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Alpha Natural Resources 10-Q 2008 SECURITIES
AND EXCHANGE COMMISSION
Washington,
D.C. 20549
Form 10-Q
(Mark
One)
For
the quarterly period ended March 31, 2008
OR
For
the transition period from
to
Commission
File No. 1-32423
ALPHA
NATURAL RESOURCES, INC.
(Exact
name of registrant as specified in its charter)
Registrant’s
telephone number, including area code:
(276) 619-4410
Indicate
by check mark whether the registrant (1) has filed all reports required to
be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934
during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to
such filing requirements for the past 90 days. þ Yes ¨ No
Indicate
by check mark whether the registrant is a large accelerated filer, an
accelerated filer, or a non-accelerated filer. See definition of “accelerated
filer and large accelerated filer” in Rule 12b-2 of the Exchange
Act.
þ Large accelerated
filer o Accelerated
filer ¨ Non-accelerated
filer
Indicate
by check mark whether the registrant is a shell company (as defined in
Rule 12b-2 of the Exchange Act).
¨ Yes þ No
Number
of shares of the registrant’s Common Stock, $0.01 par value, outstanding as of
April 23, 2008— 70,301,997
Item 1. Financial
Statements
Condensed
Consolidated Balance Sheets (Unaudited)
(In
thousands, except share and per share amounts)
See accompanying notes to
condensed consolidated financial statements.
Condensed
Consolidated Statements of Income (Unaudited)
(In
thousands, except share and per share amounts)
See accompanying notes to
condensed consolidated financial statements.
Condensed
Consolidated Statements of Cash Flows (Unaudited)
(In
thousands)
ALPHA
NATURAL RESOURCES, INC. AND SUBSIDIARIES
Condensed
Consolidated Statements of Cash Flows (Unaudited) — (Continued)
(In
thousands)
See accompanying notes to
condensed consolidated financial statements.
NOTES
TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)
March
31, 2008
(In
thousands, except percentages and share data)
(1) Business
and Basis of Presentation
Organization
and Business
Alpha Natural
Resources, Inc. and its consolidated subsidiaries (the “Company”) are primarily
engaged in the business of extracting, processing and marketing coal from deep
and surface mines, located in the Central and Northern Appalachian regions of
the United States, for sale to utility and steel companies in the United States
and in international markets.
Basis
of Presentation
The
accompanying interim condensed consolidated financial statements have been
prepared in accordance with U.S generally accepted accounting principles for
interim financial reporting. Accounting measurements at interim dates inherently
rely on estimates more than at year-end; however, in the opinion of management,
all adjustments (consisting of normal recurring accruals) considered necessary
for a fair presentation have been included. Significant items subject to such
estimates and assumptions include inventories; mineral reserves; allowance for
non-recoupable advanced mining royalties; asset retirement obligations; employee
benefit liabilities; future cash flows associated with assets; useful lives for
depreciation, depletion, and amortization; workers’ compensation and black lung
claims; postretirement benefits other than pensions; income taxes; revenue
recognized using the percentage of completion method; and fair value of
financial instruments. Due to the subjective nature of these
estimates, actual results could differ from those estimates. Results
of operations for the three months ended March 31, 2008 are not necessarily
indicative of the results to be expected for the year ending December 31,
2008. These financial statements should be read in conjunction with the audited
financial statements and related notes as of and for the year ended
December 31, 2007 included in the Company's Annual Report on Form 10-K
filed with the Securities and Exchange Commission.
Reclassifications
Prior period
coal revenues and cost of coal sales have been adjusted to exclude changes in
the fair value of coal derivative contracts to conform to the current year
presentation. These reclassification adjustments had no effect on
previously reported income from operations or net income.
(2) New
Accounting Pronouncements
In March
2008, the Financial Accounting Standards Board (“FASB”) issued Statement of
Financial Accounting Standards (“SFAS”) No. 161, Disclosures about Derivative
Instruments and Hedging Activities (“SFAS 161”), which amends SFAS No.
133,
Accounting for
Derivative Instruments and Hedging Activities (“SFAS
133”). SFAS 161 is intended to improve financial reporting about
derivative instruments and hedging activities by requiring enhanced disclosures
to enable investors to better understand their effects on an entity’s financial
position, financial performance, and cash flows. The new standard also improves
transparency about the location and amounts of derivative instruments in an
entity’s financial statements; how derivative instruments and related hedged
items are accounted for under SFAS 133; and how derivative instruments and
related hedged items affect its financial position, financial performance, and
cash flows. It is effective for financial statements issued for fiscal years and
interim periods beginning after November 15, 2008, with early application
encouraged. The Company does not expect this guidance to have a significant
impact on our consolidated financial statements; however management is currently
assessing the impact of adopting SFAS 161.
