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Delaware | 1222 | 20-2641185 | ||
(State or other jurisdiction of Incorporation) | (Primary Standard Industrial Classification Code Number) | (I.R.S. Employer Identification Number) |
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The information in this prospectus is not complete and may be changed. We may not sell these securities until the registration statement filed with the Securities and Exchange Commission is effective. This prospectus is not an offer to sell these securities and we are not soliciting offers to buy these securities in any state where the offer or sale is not permitted. |
Wilbur L. Ross, Jr. | |
Chairman of the Board |
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EX-5.1: OPINION OF JONES DAY | ||||||||
EX-8.1: OPINION OF JONES DAY AS MATERIAL FEDERAL TAX MATTERS | ||||||||
EX-23.2: CONSENT OF DELOITTE & TOUCHE LLP | ||||||||
EX-23.3: CONSENT OF MARSHALL MILLER & ASSOCIATES, INC. |
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In this prospectus, we sometimes refer to: | as: | |
Acquisitions of each of Anker and CoalQuest | Anker and CoalQuest acquisitions | |
Anker Coal Group, Inc. and its consolidated subsidiaries | Anker | |
Proven and probable coal reserves, consisting of the part of a mineral deposit that can be economically and legally extracted or produced at the time of the reserve determination | coal reserves | |
Inferred and indicated reserves, consisting of coal bearing bodies that have been sufficiently sampled and analyzed, but do not qualify as a commercially viable coal reserve as prescribed by SEC rules until a final comprehensive SEC prescribed evaluation is performed | non-reserve coal deposits | |
CoalQuest Development LLC | CoalQuest | |
Horizon NR, LLC (the entity holding the operating subsidiaries of Horizon Natural Resources Company) and its consolidated subsidiaries | Horizon | |
ICG, Inc. | ICG | |
International Coal Group, Inc. | International Coal Group, we, our, us and similar terms | |
WL Ross & Co. LLC | WLR | |
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Q: | Who are ICG and International Coal Group? | |
A: | ICG, Inc. is the current name of the entity formerly known as International Coal Group, Inc. when it acquired certain assets of Horizon Natural Resources Company in September 2004. In anticipation of the acquisitions of Anker and CoalQuest, International Coal Group, Inc. (now called ICG, Inc.) formed ICG Holdco, Inc. to act as the holding company for Anker, CoalQuest and itself. The name of ICG Holdco was changed to International Coal Group, Inc. After the reorganization, International Coal Group will own ICG and all former ICG shareholders will become International Coal Group shareholders. | |
Q: | What is the purpose of the reorganization? | |
A: | The reorganization is being completed to facilitate the acquisitions of Anker and CoalQuest on a tax-deferred basis. The reorganization will be on a tax-free basis for ICG shareholders. After the reorganization, former ICG shareholders, as well as former Anker shareholders and CoalQuest members will become shareholders of the new parent holding company, International Coal Group. | |
Q: | What will I receive in the reorganization? | |
A: | ICG shareholders will receive one International Coal Group common share for each ICG common share owned immediately prior to the reorganization. Existing stock certificates representing ICG common shares will represent International Coal Group common shares following the reorganization. You need not send your stock certificates to us. | |
Q: | How does the reorganization relate to the proposed public offering? | |
A: | Neither the reorganization nor the acquisitions are conditioned on the proposed public offering. However, the value of the shares to be issued in the Anker and CoalQuest acquisitions will be based on the public offering price if such offering is consummated prior to March 2006. See “The Reorganization” for more information on the calculation of the number of shares to be issued in connection with the acquisitions. The public offering will have no affect on the number of shares to be issued in the reorganization. | |
Q: | Will the shares I receive in the reorganization be freely tradeable? | |
A: | We expect that the shares being issued in this reorganization will be listed on the New York Stock Exchange under the symbol “ICO.” Unless you are an affiliate of International Coal Group, your International Coal Group common shares will not be subject to any restrictions on transfer under the federal securities laws. | |
Q: | What are the tax consequences of the reorganization? | |
A: | The reorganization and exchange of shares are intended to qualify as transactions in which no gain or loss is recognized by ICG shareholders for U.S. federal income tax purposes. In general, you will not be subject to U.S. federal income tax solely as a result of the receipt of shares of International Coal Group in exchange for your ICG common shares if you are a citizen or resident of the United States. However, you should consult your own tax advisor as to your particular U.S. federal, state, local and other tax consequences. | |
Q: | What shareholder or other approvals are needed to approve the reorganization? | |
A: | ICG has received irrevocable proxies from holders of a majority of all issued and outstanding common shares authorizing ICG to vote those shares in favor of the reorganization. No further board or shareholder action is required for the reorganization to be completed and, therefore, we are not soliciting your vote. Additionally, the waiting period under the Hart-Scott-Rodino Antitrust Improvements Act, or HSR, has been terminated, and all other conditions to the closing of the acquisitions and reorganization, have occurred, other than the absence of material litigation and similar technical conditions such as the delivery of required closing documents. |
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Q: | What do I need to do now? | |
A: | No further action by any shareholder is required to effect the reorganization. You do not need to send in your stock certificates. Your current ICG stock certificates will represent shares in International Coal Group following the reorganization. | |
Q: | When do you expect the reorganization to be completed? | |
A: | We expect to complete the reorganization on or about the same time that we complete the Anker and CoalQuest acquisitions. We intend to complete the reorganization and the acquisitions as soon as possible after the effectiveness of the registration statement of which this prospectus forms a part. | |
Q: | What rights do I have if I oppose the reorganization? | |
A: | Any holder of ICG common stock who otherwise complies with the requirements and procedures of Section 262 of the Delaware General Corporation Law, or DGCL, is entitled to exercise rights of appraisal, which generally entitle shareholders to receive a cash payment equal to the judicially determined fair value of the ICG common stock in connection with the reorganization. A detailed description of the appraisal rights and procedures available to ICG shareholders is included in “The Reorganization — Appraisal Rights.” | |
Q: | What is the purpose of this document? | |
A: | This prospectus is part of a registration statement that registers the shares of International Coal Group that you will receive in connection with the reorganization under the federal securities laws. If you are not an affiliate of International Coal Group, the common shares you receive in the reorganization will not be subject to any transfer restrictions under the federal securities laws. | |
Q: | Will my ownership interest be diluted? | |
A: | Not by the reorganization — in the reorganization, shares are being converted on a one-to-one basis, regardless of whether the proposed public offering is consummated. However, the issuance of shares in the acquisitions and the proposed public offering will result in increasing the number of International Coal Group common shares outstanding. This will have the effect of proportionately decreasing the percentage share ownership held by the existing ICG common shareholders who do not also have ownership interests in Anker and CoalQuest. As of June 30, 2005, there were 107,205,999 ICG common shares outstanding. The maximum number of ICG shares to be issued in connection with the Anker and CoalQuest acquisitions is 30,950,129, assuming the proposed public offering price is $8.885 per share or less, subject to possible adjustments. As the following chart illustrates, the higher the offering price per share of International Coal Group common stock in the proposed public offering, the less International Coal Group common shares will be issued in connection with the Anker and CoalQuest acquisitions. The number of shares to be issued will continue to decrease if the proposed public offering price is greater than the $16.00 shown below. The table does not reflect the impact of the proposed public offering — the shares to be issued in the proposed public offering will further dilute existing shareholders proportionately. | |
International Coal Group common stock offering price | $ | 8.885 or less | $ | 10.00 | $ | 11.00 | $ | 12.00 | $ | 13.00 | $ | 14.00 | $ | 15.00 | $ | 16.00 | |||||||||||||||||
ICG common shares issued in Anker and CoalQuest acquisitions: | |||||||||||||||||||||||||||||||||
Without adjustments | 30,950,129 | 27,500,000 | 25,000,000 | 22,916,667 | 21,153,846 | 19,642,857 | 18,333,333 | 17,187,500 | |||||||||||||||||||||||||
With adjustments | 29,824,670 | 26,500,000 | 24,090,909 | 22,083,333 | 20,384,615 | 18,928,571 | 17,666,667 | 16,562,501 | |||||||||||||||||||||||||
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Q: | How will the adjustment to the number of shares to be issued in the acquisition work? | |
A: | The shares being issued in the Anker and CoalQuest acquisitions will be deposited with an escrow agent for the benefit of the holders of shares of Anker common stock and CoalQuest membership interests, until the final determination of the number of shares issuable on account of the acquisitions. These escrowed shares will be deemed outstanding from and after the effective time of the Anker and CoalQuest acquisitions; any dividends or distributions or other rights in respect of these shares will be added to and also held in escrow; and these escrowed shares will be voted in accordance with the instructions of the beneficial owners of those shares in accordance with their relative interest. If the shares deposited exceeds the finally determined number of shares to be issued in the Anker and CoalQuest acquisitions, the excess shares will be returned to International Coal Group. | |
Q: | Who can help answer my questions about the reorganization? | |
A: | If you would like additional copies of this document, or if you would like to ask any additional questions about the reorganization and the acquisitions, you should contact: |
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AEI | ||||||||||||||||||||||||||||||||||||||
Resources | ||||||||||||||||||||||||||||||||||||||
Predecessor | Horizon | |||||||||||||||||||||||||||||||||||||
to | Horizon | Predecessor | ||||||||||||||||||||||||||||||||||||
Horizon | Predecessor to ICG, Inc. | ICG, Inc. | to ICG, Inc. | ICG, Inc. | ICG, Inc. | |||||||||||||||||||||||||||||||||
Period | ||||||||||||||||||||||||||||||||||||||
from | Period from | Period | Period | Pro Forma | Pro Forma | |||||||||||||||||||||||||||||||||
January 1, | May 10, | January 1, | May 13, | Six Months | Six Months | Year | Six Months | |||||||||||||||||||||||||||||||
2002 | 2002 to | Year Ended | 2004 to | 2004 to | Ended | Ended | Ended | Ended | ||||||||||||||||||||||||||||||
to May 9, | December 31, | December 31, | September 30, | December 31, | June 30, | June 30, | December 31, | June 30, | ||||||||||||||||||||||||||||||
2002(6) | 2002(6) | 2003(6) | 2004(6) | 2004 | 2004 | 2005 | 2004(4) | 2005(4) | ||||||||||||||||||||||||||||||
(In thousands) | ||||||||||||||||||||||||||||||||||||||
Statement of operations data: | ||||||||||||||||||||||||||||||||||||||
Revenues: | ||||||||||||||||||||||||||||||||||||||
Coal sales revenues | $ | 136,040 | $ | 264,235 | $ | 441,291 | $ | 346,981 | $ | 130,463 | $ | 233,307 | $ | 289,763 | $ | 624,120 | $ | 368,272 | ||||||||||||||||||||
Freight and handling revenues | 2,947 | 6,032 | 8,008 | 3,700 | 880 | 3,005 | 4,384 | 15,996 | 10,502 | |||||||||||||||||||||||||||||
Other revenues | 21,183 | 27,397 | 31,771 | 22,702 | 4,766 | 15,491 | 13,117 | 33,696 | 16,911 | |||||||||||||||||||||||||||||
Total revenues | 160,170 | 297,664 | 481,070 | 373,383 | 136,109 | 251,803 | 307,264 | 673,812 | 395,685 | |||||||||||||||||||||||||||||
Cost and expenses: | ||||||||||||||||||||||||||||||||||||||
Freight and handling costs | 2,947 | 6,032 | 8,008 | 3,700 | 880 | 3,005 | 4,384 | 15,996 | 10,502 | |||||||||||||||||||||||||||||
Cost of coal sales and other revenues (exclusive of depreciation, depletion and amortization shown separately below) | 114,767 | 251,361 | 400,652 | 306,429 | 113,707 | 201,628 | 234,261 | 564,723 | 314,085 | |||||||||||||||||||||||||||||
Depreciation, depletion and amortization | 32,316 | 40,033 | 52,254 | 27,547 | 7,943 | 19,003 | 18,307 | 46,054 | 24,733 | |||||||||||||||||||||||||||||
Selling, general and administrative (exclusive of depreciation, depletion and amortization shown separately above) | 9,677 | 16,695 | 23,350 | 8,477 | 4,194 | 4,819 | 13,941 | 17,257 | 17,271 | |||||||||||||||||||||||||||||
(Gain)/loss on sale of assets | (93 | ) | (39 | ) | (4,320 | ) | (226 | ) | (10 | ) | (240 | ) | 43 | (236 | ) | 43 | ||||||||||||||||||||||
Writedowns and other items | 8,323 | 729,953 | 9,100 | 10,018 | — | 10,518 | — | 10,018 | — | |||||||||||||||||||||||||||||
Total costs and expenses | 167,937 | 1,044,035 | 489,044 | 355,945 | 126,714 | 238,733 | 270,936 | 653,812 | 366,634 | |||||||||||||||||||||||||||||
Income (loss) from operations | (7,767 | ) | (746,371 | ) | (7,974 | ) | 17,438 | 9,395 | 13,070 | 36,328 | 20,000 | 29,051 | ||||||||||||||||||||||||||
Other income (expense): | ||||||||||||||||||||||||||||||||||||||
Interest expense | (36,666 | ) | (80,405 | ) | (145,892 | ) | (114,211 | ) | (3,453 | ) | (75,723 | ) | (6,784 | ) | (16,368 | ) | (8,723 | ) | ||||||||||||||||||||
Reorganization items | 787,900 | (4,075 | ) | (23,064 | ) | (12,471 | ) | (8,374 | ) | — | (12,471 | ) | ||||||||||||||||||||||||||
Other, net | 499 | 1,256 | 187 | 1,581 | 898 | 571 | 1,625 | 8,329 | 4,826 | |||||||||||||||||||||||||||||
Total interest and other income (expense) | 751,733 | (83,224 | ) | (168,769 | ) | (125,101 | ) | (2,555 | ) | (83,526 | ) | (5,159 | ) | (20,510 | ) | (3,897 | ) | |||||||||||||||||||||
Income (loss) before income taxes | 743,966 | (829,595 | ) | (176,743 | ) | (107,663 | ) | 6,840 | (70,456 | ) | 31,169 | (510 | ) | 25,154 | ||||||||||||||||||||||||
Income tax expense | — | — | — | — | (2,591 | ) | — | (11,220 | ) | 193 | (9,043 | ) | ||||||||||||||||||||||||||
Net income (loss) | $ | 743,966 | $ | (829,595 | ) | $ | (176,743 | ) | $ | (107,663 | ) | $ | 4,249 | $ | (70,456 | ) | $ | 19,949 | $ | (317 | ) | $ | 16,111 | |||||||||||||||
Earnings (loss) per share(1): | ||||||||||||||||||||||||||||||||||||||
Basic | — | — | — | — | 0.04 | — | 0.19 | 0.00 | 0.12 | |||||||||||||||||||||||||||||
Diluted | — | — | — | — | 0.04 | — | 0.19 | 0.00 | 0.12 | |||||||||||||||||||||||||||||
Average common shares outstanding(1): | ||||||||||||||||||||||||||||||||||||||
Basic | — | — | — | — | 106,605,999 | — | 107,205,999 | 138,156,128 | 138,156,128 | |||||||||||||||||||||||||||||
Diluted | — | — | — | — | 106,605,999 | — | 107,255,820 | 138,205,949 | 138,205,949 | |||||||||||||||||||||||||||||
Balance sheet data (at period end): | ||||||||||||||||||||||||||||||||||||||
Cash and cash equivalents | $ | 87,278 | $ | 114 | $ | 859 | $ | — | $ | 23,967 | $ | 1,231 | $ | 12,692 | $ | — | $ | 16,815 | ||||||||||||||||||||
Total assets | 1,521,318 | 623,800 | 576,372 | 539,606 | 459,975 | 548,955 | 489,759 | — | 885,425 | |||||||||||||||||||||||||||||
Long-term debt and capital leases | 933,106 | 1,157 | 315 | 29 | 173,446 | 52 | 172,376 | — | 210,553 | |||||||||||||||||||||||||||||
Total liabilities | 1,286,318 | 1,222,219 | 1,351,393 | 1,422,290 | 305,575 | 1,394,430 | 312,756 | — | 417,172 | |||||||||||||||||||||||||||||
Total stockholders’ equity (members deficit) | $ | 235,000 | $ | (598,419 | ) | $ | (775,021 | ) | $ | (882,684 | ) | $ | 154,400 | $ | (845,475 | ) | $ | 177,003 | $ | — | $ | 468,253 | ||||||||||||||||
Total liabilities and stockholders’ equity (members deficit) | $ | 1,521,318 | $ | 623,800 | $ | 576,372 | $ | 539,606 | $ | 459,975 | $ | 548,955 | $ | 489,759 | $ | — | $ | 885,425 | ||||||||||||||||||||
Other financial data: | ||||||||||||||||||||||||||||||||||||||
EBITDA(2) | $ | 812,948 | $ | (709,157 | ) | $ | 21,403 | $ | 34,095 | $ | 18,236 | $ | 24,270 | $ | 56,260 | $ | 61,912 | (5) | $ | 58,610 |
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AEI | |||||||||||||||||||||||||||||||||||||
Resources | |||||||||||||||||||||||||||||||||||||
Predecessor | Horizon | ||||||||||||||||||||||||||||||||||||
to | Horizon | Predecessor | |||||||||||||||||||||||||||||||||||
Horizon | Predecessor to ICG, Inc. | ICG, Inc. | to ICG, Inc. | ICG, Inc. | ICG, Inc. | ||||||||||||||||||||||||||||||||
Period | |||||||||||||||||||||||||||||||||||||
from | Period from | Period | Period | Pro Forma | Pro Forma | ||||||||||||||||||||||||||||||||
January 1, | May 10, | January 1, | May 13, | Six Months | Six Months | Year | Six Months | ||||||||||||||||||||||||||||||
2002 | 2002 to | Year Ended | 2004 to | 2004 to | Ended | Ended | Ended | Ended | |||||||||||||||||||||||||||||
to May 9, | December 31, | December 31, | September 30, | December 31, | June 30, | June 30, | December 31, | June 30, | |||||||||||||||||||||||||||||
2002(6) | 2002(6) | 2003(6) | 2004(6) | 2004 | 2004 | 2005 | 2004(4) | 2005(4) | |||||||||||||||||||||||||||||
(In thousands) | |||||||||||||||||||||||||||||||||||||
Net cash provided by (used in): | |||||||||||||||||||||||||||||||||||||
Operating activities | $ | (353,592 | ) | $ | 76,378 | $ | 20,030 | $ | 28,085 | $ | 30,211 | $ | 35,805 | $ | 38,028 | N/A | N/A | ||||||||||||||||||||
Investing activities | $ | 44,555 | $ | (12,805 | ) | $ | (3,826 | ) | $ | 3,437 | $ | (329,168 | ) | $ | 6,831 | $ | (45,258 | ) | N/A | N/A | |||||||||||||||||
Financing activities | $ | 259,011 | $ | (78,025 | ) | $ | (15,459 | ) | $ | (32,381 | ) | $ | 322,924 | $ | (42,260 | ) | $ | (4,045 | ) | N/A | N/A | ||||||||||||||||
Capital expenditures | $ | 10,963 | $ | 13,435 | $ | 16,937 | $ | 6,624 | $ | 5,583 | $ | 3,471 | $ | 43,224 | N/A | N/A | |||||||||||||||||||||
Operating data(3): | |||||||||||||||||||||||||||||||||||||
Tons sold | 5,416 | 11,124 | 16,655 | 10,421 | 3,582 | 7,102 | 7,028 | 18,400 | 9,658 | ||||||||||||||||||||||||||||
Tons produced | 4,231 | 7,139 | 12,041 | 8,812 | 2,959 | 5,975 | 6,078 | 14,591 | 7,459 | ||||||||||||||||||||||||||||
Average coal sales realization (per ton) | $ | 25.12 | $ | 23.75 | $ | 26.50 | $ | 33.30 | $ | 36.42 | $ | 32.85 | $ | 41.23 | $ | 33.92 | $ | 38.13 |
(1) | Earnings per share data and average shares outstanding are not presented for the period from January 1, 2002 to May 9, 2002, period from May 10, 2002 to December 31, 2002, year ended December 31, 2003, the period from January 1, 2004 to September 30, 2004 and the six months ended June 30, 2004 because they were prepared on a “carve-out” basis. |
(2) | EBITDA represents net income before deducting interest expense, income taxes and depreciation, depletion and amortization. We present EBITDA and pro forma EBITDA because we consider them important supplemental measures of our performance and believe they are frequently used by securities analysts, investors and other interested parties in the evaluation of companies in our industry, substantially all of which present EBITDA when reporting their results. |
• | EBITDA and pro forma EBITDA do not reflect our cash expenditures, or future requirements, for capital expenditures or contractual commitments; | |
• | EBITDA and pro forma EBITDA do not reflect changes in, or cash requirements for, our working capital needs; | |
• | EBITDA and pro forma EBITDA do not reflect the significant interest expense, or the cash requirements necessary to service interest or principal payments, on our debts; | |
• | Although depreciation and amortization are non-cash charges, the assets being depreciated and amortized will often have to be replaced in the future, and EBITDA and pro forma EBITDA do not reflect any cash requirements for such replacements; and | |
• | Other companies in our industry may calculate EBITDA and pro forma EBITDA differently than we do, limiting their usefulness as comparative measures. | |
EBITDA and pro forma EBITDA are a measure of our performance that are not required by, or presented in accordance with, GAAP and we also believe each is a useful indicator of our ability to meet debt service and capital expenditure requirements. EBITDA and pro forma EBITDA are not measurements of our financial performance under GAAP and should not be considered as alternatives to net income, operating income or any other performance measures derived in accordance with GAAP or as an alternative to cash flow from operating activities as a measure of our liquidity. |
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AEI | ||||||||||||||||||||||||||||
Resources | Horizon | |||||||||||||||||||||||||||
Predecessor | Horizon | Predecessor | ||||||||||||||||||||||||||
to Horizon | Predecessor to ICG, Inc. | ICG, Inc. | to ICG, Inc. | ICG, Inc. | ||||||||||||||||||||||||
Period from | Period | Period | ||||||||||||||||||||||||||
Period from | May 10, | January 1, | May 13, | Six Months | Six Months | |||||||||||||||||||||||
January 1, | 2002 to | Year Ended | 2004 to | 2004 to | Ended | Ended | ||||||||||||||||||||||
2002 to | December 31, | December 31, | September 30, | December 31, | June 30, | June 30, | ||||||||||||||||||||||
May 9, 2002 | 2002 | 2003 | 2004 | 2004 | 2004 | 2005 | ||||||||||||||||||||||
(In thousands) | ||||||||||||||||||||||||||||
Net income (loss) | $ | 743,966 | $ | (829,595 | ) | $ | (176,743 | ) | $ | (107,663 | ) | $ | 4,249 | $ | (70,456 | ) | $ | 19,949 | ||||||||||
Interest expense | 36,666 | 80,405 | 145,892 | 114,211 | 3,453 | 75,723 | 6,784 | |||||||||||||||||||||
Income tax expense | — | — | — | — | 2,591 | — | 11,220 | |||||||||||||||||||||
Depreciation, depletion and amortization expense | 32,316 | 40,033 | 52,254 | 27,547 | 7,943 | 19,003 | 18,307 | |||||||||||||||||||||
EBITDA | $ | 812,948 | $ | (709,157 | ) | $ | 21,403 | $ | 34,095 | $ | 18,236 | $ | 24,270 | $ | 56,260 | |||||||||||||
(3) | Amounts were not derived from the audited financial statements. |
(4) | The summary unaudited pro forma data of ICG, Inc. and its subsidiaries as of and for the year ended December 31, 2004 and the six months ended June 30, 2005 have been prepared to give pro forma effect to our corporate reorganization, the acquisition of Horizon, Anker and CoalQuest, as if each had occurred on January 1, 2004, in the case of unaudited statements of operations data, and on June 30, 2005, in the case of unaudited pro forma balance sheet data. |
(5) | The following table reconciles pro forma net income, which we believe to be the closest GAAP performance measure, to pro forma EBITDA. |
Pro forma | Pro forma | |||||||
ended | months ended | |||||||
December 31, 2004(5) | June 30, 2005(5) | |||||||
(In thousands) | ||||||||
Pro forma net income | $ | (317 | ) | $ | 16,111 | |||
Interest expense | 16,368 | 8,723 | ||||||
Income tax expense | (193 | ) | 9,043 | |||||
Depreciation, depletion and amortization expense | 46,054 | 24,733 | ||||||
Pro forma EBITDA | $ | 61,912 | $ | 58,610 | ||||
(6) | As restated. See Note 19 to the combined financial statements of Horizon NR, LLC. |
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Because of our limited operating history, historical information regarding our company prior to October 1, 2004 is of little relevance in understanding our business as currently conducted. |
• | the supply of and demand for domestic and foreign coal; | |
• | the demand for electricity; | |
• | domestic and foreign demand for steel and the continued financial viability of the domestic and/or foreign steel industry; | |
• | the proximity to, capacity of and cost of transportation facilities; | |
• | domestic and foreign governmental regulations and taxes; | |
• | air emission standards for coal-fired power plants; | |
• | regulatory, administrative and judicial decisions; |
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• | the price and availability of alternative fuels, including the effects of technological developments; and | |
• | the effect of worldwide energy conservation measures. |
Our coal mining operations are subject to operating risks that could result in decreased coal production thereby reducing our revenues. |
• | the unavailability of qualified labor; | |
• | our inability to acquire, maintain or renew necessary permits or mining or surface rights in a timely manner, if at all; | |
• | unfavorable geologic conditions, such as the thickness of the coal deposits and the amount of rock embedded in or overlying the coal deposit; | |
• | failure of reserve estimates to prove correct; | |
• | changes in governmental regulation of the coal industry, including the imposition of additional taxes, fees or actions to suspend or revoke our permits or changes in the manner of enforcement of existing regulations; | |
• | mining and processing equipment failures and unexpected maintenance problems; | |
• | adverse weather and natural disasters, such as heavy rains and flooding; | |
• | increased water entering mining areas and increased or accidental mine water discharges; | |
• | increased or unexpected reclamation costs; | |
• | interruptions due to transportation delays; | |
• | the unavailability of required equipment of the type and size needed to meet production expectations; and | |
• | unexpected mine safety accidents, including fires and explosions from methane. |
Reduced coal consumption by North American electric power generators could result in lower prices for our coal, which could reduce our revenues and adversely impact our earnings and the value of our coal reserves. |
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Our profitability may be adversely affected by the status of our long-term coal supply agreements and changes in purchasing patterns in the coal industry, which could adversely affect the capability and profitability of our operations. |
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Certain provisions in our long-term supply agreements may provide limited protection during adverse economic conditions or may result in economic penalties upon the failure to meet specifications. |
A decline in demand for metallurgical coal would limit our ability to sell our high quality steam coal as higher-priced metallurgical coal. |
Inaccuracies in our estimates of economically recoverable coal reserves could result in lower than expected revenues, higher than expected costs or decreased profitability. |
• | geological and mining conditions which may not be fully identified by available exploration data or which may differ from experience in current operations; |
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• | historical production from the area compared with production from other similar producing areas; and | |
• | the assumed effects of regulation and taxes by governmental agencies and assumptions concerning coal prices, operating costs, mining technology improvements, severance and excise tax, development costs and reclamation costs. |
We depend heavily on a small number of large customers, the loss of any of which would adversely affect our operating results. |
Disruptions in transportation services could limit our ability to deliver coal to our customers, which could cause revenues to decline. |
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Fluctuations in transportation costs could impair our ability to supply coal to our customers. |
Disruption in supplies of coal produced by third parties could temporarily impair our ability to fill our customers’ orders or increase our costs. |
The unavailability of an adequate supply of coal reserves that can be mined at competitive costs could cause our profitability to decline. |
Unexpected increases in raw material costs could significantly impair our operating profitability. |
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A shortage of skilled labor in the mining industry could pose a risk to achieving optimal labor productivity and competitive costs, which could adversely affect our profitability. |
We have a new management team, and if they are unable to work effectively together, our business may be harmed. |
Our ability to operate our company effectively could be impaired if we fail to attract and retain key personnel. |
Acquisitions that we may undertake involve a number of inherent risks, any of which could cause us not to realize the anticipated benefits. |
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• | uncertainties in assessing the value, strengths, and potential profitability of, and identifying the extent of all weaknesses, risks, contingent and other liabilities (including environmental or mine safety liabilities) of, acquisition candidates; | |
• | the potential loss of key customers, management and employees of an acquired business; | |
• | the ability to achieve identified operating and financial synergies anticipated to result from an acquisition; | |
• | problems that could arise from the integration of the acquired business; and | |
• | unanticipated changes in business, industry or general economic conditions that affect the assumptions underlying our rationale for pursuing the acquisition. |
We may not be able to effectively integrate Anker and CoalQuest into our operations. |
• | the loss of key employees or customers; | |
• | the challenge of maintaining the quality of customer service; | |
• | the need to coordinate geographically diverse operations; | |
• | retooling and reprogramming of equipment and information technology systems; and | |
• | the resulting diversion of management’s attention from our day-to-day business and the need to hire and integrate additional management personnel to manage our expanded operations. |
If the value of our goodwill becomes impaired, the write-off of the impaired portion could materially reduce the value of our assets and reduce our net income for the year in which the write-off occurs. |
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Failure to obtain or renew surety bonds in a timely manner and on acceptable terms could affect our ability to secure reclamation and coal lease obligations, which could adversely affect our ability to mine or lease coal. |
• | lack of availability, higher expense or unfavorable market terms of new bonds; | |
• | restrictions on availability of collateral for current and future third-party surety bond issuers under the terms of our credit facility; and | |
• | the exercise by third-party surety bond issuers of their right to refuse to renew the surety. |
Failure to maintain capacity for required letters of credit could limit our ability to obtain or renew surety bonds. |
Our business requires substantial capital investment and maintenance expenditures, which we may be unable to provide. |
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Our level of indebtedness and other demands on our cash resources could materially adversely affect our ability to execute our business strategy and make us more vulnerable to economic downturns. |
Our variable rate indebtedness subjects us to interest rate risk, which could cause our annual debt service obligations to increase significantly. |
Increased consolidation and competition in the U.S. coal industry may adversely affect our ability to retain or attract customers and may reduce domestic coal prices. |
Our ability to collect payments from our customers could be impaired if their creditworthiness deteriorates. |
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Defects in title or loss of any leasehold interests in our properties could limit our ability to mine these properties or result in significant unanticipated costs. |
Our work force could become unionized in the future, which could adversely affect the stability of our production and reduce our profitability. |
Our ability and the ability of some of our subsidiaries to engage in some business transactions may be limited by the terms of our debt. |
• | incur additional debt; | |
• | pay dividends on, redeem or repurchase capital stock; |
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• | allow our subsidiaries to issue new stock to any person other than us or any of our other subsidiaries; | |
• | make investments; | |
• | make acquisitions; | |
• | incur or permit to exist liens; | |
• | enter into transactions with affiliates; | |
• | guarantee the debt of other entities, including joint ventures; | |
• | merge or consolidate or otherwise combine with another company; and | |
• | transfer or sell a material amount of our assets outside the ordinary course of business. |
If our business does not generate sufficient cash for operations, we may not be able to repay our indebtedness. |
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Extensive government regulations impose significant costs on our mining operations, and future regulations could increase those costs or limit our ability to produce and sell coal. |
• | limitations on land use; | |
• | employee health and safety; | |
• | mandated benefits for retired coal miners; | |
• | mine permitting and licensing requirements; | |
• | reclamation and restoration of mining properties after mining is completed; | |
• | air quality standards; | |
• | water pollution; | |
• | protection of human health, plantlife and wildlife; | |
• | the discharge of materials into the environment; | |
• | surface subsidence from underground mining; and | |
• | the effects of mining on groundwater quality and availability. |
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Mining in Northern and Central Appalachia is more complex and involves more regulatory constraints than mining in the other areas, which could affect the mining operations and cost structures of these areas. |
Judicial rulings that restrict disposal of mining wastes could significantly increase our operating costs, discourage customers from purchasing our coal and materially harm our financial condition and operating results. |
We may be unable to obtain and renew permits necessary for our operations, which would reduce our production, cash flow and profitability. |
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If the assumptions underlying our reclamation and mine closure obligations are materially inaccurate, we could be required to expend greater amounts than anticipated. |
Our operations may substantially impact the environment or cause exposure to hazardous materials, and our properties may have significant environmental contamination, any of which could result in material liabilities to us. |
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Extensive environmental regulations affect our customers and could reduce the demand for coal as a fuel source and cause our sales to decline. |
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We may be unable to provide the required financial information in a timely and reliable manner. |
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Anti-takeover provisions in our charter documents and Delaware corporate law may make it difficult for our stockholders to replace or remove our current board of directors and could deter or delay third-parties from acquiring us, which may adversely affect the marketability and market price of our common stock. |
