e8vk
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934
Date of report (Date of earliest event reported): October 30, 2009 (October 30, 2009)
Arch Coal, Inc.
(Exact name of registrant as specified in its charter)
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Delaware
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1-13105
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43-0921172 |
(State or other jurisdiction of
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(Commission File Number)
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(I.R.S. Employer Identification No.) |
incorporation) |
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CityPlace One
One CityPlace Drive, Suite 300
St. Louis, Missouri 63141
(Address, including zip code, of principal executive offices)
Registrants telephone number, including area code: (314) 994-2700
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy
the filing obligation of the registrant under any of the following provisions:
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Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
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Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
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Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
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Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
Item 2.02 Results of Operations and Financial Condition.
On October 30, 2009, Arch Coal, Inc. (the Company) issued a press release containing its
third quarter 2009 financial results and providing guidance on its 2009 forecasted results. A copy
of the press release is attached hereto as exhibit 99.1.
The information contained in Item 2.02 and the exhibit attached hereto shall not be deemed
filed for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the
Exchange Act), or otherwise subject to the liabilities of that section, nor shall they be deemed
incorporated by reference in any filing under the Securities Act of 1933, as amended, or the
Exchange Act, except as shall be expressly set forth by specific reference in such a filing.
Item 9.01 Financial Statements and Exhibits.
(d) Exhibits
The following exhibits are attached hereto and filed herewith.
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Exhibit |
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No. |
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Description |
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99.1 |
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Press release dated October 30, 2009 announcing third quarter 2009 results. |
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Signatures
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly
caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
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Dated: October 30, 2009 |
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Arch Coal, Inc. |
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By:
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/s/ Robert G. Jones
Robert G. Jones
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Senior Vice President Law,
General Counsel
and Secretary |
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Exhibit Index
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Exhibit |
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No. |
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Description |
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99.1 |
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Press release dated October 30, 2009 announcing third quarter 2009 results. |
exv99w1
Exhibit 99.1
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News from
Arch Coal, Inc.
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FOR FURTHER INFORMATION:
Deck S. Slone
Vice President, Government, Investor and Public Affairs
314/994-2717
FOR IMMEDIATE RELEASE
Arch Coal, Inc. Reports Third Quarter 2009 Results
Arch Coal delivers a solid operating performance in weak market cycle
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Earnings Highlights |
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Quarter Ended |
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Nine Months Ended |
In $ millions, except per share data |
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9/30/09 |
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9/30/08 |
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9/30/09 |
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9/30/08 |
Revenues |
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$ |
615.0 |
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$ |
769.5 |
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$ |
1,850.6 |
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$ |
2,253.9 |
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Income from Operations |
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48.3 |
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87.9 |
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94.2 |
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373.9 |
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Net Income1 |
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25.2 |
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97.8 |
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40.6 |
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292.0 |
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Fully Diluted EPS |
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0.16 |
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0.68 |
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0.28 |
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2.02 |
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Adjusted EBITDA2 |
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$ |
120.6 |
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$ |
159.9 |
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$ |
314.4 |
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$ |
590.3 |
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1/- |
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Net income attributable to ACI. |
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2/- |
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Adjusted EBITDA is defined and reconciled under Reconciliation of Non-GAAP Measures in this
release. |
ST. LOUIS (October 30, 2009) Arch Coal, Inc. (NYSE: ACI) today reported net income of $25.2
million, or $0.16 per fully diluted share, in the third quarter of 2009 compared with net income of
$97.8 million, or $0.68 per fully diluted share, in the third quarter of 2008. The company also
recorded adjusted earnings before interest, taxes, depreciation, depletion and amortization
(EBITDA) of $120.6 million in the third quarter of 2009, representing a decline versus the
prior-year quarter when stronger coal market conditions prevailed.
Archs third quarter financial results reflect an improved performance over the second
quarter, said Steven F. Leer, Archs chairman and chief executive officer. We achieved margin
expansion in each operating segment, driven by increased metallurgical coal demand in Central
Appalachia and continued successful cost control across all regions. Our trading and brokerage
operations also added incremental earnings in the quarter just ended.
For the first nine months of 2009, Arch earned net income of $40.6 million and adjusted EBITDA
of $314.4 million. Net income and earnings per share figures included $7.2 million of expenses
pertaining to the acquisition of Jacobs Ranch. By comparison, Arch earned net income of $292.0
million and adjusted EBITDA of $590.3 million in the prior-year period when coal market conditions
were stronger.
