================================================================================
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q/A
(Amendment No. 1)
[X] Quarterly report pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934.
For the quarterly period ended March 31, 2002; or
[_] Transition Report Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Commission file number: 001-14901
CONSOL ENERGY INC.
(Exact name of registrant as specified in its charter)
Delaware 51-0337383
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
Consol Plaza
1800 Washington Road
Pittsburgh, Pennsylvania 15241
(Address of principal executive offices including zip code)
Registrant's telephone number, including area code:
(412)831-4000
Securities registered pursuant to Section 12(b) of the Act
Name of each exchange on which registered
New York Stock Exchange
Title of each Class
Common Stock ($.01 par value)
No securities are registered pursuant to Section 12(g) of the Act:
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes [X] No [_]
As of April 26, 2002, there were 78,712,374 shares of Common Stock, $.01
par value, outstanding.
Explanatory Note
This Amendment No. 1 to the Quarterly Report on Form 10-Q (the "Form 10-Q")
of CONSOL Energy Inc. (the "Company") for the three months ended March 31, 2002
is being filed to amend Item 1 (Financial Statements) of the Form 10-Q. On March
7, 2002, CONSOL Energy issued, in a private placement pursuant to Section 4(2)
of the Securities Act of 1933, $250 million of 7.875 percent Notes due in 2012.
The payment obligations under the Notes are fully and unconditionally guaranteed
by several subsidiaries of CONSOL Energy. In accordance with the terms of a
registration rights agreement between the Company and the initial purchasers of
the 7.875 percent Notes due 2012, the Company has filed a registration statement
on Form S-4 to effect the exchange of new notes for the notes issued in the
private placement. The new notes are substantially identical to the notes issued
in the private placement. Item 1 of Form 10-Q is being amended to provide an
additional note, Note 8 to the Consolidated Financial Statements, which includes
condensed consolidating financial statements in accordance with Regulation 3-10
of Regulation S-X.
2
PART I
FINANCIAL INFORMATION
ITEM 1. CONDENSED FINANCIAL STATEMENTS
CONSOL ENERGY INC. AND SUBSIDIARIES
-----------------------------------
CONSOLIDATED STATEMENTS OF INCOME
---------------------------------
(Unaudited)
(Dollars in thousands, except per share data)
Three Months Ended
March 31,
-------------------------------------
2002 2001
------------------ -----------------
Sales - Outside $ 507,194 $ 573,413
Sales - Related Parties 4 3,517
Freight - Outside 36,432 31,973
Freight - Related Parties 662
Other Income 8,371 18,371
------------------ -----------------
Total Revenue 552,001 627,936
Cost of Goods Sold and Other Operating Charges 364,902 421,415
Freight Expense 36,432 32,635
Selling, General and Administrative Expense 16,657 14,287
Depreciation, Depletion and Amortization 66,457 60,631
Interest Expense 10,137 14,662
Taxes Other Than Income 50,725 37,235
Export Sales Excise Tax Resolution (95,292)
------------------ -----------------
Total Costs 545,310 485,573
------------------ -----------------
Earnings Before Income Taxes 6,691 142,363
Income Taxes 1,190 41,563
------------------ -----------------
Net Income $ 5,501 $ 100,800
================== =================
Basic Earnings Per Share $ 0.07 $ 1.28
================== =================
Dilutive Earnings Per Share $ 0.07 $ 1.27
================== =================
Weighted Average Number of Common Shares Outstanding:
Basic 78,704,593 78,616,575
================== =================
Dilutive 78,909,819 79,201,793
================== =================
Dividends Paid Per Share $ 0.28 $ 0.28
================== =================
The accompanying notes are an integral part of these financial
statements.
3
CONSOL ENERGY INC. AND SUBSIDIARIES
-----------------------------------
CONSOLIDATED BALANCE SHEETS
---------------------------
(Dollars in thousands, except per share data)
(Unaudited)
March 31, December 31,
2002 2001
------------------- ----------------------
ASSETS
Current Assets:
Cash and Cash Equivalents $ 24,298 $ 15,582
Accounts and Notes Receivable:
Trade 220,987 220,442
Other Receivables 132,484 123,354
Inventories 183,618 113,894
Deferred Income Taxes 54,794 54,708
Recoverable Income Taxes 3,904
Prepaid Expenses 57,060 42,274
------------------- ----------------------
Total Current Assets 677,145 570,254
Property, Plant and Equipment:
Property, Plant and Equipment 5,520,032 5,413,960
Less - Accumulated Depreciation, Depletion and Amortization 2,626,793 2,498,650
------------------- ----------------------
Total Property, Plant and Equipment - Net 2,893,239 2,915,310
Other Assets:
Deferred Income Taxes 519,649 520,906
Advance Mining Royalties 92,356 92,644
Investment in Affiliates 82,515 77,667
Other 119,968 120,813
------------------- ----------------------
Total Other Assets 814,488 812,030
------------------- ----------------------
Total Assets $ 4,384,872 $ 4,297,594
=================== ======================
The accompanying notes are an integral part of these financial statements.
