Condensed Consolidated Statemen
Condensed Consolidated Statements of Income (USD $) | ||||
In Thousands, except Per Share data | 3 Months Ended
Jun. 30, 2009 | 3 Months Ended
Jun. 30, 2008 | 6 Months Ended
Jun. 30, 2009 | 6 Months Ended
Jun. 30, 2008 |
REVENUES | ||||
Coal sales | $554,612 | $785,117 | $1,235,652 | $1,484,467 |
COSTS, EXPENSES AND OTHER | ||||
Cost of coal sales | 467,521 | 568,483 | 1,014,647 | 1,082,887 |
Depreciation, depletion and amortization | 68,477 | 71,953 | 141,518 | 144,995 |
Selling, general and administrative expenses | 21,627 | 33,022 | 46,741 | 58,702 |
Change in fair value of coal derivatives and coal trading activities, net | (6,458) | (53,160) | (6,986) | (83,718) |
Costs related to acquisition of Jacobs Ranch | 3,025 | 0 | 6,375 | 0 |
Other operating income, net | (6,889) | (4,405) | (12,524) | (4,347) |
Total operating expenses | 547,303 | 615,893 | 1,189,771 | 1,198,519 |
Income from operations | 7,309 | 169,224 | 45,881 | 285,948 |
Interest expense, net | ||||
Interest expense | (20,657) | (18,721) | (40,675) | (39,209) |
Interest income | 417 | 468 | 6,885 | 893 |
Interest expense, net | (20,240) | (18,253) | (33,790) | (38,316) |
Income (loss) before income taxes | (12,931) | 150,971 | 12,091 | 247,632 |
Provision for (benefit from) income taxes | 2,230 | 37,700 | (3,320) | 52,940 |
Net income (loss) | (15,161) | 113,271 | 15,411 | 194,692 |
Less: Net (income) loss attributable to noncontrolling interest | 35 | (274) | 42 | (548) |
Net income (loss) attributable to Arch Coal, Inc. | ($15,126) | $112,997 | $15,453 | $194,144 |
EARNINGS (LOSS) PER COMMON SHARE | ||||
Basic earnings (loss) per common share | -0.11 | 0.78 | 0.11 | 1.35 |
Diluted earnings (loss) per common share | -0.11 | 0.78 | 0.11 | 1.34 |
Basic weighted average shares outstanding | 142,815 | 144,120 | 142,802 | 143,809 |
Diluted weighted average shares outstanding | 142,815 | 145,049 | 142,924 | 144,823 |
Dividends declared per common share | 0.09 | 0.09 | 0.18 | 0.16 |
Condensed Consolidated Balance
Condensed Consolidated Balance Sheets (USD $) | ||
In Thousands | Jun. 30, 2009
| Dec. 31, 2008
|
Current assets: | ||
Cash and cash equivalents | $50,560 | $70,649 |
Trade accounts receivable | 172,085 | 215,053 |
Other receivables | 31,105 | 43,419 |
Inventories | 240,828 | 191,568 |
Prepaid royalties | 23,582 | 43,780 |
Deferred income taxes | 23,872 | 52,918 |
Coal derivative assets | 23,408 | 43,173 |
Other | 40,461 | 45,818 |
Total current assets | 605,901 | 706,378 |
Property, plant and equipment, net | 2,783,686 | 2,703,083 |
Other assets: | ||
Prepaid royalties | 92,468 | 66,918 |
Goodwill | 46,832 | 46,832 |
Deferred income taxes | 315,605 | 294,682 |
Equity investments | 88,864 | 87,761 |
Other | 95,641 | 73,310 |
Total other assets | 639,410 | 569,503 |
Total assets | 4,028,997 | 3,978,964 |
Current liabilities: | ||
Accounts payable | 140,739 | 186,322 |
Coal derivative liabilities | 7,036 | 10,757 |
Accrued expenses and other current liabilities | 187,068 | 249,203 |
Current maturities of debt and short-term borrowings | 195,522 | 213,465 |
Total current liabilitiies | 530,365 | 659,747 |
Long-term debt | 1,240,793 | 1,098,948 |
Asset retirement obligations | 265,904 | 255,369 |
Accrued pension benefits | 75,976 | 73,486 |
Accrued postretirement benefits other than pension | 60,250 | 58,163 |
Accrued workers' compensation | 26,527 | 30,107 |
Other noncurrent liabilities | 69,724 | 65,526 |
Total liabilities | 2,269,539 | 2,241,346 |
Redeemable noncontrolling interest | 8,844 | 8,885 |
Stockholders' equity: | ||
Common stock, $0.01 par value, authorized 260,000 shares, issued 144,400 and 144,345 shares, respectively | 1,448 | 1,447 |
Paid-in capital | 1,388,454 | 1,381,496 |
Treasury stock, 1,512 shares at June 30, 2009 and December 31, 2008, at cost | (53,848) | (53,848) |
Retained earnings | 468,462 | 478,734 |
Accumulated other comprehensive loss | (53,902) | (79,096) |
Total stockholders' equity | 1,750,614 | 1,728,733 |
Total liabilities and stockholders' equity | $4,028,997 | $3,978,964 |
1_Condensed Consolidated Balanc
Condensed Consolidated Balance Sheets [Parenthetical] (USD $) | ||
Share data in Thousands, unless otherwise specified | Jun. 30, 2009
| Dec. 31, 2008
|
Condensed Consolidated Balance Sheets [Parenthetical] | ||
Common Stock, Par or Stated Value Per Share | 0.01 | 0.01 |
Common Stock, Shares Authorized | 260,000 | 260,000 |
Common Stock, Shares, Issued | 144,400 | 144,345 |
Treasury Stock, Shares | 1,512 | 1,512 |
2_Condensed Consolidated Statem
Condensed Consolidated Statements of Cash Flows (USD $) | ||
In Thousands | 6 Months Ended
Jun. 30, 2009 | 6 Months Ended
Jun. 30, 2008 |
OPERATING ACTIVITIES | ||
Net income | $15,411 | $194,692 |
Adjustments to reconcile net income to cash provided by operating activities: | ||
Depreciation, depletion and amortization | 141,518 | 144,995 |
Prepaid royalties expensed | 17,173 | 16,544 |
