-- Alpha per-ton price realization in second quarter up 23 percent from
last year
-- Coal margin climbs to $10.55 per ton, 16 percent higher than second
quarter of 2004
-- Uncommitted tonnage as of July 25 totals 31% for 2006, 60% for 2007
-- Metallurgical exports remain strong through first half of year
ABINGDON, Va., Aug. 4 /PRNewswire-FirstCall/ --
Financial & Operating Data
(in millions, except per-share and per-ton amounts)
Q2 '05 Q2 '04 Pro Forma Change From
Q2 '04 Pro Forma Q2
'04 to Q2 '05
Coal revenues $364.1 $293.8 $ 293.8 +24%
EBITDA, as adjusted $57.1 $47.8 $47.8 +19%
Income from continuing
operations $26.1 $12.4 $20.5 +27%
Net income $26.4 $12.2 $20.1 +31%
Earnings per diluted
share $0.43 $0.83 $0.33 +30%
Tons of coal produced &
processed 5.2 4.8 4.8 + 8%
Tons of coal sold 6.7 6.6 6.6 + 1%
Coal margin per ton $10.55 $9.10 $9.10 +16%
Note: Pro forma adjustments in table above give effect to the company's
2004 financings, IPO and related internal restructuring as if these events
had occurred on January 1, 2004.
Pro forma adjustments are detailed in an accompanying table.
Please see the notes accompanying the financial schedules for
reconciliation of EBITDA, as adjusted, to GAAP net income.
All data above reflect reclassification of divested NKC assets as
discontinued operations for all periods shown.
Alpha Natural Resources, Inc. (NYSE: ANR), a leading Appalachian coal
producer, today reported net income of $26.4 million, or $0.43 per diluted
share, for the quarter ended June 30, 2005.
The results include a previously announced charge for stock-based
compensation, related to Alpha's initial public offering in February 2005, in
the amount of $3.4 million ($2.5 million after-tax), or $0.04 per diluted
share.
Alpha completed the previously announced sale of its Colorado mining
assets (NKC) in April and has reclassified the operations as discontinued
operations for all periods presented in this press release. The after-tax gain
on the sale of NKC was $0.5 million, or $0.01 per diluted share.
Net income for the second quarter of 2004 was $12.2 million, including a
loss from discontinued operations of $0.2 million after income taxes.
Calculated on a pro forma basis as if the company's 2004 financings, IPO and
related internal restructuring transactions had occurred on January 1, 2004,
second quarter 2004 pro forma net income was $20.1 million, or $0.33 per
diluted share.
Total revenues for the second quarter of 2005 rose 23 percent to $417.6
million from $339.9 million in the comparable period in 2004. Coal sales
revenue increased by more than $70 million, driven by a 30 percent increase in
coal sales realization per ton for steam coal and a 14 percent increase in
realized prices for metallurgical coal.
"We increased mine production in the second quarter, overseas
metallurgical coal shipments are running ahead of last year and we've expanded
margins by capitalizing on continued pricing gains across the board," said
Michael Quillen, president and CEO of Alpha Natural Resources. "Alpha has a
strong product mix and a reputation both here and abroad for delivering high-
value coal blends to both the utility and steel markets. This is one of the
reasons our overall coal margins are up nearly 40 percent through the first
half of 2005."
Financial and Operating Highlights -- Second Quarter
For the three months ended June 30, 2005, company produced and processed
tonnage rose 8 percent to 5.2 million tons from 4.8 million tons in the second
quarter of 2004. Coal sales volumes -- produced and processed tonnage plus
purchased coal -- were up 1 percent year-over-year, with steam coal sales down
3 percent and metallurgical coal sales up 7 percent for the quarter.
Metallurgical coal accounted for 42 percent of Alpha's quarterly sales
volumes, compared with 39 percent in the second quarter of 2004.
Overall, coal sales realization per ton in the second quarter of 2005 was
$54.42, which was 23 percent higher than the comparable period last year.