4
CONSOL ENERGY INC. AND SUBSIDIARIES
-----------------------------------
CONSOLIDATED BALANCE SHEETS
---------------------------
(Dollars in thousands, except per share data)
(Unaudited)
March 31, December 31,
2002 2001
---------------- ----------------
LIABILITIES AND
STOCKHOLDERS' EQUITY
Current Liabilities:
Accounts Payable $ 142,527 $ 171,741
Short-Term Notes Payable 178,321 77,869
Current Portion of Long-Term Debt 49,948 72,771
Accrued Income Taxes 4,799
Other Accrued Liabilities 385,466 313,568
---------------- ----------------
Total Current Liabilities 756,262 640,748
Long-Term Debt:
Long-Term Debt 466,157 464,187
Capital Lease Obligations 7,496 8,482
---------------- ----------------
Total Long-Term Debt 473,653 472,669
Deferred Credits and Other Liabilities:
Postretirement Benefits Other Than Pensions 1,437,849 1,417,567
Pneumoconiosis Benefits 461,187 459,776
Mine Closing 334,108 333,738
Workers' Compensation 280,625 269,075
Deferred Revenue 216,043 227,595
Reclamation 9,988 13,744
Other 159,198 191,123
---------------- ----------------
Total Deferred Credits and Other Liabilities 2,898,998 2,912,618
Stockholders' Equity:
Common Stock, $.01 par value;
500,000,000 Shares Authorized; 80,267,558 Issued
and 78,712,374 Outstanding at March 31, 2002;
80,267,558 Issued and 78,705,638 Outstanding at
December 31, 2001 803 803
Preferred Stock, 15,000,000 Shares Authorized;
None Issued and Outstanding
Capital in Excess of Par Value 643,681 643,627
Retained Earnings (Deficit) (334,103) (317,566)
Other Comprehensive Loss (36,852) (37,659)
Common Stock in Treasury, at Cost - 1,555,184 Shares
at March 31, 2002; 1,561,920 Shares at
December 31, 2001 (17,570) (17,646)
---------------- ----------------
Total Stockholders' Equity 255,959 271,559
---------------- ----------------
Total Liabilities and Stockholders' Equity $ 4,384,872 $ 4,297,594
================ ================
The accompanying notes are an integral part of these financial statements.
5
CONSOL ENERGY INC. AND SUBSIDIARIES
-----------------------------------
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
-----------------------------------------------
(Dollars in thousands, except per share data)
Other Total
Capital in Retained Compre- Stock-
Excess of Earnings hensive Treasury holders'
Common Stock Par Value (Deficit) Loss Stock Equity
------------ ---------- ----------- ----------- ----------- -----------
Balance -
December 31, 2001 $ 803 $ 643,627 $ (317,566) $ (37,659) $ (17,646) $ 271,559
(Unaudited)
Net Income 5,501 5,501
Treasury Rate Lock
(net of $514 tax) 807 807
Treasury Stock Issued
(6,736 shares) 54 76 130
Dividends
($.28 per share) (22,038) (22,038)
----------- ----------- ----------- ----------- ----------- -----------
Balance -
March 31, 2002 $ 803 $ 643,681 $ (334,103) $ (36,852) $ (17,570) $ 255,959
=========== =========== =========== =========== =========== ===========
The accompanying notes are an integral part of these financial statements.
6
CONSOL ENERGY INC. AND SUBSIDIARIES
-----------------------------------
CONSOLIDATED STATEMENTS OF CASH FLOWS
-------------------------------------
(Unaudited)
(Dollars in thousands)
Three Months Ended March 31,
----------------------------
2002 2001
---------- ----------
Operating Activities:
Net Income $ 5,501 $ 100,800
Adjustments to Reconcile Net Income to Net Cash
Provided by Operating Activities:
Depreciation, Depletion and Amortization 66,457 60,631
Gain on the Sale of Assets (298) (1,700)
Amortization of Advance Mining Royalties 4,064 7,214
Deferred Income Taxes 657 13,920
Equity in Earnings of Affiliates 560 (6,144)
Changes in Operating Assets:
Accounts and Notes Receivable (9,675) (106,195)
Inventories (69,724) 673
Prepaid Expenses (14,786) (8,819)
Changes in Other Assets 3,066 14,732
Changes in Operating Liabilities:
Accounts Payable (29,214) 4,229
Other Operating Liabilities 63,195 (3,617)
Changes in Other Liabilities 13,532 52,734
Other (2,425) 1,110
---------- ----------
25,409 28,768
---------- ----------
Net Cash Provided by Operating Activities 30,910 129,568
---------- ----------
Investing Activities:
Capital Expenditures (70,360) (50,095)
Additions to Advance Mining Royalties (3,776) (1,805)
Acquisition of Line Creek Mine Joint Venture (868)
Investment in Equity Affiliates (5,408) 5,967
Proceeds from Sales of Assets 949 (6,620)
---------- ----------
Net Cash Used in Investing Activities (78,595) (53,421)
---------- ----------
Financing Activities:
Payments on Commercial Paper - Net (144,750) (48,693)
Payments on Miscellaneous Borrowings (987) (1,145)
Payments on Long Term Notes (23,000)
Proceeds from Long Term Notes 246,310
Dividends Paid (22,025) (22,005)
Proceeds from Treasury Rate Lock 1,332
Payments for Bond Issuance Costs (596)
Issuance of Treasury Stock 117 421
---------- ----------
Net Cash Provided by (Used in) Financing Activities 56,401 (71,422)
---------- ----------
Net Increase in Cash and Cash Equivalents 8,716 4,725
Cash and Cash Equivalents at Beginning of Period 15,582 10,570
---------- ----------
Cash and Cash Equivalents at End of Period $ 24,298 $ 15,295
========== ==========
The accompanying notes are an integral part of these financial statements.
