SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
----------------------------
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): January 29, 2004
(January 28, 2004)
Arch Coal, Inc.
----------------
(Exact name of registrant as specified in its charter)
Delaware 1-13105 43-0921172
------------------------ --------------------------- ----------
(State or other jurisdiction (Commission File Number) (I.R.S. Employer
of incorporation) Identification No.)
One CityPlace Drive, Suite 300, St. Louis, Missouri 63141
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(Address of principal executive offices) (Zip code)
Registrant's telephone number, including area code: (314) 994-2700
Page 1 of 5 pages.
Exhibit Index begins on page 5.
Item 7 Financial Statements, ProForma Financial Information and Exhibits.
See the Exhibit Index at page 5 of this Report.
Item 9. Regulation FD Disclosure.
Item 12. Disclosure of Results of Operations and Financial Condition.
The information in this Report is being furnished under Item 9, "Regulation FD
Disclosure" and Item 12, "Disclosure of Results of Operations and Financial
Condition."
On January 28, 2004, Arch Coal, Inc. (the "Company"), announced via press
release its earnings and operating results for the fourth quarter of 2003 and
for the 2003 calendar year. A copy of the Company's press release is attached
hereto and incorporated herein by reference in its entirety.
The Company is also providing the following reconciliation of Adjusted
EBITDA for its Arch Western Resources, LLC subsidiary:
Arch Western Resources, LLC Three Months Ended Year Ended
Reconciliation of net income to adjusted EBITDA December 31 December 31
----------------------- -----------------------------
2003 2002 2003 2002
----------- ----------- ------------ --------------
(Amounts in 000's)
Net income $ 680 $ 19,376 $ 2,718 $ 19,909
Cumulative effect of accounting change - - 18,278 -
Interest expense, net 8,562 6,890 30,043 29,915
Depreciation, depletion and amortization - Arch Western
Resources 16,190 14,104 63,054 69,388
DD&A - Equity interest in Canyon Fuel Company, LLC 4,807 5,758 21,425 24,881
Other nonoperating expense 3,388 - 11,671 -
----------- ----------- ------------ --------------
Adjusted EBITDA $ 33,627 $ 46,128 $ 147,189 $ 144,093
=========== =========== ============ ==============
Reconciliation of net income to income before other nonoperating
expense and cumulative effect of accounting change
Net income $ 680 $ 19,376 $ 2,718 $ 19,909
Cumulative effect of accounting change - - 18,278 -
Other nonoperating expense 3,388 - 11,671 -
----------- ----------- ------------ --------------
Income before other nonoperating expense and cumulative
effect of accounting change $ 4,068 $ 19,376 $ 32,667 $ 19,909
=========== =========== ============ ==============
Page 2 of 5 pages.
Exhibit Index begins on page 5
Note:Adjusted EBITDA is defined as net income before the effect of net interest
expense; income taxes; our depreciation, depletion and amortization; our
equity interest in the depreciation, depletion and amortization of Canyon
Fuel Company, LLC; cumulative effect of accounting changes; and expenses
resulting from early extinguishment of debt; and mark-to market adjustments
in the value of derivative instruments.
Adjusted EBITDA is not a measure of financial performance in accordance with
generally accepted accounting principles, and items excluded to calculate
Adjusted EBITDA are significant in understanding and assessing our financial
condition. 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 service and incur debt based on
ongoing operations. Furthermore, analogous measures are used by industry
analysts to evaluate operating performance. Investors should be aware that our
presentation of Adjusted EBITDA may not be comparable to similarly titled
measures used by other companies.
In accordance with General Instruction B.6 of Form 8-K, the information in this
Current Report on Form 8-K, including Exhibit 99, shall not be deemed "filed"
for the purposes of Section 18 of the Securities Exchange Act of 1934, as
amended, or otherwise subject to the liability of that section, nor shall it be
deemed incorporated by reference in any filing under the Securities Act of 1933,
as amended, except as shall be expressly set forth by specific reference in such
a filing.
Page 3 of 5 pages.
Exhibit Index begins on page 5
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 hereunto duly authorized.
Dated: January 29, 2004 ARCH COAL, INC.
By: /s/ Janet L. Horgan
Janet L.Horgan
Assistant General Counsel and
Assistant Secretary
Page 4 of 5 pages.
Exhibit Index begins on page 5.
EXHIBIT INDEX
Exhibit No. Description
99 Press Release dated as of January 29, 2004
Page 5 of 5 pages.
