CONSOL Energy Reports Net Loss of $11 million, or ($0.05) per Diluted Share

25 Oct, 2012, 07:00 ET from CONSOL Energy Inc.

PITTSBURGH, Oct. 25, 2012 /PRNewswire/ -- CONSOL Energy Inc. (NYSE: CNX), the leading diversified fuel producer in the Eastern United States, reported a net loss for the quarter ended September 30, 2012 of $11 million, or ($0.05) per diluted share, compared to net income of $167 million, or $0.73 per diluted share from the year-earlier quarter. Adjusted EBITDA1, a non-GAAP financial measure, was $210 million for the quarter ended September 30, 2012, compared to $441 million in the year-earlier quarter.

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The loss was due to a series of planned and unplanned idlings, as the company scaled back production to meet a  weaker market, which will also have a residual impact during the fourth quarter. The one unplanned item was the previously announced collapse of two newly-installed conveyor belts that move coal from the Enlow Fork and Bailey mines to the Bailey Preparation Plant, all in Southwestern Pa. This incident caused a total of four longwalls to be idled for approximately three weeks, at which point one rebuilt conveyor belt was re-started. Production from these mines was at approximately 60% of normal for most of the remainder of the third quarter. The company's third quarter net income would have been an estimated $53 million higher, had the conveyor belt incident not occurred. This impact is before the receipt of any insurance proceeds and any other proceeds under the indemnity provisions of the construction contract. Much lower sales from the company's flagship low-vol Buchanan Mine also reduced third quarter profitability, as the company chose not to sell into a market that was experiencing an inventory de-stocking.

"CONSOL is serious about maintaining market discipline," commented J. Brett Harvey, chairman and CEO. "Our premium low-vol coal is a scarce resource. When temporary market imbalances occur as they did this quarter with our overseas customers, we choose to idle our mine rather than force tons into the market.  Our actions, as well as the actions of others, should enable the metallurgical coal market to come into balance faster. We have a strong balance sheet with a high level of liquidity, which allows us to exercise production discipline."

The lower level of production impaired costs per ton. In the Coal Division across all of its tons, CONSOL Energy had 2012 third quarter fully-loaded costs of $55.84 per ton. This was an increase of $1.46 per ton from the year-earlier quarter. The company expects costs per ton to decrease as its mines return to more normal schedules.

Cash flow from operations in the quarter was $162 million, as compared to $457 million in the year-earlier quarter.  CONSOL continues to invest in its future, in both coal and gas, by investing $438 million in the 2012 third quarter on  capital projects.  Some of these capital projects, such as the new BMX Mine, are a multi-year investment. Our plan is to complete the BMX Mine in early 2014 and then reassess the viability of additional coal expansion projects. CONSOL does not expect to invest in new expansion projects until coal markets improve.

After investing a projected $1.5 billion in coal and gas projects this year, the company expects to end 2012 with no cash on its balance sheet and nothing drawn against its revolving credit facilities.

"The return of Bailey and Enlow Fork mines to normal production at the beginning of the fourth quarter will certainly be helpful for CONSOL's earnings going forward," continued Mr. Harvey. "Strengthening spot gas prices and a projected sequential increase in both coal and gas production will also be helpful. The steel market, though, remains challenging for all of the categories of our metallurgical coals."

The Buchanan Mine is expected to restart the week of November 5 with a five-day work week schedule, while Amonate is likely to remain idled for the remainder of 2012.

 

1The term "Adjusted EBITDA" is a non-GAAP financial measure, which is defined and reconciled to the GAAP net income below, under the caption "Non-GAAP Financial Measures."

 

Coal Division Results:

COAL DIVISION RESULTS BY PRODUCT CATEGORY - Quarter-To-Quarter Comparison

Low-Vol

Low-Vol

High-Vol

High-Vol

Thermal

Thermal

Quarter

Quarter

Quarter

Quarter

Quarter

Quarter

Ended

Ended

Ended

Ended

Ended

Ended

September

30,

September

30,

September 30,

September 30,

September

30,

September

30,

2012

2011

2012

2011

2012

2011

Beginning Inventory (millions of tons)

0.4

0.2

2.0

1.6

Coal Production (millions of tons)

0.8

1.4

0.7

1.0

10.1

12.1

Ending Inventory (millions of tons)

0.4

0.1

1.3

1.6

Sales - Company Produced (millions of tons)

