Arch Coal, Inc. Reports First Quarter 2012 Results
Quarterly revenues increased 19% versus a year ago
Focused on increasing operational excellence, optimizing asset portfolio and enhancing financial flexibility
Board sets new quarterly dividend rate of $0.03 per share
ST. LOUIS, May 1, 2012 /PRNewswire/ --
Earnings Highlights
-------------------
Quarter Ended
In $ millions, except per
share data 3/31/12 3/31/11
------------------------- ------- -------
Revenues $1,039.7 $872.9
Income from Operations 54.1 102.2
Net Income (1) 1.2 55.6
Fully Diluted EPS 0.01 0.34
----------------- ---- ----
Adjusted Net Income
(Loss)(1,2) (7.6) 59.4
Adjusted Fully Diluted EPS/
LPS (2) (0.04) 0.36
Adjusted EBITDA (2) $179.8 $191.4
1/-Net income attributable
to ACI.
2/- Defined and reconciled under 'Reconciliation of non-GAAP measures.'
Arch Coal, Inc.
today reported first quarter 2012 net income of $1.2 million, or $0.01 per diluted share, compared with net income of $55.6 million, or $0.34 per diluted share, in the prior-year period. After excluding non-cash accretion of acquired coal supply agreements, Arch reported an adjusted loss of $0.04 per diluted share in the first quarter of 2012.Revenues reached $1.0 billion in the first quarter of 2012, an increase of 19 percent versus the prior-year period. Adjusted earnings before interest, taxes, depreciation, depletion and amortization ('EBITDA') totaled $180 million in the first quarter, compared with $191 million a year ago, as higher costs more than offset higher realized prices.
'The severe weakness in U.S. thermal coal markets impacted our first quarter results and, consequently, we are resetting our 2012 expectations,' said John W. Eaves, Arch's president and chief executive officer. 'Based upon an unprecedented build in power generator coal stockpiles year to date, the continued erosion in natural gas prices and relatively soft global metallurgical demand, we are further curtailing our production in 2012. While lower planned volumes will have predictable consequences on our near-term financial results, we believe we are taking the right steps now to position Arch for success as coal markets recover.'
'We are implementing a comprehensive strategy to address the current market environment, and ensure that we emerge from this cycle stronger and better positioned to service both the growing seaborne coal trade and evolving domestic coal markets,' continued Eaves. 'Our plan is focused on improving execution in three key areas: operational excellence, portfolio management and financial flexibility. Delivering measurable results in these areas will drive superior performance and enhance shareholder value over the long term.'
Operational Excellence
Arch is taking several aggressive steps to increase operational efficiency and productivity during the cyclical market downturn, including:
-- Matching production levels to current demand to help reduce the
oversupply in domestic thermal markets, which includes leaving nearly
all unsold thermal volumes in the ground to preserve the future value of
those reserves. In total, Arch expects to reduce annual volumes by 25
million tons in 2012 versus originally planned levels.
-- In the Powder River Basin, Arch idled one dragline, placed another
into reclamation and meaningfully limited railcar loadings at Black
Thunder's West Loadout during the first quarter. The company plans
to have a total of three draglines and supporting equipment on idle
in the second quarter.
-- In Appalachia, Arch delayed the startup of Mountain Laurel's
longwall in the first quarter following the successful transition to
the Cedar Grove seam, as well as closed five thermal operations and
further curtailed production at other thermal mines. Since the
market downturn, Arch subsidiaries have eliminated approximately 500
positions.
-- In the Western Bituminous Region, Arch continued to rationalize
supply at the company's higher-cost mines.
-- Tackling cost escalation in light of reduced volume expectations,
including rationalizing higher-cost thermal production, eliminating
discretionary expenses, reducing headcount, working with suppliers to
generate savings, and right-sizing and consolidating operations.