There may be circumstances in which the interests of our major stockholders could be in conflict with your interests as a stockholder. |
If our stockholders sell substantial amounts of our common stock following the reorganization and proposed public offering, the market price of our common stock may decline. |
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The requirements of being a public company may strain our resources and distract management. |
We may not pay dividends for the foreseeable future. |
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• | actual or anticipated fluctuations in our operating results or future prospects; | |
• | the public’s reaction to our press releases, our other public announcements and our filings with the SEC; | |
• | strategic actions by us or our competitors, such as acquisitions or restructurings; | |
• | new laws or regulations or new interpretations of existing laws or regulations applicable to our business; | |
• | changes in accounting standards, policies, guidance, interpretations or principles; | |
• | conditions of the coal industry as a result of changes in financial markets or general economic conditions, including those resulting from war, incidents of terrorism and responses to such events; | |
• | sales of common stock by us or members of our management team; and | |
• | changes in stock market analyst recommendations or earnings estimates regarding our common stock, other comparable companies or the coal industry generally. | |
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• | market demand for coal, electricity and steel; | |
• | availability of qualified workers; | |
• | future economic or capital market conditions; | |
• | weather conditions or catastrophic weather-related damage; | |
• | our production capabilities; | |
• | our proposed public offering; | |
• | our consummation of the Anker and CoalQuest acquisitions and the integration of these businesses; | |
• | the consummation of financing, acquisition or disposition transactions and the effect thereof on our business; | |
• | our plans and objectives for future operations and expansion or consolidation; | |
• | our relationships with, and other conditions affecting, our customers; | |
• | timing of reductions or increases in customer coal inventories; | |
• | long-term coal supply arrangements; | |
• | risks in coal mining; | |
• | unexpected maintenance and equipment failure; | |
• | environmental laws and regulations, including those directly affecting our coal mining and production, and those affecting our customers’ coal usage; | |
• | competition; | |
• | railroad, barge, trucking and other transportation performance and costs; | |
• | employee benefits costs and labor relations issues; | |
• | our assumptions concerning economically recoverable coal reserve estimates; | |
• | regulatory and court decisions; | |
• | future legislation and changes in regulations or governmental policies or changes in interpretations thereof; | |
• | the impairment of the value of our goodwill; and | |
• | our liquidity, results of operations and financial condition. |
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• | for ICG on an actual basis; and | |
• | for ICG on a pro forma basis to give effect to the Anker and CoalQuest acquisitions. | |
As of June 30, 2005 | ||||||||||
Actual | Pro Forma | |||||||||
(In thousands) | ||||||||||
(Unaudited) | ||||||||||
Cash and cash equivalents | $ | 12,692 | $ | 16,815 | ||||||
Long-term debt, including current portion: | ||||||||||
Term loan facility(1) | 174,125 | 209,125 | ||||||||
Other long-term debt, including capital leases | 1,418 | 6,383 | ||||||||
Total debt | $ | 175,543 | $ | 215,508 | ||||||
Stockholders’ equity: | ||||||||||
Common stock, par value $0.0001 per share, 1,800,000,000 shares authorized, 107,205,999 shares issued and outstanding, actual, and 138,156,128 shares issued and outstanding, pro forma(2) | 11 | 1,382 | ||||||||
Preferred stock, par value $0.0001 per share, 200,000,000 shares authorized, no shares issued and outstanding(2) | — | — | ||||||||
Paid-in-capital | 158,436 | 448,315 | ||||||||
Unearned compensation-restricted stock | (5,642 | ) | (5,642 | ) | ||||||
Retained earnings | 24,198 | 24,198 | ||||||||
Total stockholders’ equity | 177,003 | 468,253 | ||||||||
Total capitalization | $ | 352,546 | $ | 683,761 | ||||||
(1) | Our current credit facility provides for a $110.0 million revolving credit facility, of which up to $75.0 million may be used for letters of credit. Upon consummation of the proposed public offering, we intend to use a portion of the net proceeds to fully repay our term loan of $209.1 million and to use the remaining net proceeds for general corporate purposes. Further, we intend to increase our revolving credit facility to $300.0 million. As of June 30, 2005, $50.4 million of letters of credit were outstanding. |
(2) | Represents stock of our predecessor, ICG. The par value of International Coal Group common stock is $0.01 per share and the par value of International Coal Group preferred stock is $0.01 per share. |
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• | ICG’s corporate reorganization, involving the exchange of International Coal Group common stock for existing shares of ICG common stock at a 1-for-1 exchange ratio; | |
• | ICG’s acquisition of the Horizon assets (including the preliminary application of purchase accounting) (for purposes of the December 31, 2004 unaudited pro forma statement of operations data only); | |
• | borrowings under ICG’s credit facilities, in part, to finance the Horizon asset acquisition and the Anker and CoalQuest acquisitions; and | |
• | the Anker and CoalQuest acquisitions. | |
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ICG, Inc. | Anker | CoalQuest | ||||||||||||||||||||||||||||
ICG, Inc. | Anker | CoalQuest | Reorganization | Acquisition | Acquisition | |||||||||||||||||||||||||
Historical | Historical | Historical | Adjustments | Adjustments | Adjustments | Pro Forma | ||||||||||||||||||||||||
(In thousands) | ||||||||||||||||||||||||||||||
ASSETS | ||||||||||||||||||||||||||||||
Current assets: | ||||||||||||||||||||||||||||||
Cash and cash equivalents | $ | 12,692 | $ | 295 | $ | 1,801 | $ | 2,027 | (1) | $ | — | $ | — | $ | 16,815 | |||||||||||||||
Trade accounts receivable | 47,696 | 9,702 | 1,280 | — | — | — | 58,678 | |||||||||||||||||||||||
Inventories | 21,886 | 4,414 | — | — | — | — | 26,300 | |||||||||||||||||||||||
Deferred income taxes | 1,741 | — | — | — | — | — | 1,741 | |||||||||||||||||||||||
Prepaid insurance | 2,430 | — | 24 | — | — | — | 2,454 | |||||||||||||||||||||||
Prepaid expenses and other | 9,360 | 973 | — | — | — | — | 10,333 | |||||||||||||||||||||||
Total current assets | 95,805 | 15,384 | 3,105 | 2,027 | — | — | 116,321 | |||||||||||||||||||||||
Property, plant and equipment, at cost including coal reserves, mine development and contract costs | 208,488 | 152,392 | 19,000 | — | 23,183 | (2) | 55,091 | (2) | 458,154 | |||||||||||||||||||||
Less accumulated depreciation, depletion and amortization | (26,479 | ) | (85,173 | ) | (111 | ) | — | — | — | (111,763 | ) | |||||||||||||||||||
Net property, plant and equipment | 182,009 | 67,219 | 18,889 | — | 23,183 | 55,091 | 346,391 | |||||||||||||||||||||||
Debt issuance costs, net | 7,437 | — | — | — | — | 7,437 | ||||||||||||||||||||||||
Advance royalties | 5,240 | 3,280 | — | — | — | — | 8,520 | |||||||||||||||||||||||
Goodwill | 184,999 | — | — | 2,252 | (1) | 154,277 | (2) | 42,882 | (2) | 384,410 | ||||||||||||||||||||
Deferred tax asset non-current | 5,300 | — | — | — | — | — | 5,300 | |||||||||||||||||||||||
Other non-current assets | 8,969 | 8,077 | — | — | — | — | 17,046 | |||||||||||||||||||||||
Total assets | $ | 489,759 | $ | 93,960 | $ | 21,994 | $ | 4,279 | $ | 177,460 | $ | 97,973 | $ | 885,425 | ||||||||||||||||
LIABILITIES AND STOCKHOLDERS’ EQUITY/(DEFICIT) | ||||||||||||||||||||||||||||||
Current liabilities: | ||||||||||||||||||||||||||||||
Trade accounts payable | $ | 30,297 | $ | 15,179 | $ | 103 | $ | — | $ | — | $ | — | $ | 45,579 | ||||||||||||||||
Current portion of long-term debt and capital leases | 3,167 | 25,159 | — | (23,371 | )(1) | — | — | 4,955 | ||||||||||||||||||||||
Current portion of reclamation and mine closure costs | 2,682 | 1,889 | — | — | — | — | 4,571 | |||||||||||||||||||||||
Accrued expenses and other | 37,598 | 8,151 | 825 | — | — | — | 46,574 | |||||||||||||||||||||||
Total current liabilities | 73,744 | 50,378 | 928 | (23,371 | ) | — | — | 101,679 | ||||||||||||||||||||||
Non-current liabilities, less current portion | ||||||||||||||||||||||||||||||
Long-term debt and capital leases | 172,376 | 10,527 | 16,250 | 27,650 | (1) | — | (16,250 | )(3) | 210,553 | |||||||||||||||||||||
Reclamation and mine closure costs | 39,825 | 24,104 | — | — | — | — | 63,929 | |||||||||||||||||||||||
Long-term employee benefits | 19,841 | 4,454 | — | — | — | — | 24,295 | |||||||||||||||||||||||
Other non-current liabilities | 6,970 | 8,707 | 1,039 | — | — | — | 16,716 | |||||||||||||||||||||||
Total non-current liabilities | 239,012 | 47,792 | 17,289 | 27,650 | — | (16,250 | ) | 315,493 | ||||||||||||||||||||||
Total liabilities | 312,756 | 98,170 | 18,217 | 4,279 | — | (16,250 | ) | 417,172 | ||||||||||||||||||||||
STOCKHOLDERS’ EQUITY (DEFICIT): | ||||||||||||||||||||||||||||||
Preferred stock-par value $0.0001, 200,000,000 shares authorized, none issued | — | — | — | — | — | — | — | |||||||||||||||||||||||
Common stock-par value $0.0001, 1,800,000,000 shares authorized, 107,205,999 issued and outstanding (158,156,128 issued and outstanding at a par value of $0.01 on a pro forma basis) | 11 | — | — | 1,061 | (4) | 195 | (4) | 115 | (4) | 1,382 | ||||||||||||||||||||
Paid-in Capital | 158,436 | 145,588 | 3,250 | (1,061 | )(4) | 27,467 | (2,4) | 114,635 | (2,3,4) | 448,315 | ||||||||||||||||||||
Unearned compensation-restricted stock | (5,642 | ) | (5,642 | ) | ||||||||||||||||||||||||||
Retained earnings (accumulated deficit) | 24,198 | (149,798 | ) | 527 | — | 149,798 | (2) | (527 | )(2) | 24,198 | ||||||||||||||||||||
Total stockholders’ equity (accumulated deficit) | 177,003 | (4,210 | ) | 3,777 | — | 177,460 | 114,223 | 468,253 | ||||||||||||||||||||||
Total liabilities and stockholders’ equity (accumulated deficit) | $ | 489,759 | $ | 93,960 | $ | 21,994 | $ | 4,279 | $ | 177,460 | $ | 97,973 | $ | 885,425 | ||||||||||||||||
(1) | Reflects an increase of $35.0 million to ICG’s term loan to repay Anker’s existing debt of $30.7 million (not including equipment leases of $5.0 million) and to record the related acquisition costs of $2.3 million. | |
(2) | Reflects the issuance of 30,950,129 additional common shares, the maximum number of shares issuable, for the acquisitions of Anker ($173.25 million) and CoalQuest ($101.75 million) for a total of $275.0 million. | |
(3) | Reflects the conversion of CoalQuest’s notes payable ($16.3 million) to equity upon consummation of the Anker and CoalQuest acquisitions. | |
(4) | Reflects the change in par value from $0.0001 per share to $0.01 per share upon the effective date of the reorganization. | |
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ICG, Inc. | Anker | CoalQuest | |||||||||||||||||||||||||||||
ICG, Inc. | Anker | CoalQuest | Reorganization | Acquisition | Acquisition | ||||||||||||||||||||||||||
Historical | Historical | Historical | Adjustments | Adjustments | Adjustments | Pro Forma | |||||||||||||||||||||||||
(In thousands, except share and per share data) | |||||||||||||||||||||||||||||||
Revenues: | |||||||||||||||||||||||||||||||
Coal sales revenues | $ | 289,763 | $ | 78,509 | $ | — | $ | — | $ | — | $ | — | $ | 368,272 | |||||||||||||||||
Freight and handling revenues | 4,384 | 6,118 | 10,502 | ||||||||||||||||||||||||||||
Other revenues | 13,117 | 3,794 | — | — | — | — | 16,911 | ||||||||||||||||||||||||
Total revenues | 307,264 | 88,421 | — | — | — | — | 395,685 | ||||||||||||||||||||||||
Costs and expenses: | |||||||||||||||||||||||||||||||
Freight and handling costs | 4,384 | 6,118 | — | — | — | — | 10,502 | ||||||||||||||||||||||||
Cost of coal sales and other revenues (exclusive of depreciation, depletion and amortization shown separately below) | 234,261 | 80,357 | 221 | — | (754 | )(1) | — | 314,085 | |||||||||||||||||||||||
Depreciation, depletion and amortization | 18,307 | 6,056 | 32 | — | 205 | (2) | 133 | (2) | 24,733 | ||||||||||||||||||||||
Selling, general and administrative (exclusive of depreciation, depletion and amortization shown separately above) | 13,941 | 3,330 | — | — | — | — | 17,271 | ||||||||||||||||||||||||
Gain on sale of assets | 43 | — | — | — | — | — | 43 | ||||||||||||||||||||||||
Total costs and expenses | 270,936 | 95,861 | 253 | — | (549 | ) | 133 | 366,634 | |||||||||||||||||||||||
Income (loss) from operations | 36,328 | (7,440 | ) | (253 | ) | — | 549 | (133 | ) | 29,051 | |||||||||||||||||||||
Interest and other income (expense): | |||||||||||||||||||||||||||||||
Interest expense | (6,784 | ) | (1,352 | ) | (290 | ) | (297 | )(3) | — | — | (8,723 | ) | |||||||||||||||||||
Reorganization items | |||||||||||||||||||||||||||||||
Other, net | 1,625 | 3,184 | 771 | — | — | (754 | )(1) | 4,826 | |||||||||||||||||||||||
Total interest and other income (expense) | (5,159 | ) | 1,832 | 481 | (297 | ) | — | (754 | ) | (3,897 | ) | ||||||||||||||||||||
Income (loss) before income taxes | 31,169 | (5,608 | ) | 228 | (297 | ) | 549 | (887 | ) | 25,154 | |||||||||||||||||||||
Income tax (expense) benefit | (11,220 | ) | — | — | 108 | (4) | 1,831 | (4) | 239 | (4) | (9,043 | ) | |||||||||||||||||||
Net income (loss) | $ | 19,949 | $ | (5,608 | ) | $ | 228 | $ | (189 | ) | $ | 2,380 | $ | (648 | ) | $ | 16,111 | ||||||||||||||
Basic earnings per share: | |||||||||||||||||||||||||||||||
Net income (loss) | $ | 19,949 | $ | 16,111 | |||||||||||||||||||||||||||
Average shares of common stock outstanding | 107,205,999 | 138,156,128 | (5) | ||||||||||||||||||||||||||||
Basic earnings per share | $ | 0.19 | $ | 0.12 | (5) | ||||||||||||||||||||||||||
Diluted earnings per share: | |||||||||||||||||||||||||||||||
Net income (loss) | $ | 19,949 | $ | 16,111 | |||||||||||||||||||||||||||
Average shares of common stock outstanding | 107,255,820 | 138,205,949 | (5) | ||||||||||||||||||||||||||||
Diluted earnings per share | $ | 0.19 | $ | 0.12 | (5) | ||||||||||||||||||||||||||
(1) | To eliminate intercompany royalty revenue and expense ($0.754 million) between CoalQuest and Anker. |
(2) | To record depletion expense on the purchase price allocation to coal reserves of $23.2 million to Anker and $55.0 million to CoalQuest. |
(3) | Represents pro forma interest expense to reflect the acquisition of Horizon’s assets and the related debt required to finance the purchase as shown in the tables below: |
Historical Interest Expense | |||||||||||||||||
Description | ICG, Inc. | Anker | CoalQuest | Total | |||||||||||||
(In thousands) | |||||||||||||||||
Revolver letter of credit fees | $ | 682 | $ | — | $ | — | $ | 682 | |||||||||
Revolver unutilized portion | 150 | — | — | 150 | |||||||||||||
Term note | 4,887 | — | — | 4,887 | |||||||||||||
Amortization of finance costs | 548 | — | — | 548 | |||||||||||||
Annual administration fee | 50 | — | — | 50 | |||||||||||||
Interest rate cap | 84 | — | — | 84 | |||||||||||||
Revolver base rate interest | — | — | — | — | |||||||||||||
Anker related party term loan | — | 590 | — | 590 | |||||||||||||
Anker related party revolving line of credit | — | 179 | — | 179 | |||||||||||||
Anker senior notes | — | 403 | — | 403 | |||||||||||||
Miscellaneous other (capital lease, black lung, etc.) | 383 | 180 | 290 | 853 | |||||||||||||
Total historical interest expense | $ | 6,784 | $ | 1,352 | $ | 290 | $ | 8,426 | |||||||||
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Pro Forma Interest Expense | |||||||||||||||||
Description | ICG, Inc. | Anker | CoalQuest | Total | |||||||||||||
(In thousands) | |||||||||||||||||
Revolver letter of credit fees(a) | $ | 680 | $ | — | $ | — | $ | 680 | |||||||||
Revolver unutilized portion(b) | 624 | — | — | 624 | |||||||||||||
Term note(c) | 6,174 | — | — | 6,174 | |||||||||||||
Amortization of finance costs(d) | 548 | — | — | 548 | |||||||||||||
Annual administration fee(e) | 50 | — | — | 50 | |||||||||||||
Interest rate cap(f) | 84 | — | — | 84 | |||||||||||||
Miscellaneous other (capital lease, black lung, etc.) | 383 | 180 | — | 563 | |||||||||||||
Total pro forma interest expense | 8,543 | 180 | — | 8,723 | |||||||||||||
Less: historical interest expense | 6,784 | 1,352 | 290 | 8,426 | |||||||||||||
Pro forma interest expense adjustment | $ | (1,759 | ) | $ | 1,172 | $ | 290 | $ | (297 | ) | |||||||
(a) | Reflects pro forma interest expense at the fixed rate of 2.7% on $50.4 million estimated letters of credit outstanding under ICG’s revolving letter of credit facility. | |
(b) | Reflects pro forma interest expense at the fixed rate of 0.5% on an estimated unutilized balance of $249.6 million on ICG’s revolving facility. | |
(c) | Reflects pro forma interest expense at the actual June 30, 2005 rate of 5.88% on the $210.0 million term note. The term utilizes LIBOR rate and is adjusted quarterly. | |
(d) | Reflects amortization of finance costs of $8.1 million at a nominal rate of 8.118% for 72 months. | |
(e) | Reflects the quarterly administration fee of $25 thousand per quarter to the administration agent. | |
(f) | Reflects the estimated expense incurred as a result of ICG’s two year Interest Rate Cap agreement of $88 million at a maximum rate of 4.5% per year. | |
(4) | To reflect the federal and state tax effects on the combined historical net income and pro forma adjustments assuming an estimated average tax rate at June 30, 2005 of 36.199%. |
(5) | Represents pro forma earnings per share information based on 138,156,128 outstanding shares of ICG common stock consisting of 106,605,999 shares of ICG common stock outstanding as of June 30, 2005, 600,000 shares of restricted stock outstanding as of June 30, 2005 and 30,950,129 shares of International Coal Group common stock issuable in the Anker and CoalQuest acquisitions, the maximum number of shares that will be issued. The number of shares of ICG common stock to be issued to former Anker shareholders and CoalQuest members in connection with the merger is subject to possible adjustments. As the following chart illustrates, the higher the offering price per share of International Coal Group common stock in the proposed public offering, the less shares of International Coal Group common stock will be issued in connection with the Anker and CoalQuest acquisitions. See “Information About the Companies — Business — ICG’s History — The Anker and CoalQuest acquisitions” for more information on acquisition adjustments. |
Per share offering price of ICG common stock | $ | 8.885 | $ | 10.00 | $ | 11.00 | $ | 12.00 | $ | 13.00 | $ | 14.00 | $ | 15.00 | $ | 16.00 | |||||||||||||||||
Aggregate shares of ICG common stock to be issued to holders of Anker and CoalQuest: | |||||||||||||||||||||||||||||||||
Without adjustments | 30,950,129 | 27,500,000 | 25,000,000 | 22,916,667 | 21,153,846 | 19,642,857 | 18,333,333 | 17,187,500 | |||||||||||||||||||||||||
Basic and diluted earnings per share | $ | 0.12 | $ | 0.12 | $ | 0.12 | $ | 0.12 | $ | 0.13 | $ | 0.13 | $ | 0.13 | $ | 0.13 | |||||||||||||||||
With adjustments | 29,824,670 | 26,500,000 | 24,090,909 | 22,083,333 | 20,384,615 | 18,928,571 | 17,666,667 | 16,562,501 | |||||||||||||||||||||||||
Basic and diluted earnings per share | $ | 0.12 | $ | 0.12 | $ | 0.12 | $ | 0.13 | $ | 0.13 | $ | 0.13 | $ | 0.13 | $ | 0.13 | |||||||||||||||||
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Horizon | Anker | CoalQuest | ||||||||||||||||||||||||||||||||
ICG, Inc. | Horizon | Anker | CoalQuest | Acquisition | Acquisition | Acquisition | ||||||||||||||||||||||||||||
Historical | Historical | Historical | Historical | Adjustments | Adjustments | Adjustments | Pro Forma(1) | |||||||||||||||||||||||||||
(In thousands, except share and per share data) | ||||||||||||||||||||||||||||||||||
Revenues: | ||||||||||||||||||||||||||||||||||
Coal sales revenues | $ | 130,463 | $ | 346,981 | $ | 146,676 | $ | — | $ | — | $ | — | $ | — | $ | 624,120 | ||||||||||||||||||
Freight and handling revenues | 880 | 3,700 | 11,416 | 15,996 | ||||||||||||||||||||||||||||||
Other revenues | 4,766 | 22,702 | 6,228 | — | — | — | — | 33,696 | ||||||||||||||||||||||||||
Total revenues | 136,109 | 373,383 | 164,320 | — | — | — | — | 673,812 | ||||||||||||||||||||||||||
Costs and expenses: | ||||||||||||||||||||||||||||||||||
Freight and handling costs | 880 | 3,700 | 11,416 | — | — | — | — | 15,996 | ||||||||||||||||||||||||||
Cost of coal sales and other revenues | 113,707 | 306,429 | 145,985 | 371 | (1,769 | )(2) | — | 564,723 | ||||||||||||||||||||||||||
Depreciation, depletion and amortization | 7,943 | 27,547 | 9,754 | 79 | — | 400 | (3) | 331 | (3) | 46,054 | ||||||||||||||||||||||||
Selling, general and administrative | 4,194 | 8,477 | 4,586 | — | — | — | 17,257 | |||||||||||||||||||||||||||
Gain on sale of assets | (10 | ) | (226 | ) | — | — | — | — | — | (236 | ) | |||||||||||||||||||||||
Writedowns and other items | — | 10,018 | (1) | — | — | — | — | — | 10,018 | |||||||||||||||||||||||||
Total costs and expenses | 126,714 | 355,945 | 171,741 | 450 | — | (1,369 | ) | 331 | 653,812 | |||||||||||||||||||||||||
Income (loss) from operations | 9,395 | 17,438 | (7,421 | ) | (450 | ) | — | 1,369 | (331 | ) | 20,000 | |||||||||||||||||||||||
Interest and other income (expense): | ||||||||||||||||||||||||||||||||||
Interest expense | (3,453 | ) | (114,211 | ) | (1,485 | ) | (535 | ) | 103,316 | (4) | — | — | (16,368 | ) | ||||||||||||||||||||
Reorganization items | — | (12,471 | )(1) | — | (12,471 | ) | ||||||||||||||||||||||||||||
Other, net | 898 | 5,757 | 5,709 | 1,910 | — | — | (1,769 | )(2) | 8,329 | |||||||||||||||||||||||||
Total interest and other income (expense) | (2,555 | ) | (125,101 | ) | 4,224 | 1,375 | 103,316 | — | (1,769 | ) | (20,510 | ) | ||||||||||||||||||||||
Income (loss) before income taxes | 6,840 | (107,663 | ) | (3,197 | ) | 925 | 103,316 | 1,369 | (2,100 | ) | (510 | ) | ||||||||||||||||||||||
Income tax (expense) benefit | (2,591 | ) | — | — | — | 1,647 | (5) | 692 | (5) | 445 | (5) | 193 | ||||||||||||||||||||||
Net income (loss) | $ | 4,249 | $ | (107,663 | ) | $ | (3,197 | ) | $ | 925 | $ | 104,963 | $ | 2,061 | $ | (1,655 | ) | $ | 317 | |||||||||||||||
Basic earnings per share: | ||||||||||||||||||||||||||||||||||
Net income (loss) available to common stockholders | $ | 4,249 | $ | (317 | ) | |||||||||||||||||||||||||||||
Average shares of common stock outstanding | 106,605,999 | 138,156,128 | ||||||||||||||||||||||||||||||||
Basic earning per share | $ | 0.04 | $ | 0.00 | (6) | |||||||||||||||||||||||||||||
Diluted earnings per share: | ||||||||||||||||||||||||||||||||||
Net income (loss) available to common stockholders | $ | 4,249 | $ | 7,882 | ||||||||||||||||||||||||||||||
Average shares of common stock outstanding | 106,605,999 | 138,205,949 | ||||||||||||||||||||||||||||||||
Diluted earnings per share | $ | 0.04 | $ | 0.00 | (6) | |||||||||||||||||||||||||||||
(1) | The above pro forma income statement does not reflect the removal of non-recurring charges for writedowns and other items of $10.0 million and reorganization items of $12.5 million incurred in connection with Horizon’s Chapter 11 bankruptcy proceedings. |
(2) | To eliminate intercompany royalty revenue and expense ($1.8 million) between CoalQuest and Anker. |
(3) | To record depletion expense on the purchase price allocation to coal reserves of $23.2 million to Anker and $55.0 million to CoalQuest. |
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(4) | Represents pro forma interest expense to reflect the acquisition of Horizon’s assets and the related debt required to finance the purchase as shown in the tables below: |
Historical Interest Expense | |||||||||||||||||||||
Description | ICG, Inc. | Horizon | Anker | CoalQuest | Total | ||||||||||||||||
(In thousands) | |||||||||||||||||||||
Amortization of financing fee | $ | — | $ | 1,437 | $ | — | $ | — | $ | 1,437 | |||||||||||
DIP facility | — | 11,115 | — | — | 11,115 | ||||||||||||||||
Term loan | — | 42,757 | — | — | 42,757 | ||||||||||||||||
Wells Fargo loan | — | 57,200 | — | — | 57,200 | ||||||||||||||||
Funded letter of credit fees | 130 | — | — | — | 130 | ||||||||||||||||
Revolver letter of credit fees | 248 | — | — | — | 248 | ||||||||||||||||
Revolver unutilized portion | 64 | — | — | — | 64 | ||||||||||||||||
Term note | 2,463 | — | — | — | 2,463 | ||||||||||||||||
Amortization of finance costs | 266 | — | — | — | 266 | ||||||||||||||||
Annual administration fee | 25 | — | — | — | 25 | ||||||||||||||||
Interest rate cap | 21 | — | — | — | 21 | ||||||||||||||||
Revolver base rate interest | 25 | — | — | — | 25 | ||||||||||||||||
Anker related party term loan | — | — | 293 | — | 293 | ||||||||||||||||
Anker related party revolving line of credit | — | — | 110 | — | 110 | ||||||||||||||||
Anker senior notes | — | — | 752 | — | 752 | ||||||||||||||||
Miscellaneous other (capital lease, black lung, etc.) | 211 | 1,702 | 330 | 535 | 2,778 | ||||||||||||||||
Total historical interest expense | $ | 3,453 | $ | 114,211 | $ | 1,485 | $ | 535 | $ | 119,684 | |||||||||||
Pro Forma Interest Expense | |||||||||||||||||||||
Description | ICG, Inc. | Horizon | Anker | CoalQuest | Total | ||||||||||||||||
(In thousands) | |||||||||||||||||||||
Revolver letter of credit fees(a) | $ | 1,469 | $ | — | $ | — | $ | — | $ | 1,469 | |||||||||||
Revolver unutilized portion(b) | 1,228 | — | — | — | 1,228 | ||||||||||||||||
Term note(c) | 10,479 | — | — | — | 10,479 | ||||||||||||||||
Amortization of finance costs(d) | 1,097 | — | — | — | 1,097 | ||||||||||||||||
Annual administration fee(e) | 100 | — | — | — | 100 | ||||||||||||||||
Interest rate cap(f) | 82 | — | — | — | 82 | ||||||||||||||||
Miscellaneous other (capital lease, black lung, etc.) | 211 | 1,702 | — | — | 1,913 | ||||||||||||||||
Total pro forma interest expense | $ | 14,666 | $ | 1,702 | $ | — | $ | — | $ | 16,368 | |||||||||||
Less: historical interest expense | $ | 3,453 | $ | 114,211 | $ | 1,485 | $ | 535 | $ | 119,684 | |||||||||||
Pro forma interest expense adjustment | $ | (11,213 | ) | $ | 112,509 | $ | 1,485 | $ | 535 | $ | 103,316 | ||||||||||
(a) | Reflects pro forma interest expense at the fixed rate of 2.7% on $54.4 million estimated letters of credit outstanding under ICG’s revolving letter of credit facility. | |
(b) | Reflects pro forma interest expense at the fixed rate of 0.5% on an estimated unutilized balance of $245.6 million on ICG’s revolving facility. | |
(c) | Reflects pro forma interest expense at the actual December 31, 2004 rate of 4.99% on the $210.0 million term note. The term utilizes LIBOR rate and is adjusted quarterly. | |
(d) | Reflects amortization of finance costs of $8.1 million at a nominal rate of 8.118% for 72 months. | |
(e) | Reflects the quarterly administration fee of $25 thousand per quarter to the administrative agent. | |
(f) | Reflects the estimated expense incurred as a result of ICG’s two year Interest Rate Cap agreement of $88 million at a maximum rate of 4.5% per year. | |
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(5) | To reflect the federal and state tax effects on the combined historical net income and pro forma adjustments assuming an estimated average tax rate at December 31, 2004 of 37.88%. |
(6) | Represents pro forma earnings per share information based on 137,556,128 outstanding shares of ICG common stock consisting of 106,605,999 shares of ICG common stock outstanding as of December 31, 2004 and 30,950,129 shares of ICG common stock issuable in the Anker and CoalQuest acquisitions, the maximum number of shares that will be issued. The number of shares of ICG common stock to be issued to former Anker shareholders and CoalQuest members in connection with the merger is subject to possible adjustments. As the following chart illustrates, the higher the offering price per share of ICG common stock in the proposed public offering, the less shares of ICG common stock will be issued in connection with the Anker and CoalQuest acquisitions. See “Information About the Companies — Business — ICG’s History — The Anker and CoalQuest Acquisitions” for more information on acquisition adjustments. |
Per share offering price of ICG common stock | $ | 8.885 | $ | 10.00 | $ | 11.00 | $ | 12.00 | $ | 13.00 | $ | 14.00 | $ | 15.00 | $ | 16.00 | |||||||||||||||||
Aggregate shares of ICG common stock to be issued to holders of Anker and CoalQuest: | |||||||||||||||||||||||||||||||||
Without adjustments | 30,950,129 | 27,500,000 | 25,000,000 | 22,916,667 | 21,153,846 | 19,642,857 | 18,333,333 | 17,187,500 | |||||||||||||||||||||||||
Basic and diluted earnings per share | $ | 0.00 | $ | 0.00 | $ | 0.00 | $ | 0.00 | $ | 0.00 | $ | 0.00 | $ | 0.00 | $ | 0.00 | |||||||||||||||||
With adjustments | 29,824,670 | 26,500,000 | 24,090,909 | 22,083,333 | 20,384,615 | 18,928,571 | 17,666,667 | 16,562,501 | |||||||||||||||||||||||||
Basic and diluted earnings per share | $ | 0.00 | $ | 0.00 | $ | 0.00 | $ | 0.00 | $ | 0.00 | $ | 0.00 | $ | 0.00 | $ | 0.00 | |||||||||||||||||
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Horizon | ||||||||||||||||||||||||||||||||||||||||||
AEI Resources | Horizon | Predecessor | ||||||||||||||||||||||||||||||||||||||||
Predecessor to Horizon | Predecessor to ICG, Inc. | ICG, Inc. | to ICG, Inc. | ICG, Inc. | ||||||||||||||||||||||||||||||||||||||
Period from | Period from | Period | ||||||||||||||||||||||||||||||||||||||||
January 1, | May 10, | January 1, | Six Months | |||||||||||||||||||||||||||||||||||||||
Year Ended | Year Ended | 2002 to | 2002 to | Year Ended | 2004 to | Period May 13, | Ended | Six Months | ||||||||||||||||||||||||||||||||||
December 31, | December 31, | May 9, | December 31, | December 31, | September 30, | 2004 to | June 30, | Ended | ||||||||||||||||||||||||||||||||||
2000* | 2001* | 2002(2) | 2002(2) | 2003(2) | 2004(2) | December 31,2004 | 2004 | June 30, 2005 | ||||||||||||||||||||||||||||||||||
(In thousands, except share and | ||||||||||||||||||||||||||||||||||||||||||
per share data) | ||||||||||||||||||||||||||||||||||||||||||
Statement of Operations Data: | ||||||||||||||||||||||||||||||||||||||||||
Revenues: | ||||||||||||||||||||||||||||||||||||||||||
Coal sales revenues | $ | 486,848 | $ | 500,829 | $ | 136,040 | $ | 264,235 | $ | 441,291 | $ | 346,981 | $ | 130,463 | $ | 233,307 | $ | 289,763 | ||||||||||||||||||||||||
Freight and handling revenues | 11,050 | 14,728 | 2,947 | 6,032 | 8,008 | 3,700 | 880 | 3,005 | 4,384 | |||||||||||||||||||||||||||||||||
Other revenues | 23,491 | 34,835 | 21,183 | 27,397 | 31,771 | 22,702 | 4,766 | 15,491 | 13,117 | |||||||||||||||||||||||||||||||||
Total revenues | 521,389 | 550,392 | 160,170 | 297,664 | 481,070 | 373,383 | 136,109 | 251,803 | 307,264 | |||||||||||||||||||||||||||||||||
Cost and expenses: | ||||||||||||||||||||||||||||||||||||||||||
Freight and handling costs | 11,050 | 14,728 | 2,947 | 6,032 | 8,008 | 3,700 | 880 | 3,005 | 4,384 | |||||||||||||||||||||||||||||||||
Cost of coal sales and other revenues (exclusive of depreciation, depletion and amortization shown separately below) | 409,536 | 379,333 | 114,767 | 251,361 | 400,652 | 306,429 | 113,707 | 201,628 | 234,261 | |||||||||||||||||||||||||||||||||
Depreciation, depletion and amortization | 94,183 | 92,602 | 32,316 | 40,033 | 52,254 | 27,547 | 7,943 | 19,003 | 18,307 | |||||||||||||||||||||||||||||||||
Selling, general and administrative (exclusive of depreciation, depletion and amortization shown separately above) | 20,364 | 19,324 | 9,677 | 16,695 | 23,350 | 8,477 | 4,194 | 4,819 | 13,941 | |||||||||||||||||||||||||||||||||
(Gain)/loss on sale of assets | (594 | ) | 189 | (93 | ) | (39 | ) | (4,320 | ) | (226 | ) | (10 | ) | (240 | ) | 43 | ||||||||||||||||||||||||||
Writedowns and special items | 12,306 | 20,218 | 8,323 | 729,953 | 9,100 | 10,018 | — | 10,518 | — | |||||||||||||||||||||||||||||||||
Total costs and expenses | 546,845 | 526,394 | 167,937 | 1,044,035 | 489,044 | 355,945 | 126,714 | 238,733 | 270,936 | |||||||||||||||||||||||||||||||||
Income (loss) from operations | (25,456 | ) | 23,998 | (7,767 | ) | (746,371 | ) | (7,974 | ) | 17,438 | 9,395 | 13,070 | 36,328 | |||||||||||||||||||||||||||||
Other income (expense) | ||||||||||||||||||||||||||||||||||||||||||
Interest expense | (116,319 | ) | (138,655 | ) | (36,666 | ) | (80,405 | ) | (145,892 | ) | (114,211 | ) | (3,453 | ) | (75,723 | ) | (6,784 | ) | ||||||||||||||||||||||||
Reorganization items | — | — | 787,900 | (4,075 | ) | (23,064 | ) | (12,471 | ) | (8,374 | ) | — | ||||||||||||||||||||||||||||||
Other, net | (1,523 | ) | (2,941 | ) | 499 | 1,256 | 187 | 1,581 | 898 | 571 | 1,625 | |||||||||||||||||||||||||||||||
Total interest and other income (expense) | (117,842 | ) | (141,596 | ) | 751,733 | (83,224 | ) | (168,769 | ) | (125,101 | ) | (2,555 | ) | (83,526 | ) | (5,159 | ) | |||||||||||||||||||||||||
Income (loss) before income taxes | (143,298 | ) | (117,598 | ) | 743,966 | (829,525 | ) | (176,743 | ) | (107,663 | ) | 6,840 | (70,456 | ) | 31,169 | |||||||||||||||||||||||||||
Income tax (expense) benefit | 48,290 | (4,155 | ) | — | — | — | — | (2,591 | ) | — | (11,220 | ) | ||||||||||||||||||||||||||||||
Net income (loss) | $ | (95,008 | ) | $ | (121,753 | ) | $ | 743,966 | $ | (829,525 | ) | $ | (176,743 | ) | $ | (107,663 | ) | $ | 4,249 | $ | (70,456 | ) | $ | 19,949 | ||||||||||||||||||
Earnings (loss) per share(1): | ||||||||||||||||||||||||||||||||||||||||||
Basic | — | — | — | — | — | — | 0.04 | — | 0.19 | |||||||||||||||||||||||||||||||||
Diluted | — | — | — | — | — | — | 0.04 | — | 0.19 | |||||||||||||||||||||||||||||||||
Average common shares outstanding(1): | ||||||||||||||||||||||||||||||||||||||||||
Basic | — | — | — | — | — | — | 106,605,999 | — | 107,205,999 | |||||||||||||||||||||||||||||||||
Diluted | — | — | — | — | — | — | 106,605,999 | — | 107,255,820 | |||||||||||||||||||||||||||||||||
Balance sheet data (at period end): | ||||||||||||||||||||||||||||||||||||||||||
Cash and cash equivalents | $ | 55,513 | $ | 64,592 | $ | 87,278 | $ | 114 | $ | 859 | $ | — | $ | 23,967 | $ | 1,231 | $ | 12,692 | ||||||||||||||||||||||||
Total assets | 1,311,600 | 881,924 | 1,521,318 | 623,800 | 576,372 | 539,606 | 459,975 | 548,955 | 489,759 | |||||||||||||||||||||||||||||||||
Long-term debt and capital leases | 14 | — | 933,106 | 1,157 | 315 | 29 | 173,446 | 52 | 172,376 | |||||||||||||||||||||||||||||||||
Total liabilities | 1,451,796 | 1,581,346 | 1,286,318 | 1,222,219 | 1,351,393 | 1,422,290 | 305,575 | 1,394,430 | 312,756 | |||||||||||||||||||||||||||||||||
Total stockholders’ equity (members deficit) | $ | (140,198 | ) | $ | (699,422 | ) | $ | 235,000 | $ | (598,419 | ) | $ | (775,021 | ) | $ | (882,684 | ) | $ | 154,400 | $ | (845,475 | ) | $ | 177,003 | ||||||||||||||||||
Total liabilities and stockholders’ equity (members deficit) | $ | 1,311,600 | $ | 881,924 | $ | 1,521,318 | $ | 623,800 | $ | 576,372 | $ | 539,606 | $ | 459,975 | $ | 548,955 | $ | 489,759 | ||||||||||||||||||||||||
Statement of cash flows data: | ||||||||||||||||||||||||||||||||||||||||||
Net cash provided by (used in): | ||||||||||||||||||||||||||||||||||||||||||
Operating activities | $ | — | $ | 106,060 | $ | (353,592 | ) | $ | 76,378 | $ | 20,030 | $ | 28,085 | $ | 30,211 | $ | 35,805 | $ | 37,908 | |||||||||||||||||||||||
Investing activities | $ | — | $ | (88,434 | ) | $ | 44,555 | $ | (12,805 | ) | $ | (3,826 | ) | $ | 3,437 | $ | (329,168 | ) | $ | 6,831 | $ | (45,258 | ) | |||||||||||||||||||
Financing activities | $ | — | $ | (8,547 | ) | $ | 259,011 | $ | (78,025 | ) | $ | (15,459 | ) | $ | (32,381 | ) | $ | 322,924 | $ | (42,260 | ) | $ | (3,925 | ) | ||||||||||||||||||
Capital expenditures | $ | 24,143 | $ | 34,254 | $ | 10,963 | $ | 13,435 | $ | 16,937 | $ | 6,624 | $ | 5,583 | $ | 3,471 | $ | 43,224 |