Cost of coal sales for the most recent quarter (which excludes DD&A and
SG&A) was $293.5 million compared with $233.5 million in the second quarter of
2004. On a per-ton basis, cost of coal sales for the quarter was up 25 percent
year-over-year. The primary reasons for the increase were: higher cost of
materials and supplies; increased royalty and severance taxes associated with
higher production levels and higher price realizations; challenging geological
conditions at a small number of thin seam mines; the increased per-ton price
for coal purchased on the open market; increased sales volumes of
metallurgical coal, which involve more handling and washing costs and yield
loss than steam coal; and rising costs at contractor operated mines. Alpha has
assumed operations at three high-cost contract mines where we hope to achieve
significant reductions in operating expenses in addition to production
increases.
The company's overall coal margin per ton -- defined as coal sales
realization per ton less cost of coal sales -- was $10.55 in the most recent
quarter, a 16 percent increase from the comparable period in 2004.
Depreciation, depletion and amortization increased by $2.2 million from
the second quarter of last year to $15.1 million in the most recent quarter,
equal to $2.88 per produced and processed ton sold. The increase in DD&A is
attributable primarily to recent purchases of mining equipment and capital
investments to enhance Alpha's production capabilities and expand coal sales.
Selling, general and administrative costs were $1.0 million higher in the
most recent quarter than the same period last year. The year-ago period was
impacted by $4.4 million of incentive and vacation bonuses, while the current-
year period was affected by the $3.4 million non-cash stock-based compensation
charge as well as higher professional expenses related to a strategic sourcing
initiative, the company's Sarbanes-Oxley compliance project and other expenses
related to being a public company.
Interest expense in the second quarter of 2005 was $6.6 million, slightly
below last year. Income tax expense from continuing operations rose
approximately $6 million in the most recent quarter to $9.1 million, mostly
due to higher operating income and the elimination of minority interest
expense.
Including the stock-based compensation charge and the gain on the sale of
NKC, EBITDA, as adjusted, rose 19 percent to $57.1 million in the second
quarter of 2005 compared with $47.8 million in the second quarter of last
year. The definition of EBITDA, as adjusted, and a reconciliation of EBITDA,
as adjusted, to GAAP net income is provided in a note to the accompanying
financial schedules.
Financial and Operating Highlights-Year-to-Date
For the first six months of 2005, Alpha reported revenues of
$729.8 million and net income of $0.6 million. Included in the results are
$39.8 million in stock-based compensation charges related to Alpha's IPO,
$32.3 million of which were non-cash items. Also included in reported first-
half results are minority interest charges of $2.8 million and gains
associated with the settlement of a bonding program and the NKC divestment
totaling $2.4 million.
In the first six months of 2004, Alpha had revenues of $582.6 million and
net income of $13.5 million.
On a pro forma basis, as if the 2004 financings, IPO and related internal
restructuring had occurred at the beginning of 2004, net income would have
been $2.7 million ($0.04 per diluted share) in the first half of 2005 and
$19.8 million ($0.32 per diluted share) in the comparable period in 2004.
Including the special items above, EBITDA, as adjusted, for the first half of
2005 was $56.8 million compared with $64.6 million last year.
Sales volumes for the first half of 2005 were 12.2 million tons compared
with 12.6 million tons in the first six months of 2004, with steam coal sales
accounting for 58 percent of the total and metallurgical coal sales the
remaining 42 percent. Overseas exports of metallurgical coal have remained
strong through the first half of 2005, totaling 3.4 million tons or
approximately 160,000 tons ahead of last year.
Overall coal sales realization increased 30 percent from $40.21 per ton in
the first half of 2004 to $52.13 in the first half of this year. Cost of coal
sales per ton was up 28 percent during the same period, with the net result
that the company's coal margin per ton advanced 39 percent year-over-year.