Gain on dispositions of property, plant and equipment | (286) | (179) |
Employee stock-based compensation | 6,901 | 6,921 |
Changes in: | ||
Receivables | 60,982 | (21,572) |
Inventories | (49,260) | 500 |
Coal derivative assets and liabilities | 16,830 | (88,769) |
Accounts payable, accrued expenses and other current liabilities | (51,760) | 52,239 |
Deferred income taxes | (5,751) | 10,926 |
Other | 8,433 | 19,218 |
Cash provided by operating activities | 160,191 | 335,515 |
INVESTING ACTIVITIES | ||
Capital expenditures | (246,562) | (336,080) |
Proceeds from dispositions of property, plant and equipment | 715 | 1,070 |
Purchases of investments and advances to affiliates | (9,463) | (2,994) |
Additions to prepaid royalties | (22,524) | (19,079) |
Reimbursement of deposits on equipment | 3,209 | 2,455 |
Cash used in investing activities | (274,625) | (354,628) |
FINANCING ACTIVITIES | ||
Net increase in borrowings under lines of credit and commercial paper program | 134,349 | 41,016 |
Net payments on other debt | (9,763) | (8,895) |
Debt financing costs | (4,574) | (219) |
Dividends paid | (25,725) | (22,996) |
Issuance of common stock under incentive plans | 58 | 6,288 |
Cash provided by financing activities | 94,345 | 15,194 |
Decrease in cash and cash equivalents | (20,089) | (3,919) |
Cash and cash equivalents, beginning of period | 70,649 | 5,080 |
Cash and cash equivalents, end of period | $50,560 | $1,161 |
Basis of Presentation
Basis of Presentation | |
6 Months Ended
Jun. 30, 2009 USD / shares | |
Basis of Presentation | |
Organization, Consolidation and Presentation of Financial Statements Disclosure [Text Block] | 1. Basis of Presentation The accompanying unaudited condensed consolidated financial statements include the accounts of Arch Coal, Inc. and its subsidiaries and controlled entities (the Company). The Companys primary business is the production of steam and metallurgical coal from surface and underground mines located throughout the United States, for sale to utility, industrial and export markets. The Companys mines are located in southern West Virginia, eastern Kentucky, Virginia, Wyoming, Colorado and Utah. All subsidiaries (except as noted below) are wholly-owned. Intercompany transactions and accounts have been eliminated in consolidation. The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States for interim financial reporting and U.S. Securities and Exchange Commission regulations. In the opinion of management, all adjustments, consisting of normal, recurring accruals considered necessary for a fair presentation, have been included. Results of operations for the three and six month periods ended June 30, 2009 are not necessarily indicative of results to be expected for the year ending December 31, 2009. These financial statements should be read in conjunction with the audited financial statements and related notes as of and for the year ended December 31, 2008 included in the Companys Annual Report on Form 10-K filed with the U.S. Securities and Exchange Commission. The Company owns a 99% membership interest in a joint venture named Arch Western Resources, LLC (Arch Western) which operates coal mines in Wyoming, Colorado and Utah. The Company also acts as the managing member of Arch Western. |
Accounting Policies
Accounting Policies | |
6 Months Ended
Jun. 30, 2009 USD / shares | |
Accounting Policies | |
Significant Accounting Policies [Text Block] | 2. Accounting Policies New Accounting Pronouncements On January 1, 2009, the Company adopted Statement of Financial Accounting Standards No. 160, Noncontrolling Interests in Consolidated Financial Statements, an amendment of ARB No. 51 (Statement No. 160). Statement No. 160 requires that a noncontrolling interest (previously referred to as minority interest) in a consolidated subsidiary be displayed in the consolidated balance sheet as a separate component of equity and the amount of net income attributable to the noncontrolling interest be included in consolidated net income on the face of the consolidated statement of income. Because the noncontrolling interest in Arch Western is redeemable, it is presented in the mezzanine between liabilities and equity. The adoption of Statement No. 160 resulted in a decrease in other liabilities of $8.9 million as of December 31, 2008 from what was previously reported for the reclassification of the noncontrolling interest in Arch Western. The adoption of Statement No. 160 resulted in an increase in other operating income, net and an increase in net income of $0.3 million for the three months ended June 30, 2008 from what was previously reported for the amount of income attributable to the noncontrolling interest in Arch Western. For the six months ended June 30, 2008 the adoption of Statement No. 160 resulted in an increase in other operating income, net and an increase in net income of $0.5 million from what was previously reported for the amount of