(1) | Earnings per share data and average shares outstanding are not presented for the period from January 1, 2002 to May 9, 2002, the period from May 10, 2002 to December 31, 2002, the year ended December 31, 2003 and the period from January 1, 2004 to September 30, 2004 because they were prepared on a carve-out basis. The financial statements prepared for predecessor periods are carve-out financial statements reflecting the operations and financial condition of the Horizon assets acquired by ICG as of September 30, 2004 (collectively, the “combined companies”). The predecessor financial statements were prepared from the separate accounts and records maintained by the combined companies. In addition, certain assets and expense items represent allocations from Horizon. The accounts allocated include vendor advances, reclamation deposits and selling, general and administrative expenses. |
(2) | As restated. See Note 19 to the combined financial statements of Horizon NR, LLC. |
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Anker | CoalQuest | ||||||||||||||||||
Year Ended | Six Months | Year Ended | Six Months | ||||||||||||||||
December 31, | Ended | December 31, | Ended | ||||||||||||||||
2004 | June 30, 2005 | 2004 | June 30, 2005 | ||||||||||||||||
Statement of operations data: | |||||||||||||||||||
Net income (loss) | $ | (3,196,973 | ) | $ | (5,607,310 | ) | $ | 925,553 | $ | 228,027 | |||||||||
Balance sheet data (at period end): | |||||||||||||||||||
Cash and cash equivalents | $ | 1,165,559 | $ | 294,565 | $ | 1,818,833 | $ | 1,801,311 | |||||||||||
Total assets | 83,370,701 | 93,960,180 | 21,993,658 | 21,994,186 | |||||||||||||||
Total liabilities | 81,973,367 | 98,170,156 | 18,370,242 | 18,217,748 | |||||||||||||||
Total stockholders’ equity (members’ deficit) | $ | 1,397,334 | $ | (4,209,976 | ) | $ | 3,623,416 | $ | 3,776,438 | ||||||||||
Total liabilities and stockholders’ equity/members’ deficit | $ | 83,370,701 | $ | 93,960,180 | $ | 21,993,658 | $ | 21,994,186 | |||||||||||
Statement of cash flows data: | |||||||||||||||||||
Net cash provided by (used in) | |||||||||||||||||||
Operating activities | $ | 10,149,401 | $ | 6,574,669 | $ | 1,318,103 | $ | 57,433 | |||||||||||
Investing activities | $ | (26,298,582 | ) | $ | (18,582,786 | ) | $ | — | $ | — | |||||||||
Financing activities | $ | 14,137,990 | $ | 11,137,123 | $ | — | $ | (75,005 | ) | ||||||||||
Capital expenditures | $ | 27,238,311 | $ | 19,090,286 | $ | — | $ | — |
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Reclamation |
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• | Discount rate. SFAS No. 143 requires that asset retirement obligations be recorded at fair value. In accordance with the provisions of SFAS No. 143, ICG utilizes discounted cash flow techniques to estimate the fair value of our obligations. ICG bases its discount rate on the rates of treasury bonds with maturities similar to expected mine lives, adjusted for our credit standing. | |
• | Third-party margin. SFAS No. 143 requires the measurement of an obligation to be based upon the amount a third-party would demand to assume the obligation. Because ICG plans to perform a significant amount of the reclamation activities with internal resources, a third-party margin was added to the estimated costs of these activities. This margin was estimated based upon ICG’s historical experience with contractors performing certain types of reclamation activities. The inclusion of this margin will result in a recorded obligation that is greater than ICG’s estimates of our cost to perform the reclamation activities. If ICG’s cost estimates are accurate, the excess of the recorded obligation over the cost incurred to perform the work will be recorded as a gain at the time that reclamation work is completed. | |
Asset Impairments |
Post-retirement Medical Benefits |
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Workers’ Compensation |
Coal Workers’ Pneumoconiosis |
Income Taxes |
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Basis of Presentation |
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Six Months Ended June 30, 2005 of ICG, Inc. Compared to the Six Months Ended June 30, 2004 of Predecessor |
Revenues |
Horizon | ICG, Inc. | Actual | |||||||||||||||
Six Months Ended | Increase | ||||||||||||||||
June 30, | (Decrease) | ||||||||||||||||
2004 | 2005 | $ | % | ||||||||||||||
Coal revenues | $ | 233,307 | $ | 289,763 | $ | 56,456 | 24% | ||||||||||
Freight and handling revenues | 3,005 | 4,384 | 1,379 | 46% | |||||||||||||
Other revenues | 15,491 | 13,117 | (2,374 | ) | (15% | ) | |||||||||||
Total revenues | $ | 251,803 | $ | 307,264 | $ | 55,461 | 22% | ||||||||||
Tons sold | 7,102 | 7,028 | (74 | ) | (1% | ) | |||||||||||
Coal revenue per ton | $ | 32.85 | $ | 41.23 | $ | 8.38 | 25% |
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Costs and Expenses |
Horizon | ICG, Inc. | Actual | ||||||||||||||
Six Months Ended | Increase | |||||||||||||||
June 30, | (Decrease) | |||||||||||||||
2004 | 2005 | $ | % | |||||||||||||
Cost of coal sales and other revenues (exclusive of depreciation, depletion and amortization) | $ | 201,628 | $ | 234,261 | $ | 32,633 | 16% | |||||||||
Cost of coal sales and other revenues as % of revenues | 80 | % | 76% | |||||||||||||
Freight and handling costs | 3,005 | 4,384 | 1,379 | 46% | ||||||||||||
Freight and handling costs as % of revenues | 1 | % | 1% | |||||||||||||
Depreciation, depletion and amortization | 19,003 | 18,307 | (696 | ) | (4% | ) | ||||||||||
Depreciation, depletion and amortization as % of revenues | 8 | % | 6% | |||||||||||||
Selling, general and administrative expenses (exclusive of depreciation, depletion and amortization) | 4,819 | 13,941 | 9,122 | 189% | ||||||||||||
Selling, general and administrative expenses as % of revenues | 2 | % | 5% | |||||||||||||
Gain on sale of assets | (240 | ) | 43 | 283 | * | |||||||||||
Writedowns and other items | 10,518 | — | (10,518 | ) | * | |||||||||||
Total costs and expenses | $ | 238,733 | $ | 270,936 | $ | 32,203 | 13% | |||||||||
Total costs and expenses as % of revenues | 95 | % | 88% | |||||||||||||
Cost of coal sales per ton sold | $ | 33.61 | $ | 38.55 | $ | 4.94 | 15% |
* | Not meaningful |
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Twelve Months Ended December 31, 2004 of ICG, Inc. and Predecessor (Combined) Compared to Twelve Months Ended December 31, 2003 of Predecessor. |
ICG, Inc. | |||||||||||||||||
Horizon | (Combined) | Actual | |||||||||||||||
Twelve Months Ended | Increase | ||||||||||||||||
December 31, | (Decrease) | ||||||||||||||||
2003 | 2004 | $ | % | ||||||||||||||
Coal revenues | $ | 441,291 | $ | 477,444 | $ | 36,153 | 8 | % | |||||||||
Freight and handling revenues | 8,008 | 4,580 | (3,428 | ) | (43 | %) | |||||||||||
Other revenues | 31,771 | 27,468 | (4,303 | ) | (14 | %) | |||||||||||
Total revenues | $ | 481,070 | $ | 509,492 | $ | 28,422 | 6 | % | |||||||||
Tons sold | 16,656 | 14,003 | (2,653 | ) | (16 | %) | |||||||||||
Coal revenue per ton | $ | 26.49 | $ | 34.09 | $ | 7.60 | 29 | % |
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ICG, Inc. | ||||||||||||||||
Horizon | (Combined) | Actual | ||||||||||||||
Twelve Months Ended | Increase | |||||||||||||||
December 31, | (Decrease) | |||||||||||||||
2003 | 2004 | $ | % | |||||||||||||
Cost of coal sales and other revenues (exclusive of depreciation, depletion and amortization) | $ | 400,652 | $ | 420,136 | $ | 19,484 | 5 | % | ||||||||
Cost of coal sales and other revenues as % of revenues | 83 | % | 82 | % | ||||||||||||
Freight and handling costs | 8,008 | 4,580 | (3,428 | ) | (43 | )% | ||||||||||
Freight and handling costs as % of revenues | 2 | % | 1 | % | ||||||||||||
Depreciation, depletion and amortization | 52,254 | 35,490 | (16,764 | ) | (32 | )% | ||||||||||
Depreciation, depletion and amortization as % of revenues | 11 | % | 7 | % | ||||||||||||
Selling, general and administrative expenses (exclusive of depreciation, depletion and amortization) | 23,350 | 12,671 | (10,679 | ) | (46 | )% | ||||||||||
Selling, general and administrative expenses as % of revenues | 5 | % | 3 | % | ||||||||||||
Gain on sale of assets | (4,320 | ) | (236 | ) | 4,084 | (95 | )% | |||||||||
Writedowns and other items | 9,100 | 10,018 | 918 | * | ||||||||||||
Total costs and expenses | $ | 489,044 | $ | 482,659 | $ | (6,385 | ) | (1 | )% | |||||||
Total costs and expenses as % of revenues | 102 | % | 95 | % | ||||||||||||
Cost of coal sales per ton sold | $ | 29.36 | $ | 34.47 | $ | 5.11 | 17 | % |
* | Not meaningful |
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Actual | |||||||||||||||||
Year Ended | Increase | ||||||||||||||||
December 31, | (Decrease) | ||||||||||||||||
2002(1) | 2003 | $ | % | ||||||||||||||
(In thousands, except percentages | |||||||||||||||||
and per Ton data) | |||||||||||||||||
Coal revenues | $ | 400,275 | $ | 441,291 | $ | 41,016 | 10% | ||||||||||
Freight and handling revenues | 8,979 | 8,008 | (971 | ) | (11% | ) | |||||||||||
Other revenues | 48,580 | 31,771 | (16,809 | ) | (35% | ) | |||||||||||
Total revenues | $ | 457,834 | $ | 481,070 | $ | 23,236 | 5% | ||||||||||
Tons sold | 16,540 | 16,655 | 115 | 1% | |||||||||||||
Coal sales realization per ton sold | $ | 24.20 | $ | 26.50 | $ | 2.30 | 10% |
(1) | Represents the combination of amounts for the period January 1, 2002 to May 9, 2002 with the amounts for the period May 10, 2002 to December 31, 2002. |
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Actual | |||||||||||||||||
Year Ended | Increase | ||||||||||||||||
December 31, | (Decrease) | ||||||||||||||||
2002 | 2003 | $ | % | ||||||||||||||
(In thousands, except percentages and per ton data) | |||||||||||||||||
Cost of coal sales and other revenues (exclusive of depreciation, depletion and amortization) | $ | 366,128 | $ | 400,652 | $ | 34,524 | 9% | ||||||||||
Cost of coal sales and other revenues as % of revenues | 80 | % | 83 | % | |||||||||||||
Freight and handling costs | $ | 8,979 | $ | 8,008 | $ | (971 | ) | (11% | ) | ||||||||
Freight and handling costs as % of revenues | 2 | % | 2 | % | |||||||||||||
Depreciation, depletion and amortization | $ | 72,350 | $ | 52,254 | $ | (20,096 | ) | (28% | ) | ||||||||
Depreciation, depletion and amortization as % of revenues | 16 | % | 11 | % | |||||||||||||
Selling, general and administrative expenses (exclusive of depreciation, depletion and amortization) | $ | 26,372 | $ | 23,350 | $ | (3,022 | ) | (11% | ) | ||||||||
Selling, general and administrative expenses as % of revenues | 6 | % | 5 | % | |||||||||||||
Gain on sale of assets | $ | (132 | ) | $ | (4,320 | ) | $ | (4,188 | ) | * | |||||||
Writedowns and other items | $ | 738,275 | $ | 9,100 | $ | (729,175 | ) | (99% | ) | ||||||||
Total costs and expenses | $ | 1,211,972 | $ | 489,044 | $ | (722,928 | ) | (60% | ) | ||||||||
Total costs and expenses as % of revenues | 265 | % | 102 | % | |||||||||||||
Cost of coal sales per ton sold | $ | 73.28 | $ | 29.36 | $ | (43.92 | ) | (60% | ) |
* | Not meaningful |
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As of | |||||
December 31, 2004 | |||||
(In thousands) | |||||
Term loan due 2010 | $ | 175,000 | (1) | ||
Revolving credit facility | — | ||||
Capital lease obligations | 681 | ||||
Other | 3,787 | ||||
Total long-term debt | $ | 179,468 | |||
Less current portion | (6,022 | ) | |||
Long-term debt, net of current portion | $ | 173,446 | |||
(1) | We are required to use 50% of the net proceeds of the proposed public offering to repay amounts outstanding under the term loan. |
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Payments Due by Period | ||||||||||||||||||||
More | ||||||||||||||||||||
Less than | Than | |||||||||||||||||||
1 Year | 1-3 Years | 3-5 Years | 5 Years | Total | ||||||||||||||||
(In thousands) | ||||||||||||||||||||
Long-term debt obligations | $ | 7,417 | $ | 5,739 | $ | 5,253 | $ | 199,523 | $ | 217,932 | ||||||||||
Capital leases obligations | 513 | 168 | — | — | 681 | |||||||||||||||
Operating leases | 13,506 | 12,058 | — | — | 25,564 | |||||||||||||||
Coal purchase obligation | 114,620 | 134,389 | 57,644 | 25,186 | 331,839 | |||||||||||||||
Advisory services agreement(1) | 2,000 | 4,000 | 4,000 | 3,500 | 13,500 | |||||||||||||||
Minimum royalties | 8,567 | 15,688 | 14,016 | 30,158 | 68,429 | |||||||||||||||
Total(2) | $ | 146,623 | $ | 172,042 | $ | 80,913 | $ | 258,367 | $ | 657,945 | ||||||||||
(1) | See “Certain Relationships and Related Party Transactions.” |
(2) | Our contractual obligations exclude interest amounts due for the years shown above because it is at a variable rate. ICG is also a party to an employment agreement with each of its President and Chief Executive Officer and its Senior Vice President and General Counsel. See “Management — Employment Agreements” regarding the terms and conditions of this employment agreement. |
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Room-and-Pillar Mining |
Longwall Mining |
Truck-and-Shovel/Loader Mining |
Dragline Mining |
Highwall Mining |
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Owned | Leased | Steam | |||||||||||||||||||||||||||||||||||
Mining | Proven | Proven | Proven | Metallurgical | |||||||||||||||||||||||||||||||||
Method | Total | and | and | and | Proven and | ||||||||||||||||||||||||||||||||
Operating | Surface (S) | Proven | Probable | Probable | Probable | Probable | |||||||||||||||||||||||||||||||
(O) | or | and | Reserves | Reserves | Reserves | Reserves | |||||||||||||||||||||||||||||||
Assigned or | or Planned | Underground | Probable | (In million | (In million | (In million | (In million | ||||||||||||||||||||||||||||||
Mining Complex | Unassigned(1) | (P) | State | (UG) | Reserves(2) | tons) | tons) | tons) | tons) | ||||||||||||||||||||||||||||
Central Appalachia | |||||||||||||||||||||||||||||||||||||
ICG-Eastern | Assigned | O | WV | S | 23.69 | 7.27 | 16.42 | 23.69 | 0.00 | ||||||||||||||||||||||||||||
Total ICG-Eastern | 23.69 | 7.27 | 16.42 | 23.69 | 0.00 | ||||||||||||||||||||||||||||||||
ICG-Hazard | Assigned | O | KY | S/UG | 51.27 | 0.23 | 51.04 | 51.27 | 0.00 | ||||||||||||||||||||||||||||
Unassigned | P | KY | S/UG | 20.11 | 0.00 | 20.11 | 20.11 | 0.00 | |||||||||||||||||||||||||||||
Total ICG-Hazard | 71.38 | 0.23 | 71.15 | 71.38 | 0.00 | ||||||||||||||||||||||||||||||||
ICG-Knott County | Assigned | O | KY | UG | 6.73 | 5.81 | 0.92 | 6.73 | 0.00 | ||||||||||||||||||||||||||||
Total ICG-Knott County | 6.73 | 5.81 | 0.92 | 6.73 | 0.00 | ||||||||||||||||||||||||||||||||
ICG-East Kentucky | Assigned | O | KY | S | 2.62 | 0.00 | 2.62 | 2.62 | 0.00 | ||||||||||||||||||||||||||||
Total ICG-East Kentucky | 2.62 | 0.00 | 2.62 | 2.62 | 0.00 | ||||||||||||||||||||||||||||||||
ICG-Natural Resources | Unassigned (Mt. Sterling) | P | KY | S | 5.91 | 4.36 | 1.55 | 5.91 | 0.00 | ||||||||||||||||||||||||||||
ICG-Natural Resources | Unassigned (Jennie Creek) | P | WV | S/UG | 44.90 | 2.20 | 42.69 | 44.90 | 0.00 | ||||||||||||||||||||||||||||
Central Appalachia Total | 155.23 | 19.87 | 135.35 | 155.23 | 0.00 | ||||||||||||||||||||||||||||||||
Other | |||||||||||||||||||||||||||||||||||||
ICG-Illinois | Assigned | O | IL | UG | 29.63 | 11.38 | 18.25 | 29.63 | 0.00 | ||||||||||||||||||||||||||||
(Viper) | |||||||||||||||||||||||||||||||||||||
ICG-Natural Resources | Unassigned | P | IL | UG | 325.21 | 305.06 | 20.15 | 325.21 | 0.00 | ||||||||||||||||||||||||||||
Total Other | 354.84 | 316.44 | 38.39 | 354.84 | 0.00 | ||||||||||||||||||||||||||||||||
Total Proven and Probable Reserves | 510.07 | 336.31 | 173.74 | 510.07 | 0.00 | ||||||||||||||||||||||||||||||||
(1) | The proven and probable reserves indicated for each mine are “Assigned.” Unassigned proven and probable reserves for each mining complex are shown separately. “Assigned reserves” means coal which has been committed by the coal company to operating mine shafts, mining equipment, and plant facilities, and all coal which has been leased by the company to others. “Unassigned reserves” represent coal which has not been committed, and which would require new mineshafts, mining equipment, or plant facilities before operations could begin in the property. The primary reason for this distinction is to inform investors which coal reserves will require substantial capital investments before production can begin. |
(2) | The proven and probable reserves are reported as recoverable reserves, which is that part of a coal deposit which could be economically and legally extracted or produced at the time of the reserve determination, taking into account mining recovery and preparation plant yield. |
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Total Reserves | |||||||||||||||||||||||||||||||||
As Received Quality | |||||||||||||||||||||||||||||||||
<1.2 lbs. | |||||||||||||||||||||||||||||||||
Assigned or | % | % | % | Lbs. SO2 | SO2 | >1.2 lbs SO2 | |||||||||||||||||||||||||||
Mining Complex | Unassigned(1) | Moisture | Ash | Sulfur | Btu/lb. | Million Btu’s | Compliance | Non-Compliance | |||||||||||||||||||||||||
Central Appalachia | |||||||||||||||||||||||||||||||||
ICG-Eastern | Assigned | 6.00 | 14.42 | 1.24 | 11,964 | 2.07 | 0.00 | 23.69 | |||||||||||||||||||||||||
Total ICG-Eastern | 6.00 | 14.42 | 1.24 | 11,964 | 2.07 | 0.00 | 23.69 | ||||||||||||||||||||||||||
ICG-Hazard | Assigned | 6.00 | 9.23 | 1.44 | 12,438 | 2.32 | 0.00 | 51.27 | |||||||||||||||||||||||||
Unassigned | 6.00 | 12.98 | 1.63 | 12,047 | 2.72 | 0.00 | 20.11 | ||||||||||||||||||||||||||
Total ICG-Hazard..................................... | 6.00 | 10.33 | 1.49 | 12,316 | 2.43 | 0.00 | 71.38 | ||||||||||||||||||||||||||
ICG-Knott County | Assigned | 6.00 | 4.47 | 1.22 | 13,463 | 1.87 | 3.50 | 3.23 | |||||||||||||||||||||||||
Total ICG-Knott County | 6.00 | 4.47 | 1.22 | 13,463 | 1.87 | 3.50 | 3.23 | ||||||||||||||||||||||||||
ICG-East Kentucky | Assigned | 4.50 | 11.59 | 1.36 | 12,680 | 2.14 | 0.00 | 2.62 | |||||||||||||||||||||||||
Total ICG-East Kentucky | 4.50 | 11.59 | 1.36 | 12,680 | 2.14 | 0.00 | 2.62 | ||||||||||||||||||||||||||
ICG-Natural Resources | Unassigned (Mt. Sterling) | 6.00 | 9.18 | 0.83 | 12,430 | 1.33 | 0.00 | 5.91 | |||||||||||||||||||||||||
ICG-Natural Resources | Unassigned | 7.00 | 6.47 | 1.10 | 12,935 | 1.69 | 0.00 | 44.90 | |||||||||||||||||||||||||
(Jennie Creek) | |||||||||||||||||||||||||||||||||
Central Appalachia Total................................................................................... | 3.50 | 151.73 | |||||||||||||||||||||||||||||||
Other | |||||||||||||||||||||||||||||||||
ICG-Illinois | Assigned | 16.00 | 8.80 | 2.86 | 10,692 | 5.35 | 0.00 | 29.63 | |||||||||||||||||||||||||
(Viper) | |||||||||||||||||||||||||||||||||
ICG-Natural Resources | Unassigned | 10.00 | 8.99 | 3.24 | 11,377 | 5.70 | 0.00 | 325.21 | |||||||||||||||||||||||||
Total Other........................................ | 10.50 | 8.98 | 3.21 | 11,320 | 5.67 | 0.00 | 354.84 | ||||||||||||||||||||||||||
Total Proven and Probable Reserves....................................................................... | 3.50 | 506.57 | |||||||||||||||||||||||||||||||
(1) | The proven and probable reserves indicated for each mine are “Assigned.” Unassigned proven and probable reserves for each mining complex are shown separately. “Assigned reserves” means coal which has been committed by the coal company to operating mine shafts, mining equipment, and plant facilities, and all coal which has been leased by the company to others. “Unassigned reserves” represent coal which has not been committed, and which would require new mineshafts, mining equipment, or plant facilities before operations could begin in the property. The primary reason for this distinction is to inform investors which coal reserves will require substantial capital investments before production can begin. |
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Mining | |||||||||||||||||||||||||||||
Method | |||||||||||||||||||||||||||||
Surface (S) | |||||||||||||||||||||||||||||
or | Total | Steam | Metallurgical | ||||||||||||||||||||||||||
Assigned or | Operating (O) | Underground | Non-Reserve | Non-Reserve | Non-Reserve | ||||||||||||||||||||||||
Mining Complex | Unassigned(1) | or Planned (P) | State | (UG) | Coal Deposits | Coal Deposits | Coal Deposits | ||||||||||||||||||||||
(In million | (In million | (In million | |||||||||||||||||||||||||||
tons) | tons) | tons) | |||||||||||||||||||||||||||
Central Appalachia | |||||||||||||||||||||||||||||
ICG-Eastern | Assigned | O | WV | S | 0.02 | 0.02 | 0.00 | ||||||||||||||||||||||
ICG-Hazard | Assigned | O | KY | S/UG | 3.00 | 3.00 | 0.00 | ||||||||||||||||||||||
ICG-Knott County | Assigned | O | KY | UG | 0.00 | 0.00 | 0.00 | ||||||||||||||||||||||
ICG-East Kentucky | Assigned (Blackberry) | O | KY | S | 0.00 | 0.00 | 0.00 | ||||||||||||||||||||||
ICG-Natural Resources | Unassigned (Mt. Sterling) | KY | S/UG | 35.60 | 35.60 | 0.00 | |||||||||||||||||||||||
ICG-Natural Resources | Unassigned (Jennie Creek) | WV | UG | 20.64 | 20.64 | 0.00 | |||||||||||||||||||||||
Central Appalachia Total | 59.26 | 59.26 | 0.00 | ||||||||||||||||||||||||||
Other | |||||||||||||||||||||||||||||
ICG-Illinois | Assigned (Viper) | O | IL | UG | 38.47 | 38.47 | 0.00 | ||||||||||||||||||||||
ICG-Natural Resources | Unassigned (Illinois) | IL | UG | 263.07 | 263.07 | 0.00 | |||||||||||||||||||||||
ICG-Natural Resources | Unassigned (Arkansas) | AR | S | 39.15 | 39.15 | 0.00 | |||||||||||||||||||||||
Unassigned (California) | CA | UG | 10.00 | 10.00 | 0.00 | ||||||||||||||||||||||||
Unassigned (Ohio) | OH | UG | 98.00 | 98.00 | 0.00 |
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Mining | ||||||||||||||||||||||||||||
Method | ||||||||||||||||||||||||||||
Surface (S) | ||||||||||||||||||||||||||||
or | Total | Steam | Metallurgical | |||||||||||||||||||||||||
Assigned or | Operating (O) | Underground | Non-Reserve | Non-Reserve | Non-Reserve | |||||||||||||||||||||||
Mining Complex | Unassigned(1) | or Planned (P) | State | (UG) | Coal Deposits | Coal Deposits | Coal Deposits | |||||||||||||||||||||
(In million | (In million | (In million | ||||||||||||||||||||||||||
tons) | tons) | tons) | ||||||||||||||||||||||||||
Unassigned (Montana) | MT | S | 12.00 | 12.00 | 0.00 | |||||||||||||||||||||||
Unassigned (Washington) | WA | S | 43.08 | 43.08 | 0.00 | |||||||||||||||||||||||
Total Other | 503.77 | 503.77 | 0.00 | |||||||||||||||||||||||||
Total Non-Reserve Coal Deposits | 563.03 | 563.03 | 0.00 | |||||||||||||||||||||||||
(1) | “Assigned non-reserve coal deposits” means coal which has been committed by the coal company to operating mine shafts, mining equipment, and plant facilities, and all coal which has been leased by the company to others. “Unassigned non-reserve coal deposits” represent coal which has not been committed, and which would require new mineshafts, mining equipment, or plant facilities before operations could begin in the property. |
As Received Quality | |||||||||||||||||||||||||
Assigned or | % | % | % | Lbs. SO2/ | |||||||||||||||||||||
Mining Complex | Unassigned(1) | Moisture | Ash | Sulfur | Btu/lb. | Million Btu’s | |||||||||||||||||||
Central Appalachia | |||||||||||||||||||||||||
ICG-Eastern | Assigned | 6.00 | 12.20 | 1.20 | 12,400 | 1.94 | |||||||||||||||||||
ICG-Hazard | Assigned | 6.00 | 8.26 | 1.41 | 12,732 | 2.22 | |||||||||||||||||||
ICG-Knott County | Assigned | N/A | N/A | N/A | N/A | N/A | |||||||||||||||||||
ICG-East Kentucky | Assigned (Blackberry) | N/A | N/A | N/A | N/A | N/A | |||||||||||||||||||
ICG-Natural Resources | Unassigned (Mt. Sterling) | 6.00 | 11.63 | 1.93 | 11,774 | 3.28 | |||||||||||||||||||
ICG-Natural Resources | Unassigned (Jennie Creek) | 6.00 | 12.50 | 1.10 | 12,000 | 1.83 | |||||||||||||||||||
Other | |||||||||||||||||||||||||
ICG-Illinois | Assigned (Viper) | 16.00 | 9.50 | 3.50 | 10,500 | 6.67 | |||||||||||||||||||
ICG-Natural Resources | Unassigned | 13.00 | 9.00 | 3.00 | 11,000 | 5.45 | |||||||||||||||||||
(Illinois) | |||||||||||||||||||||||||
ICG-Natural Resources | Unassigned | N/A | 8.00 | 0.40 | 5,650 | 1.42 | |||||||||||||||||||
(Arkansas) | |||||||||||||||||||||||||
Unassigned | 6.00 | 13.00 | 3.50 | 11,700 | 5.98 | ||||||||||||||||||||
(California) | |||||||||||||||||||||||||
Unassigned | 6.00 | 8.40 | 2.50 | 12,650 | 3.95 | ||||||||||||||||||||
(Ohio) | |||||||||||||||||||||||||
Unassigned | N/A | 8.00 | 0.30 | 8,900 | 0.67 | ||||||||||||||||||||
(Montana) | |||||||||||||||||||||||||
Unassigned | N/A | 8.00 | 0.50 | 7,025 | 1.42 | ||||||||||||||||||||
(Washington) |
(1) | “Assigned non-reserve coal deposits” means coal which has been committed by the coal company to operating mine shafts, mining equipment, and plant facilities, and all coal which has been leased by the company to others. “Unassigned non-reserve coal deposits” represent coal which has not been committed, and which would require new mineshafts, mining equipment, or plant facilities before operations could begin in the property. |
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Number and Type of Mines | ||||||||||||||||||||||||||||||||
Tons | ||||||||||||||||||||||||||||||||
Preparation | Produced | |||||||||||||||||||||||||||||||
Mining Complex | Location | Plant(s) | Underground | Surface | Total | Mining Method(1) | Transportation | in 2004 | ||||||||||||||||||||||||
ICG — Eastern, LLC | Cowen, WV | 1 | 0 | 1 | 1 | MTR-DL-TSL | Rail | 2,712.1 | ||||||||||||||||||||||||
ICG — Hazard, LLC | Hazard, KY | 1 | 1 | 6 | 7 | R&P, HW, MTR, TSL | Rail | 3,978.0 | ||||||||||||||||||||||||
ICG — Knott County, LLC | Kite, KY | 1 | 4 | 0 | 4 | R&P | Rail | 1,386.6 | ||||||||||||||||||||||||
ICG — East Kentucky, LLC | Pike Co., KY | 0 | 0 | 1 | 1 | MTR-TSL | Rail | 1,576.3 | ||||||||||||||||||||||||
ICG — Illinois, LLC | Williamsville, IL | 1 | 1 | 0 | 1 | R&P | Truck | 2,117.6 |
(1) | R&P = Room and Pillar; MTR = Mountain Top Removal; DL = Dragline; HW = Highwall; TSL = Truck and Shovel/ Loader |
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ICG Eastern, LLC |
ICG Hazard, LLC |
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ICG Knott County, LLC |
ICG East Kentucky, LLC |
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75
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76
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77
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78
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79
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Total | Owned | Leased | Steam | ||||||||||||||||||||||||||||||||||
Proven | Proven | Proven | Proven | Metallurgical(3)(4) | |||||||||||||||||||||||||||||||||
Mining | and | and | and | and | Proven and | ||||||||||||||||||||||||||||||||
Method | Probable | Probable | Probable | Probable | Probable | ||||||||||||||||||||||||||||||||
Surface (S) or | Reserves(2) | Reserves | Reserves | Reserves | Reserves | ||||||||||||||||||||||||||||||||
Assigned or | Operating (O) | Underground | (Inmillion | (In million | (In million | (In million | (In million | ||||||||||||||||||||||||||||||
Mining Complex | Unassigned(1) | or Planned (P) | State | (UG) | tons) | tons) | tons) | tons) | tons) | ||||||||||||||||||||||||||||
Northern Appalachia | |||||||||||||||||||||||||||||||||||||
Vindex Energy Corp. | Assigned | O | MD | S | 10.44 | 0.00 | 10.44 | 7.83 | 2.61 | ||||||||||||||||||||||||||||
Unassigned | P | MD | S/UG | 6.21 | 0.47 | 5.74 | 0.15 | 6.06 | |||||||||||||||||||||||||||||
Total Vindex Energy Corp. | 16.66 | 0.47 | 16.19 | 7.98 | 8.67 | ||||||||||||||||||||||||||||||||
Patriot Mining Co. | Assigned | O | PA/WV | S | 0.66 | 0.52 | 0.14 | 0.66 | 0.00 | ||||||||||||||||||||||||||||
Unassigned | P | WV | S | 0.39 | 0.19 | 0.20 | 0.39 | 0.00 | |||||||||||||||||||||||||||||
Total Patriot Mining Co. | 1.05 | 0.71 | 0.34 | 1.05 | 0.00 | ||||||||||||||||||||||||||||||||
Spruce Fork Division | Assigned | O | WV | UG | 8.02 | 7.95 | 0.07 | 0.00 | 8.02 | ||||||||||||||||||||||||||||
Unassigned | P | WV | UG | 40.55 | 38.75 | 1.80 | 1.30 | 39.25 | |||||||||||||||||||||||||||||
Total Spruce Fork Division | 48.57 | 46.70 | 1.87 | 1.30 | 47.27 | ||||||||||||||||||||||||||||||||
Sycamore Group | Assigned | O | WV | UG | 18.72 | 0.40 | 18.32 | 18.72 | 0.00 | ||||||||||||||||||||||||||||
Total Sycamore Group | 18.72 | 0.40 | 18.32 | 18.72 | 0.00 | ||||||||||||||||||||||||||||||||
Philippi Development Division | Assigned | O | WV | UG | 36.03 | 32.34 | 3.69 | 0.00 | 36.03 | ||||||||||||||||||||||||||||
Unassigned | P | WV | UG | 4.94 | 0.00 | 4.94 | 0.00 | 4.94 | |||||||||||||||||||||||||||||
Total Phillipi Development Division | 40.97 | 32.34 | 8.63 | 0.00 | 40.97 | ||||||||||||||||||||||||||||||||
CoalQuest Development LLC | Unassigned (Hillman) | P | WV | UG | 194.30 | 194.30 | 0.00 | 32.71 | 161.59 | ||||||||||||||||||||||||||||
Total CoalQuest Development LLC | 194.3 | 194.30 | 0.00 | 32.71 | 161.59 | ||||||||||||||||||||||||||||||||
Northern Appalachia Total | 320.27 | 274.92 | 45.35 | 61.76 | 258.51 | ||||||||||||||||||||||||||||||||
Central Appalachia | |||||||||||||||||||||||||||||||||||||
ICG-Eastern | Assigned | O | WV | S | 23.69 | 7.27 | 16.42 | 23.69 | 0.00 | ||||||||||||||||||||||||||||
Total ICG-Eastern | 23.69 | 7.27 | 16.42 | 23.69 | 0.00 | ||||||||||||||||||||||||||||||||
ICG-Hazard | Assigned | O | KY | S/UG | 51.27 | 0.23 | 51.04 | 51.27 | 0.00 | ||||||||||||||||||||||||||||
Unassigned | P | KY | S/UG | 20.11 | 0.00 | 20.11 | 20.11 | 0.00 | |||||||||||||||||||||||||||||
Total ICG-Hazard | 71.38 | 0.23 | 71.15 | 71.38 | 0.00 | ||||||||||||||||||||||||||||||||
ICG-Knott County | Assigned | O | KY | UG | 6.73 | 5.81 | 0.92 | 6.73 | 0.00 | ||||||||||||||||||||||||||||
Total ICG-Knott County | 6.73 | 5.81 | 0.92 | 6.73 | 0.00 | ||||||||||||||||||||||||||||||||
ICG-East Kentucky | Assigned | O | KY | S | 2.62 | 0.00 | 2.62 | 2.62 | 0.00 | ||||||||||||||||||||||||||||
Total ICG-East Kentucky | 2.62 | 0.00 | 2.62 | 2.62 | 0.00 | ||||||||||||||||||||||||||||||||
ICG-Natural Resources | Unassigned (Mt. Sterling) | P | KY | S | 5.91 | 4.36 | 1.55 | 5.91 | 0.00 | ||||||||||||||||||||||||||||
ICG-Natural Resources | Unassigned (Jennie Creek) | P | WV | S/UG | 44.90 | 2.20 | 42.69 | 44.90 | 0.00 | ||||||||||||||||||||||||||||
Beckley-Smokeless Division(3) | Unassigned (Bay Hill ) | P | WV | UG | 28.97 | 1.28 | 27.69 | 0.00 | 28.97 | ||||||||||||||||||||||||||||
Anker Virginia Mining Company(3) | Unassigned (Big Creek) | P | V | UG | 27.50 | 0.00 | 27.50 | 0.00 | 27.50 | ||||||||||||||||||||||||||||
Central Appalachia Total | 211.70 | 21.16 | 190.55 | 155.23 | 56.47 | ||||||||||||||||||||||||||||||||
Other | |||||||||||||||||||||||||||||||||||||
ICG-Illinois | Assigned (Viper) | O | IL | UG | 29.63 | 11.38 | 18.25 | 29.63 | 0.00 | ||||||||||||||||||||||||||||
ICG-Natural Resources | Unassigned | P | IL | UG | 325.21 | 305.06 | 20.15 | 325.21 | 0.00 | ||||||||||||||||||||||||||||
Total Other | 354.84 | 316.44 | 38.39 | 354.84 | 0.00 | ||||||||||||||||||||||||||||||||
Total Proven and Probable Reserves | 886.81 | 612.52 | 274.29 | 571.82 | 314.99 | ||||||||||||||||||||||||||||||||
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(1) | The proven and probable reserves indicated for each mine are “Assigned.” Unassigned proven and probable reserves for each mining complex are shown separately. “Assigned reserves” means coal which has been committed by the coal company to operating mine shafts, mining equipment, and plant facilities, and all coal which has been leased by the company to others. “Unassigned reserves” represent coal which has not been committed, and which would require new mineshafts, mining equipment, or plant facilities before operations could begin in the property. The primary reason for this distinction is to inform investors which coal reserves will require substantial capital investments before production can begin. |
(2) | The proven and probable reserves are reported as recoverable reserves, which is that part of a coal deposit which could be economically and legally extracted or produced at the time of the reserve determination, taking into account mining recovery and preparation plant yield. |
(3) | Beckley-Smokeless and Anker Virginia meet historical metallurgical coal quality specifications. |
(4) | Currently, ICG reports selling coal with ash and sulfur contents as high as 10% and 1.5%, respectively into the current metallurgical market from the Vindex Energy, Spruce Fork and Phillipi Divisions. Similarly, we believe all production from Mount Storm and portions of Hillman could be sold on this metallurgical market when production begins. |
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As Received Quality | Total Reserves | ||||||||||||||||||||||||||||||||
Assigned or | % | % | % | Lbs. SO2 | <1.2 lbs. SO2 | >1.2 lbs SO2 | |||||||||||||||||||||||||||
Mining Complex | Unassigned(1) | Moisture | Ash | Sulfur | Btu/lb. | million Btu’s | compliance | non-compliance | |||||||||||||||||||||||||
Northern Appalachia | |||||||||||||||||||||||||||||||||
Vindex Energy Corp. | Assigned | 6.00 | 14.01 | 1.74 | 12,407 | 2.81 | 0.00 | 10.44 | |||||||||||||||||||||||||
Unassigned | 6.00 | 9.47 | 0.86 | 13,193 | 1.31 | 0.00 | 6.21 | ||||||||||||||||||||||||||
Total Vindex Energy Corp. | 6.00 | 12.32 | 1.42 | 12,700 | 2.25 | 0.00 | 16.66 | ||||||||||||||||||||||||||
Patriot Mining Co. | Assigned | 6.00 | 14.55 | 2.01 | 11,975 | 3.36 | 0.00 | 0.66 | |||||||||||||||||||||||||
Unassigned | 6.00 | 19.06 | 2.13 | 11,240 | 3.85 | 0.00 | 0.39 | ||||||||||||||||||||||||||
Total Patriot Mining Co. | 6.00 | 16.22 | 2.05 | 11,704 | 3.54 | 0.00 | 1.05 | ||||||||||||||||||||||||||
Spruce Fork Division | Assigned | 6.00 | 9.13 | 1.05 | 13,000 | 1.62 | 0.00 | 8.02 | |||||||||||||||||||||||||
Unassigned | 6.00 | 8.87 | 1.11 | 13,076 | 1.70 | 0.00 | 40.55 | ||||||||||||||||||||||||||
Total Spruce Fork Division | 6.00 | 8.92 | 1.10 | 13,063 | 1.69 | 0.00 | 48.57 | ||||||||||||||||||||||||||
Sycamore Group | Assigned | 6.00 | 7.19 | 3.05 | 13,099 | 4.65 | 0.00 | 18.72 | |||||||||||||||||||||||||
Total Sycamore Group | 6.00 | 7.19 | 3.05 | 13,099 | 4.65 | 0.00 | 18.72 | ||||||||||||||||||||||||||
Philippi Development Division | Assigned | 6.00 | 8.17 | 1.32 | 13,299 | 1.98 | 0.00 | 36.03 | |||||||||||||||||||||||||
Unassigned | 6.00 | 8.04 | 1.44 | 13,353 | 2.15 | 0.00 | 4.94 | ||||||||||||||||||||||||||
Total Phillipi Development Division | 6.00 | 8.15 | 1.33 | 13,306 | 2.00 | 0.00 | 40.97 | ||||||||||||||||||||||||||
CoalQuest Development LLC | Unassigned (Hillman) | 6.00 | 9.21 | 1.15 | 13,179 | 1.74 | 0.00 | 194.30 | |||||||||||||||||||||||||
Northern Appalachia Total | 0.00 | 320.27 | |||||||||||||||||||||||||||||||
Central Appalachia | |||||||||||||||||||||||||||||||||
ICG-Eastern | Assigned | 6.00 | 14.42 | 1.24 | 11,964 | 2.07 | 0.00 | 23.69 | |||||||||||||||||||||||||
Total ICG-Eastern | 6.00 | 14.42 | 1.24 | 11,964 | 2.07 | 0.00 | 23.69 | ||||||||||||||||||||||||||
ICG-Hazard | Assigned | 6.00 | 9.23 | 1.44 | 12,438 | 2.32 | 0.00 | 51.27 | |||||||||||||||||||||||||
Unassigned | 6.00 | 12.98 | 1.63 | 12,047 | 2.72 | 0.00 | 20.11 | ||||||||||||||||||||||||||
Total ICG-Hazard | 6.00 | 10.33 | 1.49 | 12,316 | 2.43 | 0.00 | 71.38 | ||||||||||||||||||||||||||
ICG-Knott County | Assigned | 6.00 | 4.47 | 1.22 | 13,463 | 1.87 | 3.50 | 3.23 | |||||||||||||||||||||||||
Total ICG-Knott County | 6.00 | 4.47 | 1.22 | 13,463 | 1.87 | 3.50 | 3.23 | ||||||||||||||||||||||||||
ICG-East Kentucky | Assigned | 4.50 | 11.59 | 1.36 | 12,680 | 2.14 | 0.00 | 2.62 | |||||||||||||||||||||||||
Total ICG-East Kentucky | 4.50 | 11.59 | 1.36 | 12,680 | 2.14 | 0.00 | 2.62 | ||||||||||||||||||||||||||
ICG-Natural Resources | Unassigned (Mt. Sterling) | 6.00 | 9.18 | 0.83 | 12,430 | 1.33 | 0.00 | 5.91 | |||||||||||||||||||||||||
ICG-Natural Resources | Unassigned (Jennie Creek) | 7.00 | 6.47 | 1.10 | 12,935 | 1.69 | 0.00 | 44.90 | |||||||||||||||||||||||||
Beckley-Smokeless Division(2) | Unassigned (Bay Hill) | 6.00 | 4.87 | 0.70 | 13,913 | 1.01 | 28.97 | 0.00 | |||||||||||||||||||||||||