7
CONSOL ENERGY INC. AND SUBSIDIARIES
-----------------------------------
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
----------------------------------------------------
March 31, 2002
--------------
(Dollars in thousands, except per share data)
NOTE 1--BASIS OF PRESENTATION:
- -----------------------------
The accompanying unaudited consolidated financial statements have been prepared
in accordance with generally accepted accounting principles for interim
financial information and with the instructions to Form 10-Q and Article 10 of
Regulation S-X. Accordingly, they do not include all of the information and
footnotes required by generally accepted accounting principles for complete
financial statements. In the opinion of management, all adjustments (consisting
of normal recurring accruals) considered necessary for a fair presentation have
been included. Operating results for the three-month period ended March 31, 2002
are not necessarily indicative of the results that may be expected for future
periods.
The balance sheet at December 31, 2001 has been derived from the audited
financial statements at that date but does not include all the footnotes
required by generally accepted accounting principles for complete financial
statements.
For further information, refer to the consolidated financial statements and
footnotes for the transitional period ended December 31, 2001 included in CONSOL
Energy Inc.'s (CONSOL Energy) Form 10-K, as filed on March 29, 2002.
CONSOL Energy changed from a fiscal year ending June 30 to a fiscal year ending
December 31. CONSOL Energy had a transitional period ending December 31, 2001.
CONSOL Energy's first full year ending December 31 started January 1, 2002 and
ends December 31, 2002. CONSOL Energy has made this change in order to align its
fiscal year with that of RWE AG, which beneficially owns directly or through
subsidiaries approximately 74% of the common stock of CONSOL Energy.
Certain reclassifications of the prior year's data have been made to conform to
the three months ended March 31, 2002 classifications.
NOTE 2--ACQUISITION:
- -------------------
On December 7, 2001, in order to expand its international market share, CONSOL
Energy purchased for $17,950, a 50% interest in the Glennies Creek Mine, which
is currently under development in New South Wales, Australia. Glennies Creek
produces a high fluidity coking coal that will be sold primarily to steel makers
in the Asia-Pacific region. The acquisition has been accounted for as a purchase
and accordingly, since the date of acquisition the operating results of Glennies
Creek Mine have been included in CONSOL Energy's consolidated financial
statements using the equity method of accounting. Pro forma net income and
earnings per share of CONSOL Energy, after giving effect to certain purchase
accounting adjustments, would not materially change for the three months ended
March 31, 2001.
On August 22, 2001, in order to expand existing gas operations, CONSOL Energy
purchased the remaining 50% interest in the coalbed methane reserves and the
remaining 25% interest in the production and gathering assets in southwestern
Virginia of Pocahontas Gas Partnership and Cardinal States Gathering Company for
8
$155,312. Prior to the acquisition, CONSOL Energy owned 50% and 75%,
respectively, of these two entities. The acquisition has been accounted for as a
purchase and, accordingly, the operating results for the portion of Pocahontas
Gas Partnership and Cardinal States Gathering Company previously reported on the
equity method and the newly acquired portions have been included in CONSOL
Energy's operating results using full consolidation since the date of
acquisition. The pro forma results, assuming the acquisition of the interests in
these entities had occurred January 1, 2001, are estimated to be:
Pro forma
Three Months Ended
March 31, 2001
-------------------------
Revenues $650,659
Net income $104,795
Net income per common shares:
Basic $1.33
Diluted $1.32
The pro forma results are not necessarily indicative of what actually would have
occurred if the acquisition of the interest in these entities had been completed
as of the beginning of the period presented, nor are they necessarily indicative
of future consolidated results.
On July 2, 2001, CONSOL Energy entered into agreements with American Electric
Power to supply coal to various American Electric Power coal-fired power plants.