income attributable to the noncontrolling interest in Arch Western. On January 1, 2009, the Company adopted Statement of Financial Accounting Standards No. 161, Disclosures about Derivative Instruments and Hedging Activities, an amendment of FASB Statement No. 133 (Statement No. 161). Statement No. 161 requires additional disclosures about derivatives and hedging activities, including qualitative disclosures about objectives for using derivatives. It also requires tabular disclosures about the gross fair value of derivative instruments, gains and losses from derivative instruments by type of contract, and the locations of these amounts in the interim and annual financial statements. See Note 5, Derivatives for the disclosures required by Statement No. 161. On January 1, 2009, Statement of Financial Accounting Standards No. 141(R), Business Combinations (Statement No. 141(R)) and Staff Position FAS 141(R)-1, Accounting for Assets Acquired and Liabilities Assumed in Business Combination that Arise from Contingencies, (FSP FAS 141(R)-1) became effective. The provisions of Statement No. 141(R) are effective for any business combinations that occur on or after January 1, 2009. Statement No. 141(R) clarifies and amends the accounting guidance for the acquirers recognition and measurement of the assets acquired, liabilities assumed and any noncontrolling interest in the acquiree in a business combination. FSP FAS 141(R)-1 amends Statement No. 141(R) and previous guidance, requiring that assets acquired and liabilities assumed in a business combination that arise from pre-acquisition contingencies be recognized at fair value in accordance with S |
Business Combination
Business Combination | |
6 Months Ended
Jun. 30, 2009 USD / shares | |
Business Combinations | |
Business Combinations | 3. Business Combinations On March8, 2009, the Company entered into an agreement to purchase the Jacobs Ranch mining complex in the Powder River Basin from Rio Tinto Energy America for a purchase price of $761.0 million. At December31, 2008, Jacobs Ranch controlled approximately 381 million tons of coal reserves as reported by Rio Tinto Energy America, which are adjacent to the Companys Black Thunder mining complex. The Company recognized costs of $3.0 million and $6.4 million related to the potential acquisition in the accompanying condensed consolidated statement of income for the three and six months ended June 30, 2009, respectively, in accordance with Statement No. 141(R). The completion of the transaction is subject to certain governmental and regulatory conditions and approvals, including those under competition laws and regulations, and other customary conditions. There can be no assurance that the transaction will be completed as contemplated in the agreement. |
Fair Value Measurements
Fair Value Measurements | |
6 Months Ended
Jun. 30, 2009 USD / shares | |
Fair Value Measurements | |
Fair Value Disclosures [Text Block] | 4. Fair Value Measurements Statement No. 157 establishes a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value. The hierarchy, as defined below, gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities and the lowest priority to unobservable inputs. Level 1 is defined as observable inputs such as quoted prices in active markets for identical assets. Level 1 assets include available-for-sale equity securities and coal futures that are submitted for clearing on the New York Mercantile Exchange. Level 2 is defined as observable inputs other than Level 1 prices. These include quoted prices for similar assets or liabilities in an active market, quoted prices for identical assets and liabilities in markets that are not active, or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities. The Companys level 2 assets and liabilities include commodity contracts (coal and heating oil) with fair values derived from quoted prices in over-the-counter markets or from prices received from direct broker quotes. Level 3 is defined as unobservable inputs in which little or no market data exists, therefore requiring an entity to develop its own assumptions. These include the Companys commodity option contracts (primarily coal and heating oil) valued using modeling techniques, such as Black-Scholes, that require the use of inputs, particularly volatility, that are not observable. The table below sets forth, by level, the Companys financial assets and liabilities that are accounted for at fair value: Fair Value at June 30, 2009 Total Level 1 Level 2 Level 3 (In thousands) Assets: Investments in equity securities.......................... $ 3,018 $ 2,329 $ $ 689 Derivatives.............................................................. 