Anker Virginia Mining Company(2) | Unassigned (Big Creek) | 6.00 | 4.00 | 0.65 | 14,073 | 0.92 | 27.50 | 0.00 | |||||||||||||||||||||||||
Central Appalachia Total | 59.98 | 151.73 | |||||||||||||||||||||||||||||||
Other | |||||||||||||||||||||||||||||||||
ICG-Illinois | Assigned (Viper) | 16.00 | 8.80 | 2.86 | 10,692 | 5.35 | 0.00 | 29.63 | |||||||||||||||||||||||||
ICG-Natural Resources | Unassigned | 10.00 | 8.99 | 3.24 | 11,377 | 5.70 | 0.00 | 325.21 | |||||||||||||||||||||||||
Total Other | 10.50 | 8.98 | 3.21 | 11,320 | 5.67 | 0.00 | 354.84 | ||||||||||||||||||||||||||
Total Proven and Probable Reserves | 59.98 | 826.83 | |||||||||||||||||||||||||||||||
(1) | The proven and probable reserves indicated for each mine are “Assigned.” Unassigned proven and probable reserves for each mining complex are shown separately. “Assigned reserves” means coal which has been committed by the coal company to operating mine shafts, mining equipment, and plant facilities, and all coal which has been leased by the company to others. “Unassigned reserves” represent coal which has not been committed, and which would require new mineshafts, mining equipment, or plant facilities before operations could begin in the property. The primary reason for this distinction is to inform investors which coal reserves will require substantial capital investments before production can begin. |
(2) | Beckley-Smokeless and Anker Virginia meet historical metallurgical coal quality specifications. |
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NON-RESERVE COAL DEPOSITS |
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Mining | ||||||||||||||||||||||||||||||
Method | Total | Steam | Metallurgical(2) | |||||||||||||||||||||||||||
Surface (S) | Non-reserve | Non-reserve | Non-reserve | |||||||||||||||||||||||||||
Operating (O) | or | Coal Deposits | Coal Deposits | Coal Deposits | ||||||||||||||||||||||||||
Assigned or | or | Underground | (In million | (In million | (In million | |||||||||||||||||||||||||
Mining Complex | Unassigned(1) | Planned (P) | State | (UG) | tons) | tons) | tons) | |||||||||||||||||||||||
Northern Appalachia | ||||||||||||||||||||||||||||||
Patriot Mining Co. | Assigned | O | WV | S | 0.13 | 0.13 | 0.00 | |||||||||||||||||||||||
Unassigned | P | S | 1.77 | 1.77 | 0.00 | |||||||||||||||||||||||||
Total Patriot Mining | 1.89 | 1.89 | 0.00 | |||||||||||||||||||||||||||
Spruce Fork Division | Assigned | O | WV | UG | 0.18 | 0.18 | 0.00 | |||||||||||||||||||||||
Unassigned | P | WV | UG | 2.24 | 2.24 | 0.00 | ||||||||||||||||||||||||
Total Spruce Fork Division | 2.42 | 2.42 | 0.00 | |||||||||||||||||||||||||||
Sycamore Group | Assigned | O | WV | UG | 1.28 | 1.28 | 0.00 | |||||||||||||||||||||||
Unassigned | P | WV | UG | 0.00 | 0.00 | 0.00 | ||||||||||||||||||||||||
Total Sycamore Group | 1.28 | 1.28 | 0.00 | |||||||||||||||||||||||||||
Philippi Development Division | Assigned | O | WV | UG | 1.64 | 1.64 | 0.00 | |||||||||||||||||||||||
Unassigned | P | WV | UG | 0.76 | 0.76 | 0.00 | ||||||||||||||||||||||||
Total Phillipi Development Division | 2.40 | 2.40 | 0.00 | |||||||||||||||||||||||||||
CoalQuest Development LLC | Unassigned (Hillman) | P | WV | UG | 37.04 | 37.04 | 0.00 | |||||||||||||||||||||||
Upshur Property | Unassigned (Upshur) | WV | S | 92.96 | 92.96 | 0.00 | ||||||||||||||||||||||||
Northern Appalachia Total | 137.99 | 137.99 | 0.00 | |||||||||||||||||||||||||||
Central Appalachia | ||||||||||||||||||||||||||||||
ICG-Eastern | Assigned | O | WV | S | 0.02 | 0.02 | 0.00 | |||||||||||||||||||||||
ICG-Hazard | Assigned | O | KY | S/UG | 3.00 | 3.00 | 0.00 | |||||||||||||||||||||||
ICG-Knott County | Assigned | O | KY | UG | 0.00 | 0.00 | 0.00 | |||||||||||||||||||||||
ICG-East Kentucky | Assigned (Blackberry) | O | KY | S | 0.00 | 0.00 | 0.00 | |||||||||||||||||||||||
ICG-Natural Resources | Unassigned (Mt. Sterling) | KY | S/UG | 35.60 | 35.60 | 0.00 | ||||||||||||||||||||||||
ICG-Natural Resources | Unassigned (Jennie Creek) | WV | UG | 20.64 | 20.64 | 0.00 | ||||||||||||||||||||||||
Anker West Virginia Mining Co. | Unassigned (Juliana) | P | WV | S/UG | 1.20 | 1.20 | 0.00 | |||||||||||||||||||||||
Beckley-Smokeless Division(3) | Unassigned (Bay Hill) | P | WV | UG | 1.88 | 0.00 | 1.88 | |||||||||||||||||||||||
Anker Virginia Mining Co.(3) | Unassigned (Big Creek) | P | V | UG | 2.57 | 2.57 | 0.00 | |||||||||||||||||||||||
Central Appalachia Total | 64.91 | 63.02 | 1.88 | |||||||||||||||||||||||||||
Other | ||||||||||||||||||||||||||||||
ICG-Illinois | Assigned (Viper) | O | IL | UG | 38.47 | 38.47 | 0.00 | |||||||||||||||||||||||
ICG-Natural Resources | Unassigned (Illinois) | IL | UG | 263.07 | 263.07 | 0.00 | ||||||||||||||||||||||||
ICG-Natural Resources | Unassigned (Arkansas) | AR | S | 39.15 | 39.15 | 0.00 | ||||||||||||||||||||||||
Unassigned (California) | CA | UG | 10.00 | 10.00 | 0.00 | |||||||||||||||||||||||||
Unassigned (Ohio) | OH | UG | 98.00 | 98.00 | 0.00 | |||||||||||||||||||||||||
Unassigned (Montana) | MT | S | 12.00 | 12.00 | 0.00 | |||||||||||||||||||||||||
Unassigned (Washington) | WA | S | 43.08 | 43.08 | 0.00 | |||||||||||||||||||||||||
Total Other | 503.77 | 503.77 | 0.00 | |||||||||||||||||||||||||||
Total Non-Reserve Coal Deposits | 706.68 | 704.79 | 1.88 | |||||||||||||||||||||||||||
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(1) | “Assigned non-reserve coal deposits” means coal which has been committed by the coal company to operating mine shafts, mining equipment, and plant facilities, and all coal which has been leased by the company to others. “Unassigned non-reserve coal deposits” represent coal which has not been committed, and which would require new mineshafts, mining equipment, or plant facilities before operations could begin in the property. |
(2) | Currently, ICG reports selling coal with ash and sulfur contents as high as 10% and 1.5%, respectively into the current metallurgical market from the Vindex Energy, Spruce Fork and Philippi Divisions. Similarly, we believe all production from Mount Storm and portions of Hillman can be sold on this metallurgical market. |
(3) | Beckley-Smokeless and Anker Virginia meet historical metallurgical coal quality specifications. |
As received quality | |||||||||||||||||||||||||
Assigned or | % | % | % | Lbs. SO2/ | |||||||||||||||||||||
Mining complex | Unassigned(1) | Moisture | Ash | Sulfur | Btu/lb. | Million Btu’s | |||||||||||||||||||
Northern Appalachia | |||||||||||||||||||||||||
Patriot Mining Co. | Assigned | N/A | N/A | N/A | N/A | N/A | |||||||||||||||||||
Unassigned | N/A | N/A | N/A | N/A | N/A | ||||||||||||||||||||
Spruce Fork Division | Assigned | 6.00 | 9.00 | 1.20 | 13,000 | 1.85 | |||||||||||||||||||
Unassigned | 6.00 | 9.00 | 1.20 | 13,000 | 1.85 | ||||||||||||||||||||
Sycamore Group | Assigned | 6.00 | 7.21 | 3.05 | 13,097 | 4.66 | |||||||||||||||||||
Unassigned | N/A | N/A | N/A | N/A | N/A | ||||||||||||||||||||
Philippi Development Division | Assigned | 6.00 | 8.30 | 1.40 | 13,100 | 2.14 | |||||||||||||||||||
Unassigned | 6.00 | 8.30 | 1.40 | 13,100 | 2.14 | ||||||||||||||||||||
CoalQuest Development LLC | Unassigned | N/A | N/A | N/A | N/A | N/A | |||||||||||||||||||
(Hillman) | |||||||||||||||||||||||||
Upshur Property | Unassigned | 6.00 | 43.00 | 2.00 | 8,000 | 5.00 | |||||||||||||||||||
(Upshur) | |||||||||||||||||||||||||
Central Appalachia | |||||||||||||||||||||||||
ICG-Eastern | Assigned | 6.00 | 12.20 | 1.20 | 12,400 | 1.94 | |||||||||||||||||||
ICG-Hazard | Assigned | 6.00 | 8.26 | 1.41 | 12,732 | 2.22 | |||||||||||||||||||
ICG-Knott County | Assigned | N/A | N/A | N/A | N/A | N/A | |||||||||||||||||||
ICG-East Kentucky | Assigned (Blackberry) | N/A | N/A | N/A | N/A | N/A | |||||||||||||||||||
ICG-Natural Resources | Unassigned | 6.00 | 11.63 | 1.93 | 11,774 | 3.28 | |||||||||||||||||||
(Mt. Sterling) | |||||||||||||||||||||||||
ICG-Natural Resources | Unassigned | 6.00 | 12.50 | 1.10 | 12,000 | 1.83 | |||||||||||||||||||
(Jennie Creek) | |||||||||||||||||||||||||
Anker West Virginia Mining Co. | Unassigned | 6.00 | 7.50 | 0.82 | 13,100 | 1.25 | |||||||||||||||||||
(Juliana) | |||||||||||||||||||||||||
Beckley-Smokeless Division(2) | Unassigned | 6.00 | 4.80 | 0.70 | 13,800 | 1.01 | |||||||||||||||||||
(Bay Hill) | |||||||||||||||||||||||||
Anker Virginia Mining Co.(2) | Unassigned | 6.00 | 7.40 | 0.60 | 13,500 | 0.89 | |||||||||||||||||||
(Big Creek) | |||||||||||||||||||||||||
Other | |||||||||||||||||||||||||
ICG-Illinois | Assigned (Viper) | 16.00 | 9.50 | 3.50 | 10,500 | 6.67 | |||||||||||||||||||
ICG-Natural Resources | Unassigned | 13.00 | 9.00 | 3.00 | 11,000 | 5.45 | |||||||||||||||||||
(Illinois) | |||||||||||||||||||||||||
ICG-Natural Resources | Unassigned | N/A | 8.00 | 0.40 | 5,650 | 1.42 | |||||||||||||||||||
(Arkansas) | |||||||||||||||||||||||||
Unassigned | 6.00 | 13.00 | 3.50 | 11,700 | 5.98 | ||||||||||||||||||||
(California) | |||||||||||||||||||||||||
Unassigned | 6.00 | 8.40 | 2.50 | 12,650 | 3.95 | ||||||||||||||||||||
(Ohio) | |||||||||||||||||||||||||
(Unassigned) | N/A | 8.00 | 0.30 | 8,900 | 0.67 | ||||||||||||||||||||
(Montana) | |||||||||||||||||||||||||
(Unassigned) | N/A | 8.00 | 0.50 | 7,025 | 1.42 | ||||||||||||||||||||
(Washington) |
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(1) | The proven and probable reserves indicated for each mine are “Assigned.” Unassigned proven and probable reserves for each mining complex are shown separately. “Assigned reserves” means coal which has been committed by the coal company to operating mine shafts, mining equipment, and plant facilities, and all coal which has been leased by the company to others. “Unassigned reserves” represent coal which has not been committed, and which would require new mineshafts, mining equipment, or plant facilities before operations could begin in the property. The primary reason for this distinction is to inform investors, which coal reserves will require substantial capital investments before production can begin. |
(2) | Beckley-Smokeless and Anker Virginia meet historical metallurgical coal quality specifications. |
Number and | ||||||||||||||||||||||||||||||
Type of Mines | ||||||||||||||||||||||||||||||
Preparation | Under- | Mining | Tons Produced | |||||||||||||||||||||||||||
Mining Complex | Location | Plant(s) | ground | Surface | Total | Method(1) | Transportation | in 2004 | ||||||||||||||||||||||
(In thousands) | ||||||||||||||||||||||||||||||
ICG Eastern, LLC | Cowen, WV | 1 | 0 | 1 | 1 | MTR-DL-TSL | Rail | 2,712.1 | ||||||||||||||||||||||
ICG Hazard, LLC | Hazard, KY | 1 | 1 | 6 | 7 | R&P, HW, MTR, TSL | Rail | 3,978.0 | ||||||||||||||||||||||
ICG Knott County, LLC | Kite, KY | 1 | 4 | 0 | 4 | R&P | Rail | 1,386.6 | ||||||||||||||||||||||
ICG East Kentucky, LLC | Pike Co., KY | 0 | 0 | 1 | 1 | MTR-TSL | Rail | 1,576.3 | ||||||||||||||||||||||
ICG Illinois, LLC | Williamsville, IL | 1 | 1 | 0 | 1 | R&P | Truck | 2,117.6 | ||||||||||||||||||||||
Vindex Energy Corporation | Garrett Co., MD | 1 | 0 | 2 | 2 | CRM, CTR, R&P | Truck, Rail(2) | 170.7 | ||||||||||||||||||||||
Patriot Mining Company | Monongalia Co., WV | 0 | 0 | 3 | 3 | CTR | Barge, Rail | 921.3 | (3) | |||||||||||||||||||||
Spruce Fork Division | Upshur Co., WV | 1 | 2 | 0 | 2 | R&P | Rail | 1,213.9 | ||||||||||||||||||||||
Philippi Development Division | Barbour Co., WV | 1 | (4) | 1 | 0 | 1 | R&P | Rail | 255.4 | |||||||||||||||||||||
Beckley-Smokeless Division | Raleigh Co., WV | 1 | 0 | 0 | 0 | R&P | Rail | 0.0 | (2) | |||||||||||||||||||||
Sycamore Group | Harrison Co., WV | 0 | 2 | 0 | 2 | R&P | Truck | 259.3 | (5)(6) | |||||||||||||||||||||
CoalQuest Development LLC | Taylor Co., WV | 0 | 0 | 0 | 0 | R&P & LW | Rail | 0.0 | (7) | |||||||||||||||||||||
Juliana Complex | Webster Co., WV | 1 | 0 | 0 | 0 | R&P & CTR | Rail | 0.0 |
(1) | CRM = Cross Ridge Mining; CTR = Contour Mining; R&P = Room and Pillar; LW = Longwall; MTR = Mountain Top Removal; DL = Dragline; HW = Highwall; TSL = Truck and Shovel/ Loader |
(2) | Utilizing third-party loadout |
(3) | Including waste-fuel |
(4) | Currently utilizing one circuit |
(5) | Mine permitted but undeveloped |
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(6) | Represents Anker’s 50% share in The Sycamore Group LLC joint venture plus the Sycamore No. 2 mine, expected to begin production in 2005 |
(7) | Undeveloped, permit in progress |
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ICG Knott County, LLC |
ICG East Kentucky, LLC |
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Vindex Energy Corporation |
Patriot Mining Company |
Spruce Fork Division — Anker West Virginia Mining Company |
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Sycamore Group |
Philippi Development Division — Anker West Virginia Mining Company |
New Appalachian Mine Developments |
Hillman Property |
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Upshur Property |
Big Creek Property |
Bay Hill Property |
Juliana Complex |
Jennie Creek Property |
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96
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97
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98
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99
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Clean Air Mercury Rule |
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Carbon Dioxide |
Regional Haze |
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• | non-United States persons; | |
• | holders who may be subject to special tax treatment, such as dealers in securities or currencies, financial institutions, tax-exempt entities, traders in securities that elect to use a mark-to-market method of accounting for their securities holdings or insurance companies; | |
• | holders who acquired their ICG common shares pursuant to the exercise of employee stock options or warrants or otherwise as compensation; | |
• | persons holding ICG common shares as part of a hedge, constructive sale, integrated or conversion transaction or a straddle; | |
• | holders of outstanding warrants or options to acquire ICG common shares; or | |
• | holders whose “functional currency” is not the United States dollar. |
• | a citizen or resident of the United States; | |
• | a corporation, or a partnership or other entity that is treated as a corporation, created or organized under the laws of the United States or any political subdivision of the United States; | |
• | an estate the income of which is subject to United States federal income taxation regardless of its source; or |
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• | a trust if (1) it is subject to the primary supervision of a court within the United States and one or more United States persons have the authority to control all substantial decisions of the trust or (2) it has a valid election in effect under applicable United States Treasury regulations to be treated as a United States person. |
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• | NOT have voted in favor of the Anker business combination agreement or have voted AGAINST the Anker business combination agreement or ABSTAINED if voting by proxy; | |
• | file written notice with ICG of an intention to exercise rights of appraisal of its shares within 20 days of the date of mailing of a notice of the written consent approving the Anker business combination agreement; and | |
• | follow the procedures set forth in Section 262. |
• | the reorganization is abandoned; | |
• | the dissenting shareholder fails to make a timely written demand for appraisal; | |
• | neither International Coal Group, nor the shareholder files a complaint or petition in the Delaware Court of Chancery demanding a determination of the value of the stock within 120 days after the effective date of the reorganization; or | |
• | the shareholder delivers to International Coal Group, within 60 days of the effective date of the reorganization, or thereafter with the approval of International Coal Group, a written withdrawal of the shareholder’s demand for appraisal of the dissenting shares, although no appraisal proceeding in the Delaware Court of Chancery may be dismissed as to any shareholder without the approval of the court. |
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• | corporate organization and similar corporate matters; | |
• | capitalization; | |
• | authorization, execution, delivery, performance and enforceability of, and required consents, approvals, orders and authorizations of governmental entities relating to, the Anker business combination agreement and related matters; | |
• | compliance with applicable laws; | |
• | legal proceedings; | |
• | title, ownership and use of personal, including intellectual property, and real property; | |
• | certain material contracts; | |
• | operational and non-operational permits and licenses with governmental authorities; | |
• | matters relating to labor relations and employee benefits; | |
• | payment of brokerage and finders fees or commissions; | |
• | environmental matters; | |
• | financial statements and absence of material liabilities since December 31, 2004; | |
• | insurance; | |
• | affiliate transactions; |
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• | filing of tax returns, payment of taxes and other tax matters; and | |
• | indebtedness and distributions. |
• | adopt or propose any change in its certificate of incorporation, bylaws or other constituent documents; | |
• | merge or consolidate with any other person or acquire a material amount of assets from any other person; | |
• | sell, lease, license or otherwise dispose of any assets or property with a value in excess of $25,000 except (i) pursuant to existing contracts or commitments or (ii) otherwise in the ordinary course consistent with past practice; | |
• | pay or undertake to pay any increase in salaries or other compensation of, or to pay any bonuses to, any director or officer, or, except in the ordinary course of business consistent with past practice, any employee, or enter into any employment, severance or similar agreement with any director, officer or employee; | |
• | adopt or increase any benefits under any profit sharing, bonus or deferred compensation, savings, insurance, pension, retirement or other employee plan for or with any of its employees; | |
• | incur, assume or guarantee any indebtedness, except for indebtedness incurred, assumed or guaranteed in the ordinary course of business consistent (with respect to amount and other terms) with past practice; | |
• | cancel any material debt or claim owed to it or its subsidiaries or waive any right of material value owned by it or its subsidiaries; | |
• | repurchase, redeem or otherwise acquire directly or indirectly, any of the outstanding common shares of it or other securities of, or other ownership interests in, it or its subsidiaries; | |
• | make any change in accounting methods or practices, except as required by law or generally accepted accounting principles; | |
• | issue or sell any additional shares or other equity interests or make any other changes in its capital structure, except (i) grants or issuances of options or stock pursuant to agreements in effect on the date of the agreement or (ii) pursuant to the exercise of options or stock-based awards of that party or its subsidiaries, in each case, outstanding as of the date of the agreement or issued thereafter in compliance with the agreement; | |
• | write off as uncollectible any notes or accounts receivable, except write-offs in the ordinary course of business charged to applicable reserves, none of which individually or in the aggregate is material, or alter customary time periods for collection of accounts receivable or payments of accounts payable; | |
• | permit to be incurred any lien (other than a permitted lien) on any of its real property or real property interests or, except in the ordinary course of business consistent with past practice, on any of its personal property; |
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• | make any loan, advance or capital contributions to or investment in any person other than a wholly owned subsidiary in an aggregate amount in excess of $25,000; | |
• | enter into any warranty, guaranty or other similar undertaking with respect to a contractual performance extended by that party or any of its subsidiaries other than in the ordinary course of business consistent with past practice; | |
• | modify, terminate or enter into any contracts or commitments with respect to which the aggregate amount that could reasonably be expected to be paid or received thereunder exceeds $25,000 individually or $100,000 in the aggregate, except contracts and commitments (for capital expenditures or otherwise) in the ordinary course of business and not knowingly inconsistent with that party’s business and operating plan and budget as in effect on the date hereof; | |
• | take any action that could reasonably be expected to have a material adverse effect on that party; | |
• | modify or amend any lease or cause or permit any lien to exist on any real property owned, leased or occupied by it that is not a permitted lien; or | |
• | agree or commit to do any of the foregoing. |
• | take all actions necessary or desirable under applicable laws and regulations to consummate the transactions contemplated by the Anker business combination agreement; | |
• | obtain any consents, approvals or waivers under any contracts of those parties; and | |
• | take actions or make filings to obtain, and cooperate with the other party to obtain, the consent, approval or waiver of any governmental authority required to consummate the transactions contemplated by the Anker business combination agreement. |
• | no order, injunction or decree preventing the completion of the mergers being in effect, and no laws having been enacted or promulgated by any governmental authority having the effect of prohibiting the mergers or making them illegal; and | |
• | delivery of certificates of merger and other customary closing documents. |
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• | By mutual written consent of ICG and Anker; | |
• | By Anker or ICG after April 15, 2006, if the mergers have not been completed by that date, as long as the party terminating the agreement is not in default under the agreement; | |
• | As long as the terminating party is not otherwise in default or breach of the agreement, and has not failed or refused to close without justification, by ICG or Anker, without prejudice to other rights and remedies that the terminating party may have, if any other party (i) has materially failed to perform its covenants or agreements required to be performed on or prior to the completion of the mergers or (ii) has materially breached any of its representations or warranties in the agreement; except that the defaulting party will have 20 business days following written notice from a non-defaulting party to cure any breach, if it is curable; | |
• | By ICG or Anker, if (A) any competent governmental authority has issued an order that has become final and nonappealable or (B) any law is in effect, in either case restricting, restraining or altering in a material manner or enjoining or otherwise prohibiting or making illegal the effectuation of the transactions contemplated by the agreement; or | |
• | By ICG or Anker, if the CoalQuest business combination agreement is terminated. |
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• | prior to such time, the board of directors of the corporation approved either the business combination or the transaction which resulted in the stockholder becoming an interested stockholder; | |
• | upon consummation of the transaction that resulted in the stockholder becoming an interested stockholder, the interested stockholder owned at least 85% of the voting stock of the corporation outstanding at the time the transaction commenced, excluding specified shares; or | |
• | at or subsequent to such time, the business combination is approved by the board of directors and authorized at an annual or special meeting of stockholders, and not by written consent, by the affirmative vote of at least 662/3% of the outstanding voting stock that is not owned by the interested stockholder. |
• | any merger or consolidation involving the corporation and the interested stockholder; | |
• | any sale, lease, exchange, mortgage, pledge, transfer or other disposition of 10% or more of the assets of the corporation to or with the interested stockholder; | |
• | subject to certain exceptions, any transaction which results in the issuance or transfer by the corporation of any stock of the corporation to the interested stockholder; | |
• | any transaction involving the corporation which has the effect of increasing the proportionate share of the stock of any class or series of the corporation beneficially owned by the interested stockholder; or | |
• | the receipt by the interested stockholder of the benefit of any loans, advances, guarantees, pledges or other financial benefits provided by or through the corporation. |
• | the owner of 15% or more of the outstanding voting stock of the corporation; | |
• | an affiliate or associate of the corporation and was the owner of 15% or more of the outstanding voting stock of the corporation at any time within three years immediately prior to the relevant date; and | |
• | the affiliates and associates of the above. |
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Stockholder Action; Special Meetings |
Stockholder Proposals |
• | be a stockholder of record at the time of the giving of the notice for the meeting; | |
• | be entitled to vote at the meeting; and | |
• | have given timely written notice of the business to our secretary. |
• | a description in reasonable detail of the business proposed to be brought before the meeting and the reasons for conducting such business at the meeting; | |
• | the name and address of the stockholder proposing such business and of the beneficial owner, if any, on whose behalf the proposal is made; |
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• | the class and series and number of shares that are owned of record and beneficially by the stockholder proposing the business and by the beneficial owner, if any, on whose behalf the proposal is made; | |
• | a description of all arrangements or understandings among the stockholder, the beneficial owner on whose behalf the proposal is made, if any, and any other person or persons (including their names) in connection with the proposal of such business by the stockholders and any material interest of the stockholder in such business; | |
• | whether such stockholder or beneficial owner intends to deliver a proxy statement and forms of proxy to holders of at least the percentage of shares of our voting stock required to approve such proposal; and | |
• | a representation that the stockholder intends to appear in person or by proxy at the annual meeting to bring such business before the meeting. |
Nomination of Candidates for Election to Our Board |
• | the name and address of the stockholder giving the notice and of the beneficial owner, if any, on whose behalf the nomination is made; | |
• | a representation that the stockholder giving the notice is a holder of record of shares of our voting stock entitled to vote at such annual meeting and intends to appear in person or by proxy at the annual meeting to nominate the person or persons specified in the notice; | |
• | the class and series and number of shares of stock owned beneficially and of record by the stockholder giving the notice and by the beneficial owner, if any, on whose behalf the nomination in made; | |
• | a description of all arrangements or understandings between or among any of: |
• | the stockholder giving the notice; |
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• | the beneficial owner on whose behalf the notice is given; | |
• | each nominee; and | |
• | any other person or persons (naming such person or persons) pursuant to which the nomination or nominations are to be made by the stockholder giving the notice; |
• | the name, age, business address, residence address and occupation of the nominee proposed by the stockholder; | |
• | such other information regarding each nominee proposed by the stockholder giving the notice as would be required to be included in a proxy statement filed pursuant to the proxy rules of the SEC had the nominee been nominated, or intended to be nominated, by our board; | |
• | the signed consent of each nominee to serve as a director on our board if so elected; and | |
• | whether such stockholder or beneficial owner intends to deliver a proxy statement and form of proxy to holders of at least the percentage of shares of our voting stock required to elect such nominee or nominees. In addition, a stockholder must also comply with all applicable requirements of the Exchange Act and the rules and regulations thereunder with respect to matters relating to nomination of candidates for directors. |
Amendment to Our Bylaws |
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ICG | International Coal Group | |||||||||
Article/ | Summary Comparison | Article/ | Summary Comparison | |||||||
Section | Section | |||||||||
Nos. | Nos. | |||||||||
Authorized Capital Stock | ||||||||||
Art. IV Sec. 1- | 2.0 billion shares authorized; 1.8 billion of common stock; 200 million of preferred stock | Art. IV, Sec. 1 | 2.2 billion shares authorized; 2.0 billion of common stock; 200 million of preferred stock | |||||||
Preemptive Rights | ||||||||||
Art. IV, Sec. 4 | Grants preemptive rights to founding shareholders | No comparable provision | ||||||||
Transfer Restriction | ||||||||||
Art. IV, Sec. 5 | Creates restrictions on transfer based on the number of record holders of common stock | No comparable provision | ||||||||
Drag-Along Rights | ||||||||||
Art. IV Sec. 6 | Grants drag-along rights to shareholders holding no less than2/3 of the stock to force other shareholders to sell shares in a transaction | No comparable provision | ||||||||
Super Majority Voting Provisions | ||||||||||
Art. VI, Sec. 1 | Grants veto right to WLR and a Majority in Interest with regard to certain corporate actions | No comparable provision | ||||||||
Art. VI Sec. 2 | Grants veto right to the Board and the Founding Shareholders with regard to certain corporate actions | No comparable provision | ||||||||
Art. VI Sec. 3 | Grants veto right to the Board, a Majority in Interest and WLR with respect to certain corporate actions | No comparable provision | ||||||||
Amendment to Bylaws | ||||||||||
No comparable provision | Art. V | Provides that the Board may amend bylaws; holders of at least 80% of voting stock may also amend the bylaws | ||||||||
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ICG | International Coal Group | |||||||||
Article/ | Summary Comparison | Article/ | Summary Comparison | |||||||
Section | Section | |||||||||
Nos. | Nos. | |||||||||
Classified Board | ||||||||||
No comparable provision | Art. VII, Sec. 1 | Provides for the creation of a classified Board consisting of three classes of directors divided as equally as possible with the first class to come up for election at the annual meeting in 2006, the second in 2007 and the third in 2008 | ||||||||
Shareholder Director Nominations | ||||||||||
No comparable provision | Art. VII, Sec. 2 | Requires advance notice to International Coal Group of director nominations by shareholders | ||||||||
Removal of Directors | ||||||||||
No comparable provision | Art. VI, Sec. 3 | Provides for removal of directors for cause | ||||||||
Certain Amendments | ||||||||||
No comparable provision | Art. VII, Sec. 4 | Provides that 80% of voting stock must approve any amendment to Article VII | ||||||||
Amendment to Charter | ||||||||||
Art. IX | Allows amendments to charter only with consent of WLR and a Majority in Interest plus the affirmative vote of a majority of capital stock | Art. XII | International Coal Group has the right to amend the Charter pursuant to the DGCL | |||||||
Information Rights | ||||||||||
Art. XI, Sec. 1 | Grants information rights to shareholders | No comparable provision | ||||||||
Confidentiality | ||||||||||
Art. XI, Sec. 2 | Provides confidentiality agreement between founding shareholders and ICG | No comparable provision | ||||||||
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Stock Price | Average | |||||||||||
Daily | ||||||||||||
High | Low | Volume(1) | ||||||||||
November 15, 2004 through December 31, 2004(2) | $ | 14.50 | $ | 7.63 | 673,493 | |||||||
January 1, 2005 through March 31, 2005 | $ | 15.00 | $ | 12.13 | 224,952 | |||||||
April 1, 2005 through June 30, 2005 | $ | 15.00 | $ | 12.00 | 99,629 | |||||||
July 1, 2005 through September 23, 2005 | $ | 16.00 | $ | 12.00 | 224,566 |
(1) | Does not include days on which there were no quotes for the shares of the ICG common stock. |
(2) | Quotes for the shares of ICG common stock were not reported prior to November 15, 2004. |
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Name | Age | Position(s) | ||
Wilbur L. Ross, Jr. | 67 | Non-Executive Chairman and Director | ||
Bennett K. Hatfield | 48 | President, Chief Executive Officer and Director | ||
William D. Campbell | 57 | Vice President, Treasurer and Secretary | ||
Roger L. Nicholson | 45 | Senior Vice President and General Counsel | ||
Samuel R. Kitts | 43 | Senior Vice President, West Virginia and Maryland Operations | ||
William Scott Perkins | 50 | Senior Vice President, Kentucky and Illinois Operations | ||
Phillip Michael Hardesty | 42 | Senior Vice President, Sales and Marketing | ||
Oren Eugene Kitts | 50 | Senior Vice President, Mining Services | ||
Charles G. Snavely | 49 | Vice President, Planning and Acquisitions | ||
Jon R. Bauer | 49 | Director | ||
Cynthia B. Bezik | 52 | Director | ||
William J. Catacosinos | 75 | Director | ||
Marcia L. Page | 44 | Director | ||
Wendy L. Teramoto | 31 | Director |
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Cynthia B. Bezik — Director |
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William J. Catacosinos — Director |
Marcia L. Page — Director |
Wendy L. Teramoto — Director |
Classified Board of Directors |
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Number of Directors; Removal; Vacancies |
Audit Committee |
Compensation Committee |
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Nominating and Corporate Governance Committee |
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Annual Compensation | ||||||||||||||||||||
Other Annual | All Other | |||||||||||||||||||
Salary | Bonus | Compensation(1) | Compensation | |||||||||||||||||
Name and Principal Position | Year | ($) | ($) | ($) | ($) | |||||||||||||||
Bennett K. Hatfield, President and Chief Executive Officer(2) | 2004 | — | — | — | — | (3) | ||||||||||||||
George R. Desko, Chief Executive Officer(4) | 2004 | 450,000 | — | — | — | |||||||||||||||
Coy K. Lane, Senior Vice President of Operations(5) | 2004 | 300,000 | — | — | — | |||||||||||||||
William D. Campbell, Vice President and Treasurer(6) | 2004 | 265,000 | — | — | — | (3) | ||||||||||||||
William Scott Perkins, President— ICG Eastern(7) | 2004 | 200,000 | — | — | — | (3) | ||||||||||||||
James Ketron, Vice President and General Counsel(8) | 2004 | 190,000 | — | — | — | |||||||||||||||
Roger L. Nicholson, Senior Vice President and General Counsel(9) | 2004 | — | — | — | — | (3) | ||||||||||||||
Samuel R. Kitts, Senior Vice President, West Virginia and Maryland Operations(10) | 2004 | — | — | — | — | (3) |
(1) | Other annual compensation for fiscal 2005 has not been disclosed when the total value is less than the lesser of 10% of individual’s annual salary or $50,000. | |
(2) | Mr. Hatfield became our President and Chief Executive Officer in March 2005. For 2005, Mr. Hatfield will receive an annual salary of $500,000, and is entitled to certain other perquisites. For other information about his compensation, see “— Employment agreements” below. | |
(3) | Executives are entitled to the use of a company-owned vehicle. | |
