| Document Information (USD $) | |
| 3 Months Ended
Mar. 31, 2009 | |
| Document Information [Line Items] | |
| Document Type | 10-Q |
| Amendment Flag | false |
| Document Period End Date | 2009-03-31 |
| Document Fiscal Year Focus | 2,009 |
| Document Fiscal Period Focus | Q1 |
| Entity Information (USD $) | |
| 3 Months Ended
Mar. 31, 2009 | |
| Entity Information [Line Items] | |
| Entity Registrant Name | CONSOL Energy Inc. |
| Entity Central Index Key | 0001070412 |
| 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 Common Stock, Shares Outstanding | 180,638,248 |
| Entity Listings [Line Items] | |
| Trading Symbol | CNX |
| Notes to Financial Statements | |
| 3 Months Ended
Mar. 31, 2009 USD / shares | |
| Notes to Financial Statements [Abstract] | |
| NOTE 1—BASIS OF PRESENTATION: | NOTE 1—BASIS OF PRESENTATION: The accompanying unaudited consolidated financial statements have been prepared in accordance with generally accepted accounting principles for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included. Operating results for the three months ended March31, 2009 are not necessarily indicative of the results that may be expected for future periods. The balance sheet at December31, 2008 has been derived from the audited consolidated financial statements at that date but does not include all the notes required by generally accepted accounting principles for complete financial statements. For further information, refer to the consolidated financial statements and related notes for the year ended December31, 2008 included in CONSOL Energy’s Form 10-K. Effective January1, 2009, CONSOL Energy adopted the provisions of Statement of Financial Accounting Standards No.160, “Noncontrolling Interests in Consolidated Financial Statements—an Amendment of ARB No.51 (SFAS 160).” This adoption resulted in modifications to the reporting of noncontrolling interests in the Consolidated Financial Statements. Additionally, certain reclassifications of prior period data have been made to conform to the three months ended March31, 2009 classifications required by SFAS 160. Basic earnings per share are computed by dividing net income attributable to CONSOL Energy by the weighted average shares outstanding during the reporting period. Dilutive earnings per share are computed similarly to basic earnings per share except that the weighted average shares outstanding are increased to include additional shares from the effect of dilutive potential common shares outstanding during the period as calculated in accordance with Statement of Financial Accounting Standard No.123R (SFAS 123R). The number of additional shares is calculated by assuming that restricted stock units and performance share units were converted and outstanding stock options were exercised and that the proceeds from such activity were used to acquire shares of common stock at the average market price during the reporting period. Options to purchase 2,404,604 shares and 385,653 shares of common stock were outstanding for the three month period ended March31, 2009 and 2008, respectively, but were not included in the computation of dilutive earnings per share because the effect would be antidilutive. Unvested restricted stock units and unvested performance share units of 284 and 106,540, respectively, were outstanding for the three month period ended March31, 2009, but were not included in the computation of dilutive earnings per share because the effect would be antidilutive. Additionally, unvested restricted stock units and unvested performance share units of 61,246 and 41,581, respectively, were outstanding for th |
| NOTE 2—ACQUISITIONS AND DISPOSITIONS: | NOTE 2—ACQUISITIONS AND DISPOSITIONS: In February 2009, CONSOL Energy completed a sale/lease-back of longwall shields for Bailey Mine. Cash proceeds from the sale were $42,282, which was the same as our basis in the equipment. Accordingly, no gain or loss was recognized on the transaction. The lease has been accounted for as an operating lease. The lease term is five years. In December 2008, CONSOL Energy, through a subsidiary, completed the acquisition of the outstanding 51% interest in Southern West Virginia Energy, LLC (“SWVE”) for a cash payment of $11,521. This amount is included in capital expenditures in cash used in investing activities on the Consolidated Statement of Cash Flows. The purchase price was principally allocated to property, plant and equipment. SWVE wholly-owns Southern West Virginia Resources, LLC and Minway Contracting, LLC, and had previously been a 49% subsidiary of CONSOL Energy. Prior to the acquisition of the outstanding interest, SWVE had been fully consolidated in accordance with Financial Accounting Standards Board Interpretation No.46, “Consolidation of Variable Interest Entities” by CONSOL Energy. The proforma results for this acquisition are not material to CONSOL Energy’s financial results. In November 2008, CONSOL Energy, through a subsidiary, completed the acquisition of North Penn Pipe Supply, Inc. for a cash payment, net of cash acquired, of $22,550. This amount is included in capital expenditures in cash used in investing activities on the Consolidated Statements of Cash Flows. North Penn Pipe Supply, Inc. is a distributor of oil and gas field equipment, primarily tubular goods, to the northern Appalachian Basin, a region stretching from the state of New York to southwestern Pennsylvania and