23,408 2,130 20,447 831 Total assets....................................................... $ 26,426 $ 4,459 $ 20,447 $ 1,520 Liabilities: Derivatives.............................................................. $ 22,068 $ $ 26,232 $ (4,164) The Companys contracts with certain of its counterparties allow for the settlement of contracts in an asset position with contracts in a liability position in the event of default or termination. For classification purposes, the Company records the net fair value of all the positions with these counterparties as a net asset or liability. Each level in the table above displays the underlying contracts according to their classification in the accompanying condensed consolidated balance sheet, based on this counterparty netting. The following table summarizes the change in the fair values of financial instruments categorized as level 3. Three Months Ended June 30, 2009 Six Months Ended June 30, 2009 (In thousands) Beginning balance.......................... |
Derivatives
Derivatives | |
6 Months Ended
Jun. 30, 2009 USD / shares | |
Derivatives | |
Derivatives Text Block | 5. Derivatives The Company generally utilizes derivative financial instruments to manage exposures to commodity prices. Additionally, the Company may hold certain coal derivative financial instruments for trading purposes. All derivative financial instruments are recognized in the balance sheet at fair value. In a fair value hedge, the Company hedges the risk of changes in the fair value of a firm commitment, typically a fixed-price coal sales contract. Changes in both the hedged firm commitment and the fair value of a derivative used as a hedge instrument in a fair value hedge are recorded in earnings. In a cash flow hedge, the Company hedges the risk of changes in future cash flows related to a forecasted purchase or sale. Changes in the fair value of the derivative instrument used as a hedge instrument in a cash flow hedge are recorded in other comprehensive income. Amounts in other comprehensive income are reclassified to earnings when the hedged transaction affects earnings and are classified in a manner consistent with the transaction being hedged. The Company formally documents the relationships between hedging instruments and the respective hedged items, as well as its risk management objectives for hedge transactions. The Company evaluates the effectiveness of its hedging relationships both at the hedges inception and on an ongoing basis. Any ineffective portion of the change in fair value of a derivative instrument used as a hedge instrument in a fair value or cash flow hedge is recognized immediately in earnings. The ineffective portion is based on the extent to which exact offset is not achieved between the change in fair value of the hedge instrument and the cumulative change in expected future cash flows on the hedged transaction from inception of the hedge in a cash flow hedge or the change in the fair value of the firm commitment in a fair value hedge. Diesel fuel price risk management The Company is exposed to price risk with respect to diesel fuel purchased for use in its operations. The Company purchases approximately 45-50 million gallons of diesel fuel annually in its operations. To reduce the volatility in the price of diesel fuel for its operations, the Company uses forward physical diesel purchase contracts, as well as heating oil swaps and purchased call options. At June 30, 2009, the Company had protected the price of approximately 67% of its remaining expected purchases for fiscal year 2009 and 54% of its expected purchases for fiscal year 2010. Since the changes in the price of heating oil highly correlate to changes in the price of the hedged diesel fuel purchases, the heating oil swaps and purchased call options qualify for cash flow hedge accounting. The Company held heating oil swaps and purchased call options for approximately 34.7 million gallons as of June 30, 2009. Coal risk management positions The Company may sell or purchase forward contracts and options in the over-the-counter coal market in order to manage its exposure to coal prices. The Company has exposure to the risk of fluctuating coal prices related to forecasted sales or purchases of coal or to the risk of changes |
Stock-Based Compensation
Stock-Based Compensation | |
6 Months Ended
Jun. 30, 2009 USD / shares | |
Stock-Based Compensation | |
Disclosure of Compensation Related Costs, Share-based Payments [Text Block] | 6. Stock-Based Compensation During the six months ended June 30, 2009, the Company granted options to purchase approximately 1.0 million shares of common stock with a weighted average exercise price of $14.06 per share and a weighted average grant-date fair value of $6.62 per share. The options fair value was determined using the Black-Scholes option pricing model, using a weighted average risk-free rate of 1.75%, a weighted average dividend yield of 2.56% and a weighted average volatility of 69.32%. The options vest ratably over four years. The options provide for the continuation of vesting for retirement-eligible recipients that meet certain criteria. The expense for these options will be