Alpha Natural Resources Inc. (ANR, Financial) filed Quarterly Report for the period ended 2009-03-31.
Alpha Natural Resources is a leading Central Appalachian coal producer that also has significant operations in Northern Appalachia. Their reserves primarily consist of high Btu low sulfur steam coal and metallurgical coal. They produce process and sell steam and metallurgical coal from eight regional business units supported by active underground mines active surface mines and preparation plants located throughout Virginia West Virginia Kentucky Pennsylvania and Colorado. Alpha Natural Resources Inc. has a market cap of $2.13 billion; its shares were traded at around $30.08 with a P/E ratio of 12.4 and P/S ratio of 0.8.
As of March 9, 2009, we had committed and priced metallurgical sales for 2009 of 4.8 million tons, at an average price of approximately $114 per ton at the mine. Both were up slightly from January 2009 levels due mostly to business that was contracted and shipped in the quarter just ended. In addition, we had 3.2 million tons of metallurgical coal sales committed but unpriced as of March 9, 2009, and less than one million tons uncommitted for 2009. Also as of March 9, 2009, we had committed and priced thermal coal sales for this year of approximately 12.6 million tons, at an average price of approximately $70 per short ton, with less than one million tons uncommitted for this year. These figures include brokerage coal that is opportunistically purchased, blended and/or resold with our produced tons.
At March 31, 2009, we had unrealized gains (losses) on open sale and purchase contracts that meet the definition of a derivative under SFAS 133 in the amount of $4.6 million and ($5.6 million), respectively. Since we intend to take delivery or provide delivery of coal under these contracts, the unrealized gains and losses recorded as of March 31, 2009 will reverse into the income statement in future periods. The reversal of the net unrealized loss related to these contracts will result in higher costs of sales in future periods when we ultimately take delivery of the coal under these contracts and sell it to our customers.
In addition, as of March 31, 2009, we had net unrealized losses of $36.3 million on diesel swap agreements and net unrealized gains of $0.7 million on put options that met the definition of a derivative under SFAS 133 that are marked to market. Periodic changes in fair value for diesel swap agreements and put options are recorded to the income statement and other comprehensive income. Prior period cost of coal sales have been adjusted to exclude changes in the fair value of diesel fuel derivative contracts in the amount of $2.4 million, which is now included as increase in fair value of derivative instruments, net, to conform to the current year presentation. This reclassification adjustment had no effect on previously reported income from continuing operations or net income.
For the three months ended March 31, 2009, we recorded revenues of $486.7 million compared to $493.1 million for the three months ended March 31, 2008, a decrease of $6.4 million. Net income increased from $25.5 million ($0.39 per diluted share) in the first quarter of 2008 to $41.0 million ($0.58 per diluted share) for the first quarter of 2009.
Income from continuing operations increased from $28.0 million in the first quarter of 2008 to $46.6 million for the first quarter of 2009. EBITDA, as reconciled to our income from continuing operations in the table under “Reconciliation of Non-GAAP Measures” above, was $109.7 million and $88.6 million in the first quarter of 2009 and 2008, respectively. Income from continuing operations in the first quarter of 2009 and 2008 included an unrealized gain from the change in the fair value of our derivative instruments in the amount of $0.2 million and $16.7 million, respectively.
Read the The complete ReportANR is in the portfolios of David Williams of Columbia Value and Restructuring Fund, David Williams of Columbia Value and Restructuring Fund, David Tepper of APPALOOSA MANAGEMENT LP, Jean-Marie Eveillard of Arnhold & S. Bleichroeder Advisers, LLC.
Alpha Natural Resources is a leading Central Appalachian coal producer that also has significant operations in Northern Appalachia. Their reserves primarily consist of high Btu low sulfur steam coal and metallurgical coal. They produce process and sell steam and metallurgical coal from eight regional business units supported by active underground mines active surface mines and preparation plants located throughout Virginia West Virginia Kentucky Pennsylvania and Colorado. Alpha Natural Resources Inc. has a market cap of $2.13 billion; its shares were traded at around $30.08 with a P/E ratio of 12.4 and P/S ratio of 0.8.