Strategic Acquisition
As previously announced, Arch completed the acquisition of Rio Tintos Jacobs Ranch mine on
Oct. 1, 2009, for a purchase price of approximately $764 million, which includes an
1
estimate for
working capital adjustments. The company estimates synergies from the transaction of between $45
million and $55 million annually, beginning in 2010. Roughly one half of the synergies represent
operational cost savings, while the remaining savings relate to administrative cost reductions as
well as enhanced coal-blending optimization opportunities.
The acquisition of Jacobs Ranch will further expand our size, scale and strategic position in
the Powder River Basin (PRB), the nations largest, fastest-growing and most cost competitive
coal supply region, said Leer. The integration of Jacobs Ranch into Black Thunder also creates
what we believe to be the largest single coal-mining complex in the world, and further strengthens
Archs standing as a preferred, low-cost energy supplier to our nations electric power
generators.
The integration process has been smooth and swift to date, and we remain on target for
complete integration during the fourth quarter, said Leer. This acquisition will allow us to
reduce the expanded operations average cost structure, improve coal quality optimization, boost
our operational flexibility and increase output as market conditions warrant.
Looking ahead, this acquisition supplements our existing low-cost assets and reserves in the
PRB and further positions the company to capitalize on improving coal market fundamentals as 2010
progresses, continued Leer.
During the fourth quarter of 2009, Arch expects to record roughly $8 million in one-time
acquisition-related expenses related to severance costs, advisory and legal fees as well as other
costs from the integration of the operations.
Financial Developments
During the third quarter of 2009, Arch issued new debt and equity, with net proceeds from
those transactions totaling nearly $900 million. Additionally, the company successfully amended
and extended its $800 million revolving credit facility, increasing the capacity to $860 million
through June 2011 and extending more than 95 percent of the original capacity through March 2013.
Arch ended the third quarter of 2009 with $1.9 billion in total debt, slightly increasing its
debt-to-total-capital ratio to 47 percent. At Sept. 30, the company had $1.466 billion of
committed total liquidity, comprised of $840 million of cash on hand and $626 million available
under its short-term borrowing facilities. On a pro forma basis at Oct. 1 (which reflects the
payment of $764 million for the Jacobs Ranch acquisition), Arch had $702 million of committed total
liquidity.
Archs successful capital markets transactions helped to pre-finance the Jacobs Ranch
acquisition, further strengthen our balance sheet and expand our liquidity position, said John T.
Drexler, Archs senior vice president and chief financial officer. We currently expect our cash
on hand plus the expected cash flows from operations to sufficiently fund our anticipated capital
spending plans for the remainder of this year and next year.
Operational Results
Our mines turned in good operational performances in the third quarter of 2009 when
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compared
with the second quarter, with each region achieving an increase in per-ton operating margin and
demonstrating effective cost management, said John W. Eaves, Archs president and chief operating
officer. In particular, our Western Bituminous region overcame several challenges during the
first half of the year to deliver a significant expansion in operating margin in the third quarter.
Additionally, our Central Appalachian region benefited from improving metallurgical coal sales in
the quarter just ended compared with the second quarter of 2009.
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Arch Coal, Inc. |
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3Q09 |
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2Q09 |
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3Q08 |
Tons sold (in millions) |
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29.1 |
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27.4 |
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34.8 |
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Average sales price per ton |
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$ |
20.05 |
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$ |
19.43 |
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$ |
20.38 |
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Cash cost per ton |
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$ |
15.75 |
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$ |
16.26 |
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$ |
14.59 |
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Cash margin per ton |
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$ |
4.30 |
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$ |
3.17 |
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$ |
5.79 |
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Total operating cost per ton |
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$ |
18.19 |
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$ |
18.74 |
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$ |
16.65 |
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Operating margin per ton |
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$ |
1.86 |
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$ |
0.69 |
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$ |
3.73 |
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Consolidated results may not tie to regional breakout due to rounding.
Above figures exclude transportation costs billed to customers.
Operating cost per ton includes depreciation, depletion and amortization.
Amounts reflected in this table exclude certain coal sales and purchases which have no effect on company results. For further
description of the excluded transactions, please refer to the supplemental regional schedule that can be found at
http://investor.archcoal.com.
Consolidated tons sold and average sales price per ton increased modestly in the third quarter
of 2009 compared with the second quarter, reflecting a larger sales percentage of Western
Bituminous and Central Appalachian tons in the companys overall sales mix. Third quarter 2009
consolidated per-ton operating costs declined 3 percent over the same time period, benefiting from
cost containment across the companys operating segments. Archs consolidated operating margin
expanded nearly three-fold in the third quarter of 2009 compared with the second quarter.