CONSOL Energy purchased, for a nominal amount, the stock of Windsor Coal
Company, Southern Ohio Coal Company and Central Ohio Coal Company, subsidiaries
of American Electric Power which owns mines in Ohio and West Virginia. Under the
agreements, CONSOL Energy will supply approximately 34 million tons of coal
through 2008. These tons will be supplied by the former American Electric Power
affiliated mines and by other CONSOL Energy mines. The former American Electric
Power affiliated mines all have limited economically mineable reserves. The
Meigs 31 mine of Southern Ohio Coal Company was closed on October 24, 2001 and
the Muskingham surface mine of Central Ohio Coal Company closed on December 14,
2001. The Meigs 2 mine of Southern Ohio Coal Company closed on March 6, 2002.
CONSOL Energy will expand its McElroy and Robinson Run Mines to meet the new
supply agreement requirements as the former American Electric Power mines
deplete.
As part of this acquisition, CONSOL Energy assumed approximately $239,000 of
long-term liabilities related to employee and mine closure liabilities in this
acquisition, as well as other current liabilities. American Electric Power paid
CONSOL Energy $336,000 in cash. Subsequent to the acquisition, the cash included
as part of the acquisition was used by CONSOL Energy to reduce a portion of its
short-term debt. For income tax purposes, an election was made to treat the
stock acquisition as a purchase of assets. Therefore, an income tax liability
was recognized as part of the acquisition based upon the excess of the assets
received over the tax liabilities assumed. The acquisition has been accounted
for as a purchase and, accordingly, the operating results of Windsor Coal
Company, Southern Ohio Coal Company and Central Ohio Coal Company have been
included in CONSOL Energy's operating results since the date of acquisition. The
pro forma results, assuming the acquisition of the interests in these entities
had occurred January 1, 2001, are estimated to be:
9
Pro forma
Three Months Ended
March 31, 2001
-----------------------------------------
Revenues $714,544
Net income $104,008
Net income per common share:
Basic $1.32
Diluted $1.31
The pro forma results are not necessarily indicative of what actually would have
occurred if the acquisition of the interest in these entities had been completed
as of the beginning of the period presented, nor are they necessarily indicative
of future consolidated results.
NOTE 3--INCOME TAXES:
- --------------------
The following is a reconciliation, stated as a percentage of pretax income, of
the U. S. statutory federal income tax rate to CONSOL Energy's effective tax
rate:
For the Three
Months Ended
March 31,
-----------------------------------
2002 2001
------------------ ---------------
Statutory U.S. federal income tax rate 35.0% 35.0%
Excess tax depletion (29.7) (7.4)
Nonconventional fuel tax credit (1.3)
Net effect of state tax 5.0 2.8
Net effect of foreign tax 8.4 0.3
Other (0.9) (0.2)
------------------ ---------------
Effective Income Tax Rate 17.8% 29.2%
================== ===============
NOTE 4--INVENTORIES:
- -------------------
The components of inventories consist of the following:
March 31, December 31,
2002 2001
------------------ ---------------
Coal $ 105,304 $ 33,897
Merchandise for resale 21,565 21,816
Supplies 56,749 58,181
------------------ ---------------
Total Inventories $ 183,618 $ 113,894
================== ===============
10
NOTE 5--COMMITMENTS AND CONTINGENCIES:
- ---------------------------------------
CONSOL Energy has various purchase commitments for materials, supplies and items
of permanent investment incidental to the ordinary conduct of business. Such
commitments are not at prices in excess of current market values.
One of CONSOL Energy's subsidiaries, Fairmont Supply Company, which distributes
industrial supplies, currently is named as a defendant in a number of asbestos
cases in state courts in Pennsylvania, Ohio, West Virginia and Mississippi.
Because a very small percentage of products manufactured by third parties and
supplied by Fairmont in the past may have contained asbestos and many of the
pending claims are part of mass complaints filed by hundreds of plaintiffs
against a hundred or more defendants, it has been difficult for Fairmont to
determine how many of the cases actually involve valid claims or plaintiffs who
were actually exposed to asbestos-containing products supplied by Fairmont. In
addition, while Fairmont may be entitled to indemnity or contribution in certain
jurisdictions from manufacturers of identified products, the availability of
such indemnity or contribution is unclear at this time and, in recent years,
some of the manufacturers named as defendants in these actions have sought
protection from these claims under bankruptcy laws. Fairmont has no insurance
coverage with respect to these asbestos cases. To date, payments by Fairmont
with respect to asbestos cases have not been material. However, there cannot be
any assurance that payments in the future with respect to pending or future
asbestos cases will not be material to the financial position, results of
operations or cash flows of CONSOL Energy.