0.8

1.5

0.7

1.0

10.7

12.2

Sales Per Ton

$

135.66

$

207.21

$

67.76

$

82.21

$

62.11

$

60.18

Beginning Inventory Cost Per Ton

$

69.84

$

66.09

$

63.50

$

$

56.03

$

56.92

Total Direct Costs Per Ton

$

55.60

$

39.28

$

30.10

$

36.19

$

33.06

$

30.92

Royalty/Production Taxes Per Ton

8.75

12.42

3.09

4.11

4.46

4.07

Direct Services to Operations Per Ton

6.83

4.46

7.26

7.33

5.06

5.44

Retirement and Disability Per Ton

8.64

7.58

3.89

5.43

4.04

4.70

DD&A Per Ton

11.29

6.74

7.38

7.22

6.70

6.22

Total Production Costs

$

91.11

$

70.48

$

51.72

$

60.28

$

53.32

$

51.35

Ending Inventory Cost Per Ton

$

(87.32)

$

(67.35)

$

$

$

(51.55)

$

(52.89)

Total Cost Per Ton Sold

$

83.09

$

70.08

$

55.29

$

60.28

$

53.81

$

51.95

Average Margin Per Ton Sold

$

52.57

$

137.13

$

12.47

$

21.93

$

8.30

$

8.23

Addback: DD&A Per Ton

$

11.29

$

6.74

$

7.38

$

7.22

$

6.70

$

6.22

Average Margin Per Ton, before DD&A

$

63.86

$

143.87

$

19.85

$

29.15

$

15.00

$

14.45

Cash Flow before Cap. Ex and DD&A ($MM)

$

51

$

216

$

14

$

29

$

161

$

176

Sales and production exclude CONSOL Energy's portion from equity affiliates. Direct Costs per Ton include items such as labor and benefits, supplies, power, preparation costs, project expenses and gas well plugging costs. Direct Services to Operations Per Ton include items such as subsidence costs, direct administrative, selling expenses, permitting and compliance and asset retirement obligations. Retirement and Disability Per Ton Sold includes charges for pension, retiree medical and other employee related long-term liabilities. The treatment of general and administrative has changed; it has been removed from the costs shown in this table for both the current quarter and the year-earlier quarter. Management has decided to allocate G&A to the coal division and the gas division, but will no longer allocate G&A beyond that. Sales times Average Margin Per Ton, before DD&A is meant to approximate the amount of cash generated for the low-vol, high-vol, and thermal coal categories. This cash generation will be offset by maintenance of production (MOP) capital expenditures.

The Coal Division results table on the previous page has been re-formatted in order to increase transparency. The realization line has been replaced with a sales line. Inventory adjustments, which had flowed through realizations, are now included in costs. A table containing the recast historic quarterly comparisons for each quarter since the first quarter of 2011 is available on our website.

Certain costs were excluded from the table. For the low-vol category in the just-ended quarter, $7 million of Buchanan's costs are not included. For the thermal category, $42 million of Bailey/Enlow Fork's costs are excluded.

Excluding the impacts of Buchanan and Bailey/Enlow, noted earlier, CONSOL Energy's coal production costs in the quarter ended September 30, 2012 were $55.84 per ton, or an increase of $1.46, or 3%, from the quarter ended September 30, 2011. The majority of the cost increase was volume related, as there were four additional weeks of longwall idling that lowered volumes during the quarter.

Coal production in the quarter consisted of 0.8 million tons of low-vol, 0.7 million tons of high-vol, and 10.1 million tons of thermal, for a total of 11.6 million tons. (Amonate production of 53,000 tons is included in the low-vol category.)

Of the thermal coal production, 9.3 million tons were from Northern Appalachia and 0.8 million tons were from Central Appalachia.

During the third quarter, thermal coal inventory decreased by 0.8 million tons, when compared to the quarter ended June 30, 2012.

Coal Marketing Update:

Low-Vol: Low-vol coal continues to be oversupplied in a world economy that has weakened in the last six months. Steel utilization rates remain weak in Europe and Brazil, which are CONSOL's natural export markets. Benchmark settlements between major steel producers and coal suppliers recently settled at prices that, when adjusted for transportation, were lower than expected. Fourth quarter sales estimates range between 0.5 and 0.7 million tons.

High-Vol: We expect shipments to China will return to normal levels once a draw down of their inventories is complete. We expect a recovery to occur in the second quarter of 2013 as global steel production improves.