Production and sales highlights for the quarter and year-to-date are as
follows:
Production and Sales Data(1)
(In thousand, except per ton amounts)
Q2 '05 Q2 '04 % YTD '05 YTD '04 %
Change Change
Production
Produced/processed 5,165 4,798 8% 10,038 9.831 2%
Purchased 1,481 1,933 -23% 2,670 3,117 -14%
Total 6,646 6,731 -1% 12,708 12,948 -2%
Tons Sold
Steam 3,906 4,037 -3% 7,111 7,806 -9%
Metallurgical 2,784 2,593 7% 5,112 4,773 7%
Total 6,690 6,630 1% 12,223 12,579 -3%
Coal sales
realization / ton
Steam $40.97 $31.58 30% $39.01 $31.01 26%
Metallurgical $73.29 $64.13 14% $70.37 $55.27 27%
Total $54.42 $44.31 23% $52.13 $40.21 30%
Cost of coal
sales / ton(2)
Alpha mines $36.65 $30.51 20% $35.65 $28.99 23%
Contract mines(3) $53.12 $41.39 28% $50.14 $38.32 31%
Total produced/
processed $40.40 $32.97 23% $38.78 $31.12 25%
Purchased $56.46 $41.80 35% $58.09 $40.43 44%
Total $43.87 $35.21 25% $42.52 $33.28 28%
Coal Margin / ton $10.55 $ 9.10 16% $9.61 $6.93 39%
(1) Adjusted to exclude NKC
(2) Excludes DD&A & SG&A
(3) Includes coal purchased from third parties and processed at our
plants prior to resale
New Developments
-- One of Alpha's core commitments is to safeguard the health and welfare
of employees. The positive safety trends of the first quarter continued
into the second quarter, with reportable safety incidents lower than
both internal and industry benchmarks as well as last year's levels.
-- The company's organic mine expansion program continues to proceed as
planned, with crews at Deep Mine #35 (Virginia) and Cucumber mine (West
Virginia) installing their air shafts and slopes and reaching coal.
These new mines, along with two other new mines that started production
earlier this year, are expected to add 2.5 million tons a year of
incremental steam and metallurgical coal production when they reach
full capacity next year.
-- In July, Alpha announced that it was pursuing with other interested
partners a $20-25 million investment in a new coal import facility in
Newport News, Virginia. Alpha Terminal Company LLC, a subsidiary
company, is the largest owner in Dominion Terminal Associates, which
controls a deepwater coal export facility at the Newport News site. The
objective is to increase utilization of DTA's existing state-of-the-art
blending facility, massive storage space and high-speed loading
capability to accept seaborne vessels up to 1,000 ft. in length.
Construction could commence late this year with completion targeted for
2007. In March the United States became a net importer of coal for the
first time, and the continued shortfall in U.S. coal production creates
a favorable scenario for domestic producers that have import as well as
export flexibility.
-- At the end of the first quarter, the Emerging Issues Task Force of the
FASB ratified a new rule requiring companies to expense overburden
stripping costs when stripping occurs rather than deferring overburden
on the balance sheet as an asset until the coal seam is reached and
mined. Since Alpha is already in compliance with this accounting
pronouncement, the company will not be required to make adjustments
when the new rule takes effect in 2006.
-- Alpha Natural Resources subsidiaries successfully completed an offer to
exchange $175 million of 10% Senior Notes due 2012 for exchange notes
that are identical in all material respects, including principal
amount, interest rate and maturity, except that the exchange notes will
be transferable, subject to certain conditions. All outstanding notes
were tendered for exchange.
Liquidity and Capital Resources
Net cash used by operations in the first half of 2005 was $1.4 million,
compared with $47.1 million in net cash provided by operations during the same
period in 2004.
Net income decreased by $12.9 million from the first half of 2004 to the
current year period. The decrease was more than offset by an increase in non-
cash charges, primarily from the IPO-related stock-based compensation charge.
Net cash required for operating assets and liabilities through June 30
increased by $59.1 million year-over-year. Compared with last year, trade
receivables consumed $19.4 million more cash in the first six months as a
result of the company's 26 percent growth in coal sales revenue in the first
half of this year. Higher inventory levels this year and the associated higher
value of those inventories required $20.1 million more cash in the first six
months of 2005 than they did in the same period last year. In addition, trade
payables and accrued expenses used $21.3 million more cash in the first half
of 2005 than last year.
Capital expenditures through the first half of 2005 were $66.5 million
compared with $33.8 million during the same period a year ago, due mostly to
the company's capital equipment purchasing program and investments in new
mines. In the first half of this year, Alpha opened the new Seven Pines Mine
in West Virginia and a second unit at the Madison Mine in Pennsylvania, and
made substantial progress towards the opening of Deep Mine #35 in Virginia and
the Cucumber Mine in West Virginia. Alpha currently anticipates that capital
spending in 2005 will be in the range of $110 million to $120 million.