Portfolio Management
Arch is re-aligning capital spending plans with a goal of optimizing its asset portfolio, while ensuring that the company continues to execute on its long-term growth initiatives by:
-- Lowering capital spending at thermal mines, matching maintenance capital
needs to reduced volume expectations and cautiously proceeding with
higher-return metallurgical projects.
-- Arch further reduced its discretionary capital expenditures by $45
million, and now expects to spend a total of $410 million to $440
million in 2012. The company also is evaluating capital spending
plans in future years, including the potential delay of thermal coal
replacement and expansion projects.
-- Continuing to advance the development of the newly named Leer mine in
Appalachia, with the low-cost, longwall metallurgical coal mine targeted
to begin operations in mid-2013.
-- Supporting efforts to expand the company's coal export network, with
plans to ship 12 million tons of coal for export during 2012.
-- Considering the potential divestiture of non-core assets or reserves.
Financial Flexibility
Arch is committed to maintaining its financial strength and flexibility in the near term, while positioning the company's superior asset base to outperform as coal markets rebound. The company's strategy includes:
-- Reducing the dividend from $0.11 per share to $0.03 per share. The
common stock dividend will be payable June 15, 2012 to shareholders of
record on June 1, 2012. 'While recognizing the importance of the
dividend, Arch's board of directors believes increasing the company's
liquidity by $68 million annually at this point in the cycle is in the
best long-term interests of our company and shareholders,' said Eaves.
-- Securing a commitment for a $1 billion term loan without financial
maintenance covenants and with a maturity of not less than five years.
The proceeds from the loan will be used to repurchase or redeem Arch
Western Finance notes due in June 2013, reduce outstanding revolver
borrowings and provide additional liquidity for ongoing business needs.
-- Obtaining consent from Arch's lenders to amend the company's senior
secured revolving credit facility to allow for the new term loan and to
reduce its borrowing capacity to $1 billion in exchange for relief from
certain financial covenants over the next two years.
'The new financing package underwritten by our consortium of banks demonstrates their confidence in our company, our strategy and our long-term prospects,' said John T. Drexler, Arch's senior vice president and chief financial officer. 'With this package, and in conjunction with other elements of our strategic plan, we have enhanced our liquidity, simplified our capital structure, and extended our debt maturities. This arrangement also sets minimum performance targets that both parties believe are achievable under current market conditions - and allows us to continue pursuing our long-term growth objectives.'
Core Values
Arch continued to deliver strong safety and environmental performances during the first quarter of 2012. The company's safety record was four times better than the national coal industry average as measured by lost-time incident rate - ranking Arch first among large, diversified coal peers. Arch also advanced its environmental compliance record in the three months ended March 31, and made good progress in achieving stronger performance metrics at newly acquired operations.
'Eight operations and facilities completed the first three months of 2012 without incurring a reportable injury or receiving a single SMCRA environmental violation,' said Paul A. Lang, Arch's executive vice president and chief operating officer. 'When compared with the fourth quarter of 2011, we also achieved a 20-percent reduction in lost-time incident rates and a 50-percent improvement in environmental compliance rates in the first quarter of 2012.'
Also during the first quarter, Arch's West Elk mine was awarded Colorado's top coal mine safety award and two state environmental awards for milestones achieved during 2011. In particular, the safety honors mark the third consecutive year that West Elk has been recognized as Colorado's safest underground coal mine.
Operational Results
'Our Western Bituminous Region turned in a solid first quarter operating performance, while other regions were impacted by weaker than anticipated coal demand versus the fourth quarter,' said Eaves. 'We moved quickly to respond to the rapidly changing market conditions by reducing or delaying production as the first quarter progressed, which resulted in higher per-ton operating costs when compared with the fourth quarter of 2011.'
Arch Coal, Inc.
1Q12 4Q11 1Q11
---- ---- ----
Tons sold (in millions) 35.5 42.5 36.2
Average sales price per ton $25.73 $26.13 $22.30
Cash cost per ton $20.18 $19.42 $16.25
Cash margin per ton $5.55 $6.71 $6.05
Total operating cost per ton $24.07 $22.81 $18.55
Operating margin per ton $1.66 $3.32 $3.75
Consolidated results may not tie to regional breakout due to exclusion of other assets, rounding.