U.S. Thermal: Warm summer temperatures and Northern Appalachia production issues coupled with production cutbacks in other basins have contributed to reduced inventories at utility stockpiles.  Additionally, the potential return of normal winter weather and the strengthening natural gas price are catalysts for improving domestic thermal markets.  CONSOL has 96% of it's Northern Appalachia coal sold for 2013 and has recently completed pricing for over 3.5 million tons of our Bailey thermal product at or in excess of $60 per ton.

Global Thermal: CONSOL expects to continue to sell thermal coal into European markets under contract.

Gas Division Results:

Coalbed Methane (CBM): Total production was 21.7 Bcf, a decrease of 7% from the 23.3 Bcf produced in the year-earlier quarter.

Marcellus Shale: Total production was 10.1 Bcf, an increase of 16% from the 8.7 Bcf produced in the year-earlier quarter. Last year's Marcellus Shale production contained 4.5 Bcf that was subsequently sold to Noble Energy and Antero Resources. On a consistent basis, the company's Marcellus Shale production increased by 140% from the year-earlier quarter.

Shallow: Total production was 7.0 Bcf, a decrease of 10% from the 7.8 Bcf produced in the year-earlier quarter.   The company has been shifting rigs and capital toward higher potential return Marcellus and Utica drilling prospects.

Other: Our other category had production of 0.6 Bcf, unchanged from 0.6 Bcf in the year-earlier quarter.

The table below summarizes the key metrics for the Gas Division:

GAS DIVISION RESULTS — Quarter-to-Quarter Comparison

Quarter

Quarter

Ended

Ended

September 30,

2012

September 30,

2011

Total Revenue and Other Income ($ MM)

$

191.1

$

203.6

Net Income

$

7.2

$

2.9

Net Cash from Operating Activities ($ MM)

$

14.7

$

130.9

Total Period Production (Bcf)

39.5

40.4

Average Daily Production (MMcf)

429

439.6

Capital Expenditures ($ MM)

$

166.6

$

215.8

Production results are net of royalties.

PRICE AND COST DATA PER MCF Quarter-to-Quarter Comparison

The company experienced increased profitability within the Gas Division when compared with the quarter ended September 30, 2011.  Unit gas margins decreased despite the improvement in unit costs, as realized unit gas prices fell by $0.73 per Mcf. Total unit gas costs declined, due in part to the continued emphasis on low cost Marcellus Shale drilling, where the company has been drilling longer laterals on multi-well pads. All-in unit costs in the Marcellus Shale were $2.95 per Mcf in the just-ended quarter, a decrease of $0.10 from the $3.05 per Mcf in the year-earlier quarter. Total gathering costs were impaired by $0.13 per Mcf primarily due to increased transportation costs.

Quarter

Quarter

Ended

Ended

September 30,

2012

September 30,

2011

Average Sales Price

$4.19

$4.92

Costs - Production

Lifting

$0.57

$0.76

Ad Valorem, Severance and Other Taxes

$0.17

$0.15

DD&A

$1.12

$1.22

Total Production Costs

$1.86

$2.13

Costs - Gathering

Operating Costs

$0.65

$0.63

Transportation

$0.39

$0.26

DD&A

$0.20

$0.22

Total Gathering Costs

$1.24

$1.11

Gas Direct Administrative Selling & Other

$0.28

$0.36

Total Costs

$3.38

$3.60

Margin

$0.81

$1.32

Note:  Costs The line item "gas direct administrative, selling, & other" excludes general administration, incentive compensation, and other corporate expenses.

CONSOL Energy 2012 Production Guidance

CONSOL Energy expects its net gas production to be between 157 - 159 Bcf for the year. Fourth quarter gas production, net to CONSOL, is expected to be approximately 42.5 - 44.5 Bcf.

Total hedged gas production in the 2012 fourth quarter is 19.3 Bcf, at an average price of $5.25 per Mcf. The annual gas hedge position for three years is shown in the table below:

GAS DIVISION GUIDANCE

2012

2013

2014

Total Yearly Production (Bcf)

157-159

N/A

N/A

Volumes Hedged (Bcf),as of 10/11/12

76.9

65.4

55.0

Average Hedge Price ($/Mcf)

$5.25

$4.73

$4.95

 

COAL DIVISION GUIDANCE

Q4 2012

2012

2013

2014

Estimated Coal Sales (millions of tons)

14.0

55.9

56.7

61.8

Est. Low-Vol Met Sales

0.6

3.4

3.9

4.9

Tonnage: Firm

0.6

3.4

1.1

Avg. Price: Sold (Firm)

