CONDENSED CONSOLIDATED STATEMEN
CONDENSED CONSOLIDATED STATEMENTS OF INCOME (USD $) | ||||
In Thousands, except Share data | 3 Months Ended
Sep. 30, 2009 | 3 Months Ended
Sep. 30, 2008 | 9 Months Ended
Sep. 30, 2009 | 9 Months Ended
Sep. 30, 2008 |
Revenues | ||||
Produced coal revenue | $535,531 | $666,440 | $1,819,777 | $1,919,976 |
Freight and handling revenue | 52,523 | 81,068 | 171,253 | 229,570 |
Purchased coal revenue | 14,570 | 4,484 | 43,741 | 22,025 |
Other revenue | 38,936 | 11,304 | 72,504 | 63,188 |
Total revenues | 641,560 | 763,296 | 2,107,275 | 2,234,759 |
Costs and Expenses | ||||
Cost of produced coal revenue | 431,697 | 500,387 | 1,462,263 | 1,418,275 |
Freight and handling costs | 52,523 | 81,068 | 171,253 | 229,570 |
Cost of purchased coal revenue | 18,366 | 4,349 | 39,061 | 19,783 |
Depreciation, depletion and amortization, applicable to: | ||||
Cost of produced coal revenue | 66,105 | 64,393 | 204,524 | 185,200 |
Selling, general and administrative | 164 | 817 | 2,025 | 2,569 |
Selling, general and administrative | 21,549 | 2,820 | 63,420 | 62,815 |
Other expense | 608 | 1,049 | 1,970 | 2,457 |
Litigation charge | 0 | 5,835 | 0 | 251,111 |
Loss on refinancing | 0 | 9,088 | 0 | 9,088 |
Loss (gain) on derivative instruments | 4,765 | 0 | (4,479) | 0 |
Total costs and expenses | 595,777 | 669,806 | 1,940,037 | 2,180,868 |
Income before interest and taxes | 45,783 | 93,490 | 167,238 | 53,891 |
Interest income | 590 | 4,742 | 12,274 | 13,549 |
Interest expense | (25,493) | (29,843) | (76,182) | (71,606) |
Loss on short-term investment | 0 | (6,537) | 0 | (6,537) |
Income before taxes | 20,880 | 61,852 | 103,330 | (10,703) |
Income tax expense | (4,422) | (10,294) | (23,254) | 10,857 |
Net income | $16,458 | $51,558 | $80,076 | $154 |
Net income per share | ||||
Basic | 0.19 | 0.62 | 0.94 | $0 |
Diluted | 0.19 | 0.61 | 0.94 | $0 |
Shares used to calculate income per share | ||||
Basic | 84,930,000 | 82,623,000 | 84,887,000 | 80,851,000 |
Diluted | 85,662,000 | 83,959,000 | 85,371,000 | 82,070,000 |
Dividends per share | 0.06 | 0.05 | 0.18 | 0.15 |
CONDENSED CONSOLIDATED BALANCE
CONDENSED CONSOLIDATED BALANCE SHEETS (USD $) | ||
In Thousands | Sep. 30, 2009
| Dec. 31, 2008
|
Current Assets | ||
Cash and cash equivalents | $639,992 | $606,997 |
Short-term investment | 15,121 | 39,383 |
Trade and other accounts receivable, less allowance for doubtful accounts | 197,433 | 233,266 |
Inventories | 229,829 | 233,168 |
Income taxes receivable | 0 | 6,621 |
Other current assets | 193,744 | 116,061 |
Total current assets | 1,276,119 | 1,235,496 |
Net Property, Plant and Equipment | 2,339,623 | 2,297,696 |
Other noncurrent assets | 135,340 | 139,186 |
Total assets | 3,751,082 | 3,672,378 |
Current Liabilities | ||
Accounts payable, principally trade and bank overdrafts | 168,656 | 244,201 |
Short-term debt | 1,593 | 1,976 |
Payroll and employee benefits | 63,826 | 56,959 |
Income taxes payable | 1,489 | 0 |
Other current liabilities | 192,774 | 201,017 |
Total current liabilities | 428,338 | 504,153 |
Noncurrent Liabilities | ||
Long-term debt | 1,322,726 | 1,310,181 |
Deferred income taxes | 189,261 | 177,294 |
Pension obligation | 66,236 | 63,304 |
Other noncurrent liabilities | 533,173 | 490,834 |
Total noncurrent liabilities | 2,111,396 | 2,041,613 |
Total liabilities | 2,539,734 | 2,545,766 |
Capital Stock [Abstract] | ||
Preferred - authorized 20,000,000 shares without par value; none issued | 0 | 0 |
Common - authorized 150,000,000 shares of $0.625 par value; issued 85,544,413 and 85,447,970 shares, respectively | 53,456 | 53,378 |
Additional capital | 555,708 | 542,519 |
Retained earnings | 696,870 | 632,077 |
Accumulated other comprehensive loss | (94,686) | (101,362) |
Total shareholders' equity | 1,211,348 | 1,126,612 |
Total liabilities and shareholders' equity | $3,751,082 | $3,672,378 |
PARANTHETICAL DATA TO THE CONDE
PARANTHETICAL DATA TO THE CONDENSED CONSOLIDATED BALANCE SHEETS (USD $) | ||
In Thousands, except Share data | Sep. 30, 2009
| Dec. 31, 2008
|
Current Assets | ||
Allowance for doubtful accounts | $644 | $873 |
Capital Stock | ||
Preferred stock - autorized shares without par value | 20,000,000 | 20,000,000 |