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Powder River Basin |
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3Q09 |
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2Q09 |
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3Q08 |
Tons sold (in millions) |
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21.5 |
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21.3 |
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26.2 |
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Average sales price per ton |
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$ |
12.26 |
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$ |
12.56 |
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$ |
11.21 |
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Cash cost per ton |
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$ |
10.04 |
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$ |
10.54 |
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$ |
9.27 |
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Cash margin per ton |
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$ |
2.22 |
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$ |
2.02 |
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$ |
1.94 |
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Total operating cost per ton |
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$ |
11.31 |
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$ |
11.84 |
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$ |
10.41 |
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Operating margin per ton |
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$ |
0.95 |
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$ |
0.72 |
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$ |
0.80 |
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Above figures exclude transportation costs billed to customers.
Operating cost per ton includes depreciation, depletion and amortization.
In the Powder River Basin, third quarter 2009 volumes increased slightly when compared with
the second quarter, due to higher brokerage activity which offset lower production stemming from
current weak coal market conditions. Average sales price declined $0.30 per ton
over the same time period, resulting from lower pricing obtained on market-priced tons as well
as a larger percentage of lower-priced Coal Creek tons in the regions sales mix. Despite reduced
production, third quarter 2009 operating costs fell by $0.53 per ton versus the second quarter,
driven by ongoing cost containment efforts in the region. Archs Powder River Basin segment
expanded its third quarter 2009 per-ton operating margin by 32 percent compared with the second
quarter.
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Western Bituminous Region |
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3Q09 |
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2Q09 |
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3Q08 |
Tons sold (in millions) |
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4.6 |
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3.5 |
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5.1 |
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Average sales price per ton |
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$ |
29.08 |
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$ |
29.93 |
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$ |
26.76 |
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Cash cost per ton |
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$ |
20.70 |
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$ |
26.06 |
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$ |
19.01 |
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Cash margin per ton |
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$ |
8.38 |
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$ |
3.87 |
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$ |
7.75 |
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Total operating cost per ton |
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$ |
25.57 |
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$ |
31.49 |
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$ |
22.69 |
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Operating margin per ton |
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$ |
3.51 |
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($1.56 |
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$ |
4.07 |
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Above figures exclude transportation costs billed to customers.
Operating cost per ton includes depreciation, depletion and amortization.
In the Western Bituminous region, third quarter 2009 volumes increased 1.1 million tons versus
the second quarter, reflecting increased shipments among the operations in Utah. Average sales
price declined $0.85 per ton over the same time period due to a less favorable mix of customer
shipments. Third quarter 2009 operating costs declined $5.92 per ton compared with the second
quarter, benefiting from the absence of longwall moves and improved cost control at the West Elk
mine during the quarter just ended. The Western Bituminous region achieved a significant
improvement in operating profit in the third quarter of 2009, recording operating margin of $3.51
per ton compared with a loss of $1.56 per ton in the second quarter.
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Central Appalachia |
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3Q09 |
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2Q09 |
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3Q08 |
Tons sold (in millions) |
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3.0 |
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2.7 |
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3.5 |
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Average sales price per ton |
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$ |
62.44 |
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$ |
60.66 |
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$ |
78.95 |
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Cash cost per ton |
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$ |
49.32 |
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$ |
49.26 |
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$ |
47.56 |
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Cash margin per ton |
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$ |
13.12 |
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$ |
11.40 |
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$ |
31.39 |
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Total operating cost per ton |
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$ |
56.50 |
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$ |
57.30 |
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$ |
54.11 |
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Operating margin per ton |
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$ |
5.94 |
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$ |
3.36 |
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$ |
24.84 |
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Above figures exclude transportation costs billed to customers.
Operating cost per ton includes depreciation, depletion and amortization.
Amounts reflected in this table exclude certain coal sales and purchases which have no effect on company results.
For further description of the excluded transactions, please refer to the supplemental regional schedule that can
be found at http://investor.archcoal.com.
In Central Appalachia, third quarter 2009 volumes increased moderately compared with the
second quarter, reflecting higher shipment levels of metallurgical, pulverized coal injection (PCI)
and steam coal tons. Average price realizations rose by $1.78 per ton over the same time period,
benefiting from higher pricing on metallurgical and PCI coal sales and increased
metallurgical/PCI coal shipments. Third quarter 2009 operating costs declined $0.80 per ton
versus the second quarter, driven by higher volume levels and cost control efforts across the
operations. Archs Central Appalachian segment expanded its per-ton operating margin by 77 percent
in the third quarter of 2009 versus the second quarter.