northern West Virginia. The fair value of merchandise for resale acquired in this acquisition is $10,623 and is included in inventory on the Consolidated Balance Sheets. The proforma results for this acquisition are not significant to CONSOL Energy’s financial results. In October 2008, CONSOL Energy’s Board of Directors authorized a purchase program for shares of CNX Gas Corporation common stock for an aggregate purchase price of up to $150 million. The authorization, which is not intended to take CNX Gas private, was effective as of October21, 2008 for a twenty-four month period. During the year ended December31, 2008, CONSOL Energy completed the purchase of $67,259 of CNX Gas stock on the open market at an average price of $26.53 per share. The purchase price was allocated to property, plant and equipment. The purchase of these 2,531,400 shares changed CONSOL Energy’s ownership percentage in CNX Gas from 81.7% to 83.3% at December31, 2008. CONSOL Energy did not purchase any additional shares of CNX Gas stock during the three months ended March31, 2009. In July 2008, our 83.3% subsidiary, CNX Gas, completed the acquisition of several leases and gas wells from KIS Oil Gas Inc. for a cash payment of $19,324. The purchase price was principally allocated to property, plant and equipment.The sales agreement called for the transfer of 30 oil and gas wells and approximately 5,600 leased acres. This acqui |
| NOTE 3—COMPONENTS OF PENSION AND OTHER POSTRETIREMENT BENEFIT PLANS NET PERIODIC BENEFIT COSTS: | NOTE 3—COMPONENTS OF PENSION AND OTHER POSTRETIREMENT BENEFIT PLANS NET PERIODIC BENEFIT COSTS: Components of net periodic costs for the three months ended March31 are as follows: Pension Benefits Other Benefits ThreeMonthsEnded March31, Three Months Ended March31, 2009 2008 2009 2008 Service cost $ 2,867 $ 2,438 $ 3,378 $ 2,639 Interest cost 8,659 8,257 39,735 39,959 Expected return on plan assets (9,070 ) (8,418 ) — — Amortization of prior service costs (credit) (277 ) (278 ) (11,604 ) (12,156 ) Recognized net actuarial loss 5,440 4,182 14,970 15,376 Net periodic benefit cost $ 7,619 $ 6,181 $ 46,479 $ 45,818 For the three months ended March31, 2009, $8,393 of contributions to the pension trusts and pension benefits have been paid from operating cash flows. CONSOL Energy presently anticipates contributing a total of approximately $65,600 to the pension trust in 2009. We do not expect to contribute to the other post employment benefit plan in 2009. We intend to pay benefit claims as they become due. For the three months ended March31, 2009, $40,033 of other post employment benefits have been paid. |
| NOTE 4—COMPONENTS OF COAL WORKERS’ PNEUMOCONIOSIS (CWP) AND WORKERS’ COMPENSATION NET PERIODIC BENEFIT COSTS: | NOTE 4—COMPONENTS OF COAL WORKERS’ PNEUMOCONIOSIS (CWP) AND WORKERS’ COMPENSATION NET PERIODIC BENEFIT COSTS: Components of net periodic costs (benefits) for the three months ended March31 are as follows: CWP Workers’Compensation ThreeMonthsEnded March31, Three Months Ended March31, 2009 2008 2009 2008 Service cost $ 1,769 $ 1,259 $ 7,099 $ 7,257 Interest cost 3,014 2,937 2,191 2,082 Amortization of actuarial gain (5,080 ) (6,027 ) (1,050 ) (1,235 ) State administrative fees and insurance bond premiums — — 1,759 1,293 Legal and administrative costs 675 675 850 806 Net periodic (benefit) cost $ 378 $ (1,156 ) $ 10,849 $ 10,203 CONSOL Energy does not expect to contribute to the CWP plan in 2009. We intend to pay benefit claims as they become due. For the three months ended March31, 2009, $2,588 of CWP benefit claims have been paid. CONSOL Energy does not expect to contribute to the workers’ compensation plan in 2009. We intend to pay benefit claims as they become due. For the three months ended March31, 2009, $9,584 of workers’ compensation benefits, state administrative fees and surety bond premiums have been paid. |
| NOTE 5—INCOME TAXES: | NOTE 5—INCOME TAXES: The following is a reconciliation, stated in dollars as a percentage of pretax income, of the U.S. statutory federal income tax rate to CONSOL Energy’s effective tax rate: For the Three Months Ended March31, 2009 2008 Amount Percent Amount Percent Statutory U.S. federal income tax rate $ 99,647 35.0 % $ 41,924 35.0 % Excess tax depletion (27,816 ) (9.8 ) (10,409 ) (8.7 ) Effect of Domestic Production Activities Deduction (4,328 ) (1.5 ) (1,377 ) (1.2 ) Effect of Medicare Prescription Drug, Improvement and Modernization Act of 2003 712 0.3 299 0.3 Net Effect of state tax 10,904 3.8 4,264 3.6 Other 616 0.2 852 0.7 Income Tax Expense / Effective Rate $ 79,735 28.0 % $ 35,553 29.7 % The effective tax rate for the three months ended March31, 2009 was calculated using the annual effective rate projection on recurring earnings and includes tax liabilities related to certain discrete transactions. The effective tax rate for the three months ended March31, 2008 was calculated using the annual effective rate projection on recurring earnings. The total amounts of unrecognized tax benefits as of March31, 2009 and March31, 2008 were approximately $60,691 and $63,521, respectively. If these unrecognized tax benefits were recognized approximately $14,657 and $12,900, respectively, would affect CONSOL Energy’s effective tax rate. There were no additions to the liability for unrecognized tax benefits during the three months ended March31, 2009 and March31, 2008. CONSOL Energy Inc. and its subsidiaries file