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These excerpts taken from the ACI 10-K filed Feb 27, 2009. Accounting
Standards Issued and Not Yet Adopted
In February 2008, the FASB issued Staff Position
FAS 157-2,
Effective Date of FASB Statement No. 157, which we
refer to as FSP
FAS 157-2,
which delays the effective date of Statement No. 157 for
nonfinancial assets and nonfinancial liabilities, except for
those items that are recognized or disclosed at fair value in
the financial statements on a recurring basis. For the items
within the scope of Statement No. 157, FSP
FAS 157-2
is effective for financial statements issued for fiscal years
and interim periods beginning after November 15, 2008. We
are assessing the potential impact of Statement No. 157 on
the applicable fair value measurements and will adopt FSP
FAS 157-2
prospectively on January 1, 2009.
In December 2007, the FASB issued Statement of Financial
Accounting Standards No. 160, Noncontrolling Interests
in Consolidated Financial Statements, an amendment of ARB
No. 51, which we refer to as Statement No. 160.
Statement No. 160 requires that a noncontrolling interest
(minority interest) in a consolidated subsidiary be displayed in
the consolidated balance sheet as a separate component of
equity. The amount of net income attributable to the
noncontrolling interest will be included in consolidated net
income on the face of the consolidated statement of income for
all periods presented. Earnings per share will continue to be
calculated based on income attributable to the controlling
interest. Noncontrolling interests in our subsidiaries were
$9.2 million and $8.3 million at December 31,
2008 and 2007, respectively. Statement No. 160 also
includes expanded disclosure requirements regarding the
interests of the parent and its noncontrolling interest.
Statement No. 160 is effective for fiscal years beginning
on or after December 15, 2008. Early adoption is not
allowed. We do not expect that the adoption of Statement
No. 160 will have a material impact on our financial
position or results of operations.
The discussion below presents the sensitivity of the market
value of our financial instruments to selected changes in market
rates and prices. The range of changes reflects our view of
changes that are reasonably possible over a one-year period.
We manage our commodity price risk for our non-trading,
long-term coal contract portfolio through the use of long-term
coal supply agreements, and to a limited extent, through the use
of derivative instruments. At December 31, 2008, our
expected unpriced production approximated 14 million to
18 million tons in 2009, 55 million to 65 million
tons in 2010 and 95 million to 105 million tons in
2011.
We are exposed to commodity price risk in our coal trading
activities, which represents the potential loss that could be
caused by an adverse change in the market value of coal. Our
coal trading portfolio included forward, swap and put and call
option contracts at December 31, 2008. With respect to our
coal trading positions, a 10% decrease in forward coal prices
would cause a $0.9 million decrease in the fair value of
these positions. The timing of the estimated future realization
of the value of our trading portfolio is 88% in 2009 and 12% in
2010.
We are also exposed to the risk of fluctuations in cash flows
related to our purchase of diesel fuel. We use approximately
50 million gallons of diesel fuel annually in our
operations. We enter into forward physical purchase contracts,
as well as heating oil swaps and options, to reduce volatility
in the price of diesel fuel for our operations. At
December 31, 2008, we had protected the price of
approximately 68% of our forecasted diesel purchases for 2009,
85% of which was accomplished through the use of the derivative
instruments noted above. At December 31, 2007, we had
protected approximately 23% of our forecasted purchases for
2008. The swap agreements essentially fix the price paid for
diesel fuel by requiring us to pay a fixed heating oil price and
receive a floating heating oil price. The call options protect
against increases in diesel fuel by granting us the right to
participate in increases in heating oil prices. The changes in
the floating heating oil price highly correlate to changes in
diesel fuel prices. Accordingly, the derivatives qualify for
hedge accounting and the changes in the fair value of the
derivatives are recorded through other comprehensive income,
with any ineffectiveness recognized immediately in income. At
December 31, 2008, a $0.25 per gallon decrease in the price
of heating oil would result in an approximate $6.4 million
increase in our expense in 2009 resulting from heating oil
derivatives, which would be offset by a decrease in the cost of
our physical diesel purchases.