As of June 30, 2005, Alpha had $43.6 million available under its revolving
credit facility and a cash balance of $10.1 million, compared with $114.0
million available under the credit facility and a cash balance of $7.4 million
at December 31, 2004. Alpha's total indebtedness as of the end of June 2005
was $262.6 million compared with $201.7 million at December 31, 2004.
Market Outlook
Fundamentals strengthened at the end of the second quarter for the steam
coal market, with a heat wave driving up electricity demand and putting
further pressure on already-depleted utility coal stockpiles. With rail
problems limiting coal shipments from the West, spot prices for coal out of
Appalachia have begun to trend higher as power plants seek alternative sources
of fuel. The Energy Information Administration projects further coal demand in
the electric power sector of 2.1 percent in 2006 on top of 2.4 percent growth
this year. Alpha believes demand for low-sulfur coal, which represented 89
percent of the company's proven and probable reserves at the beginning of this
year, should be particularly strong going forward.
The recent slowdown in global steel production and declining hot-roll
steel prices are having little effect on Alpha's 2005 outlook for
metallurgical coal sales since the company is essentially sold out for the
year. Alpha customers and other industry observers increasingly expect a
fairly rapid downturn and rebound as steel inventories decline. Short-term,
Alpha expects that the market for the lower quality met coals may weaken and
prices will come down, but demand and pricing are expected to remain firm for
Alpha's higher-quality coals and blends due to supply constraints.
Long-term prospects look promising, with an estimated 10-15 million tons
of new or rebuilt coke oven capacity expected to come on stream and consume
metallurgical coal in 2006, with many of the facility owners already customers
of Alpha. Globally, industry observers predict that worldwide iron and steel
output will soar and importing mills will need 55 percent more hard coking
coal by the year 2015 than they did last year.
Forward Sales Activity and Guidance
As of July 25, 2005, Alpha had committed and priced virtually all of its
planned production for 2005, 69 percent of planned production in 2006 and 40
percent of planned production in 2007. Approximately 43 percent and 47 percent
of Alpha's uncommitted planned production in 2006 and 2007, respectively, is
metallurgical coal.
The company's usual metallurgical coal negotiating cycle with steel and
coke producers runs from August through October for domestic customers and
November to March for overseas customers.
"Alpha's forward sales book reflects a deliberate strategy of gradually
locking up new contracts when we can secure favorable terms while maintaining
a manageable long position," said Mike Quillen. "Alpha has established a
reputation for delivering high-quality products, and because of this we are
seeing more multi-year commitments from our customers for metallurgical
supply."
Alpha continues to experience disruptions in rail service at certain
locations. As a result of delays in railcar availability, timing of loadings
at export terminals and increased mine production, coal inventory levels grew
by 480,000 tons through the first half of 2005. The company expects to reduce
inventories in the normal course of business as the year progresses.
For 2005, Alpha continues to expect coal sales volumes of between 25
million and 26 million tons and coal revenue in the $1.3 billion to $1.4
billion range. EBITDA, as adjusted, is expected to range between $163 million
and $183 million, or $210 million to $230 million after adjusting for the
stock-based compensation charges related to the IPO.
Conference Call Webcast
Alpha will hold a conference call to discuss its second quarter
performance on Thursday, August 4 at 11:00 a.m. ET. The call will be
accessible through the Internet at Alpha's web site, http://www.alphanr.com ,
and will be archived on the site as well. A replay will be available through
August 11, 2005 by dialing toll-free 1-800-642-1687 or 706-645-9291 and
entering pass code 8169823.
About Alpha Natural Resources
Alpha Natural Resources is a leading producer of high-quality Appalachian
coal. Approximately 94 percent of the company's reserve base is high Btu coal
and 89 percent is low sulfur, qualities that are in high demand among electric
utilities which use steam coal. Alpha is also one of the nation's largest
producers and exporters of metallurgical coal, a key ingredient in steel
manufacturing. Alpha and its subsidiaries currently operate mining complexes
in four states, consisting of more than 60 mines feeding 11 coal preparation
and blending plants. The company and its subsidiaries employ approximately
2,800 people.