income tax returns in the U.S. federal, various states, and Canadian tax jurisdictions. With few exceptions, the Company is no longer subject to U.S. federal, state and local, or non-U.S. income tax examinations by tax authorities for years before 2002. The Internal Revenue Service has issued its audit report relating to the examination of CONSOL Energy’s 2004 and 2005 U.S. income tax returns. The estimated Federal and state income tax deficiencies payable as a result of the changes to taxable incomes for the audit years are $12,806 and $3,008, respectively. Payment of these income tax deficiencies will have no impact on net income attributable to CONSOL Energy since the 2004 and 2005 deficiencies are the result of changes in the timing of tax deductible expenses. During the three months ended March31, 2009, CONSOL Energy classified Federal and state unrecognized tax benefits of $12,883 and $3,008, respectively, as current liabilities relating to the 2004 and 2005 audit periods in its financial statements. The Company also classified interest expense relating to the two-year audit period of $4,206 as a current liability. The IRS’ examination of the Company’s 2002 and 2003 tax returns has been completed. During the three months ended March31, 2009, CONSOL Energy paid interest of approximately $1,421 relating to the tax deficiencies for this audit period. CONSOL Energy recognizes |
| NOTE 6—INVENTORIES: | NOTE 6—INVENTORIES: Inventory components consist of the following: March31, 2009 December31, 2008 Coal $ 127,646 $ 93,875 Merchandise for resale 59,234 43,074 Supplies 90,796 90,861 Total Inventories $ 277,676 $ 227,810 Merchandise for resale is valued using the Last in First Out (LIFO) cost method. The excess of replacement cost of merchandise for resale inventories over carrying LIFO value was $10,547 and $14,716 at March31, 2009 and December31, 2008, respectively. |
| NOTE 7—ACCOUNTS RECEIVABLE SECURITIZATION: | NOTE 7—ACCOUNTS RECEIVABLE SECURITIZATION: CONSOL Energy and certain of our U.S. subsidiaries are party to a trade accounts receivable facility with financial institutions for the sale on a continuous basis of eligible trade accounts receivable. The facility allows CONSOL Energy to receive on a revolving basis, up to $165,000. The facility also allows for the issuance of letters of credit against the $165,000 capacity. At March31, 2009, there were no letters of credit outstanding against the facility. CONSOL Energy formed CNX Funding Corporation, a wholly owned, special purpose, bankruptcy-remote subsidiary for the sole purpose of buying and selling eligible trade receivables generated by certain subsidiaries of CONSOL Energy. Under the receivables facility, CONSOL Energy and certain subsidiaries, irrevocably and without recourse, sell all of their eligible trade accounts receivable to financial institutions and their affiliates, while maintaining a subordinated interest in a portion of the pool of trade receivables. This retained interest, which is included in Accounts and Notes Receivable Trade in the Consolidated Balance Sheets, is recorded at fair value. Due to a short average collection cycle for such receivables, our collection experience history and the composition of the designated pool of trade accounts receivable that are part of this program, the fair value of our retained interest approximates the total amount of the designated pool of accounts receivable reduced by the amount of accounts receivables sold to the third-party financial institutions under the program. CONSOL Energy will continue to service the sold trade receivables for the financial institutions for a fee based upon market rates for similar services. The cost of funds under this facility is based upon commercial paper rates, plus a charge for administrative services paid to the financial institutions. Costs associated with the receivables facility totaled $935 and $1,577 for the three months ended March31, 2009 and 2008, respectively. These costs have been recorded as financing fees which are included in Cost of Goods Sold and Other Operating Charges in the Consolidated Statements of Income. No servicing asset or liability has been recorded. The receivables facility expires in April 2012 with the underlying liquidity agreement renewing annually each April. At March31, 2009 and 2008, eligible accounts receivable totaled approximately $165,000 and $144,300, respectively. There was no subordinated retained interest at March31, 2009. The subordinated retained interest approximated $7,500 at March31, 2008. Accounts receivable totaling $165,000 and $136,800 were removed from the Consolidated Balance Sheet at March31, 2009 and 2008, respectively. CONSOL Energy’s $11,400 increase in the accounts receivable securitization program for the quarter ended March31, 2008 is reflected in cash flows from operating activities in the Consolidated Statement of Cash Flows. There was no change in the facility usage in the three months ended March31, 2009. |
| NOTE 8—PROPERTY, PLANT AND EQUIPMENT: | NOTE 8—PROPERTY, PLANT AND EQUIPMENT: The components of property, plant and equipment are as follows: March31, 2009 December31, 2008 Coal other plant and equipment $ 4,544,827 $ 4,533,793 Coal properties and surface lands 1,306,115 1,313,496 Gas properties and related development 1,468,899 1,379,012 Gas gathering equipment 765,064 740,396 Airshafts 604,235 615,512 Leased coal lands 510,865 502,521 Mine development 538,126 527,991 Coal advance mining royalties 370,131 365,380 Gas advance royalties 2,341 2,187 Total property, plant and equipment 10,110,603 9,980,288 Less Accumulated depreciation, depletion and amortization 4,269,952 4,214,316 Total Net Property, Plant and Equipment $ 5,840,651 $ 5,765,972 |