(4) | Mr. Desko was ICG, Inc.’s Interim President and Chief Executive Officer from October 2004 until March 2005. | |
(5) | Mr. Lane was ICG, Inc.’s Senior Vice President of Operations until January 2005. | |
(6) | Mr. Campbell also became our Secretary in April 2005. | |
(7) | Mr. Perkins was ICG, Inc.’s Vice President, ICG Eastern until January 2005, when he became our Senior Vice President, Kentucky and Illinois. | |
(8) | Mr. Ketron was ICG, Inc.’s Vice President and General Counsel until February 2005. | |
(9) | Mr. Nicholson became our Senior Vice President and General Counsel in April 2005. For 2005, Mr. Nicholson will receive an annual salary of $260,000 and certain other perquisites, see “— Employment agreements” below. |
(10) | Mr. Kitts became our Senior Vice President, West Virginia and Maryland Operations in April 2005. For 2005, Mr. Kitts will receive an annual salary of $250,000. |
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2005 Equity and Performance Incentive Plan |
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Number of | ||||||||||||
Securities | ||||||||||||
Underlying | Restricted | Exercise Price | ||||||||||
Name | Options Granted(1) | Stock(1) | Per Share | |||||||||
William D. Campbell | 45,000 | 45,000 | (2) | |||||||||
Phillip Michael Hardesty | 40,000 | 40,000 | (2) | |||||||||
Bennett K. Hatfield | 319,052 | 206,250 | $ | 10.97 | ||||||||
Oren Eugene Kitts | 50,000 | 50,000 | (2) | |||||||||
Samuel R. Kitts | 50,000 | 50,000 | (2) | |||||||||
Roger L. Nicholson | 50,000 | 37,500 | (2) | |||||||||
William Scott Perkins | 50,000 | 50,000 | (2) | |||||||||
Charles G. Snavely | 40,000 | 40,000 | (2) |
(1) | All option and restricted share grants will be 25% vested upon grant, with the remaining vesting ratably over three years. |
(2) | To be priced at the price of the shares of common stock sold in the proposed public offering. |
Employment Agreements |
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• | each person who is known by ICG to own beneficially more than 5% its common shares; | |
• | each member of ICG’s board of directors and each of ICG’s named executive officers; and | |
• | all members of ICG’s board of directors and ICG’s executive officers as a group. |
International Coal Group | ||||||||||||
Shares Beneficially | ||||||||||||
Owned After the | ||||||||||||
ICG Shares Beneficially | Reorganization and the | |||||||||||
Owned Prior to the | Anker and CoalQuest | |||||||||||
Reorganization | Acquisitions | |||||||||||
Name and Address of Beneficial Owner | Number | Percent | Number | Percent | ||||||||
Värde Partners, Inc.(1) | 9,868,755 | 9.26 | % | 9,868,755 | 7.14 | % | ||||||
Värde Management, Inc. | ||||||||||||
Värde Management International, Inc. | ||||||||||||
Attn: Kathy Ricke 8500 Normandale Lake Boulevard Suite 1570 Minneapolis, MN 55347 | ||||||||||||
Contrarian Funds LLC(2) | 10,822,865 | 10.15 | % | 10,822,865 | 7.83 | % | ||||||
Attn: Michael J. Restifo 411 West Putnam Avenue, Suite 225 Greenwich, CT 06830 | ||||||||||||
WLR Recovery Fund II, L.P.(3) | 9,804,172 | 9.20 | % | 24,095,883 | 17.44 | % | ||||||
Attn: Wendy Teramoto 101 East 52nd Street, 19th Floor New York, NY 10022 | ||||||||||||
Shepherd International Coal Holdings, Ltd.(4) | 7,670,349 | 7.20 | % | 7,670,349 | 5.56 | % | ||||||
Attn: Colin M. Lancaster 3600 S. Lake Drive St. Francis, WI 53235 | ||||||||||||
Stark Trading(5) | 7,670,350 | 7.20 | % | 7,670,350 | 5.56 | % | ||||||
Attn: Colin M. Lancaster 3600 S. Lake Drive St. Francis, WI 53235 |
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International Coal Group | ||||||||||||
Shares Beneficially | ||||||||||||
Owned After the | ||||||||||||
ICG Shares Beneficially | Reorganization and the | |||||||||||
Owned Prior to the | Anker and CoalQuest | |||||||||||
Reorganization | Acquisitions | |||||||||||
Name and Address of Beneficial Owner | Number | Percent | Number | Percent | ||||||||
Third Point LLC(6) | 10,001,045 | 9.38 | % | 10,001,045 | 7.24 | % | ||||||
Attn: Lloyd Blumberg 360 Madison Ave, 24th Floor New York, NY 10017 | ||||||||||||
Wholesale Realtors Supply(7) | — | — | 7,425,345 | 5.37 | % | |||||||
Attn: Gabriel Elias 509 Spring Avenue Elkins Park, PA 19027 | ||||||||||||
Wilbur L. Ross, Jr.(3) | 9,804,172 | 9.20 | % | 24,095,883 | 17.44 | % | ||||||
Bennett K. Hatfield(8) | 354,763 | * | 354,763 | * | ||||||||
William D. Campbell(8) | 56,250 | * | 56,250 | * | ||||||||
Philip Michael Hardesty(8) | 50,000 | * | 50,000 | * | ||||||||
Oren Eugene Kitts(8) | 62,500 | * | 62,500 | * | ||||||||
Samuel R. Kitts(8) | 62,500 | * | 62,500 | * | ||||||||
Roger L. Nicholson(8) | 62,500 | * | 62,500 | * | ||||||||
William Scott Perkins(8) | 62,500 | * | 62,500 | * | ||||||||
Charles G. Snavely | 50,000 | * | 50,000 | * | ||||||||
Jon R. Bauer(2) | 10,822,865 | 10.15 | % | 10,822,865 | 7.83 | % | ||||||
George R. Desko(9) | — | — | 2,862,887 | 2.07 | % | |||||||
Marcia L. Page(1) | 9,868,755 | 9.26 | % | 9,868,755 | 7.14 | % | ||||||
All directors and executive officers as a group(1)(2)(3)(8)(14 persons) | 31,206,805 | 29.08 | % | 48,361,402 | 35.0 | % |
* | Less than 1% |
(1) | Represents 9,868,755 shares of common stock held of record by Värde Coal Inc. All of these shares are controlled by Värde Partners, Inc., Värde Management, Inc. or Värde Management International, Inc., which are controlled by Ms. Page, Gregory S. McMillan and George G. Hicks. Ms. Page and Messrs. McMillan and Hicks are (i) the principals, directors and managing partners of Värde Partners, Inc. and (ii) the principals, directors and vice president of Värde Management, Inc. and Värde Management International, Inc. To the extent Ms. Page is deemed to beneficially own these shares as a result of her position as a principal director or managing partner or vice president of Värde Partners, Inc. Värde Management |
(2) | Represents 10,822,865 shares of common stock held of record by investment management clients of Contrarian Capital Management LLC. Mr. Bauer serves as the Managing Member of Contrarian Capital Management LLC. To the extent Mr. Bauer is deemed to beneficially own these shares as a result of his position as the Managing Member of Contrarian Capital Management LLC, Mr. Bauer disclaims beneficial ownership of these shares. |
(3) | Represents 9,804,172 common shares held of record by WLR Recovery Fund II, L.P. WL Ross & Co. LLC manages WLR Recovery Fund, II, L.P. Mr. Ross serves as a principal of WL Ross & Co. LLC, which manages WLR Recovery Fund II, L.P. To the extent Mr. Ross is deemed to beneficially own these shares as a result of his position as a principal of WL Ross & Co. LLC, Mr. Ross disclaims beneficial ownership of these shares. Also represents 9,804,172 common shares held by WLR Recovery Fund II, L.P., 8,450,276 shares to be received as merger consideration for Anker common shares owned by WLR Recovery Fund, L.P. and WLR Recovery Fund II, L.P. and 5,841,435 shares to be received as merger consideration for membership interests in CoalQuest owned by WLR CoalQuest Holding Corp, which is wholly owned by WLR Recovery Fund II, L.P. WL Ross & Co. LLC manages WLR Recovery Fund II, L.P. and WLR Recovery Fund, L.P. Mr. Ross serves as a principal of WL Ross & Co. LLC, which manages WLR Recovery Fund II, L.P. To the extent Mr. Ross is deemed to beneficially own these shares as a result of his position as a principal of WL Ross & Co. LLC, Mr. Ross disclaims beneficial ownership of these shares. |
(4) | Michael A. Roth and Brian J. Stark are the Managing Members of Stark Onshore Management, LLC which acts as the Managing General Partner and has the sole dispositive power to direct the management of Stark Trading. |
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(5) | Michael A. Roth and Brian J. Stark are the Managing Members of Stark Offshore Management, LLC, which acts as the Investment Manager of Shepherd Investments International, Ltd., the sole Shareholder of Shepherd International Coal Holdings, Ltd. The Investment Manager has the sole dispositive power to direct the management of Shepherd International Coal Holdings, Ltd. |
(6) | Represents 60,000 shares of common stock beneficially owned or held of record by Third Point Partners Qualified L.P., 1,783,119 shares of common stock beneficially owned or held of record by Third Point Partners L.P., 5,355,418 shares of common stock beneficially owned or held of record by Third Point Offshore Fund, Ltd., 811,561 shares of common stock held of record by Third Point Ultra Ltd., 278,458 shares of common stock beneficially owned or held of record by Third Point Resources LP, 409,397 shares of common stock beneficially owned or held of record by Bonzai Offshore Fund, Ltd., 912,000 shares of common stock beneficially owned or held of record by Lyxor/ Third Point Fund Ltd. and 390,192 shares of common stock held of record by Third Point Loan LLC. All of these shares are controlled by Third Point LLC, which serves as investment manager or advisor to these accounts, which in turn is controlled by Daniel S. Loeb. Mr. Loeb is the managing member of Third Point LLC. To the extent Mr. Loeb is deemed to beneficially own these shares as a result of his position as the managing member of Third Point LLC, Mr. Loeb disclaims beneficial ownership of these shares. |
(7) | Represents 4,678,119 common shares to be received as merger consideration for shares held in Anker and 2,747,226 common shares to be received as merger consideration for membership interests in CoalQuest. |
(8) | Represents options to purchase shares of our common stock which are currently exercisable and all restricted shares granted to management. See “Management — Employee Benefit Plans” regarding vesting of the shares of restricted stock. |
(9) | Represents merger consideration for membership interests in CoalQuest owned by George and Janet Desko. |
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• | a maximum leverage ratio, set at 2.75 to 1.00 from the closing date of the credit facility through December 31, 2005 and decreasing to 2.50 to 1.00 for the 2006 fiscal year, and 2.25 to 1.00 from January 1, 2007 through the final maturity date of the credit facility; | |
• | a minimum interest coverage ratio set at 4.00 to 1.00 for each of the four consecutive quarters then last ended; and | |
• | a limit on capital expenditures for the 2005 fiscal year of $155.0 million (or $175.0 million upon the completion of the proposed public offering), for the 2006 fiscal year of $180.0 million (or $200.0 million upon the completion of the proposed public offering), for the 2007 fiscal year of $255.0 million (or $350.0 million upon completion of the proposed public offering), for the 2008 fiscal year of $125.0 million (or $315.0 million upon the completion of the proposed public offering), for the 2009 fiscal year of $75.0 million (or $125.0 million upon the completion of the proposed public offering) and from January 1, 2010 through the final maturity date of the credit facility of $85.0 million (or $125.0 million upon the completion of the proposed public offering). | |
• | provided for the consent by our lenders under the credit facility to the consummation of the Anker and CoalQuest acquisitions and to the corporate reorganization of ICG and certain of its subsidiaries; | |
• | increased the amount of our term loan facility by an additional $35.0 million which, upon consummation of the Anker and CoalQuest acquisitions, will bring the total outstanding amount of this term loan facility to $210.0 million; | |
• | increased the sublimit of our revolving credit facility that is available for the issuance of letters of credit from $60.0 million to $75.0 million; | |
• | permits us to make certain cash dividends, upon the completion of the proposed public offering in an amount not to exceed $40.0 million in any fiscal year; | |
• | eliminated the minimum fixed charge coverage ratio; | |
• | modify the limit on capital expenditures as detailed above; | |
• | allow us to increase the amount of our revolving credit facility at a later date by an additional $190.0 million to $300.0 million, without lender approval at the time of the requested increase; and | |
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• | allow us to increase the amount of our term loans at a later date by an additional $50.0 million, without lender approval at the time of the requested increase. |
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142
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143
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144
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145
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146
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Page | ||||
ICG, Inc. and Subsidiaries | ||||
Interim Condensed Consolidated Financial Statements (unaudited) | ||||
F-3 | ||||
F-4 | ||||
F-5 | ||||
F-6 | ||||
F-7 | ||||
Consolidated Financial Statements | ||||
F-15 | ||||
F-16 | ||||
F-17 | ||||
F-18 | ||||
F-19 | ||||
F-20 | ||||
Horizon NR, LLC and Certain Subsidiaries (Predecessor to ICG, Inc.) | ||||
F-37 | ||||
F-39 | ||||
F-40 | ||||
F-41 | ||||
F-42 | ||||
F-43 |
F-1
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Page | ||||
Anker Coal Group, Inc. | ||||
F-72 | ||||
F-73 | ||||
F-74 | ||||
F-75 | ||||
F-76 | ||||
F-77 | ||||
CoalQuest Development, LLC | ||||
F-86 | ||||
F-87 | ||||
F-88 | ||||
F-89 | ||||
F-90 | ||||
F-91 |
F-2
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June 30, 2005 | ||||||
ASSETS | ||||||
CURRENT ASSETS: | ||||||
Cash and cash equivalents | $ | 12,692 | ||||
Trade accounts receivable | 47,696 | |||||
Inventories | 21,886 | |||||
Deferred income taxes | 1,741 | |||||
Prepaid insurance | 2,430 | |||||
Prepaid expenses and other | 9,360 | |||||
Total current assets | 95,805 | |||||
PROPERTY, PLANT AND EQUIPMENT, net | 182,009 | |||||
DEBT ISSUANCE COSTS, net | 7,437 | |||||
ADVANCE ROYALTIES | 5,240 | |||||
GOODWILL | 184,999 | |||||
DEFERRED INCOME TAXES, NON-CURRENT | 5,300 | |||||
OTHER NON-CURRENT ASSETS | 8,969 | |||||
Total assets | $ | 489,759 | ||||
LIABILITIES AND STOCKHOLDERS’ EQUITY | ||||||
CURRENT LIABILITIES: | ||||||
Trade accounts payable | $ | 30,297 | ||||
Current portion of long-term debt and capital leases | 3,167 | |||||
Current portion of reclamation and mine closure costs | 2,682 | |||||
Accrued expenses and other | 37,598 | |||||
Total current liabilities | 73,744 | |||||
NON-CURRENT LIABILITIES, Less current portion | ||||||
Long-term debt and capital leases | 172,376 | |||||
Reclamation and mine closure costs | 39,825 | |||||
Long-term employee benefits | 19,841 | |||||
Other non-current liabilities | 6,970 | |||||
Total non-current liabilities | 239,012 | |||||
Total liabilities | 312,756 | |||||
COMMITMENTS AND CONTINGENCIES | ||||||
STOCKHOLDERS’ EQUITY | ||||||
Preferred stock — par value $0.0001, 200,000,000 shares authorized, none issued | — | |||||
Common stock — par value $0.0001, 1,800,000,000 shares authorized, 107,205,999 issued and outstanding | 11 | |||||
Additional paid-in capital | 158,436 | |||||
Unearned compensation — restricted stock | (5,642 | ) | ||||
Retained Earnings | 24,198 | |||||
Total stockholders’ equity | 177,003 | |||||
Total liabilities and stockholders’ equity | $ | 489,759 | ||||
F-3
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Six Months Ended | ||||||||||
June 30, | ||||||||||
Horizon | ||||||||||
Companies | ||||||||||
(Predecessor) | ||||||||||
2005 | 2004 | |||||||||
REVENUES | ||||||||||
Coal sales revenues | $ | 289,763 | $ | 233,307 | ||||||
Freight and handling revenues | 4,384 | 3,005 | ||||||||
Other revenues | 13,117 | 15,491 | ||||||||
Total revenues | 307,264 | 251,803 | ||||||||
COSTS AND EXPENSES: | ||||||||||
Freight and handling costs | 4,384 | 3,005 | ||||||||
Cost of coal sales and other revenues (exclusive of items shown separately below) | 234,261 | 201,628 | ||||||||
Depreciation, depletion and amortization | 18,307 | 19,003 | ||||||||
Selling, general and administrative (exclusive of depreciation and amortization shown separately above) | 13,941 | 4,819 | ||||||||
Writedowns and special items | — | 10,518 | ||||||||
(Gain) loss on sale of assets | 43 | (240 | ) | |||||||
Total costs and expenses | 270,936 | 238,733 | ||||||||
Income from operations | 36,328 | 13,070 | ||||||||
INTEREST AND OTHER INCOME (EXPENSE): | ||||||||||
Interest expense | (6,784 | ) | (75,723 | ) | ||||||
Reorganization items | — | (8,374 | ) | |||||||
Other, net | 1,625 | 571 | ||||||||
Total interest and other income (expense) | (5,159 | ) | (83,526 | ) | ||||||
Income (loss) before income tax expense | 31,169 | (70,456 | ) | |||||||
INCOME TAX EXPENSE | (11,220 | ) | — | |||||||
Net income (loss) | $ | 19,949 | $ | (70,456 | ) | |||||
Earnings per share: | ||||||||||
Basic | 0.19 | — | ||||||||
Diluted | 0.19 | — | ||||||||
Average common shares outstanding: | ||||||||||
Basic | 107,205,999 | — | ||||||||
Diluted | 107,255,820 | — |
F-4
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�� | |||||||||||||||||||||
For the Period January 1, 2005 to June 30, 2005 | |||||||||||||||||||||
Unearned | |||||||||||||||||||||
Additional | Compensation- | ||||||||||||||||||||
Common | Paid-in | restricted | Retained | ||||||||||||||||||
Stock | Capital | stock | Earnings | Total | |||||||||||||||||
Balance — December 31, 2004 | $ | 11 | $ | 150,140 | — | $ | 4,249 | $ | 154,400 | ||||||||||||
Net income for the period | — | — | — | 19,949 | 19,949 | ||||||||||||||||
Issuance of restricted stock and stock awards | — | 8,090 | (8,090 | ) | — | — | |||||||||||||||
Compensation expense-restricted stock | — | — | 2,448 | — | 2,448 | ||||||||||||||||
Compensation expense-stock options | 206 | 206 | |||||||||||||||||||
Balance — June 30, 2005 expense | $ | 11 | $ | 158,436 | $ | (5,642 | ) | $ | 24,198 | $ | 177,003 | ||||||||||
F-5
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Horizon | |||||||||||
Companies | |||||||||||
(Predecessor) | |||||||||||
Period from | Period from | ||||||||||
January 1, 2005 to | January 1, 2004 to | ||||||||||
June 30, 2005 | June 30, 2004 | ||||||||||
CASH FLOWS FROM OPERATING ACTIVITIES: | |||||||||||
Net income (loss) | $ | 19,949 | $ | (70,456 | ) | ||||||
Adjustments to reconcile net income (loss) to net cash provided by operating activities: | |||||||||||
Depreciation, depletion and amortization | 18,307 | 19,003 | |||||||||
Stock compensation | 2,654 | ||||||||||
Amortization of finance costs included in interest expense | 548 | 1,437 | |||||||||
(Gain) loss on sale of assets | 43 | (240 | ) | ||||||||
Deferred income taxes | 2,888 | — | |||||||||
Gain on lease buyout options | — | (7,736 | ) | ||||||||
Writedowns and special items | — | 18,254 | |||||||||
Changes in assets and liabilities: | |||||||||||
(Increase) decrease in: | |||||||||||
Receivables | (7,279 | ) | (3,899 | ) | |||||||
Inventories | (7,943 | ) | (3,117 | ) | |||||||
Prepaid expenses | 1,250 | 6,105 | |||||||||
Other assets | (3,495 | ) | 660 | ||||||||
Increase (decrease) in: | |||||||||||
Accounts payable | 9,047 | 9,192 | |||||||||
Accrued expenses | 3,744 | 69,423 | |||||||||
Accrued income tax | (2,232 | ) | — | ||||||||
Reclamation and mine closure costs | (791 | ) | (3,497 | ) | |||||||
Other liabilities | 1,338 | 676 | |||||||||
Total adjustments | 18,079 | 106,261 | |||||||||
Net cash provided by operating activities | 38,028 | 35,805 | |||||||||
CASH FLOWS FROM INVESTING ACTIVITIES: | |||||||||||
Proceeds from the sale of assets | — | 4,077 | |||||||||
Proceeds on lease buyout option | — | 7,736 | |||||||||
Additions to property, plant and equipment and mine development | (43,224 | ) | (3,471 | ) | |||||||
Deposits to restricted cash | (2,034 | ) | (1,511 | ) | |||||||
Net cash provided by (used in) investing activities | (45,258 | ) | 6,831 | ||||||||
CASH FLOWS FROM FINANCING ACTIVITIES: | |||||||||||
Repayments on long-term debt | (3,548 | ) | (4,787 | ) | |||||||
Net (repayments) on revolving line of credit | — | (37,056 | ) | ||||||||
Deferred finance costs | (120 | ) | — | ||||||||
Repayments on capital leases | (377 | ) | (417 | ) | |||||||
Net cash (used in) financing activities | (4,045 | ) | (42,260 | ) | |||||||
Net increase (decrease) in cash and cash equivalents | (11,275 | ) | 376 | ||||||||
Cash and cash equivalents, beginning of period | 23,967 | 859 | |||||||||
Cash and cash equivalents, end of period | $ | 12,692 | $ | 1,235 | |||||||
Supplemental information: | |||||||||||
Cash paid for interest | $ | 5,582 | $ | 6,529 | |||||||
Cash paid for income taxes | $ | 12,000 | $ | — | |||||||
F-6
Table of Contents
1. | Basis of Presentation |
2. | Goodwill |
F-7
Table of Contents
3. | Inventories |
Coal | $ | 11,194 | ||
Parts and supplies, net of a reserve for obsolescence of $305 | 10,692 | |||
$ | 21,886 | |||
4. | Property, Plant and Equipment |
Land and land improvements | $ | 17,617 | ||
Mining and other equipment and related facilities | 102,448 | |||
Mine development and contract costs | 17,669 | |||
Coal lands | 53,031 | |||
Mine development in process | 683 | |||
Construction work in process | 16,801 | |||
208,249 | ||||
Less-accumulated depreciation, depletion and amortization | (26,240 | ) | ||
Net property, plant and equipment | $ | 182,009 | ||
5. | Accrued Expenses and Other |
Payroll, bonus and vacation expense | $ | 21,110 | ||
Sales and use tax | 202 | |||
Severance tax | 1,692 | |||
Federal reclamation tax | 866 | |||
Excise/black lung tax | 374 | |||
Personal property tax | 4,753 | |||
Franchise tax | 144 | |||
Other | 8,457 | |||
Total | $ | 37,598 | ||
6. | Debt |
F-8
Table of Contents
7. | Income Taxes |
Current: | |||||
Federal | $ | 7,027 | |||
State | 1,305 | ||||
8,332 | |||||
Deferred | 2,888 | ||||
Total | $ | 11,220 | |||
8. | Employee Benefits |
Postretirement benefits | $ | 8,706 | |||
Black lung benefits | 11,135 | ||||
Total | 19,841 | ||||
Less—current portion | — | ||||
Long-term portion | $ | 19,841 | |||
June 30, 2005 | June 30, 2004 | |||||||
Service cost | $ | 452 | $ | 532 | ||||
Interest cost | 234 | 459 | ||||||
Benefit cost | $ | 686 | $ | 991 | ||||
June 30, 2005 | June 30, 2004 | |||||||
Service cost | $ | 843 | $ | 700 | ||||
Interest cost | 312 | 131 | ||||||
Benefit cost | $ | 1,155 | $ | 831 | ||||
9. | EMPLOYEE STOCK PLANS |
F-9
Table of Contents
June 30, 2005 | |||||
Net earnings, as reported | $ | 19,949 | |||
Add back compensation related to stock awards included in earnings net of tax effects | 1,645 | ||||
Deduct effect of stock-based employee compensation, net of tax effects: | |||||
Stock option awards | (395 | ) | |||
Restricted stock awards | (853 | ) | |||
Stock awards | (664 | ) | |||
Pro forma net earnings | $ | 19,682 | |||
Earnings per share, as reported: | |||||
Basic | $ | 0.19 | |||
Diluted | $ | 0.19 | |||
Pro forma net earnings per share: | |||||
Basic | $ | 0.18 | |||
Diluted | $ | 0.18 | |||
F-10
Table of Contents
10. | Commitments and Contingencies |
F-11
Table of Contents
Operating | Capital | |||||||||||
Royalties | Leases | Leases | ||||||||||
Year ended December 31, | ||||||||||||
2005 (July 1 to December 31, 2005) | $ | 6,149 | $ | 6,104 | $ | 176 | ||||||
2006 | 6,149 | 8,991 | 170 | |||||||||
2007 | 5,140 | 3,097 | — | |||||||||
2008 | 4,990 | 21 | — | |||||||||
2009 | 4,996 | 2 | — | |||||||||
Thereafter | 18,850 | — | — | |||||||||
Total minimum lease payments | $ | 46,274 | $ | 18,215 | 346 | |||||||
Less—amount representing interest | 12 | |||||||||||
Present value of minimum lease payments | 334 | |||||||||||
Less—current portion | 334 | |||||||||||
Total Long Term Portion of Capital Leases | $ | — | ||||||||||
F-12
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F-13
Table of Contents
Central | Illinois | |||||||||||||||||||
Appalachian | Basin | Ancillary | Eliminations | Consolidated | ||||||||||||||||
Revenue | $ | 215,459 | $ | 28,350 | $ | 64,017 | $ | (562 | ) | $ | 307,264 | |||||||||
EBITDA | 49,822 | 2,866 | 3,572 | — | 56,260 | |||||||||||||||
Depreciation, depletion and amortization | 11,315 | 2,076 | 4,916 | — | 18,307 | |||||||||||||||
Capital expenditures | 40,770 | 1,380 | 1,074 | — | 43,224 | |||||||||||||||
Total assets | 189,531 | 27,503 | 529,662 | (256,937 | ) | 489,759 |
Central | Illinois | |||||||||||||||||||
Appalachian | Basin | Ancillary | Eliminations | Consolidated | ||||||||||||||||
Revenue | $ | 169,879 | $ | 24,975 | $ | 57,759 | $ | (810 | ) | $ | 251,803 | |||||||||
EBITDA | 23,189 | 3,520 | (2,439 | ) | — | 24,270 | ||||||||||||||
Depreciation, depletion and amortization | 13,926 | 1,681 | 3,396 | — | 19,003 | |||||||||||||||
Capital expenditures | 1,404 | 817 | 1,250 | — | 3,471 | |||||||||||||||
Total assets | 312,385 | 90,277 | (225,639 | ) | 371,932 | 548,955 |
Six months | Six months | |||||||
ended | ended | |||||||
June 30, | June 30, | |||||||
2005 | 2004 | |||||||
EBITDA | $ | 56,260 | $ | 24,270 | ||||
Depreciation, depletion and amortization | (18,307 | ) | (19,003 | ) | ||||
Interest expense | (6,784 | ) | (75,723 | ) | ||||
Income (loss) before income tax expense (benefit) | $ | 31,169 | $ | (70,456 | ) | |||
F-14
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F-15
Table of Contents
December 31, | ||||||
2004 | ||||||
ASSETS | ||||||
CURRENT ASSETS: | ||||||
Cash and cash equivalents | $ | 23,967 | ||||
Trade accounts receivable | 40,417 | |||||
Inventories, net | 13,943 | |||||
Deferred income taxes | 2,188 | |||||
Prepaid insurance | 7,142 | |||||
Prepaid expenses and other | 5,899 | |||||
Total current assets | 93,556 | |||||
PROPERTY, PLANT AND EQUIPMENT, net | 157,136 | |||||
DEBT ISSUANCE COSTS, Net | 7,865 | |||||
ADVANCE ROYALTIES | 5,424 | |||||
GOODWILL | 183,946 | |||||
DEFERRED INCOME TAXES, NON-CURRENT | 7,741 | |||||
OTHER NON-CURRENT ASSETS | 4,307 | |||||
Total assets | $ | 459,975 | ||||
LIABILITIES AND STOCKHOLDERS’ EQUITY | ||||||
CURRENT LIABILITIES: | ||||||
Trade accounts payable | $ | 21,250 | ||||
Current portion of long-term debt and capital leases | 6,022 | |||||
Current portion of reclamation and mine closure costs | 2,682 | |||||
Accrued income tax | 2,232 | |||||
Accrued expenses and other | 33,854 | |||||
Total current liabilities | 66,040 | |||||
NON-CURRENT LIABILITIES, less current portion | ||||||
Long-term debt and capital leases | 173,446 | |||||
Reclamation and mine closure costs | 40,616 | |||||
Long-term employee benefits | 18,007 | |||||
Other non-current liabilities | 7,466 | |||||
Total non-current liabilities | 239,535 | |||||
Total liabilities | 305,575 | |||||
COMMITMENTS AND CONTINGENCIES | ||||||
STOCKHOLDERS’ EQUITY: | ||||||
Preferred stock-par value $0.0001, 200,000,000 shares authorized, none issued | — | |||||
Common stock-par value $0.0001, 1,800,000,000 shares authorized, 106,605,999 shares issued and outstanding | 11 | |||||
Additional paid-in capital | 150,140 | |||||
Retained earnings | 4,249 | |||||
Total stockholders’ equity | 154,400 | |||||
Total liabilities and stockholders’ equity | $ | 459,975 | ||||
F-16
Table of Contents
Period from | |||||||
May 13, 2004 | |||||||
inception to | |||||||
December 31, 2004 | |||||||
REVENUES | |||||||
Coal sales revenues | $ | 130,463 | |||||
Freight and handling revenues | 880 | ||||||
Other revenues | 4,766 | ||||||
Total revenues | 136,109 | ||||||
COSTS AND EXPENSES: | |||||||
Freight and handling costs | 880 | ||||||
Cost of coal sales and other revenues | 113,707 | ||||||
(exclusive of items shown separately below) | |||||||
Depreciation, depletion and amortization | 7,943 | ||||||
Selling, general and administrative | 4,194 | ||||||
(exclusive of depreciation and amortization shown separately above) | |||||||
Gain on sale of assets | (10 | ) | |||||
Total costs and expenses | 126,714 | ||||||
Income from operations | 9,395 | ||||||
INTEREST AND OTHER INCOME (EXPENSE): | |||||||
Interest expense | (3,453 | ) | |||||
Other, net | 898 | ||||||
Total interest and other income (expense) | (2,555 | ) | |||||
Income before income tax expense | 6,840 | ||||||
INCOME TAX EXPENSE | (2,591 | ) | |||||
Net income | $ | 4,249 | |||||
Earnings per share: | |||||||
Basic | 0.04 | ||||||
Diluted | 0.04 | ||||||
Average common shares outstanding: | |||||||
Basic | 106,605,999 | ||||||
Diluted | 106,605,999 |
F-17
Table of Contents
For the Period May 13, 2004 (inception) to | |||||||||||||||||
December 31, 2004 | |||||||||||||||||
Additional | |||||||||||||||||
Common | Paid-in | Retained | |||||||||||||||
Stock | Capital | Earnings | Total | ||||||||||||||
Capital Contribution | $ | 11 | $ | 150,140 | $ | 150,151 | |||||||||||
Net income for the period | — | — | $ | 4,249 | 4,249 | ||||||||||||
Balance — December 31, 2004 | $ | 11 | $ | 150,140 | $ | 4,249 | $ | 154,400 | |||||||||
F-18
Table of Contents
Period from | |||||||
May 13, 2004 | |||||||
(inception) | |||||||
to December 31, | |||||||
2004 | |||||||
CASH FLOWS FROM OPERATING ACTIVITIES: | |||||||
Net income | $ | 4,249 | |||||
Adjustments to reconcile net income to net cash provided by (used in) operating activities: | |||||||
Depreciation, depletion and amortization | 7,943 | ||||||
Amortization of finance costs included in interest expense | 266 | ||||||
(Gain) on sale of assets | (10 | ) | |||||
Deferred income taxes | 359 | ||||||
Changes in Assets and Liabilities: | |||||||
(Increase) decrease in: | |||||||
Receivables | 19,713 | ||||||
Inventories | 6,140 | ||||||
Prepaid expenses | (2,030 | ) | |||||
Other assets | (1,306 | ) | |||||
Deferred finance costs | (53 | ) | |||||
Increase (decrease) in: | |||||||
Accounts payable | (3,815 | ) | |||||
Accrued expenses | (1,527 | ) | |||||
Reclamation and mine closure costs | (591 | ) | |||||
Other liabilities | 873 | ||||||
Total adjustments | 25,962 | ||||||
Net cash provided by operating activities | 30,211 | ||||||
CASH FLOWS FROM INVESTING ACTIVITIES: | |||||||
Proceeds from the sale of assets | 10 | ||||||
Additions to property, plant and equipment and mine development | (5,583 | ) | |||||
Acquisition of Horizon Natural Resources | (323,593 | ) | |||||
Withdraw of restricted cash | (2 | ) | |||||
Net cash (used in) investing activities | (329,168 | ) | |||||
CASH FLOWS FROM FINANCING ACTIVITIES: | |||||||
Capital contribution | 150,151 | ||||||
Repayments on long-term debt | (2,969 | ) | |||||
Repayments on capital leases | (235 | ) | |||||
Long-term borrowings | 175,977 | ||||||
Net cash provided by financing activities | 322,924 | ||||||
Net increase in cash and cash equivalents, and cash and cash equivalents, end of period | $ | 23,967 | |||||
Supplemental information: | |||||||
Cash paid for interest | $ | 536 | |||||
Supplemental disclosure of non-cash items: | |||||||
Acquisition of Horizon Natural Resources included in accrued expenses | $ | 2,191 | |||||
F-19
Table of Contents
At | |||||
September 30, | |||||
2004 | |||||
Accounts receivable | $ | 60,130 | |||
Inventory | 20,083 | ||||
Prepaids and other | 6,508 | ||||
Property, plant, and equipment | 159,496 | ||||
Advance royalties | 4,314 | ||||
Debt issuance costs | 8,078 | ||||
Other assets | 12,256 | ||||
Goodwill | 183,896 | ||||
Accounts payable | (25,065) | ||||
Accrued expenses | (35,422) | ||||
Employee benefits | (17,127) | ||||
Accrued reclamation | (43,889) | ||||
Other long-term liabilities | (7,474) | ||||
Net assets acquired | $ | 325,784 | |||
Funded by: | |||||
Capital contribution | $ | 150,151 | |||
Long-term debt | 175,633 | ||||
Total | $ | 325,784 | |||
F-20
Table of Contents
Horizon | ||||||||||||
ICG, Inc. | Predecessor to ICG, Inc. | |||||||||||
Three Months | Nine Months | Twelve Months | ||||||||||
Ended | Ended | Ended | ||||||||||
December 31, | September 30, | December 31, | ||||||||||
2004 | 2004 | 2003 | ||||||||||
Revenues | $ | 136,109 | $ | 373,383 | $ | 481,070 | ||||||
Net Income (Loss) | $ | 4,249 | $ | (6,292 | ) | $ | (45,442 | ) | ||||
Basic and diluted earnings per share | $ | 0.04 | $ | 0.06 | $ | (0.43 | ) |
2. | Summary of Significant Accounting Policies and General |
F-21
Table of Contents
F-22
Table of Contents
Years | ||||
Buildings | 10 to 45 | |||
Mining and other equipment and related facilities | 1 to 20 | |||
Land improvements | 15 | |||
Transportation equipment | 2 to 7 | |||
Furniture and fixtures | 3 to 10 |
F-23
Table of Contents
F-24
Table of Contents
F-25
Table of Contents
Coal | $ | 4,443 | ||
Parts and supplies, net of a reserve for obsolescence of $74 | 9,500 | |||
Total | $ | 13,943 | ||
Land and land improvements | $ | 16,798 | ||
Mining and other equipment and related facilities | 72,590 | |||
Mine development and contract costs | 16,012 | |||
Coal lands | 53,031 | |||
Mine development in process | 1,373 | |||
Construction work in process | 5,275 | |||
165,079 | ||||
Less-accumulated depreciation, depletion and amortization | (7,943 | ) | ||
Net property, plant and equipment | $ | 157,136 | ||
F-26
Table of Contents
Payroll, bonus and vacation expense | $ | 16,163 | ||
Sales and use tax | 143 | |||
Severance tax | 1,355 | |||
Federal reclamation tax | 918 | |||
Excise/black lung tax | 344 | |||
Personal property tax | 5,080 | |||
Franchise tax | 58 | |||
Other | 9,793 | |||
Total | $ | 33,854 | ||
Term Notes | $ | 175,000 | |||
Capital leases (Note 10) | 681 | ||||
Insurance financing and other | 3,787 | ||||
Total | 179,468 | ||||
Less — current portion | 6,022 | ||||
Long-term debt and capital leases | $ | 173,446 | |||
F-27
Table of Contents
Year Ending December 31: | ||||
2005 | $ | 1,750 | ||
2006 | 1,750 | |||
2007 | 1,750 | |||
2008 | 1,750 | |||
2009 | 1,750 | |||
Thereafter | 166,250 | |||
Total | $ | 175,000 | ||
May 13, 2004 to | ||||
December 31, 2004 | ||||
Liabilities assumed in the acquisition | $ | 43,889 | ||
Expenditures | (1,349 | ) | ||
Accretion | 758 | |||
Balance | $ | 43,298 | ||
December 31, 2004 | ||||
Current portion of reclamation and mine closure costs | $ | 2,682 | ||
Non-current reclamation and mine closure costs | 40,616 | |||
Total | $ | 43,298 | ||
F-28
Table of Contents
May 13, 2004 to | |||||
December 31, 2004 | |||||
Current: | |||||
Federal | $ | 1,901 | |||
State | 331 | ||||
2,232 | |||||
Deferred: | |||||
Federal | 306 | ||||
State | 53 | ||||
359 | |||||
Total | $ | 2,591 | |||
May 13, 2004 to | ||||
December 31, 2004 | ||||
Federal provision computed at statutory rate | $ | 2,394 | ||
State income tax provision (net of federal tax benefits and apportionment factors) computed at statutory rate | 219 | |||
Other | (22 | ) | ||
Total | $ | 2,591 | ||
Deferred Tax Assets: | ||||||
Accrued employee benefits | $ | 6,932 | ||||
Accrued reclamation and closure | 16,670 | |||||
Other | 3,720 | |||||
27,322 | ||||||
Deferred Tax Liabilities: | ||||||
Property, coal lands and mine development costs | 16,514 | |||||
Other | 879 | |||||
17,393 | ||||||
Net deferred tax asset | $ | 9,929 | ||||
Classified in balance sheet: | ||||||
Deferred income taxes — current | $ | 2,188 | ||||
Deferred income taxes — non-current | 7,741 | |||||
Total | $ | 9,929 | ||||
F-29
Table of Contents
Postretirement benefits | $ | 8,013 | |||
Black lung benefits | 9,994 | ||||
Total | 18,007 | ||||
Less — current portion | — | ||||
Long-term portion | $ | 18,007 | |||
Other Postretirement | |||||
Benefits | |||||
December 31, 2004 | |||||
Changes in Benefit Obligations: | |||||
Benefit obligations assumed in the acquisition | $ | 7,683 | |||
Service costs | 219 | ||||
Interest cost | 111 | ||||
Actuarial loss | 121 | ||||
Benefit obligation at end of period | $ | 8,134 | |||
Fair value of plan assets at end of period | $ | — | |||
Funded Status of the Plan: | |||||
Accumulated obligations less plan assets | $ | (8,134 | ) | ||
Unrecognized actuarial loss | 121 | ||||
Net liability recognized | $ | (8,013 | ) | ||
Discount rate | 5.75% |
F-30
Table of Contents
May 13, 2004 to | |||||
December 31, 2004 | |||||
Net periodic benefit cost: | |||||
Service cost | $ | 219 | |||
Interest cost | 111 | ||||
Benefit cost | $ | 330 | |||
1-Percentage- | 1-Percentage- | |||||||
Point | Point | |||||||
Increase | Decrease | |||||||
Effect on total of service and interest cost components | $ | 174 | $ | (156 | ) | |||
Effect on postretirement benefit obligation | 987 | (889 | ) |
F-31
Table of Contents
F-32
Table of Contents