Exhibit 99
News from
Arch Coal, Inc.
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FOR FURTHER INFORMATION:
--------------------------------------------------------------------------------
Deck S. Slone
Vice President,
Investor and Public Relations
(314) 994-2717
FOR IMMEDIATE RELEASE
January 28, 2004
Arch Coal, Inc. Reports Fourth Quarter Results
Highlights:
o Income available to common shareholders of $22.1 million, or $.40 per
fully diluted share, vs. net income of $1.1 million, or $.02 per fully
diluted share, in 4Q02
o Adjusted EBITDA of $75.9 million, vs. $57.9 million in 4Q02
o Revenues from coal sales of $374.9 million, vs. $369.7 million in 4Q02
o Income from operations of $30.7 million, vs. $8.2 million in 4Q02
o Coal sales volumes of 27.0 million tons, vs. 28.4 million tons in 4Q02
o Total cash on hand of $254.5 million, vs. $9.6 million at Dec. 31, 2002
St. Louis - Arch Coal, Inc. (NYSE:ACI) today announced that it had income
available to common shareholders of $22.1 million, or $.40 per fully diluted
share, for its fourth quarter ended December 31, 2003. Excluding a net gain of
$20.0 million, which includes the partial sale of the company's investment in
Natural Resource Partners offset in part by a charge related to a long-term
incentive compensation plan, Arch had income available to common shareholders of
$2.2 million, or $.04 per fully diluted share. In the same quarter of 2002, Arch
had net income of $1.1 million, or $.02 per fully diluted share.
"Arch Coal made good progress on a number of fronts during the fourth
quarter," said Steven F. Leer, Arch Coal's president and chief executive
officer. "We increased our cash balance to more than $250 million through the
monetization of a percentage of our stake in Natural Resource Partners. We
signed contracts in a rising coal market environment for much of our previously
unsold tonnage for 2004, as well as committing nearly 20 million tons for
delivery in 2005 and 2006. And we reduced the average mining cost per ton for
the corporation as a whole, although eastern costs were up modestly compared to
the previous quarter due to a 5% reduction in produced volumes in that region
related to routine variations in mining rates at several operations." (Arch
expects a return to normal mining rates for the first quarter of 2004.)
For the year ended December 31, 2003, Arch Coal had a net loss available to
common shareholders of $9.0 million, or $.17 per fully diluted share, excluding
a total of $19.0 million, or $.36 per fully diluted share, related to the full
year impact of the items discussed above. That compares to a loss of $2.6
million, or $.05 per fully diluted share, during the same period of 2002. Total
coal sales for the year were $1,435.5 million and coal sales volumes totaled
100.6 million tons, vs. $1,473.6 million and 106.7 million tons in the
comparable period of 2002. Adjusted EBITDA totaled $220.3 million in 2003,
compared to $228.9 million in 2002.
U.S. coal markets
In recent months, U.S. coal markets have strengthened markedly,
particularly in the eastern United States where cold weather has recently
emerged as a key driver for coal consumption after a slow start to winter.
Even without the cold, demand for coal-fired power was already on the rise
- the result of a strengthening U.S. economy in general and an uptick in
industrial activity in particular. Through September 30, 2003, coal consumption
for electric generation was up an estimated 3%, according to the U.S. Energy
Information Administration. "The resurgence in U.S. manufacturing is boosting
demand for baseload power, and that means coal," Leer said.
As a result, utility stockpiles have dipped into the lower end of their
five-year average range, according to recent estimates. Arch estimates that
stockpiles declined to approximately 123 million tons at the end of December,
16% lower than last year. "In the near future, we expect activity in both the
spot and contract markets to accelerate as power generators re-enter the
market," Leer said.
In fact, the expectation of that development may already be pushing coal
prices higher. The current spot price for eastern coal is approximately 40%
higher than at the same time last year, according to Coal Daily's most recently
published pricing indices. Spot prices for Powder River Basin coal have
increased approximately 10% over the same time period, according to Coal Daily.
Contract activity
Arch signed a number of new commitments in the rising market environment
that prevailed during the quarter. At present, Arch has signed commitments for
nearly 95% of its expected 2004 production. On those already committed tons,
Arch expects average realizations for the full year to increase by approximately
8% compared to 2003 levels. (Average realizations are expected to increase
gradually throughout the year due to differences in the timing of the new
commitments.)