| NOTE 9—SHORT-TERM NOTES PAYABLE: | NOTE 9—SHORT-TERM NOTES PAYABLE: CONSOL Energy has a five-year $1,000,000 senior secured credit facility, which extends through June 2012. The facility is secured by substantially all of the assets of CONSOL Energy and certain of its subsidiaries and collateral is shared equally and ratably with the holders of CONSOL Energy Inc. 7.875% bonds maturing in 2012. The Agreement does provide for the release of collateral at the request of CONSOL Energy upon achievement of certain credit ratings. Fees and interest rate spreads are based on a ratio of financial covenant debt to twelve-month trailing earnings before interest, taxes, depreciation, depletion and amortization (EBITDA), measured quarterly. The facility includes a minimum interest coverage ratio covenant of no less than 4.50 to 1.00, measured quarterly. The interest coverage ratio was 21.95 to 1.00 at March31, 2009. The facility also includes a maximum leverage ratio covenant of not more than 3.25 to 1.00, measured quarterly. The leverage ratio was 1.10 to 1.00 at March31, 2009. Affirmative and negative covenants in the facility limit our ability to dispose of assets, make investments, purchase or redeem CONSOL Energy common stock, pay dividends and merge with another corporation. At March31, 2009, the $1,000,000 facility had $440,000 of borrowings outstanding and $267,136 of letters of credit outstanding, leaving $292,864 of capacity available for borrowings and the issuance of letters of credit. The facility bore a weighted average interest rate of 1.2% for the three months ended March31, 2009. CNX Gas has a five-year $200,000 unsecured credit agreement which extends through October 2010. The agreement contains a negative pledge provision, whereas CNX Gas assets cannot be used to secure other obligations. Fees and interest rate spreads are based on the percentage of facility utilization, measured quarterly. Covenants in the facility limit CNX Gas’ ability to dispose of assets, make investments, purchase or redeem CNX Gas stock, pay dividends and merge with another corporation. The facility includes a maximum leverage ratio covenant of not more than 3.00 to 1.00, measured quarterly. The leverage ratio was 0.32 to 1.00 at March31, 2009. The facility also includes a minimum interest coverage ratio covenant of no less than 3.00 to 1.00, measured quarterly. This ratio was 76.68 to 1.00 at March31, 2009. At March31, 2009, the CNX Gas credit agreement had $80,400 of borrowings outstanding and $14,933 of letters of credit outstanding, leaving $104,667 of capacity available for borrowings and the issuance of letters of credit. The facility bore a weighted average interest rate of 1.5% for the three months ended March31, 2009. |
| NOTE 10—COMMITMENTS AND CONTINGENCIES: | NOTE 10—COMMITMENTS AND CONTINGENCIES: CONSOL Energy and its subsidiaries are subject to various lawsuits and claims with respect to such matters as personal injury, wrongful death, damage to property, exposure to hazardous substances, governmental regulations including environmental remediation, employment and contract disputes and other claims and actions arising out of the normal course of business. Our current estimates related to these pending claims, individually and in the aggregate, are immaterial to the financial position, results of operations or cash flows of CONSOL Energy. However, it is reasonably possible that the ultimate liabilities in the future with respect to these lawsuits and claims may be material to the financial position, results of operations or cash flows of CONSOL Energy. On January30, 2008, the Pennsylvania Department of Conservation and Natural Resources filed a six-count Complaint in the Court of Common Pleas of Allegheny County, Pennsylvania, asserting claims in both tort and contract against the Company for alleged damage to park property owned by the Commonwealth allegedly due to the Company’s underground mining activities. The Commonwealth claims that the Company’s underground longwall mining activities in the summer of 2005 in Greene County, Pennsylvania, caused cracks and seepage damage to the nearby Ryerson Park Dam. The Commonwealth demolished the Ryerson Dam’s spillway allegedly under its role of Parens Patrie to protect persons and property, thereby eliminating the Ryerson Park lake. The Commonwealth claims that the Company is liable for dam reconstruction costs, lake restoration costs and natural resources damages totaling $58,000. The theories of liability include general allegations of negligence, breach of contract, strict liability, nuisance, an administrative remedy claim under the Bituminous Mine Subsidence Act and a claim of fraud; the last claim seeking punitive damages. The Court, in ruling on the Company’s Preliminary Objections to the Complaint, stayed the current proceedings in the state court, holding that the Commonwealth should pursue administrative agency review of the claim because full compensatory relief, if warranted, could be provided by the particular administrative agency and then the Environmental Hearing Board, if