Coal Market Trends
Arch believes that coal markets are in the early stages of recovery after having suffered a
record decline in coal consumption during 2009. Specifically:
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Improving global and domestic steel utilization is translating into increased demand for
U.S. metallurgical grade coal. As seen in prior market cycles, strong metallurgical coal
markets create a spillover effect on steam markets as high-quality steam coal migrates to
metallurgical coal markets to meet rising demand. |
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A resumption of economic growth in Asia has fueled increased coal consumption in that
region. In addition, ongoing supply constraints in traditional coal exporting nations
should again help further tighten seaborne coal supply. These shifting trends in global
seaborne coal supply flows will likely create opportunities for increased U.S.
metallurgical and steam coal exports over time into both the Atlantic and Pacific markets. |
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While natural gas storage levels remain well above historical averages, the significant
decline in rig counts along with under-investment across the natural gas sector and the
prospect for recovery in industrial demand have increased natural gas futures prices to
well above $5 per million Btu in 2010, which should reverse the trend of coal-to-gas
switching. |
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While Arch estimates U.S. power demand will decline 4 percent in 2009 due to one of
the mildest summers on record in major coal consuming regions as well as significant
declines in industrial demand stemming from the global recession the company believes
coal consumption could grow again in 2010 even if power demand increases only modestly. In
particular, Arch expects coal to regain ground lost temporarily to competing fuels such as
nuclear, hydro and natural gas, considering the start of nuclear refueling cycles, more
normal weather patterns and higher natural gas price futures. |
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An estimated 55 million tons of additional domestic coal will be demanded by the new
U.S. coal-fueled power plants coming online between 2009 and 2012. |
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Arch estimates total domestic coal supply will fall by roughly 100 million tons in 2009,
with declines in nearly all coal producing basins. In particular, Arch believes Central
Appalachia is on pace to produce 200 million tons of coal in 2009, with a fourth quarter
annualized run rate of below 190 million tons. Rationalization of high-cost coal mines,
continued regulatory and permitting challenges and the roll-off of high-priced contracts
should further reduce production in that region during 2010. |
While we are seeing improvement in met markets and in the underlying global and domestic
economies, high stockpiles at U.S. generators will likely dampen steam coal markets in the first
half of 2010, said Leer. Thus, we will continue to implement our company strategy of
matching production levels to our expectations of market demand, which we believe is in the
best interest of our shareholders. We will also retain the flexibility to respond to improving
coal market fundamentals, which we believe will occur during the course of 2010 and 2011.
Sales Contract Portfolio
Including volume from Jacobs Ranch for the fourth quarter of 2009, Arch now projects total
sales volumes from company-controlled operations of between 121 million and 125 million tons for
full year 2009, excluding purchased coal from third parties.
Given revised volume levels and limited sales commitments signed in the third quarter,
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Arch is
now fully committed and priced for 2009. Based on 2009 production levels, the company has
uncommitted volumes of 15 million to 25 million tons in 2010, and uncommitted volumes of 80 million
to 90 million tons in 2011. In addition, Arch has roughly 10 million tons of coal committed but
not yet priced in 2010 and approximately 15 million tons committed but not yet priced in 2011.
During the third quarter, we sold additional volumes into met markets, putting us on target
to sell 2 million tons into met and pulverized coal injection markets in 2009, said Eaves.
Additionally, we successfully shipped another vessel of steam coal to China off the West Coast in
September, and continue to have discussions for supplying the fast-growing Asia-Pacific market in
the future.
Our priorities for 2010 will be to more than double our sales of met and PCI coal, compete in
the seaborne steam markets on an opportunistic basis, patiently market our uncommitted sales
position and remain focused on profitably managing our business through a potentially muted 2010
domestic steam coal market, added Eaves.