Arch also signed commitments since October for approximately 10 million
tons to be delivered in 2005. At present, Arch has priced approximately 65% of
its expected 2005 production and 50% of its expected 2006 production. Arch has
also signed contracts for approximately 700,000 tons of metallurgical coal to be
delivered during 2004 and 2005.
"We are pleased with our recent contract activity, and we regard our
sizable open positions in 2005 and 2006 as highly advantageous given our
expectations for U.S. coal demand and pricing in the near to intermediate term,"
Leer said.
Operating statistics
Fourth Quarter 2003 Regional Analysis:
Eastern Operations Western Operations Total
------------------------------ ----------------------------- ------------------------------ --------------------------
Tons sold (in mm) 7.5 19.5 27.0
------------------------------ ----------------------------- ------------------------------ --------------------------
Sales price per ton $31.05 $7.28 $13.87
------------------------------ ----------------------------- ------------------------------ --------------------------
Cost per ton $32.03 $6.43 $13.55
------------------------------ ----------------------------- ------------------------------ --------------------------
Margin per ton $ (.98) $ .85 $ .32
------------------------------ ----------------------------- ------------------------------ --------------------------
Note: Western operations data do not include the results of 65%-owned Canyon Fuel Company, which is accounted for on the
equity method.
Capital Spending and DD&A (in millions):
FY 2003 FY 2002 FY 2004 (proj.)
------------------------------- ---------------------------- ---------------------------- ----------------------------
Capital spending $147.9 $158.9 $160
------------------------------- ---------------------------- ---------------------------- ----------------------------
DD&A $179.9 $199.6 $180
------------------------------- ---------------------------- ---------------------------- ----------------------------
Note: Data on capital spending and depreciation, depletion and amortization
include Arch's ownership percentage in Canyon Fuel Company. Projected capital
spending and DD&A do not include Triton Coal Company, other potential
acquisitions or reserve additions.
Natural Resource Partners
During the quarter, Arch strengthened its balance sheet and greatly
increased its liquidity through the previously announced sale of its 4.8 million
subordinated units, general partner interest and incentive distribution rights
in Natural Resource Partners for a purchase price of $115 million. The sale was
part of a long-term effort to monetize the value of certain non-strategic,
fee-based royalty properties previously undervalued on the company's balance
sheet.
"The sale of the NRP units provides us with tremendous financial
flexibility as we continue to prepare for the acquisition of Triton Coal
Company," Leer said. "Our balance sheet is the strongest it has been since 1998,
when we purchased Arco Coal Company. With our large cash balance, net debt as a
percent of total capitalization currently stands at 40% -- down from 83% at the
beginning of 2000."
Arch continues to hold 2.9 million common units of NRP, which have a
current market value of $118 million at close of market at Jan. 27, 2004. The
Triton acquisition is currently undergoing review by the Federal Trade
Commission.
Award-winning reclamation and safety practices
Arch received a number of prestigious honors for its industry-leading
safety and reclamation practices during 2003. For the third year in a row, an
Arch Coal subsidiary - Arch of West Virginia - claimed the Greenlands Award for
best mine reclamation in the state of West Virginia. In addition, Ducks
Unlimited awarded Catenary Coal with the 2003 West Virginia Wetlands Award for
its outstanding accomplishments in the creation and preservation of wetlands
habitat.
Moreover, two Arch subsidiaries - Hobet Mining and Coal-Mac, Inc. -
received Mountaineer Guardian awards "for their determined and successful
efforts in producing energy from within a safe working environment." Overall,
Arch reduced its total incident rate by 14% during 2003.
"We regard excellence in safety and environmental performance as defining
characteristics of our organization, and the foundation upon which our future
success will be built," Leer said.
Looking ahead
"The outlook for U.S. coal markets is strong," Leer said. "We believe there
is great potential for increased profitability in the future, driven in large
part by the ongoing expiration of older, lower-priced contracts."
During 2004, Arch will begin to benefit from the replacement of legacy
contracts with new commitments signed in the current market environment,
according to Leer. Arch currently expects profits of between $.08 and $.12 in
the first quarter, excluding charges related to the termination of hedge
accounting for interest rate swaps. (Note: First quarter projections include
approximately $1.5 million in severance costs related to the previously
announced closure of Canyon Fuel Company's Skyline mine in Utah.) The company
expects stronger results in subsequent quarters.