Preferred Stock - none issued | 0 | 0 |
Common stock - autorized | 150,000,000 | 150,000,000 |
Commom stock - par value | 0.625 | 0.625 |
Common Stock - shares issued | 85,544,413 | 85,447,970 |
1_CONDENSED CONSOLIDATED STATEM
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (USD $) | ||
In Thousands | 9 Months Ended
Sep. 30, 2009 | 9 Months Ended
Sep. 30, 2008 |
CASH FLOWS FROM OPERATING ACTIVITIES | ||
Net income | $80,076 | $154 |
Adjustment to reconcile Net Income to Cash provided by operating activities: | ||
Depreciation, depletion and amortization | 206,549 | 187,769 |
Share-based compensation expense | 9,651 | 8,590 |
Amortization of bond discount | 14,407 | 4,368 |
Deferred income taxes | 10,122 | (11,798) |
Gain on disposal of assets | (12,017) | (1,699) |
Gain on reserve exchange | (24,922) | (32,449) |
Net change in fair value of derivative instruments | (22,598) | 0 |
Unrealized loss on short-term investment | 0 | 6,537 |
Asset retirement obligations accretion | 10,515 | 8,883 |
Changes in operating asset and liabilities: | ||
Decrease (increase) in accounts receivable | 49,319 | (124,484) |
Decrease (increase) in inventories | 3,339 | (18,535) |
(Increase) decrease in other current assets | (57,537) | 1,173 |
(Increase) decrease in other assets | (1,068) | 2,568 |
(Decrease) increase in accounts payable and bank overdrafts | (75,545) | 53,454 |
Increase in accrued income taxes | 8,110 | 14,979 |
Increase in other accrued liabilities | 3,020 | 304,988 |
Increase in pension obligation | 16,140 | 361 |
Increase in other noncurrent liabilities | 17,980 | 9,613 |
Asset retirement obligations payments | (3,431) | (3,617) |
Cash provided by operating activities | 232,110 | 426,033 |
CASH FLOWS FROM INVESTING ACTIVITIES | ||
Capital expenditures | (222,970) | (532,020) |
Reclassification of cash and cash equivalent to short-term investment | 0 | (217,900) |
Proceeds from redemption of Short-term investment | 24,262 | 0 |
Proceeds from sale of assets | 15,704 | 6,783 |
Cash utilized by investing activities | (183,004) | (743,137) |
CASH FLOWS FROM FINANCING ACTIVITIES | ||
Issuance of common stock | 0 | 258,338 |
Repayments of capital lease obligations | (2,175) | (1,459) |
Proceeds from issuance of 3.25% convertible senior notes | 0 | 674,136 |
Tender payment for 6.625% senior notes | 0 | (322,139) |
Redemption of 4.75% convertible senior notes | (70) | 0 |
Cash dividends paid | (15,283) | (11,986) |
Proceeds from stock options exercised | 1,190 | 16,519 |
Excess income tax benefit from stock option exercises | 227 | 4,807 |
Loss on refinancing | 0 | 9,088 |
Loss on financing transactions | 0 | 15,178 |
Cash (utilized) provided by financing activities | (16,111) | 618,216 |
Increase in cash and cash equivalents | 32,995 | 301,112 |
Cash and cash equivalents at beginning of period | 606,997 | 365,220 |
Cash and cash equivalents at end of period | $639,992 | $666,332 |
Significant Accounting Policies
Significant Accounting Policies | |
9 Months Ended
Sep. 30, 2009 USD / shares | |
Notes To Financial Statements [Abstract] | |
Significant Accounting Policies | (1)Significant Accounting Policies Basis of Presentation The condensed consolidated financial statements do not include footnotes and certain financial information normally presented annually under accounting principles generally accepted in the United States and, therefore, should be read in conjunction with the Annual Report on Form 10-K of Massey Energy Company (we, our, us or the Company) for the year ended December 31, 2008. Accounting measurements at interim dates inherently involve greater reliance on estimates than at year-end. The results of operations for the quarterly period ended September 30, 2009 are not necessarily indicative of results that can be expected for the fiscal year ending December 31, 2009. The condensed consolidated financial statements included herein are unaudited; however, the financial statements contain all adjustments (consisting of normal recurring accruals), which, in our opinion, are necessary to present fairly our consolidated financial position at September 30, 2009, our consolidated