Operating | Capital | |||||||||||
Royalties | Leases | Leases | ||||||||||
Year ended December 31, | ||||||||||||
2005 | $ | 7,348 | $ | 13,506 | $ | 540 | ||||||
2006 | 7,348 | 9,004 | 172 | |||||||||
2007 | 6,339 | 3,059 | — | |||||||||
2008 | 6,189 | 2 | ||||||||||
2009 | 6,195 | — | ||||||||||
Thereafter | 29,345 | — | ||||||||||
Total minimum lease payments | $ | 62,764 | $ | 25,571 | 712 | |||||||
Less — amount representing interest | 31 | |||||||||||
Present value of minimum lease payments (Note 6) | 681 | |||||||||||
Less — current portion | 485 | |||||||||||
Total Long Term Portion of Capital Leases | $ | 196 | ||||||||||
F-33
Table of Contents
December 31, | May 13, 2004 to | |||||||
2004 | December 31, | |||||||
Total | 2004 | |||||||
Receivable | Total | |||||||
Balance | Revenues | |||||||
Customer A | $ | 2,563 | $ | 17,720 | ||||
Customer B | 6,581 | 19,151 | ||||||
Customer C | 5,751 | 19,759 |
F-34
Table of Contents
F-35
Table of Contents
Central | Illinois | |||||||||||||||||||
Appalachian | Basin | Ancillary | Eliminations | Consolidated | ||||||||||||||||
Revenue | $ | 98,555 | $ | 12,744 | $ | 24,982 | $ | (172 | ) | $ | 136,109 | |||||||||
EBITDA | 14,581 | 1,383 | 2,272 | — | 18,236 | |||||||||||||||
Depreciation, depletion and amortization | 4,468 | 1,048 | 2,427 | — | 7,943 | |||||||||||||||
Capital expenditures | 4,858 | 732 | (7 | ) | — | 5,583 | ||||||||||||||
Total assets | 148,331 | 27,426 | 541,155 | (256,937 | ) | 459,975 |
Period from | ||||
May 13, 2004 | ||||
to December 31, | ||||
2004 | ||||
EBITDA | $ | 18,236 | ||
Depreciation, depletion and amortization | (7,943) | |||
Interest expense | (3,453) | |||
Income (loss) before income tax expense (benefit) | $ | 6,840 | ||
F-36
Table of Contents
Horizon NR, LLC and Certain Subsidiaries:
F-37
Table of Contents
F-38
Table of Contents
Reorganized Companies | ||||||||||
September 30, | December 31, | |||||||||
2004(1) | 2003(1) | |||||||||
ASSETS | ||||||||||
CURRENT ASSETS: | ||||||||||
Cash and cash equivalents | $ | — | $ | 859 | ||||||
Trade accounts receivable (net of allowance for doubtful accounts of $5,441 and $7,798, respectively) | 46,117 | 35,658 | ||||||||
Inventories, net | 17,721 | 13,479 | ||||||||
Deferred income taxes | 5,931 | 6,020 | ||||||||
Prepaid insurance | 4,668 | 6,707 | ||||||||
Prepaid expenses and other | 4,399 | 10,333 | ||||||||
Due from other Horizon subsidiaries | 169,308 | 169,308 | ||||||||
Total current assets | 78,836 | 73,056 | ||||||||
PROPERTY, PLANT AND EQUIPMENT, net | 248,144 | 242,364 | ||||||||
DEBT ISSUANCE COSTS, Net | 1,437 | |||||||||
ADVANCE ROYALTIES | 10,501 | 9,976 | ||||||||
OTHER NON-CURRENT ASSETS | 4,804 | 4,043 | ||||||||
Total assets | $ | 539,606 | $ | 576,372 | ||||||
LIABILITIES AND MEMBERS’ DEFICIT | ||||||||||
LIABILITIES NOT SUBJECT TO COMPROMISE: | ||||||||||
CURRENT LIABILITIES: | ||||||||||
Trade accounts payable | $ | 29,975 | $ | 36,670 | ||||||
Current portion of long-term debt and capital leases | 30,603 | 62,698 | ||||||||
Current portion of reclamation and mine closure costs | 1,206 | 1,206 | ||||||||
Accrued expenses and other | 27,977 | 27,872 | ||||||||
Due to other Horizon subsidiaries | 13,198 | |||||||||
Total current liabilities | 102,959 | 128,446 | ||||||||
NON-CURRENT LIABILITIES, Less current portion | ||||||||||
Long-term debt and capital leases | 29 | 315 | ||||||||
Reclamation and mine closure costs | 22,436 | 27,443 | ||||||||
Deferred income taxes | 5,931 | 6,020 | ||||||||
Other non-current liabilities | 18,326 | 18,422 | ||||||||
Total non-current liabilities | 46,722 | 52,200 | ||||||||
Total liabilities not subject to compromise | 149,681 | 180,646 | ||||||||
LIABILITIES SUBJECT TO COMPROMISE | 1,272,609 | 1,170,747 | ||||||||
Total liabilities | 1,422,290 | 1,351,393 | ||||||||
COMMITMENTS AND CONTINGENCIES | ||||||||||
MEMBERS’ DEFICIT: | ||||||||||
Additional paid-in capital | 234,800 | 234,800 | ||||||||
Members’ investment (52,802 units authorized) | 200 | 200 | ||||||||
Accumulated other comprehensive loss | (3,683 | ) | (3,683 | ) | ||||||
Accumulated deficit | (1,114,001 | ) | (1,006,338 | ) | ||||||
Total members’ deficit | (882,684 | ) | (775,021 | ) | ||||||
Total liabilities and members’ deficit | $ | 539,606 | $ | 576,372 | ||||||
(1) | As restated. See Note 19. |
F-39
Table of Contents
Reorganized | Predecessor | |||||||||||||||||
Companies | Companies | |||||||||||||||||
Period from | Period from | Period from | ||||||||||||||||
January 1, 2004 to | Year Ended | May 10, 2002 to | January 1, 2002 | |||||||||||||||
September 30, | December 31, | December 31, | to | |||||||||||||||
2004(1) | 2003(1) | 2002(1) | May 9, 2002(1) | |||||||||||||||
REVENUES (including amounts to related parties of $3,061 in the Predecessor period) | ||||||||||||||||||
Coal Sales revenues | $ | 346,981 | $ | 441,291 | $ | 264,235 | $ | 136,040 | ||||||||||
Freight and handling revenues | 3,700 | 8,008 | 6,032 | 2,947 | ||||||||||||||
Other revenues | 22,702 | 31,771 | 27,397 | 21,183 | ||||||||||||||
Total revenues | 373,383 | 481,070 | 297,664 | 160,170 | ||||||||||||||
COSTS AND EXPENSES: | ||||||||||||||||||
Freight and handling costs | 3,700 | 8,008 | 6,032 | 2,947 | ||||||||||||||
Cost of coal sales and other revenues (including amounts to related parties of $9,116 in the Predecessor period) (exclusive of items shown separately below) | 306,429 | 400,652 | 251,361 | 114,767 | ||||||||||||||
Depreciation, depletion and amortization | 27,547 | 52,254 | 40,033 | 32,316 | ||||||||||||||
Selling, general and administrative (including amounts to related parties of $3 in the Predecessor period) (exclusive of depreciation and amortization shown separately above) | 8,477 | 23,350 | 16,695 | 9,677 | ||||||||||||||
Gain on sale of assets | (226 | ) | (4,320 | ) | (39 | ) | (93 | ) | ||||||||||
Writedowns and special items | 10,018 | 9,100 | 729,953 | 8,323 | ||||||||||||||
Total costs and expenses | 355,945 | 489,044 | 1,044,035 | 167,937 | ||||||||||||||
Income (Loss) from operations | 17,438 | (7,974 | ) | (746,371 | ) | (7,767 | ) | |||||||||||
INTEREST AND OTHER INCOME (EXPENSE): | ||||||||||||||||||
Interest expense | (114,211 | ) | (145,892 | ) | (80,405 | ) | (36,666 | ) | ||||||||||
Reorganization items | (12,471 | ) | (23,064 | ) | (4,075 | ) | 787,900 | |||||||||||
Other, net (including amounts to related parties of $93 in the Predecessor period) | 1,581 | 187 | 1,256 | 499 | ||||||||||||||
Total interest and other income (expense) | (125,101 | ) | (168,769 | ) | (83,224 | ) | 751,733 | |||||||||||
NET INCOME (LOSS) | $ | (107,663 | ) | $ | (176,743 | ) | $ | (829,595 | ) | $ | 743,966 | |||||||
(1) | As restated. See Note 19. |
F-40
Table of Contents
Accumulated | |||||||||||||||||||||
Additional | Other | ||||||||||||||||||||
Members’ | Paid-in | Comprehensive | Accumulated | ||||||||||||||||||
Investment | Capital | Loss | Deficit | Total | |||||||||||||||||
PREDECESSOR COMPANIES: | |||||||||||||||||||||
Balance — January 1, 2002 | $ | 53 | $ | 163,913 | $ | (7,720 | ) | $(900,212 | ) | $ | (743,966 | ) | |||||||||
January 1, 2002 to May 9, 2002, net income(1) | — | — | — | 743,966 | 743,966 | ||||||||||||||||
Fresh-start accounting adjustments(1) | (53 | ) | 71,087 | 7,720 | 156,246 | 235,000 | |||||||||||||||
Balance — May 9, 2002 after fresh start adjustments | — | 235,000 | — | — | 235,000 | ||||||||||||||||
REORGANIZED COMPANIES: | |||||||||||||||||||||
Balance-May 10, 2002 | 200 | 234,800 | — | — | 235,000 | ||||||||||||||||
Comprehensive Loss: | |||||||||||||||||||||
May 10, 2002 to December 31, 2002, net loss(1) | — | — | — | (829,595 | ) | (829,595 | ) | ||||||||||||||
Minimum Pension Liability Adjustment | (3,824 | ) | (3,824 | ) | |||||||||||||||||
Total comprehensive loss | (833,419 | ) | |||||||||||||||||||
BALANCE — December 31, 2002(1) | 200 | 234,800 | (3,824 | ) | (829,595 | ) | (598,419 | ) | |||||||||||||
Comprehensive Loss: | |||||||||||||||||||||
January 1, 2003 to December 31, 2003, net loss(1) | — | — | — | (176,743 | ) | (176,743 | ) | ||||||||||||||
Minimum pension liability adjustment | — | — | 141 | — | 141 | ||||||||||||||||
Total comprehensive loss | (176,602 | ) | |||||||||||||||||||
Balance — December 31, 2003(1) | 200 | 234,800 | (3,683 | ) | (1,006,338 | ) | (775,021 | ) | |||||||||||||
January 1, 2004 to September 30, 2004, net loss(1) | — | — | — | (107,663 | ) | (107,668 | ) | ||||||||||||||
BALANCE — September 30, 2004(1) | $ | 200 | $ | 234,800 | $ | (3,683 | ) | $(1,114,001 | ) | $ | (882,684 | ) | |||||||||
(1) | As restated. See Note 19 to the combined financial statements of Horizon NR, LLC. |
F-41
Table of Contents
Reorganized Companies | Predecessor Companies | ||||||||||||||||||
Period from | For the | Period from | |||||||||||||||||
January 1, 2004 | Year Ended | May 10, 2002 to | Period from | ||||||||||||||||
to September 30, | December 31, | December 31, | January 1, 2002 to | ||||||||||||||||
2004(1) | 2003(1) | 2002(1) | May 9, 2002(1) | ||||||||||||||||
CASH FLOWS FROM OPERATING ACTIVITIES: | |||||||||||||||||||
Net income (loss) | $ | (107,663 | ) | $ | 176,743 | $ | 829,595 | $ | 743,966 | ||||||||||
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities: | |||||||||||||||||||
Depreciation, depletion and amortization | 27,547 | 52,254 | 40,033 | 32,316 | |||||||||||||||
Depreciation — Allocation from Affiliates | 127 | 4,118 | 4,930 | 5,723 | |||||||||||||||
Amortization of finance costs included in interest expense | 1,437 | 3,698 | 5,644 | 5,676 | |||||||||||||||
Gain on sale of assets | (226 | ) | (4,320 | ) | (39 | ) | (93 | ) | |||||||||||
Gain on lease buyout | (7,736 | ) | |||||||||||||||||
Fresh start revaluation | (645,824 | ) | |||||||||||||||||
Fresh start adjustments | (801,495 | ) | |||||||||||||||||
Gain on debt extinguishment | (161,584 | ) | |||||||||||||||||
Writedowns and special items | 17,754 | 9,100 | 729,953 | 8,323 | |||||||||||||||
Provision for doubtful accounts | 247 | 1,656 | 1,535 | 6,594 | |||||||||||||||
Provision for asset write-downs | 91,185 | ||||||||||||||||||
Changes in Assets and Liabilities: | |||||||||||||||||||
(Increase) decrease in: | |||||||||||||||||||
Receivables | (10,706 | ) | (11,104 | ) | 40,356 | 25,864 | |||||||||||||
Inventories | (4,242 | ) | (273 | ) | 2,806 | (37,197 | ) | ||||||||||||
Prepaid expenses | 7,971 | 19,374 | 64,809 | (17,032 | ) | ||||||||||||||
Other assets | 477 | (36 | ) | 2,817 | (44,730 | ) | |||||||||||||
Increase (decrease) in: | |||||||||||||||||||
Accounts payable | 21,680 | (10,344 | ) | 21,622 | 386,387 | ||||||||||||||
Accrued expenses | 85,520 | 150,144 | 32,388 | 87,079 | |||||||||||||||
Reclamation and mine closure costs | (4,007 | ) | (11,942 | ) | (31,957 | ) | (23,060 | ) | |||||||||||
Other liabilities | (95 | ) | (5,552 | ) | (8,924 | ) | (15,690 | ) | |||||||||||
Total adjustments | 135,748 | 196,773 | 905,973 | 1,097,558 | |||||||||||||||
Net cash provided by (used in) operating activities | 28,085 | 20,030 | 76,378 | (353,592 | ) | ||||||||||||||
CASH FLOWS FROM INVESTING ACTIVITIES: | |||||||||||||||||||
Proceeds from the sale of assets | 4,089 | 15,388 | 636 | 122 | |||||||||||||||
Proceeds from lease buyout | 7,736 | ||||||||||||||||||
Additions to property, plant and equipment and mine development | (6,624 | ) | (16,937 | ) | (13,435 | ) | (10,963 | ) | |||||||||||
(Deposits) withdrawals of/from restricted cash | (1,764 | ) | (2,277 | ) | (6 | ) | 55,396 | ||||||||||||
Net cash used in investing activities | 3,437 | (3,826 | ) | (12,805 | ) | 44,555 | |||||||||||||
CASH FLOWS FROM FINANCING ACTIVITIES: | |||||||||||||||||||
Repayments on long-term debt | (4,698 | ) | (13,729 | ) | (183,162 | ) | (304,449 | ) | |||||||||||
Borrowings on long-term debt | 50,003 | 574,700 | |||||||||||||||||
Net borrowings/(repayments) on debtor-in-possession financing | (27,080 | ) | (737 | ) | 56,027 | ||||||||||||||
Financing costs | (11,238 | ) | |||||||||||||||||
Repayments on capital leases | (603 | ) | (993 | ) | (893 | ) | (2 | ) | |||||||||||
Net cash provided by (used in) financing activities | (32,381 | ) | (15,459 | ) | (78,025 | ) | 259,011 | ||||||||||||
Net increase (decrease) in cash and cash equivalents | (859 | ) | 745 | (14,452 | ) | (50,026 | ) | ||||||||||||
Cash and cash equivalents, beginning of period | 859 | 114 | 14,566 | 64,592 | |||||||||||||||
Cash and cash equivalents, end of period | $ | 0 | $ | 859 | $ | 114 | $ | 14,566 | |||||||||||
(1) | As restated. See Note 19. |
F-42
Table of Contents
1. | Organization and Basis of Presentation |
F-43
Table of Contents
Horizon Amounts | ||||||||
Account | September 30, 2004 | December 31, 2003 | ||||||
Vendor Advances | $ | 169 | $ | 691 | ||||
Reclamation Deposits | 52,706 | 54,743 |
Amounts Allocated to | ||||||||||||
Combined Companies | ||||||||||||
September 30, 2004 | December 31, 2003 | Basis of Allocation | ||||||||||
Vendor Advances | $ | 93 | $ | 373 | Coal Production Tons | |||||||
Reclamation Deposits | — | 1,343 | Premiums Paid |
Horizon Amounts | ||||||||||||||||
January 1, 2004- | January 1, 2003- | May 10, 2002- | January 1, 2002- | |||||||||||||
September 30, 2004 | December 31, 2003 | December 31, 2002 | May 9, 2002 | |||||||||||||
Selling, general, and administrative expenses | $ | 17,100 | $ | 25,000 | $ | 12,541 | $ | 20,285 |
Amounts Allocated to | ||||||||||||||||||
Combined Companies | ||||||||||||||||||
January 1, 2004- | January 1, 2003- | May 10, 2002- | January 1, 2002- | |||||||||||||||
September 30, 2004 | December 31, 2003 | December 31, 2002 | May 9, 2002 | Basis of Allocation | ||||||||||||||
Selling, general, and administrative expenses | $ | 9,081 | $ | 9,860 | $ | 4,974 | $ | 8,305 | Estimated Hours Worked |
F-44
Table of Contents
2. | Liquidity and Bankruptcy Proceedings |
September 30, | December 31, | |||||||
2004 | 2003 | |||||||
Long-term debt | $ | 915,304 | $ | 915,304 | ||||
Accrued postretirement medical benefits | 59,578 | 56,633 | ||||||
Accounts payable and accrued expenses | 22,652 | 23,872 | ||||||
Accrued interest | 275,075 | 174,938 | ||||||
$ | 1,272,609 | $ | 1,170,747 | |||||
F-45
Table of Contents
3. | Summary of Significant Accounting Policies and General |
F-46
Table of Contents
Years | ||
Buildings | 10 to 45 | |
Mining and other equipment and related facilities | 1 to 20 | |
Land improvements | 15 | |
Transportation equipment | 2 to 7 | |
Furniture and fixtures | 3 to 10 |
F-47
Table of Contents
F-48
Table of Contents
Reorganized Companies | ||||||||
January 1, 2004 to | Year Ended | |||||||
September 30, 2004 | December 31, 2003 | |||||||
Cash paid for interest | $ | 9,268 | $ | 7,797 | ||||
Income taxes paid (refunded) | (69 | ) | 38 |
F-49
Table of Contents
Reorganized Companies | Predecessor Companies | |||||||
May 10, 2002 to | January 1, 2002 to | |||||||
December 31, 2002 | May 9, 2002 | |||||||
Cash paid for interest | $ | 20,405 | $ | 150,502 | ||||
Income taxes paid (refunded) | 45 | 106 |
4. | Fresh-Start Accounting |
Post-petition liabilities | $ | 1,281,218 | ||
Liabilities subject to compromise | 436,255 | |||
Total post-petition liabilities and allowed claims | 1,717,473 | |||
Reorganization value | 1,521,320 | |||
Excess of liabilities over reorganization value | $ | 196,153 | ||
F-50
Table of Contents
Accrued | ||||||||||||
Debt | Interest | Total | ||||||||||
10.5% Senior Notes | $ | 200,000 | $ | 48,177 | $ | 248,177 | ||||||
11.5% Senior Subordinated Notes | 150,000 | 38,078 | 188,078 | |||||||||
Liabilities Subject to Compromise | $ | 350,000 | $ | 86,255 | $ | 436,255 | ||||||
Liabilities subject to compromise | $ | 436,255 | ||
Unamortized financing costs associated with retired debt | (39,671 | ) | ||
396,584 | ||||
New equity | 235,000 | |||
Gain on debt extinguishment | $ | 161,584 | ||
Gain on fresh-start revaluation | $ | 645,824 | ||
Gain on debt extinguishment | 161,584 | |||
Professional fees incurred during bankruptcy proceedings | (19,508 | ) | ||
Reorganization items | $ | 787,900 | ||
F-51
Table of Contents
Balance Sheet at May 9, 2002 (Unaudited) | ||||||||||||||||||
Fresh Start | ||||||||||||||||||
AEI | Horizon | |||||||||||||||||
Predecessor | Debt | Predecessor | ||||||||||||||||
Companies | Restructuring | Adjustments | Companies | |||||||||||||||
ASSETS | ||||||||||||||||||
CURRENT ASSETS: | ||||||||||||||||||
Cash and cash equivalents | $ | 14,566 | $ | — | $ | — | $ | 14,566 | ||||||||||
Restricted cash | 72,712 | — | — | 72,712 | ||||||||||||||
Accounts receivable — net | 47,697 | — | — | 47,697 | ||||||||||||||
Inventories | 53,109 | — | (29,020 | ) | 24,089 | |||||||||||||
Deferred income taxes | 25,270 | — | 17,241 | 42,511 | ||||||||||||||
Prepaid expenses and other | 12,949 | — | (171 | ) | 12,778 | |||||||||||||
Total current assets | 226,303 | — | (11,950 | ) | 214,353 | |||||||||||||
PROPERTY, PLANT, AND EQUIPMENT, INCLUDING COAL LANDS, MINE DEVELOPMENT AND CONTRACT COSTS — net | 427,433 | — | (34,187 | ) | 393,246 | |||||||||||||
GOODWILL | — | — | 697,063 | 697,063 | ||||||||||||||
NET RECEIVABLE FROM OTHER HORIZON SUBSIDIARIES | 191,360 | — | — | 191,360 | ||||||||||||||
DEBT ISSUANCE COSTS — net | 50,450 | (39,671 | ) | — | 10,779 | |||||||||||||
OTHER NON-CURRENT ASSETS | 14,519 | — | — | 14,519 | ||||||||||||||
Total assets | $ | 910,065 | $ | (39,671 | ) | $ | 650,926 | $ | 1,521,320 | |||||||||
LIABILITIES AND MEMBERS’ EQUITY (DEFICIT) | ||||||||||||||||||
CURRENT LIABILITIES: | ||||||||||||||||||
Accounts payable | $ | 16,876 | $ | — | $ | — | $ | 16,876 | ||||||||||
Current portion of long-term debt and capital leases | 875,565 | (755,933 | ) | 119,632 | ||||||||||||||
Accrued expenses and other | 194,414 | (157,250 | ) | 4,553 | 41,717 | |||||||||||||
Total current liabilities | 1,086,855 | (913,183 | ) | 4,553 | 178,225 | |||||||||||||
NON-CURRENT LIABILITIES, less current portion | ||||||||||||||||||
Long-term debt and capital leases | 19,923 | 913,183 | — | 933,106 | ||||||||||||||
Employee benefits | 57,035 | — | — | 57,035 | ||||||||||||||
Reclamation and mine closure costs | 64,703 | — | (22,157 | ) | 42,546 | |||||||||||||
Deferred non-current liabilities | 25,270 | — | 17,241 | 42,511 | ||||||||||||||
Other non-current liabilities | 27,432 | — | 5,465 | 32,897 | ||||||||||||||
Liabilities subject to compromise | 436,255 | (436,255 | ) | |||||||||||||||
Total liabilities | 1,717,473 | (436,255 | ) | 5,102 | 1,286,320 | |||||||||||||
MEMBERS’ EQUITY | ||||||||||||||||||
Accumulated earnings (deficit) | (963,655 | ) | 161,584 | 802,071 | — |
F-52
Table of Contents
Balance Sheet at May 9, 2002 (Unaudited) | |||||||||||||||||
Fresh Start | |||||||||||||||||
AEI | Horizon | ||||||||||||||||
Predecessor | Debt | Predecessor | |||||||||||||||
Companies | Restructuring | Adjustments | Companies | ||||||||||||||
Other members’ equity (deficit) | 156,247 | 235,000 | (156,247 | ) | 235,000 | ||||||||||||
Total liabilities and members’ equity (deficit) | $ | 910,065 | $ | (39,671 | ) | $ | 650,926 | $ | 1,521,320 | ||||||||
• | $1,453 write-up of stockpile inventory to market. | |
• | Reclassification to development costs of deferred overburden ($29,229), where it will be amortized based on the units-of-production method. | |
• | Adjustment to decrease parts and supplies ($1,244) to estimated market value. |
• | The property, plant and equipment were valued at net book value, which approximates the fair market value. | |
• | Coal lands were decreased $65,178 to reflect an independent valuation assessment. The interests were valued on a discounted royalty approach, which considered the current net royalty value of both leased and owned interest. The relevant royalty revenue streams were projected into the future based on budgeted production and discounted back to generate the coal land value. | |
• | Development cost was increased $29,229 to reflect the reclassification of deferred overburden (see inventory section above). | |
• | Contract costs were decreased $30,105 to reflect the current market value of existing sales contracts. | |
• | Asset retirement costs of $31,867 were recorded to reflect adoption of SFAS No. 143 (Note 3). |
F-53
Table of Contents
5. | Inventories |
September 30, | December 31, | |||||||
2004 | 2003 | |||||||
Coal | $ | 8,717 | $ | 5,478 | ||||
Parts and supplies, net of allowance of $2,797 and $2,803 | 9,004 | 8,001 | ||||||
$ | 17,721 | $ | 13,479 | |||||
September 30, | December 31, | |||||||
2004 | 2003 | |||||||
Land and land improvements | $ | 17,084 | $ | 17,420 | ||||
Mining and other equipment and related facilities | 137,720 | 144,601 | ||||||
Mine development and contract costs | 50,151 | 44,907 | ||||||
Coal lands | 186,420 | 202,240 | ||||||
Mine development in process | 2,081 | 4,139 | ||||||
Construction work in process | 2,243 | 2,116 | ||||||
395,699 | 415,423 | |||||||
Less-accumulated depreciation, depletion and amortization | (119,542 | ) | (96,871 | ) | ||||
Net property, plant and equipment | $ | 276,157 | $ | 318,552 | ||||
F-54
Table of Contents
7. | Accrued Expenses and Other |
September 30, | December 31, | |||||||
2004 | 2003 | |||||||
Payroll, bonus and vacation expense | $ | 15,247 | $ | 13,742 | ||||
Non-income taxes | 7,065 | 7,369 | ||||||
Deferred revenues | — | 747 | ||||||
Other | 5,665 | 6,014 | ||||||
$ | 27,977 | $ | 27,872 | |||||
September 30, | December 31, | ||||||||
2004 | 2003 | ||||||||
DIP Facility | $ | 30,016 | $ | 57,096 | |||||
Senior Secured Term Notes | 465,000 | 465,000 | |||||||
Senior Secured Notes | 450,000 | 450,000 | |||||||
Capital leases (Note 12) | 859 | 1,463 | |||||||
Other | 61 | 4,758 | |||||||
Total | 945,936 | 978,317 | |||||||
Less — long-term debt subject to compromise | 915,304 | 915,304 | |||||||
Less — current portion of long-term debt and capital leases not subject to compromise | 30,603 | 62,698 | |||||||
Long-term debt and capital leases | $ | 29 | $ | 315 | |||||
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Table of Contents
September 30, | December 31, | |||||||||
2004 | 2003 | |||||||||
Letters of Credit: | ||||||||||
Insurance/Workers’ compensation/Reclamation bonds | $ | 159,851 | $ | 155,238 | ||||||
Coal lands/Royalties | — | 450 | ||||||||
Total | $ | 159,851 | $ | 155,688 | ||||||
• | Incur additional indebtedness, pay dividends and make other restricted payments and investments; | |
• | Acquire or dispose of assets; | |
• | Engage in transactions with affiliates; | |
• | Merge, consolidate, or transfer substantially all of its assets. |
F-56
Table of Contents
Reorganized Companies | ||||||
January 1, 2004 to September 30, 2004 | ||||||
Beginning Balance | 1/1/2004 | 28,649 | ||||
Expenditures | 1/1/2004 - 9/30/2004 | (9,092 | ) | |||
Accretion | 1/1/2004 - 9/30/2004 | 3,399 | ||||
Allocation from other Horizon Subsidiaries | 1/1/2004 - 9/30/2004 | 686 | ||||
Ending Balance | $ | 23,642 | ||||
Reorganized Companies | ||||||||||||||
Year Ended December 31, 2003 | May 10, 2002 to December 31, 2002 | |||||||||||||
Beginning Balance | 1/1/2003 | $ | 35,765 | 5/9/2002 | $ | 90,973 | ||||||||
SFAS No. 143 adoption | (48,071 | ) | ||||||||||||
Liability for new mining locations | 1/1/2003 - 12/31/2003 | 228 | ||||||||||||
Expenditures | 1/1/2003 - 12/31/2003 | (9,478 | ) | 5/10/2002 - 12/31/2002 | (11,033 | ) | ||||||||
Accretion | 1/1/2003 - 12/31/2003 | 4,986 | 5/10/2002 - 12/31/2002 | 3,232 | ||||||||||
Allocation (to)/from other Horizon Subsidiaries | 1/1/2003 - 12/31/2003 | (2,852 | ) | 5/10/2002 - 12/31/2002 | 664 | |||||||||
Ending Balance | $ | 28,649 | $ | 35,765 | ||||||||||
September 30, | December 31, | |||||||
2004 | 2003 | |||||||
Current portion of reclamation and mine closure costs | $ | 1,206 | $ | 1,206 | ||||
Non-current reclamation and mine closure costs | 22,436 | 27,443 | ||||||
$ | 23,642 | $ | 28,649 | |||||
F-57
Table of Contents
Reorganized Companies (1) | ||||||||
January 1, 2004 to | January 1, 2003 to | |||||||
September 30, 2004 | December 31, 2003 | |||||||
Federal provision (benefit) computed at statutory rate | $ | (37,682 | ) | $ | (61,860 | ) | ||
State income tax provision (benefit) (net of federal tax benefits and apportionment factors) computed at statutory rate | (4,630 | ) | (7,600 | ) | ||||
Valuation allowance | 43,099 | 70,509 | ||||||
Other | (787 | ) | (1,049 | ) | ||||
$ | — | $ | — | |||||
Reorganized | Predecessor | |||||||
Companies (1) | Companies (1) | |||||||
May 10, 2002 to | January 1, 2002 to | |||||||
December 31, 2002 | May 9, 2002 | |||||||
Federal provision (benefit) computed at statutory rate | $ | (290,358 | ) | $ | 260,388 | |||
State income tax provision (benefit) (net of federal tax benefits and apportionment factors) computed at statutory rate | (35,673 | ) | 31,991 | |||||
Valuation allowance | (196,596 | ) | 312,568 | |||||
Goodwill | 524,533 | (524,533 | ) | |||||
Gain on extinguishment of debt | (79,053 | ) | ||||||
Other | (1,906 | ) | (1,361 | ) | ||||
$ | — | $ | — | |||||
F-58
Table of Contents
September 30, | December 31, | |||||||||
2004 | 2003 | |||||||||
Deferred Tax Assets: | ||||||||||
Accrued employee benefits | $ | 23,361 | $ | 30,677 | ||||||
Accrued reclamation and closure | 9,270 | 11,194 | ||||||||
Reserve for losses | 10,534 | 11,437 | ||||||||
Net operating loss carryforwards | 160,855 | 135,317 | ||||||||
Other | 6,241 | 6,972 | ||||||||
210,261 | 195,597 | |||||||||
Valuation allowance | (145,628 | ) | (116,436 | ) | ||||||
64,633 | 79,161 | |||||||||
Deferred Tax Liabilities: | ||||||||||
Property, coal lands and mine development costs | 64,538 | 78,943 | ||||||||
Other | 95 | 218 | ||||||||
64,633 | 79,161 | |||||||||
Net deferred tax liability | $ | — | $ | — | ||||||
Classified in balance sheet: | ||||||||||
Other current assets | $ | 5,931 | $ | 6,020 | ||||||
Non-current liabilities | $ | 5,931 | $ | 6,020 |
F-59
Table of Contents
September 30, | December 31, | ||||||||
2004 | 2003 | ||||||||
Postretirement benefits | $ | 11,083 | $ | 10,104 | |||||
Workers’ compensation benefits | 10,315 | 9,666 | |||||||
Black lung benefits | 21,540 | 20,618 | |||||||
Pension benefits | 16,640 | 16,245 | |||||||
Total | 59,578 | 56,633 | |||||||
Less — current portion | — | — | |||||||
Less — liabilities subject to compromise (Note 2) | 59,578 | 56,633 | |||||||
Long-term portion | $ | — | $ | — | |||||
F-60
Table of Contents
Pension | ||||||
Benefits | ||||||
December 31, | ||||||
2003 | ||||||
Changes in Benefit Obligations: | ||||||
Benefit obligations at beginning of period | $ | 92,594 | ||||
Service costs | 2,999 | |||||
Interest cost | 6,098 | |||||
Actuarial loss | 4,708 | |||||
Benefits paid | (18,511 | ) | ||||
Benefit obligation at end of period | $ | 87,888 | ||||
Change in Plan Assets: | ||||||
Fair value of plan assets at beginning of period | $ | 49,693 | ||||
Actual return on plan assets | 7,537 | |||||
Employer contributions | 3,272 | |||||
Benefits paid | (18,511 | ) | ||||
Fair value of plan assets at end of period | $ | 41,991 | ||||
Funded Status of the Plan: | ||||||
Accumulated obligations less plan assets | $ | (45,897 | ) | |||
Unrecognized actuarial loss | 15,247 | |||||
Unrecognized prior service cost | (508 | ) | ||||
Additional minimum pension liability | (10,660 | ) | ||||
Net liability recognized | $ | (41,818 | ) | |||
Weighted Average Assumptions: | ||||||
Discount rate | 6.25 | % | ||||
Expected return on plan assets | 8.50 | % | ||||
Rate of compensation increase | 4.00 | % |
F-61
Table of Contents
Other | ||||||
Postretirement | ||||||
Benefits | ||||||
December 31, | ||||||
2003 | ||||||
Changes in Benefit Obligations: | ||||||
Benefit obligations at beginning of period | $ | 501,061 | ||||
Service costs | 6,251 | |||||
Interest cost | 42,278 | |||||
Actuarial loss | 79,142 | |||||
Benefits paid | (33,975 | ) | ||||
Benefit obligation at end of period | $ | 594,757 | ||||
Change in Plan Assets: | ||||||
Fair value of plan assets at beginning of period | $ | — | ||||
Actual return on plan assets | — | |||||
Employer contributions | 33,975 | |||||
Benefits paid | (33,975 | ) | ||||
Fair value of plan assets at end of period | $ | — | ||||
Funded Status of the Plan: | ||||||
Accumulated obligations less plan assets | $ | (594,757 | ) | |||
Unrecognized actuarial loss | 142,494 | |||||
Unrecognized prior service cost | — | |||||
Additional minimum pension liability | — | |||||
Net liability recognized | $ | (452,263 | ) | |||
Weighted Average Assumptions: | ||||||
Discount rate | 6.50 | % | ||||
Expected return on plan assets | N/A | |||||
Rate of compensation increase | N/A |
Other | ||||||||
Pension | Postretirement | |||||||
Benefits | Benefits | |||||||
December 31, | December 31, | |||||||
2003 | 2003 | |||||||
Accrued benefit cost included in liabilities subject to compromise | $ | (16,245 | ) | $ | (10,104 | ) | ||
Intangible assets | 5 | — | ||||||
Accumulated other comprehensive income | 3,683 | — | ||||||
Net amount recognized | $ | (12,557 | ) | $ | (10,104 | ) | ||
F-62
Table of Contents
Pension Benefits | ||||||||||||||
Reorganized | Predecessor | |||||||||||||
Companies | Companies | |||||||||||||
January 1, 2003 | May 10, 2002 to | January 1, 2002 | ||||||||||||
December 31, 2003 | December 31, 2002 | to May 9, 2002 | ||||||||||||
Net periodic benefit cost: | ||||||||||||||
Service cost | $ | 2,999 | $ | 2,145 | $ | 1,173 | ||||||||
Interest cost | 6,098 | 4,213 | 2,303 | |||||||||||
Settlement charge | 2,184 | 3,821 | 0 | |||||||||||
Expected return on assets | (5,468 | ) | (4,812 | ) | (2,631 | ) | ||||||||
Amortization of: | ||||||||||||||
Prior service cost | (72 | ) | (47 | ) | (26 | ) | ||||||||
Actuarial loss | 21 | 222 | 122 | |||||||||||
Benefit cost | $ | 5,762 | $ | 5,542 | $ | 941 | ||||||||
Other Postretirement Benefits | |||||||||||||
Reorganized | Predecessor | ||||||||||||
Companies | Companies | ||||||||||||
January 1, 2003 | May 10, 2002 to | January 1, 2002 | |||||||||||
December 31, 2003 | December 31, 2002 | to May 9, 2002 | |||||||||||
Net periodic benefit cost: | |||||||||||||
Service cost | $ | 6,251 | $ | 4,253 | $ | 1,758 | |||||||
Interest cost | 42,278 | 20,132 | 11,004 | ||||||||||
Amortization of — Actuarial (gain) loss | 897 | (566 | ) | (310 | ) | ||||||||
Benefit cost | $ | 49,426 | $ | 23,819 | $ | 12,452 | |||||||
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Table of Contents
1-Percentage- | 1-Percentage- | |||||||
Point | Point | |||||||
Increase | Decrease | |||||||
Effect on total of service and interest cost components | $ | 6,300 | $ | (5,200 | ) | |||
Effect on postretirement benefit obligation | 81,300 | (67,300 | ) |
Asset Category | 2003 | ||||
Mutual funds | 49 | % | |||
Cash Equivalents | 51 | ||||
Total | 100 | % | |||
F-64
Table of Contents
F-65
Table of Contents
2004 | 2003 | |||||||||||||||
September 30, | January 1, 2004 to | December 31, | January 1, 2003 to | |||||||||||||
2004 | September 30, | 2003 | December 31, | |||||||||||||
Total | 2004 | Total | 2003 | |||||||||||||
Receivable | Total | Receivable | Total | |||||||||||||
Balance | Revenues | Balance | Revenues | |||||||||||||
Customer A | $ | 4,105 | $ | 44,788 | $ | 1,342 | $ | 119,817 | ||||||||
Customer B | 8,187 | 58,712 | 224 | 89,459 | ||||||||||||
Customer C | 11,499 | 36,244 | 3,233 | 42,317 |
2002 | |||||||||||||||||
May 10, 2002 to | January 1, 2002 to | ||||||||||||||||
December 31, | May 9, | ||||||||||||||||
2002 | 2002 | ||||||||||||||||
Total | Total | ||||||||||||||||
Revenues | Revenues | ||||||||||||||||
Customer A | $ | 58,566 | $ | 34,209 | |||||||||||||
Customer B | 48,033 | 24,584 | |||||||||||||||
Customer C | 18,235 | 5,543 |
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Table of Contents
Reorganized Companies | |||||||||||||
January 1, 2004 to | Year Ended | May 10, 2002 to | |||||||||||
September 30, 2004 | December 31, 2003 | December 31, 2002 | |||||||||||
Goodwill impairment | $ | — | $ | — | $ | 697,063 | |||||||
Sale of mineral rights, equipment and impairment of operating assets | 10,018 | 6,416 | 32,890 | ||||||||||
Inventory writedown and other | — | 2,684 | — | ||||||||||
Total | $ | 10,018 | $ | 9,100 | $ | 729,953 | |||||||
Predecessor | |||||||||||||
Companies | |||||||||||||
January 1, 2002 to | |||||||||||||
May 9, 2002 | |||||||||||||
Impairment of operating assets | $ | 8,323 | |||||||||||
Total | $ | 8,323 | |||||||||||
F-67
Table of Contents
Reorganized Companies | |||||||||||||
January 1, 2004 to | Year Ended | May 10, 2002 to | |||||||||||
September 30, 2004 | December 31, 2003 | December 31, 2002 | |||||||||||
Bankruptcy related reorganization expenses, including professional services fees and labor costs | $ | (12,471 | ) | $ | (23,064 | ) | $ | (4,075 | ) | ||||
Total | $ | (12,471 | ) | $ | (23,064 | ) | $ | (4,075 | ) | ||||
Predecessor Companies | |||||
January 1, 2002 to | |||||
May 9, 2002 | |||||
Gain on Fresh Start Valuation | $ | 645,824 | |||
Gain on Debt Extinguishment | 161,584 | ||||
Bankruptcy related reorganization expenses, including professional services fees and labor costs | (19,508 | ) | |||
Total | $ | 787,900 | |||
F-68
Table of Contents
January 1, 2002 | |||||
through | |||||
May 9, 2002 | |||||
Revenues, costs and expenses: | |||||
Coal sales | $ | 2,537 | |||
Equipment rental and repair income | 524 | ||||
Administrative and miscellaneous income | 93 | ||||
Trucking expense | 885 | ||||
Repair, maintenance & other mining costs | 6,818 | ||||
Equipment rental cost | 1,413 | ||||
Administrative and miscellaneous expense | 3 |
Central | Illinois | |||||||||||||||||||
Appalachian | Basin | Ancillary | Eliminations | Consolidated | ||||||||||||||||
Revenue | $ | 252,669 | $ | 38,306 | $ | 83,693 | $ | (1,285 | ) | $ | 373,383 | |||||||||
EBITDA | 28,376 | 5,243 | 476 | — | 34,095 | |||||||||||||||
Depreciation, depletion and amortization | 20,348 | 2,568 | 4,631 | — | 27,547 | |||||||||||||||
Capital expenditures | 4,309 | 1,263 | 1,052 | — | 6,624 | |||||||||||||||
Total assets | 308,193 | 89,782 | (230,301 | ) | 371,932 | 539,600 |
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Central | Illinois | |||||||||||||||||||
Appalachian | Basin | Ancillary | Eliminations | Consolidated | ||||||||||||||||
Revenue | $ | 281,488 | $ | 49,904 | $ | 151,419 | $ | (1,741 | ) | $ | 481,070 | |||||||||
EBITDA | 2,915 | 7,438 | (11,050 | ) | — | 21,403 | ||||||||||||||
Depreciation, depletion and amortization | 29,239 | 3,954 | 19,061 | — | 52,254 | |||||||||||||||
Capital expenditures | 11,252 | 784 | 4,901 | — | 16,937 | |||||||||||||||
Total assets | 304,472 | 34,792 | (192,587 | ) | 371,932 | 576,372 |
Central | Illinois | |||||||||||||||||||
Appalachian | Basin | Ancillary | Eliminations | Consolidated | ||||||||||||||||
Revenue | $ | 176,318 | $ | 30,471 | $ | 94,125 | $ | (3,250 | ) | $ | 297,664 | |||||||||
EBITDA | (237,549 | ) | (16,796 | ) | (929,910 | ) | — | (709,157 | ) | |||||||||||
Depreciation, depletion and amortization | 25,781 | 3,099 | 11,153 | — | 40,033 | |||||||||||||||
Capital expenditures | 9,964 | 2,458 | 1,013 | — | 13,435 | |||||||||||||||
Total assets | 332,519 | 88,832 | (169,543 | ) | 371,932 | 623,800 |
Central | Illinois | |||||||||||||||||||
Appalachian | Basin | Ancillary | Eliminations | Consolidated | ||||||||||||||||
Revenue | $ | 99,139 | $ | 12,617 | $ | 49,739 | $ | (1,325 | ) | $ | 160,170 | |||||||||
EBITDA | 12,050 | (1,221 | ) | 799,677 | — | 812,948 | ||||||||||||||
Depreciation, depletion and amortization | 19,598 | 2,586 | 10,132 | — | 32,316 | |||||||||||||||
Capital expenditures | 6,965 | 361 | 3,637 | — | 10,963 | |||||||||||||||
Total assets | 182,352 | 53,253 | 1,321,881 | (36,168 | ) | 1,521,318 |
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Nine months | Twelve months | Period from | Period from | |||||||||||||
ended | ended | May 10, 2002 to | January 1, 2002 to | |||||||||||||
September 30, | December 31, | December 31, | May 9, | |||||||||||||
2004 | 2003 | 2002 | 2002 | |||||||||||||
EBITDA | $ 34,095 | $ 21,403 | $(709,157 | ) | $812,948 | |||||||||||
Depreciation, depletion and amortization | (27,547 | ) | (52,254 | ) | (40,033 | ) | (32,316 | ) | ||||||||
Interest expense | (114,211 | ) | (145,892 | ) | (80,405 | ) | (36,666 | ) | ||||||||
Income (loss) before income tax expense (benefit) | $(107,663 | ) | $(176,743 | ) | $(829,595 | ) | $743,966 | |||||||||
