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ACI » Topics » Our profitability may be adversely affected if we must satisfy certain below-market contracts with coal we purchase on the open market or with coal we produce at our remaining operations.This excerpt taken from the ACI 10-K filed Mar 1, 2010. Our
profitability may be adversely affected if we must satisfy
certain below-market contracts with coal we purchase on the open
market or with coal we produce at our remaining
operations.
We have agreed to guarantee Magnum’s obligations to supply
coal under certain coal sales contracts that we sold to Magnum.
In addition, we have agreed to purchase coal from Magnum in
order to satisfy our obligations under certain other contracts
that have not yet been transferred to Magnum, the longest of
which extends to the year 2017. If Magnum cannot supply the coal
required under these coal sales contracts, we would be required
to purchase coal on the open market or supply coal from our
existing operations in order to satisfy our obligations under
these contracts. At December 31, 2009, if we had purchased
the 15.6 million tons of coal required under these
contracts over their duration at market prices then in effect,
we would have incurred a loss of approximately
$476.2 million.
We may incur losses as a result of certain marketing,
trading and asset optimization strategies.
We seek to optimize our coal production and leverage our
knowledge of the coal industry through a variety of marketing,
trading and other asset optimization strategies. We maintain a
system of complementary processes and controls designed to
monitor and control our exposure to market and other risks as a
consequence of these strategies. These processes and controls
seek to balance our ability to profit from certain marketing,
trading and asset optimization strategies with our exposure to
potential losses. While we employ a variety of risk monitoring
and mitigation techniques, those techniques and accompanying
judgments cannot anticipate every potential outcome or the
timing of such outcomes. In addition, the processes and controls
that we use to manage our exposure to market and other risks
resulting from these strategies involve assumptions about the
degrees of
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correlation or lack thereof among prices of various assets or
other market indicators. These correlations may change
significantly in times of market turbulence or other unforeseen
circumstances. As a result, we may experience volatility in our
earnings as a result of our marketing, trading and asset
optimization strategies.
These excerpts taken from the ACI 10-K filed Feb 27, 2009. Our
profitability may be adversely affected if we must satisfy
certain below-market contracts with coal we purchase on the open
market or with coal we produce at our remaining
operations.
We have agreed to guarantee Magnum’s obligations to supply
coal under certain coal sales contracts that we sold to Magnum.
In addition, we have agreed to purchase coal from Magnum in
order to satisfy our obligations under certain other contracts
that have not yet been transferred to Magnum, the longest of
which extends to the year 2017. If Magnum cannot supply the coal
required under these coal sales contracts, we would be required
to purchase coal on the open market or supply coal from our
existing operations in order to satisfy our obligations under
these contracts. At December 31, 2008, if we had purchased
the 17.8 million tons of coal required under these
contracts over their duration at market prices then in effect,
we would have incurred a loss of approximately
$305.4 million.
Our profitability may be adversely affected if we must satisfy certain below-market contracts with coal we purchase on the open market or with coal we produce at our remaining operations. We have agreed to guarantee Magnum’s obligations to supply coal under certain coal sales contracts that we sold to Magnum. In addition, we have agreed to purchase coal from Magnum in order to satisfy our obligations under certain other contracts that have not yet been transferred to Magnum, the longest of which extends to the year 2017. If Magnum cannot supply the coal required under these coal sales contracts, we would be required to purchase coal on the open market or supply coal from our existing operations in order to satisfy our obligations under these contracts. At December 31, 2008, if we had purchased the 17.8 million tons of coal required under these contracts over their duration at market prices then in effect, we would have incurred a loss of approximately $305.4 million. This excerpt taken from the ACI 10-K filed Mar 1, 2007. Our profitability may be
adversely affected if we must satisfy certain below-market
contracts with coal we purchase on the open market or with coal
we produce at our remaining operations. |
We have agreed to guarantee Magnum’s obligations to supply
coal under certain coal sales contracts that we sold to Magnum,
the longest of which extends to the year 2017. In order for the
transfer of these coal sales contracts to become effective, the
customers must approve the assignments of the contracts to
Magnum. At December 31, 2006, one customer had not yet
approved these assignments. Until this customer consents, we
have agreed to purchase the coal required to satisfy these
obligations from Magnum at the same price we charge the customer
under the contracts. If Magnum cannot supply the coal required
under these coal sales contracts, we would be required to
purchase coal on the open market or supply coal from our
existing operations in order to satisfy our obligations under
these contracts. If we had purchased all of the coal required
under these contracts at market prices in effect on
December 31, 2006, we would have incurred a loss of
approximately $97.1 million related to these contracts.
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