Highlight of Business Operations:
On January 1, 2009, we adopted FASB Staff Position (“FSP”) Accounting Principle Board (“APB”) 14-1, Accounting for Convertible Debt Instruments That May Be Settled in Cash upon Conversion (Including Partial Cash Settlement) (“FSP APB 14-1”). FSP APB 14-1 is effective for financial statements issued for fiscal years beginning after December 15, 2008 and interim periods within those fiscal years. Early adoption was not permitted and retroactive application to all periods presented is required. FSP APB 14-1 requires issuers of convertible debt instruments that may be settled wholly or partially in cash upon conversion to separately account for the liability and equity components in a manner reflective of the issuers nonconvertible debt borrowing rate. Upon adoption of FSP APB 14-1, we retrospectively applied the change in accounting principle to prior accounting periods. Adoption of the standard resulted in the following balance sheet impacts at December 31, 2008: (1) a reduction of debt by $87.8 million and an increase in paid in capital of $69.9 million, (2) an increase to deferred loan costs of $5.3 million, (3) a net reduction to deferred tax assets of $23.1 million ($36.3 million reduction in deferred tax assets, offset by a $13.1 million change in the valuation allowance), and (4) a net increase in retained earnings of $0.2 million. The adoption of FSP APB 14-1 resulted in an increase to non-cash interest expense of $2.8 million for the three month period ending March 31, 2009, of which $2.6 million is related to the accretion of the convertible debt discount and $0.2 million is related to the amortization of the deferred loan fees that were reestablished as described above. The deferred loan fees and debt discount will be amortized and accreted, respectively, over the term of the convertible notes, which are due in 2015. Adoption of the standard had no impact on the results of operations for the three months ended March 31, 2008.As of March 9, 2009, we had committed and priced metallurgical sales for 2009 of 4.8 million tons, at an average price of approximately $114 per ton at the mine. Both were up slightly from January 2009 levels due mostly to business that was contracted and shipped in the quarter just ended. In addition, we had 3.2 million tons of metallurgical coal sales committed but unpriced as of March 9, 2009, and less than one million tons uncommitted for 2009. Also as of March 9, 2009, we had committed and priced thermal coal sales for this year of approximately 12.6 million tons, at an average price of approximately $70 per short ton, with less than one million tons uncommitted for this year. These figures include brokerage coal that is opportunistically purchased, blended and/or resold with our produced tons.
At March 31, 2009, we had unrealized gains (losses) on open sale and purchase contracts that meet the definition of a derivative under SFAS 133 in the amount of $4.6 million and ($5.6 million), respectively. Since we intend to take delivery or provide delivery of coal under these contracts, the unrealized gains and losses recorded as of March 31, 2009 will reverse into the income statement in future periods. The reversal of the net unrealized loss related to these contracts will result in higher costs of sales in future periods when we ultimately take delivery of the coal under these contracts and sell it to our customers.
In addition, as of March 31, 2009, we had net unrealized losses of $36.3 million on diesel swap agreements and net unrealized gains of $0.7 million on put options that met the definition of a derivative under SFAS 133 that are marked to market. Periodic changes in fair value for diesel swap agreements and put options are recorded to the income statement and other comprehensive income. Prior period cost of coal sales have been adjusted to exclude changes in the fair value of diesel fuel derivative contracts in the amount of $2.4 million, which is now included as increase in fair value of derivative instruments, net, to conform to the current year presentation. This reclassification adjustment had no effect on previously reported income from continuing operations or net income.
For the three months ended March 31, 2009, we recorded revenues of $486.7 million compared to $493.1 million for the three months ended March 31, 2008, a decrease of $6.4 million. Net income increased from $25.5 million ($0.39 per diluted share) in the first quarter of 2008 to $41.0 million ($0.58 per diluted share) for the first quarter of 2009.
Income from continuing operations increased from $28.0 million in the first quarter of 2008 to $46.6 million for the first quarter of 2009. EBITDA, as reconciled to our income from continuing operations in the table under “Reconciliation of Non-GAAP Measures” above, was $109.7 million and $88.6 million in the first quarter of 2009 and 2008, respectively. Income from continuing operations in the first quarter of 2009 and 2008 included an unrealized gain from the change in the fair value of our derivative instruments in the amount of $0.2 million and $16.7 million, respectively.
Read the The complete ReportANR is in the portfolios of David Williams of Columbia Value and Restructuring Fund, David Williams of Columbia Value and Restructuring Fund, David Tepper of APPALOOSA MANAGEMENT LP, Jean-Marie Eveillard of Arnhold & S. Bleichroeder Advisers, LLC.