Operating cost per ton includes depreciation, depletion and amortization per ton.
Amounts reflected in this table have been adjusted for certain transactions.
For a description of adjustments, refer to the regional schedule at http://investor.archcoal.com
Compared with the fourth quarter of 2011, consolidated per-ton operating margin in the first quarter of 2012 declined, primarily reflecting the impact of lower overall sales volume on per-ton operating cost. A larger percentage of Powder River Basin coal in Arch's overall volume mix in the first quarter of 2012 also contributed to the decline in consolidated sales price per ton versus the fourth quarter.
Powder River Basin
1Q12 4Q11 1Q11
---- ---- ----
Tons sold (in millions) 27.2 32.2 28.8
Average sales price per ton $13.87 $13.65 $13.51
Cash cost per ton $11.24 $10.25 $10.26
Cash margin per ton $2.63 $3.40 $3.25
Total operating cost per ton $12.75 $11.69 $11.71
Operating margin per ton $1.12 $1.96 $1.80
Operating cost per ton includes depreciation, depletion and amortization per ton.
Amounts reflected in this table have been adjusted for certain transactions.
In the Powder River Basin, first quarter 2012 operating margin declined to $1.12 per ton. First quarter 2012 sales volumes decreased 15 percent as the company elected to curtail production and idle equipment in response to market conditions. Higher sales price per ton somewhat offset a 10 percent increase in cash cost per ton, primarily driven by the effect of lower volume levels in the quarter just ended.
Appalachia
1Q12 4Q11 1Q11
---- ---- ----
Tons sold (in
millions) 4.5 5.9 3.2
Average sales price
per ton $87.33 $86.12 $85.10
Cash cost per ton $70.95 $63.80 $60.57
Cash margin per ton $16.38 $22.32 $24.53
Total operating cost
per ton $87.74 $76.66 $67.14
Operating margin per
ton ($0.41) $9.46 $17.96
Operating cost per ton includes depreciation, depletion and amortization per ton.
Amounts reflected in this table have been adjusted for certain transactions.
In Appalachia, Arch recorded an operating loss in the first quarter of 2012. Sales volumes declined 24 percent in the first quarter versus the fourth quarter of 2011, driven by planned volume reductions in response to current market conditions. Average sales price per ton increased slightly over the same time period, benefiting from higher prices on metallurgical and steam coal shipments in the first quarter. Cash cost per ton increased 11 percent in the first quarter of 2012 versus the fourth quarter, due to the impact of the temporary longwall idling at Mountain Laurel as well as incremental severance and mine closure costs.
Western Bituminous Region
1Q12 4Q11 1Q11
---- ---- ----
Tons sold (in millions) 3.3 3.9 4.2
Average sales price per ton* $36.77 $36.40 $34.87
Cash cost per ton* $21.28 $25.21 $23.61
Cash margin per ton $15.49 $11.19 $11.26
Total operating cost per ton* $26.98 $30.21 $28.51
Operating margin per ton $9.79 $6.19 $6.36
*Sales prices and costs in the region are presented f.o.b. point for domestic customers.
Operating cost per ton includes depreciation, depletion and amortization per ton.
Amounts reflected in this table have been adjusted for certain transactions.
In the Western Bituminous Region, first quarter 2012 operating margin reached $9.79 per ton, driven by the absence of any longwall moves and effective cost control. First quarter 2012 sales volumes declined versus the fourth quarter, reflecting lower shipment levels due to weak domestic demand, partially offset by increased export sales. Average sales price per ton increased slightly over the same time period, while operating cost per ton fell, due to ongoing cost reduction efforts, a strong performance at West Elk and the lack of any longwall moves.