CONSOL Energy is subject to various lawsuits and claims with respect to such
matters as personal injury, wrongful death, damage to property, exposure to
hazardous substances, governmental regulations including environmental
remediation, employment and contract disputes, and other claims and actions
arising out of the normal course of business. In addition, CONSOL Energy has
recognized a liability related to a waste disposal site and accrued $3,275 in
Other Liabilities. CONSOL Energy has paid $1,909 cumulatively ($358 in the three
months ended March 31, 2002) related to the remediation of this waste disposal
site and, accordingly, reduced the liability to $1,366. In the opinion of
management, the ultimate liabilities resulting from such pending lawsuits and
claims will not materially affect the financial position, results of operations
or cash flows of CONSOL Energy.
11
NOTE 6--SEGMENT INFORMATION:
- ---------------------------
Industry segment results for the three months ended March 31, 2002:
Coal Gas All Other Elimination Consolidated
------------ ----------- ----------- ------------ ------------
Sales - outside $ 457,866 $ 27,692 $ 21,636 $ $ 507,194
Sales - related parties 4 4
Freight - outside 36,432 36,432
Intersegment transfers 445 25,942 (26,387)
------------ ----------- ----------- ----------- -----------
Total Sales and Freight $ 494,302 $ 28,137 $ 47,578 $ (26,387) $ 543,630
============ =========== =========== =========== ===========
Pretax Operating
Income (Loss) (A) $ 13,748 $ 4,487 $ (1,765) $ 16,470
============ =========== =========== =========== ===========
Segment assets (B) $ 2,948,028 $ 602,673 $ 208,425 $ 3,759,126
============ =========== =========== =========== ===========
Depreciation, depletion and
amortization $ 53,781 $ 8,162 $ 4,514 $ 66,457
============ =========== =========== =========== ===========
Additions to property, plant and
equipment $ 52,183 $ 18,695 $ 1,838 $ 72,716
============ =========== =========== =========== ===========
(A) Includes equity in net income (loss) of unconsolidated equity
affiliates of ($2), ($374) and ($184) for Coal, Gas and All
Other, respectively.
(B) Includes investments in unconsolidated equity affiliates of
$72,434, $9,185, and $896 for Coal, Gas and All Other,
respectively. Also, included in the Coal segment is $72,194 of
receivables related to the Export Sales Excise Tax Resolution
that was primarily recognized in the year ended June 30, 2001.
Industry segment results for the three months ended March 31, 2001:
Coal Gas All Other Elimination Consolidated
------------ ----------- ----------- ------------ ------------
Sales - outside $ 494,812 $ 43,374 $ 35,227 $ $ 573,413
Sales - related parties 3,517 3,517
Freight - outside 31,973 31,973
Freight - related parties 662 662
Intersegment transfers 613 22,113 (22,726)
------------ ----------- ----------- ----------- -----------
Total Sales and Freight $ 530,964 $ 43,987 $ 57,340 $ (22,726) $ 609,565
============ =========== =========== =========== ===========
Pretax Operating
Income (Loss) (C) $ 98,055 $ 36,403 $ (7,326) $ 127,132
============ =========== =========== =========== ===========
Segment assets (D) $ 2,966,918 $ 332,114 $ 168,988 $ 3,468,020
============ =========== =========== =========== ===========
Depreciation, depletion and
amortization $ 54,149 $ 2,008 $ 4,474 $ 60,631
============ =========== =========== =========== ===========
Additions to property, plant and
equipment $ 37,796 $ 11,056 $ 3,888 $ 52,740
============ =========== =========== =========== ===========
(C) Includes equity in earnings of unconsolidated affiliates of
($777), $8,090 and ($1,169) for Coal, Gas and All Other,
respectively. Also, included in the Coal segment is $65,675 of
income related to the Export Sales Excise Tax Resolution.
(D) Includes investments in unconsolidated equity affiliates of
$37,532, $183,504 and $840 for Coal, Gas and All Other,
respectively. Also, included in the Coal segment is $68,954 of
receivables related to the Export Sales Export Tax Resolution.
12
Reconciliation of Segment Information to Consolidated Amounts:
Operating Profit:
For the Three Months Ended
March 31,
--------------------------
2002 2001
------------ -----------
Total segment pretax operating income $ 16,470 $ 127,132
Interest income (expense), net
and other non-operating activity (9,779) 15,231
------------ -----------
Earnings Before Income Taxes $ 6,691 $ 142,363
============ ===========
Total Assets:
March 31,
--------------------------
2002 2001
------------ -----------
Total assets for reportable segments $ 3,759,126 $ 3,468,020
Cash and other investments 24,695 15,616
Export sales excise tax resolution
interest receivable 20,602 29,617
Deferred tax assets 574,443 375,499
Recoverable income taxes 3,904
Bond issuance costs 2,102
------------ -----------
Total Consolidated Assets $ 4,384,872 $ 3,888,752
============ ===========
NOTE 7--SUBSEQUENT EVENT:
- ------------------------
On April 17, 2002, CONSOL Energy received $7,350 in a contract settlement.