results of operations for the three and nine months ended September 30, 2009 and 2008, and cash flows for the nine months ended September 30, 2009 and 2008, in conformity with accounting principles generally accepted in the United States (GAAP). The condensed consolidated financial statements include our accounts and the accounts of our wholly owned and sole, direct operating subsidiary, A.T. Massey Coal Company, Inc. (A.T. Massey), and A.T. Masseys wholly and majority owned direct and indirect subsidiaries. Significant intercompany transactions and accounts are eliminated in consolidation. We have no independent assets or operations. We do not have a controlling interest in any separate independent operations. Investments in business entities in which we do not have control, but have the ability to exercise significant influence over the operating and financial policies, are accounted for under the equity method. A.T. Massey and substantially all of our indirect operating subsidiaries, each such subsidiary being indirectly 100% owned by us, fully and unconditionally, jointly and severally, guarantee our obligations under the 6.625% senior notes due 2010 (6.625% Notes), the 6.875% senior notes due 2013 (6.875% Notes), the 3.25% convertible senior notes due 2015 (3.25% Notes) and the 2.25% convertible senior notes due 2024 (2.25% Notes).The subsidiaries not providing a guarantee of the 6.625% Notes, the 6.875% Notes, the 3.25% Notes and the 2.25% Notes are minor (as defined under Securities and Exchange Commission (SEC) Rule 3-10(h)(6) of Regulation S-X). See Note 5 to the Notes to Condensed Consolidated Financial Statements for a more complete discussion of debt. In May 2009, the Financial Accounting Standards Board (FASB) issued accounting guidance, effective for financial statements issued for interim and annual periods ending after June 15, 2009, which requires us to disclose the date through which we have evaluated subsequent events and whether the date corresponds with the release of our financial statements. We have evaluatedsubsequent events through October 28, 2009, the date the financial stateme |
Inventories
Inventories | |
9 Months Ended
Sep. 30, 2009 USD / shares | |
Notes To Financial Statements [Abstract] | |
Inventories | (2)Inventories Inventories consisted of the following: September 30, 2009 December 31, 2008 (In Thousands) Saleable coal $ 141,073 $ 144,834 Raw coal 31,092 16,802 Coal inventory 172,165 161,636 Supplies inventory 57,664 71,532 Total inventory $ 229,829 $ 233,168 Saleable coal represents coal ready for sale, including inventories designated for customer facilities under consignment arrangements of $29.9 million and $50.7 million at September 30, 2009 and December 31, 2008, respectively. Raw coal represents coal that generally requires further processing prior to shipment to the customer. |
Other Current Assets
Other Current Assets | |
9 Months Ended
Sep. 30, 2009 USD / shares | |
Notes To Financial Statements [Abstract] | |
Other Current Assets | (3)Other Current Assets Other current assets are comprised of the following: September 30, 2009 December 31, 2008 (In Thousands) Longwall panel costs $ 13,003 $ 12,290 Deposits 134,214 59,648 Other 46,527 44,123 Total other current assets $ 193,744 $ 116,061 Deposits consist primarily of funds placed in restricted accounts with financial institutions to collateralize letters of credit that support workers compensation requirements, insurance and other obligations. As of September 30, 2009 and December 31, 2008, Deposits includes $46.0 million of funds pledged as collateral to support $45.0 million of outstanding letters of credit. In addition, Deposits at September 30, 2009 and December 31, 2008, includes $13.4 and $13.0 million of United States Treasury securities supporting various regulatory obligations, respectively.During the third quarter of 2009, we posted $72.0 million of cash as collateral for an appeal bond in the Harman litigation (see Note 13 to the Notes to Condensed Consolidated Financial Statements for more information). During the third quarter of 2009, we committed to the divestiture of certain mining equipment assets which are notpart ofour short-term mining plan. At September30, 2009, the carrying amount of assets held for sale totaled $20.1million and is included in Other current assets. |