Period from | Period from | ||||||||||||||||
January 1, | May 10, 2002 | ||||||||||||||||
2004 to | Year Ended | to | Period from | ||||||||||||||
September 30, | December 31, | December 31, | January 1, 2002 to | ||||||||||||||
2004 | 2003 | 2002 | May 9, 2002 | ||||||||||||||
Reorganization items: | |||||||||||||||||
As reported | $ | 727 | $ | (52,784 | ) | $ | (143,663 | ) | $ | 1,567,689 | |||||||
Adjustment | (13,198 | ) | 29,720 | 139,588 | (779,789 | ) | |||||||||||
As restated | $ | (12,471 | ) | $ | (23,064 | ) | $ | (4,075 | ) | $ | 787,900 | ||||||
Accumulated deficit — January 1, 2002: | |||||||||||||||||
As reported | $ | (878,508 | ) | ||||||||||||||
Adjustment | (21,704 | ) | |||||||||||||||
As restated | $ | (900,212 | ) | ||||||||||||||
Fresh start accounting adjustments: | |||||||||||||||||
As reported | $ | (645,247 | ) | ||||||||||||||
Adjustment | 801,493 | ||||||||||||||||
As restated | $ | 156,246 | |||||||||||||||
September 30, | December 31, | ||||||||||||||||
2004 | 2003 | ||||||||||||||||
(Due to) from other Horizon subsidiaries: | |||||||||||||||||
As reported | $ | — | $ | — | |||||||||||||
Adjustment | (13,198 | ) | 169,308 | ||||||||||||||
As restated | $ | (13,198 | ) | $ | 169,308 | ||||||||||||
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F-72
Table of Contents
June 30, | December 31, | ||||||||||
2005 | 2004 | ||||||||||
(Unaudited) | |||||||||||
ASSETS | |||||||||||
CURRENT ASSETS: | |||||||||||
Cash and cash equivalents | $ | 294,565 | $ | 1,165,559 | |||||||
Accounts receivable — trade, net of allowance of $1,609,309 and $1,194,895 at June 30, 2005 and December 31, 2004, respectively | 5,793,914 | 9,050,468 | |||||||||
Accounts receivable — other | 3,908,814 | 2,311,255 | |||||||||
Coal and supply inventory | 4,413,761 | 4,026,612 | |||||||||
Prepaid expenses and other | 972,904 | 1,457,087 | |||||||||
Total current assets | 15,383,958 | 18,010,981 | |||||||||
PROPERTY, PLANT AND EQUIPMENT, net | 67,219,787 | 54,122,751 | |||||||||
NOTES RECEIVABLE, net of allowance of $759,797 at December 31, 2004 | 500,000 | ||||||||||
ADVANCE ROYALTIES | 3,279,640 | 3,439,379 | |||||||||
OTHER NON-CURRENT ASSETS: | |||||||||||
Bonds and deposits | 2,887,365 | 2,583,082 | |||||||||
Investment in joint venture | 1,042,555 | 434,322 | |||||||||
Other | 4,146,875 | 4,280,186 | |||||||||
Total other non-current assets | 8,076,795 | 7,297,590 | |||||||||
TOTAL | $ | 93,960,180 | $ | 83,370,701 | |||||||
LIABILITIES AND STOCKHOLDERS’ EQUITY (DEFICIT) | |||||||||||
CURRENT LIABILITIES: | |||||||||||
Accounts payable | $ | 15,179,001 | $ | 10,281,124 | |||||||
Accrued expenses | 8,151,074 | 8,253,453 | |||||||||
Reclamation — current portion | 1,888,687 | 105,413 | |||||||||
Notes payable — current portion | 25,158,720 | 14,848,690 | |||||||||
Total current liabilities | 50,377,482 | 33,488,680 | |||||||||
NOTES PAYABLE | 10,526,846 | 9,699,753 | |||||||||
OTHER NON-CURRENT LIABILITIES: | |||||||||||
Reclamation | 24,104,445 | 25,168,633 | |||||||||
Deferred gain on sale-leaseback | 8,707,075 | 8,832,792 | |||||||||
Other | 4,454,308 | 4,783,509 | |||||||||
Total other non-current liabilities | 37,265,828 | 38,784,934 | |||||||||
Total liabilities | 98,170,156 | 81,973,367 | |||||||||
COMMITMENTS AND CONTINGENCIES | |||||||||||
STOCKHOLDERS’ EQUITY (DEFICIT): | |||||||||||
Common stock, no par value, 1,000,000 shares authorized and issued | |||||||||||
Paid-in capital | 145,588,000 | 145,588,000 | |||||||||
Accumulated deficit | (149,797,976 | ) | (144,190,666 | ) | |||||||
Total stockholders’ equity (deficit) | (4,209,976 | ) | 1,397,334 | ||||||||
Total liabilities and stockholders’ equity (deficit) | $ | 93,960,180 | $ | 83,370,701 | |||||||
F-73
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Six Months Ended June 30, | Year Ended | |||||||||||||
December 31, | ||||||||||||||
2005 | 2004 | 2004 | ||||||||||||
(Unaudited) | (Unaudited) | |||||||||||||
REVENUES: | ||||||||||||||
Coal revenue | $ | 78,509,309 | $ | 74,092,291 | $ | 146,675,714 | ||||||||
Freight and handling | 6,118,000 | 5,220,876 | 11,415,952 | |||||||||||
Waste and blended fuel revenue | 3,794,317 | 3,114,683 | 6,228,786 | |||||||||||
Total revenues | 88,421,626 | 82,427,850 | 164,320,452 | |||||||||||
COSTS AND EXPENSES: | ||||||||||||||
Cost of coal sold | 80,356,739 | 73,596,453 | 145,985,163 | |||||||||||
Freight and handling costs | 6,118,000 | 5,220,876 | 11,415,952 | |||||||||||
Depreciation, depletion and amortization | 6,056,311 | 4,500,713 | 9,754,467 | |||||||||||
Selling, general and administrative | 3,330,241 | 1,879,765 | 4,585,793 | |||||||||||
Total costs and expenses | 95,861,291 | 85,197,807 | 171,741,375 | |||||||||||
OPERATING LOSS | (7,439,665 | ) | (2,769,957 | ) | (7,420,923 | ) | ||||||||
OTHER INCOME (EXPENSE): | ||||||||||||||
Interest income | 114,859 | 86,782 | 181,164 | |||||||||||
Interest expense | (1,351,604 | ) | (642,612 | ) | (1,485,481 | ) | ||||||||
Other, net | 2,460,864 | 2,007,265 | 5,555,196 | |||||||||||
Total other income (expense) | 1,224,119 | 1,451,435 | 4,250,879 | |||||||||||
Equity in earnings (loss) of joint venture | 608,236 | 77,146 | (26,929 | ) | ||||||||||
Net loss | $ | (5,607,310 | ) | $ | (1,241,376 | ) | $ | (3,196,973 | ) | |||||
F-74
Table of Contents
Accumulated | |||||||||||||
Paid-in Capital | Deficit | Total | |||||||||||
Balances at December 31, 2003, as previously reported | $ | 145,588,000 | $ | (141,925,000 | ) | $ | 3,663,000 | ||||||
Prior period adjustment — see Note 13 | 931,307 | 931,307 | |||||||||||
As restated | 145,588,000 | (140,993,693 | ) | 4,594,307 | |||||||||
Net loss | (3,196,973 | ) | (3,196,973 | ) | |||||||||
Balances at December 31, 2004 | 145,588,000 | (144,190,666 | ) | 1,397,334 | |||||||||
Net loss — June 30, 2005 (unaudited) | — | (5,607,310 | ) | (5,607,310 | ) | ||||||||
Balances at June 30, 2005 (unaudited) | $ | 145,588,000 | $ | (149,797,976 | ) | $ | (4,209,976 | ) | |||||
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Table of Contents
Six Months Ended June 30, | Year Ended | |||||||||||||||
December 31, | ||||||||||||||||
2005 | 2004 | 2004 | ||||||||||||||
(Unaudited) | (Unaudited) | |||||||||||||||
OPERATING ACTIVITIES: | ||||||||||||||||
Net loss | $ | (5,607,310 | ) | $ | (1,241,376 | ) | $ | (3,196,973 | ) | |||||||
Adjustments to reconcile net loss to net cash provided by operating activities: | ||||||||||||||||
Depreciation, depletion and amortization | 6,056,311 | 4,500,713 | 9,754,467 | |||||||||||||
Loss on sales of property, plant and equipment | 7,751 | 105,805 | ||||||||||||||
Equity in loss (income) of joint venture | (608,236 | ) | (77,146 | ) | 26,929 | |||||||||||
Changes in assets and liabilities: | ||||||||||||||||
Accounts receivable — trade | 3,256,554 | (1,592,263 | ) | (1,608,549 | ) | |||||||||||
Accounts receivable — other | (1,597,559 | ) | (699,234 | ) | (1,299,892 | ) | ||||||||||
Coal and supply inventory | (387,149 | ) | (2,025,333 | ) | (2,023,272 | ) | ||||||||||
Other current assets and other assets | 234,899 | 735,832 | (568,336 | ) | ||||||||||||
Advance royalties | 159,739 | (437,795 | ) | (1,616,922 | ) | |||||||||||
Accounts payable | 4,897,877 | 1,294,850 | 5,339,644 | |||||||||||||
Accrued expenses | (102,379 | ) | 1,570,521 | 2,086,921 | ||||||||||||
Other current and non-current liabilities | 264,171 | (247,202 | ) | 3,149,579 | ||||||||||||
Net cash provided by operating activities | 6,574,669 | 1,781,567 | 10,149,401 | |||||||||||||
INVESTING ACTIVITIES: | ||||||||||||||||
Expenditures for purchases of property, plant and equipment | (19,090,286 | ) | (9,434,653 | ) | (27,238,311 | ) | ||||||||||
Proceeds from sales of property, plant and equipment | 7,500 | 151,750 | ||||||||||||||
Proceeds from notes receivable | 500,000 | 787,979 | ||||||||||||||
Net cash used in investing activities | (18,582,786 | ) | (9,434,653 | ) | (26,298,582 | ) | ||||||||||
FINANCING ACTIVITIES: | ||||||||||||||||
Principal payments on debt | (3,270,167 | ) | (610,531 | ) | (4,840,717 | ) | ||||||||||
Proceeds from debt | 14,407,290 | 6,009,365 | 18,978,707 | |||||||||||||
Net cash provided by financing activities | 11,137,123 | 5,398,834 | 14,137,990 | |||||||||||||
Net decrease in cash and cash equivalents | (870,994 | ) | (2,254,252 | ) | (2,011,191 | ) | ||||||||||
Cash and cash equivalents, beginning of period | 1,165,559 | 3,176,750 | 3,176,750 | |||||||||||||
Cash and cash equivalents, end of period | $ | 294,565 | $ | 922,498 | $ | 1,165,559 | ||||||||||
Cash paid during the period for interest | $ | 687,482 | $ | 275,612 | $ | 703,417 | ||||||||||
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Table of Contents
1. | Description of Business and Significant Accounting Policies |
June 30, | December 31, | |||||||
2005 | 2004 | |||||||
(Unaudited) | ||||||||
Coal | $4,069,696 | $ | 3,673,080 | |||||
Parts and supplies, net of allowance of $26,015 and $142,996 | 344,065 | 353,532 | ||||||
$4,413,761 | $ | 4,026,612 | ||||||
F-77
Table of Contents
Years | ||
Buildings and improvements | 10 to 30 | |
Machinery and equipment | 3 to 15 | |
Vehicles | 3 to 5 | |
Furniture and fixtures | 3 to 10 |
F-78
Table of Contents
2. | Property, Plant and Equipment |
June 30, | December 31, | |||||||
2005 | 2004 | |||||||
(Unaudited) | ||||||||
Land | $ | 4,587,029 | $ | 4,127,202 | ||||
Buildings and improvements | 20,913,551 | 19,233,942 | ||||||
Mine development | 44,114,594 | 37,623,860 | ||||||
Machinery and equipment | 63,120,611 | 56,830,387 | ||||||
Vehicles | 598,978 | 579,096 | ||||||
Furniture and fixtures | 3,669,350 | 3,451,851 | ||||||
Construction in progress | 5,820,371 | 2,631,545 | ||||||
Mineral rights | 9,567,906 | 9,567,906 | ||||||
Total property, plant and equipment | 152,392,390 | 134,045,789 | ||||||
Less accumulated depreciation, depletion and amortization | 85,172,603 | 79,923,038 | ||||||
Property, plant and equipment, net | $ | 67,219,787 | $ | 54,122,751 | ||||
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Table of Contents
3. | Notes Payable |
June 30, | December 31, | |||||||
2005 | 2004 | |||||||
(Unaudited) | ||||||||
Senior notes, interest at 10% | $ | 7,000,000 | $ | 7,000,000 | ||||
Note payable, interest at 8% | 928,185 | 1,592,622 | ||||||
Related party note payable, interest at 8% | 18,292,045 | 7,580,834 | ||||||
Related party revolving credit line, interest at 8% | 4,500,000 | 4,500,000 | ||||||
Equipment notes (fixed rates ranging from 4% to 7.643%) | 4,965,336 | 3,874,987 | ||||||
Total | 35,685,566 | 24,548,443 | ||||||
Less: current portion | 25,158,720 | 14,848,690 | ||||||
Total notes payable | $ | 10,526,846 | $ | 9,699,753 | ||||
Year Ending December 31 | ||||
2005 | $ | 14,848,690 | ||
2006 | 1,034,428 | |||
2007 | 596,862 | |||
2008 | 981,121 | |||
2009 | 1,822,478 | |||
Thereafter | 5,264,864 | |||
Total | $ | 24,548,443 | ||
4. | Deferred Gain on Sale-Leaseback |
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Table of Contents
5. | Other Income, Net |
Six Months Ended | ||||||||||||
June 30, | ||||||||||||
Year Ended | ||||||||||||
2005 | 2004 | December 31, 2004 | ||||||||||
(Unaudited) | (Unaudited) | |||||||||||
Ash revenue | $ | 857,061 | $ | 815,839 | $ | 1,637,798 | ||||||
Commissions revenue | 372,753 | 317,777 | 1,434,934 | |||||||||
Miscellaneous revenue | 737,937 | 501,220 | 1,703,069 | |||||||||
Royalty revenue | 493,113 | 372,429 | 779,395 | |||||||||
Total | $ | 2,460,864 | $ | 2,007,265 | $ | 5,555,196 | ||||||
6. | Leases |
Total | ||||
2005 | $ | 1,218,620 | ||
2006 | 1,176,476 | |||
2007 | 824,583 | |||
2008 | 818,567 | |||
2009 | 813,534 | |||
Thereafter | 813,118 | |||
Total | $ | 5,664,898 | ||
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Table of Contents
7. Income Taxes |
Six Months Ended | ||||||||||||
Year Ended | ||||||||||||
June 30, | June 30, | December 31, | ||||||||||
2005 | 2004 | 2004 | ||||||||||
(Unaudited) | (Unaudited) | |||||||||||
Current | $ | $ | $ | |||||||||
Deferred | (2,359,186 | ) | (505,240 | ) | (1,038,328 | ) | ||||||
Valuation allowance | 2,359,186 | 505,240 | 1,038,328 | |||||||||
Total | $ | $ | $ | |||||||||
December 31, | ||||
2004 | ||||
Federal provision (benefit) computed at statutory rate | $ | (1,118,941 | ) | |
State income tax provision (benefit) (net of federal tax benefits and apportionment factors) computed at statutory rate | (159,849 | ) | ||
Valuation allowance | 1,038,328 | |||
Restructuring charges | 141,456 | |||
Other | 99,006 | |||
$ | — | |||
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December 31, | ||||||
2004 | ||||||
Deferred Tax Assets: | ||||||
Accrued employee benefits | $ | 2,347,632 | ||||
Accrued reclamation and closure | 9,725,829 | |||||
Deferred income | 3,365,676 | |||||
Other | 451,984 | |||||
15,891,121 | ||||||
Valuation allowance | (2,622,294 | ) | ||||
13,268,827 | ||||||
Deferred Tax Liabilities: | ||||||
Property, mineral reserves and mine development costs | 13,268,827 | |||||
Other | — | |||||
13,268,827 | ||||||
Net deferred tax asset/liability | $ | — | ||||
Classified in balance sheet: | ||||||
Other current assets | $ | 241,052 | ||||
Non-current liabilities | $ | 241,052 |
8. | Benefit Plan |
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9. | Related Party |
For the | As of and for the | As of and for the | ||||||||||
Six Months | Six Months | Year Ended | ||||||||||
Ended | Ended | December 31, | ||||||||||
June 30, 2004 | June 30, 2005 | 2004 | ||||||||||
(Unaudited) | ||||||||||||
Advance royalties | $ | 1,038,960 | $ | 1,038,960 | ||||||||
Accounts payable | 124,521 | 70,345 | ||||||||||
Accrued expenses | 1,155,225 | 1,168,384 | ||||||||||
Royalty expense | 917,293 | 753,699 | 1,769,324 |
10. | Commitments and Contingencies |
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Table of Contents
11. | Major Customers |
Six Months Ended | Six Months Ended | |||||||||||||||||||
June 30, 2004 | June 30, 2005 | Year Ended December 31, 2004 | ||||||||||||||||||
Total | Total | |||||||||||||||||||
Total | Receivable | Total | Receivable | Total | ||||||||||||||||
Revenues | Balance | Revenues | Balance | Revenues | ||||||||||||||||
(Unaudited) | ||||||||||||||||||||
(Unaudited) | ||||||||||||||||||||
Customer A | $ | 14,039,596 | $ | 2,809,228 | $ | 15,843,017 | $ | 3,253,195 | $ | 31,377,653 | ||||||||||
Customer B | 12,190,884 | 1,671,783 | 11,262,609 | 488,537 | 25,146,998 | |||||||||||||||
Customer C | 11,940,625 | 509,105 | 10,402,052 | 3,037,820 | 24,324,298 | |||||||||||||||
Customer D | 8,525,571 | 126,900 | 10,335,785 | 563,485 | 17,734,949 |
12. | Business Combination Agreement |
13. | Prior Period Adjustment |
F-85
Table of Contents
CoalQuest Development LLC
New York, New York
F-86
Table of Contents
June 30, | December 31, | |||||||||
2005 | 2004 | |||||||||
(Unaudited) | ||||||||||
ASSETS | ||||||||||
CURRENT ASSETS: | ||||||||||
Cash and cash equivalents | $ | 1,801,311 | $ | 1,818,883 | ||||||
Royalties receivable | 1,279,746 | 1,238,729 | ||||||||
Prepaid expense | 23,925 | 15,150 | ||||||||
Total current assets | 3,104,982 | 3,072,762 | ||||||||
Coal lands, net | 18,889,204 | 18,920,896 | ||||||||
TOTAL | $ | 21,994,186 | $ | 21,993,658 | ||||||
LIABILITIES AND MEMBERS’ EQUITY | ||||||||||
CURRENT LIABILITIES: | ||||||||||
Accounts payable and accrued expenses | $ | 103,419 | $ | 546,082 | ||||||
Interest payable | 825,369 | 535,200 | ||||||||
Total current liabilities | 928,788 | 1,081,282 | ||||||||
NOTES PAYABLE | 16,250,000 | 16,250,000 | ||||||||
DEFERRED ROYALTY INCOME | 1,038,960 | 1,038,960 | ||||||||
Total liabilities | 18,217,748 | 18,370,242 | ||||||||
MEMBERS’ EQUITY: | ||||||||||
Paid-in capital | 3,250,000 | 3,250,000 | ||||||||
Retained earnings | 526,438 | 373,416 | ||||||||
Total members’ equity | 3,776,438 | 3,623,416 | ||||||||
TOTAL LIABILITIES AND MEMBERS’ EQUITY | $ | 21,994,186 | $ | 21,993,658 | ||||||
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Table of Contents
Six Months Ended | Year Ended | |||||||||||||
June 30, | December 31, | |||||||||||||
2005 | 2004 | 2004 | ||||||||||||
(Unaudited) | (Unaudited) | |||||||||||||
ROYALTY INCOME | $ | 753,699 | $ | 917,293 | $ | 1,769,324 | ||||||||
OPERATING EXPENSES | 253,102 | 412,738 | 449,112 | |||||||||||
OPERATING INCOME | 500,598 | 504,555 | 1,320,212 | |||||||||||
OTHER INCOME (EXPENSE): | ||||||||||||||
Interest income | 17,599 | 1,284 | 7,934 | |||||||||||
Interest expense | (290,169 | ) | (241,028 | ) | (535,200 | ) | ||||||||
Other income | — | — | 132,607 | |||||||||||
Total other income (expense) | (272,570 | ) | (239,744 | ) | (394,659 | ) | ||||||||
Net income | $ | 228,027 | $ | 264,811 | $ | 925,553 | ||||||||
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Table of Contents
Retained | |||||||||||||
Paid-in | Earnings | ||||||||||||
Capital | (Deficit) | Total | |||||||||||
Balance at January 1, 2004 | $ | 8,450,890 | $ | (174,491 | ) | $ | 8,276,399 | ||||||
Capital contribution | 1,592,243 | 1,592,243 | |||||||||||
Net income | 925,553 | 925,553 | |||||||||||
Distributions | (6,793,133 | ) | (377,646 | ) | (7,170,779 | ) | |||||||
Balance at December 31, 2004 | 3,250,000 | 373,416 | 3,623,416 | ||||||||||
Net income (unaudited) | 228,027 | 228,027 | |||||||||||
Distributions (unaudited) | — | (75,005 | ) | (75,005 | ) | ||||||||
Balance at June 30, 2005 (unaudited) | $ | 3,250,000 | $ | 526,438 | $ | 3,776,438 | |||||||
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Six Months Ended | Year Ended | |||||||||||||||
June 30, | December 31, | |||||||||||||||
2005 | 2004 | 2004 | ||||||||||||||
(Unaudited) | (Unaudited) | |||||||||||||||
OPERATING ACTIVITIES: | ||||||||||||||||
Net income | $ | 228,027 | $ | 264,811 | $ | 925,553 | ||||||||||
Adjustments to reconcile net income to net cash provided by operating activities: | ||||||||||||||||
Depletion | 31,692 | 41,627 | 79,104 | |||||||||||||
Changes in assets and liabilities: | ||||||||||||||||
Royalties receivable | (41,017 | ) | (171,459 | ) | (199,769 | ) | ||||||||||
Prepaid expense | (8,775 | ) | (15,150 | ) | ||||||||||||
Accounts payable and accrued expenses | (442,663 | ) | 155,206 | (6,835 | ) | |||||||||||
Interest payable | 290,169 | 241,028 | 535,200 | |||||||||||||
Net cash provided by operating activities | 57,433 | 531,213 | 1,318,103 | |||||||||||||
FINANCING ACTIVITIES: | ||||||||||||||||
Principal payments on debt | (11,049,110 | ) | (11,049,110 | ) | ||||||||||||
Proceeds from debt | 16,250,000 | 16,250,000 | ||||||||||||||
Capital contributions | 1,592,243 | 1,592,243 | ||||||||||||||
Distributions | (75,005 | ) | (6,793,133 | ) | (6,793,133 | ) | ||||||||||
Net cash used in financing activities | (75,005 | ) | — | — | ||||||||||||
Net increase (decrease) in cash and cash equivalents | (17,572 | ) | 531,213 | 1,318,103 | ||||||||||||
Cash and cash equivalents, beginning of period | 1,818,883 | 500,780 | 500,780 | |||||||||||||
Cash and cash equivalents, end of period | $ | 1,801,311 | $ | 1,031,993 | $ | 1,818,883 | ||||||||||
Supplemental disclosure of non-cash items: | ||||||||||||||||
Dividends declared included in accounts payable and accrued expenses | $ | $ | $ | 377,646 | ||||||||||||
Deferred royalty income included in royalties receivable | $ | $ | $ | 1,038,960 | ||||||||||||
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1. | Description of Business and Significant Accounting Policies |
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2. | Coal Lands |
June 30, | December 31, | |||||||
2005 | 2004 | |||||||
(Unaudited) | ||||||||
Coal lands | $ | 19,000,000 | $ | 19,000,000 | ||||
Less accumulated depletion | 110,796 | 79,104 | ||||||
Coal lands, net | $ | 18,889,204 | $ | 18,920,896 | ||||
3. | Notes Payable |
4. | Business Combination Agreement |
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(1) Provided, however, that no appraisal rights under this section shall be available for the shares of any class or series of stock, which stock, or depository receipts in respect thereof, at the record date fixed to determine the stockholders entitled to receive notice of and to vote at the meeting of stockholders to act upon the agreement of merger or consolidation, were either (i) listed on a national securities exchange or designated as a national market system security on an interdealer quotation system by the National Association of Securities Dealers, Inc. or (ii) held of record by more than 2,000 holders; and further provided that no appraisal rights shall be available for any shares of stock of the constituent corporation surviving a merger if the merger did not require for its approval the vote of the stockholders of the surviving corporation as provided in subsection (f) of §251 of this title. | |
(2) Notwithstanding paragraph (1) of this subsection, appraisal rights under this section shall be available for the shares of any class or series of stock of a constituent corporation if the holders thereof are required by the terms of an agreement of merger or consolidation pursuant to §§251, 252, 254, 257, 258, 263 and 264 of this title to accept for such stock anything except: |
a. Shares of stock of the corporation surviving or resulting from such merger or consolidation, or depository receipts in respect thereof; | |
b. Shares of stock of any other corporation, or depository receipts in respect thereof, which shares of stock (or depository receipts in respect thereof) or depository receipts at the effective date of the merger or consolidation will be either listed on a national securities exchange or designated as a national market system security on an interdealer quotation system by the National Association of Securities Dealers, Inc. or held of record by more than 2,000 holders; | |
c. Cash in lieu of fractional shares or fractional depository receipts described in the foregoing subparagraphs a. and b. of this paragraph; or | |
d. Any combination of the shares of stock, depository receipts and cash in lieu of fractional shares or fractional depository receipts described in the foregoing subparagraphs a., b. and c. of this paragraph. |
(3) In the event all of the stock of a subsidiary Delaware corporation party to a merger effected under §253 of this title is not owned by the parent corporation immediately prior to the merger, appraisal rights shall be available for the shares of the subsidiary Delaware corporation. |
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(1) If a proposed merger or consolidation for which appraisal rights are provided under this section is to be submitted for approval at a meeting of stockholders, the corporation, not less than 20 days prior to the meeting, shall notify each of its stockholders who was such on the record date for such meeting with respect to shares for which appraisal rights are available pursuant to subsection (b) or (c) hereof that appraisal rights are available for any or all of the shares of the constituent corporations, and shall include in such notice a copy of this section. Each stockholder electing to demand the appraisal of such stockholder’s shares shall deliver to the corporation, before the taking of the vote on the merger or consolidation, a written demand for appraisal of such stockholder’s shares. Such demand will be sufficient if it reasonably informs the corporation of the identity of the stockholder and that the stockholder intends thereby to demand the appraisal of such stockholder’s shares. A proxy or vote against the merger or consolidation shall not constitute such a demand. A stockholder electing to take such action must do so by a separate written demand as herein provided. Within 10 days after the effective date of such merger or consolidation, the surviving or resulting corporation shall notify each stockholder of each constituent corporation who has complied with this subsection and has not voted in favor of or consented to the merger or consolidation of the date that the merger or consolidation has become effective; or | |
(2) If the merger or consolidation was approved pursuant to §228 or §253 of this title, then either a constituent corporation before the effective date of the merger or consolidation or the surviving or resulting corporation within 10 days thereafter shall notify each of the holders of any class or series of stock of such constituent corporation who are entitled to appraisal rights of the approval of the merger or consolidation and that appraisal rights are available for any or all shares of such class or series of stock of such constituent corporation, and shall include in such notice a copy of this section. Such notice may, and, if given on or after the effective date of the merger or consolidation, shall, also notify such stockholders of the effective date of the merger or consolidation. Any stockholder entitled to appraisal rights may, within 20 days after the date of mailing of such notice, demand in writing from the surviving or resulting corporation the appraisal of such holder’s shares. Such demand will be sufficient if it reasonably informs the corporation of the identity of the stockholder and that the stockholder intends thereby to demand the appraisal of such holder’s shares. If such notice did not notify stockholders of the effective date of the merger or consolidation, either (i) each such constituent corporation shall send a second notice before the effective date of the merger or consolidation notifying each of the holders of any class or series of stock of such constituent corporation that are entitled to appraisal rights of the effective date of the merger or consolidation or (ii) the surviving or resulting corporation shall send such a second notice to all such holders on or within 10 days after such effective date; provided, however, that if such second notice is sent more than 20 days following the sending of the first notice, such second notice need only be sent to each stockholder who is entitled to appraisal rights and who has demanded appraisal of such holder’s shares in accordance with this subsection. An affidavit of the secretary or assistant secretary or of the transfer agent of the corporation that is required to give either notice that such notice has been given shall, in the absence of fraud, be prima facie evidence of the facts stated therein. For purposes of determining the stockholders entitled to receive either notice, each constituent corporation may fix, in advance, a record date that shall be not more than 10 days prior to the date the notice is given, provided, that if the notice is given on or after the effective date of the merger or consolidation, the record date shall be such effective date. If no record date is fixed and the notice is given prior to the |
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effective date, the record date shall be the close of business on the day next preceding the day on which the notice is given. |
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ITEM 20. | Indemnification of Directors and Officers. |
• | International Coal Group must indemnify its directors and officers to the fullest extent permitted by Delaware law; | |
• | International Coal Group may advance expenses, as incurred, to its directors and executive officers in connection with a legal proceeding to the fullest extent permitted by Delaware Law; and | |
• | International Coal Group may indemnify its other employees and agents to the same extent that indemnified International Coal Group’s officers and directors, unless otherwise determined by International Coal Group’s board of directors. |
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ITEM 21. | Exhibits and Financial Statement Schedules. |
Exhibit | ||||||||
Number | Description of Exhibit | Note | ||||||
2.1 | Business Combination Agreement among International Coal Group, Inc. (n/k/a ICG, Inc.), ICG Holdco, Inc. (n/k/a International Coal Group, Inc.), ICG Merger Sub, Inc., Anker Merger Sub, Inc. and Anker Coal Group, Inc., dated as of March 31, 2005 | (B) | ||||||
2.2 | First Amendment to the Business Combination Agreement among International Coal Group, Inc., (f/k/a ICG Holdco, Inc.), ICG, Inc. (f/k/a International Coal Group, Inc.), ICG Merger Sub, Inc., Anker Merger Sub, Inc. and Anker Coal Group, Inc., dated as of May 10, 2005 | (B) | ||||||
2.3 | Second Amendment to the Business Combination Agreement among International Coal Group, Inc. (f/k/a ICG Holdco, Inc.), ICG, Inc. (f/k/a International Coal Group, Inc.), ICG Merger Sub, Inc., Anker Merger Sub, Inc. and Anker Coal Group, Inc., dated as of June 29, 2005 | (D) | ||||||
2.4 | Business Combination Agreement among International Coal Group, Inc. (n/k/a ICG, Inc.), ICG Holdco, Inc. (n/k/a International Coal Group, Inc.), CoalQuest Merger Sub LLC, CoalQuest Development LLC and the members of CoalQuest Development LLC dated as of March 31, 2005 | (B) | ||||||
2.5 | First Amendment to the Business Combination Agreement among International Coal Group, Inc. (f/k/a ICG Holdco, Inc.), ICG, Inc. (f/k/a International Coal Group, Inc.), CoalQuest Merger Sub LLC, CoalQuest Development LLC and the members of CoalQuest Development LLC, dated as of May 10, 2005 | (B) | ||||||
2.6 | Second Amendment to the Business Combination Agreement among International Coal Group, Inc. (f/k/a ICG Holdco, Inc.), ICG, Inc. (f/k/a International Coal Group, Inc.), CoalQuest Merger Sub LLC, CoalQuest Development LLC and the members of CoalQuest Development LLC, dated as of June 29, 2005 | (D) | ||||||
3.1 | Amended and Restated Certificate of Incorporation of International Coal Group, Inc. | (A) | ||||||
3.2 | Amended and Restated By-laws of International Coal Group, Inc. | (A) | ||||||
3.3 | Form of Second Amended and Restated Certificate of Incorporation of International Coal Group, Inc. | (E) | ||||||
4.1 | Form of certificate of International Coal Group, Inc. common stock | (E) | ||||||
4.3 | Registration Rights Agreement by and between International Coal Group, Inc. (n/k/a ICG, Inc.), WLR Recovery Fund II, L.P., Contrarian Capital Management LLC, Värde Partners, Inc., Greenlight Capital, Inc., Stark Trading and Shepherd International Coal Holdings Inc. | (B) | ||||||
4.4 | Form of Registration Rights Agreement between International Coal Group, Inc. and certain former Anker stockholders and CoalQuest members | (D) | ||||||
5.1 | Opinion of Jones Day | (G) | ||||||
8.1 | Opinion of Jones Day as to Material Federal Tax Matters | (G) | ||||||
10.1 | Amended and Restated Credit Agreement dated as of November 5, 2004 among ICG, LLC, as Borrower, International Coal Group, Inc. (n/k/a ICG, Inc.), the guarantors party thereto, UBS Securities LLC, as Arranger, Bookmanager and Syndication Agent, General Electric Capital Corporation, as Documentation Agent, UBS AG, Stamford Branch, as Issuing Bank, Administrative Agent and Collateral Agent, and UBS Loan Finance, LLC, as Swingline Lender | (A) | ||||||
10.2 | First Amendment, dated as of November 30, 2004, to the Amended and Restated Credit Agreement dated as of November 5, 2004 among ICG, LLC, as Borrower, International Coal Group, Inc. (n/k/a ICG, Inc.), the guarantors party thereto, UBS Securities LLC, as Arranger, Bookmanager and Syndication Agent, General Electric Capital Corporation, as Documentation Agent, UBS AG, Stamford Branch, as Issuing Bank, Administrative Agent and Collateral Agent, and UBS Loan Finance, LLC, as Swingline Lender | (A) |
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Exhibit | ||||||||
Number | Description of Exhibit | Note | ||||||
10.3 | Security Agreement dated as of September 30, 2004 among ICG, LLC and the guarantors party thereto and UBS AG, Stamford Branch, as Collateral Agent | (A) | ||||||
10.4 | Advisory Services Agreement effective as of October 1, 2004 between International Coal Group, LLC and W.L. Ross & Co. LLC | (A) | ||||||
10.5 | Employment Agreement dated March 14, 2005 by and between Bennett K. Hatfield and International Coal Group, Inc. | (A) | ||||||
10.6 | Employment Agreement dated April 25, 2005 by and between Roger L. Nicholson and International Coal Group, Inc. | (B) | ||||||
10.7 | Fee Lease between Kentucky Union Company, lessor, and ICG Hazard, LLC (assigned from Leslie Resources, Inc.), lessee, of Flint Ridge Surface Mine, amended by: | |||||||
(a) Assignment of Real Property Agreements, dated September 30, 2004, assigning to ICG Hazard, LLC | ||||||||
10.8 | Fee Lease between Pocahontas Development Corp., lessor, and ICG East Kentucky, LLC (assigned from Sunny Ridge Enterprises, Inc.), lessee, of Blackberry Creek Surface Mine, amended by: | (D) | ||||||
(a) Supplemental Lease and Agreement, dated May 26, 1998 | ||||||||
(b) Supplemental Lease and Agreement, dated October 27, 1998 | ||||||||
(c) Supplemental Lease and Agreement, dated November 22, 1999 | ||||||||
(d) Supplemental Lease and Agreement, dated May 30, 2001 | ||||||||
(e) Partial Lease and Amendment of Lease, dated August 21, 2003 | ||||||||
(f) Assignment of Real Property Agreements, dated September 30, 2004, assigning to ICG East Kentucky, LLC | ||||||||
10.9 | Coal Lease between N&G Holdings Company, lessor, and ICG Hazard, LLC (assigned from Leslie Resources, Inc.), lessee, of Vicco Surface Mine, amended by: | |||||||
(a) Assignment of Real Property Agreements, dated September 30, 2004, assigning to ICG Hazard, LLC | (D) | |||||||
10.10 | Coal Lease between Knight-Ink Heirs, lessor, and ICG Eastern, LLC, lessee, of Birch River Mine | (D) | ||||||
(a) Partial Assignment of Lease, dated September 20, 1984, assigning to Twin River Coal Co. | ||||||||
(b) General Conveyance, Assignment and Transfer, dated December 8, 1988, assigning to Island Creek Coal Co. | ||||||||
(c) Assignment, dated December 12, 1990, assigning to Laurel Run Mining Co. | ||||||||
(d) Consent Letter, dated as of October 25, 1995 | ||||||||
(e) Partial Assignment, dated October 30, 1995, assigning to East Kentucky Energy Corp. | ||||||||
(f) Assignment, dated October 30, 1995, assigning to East Kentucky Energy Corp. | ||||||||
(g) Assignment of Real Property Agreements, dated September 30, 2004, assigning to ICG Eastern, LLC | ||||||||
10.11 | Surface Lease between NGHD Lands, et al., lessor, and ICG Eastern, LLC (assigned from Coastal Coal-West Virginia, LLC), lessee, of Birch River Mine, amended by: | (D) | ||||||
(a) Lease and Sublease Agreement, dated March 14, 2001 | ||||||||
(b) Memorandum of Lease and Sublease Agreement, dated June 1, 2001 | ||||||||
(c) Assignment of Real Property Agreements, dated September 30, 2004, assigning to ICG Eastern, LLC |
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Exhibit | ||||||||
Number | Description of Exhibit | Note | ||||||
10.12 | Surface Lease between NGHD Lands, et al., lessor, and ICG Eastern, LLC (assigned from Coastal Coal-West Virginia, LLC), lessee, of Birch River Mine, amended by: | (D) | ||||||
(a) Lease and Sublease Agreement, dated March 14, 2001 | ||||||||
(b) Memorandum of Lease and Sublease Agreement, dated June 1, 2001 | ||||||||
(c) Assignment of Real Property Agreements, dated September 30, 2004, assigning to ICG Eastern, LLC | ||||||||
10.13 | Fee Lease between M-B, LLC, lessor, and ICG Eastern, LLC (assigned from ANR Coal Development Company), lessee, of Birch River Mine, amended by: | (D) | ||||||
(a) Lease and Sublease Agreement, dated March 14, 2001 | ||||||||
(b) Memorandum of Lease and Sublease Agreement, dated June 1, 2001 | ||||||||
(c) Assignment of Real Property Agreements, dated September 30, 2004, assigning to ICG Eastern, LLC | ||||||||
10.14 | Fee Lease between ACIN (successor-in-interest to CSTL, LLC), lessor, and ICG Hazard, LLC (assigned from Leslie Resources, Inc.), lessee, of County Line and Rowdy Gap Mines, amended by: | (D) | ||||||
(a) Assignment of Real Property Agreements, dated September 30, 2004, assigning to ICG Hazard, LLC | ||||||||
10.15 | Fee Lease between Kentucky River Properties, LLC, lessor, and ICG Hazard, LLC (assigned from Shamrock Coal Company), lessee, of Rowdy Gap and Thunder Ridge Mines, amended by: | (D) | ||||||
(a) Agreement of Assignment, dated July 8, 1992, assigning to Ray Coal Company, Inc. | ||||||||
(b) Assignment and Assumption Agreement, dated June 30, 1994, assigning to Iker-Bandy, Co. | ||||||||