CONSOL Energy expects to recognize approximately $7,000 of income in the quarter
ended June 30, 2002 related to this settlement.
NOTE 8--GUARANTOR SUBSIDIARIES FINANCIAL INFORMATION:
- ----------------------------------------------------
The payment obligations under the $250,000 7.875 percent Notes due 2012
issued by CONSOL Energy are fully and unconditionally guaranteed by several
subsidiaries of CONSOL Energy. In accordance with positions established by the
Securities and Exchange Commission, the following financial information sets
forth separate financial information with respect to parent, the guarantor
subsidiaries and the non-guarantor subsidiaries. The principal elimination
entries eliminate investments in subsidiaries and certain intercompany balances
and transactions. CONSOL Energy's parent and a guarantor company manage several
assets and liabilities of their subsidiaries. For example, these include
deferred tax assets, cash and other post-employment liabilities. These assets
and liabilities are reflected as parent company or guarantor company amounts for
purposes of this presentation.
13
Income Statement for the Three Months Ended March 31, 2002;
Parent Guarantor Non-Guarantor Elimination Consolidated
------------ ------------ ------------- ------------ ------------
Sales - Outside $ $ 428,233 $ 78,961 $ $ 507,194
Sales - Related Parties 2 2 4
Freight - Outside 27,995 8,437 36,432
Freight - Related Parties 1,265 (1,265)
Other Income (including equity earnings) 8,278 8,116 (5,496) (2,527) 8,371
------------ ------------ ------------ ------------ ------------
Total Revenue 8,278 464,346 83,169 (3,792) 552,001
Cost of Goods Sold and
Operating Charges 2,651 330,636 70,536 (38,921) 364,902
Intercompany Activity (4,023) (26,863) (18,757) 49,643
Freight Expense 27,995 9,702 (1,265) 36,432
Selling, General and
Administrative Expense 11,400 5,257 16,657
Depreciation, Depletion and
Amortization 708 57,933 9,671 (1,855) 66,457
Interest Expense 3,552 5,928 657 10,137
Taxes Other Than Income 1,116 42,945 6,664 50,725
------------ ------------ ------------ ------------ ------------
Total Costs 4,004 449,974 83,730 7,602 545,310
------------ ------------ ------------ ------------ ------------
Earnings(Loss) Before Income Taxes 4,274 14,372 (561) (11,394) 6,691
Income Taxes (Benefit) (1,227) 2,517 (100) 1,190
------------ ------------ ------------ ------------ ------------
Net Income(Loss) $ 5,501 $ 11,855 $ (461) $ (11,394) $ 5,501
============ ============ ============ ============ ============
Balance Sheet for March 31, 2002;
Parent Guarantor Non-Guarantor Elimination Consolidated
------------ ------------ ------------- ----------- ------------
Assets:
Current Assets:
Cash and Cash Equivalents $ 15,710 $ 77 $ 8,511 $ $ 24,298
Accounts and Notes Receivable:
Trade 85,905 110,462 24,620 220,987
Other 3,360 115,179 13,945 132,484
Inventories 174 158,986 24,458 183,618
Recoverable Income Taxes 3,904 3,904
Deferred Income Taxes 54,794 54,794
Prepaid Expenses 18,369 31,548 7,143 57,060
------------ ------------ ------------ ------------ -----------
Total Current Assets 182,216 416,252 78,677 677,145
Property, Plant and Equipment:
Property, Plant and Equipment 75,769 4,482,650 961,613 5,520,032
Less-Accumulated Depreciation,
Depletion and Amortization 38,997 2,461,657 126,139 2,626,793
------------ ------------ ------------ ------------ -----------
Property, Plant and Equipment - Net 36,772 2,020,993 835,474 2,893,239
Other Assets:
Deferred Income Taxes 519,649 519,649
Advanced Mining Royalties 52,536 39,820 92,356
Investment in Affiliates 1,369,426 945,009 48,472 (2,280,392) 82,515
Other 2,699 72,005 45,264 119,968
------------ ------------ ------------ ------------ -----------
Total Other Assets 1,891,774 1,069,550 133,556 (2,280,392) 814,488
------------ ------------ ------------ ------------ -----------
Total Assets $ 2,110,762 $ 3,506,795 $ 1,047,707 $ (2,280,392) $ 4,384,872
============ ============ ============= ============ ===========
14
Parent Guarantor Non-Guarantor Elimination Consolidated
------------ ----------- ------------- ----------- ------------
Liabilities and Stockholders' Equity:
Current Liabilities:
Accounts Payable $ 126,410 $ (17,963) $ 34,080 $ $ 142,527
Accounts Payable (Receivable)-
Related Parties 1,124,261 (699,999) (524,480) 100,218