further relief was sought. Furthermore, the Court found that the Commonwealth could not recover natural resources damages under applicable law. The remainder of the Company’s objections was preserved pending the outcome of the administrative proceedings. The matter is in the early stages of review by the Department of Environmental Protection (DEP). The DEP has set specific dates for the submission of materials regarding the issue of causation with August14, 2009 being the prospective date or target date for its causation decision. The Company has submitted extensive material including comments from its mining expert indicating and showing that longwall mining activity did not cause damage to the dam. If the DEP determines that there is causation, a second phase will be set to determine the remedy. As to the underlying claim, the Company believes it is not res |
| NOTE 11—DERIVATIVES | NOTE 11—DERIVATIVES CONSOL Energy enters into financial derivative instruments to manage our exposure to natural gas price volatility. Our derivatives are accounted for under Statement of Financial Accounting Standards No.133, “Accounting for Derivative Instruments and Hedging Activities” (SFAS 133), as amended. We measure every derivative instrument at fair value and record them on the balance sheet as either an asset or liability. Changes in fair value of derivatives are recorded currently in earnings unless special hedge accounting criteria are met. For derivatives designated as fair value hedges, the changes in fair value of both the derivative instrument and the hedged item are recorded in earnings. For derivatives designated as cash flow hedges, the effective portions of changes in fair value of the derivative are reported in other comprehensive income or loss and reclassified into earnings in the same period or periods which the forecasted transaction affects earnings. The ineffective portions of hedges are recognized in earnings in the current year. CONSOL Energy currently utilizes only cash flow hedges that are considered highly effective. CONSOL Energy formally assesses, both at inception of the hedge and on an ongoing basis, whether each derivative is highly effective in offsetting changes in fair values or cash flows of the hedge item. If it is determined that a derivative is not highly effective as a hedge or if a derivative ceases to be a highly effective hedge, CONSOL Energy will discontinue hedge accounting prospectively. CONSOL Energy is exposed to credit risk in the event of nonperformance by counterparties. The creditworthiness of counterparties is subject to continuing review. All of the counterparties to CONSOL Energy’s natural gas derivative instruments also participate in CONSOL Energy’s revolving credit facility. The Company has not experienced any issues of non-performance by derivative counterparties. CONSOL Energy has entered into forward and option contracts on various commodities to manage the price risk associated with forecasted revenues of those commodities. The objective of the hedges is to reduce the variability of cash flows associated with the forecasted revenues of those commodities. As of March31, 2009, the total notional amount of the Company’s outstanding natural gas forward contracts that were entered into to hedge forecasted revenues was 56.3 Bcf. The forward contracts are forecasted to settle through December31, 2010. Over the next twelve months, $120,177 of gain is expected to be reclassified out of Other Comprehensive Income and into Earnings. No gains or losses were reclassified into earnings as a result of the discontinuance of cash flow hedges. As of March31, 2009, the total notional amount of the Company’s outstanding coal sales options was 250 tons. These coal sales options do not qualify for hedge accounting under SFAS 133. The options are expected to settle or expire over the next nine months. The fair value of CONSOL Energy’s derivative instruments at March31, 2009 are as follows: Asset Derivatives Liability Derivatives As of March31 |
| NOTE 12—OTHER COMPREHENSIVE INCOME: | NOTE 12—OTHER COMPREHENSIVE INCOME: Total comprehensive income, net of tax, was as follows: Treasury RateLock Changein FairValue ofCashFlow Hedges Minimum Pension Liability Adjustments for FASB Statement No. 158 Accumulated Other Comprehensive Loss Balance at December31, 2008 $ 263 $ 102,625 $ — $ (564,788 ) $ (461,900 ) Net increase in value of cash flow hedges — 65,788 — — 65,788 Reclassification of cash flow hedges from other comprehensive income to earnings — (41,868 ) — — (41,868 ) Current period change (20 ) — — 1,497 1,477 Comprehensive Income 243 126,545 — (563,291 ) (436,503 ) Comprehensive income attributable to Noncontrolling Interest — 4,785 — (4 ) 4,781 Balance at March31, 2009 $ 243 $ 131,330 $ — $ (563,295 ) $ (431,722 |