Table of Contents
We are exposed to market risk associated with interest rates due
to our existing level of indebtedness. At December 31,
2008, $967.0 million of our outstanding debt had fixed
interest rates, primarily our 6.75% Senior Notes, and
$339.3 million of outstanding borrowings have interest
rates that fluctuate based on changes in the respective market
rates. A one percentage point increase in the interest rates
related to these borrowings would result in an annualized
increase in interest expense of $3.4 million, based on
borrowing levels at December 31, 2008.
The consolidated financial statements and consolidated financial
statement schedule of Arch Coal, Inc. and subsidiaries are
included in this Annual Report on
Form 10-K
beginning on
page F-1.
None.
We performed an evaluation under the supervision and with the
participation of our management, including our chief executive
officer and chief financial officer, of the effectiveness of the
design and operation of our disclosure controls and procedures
as of December 31, 2008. Based on that evaluation, our
management, including our chief executive officer and chief
financial officer, concluded that the disclosure controls and
procedures were effective as of such date. There were no changes
in internal control over financial reporting that occurred
during our fiscal quarter ended December 31, 2008 that have
materially affected, or are reasonably likely to materially
affect, our internal control over financial reporting.
We incorporate by reference the report of independent registered
public accounting firm and management’s report on internal
control over financial reporting included on pages F-3 and F-4,
respectively, of this Annual Report on
Form 10-K.
None.
Accounting Standards Issued and Not Yet Adopted In February 2008, the FASB issued Staff Position FAS 157-2, Effective Date of FASB Statement No. 157, which we refer to as FSP FAS 157-2, which delays the effective date of Statement No. 157 for nonfinancial assets and nonfinancial liabilities, except for those items that are recognized or disclosed at fair value in the financial statements on a recurring basis. For the items within the scope of Statement No. 157, FSP FAS 157-2 is effective for financial statements issued for fiscal years and interim periods beginning after November 15, 2008. We are assessing the potential impact of Statement No. 157 on the applicable fair value measurements and will adopt FSP FAS 157-2 prospectively on January 1, 2009. In December 2007, the FASB issued Statement of Financial Accounting Standards No. 160, Noncontrolling Interests in Consolidated Financial Statements, an amendment of ARB No. 51, which we refer to as Statement No. 160. Statement No. 160 requires that a noncontrolling interest (minority interest) in a consolidated subsidiary be displayed in the consolidated balance sheet as a separate component of equity. The amount of net income attributable to the noncontrolling interest will be included in consolidated net income on the face of the consolidated statement of income for all periods presented. Earnings per share will continue to be calculated based on income attributable to the controlling interest. Noncontrolling interests in our subsidiaries were $9.2 million and $8.3 million at December 31, 2008 and 2007, respectively. Statement No. 160 also includes expanded disclosure requirements regarding the interests of the parent and its noncontrolling interest. Statement No. 160 is effective for fiscal years beginning on or after December 15, 2008. Early adoption is not allowed. We do not expect that the adoption of Statement No. 160 will have a material impact on our financial position or results of operations.