A conference call concerning fourth quarter earnings will be webcast live
today at 11 a.m. Eastern. The conference call can be accessed via the "investor"
section of the Arch Coal Web site (www.archcoal.com).
During the fourth quarter, the conditions necessary for the conversion
option in Arch's cumulative convertible preferred stock to become exercisable
were met. As a result, beginning with the fourth quarter, the impact of the
preferred shares must be considered in the calculation of fully diluted weighted
average shares outstanding.
Arch Coal is the nation's second largest coal producer, with subsidiary
operations in West Virginia, Kentucky, Virginia, Wyoming, Colorado and Utah.
Through these operations, Arch Coal provides the fuel for approximately 6% of
the electricity generated in the United States.
Forward-Looking Statements: Statements in this press release which are not
statements of historical fact are forward-looking statements within the "safe
harbor" provision of the Private Securities Litigation Reform Act of 1995. These
forward-looking statements are based on information currently available to, and
expectations and assumptions deemed reasonable by, the company. Because these
forward-looking statements are subject to various risks and uncertainties,
actual results may differ materially from those projected in the statements.
These expectations, assumptions and uncertainties include: the company's
expectation of continued growth in the demand for electricity; belief that
legislation and regulations relating to the Clean Air Act and the relatively
higher costs of competing fuels will increase demand for its compliance and
low-sulfur coal; expectation of continued improved market conditions for the
price of coal; expectation that the company will continue to have adequate
liquidity from its cash flow from operations, together with available borrowings
under its credit facilities, to finance the company's working capital needs; a
variety of operational, geologic, permitting, labor and weather related factors;
and the other risks and uncertainties which are described from time to time in
the company's reports filed with the Securities and Exchange Commission.
Arch Coal, Inc. and Subsidiaries
Condensed Consolidated Statements of Operations
(In thousands, except per share data)
Three Months Ended Twelve Months Ended
December 31 December 31
------------------------------------------------------
2003 2002 2003 2002
------------------------------------------------------
(Unaudited) (Unaudited)
Revenues
Coal sales $ 374,930 $ 369,676 $ 1,435,488 $ 1,473,558
Costs and expenses
Cost of coal sales 366,302 356,347 1,418,362 1,412,541
Selling, general and administrative expenses 13,630 10,344 47,295 40,019
Long-term incentive compensation plan expense 14,992 - 16,217 -
Amortization of coal supply agreements 3,412 6,311 16,622 22,184
Other expenses 5,824 9,262 18,980 30,118
------------------------------------------------------
404,160 382,264 1,517,476 1,504,862
------------------------------------------------------
Other operating income
Income from equity investments 5,432 7,800 34,390 10,092
Gain on sale of units of Natural Resource Partners, LP 42,743 - 42,743 -
Other operating income 11,798 12,966 45,226 50,489
------------------------------------------------------
59,973 20,766 122,359 60,581
------------------------------------------------------
Income from operations 30,743 8,178 40,371 29,277
Interest expense, net:
Interest expense (13,726) (12,140) (50,133) (51,922)
Interest income 1,386 284 2,636 1,083
------------------------------------------------------
(12,340) (11,856) (47,497) (50,839)
------------------------------------------------------
Other non-operating income (expense):
Expenses resulting from early debt extinguishment and termination of hedge
accounting for interest rate swaps (2,066) - (8,955) -
Other non-operating income 1,897 - 13,211 -
------------------------------------------------------
(169) - 4,256 -
------------------------------------------------------
Income (loss) before income taxes and cumulative effect of
accounting change 18,234 (3,678) (2,870) (21,562)
Benefit from income taxes (5,700) (4,750) (23,210) (19,000)
------------------------------------------------------
Income (loss) before cumulative effect of accounting change 23,934 1,072 20,340 (2,562)
Cumulative effect of accounting change, net of taxes - - (3,654) -
------------------------------------------------------
Net income (loss) 23,934 1,072 16,686 (2,562)
Preferred stock dividends (1,797) - (6,589) -
------------------------------------------------------
Net income (loss) available to common shareholders $ 22,137 $ 1,072 $ 10,097 $ (2,562)
=========== ============= ============= ============
Earnings per common share
Basic earnings (loss) before cumulative effect of accounting change $ 0.42 $ 0.02 $ 0.26 $ (0.05)
Cumulative effect of accounting change - - (0.07) -
------------------------------------------------------
Basic earnings (loss) per common share $ 0.42 $ 0.02 $ 0.19 $ (0.05)
======================================================
Diluted earnings (loss) before cumulative effect of accounting change $ 0.40 $ 0.02 $ 0.26 $ (0.05)
Cumulative effect of accounting change - - (0.07) -
------------------------------------------------------
Diluted earnings (loss) per common share $ 0.40 $ 0.02 $ 0.19 $ (0.05)
======================================================
Weighted average shares outstanding
Basic 52,720 52,382 52,511 52,374
Diluted 60,297 52,533 52,885 52,374
======================================================
Dividends declared per common share $ 0.0575 $ 0.0575 $ 0.2300 $ 0.2300
======================================================
Adjusted EBITDA (A) $ 75,872 $ 57,853 $220,260 $228,910
======================================================
(A) Adjusted EBITDA is defined as net income before the effect of net interest
expense; income taxes; our depreciation, depletion and amortization; our
equity interest in the depreciation, depletion and amortization of Canyon
Fuel Company, LLC; cumulative effect of accounting changes; expenses
resulting from early extinguishment of debt; and mark-to-market adjustments
in the value of derivative instruments.