In
December 2007, the Financial Accounting Standards Board
issued SFAS 141(R), Business Combinations, and
SFAS No. 160, Accounting
and Reporting of Noncontrolling Interest in Consolidated Financial
Statements
(“SFAS 160”), an amendment of ARB No. 51. SFAS 141(R) and SFAS 160
will significantly change the accounting for and reporting of business
combination transactions and noncontrolling (minority) interests in consolidated
financial statements. SFAS 141(R) retains the fundamental requirements in
SFAS 141 while
providing additional definitions, such as the definition of the acquirer in a
purchase and improvements in the application of how the acquisition method is
applied. SFAS 160 will change the accounting and reporting for minority
interests, which will be recharacterized as noncontrolling interests, and
classified as a component of equity. These Statements become simultaneously
effective January 1, 2009. Early adoption is not permitted. The Company is
currently evaluating the impact this guidance will have on our consolidated
financial statements.
(3) Earnings
Per Share
Basic
earnings per share are computed by dividing net income by the weighted average
number of shares of common stock outstanding during the period. Diluted earnings
per share are computed using the treasury method by dividing net income by the
weighted average number of shares of common stock and dilutive common stock
equivalents outstanding during the period. Common stock equivalents include the
number of shares issuable upon exercise of outstanding options less the number
of shares that could have been purchased with the proceeds from the exercise of
the options based on the average price of common stock during the period.
Restricted shares which have not vested at the end of the reporting period are
excluded from the calculation of basic earnings per share.
The
computations of basic and diluted net income per share are set forth
below:
(4) Inventories
Inventories
consisted of the following:
(5) Income
Taxes
A
reconciliation of the statutory federal income tax expense at 35% to income
before income taxes and minority interest, and the actual income tax expense is
as follows:
The Company
has concluded that it is more likely than not that deferred tax assets, net of
valuation allowances, currently recorded will be realized. The amount of the
valuation allowance takes into consideration the Alternative Minimum Tax system
as required by SFAS No. 109, Accounting for Income Taxes
(“SFAS 109”). The Company monitors the valuation allowance each quarter and
makes adjustments to the allowance as appropriate.
(6) Long-Term
Debt
Long-term
debt consisted of the following:
On
October 26, 2005, Alpha Natural Resources, LLC (“ANR LLC”), entered into a
senior secured credit facility with a group of lending institutions led by
Citicorp North America, Inc., as administrative agent (the “Credit Agreement”).
The Credit Agreement consists of a $250,000 term loan facility and a $275,000
revolving credit facility. The revolving credit facility includes borrowing
capacity available for letters of credit.
In March
2008, the Company and our subsidiary, ANR LLC, entered into two amendments to
the Credit Agreement. One of these amendments increased the amount
available under the revolving credit portion of the facility from $275,000 to
$375,000. The other amendment, among other things, removed Alpha Natural
Resources, Inc. from the application of most of the restrictive covenants and
added exceptions to certain other covenants relating to payment of dividends and
distributions.
The Credit
Agreement and the Senior Notes each place restrictions on the ability of ANR LLC
and its subsidiaries to make distributions or loans to the Company. At March 31,
2008, ANR LLC had net assets of $400,945 and, except for allowable distributions
for the payment of income taxes, administrative expenses and, in certain
circumstances, dividends or repurchases of common stock of the Company, the net
assets of ANR LLC are restricted.
All of the
Company borrowings under the Credit Agreement are at a variable rate, so the
Company is exposed to the effect of rising interest rates. As of March 31, 2008,
the Company has a $233,125 term loan outstanding with a variable interest rate
based upon the 3-month London Interbank Offered Rate (“LIBOR”) (2.67% at March
31, 2008) plus the applicable margin (1.75%, at March 31, 2008). To reduce the
Company's exposure to rising interest rates, effective May 22, 2006, the Company
entered into a pay-fixed, receive variable interest rate swap on the notional
amount of $233,125 for a period of approximately six and one-half years. In
effect, this swap converted the variable interest rates based on LIBOR to a
fixed interest rate of 5.59% plus the applicable margin defined in the debt
agreement for the remainder of our term loan. The Company accounts for the
interest rate swap as a cash flow hedge and changes in fair value of the swap
are recorded to other comprehensive income (loss). The critical terms of the
swap and the underlying debt instrument that it hedges coincide, resulting in no
hedge ineffectiveness being recognized in the income statement during the
quarter ended March 31, 2008. The fair value of the swap at March 31,
2008 was $21,999 which was recorded in other liabilities in the condensed
consolidated balance sheet and the offsetting unrealized loss of $16,564, net of
tax benefit, was recorded in accumulated other comprehensive loss. As interest
expense is accrued on the debt obligation, amounts in accumulated other
comprehensive loss related to the derivative hedging instrument are reclassified
into earnings to obtain a net cost on the debt obligation of 5.59% plus the
applicable margin. For the three months ended March 31, 2008 and 2007, $448
and $133, respectively, of losses in accumulated other comprehensive loss were
reclassified into interest expense.