Property, Plant and Equipment
Property, Plant and Equipment | |
9 Months Ended
Sep. 30, 2009 USD / shares | |
Notes To Financial Statements [Abstract] | |
Property, Plant and Equipment | (4)Property, Plant and Equipment Property, plant and equipment is comprised of the following: September 30, 2009 December 31, 2008 (In Thousands) Property, plant and equipment, at cost $ 4,574,826 $ 4,373,325 Accumulated depreciation, depletion and amortization (2,235,203 ) (2,075,629 ) Net property, plant and equipment $ 2,339,623 $ 2,297,696 Property, plant and equipment includes gross assets under capital leases of $12.9 and $17.3 million at September 30, 2009 and December 31, 2008, respectively. During the third quarter of 2009, we acquired approximately 23 million tons of coal reserves, permitted deep and surface mines, a permitted preparation plant and associated refuse area, infrastructure and some mobile and mining equipment from a third party for a cash payment of $5.2 million and the assumption of $14.3 million of asset retirement obligations. During the third quarter of 2009, we exchanged coal reserves and other assets with a third party, recognizing a pre-tax gain in Other revenue of $24.9 million. The gain was calculated based on the fair value of our assets that were surrendered in the exchange. We also assumed asset retirement obligations and sales contract liabilities of $5.7 million and $12.5 million, respectively. The acquired coal reserves and other assets were recorded in Property, plant and equipment at the sum of the fair value of the assets surrendered and liabilities assumed. During the first quarter of 2009, we sold our interest in certain coal reserves to a third party, recognizing a pre-tax gain of $7.1 million in Other revenue. During the first, second and third quarters of 2008, we exchanged coal reserves and other assets with various third parties, recognizing pre-tax gains in Other Revenue of $13.6 million, $15.3 million, and $3.6 million, respectively. The acquired coal reserves and other assets were recorded in Property, plant and equipment at the fair value of the reserves and other assets surrendered. |
Debt
Debt | |
9 Months Ended
Sep. 30, 2009 USD / shares | |
Notes To Financial Statements [Abstract] | |
Debt | (5)Debt Debt is comprised of the following: September 30, 2009 December 31, 2008 As Adjusted (In Thousands) 6.875% senior notes due 2013, net of discount of $3,449 and $3,959, respectively $ 756,551 $ 756,041 3.25% convertible senior notes due 2015, net of discount of $139,564 and $153,462, respectively 531,436 517,538 6.625% senior notes due 2010 21,949 21,949 2.25% convertible senior notes due 2024 9,647 9,647 4.75% convertible senior notes due 2023 - 70 Capital lease obligations 4,736 6,912 Total debt 1,324,319 1,312,157 Amounts due within one year (1,593 ) (1,976 ) Total long-term debt $ 1,322,726 $ 1,310,181 The weighted average effective interest rate of the outstanding borrowings was 7.3% both at September 30, 2009 and December 31, 2008. Convertible Debt Securities On January 1, 2009, new accounting guidance became effective relating to our 3.25% Notes. Upon adoption on the effective date, the new accounting guidance was retroactively applied, as required. This resulted in $4.8 million and $13.9 million of additional non-cash interest expense recorded for the three and nine months ended September 30, 2009, respectively, and $2.9 million of additional non-cash interest expense recorded for both the three and nine months ended September 30, 2008. The impact to Earnings per share was a decrease of $0.03 and $0.10 for the three and nine months ended September 30, 2009, respectively, and a decrease of $0.03 for both the three and nine months ended September 30, 2008. We separately account for the liability and equity components in a manner reflective of our nonconvertible debt borrowing rate, which was determined to be 7.75% at the date of issuance of our 3.25% Notes. The discount associated with the 3.25% Notes will be amortized via the effective-interest method increasing the reported liability until the notes are carried at par value on their maturity date. 4.75% Notes During May 2009, we redeemed at par the remaining $70,000 of the 4.75% convertible senior notes due 2023. |