recognized through the date that the employee first becomes eligible to retire and is no longer required to provide service to earn part or all of the award. The Company also granted 35,000 shares of restricted stock during the six months ended June 30, 2009 at a weighted average grant-date fair value of $14.05 per share. The restricted stock vests in three to four years. The Company recognized stock-based compensation expense from all plans of $3.4 million and $3.3 million for the three months ended June 30, 2009 and 2008, respectively, and $6.9 million and $8.0 million for the six months ended June 30, 2009, and 2008, respectively. This expense is primarily included in selling, general and administrative expenses in the accompanying condensed consolidated statements of income. |
Inventories
Inventories | |
6 Months Ended
Jun. 30, 2009 USD / shares | |
Inventories | |
Inventory Disclosure [Text Block] | 7. Inventories Inventories consist of the following: June 30, December 31, 2009 2008 (In thousands) Coal............................................................................................................................................ $ 106,332 $ 64,683 Repair parts and supplies, net of allowance........................................................................ 134,496 126,885 $ 240,828 $ 191,568 The repair parts and supplies are stated net of an allowance for slow-moving and obsolete inventories of $12.9 million at June 30, 2009, and $12.7 million at December 31, 2008. |
Debt
Debt | |
6 Months Ended
Jun. 30, 2009 USD / shares | |
Debt | |
Debt Disclosure [Text Block] | 8. Debt June 30, December 31, 2009 2008 (In thousands) Commercial paper................................................................................................................... $ 38,744 $ 65,671 Indebtedness to banks under credit facilities................................................................... 434,872 273,597 6.75% senior notes ($950.0 million face value) due July 1, 2013..................................... 955,465 956,148 Other........................................................................................................................................ 7,234 16,997 1,436,315 1,312,413 Less current maturities of debt and short-term borrowings............................................ 195,522 213,465 Long-term debt....................................................................................................................... $ 1,240,793 $ 1,098,948 The current maturities of debt include amounts borrowed that are supported by credit facilities that have a term of less than one year and amounts borrowed under credit facilities with terms longer than one year that the Company does not intend to refinance on a long-term basis, based on cash projections and managements plans. The Company had availability of $425.0 million under its credit facilities at June 30, 2009. On March6, 2009, the Company entered into an amendment (the Credit Amendment) to its $800.0 million secured revolving credit facility. The Credit Amendment amended certain covenants to make them less restrictive, including those related to lien creation, restricted payments and subsidiary guarantees of debt, in addition to an increase in the maximum leverage ratio, as defined, that the Company must maintain. In connection with these changes, the borrowing pricing grid was increased by 200 basis points and the rate on the unused portion of the facility was increased to 50 basis points. As of June 30, 2009 and December 31, 2008, the Company had $375.0 millionand $205.0 million of borrowings outstanding under the revolving credit facility, respectively. At June 30, 2009, the Company had availability of $425.0 million under the revolving credit facility. On March 31, 2009, the Company entered into an amendment to its accounts receivable securitization program revising certain terms to strengthen the credit quality of the pool of receivables and increasing the interest rate. The credit facility supporting the borrowings under the program was also renewed and now expires March 31, 2010. The size of the program continues to allow for aggregate borrowings and letters of credit of up to $175.0million, as limited by eligible accounts receivable. The Company had borrowings under the program of $59.9 million at June 30, 2009 and $68.6 million at December 31, 2008. The Company also had letters of credit outstanding under the securitization program of $60.5 million as of June 30, 2009. At June 30, 2009, the Company had no availability under the accounts receivable securitiz |
Taxes
Taxes | |
6 Months Ended
Jun. 30, 2009 USD / shares | |
Taxes | |