(c) Assignment of Real Property Agreements, dated September 30, 2004, assigning to ICG Hazard, LLC | ||||||||
10.16 | Fee Lease between Ark Land Company (successor-in-interest to Bach, et al.), lessor, and ICG Hazard, LLC (assigned from Falcon Coal Company), lessee, of the Flint Ridge preparation plant site, amended by: | (D) | ||||||
(a) Consent to Sublease, dated and effective October 28, 1982 | ||||||||
(b) Sublease Agreement, dated and effective October 28, 1982 | ||||||||
(c) Consent to Assignment of Lease, Estoppel Certificate and Amendment of Lease, dated October 26, 1998 | ||||||||
(d) Assignment of Lease, dated November 25, 1998, assigning to Leslie Resources, Inc. | ||||||||
10.17 | Lease between Allegany Coal and Land Company, lessor, and Patriot Mining Company, Inc., lessee, of Allegany County, Maryland Mine, including: | (D) | ||||||
(a) Amendment 1, dated and effective June 7, 1999 | ||||||||
(b) Amendment 2, dated and effective August 31, 1999 | ||||||||
(c) Amendment 3, dated and effective June 1, 2000 | ||||||||
(d) Amendment 4, dated and effective June 1, 2001 | ||||||||
(e) Default Letter, dated and effective May 6, 2002 | ||||||||
(f) Letter Agreement, dated and effective May 8, 2002 | ||||||||
10.18 | Lease between The Crab Orchard Coal and Land Company, lessor, and Anker West Virginia Mining Company, Beckley Smokeless Division (successor-in-interest to Winding Gulf Coals, Inc.), lessee, of Bay Hill Mine, including: | (D) | ||||||
(a) Modification and Amendment, dated and effective December 28, 1970 | ||||||||
(b) Second Modification and Amendment, dated and effective August 22, 1974 | ||||||||
(c) Agreement and Partial Surrender and Release, dated and effective October 13, 1980 | ||||||||
(d) Amendment, dated and effective January 1, 1983 | ||||||||
(e) Amendment, dated and effective January 1, 1986 | ||||||||
(f) Amendment, dated and effective January 1, 1991 |
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Exhibit | ||||||||
Number | Description of Exhibit | Note | ||||||
(g) Agreement of Consent, dated and effective October 27, 1994 | ||||||||
(h) Acceptance by Pine Valley Coal Company, Inc., dated and effective October 31, 1994 | ||||||||
(i) Instrument of Assignment, dated October 28, 1994, effective October 31, 1994 | ||||||||
(j) Amendment, dated and effective October 31, 1994 | ||||||||
10.19 | Lease between Beaver Coal Corporation, lessor, and Anker West Virginia Mining Company, Beckley Smokeless Division (successor-in-interest to New River Company), lessee, of Bay Hill Mine, including: | (D) | ||||||
(a) Amendment, dated and effective August 1, 1975 | ||||||||
(b) Amendment, dated and effective August 1, 1986 | ||||||||
(c) Amendment, dated and effective August 1, 1991 | ||||||||
(d) Acceptance by Pine Valley Coal Company, Inc., dated and effective October 31, 1994 | ||||||||
(e) Agreement of Consent, dated and effective October 28, 1994 | ||||||||
(f) Instrument of Assignment, dated October 28, 1994 and effective October 31, 1994 | ||||||||
(g) Option to Lease, dated April 1, 1995 | ||||||||
10.20 | Lease between Douglas Coal Company, lessor, and Patriot Mining Company, Inc., lessee, of Island and Douglas Mine, including: | (D) | ||||||
(a) Option to Lease, dated May 27, 1994 | ||||||||
(b) Guarantee, dated and effective May 1994 | ||||||||
(c) Memorandum of Lease, dated and effective September 21, 1995 | ||||||||
10.21 | Lease between Southern Region Industrial Realty, Inc., lessor, and Anker Virginia Mining Company, Inc. (successor-in-interest to Advantage Energy Corp.), lessee, of War Creek Mine, including: | (D) | ||||||
(a) Letter Agreement, dated and effective September 9, 1997 | ||||||||
(b) Amendment, dated and effective August 1, 2002 | ||||||||
10.22 | Sublease between Reserve Coal Properties, sublessors, and Patriot Mining Company, sublessee, of Sycamore No. 2 Mine | (D) | ||||||
10.23 | Amended and Restated Agreement for Sale and Purchase of Coal dated July 1, 1996, between Carolina Power & Light Company and ICG, LLC (assigned from Mountaineer Coal Development Company, d/b/a Marrowbone Development Company) and amended by: | (B) | ||||||
(a) Letter Agreement dated and effective July 19, 1996 | ||||||||
(b) Amendment 1 dated July 29, 1998, effective January 1, 1998 | ||||||||
(c) Amendment 2 dated April 19, 1999, effective January 1, 1999 | ||||||||
(d) Letter Agreement dated and effective March 25, 2002 | ||||||||
(e) Letter Agreement dated October 14, 2002, effective October 15, 2002 | ||||||||
(f) Letter Agreement dated and effective July 28, 2003 | ||||||||
(g) Amendment No. 3 dated July 28, 2003, effective January 1, 2003 | ||||||||
10.24** | Agreement for Purchase and Sales of Coal dated April 10, 2003 and effective January 1, 2004, between Georgia Power Company and ICG, LLC (assigned from Horizon Natural Resources Company) | (D) | ||||||
10.25 | Contract for Sale and Purchase of Coal dated July 1, 1980, between City of Springfield, Illinois and ICG, Illinois, LLC (assigned from Turis Coal Company), amended by: | (B) | ||||||
(a) Amendment dated March 4, 1986, effective January 1, 1986 | ||||||||
(b) Second Amendment dated April 22, 1986, effective January 1, 1986 | ||||||||
(c) Modification dated and effective June 8, 1987 | ||||||||
(d) Modification dated and effective November 4, 1988 | ||||||||
(e) Amendment dated and effective January 1, 1989 |
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Exhibit | ||||||||
Number | Description of Exhibit | Note | ||||||
(f) Amendment dated March 20, 1992, effective January 1, 1992 | ||||||||
(g) Amendment dated March 21, 1995, effective January 1, 1995 | ||||||||
(h) Amendment dated May 10, 1996, effective May 1, 1996 | ||||||||
(i) Amendment dated August 20, 1998, effective January 1, 1998 | ||||||||
(j) Amendment dated May 30, 2001, effective January 1, 2001 | ||||||||
(k) Letter dated October 8, 2004 assigning to ICG Illinois, LLC | ||||||||
10.26** | Coal Supply Agreement, dated as of April 1, 1992, between Anker Energy and Logan Generating Company (formerly Keystone Energy Service Company, L.P.), amended by: | (D) | ||||||
(a) First Amendment, effective as of September 1, 1995 | ||||||||
(b) Second Amendment, effective as of March 15, 2002 | ||||||||
(c) Third Amendment, effective as of October 31, 2004 | ||||||||
(d) Coal Price Adjustment Agreement, effective as of October 31, 2004 | ||||||||
10.27** | Coal Sales Agreement, date as of February 17, 2005, between Anker West Virginia Mining Company, Inc. and Allegheny Energy Supply Company, LLC and Monongahela Power Company | (D) | ||||||
10.28 | Second Amendment, dated as of June 29, 2005, to the Amended and Restated Credit Agreement dated as of November 5, 2004 among ICG, LLC, as Borrower, International Coal Group, Inc., the guarantors party thereto, UBS Securities LLC, as Arranger, Bookmanager and Syndication Agent, General Electric Capital Corporation, as Documentation Agent, UBS AG, Stamford Branch, as Issuing Bank, Administrative Agent and Collateral Agent, and UBS Loan Finance, LLC, as Swingline Lender | (E) | ||||||
10.29 | International Coal Group, Inc. 2005 Equity and Performance Incentive Plan | |||||||
10.30 | International Coal Group, Inc. 2005 Equity and Performance Incentive Plan: Incentive Stock Option Agreement | (E) | ||||||
10.31 | International Coal Group, Inc. 2005 Equity and Performance Incentive Plan: Non-Qualified Stock Option Agreement | (E) | ||||||
10.32 | International Coal Group, Inc. 2005 Equity and Performance Incentive Plan: Restricted Share Agreement | (E) | ||||||
10.33 | Form of Indemnification Agreement | (E) | ||||||
11.1 | Statement regarding computation of per share earnings | (E) | ||||||
21.1 | List of Subsidiaries | (A) | ||||||
23.1 | Consent of Jones Day (included as part of its opinion filed as Exhibit 5.1 hereto) | (G) | ||||||
23.2 | Consent of Deloitte & Touche, LLP | (G) | ||||||
23.3 | Consent of Marshall Miller & Associates, Inc. | (G) | ||||||
24.1 | Power of Attorney | (C) |
(A) | Previously filed as an exhibit to International Coal Group, Inc.’s Registration Statement on Form S-1 (Reg. No. 333-124393), filed on April 28, 2005 and incorporated herein by reference. | |
(B) | Previously filed as an exhibit to Amendment No. 1 to International Coal Group, Inc.’s Registration Statement on Form S-1 (Reg. No. 333-124393), filed on June 15, 2005 and incorporated herein by reference. | |
(C) | Previously filed as an exhibit to International Coal Group, Inc.’s Registration Statement on Form S-4 (Reg. No. 333-126156), filed on June 27, 2005. | |
(D) | Previously filed as an exhibit to Amendment No. 2 to International Coal Group, Inc.’s Registration Statement on Form S-1 (Reg. No. 333-124393), filed on June 30, 2005 and incorporated herein by reference. | |
(E) | Previously filed as an exhibit to Amendment No. 3 to International Coal Group, Inc.’s Registration Statement on Form S-1 (Reg. No. 333-124393), filed on September 28, 2005 and incorporated herein by reference. | |
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(F) | To be filed by amendment. | |
(G) | Filed herewith. | |
** | Confidential treatment requested as to certain portions that have been omitted and filed separately with the Securities and Exchange Commission. |
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Charged to | ||||||||||||||||
Balance at | Revenue, | Other | Balance at | |||||||||||||
Beginning | Costs or | Additions | End of | |||||||||||||
Description | of Period | Expenses | (Deductions) | Period | ||||||||||||
Period from May 13, 2004 to December 31, 2004 (ICG, Inc. period): | ||||||||||||||||
Reserve for inventory obsolescence | 74 | 74 | ||||||||||||||
Period ended September 30, 2004 (Predecessor Horizon): | ||||||||||||||||
Allowance for doubtful accounts | 7,798 | 1,590 | (3,947 | )(1) | 5,441 | |||||||||||
Reserve for inventory obsolescence | 2,803 | (6 | )(2) | 2,797 | ||||||||||||
Allowance for doubtful Notes | 2,422 | (442 | ) | 1,980 | ||||||||||||
Reserve for loss — Advance Royalties | 1,000 | 1,000 | ||||||||||||||
Year ended December 31, 2003 (Predecessor Horizon): | ||||||||||||||||
Allowance for doubtful accounts | 9,453 | (1,115 | ) | (540 | )(1) | 7,798 | ||||||||||
Reserve for inventory obsolescence | 2,485 | (190 | ) | 508 | (2) | 2,803 | ||||||||||
Allowance for doubtful Notes | 2,451 | (29 | ) | 2,422 | ||||||||||||
Reserve for loss — Advance Royalties | 1,000 | 1,000 | ||||||||||||||
Period from May 10, 2002 to December 31, 2002 (Predecessor Horizon): | ||||||||||||||||
Allowance for doubtful accounts | 7,918 | 344 | 1,191 | (3) | 9,453 | |||||||||||
Reserve for inventory obsolescence | 2,485 | 2,485 | ||||||||||||||
Reserve for loss — Advance Royalties | 1,000 | 1,000 | ||||||||||||||
Allowance for doubtful Notes | 2,451 | 2,451 | ||||||||||||||
Period from January 1, 2002 to May 9, 2002 (Predecessor AEI): | ||||||||||||||||
Allowance for doubtful accounts | 1,324 | 6,594 | 7,918 | |||||||||||||
Reserve for inventory obsolescence | 1,241 | 1,244 | (4) | 2,485 | ||||||||||||
Reserve for loss — Advance Royalties | 1,000 | 1,000 | ||||||||||||||
Allowance for doubtful Notes | 1,980 | 471 | (5) | 2,451 |
(2) | Reflects adjustment of reserve based on annual physical inventory counts. |
(3) | Reflects anticipated non-collection of balloon payment related to a lease agreement. |
(4) | Reflects opening balance sheet adjustments. |
(5) | Reflects reclass of excise tax attributable to export sales. |
Note A — | Amounts for the period from May 13, 2004 to December 31, 2004 have been restated to correct the allocation of the purchase price. Certain amounts in other periods have been reclassified between amounts charged to revenues, costs or expenses, and other additions (deductions). A summary of the restatement is as follows: |
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As Previously | ||||||||
Reported | As Restated | |||||||
(in thousands) | ||||||||
Period from May 13, 2004 to December 31, 2004 (ICG, Inc. period): | ||||||||
Other additions (deductions): | ||||||||
Allowance for doubtful accounts | $ | 2,669 | $ | — | ||||
Reserve for inventory obsolescence | 3,015 | — | ||||||
Reserve for loss — Advance Royalties | 3,110 | — | ||||||
Charged to revenue, costs or expenses: | ||||||||
Reserve for loss — Advance Royalties | (8 | ) | — | |||||
Period ended September 30, 2004 (Predecessor Horizon): | ||||||||
Charged to revenue, costs or expenses: | ||||||||
Allowance for doubtful accounts | (2,357 | ) | 1,590 | |||||
Reserve for inventory obsolescence | (6 | ) | — | |||||
Other additions (deductions): | ||||||||
Allowance for doubtful accounts | — | (3,947 | ) | |||||
Reserve for inventory obsolescence | — | (6 | ) | |||||
Year ended December 31, 2003 (Predecessor Horizon): | ||||||||
Charged to revenue, costs or expenses: | ||||||||
Allowance for doubtful accounts | (1,655 | ) | (1,115 | ) | ||||
Reserve for inventory obsolescence | 318 | (190 | ) | |||||
Other additions (deductions): | ||||||||
Allowance for doubtful accounts | — | (540 | ) | |||||
Reserve for inventory obsolescence | — | 508 | ||||||
Period from May 10, 2002 to December 31, 2002 (Predecessor Horizon): | ||||||||
Charged to revenue, costs or expenses: | ||||||||
Allowance for doubtful accounts | 6 | 344 | ||||||
Other additions (deductions): | ||||||||
Allowance for doubtful accounts | 1,529 | 1,191 |
ITEM 22. | Undertakings. |
(a) To file, during any period in which offers or sales are being made, a post-effective amendment to this registration statement: |
(i) To include any prospectus required by Section 10(a)(3) of the Securities Act of 1933; | |
(ii) To reflect in the prospectus any facts or events arising after the effective date of the registration statement (or the most recent post-effective amendment thereof) which, individually or in the aggregate, represent a fundamental change in the information set forth in the registration statement. Notwithstanding the foregoing, any increase or decrease in volume of securities offered (if the total dollar value of securities offered would not exceed that which was registered) and any deviation from the low or high end of the estimated maximum offering range may be reflected in the form of prospectus filed with the Commission pursuant to Rule 424(b) if, in the aggregate, the changes in volume and price represent no more than a 20 percent change |
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in the maximum aggregate offering price set forth in the “Calculation of Registration Fee” table in the effective registration statement; and | |
(iii) To include any material information with respect to the plan of distribution not previously disclosed in the registration statement or any material change to such information in the registration statement. |
(b) That, for the purpose of determining any liability under the Securities Act of 1933, each such post-effective amendment shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof. | |
(c) To remove from registration by means of a post-effective amendment any of the securities being registered which remain unsold at the termination of the offering. | |
(d) That prior to any public reoffering of the securities registered hereunder through use of a prospectus which is a part of this registration statement, by any person or party who is deemed to be an underwriter within the meaning of Rule 145(c), the issuer undertakes that such reoffering prospectus will contain the information called for by the applicable registration form with respect to reofferings by persons who may be deemed underwriters, in addition to the information called for by the other items of the applicable form. | |
(e) That every prospectus (i) that is filed pursuant to paragraph (d) above, or (ii) that purports to meet the requirements of Section 10(a)(3) of the Securities Act of 1933 and is used in connection with an offering of securities subject to Rule 415, will be filed as a part of an amendment to this registration statement and will not be used until such amendment has become effective, and that, for the purpose of determining any liability under the Securities Act of 1933, each such post-effective amendment shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof. | |
(f) Insofar as indemnification for liabilities arising under the Securities Act of 1933 may be permitted to directors, officers and controlling persons of the registrant pursuant to the provisions described in Item 20, or otherwise, the registrant has been advised that in the opinion of the Securities and Exchange Commission such indemnification is against public policy as expressed in the Act and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by the registrant of expenses incurred or paid by a director, officer or controlling person of the registrant in the successful defense of any action, suit or proceeding) is asserted by such director, officer or controlling person in connection with the securities being registered, the registrant will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by it is against public policy as expressed in the Act and will be governed by the final adjudication of such issue. | |
(g) To respond to requests for information that is incorporated by reference into the prospectus pursuant to Items 4, 10(b), 11 or 13 of this Form, within one business day of receipt of such request, and to send the incorporated documents by first class mail or other equally prompt means. This includes information contained in documents filed subsequent to the effective date of the registration statement through the date of responding to the request. | |
(h) To supply by means of a post-effective amendment all information concerning a transaction, and the company being acquired involved therein, that was not the subject of and included in this registration statement when it became effective. |
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INTERNATIONAL COAL GROUP, INC. |
By: | /s/ Bennett K. Hatfield |
Bennett K. Hatfield | |
President, Chief Executive Officer and Director |
Signature | Title | |||
/s/ Bennett K. Hatfield | President, Chief Executive Officer and Director (Principal Executive Officer) | |||
/s/ William D. Campbell | Vice President, Treasurer and Secretary (Principal Financial and Accounting Officer) | |||
* | Director | |||
* | Director | |||
* | Director | |||
* | Director | |||
* | Director | |||
* | Director | |||
*By: | /s/ William D. Campbell As: Attorney-in-Fact |
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Exhibit | ||||||||
Number | Description of Exhibit | Note | ||||||
2.1 | Business Combination Agreement among International Coal Group, Inc. (n/k/a ICG, Inc.), ICG Holdco, Inc. (n/k/a International Coal Group, Inc.), ICG Merger Sub, Inc., Anker Merger Sub, Inc. and Anker Coal Group, Inc., dated as of March 31, 2005 | (B) | ||||||
2.2 | First Amendment to the Business Combination Agreement among International Coal Group, Inc., (f/k/a ICG Holdco, Inc.), ICG, Inc. (f/k/a International Coal Group, Inc.), ICG Merger Sub, Inc., Anker Merger Sub, Inc. and Anker Coal Group, Inc., dated as of May 10, 2005 | (B) | ||||||
2.3 | Second Amendment to the Business Combination Agreement among International Coal Group, Inc. (f/k/a ICG Holdco, Inc.), ICG, Inc. (f/k/a International Coal Group, Inc.), ICG Merger Sub, Inc., Anker Merger Sub, Inc. and Anker Coal Group, Inc., dated as of June 29, 2005 | (D) | ||||||
2.4 | Business Combination Agreement among International Coal Group, Inc. (n/k/a ICG, Inc.), ICG Holdco, Inc. (n/k/a International Coal Group, Inc.), CoalQuest Merger Sub LLC, CoalQuest Development LLC and the members of CoalQuest Development LLC dated as of March 31, 2005 | (B) | ||||||
2.5 | First Amendment to the Business Combination Agreement among International Coal Group, Inc. (f/k/a ICG Holdco, Inc.), ICG, Inc. (f/k/a International Coal Group, Inc.), CoalQuest Merger Sub LLC, CoalQuest Development LLC and the members of CoalQuest Development LLC, dated as of May 10, 2005 | (B) | ||||||
2.6 | Second Amendment to the Business Combination Agreement among International Coal Group, Inc. (f/k/a ICG Holdco, Inc.), ICG, Inc. (f/k/a International Coal Group, Inc.), CoalQuest Merger Sub LLC, CoalQuest Development LLC and the members of CoalQuest Development LLC, dated as of June 29, 2005 | (D) | ||||||
3.1 | Amended and Restated Certificate of Incorporation of International Coal Group, Inc. | (A) | ||||||
3.2 | Amended and Restated By-laws of International Coal Group, Inc. | (A) | ||||||
3.3 | Form of Second Amended and Restated Certificate of Incorporation of International Coal Group, Inc. | (E) | ||||||
4.1 | Form of certificate of International Coal Group, Inc. common stock | (E) | ||||||
4.3 | Registration Rights Agreement by and between International Coal Group, Inc. (n/k/a ICG, Inc.), WLR Recovery Fund II, L.P., Contrarian Capital Management LLC, Värde Partners, Inc., Greenlight Capital, Inc., Stark Trading and Shepherd International Coal Holdings Inc. | (B) | ||||||
4.4 | Form of Registration Rights Agreement between International Coal Group, Inc. and certain former Anker stockholders and CoalQuest members | (D) | ||||||
5.1 | Opinion of Jones Day | (G) | ||||||
8.1 | Opinion of Jones Day as to Material Federal Tax Matters | (G) | ||||||
10.1 | Amended and Restated Credit Agreement dated as of November 5, 2004 among ICG, LLC, as Borrower, International Coal Group, Inc. (n/k/a ICG, Inc.), the guarantors party thereto, UBS Securities LLC, as Arranger, Bookmanager and Syndication Agent, General Electric Capital Corporation, as Documentation Agent, UBS AG, Stamford Branch, as Issuing Bank, Administrative Agent and Collateral Agent, and UBS Loan Finance, LLC, as Swingline Lender | (A) | ||||||
10.2 | First Amendment, dated as of November 30, 2004, to the Amended and Restated Credit Agreement dated as of November 5, 2004 among ICG, LLC, as Borrower, International Coal Group, Inc. (n/k/a ICG, Inc.), the guarantors party thereto, UBS Securities LLC, as Arranger, Bookmanager and Syndication Agent, General Electric Capital Corporation, as Documentation Agent, UBS AG, Stamford Branch, as Issuing Bank, Administrative Agent and Collateral Agent, and UBS Loan Finance, LLC, as Swingline Lender | (A) | ||||||
10.3 | Security Agreement dated as of September 30, 2004 among ICG, LLC and the guarantors party thereto and UBS AG, Stamford Branch, as Collateral Agent | (A) | ||||||
10.4 | Advisory Services Agreement effective as of October 1, 2004 between International Coal Group, LLC and W.L. Ross & Co. LLC | (A) |
Table of Contents
Exhibit | ||||||||
Number | Description of Exhibit | Note | ||||||
10.5 | Employment Agreement dated March 14, 2005 by and between Bennett K. Hatfield and International Coal Group, Inc. | (A) | ||||||
10.6 | Employment Agreement dated April 25, 2005 by and between Roger L. Nicholson and International Coal Group, Inc. | (B) | ||||||
10.7 | Fee Lease between Kentucky Union Company, lessor, and ICG Hazard, LLC (assigned from Leslie Resources, Inc.), lessee, of Flint Ridge Surface Mine, amended by: | |||||||
(a) Assignment of Real Property Agreements, dated September 30, 2004, assigning to ICG Hazard, LLC | ||||||||
10.8 | Fee Lease between Pocahontas Development Corp., lessor, and ICG East Kentucky, LLC (assigned from Sunny Ridge Enterprises, Inc.), lessee, of Blackberry Creek Surface Mine, amended by: | (D) | ||||||
(a) Supplemental Lease and Agreement, dated May 26, 1998 | ||||||||
(b) Supplemental Lease and Agreement, dated October 27, 1998 | ||||||||
(c) Supplemental Lease and Agreement, dated November 22, 1999 | ||||||||
(d) Supplemental Lease and Agreement, dated May 30, 2001 | ||||||||
(e) Partial Lease and Amendment of Lease, dated August 21, 2003 | ||||||||
(f) Assignment of Real Property Agreements, dated September 30, 2004, assigning to ICG East Kentucky, LLC | ||||||||
10.9 | Coal Lease between N&G Holdings Company, lessor, and ICG Hazard, LLC (assigned from Leslie Resources, Inc.), lessee, of Vicco Surface Mine, amended by: | |||||||
(a) Assignment of Real Property Agreements, dated September 30, 2004, assigning to ICG Hazard, LLC | (D) | |||||||
10.10 | Coal Lease between Knight-Ink Heirs, lessor, and ICG Eastern, LLC, lessee, of Birch River Mine | (D) | ||||||
(a) Partial Assignment of Lease, dated September 20, 1984, assigning to Twin River Coal Co. | ||||||||
(b) General Conveyance, Assignment and Transfer, dated December 8, 1988, assigning to Island Creek Coal Co. | ||||||||
(c) Assignment, dated December 12, 1990, assigning to Laurel Run Mining Co. | ||||||||
(d) Consent Letter, dated as of October 25, 1995 | ||||||||
(e) Partial Assignment, dated October 30, 1995, assigning to East Kentucky Energy Corp. | ||||||||
(f) Assignment, dated October 30, 1995, assigning to East Kentucky Energy Corp. | ||||||||
(g) Assignment of Real Property Agreements, dated September 30, 2004, assigning to ICG Eastern, LLC | ||||||||
10.11 | Surface Lease between NGHD Lands, et al., lessor, and ICG Eastern, LLC (assigned from Coastal Coal-West Virginia, LLC), lessee, of Birch River Mine, amended by: | (D) | ||||||
(a) Lease and Sublease Agreement, dated March 14, 2001 | ||||||||
(b) Memorandum of Lease and Sublease Agreement, dated June 1, 2001 | ||||||||
(c) Assignment of Real Property Agreements, dated September 30, 2004, assigning to ICG Eastern, LLC | ||||||||
10.12 | Surface Lease between NGHD Lands, et al., lessor, and ICG Eastern, LLC (assigned from Coastal Coal-West Virginia, LLC), lessee, of Birch River Mine, amended by: | (D) | ||||||
(a) Lease and Sublease Agreement, dated March 14, 2001 | ||||||||
(b) Memorandum of Lease and Sublease Agreement, dated June 1, 2001 | ||||||||
(c) Assignment of Real Property Agreements, dated September 30, 2004, assigning to ICG Eastern, LLC |
Table of Contents
Exhibit | ||||||||
Number | Description of Exhibit | Note | ||||||
10.13 | Fee Lease between M-B, LLC, lessor, and ICG Eastern, LLC (assigned from ANR Coal Development Company), lessee, of Birch River Mine, amended by: | (D) | ||||||
(a) Lease and Sublease Agreement, dated March 14, 2001 | ||||||||
(b) Memorandum of Lease and Sublease Agreement, dated June 1, 2001 | ||||||||
(c) Assignment of Real Property Agreements, dated September 30, 2004, assigning to ICG Eastern, LLC | ||||||||
10.14 | Fee Lease between ACIN (successor-in-interest to CSTL, LLC), lessor, and ICG Hazard, LLC (assigned from Leslie Resources, Inc.), lessee, of County Line and Rowdy Gap Mines, amended by: | (D) | ||||||
(a) Assignment of Real Property Agreements, dated September 30, 2004, assigning to ICG Hazard, LLC | ||||||||
10.15 | Fee Lease between Kentucky River Properties, LLC, lessor, and ICG Hazard, LLC (assigned from Shamrock Coal Company), lessee, of Rowdy Gap and Thunder Ridge Mines, amended by: | (D) | ||||||
(a) Agreement of Assignment, dated July 8, 1992, assigning to Ray Coal Company, Inc. | ||||||||
(b) Assignment and Assumption Agreement, dated June 30, 1994, assigning to Iker-Bandy, Co. | ||||||||
(c) Assignment of Real Property Agreements, dated September 30, 2004, assigning to ICG Hazard, LLC | ||||||||
10.16 | Fee Lease between Ark Land Company (successor-in-interest to Bach, et al.), lessor, and ICG Hazard, LLC (assigned from Falcon Coal Company), lessee, of the Flint Ridge preparation plant site, amended by: | (D) | ||||||
(a) Consent to Sublease, dated and effective October 28, 1982 | ||||||||
(b) Sublease Agreement, dated and effective October 28, 1982 | ||||||||
(c) Consent to Assignment of Lease, Estoppel Certificate and Amendment of Lease, dated October 26, 1998 | ||||||||
(d) Assignment of Lease, dated November 25, 1998, assigning to Leslie Resources, Inc. | ||||||||
10.17 | Lease between Allegany Coal and Land Company, lessor, and Patriot Mining Company, Inc., lessee, of Allegany County, Maryland Mine, including: | (D) | ||||||
(a) Amendment 1, dated and effective June 7, 1999 | ||||||||
(b) Amendment 2, dated and effective August 31, 1999 | ||||||||
(c) Amendment 3, dated and effective June 1, 2000 | ||||||||
(d) Amendment 4, dated and effective June 1, 2001 | ||||||||
(e) Default Letter, dated and effective May 6, 2002 | ||||||||
(f) Letter Agreement, dated and effective May 8, 2002 | ||||||||
10.18 | Lease between The Crab Orchard Coal and Land Company, lessor, and Anker West Virginia Mining Company, Beckley Smokeless Division (successor-in-interest to Winding Gulf Coals, Inc.), lessee, of Bay Hill Mine, including: | (D) | ||||||
(a) Modification and Amendment, dated and effective December 28, 1970 | ||||||||
(b) Second Modification and Amendment, dated and effective August 22, 1974 | ||||||||
(c) Agreement and Partial Surrender and Release, dated and effective October 13, 1980 | ||||||||
(d) Amendment, dated and effective January 1, 1983 | ||||||||
(e) Amendment, dated and effective January 1, 1986 | ||||||||
(f) Amendment, dated and effective January 1, 1991 | ||||||||
(g) Agreement of Consent, dated and effective October 27, 1994 | ||||||||
(h) Acceptance by Pine Valley Coal Company, Inc., dated and effective October 31, 1994 | ||||||||
(i) Instrument of Assignment, dated October 28, 1994, effective October 31, 1994 | ||||||||
(j) Amendment, dated and effective October 31, 1994 |
Table of Contents
Exhibit | ||||||||
Number | Description of Exhibit | Note | ||||||
10.19 | Lease between Beaver Coal Corporation, lessor, and Anker West Virginia Mining Company, Beckley Smokeless Division (successor-in-interest to New River Company), lessee, of Bay Hill Mine, including: | (D) | ||||||
(a) Amendment, dated and effective August 1, 1975 | ||||||||
(b) Amendment, dated and effective August 1, 1986 | ||||||||
(c) Amendment, dated and effective August 1, 1991 | ||||||||
(d) Acceptance by Pine Valley Coal Company, Inc., dated and effective October 31, 1994 | ||||||||
(e) Agreement of Consent, dated and effective October 28, 1994 | ||||||||
(f) Instrument of Assignment, dated October 28, 1994 and effective October 31, 1994 | ||||||||
(g) Option to Lease, dated April 1, 1995 | ||||||||
10.20 | Lease between Douglas Coal Company, lessor, and Patriot Mining Company, Inc., lessee, of Island and Douglas Mine, including: | (D) | ||||||
(a) Option to Lease, dated May 27, 1994 | ||||||||
(b) Guarantee, dated and effective May 1994 | ||||||||
(c) Memorandum of Lease, dated and effective September 21, 1995 | ||||||||
10.21 | Lease between Southern Region Industrial Realty, Inc., lessor, and Anker Virginia Mining Company, Inc. (successor-in-interest to Advantage Energy Corp.), lessee, of War Creek Mine, including: | (D) | ||||||
(a) Letter Agreement, dated and effective September 9, 1997 | ||||||||
(b) Amendment, dated and effective August 1, 2002 | ||||||||
10.22 | Sublease between Reserve Coal Properties, sublessors, and Patriot Mining Company, sublessee, of Sycamore No. 2 Mine | (D) | ||||||
10.23 | Amended and Restated Agreement for Sale and Purchase of Coal dated July 1, 1996, between Carolina Power & Light Company and ICG, LLC (assigned from Mountaineer Coal Development Company, d/b/a Marrowbone Development Company) and amended by: | (B) | ||||||
(a) Letter Agreement dated and effective July 19, 1996 | ||||||||
(b) Amendment 1 dated July 29, 1998, effective January 1, 1998 | ||||||||
(c) Amendment 2 dated April 19, 1999, effective January 1, 1999 | ||||||||
(d) Letter Agreement dated and effective March 25, 2002 | ||||||||
(e) Letter Agreement dated October 14, 2002, effective October 15, 2002 | ||||||||
(f) Letter Agreement dated and effective July 28, 2003 | ||||||||
(g) Amendment No. 3 dated July 28, 2003, effective January 1, 2003 | ||||||||
10.24** | Agreement for Purchase and Sales of Coal dated April 10, 2003 and effective January 1, 2004, between Georgia Power Company and ICG, LLC (assigned from Horizon Natural Resources Company) | (D) | ||||||
10.25 | Contract for Sale and Purchase of Coal dated July 1, 1980, between City of Springfield, Illinois and ICG, Illinois, LLC (assigned from Turis Coal Company), amended by: | (B) | ||||||
(a) Amendment dated March 4, 1986, effective January 1, 1986 | ||||||||
(b) Second Amendment dated April 22, 1986, effective January 1, 1986 | ||||||||
(c) Modification dated and effective June 8, 1987 | ||||||||
(d) Modification dated and effective November 4, 1988 | ||||||||
(e) Amendment dated and effective January 1, 1989 | ||||||||
(f) Amendment dated March 20, 1992, effective January 1, 1992 | ||||||||
(g) Amendment dated March 21, 1995, effective January 1, 1995 | ||||||||
(h) Amendment dated May 10, 1996, effective May 1, 1996 | ||||||||
(i) Amendment dated August 20, 1998, effective January 1, 1998 | ||||||||
(j) Amendment dated May 30, 2001, effective January 1, 2001 | ||||||||
(k) Letter dated October 8, 2004 assigning to ICG Illinois, LLC |
Table of Contents
Exhibit | ||||||||
Number | Description of Exhibit | Note | ||||||
10.26** | Coal Supply Agreement, dated as of April 1, 1992, between Anker Energy and Logan Generating Company (formerly Keystone Energy Service Company, L.P.), amended by: | (D) | ||||||
(a) First Amendment, effective as of September 1, 1995 | ||||||||
(b) Second Amendment, effective as of March 15, 2002 | ||||||||
(c) Third Amendment, effective as of October 31, 2004 | ||||||||
(d) Coal Price Adjustment Agreement, effective as of October 31, 2004 | ||||||||
10.27** | Coal Sales Agreement, date as of February 17, 2005, between Anker West Virginia Mining Company, Inc. and Allegheny Energy Supply Company, LLC and Monongahela Power Company | (D) | ||||||
10.28 | Second Amendment, dated as of June 29, 2005, to the Amended and Restated Credit Agreement dated as of November 5, 2004 among ICG, LLC, as Borrower, International Coal Group, Inc., the guarantors party thereto, UBS Securities LLC, as Arranger, Bookmanager and Syndication Agent, General Electric Capital Corporation, as Documentation Agent, UBS AG, Stamford Branch, as Issuing Bank, Administrative Agent and Collateral Agent, and UBS Loan Finance, LLC, as Swingline Lender | (E) | ||||||
10.29 | International Coal Group, Inc. 2005 Equity and Performance Incentive Plan | |||||||
10.30 | International Coal Group, Inc. 2005 Equity and Performance Incentive Plan: Incentive Stock Option Agreement | (E) | ||||||
10.31 | International Coal Group, Inc. 2005 Equity and Performance Incentive Plan: Non-Qualified Stock Option Agreement | (E) | ||||||
10.32 | International Coal Group, Inc. 2005 Equity and Performance Incentive Plan: Restricted Share Agreement | (E) | ||||||
10.33 | Form of Indemnification Agreement | (E) | ||||||
11.1 | Statement regarding computation of per share earnings | (E) | ||||||
21.1 | List of Subsidiaries | (A) | ||||||
23.1 | Consent of Jones Day (included as part of its opinion filed as Exhibit 5.1 hereto) | (G) | ||||||
23.2 | Consent of Deloitte & Touche, LLP | (G) | ||||||
23.3 | Consent of Marshall Miller & Associates, Inc. | (G) | ||||||
24.1 | Power of Attorney | (C) |
(A) | Previously filed as an exhibit to International Coal Group, Inc.’s Registration Statement on Form S-1 (Reg. No. 333-124393), filed on April 28, 2005 and incorporated herein by reference. | |
(B) | Previously filed as an exhibit to Amendment No. 1 to International Coal Group, Inc.’s Registration Statement on Form S-1 (Reg. No. 333-124393), filed on June 15, 2005 and incorporated herein by reference. | |
(C) | Previously filed as an exhibit to International Coal Group, Inc.’s Registration Statement on Form S-4 (Reg. No. 333-126156), filed on June 27, 2005. | |
(D) | Previously filed as an exhibit to Amendment No. 2 to International Coal Group, Inc.’s Registration Statement on Form S-1 (Reg. No. 333-124393), filed on June 30, 2005 and incorporated herein by reference. | |
(E) | Previously filed as an exhibit to Amendment No. 3 to International Coal Group, Inc.’s Registration Statement on Form S-1 (Reg. No. 333-124393), filed on September 28, 2005 and incorporated herein by reference. | |
(F) | To be filed by amendment. | |
(G) | Filed herewith. | |
** | Confidential treatment requested as to certain portions that have been omitted and filed separately with the Securities and Exchange Commission. |