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SEC Filings

10-Q
ARCH COAL INC filed this Form 10-Q on 10/31/2017
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Results of Operations - Successor

Three and Nine Months Ended September 30, 2017  

Revenues. Our revenues include sales to customers of coal produced at our operations and coal purchased from third parties. Transportation costs are included in cost of coal sales and amounts billed by us to our customers for transportation are included in revenues.

Coal Sales. The following table summarizes information about our coal sales during the three and nine months ended September 30, 2017:
 
 
Successor
 
 
Three Months Ended September 30,
 
Nine Months Ended September 30,
 
 
2017
 
2017
 
 
(In thousands)
Coal sales
 
$
613,538

 
$
1,764,379

Tons sold
 
26,307

 
74,506

 
On a consolidated basis, coal sales in the third quarter of 2017 by segment were approximately 45% Powder River Basin, 39% Metallurgical, and 15% Other, and coal sales in the first nine months of 2017 by segment were approximately 44% Powder River Basin, 39% Metallurgical, and 16% Other. Tons sold for the third quarter of 2017 by segment were approximately 83% Powder River Basin, 8% Metallurgical, and 9% Other, and tons sold for the first nine months of 2017 by segment were approximately 82% Powder River Basin, 9% Metallurgical, and 9% Other. See discussion in “Operational Performance” for further information about regional results.

Costs, expenses and other.  The following table summarizes costs, expenses and other components of operating income during the three and nine months ended September 30, 2017:
 
 
Successor
 
Three Months Ended September 30,
 
Nine Months Ended September 30,
 
2017
 
2017
 
(In thousands)
Cost of sales (exclusive of items shown separately below)
$
495,424

 
$
1,391,872

Depreciation, depletion and amortization
31,914

 
94,536

Accretion on asset retirement obligations
7,580

 
22,826

Amortization of sales contracts, net
13,861

 
42,903

Change in fair value of coal derivatives and coal trading activities, net
1,028

 
2,745

Selling, general and administrative expenses
21,052

 
63,721

Gain on sale of Lone Mountain Processing, Inc.
(21,574
)
 
(21,574
)
Other operating income, net
(8,236
)
 
(14,095
)
Total costs, expenses and other
$
541,049

 
$
1,582,934

 
Cost of sales.  Our cost of sales for the third quarter of 2017, consisted primarily of labor related costs (approximately 28%), repairs and supplies (approximately 34%), operating taxes and royalties (approximately 20%), and transportation costs (approximately 13%), and for the first nine months of 2017, consisted primarily of labor related costs (approximately 27%), repairs and supplies (approximately 36%), operating taxes and royalties (approximately 21%), and transportation costs (approximately 13%). See discussion in “Operational Performance” for further information about regional results.
 
Depreciation, depletion and amortization.  Our depreciation, depletion, and amortization costs for the third quarter of 2017 consist of depreciation of plant and equipment (approximately 58%), depletion of reserves (approximately 22%), and amortization of development costs (approximately 20%), and for the for the first nine months of 2017 consist of depreciation of plant and equipment (approximately 61%), depletion of reserves (approximately 19%), and amortization of development costs (approximately 20%). This reflects the application of fresh start accounting. For further information on fresh start accounting, please see Note 1 to the Condensed Consolidated Financial Statements, “Basis of Presentation.”


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