The discussion below presents the sensitivity of the market value of our financial instruments to selected changes in market rates and prices. The range of changes reflects our view of changes that are reasonably possible over a one-year period. We manage our commodity price risk for our non-trading, long-term coal contract portfolio through the use of long-term coal supply agreements, and to a limited extent, through the use of derivative instruments. At December 31, 2008, our expected unpriced production approximated 14 million to 18 million tons in 2009, 55 million to 65 million tons in 2010 and 95 million to 105 million tons in 2011. We are exposed to commodity price risk in our coal trading activities, which represents the potential loss that could be caused by an adverse change in the market value of coal. Our coal trading portfolio included forward, swap and put and call option contracts at December 31, 2008. With respect to our coal trading positions, a 10% decrease in forward coal prices would cause a $0.9 million decrease in the fair value of these positions. The timing of the estimated future realization of the value of our trading portfolio is 88% in 2009 and 12% in 2010. We are also exposed to the risk of fluctuations in cash flows related to our purchase of diesel fuel. We use approximately 50 million gallons of diesel fuel annually in our operations. We enter into forward physical purchase contracts, as well as heating oil swaps and options, to reduce volatility in the price of diesel fuel for our operations. At December 31, 2008, we had protected the price of approximately 68% of our forecasted diesel purchases for 2009, 85% of which was accomplished through the use of the derivative instruments noted above. At December 31, 2007, we had protected approximately 23% of our forecasted purchases for 2008. The swap agreements essentially fix the price paid for diesel fuel by requiring us to pay a fixed heating oil price and receive a floating heating oil price. The call options protect against increases in diesel fuel by granting us the right to participate in increases in heating oil prices. The changes in the floating heating oil price highly correlate to changes in diesel fuel prices. Accordingly, the derivatives qualify for hedge accounting and the changes in the fair value of the derivatives are recorded through other comprehensive income, with any ineffectiveness recognized immediately in income. At December 31, 2008, a $0.25 per gallon decrease in the price of heating oil would result in an approximate $6.4 million increase in our expense in 2009 resulting from heating oil derivatives, which would be offset by a decrease in the cost of our physical diesel purchases.
Table of ContentsWe are exposed to market risk associated with interest rates due to our existing level of indebtedness. At December 31, 2008, $967.0 million of our outstanding debt had fixed interest rates, primarily our 6.75% Senior Notes, and $339.3 million of outstanding borrowings have interest rates that fluctuate based on changes in the respective market rates. A one percentage point increase in the interest rates related to these borrowings would result in an annualized increase in interest expense of $3.4 million, based on borrowing levels at December 31, 2008.
The consolidated financial statements and consolidated financial statement schedule of Arch Coal, Inc. and subsidiaries are included in this Annual Report on Form 10-K beginning on page F-1.
None.
We performed an evaluation under the supervision and with the participation of our management, including our chief executive officer and chief financial officer, of the effectiveness of the design and operation of our disclosure controls and procedures as of December 31, 2008. Based on that evaluation, our management, including our chief executive officer and chief financial officer, concluded that the disclosure controls and procedures were effective as of such date. There were no changes in internal control over financial reporting that occurred during our fiscal quarter ended December 31, 2008 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting. We incorporate by reference the report of independent registered public accounting firm and management’s report on internal control over financial reporting included on pages F-3 and F-4, respectively, of this Annual Report on Form 10-K.
None. These excerpts taken from the ACI 10-K filed Feb 29, 2008. Accounting
Standards Issued and Not Yet Adopted
In September 2006, the FASB issued Statement of Financial
Accounting Standards No. 157, Fair Value
Measurements, which we refer to as Statement No. 157.
Statement No. 157 defines fair value, establishes a
framework for measuring fair value and expands disclosures about
fair value measurements. Statement No. 157 applies under
other accounting pronouncements that require or permit fair
value measurements. Statement No. 157 is effective
prospectively for fiscal years beginning after November 15,
2007, and interim periods within that fiscal year. We do not
expect the impact of adoption will be material.
The discussion below presents the sensitivity of the market
value of our financial instruments to selected changes in market
rates and prices. The range of changes reflects our view of
changes that are reasonably possible over a one-year period.
Market values are the present value of projected future cash
flows based on the market rates and prices chosen.
We manage our commodity price risk for our non-trading,
long-term coal contract portfolio through the use of long-term
coal supply agreements, and to a limited extent, through the use
of derivative instruments. At December 31, 2007, our
expected unpriced production approximated 15 million to
25 million tons in 2008, 85 million to 95 million
tons in 2009 and 95 million to 105 million tons in
2010.