Pension Expense
Pension Expense | |
9 Months Ended
Sep. 30, 2009 USD / shares | |
Notes To Financial Statements [Abstract] | |
Pension Expense | (6) Pension Expense Net periodic pension expense for both our qualified defined benefit pension plan and nonqualified supplemental benefit pension plan is comprised of the following components: Three Months Ended Nine Months Ended September 30, September 30, 2009 2008 2009 2008 (In Thousands) Service cost $ 2,677 $ 2,182 $ 8,031 $ 6,510 Interest cost 4,233 3,855 12,698 11,911 Expected return on plan assets (4,090 ) (5,713 ) (12,270 ) (17,139 ) Recognized loss (gain) 4,333 (54 ) 12,999 578 Amortization of prior service cost 70 11 210 31 Net periodic pension expense $ 7,223 $ 281 $ 21,668 $ 1,891 We paid benefits to participants of the nonqualified supplemental benefit pension plan of $0.05 million for both the nine month periods ended September 30, 2009 and 2008. We have contributed a total of $5.0 million to the qualified defined benefit pension plan in 2009. No additional contributions are required during 2009. The increase in our 2009 pension cost related to our qualified defined benefit pension plan was due to investment losses on our pension assets incurred during 2008. |
Other Noncurrent Liabilities
Other Noncurrent Liabilities | |
9 Months Ended
Sep. 30, 2009 USD / shares | |
Notes To Financial Statements [Abstract] | |
Other Noncurrent Liabilities | (7)Other Noncurrent Liabilities Other noncurrent liabilities is comprised of the following: September 30, 2009 December 31, 2008 (In Thousands) Reclamation $ 184,427 $ 154,823 Workers' compensation and black lung 95,360 92,982 Other postretirement benefits 166,973 161,527 Other 86,413 81,502 Total other noncurrent liabilities $ 533,173 $ 490,834 |
Black Lung and Workers' Compens
Black Lung and Workers' Compensation Expense | |
9 Months Ended
Sep. 30, 2009 USD / shares | |
Notes To Financial Statements [Abstract] | |
Black Lung and Workers' Compensation Expense | (8)Black Lung and Workers Compensation Expense Expenses for black lung benefits and workers compensation related benefits include the following components: Three Months Ended Nine Months Ended September 30, September 30, 2009 2008 2009 2008 (In Thousands) Self-insured black lung benefits: Service cost $ 922 $ 547 $ 2,767 $ 1,640 Interest cost 718 848 2,154 2,543 Amortization of actuarial gain (1,144 ) (872 ) (3,432 ) (2,617 ) Subtotal black lung benefits expense 496 523 1,489 1,566 Other workers' compensation benefits 7,536 7,812 22,601 24,360 Total black lung and workers' compensation benefits expense $ 8,032 $ 8,335 $ 24,090 $ 25,926 Payments for benefits, premiums and other costs related to black lung and workers compensation liabilities were $6.2 million and $5.5 million for the three months ended September 30, 2009 and 2008, respectively, and were $23.8 million and $18.8 million for the nine months ended September 30, 2009 and 2008, respectively. |
Other Postretirement Benefits E
Other Postretirement Benefits Expense | |
9 Months Ended
Sep. 30, 2009 USD / shares | |
Notes To Financial Statements [Abstract] | |
Other Post Retirement Benefits Expense | (9)Other Postretirement Benefits Expense Net periodic postretirement benefit cost includes the following components: Three Months Ended Nine Months Ended September 30, September 30, 2009 2008 2009 2008 (In Thousands) Service cost $ 978 $ 801 $ 2,935 $ 2,403 Interest cost 2,504 2,211 7,513 6,634 Recognized loss 576 203 1,728 610 Amortization of prior service credit (188 ) (188 ) (564 ) (563 ) Net periodic postretirement benefit cost $ 3,870 $ 3,027 $ 11,612 $ 9,084 Payments for benefits related to postretirement benefit cost were $2.3 million and $1.5 million for the three months ended September 30, 2009 and 2008, respectively, and were $5.6 million and $4.6 million for the nine months ended September 30, 2009 and 2008, respectively. |
Earnings Per Share