| NOTE 13—FAIR VALUE OF FINANCIAL INSTRUMENTS: | NOTE 13—FAIR VALUE OF FINANCIAL INSTRUMENTS: The financial assets (liabilities) measured at fair value on a recurring basis are summarized below: Fair Value Measurements at March31, 2009 Description QuotedPricesin ActiveMarketsfor Identical Liabilities (Level 1) SignificantOther Observable Inputs (Level 2) Significant Unobservable Inputs (Level 3) Gas Cash Flow Hedges $ — $ 253,134 $ — Coal Sales Options $ — $ (83 ) $ — Statement of Financial Accounting Standards No.107, “Disclosures About Fair Value of Financial Instruments” (SFAS 107) requires the disclosure of the estimated fair value of financial instruments including those financial instruments for which the SFAS 159 fair value option was not elected. The following methods and assumptions were used to estimate the fair value of those financial instruments: Cash and cash equivalents: The carrying amount reported in the balance sheets for cash and cash equivalents approximates its fair value due to the short maturity of these instruments. Short-term notes payable: The carrying amount reported in the balance sheets for short-term notes payable approximates its fair value due to the short-term maturity of these instruments. Long-term debt: The fair values of long-term debt are estimated using discounted cash flow analyses, based on CONSOL Energy’s current incremental borrowing rates for similar types of borrowing arrangements. The carrying amounts and fair values of financial instruments for which SFAS 159 was not elected are as follows: March31, 2009 December31, 2008 Carrying Amount Fair Value Carrying Amount Fair Value Cash and cash equivalents $ 71,555 $ 71,555 $ 138,512 $ 138,512 Short-term notes payable $ (520,400 ) $ (520,400 ) $ (557,700 ) $ (557,700 ) Long-term debt $ (401,250 ) $ (403,940 ) $ (402,287 ) $ (390,278 ) |
| NOTE 14—SEGMENT INFORMATION: | NOTE 14—SEGMENT INFORMATION: CONSOL Energy has two principal business units: Coal and Gas. The principal activities of the Coal unit are mining, preparation and marketing of steam coal, sold primarily to power generators, and metallurgical coal, sold to metal and coke producers. The Coal unit includes four reportable segments. These reportable segments are Northern Appalachian, Central Appalachian, Metallurgical and Other Coal. Each of these reportable segments includes a number of operating segments (mines). For the three months ended March31, 2009, the Northern Appalachian aggregated segment includes the following mines: Blacksville #2, Robinson Run, McElroy, Loveridge, Bailey, Enlow Fork, Shoemaker and Mine 84. For the three months ended March31, 2009, the Central Appalachian aggregated segment includes the following mines: Jones Fork, the Fola Complex and the Terry Eagle Complex. For the three months ended March31, 2009, the Metallurgical aggregated segment includes the Buchanan and Amonate mines. The Other Coal segment includes our purchased coal activities, idled mine cost, coal segment business units not meeting aggregation criteria, as well as various other activities assigned to the coal segment but not allocated to each individual mine. The principal activity of the Gas unit is to produce pipeline quality methane gas for sale primarily to gas wholesalers. CONSOL Energy’s All Other classification is made up of the Company’s terminal services, river and dock services, industrial supply services and other business activities, including rentals of buildings and flight operations. Intersegment sales have been recorded at amounts approximating market. Operating profit for each segment is based on sales less identifiable operating and non-operating expenses. Certain reclassifications of 2008 segment information have been made to conform to the 2009 presentation. Industry segment results for the three months ended March31, 2009: Northern Appalachian Central Appalachian Metallurgical OtherCoal TotalCoal Gas AllOther Corporate, Adjustments Eliminations Consolidated Sales—Outside $ 684,322 $ 74,639 $ 70,952 $ 88,323 $ 918,236 $ 161,905 $ 70,103 $ — $ 1,150,244 Sales—Gas Royalty Interests — — — — — 12,632 — — 12,632 Sales—Purchased Gas — — — — — 1,465 — — 1,465 Freight—outside — — — 30,916 30,916 — — 30,916 Intersegment transfers — — — — — 435 37,519 (37,954 ) — Total Sales and Freight $ 684,322 $ 74,639 $ 70,952 $ 119,239 $ 949,152 $ 176,437 $ 107,622 $ (37,954 ) $ 1,195,257 Earnings (Loss) Before Income Taxes $ 248,330 $ (11,822 ) $ 22,261 $ (43,128 ) $ 215,641 $ 89,005 $ 9,003 $ (28,943 ) $ 284,706 (A) Segment assets |
| NOTE 15—GUARANTOR SUBSIDIARIES FINANCIAL INFORMATION: | NOTE 15—GUARANTOR SUBSIDIARIES FINANCIAL INFORMATION: The payment obligations under the $250,000, 7.875%per annum notes due March1, 2012 issued by CONSOL Energy are jointly and severally, and also fully and unconditionally guaranteed by several subsidiaries of CONSOL Energy. In accordance with positions established by the Securities and Exchange Commission (“SEC”), the following financial information sets forth separate financial information with respect to the parent, CNX Gas, an 83.3% owned guarantor subsidiary, the remaining guarantor subsidiaries and the non-guarantor subsidiaries. CNX Gas is presented in a separate column in accordance with SEC Regulation S-X Rule 3-10. CNX Gas Corporation is a reporting company under Section12(b) of the Securities Exchange Act of 1933, and as such, CNX Gas Corporation files its own financial statements with the Securities and Exchange Commission and those financial statements, when filed, are publicly available on Edgar. The principal elimination entries include investments in subsidiaries and certain intercompany balances and transactions. CONSOL Energy, the parent, and a guarantor subsidiary manage several assets and liabilities of all other 100% owned subsidiaries. These include, for example, deferred tax assets, cash and other post-employment liabilities. These assets and liabilities are reflected as parent company or guarantor company amounts for purposes of this presentation. Income