2009 Guidance
Including the integration of Jacobs Ranch into Black Thunder during the fourth quarter, Arch
now expects the following guidance ranges for 2009:
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Sales volume from company-controlled operations in the 121 million to 125 million ton
range, excluding purchased coal from third parties. |
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Earnings per fully diluted share in the $0.28 to $0.43 range. The companys 2009
earnings per share estimate includes an expected $15 million of acquisition-related
expenses ($0.06 per share) for Jacobs Ranch, and an estimated $16 million of non-cash
intangible asset charges ($0.07 per share) related to above-market sales contract
amortization stemming from the Jacobs Ranch acquisition that is expected to be recorded in
the fourth quarter. |
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Adjusted EBITDA in the $449 million to $490 million range. EBITDA estimates exclude the
impact of acquisition-related expenses for Jacobs Ranch. |
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Capital spending in the $160 million to $170 million range, excluding reserve additions. |
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Depreciation, depletion and amortization expense in the $314 million to $322 million
range. |
In light of the Great Recession of 2009, were pleased to be profitably managing through a
severe downturn in energy markets, said Leer. We are also seeing domestic and global economies
begin to transition from recession to recovery. With the addition of the former Jacobs Ranch
operation to our safe, environmentally responsible and low-cost operational profile, we are
strongly positioned for the upturn which we believe is just beginning to be reflected in coal
demand.
Looking ahead, its our view that ongoing supply constraints here at home and around the
world coupled with a rebound in energy demand globally will exert upward pressure on
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coal
prices over the long term. We intend to manage our business accordingly. Arch is strategically
positioned as the nations second largest coal producer to service the expected growth in coal
demand both domestically and abroad.
A conference call discussing Arch Coals third quarter 2009 financial results will be webcast
live today at 11 a.m. E.D.T. The conference call can be accessed via the investor section of the
Arch Coal Web site (www.archcoal.com <http://www.archcoal.com>).
St. Louis-based Arch Coal is the second largest U.S. coal producer. Through its national
network of mines, Arch supplies cleaner-burning, low-sulfur coal to U.S. power producers to fuel
roughly 8 percent of the nations electricity. The company also ships coal to domestic and
international steel manufacturers as well as international power producers.
Forward-Looking Statements: This press release contains forward-looking statements that is,
statements related to future, not past, events. In this context, forward-looking statements often
address our expected future business and financial performance, and often contain words such as
expects, anticipates, intends, plans, believes, seeks, or will. Forward-looking
statements by their nature address matters that are, to different degrees, uncertain. For us,
particular uncertainties arise from changes in the demand for our coal by the domestic electric
generation industry; from legislation and regulations relating to the Clean Air Act and other
environmental initiatives; from operational, geological, permit, labor and weather-related factors;
from fluctuations in the amount of cash we generate from operations; from future integration of
acquired businesses; and from numerous other matters of national, regional and global scale,
including those of a political, economic, business, competitive or regulatory nature. These
uncertainties may cause our actual future results to be materially different than those expressed
in our forward-looking statements. We do not undertake to update our forward-looking statements,
whether as a result of new information, future events or otherwise, except as may be required by
law. For a description of some of the risks and uncertainties that may affect our future results,
you should see the risk factors described from time to time in the reports we file with the
Securities and Exchange Commission.
# # #
7
Arch Coal, Inc. and Subsidiaries
Condensed Consolidated Statements of Income
(In thousands, except per share data)
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Three Months Ended |
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Nine Months Ended |
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September 30, |
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September 30, |
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2009 |