$

134.64

$

141.72

$

130.35

$

Est. High-Vol Met Sales

0.5

3.4

2.7

4.8

Tonnage: Firm

0.5

3.4

0.3

0.3

Avg. Price: Sold (Firm)

$

81.07

$

65.46

$

73.23

$

75.53

Est. Thermal Sales

12.9

49.1

49.5

51.4

Tonnage: Firm

12.6

48.8

35.9

14.9

Avg. Price: Sold (Firm)

$

61.21

$

61.66

$

60.63

$

62.27

Note:  While most of the data in the table are single point estimates, the inherent uncertainty of markets and mining operations means that investors should consider a reasonable range around these estimates. N/A means not available or not forecast. CONSOL has chosen not to forecast prices for open tonnage due to ongoing customer negotiations. In the thermal sales category, the open tonnage includes   two items: sold, but unpriced tons and collared tons. Collared tons in 2013 are 3.0 million tons, with a ceiling of $52.37 per ton and a floor of $47.37 per ton. Collared tons in 2014 are 7.0 million tons, with a ceiling of $55.90 per ton and a floor of $46.32 per ton. For 2013, when  unpriced thermal tons are combined with collared tons, less than 2 million tons remains to be sold. Total Amonate estimated coal sales for Q4 2012 are 0.03 million tons. Calendar years 2012,  2013, and 2014 include 0.03, 0.6, and 0.7 million tons, respectively, from Amonate. The Amonate tons are not included in the category breakdowns.

Liquidity

Total company liquidity as of September 30, 2012 was $2.6 billion.

As of September 30, 2012, CONSOL Energy had $1.477 billion in total liquidity, which is comprised of $39.6 million of cash, $39.2 million available to be borrowed under the accounts receivable securitization facility, and $1,399.7 million available to be borrowed under its $1.5 billion bank facility. CONSOL Energy's credit facility has no borrowings. Outstanding letters of credit are $261.1 million.

As of September 30, 2012, CNX Gas Corporation had $1.121 billion in total liquidity, which is comprised of $191.4 million of cash and $929.8 million available to be borrowed under its $1.0 billion bank facility.  CNX Gas' credit facility has no borrowings. Outstanding letters of credit are $70.2 million.

CONSOL Energy Inc., the leading diversified fuel producer in the Eastern U.S., is a member of the Standard & Poor's 500 Equity Index and the Fortune 500. It has 12 bituminous coal mining complexes in four states and reports proven and probable coal reserves of 4.5 billion tons. It is also a leading Eastern U.S. gas producer, with proved reserves of 3.5 trillion cubic feet.  Additional information about CONSOL Energy can be found at its web site: www.consolenergy.com.

Non-GAAP Financial Measures

Definition: EBIT is defined as  earnings before deducting net interest expense (interest expense less interest income) and income taxes.  EBITDA is defined as earnings before deducting net interest expense (interest expense less interest income), income taxes and depreciation, depletion and amortization.  Adjusted EBITDA is defined as EBITDA  after adjusting for the discrete items listed below. Although EBIT, EBITDA, and Adjusted EBITDA  are not measures of performance calculated in accordance with generally accepted accounting principles, management believes that it is useful to an investor in evaluating CONSOL Energy because it is widely used to evaluate a company's operating performance before debt expense and its cash or as a substitute for measures of performance in accordance with generally accepted accounting principles.  In addition, because all companies do not calculate EBIT, EBITDA, or Adjusted EBITDA identically, the presentation here may not be comparable to similarly titled measures of other companies.

Reconciliation of EBIT, EBITDA and Adjusted EBITDA to financial net income attributable to CONSOL Energy Shareholders is as follows (dollars in 000):

Three Months Ended

September 30,

2012

2011

Net Income

$

(11,368)

$

167,329

Add:  Interest Expense

54,075

58,884

Less: Interest Income

(8,299)

(180)

Add:  Income Taxes

(19,898)

33,093

Earnings Before Interest & Taxes (EBIT)

14,510

259,126

Add:  Depreciation, Depletion & Amortization

153,877

159,750

Earnings Before Interest, Taxes and DD&A (EBITDA)

168,387

418,876

Adjustments:

Bailey Structural Incident

41,873

Noble Transaction

58,042

Antero Transaction

(41,208)

Bond Amendment Fees

14,907

Pipeline Right-of-Ways Issuance

(10,000)

Asset Abandonment - Mine 84

338

Total Pre-tax Adjustments

41,873

22,079

Adjusted Earnings Before Interest, Taxes and DD&A (Adjusted EBITDA)

$

210,260

$

440,955

Note: Income tax effect of Total Pre-tax Adjustments was ($2,165) and ($7,436) for the three months ended September 30, 2012 and September 30, 2011, respectively.