Statement for the Three Months Ended March31, 2009: Parent Issuer CNX Gas Guarantor Other Subsidiary Guarantors Non- Guarantors Elimination Consolidated Sales—Outside $ — $ 162,340 $ 938,424 $ 50,480 $ (1,000 ) $ 1,150,244 Sales—Purchased Gas — 1,465 — — — 1,465 Sales—Gas Royalty Interests — 12,632 — — — 12,632 Freight—Outside — — 30,916 — — 30,916 Other Income (including equity earnings) 214,359 1,947 12,744 5,962 (211,518 ) 23,494 Total Revenue and Other Income 214,359 178,384 982,084 56,442 (212,518 ) 1,218,751 Cost of Goods Sold and Other Operating Charges 18,496 33,274 530,487 47,842 37,875 667,974 Purchased Gas Costs — 1,530 — — — 1,530 Gas Royalty Interests’ Costs — 10,601 — — (10 ) 10,591 Related Party Activity 547 — 28,158 428 (29,133 ) — Freight Expense — — 30,916 — — 30,916 Selling, General and Administrative Expense — 19,122 11,369 325 — 30,816 Depreciation, Depletion and Amortization 3,343 22,819 81,250 661 (1,854 ) 106,219 Interest Expense 3,825 1,957 2,812 4 (86 ) 8,512 Taxes Other Than Income 1,880 — 75,310 649 — 77,839 Black Lung Excise Tax Refund — — (352 ) — — (352 ) Total Costs |
| NOTE 16—RECENT ACCOUNTING PRONOUNCEMENTS: | NOTE 16—RECENT ACCOUNTING PRONOUNCEMENTS: In April 2009, the Financial Accounting Standards Board issued three final staff positions intended to provide additional application guidance and enhance disclosures regarding fair value measurements and impairments of securities. FSP FAS 157-4, “Determining Fair Value When the Volume and Level of Activity for the Asset or Liability Have Significantly Decreased and Identifying Transactions That Are Not Orderly,” provides guidelines for making fair value measurements more consistent with the principles presented in FASB Statement No.157, “Fair Value Measurements.” FSP FAS 107-1 and APB 28-1, “Interim Disclosures about Fair Value of Financial Instruments,” enhances consistency in financial reporting by increasing the frequency of fair value disclosures. FSP FAS 115-2 and FAS 124-2, “Recognition and Presentation of Other-Than-Temporary Impairments,” provides additional guidance designed to create greater clarity and consistency in accounting for and presenting impairment losses on securities. We do not expect this guidance to have a significant impact on CONSOL Energy. |
| Statement Of Cash Flows Indirect (USD $) | ||
| In Thousands | 3 Months Ended
Mar. 31, 2009 | 3 Months Ended
Mar. 31, 2008 |
| Operating Activities: | ||
| Net Income | $204,971 | $84,231 |
| Adjustments to Reconcile Net Income Attributable to CONSOL Energy Inc. to Net Cash Provided by Operating Activities: | ||
| Depreciation, Depletion and Amortization | 106,219 | 92,728 |
| Stock-based Compensation | 9,906 | 5,657 |
| Gain on the Sale of Assets | (1,871) | (7,286) |
| Amortization of Mineral Leases | 1,671 | 2,087 |
| Deferred Income Taxes | 16,452 | 14,428 |
| Equity in Earnings of Affiliates | (3,361) | (1,355) |
| Changes in Operating Assets: | ||
| Accounts Receivable Securitization | 0 | 11,400 |
| Accounts and Notes Receivable | (30,459) | (81,648) |
| Inventories | (49,866) | (21,167) |
| Prepaid Expenses | 2,320 | 3,091 |
| Changes in Other Assets | 5,327 | 13,341 |
| Changes in Operating Liabilities: | ||
| Accounts Payable | (43,690) | (13,816) |
| Other Operating Liabilities | 26,250 | 3,487 |
| Changes in Other Liabilities | 2,938 | 38,837 |
| Other | 2,973 | 2,078 |
| Net Cash Provided by Operating Activities | 249,780 | 146,093 |
| Investing Activities: | ||
| Capital Expenditures | (299,560) | (176,342) |
| Net Investment in Equity Affiliates | 720 | 1,536 |
| Proceeds from Sales of Assets | 43,827 | 15,803 |
| Net Cash Used in Investing Activities | (255,013) | (159,003) |
| Financing Activities: | ||
| (Payments on) Proceeds from Miscellaneous Borrowings | (6,425) | 5,001 |
| (Payments on) Proceeds from Short-Term Borrowings | (37,300) | 32,500 |
| Tax Benefit from Stock-Based Compensation | 140 | 9,521 |
| Dividends Paid | (18,060) | (18,255) |
| Issuance of Treasury Stock | 121 | 5,270 |
| Purchases of Treasury Stock | 0 | (3) |
| Noncontrolling Interest Member Distribution | (200) | 0 |
| Net Cash Provided by (Used in) Financing Activities | (61,724) | 34,034 |
| Net Increase (Decrease) in Cash and Cash Equivalents | (66,957) | 21,124 |
| Cash and Cash Equivalents at Beginning of Period | 138,512 | 41,651 |
| Cash and Cash Equivalents at End of Period | $71,555 | $62,775 |
| Statement Of Financial Position Classified (USD $) | ||
| In Thousands, except Share data | Mar. 31, 2009
| Dec. 31, 2008
|
| Current Assets: | ||
| Cash and Cash Equivalents | $71,555 | $138,512 |
| Accounts and Notes Receivable: | ||
| Trade | 259,879 | 221,729 |
| Other Receivables | 71,985 | 79,552 |
| Inventories | 277,676 | 227,810 |
| Deferred Income Taxes | 48,811 | 60,599 |
| Recoverable Income Taxes | 0 | 33,862 |
| Prepaid Expenses | 269,092 | 221,750 |
| Total Current Assets | 998,998 | 983,814 |
| Property, Plant and Equipment: | ||
| Property, Plant and Equipment | 10,110,603 | 9,980,288 |
| Less-Accumulated Depreciation, Depletion and Amortization | 4,269,952 | 4,214,316 |
| Total Property, Plant and Equipment-Net | 5,840,651 | 5,765,972 |
| Other Assets: | ||
| Deferred Income Taxes | 310,590 | 333,543 |
| Investment in Affiliates | 75,637 | 72,996 |
| Other | 181,411 | 214,133 |
| Total Other Assets | 567,638 | 620,672 |
| TOTAL ASSETS | 7,407,287 | 7,370,458 |
| Current Liabilities: | ||