Market Trends
'The U.S. coal industry is in the midst of a restructuring that will cause some players to exit the market and others, like Arch, to pare back operations until market conditions improve,' said Eaves. 'Such change creates opportunities for our company, which is well-equipped to move tons offshore to serve growing global coal demand. The export market provides attractive growth potential for Arch given our low-cost mines and access to port capacity.'
Arch now expects U.S. coal consumption for power generation to decline by at least 75 million tons in 2012, as compared to 2011, due to unfavorable weather trends that have reduced power demand and contributed to a natural gas surplus. These factors have led to an increase in U.S. coal generator stockpiles to date in 2012, and internal estimates suggest that stockpile levels could peak at around 210 million tons by the end of May, before starting to reverse.
Offsetting demand declines are significant U.S. coal supply reductions. Mine Safety and Health Administration data suggests that total domestic production decreased 14 million tons in the first quarter of 2012 versus the fourth quarter of 2011, or 56 million tons annualized. Arch expects coal supply reductions to continue as the year progresses.
Furthermore, the global coal trade through March is on pace to exceed the record 1.2-billion-ton level set in 2011. More than 185 new coal-fueled plants are expected to come online in 2012, resulting in approximately 400 million tons of incremental annual coal demand this year alone. Momentum in global steel markets also is increasing, as steel output grew 6 percent during the first quarter of 2012 versus the fourth quarter of 2011. Global steel capacity utilization rose to 81 percent in March, and U.S. steel utilization hit 81 percent in April.
Tightening metallurgical coal markets and growing seaborne thermal demand should increase U.S coal exports in 2012, while coal imports into the United States are set to decline further. Arch currently expects that U.S. coal exports could reach 115 million tons this year, with imports declining to 6 million tons - for an increase in net exports of nearly 15 million tons.
Company Outlook
2012 2013
---- ----
Tons $ per ton Tons $ per ton
---- --------- ---- ---------
Sales Volume (in millions
tons)
-------------------------
Thermal 128 - 134
Met 8 - 8.5
--- -------
Total 136 - 142.5
Powder River Basin
------------------
Committed, Priced 98.5 $14.10 52.8 $14.98
Committed, Unpriced 3.4 11.5
Average Cash Cost $11.50 - $12.50
Western Bituminous
------------------
Committed, Priced 13.9 $36.32 10.3 $39.63
Committed, Unpriced 0.1 -
Average Cash Cost $24.00 - $27.00
Appalachia
----------
Committed, Priced Thermal 9.7 $68.02 4.2 $64.01
Committed, Unpriced
Thermal 0.3 -
Committed, Priced
Metallurgical 6.0 $126.64 0.2 $111.13
Committed, Unpriced
Metallurgical 0.3 0.1
Average Cash Cost $68.00 - $73.00
Illinois Basin
--------------
Committed, Priced 2.2 $41.28 1.5 $43.36
Average Cash Cost $32.00 - $35.00
Corporate (in $ millions)
------------------------
D,D&A $520 - $550
S,G&A $125 - $135
Interest Expense $290 - $300
Capital Expenditures $410 - $440
-------------------- -----------
Arch's new guidance range for 2012 reflects the reduction of nearly all unsold thermal volumes, lower expectations for high-vol B metallurgical coal sales, and the predicted impact of lower volumes on per-ton costs.
'We are taking deliberate steps to manage our assets and maintain our financial strength through this cyclical downturn, while continuing to pursue the build-out of both our metallurgical coal and export platform,' said Eaves. 'We believe that this comprehensive strategy will best position Arch for success as coal markets recover.'
A conference call regarding Arch Coal's first quarter 2012 financial results will be webcast live today at 11 a.m. E.D.T. The conference call can be accessed via the 'investor' section of the Arch Coal website (http://investor.archcoal.com).
U.S.-based Arch Coal, Inc. is a top five global coal producer and marketer, with 157 million tons of coal sold in 2011. Arch is the most diversified American coal company, with more than 20 active mining complexes across every major U.S. coal supply basin. Its core business is supplying cleaner-burning, low-sulfur thermal and metallurgical coal to power generators and steel manufacturers on five continents.