Forward-Looking Statements

We are including the following cautionary statement in this document to make applicable and take advantage of the safe harbor provisions of the Private Securities Litigation Reform Act of 1995 for any forward-looking statements made by, or on behalf of us.  With the exception of historical matters, the matters discussed in this document are forward-looking statements (as defined in Section 21E of the Securities Exchange Act of 1934) that involve risks and uncertainties that could cause actual results to differ materially from projected results.  Accordingly, investors should not place undue reliance on forward-looking statements as a prediction of actual results.  The forward-looking statements may include projections and estimates concerning the timing and success of specific projects and our future production, revenues, income and capital spending.  When we use the words "believe," "intend," "expect," "may," "should," "anticipate," "could," "estimate," "plan," "predict," "project," or their negatives, or other similar expressions, the statements which include those words are usually forward-looking statements.  When we describe strategy that involves risks or uncertainties, we are making forward-looking statements.  The forward-looking statements in this document speak only as of the date of this document; we disclaim any obligation to update these statements, and we caution you not to rely on them unduly.  We have based these forward-looking statements on our current expectations and assumptions about future events.  While our management considers these expectations and assumptions to be reasonable, they are inherently subject to significant business, economic, competitive, regulatory and other risks, contingencies and uncertainties, most of which are difficult to predict and many of which are beyond our control.  These risks, contingencies and uncertainties relate to, among other matters, the following:  deterioration in global economic conditions in any of the industries in which our customers operate, or sustained uncertainty in financial markets cause conditions we cannot predict; a significant or  extended decline in prices we receive for our coal and natural gas affecting our operating results and cash flows; our customers extending existing contracts or entering into new long-term contracts for coal; our reliance on major customers; our inability to collect payments from customers if their creditworthiness declines; the disruption of rail, barge, gathering, processing and transportation facilities and other systems that deliver our coal and natural gas to market; a loss of our competitive position because of the competitive nature of the coal and natural gas industries, or a loss of our competitive position because of overcapacity in these industries impairing our profitability; our inability to maintain satisfactory labor relations; coal users switching to other fuels in order to comply with various environmental standards related to coal combustion emissions; the impact of potential, as well as any adopted regulations relating to greenhouse gas emissions on the demand for coal and natural gas; foreign currency fluctuations could adversely affect the competitiveness of our coal abroad; the risks inherent in coal and natural gas operations being subject to unexpected disruptions, including geological conditions, equipment failure, timing of completion of significant construction or repair of equipment, fires, explosions, accidents and weather conditions which could impact financial results; decreases in the availability of, or increases in, the price of commodities or capital equipment used in our mining and natural gas operations; decreases in the availability of, an increase in the prices charged by third party contractors or, failure of third party contractors to provide quality services to us in a timely manner could impact our profitability; obtaining and renewing governmental permits and approvals for our coal and natural gas operations; the effects of government regulation on the discharge into the water or air, and the disposal and clean-up of, hazardous substances and wastes generated during our coal and natural gas operations; the effects of stringent federal and state employee health and safety regulations, including the ability of regulators to shut down a mine or well; the potential for liabilities arising from environmental contamination or alleged environmental contamination in connection with our past or current coal and gas operations; the effects of mine closing, reclamation, gas well closing and certain other liabilities; uncertainties in estimating our economically recoverable coal and gas reserves; costs associated with perfecting title for coal or gas rights on some of our properties; the outcomes of various legal proceedings, which are more fully described in our reports filed under the Securities Exchange Act of 1934; the impacts of various asbestos litigation claims; increased exposure to employee related long-term liabilities; our accruals for obligations for long-term employee benefits are based upon assumptions which, if inaccurate, could result in our being required to expend greater amounts than anticipated; due to our participation in an underfunded multi-employer pension plan, we have exposure under that plan that extends beyond what our obligation would be with respect to our employees and in the future we may have to make additional cash contributions to fund the pension plan or incur withdrawal liability; lump sum payments made to retiring salaried employees pursuant to our defined benefit pension plan exceeding total service and interest cost in a plan year; acquisitions and joint ventures that we recently have completed or entered into or may make in the future including the accuracy of our assessment of the acquired businesses and their risks, achieving any anticipated synergies, integrating the acquisitions and unanticipated changes that could affect assumptions we may have made and divestitures we anticipate may not occur or produce anticipated proceeds including joint venture partners paying anticipated carry obligations; the terms of our two significant existing gas joint ventures restrict our flexibility and actions taken by the other party in our gas joint ventures may impact our financial position; the anti-takeover effects of our rights plan could prevent a change of control; risks associated with our debt; replacing our natural gas reserves, which if not replaced, will cause our gas reserves and gas production to decline; our ability to find adequate water sources for use in gas drilling, or our ability to dispose of water used or removed from strata in connection with our gas operations at a reasonable cost and within applicable environmental rules; our hedging activities may prevent us from benefiting from price increases and may expose us to other risks; and other factors discussed in the 2011 Form 10-K under "Risk Factors," as updated by any subsequent Form 10-Qs, which are on file at the Securities and Exchange Commission.