Short-Term Notes Payable 178,321 178,321
Current Portion of Long-Term Debt
and Capital Lease Obligations 100 49,213 635 49,948
Other Accrued Liabilities 30,601 288,916 65,949 385,466
------------ ------------ -------------- ------------ ------------
Total Current Liabilities 1,459,693 (379,833) (423,816) 100,218 756,262
Long-Term Debt:
Long-Term Debt 247,936 211,614 6,607 466,157
Capital Lease Obligations 7,496 7,496
------------ ------------ -------------- ------------ ------------
Total Long-Term Debt 247,936 219,110 6,607 473,653
Deferred Credits and Other Liabilities:
Postretirement Benefits Other
Than Pensions 1,437,849 1,437,849
Pneumoconiosis 461,187 461,187
Mine Closing 199,426 134,682 334,108
Workers' Compensation 1,710 247,927 30,988 280,625
Deferred Revenue 188,062 27,981 216,043
Reclamation 5,991 3,997 9,988
Other 145,464 10,703 3,031 159,198
------------ ------------ -------------- ------------ ------------
Total Deferred Credits and Other
Liabilities 147,174 2,551,145 200,679 2,898,998
Stockholders' Equity 255,959 1,116,373 1,264,237 (2,380,610) 255,959
------------ ------------ -------------- ------------ ------------
Total Liabilities and Stockholders'
Equity $ 2,110,762 $ 3,506,795 $ 1,047,707 $ (2,280,392) $ 4,384,872
============ ============ ============== ============ ============
Condensed Statement of Cash Flows
For the Three Months Ended March 31, 2002;
Parent Guarantors Non-Guarantors Eliminations Consolidated
------------ ------------ -------------- ------------ ------------
Net Cash (Used in) Provided by
Operating Activities $ (65,488) $ 74,152 $ 22,246 $ $ 30,910
------------ ------------ -------------- ------------ ------------
Cash Flows from Investing Activities:
Capital Expenditures $ (2,507) $ (48,950) $ (18,903) $ $ (70,360)
Investment in Equity Affiliates (306) (50) (5,052) (5,408)
Other Investing Activities (1,346) (1,481) (2,827)
------------ ------------ -------------- ------------ ------------
Net Cash Used in Investing Activities $ (2,813) $ (50,346) $ (25,436) $ $ (78,595)
------------ ------------ -------------- ------------ ------------
Cash Flows from Financing Activities:
Payments on Short-Term Borrowings $ (144,750) $ $ $ (144,750)
Payments on Long-Term Notes $ (23,000) (23,000)
Proceeds from Long-Term Notes 246,310 246,310
Dividends Paid (22,025) (22,025)
Other Financing Activities 753 (887) (134)
------------ ------------ -------------- ------------ ------------
Net Cash Provided by (Used in)
Financing Activities $ 80,288 $ (23,887) $ $ $ 56,401
------------ ------------ -------------- ------------ ------------
15
Income Statement for the Three Months Ended March 31, 2001;
Parent Guarantor Non-Guarantor Elimination Consolidated
------------ ----------- ------------- ------------ ------------
Sales - Outside $ $ 416,249 $ 157,164 $ $ 573,413
Sales - Related Parties 1,412 2,105 3,517
Freight - Outside 26,910 5,063 31,973
Freight - Related Parties 662 662
Other Income (including equity earnings) 117,273 58,545 (35,271) (122,176) 18,371
------------ ----------- ------------ ------------ ------------
Total Revenue 117,273 503,778 129,061 (122,176) 627,936
Cost of Goods Sold and
Operating Charges 9,114 376,949 69,050 (33,698) 421,415
Freight Expense 27,572 5,063 32,635
Selling, General and
Administrative Expense 12,203 2,084 14,287
Intercompany Activity 4,179 (49,661) 5,284 40,198
Depreciation, Depletion and
Amortization 479 51,725 10,282 (1,855) 60,631
Interest Expense 12,243 1,342 1,077 14,662
Taxes Other Than Income 1,350 30,832 5,053 37,235
Export Sales Excise Tax
Resolution (87,612) (7,680) (95,292)
------------ ----------- ------------ ------------ ------------
Total Costs 27,365 363,350 90,213 4,645 485,573
------------ ----------- ------------ ------------ ------------
Earnings(Loss) Before Income Taxes 89,908 140,428 38,848 (126,821) 142,363
Income Taxes (Benefit) (10,892) 41,111 11,344 41,563
------------ ----------- ------------ ------------ ------------
Net Income(Loss) $ 100,800 $ 99,317 $ 27,504 $ (126,821) $ 100,800
============ =========== ============ ============ ============
Balance Sheet for December 31, 2001;
Parent Guarantor Non-Guarantor Elimination Consolidated
------------ ----------- ------------- ------------ ------------
Assets:
Current Assets:
Cash and Cash Equivalents $ 3,723 $ 158 $ 11,701 $ $ 15,582