Forward-Looking Statements: This press release contains 'forward-looking statements' - that is, statements related to future, not past, events. In this context, forward-looking statements often address our expected future business and financial performance, and often contain words such as 'expects,' 'anticipates,' 'intends,' 'plans,' 'believes,' 'seeks,' or 'will.' Forward-looking statements by their nature address matters that are, to different degrees, uncertain. For us, particular uncertainties arise from changes in the demand for our coal by the domestic electric generation industry; from legislation and regulations relating to the Clean Air Act and other environmental initiatives; from operational, geological, permit, labor and weather-related factors; from fluctuations in the amount of cash we generate from operations; from future integration of acquired businesses; and from numerous other matters of national, regional and global scale, including those of a political, economic, business, competitive or regulatory nature. These uncertainties may cause our actual future results to be materially different than those expressed in our forward-looking statements. We do not undertake to update our forward-looking statements, whether as a result of new information, future events or otherwise, except as may be required by law. For a description of some of the risks and uncertainties that may affect our future results, you should see the risk factors described from time to time in the reports we file with the Securities and Exchange Commission.
Arch Coal, Inc. and Subsidiaries
Condensed Consolidated Statements of Income
(In thousands, except per share data)
Three Months Ended March
31,
--------------------------
2012 2011
---- ----
(Unaudited)
Revenues $1,039,651 $872,938
Costs,
expenses
and
other
Cost of
sales 850,871 653,684
Depreciation,
depletion
and
amortization 139,966 83,537
Amortization
of
acquired
sales
contracts,
net (14,017) 5,944
Selling,
general
and
administrative
expenses 30,861 30,435
Change
in fair
value
of coal
derivatives
and
coal
trading
activities,
net (3,613) (1,784)
Other
operating
income,
net (18,498) (1,116)
------- ------
985,570 770,700
------- -------
Income
from
operations 54,081 102,238
Interest
expense,
net:
Interest
expense (74,772) (34,580)
Interest
income 1,021 746
----- ---
(73,751) (33,834)
------- -------
Income
(loss)
before
income
taxes (19,670) 68,404
Provision
for
(benefit
from)
income
taxes (21,079) 12,530
------- ------
Net
income 1,409 55,874
Less:
Net
income
attributable
to
noncontrolling
interest (203) (273)
Net
income
attributable
to Arch
Coal,
Inc. $1,206 $55,601
====== =======
Earnings
per
common
share
Basic
earnings
per
common
share $0.01 $0.34
===== =====
Diluted
earnings
per
common
share $0.01 $0.34
===== =====
Weighted
average
shares
outstanding
Basic 211,687 162,576
======= =======
Diluted 211,908 163,773
======= =======
Dividends
declared
per
common
share $0.11 $0.10
===== =====
Adjusted
EBITDA
(A) $179,827 $191,446
======== ========
(A) Adjusted EBITDA is defined and
reconciled under 'Reconciliation
of Non-GAAP Measures' later in
this release.