(7) Asset
Retirement Obligation
At March 31,
2008 and December 31, 2007, the Company had recorded asset retirement
obligation accruals for mine reclamation and closure costs totaling $91,852 and
$91,199, respectively. The portion of the costs expected to be incurred within a
year in the amounts of $8,187 and $8,179 at March 31, 2008 and December 31,
2007, respectively, is included in accrued expenses and other current
liabilities. These regulatory obligations are secured by surety bonds in the
amount of $144,273 at March 31, 2008 and $142,471 at December 31, 2007.
Changes in the reclamation obligation were as
follows:
(8) Share-Based
Compensation Awards
Stock
Options
Stock option
activity for the three months ended March 31, 2008 is summarized in the
following table:
The aggregate
intrinsic value of options outstanding at March 31, 2008 was $16,852 and the
aggregate intrinsic value of exercisable options was $5,594. The
total intrinsic value of options exercised during the three months ended March
31, 2008 and 2007 was $2,048 and $0, respectively. Cash received from
the exercise of stock options during the three months ended March 31, 2008 and
2007 was $1,688 and $0, respectively. As of March 31, 2008, $2,686 of
unrecognized compensation cost related to stock options is expected to be
recognized as expense over a weighted-average period of 1.78
years. The weighted average grant date fair value of options
outstanding at March 31, 2008 and 2007 was $7.38 and $7.57,
respectively.
Restricted
Stock Awards
Non-vested
share award activity for the quarter ended March 31, 2008 is summarized in the
following table:
The fair
value of non-vested restricted share awards is estimated based on the closing
stock price on the date of grant, and for purposes of expense recognition, the
total number of awards expected to vest is adjusted for estimated forfeitures.
As of March 31, 2008, there was $13,063 of unamortized compensation cost related
to non-vested shares, which is expected to be recognized as expense over a
weighted-average period of 2.17 years.
Performance
Share Awards
2008 Granted
Awards
The Company
granted 164,737 performance share awards in the first quarter of
2008. Recipients of these awards can receive shares of the Company's
common stock at the end of a performance period which ends on December 31, 2010,
based on the Company's actual performance against pre-established operating
income goals, strategic goals, and total shareholder return goals. In order to
receive the shares, the recipient must also be employed by the Company on the
vesting date. The performance share awards represent the number of shares of
common stock to be awarded based on the achievement of targeted performance and
may range from 0 percent to 150 percent of the targeted amount. The grant date
fair value of the awards related to operating income targets is based on the
closing price of the Company's common stock on the New York Stock Exchange on
the grant date of the award and is being amortized over the performance period.
The awards related to strategic goals do not meet the criteria for grant date
pursuant to SFAS No. 123(R), Share-based Payments (as amended), (“SFAS 123(R)”). The
fair value of the awards related to total shareholder return targets is based
upon a Monte Carlo simulation and is being amortized over the performance
period. For executive officers of the Company to receive these performance share
awards, the Company must achieve a pre-determined EBITDA level during the
performance period in addition to the criteria set for all other employees
participating in the plan. The Company reassesses at each reporting
date whether achievement of each of the performance conditions is probable, as
well as estimated forfeitures, and adjusts the accruals of compensation expense
as appropriate. At March 31, 2008, the Company assessed the operating income and
total shareholder return targets as probable of achievement. As of March 31,
2008, there was $2,821 of unamortized compensation cost related to the
performance share awards for 2008. This unamortized compensation cost
is expected to be recognized over the periods ending December 31,
2010.
Share-based
compensation expense measured in accordance with SFAS 123(R) totaled $2,989
($2,276 on a net-of-tax basis, or $0.03 per basic and diluted share) and $2,650
($1,994 on a net-of-tax basis, or $0.03 per basic and diluted share) for the
three months ended March 31, 2008 and 2007, respectively.