Earnings Per Share | |
9 Months Ended
Sep. 30, 2009 USD / shares | |
Notes To Financial Statements [Abstract] | |
Earnings Per Share | (10)Earnings Per Share The number of shares of our common stock, $0.625 par value per share (Common Stock), used to calculate basic earnings per share for the three and nine months ended September 30, 2009 and 2008 is based on the weighted average of outstanding shares of Common Stock during the respective periods. The number of shares of Common Stock used to calculate diluted earnings per share is based on the number of shares of Common Stock used to calculate basic earnings per share plus the dilutive effect of stock options and other stock-based instruments held by our employees and directors during each period and debt securities currently convertible into shares of Common Stock during each period. The effect of dilutive securities issuances in the amount of 1.2 million and 2.8 million shares of Common Stock for the three and nine months ended September 30, 2009, respectively, and 0.01 million shares of Common Stock for both the three and nine months ended September 30, 2008, were excluded from the calculation of diluted income per share of Common Stock, as such inclusion would result in antidilution. The computations for basic and diluted income per share are based on the following per share information: Three Months Ended Nine Months Ended September 30, September 30, 2009 2008 2009 2008 As Adjusted As Adjusted (In Thousands, Except Per Share Amounts) Numerator: Net income - numerator for basic $ 16,458 $ 51,558 $ 80,076 $ 154 Effect of convertible notes 44 45 130 143 Adjusted net income - numerator for diluted $ 16,502 $ 51,603 $ 80,206 $ 297 Denominator: Weighted average shares - denominator for basic 84,930 82,623 84,887 80,851 Effect of stock options/restricted stock 444 1,045 195 907 Effect of convertible notes 288 291 289 312 Adjusted weighted average shares - denominator for diluted 85,662 83,959 85,371 82,070 Net income per share: Basic $ 0.19 $ 0.62 $ 0.94 $ 0.00 Diluted $ 0.19 $ 0.61 $ 0.94 $ 0.00 The 2.25% Notes are convertible by holders into shares of Common Stock during certain periods under certain circumstances. The 2.25% Notes were not eligible for conversion at September 30, 2009.If all of the 2.25% Notes outstanding at September 30, 2009 had been eligible for conversion and were converted, we would have issued 287,113 shares of Common Stock. The 3.25% Notes are convertible under certain circumstances and during certain periods into (i)cash, up to the aggregate principal amount of the 3.25% Notes subject to conversion and (ii)cash, Common Stock or a combination thereof, at our election in respect to the remainder (if any) of our conversion obligation. As |
DerivativeInstruments
DerivativeInstruments | |
9 Months Ended
Sep. 30, 2009 USD / shares | |
Notes To Financial Statements [Abstract] | |
Derivative Instruments | (11)Derivative Instruments We evaluate each of our coal sales and coal purchase forward contracts to determine if they qualify for the normal purchase normal sale (NPNS) exception prescribed by current accounting guidance. The majority of our forward contracts do qualify for the NPNS exception based on management's intent and ability to physically deliver or take physical delivery of the coal and therefore are not reflected in the Condensed Consolidated Balance Sheets and Condensed Consolidated Statements of Income. For those contracts that do not qualify for the NPNS exception, the contracts are required to be accounted for as derivative instruments and must be recognized as assets or liabilities and measured at fair value. We use purchase coal contracts to supplement our produced and processed coal in order to provide coal to meet customer requirements under sales contracts. Those contracts that have been identified as derivatives have not been designated as cash flow or fair value hedges and, accordingly, the net change in fair value is recorded in current period earnings. As of September 30, 2009, there were approximately 1.8 million and 2.4 million tons outstanding under these coal purchase and coal sales contracts, respectively. We have