 

CONSOL ENERGY INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF INCOME

(Unaudited)

(Dollars in thousands, except per share data)

Three Months Ended

Nine Months Ended

September 30,

September 30,

2012

2011

2012

2011

Sales—Outside

$

1,084,041

$

1,421,689

$

3,584,805

$

4,293,167

Sales—Gas Royalty Interests

12,968

17,083

34,707

52,191

Sales—Purchased Gas

953

1,155

2,443

3,297

Freight—Outside

27,430

59,871

126,195

156,311

Other Income

34,697

21,931

293,196

70,068

Total Revenue and Other Income

1,160,089

1,521,729

4,041,346

4,575,034

Cost of Goods Sold and Other Operating Charges (exclusive of depreciation, depletion and amortization shown below)

827,530

879,268

2,588,460

2,620,376

Gas Royalty Interests Costs

10,543

15,409

27,916

46,582

Purchased Gas Costs

737

398

2,123

2,850

Freight Expense

27,430

59,871

126,195

156,122

Selling, General and Administrative Expenses

36,681

46,692

109,412

130,311

Depreciation, Depletion and Amortization

153,877

159,750

463,048

466,612

Interest Expense

54,075

58,884

168,788

189,963

Taxes Other Than Income

80,587

85,790

256,543

265,121

Abandonment of Long-Lived Assets

338

115,817

Loss on Debt Extinguishment

16,090

Transaction and Financing Fees

14,907

14,907

Total Costs

1,191,460

1,321,307

3,742,485

4,024,751

(Loss) Earnings Before Income Taxes

(31,371)

200,422

298,861

550,283

Income Taxes (Benefit) Expense

(19,898)

33,093

60,428

113,421

Net (Loss) Income

(11,473)

167,329

238,433

436,862

Add:  Net Loss Attributable to Noncontrolling Interest

105

134

Net (Loss) Income Attributable to CONSOL Energy Inc. Shareholders

$

(11,368)

$

167,329

$

238,567

$

436,862

Earnings Per Share:

Basic

$

(0.05)

$

0.74

$

1.05

$

1.93

Dilutive

$

(0.05)

$

0.73

$

1.04

$

1.91

Weighted Average Number of Common Shares Outstanding:

Basic

227,654,395

226,744,011

227,491,284

226,582,226

Dilutive

227,654,395

229,163,537

229,191,870

229,002,863

Dividends Paid Per Share

$

0.125

$

0.100

$

0.375

$

0.300

 

 

CONSOL ENERGY INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(Unaudited)

(Dollars in thousands)

Three Months Ended

Nine Months Ended

September 30,

September 30,

2012

2011

2012

2011

Net (Loss) Income

$

(11,473)

$

167,329

$

238,433

$

436,862

Other Comprehensive (Loss) Income:

Treasury Rate Lock (Net of tax:  $-, $-, $-, $59)

(96)

Actuarially Determined Long-Term Liability Adjustments

Change in Prior Service Cost (Net of tax: $-,$-, ($30,295),$-)

50,276

Amortization of Prior Service Cost (Net of tax: $5,232, $4,584,$15,016, $13,750)

(8,684)

(7,365)

(24,921)

(22,094)

Amortization of Net Loss (Net of tax: ($10,007), ($11,438), ($29,963), ($34,312))