Arch Coal, Inc. and Subsidiaries
Condensed Consolidated Balance Sheets
(In thousands)
March 31, December 31,
2012 2011
---- ----
(Unaudited)
Assets
Current assets
Cash and cash equivalents $117,770 $138,149
Restricted cash 8,866 10,322
Trade accounts receivable 295,012 380,595
Other receivables 66,702 88,584
Inventories 488,686 377,490
Prepaid royalties 18,025 21,944
Deferred income taxes 65,531 42,051
Coal derivative assets 22,043 13,335
Other 96,484 110,304
------ -------
Total current assets 1,179,119 1,182,774
Property, plant and
equipment, net 7,892,733 7,949,150
Other assets
Prepaid royalties 90,221 86,626
Goodwill 596,103 596,103
Equity investments 230,519 225,605
Other 176,423 173,701
------- -------
Total other assets 1,093,266 1,082,035
--------- ---------
Total assets $10,165,118 $10,213,959
=========== ===========
Liabilities and
Stockholders' Equity
Current liabilities
Accounts payable $294,341 $383,782
Coal derivative liabilities 9,100 7,828
Accrued expenses and other
current liabilities 357,386 348,207
Current maturities of debt
and short-term borrowings 102,356 280,851
------- -------
Total current liabilities 763,183 1,020,668
Long-term debt 3,967,796 3,762,297
Asset retirement
obligations 432,620 446,784
Accrued pension benefits 49,378 48,244
Accrued postretirement
benefits other than
pension 42,784 42,309
Accrued workers'
compensation 74,012 71,948
Deferred income taxes 982,596 976,753
Other noncurrent
liabilities 268,585 255,382
------- -------
Total liabilities 6,580,954 6,624,385
--------- ---------
Redeemable noncontrolling
interest 11,739 11,534
Stockholders' Equity
Common stock 2,141 2,136
Paid-in capital 3,024,553 3,015,349
Treasury stock, at cost (53,848) (53,848)
Retained earnings 600,230 622,353
Accumulated other
comprehensive loss (651) (7,950)
---- ------
Total stockholders' equity 3,572,425 3,578,040
--------- ---------
Total liabilities and
stockholders' equity $10,165,118 $10,213,959
=========== ===========
Arch Coal, Inc. and Subsidiaries
Condensed Consolidated Statements of Cash Flows
(In thousands)
Three Months Ended
March 31,
-------------------
2012 2011
---- ----
(Unaudited)
Operating activities
Net income $1,409 $55,874
Adjustments to reconcile
to cash provided by
operating activities:
Depreciation, depletion
and amortization 139,966 83,537
Amortization of acquired
sales contracts, net (14,017) 5,944
Prepaid royalties
expensed 8,586 8,916
Employee stock-based
compensation expense 4,079 5,290
Amortization relating to
financing activities 4,288 2,442
Changes in:
Receivables 88,082 (53,586)
Inventories (111,196) (12,292)
Coal derivative assets
and liabilities (5,347) (1,087)
Accounts payable, accrued
expenses and other
current liabilities (66,222) (38,054)
Income taxes payable/
receivable 23,002 12,558
Deferred income taxes (21,742) (1,026)
Other 4,102 17,629
----- ------
Cash provided by
operating activities 54,990 86,145
------ ------
Investing activities
Decrease in restricted
cash 1,455 -
Capital expenditures (93,271) (38,711)
Proceeds from
dispositions of
property, plant and
equipment 22,105 516
Purchases of investments
and advances to
affiliates (5,777) (34,419)
Additions to prepaid
royalties (8,262) (20,915)
------ -------
Cash used in investing
activities (83,750) (93,529)
------- -------
Financing activities
Payments to retire debt (1,330) -
Net increase in
borrowings under lines
of credit and commercial
paper program 34,000 3,681
Net payments on other
debt (5,993) (5,161)
Debt financing costs (100) (8)
Dividends paid (23,327) (16,269)
Issuance of common stock
under incentive plans 5,131 768
----- ---
Cash provided by (used
in) financing activities 8,381 (16,989)
----- -------
Decrease in cash and cash
equivalents (20,379) (24,373)
Cash and cash
equivalents, beginning
of period 138,149 93,593
------- ------
Cash and cash
equivalents, end of
period $117,770 $69,220
======== =======
Arch Coal, Inc. and Subsidiaries
Schedule of Consolidated Debt
(In thousands)
March 31, December 31,
2012 2011
---- ----
(Unaudited)
Indebtedness to
banks under
credit
facilities $515,300 $481,300
6.75% senior
notes ($450.0
million face
value) due
2013 450,809 450,971
8.75% senior
notes ($600.0
million face
value) due
2016 589,463 588,974
7.00% senior
notes due in
2019 at par 1,000,000 1,000,000
7.25% senior
notes due 2020
at par 500,000 500,000
7.25% senior
notes due 2021
at par 1,000,000 1,000,000
Other 14,580 21,903
------ ------
4,070,152 4,043,148
Less: current
maturities of
debt and
short-term
borrowings 102,356 280,851
Long-term debt $3,967,796 $3,762,297
========== ==========
Arch Coal, Inc. and Subsidiaries
Reconciliation of Non-GAAP Measures
(In thousands)
Included in the accompanying release, we have disclosed
certain non-GAAP measures as defined by Regulation G.