We are exposed to commodity price risk in our trading of coal,
which represents the potential loss that could be caused by an
adverse change in the market value of coal. Our coal trading
portfolio included forward and option contracts at
December 31, 2007. We had no positions entered into for
trading purposes as of December 31, 2006. With respect to
our coal trading positions, a $0.50 decrease in Powder River
Basin coal prices and a $2 decrease in Central Appalachia coal
prices would cause a $2.9 million decrease in the fair
value of these positions. The timing of the estimated future
realization of the value of our trading portfolio is 30% in
2008, 68% in 2009 and 2% in 2010.
We are also exposed to the risk of fluctuations in cash flows
related to our purchase of diesel fuel. We use approximately
45 million gallons of diesel fuel annually in our
operations. We enter into forward physical purchase contracts
and heating oil swaps and options to reduce volatility in the
price of diesel fuel for our operations, and in doing so had
protected approximately 23% of our forecasted purchases for 2008
at December 31, 2007. At December 31, 2006, we had
protected approximately 68% of our forecasted purchases for
2007. The swap agreements essentially fix the price paid for
diesel fuel by requiring us to pay a fixed heating oil price and
receive a floating heating oil price. The call options protect
against increases in diesel fuel by granting us the right to
participate in increases in heating oil prices. The changes in
the floating heating oil price highly correlate to changes in
diesel fuel prices. Accordingly, the derivatives qualify for
hedge accounting and the changes in the fair value of the
derivatives are recorded through other comprehensive income. At
December 31, 2007, a $0.25 per gallon decrease in the price
of heating oil would result in a $2.2 million increase in
our expense in 2008 resulting from heating oil derivatives,
which would be offset by a decrease in the cost of our physical
diesel purchases.
We are exposed to market risk associated with interest rates due
to our existing level of indebtedness. At December 31,
2007, $977.4 million of our outstanding debt had fixed
interest rates, primarily our 6.75% Senior Notes, and
$325.8 million of outstanding borrowings had interest rates
that fluctuated based on changes in the respective market rates.
A one percentage point increase in the interest rates related to
these borrowings would
Table of Contents
result in an annualized increase in interest expense of
$3.3 million, based on borrowing levels at
December 31, 2007.
The consolidated financial statements and consolidated financial
statement schedule of Arch Coal, Inc. and subsidiaries are
included in this Annual Report on
Form 10-K
beginning on
page F-1.
None.
Accounting Standards Issued and Not Yet Adopted In September 2006, the FASB issued Statement of Financial Accounting Standards No. 157, Fair Value Measurements, which we refer to as Statement No. 157. Statement No. 157 defines fair value, establishes a framework for measuring fair value and expands disclosures about fair value measurements. Statement No. 157 applies under other accounting pronouncements that require or permit fair value measurements. Statement No. 157 is effective prospectively for fiscal years beginning after November 15, 2007, and interim periods within that fiscal year. We do not expect the impact of adoption will be material.