Forward Looking Statements
Certain statements in this news release are forward-looking statements as
defined in the Private Securities Litigation Reform Act of 1995. Alpha Natural
Resources, Inc. ("Alpha" or "the company") uses the words "anticipate,"
"believe," "could," "should," "estimate," "expect," "intend," "may,"
"predict," "project," "target" and similar terms and phrases, including
references to assumptions, to identify forward-looking statements. These
forward-looking statements are based on Alpha's expectations and beliefs
concerning future events affecting the company and involve certain risks and
uncertainties that may cause actual results to differ materially from
expectations as of the date of this release. These factors are difficult to
accurately predict and may be beyond the control of the company. The following
factors are among those that may cause actual results to differ materially
from our forward-looking statements: market demand for coal, electricity and
steel; weather conditions or catastrophic weather-related damage; the
company's production capabilities; the company's relationships with, and other
conditions affecting its customers; timing of reductions or increases in
customer coal inventories; long-term coal supply arrangements; environmental
laws, including those directly affecting Alpha's coal mining and production,
and those affecting its customers' coal usage; railroad and other
transportation performance and costs; Alpha's assumptions concerning
economically recoverable coal reserve estimates; employee workforce factors;
regulatory and court decisions; future legislation and changes in regulations
or governmental policies; changes in postretirement benefit and pension
obligations; and Alpha's liquidity, results of operations and financial
condition. These and other additional risk factors and uncertainties are
discussed in greater detail in the company's annual report on Form 10-K and
other documents filed with the Securities and Exchange Commission. Investors
should keep in mind that any forward-looking statement made by the company in
this news release or elsewhere speaks only as of the date on which the company
makes it. New uncertainties and risks come up from time to time, and it is
impossible for the company to predict these events or how they may affect the
company. The company has no duty to, and does not intend to, update or revise
the forward-looking statements in this news release after the date it is
issued. In light of these risks and uncertainties, investors should keep in
mind that the results, events or developments disclosed in any forward-looking
statement made in this news release may not occur.
NOTES TO ACCOMPANYING CONDENSED CONSOLIDATED FINANCIAL STATEMENTS:
Pro forma reporting
References to pro forma financial information in this press release give
effect to the company's 2004 financings, IPO and internal restructuring as if
these events had occurred on January 1, 2004. Pro forma adjustments are
detailed in an accompanying table.
Reconciliation of Non-GAAP Measures
This news release includes certain non-GAAP financial measures as defined
by SEC regulations. A reconciliation of these measures to the most directly
comparable GAAP measures is included with this release. EBITDA and EBITDA, as
adjusted, are measures used by management to gauge operating performance.
Alpha defines EBITDA as net income or loss plus interest expense, income
taxes, and depreciation, depletion and amortization, less interest income.
EBITDA, as adjusted, includes EBITDA plus minority interest. Management
presents EBITDA and EBITDA, as adjusted, as supplemental measures of the
company's performance and debt-service capacity that may be useful to
securities analysts, investors and others. These EBITDA measures are not,
however, a measure of financial performance under GAAP and should not be
considered as an alternative to net income, operating income or cash flow as
determined in accordance with GAAP. Moreover, EBITDA is not calculated
identically by all companies.
ANRG
ALPHA NATURAL RESOURCES, INC. AND SUBSIDIARIES
Condensed Consolidated Statements of Operations (Unaudited)
(In thousands, except share and per share amounts)
Three months ended Six months ended
June 30, June 30,
2005 2004 2005 2004
Revenues:
Coal revenues $364,070 $293,798 $637,204 $505,813
Freight and handling
revenues 48,239 39,671 79,991 65,275
Other revenues 5,327 6,406 12,596 11,509
Total revenues 417,636 339,875 729,791 582,597
Costs and expenses:
Cost of coal sales
(exclusive of items
shown separately below) 293,493 233,490 519,777 418,572
Freight and handling
costs 48,239 39,671 79,991 65,275
Cost of other revenues 4,319 4,928 10,384 8,338
Depreciation, depletion
and amortization 15,075 12,916 29,245 24,690
Selling, general and
administrative expenses
(exclusive of depreciation
and amortization shown
separately above and
including stock-based
compensation of $3,381
and $39,788 for the three
and six months ended
June 30, 2005,
respectively) 14,870 13,861 62,776 25,666
Total costs and
expenses 375,996 304,866 702,173 542,541
Income from operations 41,640 35,009 27,618 40,056
Other income (expense):
Interest expense (6,647) (6,780) (12,764) (8,831)
Interest income 191 80 478 101
Miscellaneous income
(expense), net 32 151 (11) 364
Total other income
(expense), net (6,424) (6,549) (12,297) (8,366)
Income from continuing
operations before
income taxes
and minority interest 35,216 28,460 15,321 31,690
Income tax expense 9,089 3,119 11,599 3,473
Minority interest - 12,892 2,918 14,356
Income from continuing
operations 26,127 12,449 804 13,861
Income (loss) from
discontinued operations,
net of income
taxes and minority
interest (including
gain on sale in April
2005 of $522, net of
income taxes) 266 (206) (214) (381)
Net income $26,393 $12,243 $590 $13,480
Net income per share, as
adjusted:
Basic and diluted:
Income from continuing
operations $0.43 $0.84 $0.01 $0.94
Income (loss) from
discontinued operations - (0.01) - (0.03)
Net income, as
adjusted $0.43 $0.83 $0.01 $0.91
Weighted average
shares - basic 61,091,806 13,998,911 50,220,404 13,998,911
Weighted average
shares - diluted 61,562,973 13,998,911 50,439,011 13,998,911
Pro forma net income per
share:
Diluted:
Income from continuing
operations $0.43 $0.34 $0.04 $0.33
Income (loss) from
discontinued operations - (0.01) - (0.01)
Pro forma net income $0.43 $0.33 $0.04 $0.32
Pro forma weighted
average shares -
diluted 61,562,973 61,160,122 61,531,472 61,197,740
ALPHA NATURAL RESOURCES, INC. AND SUBSIDIARIES
Condensed Consolidated Balance Sheets (Unaudited)
(In thousands, except share and per share amounts)
June 30, December 31,
2005 2004
Assets
Current assets:
Cash and cash equivalents $10,117 $7,391
Trade accounts receivable, net 151,241 95,828
Notes and other receivables 10,645 9,936
Inventories 92,515 54,569
Due from affiliate - 323
Deferred income taxes 605 4,674
Prepaid expenses and other current assets 17,692 29,814
Total current assets 282,815 202,535
Property, plant, and equipment, net 250,931 217,964
Goodwill 18,641 18,641
Other intangibles, net 725 1,155
Deferred income taxes 20,492 -
Other assets 34,628 36,826
Total assets $608,232 $477,121
Liabilities and Stockholders' Equity
and Partners' Capital
Current liabilities:
Current portion of long-term debt $1,349 $1,693
Note payable 6,998 15,228
Bank overdraft 18,263 10,024
Trade accounts payable 65,666 51,050
Accrued expenses and other current
liabilities 64,924 68,283
Total current liabilities 157,200 146,278
Long-term debt, net of current portion 254,239 184,784
Workers' compensation benefits 4,780 4,678
Postretirement medical benefits 20,140 15,637
Asset retirement obligation 34,274 32,888
Deferred gains on sale of property
interests 5,366 5,516
Deferred income taxes - 7,718
Other liabilities 9,352 4,911
Total liabilities 485,351 402,410
Minority interest - 28,778
Stockholders' equity and partners' capital:
Alpha Natural Resources, Inc.:
Preferred stock - par value $0.01,
10,000,000 shares authorized,
none issued - -
Common stock - par value $0.01,
100,000,000 shares
authorized, 62,212,580 shares
issued and outstanding 622 -
Additional paid-in capital 146,372 -
Unearned stock-based compensation (22,004)
Accumulated deficit (2,109) -
Total Alpha Natural Resources,
Inc. stockholders' equity 122,881 -
Alpha NR Holding, Inc.:
Preferred stock - par value $0.01,
1,000 shares authorized, none issued - -
Common stock - par value $0.01,
1,000 shares authorized, 100 shares
issued and outstanding - -
Additional paid-in capital - 22,153
Retained earnings - 18,828
Total Alpha NR Holding, Inc.