recorded a net loss of $4.8 million ($2.5 million of unrealized losses due to fair value measurement adjustments and $2.3 million of realized losses due to settlements on existing contracts) for the three months ended September 30, 2009, and a net gain of $4.5 million ($22.6 million of unrealized gains due to fair value measurement adjustments and $18.1 million of realized losses due to settlements on existing contracts) for the nine months ended September 30, 2009, related to coal sales and purchase contracts that qualify as derivatives in the Condensed Consolidated Statements of Income under the caption Loss (gain) on derivative instruments. An asset of $0.1 million is included in Other current assets in the Condensed Consolidated Balance Sheets as of September 30, 2009. The fair values of our purchases and sales derivative contracts have been aggregated in Other current assets. We are exposed to certain risks related to coal price volatility. The forward purchases and sales contracts we enter into and deem derivatives allow us to mitigate a portion of the underlying risk associated with coal price volatility. |
Fair Value of Financial Instrum
Fair Value of Financial Instruments | |
9 Months Ended
Sep. 30, 2009 USD / shares | |
Notes To Financial Statements [Abstract] | |
Fair Value of Financial Instruments | (12)Fair Value Financial and non-financial assets and liabilities that are required to be measured at fair value must be categorized based upon the levels of judgment associated with the inputs used to measure their fair value.Hierarchical levels directly related to the amount of subjectivity associated with the inputs used to determine the fair value of financial assets and liabilities are as follows: Level 1 Inputs are unadjusted, quoted prices in active markets for identical assets or liabilities at the measurement date. Level 2 Inputs (other than quoted prices included in Level 1) are either directly or indirectly observable for the assets or liability through correlation with market data at the measurement date and for the duration of the instruments anticipated life. Level 3 Inputs reflect managements best estimate of what market participants would use in pricing the asset or liability at the measurement date.Consideration is given to the risk inherent in the valuation technique and the risk inherent in the inputs to the model. Each major category of financial assets and liabilities measured at fair value on a recurring basis are categorized in the tables below based upon the lowest level of significant input to the valuations. September 30, 2009 (In Thousands) Level 1 Level 2 Level 3 Total Fixed income securities $ 13,408 $ - $ - $ 13,408 Money market funds 723,991 - - 723,991 Short-term investment - - 15,121 15,121 Derivative instruments - 46 - 46 Total securities $ 737,399 $ 46 $ 15,121 $ 752,565 Fixed income securities and money market funds All investments in money market funds are cash equivalents or deposits pledged as collateral and are invested in AAA prime money market funds and Treasury-backed funds. Included in the money market funds are $46.0 million of funds pledged as collateral to support $45.1 million of outstanding letters of credit and $72.0 million of cash held as collateral for an appeal bond in the Harman litigation. All fixed income securities are deposits, consisting of obligations of the U.S. Treasury, supporting various regulatory obligations.See Note 3 to the Notes to Condensed Consolidated Financial Statements for more information on deposits. Short-Term Investment Short-term investment is comprised of an investment in The Reserve Primary Fund (Primary Fund), a money market fund that has suspended redemptions and is being liquidated. We have determined that our investment in the Primary Fund no longer meets the definition of a security, within the scope of current accounting guidance, since the equity investment no longer has a readily determinable fair value. Therefore, the investment has been classified as a short-term investment, subject to the cost method of accounting, on our Condensed Consolidated Balance Sheet. This classification as a short-term investment is based on our assessment of each of the individual securities that make up the underlying portfolio holdings in the Primary Fund, which |