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2008 |
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2009 |
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2008 |
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(Unaudited) |
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(Unaudited) |
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Revenues |
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Coal sales |
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$ |
614,957 |
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$ |
769,458 |
|
|
$ |
1,850,609 |
|
|
$ |
2,253,925 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Costs, expenses and other |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cost of coal sales |
|
|
489,290 |
|
|
|
567,372 |
|
|
|
1,503,937 |
|
|
|
1,650,259 |
|
Depreciation, depletion and amortization |
|
|
71,468 |
|
|
|
72,185 |
|
|
|
212,986 |
|
|
|
217,180 |
|
Selling, general and administrative expenses |
|
|
24,029 |
|
|
|
22,235 |
|
|
|
70,770 |
|
|
|
80,937 |
|
Change in fair value of coal derivatives and coal trading activities, net |
|
|
(3,342 |
) |
|
|
18,382 |
|
|
|
(10,328 |
) |
|
|
(65,336 |
) |
Costs related to acquisition of Jacobs Ranch |
|
|
791 |
|
|
|
|
|
|
|
7,166 |
|
|
|
|
|
Other operating expense (income), net |
|
|
(15,617 |
) |
|
|
1,354 |
|
|
|
(28,141 |
) |
|
|
(2,993 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
566,619 |
|
|
|
681,528 |
|
|
|
1,756,390 |
|
|
|
1,880,047 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income from operations |
|
|
48,338 |
|
|
|
87,930 |
|
|
|
94,219 |
|
|
|
373,878 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest expense, net: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest expense |
|
|
(29,791 |
) |
|
|
(17,019 |
) |
|
|
(70,466 |
) |
|
|
(56,228 |
) |
Interest income |
|
|
399 |
|
|
|
235 |
|
|
|
7,284 |
|
|
|
1,128 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(29,392 |
) |
|
|
(16,784 |
) |
|
|
(63,182 |
) |
|
|
(55,100 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income before income taxes |
|
|
18,946 |
|
|
|
71,146 |
|
|
|
31,037 |
|
|
|
318,778 |
|
Provision for (benefit from) income taxes |
|
|
(6,270 |
) |
|
|
(26,881 |
) |
|
|
(9,590 |
) |
|
|
26,059 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income |
|
|
25,216 |
|
|
|
98,027 |
|
|
|
40,627 |
|
|
|
292,719 |
|
Less: Net (income) loss attributable to noncontrolling interest |
|
|
(31 |
) |
|
|
(179 |
) |
|
|
11 |
|
|
|
(727 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income attributable to Arch Coal, Inc. |
|
$ |
25,185 |
|
|
$ |
97,848 |
|
|
$ |
40,638 |
|
|
$ |
291,992 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Earnings per common share |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic earnings per common share |
|
$ |
0.16 |
|
|
$ |
0.68 |
|
|
$ |
0.28 |
|
|
$ |
2.03 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted earnings per common share |
|
$ |
0.16 |
|
|
$ |
0.68 |
|
|
$ |
0.28 |
|
|
$ |
2.02 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average shares outstanding |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic |
|
|
155,622 |
|
|
|
144,035 |
|
|
|
147,122 |
|
|
|
143,885 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted |
|
|
156,005 |
|
|
|
144,898 |
|
|
|
147,332 |
|
|
|
144,848 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Dividends declared per common share |
|
$ |
0.09 |
|
|
$ |
0.09 |
|
|
$ |
0.27 |
|
|
$ |
0.25 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted EBITDA (A) |
|
$ |
120,566 |
|
|
$ |
159,936 |
|
|
$ |
314,382 |
|
|
$ |
590,331 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(A) |
|
Adjusted EBITDA is defined and reconciled under Reconciliation of Non-GAAP Measures later in
this release. |
Arch Coal, Inc. and Subsidiaries
Condensed Consolidated Balance Sheets
(In thousands)
|
|
|
|
|
|
|
|
|
|
|
September 30, |
|
|
December 31, |
|
|
|
2009 |
|
|
2008 |
|
|
|
(Unaudited) |
|
|
|
|
|
Assets |
|
|
|
|
|
|
|
|
Current assets |
|
|
|
|
|
|
|
|
Cash and cash equivalents |
|
$ |
840,293 |
|
|
$ |
70,649 |
|
Trade accounts receivable |
|
|
173,994 |
|
|
|
215,053 |
|
Other receivables |
|
|
20,662 |
|
|
|
43,419 |
|
Inventories |
|
|
237,293 |
|
|
|
191,568 |
|
Prepaid royalties |
|
|
25,711 |
|
|
|
43,780 |
|
Deferred income taxes |
|
|
33,830 |
|
|
|
52,918 |
|
Coal derivative assets |
|
|
23,721 |
|
|
|
43,173 |
|
Other |
|
|
45,539 |
|
|
|
45,818 |
|
|
|
|
|
|
|
|
Total current assets |
|
|
1,401,043 |
|
|
|
706,378 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Property, plant and equipment, net |
|
|
2,745,469 |
|
|
|
2,703,083 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other assets |
|
|
|
|
|
|
|
|
Prepaid royalties |
|
|
83,722 |
|
|
|
66,918 |
|
Goodwill |
|
|
46,832 |
|
|
|
46,832 |
|
Deferred income taxes |
|
|
302,377 |
|
|
|
294,682 |
|
Equity investments |
|