As of
March 31, 2008 and 2007, approximately 66% and 70%, respectively, of share-based
compensation expense is reported as selling, general and administrative
expenses, and approximately 34% and 30%, respectively, is reported as a
component of cost of sales, and both are included in the Corporate and
Eliminations category for segment reporting purposes (Note 14). As of
March 31, 2008 and 2007, approximately $170 and $206, respectively, of
stock-based compensation costs was capitalized as a component of inventories.
Under SFAS 123(R), the Company is required to report the benefits of income tax
deductions that exceed recognized compensation as cash flow from financing
activities. The excess tax benefits for the quarters ended March 31, 2008 and
2007 were $734 and $0, respectively.
(9)
Derivative Financial Instruments
Derivative
financial instruments are accounted for in accordance with SFAS 133, which
requires all derivative financial instruments to be reported on the balance
sheet at fair value. Changes in fair value are recognized either in earnings or
equity, depending on whether the transaction qualifies for hedge accounting and
if so, the nature of the underlying exposure being hedged and how effective the
derivatives are at offsetting price movements in the underlying
exposure.
The
Company accounts for certain forward purchase and forward sale coal contracts
that do not qualify under the “normal purchase and normal sale” exception of
SFAS 133 as derivatives and records these contracts as assets or liabilities at
fair value. Changes in fair value of these derivative contracts have been
recorded as an (increase) decrease in fair value of derivative coal contracts,
net, and included as a component of costs and expenses in the consolidated
statements of income. At March 31, 2008, the Company had unrealized
gains (losses) on open purchase and open sales contracts of $43,609 and
($20,177), respectively. These amounts are recorded in prepaid expenses and
other current assets and accrued expenses and other current liabilities,
respectively.
The
Company has utilized interest rate swap agreements to modify the interest
characteristics of a portion of the Company's outstanding debt. The swap
agreements essentially convert variable-rate debt to fixed-rate debt and have
been designated as cash flow hedges. Changes in the fair value of
interest rate swaps designated as hedging instruments of the variability of cash
flows associated with floating rate and long-term debt obligations are reported
in accumulated other comprehensive income (loss). These amounts are
subsequently reclassified into interest expense in the same period in which the
related floating rate debt obligation affects earnings.
The
Company is also exposed to the risk of fluctuations in cash flows related to its
purchase of diesel fuel. The Company has entered into diesel fuel swap
agreements and diesel put options to reduce the volatility in the price of
diesel fuel for its operations. The diesel fuel swap agreements and put options
are not designated as hedges and therefore the changes in the fair value for
these derivative instrument contracts have been recorded in cost of sales. These
diesel fuel swaps and put options use the NYMEX New York Harbor #2 heating oil
as the underlying commodity reference price. Any unrealized loss is
recorded in other current liabilities and any unrealized gain is recorded in
other current assets.
As of
March 31, 2008 approximately 10,848 gallons or 54% of the Company's anticipated
2008 remaining diesel fuel usage has been capped with the swap agreements in
which the company has agreed to pay a fixed price and receive a floating price
per gallon of diesel fuel. The fixed prices for the notional quantity of
10,848 gallons range from $2.39 to $2.90 per gallon for the last nine months of
2008. The fair value of these diesel fuel swap agreements is an asset
of $2,739 as of March 31, 2008.
As of
March 31, 2008, the Company entered into diesel fuel put options for 4,486
gallons at a price range of $2.20 to $2.45 per gallon for the last nine months
of 2008. In the event that diesel prices decline below the strike
price, the Company can exercise the put options and sell the 4,486 gallons at
the strike price, therefore reducing the impact of the swap
agreements. These put options provide downside protection and reduce
the fixed position risk of the outstanding diesel fuel swap agreements in the
event of a decline in diesel fuel prices below the strike price. The fair value
of these diesel fuel put options is an asset of $122 as of March 31,
2008.
(10) Fair
Value Measurements
The
Company adopted SFAS No. 157, Fair Value Measurements
(“SFAS 157”) on January 1, 2008.
This statement defines fair value, establishes a framework for measuring fair
value and expands disclosures about fair value measurements. Additionally, on
January 1, 2008, the Company elected the partial adoption of SFAS
157 under the provisions of Financial Accounting Standards Board (“FASB”) Staff
Position (“FSP”) FAS 157-2, which amends SFAS 157 to allow
an entity to delay the application of
this statement until January 1, 2009 for certain
non-financial assets and liabilities. The adoption of SFAS 157 did not have
a material impact on our consolidated financial
statements.