Adjusted EBITDA is not a measure of financial performance in accordance
with generally accepted accounting principles, and items excluded to calculate
Adjusted EBITDA are significant in understanding and assessing our financial
condition. 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 service and incur debt based on
ongoing operations. Furthermore, analogous measures are used by industry
analysts to evaluate operating performance. 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 Twelve Months Ended
December 31 December 31
------------------------------------------------------
2003 2002 2003 2002
------------------------------------------------------
(Unaudited) (Unaudited)
Net income (loss) $ 23,934 $ 1,072 $ 16,686 $ (2,562)
Cumulative effect of accounting change - - 3,654 -
Benefit from income taxes (5,700) (4,750) (23,210) (19,000)
Interest expense, net 12,340 11,856 47,497 50,839
Depreciation, depletion and amortization - Arch Coal, Inc. 40,322 43,917 158,464 174,752
DD&A - Equity interest in Canyon Fuel Company, LLC 4,807 5,758 21,425 24,881
Expenses from early debt extinguishment and other nonoperating 169 - (4,256) -
------------ ----------- -------------- --------------
Adjusted EBITDA $ 75,872 $ 57,853 $ 220,260 $ 228,910
============ =========== ============== ===============
Arch Coal, Inc. and Subsidiaries
Condensed Consolidated Balance Sheets
(In thousands)
December 31, December 31,
2003 2002
-------------------------------------------
(Unaudited)
Assets
Current assets
Cash and cash equivalents $ 254,541 $ 9,557
Trade receivables 118,376 135,903
Other receivables 29,897 30,927
Inventories 69,907 66,799
Prepaid royalties 4,586 4,971
Deferred income taxes 19,700 27,775
Other 16,638 15,781
-------------------------------------------
Total current assets 513,645 291,713
-------------------------------------------
Property, plant and equipment, net 1,315,135 1,284,968
-------------------------------------------
Other assets
Prepaid royalties 70,880 51,078
Coal supply agreements 6,397 59,240
Deferred income taxes 246,024 221,116
Equity investments 172,045 231,551
Other 63,523 43,142
-------------------------------------------
558,869 606,127
-------------------------------------------
Total assets $ 2,387,649 $ 2,182,808
===========================================
Liabilities and stockholders' equity
Current liabilities
Accounts payable $ 89,975 $ 113,527
Accrued expenses 180,314 133,287
Current portion of debt 6,349 7,100
-------------------------------------------
Total current liabilities 276,638 253,914
Long-term debt 700,022 740,242
Accrued postretirement benefits other than pension 352,097 324,539
Asset retirement obligations 143,545 117,804
Accrued workers' compensation 77,672 80,985
Other noncurrent liabilities 149,640 130,461
-------------------------------------------
Total liabilities 1,699,614 1,647,945
-------------------------------------------
Stockholders' equity
Preferred stock 29 -
Common Stock 536 527
Paid-in capital 988,476 835,763
Retained deficit (255,936) (253,943)
Treasury stock, at cost (5,047) (5,047)
Accumulated other comprehensive loss (40,023) (42,437)
-------------------------------------------
Total stockholders' equity 688,035 534,863
-------------------------------------------
Total liabilities and stockholders' equity $ 2,387,649 $ 2,182,808
===========================================
NOTE:Certain amounts in the December 31, 2002 balance sheet have been
reclassified to conform with the classifications in the 2003 balance sheet
with no effect on previously reported stockholders' equity.