16,605

18,379

49,725

55,135

Net (Decrease) Increase in the Value of Cash Flow Hedge (Net of tax: $4,161, ($38,790), ($51,716), ($59,912))

(6,459)

59,620

80,280

92,421

Reclassification of Cash Flow Hedges from OCI to Earnings (Net of tax: $29,683, $13,292, $97,760, $36,746)

(47,809)

(20,974)

(153,597)

(56,719)

Other Comprehensive (Loss) Income

(46,347)

49,660

1,763

68,647

Comprehensive (Loss) Income

(57,820)

216,989

240,196

505,509

Add: Comprehensive Loss Attributable to Noncontrolling Interest

105

134

Comprehensive (Loss) Income Attributable to CONSOL Energy Inc. Shareholders

$

(57,715)

$

216,989

$

240,330

$

505,509

 

 

CONSOL ENERGY INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

(Dollars in thousands)

(Unaudited)

September 30, 2012

December 31, 2011

ASSETS

Current Assets:

Cash and Cash Equivalents

$

230,958

$

375,736

Accounts and Notes Receivable:

Trade

457,057

462,812

Notes Receivable

314,417

314,950

Other Receivables

86,282

105,708

Inventories

266,539

258,335

Deferred Income Taxes

172,212

141,083

Recoverable Income Taxes

12,132

Prepaid Expenses

170,927

239,353

Total Current Assets

1,710,524

1,897,977

Property, Plant and Equipment:

Property, Plant and Equipment

15,143,744

14,087,319

Less—Accumulated Depreciation, Depletion and Amortization

5,215,721

4,760,903

Total Property, Plant and Equipment—Net

9,928,023

9,326,416

Other Assets:

Deferred Income Taxes

446,530

507,724

Restricted Cash

20,372

22,148

Investment in Affiliates

213,708

182,036

Notes Receivable

1,460

300,492

Other

235,977

288,907

Total Other Assets

918,047

1,301,307

TOTAL ASSETS

$

12,556,594

$

12,525,700

 

 

CONSOL ENERGY INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

(Dollars in thousands, except per share data)

(Unaudited)

September 30, 2012

December 31, 2011

LIABILITIES AND EQUITY

Current Liabilities:

Accounts Payable

$

497,604

$

522,003

Current Portion of Long-Term Debt

22,065

20,691

Accrued Income Taxes

75,633

Other Accrued Liabilities

814,033

770,070

Total Current Liabilities

1,333,702

1,388,397

Long-Term Debt:

Long-Term Debt

3,127,262

3,122,234

Capital Lease Obligations

51,747

55,189

Total Long-Term Debt

3,179,009

3,177,423

Deferred Credits and Other Liabilities:

Postretirement Benefits Other Than Pensions

2,963,646

3,059,671

Pneumoconiosis Benefits

176,514

173,553

Mine Closing

443,986

406,712

Gas Well Closing

147,067

124,051

Workers' Compensation

150,129

151,034

Salary Retirement

174,844

269,069

Reclamation

52,426

39,969

Other

138,327

124,936

Total Deferred Credits and Other Liabilities

4,246,939

4,348,995

TOTAL LIABILITIES

8,759,650

8,914,815

Stockholders' Equity:

Common Stock, $.01 Par Value; 500,000,000 Shares Authorized,

227,655,437 Issued and 227,620,682 Outstanding at September 30,

2012; 227,289,426 Issued and 226,056,212 Outstanding at

December 31, 2011

2,278

2,273

Capital in Excess of Par Value

2,275,320

2,234,775

Preferred Stock, 15,000,000 authorized, None issued and outstanding

Retained Earnings

2,319,530

2,184,737

Accumulated Other Comprehensive Loss

(799,791)

(801,554)

Common Stock in Treasury, at Cost—34,755 Shares at September 30,

2012 and 233,214 Shares at December 31, 2011

(609)

(9,346)

Total CONSOL Energy Inc. Stockholders' Equity

3,796,728

3,610,885

Noncontrolling Interest

216

TOTAL EQUITY

3,796,944

3,610,885

TOTAL LIABILITIES AND EQUITY

$

12,556,594

$

12,525,700

 

 

CONSOL ENERGY INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY

(Dollars in thousands, except per share data)

Common

Stock

Capital in

Excess

of Par

Value

Retained

Earnings

(Deficit)

Accumulated

Other

Comprehensive

Income

(Loss)