The
Company adopted SFAS No. 159, The Fair Value Option for Financial
Assets and Financial Liabilities-Including an Amendment of FASB Statement
No. 115 (“SFAS 159”), on January 1, 2008. This standard permits
entities to choose to measure many financial instruments and certain other items
at fair value. The adoption of SFAS 159 did not impact our consolidated
financial statements, as the Company elected not to measure any additional
financial assets or liabilities at fair value other than those which were
recorded at fair value prior to adoption.
SFAS 157
clarifies that fair value is an exit price, representing the amount that would
be received to sell an asset or paid to transfer a liability in an orderly
transaction between market participants. As such, fair value is a
market-based measurement that should be determined based on assumptions that
market participants would use in pricing an asset and liability. As a
basis for considering such assumptions, SFAS 157 establishes a fair value
hierarchy that prioritizes the inputs used to measure fair value. The
hierarchy gives the highest priority to unadjusted quoted prices in active
markets for identical assets or liabilities (level 1 measurement) and the lowest
priority to unobservable inputs (level 3 measurements). The three
levels of the fair value hierarchy defined by SFAS 157 are as
follows:
Level 1 - Quoted
prices in active markets for identical assets or
liabilities;
Level
2 - Quoted prices for similar instruments in active markets; quoted prices for
identical or similar instruments in markets that are not active;
and
Level
3 - Unobservable inputs in
which there is little or no market data which require the reporting entity to
develop its own assumptions.
The following
table sets forth by level within the fair value hierarchy the company's
financial assets that were accounted for at fair value on a recurring basis as
of March 31, 2008. As required by SFAS 157, financial assets and
liabilities are classified in their entirety based on the lowest level of input
that is significant to the fair value measurement. The company's
assessment of the significance of a particular input to the fair value
measurement requires judgment, and may affect the valuation of fair value assets
and liabilities and their placement within the fair value hierarchy
levels.
The
following methods and assumptions were used to estimate the fair values of the
assets and liabilities in the tables above.
Level 2
Fair Value Measurements
Forward Coal Purchases and
Sales — The fair value of the forward coal purchases and sales
contracts were estimated using discounted cash flow calculations based upon
forward commodity price curves. The curves were obtained from
independent pricing services reflecting broker market quotes.
Diesel Fuel derivatives — Since the
Company’s diesel fuel derivative instruments are not traded on a market
exchange, the fair values are determined using valuation models which include
assumptions about commodity prices based on those observed in the underlying
markets.
Interest Rate Swaps — The fair value of
the interest rate swaps were estimated using discounted cash flow calculations
based upon forward interest-rate yield curves. The curves were
obtained from independent pricing services reflecting broker market
quotes.
(11) Postretirement
Benefits Other Than Pensions
The following
table details the components of the net periodic benefit cost for the Company’s
retiree medical plan (the Plan):
Employer
contributions for postretirement medical benefits paid were $32 for the three
months ended March 31, 2008 and 2007. Employee contributions are not expected to
be made and the Plan is unfunded.
Two of the
Company’s subsidiaries are required to make contributions to the 1974 UMWA
Pension Plan and Trust and/or the 1993 UMWA Benefit Plan. The
contributions that the Company made to these plans were $45 and $25 for the
three months ended March 31, 2008 and 2007, respectively.
(12) Comprehensive
Income
Total
comprehensive income is as follows for the three months ended March 31,
2008:
The following
table summarizes the components of accumulated other comprehensive loss at March
31, 2008:
(13) Commitments
and Contingencies
(a) Guarantees and
Financial Instruments with Off-balance Sheet Risk>
In the
normal course of business, the Company is a party to certain guarantees and
financial instruments with off-balance sheet risk, such as bank letters of
credit and performance or surety bonds. No liabilities related to these
arrangements are reflected in the Company's condensed consolidated balance
sheets. Management does not expect any material losses to result from these
guarantees or off-balance sheet financial instruments. The amount of bank
letters of credit outstanding as of March 31, 2008 was $88,195. The amount
of surety bonds outstanding at March 31, 2008 related to the Company's
reclamation obligations is presented in Note 7 to the condensed consolidated
financial statements. The Company has provided guarantees for equipment
financing obtained by certain of its contract mining operators totaling
approximately $780 as of March 31, 2008. The estimated fair value of these
guarantees is not significant.