Accounts and Notes Receivable:
Trade 204,520 59,331 (43,409) 220,442
Other 1,577 108,791 12,986 123,354
Inventories 240 83,668 29,986 113,894
Deferred Income Taxes 54,708 54,708
Prepaid Expenses 3,142 30,667 8,465 42,274
------------ ----------- ------------ ------------ ------------
Total Current Assets 63,390 427,804 122,469 (43,409) 570,254
Property, Plant and Equipment:
Property, Plant and Equipment 51,581 4,055,229 1,307,150 5,413,960
Less-Accumulated Depreciation,
Depletion and Amortization 20,737 2,074,162 403,751 2,498,650
------------ ----------- ------------ ------------ ------------
Property, Plant and Equipment - Net 30,844 1,981,067 903,399 2,915,310
Other Assets:
Deferred Income Taxes 520,906 520,906
Advanced Mining Royalties 9 52,966 39,669 92,644
Investment in Affiliates 1,113,721 951,651 51,236 (2,038,941) 77,667
Other 754 74,451 45,608 120,813
------------ ----------- ------------ ------------ ------------
Total Other Assets 1,635,390 1,079,068 136,513 (2,038,941) 812,030
------------ ----------- ------------ ------------ ------------
Total Assets $ 1,729,624 $ 3,487,939 $ 1,162,381 $ (2,082,350) $ 4,297,594
============ =========== ============ ============ ============
16
Non-
Parent Guarantor Guarantor Elimination Consolidated
----------- ----------- ----------- ------------ ------------
Liabilities and Stockholders' Equity:
Current Liabilities:
Accounts Payable $ 117,281 $ 5,957 $ 91,912 $ (43,409) $ 171,741
Accounts Payable (Receivable)-
Related Parties 811,479 (374,435) (517,919) 80,875
Short-Term Notes Payable 77,869 77,869
Current Portion of Long-Term Debt
and Capital Lease Obligations 100 72,036 635 72,771
Accrued Income Taxes 4,799 4,799
Other Accrued Liabilities 31,753 208,826 72,989 313,568
----------- ----------- ----------- ------------ ------------
Total Current Liabilities 1,043,281 (87,616) (352,383) 37,466 640,748
Long-Term Debt:
Long-Term Debt 245,892 211,688 6,607 464,187
Capital Lease Obligations 8,482 8,482
----------- ----------- ----------- ------------ ------------
Total Long-Term Debt 245,892 220,170 6,607 472,669
Deferred Credits and Other Liabilities:
Postretirement Benefits Other
Than Pensions 1,417,567 1,417,567
Pneumoconiosis 459,776 459,776
Mine Closing 198,700 135,038 333,738
Workers' Compensation 1,738 234,814 32,523 269,075
Deferred Revenue 195,370 32,225 227,595
Reclamation 7,715 6,029 13,744
Other 167,154 21,649 2,320 191,123
----------- ----------- ----------- ------------ ------------
Total Deferred Credits and Other
Liabilities 168,892 2,535,591 208,135 2,912,618
Stockholders' Equity 271,559 819,794 1,300,022 (2,119,816) 271,559
----------- ----------- ----------- ------------ ------------
Total Liabilities and Stockholders' Equity $ 1,729,624 $ 3,487,939 $ 1,162,381 $ (2,082,350) $ 4,297,594
=========== =========== =========== ============ ============
Condensed Statement of Cash Flows
For the Three Months Ended March 31, 2001;
Non-
Parent Guarantors Guarantors Eliminations Consolidated
----------- ----------- ----------- ------------ ------------
Net Cash (Used in) Provided by
Operating Activities $ (386,740) $ 487,943 $ 28,365 $ $ 129,568
----------- ----------- ----------- ------------ ------------
Cash Flows from Investing Activities:
Capital Expenditures $ (2,212) $ (30,717) $ (17,166) $ $ (50,095)
Acquisition of Line Creek Mine Joint Venture (868) (868)
Investment in Equity Affiliates (26) 5,201 792 5,967
Other Investing Activities 53 1,106 (9,584) (8,425)
----------- ----------- ----------- ------------ ------------
Net Cash Used in Investing Activities $ (2,185) $ (24,410) $ (26,826) $ $ (53,421)
----------- ----------- ----------- ------------ ------------
Cash Flows from Financing Activities:
Proceeds from (Payments on) Short-Term
Borrowings $ 413,996 $ (462,689) $ $ $ (48,693)
Dividends Paid (22,005) (22,005)
Other Financing Activities 321 (1,045) (724)
----------- ----------- ----------- ------------ ------------
Net Cash Provided by (Used in)
Financing Activities $ 392,312 $ (463,734) $ $ $ (71,422)
=========== =========== =========== ============ ============
17
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
CONSOL ENERGY INC.
Date: May 23, 2002 By: /s/ William J. Lyons
------------------------------------------------
William J. Lyons,
Senior Vice President, Chief Financial Officer
and Controller
18