|
90,306 |
|
|
|
87,761 |
|
Other |
|
|
124,189 |
|
|
|
73,310 |
|
|
|
|
|
|
|
|
Total other assets |
|
|
647,426 |
|
|
|
569,503 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total assets |
|
$ |
4,793,938 |
|
|
$ |
3,978,964 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Liabilities and Stockholders Equity |
|
|
|
|
|
|
|
|
Current liabilities |
|
|
|
|
|
|
|
|
Accounts payable |
|
$ |
129,048 |
|
|
$ |
186,322 |
|
Coal derivative liabilities |
|
|
5,640 |
|
|
|
10,757 |
|
Accrued expenses and other current liabilities |
|
|
166,448 |
|
|
|
249,203 |
|
Current maturities of debt and short-term borrowings |
|
|
195,333 |
|
|
|
213,465 |
|
|
|
|
|
|
|
|
Total current liabilities |
|
|
496,469 |
|
|
|
659,747 |
|
Long-term debt |
|
|
1,692,167 |
|
|
|
1,098,948 |
|
Asset retirement obligations |
|
|
270,642 |
|
|
|
255,369 |
|
Accrued pension benefits |
|
|
63,904 |
|
|
|
73,486 |
|
Accrued postretirement benefits other than pension |
|
|
40,566 |
|
|
|
58,163 |
|
Accrued workers compensation |
|
|
27,706 |
|
|
|
30,107 |
|
Other noncurrent liabilities |
|
|
80,473 |
|
|
|
65,526 |
|
|
|
|
|
|
|
|
Total liabilities |
|
|
2,671,927 |
|
|
|
2,241,346 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Redeemable noncontrolling interest |
|
|
8,940 |
|
|
|
8,885 |
|
|
|
|
|
|
|
|
|
|
Stockholders Equity |
|
|
|
|
|
|
|
|
Common stock |
|
|
1,643 |
|
|
|
1,447 |
|
Paid-in capital |
|
|
1,718,088 |
|
|
|
1,381,496 |
|
Treasury stock, at cost |
|
|
(53,848 |
) |
|
|
(53,848 |
) |
Retained earnings |
|
|
479,025 |
|
|
|
478,734 |
|
Accumulated other comprehensive loss |
|
|
(31,837 |
) |
|
|
(79,096 |
) |
|
|
|
|
|
|
|
Total stockholders equity |
|
|
2,113,071 |
|
|
|
1,728,733 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total liabilities and stockholders equity |
|
$ |
4,793,938 |
|
|
$ |
3,978,964 |
|
|
|
|
|
|
|
|
Arch Coal, Inc. and Subsidiaries
Condensed Consolidated Statements of Cash Flows
(In thousands)
|
|
|
|
|
|
|
|
|
|
|
Nine Months Ended |
|
|
|
September 30, |
|
|
|
2009 |
|
|
2008 |
|
|
|
(Unaudited) |
|
Operating activities |
|
|
|
|
|
|
|
|
Net income |
|
$ |
40,627 |
|
|
$ |
292,719 |
|
Adjustments to reconcile to cash provided by operating activities: |
|
|
|
|
|
|
|
|
Depreciation, depletion and amortization |
|
|
212,986 |
|
|
|
217,180 |
|
Prepaid royalties expensed |
|
|
24,140 |
|
|
|
27,161 |
|
Gain on dispositions of property, plant and equipment |
|
|
(81 |
) |
|
|
(178 |
) |
Employee stock-based compensation expense |
|
|
10,253 |
|
|
|
9,768 |
|
Changes in: |
|
|
|
|
|
|
|
|
Receivables |
|
|
63,785 |
|
|
|
(29,646 |
) |
Inventories |
|
|
(45,725 |
) |
|
|
3,923 |
|
Coal derivative assets and liabilities |
|
|
21,911 |
|
|
|
(57,929 |
) |
Accounts payable, accrued expenses and other current liabilities |
|
|
(74,607 |
) |
|
|
28,821 |
|
Deferred income taxes |
|
|
(15,165 |
) |
|
|
8,067 |
|
Other |
|
|
8,319 |
|
|
|
8,208 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash provided by operating activities |
|
|
246,443 |
|
|
|
508,094 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Investing activities |
|
|
|
|
|
|
|
|
Capital expenditures |
|
|
(280,033 |
) |
|
|
(414,125 |
) |
Proceeds from dispositions of property, plant and equipment |
|
|
806 |
|
|
|
1,069 |
|
Purchases of investments and advances to affiliates |
|
|
(10,353 |
) |
|
|
(4,359 |
) |
Additions to prepaid royalties |
|
|
(22,874 |
) |
|
|
(19,429 |
) |
Reimbursement of deposits on equipment |
|
|
3,209 |
|
|
|
2,697 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash used in investing activities |
|
|
(309,245 |
) |
|
|
(434,147 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Financing activities |
|
|
|
|
|
|
|
|
Proceeds from the issuance of long-term debt |
|
|
584,784 |
|
|
|
|
|
Proceeds from the sale of common stock |
|
|
326,452 |
|
|
|
|
|
Purchases of treasury stock |
|
|
|
|
|
|
(47,932 |
) |
Net increase in borrowings under lines of credit and commercial paper program |
|
|
4,345 |
|
|
|
50,882 |
|
Net payments on other debt |
|
|
(13,276 |
) |
|
|
(10,995 |
) |
Debt financing costs |
|
|
(29,596 |
) |
|
|
(233 |
) |
Dividends paid |
|
|
(40,347 |
) |
|
|
(35,989 |
) |
Issuance of common stock under incentive plans |
|
|
84 |
|
|
|
6,306 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash provided by (used in) financing activities |
|
|
832,446 |
|
|
|
(37,961 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Increase in cash and cash equivalents |
|
|
769,644 |
|
|
|
35,986 |
|
Cash and cash equivalents, beginning of period |
|
|
70,649 |
|
|
|
5,080 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents, end of period |
|
$ |
840,293 |
|
|
$ |
41,066 |
|
|
|
|
|
|
|
|
Arch Coal, Inc. and Subsidiaries
Reconciliation of Non-GAAP Measures
(In thousands)
Included in the accompanying release, we have disclosed certain non-GAAP measures as defined by Regulation G.