Unusual or Infrequent Items Disclosure [Text Block] | 9. Taxes As part of the Emergency Economic Stabilization Act enacted on October 3, 2008, the Company filed for black lung excise tax refunds on taxes paid on export sales subsequent to October 1, 1990, along with interest computed at statutory rates. The Company recognized refunds of $11.0 million, plus interest of $10.3 million, in the fourth quarter of 2008. The Internal Revenue Service has approved the Companys claim for refund and the Company recorded income of $6.8 million during the six months ended June 30, 2009, to adjust the estimated amount to be received, of which $6.1 million is reflected in the caption interest income in the accompanying condensed consolidated income statement, with the remainder in cost of coal sales. As of June 30, 2009 the Company has received all of the refunds recognized. |
Workers' Compensation Expense
Workers' Compensation Expense | |
6 Months Ended
Jun. 30, 2009 USD / shares | |
Workers' Compensation Expense | |
Workers' Compensation Expense | 10. Workers Compensation Expense The following table details the components of workers compensation expense: Three Months Ended June 30 Six Months Ended June 30 2009 2008 2009 2008 (In thousands) Self-insured occupational disease benefits: Service cost.......................................................... $ 145 $ 325 $ 265 $ 650 Interest cost......................................................... 167 275 279 550 Net amortization................................................... (469) (450) (1,440) (900) Total occupational disease.................................. (157) 150 (896) 300 Traumatic injury claims and assessments......... 2,047 2,062 3,552 5,260 Total workers compensation expense............... $ 1,890 $ 2,212 $ 2,656 $ 5,560 |
Employee Benefit Plans
Employee Benefit Plans | |
6 Months Ended
Jun. 30, 2009 USD / shares | |
Employee Benefit Plans | |
Pension and Other Postretirement Benefits Disclosure [Text Block] | 11. Employee Benefit Plans The following table details the components of pension benefit costs: Three Months Ended June 30 Six Months Ended June 30 2009 2008 2009 2008 (In thousands) Service cost........................................................................... $ 3,493 $ 3,150 $ 6,722 $ 6,300 Interest cost.......................................................................... 4,303 3,675 7,962 7,350 Expected return on plan assets.......................................... (4,377) (4,600) (8,860) (9,200) Amortization of prior service cost..................................... 150 (50) 97 (100) Amortization of other actuarial gains and losses............ 1,180 625 1,983 1,250 Curtailments.......................................................................... 586 586 $ 5,335 $ 2,800 $ 8,490 $ 5,600 The following table details the components of other postretirement benefit costs: Three Months Ended June 30 Six Months Ended June 30 2009 2008 2009 2008 (In thousands) Service cost........................................................................... $ 897 $ 668 $ 1,631 $ 1,468 Interest cost.......................................................................... 1,088 883 2,017 1,858 Amortization of prior service cost..................................... 1,026 879 1,890 1,729 Amortization of other actuarial gains and losses............ (795) (1,047) (1,706) (1,822) $ 2,216 $ 1,383 $ 3,832 $ 3,233 |
Comprehensive Income
Comprehensive Income | |
6 Months Ended
Jun. 30, 2009 USD / shares | |
Comprehensive Income | |
Comprehensive Income Note [Text Block] | 12. Comprehensive Income Comprehensive income consists of net income and other comprehensive income. Other comprehensive income items are transactions recorded in stockholders equity during the year, excluding net income and transactions with stockholders. The following table presents the components of comprehensive income: Three Months Ended June 30 Six Months Ended June 30 2009 2008 2009 2008 (In thousands) Net income (loss)......................................................................... $ (15,161) $ 113,271 $ 15,411 $ 194,692 Other comprehensive income, net of income taxes: Pension, postretirement and other post-employment benefits, net of reclassifications into net income.............. 1,073 (45) 902 100 Available-for-sale securities, net of reclassifications into net income............................................................................... (56) 119 (94) 1,175 Unrealized gains and losses on derivatives: Unrealized gains on derivatives..................................... 7,301 5,577 1,870 9,894 Reclassifications of losses into net income................. 12,678 2,218 22,405 633 Total comprehensive income..................................................... $ 5,835 $ 121,140 $ 40,494 $ 206,494 |
Earnings Per Share
Earnings Per Share | |
6 Months Ended
Jun. 30, 2009 USD / shares | |
Earnings Per Share | |