The following reconciles these items to net income and
cash flows as reported under GAAP.
Adjusted EBITDA
Adjusted EBITDA is defined as net income
attributable to the Company before the effect of
net interest expense, income taxes,
depreciation, depletion and amortization, and
the amortization of acquired sales contracts.
Adjusted EBITDA may also be adjusted for items
that may not reflect the trend of future
results.
Adjusted EBITDA is not a measure of financial
performance in accordance with generally
accepted accounting principles, and items
excluded from Adjusted EBITDA are significant in
understanding and assessing our
financialcondition. Therefore, Adjusted EBITDA
should not be considered in isolation, nor as an
alternative to net income, income from
operations, cash flows from operations or as a
measure of our profitability, liquidity or
performance under generally accepted accounting
principles. We believe that Adjusted EBITDA
presents a useful measure of our ability to
incur and service debt based on ongoing
operations. Furthermore, analogous measures are
used by industry analysts to evaluate our
operating performance. In addition, acquisition
related expenses are excluded to make results
more comparable between periods. Investors
should be aware that our presentation of
Adjusted EBITDA may not be comparable to
similarly titled measures used by other
companies. The table below shows how we
calculate Adjusted EBITDA.
Three Months Ended March
31,
------------------------
2012 2011
---- ----
(Unaudited)
Net income $1,409 $55,874
Income tax expense (benefit) (21,079) 12,530
Interest expense, net 73,751 33,834
Depreciation, depletion and
amortization 139,966 83,537
Amortization of acquired sales
contracts, net (14,017) 5,944
Net income attributable to
noncontrolling interest (203) (273)
---- ----
Adjusted EBITDA $179,827 $191,446
======== ========
Adjusted net income and adjusted diluted
earnings per common share
Adjusted net
income and
adjusted
diluted
earnings per
common share
are adjusted
for the
after-tax
impact of
acquisition
related costs
and are not
measures of
financial
performance
in accordance
with
generally
accepted
accounting
principles.
We believe
that adjusted
net income
and adjusted
diluted
earnings per
common share
better
reflect the
trend of our
future
results by
excluding
items
relating to
significant
transactions.
The
adjustments
made to
arrive at
these
measures are
significant
in
understanding
and assessing
our financial
condition.
Therefore,
adjusted net
income and
adjusted
diluted
earnings per
share should
not be
considered in
isolation,
nor as an
alternative
to net income
or diluted
earnings per
common share
under
generally
accepted
accounting
principles.
Three Months Ended
March 31,
-------------------
2012 2011
---- ----
(Unaudited)
Net income attributable to Arch
Coal $1,206 $55,601
Amortization of acquired sales
contracts, net (14,017) 5,944
Tax impact of adjustments 5,186 (2,170)
----- ------
Adjusted net income (loss)
attributable to Arch Coal $(7,625) $59,375
======= =======
Diluted weighted average shares
outstanding 211,908 163,773
======= =======
Diluted earnings per share $0.01 $0.34
Amortization of acquired sales
contracts, net (0.07) 0.03
Tax impact of adjustments 0.02 (0.01)
---- -----
Adjusted diluted earnings
(loss) per share $(0.04) $0.36
====== =====
Arch Coal, Inc.
CONTACT: Deck S. Slone, Vice President, Government, Investor and Public
Affairs, +1-314-994-2717
Web site: http://www.archcoal.com/