Arch Coal, Inc. and Subsidiaries
Condensed Consolidated Statements of Cash Flows
(In Thousands)
Twelve Months Ended
December 31,
-------------------------------------------------
2003 2002
--------------- ---------------
(Unaudited)
Operating activities
Net income (loss) $ 16,686 $ (2,562)
Adjustments to reconcile to cash
provided by operating activities:
Depreciation, depletion and amortization 158,464 174,752
Prepaid royalties expensed 13,153 8,503
Accretion on asset retirement obligations 12,999 -
Net gain on disposition of assets (3,782) (751)
Gain on sale of units of Natural Resource Partners, LP (42,743) -
Income from equity investments (34,390) (10,092)
Net distributions from equity investments 49,686 17,121
Cumulative effect of accounting change 3,654 -
Other nonoperating income (4,256) -
Changes in:
Receivables 18,805 14,028
Inventories (2,857) (6,666)
Accounts payable and accrued expenses 8,844 (4,711)
Income taxes (13,822) (15,826)
Accrued postretirement benefits other than pension 27,558 (1,559)
Asset retirement obligations (20,606) 6,336
Accrued workers' compensation benefits (3,313) 2,217
Other noncurrent liabilities (14,984) 1,547
Other (6,735) (5,920)
--------------- ---------------
Cash provided by operating activities 162,361 176,417
--------------- ---------------
Investing activities
Additions to property, plant and equipment (132,427) (137,089)
Proceeds from sale of units of Natural Resource Partners, LP 115,000 33,603
Proceeds from dispositions of property, plant and equipment 4,282 2,522
Proceeds from coal supply agreements 52,548 -
Additions to prepaid royalties (32,571) (27,339)
--------------- ---------------
Cash provided by (used in) investing activities 6,832 (128,303)
--------------- ---------------
Financing activities
Net payments on revolver and lines of credit (65,971) (26,513)
Payments on term loans (675,000) -
Proceeds from issuance of senior notes 700,000 -
Debt financing costs (18,508) (8,228)
Proceeds from sale and leaseback of equipment - 9,213
Reductions of obligations under capital lease - (8,210)
Dividends paid (17,481) (12,045)
Proceeds from issuance of preferred stock 139,024 -
Proceeds from sale of common stock 13,727 336
--------------- ---------------
Cash provided by (used in) financing activities 75,791 (45,447)
--------------- ---------------
Increase in cash and cash equivalents 244,984 2,667
Cash and cash equivalents, beginning of period 9,557 6,890
--------------- ---------------
Cash and cash equivalents, end of period $ 254,541 $ 9,557
=============== ===============
Canyon Fuel Company cash flow information (Arch Coal ownership percentage)
Depreciation, depletion and amortization 21,425 24,881
Additions to property, plant and equipment (15,498) (21,773)
Arch Coal, Inc. and Subsidiaries
Reconciliation of Non-GAAP Measures
(In thousands, except per share data)
Included in the accompanying release, we have disclosed income available to
common shareholders for the quarter and year ending December 31, 2003 excluding
the partial sale of the company's investment in Natural Resource Partners and a
charge related to a long-term incentive compensation plan. These measures are
considered non-GAAP measures as defined by Regulation G. The following
reconciles these amounts to net income available to common shareholders reported
under GAAP:
Three Months Ended Twelve Months Ended
December 31 December 31
----------------------------------------
2003 2003
----------------------------------------
(Unaudited) (Unaudited)
Net income available to common shareholders $ 22,137 $ 10,097
Gain on sale of units of Natural Resource Partners, LP (42,743) (42,743)
Long-term incentive compensation plan expense 14,992 16,217
Long-term incentive compensation plan expense included in
equity income from Canyon Fuel Company 1,129 1,129
Tax impact of the excluded items (at AMT rate of 25%) 6,656 6,349
----------------------------------------
Net income (loss) available to common shareholders excluding items $ 2,171 $ (8,951)
========================================
Fully diluted shares outstanding 60,297 52,885
Adjustment to exclude impact of stock options due to net loss - (374)
Adjustment to exclude impact of convertible preferred shares
that would not be dilutive (6,896) -
----------------------------------------
Fully diluted shares outstanding 53,401 52,511
----------------------------------------
Earnings (loss) per common share excluding items $ 0.04 $ (0.17)
================= =====================