Earnings Per Share, Policy [Text Block] | 13. Earnings per Share The following table provides the basis for earnings per share calculations by presenting the income available to common stockholders of the Company and by reconciling basic and diluted weighted average shares outstanding: Three Months Ended June 30 Six Months Ended June 30 2009 2008 2009 2008 (In thousands) Income (loss) for basic earnings per share calculation: Net income (loss) allocated to common stockholders....... $ (15,109) $ 112,871 $ 15,436 $ 193,928 Weighted average shares outstanding: Basic weighted average shares outstanding ...................... 142,815 144,120 142,802 143,809 Effect of common stock equivalents under incentive plans 929 122 945 Effect of common stock equivalents arising from Preferred Stock....................................................................... 69 Diluted weighted average shares outstanding .................. 142,815 145,049 142,924 144,823 The effect of options to purchase 1.7 million shares of common stock were excluded from the calculation of diluted weighted average shares outstanding for both the three and six months ended June 30, 2009 because the exercise price of these options exceeded the average market price of the Companys common stock for these periods. The additional dilutive effect of options, restricted stock and restricted stock units totaling 2.5 million shares of common stock were excluded from the calculation of diluted weighted average shares outstanding for the three months ended June 30, 2009 because of the net loss for the quarter. |
Guarantees
Guarantees | |
6 Months Ended
Jun. 30, 2009 USD / shares | |
Guarantees | |
Schedule of Guarantee Obligations [Text Block] | 14. Guarantees The Company has agreed to continue to provide surety bonds and letters of credit for the reclamation and retiree healthcare obligations of Magnum Coal Company (Magnum) related to the properties the Company sold to Magnum on December 31, 2005. The purchase agreement requires Magnum to reimburse the Company for costs related to the surety bonds and letters of credit and to use commercially reasonable efforts to replace the obligations. If the surety bonds and letters of credit related to the reclamation obligations are not replaced by Magnum within a specified period of time, Magnum must post a letter of credit in favor of the Company in the amounts of the reclamation obligations. At June 30, 2009, the Company had approximately $91.6 million of surety bonds related to properties sold to Magnum. As a result of Magnums purchase by Patriot Coal Corporation, Magnum will be required to post letters of credit in the Companys favor for the full amount of the reclamation obligation on or before February 2011. Magnum also acquired certain coal supply contracts with customers who have not consented to the contracts assignment from the Company to Magnum. The Company has committed to purchase coal from Magnum to sell to those customers at the same price it is charging the customers for the sale. In addition, certain contracts were assigned to Magnum, but the Company has guaranteed Magnums performance under the contracts. The longest of the coal supply contracts extends to the year 2017. If Magnum is unable to supply the coal for these coal sales contracts then the Company would be required to purchase coal on the open market or supply contracts from its existing operations. At market prices effective at June 30, 2009, the cost of purchasing 13.6 million tons of coal to supply the contracts that have not been assigned over their duration would exceed the sales price under the contracts by approximately $208.7million, and the cost of purchasing 3.3 million tons of coal to supply the assigned and guaranteed contracts over their duration would exceed the sales price under the contracts by approximately $62.8 million. The Company has also guaranteed Magnums performance under certain operating leases, the longest of which extends through 2011. If the Company were required to perform under its guarantees of the operating lease agreements, it would be required to make $4.4 million of lease payments. As the Company does not believe that it is probable that it would have to purchase replacement coal or fulfill its obligations under the lease guarantees, no losses have been recorded in the consolidated financial statements as of June 30, 2009. However, if the Company would have to perform under these guarantees, it could potentially have a material adverse effect on the business, results of operations and financial condition of the Company. In connection with the Companys acquisition of the coal operations of ARCO and the simultaneous combination of the acquired ARCO operations and the Companys Wyoming operations into the Arch Western joint venture, the Company agreed to indemnify the other member of Arch Western against certain tax lia |
Contingencies
Contingencies | |
6 Months Ended
Jun. 30, 2009 USD / shares | |
Contingencies | |