The following reconciles these items to net income as reported under GAAP.
Adjusted EBITDA:
Adjusted EBITDA is defined as net income before the effect of net interest expense, income taxes
and our depreciation, depletion and amortization; less the income or loss of subsidiaries
attributable to noncontrolling interests.
Adjusted EBITDA is not a measure of financial performance in accordance with generally accepted
accounting principles, and items excluded to calculate Adjusted EBITDA are significant in
understanding and assessing our financial condition. Therefore, Adjusted EBITDA should not be
considered in isolation nor as an alternative to net income, income from operations, cash flows
from operations or as a measure of our profitability, liquidity or performance under generally
accepted accounting principles. We believe that Adjusted EBITDA presents a useful measure of our
ability to service and incur debt based on ongoing operations. Furthermore, analogous measures are
used by industry analysts to evaluate operating performance. In
addition, certain one-time events are excluded to make results more
comparable between periods. Investors should be aware that our
presentation of Adjusted EBITDA may not be comparable to similarly titled measures used by other
companies. The table below shows how we calculate Adjusted EBITDA.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended |
|
|
Nine Months Ended |
|
|
|
September 30, |
|
|
September 30, |
|
|
|
2009 |
|
|
2008 |
|
|
2009 |
|
|
2008 |
|
|
|
(Unaudited) |
|
|
(Unaudited) |
|
Net income |
|
$ |
25,216 |
|
|
$ |
98,027 |
|
|
$ |
40,627 |
|
|
$ |
292,719 |
|
Income tax expense (benefit) |
|
|
(6,270 |
) |
|
|
(26,881 |
) |
|
|
(9,590 |
) |
|
|
26,059 |
|
Interest expense, net |
|
|
29,392 |
|
|
|
16,784 |
|
|
|
63,182 |
|
|
|
55,100 |
|
Depreciation, depletion and amortization |
|
|
71,468 |
|
|
|
72,185 |
|
|
|
212,986 |
|
|
|
217,180 |
|
Costs related to acquisition of Jacobs Ranch |
|
|
791 |
|
|
|
|
|
|
|
7,166 |
|
|
|
|
|
(Income) loss attributable to noncontrolling interest |
|
|
(31 |
) |
|
|
(179 |
) |
|
|
11 |
|
|
|
(727 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted EBITDA |
|
$ |
120,566 |
|
|
$ |
159,936 |
|
|
$ |
314,382 |
|
|
$ |
590,331 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Reconciliation of Adjusted EBITDA to Net Income 2009 Targets
|
|
|
|
|
|
|
|
|
|
|
Targeted Results |
|
|
|
Year Ended |
|
|
|
December 31, 2009 |
|
|
|
Low |
|
|
High |
|
|
|
(Unaudited) |
|
Net income attributable to Arch Coal, Inc. |
|
$ |
42,000 |
|
|
$ |
65,000 |
|
Income tax benefit |
|
|
(20,000 |
) |
|
|
(8,000 |
) |
Interest expense, net |
|
|
98,000 |
|
|
|
96,000 |
|
Depreciation, depletion and amortization |
|
|
314,000 |
|
|
|
322,000 |
|
Costs related to acquisition of Jacobs Ranch |
|
|
15,000 |
|
|
|
15,000 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted EBITDA |
|
$ |
449,000 |
|
|
$ |
490,000 |
|
|
|
|
|
|
|
|