The discussion below presents the sensitivity of the market value of our financial instruments to selected changes in market rates and prices. The range of changes reflects our view of changes that are reasonably possible over a one-year period. Market values are the present value of projected future cash flows based on the market rates and prices chosen. We manage our commodity price risk for our non-trading, long-term coal contract portfolio through the use of long-term coal supply agreements, and to a limited extent, through the use of derivative instruments. At December 31, 2007, our expected unpriced production approximated 15 million to 25 million tons in 2008, 85 million to 95 million tons in 2009 and 95 million to 105 million tons in 2010. We are exposed to commodity price risk in our trading of coal, which represents the potential loss that could be caused by an adverse change in the market value of coal. Our coal trading portfolio included forward and option contracts at December 31, 2007. We had no positions entered into for trading purposes as of December 31, 2006. With respect to our coal trading positions, a $0.50 decrease in Powder River Basin coal prices and a $2 decrease in Central Appalachia coal prices would cause a $2.9 million decrease in the fair value of these positions. The timing of the estimated future realization of the value of our trading portfolio is 30% in 2008, 68% in 2009 and 2% in 2010. We are also exposed to the risk of fluctuations in cash flows related to our purchase of diesel fuel. We use approximately 45 million gallons of diesel fuel annually in our operations. We enter into forward physical purchase contracts and heating oil swaps and options to reduce volatility in the price of diesel fuel for our operations, and in doing so had protected approximately 23% of our forecasted purchases for 2008 at December 31, 2007. At December 31, 2006, we had protected approximately 68% of our forecasted purchases for 2007. The swap agreements essentially fix the price paid for diesel fuel by requiring us to pay a fixed heating oil price and receive a floating heating oil price. The call options protect against increases in diesel fuel by granting us the right to participate in increases in heating oil prices. The changes in the floating heating oil price highly correlate to changes in diesel fuel prices. Accordingly, the derivatives qualify for hedge accounting and the changes in the fair value of the derivatives are recorded through other comprehensive income. At December 31, 2007, a $0.25 per gallon decrease in the price of heating oil would result in a $2.2 million increase in our expense in 2008 resulting from heating oil derivatives, which would be offset by a decrease in the cost of our physical diesel purchases. We are exposed to market risk associated with interest rates due to our existing level of indebtedness. At December 31, 2007, $977.4 million of our outstanding debt had fixed interest rates, primarily our 6.75% Senior Notes, and $325.8 million of outstanding borrowings had interest rates that fluctuated based on changes in the respective market rates. A one percentage point increase in the interest rates related to these borrowings would
Table of Contentsresult in an annualized increase in interest expense of $3.3 million, based on borrowing levels at December 31, 2007.
The consolidated financial statements and consolidated financial statement schedule of Arch Coal, Inc. and subsidiaries are included in this Annual Report on Form 10-K beginning on page F-1.
None. This excerpt taken from the ACI 10-K filed Mar 1, 2007. Accounting Standards
Issued and Not Yet Adopted |
In February 2006, the FASB issued Statement of Financial
Accounting Standards No. 155, Accounting for Certain
Hybrid Financial Instruments (“Statement
No. 155”). Statement No. 155 simplifies the
accounting for certain hybrid financial instruments by
permitting fair value remeasurement for any hybrid financial
instrument that contains an embedded derivative that otherwise
would require bifurcation. Statement No. 155 also clarifies and
amends certain other provisions of Statement of Financial
Accounting Standards No. 133, Accounting for Derivative
Instruments and Hedging Activities and Statement of
Financial Accounting Standards No. 140, Accounting for
Transfers and Servicing of Financial Assets and Extinguishment
of Liabilities. Statement No. 155 is effective for all
financial instruments acquired, issued, or subject to a
remeasurement event occurring after January 1, 2007. The
Company does not expect the adoption of this statement to have a
material impact on its financial statements.
In July 2006, the FASB issued Interpretation No. 48,
Accounting for Uncertainty in Income Taxes
(“FIN 48”). FIN 48 prescribes a
recognition threshold and measurement attributes for the
financial statement recognition and measurement of a tax
position taken or expected to be taken in a tax return.
FIN 48 is effective for fiscal years beginning after
December 15, 2006. While the Company expects there will be
some impact of recognizing tax positions previously unrecognized
under Statement of Financial
F-17
Table of Contents
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS —
(Continued)
Accounting Standards No. 5, Accounting for
Contingencies, the Company is still analyzing FIN 48 to
determine what the impact of adoption will be.
In September 2006, the FASB issued Statement of Financial
Accounting Standards No. 157, Fair Value Measurements
(“Statement No. 157”). Statement No. 157
defines fair value, establishes a framework for measuring fair
value and expands disclosures about fair value measurements and
applies under other accounting pronouncements that require or
permit fair value measurements. Statement No. 157 is
effective prospectively for fiscal years beginning after
November 15, 2007, and interim periods within that fiscal
year. The Company is still analyzing Statement No. 157 to
determine what the impact of adoption will be.
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