,320


     Amortization of acquired sales contracts, net

(4,093)


(12,698)


(22,561)


(5,492)


     Acquisition and transition costs

-


8,584


-


55,569


     Mine closure and asset impairment costs

(2,194)


-


523,568


7,316


     Goodwill impairment

-


-


115,791


-


     Other nonoperating expenses

-


1,708


19,042


51,448


     Net income attributable to noncontrolling interest

-


(231)


(268)


(822)











Adjusted EBITDA

$256,511


$211,458


$ 617,259


$650,739





























Adjusted net income and adjusted diluted earnings per common share











Adjusted net income and adjusted diluted earnings per common share are adjusted for the after-tax impact of acquisition related costs and are not measures of financial performance in accordance with generally accepted accounting principles. We believe that adjusted net income and adjusted diluted earnings per common share better reflect the trend of our future results by excluding items relating to significant transactions. The adjustments made to arrive at these measures are significant in understanding and assessing our financial condition. Therefore, adjusted net income and adjusted diluted earnings per share should not be considered in isolation, nor as an alternative to net income or diluted earnings per common share under generally accepted accounting principles.












 Three Months Ended


 Nine Months Ended



 September 30,


 September 30,



2012


2011


2012


2011



(Unaudited)


Net income (loss) attributable to Arch Coal

$  45,751


$    8,890


$(388,532)


$  70,803











      Amortization of acquired sales contracts, net 

(4,093)


(12,698)


(22,561)


(5,492)


      Acquisition and transition costs 

-


8,584


-


55,569


      Mine closure and asset impairment costs 

(2,194)


-


523,568


7,316


      Goodwill impairment 

-


-


115,791


-


      Other nonoperating expenses

-


1,708


19,042


51,448


      Tax impact of adjustments

2,326


890


(235,261)


(35,709)











Adjusted net income attributable to Arch Coal

$  41,790


$    7,374


$   12,047


$143,935


Diluted weighted average shares outstanding

212,076


211,974


211,931


183,850




















Diluted earnings (loss) per share

$     0.22


$     0.04


$     (1.83)


$     0.39











      Amortization of acquired sales contracts, net

(0.02)


(0.06)


(0.11)


(0.03)


      Acquisition and transition costs

-


0.04


-


0.30


      Mine closure and asset impairment costs 

(0.01)


-


2.47


0.04


      Goodwill impairment 

-


-


0.55


-


      Other nonoperating expenses

-


0.01


0.09


0.28


      Tax impact of adjustments

0.01


-


(1.11)


(0.20)


Adjusted diluted earnings per share

$     0.20


$     0.03


$      0.06


$     0.78


SOURCE Arch Coal, Inc.



RELATED LINKS
http://www.archcoal.com

More by this Source


Custom Packages

Browse our custom packages or build your own to meet your unique communications needs.

Start today.

 

PR Newswire Membership

Fill out a PR Newswire membership form or contact us at (888) 776-0942.

Learn about PR Newswire services

Request more information about PR Newswire products and services or call us at (888) 776-0942.