Contingencies
Contingencies | |
9 Months Ended
Sep. 30, 2009 USD / shares | |
Notes To Financial Statements [Abstract] | |
Contingencies | (13)Contingencies Harman In December 1997, A.T. Masseys then subsidiary, Wellmore Coal Corporation (Wellmore), declared force majeure under its coal supply agreement with Harman Mining Corporation (Harman) and reduced the amount of coal to be purchased from Harman. On October 29, 1998, Harman and its sole shareholder sued A.T. Massey and five of its other subsidiaries (the Massey Defendants) in the Circuit Court of Boone County, West Virginia, alleging that the Massey Defendants tortiously interfered with Wellmores agreement with Harman, causing Harman to go out of business. On August 1, 2002, the jury awarded the plaintiffs $50 million in compensatory and punitive damages. On October 24, 2006, the Massey Defendants timely filed their Petition for Appeal to the Supreme Court of Appeals of West Virginia (WV Supreme Court).On November 21, 2007, the WV Supreme Court issued a 3-2 majority opinion reversing the judgment against the Massey Defendants and remanding the case to the Circuit Court of Boone County with directions to enter an order dismissing the case, with prejudice, in its entirety.The Harman plaintiffs filed motions asking the WV Supreme Court to conduct a rehearing in the case. On January 24, 2008, the WV Supreme Court decided to rehear the case, which was re-argued on March 12, 2008. On April 3, 2008, the WV Supreme Court again reversed the judgment against the Massey Defendants and remanded the case with direction to enter an order dismissing the case, with prejudice, in its entirety. In July 2008, the Harman plaintiffs petitioned the United States Supreme Court (the U.S. Supreme Court) to review the WV Supreme Courts dismissal of their claims. In December 2008, the U.S. Supreme Court agreed to review the case.The U.S. Supreme Court granted review based on the question of whether a justice of the WV Supreme Court should have recused himself from the appeal. The U.S. Supreme Court found that the justice should have recused himself and ruled on June 8, 2009 that the matter should be reheard by the West Virginia Supreme Court.The West Virginia Supreme Court heard oral arguments on the matter on September 8, 2009, but has not yet rendered a decision.We were required to post $72 million ofcash as collateral for an appeal bond prior to the rehearing on September 8, 2009. We believe the maximum loss exposure related to this matter is approximately $86 million as of September 30, 2009, including post-judgment interest and other costs. We believe a loss is not probable and therefore have not recorded an accrual.It is reasonably possible that our judgments regarding these matters could change in the near term, resulting in the recording of material losses that would affect our operating results and financial position. West Virginia Flooding Since July 2001, we and nine of our subsidiaries have been sued in 17 consolidated civil actions filed in the Circuit Courts of Boone, Fayette, Kanawha, McDowell, Mercer, Raleigh and Wyoming Counties, West Virginia, for alleged property damages and personal injuries arising out of flooding on or about July 8, 2001. Along with 32 other consolidated cases not involving us or our sub |
Document Information
Document Information | |
9 Months Ended
Sep. 30, 2009 USD / shares | |
[DocumentInformationLineItems] | |
Document Type | 10-Q |
Document Period End Date | 2009-09-30 |
Amendment Flag | false |
Entity Information
Entity Information (USD $) | ||
9 Months Ended
Sep. 30, 2009 | Jun. 30, 2008
| |
[EntityInformationLineItems] | ||
Entity Registrant Name | MASSEY ENERGY CO | |
Entity Central Index Key | 0000037748 | |
Current Fiscal Year End Date | --12-31 | |
Entity Well Known Seasoned Issuer | No | |
Entity Voluntary Filers | No | |
Entity Current Reporting Status | No | |
Entity Filer Category | Large Accelerated Filer | |
Entity Public Float | $7,571,508,750 | |
Entity Common Stock Shares Outstanding | 85,544,413 |