Common

Stock in

Treasury

Total CONSOL Energy Inc. Stockholders' Equity

Non-

Controlling

Interest

Total

Equity

Balance at

December 31, 2011

$

2,273

$

2,234,775

$

2,184,737

$

(801,554)

$

(9,346)

$

3,610,885

$

$

3,610,885

(Unaudited)

Net Income (Loss)

238,567

238,567

(134)

238,433

Other Comprehensive

Income

1,763

1,763

1,763

Comprehensive Income

(Loss)

238,567

1,763

240,330

(134)

240,196

Issuance of Common Stock

5

1,229

1,234

1,234

Issuance of Treasury Stock

(18,484)

8,737

(9,747)

(9,747)

Tax Cost From Stock-Based Compensation

893

893

893

Amortization of Stock-Based Compensation Awards

38,423

38,423

38,423

Net Change in Greenshale Energy Noncontrolling Interest

350

350

Dividends ($0.375 per share)

(85,290)

(85,290)

(85,290)

Balance at September

30, 2012

$

2,278

$

2,275,320

$

2,319,530

$

(799,791)

$

(609)

$

3,796,728

$

216

$

3,796,944

 

 

CONSOL ENERGY INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

(Dollars in thousands)

Three Months Ended

Nine Months Ended

September 30,

September 30,

2012

2011

2012

2011

Operating Activities:

Net (Loss) Income Attributable to CONSOL

Energy Inc. Shareholders

$

(11,368)

$

167,329

$

238,567

$

436,862

Adjustments to Reconcile Net (Loss) Income

to Net Cash Provided By Operating Activities:

Depreciation, Depletion and Amortization

153,877

159,750

463,048

466,612

Abandonment of Long-Lived Assets

338

115,817

Stock-Based Compensation

11,488

11,508

38,423

37,083

(Gain) Loss on Sale of Assets

(276)

15,132

(190,257)

9,993

Loss on Extinguishment of Debt

16,090

Amortization of Mineral Leases

187

571

3,818

4,149

Deferred Income Taxes

(35,850)

(7,472)

(5,225)

120

Equity in Earnings of Affiliates

(7,573)

(8,677)

(22,676)

(19,989)

Changes in Operating Assets:

Accounts and Notes Receivable

(26,675)

885

13,359

(50,212)

Inventories

38,522

17,972

(8,204)

16,264

Prepaid Expenses

(21,071)

(24,290)

(1,362)

(611)

Changes in Other Assets

(19,565)

1,139

(8,961)

16,446

Changes in Operating Liabilities:

Accounts Payable

46,484

77,136

5,218

98,320

Other Operating Liabilities

54,563

43,198

(11,130)

66,589

Changes in Other Liabilities

(21,987)

(175)

1,469

29,432

Other

1,458

2,577

14,076

9,439

Net Cash Provided by Operating

Activities

162,214

456,921

530,163

1,252,404

Investing Activities:

Capital Expenditures

(437,622)

(412,022)

(1,152,021)

(997,463)

Proceeds from Sales of Assets

331,713

687,811

583,942

695,291

Distributions From, net of (Investments In),

Equity Affiliates

3,138

66,990

(18,701)

70,860

Net Cash (Used in) Provided by Investing Activities

(102,771)

342,779

(586,780)

(231,312)

Financing Activities:

Payments on Short-Term Borrowings

(260,750)

(284,000)

Payments on Miscellaneous Borrowings

(1,903)

(2,215)

(6,565)

(9,320)

Payments on Securitization Facility

(70,000)

(200,000)

Payments on Long Term Notes, including

Redemption Premium

(265,785)

Proceeds from Issuance of Long-Term Notes

250,000

Tax Benefit from Stock-Based Compensation

970

853

2,578

5,034

Dividends Paid

(28,457)

(22,679)

(85,290)

(67,972)

Issuance of Common Stock

777

1,234

Issuance of Treasury Stock

1,207

109

6,219

Debt Issuance and Financing Fees

(79)

(112)

(227)

(15,539)

Net Cash Used in Financing Activities

(28,692)

(353,696)

(88,161)

(581,363)

Net Increase (Decrease) in Cash and Cash Equivalents

30,751

446,004

(144,778)

439,729

Cash and Cash Equivalents at Beginning of Period

200,207

26,519

375,736

32,794

Cash and Cash Equivalents at End of Period

$

230,958

$

472,523

$

230,958

$

472,523

 

SOURCE CONSOL Energy Inc.



RELATED LINKS

http://www.consolenergy.com