(b) Litigation>
The Company
is a party to a number of legal proceedings incident to our normal business
activities. While we cannot predict the outcome of these proceedings, we do not
believe that any liability arising from these matters individually or in the
aggregate should have a material impact upon our consolidated cash flows,
results of operations or financial condition.
Nicewonder
Litigation
In December 2004,
prior to our Nicewonder Acquisition in October 2005, the Affiliated Construction
Trades Foundation brought an action against the West Virginia Department of
Transportation, Division of Highways (“WVDOH”) and Nicewonder Contracting, Inc.
("NCI"), which became our wholly-owned indirect subsidiary after the Nicewonder
Acquisition, in the United States District Court in the Southern District of
West Virginia. The plaintiff sought a declaration that the contract between NCI
and the State of West Virginia related to NCI's road construction project was
illegal as a violation of applicable West Virginia and federal competitive
bidding and prevailing wage laws. The plaintiff also sought an injunction
prohibiting performance of the contract but has not sought monetary
damages.
On September
5, 2007, the Court ruled that WVDOH and the Federal Highway Administration
(which is now a party to the suit) could not, under the circumstances of this
case, enter into a contract not requiring the contractor to pay the prevailing
wages as required by the Davis-Bacon Act. Although the Court has not yet decided
what remedy it will impose, the Company expects a ruling before mid-2008.
The Company anticipates that the most likely remedy is a directive that the
contract be renegotiated for such payment. If that renegotiation occurs, WVDOH
has committed to agree, and NCI has a contractual right to insist, that
additional costs resulting from the order will be reimbursed by WVDOH and as
such neither NCI nor the Company believe, at this time, that they have any
monetary expense from this ruling. As of March 31, 2008, the Company had a
$6,600 long-term receivable for the recovery of these costs from WVDOH and a
long-term liability for the obligations under the ruling.
(14) Segment
Information
The Company
extracts, processes and markets steam and metallurgical coal from surface and
deep mines for sale to electric utilities, steel and coke producers, and
industrial customers. The Company operates only in the United States with mines
in the Central Appalachian and Northern Appalachian regions. The Company has one
reportable segment: Coal Operations, which as of March 31, 2008, consisted of
33 active underground mines and 24 surface mines located in Central
Appalachia and Northern Appalachia. Coal Operations also includes the Company's
purchased coal sales function, which markets the Company's Appalachian coal to
domestic and international customers. The All Other category includes the
Company's equipment sales and repair operations, as well as other ancillary
business activities, including terminal services, trucking services, coal and
environmental analysis services, and leasing of mineral rights. In
addition, the All Other category includes revenues from the operation of its
road construction businesses which the Company acquired on October 26, 2005
as part of the Nicewonder Acquisition. The Corporate and Eliminations category
includes general corporate overhead and the elimination of intercompany
transactions. The revenue elimination amount represents inter-segment revenues.
The Company evaluates the performance of its segment based on EBITDA which the
Company defines as net income plus interest expense, income tax expense, and
depreciation, depletion and amortization, less tax benefit and interest
income.
Segment
operating results and capital expenditures for the three months ended March 31,
2008, and segment assets as of March 31, 2008 were as follows:
Segment
operating results and capital expenditures for the three months ended March 31,
2007, and segment assets as of March 31, 2007 were as follows:
Reconciliation of
total segment EBITDA to net income:
The Company
markets produced, processed, and purchased coal to customers in the United
States and in international markets. Export revenues totaled $218,443,
approximately 43% of total coal and freight revenues, for the three months
ended March 31, 2008 and $146,482, approximately 35% of total coal and freight
revenues, for the three months ended March 31, 2007.
(15) Supplemental Guarantor/Non-Guarantor
Financial Information>
On June 28,
2007, Alpha NR Holding, Inc. ("Holdings") was merged into the Company and the
Company became a parent guarantor of the Senior Notes. The payment obligations
under the Senior Notes, issued jointly by our subsidiary ANR LLC and its
wholly-owned subsidiary Alpha Natural Resource Capital Corp. in 2004, are
unsecured, but are guaranteed fully and unconditionally on a joint and several
basis by the Company and all its subsidiaries other than the issuers of the
notes and our subsidiary, Gallatin. The following financial information
sets forth separate financial information with respect to the Company, the
issuers, the guarantor subsidiaries and the non-guarantor subsidiary. The
principal elimination entries eliminate investments in subsidiaries and certain
intercompany balances and transactions.
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