stockholder's equity - 40,981
Alpha Fund IX Holdings, L.P.:
Partners' capital - 4,952
Total stockholders' equity and
partners' capital 122,881 45,933
Total liabilities and
stockholders' equity and
partners' capital $608,232 $477,121
ALPHA NATURAL RESOURCES, INC. AND SUBSIDIARIES
Condensed Consolidated Statements of Cash Flows (Unaudited)
(In thousands)
Six months ended
June 30,
2005 2004
Operating activities:
Net income $590 $13,480
Adjustments to reconcile net income
to net cash provided by (used in)
operating activities:
Depreciation, depletion and
amortization 29,528 25,040
Amortization of debt issuance
costs 875 3,531
Minority interest 2,846 13,961
Accretion of asset retirement
obligation 1,631 1,943
Virginia tax credit (343) (1,292)
Stock-based compensation - non-cash 32,312 -
Gain on sale of discontinued
operations (704) -
Deferred income taxes 1,588 1,748
Other non-cash items (88) (789)
Changes in operating assets and
liabilities (69,655) (10,548)
Net cash provided by (used in)
operating activities (1,420) 47,074
Investing activities:
Capital expenditures $(66,521) $(33,842)
Proceeds from disposition of
property, plant, and equipment 5,148 793
Purchase of net assets of acquired
companies (389) (2,891)
Purchase of equity investment (654) -
Issuance of note receivable to coal
supplier - (10,000)
Collections on note receivable from
coal supplier 2,612 -
Payment of additional consideration
on previous acquisition (5,000) -
Decrease in due from affiliate - (209)
Net cash used in investing
activities (64,804) (46,149)
Financing activities:
Repayments of notes payable (8,230) (7,841)
Proceeds from issuance of long-term
debt 70,000 175,000
Repayments on long-term debt (944) (45,410)
Increase in bank overdraft 8,239 4,064
Proceeds from initial public
offering, net of offering costs 598,066 -
Repayment of restructuring notes
payable (517,692) -
Distributions to former owners (80,067) (113,169)
Debt issuance costs (422) (10,500)
Net cash provided by
financing activities 68,950 2,144
Net increase in cash and
cash equivalents 2,726 3,069
Cash and cash equivalents at
beginning of period 7,391 11,246
Cash and cash equivalents at end of
period $10,117 $14,315
The following unaudited table reconciles reported net income to net
income, as adjusted, and to pro forma net income as if the 2004
Financings, the Internal Restructuring, and the initial public offering
had occurred on January 1, 2004. Net income, as adjusted, includes net
income and a pro forma adjustment for income taxes to reflect the pro
forma income taxes for ANR Fund IX Holdings, L.P.'s portion of pre-tax
income which would have been recorded if the Internal Restructuring had
occurred on January 1, 2004. Net income, as adjusted is further adjusted
by the pro forma effects of the 2004 Financings and the add back of
minority interest due to the Internal Restructuring, both net of income
taxes, as if those events had occurred on January 1, 2004.
Three months ended Six months ended
June 30, June 30, June 30, June 30,
2005 2004 2005 2004
(In thousands)
Reported net income $26,393 $12,243 $590 $13,480
Deduct: Income tax effect
of ANR Fund IX Holdings,
L.P. income prior to
Internal Restructuring - (638) (89) (702)
Net income, as adjusted 26,393 11,605 501 12,778
Deduct: Pro forma effects
of the 2004 Financings,
net of income taxes - 672 - (1,614)
Add: Elimination of
minority interest, net of
income tax effect - 7,860 2,176 8,656
Pro forma net income $26,393 $20,137 $2,677 $19,820
The following table reconciles EBITDA and EBITDA, as adjusted, to net
income, the most directly comparable GAAP measure:
Three months ended Six months ended
June 30, June 30,
2005 2004 2005 2004
(In thousands)
Net income $26,393 $12,243 $590 $13,480
Interest expense 6,647 6,780 12,764 8,831
Interest income (191) (80) (478) (101)
Income tax expense
(including continuing and
discontinued operations) 9,182 3,067 11,506 3,377
Depreciation, depletion and
amortization (including
continuing and
discontinued operations) 15,048 13,111 29,528 25,040
EBITDA 57,079 35,121 53,910 50,627
Minority interest
(including continuing and
discontinued operations) - 12,678 2,846 13,961
EBITDA, as adjusted $57,079 $47,799 $56,756 $64,588
SOURCE Alpha Natural Resources, Inc.
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Related links:
http://www.alphanr.com
CONTACT:
Ted Pile of Alpha Natural Resources, Inc.,
+1-276-623-2920
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