| Accounts Payable | 274,730 | 385,197 |
| Short-Term Notes Payable | 520,400 | 557,700 |
| Current Portion of Long-Term Debt | 22,045 | 22,401 |
| Accrued Income Taxes | 28,913 | 0 |
| Other Accrued Liabilities | 511,812 | 546,442 |
| Total Current Liabilities | 1,357,900 | 1,511,740 |
| Long-Term Debt: | ||
| Long-Term Debt | 393,019 | 393,312 |
| Capital Lease Obligations | 70,988 | 75,039 |
| Total Long-Term Debt | 464,007 | 468,351 |
| Deferred Credits and Other Liabilities: | ||
| Postretirement Benefits Other Than Pensions | 2,494,558 | 2,493,344 |
| Pneumoconiosis Benefits | 193,009 | 190,261 |
| Mine Closing | 418,827 | 404,629 |
| Workers' Compensation | 130,345 | 128,477 |
| Salary Retirement | 188,638 | 194,567 |
| Reclamation | 19,867 | 38,193 |
| Other | 240,516 | 266,550 |
| Total Deferred Credits and Other Liabilities | 3,685,760 | 3,716,021 |
| Total Liabilities | 5,507,667 | 5,696,112 |
| Stockholders' Equity: | ||
| Common Stock, $.01 par value; 500,000,000 Shares Authorized, 183,014,426 Issued and 180,603,707 Outstanding at March 31, 2009; 183,014,426 Issued and 180,549,851 Outstanding at December 31, 2008 | 1,830 | 1,830 |
| Common Stock, par value | 0.01 | 0.01 |
| Common Stock, Shares Authorized | 500,000,000 | 500,000,000 |
| Common Stock, Shares Issued | 183,014,426 | 183,014,426 |
| Common Stock, Shares Outstanding | 180,603,707 | 180,549,851 |
| Preferred Stock, 15,000,000 Shares Authorized; None Issued and Outstanding | 0 | 0 |
| Preferred Stock, Shares Authorized | 15,000,000 | 15,000,000 |
| Preferred Stock, Shares Issued | 0 | 0 |
| Preferred Stock, Shares Outstanding | 0 | 0 |
| Capital in Excess of Par Value | 1,002,682 | 993,478 |
| Retained Earnings | 1,186,324 | 1,010,902 |
| Other Comprehensive Loss | (436,503) | (461,900) |
| Common Stock in Treasury, at Cost-2,410,719 Shares at March 31, 2009 and 2,464,575 Shares at December 31, 2008 | (80,203) | (82,123) |
| Common Stock in Treasury, at Cost, Shares | 2,410,719 | 2,464,575 |
| Total CONSOL Energy Inc. Stockholders' Equity | 1,674,130 | 1,462,187 |
| Noncontrolling Interest | 225,490 | 212,159 |
| Total Equity | 1,899,620 | 1,674,346 |
| TOTAL LIABILITIES AND EQUITY | $7,407,287 | $7,370,458 |
| Statement Of Income Alternative (USD $) | ||
| In Thousands, except Share data | 3 Months Ended
Mar. 31, 2009 | 3 Months Ended
Mar. 31, 2008 |
| Sales-Outside | $1,150,244 | $886,325 |
| Sales-Gas Royalty Interests | 12,632 | 16,504 |
| Sales-Purchased Gas | 1,465 | 3,539 |
| Freight-Outside | 30,916 | 44,744 |
| Other Income | 23,494 | 74,619 |
| Total Revenue and Other Income | 1,218,751 | 1,025,731 |
| Cost of Goods Sold and Other Operating Charges (exclusive of depreciation, depletion and amortization shown below) | 667,974 | 636,728 |
| Gas Royalty Interests' Costs | 10,591 | 16,074 |
| Purchased Gas Costs | 1,530 | 3,421 |
| Freight Expense | 30,916 | 44,744 |
| Selling, General and Administrative Expense | 30,816 | 30,470 |
| Depreciation, Depletion and Amortization | 106,219 | 92,728 |
| Interest Expense | 8,512 | 10,176 |
| Taxes Other Than Income | 77,839 | 71,606 |
| Black Lung Excise Tax Refund | (352) | 0 |
| Total Costs | 934,045 | 905,947 |
| Earnings Before Income Taxes | 284,706 | 119,784 |
| Income Taxes | 79,735 | 35,553 |
| Net Income | 204,971 | 84,231 |
| Less: Net Income Attributable to Noncontrolling Interest | (9,152) | (9,149) |
| Net Income Attributable to CONSOL Energy Inc. Shareholders | $195,819 | $75,082 |
| Basic Earnings Per Share | 1.08 | 0.41 |
| Diluted Earnings Per Share | 1.08 | 0.41 |
| Weighted Average Number of Common Shares Outstanding: | ||
| Basic | 180,576,479 | 182,572,985 |
| Dilutive | 182,150,090 | 185,192,551 |
| Dividends Paid Per Share | 0.1 | 0.1 |
| Statement Of Shareholders Equity And Other Comprehensive Income (USD $) | ||||||||
| In Thousands, except Per Share data | Common Stock
| Capital in Excess of Par Value
| Retained Earnings (Deficit)
| Other Comprehensive Income (Loss)
| Treasury Stock
| Total CONSOL Energy, Inc. Stockholders' Equity
| Noncontrolling Interest
| Total
|
| Beginning Balance at Dec. 31, 2008 | $1,830 | $993,478 | $1,010,902 | ($461,900) | ($82,123) | $1,462,187 | $212,159 | $1,674,346 |
| Net Income | 195,819 | 195,819 | 9,152 | 204,971 | ||||
| Treasury Rate Lock (Net of ($12) tax) | (20) | (20) | (20) | |||||
| Treasury Rate Lock, tax | (12) | (12) | (12) | |||||
| FASB 158 Long-Term Liability Adjustment (Net of $915 tax) | 1,497 | 1,497 | (4) | 1,493 | ||||
| FASB 158 Long-Term Liability Adjustment, tax | 915 | 915 | 915 | |||||
| Gas Cash Flow Hedge (Net of $18,295 tax) | 23,920 | 23,920 | 4,785 | 28,705 | ||||
| Gas Cash Flow Hedge, tax | 18,295 | 18,295 | 18,295 | |||||
| Comprehensive Income | 195,819 | 25,397 | 221,216 | 13,933 | 235,149 | |||
| Issuance of Treasury Stock | (2,337) | 1,920 | (417) | (417) | ||||
| Tax Benefit from Stock-Based Compensation | 140 | 140 | 140 | |||||
| Amortization of Stock-Based Compensation Awards | 8,786 | 8,786 | 1,120 | 9,906 | ||||
| Stock-Based Compensation Awards to CNX Gas | 278 | 278 | (278) | 0 | ||||
| Net Change in Crown Drilling Noncontrolling Interest | 0 | (1,444) | (1,444) | |||||
| Dividends ($0.10 per share) | (18,060) | (18,060) | (18,060) | |||||
| Dividends Paid Per Share | 0.1 | 0.1 | 0.1 | |||||
| Ending Balance at Mar. 31, 2009 | $1,830 | $1,002,682 | $1,186,324 | ($436,503) | ($80,203) | $1,674,130 | $225,490 | $1,899,620 |