Commitments and Contingencies Disclosure [Text Block] | 15. Contingencies The Company is a party to numerous claims and lawsuits with respect to various matters. The Company provides for costs related to contingencies when a loss is probable and the amount is reasonably estimable. After conferring with counsel, it is the opinion of management that the ultimate resolution of pending claims will not have a material adverse effect on the consolidated financial condition, results of operations or liquidity of the Company. |
Segment Information
Segment Information | |
6 Months Ended
Jun. 30, 2009 USD / shares | |
Segment Information | |
Segment Reporting Disclosure [Text Block] | 16. Segment Information The Company has three reportable business segments, which are based on the major low-sulfur coal basins in which the Company operates. Each of these reportable business segments includes a number of mine complexes. The Company manages its coal sales by coal basin, not by individual mine complex. Geology, coal transportation routes to customers, regulatory environments and coal quality are generally consistent within a basin. Accordingly, market and contract pricing have developed by coal basin. Mine operations are evaluated based on their per-ton operating costs (defined as including all mining costs but excluding pass-through transportation expenses), as well as on other non-financial measures, such as safety and environmental performance. The Companys reportable segments are the Powder River Basin (PRB) segment, with operations in Wyoming; the Western Bituminous (WBIT) segment, with operations in Utah, Colorado and southern Wyoming; and the Central Appalachia (CAPP) segment, with operations in southern West Virginia, eastern Kentucky and Virginia. Operating segment results for the three and six months ended June 30, 2009 and 2008 are presented below. Results for the operating segments include all direct costs of mining. Corporate, Other and Eliminations includes the change in fair value of coal derivatives and coal trading activities, net; corporate overhead; land management; other support functions; and the elimination of intercompany transactions. PRB WBIT CAPP Corporate, Other and Eliminations Consolidated (In thousands) Three months ended June 30, 2009 Coal sales.................................................... $ 268,558 $ 112,081 $ 173,973 $ $ 554,612 Income (loss) from operations................. 18,093 (4,457) 12,282 (18,609) 7,309 Depreciation, depletion and amortization 27,695 18,879 21,416 487 68,477 Capital expenditures.................................. 8,092 27,412 17,548 1,624 54,676 Three months ended June 30, 2008 Coal sales.................................................... $ 284,347 $ 194,576 $ 306,194 $ $ 785,117 Income from operations............................ 24,720 44,127 79,503 20,874 169,224 Depreciation, depletion and amortization 28,501 19,843 23,148 461 71,953 Capital expenditures.................................. 38,385 34,498 17,987 719 91,589 Six months ended June 30, 2009 Coal sales.................................................... $ 579,800 $ 234,638 $ 421,214 $ $ 1,235,652 Income (loss) from operations................. 49,307 (12,112) 55,833 (47,147) 45,881 Total assets................................................ 1,880,823 2,070,520 1,141,956 (1,064,302) |
Subsequent Events
Subsequent Events | |
6 Months Ended
Jun. 30, 2009 USD / shares | |
Subsequent Events | |
Schedule of Subsequent Events [Text Block] | 17. Subsequent Events The Companys management evaluated the period from June 30, 2009 to August 7, 2009 for items requiring recognition or disclosure in the financial statements. No events that require recognition in the financial statements were identified. On July 31, 2009, the Company sold 17 million shares of its common stock at a public offering price of $17.50 per share and issued $600 million in aggregate principal amount of 8.750% senior unsecured notes due 2016 at an initial issue price of 97.464%. On August 6, 2009, the Company issued an additional 2.55 million shares of its common stock under the same terms and conditions to cover over-allotments. The Company plans to use the net proceeds from these offerings to finance the acquisition of the Jacobs Ranch mining complex, as discussed in Note 3, Business Combinations. There were no other events occurring during the evaluation period that require disclosure. |
Document Information
Document Information | |
6 Months Ended
Jun. 30, 2009 USD / shares | |
Document Information [Line Items] | |
Document Type | 10-Q |
Amendment Flag | false |
Document Period End Date | 2009-06-30 |
Entity Information
Entity Information (USD $) | ||
6 Months Ended
Jun. 30, 2009 | Jun. 30, 2008
| |
Entity Information [Line Items] | ||
Entity Registrant Name | Arch Coal, Inc. | |
Entity Central Index Key | 0001037676 | |
Current Fiscal Year End Date | --12-31 | |
Entity Well-known Seasoned Issuer | Yes | |
Entity Voluntary Filers | No | |
Entity Current Reporting Status | Yes | |
Entity Filer Category | Large Accelerated Filer | |
Entity Public Float | $10,800,000,000 | |
Entity Common Stock, Shares Outstanding | 162,471,165 |